Exhibit 10.2

 

	
 
    


 

SALE AND SERVICING AGREEMENT

 

among

 

HARLEY-DAVIDSON MOTORCYCLE TRUST [           ],

as Issuer,

 

HARLEY-DAVIDSON CUSTOMER FUNDING CORP.,

as Trust Depositor,

 

[HARLEY-DAVIDSON MOTORCYCLE GRANTOR TRUST [           ],

as Underlying Trust,]

 

HARLEY-DAVIDSON CREDIT CORP.,

as Servicer

 

and

 

[                                                      ],

as Indenture Trustee

 

Dated as of [                     ]

 

	
 
    


 











 

Table of Contents

 


	
 
    	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE ONE DEFINITIONS
    	
 
    	
1
    
	
Section 1.01.
    	
Definitions
    	
 
    	
1
    
	
Section 1.02.
    	
Usage of Terms
    	
 
    	
18
    
	
Section 1.03.
    	
Section References
    	
 
    	
18
    
	
Section 1.04.
    	
Calculations
    	
 
    	
18
    
	
Section 1.05.
    	
Accounting Terms
    	
 
    	
19
    
	
ARTICLE TWO TRANSFER OF CONTRACTS
    	
 
    	
19
    
	
Section 2.01.
    	
Closing
    	
 
    	
19
    
	
Section 2.02.
    	
Conditions to the Closing
    	
 
    	
19
    
	
ARTICLE THREE REPRESENTATIONS AND WARRANTIES
    	
 
    	
21
    
	
Section 3.01.
    	
Representations and Warranties Regarding the   Trust Depositor
    	
 
    	
21
    
	
Section 3.02.
    	
Representations and Warranties Regarding the   Servicer
    	
 
    	
23
    
	
ARTICLE FOUR PERFECTION OF TRANSFER AND   PROTECTION OF SECURITY INTERESTS
    	
 
    	
24
    
	
Section 4.01.
    	
Custody of Contracts
    	
 
    	
24
    
	
Section 4.02.
    	
Filing
    	
 
    	
25
    
	
Section 4.03.
    	
Name Change or Relocation
    	
 
    	
25
    
	
Section 4.04.
    	
Costs and Expenses
    	
 
    	
26
    
	
ARTICLE FIVE SERVICING OF CONTRACTS
    	
 
    	
26
    
	
Section 5.01.
    	
Responsibility for Contract Administration
    	
 
    	
26
    
	
Section 5.02.
    	
Standard of Care
    	
 
    	
26
    
	
Section 5.03.
    	
Records
    	
 
    	
26
    
	
Section 5.04.
    	
Inspection
    	
 
    	
26
    
	
Section 5.05.
    	
Trust Accounts
    	
 
    	
27
    
	
Section 5.06.
    	
Enforcement
    	
 
    	
28
    
	
Section 5.07.
    	
Trustees to Cooperate
    	
 
    	
29
    
	
Section 5.08.
    	
Costs and Expenses
    	
 
    	
30
    
	
Section 5.09.
    	
Maintenance of Security Interests in Motorcycles
    	
 
    	
30
    
	
Section 5.10.
    	
Successor Servicer/Lockbox Agreements
    	
 
    	
30
    
	
Section 5.11.
    	
Separate Entity Existence
    	
 
    	
30
    
	
ARTICLE SIX THE TRUST DEPOSITOR
    	
 
    	
31
    
	
Section 6.01.
    	
Covenants of the Trust Depositor
    	
 
    	
31
    
	
Section 6.02.
    	
Liability of Trust Depositor; Indemnities
    	
 
    	
32
    
	
Section 6.03.
    	
Merger or Consolidation of, or Assumption of the   Obligations of, Trust Depositor; Certain Limitations
    	
 
    	
34
    
	
Section 6.04.
    	
Limitation on Liability of Trust Depositor and   Others
    	
 
    	
35
    
	
Section 6.05.
    	
Trust Depositor Not to Resign
    	
 
    	
35
    
	
ARTICLE SEVEN DISTRIBUTIONS; RESERVE FUND
    	
 
    	
35
    
	
Section 7.01.
    	
Monthly Distributions
    	
 
    	
35
    
	
Section 7.02.
    	
Fees
    	
 
    	
35
    
	
Section 7.03.
    	
Advances
    	
 
    	
35
    
	
Section 7.04.
    	
Reserved
    	
 
    	
36
    
	
Section 7.05.
    	
Distributions; Priorities
    	
 
    	
36
    
	
Section 7.06.
    	
Reserve Fund
    	
 
    	
41
    
	
Section 7.07.
    	
Reserved
    	
 
    	
42
    
	
Section 7.08.
    	
Purchase of Contracts for Breach of   Representations and Warranties
    	
 
    	
42
    
	
Section 7.09.
    	
Reassignment of Reacquired Contracts
    	
 
    	
43
    
	
Section 7.10.
    	
Servicer’s Purchase Option
    	
 
    	
43
    




 

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Section 7.11.
    	
Purchase of Contracts for Breach of Servicing   Obligations
    	
 
    	
43
    
	
Section 7.12.
    	
Interest Rate [Swap][Cap] Agreement
    	
 
    	
44
    
	
Section 7.13.
    	
Interest Rate [Swap][Cap] Agreement
    	
 
    	
46
    
	
ARTICLE EIGHT EVENTS OF TERMINATION; SERVICE   TRANSFER
    	
 
    	
48
    
	
Section 8.01.
    	
Events of Termination
    	
 
    	
48
    
	
Section 8.02.
    	
Waiver of Event of Termination
    	
 
    	
48
    
	
Section 8.03.
    	
Servicing Transfer
    	
 
    	
48
    
	
Section 8.04.
    	
Successor Servicer to Act; Appointment of   Successor Servicer
    	
 
    	
49
    
	
Section 8.05.
    	
Notification Noteholders
    	
 
    	
49
    
	
Section 8.06.
    	
Effect of Transfer
    	
 
    	
50
    
	
Section 8.07.
    	
Database File
    	
 
    	
50
    
	
Section 8.08.
    	
Successor Servicer Indemnification
    	
 
    	
50
    
	
Section 8.09.
    	
Responsibilities of the Successor Servicer
    	
 
    	
50
    
	
Section 8.10.
    	
Limitation of Liability of Servicer
    	
 
    	
51
    
	
Section 8.11.
    	
Merger or Consolidation of Servicer
    	
 
    	
51
    
	
Section 8.12.
    	
Servicer Not to Resign
    	
 
    	
51
    
	
Section 8.13.
    	
Appointment of Subservicer
    	
 
    	
51
    
	
ARTICLE NINE REPORTS
    	
 
    	
52
    
	
Section 9.01.
    	
Monthly Reports
    	
 
    	
52
    
	
Section 9.02.
    	
Officer’s Certificate
    	
 
    	
52
    
	
Section 9.03.
    	
Other Data
    	
 
    	
52
    
	
Section 9.04.
    	
Report on Assessment of Compliance with Servicing   Criteria and Attestation; Annual Officer’s Certificate
    	
 
    	
52
    
	
Section 9.05.
    	
Monthly Reports to Noteholders
    	
 
    	
53
    
	
Section 9.06.
    	
Regulation AB
    	
 
    	
54
    
	
Section 9.07.
    	
Information to Be Provided by the Indenture   Trustee
    	
 
    	
54
    
	
Section 9.08.
    	
Exchange Act Reporting
    	
 
    	
55
    
	
ARTICLE TEN TERMINATION
    	
 
    	
56
    
	
Section 10.01.
    	
Sale of Trust Assets
    	
 
    	
56
    
	
ARTICLE ELEVEN MISCELLANEOUS
    	
 
    	
56
    
	
Section 11.01.
    	
Amendment
    	
 
    	
56
    
	
Section 11.02.
    	
Protection of Title to Trust
    	
 
    	
57
    
	
Section 11.03.
    	
Governing Law
    	
 
    	
58
    
	
Section 11.04.
    	
Notices
    	
 
    	
58
    
	
Section 11.05.
    	
Severability of Provisions
    	
 
    	
60
    
	
Section 11.06.
    	
Assignment
    	
 
    	
60
    
	
Section 11.07.
    	
Third Party Beneficiaries
    	
 
    	
60
    
	
Section 11.08.
    	
Counterparts
    	
 
    	
60
    
	
Section 11.09.
    	
Headings
    	
 
    	
60
    
	
Section 11.10.
    	
No Bankruptcy Petition; Disclaimer and   Subordination
    	
 
    	
61
    
	
Section 11.11.
    	
Limitation of Liability of Owner Trustee and   Indenture Trustee
    	
 
    	
61
    




 

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EXHIBITS

 


	
Exhibit A
    	
Form of Assignment
    	
 
    	
A-1
    
	
Exhibit B
    	
Form of Closing Certificate of Trust Depositor
    	
 
    	
B-1
    
	
Exhibit C
    	
Form of Closing Certificate of Seller/Servicer
    	
 
    	
C-1
    
	
Exhibit D
    	
Form of Servicing Officer Certification as to   Monthly Report
    	
 
    	
D-1
    
	
Exhibit E
    	
Servicing Criteria to be Addressed in Indenture   Trustee’s Assessment of Compliance
    	
 
    	
E-1
    
	
Exhibit F
    	
Form of Indenture Trustee’s Annual Certificate
    	
 
    	
F-1
    
	
Exhibit G
    	
Form of Certificate Regarding Reacquired   Contracts
    	
 
    	
G-1
    
	
Exhibit H
    	
List of Contracts
    	
 
    	
H-1
    
	
Exhibit I
    	
Form of Monthly Report to Noteholders
    	
 
    	
I-1
    
	
Exhibit J
    	
Seller’s Representations and Warranties
    	
 
    	
J-1
    
	
Exhibit K
    	
Lockbox Bank and Lockbox Account
    	
 
    	
K-1
    




 

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THIS SALE AND SERVICING AGREEMENT, dated as of [                      ] (this “Agreement”), is entered into by and 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”), [Harley-Davidson Motorcycle Grantor Trust [             ] (together with its successors and assigns, the “Underlying Trust”),] [                      ] (solely in its capacity as Indenture Trustee, together with its successors and assigns, the “Indenture Trustee”) and Harley-Davidson Credit Corp. (solely in its capacity as Servicer, together with its successor and assigns, “Harley-Davidson Credit” or the “Servicer”).

 

WHEREAS the Issuer desires to acquire from the Trust Depositor a pool of fixed-rate, simple interest promissory notes and security agreements and retail installment sale contracts relating to Harley-Davidson motorcycles and motorcycles not manufactured by Harley-Davidson (collectively, the “Contracts”) purchased by Harley-Davidson Credit and subsequently sold by Harley-Davidson Credit to the Trust Depositor;

 

WHEREAS the Trust Depositor is willing to transfer and assign the Contracts to the [Issuer][Underlying Trust] 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:

 

[“Adjusted Aggregate Principal Balance” will equal the Aggregate Principal Pool Balance less the Yield Supplement Overcollateralization Amount.]

 

“Administration Agreement” means the Administration Agreement, dated as of the date hereof, among the Issuer, Harley-Davidson Credit Corp. (in its capacity as administrator), the Trust Depositor[, the Underlying Trust] and the Indenture Trustee.

 

“ADR Organization” means The American Arbitration Association or, if The American Arbitration Association no longer exists or if its ADR Rules would no longer permit mediation or arbitration, as applicable, of the dispute, another nationally recognized mediation or arbitration organization selected by the Seller.

 

“ADR Rules” means the relevant rules of the ADR Organization for mediation (including non-binding arbitration) or binding arbitration, as applicable, of commercial disputes in effect at the time of the mediation or arbitration.

 

“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.

 

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“Affiliate” of any specified Person means any other Person controlling or controlled by, or under common control with, such specified Person.  For the purposes of this definition, “control” when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” or “controlled” have meanings correlative to the foregoing.

 

“Aggregate Principal Balance” will equal the sum of the Principal Balances of each outstanding Contract.

 

“Agreement” means this Sale and Servicing Agreement, as amended, supplemented or otherwise modified from time to time in accordance with the terms hereof.

 

“Asset Representations Review Agreement” means the Asset Representations Review Agreement, dated as of the Cutoff Date, among the Issuer, the Servicer and the Asset Representations Reviewer.

 

“Asset Representations Reviewer” means [                     ], a [                        ].

 

“Asset Representations Reviewer Fee” means “Review Fee” as such term is defined in the Asset Representations Review Agreement.

 

“Available Monies” means, with respect to any Distribution Date, the sum (without duplication) of (a) 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 of and interest on the Contracts, (ii) all Net Liquidation Proceeds, and (iii) 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), and (b) the following amounts received on or prior to such Distribution Date: (i) the aggregate of the Purchase Prices for Contracts reacquired by the Trust Depositor pursuant to Section 7.08 or moneys otherwise deposited in the Collection Account pursuant to such Section, (ii) all Advances made by the Servicer pursuant to Section 7.03, (iii) all amounts paid by the Servicer in connection with an optional purchase of the Contracts pursuant to Section 7.10, (iv) the aggregate of the Purchase Prices for Contracts purchased by the Servicer pursuant to Section 7.11, [(v) the Net Swap Receipt, if any, received from the [Swap][Cap] Counterparty for such Distribution Date, and [Swap][Cap] Termination Payments made by the [Swap][Cap] Counterparty (less any amounts used to enter into a Replacement [Swap][Cap] Agreement)].

 

“Business Day” means any day other than a Saturday or a Sunday, or another day on which banking institutions in the cities of [                   ], [                   ] or New York, New York are authorized or obligated by law, executive order, or governmental decree to be closed.

 

“Certificate[s]” means [a Trust Certificate][the Trust Certificates] (as such term is defined in the Trust Agreement), representing a beneficial equity interest in the Trust and issued pursuant to the Trust Agreement.

 

“Certificate Register” shall have the meaning specified in the Trust Agreement.

 

“Certificateholder[s]” shall have the meaning specified in the Trust Agreement.

 

“Class” means all Notes whose form is identical except for variation in denomination, principal amount or owner.

 

“Class A Noteholder” means the Person in whose name a Class A Note is registered in the Note Register.

 

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“Class A Notes” means, collectively, the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and the Class A-4 Notes.

 

“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.

 

“Class A-1 Notes” has the meaning set forth in the Indenture.

 

“Class A-1 Rate” means [      ]% per annum (computed on the basis of the actual number of days elapsed and a 360-day year).

 

“Class A-2 Final Distribution Date” means the [    ] Distribution Date.

 

“Class A-2 Noteholder” means a Class A-2a Noteholder or a Class A-2b Noteholder.

 

“Class A-2 Notes” means the Class A-2a Notes and the Class A-2b Notes, collectively.

 

“Class A-2a Noteholder” means the Person in whose name a Class A-2a Note is registered in the Note Register.

 

“Class A-2a Notes” has the meaning set forth in the Indenture.

 

“Class A-2a Rate” means [     ]% per annum (computed on the basis of a 360-day year of twelve 30-day months).

 

“Class A-2b Noteholder” means the Person in whose name a Class A-2b Note is registered in the Note Register.

 

“Class A-2b Notes” has the meaning set forth in the Indenture.

 

“Class A-2b Rate” means LIBOR plus [     ]% per annum (computed on the basis of the actual number of days elapsed and a 360-day year).

 

“Class A-3 Final Distribution Date” means the [     ] Distribution Date.

 

“Class A-3 Noteholder” means the Person in whose name a Class A-3 Note is registered in the Note Register.

 

“Class A-3 Notes” has the meaning set forth in the Indenture.

 

“Class A-3 Rate” means [     ]% per annum (computed on the basis of a 360-day year of twelve 30-day months).

 

“Class A-4 Final Distribution Date” means the [             ] Distribution Date.

 

“Class A-4 Noteholder” means the Person in whose name a Class A-4 Note is registered in the Note Register.

 

“Class A-4 Notes” has the meaning set forth in the Indenture.

 

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“Class A-4 Rate” means [     ]% per annum (computed on the basis of a 360-day year of twelve 30-day months).

 

“Class B Final 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 Notes” has the meaning set forth in the Indenture.

 

“Class B Rate” means [     ]% per annum (computed on the basis of a 360-day year of twelve 30-day months).

 

“Class C Final Distribution Date” means the [                    ] Distribution Date.

 

“Class C Noteholder” means the Person in whose name a Class C Note is registered in the Note Register.

 

“Class C Notes” has the meaning set forth in the Indenture.

 

“Class C Rate” means [     ]% per annum (computed on the basis of a 360-day year of twelve 30-day months).

 

“Class D Final Distribution Date” means the [                         ] Distribution Date.

 

“Class D Noteholder” means the Person in whose name a Class D Note is registered in the Note Register.

 

“Class D Notes” has the meaning set forth in the Indenture.

 

“Class D Rate” means [     ]% per annum (computed on the basis of a 360-day year of twelve 30-day months).

 

“Clearing Agency” shall have the meaning specified in the Indenture.

 

“Closing Date” means [                            ].

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Collateral” shall have the meaning specified in the Indenture.

 

“Collection Account” means a trust account as described in Section 5.05 maintained in the name of the Indenture Trustee and which shall be an Eligible Account.

 

“Computer File” means the computer file generated by the Servicer which provides information relating to the Contracts and which was used by the Seller in selecting the Contracts sold to the Trust Depositor pursuant to the Transfer and Sale Agreement and transferred to the Trust by the Trust Depositor pursuant to this Agreement, and includes the master file and the history file as well as servicing information with respect to the Contracts.

 

“Contract Assets” has the meaning assigned in Section 2.01 of the Transfer and Sale Agreement.

 

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“Contract File” means, as to each Contract, (a) the original Contract (or with respect to “electronic chattel paper”, the “authoritative copy” thereof), including the executed promissory note and security agreement or retail installment sale 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(s) (or with respect to “electronic chattel paper,” the “authoritative 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 (terms in quotation marks have the meaning assigned to them in the UCC).

 

“Contract Rate” means, as to any Contract, the annual rate of interest with respect to such Contract.

 

“Contracts” means the promissory notes and security agreements or retail installment sale contracts described in the List of Contracts and constituting part of the Trust Corpus, and includes, without limitation, all related security interests and any and all rights to receive payments which are collected pursuant thereto after the Cutoff Date, but excluding any rights to receive payments which are collected pursuant thereto on or prior to the Cutoff Date.

 

“Controlling Class” means the Class A Notes (voting together as a single class, if applicable) for so long as any Class A Notes are outstanding, then the Class B Notes for so long as any Class B Notes are outstanding, then the Class C Notes for so long as any Class C Notes are outstanding, and then the Class D Notes for so long as any Class D Notes are outstanding.

 

“Corporate Trust Office” means the office of the Indenture Trustee at which at any particular time its activities under the Transaction Documents 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 a bankruptcy or 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).

 

“Cutoff Date” means the close of business on [           ].

 

“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 the Contract or (iii) the Servicer has determined in good faith that an Obligor is not likely to resume payment under the Contract.

 

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“Delinquency Trigger” means, for any Due Period, that the aggregate Principal Balance of Contracts that are 60 days or more Delinquent (assuming 30-day months) as a percentage of the Pool Balance as of the last day of the Due Period exceeds [   ]%.

 

“Delinquent” means, as of a date of determination, a Contract with a past due amount greater than 10% of the scheduled payment then due; provided, no Contract with a past due amount of $10 or less shall be deemed “Delinquent.”

 

“Delinquent Interest” means, with respect to each Determination Date, all accrued and unpaid interest on any Contract for which the related Obligor is 30 or more days delinquent (assuming 30-day months) in any payment due, as of the last day of the related Due Period.

 

“Designated LIBOR Page” means the display on Reuters Screen LIBOR01 Page or any successor service or any page as may replace the designated page on that service or any successor service that display the London interbank rates of major banks for U.S. dollars.

 

“Determination Date” means the fourth Business Day following the conclusion of a Due Period during the term of this Agreement.

 

“Distribution Date” means the fifteenth day of each calendar month during the term of this Agreement, or if such day is not a Business Day, the next Business Day, with the first such Distribution Date hereunder being [                  ].

 

“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 (i) 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 first Determination Date or first Distribution Date, the Due Period shall be the period from the Cutoff Date through [           ] and (ii) the Due Period related to the Purchase Price shall be the calendar month in which the Seller or Servicer, as applicable, becomes aware or receives notice of the breach or potential breach giving rise to a repurchase or a purchase obligation pursuant to Section 7.08 or 7.11, as applicable.

 

“Eligible Account” means a segregated deposit account maintained with the Indenture Trustee, acting in its fiduciary capacity, or a depository institution or trust company organized under the laws of the United States of America, or any of the States thereof, or the District of Columbia, the deposits of which are insured by the Federal Deposit Insurance Corporation, having a certificate of deposit, short-term deposit or commercial paper rating of at least [   ] by [            ] and [   ] by [            ].

 

“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

 

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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 each Rating Agency in the highest investment category granted thereby;

 

(c)           commercial paper, master notes, promissory notes, demand notes or other short term debt obligations having, at the time of the investment or contractual commitment to invest therein, a rating from each Rating Agency in the highest investment category granted thereby;

 

(d)           investments in money market funds having a rating from each Rating Agency in the highest investment category granted thereby (including funds for which the Indenture Trustee or the Owner Trustee or any of their respective Affiliates is investment manager or advisor);

 

(e)           notes or bankers’ acceptances issued by any depository institution or trust company referred to in clause (b);

 

(f)            repurchase and reverse repurchase agreements collateralized by securities issued or guaranteed by the United States government or any agency, instrumentality or establishment of the United States government, in either case entered into with a depository institution or trust company (acting as principal) described in clause (b), or entered into with an entity (acting as principal) which has, or whose parent has, a credit rating from each Rating Agency in the highest credit category granted thereby; and

 

(g)           any other investment with respect to which the Rating Agency Condition is satisfied.

 

“Event of Termination” means an event specified in Section 8.01.

 

“Excess Amounts” shall mean Available Monies after distributions made in accordance with Section 7.05(a)(i) through [(xi)].

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Final Distribution Date” means the Class A-1 Final Distribution Date, the Class A-2 Final Distribution Date, the Class A-3 Final Distribution Date, the Class A-4 Final Distribution Date, the Class B Final Distribution Date, the Class C Final Distribution Date, or the Class D Final Distribution Date, as the case may be.

 

“First Priority Principal Distributable Amount” means, with respect to any Distribution Date, an amount, not less than zero, equal to the difference of (a) the aggregate Outstanding Amount of the Class A Notes as of such Distribution Date (before giving effect to any principal payments made on the Class A Notes on such Distribution Date), minus (b) the [Adjusted] Aggregate Principal Balance at the end of Due Period related to that Distribution Date; provided, however, that the First Priority Principal Distributable Amount shall not exceed the Outstanding Amount of the Class A Notes (before giving effect to any principal payments made on the Class A Notes on such Distribution Date); provided, further, that the First Priority Principal Distributable Amount on or after the Final Distribution Date for a Class of Class A Notes shall not be less than the amount that is necessary to pay such Class of Class A Notes in full.

 

“Fixed Rate Notes” means the Class A-1 Notes, the Class A-2a Notes, the Class A-3 Notes, the Class A-4 Notes, the Class B Notes, the Class C Notes and the Class D Notes.

 

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“Floating Rate Notes” means the Class A-2b Notes.

 

“Form 10-D Disclosure Item” means with respect to any Person, any litigation or governmental proceedings pending against (i) such Person in the case of the Issuer, the Seller, the Indenture Trustee, the Owner Trustee or the Servicer or (ii) a Responsible Officer of such Person in the case of the Owner Trustee or Indenture Trustee, to the extent such Person (or Responsible Officer of such Person, has actual knowledge thereof, in each case that would be material to the Noteholders.

 

“Form 10-K Disclosure Item” means with respect to any Person, (a) any Form 10-D Disclosure Item, (b) any affiliations between such Person and the Seller, the Servicer, the Trust Depositor, the Owner Trustee and the Indenture Trustee (each, an “Item 1119 Party”), to the extent such Person, or in the case of the Owner Trustee or Indenture Trustee, a Responsible Officer of such Person, has actual knowledge thereof and (c) any relationships or transactions between such Person and any Item 1119 Party that are outside the ordinary course of business or on terms other than would be obtained in an arm’s-length transaction with an unrelated third party, apart from the transactions contemplated under the Transaction Documents, and that are material to the investors’ understanding of the Notes, but only to the extent such Person, or in the case of the Owner Trustee or Indenture Trustee, a Responsible Officer of such Person, has actual knowledge of such relationships or transactions.

 

“Harley-Davidson” means, collectively, Harley-Davidson, Inc. and its subsidiaries.

 

“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, including any successor trustee under the Indenture.

 

“Indenture Trustee Fee” means, with respect to any Distribution Date, the greater of (i) one-twelfth of the product of [              ]% and the Pool Balance as of the beginning of the related Due Period, or (ii) $200.00.

 

“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.

 

“Interest Period” means (i) with respect to any Distribution Date and the Class A-1 Notes and the Floating Rate Notes, the period from and including the Distribution Date immediately preceding such Distribution Date (or, in the case of the first Distribution Date, from and including the Closing Date) to but excluding such Distribution Date and (ii) with respect to any Distribution Date and the Fixed Rate Notes (other than the Class A-1 Notes), 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

 

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Distribution Date, from and including the Closing Date) to but excluding the fifteenth day of the month of such Distribution Date.

 

“Interest Rate” means the Class A-1 Rate, the Class A-2a Rate, the Class A-2b Rate, the Class A-3 Rate, the Class A-4 Rate, the Class B Rate, the Class C Rate or the Class D Rate, as applicable.

 

[“Interest Rate [Swap][Cap] Agreement” means (i) the 1992 ISDA Master Agreement, the Schedule and the 1994 Credit Support Annex thereto, each dated as of the Closing Date, between the [Swap][Cap] Counterparty and the Issuer, and the Confirmations thereto, each dated as of the Closing Date, and entered into pursuant to such ISDA Master Agreement, as the same may be amended or supplemented from time to time in accordance with the terms thereof, and (ii) any Replacement Interest Rate [Swap][Cap] Agreement.]

 

“Issuer” means the Harley-Davidson Motorcycle Trust [       ].

 

“Late Payment Penalty Fees” means any late payment fees paid by Obligors on Contracts.

 

“LIBOR” means (i) for the initial Interest Period, [   ]%, and (ii) for any Interest Period thereafter, the rate for deposits in U.S. Dollars having a maturity of one month (commencing on the first day of such Interest Period) that appears on the Designated LIBOR Page as of 11:00 a.m. London time, on the applicable LIBOR Determination Date.  If one-month LIBOR does not appear on the Designated LIBOR Page, the Indenture Trustee shall request the principal London offices of each of four major reference banks in the London interbank market, which may include the Indenture Trustee and its affiliates, as selected by the Indenture Trustee, to provide the Indenture Trustee with their offered quotations for deposits in U.S. Dollars for the period of one month (commencing on the first day of such Interest Period), to prime banks in the London interbank market at approximately 11:00 a.m., London time, on such LIBOR Determination Date and in a principal amount that is representative of a single transaction in U.S. Dollars in that market at that time.  If at least two such quotations are provided, LIBOR for the applicable Interest Period will be the arithmetic mean of the quotations, rounded upwards to the nearest one-sixteenth of one percent.  If fewer than two such quotations are provided, LIBOR for the applicable Interest Period will be the rate calculated by the Indenture Trustee as the arithmetic mean, rounded upwards to the nearest one-sixteenth of one percent, of the rates quoted at approximately 11:00 a.m., New York, New York time, on the applicable LIBOR Determination Date by three major banks selected by the Indenture Trustee, which may include the Indenture Trustee and its affiliates, in New York, New York for loans in U.S. Dollars to leading European banks in a principal amount that is representative of a single transaction in U.S. Dollars in that market at that time and having a maturity of one month.  If the banks so selected by the Indenture Trustee are not quoting as described in this definition, LIBOR for the applicable Interest Period will be LIBOR in effect for the prior Interest Period.

 

“LIBOR Determination Date” means, for each Interest Period, the day that is two London Business Days prior to the first day of such Interest Period.

 

“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.

 

“Liquidated Contract” means a Contract with respect to which there has occurred one or more of the following, as determined as of the end of a Due Period: (i) 90 days have elapsed following the date of repossession (and expiration of any redemption period) with respect to the Motorcycle securing such Contract, (ii) the receipt of proceeds by the Servicer from the sale of a repossessed Motorcycle securing a Contract, (iii) the Servicer has determined in good faith that all amounts expected to be recovered have

 

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been received with respect to such Contract, or (iv) all or any portion of any payment is delinquent 150 days or more.

 

“List of Contracts” means the list identifying each Contract constituting part of the Trust Corpus, which list (a) identifies each Contract and (b) sets forth as to each Contract (i) the Principal Balance as of the Cutoff Date, (ii) the amount of monthly payments due from the Obligor, (iii) the Contract Rate and (iv) the maturity date, and which list (as in effect on the Closing Date) is attached to this Agreement as Exhibit H.

 

“Lockbox” means the post office box maintained by a Lockbox Bank identified on Exhibit K hereto and any other Lockbox hereafter established to accept collections on the Contracts.

 

“Lockbox Account” means the account maintained with the Lockbox Bank and identified on Exhibit K hereto and any other account hereafter established to accept collections on the Contracts.

 

“Lockbox Agreement” means the Amended and Restated Lockbox Administration Agreement dated as of July 14, 2009 by and among the Lockbox Bank, the Servicer, the Trust Depositor, Harley-Davidson Warehouse Funding Corp., a Nevada corporation, The Bank of New York Mellon Trust Company, National Association, JPMorgan Chase Bank, National Association, Eaglemark Customer Funding Corporation IV, and Bank of America, National Association, with respect to the Lockbox Account, unless such agreement shall be terminated in accordance with its terms, in which event “Lockbox Agreement” shall mean such other agreement, in form and substance acceptable to the above-described parties; such term shall also include any other agreement having substantially the same terms as the existing agreement described above, between or among a Lockbox Bank, the Indenture Trustee and the Servicer, the Trust Depositor and any other parties in respect of any Lockbox Account.

 

“Lockbox Bank” means the financial institution maintaining the Lockbox Account and identified on Exhibit K hereto or any successor thereto and any other financial institution at which a Lockbox Account is maintained.

 

“London Business Day” means any day on which dealings in deposits in U.S. Dollars are transacted in the London interbank market.

 

“Monthly Report” shall have the meaning specified in Section 9.05.

 

“Monthly Servicing Fee” means, as to any Distribution Date, one-twelfth of the product of [1.00]% and the Pool Balance as of the beginning of the related Due Period or, with respect to the first Distribution Date after the Closing Date, as of the Cutoff Date.

 

“Motorcycle” means a motorcycle manufactured by a subsidiary of Harley-Davidson, Inc. (or in certain limited instances certain other manufacturers) securing a Contract.

 

“Net Liquidation Losses” means, as of any Distribution Date, with respect to all Liquidated Contracts on an aggregate basis, the amount, if any, by which (a) the outstanding Principal Balance of all Liquidated Contracts (as of the respective dates upon which they became Liquidated Contracts) exceeds (b) the Net Liquidation Proceeds received in respect of Liquidated Contracts.

 

“Net Liquidation Proceeds” means, as to any Liquidated Contract, the proceeds realized on the sale or other disposition of the related Motorcycle, including proceeds realized on the repurchase of such Motorcycle by the originating dealer for breach of warranties, and the proceeds of any insurance relating to such Motorcycle, after payment of all reasonable expenses incurred in the collection of such proceeds,

 

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together, in all instances, with the expected or actual proceeds of any recourse rights relating to such Contract as well as any post-disposition proceeds or other amounts in respect of a Liquidated Contract received by the Servicer.

 

[“Net [Swap][Cap] Payment” means, for any Distribution Date, the net amount owed by the Issuer to the [Swap][Cap] Counterparty, if any, on such Distribution Date under the Interest Rate [Swap][Cap] Agreement, excluding any [Swap][Cap] Termination Payment.

 

“Net [Swap][Cap] Receipt” means, for any Distribution Date, the net amount owed by the [Swap][Cap] Counterparty to the Issuer, if any, on such Distribution Date under the Interest Rate [Swap][Cap] Agreement, excluding any [Swap][Cap] Termination Payment.]

 

“Note Depository Agreement” shall have the meaning specified in the Indenture.

 

“Note Distribution Account” means the account established and maintained as such pursuant to Section 5.05.

 

“Note Interest Carryover Shortfall” means, with respect to any Distribution Date and a Class of Notes, the excess, if any, of the sum of the Note Interest Distributable Amount for such Class for the immediately preceding Distribution Date, over the amount in respect of interest that was actually paid from 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 applicable Interest Rate for the related Interest Period.

 

“Note Interest Distributable Amount” means, with respect to any Distribution Date and a Class of Notes, the sum of the Note Monthly Interest Distributable Amount and the Note Interest Carryover Shortfall for such Class of Notes with respect to such Distribution Date.

 

“Note Monthly Interest Distributable Amount” means, with respect to any Distribution Date for any Class of Notes, interest accrued for the related Interest Period at the applicable Interest Rate for such Class of Notes on the outstanding principal amount of the Notes of such Class on the immediately preceding Distribution Date, after giving effect to all payments of principal to Noteholders of such Class on or prior to such preceding Distribution Date (or, in the case of the first Distribution Date, on the original principal amount of such Class of Notes).

 

“Note Pool Factor” means with respect to any Class of Notes as of the close of business on any Distribution Date, a seven-digit decimal figure equal to the outstanding principal amount of such Class of Notes (after giving effect to any reductions thereof to be made on such Distribution Date) divided by the original outstanding principal amount of such Class of Notes.

 

“Note Register” shall have the meaning specified in the Indenture.

 

“Noteholder” shall have the meaning specified in the Indenture.

 

“Noteholders’ Regular Principal Distributable Amount” means, with respect to any Distribution Date, the excess of the Principal Distributable Amount with respect to such Distribution Date over the aggregate amount of the First Priority Principal Distributable Amount, the Second Priority Principal Distributable Amount, and the Third Priority Principal Distributable Amount distributed on such Distribution Date; provided, however, that the Noteholder’s Regular Principal Distributable Amount shall not exceed the Outstanding Amount of the Notes (after giving effect to other amounts distributable in respect of principal on the Class A Notes, Class B Notes, and Class C Notes to be deposited in the Note

 

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Distribution Account in respect of the First Priority Principal Distributable Amount, the Second Priority Principal Distributable Amount, and the Third Priority Principal Distributable Amount on such Distribution Date); and provided, further, that the Noteholder’s Regular Principal Distributable Amount on or after the Final Distribution Date for a Class of Notes shall not be less than the amount that is necessary (after giving effect to other amounts to be deposited in the Note Distribution Account for payment on such Class of Notes on such Distribution Date and allocable to principal) to reduce the Outstanding Amount of such Class of Notes to zero.

 

“Notes” means the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes, the Class B Notes, the Class C Notes and the Class D Notes, in each case as executed and authenticated in accordance with the Indenture.

 

“Obligor” means a Motorcycle buyer or other person who owes payments under a Contract.

 

“Officer’s Certificate” means a certificate signed by the Chairman, the President, a Vice President, the Treasurer, an Assistant Treasurer, the Controller, an Assistant Controller, the Secretary or an Assistant Secretary of any Person delivering such certificate and delivered to the Person to whom such certificate is required to be delivered, including any certificate delivered under any of the Transaction Documents required to be executed by a Servicing Officer.  In the case of an Officer’s Certificate of the Servicer, at least one of the signing officers must be a Servicing Officer.  Unless otherwise specified, any reference herein to an Officer’s Certificate shall be to an Officers’ Certificate of the Servicer.

 

“Opinion of Counsel” means a written opinion of counsel (who may be counsel to the Trust Depositor or the Servicer) acceptable to the Indenture Trustee or the Owner Trustee, as the case may be.

 

“Outstanding Amount” shall have the meaning specified in the Indenture.

 

“Overcollateralization Target Amount” means, with respect to any Distribution Date, [  ]% of the Pool Balance as of the Cutoff Date.

 

“Owner Trustee” means the Person acting, not in its individual capacity, but solely as Owner Trustee under the Trust Agreement, its successors in interest and any successor owner trustee under the Trust Agreement.

 

“Paying Agent” means the entity described in Section 1.01 of the Indenture[, Section [    ] of the Underlying Trust Agreement] and Section 3.10 of the Trust Agreement.

 

“Permitted Lien” means, any tax lien, mechanics’ lien and other lien that arises 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.

 

“Person” means any individual, corporation, estate, limited liability company, partnership, joint venture, association, joint stock company, trust (including any beneficiary thereof), unincorporated organization or government or any agency or political subdivision thereof.

 

“Pool Balance” means as of any date of determination, the aggregate outstanding Principal Balance of outstanding Contracts as of the close of business on such date.

 

“Principal Balance” means (a) with respect to any Contract as of any date, an amount equal to the unpaid principal balance of such Contract as of the close of business on the Cutoff Date reduced by the sum of (1) all payments received by the Servicer as of such date allocable to principal and (2) any

 

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Cram Down Loss in respect of such Contract; provided, however, that (i) if (x) a Contract is reacquired by the Seller pursuant to Section 5.01 of the Transfer and Sale Agreement and Section 7.08 hereof because of a breach or potential breach of representation or warranty or is purchased by the Servicer pursuant to Section 7.11 hereof, or (y) the Servicer gives notice of its intent to purchase the Contracts in connection with an optional termination of the Trust pursuant to Section 7.10 hereof, in each case the Principal Balance of such Contract or Contracts shall be deemed as of the related Determination Date to be zero for the Due Period in which such event occurs and for each Due Period thereafter and (ii) from and after the Due Period in which a Contract becomes a Liquidated Contract, the Principal Balance of such Contract shall be deemed 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, in respect of any Distribution Date, the excess of (1) the aggregate outstanding principal amount of the Notes as of such Distribution Date (before giving effect to any principal payments made on the Notes on that Distribution Date) and (2) the result of the [Adjusted Aggregate Pool Balance][Pool Balance] as of the close of business on the last day of the related Due Period minus the Overcollateralization Target Amount.

 

“Prospectus” means the Prospectus dated [                   ] relating to the Notes.

 

“Purchase Price” means, with respect to a Contract to be reacquired or purchased under Section 7.08 or 7.11 hereof, an amount equal to the sum of (a) the Principal Balance of such Contract as of the end of the related Due Period, plus (b) accrued and unpaid interest at the Contract Rate on such Contract as of the end of the related Due Period.

 

“Qualified Eligible Investments” means Eligible Investments acquired by the Indenture Trustee in its name and in its capacity as Indenture Trustee, which are held by the Indenture Trustee in any Trust Account and with respect to which (a) the Indenture Trustee has noted its interest therein on its books and records, and (b) the Indenture Trustee has purchased such investments for value without notice of any adverse claim thereto (and, if such investments are securities or other financial assets or interests therein, within the meaning of Section 8-102 of the UCC as enacted in Illinois, without acting in collusion with a securities intermediary in violating such securities intermediary’s obligations to entitlement holders in such assets, under Section 8-504 of such UCC, to maintain a sufficient quantity of such assets in favor of such entitlement holders), and (c) either (i) such investments are in the possession, or are under the control, of the Indenture Trustee, or (ii) such investments, (A) if certificated securities and (1) in bearer form, have been delivered to the Indenture Trustee, or (2) in registered form, have been delivered to the Indenture Trustee and either registered by the issuer thereof in the name of the Indenture Trustee or endorsed by effective endorsement to the Indenture Trustee or in blank; (B) if uncertificated securities, the ownership of which has been registered to the Indenture Trustee on the books of the issuer thereof (or another person, other than a securities intermediary, either becomes the registered owner of the uncertified security on behalf of the Indenture Trustee or, having previously become the registered owner, acknowledges that it holds for the Indenture Trustee); or (C) if securities entitlements (within the meaning of Section 8-102 of the UCC as enacted in Illinois) representing interests in securities or other financial assets (or interests therein) held by a securities intermediary (within the meaning of said Section 8-102), a securities intermediary indicates by book entry that a security or other financial asset has been credited to the Indenture Trustee’s securities account with such securities intermediary.  Any such Qualified Eligible Investment may be purchased by or through the Indenture Trustee or any of its affiliates.

 

“Rating Agency” means each of [          ] and [          ], so long as such Persons maintain a rating on the Notes; and if either of [          ] or [           ] no longer maintains a rating on the Notes, such other nationally recognized statistical rating organization selected by the Trust Depositor.

 

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“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 within ten days of such Rating Agency’s receipt of such notice (or such shorter period as is acceptable to each Rating Agency) such Rating Agency shall not have notified the Trust Depositor, the Servicer, the Indenture Trustee or the Issuer in writing that such action will result in a qualification, reduction or withdrawal of its then-current rating of any Class of Notes.

 

“Record Date” means, with respect to any Distribution Date, the close of business on the Business Day immediately preceding such Distribution Date.

 

“Regulation AB” means Subpart 229.1100 - Asset Backed Securities (Regulation AB), 17 C.F.R. Sections 229.1100-229.1125, as amended from time to time and as clarified and interpreted by the Securities and Exchange Commission or its staff from time to time.

 

“Reimbursement Amount” has the meaning assigned in Section 7.03 hereof.

 

[“Replacement Interest Rate [Swap][Cap] Agreement” means any ISDA Master Agreement, the Schedule and Credit Support Annex thereto, each dated after the Closing Date, between a Replacement [Swap][Cap] Counterparty and the Issuer, and the Confirmations thereto, each dated after the Closing Date, and entered into pursuant to such ISDA Master Agreement, and pursuant to the conditions set forth in the Interest Rate [Swap][Cap] Agreement, as the same may be amended or supplemented from time to time in accordance with the terms thereof.

 

“Replacement [Swap][Cap] Counterparty” means any swap counterparty under a Replacement Interest Rate [Swap][Cap] Agreement that is an “Eligible Replacement” (as defined in the Interest Rate [Swap][Cap] Agreement).]

 

“Reportable Event” means any event required to be reported on Form 8-K.

 

“Required Holders” means Holders of more than 50% of the aggregate Outstanding Amount of the Controlling Class.

 

“Reserve Fund” means the Reserve Fund established and maintained pursuant to Section 7.06 hereof.

 

“Reserve Fund Deposits” means all moneys deposited in the Reserve Fund from time to time including, but not limited to, the Reserve Fund Initial Deposit, as well as any monies deposited therein pursuant to Section 7.05(a), all investments and reinvestments thereof, earnings thereon, and proceeds of the foregoing, whether now or hereafter existing.

 

“Reserve Fund Initial Deposit” means $          .

 

“Responsible Officer” means, with respect to the Owner Trustee, any officer in its Corporate Trust Administration Department (or any similar group of a successor Owner Trustee) and with respect to the Indenture Trustee, the chairman and any vice chairman of the board of directors, the president, the chairman and vice chairman of any executive committee of the board of directors, every vice president, assistant vice president, the secretary, every assistant secretary, cashier or any assistant cashier, controller or assistant controller, the treasurer, every assistant treasurer, every trust officer, assistant trust officer and every other authorized officer or assistant officer of the Indenture Trustee customarily performing functions similar to those performed by persons who at the time shall be such officers, respectively, or to

 

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whom a corporate trust matter is referred because of knowledge of, familiarity with, and authority to act with respect to a particular matter.

 

“Review” has the meaning stated in the Asset Representations Review Agreement.

 

“Review Report” has the meaning stated in the Asset Representations Review Agreement.

 

“Second Priority Principal Distributable Amount” means, with respect to any Distribution Date, an amount, not less than zero, equal to the result of (a) the aggregate Outstanding Amount of the Class A Notes and Class B Notes as of such Distribution Date (before giving effect to any principal payments made on the Class A Notes and Class B Notes on that preceding Distribution Date), minus (b) the sum of (i) [the amount of principal distributed in respect of] the First Priority Principal Distributable Amount on such Distribution Date and (ii) the [Adjusted] Aggregate Principal Balance at the end of Due Period related to that Distribution Date; provided, however, that the Second Priority Principal Distributable Amount shall not exceed the Outstanding Amount of the Class A Notes and Class B Notes (after giving effect to the other amounts distributable in respect of principal on the Class A Notes to be deposited in the Note Distribution Account in respect of the First Priority Principal Distributable Amount on such Distribution Date); provided, further, that the Second Priority Principal Distributable Amount on or after the Final Distribution Date for the Class B Notes shall not be less than the amount that is necessary to pay the Class B Notes in full.

 

“Securities” means the Notes and the Certificate[s], or any of them.

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Securityholders” means the Holders of the Notes and the Certificate[s].

 

“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.

 

[“Senior [Swap][Cap] Termination Payment” means any [Swap][Cap] Termination Payment owed by the Issuer to the [Swap][Cap] Counterparty under the Interest Rate [Swap][Cap] Agreement unless if the [Swap][Cap] Counterparty is the “defaulting party” or “sole affected party” (other than in connection with a “tax event” or “illegality”) under the Interest Rate [Swap][Cap] Agreement.]

 

“Servicer” means Harley-Davidson Credit Corp., a Nevada corporation, or its successor, until any Servicing Transfer hereunder and thereafter means the Successor Servicer or its successor pursuant to Article Eight below with respect to the duties and obligations required of the Servicer under this Agreement.

 

“Servicing Transfer” has the meaning assigned in Section 8.03(a).

 

“Servicing Criteria” means the “servicing criteria” set forth in Item 1122(d) of Regulation AB.

 

“Servicing Fee” means, on any Distribution Date, the sum of (a) the Monthly Servicing Fee payable on such Distribution Date, (b) Late Payment Penalty Fees received by the Servicer during the related Due Period, and (c) extension fees, convenience fees and other similar 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

 

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an Officer’s Certificate furnished to the Indenture Trustee by the Servicer, as the same may be amended from time to time.

 

“Shortfall” means, with respect to a Distribution Date, an amount equal to the excess (if any) of (a) the sum of the amounts payable pursuant to (1) clauses [(iv) through (xii)] of Section 7.05(a), (2) clauses [(i) through (vii)] of Section 7.05(b) or (3) clauses [(i) through (viii)] of Section 7.05(c), as applicable, over (b) Available Monies for such Distribution Date minus the amounts payable pursuant to clauses (i) through (iv) of Section 7.05(a) on such Distribution Date.

 

“Solvent” means, as to any Person at any time, that (a) the fair value of the property of such Person is greater than the amount of such Person’s liabilities (including disputed, contingent and unliquidated liabilities) as such value is established and liabilities evaluated for purposes of Section 101(31) of the Bankruptcy Code; (b) the present fair saleable value of the property of such Person in an orderly liquidation of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured; (c) such Person is able to realize upon its property and pay its debts and other liabilities (including disputed, contingent and unliquidated liabilities) as they mature in the normal course of business; (d) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay as such debts and liabilities mature; and (e) such Person is not engaged in business or a transaction, and is not about to engage in a business or a transaction, for which such Person’s property would constitute unreasonably small capital.

 

“Specified Reserve Fund Balance” means, [    ]% of the Pool Balance as of the Cutoff Date; provided, however, in no event shall the Specified Reserve Fund Balance be greater than the aggregate Outstanding Amount of the Notes.  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.

 

[“Subordinated [Swap][Cap] Termination Payment” means any [Swap][Cap] Termination Payment owed by the Issuer to the [Swap][Cap] Counterparty under the Interest Rate [Swap][Cap] Agreement other than a Senior [Swap][Cap] Termination Payment.]

 

“Successor Servicer” has the meaning assigned in Section 8.03(b).

 

[“[Swap][Cap] Collateral Account” means a trust account as described in Section 7.12 maintained in the name of the Indenture Trustee and which shall be an Eligible Account.

 

“[Swap][Cap] Counterparty” means [                    ], as the swap counterparty under the Interest Rate [Swap][Cap] Agreement, or any successor or replacement swap counterparty from time to time.

 

“[Swap][Cap] Replacement Proceeds” means any amounts received from a Replacement [Swap][Cap] Counterparty in consideration for entering into a Replacement Interest Rate [Swap][Cap] Agreement for a terminated Interest Rate [Swap][Cap] Agreement.

 

“[Swap][Cap] Termination Payment” means the payment due to the [Swap][Cap] Counterparty by the Trust or to the Trust by the [Swap][Cap] Counterparty under the Interest Rate [Swap][Cap] Agreement, as applicable, including interest that may accrue thereon, arising from a termination of the Interest Rate [Swap][Cap] Agreement in connection with the occurrence of an “event of default” or “termination event” under the Interest Rate [Swap][Cap] Agreement.

 

“[Swap][Cap] Termination Payment Account” means an Eligible Account maintained in the name of the Indenture Trustee pursuant to Section 7.12.]

 

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“Test Fail” has the meaning set forth in the Asset Representations Review Agreement.

 

“Third Priority Principal Distributable Amount” means, with respect to any Distribution Date, an amount, not less than zero, equal to the result of (a) the aggregate Outstanding Amount of the Class A Notes, Class B Notes, and Class C Notes as of such Distribution Date (before giving effect to any principal payments made on the Class A Notes, Class B Notes, and Class C Notes on that preceding Distribution Date), minus (b) the sum of (i) [the amount of principal distributed in respect of] the First Priority Principal Distributable Amount and the Second Priority Principal Distributable Amount on such Distribution Date and (ii) the [Adjusted] Aggregate Principal Balance at the end of Due Period related to that Distribution Date; provided, however, that the Third Priority Principal Distributable Amount shall not exceed the Outstanding Amount of the Class A Notes, Class B Notes, and Class C Notes (after giving effect to the other amounts distributable in respect of principal on the Class A Notes and Class B Notes to be deposited in the Note Distribution Account in respect of the First Priority Principal Distributable Amount and Second Priority Principal Distributable Amount on such Distribution Date); provided, further, that the Third Priority Principal Distributable Amount on or after the Final Distribution Date for the Class C Notes shall not be less than the amount that is necessary to pay the Class C Notes in full.

 

“Transaction Documents” means this Agreement, the Transfer and Sale Agreement, the Lockbox Agreement, the Indenture, the Trust Agreement[, the Underlying Trust Agreement], the Asset Representations Review Agreement, the Administration Agreement[, the Interest Rate [Swap][Cap] Agreement], and the Note Depository Agreement.

 

“Transfer and Sale Agreement” means the Transfer and Sale Agreement dated as of the date hereof by and between the Seller and the Trust Depositor, as amended, supplemented or otherwise modified from time to time.

 

“Trust” means the trust created by the Trust Agreement, comprised of the Trust Corpus.

 

“Trust Accounts” means, collectively, the Collection Account, the Note Distribution Account, the Reserve Fund[, the [Swap][Cap] Collateral Account, and the [Swap][Cap] Termination Payment Account (to the extent established in accordance with Section 7.12)], 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) and all proceeds of the foregoing.

 

“Trust Agreement” means the Trust Agreement, dated as of [             ], 20[  ], between the Trust Depositor and the Owner Trustee.

 

“Trust Corpus” has the meaning given to such term in Section 2.01(a) hereof.

 

“Trust Depositor” has the meaning assigned such term in the preamble hereunder or any successor thereto.

 

“Trust Estate” shall have the meaning specified in the Trust Agreement.

 

“Trustees” means the Owner Trustee[, the Underlying Trustee] and the Indenture Trustee.

 

“UCC” means the Uniform Commercial Code as in effect on the date hereof and from time to time in the State of Illinois, provided, that if by reason of mandatory provisions of law, the perfection or

 

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the effect of perfection or non-perfection or priority of the security interests in any collateral or the availability of any remedy hereunder is governed by the Uniform Commercial Code as in effect on or after the date hereof in any other jurisdiction, “UCC” means the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such perfection or effect of perfection or non-perfection or priority or availability of such remedy.

 

“Uncollectible Advance” means with respect to any Determination Date and any Contract, the amount, if any, otherwise to be advanced by the Servicer pursuant to Section 7.03 which the Servicer has as of such Determination Date determined in good faith would 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.

 

[“Underlying Trust” means Harley-Davidson Motorcycle Grantor Trust [        ].]

 

[“Underlying Trust Agreement” means that certain Trust Agreement dated as of the Closing Date, among the Issuer, as settlor, the Administrator, the Trust Depositor and the Underlying Trustee.]

 

[“Underlying Trustee” means [                          ], not in its individual capacity but solely as Underlying Trustee under the Underlying Trust Agreement, or any successor trustee under the Underlying Trust Agreement.]

 

“Underwriters” has the meaning set forth in the Underwriting Agreement.

 

“Underwriting Agreement” means the Underwriting Agreement, dated [                            ], by and among the Trust Depositor, the Seller and the Underwriters.

 

“United States” means the United States of America.

 

“Vice President” of any Person means any vice president of such Person, whether or not designated by a number or words before or after the title “Vice President” who is a duly elected officer of such Person.

 

“[insert name of Owner Trustee]” means [insert name of Owner Trustee], in its individual capacity.

 

[“[insert name of Underlying Trustee]” means [insert name of Underlying Trustee], 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, (including digitally), 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 with respect to the Class A-1 Notes and Floating Rate Notes and except as otherwise provided herein, all interest rate and basis point calculations hereunder will

 

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be made on the basis of a 360-day year and twelve 30-day months and will be carried out to at least three decimal places.

 

Section 1.05.        Accounting Terms.  All accounting terms used but not specifically defined herein shall be construed in accordance with generally accepted accounting principles in the United States.

 

ARTICLE TWO

 

TRANSFER OF CONTRACTS

 

Section 2.01.        Closing.  (a) On the Closing Date, the Trust Depositor shall transfer, assign, set over and otherwise convey to the [Underlying] Trust by execution of an assignment substantially in the form of Exhibit A hereto, without recourse other than as expressly provided herein, for a purchase price in cash of $[                    ] (less fees and expenses in connection with the offering and sale of the Notes and the Reserve Fund Initial Deposit) [and the Trust’s issuance of the Class [    ] Notes and the Certificate[s] to the Trust Depositor], (i) all right, title and interest of the Trust Depositor in and to the Contracts listed on the List of Contracts delivered on the Closing Date (including, without limitation, all security interests created thereunder), (ii) all rights of the Trust Depositor to payments which are collected pursuant to such Contracts after the Cutoff Date, including any liquidation proceeds therefrom, (iii) all rights of the Trust Depositor under any theft, physical damage, credit life, disability or other individual insurance policy (and rights under a “forced placed” policy, if any), any debt insurance policy or any debt cancellation agreement relating to any such Contract, an Obligor or a Motorcycle securing such Contract, (iv) all security interests in each such Motorcycle, (v) all documents contained in the related Contract Files, (vi) all rights (but not the obligations) of the Trust Depositor under any related motorcycle dealer agreements between dealers (i.e., the originators of certain Contracts) and the Seller, (vii) all rights of the Trust Depositor in the Lockbox, the Lockbox Account and the related Lockbox Agreement to the extent they relate to the Contracts (but excluding payments received on or before the Cutoff Date), (viii) 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, (ix) 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), (x) all rights of the Trust Depositor to rebates of premiums and other amounts relating to insurance policies, debt cancellation agreements, extended service contracts or other repair agreements and other items financed under such Contracts and (xi) all proceeds and products of the foregoing (the property in clauses (i)-(xi) above being the “Trust Corpus”).  Although the Trust Depositor and the [Owner][Underlying] Trustee agree that such transfer is intended to be a transfer of ownership of the Trust Corpus, rather than the granting of a security interest to secure a borrowing, and that the Trust Corpus shall not be property of the Trust Depositor, in the event such transfer is deemed to be of a mere security interest to secure a borrowing, the Trust Depositor shall be deemed to have granted the [Underlying] Trust a first priority security interest in such Trust Corpus and this Agreement shall constitute a security agreement under applicable law.

 

Section 2.02.        Conditions to the Closing.  On or before the Closing Date, the Trust Depositor shall deliver or cause to be delivered the following documents to the Owner Trustee[, the Underlying Trustee] and the Indenture Trustee:

 

(a)           The List of Contracts, certified by the Chairman of the Board, President or any Vice President of the Trust Depositor, together with an assignment substantially in the form of Exhibit A hereto.

 

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(b)           A certificate of an officer of the Seller substantially in the form of Exhibit B to the Transfer and Sale Agreement and a certificate 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 in form and substance reasonably satisfactory to the Underwriters (and including as an addressee thereof each Rating Agency).

 

(d)           A letter or letters from [                   ], or another nationally recognized accounting firm, addressed to the Seller, the Trust Depositor and the Underwriters and stating that such firm has reviewed a sample of the Contracts and performed specific procedures for such sample with respect to certain contract terms and which identifies those Contracts which do not conform.

 

(e)           Copies of resolutions of the Board of Directors 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 or the Trust Depositor, as applicable.

 

(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)           A UCC financing statement naming the Seller as debtor, naming the Trust Depositor [and the Trust] as assignor secured parties (and the [Indenture Trustee][Underlying Trust as secured party) and identifying the Contract Assets as collateral, in proper form for filing with the appropriate office in Nevada; and a UCC financing statement naming the Trust Depositor as debtor, naming the Trust as assignor secured party (and the Indenture Trustee as secured party) and identifying the Trust Corpus as collateral, in proper form for filing with the appropriate office in Nevada; and a UCC financing statement naming the Trust as debtor, and naming the Indenture Trustee as secured party and identifying the Collateral as collateral, in proper form for filing with the appropriate office in Delaware.

 

(h)           An Officer’s Certificate listing the Servicer’s Servicing Officers.

 

(i)            Evidence of deposit in the Collection Account of all funds received with respect to the Contracts after the Cutoff Date, and prior to the Business Day before 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 Indenture Trustee.

 

(l)            A fully executed Transfer and Sale Agreement.

 

(m)          A fully executed Trust Agreement [and Underlying Trust Agreement].

 

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(n)           A fully executed Administration Agreement.

 

(o)           A fully executed Indenture.

 

(p)           A fully executed Asset Representations Review Agreement.

 

[(q)          A fully executed Interest Rate [Swap][Cap] Agreement.]

 

ARTICLE THREE

 

REPRESENTATIONS AND WARRANTIES

 

The Seller under the Transfer and Sale Agreement has made each of the representations and warranties set forth in Exhibit J hereto and has consented to the assignment by the Trust Depositor to the [Issuer][Underlying Trust] of the Trust Depositor’s rights with respect thereto.  Such representations speak as of the execution and delivery of this Agreement and as of the Closing Date, but shall survive the transfer and assignment of the Contracts to the Trust.  Pursuant to Section 2.01 of this Agreement, the Trust Depositor has assigned, transferred and conveyed to the [Underlying Trust][Issuer] as part of the Trust Corpus its rights under the Transfer and Sale Agreement, including without limitation, the representations and warranties of the Seller therein as set forth in Exhibit J attached hereto, together with all rights of the Trust Depositor with respect to any breach thereof including any right to require the Seller to reacquire any Contract in accordance with the Transfer and Sale Agreement.  It is understood and agreed that the representations and warranties set forth or referred to in this Section shall survive delivery of the Contract Files to the Owner Trustee or any custodian.

 

The Trust Depositor hereby represents and warrants to [the Underlying Trust,] the Trust and the Indenture Trustee that it has entered into the Transfer and Sale Agreement with the Seller, that the Seller has made the representations and warranties in the Transfer and Sale Agreement as set forth in Exhibit J hereto, that such representations and warranties run to and are for the benefit of the Trust Depositor, and that pursuant to Section 2.01 of this Agreement the Trust Depositor has transferred and assigned to the [Underlying] Trust all rights of the Trust Depositor to cause the Seller under the Transfer and Sale Agreement to reacquire Contracts in the event of a breach of such representations and warranties.

 

Section 3.01.        Representations and Warranties Regarding the Trust Depositor.  By its execution of this Agreement, the Trust Depositor represents and warrants to [the Underlying Trust,] the Trust, the Indenture Trustee and the Noteholders that:

 

(a)           Assumption of Seller’s Representations and Warranties.  The representations and warranties set forth in Exhibit J are true and correct.

 

(b)           Organization and Good Standing.  The Trust Depositor is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization and has the corporate power to own its assets and to transact the business in which it is currently engaged.  The Trust Depositor is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction in which the character of the business transacted by it or properties owned or leased by it requires such qualification and in which the failure so to qualify would have a material adverse effect on the business, properties, assets, or condition (financial or other) of the Trust Depositor[, the Underlying Trust] or the Trust.

 

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(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 shall effect a valid transfer and assignment of the Trust Corpus, enforceable against the Trust Depositor and creditors of and purchasers from the Trust Depositor.  This Agreement and the other Transaction Documents to which the Trust Depositor is a party constitute the legal, valid and binding obligation of the Trust Depositor enforceable in accordance with their terms, except as enforcement of such terms may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally and by the availability of equitable remedies.

 

(d)           No Consent Required.  The Trust Depositor is not required to obtain the consent of any other party or any consent, license, approval or authorization from, or registration or declaration with, any governmental authority, bureau or agency in connection with the execution, delivery, performance, validity or enforceability of this Agreement or the other Transaction Documents to which it is a party.

 

(e)           No Violations.  The execution, delivery and performance of this Agreement and the other Transaction Documents to which it is a party by the Trust Depositor, and the consummation of the transactions contemplated hereby and thereby, will not violate any provision of any existing law or regulation or any order or decree of any court or of any Federal or state regulatory body or administrative agency having jurisdiction over the Trust Depositor or any of its properties or the Articles of Incorporation or Bylaws of the Trust Depositor, or constitute a material breach of any mortgage, indenture, contract or other agreement to which the Trust Depositor is a party or by which the Trust Depositor or any of the Trust Depositor’s properties may be bound, or result in the creation or imposition of any security interest, lien, charge, pledge, preference, equity or encumbrance of any kind upon any of its properties pursuant to the terms of any such mortgage, indenture, contract or other agreement, other than as contemplated by the Transaction Documents.

 

(f)            Litigation.  No litigation or administrative proceeding of or before any court, tribunal or governmental body is currently pending, or to the knowledge of the Trust Depositor threatened, against the Trust Depositor or any of its properties or with respect to this Agreement or the other Transaction Documents to which it is a party or the Notes (1) which, if adversely determined, would in the opinion of the Trust Depositor have a material adverse effect on the business, properties, assets or condition (financial or otherwise) of the Trust Depositor or the Trust or the transactions contemplated by this Agreement or the other Transaction Documents to which the Trust Depositor is a party or (2) seeking to adversely affect the federal income tax or other federal, state or local tax attributes of the Notes.

 

(g)           State of Incorporation; Name; No Changes.  The Trust Depositor’s state of incorporation is the State of Nevada.  The Trust Depositor’s exact legal name is as set forth in the first paragraph of this Agreement.  The Trust Depositor has not changed its name, whether by amendment of its Articles of Incorporation, by reorganization or otherwise, and has not changed the location of its place of business, within the four months preceding the Closing Date.

 

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(h)           Solvency.  The Trust Depositor, after giving effect to the conveyances made by it hereunder, is Solvent.

 

Such representations speak as of the execution and delivery of this Agreement and as of the Closing Date, but shall survive the transfer and assignment of the Contracts to the Trust.

 

Section 3.02.        Representations and Warranties Regarding the Servicer.  The Servicer represents and warrants to the Trust, the Indenture Trustee and the Noteholders that:

 

(a)           Organization and Good Standing.  The Servicer is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization and has the corporate power to own its assets and to transact the business in which it is currently engaged.  The Servicer is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction in which the character of the business transacted by it or properties owned or leased by it requires such qualification and in which the failure so to qualify would have a material adverse effect on the business, properties, assets, or condition (financial or otherwise) of the Servicer[, the Underlying Trust] or the Trust.  The Servicer is properly licensed in each jurisdiction to the extent required by the laws of such jurisdiction to service the Contracts in accordance with the terms hereof other than such licenses the failure to obtain would not have a material adverse effect on the business, properties, assets, or condition (financial or otherwise) of the Servicer or on the ability of the Servicer to perform its obligations hereunder.

 

(b)           Authorization; Binding Obligations.  The Servicer has the power and authority to make, execute, deliver and perform this Agreement and the other Transaction Documents to which the Servicer is a party and all of the transactions contemplated under this Agreement and the other Transaction Documents to which the Servicer is a party, and has taken all necessary corporate action to authorize the execution, delivery and performance of this Agreement and the other Transaction Documents to which the Servicer is a party.  This Agreement and the other Transaction Documents to which the Servicer is a party constitute the legal, valid and binding obligation of the Servicer enforceable in accordance with their terms, except as enforcement of such terms may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally and by the availability of equitable remedies.

 

(c)           No Consent Required.  The Servicer is not required to obtain the consent of any other party or any consent, license, approval or authorization from, or registration or declaration with, any governmental authority, bureau or agency in connection with the execution, delivery, performance, validity or enforceability of this Agreement and the other Transaction Documents to which the Servicer is a party.

 

(d)           No Violations.  The execution, delivery and performance of this Agreement and the other Transaction Documents to which the Servicer is a party by the Servicer will not violate any provisions of any existing law or regulation or any order or decree of any court or of any Federal or state regulatory body or administrative agency having jurisdiction over the Servicer or any of its properties or the Articles of Incorporation or Bylaws of the Servicer, or constitute a material breach of any mortgage, indenture, contract or other agreement to which the Servicer is a party or by which the Servicer or any of the Servicer’s properties may be bound, or result in the creation of or imposition of any security interest, lien, pledge, preference, equity or encumbrance of any kind upon any of its properties pursuant to the terms of any such mortgage, indenture, contract or other agreement, other than this Agreement.

 

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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 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[, the Underlying Trust] or the Trust or the transactions contemplated by this Agreement or any other Transaction Document to which the Servicer is a party.

 

ARTICLE FOUR

 

PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS

 

Section 4.01.        Custody of Contracts.  (a) Subject to the terms and conditions of this Section 4.01, the contents of each Contract File shall be held and controlled by the Servicer, or its custodian, for the benefit of, and as agent for, the [Underlying] Trust as the owner thereof [and the Indenture Trustee].

 

(b)           The Servicer agrees to maintain the related Contract Files at its offices, or the offices of one of its custodians, where they are currently maintained, or at such other offices of the Servicer, or its custodian, as shall from time to time be identified to the Trustees by written notice except that in the case of any Contracts constituting “electronic chattel paper”, the “authoritative copy” thereof shall be maintained by the Servicer in a computer system such that the Servicer maintains “control” over such “authoritative copy” (terms in quotation marks have the meaning assigned to them in the UCC).  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 [Underlying] 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 [Indenture Trustee][Underlying Trustee] shall be deemed to have possession of the Contract Files for purposes of Section 9-313 of the Uniform Commercial Code of the State in which the Contract Files are located and control of the Contracts that represent electronic chattel paper for purposes of Section 9-105 of the Uniform Commercial Code.

 

(c)           As custodian, the Servicer shall have the following powers and perform the following duties:

 

(i)            hold, or cause the Servicer’s custodian to hold, the Contract Files on behalf of the [Underlying] Trust [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 and certify to the [Underlying Trustee][Owner Trustee and the Indenture Trustee] annually that it, or its custodian, continues to maintain possession of such Contract Files;

 

(ii)           implement policies and procedures in writing and signed by a Servicing Officer with respect to persons authorized to have access to the Contract Files on the Servicer’s premises and the receipting for Contract Files taken from their storage area by an employee of the Servicer for purposes of servicing or any other purposes;

 

(iii)          attend to all details in connection with maintaining custody of the Contract Files on behalf of the Trust; and

 

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(iv)          at all times maintain, or cause the Servicer’s custodian to maintain, the original of the fully executed Contract (or, in the case of “electronic chattel paper”, the “authoritative copy” of such Contract) in accordance with its customary practices and procedures, except as may be necessary to conduct collection and servicing activities in accordance with its customary practices and procedures (terms in quotation marks have the meaning assigned to them in the UCC).

 

(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 promissory notes and security agreements and retail installment sale contracts.  The Servicer shall promptly report to the Owner Trustee[, the Underlying Trustee] and the Indenture Trustee any failure by it, or its custodian, to hold the Contract Files as herein provided and shall promptly take appropriate action to remedy any such failure.  In acting as custodian of the Contract Files, the Servicer further agrees not to assert any legal or beneficial ownership interest in the Contracts or the Contract Files, except as provided in Section 5.06.  The Servicer agrees to indemnify the Noteholders, the Certificateholder[s], the Owner Trustee[, the Underlying Trustee] and the Indenture Trustee for any and all liabilities, obligations, losses, damages, payments, costs, or expenses of any kind whatsoever which may be imposed on, incurred by or asserted against the Noteholders, the Certificateholder[s], the Owner Trustee[, the Underlying 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, the Certificateholder[s], the Owner Trustee[, the Underlying 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 [Underlying Trustee][Owner Trustee or Indenture Trustee] may reasonably request to perfect and protect the [Underlying] Trust’s first priority perfected interest in the Trust Corpus against all other persons, including, without limitation, the filing of financing statements, amendments thereto and continuation statements, the execution of transfer instruments and the making of notations on or taking possession of all records or documents of title.  All financing statements filed or to be filed against the Seller in favor of the Trust Depositor or the [Underlying] Trust in connection herewith describing the Contract Assets as collateral shall contain a statement to the following effect: “A purchase of or security interest in any collateral described in this financing statement, except as permitted in the Transfer and Sale Agreement or the Sale and Servicing Agreement, will violate the rights of the Secured Party.”

 

Section 4.03.        Name Change or Relocation.  (a) During the term of this Agreement, neither the Seller nor the Trust Depositor shall change its name, identity or structure or change its state of incorporation without first giving at least 30 days’ prior written notice to the Owner Trustee[, the Underlying 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, if any, as may be required to preserve and protect the [Underlying] Trust’s interests in the Trust Corpus and the proceeds thereof.  In addition, neither the Seller nor the Trust Depositor shall change its state of incorporation unless it has first taken such action as is advisable or necessary to

 

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preserve and protect the [Underlying] Trust’s interest in the Trust Corpus.  Promptly after taking any of the foregoing actions, the Servicer shall deliver to the Owner Trustee[, the Underlying Trustee] and the Indenture Trustee an opinion of counsel reasonably acceptable to the Owner Trustee[, the Underlying 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 [Underlying] Trust in the Trust Corpus [and the Indenture Trustee in the Collateral] have been filed, and reciting the details of such filing.

 

Section 4.04.        Costs and Expenses.  The Servicer agrees to pay all reasonable costs and disbursements in connection with the perfection and the maintenance of perfection, as against all third parties, of the Trust’s right, title and interest in and to the Contracts (including, without limitation, the security interest in the Motorcycles granted thereby).

 

ARTICLE FIVE

 

SERVICING OF CONTRACTS

 

Section 5.01.        Responsibility for Contract Administration.  The Servicer will have the sole obligation to manage, administer, service and make collections on the Contracts and perform or cause to be performed all contractual and customary undertakings of the holder of the Contracts to the Obligor.  The [Underlying][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 [Underlying][Owner] Trustee to enable the Servicer to carry out its servicing and administrative duties hereunder.  The Servicer is hereby appointed the servicer hereunder until such time as any Servicing Transfer may be effected under Article Eight.

 

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 promissory notes and security agreements and retail installment sale contracts; provided, however, that notwithstanding the foregoing, the Servicer shall not release or waive the right to collect the unpaid balance of any Contract except that with respect to a Contract that has become a Defaulted Contract, the Servicer, consistent with its collection policies, may release or waive the right to collect the unpaid balance of such Defaulted Contract in an effort to maximize collections thereon.

 

Section 5.03.        Records.  The Servicer shall, during the period it is servicer hereunder, maintain such books of account and other records as will enable the Owner Trustee[, the Underlying 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[, the Underlying 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[, the Underlying 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[, the Underlying Trustee] or the Indenture Trustee may, using generally accepted audit procedures, verify the status of each Contract and review the Computer File and records relating thereto for conformity to Monthly Reports prepared pursuant to

 

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Article Nine and compliance with the standards represented to exist as to each Contract in this Agreement.

 

(b)           At all times during the term hereof, the Servicer shall keep available a copy of the List of Contracts at its principal executive office for inspection by the Trustees.

 

Section 5.05.        Trust Accounts.  (a) On or before the Closing Date, the Trust Depositor shall establish the Trust Accounts, each with and in the name of the Indenture Trustee for the benefit of the Noteholders [and the [Swap][Cap] Counterparty] [and the Underlying Trustee for the benefit of the holder of the Underlying Trust Certificate].  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, except as provided in Section 5.05(e) hereof, the Servicer shall deposit, with respect to payments by or on behalf of the Obligors received directly by the Servicer) into the Collection Account as promptly as practical (but in any case not later than the second Business Day following the processing thereof):

 

(i)            With respect to principal and interest on the Contracts received after the Cutoff Date (which for the purpose of this paragraph (b)(i) shall include those monies in the Lockbox Account allocable to principal and interest on the Contracts), all such amounts received by the [Underlying][Owner] Trustee or Servicer;

 

(ii)           All Net Liquidation Proceeds related to the Contracts;

 

(iii)          The aggregate of the Purchase Prices for Contracts reacquired by the Trust Depositor as described in Section 7.08, and by the Seller as described in the Sale and Transfer Agreement;

 

(iv)          All Advances made by the Servicer pursuant to Section 7.03;

 

(v)           All amounts paid by the Servicer in connection with an optional purchase of the Contracts described in Section 7.10;

 

(vi)          The aggregate of the Purchase Prices for Contracts purchased by the Servicer as described in Section 7.11;

 

(vii)         All amounts received in respect of interest, dividends, gains, income and earnings on investments of funds in the Collection Account and the Note Distribution Account as contemplated herein; and

 

[(viii)           All Net [Swap][Cap] Receipts and [Swap][Cap] Termination Payments received by it under the Interest Rate [Swap][Cap] Agreement.]

 

(c)           [Reserved].

 

(d)           The Servicer shall direct the Indenture Trustee to, and the Indenture Trustee shall, invest the amounts in the Trust Accounts in Qualified Eligible Investments that are payable on demand or that mature not later than one Business Day prior to the next succeeding Distribution Date.  Once such funds are invested, the Indenture Trustee shall not change the investment of such funds.  Any loss on such investments shall be charged to such Trust Account.  Funds in the Trust Accounts not so invested must be insured to the extent permitted by law by the Deposit Insurance Fund of the Federal Deposit Insurance

 

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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 applicable Distribution Date pursuant to Section 7.05.  The Trust Depositor and the Trust agree and acknowledge that the Indenture Trustee is to have “control” (within the meaning of Section 9-106 of the UCC) of collateral comprised of “investment property” (within the meaning of Section 9-102 of the UCC) for all purposes of this Agreement.

 

(e)           Notwithstanding anything to the contrary herein, the Servicer may remit payments on the Contracts and Net Liquidation Proceeds to the Collection Account in next-day funds or immediately available funds no later than 10:00 a.m., Central time, on the Business Day prior to the next succeeding Distribution Date, but only for so long as the short-term debt security rating of the Servicer is at least “[   ]” by [              ] and “[   ]” by [              ].

 

(f)            The Servicer shall apply collections received in respect of a Contract as follows:

 

(i)            First, to accrued interest with respect to such Contract;

 

(ii)           Second, to pay any expenses and unpaid late charges or fees (if any) due and owing under such Contract; and

 

(iii)          Third, to principal until such Contract is paid in full;

 

provided, however, that the Servicer may, in its discretion, apply collections to any expenses and unpaid late charges or fees (if any) due and owing under a Contract after applying such collections to accrued interest with respect to a Contract and principal due and owing under the Contract.

 

(g)           Any collections on a Contract remaining after application by the Servicer in accordance with the provisions of Section 5.05(f) shall constitute an excess payment (an “Excess Payment”).  Excess Payments 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 or request the withdrawal from the Collection Account any amount deposited therein that, based on the Servicer’s good-faith determination, was deposited in error.

 

Section 5.06.        Enforcement.  (a) The Servicer will, consistent with Section 5.02, act with respect to the Contracts in such manner as in its judgment will maximize the receipt of all payments called for under the terms of the Contracts.  The Servicer, acting as agent for the Trust pursuant to the Lockbox Agreement, shall use its best efforts to cause Obligors to make all payments on the Contracts to the Lockbox Account (either directly by remitting payments to the Lockbox, or indirectly by making payments through a credit card, direct debit, the telephone or the internet to an account of the Servicer which payments will be subsequently transferred from such account to the Lockbox Account).  The Servicer will act in a commercially reasonable manner with respect to the repossession and disposition of a Motorcycle following a default under the related Contract with a view to realizing proceeds at least equal to the Motorcycle’s fair market value.  If the Servicer determines that eventual payment in full of a Contract is unlikely, the Servicer will follow its normal practices and procedures to recover all amounts

 

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due upon that Contract, including repossessing and disposing of the related Motorcycle at a public or private sale or taking other action permitted by applicable law.  The Servicer will be entitled to recover all reasonable out-of-pocket expenses incurred by it in liquidating a Contract and disposing of the related Motorcycle.

 

(b)           The Servicer may sue to enforce or collect upon Contracts, in its own name, if possible, or as agent for the Trustees.  If the Servicer elects to commence a legal proceeding to enforce a Contract, the act of commencement shall be deemed to be an automatic assignment of the Contract to the Servicer for purposes of collection only.  If, however, in any enforcement suit or legal proceeding it is held that the Servicer may not enforce a Contract on the ground that it is not a real party in interest or a holder entitled to enforce the Contract, the [Underlying Trustee on behalf of the Underlying Trust][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[, the [Swap][Cap] Counterparty] and the Certificateholder[s] as owner of the Trust.

 

(c)           The Servicer shall exercise any rights of recourse against third persons that exist with respect to any Contract in accordance with the Servicer’s usual practice.  In exercising recourse rights, the Servicer is authorized on the Trust’s and Indenture 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 in its judgment will maximize the aggregate recovery with respect to the Contract; and provided further, however, that notwithstanding the foregoing the Servicer in its capacity as such may exercise such recourse only if such Contract (i) was not required to be reacquired by the Seller pursuant to the Transfer and Sale Agreement or (ii) was required to be reacquired by the Seller and the Seller has defaulted on such reacquisition obligation.

 

(d)           The Servicer will not permit any rescission or cancellation of any Contract due to the acts or omissions of the Trust Depositor.

 

(e)           Subject to Section 5.02, the Servicer may grant extensions, rebates or adjustments on a Contract; provided, however, that if the Servicer extends the date for final payment by the Obligor of any Contract beyond the Class D Final Distribution Date, it shall promptly purchase such Contract pursuant to Section 7.11.

 

(f)            The Servicer will not add to the outstanding Principal Balance of any Contract the premium of any physical damage or other individual insurance on a Motorcycle securing such Contract it obtains on behalf of the Obligor under the terms of such Contract, but may create a separate Obligor obligation with respect to such premium if and as provided by the Contract.

 

(g)           If the Servicer shall have repossessed a Motorcycle on behalf of the Trust, the Servicer shall either (i) maintain at its expense physical damage insurance with respect to such Motorcycle, or (ii) indemnify the Trust against any damage to such Motorcycle prior to resale or other disposition.  The Servicer shall not allow such repossessed Motorcycles to be used in an active trade or business, but rather shall dispose of the Motorcycle in a reasonable time in accordance with the Servicer’s normal business practices.

 

Section 5.07.        Trustees to Cooperate.  Upon payment in full on any Contract, the Servicer shall (if the Servicer is not then in possession of the Contracts and Contract Files) notify the Trustees and request delivery of the Contract and Contract File to the Servicer.  Upon receipt of such notice and

 

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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 acquired as described in Section 7.10 or 7.11.  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 each Certificateholder’s rights and remedies with respect to the Contracts.

 

Section 5.08.        Costs and Expenses.  All costs and expenses incurred by the Servicer in carrying out its duties hereunder, fees and expenses of accountants and payments of all fees and expenses incurred in connection with the enforcement of Contracts (including enforcement of Defaulted Contracts and repossessions of Motorcycles securing such Contracts when such Contracts are not reacquired pursuant to Section 7.08) and all other fees and expenses not expressly stated hereunder to be for the account of the Trust shall be paid by the Servicer and the Servicer shall not be entitled to reimbursement hereunder.

 

Section 5.09.        Maintenance of Security Interests in Motorcycles.  The Servicer shall take such steps as are necessary to maintain continuous perfection and the first priority of the security interest created by each Contract in the related Motorcycle.  The Owner Trustee and the Indenture Trustee hereby authorize the Servicer to take such steps as are necessary to perfect such security interest and to maintain the first priority thereof in the event of a relocation of a Motorcycle or for any other reason.

 

Section 5.10.        Successor Servicer/Lockbox Agreements.  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 each Lockbox Agreement; provided, however, that the Successor Servicer shall not be liable for any acts or obligations of the Servicer arising 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 a Lockbox Bank under such Lockbox Agreement.  The outgoing Servicer shall, upon the request of the [Underlying][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 a Lockbox Bank and otherwise use its best efforts to effect the orderly and efficient transfer of any Lockbox Agreement to the Successor Servicer.

 

Section 5.11.        Separate Entity Existence.  The Servicer agrees to take or refrain from taking or engaging in with respect to the Trust Depositor, as applicable, each of the actions or activities specified in the “substantive consolidation” opinion of Foley & Lardner LLP (or in any related Certificate of the Servicer) delivered on the Closing Date, upon which the conclusions expressed therein are based.

 

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ARTICLE SIX

 

THE TRUST DEPOSITOR

 

Section 6.01.        Covenants of the Trust Depositor.

 

(a)           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; provided, however, that the Trust Depositor may purchase and transfer (or grant Liens in respect of) contracts and/or other related assets similar to the Contracts to other Persons in securitization or other non-recourse financing transactions involving the Seller or any of its Affiliates (or with respect to the Contract Assets themselves, following a release and reconveyance thereof from the Trust), on terms and conditions (with respect to the liabilities imposed upon the Trust Depositor by virtue of such transactions, as well as in respect of agreements or restrictions concerning activities of the Trust Depositor and its relations or interactions with the Seller or the Servicer or other applicable Affiliate relevant to “bankruptcy remoteness” or “substantive consolidation” analysis), in each case substantially similar to such terms and conditions applicable to the Trust Depositor hereunder and under the other Transaction Documents.

 

(d)           No Borrowing.  The Trust Depositor shall not issue, incur, assume, guarantee or otherwise become liable, directly or indirectly, for (i) any Indebtedness except for any Indebtedness permitted by or arising under the Transaction Documents or (ii) obligations in connection with transactions described in the proviso of Section 6.01(c), as limited thereby.  The proceeds of the Notes shall be used exclusively to fund the Trust Depositor’s purchase of the Contracts and the other assets specified in this Agreement, to pay the transactional expenses of the Trust Depositor and to make the required deposits to the Reserve Fund.

 

(e)           Guarantees, Loans, Advances and Other Liabilities.  Except as otherwise contemplated by the Transaction Documents or in connection with transactions described in Section 6.01(c), as limited thereby, the Trust Depositor shall not make any loan or advance or credit to, or guarantee (directly or indirectly or by an instrument having the effect of assuming another’s payment or performance on any obligation or capability of so doing or otherwise), endorse or otherwise become contingently liable, directly or indirectly, in connection with the obligations, stocks or dividends of, or own, purchase, repurchase or acquire (or agree contingently to do so) any stock, obligations, assets or securities of, any other interest in, or make any capital contribution to, any other Person.

 

(f)            Capital Expenditures.  The Trust Depositor shall not make any expenditure (by long-term or operating lease or otherwise) for capital assets (either realty or personalty).

 

(g)           Restricted Payments.  Except as permitted or contemplated by the Transaction Documents or in connection with transactions described in Section 6.01(c), the Trust Depositor shall not,

 

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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 any owner of an equity interest in the Trust Depositor, (ii) redeem, purchase, retire or otherwise acquire for value any such equity interest or (iii) set aside or otherwise segregate any amounts for any such purpose; it being understood that the Trust Depositor shall at all times have the right to distribute funds received pursuant to the Transaction Documents, and pursuant to documents entered into in connection with transactions described in Section 6.01(c),  to its equity owner.

 

(h)           Separate Entity Existence.  The Trust Depositor shall:

 

(i)            Maintain its own deposit account or accounts, separate from those of any Affiliate, with commercial banking institutions.  The funds of the Trust Depositor will not be diverted to any other Person or for other than authorized uses of the Trust Depositor.

 

(ii)           Ensure that, to the extent that it shares the same officers or other employees as any of its members or Affiliates, the salaries of and the expenses related to providing benefits to such officers and other employees shall be fairly allocated among such entities, and each such entity shall bear its fair share of the salary and benefit costs associated with all such common officers and employees.

 

(iii)          Ensure that, to the extent that it jointly contracts with any of its members or Affiliates to do business with vendors or service providers or to share overhead expenses, the costs incurred in so doing shall be allocated fairly among such entities, and each such entity shall bear its fair share of such costs.  To the extent that the Trust Depositor contracts or does business with vendors or service providers when the goods and services provided are partially for the benefit of any other Person, the costs incurred in so doing shall be fairly allocated to or among such entities for whose benefit the goods and services are provided, and each such entity shall bear its fair share of such costs.  All material transactions between Trust Depositor and any of its Affiliates shall be only on an arm’s-length basis.

 

(iv)          To the extent that the Trust Depositor and any of its members or Affiliates have offices in the same location, there shall be a fair and appropriate allocation of overhead costs among them, and each such entity shall bear its fair share of such expenses.

 

(v)           Conduct its affairs strictly in accordance with its By-laws and Articles of Incorporation, and observe all necessary, appropriate and customary corporate formalities, including, but not limited to, holding all regular and special stockholders’ and directors’ meetings appropriate to authorize all entity action, keeping separate and accurate records of such meetings and its actions, passing all resolutions or consents necessary to authorize actions taken or to be taken, and maintaining accurate and separate books, records and accounts, including, but not limited to, payroll and intercompany transaction accounts.

 

(vi)          Take or refrain from taking or engaging in, as applicable, each of the actions or activities specified in the “true sale” and “substantive consolidation” opinions of Foley & Lardner LLP delivered on the Closing Date (or in any related certificate delivered in connection therewith), upon which the conclusions expressed therein are based.

 

Section 6.02.        Liability of Trust Depositor; Indemnities.  The Trust Depositor shall be liable in accordance herewith only to the extent of the obligations specifically undertaken by the Trust Depositor under this Agreement.

 

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The Trust Depositor shall indemnify, defend and hold harmless the Issuer, the Owner Trustee, [insert name of Owner Trustee, in its individual capacity], [the Underlying Trustee, [insert name of Underlying Trustee, in its individual capacity],] the Indenture Trustee and the Servicer from and against any taxes that may at any time be asserted against any such Person as a result of or relating to the transactions contemplated herein and in the other Transaction Documents, including any sales, gross receipts, gross margin, general corporation, tangible personal property, Illinois personal property replacement privilege or license taxes (but, in the case of the Issuer, not including any taxes asserted with respect to, and as of the date of, the transfer of the Contracts to the Issuer or the issuance and original sale of the Securities, or federal or other income taxes arising out of distributions on the Notes or the Certificate[s]) and costs and expenses in defending against the same.

 

The Trust Depositor shall indemnify, defend and hold harmless the Issuer, the Owner Trustee, [insert name of Owner Trustee, in its individual capacity], [the Underlying Trustee, [insert name of Underlying Trustee, in its individual capacity],] 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, [insert name of Owner Trustee, in its individual capacity,] [the Underlying Trustee, [insert name of Underlying Trustee, in its individual capacity],] 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[, in the case of the Underlying Trustee, in the Underlying 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 [insert name of Owner Trustee, in its individual capacity], as the case may be, shall be due to the willful misfeasance, bad faith or negligence of the Owner Trustee or [insert name of Owner Trustee, in its individual capacity], as the case may be, or shall arise from the breach by the Owner Trustee or [insert name of Owner Trustee, in its individual capacity], 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 Underlying Trustee or [insert name of Underlying Trustee, in its individual capacity], as the case may be, shall be due to the willful misfeasance, bad faith or negligence of the Underlying Trustee or [insert name of Underlying Trustee, in its individual capacity], as the case may be, or shall arise from the breach by the Underlying Trustee or [insert name of Underlying Trustee, in its individual capacity], as the case may be, of any of its representations or warranties set forth in Section 7.03 of the Trust Agreement, or (iii)] 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 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; provided, however, that Trust Depositor shall not be liable for any losses incurred by a Certificateholder in the capacity of any investor in the Trust Certificate[s] 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 proviso to the immediately preceding sentence for which Trust Depositor shall not be liable) shall be deemed third party beneficiaries of this paragraph.  The obligations of Trust Depositor under this paragraph shall be evidenced by the Trust Certificate[s] described in the Trust Agreement.

 

Indemnification under this Section shall include, without limitation, reasonable fees and expenses of counsel and expenses of litigation and shall survive the termination of the Trust and the resignation or

 

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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 and the Trust Depositor may, as a condition to any such indemnification, require such Person to agree in writing to do so.

 

Notwithstanding anything to the contrary herein, the obligations of the Trust Depositor under this Section are solely the corporate obligations of the Trust Depositor and shall be payable by it solely as provided in this Section.  The Trust Depositor shall only be required to make such payments required under this Section, (a) from funds available to it pursuant to, and in accordance with the payment priorities set forth in Section 7.05 and (b) to the extent that it receives additional funds designated for such purposes or to the extent that it has additional funds available (other than funds described in the preceding clause (a)) that would be in excess of amounts that would be necessary to pay the debt and other obligations of the Trust Depositor incurred in accordance with its Articles of Incorporation and all financing documents to which it is a party as they come due.  In addition, no amount owing by the Trust Depositor hereunder in excess of the liabilities that it is required to pay in accordance with the preceding sentence shall constitute a “claim” (as defined in Section 101(5) of the Bankruptcy Code) against it.  No recourse shall be had for the payment of any amount owing hereunder or any other obligation of, or claim against the Trust Depositor arising out of or based upon this Section against any stockholder, employee, officer, agent, director or authorized person of the Trust Depositor or Affiliate thereof; provided, however, that the foregoing shall not relieve any such person or entity of any liability they might otherwise have as a result of fraudulent actions or omissions taken by them.

 

Section 6.03.                         Merger or Consolidation of, or Assumption of the Obligations of, Trust Depositor; Certain Limitations.  Notwithstanding any other provision in this Section and any provision of law, the Trust Depositor shall not do any of the following:

 

(a)                                 engage in any business or activity other than as set forth in its Articles of Incorporation;

 

(b)                                 without the affirmative vote of a majority of the members of the Board of Directors of the Trust Depositor (which must include the affirmative vote of at least two duly appointed Independent directors) (i) dissolve or liquidate, in whole or in part, or institute proceedings to be adjudicated bankrupt or insolvent, (ii) consent to the institution of bankruptcy or insolvency proceedings against it, (iii) file a petition seeking or consent to reorganization or relief under any applicable federal or state law relating to bankruptcy, (iv) consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the corporation or a substantial part of its property, (v) make a general assignment for the benefit of creditors, (vi) admit in writing its inability to pay its debts generally as they become due, or (vii) take any corporate action in furtherance of the actions set forth in clauses (i) through (vi) above; provided, however, that no director may be required by any shareholder of the Trust Depositor to consent to the institution of bankruptcy or insolvency proceedings against the Trust Depositor so long as it is solvent; or

 

(c)                                  merge or consolidate with any other corporation, company or entity or sell all or substantially all of its assets or acquire all or substantially all of the assets or capital stock or other ownership interest of any other corporation, company or entity unless the Person formed by such consolidation or into which the Trust Depositor has merged or the Person which acquires by conveyance, transfer or lease substantially all the assets of the Trust Depositor as an entirety, can lawfully perform the obligations of the Trust Depositor hereunder and executes and delivers to the Owner Trustee and the Indenture Trustee an agreement in form and substance reasonably

 

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satisfactory to the Owner Trustee and the Indenture Trustee which contains an assumption by such successor entity of the due and punctual performance and observance of each covenant and condition to be performed or observed by the Trust Depositor under this Agreement; provided that the Rating Agency Condition shall be satisfied with respect to any merger, consolidation or succession pursuant to this Section.

 

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 and under the other Transaction Documents, or by reason of reckless disregard of their respective obligations and duties hereunder and under the other Transaction Documents.  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.

 

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 each Distribution Date by wire transfer if such Noteholder or Certificateholder provides written instructions to the Indenture Trustee or the Owner Trustee, respectively, at least ten days prior to such Distribution Date.

 

(b)                                 The Indenture Trustee shall serve as the paying agent hereunder (the “Paying Agent”) and shall make the payments to or on behalf of the Noteholders and the Certificateholder[s] required hereunder.  The Indenture Trustee hereby agrees that all amounts held by it for payment hereunder will be held in trust for the benefit of the Noteholders and the Certificateholder[s].

 

Section 7.02.                         Fees.  The Indenture Trustee shall be paid the Indenture Trustee Fee and the Servicer shall be paid the Monthly Servicing Fee, each of which shall be paid solely from the monies and in accordance with the priorities described in Section 7.05(a).  No recourse may be had to the Seller, Trust Depositor, Trustees, Servicer, or any of their respective Affiliates in the event that amounts available under Section 7.05(a) are insufficient for payment of the Indenture Trustee Fee and the Monthly Servicing Fee.

 

Section 7.03.                         Advances.  On each Determination Date, the Servicer shall compute the amount of Delinquent Interest, if any, on the Contracts.  Not later than each Distribution Date, the Servicer shall advance (each, an “Advance”) an amount equal to the Delinquent Interest for such Determination Date by depositing such amount in the Collection Account; provided, however, that the Servicer shall be obligated to advance Delinquent Interest only to the extent that the Servicer, in its sole discretion, expects that such advance will not become an Uncollectible Advance.  The Servicer shall indicate on each Monthly Report

 

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(i) the amount of Delinquent Interest, if any, on the Contracts for the related Determination Date and (ii) the amount of the Advance, if any, made by the Servicer in respect of the Delinquent Interest pursuant to this Section 7.03.  If the amount of such Advance is less than the amount of the Delinquent Interest, the relevant Monthly Report shall be accompanied by a certificate of a Servicing Officer setting forth in reasonable detail the basis for the determination by the Servicer that the portion of the Delinquent Interest not advanced would become an Uncollectible Advance.  By each Determination Date, the Servicer shall determine the amount of prior unreimbursed Advances for which it shall be entitled to be reimbursed pursuant to the provisions of this Section (such amount, the “Reimbursement Amount”).  The Servicer shall be entitled to be reimbursed for any outstanding Advance with respect to a Contract as provided in Section 7.05(a)(ii).

 

Section 7.04.                         [Reserved].

 

Section 7.05.                         Distributions; Priorities.

 

(a)                                 Except as provided in Section 7.05(b), (c) or (d), on each Distribution Date, the Indenture Trustee, at the Servicer’s direction, will make the following allocations and distributions of Available Monies in the following order of priority:

 

(i)                                                             to the Servicer, the Reimbursement Amount for Advances previously made;

 

(ii)                                                          to the Servicer, the Monthly Servicing Fee, including any unpaid Monthly Servicing Fee with respect to one or more prior Distribution Dates;

 

(iii)                                                       to the Indenture Trustee, the Indenture Trustee Fee, including any unpaid Indenture Trustee Fee with respect to one or more prior Distribution Dates;

 

(iv)                                                      to the Asset Representations Reviewer, the Asset Representations Reviewer Fee and expenses and indemnity amounts due and owing under the Asset Representations Review Agreement, to the extent not already paid by the Administrator on behalf of the Issuer, up to an amount not to exceed $[          ] per calendar year;

 

(v)                                                         [to the Note Distribution Account for further distribution to the [Swap][Cap] Counterparty, any Net [Swap][Cap] Payment;]

 

(vi)                                                      to the Note Distribution Account, together with any amounts deposited therein pursuant to Section 7.06, the applicable Note Interest Distributable Amount with respect to such Distribution Date for further distribution [pro rata (1)] to the Class A Noteholders; provided, however, that if there are insufficient Available Monies to pay the entire amount of the Note Interest Distributable Amount, then the remaining Available Monies shall be applied to the Class A-1 Notes, the Class A-2a Notes, the Class A-2b Notes, the Class A-3 Notes, and the Class A-4 Notes, pro rata, on the basis of the Note Interest Distributable Amount for each such Class of Notes[, and (2) to the [Swap][Cap] Counterparty, any unpaid Senior [Swap][Cap] Termination Payment];

 

(vii)                                                   to the Note Distribution Account, together with any amounts deposited therein pursuant to Section 7.06, the First Priority Principal Distributable Amount with respect to such Distribution Date for further distribution first, to the Class  A-1  Noteholders  until  the  Outstanding  Amount  of  the  Class  A-1  Notes  has  been  paid  in  full,  second,  to  the  Class  A-2

 

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Noteholders (pro rata to the Class A-2a Noteholders and the Class A-2b Noteholders) until the Outstanding Amount of the Class A-2 Notes has been paid in full, third, to the Class A-3 Noteholders until the Outstanding Amount of the Class A-3 Notes has been paid in full, and fourth, to the Class A-4 Noteholders until the Outstanding Amount of the Class A-4 Notes has been paid in full;

 

(viii)                                                to the Note Distribution Account, together with any amounts deposited therein pursuant to Section 7.06, the applicable Note Interest Distributable Amount with respect to such Distribution Date for further distribution to the Class B Noteholders;

 

(ix)                                                      to the Note Distribution Account, together with any amounts deposited therein pursuant to Section 7.06, the Second Priority Principal Distributable Amount with respect to such Distribution Date, for further distribution first, to the Class A-1 Noteholders until the Outstanding Amount of the Class A-1 Notes has been paid in full, second, to the Class A-2 Noteholders (pro rata to the Class A-2a Noteholders and the Class A-2b Noteholders) until the Outstanding Amount of the Class A-2 Notes has been paid in full, third, to the Class A-3 Noteholders until the Outstanding Amount of the Class A-3 Notes has been paid in full, fourth, to the Class A-4 Noteholders until the Outstanding Amount of the Class A-4 Notes has been paid in full and fifth, to the Class B Noteholders until the Outstanding Amount of the Class B Notes has been paid in full;

 

(x)                                                         to the Note Distribution Account, together with any amounts deposited therein pursuant to Section 7.06, the applicable Note Interest Distributable Amount with respect to such Distribution Date for further distribution to the Class C Noteholders;

 

(xi)                                                      to the Note Distribution Account, together with any amounts deposited therein pursuant to Section 7.06, the Third Priority Principal Distributable Amount with respect to such Distribution Date, for further distribution first, to the Class A-1 Noteholders until the Outstanding Amount of the Class A-1 Notes has been paid in full, second, to the Class A-2 Noteholders (pro rata to the Class A-2a Noteholders and the Class A-2b Noteholders) until the Outstanding Amount of the Class A-2 Notes has been paid in full, third, to the Class A-3 Noteholders until the Outstanding Amount of the Class A-3 Notes has been paid in full, fourth, to the Class A-4 Noteholders until the Outstanding Amount of the Class A-4 Notes has been paid in full, fifth, to the Class B Noteholders until the Outstanding Amount of the Class B Notes has been paid in full, and sixth, to the Class C Noteholders until the Outstanding Amount of the Class C Notes has been paid in full;

 

(xii)                                                   to the Note Distribution Account, together with any amounts deposited therein pursuant to Section 7.06, the applicable Note Interest Distributable Amount with respect to such Distribution Date for further distribution to the Class D Noteholders;

 

(xiii)                                                to the Note Distribution Account, together with any amounts deposited therein pursuant to Section 7.06, the Noteholders’ Regular Principal Distributable Amount with respect to such Distribution Date, for further distribution first, to the Class A-1 Noteholders until the Outstanding Amount of the Class A-1 Notes has been paid in full, second, to the Class A-2 Noteholders (pro rata to the Class A-2a Noteholders and the Class A-2b Noteholders) until the Outstanding Amount of the Class A-2 Notes has been paid in full, third, to the Class A-3 Noteholders until the Outstanding Amount of the Class A-3 Notes has been paid in full, fourth, to the Class A-4 Noteholders, until the Outstanding Amount of the Class A-4 Notes has been paid in full, fifth, to the Class B Noteholders until the Outstanding Amount of the Class B Notes has been paid in full, sixth, to the Class C Noteholders until the Outstanding Amount of the Class C Notes

 

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has been paid in full, and, seventh, to the Class D Noteholders until the Outstanding Amount of the Class D Notes has been paid in full;

 

(xiv)                                               any Excess Amounts to the Reserve Fund up to the amount, if any, necessary to increase the balance thereof to the Specified Reserve Fund Balance; [and]

 

(xv)                                                  [NICK]to the Asset Representations Reviewer, any fees, expenses and indemnity amounts due but not paid under item (iv) above;

 

(xvi)                                               [to the Note Distribution Account for further distribution to the [Swap][Cap] Counterparty, any unpaid Subordinated [Swap][Cap] Termination Payment; and]

 

(xvii)                                            any remaining amounts to the Certificateholder[s] as residual interestholder under the Trust Agreement.

 

(b)                                 If the Notes have been declared immediately due and payable as provided in Section 5.02 of the Indenture following the occurrence of an Event of Default under Section 5.01(iii) of the Indenture, then, until such time as the Notes have been paid in full, Available Monies shall be allocated and distributed in the following order of priority after payment of the amounts set forth in Section 7.05(a)(i) through (v):

 

(i)                                     to the Note Distribution Account, together with any amounts deposited therein pursuant to Section 7.06, the applicable Note Interest Distributable Amount with respect to such Distribution Date for further distribution [pro rata (1)] to the Class A Noteholders; provided, however, that if there are insufficient Available Monies to pay the entire amount of the Note Interest Distributable Amount for the Class A Notes, then the remaining Available Monies shall be applied to the Class A-1 Notes, the Class A-2a Notes, the Class A-2b Notes, the Class A-3 Notes, and the Class A-4 Notes, pro rata, on the basis of the Note Interest Distributable Amount for each such Class of Notes[, and (2) to the [Swap][Cap] Counterparty, any unpaid Senior [Swap][Cap] Termination Payment];

 

(ii)                                  to the Note Distribution Account, together with any amounts deposited therein pursuant to Section 7.06, the First Priority Principal Distributable Amount with respect to such Distribution Date for further distribution first, to the Class A-1 Noteholders until the Outstanding Amount of the Class A-1 Notes has been paid in full, and second, to the Class A-2a Noteholders, the Class A-2b Noteholders, the Class A-3 Noteholders, and the Class A-4 Noteholders, pro rata, based on the outstanding principal amount of the related Classes of Notes, until the Outstanding Amount of such Classes of Notes has been paid in full;

 

(iii)                               to the Note Distribution Account, together with any amounts deposited therein pursuant to Section 7.06, the applicable Note Interest Distributable Amount with respect to such Distribution Date for further distribution to the Class B Noteholders;

 

(iv)                              to the Note Distribution Account, together with any amounts deposited therein pursuant to Section 7.06, the Second Priority Principal Distributable Amount with respect to such Distribution Date for further distribution first, to the Class A-1 Noteholders until the Outstanding Amount of the Class A-1 Notes has been paid in full, second, to the Class A-2a Noteholders, the Class A-2b Noteholders, the Class A-3 Noteholders, and the Class A-4 Noteholders, pro rata, based on the outstanding principal amount of the related Classes of Notes, until the Outstanding Amount of such Classes of Notes has been paid in full and third, to the Class B Noteholders until the Outstanding Amount of the Class B Notes has been paid in full;

 

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(v)                                 to the Note Distribution Account, together with any amounts deposited therein pursuant to Section 7.06, the applicable Note Interest Distributable Amount with respect to such Distribution Date for further distribution to the Class C Noteholders;

 

(vi)                              to the Note Distribution Account, together with any amounts deposited therein pursuant to Section 7.06, the Third Priority Principal Distributable Amount with respect to such Distribution Date for further distribution first, to the Class A-1 Noteholders until the Outstanding Amount of the Class A-1 Notes has been paid in full, second, to the Class A-2a Noteholders, the Class A-2b Noteholders, the Class A-3 Noteholders, and the Class A-4 Noteholders, pro rata, based on the outstanding principal amount of the related Classes of Notes, until the Outstanding Amount of such Classes of Notes has been paid in full, third, to the Class B Noteholders until the Outstanding Amount of the Class B Notes has been paid in full, and, fourth, to the Class C Noteholders until the Outstanding Amount of the Class C Notes has been paid in full;

 

(vii)                           to the Note Distribution Account, together with any amounts deposited therein pursuant to Section 7.06, the applicable Note Interest Distributable Amount with respect to such Distribution Date to the Class D Noteholders;

 

(viii)                        to the Note Distribution Account, together with any amounts deposited therein pursuant to Section 7.06, all amounts remaining after distribution of amounts in clauses (i) through [(vii)] above shall be allocated in the following order of priority:

 

(1)                                 to the Class A Noteholders, first, to the Class A-1 Noteholders, until the outstanding principal balance of the Class A-1 Notes has been paid in full and second, to the Class A-2a Noteholders, the Class A-2b Noteholders, the Class A-3 Noteholders, and the Class A-4 Noteholders, pro rata, based on the outstanding principal amount of the related Classes of Notes, until the outstanding principal balance of each such Class of the Notes has been paid in full;

 

(2)                                 to the Class B Noteholders, until the outstanding principal balance of the Class B Notes has been paid in full; and

 

(3)                                 to the Class C Noteholders, until the outstanding principal balance of the Class C Notes has been paid in full; and

 

(4)                                 to the Class D Noteholders, until the outstanding principal balance of the Class D Notes has been paid in full;

 

(viii)                        to the Asset Representations Reviewer, any fees, expenses and indemnity amounts due but not paid above;

 

[(ix)                          to the Note Distribution Account for further distribution to the [Swap][Cap] Counterparty, any unpaid Subordinated [Swap][Cap] Termination Payment; and]

 

[(ix)][(x)]                                               any remaining amounts to the Certificateholder[s] as residual interestholder under the Trust Agreement.

 

(c)                                  If the Notes have been declared immediately due and payable as provided in Section 5.02 of the Indenture following the occurrence of an Event of Default under Section 5.01(i), (ii), (iv) or (v) of the Indenture, then, until such time as the Notes have been paid in full, Available Monies shall be

 

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allocated and distributed in the following order of priority after payment of amounts set forth in Section 7.05(a)(i) through (v):

 

(i)                                     to the Note Distribution Account, together with any amounts deposited therein pursuant to Section 7.06, the applicable Note Interest Distributable Amount with respect to such Distribution Date for further distribution [pro rata (1)] to the Class A Noteholders; provided, however, that if there are insufficient funds on deposit in the Note Distribution Account to pay the entire amount of the Note Interest Distributable Amount for the Class A Notes, then the amount in the Note Distribution Account [paid to the Class A Noteholders] shall be applied to the Class A-1 Notes, the Class A-2a Notes, the Class A-2b Notes, the Class A-3 Notes, and the Class A-4 Notes, pro rata, on the basis of the Note Interest Distributable Amount for each such Class of Notes[, and (2) to the [Swap][Cap] Counterparty, any unpaid Senior [Swap][Cap] Termination Payment];

 

(ii)                                  to the Note Distribution Account, together with any amounts deposited therein pursuant to Section 7.06, any amounts remaining after the distribution of amounts in clause (i) above to the Class A Noteholders for further distribution first, to the Class A-1 Noteholders until the Outstanding Amount of the Class A-1 Notes has been paid in full and second, pro rata, to the Class A-2a Noteholders, the Class A-2b Noteholders, the Class A-3 Noteholders and the Class A-4 Noteholders, based on the outstanding principal amount of the related Classes of Notes, until the Outstanding Amount of such Classes of Notes has been paid in full;

 

(iii)                               to the Note Distribution Account, together with any amounts deposited therein pursuant to Section 7.06, the applicable Note Interest Distributable Amount with respect to such Distribution Date for further distribution to the Class B Noteholders;

 

(iv)                              to the Note Distribution Account, together with any amounts deposited therein pursuant to Section 7.06, all amounts remaining after distribution of amounts in clauses (i), (ii) and (iii) above, for further distribution to the Class B Noteholders in reduction of the outstanding principal balance of the Class B Notes until the outstanding principal balance of the Class B Notes has been paid in full;

 

(v)                                 to the Note Distribution Account, together with any amounts deposited therein pursuant to Section 7.06, the applicable Note Interest Distributable Amount with respect to such Distribution Date for further distribution to the Class C Noteholders;

 

(vi)                              to the Note Distribution Account, together with any amounts deposited therein pursuant to Section 7.06, all amounts remaining after distribution of amounts in clauses (i) through (v) above, for further distribution to the Class C Noteholders in reduction of the outstanding principal balance of the Class C Notes until the outstanding principal balance of the Class C Notes has been paid in full; and

 

(vii)                           to the Note Distribution Account, together with any amounts deposited therein pursuant to Section 7.06, the applicable Note Interest Distributable Amount with respect to such Distribution Date for distribution to the Class D Noteholders;

 

(viii)                        to the Note Distribution Account, together with any amounts deposited therein pursuant to Section 7.06, all amounts remaining after distribution of amounts in clauses (i) through (vii) above, for distribution to the Class D Noteholders in reduction of the outstanding principal balance of the Class D Notes until the outstanding principal balance of the Class D Notes has been paid in full;

 

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(ix)                              to the Asset Representations Reviewer, any fees, expenses and indemnity amounts due but not paid above;

 

[(x)                             to the Note Distribution Account for further distribution to the [Swap][Cap] Counterparty, any unpaid Subordinated [Swap][Cap] Termination Payment; and]

 

[(x)][(xi)]                                               any remaining amounts to the Certificateholder[s] as residual interestholder under the Trust Agreement.

 

Notwithstanding that the Notes have been paid in full, the Indenture Trustee shall continue to maintain the Collection Account hereunder until the Pool Balance has been reduced to zero.

 

Section 7.06.                         Reserve Fund.

 

(a)                                 On 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 Notes.

 

(b)                                 The Indenture Trustee shall determine no later than 10:00 a.m., Chicago, Illinois time, on each Distribution Date (but after making, and taking into account, the transfers of funds contemplated in Section 7.05 above) whether there exists a Shortfall with respect to such Distribution Date.  In the event that the Indenture Trustee determines that there exists a Shortfall, the Indenture Trustee shall no later than 12:00 noon, Chicago, Illinois time, on such Distribution Date remit monies from the Reserve Fund in the following order of priority: first, to the Note Distribution Account the amount of such Shortfall relating to [[the Note Interest Distributable Amount [and Senior [Swap][Cap] Termination Payments][, and]][any unpaid Net [Swap][Cap] Payment], for such Distribution Date, second, to the Note Distribution Account, the amount of such Shortfall relating to the Note Interest Distributable Amount [and Senior [Swap][Cap] Termination Payments], and third, to the Note Distribution Account, the amount of such Shortfall relating to the Principal Distributable Amount.

 

(c)                                  The Indenture Trustee shall at the written direction of the Servicer invest the funds in the Reserve Fund in Qualified Eligible Investments.  Funds in the Reserve Fund shall be invested in investments that are payable on demand or mature on or before the Business Day prior to each Distribution Date.  Once such funds are invested, the Indenture Trustee shall not change the investment of such funds prior to maturity.  Upon any such investment, the Indenture Trustee shall, consistent with the definition of Qualified Eligible Investment herein, make an appropriate notation of the security interest in such Qualified Eligible Investment on the Indenture Trustee’s records, by book entry or otherwise.  All income and gain realized from any such investments as well as any interest earned on Reserve Fund Deposits shall be deposited and retained in the Reserve Fund (subject to Section 7.06(e)).  Losses, if any, realized on amounts in the Reserve Fund invested pursuant to this paragraph shall first be credited against undistributed investment earnings on amounts in the Reserve Fund invested pursuant to this paragraph, and shall thereafter be deemed to reduce the amount on deposit in the Reserve Fund.  Neither the Trust Depositor nor the Indenture Trustee shall be liable for the amount of any loss incurred in respect of any investment, or lack of investment, of funds held in the Reserve Fund.  All income or loss on funds held in the Reserve Fund shall be taxable to the Certificateholder[s].

 

(d)                                 Any Excess Amounts will be applied as provided in Section 7.05(a)(xiv) to increase the balance of the Reserve Fund 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) exceeds the

 

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Specified Reserve Fund Balance, the Indenture Trustee shall release such excess amounts to the Trust Depositor.

 

Section 7.07.                         [Reserved].

 

Section 7.08.                         Purchase of Contracts for Breach of Representations and Warranties.

 

(a)                                 If the Trust Depositor (i) has knowledge of a breach of a representation or warranty of the Seller as set forth in Exhibit J hereto, (ii) receives notice from the Issuer, the Owner Trustee[, the Underlying Trustee] or the Indenture Trustee of a breach of a representation or warranty of the Seller as set forth in Exhibit J hereto, (iii) receives a Repurchase Request from the Owner Trustee[, the Underlying Trustee] or the Indenture Trustee for a Contract or (iv) receives a Review Report that indicates a Test Fail for a Contract, then, in each case, the Trust Depositor will investigate the Contract to confirm the breach and determine if the breach has a material adverse effect on the Contract.  None of the Servicer, the Issuer, the Owner Trustee, [the Underlying Trustee,] the Indenture Trustee or the Administrator will have an obligation to investigate whether a breach of any representation or warranty has occurred or whether any Contract is required to be repurchased under this Section 7.08.

 

(b)                                 Upon a discovery by the Servicer, the Trust Depositor or the Trustees of a breach of a representation or warranty of the Seller as set forth in Exhibit J hereto that materially adversely affects the [Underlying] Trust’s interest in such Contract (without regard to the benefits of the Reserve Fund), the party discovering the breach shall give prompt written notice to the other parties; provided, that the Trustees shall have no duty or obligation to inquire or to investigate the breach by the Seller of any of such representations or warranties.  The Trust Depositor shall reacquire from the [Underlying] Trust, and the Trust Depositor shall cause the Seller to reacquire from the Trust Depositor, as provided in the Transfer and Sale Agreement and in accordance with this Section 7.08, a Contract at its Purchase Price (which shall be deposited into the Collection Account), not later than two Business Days prior to the first Distribution Date after the last day of the calendar month in which the Trust Depositor or the Seller become aware or receive written notice from the Trustees, 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 [Underlying] Trust’s interest in such Contract and which breach has not been cured; provided, however, that with respect to any Contract described on the List of Contracts with respect to an incorrect unpaid Principal Balance which the Seller would otherwise be required to reacquire under the Transfer and Sale Agreement, the Seller may, in lieu of reacquiring such Contract, deposit in the Collection Account, not later than one Business Day prior to the first Distribution Date after the last day of the calendar month in which the Seller becomes aware of such inaccuracy, cash in an amount sufficient to cure any deficiency or discrepancy; and provided further that with respect to a breach of representation or warranty relating to the Contracts in the aggregate and not to any particular Contract the Seller may select Contracts (without adverse selection) to reacquire such that had such Contracts not been included as part of the Trust Corpus there would have been no breach of such representation or warranty.

 

(c)                                  If the Servicer determines in good faith that the representation and warranty of the Seller as set forth in Section 2(i) of Exhibit J hereto may have been violated with respect to one or more Contracts, and that amendment of the terms of such Contract(s) could better ensure compliance with applicable laws and if the Seller shall have notified the Servicer in writing of its intention to amend the terms of such Contract(s) to ensure compliance with applicable laws upon reacquisition pursuant to this Section 7.08(c) and the Transfer and Sale Agreement, the Servicer shall give prompt written notice of such determination to the other parties. The Trust Depositor shall reacquire from the [Underlying] Trust, and the Trust Depositor shall cause the Seller to reacquire from the Trust Depositor, as provided in the Transfer and Sale Agreement and in accordance with this Section 7.08, a Contract at its Purchase Price

 

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(which shall be deposited into the Collection Account), not later than two Business Days prior to the first Distribution Date after the last day of the calendar month in which the Trust Depositor and the Seller receive the written notice from the Servicer described above; provided, however, that no Contract shall be reacquired pursuant to this Section 7.08(b) if, after giving effect to such reacquisition, the aggregate Principal Balance of the Contracts so reacquired, measured as of the Cutoff Date, would exceed 10% of the Pool Balance as of the Cutoff Date.  For the avoidance of doubt, this provision does not limit the obligation of the Seller to repurchase any Contract for which there is a breach of a representation or warranty of the Seller as set forth in Exhibit J and there shall be no limitation on the Principal Balance or the number of Contracts that are required to be repurchased by the Seller in connection with a breach of a representation or warranty of the Seller as set forth in Exhibit J.

 

(d)                                 Notwithstanding any other provision of this Agreement, the obligations 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 Servicing Transfer pursuant to Article Eight.  The reacquisition obligations described in this Section 7.08 are in no way to be satisfied with monies on deposit in the Reserve Fund.  The sole remedy of the Issuer, the Trustees[, the [Swap][Cap] Counterparty], and the Noteholders against the Seller with respect to a breach of a representation or warranty of the Seller shall be to require the Seller to reacquire the related Contract pursuant to this Section 7.08.

 

Section 7.09.                         Reassignment of Reacquired Contracts.  Upon receipt by the Indenture Trustee for deposit in the Collection Account of the Purchase Price as described in Section 7.08, Section 7.10 or Section 7.11, and upon receipt of a certificate of a Servicing Officer in the form attached hereto as Exhibit G, [the Indenture Trustee shall release its lien on and] the [Underlying] Trust shall assign to the Trust Depositor, the Seller or the Servicer, as applicable, all of the [Underlying] Trust’s right, title and interest in the reacquired or purchased Contract without recourse, representation or warranty, except as to the absence of liens, charges or encumbrances created by or arising as a result of actions of the Trustees.

 

Section 7.10.                         Servicer’s Purchase Option.  On written notice to the Owner Trustee and Indenture Trustee at least 20 days prior to a Distribution Date, and provided that the Pool Balance is then less than 10% of the Pool Balance as of the Cutoff Date, the Servicer may (but is not required to) purchase on that Distribution Date all outstanding Contracts (and related Contract Assets) at a price equal to the aggregate Outstanding Amount of the Notes on the previous Distribution Date plus the aggregate of the Note Interest Distributable Amount for the current Distribution Date, the Reimbursement Amount (if any) as well as accrued and unpaid Monthly Servicing Fees and the Indenture Trustee Fee to the date of such purchase [plus all amounts owing to the [Swap][Cap] Counterparty under the Interest Rate [Swap][Cap] Agreement].  Such price shall be deposited in the Collection Account not later than one (1) Business Day before such Distribution Date, against the Owner Trustee’s and Indenture Trustee’s release of the Contracts and the Contract Files to the Servicer.

 

Section 7.11.                         Purchase of Contracts for Breach of Servicing Obligations.  Upon a discovery by the Servicer or the Trustees of a breach of any of the covenants of the Servicer set forth in Section 5.02, 5.06 or 5.09 that materially adversely affects the [Underlying] Trust’s interest in a 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 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 [Underlying] Trust’s interest in the Contract or in the related Contracts; provided, further, that the Trustees shall have no duty or obligation to inquire or to investigate the breach by the Servicer of any of such covenants.  The Servicer, in accordance with this Section 7.11, shall purchase such Contract at its Purchase Price, two Business Days prior to the first Distribution Date after the last day of the calendar month in which the Servicer becomes aware, or receives written notice

 

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from the Trustees of any breach described in the preceding sentence which breach has not been cured; provided, however, that with respect to a breach of any of the covenants of the Servicer set forth in Section 5.02, 5.06 or 5.09 relating to the Contracts in the aggregate and not to any particular Contract the Servicer may select Contracts (without adverse selection) to purchase such that had such Contracts not been included as part of the Trust Corpus there would have been no breach of such covenant.  Notwithstanding any other provision of this Agreement, the obligation of the Servicer described in this Section 7.11 shall not terminate or be deemed released by any party hereto upon a Servicing Transfer pursuant to Article Eight.  The purchase obligation described in this Section 7.11 is in no way to be satisfied with monies in the Reserve Fund.  Upon Servicer’s payment of the Purchase Price of the Contract, any Event of Termination pursuant to Section 8.01(b) arising as a result of the Servicer’s breach of any of the covenants set forth in Section 5.02, 5.06 or 5.09 with respect to such Contract shall be deemed not to have occurred.

 

Section 7.12.                         Dispute Resolution.

 

(a)                                  If the Issuer, the Owner Trustee[, the Underlying Trustee], the Indenture Trustee or a Noteholder (the “Requesting Party”) requests that the Trust Depositor and/or the Seller repurchase a Contract due to an alleged breach of a representation and warranty set forth on Exhibit J hereto or in Section 3.02 of the Sale and Transfer Agreement (each, a “Repurchase Request”), and the Repurchase Request has not been resolved within [180] days after the Trust Depositor or the Seller receives the Repurchase Request, the Requesting Party may refer the matter, in its discretion, to either mediation (including non-binding arbitration) or binding third-party arbitration.  However, if the Contract subject to a Repurchase Request was part of a Review and the Review Report showed no Test Fails for the Contract, the Repurchase Request for the Contract will be deemed to be resolved.  The Requesting Party must start the mediation or arbitration proceeding according to the ADR Rules of the ADR Organization within [90] days after the end of the [180]-day period.  The Trust Depositor and the Seller agree to participate in the dispute resolution method selected by the Requesting Party.

 

(b)                                  If the Requesting Party selects mediation for dispute resolution:

 

(i)                                                             The mediation will be administered by the ADR Organization using its ADR Rules.  However, if any ADR Rules are inconsistent with the procedures for mediation stated in this Section 7.12, the procedures in this Section 7.12 will control.

 

(ii)                                                          A single mediator will be selected by the ADR Organization from a list of neutrals maintained by it according to the ADR Rules.  The mediator must be impartial, an attorney admitted to practice in the State of [Illinois] and have at least [15] years of experience in commercial litigation and, if possible, consumer finance or asset-backed securitization matters.

 

(iii)                                                       The mediation will start within [15] days after the selection of the mediator and conclude within [30] days after the start of the mediation.  .

 

(iv)                                                      Expenses of the mediation will be allocated to the parties as mutually agreed by them as part of the mediation.

 

(v)                                                         If the parties fail to agree at the completion of the mediation, the Requesting Party may refer the Repurchase Request to arbitration under this Section 7.12.

 

(c)                                   If the Requesting Party selects arbitration for dispute resolution:

 

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(i)                                     The arbitration will be administered by the ADR Organization using its ADR Rules.  However, if any ADR Rules are inconsistent with the procedures for arbitration stated in this Section 7.12, the procedures in this Section 7.12 will control.

 

(ii)                                  A single arbitrator will be selected by the ADR Organization from a list of neutrals maintained by it according to the ADR Rules.  The arbitrator must be impartial, an attorney admitted to practice in the State of [Illinois] and have at least [15] years of experience in commercial litigation and, if possible, consumer finance or asset-backed securitization matters.  The arbitrator will be independent and impartial and will comply with the Code of Ethics for Arbitrators in Commercial Disputes in effect at the time of the arbitration.  Before accepting an appointment, the arbitrator must promptly disclose any circumstances likely to create a reasonable inference of bias or conflict of interest or likely to preclude completion of the proceedings within the stated time schedule.  The arbitrator may be removed by the ADR Organization for cause consisting of actual bias, conflict of interest or other serious potential for conflict.

 

(iii)                               The arbitrator will have the authority to schedule, hear and determine any motions, according to [Illinois] law, and will do so at the motion of any party.  Discovery will be completed with [30] days of selection of the arbitrator and will be limited for each party to two witness depositions not to exceed five hours, two interrogatories, one document request and one request for admissions.  However, the arbitrator may grant additional discovery on a showing of good cause that the additional discovery is reasonable and necessary.  Briefs will be limited to no more than ten pages each, and will be limited to initial statements of the case, motions and a pre-hearing brief.  The evidentiary hearing on the merits will start no later than [60] days after selection of the arbitrator and will proceed for no more than six consecutive Business Days with equal time allocated to each party for the presentation of evidence and cross examination.  The arbitrator may allow additional time for discovery and hearings on a showing of good cause or due to unavoidable delays.

 

(iv)                              The arbitrator will make its final determination no later than [90] days after its selection.  The arbitrator will resolve the dispute according to the terms of this Agreement and the other Transaction Documents, and may not modify or change this Agreement or the other Transaction Documents in any way.  The arbitrator will not have the power to award punitive damages or consequential damages in any arbitration conducted by them.  In its final determination, the arbitrator will determine and award the expenses of the arbitration (including filing fees, the fees of the arbitrator, expense of any record or transcript of the arbitration and administrative fees) to the parties in its reasonable discretion.  The determination of the arbitrator will be in writing and counterpart copies will be promptly delivered to the parties.  The determination will be final and non-appealable, except for actions to confirm or vacate the determination permitted under federal or State law, and may be entered and enforced in any court of competent jurisdiction.

 

(v)                                 By selecting arbitration, the Requesting Party is giving up the right to sue in court, including the right to a trial by jury.

 

(vi)                              The Requesting Party may not bring a putative or certificated class action to arbitration.  If this waiver of class action rights is found to be unenforceable for any reason, the Requesting Party agrees that it will bring its claims in a court of competent jurisdiction.

 

(d)                                 For each mediation or arbitration:

 

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(i)                                     Any mediation or arbitration will be held in [Chicago, Illinois] at the offices of the mediator or arbitrator or at another location selected by the Trust Depositor or the Seller.  Any party or witness may participate by teleconference or video conference.

 

(ii)                                  The Trust Depositor, the Seller and the Requesting Party will have the right to seek provisional relief from a competent court of law, including a temporary restraining order, preliminary injunction or attachment order, if such relief is available by law.

 

(iii)                               Neither the Trust Depositor nor the Seller will be required to produce personally identifiable customer information for purposes of any mediation or arbitration.  The existence and details of any unresolved Repurchase Request, any informal meetings, mediations or arbitration proceedings, the nature and amount of any relief sought or granted, any offers or statements made and any discovery taken in the proceeding will be confidential, privileged and inadmissible for any purpose in any other mediation, arbitration, litigation or other proceeding.  The parties will keep this information confidential and will not disclose or discuss it with any third party (other than a party’s attorneys, experts, accountants and other advisors, as reasonably required in connection with the mediation or arbitration proceeding under this Section 7.12), except as required by law, regulatory requirement or court order.  If a party to a mediation or arbitration proceeding receives a subpoena or other request for information from a third party (other than a governmental regulatory body) for confidential information of the other party to the mediation or arbitration proceeding, the recipient will promptly notify the other party and will provide the other party with the opportunity to object to the production of its confidential information.

 

Section 7.13.                         Interest Rate [Swap][Cap] Agreement.

 

(a)                                  The Issuer shall enter into the Interest Rate [Swap][Cap] Agreement with the [Swap][Cap] Counterparty on the Closing Date.  The Issuer shall deposit Net Swap Receipts into the Note Distribution Account to be included as Available Monies on the related Distribution Date.  Subject to the requirements of this Section 7.12, the Issuer may from time to time enter into one or more Replacement Interest Rate [Swap][Cap] Agreements in the event that the Interest Rate [Swap][Cap] Agreement is terminated due to certain “termination events” or “events of default” (each as defined in the Interest Rate [Swap][Cap] Agreement) prior to its scheduled expiration and in accordance with the terms of such Interest Rate [Swap][Cap] Agreement.  Other than any Replacement Interest Rate [Swap][Cap] Agreement entered into pursuant to this Section 7.13(a), the Issuer may not enter into any additional interest rate swap agreements.

 

(b)                                  In the event of any early termination of the Interest Rate [Swap][Cap] Agreement, (i) upon written direction and notification of such early termination, the Indenture Trustee shall establish the [Swap][Cap] Termination Payment Account and (ii) any [Swap][Cap] Termination Payments received from the [Swap][Cap] Counterparty will be remitted to the [Swap][Cap] Termination Payment Account.  Any Swap Replacement Proceeds received from any Replacement [Swap][Cap] Counterparty pursuant to Section 7.12(c) will be remitted to the [Swap][Cap] Termination Payment Account for payment of any [Swap][Cap] Termination Payment owed by the Issuer to the [Swap][Cap] Counterparty.  To the extent not fully paid from Swap Replacement Proceeds, any [Swap][Cap] Termination Payment owed by the Issuer to the [Swap][Cap] Counterparty under the Interest Rate [Swap][Cap] Agreement shall be payable to the [Swap][Cap] Counterparty in installments made on each following Distribution Date until paid in full in accordance with the order of priority specified in Section 7.05.

 

(c)                                   Following the early termination of the Interest Rate [Swap][Cap] Agreement due to an “event of default” or “termination event” (each as defined in the Interest Rate [Swap][Cap] Agreement)

 

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and in accordance with the terms of such Interest Rate [Swap][Cap] Agreement, the Issuer shall promptly enter into a Replacement Interest Rate [Swap][Cap] Agreement to the extent possible and practicable using funds available in the [Swap][Cap] Termination Payment Account.

 

(d)                                  To the extent that the funds available in the [Swap][Cap] Termination Payment Account exceed the costs of entering into a Replacement Interest Rate [Swap][Cap] Agreement, the amounts in the [Swap][Cap] Termination Payment Account (other than funds used to pay the costs of entering into a Replacement Interest Rate [Swap][Cap] Agreement, if applicable) shall be allocated in accordance with the order of priority specified in Section 7.05 on the following Distribution Date.  In any other situation, amounts on deposit in the [Swap][Cap] Termination Payment Account at any time shall be invested in Eligible Investments and on each Distribution Date after the creation of a [Swap][Cap] Termination Payment Account, the funds therein shall be used to cover any shortfalls in the amounts payable under clauses (i) through (x) of Section 7.05(a), under Section 7.05(b), or under Section 7.05(c); provided, that in no event will the amount withdrawn from the [Swap][Cap] Termination Payment Account on such Distribution Date exceed the amount of Net Swap Receipts that would have been required to be paid on such Distribution Date under the terminated Interest Rate Swap Transaction had there been no termination of such transaction.  Any amounts remaining in the [Swap][Cap] Termination Payment Account after payment in full of the Class C Notes shall be included in Available Monies and allocated in accordance with the order of priority specified in Section 7.05 on the following Distribution Date.

 

(e)                                   If the [Swap][Cap] Counterparty is required to post collateral under the terms of the Interest Rate [Swap][Cap] Agreement, upon written direction and notification of such requirement the Indenture Trustee shall establish the [Swap][Cap] Collateral Account (the “[Swap][Cap] Collateral Account”) over which the Indenture Trustee shall have exclusive control and the sole right of withdrawal, and in which no Person other than the Indenture Trustee, the [Swap][Cap] Counterparty and the Noteholders shall have any legal or beneficial interest. The Indenture Trustee shall deposit all “Eligible Collateral” (as defined in the Interest Rate [Swap][Cap] Agreement) received from the [Swap][Cap] Counterparty into the [Swap][Cap] Collateral Account.  Any and all funds at any time on deposit in, or otherwise to the credit of, the [Swap][Cap] Collateral Account shall be held in trust by the Indenture Trustee for the benefit of the [Swap][Cap] Counterparty and the Noteholders.  The only permitted withdrawal from or application of funds on deposit in, or otherwise to the credit of, the [Swap][Cap] Collateral Account shall be (i) to pay any Net Swap Receipts or [Swap][Cap] Termination Payments owed to the Issuer by the [Swap][Cap] Counterparty in accordance with the terms of the Interest Rate [Swap][Cap] Agreement or (ii) to return collateral to the [Swap][Cap] Counterparty when and as required by the Interest Rate [Swap][Cap] Agreement.

 

(f)                                    The Issuer hereby grants to the Indenture Trustee for the benefit of the Noteholders and the [Swap][Cap] Counterparty a security interest in the [Swap][Cap] Collateral Account and all funds in the [Swap][Cap] Collateral Account and the proceeds thereof to secure the payment of interest on and principal of the Notes and the [Swap][Cap] Termination Payments to the [Swap][Cap] Counterparty under the Interest Rate [Swap][Cap] Agreement, and the Indenture Trustee shall have all of the rights of a secured party under the UCC with respect thereto.  If for any reason the [Swap][Cap] Collateral Account is no longer an Eligible Account, the Indenture Trustee shall promptly cause the [Swap][Cap] Collateral Account to be moved to another institution or otherwise changed so that the [Swap][Cap] Collateral Account becomes an Eligible Account.

 

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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 with respect to the Notes hereunder and the continuance of such failure for a period of four Business Days after the date on which a Servicing Officer discovers such failure or the Indenture Trustee provides written notice of such failure to the Servicer;

 

(b)                                 Failure on the Servicer’s part to observe or perform in any material respect any covenant or agreement in this Agreement (other than a covenant or agreement the breach of which is specifically addressed elsewhere in this Section) which failure shall (i) materially and adversely affect the rights of Noteholders and (ii) continue unremedied for a period of 60 days after the date on which written notice of such failure, requiring the same to be remedied, shall have been given (A) to the Servicer by the Owner Trustee or the Indenture Trustee or (B) to the Servicer and to the Indenture Trustee by the Holders of not less than 25% of the aggregate Outstanding Amount of the Notes;

 

(c)                                  An involuntary case under any applicable bankruptcy, insolvency or other similar law shall have been commenced in respect of the Servicer or Trust Depositor and shall not have been dismissed within 90 days, or a court having jurisdiction in the premises shall have entered a decree or order for relief in respect of either the Servicer or Trust Depositor in an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of either the Servicer or Trust Depositor, or for any substantial liquidation or winding up of their respective affairs;

 

(d)                                 The Servicer or Trust Depositor shall have commenced a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or shall have consented to the entry of an order for relief in an involuntary case under any such law, or shall have consented to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian or sequestrator (or other similar official) of the Servicer or Trust Depositor, as the case may be, or for any substantial part of their respective property, or shall have made any general assignment for the benefit of their respective creditors, or shall have failed to, or admitted in writing its inability to, pay its debts as they become due, or shall have taken any corporate action in furtherance of the foregoing;

 

(e)                                  Any representation, warranty or statement of the Servicer made in this Agreement or any certificate, report or other writing delivered pursuant hereto shall prove to have been 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 the Indenture Trustee, the circumstances or condition in respect of which such representation, warranty or statement was incorrect shall not have been eliminated or otherwise cured.

 

Section 8.02.                         Waiver of Event of Termination.  The Required Holders may, by written notice delivered to the parties hereto, waive any Event of Termination other than an Event of Termination described in Section 8.01(a).

 

Section 8.03.                         Servicing Transfer.  (a)  If an Event of Termination has occurred and is continuing and has not been waived pursuant to Section 8.02, (i) the Required Holders or (ii) the

 

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Indenture 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 hereunder (such termination being herein called a “Servicing 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”); 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 (i) 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 Servicing Transfer, the Successor Servicer shall also be entitled to receive the Servicing Fee for performing the obligations of the Servicer.

 

Section 8.04.                         Successor Servicer to Act; Appointment of Successor Servicer.  On or after a Servicing 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, to the extent provided in Section 8.06, 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 Servicing Transfer; provided, however, that (i) the Successor Servicer will not assume any obligations of the Servicer described in Section 8.08 and (ii) the Successor Servicer shall not be liable for any acts or omissions of the Servicer occurring prior to such Servicing Transfer or for any breach by the Servicer of any of its representations and warranties contained herein or in any related document or agreement. Notwithstanding the above, if the Successor Servicer is legally unable or unwilling to act as Servicer, the Indenture Trustee or the Required Holders may appoint a successor servicer (other than the original Servicer or an Affiliate of the original Servicer) to act as Servicer.  As compensation therefor, the successor servicer shall be entitled to receive reasonable compensation equal to the 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; provided, however, that the Indenture Trustee shall not be required to make payment for compensation or any other payment in order to effectuate 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 Noteholders.  (a)  Promptly following the occurrence of any Event of Termination, the Servicer shall give written notice thereof to the Trustees, the Trust Depositor[, the [Swap][Cap] Counterparty] and each Rating Agency at the addresses described in Section 11.04 hereof and to the Noteholders at their respective addresses appearing on the Note Register.

 

(b)                                 Within 10 days following any termination or appointment of a Successor Servicer pursuant to this Article Eight, the Issuer shall give written notice thereof to each Rating Agency and the

 

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Trust Depositor at the addresses described in Section 11.04 hereof, and to the Noteholders at their addresses appearing on the Note Register.

 

(c)                                  As provided in Section 8(f) of the Administration Agreement, the Successor Servicer shall become the “Administrator” thereunder.

 

Section 8.06.                         Effect of Transfer.  (a)  After a Servicing 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 8.04 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 Servicing Transfer shall not affect the rights and duties of the parties hereunder (including but not limited to the indemnities of the Servicer)  other than those relating to the management, administration, servicing, custody or collection of the Contracts.

 

Section 8.07.                         Database File.  The Servicer will provide the Successor Servicer with a data file (in a format reasonably acceptable to the Indenture Trustee and the Servicer) containing the database file for each Contract (i) as of the Cutoff Date, (ii) thereafter, as of the last day of the preceding Due Period on each Determination Date prior to a Servicing Transfer, and (iii) on and as of the Business Day before the actual commencement of servicing functions by the Successor Servicer following the occurrence of a Servicing Transfer.

 

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 applicable and deemed necessary by the Successor Servicer at such time): (i) imaged Contract 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 Contract 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

 

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Servicer, the Trust Depositor or the Trustees, or for any inaccuracy or omission in a notice or communication received by the Successor Servicer from any third party or (ii) which is due to or results from the invalidity, unenforceability of any Contract with applicable law or the breach or the inaccuracy of any representation or warranty made with respect to any Contract.

 

Section 8.10.                         Limitation of Liability of Servicer.  (a)  Neither the Servicer nor any of the directors, officers, employees or agents of the Servicer shall be under any liability to the Trust, the Owner Trustee, the Indenture Trustee or the Noteholders, except as provided under this Agreement, for any action taken or for refraining from the taking of any action pursuant to this Agreement or for errors in judgment; provided, however, that this provision shall not protect the Servicer or any such person against any liability that would otherwise be imposed by reason of willful misfeasance, bad faith or negligence in the performance of duties or by reason of reckless disregard of obligations and duties under this Agreement.  The Servicer and any director, officer, employee or agent of the Servicer may rely in good faith on the advice of counsel or on any document of any kind, prima facie properly executed and submitted by any Person respecting any matters arising under this Agreement.

 

(b)                                 Except as provided in this Agreement, the Servicer shall not be under any obligation to appear in, prosecute or defend any legal action that shall not be incidental to its duties to service the Contracts in accordance with this Agreement, and that in its opinion may cause it to incur any expense or liability; provided, however, that the Servicer may undertake any reasonable action that it may deem necessary or desirable in respect of the Transaction Documents and the rights and duties of the parties to the Transaction Documents and the interests of the Noteholders under the Indenture.  In such event, the legal expenses and costs of such action and any liability resulting therefrom shall be expenses, costs and liabilities of the Servicer and the Servicer will not be entitled to be reimbursed therefor.

 

Section 8.11.                         Merger or Consolidation of Servicer.  Any Person into which the Servicer may be merged or consolidated, or any corporation or other entity resulting from any merger conversion or consolidation to which the Servicer shall be a party, or any Person succeeding to all or substantially all of the servicing 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, consolidation, or succession to which it is a party to the Issuer, the Owner Trustee, the Indenture Trustee and the Rating Agencies.

 

Section 8.12.                         Servicer Not to Resign.  Subject to the provisions of Section 8.03, Servicer shall not resign from the obligations and duties hereby imposed on it as Servicer under this Agreement except upon determination that the performance of its duties under this Agreement shall no longer be permissible under applicable law.  Notice of any such determination permitting the resignation of Servicer shall be communicated to the Owner Trustee and the Indenture Trustee at the earliest practicable time (and, if such communication is not in writing, shall be confirmed in writing at the earliest practicable time) and any such determination shall be evidenced by an Opinion of Counsel to such effect delivered to the Owner Trustee and the Indenture Trustee concurrently with or promptly after such notice. No such resignation shall become effective until a successor shall have assumed the responsibilities and rights of the predecessor Servicer in accordance with Section 8.04.

 

Section 8.13.                         Appointment of Subservicer.  So long as Harley-Davidson Credit Corp. acts as the Servicer, the Servicer may at any time without notice or consent perform specific duties as servicer under this Agreement through subcontractors; provided, however, that, in each case, no such delegation or subcontracting shall relieve the Servicer of its responsibilities with respect to such duties, as to which the Servicer shall remain primarily responsible with respect thereto.

 

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ARTICLE NINE

 

REPORTS

 

Section 9.01.                         Monthly Reports.  No later than 10:00 a.m., Chicago, Illinois time, two Business Days prior to each Distribution Date, the Servicer shall deliver to the Trustees and each Rating Agency a Monthly Report.

 

Section 9.02.                         Officer’s Certificate.  Each Monthly Report delivered pursuant to Section 9.01 shall be accompanied by a certificate of a Servicing Officer substantially in the form of Exhibit D, certifying the accuracy of the Monthly Report and that no Event of Termination or event that with notice or lapse of time or both would become an Event of Termination has occurred, or if such event has occurred and is continuing, specifying the event and its status.

 

Section 9.03.                         Other Data.  In addition, the Trust Depositor and the Servicer shall, upon the request of the Trustees or a Rating Agency, furnish the Trustees, or such Rating Agency, as the case may be, such underlying data as may be reasonably requested.

 

Section 9.04.                         Report on Assessment of Compliance with Servicing Criteria and Attestation; Annual Officer’s Certificate.

 

(a)  The Servicer will:

 

(i)                                     deliver to the Indenture Trustee and each Rating Agency within 90 days after the end of each calendar year a report on its assessment of compliance with the servicing criteria applicable to it during the preceding calendar year, including disclosure of any material instance of non-compliance identified by the Servicer, as required by Rule 13a-18 and 15d-18 of the Exchange Act and Item 1122 of Regulation AB under the Securities Act;

 

(ii)                                  cause a firm of registered public accountants that is qualified and independent within the meaning of Rule 2-01 of Regulation S-X under the Securities Act to deliver to the Indenture Trustee and each Rating Agency within 90 days after the end of each calendar year an attestation report that satisfies the requirements of Rule 13a-18 or Rule 15d-18 under the Exchange Act and Item 1122 of Regulation AB, as applicable, on the Servicer’s assessment of compliance with servicing criteria with respect to the prior calendar year; and

 

(iii)                               deliver to the Indenture Trustee and each Rating Agency within 90 days after the end of each calendar year, an Officer’s Certificate to the effect that (i) a review of the Servicer’s activities during the immediately preceding calendar year (or, in the case of the first certificate, since the Closing Date) and of its performance under this Agreement has been made under the supervision of the officer signing such certificate and (ii) to the best of such officer’s knowledge, based on such review, the Servicer has fulfilled in all material respects all of its obligations under this Agreement throughout such calendar year (or applicable portion of such calendar year), or, if there has been a failure to fulfill any such obligation in any material respect, specifying each such failure known to such officer and the nature and status of such failure.

 

(b)                                 If the Trust is not required to file periodic reports under the Exchange Act, or otherwise required by law to file the reports described in clause (a) above, such reports may be delivered on or before April 30 of each calendar year.  A copy of such reports may be obtained by any Noteholder by a request in writing to the Indenture Trustee.

 

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Section 9.05.                         Monthly Reports to Noteholders.  (a)  On or before two Business Days prior to each Distribution Date, the Servicer shall prepare and, concurrently with each distribution pursuant to Article Seven, deliver to the Indenture Trustee, in its capacity as Note Registrar and Paying Agent, to forward or otherwise make available via internet to each Noteholder [and the [Swap][Cap] Counterparty], a statement as of the related Distribution Date substantially in the form of Exhibit I hereto (the “Monthly Report”) setting forth at least the following information:

 

(i)                                     the amount of Noteholders’ principal distribution;

 

(ii)                                  the amount of Noteholders’ 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 on such Distribution Date and the change in such amount with respect to the immediately preceding Distribution Date;

 

(v)                                                         the Note Pool Factor for each Class of Notes as of such Distribution Date;

 

(vi)                                                      the amount of the distributions described in (i) or (ii) above payable pursuant to a claim on the Reserve Fund or from any other source not constituting Available Monies and the amount remaining in the Reserve Fund after giving effect to all deposits and withdrawals from the Reserve Fund on such Distribution Date;

 

(vii)                                                   LIBOR for the related Interest Period and the interest rate on each Class of Floating Rate Notes;

 

(viii)                                                the remaining Outstanding Amount of each Class of Notes after giving effect to the distribution of principal to each Class of Notes to be made on such Distribution Date;

 

(ix)                                                      [the amount of any Net [Swap][Cap] Payments or Net Swap Receipts;]

 

(x)                                                         [the amount of any unpaid Senior [Swap][Cap] Termination Payment and Subordinated [Swap][Cap] Termination Payment;]

 

(xi)                                                      the number and aggregate Principal Balance of Contracts delinquent 30-59 days, 60-89 days, 90-119 days and 120 or more days, assuming 30-day months, computed as of the end of the related Due Period;

 

(xii)                                                   the number and aggregate Principal Balance of Contracts that became Liquidated Contracts during the related Due Period, the Net Liquidation Proceeds for such Due Period and the Net Liquidation Losses as of such Distribution Date;

 

(xiii)                                                [Reserved];

 

(xiv)                                               the number of Contracts and the aggregate Principal Balance of such Contracts, as of the first day of the related Due Period and as of the last day of the related Due Period (after giving effect to payments received during such Due Period);

 

(xv)                                                  the aggregate Principal Balance and number of Contracts that were reacquired by the Seller pursuant to the Transfer and Sale Agreement during the related Due

 

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Period, identifying the Purchase Price for such Contracts;

 

(xvi)                                               the aggregate Principal Balance and number of Contracts that were purchased by the Servicer pursuant to this Agreement during the related Due Period, identifying the Purchase Price for such Contracts;

 

(xvii)                                            the amount of Advances made by the Servicer in respect of the related Contracts and such Distribution Date and the amount, if any, of unreimbursed Advances in respect of prior Distribution Dates; and

 

(xviii)                                         such other customary factual information as is available to the Servicer as the Servicer deems necessary and can reasonably obtain from its existing data base to enable the Noteholders and the Certificateholder[s] to prepare their tax returns.

 

(b)                                 Within the prescribed period of time for tax reporting purposes after the end of each calendar year, the Servicer shall prepare and the Note Registrar shall mail to each Noteholder of record at any time during such year a report as to the aggregate amounts reported pursuant to subsections (a)(i), (ii), (iv) and (v) of this Section, attributable to such Noteholder.

 

(c)                                  The Indenture Trustee shall send the Monthly Report to (i) the initial Clearing Agency under the Note Depository Agreement or any qualified successor appointed pursuant to Section 2.11 of the Indenture and (ii) each Securityholder or party to this Agreement.

 

Section 9.06.                         Regulation AB.

 

The parties hereto acknowledge that certain amendments to Regulation AB will be effective November 24, 2015 and that requirements of Regulation AB and interpretations thereof may further change over time, whether due to interpretive guidance provided by the Securities and Exchange Commission or its staff, consensus among participants in the asset backed securities markets, advice of counsel, or otherwise, and agree to comply with reasonable requests (which are practical from a timing perspective) made by the Trust Depositor or the Servicer in good faith for delivery of information under these provisions on the basis of evolving interpretations of Regulation AB.  In connection therewith, the Owner Trustee and the Indenture Trustee shall reasonably cooperate with the Servicer in connection with the satisfaction of the Trust Depositor’s and the Trust’s reporting requirements under the Exchange Act, subject to reimbursement of expenses in accordance with the Transaction Documents.

 

Section 9.07.                         Information to Be Provided by the Indenture Trustee.

 

(a)                                 As soon as available but no later than March 15 of each calendar year for so long as the Issuer is required to report under the Exchange Act, commencing in [        ], the Indenture Trustee shall:

 

(i)                                     deliver to the Servicer a report regarding the Indenture Trustee’s assessment of compliance with the Servicing Criteria during the immediately preceding calendar year, as required under paragraph (b) of Rule 13a-18, Rule 15d-18 of the Exchange Act and Item 1122 of Regulation AB. Such report shall be signed by an authorized officer of the Indenture Trustee, and shall address each of the Servicing Criteria specified in Exhibit E or such criteria as mutually agreed upon by the Servicer and the Indenture Trustee;

 

(ii)                                  deliver to the Servicer a report of a registered public accounting firm that attests to, and reports on, the assessment of compliance made by the Indenture Trustee and delivered

 

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pursuant to the preceding paragraph. Such attestation shall be in accordance with Rules 1-02(a)(3) and 2-02(g) of Regulation S-X under the Securities Act and the Exchange Act; and

 

(iii)                               deliver to the Servicer and any other Person that will be responsible for signing the certification required by Rules 13a-14(d) and 15d-14(d) under the Exchange Act (pursuant to Section 302 of the Sarbanes-Oxley Act of 2002) (a “Sarbanes Certification”) on behalf of the Issuer or the Servicer a certification substantially in the form attached hereto as Exhibit F in such form as mutually agreed upon by the Servicer and the Indenture Trustee.

 

The Indenture Trustee acknowledges that the parties identified in clause (iii) above may rely on the certification provided by the Indenture Trustee pursuant to such clause in signing a Sarbanes Certification and filing such with the Securities and Exchange Commission.

 

Section 9.08.                         Exchange Act Reporting.

 

(a)                                 Form 10-D Filings.  So long as the Issuer is required to report under the Exchange Act, no later than each Distribution Date, each of the Indenture Trustee[, the Underlying Trustee] and the Owner Trustee shall notify the Servicer of any Form 10-D Disclosure Item with respect to such Person (to the extent there is any Form 10-D Disclosure Item), together with a description of any such Form 10-D Disclosure Item in form and substance reasonably acceptable to the Servicer.

 

(b)                                 Form 8-K Filings.  So long as the Issuer is required to report under the Exchange Act, each of the Indenture Trustee[, the Underlying Trustee] and the Owner Trustee shall promptly notify the Servicer, but in no event later than one (1) Business Day after its occurrence, of any Reportable Event of which such Person (or in the case of the Owner Trustee[, the Underlying Trustee] and the Indenture Trustee, a Responsible Officer of such Person) has actual knowledge.  Each Person shall have actual knowledge of any such event only to the extent that it relates to such Person or any action or failure to act by such Person.

 

(c)                                  Form 10-K Filings.  So long as the Issuer is required to report under the Exchange Act, no later than March 15 of each year, commencing in [     ], the Indenture Trustee[, the Underlying Trustee] and the Owner Trustee shall notify the Servicer of any Form 10-K Disclosure Item known to any Responsible Officer thereof or relating to the Indenture Trustee[, the Underlying Trustee] or Owner Trustee, as applicable, together with a description of any such Form 10-K Disclosure Item in form and substance reasonably acceptable to the Servicer.

 

(d)                                 Form ABS-15G Filings.  So long as any Note remains outstanding, no later than 30 days after the end of each calendar quarter, (1) the Indenture Trustee shall notify the Servicer of any Noteholder requests for a repurchase of contracts for breach of representation of warranty, as described in Section 7.08(a) herein, and (2) the Servicer shall notify the Trust Depositor of any notifications under subsection (1) of this paragraph and of any fulfilled and unfulfilled requests by the Indenture Trustee for the repurchase of contracts for breach of representation of warranty, as described in Section 7.08(a) herein.  Promptly upon reasonable request by the Seller or Trust Depositor, the Indenture Trustee shall facilitate compliance by the Seller or the Trust Depositor, as the case may be, with Rule 15Ga-1 under the Exchange Act and Items 1104(e) and 1121(c) of Regulation AB.  In no event shall the Indenture Trustee be deemed to be a “securitizer” as defined in Section 15G(a) of the Exchange Act with respect to the transactions contemplated by the Transaction Documents, nor shall it have any responsibility for making any filing to be made by a securitizer under the Exchange Act or Regulation AB with respect to the transactions contemplated by the Transaction Documents.

 

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ARTICLE TEN
 TERMINATION

 

Section 10.01.                  Sale of Trust Assets.

 

(a)                                 [Reserved].

 

(b)                                 As described in Article Nine of the Trust Agreement, notice of any termination of the Trust shall be given by the Servicer to the Owner Trustee and the Indenture Trustee as soon as practicable after the Servicer has received notice thereof.

 

(c)                                  Following the satisfaction and discharge of the Indenture and the payment in full of the principal of and interest on the Notes, the Certificateholder[s] 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.

 

ARTICLE ELEVEN

 

MISCELLANEOUS

 

Section 11.01.                  Amendment.

 

(a)                                 This Agreement may be amended by the Trust Depositor, the Servicer, the Indenture Trustee and the Owner Trustee on behalf of the Issuer, collectively, without the consent of any Securityholders [or [Swap][Cap] Counterparty], (i) to cure any ambiguity, to correct or supplement any provisions in this Agreement which are inconsistent with the provisions herein or in the Prospectus, 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 or the Prospectus, and (ii) to add or provide any credit enhancement for any Class of Notes; provided, however that any such action described in clause (i) above shall not, as evidenced by an Opinion of Counsel, adversely affect in any material respect the interests of any Securityholder [or [Swap][Cap] Counterparty] that has not consented to such action.

 

(b)                                 This Agreement may also be amended from time to time by the Trust Depositor, the Servicer, the Indenture Trustee and the Owner Trustee on behalf of the Issuer, with the consent of the Required Holders [and, to the extent the [Swap][Cap] Counterparty is materially and adversely affected thereby, the [Swap][Cap] Counterparty (which consent shall not be unreasonably withheld or delayed)], 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[, the [Swap][Cap] Counterparty] or the Certificateholder[s]; provided, however, that no such amendment shall, without the consent of the Holders of all Notes of the relevant Classes then outstanding, (i)(A) reduce in any manner the amount of, or accelerate or delay the timing of, collections of payments on any Contracts or distributions that shall be required to be made on any Note, or (B) change any Interest Rate, (ii) adversely affect the priority of payment of principal or interest to the Noteholders of any Class, or (iii) reduce the aforesaid percentage of the Outstanding Amount of the Notes, the Holders of which are required to consent to any such amendment, or any waiver pursuant to this Agreement.

 

(c)                                  Prior to the execution of any amendment or consent pursuant to this Section 11.01, the Issuer shall furnish written notification of the substance of such amendment or consent, together with a copy thereof, to each Rating Agency [and the [Swap][Cap] Counterparty].

 

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(d)                                 Promptly after the execution of any such amendment or consent, the Indenture Trustee shall furnish written notification of the substance of such amendment or consent to each Noteholder [and the [Swap][Cap] Counterparty].  It shall not be necessary for the consent of Noteholders or Certificateholder[s] 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 or Certificateholder[s] [and, if applicable, the [Swap][Cap] Counterparty] of the execution thereof shall be subject to such reasonable requirements as 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.

 

Section 11.02.                  Protection of Title to Trust.

 

(a)                                 The Servicer shall file such financing statements and cause to be filed such continuation statements, all in such manner and in such places as may be required by law fully to preserve, maintain and protect the interests of the Issuer, the Securityholders[, the [Swap][Cap] Counterparty] and the Indenture Trustee in the Contracts and in the proceeds thereof.  The Servicer shall deliver (or cause to be delivered) to the Owner Trustee and the Indenture Trustee file-stamped copies of, or filing receipts for, any document filed as provided above, as soon as available following such filing.  The Trust Depositor authorizes the Trust to file financing statements describing the Trust Corpus as collateral.

 

(b)                                 Neither the Seller, the Trust Depositor nor the Servicer shall change its name, identity or corporate structure in any manner that would, could or might make any financing statement or continuation statement filed in accordance with Section 4.02 seriously misleading within the meaning of § 9-507 of the UCC, unless it shall have given the Issuer, the Owner Trustee and the Indenture Trustee at least 30 days’ prior written notice thereof and shall have promptly filed appropriate amendments to all previously filed financing statements.

 

(c)                                  The Seller and the Trust Depositor shall give the Issuer, the Owner Trustee and the Indenture Trustee at least 30 days’ prior written notice of any change in its state of incorporation.  The Servicer shall at all times maintain each office from which it shall service Contracts, and its principal executive office, within the United States.

 

(d)                                 The Servicer shall maintain or cause to be maintained accounts and records as to each Contract accurately and in sufficient detail to permit (i) the reader thereof to know at any time the status of such Contract, including payments and recoveries made and payments owing (and the nature of each) and (ii) reconciliation between payments or recoveries on (or with respect to) each Contract and the amounts from time to time deposited in or credited to the Collection Account in respect of each Contract.

 

(e)                                  The Servicer shall maintain or cause to be maintained its computer systems so that, from and after the time of transfer under this Agreement of the Contracts, the Servicer’s master computer records (including any backup archives) that shall refer to a Contract indicate clearly the interest of the Issuer and the Indenture Trustee in such Contract and that such Contract is owned by the Issuer and has been pledged to the Indenture Trustee.  Indication of the Issuer’s ownership of and the Indenture Trustee’s interest in a Contract shall be deleted from or modified on the Servicer’s computer systems

 

57











 

when, and only when, the related Contract shall have been paid in full or reacquired or, in the case of the Indenture Trustee’s interest, when the Indenture shall have been discharged.

 

(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 promissory notes and security agreements or retail installment sale contracts to any prospective purchaser, lender or other transferee, the Servicer shall give or cause to be given to such prospective purchaser, lender or other transferee computer tapes, records or print-outs (including any restored from back-up archives) that, if they shall refer in any manner whatsoever to any Contract, shall indicate clearly that such Contract has been transferred and is owned by the Issuer and has been pledged to the Indenture Trustee.

 

(g)                                  The Servicer shall permit the Owner Trustee and its agents, at any time during normal business hours, to inspect, audit and make copies of and abstracts from the Servicer’s records regarding any Contract.

 

(h)                                 Upon request, the Servicer shall furnish to the Owner Trustee and the Indenture Trustee, within five Business Days, a list of all Contracts then held as part of the Trust Estate, together with a reconciliation of such list to the List of Contracts and to the most recent Monthly Report furnished before such request indicating any removal of Contracts from the Trust Corpus.

 

(i)                                     The Servicer shall deliver to the Owner Trustee, the Indenture Trustee and each Rating Agency, promptly after the execution and delivery of this Agreement and of each amendment hereto, an Opinion of Counsel either (A) stating that, in the opinion of such counsel, all financing statements and continuation statements have been executed and filed that are necessary fully to preserve and protect the interest of the Owner Trustee and the Indenture Trustee and reciting the details of such 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.

 

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. mail, 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) upon receipt when sent through 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 or electronic mail 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.
 222 West Adams Street, Suite 2000
 Chicago, Illinois 60606
 Attention:  James Darrell Thomas, Treasurer
 Telecopier No.: (312) 368-4372

 

(ii)                                  If to the Trust Depositor:

 

Harley-Davidson Customer Funding Corp.

 

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3850 Arrowhead Drive
 Carson City, Nevada 89706
 Attention:  James Darrell Thomas, Treasurer
 Telecopier No.: (775) 886-3490

 

with a copy to:

 

Harley-Davidson Credit Corp.
 222 West Adams Street, Suite 2000
 Chicago, Illinois 60606
 Attention:  James Darrell Thomas, Treasurer
 Telecopier No.: (312) 368-4372

 

(iii)                               If to the Indenture Trustee:

 

[                                        ]

[                                        ]

Attention:  [                            ]

Telecopier No.:  [                            ]

 

(iv)                              If to the Owner Trustee:

 

[                                        ]

[                                        ]

Attention: [                            ]

Telecopier No.: [                            ]

 

[(v)                             If to the Underlying Trustee:

 

[                                        ]

[                                        ]

Attention: [                            ]

Telecopier No.: [                            ]

 

[(v)]                         If to [insert rating agency]:

 

[                                        ]

[                                        ]

Attention: [                            ]

Telecopier No.: [                            ]

Email: [                            ]

 

[(vi)]                      If to [insert rating agency]:

 

[                                        ]

 

59











 

[                                        ]

Attention: [                            ]

Telecopier No.: [                            ]

Email: [                            ]

 

[(vii)]                   If to Asset Representation Reviewer:

 

[                                        ]

[                                        ]

Attention: [                            ]

Telecopier No.: [                            ]

Email: [                            ]

 

[(viii)]                If to the Underwriters:

 

At the address set forth in the Underwriting Agreement

 

[(ix)                          If to the [Swap][Cap] Counterparty:

 

At the address set forth in the Interest Rate [Swap][Cap] Agreement]

 

Each party hereto may, by notice given in accordance herewith to each of the other parties hereto, designate any further or different address to which subsequent notices shall be sent.

 

Section 11.05.                  Severability of Provisions.  If one or more of the covenants, agreements, provisions or terms of this Agreement shall be for any reason whatsoever held invalid, then such covenants, agreements, provisions or terms shall be deemed severable from the remaining covenants, agreements, provisions or terms of this Agreement and shall in no way affect the validity or enforceability of the other provisions of this Agreement or of the Notes or the rights of the Holders thereof.

 

Section 11.06.                  Assignment.  Notwithstanding anything to the contrary contained herein, but except as provided in Sections 6.03, 8.03, 8.11, and 8.12, this Agreement may not be assigned by the Trust Depositor or the Servicer without the prior written consent of Noteholders aggregating not less than 66-2/3% of each Class.

 

Section 11.07.                  Third Party Beneficiaries.  [The [Swap][Cap] Counterparty shall be a third-party beneficiary to the provisions of this Agreement to the extent of any rights specified in this Agreement.]  Except as otherwise specifically provided herein, no [other] third party shall be deemed a third party beneficiary of this Agreement.  Without limiting the generality of the foregoing, 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.

 

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Section 11.10.                  No Bankruptcy Petition; Disclaimer and Subordination.  (a) Each of the Seller, the Indenture Trustee, the Servicer and each Holder (by acceptance of the applicable Securities) covenants and agrees that, prior to the date that is one year and one day after the payment in full of all amounts owing in respect of all outstanding Securities, it will not institute against the Trust Depositor, or the Trust, or join any other Person in instituting against the Trust Depositor or the Trust, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or other similar proceedings under the laws of the United States or any state of the United States.  This Section 11.10 will survive the termination of this Agreement.

 

(b)                                 The Trust acknowledges and agrees that each Certificate represents a beneficial interest in the Trust and Trust Corpus only and the Securities do not represent an interest in any assets of the Trust Depositor (including by virtue of any deficiency claim in respect of obligations not paid or otherwise satisfied from the Trust Corpus and proceeds thereof).  In furtherance of and not in derogation of the foregoing, to the extent that the Trust Depositor enters into other securitization transactions, the Trust acknowledges and agrees that it shall have no right, title or interest in or to any assets (or interests therein), other than the Contracts and other assets included in the Trust Estate, conveyed or purported to be conveyed (whether by way of a sale, capital contribution or by the granting of a Lien) by the Trust Depositor to any Person other than the Trust (the “Other Assets”).

 

To the extent that notwithstanding the agreements contained in this Section, the Trust or any Securityholder, either (i) asserts an interest in or claim to, or benefit from any Other Assets, whether asserted against or through the Trust Depositor or any other Person owned by the Trust Depositor, or (ii) is deemed to have any interest, claim or benefit in or from any Other Assets, whether by operation of law, legal process, pursuant to applicable provisions of insolvency laws or otherwise (including without limitation pursuant to Section 1111(b) of the federal Bankruptcy Code, as amended) and whether deemed asserted against or through the Trust Depositor or any other Person owned by the Trust Depositor, then the Trust and each Securityholder by accepting a Note or Certificate further acknowledges and agrees that any such interest, claim or benefit in or from the Other Assets is and shall be expressly subordinated to the indefeasible payment in full of all obligations and liabilities of the Trust Depositor which, under the terms of the documents relating to the securitization of the Other Assets, are entitled to be paid from, entitled to the benefits of, or otherwise secured by such Other Assets (whether or not any such entitlement or security interest is legally perfected or otherwise entitled to a priority of distribution under applicable law, including insolvency laws, and whether asserted against the Trust Depositor or any other Person owned by the Trust Depositor) including, without limitation, the payment of post-petition interest on such other obligations and liabilities.  This subordination agreement shall be deemed a subordination agreement within the meaning of Section 510(a) of the Bankruptcy Code.  Each Securityholder is deemed to have acknowledged and agreed that no adequate remedy at law exists for a breach of this Section 11.10 and that the terms and provisions of this Section 11.10 may be enforced by an action for specific performance.

 

(c)                                  The provisions of this Section 11.10 shall be for the third party benefit of those expressly entitled to rely thereon and shall survive the termination of this Agreement.

 

Section 11.11.                  Limitation of Liability of Owner Trustee and Indenture Trustee.

 

(a)                                 Notwithstanding anything contained herein to the contrary, this Agreement has been executed by [                        ], 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

 

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Owner Trustee shall be subject to, and entitled to the benefits of, the terms and provisions of Articles Six, Seven and Eight of the Trust Agreement.

 

(b)                                 Notwithstanding anything contained herein to the contrary, this Agreement has been executed by [                    ], 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.

 

[(c)                              Notwithstanding anything contained herein to the contrary, this Agreement has been executed by [                    ], not in its individual capacity but solely as Underlying 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.

 

[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:
    	
 
    
	
 
    	
 
    	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
HARLEY-DAVIDSON CREDIT   CORP., as Servicer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
Printed Name:
    	
 
    
	
 
    	
 
    	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
[HARLEY-DAVIDSON  MOTORCYCLE  GRANTOR  TRUST  [    ]
    
	
 
    	
 
    
	
 
    	
 
    	
By:
    	
[                                          ],   not in its individual capacity but solely as Underlying Trustee on behalf of   the Underlying Trust
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
Printed Name:
    	
 
    
	
 
    	
 
    	
 
    	
Title:
    	
]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
[                                                                                  ], not in its individual capacity but solely as Indenture Trustee
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
Printed Name:
    	
 
    
	
 
    	
 
    	
 
    	
Title:
    	
 
    
						


 

Signature Page to Sale & Servicing Agreement

 












 

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 (“HDCC”), [               ], as Indenture Trustee[,Harley-Davidson Motorcycle Grantor Trust [          ] (the “Underlying Trust”),] 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 right, title and interest of the Trust Depositor in and to the Contracts listed on the List of Contracts delivered on the Closing Date (including, without limitation, all security interests created thereunder), (ii) all rights of the Trust Depositor to payments which are collected pursuant to the Contracts after the Cutoff Date, including any liquidation proceeds therefrom, (iii) all rights of the Trust Depositor under any theft, physical damage, credit life, disability or other individual insurance policy (and rights under a “forced placed” policy, if any), any debt insurance policy or any debt cancellation agreement relating to any such Contract, an Obligor or a Motorcycle securing such Contract, (iv) all security interests in each such Motorcycle, (v) all documents contained in the related Contract Files, (vi) all rights (but not the obligations) of the Trust Depositor under any related motorcycle dealer agreements between dealers (i.e., the originators of certain Contracts) and HDCC, (vii) all rights of the Trust Depositor in the Lockbox, the Lockbox Account and related Lockbox Agreement to the extent they relate to such Contracts (but excluding payments received on or before the Cutoff Date), (viii) 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, (ix) 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), (x) all rights of the Trust Depositor to certain rebates of premiums and other amounts relating to insurance policies, debt cancellation agreements, extended service contracts or other repair agreements and other items financed under such Contracts, and (xi) 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 Three 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:
    	
 
    
	
 
    	
Title:
    	
 
    


 

A-1











 

Exhibit B

 

[Form of Closing Certificate of Trust Depositor]

 

Harley-Davidson Customer Funding Corp.

 

Officer’s Certificate

 

The undersigned certifies that [s]he is [           ] 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 May 12, 2000, and no such amendment has been authorized by the Board of Directors or shareholders of the Trust Depositor.

 

(3)           Attached hereto as Exhibit II is a Certificate of the Secretary of State of the State of Nevada dated as of a recent date stating that the Trust Depositor is duly incorporated under the laws of the State of Nevada and is in good standing.

 

(4)           Attached hereto as Exhibit III is a true and correct copy of the By-laws of the Trust Depositor, which are in full force and effect on the date hereof.

 

(5)           Attached hereto as Exhibit IV is a true and correct copy of resolutions adopted pursuant to the unanimous written consent of the Board of Directors of the Trust Depositor relating to the execution, delivery and performance of the Agreement, the Transfer and Sale Agreement, the Trust Agreement, the Administration Agreement, [the Underlying Trust Agreement] and the Underwriting Agreement (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 Preliminary Prospectus (as defined in the Underwriting Agreement) or the Prospectus and except as set forth therein.

 

B-1











 

(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 my 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 of the Certificate[s].

 

(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 [Underlying] Trust, nor the concurrent pledge of the Collateral by the Trust to the Indenture Trustee nor the issuance and sale of the Notes, nor the execution and delivery of the Program Agreements, nor the consummation of any other of the transactions contemplated therein, will violate or conflict with any agreement or instrument to which 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-2











 

In Witness Whereof, I have affixed my signature hereto this     day of              .

 

	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
Printed Name:
    	
 
    
	
 
    	
 
    	
 
    	
Title:
    	
 
    


 











 

Exhibit C

 

[Form of Closing Certificate of Servicer/Seller]

 

HARLEY-DAVIDSON CREDIT CORP.

 

Officer’s Certificate

 

The undersigned certifies that [s]he is [             ] 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”), and as Seller 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 August 9, 1999, 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 as of a recent date, 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 as of August 9, 1999 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 and the Administration Agreement.  Said resolutions have not been amended, modified, annulled or revoked, and are on the date hereof in full force and effect and are the only resolutions relating to these matters which have been adopted by the Board of Directors.

 

(6)           No event with respect to Harley-Davidson Credit has occurred and is continuing which would constitute an Event of Termination or an event that, with notice or the passage of time, would constitute an Event of Termination under the Sale and Servicing Agreement.  To the best of my knowledge after reasonable investigation, there has been no material adverse change in the condition, financial or otherwise, or the earnings, business affairs or business prospects of Harley-Davidson Credit, whether or not arising in the ordinary course of business, since the

 

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respective dates as of which information is given in the Preliminary Prospectus (as defined in the Underwriting Agreement) or the Prospectus and except as set forth therein.

 

(7)           All federal, state and local taxes of Harley-Davidson Credit due and owing as of the date hereof have been paid.

 

(8)           All representations and warranties of Harley-Davidson Credit contained in the Transfer and Sale Agreement, the Sale and Servicing Agreement, the Underwriting Agreement and the Administration Agreement (collectively, the “Program Agreements”) or in any document, certificate or financial or other statement delivered in connection therewith are true and correct as of the date hereof.

 

(9)           There is no action, investigation or proceeding pending or, to my knowledge, threatened against Harley-Davidson Credit before any court, administrative agency or other tribunal (a) asserting the invalidity of any Program Agreement to which Harley-Davidson Credit is a party; or (b) which is likely materially and adversely to affect Harley-Davidson Credit’s performance of its obligations under, or the validity or enforceability of, the Program Agreements.

 

(10)         No consent, approval, authorization or order of, and no notice to or filing with, any governmental agency or body or state or federal court is required to be obtained by Harley-Davidson Credit for Harley-Davidson Credit’s consummation of the transactions contemplated by the Program Agreements, except such as have been obtained or made and such as may be required under the blue sky laws of any jurisdiction in connection with the issuance and sale of the Notes or the issuance of the Certificate[s].

 

(11)         Neither Harley-Davidson Credit’s transfer and assignment of the Contract Assets to CFC, CFC’s concurrent transfer and assignment of the Trust Corpus to the Trust, nor the concurrent pledge by the Trust of the Collateral to the [Indenture Trustee][Underlying Trustee], nor the issuance and sale of the Notes, the issuance of the Certificate[s] or the entering into of the Program Agreements, nor the consummation of any other of the transactions contemplated therein, will violate or conflict with any agreement or instrument to which Harley-Davidson Credit is a party or by which it is otherwise bound.

 

(12)         In connection with the transfers of Contracts and related assets contemplated in the Transfer and Sale Agreement, (a) Harley-Davidson Credit has not made such transfer with actual intent to hinder, delay or defraud any creditor of Harley-Davidson Credit, and (b) Harley-Davidson Credit has not received less than a reasonably equivalent value in exchange for such transfer, is not on the date hereof insolvent (nor will Harley-Davidson Credit become insolvent as a result thereof), is not engaged (or about to engage) in a business or transaction for which it has unreasonably small capital, and does not intend to incur or believe it will incur debts beyond its ability to pay when matured.

 

(13)         The sole shareholder of Harley-Davidson Credit is Harley-Davidson Financial Services, Inc., a Delaware corporation, which has its chief executive office and only office in Chicago, Illinois, and has no other offices in any other state.

 

(14)         Each of the agreements and conditions of Harley-Davidson Credit to be performed or satisfied on or before the Closing Date under the Program Agreements has been performed or satisfied in all material respects.

 

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(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.

 

(16)         Harley-Davidson Credit has not authorized the filing of 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.

 

*   *   *   *   *   *

 

In Witness Whereof, I have affixed my signature hereto this     day of [     ], 20[  ]

 

	
 
    	
By:
    	
 
    
	
 
    	
Printed Name:
    	
 
    
	
 
    	
Title:
    	
 
    


 

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Exhibit D

 

 

[Form of Servicing Officer Certification as to Monthly Report]

 

HARLEY-DAVIDSON CREDIT CORP.

 

CERTIFICATE OF SERVICING OFFICER

 

The undersigned certifies that [s]he is the [            ] of Harley-Davidson Credit Corp., a Nevada corporation, (the “Servicer”), and  that as such he is duly authorized to execute and deliver this certificate on behalf of the Servicer pursuant to Section 9.02 of the Sale and Servicing Agreement (the “Agreement”) dated as of [          ] by and among Harley-Davidson Customer Funding Corp., as Trust Depositor, the Servicer and [          ], as Trustee of 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 Monthly Report for the period from [        ], 20[  ] to [        ], 20[  ] attached to this certificate is complete and accurate in accordance with the requirements of Sections 9.01 and 9.02 of the Agreement; and

 

2.  As of the date hereof, no Event of Termination event that with notice or lapse of time or both would become an Event of Termination has occurred.

 

IN WITNESS WHEREOF, I have affixed hereunto my signature this [  ] day of [    ], 20[  ].

 

	
 
    	
HARLEY-DAVIDSON CREDIT CORP.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    


 

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Exhibit E

 

SERVICING CRITERIA TO BE ADDRESSED IN

INDENTURE TRUSTEE’S ASSESSMENT OF COMPLIANCE

 

The assessment of compliance to be delivered by the Indenture Trustee shall address, at a minimum, the criteria identified as below as “Applicable Servicing Criteria” (1):

 

	
 
    	
 
    	
Servicing Criteria
    	
 
    	
Applicable
   Servicing
    
	
Reference
    	
 
    	
Criteria
    	
 
    	
Criteria
    
	
 
    	
 
    	
General   Servicing Considerations
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
1122(d)(1)(i)
    	
 
    	
Policies and procedures are instituted to monitor   any performance or other triggers and events of default in accordance with   the transaction agreements.
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
1122(d)(1)(ii)
    	
 
    	
If any material servicing activities are outsourced   to third parties, policies and procedures are instituted to monitor the third   party’s performance and compliance with such servicing activities.
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
1122(d)(1)(iii)
    	
 
    	
Any requirements in the transaction agreements to   maintain a back-up servicer for the pool assets are maintained.
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
1122(d)(1)(iv)
    	
 
    	
A fidelity bond and errors and omissions policy is   in effect on the party participating in the servicing function throughout the   reporting period in the amount of coverage required by and otherwise in   accordance with the terms of the transaction agreements.
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
1122(d)(1)(v)
    	
 
    	
Aggregation of information, as applicable, is   mathematically accurate and the information conveyed accurately reflects the   information.
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Cash   Collection and Administration
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
1122(d)(2)(i)
    	
 
    	
Payments on pool assets are deposited into the   appropriate custodial bank accounts and related bank clearing accounts no   more than two business days following receipt, or such other number of days   specified in the transaction agreements.
    	
 
    	
ü(2)
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
1122(d)(2)(ii)
    	
 
    	
Disbursements made via wire transfer on behalf of an   obligor or to an investor are made only by authorized personnel.
    	
 
    	
ü
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
1122(d)(2)(iii)
    	
 
    	
Advances of funds or guarantees regarding   collections, cash flows or distributions, and any interest or other fees   charged for such advances, are made, reviewed and approved as specified in   the transaction agreements.
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
1122(d)(2)(iv)
    	
 
    	
The related accounts for the transaction, such as   cash reserve accounts or accounts established as a form of   overcollateralization, are separately maintained (e.g., with respect to   commingling of cash) as set forth in the transaction agreements.
    	
 
    	
ü
    


 




(1)                                 Each Assessment of compliance delivered by the Indenture Trustee shall be made only toward such portion(s) of servicing criteria applicable to the Indenture Trustee and not such other portion(s) applicable to other persons.

(2)                                 Solely with regard to deposits made by the Indenture Trustee.

 

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Servicing Criteria
    	
 
    	
Applicable
   Servicing
    
	
Reference
    	
 
    	
Criteria
    	
 
    	
Criteria
    
	
1122(d)(2)(v)
    	
 
    	
Each custodial account is maintained at a federally   insured depository institution as set forth in the transaction agreements.   For purposes of this criterion, “federally insured depository institution”   with respect to a foreign financial institution means a foreign financial   institution that meets the requirements of Rule 13k-1(b)(1) of the   Securities Exchange Act.
    	
 
    	
ü(3)
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
1122(d)(2)(vi)
    	
 
    	
Unissued checks are safeguarded so as to prevent   unauthorized access.
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
1122(d)(2)(vii)
    	
 
    	
Reconciliations are prepared on a monthly basis for   all asset-backed securities related bank accounts, including custodial   accounts and related bank clearing accounts. These reconciliations   (A) are mathematically accurate; (B) are prepared within 30   calendar days after the bank statement cutoff date, or such other number of   days specified in the transaction agreements; (C) are reviewed and   approved by someone other than the person who prepared the reconciliation;   and (D) contain explanations for reconciling items. These reconciling   items are resolved within 90 calendar days of their original identification,   or such other number of days specified in the transaction agreements.
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Investor   Remittances and Reporting
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
1122(d)(3)(i)
    	
 
    	
Reports to investors, including those to be filed   with the Commission, are maintained in accordance with the transaction   agreements and applicable Commission requirements. Specifically, such reports   (A) are prepared in accordance with timeframes and other terms set forth   in the transaction agreements; (B) provide information calculated in   accordance with the terms specified in the transaction agreements;   (C) are filed with the Commission as required by its rules and   regulations; and (D) agree with investors’ or the trustee’s records as   to the total unpaid principal balance and number of pool assets serviced by   the Servicer.
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
1122(d)(3)(ii)
    	
 
    	
Amounts due to investors are allocated and remitted   in accordance with timeframes, distribution priority and other terms set   forth in the transaction agreements.
    	
 
    	
ü
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
1122(d)(3)(iii)
    	
 
    	
Disbursements made to an investor are posted within   two business days to the Servicer’s investor records, or such other number of   days specified in the transaction agreements.
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
1122(d)(3)(iv)
    	
 
    	
Amounts remitted to investors per the investor   reports agree with cancelled checks, or other form of payment, or custodial   bank statements.
    	
 
    	
ü
    


 




(3)                                 Assessment to be given by Indenture Trustee shall be only with respect to Trust Accounts maintained by the Indenture Trustee under the Sale and Servicing Agreement

 

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Servicing Criteria
    	
 
    	
Applicable
   Servicing
    
	
Reference
    	
 
    	
Criteria
    	
 
    	
Criteria
    
	
 
    	
 
    	
Pool   Asset Administration
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
1122(d)(4)(i)
    	
 
    	
Collateral or security on pool assets is maintained   as required by the transaction agreements or related asset pool documents.
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
1122(d)(4)(ii)
    	
 
    	
Pool assets and related documents are safeguarded as   required by the transaction agreements
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
1122(d)(4)(iii)
    	
 
    	
Any additions, removals or substitutions to the   asset pool are made, reviewed and approved in accordance with any conditions   or requirements in the transaction agreements.
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
1122(d)(4)(iv)
    	
 
    	
Payments on pool assets, including any payoffs, made   in accordance with the related pool asset documents are posted to the   Servicer’s obligor records maintained no more than two business days after   receipt, or such other number of days specified in the transaction   agreements, and allocated to principal, interest or other items (e.g.,   escrow) in accordance with the related asset pool documents.
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
1122(d)(4)(v)
    	
 
    	
The Servicer’s records regarding the accounts and   the accounts agree with the Servicer’s records with respect to an obligor’s   unpaid principal balance.
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
1122(d)(4)(vi)
    	
 
    	
Changes with respect to the terms or status of an   obligor’s account (e.g., loan modifications or re-agings) are made, reviewed   and approved by authorized personnel in accordance with the transaction   agreements and related pool asset documents.
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
1122(d)(4)(vii)
    	
 
    	
Loss mitigation or recovery actions (e.g.,   forbearance plans, modifications and deeds in lieu of foreclosure,   foreclosures and repossessions, as applicable) are initiated, conducted and   concluded in accordance with the timeframes or other requirements established   by the transaction agreements.
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
1122(d)(4)(viii)
    	
 
    	
Records documenting collection efforts are   maintained during the period a pool asset is delinquent in accordance with   the transaction agreements. Such records are maintained on at least a monthly   basis, or such other period specified in the transaction agreements, and   describe the entity’s activities in monitoring delinquent pool assets   including, for example, phone calls, letters and payment rescheduling plans   in cases where delinquency is deemed temporary (e.g., illness or   unemployment).
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
1122(d)(4)(ix)
    	
 
    	
Adjustments to interest rates or rates of return for   pool assets with variable rates are computed based on the related pool asset   documents.
    	
 
    	
 
    


 

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Servicing Criteria
    	
 
    	
Applicable
   Servicing
    
	
Reference
    	
 
    	
Criteria
    	
 
    	
Criteria
    
	
1122(d)(4)(x)
    	
 
    	
Regarding any funds held in trust for an obligor   (such as escrow accounts): (A) such funds are analyzed, in accordance   with the obligor’s Account documents, on at least an annual basis, or such   other period specified in the transaction agreements; (B) interest on   such funds is paid, or credited, to obligors in accordance with applicable   Account documents and state laws; and (C) such funds are returned to the   obligor within 30 calendar days of full repayment of the related Accounts, or   such other number of days specified in the transaction agreements.
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
1122(d)(4)(xi)
    	
 
    	
Payments made on behalf of an obligor (such as tax   or insurance payments) are made on or before the related penalty or   expiration dates, as indicated on the appropriate bills or notices for such   payments, provided that such support has been received by the servicer at   least 30 calendar days prior to these dates, or such other number of days   specified in the transaction agreements.
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
1122(d)(4)(xii)
    	
 
    	
Any late payment penalties in connection with any   payment to be made on behalf of an obligor are paid from the servicer’s funds   and not charged to the obligor, unless the late payment was due to the   obligor’s error or omission.
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
1122(d)(4)(xiii)
    	
 
    	
Disbursements made on behalf of an obligor are   posted within two business days to the obligor’s records maintained by the   servicer, or such other number of days specified in the transaction   agreements.
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
1122(d)(4)(xiv)
    	
 
    	
Delinquencies, charge-offs and uncollectible   accounts are recognized and recorded in accordance with the transaction   agreements.
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
1122(d)(4)(xv)
    	
 
    	
Any external enhancement or other support,   identified in Item 1114(a)(1) through (3) or Item 1115 of Regulation   AB, is maintained as set forth in the transaction agreements.
    	
 
    	
 
    


 

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Exhibit F

 

FORM OF ANNUAL CERTIFICATION OF THE INDENTURE TRUSTEE

 

	
 
    	
Dated:   [             ]
    


 

[                                  ], not in its individual capacity but solely as indenture trustee (the “Indenture Trustee”), certifies to Harley-Davidson Credit Corp. (the “Servicer”), its officers and Harley-Davidson Motorcycle Trust [     ] (the “Issuer”), with the knowledge and intent that they will rely upon this certification, that:

 

(1)   It has reviewed the report on assessment of the Indenture Trustee’s compliance provided in accordance with Rules 13a-18 and 15d-18 under the Securities Exchange Act of 1934, as amended (the “Securities Exchange Act”), and Item 1122 of Regulation AB under the Securities Act of 1933, as amended, and the Securities Exchange Act (the “Servicing Assessment”), that were delivered by the Indenture Trustee to the Seller pursuant to the Sale and Servicing Agreement dated as of [            ], among Harley-Davidson Customer Funding Corp., the Servicer, the Indenture Trustee and the Issuer (collectively, the “Indenture Trustee Information”);

 

(2)   To the best of its knowledge, the Indenture Trustee Information, taken as a whole, does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in the light of the circumstances under which such statements were made, not misleading with respect to the period of time covered by the Indenture Trustee Information (in making such statement, the Indenture Trustee makes no representation or warranty as to any information prepared or provided to it by a third person and upon which it relied in preparing our information); and

 

(3)   To the best of its knowledge, all of the Indenture Trustee Information required to be provided by the Indenture Trustee under the Indenture has been provided to the Servicer.

 

	
 
    	
[                                               ],   as Indenture Trustee
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
Title:
    	
 
    


 

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Exhibit G

 

[Form of Certificate Regarding Reacquired Contracts]

 

Harley-Davidson Credit Corp.

 

Certificate Regarding Reacquired Contracts

 

The undersigned certifies that [s]he is the [        ] 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, [Harley-Davidson Motorcycle Grantor Trust [           ]] 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 [re]acquired by the [Seller/Servicer][Trust Depositor] on the date hereof pursuant to [Section 7.08[(a)][(b)] of the Agreement and Section 5.01 of the Transfer and Sale Agreement/Section 7.10 of the Agreement/Section 7.11 of the Agreement.]

 

2.                                      [After giving effect to such reacquisition, the aggregate Principal Balance, as of the Cutoff Date, of all Contract(s) reacquired pursuant to Section 7.08(b) of the Agreement does not exceed [10]% of the Pool Balance as of the Cutoff Date.]

 

3.                                      Upon deposit of the Purchase Price for such Contracts, such Contracts may, pursuant to Section 7.09 of the Agreement, be assigned by the Trustee to the Seller[/Servicer].

 

IN WITNESS WHEREOF, I have affixed hereunto my signature this        day of              .

 

	
 
    	
Harley-Davidson Credit   Corp.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
Printed Name:
    	
 
    
	
 
    	
 
    	
 
    	
Title:
    	
 
    


 

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Exhibit H

 

[List of Contracts]

 

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Exhibit I

 

[Form of Monthly Report to Noteholders]

 

[see attached]

 

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Exhibit J

 

[Seller’s Representations and Warranties]

 

(1)           Representations and Warranties Regarding Seller.  Seller represents and warrants, as of the execution and delivery of this Agreement and as of the Closing Date, 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.

 

(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 obligations 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.

 

(e)           Litigation.  No litigation or administrative proceeding of or before any court, tribunal or governmental body is currently pending, or to the knowledge of Seller threatened, against Seller or any of its properties or with respect to this Agreement or any other Transaction Document to which the Seller is a party which, if adversely determined, would in the opinion of Seller have a material adverse effect on the business, properties, assets or condition (financial or other) of Seller or the transactions contemplated by this Agreement or any other Transaction Document to which the Seller is a party.

 

(f)            State of Incorporation; Name; No Changes.  Seller’s state of incorporation is the State of Nevada.  Seller’s exact legal name is as set forth in the first paragraph of this Agreement.  Seller has not changed its name whether by amendment of its Articles of Incorporation, by

 

J-1











 

reorganization or otherwise, and has not changed its state of incorporation within the four months preceding the Closing Date.

 

(g)           Solvency.  The Seller, after giving effect to the conveyances made by it hereunder, is Solvent.

 

(2)           Representations and Warranties Regarding Each Contract.  Seller represents and warrants as to each Contract as of the execution and delivery of this Agreement and as of the Closing Date, that:

 

(a)           Payments.  Except for a payment that is not more than 29 days delinquent as of the Cutoff Date, no payment default exists on the Contract.

 

(b)           No Waivers.  As of the Cutoff Date, no material term of the Contract has been affirmatively amended or modified, except amendments and modifications indicated in the Servicer’s servicing system [or in the Contract File].

 

(c)           Binding Obligation.  The Contract is on a form of contract that includes rights and remedies allowing the holder to enforce the obligation and realize on the Motorcycle and represents the legal, valid and binding payment obligation of the Obligor, enforceable in all material respects by the holder of the Contract, except as may be limited by bankruptcy, insolvency, reorganization or other laws relating to the enforcement of creditors’ rights or by general equitable principles and consumer protection laws.

 

(d)           No Defenses.  As of the Cutoff Date, no right of rescission, setoff, counterclaim or defense asserted or threatened with respect to such Contract was indicated in the Servicer’s servicing system [or related Contract File].

 

(e)           Insurance.  The terms of the Contract require that for the term of such Contract the Motorcycle securing such Contract will be covered by physical damage insurance.

 

(f)            Origination.  The Contract (i) was originated by Eaglemark Savings Bank or a Harley-Davidson motorcycle dealer, in each case, in the regular course of its business, (ii) was fully and properly executed by the parties thereto, and (iii) has been purchased by Seller in the regular course of its business.

 

(g)           Compliance with Law.  At the time it was originated, the Contract complied in all material respects with all requirements of law in effect at the time.

 

(h)           Contract in Force.  As of the Cutoff Date, the Servicer’s servicing system indicates that the Contract was not satisfied or subordinated in whole or in part or rescinded, and the related Motorcycle securing the Contract has not been released from the lien of the Contract in whole or in part.

 

(i)            Valid Security Interest.  The Contract has created or shall create a valid, binding and enforceable first priority security interest in favor of the Seller in the Motorcycle, except as to priority for any Permitted Liens, which security interest is assignable by the Seller to the Depositor.

 

(j)            No Defaults.  As of the Cutoff Date, no default, breach, violation or event permitting acceleration was recorded in the Servicer’s servicing system with respect to any

 

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Contract.  Seller has not waived any such default, breach, violation or event permitting acceleration.  As of the Cutoff Date, no Motorcycle was in repossession.

 

(k)           Installments.  The 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.

 

(l)            Owner of Record.  The Seller is identified as the “owner of record” on all electronic chattel paper relating to the Contract, and the Seller has “control,” as defined in Section 9-105 of the UCC, of all electronic chattel paper relating to the Contract. The Contract does not have any marks or notations indicating that it has been pledged, assigned or otherwise conveyed by the Seller to any Person other than the Trust Depositor.

 

(m)          Good Title.  Immediately before the sale and assignment under the Transfer and Sale Agreement and under this Agreement, the Seller has good and marketable title to the Contract, free and clear of any encumbrance or lien, except for any Permitted Liens, and, immediately upon the transfer of the Contract by the Seller, the Trust Depositor shall have good and marketable title to the Contract free and clear of any encumbrance or lien, except for any Permitted Liens, and, immediately upon the transfer of the Contract by the Trust Depositor, the [Issuer][Underlying Trust] shall have good and marketable title to the Contract free and clear of any encumbrance, equity, loan, pledge, charge, claim or security interest, other than [the liens created by the Indenture] and any Permitted Liens.

 

(n)           No Government Obligors. The Obligor is not the United States government or an agency, authority, instrumentality or other political subdivision of the United States government.

 

(o)           Obligor Bankruptcy.  At the Cutoff Date, the Obligor was not the subject of a bankruptcy proceeding, according to the records in Servicer’s servicing system.

 

(p)           Chattel Paper; One Original.  The Contract is either “tangible chattel paper” or “electronic chattel paper”.  The Contract is evidenced by either (i) one executed tangible record constituting or forming a part of the Contract that is “tangible chattel paper”, or (ii) a single “authoritative copy” of the electronic record constituting or forming a part of the Contract that is “electronic chattel paper”. Terms in quotation marks have the meaning assigned to them in the applicable UCC.

 

(q)           Selection Criteria.  The Contract is secured by a new or used Motorcycle.  No Contract has a Contract Rate less than [1.00]%.  The Contract amortizes the amount financed over an original term no greater than [84] months (excluding periods of deferral of first payment).  The Contract has a Principal Balance of at least [$500.00] as of the Cutoff Date.

 

(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, that:

 

(a)           Amounts.  The Pool Balance as of the Cutoff Date equals or exceeds the aggregate principal amount of the Notes on the Closing Date.

 

(b)           Characteristics.  The Contracts have the following characteristics: (i) all the Contracts are secured by Motorcycles; (ii) no Contract has a remaining maturity of more than 84

 

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months; and (iii) the final scheduled payment on the Contract with the latest maturity is due no later than [               ].  Approximately [      ]% of the Pool Balance as of the Cutoff Date is attributable to loans for purchases of new Motorcycles and approximately [      ]% is attributable to loans for purchases of used Motorcycles.  No Contract was originated after the Cutoff Date.  No Contract has a Contract Rate less than 1.00%.  Approximately [      ]% of the Pool Balance as of the Cutoff Date is attributable to loans for purchases of Motorcycles manufactured by Harley-Davidson Motor Company, and approximately [      ]% of the Pool Balance as of the Cutoff Date is attributable to loans to purchase Motorcycles not manufactured by Harley-Davidson Motor Company.

 

(c)           Marking Records.  As of the Closing Date, Seller has caused the Computer File 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.

 

(d)           No Adverse Selection.  No selection procedures adverse to Noteholders have been employed in selecting the Contracts.

 

(e)           True Sale.  The transactions contemplated by the Transfer and Sale Agreement and the Sale and Servicing Agreement constitute valid sales, transfers and assignments 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.

 

(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 Indenture Trustee a first priority perfected security interest (subject only to Permitted Liens) in the Contracts, the proceeds thereof and the rest of the Collateral have been made, taken or performed.  All financing statements filed or to be filed against the Seller in favor of the Trust Depositor in connection herewith describing the Contracts contain a statement to the following effect:  “A purchase of or security interest in any collateral described in this financing statement, except as provided in the Sale and Servicing Agreement, will violate the rights of the Issuer.”

 

(g)           List of Contracts.  The information set forth in the List of Contracts is true, complete and correct in all material respects as of the Cutoff Date.

 

(h)           Lockbox Bank.  All Obligors have been instructed to make payments to a Lockbox Account (either directly by remitting payments to a Lockbox, or indirectly by making payments through direct debit, the telephone or the internet to an account of the Servicer which payments will be subsequently transferred from such account to one or more Lockbox Banks), and no person claiming through or under Seller has any claim or interest in a Lockbox Account other than the related Lockbox Bank; provided, however, that other Persons may have an interest in certain other collections therein not related to the Contracts.

 

(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, that:

 

(a)           Possession.  Immediately prior to the Closing Date, the Servicer or its custodian will have possession of each original Contract and the related complete Contract File.  Each of

 

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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 or its custodian.

 

(b)           Bulk Transfer Laws.  The transfer, assignment and conveyance of the Contracts and the Contract Files by Seller pursuant to the Transfer and Sale Agreement 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.

 

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Exhibit K

 

[Lockbox Bank and Lockbox Account]

 

Lockbox

 

	
 
    	
For Standard U.S. Mail:
    	
 
    
	
 
    	
Harley-Davidson Credit Corp.
    	
 
    
	
 
    	
Department 15129
    	
 
    
	
 
    	
Palatine, IL 60055-5129
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
For UPS and FedEx:
    	
 
    
	
 
    	
Harley-Davidson Credit Corp.
    	
 
    
	
 
    	
Department 15129
    	
 
    
	
 
    	
5505 N. Cumberland Avenue, Suite 307
    	
 
    
	
 
    	
Chicago, IL 60656-1471
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Lockbox Bank
    	
 
    


 

The Bank of New York Mellon

 

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