Document:

EXHIBIT

10.22

 

 

 

 

TRANSFER AND SALE AGREEMENT

 

 

by and between

 

 

HARLEY-DAVIDSON CREDIT CORP.,

as  Seller

 

 

and

 

 

HARLEY-DAVIDSON CUSTOMER FUNDING CORP.,

 

 

as Purchaser

 

 

Dated as of May 1, 2003

 

 

 

 

TABLE OF

CONTENTS

 

	

  ARTICLE I  DEFINITION

  
	

   

  	

   

  
	

  SECTION 1.01.

  	

  GENERAL

  
	

   

  	

   

  
	

  ARTICLE II TRANSFER OF

  CONTRACTS; ASSIGNMENT OF AGREEMENT

  
	

   

  	

   

  
	

  SECTION 2.01.

  	

  CLOSING

  
	

  SECTION 2.02.

  	

  CONDITIONS

  TO THE CLOSING

  
	

  SECTION 2.03.

  	

  ASSIGNMENT

  OF AGREEMENT

  
	

  SECTION 2.04.

  	

  SUBSEQUENT

  CONTRACTS

  
	

   

  	

   

  
	

  ARTICLE III

  REPRESENTATIONS AND WARRANTIES

  
	

   

  	

   

  
	

  SECTION 3.01.

  	

  REPRESENTATIONS

  AND WARRANTIES REGARDING SELLER

  
	

  SECTION 3.02.

  	

  REPRESENTATIONS

  AND WARRANTIES REGARDING EACH CONTRACT

  
	

  SECTION 3.03.

  	

  REPRESENTATIONS

  AND WARRANTIES REGARDING THE CONTRACTS IN THE AGGREGATE

  
	

  SECTION 3.04.

  	

  REPRESENTATIONS

  AND WARRANTIES REGARDING THE CONTRACT FILES

  
	

   

  	

   

  
	

  ARTICLE IV PERFECTION OF

  TRANSFER AND PROTECTION OF SECURITY INTERESTS

  
	

   

  	

   

  
	

  SECTION 4.01.

  	

  CUSTODY

  OF CONTRACTS

  
	

  SECTION 4.02.

  	

  FILING

  
	

  SECTION 4.03.

  	

  NAME

  CHANGE OR RELOCATION

  
	

  SECTION 4.04.

  	

  COSTS

  AND EXPENSES

  
	

  SECTION 4.05

  	

  SALE

  TREATMENT

  
	

  SECTION 4.06

  	

  SEPARATENESS

  FROM TRUST DEPOSITOR

  
	

  SECTION 4.07

  	

  PROTECTION

  OF SECURITY INTERESTS

  
	

   

  	

   

  
	

  ARTICLE V REMEDIES UPON

  MISREPRESENTATION

  
	

   

  	

   

  
	

  SECTION 5.01.

  	

  REPURCHASES

  OF CONTRACTS FOR BREACH OF REPRESENTATIONS AND WARRANTIES

  
	

  SECTION 5.02.

  	

  SELLER’S

  REPURCHASE OPTION

  
	

   

  	

   

  
	

  ARTICLE VI INDEMNITIES

  
	

   

  	

   

  
	

  SECTION 6.01.

  	

  SELLER

  INDEMNIFICATION

  
	

  SECTION 6.02.

  	

  LIABILITIES

  TO OBLIGORS

  
	

  SECTION 6.03.

  	

  TAX

  INDEMNIFICATION

  
	

  SECTION 6.04.

  	

  OPERATION

  OF INDEMNITIES

  
	

   

  	

   

  
	

  ARTICLE VII

  MISCELLANEOUS

  
	

   

  	

   

  
	

  SECTION 7.01.

  	

  PROHIBITED

  TRANSACTIONS WITH RESPECT TO THE TRUST

  
	

  SECTION 7.02.

  	

  MERGER

  OR CONSOLIDATION

  
	

  SECTION 7.03.

  	

  TERMINATION

  
	

  SECTION 7.04.

  	

  ASSIGNMENT

  OR DELEGATION BY SELLER

  
	

  SECTION 7.05.

  	

  AMENDMENT

  
	

  SECTION 7.06.

  	

  NOTICES

  
	

  SECTION 7.07.

  	

  MERGER

  AND INTEGRATION

  
	

  SECTION 7.08.

  	

  HEADINGS

  
	

  SECTION 7.09.

  	

  GOVERNING

  LAW

  

 

i

 

EXHIBITS

 

Exhibit A                      Form of Assignment

Exhibit B                       Form of Officer’s Certificate

Exhibit C                       Form of Subsequent Purchase Agreement

 

ii

 

THIS AGREEMENT,

dated as of May 1, 2003, is made by and between Harley-Davidson Credit Corp., a

Nevada corporation, as seller hereunder (together with its successors and

assigns

“Harley-Davidson Credit” or “Seller”), and Harley-Davidson Customer

Funding Corp., a Nevada corporation and wholly-owned subsidiary of Seller

(together with its successors and assigns “Trust Depositor”), as purchaser hereunder.

 

WHEREAS, in the

regular course of its business, Seller purchases and services (i) motorcycle

conditional sales contracts from Harley-Davidson motorcycle retailers and (ii)

motorcycle promissory note and security agreements from Eaglemark Savings Bank,

each of which contracts provides for installment payment obligations by or on

behalf of the retailer’s customer/purchaser and grants a security interest in

the related motorcycle in order to secure such obligations;

 

WHEREAS, Seller and

Trust Depositor wish to set forth the terms and conditions pursuant to which

Trust Depositor will acquire from time to time the “Contract Assets,” as

hereinafter defined; and

 

WHEREAS, Trust

Depositor intends concurrently with its purchases from time to time of Contract

Assets hereunder to convey all right, title and interest in such Contract

Assets to Harley-Davidson Motorcycle Trust 2003-2 (the “Trust”) pursuant to the Sale

and Servicing Agreement dated as of May 1, 2003 by and among Trust Depositor,

Harley-Davidson Credit, as Servicer, the Trust, as issuer (the “Issuer”)

and BNY Midwest Trust Company, as Indenture Trustee (as amended, supplemented

or otherwise modified from time to time, the “Sale and Servicing Agreement”),

executed concurrently herewith;

 

NOW, THEREFORE, in

consideration of the premises and the mutual agreements hereinafter set forth,

Seller and Trust Depositor agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

Section

1.01.        General.  Unless otherwise defined in this Agreement,

capitalized terms used herein (including in the preamble above) shall have the

meanings assigned to them in the Sale and Servicing Agreement.

 

ARTICLE II

 

TRANSFER OF CONTRACTS; ASSIGNMENT OF AGREEMENT

 

Section

2.01.        Closing.  Subject to and upon the terms and conditions

set forth in this Agreement, Seller hereby sells, transfers, assigns, sets over

and otherwise conveys to Trust Depositor, in consideration of Trust Depositor’s

payment of $309,124,002.80 in cash as the purchase price therefor, (i) all the

right, title and interest of Seller in and to the Initial Contracts

 

 

listed on the initial

List of Contracts in effect on the Closing Date (including, without limitation,

all security interests and all rights to receive payments which are collected

pursuant thereto on or after the Initial Cutoff Date, including any liquidation

proceeds therefrom, but excluding any rights to receive payments which were

collected pursuant thereto prior to the Initial Cutoff Date), (ii) all rights

of Seller under any physical damage or other individual insurance policy

(including a “forced placed” policy, if any) or any debt cancellation

agreement relating to any such Contract, an Obligor or a Motorcycle securing

such Contract, (iii) all security interests in each such Motorcycle, (iv) all

documents contained in the related Contract Files, (v) all rights of Seller in

the Lockbox, Lockbox Account and related Lockbox Agreement to the extent they

relate to the Contracts, (vi) all rights (but not the obligations) of the

Seller under any motorcycle dealer agreements between the dealers (i.e.

originators of the Contracts) and the Seller, (vii) all rights of Seller 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 (viii) all

proceeds and products of the foregoing (items (i) - (viii), together with the

additional assets referred to in Section 2.04 below which may be transferred

from time to time in respect of Subsequent Contracts, being collectively

referred to herein as the “Contract Assets”).  Although Seller and Trust Depositor agree

that any such transfer is intended to be a sale of ownership in the Contract

Assets, rather than the mere granting of a security interest to secure a

borrowing, in the event such transfer is deemed to be of a mere security

interest to secure indebtedness, Seller shall be deemed to have granted Trust

Depositor a perfected first priority security interest in such Contract Assets

and this Agreement shall constitute a security agreement under applicable

law.  If such transfer is deemed to be

the mere granting of a security interest to secure a borrowing, Trust Depositor

may, to secure Trust Depositor’s own borrowing under the Sale and Servicing

Agreement (to the extent that the transfer of the Contract Assets thereunder is

deemed to be a mere granting of a security interest to secure a borrowing)

repledge and reassign (i) all or a portion of the Contract Assets pledged to

Trust Depositor and not released from the security interest of this Agreement

at the time of such pledge and assignment, and (ii) all proceeds thereof.  Such repledge and reassignment may be made

by Trust Depositor with or without a repledge and reassignment by Trust Depositor

of its rights under this Agreement, and without further notice to or

acknowledgment from Seller.  Seller

waives, to the extent permitted by applicable law, all claims, causes of action

and remedies, whether legal or equitable (including any right of setoff),

against Trust Depositor or any assignee of Trust Depositor relating to such

action by Trust Depositor in connection with the transactions contemplated by

the Sale and Servicing Agreement.

 

Section

2.02.        Conditions

to the Closing.  On or before

the Closing Date, Seller shall deliver or cause to be delivered to Trust

Depositor each of the documents, certificates and other items as follows:

 

(a)           The

initial List of Contracts, certified by the Chairman of the Board, President or

any Vice President of Seller together with an Assignment substantially in the

form attached as Exhibit A hereto.

 

(b)           A

certificate of an officer of Seller substantially in the form of Exhibit B

hereto.

 

2

 

(c)           An

opinion of counsel for Seller substantially in the form of Exhibit D to the Sale and

Servicing Agreement.

 

(d)           A

letter or letters from Ernst & Young LLP, or another nationally recognized

accounting firm, addressed to Trust Depositor and the Issuer and the Trustees

and stating that such firm has reviewed a sample of the Initial Contracts and

performed specific procedures for such sample with respect to certain contract

terms and identifying those Initial Contracts which do not so conform.

 

(e)           Copies

of resolutions of the Board of Directors of Seller or of the Executive

Committee of the Board of Directors of Seller approving the execution, delivery

and performance of this Agreement and the transactions contemplated hereunder,

certified in each case by the Secretary or an Assistant Secretary of Seller.

 

(f)            Officially

certified recent evidence of due incorporation and good standing of Seller

under the laws of Nevada.

 

(g)           Evidence

of proper filing with the appropriate office in Nevada of a UCC financing

statement naming Seller as debtor, naming Trust Depositor as assignor secured

party and the Owner Trust as secured party, and listing the Contract Assets as

collateral as well as evidence of proper filing with the appropriate office in

Delaware of a UCC financing statement naming the Issuer as debtor, naming the

Indenture Trustee, as secured party, and listing the Contract Assets as

collateral.

 

(h)           An

Officer’s Certificate from Seller certifying that the Seller, on or prior to

the Closing Date, has indicated in its computer files, in accordance with its

customary standards, policies and procedures, that the Contracts have been

conveyed to the Trust Depositor pursuant to this Agreement.

 

(i)            The

documents, certificates and other items described in Section 2.02 of the Sale

and Servicing Agreement, to the extent not already described above.

 

Section

2.03.        Assignment

of Agreement.  Trust

Depositor has the right to assign its interest under this Agreement to the

Issuer as may be required to effect the purposes of the Sale and Servicing

Agreement, without further notice to, or consent of, Seller, and the Issuer

shall succeed to such of the rights of Trust Depositor hereunder as shall be so

assigned.  Seller acknowledges that,

pursuant to the Sale and Servicing Agreement, Trust Depositor will assign all

of its right, title and interest in and to the Contract Assets and its right to

exercise the remedies created by Section 5.01 hereof for breaches of

representations and warranties of Seller contained in Sections 3.01, 3.02, 3.03

and 3.04 hereof to the Issuer and the Indenture Trustee for the benefit of the

Noteholders.  Seller agrees that, upon

such assignment to the Issuer and the Indenture Trustee, such representations

will run to and be for the benefit of the Issuer and the Indenture Trustee and

the Issuer and the Indenture Trustee may enforce directly without joinder of

Trust Depositor, the obligations of Seller set forth herein.

 

3

 

Section

2.04.        Subsequent

Contracts.  (a) Subject to

and upon the terms and conditions set forth in paragraph (b) below and in the

related Subsequent Purchase Agreement, Seller hereby agrees to sell, transfer,

assign, set over and otherwise convey to Trust Depositor, in consideration of

Trust Depositor’s payment on the related Subsequent Transfer Date of the

purchase price therefor (as set forth in the related Subsequent Purchase

Agreement), and Trust Depositor hereby agrees to purchase, (i) all the right,

title and interest of Seller in and to the Subsequent Contracts listed on the

related Subsequent List of Contracts (including, without limitation, all

security interests and all rights to receive payments which are collected

pursuant thereto on or after the applicable Subsequent Cutoff Date, including

any liquidation proceeds therefrom, but excluding any rights to receive

payments which were collected pursuant thereto prior to such Subsequent Cutoff

Date), (ii) all rights of Seller under any physical damage or other individual

insurance policy (including a “forced placed” policy, if any) or any

debt cancellation agreement relating to any such Subsequent Contract , an

Obligor or a Motorcycle securing such Subsequent Contract, (iii) all security

interests in each such Motorcycle, (iv) all documents contained in the related

Contract Files, (v) all rights of Seller in the Lockbox, Lockbox Account and

related Lockbox Agreement to the extent they relate to the Subsequent

Contracts, (vi) all rights (but not the obligations) of the Seller under any

motorcycle dealer agreements between the dealers (i.e. originators of such

Subsequent Contracts) and the Seller, (vii) all rights of Seller to certain

rebates of premiums and other amounts relating to insurance policies, debt

cancellation agreements, extended service contracts or other repair agreements

and other items financed under such Subsequent Contracts and (viii) all

proceeds and products of the foregoing (items (i) - (viii), upon consummation

of any above-described purchase, becoming part of the “Contract Assets”).  Seller agrees, subject to the terms and

conditions herein applicable to transfers of Subsequent Contracts, to sell an

aggregate Principal Balance of Subsequent Contracts at or prior to the end of

the Funding Period equal to the Pre-Funded Amount on the Closing Date.

 

(b)           Seller shall transfer to Trust

Depositor, and Trust Depositor shall purchase, the Subsequent Contracts and

related assets to be transferred on any Subsequent Transfer Date only upon the

satisfaction of each of the following conditions on or prior to the Subsequent

Transfer Date:

 

(i)            The

Seller shall have provided the Trustees, the Underwriters and the Rating

Agencies with a timely Addition Notice and shall have provided any information

reasonably requested by any of the foregoing with respect to the Subsequent

Contracts;

 

(ii)           the Funding Period shall not have

terminated;

 

(iii)          the

Seller shall have delivered to the Trust Depositor a duly executed Purchase

Agreement and Assignment in substantially the form of Exhibit C hereto (the “Subsequent

Purchase Agreement”), which shall include a Subsequent List of

Contracts listing the Subsequent Contracts being purchased;

 

(iv)          as

of each Subsequent Transfer Date, neither the Seller nor the Trust Depositor

was insolvent nor will either of them have been made insolvent by such transfer

nor is either of them aware of any pending insolvency;

 

4

 

(v)           each

Rating Agency shall have notified the Trust Depositor and the Trustees in

writing that following such transfer, and the transfer immediately thereafter

of the Subsequent Contracts to the Trust, the Class A-1 Notes and the Class A-2

Notes will be rated in the highest rating category by such Rating Agency and

the Class B Notes will be rated at least “A” by Standard & Poor’s and “A1”

by Moody’s;

 

(vi)          such

addition will not result in a material adverse tax consequence to the Issuer or

the Noteholders as evidenced by an Opinion of Counsel to be delivered by the

Seller to the Issuer, the Trustees, and the Underwriters;

 

(vii)         the

Seller shall have delivered to the Rating Agencies and to the Underwriters one

or more opinions of counsel with respect to the transfer of the Subsequent

Contracts substantially in the form of the opinions of counsel delivered to

such Persons on the Closing Date;

 

(viii)        the

Seller shall have taken any action necessary to maintain the first perfected

ownership interest of the Trust in the Trust Corpus and the first perfected

security interest of the Trust Depositor in the Contract Assets, the Trust in

the Trust Corpus and the Indenture Trustee in the Reserve Fund Deposits; and

 

(ix)           no

selection procedures believed by the Seller to be adverse to the interests of

the Noteholders shall have been utilized in selecting the Subsequent Contracts.

 

(c)           Seller agrees to pay all reasonable

out-of-pocket expenses in connection with any request for the conveyance of

Subsequent Contracts, whether or not such conveyance is actually consummated.

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES

 

Seller makes the following

representations and warranties, on which Trust Depositor will rely in

purchasing the initial Contract Assets on the Closing Date (and any Subsequent

Contracts on the related Subsequent Transfer Date) and concurrently reconveying

the same to the Trust, and on which the Trust and the Noteholders will rely

under the Sale and Servicing Agreement. 

Such representations speak as of the execution and delivery of this

Agreement and as of the Closing Date in the case of the Initial Contracts, and

as of the applicable Subsequent Transfer Date in the case of Subsequent

Contracts, but shall survive the sale, transfer and assignment of the Contracts

to the Trust and the pledge of the Contracts to the Indenture Trustee.  The repurchase obligation of Seller set forth

in Section 5.01 below and in Section 7.08 of the Sale and Servicing Agreement

constitutes the sole remedy available for a breach of a representation or

warranty of Seller set forth in Section 3.02, 3.03 or 3.04 of this Agreement.

 

Section

3.01.        Representations

and Warranties Regarding Seller. 

Seller represents and warrants, as of the execution and delivery of this

Agreement and as of the Closing Date, in the

 

5

 

case of the Initial

Contracts, and as of the applicable Subsequent Transfer Date, in the case of

Subsequent Contracts, that:

 

(a)           Organization

and Good Standing.  Seller is

a corporation duly organized, validly existing and in good standing under the

laws of the jurisdiction of its organization and has the corporate power to own

its assets and to transact the business in which it is currently engaged.  Seller is duly qualified to do business as a

foreign corporation and is in good standing in each jurisdiction in which the

character of the business transacted by it or properties owned or leased by it

requires such qualification and in which the failure so to qualify would have a

material adverse effect on the business, properties, assets, or condition

(financial or otherwise) of Seller or Trust Depositor.  Seller is properly licensed in each

jurisdiction to the extent required by the laws of such jurisdiction to service

the Contracts in accordance with the terms of the Sale and Servicing Agreement.

 

(b)           Authorization;

Binding Obligation.  Seller

has the power and authority to make, execute, deliver and perform this

Agreement and the other Transaction Documents to which the Seller is a party

and all of the transactions contemplated under this Agreement and the other

Transaction Documents to which the Seller is a party, and has taken all

necessary corporate action to authorize the execution, delivery and performance

of this Agreement and the other Transaction Documents to which the Seller is a

party.  This Agreement and the other

Transaction Documents to which the Seller is a party constitute the legal,

valid and binding obligation of Seller enforceable in accordance with their

terms, except as enforcement of such terms may be limited by bankruptcy,

insolvency or similar laws affecting the enforcement of creditors’ rights

generally and by the availability of equitable remedies.

 

(c)           No

Consent Required.  Seller is

not required to obtain the consent of any other party or any consent, license,

approval or authorization from, or registration or declaration with, any

governmental authority, bureau or agency in connection with the execution,

delivery, performance, validity or enforceability of this Agreement and the

other Transaction Documents to which the Seller is a party.

 

(d)           No

Violations.  Seller’s

execution, delivery and performance of this Agreement and the other Transaction

Documents to which the Seller is a party will not violate any provision of any

existing law or regulation or any order or decree of any court or the Articles

of Incorporation or Bylaws of Seller, or constitute a material breach of any

mortgage, indenture, contract or other agreement to which Seller is a party or

by which Seller or any of Seller’s properties may be bound.

 

(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

 

6

 

contemplated

by this Agreement or any other Transaction Document to which the Seller is a

party.

 

(f)            State

of Incorporation; Name; No Changes. 

Seller’s state of incorporation is the State of Nevada.  Seller’s exact legal name is as set forth in

the first paragraph of this Agreement. 

Seller has not changed its name whether by amendment of its Articles of

Incorporation, by reorganization or otherwise, and has not changed its state of

incorporation, within the four months preceding the Closing Date.

 

(g)           Operations.  Approximately 5.0% of the aggregate

principal balance of contracts financed from time to time by the Seller are

secured by motorcycles manufactured by Buell.

 

(h)           Solvency.  The Seller, after giving effect to the

conveyances made by it hereunder, is Solvent.

 

Section

3.02.        Representations

and Warranties Regarding Each Contract.  Seller represents and warrants as to each Contract as of the

execution and delivery of this Agreement and as of the Closing Date, in the

case of the Initial Contracts, and as of the applicable Subsequent Transfer

Date, in the case of Subsequent Contracts, that:

 

(a)           List

of Contracts.  The

information set forth in the List of Contracts (or Subsequent List of

Contracts, in the case of Subsequent Contracts) is true, complete and correct in

all material respects as of the Initial Cutoff Date or applicable Subsequent

Cutoff Date, as the case may be.

 

(b)           Payments.  As of the Initial Cutoff Date or applicable

Subsequent Cutoff Date, as the case may be, the most recent scheduled payment

with respect to any Contract either had been made or was not delinquent for

more than 30 days.  To the best of

Seller’s knowledge, all payments made on each Contract were made by the

respective Obligor.

 

(c)           No

Waivers.  As of the Closing

Date (or the applicable Subsequent Transfer Date, in the case of Subsequent

Contracts), the terms of the Contracts have not been waived, altered or

modified in any respect, except by instruments or documents included in the

related Contract File.

 

(d)           Binding

Obligation.  Each Contract is

a legal, valid and binding payment obligation of the Obligor thereunder and is

enforceable in accordance with its terms, except as such enforceability may be

limited by insolvency, bankruptcy, moratorium, reorganization, or other similar

laws affecting the enforcement of creditors’ rights generally.

 

(e)           No

Defenses.  No Contract is

subject to any right of rescission, setoff, counterclaim or defense, including

the defense of usury, and the operation of any of the

 

7

 

terms

of such Contract or the exercise of any right thereunder will not render the

Contract unenforceable in whole or in part or subject to any right of

rescission, setoff, counterclaim or defense, including the defense of usury,

and no such right of rescission, setoff, counterclaim or defense has been

asserted with respect thereto.

 

(f)            Insurance.  As of the origination date of each Contract

(or the applicable Subsequent Transfer Date in the case of Subsequent

Contracts), the related Motorcycle securing each Contract is covered by

physical damage insurance (i) in an amount not less than the value of the

Motorcycle at the time of origination of the Contract, (ii) naming Seller as a

loss payee and (iii) insuring against loss and damage due to fire, theft,

transportation, collision and other risks covered by comprehensive coverage,

and all premiums due on such insurance have been paid in full from the date of

the Contract’s origination.

 

(g)           Origination.  Either (i) Contracts were originated by a

Harley-Davidson motorcycle dealer in the regular course of its business which

dealer had all necessary licenses and permits to originate the Contracts in the

state where such dealer was located, was fully and properly executed by the

parties thereto, and has been purchased by Seller in the regular course of its

business, or (ii) Contracts were originated by Eaglemark Savings Bank in the

regular course of its business which had all necessary licenses and permits to

originate the Contracts in the state where it was located, was fully and

properly executed by the parties thereto, and has been purchased by Seller in

the regular course of its business. 

Each Contract was sold by such motorcycle dealer or Eaglemark Savings

Bank, as the case may be, to the Seller without any fraud or misrepresentation

on the part of such motorcycle dealer or Eaglemark Savings Bank.

 

(h)           Lawful

Assignment.  No Contract was

originated in or is subject to the laws of any jurisdiction whose laws would

make the sale, transfer and assignment of the Contract under this Agreement or

under the Sale and Servicing Agreement or the pledge of the Contract under the

Indenture unlawful, void or voidable.

 

(i)            Compliance

with Law.  None of the

Contracts, the origination of the Contracts by the dealers or Eaglemark Savings

Bank, the purchase of the Contracts by the Seller, the sale of the Contracts by

the Seller to the Trust Depositor or by the Trust Depositor to the Trust, or

any combination of the foregoing, violated at the time of origination or as of

the Closing Date or as of any Subsequent Transfer Date, as applicable, any

requirement of any federal, state or local law and regulations thereunder,

including, without limitation, usury, truth in lending, motor vehicle

installment loan and equal credit opportunity laws, applicable to the Contracts

and the sale of Motorcycles.  Seller

shall, for at least the period of this Agreement, maintain in its possession,

available for the Trust Depositor’s and the Trustees’  inspection, and shall deliver to Trust Depositor or  the Trustee 

upon demand, evidence of compliance with all such requirements.

 

8

 

(j)            Contract

in Force.  As of the Closing

Date (or the applicable Subsequent Transfer Date in the case of Subsequent

Contracts), no Contract has been satisfied or subordinated in whole or in part

or rescinded, and the related Motorcycle securing any Contract has not been

released from the lien of the Contract in whole or in part.

 

(k)           Valid

Security Interest.  Each

Contract creates a valid, subsisting and enforceable first priority perfected

security interest in favor of Seller or Eaglemark Savings Bank (as the case may

be) in the Motorcycle covered thereby, and such security interest has been

assigned by Eaglemark Savings Bank to Seller (where applicable) and by Seller

to the Trust Depositor.  The original

certificate of title, certificate of lien or other notification or evidence

(the “Lien

Certificate”) issued by the body responsible for the registration

of, and the issuance of certificates of title or evidence relating to, motor

vehicles and liens thereon (the “Registrar of Titles”) of the applicable

state shows Seller or Eaglemark Savings Bank (as the case may be) as original

secured party under each Contract as the holder of a first priority security

interest in such Motorcycle.  With

respect to each Contract for which a written Lien Certificate is provided and

has not yet been returned from the Registrar of Titles, the Seller has received

written evidence that such Lien Certificate showing Seller or Eaglemark Savings

Bank as lienholder has been applied for. 

Eaglemark Savings Bank’s security interest has been validly assigned by

Eaglemark Savings Bank to Seller. 

Seller’s security interest has been validly assigned by the Seller to

the Trust Depositor and by the Trust Depositor to the Issuer and Owner Trustee

pursuant to this Agreement.  Immediately

after the sale, each Contract will be secured by an enforceable and perfected

first priority security interest in the Motorcycle in favor of the Trust as

secured party, which security interest is prior to all other liens upon and

security interests in such Motorcycle which now exist or may hereafter arise or

be created (except, as to priority, for any lien for taxes, labor, materials or

of any state law enforcement agency affecting a Motorcycle).

 

(1)           Capacity

of Parties.  All parties to

any Contract had capacity to execute such Contract and all other documents

related thereto and to grant the security interest purported to be granted

thereby.

 

(m)          Good

Title.  Each Contract was

purchased by Seller for value and taken into possession prior to the Cutoff

Date (or the applicable Subsequent Cutoff Date in the case of Subsequent

Contracts) in the ordinary course of its business, without knowledge that the

Contract was subject to a security interest. 

No Contract has been sold, assigned or pledged to any person other than

Trust Depositor and the Trustee as the transferee of Trust Depositor, and prior

to the transfer of the Contract to Trust Depositor, Seller had good and

marketable title to each Contract free and clear of any encumbrance, equity,

loan, pledge, charge, claim or security interest and was the sole owner thereof

and had full right to transfer the Contract to Trust Depositor and to permit

Trust Depositor to transfer the same to the Issuer and the Owner Trustee, and,

as of the Closing Date (or the applicable Subsequent Transfer Date in the case

of Subsequent Contracts), the Issuer and the Owner Trustee will have a first

priority perfected security interest therein.

 

9

 

(n)           No

Defaults.  As of the Initial

Cutoff Date (or the applicable Subsequent Cutoff Date in the case of Subsequent

Contracts), no default, breach, violation or event permitting acceleration

existed with respect to any Contract and no event had occurred which, with

notice and the expiration of any grace or cure period, would constitute such a

default, breach, violation or event permitting acceleration under such

Contract.  Seller has not waived any

such default, breach, violation or event permitting acceleration, and Seller

has not granted any extension of payment terms on any Contract.  As of the Initial Cutoff Date (or the

applicable Subsequent Cutoff Date in the case of Subsequent Contracts), no

Motorcycle had been repossessed.

 

(o)           No

Liens.  As of the Closing

Date (or the applicable Subsequent Transfer Date in the case of Subsequent

Contracts) there are, to the best of Seller’s knowledge, no liens or claims

which have been filed for work, labor or materials affecting the Motorcycle

securing any Contract which are or may be liens prior to, or equal with, the

lien of such Contract.

 

(p)           Installments.  Each Contract has a fixed Contract Rate and

provides for monthly payments of principal and interest which, if timely made,

would fully amortize the loan on a simple-interest basis over its term.

 

(q)           Enforceability.  Each Contract contains customary and

enforceable provisions such as to render the rights and remedies of the holder

thereof adequate for the realization against the collateral of the benefits of

the security.

 

(r)            One

Original.  Each Contract is

evidenced by only one original executed Contract, which original has been

delivered to the Issuer and the Owner Trustee or its designee on or before the

Closing Date (or the applicable Subsequent Transfer Date in the case of

Subsequent Contracts).

 

(s)           No

Government Contracts.  No

Obligor is the United States government or an agency, authority, instrumentality

or other political subdivision of the United States government.

 

(t)            Lockbox

Bank.  The Lockbox Bank is

the only institution holding any Lockbox Account for receipt of payments from

Obligors, and all Obligors, and only such Obligors, have been instructed to

make payments to the Lockbox Account, and no person claiming through or under

Seller has any claim or interest in the Lockbox Account other than the Lockbox

Bank; provided,

however, that other “Trusts” (as defined in the Lockbox Agreement)

shall have an interest in certain other collections therein not related to the

Contracts.

 

(u)           Obligor

Bankruptcy.  At the Cutoff

Date (or the applicable Subsequent Cutoff Date in the case of Subsequent

Contracts), no Obligor was subject to a bankruptcy proceeding within the one

year preceding such Cutoff Date.

 

10

 

(v)           Chattel

Paper.  The Contracts

constitute tangible chattel paper within the meaning of the UCC.

 

(w)          No

Impairment.  Neither the

Seller nor the Trust Depositor has done anything to convey any right to any

Person that would result in such Person having a right to payments due under

the Contract or otherwise to impair the rights of the Trust in any Contract or

the proceeds thereof.

 

(x)            Contract

Not Assumable.  No Contract

is assumable by another Person in a manner which would release the Obligor

thereof from such Obligor’s obligations to the Trust Depositor with respect to

such Contract.

 

Section

3.03.        Representations

and Warranties Regarding the Contracts in the Aggregate.  Seller represents and warrants, as of the

execution and delivery of this Agreement and as of the Closing Date, in the

case of the Initial Contracts, and, if applicable, as of the applicable

Subsequent Transfer Date, in the case of Subsequent Contracts, that:

 

(a)           Amounts.  The sum of the aggregate Principal Balances

payable by Obligors under the Contracts as of the Initial Cutoff Date (or the

applicable Subsequent Cutoff Date in the case of Subsequent Contracts), plus

the Pre-Funded Amount as of such date, equals the sum of the principal balance

of  the Class A-1 Notes, the Class A-2

Notes  and the Class B Notes on the

Closing Date or the related Subsequent Transfer Date, as applicable.

 

(b)           Characteristics.  The Initial Contracts have the following

characteristics: (i) all the Contracts are secured by Motorcycles; (ii) no

Initial Contract has a remaining maturity of more than 84 months; and (iii) the

final scheduled payment on the Initial Contract with the latest maturity is due

no later than May 2010.  Approximately

75.72% of the Principal Balance of the Initial Contracts as of the Initial

Cutoff Date is attributable to loans for purchases of new Motorcycles and

approximately 24.28% is attributable to loans for purchases of used Motorcycles.  No Initial Contract was originated after the

Initial Cutoff Date.  No Initial

Contract has a Contract Rate less than 5.48%. 

The first scheduled payment date of the Contracts (including any

Subsequent Contracts) is due no later than August 2003.  Approximately 0.02% of the Principal Balance

of the Initial Contracts as of the Initial Cutoff Date is attributable to loans

for purchases of Motorcycles not manufactured by Harley-Davidson or Buell.

 

(c)           Marking

Records.  As of the Closing

Date (or the applicable Subsequent Transfer Date in the case of Subsequent

Contracts), Seller has caused the Computer Disk relating to the Contracts sold

hereunder and concurrently reconveyed by Trust Depositor to the Trust and

pledged by the Trust to the Indenture Trustee to be clearly and unambiguously

marked to indicate that such Contracts constitute part of the Trust, are owned

by the Trust and constitute security for the Notes.

 

11

 

(d)           No

Adverse Selection.  No

selection procedures adverse to Noteholders have been employed in selecting the

Contracts.

 

(e)           True

Sale.  The transaction

contemplated by this Agreement constitutes a valid sale, transfer and

assignment from Seller to Trust Depositor and from Trust Depositor to the Trust

of all of Seller’s right, title and interest in the Contract Assets as of the

Closing Date and any Subsequent Transfer Date, as applicable.

 

(f)            All

Filings Made.  All filings

(including, without limitation, UCC filings) required to be made by any Person

and actions required to be taken or performed by any Person in any jurisdiction

to give the Indenture Trustee a first priority perfected lien on, or ownership

interest in, the Contracts and the proceeds thereof and the rest of the Trust

Corpus have been made, taken or performed.

 

(g)           Delta

Loans.  No more than 11.00%

of the Principal Balance of the Contracts as of the end of the Funding Period

is attributable to Delta Loans.

 

Section

3.04.        Representations

and Warranties Regarding the Contract Files.  Seller represents and warrants as of the

execution and delivery of this Agreement and as of the Closing Date, in the

case of the Initial Contracts, and as of the applicable Subsequent Transfer

Date, in the case of Subsequent Contracts, that:

 

(a)           Possession.  Immediately prior to the Closing Date or any

Subsequent Transfer Date, the Servicer will have possession of each original

Contract and the related complete Contract File, and there are and there will

be no custodial agreements relating to the same in effect.  Each of such documents which is required to

be signed by the Obligor has been signed by the Obligor in the appropriate

spaces.  All blanks on any form have

been properly filled in and each form has otherwise been correctly

prepared.  The complete Contract File

for each Contract currently is in the possession of the Servicer.

 

(b)           Bulk

Transfer Laws.  The transfer,

assignment and conveyance of the Contracts and the Contract Files by Seller

pursuant to this Agreement or any Subsequent Purchase Agreement and by Trust

Depositor pursuant to the Sale and Servicing Agreement is not subject to the

bulk transfer or any similar statutory provisions in effect in any applicable

jurisdiction.

 

ARTICLE IV

 

PERFECTION OF TRANSFER AND PROTECTION OF SECURITY

INTERESTS

 

Section

4.01.        Custody

of Contracts.  The contents

of each Contract File shall be held in the custody of the Servicer for the

benefit of the Trust as the owner thereof in accordance with the Sale and

Servicing Agreement.

 

12

 

Section

4.02.        Filing.  On or prior to the Closing Date and each

Subsequent Transfer Date, Seller shall cause the UCC financing statement(s)

referred to in Section 2.02(g) hereof and in Section 2.02(g) of the Sale and

Servicing Agreement to be filed and from time to time Seller shall take and

cause to be taken such actions and execute such documents as are necessary or

desirable or as Trust Depositor or the Trust may reasonably request to perfect

and protect the Trust Depositor’s and the Trust’s ownership interest in the

Contract Assets against all other persons, including, without limitation, the

filing of financing statements, amendments thereto and continuation statements,

the execution of transfer instruments and the making of notations on or taking

possession of all records or documents of title.  The Seller authorizes the Trust Depositor to file financing

statements describing the Contract Assets as collateral.

 

Section

4.03.        Name Change or Relocation.  (a) During the term of this Agreement,

Seller shall not change its name, identity or structure or state of

incorporation without first giving at least 30 days’ prior written notice to

Trust Depositor and to the Trustees.

 

(b)           If any change in Seller’s name,

identity or structure or other action would make any financing or continuation

statement or notice of ownership interest or lien filed under this Agreement

seriously misleading within the meaning of applicable provisions of the UCC or

any title statute, Seller, no later than five days after the effective date of

such change, shall file such amendments as may be required to preserve and

protect the Trust Depositor’s and the Trust’s interests in the Contract Assets

and proceeds thereof.  In addition,

Seller shall not change its state of incorporation unless it has first taken

such action as is advisable or necessary to preserve and protect the Trust

Depositor’s and the Trusts’ interest in the Contract Assets.  Promptly after taking any of the foregoing

actions, Seller shall deliver to Trust Depositor and the Trustees an opinion of

counsel stating that, in the opinion of such counsel, all financing statements

or amendments necessary to preserve and protect the interests of the Trustees

in the Contract Assets have been filed, and reciting the details of such

filing.

 

Section

4.04.        Costs

and Expenses.  Seller agrees

to pay all reasonable costs and disbursements in connection with the perfection

and the maintenance of perfection, as against all third parties, of (i) Trust

Depositor’s and the Trustees’ right, title and interest in and to the Contract

Assets (including, without limitation, the security interest in the Motorcycles

related thereto) and (ii) the security interests provided for in the Indenture.

 

Section

4.05         Sale

Treatment.  Each of Seller

and Trust Depositor shall treat the transfer of Contract Assets made hereunder

(including in respect of Subsequent Contracts) for all purposes (including tax

and financial accounting purposes) as a sale and purchase on all of its

relevant books, records, financial statements and other applicable documents.

 

Section

4.06         Separateness

from Trust Depositor.  The

Seller agrees to take or refrain from taking or engaging in with respect to the

Trust Depositor each of the actions or activities specified in the “substantive

consolidation” opinion of Winston & Strawn (or in any related certificate

of Seller) delivered on the Closing Date, upon which the conclusions expressed

therein are based.

 

13

 

Section

4.07         Protection

of Security Interests.  The

Seller agrees to deliver an Officer’s Certificate to the Owner Trustee and the

Indenture Trustee, as promptly as practicable after the Closing Date (or

Subsequent Transfer Date, as the case may be), and in any event within 60 days

thereof, certifying that the Seller’s compliance officer has reviewed the

original of each Initial Contract and each related Contract File, that each

Initial Contract and related Contract File conforms in all material respects

with the initial List of Contracts and each such Contract File is complete,

that each document required be an original, and that the face of each original

Initial Contract has been stamped with the following notation:

 

“This

Contract/Note is subject to a security interest granted to Harley-Davidson

Motorcycle Trust 2003-2.  A UCC1

financing statement covering this Contract/Note has been filed with the

Secretary of State of the State of Nevada. 

Such lien will be released only in connection with appropriate filings in

such offices.  Consequently, potential

purchasers of this Contract/Note must refer to such filings to determine

whether such lien has been released.”

 

ARTICLE V

 

REMEDIES UPON MISREPRESENTATION

 

Section

5.01.        Repurchases

of Contracts for Breach of Representations and Warranties.  Seller hereby agrees, for the benefit of the

Trustees and the Trust Depositor, that it shall repurchase a Contract including

any Subsequent Contracts (together with all related Contract Assets), at its

Repurchase Price, not later than two Business Days prior to the first

Determination Date after Seller becomes aware, or should have become aware, or

receives written notice from Trust Depositor, either of the Trustees or the

Servicer of any breach of a representation or warranty of Seller set forth in

Article III of this Agreement that materially adversely affects Trust

Depositor’s or the Trust’s interest in such Contract (without regard to the

benefits of the Reserve Fund) and which breach has not been cured; provided,

however, that with respect to any Contract incorrectly described on

the List of Contracts with respect to unpaid Principal Balance which Seller

would otherwise be required to repurchase pursuant to this Section 5.01 and

Section 7.08 of the Sale and Servicing Agreement, Seller may, in lieu of

repurchasing such Contract, deposit in the Collection Account not later than

two Business Days prior to such Determination Date cash in an amount sufficient

to cure such deficiency or discrepancy; and provided further that with respect to a

breach of a representation or warranty relating to the Contracts in the

aggregate and not to any particular Contract, Seller may select Contracts

(without adverse selection) to repurchase such that had such Contracts not been

reconveyed by Trust Depositor and included as part of the Trust there would

have been no breach of such representation or warranty; provided further that the

failure to maintain perfection of the security interest in the Motorcycle

securing a Contract in accordance with the Sale and Servicing Agreement, shall

be deemed to be a breach materially and adversely affecting the Trust’s

interest in the Contracts or in the related Contract Assets.  Notwithstanding any other provision of this

Agreement, the obligation of Seller under this Section 5.01 and under Section

7.08 of the Sale and Servicing Agreement shall not terminate upon a Service

Transfer pursuant to Article VIII of the Sale and Servicing Agreement.

 

14

 

Section

5.02.        Seller’s

Repurchase Option.  On

written notice to the Owner Trustee and the Indenture Trustee at least 20 days

prior to a Distribution Date, provided the Pool Balance is then less than 10%

of the Aggregate Principal Balance as of the Closing Date, Seller may (but is

not required to) repurchase from the Trust on that Distribution Date all

outstanding Contracts (and related Contract Assets) at a price equal to the

outstanding principal balance of the Notes on the previous Distribution Date

plus the Note Interest Distributable Amount for the current Distribution Date

as well as any unreimbursed Service Advances and the accrued and unpaid Monthly

Servicing Fee and Indenture Trustee Fee to the date of such repurchase.  Such price will be deposited in the

Collection Account not later than one Business Day before such Distribution

Date, against the Trustees’ release of the Contracts and Contract Files as

described in Section 7.10 of the Sale and Servicing Agreement.

 

ARTICLE VI

 

INDEMNITIES

 

Section

6.01.        Seller

Indemnification.  Seller will

defend and indemnify Trust Depositor, the Trust, the Trustees, any agents of

the Trustees and the Noteholders against any and all costs, expenses, losses,

damages, claims and liabilities, joint or several, including reasonable fees

and expenses of counsel and expenses of litigation arising out of or resulting

from (i) this Agreement or the use, ownership or operation of any Motorcycle by

Seller or the Servicer or any Affiliate of either, (ii) any representation or

warranty or covenant made by Seller in this Agreement being untrue or incorrect

(subject to the second sentence of the preamble to Article III of this

Agreement above), and (iii) any untrue statement or alleged untrue statement of

a material fact contained in the Prospectus or in any amendment thereto or the

omission or alleged omission to state therein a material fact necessary to make

the statements therein, in light of the circumstances in which they were made,

not misleading, in each case to the extent, but only to the extent, that such

untrue statement or alleged untrue statement was made in conformity with

information furnished to Trust Depositor by Seller specifically for use

therein.  Notwithstanding any other

provision of this Agreement, the obligation of Seller under this Section 6.01

shall not terminate upon a Service Transfer pursuant to Article VIII of the

Sale and Servicing Agreement and shall survive any termination of that

agreement or this Agreement.

 

Section

6.02.        Liabilities to Obligors.  No obligation or liability to any

Obligor under any of the Contracts is intended to be assumed by the Trustees,

the Trust or the Noteholders under or as a result of this Agreement and the

transactions contemplated hereby.

 

Section

6.03.        Tax

Indemnification.  Seller

agrees to pay, and to indemnify, defend and hold harmless the Trust Depositor,

the Trust, the Trustees or the Noteholders from, any taxes which may at any

time be asserted with respect to, and as of the date of, the transfer of the

Contracts to Trust Depositor hereunder and the concurrent reconveyance to the

Trust and the further pledge by the Trust to the Indenture Trustee, including,

without limitation, any sales, gross receipts, general corporation, personal

property, privilege or license taxes (but not including any federal, state or

other taxes arising out of the creation of the Trust and the issuance of the

Notes) and costs, expenses and reasonable counsel fees in defending against the

same,

 

15

 

whether arising by reason

of the acts to be performed by Seller under this Agreement or the Servicer

under the Sale and Servicing Agreement or imposed against the Trust, a

Noteholder or otherwise. 

Notwithstanding any other provision of this Agreement, the obligation of

Seller under this Section 6.03 shall not terminate upon a Service Transfer

pursuant to Article VIII of the Sale and Servicing Agreement and shall survive

any termination of this Agreement.

 

Section

6.04.        Operation

of Indemnities. 

Indemnification under this Article VI shall include, without limitation,

reasonable fees and expenses of counsel and expenses of litigation.  If Seller has made any indemnity payments to

Trust Depositor or the Trustees pursuant to this Article VI and Trust Depositor

or the Trustees thereafter collects any of such amounts from others, Trust

Depositor or the Trustees will repay such amounts collected to Seller, except

that any payments received by Trust Depositor or the Trustees from an insurance

provider as a result of the events under which the Seller’s indemnity payments

arose shall be repaid prior to any repayment of the Seller’s indemnity payment.

 

ARTICLE VII

 

MISCELLANEOUS

 

Section

7.01.        Prohibited

Transactions with Respect to the Trust.  Seller shall not:

 

(a)           Provide

credit to any Noteholder for the purpose of enabling such Noteholder to

purchase Notes;

 

(b)           Purchase

any Notes in an agency or trustee capacity; or

 

(c)           Except

in its capacity as Servicer as provided in the Sale and Servicing Agreement,

lend any money to the Trust.

 

Section

7.02.        Merger

or Consolidation.  (a) Except

as otherwise provided in this Section 7.02, Seller will keep in full force and

effect its existence, rights and franchises as a Nevada corporation, and will

obtain and preserve its qualification to do business as a foreign corporation

in each jurisdiction in which such qualification is or shall be necessary to

protect the validity and enforceability of this Agreement and of any of the

Contracts and to perform its duties under this Agreement.

 

(b)           Any person into which Seller may be

merged or consolidated, or any corporation 

or other entity resulting from such merger or consolidation to which

Seller is a party, or any person succeeding to the business of Seller, shall be

the successor to Seller hereunder, without the execution or filing of any paper

or any further act on the part of any of the parties hereto, anything herein to

the contrary notwithstanding.

 

(c)           Upon the merger or consolidation of

the Seller as described in this Section 7.02, the Seller shall provide Standard

& Poor’s and Moody’s notice of such merger or consolidation within thirty

(30) days after completion of the same.

 

16

 

Section

7.03.        Termination.  This Agreement shall terminate (after distribution

of any Note Distributable Amount due pursuant to Section 7.05  of the Sale and Servicing Agreement) on the

Distribution Date on which the principal balance of the Class A-1 Notes,  Class A-2 Notes and the Class B Notes is

reduced to zero; provided, that Seller’s representations and warranties and

indemnities by Seller shall survive termination.

 

Section

7.04.        Assignment

or Delegation by Seller. 

Except as specifically authorized hereunder, Seller may not convey and

assign or delegate any of its rights or obligations hereunder absent the prior

written consent of Trust Depositor and the Trustees, and any attempt to do so

without such consent shall be void.

 

Section

7.05.        Amendment.  (a) This Agreement may be amended from time

to time by Seller and Trust Depositor, with notice to the Rating Agencies, but

without the consent of the Trustees or any of the Noteholders, to correct

manifest error, to cure any ambiguity, to correct or supplement any provisions

herein or therein which may be inconsistent with any other provisions herein,

therein or in the Prospectus, as the case may be, or to add any other

provisions with respect to matters or questions arising under this Agreement

which shall not be inconsistent with the provisions of this Agreement or the Prospectus;

provided,

however, that such action shall not, as evidenced by an opinion of

Counsel for Seller acceptable to the Trustees, adversely affect the interests

of any Noteholder.

 

(b)           This Agreement may also be amended

from time to time by Seller and Trust Depositor, with the consent of the

Modified Required Holders, for the purpose of adding any provisions to or

changing in any manner or eliminating any of the provisions of this Agreement

or of modifying in any manner the rights of the Indenture Trustee for the

benefit of Noteholders; provided, however, that no such amendment

or waiver shall (a) reduce in any manner the amount of, or delay the timing of,

collections of payments on the Contracts or distributions which are required to

be made on any Note or (b) reduce the aforesaid percentage required to consent

to any such amendment, without the consent of the holders of all Notes then

outstanding.

 

(c)           Promptly after the execution of any

amendment or consent pursuant to this Section 7.05, Trust Depositor shall

furnish written notification of the substance of such amendment and a copy of

such amendment to each Trustee and each Rating Agency.

 

(d)           It shall not be necessary for the

consent of Noteholders under this Section 7.05 to approve the particular form

of any proposed amendment, but it shall be sufficient if such consent shall

approve the substance thereof.  The

manner of obtaining such consents and of evidencing the authorization of the

execution thereof by Noteholders shall be subject to such reasonable

requirements as the Trustees may prescribe.

 

(e)           Upon the execution of any amendment

or consent pursuant to this Section 7.05, this Agreement shall be modified in

accordance therewith, and such amendment or consent shall form a part of this

Agreement for all purposes, and every holder of Notes theretofore or thereafter

issued hereunder shall be bound thereby.

 

17

 

Section

7.06.        Notices.  All notices, demands,

certificates, requests and communications hereunder (“notices”) shall be in

writing and shall be effective (a) upon receipt when sent through the U.S.

mails, registered or certified mail, return receipt requested, postage prepaid,

with such receipt to be effective the date of delivery indicated on the return

receipt, or (b) one Business Day after delivery to an overnight courier, or (c)

on the date personally delivered to an Authorized Officer of the party to which

sent, or (d) on the date transmitted by legible telecopier transmission with a

confirmation of receipt, in all cases addressed to the recipient at the address

for such recipient set forth in the Sale and Servicing 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.

 

All communications and

notices pursuant hereto to Noteholders shall be in writing and delivered or

mailed at the address shown in the Note Register.

 

Section

7.07.        Merger

and Integration.  Except as

specifically stated otherwise herein, this Agreement sets forth the entire

understanding of the parties relating to the subject matter hereof, and all

prior understandings, written or oral, are superseded by this Agreement.  This Agreement may not be modified, amended,

waived, or supplemented except as provided herein.

 

Section

7.08.        Headings.  The headings herein are for purposes of

reference only and shall not otherwise affect the meaning or interpretation of

any provision hereof.

 

Section

7.09.        Governing

Law.  This Agreement shall be

governed by, and construed and enforced in accordance with, the internal laws

of the State of Illinois.

 

Section

7.10.        No

Bankruptcy Petition.  The

Seller 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, as well as any other amounts distributable or payable

from the Trust Estate, together with any other amounts owing in respect of

obligations of the Trust Depositor, it will not institute against, or solicit

or join in or cooperate with or encourage any Person to institute 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 State or any State of the United States.  This Section 7.10 shall survive termination

of this Agreement.

 

[signature page follows]

 

18

 

IN WITNESS WHEREOF,

the parties hereto have caused this Agreement to be executed by their

respective officers thereunto duly authorized as of the date first written

above.

 

 

	

   

  	

  HARLEY-DAVIDSON

  CUSTOMER FUNDING CORP.

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

  Printed Name: 

  Perry A. Glassgow

  
	

   

  	

   

  	

  Title: Treasurer

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  HARLEY-DAVIDSON

  CREDIT CORP.

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

  Printed Name: 

  Perry A. Glassgow

  
	

   

  	

   

  	

  Title: Treasurer

  

 

 

Signature Page to

Transfer and

Sale Agreement

 

 

Exhibit A

Transfer and Sale

Agreement

 

FORM

OF ASSIGNMENT

 

In accordance with the Transfer

and Sale Agreement (the “Agreement”) dated as of May 1, 2003

made by and between the undersigned, as seller thereunder (“Seller”),

and Harley-Davidson Customer Funding Corp., a Nevada corporation and

wholly-owned subsidiary of Seller (“Trust Depositor”), as purchaser

thereunder, the undersigned does hereby sell, transfer, convey and assign, set

over and otherwise convey to Trust Depositor (i) all the right, title and

interest of Seller in and to the Initial Contracts listed on the initial List

of Contracts in effect on the Closing Date (including, without limitation, all

security interests and all rights to receive payments which are collected

pursuant thereto on or after the Initial Cutoff Date, including any liquidation

proceeds therefrom, but excluding any rights to receive payments which were

collected pursuant thereto prior to the Initial Cutoff Date), (ii) all rights

of Seller under any physical damage or other individual insurance policy

(including a “forced placed” policy, if any) or any debt cancellation

agreement relating to any such Contract, an Obligor or a Motorcycle securing

such Contract, (iii) all security interests in each such Motorcycle, (iv) all

documents contained in the related Contract Files, (v) all rights of Seller in

the Lockbox, Lockbox Account and related Lockbox Agreement to the extent they

relate to the Contracts, (vi) all rights (but not the obligations) of the

Seller under any motorcycle dealer agreements between the dealers (i.e.

originators of the Contracts) and the Seller, (vii) all rights of Seller 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 (viii) all

proceeds and products of the foregoing

 

This Assignment is made

pursuant to and in reliance upon the representation and warranties on the part

of the undersigned contained in Article III of the Agreement and no others.

 

Capitalized terms used

herein but not otherwise defined shall have the meanings assigned to such terms

in the Sale and Servicing Agreement dated as of May 1, 2003 made by and among

the undersigned, as servicer, the Trust Depositor, Harley-Davidson Motorcycle

Trust 2003-2, as issuer, and BNY Midwest Trust Company, as indenture trustee.

 

 

A-1

 

IN WITNESS WHEREOF, the

undersigned has caused this Assignment to be duly executed this

     day of May, 2003.

 

	

   

  	

  HARLEY-DAVIDSON

  CREDIT CORP.

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

  Printed Name: 

  Perry A. Glassgow

  
	

   

  	

   

  	

  Title: Treasurer

  

 

A-2

 

Exhibit B

Transfer and Sale

Agreement

 

FORM

OF OFFICER’S CERTIFICATE

 

 

(See Exhibit C to the Sale and Servicing Agreement)

 

B-1

 

Exhibit C

Transfer and Sale

Agreement

 

FORM OF SUBSEQUENT PURCHASE AGREEMENT

 

SUBSEQUENT PURCHASE

AGREEMENT (the “Agreement”), dated as of

                    ,

          , by and among

Harley-Davidson Customer Funding Corp., a Nevada corporation (the “Trust

Depositor”), and Harley-Davidson Credit Corp., a  Nevada corporation (the “Seller”),

pursuant to the Transfer and Sale Agreement referred to below.

 

WITNESSETH:

 

WHEREAS, the Trust

Depositor and the Seller are parties to the Transfer and Sale Agreement, dated

as of May 1, 2003 (the “Transfer and Sale Agreement”);

 

WHEREAS, pursuant to the

Transfer and Sale Agreement, the Seller wishes to sell the Subsequent Contracts

to the Trust Depositor, and the Trust Depositor wishes to purchase the same,

for the purchase price set forth in Section 3 below; and

 

WHEREAS, the Seller has

timely delivered an Addition Notice related to such conveyance as required in

the Sale and Servicing Agreement dated as of May 1, 2003 among the Seller (in

the capacity of Servicer thereunder), the Issuer as defined therein, the Trust

Depositor and the Indenture Trustee as defined therein (the “Sale and

Servicing Agreement”).

 

NOW, THEREFORE, the Trust

Depositor and the Seller hereby agree as follows:

 

Section 1.              Capitalized

terms used herein shall have the meanings ascribed to them in the Sale and

Servicing Agreement unless otherwise defined herein.

 

“Subsequent

Cutoff Date” shall mean, with respect to the Subsequent

Contracts transferred hereby,

[                  ].

 

“Subsequent

Contracts” shall mean, for purposes of this Agreement, the

Subsequent Contracts listed in the Subsequent List of Contracts attached hereto

as Exhibit A.

 

“Subsequent

Transfer Date” shall mean, with respect to the Subsequent

Contracts transferred hereby,

[                  ].

 

Section 2.              Subsequent List of Contracts.  The Subsequent List of Contracts attached

hereto as Exhibit A is a supplement to the initial List of Contracts attached

as Exhibit

H to the Sale and Servicing Agreement.  The Contracts listed in the Subsequent List of Contracts

 

C-1

 

constitute the Subsequent

Contracts to be transferred pursuant to this Agreement on the subsequent

Transfer Date.

 

Section 3.              Transfer of Subsequent Contracts.  Subject to and upon the terms and conditions

set forth in Section 2.04(b) of the Transfer and Sale Agreement and this

Agreement, Seller hereby sells, transfers, assigns, sets over and otherwise

conveys to Trust Depositor, in consideration of Trust Depositor’s payment of

$[            ] as

the purchase price therefor, (i) all the right, title and interest of Seller in

and to the Subsequent Contracts listed on the related Subsequent List of

Contracts (including, without limitation, all security interests and all rights

to receive payments which are collected pursuant thereto on or after the

applicable Subsequent Cutoff Date, including any liquidation proceeds

therefrom, but excluding any rights to receive payments which were collected

pursuant thereto prior to such Subsequent Cutoff Date), (ii) all rights of

Seller under any physical damage or other individual insurance policy

(including a

“forced placed” policy, if any) or any debt cancellation agreement

relating to any such Subsequent Contract, an Obligor or a Motorcycle securing

such Subsequent Contract, (iii) all security interests in each such Motorcycle,

(iv) all documents contained in the related Subsequent Contract Files, (v) all

rights of Seller in the Lockbox, Lockbox Account and related Lockbox Agreement

to the extent they relate to the Subsequent Contracts, (vi) all rights (but not

the obligations) of the Seller under any motorcycle dealer agreements between

the dealers (i.e. originators of such Subsequent Contracts) and the

Seller, (vii) all rights of Seller to certain rebates of premiums and other

amounts relating to insurance policies, debt cancellation agreements, extended

service contracts or other repair agreements and other items financed under

such Subsequent Contracts and (viii) all proceeds and products of the

foregoing.  It is the intention of the

Seller and the Trust Depositor that the transfer contemplated by this Agreement

shall constitute a sale of the Subsequent Contracts from the Seller to the Trust

Depositor, conveying good title thereto free and clear of any Liens, and that

the Subsequent Contracts shall not be part of the Seller’s estate in the event

of the filing of a bankruptcy petition by or against Seller under any

bankruptcy or similar law.

 

Section 4.              Representations and Warranties of the Seller.  (a) Seller hereby represents and warrants to

the Trust Depositor that the representations and warranties of Seller in

Section 3.01 of the Transfer and Sale Agreement are true and correct as of the Subsequent

Transfer Date.

 

(b)           Seller hereby repeats and remakes

with respect to the Subsequent Contracts as of the Subsequent Transfer Date (i)

the representations and warranties of Seller in Sections 3.02, 3.03 and 3.04 of

the Transfer and Sale Agreement, except that, with respect to subsection (b) of

Section 3.03, (A) approximately

         % of the Principal

Balance of the Contracts as of the Subsequent Cutoff Date is attributable to

loans for purchases of new Motorcycles and approximately

    % is attributable to loans for purchases of used

Motorcycles, and (B) no Contract was originated after the Subsequent Cutoff

Date, as well as (ii) covenants to provide the certificate required by Section

2.02(h) (solely with respect to the Subsequent Contracts).

 

(c)           Seller hereby represents and warrants

that (a) the aggregate Principal Balance of the Subsequent Contracts listed on

the Subsequent List of Contracts and conveyed to the Trust

 

C-2

 

Depositor pursuant to this

Agreement is

$[                     ]

as of the Subsequent Cutoff Date, and (b) the conditions set forth in Section

2.04(b) of the Transfer and Sale Agreement have been satisfied as of the

Subsequent Transfer Date.

 

Section 5.              Ratification of Agreement.  As supplemented by this Agreement, the

Transfer and Sale Agreement is in all respects ratified and confirmed and, as

so supplemented by this Agreement, shall be read, taken and construed as one

and the same instrument.

 

Section 6.              Counterparts.  This Agreement may be executed in two or

more counterparts (and by different parties in separate counterparts), each of

which shall be an original but all of which together shall constitute one and

the same instrument.

 

Section 7.              Governing Law.  This Agreement shall be construed in

accordance with the laws of the State of Illinois, without reference to its

conflict of law provisions, and the obligations, rights and remedies of the

parties hereunder shall be determined in accordance with such laws.

 

C-3

 

IN

WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed

by their respective officers thereunto duly authorized as of the date first

written above.

 

 

	

   

  	

  HARLEY-DAVIDSON

  CUSTOMER FUNDING CORP.

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

  Printed Name: 

  Perry A. Glassgow

  
	

   

  	

   

  	

  Title: Treasurer

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  HARLEY-DAVIDSON

  CREDIT CORP.

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

  Printed Name: 

  Perry A. Glassgow

  
	

   

  	

   

  	

  Title: TreasurerEXHIBIT

10.23

 

 

 

SALE AND SERVICING

AGREEMENT

 

 

among

 

 

HARLEY-DAVIDSON

MOTORCYCLE TRUST 2003-2,

as Issuer,

 

 

HARLEY-DAVIDSON

CUSTOMER FUNDING CORP.,

as Trust

Depositor,

 

 

HARLEY-DAVIDSON

CREDIT CORP.,

as Servicer

 

 

and

 

 

BNY MIDWEST TRUST

COMPANY,

as Indenture

Trustee

 

 

Dated as of May 1,

2003

 

 

 

Table of Contents

 

	

  ARTICLE ONE

  	

  DEFINITIONS

  
	

  Section 1.01.

  	

  Definitions

  
	

  Section 1.02.

  	

  Usage of Terms

  
	

  Section 1.03.

  	

  Section References

  
	

  Section 1.04.

  	

  Calculations

  
	

  Section 1.05.

  	

  Accounting Terms

  
	

  ARTICLE TWO

  	

  ESTABLISHMENT OF TRUST; TRANSFER OF

  CONTRACTS

  
	

  Section 2.01.

  	

  Closing

  
	

  Section 2.02.

  	

  Conditions to the

  Closing

  
	

  Section 2.03.

  	

  Conveyance of

  Subsequent Contracts

  
	

  ARTICLE THREE

  	

  REPRESENTATIONS AND WARRANTIES

  
	

  Section 3.01.

  	

  Representations and

  Warranties Regarding the Trust Depositor

  
	

  Section 3.02.

  	

  Representations and

  Warranties Regarding the Servicer

  
	

  ARTICLE FOUR

  	

  PERFECTION OF TRANSFER AND PROTECTION OF

  SECURITY INTERESTS

  
	

  Section 4.01.

  	

  Custody of Contracts

  
	

  Section 4.02.

  	

  Filing

  
	

  Section 4.03.

  	

  Name Change or

  Relocation

  
	

  Section 4.04.

  	

  Costs and Expenses

  
	

  ARTICLE FIVE

  	

  SERVICING OF CONTRACTS

  
	

  Section 5.01.

  	

  Responsibility for

  Contract Administration

  
	

  Section 5.02.

  	

  Standard of Care

  
	

  Section 5.03.

  	

  Records

  
	

  Section 5.04.

  	

  Inspection

  
	

  Section 5.05.

  	

  Trust Accounts

  
	

  Section 5.06.

  	

  Enforcement

  
	

  Section 5.07.

  	

  Trustees to

  Cooperate

  
	

  Section 5.08.

  	

  Costs and Expenses

  
	

  Section 5.09.

  	

  Maintenance of

  Security Interests in Motorcycles

  
	

  Section 5.10.

  	

  Successor

  Servicer/Lockbox Agreements

  
	

  Section 5.11.

  	

  Separate Entity

  Existence

  
	

  ARTICLE SIX

  	

  THE TRUST DEPOSITOR

  
	

  Section 6.01.

  	

  Covenants of the

  Trust Depositor

  
	

  Section 6.02.

  	

  Liability of Trust

  Depositor; Indemnities

  
	

  Section 6.03.

  	

  Merger or

  Consolidation of, or Assumption of the Obligations of, Trust Depositor;

  Certain Limitations

  
	

  Section 6.04.

  	

  Limitation on

  Liability of Trust Depositor and Others

  
	

  Section 6.05.

  	

  Trust Depositor Not

  to Resign

  
	

  ARTICLE SEVEN

  	

  DISTRIBUTIONS; RESERVE FUND

  
	

  Section 7.01.

  	

  Monthly

  Distributions

  
	

  Section 7.02.

  	

  Fees

  
	

  Section 7.03.

  	

  Advances;

  Realization of Carrying Charge

  
	

  Section 7.04.

  	

  Interest Reserve

  Account

  
	

  Section 7.05.

  	

  Distributions;

  Priorities

  
	

  Section 7.06.

  	

  Reserve Fund

  
	

  Section 7.07.

  	

  Establishment of

  Pre-Funding Account

  
	

  Section 7.08.

  	

  Reacquisition of

  Contracts for Breach of Representations and Warranties

  
	

  Section 7.09.

  	

  Reassignment of

  Reacquired Contracts

  
	

  Section 7.10.

  	

  Seller’s

  Reacquisition Option

  
	

  ARTICLE EIGHT

  	

  EVENTS OF TERMINATION; SERVICE TRANSFER

  

 

i

 

	

  Section 8.01.

  	

  Events of

  Termination

  
	

  Section 8.02.

  	

  Waiver of Servicer

  Default

  
	

  Section 8.03.

  	

  Service Transfer

  
	

  Section 8.04.

  	

  Successor Servicer

  to Act; Appointment of Successor Servicer

  
	

  Section 8.05.

  	

  Notification to

  Securityholders

  
	

  Section 8.06.

  	

  Effect of Transfer

  
	

  Section 8.07.

  	

  Database File

  
	

  Section 8.08.

  	

  Successor Servicer

  Indemnification

  
	

  Section 8.09.

  	

  Responsibilities of

  the Successor Servicer

  
	

  Section 8.10.

  	

  Limitation of

  Liability of Servicer

  
	

  Section 8.11.

  	

  Merger or

  Consolidation of Servicer

  
	

  Section 8.12.

  	

  Servicer Not to

  Resign

  
	

  Section 8.13.

  	

  Appointment of

  Subservicer

  
	

  ARTICLE NINE

  	

  REPORTS

  
	

  Section 9.01.

  	

  Monthly Reports

  
	

  Section 9.02.

  	

  Officer’s

  Certificate

  
	

  Section 9.03.

  	

  Other Data

  
	

  Section 9.04.

  	

  Annual Report of

  Accountants

  
	

  Section 9.05.

  	

  Annual Statement of

  Compliance from Servicer

  
	

  Section 9.06.

  	

  Monthly Reports to

  Noteholders

  
	

  ARTICLE TEN

  	

  TERMINATION

  
	

  Section 10.01.

  	

  Sale of Trust

  Assets

  
	

  ARTICLE ELEVEN

  	

  MISCELLANEOUS

  
	

  Section 11.01.

  	

  Amendment

  
	

  Section 11.02.

  	

  Protection of

  Title to Trust

  
	

  Section 11.03.

  	

  Governing Law

  
	

  Section 11.04.

  	

  Notices

  
	

  Section 11.05.

  	

  Severability of

  Provisions

  
	

  Section 11.06.

  	

  Assignment

  
	

  Section 11.07.

  	

  Third Party

  Beneficiaries

  
	

  Section 11.08.

  	

  Counterparts

  
	

  Section 11.09.

  	

  Headings

  
	

  Section 11.10.

  	

  No Bankruptcy

  Petition; Disclaimer and Subordination

  
	

  Section 11.11.

  	

  Limitation of

  Liability of Owner Trustee and Indenture Trustee

  

 

ii

 

EXHIBITS

 

	

  Exhibit

  A

  	

  Form

  of Assignment

  
	

  Exhibit B

  	

  Form of Closing Certificate of Trust

  Depositor

  
	

  Exhibit C

  	

  Form of Closing Certificate of

  Seller/Servicer

  
	

  Exhibit D

  	

  Form of Opinion of Counsel for Trust

  Depositor regarding general corporate matters (including perfection opinion)

  
	

  Exhibit E

  	

  Form of Opinion of Counsel for Trust

  Depositor regarding the “true sale” nature of the transaction

  
	

  Exhibit F

  	

  Form of Opinion of Counsel for Trust

  Depositor regarding non-consolidation

  
	

  Exhibit G

  	

  Form of Certificate Regarding Reacquired

  Contracts

  
	

  Exhibit H

  	

  List of Contracts

  
	

  Exhibit I

  	

  Form of Monthly

  Report to Noteholders and the Certificateholder

  
	

  Exhibit J

  	

  Seller’s Representations and Warranties

  
	

  Exhibit K

  	

  Lockbox Bank and Lockbox Account

  
	

  Exhibit L

  	

  Form of Contract Stamp

  
	

  Exhibit M

  	

  Form of Subsequent Transfer Agreement

  

 

iii

 

SALE AND SERVICING AGREEMENT, dated as of May 1, 2003,

among Harley-Davidson Motorcycle Trust 2003-2 (together with its successors and

assigns, the

“Issuer” or the “Trust”), Harley-Davidson Customer Funding

Corp. (together with its successor and assigns, the “Trust Depositor”), BNY

Midwest Trust Company (solely in its capacity as Indenture Trustee together

with its successors and assigns, the “Indenture Trustee”) and Harley-Davidson

Credit Corp. (solely in its capacity as Servicer together with its successor

and assigns, “Harley-Davidson Credit” or the “Servicer”).

 

WHEREAS the Issuer desires to acquire from the Trust

Depositor an initial and subsequent pool of fixed-rate, simple interest

motorcycle conditional sales contracts and promissory note and security

agreements relating to Harley-Davidson and Buell motorcycles and motorcycles

not manufactured by Harley-Davidson or Buell (collectively, the “Contracts”)

originated by Harley-Davidson Credit and subsequently sold by Harley-Davidson

Credit to the Trust Depositor;

 

WHEREAS the Trust Depositor is willing to transfer and

assign the Contracts to the Issuer pursuant to the terms hereof; and

 

WHEREAS the Servicer is willing to service the

Contracts pursuant to the terms hereof;

 

NOW, THEREFORE, in consideration of the premises and

the mutual covenants herein contained, the parties hereto agree as follows:

 

ARTICLE ONE

 

DEFINITIONS

 

Section 1.01.        Definitions. 

Whenever used in this Agreement, the following words and phrases, unless

the context otherwise requires, shall have the following meanings:

 

“Addition

Notice” means,

with respect to any transfer of Subsequent Contracts to the Issuer  pursuant to Section 2.03 and the Trust

Depositor’s corresponding prior purchase of such Contracts from the Seller, a

notice, which shall be given at least 10 days prior to the related Subsequent

Transfer Date, identifying the aggregate Principal Balance of the Subsequent

Contracts to be transferred.

 

“Advance” means, with respect to any Distribution

Date, the amounts, if any, deposited by the Servicer in the Collection Account

for such Distribution Date pursuant to Section 7.03.

 

“Affiliate” of any specified Person means any other

Person controlling or controlled by, or under common control with, such

specified Person.  For the purposes of

this definition, “control” when used with respect to any specified Person

means the power to direct the management and policies of such Person, directly

or indirectly, whether through the ownership

 

1

 

of voting securities, by contract or otherwise; and the terms “controlling”

or “controlled”

have meanings correlative to the foregoing.

 

“Aggregate

Principal Balance” will

equal the sum of the Principal Balances of each outstanding Contract and the

Pre-Funded Amount, if any.  At the time

of initial issuance of the Securities, the initial aggregate principal amount

of the Securities will equal the initial Pool Balance plus the initial

Pre-Funded Amount.

 

“Aggregate

Principal Balance Decline” means, with respect to any Distribution Date, the

amount by which the Aggregate Principal Balance as of the close of business on

the last day of the Due Period relating to the Distribution Date immediately

preceding such Distribution Date (or as of the Cutoff Date in the case of the

first Distribution Date) exceeds the Aggregate Principal Balance as of the

close of business on the last day of the Due Period relating to such

Distribution Date.

 

“Agreement” 

means this Sale and Servicing Agreement, as amended, supplemented or

otherwise modified from time to time in accordance with the terms hereof.

 

“Available

Monies” means,

with respect to any Distribution Date, the sum of the Available Interest and

the Available Principal for such Distribution Date.

 

“Available

Interest” means,

with respect to any Distribution Date, the total (without duplication) of the

following amounts received by the Servicer on or in respect of the Contracts

during the related Due Period: (i) all amounts received in respect of interest

on the Contracts, (ii) the interest component of all Net Liquidation Proceeds,

(iii) the interest component of the aggregate of the Reacquisition Prices for

Contracts reacquired by the Trust Depositor pursuant to Section 7.08, (iv) all

Advances made by the Servicer pursuant to Section 7.03, (v) the interest

component of all amounts paid by the Trust Depositor in connection with an

optional reacquisition of the Contracts pursuant to Section 7.10, (vi) all

amounts received in respect of Carrying Charges transferred from the Interest

Reserve Account pursuant to Section 7.03, and (vii) all amounts received in respect

of interest, dividends, gains, income and earnings on investment of funds in

the Trust Accounts as contemplated in Section 5.05(d).

 

“Available

Principal” means,

with respect to any Distribution Date, the total (without duplication) of the

following amounts received by the Servicer on or in respect of the Contracts

during the related Due Period: (i) all amounts received in respect of principal

on the Contracts, (ii) the principal component of all Net Liquidation Proceeds,

(iii) the principal component of the aggregate of the Reacquisition Prices for

Contracts reacquired by the Trust Depositor pursuant to Section 7.08, and (iv)

the principal component of all amounts paid by the Trust Depositor in

connection with an optional reacquisition of the Contracts pursuant to Section

7.10.

 

“Average

Delinquency Ratio”

means, for any Distribution Date, the arithmetic average of the Delinquency

Ratios for such Distribution Date and the two immediately preceding

Distribution Dates.

 

2

 

“Average

Loss Ratio”

means, for any Distribution Date, the arithmetic average of the Loss Ratios for

such Distribution Date and the two immediately preceding Distribution Dates.

 

“Base

Prospectus” means

the Prospectus dated January 28, 2003 relating to the Harley-Davidson

Motorcycle Trusts.

 

“Buell” means

Buell Motorcycle Company.

 

“Business

Day” means any

day other than a Saturday or a Sunday, or another day on which banking

institutions in the city of Chicago, Illinois, Wilmington, Delaware or New

York, New York are authorized or obligated by law, executive order, or

governmental decree to be closed.

 

“Calculation Day” means

the last day of each calendar month.

 

“Carrying

Charges” means

the sum of (i) the product of (x) the weighted average of the Class A-1 Rate,

the Class A-2 Rate and the Class B Rate and (y) the undisbursed funds

(excluding investment earnings) in the Pre-Funding Account (as of the last day

of the related Due Period) and (ii) the Indenture Trustee Fee for the related Distribution

Date, minus (iii) the amount of any investment earnings on funds in the

Pre-Funding Account which was transferred to the Interest Reserve Account, as

well as interest earnings on amounts in the Interest Reserve Account.

 

“Certificate”

means the Trust

Certificate (as such term is defined in the Trust Agreement), representing 100%

of the beneficial equity interest in the Trust and issued pursuant to the Trust

Agreement.

 

“Certificate

Register” shall

have the meaning specified in the Trust Agreement.

 

“Certificateholder”

shall have the

meaning specified in the Trust Agreement.

 

“Class” means all Notes whose form is identical

except for variation in denomination, principal amount or owner.

 

“Class

A Note Monthly Principal Distributable Amount” means, with respect to any Distribution Date, the

Class A Note Percentage of the Principal Distributable Amount for such

Distribution Date.

 

“Class A Note Percentage”

means, (i) for each Distribution Date to but excluding the Distribution Date on

which the principal amount of the Class A-2 Notes is reduced to zero, 95.00%;

(ii) for the Distribution Date on which the principal amount of the Class A-2

Notes is reduced to zero, such percentage which represents the fraction of the

Principal Distributable Amount necessary to reduce the principal amount of the

Class A-2 Notes to zero; and (iii) for each Distribution Date thereafter, 0%.

 

3

 

“Class

A Note Principal Carryover Shortfall” means, as of the close of any Distribution Date, the

excess of the Class A Note Principal Distributable Amount with respect to the

immediately preceding Distribution Date over the amount in respect of principal

for the Class A Notes that is actually deposited in the Note Distribution

Account on such preceding Distribution Date.

 

“Class

A Note Principal Distributable Amount” means, with respect to any Distribution Date, the sum

of the Class A Note Monthly Principal Distributable Amount with respect to such

Distribution Date and the Class A Note Principal Carryover Shortfall as of the

close of the immediately preceding Distribution Date; provided, however, that the

Class A Note Principal Distributable Amount shall not exceed the outstanding

principal amount of the Class A Notes; and provided, further, that the Class A Note

Principal Distributable Amount (i) on the Class A-1 Final Distribution Date

shall not be less than the amount that is necessary (after giving effect to

other amounts to be deposited in the Note Distribution Account for payment on

the Class A-1 Notes on such Distribution Date and allocable to principal) to

reduce the outstanding principal amount of the Class A-1 Notes to zero, and

(ii) on the Class A-2 Final Distribution Date shall not be less than the amount

that is necessary (after giving effect to other amounts to be deposited in the

Note Distribution Account for payment on the Class A-2 Notes on such

Distribution Date and allocable to principal) to reduce the outstanding

principal amount of the Class A-2 Notes to zero.

 

“Class

A Notes” means,

collectively, the Class A-1 Notes and the Class A-2 Notes.

 

“Class

A-1 Final Distribution Date” means the January 2008 Distribution Date.

 

“Class

A-1 Noteholder”

means the Person in whose name a Class A-1 Note is registered in the Note Register,

as such term is defined in the Indenture.

 

“Class A-1 Rate” means

1.34% per annum (computed on the basis of a 360-day year of twelve 30-day

months).

 

“Class

A-2 Final Distribution Date” means the February 2011 Distribution Date.

 

“Class

A-2 Noteholder”

means the Person in whose name a Class A-2 Note is registered in the Note

Register.

 

“Class A-2 Rate”

means 2.07% per annum (computed on the basis of a 360-day year of twelve 30-day

months).

 

“Class

B Final Distribution Date” means the February 2011 Distribution Date.

 

“Class

B Noteholder”

means the Person in whose name a Class B Note is registered in the Note

Register, as such term is defined in the Indenture.

 

4

 

“Class

B Note Monthly Principal Distributable Amount” means, with respect to any Distribution Date, the

Class B Note Percentage of the Principal Distributable Amount for such

Distribution Date.

 

“Class B Note Percentage” means, (i) for

each Distribution Date to but excluding the Distribution Date on which the

principal amount of the Class A-2 Notes is reduced to zero, 5.00%; and (ii) for

the Distribution Date on which the principal amount of the Class A-2 Notes is

reduced to zero, that percentage that equals 100% minus the Class A Note

Percentage for such Distribution Date; and (iii) 100% thereafter.

 

“Class

B Note Principal Carryover Shortfall” means, as of the close of any Distribution Date, the

excess of the Class B Note Principal Distributable Amount with respect to the

immediately preceding Distribution Date over the amount in respect of principal

for the Class B Notes that is actually deposited in the Note Distribution

Account on such preceding Distribution Date.

 

“Class

B Note Principal Distributable Amount” means, with respect to any Distribution Date, the sum

of the Class B Note Monthly Principal Distributable Amount with respect to such

Distribution Date and the Class B Note Principal Carryover Shortfall as of the

close of the immediately preceding Distribution Date; provided, however, that the

Class B Note Principal Distributable Amount shall not exceed the outstanding

principal amount of the Class B Notes; and provided, further, that the Class B Note

Principal Distributable Amount on the Class B Final Distribution Date shall not

be less than the amount that is necessary (after giving effect to other amounts

to be deposited in the Note Distribution Account for payment on the Class B

Notes on such Distribution Date and allocable to principal) to reduce the

outstanding principal amount of the Class B Notes to zero.

 

“Class B Rate” means

1.89% per annum (computed on the basis of a 360-day year of twelve 30-day

months).

 

“Clearing Agency”

shall have the meaning specified in the Indenture.

 

“Closing Date”

means May 20, 2003.

 

“Code” means the

Internal Revenue Code of 1986, as amended.

 

“Collateral” shall

have the meaning specified in the “granting clause” of the Indenture.

 

“Collection

Account” means a

trust account as described in Section 5.05 maintained in the name of the

Indenture Trustee and which shall be an Eligible Account.

 

“Computer

Disk” means the

computer disk generated by the Servicer which provides information relating to

the Contracts and which was used by the Seller in selecting the Contracts sold

to the Trust Depositor pursuant to the Transfer and Sale Agreement (and any

Subsequent Purchase Agreement) by the Trust Depositor in selecting the

Contracts transferred to the Trust

 

5

 

pursuant to this Agreement (and any Subsequent Transfer Agreement), and

includes the master file and the history file as well as servicing information

with respect to the Contracts.

 

“Contract

Assets” has the

meaning assigned in Section 2.01 (and 2.03, as applicable in the case of

Subsequent Contracts) of the Transfer and Sale Agreement.

 

“Contract

File” means, as

to each Contract, (a) the original copy of the Contract, including the executed

conditional sales contract or promissory note and security agreement or other

evidence of the obligation of the Obligor, (b) the original title certificate

to the Motorcycle and, where applicable, the certificate of lien recordation,

or, if such title certificate has not yet been issued, an application for such

title certificate, or other appropriate evidence of a security interest in the

covered Motorcycle; (c) the assignments of the Contract; (d) the original copy

of any agreement(s) modifying the Contract including, without limitation, any

extension agreement(s) and (e) documents evidencing the existence of physical

damage insurance covering such Motorcycle.

 

“Contract

Rate” means, as

to any Contract, the annual rate of interest specified in the Contract.

 

“Contracts” 

means the motorcycle conditional sales contracts and promissory note and

security agreements described in the List of Contracts and constituting part of

the Trust Corpus (as such list may be supplemented from time to time to reflect

transfers of Subsequent Contracts), and includes, without limitation, all

related security interests and any and all rights to receive payments which are

collected pursuant thereto on or after the Initial Cutoff Date or, with respect

to any Subsequent Contracts, any related Subsequent Cutoff Date, but excluding

any rights to receive payments which are collected pursuant thereto prior to

the Initial Cutoff Date, or with respect to any Subsequent Contracts, any

related Subsequent Cutoff Date.

 

“Corporate

Trust Office”

means the office of the Indenture Trustee at which at any particular time its

corporate trust business shall be principally administered, which office at the

date of the execution of this Agreement is located at the address set forth in

Section 11.04.

 

“Cram

Down Loss” means,

with respect to a Contract, if a court of appropriate jurisdiction in an

insolvency proceeding shall have issued an order reducing the Principal Balance

of such Contract, the amount of such reduction (with a “Cram Down Loss”  being deemed to have occurred on the date of

issuance of such order).

 

“Cumulative

Loss Ratio”

means, as of any Distribution Date, the fraction (expressed as a percentage)

computed by the Servicer by dividing (i) the aggregate Net Liquidation Losses

for all Contracts since the related Cutoff Date through the end of the related

Due Period by (ii)  the sum of (A) the

Principal Balance of the Contracts as of the Cutoff Date plus (B) the Principal

Balance of any Subsequent Contracts as of the related Subsequent Cutoff Date

plus (C) the Pre-Funded Amount.

 

6

 

“Cutoff

Date” means

either or both (as the context may require) the Initial Cutoff Date and any

Subsequent Cutoff Date.

 

“Defaulted Contract” means a Contract with

respect to which there has occurred one or more of the following: (i) all or

some portion of any payment under the Contract is 120 days or more delinquent,

(ii) repossession (and expiration of any redemption period) of a Motorcycle

securing a Contract or (iii) the Servicer has determined in good faith that an

Obligor is not likely to resume payment under a Contract.

 

“Delinquency

Amount” means, as

of any Distribution Date, the Principal Balance of all Contracts that were

delinquent 60 days or more as of the end of the related Due Period (including

Contracts in respect of which the related Motorcycles have been repossessed and

are still inventory).

 

“Delinquent

Interest” means,

for each Contract and each Determination Date as to which the full payment due

in the related Due Period has not been paid before the 30th day after the

scheduled payment dated therefor (any such payment being “delinquent” for purposes of

this definition), all interest accrued on such Contract from the Due Date in

the Due Period one month prior to the Due Period in which the payment is

delinquent.

 

“Delinquency

Ratio” means, for

any Distribution Date, the fraction (expressed as a percentage) computed by

dividing (a) the Delinquency Amount during the immediately preceding Due Period

by (b) the Principal Balance of the Contracts as of the beginning of the

related Due Period.

 

“Delta

Loan” means a

loan made by the Seller pursuant to the program designated as the Delta

Program.

 

“Determination Date” means the fourth

Business Day following the conclusion of a Due Period during the term of this

Agreement.

 

“Distribution

Date” means the

fifteenth day of each calendar month during the term of this Agreement, or if

such day is not a Business Day, the next succeeding Business Day, with the

first such Distribution Date hereunder being June 16, 2003.

 

“Due

Date” means, with

respect to any Contract, the day of the month on which each scheduled payment

of principal and interest is due on such Contract, exclusive of days of grace.

 

“Due

Period” means a

calendar month during the term of this Agreement, and the Due Period related to

a Determination Date or Distribution Date shall be the calendar month

immediately preceding such date; provided, however, that with respect to

the Initial Determination Date or Initial Distribution Date, the Due Period

shall be the period from the Initial Cutoff Date to and including May 31, 2003.

 

7

 

“Eligible

Account” means a

segregated direct deposit account maintained with the Indenture Trustee, acting

in its fiduciary capacity, or a depository institution or trust company

organized under the laws of the United States of America, or any of the States

thereof, or the District of Columbia, having a certificate of deposit, short-term

deposit or commercial paper rating of at least A-1+ by Standard & Poor’s

and P-1 by Moody’s.

 

“Eligible

Investments” mean

book-entry securities, negotiable instruments or securities represented by

instruments in bearer or registered form which evidence:

 

(a)           direct obligations of, and

obligations fully guaranteed as to timely payment by, the United States of

America;

 

(b)           demand deposits, time deposits or

certificates of deposit of any depository institution or trust company

incorporated under the laws of the United States of America or any State (or

any domestic branch of a foreign bank) and subject to supervision and examination

by Federal or State banking or depository institution authorities; provided,

however, that at the time of the investment or contractual

commitment to invest therein, the commercial paper or other short-term senior

unsecured debt obligations (other than such obligations the rating of which is

based on the credit of a Person other than such depository institution or trust

company) thereof shall have a credit rating from the Rating Agency in the

highest investment category granted thereby;

 

(c)           commercial paper having, at the time

of the investment or contractual commitment to invest therein, a rating from

the Rating Agency in the highest investment category granted thereby;

 

(d)           investments in money market funds

having a rating from the Rating Agency in the highest investment category

granted thereby (including funds for which the Indenture Trustee or the Owner

Trustee or any of their respective Affiliates is investment manager or

advisor);

 

(e)           bankers’ acceptances issued by any

depository institution or trust company referred to in clause (b); and

 

(f)            repurchase obligations with respect

to any security that is a direct obligation of, or fully guaranteed as to

timely payment by, the United States of America or any agency or

instrumentality thereof the obligations of which are backed by the full faith

and credit of the United States of America, in either case entered into with a

depository institution or trust company (acting as principal) described in clause

(b).

 

“Event of Termination”

means an event specified in Section 8.01.

 

“Excess

Amounts” shall

mean Available Monies after distributions made in accordance with Section 7.05.

 

8

 

“Final

Distribution Date”

means the Class A-1 Final Distribution Date, the Class A-2 Final Distribution

Date or the Class B Final Distribution Date, as the case may be.

 

“Funding

Period” means the

period beginning on the Closing Date and ending on the first to occur of (a)

the Distribution Date on which the amount on deposit in the Pre-Funding

Account (after giving effect to any transfers therefrom in connection with the

transfer of Subsequent Contracts to the Trust on such Distribution Date) is

less than $150,000, (b) the date on which an Event of Termination occurs, (c)

the date on which an Insolvency Event occurs with respect to the Trust

Depositor and (d) the close of business on the date which is 90 days from and

including the Closing Date.

 

“Harley-Davidson Financial” means Harley-Davidson Financial Services,

Inc., a Delaware corporation.

 

“Holder” means, with respect to a (i)

Certificate, the Person in whose name such Certificate is registered in the

Certificate Register and (ii) Note, the Person in whose name such Note is

registered in the Note Register.

 

“Indenture” means the Indenture, dated as of the

date hereof, between the Issuer and the Indenture Trustee.

 

“Indenture

Trustee” means

the Person acting as Indenture Trustee under the Indenture, its successors in

interest and any successor trustee under the Indenture.

 

“Indenture

Trustee Fee”

means, with respect to any Distribution Date, one-twelfth of the product

of .002% and the sum of (i) the Principal Balance of the Contracts as of the

beginning of the related Due Period and (ii) the Pre-Funded Amount as of the

beginning of such period; provided, however, in no event shall such

fee be less than $200.00 per month.

 

“Independent” when used with respect to any specified

Person, means such a Person who (i) is in fact independent of the Issuer, the

Trust Depositor or the Servicer, (ii) is not a director, officer or employee of

any Affiliate of the Issuer, the Trust Depositor or the Servicer, (iii) is not

a person related to any officer or director of the Issuer, the Trust Depositor

or the Servicer or any of their respective Affiliates, (iv) is not a holder

(directly or indirectly) of more than 10% of any voting securities of Issuer,

the Trust Depositor or the Servicer or any of their respective Affiliates, and

(v) is not connected with the Issuer, the Trust Depositor or the Servicer as an

officer, employee, promoter, underwriter, trustee, partner, director or person

performing similar functions.

 

“Initial Class A-1 Note Balance” means

$251,000,000.

 

“Initial Class A-2 Note Balance” means

$152,750,000.

 

“Initial Class B Note Balance” means

$21,250,000.

 

9

 

“Initial

Contracts” means

those Contracts conveyed to the Trust on the Closing Date.

 

“Initial Cutoff Date”

means as of the close of business on May 6, 2003.

 

“Insolvency

Event” means,

with respect to a specified Person, (i) the entry of a decree or order for

relief by a court or regulatory authority having jurisdiction in respect of

such Person in an involuntary case under the federal bankruptcy laws, as now or

hereafter in effect, or any other present or future, federal or state,

bankruptcy, insolvency or similar law, or appointing a receiver, liquidator,

assignee, custodian, trustee, sequestrator or other similar official for such

Person or for any substantial part of its property, or ordering the winding-up

or liquidation of such Person’s affairs, and the continuance of any such decree

or order unstayed and in effect for a period of 60 consecutive days; (ii) the

commencement of an involuntary case under the federal bankruptcy laws, as now

or hereinafter in effect, or another present or future federal or state

bankruptcy, insolvency or similar law and such case is not dismissed within 60

days; or (iii) the commencement by such Person of a voluntary case under the

federal bankruptcy laws, as now or hereinafter in effect, or any other present

or future federal or state, bankruptcy, insolvency or similar law, or the

consent by such Person to the appointment of or taking possession by a

receiver, liquidator, assignee, custodian, trustee, sequestrator or other

similar official for such Person or for any substantial part of its property,

or the making by such Person of an assignment for the benefit of creditors or

the failure by such Person generally to pay its debts as such debts become due

or the taking of corporate action by such Person in furtherance of any the

foregoing.

 

“Interest

Period” means,

with respect to any Distribution Date, the period from and including the

fifteenth day of the month of the Distribution Date immediately preceding such

Distribution Date (or, in the case of the first Distribution Date, from and

including the Closing Date) to but excluding the fifteenth day of the month of

such Distribution Date.

 

“Interest

Rate” means the

Class A-1 Rate, the Class A-2 Rate or the Class B Rate, as applicable.

 

“Interest

Reserve Account”

means the account designated as the Interest Reserve Account in, and which is

established and maintained pursuant to, Section 7.04 hereof.

 

“Interest

Reserve Amount”

means, as of any date of determination, the amount on deposit in the Interest  Reserve

Account on such date, and as of the Closing Date shall be $241,276.36.

 

“Investment

Earnings” means,

with respect to any Distribution Date, the investment earnings (net of losses

and investment expenses) on amounts on deposit in the Trust Accounts, other

than the Pre-Funding Account, to be deposited into the Collection Account on

such Distribution Date pursuant to Section 5.05(b).

 

“Issuer” means the

Harley-Davidson Motorcycle Trust 2003-2.

 

10

 

“Late

Payment Penalty Fees” means any late payment fees paid by Obligors on Contracts after all

sums received have been allocated first to regular installments due or overdue

and all such installments are then paid in full.

 

“Lien” means a security interest, lien, charge,

pledge, equity or encumbrance of any kind, other than tax liens, mechanics’

liens and any liens that attach to the respective Contract by operation of law.

 

“Liquidated

Contract” means a

Contract with respect to which there has occurred one or more of the following:

(i) 90 days have elapsed following the date of repossession (and expiration of

any redemption period) with respect to the Motorcycle securing such Contract,

(ii) the receipt of proceeds by the Servicer from the sale of a repossessed

Motorcycle securing a Contract, (iii) the Servicer has determined in good faith

that all amounts expected to be recovered have been received with respect to

such Contract, or (iv) all or any portion of any payment is delinquent 150 days

or more.

 

“List

of Contracts”

means the list identifying each Contract constituting part of the Trust Corpus,

which list shall consist of the initial List of Contracts reflecting the

Initial Contracts transferred to the Trust on the Closing Date, together with

any Subsequent List of Contracts reflecting the Subsequent Contracts

transferred to the Trust on the related Subsequent Transfer Date, and which

list (a) identifies each Contract and (b) sets forth as to each Contract (i) the

Principal Balance as of the applicable Cutoff Date, (ii) the amount of monthly

payments due from the Obligor, (iii) the Contract Rate and (iv) the maturity

date, and which list (as in effect on the Closing Date) is attached to this

Agreement as Exhibit H.

 

“Lockbox” means the Lockbox maintained by the

Lockbox Bank identified on Exhibit K hereto.

 

“Lockbox

Account” means

the account maintained with the Lockbox Bank and identified on Exhibit K

hereto.

 

“Lockbox

Agreement” means

the Fifth Amended and Restated Lockbox Administration Agreement dated as of

November 1, 2000 by and among the Lockbox Bank, Servicer, the Trust Depositor,

Harley-Davidson Customer Funding Corp., The Bank of New York

(successor-in-interest to the corporate trust business of Harris Trust and

Savings Bank), BNY Midwest Trust Company and Bank One, National Association,

with respect to the Lockbox Account, unless such agreement shall be terminated

in accordance with its terms, in which event “Lockbox Agreement” shall

mean such other agreement, in form and substance acceptable to the

above-described parties.

 

“Lockbox

Bank” means the

financial institution maintaining the Lockbox Account and identified on Exhibit K

hereto or any successor thereto.

 

“Loss

Ratio” means, for

any Distribution Date, the fraction (expressed as a percentage) derived by

dividing (x) Net Liquidation Losses for all Contracts that became Liquidated

 

11

 

Contracts during the immediately preceding Due Period multiplied by

twelve by (y) the outstanding Principal Balances of all Contracts as of the

beginning of the Due Period.

 

“Mandatory

Redemption” means

the prepayment, in part, made to the Noteholders without premium made on the

Distribution Date on or immediately following the last day of the Funding

Period in the event that any amount remains on deposit in the Pre-Funding

Account after giving effect to the acquisition of all Subsequent Contracts,

including any such acquisition on such date.

 

“Mandatory

Redemption Subaccount” means the subaccount of the Note Distribution Account into which

deposits from the Pre-Funding Account for any Mandatory Redemption are made.

 

“Modified

Required Holders”

means (i) prior to the payment in full of the Class A Notes outstanding, Class

A-1 Noteholders and/or Class A-2 Noteholders evidencing at least 66 2/3% of the

aggregate outstanding principal balance of the Class A Notes and (ii) from and

after the payment in full of the Class A Notes outstanding, Class B Noteholders

evidencing at least 66 2/3% of the aggregate outstanding principal balance of

the Class B Notes.

 

“Monthly Report”

shall have the meaning specified in Section 9.06.

 

“Monthly

Servicing Fee”

means, as to any Distribution Date, one-twelfth of the product of 1% and the Principal Balance of the

Contracts as of the beginning of the related Due Period or, with respect to the

first Distribution Date of June 16, 2003, as of the Initial Cutoff Date.

 

“Moody’s” means

Moody’s Investors Service, Inc. or any successor thereto.

 

“Motorcycle” means a motorcycle manufactured by

Harley-Davidson, Inc. (or in certain limited instances Buell or certain

other manufacturers) securing a Contract.

 

“Net

Liquidation Losses”

means, as of any Distribution Date, with respect to all Liquidated Contracts on

an aggregate basis, the amount, if any, by which (a) the outstanding Principal

Balance of all Liquidated Contracts plus accrued and unpaid interest thereon at

the Contract Rate to the date on which such Liquidated Contracts became

Liquidated Contracts exceeds (b) the Net Liquidation Proceeds for such

Liquidated Contracts.

 

“Net

Liquidation Proceeds” means, as to any Liquidated Contract, the proceeds realized on the

sale or other disposition of the related Motorcycle, including proceeds

realized on the repurchase of such Motorcycle by the originating dealer for

breach of warranties, and the proceeds of any insurance relating to such

Motorcycle, after payment of all reasonable expenses incurred thereby,

together, in all instances, with the expected or actual proceeds of any

recourse rights relating to such Contract as well as any post-disposition

proceeds or other amounts in respect of a Liquidated Contract received by the

Servicer.

 

“Note

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

 

12

 

“Note

Distributable Amount” means, with respect to any Distribution Date, the sum of the Note

Principal Distributable Amount and the Note Interest Distributable Amount for

such Distribution Date.

 

“Note

Distribution Account” means the account established and maintained as such pursuant to

Section 5.05.

 

“Note

Interest Carryover Shortfall” means, with respect to any Distribution Date and a

Class of Notes, the excess, if any, of the sum of the Note Interest Distributable

Amount for such Class for the immediately preceding Distribution Date plus any

outstanding Note Interest Carryover Shortfall for such Class on such preceding

Distribution Date, over the amount in respect of interest that is actually

deposited in the Note Distribution Account with respect to such Class on such

preceding Distribution Date, plus, interest on such excess to the extent

permitted by applicable law, at the related Interest Rate for the related

Interest Period.

 

“Note

Interest Distributable Amount” means, with respect to any Distribution Date and a

Class of Notes, the sum of the Note Monthly Interest Distributable Amount and

the Note Interest Carryover Shortfall for such Class of Notes with respect to

such Distribution Date.

 

“Note

Monthly Interest Distributable Amount” means, with respect to any Distribution Date for any

Class of Notes, interest accrued from and including the fifteenth day of the

month of the preceding calendar month to, but excluding, the fifteenth day of

the calendar month in which such Distribution Date occurs (or in the case of

the first Distribution Date, interest accrued from and including the Closing

Date to but excluding such Distribution Date) at the related Interest Rate for

such Class of Notes on the outstanding principal amount of the Notes of such

Class on the immediately preceding Distribution Date, after giving effect to

all payments of principal to Noteholders of such Class on or prior to such

preceding Distribution Date (or, in the case of the first Distribution Date, on

the original principal amount of such Class of Notes).

 

“Note

Pool Factor”

means with the respect to any Class of Notes as of the close of business on any

Distribution Date, a seven-digit decimal figure equal to the outstanding

principal amount of such Class of Notes (after giving effect to any reductions

thereof to be made on such Distribution Date) divided by the original

outstanding principal amount of such Class of Notes.

 

“Note

Principal Carryover Shortfall” means the Class A Note Principal Carryover Shortfall

and the Class B Note Principal Carryover Shortfall.

 

“Note

Principal Distributable Amount” means the Class A Note Principal Distributable Amount

and the Class B Note Principal Distributable Amount.

 

“Note Register” shall

have the meaning specified in the Indenture.

 

“Notes” means the Class A-1

Notes, the Class A-2 Notes and the Class B Notes, in each case as executed and

authenticated in accordance with the Indenture.

 

13

 

“Obligee” means the Person to whom an Obligor is

indebted under a Contract.

 

“Obligor” means a Motorcycle buyer or other person

who owes payments under a Contract.

 

“Officer’s

Certificate”

means a certificate signed by the Chairman, the President, a Vice President,

the Treasurer, an Assistant Treasurer, the Controller, an Assistant Controller,

the Secretary or an Assistant Secretary of any Person delivering such

certificate and delivered to the Person to whom such certificate is required to

be delivered, including any certificate delivered under any of the Transaction

Documents required to be executed by a Servicing Officer.  In the case of an Officer’s Certificate of

the Servicer, at least one of the signing officers must be a Servicing

Officer.  Unless otherwise specified,

any reference herein to an Officer’s Certificate shall be to an Officers’

Certificate of the Servicer.

 

“Opinion

of Counsel” means

a written opinion of counsel (who may be counsel to the Trust Depositor or the

Servicer) acceptable to the Indenture Trustee or the Owner Trustee, as the case

may be.

 

“Owner

Trustee” means

the Person acting, not in its individual capacity, but solely  as Owner Trustee under the Trust Agreement,

its successors in interest and any successor owner trustee under the Trust Agreement.

 

“Paying

Agent” means as

described in Section 1.01 of  the

Indenture and Section 3.10 of the Trust Agreement.

 

“Person” 

means any individual, corporation, estate, limited liability company,

partnership, joint venture, association, joint stock company, trust (including

any beneficiary thereof), unincorporated organization or government or any

agency or political subdivision thereof.

 

“Pool

Balance” means as

of any date, the Principal Balance of Contracts as of the close of business on

such date.

 

“Pre-Funded

Amount” means as

of any date, the amount on deposit in the Pre-Funding Account at the close of

business on such date.

 

“Pre-Funding

Account” means

the account designated as the Pre-Funding Account in, and which is established

and maintained pursuant to Section 7.07.

 

“Principal

Balance” means

(a) with respect to any Contract as of any date, an amount equal to the unpaid

principal balance of such Contract as of the close of business on the Initial

Cutoff Date or related Subsequent Cutoff Date, as applicable, reduced by the

sum of (x) all payments received by the Servicer as of such date allocable to

principal and (y) any Cram Down Loss in respect of such Contract; provided,

however, that (i) if (x) a Contract is reacquired by the Seller

pursuant to Section 5.01 of the Transfer and Sale Agreement and Section 7.08

hereof

 

14

 

because of a breach of representation or warranty, or if (y) the Seller

gives notice of its intent to reacquire the Contracts in connection with an

optional termination of the Trust pursuant to Section 5.02 of the Transfer and

Sale Agreement and Section 7.10 hereof, in each case the Principal Balance of

such Contract or Contracts shall be deemed as of the related Determination Date

to be zero for the Due Period in which such event occurs and for each Due

Period thereafter and (ii) from and after the Due Period in which a Contract

becomes a Liquidated Contract, the Principal Balance of such Contract shall be

deemed to be zero; and (b) where the context requires, the aggregate of the

Principal Balances described in clause (a) for all such Contracts.

 

“Principal

Distributable Amount” means, with respect to any Distribution Date, the Aggregate Principal

Balance Decline for such Distribution Date.

 

“Prospectus” means

the Base Prospectus together with the Supplement.

 

“Qualified

Eligible Investments” means Eligible Investments acquired by the Indenture Trustee in its

name and in its capacity as Indenture Trustee, which are held by the Indenture

Trustee in the Pre-Funding Account, the Interest Reserve Account or the Reserve

Fund and with respect to which (a) the Indenture Trustee has noted its interest

therein on its books and records, and (b) the Indenture Trustee has purchased

such investments for value without notice of any adverse claim thereto (and, if

such investments are securities or other financial assets or interests therein,

within the meaning of Section 8-102 of the UCC as enacted in Illinois, without

acting in collusion with a securities intermediary in violating such securities

intermediary’s obligations to entitlement holders in such assets, under Section

8-504 of such UCC, to maintain a sufficient quantity of such assets in favor of

such entitlement holders), and (c) either (i) such investments are in the

possession, or are under the control, of the Indenture Trustee, or (ii) such

investments, (A) if certificated securities and in bearer form, have been

delivered to the Indenture Trustee, or in registered form, have been delivered

to the Indenture Trustee and either registered by the issuer thereof in the

name of the Indenture Trustee or endorsed by effective endorsement to the

Indenture Trustee or in blank; (B) if uncertificated securities, the ownership

of which has been registered to the Indenture Trustee on the books of the

issuer thereof (or another person, other than a securities intermediary, either

becomes the registered owner of the uncertified security on behalf of the

Indenture Trustee or, having previously become the registered owner,

acknowledges that it holds for the Indenture Trustee); or (C) if securities

entitlements (within the meaning of Section 8-102 of the UCC as enacted in

Illinois) representing interests in securities or other financial assets (or

interests therein) held by a securities intermediary (within the meaning of

said Section 8-102), a securities intermediary indicates by book entry that a

security or other financial asset has been credited to the Indenture Trustee’s

securities account with such securities intermediary.  Any such Qualified Eligible Investment may be purchased by or

through the Indenture Trustee or any of its affiliates.

 

“Rating

Agency” means

each of Moody’s and Standard & Poor’s, so long as such Persons maintain a

rating on the Notes; and if either Moody’s or Standard & Poor’s no longer

maintains a rating on the Notes, such other nationally recognized statistical

rating organization selected by the Trust Depositor.

 

15

 

“Reacquisition Price” means, with respect to a Contract to be reacquired

hereunder as of the last day of any Due Period an amount equal to (a) the

Principal Balance of such Contract as of such day, plus (b) accrued and unpaid

interest at the Contract Rate on such Contract through the end of such Due

Period.

 

“Record

Date” means, with

respect to any Distribution Date, the close of business on the day immediately

preceding such date.

 

“Reimbursement

Amount” has the meaning assigned in Section 7.03 hereof.

 

“Required

Holders” means

(i) prior to the payment in full of the Class A Notes outstanding, Class A-1

Noteholders and Class A-2 Noteholders evidencing more than 50% of the aggregate

outstanding principal balance of the Class A Notes and (ii) from and after the

payment in full of the Class A Notes outstanding, Class B Noteholders

evidencing more than 50% of the aggregate outstanding principal balance of the

Class B Notes.

 

“Reserve

Fund” means the

Reserve Fund established and maintained pursuant to Section 7.06 hereof.

 

“Reserve Fund Initial Deposit”

means $3,091,240.03.

 

“Reserve

Fund Deposits”

means all moneys deposited in the Reserve Fund from time to time including, but

not limited to, the Reserve Fund Initial Deposit as well as any monies

deposited therein pursuant to Section 7.05(a), all investments and

reinvestments thereof, earnings thereon, and proceeds of the foregoing, whether

now or hereafter existing.

 

“Reserve

Fund Trigger Event”

means the occurrence with respect to any Distribution Date (i) the Average

Delinquency Ratio for such Distribution Date is equal to or greater than (a)

2.50% with respect to any Distribution Date which occurs within the period from

the Closing Date to, and inclusive of, the first anniversary of the Closing

Date, (b) 3.00% with respect to any Distribution Date which occurs within the

period from the day after the first anniversary of the Closing Date to, and

inclusive of, the second anniversary of the Closing Date, or (c) 3.50% with

respect to any Distribution Date which occurs within the period from the day

after the second anniversary of the Closing Date to, and inclusive of, the

third anniversary of the Closing Date or (d) 4.00% with respect to any

Distribution Date occurring after the third anniversary of the Closing Date;

(ii) the Average Loss Ratio for such Distribution Date is equal to or greater

than (a) 3.00% with respect to any Distribution Date which occurs within the

period from the Closing Date to, and inclusive of, the second anniversary of

the Closing Date or (b) 2.75% with respect to any Distribution Date which

occurs following the second anniversary of the Closing Date;  or (iii) the Cumulative Loss Ratio for such

Distribution Date is equal to or greater than (a) 1.25% with respect to any

Distribution Date which occurs within the period from the Closing Date to, and

inclusive of, the first anniversary of the Closing Date, (b) 2.00% with respect

to any Distribution Date which occurs within the period from the day after the

first anniversary of the Closing Date to, and inclusive of, the second

anniversary of the Closing Date, (c) 2.50% with respect to any Distribution

Date which occurs within the period from the day after the second

 

16

 

anniversary of the Closing Date to, and inclusive of, the third

anniversary of the Closing Date, or (d) 2.75% with respect to any Distribution

Date occurring after the third anniversary of the Closing Date.

 

A Reserve Fund Trigger Event shall be deemed to have

terminated with respect to a Distribution Date if no Reserve Fund Trigger Event

shall exist with respect to three consecutive Distribution Dates (inclusive of

the respective Distribution Date).

 

“Responsible

Officer” means,

with respect to the Owner Trustee, any officer in its Corporate Trust Administration

Department (or any similar group of a successor Owner Trustee) and with respect

to the Indenture Trustee, the chairman and any vice chairman of the board of

directors, the president, the chairman and vice chairman of any executive

committee of the board of directors, every vice president, assistant vice

president, the secretary, every assistant secretary, cashier or any assistant

cashier, controller or assistant controller, the treasurer, every assistant

treasurer, every trust officer, assistant trust officer and every other

authorized officer or assistant officer of the Trustee customarily performing

functions similar to those performed by persons who at the time shall be such

officers, respectively, or to whom a corporate trust matter is referred because

of knowledge of, familiarity with, and authority to act with respect to a

particular matter.

 

“Securities” means

the Notes, or any of them.

 

“Securityholders”

means the Holders of the Notes.

 

“Seller” means Harley-Davidson Credit Corp., a

Nevada corporation, or its successor, in its capacity as Seller of Contract

Assets under the Transfer and Sale Agreement and any Subsequent Purchase

Agreement.

 

“Servicer” means Harley-Davidson Credit Corp., a

Nevada corporation, or its successor, until any Service Transfer hereunder and

thereafter means the Successor Servicer appointed pursuant to Article VIII

below with respect to the duties and obligations required of the Servicer under

this Agreement.

 

“Service Transfer”

has the meaning assigned in Section 8.03(a).

 

“Servicing

Fee” means, on

any Determination Date, the sum of (a) the Monthly Servicing Fee payable on the

related Distribution Date, (b) Late Payment Penalty Fees received by the

Servicer during the related Due Period, and (c) extension fees received by the

Servicer during the related Due Period.

 

“Servicing

Officer” means

any officer of the Servicer involved in, or responsible for, the administration

and servicing of Contracts whose name appears on a list of servicing officers

appearing in an Officer’s Certificate furnished to the Indenture Trustee by the

Servicer, as the same may be amended from time to time.

 

17

 

“Shortfall” means, with respect to a Distribution

Date, the excess (if any), of the sum of the amounts payable pursuant to

clauses (v) through (viii) of Section 7.05 over Available Monies for such

Distribution Date minus the amounts payable pursuant to clauses (i) through

(iv) of Section 7.05 on such Distribution Date.

 

“Solvent” means, as to any Person at any time,

that (a) the fair value of the property of such Person is greater than the

amount of such Person’s liabilities (including disputed, contingent and

unliquidated liabilities) as such value is established and liabilities

evaluated for purposes of Section 101(31) of the Bankruptcy Code; (b) the

present fair saleable value of the property of such Person in an orderly

liquidation of such Person is not less than the amount that will be required to

pay the probable liability of such Person on its debts as they become absolute

and matured; (c) such Person is able to realize upon its property and pay its

debts and other liabilities (including disputed, contingent and unliquidated

liabilities) as they mature in the normal course of business; (d) such Person

does not intend to, and does not believe that it will, incur debts or

liabilities beyond such Person’s ability to pay as such debts and liabilities

mature; and (e) such Person is not engaged in business or a transaction, and is

not about to engage in a business or a transaction, for which such Person’s

property would constitute unreasonably small capital.

 

“Specified

Reserve Fund Balance” means, with respect to any Distribution Date, an amount equal to the

greater of:

 

(a)           2.00% of the Principal Balance of the

Contracts in the Trust as of the last day of the related Due Period; provided,

however, in the event a Reserve Fund Trigger Event occurs and is

continuing for three consecutive Distribution Dates (inclusive of the

respective Distribution Date), the Specified Reserve Fund Balance shall be

equal to 6.00% of the Principal Balance of the Contracts in the Trust as of the

last day of the immediately preceding Due Period; and

 

(b)           1.00% of the aggregate of the Initial

Class A-1 Note Balance, Initial Class A-2 Note Balance and Initial Class B Note

Balance;

 

provided, however, in no event shall the Specified Reserve Fund Balance

be greater than the aggregate outstanding principal balance of the

Securities.  As of any Distribution

Date, the amount of funds actually on deposit in the Reserve Fund may, in

certain circumstances, be less than the Specified Reserve Fund Balance

 

“Standard

& Poor’s”

means Standard & Poor’s Ratings Services, a division of The McGraw Hill

Companies, or any successor thereto.

 

“Subsequent

Contracts” means

all Contracts transferred to the Trust pursuant to Section 2.03.

 

“Subsequent

Cutoff Date”

means the date specified as such for Subsequent Contracts in the related

Subsequent Transfer Agreement.

 

18

 

“Subsequent

List of Contracts”

means a list, in the form of the initial List of Contracts delivered on the

Closing Date, but listing each Subsequent Contract transferred to the Trust

pursuant to the related Subsequent Transfer Agreement.

 

“Subsequent

Purchase Agreement”

means, with respect to any Subsequent Contracts, the agreement between the

Seller and the Trust Depositor pursuant to which the Seller will transfer the

Subsequent Contracts to the Trust Depositor, the form of which is attached to

the Transfer and Sale Agreement as Exhibit C.

 

“Subsequent

Reserve Fund Amount”

means the amount on each Subsequent Transfer Date equal to 1.00% of the

aggregate balance of the Subsequent Contracts conveyed to the Trust.

 

“Subsequent

Transfer Agreement”

means the agreement described in Section 2.03(b) hereof.

 

“Subsequent

Transfer Date”

means any date during the Funding Period on which Subsequent Contracts are

transferred to the Trust.

 

“Successor Servicer”

means a servicer described in Section 8.03(b).

 

“Supplement” means

the Prospectus Supplement dated May 13, 2003.

 

“Transaction

Documents” means

this Agreement, the Transfer and Sale Agreement, the Lockbox Agreement, the

Indenture, the Trust Agreement, the Administration Agreement, the Note Depository

Agreement, any Subsequent Transfer Agreement and any Subsequent Purchase

Agreement.

 

“Transfer

and Sale Agreement”

means the Transfer and Sale Agreement dated as of the date hereof by and

between the Seller and the Trust Depositor, as amended, supplemented or

otherwise modified from time to time.

 

“Trust” means the trust created by the Trust

Agreement, comprised of the Trust Corpus.

 

“Trust

Accounts” means,

collectively, the Collection Account, the Pre-Funding Account, the Note

Distribution Account and the Reserve Fund, or any of them.

 

“Trust

Account Property”

means the Trust Accounts, all amounts and investments held from time to time in

any Trust Account (whether in the form of deposit accounts, physical property,

book-entry securities, uncertificated securities or otherwise), including the

Reserve Fund Initial Deposit, and all proceeds of the foregoing.

 

“Trust

Agreement” means

the Trust Agreement, dated as of May 1, 2003, between the Trust Depositor and

the Owner Trustee.

 

19

 

“Trust

Corpus” has the

meaning given to such term in Section 2.01(a) hereof (and in Section 2.03(a)

hereof in respect of Subsequent Contracts and related assets transferred to the

Trust pursuant to Subsequent Transfer Agreements).

 

“Trust

Depositor” has

the meaning assigned such term in the preamble hereunder or any successor

thereto.

 

“Trust Estate” shall

have the meaning specified in the Trust Agreement.

 

“Trustees” means

the Owner Trustee and the Indenture Trustee.

 

“UCC” means the Uniform Commercial Code as in

effect on the date hereof and from time to time in the State of

Illinois, provided that if by reason of mandatory provisions of law, the

perfection or the effect of perfection or non-perfection or priority of the

security interests in any collateral or the availability of any remedy

hereunder is governed by the Uniform Commercial Code as in effect on or after

the date hereof in any other jurisdiction, “UCC” means the Uniform Commercial Code as

in effect in such other jurisdiction for purposes of the provisions hereof

relating to such perfection or effect of perfection or non-perfection or

priority or availability of such remedy.

 

“Uncollectible

Advance” means

with respect to any Determination Date and any Contract, the amount, if any,

advanced by the Servicer pursuant to Section 7.03  which the Servicer has as of such Determination Date determined

in good faith will not be ultimately recoverable by the Servicer from insurance

policies on the related Motorcycle, the related Obligor or out of Net

Liquidation Proceeds with respect to such Contract.  The determination by the Servicer that it has made an

Uncollectible Advance, or, that any Advance proposed to be made would be an

Uncollectible Advance, shall be evidenced by an Officer’s Certificate delivered

to the Trustees.

 

“Underwriters” means J.P. Morgan Securities Inc., Banc

One Capital Markets, Inc. and BNP Paribas Securities Corp.

 

“United States”

means the United States of America.

 

“Vice

President” of any

Person means any vice president of such Person, whether or not designated by a

number or words before or after the title “Vice President” who is a duly elected

officer of such Person.

 

“WTC” means

Wilmington Trust Company, in its individual capacity.

 

Section 1.02.        Usage of Terms. 

With respect to all terms in this Agreement, the singular includes the

plural and the plural the singular; words importing any gender include the

other genders; references to “writing” include printing, typing, lithography

and other means of reproducing words in a visible form; references to

agreements and other contractual instruments include all amendments,

modifications and supplements thereto or any changes therein entered

 

20

 

into in accordance with their respective terms and not prohibited by

this Agreement; references to Persons include their permitted successors and

assigns; and the term “including” means “including without limitation.”

 

Section 1.03.        Section

References.  All section references, unless otherwise

indicated, shall be to Sections in this Agreement.

 

Section 1.04.        Calculations. 

Except as otherwise provided herein, all interest rate and basis point

calculations hereunder will be made on the basis of a 360-day year and twelve 30-day

months and will be carried out to at least three decimal places.

 

Section 1.05.        Accounting

Terms.  All accounting terms used but not

specifically defined herein shall be construed in accordance with generally

accepted accounting principles in the United States.

 

ARTICLE TWO

 

TRANSFER OF CONTRACTS

 

Section 2.01.        Closing. 

(a)  On the Closing Date, the

Trust Depositor shall transfer, assign, set over and otherwise convey to the

Trust by execution of an assignment substantially in the form of Exhibit A

hereto, without recourse other than as expressly provided herein, (i) all the

right, title and interest of the Trust Depositor in and to the Initial

Contracts listed on the initial List of Contracts delivered on the Closing Date

(including, without limitation, all security interests and all rights to

receive payments which are collected pursuant thereto on or after the Initial

Cutoff Date, including any liquidation proceeds therefrom, but excluding any

rights to receive payments which were collected pursuant thereto prior to the

Initial Cutoff Date), (ii) all rights of the Trust Depositor under any physical

damage or other individual insurance policy (and rights under a “forced

placed” policy, if any) or any debt cancellation agreement relating

to any such Contract, an Obligor or a Motorcycle securing such Contract, (iii)

all security interests in each such Motorcycle, (iv) all documents contained in

the related Contract Files, (v) all rights (but not the obligations) of the

Trust Depositor under any related motorcycle dealer agreements between dealers

(i.e., the originators of such Contracts) and the Seller, (vi) all rights of

the Trust Depositor in the Lockbox, the Lockbox Account and the related Lockbox

Agreement to the extent they relate to such Contracts, (vii) all rights (but

not the obligations) of the Trust Depositor under the Transfer and Sale

Agreement, including but not limited to the Trust Depositor’s rights under

Article V thereof, (viii) the remittances, deposits and payments made into the

Trust Accounts from time to time and amounts in the Trust Accounts from time to

time (and any investments of such amounts), (ix) all rights of the Trust

Depositor to certain rebates of premiums and other amounts relating to

insurance policies, debt cancellation agreements, extended service contracts or

other repair agreements and other items financed under such Contracts and (x)

all proceeds and products of the foregoing (the property in clauses (i)-(x)

above, being the “Trust Corpus”). 

Although the Trust Depositor and the Owner Trustee agree

 

21

 

that such transfer is intended to be a transfer of ownership of the

Trust Corpus, rather than the granting of a security interest to secure a

borrowing, and that the Trust Corpus shall not be property of the Trust

Depositor, in the event such transfer is deemed to be of a mere security

interest to secure a borrowing, the Trust Depositor shall be deemed to have

granted the Trust a perfected first priority security interest in such Trust

Corpus and this Agreement shall constitute a security agreement under

applicable law.

 

Section 2.02.        Conditions to

the Closing.  On or before the Closing Date, the Trust

Depositor shall deliver or cause to be delivered the following documents to the

Owner Trustee and the Indenture Trustee:

 

(a)           The initial List of Contracts,

certified by the Chairman of the Board, President or any Vice President of the

Trust Depositor, together with an assignment substantially in the form of Exhibit A

hereto.

 

(b)           A certificate of an officer of the

Seller substantially in the form of Exhibit B to the Transfer and Sale

Agreement and of an officer of the Trust Depositor substantially in the form of

Exhibit B

hereto.

 

(c)           Opinions of counsel for the Seller

and the Trust Depositor substantially in the form of Exhibits  D, E

and F

hereto (and including as an addressee thereof each Rating Agency).

 

(d)           A letter or letters from Ernst &

Young LLP, or another nationally recognized accounting firm, addressed to the

Seller and the Underwriters and stating that such firm has reviewed a sample of

the Initial Contracts and performed specific procedures for such sample with

respect to certain contract terms and which identifies those Initial Contracts

which do not conform.

 

(e)           Copies of resolutions of the Board of

Directors of each of the Seller/Servicer and the Trust Depositor or of the

Executive Committee of the Board of Directors of each of the Seller/Servicer

and the Trust Depositor approving the execution, delivery and performance of

this Agreement and the other Transaction Documents to which any of them is a

party, as applicable, and the transactions contemplated hereunder and

thereunder, certified in each case by the Secretary or an Assistant Secretary

of the Seller/Servicer and the Trust Depositor.

 

(f)            Officially certified, recent

evidence of due incorporation and good standing of each of the Seller and the

Trust Depositor under the laws of Nevada.

 

(g)           Evidence of proper filing with the

appropriate office in Nevada of a UCC financing statement naming the Seller, as

debtor, naming the Trust Depositor as assignor secured party (and the Trust as

secured party) and identifying the Contract Assets as collateral; and evidence

of proper filing with the appropriate office in Nevada of a UCC financing

statement naming the Trust Depositor, as debtor, naming the Trust as assignor

 

22

 

secured party (and the

Indenture Trustee as secured party) and identifying the Trust Corpus as

collateral; and evidence of proper filing with the appropriate office in

Delaware of a UCC financing statement naming the Trust, as debtor, and naming

the Indenture Trustee, as secured party and identifying the Collateral as

collateral.

 

(h)           An Officer’s Certificate listing the

Servicer’s Servicing Officers.

 

(i)            Evidence of deposit in the

Collection Account of all funds received with respect to the Initial Contracts

on or after the Initial Cutoff Date to the Closing Date, together with an

Officer’s Certificate from the Trust Depositor to the effect that such amount

is correct.

 

(j)            The Officer’s Certificate of the

Seller specified in Section 2.02(h) of the Transfer and Sale Agreement.

 

(k)           Evidence of deposit in the Reserve

Fund of the Reserve Fund Initial Deposit by the Owner Trustee.

 

(l)            A fully executed Transfer and Sale

Agreement.

 

(m)          A fully executed Trust Agreement.

 

(n)           A fully executed Administration

Agreement.

 

(o)           A fully executed Indenture.

 

Section 2.03.        Conveyance of

Subsequent Contracts.  (a) Subject to the conditions set forth in

paragraph (b) below, the Trust Depositor, shall transfer, assign, set over and

otherwise convey to the Trust, without recourse other than as expressly

provided herein and therein, (i) all the right, title and interest of the Trust

Depositor in and to the Subsequent Contracts listed on the Subsequent List of

Contracts (including, without limitation, all security interests and all rights

to receive payments which are collected pursuant thereto on or after the

related Subsequent Cutoff Date, including any liquidation proceeds therefrom,

but excluding any rights to receive payments which were collected pursuant

thereto prior to such Subsequent Cutoff Date), (ii) all rights of the Trust

Depositor under any physical damage or other individual insurance policy

(including a “forced placed” policy, if any) or any debt cancellation

agreement relating to any such Subsequent Contract, an Obligor or a Motorcycle

securing such Subsequent Contract, (iii) all security interests in each such

Motorcycle, (iv) all documents contained in the related Contract Files, (v) all

rights (but not the obligations) of the Trust Depositor under any related

motorcycle dealer agreements between dealers (i.e., the originators of such

Subsequent Contracts) and the Seller, (vi) all rights of the Trust Depositor in

the Lockbox, the Lockbox Account and the related Lockbox Agreement to the

extent they relate to such Subsequent Contracts, (vii) all rights (but not the

obligations) of the Trust Depositor under the Transfer and Sale Agreement

related to such Subsequent Contracts (to the extent not already conveyed under

Section 2.01(a)), including but not limited to the Trust Depositor’s related

rights under Article V thereof, as well as all rights,

 

23

 

but not the obligations, of the Trust Depositor under the Subsequent

Purchase Agreement related to such Subsequent Contracts, (viii) the

remittances, deposits and payments made into the Trust Accounts from time to

time and amounts in the Trust Accounts from time to time related to such

Subsequent Contracts (to the extent not already conveyed under Section 2.01(a))

(and any investments of such amounts), (ix) all rights of the Trust Depositor

to certain rebates of premiums and other amounts relating to insurance

policies, debt cancellation agreements, extended service contracts or other

repair agreements and other items financed under such Subsequent Contracts and

(x) all proceeds and products of the foregoing (the property in clauses (i)-(x)

above, upon such transfer, becoming part of the “Trust Corpus”).  Although the Trust Depositor and the Owner

Trustee agree that such transfer is intended to be a transfer of ownership,

rather than the granting of a security interest to secure a borrowing, and that

the Trust Corpus following such transfer shall not be property of the Trust

Depositor, in the event such transfer is deemed to be of a mere security

interest to secure a borrowing, the Trust Depositor shall be deemed to have

granted the Owner Trustee for the benefit of the Trust a perfected first

priority security interest in such Trust Corpus and this Agreement shall

constitute a security agreement under applicable law.

 

(b)           The

Trust Depositor shall transfer to the Trust the Subsequent Contracts and the

other property and rights related thereto described in paragraph (a) above only

upon the satisfaction of each of the following conditions on or prior to the

related Subsequent Transfer Date:

 

(i)            The Trust Depositor shall have

provided the Owner Trustee, the Indenture Trustee, the Underwriters and the

Rating Agencies with a timely Addition Notice and shall have provided any

information reasonably requested by any of the foregoing with respect to the

Subsequent Contracts;

 

(ii)           the Funding Period shall not have

terminated;

 

(iii)          the Trust Depositor shall have

delivered to the Owner Trustee a duly executed written assignment (including an

acceptance by the Owner Trustee) in substantially the form of Exhibit M

hereto (the “Subsequent Transfer Agreement”), which shall include a

Subsequent List of Contracts listing the Subsequent Contracts;

 

(iv)          the Trust Depositor shall have

deposited or caused to be deposited in the Collection Account all collections

received with respect to the Subsequent Contracts on or after the related

Subsequent Cutoff Date;

 

(v)           as of each Subsequent Transfer Date,

neither the Seller nor the Trust Depositor was insolvent nor will either of

them have been made insolvent by such transfer nor is either of them aware of any

pending insolvency;

 

(vi)          the applicable Subsequent Reserve Fund

Amount for such Subsequent Transfer Date shall have been deposited by the

Indenture Trustee from the Pre-Funding Account to the Reserve Fund;

 

24

 

(vii)         each Rating Agency shall have notified

the Trust Depositor, the Owner Trustee and the Indenture Trustee in writing

that following such transfer the Class A-1 Notes and Class A-2 Notes will be

rated in the highest rating category by such Rating Agency and the Class B

Notes will be rated at least its rating as of the Closing Date by Standard

& Poor’s and Moody’s;

 

(viii)        such addition will not result in a

material adverse tax consequence to the Trust or the Certificateholder as

evidenced by an Opinion of Counsel to be delivered by the Trust Depositor to

the Owner Trustee, Indenture Trustee, the Rating Agencies and the Underwriters;

 

(ix)           the Trust Depositor shall have

delivered to the Owner Trustee and the Indenture Trustee an Officers’ Certificate

confirming the satisfaction of each condition precedent specified in this

paragraph (b);

 

(x)            the Trust Depositor shall have

delivered to the Rating Agencies and the Underwriters one or more opinions of

counsel with respect to the transfer of the Subsequent Contracts substantially

in the form of the opinions of counsel delivered to such Persons on the Closing

Date;

 

(xi)           no selection procedures believed by

the Trust Depositor to be adverse to the interests of the Noteholders shall

have been utilized in selecting the Subsequent Contracts;

 

(xii)          the

Trust Depositor shall have delivered to the Rating Agencies evidence that (A)

the weighted average annual percentage rate of the Contracts collectively,

following the transfer of the Subsequent Contracts, is not less than 10.30% and

(B) that the weighted average calculated remaining term to maturity of the

Contracts collectively, following the transfer of the Subsequent Contracts,

does not exceed 76 months;

 

(xiii)         the Trust Depositor shall have

delivered to the Rating Agencies, a report with respect to certain agreed-upon

procedures relating to the Subsequent Contracts being transferred, confirming

that procedures were performed substantially similar to such procedures as were

performed in connection with the transfer of the Initial Contracts;

 

(xiv)        each of the representations and

warranties made by the Seller pursuant to Section 3.01 of the Transfer and

Sale Agreement with respect to the Subsequent Contracts shall be true and

correct as of the related Subsequent Transfer Date, and the Seller shall have

performed all obligations to be performed by it hereunder on or prior to such

Subsequent Transfer Date;

 

(xv)         the Seller shall, at its own expense,

on or prior to the Subsequent Transfer Date indicate in its Computer Disk that

the Subsequent Contracts identified on the Subsequent List of Contracts in the

Subsequent Transfer Agreement have been

 

25

 

transferred to the Issuer

pursuant to this Agreement and the Transfer and Sale Agreement; and

 

(xvi)        the Seller shall have taken any action

required to maintain the first perfected ownership interest of the Issuer in

the Trust Estate and the first perfected security interest of the Indenture

Trustee in the Collateral.

 

(c)           The

Trust Depositor covenants to transfer (at or prior to the end of the Funding

Period) to the Trust pursuant thereto Subsequent Contracts with an aggregate

Principal Balance equal to $115,875,997.20; provided, however, that in complying with

such covenant, the Trust Depositor agrees to make no more than one separate

transfer of Subsequent Contracts per monthly period (as measured by the

corresponding Distribution Dates).  In

the event that the Trust Depositor shall fail to deliver and transfer to the

Trust any or all of such Subsequent Receivables by the date on which the

Funding Period ends and the Pre-Funded Amount is greater than $150,000 on such

date, the Trust Depositor shall cause to be deposited into the Collection

Account the amount then on deposit in the Pre-Funding Account; provided,

however, that the foregoing shall be the sole remedy of the Trust,

the Owner Trustee, the Indenture Trustee or the Securityholders with respect to

a failure of the Trust Depositor to comply with such covenant.

 

ARTICLE THREE

 

REPRESENTATIONS AND WARRANTIES

 

The Seller under the Transfer and Sale Agreement has

made, and upon execution of each Subsequent Purchase Agreement is deemed to

remake, each of the representations and warranties set forth in Exhibit J

hereto and has consented to the assignment by the Trust Depositor to the Issuer

of the Trust Depositor’s rights with respect thereto.  Such representations speak as of the execution and delivery of

this Agreement and as of the Closing Date in the case of the Initial Contracts,

and as of the applicable Subsequent Transfer Date in the case of the Subsequent

Contracts, but shall survive the transfer and assignment of the Contracts to

the Trust.  Pursuant to Section 2.01 of

this Agreement, the Trust Depositor has assigned, transferred and conveyed to

the Issuer as part of the Trust Corpus its rights under the Transfer and Sale

Agreement, including without limitation, the representations and warranties of

the Seller therein as set forth in Exhibit J attached hereto, together with

all rights of the Trust Depositor with respect to any breach thereof including

any right to require the Seller to reacquire any Contract in accordance with

the Transfer and Sale Agreement.  It is

understood and agreed that the representations and warranties set forth or

referred to in this Section shall survive delivery of the Contract Files to the

Owner Trustee or any custodian.

 

The Trust Depositor hereby represents and warrants to

the Trust and the Indenture Trustee that it has entered into the Transfer and

Sale Agreement with the Seller, that the Seller has made the representations

and warranties in the Transfer and Sale Agreement as set forth in Exhibit J hereto,

that such representations and warranties run to and are for the benefit of the

 

26

 

Trust Depositor, and that pursuant to Section 2.01 of this Agreement

the Trust Depositor has transferred and assigned to the Trust all rights of the

Trust Depositor to cause the Seller under the Transfer and Sale Agreement to

reacquire Contracts in the event of a breach of such representations and

warranties.

 

Section 3.01.        Representations

and Warranties Regarding the Trust Depositor.  By its

execution of this Agreement and each Subsequent Transfer Agreement, the Trust

Depositor represents and warrants to the Trust, the Indenture Trustee and the

Noteholders that:

 

(a)           Assumption of Seller’s

Representations and Warranties.     The

representations and warranties set forth in Exhibit J are true and correct.

 

(b)           Organization and Good Standing.  The Trust Depositor is a corporation duly

organized, validly existing and in good standing under the laws of the

jurisdiction of its organization and has the corporate power to own its assets

and to transact the business in which it is currently engaged.  The Trust Depositor is duly qualified to do

business as a foreign corporation and is in good standing in each jurisdiction

in which the character of the business transacted by it or properties owned or

leased by it requires such qualification and in which the failure so to qualify

would have a material adverse effect on the business, properties, assets, or

condition (financial or other) of the Trust Depositor or the Trust.

 

(c)           Authorization; Valid Sale; Binding

Obligations.  The Trust

Depositor has the power and authority to make, execute, deliver and perform its

obligations under this Agreement and the other Transaction Documents to which

it is a party and all of the transactions contemplated under this Agreement and

the other Transaction Documents to which it is a party, and to create the Trust

and cause it to make, execute, deliver and perform its obligations under this

Agreement and the other Transaction Documents to which it is a party and has

taken all necessary corporate action to authorize the execution, delivery and

performance of this Agreement and the other Transaction Documents to which it

is a party and to cause the Trust to be created.  This Agreement and the related Subsequent Transfer Agreement, if

any, shall effect a valid transfer and assignment of the Trust Corpus,

enforceable against the Trust Depositor and creditors of and purchasers from

the Trust Depositor.  This Agreement and

the other Transaction Documents to which the Trust Depositor is a party constitute

the legal, valid and binding obligation of the Trust Depositor enforceable in

accordance with their terms, except as enforcement of such terms may be limited

by bankruptcy, insolvency or similar laws affecting the enforcement of

creditors’ rights generally and by the availability of equitable remedies.

 

(d)           No Consent Required.  The Trust Depositor is not required to

obtain the consent of any other party or any consent, license, approval or

authorization from, or registration or declaration with, any governmental

authority, bureau or agency in connection with the execution, delivery,

performance, validity or enforceability of this Agreement or the other

Transaction Documents to which it is a party.

 

27

 

(e)           No Violations.  The execution, delivery and performance of

this Agreement and the other Transaction Documents to which it is a party by

the Trust Depositor, and the consummation of the transactions contemplated

hereby and thereby, will not violate any provision of any existing law or

regulation or any order or decree of any court or of any Federal or state

regulatory body or administrative agency having jurisdiction over the Trust

Depositor or any of its properties or the Articles of Incorporation or Bylaws

of the Trust Depositor, or constitute a material breach of any mortgage,

indenture, contract or other agreement to which the Trust Depositor is a party

or by which the Trust Depositor or any of the Trust Depositor’s properties may

be bound, or result in the creation or imposition of any security interest,

lien, charge, pledge, preference, equity or encumbrance of any kind upon any of

its properties pursuant to the terms of any such mortgage, indenture, contract

or other agreement, other than as contemplated by the Transaction Documents.

 

(f)            Litigation.  No litigation or administrative proceeding

of or before any court, tribunal or governmental body is currently pending, or

to the knowledge of the Trust Depositor threatened, against the Trust Depositor

or any of its properties or with respect to this Agreement, the other

Transaction Documents to which it is a party or the Notes (1) which, if

adversely determined, would in the opinion of the Trust Depositor have a

material adverse effect on the business, properties, assets or condition

(financial or otherwise) of the Trust Depositor or the Trust or the

transactions contemplated by this Agreement or the other Transaction Documents

to which the Trust Depositor is a party or (2) seeking to adversely affect the federal

income tax or other federal, state or local tax attributes of the Certificate

or Notes.

 

(g)           State of Incorporation; Name; No

Changes.  The Trust

Depositor’s state of incorporation is the State of Nevada.  The Trust Depositor’s exact legal name is as

set forth in the first paragraph of this Agreement.  The Trust Depositor has not changed its name, whether by

amendment of its Articles of Incorporation, by reorganization or otherwise, and

has not changed the location of its place of business, within the four months

preceding the Closing Date.

 

(h)           Solvency. 

The Trust Depositor, after giving effect to the conveyances made by it

hereunder, is Solvent.

 

Such representations speak as of the execution and delivery of this

Agreement and as of the Closing Date in the case of the Initial Contracts, and

as of the applicable Subsequent Transfer Date in the case of the Subsequent

Contracts, but shall survive the transfer and assignment of the Contracts to

the Trust.

 

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Section 3.02.        Representations

and Warranties Regarding the Servicer.  The Servicer

represents and warrants to the Trust, the Indenture Trustee and the Noteholders

that:

 

(a)           Organization and Good Standing.  The Servicer is a corporation duly organized,

validly existing and in good standing under the laws of the jurisdiction of its

organization and has the corporate power to own its assets and to transact the

business in which it is currently engaged. 

The Servicer is duly qualified to do business as a foreign corporation

and is in good standing in each jurisdiction in which the character of the

business transacted by it or properties owned or leased by it requires such

qualification and in which the failure so to qualify would have a material

adverse effect on the business, properties, assets, or condition (financial or

otherwise) of the Servicer or the Trust. 

The Servicer is properly licensed in each jurisdiction to the extent

required by the laws of such jurisdiction to service the Contracts in accordance

with the terms hereof other than such licenses the failure to obtain would not

have a material adverse effect on the business, properties, assets, or

condition (financial or otherwise) of the Servicer or on the ability of the

Servicer to perform its obligations hereunder..

 

(b)           Authorization; Binding Obligations.  The Servicer has the power and authority to

make, execute, deliver and perform this Agreement and the other Transaction

Documents to which the Servicer is a party and all of the transactions

contemplated under this Agreement and the other Transaction Documents to which

the Servicer is a party, and has taken all necessary corporate action to

authorize the execution, delivery and performance of this Agreement and the

other Transaction Documents to which the Servicer is a party.  This Agreement and the other Transaction

Documents to which the Servicer is a party constitute the legal, valid and

binding obligation of the Servicer enforceable in accordance with their terms,

except as enforcement of such terms may be limited by bankruptcy, insolvency or

similar laws affecting the enforcement of creditors’ rights generally and by

the availability of equitable remedies.

 

(c)           No Consent Required.  The Servicer is not required to obtain the

consent of any other party or any consent, license, approval or authorization

from, or registration or declaration with, any governmental authority, bureau

or agency in connection with the execution, delivery, performance, validity or

enforceability of this Agreement and the other Transaction Documents to which

the Servicer is a party.

 

(d)           No Violations.  The execution, delivery and performance of

this Agreement and the other Transaction Documents to which the Servicer is a

party by the Servicer will not violate any provisions of any existing law or

regulation or any order or decree of any court or of any Federal or state

regulatory body or administrative agency having jurisdiction over the Servicer

or any of its properties or the Articles of Incorporation or Bylaws of the

Servicer, or constitute a material breach of any mortgage, indenture, contract

or other agreement to which the Servicer is a party or by which the Servicer or

any of the Servicer’s properties may be bound, or result in the creation of or

imposition of any security interest, lien, pledge, preference, equity or

encumbrance of any

 

29

 

kind upon any of its

properties pursuant to the terms of any such mortgage, indenture, contract or

other agreement, other than this Agreement.

 

(e)           Litigation.  No litigation or administrative proceeding

of or before any court, tribunal or governmental body is currently pending, or

to the knowledge of the Servicer threatened, against the Servicer or any of its

properties or with respect to this Agreement, any other Transaction Document to

which the Servicer is a party which, if adversely determined, would in the

opinion of the Servicer have a material adverse effect on the business,

properties, assets or condition (financial or otherwise) of the Servicer or the

Trust or the transactions contemplated by this Agreement or any other

Transaction Document to which the Servicer is a party.

 

ARTICLE FOUR

 

PERFECTION OF TRANSFER AND PROTECTION OF SECURITY

INTERESTS

 

Section 4.01.        Custody of

Contracts.  (a) Subject to the terms and conditions of

this Section 4.01, the contents of each Contract File shall be held in the

custody of the Servicer for the benefit of, and as agent for, the Trust as the

owner thereof.

 

(b)           The

Servicer agrees to maintain the related Contract Files at its offices where

they are currently maintained, or at such other offices of the Servicer in the

State of Nevada as shall from time to time be identified to the Trustees  by written notice.  The Servicer may temporarily move individual Contract Files or

any portion thereof without notice as necessary to conduct collection and other

servicing activities in accordance with its customary practices and procedures;

provided,

however, that the Servicer will take all action necessary to

maintain the perfection of the Trust’s interest in the Contracts and the

proceeds thereof.  It is intended that

by the Servicer’s agreement pursuant to Section 4.01(a) above and this

Section 4.01(b) the Trustees  shall

be deemed to have possession of the Contract Files for purposes of

Section 9-313 of the Uniform Commercial Code of the State in which the

Contract Files are located.

 

(c)           As

custodian, the Servicer shall have the following powers and perform the

following duties:

 

(i)            hold the Contract Files on behalf of

the Trust, maintain accurate records pertaining to each Contract to enable it

to comply with the terms and conditions of this Agreement, maintain a current

inventory thereof and certify to the Owner Trustee and the Indenture Trustee  annually that it continues to maintain

possession of such Contract Files;

 

(ii)           implement policies and procedures in

writing and signed by a Servicing Officer with respect to persons authorized to

have access to the Contract Files on the Servicer’s premises and the receipting

for Contract Files taken from their storage area by an employee of the Servicer

for purposes of servicing or any other purposes;

 

30

 

(iii)          attend to all details in connection

with maintaining custody of the Contract Files on behalf of the Trust;

 

(iv)          at all times maintain the original of

the fully executed Contract and store such original Contract in a fireproof

vault;

 

(v)           stamp each Contract on both the first

and the signature page (if different) as promptly as practicable after the

Closing Date (or Subsequent Transfer Date, as the case may be), and in any

event within 60 days thereof, in the form attached hereto as Exhibit L;

and

 

(vi)          as promptly as practicable after the

Closing Date (or Subsequent Transfer Date, as the case may be), and in any

event within 60 days thereof, deliver an Officer’s Certificate to the Owner

Trustee and the Indenture Trustee certifying that as of a date no earlier than

the Closing Date (or Subsequent Transfer Date, as the case may be) it has

conducted an inventory of the Contract Files (which in the case of Subsequent

Contracts, need be only of the Contract Files related to such Subsequent

Contracts) and that there exists a Contract File for each Contract and stating

all exceptions to such statement, if any.

 

(d)                                 In performing its duties under this

Section 4.01, the Servicer agrees to act with reasonable care, using that

degree of skill and care that it exercises with respect to similar contracts

for the installment purchase of consumer goods owned and/or serviced by it, and

in any event with no less degree of skill and care than would be exercised by a

prudent servicer of motorcycle conditional sales contracts and promissory note

and security agreements.  The Servicer

shall promptly report to the Owner Trustee and the Indenture Trustee any

failure by it to hold the Contract Files as herein provided and shall promptly

take appropriate action to remedy any such failure.  In acting as custodian of the Contract Files, the Servicer

further agrees not to assert any legal or beneficial ownership interest in the

Contracts or the Contract Files, except as provided in Section 5.06.  The Servicer agrees to indemnify the

Noteholders, the Certificateholder, the Owner Trustee and the Indenture Trustee

for any and all liabilities, obligations, losses, damages, payments, costs, or

expenses of any kind whatsoever which may be imposed on, incurred by or

asserted against the Noteholders, the Certificateholder, the Owner Trustee and

the Indenture Trustee as the result of any act or omission by the Servicer

relating to the maintenance and custody of the Contract Files; provided,

however, that the Servicer will not be liable for any portion of any

such amount resulting from the gross negligence or willful misconduct of any

Noteholder, Certificateholder, the Owner Trustee or the Indenture Trustee.  The Trustees shall have no duty to monitor

or otherwise oversee the Servicer’s performance as custodian hereunder.

 

Section 4.02.        Filing. 

On or prior to the Closing Date, the Servicer shall cause the UCC

financing statement(s) referred to in Section 2.02(g) hereof to be filed and

from time to time the Servicer shall take and cause to be taken such actions

and execute such documents as are necessary or desirable or as the Owner

Trustee or Indenture Trustee may reasonably request

 

31

 

to perfect and protect the Trust’s first priority perfected interest in

the Trust Corpus against all other persons, including, without limitation, the

filing of financing statements, amendments thereto and continuation statements,

the execution of transfer instruments and the making of notations on or taking

possession of all records or documents of title.

 

Section 4.03.        Name Change

or Relocation.  (a) During the term of this Agreement,

neither the Seller nor the Trust Depositor shall change its name, identity or

structure or change its state of incorporation without first giving at least 30

days’ prior written notice to the Owner Trustee and the Indenture Trustee.

 

(b)           If

any change in either the Seller’s or the Trust Depositor’s name, identity or

structure or other action would make any financing or continuation statement or

notice of lien filed under this Agreement seriously misleading within the

meaning of applicable provisions of the UCC or any title statute, the Servicer,

no later than five days after the effective date of such change, shall file

such amendments as may be required to preserve and protect the Trust’s

interests in the Trust Corpus and the proceeds thereof.  In addition, neither the Seller nor the

Trust Depositor shall change its state of incorporation unless it has first

taken such action as is advisable or necessary to preserve and protect the Trust’s

interest in the Trust Corpus.  Promptly

after taking any of the foregoing actions, the Servicer shall deliver to the

Owner Trustee and the Indenture Trustee an opinion of counsel reasonably

acceptable to the Owner Trustee and the Indenture Trustee stating that, in the

opinion of such counsel, all financing statements or amendments necessary to

preserve and protect the interests of the Trust in the Trust Corpus and the

Indenture Trustee in the Collateral have been filed, and reciting the details

of such filing.

 

Section 4.04.        Costs and

Expenses.  The Servicer agrees to pay all reasonable

costs and disbursements in connection with the perfection and the maintenance

of perfection, as against all third parties, of the Trust’s right, title and

interest in and to the Contracts (including, without limitation, the security

interest in the Motorcycles granted thereby).

 

ARTICLE FIVE

 

SERVICING OF CONTRACTS

 

Section 5.01.        Responsibility

for Contract Administration.  The Servicer

will have the sole obligation to manage, administer, service and make

collections on the Contracts and perform or cause to be performed all

contractual and customary undertakings of the holder of the Contracts to the

Obligor.  The Owner Trustee, at the

written request of a Servicing Officer, shall furnish the Servicer with any

powers of attorney or other documents necessary or appropriate in the opinion

of the Owner Trustee to enable the Servicer to carry out its servicing and

administrative duties hereunder.  The

Servicer is hereby appointed the servicer hereunder until such time as any

Service Transfer may be effected under Article VIII.

 

Section 5.02.        Standard of

Care.  In managing, administering, servicing and

making collections on the Contracts pursuant to this Agreement, the Servicer will

exercise that degree of

 

32

 

skill and care consistent with the skill and care that the Servicer

exercises with respect to similar contracts serviced by the Servicer, and, in

any event no less degree of skill and care than would be exercised by a prudent

servicer of motorcycle conditional sales contracts and promissory note and

security agreements; provided, however, that notwithstanding

the foregoing, the Servicer shall not release or waive the right to collect the

unpaid balance of any Contract except that with respect to a Contract that has

become a Defaulted Contract, the Servicer, consistent with its collection

policies, may release or waive the right to collect the unpaid balance of such

Defaulted Contract in an effort to maximize collections thereon.

 

Section 5.03.        Records. 

The Servicer shall, during the period it is servicer hereunder, maintain

such books of account and other records as will enable the Owner Trustee and

the Indenture Trustee to determine the status of each Contract.

 

Section 5.04.        Inspection. 

(a) At all times during the term hereof, the Servicer shall afford the

Owner Trustee and  the Indenture Trustee

and their respective authorized agents reasonable access during normal business

hours to the Servicer’s records relating to the Contracts and will cause its

personnel to assist in any examination of such records by the Owner Trustee or

the Indenture Trustee, or such authorized agents and allow copies of the same

to be made.  The examination referred to

in this Section will be conducted in a manner which does not unreasonably

interfere with the Servicer’s normal operations or customer or employee

relations.  Without otherwise limiting

the scope of the examination the Owner Trustee or the Indenture Trustee may,

using generally accepted audit procedures, verify the status of each Contract

and review the Computer Disk and records relating thereto for conformity to

Monthly Reports prepared pursuant to Article IX and compliance with the

standards represented to exist as to each Contract in this Agreement.

 

(b)           At

all times during the term hereof, the Servicer shall keep available a copy of

the List of Contracts at its principal executive office for inspection by the

Trustees.

 

Section 5.05.        Trust Accounts. 

(a) On or before the Closing Date, the Trust Depositor shall establish

the Collection Account, Note Distribution Account, Pre-Funding Account and

Reserve Fund, each with and in the name of the Indenture Trustee for the

benefit of the Noteholders.  The

Indenture Trustee is hereby required to ensure that each of the Trust Accounts

is established and maintained as an Eligible Account.

 

(b)           The

Indenture Trustee shall deposit (or the Servicer shall deposit, with respect to

payments by or on behalf of the Obligors received directly by the Servicer),

without deposit into any intervening account, into the Collection Account as

promptly as practical (but in any case not later than the second Business Day

following the receipt thereof):

 

(i)            With respect to principal and

interest on the Contracts received on or after the Initial Cutoff Date or

Subsequent Cutoff Date, as applicable (which for the purpose of this paragraph

(b)(i) shall include those monies in the Lockbox Account allocable to

 

33

 

principal and interest on

the Contracts), all such amounts received by the Owner Trustee or Servicer;

 

(ii)           All Net Liquidation Proceeds related

to the Contracts;

 

(iii)          The aggregate of the Reacquisition

Prices for Contracts reacquired by the Trust Depositor as described in Section

7.08;

 

(iv)          All Advances made by the Servicer

pursuant to Section 7.03(a);

 

(v)           All amounts paid by the Trust

Depositor in connection with an optional reacquisition of the Contracts described

in Section 7.10;

 

(vi)          All amounts realized in respect of

Carrying Charges transferred from the Interest Reserve Account as contemplated

in Section 7.03(b); and

 

(vii)         All amounts received in respect of

interest, dividends, gains, income and earnings on investments of funds in the

Trust Accounts (except the Reserve Fund and the Pre-Funding Account) as

contemplated herein.

 

(c)           The

Indenture Trustee shall, if amounts remain on deposit in the Pre-Funding

Account at the expiration of the Funding Period, cause to be deposited into the

Note Distribution Account the amount then in deposit in the Pre-Funding

Account.

 

(d)           If

the Servicer so directs, in writing, the Indenture Trustee shall invest the

amounts in the Trust Accounts in Qualified Eligible Investments that are

payable on demand or that mature not later than one Business Day prior to the

next succeeding Distribution Date.  Once

such funds are invested, the Indenture Trustee shall not change the investment

of such funds.  Any loss on such

investments shall be deposited in the applicable Trust Account by the Servicer

out of its own funds immediately as realized. 

Funds in the Trust Accounts not so invested must be insured to the

extent permitted by law by the Bank Insurance Fund or the Savings Association

Insurance Fund of the Federal Deposit Insurance Corporation.  Subject to the restrictions herein, the

Indenture Trustee may purchase a Qualified Eligible Investment from itself or

an Affiliate.   Subject to the other

provisions hereof, the Indenture Trustee shall have sole control over each such

investment and the income thereon, and any certificate or other instrument

evidencing any such investment, if any, shall be delivered directly to the

Indenture Trustee or its agent, together with each document of transfer, if

any, necessary to transfer title to such investment to the Indenture Trustee in

a manner which complies with this Section 5.05(d).  All interest, dividends, gains upon sale and other income from,

or earnings on, investments of funds in the Trust Accounts (other than the

Reserve Fund and the Pre-Funding Account) shall be deposited in the Collection

Account pursuant to Section 5.05(b) and distributed on the next Distribution

Date pursuant to Section 7.05.  The

Trust Depositor and the Trust agree and acknowledge that the Indenture Trustee

is to have

“control” (within the meaning of Section 9-106 of the UCC) of

collateral comprised of “Investment Property” (within the meaning

of Section 9-102 of the UCC) for all purposes of this Agreement.

 

34

 

(e)           Notwithstanding

anything to the contrary herein, the Servicer may remit payments on the

Contracts and Net Liquidation Proceeds to the Collection Account in next-day

funds or immediately available funds no later than 10:00 a.m., Central

time, on the Business Day prior to the next succeeding Distribution Date, but

only for so long as (i) the short-term debt security rating of the Servicer is

at least “P-1” by Moody’s and “A-1+” by Standard & Poor’s or (ii) the long-term

debt security rating of the Servicer is at least “A2” by Moody’s and “A” by

Standard & Poor’s.

 

(f)                                    The Servicer shall apply collections

received in respect of a Contract as follows:

 

(i)                                     First, to accrued interest with respect

to such Contract;

 

(ii)                                  Second, to pay any expenses and unpaid

late charges or extension fees (if any) due and owing under such Contract; and

 

(iii)                               Third, to principal to the extent due and owing under

such Contract.

 

(g)           Any

collections on a Contract remaining after application by the Servicer in

accordance with the provisions of Section 5.05(f) shall constitute an excess

payment (an “Excess Payment”). 

Excess Payments constituting prepayments of principal shall be applied

as a prepayment of the Principal Balance of such Contract.  All other Excess Payments shall be permitted

to be retained by the Servicer.

 

(h)           The

Servicer will, from time to time as provided herein, be permitted to withdraw

or request the withdrawal from the Collection Account any amount deposited

therein that, based on the Servicer’s good-faith determination, was deposited

in error.

 

Section 5.06.        Enforcement. 

(a) The Servicer will, consistent with Section 5.02, act with respect to

the Contracts in such manner as will maximize the receipt of all payments called

for under the terms of the Contracts. 

The Servicer shall use its best efforts to cause Obligors to make all

payments on the Contracts directly to the Lockbox Account.  The Servicer will act in a commercially

reasonable manner with respect to the repossession and disposition of a

Motorcycle following a default under the related Contract with a view to

realizing proceeds at least equal to the Motorcycle’s fair market value.  If the Servicer determines that eventual

payment in full of a Contract is unlikely, the Servicer will follow its normal

practices and procedures to recover all amounts due upon that Contract,

including repossessing and disposing of the related Motorcycle at a public or

private sale or taking other action permitted by applicable 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

 

35

 

not a real party in interest or a holder entitled to enforce the

Contract, the Owner Trustee (or the Indenture Trustee) on behalf of the Trust

shall, at the Servicer’s expense, take such steps as the Servicer deems

reasonably necessary to enforce the Contract, including bringing suit in its

name or the names of the Noteholders under the Indenture and the

Certificateholder as owner of the Trust.

 

(c)           The

Servicer shall exercise any rights of recourse against third persons that exist

with respect to any Contract in accordance with the Servicer’s usual

practice.  In exercising recourse

rights, the Servicer is authorized on the Trust’s behalf to reassign the

Defaulted Contract or the related Motorcycle to the Person against whom

recourse exists at the price set forth in the document creating the recourse; provided,

however, the Servicer in exercising recourse against any third

persons as described in the immediately preceding sentence shall do so in such

manner as to maximize the aggregate recovery with respect to the Contract; and provided

further, however, that notwithstanding the foregoing the Servicer in

its capacity as such may exercise such recourse only if such Contract (i) was

not required to be reacquired by the Seller pursuant to the Transfer and Sale

Agreement or (ii) was required to be reacquired by the Seller and the Seller

has defaulted on such reacquisition obligation.

 

(d)           The

Servicer will not permit any rescission or cancellation of any Contract due to

the acts or omissions of the Trust Depositor.

 

(e)           The

Servicer may grant to the Obligor on any Contract an extension of payments due

under such Contract; provided that (i) the extension period is

limited to 45 days, (ii) the Obligor has not received an extension during the

previous twelve-month period, (iii) the evidence supports the Obligor’s

willingness and capability to resume monthly payments, (iv) such extension is

consistent with the Servicer’s customary servicing procedures and is consistent

with Section 5.02, (v) such extension does not extend the maturity date of the

Contract beyond the latest maturity date of any of the Contracts as of the

Initial Cutoff Date (or, if a transfer of Subsequent Contracts to the Trust

occurs, beyond the latest maturity date of such Subsequent Contracts) and (vi)

the aggregate Principal Balances of Contracts which have had extensions granted

does not exceed more than 3.00%

of the aggregate of the Initial Class A-1 Note 

Balance, the Initial Class A-2 Note Balance and the Initial Class B Note

Balance.

 

(f)            The

Servicer will not add to the outstanding Principal Balance of any Contract the

premium of any physical damage or other individual insurance on a Motorcycle

securing such 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.

 

36

 

Section 5.07.        Trustees to

Cooperate.  Upon payment in full on any Contract, the

Servicer will notify the Trust Depositor on the next succeeding Distribution

Date by certification of a Servicing Officer (which certification shall include

a statement to the effect that all amounts received in connection with such

payments which are required to be deposited in the Collection Account pursuant

to Section 5.05 have been so deposited) and shall (if the Servicer is not then

in possession of the Contracts and Contract Files) notify the Trustees and

request delivery of the Contract and Contract File to the Servicer.  Upon receipt of such notice and request, the

Trustees shall promptly release or cause to be released such Contract and

Contract File to the Servicer.  Upon

receipt of such Contract and Contract File, each of the Trust Depositor and the

Servicer is authorized to execute an instrument in satisfaction of such

Contract and to do such other acts and execute such other documents as the

Servicer deems necessary to discharge the Obligor thereunder and eliminate the

security interest in the Motorcycle related thereto.  The Servicer shall determine when a Contract has been paid in

full; to the extent that insufficient payments are received on a Contract

credited by the Servicer as prepaid or paid in full and satisfied, the

shortfall shall be paid by the Servicer out of its own funds.  From time to time as appropriate for servicing

and repossession in connection with any Contract, if the Servicer is not then

in possession of the Contracts and Contract Files, the Indenture Trustee shall,

upon written request of a Servicing Officer and delivery to the Indenture

Trustee of a receipt signed by such Servicing Officer, cause the original

Contract and the related Contract File to be released to the Servicer and shall

execute such documents as the Servicer shall deem reasonably necessary to the

prosecution of any such proceedings. 

Such receipt shall obligate the Servicer to return the original Contract

and the related Contract File to the Indenture Trustee when the need by the

Servicer has ceased unless the Contract shall be reacquired as described in

Section 7.10.  Upon request of a Servicing

Officer, the Indenture Trustee shall perform such other acts as reasonably

requested by the Servicer and otherwise cooperate with the Servicer in the

enforcement of the Certificateholder’s rights and remedies with respect to

Contracts.

 

Section 5.08.        Costs and

Expenses.  All costs and expenses incurred by the

Servicer in carrying out its duties hereunder, fees and expenses of accountants

and payments of all fees and expenses incurred in connection with the

enforcement of Contracts (including enforcement of defaulted Contracts and

repossessions of Motorcycles securing such Contracts when such Contracts are

not reacquired pursuant to Section 7.08) and all other fees and expenses not

expressly stated hereunder to be for the account of the Trust shall be paid by

the Servicer and the Servicer shall not be entitled to reimbursement hereunder.

 

Section 5.09.        Maintenance of

Security Interests in Motorcycles.  The Servicer

shall take such steps as are necessary to maintain continuous perfection and

the first priority of the security interest created by each Contract in the

related Motorcycle.  The Owner Trustee

and the Indenture Trustee hereby authorize the Servicer to take such steps as

are necessary to perfect such security interest and to maintain the first priority

thereof in the event of a relocation of a Motorcycle or for any other reason.

 

Section 5.10.        Successor

Servicer/Lockbox Agreements.  The Servicer

shall use its best efforts to cause Obligors to make all payments on the

Contracts directly to one or more

 

37

 

Lockbox Banks, acting as agent for the Trust pursuant to a Lockbox

Agreement.  In the event the Servicer

shall for any reason no longer be acting as such, the Successor Servicer shall

thereupon assume all of the rights and obligations of the outgoing servicer

under the Lockbox Agreement; provided, however, that the Successor

Servicer shall not be liable for any acts or obligations of the Servicer prior

to such succession.  In such event, the

Successor Servicer shall be deemed to have assumed all of the outgoing

Servicer’s interest therein and to have replaced the outgoing Servicer as a

party to each such Lockbox Agreement to the same extent as if such Lockbox

Agreement had been assigned to the Successor Servicer, except that the outgoing

Servicer shall not thereby be relieved of any liability or obligations on the

part of the outgoing Servicer to the Lockbox Bank under such Lockbox

Agreement.  The outgoing Servicer shall,

upon the request of the Owner Trustee, but at the expense of the outgoing

Servicer, deliver to the Successor Servicer all documents and records relating

to each such Lockbox Agreement and an accounting of amounts collected and held

by the Lockbox Bank and otherwise use its best efforts to effect the orderly

and efficient transfer of any Lockbox Agreement to the Successor Servicer.

 

Section 5.11.        Separate Entity

Existence.  The Servicer agrees to take or refrain

from taking or engaging in with respect to the Trust Depositor, as applicable,

each of the actions or activities specified in the “substantive consolidation”

opinion of Winston & Strawn (or in any related Certificate of the Servicer)

delivered on the Closing Date, upon which the conclusions expressed therein are

based.

 

ARTICLE SIX

 

THE TRUST DEPOSITOR

 

Section 6.01.        Covenants of

the Trust Depositor.

 

(a)           During the term of this Agreement,

the Trust Depositor will keep in full force and effect its existence, rights

and franchises as a corporation under the laws of the jurisdiction of its

incorporation and will obtain and preserve its qualification to do business in

each jurisdiction in which such qualification is or shall be necessary to

protect the validity and enforceability of this Agreement, the other

Transaction Documents and each other instrument or agreement necessary or

appropriate to the proper administration of this Agreement and the transactions

contemplated hereby.

 

(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

 

38

 

securitization or other non-recourse financing transactions involving

the Seller or any of its Affiliates (or with respect to the Contract Assets

themselves, following a release and reconveyance thereof from the Trust), on

terms and conditions (with respect to the liabilities imposed upon the Trust

Depositor by virtue of such transactions, as well as in respect of agreements

or restrictions concerning activities of the Trust Depositor and its relations

or interactions with the Seller or the Servicer or other applicable Affiliate

relevant to “bankruptcy remoteness” or “substantive consolidation” analysis),

in each case substantially similar to such terms and conditions applicable to

the Trust Depositor hereunder and under the other Transaction Documents.

 

(d)           No

Borrowing.  The Trust

Depositor shall not issue, incur, assume, guarantee or otherwise become liable,

directly or indirectly, for (i) any Indebtedness except for any Indebtedness

permitted by or arising under the Transaction Documents or (ii) obligations in

connection with transactions described in the proviso of Section 6.01(c), as

limited thereby.  The proceeds of the

Notes shall be used exclusively to fund the Trust Depositor’s purchase of the

Contracts and the other assets specified in this Agreement and to pay the

transactional expenses of the Trust Depositor.

 

(e)           Guarantees,

Loans Advances and Other Liabilities.  Except as otherwise contemplated by the Transaction Documents or

in connection with transactions described in Section 6.01(c), as limited

thereby, the Trust Depositor shall not make any loan or advance or credit to,

or guarantee (directly or indirectly or by an instrument having the effect of

assuming another’s payment or performance on any obligation or capability of so

doing or otherwise), endorse or otherwise become contingently liable, directly

or indirectly, in connection with the obligations, stocks or dividends of, or

own, purchase, repurchase or acquire (or agree contingently to do so) any

stock, obligations, assets or securities of, any other interest in, or make any

capital contribution to, any other Person.

 

(f)            Capital

Expenditures.  The Trust

Depositor shall not make any expenditure (by long-term or operating lease or

otherwise) for capital assets (either realty or personalty).

 

(g)           Restricted

Payments.  Except as

permitted or contemplated by the Transaction Documents, the Trust Depositor

shall not, directly or indirectly, (i) pay any dividend or make any

distribution (by reduction of capital or otherwise), whether in cash, property,

securities or a combination thereof, to any owner of an equity interest in the

Trust Depositor, (ii) redeem, purchase, retire or otherwise acquire for value

any such equity interest or (iii) set aside or otherwise segregate any amounts

for any such purpose; it being understood that the Trust Depositor shall at all

times have the right to distribute funds received pursuant to the Transaction

Documents to its equity owner.

 

(h)           Separate

Entity Existence.   The Trust

Depositor shall:

 

39

 

(i)            Maintain its own

deposit account or accounts, separate from those of any Affiliate, with

commercial banking institutions.  The

funds of the Trust Depositor will not be diverted to any other Person or for

other than authorized uses of the  Trust

Depositor.

 

(ii)           Ensure that, to the

extent that it shares the same officers or other employees as any of its

members or Affiliates, the salaries of and the expenses related to providing

benefits to such officers and other employees shall be fairly allocated among

such entities, and each such entity shall bear its fair share of the salary and

benefit costs associated with all such common officers and employees.

 

(iii)          Ensure that, to the

extent that it jointly contracts with any of its members or Affiliates to do

business with vendors or service providers or to share overhead expenses, the

costs incurred in so doing shall be allocated fairly among such entities, and

each such entity shall bear its fair share of such costs.  To the extent that the Trust Depositor

contracts or does business with vendors or service providers when the goods and

services provided are partially for the benefit of any other Person, the costs

incurred in so doing shall be fairly allocated to or among such entities for

whose benefit the goods and services are provided, and each such entity shall

bear its fair share of such costs.  All

material transactions between Trust Depositor and any of its Affiliates shall

be only on an arm’s length basis.

 

(iv)          To the extent that

the Trust Depositor and any of its members or Affiliates have offices in the

same location, there shall be a fair and appropriate allocation of overhead

costs among them, and each such entity shall bear its fair share of such

expenses.

 

(v)           Conduct its affairs

strictly in accordance with its By-laws and Articles of Incorporation, and

observe all necessary, appropriate and customary limited liability company

formalities, including, but not limited to, holding all regular and special

members’ and directors’ meetings appropriate to authorize all entity action,

keeping separate and accurate records of such meetings and its actions, passing

all resolutions or consents necessary to authorize actions taken or to be

taken, and maintaining accurate and separate books, records and accounts,

including, but not limited to, payroll and intercompany transaction accounts.

 

(vi)          Take or refrain from

taking or engaging in, as applicable, each of the actions or activities

specified in the “true sale” and “substantive consolidation” opinions of

Winston & Strawn delivered on the Closing Date (or in any related

certificate delivered in connection therewith), upon which the conclusions expressed

therein are based.

 

40

 

Section 6.02.        Liability of

Trust Depositor; Indemnities.  The Trust

Depositor shall be liable in accordance herewith only to the extent of the

obligations specifically undertaken by the Trust Depositor under this

Agreement.

 

The Trust Depositor shall indemnify, defend and hold

harmless the Issuer, the Owner Trustee, WTC, the Indenture Trustee and the

Servicer from and against any taxes that may at any time be asserted against

any such Person with respect to the transactions contemplated herein and in the

other Transaction Documents, including any sales, gross receipts, general

corporation, tangible personal property, Illinois personal property replacement

privilege or license taxes (but, in the case of the Issuer, not including any

taxes asserted with respect to, and as of the date of, the transfer of the

Contracts to the Issuer or the issuance and original sale of the Securities, or

asserted with respect to ownership of the Contracts, or federal or other income

taxes arising out of distributions on the Certificate or the Notes) and costs

and expenses in defending against the same.

 

The Trust Depositor shall indemnify, defend and hold

harmless the Issuer, the Owner Trustee, WTC, the Indenture Trustee and the

Securityholders from and against any loss, liability or expense incurred by

reason of the Trust Depositor’s willful misfeasance, bad faith or negligence

(other than errors in judgment) in the performance of its duties under this Agreement,

or by reason of reckless disregard of its obligations and duties under this

Agreement.

 

The Trust Depositor shall indemnify, defend and hold

harmless the Issuer, the Owner Trustee, WTC and the Indenture Trustee from and

against all costs, expenses, losses, claims, damages and liabilities arising

out of or incurred in connection with the acceptance or performance of the

trusts and duties herein and, in the case of the Owner Trustee, in the Trust

Agreement and, in the case of the Indenture Trustee, in the Indenture, except

to the extent that such cost, expense, loss, claim, damage or liability  in the case of (i) the Owner Trustee or WTC,

as the case may be, shall be due to the willful misfeasance, bad faith or negligence

of the Owner Trustee or WTC, as the case may be, or shall arise from the breach

by the Owner Trustee or WTC, as the case may be, of any of its representations

or warranties set forth in Section 7.03 of the Trust Agreement, or (ii) the

Indenture Trustee, shall be due to the willful misfeasance, bad faith or

negligence of the Indenture Trustee.

 

The Trust Depositor shall be liable directly to and

will indemnify any injured party or any other creditor of the Trust for all

losses, claims, damages, liabilities and expenses of the Trust to the extent

that Trust Depositor would be liable if the Trust were a partnership under the

Delaware Revised Uniform Limited Partnership Act in which Trust Depositor were

a general partner; provided, however, that Trust Depositor

shall not be liable for any losses incurred by a Certificateholder in the

capacity of an investor in the Trust Certificate or a Noteholder in the

capacity of an investor in the Notes. 

In addition, any third party creditors of the Trust (other than in

connection with the obligations described in the immediately preceding sentence

for which Trust Depositor shall not be liable) shall be deemed third party

beneficiaries of this paragraph.  The

obligations of Trust Depositor under this paragraph shall be evidenced by the

Trust Certificate described in the Trust Agreement.

 

41

 

Indemnification under this Section shall include,

without limitation, reasonable fees and expenses of counsel and expenses of

litigation and shall survive the termination of the Trust and the resignation

or removal of the Trustees.  If the

Trust Depositor shall have made any indemnity payments pursuant to this Section

and the Person to or on behalf of whom such payments are made thereafter shall

collect any of such amounts from others, such Person shall promptly repay such

amounts to the Trust Depositor, without interest.

 

Notwithstanding anything to the contrary herein, the

obligations of the Trust Depositor under this Section are solely the corporate

obligations of the Trust Depositor and shall be payable by it solely as

provided in this Section.  The Trust

Depositor shall only be required to make such contributions required under this

Section, (y) from funds available to it pursuant to, and in accordance with the

payment priorities set forth in Section 7.05 and (z) only to the extent that it

receives additional funds designated for such purposes or to the extent that it

has additional funds available (other than funds described in the preceding

clause (y)) that would be in excess of amounts that would be necessary to pay

the debt and other obligations of such entity incurred in accordance with its

certificate of incorporation and all financing documents to which it is a party

as they come due.  In addition , no

amount owing by the Trust Depositor hereunder in excess of the liabilities that

it is required to pay in accordance with the preceding sentence shall

constitute a “claim” (as defined in Section 101(5) of the Bankruptcy Code)

against it.  No recourse shall be had

for the payment of any amount owing hereunder or any other obligation of, or

claim against the Trust Depositor arising out of or based up on this Section

against any stockholder, employee, officer, agent, director or authorized

person of the Trust Depositor or Affiliate thereof; provided, however, that the

foregoing shall not relieve any such person or entity of any liability they

might otherwise have as a result of fraudulent actions or omissions taken by

them.

 

Section 6.03.        Merger or

Consolidation of, or Assumption of the Obligations of, Trust Depositor; Certain

Limitations.  Notwithstanding any other provision in

this Section and any provision of law, the Trust Depositor shall not do any of

the following:

 

(a)           engage

in any business or activity other than as set forth in its Articles of

Incorporation;

 

(b)           without the affirmative vote of a

majority of the members of the Board of Directors of the Trust Depositor (which

must include the affirmative vote of at least two duly appointed Independent

directors) (i) dissolve or liquidate, in whole or in part, or institute

proceedings to be adjudicated bankrupt or insolvent, (ii) consent to the

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,

 

42

 

however, that no

director may be required by any shareholder of the Trust Depositor to consent

to the institution of bankruptcy or insolvency proceedings against the Trust

Depositor so long as it is solvent; or

 

(c)           merge or consolidate with any other

corporation, company or entity or sell all or substantially all of its assets

or acquire all or substantially all of the assets or capital stock or other

ownership interest of any other corporation, company or entity unless the

Person formed by such consolidation or into which the Trust Depositor has

merged or the Person which acquires by conveyance, transfer or lease

substantially all the assets of the Trust Depositor as an entirety, can

lawfully perform the obligations of the Trust Depositor hereunder and executes

and delivers to the Owner Trustee and the Indenture Trustee an agreement in

form and substance reasonably satisfactory to the Owner Trustee and the

Indenture Trustee which contains an assumption by such successor entity of the

due and punctual performance and observance of each covenant and condition to

be performed or observed by the Trust Depositor under this Agreement; provided

that the Trust Depositor shall provide notice of any merger, consolidation or

succession pursuant to this Section to each Rating Agency and shall receive

from each Rating Agency a letter to the effect that such merger, consolidation

or succession will not result in a qualification, downgrading or withdrawal of

the then-current ratings of each Class of Notes.

 

Section 6.04.        Limitation on

Liability of Trust Depositor and Others.  The Trust

Depositor and any director or officer or employee or agent of the Trust

Depositor may rely in good faith on any document of any kind, prima facie

properly executed and submitted by any Person respecting any matters arising

hereunder.  The Trust Depositor and any

director or officer or employee or agent of the Trust Depositor shall be

reimbursed by the Owner Trustee or the Indenture Trustee, as the case may be,

for any contractual damages, liability or expense incurred by reason of the

Owner Trustee’s or the Indenture Trustee’s willful misfeasance, bad faith or

negligence (except errors in judgment) in the performance of their respective

duties hereunder, or by reason of reckless disregard of their respective

obligations and duties hereunder.  The

Trust Depositor shall not be under any obligation to appear in, prosecute or

defend any legal action that shall not be incidental to its obligations under

this Agreement, and that in its opinion may involve it in any expense or

liability.

 

Section 6.05.        Trust Depositor

Not to Resign.  Subject to the provisions of Section 6.03,

the Trust Depositor shall not resign from the obligations and duties hereby imposed

on it as Trust Depositor hereunder.

 

43

 

ARTICLE SEVEN

 

DISTRIBUTIONS; RESERVE FUND

 

Section 7.01.        Monthly

Distributions.  (a) 

Each Noteholder and Certificateholder as of the related Record Date shall

be paid on the next succeeding Distribution Date by check mailed to such

Noteholder or Certificateholder at the address for such Noteholder or

Certificateholder appearing on the Note Register or Certificate Register or by

wire transfer if such Noteholder or Certificateholder provides written

instructions to the Indenture Trustee or the Owner Trustee, respectively, at

least ten days prior to such Distribution Date.

 

(b)           The

Indenture Trustee shall serve as the paying agent hereunder (the “Paying

Agent”) and shall make the payments to or on behalf of the

Noteholders and the Certificateholder required hereunder.  The Indenture Trustee hereby agrees that all

amounts held by it for payment hereunder will be held in trust for the benefit

of the Noteholders and the Certificateholder.

 

Section 7.02.        Fees. 

The Indenture Trustee shall be paid the Indenture Trustee Fee and the

Servicer shall be paid the Monthly Servicing Fee, each of which shall be paid

solely from the monies and in accordance with the priorities described in

Section 7.05(a).  No recourse may be had

to the Seller, Trust Depositor, Trustees, Servicer, or any of their respective

Affiliates in the event that amounts available under Section 7.05(a) are

insufficient for payment of the Indenture Trustee’s Fee and the Monthly

Servicing Fee.

 

Section 7.03.        Advances;

Realization of Carrying Charge.  (a) On each

Determination Date, the Servicer shall compute the amount of Delinquent

Interest, if any, on the Contracts for the immediately preceding Due

Period.  Not later than each

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 (i) the amount of Delinquent Interest, if

any, on the Contracts for the related Due Period and (ii) the amount of the

Advance, if any, made by the Servicer in respect of the Delinquent Interest

pursuant to this Section 7.03.  If the

amount of such Advance is less than the amount of the Delinquent Interest, the

relevant Monthly Report shall be accompanied by a certificate of a Servicing

Officer setting forth in reasonable detail the basis for the determination by

the Servicer that the portion of the Delinquent Interest not advanced would become

an Uncollectible Advance.  By each

Determination Date, the Servicer shall determine the amount of prior

unreimbursed Advances for which it shall be entitled to be reimbursed pursuant

to the provisions of this Section (such amount, the “Reimbursement Amount”).  The Servicer shall be entitled to be

reimbursed for any outstanding Advance with respect to a Contract by means of a

first priority withdrawal from the Collection Account of such Reimbursement

Amount as provided in Section 7.05(a)(ii).

 

44

 

(b)           The

Servicer shall determine no later than 12:00 noon, New York City time, on the

second Business Day prior to a Distribution Date the Carrying Charges in

respect of the upcoming Distribution Date. 

To the extent of such amount, the Indenture Trustee shall transfer an

amount equal to the Carrying Charges from the Interest Reserve Account (solely

to the extent of the amount then on deposit) into the Collection Account as

contemplated in Section 5.05(b)(vi) hereof.

 

Section 7.04.        Interest

Reserve Account.

 

(a)           On

or prior to the Closing Date, the Trust Depositor shall establish with and in

the name of the Indenture Trustee on behalf of the Securityholders, an Eligible

Account designated “Harley-Davidson Customer Funding Corp. Interest

Reserve Account - Harley Davidson Motorcycle Trust 2003-2 — BNY Midwest Trust

Company, as Indenture Trustee” (such account being the “Interest

Reserve Account”).

 

(b)           No

withdrawals may be made of funds in the Interest Reserve Account except as

provided in (c) below.  Except as

specifically provided, funds in the Interest Reserve Account shall not be

commingled with funds in any other account established with respect to the

Notes, the Certificate or with any other monies.

 

(c)           All

investment earnings realized in respect of amounts in the Pre-Funding Account

shall be deposited when and as received in the Interest Reserve Account, such

that the Pre-Funded Amount shall never exceed the amount initially deposited

into the Pre-Funding Account on the Closing Date.  With respect to amounts on deposit in the Interest Reserve

Account, the Indenture Trustee shall disburse from such funds the amount

specified in respect of Carrying Charges in accordance with Section 7.03

herein.  In the event that (i) the

Funding Period has terminated, (ii) all amounts on deposit in the

Pre-Funding Account have been disbursed, (iii) a Distribution Date has

elapsed following the occurrence of both (i) and (ii), and (iv) all

amounts referred to in clause (ii) have been applied, then any amounts

remaining in the Interest Reserve Account shall be allocated and distributed to

the Trust Depositor.

 

Section 7.05.        Distributions;

Priorities.

 

(a)           Except

as provided in Section 7.05(b) or (c), on each Distribution Date, the Indenture

Trustee, at the Servicer’s direction, will make the following allocations and

distributions of Available Monies in the following order of priority:

 

(i)            to the Mandatory Redemption

Subaccount in the Note Distribution Account to the Noteholders, the amount of

any Mandatory Redemption, pro rata (based on the outstanding

principal amount of each Class of Notes), calculated on the then current

principal balance of the Notes with the amounts derived from draws on the

Pre-Funding Account (which amounts are available for payment of such Mandatory

Redemptions and not for any other purpose); provided, however, in the event the amount

in the Mandatory Redemption subaccount is less than $150,000 such amount shall

be distributed solely to the Class A-1 Noteholders;

 

45

 

(ii)           to the Servicer, the Reimbursement

Amount to the Servicer for Advances previously made;

 

(iii)          to the Servicer, the Servicing Fee,

including any unpaid Servicing Fee with respect to one or more prior Due

Periods;

 

(iv)          to the Indenture Trustee, any accrued

and unpaid Indenture Trustee Fee with respect to one or more prior Due Periods;

 

(v)           to the Note Distribution Account,

together with any amounts deposited therein pursuant to Section 7.06, the Note

Interest Distributable Amount with respect to such Distribution Date for each

Class of Notes allocated in the following order of priority:

 

(1)           to the Class A-1 Noteholders and to

the Class A-2 Noteholders, the Note Interest Distributable Amount for each such

Class of Notes; provided, however, that if there are insufficient funds on

deposit in the Note Distribution Account to pay the entire amount of the Note

Interest Distributable Amount for each such Class of Notes, then the amount in

the Note Distribution Account shall be applied to the Class A-1 Notes and the

Class A-2 Notes pro rata on the basis of the Note Interest Distributable

Amount for each such Class of Notes; and

 

(2)           to the Class B Noteholders, the Note

Interest Distributable Amount for such Class of Notes;

 

(vi)          to the Note Distribution Account,

together with any amounts deposited therein pursuant to Section 7.06, the Class

A Note Principal Distributable Amount with respect to such Distribution Date,

first, to the Class A-1 Notes until the Class A-1 Notes have been paid in full,

and second, to the Class A-2 Notes until the Class A-2 Notes have been paid in

full;

 

(vii)         to the Note Distribution Account,

together with any amounts deposited therein pursuant to Section 7.06, the Class

B Note Principal Distributable Amount to the Class B Notes until the Class B

Notes have been paid in full;

 

(viii)        any Excess Amounts to the Reserve Fund

up to the Specified Reserve Fund Balance; and

 

(ix)           to the Holder of the Certificate.

 

(b)           If

the Notes have been declared immediately due and payable as provided in Section

5.02 of the Indenture following the occurrence of an Event of Default under

Section 5.01(iii) of the Indenture, then, until such time as the Notes have

been paid in full, Available Monies shall be allocated and distributed in the

following order of priority after payment of the amounts set forth in Section

7.05(a)(i), (ii), (iii) and (iv):

 

46

 

(i)            to the Note Distribution Account,

together with any amounts deposited therein pursuant to Section 7.06, the Note

Interest Distributable Amount with respect to such Distribution Date for each

Class of Notes allocated in the following order of priority:

 

(1)           to the Class A-1 Noteholders and to

the Class A-2 Noteholders, the Note Interest Distributable Amount for each such

Class of Notes; provided, however, that if there are insufficient funds on

deposit in the Note Distribution Account to pay the entire amount of the Note

Interest Distributable Amount for each such Class of Notes, then the amount in

the Note Distribution Account shall be applied to the Class A-1 Notes and the

Class A-2 Notes pro rata on the basis of the Note Interest Distributable

Amount for each such Class; and

 

(2)           to the Class B Noteholders, the Note

Interest Distributable Amount for such Class of Notes;

 

(ii)           to the Note Distribution Account,

together with any amounts deposited therein pursuant to Section 7.06, all

amounts remaining after distribution of interest to each Class of Notes shall

be allocated in the following order of priority:

 

(1)           to the Class A Notes, pro rata (based

on outstanding principal amount), until the outstanding principal balance of

each Class of the Class A Notes has been reduced to zero; and

 

(2)           to the Class B Notes, until the

outstanding principal balance of the Class B Notes has been reduced to zero;

and

 

(iii)          to the Holder of the Certificate.

 

(c)           If

the Notes have been declared immediately due and payable as provided in Section

5.02 of the Indenture following the occurrence of an Event of Default under

Section 5.01(i), (ii), (iv) or (v) of the Indenture, then, until such time as

the Notes have been paid in full, Available Monies shall be allocated and

distributed in the following order of priority after payment of amounts set

forth in Section 7.05(a)(i), (ii), (iii) and (iv):

 

(i)            to the Note Distribution Account,

together with any amounts deposited therein pursuant to Section 7.06, the Note

Interest Distributable Amount with respect to such Distribution Date for

distribution to the Class A-1 Noteholders and to the Class A-2 Noteholders, as

applicable; provided,

however, that if there are insufficient funds on deposit in the Note

Distribution Account to pay the entire amount of the Note Interest

Distributable Amount for each such Class of Notes, then the amount in the Note

Distribution Account shall be applied to the Class A-1 Notes and the Class A-2

Notes pro

rata (on the basis of the Note Interest Distributable Amount for

each such Class);

 

47

 

 

(ii)           to the Note Distribution Account,

together with any amounts deposited therein pursuant to Section 7.06, the Class

A Note Principal Distributable Amount for distribution to the Class A-1

Noteholders and the Class A-2 Noteholders in reduction of the outstanding

principal amount of the Class A-1 Notes and Class A-2 Notes, as applicable,

until the outstanding principal balance of the Class A-1 Notes and the Class

A-2 Notes has been reduced to zero; provided, however, that if there are

insufficient funds on deposit in the Note Distribution Account to reduce the

outstanding principal balance of the Class A-1 Notes and the Class A-2 Notes to

zero, the amount in the Note Distribution Account shall be applied to the

payment of principal on the Class A-1 Notes and the Class A-2 Notes pro rata

(based on outstanding principal amount);

 

(iii)          to the Note Distribution Account,

together with any amounts deposited therein pursuant to Section 7.06, the Note

Interest Distributable Amount with respect to such Distribution Date for

distribution to the Class B Noteholders;

 

(iv)          to the Note Distribution Account,

together with any amounts deposited therein pursuant to Section 7.06, the Class

B Note Principal Distributable Amount with respect to such Distribution Date

for distribution to the Class B Noteholders in reduction of the outstanding

principal amount of the Class B Notes until the outstanding principal balance

of the Class B Notes has been reduced to zero; and

 

(v)           to the Holder of the Certificate.

 

Section 7.06.        Reserve Fund.

 

(a)           On

or prior to the Closing Date, the Indenture Trustee, on behalf of the Trust

Depositor shall deposit the Reserve Fund Initial Deposit into the Reserve Fund

from the net proceeds of the Securities.

 

(b)           The

Indenture Trustee shall determine no later than 10:00 a.m., Chicago, Illinois

time, on the Distribution Date (but after making, and taking into account, the

determination, demand and transfer of funds contemplated in Section 7.05 above)

whether there exists a Shortfall with respect to the upcoming Distribution

Date.  In the event that the Indenture

Trustee determines that there exists a Shortfall, the Indenture Trustee shall

no later than 12:00 noon, Chicago, Illinois time, on such Distribution Date

remit monies from the Reserve Fund in the following order of priority:  first, to the Note Distribution Account, the

amount of such Shortfall relating to the Note Interest Distributable Amount and

second, to the Note Distribution Account, the amount of such Shortfall relating

to the Note Principal Distributable Amount.

 

(c)           The

Indenture Trustee shall at the written direction of the Servicer invest the

funds in the Reserve Fund in Qualified Eligible Investments.  Funds in the Reserve Fund shall be invested

in investments that are payable on demand or mature on or before the Business

Day prior to each Distribution Date. 

Once such funds are invested, the Indenture Trustee shall not change the

investment of such funds prior to maturity. 

Upon any such investment, the Indenture Trustee shall, consistent with

the definition of Qualified Eligible Investment herein, make an

 

48

 

appropriate notation of the security interest in such Qualified

Eligible Investment on the Indenture Trustee’s records, by book entry or

otherwise.  All income and gain realized

from any such investments as well as any interest earned on Reserve Fund

Deposits shall be deposited and retained in the Reserve Fund (subject to

Section 7.06(e)).  Losses, if any,

realized on amounts in the Reserve Fund invested pursuant to this paragraph

shall first be credited against undistributed investment earnings on amounts in

the Reserve Fund invested pursuant to this paragraph, and shall thereafter be

deemed to reduce the amount on deposit in the Reserve Fund.  Neither the Trust Depositor nor the

Indenture Trustee shall be liable for the amount of any loss incurred in

respect of any investment, or lack of investment, of funds held in the Reserve

Fund.  All income or loss on funds held

in the Reserve Fund shall be taxable to the Trust Depositor.

 

(d)           Any

Excess Amounts will be applied to the Specified Reserve Fund Balance.

 

(e)           On

each Distribution Date on which the amount on deposit in the Reserve Fund

(after giving effect to all deposits thereto and withdrawals therefrom on such

Distribution Date) is greater than the Specified Reserve Fund Balance, the

Indenture Trustee shall release its lien on any remaining amounts to the Trust

Depositor.

 

Section 7.07.        Establishment of

Pre-Funding Account.

 

(a)           On

or prior to the Closing Date, the Trust Depositor shall establish with and in

the name of the Indenture Trustee on behalf of the Securityholders, an Eligible

Account designated “Harley-Davidson Customer Funding Corp. Pre-Funding

Account - Harley Davidson Motorcycle Trust 2003-2 — BNY Midwest Trust Company,

as Indenture Trustee” (such account being the “Pre-Funding

Account”).

 

(b)           During

the Funding Period, following receipt from the Trust Depositor of an Addition

Notice, and upon further receipt of a written demand from the Trust Depositor

for a disbursement of funds from the Pre-Funding Account to be made on or

before the date on which the Funding Period terminates (which written demand

must be delivered not later than one Business Day prior to the requested date

of funding and must be accompanied by the written consent of the Indenture

Trustee), the Indenture Trustee will disburse the amount demanded from the

Pre-Funding Account to Harley-Davidson Credit upon the order of the Trust

Depositor for the purpose of purchasing Subsequent Contracts from

Harley-Davidson Credit pursuant to a Subsequent Purchase Agreement.  With respect to amounts still remaining on

deposit in the Pre-Funding Account on the date upon which the Funding Period

ends (and provided a timely written demand for funding as described above has

not been received requesting funding on such date) the Indenture Trustee shall

immediately transfer all funds remaining in the Pre-Funding Account to the Note

Distribution Account.

 

(c)           If

(x) the Pre-Funded Amount has not been reduced to zero on the Distribution

Date on which the Funding Period ends (or, if the Funding Period does not end

on a Distribution Date, on the first Distribution Date following the end of the

Funding Period) or (y) the Pre-Funded Amount has been reduced to $150,000

or less on any Determination Date, in either case

 

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after giving effect to any reductions in the Pre-Funded Amount on such

Distribution Date or Determination Date pursuant to paragraph (a) above,

the Trust Depositor shall instruct the Indenture Trustee to withdraw from the

Pre-Funding Account the Pre-Funded Amount and, in the case of (x), on such

Distribution Date or, in the Determination Date (i) if the Pre-Funded

Amount is less than $150,000, deposit the Pre-Funded Amount in the Note

Distribution Account for payment as principal of the Class A-1 Notes up to

the Outstanding Amount thereof and then for payment of principal of the

Class A-2 Notes and Class B Notes and (ii) if the Pre-Funded Amount

is equal to or greater than $150,000, deposit the Pre-Funded Amount in the Note

Distribution Account for payment as principal of the Notes, pro rata,

calculated on the then current principal balance of each Class of Notes.

 

Section 7.08.        Reacquisition

of Contracts for Breach of Representations and Warranties.

 

Upon a discovery by the Servicer, the Trust Depositor

or the Trustees of a breach of a representation or warranty of the Seller as

set forth in Exhibit J hereto or as made in any Subsequent Purchase

Agreement relating to Subsequent Contracts that materially adversely affects

the Trust’s interest in such Contract (without regard to the benefits of the

Reserve Fund), the party discovering the breach shall give prompt written

notice to the other parties; provided, that the Trustees shall have no

duty or obligation to inquire or to investigate the breach by the Seller of any

of such representations or warranties. 

The Seller, as provided in  the

Transfer and Sale Agreement and in accordance with this Section 7.08, shall

reacquire a Contract at its Reacquisition Price, two Business Days prior to the

first Determination Date after the Seller becomes aware, or should have become

aware, or receives written notice from the Trustee, the Servicer or the Trust

Depositor of any breach of a representation or warranty of the Seller set forth

in Article III of the Transfer and Sale Agreement that materially and adversely

affects such Contract or the Trust’s interest in such Contract and which breach

has not been cured; provided, however, that with respect to

any Contract incorrectly described on the List of Contracts with respect to

unpaid Principal Balance which the Seller would otherwise be required to

reacquire under the Transfer and Sale Agreement, the Seller may, in lieu of

reacquiring such Contract, deposit in the Collection Account not later than one

Business Day after such Determination Date cash in an amount sufficient to cure

such deficiency or discrepancy; and provided further that with respect to a

breach of representation or warranty relating to the Contracts in the aggregate

and not to any particular Contract the Seller may select Contracts (without

adverse selection) to reacquire such that had such Contracts not been included

as part of the Trust Corpus there would have been no breach of such

representation or warranty; provided further that the failure to

maintain perfection of the security interest in the Motorcycle securing a

Contract in accordance with Section 5.09, shall be deemed to be a breach

materially and adversely affecting the Trust’s interest in the Contract or in

the related Contracts.  Notwithstanding

any other provision of this Agreement, the obligation of the Seller under the

Transfer and Sale Agreement and described in this Section 7.08 shall not

terminate or be deemed released by any party hereto upon a Service Transfer

pursuant to Article VIII.  The

reacquisition obligation described in this Section 7.08 is in no way to be

satisfied with monies in the Reserve Fund.

 

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Section 7.09.        Reassignment of

Reacquired Contracts.  Upon receipt by the Indenture Trustee for

deposit in the Collection Account of the Reacquisition Price as described in

Section 7.08 or Section 7.10, and upon receipt of a certificate of a Servicing

Officer in the form attached hereto as Exhibit G, the Indenture Trustee shall

release its lien on and the Trust shall assign to the Seller all of the Trust’s

right, title and interest in the reacquired Contract without recourse,

representation or warranty, except as to the absence of liens, charges or

encumbrances created by or arising as a result of actions of the Trustees.

 

Section 7.10.        Seller’s

Reacquisition Option.  As provided in the Transfer and Sale

Agreement, on written notice to the Indenture Trustee at least 20 days prior to

a Distribution Date, and provided that the Pool Balance is then less than 10%

of the Aggregate Principal Balance as of the Closing Date, and provided a

valuation letter is delivered as required in Section 5.02 of the Transfer and

Sale Agreement, the Seller may (but is not required to) purchase on that

Distribution Date all outstanding Contracts at a price equal to the aggregate

unpaid principal balance of the Notes on the previous Distribution Date plus

the aggregate of the Note Interest Distributable Amount for the current

Distribution Date, the Reimbursement Amount (if any) as well as accrued and

unpaid Monthly Servicing Fees and the Indenture Trustee Fee to the date of such

reacquisition.  Such price shall be

deposited in the Collection Account not later than one (1) Business Day before

such Distribution Date, against the Owner Trustee’s and Indenture Trustee’s

release of the Contracts and the Contract Files to the Seller.

 

ARTICLE EIGHT

 

EVENTS OF TERMINATION; SERVICE TRANSFER

 

Section 8.01.        Events of

Termination.  “Event of Termination” means the occurrence

of any of the following:

 

(a)           Any

failure by the Servicer or the Seller to make any payment or deposit required

to be made hereunder or in the Transfer and Sale Agreement (or in any

Subsequent Purchase Agreement or Subsequent Transfer Agreement) and the

continuance of such failure for a period of four Business Days after the date

on which such payment or deposit was due;

 

(b)           Failure

on the Servicer’s or the Seller’s part to observe or perform in any material

respect any covenant or agreement in this Agreement or in the Transfer and Sale

Agreement (or in any Subsequent Purchase Agreement or Subsequent Transfer

Agreement) (other than a covenant or agreement, the breach of which is

specifically addressed elsewhere in this Section) which continues unremedied

for 30 days after the date on which such failure commences;

 

(c)           Any

assignment by the Servicer or the Seller of its duties or rights hereunder or

under the Transfer and Sale Agreement (or under any Subsequent Purchase

Agreement or Subsequent Transfer Agreement), except as specifically permitted

hereunder or thereunder, or any attempt to make such an assignment;

 

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(d)           An

involuntary case under any applicable bankruptcy, insolvency or other similar

law shall have been commenced in respect of the Servicer or Trust Depositor and

shall not have been dismissed within 90 days, or a court having jurisdiction in

the premises shall have entered a decree or order for relief in respect of

either the Servicer or Trust Depositor in an involuntary case under any

applicable bankruptcy, insolvency or other similar law now or hereafter in

effect, or appointing a receiver, liquidator, assignee, custodian, trustee,

sequestrator (or similar official) of either the Servicer or Trust Depositor,

or for any substantial liquidation or winding up of their respective affairs;

 

(e)           The

Servicer or Trust Depositor shall have commenced a voluntary case under any

applicable bankruptcy, insolvency or other similar law now or hereafter in

effect, or shall have consented to the entry of an order for relief in an

involuntary case under any such law, or shall have consented to the appointment

of or taking possession by a receiver, liquidator, assignee, trustee, custodian

or sequestrator (or other similar official) of the Servicer or Trust Depositor,

as the case may be, or for any substantial part of their respective property,

or shall have made any general assignment for the benefit of their respective

creditors, or shall have failed to, or admitted in writing its inability to,

pay its debts as they become due, or shall have taken any corporate action in

furtherance of the foregoing;

 

(f)            Any

failure by the Servicer to deliver to the Trustees the Monthly Report pursuant

to the terms of this Agreement which remains uncured for five Business Days

after the date which such failure commences;

 

(g)           Any

representation, warranty or statement of the Servicer made in this Agreement,

in any Subsequent Transfer Agreement or any certificate, report or other

writing delivered pursuant hereto shall prove to be incorrect in any material

respect as of the time when the same shall have been made and the incorrectness

of such representation, warranty or statement has a material adverse effect on

the Trust and, within 30 days after written notice thereof shall have been

given to the Servicer or the Trust Depositor by the Indenture Trustee, the

circumstances or condition in respect of which such representation, warranty or

statement was incorrect shall not have been eliminated or otherwise cured.

 

Section 8.02.        Waiver of

Servicer Default.  The Required Noteholders may, by written

notice delivered to the parties hereto, waive any Servicer Default other than a

Servicer Default described in Section 8.01(a).

 

Section

8.03.        Service Transfer.  (a)  If an Event of Termination has occurred and

is continuing and has not been waived pursuant to Section 8.02, (x) the

Required Holders or (y) the Indenture Trustee may, by written notice delivered

to the parties hereto, terminate all (but not less than all) of the Servicer’s

management, administrative, servicing, custodial and collection functions (such

termination being herein called a “Service Transfer”).

 

(b)           Upon

receipt of the notice required by Section 8.03(a) (or, if later, on a date

designated therein), all rights, benefits, fees, indemnities, authority and

power of the Servicer

 

52

 

under this Agreement, whether with respect to the Contracts, the

Contract Files or otherwise, shall pass to and be vested in the Indenture

Trustee (the “Successor Servicer”) pursuant to and under this Section

8.03; and, without limitation, the Successor Servicer is authorized and

empowered to execute and deliver on behalf of the Servicer, as attorney-in-fact

or otherwise, any and all documents and other instruments, and to do any and

all acts or things necessary or appropriate to effect the purposes of such

notice of termination.  The Servicer

agrees to cooperate with the Successor Servicer in effecting the termination of

the responsibilities and rights of the Servicer hereunder, including, without

limitation, the transfer to the Successor Servicer for administration by it of

all cash amounts which shall at the time be held by the Servicer for deposit,

or have been deposited by the Servicer, in the Collection Account, or for its

own account in connection with its services hereafter or thereafter received

with respect to the Contracts.  The

Servicer shall transfer to the Successor Servicer all records held by the

Servicer relating to the Contracts in such electronic form as the Successor

Servicer may reasonably request and (ii) any Contract Files in the Servicer’s

possession.  In addition, the Servicer

shall permit access to its premises (including all computer records and

programs) to the Successor Servicer or its designee, and shall pay the reasonable

transition expenses of the Successor Servicer. 

Upon a Service Transfer, the Successor Servicer shall also be entitled

to receive the Monthly Servicing Fee for performing the obligations of the

Servicer.

 

Section 8.04.        Successor

Servicer to Act; Appointment of Successor Servicer. 

On or after a Service Transfer pursuant to Section 8.03, the Successor

Servicer shall be the successor in all respects to the Servicer in its capacity

as servicer under this Agreement and the transactions set forth or provided for

herein and shall be subject to all the responsibilities, duties and liabilities

relating thereto placed on the Servicer by the terms and provisions hereof, and

the terminated Servicer shall be relieved of such responsibilities, duties and

liabilities arising after such Service Transfer; provided, however, that (i)

the Successor Servicer will not assume any obligations of the Servicer

described in Section 8.08 and (ii) the Successor Servicer shall not be liable

for any acts or omissions of the Servicer occurring prior to such Service

Transfer or for any breach by the Servicer of any of its representations and

warranties contained herein or in any related document or agreement.

Notwithstanding the above, if the Successor Servicer is legally unable or unwilling

to act as Servicer, the Required Holders may appoint a successor servicer

(other than the original Servicer or an Affiliate of the original Servicer) to

act as Servicer.  As compensation

therefor, the successor servicer shall be entitled to receive reasonable

compensation equal to the Monthly Servicing Fee.  The Owner Trustee, Noteholders and the Indenture Trustee and such

successor shall take such action, consistent with this Agreement, as shall be

necessary to effectuate any such succession. 

To the extent the terminated Servicer has made Advances, it shall be

entitled to reimbursement of the same notwithstanding its termination

hereunder, to the same extent as if it had continued to service the Contracts

hereunder.

 

Section 8.05.        Notification to

Securityholders.  (a) 

Promptly following the occurrence of any Event of Termination, the

Servicer shall give written notice thereof to the Trustees, the Trust Depositor

and each Rating Agency at the addresses described in Section 11.04 hereof and

to the Noteholders at their respective addresses appearing on the Note

Register.

 

53

 

(b)           Within

10 days following any termination or appointment of a Successor Servicer

pursuant to this Article VIII, the Indenture Trustee shall give written notice

thereof to each Rating Agency and the Trust Depositor at the addresses

described in Section 11.04 hereof, and to the Noteholders at their addresses

appearing on the Note Register.

 

Section 8.06.        Effect of

Transfer.  (a) 

After a Service Transfer, the terminated Servicer shall have no further

obligations with respect to the management, administration, servicing, custody

or collection of the Contracts and the Successor Servicer appointed pursuant to

Section 8.04 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

Service Transfer shall not affect the rights and duties of the parties

hereunder (including but not limited to the indemnities of the Servicer)  other than those relating to the management,

administration, servicing, custody or collection of the Contracts.

 

Section 8.07.        Database File. 

The Servicer will provide the Successor Servicer with a magnetic tape

(in a format reasonably acceptable to the Indenture Trustee and the Servicer)

containing the database file for each Contract (i) as of the Cutoff Date, (ii)

the Subsequent Cutoff Date, (iii) thereafter, as of the last day of the

preceding Due Period on each Determination Date prior to a Servicer Termination

Event and (iv) on and as of the Business Day before the actual commencement of

servicing functions by the Successor Servicer following the occurrence of a

Servicer Termination Event.

 

Section 8.08.        Successor

Servicer Indemnification.  The Servicer shall defend,

indemnify and hold the Successor Servicer and any officers, directors,

employees or agents of the Successor Servicer harmless against any and all

claims, losses, penalties, fines, forfeitures, legal fees and related costs, judgments

and any other costs, fees, and expenses that the Successor Servicer may sustain

in connection with the claims asserted at any time by third parties against the

Successor Servicer which result from (i) any willful or grossly negligent act

taken or omission by the Servicer or (ii) a breach of any representations of

the Servicer in Section 3.02 hereof. 

The indemnification provided by this Section 8.08 shall survive the

termination of this Agreement.

 

Section 8.09.        Responsibilities

of the Successor Servicer.  The Successor Servicer will

not be responsible for delays attributable to the Servicer’s failure to deliver

information, defects in the information supplied by the Servicer or other

circumstances beyond the control of the Successor Servicer.

 

The Successor Servicer will make arrangements with the

Servicer for the prompt and safe transfer of, and the Servicer shall provide to

the Successor Servicer, all necessary servicing files and records, including

(as deemed necessary by the Successor Servicer at such time):

 

54

 

(i) microfiche loan documentation, (ii) servicing system tapes, (iii)

Contract payment history, (iv) collections history and (v) the trial balances,

as of the close of business on the day immediately preceding conversion to the

Successor Servicer, reflecting all applicable loan information.

 

The Successor Servicer shall have no responsibility

and shall not be in default hereunder nor incur any liability for any failure,

error, malfunction or any delay in carrying out any of its duties under this

Agreement if any such failure or delay results from the Successor Servicer

acting in accordance with information prepared or supplied by a Person other

than the Successor Servicer or the failure of any such Person to prepare or

provide such information.  The Successor

Servicer shall have no responsibility, shall not be in default and shall incur

no liability (i) for any act or failure to act by any third party, including

the Servicer, the Trust Depositor or the Trustees or for any inaccuracy or

omission in a notice or communication received by the Successor Servicer from

any third party or (ii) which is due to or results from the invalidity,

unenforceability of any Contract with applicable law or the breach or the

inaccuracy of any representation or warranty made with respect to any Contract.

 

Section 8.10.        Limitation of

Liability of Servicer.  (a)  Neither the Servicer nor any of the directors, officers,

employees or agents of the Servicer shall be under any liability to the Trust,

the Owner Trustee, the Indenture Trustee or the Noteholders, except as provided

under this Agreement, for any action taken or for refraining from the taking of

any action pursuant to this Agreement or for errors in judgment; provided,

however, that this provision shall not protect the Servicer or any

such person against any liability that would otherwise be imposed by reason of

willful misfeasance, bad faith or negligence in the performance of duties or by

reason of reckless disregard of obligations and duties under this

Agreement.  The Servicer and any

director, officer, employee or agent of the Servicer may rely in good faith on

the advice of counsel or on any document of any kind, prima facie properly

executed and submitted by any Person respecting any matters arising under this

Agreement.

 

(b)           Except

as provided in this Agreement, the Servicer shall not be under any obligation

to appear in, prosecute or defend any legal action that shall not be incidental

to its duties to service the Contracts in accordance with this Agreement, and

that in its opinion may cause it to incur any expense or liability; provided,

however, that the Servicer may undertake any reasonable action that

it may deem necessary or desirable in respect of the Transaction  Documents and the rights and duties of the

parties to the Transaction Documents and the interests of the Noteholders under

the Indenture.  In such event, the legal

expenses and costs of such action and any liability resulting therefrom shall

be expenses, costs and liabilities of the Servicer and the Servicer will not be

entitled to be reimbursed therefor.

 

Section 8.11.        Merger or

Consolidation of Servicer.  Any Person

into which the Servicer may be merged or consolidated, or any corporation, or

other entity resulting from any merger conversion or consolidation to which the

Servicer shall be a party, or any Person succeeding to all or substantially all

of the business of the Servicer (which Person assumes the obligations of the

Servicer), shall be the successor of the Servicer hereunder, without the

execution or filing of any paper or any further act on the part of any of the

parties hereto,

 

55

 

anything herein to the contrary notwithstanding.  The Servicer shall give prior written notice

of any such merger or consolidation to which it is a party to the Issuer, the

Owner Trustee, the Indenture Trustee and the Rating Agencies.

 

Section 8.12.        Servicer Not to

Resign.  Subject to the provisions of Section 8.03,

Servicer shall not resign from the obligations and duties hereby imposed on it

as Servicer under this Agreement except upon determination that the performance

of its duties under this Agreement shall no longer be permissible under

applicable law.  Notice of any such

determination permitting the resignation of Servicer shall be communicated to

the Owner Trustee and the Indenture Trustee at the earliest practicable time

(and, if such communication is not in writing, shall be confirmed in writing at

the earliest practicable time) and any such determination shall be evidenced by

an Opinion of Counsel to such effect delivered to the Owner Trustee and the

Indenture Trustee concurrently with or promptly after such notice. No such

resignation shall become effective until the Indenture Trustee shall have

assumed the responsibilities and rights of the predecessor Servicer in

accordance with Section 8.04.

 

Section 8.13.        Appointment of

Subservicer.  So long as Harley-Davidson Credit Corp. acts

as the  Servicer, the Servicer may at

any time without notice or consent perform specific duties as servicer under

this Agreement through other subcontractors; provided, however, that, in

each case, no such delegation or subcontracting shall relieve the Servicer of

its responsibilities with respect to such duties as to which the Servicer shall

remain primarily responsible with respect thereto.

 

ARTICLE NINE

 

REPORTS

 

Section 9.01.        Monthly Reports. 

No later than 10:00 a.m. Chicago, Illinois time two Business Days prior

to each Distribution Date, the Servicer shall cause the Trustees and each

Rating Agency to receive a  Monthly Report.

 

Section 9.02.        Officer’s

Certificate.  Each Monthly Report delivered pursuant to

Section 9.01 shall be accompanied by a certificate of a Servicing Officer

substantially in the form of Exhibit C, certifying the accuracy of the

Monthly Report and that no Event of Termination or event that with notice or

lapse of time or both would become an Event of Termination has occurred, or if

such event has occurred and is continuing, specifying the event and its status.

 

Section 9.03.        Other Data. 

In addition, the Trust Depositor and the Servicer shall, upon the

request of the Trustees, Moody’s or Standard & Poor’s, furnish the

Trustees, Moody’s or Standard & Poor’s, as the case may be, such underlying

data as may be reasonably requested.

 

56

 

Section 9.04.        Annual Report

of Accountants.

 

(a)           The

Servicer shall cause a firm of nationally recognized independent certified

public accountants (the “Independent  Accountants”), who may also

render other services to the Servicer, Harley-Davidson Financial or to the

Trust Depositor, to deliver to the Trustees, the Underwriters and each Rating

Agency, on or before March 31 (or 90 days after the end of the Servicer’s

fiscal year, if other than December 31) of each year, beginning on March 31,

2004, with respect to the twelve months ended the immediately preceding

December 31 (or other applicable date), a statement (the “Accountant’s  Report”)

addressed to the Board of Directors of the Servicer and to the Trustees to the

effect that such firm has audited the financial statements of Harley-Davidson

Financial and issued its report thereon and that such audit:

 

(1)           was made in accordance with generally

accepted auditing standards, and accordingly included such tests of the

accounting records and such other auditing procedures as such firm considered

necessary in the circumstances;

 

(2)           included an examination of documents

and records relating to the servicing of motorcycle conditional sales contracts

and promissory note and security agreements under pooling and servicing

agreements substantially similar to one another (such statement to have

attached thereto a schedule setting forth the pooling and servicing agreements

covered thereby, including this Agreement);

 

(3)           included an examination of the

delinquency and loss statistics relating to Harley-Davidson Financial’s

portfolio of motorcycle conditional sales contracts and promissory note and

security agreements; and

 

(4)           except as described in the statement,

disclosed no exceptions or errors in the records relating to motorcycle loans

serviced for others that, in the firm’s opinion, generally accepted auditing

standards requires such firm to report.

 

The Accountant’s Report

shall further state that:

 

(1)           a review in accordance with agreed

upon procedures was made of one randomly selected Monthly Report; and

 

(2)           except as disclosed in the Report, no

exceptions or errors in the Monthly Report so examined were found.

 

(b)           The

Accountant’s Report shall also indicate that the firm is independent of

Harley-Davidson Financial within the meaning of the Code of Professional Ethics

of the American Institute of Certified Public Accountants.

 

(c)           In

the event the Independent Accountants require the Indenture Trustee to agree to

the procedures performed by such firm, the Servicer shall direct the Indenture

Trustee in writing to so agree; it being understood and agreed that the

Indenture Trustee will deliver such letter of agreement in conclusive reliance

upon the direction of the Servicer, and the Indenture Trustee

 

57

 

shall not make any independent inquiry or investigation as to, and

shall have no obligation or liability in respect of, the sufficiency, validity

or correctness of such procedures.

 

Section 9.05.        Annual

Statement of Compliance from Servicer.  The Servicer

will deliver to the Trustees, the Underwriters and each of the Rating Agencies,

on or before January 31 of each year commencing January 31, 2004, an Officer’s

Certificate stating that (a) a review of the activities of the Servicer during

the prior calendar year and of its performance under this Agreement was made

under the supervision of the officer signing such certificate and (b) to such

officer’s knowledge, based on such review, the Servicer has fully performed all

its obligations under this Agreement, or, if there has been a default in the

performance of any such obligation, specifying each such default known to such

officer and the nature and status thereof. 

A copy of such certificate may be obtained (i) by any Noteholder by a

request in writing to the Indenture Trustee and (ii) by any Certificateholder

by a request in writing to the Owner Trustee.

 

Section 9.06.        Monthly Reports

to Noteholders.  (a) 

On or before two Business Days prior to each Distribution Date, the

Servicer shall prepare and, concurrently with each distribution to Noteholders

pursuant to Article VII, deliver to the Indenture Trustee, in its capacity as

Note Registrar and Paying Agent, shall cause to be delivered and mailed to each

Noteholder at the addresses appearing on the Note Register a statement as of

the related Distribution Date substantially in the form of Exhibit I hereto (the “Monthly

Report”) setting forth:

 

(i)            the amount of Noteholder’s principal

distribution;

 

(ii)           the amount of Noteholder’s interest

distribution;

 

(iii)          the amount of fees payable out of the

Trust, separately identifying the Monthly Servicing Fee and the Indenture

Trustee Fee;

 

(iv)          the amount of any Note Interest

Carryover Shortfall and Note Principal Carryover Shortfall on such Distribution

Date and the change in such amounts from those with respect to the immediately

preceding Distribution Date;

 

(v)           the Note Pool Factor for each Class

of Notes, in each case of such Distribution Date;

 

(vi)          the amount of the distributions

described in (i) or (ii) above payable pursuant to a claim on the Reserve Fund

or from any other source not constituting Available Monies and the amount

remaining in the Reserve Fund after giving effect to all deposits and

withdrawals from the Reserve Fund on such date;

 

(vii)         the amount of any Mandatory Redemption

to be made on such Distribution Date;

 

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(viii)        for each Distribution Date during the

Funding Period, the remaining Pre-Funded Amount;

 

(ix)           for each Distribution Date during the

Funding Period to and including the Distribution Date immediately following the

end of the Funding Period, the Principal Balance and number of Subsequent

Contracts conveyed to the Trust during the related Due Period;

 

(x)            the remaining Principal Balance

after giving effect to the distribution of principal (and Mandatory Redemption,

if any) to each class of Notes to be made on such Distribution Date;

 

(xi)           the number and aggregate principal

balance of Contracts delinquent 30-59 days, 60-89 days and 90 or more days,

computed as of the end of the related Due Period;

 

(xii)          the number and aggregate principal

balance of Contracts that became Liquidated Contracts during the immediately

preceding Due Period, the amount of liquidation proceeds for such Due Period,

the amount of liquidation expenses being deducted from liquidation proceeds for

such Due Period, the Net Liquidation Proceeds and the Net Liquidation Losses

for such Due Period;

 

(xiii)         the Loss Ratio, Average Loss Ratio,

Cumulative Loss Ratio, the Delinquency Ratio and the Average Delinquency Ratio

as of such Distribution Date;

 

(xiv)        the number of Contracts and the

aggregate Principal Balance of such Contracts, as of the first day of the Due

Period relating to such Distribution Date (after giving effect to payments

received during such Due Period and to any transfers of Subsequent Contracts to

the Trust occurring on or prior to such Distribution Date);

 

(xv)         the aggregate Principal Balance and

number of Contracts that were reacquired by the Seller pursuant to the

Agreement with respect to the related Due Period, identifying such Contracts

and the Reacquisition Price for such Contracts;

 

(xvi)        the amount otherwise distributable on

the Class B Notes that has instead been distributed to one or more senior

Classes of Notes on such Distribution Date;

 

(xvii)       the amount of Advances made by the

Servicer in respect of the related Contracts and the related Due Period and the

amount of unreimbursed Advances in respect of the related Contracts determined

by the Servicer to be Defaulted Contracts; and

 

(xviii)      such other customary factual information

as is available to the Servicer as the Servicer deems necessary and can

reasonably obtain from its existing data base to enable the Noteholders and the

Certificateholder to prepare their tax returns.

 

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(b)           Within

the prescribed period of time for tax reporting purposes after the end of each

calendar year, the Servicer shall prepare and the Note Registrar shall mail to

each Noteholder of record at any time during such year a report as to the

aggregate amounts reported pursuant to subsections (i), (ii), (iii) and (iv) of

this Section, attributable to such Noteholder.

 

(c)           The Indenture Trustee shall send via first class mail a paper copy of the Monthly

Report to (i) the initial Clearing Agency under the Note Depository Agreement

or any qualified successor appointed pursuant to Section 2.11 of the Indenture

and (ii) each Securityholder or party to this Agreement.

 

ARTICLE TEN

 

TERMINATION

 

Section 10.01.      Sale of Trust

Assets.

 

(a)           [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 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, (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, (ii) to

add or provide any credit enhancement for any Class of Notes and (iii) to

change any provision applicable for determining the Specified Reserve Fund

Balance or the manner in which the Reserve Fund is funded; provided, however that any

such action shall not, as evidenced by an Opinion of Counsel, adversely affect

in any material respect the interests of any Securityholder

 

60

 

and provided, further, that in connection with any amendment pursuant

to clause (iii) above, the Servicer shall deliver to the Owner Trustee and the

Indenture Trustee a letter from Standard & Poor’s (so long as Standard

& Poor’s is a Rating Agency) and Moody’s (so long as Moody’s is a Rating

Agency) to the effect that such amendment will not cause its then-current

rating on any Class of Notes to be qualified, reduced or withdrawn.

 

(b)           This

Agreement may also be amended from time to time by the Trust Depositor, the

Servicer, the Indenture Trustee and the Owner Trustee on behalf of the Issuer,

with the consent of the Required Holders, for the purpose of adding any

provisions to or changing in any manner or eliminating any of the provisions of

this Agreement or of modifying in any manner the rights of the Noteholders or

the Certificateholder; provided, however, that no such amendment

shall increase or reduce in any manner the amount of, or accelerate or delay

the timing of (i)(a) collections of payments on the Contracts or distributions

that shall be required to be made on any Note or any Interest Rate, (b) except

as otherwise provided in Section 11.01(a), the Specified Reserve Fund Balance

or the manner in which the Reserve Fund is funded or (ii) reduce the aforesaid

percentage of the Outstanding Amount of the Notes, the Holders of which are

required to consent to any such amendment, without the consent of the Holders

of all Notes of the relevant Class then outstanding and the Certificate.

 

(c)           Prior

to the execution of any such amendment or consent, the Indenture Trustee shall

furnish written notification of the substance of such amendment or consent,

together with a copy thereof, to each Rating Agency.

 

(d)           Promptly

after the execution of any such amendment or consent, the Owner Trustee and the

Indenture Trustee, as the case may be, shall furnish written notification of

the substance of such amendment or consent to each Noteholder.  It shall not be necessary for the consent of

Noteholders pursuant to Section 11.01(b) to approve the particular form of any

proposed amendment or consent, but it shall be sufficient if such consent shall

approve the substance thereof.  The

manner of obtaining such consents and of evidencing the authorization by

Noteholders of the execution thereof shall be subject to such reasonable

requirements as the Owner Trustee or the Indenture Trustee may prescribe.

 

(e)           Prior

to the execution of any amendment to this Agreement, the Owner Trustee and the

Indenture Trustee shall be entitled to receive and rely upon an Opinion of

Counsel stating that the execution of such amendment is authorized or permitted

by this Agreement.  The Owner Trustee

and the Indenture Trustee may, but shall not be obligated to, enter into any

such amendment which affects the Owner Trustee’s or the Indenture Trustee’s own

rights, duties or immunities under this Agreement or otherwise.

 

(f)            Notwithstanding

anything to the contrary in this Section 11.01, the Trust Depositor or the

Servicer, acting on behalf of the Trust Depositor, may request each Rating

Agency to approve a formula for determining the Specified Reserve Fund Balance

that is different from the formula or result determined from the current

definition thereof contained herein so as to result in a decrease in the amount

of the Specified Reserve Fund Balance or the

 

61

 

manner by which such Reserve Fund is funded.  If each Rating Agency delivers to the Indenture Trustee and Owner

Trustee a written notice or letter stating that such action will not result in

a reduction or withdrawal of the rating of any outstanding Class with respect

to which a Rating Agency has previously issued a rating as a result or such

action, then the Specified Reserve Fund Balance will be theretofore determined

in accordance with such changed formula or manner of funding, and an amendment

to this Agreement effecting such change may be executed without the consent of

any Securityholder.

 

Section 11.02.      Protection of

Title to Trust.

 

(a)           The

Servicer shall file such financing statements and cause to be filed such

continuation statements, all in such manner and in such places as may be

required by law fully to preserve, maintain and protect the interest of the

Issuer, the Securityholders and the Indenture Trustee in the Contracts and in

the proceeds thereof.  The Servicer

shall deliver (or cause to be delivered) to the Owner Trustee and the Indenture

Trustee file-stamped copies of, or filing receipts for, any document filed as

provided above, as soon as available following such filing.  The Trust Depositor authorizes the Trust to

file financing statements describing the Trust Corpus as collateral.

 

(b)           Neither

the Seller, the Trust Depositor nor the Servicer shall change its name,

identity or corporate structure in any manner that would, could or might make

any financing statement or continuation statement filed in accordance with

Section 4.02 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 or

continuation 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

 

62

 

Issuer’s ownership of and the Indenture Trustee’s interest in a

Contract shall be deleted from or modified on the Servicer’s computer systems

when, and only when, the related Contract shall have been paid in full or

reacquired or shall have become a Liquidated Contract.

 

(f)            If

at any time the Trust Depositor or the Servicer shall propose to sell, grant a

security interest in, or otherwise transfer any interest in motorcycle

conditional sales contracts or promissory note and security agreements to any

prospective purchaser, lender or other transferee, the Servicer shall give or

cause to be given to such prospective purchaser, lender or other transferee

computer tapes, records or print-outs (including any restored from back-up

archives) that, if they shall refer in any manner whatsoever to any Contract,

shall indicate clearly that such Contract has been transferred and is owned by

the Issuer and has been pledged to the Indenture Trustee.

 

(g)           The

Servicer shall permit the Owner Trustee and its agents, at any time during

normal business hours, to inspect, audit and make copies of and abstracts from

the Servicer’s records regarding any Contract.

 

(h)           Upon

request, the Servicer shall furnish to the Owner Trustee and the Indenture

Trustee, within five Business Days, a list of all Contracts then held as part

of the Trust Estate, together with a reconciliation of such list to the List of

Contracts and to each of the Monthly Reports furnished before such request

indicating removal of Contracts from the Trust.

 

(i)            The

Servicer shall deliver to the Owner Trustee, the Indenture Trustee and each

Rating Agency promptly after the execution and delivery of this Agreement and

of each amendment hereto, an Opinion of Counsel either (A) stating that, in the

opinion of such counsel, all financing statements and continuation statements

have been executed and filed that are necessary fully to preserve and protect the

interest of the Owner Trustee and the Indenture Trustee and reciting the

details of each filings or referring to prior Opinions of Counsel in which such

details are given, or (B) stating that, in the opinion of such counsel, no such

action shall be necessary to preserve and protect such interest.

 

Section 11.03.      Governing Law. 

This Agreement shall be construed in accordance with the laws of the

State of Illinois and the obligations, rights, and remedies of the parties

under the Agreement shall be determined in accordance with such laws, except

that the duties of the Owner Trustee shall be governed by the laws of the State

of Delaware.

 

Section 11.04.      Notices. 

All notices, demands, certificates, requests and communications

hereunder (“notices”) shall be in writing and shall be effective (a) upon

receipt when sent through the U.S. mails, registered or certified mail, return

receipt requested, postage prepaid, with such receipt to be effective the date

of delivery indicated on the return receipt, or (b) one Business Day after

delivery to an overnight courier, or (c) on the date personally delivered to an

Authorized Officer of the party to which sent, or (d) on the date transmitted

by legible telecopier transmission with a confirmation of receipt, in all cases

addressed to the recipient as follows:

 

63

 

(i)                                     If

to the Servicer or Seller:

 

Harley-Davidson Credit

Corp.

150 South Wacker Drive,

Suite 3100

Chicago, Illinois 60606

Attention: Perry A.

Glassgow

 

Telecopier No.: (312)

368-4782

 

(ii)                                  If

to the Trust Depositor:

 

Harley-Davidson Customer

Funding Corp.

4150 Technology Way

Carson City, Nevada 89706

Attention:  Perry A. Glassgow

 

Telecopier No.: (702)

884-4469

 

(iii)                               If

to the Indenture Trustee:

 

BNY Midwest Trust Company

2 North LaSalle Street

Suite 1020

Chicago, Illinois 60602

Attention:  Corporate Trust Administration

 

Telecopier No.:  (312) 827-8562

 

(iv)                              If

to the Owner Trustee:

 

Wilmington Trust Company

Rodney Square North

1100 North Market Street

Wilmington, Delaware

19890-0001

Attention: Corporate

Trust Administration

 

Telecopier No.: (302)

651-8882

 

(v)                                 If

to Moody’s:

 

Moody’s Investors

Service, Inc.

99 Church Street

New York, New York 10007

Attention: ABS Monitoring

Department

 

Telecopier No.: (212) 553-1350

 

64

 

(vi)                              If

to Standard & Poor’s:

 

Standard & Poor’s

Ratings Services, a

division of The McGraw

Hill Companies

55 Water Street

New York, New York 10004

 

Telecopier No.: (212)

438-2657

 

(vii)                           If to

the Underwriters:

 

J.P. Morgan Securities

Inc.

270 Park Avenue

10th Floor

New York, New York  10017

Attention:  General Counsel

 

Telecopier No.:  (212) 834-6564

 

Banc One Capital Markets,

Inc.

1 Bank One Plaza

Chicago, Illinois  60670

Attention:  Asset Backed Finance Division

 

Telecopier No.: (312)

732-4487

 

BNP Paribas Securities

Corp.

787 Seventh Avenue

New York, New York  10019

Attention:  Michael Gonik

 

Telecopier No.: (212)

841-2689

 

Each party hereto may, by notice given in accordance herewith to each

of the other parties hereto, designate any further or different address to

which subsequent notices shall be sent.

 

Section 11.05.      Severability of

Provisions.  If one or more of the covenants, agreements,

provisions or terms of this Agreement shall be for any reason whatsoever held

invalid, then such covenants, agreements, provisions or terms shall be deemed

severable from the remaining covenants, agreements, provisions or terms of this

Agreement and shall in no way affect the validity or enforceability of the

other provisions of this Agreement or of the Notes or the Certificate or the

rights of the Holders thereof.

 

65

 

Section 11.06.      Assignment. 

Notwithstanding anything to the contrary contained herein, as provided

in Sections 6.03 and 8.03, this Agreement may not be assigned by the Trust

Depositor or the Servicer without the prior written consent of Holders of Notes

aggregating not less than 66-2/3% of each Class.

 

Section 11.07.      Third Party

Beneficiaries.  Except as otherwise specifically provided

herein, the parties hereto hereby manifest their intent that no third party

shall be deemed a third party beneficiary of this Agreement, and specifically

that the Obligors are not third party beneficiaries of this Agreement.

 

Section 11.08.      Counterparts. 

This Agreement may be executed in several counterparts, each of which

shall be an original and all of which shall together constitute but one and the

same instrument.

 

Section 11.09.      Headings. 

The headings of the various Articles and Sections herein are for

convenience of reference only and shall not define or limit any of the terms or

provisions hereof.

 

Section 11.10.      No Bankruptcy

Petition; Disclaimer and Subordination.  (a) Each of

the Seller, the Indenture Trustee, the Servicer, the Owner Trustee and each

Holder (by acceptance of the applicable Securities) covenants and agrees that,

prior to the date that is one year and one day after the payment in full of all

amounts owing in respect of all outstanding Securities, it will not institute

against the Trust Depositor, or the Trust, or join any other Person in

instituting against the Trust Depositor or the Trust, any bankruptcy,

reorganization, arrangement, insolvency or liquidation proceedings or other

similar proceedings under the laws of the United States or any state of the

United States.  This Section 11.10 will

survive the termination of this Agreement.

 

(b)           The

Trust acknowledges and agrees that the Certificate represents a beneficial

interest in the Trust and Trust Corpus only and the Securities do not represent

an interest in any assets (other than the Trust Corpus) of the Trust Depositor

(including by virtue of any deficiency claim in respect of obligations not paid

or otherwise satisfied from the Trust Assets and proceeds thereof).  In furtherance of and not in derogation of

the foregoing, to the extent that the Trust Depositor enters into other

securitization transactions, the Trust acknowledges and agrees that it shall

have no right, title or interest in or to any assets (or interests therein)

other than the Trust Assets conveyed or purported to be conveyed (whether by

way of a sale, capital contribution or by the granting of a Lien) by the Trust

Depositor to any Person other than the Trust (the “Other Assets”).

 

To the extent that notwithstanding the agreements

contained in this Section, the Trust or any Securityholder, either (i) asserts

an interest in or claim to, or benefit from any Other Assets, whether asserted

against or through the Trust Depositor or any other Person owned by the Trust

Depositor, or (ii) is deemed to have any interest, claim or benefit in or from

any Other Assets, whether by operation of law, legal process, pursuant to

applicable provisions of Insolvency Laws

 

66

 

or otherwise (including without limitation pursuant to Section 1111(b)

of the federal Bankruptcy Code, as amended) and whether deemed asserted against

or through the Trust Depositor or any other Person owned by the Trust Depositor,

then the Trust and each Securityholder by accepting a Note or Certificate

further acknowledges and agrees that any such interest, claim or benefit in or

from the Other Assets is and shall be expressly subordinated to the

indefeasible payment in full of all obligations and liabilities of the Trust

Depositor which, under the terms of the documents relating to the

securitization of the Other Assets, are entitled to be paid from, entitled to

the benefits of, or otherwise secured by such Other Assets (whether or not any

such entitlement or security interest is legally perfected or otherwise

entitled to a priority of distribution under applicable law, including

Insolvency Laws, and whether asserted against the Trust Depositor or any other

Person owned by the Trust Depositor) including, without limitation, the payment

of post-petition interest on such other obligations and liabilities.  This subordination agreement shall be deemed

a subordination agreement within the meaning of Section 510(a) of the

Bankruptcy Code.  Each Securityholder is

deemed to have acknowledged and agreed that no adequate remedy at law exists

for a breach of this Section 11.10 and that the terms and provisions of this

Section 11.10 may be enforced by an action for specific performance.

 

(c)           The

provisions of this Section 11.10 shall be for the third party benefit of those

entitled to rely thereon and shall survive the termination of this Agreement.

 

Section 11.11.      Limitation of

Liability of Owner Trustee and Indenture Trustee.

 

(a)           Notwithstanding

anything contained herein to the contrary, this Agreement has been executed by

Wilmington Trust Company, not in its individual capacity but solely in its

capacity as Owner Trustee of the Issuer, and in no event shall Wilmington Trust

Company in its individual capacity or any beneficial owner of the Issuer have

any liability for  the representations,

warranties, covenants, agreements or other obligations of the Issuer hereunder,

as to all of which recourse shall be had solely to the assets of the Issuer.  For all purposes of this Agreement, in the

performance of any duties or obligations of the Issuer hereunder, the Owner

Trustee shall be subject to, and entitled to the benefits of, the terms and

provisions of Articles Six, Seven and Eight of the Trust Agreement.

 

(b)           Notwithstanding

anything contained herein to the contrary, this Agreement has been executed by

BNY Midwest Trust Company, not in its individual capacity but solely as

Indenture Trustee, and in no event shall BNY Midwest Trust Company have any

liability for the 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]

 

67

 

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 2003-2

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  By:

  	

  Wilmington Trust

  Company, not in its

  individual capacity but solely as Owner

  Trustee on behalf of the Trust

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  By:

  	

   

  
	

   

  	

   

  	

   

  	

  Printed Name:

  	

   

  
	

   

  	

   

  	

   

  	

  Title:

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  HARLEY-DAVIDSON

  CUSTOMER FUNDING CORP.,

  as Trust Depositor

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  By:

  	

   

  
	

   

  	

   

  	

   

  	

  Printed Name: Perry A.

  Glassgow

  
	

   

  	

   

  	

   

  	

  Title: Treasurer

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  HARLEY-DAVIDSON CREDIT

  CORP., as Servicer

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  By:

  	

   

  
	

   

  	

   

  	

   

  	

  Printed Name: Perry A.

  Glassgow

  
	

   

  	

   

  	

   

  	

  Title: Treasurer

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  BNY MIDWEST TRUST

  COMPANY, not in its

  individual capacity but solely as Indenture Trustee

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  By:

  	

   

  
	

   

  	

   

  	

   

  	

  Printed Name:  Cynthia L. Davis

  
	

   

  	

   

  	

   

  	

  Title:  Assistant

  Vice President

  
								

 

Signature Page to Sale

and Servicing Agreement

 

 

 

Exhibit A

 

[Form of

Assignment]

 

In accordance with the Sale and Servicing Agreement

(the “Sale

and Servicing Agreement”) dated as of May 1, 2003 made by and

between the undersigned, as Trust Depositor 

(“Trust

Depositor”), Harley-Davidson Credit Corp., as Servicer (“HDCC”),

BNY Midwest Trust Company, as Indenture Trustee and Harley-Davidson Motorcycle

Trust 2003-2 (the “Trust”), as assignee thereunder, the undersigned does

hereby sell, transfer, convey and assign, set over and otherwise convey to the

Trust (i) all the right, title and interest of the Trust Depositor in and to

the Initial Contracts listed on the initial List of Contracts delivered on the

Closing Date (including, without limitation, all security interests and all

rights to receive payments which are collected pursuant thereto on or after the

Initial Cutoff Date, including any liquidation proceeds therefrom, but

excluding any rights to receive payments which were collected pursuant thereto

prior to the Initial Cutoff Date), (ii) all rights of the Trust Depositor under

any physical damage or other individual insurance policy (and rights under a “forced

placed” policy, if any) or any debt cancellation agreement relating

to any such Contract, an Obligor or a Motorcycle securing such Contract, (iii)

all security interests in each such Motorcycle, (iv) all documents contained in

the related Contract Files, (v) all rights (but not the obligations) of the

Trust Depositor under any related motorcycle dealer agreements between dealers

(i.e., the originators of such Contracts) and the HDCC, (vi) all rights of the

Trust Depositor in the Lockbox, the Lockbox Account and related Lockbox

Agreement to the extent they relate to such Contracts, (vii) all rights (but

not the obligations) of the Trust Depositor under the Transfer and Sale

Agreement, including but not limited to the Trust Depositor’s rights under

Article V thereof, (viii) the remittances, deposits and payments made into the

Trust Accounts from time to time and amounts in the Trust Accounts (other than

the Reserve Fund) from time to time (and any investments of such amounts), (ix)

all rights of the Trust Depositor to certain rebates of premiums and other

amounts relating to insurance policies, debt cancellation agreements, extended

service contracts or other repair agreements and other items financed under

such Contracts, and (x) all proceeds and products of the foregoing.

 

This Assignment is made pursuant to and in reliance

upon the representation and warranties on the part of the undersigned contained

in Article III of the Agreement and no others.

 

Capitalized terms used herein but not otherwise

defined shall have the meanings assigned to such terms in the Agreement.

 

IN WITNESS WHEREOF, the undersigned has caused this

Assignment to be duly executed this

          day of May, 2003.

 

	

   

  	

  HARLEY-DAVIDSON

  CUSTOMER FUNDING

  CORP.

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

  Printed Name: Perry A.

  Glassgow

  
	

   

  	

  Title:  Treasurer

  

 

A-1

 

Exhibit

B

 

[Form of Closing

Certificate of Trust Depositor]

 

Harley-Davidson Customer Funding Corp.

 

President’s Certificate

 

The undersigned certifies that she is President of

Harley-Davidson Customer Funding Corp., a Nevada corporation (the “Trust

Depositor”), and that as such is duly authorized to execute and

deliver this certificate on behalf of the Trust Depositor in connection with

the Sale and Servicing Agreement (the “Agreement”) dated as of May 1, 2003 (the “Effective

Date”) by and among the Trust Depositor, BNY Midwest Trust Company

(the “Indenture

Trustee”), as Indenture Trustee, 

Harley-Davidson Credit Corp. (“Harley-Davidson Credit”), as Servicer, and

Harley-Davidson Motorcycle Trust 2003-2 (“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 May 5,

2003 stating that the Trust Depositor is duly incorporated under the laws of

the State of Nevada and is in good standing.

 

(4)           Attached hereto as Exhibit III

is a true and correct copy of the By-laws of the Trust Depositor, which

are in full force and effect on the date hereof.

 

(5)           Attached hereto as Exhibit IV

is a true and correct copy of resolutions adopted pursuant to the unanimous

written consent of the Board of Directors of the Trust Depositor relating to the

execution, delivery and performance of the Agreement; the Transfer and Sale

Agreement dated as of the Effective Date between the Trust Depositor and

Harley-Davidson Credit; the Trust Agreement dated as of the Effective Date

between the Trust Depositor and the Wilmington Trust Company (the “Owner

Trustee”), as Owner Trustee; the Administrative Agreement dated as of the

Effective Date between the Trust Depositor, the Issuer, the Indenture Trustee,

Harley-Davidson Credit, as Administrator; the Underwriting Agreement dated May

13, 2003 among the Trust

 

B-1

 

Depositor, Harley-Davidson Credit and the Underwriters

(collectively, the “Program Agreements”).  Said resolutions have not been amended,

modified, annulled or revoked, and are on the date hereof in full force and

effect and are the only resolutions relating to these matters which have been

adopted by the Board of Directors.

 

(6)           No event with respect to the Trust

Depositor has occurred and is continuing which would constitute an Event of

Termination or an event that, with notice or the passage of time or both, would

become an Event of Termination under the Agreement.  To the best of my knowledge after reasonable investigation, there

has been no material adverse change in the condition, financial or otherwise,

or the earnings, business affairs or business prospects of the Trust Depositor,

whether or not arising in the ordinary course of business since the respective

dates as of which information is given in the Prospectus and except as set

forth therein.

 

(7)           All federal, state and local taxes of

the Trust Depositor due and owing as of the date hereof have been paid.

 

(8)           All representations and warranties of

the Trust Depositor contained in the Program Agreements or any other related

documents, or in any document, certificate or financial or other statement

delivered in connection therewith are true and correct as of the date hereof.

 

(9)           There is no action, investigation or

proceeding pending or, to our knowledge, threatened against the Trust Depositor

before any court, administrative agency or other tribunal (a) asserting the

invalidity of the Program Agreements; (b) seeking to prevent the consummation

of any of the transactions contemplated by the Program Agreements; or (c) which

is likely materially and adversely to affect the Trust Depositor’s performance

of its obligations under, or the validity or enforceability of, the Program

Agreements.

 

(10)         No consent, approval, authorization or

order of, and no notice to or filing with, any governmental agency or body or

state or federal court is required to be obtained by the Trust Depositor for

the Trust Depositor’s consummation of the transactions contemplated by the

Program Agreements, except such as have been obtained or made and such as may

be required under the blue sky laws of any jurisdiction in connection with the

issuance and sale of the Certificate.

 

(11)         The Trust Depositor is not a party to

any agreements or instruments evidencing or governing indebtedness for money

borrowed or by which the Trust Depositor or its property is bound (other than

the Program Agreements).  Neither

Harley-Davidson Credit’s transfer and assignment of the Contract Assets to the

Trust Depositor, the Trust Depositor’s concurrent transfer and assignment of

the Trust Corpus to the Trust, nor the concurrent pledge of the Collateral by

the Trust to the Indenture Trustee nor the issuance and sale of the Certificate

and the Notes, nor the execution and delivery of the

 

B-2

 

Program Agreements, nor

the consummation of any other of the transactions contemplated therein, will

violate or conflict with any agreement or instrument to which the Trust

Depositor is a party or by which it is otherwise bound.

 

(12)         In connection with the transfer of

Contracts and related collateral contemplated in the Agreement, (a) the Trust

Depositor has not made such transfer with actual intent to hinder, delay or

defraud any creditor of the Trust Depositor, and (b) the Trust Depositor has

not received less than a reasonably equivalent value in exchange for such

transfer, is not on the date thereof insolvent (nor will become insolvent as a

result thereof), is not engaged (or about to engage) in a business or transaction

for which it has unreasonably small capital, and does not intend to incur or

believe it will incur debts beyond its ability to pay when matured.

 

(13)         Each of the agreements and conditions

of the Trust Depositor to be performed on or before the Closing Date pursuant

to the Program Agreements have been performed in all material respects.

 

*    *   

*    *

 

B-3

 

In Witness Whereof,

I have affixed my signature hereto this       day of

May, 2003.

 

 

	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

  Printed Name:

  	

  Donna F. Zarcone

  
	

   

  	

  Title:

  	

  President

  
					

 

B-4

 

Exhibit

C

 

[Form of Closing

Certificate of Servicer/Seller]

 

HARLEY-DAVIDSON CREDIT CORP.

 

President’s Certificate

 

The undersigned certifies that she is President of

Harley-Davidson Credit Corp. (“Harley-Davidson Credit”), and that as such

is duly authorized to execute and deliver this certificate on behalf of

Harley-Davidson Credit, as Servicer, in connection with the Sale and Servicing

Agreement (the “Sale and Servicing Agreement”) dated as of May 1, 2003

(the “Effective

Date”) by and among Harley-Davidson Credit, as Servicer,

Harley-Davidson Customer Funding Corp. (“CFC”), BNY Midwest Trust Company, as

Indenture Trustee and Harley-Davidson Motorcycle Trust 2003-2 (“Issuer”),

in connection with the Transfer and Sale Agreement dated as of the Effective

Date (the “Transfer

and Sale Agreement”) by and between Harley-Davidson Credit and CFC

(all capitalized terms used herein without definition having the respective

meanings set forth in the Sale and Servicing Agreement), and further certifies

as follows:

 

(1)           Attached hereto as Exhibit I

is a true and correct copy of the Articles of Incorporation of Harley-Davidson

Credit, together with all amendments thereto as in effect on the date hereof.

 

(2)           There has been no other amendment or

other document filed affecting the Articles of Incorporation of Harley-Davidson

Credit since 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 May 5,

2003 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 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 dated May 13, 2003 among Harley-Davidson Credit, CFC and the

Underwriters (the “Underwriting Agreement”); and the Administration Agreement

dated May 1, 2003 among Harley-Davidson Credit, CFC, the Issuer and BNY Midwest

Trust

 

C-1

 

Company, as Indenture

Trustee (the “Indenture Trustee”) (the “Administration Agreement”).  Said resolutions have not been amended,

modified, annulled or revoked, and are on the date hereof in full force and

effect and are the only resolutions relating to these matters which have been

adopted by the Board of Directors.

 

(6)           No event with respect to

Harley-Davidson Credit has occurred and is continuing which would constitute an

Event of Termination or an event that, with notice or the passage of time,

would constitute an Event of Termination under the Sale and Servicing

Agreement.  To the best of my knowledge

after reasonable investigation, there has been no material adverse change in

the condition, financial or otherwise, or the earnings, business affairs or

business prospects of Harley-Davidson Credit, whether or not arising in the

ordinary course of business, since the respective dates as of which information

is given in the Prospectus and except as set forth therein.

 

(7)           All federal, state and local taxes of

Harley-Davidson Credit due and owing as of the date hereof have been paid.

 

(8)           All representations and warranties of

Harley-Davidson Credit contained in the Transfer and Sale Agreement, the Sale

and Servicing Agreement, the Underwriting Agreement and the Administration

Agreement (collectively, the “Program Agreements”) or in any document,

certificate or financial or other statement delivered in connection therewith

are true and correct as of the date hereof.

 

(9)           There is no action, investigation or

proceeding pending or, to my knowledge, threatened against Harley-Davidson

Credit before any court, administrative agency or other tribunal (a) asserting

the invalidity of any Program Agreement to which Harley-Davidson Credit is a

party; or (b) which is likely materially and adversely to affect

Harley-Davidson Credit’s performance of its obligations under, or the validity

or enforceability of, the Program Agreements.

 

(10)         No consent, approval, authorization or

order of, and no notice to or filing with, any governmental agency or body or

state or federal court is required to be obtained by Harley-Davidson Credit for

Harley-Davidson Credit’s consummation of the transactions contemplated by the

Program Agreements, except such as have been obtained or made and such as may

be required under the blue sky laws of any jurisdiction in connection with the

issuance and sale of the Notes or the Certificate.

 

(11)         Schedule A hereto contains a

complete list of all material agreements (other than the Transfer and Sale

Agreement) or instruments evidencing or governing indebtedness for money

borrowed to which Harley-Davidson Credit is a party or by which Harley-Davidson

Credit or its property is bound. 

Neither Harley-Davidson Credit’s transfer and assignment of the Contract

Assets to CFC, CFC’s concurrent transfer and assignment of the Trust Corpus to

the Trust, nor the concurrent pledge by the Trust of the Collateral to the

Indenture Trustee, nor the issuance and sale of the Notes or

 

C-2

 

the Certificate or the

entering into of the Program Agreements, nor the consummation of any other of

the transactions contemplated therein, will violate or conflict with any

agreement or instrument to which Harley-Davidson Credit is a party or by which

it is otherwise bound.

 

(12)         In connection with the transfers of

Contracts and related assets contemplated in the Transfer and Sale Agreement,

(a) Harley-Davidson Credit has not made such transfer with actual intent to

hinder, delay or defraud any creditor of Harley-Davidson Credit, and (b)

Harley-Davidson Credit has not received less than a reasonably equivalent value

in exchange for such transfer, is not on the date hereof insolvent (nor will

Harley-Davidson Credit become insolvent as a result thereof), is not engaged

(or about to engage) in a business or transaction for which it has unreasonably

small capital, and does not intend to incur or believe it will incur debts beyond

its ability to pay when matured.

 

(13)         The sole shareholder of Harley-Davidson

Credit is Harley-Davidson Financial Services, Inc., a Delaware corporation,

which has its chief executive office and only office in Chicago, Illinois, and

has no other offices in any other state.

 

(14)         Each of the agreements and conditions

of Harley-Davidson Credit to be performed or satisfied on or before the Closing

Date under the Program Agreements has been performed or satisfied in all

material respects.

 

(15)         Each Contract being transferred

pursuant to the Transfer and Sale Agreement is evidenced by a written agreement

providing for a repayment obligation as well as a security interest in the

related Motorcycle securing such obligation, and conforms as to these matters

in all material respects with the form of written Contract provided as Exhibit A

hereto (with such minor variations as to specific terms as may be required or

deemed desirable in respect of the laws or requirements of particular states).

 

(16)         Harley-Davidson Credit has not executed

for filing any UCC financing statements listing the Contract Assets as

collateral other than financing statements relating to the transactions

contemplated in the Transfer and Sale Agreement and in the agreements listed on

Schedule

A hereto.

 

*   *  

*   *   *   *

 

C-3

 

In Witness Whereof,

I have affixed my signature hereto this       day of

May, 2003.

 

 

	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

  Printed Name:

  	

  Donna F. Zarcone

  
	

   

  	

  Title:

  	

  President

  
					

 

 

 

Exhibit

D

 

[Form of Opinion

of Counsel for Trust Depositor

Regarding General

Corporate Matters

(Including

Perfection Opinion)]

 

D-1

 

Exhibit

E

 

[Form of Opinion

of Counsel for Trust

Depositor

Regarding the “True Sale” Nature

of the

Transaction]

 

E-1

 

Exhibit

F

 

[Form of Opinion

of Counsel for Trust

Depositor

Regarding Non-consolidation]

 

F-1

 

Exhibit

G

 

[Form of Certificate

Regarding Reacquired Contracts]

 

Harley-Davidson

Credit Corp.

 

Certificate

Regarding Reacquired Contracts

 

The undersigned certifies that he is the Treasurer of

Harley-Davidson Credit Corp., a Nevada corporation (the “Servicer”), and that as

such is duly authorized to execute and deliver this certificate on behalf of

the Servicer pursuant to Section 7.08 of the Sale and Servicing Agreement (the “Agreement”)

dated as of May 1, 2003 by and among Harley-Davidson Customer Funding Corp., as

Trust Depositor, the Servicer, BNY Midwest Trust Company, as Indenture Trustee,

and Harley-Davidson Motorcycle Trust 2003-2 (all capitalized terms used herein

without definition having the respective meanings specified in the Agreement),

and further certifies that:

 

1.                                       The

Contracts on the attached schedule are to be reacquired by the Seller on the

date hereof pursuant to Section 7.08 of the Agreement and Section 5.01 of the

Transfer and Sale Agreement.

 

2.                                       Upon

deposit of the Reacquisition Price for such Contracts, such Contracts may,

pursuant to Section 7.08 of the Agreement, be assigned by the Trustee to the

Seller.

 

IN WITNESS WHEREOF, I have affixed hereunto my

signature this           day of

                       .

 

	

   

  	

  Harley-Davidson Credit

  Corp.

  
	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

   

  
	

   

  	

   

  	

  Printed Name: Perry A.

  Glassgow

  
	

   

  	

   

  	

  Title: Treasurer

  
					

 

G-1

 

Exhibit

H

 

[List of

Contracts]

 

H-1

 

Exhibit

I

 

[Form of Monthly

Report to Noteholders and the Certificateholder]

 

Harley-Davidson

Motorcycle Trust 2003-2

$                     %

Harley-Davidson Motorcycle Contract Backed Notes, Class A-1

$                     %

Harley-Davidson Motorcycle Contract Backed Notes, Class A-2

$                     %

Harley-Davidson Motorcycle Contract Backed Notes, Class B

 

Monthly Report

For the

[        ] Distribution Date

 

	

  A.

  	

  Calculation of

  Available Monies

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  1.             Available Principal (as defined

  in Article I of the Sale and Servicing Agreement)

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  2.             Available Interest (as defined in

  Article I of the Sale and Servicing Agreement)

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  3.             Available Monies (l. plus 2.)

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  B.

  	

  Calculation of

  Principal Distributable Amount (as defined in Article I of the Sale and

  Servicing Agreement)

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  C.

  	

  Calculation of

  Available Interest (as defined in Article I of  the Sale and Servicing Agreement).

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  D.

  	

  Calculation of Note

  Monthly Principal Distributable Amount

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  1A.          Class A Note Percentage for such

  Distribution Date

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  (a)           for each Distribution Date to but

  excluding the Distribution Date on which the principal amount of the Class

  A-1 Notes is reduced to zero

  	

   

  	

  95.0

  	

  %

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  (b)           on the Distribution Date on which

  the principal amount of the Class A-1 Notes is reduced to zero, 95.0% until

  the principal amount of the Class A-2 Notes has been reduced to zero

  	

   

  	

  95.0

  	

  %

  

 

I-1

 

	

   

  	

  (c)           on the Distribution Date on which

  the principal amount of the Class A-2 Notes is reduced to zero,

         %

  	

   

  	

   

  	

  %

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  (d)           after the principal amount of the

  Class A-2 Notes have been reduced to zero

  	

   

  	

  0.00

  	

  %

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  1B.          Class B Note Percentage for such

  Distribution Date

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  (a)           for each Distribution Date to but

  excluding the Distribution Date on which the principal amount of the Class

  A-2 Notes is reduced to zero

  	

   

  	

  5.0

  	

  %

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  (b)           on the Distribution Date on which

  the principal amount of the Class A-2 Notes is reduced to zero,

      %

  	

   

  	

   

  	

  %

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  (c)           after the principal amount of the

  Class A-2 Notes have been reduced to zero

  	

   

  	

  100.00

  	

  %

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  2.             Principal Distributable Amount

  (from B)

  	

   

  	

  $

  	

   

  	

   

  
						

 

I-2

 

	

   

  	

  3.                             Note Monthly

  Principal Distributable Amount for

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  (a)           Class A-1 Notes (D.1(a)  multiplied by D.2 until Principal Balance

  of Class A-1 Notes Principal Balance is zero)

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  (b)           Class A-2 Notes (D.1(b) multiplied

  by D.2 until Class A-2 Notes Principal Balance is zero)

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  (c)           Class B Notes (D.1(c) multiplied by

  D.2 until Class B Notes Principal Balance is zero)

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  (d)           Note Principal Carryover Shortfall

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  (e)           Mandatory Redemption Amounts (from

  Pre-Funding Account as defined in Article I of the Sale and Servicing

  Agreement)

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  (f)            Class A Note Monthly Principal

  Distributable Amount (the sum of items 3(a), 3(b), 3(d) and 3(e))

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  (g)           Class B Note Monthly Principal

  Distributable Amount (the sum of items 3(c), 3(d) and 3(e))

  	

   

  	

  $

  	

   

  	

   

  

 

I-3

 

	

  E.

  	

  Calculation of Note

  Monthly Interest Distributable Amount.

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  1.                                       Class

  A-l Interest Rate

  	

   

  	

   

  	

  %

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  2.                                       Class

  A-2 Interest Rate

  	

   

  	

   

  	

  %

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  3.                                       Class

  B Interest Rate

  	

   

  	

   

  	

  %

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  4.                                       One-twelfth

  of the Class A-1 Interest Rate times the Class A-1 Note Balance from and

  including the fifteenth day of the month based on a 360-day year of 12 months

  of 30 days each (or from and including the Closing Date with respect to the

  first Distribution Date) to but excluding the fifteenth day of the month of

  the current Distribution Date

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  5.                                       One-twelfth

  of the Class A-2 Note Interest Rate times the Class A-2 Note Balance from and

  including the fifteenth day of the month based on a 360-day year of 12 months

  of 30 days each (or from and including the Closing Date with respect to the

  first Distribution Date) to but excluding the fifteenth day of the month of

  the current Distribution Date

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  6.                                       One-twelfth

  of the Class B Note Interest Rate times the Class B Note Balance from and

  including the fifteenth day of the month based on a 360-day year of 12 months

  of 30 days each (or from and including the Closing Date with respect to the

  first Distribution Date) to but excluding the fifteenth day of the month of

  the current Distribution Date

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  7.                                       Interest

  Carryover Shortfall for such Distribution Date

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  8.                                       Note

  Monthly Interest Distributable Amount (the sum of items 3,  4 and 5)

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  F.

  	

  Calculation of Note

  Distributable Amount (sum of D.3(e) plus E.6.)

  	

   

  	

  $

  	

   

  	

   

  

 

I-4

 

	

  G.

  	

  Fees

  	

   

  	

   

  	

   

  
	

   

  	

  1.                                       The

  Monthly Servicing Fee for such Distribution Date (1/12 of the product of 1%

  and the Principal Balance of the Contracts as of the beginning of the related

  Due Period)

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  2.                                       Indenture

  Trustee Fee for such Distribution Date excluding expense component (1/12 of

  the product of .002% and the sum of (i) the Principal Balance of the

  Contracts as of the beginning of the related Due Period and (ii) the

  Pre-Funded Amount as of the beginning of such Period; provided, however, in

  no event shall such fee be less than $200.00 per month)

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  H.

  	

  CALCULATION OF THE

  AVAILABLE MONIES FOR SUCH DISTRIBUTION DATE

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  1.                                       The

  amount of funds deposited into the Collection Account pursuant to Section

  5.05(b) of the Sale and Servicing Agreement with respect  to the related Due Period

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  a.                                       amounts

  received by the Indenture Trustee or the Servicer with respect to principal

  and interest on the Contracts, as well as Late Payment Penalty Fees and

  Extensions Fees for the related Due Period

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  b.                                      All

  Net Liquidation Proceeds

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  c.                                       The

  aggregate of the Reacquisition Prices for Contracts required to be reacquired

  by the Seller as described in Section 7.08 of the Sale and Servicing

  Agreement

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  d.                                      All

  Advances made by Servicer pursuant to Section 7.03(a) of the Sale and

  Servicing Agreement

  	

   

  	

  $

  	

   

  	

   

  

 

I-5

 

	

   

  	

  e.                                       All

  amounts paid by the Seller in connection with an optional reacquisition of

  the Contracts described in Section 7.10 of the Sale and Servicing Agreement

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  f.                                         All

  amounts obtained from the Indenture Trustee in respect of Carrying Charges to

  be deposited into the Collection Account for the upcoming Distribution Date

  as contemplated in Section 7.03(b) of the Sale and Servicing Agreement

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  g.                                      All

  amounts received in respect of interest, dividends, gains, income and

  earnings on investments of funds in the Trust Accounts as contemplated in

  Section 5.05(b)(viii) of the Sale and Servicing Agreement

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  h.                                      Total

  amount of funds deposited into the Collection Account pursuant to Section

  5.05(b) (the sum of a. through g.)

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  2.                                       The

  amount of funds permitted to be withdrawn from the Collection Account

  pursuant to clauses (ii) through (iv) of Section 7.05(a) of the Sale and

  Servicing Agreement with respect to the related Due Period

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  a.                                       Amounts

  to be paid to the Servicer as the Reimbursement Amount in accordance with

  Section 7.03(a) of the Sale and Servicing Agreement

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  b.                                      Amounts

  to be paid to the Servicer in respect to the Servicing Fee for the related

  Due Period

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  c.                                       Amounts

  to be paid to the Indenture Trustee in respect of the Indenture

  Trustee’s  Fee for the related Due

  Period

  	

   

  	

  $

  	

   

  	

   

  

 

I-6

 

	

   

  	

  d.                                      Other

  amounts required or authorized to be withdrawn from the Collection Account

  pursuant to the Sale and Servicing Agreement.  Specify

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  e.                                       Total

  amount of funds permitted to be withdrawn from the Collection Account

  pursuant to clauses (ii) through (iv) Section 7.05(a) of the Sale and

  Servicing Agreement with respect to the related Due Period (sum of a. through

  d.)

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  3.                                       The

  Available Monies (not including amounts from Reserve Fund Account) for such

  Distribution Date available to pay Note Distributable Amounts  and Certificate Distributable Amounts  (1(h) minus 2(e))

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  4.                                       The

  Available Monies otherwise distributable to the Certificateholders that will

  be distributed to the Noteholders on such Distribution Date

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  I.

  	

  The shortfall of

  Available Monies for such Distribution Date to pay either the Note

  Distributable Amount (the Available Monies for such Distribution Date minus

  the sum of the Note Distributable Amount as set forth in F.)

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  J.

  	

  The amount to be

  withdrawn from the Reserve Fund on such Distribution Date to cover the Note

  Interest Distributable Amount

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  K.

  	

  The amount to be

  withdrawn from the Reserve Fund on such Distribution Date to cover the Note

  Principal Distributable Amount

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  L.

  	

  Interest Earnings on

  the Reserve Fund.

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  M.

  	

  The amount on deposit

  in the Reserve Fund after giving 

  effect to deposits and withdrawals therefrom on such Distribution Date

  	

   

  	

  $

  	

   

  	

   

  

 

I-7

 

	

  N.

  	

  The Specified Reserve

  Fund Amount for such Distribution Date will be an amount equal to the greater

  of (a) 2.00% of the Principal Balance of the Contracts in the Trust as of the

  last day of the immediately preceding Due Period; provided, however, in the

  event a Reserve Fund Trigger Event occurs with respect to a Distribution Date

  and has not terminated for three (3) consecutive Distribution Dates

  (inclusive) such amount shall be equal to 6.00% of the Principal Balance of

  the Contracts in the Trust as of the last day of the immediately preceding

  Due Period) and (b) 1.00% of the aggregate of the Initial Class A-1 Note

  Balance, Initial Class A-2 Note Balance and Initial Class B Note Balance;

  provided, however, in no event shall the Specified Reserve Fund Balance be

  greater than the aggregate outstanding principal balance of the Securities.

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  O.

  	

  The Pool Factor

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  1.             The Class A-1 Note Pool Factor

  immediately before such Distribution Date

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  2.             The Class A-2 Note Pool Factor

  immediately after such Distribution Date

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  3.             The Class B Note Pool Factor

  immediately after such Distribution Date

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  4.             The Class A-1 Note Pool Factor

  immediately before such Distribution Date

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  5.             The Class A-2 Note Pool Factor

  immediately after such Distribution Date

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  6.             The Class B Note Pool Factor

  immediately after such Distribution Date

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  P.

  	

  Delinquent Contracts

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  1.             31-59 Days

  	

  #          

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  2.             60-89 Days

  	

  #          

  	

   

  	

  $

  	

   

  	

   

  

 

I-8

 

	

   

  	

  3.             90 or More Days

  	

  #          

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Q.

  	

  Liquidated Contracts

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  1.                                       Total

  Liquidated

  Contracts      #         

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  2.                                       Liquidation

  proceeds for the Due Period

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  3.                                       Liquidation

  expenses for the Due Period

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  4.                                       Net

  Liquidation Proceeds for the Due Period

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  5.                                       Net

  Liquidation Losses for the Due Period

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  R.

  	

  Advances

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  1.                                       Unreimbursed

  Advances prior to such Distribution Date

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  2.                                       Amount

  paid to Servicer on such Distribution Date to reimburse Servicer for such

  unreimbursed Advances

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  3.                                       Amount

  of Delinquent Interest for such Distribution Date

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  4.                                       Amount

  of new Advances on such Distribution Date (if such amount is less than the

  amount of Delinquent Interest, attach the certificate required by Section

  7.03 of the Sale and Servicing Agreement)

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  5.                                       Total

  of unreimbursed Advances after new Advances on such Distribution Date

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  S.

  	

  Reacquired Contracts

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  1.                                       Number

  of Contracts to be reacquired by the Seller pursuant to Section 7.08 of the

  Sale and Servicing Agreement

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  2.                                       Principal

  Amount of such Contracts

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  3.                                       Related

  Reacquisition Price of such Contracts

  	

   

  	

  $

  	

   

  	

   

  

 

I-9

 

	

  T.

  	

  Contracts

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  1.                                       Number

  of Contracts as of beginning of Due Period

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  2.                                       Principal

  Balance of Contracts as of beginning of Due Period

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  3.                                       The

  weighted average Contract Rate of the Contracts as of the beginning of the

  Due Period

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  4.                                       Number

  of Contracts as of end of Due Period

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  5.                                       Principal

  Balance of Contracts as of end of Due Period

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  6.                                       The

  weighted average Contract Rate of the Contracts as of the end of the Due

  Period

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  7.                                       The

  weighted average remaining term to maturity of the Contracts as of the end of

  the Due Period

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  8.                                       Pre-Funded

  Amount as of beginning of Due Period

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  9.                                       Pre-Funded

  Amount as of end of Due Period

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  U.

  	

  Interest Reserve

  Account

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  1.                                       Interest

  Reserve Amount as of previous Distribution Date

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  2.                                       Interest

  received into Interest Reserve Account

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  3.                                       Carrying

  Charges (if any) to be paid on upcoming Distribution Date

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  4.                                       Excess

  Funds remitted to Trust Depositor

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  5.                                       Interest

  Reserve Amount as of upcoming Distribution Date

  	

   

  	

  $

  	

   

  	

   

  

 

I-10

 

	

  V.

  	

  Ratios

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  1.                                       Cumulative

  Loss Ratio

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  a.                                       The

  aggregate Net Liquidation Losses for all Contracts since the Cutoff Date

  through the end of the related Due Period

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  b.                                      The

  sum of the Principal Balance of the Contracts as of the Cutoff Date plus the

  Principal Balance of any Subsequent Contracts as of the related Subsequent

  Cutoff Date

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  c.                                       The

  Cumulative Loss Ratio for such Distribution Date (the quotient of a. divided

  by b., expressed as a percentage)

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  2.                                       Average

  Delinquency Ratio for such Distribution Date

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  (a)                                  The

  Delinquency Amount (the Principal Balance of all Contracts that were

  delinquent 60 days or more as of the end of the Due Period)

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  (b)                                 The

  Delinquency Ratio (the fraction (expressed as a percentage) computed by

  dividing (a) the Delinquency Amount during the immediately preceding Due

  Period by (b) the Principal Balance of the Contracts as of the beginning of

  the related Due Period) for such Distribution Date

  	

   

  	

   

  	

   

  	

  %

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  (c)                                  The

  Delinquency Ratio for the prior Distribution Date

  	

   

  	

   

  	

   

  	

  %

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  (d)                                 The

  Delinquency Ratio for the second prior Distribution Date

  	

   

  	

   

  	

   

  	

  %

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  (e)                                  The

  Average Delinquency Ratio (the arithmetic average of a. through c.)

  	

   

  	

   

  	

   

  	

  %

  

 

I-11

 

	

   

  	

  3.                                       Average

  Loss Ratio for such Distribution Date

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  (a)                                  Net

  Liquidation Losses

  	

   

  	

  $

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  (b)                                 The

  Loss Ratio for (the fraction (expressed as a percentage) derived by dividing

  (x) Net Liquidation Losses for all Contracts that became Liquidated Contracts

  during the immediately preceding Due Period multiplied by twelve by (y) the

  outstanding Principal Balances of all Contracts as of the beginning of the

  Due Period) such Distribution Date

  	

   

  	

   

  	

  %

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  (c)                                  The

  Loss Ratio for the prior Distribution Date

  	

   

  	

   

  	

  %

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  (d)                                 The

  Loss Ratio for the second prior Distribution Date

  	

   

  	

   

  	

  %

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  (e)                                  The

  Average Loss Ratio (the arithmetic average of a. through c.)

  	

   

  	

   

  	

  %

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  4.                                       Computation

  of Specified Reserve Fund Balance

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  Reserve

  Fund Trigger Events

  	

   

  	

   

  	

   

  
						

 

I-12

 

	

   

  	

  (1)                                  Average

  Delinquency Ratio (if (a) (i) Average Delinquency Ratio 2.50% with respect to

  any Distribution Date which occurs within the period from the Closing Date

  to, and inclusive of, the first anniversary of the Closing Date, (ii) 3.00%

  with respect to any Distribution Date which occurs within the period from the

  day after the first anniversary of the Closing Date to, and inclusive of, the

  second anniversary of the Closing Date or (iii) 3.50% for any Distribution

  Date which occurs within the period from the day after the second anniversary

  of the Closing Date to, and inclusive of, the third anniversary of the

  Closing Date or (iv) 4.00% for any Distribution Date following the third

  anniversary of the Closing Date, then a Reserve Fund Trigger Event has

  occurred)

  	

   

  	

   

  	

  %

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  (2)                                  Average

  Loss Ratio (if Average Loss Ratio is equal to or greater than (i) 3.00% with

  respect to any Distribution Date which occurs within the period from the

  Closing Date to, and inclusive of, the second anniversary of the Closing Date

  or (ii)  2.75% with respect to any

  Distribution Date which occurs following the second anniversary of the

  Closing Date, then a Reserve Fund Trigger Event has occurred)

  	

   

  	

   

  	

  %

  

 

I-13

 

	

   

  	

  (3)                                  Cumulative

  Loss Ratio (if Cumulative Loss Ratio is equal to or greater than (i) 1.25%

  with respect to any Distribution Date which occurs within the period from the

  Closing Date to, and inclusive of, the first anniversary of the Closing Date,

  (ii) 2.00% with respect to any Distribution Date which occurs within the

  period from the day after the first anniversary of the Closing Date to, and

  inclusive of, the second anniversary of the Closing Date, (iii) 2.50% for any

  Distribution Date while occurs within the period from the day after the

  second anniversary of the Closing Date to, and inclusive of the third

  anniversary of the Closing Date, or (iv) 2.75% following the third

  anniversary of the Closing Date, then a Reserve Fund Trigger Event has

  occurred)

  	

   

  	

   

  	

  %

  

 

I-14

 

Exhibit

J

 

[Seller’s

Representations and Warranties]

 

(1)           Representations

and Warranties Regarding Seller. 

Seller represents and warrants, as of the execution and delivery of this

Agreement and as of the Closing Date, in the case of the Initial Contracts, and

as of the applicable Subsequent Transfer Date, in the case of Subsequent

Contracts, that:

 

(a)           Organization and Good Standing.  Seller is a corporation duly organized,

validly existing and in good standing under the laws of the jurisdiction of its

organization and has the corporate power to own its assets and to transact the

business in which it is currently engaged. 

Seller is duly qualified to do business as a foreign corporation and is

in good standing in each jurisdiction in which the character of the business

transacted by it or properties owned or leased by it requires such

qualification and in which the failure so to qualify would have a material adverse

effect on the business, properties, assets, or condition (financial or

otherwise) of Seller or Trust Depositor. 

Seller is properly licensed in each jurisdiction to the extent required

by the laws of such jurisdiction to service the Contracts in accordance with

the terms of the Sale and Servicing Agreement.

 

(b)           Authorization; Binding Obligation.  Seller has the power and authority to make,

execute, deliver and perform this Agreement and the other Transaction Documents

to which the Seller is a party and all of the transactions contemplated under

this Agreement and the other Transaction Documents to which the Seller is a

party, and has taken all necessary corporate action to authorize the execution,

delivery and performance of this Agreement and the other Transaction Documents

to which the Seller is a party. This Agreement and the other Transaction

Documents to which the Seller is a party constitute the legal, valid and

binding obligation of Seller enforceable in accordance with their terms, except

as enforcement of such terms may be limited by bankruptcy, insolvency or

similar laws affecting the enforcement of creditors’ rights generally and by

the availability of equitable remedies.

 

(c)           No Consent Required.  Seller is not required to obtain the consent

of any other party or any consent, license, approval or authorization from, or

registration or declaration with, any governmental authority, bureau or agency

in connection with the execution, delivery, performance, validity or

enforceability of this Agreement and the other Transaction Documents to which

the Seller is a party.

 

(d)           No Violations.  Seller’s execution, delivery and performance

of this Agreement and the other Transaction Documents to which the Seller is a

party will not violate any provision of any existing law or regulation or any

order or decree of any court or the Articles of Incorporation or Bylaws of

Seller, or constitute a material breach of any mortgage, indenture, contract or

other agreement to which Seller is a party or by which Seller or any of

Seller’s properties may be bound.

 

J-1

 

(e)           Litigation.  No litigation or administrative proceeding

of or before any court, tribunal or governmental body is currently pending, or

to the knowledge of Seller threatened, against Seller or any of its properties

or with respect to this Agreement or any other Transaction Document to which

the Seller is a party which, if adversely determined, would in the opinion of

Seller have a material adverse effect on the business, properties, assets or

condition (financial or other) of Seller or the transactions contemplated by

this Agreement or any other Transaction Document to which the Seller is a

party.

 

(f)            State of Incorporation; Name; No

Changes.  Seller’s state of

incorporation is the State of Nevada. 

Seller’s exact legal name is as set forth in the first paragraph of this

Agreement.  Seller has not changed its

name whether by amendment of its Articles of Incorporation, by reorganization

or otherwise, and has not changed its state of incorporation within the four

months preceding the Closing Date.

 

(g)           Buell.  Approximately 5.0% of the aggregate

principal balance of contracts financed from time to time by the Seller are

secured by motorcycles manufactured by Buell.

 

(h)           Solvency. 

The Seller, after giving effect to the conveyances made by it hereunder,

is Solvent.

 

(2)           Representations

and Warranties Regarding Each Contract.  Seller represents and warrants as to each Contract as of the

execution and delivery of this Agreement and as of the Closing Date, in the

case of the Initial Contracts, and as of the applicable Subsequent Transfer

Date, in the case of Subsequent Contracts, that:

 

(a)           List of Contracts.  The information set forth in the List of

Contracts (or Subsequent List of Contracts, in the case of Subsequent

Contracts) is true, complete and correct in all material respects as of the

Initial Cutoff Date or applicable Subsequent Cutoff Date, as the case may be.

 

(b)           Payments.  As of the Initial Cutoff Date or applicable

Subsequent Cutoff Date, as the case may be, the most recent scheduled payment

with respect to any Contract either had been made or was not delinquent for

more than 30 days.  To the best of

Seller’s knowledge, all payments made on each Contract were made by the

respective Obligor.

 

(c)           No Waivers.  As of the Closing Date (or the applicable

Subsequent Transfer Date, in the case of Subsequent Contracts), the terms of

the Contracts have not been waived, altered or modified in any respect, except

by instruments or documents included in the related Contract File.

 

(d)           Binding Obligation.  Each Contract is a legal, valid and binding

payment obligation of the Obligor thereunder and is enforceable in accordance

with its terms,

 

J-2

 

except as such

enforceability may be limited by insolvency, bankruptcy, moratorium,

reorganization, or other similar laws affecting the enforcement of creditors’

rights generally.

 

(e)           No Defenses.  No Contract is subject to any right of

rescission, setoff, counterclaim or defense, including the defense of usury,

and the operation of any of the terms of such Contract or the exercise of any

right thereunder will not render the Contract unenforceable in whole or in part

or subject to any right of rescission, setoff, counterclaim or defense,

including the defense of usury, and no such right of rescission, setoff,

counterclaim or defense has been asserted with respect thereto.

 

(f)            Insurance.  As of the origination date of each Contract

(or the applicable Subsequent Transfer Date in the case of Subsequent

Contracts), the related Motorcycle securing each Contract is covered by

physical damage insurance (i) in an amount not less than the value of the

Motorcycle at the time of origination of the Contract, (ii) naming Seller as a

loss payee and (iii) insuring against loss and damage due to fire, theft,

transportation, collision and other risks covered by comprehensive coverage,

and all premiums due on such insurance have been paid in full from the date of

the Contract’s origination.

 

(g)           Origination.  Either (i) Contracts were originated by a

Harley-Davidson motorcycle dealer in the regular course of its business which

dealer had all necessary licenses and permits to originate the Contracts in the

state where such dealer was located, was fully and properly executed by the

parties thereto, and has been purchased by Seller in the regular course of its

business, or (ii) Contracts were originated by Eaglemark Savings Bank in the

regular course of its business which had all necessary licenses and permits to

originate the Contracts in the state where it was located, was fully and

properly executed by the parties thereto, and has been purchased by Seller in

the regular course of its business. 

Each Contract was sold by such motorcycle dealer or Eaglemark Savings

Bank, as the case may be, to the Seller without any fraud or misrepresentation

on the part of such motorcycle dealer or Eaglemark Savings Bank.

 

(h)           Lawful Assignment.  No Contract was originated in or is subject

to the laws of any jurisdiction whose laws would make the transfer and

assignment of the Contract under this Agreement or under the Sale and Servicing

Agreement or the pledge of the Contract under the Indenture unlawful, void or

voidable.

 

(i)            Compliance with Law.  None of the Contracts, the origination of

the Contracts by the dealers or Eaglemark Savings Bank, the purchase of the

Contracts by the Seller, the sale of the Contracts by the Seller to the Trust

Depositor or the transfer of the Contracts by the Trust Depositor to the Trust,

or any combination of the foregoing, violated as of the Closing Date or as of

any Subsequent Transfer Date, as applicable, any requirement of any federal,

state or local law and regulations thereunder, including, without limitation,

usury, truth in lending, motor vehicle installment loan and equal credit

 

J-3

 

opportunity laws,

applicable to the Contracts and the sale of Motorcycles.  Seller shall, for at least the period of

this Agreement, maintain in its possession, available for the Trust

Depositor’s, and the Trustee’s inspection, and shall deliver to Trust Depositor

or  the Trustee upon demand, evidence of

compliance with all such requirements.

 

(j)            Contract in Force.  As of the Closing Date (or the applicable

Subsequent Transfer Date in the case of Subsequent Contracts), no Contract has

been satisfied or subordinated in whole or in part or rescinded, and the

related Motorcycle securing any Contract has not been released from the lien of

the Contract in whole or in part.

 

(k)           Valid Security Interest.  Each Contract creates a valid, subsisting

and enforceable first priority perfected security interest in favor of Seller

or Eaglemark Savings Bank (as the case may be) in the Motorcycle covered

thereby, and such security interest has been assigned by Eaglemark Savings Bank

to Seller (where applicable) and by Seller to the Trust Depositor.  The original certificate of title,

certificate of lien or other notification or evidence (the “Lien

Certificate”) issued by the body responsible for the registration

of, and the issuance of certificates of title or evidence relating to, motor

vehicles and liens thereon (the “Registrar of Titles”) of the applicable

state shows the Seller or Eaglemark Savings Bank (as the case may be) as

original secured party under each Contract as the holder of a first priority

security interest in such Motorcycle. 

With respect to each Contract for which a written Lien Certificate is

provided and has not yet been returned from the Registrar of Titles, the Seller

has received written evidence that such Lien Certificate showing the Seller or

Eaglemark Savings Bank as lienholder has been applied for.   Eaglemark Savings Bank’s security interest

has been validly assigned by Eaglemark Savings Bank to Seller.  The Seller’s security interest has been

validly assigned by the Seller to the Trust Depositor and by the Trust

Depositor to the Issuer pursuant to this Agreement.  Immediately after the transfer, each Contract will be secured by

an enforceable and perfected first priority security interest in the Motorcycle

in favor of the Trust as secured party, which security interest is prior to all

other liens upon and security interests in such Motorcycle which now exist or

may hereafter arise or be created (except, as to priority, for any lien for

taxes, labor, materials or of any state law enforcement agency affecting a

Motorcycle).

 

(1)           Capacity of Parties.  All parties to any Contract had capacity to

execute such Contract and all other documents related thereto and to grant the

security interest purported to be granted thereby.

 

(m)          Good Title.  Each Contract was purchased by Seller for

value and taken into possession prior to the Cutoff Date (or the applicable

Subsequent Cutoff Date in the case of Subsequent Contracts) in the ordinary

course of its business, without knowledge that the Contract was subject to a

security interest.  No Contract has been

sold, assigned or pledged to any person other than Trust Depositor and the

Trustee as the transferee of Trust Depositor, and prior to the transfer of the

Contract to Trust Depositor, Seller had good and marketable title to each

Contract free and clear of any encumbrance, equity,

 

J-4

 

loan, pledge, charge,

claim or security interest and was the sole owner thereof and had full right to

transfer the Contract to Trust Depositor and to permit Trust Depositor to

transfer the same to the Issuer, and, as of the Closing Date (or the applicable

Subsequent Transfer Date in the case of Subsequent Contracts), the Issuer will

have a first priority perfected security interest therein.

 

(n)           No Defaults.  As of the Initial Cutoff Date (or the

applicable Subsequent Cutoff Date in the case of Subsequent Contracts), no

default, breach, violation or event permitting acceleration existed with

respect to any Contract and no event had occurred which, with notice and the

expiration of any grace or cure period, would constitute such a default,

breach, violation or event permitting acceleration under such Contract.  Seller has not waived any such default,

breach, violation or event permitting acceleration, and Seller has not granted

any extension of payment terms on any Contract.  As of the Initial Cutoff Date (or the applicable Subsequent

Cutoff Date in the case of Subsequent Contracts), no Motorcycle had been

repossessed.

 

(o)           No Liens.  As of the Closing Date (or the applicable

Subsequent Transfer Date in the case of Subsequent Contracts) there are, to the

best of Seller’s knowledge, no liens or claims which have been filed for work,

labor or materials affecting the Motorcycle securing any Contract which are or

may be liens prior to, or equal with, the lien of such Contract.

 

(p)           Installments.  Each Contract has a fixed Contract Rate and

provides for monthly payments of principal and interest which, if timely made,

would fully amortize the loan on a simple-interest basis over its term.

 

(q)           Enforceability.  Each Contract contains customary and

enforceable provisions such as to render the rights and remedies of the holder

thereof adequate for the realization against the collateral of the benefits of

the security.

 

(r)            One Original.  Each Contract is evidenced by only one

original executed Contract, which original is being held by the Servicer as

custodian.

 

(s)           No Government Contracts.  No Obligor is the United States government

or an agency, authority, instrumentality or other political subdivision of the

United States government.

 

(t)            Lockbox Bank.  The Lockbox Bank is the only institution

holding any Lockbox Account for receipt of payments from Obligors, and all

Obligors, and only such Obligors, have been instructed to make payments to the

Lockbox Account, and no person claiming through or under Seller has any claim

or interest in the Lockbox Account other than the Lockbox Bank; provided,

however, that other “Trusts” (as defined in the Lockbox Agreement) shall have

an interest in certain other collections therein not related to the Contracts.

 

J-5

 

(u)           Obligor Bankruptcy.  At the Cutoff Date (or the applicable

Subsequent Cutoff Date in the case of Subsequent Contracts), no Obligor was

subject to a bankruptcy proceeding within the one year preceding such Cutoff

Date.

 

(v)           Chattel Paper.  The Contracts constitute tangible chattel

paper within the meaning of the UCC.

 

(w)          No Impairment.  Neither the Seller nor the Trust Depositor

has done anything to convey any right to any Person that would result in such

Person having a right to payments due under the Contract or otherwise to impair

the rights of the Trust in any Contract or the proceeds thereof.

 

(x)            Contract Not Assumable.  No Contract is assumable by another Person

in a manner which would release the Obligor thereof from such Obligor’s

obligations to the Trust Depositor with respect to such Contract.

 

(3)           Representations

and Warranties Regarding the Contracts in the Aggregate.  Seller represents and warrants, as of the

execution and delivery of this Agreement and as of the Closing Date, in the

case of the Initial Contracts, and as of the applicable Subsequent Transfer

Date, in the case of Subsequent Contracts, that:

 

(a)           Amounts.  The sum of the aggregate Principal Balances

payable by Obligors under the Contracts as of the Initial Cutoff Date (or the

applicable Subsequent Cutoff Date in the case of Subsequent Contracts), plus

the Pre-Funded Amount as of such date, equals the sum of the principal

balance of the Class A-1 Notes, the Class A-2 Notes and the Class B Notes on

the Closing Date or the related Subsequent Transfer Date, as applicable.

 

(b)           Characteristics.  The Initial Contracts have the following characteristics: (i) all

the Contracts are secured by Motorcycles; (ii) no Initial Contract has a remaining

maturity of more than 84 months; and (iii) the final scheduled payment on the

Initial Contract with the latest maturity is due not later than May 2010.  Approximately 75.72% of the Principal

Balance of the Initial Contracts as of the Initial Cutoff Date is attributable

to loans for purchases of new Motorcycles and approximately 24.28% is

attributable to loans for purchases of used Motorcycles.  No Initial Contract was originated after the

Initial Cutoff Date.  No Initial

Contract has a Contract Rate less than 5.48%. 

The first scheduled payment date of the Contracts (including any

Subsequent Contracts) is due no later than August 2003.  Approximately 0.02% of the Principal Balance

of the Initial Contracts as of the Initial Cutoff Date is attributable to loans

for purchases of Motorcycles not manufactured by Harley-Davidson or Buell.

 

(c)           Marking Records.  As of the Closing Date (or the applicable

Subsequent Transfer Date in the case of Subsequent Contracts), Seller has

caused the Computer Disk relating to the Contracts sold hereunder and

concurrently reconveyed by Trust Depositor to the Trust and pledged by the

Trust to the Indenture Trustee to be clearly and

 

J-6

 

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 transaction contemplated by this

Agreement constitutes a valid sale, transfer and assignment from Seller to

Trust Depositor and from Trust Depositor to the Trust of all of Seller’s right,

title and interest in the Contract Assets as of the Closing Date and any

Subsequent Transfer Date, as applicable.

 

(f)            All Filings Made.  All filings (including, without limitation,

UCC filings) required to be made by any Person and actions required to be taken

or performed by any Person in any jurisdiction to give the Trustee a first

priority perfected lien on, or ownership interest in, the Contracts and the

proceeds thereof and the rest of the Trust Corpus have been made, taken or

performed.

 

(g)           Delta Loans.  No more than 11.00% of the Principal Balance

of the Contracts as of the end of the Funding Period is attributable to Delta

Loans.

 

(4)           Representations

and Warranties Regarding the Contract Files.  Seller represents and warrants as of the

execution and delivery of this Agreement and as of the Closing Date, in the case

of the Initial Contracts, and as of the applicable Subsequent Transfer Date, in

the case of Subsequent Contracts, that:

 

(a)           Possession.  Immediately prior to the Closing Date or any

Subsequent Transfer Date, the Servicer will have possession of each original

Contract and the related complete Contract File, and there are and there will

be no custodial agreements relating to the same in effect.  Each of such documents which is required to

be signed by the Obligor has been signed by the Obligor in the appropriate

spaces.  All blanks on any form have

been properly filled in and each form has otherwise been correctly

prepared.  The complete Contract File

for each Contract currently is in the possession of the Servicer.

 

(b)           Bulk Transfer Laws.  The transfer, assignment and conveyance of

the Contracts and the Contract Files by Seller pursuant to the Transfer and

Sale Agreement or any Subsequent Purchase Agreement and by Trust Depositor

pursuant to the Sale and Servicing Agreement is not subject to the bulk transfer

or any similar statutory provisions in effect in any applicable jurisdiction.

 

J-7

 

Exhibit

K

 

[Lockbox Bank and

Lockbox Account]

 

 

Lockbox

 

Harley-Davidson Credit

Corp.

135 South LaSalle Street

Chicago, Illinois 60674

 

Lockbox Bank

 

LaSalle Bank National

Association

135 South LaSalle Street

Chicago, Illinois 60674

 

K-1

 

Exhibit

L

 

[Form of Contract

Stamp]

 

This Contract/Note is subject to a security interest

granted to Harley-Davidson Motorcycle Trust 2003-2.  A UCC1 Financing Statement covering this Contract/Note has been

filed with the Secretary of State of the State of Nevada.  Such lien will be released only in

connection with appropriate filings in such offices.  Consequently, potential purchasers of this Contract/Note must

refer to such filings to determine whether such lien has been released.

 

L-1

 

Exhibit

M

 

[Form of

Subsequent Transfer Agreement]

 

[see Exhibit C

of the Transfer and Sale Agreement]

 

M-1

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