EXHIBIT 10.2
--------------------------------------------------------------------------------
CERTIFICATES FOR HARLEY-DAVIDSON MOTORCYCLE CONTRACTS
[_____] GRANTOR TRUST
[___]% CLASS A CERTIFICATES
[___]% CLASS B CERTIFICATES
POOLING AND SERVICING AGREEMENT
BY AND AMONG
EAGLEMARK CUSTOMER FUNDING CORPORATION-[___]
as Trust Depositor
EAGLEMARK, INC.
as Servicer
AND
XXXXXX TRUST AND SAVINGS BANK
not in its individual capacity but solely as Trustee of, and
Back-up Servicer for,
EAGLEMARK TRUST [___]
Dated as of [________]
--------------------------------------------------------------------------------
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.01. General. . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02. Specific Terms . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
ESTABLISHMENT OF TRUST; TRANSFER OF CONTRACTS . . . . . . . . . . .19
Section 2.01. Closing. . . . . . . . . . . . . . . . . . . . . . .19
Section 2.02. Conditions to the Closing. . . . . . . . . . . . . .19
Section 2.03. Acceptance by Trustee. . . . . . . . . . . . . . . .21
Section 2.04. Conveyance of Subsequent Contracts . . . . . . . . .21
Section 2.05. Tax Treatment. . . . . . . . . . . . . . . . . . . .24
ARTICLE III
REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . .24
Section 3.01. Representations and Warranties Regarding the Trust
Depositor. . . . . . . . . . . . . . . . . . . . . .24
Section 3.02. Representations and Warranties Regarding the
Servicer . . . . . . . . . . . . . . . . . . . . . .26
ARTICLE IV
PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS . . . .28
Section 4.01. Custody of Contracts . . . . . . . . . . . . . . . .28
Section 4.02. Filing . . . . . . . . . . . . . . . . . . . . . . .29
Section 4.03. Name Change or Relocation. . . . . . . . . . . . . .29
Section 4.04. Chief Executive Office . . . . . . . . . . . . . . .30
Section 4.05. Costs and Expenses . . . . . . . . . . . . . . . . .30
ARTICLE V
SERVICING OF CONTRACTS. . . . . . . . . . . . . . . . . . . . . . .30
Section 5.01. Responsibility for Contract Administration . . . . .30
Section 5.02. Standard of Care . . . . . . . . . . . . . . . . . .30
Section 5.03. Records. . . . . . . . . . . . . . . . . . . . . . .31
Section 5.04. Inspection . . . . . . . . . . . . . . . . . . . . .31
Section 5.05. Trust Accounts . . . . . . . . . . . . . . . . . . .31
Section 5.06. Enforcement. . . . . . . . . . . . . . . . . . . . .33
Section 5.07. Trustee to Cooperate . . . . . . . . . . . . . . . .34
Section 5.08. Costs and Expenses . . . . . . . . . . . . . . . . .35
Section 5.09. Maintenance of Security Interests in Motorcycles . .35
-i-
Section 5.10. Representations of Back-up Servicer. . . . . . . . .35
Section 5.11. Merger or Consolidation of, or Assumption of the
Obligations of, Back-up Servicer . . . . . . . . . .36
Section 5.12. Review of Monthly Report . . . . . . . . . . . . . .36
Section 5.13. Back-up Servicer Compensation. . . . . . . . . . . .37
Section 5.14. Back-up Servicer Not to Resign . . . . . . . . . . .38
Section 5.15. Back-up Servicer/Lockbox Agreements. . . . . . . . .38
ARTICLE VI
REPORTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39
Section 6.01. Monthly Reports. . . . . . . . . . . . . . . . . . .39
Section 6.02. Officer's Certificate. . . . . . . . . . . . . . . .39
Section 6.03. Other Data . . . . . . . . . . . . . . . . . . . . .39
Section 6.04. Annual Report of Accountants . . . . . . . . . . . .39
Section 6.05. Annual Statement of Compliance from Servicer . . . .40
Section 6.06. Statements to Certificateholders . . . . . . . . . .40
ARTICLE VII
EVENTS OF TERMINATION; SERVICE TRANSFER . . . . . . . . . . . . . .42
Section 7.01. Events of Termination. . . . . . . . . . . . . . . .42
Section 7.02. Service Transfer . . . . . . . . . . . . . . . . . .43
Section 7.03. Back-up Servicer to Act; Appointment of Back-up
Servicer . . . . . . . . . . . . . . . . . . . . . .44
Section 7.04. Notification to Certificateholders . . . . . . . . .45
Section 7.05. Effect of Transfer . . . . . . . . . . . . . . . . .45
Section 7.06. Database File. . . . . . . . . . . . . . . . . . . .45
Section 7.07. Back-up Servicer Indemnification . . . . . . . . . .45
Section 7.07. Responsibilities of the Back-up Servicer . . . . . .46
ARTICLE VIII
PAYMENTS AND RESERVE FUND . . . . . . . . . . . . . . . . . . . . .46
Section 8.01. Monthly Payments . . . . . . . . . . . . . . . . . .46
Section 8.02. Fees . . . . . . . . . . . . . . . . . . . . . . . .46
Section 8.03. Advances; Realization of Carrying Charge . . . . . .47
Section 8.04. Payments . . . . . . . . . . . . . . . . . . . . . .47
Section 8.05. Withdrawal from Reserve Fund to Cover a Shortfall. .49
Section 8.06. Repurchases of Contracts for Breach of
Representations and Warranties . . . . . . . . . . .49
Section 8.07. Reassignment of Repurchased Contracts. . . . . . . .50
Section 8.08. Seller's Repurchase Option . . . . . . . . . . . . .50
ARTICLE IX
THE CERTIFICATES. . . . . . . . . . . . . . . . . . . . . . . . . .50
-ii-
Section 9.01. The Certificates . . . . . . . . . . . . . . . . . .50
Section 9.02. Registration of Transfer and Exchange of
Certificates . . . . . . . . . . . . . . . . . . . .51
Section 9.03. No Charge; Disposition of Void Certificates. . . . .52
Section 9.04. Mutilated, Destroyed, Lost or Stolen Certificate . .52
Section 9.05. Persons Deemed Owners. . . . . . . . . . . . . . . .53
Section 9.06. Access to List of Certificateholders' Names and
Addresses. . . . . . . . . . . . . . . . . . . . . .53
Section 9.07. Authenticating Agents. . . . . . . . . . . . . . . .53
ARTICLE X
INDEMNITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . .54
Section 10.01. Servicer Indemnification. . . . . . . . . . . . . .54
Section 10.02. Liabilities to Obligors . . . . . . . . . . . . . .54
Section 10.03. Tax Indemnification . . . . . . . . . . . . . . . .54
Section 10.04. Servicer's Indemnities. . . . . . . . . . . . . . .54
Section 10.05. Operation of Indemnities. . . . . . . . . . . . . .55
ARTICLE XI
THE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . .55
Section 11.01. Duties of Trustee . . . . . . . . . . . . . . . . .55
Section 11.02. Certain Matters Affecting the Trustee . . . . . . .57
Section 11.03. Trustee not Liable for Certificates or Contracts. .58
Section 11.04. Trustee May Own Certificates. . . . . . . . . . . .58
Section 11.05. Rights to Direct Trustee and to Waive Events of
Termination . . . . . . . . . . . . . . . . . . . .58
Section 11.06. The Servicer to Pay Trustee's Expenses. . . . . . .58
Section 11.07. Eligibility Requirements for Trustee. . . . . . . .59
Section 11.08. Resignation or Removal of Trustee . . . . . . . . .59
Section 11.09. Successor Trustee . . . . . . . . . . . . . . . . .60
Section 11.10. Merger or Consolidation of Trustee. . . . . . . . .60
Section 11.11. Tax Returns . . . . . . . . . . . . . . . . . . . .61
Section 11.12. Obligor Claims. . . . . . . . . . . . . . . . . . .61
Section 11.13. Appointment of Co-Trustee or Separate Trustee . . .62
Section 11.14. Representations and Warranties of Trustee . . . . .63
ARTICLE XII
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . .64
Section 12.01. Servicer Not to Resign. . . . . . . . . . . . . . .64
Section 12.02. Prohibited Transactions with Respect to the Trust .64
Section 12.03. Maintenance of Office or Agency . . . . . . . . . .64
Section 12.04. Termination . . . . . . . . . . . . . . . . . . . .65
Section 12.05. Acts of Certificateholders. . . . . . . . . . . . .65
Section 12.06. Calculations. . . . . . . . . . . . . . . . . . . .66
Section 12.07. Assignment or Delegation by Trust Depositor . . . .66
-iii-
Section 12.08. Amendment . . . . . . . . . . . . . . . . . . . . .66
Section 12.09. Notices . . . . . . . . . . . . . . . . . . . . . .67
Section 12.10. Merger and Integration. . . . . . . . . . . . . . .69
Section 12.11. Headings. . . . . . . . . . . . . . . . . . . . . .69
Section 12.12. Governing Law . . . . . . . . . . . . . . . . . . .69
Section 12.13. No Insolvency Petition. . . . . . . . . . . . . . .69
Section 12.14. Third Party Beneficiary . . . . . . . . . . . . . .69
Section 12.15. No Additional Securities. . . . . . . . . . . . . .69
Section 12.16. No additional Indebtedness by the Trust Depositor .69
-iv-
Exhibit A-1 -- Form of Certificate for Motorcycle Contracts [_____] Grantor
Trust Class A Certificates
Exhibit A-2 -- Form of Certificate for Motorcycle Contracts [_____] Grantor
Trust Class B Certificates
EXHIBIT B -- Form of Assignment
EXHIBIT C-1 -- Form of Closing Certificate of Trust Depositor
EXHIBIT C-2 -- Form of Closing Certificate of Servicer/Seller
EXHIBIT D-1 -- Form of Opinion of Counsel for Trust Depositor regarding
general corporate matters (including perfection opinion)
EXHIBIT D-2 -- Form of Opinion of Counsel for Trust Depositor Regarding the
"true sale" nature of the transaction
EXHIBIT D-3 -- Form of Opinion of Counsel for Trust Depositor regarding
non-consolidation
EXHIBIT E -- Form of Reserve Account Agreement
EXHIBIT F -- Form of Certificate of Servicing Officer
EXHIBIT G -- Form of Certificate Regarding Repurchased Contracts
EXHIBIT H-1 -- Form of Representation Letter of Certificateholder (Class A
Certificates or Class B Certificates) (Non-Rule 144A)
EXHIBIT H-2 -- Form of Representation Letter of Certificateholder (Class A
Certificates or Class B Certificates) (Rule 144A)
EXHIBIT I -- List of Contracts
EXHIBIT J -- Form of Monthly Report to Certificateholders
EXHIBIT K -- Seller's Representations and Warranties
EXHIBIT L -- Lockbox Bank and Lockbox Account
EXHIBIT M -- Form of Contract Stamp
EXHIBIT N -- Form of Subsequent Transfer Agreement
-v-
This Agreement, dated as of [_____], is made by and among Eaglemark
Customer Funding Corporation-[___], a Nevada corporation (the "TRUST
DEPOSITOR"), Eaglemark, Inc., a Nevada corporation, as Servicer (in such
capacity, the "SERVICER"), Xxxxxx Trust and Savings Bank, as Back-up Servicer
(in such capacity, the "Back-up Servicer") and Xxxxxx Trust and Savings Bank, an
Illinois banking corporation ("XXXXXX") not in its individual capacity but
solely as Trustee (in such capacity, the "TRUSTEE") of Eaglemark Trust [_____]
(the "TRUST").
In consideration of the premises and the mutual agreements hereinafter set
forth, the Trust Depositor, the Servicer, the Back-up Servicer and the Trustee
agree as provided herein:
ARTICLE I
DEFINITIONS
SECTION 1.01. GENERAL. For the purpose of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires, the terms
defined in this Article include the plural as well as the singular, the words
"herein," "hereof" and "hereunder" and other words of similar import refer to
this Agreement as a whole and not to any particular article, section or other
subdivision, and Section references refer to Sections of this Agreement.
SECTION 1.02. SPECIFIC TERMS.
"ACT" HAS THE MEANING ASSIGNED IN SECTION 9.02(b).
"ADDITION NOTICE" means, with respect to any transfer of Subsequent
Contracts to the Trust pursuant to Section 2.04 and the Deposit Agreement and
the Trust Depositor's corresponding prior purchase of such Contracts from the
Seller, a notice, which shall be given at least 10 days prior to the related
Subsequent Transfer Date, identifying the Subsequent Contracts to be transferred
and the aggregate Principal Balance of such Subsequent Contracts.
"ADVANCE" means, with respect to any Payment Date, the amounts, if any,
deposited by the Servicer in the Collection Account for such Payment Date
pursuant to Section 8.03.
"AFFILIATE" of any specified Person means any other Person controlling or
controlled by, or under common control with, such specified Person. For the
purposes of this definition, "CONTROL" when used with respect to any specified
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "CONTROLLING" or "CONTROLLED" have meanings
correlative to the foregoing.
"AGREEMENT" means this Pooling and Servicing Agreement, as amended,
supplemented or otherwise modified from time to time in accordance with the
terms hereof.
-1-
"APPLICANTS" has the meaning assigned in Section 9.06.
"AUTHENTICATING AGENT" means any authenticating agent appointed pursuant to
Section 9.07.
"AVAILABLE FUNDS" means, with respect to any Payment Date, the sum of the
Available Interest and the Available Principal for such Payment Date.
"AVAILABLE INTEREST" means, with respect to any Payment Date, the total
(without duplication) of the following amounts received by the Servicer on or in
respect of the Contracts during the related Due Period: (i) all amounts received
in respect of interest on the Contracts (as well as Late Payment Penalty Fees
and Extension Fees), (ii) the interest component of all Net Liquidation
Proceeds, (iii) the interest component of the aggregate of the Repurchase Prices
for Contracts repurchased by the Seller pursuant to Section 8.06, (iv) all
Advances made by the Servicer pursuant to Section 8.03, (v) the interest
component of all amounts paid by the Seller in connection with an optional
repurchase of the Contracts pursuant to Section 8.08, (vi) all amounts received
in respect of Carrying Charges transferred from the Interest Reserve Account
pursuant to Section 8.03, and (vii) all amounts received in respect of interest,
dividends, gains, income and earnings on investment of funds in the Trust
Accounts as contemplated in the last sentence of Section 5.05(d).
"AVAILABLE PRINCIPAL" means, with respect to any Payment Date, the total
(without duplication) of the following amounts received by the Servicer on or in
respect of the Contracts during the related Due Period: (i) all amounts received
in respect of principal on the Contracts, (ii) the principal component of all
Net Liquidation Proceeds, (iii) the principal component of the aggregate of the
Repurchase Prices for Contracts repurchased by the Seller pursuant to
Section 8.06, and (iv) the principal component of all amounts paid by the Seller
in connection with an optional repurchase of the Contracts pursuant to
Section 8.08.
"AVERAGE DEFAULT RATIO" means, for any Payment Date, the arithmetic average
of the Default Ratios for such Payment Dates and the two immediately preceding
Payment Dates.
"AVERAGE DELINQUENCY RATIO" means, the arithmetic average of the
Delinquency Ratios for that Payment Date and the two immediately preceding
Payment Dates.
"AVERAGE LOSS RATIO" means, for a Payment Date is equal to the arithmetic
average of the Loss Ratios for such Payment Date and the two immediately
preceding Payment Dates.
"BACK-UP SERVICER" means Xxxxxx Trust and Savings Bank or its successors
and assigns with respect to the duties and obligations required of the Back-up
Servicer under this Agreement.
-2-
"BACK-UP SERVICER FEE" means, as to any Payment Date, one-twelfth of the
product of 0.03% and the Principal Balance of the Contracts as of the beginning
of the related Due Period; provided, however, in no event shall such fee be less
than $750.00 per month.
"BUELL" means Buell Motorcycle Company.
"BUSINESS DAY" means any day other than (a) a Saturday or a Sunday, or (b)
another day on which banking institutions in the city of Chicago, Illinois are
authorized or obligated by law, executive order, or governmental decree to be
closed.
"CARRYING CHARGES" means the sum of (i) the product of (A) one-twelfth of
the sum of (x) the Class A Pass-Through Rate and (y) 0.018% times (B) the Class
A Percentage of the Pre-Funded Amount as of the beginning of the related Due
Period plus (ii) the product of (A) one-twelfth of the sum of (x) the Class B
Pass-Through Rate and (y) .018% times (B) the Class B Percentage of the
Pre-Funded Amount as of the beginning of the related Due Period.
"CERTIFICATEHOLDER" or "HOLDER" means the person in whose name either a
Class A Certificate or a Class B Certificate is registered on the Certificate
Register, except that, solely for the purposes of giving any consent, waiver,
request or demand pursuant to this Agreement, any Certificate registered in the
name of the Trust Depositor or any Affiliate of the Trust Depositor shall be
deemed not to be outstanding and the Fractional Interest evidenced thereby shall
not be taken into account in determining whether the requisite Fractional
Interest necessary to effect any such consent, request, waiver or demand has
been obtained; PROVIDED, HOWEVER, that in determining whether the Trustee shall
be protected in relying upon any such consent, waiver, request or demand only
Certificates which the Trustee knows to be so owned shall be so disregarded.
"CERTIFICATE REGISTER" means the register maintained pursuant to
Section 9.02(a).
"CERTIFICATE REGISTRAR" or "REGISTRAR" means the registrar appointed
pursuant to Section 9.02.
"CERTIFICATES" means the Class A Certificates and the Class B Certificates.
"CLASS" means all Certificates whose form is identical except for variation
in denomination, principal amount or Holder.
"CLASS A CERTIFICATE" means a Certificate for Harley-Davidson Motorcycle
Contracts evidencing a Fractional Interest executed and delivered by the Trustee
substantially in the form of EXHIBIT A-1.
-3-
"CLASS A CERTIFICATE BALANCE" shall initially equal the Class A Initial
Certificate Balance and, on any date thereafter, shall equal the Class A
Certificate Balance, reduced by all amounts previously distributed to Class A
Certificateholders and allocable to principal.
"CLASS A DISTRIBUTABLE AMOUNT" means, with respect to any Payment Date, the
sum of the Class A Principal Distributable Amount and the Class A Interest
Distributable Amount.
"CLASS A INITIAL CERTIFICATE BALANCE" means $[_____], which is equal to the
aggregate Principal Balance of the Initial Contracts as of the Initial Cutoff
Date plus the Pre-Funded Amount as of the Closing Date multiplied by the Class A
Percentage, and with respect to a particular Certificate means the amount set
forth on the face thereof.
"CLASS A INTEREST CARRYOVER SHORTFALL" means, with respect to any Payment
Date, (i) the excess of the Class A Interest Distributable Amount for the
preceding Payment Date over the amount of interest that was actually distributed
to Class A Certificateholders on such preceding Payment Date, plus (ii) 30 days
of interest on the amount specified in clause (i), to the extent permitted by
law, at the Class A Pass-Through Rate.
"CLASS A INTEREST DISTRIBUTABLE AMOUNT" means, with respect to any Payment
Date (other than the first Payment Date), the sum of (i) the product of (A)
one-twelfth (or, with respect to the first Payment Date, a fraction, the
numerator of which equals the number of days from and including the Closing Date
to but excluding the first Payment Date and the denominator of which equals 360)
of the Class A Pass-Through Rate and (B) the Class A Certificate Balance as of
the immediately preceding Payment Date (after giving effect to distributions of
principal made on such immediately preceding Payment Date) or, in the case of
the first Payment Date, the Class A Initial Certificate Balance plus (ii) the
Class A Interest Carryover Shortfall for such Payment Date.
"CLASS A PASS-THROUGH RATE" means [___]% per annum computed on the basis of
a 360-day year consisting of twelve 30-day months.
"CLASS A PERCENTAGE" means [___]%.
"CLASS A POOL FACTOR" means, at any time, the percentage (carried out to
seven decimal places) derived from a fraction, the numerator of which is the
Class A Certificate Balance at such time and the denominator of which is the
Class A Initial Certificate Balance.
"CLASS A PRINCIPAL CARRYOVER SHORTFALL" means, with respect to any Payment
Date, (i) the excess of the Class A Principal Distributable Amount over (ii) the
amount of principal that was actually distributed to Class A Certificateholders
on such preceding Payment Date.
-4-
"CLASS A PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to any Payment
Date, the sum of (i) the product of (a) the Class A Percentage and (b) the
Monthly Principal for such Payment Date plus (ii) the Class A Principal
Carryover Shortfall for such Payment Date.
"CLASS B CERTIFICATE" means a Certificate for Harley-Davidson Motorcycle
Contracts evidencing a Fractional Interest executed and delivered by the Trustee
substantially in the form of EXHIBIT A-2.
"CLASS B CERTIFICATE BALANCE" shall initially equal the Class B Initial
Certificate Balance and, on any Payment Date (after giving effect to all
payments made to Certificateholders on such date) shall equal the amount by
which the sum of (i) the Pool Balance as of the last day of the related Due
Period and (ii) the Pre-Funded Amount as of such day exceeds the Class A
Certificate Balance on such Payment Date (after giving effect to all payments
made to the Class A Certificateholders on such date).
"CLASS B DISTRIBUTABLE AMOUNT" means, with respect to any Payment Date, the
sum of the Class B Principal Distributable Amount and the Class B Interest
Distributable Amount.
"CLASS B INITIAL CERTIFICATE BALANCE" means $[____], which is equal to the
aggregate Principal Balance of the Initial Contracts as of the Initial Cutoff
Date plus the Pre-Funded Amount as of the Closing Date multiplied by the Class B
Percentage, and with respect to a particular Certificate means the amount set
forth on the face thereof.
"CLASS B INTEREST CARRYOVER SHORTFALL" means, with respect to any Payment
Date, (i) the excess of the Class B Interest Distributable Amount for the
preceding Payment Date over the amount of interest that was actually distributed
to Class B Certificateholders on such preceding Payment Date, plus (ii) 30 days
of interest on the amount specified in clause (i), to the extent permitted by
law, at the Class B Pass-Through Rate.
"CLASS B INTEREST DISTRIBUTABLE AMOUNT" means, with respect to any Payment
Date (other than the first Payment Date), the sum of (i) the product of
(A) one-twelfth (or, with respect to the first Payment Date, a fraction the
numerator of which equals the number of days from and including the Closing Date
to but excluding the first Payment Date and the denominator of which equals 360)
of the Class B Pass-Through Rate and (B) the Class B Certificate Balance as of
the immediately preceding Payment Date (after giving effect to distributions of
principal made on such immediately preceding Payment Date) or, in the case of
the first Payment Date, the Class B Initial Certificate Balance plus (ii) the
Class B Interest Carryover Shortfall for such Payment Date.
"CLASS B PRINCIPAL CARRYOVER SHORTFALL" means, with respect to any Payment
Date, (i) the excess of the Class B Principal Distributable Amount over (ii) the
amount of principal that was actually distributed to Class B Certificateholders
on such preceding Payment Date.
-5-
"CLASS B PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to any Payment
Date, the sum of (i) the product of (A) the Class B Percentage and (B) the
Monthly Principal for such Payment Date plus (ii) the Class B Principal
Carryover Shortfall for such Payment Date.
"CLASS B PASS-THROUGH RATE" means [___]% per annum computed on the basis of
a 360-day year consisting of twelve 30-day months. The Class B Pass-Through
Rate includes (i) at any time during the Funding Period, the sum of (a) the
Class A Pass-Through Rate multiplied by the Class B Percentage multiplied by the
Pool Balance, (b) 1.75 basis points on the Pool Balance and (c) a portion of the
amount deposited to the Collection Account from the Interest Reserve Account
during the Funding Period equal to the difference between the Class B
Pass-Through Rate multiplied by the Class B Certificate Balance and the sum of
items (a) and (b) above and (ii) at any time after the Funding Period, the sum
of (a) the Class A Pass-Through Rate multiplied by the Class B Certificate
Balance and (b) 1.75 basis points on the Pool Balance. In no event will the
Class B Pass-Through Rate exceed 7.00% per annum.
"CLASS B PERCENTAGE" means [___]%
"CLASS B POOL FACTOR" means, at any time, the percentage (carried out to
seven decimal places) derived from a fraction, the numerator of which is the
Class B Certificate Balance at such time and the denominator of which is the
Class B Initial Certificate Balance.
"CLOSING DATE" means [_______].
"CODE" means the Internal Revenue Code of 1986, as amended.
"COLLATERAL AGENT" means the Collateral Agent named in the Security
Agreement and any successor thereto pursuant to the terms of the Security
Agreement.
"COLLECTION ACCOUNT" means a trust account as described in Section 5.05
maintained in the name of the Trust which shall be an Eligible Account.
"COMPUTER DISK" means the computer disk generated by the Servicer which
provides information relating to the Contracts and which was used by the Seller
in selecting the Contracts sold to the Trust Depositor pursuant to the Transfer
and Sale Agreement (and any Subsequent Purchase Agreement) by the Trust
Depositor in selecting the Contracts sold to the Trust pursuant to this
Agreement (and any Subsequent Transfer Agreement), and includes the master file
and the history file as well as servicing information with respect to the
Contracts.
"CONTRACT ASSETS" has the meaning assigned in Section 2.01 (and 2.04, as
applicable in the case of Subsequent Contracts) of the Transfer and Sale
Agreement.
-6-
"CONTRACT FILE" means, as to each Contract, (a) the original copy of the
Contract, including the executed conditional sales contract or other evidence of
the obligation of the Obligor, (b) the original title certificate to the
Motorcycle and, where applicable, the certificate of lien recordation, or, if
such title certificate has not yet been issued, an application for such title
certificate, or other appropriate evidence of a security interest in the covered
Motorcycle; (c) the assignments of the Contract; (d) the original copy of any
agreement(s) modifying the Contract including, without limitation, any extension
agreement(s) and (e) documents evidencing the existence of physical damage
insurance covering such Motorcycle.
"CONTRACT RATE" means, as to any Contract, the annual rate of interest
specified in the Contract.
"CONTRACTS" means the motorcycle conditional sales contracts described in
the List of Contracts and constituting part of the Trust Corpus (as such list
may be supplemented from time to time to reflect transfers of Subsequent
Contracts), and includes, without limitation, all related security interests and
any and all rights to receive payments which are collected pursuant thereto on
or after the Initial Cutoff Date or, with respect to any Subsequent Contracts,
any related Subsequent Cutoff Date, but excluding any rights to receive payments
which are collected pursuant thereto prior to the Initial Cutoff Date, or with
respect to any Subsequent Contracts, any related Subsequent Cutoff Date.
"CORPORATE TRUST OFFICE" means the office of the Trustee at which at any
particular time its corporate trust business shall be principally administered,
which office at the date of the execution of this Agreement is located at the
address set forth in Section 12.09.
"CRAM DOWN LOSS" means, with respect to a Contract, if a court of
appropriate jurisdiction in an insolvency proceeding shall have issued an order
reducing the Principal Balance of such Contract the amount of such reduction
(with a "CRAM DOWN LOSS" being deemed to have occurred on the date of issuance
of such order).
"CUMULATIVE LOSS RATIO" means, as of any Payment Date, the fraction
(expressed as a percentage) computed by the Servicer by dividing (i) the
aggregate Net Liquidation Losses for all Contracts since the Cutoff Date through
the end of the related Due Period by (ii) the sum of (A) the Principal Balance
of the Contracts as of the Cutoff Date plus (B) the Principal Balance of any
Subsequent Contracts as of the related Subsequent Cutoff Date.
"CUTOFF DATE" means either or both (as the context may require) the Initial
Cutoff Date and any Subsequent Cutoff Date.
"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
-7-
securing a Contract or (iii) the Servicer has determined in good faith that an
Obligor is not likely to resume payment under a Contract.
"DEFAULT RATIO" means, as of any Payment Date, the fraction (expressed as a
percentage) derived by dividing (x) the Principal Balance for all Contracts that
become Defaulted Contracts during the immediately preceding Due Period
multiplied by twelve by (y) the outstanding Principal Balances of all Contracts
as of the beginning of the related Due Period.
"DELINQUENCY AMOUNT" means, as of any Payment Date means the Principal
Balance of all Contracts that were delinquent 60 days or more as of the end of
the related Due Period (including Contracts in respect of which the related
Motorcycles have been repossessed and are still inventory).
"DELINQUENT INTEREST" means, for each Contract and each Determination Date
as to which the full payment due in the related Due Period has not been paid
(any such payment being "DELINQUENT" for purposes of this definition), all
interest accrued on such Contract from the Due Date in the Due Period one month
prior to the Due Period in which the payment is delinquent.
"DELINQUENCY RATIO" means, for any Payment Date, the fraction (expressed as
a percentage) computed by dividing (a) the Delinquency Amount during the
immediately preceding Due Period multiplied by twelve by (b) the Principal
Balance of the Contracts as of the beginning of the related Due Period.
"DEPOSIT AGREEMENT" means the Agreement to Deposit Contracts, dated as of
[___], from the Trust Depositor in favor of the Trustee for the benefit of the
Trust, which comprises part of the Trust Corpus.
"DETERMINATION DATE" means the fourth Business Day following the conclusion
of a Due Period during the term of this Agreement.
"DUE DATE" means, with respect to any Contract, the day of the month on
which each scheduled payment of principal and interest is due on such Contract,
exclusive of days of grace.
"DUE PERIOD" means a calendar month during the term of this Agreement, and
the Due Period related to a Determination Date or Payment Date shall be the
calendar month immediately preceding such date; PROVIDED, however, that with
respect to the Initial Determination Date or Initial Payment Date, the Due
Period shall be the period from the Initial Cutoff Date to and including
[_____].
"EAGLEMARK FINANCIAL" has the meaning assigned in Section 5.15.
-8-
"ELIGIBLE ACCOUNT" means a segregated direct deposit account maintained
with a depository institution or trust company organized under the laws of the
United States of America, or any of the States thereof, or the District of
Columbia, having a certificate of deposit, short-term deposit or commercial
paper rating of at least A-1+ by Standard & Poor's and P-1 by Xxxxx'x.
"ELIGIBLE INVESTMENTS" means any one or more of the following types of
investments:
(a) (i) direct interest-bearing obligations of, and interest-bearing
obligations guaranteed as to timely payment of principal and interest by,
the United States or any agency or instrumentality of the United States the
obligations of which are backed by the full faith and credit of the United
States; and (ii) direct interest-bearing obligations of, and
interest-bearing obligations guaranteed as to timely payment of principal
and interest by, the Federal National Mortgage Association or the Federal
Home Loan Mortgage Corporation, but only if, at the time of investment,
such obligations are assigned the highest credit rating by each Rating
Agency;
(b) demand or time deposits in, certificates of deposit of, or
bankers' acceptances issued by any depositary institution or trust company
organized under the laws of the United States or any State and subject to
supervision and examination by federal and/or State banking authorities
(including, if applicable, the Trustee or any agent of the Trustee acting
in their respective commercial capacities); PROVIDED that the short-term
unsecured debt obligations of such depositary institution or trust company
at the time of such investment, or contractual commitment providing for
such investment, are assigned the highest credit rating by each Rating
Agency;
(c) repurchase obligations pursuant to a written agreement (i) with
respect to any obligation described in clause (a) above, where the Trustee
has taken actual or constructive delivery of such obligation in accordance
with Section 5.05, and (ii) entered into with a depositary institution or
trust company organized under the laws of the United States or any State
thereof, the deposits of which are insured by the Federal Deposit Insurance
Corporation and the short-term unsecured debt obligations of which are
rated "A-1+" by Standard & Poor's and "P-1" by Moody's (including, if
applicable, the Trustee or any agent of the Trustee acting in their
respective commercial capacities);
(d) securities bearing interest or sold at a discount issued by any
corporation incorporated under the laws of the United States or any State
whose long-term unsecured debt obligations are assigned the highest credit
rating by each Rating Agency at the time of such investment or contractual
commitment providing for such investment; PROVIDED, HOWEVER, that
securities issued by any particular corporation will not be Eligible
Investments to the extent that an investment therein will cause the then
outstanding principal amount of securities issued by such corporation and
held as part of the Trust
-9-
to exceed 10% of the Eligible Investments held in the Trust (with Eligible
Investments valued at par);
(e) commercial paper that (i) is payable in United States dollars and
(ii) is rated in the highest credit rating category by each Rating Agency;
(f) money market mutual funds registered under the Investment Company
Act of 1940, as amended, having a rating, at the time of such investment,
from each of the Rating Agencies in the highest investment category granted
thereby; and
(g) any other demand or time deposit, obligation, security or
investment as may be acceptable to each Rating Agency and as may from time
to time be confirmed in writing to the Trustee by each Rating Agency;
PROVIDED, HOWEVER, that securities issued by any entity (except as provided in
paragraph (a)) will not be Eligible Investments to the extent that an investment
therein will cause the then outstanding principal amount of securities issued by
such entity and held in the Pre-Funding Account to exceed $10 million (with
Eligible Investments held in the Pre-Funding Account valued at par).
"EVENT OF TERMINATION" has the meaning assigned to such term in
Section 7.01.
"EXTENSION FEE" means any extension fee paid by the Obligor on a Contract.
"FINAL SCHEDULED PAYMENT DATE" means November 15, 2002.
"FRACTIONAL INTEREST" means an undivided interest in the Trust and, as to a
particular Certificateholder, means the undivided interest in the Trust owned by
that Certificateholder equal to the percentage obtained by dividing (a) the
Certificate Balance of all Certificates held by such Certificateholder at the
time of determination by (b) the aggregate of the Certificate Balance of all of
the Certificates held by all Certificateholders at such time.
"FUNDING PERIOD" means the period beginning on the Closing Date and ending
on the first to occur of (a) the Payment Date on which the amount on deposit in
the Pre-Funding Account (after giving effect to any transfers therefrom in
connection with the transfer of Subsequent Contracts to the Trust on such
Payment Date) is less than $100,000, (b) the date on which an Event of
Termination occurs, (c) the date on which an Insolvency Event occurs with
respect to the Seller and (d) the close of business on the date which is 90 days
from and including the Closing Date.
"HOLDER" means a Person in whose name a Certificate is registered in the
Certificate Register.
-10-
"INITIAL CONTRACTS" means those Contracts conveyed to the Trust on the
Closing Date.
"INITIAL CUTOFF DATE" means [_____].
"INSOLVENCY EVENT" means with respect to a specified Person, (a) the filing
of a decree or order for relief by a court having jurisdiction in the premises
in respect of such Person or any substantial part of its property in an
involuntary case under any applicable Federal or state bankruptcy, insolvency or
other similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official for
such Person or for any substantial part of its property, or ordering the
winding-up or liquidation of such Person's affairs, and such decree or order
shall remain unstayed and in effect for a period of 60 consecutive days; or (b)
the commencement by such Person of a voluntary case under any applicable Federal
or state bankruptcy, insolvency or other similar law now or hereafter in effect,
or the consent by such Person to the entry of an order for relief in an
involuntary case under any such law, or the consent by such Person to the
appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official for such Person or for any
substantial part of its property, or the making by such Person of any general
assignment for the benefit of creditors, or the failure by such Person generally
to pay its debts as such debts become due, or the taking of action by such
Person in furtherance of any of the foregoing.
"INTEREST RESERVE ACCOUNT" means the account designated as the Interest
Reserve Account in, and which is established and maintained pursuant to,
Section 3.01 of the Security Agreement.
"INTEREST RESERVE AMOUNT" means, as of any date of determination, the
amount on deposit in the Interest Reserve Account on such date, and as of the
Closing Date shall be $[___].
"Late Payment Penalty Fees" means any late payment fees paid by Obligors on
Contracts after all sums received have been allocated first to regular
installments due or overdue and all such installments are then paid in full.
"LIQUIDATED CONTRACT" means a Contract with respect to which there has
occurred one or more of the following: (i) 90 days have elapsed following the
date of repossession (and expiration of any redemption period) with respect to
the Motorcycle securing such Contract, (ii) such Contract is a Defaulted
Contract with respect to which the Servicer has determined in good faith that
all amounts expected to be recovered have been received, or (iii) all or any
portion of any payment is delinquent 150 days or more.
"LIQUIDATED DAMAGES" means the amounts payable by the Trust Depositor to
the Trust upon the end of the Funding Period under Section 2.02 of the Deposit
Agreement, to be derived from any remaining Pre-Funded Amount at the end of the
Funding Period, and described as "Liquidated Damages" in Section 2.02 of the
Deposit Agreement.
-11-
"LIST OF CONTRACTS" means the list identifying each Contract constituting
part of the Trust Corpus, which list shall consist of the initial List of
Contracts reflecting the Initial Contracts transferred to the Trust on the
Closing Date, together with any Subsequent List of Contracts reflecting the
Subsequent Contracts transferred to the Trust on the related Subsequent Transfer
Date, and which list (a) identifies each Contract and (b) sets forth as to each
Contract (i) the Principal Balance as of the applicable Cutoff Date, (ii) the
amount of monthly payments due from the Obligor, (iii) the Contract Rate and
(iv) the maturity date, and which list (as in effect on the Closing Date) is
attached to this Agreement as EXHIBIT I.
"LOCKBOX" means the Lockbox maintained by the Lockbox Bank identified on
EXHIBIT L hereto.
"LOCKBOX ACCOUNT" means the account maintained with the Lockbox Bank and
identified on EXHIBIT L hereto.
"LOCKBOX AGREEMENT" means the Third Amended and Restated Lockbox
Administration Agreement dated as of March 1, 1996 by and among the Servicer,
the Trust Depositor, Eaglemark Customer Funding Corporation-II, NBD Bank, N.A.,
Bank of America National Trust and Savings Association ("BOFA"), Norwest Bank
Minnesota, National Association (the "PREDECESSOR TRUSTEE"), the Trustee,
Financial Security Assurance Inc. ("FSA," with respect to certain prior trusts,
the "PRIOR TRUSTS"), with respect to the Lockbox Account, unless such agreement
shall be terminated in accordance with its terms, in which event "LOCKBOX
AGREEMENT" shall mean such other agreement, in form and substance acceptable to
the above-described parties and FSA, or if an Insurer Default (as defined in
FSA's documentation relating to such Prior Trusts) shall have occurred and be
continuing or FSA is owed no obligation with respect to such Prior Trusts, the
majority of the Certificateholders with respect to such Prior Trusts), the
Servicer, the Trustee and the Lockbox Bank.
"LOCKBOX BANK" means the financial institution maintaining the Lockbox
Account and identified on EXHIBIT L hereto or any successor thereto acceptable
to a majority of the Certificateholders.
"LOSS RATIO" means, for any Payment Date, the fraction (expressed as a
percentage) derived by dividing (x) Net Liquidation Losses for all Contracts
that became Liquidated Contracts during the immediately preceding Due Period
multiplied by twelve by (y) the outstanding Principal Balances of all Contracts
as of the beginning of the Due Period.
"MONTHLY PRINCIPAL" means, as to any Payment Date, the following amount
calculated as of the related Determination Date: the difference between (i) the
sum of (A) the Principal Balance of the Contracts as of the first day of the Due
Period preceding the Due Period in which such Payment Date occurs (or, in the
case of the first Payment Date, the Principal Balance of the Contracts as of the
Initial Cutoff Date), plus (B) the Pre-Funded Amount on such date (or, in the
-12-
case of the first Payment Date, the Pre-Funded Amount on the Closing Date) and
(ii) the sum of (A) the Principal Balance of the Contracts as of the first day
of the Due Period in which such Payment Date occurs, plus (B) the Pre-Funded
Amount on such day, plus (C) the amount of any Special Distribution occurring
from the day referred to in clause (i)(A) above to the day referred to in
clause (ii)(A) above; provided, that on the Final Scheduled Payment Date,
Monthly Principal shall equal the aggregate of the Class A Certificate Balance
and the Class B Certificate Balance. For purposes of determining the amount in
clause (ii)(C) above as to any particular Payment Date and with respect to the
Due Period preceding such Payment Date, if the Funding Period ends during such
Due Period and Liquidated Damages (as defined in the Security Agreement) are
consequently paid from the Pre-Funding Account during such Due Period but will
not be distributed as a Special Distribution until the Payment Date occurring in
the following Due Period (i.e., the particular Payment Date referred to above),
then the amount calculated in clause (ii)(C) for such preceding Due Period shall
be deemed to include such Special Distribution, in such amount (although paid as
a Special Distribution) on the Payment Date occurring during the following Due
Period) will not be included in the next calculation of clause (ii)(C) to be
made with respect to the following Due Period.
"MONTHLY REPORT" has the meaning assigned in Section 6.01.
"MONTHLY SERVICING FEE" means, as to any Payment Date, one-twelfth of the
product of 1% and the Principal Balance of the Contracts as of the beginning of
the related Due Period.
"MOODY'S" means Xxxxx'x Investors Service, Inc. or any successor thereto.
"MOTORCYCLE" means a motorcycle manufactured by Harley-Davidson, Inc. (or
in certain limited instances Buell) securing a Contract.
"NET LIQUIDATION LOSSES" means, as of any Payment Date, with respect to a
Liquidated Contract, the amount, if any, by which (a) the outstanding Principal
Balance of such Liquidated Contract plus accrued and unpaid interest thereon at
the Contract Rate to the date on which such Liquidated Contract became a
Liquidated Contract exceeds (b) the Net Liquidation Proceeds for such Liquidated
Contract.
"NET LIQUIDATION PROCEEDS" means, as to any Liquidated Contract, the
proceeds realized on the sale or other disposition of the related Motorcycle,
including proceeds realized on the repurchase of such Motorcycle by the
originating dealer for breach of warranties, and the proceeds of any insurance
relating to such Motorcycle, after payment of all reasonable expenses incurred
thereby, together, in all instances, with the expected or actual proceeds of any
recourse rights relating to such Contract as well as any post-disposition
proceeds received by the Servicer.
"OBLIGOR" means a Motorcycle buyer or other person who owes payments under
a Contract.
-13-
"OFFICER'S CERTIFICATE" means a certificate signed by the Chairman of the
Board, President, or any Vice President of the Seller, the Trust Depositor or
the Servicer and delivered to the Trustee.
"PAYING AGENT" has the meaning assigned in Section 8.01(b).
"PAYMENT DATE" means the fifteenth day of each calendar month during the
term of this Agreement, or if such day is not a Business Day, the next
succeeding Business Day, with the first such Payment Date hereunder being
[_____].
"PERSON" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust (including any beneficiary thereof),
unincorporated organization or government or any agency or political subdivision
thereof.
"PLACEMENT AGENT" has the meaning assigned in Section 6.01.
"POOL BALANCE" means, as of any date, the aggregate 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 3.01 of
the Security Agreement.
"PRINCIPAL BALANCE" means (a) with respect to any Contract as of any date,
an amount equal to the unpaid principal balance of such Contract as of the
opening of business on the Initial Cutoff Date or related Subsequent Cutoff
Date, as applicable, reduced by the sum of (x) all payments received by the
Servicer as of such date allocable to principal and (y) any Cram Down Loss in
respect of such Contract; provided, however, that (i) if (x) a Contract is
repurchased by the Seller pursuant to Section 5.01 of the Transfer and Sale
Agreement and Section 8.06 hereof because of a breach of representation or
warranty, or if (y) the Seller gives notice of its intent to purchase the
Contracts in connection with an optional termination of the Trust pursuant to
Section 5.02 of the Transfer and Sale Agreement and Section 8.08 hereof, in each
case the Principal Balance of such Contract or Contracts shall be deemed as of
the related Determination Date to be zero for the Due Period in which such event
occurs and for each Due Period thereafter, (ii) from and after the third Due
Period succeeding the final Due Period in which the Obligor is required to make
the final scheduled payment on a Contract, the Principal Balance, if any, of
such Contract shall be deemed to be zero, and (iii) from and after the Due
Period in which a Contract becomes a Liquidated Contract, the Principal Balance
of such Contract shall be deemed to be zero; and (b) where the context requires,
the aggregate of the Principal Balances described in clause (a) for all such
Contracts.
-14-
"RATING AGENCY" means each of Moody's and Standard & Poor's, so long as
such Persons maintain a rating on the Certificates; and if either Xxxxx'x or
Standard & Poor's no longer maintains a rating on the Certificates, such other
nationally recognized statistical rating organization selected by the Trust
Depositor.
"RECORD DATE" means, with respect to any Payment Date, the last Business
Day of the preceding calendar month.
"REIMBURSEMENT AMOUNT" has the meaning assigned in Section 8.03 hereof.
"REPURCHASE PRICE" means, with respect to a Contract to be repurchased
hereunder, an amount equal to (a) the remaining principal balance of such
Contract, plus (b) accrued and unpaid interest at the Contract Rate on such
Contract through the end of the immediately preceding Due Period.
"REQUISITE INTEREST RESERVE AMOUNT" means, as of the Closing Date, $[_____]
and as of any Payment Date thereafter during the Funding Period an amount equal
to the product of (i) a fraction, the numerator of which equals the difference
between (x) the sum of the weighted average of the Class A Pass-Through Rate and
the Class B Pass-Through Rate and .018% and (y) 2.5%, and the denominator of
which equals 360, times (ii) the Pre-Funded Amount on such date times (iii) the
number of days remaining in the Funding Period. The Requisite Interest Reserve
Amount for any Subsequent Transfer Date shall be calculated after taking into
account the transfer of Subsequent Contracts to the Trust on such Payment Date.
"RESERVE AGENT" means the Reserve Agent named in the Reserve Fund
Agreement, and any successor thereto pursuant to the terms of the Reserve Fund
Agreement.
"RESERVE FUND" means with respect to the Trust, the Reserve Fund
established and maintained pursuant to the Reserve Fund Agreement. The Reserve
Fund shall in no event be deemed part of the Trust Corpus.
"RESERVE FUND ADDITIONAL DEPOSITS" means, with respect to any transfer of
Subsequent Contracts to the Trust, the amount (if any) required to be deposited
in the Reserve Fund on or prior to such transfer in satisfaction of the
condition set forth in Section 2.04(b)(vi) hereof.
"RESERVE FUND AGREEMENT" means the Reserve Fund Agreement, dated as of
[____] among the Trust Depositor, the Reserve Agent and the Trustee (as amended,
supplemented or otherwise modified from time to time).
"RESERVE FUND DEPOSITS" shall have the meaning provided in the Reserve Fund
Agreement.
-15-
"RESERVE FUND INITIAL DEPOSIT" means $[____].
"RESERVE FUND TRIGGER EVENT" means as of any particular Payment Date (i)
the Average Delinquency Ratio is equal to or greater than 2.50%; (ii) the
Average Loss Ratio is equal to or greater than 1.75%, (iii) the Cumulative Loss
Ratio is equal to or greater than (a) .75% with respect to any Payment Date
which occurs within the period from the Closing Date to, and inclusive of, the
first anniversary of the Closing Date, (b) 1.50% with respect to any Payment
Date which occurs within the period from the day after the first anniversary of
the Closing Date to, and inclusive of, the second anniversary of the Closing
Date, or (c) 1.75% for any Payment Date following the second anniversary of the
Closing Date or (iv) the Average Default Ratio is equal to or greater than
7.00%.
"RESERVE FUND REQUISITE AMOUNT" means, with respect to any Payment Date, an
amount equal to 4.50% of the Principal Balance of the Contracts in the Trust as
of the first day of the immediately preceding Due Period or, upon the occurrence
of a Reserve Fund Trigger Event which has not terminated for three consecutive
Payment Dates (inclusive of the respective Payment Date), an amount equal to
9.00% of the Principal Balance of the Contracts in the Trust as of the first day
of the immediately preceding Due Period; provided, however, in no event, after
the Funding Period, shall the Reserve Fund Requisite Amount be less than 2.00%
of the aggregate of the Initial Class A Certificate Balance and Initial Class B
Certificate Balance.
"RESPONSIBLE OFFICER" means, with respect to the Trustee, the chairman and
any vice chairman of the board of directors, the president, the chairman and
vice chairman of any executive committee of the board of directors, every vice
president, assistant vice president, the secretary, every assistant secretary,
cashier or any assistant cashier, controller or assistant controller, the
treasurer, every assistant treasurer, every trust officer, assistant trust
officer and every other officer or assistant officer of the Trustee customarily
performing functions similar to those performed by persons who at the time shall
be such officers, respectively, or to whom a corporate trust matter is referred
because of knowledge of, familiarity with, and authority to act with respect to
a particular matter.
"SECURITY AGREEMENT" means the Security Agreement, dated as of [____] among
the Trust Depositor, the Collateral Agent and the Trustee, securing the Trust
Depositor's obligations to the Trust under the Deposit Agreement.
"SELLER" means Eaglemark, Inc., 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 Eaglemark, Inc., a Nevada corporation, or its successor,
until any Service Transfer hereunder and thereafter means the Back-up Servicer
appointed pursuant to
-16-
Article VII below with respect to the duties and obligations required of the
Servicer under this Agreement.
"SERVICE TRANSFER" has the meaning assigned in Section 7.02(a).
"SERVICING FEE" means, on any Determination Date, the sum of (a) the
Monthly Servicing Fee payable on the related Payment Date, (b) Late Payment
Penalty Fees received by the Servicer during the related Due Period, and (c)
Extension Fees received by the Servicer during the related Due Period.
"SERVICING OFFICER" means any officer of the Servicer involved in, or
responsible for, the administration and servicing of Contracts whose name
appears on a list of servicing officers appearing in an Officer's Certificate
furnished to the Trustee by the Servicer, as the same may be amended from time
to time.
"SHORTFALL" means, with respect to a Payment Date as determined in
accordance with Section 8.04(b), the amounts described in clauses (v) through
(viii) thereof over Available Funds (after the payment of amounts described in
clauses (i) through (iv) of Section 8.04(b) on such Payment Date) in the
Collection Account with respect to the related Due Period.
"SPECIAL DISTRIBUTION" means a distribution on a Payment Date of amounts
deposited in the Special Distribution Subaccount derived from the payment of
Liquidated Damages under the Deposit Agreement, which shall be deemed a
distribution of principal with respect to the Certificates.
"SPECIAL DISTRIBUTION SUBACCOUNT" means the account described in
Section 5.05(a) established for the purpose of Special Distributions.
"STANDARD & POOR'S" means Standard & Poor's Ratings Services, a division of
The McGraw Hill Company or any successor thereto.
"SUBSEQUENT CONTRACTS" means all Contracts sold and transferred to the
Trust pursuant to Section 2.04 hereof and Section 2.01 of the Deposit Agreement.
"SUBSEQUENT CUTOFF DATE" means the date specified as such for Subsequent
Contracts in the related Subsequent Transfer Agreement.
"SUBSEQUENT LIST OF CONTRACTS" means a list, in the form of the initial
List of Contracts delivered on the Closing Date, but listing each Subsequent
Contract transferred to the Trust pursuant to the related Subsequent Transfer
Agreement.
-17-
"SUBSEQUENT PURCHASE AGREEMENT" means, with respect to any Subsequent
Contracts, the agreement between the Seller and the Trust Depositor pursuant to
which the Seller transferred the Subsequent Contracts to the Trust Depositor,
the form of which is attached to the Transfer and Sale Agreement as EXHIBIT C.
"SUBSEQUENT TRANSFER AGREEMENT" means the agreement described in
Section 2.04 hereof and Section 2.01 of the Deposit Agreement.
"SUBSEQUENT TRANSFER DATE" means any date during the Funding Period on
which Subsequent Contracts are transferred to the Trust.
"TRANSACTION DOCUMENTS" means this Agreement, the Transfer and Sale
Agreement, the Reserve Fund Agreement, the Deposit Agreement, the Security
Agreement, the Lockbox Agreement, any Subsequent Transfer Agreement and any
Subsequent Purchase Agreement.
"TRANSFER AND SALE AGREEMENT" means the Transfer and Sale Agreement dated
as of [____] by and between the Trust Depositor and the Seller, as amended,
supplemented or otherwise modified from time to time.
"TRUST" means the trust created by this Agreement, comprised of the Trust
Corpus.
"TRUST ACCOUNTS" means, collectively, the Collection Account and the
Special Distribution Subaccount therein, or any of them.
"TRUST CORPUS" has the meaning given to such term in Section 2.01(b) hereof
(and in Section 2.04(a) hereof in respect of Subsequent Contracts and related
assets transferred to the Trust pursuant to Subsequent Transfer Agreements).
Although the Trust Depositor has pledged the Reserve Fund to the Trustee
pursuant to the Reserve Fund Agreement, the Reserve Fund shall not under any
circumstances be deemed to be a part of or otherwise includable in the Trust or
the Trust Corpus.
"TRUST DEPOSITOR" has the meaning assigned such term in the preamble
hereunder or any successor thereto.
"TRUSTEE'S FEE" means, with respect to any Payment Date, one-twelfth of the
product of .018% and the sum of (i) the Principal Balance of the Contracts as of
the beginning of the related Due Period and (ii) the Pre-Funded Amount as of the
beginning of such period; provided, however, in no event shall such fee be less
than $200.00 per month.
"UCC" means the Uniform Commercial Code as enacted in Illinois or Nevada,
as applicable.
-18-
"UNCOLLECTIBLE ADVANCE" means with respect to any Determination Date and
any Contract, the amount, if any, advanced by the Servicer pursuant to
Section 8.03 which the Servicer has as of such Determination Date determined in
good faith will not be ultimately recoverable by the Servicer from insurance
policies on the related Motorcycle, the related Obligor or out of Net
Liquidation Proceeds with respect to such Contract. The determination by the
Servicer that it has made an Uncollectible Advance shall be evidenced by an
Officer's Certificate delivered to the Trustee.
-19-
ARTICLE II
ESTABLISHMENT OF TRUST; TRANSFER OF CONTRACTS
SECTION 2.01. CLOSING. (a) There is hereby created by the Trust
Depositor, as settlor, a separate trust which shall be known as the Eaglemark
Trust [_____]. The Trust shall be administered pursuant to the provisions of
this Agreement for the benefit of the Certificateholders. The Trustee is hereby
specifically empowered to conduct business dealings on behalf of the Trust in
accordance with the terms hereof.
(b) On the Closing Date, the Trust Depositor shall sell, transfer, assign,
set over and otherwise convey to the Trust by execution of an assignment
substantially in the form of EXHIBIT B hereto, without recourse other than as
expressly provided herein, (i) all the right, title and interest of the Trust
Depositor in and to the Initial Contracts listed on the initial List of
Contracts delivered on the Closing Date (including, without limitation, all
security interests and all rights to receive payments which are collected
pursuant thereto on or after the Initial Cutoff Date, including any liquidation
proceeds therefrom, but excluding any rights to receive payments which were
collected pursuant thereto prior to the Initial Cutoff Date), (ii) all rights of
the Trust Depositor under any physical damage or other individual insurance
policy (and rights under a "forced placed" policy, if any) relating to any such
Contract, an Obligor or a Motorcycle securing such Contract, (iii) all security
interests in each such Motorcycle, (iv) all documents contained in the related
Contract Files, (v) all rights (but not the obligations) of the Trust Depositor
under any related motorcycle dealer agreements between dealers (i.e., the
originators of such Contracts) and the Seller, (vi) all rights of the Trust
Depositor in the Lockbox, the Lockbox Account and related Lockbox Agreement to
the extent they relate to such Contracts, (vii) all rights (but not the
obligations) of the Trust Depositor under the Transfer and Sale Agreement,
including but not limited to the Trust Depositor's rights under Article V
thereof, (viii) the remittances, deposits and payments made into the Trust
Accounts from time to time and amounts in the Trust Accounts from time to time
(and any investments of such amounts), and (ix) all proceeds and products of the
foregoing (the property in clauses (i)-(ix) above, along with the Deposit
Agreement (which has been executed directly in favor of the Trustee for the
benefit of the Trust), being the "TRUST CORPUS"). Although the Trust Depositor
and the Trustee agree that such transfer is intended to be a sale of ownership
of the Trust Corpus, rather than the granting of a security interest to secure a
borrowing, and that the Trust Corpus shall not be property of the Trust
Depositor, in the event such transfer is deemed to be of a mere security
interest to secure a borrowing, the Trust Depositor shall be deemed to have
granted the Trustee for the benefit of the Trust a perfected first priority
security interest in such Trust Corpus and this Agreement shall constitute a
security agreement under applicable law.
SECTION 2.02. CONDITIONS TO THE CLOSING. On or before the Closing Date,
the Trust Depositor shall deliver or cause to be delivered the following
documents to the Trustee:
-20-
(a) The initial List of Contracts, certified by the Chairman of the
Board, President or any Vice President of the Trust Depositor, together
with an assignment substantially in the form of EXHIBIT B hereto.
(b) A certificate of an officer of the Seller substantially in the
form of EXHIBIT B to the Transfer and Sale Agreement and of an Officer of
the Trust Depositor substantially in the form of EXHIBIT C hereto.
(c) Opinions of counsel for the Seller and the Trust Depositor
substantially in the form of EXHIBITS D-1, D-2 and D-3 hereto (and
including as an addressee thereof each Rating Agency).
(d) A letter from Xxxxxx Xxxxxxxx LLP, or another nationally
recognized accounting firm, addressed to the Trustee and stating that such
firm has reviewed a sample of the Initial Contracts and performed specific
procedures for such sample with respect to certain contract terms and which
identifies those Initial Contracts which do not conform.
(e) Copies of resolutions of the Board of Directors of each of the
Seller/Servicer and the Trust Depositor or of the Executive Committee of
the Board of Directors of each of the Seller/Servicer and the Trust
Depositor approving the execution, delivery and performance of this
Agreement and the other Transaction Documents to which any of them is a
party, as applicable, and the transactions contemplated hereunder and
thereunder, certified in each case by the Secretary or an Assistant
Secretary of the Seller/Servicer and the Trust Depositor.
(f) Officially certified recent evidence of due incorporation and
good standing of each of the Seller and the Trust Depositor under the laws
of Nevada.
(g) Evidence of proper filing with the appropriate offices in Nevada
and Illinois of UCC financing statements executed by the Seller, as debtor,
naming the Trust Depositor as secured party (and the Trustee as assignee)
and identifying the Contract Assets as collateral; and evidence of proper
filing with the appropriate offices in Nevada and Illinois of UCC financing
statements executed by the Trust Depositor, as debtor, (i) naming the
Trustee as secured party and identifying the Trust Corpus as collateral,
and (ii) naming the Trustee as secured party and identifying the Reserve
Fund Deposits therein as collateral, and (iii) naming the Trustee as
secured party and identifying the Collateral (as defined in the Security
Agreement) as collateral.
(h) An Officer's Certificate listing the Servicer's Servicing
Officers.
-21-
(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 Seller to the effect that such amount is correct.
(j) The Officer's Certificate of the Seller specified in
Section 2.02(i) of the Transfer and Sale Agreement.
(k) A fully executed copy of the Reserve Fund Agreement, together
with evidence of deposit in the Reserve Fund of the Reserve Fund Initial
Deposit by the Depositor in accordance with the Reserve Fund Agreement.
(l) Evidence of deposit in the Interest Reserve Account of $[_____].
(m) A fully executed Deposit Agreement.
(n) A fully executed Security Agreement.
(o) A fully executed Transfer and Sale Agreement.
SECTION 2.03. ACCEPTANCE BY TRUSTEE. On the Closing Date, if the
conditions set forth in Section 2.02 have been satisfied, the Trustee shall
issue on behalf of the Trust to, or upon the order of, the Trust Depositor the
Class A Certificates and Class B Certificates representing ownership of a
beneficial interest in 100% of the Trust.
SECTION 2.04. CONVEYANCE OF SUBSEQUENT CONTRACTS. (a) Subject to the
conditions set forth in paragraph (b) below, the Trust Depositor, pursuant to
the mutually agreed upon terms contained in the Deposit Agreement and pursuant
to one or more Subsequent Transfer Agreements, shall sell, transfer, assign, set
over and otherwise convey to the Trust, without recourse other than as expressly
provided herein and therein, (i) all the right, title and interest of the Trust
Depositor in and to the Subsequent Contracts (including, without limitation, all
security interests and all rights to receive payments which are collected
pursuant thereto on or after the related Subsequent Cutoff Date, including any
liquidation proceeds therefrom, but excluding any rights to receive payments
which were collected pursuant thereto prior to such Subsequent Cutoff Date),
(ii) all rights of the Trust Depositor under any physical damage or other
individual insurance policy (or a "forced placed" policy, if any) relating to
any such Contract, an Obligor or a Motorcycle securing such Contract, (iii) all
security interests in each such Motorcycle, (iv) all documents contained in the
related Contract Files, (v) all rights (but not the obligations) of the Trust
Depositor under any related motorcycle dealer agreements between dealers (i.e.,
the originators of such Contracts) and the Seller, (vi) all rights of the Trust
Depositor in the Lockbox, the Lockbox Account and related Lockbox Agreement to
the extent they relate to such Contracts, (vii) all rights (but not the
obligations) of the Trust Depositor under the Transfer and
-22
Sale Agreement related to such Contracts (to the extent not already conveyed
under Section 2.01(b)), including but not limited to the Trust Depositor's
related rights under Article V thereof, as well as all rights, but not the
obligations, of the Trust Depositor under the Subsequent Purchase Agreement
related to such Contracts, (viii) the remittances, deposits and payments made
into the Trust Accounts from time to time and amounts in the Trust Accounts from
time to time related to such Contracts (to the extent not already conveyed under
Section 2.01(b)) (and any investments of such amounts), and (ix) all proceeds
and products of the foregoing (the property in clauses (i)-(ix) above, upon such
transfer, becoming part of the "TRUST CORPUS"). Although the Trust Depositor
and the Trustee agree that such transfer is intended to be a sale of ownership,
rather than the granting of a security interest to secure a borrowing, and that
the Trust Corpus following such transfer shall not be property of the Trust
Depositor, in the event such transfer is deemed to be of a mere security
interest to secure a borrowing, the Trust Depositor shall be deemed to have
granted the Trustee for the benefit of the Trust a perfected first priority
security interest in such Trust Corpus and this Agreement shall constitute a
security agreement under applicable law.
(b) The Trust Depositor shall transfer to the Trust the Subsequent
Contracts and the other property and rights related thereto described in
paragraph (a) above only upon the satisfaction of each of the following
conditions on or prior to the related Subsequent Transfer Date:
(i) The Seller shall have provided the Trustee, the Placement Agent
and the Rating Agencies with a timely Addition Notice and shall have
provided any information reasonably requested by any of the foregoing with
respect to the Subsequent Contracts;
(ii) the Funding Period shall not have terminated;
(iii) the Trust Depositor shall have delivered to the Trustee a
duly executed written assignment (including an acceptance by the Trustee)
in substantially the form of EXHIBIT N hereto (the "SUBSEQUENT TRANSFER
AGREEMENT"), which shall include a Subsequent List of Contracts listing the
Subsequent Contracts;
(iv) the Trust Depositor shall have deposited or caused to be
deposited in the Collection Account all collections received with respect
to the Subsequent Contracts on or after the related Subsequent Cutoff Date;
(v) as of each Subsequent Transfer Date, neither the Seller nor the
Trust Depositor was insolvent nor will either of them have been made
insolvent by such transfer nor is either of them aware of any pending
insolvency;
(vi) the applicable Reserve Fund Additional Deposit for such
Subsequent Transfer Date (if any is required) shall have been made;
-23-
(vii) each Rating Agency shall have notified the Trust Depositor
and the Trustee in writing that following such transfer the Class A
Certificates will be rated in the highest rating category by such Rating
Agency and the Class B Certificates will be rated at least "BBB" by
Standard & Poor's and Baa2 by Xxxxx'x;
(viii) such addition will not result in a material adverse tax
consequence to the Trust or the Certificateholders as evidenced by an
Opinion of Counsel to be delivered by the Seller to the Trustee, the Rating
Agency and the Placement Agent;
(ix) the Trust Depositor shall have delivered to the Trustee an
Officers' Certificate confirming the satisfaction of each condition
precedent specified in this paragraph (b);
(x) the Trust Depositor shall have delivered to the Rating Agencies
and the Placement Agent one or more opinions of counsel with respect to the
transfer of the Subsequent Contracts substantially in the form of the
opinions of counsel delivered to such Persons on the Closing Date;
(xi) the Trust Depositor shall have taken any action necessary to
maintain the first perfected ownership interest of the Trust in the Trust
Corpus and the first perfected security interest of the Reserve Agent in
the Reserve Fund Deposits;
(xii) no selection procedures believed by the Trust Depositor to
be adverse to the interests of the Certificateholders shall have been
utilized in selecting the Subsequent Contracts;
(xiii) the Trust Depositor shall have delivered to the Rating
Agencies evidence that (A) the weighted average annual percentage rate of
the Contracts collectively, following the transfer of the Subsequent
Contracts, is not less than 12.25%, and (B) that the weighted average
calculated remaining term to maturity of the Contracts collectively,
following the transfer of the Subsequent Contracts, does not exceed 66
months; and
(xiv) the Trust Depositor shall have delivered to the Rating
Agencies, a report with respect tocertain agreed-upon procedures relating
to the Subsequent Contracts being transferred, confirming that procedures
were performed substantially similar to such procedures as were performed
in connection with the transfer of the Initial Contracts.
(c) As provided in the Deposit Agreement, the Trust Depositor covenants to
transfer (at or prior to the end of the Funding Period) to the Trust pursuant
thereto Subsequent Contracts with an aggregate Principal Balance equal to
$[_____]; PROVIDED, HOWEVER, that in complying with such covenant the Trust
Depositor agrees to make no more than one separate transfer of Subsequent
Contracts per monthly period (as measured by the corresponding Payment Dates),
-24-
and PROVIDED FURTHER, HOWEVER, that the sole remedy of the Trust or the
Certificateholders with respect to a failure to comply with such covenant shall
be to enforce the provisions of Section 2.02 of the Deposit Agreement by
demanding the payment of Liquidated Damages thereunder.
SECTION 2.05. TAX TREATMENT. It is the intention of the Trust Depositor
that, for federal income tax purposes, the Trust will be classified as a grantor
trust and not as an association taxable as a corporation. The Trust Depositor
and the Servicer by entering into this Agreement, and each Certificateholder by
the purchase of a Certificate, agree to report such transactions for federal
income tax purposes in a manner consistent with such characterization.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Seller under the Transfer and Sale Agreement has made, and upon execution of
each Subsequent Purchase Agreement is deemed to remake, each of the
representations and warranties set forth in EXHIBIT K hereto and has consented
to the assignment by the Trust Depositor to the Trustee of the Trust Depositor's
rights with respect thereto. Such representations speak as of the execution and
delivery of this Agreement and as of the Closing Date in the case of the Initial
Contracts, and as of the applicable Subsequent Transfer Date in the case of the
Subsequent Contracts, but shall survive the sale, transfer and assignment of the
Contracts to the Trust. Pursuant to Section 2.01 of this Agreement, the Trust
Depositor has sold, assigned, transferred and conveyed to the Trustee as part of
the Trust Corpus its rights under the Transfer and Sale Agreement, including
without limitation, the representations and warranties of the Seller therein as
set forth in EXHIBIT K attached hereto, together with all rights of the Trust
Depositor with respect to any breach thereof including any right to require the
Seller to repurchase any Contract in accordance with the Transfer and Sale
Agreement. It is understood and agreed that the representations and warranties
set forth or referred to in this Section shall survive delivery of the Contract
Files to the Trustee or any custodian.
The Trust Depositor hereby represents and warrants to the Trustee that it
has entered into the Transfer and Sale Agreement with the Seller, that the
Seller has made the representations and warranties in the Transfer and Sale
Agreement as set forth in EXHIBIT K hereto, that such representations and
warranties run to and are for the benefit of the Trust Depositor, and that
pursuant to Section 2.01 of this Agreement the Trust Depositor has transferred
and assigned to the Trustee all rights of the Trust Depositor to cause the
Seller under the Transfer and Sale Agreement to repurchase Contracts in the
event of a breach of such representations and warranties.
SECTION 3.01. REPRESENTATIONS AND WARRANTIES REGARDING THE TRUST
DEPOSITOR. By its execution of this Agreement and each Subsequent Transfer
Agreement, the Trust Depositor represents and warrants to the Trustee and the
Certificateholders that:
-25-
(a) ASSUMPTION OF SELLER'S REPRESENTATIONS AND WARRANTIES. The
representations and warranties set forth in EXHIBIT K are true and correct.
(b) ORGANIZATION AND GOOD STANDING. The Trust Depositor is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization and has the corporate power to
own its assets and to transact the business in which it is currently
engaged. The Trust Depositor is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which the
character of the business transacted by it or properties owned or leased by
it requires such qualification and in which the failure so to qualify would
have a material adverse effect on the business, properties, assets, or
condition (financial or other) of the Trust Depositor or the Trust.
(c) AUTHORIZATION; VALID SALE; BINDING OBLIGATIONS. The Trust
Depositor has the power and authority to make, execute, deliver and perform
this Agreement and the other Transaction Documents to which it is a party
and all of the transactions contemplated under this Agreement and the other
Transaction Documents to which it is a party, and to create the Trust and
cause it to make, execute, deliver and perform its obligations under this
Agreement and the other Transaction Documents to which it is a party and
has taken all necessary corporate action to authorize the execution,
delivery and performance of this Agreement and the other Transaction
Documents to which it is a party and to cause the Trust to be created.
This Agreement and the related Subsequent Transfer Agreement, if any, shall
effect a valid sale, transfer and assignment of the Trust Corpus,
enforceable against the Trust Depositor and creditors of and purchasers
from the Trust Depositor. This Agreement and the other Transaction
Documents to which the Trust Depositor is a party constitute the legal,
valid and binding obligation of the Trust Depositor enforceable in
accordance with their terms, except as enforcement of such terms may be
limited by bankruptcy, insolvency or similar laws affecting the enforcement
of creditors' rights generally and by the availability of equitable
remedies.
(d) NO CONSENT REQUIRED. The Trust Depositor is not required to
obtain the consent of any other party or any consent, license, approval or
authorization from, or registration or declaration with, any governmental
authority, bureau or agency in connection with the execution, delivery,
performance, validity or enforceability of this Agreement or the other
Transaction Documents to which it is a party.
(e) NO VIOLATIONS. The execution, delivery and performance of this
Agreement and the other Transaction Documents to which it is a party by the
Trust Depositor, and the consummation of the transactions contemplated
hereby and thereby, will not violate any provision of any existing law or
regulation or any order or decree of any court or of any Federal or state
regulatory body or administrative agency having jurisdiction over the Trust
Depositor or any of its properties or the Articles of
-26-
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 Certificates (1)
which, if adversely determined, would in the opinion of the Trust Depositor
have a material adverse effect on the business, properties, assets or
condition (financial or otherwise) of the Trust Depositor or the Trust or
the transactions contemplated by this Agreement or the other Transaction
Documents to which the Trust Depositor is a party or (2) seeking to
adversely affect the federal income tax or other federal, state or local
tax attributes of the Certificates.
(g) PLACE OF BUSINESS; NO CHANGES. The Trust Depositor's sole place
of business (within the meaning of Article 9 of the UCC) is as set forth in
Section 12.09 below. The Trust Depositor has not changed its name, whether
by amendment of its Articles of Incorporation, by reorganization or
otherwise, and has not changed the location of its place of business,
within the four months preceding the Closing Date.
Such representations speak as of the execution and delivery of this Agreement
and as of the Closing Date in the case of the Initial Contracts, and as of the
applicable Subsequent Transfer Date in the case of the Subsequent Contracts, but
shall survive the sale, transfer and assignment of the Contracts to the Trust.
SECTION 3.02. REPRESENTATIONS AND WARRANTIES REGARDING THE SERVICER. The
Servicer represents and warrants to the Trustee and the Certificateholders that:
(a) ORGANIZATION AND GOOD STANDING. The Servicer is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has the corporate power to own its
assets and to transact the business in which it is currently engaged. The
Servicer is duly qualified to do business as a foreign corporation and is
in good standing in each jurisdiction in which the character of the
business transacted by it or properties owned or leased by it requires such
qualification and in which the failure so to qualify would have a material
adverse effect on the business, properties, assets, or condition (financial
or otherwise) of the Servicer or the
-27-
Trust. The Servicer is properly licensed in each jurisdiction to the extent
required by the laws of such jurisdiction to service the Contracts in
accordance with the terms hereof.
(b) AUTHORIZATION; BINDING OBLIGATIONS. The Servicer has the power
and authority to make, execute, deliver and perform this Agreement and the
other Transaction Documents to which the Servicer is a party and all of the
transactions contemplated under this Agreement and the other Transaction
Documents to which the Servicer is a party, and has taken all necessary
corporate action to authorize the execution, delivery and performance of
this Agreement and the other Transaction Documents to which the Servicer is
a party. This Agreement and the other Transaction Documents to which the
Servicer is a party constitute the legal, valid and binding obligation of
the Servicer enforceable in accordance with their terms, except as
enforcement of such terms may be limited by bankruptcy, insolvency or
similar laws affecting the enforcement of creditors' rights generally and
by the availability of equitable remedies.
(c) NO CONSENT REQUIRED. The Servicer is not required to obtain the
consent of any other party or any consent, license, approval or
authorization from, or registration or declaration with, any governmental
authority, bureau or agency in connection with the execution, delivery,
performance, validity or enforceability of this Agreement and the other
Transaction Documents to which the Servicer is a party.
(d) NO VIOLATIONS. The execution, delivery and performance of this
Agreement and the other Transaction Documents to which the Servicer is a
party by the Servicer will not violate any provisions of any existing law
or regulation or any order or decree of any court or of any Federal or
state regulatory body or administrative agency having jurisdiction over the
Servicer or any of its properties or the Articles of Incorporation or
Bylaws of the Servicer, or constitute a material breach of any mortgage,
indenture, contract or other agreement to which the Servicer is a party or
by which the Servicer or any of the Servicer's properties may be bound, or
result in the creation of or imposition of any security interest, lien,
pledge, preference, equity or encumbrance of any kind upon any of its
properties pursuant to the terms of any such mortgage, indenture, contract
or other agreement, other than this Agreement.
(e) LITIGATION. No litigation or administrative proceeding of or
before any court, tribunal or governmental body is currently pending, or to
the knowledge of the Servicer threatened, against the Servicer or any of
its properties or with respect to this Agreement, any other Transaction
Document to which the Servicer is a party or the Certificates which, if
adversely determined, would in the opinion of the Servicer have a material
adverse effect on the business, properties, assets or condition (financial
or otherwise) of the Servicer or the Trust or the transactions contemplated
by this Agreement or any other Transaction Document to which the Servicer
is a party.
-28-
(f) INFORMATION TO BACK-UP SERVICER. The Servicer represents and
warrants to the Back-up Servicer that the database and information
furnished to the Back-up Servicer hereunder concerning the Contracts is
accurate and complete in all material respects.
ARTICLE IV
PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS;
SECTION 4.01. CUSTODY OF CONTRACTS. (a) Subject to the terms and
conditions of this Section 4.01, the contents of each Contract File shall be
held in the custody of the Servicer for the benefit of, and as agent for, the
Certificateholders and the Trustee as the owner thereof.
(b) The Servicer agrees to maintain the related Contract Files at its
offices where they are currently maintained, or at such other offices of the
Servicer in the State of Nevada as shall from time to time be identified to the
Trustee by written notice. The Servicer may temporarily move individual
Contract Files or any portion thereof without notice as necessary to conduct
collection and other servicing activities in accordance with its customary
practices and procedures; PROVIDED, HOWEVER, that the Servicer will take all
action necessary to maintain the perfection of the Trust's interest in the
Contracts and the proceeds thereof. It is intended that by the Servicer's
agreement pursuant to Section 4.01(a) above and this Section 4.01(b) the Trustee
shall be deemed to have possession of the Contract Files for purposes of
Section 9-305 of the Uniform Commercial Code of the State in which the Contract
Files are located.
(c) As custodian, the Servicer shall have and perform the following powers
and duties:
(i) hold the Contract Files on behalf of the Certificateholders and
the Trustee, maintain accurate records pertaining to each Contract to
enable it to comply with the terms and conditions of this Agreement,
maintain a current inventory thereof, conduct annual physical inspections
of Contract Files held by it under this Agreement and certify to the
Trustee annually that it continues to maintain possession of such Contract
Files;
(ii) implement policies and procedures in writing and signed by a
Servicing Officer with respect to persons authorized to have access to the
Contract Files on the Servicer's premises and the receipting for Contract
Files taken from their storage area by an employee of the Servicer for
purposes of servicing or any other purposes;
(iii) attend to all details in connection with maintaining custody
of the Contract Files on behalf of the Certificateholders and the Trustee;
(iv) at all times maintain the original of the fully executed
Contract and store such original Contract in a fireproof vault;
-29-
(v) stamp each Contract on both the first and the signature page (if
different) as of the Closing Date (or Subsequent Transfer Date, as the case
may be) in the form attached hereto as EXHIBIT M;
(vi) within 30 days of the Closing Date (or Subsequent Transfer Date,
as the case may be) deliver an Officer's Certificate to the Trustee
certifying that as of a date no earlier than the Closing Date (or
Subsequent Transfer Date, as the case may be) it has conducted an inventory
of the Contract Files (which in the case of Subsequent Contracts, need be
only of the Contract Files related to such Subsequent Contracts) and that
there exists a Contract File for each Contract and stating all exceptions
to such statement, if any; and
(vii) within 185 days of the Closing Date (or Subsequent Transfer
Date, as the case may be) deliver an Officer's Certificate to the Trustee
listing each Contract with respect to which there did not exist as of 180
days of the Closing Date (or Subsequent Transfer Date, as the case may be)
an original title certificate to the motorcycle and the certificate of lien
recordation relating thereto.
(d) In performing its duties under this Section 4.01, the Servicer agrees
to act with reasonable care, using that degree of skill and care that it
exercises with respect to similar contracts for the installment purchase of
consumer goods owned and/or serviced by it, and in any event with no less degree
of skill and care than would be exercised by a prudent servicer of motorcycle
conditional sales contracts. The Servicer shall promptly report to the Trustee
any failure by it to hold the Contract Files as herein provided and shall
promptly take appropriate action to remedy any such failure. In acting as
custodian of the Contract Files, the Servicer further agrees not to assert any
legal or beneficial ownership interest in the Contracts or the Contract Files,
except as provided in Section 5.06. The Servicer agrees to indemnify the
Certificateholders, the Trustee for any and all liabilities, obligations,
losses, damages, payments, costs, or expenses of any kind whatsoever which may
be imposed on, incurred by or asserted against the Certificateholders, or the
Trustee as the result of any act or omission by the Servicer relating to the
maintenance and custody of the Contract Files; PROVIDED, HOWEVER, that the
Servicer will not be liable for any portion of any such amount resulting from
the gross negligence or willful misconduct of any Certificateholder, or the
Trustee. The Trustee shall have no duty to monitor or otherwise oversee the
Servicer's performance as custodian hereunder.
SECTION 4.02. FILING. On or prior to the Closing Date, the Servicer shall
cause the UCC financing statement(s) referred to in Section 2.02(g) hereof to be
filed and from time to time the Servicer shall take and cause to be taken such
actions and execute such documents as are necessary or desirable or as the
Trustee may reasonably request to perfect and protect the Trust's first priority
perfected interest in the Trust Corpus against all other persons, including,
without limitation, the filing of financing statements, amendments thereto and
continuation statements,
-30-
the execution of transfer instruments and the making of notations on or taking
possession of all records or documents of title.
SECTION 4.03. NAME CHANGE OR RELOCATION. (a) During the term of this
Agreement, neither the Seller nor the Trust Depositor shall change its name,
identity or structure or relocate its chief executive office without first
giving at least 30 days' prior written notice to the Trustee.
(b) If any change in either the Seller's or the Trust Depositor's name,
identity or structure or other action would make any financing or continuation
statement or notice of lien filed under this Agreement seriously misleading
within the meaning of applicable provisions of the UCC or any title statute, the
Servicer, no later than five days after the effective date of such change, shall
file such amendments as may be required to preserve and protect the Trust's
interests in the Trust Corpus and the proceeds thereof. In addition, neither
the Seller nor the Trust Depositor shall change its place of business (within
the meaning of Article 9 of the UCC) from the location specified in
Section 12.09 below unless it has first taken such action as is advisable or
necessary to preserve and protect the Trust's interest in the Trust Corpus.
Promptly after taking any of the foregoing actions, the Servicer shall deliver
to the Trustee an opinion of counsel reasonably acceptable to the Trustee
stating that, in the opinion of such counsel, all financing statements or
amendments necessary to preserve and protect the interests of the Trustee in the
Trust Corpus have been filed, and reciting the details of such filing.
SECTION 4.04. CHIEF EXECUTIVE OFFICE. During the term of this Agreement,
the Trust Depositor will maintain its chief executive office in one of the
States of the United States, except Louisiana, Tennessee, Colorado, Kansas, New
Mexico, Oklahoma, Utah or Wyoming.
SECTION 4.05. COSTS AND EXPENSES. The Servicer agrees to pay all
reasonable costs and disbursements in connection with the perfection and the
maintenance of perfection, as against all third parties, of the Trust's right,
title and interest in and to the Contracts (including, without limitation, the
security interest in the Motorcycles granted thereby).
ARTICLE V
SERVICING OF CONTRACTS
SECTION 5.01. RESPONSIBILITY FOR CONTRACT ADMINISTRATION. The Servicer
will have the sole obligation to manage, administer, service and make
collections on the Contracts and perform or cause to be performed all
contractual and customary undertakings of the holder of the Contracts to the
Obligor. The Trustee, at the written request of a Servicing Officer, shall
furnish the Servicer with any powers of attorney or other documents necessary or
appropriate in the opinion of the Trustee to enable the Servicer to carry out
its servicing and administrative duties hereunder. The Servicer is hereby
appointed the servicer hereunder until such time as any Service Transfer may be
effected under Article VII.
-31-
SECTION 5.02. STANDARD OF CARE. In managing, administering, servicing and
making collections on the Contracts pursuant to this Agreement, the Servicer
will exercise that degree of skill and care consistent with the skill and care
that the Servicer exercises with respect to similar contracts serviced by the
Servicer, and, in any event no less degree of skill and care than would be
exercised by a prudent servicer of motorcycle conditional sales contracts;
PROVIDED, HOWEVER, that notwithstanding the foregoing, the Servicer shall not
release or waive the right to collect the unpaid balance on any Contract.
SECTION 5.03. RECORDS. The Servicer shall, during the period it is
servicer hereunder, maintain such books of account and other records as will
enable the Trustee or the Back-up Servicer to determine the status of each
Contract.
SECTION 5.04. INSPECTION. (a) At all times during the term hereof, the
Servicer shall afford the Trustee, the Back-up Servicer 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 Trustee, or such authorized
agents and allow copies of the same to be made. The examination referred to in
this Section will be conducted in a manner which does not unreasonably interfere
with the Servicer's normal operations or customer or employee relations.
Without otherwise limiting the scope of the examination the Trustee may, using
generally accepted audit procedures, verify the status of each Contract and
review the Computer Disk and records relating thereto for conformity to Monthly
Reports prepared pursuant to Article VI and compliance with the standards
represented to exist as to each Contract in this Agreement.
(b) At all times during the term hereof, the Servicer shall keep available
a copy of the List of Contracts at its principal executive office for inspection
by Certificateholders.
SECTION 5.05. TRUST ACCOUNTS. (a) On or before the Closing Date, the
Trust Depositor shall establish the Collection Account and the Special
Distribution Subaccount therein, each in the name of the Trustee for the benefit
of the Certificateholders. The Trustee is hereby required to ensure that each
of the Trust Accounts is established and maintained as an Eligible Account.
(b) The Trustee shall deposit (or the Servicer shall deposit, with respect
to payments by or on behalf of the Obligors received directly by the Servicer),
without deposit into any intervening account, into the Collection Account as
promptly as practical (but in any case not later than the second Business Day
following the receipt thereof):
(i) With respect to principal and interest on the Contracts (as well
as Late Payment Penalty Fees and Extension Fees) received on or after the
Initial Cutoff Date or Subsequent Cutoff Date, as applicable (which for the
purpose of this paragraph (b)(i) shall include those monies in the Lockbox
Account allocable to principal and interest on the Contracts), all such
amounts received by the Trustee or Servicer;
-32-
(ii) All Net Liquidation Proceeds related to the Contracts;
(iii) The aggregate of the Repurchase Prices for Contracts repurchased
by the Seller as described in Section 8.06;
(iv) All Advances made by the Servicer pursuant to Section 8.03(a);
(v) All amounts paid by the Seller in connection with an optional
repurchase of the Contracts described in Section 8.08;
(vi) All amounts realized in respect of Carrying Charges transferred
from the Interest Reserve Account as contemplated in Section 8.03(b); and
(vii) All amounts received in respect of interest, dividends, gains,
income and earnings on investments of funds in the Trust Accounts as
contemplated in the last sentence of Section 5.05(d) hereof.
(c) The Trustee shall, if amounts remain on deposit in the Pre-Funding
Account at the expiration of the Funding Period, make demand, immediately upon
expiration of the Funding Period, upon the Trust Depositor and the Collateral
Agent for the payment of Liquidated Damages as contemplated in Section 2.02 of
the Deposit Agreement and Section 3.03 of the Security Agreement. The Trustee
shall deposit the amounts received from the Deposit Collateral Agent in respect
of such Liquidated Damages into the Special Distribution Subaccount in the
Collection Account to be distributed on the next upcoming Payment Date as
contemplated in Section 8.04(b) hereof.
(d) If the Servicer so directs, in writing, the Trustee shall in its
capacity as Trustee hereunder, invest the amounts in the Trust Accounts in
Eligible Investments that mature not later than one Business Day prior to the
next succeeding Payment Date. Once such funds are invested, the Trustee shall
not change the investment of such funds. Any loss on such investments shall be
deposited in the applicable Trust Account by the Servicer out of its own funds
immediately as realized. Funds in the Trust Accounts not so invested must be
insured to the extent permitted by law by the Bank Insurance Fund or the Savings
Association Insurance Fund of the Federal Deposit Insurance Corporation.
Subject to the restrictions herein, the Trustee may purchase an Eligible
Investment from itself or an Affiliate. Any investment of funds in the Trust
Accounts shall be made in Eligible Investments (a) held in the possession of the
Trustee or maintained with another institution as an Eligible Account with
respect to which such institution has noted the Trustee's interest therein on
its books and records and a confirmation of the Trustee's interest has been sent
to the Trustee by such institution, and (b) with respect to Eligible Investments
comprised of securities, the Trustee has purchased such securities for value in
good faith without notice of any adverse claim thereto, and which securities
(A) if certificated and in bearer form, have been delivered to the Trustee, or
in
-33-
registered form, have been issued or endorsed to the Trustee or in blank, (B) if
uncertificated, the transfer of which is registered on the books of the issuer
thereof, or (C) have been transferred (x) through acquisition or possession by a
financial intermediary of a certificated security specially endorsed to or
issued in the name of the Trustee, or (y) through confirmation by a financial
intermediary (not a clearing corporation) of the Trustee's purchase of a
certificated security and appropriate identification of its interest in the
records of such intermediary, or (z) through the making of appropriate entries
to the Trustee's (or its designee's) account on the books of a clearing
corporation in accordance with Section 8-320 of the applicable Uniform
Commercial Code. Subject to the other provisions hereof, the Trustee shall have
sole control over each such investment and the income thereon, and any
certificate or other instrument evidencing any such investment, if any, shall be
delivered directly to the Trustee or its agent, together with each document of
transfer, if any, necessary to transfer title to such investment to the Trustee
in a manner which complies with this Section 5.05(d). All interest, dividends,
gains upon sale and other income from, or earnings on, investments of funds in
the Trust Accounts shall be deposited in the Collection Account pursuant to
Section 5.05(b)(ii) and distributed on the next Payment Date pursuant to
Section 8.04(b).
SECTION 5.06. ENFORCEMENT. (a) The Servicer will, consistent with
Section 5.02, act with respect to the Contracts in such manner as will maximize
the receipt of principal and interest on such Contracts. However, nothing
provided herein will give the Servicer the power to vary the investment of the
Certificateholders in such a way as to cause the trust not to be treated as an
investment trust under the regulations promulgated under Code Section 7701.
(b) The Servicer may sue to enforce or collect upon Contracts, in its own
name, if possible, or as agent for the Trustee. If the Servicer elects to
commence a legal proceeding to enforce a Contract, the act of commencement shall
be deemed to be an automatic assignment of the Contract to the Servicer for
purposes of collection only. If, however, in any enforcement suit or legal
proceeding it is held that the Servicer may not enforce a Contract on the ground
that it is not a real party in interest or a holder entitled to enforce the
Contract, the Trustee on behalf of the Trust shall, at the Servicer's expense,
take such steps as the Servicer deems reasonably necessary to enforce the
Contract, including bringing suit in its name or the names of the
Certificateholders.
(c) The Servicer shall exercise any rights of recourse against third
persons that exist with respect to any Contract in accordance with the
Servicer's usual practice. In exercising recourse rights, the Servicer is
authorized on the Trustee's behalf to reassign the defaulted Contract or the
related Motorcycle to the person against whom recourse exists at the price set
forth in the document creating the recourse; PROVIDED, HOWEVER, the Servicer in
exercising recourse against any third persons as described in the immediately
preceding sentence shall do so in such manner as to maximize the aggregate
recovery with respect to the Contract; and PROVIDED FURTHER, HOWEVER, that
notwithstanding the foregoing the Servicer in its capacity as such may exercise
such recourse only if such Contract was not required to be repurchased by the
Seller
-34-
pursuant to the Transfer and Sale Agreement or was required to be repurchased by
the Seller and the Seller has defaulted on such repurchase obligation.
(d) The Servicer will not permit any rescission or cancellation of any
Contract due to the acts or omissions of the Servicer.
(e) The Servicer may grant to the Obligor on any Contract an extension of
payments due under such Contract, PROVIDED that (i) the extension period is
limited to 45 days, (ii) the Obligor has been in good standing for the previous
twelve-month period, (iii) such extension is consistent with the Servicer's
customary servicing procedures and is consistent with Section 5.02, (iv) such
extension does not extend the maturity date of the Contract beyond the latest
maturity date of any of the Contracts as of the Initial Cutoff Date (or, if a
transfer of Subsequent Contracts to the Trust occurs, beyond the latest maturity
date of such Subsequent Contracts) and (v) the aggregate Principal Balances of
Contracts which have had extensions granted does not exceed more than 3.00% of
the aggregate of the Class A Initial Certificate Balance and the Class B Initial
Certificate Balance.
(f) The Servicer will not add to the outstanding Principal Balance of any
Contract the premium of any physical damage or other individual insurance on a
Motorcycle securing such Contract it obtains on behalf of the Obligor under the
terms of such Contract, but may create a separate Obligor obligation with
respect to such premium if and as provided by the Contract.
(g) If the Servicer shall have repossessed a Motorcycle on behalf of the
Trust, the Servicer shall either (i) maintain at its expense physical damage
insurance with respect to such Motorcycle, or (ii) indemnify the Trust against
any damage to such Motorcycle prior to resale or other disposition. The
Servicer shall not allow such repossessed Motorcycles to be used in an active
trade or business, but rather shall dispose of the Motorcycle in a reasonable
time in accordance with the Servicer's normal business practices.
SECTION 5.07. TRUSTEE TO COOPERATE. Upon payment in full on any Contract,
the Servicer will notify the Trustee, the Back-up Servicer and the Trust
Depositor on the next succeeding Payment Date by certification of a Servicing
Officer (which certification shall include a statement to the effect that all
amounts received in connection with such payments which are required to be
deposited in the Collection Account pursuant to Section 5.05 have been so
deposited) and shall (if the Servicer is not then in possession of the
Contracts and Contract Files) request delivery of the Contract and Contract
File to the Servicer. Upon receipt of such delivery and request, the Trustee
shall promptly release or cause to be released such Contract and Contract File
to the Servicer. Upon receipt of such Contract and Contract File, each of the
Trust Depositor and the Servicer is authorized to execute an instrument in
satisfaction of such Contract and to do such other acts and execute such other
documents as the Servicer deems necessary to discharge the Obligor thereunder
and eliminate the security interest in the Motorcycle related thereto. The
Servicer shall determine when a Contract has been paid in full; to the extent
that
-35-
insufficient payments are received on a Contract credited by the Servicer as
prepaid or paid in full and satisfied, the shortfall shall be paid by the
Servicer out of its own funds. From time to time as appropriate for servicing
and repossession in connection with any Contract, if the Servicer is not then in
possession of the Contracts and Contract Files, the Trustee shall, upon written
request of a Servicing Officer and delivery to the Trustee of a receipt signed
by such Servicing Officer, cause the original Contract and the related Contract
File to be released to the Servicer and shall execute such documents as the
Servicer shall deem reasonably necessary to the prosecution of any such
proceedings. Such receipt shall obligate the Servicer to return the original
Contract and the related Contract File to the Trustee when the need by the
Servicer has ceased unless the Contract shall be repurchased as described in
Section 8.09. Upon request of a Servicing Officer, the Trustee shall perform
such other acts as reasonably requested by the Servicer and otherwise cooperate
with the Servicer in the enforcement of the Certificateholders' rights and
remedies with respect to Contracts.
SECTION 5.08. COSTS AND EXPENSES. All costs and expenses incurred by the
Servicer in carrying out its duties hereunder, fees and expenses of accountants
and payments of all fees and expenses incurred in connection with the
enforcement of Contracts (including enforcement of defaulted Contracts and
repossessions of Motorcycles securing such Contracts when such Contracts are not
repurchased pursuant to Section 8.06) and all other fees and expenses not
expressly stated hereunder to be for the account of the Trust shall be paid by
the Servicer (or, in the event that the Back-up Servicer is appointed Servicer,
by Eaglemark, Inc.) and the Servicer shall not be entitled to reimbursement
hereunder.
SECTION 5.09. MAINTENANCE OF SECURITY INTERESTS IN MOTORCYCLES. The
Servicer shall take such steps as are necessary to maintain continuous
perfection and the first priority of the security interest created by each
Contract in the related Motorcycle. The Trustee hereby authorizes the Servicer
to take such steps as are necessary to perfect such security interest and to
maintain the first priority thereof in the event of a relocation of a Motorcycle
or for any other reason.
SECTION 5.10. REPRESENTATIONS OF BACK-UP SERVICER. The Back-up Servicer
makes the following representations and warranties to the Trustee and the
Certificateholders:
(a) The Back-up Servicer has been duly organized and is validly
existing as an Illinois banking corporation in good standing under the laws
of the United States of America, with power and authority to own its
properties and to conduct its business as such properties shall be
currently owned and such business is presently conducted. The Back-up
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 Back-up Servicer.
-36-
(b) The Back-up Servicer has the power and authority to execute and
deliver this Agreement and to carry out its terms; and the execution,
delivery, and performance of this Agreement has been duly authorized by the
Back-up Servicer by all necessary corporate action.
(c) This Agreement constitutes a legal, valid, and binding obligation
of the Back-up Servicer enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization or
other similar laws affecting the enforcement of creditors' rights in
general and by general principles of equity, regardless of whether such
enforceability shall be considered in a proceeding in equity or at law.
(d) The consummation of the transactions contemplated by this
Agreement, and the fulfillment of the terms hereof do not conflict with,
result in any breach of any of the terms and provisions of, nor constitute
(with or without notice or lapse of time) a default under, the charter or
by-laws of the Back-up Servicer, or any indenture, agreement or other
instrument to which the Back-up Servicer is a party or by which it is
bound; nor result in the creation or imposition of any lien upon any of its
properties pursuant to terms of any such indenture, agreement, or other
instrument; nor violate any law or any order, rule, or regulation
applicable to the Back-up Servicer of any court or of any Federal or state
regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over the Back-up Servicer or its
properties.
(e) There are no proceedings or investigations pending or, to the
Back-up Servicer's best knowledge, threatened before any court, regulatory
body, administrative agency, or other governmental instrumentality having
jurisdiction over the Back-up Servicer or its properties (i) asserting the
invalidity of this Agreement (ii) seeking to prevent the consummation of
any of the transactions contemplated by this Agreement or (iii) seeking any
determination or ruling that might materially and adversely affect the
performance by the Back-up Servicer of its obligations under, or the
validity or enforceability of, this 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 the Subsequent
Contracts, but shall survive the sale, transfer and assignment of the Contracts
to the Trust.
SECTION 5.11. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, BACK-UP SERVICER. Any Person (a) into which the Back-up
Servicer may be merged or consolidated, (b) which may result from any merger
or consolidation to which the Back-up Servicer shall be a party, or (c) which
may succeed to the properties and assets of the Back-up Servicer
substantially as a whole, in any of the foregoing cases shall execute an
agreement of assumption to perform every obligation of the Back-up Servicer
hereunder and, whether or not such assumption
-37-
agreement is executed, shall be the successor to the Back-up Servicer under
this Agreement without further act on the part of any of the parties to this
Agreement, anything in this Agreement to the contrary notwithstanding. Upon
the occurrence of an event described in clauses (a), (b) or (c) of this
Section 5.11, the Rating Agencies shall receive written notice within
thirty (30) days of the completion of such event.
SECTION 5.12. REVIEW OF MONTHLY REPORT. (a) Prior to each Payment Date,
the Back-up Servicer shall review the Monthly Report related thereto and shall:
(i) confirm that such Monthly Report has been completed;
(ii) load the Computer Disk (which shall be in a format acceptable to
the Back-up Servicer) received from the Servicer pursuant to Section 6.01
hereof, confirm that such Computer Disk is in readable form and calculate
and confirm the Monthly Principal for such Payment Date;
(iii) confirm that the items set forth as items (C)(3)(a),
(C)(3)(b), (C)(4)(a), (C)(4)(b), (D)(1), (D)(2), (F)(1), (F)(4), (F)(5),
(H), (I), (L), (M)(1), (M)(2), (M)(3), (M)(4), and (T) in the Monthly
Report as set forth in EXHIBIT J hereto are consistent with the Monthly
Report based solely on the recalculation of the Servicer's Monthly Report;
and
(iv) calculate and confirm that the Delinquency Ratio, Average
Delinquency Ratio, Default Ratio, Average Default Ratio, Loss Ratio,
Average Loss Ratio and Cumulative Loss Ratio as of such Payment Date and
the number, identity and principal balance of Liquidated Contracts.
(b) In the event of any discrepancy between the information set forth in
subparagraphs (a) (ii), (a) (iii) or (a)(iv) as calculated by the Servicer from
that determined or calculated by the Back-up Servicer, the Back-up Servicer
shall promptly notify the Servicer and the Trustee of such discrepancy. In the
event of a discrepancy as described in the preceding sentence, payments to
Certificateholders on the related Payment Date shall be made by the Trustee
consistent with the information provided by the Servicer. If within 30 days of
such notice being provided to the Servicer, the Back-up Servicer and the
Servicer are unable to resolve such discrepancy, the Back-up Servicer shall
promptly notify the Rating Agencies, and the Trustee of such discrepancy and the
Back-up Servicer shall appoint an independent certified public accountant (at
the Servicer's expense and which independent certified public accountant shall
be acceptable to the Back-up Servicer) to review and resolve any such
discrepancy.
(c) Other than as specifically set forth in this Agreement, the Back-up
Servicer shall have no obligation to supervise, verify, monitor or administer
the performance of the Servicer and shall have no liability or responsibility
for any action taken or omitted by the Servicer. The
-38-
duties and obligations of the Back-up Servicer shall be determined solely by the
express provisions of this Agreement and no implied covenants or obligations
shall be read into this Agreement against the Back-up Servicer.
(d) The Back-up Servicer shall consult fully with the Servicer as may be
necessary from time to time to perform or carry out the Back-up Servicer's
obligations hereunder, including the obligation to succeed at any time to the
duties and obligations of the Servicer as servicer under Section 7.02.
SECTION 5.13. BACK-UP SERVICER COMPENSATION. As compensation for the
performance of its obligations as Back-up Servicer under this Agreement, the
Back-up Servicer shall be entitled to receive the Back-up Servicer Fee which
shall be paid as provided herein.
SECTION 5.14. BACK-UP SERVICER NOT TO RESIGN. Subject to the provisions
of Section 5.11, the Back-up Servicer shall not resign from the obligations and
duties imposed on it by this Agreement as Back-up Servicer or, in the event of a
Service Transfer, as Back-up Servicer, except upon a determination that by
reason of a change in legal requirements the performance of its duties under
this Agreement would cause the Back-up Servicer to be in violation of such legal
requirements in a manner which would have a material adverse effect on the
Back-up Servicer. Any such determination permitting the resignation of the
Back-up Servicer shall be evidenced by an opinion of counsel to such effect
delivered and acceptable to the Trustee. No resignation of the Back-up Servicer
shall become effective until an entity acceptable to the Trustee shall have
assumed the responsibilities and obligations of the Back-up Servicer; PROVIDED,
HOWEVER, that in the event a successor Back-up Servicer is not appointed within
60 days after the Back-up Servicer has given notice of its resignation as
permitted by this Section 5.14, the Back-up Servicer may petition a court for
its removal. In the event the Back-up Servicer resigns, the Trustee shall
provide the Rating Agencies written notice of such resignation.
SECTION 5.15. BACK-UP SERVICER/LOCKBOX AGREEMENTS. The Servicer shall use
its best efforts to cause Obligors to make all payments on the Contracts
directly to one or more Lockbox Banks, acting as agent for the Trust pursuant to
a Lockbox Agreement. In the event the Servicer shall for any reason no longer
be acting as such, the Back-up Servicer shall thereupon assume all of the rights
and obligations of the outgoing servicer under the Lockbox Agreement; PROVIDED,
HOWEVER, that the Back-up Servicer shall not be liable for any acts or
obligations of the Servicer prior to such succession. In such event, the
Back-up 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 Back-up 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 Trustee, but at the expense of the
outgoing Servicer, deliver to the Back-up Servicer all documents and records
relating to each such Lockbox Agreement and an accounting of amounts collected
and
-39-
held by the Lockbox Bank and otherwise use its best efforts to effect the
orderly and efficient transfer of any Lockbox Agreement to the Back-up Servicer.
In connection with its assumption of all of the rights and obligations of the
outgoing Servicer, the Back-up Servicer shall deliver a written notice to
Norwest Financial Information Services Group to the effect that the outgoing
Servicer has been terminated as Servicer or has resigned as Servicer hereunder.
Such notice shall also include a request to Norwest Financial Information
Services Group to assign to the Back-up Servicer the rights under that certain
Agreement between Norwest Financial Information Services Group and Eaglemark
Financial Services, Inc., a Delaware corporation ("EAGLEMARK FINANCIAL"), dated
as of November 4, 1992 (the "NORWEST AGREEMENT") insofar as such rights relate
to the Contracts, and an agreement on the part of the Back-up Servicer to assume
the obligations under the Norwest Agreement insofar as such obligations relate
to the servicing of the Contracts. No such assignment and assumption will
relieve the Seller or Eaglemark Financial of its obligations under the Norwest
Agreement.
ARTICLE VI
REPORTS
SECTION 6.01. MONTHLY REPORTS. No later than 10:00 a.m. Chicago, Illinois
time two Business Days following each Determination Date, the Servicer shall
cause the Trustee, Xxxxxxx Lynch, Xxxxxx, Xxxxxx & Xxxxx Incorporated (the
"PLACEMENT AGENT"), the Back-up Servicer and each Rating Agency to receive a
"Monthly Report" substantially in the form of EXHIBIT J hereto.
SECTION 6.02. OFFICER'S CERTIFICATE. Each Monthly Report delivered
pursuant to Section 6.01 shall be accompanied by a certificate of a Servicing
Officer substantially in the form of EXHIBIT F, certifying the accuracy of the
Monthly Report and that no 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 6.03. OTHER DATA. In addition, the Trust Depositor and the
Servicer shall, on request of the Trustee, the Back-up Servicer, Xxxxx'x or
Standard & Poor's, furnish the Trustee, the Back-up Servicer, Xxxxx'x or
Standard & Poor's, as the case may be, such underlying data as may be reasonably
requested.
SECTION 6.04. ANNUAL REPORT OF ACCOUNTANTS.
(a) The Servicer shall cause a firm of nationally recognized independent
certified public accountants (the "INDEPENDENT ACCOUNTANTS"), who may also
render other services to the Servicer, Eaglemark Financial or to the Trust
Depositor, to deliver to the Trustee, the Placement Agent and each Rating
Agency, on or before March 31 (or 90 days after the end of the Servicer's fiscal
year, if other than December 31) of each year, beginning on March 31, 1997, with
respect to the twelve months ended the immediately preceding December 31 (or
other applicable date), a
-40-
statement (the "ACCOUNTANT'S REPORT") addressed to the Board of Directors of the
Servicer to the Trustee to the effect that such firm has audited the financial
statements of Eaglemark Financial and issued its report thereon and that such
audit
(1) was made in accordance with generally accepted auditing
standards, and accordingly included such tests of the accounting records
and such other auditing procedures as such firm considered necessary in the
circumstances;
(2) included an examination of documents and records relating to the
servicing of motorcycle conditional sales contracts under pooling and
servicing agreements substantially similar to one another (such statement
to have attached thereto a schedule setting forth the pooling and servicing
agreements covered thereby, including this Agreement);
(3) included an examination of the delinquency and loss statistics
relating to Eaglemark Financial's portfolio of motorcycle conditional sales
contracts; and
(4) except as described in the statement, disclosed no exceptions or
errors in the records relating to motorcycle loans serviced for others
that, in the firm's opinion, generally accepted auditing standards requires
such firm to report.
The Accountant's Report shall further state that
(1) a review in accordance with agreed upon procedures was made of
one randomly selected Monthly Report and
(2) except as disclosed in the Report, no exceptions or errors in
the Monthly Report so examined were found.
(b) The Accountant's Report shall also indicate that the firm is
independent of Eaglemark Financial within the meaning of the Code of
Professional Ethics of the American Institute of Certified Public Accountants.
SECTION 6.05. ANNUAL STATEMENT OF COMPLIANCE FROM SERVICER. The Servicer
will deliver to the Trustee, the Back-up Servicer, the Placement Agent and each
of the Rating Agencies, on or before January 31 of each year commencing
January 31, 1997, 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
-41-
nature and status thereof. A copy of such certificate may be obtained by any
Certificateholder by a request in writing to the Trustee.
SECTION 6.06. STATEMENTS TO CERTIFICATEHOLDERS. (a) On or before two
Business Days prior to each Payment Date, the Servicer shall prepare and,
concurrently with each distribution to Certificateholders pursuant to
Article VIII, the Trustee, in its capacity as Certificate Registrar and Paying
Agent, shall cause to be delivered and mailed to each Holder of a Class A
Certificate and each Holder of a Class B Certificate at the address appearing on
the Certificate Register a statement as of the related Payment Date setting
forth:
(i) the amount distributed on such date and allocable to principal
of the Class A Certificates and the Class B Certificates;
(ii) the amount distributed on such date and allocable to interest on
the Class A Certificates and the Class B Certificates;
(iii) the amount of the Class A and Class B Principal and Interest
Carryover Shortfalls, if any, for such Payment Date and the change in the
Class A and Class B Principal and Interest Carryover Shortfalls from the
immediately preceding Payment Date;
(iv) the amount otherwise distributable to the Class B
Certificateholders that will be distributed to the Class A Certificateholders on
such Payment Date;
(v) the amount of the distributions described in (i) or (ii) above
payable pursuant to a claim on the Reserve Fund or from any other source
not constituting Available Funds and the amount remaining in the Reserve
Fund after giving effect to all deposits and withdrawals from the Reserve
Fund on such date;
(vi) the amount of any Special Distribution to be made on such
Payment Date;
(vii) for each Payment Date during the Funding Period, the
remaining Pre-Funded Amount;
(viii) for each Payment Date to and including the Payment Date
immediately following the end of the Funding Period, the Principal Balance
and number of Subsequent Contracts conveyed to the Trust during the related
Due Period;
(ix) the remaining Class A Certificate Balance and Class B
Certificate Balance after giving effect to the distribution of principal
(and Special Distribution, if any) to be made on such Payment Date;
-42-
(x) the Pool Balance as of the close of business on the last day of
the related Due Period;
(xi) the Class A Pool Factor and the Class B Pool Factor immediately
before and immediately after such Payment Date;
(xii) the amount of fees payable out of the Trust, separately
identifying the Monthly Servicing Fee, the Back-up Servicer Fee and the
Trustee Fee;
(xiii) the number and aggregate Principal Balance of Contracts
delinquent 31-59 days, 60-89 days and 90 or more days, computed as of the
end of the related Due Period;
(xiv) the number and aggregate Principal Balance of Contracts that
became Liquidated Contracts during the immediately preceding Due Period,
the amount of liquidation proceeds for such Due Period, the amount of
liquidation expenses being deducted from liquidation proceeds for such Due
Period, and the Net Liquidation Proceeds for such Due Period;
(xv) the Loss Ratio, Average Loss Ratio, Cumulative Loss Ratio,
Default Ratio, Average Default Ratio, Delinquency Ratio and Average
Delinquency Ratio each as of such Payment Date;
(xvi) the number of Contracts and the aggregate Principal Balance
of such Contracts, as of the first day of the Due Period relating to such
Payment Date and as of the end of such Payment Date (after giving effect to
payments received during such Due Period and to any transfers of Subsequent
Contracts to the Trust occurring on or prior to such Payment Date);
(xvii) the aggregate Principal Balance and number of Contracts that
were repurchased by the Seller pursuant to Section 8.06 with respect to the
related Due Period, identifying such Contracts and the Repurchase Price for
such Contracts; and
(xix) such other customary factual information as is available to
the Servicer as the Servicer deems necessary and can reasonably obtain from
its existing data base to enable Certificateholders to prepare their tax
returns.
(b) Within 75 days after the end of each calendar year, the Servicer shall
prepare and the Certificate Registrar shall mail to each Certificateholder of
record at any time during such year a report as to the aggregate amounts
reported pursuant to subsections (a)(i), (ii) and (xii) of this Section 6.06,
attributable to such Certificateholder.
ARTICLE VII
-43-
EVENTS OF TERMINATION; SERVICE TRANSFER
SECTION 7.01. 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 the
Certificates, 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;
(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;
-44-
(f) Any failure by the Servicer to deliver to the Trustee the Monthly
Report pursuant to the terms of this Agreement which remains uncured for
five Business Days after the date which such failure commences;
(g) Any representation, warranty or statement of the Servicer made in
this Agreement, in any Subsequent Transfer Agreement or any certificate,
report or other writing delivered pursuant hereto shall prove to be
incorrect in any material respect as of the time when the same shall have
been made and the incorrectness of such representation, warranty or
statement has a material adverse effect on the Trust and, within 30 days
after written notice thereof shall have been given to the Servicer or the
Trust Depositor by the 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 7.02. SERVICE TRANSFER. (a) If an Event of Termination has
occurred and is continuing, (x) Certificateholders with aggregate Fractional
Interests representing 25% or more of the Trust or (y) the Trustee may, by
written notice delivered to the parties hereto, terminate all (but not less than
all) of the Servicer's management, administrative, servicing, custodial and
collection functions (such termination being herein called a "SERVICE
TRANSFER").
(b) Upon receipt of the notice required by Section 7.02(a) (or, if later,
on a date designated therein), all rights, benefits, fees, indemnities,
authority and power of the Servicer under this Agreement, whether with respect
to the Contracts, the Contract Files or otherwise, shall pass to and be vested
in the Back-up Servicer (the "BACK-UP SERVICER") pursuant to and under this
Section 7.02; and, without limitation, the Back-up 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 Back-up Servicer in
effecting the termination of the responsibilities and rights of the Servicer
hereunder, including, without limitation, the transfer to the Back-up 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 Back-up Servicer all records held by the Servicer relating
to the Contracts in such electronic form as the Back-up 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 Back-up Servicer or its designee, and shall pay the
reasonable transition expenses of the Back-up Servicer. Upon a Service
Transfer, the Back-up Servicer shall also be entitled to receive the Servicing
Fee for performing the obligations of the Servicer (but shall no longer receive
the Back-up Servicer Fee)
-45-
SECTION 7.03. BACK-UP SERVICER TO ACT; APPOINTMENT OF BACK-UP SERVICER.
Subject to Section 5.14 on and after a Service Transfer pursuant to
Section 7.02, the Back-up 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 Back-up Servicer will not
assume any obligations of the Servicer described in Section 8.03 and (ii) the
Back-up 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 Back-up Servicer is
legally unable or unwilling to act as Servicer, Certificateholders with
aggregate Fractional Interests representing 50% or more of the Trust, may
appoint a successor servicer (other than the original Servicer or an Affiliate
of the original Servicer) to act as Servicer. As compensation therefor, the
successor servicer shall be entitled to receive reasonable compensation equal to
the Monthly Servicing Fee. The 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 7.04. NOTIFICATION TO CERTIFICATEHOLDERS. (a) Promptly following
the occurrence of any Event of Termination, the Servicer shall give written
notice thereof to the Trustee, the Trust Depositor, the Back-up Servicer and
each Rating Agency at the addresses described in Section 12.09 hereof and to the
Certificateholders at their respective addresses appearing on the Certificate
Register.
(b) Within 10 days following any termination or appointment of a Back-up
Servicer pursuant to this Article VII, the Trustee shall give written notice
thereof to each Rating Agency and the Trust Depositor at the addresses described
in Section 12.09 hereof, and to the Certificateholders at their respective
addresses appearing on the Certificate Register.
SECTION 7.05. 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 Back-up Servicer appointed pursuant to Section 7.03 shall have all of
such obligations, except that the terminated Servicer will transmit or cause to
be transmitted directly to the Back-up Servicer for its own account, promptly on
receipt and in the same form in which received, any amounts (properly endorsed
where required for the Back-up Servicer to collect them) received as payments
upon or otherwise in connection with the Contracts.
-46-
(b) A Service Transfer shall not affect the rights and duties of the
parties hereunder (including but not limited to the indemnities of the Servicer
and the Seller pursuant to Article X and Section 11.06), other than those
relating to the management, administration, servicing, custody or collection of
the Contracts.
SECTION 7.06. DATABASE FILE. The Servicer will provide the Back-up
Servicer with a magnetic tape containing the database file for each Contract (i)
as of the Cutoff Date, (ii) the Subsequent Cutoff Date, (iii) thereafter, as of
the last day of the preceding Due Period on each Determination Date prior to a
Servicer Termination Event and (iv) on and as of the Business Day before the
actual commencement of servicing functions by the Back-up Servicer following the
occurrence of a Servicer Termination Event.
SECTION 7.07. BACK-UP SERVICER INDEMNIFICATION. The Servicer shall
defend, indemnify and hold the Back-up Servicer and any officers, directors,
employees or agents of the Back-up 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 Back-up Servicer may sustain in
connection with the claims asserted at any time by third parties against the
Back-up Servicer which result from (i) any willful or grossly negligent act
taken or omission by the Servicer or (ii) a breach of any representations of the
Servicer in Section 3.02 hereof. The indemnification provided by this
Section 7.07 shall survive the termination of this Agreement.
SECTION 7.08. RESPONSIBILITIES OF THE BACK-UP SERVICER. The Back-up
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 Back-up Servicer.
The Back-up Servicer will make arrangements with the Servicer for the
prompt and safe transfer of, and the Servicer shall provide to the Back-up
Servicer, all necessary servicing files and records, including (as deemed
necessary by the Back-up Servicer at such time): (i) microfiche loan
documentation, (ii) servicing system tapes, (iii) Contract payment history, (iv)
collections history and (v) the trial balances, as of the close of business on
the day immediately preceding conversion to the Back-up Servicer, reflecting all
applicable loan information.
The Back-up 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 Back-up Servicer acting in accordance with
information prepared or supplied by a Person other than the Back-up Servicer or
the failure of any such Person to prepare or provide such information. The
Back-up 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 Trustee or for any inaccuracy
or omission in a notice or communication received by the Back-up Servicer from
any third party or (ii) which is due to or results from the invalidity,
unenforceability of any
-47-
Contract with applicable law or the breach or the inaccuracy of any
representation or warrant made with respect to any Contract.
ARTICLE VIII
PAYMENTS AND RESERVE FUND
SECTION 8.01. MONTHLY PAYMENTS. (a) Each Certificateholder as of the
related Record Date shall be paid on the next succeeding Payment Date by check
mailed to such Certificateholder at the address for such Certificateholder
appearing on the Certificate Register or by wire transfer if such
Certificateholder provides written instructions to the Trustee at least ten days
prior to such Payment Date.
(b) The Trustee shall serve as the paying agent hereunder (the "PAYING
AGENT") and shall make the payments to the Certificateholders required
hereunder. The Trustee hereby agrees that all amounts held by it for payment
hereunder will be held in trust for the benefit of the Certificateholders.
SECTION 8.02. FEES. The Trustee shall be paid the Trustee's Fee, the
Back-up Servicer shall be paid the Back-up Servicer Fee and the Servicer shall
be paid the Monthly Servicing Fee, each of which shall be paid solely from the
monies and in accordance with the priorities described in Section 8.04(b). No
recourse may be had to the Seller, Trust Depositor, Trustee, Servicer, or any of
their respective Affiliates in the event that amounts available under
Section 8.04(b) are insufficient for payment of the Trustee Fee, the Back-up
Servicer Fee and the Monthly Servicing Fee.
SECTION 8.03. ADVANCES; REALIZATION OF CARRYING CHARGE. (a) On each
Determination Date, the Servicer shall compute the amount of Delinquent
Interest, if any, on the Contracts for the immediately preceding Due Period.
Not later than each Determination Date, the Servicer shall advance (each, an
"ADVANCE") such Delinquent Interest by depositing the aggregate amount of such
Delinquent Interest in the Collection Account, PROVIDED, HOWEVER, that the
Servicer shall be obligated to advance Delinquent Interest only to the extent
that the Servicer, in its sole discretion, expects that such Advance will not
become an Uncollectible Advance. The Servicer shall indicate on each Monthly
Report (i) the amount of Delinquent Interest, if any, on the Contracts for the
related Due Period and (ii) the amount of the Advance, if any, made by the
Servicer in respect of such Delinquent Interest pursuant to this Section 8.03.
If the amount of such Advance is less than the amount of the Delinquent
Interest, the relevant Monthly Report shall be accompanied by a certificate of a
Servicing Officer setting forth in reasonable detail the basis for the
determination by the Servicer that the portion of the Delinquent Interest not
advanced would become an Uncollectible Advance. By each Determination Date, the
Servicer shall determine the amount of prior unreimbursed Advances for which it
desires to be reimbursed pursuant to the provisions of Section 8.03 (such
amount, the "REIMBURSEMENT AMOUNT"). The Servicer shall be entitled to be
reimbursed for any outstanding Advance with respect to a
-48-
Contract by means of a first priority withdrawal from the Collection Account of
such Reimbursement Amount as provided in Section 8.04(b)(i).
(b) The Servicer shall determine no later than 12:00 noon, New York City
time, on the second Business Day prior to a Payment Date the Carrying Charges in
respect of the upcoming Payment Date. To the extent of such amount, the Trustee
shall, pursuant to the Deposit Agreement, make demand upon the Trust Depositor
for payment of the Carrying Charges, to be satisfied from (and solely to the
extent of) the amount then on deposit in the Interest Reserve Account. Such
demand shall be effected by giving the notice to the Collateral Agent described
in Section 3.03 of the Security Agreement. Amounts realized from such demand
shall be deposited immediately into the Collection Account as contemplated in
Section 5.05(b)(vi) hereof.
SECTION 8.04. PAYMENTS. (a) On each Determination Date, the Servicer
shall determine the amount of the Available Funds for the related Payment Date
and shall calculate the Available Interest, the Available Principal, the Class A
Distributable Amount, the Class B Distributable Amount, and all other
distributions to be made on the related Payment Date.
(b) On each Payment Date, the Trustee will, based on the information in
the Monthly Report, distribute as a Special Distribution from the Special
Distribution Subaccount (a) to the Holders of the Class A Certificateholders,
pro rata, in an amount equal to the Class A Percentage multiplied by the amount
in the Special Distribution Subaccount and (b) to the Class B
Certificateholders, pro rata, in an amount equal to the Class B Percentage
multiplied by the amount in the Special Distribution Subaccount, and shall also
distribute the following amounts in the following order of priority:
(i) from Available Funds, the Reimbursement Amount to the Servicer;
(ii) from Available Interest, the Servicing Fee for the related Due
Period to the Servicer;
(iii) from Available Interest, the Trustee's Fee for the related
Due Period to the Trustee;
(iv) from Available Interest, the Back-up Servicer Fee for the
related Due Period to the Back-up Servicer;
(v) to the Class A Certificateholders of record, from Available
Interest, an amount equal to the Class A Interest Distributable Amount for
such Payment Date and, if such Available Interest is insufficient, the
Class A Certificateholders will receive such shortfall first, from the
Class B Percentage of Available Principal and second, if such amounts are
still insufficient, from monies on deposit in the Reserve Fund;
-49-
(vi) to the Class B Certificateholders of record, from Available
Interest, an amount equal to the Class B Interest Distributable Amount for
such Payment Date and, if such Available Interest is insufficient, the
Class B Certificateholders will receive such shortfall from monies on
deposit in the Reserve Fund;
(vii) to the Class A Certificateholders of record, from Available
Principal, an amount equal to the Class A Principal Distributable Amount
for such Payment Date and, if such Available Principal is insufficient, the
Class A Certificateholders will receive such shortfall first, from
Available Interest, and second, if such amounts are still insufficient,
from monies on deposit in the Reserve Fund;
(viii) to the Class B Certificateholders of record, from Available
Principal, an amount equal to the Class B Principal Distributable Amount
for such Payment Date and, if such Available Principal is insufficient, the
Class B Certificateholders will receive such shortfall first, from
Available Interest, and second, if such amounts are still insufficient,
from monies on deposit in the Reserve Fund; and
(ix) any remaining Available Funds after the payments described in
clauses (i) through (viii) above shall be paid to the Reserve Agent for
deposit in the Reserve Fund.
Any monies intended for the payment of Class A Distributable Amounts or
Class B Distributable Amounts but which remain unclaimed by Certificateholders
for a period of two years after the Final Scheduled Payment Date shall, upon the
written request of the Trust Depositor, be paid to the Trust Depositor, and such
Certificateholders shall thereafter look only to the Trust Depositor for
payment, and then only to the extent of the amounts so received without interest
thereon; PROVIDED, HOWEVER, that within thirty days prior to the expiration of
the two-year period mentioned above, the Trustee, before being required to make
any such repayment, may, at the expense of the Trust Depositor, cause to be
published in a financial journal a notice that after a date named xxxxxxx said
monies will be returned to the Trust Depositor.
SECTION 8.05. WITHDRAWAL FROM RESERVE FUND TO COVER A SHORTFALL. The
Trustee shall determine no later than 10:00 a.m., Chicago, Illinois time, on the
Payment Date (but after making, and taking into account, the determination,
demand and transfer of funds contemplated in Section 8.03(b) above) whether
there exists a Shortfall with respect to the upcoming Payment Date. In the
event that the Trustee determines that there exists a Shortfall, the Trustee
shall furnish to the Reserve Agent no later than 12:00 noon, Chicago, Illinois
time, on such Payment Date a written notice specifying the Shortfall for such
Payment Date and directing the Reserve Agent to remit monies in respect of such
Shortfall (to the extent of funds available to be so distributed pursuant to the
Reserve Fund Agreement) to the Trustee for deposit in the Collection
-50-
Account. Upon receipt of any such funds the Trustee shall deposit such amounts
into the Collection Account.
SECTION 8.06. REPURCHASES OF CONTRACTS FOR BREACH OF REPRESENTATIONS AND
WARRANTIES. Upon a discovery by the Servicer, the Trust Depositor or the
Trustee of a breach of a representation or warranty of the Seller as set forth
in EXHIBIT K hereto or as made in any Subsequent Purchase Agreement relating to
Subsequent Contracts that materially adversely affects the Trust's interest in
such Contract (without regard to the benefits of the Reserve Fund), the party
discovering the breach shall give prompt written notice to the other parties
PROVIDED, that the Trustee shall have no duty or obligation to inquire or to
investigate the breach by the Seller of any of such representations or
warranties. The Seller, as provided in the Transfer and Sale Agreement and in
accordance with this Section 8.06, shall repurchase a Contract at its Repurchase
Price, two Business Days prior to the first Determination Date after the Seller
becomes aware, or should have become aware, or receives written notice from the
Trustee, the Servicer or the Trust Depositor of any breach of a representation
or warranty of the Seller set forth in Article III of the Transfer and Sale
Agreement that materially adversely affects such Contract or the Trust's
interest in such Contract and which breach has not been cured; PROVIDED,
HOWEVER, that with respect to any Contract incorrectly described on the List of
Contracts with respect to unpaid Principal Balance which the Seller would
otherwise be required to repurchase under the Transfer and Sale Agreement, the
Seller may, in lieu of repurchasing such Contract, deposit in the Collection
Account not later than one Business Day after such Determination Date cash in an
amount sufficient to cure such deficiency or discrepancy, and PROVIDED FURTHER
that with respect to a breach of representation or warranty relating to the
Contracts in the aggregate and not to any particular Contract the Seller may
select Contracts (without adverse selection) to repurchase such that had such
Contracts not been included as part of the Trust Corpus there would have been no
breach of such representation or warranty; PROVIDED FURTHER that (a) the failure
of a Contract File to be complete or of the original certificate of title and
evidence of recordation of such certificate to be included in the Contract File
as of 180 days after the Closing Date (or Subsequent Transfer Date, in the case
of Subsequent Contracts) or (b) the failure to maintain perfection of the
security interest in the Motorcycle securing a Contract in accordance with
Section 5.09, shall be deemed to be a breach materially and adversely affecting
the Trust's interest in the Contract or in the related Contracts.
Notwithstanding any other provision of this Agreement, the obligation of the
Seller under the Transfer and Sale Agreement and described in this Section 8.06
shall not terminate or be deemed released by any party hereto upon a Service
Transfer pursuant to Article VII. The repurchase obligation described in this
Section 8.06 is in no way to be satisfied with monies in the Reserve Fund.
SECTION 8.07. REASSIGNMENT OF REPURCHASED CONTRACTS. Upon receipt by the
Trustee for deposit in the Collection Account of the Repurchase Price as
described in Section 8.06 or Section 8.08, and upon receipt of a certificate of
a Servicing Officer in the form attached hereto as EXHIBIT G, the Trustee shall
assign to the Seller all of the Trust's right, title and interest in the
-51-
repurchased Contract without recourse, representation or warranty, except as to
the absence of liens, charges or encumbrances created by or arising as a result
of actions of the Trustee.
SECTION 8.08. SELLER'S REPURCHASE OPTION. As provided in the Transfer and
Sale Agreement, on written notice to the Trustee at least 20 days prior to a
Payment Date, and provided that aggregate of the Class A Certificate Balance and
Class B Certificate Balance is then less than 10% of the Class A Initial
Certificate Balance and Class B Initial Certificate Balance, and provided a
valuation letter is delivered as required in Section 5.02 of the Transfer and
Sale Agreement, the Seller may (but is not required to) repurchase on that
Payment Date all outstanding Contracts at a price equal to the aggregate of the
Class A and Class B Certificate Balance on the previous Payment Date plus the
aggregate of the Class A Interest Distributable Amount and the Class B Interest
Distributable Amount for the current Payment Date thereon, the Reimbursement
Amount (if any) as well as accrued and unpaid Monthly Servicing Fees, Back-up
Servicing Fees and Trustee Fees to the date of such repurchase. Such price is
to be deposited in the Collection Account one Business Day before such Payment
Date, against the Trustee's release of the Contracts and the Contract Files to
the Seller in the manner described in Section 8.07 above.
ARTICLE IX
THE CERTIFICATES
SECTION 9.01. THE CERTIFICATES. The Certificates shall be substantially
in the form of EXHIBIT A. Certificates shall be issued in denominations of
$[____] and any integral multiple of $1,000 in excess thereof, except that one
Certificate may be issued in a denomination representing the remainder of the
Class A Initial Certificate Balance and the remainder of the Class B Initial
Certificate Balance. Each Certificate shall be executed by the Trustee on
behalf of the Trust by the manual signature of a duly authorized Responsible
Officer or authorized signatory of the Trustee. Certificates bearing the
signatures of individuals who were at any time the proper officers or authorized
signatories of the Trustee shall bind the Trust, notwithstanding that such
individuals or any of them have ceased to hold such offices or positions prior
to the delivery of such Certificates or did not hold such offices or positions
at the date of such Certificates. All Certificates shall be dated the date of
their execution.
SECTION 9.02. REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES.
(a) The Trustee shall keep at the office or agency to be maintained by it in
accordance with Section 12.03 a "Certificate Register" in which the Trustee
shall provide for the registration of Certificates and of transfers and
exchanges of Certificates as herein provided. The Trustee initially appoints
itself to be the "Certificate Registrar" and transfer agent for the purpose of
registering Certificates and transfers and exchanges of Certificates as provided
herein. The Trustee will give prompt written notice to Certificateholders and
the Servicer of any change in the Certificate Registrar.
-52-
(b) (1) No transfer of a Certificate shall be made by the Trust Depositor
or any other Person unless such transfer is exempt from the registration
requirements of the Securities Act of 1933 (the "ACT"), as amended, and any
applicable state securities laws or is made in accordance with the Act and laws.
Except in the case of a transfer permitted by clause (2) below, in the event
that any such transfer is to be made, (A) the Trustee may require a written
opinion of counsel acceptable to, and in form and substance satisfactory to, the
Trustee that such transfer may be made pursuant to, an exemption, describing the
applicable exemption and the basis therefor, from the Act and any applicable
state securities laws or is being made pursuant to the Act and any applicable
state securities laws, which opinion of counsel shall not be an expense of the
Trustee or the Trust Depositor, and (B) the Trustee shall require the transferee
to execute an investment letter substantially in the form of EXHIBIT H-1
attached hereto, which investment letter shall not be an expense of the Trustee
or the Trust Depositor. Except as provided in clause (2) below, any transfer,
sale or other disposition not in compliance with the provisions of this
Section 9.02(b)(1) shall be deemed to be void and of no legal force or effect
whatsoever and such transferee shall be deemed to not be the Certificateholder
for any purpose hereunder, including, but not limited to, the receipt of
distributions on the Certificate, and shall be deemed to have no interest
whatsoever in the Certificate. The Certificateholder desiring to effect such
transfer shall, and does hereby agree to, indemnify the Trustee, the Trust
Depositor, and the Certificate Registrar against any liability that may result
if the transfer is not so exempt or is not made in accordance with such federal
and state laws.
(2) Except in the case of a transfer permitted by clause (1) above, no
transfer of a Certificate shall be made by any Person other than the Trust
Depositor unless the prospective transferee of a Certificate provides the
Trustee and the Trust Depositor with an investment letter substantially in the
form of EXHIBIT H-2 attached hereto, which investment letter shall not be an
expense of the Trustee or the Trust Depositor, and which investment letter
states that, among other things, such transferee (A) is a "qualified
institutional buyer" as defined under Rule 144A of the Act, acting for its own
account or the accounts of other "qualified institutional buyers" as defined
under Rule 144A, and (B) is aware that the proposed transferor intends to rely
on the exemption from registration requirements under the Act provided by
Rule 144A. Except in the case of a transfer permitted by clause (1) above, any
transfer, sale or other disposition not in compliance with the provisions of
this Section 9.02(b)(2) shall be deemed to be void and of no legal force or
effect whatsoever and such transferee shall be deemed to not be the
Certificateholder for any purpose hereunder, including, but not limited to, the
receipt of distributions on the Certificate, and shall be deemed to have no
interest whatsoever in the Certificate. Any Certificateholder desiring to
effect such transfer does hereby agree to indemnify the Trustee, the Trust
Depositor and the Certificate Registrar against any liability that may result if
the transfer is not made in accordance with Rule 144A.
(c) At the option of a Certificateholder, Certificates may be exchanged
for other Certificates of authorized denominations of a like aggregate original
denomination, upon surrender of the Certificates to be exchanged at the office
of the Trustee referred to in Subsection
-53-
(a) above. Whenever any Certificates are so surrendered for exchange, the
Trustee shall execute and deliver the Certificates which the Certificateholder
making the exchange is entitled to receive. Every Certificate presented or
surrendered for transfer or exchange shall be duly endorsed by, or shall be
accompanied by a written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by, the holder thereof or
his or her attorney duly authorized in writing.
(d) The Trust Depositor and the Trustee, on behalf of the Trust, shall
provide to any Certificateholder or any Person designated by such
Certificateholder such financial or other information as such Certificateholder
may reasonably determine is required to permit such Certificateholder to comply
with the requirements of Rule 144A of the Act in connection with the resale of
the Certificates.
SECTION 9.03. NO CHARGE; DISPOSITION OF VOID CERTIFICATES. No service
charge shall be made to a Certificateholder for any transfer or exchange of
Certificates, but the Certificate Registrar or the Trustee may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of Certificates. All
Certificates surrendered for transfer and exchange shall be disposed of in a
manner approved by the Trustee.
SECTION 9.04. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES. If (a)
any mutilated Certificate is surrendered to the Certificate Registrar, or the
Certificate Registrar receives evidence to its satisfaction of the destruction,
loss or theft of any Certificate, and (b) the Certificateholder delivers to the
Certificate Registrar, the Trust Depositor and the Trustee (at the expense of
the Certificateholder) such security or indemnity as may be required by each to
save it harmless, then in the absence of notice to the Certificate Registrar or
the Trustee that such Certificate has been acquired by a bona fide purchaser,
the Trustee shall execute and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
tenor and original denomination. Upon the issuance of any new Certificate under
this Section 9.04, the Trustee may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto. Any duplicate Certificate issued pursuant to this Section 9.04 shall
constitute complete and indefeasible evidence of ownership of the related
Fractional Interest, as if originally issued, whether or not the mutilated,
destroyed, lost or stolen Certificate shall be found at any later time.
SECTION 9.05. PERSONS DEEMED OWNERS. Prior to due presentation of a
Certificate for registration of transfer, the Trustee and the Certificate
Registrar may treat the person in whose name any Certificate is registered on
the Certificate Register as the owner of such Certificate for the purpose of
receiving remittances pursuant to Section 8.01 and for all other purposes
whatsoever, and none of the Trustee, the Certificate Registrar, the Paying Agent
or any agent of the Trustee, the Paying Agent, or the Certificate Registrar
shall be affected by notice to the contrary.
-54-
SECTION 9.06. ACCESS TO LIST OF CERTIFICATEHOLDERS' NAMES AND ADDRESSES.
The Certificate Registrar will furnish to the Trustee, the Trust Depositor, the
Back-up Servicer and the Servicer, within five days after receipt by the
Certificate Registrar of a request therefor from the Trustee or the
Certificateholder in writing, a list, in such form as the Trustee may reasonably
require, of the names and addresses of the Certificateholders as of the most
recent Record Date. If Class A Certificateholders or Class B Certificateholders
with aggregate Fractional Interests representing 25% or more of the Class A
Certificate Balance or Class B Certificate Balance, respectively, (hereinafter
referred to as "APPLICANTS") apply in writing to the Trustee, and such
application states that the Applicants desire to communicate with other
Certificateholders with respect to their rights under this Agreement or under
the Certificates and is accompanied by a copy of the communication which such
Applicants propose to transmit, then the Trustee shall, within five Business
Days after the receipt of such application, afford such Applicants access during
normal business hours to the most recent list of Certificateholders held by the
Trustee. If such list is as of a date more than 90 days prior to the date of
receipt of such Applicants' request, the Trustee shall promptly request from the
Certificate Registrar a current list as provided above, and shall afford such
Applicants access to such list promptly upon receipt. Every Certificateholder,
by receiving and holding a Certificate, agrees with the Certificate Registrar
and the Trustee that none of the Trust Depositor, the Certificate Registrar or
the Trustee shall be held accountable by reason of the disclosure of any such
information as to the names and addresses of the Certificateholders hereunder,
regardless of the source from which such information was derived.
SECTION 9.07. AUTHENTICATING AGENTS. By written instrument, the Trustee
may appoint one or more Authenticating Agents (each, an "AUTHENTICATING AGENT")
with power to act on its behalf and subject to its direction in the execution
and delivery of the Certificates. For all purposes of this Agreement, the
execution and delivery of Certificates by an Authenticating Agent pursuant to
this Section 9.07 shall be deemed to be the execution and delivery of
Certificates "by the Trustee."
ARTICLE X
INDEMNITIES
SECTION 10.01. SERVICER INDEMNIFICATION. The Servicer agrees to defend
and indemnify the Trust, the Trustee, the Back-up Servicer, the Paying Agent,
the Certificateholders and any agents of the Trustee, and the
Certificateholders against any and all costs, expenses, losses, damages, claims
and liabilities, and shall also assume the obligations of the Trust Depositor to
pay expenses and costs incurred pursuant to the terms of the Security Agreement
(which expenses and costs shall not be borne by the Collateral as defined
therein), including reasonable fees and expenses of counsel and expenses of
litigation arising out of or resulting from this Agreement or any of the related
Transaction Documents, or the use, ownership or operation of any Motorcycle by
the Servicer or any Affiliate of the Servicer. Notwithstanding any other
-55-
provision of this Agreement, the obligation of the Servicer described in this
Section 10.01 shall not terminate or be deemed released upon a Service Transfer
pursuant to Article VII and shall survive any termination of this Agreement.
SECTION 10.02. LIABILITIES TO OBLIGORS. No obligation or liability to any
Obligor under any of the Contracts is intended to be assumed by the Trust or the
Certificateholders under or as a result of this Agreement and the transactions
contemplated hereby and, to the maximum extent permitted and valid under
mandatory provisions of law, the Trust and the Certificateholders expressly
disclaim any such assumption.
SECTION 10.03. TAX INDEMNIFICATION. As provided in the Transfer and Sale
Agreement, the Seller has agreed to pay, and to indemnify, defend and hold
harmless the Trust, the Trustee and the Certificateholders from, any taxes which
may at any time be asserted with respect to, and as of the date of, the transfer
of the Contracts to the Trust, including, without limitation, any sales, gross
receipts, general corporation, personal property, privilege or license taxes
(but not including any federal, state or other taxes arising out of the creation
of the Trust and the issuance of the Certificates) and costs, expenses and
reasonable counsel fees in defending against the same, whether arising by reason
of the acts to be performed by the Trust Depositor, the Seller or the original
Servicer under this Agreement or imposed against the Trust, a Certificateholder
or otherwise. Notwithstanding any other provision of this Agreement, the
obligation of the Seller described in this Section 10.03 shall not terminate or
be deemed released upon a Service Transfer pursuant to Article VII and shall
survive any termination of this Agreement.
SECTION 10.04. SERVICER'S INDEMNITIES. The Servicer shall defend and
indemnify the Trust, the Trustee and the Certificateholders against any and all
costs, expenses, losses, damages, claims and liabilities, including reasonable
fees and expenses of counsel and expenses of litigation, in respect of any
action taken by such Servicer with respect to any Contract. This indemnity
shall survive any Service Transfer (but the original Servicer's obligations
under this Section 10.04 shall not relate to any actions of any subsequent
Servicer after a Service Transfer) and any payment of the amount owing under, or
any repurchase by the Seller of, any such Contract and shall survive any
termination of this Agreement.
SECTION 10.05. OPERATION OF INDEMNITIES. Indemnification under this
Article X shall include, without limitation, reasonable fees and expenses of
counsel and expenses of litigation. If the Servicer has made any indemnity
payments to the Trustee pursuant to this Article X and the Trustee thereafter
collects any of such amounts from others, the Trust will repay such amounts
collected to the Servicer, without interest.
-56-
ARTICLE XI
THE TRUSTEE
SECTION 11.01. DUTIES OF TRUSTEE. The Trustee, prior to the occurrence of
an Event of Termination and after the curing of all Events of Termination which
may have occurred, undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement. If an Event of Termination has
occurred (which has not been cured), the Trustee shall exercise such of the
rights and powers vested in it by this Agreement, and use the same degree of
care and skill in their exercise, as a prudent person would exercise or use
under the circumstances in the conduct of his own affairs.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform as to form to the requirements of this Agreement and shall promptly
notify the Servicer, the Back-up Servicer and each Certificateholder of any
failure of any of the foregoing to so conform.
Subject to Section 11.03, no provision of this Agreement shall be construed
to relieve the Trustee from liability for its own negligent action, its own
negligent failure to act (including actions or omissions within its control
resulting in the failure of Certificateholders to receive timely payment of
either the Class A Distributable Amount or the Class B Distributable Amount) or
its own misconduct; PROVIDED, HOWEVER, that:
(a) Prior to the occurrence of an Event of Termination, and after the
curing of all such Events of Termination which may have occurred, the
duties and obligations of the Trustee shall be determined solely by the
express provisions of this Agreement, the Trustee shall not be liable
except for the performance of such duties and obligations as are
specifically set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the Trustee and, in
the absence of bad faith on the part of the Trustee, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon any certificates or opinions furnished
to the Trustee and conforming to the requirements of this Agreement;
(b) The Trustee shall not be liable for an error of judgment made in
good faith by a Responsible Officer of the Trustee, unless it shall be
proved that the Trustee was negligent in ascertaining the pertinent facts;
(c) The Trustee shall not be personally liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in
accordance with the direction of Certificateholders with aggregate
Fractional Interests representing 25% or more of the Trust relating to the
time, method and place of conducting any proceeding for any remedy
-57-
available to the Trustee, or exercising any trust or power conferred upon
the Trustee, under this Agreement; and
(d) The Trustee shall not be charged with knowledge of any event
referred to in Section 7.01 unless a Responsible Officer of the Trustee at
the Corporate Trust Office obtains actual knowledge of such event or the
Trustee receives written notice of such event from the Seller, the Trust
Depositor, the Servicer, the Back-up Servicer or the Certificateholders
with aggregate Fractional Interests representing 25% or more of the Trust.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it,
PROVIDED, HOWEVER, that nothing contained herein shall relieve the Trustee of
the obligations, upon the occurrence of an Event of Termination (which has not
been cured), to exercise such of the rights and powers vested in it by this
Agreement, and to use the same degree of care and skill in their exercise as a
prudent person would exercise or use under the circumstances in the conduct of
his own affairs.
None of the provisions contained in this Agreement shall in any event
require the Trustee to perform, or be responsible for the manner of performance
of, any of the obligations of the Seller, the Trust Depositor or the Servicer
under this Agreement.
Without limiting the generality of this Section 11.01, the Trustee shall
have no duty (i) to see to any recording, filing or depositing of this Agreement
or any agreement referred to herein or any financing statement evidencing a
security interest in the Motorcycles or to see to the maintenance of any such
recording or filing or depositing or to any re-recording, refiling or
redepositing of any thereof, (ii) to see to any insurance of the Motorcycles or
Obligors or to effect or maintain any such insurance, (iii) to see to the
payment or discharge of any tax, assessment or other governmental charge or any
lien or encumbrance of any kind owing with respect to, assessed or levied
against any part of the Trust, (iv) to confirm or verify the contents of any
reports or certificates delivered to the Trustee pursuant to this Agreement
believed by the Trustee to be genuine and to have been signed or presented by
the proper party or parties, or (v) to inspect the Motorcycles at any time or
ascertain or inquire as to the performance or observance of any of the Seller's
or the Servicer's representations, warranties or covenants or the Servicer's
duties and obligations as Servicer and as custodian of the Contract Files under
this Agreement.
SECTION 11.02. CERTAIN MATTERS AFFECTING THE TRUSTEE. Except as otherwise
provided in Section 11.01 and provided the Paying Agent shall also benefit from
the provisions of this Section 11.02:
-58-
(a) The Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, Officer's Certificate, certificate of a
Servicing Officer, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal, bond or
other paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) The Trustee may consult with counsel and any opinion of any counsel
for the Seller, the Trust Depositor or the Servicer shall be full and complete
authorization and protection in respect of any action taken or suffered or
omitted by the Trustee hereunder in good faith and in accordance with such
opinion of counsel;
(c) The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Agreement, or to institute, conduct or defend any
litigation hereunder or in relation hereto, at the request, order or direction
of any of the Certificateholders, pursuant to the provisions of this Agreement,
unless such Certificateholders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities which may be
incurred therein or thereby; PROVIDED, HOWEVER, that nothing contained herein
shall relieve the Trustee of the obligations, upon the occurrence of an Event of
Termination (which has not been cured), to exercise such of the rights and
powers vested in it by this Agreement, and to use the same degree of care and
skill in their exercise as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs;
(d) Prior to the occurrence of an Event of Termination and after the
curing of all Events of Termination which may have occurred, the Trustee shall
not be bound to make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, approval, bond or other paper or document, unless
requested in writing so to do by Certificateholders with aggregate Fractional
Interests representing 25% or more of the Trust; PROVIDED, HOWEVER, that if the
payment within a reasonable time to the Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such investigation is,
in the opinion of the Trustee, not reasonably assured to the Trustee by the
security afforded to it by the terms of this Agreement, the Trustee may require
reasonable indemnity against such cost, expense or liability as a condition to
so proceeding. The reasonable expense of every such examination shall be paid
by the Servicer or, if paid by the Trustee, shall be reimbursed by the Servicer
upon demand; and
(e) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys or co-trustees or a custodian and shall not be liable for any acts or
omissions of such agents, attorneys or co-trustees or custodians if appointed by
it with due care hereunder; PROVIDED, HOWEVER, if the Servicer is acting as
custodian, the Servicer is deemed by all parties to have been appointed with due
care.
-59-
SECTION 11.03. TRUSTEE NOT LIABLE FOR CERTIFICATES OR CONTRACTS. The
Trustee assumes no responsibility for the correctness of the recitals contained
herein or in the Certificates (other than the Trustee's execution thereof). The
Trustee makes no representations as to the validity or sufficiency of this
Agreement, the Trust or of the Certificates (other than its execution thereof)
or of any Contract, Contract File or related document. The Trustee shall not be
accountable for the use or application by the Servicer or the Trust Depositor of
funds paid to the Trust Depositor in consideration of conveyance of the
Contracts to the Trust by the Trust Depositor or deposited in or withdrawn from
the Collection Account by the Servicer.
SECTION 11.04. TRUSTEE MAY OWN CERTIFICATES. The Trustee in its
individual or other capacity may become the owner or pledgee of Certificates
representing less than all the beneficial interest in the Trust with the same
rights as it would have if it were not Trustee.
SECTION 11.05. RIGHTS TO DIRECT TRUSTEE AND TO WAIVE EVENTS OF
TERMINATION. Certificateholders with aggregate Fractional Interests
representing 25% or more of the Trust shall have the right to direct the time,
method, and place of conducting any proceeding for any remedy available to the
Trustee under this Agreement or any Transaction Document assigned to the
Trustee, or exercising any trust or power conferred on the Trustee under this
Agreement or any Transaction Document assigned to the Trustee; PROVIDED,
HOWEVER, that, subject to Section 11.01, the Trustee shall have the right to
decline to follow any such direction if the Trustee being advised by counsel
determines that the action so directed may not lawfully be taken, or if the
Trustee in good faith shall, by a Responsible Officer or Responsible Officers of
the Trustee, determine that the proceedings so directed would be illegal or
involve the Trustee in personal liability or (in the case of directions by the
Certificateholders) be unduly prejudicial to the rights of Certificateholders
not parties to such direction; and PROVIDED FURTHER that nothing in this
Agreement shall impair the right of the Trustee to take any action deemed proper
by the Trustee and which is not inconsistent with such direction by the
Certificateholders. Certificateholders with aggregate Fractional Interests
representing 51% or more of the Trust may waive any past Event of Termination
hereunder and its consequences, and upon any such waiver, such Event of
Termination shall cease to exist and shall be deemed to have been cured for
every purpose of this Agreement; but no such waiver shall extend to any
subsequent or other Event of Termination or impair any right consequent thereon.
The Trustee shall have no liability for acting upon the direction of the
Certificateholders.
SECTION 11.06. THE SERVICER TO PAY TRUSTEE'S EXPENSES. The Servicer
agrees to indemnify the Trustee for, and to hold it harmless against, any loss,
liability or expense incurred without negligence or bad faith on the Trustee's
part, arising out of or in connection with the acceptance or administration of
this trust and its duties hereunder, including the costs and expenses of
defending itself against any claim or liability in connection with the exercise
or performance of any of its powers or duties hereunder.
-60-
This Section 11.06 shall be for the benefit of the Trustee in its
capacities as Trustee, Paying Agent, and Certificate Registrar hereunder, and
shall not terminate or be deemed released upon a Service Transfer pursuant to
Article VII and shall survive the termination of this Agreement.
SECTION 11.07. ELIGIBILITY REQUIREMENTS FOR TRUSTEE. The Trustee
hereunder shall at all times be a financial institution organized and doing
business under the laws of the United States of America or any state, authorized
under such laws to exercise corporate trust powers, whose long term Unsecured
debt is rated at least Baa3 by Moody's and shall have a combined capital and
surplus of at least $50,000,000 or shall be a member of a bank holding system
the aggregate combined capital and surplus of which is $50,000,000 and subject
to supervision or examination by Federal or state authority, PROVIDED that the
Trustee's separate capital and surplus shall at all times be at least the amount
required by Section 310(a)(2) of the Trust Indenture Act of 1939, as amended.
If such Person publishes reports of condition at least annually, pursuant to law
or to the requirements of a supervising or examining authority, then for the
purposes of this Section 11.07, the combined capital and surplus of such Person
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. In case at any time the Trustee shall
cease to be eligible in accordance with the provisions of this Section 11.07,
the Trustee shall resign immediately in the manner and with the effect specified
in Section 11.08.
SECTION 11.08. RESIGNATION OR REMOVAL OF TRUSTEE. The Trustee may at any
time resign and be discharged from the trusts hereby created by giving written
notice thereof to the Servicer with a copy to the Trust Depositor, the Seller,
and the Certificateholders. Upon receiving such notice of resignation, the
Servicer shall promptly appoint a successor Trustee by written instrument, in
duplicate, one copy of which instrument shall be delivered to each of the Trust
Depositor, the Seller, and the Certificateholders and one copy to the successor
Trustee. If no successor Trustee shall have been so appointed and shall have
accepted such appointment within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
If at any time the Trustee shall cease to be eligible in accordance with
the provisions of Section 11.07 and shall fail to resign after written request
therefor by the Servicer, or if at any time the Trustee shall be legally unable
to act, or shall be adjudged a bankrupt or insolvent, or a receiver of the
Trustee or of its property shall be appointed, or any public officer shall take
charge or control of the Trustee or of its property or affairs for the purpose
of rehabilitation, conservation or liquidation, then the Servicer may remove the
Trustee. If the Servicer shall have removed the Trustee under the authority of
the immediately preceding sentence, the Servicer shall promptly appoint a
successor Trustee by written instrument one copy of which instrument shall be
delivered to the Trustee so removed, the Trust Depositor, the Back-up Servicer
and the Seller and one copy to the successor trustee.
-61-
Any resignation or removal of the Trustee and appointment of a successor
Trustee pursuant to any of the provisions of this Section 11.08 shall not become
effective until acceptance of appointment by the successor Trustee as provided
in Section 11.09.
Any resigning or removed Trustee shall be entitled to payment of all
Trustee's Fees earned and reimbursement for all expenses incurred by it up to
the date of resignation. All indemnification obligations of the Servicer and
the Seller shall survive such resignation or removal.
SECTION 11.09. SUCCESSOR TRUSTEE. Any successor Trustee appointed as
provided in Section 11.08 shall execute, acknowledge and deliver to the
Servicer, the Back-up Servicer, the Trust Depositor and to its predecessor
Trustee, with a copy to the Certificateholders, an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor Trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become fully vested with all the
rights, powers, duties and obligations of its predecessor hereunder, with like
effect as if originally named as Trustee. The predecessor Trustee shall deliver
or cause to be delivered to the successor Trustee the Contracts and the Contract
Files (if any such Contracts and Contract Files are in the Trustee's possession)
and any related documents and statements held by it hereunder; and, if the
Contracts are then held by a custodian pursuant to a custodial agreement, the
predecessor Trustee and the custodian shall amend such custodial agreement to
make the successor Trustee the successor to the predecessor Trustee thereunder;
and the Servicer, the Back-up Servicer, the Trust Depositor and the predecessor
Trustee shall execute and deliver such instruments and do such other things as
may reasonably be required for fully and certainly vesting and confirming in the
successor Trustee all such rights, powers, duties and obligations.
No successor Trustee shall accept appointment as provided in this
Section 11.09 unless at the time of such acceptance such successor Trustee shall
be eligible under the provisions of Section 11.07.
Upon acceptance of appointment by a successor Trustee as provided in this
Section 11.09, the Servicer shall cause notice of the succession of such Trustee
hereunder to be mailed to each Rating Agency and to each Certificateholder at
their addresses as shown in the Certificate Register. If the Servicer fails to
mail such notice within ten days after acceptance of appointment by the
successor Trustee, the successor Trustee shall cause such notice to be mailed at
the expense of the Servicer.
SECTION 11.10. MERGER OR CONSOLIDATION OF TRUSTEE. Any Person into which
the Trustee may be merged or converted or with which it may be consolidated, or
any Person resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any Person succeeding to the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such Person shall be eligible under the provisions of Section 11.07,
without
-62-
the execution or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding.
Upon such occasion, the Servicer shall cause notice thereof to be mailed to each
Rating Agency and each Certificateholder. If the Servicer fails to mail such
notice within ten days after such succession, the successor Trustee shall cause
such notice to be mailed at the expense of the Servicer with a copy to each
Certificateholder.
SECTION 11.11. TAX RETURNS.
(a) The Servicer, on behalf of the Trust, shall request that the Trustee
furnish the Servicer with all such information in the Trustee's possession as
may be reasonably required in connection with the preparation of all tax returns
of the Trust and the Trustee shall, upon such request, furnish such information
and execute such returns; and
(b) As directed by the Servicer in writing, the Trustee shall take all
action specified in such writing relating to (i) certain withholding
requirements applicable to non-U.S. persons; (ii) backup withholding
requirements; and (iii) certain taxpayer certification requirements relating to
clauses (i) and (ii) above.
SECTION 11.12. OBLIGOR CLAIMS. In connection with any offset defenses, or
affirmative claims for recovery, asserted in legal actions brought by Obligors
under one or more Contracts based upon provisions therein complying with, or
upon other rights or remedies arising from, any legal requirements applicable to
the Contracts, including, without limitation, the Federal Trade Commission's
Trade Regulation Rule Concerning Preservation of Consumers' Claims and Defenses
(16 C.F.R. Section 433) as amended from time to time:
(a) The Trustee is not, and shall not be deemed to be, either in any
individual capacity, as trustee hereunder or otherwise, a creditor, or a
joint venturer with or an Affiliate of, or acting in concert or cooperation
with, any seller of Motorcycles, in the arrangement, origination or making
of Contracts. The Trustee is the holder of the Contracts only as trustee
on behalf of the Certificateholders, and not as a principal or in any
individual or personal capacity;
(b) The Trustee shall not be personally liable for or obligated to
pay Obligors any affirmative claims asserted thereby, or responsible to
Certificateholders for any offset defense amounts applied against Contract
payments pursuant to such legal actions;
(c) The Trustee will pay, solely from available Trust monies,
affirmative claims for recovery by Obligors only pursuant to final judicial
orders or judgments, or judicially approved settlement agreements,
resulting from such legal actions; and
(d) The Servicer has agreed to indemnify, hold harmless and defend
the Trustee and Certificateholders from and against any and all liability,
loss, costs and
-63-
expenses of the Trustee and Certificateholders resulting from any
affirmative claims for recovery asserted or collected by Obligors under
the Contracts. Notwithstanding any other provision of this Agreement,
the obligation of the Servicer described in this Section 11.12(d) shall
not terminate or be deemed released upon a Service Transfer pursuant to
Article VII and shall survive termination of this Agreement.
SECTION 11.13 APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.
Notwithstanding any other provisions hereof, at any time, for the purpose of
meeting any legal requirements of any jurisdiction having authority over the
Trust, the Contracts or the Obligors, the Servicer and Trustee acting jointly
shall have the power and shall execute and deliver all instruments to appoint
one or more Persons approved by the Trustee to act as co-trustee or co-trustees,
jointly with the Trustee, or separate trustee or separate trustees, of all or
any part of the Trust, and to vest in such Person or Persons, in such capacity,
such title to the Trust, or any part thereof, and, subject to the other
provisions of this Section 11.13, such powers, duties, obligations, rights and
trusts as the Servicer and the Trustee may consider necessary or desirable. If
the Servicer shall not have joined in such appointment within 15 days after the
receipt by it of a request to do so, or in case an Event of Termination shall
have occurred and be continuing, the Trustee alone shall have the power to make
such appointment. No co-trustee or separate trustee hereunder shall be required
to meet the terms of eligibility as a successor trustee under Section 11.07
hereunder and no notice to Certificateholders of the appointment of
co-trustee(s) or separate trustee(s) shall be required under Section 11.09
hereof; PROVIDED, HOWEVER, that notice of appointment of any co-trustee or
separate trustee shall be provided to Moody's, and any co-trustee or separate
trustee shall have a long-term debt rating from Moody's of Baa3 or higher.
In the case of any appointment of a co-trustee or separate trustee pursuant
to this Section 11.13, all rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and exercised or
performed by the Trustee and such co-trustee or separate trustee jointly, except
to the extent that under any law of any jurisdiction in which any particular act
or acts are to be performed (whether as Trustee hereunder or as successor to the
Servicer hereunder), the Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Trust or any portion thereof in any such
jurisdiction) shall be exercised and performed by such co-trustee or separate
trustee at the direction of the Trustee.
Any notice, request or other writing given to the Trustee shall be deemed
to have been given to each of the then co-trustees and separate trustees, as
effectively as if given to each of them. Every instrument appointing any
co-trustee or separate trustee shall refer to this Agreement and the conditions
of this Article XI. Each co-trustee and separate trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of
-64-
this Agreement relating to the conduct of, affecting the liability of, or
affording protection to, the Trustee. Every such instrument shall be filed with
the Trustee.
Any co-trustee or separate trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any co-trustee or separate trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
SECTION 11.14 REPRESENTATIONS AND WARRANTIES OF TRUSTEE. The Trustee,
solely in its capacity as Trustee, makes the following representations and
warranties:
(a) The Trustee is duly organized and validly existing as an Illinois
banking corporation in good standing under the laws of the State of
Illinois, with trust powers and with power and authority to own its
properties and to conduct its business as such properties shall be
currently owned and such business is presently conducted.
(b) The Trustee has the power and authority to execute and deliver
this Agreement and to carry out its terms; and the execution, delivery, and
performance of this Agreement has been duly authorized by the Trustee by
all necessary corporate action.
(c) This Agreement constitutes a legal, valid, and binding obligation
of the Trustee, enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization, or
other similar laws affecting the enforcement of creditors' rights in
general and by general principles of equity, regardless of whether such
enforceability shall be considered in a proceeding in equity or at law.
(d) The consummation of the transactions contemplated by this
Agreement, and the fulfillment of the terms hereof, do not conflict with,
result in any breach of any of the terms and provisions of, nor constitute
(with or without notice or lapse of time) a default under, the charter or
by-laws of the Trustee or any indenture, agreement, or other instrument to
which the Trustee is a party or by which it is bound; nor result in the
creation or imposition of any lien upon any of its properties pursuant to
terms of any such indenture, agreement, or other instrument; nor violate
any law or any order, rule, or regulation applicable to the Trustee of any
court or of any Federal or state regulatory body, administrative agency, or
other governmental instrumentality having jurisdiction over the Trustee or
its properties.
(e) There are no proceedings or investigations pending or, to the
best knowledge of the Trustee, threatened before any court, regulatory
body, administrative agency, or other governmental instrumentality having
jurisdiction over the Trustee or its
-65-
properties (i) asserting the invalidity of this Agreement, or (ii) seeking
to prevent the consummation of any of the transactions contemplated by this
Agreement, or (iii) seeking any determination or ruling that might
materially and adversely affect the performance by the Trustee of its
obligations under, or the validity or enforceability of, this Agreement.
(f) In no event shall the Trustee be required to perform, or be
responsible for the manner of performance of, any of the obligations of the
Servicer, or any other party, under this Agreement except that Xxxxxx Trust
and Savings Bank solely in its capacity as Back-up Servicer shall perform
and be responsible for such obligations during such time, if any, as the
Back-up Servicer shall be the successor to, and be vested with the rights,
powers, duties and privileges of the Servicer in accordance with the terms
of the Agreement.
(g) The Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Agreement, the Trust
Corpus or the Certificates, it shall not be accountable for the Trust
Depositor's use of the proceeds from the Certificates, and it shall not be
responsible for any statement of the Trust Depositor in the Agreement or in
any document issued in connection with the sale of the Certificates or in
the Certificates other than the Trustee's certificate of authentication.
ARTICLE XII
MISCELLANEOUS
SECTION 12.01. SERVICER NOT TO RESIGN. The Servicer shall not resign from
the obligations and duties hereby imposed on it except upon a determination that
the performance of its duties hereunder is no longer permissible under
applicable law. Any such determination permitting the resignation of the
Servicer shall be evidenced by an opinion of counsel for the Servicer to such
effect delivered to the Trustee. No such resignation shall become effective
until a Back-up Servicer shall have assumed the responsibilities and obligations
of the Servicer in accordance with Section 7.03.
SECTION 12.02. PROHIBITED TRANSACTIONS WITH RESPECT TO THE TRUST. Neither
the Servicer nor the Trust Depositor shall:
(a) Provide credit to any Certificateholder for the purpose of
enabling such Certificateholder to purchase Certificates;
(b) Purchase any Certificates in an agency or trustee capacity; or
(c) Except as provided herein, lend any money to the Trust.
-66-
SECTION 12.03. MAINTENANCE OF OFFICE OR AGENCY. The Trustee shall
maintain an office or agency in Chicago, Illinois where Certificates may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Trustee in respect of the Certificates and this Agreement
may be served. On the date hereof the Trustee's office for such purposes is
located at the address set forth in Section 12.09. The Trustee will give prompt
written notice to Certificateholders of any change in the location of the
Certificate Register or any such office or agency.
SECTION 12.04. TERMINATION. This Agreement shall terminate (after
distribution of all Class A Distributable Amounts and Class B Distributable
Amounts due to Certificateholders pursuant to Sections 8.01 and 8.04) on the
Payment Date on which the Class A Certificate Balance and Class B Certificate
Balance is reduced to zero; PROVIDED, that in no event shall the trust created
hereby continue beyond the expiration of 21 years from the death of the last
survivor of the descendants of Xxxxxx X. Xxxxxxx, the late Ambassador of the
United States to the Court of St. Xxxxx, living on the date hereof, and
PROVIDED, FURTHER, that the Servicer's and the Trust Depositor's representations
and warranties and the indemnities by the Seller and Servicer shall survive
termination. Upon such termination, the Trustee shall provide each Rating
Agency written notice of such termination. Additionally, upon such termination
any amounts remaining in the Collection Account after distribution of all
amounts payable to the Certificateholders in respect of Class A Distributable
Amounts and Class B Distributable Amounts and payment of all other amounts owed
to the Certificateholders shall be paid to the Seller.
SECTION 12.05. ACTS OF CERTIFICATEHOLDERS. (a) Except as otherwise
specifically provided herein, whenever Certificateholder approval,
authorization, direction, notice, consent, waiver or other action is required
hereunder, such approval, authorization, direction, notice, consent, waiver or
other action shall be deemed to have been given or taken on behalf of, and shall
be binding upon, all Certificateholders if agreed to by Certificateholders with
aggregate Fractional Interests representing 51% or more of the Trust.
(b) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Agreement to be given or taken by
Certificateholders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Certificateholders in person or by
an agent duly appointed in writing; and except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
are delivered to the Trustee and, where required, to the Servicer. Proof of
execution of any such instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Agreement and (subject to Section 11.01)
conclusive in favor of the Trustee, the Servicer, the Trust Depositor and the
Seller if made in the manner provided in this Section 12.05.
(c) The fact and date of the execution by any Certificateholder of any
such instrument or writing may be proved in any reasonable manner which the
Trustee deems sufficient.
-67-
(d) The ownership of Certificates shall be proved by the Certificate
Register, absent manifest error.
(e) Any request, demand, authorization, direction, notice, consent, waiver
or other act by a Certificateholder shall bind every holder of every Certificate
issued upon the registration of transfer thereof or in exchange therefor or in
lieu thereof, in respect of anything done, or omitted to be done by the Trustee,
the Servicer or the Trust Depositor in reliance thereon, whether or not notation
of such action is made upon such security.
(f) The Trustee may require such additional proof of any matter referred
to in this Section 12.05 as it shall deem necessary.
SECTION 12.06. CALCULATIONS. Except as otherwise provided in this
Agreement, all interest rate and basis point calculations under this Agreement
will be made on the basis of a 360-day year comprised of twelve 30-day months
and will be carried out to at least three decimal places.
SECTION 12.07. ASSIGNMENT OR DELEGATION BY TRUST DEPOSITOR. Except as
specifically authorized hereunder, the Trust Depositor may not convey and assign
or delegate any of its rights or obligations hereunder absent the prior written
consent of 100% of the Class A Certificateholders and the Class B
Certificateholders, and any attempt to do so without such consent shall be void.
SECTION 12.08. AMENDMENT. (a) This Agreement may be amended from time to
time by the Servicer, the Back-up Servicer, the Trust Depositor and the Trustee,
without the consent of any of the Certificateholders, to correct manifest error,
to cure any ambiguity, to correct or supplement any provisions herein or therein
which may be inconsistent with any other provisions herein or therein, as the
case may be, or to add any other provisions with respect to matters or questions
arising under this Agreement which shall not be inconsistent with the provisions
of this Agreement; PROVIDED, HOWEVER, that such action shall not, as evidenced
by an opinion of Counsel for the Trust Depositor, adversely affect the interests
of any Certificateholder.
(b) This Agreement may also be amended from time to time by the Servicer,
the Back-up Servicer, the Trust Depositor and the Trustee, with the consent of
Certificateholders with aggregate Fractional Interests representing 66-2/3% or
more of each Class voting as a separate Class, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or of modifying in any manner the rights of the
Certificateholders; and any Event of Termination may be waived by the
Certificateholders with aggregate Fractional Interests representing 51% of the
Trust; PROVIDED, HOWEVER, that no such amendment or waiver described above shall
(a) reduce in any manner the amount of, or delay the timing of, collections of
payments on the Contracts or distributions which are required to be made on any
Certificate or (b) reduce the aforesaid percentage required to consent to any
such amendment, without the consent of the holders of all Certificates then
outstanding.
-68-
Notwithstanding anything to the contrary contained herein, the Depositor may,
from time to time after the date of this Agreement, request each Rating Agency
to approve a formula for determining the Reserve Fund Requisite Amount that is
different from that on the Closing Date and would result in a decrease in the
Reserve Fund Requisite Amount or the manner by which the Reserve Fund is funded.
In the event each Rating Agency delivers a letter to the Trustee to the effect
that the use of any such new formulation will not result in a qualification,
reduction or withdrawal of its then-current rating of the Class A Certificates
and the Class B Certificates, then either the Reserve Fund Requisite Amount will
be determined in accordance with such new formula or the manner by which the
Reserve Fund is funded will be modified.
(c) Promptly after the execution of any amendment or consent pursuant to
this Section 12.08, the Trustee shall furnish written notification of the
substance of such amendment and a copy of such amendment to each
Certificateholder, and to each Rating Agency.
(d) It shall not be necessary for the consent of Certificateholders under
this Section 12.08 to approve the particular form of any proposed amendment, but
it shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Certificateholders shall be subject to such reasonable
requirements as the Trustee may prescribe.
(e) The Trustee may, but shall not be obligated to, enter into any such
amendment which affects the Trustee's own rights, duties or immunities under
this Agreement or otherwise.
(f) In connection with any amendment pursuant to this Section 12.08, the
Trustee shall be entitled to receive an opinion of counsel to the Servicer and
acceptable to the Trustee to the effect that such amendment is authorized or
permitted by this Agreement.
(g) Upon the execution of any amendment or consent pursuant to this
Section 12.08, this Agreement shall be modified in accordance therewith, and
such amendment or consent shall form a part of this Agreement for all purposes,
and every holder of Certificates theretofore or thereafter issued hereunder
shall be bound thereby.
SECTION 12.09. NOTICES. All communications and notices pursuant hereto to
the Servicer, the Trust Depositor, the Servicer, the Trustee, the Back-up
Servicer, the Seller, Standard & Poor's, Moody's and the Placement Agent shall
be in writing and delivered or mailed to it at the appropriate following
address:
If to the Servicer: Eaglemark, Inc.
000 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
-69-
If to the Trust Depositor: Eaglemark Customer Funding Corporation-III
0000 Xxxxxxxx Xxxxx
Xxxxx X
Xxxxxx Xxxx, Xxxxxx 00000
Attention: President
If to the Trustee: Xxxxxx Trust and Savings Bank
000 Xxxx Xxxxxx Xxxxxx
00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Indenture Trust Administration
If to the Back-up Servicer: Xxxxxx Trust and Savings Bank
000 Xxxx Xxxxxx Xxxxxx
00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Indenture Trust Administration
If to the Seller: Eaglemark, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxx X
Xxxxxx Xxxx, Xxxxxx 00000
Attention: Xxxxxxx X. Xxxx
If to Moody's: Xxxxx'x Investors Service
00 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: ABS Monitoring Department
If to Standard & Poor's: Standard & Poor's Ratings Services, a
division of The McGraw Hill Company,
00 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Asset Backed Securities
Surveillance
-70-
If to the Placement Agent Xxxxxxx Lynch, Xxxxxx, Xxxxxx and
Xxxxx Incorporated
World Financial Center, North Tower
New York, New York 10281-1317
Attention: Xxxxxx X'Xxxx
or at such other address as the party may designate by notice to the other
parties hereto, which notice shall be effective when received.
All communications and notices pursuant hereto to a Certificateholder shall
be in writing and delivered or mailed at the address shown in the Certificate
Register.
SECTION 12.10. MERGER AND INTEGRATION. Except as specifically stated
otherwise herein, this Agreement sets forth the entire understanding of the
parties relating to the subject matter hereof, and all prior understandings,
written or oral, are superseded by this Agreement. This Agreement may not be
modified, amended, waived, or supplemented except as provided herein.
SECTION 12.11. HEADINGS. The headings herein are for purposes of
reference only and shall not otherwise affect the meaning or interpretation of
any provision hereof.
SECTION 12.12. GOVERNING LAW. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of Illinois.
SECTION 12.13. NO INSOLVENCY PETITION. The Trustee, the Back-up Servicer
and the Servicer hereby covenant and agree that, prior to the date which is one
year and one day after the payment in full of the Certificates, they will not
institute against, or join with any other Person in instituting against the
Trust Depositor or the Trust any involuntary insolvency proceedings under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or requesting the appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official), or for the substantial
liquidation of their respective affairs. This Section 12.13 shall survive the
termination of this Agreement.
SECTION 12.14. THIRD PARTY BENEFICIARY. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Except as otherwise provided in this Article
XII, no other Person shall have any right or obligation hereunder.
SECTION 12.15. NO ADDITIONAL SECURITIES. Notwithstanding anything to the
contrary contained herein, the Trust shall not issue any additional Certificates
or issue any other form of securities. Moreover, except as provided for herein
during the Funding Period or in
-71-
Section 5.05(d), the Trust will not purchase, or otherwise obtain any assets
after the Closing Date or reinvest amounts received with respect to the assets
in the Trust.
SECTION 12.16. NO ADDITIONAL INDEBTEDNESS BY THE TRUST DEPOSITOR. The
Trust Depositor hereby covenants that it shall not incur any indebtedness other
than indebtedness necessary to meet its obligations under the Transaction
Documents or any other similar documentation relating to any future grantor
trusts in which the Trust Depositor participates.
-72-
In WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first above written.
EAGLEMARK CUSTOMER FUNDING
CORPORATION-III, as Trust Depositor
By__________________________________________
Name: Xxxxxxx X. Xxxxxxxx
Title: Treasurer
EAGLEMARK, INC.,
as Servicer
By__________________________________________
Name: Xxxxxxx X. Xxxxxxxx
Title: Treasurer
XXXXXX TRUST AND SAVINGS BANK,
an Illinois banking corporation, not in its
individual capacity but solely as Trustee
By__________________________________________
Name:_______________________________________
Title:______________________________________
XXXXXX TRUST AND SAVINGS BANK,
an Illinois banking corporation, not in its
individual capacity but solely as Back-up
Servicer
By__________________________________________
Name:_______________________________________
Title:______________________________________
-73-
