Exhibit 10.32


 


 




 


 





SALE AND SERVICING AGREEMENT


 


among


 


 


HARLEY-DAVIDSON MOTORCYCLE TRUST 2004-1,


as Issuer,


 


 


HARLEY-DAVIDSON CUSTOMER FUNDING CORP.,


as Trust Depositor,


 


 


HARLEY-DAVIDSON CREDIT CORP.,


as Servicer


 


and


 


 


BNY MIDWEST TRUST COMPANY,


as Indenture Trustee


 


 


Dated as of February 1, 2004


 




 





 

















 


	
  Table of Contents

  
	
   

  
	
  ARTICLE
  ONE  DEFINITIONS

  	
   

  
	
   

  	
  Section 1.01.

  	
  Definitions

  	
   

  
	
   

  	
  Section 1.02.

  	
  Usage of Terms

  	
   

  
	
   

  	
  Section 1.03.

  	
  Section References

  	
   

  
	
   

  	
  Section 1.04.

  	
  Calculations

  	
   

  
	
   

  	
  Section 1.05.

  	
  Accounting Terms

  	
   

  
	
  ARTICLE
  TWO  TRANSFER OF CONTRACTS

  	
   

  
	
   

  	
  Section 2.01.

  	
  Closing

  	
   

  
	
   

  	
  Section 2.02.

  	
  Conditions to the Closing

  	
   

  
	
   

  	
  Section 2.03.

  	
  Conveyance of Subsequent
  Contracts

  	
   

  
	
  ARTICLE
  THREE  REPRESENTATIONS AND WARRANTIES

  	
   

  
	
   

  	
  Section 3.01.

  	
  Representations and
  Warranties Regarding the Trust Depositor

  	
   

  
	
   

  	
  Section 3.02.

  	
  Representations and
  Warranties Regarding the Servicer

  	
   

  
	
  ARTICLE
  FOUR  PERFECTION OF TRANSFER AND
  PROTECTION OF SECURITY INTERESTS

  	
   

  
	
   

  	
  Section 4.01.

  	
  Custody of Contracts

  	
   

  
	
   

  	
  Section 4.02.

  	
  Filing

  	
   

  
	
   

  	
  Section 4.03.

  	
  Name Change or Relocation

  	
   

  
	
   

  	
  Section 4.04.

  	
  Costs and Expenses

  	
   

  
	
  ARTICLE
  FIVE  SERVICING OF CONTRACTS

  	
   

  
	
   

  	
  Section 5.01.

  	
  Responsibility for Contract
  Administration

  	
   

  
	
   

  	
  Section 5.02.

  	
  Standard of Care

  	
   

  
	
   

  	
  Section 5.03.

  	
  Records

  	
   

  
	
   

  	
  Section 5.04.

  	
  Inspection

  	
   

  
	
   

  	
  Section 5.05.

  	
  Trust Accounts

  	
   

  
	
   

  	
  Section 5.06.

  	
  Enforcement

  	
   

  
	
   

  	
  Section 5.07.

  	
  Trustees to Cooperate

  	
   

  
	
   

  	
  Section 5.08.

  	
  Costs and Expenses

  	
   

  
	
   

  	
  Section 5.09.

  	
  Maintenance of Security
  Interests in Motorcycles

  	
   

  
	
   

  	
  Section 5.10.

  	
  Successor Servicer/Lockbox
  Agreements

  	
   

  
	
   

  	
  Section 5.11.

  	
  Separate Entity Existence

  	
   

  
	
  ARTICLE
  SIX  THE TRUST DEPOSITOR

  	
   

  
	
   

  	
  Section 6.01.

  	
  Covenants of the Trust
  Depositor.

  	
   

  
	
   

  	
  Section 6.02.

  	
  Liability of Trust
  Depositor; Indemnities

  	
   

  
	
   

  	
  Section 6.03.

  	
  Merger or Consolidation of,
  or Assumption of the Obligations of, Trust Depositor; Certain Limitations

  	
   

  
	
   

  	
  Section 6.04.

  	
  Limitation on Liability of
  Trust Depositor and Others

  	
   

  
	
   

  	
  Section 6.05.

  	
  Trust Depositor Not to
  Resign

  	
   

  
	
  ARTICLE
  SEVEN  DISTRIBUTIONS; RESERVE FUND

  	
   

  
	
   

  	
  Section 7.01.

  	
  Monthly Distributions

  	
   

  
	
   

  	
  Section 7.02.

  	
  Fees

  	
   

  
	
   

  	
  Section 7.03.

  	
  Advances; Realization of
  Carrying Charge

  	
   

  
	
   

  	
  Section 7.04.

  	
  Interest Reserve Account.

  	
   

  
	
   

  	
  Section 7.05.

  	
  Distributions; Priorities.

  	
   

  
	
   

  	
  Section 7.06.

  	
  Reserve Fund.

  	
   

  
	
   

  	
  Section 7.07.

  	
  Establishment of Pre-Funding
  Account.

  	
   

  
	
   

  	
  Section 7.08.

  	
  Reacquisition of Contracts
  for Breach of Representations and Warranties.

  	
   

  
	
   

  	
  Section 7.09.

  	
  Reassignment of Reacquired
  Contracts

  	
   

  
	
   

  	
  Section 7.10.

  	
  Seller’s Reacquisition
  Option

  	
   

  
	
  ARTICLE
  EIGHT  EVENTS OF TERMINATION; SERVICE
  TRANSFER

  	
   

  



 


i

















 


	
   

  	
  Section 8.01.

  	
  Events of Termination

  	
   

  
	
   

  	
  Section 8.02.

  	
  Waiver of Event of
  Termination

  	
   

  
	
   

  	
  Section 8.03.

  	
  Service Transfer

  	
   

  
	
   

  	
  Section 8.04.

  	
  Successor Servicer to Act;
  Appointment of Successor Servicer

  	
   

  
	
   

  	
  Section 8.05.

  	
  Notification to
  Securityholders

  	
   

  
	
   

  	
  Section 8.06.

  	
  Effect of Transfer

  	
   

  
	
   

  	
  Section 8.07.

  	
  Database File

  	
   

  
	
   

  	
  Section 8.08.

  	
  Successor Servicer
  Indemnification

  	
   

  
	
   

  	
  Section 8.09.

  	
  Responsibilities of the
  Successor Servicer

  	
   

  
	
   

  	
  Section 8.10.

  	
  Limitation of Liability of
  Servicer

  	
   

  
	
   

  	
  Section 8.11.

  	
  Merger or Consolidation of
  Servicer

  	
   

  
	
   

  	
  Section 8.12.

  	
  Servicer Not to Resign

  	
   

  
	
   

  	
  Section 8.13.

  	
  Appointment of Subservicer

  	
   

  
	
  ARTICLE
  NINE  REPORTS

  	
   

  
	
   

  	
  Section 9.01.

  	
  Monthly Reports

  	
   

  
	
   

  	
  Section 9.02.

  	
  Officer’s Certificate

  	
   

  
	
   

  	
  Section 9.03.

  	
  Other Data

  	
   

  
	
   

  	
  Section 9.04.

  	
  Annual Report of
  Accountants.

  	
   

  
	
   

  	
  Section 9.05.

  	
  Annual Statement of
  Compliance from Servicer

  	
   

  
	
   

  	
  Section 9.06.

  	
  Monthly Reports to
  Noteholders

  	
   

  
	
  ARTICLE
  TEN  TERMINATION

  	
   

  
	
   

  	
  Section 10.01.

  	
  Sale of Trust Assets.

  	
   

  
	
  ARTICLE ELEVEN  MISCELLANEOUS

  	
   

  
	
   

  	
  Section 11.01.

  	
  Amendment.

  	
   

  
	
   

  	
  Section 11.02.

  	
  Protection of Title to
  Trust.

  	
   

  
	
   

  	
  Section 11.03.

  	
  Governing Law

  	
   

  
	
   

  	
  Section 11.04.

  	
  Notices

  	
   

  
	
   

  	
  Section 11.05.

  	
  Severability of Provisions

  	
   

  
	
   

  	
  Section 11.06.

  	
  Assignment

  	
   

  
	
   

  	
  Section 11.07.

  	
  Third Party Beneficiaries

  	
   

  
	
   

  	
  Section 11.08.

  	
  Counterparts

  	
   

  
	
   

  	
  Section 11.09.

  	
  Headings

  	
   

  
	
   

  	
  Section 11.10.

  	
  No Bankruptcy Petition;
  Disclaimer and Subordination

  	
   

  
	
   

  	
  Section 11.11.

  	
  Limitation of Liability of
  Owner Trustee and Indenture Trustee.

  	
   

  
	
   

  	
  Section
  11.12.

  	
  Nonconfidentiality
  of Tax Treatment and Tax Structure.

  	
   

  



 


ii

















 


EXHIBITS


 


	
  Exhibit A

  	
  Form of Assignment

  	
   

  
	
  Exhibit
  B

  	
  Form of
  Closing Certificate of Trust Depositor

  	
   

  
	
  Exhibit
  C

  	
  Form of
  Closing Certificate of Seller/Servicer

  	
   

  
	
  Exhibit
  D

  	
  Form of
  Opinion of Counsel for Trust Depositor regarding general corporate matters
  (including perfection opinion)

  	
   

  
	
  Exhibit
  E

  	
  Form of
  Opinion of Counsel for Trust Depositor regarding the “true sale” nature of the
  transaction

  	
   

  
	
  Exhibit
  F

  	
  Form of
  Opinion of Counsel for Trust Depositor regarding non-consolidation

  	
   

  
	
  Exhibit
  G

  	
  Form of
  Certificate Regarding Reacquired Contracts

  	
   

  
	
  Exhibit
  H

  	
  List of
  Contracts

  	
   

  
	
  Exhibit I

  	
  Form of Monthly Report to Noteholders and the
  Certificateholder

  	
   

  
	
  Exhibit
  J

  	
  Seller’s
  Representations and Warranties

  	
   

  
	
  Exhibit
  K

  	
  Lockbox
  Bank and Lockbox Account

  	
   

  
	
  Exhibit
  L

  	
  Form of
  Subsequent Transfer Agreement

  	
   

  



 


iii

















 


SALE AND SERVICING
AGREEMENT, dated as of February 1, 2004, among Harley-Davidson Motorcycle Trust
2004-1 (together with its successors and assigns, the “Issuer” or the “Trust”),
Harley-Davidson Customer Funding Corp. (together with its successor and
assigns, the
“Trust Depositor”), BNY Midwest Trust Company (solely in its
capacity as Indenture Trustee together with its successors and assigns, the “Indenture
Trustee”) and Harley-Davidson Credit Corp. (solely in its capacity
as Servicer together with its successor and assigns, “Harley-Davidson Credit” or
the “Servicer”).


 


WHEREAS the Issuer
desires to acquire from the Trust Depositor an initial and subsequent pool of
fixed-rate, simple interest motorcycle conditional sales contracts and promissory
note and security agreements relating to Harley-Davidson and Buell motorcycles
and motorcycles not manufactured by Harley-Davidson or Buell (collectively, the
“Contracts”)
purchased by Harley-Davidson Credit and subsequently sold by Harley-Davidson
Credit to the Trust Depositor;


 


WHEREAS the Trust
Depositor is willing to transfer and assign the Contracts to the Issuer
pursuant to the terms hereof; and


 


WHEREAS the Servicer is
willing to service the Contracts pursuant to the terms hereof;


 


NOW, THEREFORE, in
consideration of the premises and the mutual covenants herein contained, the
parties hereto agree as follows:


 


ARTICLE ONE



DEFINITIONS


 


Section 1.01.        Definitions. 
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:


 


“Addition Notice” means, with respect to any transfer of Subsequent
Contracts to the Issuer pursuant to Section 2.03 and the Trust Depositor’s
corresponding prior purchase of such Contracts from the Seller, a notice, which
shall be given at least 10 days prior to the related Subsequent Transfer Date,
identifying the aggregate Principal Balance of the Subsequent Contracts to be
transferred.


 


“Advance” means, with respect to any Distribution Date, the
amounts, if any, deposited by the Servicer in the Collection Account for such
Distribution Date pursuant to Section 7.03.


 


“Affiliate” of any specified Person means any other Person
controlling or controlled by, or under common control with, such specified
Person.  For the purposes of this
definition, “control” when used with respect to any specified Person
means the power to direct the management and policies of such Person, directly
or indirectly, whether through the ownership


 


1

















 


of voting securities, by contract or otherwise; and
the terms “controlling”
or “controlled”
have meanings correlative to the foregoing.


 


“Aggregate Principal Balance” will equal the sum of the Principal
Balances of each outstanding Contract and the Pre-Funded Amount, if any.  At the time of initial issuance of the
Securities, the initial aggregate principal amount of the Securities will equal
the initial Pool Balance plus the initial Pre-Funded Amount.


 


“Aggregate Principal Balance Decline” means, with respect to any Distribution
Date, the amount by which the Aggregate Principal Balance as of the close of
business on the last day of the Due Period relating to the Distribution Date
immediately preceding such Distribution Date (or as of the Initial Cutoff Date
in the case of the first Distribution Date) exceeds the Aggregate Principal
Balance as of the close of business on the last day of the Due Period relating
to such Distribution Date.


 


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


 


“Available Monies” means, with respect to any Distribution Date, the sum
of the Available Interest and the Available Principal for such Distribution
Date.


 


“Available Interest” means, with respect to any Distribution Date, the
total (without duplication) of the following amounts received by the Servicer
on or in respect of the Contracts during the related Due Period: (i) all
amounts received in respect of interest on the Contracts, (ii) the interest
component of all Net Liquidation Proceeds, (iii) the interest component of the
aggregate of the Reacquisition Prices for Contracts reacquired by the Trust
Depositor pursuant to Section 7.08, (iv) all Advances made by the Servicer
pursuant to Section 7.03, (v) the interest component of all amounts paid by the
Trust Depositor in connection with an optional reacquisition of the Contracts
pursuant to Section 7.10, (vi) all amounts received in respect of Carrying
Charges transferred from the Interest Reserve Account pursuant to Section 7.03,
and (vii) all amounts received in respect of interest, dividends, gains, income
and earnings on investment of funds in the Trust Accounts as contemplated in
Section 5.05(d).


 


“Available Principal” means, with respect to any Distribution Date, the
total (without duplication) of the following amounts received by the Servicer
on or in respect of the Contracts during the related Due Period: (i) all
amounts received in respect of principal on the Contracts, (ii) the principal
component of all Net Liquidation Proceeds, (iii) the principal component of the
aggregate of the Reacquisition Prices for Contracts reacquired by the Trust
Depositor pursuant to Section 7.08, and (iv) the principal component of all
amounts paid by the Trust Depositor in connection with an optional
reacquisition of the Contracts pursuant to Section 7.10.


 


“Average Delinquency Ratio” means, for any Distribution Date, the arithmetic
average of the Delinquency Ratios for such Distribution Date and the two
immediately preceding Distribution Dates.


 


2

















 


“Average Loss Ratio” means, for any Distribution Date, the arithmetic
average of the Loss Ratios for such Distribution Date and the two immediately
preceding Distribution Dates.


 


“Base Prospectus” means the Prospectus dated February 17, 2004 relating
to the Harley-Davidson Motorcycle Trusts.


 


“Buell” means Buell Motorcycle Company.


 


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


 


“Calculation Day” means the last day of each
calendar month.


 


“Carrying Charges” means, with respect to any Distribution Date, the sum
of (i) the product of (x) the weighted average of the Class A-1 Rate, the Class
A-2 Rate and the Class B Rate for the related Interest Period and (y) the
undisbursed funds (excluding investment earnings) in the Pre-Funding Account
(as of the last day of the related Due Period) and (ii) the Indenture Trustee
Fee for the related Distribution Date, minus (iii) the amount of any investment
earnings on funds in the Pre-Funding Account which was transferred to the
Interest Reserve Account, as well as interest earnings on amounts in the
Interest Reserve Account with respect to such Distribution Date.


 


“Certificate” means the Trust Certificate (as such term is defined
in the Trust Agreement), representing 100% of the beneficial equity interest in
the Trust and issued pursuant to the Trust Agreement.


 


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


 


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


 


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


 


“Class A Note Monthly Principal Distributable Amount” means, with respect to any Distribution
Date, the Class A Note Percentage of the Principal Distributable Amount for
such Distribution Date.


 


“Class
A Note Percentage” means, (i) for each Distribution Date to but
excluding the Distribution Date on which the principal amount of the Class A-2
Notes is reduced to zero, 95.00%; (ii) for the Distribution Date on which the
principal amount of the Class A-2 Notes is reduced to zero, such percentage
which represents the fraction of the Principal Distributable Amount necessary
to reduce the principal amount of the Class A-2 Notes to zero; and (iii) for
each Distribution Date thereafter, 0%.


 


3

















 


“Class A Note Principal Carryover Shortfall” means, as of the close of any
Distribution Date, the excess of the Class A Note Principal Distributable
Amount with respect to the immediately preceding Distribution Date over the
amount in respect of principal for the Class A Notes that is actually deposited
in the Note Distribution Account on such preceding Distribution Date.


 


“Class A Note Principal Distributable Amount” means, with respect to any Distribution
Date, the sum of the Class A Note Monthly Principal Distributable Amount with
respect to such Distribution Date and the Class A Note Principal Carryover Shortfall
as of the close of the immediately preceding Distribution Date; provided,
however, that the Class A Note Principal Distributable Amount shall
not exceed the outstanding principal amount of the Class A Notes; and provided,
further, that the Class A Note Principal Distributable Amount (i) on
the Class A-1 Final Distribution Date shall not be less than the amount that is
necessary (after giving effect to other amounts to be deposited in the Note
Distribution Account for payment on the Class A-1 Notes on such Distribution
Date and allocable to principal) to reduce the outstanding principal amount of
the Class A-1 Notes to zero, and (ii) on the Class A-2 Final Distribution Date
shall not be less than the amount that is necessary (after giving effect to other
amounts to be deposited in the Note Distribution Account for payment on the
Class A-2 Notes on such Distribution Date and allocable to principal) to reduce
the outstanding principal amount of the Class A-2 Notes to zero.


 


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


 


“Class A-1 Final Distribution Date” means the October 2008 Distribution
Date.


 


“Class A-1 Noteholder” means the Person in whose name a Class A-1 Note is
registered in the Note Register, as such term is defined in the Indenture.


 


“Class A-1 Rate” means 1.40% per annum
(computed on the basis of a 360-day year of twelve 30-day months).


 


 “Class A-2 Final
Distribution Date”
means the November 2011 Distribution Date.


 


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


 


“Class A-2 Rate” means 2.53% per annum
(computed on the basis of a 360-day year of twelve 30-day months).


 


“Class B Final Distribution Date” means the November 2011 Distribution
Date.


 


“Class B Noteholder” means the Person in whose name a Class B Note is
registered in the Note Register, as such term is defined in the Indenture.


 


4

















 


“Class B Note Monthly Principal Distributable Amount” means, with respect to any Distribution
Date, the Class B Note Percentage of the Principal Distributable Amount for
such Distribution Date.


 


“Class B Note Percentage”
means, (i) for each Distribution Date to but excluding the Distribution Date on
which the principal amount of the Class A-2 Notes is reduced to zero, 5.00%;
and (ii) for the Distribution Date on which the principal amount of the Class
A-2 Notes is reduced to zero, that percentage that equals 100% minus the Class
A Note Percentage for such Distribution Date; and (iii) 100% thereafter.


 


“Class B Note Principal Carryover Shortfall” means, as of the close of any
Distribution Date, the excess of the Class B Note Principal Distributable
Amount with respect to the immediately preceding Distribution Date over the
amount in respect of principal for the Class B Notes that is actually deposited
in the Note Distribution Account on such preceding Distribution Date.


 


“Class B Note Principal Distributable Amount” means, with respect to any Distribution
Date, the sum of the Class B Note Monthly Principal Distributable Amount with
respect to such Distribution Date and the Class B Note Principal Carryover
Shortfall as of the close of the immediately preceding Distribution Date; provided,
however, that the Class B Note Principal Distributable Amount shall
not exceed the outstanding principal amount of the Class B Notes; and provided,
further, that the Class B Note Principal Distributable Amount on the
Class B Final Distribution Date shall not be less than the amount that is
necessary (after giving effect to other amounts to be deposited in the Note
Distribution Account for payment on the Class B Notes on such Distribution Date
and allocable to principal) to reduce the outstanding principal amount of the
Class B Notes to zero.


 


“Class B Rate” means 2.00% per annum (computed
on the basis of a 360-day year of twelve 30-day months).


 


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


 


“Closing Date” means February 25, 2004.


 


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


 


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


 


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


 


“Computer File” means the computer file generated by the Servicer
which provides information relating to the Contracts and which was used by the
Seller in selecting the Contracts sold to the Trust Depositor pursuant to the
Transfer and Sale Agreement (and any Subsequent Purchase Agreement) and
transferred to the Trust by the Trust Depositor pursuant to this


 


5

















 


Agreement (and any Subsequent Transfer Agreement), and
includes the master file and the history file as well as servicing information
with respect to the Contracts.


 


“Contract Assets” has the meaning assigned in Section 2.01 (and 2.03, as
applicable in the case of Subsequent Contracts) of the Transfer and Sale
Agreement.


 


“Contract File” means, as to each Contract, (a) the original copy of
the Contract, including the executed conditional sales contract or promissory
note and security agreement or other evidence of the obligation of the Obligor,
(b) the original title certificate to the Motorcycle and, where applicable, the
certificate of lien recordation, or, if such title certificate has not yet been
issued, an application for such title certificate, or other appropriate
evidence of a security interest in the covered Motorcycle; (c) the assignments
of the Contract; (d) the original copy of any agreement(s) modifying the
Contract including, without limitation, any extension agreement(s) and (e)
documents evidencing the existence of physical damage insurance covering such
Motorcycle.


 


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


 


“Contracts” means the motorcycle conditional sales contracts or
promissory note and security agreements described in the List of Contracts and
constituting part of the Trust Corpus (as such list may be supplemented from
time to time to reflect transfers of Subsequent Contracts), and includes,
without limitation, all related security interests and any and all rights to
receive payments which are collected pursuant thereto 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 on or prior to the Initial Cutoff Date, or with respect to any
Subsequent Contracts, any related Subsequent Cutoff Date.


 


“Corporate Trust Office” means the office of the Indenture Trustee at which at
any particular time its corporate trust business shall be principally
administered, which office at the date of the execution of this Agreement is
located at the address set forth in Section 11.04.


 


“Cram Down Loss” means, with respect to a Contract, if a court of
appropriate jurisdiction in an insolvency proceeding shall have issued an order
reducing the Principal Balance of such Contract, the amount of such reduction
(with a “Cram
Down Loss” being deemed to have occurred on the date of issuance of
such order).


 


“Cumulative Loss Ratio” means, as of any Distribution Date, the fraction
(expressed as a percentage) computed by the Servicer by dividing (i) the
aggregate Net Liquidation Losses for all Contracts since the related Cutoff
Date through the end of the related Due Period by (ii) the sum of (A) the
Principal Balance of the Contracts as of the Initial Cutoff Date plus (B) the
Principal Balance of any Subsequent Contracts as of the related Subsequent
Cutoff Date plus (C) the Pre-Funded Amount.


 


6

















 


“Cutoff Date” means either or both (as the context may require) the
Initial Cutoff Date and any Subsequent Cutoff Date.


 


“Defaulted Contract” means a
Contract with respect to which there has occurred one or more of the following:
(i) all or some portion of any payment under the Contract is 120 days or more
delinquent, (ii) repossession (and expiration of any redemption period) of a
Motorcycle securing a Contract or (iii) the Servicer has determined in good
faith that an Obligor is not likely to resume payment under a Contract.


 


“Delinquency Amount” means, as of any Distribution Date, the Principal
Balance of all Contracts that were delinquent 60 days or more as of the end of
the related Due Period (including Contracts in respect of which the related
Motorcycles have been repossessed and are still in inventory).


 


“Delinquent Interest” means, for each Contract and each Determination Date
as to which the full payment due in the related Due Period has not been paid
before the 30th day after the scheduled payment dated therefor (any such
payment being “delinquent” for purposes of this definition), all interest
accrued on such Contract from the Due Date in the Due Period one month prior to
the Due Period in which the payment is delinquent.


 


“Delinquency Ratio” means, for any Distribution Date, the fraction
(expressed as a percentage) computed by dividing (a) the Delinquency Amount
during the immediately preceding Due Period by (b) the Principal Balance of the
Contracts as of the beginning of the related Due Period.


 


“Delta Loan” means a loan made by the Seller pursuant to the program
designated as the Delta Program.


 


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


 


“Distribution Date” means the fifteenth day of each calendar month during
the term of this Agreement, or if such day is not a Business Day, the next
succeeding Business Day, with the first such Distribution Date hereunder being
March 15, 2004.


 


“Due Date” means, with respect to any Contract, the day of the
month on which each scheduled payment of principal and interest is due on such
Contract, exclusive of days of grace.


 


“Due Period” means a calendar month during the term of this
Agreement, and the Due Period related to a Determination Date or Distribution
Date shall be the calendar month immediately preceding such date; provided,
however, that with respect to the Initial Determination Date or
Initial Distribution Date, the Due Period shall be the period from the Initial
Cutoff Date to and including February 29, 2004.


 


7

















 


“Eligible Account” means a segregated direct deposit account maintained
with the Indenture Trustee, acting in its fiduciary capacity, or a depository
institution or trust company organized under the laws of the United States of America,
or any of the States thereof, or the District of Columbia, having a certificate
of deposit, short-term deposit or commercial paper rating of at least A-1+ by
Standard & Poor’s and P-1 by Moody’s.


 


“Eligible Investments” mean book-entry securities, negotiable instruments or
securities represented by instruments in bearer or registered form which
evidence:


 


(a)           direct
obligations of, and obligations fully guaranteed as to timely payment by, the
United States of America;


 


(b)           demand
deposits, time deposits or certificates of deposit of any depository
institution or trust company incorporated under the laws of the United States
of America or any State (or any domestic branch of a foreign bank) and subject
to supervision and examination by Federal or State banking or depository
institution authorities; provided, however, that at the time of the
investment or contractual commitment to invest therein, the commercial paper or
other short-term senior unsecured debt obligations (other than such obligations
the rating of which is based on the credit of a Person other than such
depository institution or trust company) thereof shall have a credit rating
from the Rating Agency in the highest investment category granted thereby;


 


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


 


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


 


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


 


(f)            repurchase
obligations with respect to any security that is a direct obligation of, or
fully guaranteed as to timely payment by, the United States of America or any
agency or instrumentality thereof the obligations of which are backed by the
full faith and credit of the United States of America, in either case entered
into with a depository institution or trust company (acting as principal) described
in clause (b); and


 


(g)           any
other investment with respect to which the Issuer or the Servicer has received
written notification from the Rating Agencies that the acquisition of such
investment as an Eligible Investment will not result in a withdrawal or
downgrading of the ratings on the Notes.


 


8

















 


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


 


“Excess Amounts” shall mean Available Monies after distributions made
in accordance with Section 7.05.


 


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


 


“Funding Period” means the period beginning on the Closing Date and
ending on the first to occur of (a) the Distribution Date on which the amount
on deposit in the Pre-Funding Account (after giving effect to any transfers
therefrom in connection with the transfer of Subsequent Contracts to the Trust
on such Distribution Date) is less than $150,000, (b) the date on which an
Event of Termination occurs, (c) the date on which an Insolvency Event occurs
with respect to the Trust Depositor and (d) the close of business on the date
which is 90 days from and including the Closing Date.


 


“Harley-Davidson Financial” means Harley-Davidson Financial Services,
Inc., a Delaware corporation.


 


“Holder” means, with respect to a (i) Certificate, the Person
in whose name such Certificate is registered in the Certificate Register and
(ii) Note, the Person in whose name such Note is registered in the Note
Register.


 


“Indenture” means the Indenture, dated as of the date hereof,
between the Issuer and the Indenture Trustee.


 


“Indenture Trustee” means the Person acting as Indenture Trustee under
the Indenture, its successors in interest and any successor trustee under the
Indenture.


 


“Indenture Trustee Fee” means, with respect to any Distribution Date,
one-twelfth of the product of .002% and the sum of (i) the Principal Balance of
the Contracts as of the beginning of the related Due Period and (ii) the
Pre-Funded Amount as of the beginning of such period; provided, however, in no
event shall such fee be less than $200.00 per month.


 


“Independent” when used with respect to any specified Person, means
such a Person who (i) is in fact independent of the Issuer, the Trust Depositor
or the Servicer, (ii) is not a director, officer or employee of any Affiliate
of the Issuer, the Trust Depositor or the Servicer, (iii) is not a person
related to any officer or director of the Issuer, the Trust Depositor or the
Servicer or any of their respective Affiliates, (iv) is not a holder (directly
or indirectly) of more than 10% of any voting securities of Issuer, the Trust
Depositor or the Servicer or any of their respective Affiliates, and (v) is not
connected with the Issuer, the Trust Depositor or the Servicer as an officer,
employee, promoter, underwriter, trustee, partner, director or person
performing similar functions.


 


“Initial Class A-1 Note Balance” means $379,000,000.


 


9

















 


“Initial Class A-2 Note Balance” means
$214,750,000.


 


“Initial Class B Note Balance” means
$31,250,000.


 


“Initial Contracts” means those Contracts conveyed to the Trust on the
Closing Date.


 


“Initial Cutoff Date” means as of the close of
business on February 10, 2004.


 


“Insolvency Event” means, with respect to a specified Person, (i) the
entry of a decree or order for relief by a court or regulatory authority having
jurisdiction in respect of such Person in an involuntary case under the federal
bankruptcy laws, as now or hereafter in effect, or any other present or future,
federal or state, bankruptcy, insolvency or similar law, or appointing a
receiver, liquidator, assignee, custodian, trustee, sequestrator or other
similar official for such Person or for any substantial part of its property,
or ordering the winding-up or liquidation of such Person’s affairs, and the
continuance of any such decree or order unstayed and in effect for a period of
60 consecutive days; (ii) the commencement of an involuntary case under the
federal bankruptcy laws, as now or hereinafter in effect, or another present or
future federal or state bankruptcy, insolvency or similar law and such case is
not dismissed within 60 days; or (iii) the commencement by such Person of a
voluntary case under the federal bankruptcy laws, as now or hereinafter in
effect, or any other present or future federal or state, bankruptcy, insolvency
or similar law, or the consent by such Person to the appointment of or taking
possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator or other similar official for such Person or for any substantial
part of its property, or the making by such Person of an assignment for the
benefit of creditors or the failure by such Person generally to pay its debts
as such debts become due or the taking of corporate action by such Person in
furtherance of any the foregoing.


 


“Interest Period” means, with respect to any Distribution Date, the
period from and including the fifteenth day of the month of the Distribution
Date immediately preceding such Distribution Date (or, in the case of the first
Distribution Date, from and including the Closing Date) to but excluding the
fifteenth day of the month of such Distribution Date.


 


“Interest Rate” means the Class A-1 Rate, the Class A-2 Rate or the
Class B Rate, as applicable.


 


“Interest Reserve Account” means the account designated as the Interest Reserve
Account in, and which is established and maintained pursuant to, Section 7.04
hereof.


 


“Interest Reserve Amount” means, as of any date of determination, the amount on
deposit in the Interest  Reserve Account on such date, and as of
the Closing Date shall be $455,046.62.


 


“Investment Earnings” means, with respect to any Distribution Date, the
investment earnings (net of losses and investment expenses) on amounts on
deposit in the Trust Accounts, other than the Pre-Funding Account, to be
deposited into the Collection Account on such Distribution Date pursuant to
Section 5.05(b).


 


10

















 


“Issuer” means the Harley-Davidson Motorcycle
Trust 2004-1.


 


“Late Payment Penalty Fees” means any late payment fees paid by Obligors on
Contracts after all sums received have been allocated first to regular
installments due or overdue and all such installments are then paid in full.


 


“Lien” means a security interest, lien, charge, pledge, equity or encumbrance
of any kind, other than tax liens, mechanics’ liens and any liens that attach
to the respective Contract by operation of law.


 


“Liquidated Contract” means a Contract with respect to which there has
occurred one or more of the following: (i) 90 days have elapsed following the
date of repossession (and expiration of any redemption period) with respect to
the Motorcycle securing such Contract, (ii) the receipt of proceeds by the
Servicer from the sale of a repossessed Motorcycle securing a Contract, (iii)
the Servicer has determined in good faith that all amounts expected to be recovered
have been received with respect to such Contract, or (iv) all or any portion of
any payment is delinquent 150 days or more.


 


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


 


“Lockbox” means the Lockbox maintained by a Lockbox Bank
identified on Exhibit K hereto.


 


“Lockbox Account” means the account maintained with the Lockbox Bank and
identified on Exhibit K hereto.


 


“Lockbox Agreement” means the Fifth Amended and Restated Lockbox
Administration Agreement dated as of November 1, 2000 by and among the Lockbox
Bank, the Servicer, the Trust Depositor, Eaglemark Customer Funding Corporation-IV,
The Bank of New York (successor-in-interest to the corporate trust business of
Harris Trust and Savings Bank), BNY Midwest Trust Company and Bank One,
National Association, with respect to the Lockbox Account, unless such
agreement shall be terminated in accordance with its terms, in which event “Lockbox
Agreement” shall mean such other agreement, in form and substance
acceptable to the above-described parties.


 


“Lockbox Bank” means the financial institution maintaining the
Lockbox Account and identified on Exhibit K hereto or any successor thereto.


 


11

















 


“Loss Ratio” means, for any Distribution Date, the fraction
(expressed as a percentage) derived by dividing (x) Net Liquidation Losses for
all Contracts that became Liquidated Contracts during the immediately preceding
Due Period multiplied by twelve by (y) the outstanding Principal Balances of
all Contracts as of the beginning of the Due Period.


 


“Mandatory Redemption” means the prepayment, in part, made to the
Noteholders without premium made on the Distribution Date on or immediately
following the last day of the Funding Period in the event that any amount
remains on deposit in the Pre-Funding Account after giving effect to the
acquisition of all Subsequent Contracts, including any such acquisition on such
date.


 


“Mandatory Redemption Subaccount” means the subaccount of the Note
Distribution Account into which deposits from the Pre-Funding Account for any
Mandatory Redemption are made.


 


“Modified Required Holders” means (i) prior to the payment in full of the Class A
Notes outstanding, Class A-1 Noteholders and/or Class A-2 Noteholders
evidencing at least 66 2/3% of the aggregate outstanding principal balance of
the Class A Notes and (ii) from and after the payment in full of the Class A
Notes outstanding, Class B Noteholders evidencing at least 66 2/3% of the
aggregate outstanding principal balance of the Class B Notes.


 


“Monthly Report” shall have the meaning
specified in Section 9.06.


 


“Monthly Servicing Fee” means, as to any Distribution Date, one-twelfth of
the product of 1.00% and the Principal Balance of the Contracts as of the
beginning of the related Due Period or, with respect to the first Distribution
Date of March 15, 2004, as of the Initial Cutoff Date.


 


“Moody’s” means Moody’s Investors Service,
Inc. or any successor thereto.


 


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


 


“Net Liquidation Losses” means, as of any Distribution Date, with respect to
all Liquidated Contracts on an aggregate basis, the amount, if any, by which
(a) the outstanding Principal Balance of all Liquidated Contracts plus accrued
and unpaid interest thereon at the Contract Rate to the date on which such
Liquidated Contracts became Liquidated Contracts exceeds (b) the Net
Liquidation Proceeds for such Liquidated Contracts.


 


“Net Liquidation Proceeds” means, as to any Liquidated Contract, the proceeds
realized on the sale or other disposition of the related Motorcycle, including
proceeds realized on the repurchase of such Motorcycle by the originating
dealer for breach of warranties, and the proceeds of any insurance relating to
such Motorcycle, after payment of all reasonable expenses incurred thereby,
together, in all instances, with the expected or actual proceeds of any
recourse rights relating to such Contract as well as any post-disposition
proceeds or other amounts in respect of a Liquidated Contract received by the
Servicer.


 


12

















 


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


 


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


 


“Note Distributable Amount” means, with respect to any Distribution Date, the sum
of the Note Principal Distributable Amount and the Note Interest Distributable
Amount for such Distribution Date.


 


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


 


“Note Interest Carryover Shortfall” means, with respect to any Distribution
Date and a Class of Notes, the excess, if any, of the sum of the Note Interest
Distributable Amount for such Class for the immediately preceding Distribution
Date plus any outstanding Note Interest Carryover Shortfall for such Class on
such preceding Distribution Date, over the amount in respect of interest that
is actually deposited in the Note Distribution Account with respect to such
Class on such preceding Distribution Date, plus, interest on such excess to the
extent permitted by applicable law, at the related Interest Rate for the
related Interest Period.


 


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


 


“Note Monthly Interest Distributable Amount” means, with respect to any Distribution
Date for any Class of Notes, interest accrued from and including the fifteenth
day of the month of the preceding calendar month to, but excluding, the
fifteenth day of the calendar month in which such Distribution Date occurs (or
in the case of the first Distribution Date, interest accrued from and including
the Closing Date to but excluding such Distribution Date) at the related
Interest Rate for such Class of Notes on the outstanding principal amount of
the Notes of such Class on the immediately preceding Distribution Date, after
giving effect to all payments of principal to Noteholders of such Class on or
prior to such preceding Distribution Date (or, in the case of the first
Distribution Date, on the original principal amount of such Class of Notes).


 


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


 


“Note Principal Carryover Shortfall” means the Class A Note Principal
Carryover Shortfall and the Class B Note Principal Carryover Shortfall.


 


“Note Principal Distributable Amount” means the Class A Note Principal
Distributable Amount and the Class B Note Principal Distributable Amount.


 


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


 


13

















 


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


 


“Obligee” means the Person to whom an Obligor is indebted under
a Contract.


 


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


 


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


 


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


 


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


 


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


 


“Paying Agent” means as described in Section 1.01 of the Indenture
and Section 3.10 of the Trust Agreement.


 


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


 


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


 


“Pre-Funded Amount” means as of any date, the amount on deposit in the
Pre-Funding Account at the close of business on such date.


 


“Pre-Funding Account” means the account designated as the Pre-Funding
Account in, and which is established and maintained pursuant to Section 7.07.


 


14

















 


“Principal Balance” means (a) with respect to any Contract as of any
date, an amount equal to the unpaid principal balance of such Contract as of
the close of business on the Initial Cutoff Date or related Subsequent Cutoff
Date, as applicable, reduced by the sum of (x) all payments received by the
Servicer as of such date allocable to principal and (y) any Cram Down Loss in
respect of such Contract; provided, however, that (i) if (x) a
Contract is reacquired by the Seller pursuant to Section 5.01 of the Transfer
and Sale Agreement and Section 7.08 hereof because of a breach of
representation or warranty, or if (y) the Seller gives notice of its intent to
reacquire the Contracts in connection with an optional termination of the Trust
pursuant to Section 5.02 of the Transfer and Sale Agreement and Section 7.10
hereof, in each case the Principal Balance of such Contract or Contracts shall
be deemed as of the related Determination Date to be zero for the Due Period in
which such event occurs and for each Due Period thereafter and (ii) from and
after the Due Period in which a Contract becomes a Liquidated Contract, the
Principal Balance of such Contract shall be deemed to be zero; and (b) where
the context requires, the aggregate of the Principal Balances described in
clause (a) for all such Contracts.


 


“Principal Distributable Amount” means, with respect to any Distribution
Date, the Aggregate Principal Balance Decline for such Distribution Date.


 


“Prospectus” means the Base Prospectus
together with the Supplement.


 


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


 


15

















 


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


 


“Reacquisition Price” means,
with respect to a Contract to be reacquired hereunder as of the last day of any
Due Period an amount equal to (a) the Principal Balance of such Contract as of
such day, plus (b) accrued and unpaid interest at the Contract Rate on such
Contract through the end of such Due Period.


 


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


 


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


 


“Required Holders” means (i) prior to the payment in full of the Class A
Notes outstanding, Class A-1 Noteholders and Class A-2 Noteholders evidencing
more than 50% of the aggregate outstanding principal balance of the Class A
Notes and (ii) from and after the payment in full of the Class A Notes
outstanding, Class B Noteholders evidencing more than 50% of the aggregate
outstanding principal balance of the Class B Notes.


 


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


 


“Reserve Fund Initial Deposit” means
$4,336,731.74.


 


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


 


“Reserve Fund Trigger Event” means the occurrence with respect to any Distribution
Date (i) the Average Delinquency Ratio for such Distribution Date is equal to
or greater than (a) 2.50% with respect to any Distribution Date which occurs
within the period from the Closing Date to, and inclusive of, the first
anniversary of the Closing Date, (b) 3.00% with respect to any Distribution
Date which occurs within the period from the day after the first anniversary of
the Closing Date to, and inclusive of, the second anniversary of the Closing
Date, or (c) 3.50% with respect to any Distribution Date which occurs within
the period from the day after the second anniversary of the Closing Date to, and
inclusive of, the third anniversary of the Closing Date or (d) 4.00% with
respect to any Distribution Date occurring after the third anniversary of the
Closing Date; (ii) the Average Loss Ratio for such Distribution Date is equal
to or greater than (a) 3.00% with respect to any Distribution Date which occurs
within the period from the Closing Date to, and inclusive of, the second
anniversary of the Closing Date or (b) 2.75% with respect to any Distribution
Date which occurs following the second anniversary of the Closing Date;  or (iii) the Cumulative Loss Ratio for such
Distribution Date is equal to or greater than (a) 1.25%


 


16

















 


with respect to any Distribution Date which occurs
within the period from the Closing Date to, and inclusive of, the first
anniversary of the Closing Date, (b) 2.00% with respect to any Distribution
Date which occurs within the period from the day after the first anniversary of
the Closing Date to, and inclusive of, the second anniversary of the Closing
Date, (c) 2.50% with respect to any Distribution Date which occurs within the
period from the day after the second anniversary of the Closing Date to, and
inclusive of, the third anniversary of the Closing Date, or (d) 2.75% with respect
to any Distribution Date occurring after the third anniversary of the Closing
Date.


 


A Reserve Fund Trigger
Event shall be deemed to have terminated with respect to a Distribution Date if
no Reserve Fund Trigger Event shall exist with respect to three consecutive
Distribution Dates (inclusive of the respective Distribution Date).


 


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


 


“Securities” means the Notes, or any of them.


 


“Securityholders” means the Holders of the
Notes.


 


“Seller” means Harley-Davidson Credit Corp., a Nevada
corporation, or its successor, in its capacity as Seller of Contract Assets
under the Transfer and Sale Agreement and any Subsequent Purchase Agreement.


 


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


 


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


 


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


 


17

















 


“Servicing Officer” means any officer of the Servicer involved in, or
responsible for, the administration and servicing of Contracts whose name
appears on a list of servicing officers appearing in an Officer’s Certificate
furnished to the Indenture Trustee by the Servicer, as the same may be amended
from time to time.


 


“Shortfall” means, with respect to a Distribution Date, the
excess (if any), of the sum of the amounts payable pursuant to clauses (v)
through (viii) of Section 7.05 over Available Monies for such Distribution Date
minus the amounts payable pursuant to clauses (i) through (iv) of Section 7.05
on such Distribution Date.


 


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


 


“Specified Reserve Fund Balance” means, with respect to any Distribution
Date, an amount equal to the greater of:


 


(a)           2.00% of the Principal Balance of the
Contracts in the Trust as of the last day of the related Due Period; provided,
however, in the event a Reserve Fund Trigger Event occurs and is
continuing for three consecutive Distribution Dates (inclusive of the
respective Distribution Date), the Specified Reserve Fund Balance shall be
equal to 6.00% of the Principal Balance of the Contracts in the Trust as of the
last day of the immediately preceding Due Period; and


 


(b)           1.00% of the aggregate of the Initial
Class A-1 Note Balance, Initial Class A-2 Note Balance and Initial Class B Note
Balance;


 


provided, however, in no event shall the Specified Reserve
Fund Balance be greater than the aggregate outstanding principal balance of the
Securities.  As of any Distribution
Date, the amount of funds actually on deposit in the Reserve Fund may, in
certain circumstances, be less than the Specified Reserve Fund Balance.


 


“Standard & Poor’s” means Standard & Poor’s Ratings Services, a
division of The McGraw Hill Companies, or any successor thereto.


 


18

















 


“Subsequent Contracts” means all Contracts transferred to the Trust pursuant
to Section 2.03.


 


“Subsequent Cutoff Date” means the date specified as such for Subsequent
Contracts in the related Subsequent Transfer Agreement.


 


“Subsequent List of Contracts” means a list, in the form of the initial
List of Contracts delivered on the Closing Date, but listing each Subsequent
Contract transferred to the Trust pursuant to the related Subsequent Transfer
Agreement.


 


“Subsequent Purchase Agreement” means, with respect to any Subsequent
Contracts, the agreement between the Seller and the Trust Depositor pursuant to
which the Seller will transfer the Subsequent Contracts to the Trust Depositor,
the form of which is attached to the Transfer and Sale Agreement as Exhibit C.


 


“Subsequent Reserve Fund Amount” means the amount on each Subsequent
Transfer Date equal to 1.00% of the aggregate balance of the Subsequent
Contracts conveyed to the Trust.


 


“Subsequent Transfer Agreement” means the agreement described in Section
2.03(b) hereof.


 


“Subsequent Transfer Date” means any date during the Funding Period on which
Subsequent Contracts are transferred to the Trust.


 


“Successor Servicer” means a servicer
described in Section 8.03(b).


 


“Supplement” means the Prospectus Supplement
dated February 17, 2004.


 


“Transaction Documents” means this Agreement, the Transfer and Sale
Agreement, the Lockbox Agreement, the Indenture, the Trust Agreement, the
Administration Agreement, the Note Depository Agreement, any Subsequent
Transfer Agreement and any Subsequent Purchase Agreement.


 


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


 


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


 


“Trust Accounts” means, collectively, the Collection Account, the
Pre-Funding Account, the Note Distribution Account, the Reserve Fund and the
Interest Reserve Account, or any of them.


 


“Trust Account Property” means the Trust Accounts, all amounts and investments
held from time to time in any Trust Account (whether in the form of deposit
accounts, physical


 


19

















 


property, book-entry securities, uncertificated
securities or otherwise), including the Reserve Fund Initial Deposit, and all
proceeds of the foregoing.


 


“Trust Agreement” means the Trust Agreement, dated as of January 30,
2004, between the Trust Depositor and the Owner Trustee.


 


“Trust Corpus” has the meaning given to such term in Section 2.01(a)
hereof (and in Section 2.03(a) hereof in respect of Subsequent Contracts and
related assets transferred to the Trust pursuant to Subsequent Transfer
Agreements).


 


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


 


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


 


“Trustees” means the Owner Trustee and the
Indenture Trustee.


 


“UCC” means the Uniform Commercial Code as in effect on the date hereof and
from time to time in the State of Illinois, provided that if by reason
of mandatory provisions of law, the perfection or the effect of perfection or
non-perfection or priority of the security interests in any collateral or the
availability of any remedy hereunder is governed by the Uniform Commercial Code
as in effect on or after the date hereof in any other jurisdiction, “UCC”
means the Uniform Commercial Code as in effect in such other jurisdiction for
purposes of the provisions hereof relating to such perfection or effect of
perfection or non-perfection or priority or availability of such remedy.


 


“Uncollectible Advance” means with respect to any Determination Date and any
Contract, the amount, if any, advanced by the Servicer pursuant to Section 7.03
which the Servicer has as of such Determination Date determined in good faith
will not be ultimately recoverable by the Servicer from insurance policies on
the related Motorcycle, the related Obligor or out of Net Liquidation Proceeds
with respect to such Contract.  The
determination by the Servicer that it has made an Uncollectible Advance, or,
that any Advance proposed to be made would be an Uncollectible Advance, shall
be evidenced by an Officer’s Certificate delivered to the Trustees.


 


“Underwriters” means J.P. Morgan Securities Inc., ABN AMRO
Incorporated, BNP Paribas Securities Corp. and Citigroup Global Markets Inc. 


 


“United States” means the United States of
America.


 


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


 


“WTC” means Wilmington Trust Company, in its
individual capacity.


 


20

















 


Section 1.02.        Usage of Terms. 
With respect to all terms in this Agreement, the singular includes the
plural and the plural the singular; words importing any gender include the
other genders; references to “writing” include printing, typing, lithography
and other means of reproducing words in a visible form; references to
agreements and other contractual instruments include all amendments,
modifications and supplements thereto or any changes therein entered into in
accordance with their respective terms and not prohibited by this Agreement;
references to Persons include their permitted successors and assigns; and the
term “including” means “including without limitation.”


 


Section 1.03.        Section References. 
All section references, unless otherwise indicated, shall be to Sections
in this Agreement.


 


Section 1.04.        Calculations. 
Except as otherwise provided herein, all interest rate and basis point
calculations hereunder will be made on the basis of a 360-day year and twelve
30-day months and will be carried out to at least three decimal places.


 


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


 


ARTICLE TWO



TRANSFER OF CONTRACTS


 


Section 2.01.        Closing.  (a)  On the Closing Date, the Trust Depositor
shall transfer, assign, set over and otherwise convey to the Trust by execution
of an assignment substantially in the form of Exhibit A hereto, without
recourse other than as expressly provided herein, (i) all the right, title and
interest of the Trust Depositor in and to the Initial Contracts listed on the
initial List of Contracts delivered on the Closing Date (including, without
limitation, all security interests and all rights to receive payments which are
collected pursuant thereto after the Initial Cutoff Date, including any
liquidation proceeds therefrom, but excluding any rights to receive payments
which were collected pursuant thereto on or prior to the Initial Cutoff Date),
(ii) all rights of the Trust Depositor under any physical damage or other
individual insurance policy (and rights under a “forced placed” policy, if
any) or any debt cancellation agreement relating to any such Contract, an
Obligor or a Motorcycle securing such Contract, (iii) all security interests in
each such Motorcycle, (iv) all documents contained in the related Contract
Files, (v) all rights (but not the obligations) of the Trust Depositor under
any related motorcycle dealer agreements between dealers (i.e., the originators
of certain Contracts) and the Seller, (vi) all rights of the Trust Depositor in
the Lockbox, the Lockbox Account and the related Lockbox Agreement to the
extent they relate to the 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


 


21

















 


investments
of such amounts), (ix) all rights of the Trust Depositor to certain rebates of
premiums and other amounts relating to insurance policies, debt cancellation
agreements, extended service contracts or other repair agreements and other
items financed under such Contracts and (x) all proceeds and products of the
foregoing (the property in clauses (i)-(x) above, being the “Trust
Corpus”).  Although the Trust
Depositor and the Owner Trustee agree that such transfer is intended to be a
transfer of ownership of the Trust Corpus, rather than the granting of a
security interest to secure a borrowing, and that the Trust Corpus shall not be
property of the Trust Depositor, in the event such transfer is deemed to be of
a mere security interest to secure a borrowing, the Trust Depositor shall be
deemed to have granted the Trust a perfected first priority security interest
in such Trust Corpus and this Agreement shall constitute a security agreement
under applicable law.


 


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


 


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


 


(b)           A
certificate of an officer of the Seller substantially in the form of Exhibit B
to the Transfer and Sale Agreement and of an officer of the Trust Depositor
substantially in the form of Exhibit B hereto.


 


(c)           Opinions
of counsel for the Seller and the Trust Depositor substantially in the form of Exhibits
D, E
and F
hereto (and including as an addressee thereof each Rating Agency).


 


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


 


(e)           Copies
of resolutions of the Board of Directors of each of the Seller/Servicer and the
Trust Depositor or of the Executive Committee of the Board of Directors of each
of the Seller/Servicer and the Trust Depositor approving the execution,
delivery and performance of this Agreement and the other Transaction Documents
to which any of them is a party, as applicable, and the transactions
contemplated hereunder and thereunder, certified in each case by the Secretary
or an Assistant Secretary of the Seller/Servicer and the Trust Depositor.


 


(f)            Officially
certified, recent evidence of due incorporation and good standing of each of
the Seller and the Trust Depositor under the laws of Nevada.


 


22

















 


(g)           Evidence
of proper filing with the appropriate office in Nevada of a UCC financing
statement naming the Seller, as debtor, naming the Trust Depositor as assignor
secured party (and the Trust as secured party) and identifying the Contract
Assets as collateral; and evidence of proper filing with the appropriate office
in Nevada of a UCC financing statement naming the Trust Depositor, as debtor,
naming the Trust as assignor secured party (and the Indenture Trustee as
secured party) and identifying the Trust Corpus as collateral; and evidence of
proper filing with the appropriate office in Delaware of a UCC financing
statement naming the Trust, as debtor, and naming the Indenture Trustee, as
secured party and identifying the Collateral as collateral.


 


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


 


(i)            Evidence
of deposit in the Collection Account of all funds received with respect to the
Initial Contracts after the Initial Cutoff Date to the Closing Date, together
with an Officer’s Certificate from the Trust Depositor to the effect that such
amount is correct.


 


(j)            The
Officer’s Certificate of the Seller specified in Section 2.02(h) of the
Transfer and Sale Agreement.


 


(k)           Evidence
of deposit in the Reserve Fund of the Reserve Fund Initial Deposit by the Owner
Trustee.


 


(l)            A
fully executed Transfer and Sale Agreement.


 


(m)          A
fully executed Trust Agreement.


 


(n)           A
fully executed Administration Agreement.


 


(o)           A
fully executed Indenture.


 


Section 2.03.        Conveyance of Subsequent Contracts. 
(a) Subject to the conditions set forth in paragraph (b) below, the
Trust Depositor, shall transfer, assign, set over and otherwise convey to the
Trust, without recourse other than as expressly provided herein and therein,
(i) all the right, title and interest of the Trust Depositor in and to the
Subsequent Contracts listed on the Subsequent List of Contracts (including,
without limitation, all security interests and all rights to receive payments
which are collected pursuant thereto after the related Subsequent Cutoff Date,
including any liquidation proceeds therefrom, but excluding any rights to
receive payments which were collected pursuant thereto on or prior to such
Subsequent Cutoff Date), (ii) all rights of the Trust Depositor under any
physical damage or other individual insurance policy (including a “forced
placed” policy, if any) or any debt cancellation agreement relating
to any such Subsequent Contract, an Obligor or a Motorcycle securing such
Subsequent Contract, (iii) all security interests in each such Motorcycle, (iv)
all documents contained in the related Contract Files, (v) all rights (but not
the obligations) of the Trust Depositor under any related motorcycle dealer
agreements between dealers (i.e., the originators of certain Subsequent
Contracts) and the


 


23

















 


Seller,
(vi) all rights of the Trust Depositor in the Lockbox, the Lockbox Account and
the related Lockbox Agreement to the extent they relate to such Subsequent
Contracts, (vii) all rights (but not the obligations) of the Trust Depositor
under the Transfer and Sale Agreement related to such Subsequent Contracts (to
the extent not already conveyed under Section 2.01(a)), including but not
limited to the Trust Depositor’s related rights under Article V thereof, as
well as all rights, but not the obligations, of the Trust Depositor under the
Subsequent Purchase Agreement related to such Subsequent Contracts, (viii) the
remittances, deposits and payments made into the Trust Accounts from time to
time and amounts in the Trust Accounts from time to time related to such
Subsequent Contracts (to the extent not already conveyed under Section 2.01(a))
(and any investments of such amounts), (ix) all rights of the Trust Depositor
to certain rebates of premiums and other amounts relating to insurance
policies, debt cancellation agreements, extended service contracts or other
repair agreements and other items financed under such Subsequent Contracts and
(x) all proceeds and products of the foregoing (the property in clauses (i)-(x)
above, upon such transfer, becoming part of the “Trust Corpus”).  Although the Trust Depositor and the Owner
Trustee agree that such transfer is intended to be a transfer of ownership,
rather than the granting of a security interest to secure a borrowing, and that
the Trust Corpus following such transfer shall not be property of the Trust
Depositor, in the event such transfer is deemed to be of a mere security
interest to secure a borrowing, the Trust Depositor shall be deemed to have
granted the Owner Trustee for the benefit of the Trust a perfected first
priority security interest in such Trust Corpus and this Agreement shall
constitute a security agreement under applicable law.


 


(b)           The Trust Depositor shall transfer to
the Trust the Subsequent Contracts and the other property and rights related
thereto described in paragraph (a) above only upon the satisfaction of each of
the following conditions on or prior to the related Subsequent Transfer Date:


 


(i)            The
Trust Depositor shall have provided the Owner Trustee, the Indenture Trustee,
the Underwriters and the Rating Agencies with a timely Addition Notice and
shall have provided any information reasonably requested by any of the
foregoing with respect to the Subsequent Contracts;


 


(ii)           the
Funding Period shall not have terminated;


 


(iii)          the
Trust Depositor shall have delivered to the Owner Trustee a duly executed
written assignment (including an acceptance by the Owner Trustee) in
substantially the form of Exhibit L 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 after the related Subsequent Cutoff Date;


 


24

















 


(v)           as
of each Subsequent Transfer Date, neither the Seller nor the Trust Depositor
was insolvent nor will either of them have been made insolvent by such transfer
nor is either of them aware of any pending insolvency;


 


(vi)          the
applicable Subsequent Reserve Fund Amount for such Subsequent Transfer Date
shall have been deposited by the Indenture Trustee from the Pre-Funding Account
to the Reserve Fund;


 


(vii)         each
Rating Agency shall have notified the Trust Depositor, the Owner Trustee and
the Indenture Trustee that following such transfer the Class A-1 Notes and
Class A-2 Notes will be rated in the highest rating category by such Rating
Agency and the Class B Notes will be rated at least its rating as of the
Closing Date by Standard & Poor’s and Moody’s;


 


(viii)        such
addition will not result in a material adverse tax consequence to the Trust or
the Certificateholder as evidenced by an Opinion of Counsel to be delivered by
the Trust Depositor to the Owner Trustee, Indenture Trustee, the Rating
Agencies and the Underwriters;


 


(ix)           the
Trust Depositor shall have confirmed the satisfaction of each condition
precedent specified in this paragraph (b);


 


(x)            the
Trust Depositor shall have delivered to the Rating Agencies and the
Underwriters one or more opinions of counsel (or bring-downs of opinions of
counsel delivered on the Closing Date) with respect to the transfer of the
Subsequent Contracts substantially in the form of the opinions of counsel
delivered to such Persons on the Closing Date;


 


(xi)           no
selection procedures believed by the Trust Depositor to be adverse to the
interests of the Noteholders shall have been utilized in selecting the
Subsequent Contracts;


 


(xii)          the Trust Depositor shall have
delivered to the Rating Agencies evidence that (A) the weighted average
contract rate of the Contracts collectively, following the transfer of the
Subsequent Contracts, is not less than 9.70% and (B) that the weighted average
calculated remaining term to maturity of the Contracts collectively, following
the transfer of the Subsequent Contracts, does not exceed 76 months; 


 


(xiii)         each
of the representations and warranties made by the Seller pursuant to
Section 3.01 of the Transfer and Sale Agreement with respect to the
Subsequent Contracts shall be true and correct as of the related Subsequent
Transfer Date, and the Seller shall have performed all obligations to be
performed by it hereunder on or prior to such Subsequent Transfer Date;


 


25

















 


(xiv)        the
Seller or the Servicer shall, at its own expense, on or prior to the Subsequent
Transfer Date indicate in its Computer File that the Subsequent Contracts
identified on the Subsequent List of Contracts in the Subsequent Transfer
Agreement have been transferred to the Issuer pursuant to this Agreement and
the Transfer and Sale Agreement; and


 


(xv)         the
Seller shall have taken any action required to maintain the first perfected
ownership interest of the Issuer in the Trust Estate and the first perfected
security interest of the Indenture Trustee in the Collateral.


 


(c)           The Trust Depositor covenants to
transfer (at or prior to the end of the Funding Period) to the Trust pursuant
thereto Subsequent Contracts with an aggregate Principal Balance equal to
$191,326,825.85; provided, however, that in complying with such covenant, the
Trust Depositor agrees to make no more than one separate transfer of Subsequent
Contracts per monthly period (as measured by the corresponding Distribution
Dates).  In the event that the Trust
Depositor shall fail to deliver and transfer to the Trust any or all of such
Subsequent Receivables by the date on which the Funding Period ends and the
Pre-Funded Amount is greater than $150,000 on such date, the Trust Depositor
shall cause to be deposited into the Collection Account the amount then on
deposit in the Pre-Funding Account; provided, however, that the foregoing
shall be the sole remedy of the Trust, the Owner Trustee, the Indenture Trustee
and the Securityholders with respect to a failure of the Trust Depositor to
comply with such covenant.


 


ARTICLE THREE



REPRESENTATIONS AND WARRANTIES


 


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


 


26

















 


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


 


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


 


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


 


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


 


(c)           Authorization;
Valid Sale; Binding Obligations. 
The Trust Depositor has the power and authority to make, execute,
deliver and perform its obligations under this Agreement and the other
Transaction Documents to which it is a party and all of the transactions
contemplated under this Agreement and the other Transaction Documents to which
it is a party, and to create the Trust and cause it to make, execute, deliver
and perform its obligations under this Agreement and the other Transaction
Documents to which it is a party and has taken all necessary corporate action
to authorize the execution, delivery and performance of this Agreement and the
other Transaction Documents to which it is a party and to cause the Trust to be
created.  This Agreement and the related
Subsequent Transfer Agreement, if any, shall effect a valid transfer and
assignment of the Trust Corpus, enforceable against the Trust Depositor and
creditors of and purchasers from the Trust Depositor.  This Agreement and the other Transaction Documents to which the
Trust Depositor is a party constitute the legal, valid and binding obligation
of the Trust Depositor enforceable in accordance with their terms, except as
enforcement of such terms may be limited by bankruptcy, insolvency or similar
laws affecting the enforcement of creditors’ rights generally and by the
availability of equitable remedies.


 


27

















 


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


 


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


 


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


 


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


 


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


 


Such representations
speak as of the execution and delivery of this Agreement and as of the Closing
Date in the case of the Initial Contracts, and as of the applicable Subsequent
Transfer


 


28

















 


Date in the case of the
Subsequent Contracts, but shall survive the transfer and assignment of the
Contracts to the Trust.


 


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


 


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


 


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


 


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


 


(d)           No
Violations.  The execution,
delivery and performance of this Agreement and the other Transaction Documents
to which the Servicer is a party by the Servicer will not violate any
provisions of any existing law or regulation or any order or decree of any
court or of any Federal or state regulatory body or administrative agency
having jurisdiction over the Servicer or any of its properties or the Articles
of Incorporation or Bylaws of the Servicer, or constitute a material breach of
any mortgage,


 


29

















 


indenture,
contract or other agreement to which the Servicer is a party or by which the
Servicer or any of the Servicer’s properties may be bound, or result in the
creation of or imposition of any security interest, lien, pledge, preference,
equity or encumbrance of any kind upon any of its properties pursuant to the
terms of any such mortgage, indenture, contract or other agreement, other than
this Agreement.


 


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


 


ARTICLE FOUR



PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS


 


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


 


(b)           The Servicer agrees to maintain the
related Contract Files at its offices where they are currently maintained, or
at such other offices of the Servicer in the State of Nevada as shall from time
to time be identified to the Trustees by written notice.  The Servicer may temporarily move individual
Contract Files or any portion thereof without notice as necessary to conduct
collection and other servicing activities in accordance with its customary
practices and procedures; provided, however, that the Servicer will
take all action necessary to maintain the perfection of the Trust’s interest in
the Contracts and the proceeds thereof. 
It is intended that, by the Servicer’s agreement pursuant to Section
4.01(a) above and this Section 4.01(b), the Trustees shall be deemed to have
possession of the Contract Files for purposes of Section 9-313 of the Uniform
Commercial Code of the State in which the Contract Files are located.


 


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


 


(i)            hold,
or cause the Servicer’s custodian to hold, the Contract Files on behalf of the
Trust, maintain accurate records pertaining to each Contract to enable it to
comply with the terms and conditions of this Agreement, maintain a current
inventory thereof and certify to the Owner Trustee and the Indenture Trustee
annually that it, or its custodian, continues to maintain possession of such
Contract Files;


 


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


 


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


 


(iv)          at
all times maintain, or cause the Servicer’s custodian to maintain, the original
of the fully executed Contract and store such original Contract in a fireproof
vault except as may be necessary to conduct collection and servicing activities
in accordance with its customary practices and procedures; and


 


(v)           as
promptly as practicable after the Closing Date (or Subsequent Transfer Date, as
the case may be), and in any event within 60 days thereof, deliver an Officer’s
Certificate to the Owner Trustee and the Indenture Trustee certifying that as
of a date no earlier than the Closing Date (or Subsequent Transfer Date, as the
case may be) it has conducted an inventory of the Contract Files (which in the
case of Subsequent Contracts, need be only of the Contract Files related to
such Subsequent Contracts) and that there exists a Contract File for each
Contract and stating all exceptions to such statement, if any.


 


(d)           In performing its duties under this
Section 4.01, the Servicer agrees to act with reasonable care, using that
degree of skill and care that it exercises with respect to similar contracts
for the installment purchase of consumer goods owned and/or serviced by it, and
in any event with no less degree of skill and care than would be exercised by a
prudent servicer of motorcycle conditional sales contracts and promissory notes
and security agreements.  The Servicer
shall promptly report to the Owner Trustee and the Indenture Trustee any
failure by it, or its custodian, to hold the Contract Files as herein provided
and shall promptly take appropriate action to remedy any such failure.  In acting as custodian of the Contract
Files, the Servicer further agrees not to assert any legal or beneficial
ownership interest in the Contracts or the Contract Files, except as provided
in Section 5.06.  The Servicer agrees to
indemnify the Noteholders, the Certificateholder, the Owner Trustee and the
Indenture Trustee for any and all liabilities, obligations, losses, damages,
payments, costs, or expenses of any kind whatsoever which may be imposed on,
incurred by or asserted against the Noteholders, the Certificateholder, the
Owner Trustee and the Indenture Trustee as the result of any act or omission by
the Servicer relating to the maintenance and custody of the Contract Files; provided,
however, that the Servicer will not be liable for any portion of any
such amount resulting from the gross negligence or willful misconduct of any
Noteholder, Certificateholder, the Owner Trustee or the Indenture Trustee.  The Trustees shall have no duty to monitor
or otherwise oversee the Servicer’s performance as custodian hereunder.


 


Section 4.02.        Filing.  On or prior
to the Closing Date, the Servicer shall cause the UCC financing statement(s)
referred to in Section 2.02(g) hereof to be filed and from time to 


 


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time
the Servicer shall take and cause to be taken such actions and execute such
documents as are necessary or desirable or as the Owner Trustee or Indenture
Trustee may reasonably request to perfect and protect the Trust’s first
priority perfected interest in the Trust Corpus against all other persons,
including, without limitation, the filing of financing statements, amendments
thereto and continuation statements, the execution of transfer instruments and
the making of notations on or taking possession of all records or documents of
title.  All financing statements filed
or to be filed against the Seller in favor of the Trust Depositor or the Trust
in connection herewith describing the Contract Assets as collateral shall
contain a statement to the following effect: “A purchase of or security
interest in any collateral described in this financing statement, except as
permitted in the Transfer and Sale Agreement or Sale and Servicing Agreement,
will violate the rights of the Secured Party.”


 


Section 4.03.        Name Change or Relocation. 
(a) During the term of this Agreement, neither the Seller nor the Trust
Depositor shall change its name, identity or structure or change its state of
incorporation without first giving at least 30 days’ prior written notice to
the Owner Trustee and the Indenture Trustee.


 


(b)           If any change in either the Seller’s
or the Trust Depositor’s name, identity or structure or other action would make
any financing or continuation statement or notice of lien filed under this
Agreement seriously misleading within the meaning of applicable provisions of
the UCC or any title statute, the Servicer, no later than five days after the effective
date of such change, shall file such amendments as may be required to preserve
and protect the Trust’s interests in the Trust Corpus and the proceeds
thereof.  In addition, neither the
Seller nor the Trust Depositor shall change its state of incorporation unless
it has first taken such action as is advisable or necessary to preserve and
protect the Trust’s interest in the Trust Corpus.  Promptly after taking any of the foregoing actions, the Servicer
shall deliver to the Owner Trustee and the Indenture Trustee an opinion of
counsel reasonably acceptable to the Owner Trustee and the Indenture Trustee
stating that, in the opinion of such counsel, all financing statements or
amendments necessary to preserve and protect the interests of the Trust in the
Trust Corpus and the Indenture Trustee in the Collateral have been filed, and
reciting the details of such filing.


 


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


 


ARTICLE FIVE



SERVICING OF
CONTRACTS


 


Section 5.01.        Responsibility for Contract
Administration.  The Servicer will have the sole obligation
to manage, administer, service and make collections on the Contracts and
perform or cause to be performed all contractual and customary undertakings of
the holder of the


 


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Contracts
to the Obligor.  The Owner Trustee, at
the written request of a Servicing Officer, shall furnish the Servicer with any
powers of attorney or other documents necessary or appropriate in the opinion
of the Owner Trustee to enable the Servicer to carry out its servicing and
administrative duties hereunder.  The
Servicer is hereby appointed the servicer hereunder until such time as any
Service Transfer may be effected under Article VIII.


 


Section 5.02.        Standard of Care. 
In managing, administering, servicing and making collections on the
Contracts pursuant to this Agreement, the Servicer will exercise that degree of
skill and care consistent with the skill and care that the Servicer exercises
with respect to similar contracts serviced by the Servicer, and, in any event
no less degree of skill and care than would be exercised by a prudent servicer
of motorcycle conditional sales contracts and promissory note and security
agreements; provided,
however, that notwithstanding the foregoing, the Servicer shall not
release or waive the right to collect the unpaid balance of any Contract except
that with respect to a Contract that has become a Defaulted Contract, the
Servicer, consistent with its collection policies, may release or waive the
right to collect the unpaid balance of such Defaulted Contract in an effort to
maximize collections thereon.


 


Section 5.03.        Records.  The Servicer
shall, during the period it is servicer hereunder, maintain such books of
account and other records as will enable the Owner Trustee and the Indenture
Trustee to determine the status of each Contract.


 


Section 5.04.        Inspection. 
(a) At all times during the term hereof, the Servicer shall afford the
Owner Trustee and the Indenture Trustee and their respective authorized agents
reasonable access during normal business hours to the Servicer’s records
relating to the Contracts and will cause its personnel to assist in any
examination of such records by the Owner Trustee or the Indenture Trustee, or
such authorized agents and allow copies of the same to be made.  The examination referred to in this Section
will be conducted in a manner which does not unreasonably interfere with the Servicer’s
normal operations or customer or employee relations.  Without otherwise limiting the scope of the examination the Owner
Trustee or the Indenture Trustee may, using generally accepted audit
procedures, verify the status of each Contract and review the Computer File and
records relating thereto for conformity to Monthly Reports prepared pursuant to
Article IX and compliance with the standards represented to exist as to each
Contract in this Agreement.


 


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


 


Section 5.05.        Trust Accounts. 
(a) On or before the Closing Date, the Trust Depositor shall establish
the Trust Accounts, each with and in the name of the Indenture Trustee for the
benefit of the Noteholders.  The
Indenture Trustee is hereby required to ensure that each of the Trust Accounts
is established and maintained as an Eligible Account.


 


(b)           The Indenture Trustee shall deposit
(or the Servicer shall deposit, with respect to payments by or on behalf of the
Obligors received directly by the Servicer), without deposit into


 


33

















 


any intervening account, into the Collection Account
as promptly as practical (but in any case not later than the second Business
Day following the receipt thereof):


 


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


 


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


 


(iii)          The
aggregate of the Reacquisition Prices for Contracts reacquired by the Trust
Depositor as described in Section 7.08;


 


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


 


(v)           All
amounts paid by the Trust Depositor in connection with an optional reacquisition
of the Contracts described in Section 7.10;


 


(vi)          All
amounts realized in respect of Carrying Charges transferred from the Interest
Reserve Account as contemplated in Section 7.03(b); and


 


(vii)         All
amounts received in respect of interest, dividends, gains, income and earnings
on investments of funds in the Trust Accounts (except the Reserve Fund and the
Pre-Funding Account) as contemplated herein.


 


(c)           The Indenture Trustee shall, if
amounts remain on deposit in the Pre-Funding Account at the expiration of the
Funding Period, cause to be deposited into the Note Distribution Account the
amount then in deposit in the Pre-Funding Account.


 


(d)           If the Servicer so directs, in
writing, the Indenture Trustee shall invest the amounts in the Trust Accounts
in Qualified Eligible Investments that are payable on demand or that mature not
later than one Business Day prior to the next succeeding Distribution
Date.  Once such funds are invested, the
Indenture Trustee shall not change the investment of such funds.  Any loss on such investments shall be
deposited in the applicable Trust Account by the Servicer out of its own funds
immediately as realized.  Funds in the
Trust Accounts not so invested must be insured to the extent permitted by law
by the Bank Insurance Fund or the Savings Association Insurance Fund of the
Federal Deposit Insurance Corporation. 
Subject to the restrictions herein, the Indenture Trustee may purchase a
Qualified Eligible Investment from itself or an Affiliate.   Subject to the other provisions hereof, the
Indenture Trustee shall have sole control over each such investment and the
income thereon, and any certificate or other instrument evidencing any such
investment, if any, shall be delivered directly to the Indenture Trustee or its
agent, together with each document of transfer, if any, necessary to transfer
title to such investment to the Indenture Trustee in a manner which complies
with this Section 5.05(d).  All
interest, dividends, gains upon sale and other income from, or earnings on, investments
of funds in the Trust


 


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Accounts (other than the Reserve Fund and the
Pre-Funding Account) shall be deposited in the Collection Account pursuant to
Section 5.05(b) and distributed on the next Distribution Date pursuant to
Section 7.05.  The Trust Depositor and
the Trust agree and acknowledge that the Indenture Trustee is to have “control”
(within the meaning of Section 9-106 of the UCC) of collateral comprised of “Investment
Property” (within the meaning of Section 9-102 of the UCC) for all
purposes of this Agreement.


 


(e)           Notwithstanding anything to the
contrary herein, the Servicer may remit payments on the Contracts and Net
Liquidation Proceeds to the Collection Account in next-day funds or immediately
available funds no later than 10:00 a.m., Central time, on the Business Day
prior to the next succeeding Distribution Date, but only for so long as the
short-term debt security rating of the Servicer is at least “P-1” by Moody’s
and “A-1” by Standard & Poor’s.


 


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


 


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


 


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


 


(iii)          Third, to principal to the extent due
and owing under such Contract.


 


(g)           Any collections on a Contract
remaining after application by the Servicer in accordance with the provisions
of Section 5.05(f) shall constitute an excess payment (an “Excess Payment”).  Excess Payments constituting prepayments of
principal shall be applied as a prepayment of the Principal Balance of such
Contract.  All other Excess Payments
shall be permitted to be retained by the Servicer.


 


(h)           The Servicer will, from time to time
as provided herein, be permitted to withdraw or request the withdrawal from the
Collection Account any amount deposited therein that, based on the Servicer’s
good-faith determination, was deposited in error.


 


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


 


35

















 


all
reasonable out-of-pocket expenses incurred by it in liquidating a Contract and
disposing of the related Motorcycle.


 


(b)           The Servicer may sue to enforce or
collect upon Contracts, in its own name, if possible, or as agent for the
Trustees.  If the Servicer elects to
commence a legal proceeding to enforce a Contract, the act of commencement
shall be deemed to be an automatic assignment of the Contract to the Servicer
for purposes of collection only.  If,
however, in any enforcement suit or legal proceeding it is held that the
Servicer may not enforce a Contract on the ground that it is not a real party
in interest or a holder entitled to enforce the Contract, the Owner Trustee (or
the Indenture Trustee) on behalf of the Trust shall, at the Servicer’s expense,
take such steps as the Servicer deems reasonably necessary to enforce the
Contract, including bringing suit in its name or the names of the Noteholders
under the Indenture and the Certificateholder as owner of the Trust.


 


(c)           The Servicer shall exercise any
rights of recourse against third persons that exist with respect to any
Contract in accordance with the Servicer’s usual practice.  In exercising recourse rights, the Servicer
is authorized on the Trust’s behalf to reassign the Defaulted Contract or the
related Motorcycle to the Person against whom recourse exists at the price set
forth in the document creating the recourse; provided, however, the
Servicer in exercising recourse against any third persons as described in the
immediately preceding sentence shall do so in such manner as to maximize the
aggregate recovery with respect to the Contract; and provided further, however,
that notwithstanding the foregoing the Servicer in its capacity as such may
exercise such recourse only if such Contract (i) was not required to be
reacquired by the Seller pursuant to the Transfer and Sale Agreement or (ii)
was required to be reacquired by the Seller and the Seller has defaulted on
such reacquisition obligation.


 


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


 


(e)           The Servicer may grant to the Obligor
on any Contract an extension of payments due under such Contract; provided
that (i) the extension period is limited to 45 days, provided that such period
may be extended to 62 days on a case-by-case basis (ii) the Obligor has not
received an extension during the previous twelve-month period, (iii) the
evidence supports the Obligor’s willingness and capability to resume monthly payments,
(iv) such extension is consistent with the Servicer’s customary servicing
procedures and is consistent with Section 5.02, (v) such extension does not
extend the maturity date of the Contract beyond the latest maturity date of any
of the Contracts as of the Initial Cutoff Date (or, if a transfer of Subsequent
Contracts to the Trust occurs, beyond the latest maturity date of such
Subsequent Contracts) and (vi) the aggregate Principal Balances of Contracts
which have had extensions granted does not exceed more than 3.00% of the
aggregate of the Initial Class A-1 Note Balance, the Initial Class A-2 Note
Balance and the Initial Class B Note Balance. 
Exceptions to any of clauses (i) through (iv) above may be authorized by
the Servicer’s management on a case-by-case basis consistent with the
Servicer’s prudent business practices.


 


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


 


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


 


Section 5.07.        Trustees to Cooperate. 
Upon payment in full on any Contract, the Servicer shall (if the
Servicer is not then in possession of the Contracts and Contract Files) notify
the Trustees and request delivery of the Contract and Contract File to the
Servicer.  Upon receipt of such notice
and request, the Trustees shall promptly release or cause to be released such
Contract and Contract File to the Servicer. 
Upon receipt of such Contract and Contract File, each of the Trust
Depositor and the Servicer is authorized to execute an instrument in
satisfaction of such Contract and to do such other acts and execute such other
documents as the Servicer deems necessary to discharge the Obligor thereunder
and eliminate the security interest in the Motorcycle related thereto.  The Servicer shall determine when a Contract
has been paid in full; to the extent that insufficient payments are received on
a Contract credited by the Servicer as prepaid or paid in full and satisfied,
the shortfall shall be paid by the Servicer out of its own funds.  From time to time as appropriate for
servicing and repossession in connection with any Contract, if the Servicer is
not then in possession of the Contracts and Contract Files, the Indenture
Trustee shall, upon written request of a Servicing Officer and delivery to the
Indenture Trustee of a receipt signed by such Servicing Officer, cause the
original Contract and the related Contract File to be released to the Servicer
and shall execute such documents as the Servicer shall deem reasonably
necessary to the prosecution of any such proceedings.  Such receipt shall obligate the Servicer to return the original
Contract and the related Contract File to the Indenture Trustee when the need
by the Servicer has ceased unless the Contract shall be reacquired as described
in Section 7.10.  Upon request of a
Servicing Officer, the Indenture Trustee shall perform such other acts as
reasonably requested by the Servicer and otherwise cooperate with the Servicer
in the enforcement of the Certificateholder’s rights and remedies with respect
to Contracts.


 


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


 


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


 


Section 5.10.        Successor Servicer/Lockbox Agreements. 
The Servicer shall use its best efforts to cause Obligors to make all
payments on the Contracts to one or more Lockbox Banks, acting as agent for the
Trust pursuant to a Lockbox Agreement. 
In the event the Servicer shall for any reason no longer be acting as
such, the Successor Servicer shall thereupon assume all of the rights and
obligations of the outgoing servicer under the Lockbox Agreement; provided,
however, that the Successor Servicer shall not be liable for any
acts or obligations of the Servicer prior to such succession.  In such event, the Successor Servicer shall
be deemed to have assumed all of the outgoing Servicer’s interest therein and
to have replaced the outgoing Servicer as a party to each such Lockbox
Agreement to the same extent as if such Lockbox Agreement had been assigned to
the Successor Servicer, except that the outgoing Servicer shall not thereby be
relieved of any liability or obligations on the part of the outgoing Servicer
to the Lockbox Bank under such Lockbox Agreement.  The outgoing Servicer shall, upon the request of the Owner
Trustee, but at the expense of the outgoing Servicer, deliver to the Successor
Servicer all documents and records relating to each such Lockbox Agreement and
an accounting of amounts collected and held by the Lockbox Bank and otherwise
use its best efforts to effect the orderly and efficient transfer of any
Lockbox Agreement to the Successor Servicer.


 


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


 


ARTICLE SIX



THE TRUST DEPOSITOR


 


Section 6.01.        Covenants of the Trust Depositor.  


 


(a)           During the term of this Agreement,
the Trust Depositor will keep in full force and effect its existence, rights
and franchises as a corporation under the laws of the jurisdiction of its
incorporation and will obtain and preserve its qualification to do business in
each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of this Agreement, the other
Transaction Documents and each other instrument or agreement necessary or
appropriate to the proper administration of this Agreement and the transactions
contemplated hereby.


 


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(b)           Arm’s Length Transactions.  During the term of this Agreement, all
transactions and dealings between the Trust Depositor and its Affiliates will
be conducted on an arm’s-length basis.


 


(c)           No Other Business.  The Trust Depositor shall not engage in any
business other than financing, purchasing, owning, selling and managing the
Contracts in the manner contemplated by this Agreement and the other
Transaction Documents and activities incidental thereto; provided, however, that the
Trust Depositor may purchase and transfer (or grant Liens in respect of)
contracts and/or other related assets similar to the Contracts to other Persons
in securitization or other non-recourse financing transactions involving the
Seller or any of its Affiliates (or with respect to the Contract Assets
themselves, following a release and reconveyance thereof from the Trust), on
terms and conditions (with respect to the liabilities imposed upon the Trust
Depositor by virtue of such transactions, as well as in respect of agreements
or restrictions concerning activities of the Trust Depositor and its relations
or interactions with the Seller or the Servicer or other applicable Affiliate
relevant to “bankruptcy remoteness” or “substantive consolidation” analysis),
in each case substantially similar to such terms and conditions applicable to
the Trust Depositor hereunder and under the other Transaction Documents.


 


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


 


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


 


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


 


(g)           Restricted Payments.  Except as permitted or contemplated by the
Transaction Documents, the Trust Depositor shall not, directly or indirectly,
(i) pay any dividend or make any distribution (by reduction of capital or
otherwise), whether in cash, property,


 


39

















 


securities or a combination thereof, to any owner of
an equity interest in the Trust Depositor, (ii) redeem, purchase, retire or
otherwise acquire for value any such equity interest or (iii) set aside or
otherwise segregate any amounts for any such purpose; it being understood that
the Trust Depositor shall at all times have the right to distribute funds
received pursuant to the Transaction Documents to its equity owner.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


The Trust Depositor shall
indemnify, defend and hold harmless the Issuer, the Owner Trustee, WTC, the
Indenture Trustee and the Securityholders from and against any loss, liability
or expense incurred by reason of the Trust Depositor’s willful misfeasance, bad
faith or negligence (other than errors in judgment) in the performance of its
duties under this Agreement, or by reason of reckless disregard of its
obligations and duties under this Agreement.


 


The Trust Depositor shall
indemnify, defend and hold harmless the Issuer, the Owner Trustee, WTC and the
Indenture Trustee from and against all costs, expenses, losses, claims, damages
and liabilities arising out of or incurred in connection with the acceptance or
performance of the trusts and duties herein and, in the case of the Owner Trustee,
in the Trust Agreement and, in the case of the Indenture Trustee, in the
Indenture, except to the extent that such cost, expense, loss, claim, damage or
liability in the case of (i) the Owner Trustee or WTC, as the case may be,
shall be due to the willful misfeasance, bad faith or negligence of the Owner
Trustee or WTC, as the case may be, or shall arise from the breach by the Owner
Trustee or WTC, as the case may be, of any of its representations or warranties
set forth in Section 7.03 of the Trust Agreement, or (ii) the Indenture
Trustee, shall be due to the willful misfeasance, bad faith or negligence of
the Indenture Trustee.


 


The Trust Depositor shall
be liable directly to and will indemnify any injured party or any other
creditor of the Trust for all losses, claims, damages, liabilities and expenses
of the Trust to the extent that Trust Depositor would be liable if the Trust
were a partnership under the Delaware Revised Uniform Limited Partnership Act
in which Trust Depositor were a general partner; provided, however, that
Trust Depositor shall not be liable for any losses incurred by a


 


41

















 


Certificateholder in the capacity of an investor in
the Trust Certificate or a Noteholder in the capacity of an investor in the
Notes.  In addition, any third party
creditors of the Trust (other than in connection with the obligations described
in the immediately preceding sentence for which Trust Depositor shall not be
liable) shall be deemed third party beneficiaries of this paragraph.  The obligations of Trust Depositor under
this paragraph shall be evidenced by the Trust Certificate described in the
Trust Agreement.


 


Indemnification under
this Section shall include, without limitation, reasonable fees and expenses of
counsel and expenses of litigation and shall survive the termination of the
Trust and the resignation or removal of the Trustees.  If the Trust Depositor shall have made any indemnity payments
pursuant to this Section and the Person to or on behalf of whom such payments
are made thereafter shall collect any of such amounts from others, such Person
shall promptly repay such amounts to the Trust Depositor, without interest.


 


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


 


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


 


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


 


(b)           without the affirmative vote of a
majority of the members of the Board of Directors of the Trust Depositor (which
must include the affirmative vote of at least two duly appointed Independent
directors) (i) dissolve or liquidate, in whole or in part, or institute
proceedings to be adjudicated bankrupt or insolvent, (ii) consent to the


 


42

















 


institution of bankruptcy or insolvency proceedings against it, (iii)
file a petition seeking or consent to reorganization or relief under any
applicable federal or state law relating to bankruptcy, (iv) consent to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator (or
other similar official) of the corporation or a substantial part of its
property, (v) make a general assignment for the benefit of creditors, (vi)
admit in writing its inability to pay its debts generally as they become due,
or (vii) take any corporate action in furtherance of the actions set forth in
clauses (i) through (vi) above; provided, however, that no director may be
required by any shareholder of the Trust Depositor to consent to the
institution of bankruptcy or insolvency proceedings against the Trust Depositor
so long as it is solvent; or


 


(c)           merge or consolidate with any other
corporation, company or entity or sell all or substantially all of its assets
or acquire all or substantially all of the assets or capital stock or other
ownership interest of any other corporation, company or entity unless the
Person formed by such consolidation or into which the Trust Depositor has
merged or the Person which acquires by conveyance, transfer or lease
substantially all the assets of the Trust Depositor as an entirety, can
lawfully perform the obligations of the Trust Depositor hereunder and executes
and delivers to the Owner Trustee and the Indenture Trustee an agreement in
form and substance reasonably satisfactory to the Owner Trustee and the
Indenture Trustee which contains an assumption by such successor entity of the
due and punctual performance and observance of each covenant and condition to
be performed or observed by the Trust Depositor under this Agreement; provided
that the Trust Depositor shall provide notice of any merger, consolidation or
succession pursuant to this Section to each Rating Agency and shall receive
from each Rating Agency a letter to the effect that such merger, consolidation
or succession will not result in a qualification, downgrading or withdrawal of
the then-current ratings of each Class of Notes.


 


Section 6.04.        Limitation on Liability of Trust
Depositor and Others.  The Trust Depositor and any director or
officer or employee or agent of the Trust Depositor may rely in good faith on
any document of any kind, prima facie properly executed and submitted by any
Person respecting any matters arising hereunder.  The Trust Depositor and any director or officer or employee or
agent of the Trust Depositor shall be reimbursed by the Owner Trustee or the
Indenture Trustee, as the case may be, for any contractual damages, liability
or expense incurred by reason of the Owner Trustee’s or the Indenture Trustee’s
willful misfeasance, bad faith or negligence (except errors in judgment) in the
performance of their respective duties hereunder, or by reason of reckless
disregard of their respective obligations and duties hereunder.  The Trust Depositor shall not be under any
obligation to appear in, prosecute or defend any legal action that shall not be
incidental to its obligations under this Agreement, and that in its opinion may
involve it in any expense or liability.


 


Section 6.05.        Trust Depositor Not to Resign. 
Subject to the provisions of Section 6.03, the Trust Depositor shall not
resign from the obligations and duties hereby imposed on it as Trust Depositor
hereunder.


 


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ARTICLE SEVEN



DISTRIBUTIONS; RESERVE FUND


 


Section 7.01.        Monthly Distributions. 
(a)  Each Noteholder and
Certificateholder as of the related Record Date shall be paid on the next
succeeding Distribution Date by check mailed to such Noteholder or
Certificateholder at the address for such Noteholder or Certificateholder
appearing on the Note Register or Certificate Register or by wire transfer if
such Noteholder or Certificateholder provides written instructions to the
Indenture Trustee or the Owner Trustee, respectively, at least ten days prior
to such Distribution Date.


 


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


 


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


 


Section 7.03.        Advances; Realization of Carrying Charge. 
(a) On each Determination Date, the Servicer shall compute the amount of
Delinquent Interest, if any, on the Contracts for the immediately preceding Due
Period.  Not later than each
Distribution Date, the Servicer shall advance (each, an “Advance”) an amount equal to
the Delinquent Interest for such Determination Date by depositing such amount in
the Collection Account; provided, however, that the Servicer shall
be obligated to advance Delinquent Interest only to the extent that the
Servicer, in its sole discretion, expects that such advance will not become an
Uncollectible Advance.  The Servicer
shall indicate on each Monthly Report (i) the amount of Delinquent Interest, if
any, on the Contracts for the related Due Period and (ii) the amount of the
Advance, if any, made by the Servicer in respect of the Delinquent Interest
pursuant to this Section 7.03.  If the
amount of such Advance is less than the amount of the Delinquent Interest, the
relevant Monthly Report shall be accompanied by a certificate of a Servicing
Officer setting forth in reasonable detail the basis for the determination by
the Servicer that the portion of the Delinquent Interest not advanced would
become an Uncollectible Advance.  By
each Determination Date, the Servicer shall determine the amount of prior
unreimbursed Advances for which it shall be entitled to be reimbursed pursuant
to the provisions of this Section (such amount, the “Reimbursement Amount”).  The Servicer shall be entitled to be
reimbursed for any outstanding Advance with respect to a Contract by means of a
first priority withdrawal from the Collection Account of such Reimbursement
Amount as provided in Section 7.05(a)(ii).


 


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(b)           The Servicer shall determine no later
than 11:00 a.m., Chicago, Illinois time, on the second Business Day prior to a
Distribution Date the Carrying Charges in respect of the upcoming Distribution
Date.  To the extent of such amount, the
Indenture Trustee shall transfer an amount equal to the Carrying Charges from
the Interest Reserve Account (solely to the extent of the amount then on deposit
in such account) into the Collection Account as contemplated in Section
5.05(b)(vi) hereof.


 


Section 7.04.        Interest Reserve Account.


 


(a)           On
or prior to the Closing Date, the Trust Depositor shall establish with and in
the name of the Indenture Trustee on behalf of the Securityholders, an Eligible
Account designated “Harley-Davidson Customer Funding Corp. Interest
Reserve Account - Harley Davidson Motorcycle Trust 2004-1 – BNY Midwest Trust
Company, as Indenture Trustee” (such account being the “Interest Reserve Account”).


 


(b)           No
withdrawals may be made of funds in the Interest Reserve Account except as
provided in (c) below.  Except as
specifically provided, funds in the Interest Reserve Account shall not be
commingled with funds in any other account established with respect to the
Notes, the Certificate or with any other monies.


 


(c)           All
investment earnings realized in respect of amounts in the Pre-Funding Account
shall be deposited when and as received in the Interest Reserve Account, such
that the Pre-Funded Amount shall never exceed the amount initially deposited
into the Pre-Funding Account on the Closing Date.  With respect to amounts on deposit in the Interest Reserve
Account, the Indenture Trustee shall disburse from such funds the amount specified
in respect of Carrying Charges in accordance with Section 7.03
herein.  In the event that (i) the
Funding Period has terminated, (ii) all amounts on deposit in the
Pre-Funding Account have been disbursed, (iii) a Distribution Date has
elapsed following the occurrence of both (i) and (ii), and (iv) all
amounts referred to in clause (ii) have been applied, then any amounts
remaining in the Interest Reserve Account shall be allocated and distributed to
the Trust Depositor.


 


Section 7.05.        Distributions; Priorities.


 


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


 


(i)            to the Mandatory Redemption
Subaccount in the Note Distribution Account to the Noteholders, the amount of
any Mandatory Redemption, pro rata (based on the outstanding
principal amount of each Class of Notes), calculated on the then current
principal balance of the Notes with the amounts derived from draws on the
Pre-Funding Account (which amounts are available for payment of such Mandatory
Redemptions and not for any other purpose); provided, however, in the event the amount
in the Mandatory Redemption subaccount is less than $150,000 such amount shall
be distributed solely to the Class A-1 Noteholders;


 


45

















 


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


 


(iii)          to the Servicer, the Servicing Fee,
including any unpaid Servicing Fee with respect to one or more prior Due
Periods;


 


(iv)          to the Indenture Trustee, any accrued
and unpaid Indenture Trustee Fee with respect to one or more prior Due Periods;


 


(v)           to the Note Distribution Account,
together with any amounts deposited therein pursuant to Section 7.06, the Note
Interest Distributable Amount with respect to such Distribution Date for each
Class of Notes allocated in the following order of priority:


 


(1)           to the Class A-1 Noteholders and to
the Class A-2 Noteholders, the Note Interest Distributable Amount for each such
Class of Notes; provided, however, that if there are insufficient funds on
deposit in the Note Distribution Account to pay the entire amount of the Note Interest
Distributable Amount for each such Class of Notes, then the amount in the Note
Distribution Account shall be applied to the Class A-1 Notes and the Class A-2
Notes pro
rata on the basis of the Note Interest Distributable Amount for each
such Class of Notes; and


 


(2)           to the Class B Noteholders, the Note
Interest Distributable Amount for such Class of Notes;


 


(vi)          to the Note Distribution Account,
together with any amounts deposited therein pursuant to Section 7.06, the Class
A Note Principal Distributable Amount with respect to such Distribution Date,
first, to the Class A-1 Notes until the Class A-1 Notes have been paid in full,
and second, to the Class A-2 Notes until the Class A-2 Notes have been paid in
full;


 


(vii)         to the Note Distribution Account,
together with any amounts deposited therein pursuant to Section 7.06, the Class
B Note Principal Distributable Amount to the Class B Notes until the Class B
Notes have been paid in full;


 


(viii)        any Excess Amounts to the Reserve Fund
up to the Specified Reserve Fund Balance; and


 


(ix)           to the Holder of the Certificate.


 


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


 


46

















 


(i)            to the Note Distribution Account,
together with any amounts deposited therein pursuant to Section 7.06, the Note
Interest Distributable Amount with respect to such Distribution Date for each
Class of Notes allocated in the following order of priority:


 


(1)           to the Class A-1 Noteholders and to
the Class A-2 Noteholders, the Note Interest Distributable Amount for each such
Class of Notes; provided, however, that if there are insufficient funds on
deposit in the Note Distribution Account to pay the entire amount of the Note
Interest Distributable Amount for each such Class of Notes, then the amount in
the Note Distribution Account shall be applied to the Class A-1 Notes and the
Class A-2 Notes pro rata on the basis of the Note Interest Distributable
Amount for each such Class; and


 


(2)           to the Class B Noteholders, the Note
Interest Distributable Amount for such Class of Notes;


 


(ii)           to the Note Distribution Account,
together with any amounts deposited therein pursuant to Section 7.06, all
amounts remaining after distribution of interest to each Class of Notes shall
be allocated in the following order of priority:


 


(1)           to the Class A Notes, pro rata (based
on outstanding principal amount), until the outstanding principal balance of
each Class of the Class A Notes has been reduced to zero; and


 


(2)           to the Class B Notes, until the
outstanding principal balance of the Class B Notes has been reduced to zero;
and


 


(iii)          to the Holder of the Certificate.


 


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


 


(i)            to the Note Distribution Account,
together with any amounts deposited therein pursuant to Section 7.06, the Note
Interest Distributable Amount with respect to such Distribution Date for
distribution to the Class A-1 Noteholders and to the Class A-2 Noteholders, as
applicable; provided,
however, that if there are insufficient funds on deposit in the Note
Distribution Account to pay the entire amount of the Note Interest
Distributable Amount for each such Class of Notes, then the amount in the Note
Distribution Account shall be applied to the Class A-1 Notes and the Class A-2
Notes pro
rata (on the basis of the Note Interest Distributable Amount for
each such Class);


 


47

















 


(ii)           to the Note Distribution Account,
together with any amounts deposited therein pursuant to Section 7.06, the Class
A Note Principal Distributable Amount for distribution to the Class A-1
Noteholders and the Class A-2 Noteholders in reduction of the outstanding
principal amount of the Class A-1 Notes and Class A-2 Notes, as applicable,
until the outstanding principal balance of the Class A-1 Notes and the Class
A-2 Notes has been reduced to zero; provided, however, that if there are
insufficient funds on deposit in the Note Distribution Account to reduce the
outstanding principal balance of the Class A-1 Notes and the Class A-2 Notes to
zero, the amount in the Note Distribution Account shall be applied to the
payment of principal on the Class A-1 Notes and the Class A-2 Notes pro rata
(based on outstanding principal amount);


 


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


 


(iv)          to the Note Distribution Account,
together with any amounts deposited therein pursuant to Section 7.06, the Class
B Note Principal Distributable Amount with respect to such Distribution Date
for distribution to the Class B Noteholders in reduction of the outstanding
principal amount of the Class B Notes until the outstanding principal balance
of the Class B Notes has been reduced to zero; and


 


(v)           to the Holder of the Certificate.


 


Section 7.06.        Reserve Fund.


 


(a)           On or prior to the Closing Date, the
Indenture Trustee, on behalf of the Trust Depositor shall deposit the Reserve Fund
Initial Deposit into the Reserve Fund from the net proceeds of the Securities.


 


(b)           The Indenture Trustee shall determine
no later than 10:00 a.m., Chicago, Illinois time, on the Distribution Date (but
after making, and taking into account, the determination, demand and transfer
of funds contemplated in Section 7.05 above) whether there exists a Shortfall
with respect to the upcoming Distribution Date.  In the event that the Indenture Trustee determines that there
exists a Shortfall, the Indenture Trustee shall no later than 12:00 noon,
Chicago, Illinois time, on such Distribution Date remit monies from the Reserve
Fund in the following order of priority: 
first, to the Note Distribution Account, the amount of such Shortfall
relating to the Note Interest Distributable Amount and second, to the Note
Distribution Account, the amount of such Shortfall relating to the Note
Principal Distributable Amount.


 


(c)           The Indenture Trustee shall at the
written direction of the Servicer invest the funds in the Reserve Fund in
Qualified Eligible Investments.  Funds
in the Reserve Fund shall be invested in investments that are payable on demand
or mature on or before the Business Day prior to each Distribution Date.  Once such funds are invested, the Indenture
Trustee shall not change the investment of such funds prior to maturity.  Upon any such investment, the Indenture
Trustee shall, consistent with the definition of Qualified Eligible Investment
herein, make an


 


48

















 


appropriate notation of the
security interest in such Qualified Eligible Investment on the Indenture
Trustee’s records, by book entry or otherwise. 
All income and gain realized from any such investments as well as any interest
earned on Reserve Fund Deposits shall be deposited and retained in the Reserve
Fund (subject to Section 7.06(e)). 
Losses, if any, realized on amounts in the Reserve Fund invested
pursuant to this paragraph shall first be credited against undistributed
investment earnings on amounts in the Reserve Fund invested pursuant to this
paragraph, and shall thereafter be deemed to reduce the amount on deposit in
the Reserve Fund.  Neither the Trust
Depositor nor the Indenture Trustee shall be liable for the amount of any loss
incurred in respect of any investment, or lack of investment, of funds held in
the Reserve Fund.  All income or loss on
funds held in the Reserve Fund shall be taxable to the Trust Depositor.


 


(d)           Any Excess Amounts will be applied to
the Specified Reserve Fund Balance.


 


(e)           On each Distribution Date on which
the amount on deposit in the Reserve Fund (after giving effect to all deposits
thereto and withdrawals therefrom on such Distribution Date) is greater than
the Specified Reserve Fund Balance, the Indenture Trustee shall release its
lien on any remaining amounts to the Trust Depositor.


 


Section 7.07.        Establishment of Pre-Funding Account.


 


(a)           On
or prior to the Closing Date, the Trust Depositor shall establish with and in
the name of the Indenture Trustee on behalf of the Securityholders, an Eligible
Account designated “Harley-Davidson Customer Funding Corp. Pre-Funding
Account - Harley Davidson Motorcycle Trust 2004-1 – BNY Midwest Trust Company,
as Indenture Trustee” (such account being the “Pre-Funding Account”).


 


(b)           During
the Funding Period, following receipt from the Trust Depositor of an Addition
Notice, and upon further receipt of a written demand from the Trust Depositor
for a disbursement of funds from the Pre-Funding Account to be made on or
before the date on which the Funding Period terminates (which written demand
must be delivered not later than one Business Day prior to the requested date
of funding and must be accompanied by the written consent of the Indenture
Trustee), the Indenture Trustee will disburse the amount demanded from the
Pre-Funding Account to the Seller upon the order of the Trust Depositor for the
purpose of purchasing Subsequent Contracts from the Seller pursuant to a
Subsequent Purchase Agreement.  With
respect to amounts still remaining on deposit in the Pre-Funding Account on the
date upon which the Funding Period ends (and provided a timely written demand
for funding as described above has not been received requesting funding on such
date) the Indenture Trustee shall immediately transfer all funds remaining in
the Pre-Funding Account to the Note Distribution Account.


 


(c)           If
(x) the Pre-Funded Amount has not been reduced to zero on the Distribution
Date on which the Funding Period ends (or, if the Funding Period does not end
on a Distribution Date, on the first Distribution Date following the end of the
Funding Period) or (y) the Pre-Funded Amount has been reduced to $150,000
or less on any Determination Date, in either case


 


49

















 


after giving effect to any reductions in the
Pre-Funded Amount on such Distribution Date or Determination Date pursuant to
paragraph (a) above, the Trust Depositor shall instruct the Indenture
Trustee to withdraw from the Pre-Funding Account the Pre-Funded Amount and, in
the case of (x), on such Distribution Date or, on the Determination Date
(i) if the Pre-Funded Amount is less than $150,000, deposit the Pre-Funded
Amount in the Note Distribution Account for payment as principal of the
Class A-1 Notes up to the Outstanding Amount thereof and then for payment
of principal of the Class A-2 Notes and Class B Notes and (ii) if the
Pre-Funded Amount is equal to or greater than $150,000, deposit the Pre-Funded
Amount in the Note Distribution Account for payment as principal of the Notes,
pro rata, calculated on the then current principal balance of each Class of
Notes.


 


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


 


Upon a discovery by the
Servicer, the Trust Depositor or the Trustees of a breach of a representation
or warranty of the Seller as set forth in Exhibit J hereto or as made in any
Subsequent Purchase Agreement relating to Subsequent Contracts that materially
adversely affects the Trust’s interest in such Contract (without regard to the
benefits of the Reserve Fund), the party discovering the breach shall give
prompt written notice to the other parties; provided, that the Trustees shall have no
duty or obligation to inquire or to investigate the breach by the Seller of any
of such representations or warranties. 
The Seller, as provided in the Transfer and Sale Agreement and in
accordance with this Section 7.08, shall reacquire a Contract at its
Reacquisition Price, two Business Days prior to the first Determination Date
after the Seller becomes aware, or should have become aware, or receives
written notice from the Trustees, the Servicer or the Trust Depositor of any
breach of a representation or warranty of the Seller set forth in Article III
of the Transfer and Sale Agreement that materially and adversely affects such
Contract or the Trust’s interest in such Contract and which breach has not been
cured; provided,
however, that with respect to any Contract described on the List of
Contracts with respect to an incorrect unpaid Principal Balance which the
Seller would otherwise be required to reacquire under the Transfer and Sale
Agreement, the Seller may, in lieu of reacquiring such Contract, deposit in the
Collection Account not later than one Business Day after such Determination Date
cash in an amount sufficient to cure any deficiency or discrepancy; and provided
further that with respect to a breach of representation or warranty
relating to the Contracts in the aggregate and not to any particular Contract
the Seller may select Contracts (without adverse selection) to reacquire such
that had such Contracts not been included as part of the Trust Corpus there
would have been no breach of such representation or warranty; provided
further that the failure to maintain perfection of the security
interest in the Motorcycle securing a Contract in accordance with Section 5.09,
shall be deemed to be a breach materially and adversely affecting the Trust’s
interest in the Contract or in the related Contracts.  Notwithstanding any other provision of this Agreement, the
obligation of the Seller under the Transfer and Sale Agreement and described in
this Section 7.08 shall not terminate or be deemed released by any party hereto
upon a Service Transfer pursuant to Article VIII.  The reacquisition obligation described in this Section 7.08 is in
no way to be satisfied with monies in the Reserve Fund.


 


50



















 


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


 


Section 7.10.        Seller’s Reacquisition Option. 
As provided in the Transfer and Sale Agreement, on written notice to the
Owner Trustee and Indenture Trustee at least 20 days prior to a Distribution
Date, and provided that the Pool Balance is then less than 10% of the Aggregate
Principal Balance as of the Initial Cutoff Date, the Seller may (but is not
required to) purchase on that Distribution Date all outstanding Contracts (and
related Contract Assets) at a price equal to the aggregate unpaid principal
balance of the Notes on the previous Distribution Date plus the aggregate of
the Note Interest Distributable Amount for the current Distribution Date, the
Reimbursement Amount (if any) as well as accrued and unpaid Monthly Servicing
Fees and the Indenture Trustee Fee to the date of such reacquisition.  Such price shall be deposited in the
Collection Account not later than one (1) Business Day before such Distribution
Date, against the Owner Trustee’s and Indenture Trustee’s release of the
Contracts and the Contract Files to the Seller.


 


ARTICLE EIGHT


 


EVENTS
OF TERMINATION; SERVICE TRANSFER


 


Section 8.01.        Events of Termination. 
“Event of Termination” means the occurrence of any of the following:


 


(a)           Any failure by the Servicer or the
Seller to make any payment or deposit required to be made hereunder or in the
Transfer and Sale Agreement (or in any Subsequent Purchase Agreement or
Subsequent Transfer Agreement) and the continuance of such failure for a period
of four Business Days after the date on which such payment or deposit was due;


 


(b)           Failure on the Servicer’s or the
Seller’s part to observe or perform in any material respect any covenant or
agreement in this Agreement or in the Transfer and Sale Agreement (or in any
Subsequent Purchase Agreement or Subsequent Transfer Agreement) (other than a
covenant or agreement, the breach of which is specifically addressed elsewhere
in this Section) which continues unremedied for 30 days after the date on which
such failure commences;


 


(c)           Any assignment by the Servicer or the
Seller of its duties or rights hereunder or under the Transfer and Sale
Agreement (or under any Subsequent Purchase Agreement or Subsequent Transfer
Agreement), except as specifically permitted hereunder or thereunder, or any
attempt to make such an assignment;


 


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


 


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


 


(f)            Any failure by the Servicer to
deliver to the Trustees the Monthly Report pursuant to the terms of this
Agreement which remains uncured for five Business Days after the date which
such failure commences;


 


(g)           Any representation, warranty or
statement of the Servicer made in this Agreement, in any Subsequent Transfer
Agreement or any certificate, report or other writing delivered pursuant hereto
shall prove to be incorrect in any material respect as of the time when the
same shall have been made and the incorrectness of such representation,
warranty or statement has a material adverse effect on the Trust and, within 30
days after written notice thereof shall have been given to the Servicer or the
Trust Depositor by the Indenture Trustee, the circumstances or condition in
respect of which such representation, warranty or statement was incorrect shall
not have been eliminated or otherwise cured.


 


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


 


Section 8.03.        Service Transfer. 
(a)  If an Event of Termination
has occurred and is continuing and has not been waived pursuant to Section
8.02, (x) the Required Holders or (y) the Indenture Trustee may, by written
notice delivered to the parties hereto, terminate all (but not less than all)
of the Servicer’s management, administrative, servicing, custodial and
collection functions hereunder (such termination being herein called a “Service
Transfer”).


 


(b)           Upon receipt of the notice required
by Section 8.03(a) (or, if later, on a date designated therein), all rights,
benefits, fees, indemnities, authority and power of the Servicer


 


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under this Agreement, whether with respect to the
Contracts, the Contract Files or otherwise, shall pass to and be vested in the
Indenture Trustee (the “Successor Servicer”) pursuant to and
under this Section 8.03; and, without limitation, the Successor Servicer is
authorized and empowered to execute and deliver on behalf of the Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments, and
to do any and all acts or things necessary or appropriate to effect the
purposes of such notice of termination. 
The Servicer agrees to cooperate with the Successor Servicer in
effecting the termination of the responsibilities and rights of the Servicer
hereunder, including, without limitation, the transfer to the Successor
Servicer for administration by it of all cash amounts which shall at the time
be held by the Servicer for deposit, or have been deposited by the Servicer, in
the Collection Account, or for its own account in connection with its services
hereafter or thereafter received with respect to the Contracts.  The Servicer shall transfer to the Successor
Servicer all records held by the Servicer relating to the Contracts in such
electronic form as the Successor Servicer may reasonably request and (ii) any
Contract Files in the Servicer’s possession. 
In addition, the Servicer shall permit access to its premises (including
all computer records and programs) to the Successor Servicer or its designee,
and shall pay the reasonable transition expenses of the Successor
Servicer.  Upon a Service Transfer, the
Successor Servicer shall also be entitled to receive the Monthly Servicing Fee
for performing the obligations of the Servicer.


 


Section 8.04.        Successor Servicer to Act; Appointment
of Successor Servicer.  On or after a Service Transfer
pursuant to Section 8.03, the Successor Servicer shall be the successor in all
respects to the Servicer in its capacity as servicer under this Agreement and
the transactions set forth or provided for herein and shall be subject to all
the responsibilities, duties and liabilities relating thereto placed on the
Servicer by the terms and provisions hereof, and the terminated Servicer shall
be relieved of such responsibilities, duties and liabilities arising after such
Service Transfer; provided, however, that (i) the Successor Servicer will not
assume any obligations of the Servicer described in Section 8.08 and (ii) the
Successor Servicer shall not be liable for any acts or omissions of the
Servicer occurring prior to such Service Transfer or for any breach by the
Servicer of any of its representations and warranties contained herein or in
any related document or agreement. Notwithstanding the above, if the Successor
Servicer is legally unable or unwilling to act as Servicer, the Required
Holders may appoint a successor servicer (other than the original Servicer or
an Affiliate of the original Servicer) to act as Servicer.  As compensation therefor, the successor
servicer shall be entitled to receive reasonable compensation equal to the
Monthly Servicing Fee.  The Owner
Trustee, Noteholders and the Indenture Trustee and such successor shall take
such action, consistent with this Agreement, as shall be necessary to
effectuate any such succession.  To the
extent the terminated Servicer has made Advances, it shall be entitled to
reimbursement of the same notwithstanding its termination hereunder, to the
same extent as if it had continued to service the Contracts hereunder.


 


Section 8.05.        Notification to Securityholders. 
(a)  Promptly following the
occurrence of any Event of Termination, the Servicer shall give written notice
thereof to the Trustees, the Trust Depositor and each Rating Agency at the
addresses described in Section 11.04 hereof and to the Noteholders at their
respective addresses appearing on the Note Register.


 


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(b)           Within 10 days following any
termination or appointment of a Successor Servicer pursuant to this Article
VIII, the Indenture Trustee shall give written notice thereof to each Rating
Agency and the Trust Depositor at the addresses described in Section 11.04
hereof, and to the Noteholders at their addresses appearing on the Note
Register.


 


Section 8.06.        Effect of Transfer. 
(a)   After a Service Transfer,
the terminated Servicer shall have no further obligations with respect to the
management, administration, servicing, custody or collection of the Contracts
and the Successor Servicer appointed pursuant to Section 8.04 shall have all of
such obligations, except that the terminated Servicer will transmit or cause to
be transmitted directly to the Successor Servicer for its own account, promptly
on receipt and in the same form in which received, any amounts (properly
endorsed where required for the Successor Servicer to collect them) received as
payments upon or otherwise in connection with the Contracts.


 


(b)           A Service Transfer shall not affect
the rights and duties of the parties hereunder (including but not limited to
the indemnities of the Servicer)  other
than those relating to the management, administration, servicing, custody or
collection of the Contracts.


 


Section 8.07.        Database File. 
The Servicer will provide the Successor Servicer with a magnetic tape
(in a format reasonably acceptable to the Indenture Trustee and the Servicer)
containing the database file for each Contract (i) as of the Initial 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 Service Transfer
and (iv) on and as of the Business Day before the actual commencement of servicing
functions by the Successor Servicer following the occurrence of a Service
Transfer.


 


Section 8.08.        Successor Servicer Indemnification. 
The Servicer shall defend, indemnify and hold the Successor Servicer and
any officers, directors, employees or agents of the Successor Servicer harmless
against any and all claims, losses, penalties, fines, forfeitures, legal fees
and related costs, judgments and any other costs, fees, and expenses that the
Successor Servicer may sustain in connection with the claims asserted at any
time by third parties against the Successor Servicer which result from (i) any
willful or grossly negligent act taken or omission by the Servicer or (ii) a
breach of any representations of the Servicer in Section 3.02 hereof.  The indemnification provided by this Section
8.08 shall survive the termination of this Agreement.


 


Section 8.09.        Responsibilities of the Successor
Servicer.  The Successor Servicer will not be
responsible for delays attributable to the Servicer’s failure to deliver information,
defects in the information supplied by the Servicer or other circumstances
beyond the control of the Successor Servicer.


 


The Successor Servicer
will make arrangements with the Servicer for the prompt and safe transfer of,
and the Servicer shall provide to the Successor Servicer, all necessary
servicing files and records, including (as deemed necessary by the Successor
Servicer at such time): (i)


 


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microfiche loan documentation, (ii) servicing system
tapes, (iii) Contract payment history, (iv) collections history and (v) the
trial balances, as of the close of business on the day immediately preceding
conversion to the Successor Servicer, reflecting all applicable loan
information.


 


The Successor Servicer
shall have no responsibility and shall not be in default hereunder nor incur
any liability for any failure, error, malfunction or any delay in carrying out
any of its duties under this Agreement if any such failure or delay results
from the Successor Servicer acting in accordance with information prepared or
supplied by a Person other than the Successor Servicer or the failure of any
such Person to prepare or provide such information.  The Successor Servicer shall have no responsibility, shall not be
in default and shall incur no liability (i) for any act or failure to act by
any third party, including the Servicer, the Trust Depositor or the Trustees or
for any inaccuracy or omission in a notice or communication received by the
Successor Servicer from any third party or (ii) which is due to or results from
the invalidity, unenforceability of any Contract with applicable law or the
breach or the inaccuracy of any representation or warranty made with respect to
any Contract.


 


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


 


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


 


Section 8.11.        Merger or Consolidation of Servicer. 
Any Person into which the Servicer may be merged or consolidated, or any
corporation, or other entity resulting from any merger conversion or
consolidation to which the Servicer shall be a party, or any Person succeeding
to all or substantially all of the business of the Servicer (which Person
assumes the obligations of the Servicer), shall be the successor of the
Servicer hereunder, without the execution or filing of any paper or any further
act on the part of any of the parties hereto,


 


55

















 


anything
herein to the contrary notwithstanding. 
The Servicer shall give prior written notice of any such merger or
consolidation to which it is a party to the Issuer, the Owner Trustee, the
Indenture Trustee and the Rating Agencies.


 


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


 


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


 


ARTICLE NINE


 


REPORTS


 


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


 


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


 


Section 9.03.        Other Data. 
In addition, the Trust Depositor and the Servicer shall, upon the
request of the Trustees, Moody’s or Standard & Poor’s, furnish the
Trustees, Moody’s or Standard & Poor’s, as the case may be, such underlying
data as may be reasonably requested.


 


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Section 9.04.        Annual
Report of Accountants.


 


(a)           The Servicer shall cause a firm of
nationally recognized independent certified public accountants (the “Independent
Accountants”),
who may also render other services to the Servicer, Harley-Davidson Financial
or to the Trust Depositor, to deliver to the Trustees, the Underwriters and
each Rating Agency, on or before March 31 (or 90 days after the end of the
Servicer’s fiscal year, if other than December 31) of each year, beginning on
March 31, 2005, with respect to the twelve months ended the immediately
preceding December 31 (or other applicable date), a statement (the “Accountant’s
Report”)
addressed to the Board of Directors of the Servicer and to the Trustees to the
effect that such firm has audited the financial statements of Harley-Davidson
Financial and issued its report thereon and that such audit:


 


(1)           was
made in accordance with generally accepted auditing standards, and accordingly
included such tests of the accounting records and such other auditing
procedures as such firm considered necessary in the circumstances;


 


(2)           included
an examination of documents and records relating to the servicing of motorcycle
conditional sales contracts and promissory note and security agreements under
pooling and servicing agreements substantially similar to one another (such
statement to have attached thereto a schedule setting forth the pooling and
servicing agreements covered thereby, including this Agreement);


 


(3)           included
an examination of the delinquency and loss statistics relating to
Harley-Davidson Financial’s portfolio of motorcycle conditional sales contracts
and promissory notes and security agreements; and


 


(4)           except
as described in the statement, disclosed no exceptions or errors in the records
relating to motorcycle loans serviced for others that, in the firm’s opinion,
generally accepted auditing standards requires such firm to report.


 


The Accountant’s Report shall further state that:


 


(1)           a
review in accordance with agreed upon procedures was made of one randomly
selected Monthly Report; and


 


(2)           except
as disclosed in the Report, no exceptions or errors in the Monthly Report so
examined were found.


 


(b)           The Accountant’s Report shall also
indicate that the firm is independent of Harley-Davidson Financial within the
meaning of the Code of Professional Ethics of the American Institute of
Certified Public Accountants.


 


(c)           In the event the Independent
Accountants require the Indenture Trustee to agree to the procedures performed
by such firm, the Servicer shall direct the Indenture Trustee in writing to so
agree; it being understood and agreed that the Indenture Trustee will deliver
such letter of agreement in conclusive reliance upon the direction of the
Servicer, and the Indenture Trustee


 


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shall not make any independent inquiry or
investigation as to, and shall have no obligation or liability in respect of,
the sufficiency, validity or correctness of such procedures.


 


Section 9.05.        Annual Statement of Compliance from
Servicer.  The Servicer will deliver to the Trustees,
the Underwriters and each of the Rating Agencies, on or before January 31 of
each year commencing January 31, 2005, an Officer’s Certificate stating that
(a) a review of the activities of the Servicer during the prior calendar year
and of its performance under this Agreement was made under the supervision of
the officer signing such certificate and (b) to such officer’s knowledge, based
on such review, the Servicer has fully performed all its obligations under this
Agreement, or, if there has been a default in the performance of any such
obligation, specifying each such default known to such officer and the nature
and status thereof.  A copy of such
certificate may be obtained (i) by any Noteholder by a request in writing to
the Indenture Trustee and (ii) by any Certificateholder by a request in writing
to the Owner Trustee.


 


Section 9.06.        Monthly Reports to Noteholders. 
(a)  On or before two Business
Days prior to each Distribution Date, the Servicer shall prepare and,
concurrently with each distribution to Noteholders pursuant to Article VII,
deliver to the Indenture Trustee, in its capacity as Note Registrar and Paying
Agent, shall cause to be delivered and mailed to each Noteholder at the
addresses appearing on the Note Register a statement as of the related
Distribution Date substantially in the form of Exhibit I hereto (the “Monthly
Report”) setting forth:


 


(i)            the
amount of Noteholder’s principal distribution;


 


(ii)           the
amount of Noteholder’s interest distribution;


 


(iii)          the
amount of fees payable out of the Trust, separately identifying the Monthly
Servicing Fee and the Indenture Trustee Fee;


 


(iv)          the
amount of any Note Interest Carryover Shortfall and Note Principal Carryover
Shortfall on such Distribution Date and the change in such amounts from those
with respect to the immediately preceding Distribution Date;


 


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


 


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


 


(vii)         the
amount of any Mandatory Redemption to be made on such Distribution Date;


 


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(viii)        for
each Distribution Date during the Funding Period, the remaining Pre-Funded
Amount;


 


(ix)           for
each Distribution Date during the Funding Period to and including the
Distribution Date immediately following the end of the Funding Period, the
Principal Balance and number of Subsequent Contracts conveyed to the Trust
during the related Due Period;


 


(x)            the
remaining Principal Balance after giving effect to the distribution of
principal (and Mandatory Redemption, if any) to each class of Notes to be made
on such Distribution Date;


 


(xi)           the
number and aggregate principal balance of Contracts delinquent 30-59 days,
60-89 days and 90 or more days, computed as of the end of the related Due
Period;


 


(xii)          the
number and aggregate principal balance of Contracts that became Liquidated
Contracts during the immediately preceding Due Period, the amount of
liquidation proceeds for such Due Period, the amount of liquidation expenses
being deducted from liquidation proceeds for such Due Period, the Net
Liquidation Proceeds and the Net Liquidation Losses for such Due Period;


 


(xiii)         the
Loss Ratio, Average Loss Ratio, Cumulative Loss Ratio, the Delinquency Ratio
and the Average Delinquency Ratio as of such Distribution Date;


 


(xiv)        the
number of Contracts and the aggregate Principal Balance of such Contracts, as
of the first day of the Due Period relating to such Distribution Date (after
giving effect to payments received during such Due Period and to any transfers
of Subsequent Contracts to the Trust occurring on or prior to such Distribution
Date);


 


(xv)         the
aggregate Principal Balance and number of Contracts that were reacquired by the
Seller pursuant to the Agreement with respect to the related Due Period,
identifying such Contracts and the Reacquisition Price for such Contracts;


 


(xvi)        the
amount otherwise distributable on the Class B Notes that has instead been
distributed to one or more senior Classes of Notes on such Distribution Date;


 


(xvii)       the
amount of Advances made by the Servicer in respect of the related Contracts and
the related Due Period and the amount of unreimbursed Advances in respect of
the related Contracts determined by the Servicer to be Defaulted Contracts; and


 


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


 


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


 


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


 


ARTICLE TEN


 


TERMINATION


 


Section 10.01.      Sale of Trust Assets.


 


(a)           [Intentionally
Omitted].


 


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


 


(c)           Following
the satisfaction and discharge of the Indenture and the payment in full of the
principal of and interest on the Notes, the Certificateholder will succeed to
the rights of the Noteholders hereunder and the Owner Trustee will succeed to
the rights of, and assume the obligations of, the Indenture Trustee pursuant to
this Agreement.


 


ARTICLE ELEVEN


 


MISCELLANEOUS


 


Section 11.01.      Amendment.


 


(a)           This
Agreement may be amended by the Trust Depositor, the Servicer, the Indenture
Trustee and the Owner Trustee on behalf of the Issuer, collectively, without
the consent of any Securityholders, (i) to cure any ambiguity, to correct or
supplement any provisions in this Agreement which are inconsistent with the
provisions herein or in the Prospectus, or to add any other provisions with
respect to matters or questions arising under this Agreement that shall not be
inconsistent with the provisions of this Agreement or the Prospectus, (ii) to
add or provide any credit enhancement for any Class of Notes and (iii) to
change any provision applicable for determining the Specified Reserve Fund
Balance or the manner in which the Reserve Fund is funded; provided, however that any
such action shall not, as evidenced by an Opinion of Counsel, adversely affect
in any material respect the interests of any Securityholder and provided,
further, that in connection with any amendment pursuant to clause (iii) above,
the


 


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Servicer shall deliver to the Owner Trustee and the
Indenture Trustee a letter from Standard & Poor’s (so long as Standard
& Poor’s is a Rating Agency) and Moody’s (so long as Moody’s is a Rating
Agency) to the effect that such amendment will not cause its then-current
rating on any Class of Notes to be qualified, reduced or withdrawn.


 


(b)           This
Agreement may also be amended from time to time by the Trust Depositor, the
Servicer, the Indenture Trustee and the Owner Trustee on behalf of the Issuer,
with the consent of the Required Holders, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or of modifying in any manner the rights of the Noteholders or the
Certificateholder; provided, however, that no such amendment
shall increase or reduce in any manner the amount of, or accelerate or delay
the timing of (i)(a) collections of payments on the Contracts or distributions
that shall be required to be made on any Note or any Interest Rate, (b) except
as otherwise provided in Section 11.01(a), the Specified Reserve Fund Balance
or the manner in which the Reserve Fund is funded or (ii) reduce the aforesaid
percentage of the Outstanding Amount of the Notes, the Holders of which are
required to consent to any such amendment, without the consent of the Holders
of all Notes of the relevant Class then outstanding and the Certificate.


 


(c)           Prior
to the execution of any such amendment or consent, the Indenture Trustee shall
furnish written notification of the substance of such amendment or consent,
together with a copy thereof, to each Rating Agency.


 


(d)           Promptly
after the execution of any such amendment or consent, the Owner Trustee and the
Indenture Trustee, as the case may be, shall furnish written notification of
the substance of such amendment or consent to each Noteholder.  It shall not be necessary for the consent of
Noteholders pursuant to Section 11.01(b) to approve the particular form of any
proposed amendment or consent, but it shall be sufficient if such consent shall
approve the substance thereof.  The
manner of obtaining such consents and of evidencing the authorization by
Noteholders of the execution thereof shall be subject to such reasonable
requirements as the Owner Trustee or the Indenture Trustee may prescribe.


 


(e)           Prior
to the execution of any amendment to this Agreement, the Owner Trustee and the
Indenture Trustee shall be entitled to receive and rely upon an Opinion of
Counsel stating that the execution of such amendment is authorized or permitted
by this Agreement.  The Owner Trustee
and the Indenture Trustee may, but shall not be obligated to, enter into any
such amendment which affects the Owner Trustee’s or the Indenture Trustee’s own
rights, duties or immunities under this Agreement or otherwise.


 


(f)            Notwithstanding anything to the
contrary in this Section 11.01, the Trust Depositor or the Servicer, acting on
behalf of the Trust Depositor, may request each Rating Agency to approve a
formula for determining the Specified Reserve Fund Balance that is different
from the formula or result determined from the current definition thereof
contained herein so as to result in a decrease in the amount of the Specified
Reserve Fund Balance or the manner by which such Reserve Fund is funded.  If each Rating Agency delivers to the
Indenture


 


61

















 


Trustee and Owner Trustee a written notice or letter
stating that such action will not result in a reduction or withdrawal of the
rating of any outstanding Class with respect to which a Rating Agency has
previously issued a rating as a result or such action, then the Specified
Reserve Fund Balance will be theretofore determined in accordance with such
changed formula or manner of funding, and an amendment to this Agreement
effecting such change may be executed without the consent of any
Securityholder.


 


Section 11.02.      Protection of Title to Trust.


 


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


 


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


 


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


 


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


 


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


 


62

















 


modified on the Servicer’s computer systems when, and
only when, the related Contract shall have been paid in full or reacquired or
shall have become a Liquidated Contract.


 


(f)            If
at any time the Trust Depositor or the Servicer shall propose to sell, grant a
security interest in, or otherwise transfer any interest in motorcycle
conditional sales contracts or promissory note and security agreements to any
prospective purchaser, lender or other transferee, the Servicer shall give or
cause to be given to such prospective purchaser, lender or other transferee
computer tapes, records or print-outs (including any restored from back-up
archives) that, if they shall refer in any manner whatsoever to any Contract,
shall indicate clearly that such Contract has been transferred and is owned by
the Issuer and has been pledged to the Indenture Trustee.


 


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


 


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


 


(i)            The
Servicer shall deliver to the Owner Trustee, the Indenture Trustee and each
Rating Agency promptly after the execution and delivery of this Agreement and
of each amendment hereto, an Opinion of Counsel either (A) stating that, in the
opinion of such counsel, all financing statements and continuation statements
have been executed and filed that are necessary fully to preserve and protect
the interest of the Owner Trustee and the Indenture Trustee and reciting the
details of each filings or referring to prior Opinions of Counsel in which such
details are given, or (B) stating that, in the opinion of such counsel, no such
action shall be necessary to preserve and protect such interest.


 


Section 11.03.      Governing Law. 
This Agreement shall be construed in accordance with the laws of the
State of Illinois and the obligations, rights, and remedies of the parties
under the Agreement shall be determined in accordance with such laws, except
that the duties of the Owner Trustee shall be governed by the laws of the State
of Delaware.


 


Section 11.04.      Notices.  All notices,
demands, certificates, requests and communications hereunder (“notices”) shall
be in writing and shall be effective (a) upon receipt when sent through the
U.S. mails, registered or certified mail, return receipt requested, postage
prepaid, with such receipt to be effective the date of delivery indicated on
the return receipt, or (b) one Business Day after delivery to an overnight
courier, or (c) on the date personally delivered to an Authorized Officer of
the party to which sent, or (d) on the date transmitted by legible telecopier
transmission with a confirmation of receipt, in all cases addressed to the
recipient as follows:


 


(i)            If to the Servicer
or Seller:


 


63

















 


Harley-Davidson Credit Corp.

150 South Wacker Drive, Suite 3100

Chicago, Illinois 60606

Attention: Perry A. Glassgow


 


Telecopier No.: (312) 368-4372


 


(ii)           If to the Trust
Depositor:


 


Harley-Davidson Customer Funding Corp.

4150 Technology Way

Carson City, Nevada 89706

Attention:  Perry A. Glassgow


 


Telecopier No.: (775) 886-3490


 


with a copy to:


 


Harley-Davidson Credit Corp.

150 South Wacker Drive, Suite 3100

Chicago, Illinois  60606

Attention:  Perry A. Glassgow

Telecopier No.:   (312) 368-4372


 


(iii)          If to the Indenture
Trustee:


 


BNY Midwest Trust Company

2 North LaSalle Street

Suite 1020

Chicago, Illinois 60602

Attention:  Corporate Trust
Administration


 


Telecopier No.:  (312) 827-8562


 


(iv)          If to the Owner
Trustee:


 


Wilmington Trust Company

Rodney Square North

1100 North Market Street

Wilmington, Delaware 19890-0001

Attention: Corporate Trust Administration


 


Telecopier No.: (302) 651-8882


 


64

















 


(v)           If to Moody’s:


 


Moody’s Investors Service, Inc.

99 Church Street

New York, New York 10007

Attention: ABS Monitoring Department


 


Telecopier No.: (212) 553-1350


 


(vi)          If to Standard &
Poor’s:


 


Standard & Poor’s Ratings Services, a

division of The McGraw Hill Companies


55 Water Street

New York, New York 10004


 


Telecopier No.: (212) 438-2657


 


(vii)         If to the
Underwriters:


 


J.P. Morgan Securities, Inc.

270 Park Avenue

10th Floor

New York, New York 10017

Attention:  General Counsel


 


Telecopier No.:  (212) 834-6562


 


ABN AMRO Incorporated

135 South LaSalle Street, Suite 725

Chicago, Illinois  60603

Attention:  Erik Ford


 


Telephone No.:  (312) 904-4028


 


BNP Paribas Securities Corp.

787 Seventh Avenue

New York, New York  10019

Attention:  Michael Gonik


 


Telecopier No.:  (212) 841-2689


 


Citigroup Global Markets Inc.

390 Greenwich Street

6th Floor


 


65

















 


New York, New York  10013

Attention:  Asset Backed Finance
Division


 


Telecopier No.:  (212) 723-8591


 


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


 


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


 


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


 


Section 11.07.      Third Party Beneficiaries. 
Except as otherwise specifically provided herein, the parties hereto
hereby manifest their intent that no third party shall be deemed a third party
beneficiary of this Agreement, and specifically that the Obligors are not third
party beneficiaries of this Agreement.


 


Section 11.08.      Counterparts. 
This Agreement may be executed in several counterparts, each of which
shall be an original and all of which shall together constitute but one and the
same instrument.


 


Section 11.09.      Headings.  The headings
of the various Articles and Sections herein are for convenience of reference
only and shall not define or limit any of the terms or provisions hereof.


 


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


 


(b)           The Trust acknowledges and agrees
that the Certificate represents a beneficial interest in the Trust and Trust
Corpus only and the Securities do not represent an interest in any


 


66

















 


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


 


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


 


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


 


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


 


(a)           Notwithstanding anything contained
herein to the contrary, this Agreement has been executed by Wilmington Trust
Company, not in its individual capacity but solely in its capacity as Owner
Trustee of the Issuer, and in no event shall Wilmington Trust Company in its
individual capacity or any beneficial owner of the Issuer have any liability
for the representations, warranties, covenants, agreements or other obligations
of the Issuer hereunder, as to all of which recourse shall be had solely to the
assets of the Issuer.  For all purposes
of this Agreement, in the performance of any duties or obligations of the
Issuer hereunder, the Owner


 


67

















 


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


 


(b)           Notwithstanding anything contained
herein to the contrary, this Agreement has been executed by BNY Midwest Trust
Company, not in its individual capacity but solely as Indenture Trustee, and in
no event shall BNY Midwest Trust Company have any liability for the
representations, warranties, covenants, agreements or other obligations of the
Issuer hereunder or in any of the certificates, notices or agreements delivered
pursuant hereto, as to all of which recourse shall be had solely to the assets
of the Issuer.


 


[signature page
follows]


 


68

















 


IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be duly executed by their
respective officers as of the day and year first above written.


 


	
   

  	
  HARLEY-DAVIDSON MOTORCYCLE TRUST 2004-1

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Wilmington Trust Company, not in its individual capacity but solely
  as Owner Trustee on behalf of the Trust

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/  Patricia A. Evans

  
	
   

  	
   

  	
   

  	
   

  	
  Printed Name: Patricia A. Evans

  Title: Assistant Vice President

  



 


 


	
   

  	
  HARLEY-DAVIDSON CUSTOMER FUNDING CORP.,

  as Trust Depositor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  /s/  Perry A. Glassgow

  
	
   

  	
   

  	
   

  	
   

  	
  Printed Name: Perry A. Glassgow

  Title: Treasurer

  



 


 


	
   

  	
  HARLEY-DAVIDSON CREDIT CORP., as Servicer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  /s/  Perry A. Glassgow

  
	
   

  	
   

  	
   

  	
   

  	
  Printed Name: Perry A. Glassgow

  
	
   

  	
   

  	
   

  	
   

  	
  Title: Treasurer

  



 


 


	
   

  	
  BNY MIDWEST TRUST COMPANY, not in its 

  individual capacity but solely as Indenture Trustee

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  /s/  Cynthia Davis

  
	
   

  	
   

  	
   

  	
   

  	
  Printed Name: Cynthia Davis

  Title: Assistant Vice President

  



 


Signature Page to Sale and Servicing Agreement


 


69

















 


Exhibit A


 


[Form of Assignment]


 


In accordance with the
Sale and Servicing Agreement (the “Sale and Servicing Agreement”) dated as of
February 1, 2004 made by and between the undersigned, as Trust Depositor (“Trust
Depositor”), Harley-Davidson Credit Corp., as Servicer (“HDCC”),
BNY Midwest Trust Company, as Indenture Trustee and Harley-Davidson Motorcycle
Trust 2004-1 (the “Trust”), as assignee thereunder, the undersigned does
hereby sell, transfer, convey and assign, set over and otherwise convey to the
Trust (i) all the right, title and interest of the Trust Depositor in and to
the Initial Contracts listed on the initial List of Contracts delivered on the
Closing Date (including, without limitation, all security interests and all
rights to receive payments which are collected pursuant thereto after the
Initial Cutoff Date, including any liquidation proceeds therefrom, but
excluding any rights to receive payments which were collected pursuant thereto
on or prior to the Initial Cutoff Date), (ii) all rights of the Trust Depositor
under any physical damage or other individual insurance policy (and rights
under a “forced
placed” policy, if any) or any debt cancellation agreement relating
to any such Contract, an Obligor or a Motorcycle securing such Contract, (iii)
all security interests in each such Motorcycle, (iv) all documents contained in
the related Contract Files, (v) all rights (but not the obligations) of the
Trust Depositor under any related motorcycle dealer agreements between dealers
(i.e., the originators of certain Contracts) and HDCC, (vi) all rights of the
Trust Depositor in the Lockbox, the Lockbox Account and related Lockbox
Agreement to the extent they relate to such Contracts, (vii) all rights (but
not the obligations) of the Trust Depositor under the Transfer and Sale
Agreement, including but not limited to the Trust Depositor’s rights under
Article V thereof, (viii) the remittances, deposits and payments made into the
Trust Accounts from time to time and amounts in the Trust Accounts from time to
time (and any investments of such amounts), (ix) all rights of the Trust
Depositor to certain rebates of premiums and other amounts relating to
insurance policies, debt cancellation agreements, extended service contracts or
other repair agreements and other items financed under such Contracts, and (x)
all proceeds and products of the foregoing.


 


This Assignment is made
pursuant to and in reliance upon the representation and warranties on the part
of the undersigned contained in Article III of the Agreement and no others.


 


Capitalized terms used
herein but not otherwise defined shall have the meanings assigned to such terms
in the Agreement.


 


IN WITNESS WHEREOF, the
undersigned has caused this Assignment to be duly executed this
           day of February,
2004.


 


	
   

  	
  HARLEY-DAVIDSON CUSTOMER FUNDING CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  
	
   

  	
  Printed Name:  Perry A.
  Glassgow

  
	
   

  	
  Title:   Treasurer

  



 


A-1

















 


Exhibit B


 


[Form of Closing Certificate of Trust
Depositor]


 


Harley-Davidson
Customer Funding Corp.


 


Officer’s
Certificate


 


The undersigned certifies
that he is Vice President, Treasurer and Assistant Secretary of Harley-Davidson
Customer Funding Corp., a Nevada corporation (the “Trust Depositor”), and that
as such is duly authorized to execute and deliver this certificate on behalf of
the Trust Depositor in connection with the Sale and Servicing Agreement (the “Agreement”)
dated as of February 1, 2004 (the “Effective Date”) by and among the Trust
Depositor, BNY Midwest Trust Company (the “Indenture Trustee”), as Indenture
Trustee,  Harley-Davidson Credit Corp.
(“Harley-Davidson
Credit”), as Servicer, and Harley-Davidson Motorcycle Trust 2004-1
(“Issuer”)
(all capitalized terms used herein without definition have the respective
meanings set forth in the Agreement), and further certifies as follows:


 


(1)           Attached
hereto as Exhibit
I is a true and correct copy of the Articles of Incorporation of the
Trust Depositor, together with all amendments thereto as in effect on the date
hereof.


 


(2)           There
has been no other amendment or other document filed affecting the Articles of
Incorporation of the Trust Depositor since May 12, 2000, and no such amendment
has been authorized by the Board of Directors or shareholders of the Trust
Depositor.


 


(3)           Attached
hereto as Exhibit
II is a Certificate of the Secretary of State of the State of Nevada
dated February 2, 2004 stating that the Trust Depositor is duly
incorporated under the laws of the State of Nevada and is in good standing.


 


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


 


(5)           Attached
hereto as Exhibit
IV is a true and correct copy of resolutions adopted pursuant to the
unanimous written consent of the Board of Directors of the Trust Depositor
relating to the execution, delivery and performance of the Agreement; the
Transfer and Sale Agreement dated as of the Effective Date between the Trust
Depositor and Harley-Davidson Credit; the Trust Agreement dated as of January
30, 2004 between the Trust Depositor and Wilmington Trust Company (the “Owner
Trustee”), as Owner Trustee; the Administration Agreement dated as of the Effective
Date between the Trust Depositor, the Issuer, the Indenture Trustee,
Harley-Davidson Credit, as Administrator; the Underwriting Agreement dated
February 17, 2004 among the Trust Depositor,


 


B-1

















 


Harley-Davidson
Credit and the Underwriters (collectively, the “Program Agreements”).  Said resolutions have not been amended,
modified, annulled or revoked, and are on the date hereof in full force and
effect and are the only resolutions relating to these matters which have been
adopted by the Board of Directors.


 


(6)           No
event with respect to the Trust Depositor has occurred and is continuing which
would constitute an Event of Termination or an event that, with notice or the
passage of time or both, would become an Event of Termination under the
Agreement.  To the best of my knowledge
after reasonable investigation, there has been no material adverse change in
the condition, financial or otherwise, or the earnings, business affairs or
business prospects of the Trust Depositor, whether or not arising in the
ordinary course of business since the respective dates as of which information
is given in the Prospectus and except as set forth therein.


 


(7)           All
federal, state and local taxes of the Trust Depositor due and owing as of the
date hereof have been paid.


 


(8)           All
representations and warranties of the Trust Depositor contained in the Program
Agreements or any other related documents, or in any document, certificate or
financial or other statement delivered in connection therewith are true and
correct as of the date hereof.


 


(9)           There
is no action, investigation or proceeding pending or, to our knowledge,
threatened against the Trust Depositor before any court, administrative agency
or other tribunal (a) asserting the invalidity of the Program Agreements; (b)
seeking to prevent the consummation of any of the transactions contemplated by
the Program Agreements; or (c) which is likely materially and adversely to
affect the Trust Depositor’s performance of its obligations under, or the
validity or enforceability of, the Program Agreements.


 


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


 


(11)         The
Trust Depositor is not a party to any agreements or instruments evidencing or
governing indebtedness for money borrowed or by which the Trust Depositor or
its property is bound (other than the Program Agreements).  Neither Harley-Davidson Credit’s transfer
and assignment of the Contract Assets to the Trust Depositor, the Trust
Depositor’s concurrent transfer and assignment of the Trust Corpus to the
Trust, nor the concurrent pledge of the Collateral by the Trust to the
Indenture Trustee nor the issuance and sale of the Certificate and the Notes,
nor the execution and delivery of the


 


B-2

















 


Program
Agreements, nor the consummation of any other of the transactions contemplated
therein, will violate or conflict with any agreement or instrument to which the
Trust Depositor is a party or by which it is otherwise bound.


 


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


 


(13)         Each
of the agreements and conditions of the Trust Depositor to be performed on or
before the Closing Date pursuant to the Program Agreements have been performed
in all material respects.


 


*   
*    *    *


 


B-3

















 


In
Witness Whereof, I have affixed my signature hereto
this       day of February, 2004.


 


	
   

  	
  By:

  	
   

  
	
   

  	
  Printed Name:  Perry A.
  Glassgow

  
	
   

  	
  Title: Vice President, Treasurer and

  Assistant Secretary

  



 

















 


Exhibit C


 


[Form of Closing Certificate of
Servicer/Seller]


 


HARLEY-DAVIDSON
CREDIT CORP.


 


Officer’s
Certificate


 


The undersigned certifies
that he is Vice President, Treasurer and Assistant Secretary of Harley-Davidson
Credit Corp. (“Harley-Davidson Credit”), and that as such is duly
authorized to execute and deliver this certificate on behalf of Harley-Davidson
Credit, as Servicer, in connection with the Sale and Servicing Agreement (the “Sale and
Servicing Agreement”) dated as of February 1, 2004 (the “Effective
Date”) by and among Harley-Davidson Credit, as Servicer,
Harley-Davidson Customer Funding Corp. (“CFC”), BNY Midwest Trust Company, as
Indenture Trustee and Harley-Davidson Motorcycle Trust 2004-1 (“Issuer”),
in connection with the Transfer and Sale Agreement dated as of the Effective
Date (the “Transfer
and Sale Agreement”) by and between Harley-Davidson Credit and CFC
(all capitalized terms used herein without definition having the respective
meanings set forth in the Sale and Servicing Agreement), and further certifies
as follows:


 


(1)           Attached
hereto as Exhibit
I is a true and correct copy of the Articles of Incorporation of
Harley-Davidson Credit, together with all amendments thereto as in effect on
the date hereof.


 


(2)           There
has been no other amendment or other document filed affecting the Articles of
Incorporation of Harley-Davidson Credit since August 9, 1999, and no such
amendment has been authorized by the Board of Directors or shareholders of
Harley-Davidson Credit.


 


(3)           Attached
hereto as Exhibit
II is a Certificate of the Secretary of State of the State of Nevada
dated February 2, 2004 stating that Harley-Davidson Credit is duly incorporated
under the laws of the State of Nevada and is in good standing.


 


(4)           Attached
hereto as Exhibit
III is a true and correct copy of the By-laws of Harley-Davidson
Credit which were in full force and effect as of August 1999 and at all times
subsequent thereto.


 


(5)           Attached
hereto as Exhibit
IV is a true and correct copy of resolutions adopted pursuant to a
unanimous written consent of the Board of Directors of Harley-Davidson Credit
and relating to the authorization, execution, delivery and performance of the
Transfer and Sale Agreement; the Sale and Servicing Agreement; the Underwriting
Agreement dated February 17, 2004 among Harley-Davidson Credit, CFC and the
Underwriters (the “Underwriting Agreement”); and the Administration Agreement
dated


 


C-1

















 


as of the Effective Date among Harley-Davidson Credit, CFC, the Issuer
and BNY Midwest Trust Company, as Indenture Trustee (the “Indenture Trustee”) (the “Administration
Agreement”).  Said
resolutions have not been amended, modified, annulled or revoked, and are on
the date hereof in full force and effect and are the only resolutions relating
to these matters which have been adopted by the Board of Directors.


 


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


 


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


 


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


 


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


 


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


 


(11)         Schedule
A hereto contains a complete list of all material agreements (other
than the Transfer and Sale Agreement) or instruments evidencing or governing
indebtedness for money borrowed to which Harley-Davidson Credit is a party or
by which Harley-Davidson Credit or its property is bound.  Neither Harley-Davidson Credit’s transfer
and assignment of the Contract Assets to CFC, CFC’s concurrent transfer and
assignment of the Trust Corpus to the Trust, nor the concurrent pledge by the


 


C-2

















 


Trust of the Collateral to the Indenture Trustee, nor the issuance and
sale of the Notes or the Certificate or the entering into of the Program
Agreements, nor the consummation of any other of the transactions contemplated
therein, will violate or conflict with any agreement or instrument to which
Harley-Davidson Credit is a party or by which it is otherwise bound.


 


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


 


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


 


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


 


(15)         Each
Contract being transferred pursuant to the Transfer and Sale Agreement is
evidenced by a written agreement providing for a repayment obligation as well
as a security interest in the related Motorcycle securing such obligation, and
conforms as to these matters in all material respects with the form of written Contract
provided as Exhibit
A hereto (with such minor variations as to specific terms as may be
required or deemed desirable in respect of the laws or requirements of
particular states).


 


(16)         Harley-Davidson
Credit has not executed for filing any UCC financing statements listing the
Contract Assets as collateral other than financing statements relating to the
transactions contemplated in the Transfer and Sale Agreement and in the
agreements listed on Schedule A hereto.


 


*  
*   *   *   *   *


 


C-3

















 


In
Witness Whereof, I have affixed my signature hereto
this        day of February, 2004.


 


	
   

  	
  By:

  	
   

  
	
   

  	
  Printed Name:  Perry A.
  Glassgow

  
	
   

  	
  Title: Vice
  President, Treasurer and

  Assistant Secretary

  



 

















 


Exhibit D


 


[Form of Opinion of Counsel for Trust
Depositor

Regarding General Corporate Matters

(Including Perfection Opinion)]


 


See Tab 23


 


D-1

















 


Exhibit E


 


[Form of Opinion of Counsel for Trust

Depositor Regarding the “True Sale” Nature

of the Transaction]


 


See Tab 24


 


E-1

















 


Exhibit F


 


[Form of Opinion of Counsel for Trust

Depositor Regarding Non-consolidation]


 


See Tab 25


 


F-1

















 


Exhibit G


 


[Form of Certificate Regarding Reacquired
Contracts]


 


Harley-Davidson Credit Corp.


 


Certificate Regarding Reacquired Contracts


 


The undersigned certifies
that he is the Treasurer of Harley-Davidson Credit Corp., a Nevada corporation
(the “Servicer”),
and that as such is duly authorized to execute and deliver this certificate on
behalf of the Servicer pursuant to Section 7.08 of the Sale and Servicing
Agreement (the “Agreement”) dated as of February 1, 2004 by and among
Harley-Davidson Customer Funding Corp., as Trust Depositor, the Servicer, BNY
Midwest Trust Company, as Indenture Trustee, and Harley-Davidson Motorcycle
Trust 2004-1 (all capitalized terms used herein without definition having the
respective meanings specified in the Agreement), and further certifies that:


 


1.                                       The Contracts on
the attached schedule are to be reacquired by the Seller on the date hereof
pursuant to Section 7.08 of the Agreement and Section 5.01 of the Transfer and
Sale Agreement.


 


2.                                       Upon deposit of
the Reacquisition Price for such Contracts, such Contracts may, pursuant to
Section 7.08 of the Agreement, be assigned by the Trustee to the Seller.


 


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


 


	
   

  	
  Harley-Davidson Credit Corp.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  
	
   

  	
  Printed Name: Perry A. Glassgow

  
	
   

  	
  Title: Treasurer

  



 


G-1

















 


Exhibit H


 


[List of Contracts]


 


See Tab 6


 


H-1

















 


Exhibit I


 


[Form of Monthly Report to Noteholders and
the Certificateholder]


 


Harley-Davidson Motorcycle Trust 2004-1

$379,000,000     1.40% Harley-Davidson Motorcycle Contract
Backed Notes, Class A–1

$214,750,000     2.53% Harley-Davidson Motorcycle Contract
Backed Notes, Class A–2

$31,250,000     2.00% Harley-Davidson Motorcycle Contract Backed
Notes, Class B


 


Monthly Report

For the [        ] Distribution Date


 


 


	
  A.

  	
   

  	
  Calculation of Available Monies

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.

  	
   

  	
  Available Principal (as defined in Article I of the Sale and
  Servicing Agreement)

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.

  	
   

  	
  Available Interest (as defined in Article I of the Sale and Servicing
  Agreement)

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.

  	
   

  	
  Available Monies (l. plus 2.)

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B.

  	
   

  	
  Calculation of Principal Distributable Amount (as defined in Article
  I of the Sale and Servicing Agreement)

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C.

  	
   

  	
  Calculation of Available Interest (as defined in Article I of the
  Sale and Servicing Agreement).

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  D.

  	
   

  	
  Calculation of Note Monthly Principal Distributable Amount

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1A.

  	
   

  	
  Class A Note Percentage for such Distribution Date

  	
   

  	
  95.0

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  (a)     for each Distribution Date to but
  excluding the Distribution Date on which the principal amount of the Class
  A-1 Notes is reduced to zero

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  (b)     on the Distribution Date on which
  the principal amount of the Class A-1 Notes is reduced to zero, 95.0% until
  the principal amount of the Class A-2 Notes has been reduced to zero

  	
   

  	
  95.0

  	
  %

  



 


 


I-1

















 


	
   

  	
   

  	
   

  	
   

  	
   

  	
  (c)     on the Distribution Date on which
  the principal amount of the Class A-2 Notes is reduced to zero,
      %

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  (d)     after the principal amount of the
  Class A-2 Notes have been reduced to zero

  	
   

  	
  0.00

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1B.

  	
   

  	
  Class B Note Percentage for such Distribution Date

  	
   

  	
  5.0

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  (a)     for each Distribution Date to but
  excluding the Distribution Date on which the principal amount of the Class
  A-2 Notes is reduced to zero

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  (b)on the Distribution Date on which the principal amount of the
  Class A-2 Notes is reduced to zero,      %

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  (c)after the principal amount of the Class A-2 Notes have been
  reduced to zero

  	
   

  	
  100.00

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.

  	
   

  	
  Principal Distributable Amount (from B)

  	
   

  	
  $

  	
   

  
										



 


I-2

















 


	
   

  	
   

  	
  3.

  	
   

  	
   

  	
  Note Monthly Principal Distributable Amount for

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  (a)     Class A-1 Notes (D.1(a)  multiplied by D.2 until Principal Balance
  of Class A-1 Notes Principal Balance is zero)

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  (b)     Class A-2 Notes (D.1(b) multiplied
  by D.2 until Class A-2 Notes Principal Balance is zero)

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  (c)     Class B Notes (D.1(c) multiplied by
  D.2 until Class B Notes Principal Balance is zero)

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  (d)     Note Principal Carryover Shortfall

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  (e)     Mandatory Redemption Amounts (from
  Pre-Funding Account as defined in Article I of the Sale and Servicing
  Agreement)

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  (f)     Class A Note Monthly Principal
  Distributable Amount (the sum of items 3(a), 3(b), 3(d) and 3(e))

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  (g)      Class B Note Monthly Principal
  Distributable Amount (the sum of items 3(c), 3(d) and 3(e))

  	
   

  	
  $

  	
   

  



 


I-3

















 


	
  E.

  	
   

  	
  Calculation of Note Monthly Interest Distributable Amount.  

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.

  	
   

  	
   

  	
  Class A-l Interest Rate

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.

  	
   

  	
   

  	
  Class A-2 Interest Rate

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.

  	
   

  	
   

  	
  Class B Interest Rate

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.

  	
   

  	
   

  	
  One-twelfth of the Class A-1 Interest Rate times the Class A-1 Note
  Balance from and including the fifteenth day of the month based on a 360-day
  year of 12 months of 30 days each (or from and including the Closing Date
  with respect to the first Distribution Date) to but excluding the fifteenth
  day of the month of the current Distribution Date

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  5.

  	
   

  	
   

  	
  One-twelfth of the Class A-2 Note Interest Rate times the Class A-2
  Note Balance from and including the fifteenth day of the month based on a
  360-day year of 12 months of 30 days each (or from and including the Closing
  Date with respect to the first Distribution Date) to but excluding the
  fifteenth day of the month of the current Distribution Date

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.

  	
   

  	
   

  	
  One-twelfth of the Class B Note Interest Rate times the Class B Note
  Balance from and including the fifteenth day of the month based on a 360-day
  year of 12 months of 30 days each (or from and including the Closing Date
  with respect to the first Distribution Date) to but excluding the fifteenth
  day of the month of the current Distribution Date

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  7.

  	
   

  	
   

  	
  Interest Carryover Shortfall for such Distribution Date

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  8.

  	
   

  	
   

  	
  Note Monthly Interest Distributable Amount (the sum of items 3,  4 and 5)

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  F.

  	
   

  	
  Calculation of Note Distributable Amount (sum of D.3(e) plus E.6.)

  	
   

  	
  $

  	
   

  



 


I-4

















 


	
  G.

  	
   

  	
  Fees

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.

  	
   

  	
   

  	
  The Monthly
  Servicing Fee for such Distribution Date (1/12 of the product of 1.00% and
  the Principal Balance of the Contracts as of the beginning of the related Due
  Period)

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.

  	
   

  	
   

  	
  Indenture Trustee Fee for such Distribution Date excluding expense
  component (1/12 of the product of .002% and the sum of (i) the Principal
  Balance of the Contracts as of the beginning of the related Due Period and
  (ii) the Pre-Funded Amount as of the beginning of such Period; provided,
  however, in no event shall such fee be less than $200.00 per month)

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  H.

  	
   

  	
  CALCULATION OF THE AVAILABLE MONIES FOR SUCH DISTRIBUTION DATE

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.

  	
   

  	
   

  	
  The amount of funds deposited into the Collection Account pursuant to
  Section 5.05(b) of the Sale and Servicing Agreement with respect to the
  related Due Period

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  a.     All amounts received by the Indenture
  Trustee or the Servicer with respect to principal and interest on the
  Contracts, as well as Late Payment Penalty Fees and Extensions Fees for the
  related Due Period

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  b.     All Net Liquidation Proceeds

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  c.     The aggregate of the Reacquisition
  Prices for Contracts required to be reacquired by the Seller as described in
  Section 7.08 of the Sale and Servicing Agreement

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  d.     All Advances made by Servicer
  pursuant to Section 7.03(a) of the Sale and Servicing Agreement

  	
   

  	
  $

  	
   

  
										



 


I-5

















 


	
   

  	
   

  	
   

  	
   

  	
   

  	
  e.     All amounts paid by the Seller in
  connection with an optional reacquisition of the Contracts described in
  Section 7.10 of the Sale and Servicing Agreement

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  f.     All amounts obtained from the
  Indenture Trustee in respect of Carrying Charges to be deposited into the
  Collection Account for the upcoming Distribution Date as contemplated in
  Section 7.03(b) of the Sale and Servicing Agreement

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  g.     All amounts received in respect of
  interest, dividends, gains, income and earnings on investments of funds in
  the Trust Accounts as contemplated in Section 5.05(b)(viii) of the Sale and
  Servicing Agreement

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  h.     Total amount of funds deposited into
  the Collection Account pursuant to Section 5.05(b) (the sum of a. through g.)

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
   

  	
   

  	
  The amount
  of funds permitted to be withdrawn from the Collection Account pursuant to
  clauses (ii) through (iv) of Section 7.05(a) of the Sale and Servicing Agreement
  with respect to the related Due Period

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  a.     Amounts to be paid to the Servicer as
  the Reimbursement Amount in accordance with Section 7.03(a) of the Sale and
  Servicing Agreement

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  b.     Amounts to be paid to the Servicer in
  respect to the Servicing Fee for the related Due Period

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  c.     Amounts to be paid to the Indenture
  Trustee in respect of the Indenture Trustee’s Fee for the related Due Period

  	
   

  	
  $

  	
   

  
										



 


I-6

















 


	
   

  	
   

  	
   

  	
   

  	
   

  	
  d.     Other amounts required or authorized
  to be withdrawn from the Collection Account pursuant to the Sale and
  Servicing Agreement.  Specify

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  e.     Total amount of funds permitted to be
  withdrawn from the Collection Account pursuant to clauses (ii) through (iv)
  Section 7.05(a) of the Sale and Servicing Agreement with respect to the
  related Due Period (sum of a. through d.)

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.

  	
   

  	
  The
  Available Monies (not including amounts from Reserve Fund Account) for such
  Distribution Date available to pay Note Distributable Amounts and Certificate
  Distributable Amounts (1(h) minus 2(e))

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.

  	
   

  	
  The Available Monies otherwise distributable to the
  Certificateholders that will be distributed to the Noteholders on such
  Distribution Date

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  I.

  	
   

  	
  The
  shortfall of Available Monies for such Distribution Date to pay either the
  Note Distributable Amount (the Available Monies for such Distribution Date
  minus the sum of the Note Distributable Amount as set forth in F.)

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  J.

  	
   

  	
  The amount
  to be withdrawn from the Reserve Fund on such Distribution Date to cover the
  Note Interest Distributable Amount

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  K.

  	
   

  	
  The amount
  to be withdrawn from the Reserve Fund on such Distribution Date to cover the
  Note Principal Distributable Amount

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  L.

  	
   

  	
  Interest
  Earnings on the Reserve Fund.

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  M.

  	
   

  	
  The amount
  on deposit in the Reserve Fund after giving effect to deposits and
  withdrawals therefrom on such Distribution Date

  	
   

  	
  $

  	
   

  



 


I-7

















 


	
  N.

  	
   

  	
  The
  Specified Reserve Fund Amount for such Distribution Date will be an amount
  equal to the greater of (a) 2.00% of the Principal Balance of the Contracts
  in the Trust as of the last day of the immediately preceding Due Period;
  provided, however, in the event a Reserve Fund Trigger Event occurs with
  respect to a Distribution Date and has not terminated for three (3)
  consecutive Distribution Dates (inclusive) such amount shall be equal to
  6.00% of the Principal Balance of the Contracts in the Trust as of the last
  day of the immediately preceding Due Period) and (b) 1.00% of the aggregate
  of the Initial Class A-1 Note Balance, Initial Class A-2 Note Balance and
  Initial Class B Note Balance; provided, however, in no event shall the
  Specified Reserve Fund Balance be greater than the aggregate outstanding
  principal balance of the Securities.

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  O.

  	
   

  	
  The Pool Factor

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.

  	
   

  	
   

  	
  The Class A-1 Note Pool Factor immediately before such Distribution
  Date

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.

  	
   

  	
   

  	
  The Class A-2 Note Pool Factor immediately after such Distribution
  Date

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.

  	
   

  	
   

  	
  The Class B Note Pool Factor immediately after such Distribution Date

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.

  	
   

  	
   

  	
  The Class A-1 Note Pool Factor immediately before such Distribution
  Date

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  5.

  	
   

  	
   

  	
  The Class A-2 Note Pool Factor immediately after such Distribution
  Date

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.

  	
   

  	
   

  	
  The Class B Note Pool Factor immediately after such Distribution Date

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  P.

  	
   

  	
  Delinquent Contracts

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.

  	
   

  	
   

  	
  31-59 Days

  	
  #

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.

  	
   

  	
   

  	
  60-89 Days

  	
  #

  	
   

  	
  $

  	
   

  



 


I-8

















 


	
   

  	
   

  	
  3.

  	
   

  	
   

  	
  90 or More Days

  	
  #

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Q.

  	
   

  	
  Liquidated Contracts

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.

  	
   

  	
   

  	
  Total Liquidated Contracts                

  	
  #

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
  2.

  	
   

  	
   

  	
  Liquidation proceeds for the Due Period

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.

  	
   

  	
   

  	
  Liquidation expenses for the Due Period

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.

  	
   

  	
   

  	
  Net Liquidation Proceeds for the Due Period

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  5.

  	
   

  	
   

  	
  Net Liquidation Losses for the Due Period

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  R.

  	
   

  	
  Advances

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.

  	
   

  	
   

  	
  Unreimbursed Advances prior to such Distribution Date

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.

  	
   

  	
   

  	
  Amount paid to Servicer on such Distribution Date to reimburse
  Servicer for such unreimbursed Advances

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.

  	
   

  	
   

  	
  Amount of Delinquent Interest for such Distribution Date

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.

  	
   

  	
   

  	
  Amount of new Advances on such Distribution Date (if such amount is
  less than the amount of Delinquent Interest, attach the certificate required
  by Section 7.03 of the Sale and Servicing Agreement)

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  5.

  	
   

  	
   

  	
  Total of unreimbursed Advances after new Advances on such
  Distribution Date

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  S.

  	
   

  	
  Reacquired Contracts

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.

  	
   

  	
   

  	
  Number of Contracts to be reacquired by the Seller pursuant to
  Section 7.08 of the Sale and Servicing Agreement

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.

  	
   

  	
   

  	
  Principal Amount of such Contracts

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.

  	
   

  	
   

  	
  Related Reacquisition Price of such Contracts

  	
   

  	
  $

  	
   

  
											



 


I-9

















 


	
  T.

  	
   

  	
  Contracts

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.

  	
   

  	
   

  	
  Number of Contracts as of beginning of Due Period

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.

  	
   

  	
   

  	
  Principal Balance of Contracts as of beginning of Due Period

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.

  	
   

  	
   

  	
  The weighted average Contract Rate of the Contracts as of the
  beginning of the Due Period

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.

  	
   

  	
   

  	
  Number of Contracts as of end of Due Period

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  5.

  	
   

  	
   

  	
  Principal Balance of Contracts as of end of Due Period

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.

  	
   

  	
   

  	
  The weighted average Contract Rate of the Contracts as of the end of
  the Due Period

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  7.

  	
   

  	
   

  	
  The weighted average remaining term to maturity of the Contracts as
  of the end of the Due Period

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  8.

  	
   

  	
   

  	
  Pre-Funded Amount as of beginning of Due Period

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  9.

  	
   

  	
   

  	
  Pre-Funded Amount as of end of Due Period

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  U.

  	
   

  	
  Interest Reserve Account

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
  1.

  	
   

  	
   

  	
  Interest Reserve Amount as of previous Distribution Date

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.

  	
   

  	
   

  	
  Interest received into Interest Reserve Account

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.

  	
   

  	
   

  	
  Carrying Charges (if any) to be paid on upcoming Distribution Date

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.

  	
   

  	
   

  	
  Excess Funds remitted to Trust Depositor

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  5.

  	
   

  	
   

  	
  Interest Reserve Amount as of upcoming Distribution Date

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  V.

  	
   

  	
  Ratios

  	
   

  	
   

  	
   

  	
   

  



 


I-10

















 


	
  1.

  	
   

  	
  Cumulative Loss Ratio

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  a.             The
  aggregate Net Liquidation Losses for all Contracts since the Initial Cutoff
  Date through the end of the related Due Period

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  b.             The
  sum of the Principal Balance of the Contracts as of the Initial Cutoff Date
  plus the Principal Balance of any Subsequent Contracts as of the related
  Subsequent Cutoff Date

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  c.             The
  Cumulative Loss Ratio for such Distribution Date (the quotient of a. divided
  by b., expressed as a percentage)

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Average Delinquency Ratio for such Distribution Date

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  (a)   
         The Delinquency Amount
  (the Principal Balance of all Contracts that were delinquent 60 days or more
  as of the end of the Due Period)

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  (b)           The
  Delinquency Ratio (the fraction (expressed as a percentage) computed by
  dividing (a) the Delinquency Amount during the immediately preceding Due
  Period by (b) the Principal Balance of the Contracts as of the beginning of
  the related Due Period) for such Distribution Date

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  (c)           The
  Delinquency Ratio for the prior Distribution Date

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  (d)           The
  Delinquency Ratio for the second prior Distribution Date

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  (e)           The
  Average Delinquency Ratio (the arithmetic average of a. through c.)

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.

  	
   

  	
   

  	
  Average Loss Ratio for such Distribution Date

  	
   

  	
   

  	
   

  



 


I-11

















 


	
   

  	
   

  	
   

  	
   

  	
   

  	
  (a)           Net
  Liquidation Losses

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  (b)           The
  Loss Ratio for (the fraction (expressed as a percentage) derived by dividing
  (x) Net Liquidation Losses for all Contracts that became Liquidated Contracts
  during the immediately preceding Due Period multiplied by twelve by (y) the
  outstanding Principal Balances of all Contracts as of the beginning of the
  Due Period) such Distribution Date

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  (c)           The
  Loss Ratio for the prior Distribution Date

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  (d)           The Loss Ratio for
  the second prior Distribution Date

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  (e)           The
  Average Loss Ratio (the arithmetic average of a. through c.)

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.

  	
   

  	
   

  	
  Computation of Specified Reserve Fund Balance

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Reserve Fund Trigger Events

  	
   

  	
   

  	
   

  



 


I-12

















 


	
   

  	
   

  	
   

  	
   

  	
   

  	
  (1)           Average
  Delinquency Ratio (if (a) (i) Average Delinquency Ratio 2.50% with respect to
  any Distribution Date which occurs within the period from the Closing Date
  to, and inclusive of, the first anniversary of the Closing Date, (ii) 3.00%
  with respect to any Distribution Date which occurs within the period from the
  day after the first anniversary of the Closing Date to, and inclusive of, the
  second anniversary of the Closing Date or (iii) 3.50% for any Distribution
  Date which occurs within the period from the day after the second anniversary
  of the Closing Date to, and inclusive of, the third anniversary of the
  Closing Date or (iv) 4.00% for any Distribution Date following the third
  anniversary of the Closing Date, then a Reserve Fund Trigger Event has
  occurred)

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  (2)           Average
  Loss Ratio (if Average Loss Ratio is equal to or greater than (i) 3.00% with
  respect to any Distribution Date which occurs within the period from the
  Closing Date to, and inclusive of, the second anniversary of the Closing Date
  or (ii)  2.75% with respect to any
  Distribution Date which occurs following the second anniversary of the
  Closing Date, then a Reserve Fund Trigger Event has occurred)

  	
   

  	
   

  	
  %

  



 


I-13

















 


	
   

  	
   

  	
   

  	
   

  	
   

  	
  (3)           Cumulative
  Loss Ratio (if Cumulative Loss Ratio is equal to or greater than (i) 1.25%
  with respect to any Distribution Date which occurs within the period from the
  Closing Date to, and inclusive of, the first anniversary of the Closing Date,
  (ii) 2.00% with respect to any Distribution Date which occurs within the
  period from the day after the first anniversary of the Closing Date to, and
  inclusive of, the second anniversary of the Closing Date, (iii) 2.50% for any
  Distribution Date while occurs within the period from the day after the
  second anniversary of the Closing Date to, and inclusive of the third anniversary
  of the Closing Date, or (iv) 2.75% following the third anniversary of the
  Closing Date, then a Reserve Fund Trigger Event has occurred)

  	
   

  	
   

  	
  %

  



 


I-14

















 


Exhibit J


 


[Seller’s Representations and Warranties]


 


(1)           Representations
and Warranties Regarding Seller. 
Seller represents and warrants, as of the execution and delivery of this
Agreement and as of the Closing Date, in the case of the Initial Contracts, and
as of the applicable Subsequent Transfer Date, in the case of Subsequent
Contracts, that:


 


(a)           Organization
and Good Standing.  Seller is
a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization and has the corporate power to own
its assets and to transact the business in which it is currently engaged.  Seller is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction in which the
character of the business transacted by it or properties owned or leased by it
requires such qualification and in which the failure so to qualify would have a
material adverse effect on the business, properties, assets, or condition
(financial or otherwise) of Seller or Trust Depositor.  Seller is properly licensed in each
jurisdiction to the extent required by the laws of such jurisdiction to service
the Contracts in accordance with the terms of the Sale and Servicing Agreement.


 


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


 


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


 


(d)           No
Violations.  Seller’s
execution, delivery and performance of this Agreement and the other Transaction
Documents to which the Seller is a party will not violate any provision of any
existing law or regulation or any order or decree of any court or the Articles
of Incorporation or Bylaws of Seller, or constitute a material breach of any
mortgage, indenture, contract or other agreement to which Seller is a party or
by which Seller or any of Seller’s properties may be bound.


 


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


 


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


 


(g)           Buell. 
Approximately 5.0% of the aggregate principal balance of contracts
financed from time to time by the Seller are secured by motorcycles
manufactured by Buell.


 


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


 


(2)           Representations and Warranties Regarding
Each Contract.  Seller
represents and warrants as to each Contract as of the execution and delivery of
this Agreement and as of the Closing Date, in the case of the Initial
Contracts, and as of the applicable Subsequent Transfer Date, in the case of Subsequent
Contracts, that:


 


(a)           List
of Contracts.  The
information set forth in the List of Contracts (or Subsequent List of
Contracts, in the case of Subsequent Contracts) is true, complete and correct
in all material respects as of the Initial Cutoff Date or applicable Subsequent
Cutoff Date, as the case may be.


 


(b)           Payments.  As of the Initial Cutoff Date or applicable
Subsequent Cutoff Date, as the case may be, the most recent scheduled payment
with respect to any Contract either had been made or was not delinquent for
more than 30 days.  To the best of
Seller’s knowledge, all payments made on each Contract were made by the
respective Obligor.


 


(c)           No
Waivers.  As of the Closing
Date (or the applicable Subsequent Transfer Date, in the case of Subsequent
Contracts), the terms of the Contracts have not been waived, altered or
modified in any respect, except by instruments or documents included in the
related Contract File.


 


(d)           Binding
Obligation.  Each Contract is
a legal, valid and binding payment obligation of the Obligor thereunder and is
enforceable in accordance with its terms,


 


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except as such enforceability may be limited by insolvency, bankruptcy,
moratorium, reorganization, or other similar laws affecting the enforcement of
creditors’ rights generally.


 


(e)           No
Defenses.  No Contract is
subject to any right of rescission, setoff, counterclaim or defense, including
the defense of usury, and the operation of any of the terms of such Contract or
the exercise of any right thereunder will not render the Contract unenforceable
in whole or in part or subject to any right of rescission, setoff, counterclaim
or defense, including the defense of usury, and no such right of rescission,
setoff, counterclaim or defense has been asserted with respect thereto.


 


(f)            Insurance.  As of the origination date of each Contract
(or the applicable Subsequent Transfer Date in the case of Subsequent
Contracts), the related Motorcycle securing each Contract is covered by physical
damage insurance (i) in an amount not less than the value of the Motorcycle at
the time of origination of the Contract, (ii) naming Seller as a loss payee and
(iii) insuring against loss and damage due to fire, theft, transportation,
collision and other risks covered by comprehensive coverage, and all premiums
due on such insurance have been paid in full from the date of the Contract’s
origination.


 


(g)           Origination.  Either (i) Contracts were originated by a
Harley-Davidson motorcycle dealer in the regular course of its business which
dealer had all necessary licenses and permits to originate the Contracts in the
state where such dealer was located, was fully and properly executed by the
parties thereto, and has been purchased by Seller in the regular course of its
business, or (ii) Contracts were originated by Eaglemark Savings Bank in the
regular course of its business which had all necessary licenses and permits to
originate the Contracts in the state where it was located, was fully and
properly executed by the parties thereto, and has been purchased by Seller in
the regular course of its business. 
Each Contract was sold by such motorcycle dealer or Eaglemark Savings
Bank, as the case may be, to the Seller without any fraud or misrepresentation
on the part of such motorcycle dealer or Eaglemark Savings Bank.


 


(h)           Lawful
Assignment.  No Contract was
originated in or is subject to the laws of any jurisdiction whose laws would
make the transfer and assignment of the Contract under this Agreement or under
the Sale and Servicing Agreement or the pledge of the Contract under the
Indenture unlawful, void or voidable.


 


(i)            Compliance
with Law.  None of the
Contracts, the origination of the Contracts by the dealers or Eaglemark Savings
Bank, the purchase of the Contracts by the Seller, the sale of the Contracts by
the Seller to the Trust Depositor or the transfer of the Contracts by the Trust
Depositor to the Trust, or any combination of the foregoing, violated at the
time of origination or as of the Closing Date or as of any Subsequent Transfer
Date, as applicable, any requirement of any federal, state or local law and
regulations thereunder, including, without limitation, usury, truth in lending,
motor


 


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vehicle installment loan and equal credit opportunity laws, applicable
to the Contracts and the sale of Motorcycles. 
Seller shall, for at least the period of this Agreement, maintain in its
possession, available for the Trust Depositor’s, and the Trustee’s inspection,
and shall deliver to Trust Depositor or the Trustee upon demand, evidence of
compliance with all such requirements.


 


(j)            Contract
in Force.  As of the Closing
Date (or the applicable Subsequent Transfer Date in the case of Subsequent
Contracts), no Contract has been satisfied or subordinated in whole or in part
or rescinded, and the related Motorcycle securing any Contract has not been
released from the lien of the Contract in whole or in part.


 


(k)           Valid
Security Interest.  Each
Contract creates a valid, subsisting and enforceable first priority perfected
security interest in favor of Seller or Eaglemark Savings Bank (as the case may
be) in the Motorcycle covered thereby, and such security interest has been
assigned by Eaglemark Savings Bank to Seller (where applicable) and by Seller
to the Trust Depositor.  The original
certificate of title, certificate of lien or other notification or evidence
(the “Lien
Certificate”) issued by the body responsible for the registration
of, and the issuance of certificates of title or evidence relating to, motor
vehicles and liens thereon (the “Registrar of Titles”) of the applicable
state shows the Seller or Eaglemark Savings Bank (as the case may be) as
original secured party under each Contract and as the holder of a first
priority security interest in such Motorcycle. 
With respect to each Contract for which a written Lien Certificate is
provided and has not yet been returned from the Registrar of Titles, the Seller
has received written evidence that such Lien Certificate showing the Seller or
Eaglemark Savings Bank as lienholder has been applied for.   Eaglemark Savings Bank’s security interest
has been validly assigned by Eaglemark Savings Bank to Seller.  The Seller’s security interest has been
validly assigned by the Seller to the Trust Depositor pursuant to the Transfer
and Sale Agreement and by the Trust Depositor to the Issuer pursuant to this
Agreement.  Immediately after the
transfer, each Contract will be secured by an enforceable and perfected first
priority security interest in the Motorcycle in favor of the Trust as secured
party, which security interest is prior to all other liens upon and security
interests in such Motorcycle which now exist or may hereafter arise or be
created (except, as to priority, for any lien for taxes, labor, materials or of
any state law enforcement agency affecting a Motorcycle).


 


(1)           Capacity
of Parties.  All parties to
any Contract had capacity to execute such Contract and all other documents
related thereto and to grant the security interest purported to be granted
thereby.


 


(m)          Good
Title.  Each Contract was
purchased by Seller for value and taken into possession prior to the Initial
Cutoff Date (or the applicable Subsequent Cutoff Date in the case of Subsequent
Contracts) in the ordinary course of its business, without knowledge that the
Contract was subject to a security interest. 
No Contract has been sold, assigned or pledged to any person other than
Trust Depositor and the Issuer as the


 


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transferee of Trust Depositor, and prior to the transfer of the
Contract to Trust Depositor, Seller had good and marketable title to each
Contract free and clear of any encumbrance, equity, loan, pledge, charge, claim
or security interest and was the sole owner thereof and had full right to
transfer the Contract to Trust Depositor and to permit Trust Depositor to
transfer the same to the Issuer, and, as of the Closing Date (or the applicable
Subsequent Transfer Date in the case of Subsequent Contracts), the Issuer will
have a first priority perfected security interest therein.


 


(n)           No
Defaults.  As of the Initial
Cutoff Date (or the applicable Subsequent Cutoff Date in the case of Subsequent
Contracts), no default, breach, violation or event permitting acceleration
existed with respect to any Contract and no event had occurred which, with
notice and the expiration of any grace or cure period, would constitute such a
default, breach, violation or event permitting acceleration under such Contract.  Seller has not waived any such default,
breach, violation or event permitting acceleration, and Seller has not granted
any extension of payment terms on any Contract.  As of the Initial Cutoff Date (or the applicable Subsequent
Cutoff Date in the case of Subsequent Contracts), no Motorcycle had been
repossessed.


 


(o)           No
Liens.  As of the Closing
Date (or the applicable Subsequent Transfer Date in the case of Subsequent
Contracts) there are, to the best of Seller’s knowledge, no liens or claims which
have been filed for work, labor or materials affecting the Motorcycle securing
any Contract which are or may be liens prior to, or equal with, the lien of
such Contract.


 


(p)           Installments.  Each Contract has a fixed Contract Rate and
provides for monthly payments of principal and interest which, if timely made,
would fully amortize the loan on a simple-interest basis over its term.


 


(q)           Enforceability.  Each Contract contains customary and
enforceable provisions such as to render the rights and remedies of the holder
thereof adequate for the realization against the collateral of the benefits of
the security.


 


(r)            One
Original.  Each Contract is
evidenced by only one original executed Contract, which original is being held
by the Servicer as custodian.


 


(s)           No
Government Contracts.  No
Obligor is the United States government or an agency, authority,
instrumentality or other political subdivision of the United States government.


 


(t)            Lockbox
Bank.  The Lockbox Bank is
the only institution holding any Lockbox Account for receipt of payments from
Obligors, and all Obligors have been instructed to make payments to the Lockbox
Account (either directly by remitting payments to the Lockbox, or indirectly by
making payments through direct debit, the telephone or the internet to an
account of the Servicer which payments will be subsequently transferred from
such account to one or more Lockbox Banks), and no


 


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person claiming through or under Seller has any claim or interest in
the Lockbox Account other than the Lockbox Bank; provided, however, that other
“Trusts” (as defined in the Lockbox Agreement) shall have an interest in
certain other collections therein not related to the Contracts.


 


(u)           Obligor
Bankruptcy.  At the Initial
Cutoff Date (or the applicable Subsequent Cutoff Date in the case of Subsequent
Contracts), no Obligor was subject to a bankruptcy proceeding within the one
year preceding such Cutoff Date.


 


(v)           Chattel
Paper.  The Contracts
constitute tangible chattel paper within the meaning of the UCC.


 


(w)          No
Impairment.  Neither the
Seller nor the Trust Depositor has done anything to convey any right to any
Person that would result in such Person having a right to payments due under
the Contract or otherwise to impair the rights of the Trust in any Contract or
the proceeds thereof.


 


(x)            Contract
Not Assumable.  No Contract
is assumable by another Person in a manner which would release the Obligor
thereof from such Obligor’s obligations to the Trust Depositor with respect to
such Contract.


 


(3)           Representations
and Warranties Regarding the Contracts in the Aggregate.  Seller represents and warrants, as of the
execution and delivery of this Agreement and as of the Closing Date, in the
case of the Initial Contracts, and as of the applicable Subsequent Transfer
Date, in the case of Subsequent Contracts, that:


 


(a)           Amounts.  The sum of the aggregate Principal Balances
payable by Obligors under the Contracts as of the Initial Cutoff Date (or the
applicable Subsequent Cutoff Date in the case of Subsequent Contracts), plus
the Pre-Funded Amount as of such date, equals or exceeds the sum of the
principal balance of the Class A-1 Notes, the Class A-2 Notes and the Class B
Notes on the Closing Date or the related Subsequent Transfer Date, as
applicable.


 


(b)           Characteristics.  The Initial Contracts have the following
characteristics: (i) all the Contracts are secured by Motorcycles; (ii) no
Initial Contract has a remaining maturity of more than 84 months; and (iii) the
final scheduled payment on the Initial Contract with the latest maturity is due
not later than February 2011. 
Approximately 77.29% of the Principal Balance of the Initial Contracts
as of the Initial Cutoff Date is attributable to loans for purchases of new Motorcycles
and approximately 22.71% is attributable to loans for purchases of used
Motorcycles.  No Initial Contract was
originated after the Initial Cutoff Date. 
No Initial Contract has a Contract Rate less than 3.98%.  The first scheduled payment date of the
Contracts (including any Subsequent Contracts) is due no later than August
2004.  Approximately 99.97% of the
Principal Balance of the Initial Contracts as of the Initial Cutoff Date is
attributable to loans for purchases of Motorcycles manufactured by
Harley-Davidson or Buell and approximately


 


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0.03% of the Principal Balance of the Initial Contracts as of the
Initial Cutoff Date is attributable to loans to purchase Motorcycles not
manufactured by Harley-Davidson or Buell.


 


(c)           Marking
Records.  As of the Closing
Date (or the applicable Subsequent Transfer Date in the case of Subsequent
Contracts), Seller has caused the Computer File relating to the Contracts sold
hereunder and concurrently reconveyed by Trust Depositor to the Trust and
pledged by the Trust to the Indenture Trustee to be clearly and unambiguously
marked to indicate that such Contracts constitute part of the Trust Corpus, are
owned by the Trust and constitute security for the Notes.


 


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


 


(e)           True
Sale.  The transactions
contemplated by the Transfer and Sale Agreement and this Agreement constitute
valid sales, transfers and assignments from Seller to Trust Depositor and from
Trust Depositor to the Trust of all of Seller’s right, title and interest in
the Contract Assets as of the Closing Date and any Subsequent Transfer Date, as
applicable.


 


(f)            All
Filings Made.  All filings
(including, without limitation, UCC filings) required to be made by any Person
and actions required to be taken or performed by any Person in any jurisdiction
to give the Trustee a first priority perfected lien on, or ownership interest
in, the Contracts and the proceeds thereof and the rest of the Trust Corpus
have been made, taken or performed.


 


(g)           Delta
Loans.  No more than 11.00%
of the Principal Balance of the Contracts as of the end of the Funding Period
is attributable to Delta Loans.


 


(4)           Representations
and Warranties Regarding the Contract Files.  Seller represents and warrants as of the
execution and delivery of this Agreement and as of the Closing Date, in the
case of the Initial Contracts, and as of the applicable Subsequent Transfer
Date, in the case of Subsequent Contracts, that:


 


(a)           Possession.  Immediately prior to the Closing Date or any
Subsequent Transfer Date, the Servicer, or its custodian, will have possession
of each original Contract and the related complete Contract File.  Each of such documents which is required to
be signed by the Obligor has been signed by the Obligor in the appropriate
spaces.  All blanks on any form have
been properly filled in and each form has otherwise been correctly
prepared.  The complete Contract File
for each Contract currently is in the possession of the Servicer, or its
custodian.


 


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


 


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Servicing Agreement is not subject to the bulk transfer or any similar
statutory provisions in effect in any applicable jurisdiction.


 


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Exhibit K


 


[Lockbox Bank and Lockbox Account]


 


Lockbox


 


Harley-Davidson Credit Corp.


135 South LaSalle Street, Dept. 8529


Chicago, Illinois 60674-8529


 


Lockbox Bank


 


LaSalle Bank National Association


135 South LaSalle Street


Chicago, Illinois 60674


 


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Exhibit L


 


[Form of Subsequent Transfer Agreement]


 


[see Exhibit C of the Transfer and Sale
Agreement]


 


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