EXHIBIT 10.14




 





 


SALE AND SERVICING
AGREEMENT


 


among


 


HARLEY-DAVIDSON
MOTORCYCLE TRUST 2002-1,


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 April 1, 2002




 





 

















 


Table of Contents


 


	
  ARTICLE ONE

  	
  DEFINITIONS

  
	
   

  	
  Section 1.01.

  	
  Definitions

  
	
   

  	
  Section 1.02.

  	
  Usage of Terms

  
	
   

  	
  Section 1.03.

  	
  Section References

  
	
   

  	
  Section 1.04.

  	
  Calculations

  
	
   

  	
  Section 1.05.

  	
  Accounting Terms

  
	
  ARTICLE TWO

  	
  ESTABLISHMENT OF TRUST; TRANSFER
  OF CONTRACTS

  
	
   

  	
  Section 2.01.

  	
  Closing

  
	
   

  	
  Section 2.02.

  	
  Conditions to
  the Closing

  
	
   

  	
  Section
  2.03.

  	
  Conveyance
  of Subsequent Contracts

  
	
  ARTICLE THREE

  	
  REPRESENTATIONS AND
  WARRANTIES

  
	
   

  	
  Section
  3.01.

  	
  Representations
  and Warranties Regarding the Trust Depositor

  
	
   

  	
  Section
  3.02.

  	
  Representations
  and Warranties Regarding the Servicer

  
	
  ARTICLE FOUR

  	
  PERFECTION
  OF TRANSFER AND PROTECTION OF SECURITY INTERESTS

  
	
   

  	
  Section 4.01.

  	
  Custody of Contracts

  
	
   

  	
  Section 4.02.

  	
  Filing

  
	
   

  	
  Section 4.03.

  	
  Name Change or
  Relocation

  
	
   

  	
  Section 4.04.

  	
  Costs and Expenses

  
	
  ARTICLE FIVE

  	
  SERVICING OF CONTRACTS

  
	
   

  	
  Section
  5.01.

  	
  Responsibility
  for Contract Administration

  
	
   

  	
  Section 5.02.

  	
  Standard of Care

  
	
   

  	
  Section 5.03.

  	
  Records

  
	
   

  	
  Section 5.04.

  	
  Inspection

  
	
   

  	
  Section 5.05.

  	
  Trust Accounts

  
	
   

  	
  Section 5.06.

  	
  Enforcement

  
	
   

  	
  Section 5.07.

  	
  Trustees to
  Cooperate

  
	
   

  	
  Section 5.08.

  	
  Costs and Expenses

  
	
   

  	
  Section
  5.09.

  	
  Maintenance
  of Security Interests in Motorcycles

  
	
   

  	
  Section
  5.10.

  	
  Successor
  Servicer/Lockbox Agreements

  
	
   

  	
  Section 5.11.

  	
  Separate Entity
  Existence

  
	
  ARTICLE SIX

  	
  THE TRUST DEPOSITOR

  
	
   

  	
  Section
  6.01.

  	
  Covenants
  of the Trust Depositor.

  
	
   

  	
  Section
  6.02.

  	
  Liability
  of Trust Depositor; Indemnities

  
	
   

  	
  Section
  6.03.

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

  
	
   

  	
  Section
  6.04.

  	
  Limitation
  on Liability of Trust Depositor and Others

  
	
   

  	
  Section
  6.05.

  	
  Trust
  Depositor Not to Resign

  
	
  ARTICLE SEVEN

  	
  DISTRIBUTIONS; RESERVE
  FUND

  
	
   

  	
  Section 7.01.

  	
  Monthly
  Distributions

  
	
   

  	
  Section 7.02.

  	
  Fees

  
	
   

  	
  Section
  7.03.

  	
  Advances;
  Realization of Carrying Charge

  
	
   

  	
  Section 7.04.

  	
  Interest
  Reserve Account.

  
	
   

  	
  Section 7.05.

  	
  Distributions;
  Priorities.

  
	
   

  	
  Section 7.06.

  	
  Reserve Fund.

  
	
   

  	
  Section
  7.07.

  	
  Establishment
  of Pre-Funding Account.

  
	
   

  	
  Section
  7.08.

  	
  Reacquisition
  of Contracts for Breach of Representations and Warranties.

  
	
   

  	
  Section
  7.09.

  	
  Reassignment
  of Reacquired Contracts

  
	
   

  	
  Section
  7.10.

  	
  Seller’s
  Reacquisition Option

  
	
  ARTICLE EIGHT

  	
  EVENTS OF
  TERMINATION; SERVICE TRANSFER

  



 


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  Section 8.01.

  	
  Events of
  Termination

  
	
   

  	
  Section 8.02.

  	
  Waiver of
  Servicer Default

  
	
   

  	
  Section 8.03.

  	
  Service Transfer

  
	
   

  	
  Section
  8.04.

  	
  Successor
  Servicer to Act; Appointment of Successor Servicer

  
	
   

  	
  Section
  8.05.

  	
  Notification
  to Securityholders

  
	
   

  	
  Section 8.06.

  	
  Effect of Transfer

  
	
   

  	
  Section 8.07.

  	
  Database File

  
	
   

  	
  Section
  8.08.

  	
  Successor
  Servicer Indemnification

  
	
   

  	
  Section
  8.09.

  	
  Responsibilities
  of the Successor Servicer

  
	
   

  	
  Section
  8.10.

  	
  Limitation
  of Liability of Servicer

  
	
   

  	
  Section
  8.11.

  	
  Merger
  or Consolidation of Servicer

  
	
   

  	
  Section 8.12.

  	
  Servicer Not to
  Resign

  
	
   

  	
  Section 8.13.

  	
  Appointment of
  Subservicer

  
	
  ARTICLE NINE

  	
  REPORTS

  
	
   

  	
  Section 9.01.

  	
  Monthly Reports

  
	
   

  	
  Section 9.02.

  	
  Officer’s
  Certificate

  
	
   

  	
  Section 9.03.

  	
  Other Data

  
	
   

  	
  Section
  9.04.

  	
  Annual
  Report of Accountants.

  
	
   

  	
  Section
  9.05.

  	
  Annual
  Statement of Compliance from Servicer

  
	
   

  	
  Section 9.06.

  	
  Monthly
  Reports to Noteholders

  
	
  ARTICLE TEN

  	
  TERMINATION

  
	
   

  	
  Section 10.01.

  	
  Sale of Trust
  Assets.

  
	
  ARTICLE ELEVEN

  	
  MISCELLANEOUS

  
	
   

  	
  Section 11.01.

  	
  Amendment.

  
	
   

  	
  Section
  11.02.

  	
  Protection
  of Title to Trust.

  
	
   

  	
  Section 11.03.

  	
  Governing Law

  
	
   

  	
  Section 11.04.

  	
  Notices

  
	
   

  	
  Section
  11.05.

  	
  Severability
  of Provisions

  
	
   

  	
  Section 11.06.

  	
  Assignment

  
	
   

  	
  Section 11.07.

  	
  Third Party
  Beneficiaries

  
	
   

  	
  Section 11.08.

  	
  Counterparts

  
	
   

  	
  Section 11.09.

  	
  Headings

  
	
   

  	
  Section
  11.10.

  	
  No
  Bankruptcy Petition; Disclaimer and Subordination

  
	
   

  	
  Section
  11.11.

  	
  Limitation
  of Liability of Owner Trustee and Indenture Trustee.

  



 


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EXHIBITS


 


	
  Exhibit
  A

  	
   

  	
  Form of Assignment

  	
   

  
	
  Exhibit
  B

  	
   

  	
  Form of
  Closing Certificate of Trust Depositor

  	
   

  
	
  Exhibit
  C

  	
   

  	
  Form
  of Closing Certificate of Seller/Servicer

  	
   

  
	
  Exhibit
  D

  	
   

  	
  Form
  of Opinion of Counsel for Trust Depositor regarding

  general corporate matters (including perfection opinion)

  	
   

  
	
  Exhibit
  E

  	
   

  	
  Form of
  Opinion of Counsel for Trust Depositor regarding

  the “true
  sale” nature of the transaction

  	
   

  
	
  Exhibit
  F

  	
   

  	
  Form of Opinion of Counsel for Trust
  Depositor regarding

  non-consolidation

  	
   

  
	
  Exhibit
  G

  	
   

  	
  Form
  of Certificate Regarding Reacquired Contracts

  	
   

  
	
  Exhibit
  H

  	
   

  	
  List of Contracts

  	
   

  
	
  Exhibit
  I

  	
   

  	
  Form
  of Monthly Report to Noteholders and the Certificateholder

  	
   

  
	
  Exhibit
  J

  	
   

  	
  Seller’s
  Representations and Warranties

  	
   

  
	
  Exhibit
  K

  	
   

  	
  Lockbox Bank and
  Lockbox Account

  	
   

  
	
  Exhibit
  L

  	
   

  	
  Form of Contract Stamp

  	
   

  
	
  Exhibit
  M

  	
   

  	
  Form of
  Subsequent Transfer Agreement

  	
   

  



 


iii

















 


SALE AND SERVICING AGREEMENT, dated as of April 1,
2002, among Harley-Davidson Motorcycle Trust 2002-1 (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 relating to Harley-Davidson and Buell
motorcycles and motorcycles not manufactured by Harley-Davidson or Buell
(collectively, the “Contracts”) originated by Harley-Davidson
Credit and subsequently sold by Harley-Davidson Credit to the Trust Depositor;


 


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


 


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


 


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


 


ARTICLE ONE


 


DEFINITIONS


 


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


 


“Addition
Notice” means, with respect to any transfer of Subsequent
Contracts to the Issuer  pursuant to
Section 2.04 and the Trust Depositor’s corresponding prior purchase of such
Contracts from the Seller, a notice, which shall be given at least 10 days
prior to the related Subsequent Transfer Date, identifying the aggregate
Principal Balance of the Subsequent Contracts to be transferred.


 


“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 Distribution Date immediately preceding such Distribution Date (or as of
the Cutoff Date in the case of the first Distribution Date) exceeds the Aggregate
Principal Balance as of 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.


 


“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.


 


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“Base
Prospectus” means the Prospectus dated April 8, 2002 relating
to the Harley-Davidson Motorcycle Trusts.


 


“Buell”
means Buell Motorcycle Company.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


“Class
A Note 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


 


3

















 


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 September 2006
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 3.02% per annum (computed on the basis of a
360-day year of twelve 30-day months).


 


“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%.


 


“Class
A-2 Final Distribution Date” means the January 2010
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 4.50% per annum (computed on the basis of a
360-day year of twelve 30-day months).


 


“Class
B Final Distribution Date” means the January 2010
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.


 


“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.


 


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“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 4.36% 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 April 16, 2002.


 


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


 


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


 


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


 


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


 


5

















 


“Contract
Assets” has the meaning assigned in Section 2.01 (and 2.04,
as applicable in the case of Subsequent Contracts) of the Transfer and Sale
Agreement.


 


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


 


“Contract
Rate” means, as to any Contract, the annual rate of interest
specified in the Contract.


 


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


 


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


 


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


 


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


 


“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


 


6

















 


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


 


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


 


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


 


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


 


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


 


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


 


“Distribution
Date” means the fifteenth day of each calendar month during
the term of this Agreement, or if such day is not a Business Day, the next
succeeding Business Day, with the first such Distribution Date hereunder being
May 15, 2002.


 


“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 April 30, 2002.


 


“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.


 


7

















 


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


 


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


 


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


 


(c)           commercial paper having, at the time
of the investment or contractual commitment to invest therein, a rating from
the Rating Agency in the highest investment category granted thereby;


 


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


 


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


 


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


 


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


 


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


 


“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


 


8

















 


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” has the meaning assigned in Section 5.10 hereof.


 


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


 


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


 


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


 


“Indenture
Trustee Fee” means, with respect to any Distribution Date,
one–twelfth of the product of .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 $348,000,000.


 


“Initial
Class A-2 Note Balance” means $208,700,000.


 


“Initial
Class B Note Balance” means $29,300,000.


 


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


 


“Initial
Cutoff Date” means April 3, 2002.


 


“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


 


9

















 


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


 


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


 


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


 


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


 


“Interest
Reserve Amount” means, as of any date of determination, the
amount on deposit in the Interest  Reserve Account on such date, and as of
the Closing Date shall be $565,802.33.


 


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


 


“Issuer”
means the Harley-Davidson Motorcycle Trust 2002-1.


 


“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.


 


10

















 


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


 


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


 


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


 


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


 


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


 


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


 


“Loss
Ratio” means, for any Distribution Date, the fraction
(expressed as a percentage) derived by dividing (x) Net Liquidation Losses for
all Contracts that became Liquidated 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.


 


11

















 


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


 


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


 


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


 


“Monthly
Servicing Fee” means, as to any Distribution Date,
one-twelfth of the product of 1%
and the Principal Balance of the Contracts as of the beginning of the related
Due Period.


 


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


 


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


 


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


 


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


 


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


 


“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


 


12

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


“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


 


13

















 


under any of the Transaction Documents required to be executed by a
Servicing Officer.  In the case of an
Officer’s Certificate of the Servicer, at least one of the signing officers
must be a Servicing Officer.  Unless
otherwise specified, any reference herein to an Officer’s Certificate shall be
to an Officers’ Certificate of the Servicer.


 


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


 


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


 


“Paying
Agent” means as described in Section 6.11 of  the Indenture and Section 3.10 of the Trust
Agreement.


 


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


 


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


 


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


 


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


 


“Principal
Balance” means (a) with respect to any Contract as of any
date, an amount equal to the unpaid principal balance of such Contract as of
the opening of business on the Initial Cutoff Date or related Subsequent Cutoff
Date, as applicable, reduced by the sum of (x) all payments received by the
Servicer as of such date allocable to principal and (y) any Cram Down Loss in
respect of such Contract; provided, however, that (i) if (x) a
Contract is 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 Trust Depositor 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,
(ii) from and after the third Due Period succeeding the final Due Period in
which the Obligor is required to make the final scheduled payment on a
Contract, the Principal Balance, if any, of such Contract shall be deemed to be
zero, and (iii) from and after the Due Period in which a Contract becomes a
Liquidated Contract, the Principal Balance of such Contract shall be


 


14

















 


deemed to be zero; and (b) where the context requires, the aggregate of
the Principal Balances described in clause (a) for all such Contracts.


 


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


 


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


 


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


 


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


 


“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.


 


15

















 


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


 


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


 


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


 


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


 


“Reserve
Fund Initial Deposit” means $3,809,417.86.


 


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


 


“Reserve
Fund Trigger Event” means the occurrence with respect to any
Distribution Date (i) the Average Delinquency Ratio for such Distribution Date
is equal to or greater than (a) 2.50% with respect to any Distribution Date
which occurs within the period from the Closing Date to, and inclusive of, the
first anniversary of the Closing Date, (b) 3.00% with respect to any
Distribution Date which occurs within the period from the day after the first
anniversary of the Closing Date to, and inclusive of, the second anniversary of
the Closing Date, or (c) 3.50% with respect to any Distribution Date which
occurs within the period from the day after the second anniversary of the
Closing Date to, and inclusive of, the third anniversary of the Closing Date or
(d) 4.00% with respect to any Distribution Date occurring after the third
anniversary of the Closing Date; (ii) the Average Loss Ratio for such
Distribution Date is equal to or greater than (a) 3.00% with respect to any
Distribution Date which occurs within the period from the Closing Date to, and
inclusive of, the second anniversary of the Closing Date or (b) 2.75% with
respect to any Distribution Date which occurs following the second anniversary
of the Closing Date;  or (iii) the
Cumulative Loss Ratio for such Distribution Date is equal to or greater than
(a) 1.25% with respect to any Distribution Date which occurs within the period
from the Closing Date to, and inclusive of, the first anniversary of the
Closing Date, (b) 1.75% 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) 2.25%
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) 2.50% with respect to any
Distribution Date occurring after the third anniversary of the Closing Date.


 


16

















 


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 8.02(a).


 


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


 


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


 


“Shortfall”
means, with respect to a Distribution Date, 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.


 


17

















 


“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 will be an amount equal to the greater of:


 


(a)           2.25% 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 and is
continuing for three consecutive Distribution Dates (inclusive of the
respective Distribution Date), the Specified Reserve Fund Balance shall be
equal to 6.00% of the Principal Balance of the Contracts in the Trust as of the
last day of the immediately preceding Due Period; and


 


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


 


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


 


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


 


“Subsequent
Contracts” means all Contracts transferred to the Trust
pursuant to Section 2.04.


 


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


 


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


 


18

















 


“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
2.04(b) hereof.


 


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


 


“Successor
Servicer” means a servicer described in Section 8.02(b).


 


“Supplement”
means the Prospectus Supplement dated April 8, 2002.


 


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


 


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


 


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


 


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


 


“Trust
Account Property” means the Trust Accounts, all amounts and
investments held from time to time in any Trust Account (whether in the form of
deposit accounts, physical property, book-entry securities, uncertificated
securities or otherwise), including the Reserve Fund Initial Deposit, and all
proceeds of the foregoing.


 


“Trust
Agreement” means the Trust Agreement, dated as of the date
hereof, 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 2.04(a) hereof in respect of Subsequent Contracts and
related assets transferred to the Trust pursuant to Subsequent Transfer
Agreements).


 


19

















 


“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 Salomon Smith Barney Inc., Banc One Capital Markets, Inc. and First Union
Securities, 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 on or after the Initial Cutoff Date, including any liquidation
proceeds therefrom, but excluding any rights to receive payments which were
collected pursuant thereto prior to the Initial Cutoff Date), (ii) all rights
of the Trust Depositor under any physical damage or other individual insurance
policy (and rights under a “forced placed” policy, if any) or any debt
cancellation agreement relating to any such Contract, an Obligor or a
Motorcycle securing such Contract, (iii) all security interests in each such
Motorcycle, (iv) all documents contained in the related Contract Files, (v) all
rights (but not the obligations) of the Trust Depositor under any related
motorcycle dealer agreements between dealers (i.e., the originators of such
Contracts) and the Trust Depositor, (vi) all rights of the Trust Depositor in
the Lockbox, the Lockbox Account and related Lockbox Agreement to the extent
they relate to such Contracts, (vii) all rights (but not the obligations) of
the Trust Depositor under the Transfer and Sale Agreement, including but not
limited to the Trust Depositor’s rights under Article V thereof, (viii) the
remittances, deposits and payments made into the Trust Accounts from time to
time and amounts in the Trust Accounts from time to time


 


21

















 


(and any investments of such amounts), (ix) all rights of the Trust
Depositor to certain rebates of premiums and other amounts relating to
insurance policies, debt cancellation agreements, extended service contracts or
other repair agreements and other items financed under such Contracts and (x)
all proceeds and products of the foregoing (the property in clauses (i)-(x)
above, being the “Trust Corpus”). 
Although the Trust Depositor and the Owner Trustee agree 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 Arthur
Andersen LLP, or another nationally recognized accounting firm, addressed to
the Seller and the Underwriters and stating that such firm has reviewed a
sample of the Initial Contracts and performed specific procedures for such
sample with respect to certain contract terms and which identifies those
Initial Contracts which do not conform.


 


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


 


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


 


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 secured party (and the Trust as assignee)
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 secured party and
identifying the Trust Corpus as collateral; and evidence of proper filing with
appropriate office in Delaware of a UCC financing statement naming the Trust,
as debtor, and naming the Indenture Trustee, as secured party and identifying
the Collateral as collateral.


 


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


 


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


 


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


 


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


 


(l)            A fully executed Transfer and Sale
Agreement.


 


(m)          A fully executed Trust Agreement.


 


(n)           A fully executed Administration
Agreement.


 


(o)           A fully executed Indenture.


 


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


 


23

















 


Depositor in the Lockbox, the Lockbox Account and related Lockbox
Agreement to the extent they relate to such Contracts, (vii) all rights (but
not the obligations) of the Trust Depositor under the Transfer and Sale
Agreement related to such Contracts (to the extent not already conveyed under
Section 2.01(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
Contracts, (viii) the remittances, deposits and payments made into the Trust
Accounts from time to time and amounts in the Trust Accounts from time to time
related to such Contracts (to the extent not already conveyed under Section
2.01(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 Contracts and (x)
all proceeds and products of the foregoing (the property in clauses (i)-(x)
above, upon such transfer, becoming part of the “Trust Corpus”).  Although the Trust Depositor and the Owner
Trustee agree that such transfer is intended to be a transfer of ownership,
rather than the granting of a security interest to secure a borrowing, and that
the Trust Corpus following such transfer shall not be property of the Trust
Depositor, in the event such transfer is deemed to be of a mere security
interest to secure a borrowing, the Trust Depositor shall be deemed to have
granted the Owner Trustee for the benefit of the Trust a perfected first
priority security interest in such Trust Corpus and this Agreement shall
constitute a security agreement under applicable law.


 


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


 


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


 


(ii)           the Funding Period shall not have
terminated;


 


(iii)          the Trust Depositor shall have
delivered to the Owner Trustee a duly executed written assignment (including an
acceptance by the Owner Trustee) in substantially the form of Exhibit M hereto
(the “Subsequent Transfer Agreement”), which shall include a Subsequent List of
Contracts listing the Subsequent Contracts;


 


(iv)          the Trust Depositor shall have
deposited or caused to be deposited in the Collection Account all collections
received with respect to the Subsequent Contracts on or after the related
Subsequent Cutoff Date;


 


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 in writing
that following such transfer the Class A-1 Notes and Class A-2 Notes will be
rated in the highest rating category by such Rating Agency and the Class B
Notes will be rated at least its rating as of the Closing Date by Standard
& Poor’s and Moody’s;


 


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


 


(ix)           the Trust Depositor shall have
delivered to the Owner Trustee and the Indenture Trustee an Officers’
Certificate confirming the satisfaction of each condition precedent specified
in this paragraph (b);


 


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


 


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


 


(xii)          the Trust Depositor shall have
delivered to the Rating Agencies evidence that (A) the weighted average annual
percentage rate of the Contracts collectively, following the transfer of the
Subsequent Contracts, is not less than 11.00% 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 75 months;


 


(xiii)         the Trust Depositor shall have
delivered to the Rating Agencies, a report with respect to certain agreed-upon
procedures relating to the Subsequent Contracts being transferred, confirming
that procedures were performed substantially similar to such procedures as were
performed in connection with the transfer of the Initial Contracts;


 


(xiv)        each of the representations and
warranties made by the Seller pursuant to Section 3.01 of the Transfer and
Sale Agreement with respect to the Subsequent


 


25

















 


Receivables shall be true and correct as of the
related Subsequent Transfer Date, and the Seller shall have performed all
obligations to be performed by it hereunder on or prior to such Subsequent
Transfer Date;


 


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


 


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


 


(c)           The
Trust Depositor covenants to transfer (at or prior to the end of the Funding
Period) to the Trust pursuant thereto Subsequent Contracts with an aggregate
Principal Balance equal to $205,058,214.37; provided, however, that in complying with
such covenant, the Trust Depositor agrees to make no more than one separate
transfer of Subsequent Contracts per monthly period (as measured by the
corresponding Distribution Dates).  In
the event that the Trust Depositor shall fail to deliver and transfer to the
Trust any or all of such Subsequent Receivables by the date on which the
Funding Period ends and the Pre-Funded Amount is greater than $150,000 on such
date, the Trust Depositor shall cause to be deposited into the Collection
Account the amount then on deposit in the Pre-Funding Account; provided,
however, that the foregoing shall be the sole remedy of the Trust,
the Owner Trustee, the Indenture Trustee or the Securityholders with respect to
a failure of the Trust Depositor to comply with such covenant.


 


ARTICLE THREE


 


REPRESENTATIONS AND WARRANTIES


 


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


 


26

















 


set forth or referred to in this Section shall survive delivery of the
Contract Files to the Owner Trustee or any custodian.


 


The Trust Depositor hereby represents and warrants to
the Trust and the Indenture Trustee that it has entered into the Transfer and
Sale Agreement with the Seller, that the Seller has made the representations
and warranties in the Transfer and Sale Agreement as set forth in Exhibit J hereto,
that such representations and warranties run to and are for the benefit of the
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 


 


27

















 


such terms may be limited by bankruptcy, insolvency or
similar laws affecting the enforcement of creditors’ rights generally and by
the availability of equitable remedies.


 


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


 


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


 


(f)             Litigation.  No litigation or administrative proceeding
of or before any court, tribunal or governmental body is currently pending, or
to the knowledge of the Trust Depositor threatened, against the Trust Depositor
or any of its properties or with respect to this Agreement, 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.


 


28

















 


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.


 


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


 


29

















 


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


 


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


 


ARTICLE FOUR


 


PERFECTION OF TRANSFER
AND PROTECTION OF SECURITY INTERESTS


 


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


 


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


 


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


 


(i)            hold the Contract Files on behalf of
the Trust, maintain accurate records pertaining to each Contract to enable it
to comply with the terms and conditions of this Agreement, maintain a current
inventory thereof, conduct annual physical inspections of Contract Files held
by it under this Agreement and certify to the Owner Trustee and the


 


30

















 


Indenture Trustee 
annually that it continues to maintain possession of such Contract
Files;


 


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


 


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


 


(iv)          at all times maintain the original of
the fully executed Contract and store such original Contract in a fireproof
vault;


 


(v)           stamp each Contract on both the first
and the signature page (if different) as of the Closing Date (or Subsequent
Transfer Date, as the case may be) in the form attached hereto as Exhibit L;


 


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


 


(vii)         within 185 days of the Closing Date (or
Subsequent Transfer Date, as the case may be) deliver an Officer’s Certificate
to the Owner Trustee listing each Contract with respect to which there did not
exist as of 180 days of the Closing Date (or Subsequent Transfer Date, as the
case may be) an original title certificate to the motorcycle and the
certificate of lien recordation relating thereto.


 


(d)           In
performing its duties under this Section 4.01, the Servicer agrees to act with
reasonable care, using that degree of skill and care that it exercises with
respect to similar contracts for the installment purchase of consumer goods
owned and/or serviced by it, and in any event with no less degree of skill and
care than would be exercised by a prudent servicer of motorcycle conditional
sales contracts.  The Servicer shall
promptly report to the Owner Trustee and the Indenture Trustee any failure by
it to hold the Contract Files as herein provided and shall promptly take
appropriate action to remedy any such failure. 
In acting as custodian of the Contract Files, the Servicer further
agrees not to assert any legal or beneficial ownership interest in the
Contracts or the Contract Files, except as provided in Section 5.06.  The Servicer agrees to indemnify the
Noteholders, the 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


 


31

















 


Certificateholder, the Owner Trustee and the Indenture Trustee as the
result of any act or omission by the Servicer relating to the maintenance and
custody of the Contract Files; provided, however, that the Servicer will
not be liable for any portion of any such amount resulting from the gross
negligence or willful misconduct of any Noteholder, Certificateholder, the
Owner Trustee or the Indenture Trustee. 
The Trustees shall have no duty to monitor or otherwise oversee the
Servicer’s performance as custodian hereunder.


 


Section
4.02.        Filing.  On or prior to the Closing Date, the
Servicer shall cause the UCC financing statement(s) referred to in Section
2.02(g) hereof to be filed and from time to time the Servicer shall take and
cause to be taken such actions and execute such documents as are necessary or
desirable or as the Owner Trustee or Indenture Trustee may reasonably request
to perfect and protect the Trust’s first priority perfected interest in the
Trust Corpus against all other persons, including, without limitation, the
filing of financing statements, amendments thereto and continuation statements,
the execution of transfer instruments and the making of notations on or taking
possession of all records or documents of title.


 


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


 


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


 


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


 


 


32

















 


ARTICLE FIVE


 


SERVICING OF CONTRACTS


 


Section
5.01.        Responsibility for Contract
Administration. 
The Servicer will have the sole obligation to manage, administer,
service and make collections on the Contracts and perform or cause to be
performed all contractual and customary undertakings of the holder of the
Contracts to the Obligor.  The Owner
Trustee, at the written request of a Servicing Officer, shall furnish the
Servicer with any powers of attorney or other documents necessary or
appropriate in the opinion of the Owner Trustee to enable the Servicer to carry
out its servicing and administrative duties hereunder.  The Servicer is hereby appointed the
servicer hereunder until such time as any Service Transfer may be effected
under Article VIII.


 


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


 


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


 


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


 


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


 


Section
5.05.        Trust Accounts.  (a) On or before the Closing Date, the Trust
Depositor shall establish the Collection Account, Note Distribution Account,
Pre-Funding Account and Reserve Fund, each with and in the name of the
Indenture Trustee for the benefit of the


 


33

















 


Noteholders.  The Indenture
Trustee is hereby required to ensure that each of the Trust Accounts is
established and maintained as an Eligible Account.


 


(b)           The
Indenture Trustee shall deposit (or the Servicer shall deposit, with respect to
payments by or on behalf of the Obligors received directly by the Servicer),
without deposit into any intervening account, into the Collection Account as
promptly as practical (but in any case not later than the second Business Day
following the receipt thereof):


 


(i)            With respect to principal and
interest on the Contracts received on or after the Initial Cutoff Date or
Subsequent Cutoff Date, as applicable (which for the purpose of this paragraph
(b)(i) shall include those monies in the Lockbox Account allocable to 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, make a demand, immediately
upon expiration of the Funding Period, upon the Trust Depositor to cause to be
deposited into the Collection Account the amount then in deposit in the
Pre-Funding Account.


 


(d)           If
the Servicer so directs, in writing, the Indenture Trustee shall invest the
amounts in the Trust Accounts in Qualified Eligible Investments that are
payable on demand or that mature not later than one Business Day prior to the
next succeeding Distribution Date.  Once
such funds are invested, the Indenture Trustee shall not change the investment
of such funds.  Any loss on such
investments shall be deposited in the applicable Trust Account by the Servicer
out of its own funds immediately as realized. 
Funds in the Trust Accounts not so invested must be insured to the
extent permitted by law by the Bank Insurance Fund or the Savings Association
Insurance Fund of the Federal Deposit Insurance Corporation.  Subject to the restrictions herein, the
Indenture Trustee may purchase a Qualified Eligible Investment from itself or
an Affiliate.


 


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Subject to the other provisions hereof, the Indenture Trustee shall
have sole control over each such investment and the income thereon, and any
certificate or other instrument evidencing any such investment, if any, shall
be delivered directly to the Indenture Trustee or its agent, together with each
document of transfer, if any, necessary to transfer title to such investment to
the Indenture Trustee in a manner which complies with this Section
5.05(d).  All interest, dividends, gains
upon sale and other income from, or earnings on, investments of funds in the
Trust Accounts (other than the Reserve Fund and the Pre-Funding Account) shall
be deposited in the Collection Account pursuant to Section 5.05(b) and
distributed on the next Distribution Date pursuant to Section 7.05.  The Trust Depositor and the Trust agree and
acknowledge that the Indenture Trustee is to have “control” (within the
meaning of Section 9-106 of the UCC) of collateral comprised of “Investment
Property” (within the meaning of Section 9-102 of the UCC) for all
purposes of this Agreement.


 


(e)           Notwithstanding
anything to the contrary herein, the Servicer may remit payments on the
Contracts and Net Liquidation Proceeds to the Collection Account in next-day
funds or immediately available funds no later than 10:00 a.m., Central time, on
the Business Day prior to the next succeeding Distribution Date, but only for
so long as (i) the short-term debt security rating of the Servicer is at least
“P-1” by Moody’s and “A-1+” by Standard & Poor’s or (ii) the long-term debt
security rating of the Servicer is at least “A2” by Moody’s and “A” by Standard
& Poor’s.


 


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


 


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


 


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


 


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


 


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


 


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


 


Section
5.06.        Enforcement.  (a) The Servicer will, consistent with
Section 5.02, act with respect to the Contracts in such manner as will maximize
the receipt of all payments called for under the terms of the Contracts.  The Servicer shall use its best efforts to
cause Obligors to make all payments on the Contracts directly to the Lockbox
Account.  The Servicer will act in a
commercially reasonable manner with respect to the repossession and disposition
of a


 


35

















 


Motorcycle following a default under the related Contract with a view
to realizing proceeds at least equal to the Motorcycle’s fair market
value.  If the Servicer determines that
eventual payment in full of a Contract is unlikely, the Servicer will follow
its normal practices and procedures to recover all amounts due upon that
Contract, including repossessing and disposing of the related Motorcycle at a
public or private sale or taking other action permitted by applicable law.  The Servicer will be entitled to recover all
reasonable out-of-pocket expenses incurred by it in liquidating a Contract and
disposing of the related Motorcycle.


 


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


 


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


 


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


 


(e)           The
Servicer may grant to the Obligor on any Contract an extension of payments due
under such Contract; provided that (i) the extension period is
limited to 45 days, (ii) the Obligor has not received an extension during the
previous twelve–month period, (iii) the evidence supports the Obligor’s
willingness and capability to resume monthly payments, (iv) such extension is
consistent with the Servicer’s customary servicing procedures and is consistent
with Section 5.02, (v) such extension does not extend the maturity date of the
Contract beyond the latest maturity date of any of the Contracts as of the
Initial Cutoff Date (or, if a transfer of Subsequent Contracts to the Trust
occurs, beyond the latest maturity date of such Subsequent Contracts) and (vi)
the aggregate Principal Balances of Contracts which have had extensions


 


36

















 


granted does not exceed more than 3.00%
of the aggregate of the Initial Class A-1 Note 
Balance, the Initial Class A-2 Note Balance and the Initial Class B Note
Balance.


 


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


 


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


 


Section
5.07.        Trustees to Cooperate.  Upon payment in full on any Contract, the
Servicer will notify the Trustees and the Trust Depositor on the next
succeeding Distribution Date by certification of a Servicing Officer (which
certification shall include a statement to the effect that all amounts received
in connection with such payments which are required to be deposited in the
Collection Account pursuant to Section 5.05 have been so deposited) and shall
(if the Servicer is not then in possession of the Contracts and Contract Files)
request delivery of the Contract and Contract File to the Servicer.  Upon receipt of such delivery and request,
the Trustees shall promptly release or cause to be released such Contract and
Contract File to the Servicer.  Upon
receipt of such Contract and Contract File, each of the Trust Depositor and the
Servicer is authorized to execute an instrument in satisfaction of such
Contract and to do such other acts and execute such other documents as the
Servicer deems necessary to discharge the Obligor thereunder and eliminate the
security interest in the Motorcycle related thereto.  The Servicer shall determine when a Contract has been paid in
full; to the extent that insufficient payments are received on a Contract
credited by the Servicer as prepaid or paid in full and satisfied, the
shortfall shall be paid by the Servicer out of its own funds.  From time to time as appropriate for servicing
and repossession in connection with any Contract, if the Servicer is not then
in possession of the Contracts and Contract Files, the Indenture Trustee shall,
upon written request of a Servicing Officer and delivery to the Indenture
Trustee of a receipt signed by such Servicing Officer, cause the original
Contract and the related Contract File to be released to the Servicer and shall
execute such documents as the Servicer shall deem reasonably necessary to the
prosecution of any such proceedings. 
Such receipt shall obligate the Servicer to return the original Contract
and the related Contract File to the Indenture Trustee when the need by the
Servicer has ceased unless the Contract shall be 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


 


37

















 


expenses incurred in connection with the enforcement of Contracts
(including enforcement of defaulted Contracts and repossessions of Motorcycles
securing such Contracts when such Contracts are not reacquired pursuant to
Section 7.08) and all other fees and expenses not expressly stated hereunder to
be for the account of the Trust shall be paid by the Servicer and the Servicer
shall not be entitled to reimbursement hereunder.


 


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


 


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


 


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


 


ARTICLE SIX


 


THE TRUST DEPOSITOR


 


Section
6.01.           Covenants of the Trust
Depositor.


 


(a)            During the term of this Agreement,
the Trust Depositor will keep in full force and effect its existence, rights
and franchises as a corporation under the laws of the


 


38

















 


jurisdiction of its incorporation and will obtain and preserve its
qualification to do business in each jurisdiction in which such qualification
is or shall be necessary to protect the validity and enforceability of this
Agreement, the other Transaction Documents and each other instrument or
agreement necessary or appropriate to the proper administration of this
Agreement and the transactions contemplated hereby.


 


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


 


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


 


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


 


39

















 


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


 


(g)           Restricted
Payments.  Except as
permitted or contemplated by the Transaction Documents, the Trust Depositor
shall not, directly or indirectly, (i) pay any dividend or make any
distribution (by reduction of capital or otherwise), whether in cash, property,
securities or a combination thereof, to any owner of an equity interest in the
Trust Depositor, (ii) redeem, purchase, retire or otherwise acquire for value
any such equity interest or (iii) set aside or otherwise segregate any amounts
for any such purpose; it being understood that the Trust Depositor shall at all
times have the right to distribute funds received pursuant to the Transaction
Documents to its equity owner.


 


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


 


(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


 


40

















 


members’ and directors’ meetings appropriate to
authorize all entity action, keeping separate and accurate records of such
meetings and its actions, passing all resolutions or consents necessary to
authorize actions taken or to be taken, and maintaining accurate and separate
books, records and accounts, including, but not limited to, payroll and
intercompany transaction accounts.


 


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


 


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.


 


41

















 


The Trust Depositor shall be liable directly to and
will indemnify any injured party or any other creditor of the Trust for all
losses, claims, damages, liabilities and expenses of the Trust to the extent
that Trust Depositor would be liable if the Trust were a partnership under the
Delaware Revised Uniform Limited Partnership Act in which Trust Depositor were
a general partner; provided, however, that Trust Depositor
shall not be liable for any losses incurred by a Certificateholder in the
capacity of an investor in the Trust Certificate or a Noteholder in the
capacity of an investor in the Notes. 
In addition, any third party creditors of the Trust (other than in
connection with the obligations described in the immediately preceding sentence
for which Trust Depositor shall not be liable) shall be deemed third party
beneficiaries of this paragraph.  The
obligations of Trust Depositor under this paragraph shall be evidenced by the
Trust Certificate described in the Trust Agreement.


 


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;


 


42

















 


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


 


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


 


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


 


ARTICLE SEVEN


 


DISTRIBUTIONS; RESERVE FUND


 


Section
7.01.        Monthly Distributions.  (a) 
Each Noteholder and Certificateholder as of the related Record Date
shall be paid on 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
Determination 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


 


44

















 


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).


 


(b)           The
Servicer shall determine no later than 12:00 noon, New York City time, on the
second Business Day prior to a Distribution Date the Carrying Charges in
respect of the upcoming Distribution Date. 
To the extent of such amount, the Indenture Trustee shall transfer an
amount equal to the Carrying Charges from the Interest Reserve Account (solely
to the extent of the amount then on deposit) into the Collection Account as
contemplated in Section 5.05(b)(vi) hereof.


 


Section
7.04.        Interest Reserve Account.


 


(a)           On or prior to the Closing Date, the
Trust Depositor shall establish with and in the name of the Indenture Trustee
on behalf of the Securityholders, an Eligible Account designated “Harley-Davidson
Customer Funding Corp. Interest Reserve Account - Harley Davidson Motorcycle
Trust 2002-1 — 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


 


45

















 


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;


 


(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.


 


46

















 


(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):


 


(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


 


47

















 


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);


 


(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.


 


48

















 


(c)           The
Indenture Trustee shall at the written direction of the Servicer invest the
funds in the Reserve Fund in Qualified Eligible Investments.  Funds in the Reserve Fund shall be invested
in investments that are payable on demand or mature on or before the Business
Day prior to each Distribution Date. 
Once such funds are invested, the Indenture Trustee shall not change the
investment of such funds prior to maturity. 
Upon any such investment, the Indenture Trustee shall, consistent with
the definition of Qualified Eligible Investment herein, make an appropriate
notation of the security interest in such Qualified Eligible Investment on the
Indenture Trustee’s records, by book entry or otherwise.  All income and gain realized from any such
investments as well as any interest earned on Reserve Fund Deposits shall be
deposited and retained in the Reserve Fund (subject to Section 7.06(e)).  Losses, if any, realized on amounts in the
Reserve Fund invested pursuant to this paragraph shall first be credited
against undistributed investment earnings on amounts in the Reserve Fund
invested pursuant to this paragraph, and shall thereafter be deemed to reduce
the amount on deposit in the Reserve Fund. 
Neither the Trust Depositor nor the Indenture Trustee shall be liable
for the amount of any loss incurred in respect of any investment, or lack of
investment, of funds held in the Reserve Fund. 
All income or loss on funds held in the Reserve Fund shall be taxable to
the 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
2002-1 – 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
Harley-Davidson Credit upon the order of the Trust Depositor for the purpose of
purchasing Subsequent Contracts from Harley-Davidson Credit pursuant to a
Subsequent Purchase Agreement.  With
respect to amounts still remaining on deposit in the Pre-Funding Account on the
date upon which the Funding Period ends (and provided a timely written demand
for funding as described above has not been received requesting funding on such
date)


 


49

















 


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


 


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


 


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


 


50

















 


such certificate to be included in the Contract File as of 180 days
after the Closing Date (or Subsequent Transfer Date, in the case of Subsequent
Contracts) or (b) the failure to maintain perfection of the security interest
in the Motorcycle securing a Contract in accordance with Section 5.09, shall be
deemed to be a breach materially and adversely affecting the Trust’s interest
in the Contract or in the related Contracts. 
Notwithstanding any other provision of this Agreement, the obligation of
the Seller under the Transfer and Sale Agreement and described in this Section
7.08 shall not terminate or be deemed released by any party hereto upon a
Service Transfer pursuant to Article VIII. 
The reacquisition obligation described in this Section 7.08 is in no way
to be satisfied with monies in the Reserve Fund.


 


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


 


Section
7.10.        Seller’s Reacquisition Option.  As provided in the Transfer and Sale
Agreement, on written notice to the Indenture Trustee at least 20 days prior to
a Distribution Date, and provided that the Pool Balance is then less than 10%
of the Aggregate Principal Balance as of the Closing Date, and provided a valuation
letter is delivered as required in Section 5.02 of the Transfer and Sale
Agreement, the Seller, through the Trust Depositor, may (but is not required
to) reacquire on that Distribution Date all outstanding Contracts at a price
equal to the aggregate unpaid principal balance of the Notes on the previous
Distribution Date plus the aggregate of the Note Interest Distributable Amount
for the current Distribution Date, the Reimbursement Amount (if any) as well as
accrued and unpaid Monthly Servicing Fees and the Indenture Trustee Fee to the
date of such reacquisition.  Such price
shall be deposited in the Collection Account not later than one (1) Business
Day before such Distribution Date, against the Owner Trustee’s and Indenture
Trustee’s release of the Contracts and the Contract Files to the Seller.


 


ARTICLE EIGHT


 


EVENTS OF TERMINATION;
SERVICE TRANSFER


 


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


 


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


 


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(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;


 


(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.


 


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


 


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


 


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


 


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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.


 


(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 8.03 shall have all of such obligations, except that the terminated
Servicer will transmit or cause to be transmitted directly to the Successor
Servicer for its own account, promptly on receipt and in the same form in which
received, any amounts (properly endorsed where required for the Successor
Servicer to collect them) received as payments upon or otherwise in connection
with the Contracts.


 


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


 


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


 


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


54

















 


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 8.07 shall survive the termination of
this Agreement.


 


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


 


The Successor Servicer will make arrangements with the
Servicer for the prompt and safe transfer of, and the Servicer shall provide to
the Successor Servicer, all necessary servicing files and records, including
(as deemed necessary by the Successor Servicer at such time): (i) microfiche
loan documentation, (ii) servicing system tapes, (iii) Contract payment
history, (iv) collections history and (v) the trial balances, as of the close of
business on the day immediately preceding conversion to the Successor Servicer,
reflecting all applicable loan information.


 


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


 


Section
8.10.        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


 


55

















 


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, 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.


 


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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.


 


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,
2003, 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
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


 


(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


 


57

















 


(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 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, 2003, 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;


 


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(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;


 


(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 31-59 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;


 


59

















 


(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.


 


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


 


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


 


ARTICLE TEN


 


TERMINATION


 


Section
10.01.      Sale of Trust Assets.


 


(a)           Upon any sale of the assets of the
Trust pursuant to Section 9.02 of the Trust Agreement, the Servicer shall
instruct the Indenture Trustee to deposit the proceeds from such sale after all
payments and reserves therefrom have been made (the “Insolvency Proceeds”) in
the Collection Account.  On the
Distribution Date on which the Insolvency Proceeds are deposited in the
Collection Account (or, if such proceeds are not so deposited on a Distribution
Date, on the Distribution Date immediately following such deposit), the
Servicer shall instruct the Indenture Trustee to make the following deposits
(after the application on such Distribution Date of Available Monies and funds
on deposit in the Reserve Fund pursuant to Section 7.06) from the Insolvency
Proceeds as if (and in the same order of priority as) the Insolvency Proceeds
were Available Monies being allocated and distributed on such date pursuant to
Section 7.06(b).


 


(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


 


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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 to add any
other provisions with respect to matters or questions arising under this
Agreement that shall not be inconsistent with the provisions of this Agreement,
(ii) to add or provide any credit enhancement for any Class of Notes 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 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
10.01(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


 


61

















 


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 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(a) 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


 


62

















 


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 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 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


 


63

















 


necessary fully to preserve and protect the interest of the Owner
Trustee and the Indenture Trustee and reciting the details of each filings or
referring to prior Opinions of Counsel in which such details are given, or (B)
stating that, in the opinion of such counsel, no such action shall be necessary
to preserve and protect such interest.


 


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


 


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


 


(i)            If
to the Servicer or Seller:


 


Harley-Davidson Credit Corp.


150 South Wacker Drive, Suite 3100


Chicago, Illinois 60606


Attention: Perry A. Glassgow


 


Telecopier No.: (312) 368-4372


 


(ii)           If
to the Trust Depositor:


 


Harley-Davidson Customer Funding Corp.


4150 Technology Way


Carson City, Nevada 89706


 


Telecopier No.: (702) 884-4469


 


(iii)          If
to the Indenture Trustee:


 


BNY Midwest Trust Company


2 North LaSalle Street


Suite 1020


Chicago, Illinois 60602


Attention: 
Corporate Trust Administration


 


Telecopier No.: 
(312) 827-8562


 


64

















 


(iv)          If
to the Owner Trustee:


 


Wilmington Trust Company


Rodney Square North


1100 North Market Street


Wilmington, Delaware 19890-0001


Attention: Corporate Trust Administration


 


Telecopier No.: (302) 651-8882


 


(v)           If
to Moody’s:


 


Moody’s Investors Service, Inc.


99 Church Street


New York, New York 10007


Attention: ABS Monitoring Department


 


Telecopier No.: (212) 553-1350


 


(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:


 


Salomon Smith Barney Inc.

388 Greenwich Street

New York, New York  10013

Attention:  General Counsel


 


Telecopier No.: 
(212) 816-8591


 


Banc One Capital Markets, Inc.


1 Bank One Plaza


Chicago, Illinois 
60670


Attention: 
Asset-Backed Finance Division


 


Telecopier No.: (312) 732-4487


 


65

















 


First Union Securities, Inc.


One First Union Center, TW-6


301 South College Street


Charlotte, North Carolina  28288


Attention: 
Asset-Securitization Division


 


Telecopier No.: (704) 374-3254


 


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 8.02, this Agreement may not
be assigned by the Trust Depositor or the Servicer without the prior written
consent of Holders of Notes aggregating not less than 66-2/3% of each Class.


 


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


 


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


 


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


 


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


 


66

















 


of the United States or any state of the United States.  This Section 11.10 will survive the
termination of this Agreement.


 


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


 


To the extent that notwithstanding the agreements
contained in this Section, the Trust or any Securityholder, either (i) asserts
an interest in or claim to, or benefit from any Other Assets, whether asserted
against or through the Trust Depositor or any other Person owned by the Trust
Depositor, or (ii) is deemed to have any interest, claim or benefit in or from
any Other Assets, whether by operation of law, legal process, pursuant to
applicable provisions of Insolvency Laws 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


 


67

















 


individual capacity or any beneficial owner of the Issuer have any
liability for  the representations,
warranties, covenants, agreements or other obligations of the Issuer hereunder,
as to all of which recourse shall be had solely to the assets of the
Issuer.  For all purposes of this
Agreement, in the performance of any duties or obligations of the Issuer
hereunder, the Owner Trustee shall be subject to, and entitled to the benefits
of, the terms and provisions of Articles Six, Seven and Eight of the Trust
Agreement.


 


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


 


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 2002-1

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Wilmington Trust Company, not in its

  individual capacity but solely as Owner

  Trustee on behalf of the Trust

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Printed Name: 

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  HARLEY-DAVIDSON CUSTOMER FUNDING CORP.,

  as Trust Depositor

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Printed Name:

  	
  Perry A. Glassgow

  
	
   

  	
  Title: Treasurer

  
	
   

  	
   

  
	
   

  	
  HARLEY-DAVIDSON CREDIT CORP., as Servicer

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Printed Name:

  	
  Perry A. Glassgow

  
	
   

  	
  Title: Treasurer

  
	
   

  	
   

  
	
   

  	
  BNY MIDWEST TRUST COMPANY, not in its

  individual capacity but solely as Indenture Trustee

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Printed Name:

  
	
   

  	
  Title:

  
											



 


Signature Page to Sale
and Servicing Agreement


 

















 


Exhibit A


 


[Form of Assignment]


 


In accordance with the Sale and Servicing Agreement
(the “Sale
and Servicing Agreement”) dated as of April 1, 2002 made by and
between the undersigned, as Trust Depositor 
(“Trust
Depositor”), Harley-Davidson Credit Corp., as Servicer, BNY Midwest
Trust Company, as Indenture Trustee and Harley-Davidson Motorcycle Trust 2002-1
(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 on or after the Initial Cutoff Date, including any
liquidation proceeds therefrom, but excluding any rights to receive payments
which were collected pursuant thereto prior to the Initial Cutoff Date), (ii)
all rights of the Trust Depositor under any physical damage or other individual
insurance policy (and rights under a “forced placed” policy, if any) or any debt
cancellation agreement relating to any such Contract, an Obligor or a
Motorcycle securing such Contract, (iii) all security interests in each such
Motorcycle, (iv) all documents contained in the related Contract Files, (v) all
rights (but not the obligations) of the Trust Depositor under any related
motorcycle dealer agreements between dealers (i.e., the originators of such
Contracts) and the Trust Depositor, (vi) all rights of the Trust Depositor in
the Lockbox, the Lockbox Account and related Lockbox Agreement to the extent
they relate to such Contracts, (vii) all rights (but not the obligations) of
the Trust Depositor under the Transfer and Sale Agreement, including but not
limited to the Trust Depositor’s rights under Article V thereof, (viii) the
remittances, deposits and payments made into the Trust Accounts from time to
time and amounts in the Trust Accounts (other than the Reserve Fund) from time
to time (and any investments of such amounts), (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        day of
April, 2002.


 


	
   

  	
   

  	
  HARLEY-DAVIDSON CUSTOMER FUNDING CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Printed Name: Perry A. Glassgow

  



 


A-1

















 


 


Title:       Treasurer


 


 


A-2

















 


Exhibit B


 


[Form of Closing Certificate of Trust Depositor]


 


Harley-Davidson
Customer Funding Corp.


 


President’s
Certificate


 


The undersigned certifies that she is President of
Harley-Davidson Customer Funding Corp., a Nevada corporation (the “Trust
Depositor”), and that as such is duly authorized to execute and
deliver this certificate on behalf of the Trust Depositor in connection with
the Sale and Servicing Agreement (the “Agreement”) dated as of April 1, 2002 (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 2002-1 (“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 April
      2002 stating that the Trust Depositor is duly
incorporated under the laws of the State of Nevada and is in good standing.


 


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


 


(5)           Attached hereto as Exhibit IV
is a true and correct copy of resolutions adopted pursuant to the unanimous
written consent of the Board of Directors of the Trust Depositor relating to
the execution, delivery and performance of the Agreement; the Transfer and Sale
Agreement dated as of the Effective Date between the Trust Depositor and
Harley-Davidson Credit; the Trust Agreement dated as of the Effective Date
between the Trust Depositor and the Wilmington Trust Company (the “Owner
Trustee”), as Owner Trustee; the Administrative Agreement dated as of the
Effective Date between the Trust Depositor, the Issuer, the Indenture Trustee,
Harley-Davidson Credit, as Administrator; the Underwriting Agreement dated
April 8, 2002 among the Trust


 


B-1

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


B-2

















 


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


 


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


 


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


 


*    *   
*    *


 


B-3

















 


In Witness Whereof, I have affixed my
signature hereto this      day of April, 2002.


 


	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Printed Name:

  	
  Donna F. Zarcone

  
	
   

  	
  Title:

  	
  President

  
					



 

















 


Exhibit C


 


[Form of Closing
Certificate of Servicer/Seller]


 


HARLEY-DAVIDSON
CREDIT CORP.


 


President’s
Certificate


 


The undersigned certifies that she is President of
Harley-Davidson Credit Corp. (“Harley-Davidson Credit”), and that as such
is duly authorized to execute and deliver this certificate on behalf of
Harley-Davidson Credit, as Servicer, in connection with the Sale and Servicing
Agreement (the “Sale and Servicing Agreement”) dated as of April 1, 2002
(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 2002-1 (“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 July 6, 1995, and no such amendment has been authorized by the
Board of Directors or shareholders of Harley-Davidson Credit.


 


(3)           Attached hereto as Exhibit II
is a Certificate of the Secretary of State of the State of Nevada dated April
   , 2002 stating that Harley-Davidson Credit is duly
incorporated under the laws of the State of Nevada and is in good standing.


 


(4)           Attached hereto as Exhibit III
is a true and correct copy of the By–laws of Harley-Davidson Credit which
were in full force and effect on November 5, 1992 and at all times subsequent
thereto.


 


(5)           Attached hereto as Exhibit IV
is a true and correct copy of resolutions adopted pursuant to a unanimous
written consent of the Board of Directors of Harley-Davidson Credit and
relating to the authorization, execution, delivery and performance of the
Transfer and Sale Agreement; the Sale and Servicing Agreement; the Underwriting
Agreement dated April 8, 2002 among Harley-Davidson Credit, CFC and the
Underwriters (the “Underwriting Agreement”); and the Administration Agreement
dated April 1, 2002 among Harley-Davidson Credit, CFC, the Issuer and BNY
Midwest Trust 


 


C-1

















 


Company, as Indenture Trustee (the “Indenture
Trustee”) (the “Administration Agreement”).  Said resolutions have not been amended,
modified, annulled or revoked, and are on the date hereof in full force and
effect and are the only resolutions relating to these matters which have been
adopted by the Board of Directors.


 


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


 


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


 


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


 


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


 


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


 


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


 


C-2

















 


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


 


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


 


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


 


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


 


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


 


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


 


*   *  
*   *   *   *


 


C-3

















 


In Witness Whereof,
I have affixed my signature hereto this ___ day of April, 2002.


 


	
   

  	
  By:

  	
   

  
	
   

  	
  Printed Name: 
  Donna F. Zarcone

  
	
   

  	
  Title:

  	
  President

  
				



 

















 


Exhibit D


 


[Form of Opinion of Counsel for Trust
Depositor


Regarding General
Corporate Matters


(Including Perfection
Opinion)]


 


D-1

















 


Exhibit E


 


[Form of Opinion of Counsel for Trust


Depositor
Regarding the “True Sale” Nature


of the
Transaction]


 


E-1

















 


Exhibit
F


 


[Form of Opinion of Counsel for
Trust


Depositor
Regarding Non-consolidation]


 


F-1

















 


Exhibit G


 


[Form of Certificate
Regarding Reacquired Contracts]


 


Harley-Davidson Credit
Corp.


 


Certificate Regarding
Reacquired Contracts


 


The undersigned certifies that he is the Treasurer of
Harley-Davidson Credit Corp., a Nevada corporation (the “Servicer”), and that as
such is duly authorized to execute and deliver this certificate on behalf of
the Servicer pursuant to Section 7.08 of the Sale and Servicing Agreement (the “Agreement”)
dated as of April 1, 2002 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 2002-1 (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]


 


A-1

















 


Exhibit I


 


[Form of Monthly Report to Noteholders and the
Certificateholder]


 


Harley-Davidson Motorcycle Trust 2002-1


$                           %
Harley-Davidson Motorcycle Contract Backed Notes, Class A-1


$                           %
Harley-Davidson Motorcycle Contract Backed Notes, Class A-2


$                              %
Harley-Davidson Motorcycle Contract Backed Notes, Class B


 


Monthly Report


For the [              ] Distribution Date


 


	
  A.

  	
   

  	
  Calculation of Available Monies

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.

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

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.

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

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.

  	
  Available Monies (l. plus 2.)

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B.

  	
   

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

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C.

  	
   

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

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  D.

  	
   

  	
  Calculation of Note Monthly Principal Distributable
  Amount

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1A.

  	
  Class A Note Percentage for such Distribution Date

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  95.0%

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  95.0%

  
									



 


I-1

















 


 


	
   

  	
   

  	
   

  	
   

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

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  0.00

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1B.

  	
  Class B Note Percentage for such Distribution Date

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  5.0%

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  100.00

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.

  	
  Principal Distributable Amount (from B)

  	
   

  	
  $

  	
   

  	
   

  
											



 


I-2

















 


	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.

  	
   

  	
  Note Monthly Principal Distributable Amount for

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (d)           Note
  Principal Carryover Shortfall

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
   

  



 


I-3

















 


	
  E.

  	
   

  	
  Calculation of Note Monthly Interest Distributable
  Amount.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.

  	
   

  	
  Class A-l Interest Rate

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.

  	
  Class A-2 Interest Rate

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.

  	
  Class B Interest Rate

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  5.

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  7.

  	
  Interest Carryover Shortfall for such Distribution
  Date

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  8.

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  F.

  	
   

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  J.

  	
   

  	
  Fees

  	
   

  	
   

  
								



 


I-4

















 


	
   

  	
   

  	
  1.

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.

  	
  Late Payment Penalty Fees for such Distribution Date

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.

  	
  Extension Fees for such Distribution Date

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.

  	
  Indenture Trustee Fee for such Distribution Date
  excluding expense component (1/12 of the product of .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)

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  K.

  	
   

  	
  CALCULATION OF THE AVAILABLE MONIES FOR SUCH
  DISTRIBUTION DATE

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  b.             All
  Net Liquidation Proceeds

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  L.

  	
   

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  M.

  	
   

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  N.

  	
   

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  O.

  	
   

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  P.

  	
   

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Q.

  	
   

  	
  Interest Earnings on the Reserve Fund.

  	
  $

  	
   

  



 


I-7

















 


	
  R.

  	
   

  	
  The amount on deposit in the Reserve Fund after
  giving

  effect to deposits and withdrawals therefrom on such
  Distribution Date

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  S.

  	
   

  	
  The Specified Reserve Fund Amount for such
  Distribution Date will be an amount equal to the greater of (a) 2.25% 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.

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  T.

  	
   

  	
  The Pool Factor

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.

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

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.

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

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.

  	
  The Class B Note Pool Factor immediately after such
  Distribution Date

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.

  	
  The 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

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  



 


I-8

















 


	
  U.

  	
   

  	
  Delinquent Contracts

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.

  	
  31-59 Days

  	
  #

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.

  	
  60-89 Days

  	
  #

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.

  	
  90 or More Days

  	
  #

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  V.

  	
   

  	
  Liquidated Contracts

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.

  	
  Total Liquidated Contracts                

  	
  #

  	
   

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.

  	
  Identity (attach)

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.

  	
  Liquidation proceeds for the Due Period

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.

  	
  Liquidation expenses for the Due Period

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  5.

  	
  Net Liquidation Proceeds for the Due Period

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.

  	
  Net Liquidation Losses for the Due Period

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  W.

  	
   

  	
  Advances

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.

  	
  Unreimbursed Advances prior to such Distribution
  Date

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.

  	
  Amount of Delinquent Interest for such Distribution
  Date

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  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

  	
  $

  	
   

  
											



 


I-9

















 


	
  X

  	
   

  	
  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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Y.

  	
   

  	
  Contracts

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.

  	
  Number of Contracts as of beginning of Due Period

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.

  	
  Principal Balance of Contracts as of beginning of
  Due Period

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  5.

  	
  Number of Contracts as of end of Due Period

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.

  	
  Principal Balance of Contracts as of end of Due
  Period

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  7.

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  8.

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  9.

  	
  Pre-Funded Amount as of beginning of Due Period

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  10.

  	
  Pre-Funded Amount as of end of Due Period

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Z.

  	
   

  	
  Interest Reserve Account

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.

  	
  Interest Reserve Amount as of previous Distribution
  Date

  	
  $

  	
   

  



 


I-10

















 


	
   

  	
   

  	
  2.

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.

  	
  Interest Reserve Amount as of upcoming Distribution
  Date

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  AA

  	
   

  	
  Ratios

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.

  	
  Cumulative Loss Ratio

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  a.

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  b.

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

  	
  $

   

   

   

   

   

   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  c.

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.

  	
  Average Delinquency Ratio for such Distribution Date

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (a)

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (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

  	
   

  	
   

  	
  %

  



 


I-11

















 


	
   

  	
   

  	
   

  	
  (d)

  	
  The Delinquency Ratio for the second prior
  Distribution Date

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (e)

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

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.

  	
  Average Loss Ratio for such Distribution Date

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (a)

  	
  Net Liquidation Losses

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (b)

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

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (c)

  	
  The Loss Ratio for the prior Distribution Date

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (d)

  	
  The Loss Ratio for the second prior Distribution
  Date

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (e)

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

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.

  	
  Computation of Specified Reserve Fund Balance

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Reserve Fund Trigger Events

  	
   

  	
   

  



 


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) 1.75% 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) 2.25% 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)
  2.50% following the third anniversary of the Closing Date, then a Reserve
  Fund Trigger Event has occurred)

  	
   

  	
   

  	
  %

  



 


 


I-14

















 


Exhibit J


 


[Seller’s Representations
and Warranties]


 


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


 


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


 


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


 


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


 


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


 


J-1

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


J-2

















 


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


 


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


 


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


 


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


 


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


 


(i)            Compliance with Law.  None of the Contracts, the origination of
the Contracts by the dealers, the purchase of the Contracts by the Seller, the
sale of the Contracts by the Seller to the Trust Depositor or the transfer of
the Contracts by the Trust Depositor to the Trust, or any combination of the
foregoing, violated as of the Closing Date or as of any Subsequent Transfer
Date, as applicable, any requirement of any federal, state or local law and
regulations thereunder, including, without limitation, usury, truth in lending,
motor vehicle installment loan and equal credit 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-3

















 


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


 


(k)           Valid Security Interest.  Each Contract creates a valid, subsisting
and enforceable first priority perfected security interest in favor of Seller
in the Motorcycle covered thereby, and such security interest has been assigned
by Seller to the Trust Depositor.  The
original certificate of title, certificate of lien or other notification (the “Lien
Certificate”) issued by the body responsible for the registration
of, and the issuance of certificates of title relating to, motor vehicles and
liens thereon (the “Registrar of Titles”) of the applicable
state to a secured party which indicates the lien of the secured party on the
Motorcycle is recorded on the original certificate of title, and original
certificate of title for each Motorcycle, show, or if a new or replacement Lien
Certificate is being applied for with respect to such Motorcycle the Lien
Certificate will be received within 180 days of the Closing Date (or the
applicable Subsequent Transfer Date in the case of Subsequent Contracts) and
will show, the Seller as original secured party under each Contract as the
holder of a first priority security interest in such Motorcycle.  With respect to each Contract for which the
Lien Certificate has not yet been returned from the Registrar of Titles, the
Seller has received written evidence from the related dealer that such Lien
Certificate showing the Seller as lienholder has been applied for, the Seller’s
security interest has been validly assigned by the Seller to the Trust
Depositor and by the Trust Depositor to the Issuer pursuant to this Agreement.  Immediately after the transfer, each
Contract will be secured by an enforceable and perfected first priority
security interest in the Motorcycle in favor of the Trust as secured party,
which security interest is prior to all other liens upon and security interests
in such Motorcycle which now exist or may hereafter arise or be created
(except, as to priority, for any lien for taxes, labor, materials or of any
state law enforcement agency affecting a Motorcycle).


 


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


 


(m)          Good Title.  Each Contract was purchased by Seller for
value and taken into possession prior to the Cutoff Date (or the applicable
Subsequent Cutoff Date in the case of Subsequent Contracts) in the ordinary
course of its business, without knowledge that the Contract was subject to a
security interest.  No Contract has been
sold, assigned or pledged to any person other than Trust Depositor and the
Trustee as the transferee of Trust Depositor, and prior to the transfer of the
Contract to Trust Depositor, Seller had good and marketable title to each
Contract free and clear of any encumbrance, equity, 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


 


J-4

















 


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-nterest basis over its term.


 


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


 


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


 


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


 


(t)            Lockbox Bank.  The Lockbox Bank is the only institution
holding any Lockbox Account for receipt of payments from Obligors, and all
Obligors, and only such Obligors, have been instructed to make payments to the
Lockbox Account, and no person claiming through or under Seller has any claim
or interest in the Lockbox Account other than the Lockbox Bank; provided,
however, that other “Trusts” (as defined in the Lockbox Agreement) shall have
an interest in certain other collections therein not related to the Contracts.


 


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


 


J-5

















 


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


 


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


 


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


 


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


 


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


 


(b)           Characteristics.  The Initial Contracts have the following characteristics: (i) all
the Contracts are secured by Motorcycles; (ii) no Initial Contract has a
remaining maturity of more than 84 months; and (iii) the final scheduled
payment on the Initial Contract with the latest maturity is due not later than
April 2009.  Approximately 76.26% 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 23.74%
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 4.99%. 
The first scheduled payment date of the Contracts (including any
Subsequent Contracts) is due no later than August 2002.  Approximately 3.0% of the Principal Balance
of the Initial Contracts as of the Initial Cutoff Date is attributable to loans
for purchases of Motorcycles not manufactured by Harley-Davidson or Buell.


 


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


 


J-6

















 


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


 


(e)           True Sale.  The transaction contemplated by this
Agreement constitutes a valid sale, transfer and assignment from Seller to
Trust Depositor and from Trust Depositor to the Trust of all of Seller’s right,
title and interest in the Contract Assets as of the Closing Date and any
Subsequent Transfer Date, as applicable.


 


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


 


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


 


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


 


(a)           Possession.  Immediately prior to the Closing Date or any
Subsequent Transfer Date, the Servicer will have possession of each original
Contract and the related complete Contract File, and there are and there will
be no custodial agreements relating to the same in effect.  Each of such documents which is required to
be signed by the Obligor has been signed by the Obligor in the appropriate
spaces.  All blanks on any form have
been properly filled in and each form has otherwise been correctly
prepared.  The complete Contract File
for each Contract currently is in the possession of the Servicer.


 


(b)           Bulk Transfer Laws.  The transfer, assignment and conveyance of
the Contracts and the Contract Files by Seller pursuant to the Transfer and
Sale Agreement or any Subsequent Purchase Agreement and by Trust Depositor
pursuant to the Sale and Servicing Agreement is not subject to the bulk
transfer or any similar statutory provisions in effect in any applicable
jurisdiction.


 


J-7

















 


Exhibit
K


 


[Lockbox Bank and Lockbox
Account]


 


Lockbox


 


	
   

  	
  Harley-Davidson Credit
  Corp.

  
	
   

  	
  135 South LaSalle
  Street

  
	
   

  	
  Chicago, Illinois 60674

  



 


Lockbox Bank


 


	
   

  	
  LaSalle Bank National
  Association

  
	
   

  	
  135 South LaSalle
  Street

  
	
   

  	
  Chicago, Illinois 60674

  



 


K-1

















 


Exhibit
L


 


[Form of Contract Stamp]


 


This Contract/Note is
subject to a security interest granted to Harley-Davidson Motorcycle Trust
2002-1.  A UCC1 Financing Statement
covering this Contract/Note has been filed with the Secretary of State of the
State of Nevada.  Such lien will be
released only in connection with appropriate filings in such offices.  Consequently, potential purchasers of this
Contract/Note must refer to such filings to determine whether such lien has
been released.


 


L-1

















 


Exhibit
M


 


[Form of Subsequent
Transfer Agreement]


 


[see Exhibit C
of the Transfer and Sale Agreement]


 


M-1