Exhibit
10.2


	
   

  	
   

  	
   

  



 


 


SALE AND SERVICING AGREEMENT


 


 


among


 


 


HARLEY-DAVIDSON MOTORCYCLE TRUST 2010-1,


as Issuer,


 


 


HARLEY-DAVIDSON CUSTOMER FUNDING CORP.,


as Trust Depositor,


 


 


HARLEY-DAVIDSON CREDIT CORP.,


as Servicer


 


and


 


 


THE BANK OF NEW YORK MELLON TRUST COMPANY,
N.A.,


as Indenture Trustee


 


 


Dated as of November 1, 2010


 


	
   

  	
   

  	
   

  



 

















 


Table of Contents


 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE One
  DEFINITIONS

  	
  1

  
	
  Section 1.01.

  	
  Definitions

  	
  1

  
	
  Section 1.02.

  	
  Usage of Terms

  	
  18

  
	
  Section 1.03.

  	
  Section References

  	
  18

  
	
  Section 1.04.

  	
  Calculations

  	
  18

  
	
  Section 1.05.

  	
  Accounting Terms

  	
  18

  
	
  ARTICLE Two
  TRANSFER OF CONTRACTS 

  	
  18

  
	
  Section 2.01.

  	
  Closing

  	
  18

  
	
  Section 2.02.

  	
  Conditions to the Closing

  	
  19

  
	
  ARTICLE Three
  REPRESENTATIONS AND WARRANTIES

  	
  20

  
	
  Section 3.01.

  	
  Representations and Warranties
  Regarding the Trust Depositor

  	
  21

  
	
  Section 3.02.

  	
  Representations and Warranties
  Regarding the Servicer

  	
  22

  
	
  ARTICLE Four
  PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS

  	
  23

  
	
  Section 4.01.

  	
  Custody of Contracts

  	
  23

  
	
  Section 4.02.

  	
  Filing

  	
  25

  
	
  Section 4.03.

  	
  Name Change or Relocation

  	
  25

  
	
  Section 4.04.

  	
  Costs and Expenses

  	
  25

  
	
  ARTICLE Five
  SERVICING OF CONTRACTS

  	
  25

  
	
  Section 5.01.

  	
  Responsibility for Contract
  Administration

  	
  25

  
	
  Section 5.02.

  	
  Standard of Care

  	
  26

  
	
  Section 5.03.

  	
  Records

  	
  26

  
	
  Section 5.04.

  	
  Inspection

  	
  26

  
	
  Section 5.05.

  	
  Trust Accounts

  	
  26

  
	
  Section 5.06.

  	
  Enforcement

  	
  28

  
	
  Section 5.07.

  	
  Trustees to Cooperate

  	
  29

  
	
  Section 5.08.

  	
  Costs and Expenses

  	
  29

  
	
  Section 5.09.

  	
  Maintenance of Security
  Interests in Motorcycles

  	
  29

  
	
  Section 5.10.

  	
  Successor Servicer/Lockbox
  Agreements

  	
  29

  
	
  Section 5.11.

  	
  Separate Entity Existence

  	
  30

  
	
  ARTICLE Six
  THE TRUST DEPOSITOR

  	
  30

  
	
  Section 6.01.

  	
  Covenants of the Trust Depositor

  	
  30

  
	
  Section 6.02.

  	
  Liability of Trust Depositor;
  Indemnities

  	
  32

  
	
  Section 6.03.

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

  	
  33

  
	
  Section 6.04.

  	
  Limitation on Liability of Trust
  Depositor and Others

  	
  34

  
	
  Section 6.05.

  	
  Trust Depositor Not to Resign

  	
  34

  
	
  ARTICLE Seven
  DISTRIBUTIONS; RESERVE FUND

  	
  34

  
	
  Section 7.01.

  	
  Monthly Distributions

  	
  34

  
	
  Section 7.02.

  	
  Fees

  	
  34

  
	
  Section 7.03.

  	
  Advances

  	
  34

  
	
  Section 7.04.

  	
  Reserved

  	
  35

  
	
  Section 7.05.

  	
  Distributions; Priorities

  	
  35

  
	
  Section 7.06.

  	
  Reserve Fund

  	
  38

  
	
  Section 7.07.

  	
  Reserved

  	
  39

  
	
  Section 7.08.

  	
  Purchase of Contracts for Breach
  of Representations and Warranties

  	
  39

  
	
  Section 7.09.

  	
  Reassignment of Reacquired
  Contracts

  	
  40

  
	
  Section 7.10.

  	
  Servicer’s Purchase Option

  	
  40

  
	
  Section 7.11.

  	
  Purchase of Contracts for Breach
  of Servicing Obligations

  	
  40

  



 


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  ARTICLE Eight
  EVENTS OF TERMINATION; SERVICE TRANSFER

  	
  41

  
	
  Section 8.01.

  	
  Events of Termination

  	
  41

  
	
  Section 8.02.

  	
  Waiver of Event of Termination

  	
  42

  
	
  Section 8.03.

  	
  Service Transfer

  	
  42

  
	
  Section 8.04.

  	
  Successor Servicer to Act;
  Appointment of Successor Servicer

  	
  42

  
	
  Section 8.05.

  	
  Notification to Securityholders

  	
  42

  
	
  Section 8.06.

  	
  Effect of Transfer

  	
  43

  
	
  Section 8.07.

  	
  Database File

  	
  43

  
	
  Section 8.08.

  	
  Successor Servicer
  Indemnification

  	
  43

  
	
  Section 8.09.

  	
  Responsibilities of the
  Successor Servicer

  	
  43

  
	
  Section 8.10.

  	
  Limitation of Liability of
  Servicer

  	
  44

  
	
  Section 8.11.

  	
  Merger or Consolidation of
  Servicer

  	
  44

  
	
  Section 8.12.

  	
  Servicer Not to Resign

  	
  44

  
	
  Section 8.13.

  	
  Appointment of Subservicer

  	
  44

  
	
  ARTICLE Nine
  REPORTS

  	
  45

  
	
  Section 9.01.

  	
  Monthly Reports

  	
  45

  
	
  Section 9.02.

  	
  Officer’s Certificate

  	
  45

  
	
  Section 9.03.

  	
  Other Data

  	
  45

  
	
  Section 9.04.

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

  	
  45

  
	
  Section 9.05.

  	
  Monthly Reports to Noteholders

  	
  46

  
	
  Section 9.06.

  	
  Regulation AB

  	
  47

  
	
  Section 9.07.

  	
  Information to Be Provided by
  the Indenture Trustee

  	
  47

  
	
  Section 9.08.

  	
  Exchange Act Reporting

  	
  48

  
	
  ARTICLE Ten
  TERMINATION

  	
  49

  
	
  Section 10.01.

  	
  Sale of Trust Assets

  	
  49

  
	
  ARTICLE Eleven
  MISCELLANEOUS

  	
  49

  
	
  Section 11.01.

  	
  Amendment

  	
  49

  
	
  Section 11.02.

  	
  Protection of Title to Trust

  	
  50

  
	
  Section 11.03.

  	
  Governing Law

  	
  51

  
	
  Section 11.04.

  	
  Notices

  	
  51

  
	
  Section 11.05.

  	
  Severability of Provisions

  	
  53

  
	
  Section 11.06.

  	
  Assignment

  	
  53

  
	
  Section 11.07.

  	
  Third Party Beneficiaries

  	
  53

  
	
  Section 11.08.

  	
  Counterparts

  	
  53

  
	
  Section 11.09.

  	
  Headings

  	
  53

  
	
  Section 11.10.

  	
  No Bankruptcy Petition;
  Disclaimer and Subordination

  	
  53

  
	
  Section 11.11.

  	
  Limitation of Liability of Owner Trustee and Indenture
  Trustee

  	
  54

  



 


ii

















 


EXHIBITS


 


	
  Exhibit A

  	
  Form of Assignment

  	
  A-1

  
	
  Exhibit B

  	
  Form of Closing Certificate of Trust Depositor

  	
  B-1

  
	
  Exhibit C

  	
  Form of Closing Certificate of Seller/Servicer

  	
  C-1

  
	
  Exhibit D

  	
  Reserved

  	
  D-1

  
	
  Exhibit E

  	
  Servicing Criteria to be Addressed in Indenture
  Trustee’s Assessment of Compliance

  	
  E-1

  
	
  Exhibit F

  	
  Form of Indenture Trustee’s Annual Certificate

  	
  F-1

  
	
  Exhibit G

  	
  Form of Certificate Regarding Reacquired
  Contracts

  	
  G-1

  
	
  Exhibit H

  	
  List of Contracts

  	
  H-1

  
	
  Exhibit I

  	
  Form of Monthly Report to Noteholders and the
  Certificateholder

  	
  I-1

  
	
  Exhibit J

  	
  Seller’s Representations and Warranties

  	
  J-1

  
	
  Exhibit K

  	
  Lockbox Bank and Lockbox Account

  	
  K-1

  
	
  Exhibit L

  	
  Reserved

  	
  L-1

  



 


iii

















 


SALE AND SERVICING AGREEMENT, dated as of November 1,
2010, among Harley-Davidson Motorcycle Trust 2010-1 (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”),
The Bank of New York Mellon Trust Company, N.A. (solely in its capacity as Indenture
Trustee together with its successors and assigns, the “Indenture
Trustee”) and Harley-Davidson Credit Corp. (solely in its capacity
as Servicer together with its successor and assigns, “Harley-Davidson
Credit” or the “Servicer”).


 


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


 


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


 


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


 


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


 


ARTICLE ONE


 


DEFINITIONS


 


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


 


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


 


“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 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.  At the time of initial issuance of the
Securities, the initial aggregate principal amount of the Securities will be
less than or equal to the Pool Balance.


 


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


 


1

















 


in the case of the first Distribution Date) exceeds
the Aggregate Principal Balance as of the close of business on the last day of
the Due Period relating to such Distribution Date.


 


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


 


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


 


“Available Interest”
means, with respect to any Distribution Date, the total (without duplication)
of the following amounts received by the Servicer on or in respect of the
Contracts during the related Due Period: (i) all amounts received in
respect of interest on the Contracts, (ii) the interest component of all
Net Liquidation Proceeds, (iii) the interest component of the aggregate of
the Purchase 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 Servicer in
connection with an optional purchase of the Contracts pursuant to Section 7.10,
(vi) the interest component of the aggregate of the Purchase Prices for
Contracts purchased by the Servicer pursuant to Section 7.11, 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 Purchase Prices for Contracts reacquired by the Trust Depositor pursuant
to Section 7.08, (iv) the principal component of all amounts paid by
the Servicer in connection with an optional purchase of the Contracts pursuant
to Section 7.10, and (v) the principal component of the aggregate of
the Purchase Prices for Contracts purchased by the Servicer pursuant to Section 7.11.


 


“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.


 


“Base Prospectus”  means the Prospectus dated November 15, 2010 relating
to the Harley-Davidson Motorcycle Trusts.


 


“Buell” means
Buell Motorcycle Company, LLC.


 


“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.


 


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


 


“Certificate Balance”
means, on any Distribution Date, the Initial Certificate Balance reduced by all
distributions of principal previously made in respect of the Certificates.


 


“Certificate Distribution
Account” has the meaning specified in the Trust Agreement.


 


2

















 


“Certificate Monthly
Principal Distributable Amount” means, with respect to any
Distribution Date, the Certificate Percentage of the Principal Distributable
Amount (as reduced by the Note Principal Distributable Amount, if any, for such
Distribution Date (after giving effect to any First Priority Principal
Distributable Amount and Second Priority Principal Distributable Amount, if any
for such Distribution Date) for such Distribution Date.


 


“Certificate Percentage”
means (i) for each Distribution Date until the Notes have been paid in
full, 0%; and (ii) thereafter, 100%.


 


“Certificate Pool Factor”
means, with respect to the Certificates on any Distribution Date, a seven-digit
decimal figure equal to the outstanding principal balance of the Certificates
on such Distribution Date (after giving effect to any reductions thereof to be
made on such Distribution Date) divided by the Initial Certificate Balance.


 


“Certificate Principal
Carryover Shortfall” means, as of the close of any Distribution
Date, the excess, if any, of the Certificate Principal Distributable Amount
with respect to such Distribution Date over the amount in respect of principal
that is actually deposited in the Certificate Distribution Account on such
Distribution Date.


 


“Certificate Principal
Distributable Amount” means, with respect to any Distribution Date,
the sum of (x) the Certificate Monthly Principal Distributable Amount for
each Distribution Date and (y) any outstanding Certificate Principal
Carryover Shortfall as of the close of the immediately preceding Distribution
Date; provided, however, that the Certificate
Principal Distributable Amount shall not exceed the Certificate Balance. In
addition, on the Distribution Date as of which all of the Contracts are to be
purchased pursuant to Section 7.11, the principal required to be deposited
into the Certificate Distribution Account will include the amount necessary to
reduce the Certificate Balance to zero.


 


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


 


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


 


“Class A-1 Final
Distribution Date” means the December 2011 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 Notes”
has the meaning set forth in the Indenture.


 


“Class A-1 Rate”  means 0.31325% per annum (computed on the basis of the
actual number of days elapsed and a 360-day year).


 


“Class A-2 Final
Distribution Date” means the November 2013 Distribution Date.


 


3

















 


“Class A-2 Noteholder”
means the Person in whose name a Class A-2 Note is registered in the Note
Register, as such term is defined in the Indenture.


 


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


 


“Class A-2 Rate”
means 0.83% per annum (computed on the basis of a 360-day year of twelve 30-day
months).


 


“Class A-3 Final
Distribution Date” means the February 2015 Distribution Date.


 


“Class A-3 Noteholder”
means the Person in whose name a Class A-3 Note is registered in the Note
Register, as such term is defined in the Indenture.


 


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


 


“Class A-3 Rate”
means 1.16% per annum (computed on the basis of a 360-day year of twelve 30-day
months).


 


“Class A-4 Final
Distribution Date” means the September 2015 Distribution Date.


 


“Class A-4 Noteholder”
means the Person in whose name a Class A-4 Note is registered in the Note
Register, as such term is defined in the Indenture.


 


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


 


“Class A-4 Rate”
means 1.53% per annum (computed on the basis of a 360-day year of twelve 30-day
months).


 


“Class B Final
Distribution Date” means the January 2016 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 Notes”
has the meaning set forth in the Indenture.


 


“Class B Rate”
means 1.99% per annum (computed on the basis of a 360-day year of twelve 30-day
months).


 


“Class C Final
Distribution Date” means the April 2018 Distribution Date.


 


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


 


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


 


“Class C Rate”
means 2.59% 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 November 23, 2010.


 


4

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


“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 


 


5

















 


Contracts since the Cutoff Date through the end of the
related Due Period by (ii) the Principal Balance of the Contracts as of
the Cutoff Date.


 


“Cutoff Date”
means the close of business on October 31, 2010.


 


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


 


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


 


“Delinquent Interest”
means, for each Contract and each Determination Date as to which the full
payment due in the related Due Period has not been paid before the 30th day
after the scheduled payment date 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 Business Day, with
the first such Distribution Date hereunder being December 15, 2010.


 


“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 first Determination Date or first Distribution Date,
the Due Period shall be the period from the Cutoff Date to and including November 30,
2010.


 


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


 


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


 


6
















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


“First Priority Principal
Distributable Amount”  means, with
respect to any Distribution Date, an amount, not less than zero, equal to the
result of (a) the aggregate Outstanding Amount of the Class A Notes
as of the preceding Distribution Date (after giving effect to any principal
payments made on the Class A Notes on that preceding Distribution Date),
minus (b) the Aggregate Principal
Balance at the end of Due Period related to that Distribution Date; provided, however, that
the First Priority Principal Distributable Amount shall not exceed the
Outstanding Amount of the Class A Notes (after giving effect 


 


7

















 


to any principal payments made on the Class A
Notes on that preceding Distribution Date); provided, further, that the First Priority Principal Distributable
Amount on or after the Final Distribution Date for a class of Class A
Notes shall not be less than the amount that is necessary to pay such class of Class A
Notes in full.


 


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


 


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


 


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


 


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


 


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


 


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


 


“Indenture Trustee Fee”
means, with respect to any Distribution Date, one-twelfth of the product of
0.00225% and the Principal Balance of the Contracts as of the beginning of the
related Due Period; provided, however,
in no event shall such fee be less than $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 Certificate
Balance” means $70,765,786.32.


 


“Initial Class A-1
Note Balance”  means
$130,000,000.


 


8

















 


“Initial Class A-2
Note Balance” means $182,000,000.


 


“Initial Class A-3  Note Balance”  means
$148,000,000.


 


“Initial Class A-4
Note Balance”  means
$77,610,000.


 


“Initial Class B Note
Balance”  means
$25,820,000.


 


“Initial Class C Note
Balance”  means
$36,570,000.


 


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


 


“Interest Period”
means (i) with respect to any Distribution Date and the Class A-1
Notes, the period from and including the Distribution Date immediately
preceding such Distribution Date (or, in the case of the first Distribution
Date, from and including the Closing Date) to but excluding such Distribution
Date and (ii) with respect to any Distribution Date and the Class A-2
Notes, Class A-3 Notes, Class A-4 Notes, Class B Notes and Class C
Notes, the period from and including the fifteenth day of the month of the
Distribution Date immediately preceding such Distribution Date (or, in the case
of the first Distribution Date, from and including the Closing Date) to but
excluding the fifteenth day of the month of such Distribution Date.


 


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


 


“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 to
be deposited into the Collection Account on such Distribution Date pursuant to Section 5.05(b).


 


“Issuer”  means the Harley-Davidson Motorcycle Trust 2010-1.


 


“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.


 


9

















 


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


 


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


 


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


 


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


 


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


 


“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 related Due Period.


 


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


 


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


 


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


 


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


 


10

















 


“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 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.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


“Note Principal
Distributable Amount”  means, with
respect to any Distribution Date, the sum of (x) the Principal
Distributable Amount with respect to such Distribution Date and  (y) the Note Principal 


 


11

















 


Carryover Shortfall as of the close of the immediately
preceding Distribution Date, minus the aggregate amount of the First Priority
Distributable Amount and the Second Priority Distributable Amount distributed
on such Distribution Date; provided, however,
that the Note Principal Distributable Amount shall not exceed the Outstanding
Amount of the Notes (after giving effect to other amounts distributable in
respect of principal on the Class A Notes and Class B Notes to be
deposited in the Note Distribution Account in respect of the First Priority
Principal Distributable Amount and the Second Priority Principal Distributable
Amount on such Distribution Date); and provided, further,
that the Note Principal Distributable Amount (i) on or after 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 Amount of the Class A-1
Notes to zero, (ii) on or after 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 Amount of the Class A-2 Notes to zero, (iii) on
or after the Class A-3 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-3 Notes on
such Distribution Date and allocable to principal) to reduce the Outstanding
Amount of the Class A-3 Notes to zero, (iv) on or after the Class A-4
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-4 Notes on such Distribution Date and
allocable to principal) to reduce the Outstanding Amount of the Class A-4
Notes to zero, (v) on or after 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 Amount of the Class B Notes to zero, and (vi) on
or after the Class C 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 C Notes on such
Distribution Date and allocable to principal) to reduce the Outstanding Amount
of the Class C Notes to zero.


 


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


 


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


 


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


 


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


 


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


 


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


 


12

















 


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


 


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


 


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


 


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


 


“Principal Balance”
means (a) with respect to any Contract as of any date, an amount equal to
the unpaid principal balance of such Contract as of the close of business on
the Cutoff Date, reduced by the sum of (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 is purchased by the Servicer pursuant
to Section 7.11 hereof, or if (y) the Servicer gives notice of its
intent to purchase the Contracts in connection with an optional termination of
the Trust pursuant to Section 7.10 hereof, in each case the Principal
Balance of such Contract or Contracts shall be deemed as of the related
Determination Date to be zero for the Due Period in which such event occurs and
for each Due Period thereafter and (ii) from and after the Due Period in
which a Contract becomes a Liquidated Contract, the Principal Balance of such
Contract shall be deemed to be zero; and (b) where the context requires,
the aggregate of the Principal Balances described in clause (a) for all
such Contracts.


 


“Principal Distributable
Amount” means (i) in respect of the first Distribution Date
after the Closing Date, the excess of (x) the Aggregate Principal Balance
as of the Cutoff Date over (y) the Aggregate Principal Balance as of the
last day of the Due Period relating to the first Distribution Date, and (ii) on
any Distribution Date thereafter, the Aggregate Principal Balance Decline for
that Distribution Date.


 


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


 


“Purchase Price”
means, with respect to a Contract to be reacquired or purchased 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.


 


“Qualified Eligible
Investments” means Eligible Investments acquired by the Indenture
Trustee in its name and in its capacity as Indenture Trustee, which are held by
the Indenture Trustee in any Trust Account and with respect to which (a) the
Indenture Trustee has noted its interest therein on its books and records, and (b) the
Indenture Trustee has purchased such investments for value without notice of
any adverse claim thereto (and, if such investments are securities or other
financial assets or interests therein, within the meaning of Section 8-102
of the UCC as enacted in Illinois, without acting in collusion with a
securities intermediary in violating such securities intermediary’s obligations
to entitlement holders in such assets, under Section 8-504 of such UCC, to
maintain a sufficient quantity of such assets in favor of such entitlement
holders), and (c) either (i) such investments are in the possession,
or are under the control, of the Indenture Trustee, or (ii) such
investments, (A) if certificated securities and in bearer form, 


 


13

















 


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.


 


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


 


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


 


“Regulation AB”  means Subpart
229.1100 - Asset Backed Securities (Regulation AB), 17 C.F.R. Sections
229.1100-229.1123, as amended from time to time and as clarified and
interpreted by the Securities and Exchange Commission or its staff from time to
time.


 


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


 


“Required Holders”
means (i) prior to payment in full of the Notes, Noteholders evidencing
more than 50% of the aggregate Outstanding Amount of the Controlling Class and
(ii) after payment in full of the Notes, Certificateholders evidencing
more than 50% of the aggregate Certificate Balance.


 


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


 


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


 


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


 


“Reserve Fund Initial
Deposit” means $6,707,657.86.


 


14

















 


“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) 3.75%
with respect to any Distribution Date which occurs within the period from the
Closing Date to, and inclusive of, the 12th Distribution Date occurring after the Closing
Date, (b) 4.25% with respect to any Distribution Date which occurs within
the period from the day after the 12th Distribution Date occurring after the Closing
Date to, and inclusive of, the 24th Distribution Date occurring after the Closing
Date, (c) 4.75% with respect to any Distribution Date which occurs within
the period from the day after the 24th Distribution Date occurring after the Closing
Date to, and inclusive of, the 36th Distribution Date occurring after the Closing
Date or (d) 5.25% with respect to any Distribution Date occurring
thereafter; (ii) the Average Loss Ratio for such Distribution Date is
equal to or greater than 6.00% with respect to such Distribution Date; or (iii) the
Cumulative Loss Ratio for such Distribution Date is equal to or greater than (a) 2.25%
with respect to any Distribution Date which occurs within the period from the
Closing Date to, and inclusive of, the 12th Distribution Date occurring after the Closing
Date, (b) 3.50% with respect to any Distribution Date which occurs within
the period from the day after the 12th Distribution Date occurring after the Closing
Date to, and inclusive of, the 24th Distribution Date occurring after the Closing
Date, (c) 5.00% with respect to any Distribution Date which occurs within
the period from the day after the 24th Distribution Date occurring after the Closing
Date to, and inclusive of, the 36th Distribution Date occurring after the Closing
Date, (d) 6.00% with respect to any Distribution Date which occurs within
the period from the day after the 36th Distribution Date occurring after the Closing
Date to, and inclusive of, the 48th Distribution Date occurring after the Closing
Date; or (e) 6.75% for any Distribution Date occurring thereafter.


 


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 Indenture 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.


 


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


 


15
















 


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


 


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


 


“Securityholders”
means the Holders of the Notes and Certificates.


 


“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.


 


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


 


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


 


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


 


“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, an amount equal to the excess (if
any) of (a) the sum of the amounts payable pursuant to (1) clauses (iv) through
(x) of Section 7.05(a), (2) clauses (i) through (vii) of
Section 7.05(b) or (3) clauses (i) through (vii) of Section 7.05(c),
as applicable, over (b) Available Monies for such Distribution Date minus
the amounts payable pursuant to clauses (i) through (iii) of Section 7.05(a) on
such Distribution Date.


 


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


 


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


 


(a)                                  2.70% of the Principal Balance of the Contracts in the Trust as of the
last day of the related Due Period; provided, however,
in the event a Reserve Fund Trigger Event occurs and is continuing for three
consecutive Distribution Dates (inclusive of the respective Distribution 


 


16

















 


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, Initial Class A-3 Note Balance, Initial
Class A-4 Note Balance, Initial Class B Note Balance, Initial
Class C Note Balance and the Initial Certificate Balance;


 


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


 


“Standard & Poor’s”
means Standard & Poor’s Ratings Services, a Standard & Poor’s
Financial Services LLC business, or any successor thereto.


 


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


 


“Supplement”
means the Prospectus Supplement dated November 17, 2010.


 


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


 


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


 


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


 


“Trust Accounts”
means, collectively, the Collection Account, the Note Distribution Account 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 October 1, 2010, between the Trust
Depositor and the Owner Trustee.


 


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


 


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


 


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


 


“Trustees” means
the Owner Trustee 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 


 


17

















 


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”
has the meaning set forth in the Underwriting Agreement.


 


“Underwriting Agreement”
means the Underwriting Agreement, dated November 17, 2010, by and among
the Trust Depositor, the Seller and the Underwriters.


 


“United States”
means the United States of America.


 


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


 


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


 


Section 1.02.                         Usage of Terms.  With
respect to all terms in this Agreement, the singular includes the plural and
the plural the singular; words importing any gender include the other genders;
references to “writing” include printing, typing, lithography and other means
of reproducing words in a visible form; references to agreements and other
contractual instruments include all amendments, modifications and supplements
thereto or any changes therein entered 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


 


18

















 


A hereto, without recourse other than as expressly
provided herein, for a purchase price in cash of $600,000,000 (less fees and
expenses in connection with the offering and sale of the Notes and certain
deposits to the Reserve Fund on the Closing Date)  and
the Trust’s issuance of the Certificates to the Trust Depositor, (i) all
the right, title and interest of the Trust Depositor in and to the Contracts
listed on the List of Contracts delivered on the Closing Date (including,
without limitation, all security interests and all rights to receive payments
which are collected pursuant thereto after the Cutoff Date, including any
liquidation proceeds therefrom, but excluding any rights to receive payments
which were collected pursuant thereto on or prior to the Cutoff Date), (ii) all
rights of the Trust Depositor under any theft, physical damage, credit life,
disability or other individual insurance policy (and rights under a “forced placed” policy, if any), any debt insurance policy or
any debt cancellation agreement relating to any such Contract, an Obligor or a
Motorcycle securing such Contract, (iii) all security interests in each
such Motorcycle, (iv) all documents contained in the related Contract
Files, (v) all rights (but not the obligations) of the Trust Depositor
under any related motorcycle dealer agreements between dealers (i.e., the
originators of certain Contracts) and the Seller, (vi) all rights of the
Trust Depositor in the Lockbox, the Lockbox Account and the related Lockbox
Agreement to the extent they relate to the Contracts, (vii) all rights
(but not the obligations) of the Trust Depositor under the Transfer and Sale
Agreement, including but not limited to the Trust Depositor’s rights under Article V
thereof, (viii) the remittances, deposits and payments made into the Trust
Accounts from time to time and amounts in the Trust Accounts from time to time
(and any 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 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 in form and
substance reasonably satisfactory to the Underwriters (and including as an
addressee thereof each Rating Agency).


 


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


 


19

















 


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


 


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


 


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


 


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


 


(i)                                     Evidence of deposit in the Collection Account of all funds received with
respect to the Contracts after the Cutoff Date 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 Indenture 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.


 


ARTICLE THREE


 


REPRESENTATIONS AND WARRANTIES


 


The Seller under the Transfer and Sale Agreement has
made each of the representations and warranties set forth in Exhibit J hereto and has consented to the assignment by
the Trust Depositor to the Issuer of the Trust Depositor’s rights with respect
thereto.  Such representations speak as
of the execution and delivery of this Agreement and as of the Closing Date, but
shall survive the transfer and assignment of the Contracts to the Trust.  Pursuant to Section 2.01 of this
Agreement, the Trust Depositor has assigned, transferred and conveyed to the
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


 


20

















 


as set forth in Exhibit J
attached hereto, together with all rights of the Trust Depositor with respect
to any breach thereof including any right to require the Seller to reacquire
any Contract in accordance with the Transfer and Sale Agreement.  It is understood and agreed that the
representations and warranties set forth or referred to in this Section shall
survive delivery of the Contract Files to the Owner Trustee or any custodian.


 


The Trust Depositor hereby represents and warrants to
the Trust and the Indenture Trustee that it has entered into the Transfer and
Sale Agreement with the Seller, that the Seller has made the representations
and warranties in the Transfer and Sale Agreement as set forth in Exhibit J hereto, that such representations and
warranties run to and are for the benefit of the 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, 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 shall effect a valid transfer and assignment of the Trust
Corpus, enforceable against the Trust Depositor and creditors of and purchasers
from the Trust Depositor.  This Agreement
and the other Transaction Documents to which the Trust Depositor is a party
constitute the legal, valid and binding obligation of the Trust Depositor
enforceable in accordance with their terms, except as enforcement of such terms
may be limited by bankruptcy, insolvency or similar laws affecting the
enforcement of creditors’ rights generally and by the availability of equitable
remedies.


 


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


 


21

















 


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


 


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


 


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


 


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


 


Such representations speak as of the execution and
delivery of this Agreement and as of the Closing Date, 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.


 


22

















 


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


 


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


 


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


 


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


 


ARTICLE FOUR


 


PERFECTION OF TRANSFER AND PROTECTION OF SECURITY
INTERESTS


 


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


 


(b)                                 The Servicer agrees to maintain the related Contract Files at its
offices, or the offices of one of its custodians, where they are currently
maintained, or at such other offices of the Servicer, or its custodian, as
shall from time to time be identified to the Trustees by written notice except
that in the case of any Contracts constituting “electronic chattel paper,” the “authoritative
copy” thereof shall be maintained by the Servicer in a computer system such
that the Servicer maintains “control” over such


 


23

















 


“authoritative copy” (quoted terms have the meaning
assigned to them in the UCC).  The
Servicer may temporarily move individual Contract Files or any portion thereof
without notice as necessary to conduct collection and other servicing activities
in accordance with its customary practices and procedures; provided,
however, that the Servicer will take all action necessary to
maintain the perfection of the Trust’s interest in the Contracts and the
proceeds thereof.  It is intended that,
by the Servicer’s agreement pursuant to Section 4.01(a) above and
this Section 4.01(b), the Trustees shall be deemed to have possession of
the Contract Files for purposes of Section 9-313 of the Uniform Commercial
Code of the State in which the Contract Files are located.


 


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


 


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


 


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


 


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


 


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


 


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


 


24

















 


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.  All financing statements filed or
to be filed against the Seller in favor of the Trust Depositor or the Trust in
connection herewith describing the Contract Assets as collateral shall contain
a statement to the following effect: “A purchase of or security interest in any
collateral described in this financing statement, except as permitted in the
Transfer and Sale Agreement or Sale and Servicing Agreement, will violate the
rights of the Secured Party.”


 


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


 


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


 


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


 


ARTICLE FIVE


 


SERVICING OF CONTRACTS


 


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


 


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


 


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


 


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


 


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


 


Section 5.05.                         Trust Accounts.  (a) On
or before the Closing Date, the Trust Depositor shall establish the Trust
Accounts, each with and in the name of the Indenture Trustee for the benefit of
the Noteholders (and, in the case of the Reserve Fund, the
Certificateholders).  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) into the Collection Account as promptly as practical (but in any case
not later than the second Business Day following the receipt thereof):


 


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


 


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


 


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


 


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


 


26

















 


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


 


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


 


(c)                                  Reserved.


 


(d)                                 The Servicer shall direct the Indenture Trustee to, and the Indenture
Trustee shall, invest the amounts in the Trust Accounts in Qualified Eligible
Investments that are payable on demand or that mature not later than one
Business Day prior to the next succeeding Distribution Date.  Once such funds are invested, the Indenture
Trustee shall not change the investment of such funds.  Any loss on such investments shall be
deposited in the applicable Trust Account by the Servicer out of its own funds
immediately as realized.  Funds in the
Trust Accounts not so invested must be insured to the extent permitted by law
by the Bank Insurance Fund or the Savings Association Insurance Fund of the
Federal Deposit Insurance Corporation. 
Subject to the restrictions herein, the Indenture Trustee may purchase a
Qualified Eligible Investment from itself or an Affiliate.  Subject to the other provisions hereof, the
Indenture Trustee shall have sole control over each such investment and the
income thereon, and any certificate or other instrument evidencing any such
investment, if any, shall be delivered directly to the Indenture Trustee or its
agent, together with each document of transfer, if any, necessary to transfer
title to such investment to the Indenture Trustee in a manner which complies
with this Section 5.05(d).  All
interest, dividends, gains upon sale and other income from, or earnings on,
investments of funds in the Trust Accounts (other than the Reserve Fund) shall
be deposited in the Collection Account pursuant to Section 5.05(b) and
distributed on the next Distribution Date pursuant to Section 7.05.  The Trust Depositor and the Trust agree and
acknowledge that the Indenture Trustee is to have  “control” (within the meaning of Section 9-106 of the
UCC) of collateral comprised of “Investment Property”
(within the meaning of Section 9-102 of the UCC) for all purposes of this
Agreement.


 


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


 


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


 


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


 


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


 


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


 


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


 


27

















 


(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 acting as agent for the Trust pursuant to the Lockbox
Agreement shall use its best efforts to cause Obligors to make all payments on
the Contracts to the Lockbox Account (either directly by remitting payments to
the Lockbox, or indirectly by making payments through a credit card, direct
debit, the telephone or the internet to an account of the Servicer which
payments will be subsequently transferred from such account to the Lockbox
Account).  The Servicer will act in a
commercially reasonable manner with respect to the repossession and disposition
of a Motorcycle following a default under the related Contract with a view to realizing
proceeds at least equal to the Motorcycle’s fair market value.  If the Servicer determines that eventual
payment in full of a Contract is unlikely, the Servicer will follow its normal
practices and procedures to recover all amounts 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 Certificateholders as owners 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)                                  Subject to Section 5.02, the Servicer may grant extensions, rebates
or adjustments on a Contract; provided, however, that if the Servicer extends the date for final
payment by the Obligor of any Contract beyond the Class C Final
Distribution Date, it shall promptly purchase such Contract pursuant to Section 7.11.


 


(f)                                    The Servicer will not add to the outstanding Principal Balance of any
Contract the premium of any physical damage or other individual insurance on a
Motorcycle securing such Contract it


 


28

















 


obtains on behalf of the Obligor under the terms of
such Contract, but may create a separate Obligor obligation with respect to
such premium if and as provided by the Contract.


 


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


 


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


 


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


 


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


 


Section 5.10.                         Successor Servicer/Lockbox
Agreements.  In the event the Servicer shall for any
reason no longer be acting as such, the Successor Servicer shall thereupon
assume all of the rights and obligations of the outgoing servicer under each
Lockbox Agreement; provided, however,
that the Successor Servicer shall not be liable for any acts or obligations of
the Servicer 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


 


29

















 


the same extent as if such
Lockbox Agreement had been assigned to the Successor Servicer, except that the
outgoing Servicer shall not thereby be relieved of any liability or obligations
on the part of the outgoing Servicer to a Lockbox Bank under such Lockbox
Agreement.  The outgoing Servicer shall,
upon the request of the Owner Trustee, but at the expense of the outgoing
Servicer, deliver to the Successor Servicer all documents and records relating
to each such Lockbox Agreement and an accounting of amounts collected and held
by a Lockbox Bank and otherwise use its best efforts to effect the orderly and
efficient transfer of any Lockbox Agreement to the Successor Servicer.


 


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


 


ARTICLE SIX


 


THE TRUST DEPOSITOR


 


Section 6.01.                         Covenants of the Trust Depositor.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


31

















 


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 LLP delivered on the
Closing Date (or in any related certificate delivered in connection therewith),
upon which the conclusions expressed therein are based.


 


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


 


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


 


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


 


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


 


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


 


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


 


32

















 


removal of the Trustees.  If the Trust Depositor shall have made any
indemnity payments pursuant to this Section and the Person to or on behalf
of whom such payments are made thereafter shall collect any of such amounts
from others, such Person shall promptly repay such amounts to the Trust
Depositor, without interest.


 


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


 


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


 


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


 


(b)                                 without the affirmative vote of a majority of the members of the Board
of Directors of the Trust Depositor (which must include the affirmative vote of
at least two duly appointed Independent directors) (i) dissolve or
liquidate, in whole or in part, or institute proceedings to be adjudicated
bankrupt or insolvent, (ii) consent to the institution of bankruptcy or
insolvency proceedings against it, (iii) file a petition seeking or
consent to reorganization or relief under any applicable federal or state law
relating to bankruptcy, (iv) consent to the appointment of a receiver,
liquidator, assignee, trustee, sequestrator (or other similar official) of the
corporation or a substantial part of its property, (v) make a general
assignment for the benefit of creditors, (vi) admit in writing its
inability to pay its debts generally as they become due, or (vii) take any
corporate action in furtherance of the actions set forth in clauses (i) through
(vi) above; provided, 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


 


33

















 


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


 


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


 


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


 


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 Certificateholders 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 Certificateholders.


 


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


 


34

















 


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


 


Section 7.04.                         Reserved.


 


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 Servicer, the Reimbursement Amount to the Servicer for Advances
previously made;


 


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


 


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


 


(iv)                             to the Note Distribution Account, together with any amounts deposited
therein pursuant to Section 7.06, the applicable Note Interest
Distributable Amount with respect to such Distribution Date to the Class A
Noteholders; provided, however, that if there
are insufficient funds on deposit in the Note Distribution Account to pay the
entire amount of the Note Interest Distributable Amount for the Class A
Notes, then the amount in the Note Distribution Account shall be applied to the
Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and
the Class A-4 Notes, pro rata, on the basis of the Note Interest
Distributable Amount for each such Class of Notes;


 


(v)                         to the Note Distribution Account, together with any amounts deposited
therein pursuant to Section 7.06, the First Priority Principal
Distributable Amount with respect to such Distribution Date first, to the Class A-1
Noteholders until the Class A-1 Notes have been paid in full, second, to
the Class A-2 Noteholders until the Class A-2 Notes have been paid in
full, third, to the Class A-3 Noteholders until the Class A-3 Notes
have been paid in full and, fourth, to the Class A-4 Noteholders until the
Class A-4 Notes have been paid in full;


 


(vi)                      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 to the Class B Noteholders;


 


(vii)                   to the Note Distribution Account, together with any amounts deposited
therein pursuant to Section 7.06, the Second Priority Principal
Distributable Amount with respect to such


 


35

















 


Distribution
Date, first, to the Class A-1 Noteholders until the Class A-1 Notes
have been paid in full, second, to the Class A-2 Noteholders until the Class A-2
Notes have been paid in full, third, to the Class A-3 Noteholders until
the Class A-3 Notes have been paid in full, fourth, to the Class A-4
Noteholders until the Class A-4 Notes have been paid in full and, fifth,
to the Class B Noteholders until the Class B Notes have been paid in
full;


 


(viii)                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 to the Class C Noteholders;


 


(ix)                        to the Note Distribution Account, together with any amounts deposited
therein pursuant to Section 7.06, the Note Principal Distributable Amount
with respect to such Distribution Date, first, to the Class A-1
Noteholders until the Class A-1 Notes have been paid in full, second, to
the Class A-2 Noteholders, until the Class A-2 Notes have been paid
in full, third, to the Class A-3 Noteholders until the Class A-3
Notes have been paid in full, fourth, to the Class A-4 Noteholders, until
the Class A-4 Notes have been paid in full, fifth, to the Class B
Noteholders until the Class B Notes have been paid in full and, sixth, to
the Class C Noteholders until the Class C Notes have been paid in
full;


 


(x)                           to the Certificate Distribution Account, together with any amounts
deposited therein pursuant to Section 7.06, the Certificate Principal
Distributable Amount with respect to such Distribution Date to the
Certificateholders;


 


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


 


(xii)                            any remaining amounts to the Trust Depositor as residual interestholder
under the Trust Agreement.


 


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


 


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


 


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


 


36
















 


(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 to the Class B Noteholders;


 


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


 


(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 to the Class C Noteholders;


 


(vi)                              to the Note Distribution Account, together with any amounts deposited
therein pursuant to Section 7.06, all amounts remaining after distribution
of amounts in clauses (i), (ii), (iii), (iv) and (v) above shall be
allocated in the following order of priority:


 


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


 


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


 


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


 


(vii)                           to the Certificate Distribution Account, together with any amounts
deposited therein pursuant to Section 7.06, the Certificate Principal
Distributable Amount with respect to such Distribution Date to the
Certificateholders; and


 


(viii)                        any remaining amounts to the Trust Depositor as residual interestholder
under the Trust Agreement.


 


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


 


(i)                                     to the Note Distribution Account, together with any amounts deposited
therein pursuant to Section 7.06, the applicable Note Interest
Distributable Amount with respect to such Distribution Date to the Class A
Noteholders; provided, however, that if there
are insufficient funds on deposit in the Note Distribution Account to pay the
entire amount of the Note Interest Distributable Amount for the Class A
Notes, then the amount in the Note Distribution Account


 


37

















 


shall be applied to the Class A-1 Notes, the Class A-2
Notes, the Class A-3 Notes and the Class A-4 Notes, pro rata, on the basis of the Note Interest Distributable
Amount for each such Class of Notes;


 


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


 


(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 to the Class B Noteholders;


 


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


 


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


 


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


 


(vii)                           to the Certificate Distribution Account, together with any amounts
deposited therein pursuant to Section 7.06, the Certificate Principal
Distributable Amount with respect to such Distribution Date to the
Certificateholders; and


 


(viii)                        any remaining amounts to the Trust Depositor as residual interestholder
under the Trust Agreement.


 


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


 


Section 7.06.                         Reserve Fund.


 


(a)                                  On 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 Class A Notes and Class B Notes.


 


(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


 


38

















 


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, second, to the Note Distribution Account, the amount of
such Shortfall relating to the Note Principal Distributable Amount and third,
to the Certificate Distribution Account, the amount of such Shortfall relating
to the Certificate Principal Distributable Amount.


 


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


 


Section 7.08.                         Purchase 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 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 Purchase Price, not later than two Business Days prior to the
first Distribution Date after the last day of the calendar month in which the
Seller becomes aware or receives written notice from the Trustees, the Servicer
or the Trust Depositor of any breach of a representation or warranty of the
Seller set forth in Article III of the Transfer and Sale Agreement that
materially and adversely affects such Contract or the Trust’s interest in such
Contract and which breach has not been cured; provided,
however, that with respect to any Contract described on the List of
Contracts with respect to an incorrect unpaid Principal Balance which the
Seller would otherwise be required to reacquire under the Transfer and Sale
Agreement, the Seller may, in lieu of reacquiring such Contract, deposit in the
Collection Account, not later than one Business Day prior to the first
Distribution Date after the last day of the calendar month in which the Seller
becomes aware of such inaccuracy, cash in an amount sufficient to cure any
deficiency or discrepancy; and provided further
that


 


39

















 


with respect to a breach of representation or warranty
relating to the Contracts in the aggregate and not to any particular Contract
the Seller may select Contracts (without adverse selection) to reacquire such
that had such Contracts not been included as part of the Trust Corpus there
would have been no breach of such representation or warranty; provided further that the failure to maintain perfection of
the security interest in the Motorcycle securing a Contract in accordance with Section 5.09,
shall be deemed to be a breach materially and adversely affecting the Trust’s
interest in the Contract or in the related Contracts.  Notwithstanding any other provision of this
Agreement, the obligation of the Seller under the Transfer and Sale Agreement
and described in this Section 7.08 shall not terminate or be deemed
released by any party hereto upon a Service Transfer pursuant to Article VIII.  The reacquisition obligation described in
this Section 7.08 is in no way to be satisfied with monies in the Reserve
Fund.  The sole remedy of the Issuer, the
Trustees and the Noteholders against the Seller with respect to a breach of a
representation or warranty of the Seller shall be to require the Seller to
reacquire the related Contract pursuant to this Section 7.08.


 


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


 


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


 


Section 7.11.                         Purchase of Contracts for Breach
of Servicing Obligations.  Upon a discovery by the Servicer or the
Trustees of a breach of any of the covenants of the Servicer set forth in Section 5.02,
5.06 or 5.09 that materially adversely affects the Trust’s interest in a Contract
(without regard to the benefits of the Reserve Fund), the party discovering the
breach shall give prompt written notice to the other parties; provided, that the Trustees shall have no duty or obligation
to inquire or to investigate the breach by the Servicer of any of such
covenants.  The Servicer, in accordance
with this Section 7.11, shall purchase such Contract at its Purchase
Price, two Business Days prior to the first Distribution Date after the last
day of the calendar month in which the Servicer becomes aware, or receives
written notice from the Trustees of any breach described in the preceding
sentence which breach has not been cured; provided, however,
that with respect to a breach of any of the covenants of the Servicer set forth
in Section 5.02, 5.06 or 5.09 relating to the Contracts in the aggregate
and not to any particular Contract the Servicer may select Contracts (without
adverse selection) to purchase such that had such Contracts not been included
as part of the Trust Corpus there would have been no breach of such
covenant.  Notwithstanding any other
provision of this Agreement, the obligation of the Servicer described in this Section 7.11
shall not terminate or be deemed released by any party hereto upon a Service
Transfer pursuant to Article VIII. 
The purchase obligation described in this Section 7.11 is in no way
to be satisfied with monies in the Reserve Fund.  Upon Servicer’s payment of the Purchase Price
of the


 


40

















 


Contract, any Event of
Termination pursuant to Section 8.01(b) arising as a result of the
Servicer’s breach of any of the covenants set forth in Section 5.02, 5.06
or 5.09 with respect to such Contract shall be deemed not to have occurred.


 


ARTICLE EIGHT


 


EVENTS OF TERMINATION; SERVICE TRANSFER


 


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


 


(a)                                  Any failure by the Servicer to make any payment or deposit required to
be made under the Notes hereunder or in the Transfer and Sale Agreement and the
continuance of such failure for a period of four Business Days after the date
on which a Servicing Officer discovers such failure or the Indenture Trustee
provides written notice of such failure to the Servicer;


 


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


 


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


 


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


 


(e)                                  Any representation, warranty or statement of the Servicer made in this
Agreement or any certificate, report or other writing delivered pursuant hereto
shall prove to 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 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.


 


41

















 


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


 


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


 


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


 


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


 


Section 8.05.                         Notification to Securityholders.  (a) 
Promptly following the occurrence of any Event of Termination, the Servicer
shall give written notice thereof to the Trustees, the Trust Depositor


 


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and each Rating Agency at the
addresses described in Section 11.04 hereof and to the Noteholders and
Certificateholders at their respective addresses appearing on the Note Register
and the Certificate Register.


 


(b)                                 Within 10 days following any termination or appointment of a Successor
Servicer pursuant to this Article VIII, the Issuer 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 and Certificateholders
at their addresses appearing on the Note Register and Certificate Register.


 


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


 


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


 


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


 


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


 


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


 


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


 


43

















 


information prepared or supplied by a Person other
than the Successor Servicer or the failure of any such Person to prepare or
provide such information.  The Successor
Servicer shall have no responsibility, shall not be in default and shall incur
no liability (i) for any act or failure to act by any third party,
including the Servicer, the Trust Depositor or the Trustees or for any
inaccuracy or omission in a notice or communication received by the Successor
Servicer from any third party or (ii) which is due to or results from the
invalidity, unenforceability of any Contract with applicable law or the breach
or the inaccuracy of any representation or warranty made with respect to any
Contract.


 


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


 


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


 


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


 


44

















 


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 deliver to the Trustees and each
Rating Agency a  Monthly Report.


 


Section 9.02.                         Officer’s Certificate.  Each
Monthly Report delivered pursuant to Section 9.01 shall be accompanied by
a certificate of a Servicing Officer substantially in the form of Exhibit 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.                         Report on Assessment of
Compliance with Servicing Criteria and Attestation; Annual Officer’s
Certificate.


 


(a)  The Servicer will:


 


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


 


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


 


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


 


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


 


Section 9.05.                         Monthly Reports to Noteholders.  (a) 
On or before two Business Days prior to each Distribution Date, the Servicer
shall prepare and, concurrently with each distribution pursuant to Article VII,
deliver to the Indenture Trustee, in its capacity as Note Registrar and Paying
Agent, to forward or otherwise make available via internet to each Noteholder
and deliver to each Certificateholder that is not the Trust Depositor or an
Affiliate thereof a statement as of the related Distribution Date substantially
in the form of Exhibit I hereto (the “Monthly Report”) setting forth at least the following
information:


 


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


 


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


 


(iii)                           the Certificate Principal Distributable Amount,


 


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


 


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


 


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


 


(vii)                       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;


 


(viii)                    the
remaining Principal Balance after giving effect to the distribution of
principal to each Class of Notes to be made on such Distribution Date and
the remaining Certificate Balance after giving effect to the distribution of
principal to each Certificate to be made on such Distribution Date;


 


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


 


(x)                               the number and aggregate principal balance of Contracts that became
Liquidated Contracts during the immediately preceding Due Period, the Net
Liquidation Proceeds and the Net Liquidation Losses for such Due Period;


 


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


 


(xii)                         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 and as of the last day of the


 


46

















 


Due Period relating to such Distribution Date (after
giving effect to payments received during such Due Period);


 


(xiii)                      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 the Purchase Price for such Contracts;


 


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


 


(xv)                        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;


 


(xvi)                     the
amount otherwise distributable on the Class C 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), (iv) and (v) of this Section, attributable to such Noteholder.


 


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


 


Section 9.06.                         Regulation AB.


 


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


 


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


 


(a)                                  As soon as available but no later than March 15 of each calendar
year for so long as the Issuer is required to report under the Exchange Act,
commencing in 2011, the Indenture Trustee shall:


 


47
















 


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


 


(ii)                                  deliver to the Servicer a report of a registered public accounting firm
that attests to, and reports on, the assessment of compliance made by the
Indenture Trustee and delivered pursuant to the preceding paragraph. Such
attestation shall be in accordance with Rules 1-02(a)(3) and 2-02(g) of
Regulation S-X under the Securities Act and the Exchange Act; and


 


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


 


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


 


Section 9.08.                         Exchange Act Reporting.


 


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


 


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


 


(c)                                  Form 10-K Filings.  So long as the Issuer is required to report
under the Exchange Act, no later than March 15 of each year, commencing in
2011, the Indenture Trustee and the Owner Trustee shall notify the Servicer of
any Form 10-K Disclosure Item known to any Responsible Officer thereof or
relating to the Indenture Trustee or Owner Trustee, as applicable, together
with a description of any such Form 10-K Disclosure Item in form and
substance reasonably acceptable to the Servicer.


 


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ARTICLE TEN


TERMINATION


 


Section 10.01.                  Sale of Trust Assets.


 


(a)                                  [Intentionally Omitted].


 


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


 


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


 


ARTICLE ELEVEN


 


MISCELLANEOUS


 


Section 11.01.                  Amendment.


 


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


 


(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 Certificateholders; provided, however,
that no such amendment shall increase or reduce in any manner the amount of, or
accelerate or delay the timing of (i)(a) collections of payments on the
Contracts or distributions that shall be required to be made on any Note or any
Interest Rate, (b) except as otherwise provided in Section 11.01(a),
the Specified Reserve Fund Balance or the manner in which the Reserve Fund is
funded or (ii) reduce the aforesaid percentage of the Outstanding Amount
of the Notes, the Holders of which are required to consent to any such
amendment, without the consent of the Holders of all Notes of the relevant Class then
outstanding and, to the extent affected thereby, the Holders of the
Certificates.


 


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


 


(d)                                 Promptly after the execution of any such amendment or consent, the Owner
Trustee and the Indenture Trustee, as the case may be, shall furnish written
notification of the substance of such amendment or consent to each Noteholder
and Certificateholder.  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


 


49

















 


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 and/or Certificateholders 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 the
Rating Agency Condition is satisfied with respect to such action, then the
Specified Reserve Fund Balance will be theretofore determined in accordance
with such changed formula or manner of funding, and an amendment to this
Agreement effecting such change may be executed without the consent of any
Securityholder.


 


Section 11.02.                  Protection of Title to Trust.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


Section 11.03.                  Governing Law.  This
Agreement shall be construed in accordance with the laws of the State of
Illinois and the obligations, rights, and remedies of the parties under the
Agreement shall be determined in accordance with such laws.


 


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 or electronic mail transmission with a
confirmation of receipt, in all cases addressed to the recipient as follows:


 


	
   

  	
  (i)

  	
  If to the Servicer or Seller:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Harley-Davidson Credit Corp.

  
	
   

  	
   

  	
  222 West Adams Street, Suite 2000

  
	
   

  	
   

  	
  Chicago, Illinois 60606

  



 


51

















 


	
   

  	
   

  	
  Attention: James Darrell Thomas

  
	
   

  	
   

  	
  Telecopier No.: (312) 368-4372

  
	
   

  	
   

  	
   

  
	
   

  	
  (ii)

  	
  If to the Trust Depositor:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Harley-Davidson Customer Funding Corp.

  
	
   

  	
   

  	
  3850 Arrowhead Drive

  
	
   

  	
   

  	
  Carson City, Nevada 89706

  
	
   

  	
   

  	
  Attention: James Darrell Thomas

  
	
   

  	
   

  	
  Telecopier No.: (775) 886-3490

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  with a copy to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Harley-Davidson Credit Corp.

  
	
   

  	
   

  	
  222 West Adams Street, Suite 2000

  
	
   

  	
   

  	
  Chicago, Illinois 60606

  
	
   

  	
   

  	
  Attention: James Darrell Thomas

  
	
   

  	
   

  	
  Telecopier No.: (312) 368-4372

  
	
   

  	
   

  	
   

  
	
   

  	
  (iii)

  	
  If to the Indenture Trustee:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The Bank of New York Mellon Trust Company, N.A.

  
	
   

  	
   

  	
  2 North LaSalle Street

  
	
   

  	
   

  	
  Suite 1020

  
	
   

  	
   

  	
  Chicago, Illinois 60602

  
	
   

  	
   

  	
  Attention: Corporate Trust Administration

  
	
   

  	
   

  	
  Telecopier No.: (312) 827-8562

  
	
   

  	
   

  	
   

  
	
   

  	
  (iv)

  	
  If to the Owner Trustee:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Wilmington Trust Company

  
	
   

  	
   

  	
  1100 North Market Street

  
	
   

  	
   

  	
  Wilmington, Delaware 19890-1605

  
	
   

  	
   

  	
  Attention: Corporate Trust Administration

  
	
   

  	
   

  	
  Telecopier No.: (302) 636-4140

  
	
   

  	
   

  	
   

  
	
   

  	
  (v)

  	
  If to Moody’s:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Moody’s Investors Service, Inc.

  
	
   

  	
   

  	
  7 World Trade Center at 250 Greenwich Street

  
	
   

  	
   

  	
  New York, New York 10007

  
	
   

  	
   

  	
  Attention: ABS Monitoring Department

  
	
   

  	
   

  	
  Telecopier No.: (212) 298-7139

  
	
   

  	
   

  	
  Email: servicerreports@moodys.com

  
	
   

  	
   

  	
   

  
	
   

  	
  (vi)

  	
  If to Standard & Poor’s:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Standard & Poor’s Ratings Services,

  
	
   

  	
   

  	
  a Standard & Poor’s Financial Services LLC
  business

  



 


52

















 


	
   

  	
   

  	
  55 Water Street / 41st Floor

  
	
   

  	
   

  	
  New York, NY 10041-0003

  
	
   

  	
   

  	
  Attention: ABS Surveillance Group

  
	
   

  	
   

  	
  Telecopier No. (212)-438-2657

  
	
   

  	
   

  	
  Email: servicer_reports@sandp.com

  
	
   

  	
   

  	
   

  
	
   

  	
  (vii)

  	
  If to the Underwriters:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  At the address set forth in the Underwriting
  Agreement

  



 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


(b)                                 The Trust acknowledges and agrees that each 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


 


53

















 


or to any assets (or interests therein) other than the
Trust Assets conveyed or purported to be conveyed (whether by way of a sale,
capital contribution or by the granting of a Lien) by the Trust Depositor to
any Person other than the Trust (the “Other Assets”).


 


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


 


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


 


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


 


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


 


[signature page follows]


 


54

















 


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 2010-1

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

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

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Jeanne M. Oller

  
	
   

  	
   

  	
   

  	
  Printed Name: Jeanne M. Oller

  
	
   

  	
   

  	
   

  	
  Title: Assistant Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  HARLEY-DAVIDSON CUSTOMER FUNDING CORP., as Trust
  Depositor

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  J. Darrell Thomas

  
	
   

  	
   

  	
   

  	
  Printed Name: James Darrell Thomas

  
	
   

  	
   

  	
   

  	
  Title: Vice President, Treasurer and Assistant
  Secretary

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  HARLEY-DAVIDSON CREDIT CORP., as Servicer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  J. Darrell Thomas

  
	
   

  	
   

  	
   

  	
  Printed Name: James Darrell Thomas

  
	
   

  	
   

  	
   

  	
  Title: Vice President, Treasurer and Assistant
  Secretary

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., not
  in its individual capacity but solely as Indenture Trustee

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  David H. Hill

  
	
   

  	
   

  	
   

  	
  Printed Name: David H. Hill

  
	
   

  	
   

  	
   

  	
  Title: Vice President

  



 


Signature
Page to Sale & Servicing Agreement


 

















 


Exhibit A


 


[Form of Assignment]


 


In accordance with the Sale and Servicing Agreement
(the “Sale and Servicing Agreement”) dated as
of November 1, 2010 made by and between the undersigned, as Trust
Depositor  (“Trust
Depositor”), Harley-Davidson Credit Corp., as Servicer (“HDCC”), The
Bank of New York Mellon Trust Company, N.A., as Indenture Trustee and
Harley-Davidson Motorcycle Trust 2010-1 (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 Contracts listed on the
List of Contracts delivered on the Closing Date (including, without limitation,
all security interests and all rights to receive payments which are collected
pursuant thereto after the Cutoff Date, including any liquidation proceeds
therefrom, but excluding any rights to receive payments which were collected
pursuant thereto on or prior to the Cutoff Date), (ii) all rights of the
Trust Depositor under any theft, physical damage, credit life, disability or
other individual insurance policy (and rights under a “forced
placed” policy, if any), any debt insurance policy or any debt
cancellation agreement relating to any such Contract, an Obligor or a
Motorcycle securing such Contract, (iii) all security interests in each
such Motorcycle, (iv) all documents contained in the related Contract
Files, (v) all rights (but not the obligations) of the Trust Depositor
under any related motorcycle dealer agreements between dealers (i.e., the
originators of certain Contracts) and HDCC, (vi) all rights of the Trust
Depositor in the Lockbox, the Lockbox Account and related Lockbox Agreement to
the extent they relate to such Contracts, (vii) all rights (but not the
obligations) of the Trust Depositor under the Transfer and Sale Agreement,
including but not limited to the Trust Depositor’s rights under Article V
thereof, (viii) the remittances, deposits and payments made into the Trust
Accounts from time to time and amounts in the Trust Accounts from time to time
(and any investments of such amounts), (ix) all rights of the Trust
Depositor to certain rebates of premiums and other amounts relating to
insurance policies, debt cancellation agreements, extended service contracts or
other repair agreements and other items financed under such Contracts, and (x) all
proceeds and products of the foregoing.


 


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


 


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


 


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


 


	
   

  	
  HARLEY-DAVIDSON CUSTOMER FUNDING CORP.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Printed Name:

  
	
   

  	
  Title:

  



 


A-1

















 


Exhibit B


 


[Form of Closing Certificate of Trust
Depositor]


 


Harley-Davidson Customer Funding
Corp.


 


Officer’s Certificate


 


The undersigned certifies that he is
[                      ]
of Harley-Davidson Customer Funding Corp., a Nevada corporation (the “Trust Depositor”), and that as such is duly authorized to
execute and deliver this certificate on behalf of the Trust Depositor in
connection with the Sale and Servicing Agreement (the “Agreement”)
dated as of November 1, 2010 (the “Effective Date”)
by and among the Trust Depositor, The Bank of New York Mellon Trust Company,
N.A. (the “Indenture Trustee”), as Indenture
Trustee,  Harley-Davidson Credit Corp. (“Harley-Davidson Credit”), as Servicer, and Harley-Davidson
Motorcycle Trust 2010-1 (“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 as of a
recent date stating that the Trust Depositor is duly incorporated under the
laws of the State of Nevada and is in good standing.


 


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


 


(5)                                  Attached hereto as Exhibit IV
is a true and correct copy of resolutions adopted pursuant to the unanimous
written consent of the Board of Directors of the Trust Depositor relating to
the execution, delivery and performance of the Agreement, the Transfer and Sale
Agreement, the Trust Agreement; the Administration Agreement and the
Underwriting Agreement (collectively, the “Program Agreements”).  Said resolutions have not been amended,
modified, annulled or revoked, and are on the date hereof in full force and
effect and are the only resolutions relating to these matters which have been
adopted by the Board of Directors.


 


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


 


B-1

















 


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


 


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


 


(9)                                  There is no action, investigation or proceeding pending or, to 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 Program Agreements, nor the consummation of any other of the
transactions contemplated therein, will violate or conflict with any agreement
or instrument to which the Trust Depositor is a party or by which it is
otherwise bound.


 


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


 


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


 


*   
*    *    *


 


B-2

















 


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


 


 


	
   

  	
  By:

  	
   

  
	
   

  	
  Printed Name:

  
	
   

  	
  Title:

  



 
















 


Exhibit C


 


[Form of Closing Certificate of
Servicer/Seller]


 


HARLEY-DAVIDSON CREDIT CORP.


 


Officer’s Certificate


 


The undersigned certifies that he is
[                          ]
of Harley-Davidson Credit Corp. (“Harley-Davidson Credit”),
and that as such is duly authorized to execute and deliver this certificate on
behalf of Harley-Davidson Credit, as Servicer, in connection with the Sale and
Servicing Agreement (the  “Sale and Servicing Agreement”) dated as of November 1,
2010 (the “Effective Date”) by and among
Harley-Davidson Credit, as Servicer, Harley-Davidson Customer Funding Corp. (“CFC”), The Bank of New York Mellon Trust Company, N.A., as
Indenture Trustee and Harley-Davidson Motorcycle Trust 2010-1 (“Issuer”), in connection with the Transfer and Sale Agreement
dated as of the Effective Date (the “Transfer and Sale
Agreement”) by and between Harley-Davidson Credit and CFC (all
capitalized terms used herein without definition having the respective meanings
set forth in the Sale and Servicing Agreement), and further certifies as
follows:


 


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


 


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


 


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


 


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


 


(5)           Attached hereto as Exhibit IV
is a true and correct copy of resolutions adopted pursuant to a unanimous
written consent of the Board of Directors of Harley-Davidson Credit and
relating to the authorization, execution, delivery and performance of the
Transfer and Sale Agreement, the Sale and Servicing Agreement, the Underwriting
Agreement and the Administration Agreement. 
Said resolutions have not been amended, modified, annulled or revoked,
and are on the date hereof in full force and effect and are the only
resolutions relating to these matters which have been adopted by the Board of
Directors.


 


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


 


C-1

















 


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


 


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


 


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


 


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


 


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


 


C-2

















 


(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 authorized the filing of any
UCC financing statements listing the Contract Assets as collateral other than
financing statements relating to the transactions contemplated in the Transfer
and Sale Agreement and in the agreements listed on Schedule A
hereto.


 


*  
*   *   *  
*   *


 


C-3

















 


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


 


 


	
   

  	
  By:

  	
   

  
	
   

  	
  Printed Name:

  
	
   

  	
  Title:

  



 

















 


Exhibit D


 


[RESERVED]


 


D-1

















 


Exhibit E


 


SERVICING CRITERIA TO BE
ADDRESSED IN


INDENTURE TRUSTEE’S ASSESSMENT
OF COMPLIANCE


 


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


 


Servicing
Criteria


 


	
  Reference

  	
   

  	
  Criteria

  	
   

  	
  Applicable

  Servicing

  Criteria

  
	
   

  	
   

  	
  General Servicing
  Considerations

  	
   

  	
   

  
	
  1122(d)(1)(i)

  	
   

  	
  Policies and procedures are instituted to monitor
  any performance or other triggers and events of default in accordance with
  the transaction agreements.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(1)(ii)

  	
   

  	
  If any material servicing activities are outsourced
  to third parties, policies and procedures are instituted to monitor the third
  party’s performance and compliance with such servicing activities.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(1)(iii)

  	
   

  	
  Any requirements in the transaction agreements to
  maintain a back-up servicer for the pool assets are maintained.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(1)(iv)

  	
   

  	
  A fidelity bond and errors and omissions policy is
  in effect on the party participating in the servicing function throughout the
  reporting period in the amount of coverage required by and otherwise in
  accordance with the terms of the transaction agreements.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Cash Collection and Administration

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(2)(i)

  	
   

  	
  Payments on pool assets are deposited into the
  appropriate custodial bank accounts and related bank clearing accounts no
  more than two business days following receipt, or such other number of days
  specified in the transaction agreements.

  	
   

  	
  ü(2)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(2)(ii)

  	
   

  	
  Disbursements made via wire transfer on behalf of an
  obligor or to an investor are made only by authorized personnel.

  	
   

  	
  ü

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(2)(iii)

  	
   

  	
  Advances of funds or guarantees regarding
  collections, cash flows or distributions, and any interest or other fees
  charged for such advances, are made, reviewed and approved as specified in
  the transaction agreements.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(2)(iv)

  	
   

  	
  The related accounts for the transaction, such as
  cash reserve accounts or accounts established as a form of
  overcollateralization, are separately maintained (e.g., with respect to
  commingling of cash) as set forth in the transaction agreements.

  	
   

  	
  ü

  



 








	
  (1)

  	
   

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

  
	
  (2)

  	
   

  	
  Solely with regard to deposits made by the Indenture
  Trustee.

  






 


E-1

















 


Servicing Criteria


 


	
   

  	
   

  	
   

  	
   

  	
  Applicable

  Servicing

  Criteria

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(2)(v)

  	
   

  	
  Each custodial account is maintained at a federally
  insured depository institution as set forth in the transaction agreements.
  For purposes of this criterion, “federally insured depository institution”
  with respect to a foreign financial institution means a foreign financial
  institution that meets the requirements of Rule 13k-1(b)(1) of the
  Securities Exchange Act.

  	
   

  	
  ü(3)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(2)(vi)

  	
   

  	
  Unissued checks are safeguarded so as to prevent
  unauthorized access.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(2)(vii)

  	
   

  	
  Reconciliations are prepared on a monthly basis for
  all asset-backed securities related bank accounts, including custodial
  accounts and related bank clearing accounts. These reconciliations are
  (A) mathematically accurate; (B) prepared within 30 calendar days
  after the bank statement cutoff date, or such other number of days specified
  in the transaction agreements; (C) reviewed and approved by someone
  other than the person who prepared the reconciliation; and (D) contain
  explanations for reconciling items. These reconciling items are resolved
  within 90 calendar days of their original identification, or such other
  number of days specified in the transaction agreements.

  	
   

  	
   

  



 


	
  Reference

  	
   

  	
  Criteria

  	
   

  	
   

  
	
   

  	
   

  	
  Investor Remittances and
  Reporting

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(3)(i)

  	
   

  	
  Reports to investors, including those to be filed
  with the Commission, are maintained in accordance with the transaction
  agreements and applicable Commission requirements. Specifically, such reports
  (A) are prepared in accordance with timeframes and other terms set forth
  in the transaction agreements; (B) provide information calculated in
  accordance with the terms specified in the transaction agreements;
  (C) are filed with the Commission as required by its rules and
  regulations; and (D) agree with investors’ or the trustee’s records as
  to the total unpaid principal balance and number of pool assets serviced by
  the Servicer.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(3)(ii)

  	
   

  	
  Amounts due to investors are allocated and remitted
  in accordance with timeframes, distribution priority and other terms set
  forth in the transaction agreements.

  	
   

  	
  ü

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(3)(iii)

  	
   

  	
  Disbursements made to an investor are posted within
  two business days to the Servicer’s investor records, or such other number of
  days specified in the transaction agreements.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(3)(iv)

  	
   

  	
  Amounts remitted to investors per the investor
  reports agree with cancelled checks, or other form of payment, or custodial
  bank statements.

  	
   

  	
  ü

  



 








	
  (3)

  	
   

  	
  Assessment to be given by Indenture Trustee shall be
  only with respect to trust accounts maintained by the Indenture Trustee under
  the Sale and Servicing Agreement

  






 


E-2

















 


	
   

  	
   

  	
  Pool Asset Administration

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(4)(i)

  	
   

  	
  Collateral or security on pool assets is maintained
  as required by the transaction agreements or related asset pool documents.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(4)(ii)

  	
   

  	
  Pool assets and related documents are safeguarded as
  required by the transaction agreements

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(4)(iii)

  	
   

  	
  Any additions, removals or substitutions to the
  asset pool are made, reviewed and approved in accordance with any conditions
  or requirements in the transaction agreements.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(4)(iv)

  	
   

  	
  Payments on pool assets, including any payoffs, made
  in accordance with the related pool asset documents are posted to the
  Servicer’s obligor records maintained no more than two business days after
  receipt, or such other number of days specified in the transaction
  agreements, and allocated to principal, interest or other items (e.g.,
  escrow) in accordance with the related asset pool documents.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(4)(v)

  	
   

  	
  The Servicer’s records regarding the accounts and
  the accounts agree with the Servicer’s records with respect to an obligor’s
  unpaid principal balance.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(4)(vi)

  	
   

  	
  Changes with respect to the terms or status of an
  obligor’s account (e.g., loan modifications or re-agings) are made, reviewed
  and approved by authorized personnel in accordance with the transaction
  agreements and related pool asset documents.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(4)(vii)

  	
   

  	
  Loss mitigation or recovery actions (e.g.,
  forbearance plans, modifications and deeds in lieu of foreclosure,
  foreclosures and repossessions, as applicable) are initiated, conducted and
  concluded in accordance with the timeframes or other requirements established
  by the transaction agreements.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(4)(viii)

  	
   

  	
  Records documenting collection efforts are
  maintained during the period a pool asset is delinquent in accordance with
  the transaction agreements. Such records are maintained on at least a monthly
  basis, or such other period specified in the transaction agreements, and
  describe the entity’s activities in monitoring delinquent pool assets
  including, for example, phone calls, letters and payment rescheduling plans
  in cases where delinquency is deemed temporary (e.g., illness or
  unemployment).

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(4)(ix)

  	
   

  	
  Adjustments to interest rates or rates of return for
  pool assets with variable rates are computed based on the related pool asset
  documents.

  	
   

  	
   

  



 


	
  Reference

  	
   

  	
  Criteria

  	
   

  	
   

  
	
  1122(d)(4)(x)

  	
   

  	
  Regarding any funds held in trust for an obligor
  (such as escrow accounts): (A) such funds are analyzed, in accordance
  with the obligor’s Account documents, on at least an annual basis, or such
  other period specified in the transaction agreements; (B) interest on
  such funds is paid, or credited, to obligors in accordance with applicable
  Account documents and state laws;

  	
   

  	
   

  



 


E-3

















 


	
   

  	
   

  	
  and (C) such funds are returned to the obligor
  within 30 calendar days of full repayment of the related Accounts, or such
  other number of days specified in the transaction agreements.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(4)(xi)

  	
   

  	
  Payments made on behalf of an obligor (such as tax
  or insurance payments) are made on or before the related penalty or
  expiration dates, as indicated on the appropriate bills or notices for such
  payments, provided that such support has been received by the servicer at
  least 30 calendar days prior to these dates, or such other number of days
  specified in the transaction agreements.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(4)(xii)

  	
   

  	
  Any late payment penalties in connection with any
  payment to be made on behalf of an obligor are paid from the servicer’s funds
  and not charged to the obligor, unless the late payment was due to the
  obligor’s error or omission.

  	
   

  	
   

  



 


Servicing Criteria


 


	
   

  	
   

  	
   

  	
   

  	
  Applicable

  Servicing

  Criteria

  
	
  1122(d)(4)(xiii)

  	
   

  	
  Disbursements made on behalf of an obligor are
  posted within two business days to the obligor’s records maintained by the servicer,
  or such other number of days specified in the transaction agreements.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(4)(xiv)

  	
   

  	
  Delinquencies, charge-offs and uncollectible
  accounts are recognized and recorded in accordance with the transaction
  agreements.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(4)(xv)

  	
   

  	
  Any external enhancement or other support,
  identified in Item 1114(a)(1) through (3) or Item 1115 of
  Regulation AB, is maintained as set forth in the transaction agreements.

  	
   

  	
   

  



 


E-4
















 


Exhibit F


 


FORM OF ANNUAL CERTIFICATION OF THE INDENTURE
TRUSTEE


 




	
   

  	
  Dated:

  	
   

  






 


The
Bank of New York Mellon Trust Company, N.A., not in its individual capacity but
solely as indenture trustee (the “Indenture Trustee”), certifies to
Harley-Davidson Credit Corp. (the “Servicer”), its officers and Harley-Davidson
Motorcycle Trust 2010-1 (the “Issuer”), with the knowledge and intent that they
will rely upon this certification, that:


 


(1)   It has reviewed the report on assessment of
the Indenture Trustee’s compliance provided in accordance with Rules 13a-18
and 15d-18 under the Securities Exchange Act of 1934, as amended (the “Securities
Exchange Act”) and Item 1122 of Regulation AB under the Securities Act of 1933,
as amended, and the Securities Exchange Act (the “Servicing Assessment”), that
were delivered by the Indenture Trustee to the Seller pursuant to the Sale and
Servicing Agreement dated as of November 1, 2010, among Harley-Davidson
Customer Funding Corp., the Servicer, the Indenture Trustee and the Issuer
(collectively, the “Indenture Trustee Information”);


 


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


 


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


 


	
   

  	
  THE
  BANK OF NEW YORK MELLON TRUST

  
	
   

  	
   

  	
  COMPANY, N.A., as Indenture Trustee

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
				



 


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
[                ]
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 November 1, 2010 by and among Harley-Davidson Customer Funding
Corp., as Trust Depositor, the Servicer, The Bank of New York Mellon Trust
Company, N.A., as Indenture Trustee, and Harley-Davidson Motorcycle Trust
2010-1 (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/Servicer] on the date hereof pursuant to [Section 7.08 of the
Agreement and Section 5.01 of the Transfer and Sale Agreement/Section 7.10
of the Agreement/Section 7.11 of the Agreement.]


 


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


 


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


 


	
   

  	
  Harley-Davidson Credit Corp.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Printed Name:

  
	
   

  	
  Title:

  



 


G-1

















 


Exhibit H


 


[List of Contracts]


 


On File with Indenture Trustee.


 


H-1

















 


Exhibit I


 


[Form of Monthly Report to Noteholders and
Certificateholders]


 


On File with Servicer.


 


I-1

















 


Exhibit J


 


[Seller’s Representations and Warranties]


 


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


 


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


 


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


 


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


 


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


 


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


 


J-1

















 


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


 


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


 


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


 


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


 


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


 


(b)           Payments.  As of the Cutoff Date, 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 or under a debt insurance policy or debt cancellation
agreement.


 


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


 


(d)           Binding Obligation.  Each Contract is a legal, valid and binding
payment obligation of the Obligor thereunder and is enforceable in accordance
with its terms, except as such enforceability may be limited by insolvency,
bankruptcy, moratorium, reorganization, or other similar laws affecting the
enforcement of creditors’ rights generally.


 


(e)           No Defenses.  No Contract is subject to any right of
rescission, setoff, counterclaim or defense, including the defense of usury,
and the operation of any of the 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.  The Seller, in accordance with its policies
and procedures, has determined that, as of the date of origination of each
Contract, the related Obligor had obtained or agreed to obtain physical damage
insurance covering the Motorcycle.  The
terms of each Contract require that for the term of such Contract the
Motorcycle securing such Contract will be covered by physical damage insurance.


 


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


 


J-2

















 


motorcycle dealer, as the case may be, to the Seller
without any fraud or misrepresentation on the part of Eaglemark Savings Bank or,
to the knowledge of the Seller, 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 sale, transfer and
assignment of the Contract under the Transfer and Sale 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 Harley-Davidson motorcycle dealers or Eaglemark Savings Bank, the
purchase of the Contracts by the Seller, the sale of the Contracts by the
Seller to the Trust Depositor or by the Trust Depositor to the Trust, or any
combination of the foregoing, violated at the time of origination or as of the
Closing Date, in any material respect 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.


 


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


 


(k)           Valid Security Interest.  Each Contract creates a valid, subsisting and
enforceable first priority perfected security interest in favor of Seller or
Eaglemark Savings Bank (as the case may be) in the Motorcycle covered thereby,
and such security interest has been validly assigned by Eaglemark Savings Bank
to Seller (where applicable) and by Seller to the Trust Depositor.  Seller’s security interest has been validly
assigned by the Seller to the Trust Depositor pursuant to this Agreement and by
the Trust Depositor to the Issuer pursuant to the Sale and Servicing
Agreement.  Immediately prior to the
transfer, assignment and conveyance thereof, each Contract is secured by a first
priority, validly perfected security interest in the Motorcycle covered thereby
in favor of the Seller or Eaglemark Savings Bank as secured party or all
necessary and appropriate actions have been commenced that would result in a
first priority, validly perfected security interest in the Motorcycle covered
thereby in favor of the Seller or Eaglemark Savings Bank as secured party,
except, in each case, as to priority for any lien for taxes, labor, materials
or of any state law enforcement agency affecting a Motorcycle.


 


(1)           Good Title.  Each Contract was purchased by Seller for
value and taken into possession prior to the Cutoff Date in the ordinary course
of its business, without knowledge that the Contract was subject to a security
interest.  No Contract has been sold,
assigned or pledged to any person other than Trust Depositor and the Issuer as
the 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, immediately upon the transfer of each
Contract by the Seller, the Trust Depositor shall have good and marketable title
to each Contract free and clear of any encumbrance, equity, loan, pledge,
charge, claim or security interest, and, immediately upon the transfer of each
Contract by the Trust Depositor, the Issuer shall have good and marketable
title to each Contract free and clear of any encumbrance, equity, loan, pledge,
charge, claim or security interest.


 


(m)          No
Defaults.  As of the Cutoff Date, 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,


 


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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 Cutoff Date, no Motorcycle had been
repossessed.


 


(n)           No Liens.  As of the Closing Date 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 liens
prior to, or equal with, the lien of such Contract.


 


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


 


(p)           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.


 


(q)           One Original.  Each Contract is evidenced by only one
original executed tangible record constituting or forming a part of each
Contract that is “tangible chattel paper,” or a single “authoritative copy,” of
each electronic record constituting or forming a part of each Contract that is “electronic
chattel paper,” which tangible record or “authoritative copy” is held (or, in
the case of “electronic chattel paper,” maintained) by the Servicer or its
designee, as custodian on behalf of the Issuer (quoted terms have the meaning
assigned to them in the UCC).


 


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


 


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


 


(t)            Obligor Bankruptcy.  At the Cutoff Date, no Obligor was subject to
a bankruptcy proceeding (according to the records of the Seller) within the one
year preceding the Cutoff Date.


 


(u)           Chattel Paper.  Each Contract constitutes “tangible chattel
paper” or “electronic chattel paper” within the meaning of the UCC.


 


(v)           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.


 


(w)          Selection Criteria.  Each Contract is secured by a new or used Motorcycle.  No Contract has a Contract Rate less than
1.000%.  Each Contract amortizes the
amount financed over an original term no greater than 84 months.  Each Contract has a Principal Balance of at
least $500.00 as of the related Cutoff Date.


 


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


 


(a)           Amounts.  The aggregate Principal Balances payable by
Obligors under the Contracts as of the Cutoff Date equals or exceeds the sum of
the principal balance of the Notes on the Closing Date.


 


(b)           Characteristics.  The Contracts have the
following characteristics: (i) all the Contracts are secured by
Motorcycles; (ii) no Contract has a remaining maturity of more than 84
months; and (iii) the final scheduled payment on the Contract with the
latest maturity is due no later than September 25, 2017.  Approximately 68.35% of the Principal Balance
of the Contracts as of the Cutoff Date is attributable to loans for purchases
of new Motorcycles and approximately 31.65% is attributable to loans for
purchases of used Motorcycles.  No
Contract was originated after the Cutoff Date. 
Approximately 98.91% of the Principal Balance of the Contracts as of the
Cutoff Date is attributable to loans for purchases of Motorcycles manufactured
by Harley-Davidson, approximately 0.43% of the Principal Balance of the
Contracts as of the Cutoff Date is attributable to loans to purchase
Motorcycles manufactured by Buell and approximately 0.67% of the Principal
Balance of the Contracts as of the Cutoff Date is attributable to loans to
purchase Motorcycles not manufactured by Harley-Davidson or Buell.


 


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


 


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


 


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


 


(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 Cutoff Date 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,
that:


 


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


 


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otherwise been correctly prepared.  The complete Contract File for each Contract
currently is in the possession of the Servicer, or its custodian.


 


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


 


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Exhibit K


 


[Lockbox Bank and Lockbox Account]


 


Lockbox


 


Harley-Davidson Credit Corp.


PO Box 15129


Palatine, IL  60055-5129


 


Lockbox Bank


 


The Bank of New York Mellon


 


K-1

















 


Exhibit L


 


RESERVED


 


L-1