Document:

Exhibit 10.6

 

SCHEDULE

 

to the

 

ISDA 1992 Master
Agreement

 

dated as of February 15,
2008

 

between

 

CITIBANK, N.A.,

a national banking
association organized under the laws of the United States

(“Party A”)

 

and

 

Harley-Davidson
Motorcycle Trust 2008-1

(“Party B”)

 

Reference is made to that
certain Indenture dated as of February 15, 2008 (as amended, modified or
supplemented from time to time in accordance with its terms, the “Indenture”) between Party B, as the Issuer thereunder, and
The Bank of New York Trust Company, N.A., as Indenture Trustee, and to that
certain Sale and Servicing Agreement dated as of February 15, 2008 (as
amended, modified or supplemented from time to time in accordance with its
terms, the “Sale and Servicing Agreement”)
among Party B, Harley-Davidson Customer Funding Corp., as Trust Depositor,
Harley-Davidson Credit Corp., as the Servicer, and The Bank of New York Trust
Company, N.A., as Indenture Trustee. Capitalized terms used but not defined in
this Agreement will have the meanings ascribed to them in the Sale and
Servicing Agreement and/or the Indenture.

 

Part 1

 

Termination
Provisions

 

(a)                                  “Specified
Entity” means:

 

                                                (i)                                     in relation to Party A:                              not applicable; and

 

                                                (ii)                                  in relation to Party B:                                not applicable.

 

(b)                                 “Specified
Transaction” shall have the meaning specified in Section 14 of
this Agreement.

 

(c)                                  The “Failure
to Pay or Deliver” provisions of Section 5(a)(i) will
apply to Party A and will apply to Party B; provided, however, that  Section 5(a)(i) is hereby amended
by replacing the word “third” with the word “first”.

 

(d)                                 The “Breach
of Agreement” provisions of Section 5(a)(ii) will apply to
Party A and will not apply to Party B.

 

 

(e)                                  The “Credit
Support Default” provisions of Section 5(a)(iii) will
apply to Party A and will not apply to Party B except that Section 5(a)(iii)(1) will
apply to Party B solely in respect of Party B’s obligations under Paragraphs
3(b), 6(d) and 8(d) of the Credit Support Annex referred to in Part 4(g) herein.

 

(f)                                    The “Misrepresentation”
provisions of Section 5(a)(iv) will apply to Party A and will not
apply to Party B.

 

(g)                                 The “Default
under Specified Transaction” provisions of Section 5(a)(v) will
not apply to Party A and will not apply to Party B.

 

(h)                                 The “Cross
Default” provisions of Section 5(a)(vi) will apply to
Party A and will not apply to Party B.

 

For purposes of Section 5(a)(vi),
the following provisions apply:

 

“Specified Indebtedness” will have the
meaning specified in Section 14 of this Agreement except that such term
shall not include obligations in respect of deposits received in the ordinary
course of Party A’s banking business.

 

 “Threshold
Amount” means with respect to Party A an amount equal to three
percent (3%) of the Shareholders’ Equity of Party A or, if applicable, the Eligible
Guarantor.

 

“Shareholders’ Equity” means with respect to an entity, at any time, the sum
(as shown in the most recent annual audited financial statements of such
entity) of (i) its capital stock (including preferred stock) outstanding,
taken at par value, (ii) its capital surplus and (iii) its retained
earnings, minus (iv) treasury stock, each to be determined in accordance
with generally accepted accounting principles.

 

(i)                                     The “Bankruptcy”
provisions of Section 5(a)(vii) will apply to Party A and will apply
to Party B except that in respect of Party B (A) Section 5(a)(vii)(2) shall
not apply, (B) Section 5(a)(vii)(3) shall not apply to any
assignment, arrangement or composition that is effected by or pursuant to the
Transaction Documents, (C) Section 5(a)(vii)(4) shall not apply
to a proceeding instituted, or a petition presented, by Party A or any of its
Affiliates (for purposes of Section 5(a)(vii)(4), Affiliate shall have the
meaning set forth in Section 14, notwithstanding anything to the contrary
in this Agreement), (D) Section 5(a)(vii)(6) shall not apply to
any appointment that is effected by or pursuant to the Transaction Documents,
or any appointment to which Party B has not yet become subject; (E) Section 5(a)(vii)(7) shall
not apply; (F) Section 5(a)(vii)(8) shall apply only to the
extent of any event which has an effect analogous to any of the events
specified in clauses (1), (3), (4), (5) or (6) of Section 5(a)(vii),
in each case as modified in this Part 1(i), and (G) Section 5(a)(vii)(9) shall
not apply.

 

(j)                                     The “Merger
Without Assumption” provisions of Section 5(a)(viii) will
apply to Party A and will not apply to Party B.

 

(k)                                  Notwithstanding anything to the contrary
in Sections 5(a)(i) and 5(a)(iii) of this Agreement, any failure by Party
A to comply with or perform any obligation to be complied with or performed by
Party A under any Credit Support Document shall not be an Event of Default
under Section 5(a)(i) or Section 5(a)(iii) unless (A) a
Moody’s Ratings Event has occurred and is continuing and at least 30 Local
Business Days have elapsed since the last time such Moody’s Ratings Event first
occurred and (B) such failure is not remedied on or before the third Local
Business Day after notice of such failure is received by Party A.

 

(l)                                     The “Illegality”
provisions of Section 5(b)(i) will apply to Party A and will apply to
Party B.

 

(m)                               The “Tax
Event” provisions of Section 5(b)(ii) will apply to Party
A and will apply to Party B, provided that the words “(x) any action taken
by a taxing authority, or brought in a court of competent jurisdiction, on or
after the date on which a Transaction is entered into (regardless of whether
such action is taken or brought with respect to a party to this Agreement) or
(y)” are hereby deleted.

 

(n)                                 The “Tax
Event Upon Merger” provisions of Section 5(b)(iii) will
apply to Party A and will apply to Party B, provided that Party A shall not be
entitled to designate an Early Termination Date by reason of a Tax Event upon
Merger in respect of which it is the Affected Party.

 

2

 

(o)                                 The “Credit
Event Upon Merger” provisions of Section 5(b)(iv) will not
apply to Party A and will not apply to Party B.

 

(p)                                 The “Automatic
Early Termination” provisions of Section 6(a) will not
apply to Party A and will not apply to Party B;

 

(q)                                 For the purpose of the “Payments on Early Termination” provisions
of Section 6(e): Market Quotation and Second Method will apply; provided,
however, that, notwithstanding anything to the contrary in this Agreement, if
an Early Termination Date has been designated as a result of a Derivative
Provider Trigger Event, the following provisions will apply:

 

(i)                                     The definition of Market Quotation in Section 14
shall be deleted in its entirety and replaced with the following:

 

“ “Market Quotation”  means, with respect to one or more Terminated
Transactions, a Firm Offer which is (1) made by an Eligible Replacement, (2) for
an amount that would be paid to Party B (expressed as a negative number) or by
Party B (expressed as a positive number) in consideration of an agreement
between Party B and such Eligible Replacement to enter into a Replacement
Transaction, and (3) made on the basis that Unpaid Amounts in respect of
the Terminated Transaction or group of Transactions are to be excluded but,
without limitation, any payment or delivery that would, but for the relevant
Early Termination Date, have been required (assuming satisfaction of each
applicable condition precedent) after that Early Termination Date is to be
included.”

 

(ii)                                  The definition of “Settlement Amount”
shall be deleted in its entirety and replaced with the following:

 

““Settlement Amount”
means, with respect to any Early Termination Date, an amount (as determined by
Party B) equal to the Termination Currency Equivalent of the amount (whether
positive or negative) of any Market Quotation for the relevant Terminated
Transaction or group of Terminated Transactions that is accepted by Party B so
as to become legally binding,; provided that:

 

(1)                                  If,
on the Early Termination Date, no Market Quotation for the relevant Terminated
Transaction or group of Terminated Transactions has been accepted by Party B so
as to become legally binding and one or more Market Quotations from Approved
Replacements have been communicated to Party B and remain capable of becoming
legally binding upon acceptance by Party B, the Settlement Amount shall equal
the Termination Currency Equivalent of the amount (whether positive or
negative) of the lowest of such Market Quotations (for the avoidance of doubt,
the lowest of such Market Quotations shall be the lowest Market Quotation of
such Market Quotations expressed as a positive number or, if any of such Market
Quotations is expressed as a negative number, the Market Quotation expressed as
a negative number with the largest absolute value); and

 

(2)                                  If,
on the Early Termination Date, no Market Quotation for the relevant Terminated
Transaction or group of Terminated Transactions is accepted by Party B so as to
become legally binding and no Market Quotations from Approved Replacements have
been made and remain capable of becoming legally binding upon acceptance, the
Settlement Amount shall equal Party B’s Loss (whether positive or negative and
without reference to any Unpaid Amounts) for the relevant Terminated
Transaction or group of Terminated Transactions.”

 

(iii)                               If Party B, at the written direction
of the Depositor, requests Party A in writing to 

 

3

 

obtain Market Quotations, Party A
shall use its reasonable efforts to do so as soon as practicable before the
Early Termination Date.

 

(iv)                              Without prejudice to Party B’s
discretion as to the time of obtaining and accepting quotations, Party B shall
consult with Party A as to the day and time of obtaining any quotations.

 

(v)                                 At any time on or before the Early
Termination Date at which two or more Market Quotations from Approved
Replacements remain capable of becoming legally binding upon acceptance, Party
B shall be entitled to accept only the lowest of such Market Quotations (for
the avoidance of doubt, the lowest of such Market Quotations shall be the
lowest Market Quotation of such Market Quotations expressed as a positive
number or, if any of such Market Quotations are expressed as negative numbers,
the Market Quotation expressed as a negative number with the largest absolute
value).

 

(vi)                              If the Settlement Amount is a negative
number, Section 6(e)(i)(3) shall be deleted in its entirety and
replaced with the following:

 

“(3) Second Method and Market Quotation. If the
Second Method and Market Quotation apply, (I) Party B shall pay to Party A
an amount equal to the absolute value of the Settlement Amount in respect of
the Terminated Transactions, (II) Party B shall pay to Party A the
Termination Currency Equivalent of the Unpaid Amounts owing to Party A and (III) Party
A shall pay to Party B the Termination Currency Equivalent of the Unpaid
Amounts owing to Party B; provided, however, that (x) the amounts payable
under the immediately preceding clauses (II) and (III) shall be
subject to netting in accordance with Section 2(c) of this Agreement
and (y) notwithstanding any other provision of this Agreement, any amount
payable by Party A under the immediately preceding clause (III) shall not
be netted-off against any amount payable by Party B under the immediately
preceding clause (I).”

 

(r)                                    “Termination
Currency” means United States Dollars.

 

(s)                                  “Additional
Termination Events”.  The occurrence of any of the events specified in Part 5(b) shall
constitute an “Additional
Termination Event”  for purposes of Section 5(b)(v).

 

Part 2

 

Tax Matters

 

(a)                                  Tax Representations.

 

(i)                                     Payer Representations. 
For the purpose of Section 3(e) of this Agreement,

 

(A)                              Party A makes the following representation:

 

None.

 

(B)                              Party B makes the following
representation:

 

                                                                                                None.

 

Payee Representations.  
For the purpose of Section 3(f) of the Agreement, Party A and
Party B make no representations.

 

(b)                                 Tax Provisions.

 

4

 

(i)                                     Gross Up.  Section 2(d)(i)(4) shall
not apply to Party B as X, and Section 2(d)(ii) shall not apply to
Party B as Y, in each case such that Party B shall not be required to pay any
additional amounts referred to therein.

 

(ii)                                  Indemnifiable Tax. 
The definition of “Indemnifiable Tax” in Section 14 is deleted in
its entirety and replaced with the following:

 

“Indemnifiable Tax” means, in relation to payments by Party
A, any Tax and, in relation to payments by Party B, no Tax.

 

5

 

Part 3

 

Agreement to
Deliver Documents

 

For the purpose of
Section 4(a) of this Agreement:

 

I.  Tax forms, documents or certificates to be
delivered are:

 

	
  Party required to

  deliver document

  	
   

  	
  Form/Document/

  Certificate

  	
   

  	
  Date by which to

  be delivered

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Party B

  	
   

  	
  As required under Section 4(a)(i) of this
  Agreement: IRS Form W-9.

  	
   

  	
  Promptly upon execution of this Agreement or
  thereafter upon reasonable demand.

  	
   

  

 

6

 

II.  Other documents to be
delivered are:

 

	
  Party required

  to deliver

  document

  	
   

  	
  

  Form/Document/

  Certificate

  	
   

  	
  

  Date by which to

  be delivered

  	
   

  	
  

  Covered by

  Section 3(d)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Party A and Party B

  	
   

  	
  Any documents required by the receiving party to
  evidence the authority of the delivering party or its Credit Support
  Provider, if any, for it to execute and deliver, and to perform its
  obligations under the Agreement, this Confirmation, and any Credit Support
  Documents to which it is a party

  	
   

  	
  Upon the execution and delivery of this Agreement

  	
   

  	
  Yes

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Party A and Party B

  	
   

  	
  Incumbency and authority certificate authorizing the
  officers of the party signing the Agreement, this Confirmation, and any
  relevant Credit Support Document, as the case may be

  	
   

  	
  Upon the execution and delivery of this Agreement

  	
   

  	
  Yes

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Party A and Party B

  	
   

  	
  An opinion of counsel to such party reasonably
  acceptable to the other party

  	
   

  	
  Upon the execution and delivery of this Agreement

  	
   

  	
  No

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Party B

  	
   

  	
  A copy of the Indenture, the Sale and Servicing
  Agreement-and all other Transaction
  Documents-

  	
   

  	
  Upon the execution and delivery of this Agreement

  	
   

  	
  Yes

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Party B

  	
   

  	
  Each Monthly Report (pursuant to Section 9.05
  of the Sale and Servicing Agreement)

  	
   

  	
  In accordance with the Sale and Servicing Agreement

  	
   

  	
  Yes

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Party B

  	
   

  	
  Notice of all proposed amendments to any Transaction
  Document

  	
   

  	
  Prior to the execution of any proposed amendment, in
  accordance with the Transaction Documents

  	
   

  	
  Yes

  	
   

  

 

7

 

Part 4

 

Miscellaneous

 

(a)                                  Addresses for Notices. 
For the purpose of Section 12(a) of this Agreement:

 

Address
for notices or communications to Party A:

 

Address: Capital Markets Documentation Unit

388 Greenwich Street

New York, New York 
10013

 

Attention:                                         Director Derivatives Operations

 

Facsimile No.:                      (212) 657-3992

 

(For all purposes)

 

In addition, in
the case of notices or communications relating to Section 5, 6, 11 or 13
of this Agreement, a second copy of any such notice or communication shall be
addressed to the attention of Party A’s legal department as follows:

 

Address: Legal
Department

388 Greenwich
Street, 17th Floor

New York, New York
10013

 

Attention:                                         Senior Deputy
General Counsel, Citi Markets and Banking

 

Facsimile No.:                 (212) 816-5550

 

Address
for notices or communications to Party B:

 

Address:                                               Harley-Davidson Motorcycle Trust 2008-1

c/o Wilmington
Trust Company, as Owner Trustee

Rodney Square
North

1100 North Market
Street

Wilmington, DE
19890-0001

 

Attention:                                         Corporate Trust Administration Services

 

Telex No.: 835437

Answerback:
WILM-TR

Telephone No.:
302-636-6000

Facsimile No.:
302-636-4140

 

With a copy to:

 

 

Harley-Davidson Financial
Services, Inc.

222 West Adams Street,
20th Floor

Chicago, IL 60606

Attention: Andrea Golvach

Telephone: 312-696-5379

Facsimile: 312-368-1802

 

8

 

(b)                                 Effectiveness of Notice.  Section 12(a) is
hereby amended by deleting the words “facsimile transmission or” in line 3
thereof.

 

(c)                                  Process Agent. 
For the purpose of Section 13(c) of this Agreement:

 

Party A appoints as its
Process Agent:  Not applicable.

 

Party B appoints as its
Process Agent:  Not Applicable.

 

(d)                                 Offices. 
The provisions of Section 10(a) will apply to this Agreement.

 

(e)                                  Multibranch Party. 
For the purpose of Section 10(c) of this Agreement:

 

Party A is a Multibranch
Party and may enter into a Transaction through any of the following
offices:  New York, London, Singapore and
Sydney.

 

Party B is not a
Multibranch Party.

 

(f)                                    Calculation Agent. 
The Calculation Agent will be Party A unless otherwise specified in a
Confirmation in reference to the relevant Transaction.

 

(g)                                 Credit Support Document.

 

With respect to Party
A:  The 1994 ISDA Credit Support Annex to
this Schedule, including Paragraph 13 thereof (the “Credit Support Annex”), and
any guarantee that is provided to Party B pursuant to Part 5(b) below.

 

With
respect to Party B:  The Credit Support
Annex, solely in respect of Party B’s obligations under Paragraphs 3(b), 6(d) and
8(d) of the Credit Support Annex.

 

(h)                                 Credit Support Provider. 
Means (i) in relation to Party A, if a guarantee is provided to
Party B pursuant to Part 5 (b) below, the guarantor providing such
guarantee and (ii) in relation to Party B, not applicable.

 

(i)                                     Governing Law. This Agreement including any claim or
controversy arising out of or relating to this Agreement will be governed by
and construed in accordance with the laws of the State of New York without
regard to the conflict of law provisions thereof other than the New York
General Obligations Law Sections 5-1401 and 5-1402.

 

(j)                                     Jurisdiction.  Section 13(b) of
the Agreement is hereby amended by (1) deleting in line 2 of subsection (i) the
word “non-” and (2) deleting the final paragraph thereof.  The following shall be added at the end of Section 13(b):  “Nothing in this provision shall prohibit a
party from bringing an action to enforce a money judgment in any other
jurisdiction.”

 

(k)                                  “Affiliate”
will have the meaning specified in Section 14 of this Agreement except,
for purposes of Section 3(c) of this Agreement, Party A and Party B
shall be considered to have no Affiliates.

 

(l)                                     Netting of Payments. 
The parties agree that subparagraph (ii) of Section 2(c) will
apply to each Transaction hereunder.

 

9

 

(m)                               Single Agreement. Section 1(c) shall be amended
by the addition of the words “The Credit Support Annex” after the words “Master
Agreement”.

 

(n)                                 Local Business Day. 
The definition of Local Business Day in Section 14 of this
Agreement shall be amended by the addition of the words “or any Credit Support
Document” after “Section 2(a)(i)” and the addition of the words “or Credit
Support Document” after “Confirmation”.

 

(o)                                 Definitions. 
Unless otherwise specified in a Confirmation, this Agreement and each
Transaction under this Agreement are subject to the 2000 ISDA Definitions as
published and copyrighted in 2000 by the International Swaps and Derivatives
Association, Inc. (the “Definitions”),
and will be governed in all relevant respects by the provisions set forth in
the Definitions, without regard to any amendment to the Definitions subsequent
to the date hereof.  The provisions of
the Definitions are hereby incorporated by reference in and shall be deemed a
part of this Agreement, except that (i) references in the Definitions to a
“Swap Transaction” shall be deemed references to a “Transaction” for purposes
of this Agreement, and (ii) references to a “Transaction” in this
Agreement shall be deemed references to a “Swap Transaction” for purposes of
the Definitions.

 

Each reference herein to
a “Section” (unless specifically referencing the Sale and Servicing Agreement)
or to a “Section” “of this Agreement” will be construed as a reference to a Section of
the ISDA Master Agreement; each herein reference to a “Part” will be construed
as a reference to the Schedule to the ISDA Master Agreement; each reference
herein to a “Paragraph” will be construed as a reference to a Paragraph of the
Credit Support Annex.

 

10

Part 5

 

Other Provisions

 

(a)           No
Set-Off

 

(i)                                     All payments under this Agreement shall
be made without set-off or counterclaim, except as expressly provided for in Section 2(c),
Section 6 or Part 1(q)(vi) or in Section 8 of the Credit
Support Annex.

 

(ii)                                  Section 6(e) shall be amended
by the deletion of the following sentence; “The amount, if any, payable in
respect of an Early Termination Date and determined pursuant to this Section will
be subject to any Set-off.”

 

(b)                                 Additional Termination
Events.  The following Additional Termination Events
will apply. For purposes hereof, Party A shall be the Affected Party with
respect to the events listed in numbers (i) through (v), and Party B shall
be the Affected Party with respect to the events listed in numbers (vi) through
(viii):

 

An S&P
Approved Ratings Downgrade Event has occurred and is continuing and Party A has
failed to comply with or perform any obligation to be complied with or
performed by Party A in accordance with the Credit Support Annex.

 

A Moody’s First
Trigger Ratings Event has occurred and is continuing, and Party A has failed to
comply with or perform any obligation to be complied with or performed by Party
A in accordance with the Credit Support Annex.

 

(1) An
S&P Required Ratings Downgrade Event has occurred and is continuing and
Party A has failed to comply with or perform any obligation to be complied with
or performed by Party A in accordance with the Credit Support Annex or (2) An
S&P Required Ratings Downgrade Event has been continuing for 60 or more
calendar days.

 

A Moody’s Second
Trigger Ratings Event has occurred and is continuing and Party A has failed to
comply with or perform any obligation to be complied with or performed by Party
A in accordance with the Credit Support Annex and (i) at least one
Eligible Replacement has made a Firm Offer that would, assuming the occurrence
of an Early Termination Date, qualify as a Market Quotation and which remains
capable of becoming legally binding upon acceptance and (ii) 30 Local
Business Days or more have elapsed since such Moody’s Second Trigger Rating
Event first occurred.

 

Swap Disclosure
Event. Upon the occurrence of a Swap Disclosure Event (as defined in Part 5(p) below)
Party A has not, within 10 Business Days after such Swap Disclosure Event,
complied with any of the provisions set forth in clause (iii) of Part 5(p) below.

 

Without the prior
written consent of Party A and only to the extent such consent is required
under the Indenture or the Sale and Servicing Agreement (such consent not to be
unreasonably withheld, conditioned or delayed), an amendment is made to any
Transaction Document which amendment could reasonably be expected to have a
material adverse effect on the interests of Party A under this Agreement.  Any payments owed to Party A under Section 6(e) of
this Agreement as a result of such Additional Termination Event shall be made
without regard to the effect of any such amendment, modification or supplement.

 

Any redemption,
acceleration, auction, clean-up call or other prepayment in full, but not in
part, of the Notes outstanding occurs under the Indenture (or any notice is
given to that effect and such redemption, acceleration, auction, clean-up call
or other prepayment is not capable of being rescinded).  If this Additional Termination Event occurs,
Party B shall be the sole Affected Party; provided, however, that
notwithstanding Section 6(b)(iv), either party may designate an Early
Termination Date in respect of this Additional Termination Event; provided,
further, that such Early Termination Date shall not be prior to ten Business
Days prior to the final 

 

11

 

Distribution Date;

 

The Indenture
Trustee declares the Notes immediately due and payable following the occurrence
of an Event of Default (as defined in the Indenture) pursuant to Section 5.01(i) or
(ii) of the Indenture (provided that such acceleration has not been
rescinded pursuant to Section 5.02 of the Indenture) or an Event of
Default (as defined in the Indenture) pursuant to Section 5.01(iv) or
(v) of the Indenture occurs and is continuing and the principal amount of
the Notes becomes immediately due and payable. 
For the purpose of the foregoing Termination Event, (A) Party B
shall be the sole Affected Party and (B) notwithstanding the provisions of
Section 6(b) of the Agreement, the date on which the Notes are due
and payable shall be the Early Termination Date of the Transaction.

 

(c)           Required
Ratings Downgrade Event.  So
long as either a Moody’s Second Trigger Rating Event or an S&P Required
Ratings Downgrade Event has occurred and is continuing, then Party A shall, at
its own expense, use commercially reasonable efforts to, as soon as reasonably
practicable, either (A) effect a Permitted Transfer or (B) procure an
Eligible Guarantee from an Eligible Guarantor.

 

(d)           Timing of Payments by
Party B upon Early Termination. 
Notwithstanding anything to the contrary in Section 6(d)(ii), to
the extent that all or a portion (in either case, the “Unfunded Amount”) of any
amount that is calculated as being due in respect of any Early Termination Date
under Section 6(e) from Party B to Party A will be paid by Party B
from amounts other than any upfront payment paid to Party B by an Eligible
Replacement that has entered into a Replacement Transaction with Party B, then
such Unfunded Amount shall be due on the next subsequent Distribution Date
following the date on which the payment would have been payable as determined
in accordance with Section 6(d)(ii), and on any subsequent Distribution
Dates until paid in full (or if such Early Termination Date is the final
Distribution Date, on such final Distribution Date); provided, however, that if
the date on which the payment would have been payable as determined in
accordance with Section 6(d)(ii) is a Distribution Date, such payment
will be payable on such Distribution Date.

 

(e)           Rating
Agency Notifications. 
Notwithstanding any other provision of this Agreement, no Early
Termination Date shall be effectively designated hereunder by Party B and no
transfer of any rights or obligations under this Agreement shall be made by
either party unless each Rating Agency has been given prior written notice of
such designation or transfer.

 

(f)            Agent
for Party B.  Party A
acknowledges that Party B has appointed Harley-Davidson Credit Corp. as
administrator under the Administration Agreement to carry out certain functions
on behalf of Party B, and that Harley-Davidson Credit Corp. shall be entitled
to give notices and to perform and satisfy the obligations of Party B hereunder
on behalf of Party B.

 

(g)           Conduct
of Party B in connection with Replacement Transactions and Permitted Transfers.
In determining whether or not a Firm Offer satisfies clause (b)(ii) of the
definition of Replacement Transaction, Party B shall act in a commercially
reasonable manner.

 

(h)           Limited
Recourse.  Notwithstanding any
other provision of this Agreement to the contrary, Party A hereby acknowledges
and agrees that all of Party B’s obligations hereunder or in connection herewith
will be solely the limited recourse obligations of Party B, payable solely from
the Collateral and the proceeds thereof, in accordance with the priority of
payments and other terms of the Indenture and the Sale and Servicing Agreement
and Party A will not have any recourse to any of the directors, officers,
incorporators, shareholders, partners, agents or Affiliates of Party B or any
of their successors or assigns with respect to any claims, losses, damages,
liabilities, indemnities or other obligations in connection with any
transactions contemplated hereby. The provisions of this paragraph will survive
the designation of any Early Termination Date and any termination of this
Agreement.

 

(i)            Non-petition.  Party A agrees not to institute against or
join any person in instituting against Party B any bankruptcy, reorganization,
arrangement, insolvency, moratorium or liquidation proceeding or other similar
proceeding against Party B for any reason whatsoever, until the payment in full
of all Notes issued under the Indenture and the expiration of a period equal to
one year and one day (or, if longer, the then applicable preference period)
following all such payments; provided that nothing in this clause shall
preclude, prohibit or restrict, or be deemed to estop, Party A (i) from
taking any action prior to the expiration of the aforementioned one year and
one day period (or, if longer, the then applicable preference period) in (x) any
case or proceeding voluntarily filed or commenced by Party B or (y) any
involuntary insolvency proceeding filed or commenced 

 

12

 

against Party B by a
person other than Party A or its Affiliates, or (ii) from commencing
against Party B or any properties of Party B any legal action which is not a
bankruptcy, reorganization, arrangement, insolvency, moratorium or liquidation
proceeding, or (iii) from joining any other person, including, without
limitation, the Indenture Trustee, in any bankruptcy, reorganization,
arrangement, insolvency, moratorium or liquidation proceedings already
commenced or other analogous proceedings already commenced under applicable
laws. The provisions of this paragraph will survive the designation of any
Early Termination Date and any termination of this Agreement.

 

(j)            Transfers.  Section 7 of this Agreement shall be
deleted in its entirety and replaced with the following:

 

“(i)                               Neither this Agreement nor any interest
or obligation in or under this Agreement may be transferred (whether by way of
security or otherwise) by either party unless (a) the prior written
consent of the other party is obtained and (b) the Rating Agency Condition
has been satisfied with respect to each Rating Agency other than Moody’s,
except that Party A may (at its own cost):

 

(A)                        transfer all or any part of its interest
in any amount payable to it if Party B is a Defaulting Party under Section 6(e);
or

 

(B)                          effect a Permitted Transfer of all of its
rights and obligations with respect to this Agreement to any other entity (a “Transferee”):

 

(I)                  at any time at which a Moody’s First Trigger Ratings
Event, S&P Approved Ratings Downgrade Event or S&P Required Ratings
Downgrade Event has occurred and is continuing,

 

(II)              pursuant to Section 6(b)(ii) or Part 5(p) of
this Agreement,

 

(III)          pursuant to a consolidation or amalgamation with, or
merger with or into, or transfer of all or substantially all its assets to,
another entity, or

 

(IV)          to another of its offices or branches at any time.

 

Following such transfer, all references to Party A
shall be deemed to be references to the Transferee.

 

(ii)                                  If an entity has made a Firm Offer to be
the transferee of a transfer to be made in accordance with clause (B) above,
Party B shall (at Party A’s cost) at Party A’s written request, take any
reasonable steps required to be taken by it to effect such transfer.

 

(k)           Waiver
of Right to Trial by Jury. 
Each party hereby irrevocably waives, to the fullest extent permitted by
applicable law, any right it may have to a trial by jury in respect of any
suit, action or proceeding relating to this Agreement.

 

(l)            Severability.  In the event that any one or more of the
provisions contained in this Agreement should be held invalid, illegal, or
unenforceable in any jurisdiction, the validity, legality and enforceability of
the remaining provisions contained herein shall not in any way be affected or
impaired thereby. The parties shall endeavor, in good faith negotiations, to
replace the invalid, illegal or unenforceable provisions with valid provisions,
the economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.

 

(m)          Additional
Representations.  For purposes
of Section 3 of this Agreement, the following shall be added, immediately
following paragraph (f) thereof:

 

“(g)                           No
Reliance.  It has made its own independent decisions to
enter into that Transaction and as to whether that Transaction is appropriate
or proper for it based upon its own judgment and upon advice from such advisors
as it has deemed necessary.  It is not
relying on any communication (written or oral) of the other party as investment
advice or as a recommendation to enter into that Transaction; it being
understood that information and explanations related to the terms and
conditions of a Transaction shall not be considered 

 

13

 

investment advice or a
recommendation to enter into that Transaction. 
It has not received from the other party any assurance or guarantee as
to the expected results of that Transaction.

 

(h)                                 Evaluation
and Understanding.  It is capable
of evaluating and understanding (on its own behalf or through independent
professional advice), and understands and accepts, the terms, conditions and
risks of that Transaction.  It is also
capable of assuming, and assumes, the financial and other risks of that
Transaction.

 

(i)                                     Status
of Parties.  The other party is not acting as a fiduciary
or an advisor for it in respect of that Transaction.

 

(j)                                     Risk
Management.  Each of Party A and Party B represents that
this Agreement has been, and each Transaction hereunder has been or will be, as
the case may be, entered into for the purpose of managing its borrowings or
investments, hedging its underlying assets or liabilities or in connection with
its line of business (including financial intermediation services) and not for
the purpose of speculation.

 

(k)                                  Eligible
Contract Participant.  Each of Party A and Party B (a) 
represents that it is an “eligible contract participant” within the meaning of Section 1(a)(12)
of the Commodity Exchange Act, as amended (the “CEA”),
(b) this Agreement and each Transaction is subject to individual
negotiation by each party, and (c) neither this Agreement nor any
Transaction will be executed or traded on a “trading facility” within the
meaning of Section 1a(33) of the CEA.

 

(l)                                     Financial
Institution.  Party A represents that it is a “financial
institution” as defined in the Federal Deposit Insurance Corporation
Improvement Act of 1991 or Regulation EE promulgated by the Federal Reserve
Board thereunder.

 

(m)                               FDIC Representation. 
Party A represents to Party B on the date on which Party A enters into
each Transaction that Party A is a depository institution subject to the
requirements of the Federal Deposit Insurance Act.  This Agreement (including the Credit Support
Annex and each Confirmation) has been authorized by all necessary corporate
action of Party A, the person executing this Agreement on behalf of Party A is
an officer of Party A of the level of vice president or higher, and this
Agreement (including the Credit Support Annex and each Confirmation) will be
maintained by Party A in its official books and records.

 

(n)                                 Capacity. 
Party A represents to Party B on the date on which Party A enters into
each  Transaction that it is entering
into the Agreement and the Transaction as principal and not as agent of any
person.  The Indenture Trustee represents
to Party A on the date on which the Indenture Trustee executes this Agreement
that it is executing the Agreement in its capacity as the Indenture Trustee.

 

(o)                                 ERISA.  The assets that are used in
connection with the execution, delivery and performance of this Agreement and
the Transactions entered into pursuant hereto are not the assets of an
employee  benefit or other plan subject
to Title I of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), a plan described in Section 4975 of the
Internal Revenue Code of 1986, as amended (the “Code”),
an entity whose underlying assets include “plan assets” by reason of Department
of Labor regulation section 2510.3-101, or a governmental plan that is subject
to any federal, state, or local law that is substantially similar to the
provisions of Section 406 of ERISA or Section 4975 of the Code.

 

(n)           Recording
of Conversations.  Each party
hereto consents to the recording of its telephone conversations pursuant to
this Agreement. To the extent that one party records telephone conversations
(the “Recording Party”) and the other party
does not (the “Non-Recording Party”), the
Recording Party shall, in the event of any dispute, make a complete and
unedited copy of such party’s tape of the entire day’s conversations with the
Non-Recording Party’s personnel available to the Non-Recording Party. The
Recording Party’s tapes may be used by either party in any forum in which a
dispute is sought to be resolved and the Recording Party will retain tapes for
a consistent period of time in accordance with the Recording Party’s policy
unless one party notifies the other that a particular transaction is under
review and warrants further retention.

 

14

 

(o)           Transfer
to Avoid Termination Event.  Section 6(b)(ii) is
hereby amended (i) by deleting the words “or if a Tax Event Upon Merger
occurs and the Burdened Party is the Affected Party,” and the words “, which
consent will not be withheld if such other party’s policies in effect at such
time would permit it to enter into transactions with the transferee on the
terms proposed” and (ii) by deleting the words “to transfer” and inserting
the words “to effect a Permitted Transfer” in lieu thereof.

 

(p)           Compliance
with Regulation AB.

 

(i)                                     Party A agrees and acknowledges that
Harley-Davidson Customer Funding Corp. (the “Depositor”)
may be required under Regulation AB, as defined in the Sale and Servicing
Agreement, to disclose certain financial information regarding Party A or its
group of affiliated entities, if applicable, depending on the aggregate “significance
percentage” of this Agreement and any other derivative contracts between Party
A or its group of affiliated entities, if applicable, and Party B, as
calculated from time to time in accordance with Item 1115 of Regulation AB.

 

(ii)                                  It shall be a swap disclosure event (“Swap Disclosure Event”)
if, on any Business Day after the date hereof for so long as the Issuer is
required to file periodic reports under the Exchange Act with respect to the
Notes, Party B or the Depositor requests from Party A the applicable financial
information described in Item 1115(b) of Regulation AB (such request to be
based on a reasonable determination by the Depositor, based on “significance
estimates” made in substantially the same manner as that used in
Harley-Davidson Credit Corp.’s internal risk management process in respect of
similar instruments and furnished by Harley-Davidson Credit Corp. to the
Depositor, or if Harley-Davidson Credit Corp. does not furnish such
significance estimates to the Depositor, based on a determination of such
significance estimates by the Depositor in a commercially reasonable manner)
(the “Swap Financial
Disclosure”).

 

(iii)                               Upon the occurrence of a Swap Disclosure
Event, Party A, at its own expense, shall either (1)(a) either (i) provide
to the Depositor the current Swap Financial Disclosure in an EDGAR-compatible
format (for example, such information may be provided in Microsoft Word® or
Microsoft Excel® format but not in .pdf format) or (ii) provide written
consent to the Depositor to incorporation by reference of such current Swap
Financial Disclosure that is filed with the Securities and Exchange Commission
in the Exchange Act Reports of the Depositor, (b) if applicable, cause its
outside accounting firm to provide its consent to filing or incorporation by
reference in the Exchange Act Reports of the Depositor of such accounting firm’s
report relating to its audits of such current Swap Financial Disclosure, and (c) provide
to the Depositor any updated Swap Financial Disclosure with respect to Party A
or any entity that consolidates Party A within five days of the release of any
such updated Swap Financial Disclosure; (2) secure another entity through
a Permitted Transfer to replace Party A as party to this Agreement on terms
substantially similar to this Agreement, which entity (or a guarantor thereto)
meets or exceeds the Replacement Ratings Threshold and which entity complies
with the requirements of Item 1115 of Regulation AB and clause (1) above,
or (3) obtain a guaranty of Party A’s obligations under this Agreement
from an affiliate of Party A that complies with the financial information
disclosure requirements of Item 1115 of Regulation AB, and cause such affiliate
to provide Swap Financial Disclosure and any future Swap Financial Disclosure
and other information pursuant to clause (1), such that disclosure provided in
respect of such affiliate will satisfy any disclosure requirements applicable
to Party A.

 

(iv)                              Party A agrees that, in the event that
Party A provides Swap Financial Disclosure to the Depositor in accordance with
clause (iii)(1) above or causes its affiliate to provide Swap Financial
Disclosure to the Depositor in accordance with clause (iii)(3) above, it
will indemnify and hold harmless the Depositor, its respective directors or
officers and any person controlling the Depositor, from and against any and all
losses, claims, damages and liabilities caused by any untrue statement or
alleged untrue statement of a material fact contained in such Swap Financial
Disclosure or caused by any omission or alleged omission to state in such Swap
Financial Disclosure a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading.

 

15

 

(q)           Security Interest

 

The Parties hereby acknowledge and agree that:

 

(i)                                     Party B has in
the Indenture granted to the Indenture Trustee for the benefit of certain
secured parties named therein (the “Secured Parties”),
including Party A, a security interest in certain assets of Party B (including
without limitation, all payments due to Party B under this Agreement);

 

(ii)                                  Party A is a
Secured Party entitled to the benefits set forth in the Indenture;

 

(iii)                               in connection
with such grant, Party B has assigned to the Indenture Trustee on behalf of the
Secured Parties (other than Party A) all of Party B’s rights to payment due to
it under this Agreement, any credit support annex and any other document which
by its terms secures, guarantees or otherwise supports Party A’s obligations
under this Agreement; and

 

(iv)                              following the
occurrence of any Event of Default or Termination Event in respect of Party A
under this Agreement which is continuing, the Indenture Trustee may directly
enforce the rights of Party B hereunder.

 

(r)            Payment on transfer of
the Swap to a Transferee

 

If Party A is replaced
under this Agreement by a Transferee and the Transferee is required to pay an
amount to take over Party A’s role, Party B acknowledges and agrees that such
amount(s) shall be paid directly by the Transferee to Party A to reduce,
ratably, any termination payments due and unpaid to Party A from Party B.  Such amount(s) shall not be subject to
the priority of payments in the Indenture or the Sale and Servicing Agreement
and shall not be applied in whole or in part to pay any other party secured
pursuant to the Transaction Documents or any other party either prior to or
subsequent to the enforcement of security constituted by the Indenture.

 

(s)           Amendments.
In addition to the requirements of Section 9, this Agreement will not be
amended unless Party B shall have obtained satisfaction of the Rating Agency
Condition with respect to S&P.

 

(t)            Additional
Definitions.

 

As used in this
Agreement, the following terms shall have the meanings set forth below, unless
the context clearly requires otherwise:

 

“Approved Replacement”
means, with respect to a Market Quotation, an entity making such Market
Quotation, which entity would satisfy conditions (a), (b), (c) and (d) of
the definition of Permitted Transfer (as determined by Party B in its sole
discretion, acting in a commercially reasonable manner) if such entity were a
Transferee, as defined in the definition of Permitted Transfer.

 

“Derivative Provider Trigger Event” means (i) an Event of Default with
respect to which Party A is a Defaulting Party, (ii) a Termination Event
with respect to which Party A is the sole Affected Party other than a
Termination Event occurring under Section 5(b)(i) or Section 5(b)(ii),
or (iii) an Additional Termination Event with respect to which Party A is
the sole Affected Party.

 

“Eligible Guarantee” means an unconditional and irrevocable
guarantee of all present and future obligations of Party A under this Agreement
(or, solely for purposes of the definition of Eligible Replacement, all present
and future obligations of such Eligible Replacement under this Agreement or its
replacement, as applicable) which is provided by an Eligible Guarantor as
principal debtor rather than surety and that is directly enforceable by Party B
the form and substance of which guarantee are subject to the Rating Agency
Condition with respect to each Rating Agency other than Moody’s, and either (A) a
law firm has given a legal opinion confirming that none of the guarantor’s
payments to Party B under such guarantee will be subject to Tax collected by
withholding or (B) such guarantee provides that, in the event that any of
such guarantor’s payments to Party B 

 

16

 

are subject to Tax collected
by withholding, such guarantor is required to pay such additional amount as is
necessary to ensure that the net amount actually received by Party B (free and
clear of any Tax collected by withholding) will equal the full amount Party B
would have received had no such withholding been required or (C) in the
event that any payment under such guarantee is made net of deduction or
withholding for Tax, Party A is required, under Section 2(a)(i), to make
such additional payment as is necessary to ensure that the net amount actually
received by Party B from the guarantor will equal the full amount Party B would
have received had no such deduction or withholding been required.

 

“Eligible Guarantor” means an entity that (A) has credit
ratings at least equal to the Replacement Ratings Threshold.

 

“Eligible Replacement” means an entity (A) that lawfully
could perform the obligations owing to Party B under this Agreement (or its
replacement, as applicable) and (B) that has credit ratings at least equal
to the Replacement Ratings Threshold or the present and future obligations (for
the avoidance of doubt, not limited to payment obligations) of such entity to
Party B under this Agreement are guaranteed pursuant to an Eligible Guarantee
provided by an Eligible Guarantor.

 

“Financial Institution” means a bank, broker/dealer, insurance
company, structured investment vehicle or derivative product company.

 

“Firm Offer” means an offer that will become legally binding upon
acceptance.

 

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

 

“Moody’s
First Trigger Ratings Event” means that no Relevant Entity has credit ratings from
Moody’s at least equal to the Moody’s First Trigger Rating Threshold.

 

“Moody’s
First Trigger Ratings Threshold” means, with respect to Party A, the guarantor under an
Eligible Guarantee or an Eligible Replacement, (i) if such entity has both
a long-term unsecured and unsubordinated debt rating or counterparty rating
from Moody’s and a short-term unsecured and unsubordinated debt rating from
Moody’s, a long-term unsecured and unsubordinated debt rating or counterparty
rating from Moody’s of “A2” and a short-term unsecured and unsubordinated debt
rating from Moody’s of “Prime-1”, or (ii) if such entity has only a
long-term unsecured and unsubordinated debt rating or counterparty rating from
Moody’s, a long-term unsecured and unsubordinated debt rating or counterparty
rating from Moody’s of “A1”.

 

“Moody’s
Second Trigger Ratings Event” means that no Relevant Entity has credit ratings from
Moody’s at least equal to the Moody’s Second Trigger Ratings Threshold.

 

“Moody’s
Second Trigger Ratings Threshold” means, with respect to Party A, the guarantor under
an Eligible Guarantee or an Eligible Replacement, (i) if such entity has
both a long-term unsecured and unsubordinated debt rating or counterparty
rating from Moody’s and a short-term unsecured and unsubordinated debt rating
from Moody’s, a long-term unsecured and unsubordinated debt rating or
counterparty rating from Moody’s of “A3” and a short-term unsecured and
unsubordinated debt rating from Moody’s of “P-2”, or (ii) if such entity
has only a long-term unsecured and unsubordinated debt rating or counterparty
rating from Moody’s, a long-term unsecured and unsubordinated debt rating or counterparty
rating from Moody’s of “A3.

 

“Permitted Transfer” means a transfer by novation by Party A
to a transferee (the “Transferee”) of all, but not less than all, of Party A’s
rights, liabilities, duties and obligations under this Agreement, with respect
to which transfer each of the following conditions is satisfied:  (a) the Transferee is an Eligible
Replacement (b) Party A and the Transferee are both “dealers in notional
principal contracts” within the meaning of Treasury regulations section 1.1001-4
(c) as of the date of such transfer the Transferee would not be required
to withhold or deduct on account of Tax from any payments under this Agreement
or would be required to gross up for such Tax under Section 2(d)(i)(4), (d) an
Event of Default or Termination Event would not occur as a result of such
transfer, (e) pursuant to a written instrument (the “Transfer Agreement”),
the Transferee acquires and assumes all rights and obligations of Party A under
the Agreement and the relevant Transaction, (f) Party B shall have
determined, in its sole discretion, acting in a commercially reasonable manner,
that such Transfer Agreement is effective to transfer to the Transferee all,
but not less than all, of Party A’s rights and obligations under the Agreement
and all relevant Transactions, (g) Party A will be responsible for any
costs or expenses incurred in connection with such transfer (including any
replacement cost of entering into a replacement transaction); (h) either (A) Moody’s
has been given prior written notice of such transfer and the Rating Agency
Condition is 

 

17

 

satisfied with respect to
S&P or (B) each Rating Agency has been given prior written notice of
such transfer and such transfer is in connection with the assignment and
assumption of this Agreement without modification of its terms, other than
party names, dates relevant to the effective date of such transfer, tax
representations (provided that the representations in Part 2(a)(i) are
not modified) and any other representations regarding the status of the
substitute counterparty, notice information and account details; and (i) such
transfer otherwise complies with the terms of the Sale and Servicing Agreement.

 

“Rating Agency Condition” means, with respect to any particular
proposed act or omission to act hereunder and each Rating Agency specified in
connection with such proposed act or omission, that the party proposing such
act or failure to act must consult with each of the specified Rating Agencies
and receive from each such Rating Agency a prior written confirmation that the
proposed action or inaction would not cause a downgrade or withdrawal of the
then-current rating of any Notes.

 

“Relevant Entity” means Party A and, to the extent
applicable, a guarantor under an Eligible Guarantee.

 

“Replacement Ratings Threshold” means each of the S&P Required
Ratings Threshold and the Moody’s Second Trigger Ratings Threshold.

 

“Replacement Transaction” means, with respect to any Terminated
Transaction or group of Terminated Transactions, a transaction or group of
transactions that (a) has terms which would be effective to transfer to a
transferee all, but not less than all, of Party A’s rights, liabilities, duties
and obligations under this Agreement and all relevant Transactions, which terms
are identical to the terms of this Agreement, other than party names, dates
relevant to the effective date of such transfer, tax representations (provided
that the representations in Part 2(a)(i) are not modified) and any
other representations regarding the status of the substitute counterparty of
the type included in Part 5(m), notice information and account details,
save for the exclusion of provisions relating to Transactions that are not
Terminated Transactions, or (b) (i) would have the effect of
preserving for Party B the economic equivalent of any payment or delivery
(whether the underlying obligation was absolute or contingent and assuming the
satisfaction of each applicable condition precedent) under this Agreement in
respect of such Terminated Transaction or group of Terminated Transactions that
would, but for the occurrence of the relevant Early Termination Date, have been
required after that date, and (ii) has terms which are, in all material
respects, no less beneficial for Party B than those of this Agreement (save for
the exclusion of provisions relating to Transactions that are not Terminated
Transactions), as determined by Party B, acting in a commercially reasonable
manner.

 

“Required Ratings Downgrade Event” means either a Moody’s Second Trigger
Ratings Event or an S&P Required Ratings Downgrade Event has occurred.

 

“Required Ratings Threshold” means each of the S&P Required
Ratings Threshold and the Moody’s Second Trigger Ratings Threshold.

 

“S&P” means Standard & Poor’s Rating Services, a
division of The McGraw-Hill Companies, Inc., or any successor thereto.

 

“S&P Approved Ratings Downgrade Event” means, with respect to any Relevant
Entities that are Financial Institutions, no such Relevant Entity meets the
S&P Approved Ratings Threshold.

 

“S&P Approved Ratings Threshold” means, with respect to a Relevant
Entity, a short-term unsecured and unsubordinated debt rating from S&P of “A-1”,
or, if such entity does not have a short-term unsecured and unsubordinated debt
rating from S&P, a long-term unsecured and unsubordinated debt rating from
S&P of “A+”.

 

“S&P Required Ratings Downgrade Event” means no Relevant Entity meets the
S&P Required Ratings Threshold.

 

“S&P Required Ratings Threshold” means, (a) with respect to a
Relevant Entity that is a Financial Institution,  a short-term unsecured and unsubordinated
debt rating from S&P of at least “A-2” or, if the entity does not have a
short-term unsecured rating from S&P, a long-term unsecured and
unsubordinated debt rating from S&P of at least  “BBB+”, (b) with respect to a Relevant
Entity that is not a Financial Institution, 
a short-term unsecured and unsubordinated debt rating from S&P of at
least “A-1” or, if the entity does not have a short-term unsecured rating from
S&P, a long-term unsecured and unsubordinated debt rating from S&P of
at least  “A+”.

 

18

 

“Rating Agencies”
means, with respect to any date of determination, each of S&P or Moody’s,
to the extent that each such rating agency is then providing a rating for any
of the Notes.

 

 

19

 

 

IN WITNESS WHEREOF the
parties have executed this document on the respective dates specified below
with effect from the date specified on the first page of this document.

 

 

	
  CITIBANK, N.A.

  	
  HARLEY-DAVIDSON
  MOTORCYCLE TRUST 

  
	
   

  	
  2008-1

  
	
   

  	
   

  	
   

  
	
   

  	
  By:  Wilmington Trust Company, not in its
  Individual capacity but soley as Owner Trustee on behalf of Party B

  
	
   

  	
   

  	
   

  
	
  By:  

  	
        /s/
  Linda Cook

  	
   

  	
  By: 

  	
    /s/ Erik E.
  Overcash

  
						

 

20

(Bilateral Form)                                                                                                  (ISDA Agreements Subject to New York Law Only)

 

I S D Aâ

 

International
Swaps and Derivatives Association, Inc.

 

CREDIT SUPPORT
ANNEX

to the Schedule to the

 

ISDA Master Agreement

 

dated as of February 15, 2008

 

between

 

	
   

  CITIBANK, N.A.

  (“Party A”)

  	
      and

  	
  HARLEY-DAVIDSON

  MOTORCYCLE TRUST 2008-1

  (“Party B”)

  

 

This Annex supplements, forms part of, and is subject to, the
above-referenced Agreement, is part of its Schedule and is a Credit Support
Document under this Agreement with respect to each party.

 

Accordingly, the parties
agree as follows:—

 

Paragraph 1.  Interpretation

 

(a)          Definitions and
Inconsistency.  Capitalized
terms not otherwise defined herein or elsewhere in this Agreement have the
meanings specified pursuant to Paragraph 12, and all references in this Annex
to Paragraphs are to Paragraphs of this Annex. 
In the event of any inconsistency between this Annex and the other
provisions of this Schedule, this Annex will prevail, and in the event of any
inconsistency between Paragraph 13 and the other provisions of this Annex,
Paragraph 13 will prevail.

 

(b)          Secured Party and Pledgor.  All references in this Annex to the “Secured
Party” will be to either party when acting in that capacity and all
corresponding references to the “Pledgor” will be to the other party when acting
in that capacity; provided, however, that if Other
Posted Support is held by a party to this Annex, all references herein to that
party as the Secured Party with respect to that Other Posted Support will be to
that party as the beneficiary thereof and will not subject that support or that
party as the beneficiary thereof to provisions of law generally relating to
security interests and secured parties.

 

Paragraph
2.  Security Interest

 

Each party, as the
Pledgor, hereby pledges to the other party, as the Secured Party, as security
for its Obligations, and grants to the Secured Party a first priority
continuing security interest in, lien on and right of Set-off against all
Posted Collateral Transferred to or received by the Secured Party
hereunder.  Upon the Transfer by the
Secured Party to the Pledgor of Posted Collateral, the security interest and
lien granted hereunder on that Posted Collateral will be released immediately
and, to the extent possible, without any further action by either party.

 

 

 

 

 

Copyright ã 1994
by International Swaps and Derivatives Association, Inc.

 

 

 

 

Paragraph
3.  Credit Support Obligations

 

(a)           Delivery Amount.   Subject to Paragraphs 4 and 5, upon a demand
made by the Secured Party on or  promptly
following a Valuation Date, if the Delivery Amount for that Valuation Date
equals or exceeds the   Pledgor’s Minimum
Transfer Amount, then the Pledgor will Transfer to the Secured Party Eligible
Credit Support having a Value as of the date of Transfer at least equal to the
applicable Delivery Amount (rounded pursuant to Paragraph 13).  Unless otherwise specified in Paragraph 13,
the “Delivery Amount” applicable to the
Pledgor for   any Valuation Date will
equal the amount by which:

                

                (i)            the
Credit Support Amount

                exceeds

 

                (ii)           the
Value as of that Valuation Date of all Posted Credit Support held by the
Secured Party.

 

(b)           Return Amount.  Subject to Paragraphs 4 and 5, upon a demand
made by the Pledgor on or promptly following a Valuation Date, if the Return
Amount for that Valuation Date equals or exceeds the Secured Party’s Minimum
Transfer Amount, then the Secured Party will Transfer to the Pledgor Posted
Credit Support specified      by the
Pledgor in that demand having a Value as of the date of Transfer as close as
practicable to the applicable Return Amount (rounded pursuant to Paragraph
13).  Unless otherwise specified in
Paragraph 13, the  “Return Amount”
applicable to the Secured Party for any Valuation Date will equal the amount by
which:

 

                (i)            the
Value as of that Valuation Date of all Posted Credit Support held by the
Secured Party

                exceeds

 

                (ii)           the
Credit Support Amount.

 

“Credit Support Amount” means, unless otherwise specified in Paragraph 13,
for any Valuation Date (i) the   Secured Party’s Exposure for that Valuation
Date plus (ii) the aggregate of all Independent Amounts applicable        to the Pledgor, if any, minus (iii) all
Independent Amounts applicable to the Secured Party, if any, minus (iv) the
Pledgor’s Threshold; provided, however, that
the Credit Support Amount will be deemed to be zero whenever         the calculation of Credit Support
Amount yields a number less than zero.

 

Paragraph 4.  Conditions Precedent, Transfer Timing,
Calculations and Substitutions

 

(a)           Conditions Precedent.  Each
Transfer obligation of the Pledgor under Paragraphs 3 and 5 and of the  Secured Party under Paragraphs 3, 4(d)(ii), 5
and 6(d) is subject to the conditions precedent that:

 

(i)            no Event of Default, Potential Event
of Default or Specified Condition has occurred and is continuing with respect
to the other party; and

 

(ii)           no Early Termination Date for which
any unsatisfied payment obligations exist has occurred or been  designated as the result of an Event of
Default or Specified Condition with respect to the other party.

 

(b)          Transfer Timing.  Subject to Paragraphs 4(a) and
5 and unless otherwise specified, if a demand for the Transfer of Eligible
Credit Support or Posted Credit Support is made by the Notification Time, then
the relevant Transfer will be made not later than the close of business on the
next Local Business Day; if a demand is made    
after the Notification Time, then the relevant Transfer will be made not
later than the close of business on the   
second Local Business Day thereafter.

 

(c)          Calculations.  All calculations of Value and Exposure for
purposes of Paragraphs 3 and 6(d) will be made by the Valuation Agent as
of the Valuation Time.  The Valuation
Agent will notify each party (or the other party,      if the Valuation Agent is a party) of its
calculations not later than the Notification Time on the Local Business       Day following the applicable Valuation
Date (or in the case of Paragraph 6(d), following the date of calculation).

 

 

2

 

(d)          Substitutions.

 

(i)            Unless otherwise specified in
Paragraph 13, upon notice to the Secured Party specifying the items of Posted
Credit Support to be exchanged, the Pledgor may, on any Local Business Day,
Transfer to the Secured Party substitute Eligible Credit Support (the “Substitute
Credit Support”); and

 

(ii)           subject to Paragraph 4(a), the
Secured Party will Transfer to the Pledgor the items of Posted Credit
Support  specified by  the 
Pledgor  in  its 
notice not later than the Local Business Day following the date on  which 
the Secured Party receives the Substitute Credit Support, unless
otherwise specified in Paragraph 13 (the “Substitution Date”); provided that the Secured Party will only be obligated to
Transfer         Posted Credit Support with a Value as of the
date of Transfer of that Posted Credit Support equal to the Value as of that
date of the Substitute Credit Support.

 

 Paragraph 5.  Dispute Resolution

 

If a party (a “Disputing Party”) disputes (I) the
Valuation Agent’s calculation of a Delivery Amount or a Return Amount or (II) the
Value of any Transfer of Eligible Credit Support or Posted Credit Support, then
(1) the       Disputing Party will
notify the other party and the Valuation Agent (if the Valuation Agent is not
the other party)   not later than the
close of business on the Local Business Day following (X) the date that
the demand is made     under Paragraph 3
in the case of (I) above or (Y) the date of Transfer in the case of (II) above,
(2) subject to Paragraph 4(a), the appropriate party will Transfer the
undisputed amount to the other party not later than the       close of business on the Local Business
Day following (X) the date that the demand is made under Paragraph 3         in the case of (I) above or (Y) the
date of Transfer in the case of (II) above, (3) the parties will
consult with each  other in an attempt to
resolve the dispute and (4) if they fail to resolve the dispute by the
Resolution Time, then:

 

(i)            In 
the  case  of  a
dispute involving a Delivery Amount or Return Amount, unless otherwise
specified in Paragraph 13, the Valuation Agent will recalculate the Exposure
and the Value as of the Recalculation Date by:

 

(A)          utilizing any calculations of Exposure
for the Transactions (or Swap Transactions) that the parties have agreed are
not in dispute;

 

(B)           calculating the Exposure for the
Transactions (or Swap Transactions) in dispute by seeking four actual
quotations at mid-market from Reference Market-makers for purposes of
calculating Market Quotation, and taking the arithmetic average of those
obtained; provided that if four quotations are not
available for a particular Transaction (or Swap Transaction), then fewer than
four quotations may be used for that Transaction (or Swap Transaction); and if
no quotations are available for a particular Transaction (or Swap Transaction),
then the Valuation Agent’s original calculations will be used for that
Transaction (or Swap Transaction); and

 

(C)           utilizing the procedures specified in
Paragraph 13 for calculating the Value, if disputed, of Posted Credit Support.

 

(ii)           In 
the case of a dispute involving the Value of any Transfer of Eligible
Credit Support or Posted Credit Support, the Valuation Agent will recalculate
the Value as of the date of Transfer pursuant to Paragraph 13.

 

Following 
a  recalculation  pursuant to this Paragraph, the Valuation
Agent will notify each party (or the other party, if the Valuation Agent is a
party)  not later than the Notification
Time on the Local Business Day following the 
Resolution  Time.   The appropriate  party 
will, upon  demand  following 
that notice by the Valuation Agent or a resolution pursuant to (3) above
and subject to Paragraphs 4(a) and 4(b), make the appropriate Transfer.

 

 

3

 

 

Paragraph 6.  Holding and Using Posted Collateral

 

(a)          Care of Posted
Collateral.  Without
limiting the Secured Party’s rights under Paragraph 6(c), the Secured Party
will exercise reasonable care to assure the safe custody of all Posted
Collateral to the extent required by applicable 
law,  and  in  any  event 
the  Secured  Party 
will  be  deemed 
to  have  exercised 
reasonable care if it exercises at 
least  the same  degree of care  as it would exercise with respect to its own
property.  Except as specified  in the preceding sentence, the Secured  Party will have no duty with respect to
Posted Collateral, including, without limitation, any duty to collect any
Distributions, or enforce or preserve any rights pertaining thereto.

 

(b)          Eligibility
to Hold Posted Collateral; Custodians.

 

(i)            General.  Subject to the satisfaction of any conditions
specified in Paragraph 13 for holding Posted Collateral,  the Secured Party will be entitled to hold
Posted Collateral or to appoint an agent (a “Custodian”) to hold Posted
Collateral for the Secured Party.  Upon
notice by the Secured Party to the Pledgor of the appointment of a Custodian,
the Pledgor’s obligations to make any Transfer will be discharged  by making 
the Transfer to  that  Custodian. 
The holding of Posted Collateral by a Custodian will  be deemed 
to be the  holding of  that Posted 
Collateral by the Secured Party for which the Custodian is acting.

 

(ii)           Failure to Satisfy
Conditions.   If  the Secured Party or its Custodian fails to
satisfy any conditions for holding Posted Collateral, then upon a demand made
by the Pledgor, the Secured Party will, not later than five Local Business Days
after the demand, Transfer or cause its Custodian to Transfer all Posted
Collateral  held by  it to a Custodian  that satisfies those conditions or to the
Secured Party if it satisfies those conditions.

 

(iii)          Liability.  The Secured Party will be liable for the acts
or omissions of its Custodian to the same extent that the Secured Party would
be liable hereunder for its own acts or omissions.

 

(c)          Use
of Posted Collateral.   Unless otherwise specified in Paragraph 13 and
without limiting the rights and obligations of the parties under
Paragraphs  3,  4(d)(ii), 
5,  6(d) and 8, if the Secured
Party is not a Defaulting Party or an Affected Party with respect to a
Specified Condition and no Early Termination Date has occurred or been
designated as the result of an Event of Default or Specified Condition with
respect to the Secured Party, then the Secured 
Party will,  notwithstanding  Section  9-207 of  the New York 
Uniform Commercial  Code, have the
right to:

 

(i)            sell,  pledge, 
rehypothecate, assign, invest, use, commingle or otherwise dispose of,
or otherwise use in  its business any  Posted Collateral  it holds, 
free from any  claim or  right of any nature whatsoever of the
Pledgor, including any equity or right of redemption by the Pledgor; and

 

(ii)           register any Posted Collateral in the
name of the Secured Party, its Custodian or a nominee for either.

 

For  purposes of  the obligation  to Transfer 
Eligible Credit  Support or  Posted Credit Support pursuant to
Paragraphs  3 and  5 and any rights or remedies  authorized under this Agreement, the  Secured Party 
will be deemed to continue to hold all Posted Collateral and to receive
Distributions made thereon, regardless of whether the Secured Party has
exercised any rights with respect to any Posted Collateral pursuant to (i) or
(ii) above.

 

(d)          Distributions
and Interest Amount.

 

(i)            Distributions.  Subject to Paragraph 4(a), if the Secured
Party receives or is deemed to receive Distributions on a Local Business Day,
it will Transfer to the Pledgor not later than the following Local Business Day
any Distributions it receives or is deemed to receive to the extent that a
Delivery Amount would  not be  created or increased  by 
that Transfer, as calculated by 
the Valuation Agent  (and the date
of calculation will be deemed to be a Valuation Date for this purpose).

 

 

4

 

(ii)           Interest Amount.  Unless otherwise specified in
Paragraph 13 and subject to Paragraph 4(a), in lieu of any interest, dividends
or other amounts paid or deemed to have been paid with respect to Posted
Collateral  in the  form of Cash (all of  which may be 
retained by the Secured Party), the Secured Party will  Transfer to 
the Pledgor at the times 
specified in  Paragraph 13 the
Interest Amount to the extent that a Delivery Amount would not be created or
increased by that Transfer, as calculated by the Valuation Agent (and the date
of calculation will be deemed to be a Valuation Date for this purpose).  The Interest Amount  or portion thereof  not Transferred pursuant  to 
this Paragraph  will
constitute  Posted Collateral in the form
of Cash and will be subject to the security interest granted under Paragraph 2.

 

Paragraph 7. 
Events of Default

 

For  purposes  of  Section 5(a)(iii)(1) 
of  this 
Agreement,  an  Event 
of  Default will exist with
respect to a party if:

 

(i)            that party fails (or fails to cause
its Custodian) to make, when due, any Transfer of Eligible Collateral, Posted
Collateral or the Interest Amount, as applicable, required to be made by it and
that failure continues for two Local Business Days after notice of that failure
is given to that party;

 

(ii)           that party fails to comply with any
restriction or prohibition specified in this Annex with respect to any of the
rights specified in Paragraph 6(c) and that failure continues for five
Local Business Days after notice of that failure is given to that party; or

 

(iii)          that party fails to comply with or
perform any agreement or obligation other than those specified in  Paragraphs 
7(i) and  7(ii) and that
failure continues for 30 days after notice of that failure is given to that
party.

 

Paragraph 8. 
Certain Rights and Remedies

 

(a)          Secured Party’s Rights and Remedies. 
If at any time (1) an Event of 
Default or Specified Condition with respect to the Pledgor has occurred
and is continuing or (2) an Early Termination Date has occurred or been
designated  as the result of an Event
of  Default or Specified Condition  with respect to the  Pledgor, 
then,  unless the  Pledgor has paid  in full all of its Obligations  that are then due, the Secured  Party may 
exercise  one or more of the
following rights and remedies:

 

(i)            all rights and remedies available to
a secured party under applicable law with respect to Posted Collateral held by
the Secured Party;

 

(ii)           any other rights and remedies
available to the Secured Party under the terms of Other Posted Support, if any;

 

(iii)          the right to Set-off any amounts
payable by the Pledgor with respect to any Obligations against any Posted
Collateral or the Cash equivalent of any Posted Collateral held by the Secured
Party (or any obligation of the Secured Party to Transfer that Posted
Collateral); and

 

(iv)          the 
right  to  liquidate any Posted  Collateral held by the Secured  Party through 
one or  more public or
private  sales or other dispositions
with  such  notice, if any, as  may  be
required under applicable law, free from any claim or right of any nature
whatsoever of the Pledgor, including any equity or right of redemption by the
Pledgor (with the Secured Party having the right to purchase any or all of the
Posted Collateral to be sold) and  to
apply the proceeds (or  the  Cash equivalent thereof) from the liquidation
of the Posted Collateral to any amounts payable by  the 
Pledgor with respect to any Obligations in that order as the Secured
Party may elect.

 

Each party acknowledges and agrees that Posted Collateral in the form
of securities may decline speedily in value and 
is of  a type customarily sold
on  a 
recognized  market,  and, accordingly, the Pledgor is not entitled
to prior notice  of  any 
sale of that Posted Collateral by the Secured Party, except any notice
that is required under applicable law and cannot be waived.

 

 

5

 

(b)          Pledgor’s Rights and
Remedies.   If at any time
an Early Termination Date has occurred or been designated  as the result of an Event of Default or
Specified Condition with respect to the Secured Party, then (except  in the 
case of an Early Termination Date relating to less than all Transactions
(or Swap Transactions) where  the Secured
Party has paid in full all of its obligations that are then due under Section 6(e) of
this Agreement):

 

(i)            the Pledgor may exercise all rights
and remedies available to a pledgor under applicable law with respect to Posted
Collateral held by the Secured Party;

 

(ii)           the Pledgor may exercise any other
rights and remedies available to the Pledgor under the terms of Other Posted
Support, if any;

 

(iii)          the Secured Party will be obligated
immediately to Transfer all Posted Collateral and the Interest Amount to the Pledgor;
and

 

(iv)          to 
the  extent  that 
Posted  Collateral  or  the
Interest  Amount  is  not
so  Transferred  pursuant 
to  (iii) above, the Pledgor
may:

 

(A)          Set-off any amounts payable by the
Pledgor with respect to any Obligations against any Posted Collateral or the
Cash equivalent of any Posted Collateral held by the Secured Party (or any
obligation of the Secured Party to Transfer that Posted Collateral); and

 

(B)           to the extent that the Pledgor does
not Set-off under (iv)(A) above, withhold payment of any remaining amounts
payable by the Pledgor with respect to any Obligations, up to the Value of any
remaining  Posted Collateral held by the
Secured Party, until that Posted Collateral is Transferred to the Pledgor.

 

(c)          Deficiencies and Excess
Proceeds.  The Secured
Party will Transfer to the Pledgor any proceeds and Posted Credit Support
remaining after liquidation, Set-off and/or application under Paragraphs 8(a) and
8(b) after satisfaction in full of all amounts payable by the Pledgor with
respect to any Obligations; the Pledgor in all events will remain liable for
any amounts remaining unpaid after any liquidation, Set-off and/or application
under Paragraphs 8(a) and 8(b).

 

(d)          Final Returns.  When 
no amounts are or thereafter may become payable by the Pledgor with
respect to any Obligations (except for any potential liability under Section 2(d) of
this Agreement), the Secured Party will Transfer to the Pledgor all Posted
Credit Support and the Interest Amount, if any.

 

Paragraph 9. 
Representations

 

Each party represents to the other party (which representations will be
deemed to be repeated as of each date on which it, as the Pledgor, Transfers
Eligible Collateral) that:

 

(i)            it has the power to grant a security
interest in and lien on any Eligible Collateral it Transfers as the Pledgor and
has taken all necessary actions to authorize the granting of that security
interest and lien;

 

(ii)           it is the sole owner of or otherwise
has the right to Transfer all Eligible Collateral it Transfers to the Secured
Party hereunder, free and clear of any security interest, lien, encumbrance or
other restrictions other than the security interest and lien granted under
Paragraph 2;

 

(iii)          upon the Transfer of any Eligible
Collateral to the Secured Party under the terms of this Annex, the Secured
Party will have a valid and perfected first priority security interest  therein (assuming that any central clearing
corporation or any third-party financial intermediary or other entity not
within the control of the Pledgor involved in the Transfer of that Eligible
Collateral gives the notices and takes the action required of it under
applicable law for perfection of that interest); and

 

(iv)          the performance by it of its
obligations under this Annex will not result in the creation of any
security  interest,  lien or other encumbrance  on any 
Posted Collateral  other  than 
the security interest and lien granted under Paragraph 2.

 

 

6

 

Paragraph 10. 
Expenses

 

(a)           General.  Except as otherwise provided in Paragraphs 10(b) and
10(c), each party will pay its own costs and 
expenses in  connection with
performing its obligations under this Annex and neither party will be liable
for any costs and expenses incurred by the other party in connection herewith.

 

(b)           Posted Credit Support.  The Pledgor will promptly pay when due all
taxes, assessments or charges of any nature 
that  are imposed  with 
respect  to  Posted 
Credit  Support  held by the Secured Party upon becoming aware
of the same, regardless of whether any portion of that Posted Credit Support is
subsequently disposed of under Paragraph 
6(c),  except  for 
those taxes, assessments and charges that result from the exercise of
the Secured Party’s rights under Paragraph 6(c).

 

(c)           Liquidation/Application of Posted Credit Support.  All reasonable costs and expenses incurred by
or on behalf  of  the Secured Party or the Pledgor in
connection with the liquidation and/or application of any Posted Credit Support
under Paragraph 8 will be payable, on demand and pursuant to the Expenses Section of
this Agreement, by the Defaulting Party or, if there is no Defaulting Party,
equally by the parties.

 

Paragraph 11. 
Miscellaneous

 

(a)           Default
Interest.  A Secured Party
that fails to make, when due, any Transfer of Posted Collateral or the
Interest  Amount will be obligated  to pay the Pledgor (to the extent permitted
under applicable law) an amount equal to interest at the Default Rate
multiplied by the Value of the items of property that were required to be
Transferred,  from (and  including) 
the date that Posted Collateral or Interest Amount was required to be
Transferred to (but excluding) the date of Transfer of that Posted Collateral
or Interest  Amount.  This interest will be calculated on the basis
of daily compounding and the actual number of days elapsed.

 

(b)           Further
Assurances.  Promptly
following a demand made by a party, the other party will execute, deliver, file
and record  any financing statement,
specific assignment or other document and take any other action that may be
necessary or desirable and  reasonably
requested  by  that party to create, preserve, perfect or validate
any security interest or lien granted under Paragraph 2, to enable that party
to exercise or enforce its rights under this Annex  with respect to Posted Credit Support or  an 
Interest Amount  or  to effect or document a release of a security
interest on Posted Collateral or an Interest Amount.

 

(c)           Further
Protection.  The Pledgor
will promptly give notice to the Secured Party of, and defend against, any
suit, action, proceeding or lien that involves Posted Credit Support
Transferred by the Pledgor or that could adversely affect the security interest
and lien  granted  by  it
under Paragraph 2, unless that suit, action, proceeding or lien results from
the exercise of the Secured Party’s rights under Paragraph 6(c).

 

(d)           Good
Faith and Commercially Reasonable Manner.  Performance of all obligations under this
Annex, including, but not  limited  to, 
all  calculations,  valuations 
and determinations made by either party, will be made in good faith and
in a commercially reasonable manner.

 

(e)           Demands
and Notices.  All demands
and notices made by a party under this Annex will be made as specified in the
Notices Section of this Agreement, except as otherwise provided in
Paragraph 13.

 

(f)            Specifications of Certain Matters.  Anything 
referred to  in  this 
Annex as being specified in Paragraph 13 also may be specified in one or
more Confirmations or other documents and this Annex will be construed
accordingly.

 

 

7

 

Paragraph 12. 
Definitions

 

As used in this Annex:—

 

“Cash” means the lawful
currency of the United States of America.

 

“Credit Support Amount” has
the meaning specified in Paragraph 3.

 

“Custodian”
has the meaning specified in Paragraphs 6(b)(i) and 13.

 

“Delivery Amount” has the
meaning specified in Paragraph 3(a).

 

“Disputing Party” has the meaning specified in Paragraph 5.

 

“Distributions” means with
respect to Posted Collateral other than Cash, all principal, interest and other
payments and  distributions of cash or
other property with respect thereto, regardless of whether the Secured Party
has disposed  of that  Posted Collateral under Paragraph 6(c).  Distributions will not include any item of
property acquired by the Secured Party upon any disposition or  liquidation of  Posted Collateral or, with respect to any
Posted Collateral in the form of Cash, any distributions on that collateral,
unless otherwise specified herein.

 

“Eligible Collateral” means,
with  respect  to a 
party,  the  items, 
if  any,  specified 
as  such  for 
that  party  in Paragraph 13.

 

“Eligible Credit Support”
means Eligible Collateral and Other Eligible Support.

 

“Exposure”  means 
for any Valuation  Date  or 
other date  for  which 
Exposure  is  calculated 
and  subject  to Paragraph 
5  in  the 
case  of  a 
dispute,  the  amount, 
if  any,  that 
would  be  payable to a party that is the Secured Party
by the other party (expressed as a positive number) or by a party that is the
Secured Party to the other party (expressed as a negative number) pursuant to Section 6(e)(ii)(2)(A) of
this Agreement as if all Transactions (or Swap Transactions)  were 
being  terminated as of the relevant
Valuation Time;  provided  that Market Quotation will be
determined by the Valuation  Agent  using 
its estimates  at mid-market of
the amounts that would be paid for Replacement Transactions (as that term is
defined in the definition of “Market Quotation”).

 

“Independent Amount” means,
with respect to a party,  the  amount 
specified  as  such 
for  that party  in Paragraph 13; if no amount is specified,
zero.

 

“Interest Amount” means,  with respect to an Interest Period, the
aggregate sum of the amounts of interest calculated for each day in  that 
Interest Period on the principal 
amount of Posted Collateral in the form of Cash held by the Secured
Party on that day, determined by the Secured Party for each such day as
follows:

 

(x)            the
amount of that Cash on that day; multiplied by

 

(y)            the
Interest Rate in effect for that day; divided by

 

(z)            360.

 

“Interest Period” means  the period 
from (and including) the  last
Local Business  Day on which an Interest
Amount was Transferred (or, if no Interest Amount has yet been Transferred, the
Local Business Day on which Posted 
Collateral in the form of Cash was 
Transferred to or received by the 
Secured  Party) to  (but 
excluding)  the Local Business Day
on which the current Interest Amount is to be Transferred.

 

“Interest Rate” means the rate
specified in Paragraph 13.

 

“Local Business Day”, unless
otherwise specified in Paragraph 13, has the meaning specified in the
Definitions Section  of  this  Agreement, except that  references to a  payment 
in clause  (b)  thereof  will 
be deemed to  include  a Transfer under this Annex.

 

 

8

 

“Minimum Transfer Amount”
means, with respect to a party, the amount specified as such for that party in
Paragraph 13; if no amount is specified, zero.

 

“Notification Time” has the
meaning specified in Paragraph 13.

 

“Obligations” means, with
respect to a party, all present and future obligations of that party under this
Agreement and any additional obligations specified for that party in Paragraph
13.

 

“Other Eligible Support”
means, with respect to a party, the items, if any, specified as such for that
party in Paragraph 13.

 

“Other Posted Support”
means  all Other Eligible Support
Transferred to the Secured Party that remains in effect for the benefit of that
Secured Party.

 

“Pledgor” means either party,
when that party (i) receives a demand for or is required to Transfer
Eligible Credit Support under Paragraph 3(a) or (ii) has Transferred
Eligible Credit Support under Paragraph 3(a).

 

“Posted Collateral” means all
Eligible Collateral, other property, Distributions, and all proceeds thereof
that have been  Transferred  to  or  received by the Secured Party under this
Annex and not Transferred to the Pledgor pursuant to Paragraph 3(b), 4(d)(ii) or
6(d)(i) or released by the Secured Party under Paragraph 8.  Any Interest Amount or portion thereof not
Transferred pursuant to Paragraph 6(d)(ii) will constitute Posted
Collateral in the form of Cash.

 

“Posted Credit Support” means
Posted Collateral and Other Posted Support.

 

“Recalculation Date”
means  the Valuation  Date that 
gives rise to the dispute under Paragraph 5; provided,
however,  that  if a 
subsequent Valuation Date  occurs
under  Paragraph  3 prior to the  resolution of the dispute, then the “Recalculation
Date” means the most recent Valuation Date under Paragraph 3.

 

“Resolution Time” has the
meaning specified in Paragraph 13.

 

“Return Amount” has the
meaning specified in Paragraph 3(b).

 

“Secured Party” means either
party, when that  party (i)  makes
a  demand for or is entitled to receive
Eligible Credit Support under Paragraph 3(a) or (ii) holds or is
deemed to hold Posted Credit Support.

 

“Specified Condition” means,
with respect to a party, any event specified as such for that party in
Paragraph 13.

 

“Substitute Credit Support”
has the meaning specified in Paragraph 4(d)(i).

 

“Substitution Date” has the
meaning specified in Paragraph 4(d)(ii).

 

“Threshold” means, with
respect to a party, the amount specified as such for that party in Paragraph
13; if no amount is specified, zero.

 

“Transfer” means, with  respect to any Eligible  Credit Support, Posted  Credit 
Support  or  Interest 
Amount, and in accordance with the instructions of the Secured Party,
Pledgor or Custodian, as applicable:

 

(i)                in  the 
case of  Cash,  payment or 
delivery  by  wire transfer 
into  one or more bank
accounts  specified  by the recipient;

 

(ii)               in  the 
case of  certificated  securities that cannot  be paid or delivered by book-entry,  payment 
or  delivery in appropriate
physical form to the recipient or its account accompanied by any duly executed
instruments of transfer, assignments in blank, transfer tax stamps and any
other documents necessary to constitute a legally valid transfer to the
recipient.

 

(iii)              in  the 
case  of  securities that can  be 
paid  or  delivered by book-entry, the giving of
written instructions to  the  relevant 
depository  institution  or 
other entity specified  by  the recipient,  together 
with a  written  copy 
thereof  to  the 
recipient,  sufficient  if 
complied with to result in a legally effective transfer of the relevant
interest to the recipient; and

 

(iv)             in
the case of Other Eligible Support or Other Posted Support, as specified in
Paragraph 13.

 

 

9

 

 

“Valuation Agent” has the
meaning specified in Paragraph 13.

 

“Valuation Date” means each
date specified in or otherwise determined pursuant to Paragraph 13.

 

“Valuation Percentage” means,
for any item of Eligible Collateral, the percentage specified in Paragraph 13.

 

“Valuation Time” has the
meaning specified in Paragraph 13.

 

“Value”  means 
for  any  Valuation 
Date  or  other 
date  for  which 
Value is calculated and subject to Paragraph 5 in the case of a dispute,
with respect to:

 

(i)            Eligible
Collateral or Posted Collateral that is:

 

(A)                              Cash, the amount thereof; and

 

(B)                                a security, the bid price obtained by the
Valuation Agent multiplied by the applicable Valuation Percentage, if any:

 

(ii)           Posted
Collateral that consists of items that are not specified as Eligible
Collateral, zero; and

 

(iii)          Other Eligible Support and Other
Posted Support, as specified in Paragraph 13.

 

 

10

 

Paragraph 13. Elections and
Variables

 

(a)                                  Security Interest for “Obligations”.  The term “Obligations” shall have the meaning
set forth in Paragraph 12.

 

(b)                                 Credit Support Obligations.

 

(i)                                   Delivery Amount, Return Amount
and Credit Support Amount; Addition to Paragraph 3.

 

(A)                              “Delivery Amount”
has the meaning specified in Paragraph 3(a), except that:

 

(I)                                    the words “upon a
demand made by the Secured Party on or promptly following a Valuation Date”
shall be deleted and replaced with the words “not later than the close of
business on each Valuation Date”;

 

(II)                                the sentence
beginning “Unless otherwise specified in Paragraph 13” and ending “(ii) the
Value as of that Valuation Date of all Posted Credit Support held by the
Secured Party.” shall be deleted in its entirety and replaced with the
following:

 

“The “Delivery Amount” applicable to the Pledgor for any Valuation Date
will equal the greater of:

 

(1)                                  the amount by which (a) the
Moody’s Credit Support Amount for such Valuation Date exceeds (b) the
Moody’s Value, as of such Valuation Date, of all Posted Credit Support held by
the Secured Party; and

 

(2)                                  the amount by which (a) the
S&P Credit Support Amount for such Valuation Date exceeds (b) the
S&P Value, as of such Valuation Date, of all Posted Credit Support held by
the Secured Party”; and

 

(III)                            if, on any Valuation
Date, the Delivery Amount equals or exceeds the Pledgor’s Minimum Transfer
Amount, the Pledgor will Transfer to the Secured Party sufficient Eligible
Credit Support to ensure that, immediately following such transfer, the
Delivery Amount shall be zero.

 

(B)                                “Return Amount” has
the meaning specified in Paragraph 3(b), except that:

 

(I)                                    the sentence
beginning “Unless otherwise specified in Paragraph 13” and ending “(ii) the
Credit Support Amount.” shall be deleted in its entirety and replaced with the
following:

 

“The “Return Amount” applicable to the Secured Party for any Valuation
Date will equal the lesser of:

 

(1)                                  the amount by which (a) the
Moody’s Value, as of such Valuation Date, of all Posted Credit Support held by
the Secured Party exceeds (b) the Moody’s Credit Support Amount for such
Valuation Date; and

 

(2)                                  the amount by which (a) the
S&P Value, as of such Valuation Date, of all Posted Credit Support held by
the Secured Party exceeds (b) the S&P Credit Support Amount for such
Valuation Date”; and

 

(II)                                in no event shall
the Secured Party be required to Transfer any Posted Credit Support under
Paragraph 3(b) if, immediately following such transfer, the Delivery
Amount would be greater than zero.

 

(C)                                Paragraph 4(b) is
hereby amended by the insertion of the words “(i) in respect of a Transfer
pursuant to Paragraph 3(b),” immediately prior to the words “if a demand for”
and the

 

11

 

insertion of the words “; and (ii) in respect of a Transfer
pursuant to Paragraph 3(a), the relevant Transfer will be made not later than
the close of business on the Local Business Day following the Valuation Date”
immediately prior to the period.

 

(D)                               The term “Credit
Support Amount”  shall not apply.

 

(E)                                 Moody’s Credit Support Amount means, for any Valuation Date:

 

(i)                                     if the Moody’s
Threshold for such Valuation Date is zero and either (a) a Moody’s Second
Trigger Ratings Event is not continuing or (b) a Moody’s Second Trigger
Ratings Event is continuing but less than 30 Local Business Days have elapsed
since such Moody’s Second Trigger Ratings Event first occurred, an amount in
USD equal to the greater of (1) the sum of (a) the Secured Party’s
Exposure and (b) the aggregate of First Trigger Collateral Amounts (as
defined below) for all Transactions hereunder and (2) zero;

 

(ii)                                  so long as a Moody’s
Second Trigger Ratings Event has occurred and is continuing and 30 or more
Local Business Days have elapsed since such Moody’s Second Trigger Ratings
Event first occurred, an amount in USD equal to the greatest of (1) the
sum of (a) the Secured Party’s Exposure and (b) the aggregate of
Second Trigger Collateral Amounts (as defined below) for all Transactions
hereunder, (2) an aggregate amount equal to the sum of the Floating Amount
payable by Party A pursuant to each Transaction hereunder in respect of the
first Floating Rate Payer Payment Date scheduled to occur on or after such
Valuation Date and (3) zero; or

 

(iii)                               if the Moody’s
Threshold for such Valuation Date is infinity, zero.

 

(F)                                 S&P
Credit Support Amount means, for any Valuation Date:

 

(i)                                     if the S&P
Threshold for such Valuation Date is zero and an S&P Required Ratings
Downgrade Event has not been continuing for 10 or more Local Business Days, an
amount equal to the Secured Party’s Exposure;

 

(ii)                                  if the S&P
Threshold for such Valuation Date is zero and an S&P Required Ratings
Downgrade Event has been continuing for at least 10 Local Business Days, an
amount equal to 125% of the Secured Party’s Exposure; or

 

(iii)                               if the S&P
Threshold is infinity, zero.

 

(G)                                Reserved.

 

(H)                               Certain
definitions:

 

First Trigger Collateral Amount means, in respect of each
Transaction hereunder on any date, an amount in USD equal to the Notional
Amount of such Transaction on such date multiplied by the Applicable Percentage
set forth in the table in Exhibit A hereto.

 

Moody’s Value  means, on any date and with respect to any
Eligible Collateral, the bid price obtained by the Valuation Agent multiplied
by the applicable Moody’s Valuation Percentage.

 

S&P Value  means, on any date
and with respect to any Eligible Collateral other than cash, the bid price
obtained by the Valuation Agent, or in the case of Cash the amount thereof,
multiplied by the applicable S&P Valuation Percentage.

 

Second Trigger Collateral Amount means, in respect of each
Transaction hereunder on any date, an amount in USD equal to the Notional
Amount of such Transaction on such date multiplied by the Applicable Percentage
set forth in the applicable table in Exhibit B hereto.

 

                                                (ii)                                  Eligible Collateral.  On any date, the following items will qualify as “Eligible Collateral” for

 

12

 

Party A (all Eligible Collateral to be denominated in USD):

 

(A)                               Valuation
Percentage S&P

 

	
   

  	
   

  	
   

  	
  S&P

  Approved

  Ratings

  Downgrade

  Event

  	
   

  	
  S&P

  Required

  Ratings

  Downgrade

  Event

  	
   

  
	
  (i)

  	
  Cash

  	
   

  	
  100

  	
  %

  	
  80

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (ii)

  	
  Coupon-bearing negotiable debt obligations issued
  after 18 July 1984 by the U.S. Treasury Department having a residual
  maturity on such date of less than 5 years

  	
   

  	
  98

  	
  %

  	
  78.4

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (iii)

  	
  Coupon-bearing negotiable debt obligations issued
  after 18 July 1984 by the U.S. Treasury Department having a residual
  maturity on such date equal to or greater than 5 years but less than or equal
  to 10 years

  	
   

  	
  92.6

  	
  %

  	
  74.1

  	
  %

  

 

S&P Valuation
Percentage means, with respect
to a Valuation Date and each instrument in the above table (i) so long as
the S&P Threshold for such Valuation Date is zero and an S&P Required
Ratings Downgrade Event has not been continuing for 10 or more Local Business
Days, the corresponding percentage for such instrument in the column headed “S&P
Approved Ratings Downgrade Event” or (ii) so long as the S&P Threshold
for such Valuation Date is zero and an S&P Required Ratings Downgrade Event
has been continuing for at least 10 Local Business Days, the corresponding
percentage in the column headed “S&P Required Ratings Downgrade Event.”

 

(B)                               Valuation
Percentage Moody’s

 

	
  INTRUMENT

  	
   

  	
  Moody’s First Trigger

  Ratings Event

  	
   

  	
  Moody’s Second Trigger

  Ratings Event

  	
   

  
	
  U.S. Dollar Cash

  	
   

  	
  100%

  	
   

  	
  100%

  	
   

  
	
  Fixed-Rate
  Negotiable treasury Debt Issued by the U.S. Treasury Department with
  Remaining Maturity

  	
   

  
	
  <1 Year

  	
   

  	
  100%

  	
   

  	
  100%

  	
   

  
	
  1 to 2 years

  	
   

  	
  100%

  	
   

  	
  99%

  	
   

  
	
  2 to 3 years

  	
   

  	
  100%

  	
   

  	
  98%

  	
   

  
	
  3 to 5 years

  	
   

  	
  100%

  	
   

  	
  97%

  	
   

  
	
  5 to 7 years

  	
   

  	
  100%

  	
   

  	
  96%

  	
   

  
	
  7 to 10 years

  	
   

  	
  100%

  	
   

  	
  94%

  	
   

  
	
  Floating-Rate
  Negotiable treasury Debt Issued by the U.S. Treasury Department 

  	
   

  
	
  All Maturities

  	
   

  	
  100%

  	
   

  	
  99%

  	
   

  

 

Moody’s Valuation Percentage means, with
respect to a Valuation Date and each instrument in the above table (i) so
long as the Moody’s Threshold for such Valuation Date is zero and either (A) a
Moody’s Second Trigger Ratings Event is not continuing or (B) a Moody’s
Second Trigger Ratings Event is continuing but less than 30 Local Business Days
have elapsed since such Moody’s Second Trigger Ratings Event first occurred,
the corresponding percentage for such instrument in the column headed “Moody’s
First Trigger Ratings Event” or (ii) so long as (A) a Moody’s Second
Trigger Ratings Event has occurred and is continuing and (B) at least 30
Local Business Days have elapsed since such Moody’s Second Trigger Ratings
Event first occurred, the corresponding percentage in the column headed “Moody’s
Second Trigger Ratings Event.”

 

                                                (iii)                               Other Eligible Support.  There shall
be no “Other Eligible Support” for either party for purposes of this Annex.

 

13

 

                                                (iv)                              Thresholds.

 

                                                                                              (A) “Moody’s Threshold” 
means, with respect to Party A and any Valuation Date, if a Moody’s
First Trigger Ratings Event has occurred and is continuing and such Moody’s
First Trigger Ratings Event has been continuing for at least 30 Local Business
Days or since this Annex was executed, zero; otherwise, infinity.

 

(B) “S&P Threshold” means, with
respect to Party A and any Valuation Date, if (i) an S&P Approved
Ratings Downgrade Event has been continuing for at least 10 Local Business Days
or since this Annex was executed, or (ii) if an S&P Required Ratings
Downgrade Event has been continuing for at least 10 Local Business Days, zero;
otherwise, infinity.

 

(C) “Minimum Transfer Amount” means
USD 100,000 with respect to Party A and Party B;  provided, however, that if the aggregate and
Note Principal Balance of Notes rated by S&P ceases to be more than USD
50,000,000 the “Minimum Transfer Amount”
shall be USD 50,000.

 

(D) Rounding.  The
Delivery Amount will be rounded up to the nearest integral multiple of USD
10,000.  The Return Amount will be
rounded down to the nearest integral multiple of USD 10,000.

 

(c)                                  Valuation and Timing.

 

(i) “Valuation Agent” means Party A.  The Valuation Agent’s calculations shall be
made in accordance with standard market practices using commonly accepted third
party sources such as Bloomberg or Reuters.

 

(ii) “Valuation Date” means the
last Local Business Day of each calendar week.

 

(iii) “Valuation Time” means, with respect to the determination of
Exposure, Value of Eligible Credit Support and Posted Credit Support, the close
of business on the Local Business Day immediately before the Valuation Date or
date of calculation, as applicable; provided that
the calculations of Value and Exposure will be made as of approximately the
same time on the same date.

 

(iv) “Notification Time” means 11:00 a.m., New York time on a
Valuation Date; provided, however, that, notwithstanding Paragraph 4(b), with
regard to Transfers of Eligible Credit Support or Posted Credit Support in the
form of Cash, if a request for Transfer is made by the Notification Time, then
the relevant Transfer shall be made not later than the close of business on the
day on which such request is received, or, if such day is not a Local Business
Day or, if such request is received after the Notification Time, not later than
the close of business on the next Local Business Day.  Notwithstanding anything herein to the
contrary, with regard to Transfers of Independent Amounts, the relevant
Transfer shall be made by the close of business on the second Local Business
Day following the Trade Date of the applicable Transaction.

 

(d)                                 Conditions Precedent and Secured
Party’s Rights and Remedies. 
There shall be no “Specified Condition” with respect to Party A or Party
B.

 

(e)                                  Substitution.

 

                                                (i) “Substitution
Date” has the meaning specified in Paragraph 4(d)(ii).

 

(f)                                    Dispute Resolution.

 

                                                (i) “Resolution
Time” means 1:00 p.m., New York time, on the Local Business Day
following the date on which notice is given that gives rise to a dispute under
Paragraph 5.

 

                                                (ii) Value.  For the purpose of Paragraphs 5(i)(C) and
5(ii), the Valuation Agent will determine the Value of Eligible Credit Support
or Posted Credit Support consisting of securities based upon the bid price
quotations of any generally recognized dealer (which may include an affiliate
of the Valuation Agent), and

 

14

 

adding thereto any
interest accrued but not paid to any person with respect to such securities
through the day on which the determination is made and multiplying the sum by
the applicable Valuation Percentage, if any.

 

                                                (iii) Alternative.  The provisions of Paragraph 5 will apply,
provided, however, that in the event of a dispute regarding the Value of
securities which constitute  Eligible
Credit Support or Posted Credit Support, the Disputing Party may submit mid
market quotations from two other recognized dealers in which case the Value of
such securities shall be the mean of the two quotations submitted by the
Disputing Party.

 

(g)                                 Holding and Using Posted
Collateral.

 

                                                (i)  Eligibility
to Hold Posted Collateral; Custodians.  The Indenture Trustee will be entitled to
hold Posted Collateral pursuant to Paragraph 6(b), such Posted Collateral to be
held in a segregated account.  If at any
time the Indenture Trustee does not have a short-term unsecured and
unsubordinated debt rating of “A-1” from S&P, the Indenture Trustee shall,
within 60 calendar days of such rating downgrade, be replaced as custodian by
an entity with a short-term unsecured and unsubordinated debt rating of “A-1”
from S&P.

 

                                                (ii)  Use of
Posted Collateral.  The
provisions of Paragraph 6(c) will not apply to Party B; provided, however,
that if Party A delivers Posted Collateral in book-entry form, then Paragraph
6(c)(ii) will apply to Party B and its Custodian, and Party B and its
Custodian shall have the rights specified in Paragraph 6(c)(ii).

 

(h)                                 Distributions and Interest Amount.

 

                                                (i)                                     Interest Rate. 
The “Interest Rate” will be the actual rate earned on Posted Collateral
in the form of Cash that is held by Party B or its Custodian. Posted Collateral
in the form of Cash shall be invested in such overnight (or redeemable within
two Local Business Days of demand) Eligible Investments (as defined in the Sale
and Servicing Agreement) rated at least (x) AAAm or AAAm-G by S&P and (y) Prime-1
by Moody’s or Aaa by Moody’s, as directed by Party A unless (x) an Event
of Default or an Additional Termination Event has occurred with respect to
which Party A is the defaulting or sole Affected Party or (y) an Early
Termination Date has been designated, in which case such investment shall be
uninvested).  Gains and losses incurred
in respect of any investment of Posted Collateral in the form of Cash in
Eligible Investments as directed by Party A shall be for the account of Party
A.  If no investment direction is
received, the Posted Collateral in the form of Cash shall be held uninvested.

 

                                                (ii)                                  Transfer of Interest Amount.  Transfers of
the Interest Amount will be made in arrears on the last Local Business Day of
each calendar month,  provided that Party B shall not be obliged to so transfer
any Interest Amount unless and until it has earned and received such interest

 

                                                (iii)                               Alternative to Interest Amount.  The
provisions of Paragraph 6(d)(ii) will apply, provided, however, that the
Interest Amount will compound daily.

 

                                                (iv)                              Distributions. Paragraph 6(d)(i) shall be deleted in its entirety and replaced
with the following:

 

“Distributions. Subject
to Paragraph 4(a), if Party B receives Distributions on a Local Business Day,
it will Transfer to Party A not later than the following Local Business Day any
Distributions it receives to the extent that a Delivery Amount would not be
created or increased by that Transfer, as calculated by the Valuation Agent
(and the date of calculation will be deemed to be a Valuation Date for this
purpose).”

 

(i)                                     Additional Representations.

 

Party A represents to
Party B (which representation will be deemed to be repeated as of each
date on which it, as the Pledgor, Transfers Eligible Collateral) that:

 

                                                (i) no consent, approval or other
authorization of any governmental authority is required in connection with the
Transfer of Eligible Collateral hereunder.

 

15

 

                                                (ii) Its assets exceed its
liabilities.

 

(j)                                     Other Eligible Support and Other
Posted Support.

 

                                                (i)                                     “Value” with
respect to Other Eligible Support and Other Posted Support shall not be
applicable.

 

                                                (ii)                                  “Transfer” with
respect to Other Eligible Support and Other Posted Support shall not be applicable.

 

(k)                                  Demands and Notices.

 

All demands,
specifications and notices under this Annex will be made pursuant to the
Notices Section of this Annex, provided, that the address for Party A for
such purposes shall be:

 

Citibank N.A.

Collateral
Management Group

333 West 34th Street, 2nd FL

New York, NY  10001

Telephone no.
(212) 615-8406

Facsimile no.
(212) 994-0727;

 

and the address for Party
B for such purposes shall be as set forth in the Schedule to the Master
Agreement.

 

(l)                                     Other Provisions.

 

                                                (i)                                     Actions Hereunder. 
Either party may take any actions hereunder, including liquidation
rights, through its Custodian, and, in the case of Party A, through Salomon
Smith Barney Inc. or any successor, as agent for Party A.

 

                                                (ii)                                        Events of Default. 
Paragraph 7 shall be deleted and replaced in its entirety by the
following paragraph:

 

                                                                                                “For the purposes of Section 5(a)(iii)(1) of
this Agreement, an Event of Default will exist with respect to a party if that
party fails (or fails to cause its Custodian) to make, when due, any Transfer
of Eligible Collateral, Posted Collateral, any Distributions or the Interest
Amount, as applicable, required to be made by it and that failure continues for
one Local Business Day after the notice of that failure is given to that party,
except that (A) if such failure would constitute an Additional Termination
Event under another provision of this Agreement and (B) no more than 30
Local Business Days have elapsed since the last time that Party A satisfied the
Moody’s Second Trigger Ratings Threshold, then such failure shall be an
Additional Termination Event and not an Event of Default”.

 

(iiii)                            Agreement as to Single Secured
Party and Pledgor

 

                                                Party A and Party B agree that,
notwithstanding anything to the contrary in the recital to this Annex,
Paragraph 1(b), Paragraph 2 or the definitions in Paragraph 12, (a) the
term “Secured Party” as used in this Annex means only Party B, (b) the
term “Pledgor” as used in this Annex means only Party A, (c) only Party A
makes the pledge and grant in Paragraph 2, the acknowledgment in the final
sentence of Paragraph 8(a) and the representations in Paragraph 9 and (d) only
Party A will be required to make Transfers of Eligible Credit Support
hereunder.

 

(iv)                              Expenses.

 

Notwithstanding
Paragraph 10(a), the Pledgor will be responsible for, and will reimburse the
Secured Party for, all costs involved in the Transfer and maintenance of
Eligible Collateral from the Pledgor to the Secured Party (or any agent or
custodian for safekeeping of the Secured Party) or from the Secured Party (or
any agent or

 

16

 

custodian for
safekeeping of the Secured Party ) to the Pledgor pursuant to paragraph 4(d).

 

IN WITNESS WHEREOF, the
parties hereto have executed this Annex as of the date first above written.

 

	
  CITIBANK, N.A.

  	
   

  	
   

  	
   

  	
   

  	
  HARLEY-DAVIDSON MOTORCYCLE

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  TRUST 2008-1

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  By: Wilmington Trust
  Company, not in its

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Individual capacity but
  solely as Owner Trustee on behalf of Party B

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Linda Cook

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  /s/
  Erik E. Overcash

  
	
  Name:
  Linda Cook

  	
   

  	
   

  	
   

  	
   

  	
  Name:
  Erik E. Overcash

  
	
  Title:   Vice President

  	
   

  	
   

  	
   

  	
   

  	
  Title:
  Financial Services Officer

  
								

 

17

 

EXHIBIT A

 

FIRST
TRIGGER COLLATERAL AMOUNT APPLICABLE PERCENTAGES

 

	
   

  	
   

  	
  Interest Rate Hedges

  	
   

  	
  Currency Hedges

  	
   

  
	
   

  	
   

  	
  Valuation Dates:

  	
   

  
	
  Weighted Average Life of Hedge
  in Years

  	
   

  	
  Daily

  	
   

  	
  Weekly

  	
   

  	
  Daily

  	
   

  	
  Weekly

  	
   

  
	
  Less than 1 year

  	
   

  	
  0.15

  	
  %

  	
  0.25

  	
  %

  	
  1.10

  	
  %

  	
  2.20

  	
  %

  
	
  Equal to or greater than 1 year but less than 2
  years

  	
   

  	
  0.30

  	
  %

  	
  0.50

  	
  %

  	
  1.20

  	
  %

  	
  2.40

  	
  %

  
	
  Equal to or greater than 2 years but less than 3
  years

  	
   

  	
  0.40

  	
  %

  	
  0.70

  	
  %

  	
  1.30

  	
  %

  	
  2.60

  	
  %

  
	
  Equal to or greater than 3 years but less than 4
  years

  	
   

  	
  0.60

  	
  %

  	
  1.00

  	
  %

  	
  1.40

  	
  %

  	
  2.80

  	
  %

  
	
  Equal to or greater than 4 years but less than 5
  years

  	
   

  	
  0.70

  	
  %

  	
  1.20

  	
  %

  	
  1.50

  	
  %

  	
  2.90

  	
  %

  
	
  Equal to or greater than 5 years but less than 6
  years

  	
   

  	
  0.80

  	
  %

  	
  1.40

  	
  %

  	
  1.60

  	
  %

  	
  3.10

  	
  %

  
	
  Equal to or greater than 6 years but less than 7
  years

  	
   

  	
  1.00

  	
  %

  	
  1.60

  	
  %

  	
  1.60

  	
  %

  	
  3.30

  	
  %

  
	
  Equal to or greater than 7 years but less than 8
  years

  	
   

  	
  1.10

  	
  %

  	
  1.80

  	
  %

  	
  1.70

  	
  %

  	
  3.40

  	
  %

  
	
  Equal to or greater than 8 years but less than 9
  years

  	
   

  	
  1.20

  	
  %

  	
  2.00

  	
  %

  	
  1.80

  	
  %

  	
  3.60

  	
  %

  
	
  Equal to or greater than 9 years but less than 10
  years

  	
   

  	
  1.30

  	
  %

  	
  2.20

  	
  %

  	
  1.90

  	
  %

  	
  3.80

  	
  %

  
	
  Equal to or greater than 10 years but less than 11
  years

  	
   

  	
  1.40

  	
  %

  	
  2.30

  	
  %

  	
  1.90

  	
  %

  	
  3.90

  	
  %

  
	
  Equal to or greater than 11 years but less than 12
  years

  	
   

  	
  1.50

  	
  %

  	
  2.50

  	
  %

  	
  2.00

  	
  %

  	
  4.00

  	
  %

  
	
  Equal to or greater than 12 years but less than 13
  years

  	
   

  	
  1.60

  	
  %

  	
  2.70

  	
  %

  	
  2.10

  	
  %

  	
  4.10

  	
  %

  
	
  Equal to or greater than 13 years but less than 14
  years

  	
   

  	
  1.70

  	
  %

  	
  2.80

  	
  %

  	
  2.10

  	
  %

  	
  4.30

  	
  %

  
	
  Equal to or greater than 14 years but less than 15
  years

  	
   

  	
  1.80

  	
  %

  	
  3.00

  	
  %

  	
  2.20

  	
  %

  	
  4.40

  	
  %

  
	
  Equal to or greater than 15 years but less than 16
  years

  	
   

  	
  1.90

  	
  %

  	
  3.20

  	
  %

  	
  2.30

  	
  %

  	
  4.50

  	
  %

  
	
  Equal to or greater than 16 years but less than 17
  years

  	
   

  	
  2.00

  	
  %

  	
  3.30

  	
  %

  	
  2.30

  	
  %

  	
  4.60

  	
  %

  
	
  Equal to or greater than 17 years but less than 18
  years

  	
   

  	
  2.00

  	
  %

  	
  3.50

  	
  %

  	
  2.40

  	
  %

  	
  4.80

  	
  %

  
	
  Equal to or greater than 18 years but less than 19
  years

  	
   

  	
  2.00

  	
  %

  	
  3.60

  	
  %

  	
  2.40

  	
  %

  	
  4.90

  	
  %

  
	
  Equal to or greater than 19 years but less than 20
  years

  	
   

  	
  2.00

  	
  %

  	
  3.70

  	
  %

  	
  2.50

  	
  %

  	
  5.00

  	
  %

  
	
  Equal to or greater than 20 years but less than 21
  years

  	
   

  	
  2.00

  	
  %

  	
  3.90

  	
  %

  	
  2.50

  	
  %

  	
  5.00

  	
  %

  
	
  Equal to or greater than 21 years but less than 22
  years

  	
   

  	
  2.00

  	
  %

  	
  4.00

  	
  %

  	
  2.50

  	
  %

  	
  5.00

  	
  %

  
	
  Equal to or greater than 22 years but less than 23
  years

  	
   

  	
  2.00

  	
  %

  	
  4.00

  	
  %

  	
  2.50

  	
  %

  	
  5.00

  	
  %

  
	
  Equal to or greater than 23 years but less than 24
  years

  	
   

  	
  2.00

  	
  %

  	
  4.00

  	
  %

  	
  2.50

  	
  %

  	
  5.00

  	
  %

  
	
  Equal to or greater than 24 years but less than 25
  years

  	
   

  	
  2.00

  	
  %

  	
  4.00

  	
  %

  	
  2.50

  	
  %

  	
  5.00

  	
  %

  
	
  Equal to or greater than 25 years but less than 26
  years

  	
   

  	
  2.00

  	
  %

  	
  4.00

  	
  %

  	
  2.50

  	
  %

  	
  5.00

  	
  %

  
	
  Equal to or greater than 26 years but less than 27
  years

  	
   

  	
  2.00

  	
  %

  	
  4.00

  	
  %

  	
  2.50

  	
  %

  	
  5.00

  	
  %

  
	
  Equal to or greater than 27 years but less than 28
  years

  	
   

  	
  2.00

  	
  %

  	
  4.00

  	
  %

  	
  2.50

  	
  %

  	
  5.00

  	
  %

  
	
  Equal to or greater than 28 years but less than 29
  years

  	
   

  	
  2.00

  	
  %

  	
  4.00

  	
  %

  	
  2.50

  	
  %

  	
  5.00

  	
  %

  
	
  Equal to or greater than 29 years but less than 30
  years

  	
   

  	
  2.00

  	
  %

  	
  4.00

  	
  %

  	
  2.50

  	
  %

  	
  5.00

  	
  %

  
	
  Equal to 30 years

  	
   

  	
  2.00

  	
  %

  	
  4.00

  	
  %

  	
  2.50

  	
  %

  	
  5.00

  	
  %

  

 

18

 

EXHIBIT B

 

SECOND TRIGGER COLLATERAL AMOUNT APPLICABLE PERCENTAGES

 

For
Transactions that are not Transaction-Specific Hedges.

 

“Transaction-Specific
Hedge”  means any Transaction that is a cap, floor or
swaption, or a Transaction in respect of which 
(x) the notional amount of the swap is “balance guaranteed” or (y) the
notional amount of the swap for any Calculation Period otherwise is not a
specific dollar amount that is fixed at the inception of the Transaction.

 

	
   

  	
   

  	
  Interest Rate Swaps

  	
   

  	
  Currency Swaps

  	
   

  
	
   

  	
   

  	
  Valuation Dates:

  	
   

  
	
  Weighted Average Life of Hedge
  in Years

  	
   

  	
  Daily

  	
   

  	
  Weekly

  	
   

  	
  Daily

  	
   

  	
  Weekly

  	
   

  
	
  Less than 1 year

  	
   

  	
  0.50

  	
  %

  	
  0.60

  	
  %

  	
  6.10

  	
  %

  	
  7.25

  	
  %

  
	
  Equal to or greater than 1 year but less than 2
  years

  	
   

  	
  1.00

  	
  %

  	
  1.20

  	
  %

  	
  6.30

  	
  %

  	
  7.50

  	
  %

  
	
  Equal to or greater than 2 years but less than 3
  years

  	
   

  	
  1.50

  	
  %

  	
  1.70

  	
  %

  	
  6.40

  	
  %

  	
  7.70

  	
  %

  
	
  Equal to or greater than 3 years but less than 4
  years

  	
   

  	
  1.90

  	
  %

  	
  2.30

  	
  %

  	
  6.60

  	
  %

  	
  8.00

  	
  %

  
	
  Equal to or greater than 4 years but less than 5
  years

  	
   

  	
  2.40

  	
  %

  	
  2.80

  	
  %

  	
  6.70

  	
  %

  	
  8.20

  	
  %

  
	
  Equal to or greater than 5 years but less than 6
  years

  	
   

  	
  2.80

  	
  %

  	
  3.30

  	
  %

  	
  6.80

  	
  %

  	
  8.40

  	
  %

  
	
  Equal to or greater than 6 years but less than 7
  years

  	
   

  	
  3.20

  	
  %

  	
  3.80

  	
  %

  	
  7.00

  	
  %

  	
  8.60

  	
  %

  
	
  Equal to or greater than 7 years but less than 8
  years

  	
   

  	
  3.60

  	
  %

  	
  4.30

  	
  %

  	
  7.10

  	
  %

  	
  8.80

  	
  %

  
	
  Equal to or greater than 8 years but less than 9
  years

  	
   

  	
  4.00

  	
  %

  	
  4.80

  	
  %

  	
  7.20

  	
  %

  	
  9.00

  	
  %

  
	
  Equal to or greater than 9 years but less than 10
  years

  	
   

  	
  4.40

  	
  %

  	
  5.30

  	
  %

  	
  7.30

  	
  %

  	
  9.20

  	
  %

  
	
  Equal to or greater than 10 years but less than 11
  years

  	
   

  	
  4.70

  	
  %

  	
  5.60

  	
  %

  	
  7.40

  	
  %

  	
  9.30

  	
  %

  
	
  Equal to or greater than 11 years but less than 12
  years

  	
   

  	
  5.00

  	
  %

  	
  6.00

  	
  %

  	
  7.50

  	
  %

  	
  9.50

  	
  %

  
	
  Equal to or greater than 12 years but less than 13
  years

  	
   

  	
  5.40

  	
  %

  	
  6.40

  	
  %

  	
  7.60

  	
  %

  	
  9.70

  	
  %

  
	
  Equal to or greater than 13 years but less than 14
  years

  	
   

  	
  5.70

  	
  %

  	
  6.80

  	
  %

  	
  7.70

  	
  %

  	
  9.80

  	
  %

  
	
  Equal to or greater than 14 years but less than 15
  years

  	
   

  	
  6.00

  	
  %

  	
  7.20

  	
  %

  	
  7.80

  	
  %

  	
  10.00

  	
  %

  
	
  Equal to or greater than 15 years but less than 16
  years

  	
   

  	
  6.30

  	
  %

  	
  7.60

  	
  %

  	
  7.90

  	
  %

  	
  10.00

  	
  %

  
	
  Equal to or greater than 16 years but less than 17
  years

  	
   

  	
  6.60

  	
  %

  	
  7.90

  	
  %

  	
  8.00

  	
  %

  	
  10.00

  	
  %

  
	
  Equal to or greater than 17 years but less than 18
  years

  	
   

  	
  6.90

  	
  %

  	
  8.30

  	
  %

  	
  8.10

  	
  %

  	
  10.00

  	
  %

  
	
  Equal to or greater than 18 years but less than 19
  years

  	
   

  	
  7.20

  	
  %

  	
  8.60

  	
  %

  	
  8.20

  	
  %

  	
  10.00

  	
  %

  
	
  Equal to or greater than 19 years but less than 20
  years

  	
   

  	
  7.50

  	
  %

  	
  9.00

  	
  %

  	
  8.20

  	
  %

  	
  10.00

  	
  %

  
	
  Equal to or greater than 20 years but less than 21
  years

  	
   

  	
  7.80

  	
  %

  	
  9.00

  	
  %

  	
  8.30

  	
  %

  	
  10.00

  	
  %

  
	
  Equal to or greater than 21 years but less than 22
  years

  	
   

  	
  8.00

  	
  %

  	
  9.00

  	
  %

  	
  8.40

  	
  %

  	
  10.00

  	
  %

  
	
  Equal to or greater than 22 years but less than 23
  years

  	
   

  	
  8.00

  	
  %

  	
  9.00

  	
  %

  	
  8.50

  	
  %

  	
  10.00

  	
  %

  
	
  Equal to or greater than 23 years but less than 24
  years

  	
   

  	
  8.00

  	
  %

  	
  9.00

  	
  %

  	
  8.60

  	
  %

  	
  10.00

  	
  %

  
	
  Equal to or greater than 24 years but less than 25
  years

  	
   

  	
  8.00

  	
  %

  	
  9.00

  	
  %

  	
  8.60

  	
  %

  	
  10.00

  	
  %

  
	
  Equal to or greater than 25 years but less than 26
  years

  	
   

  	
  8.00

  	
  %

  	
  9.00

  	
  %

  	
  8.70

  	
  %

  	
  10.00

  	
  %

  
	
  Equal to or greater than 26 years but less than 27
  years

  	
   

  	
  8.00

  	
  %

  	
  9.00

  	
  %

  	
  8.80

  	
  %

  	
  10.00

  	
  %

  
	
  Equal to or greater than 27 years but less than 28
  years

  	
   

  	
  8.00

  	
  %

  	
  9.00

  	
  %

  	
  8.80

  	
  %

  	
  10.00

  	
  %

  
	
  Equal to or greater than 28 years but less than 29
  years

  	
   

  	
  8.00

  	
  %

  	
  9.00

  	
  %

  	
  8.90

  	
  %

  	
  10.00

  	
  %

  
	
  Equal to or greater than 29 years but less than 30
  years

  	
   

  	
  8.00

  	
  %

  	
  9.00

  	
  %

  	
  8.90

  	
  %

  	
  10.00

  	
  %

  
	
  Equal to 30 years

  	
   

  	
  8.00

  	
  %

  	
  9.00

  	
  %

  	
  9.00

  	
  %

  	
  10.00

  	
  %

  

 

19

 

For
Transactions that are Transaction-Specific Hedges.

 

	
   

  	
   

  	
  Interest Rate Hedges

  	
   

  	
  Currency Hedges

  	
   

  
	
   

  	
   

  	
  Valuation Dates:

  	
   

  
	
  Weighted Average Life of Hedge
  in Years

  	
   

  	
  Daily

  	
   

  	
  Weekly

  	
   

  	
  Daily

  	
   

  	
  Weekly

  	
   

  
	
  Less than 1 year

  	
   

  	
  0.65

  	
  %

  	
  0.75

  	
  %

  	
  6.30

  	
  %

  	
  7.40

  	
  %

  
	
  Equal to or greater than 1 year but less than 2
  years

  	
   

  	
  1.30

  	
  %

  	
  1.50

  	
  %

  	
  6.60

  	
  %

  	
  7.80

  	
  %

  
	
  Equal to or greater than 2 years but less than 3
  years

  	
   

  	
  1.90

  	
  %

  	
  2.20

  	
  %

  	
  6.90

  	
  %

  	
  8.20

  	
  %

  
	
  Equal to or greater than 3 years but less than 4
  years

  	
   

  	
  2.50

  	
  %

  	
  2.90

  	
  %

  	
  7.10

  	
  %

  	
  8.50

  	
  %

  
	
  Equal to or greater than 4 years but less than 5
  years

  	
   

  	
  3.10

  	
  %

  	
  3.60

  	
  %

  	
  7.40

  	
  %

  	
  8.90

  	
  %

  
	
  Equal to or greater than 5 years but less than 6
  years

  	
   

  	
  3.60

  	
  %

  	
  4.20

  	
  %

  	
  7.70

  	
  %

  	
  9.20

  	
  %

  
	
  Equal to or greater than 6 years but less than 7
  years

  	
   

  	
  4.20

  	
  %

  	
  4.80

  	
  %

  	
  7.90

  	
  %

  	
  9.60

  	
  %

  
	
  Equal to or greater than 7 years but less than 8
  years

  	
   

  	
  4.70

  	
  %

  	
  5.40

  	
  %

  	
  8.20

  	
  %

  	
  9.90

  	
  %

  
	
  Equal to or greater than 8 years but less than 9
  years

  	
   

  	
  5.20

  	
  %

  	
  6.00

  	
  %

  	
  8.40

  	
  %

  	
  10.20

  	
  %

  
	
  Equal to or greater than 9 years but less than 10
  years

  	
   

  	
  5.70

  	
  %

  	
  6.60

  	
  %

  	
  8.60

  	
  %

  	
  10.50

  	
  %

  
	
  Equal to or greater than 10 years but less than 11
  years

  	
   

  	
  6.10

  	
  %

  	
  7.00

  	
  %

  	
  8.80

  	
  %

  	
  10.70

  	
  %

  
	
  Equal to or greater than 11 years but less than 12
  years

  	
   

  	
  6.50

  	
  %

  	
  7.50

  	
  %

  	
  9.00

  	
  %

  	
  11.00

  	
  %

  
	
  Equal to or greater than 12 years but less than 13
  years

  	
   

  	
  7.00

  	
  %

  	
  8.00

  	
  %

  	
  9.20

  	
  %

  	
  11.30

  	
  %

  
	
  Equal to or greater than 13 years but less than 14
  years

  	
   

  	
  7.40

  	
  %

  	
  8.50

  	
  %

  	
  9.40

  	
  %

  	
  11.50

  	
  %

  
	
  Equal to or greater than 14 years but less than 15
  years

  	
   

  	
  7.80

  	
  %

  	
  9.00

  	
  %

  	
  9.60

  	
  %

  	
  11.80

  	
  %

  
	
  Equal to or greater than 15 years but less than 16
  years

  	
   

  	
  8.20

  	
  %

  	
  9.50

  	
  %

  	
  9.80

  	
  %

  	
  11.80

  	
  %

  
	
  Equal to or greater than 16 years but less than 17
  years

  	
   

  	
  8.60

  	
  %

  	
  9.90

  	
  %

  	
  10.00

  	
  %

  	
  12.00

  	
  %

  
	
  Equal to or greater than 17 years but less than 18
  years

  	
   

  	
  9.00

  	
  %

  	
  10.40

  	
  %

  	
  10.10

  	
  %

  	
  12.00

  	
  %

  
	
  Equal to or greater than 18 years but less than 19
  years

  	
   

  	
  9.40

  	
  %

  	
  10.80

  	
  %

  	
  10.30

  	
  %

  	
  12.00

  	
  %

  
	
  Equal to or greater than 19 years but less than 20
  years

  	
   

  	
  9.70

  	
  %

  	
  11.00

  	
  %

  	
  10.50

  	
  %

  	
  12.00

  	
  %

  
	
  Equal to or greater than 20 years but less than 21
  years

  	
   

  	
  10.00

  	
  %

  	
  11.00

  	
  %

  	
  10.70

  	
  %

  	
  12.00

  	
  %

  
	
  Equal to or greater than 21 years but less than 22
  years

  	
   

  	
  10.00

  	
  %

  	
  11.00

  	
  %

  	
  10.80

  	
  %

  	
  12.00

  	
  %

  
	
  Equal to or greater than 22 years but less than 23
  years

  	
   

  	
  10.00

  	
  %

  	
  11.00

  	
  %

  	
  11.00

  	
  %

  	
  12.00

  	
  %

  
	
  Equal to or greater than 23 years but less than 24
  years

  	
   

  	
  10.00

  	
  %

  	
  11.00

  	
  %

  	
  11.00

  	
  %

  	
  12.00

  	
  %

  
	
  Equal to or greater than 24 years but less than 25
  years

  	
   

  	
  10.00

  	
  %

  	
  11.00

  	
  %

  	
  11.00

  	
  %

  	
  12.00

  	
  %

  
	
  Equal to or greater than 25 years but less than 26
  years

  	
   

  	
  10.00

  	
  %

  	
  11.00

  	
  %

  	
  11.00

  	
  %

  	
  12.00

  	
  %

  
	
  Equal to or greater than 26 years but less than 27
  years

  	
   

  	
  10.00

  	
  %

  	
  11.00

  	
  %

  	
  11.00

  	
  %

  	
  12.00

  	
  %

  
	
  Equal to or greater than 27 years but less than 28
  years

  	
   

  	
  10.00

  	
  %

  	
  11.00

  	
  %

  	
  11.00

  	
  %

  	
  12.00

  	
  %

  
	
  Equal to or greater than 28 years but less than 29
  years

  	
   

  	
  10.00

  	
  %

  	
  11.00

  	
  %

  	
  11.00

  	
  %

  	
  12.00

  	
  %

  
	
  Equal to or greater than 29 years but less than 30
  years

  	
   

  	
  10.00

  	
  %

  	
  11.00

  	
  %

  	
  11.00

  	
  %

  	
  12.00

  	
  %

  
	
  Equal to 30 years

  	
   

  	
  10.00

  	
  %

  	
  11.00

  	
  %

  	
  11.00

  	
  %

  	
  12.00

  	
  %

  

 

20Exhibit 10.7

 

Interest Rate
Swap Transaction

 

The
purpose of this letter agreement is to confirm the terms and conditions of
the Transaction entered into between:

 

CITIBANK, N.A.

(“Citibank”)

 

and

 

HARLEY-DAVIDSON MOTORCYCLE TRUST 2008-1

(the “Counterparty”)

 

on the
Trade Date and identified by the Citibank Deal Number specified below
(the “Transaction”). This letter agreement constitutes a “Confirmation” as
referred to in the Master Agreement specified below, and supersedes any
previous confirmation or other writing with respect to the transaction
described below.

 

The definitions and
provisions contained in the 2006 ISDA Definitions (as published by the
International Swaps and Derivatives Association, Inc., the “Definitions”)
are incorporated into this Confirmation. 
In the event of any inconsistency between the Definitions and this
Confirmation, this Confirmation will govern.

 

Terms not otherwise defined
herein shall have the respective meaning set forth in the Indenture relating to
the Counterparty’s USD540,000,000 Motorcycle Contract Backed Notes and dated as
of 15 February 2008 (the “Indenture”), between the Counterparty, as
issuer, and The Bank of New York Trust Company, N.A., not in its individual
capacity but solely in its capacity, as indenture trustee (the “Indenture
Trustee”).

 

This
Confirmation supplements, forms part of, and is subject to, the ISDA
Master Agreement dated as of 15 February 2008, as amended
and supplemented from time to time (the “Agreement”), between Citibank and the
Counterparty.  All provisions contained in the Agreement govern this
Confirmation except as expressly modified below.

 

1

 

The terms of the particular Interest Rate
Swap Transaction to which this Confirmation relates are as follows:

 

A. TRANSACTION DETAILS

 

	
  Citibank Deal
  Number(s):

  	
   

  	
  M081712

  
	
   

  	
   

  	
   

  
	
  Notional
  Amount:

  	
   

  	
  For each Calculation
  Period, the Outstanding Amount of the Class A-2 Notes as of the close of
  business on the Payment Date that is
  the first day of each Calculation Period, as stated in Servicer’s monthly investor report relating to such
  Payment Date (“Monthly Report”), or for the first Calculation Period,
  USD197,000,000.00. The Counterparty
  will cause the Monthly Report relating to such calculation period to be delivered
  to Citibank on or prior to the date such Monthly Report is required to be
  delivered pursuant to the Transaction Documents.

  
	
   

  	
   

  	
   

  
	
  Trade
  Date:

  	
   

  	
  15
  February 2008

  
	
   

  	
   

  	
   

  
	
  Effective
  Date:

  	
   

  	
  20
  February 2008

  
	
   

  	
   

  	
   

  
	
  Termination
  Date:

  	
   

  	
  The
  earliest of (i) 15 November 2011 or (ii) the date on which the
  Notional Amount hereunder has been reduced to zero, subject to adjustment in
  accordance with the Modified Following Business Day Convention and subject to
  Early Termination in accordance with the terms of the Agreement.

  
	
   

  	
   

  	
   

  
	
  Fixed Amounts:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Fixed
  Rate Payer:

  	
   

  	
  Counterparty

  
	
   

  	
   

  	
   

  
	
  Fixed
  Rate Payer Payment Dates:

  	
   

  	
  The
  15th of each month in each year, from and including 15
  March 2008 to and including the Termination Date, subject to
  adjustment in accordance with the Modified Following Business Day
  Convention and there will be No Adjustment to any Calculation Period.

  
	
   

  	
   

  	
   

  
	
  Fixed
  Rate:

  	
   

  	
  3.54000%

  
	
   

  	
   

  	
   

  
	
  Fixed
  Rate Day Count Fraction:

  	
   

  	
  30/360

  
	
   

  	
   

  	
   

  
	
  Business
  Days:

  	
   

  	
  New
  York

  

 

2

 

	
  Floating Amounts:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Floating
  Rate Payer:

  	
   

  	
  Citibank

  
	
   

  	
   

  	
   

  
	
  Floating
  Rate Payer Payment Dates:

  	
   

  	
  The
  15th of each month in each year, from and including 15
  March 2008 to and including the Termination Date, subject to
  adjustment in accordance with the Modified Following Business Day
  Convention and there will be an adjustment to each Calculation Period.

  
	
   

  	
   

  	
   

  
	
  Floating
  Rate for initial Calculation Period:

  	
   

  	
  4.01375%

  
	
   

  	
   

  	
   

  
	
  Floating
  Rate Option:

  	
   

  	
  USD-LIBOR-BBA

  
	
   

  	
   

  	
   

  
	
  Reset
  Dates:

  	
   

  	
  The
  first day of each Calculation Period.

  
	
   

  	
   

  	
   

  
	
  Spread:

  	
   

  	
  Plus
  0.90000%

  
	
   

  	
   

  	
   

  
	
  Compounding:

  	
   

  	
  Inapplicable

  
	
   

  	
   

  	
   

  
	
  Floating
  Rate Day Count Fraction:

  	
   

  	
  Actual/360

  
	
   

  	
   

  	
   

  
	
  Designated
  Maturity:

  	
   

  	
  1
  Month

  
	
   

  	
   

  	
   

  
	
  Business
  Days:

  	
   

  	
  New
  York

  
	
   

  	
   

  	
   

  
	
  Calculation
  Agent:

  	
   

  	
  Citibank,
  unless otherwise stated in the Agreement.

  
	
   

  	
   

  	
   

  
	
  B. ACCOUNT DETAILS

  	
   

  	
   

  
	
  Payments
  to Citibank in USD:

  	
   

  	
  CITIBANK
  NEW YORK

  
	
   

  	
   

  	
  CITIBANK
  N.A.

  
	
   

  	
   

  	
  ABA:
  021000089

  
	
   

  	
   

  	
  AC
  No: 00167679

  
	
   

  	
   

  	
  SWIFT
  code: CITIUS33

  
	
   

  	
   

  	
  Ref:
  HDMOT 2008-1

  
	
   

  	
   

  	
   

  
	
  Payments
  to Counterparty in USD:

  	
   

  	
  As
  per your standard settlement instructions.

  
	
   

  	
   

  	
   

  
	
  C. OFFICES

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Citibank:

  	
   

  	
  NEW
  YORK

  
	
   

  	
   

  	
   

  

 

3

 

D. DOCUMENTS TO BE DELIVERED

 

Each
party shall deliver to the other, at the time of its execution of this
Confirmation, evidence of the incumbency and specimen signature of the
person(s) executing this Confirmation, unless such evidence has been
previously supplied and remains true and in effect.

 

E.  RELATIONSHIP BETWEEN
PARTIES

 

Each
party will be deemed to represent to the other party on the date on which it
enters into an Interest Rate Swap Transaction that (absent a written agreement
between the parties that expressly imposes affirmative obligations to the
contrary for that Interest Rate Swap Transaction):

 

(a)           Non-Reliance.  It is acting for its own account, and it has
made its own independent decision to enter into that Interest Rate Swap
Transaction and as to whether that Interest Rate Swap Transaction is
appropriate or proper for it based upon its own judgment and upon advice from
such advisers as it has deemed necessary. It is not relying on any
communication (written or oral) of the other party as investment advice or as a
recommendation to enter into that Interest Rate Swap Transaction; it being
understood that information and explanations related to the terms and
conditions of an Interest Rate Swap Transaction shall not be considered
investment advice or a recommendation to enter into that Interest Rate Swap
Transaction.  No communication (written
or oral) received from the other party shall be deemed to be an assurance or
guarantee as to the expected results of that Interest Rate Swap Transaction.

 

(b)           Assessment and
Understanding.  It is capable
of assessing the merits of and understanding (on its own behalf or through
independent professional advice), and understands and accepts, the terms,
conditions and risks of that Interest Rate Swap Transaction.  It is capable of assuming, and assumes the
risks of that Interest Rate Swap Transaction.

 

(c)      Status of Parties.   The other party is not acting as a fiduciary
for or an adviser to it in respect of that Interest Rate Swap Transaction.

 

4

 

Please
confirm that the foregoing correctly sets forth the terms of our agreement by
executing a copy of this Confirmation and returning it to us or by sending to
us a letter, telex or facsimile substantially similar to this letter, which
letter, telex or facsimile sets forth the material terms of the Transaction to
which this Confirmation relates and indicates agreement to those terms. When
referring to this Confirmation, please indicate: Citibank Deal
Number(s): M081712

 

 

	
  Citibank,
  N.A.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:
  /s/ Frank A. Licciardello

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Frank
  A. Licciardello

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   Authorized Signatory

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Accepted
  and confirmed as of the date

  first written:

  	
   

  
	
  HARLEY-DAVIDSON

  MOTORCYCLE TRUST 2008-1

  

  By: Wilmington Trust Company, not

  in its individual capacity but solely as

  Owner Trustee on behalf of the

  Counterparty

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:
  /s/ Erik E. Overcash

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Erik
  E. Overcash

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Financial
  Services Officer

  	
   

  
	
   

  	
   

  
	
  Your
  reference number:

  	
   

  	
   

  	
   

  
							

 

5

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