Document:

EXHIBIT 10.1

 

 

 

 

TRANSFER AND SALE AGREEMENT

 

 

by and between

 

 

HARLEY-DAVIDSON CREDIT CORP.,

as Seller

 

 

and

 

 

HARLEY-DAVIDSON CUSTOMER FUNDING CORP.,

 

 

as Purchaser

 

 

Dated as of August 1, 2005

 

 

 

 

TABLE OF
CONTENTS

 

	
  ARTICLE I DEFINITION

  	
  1

  
	
   

  	
   

  	
   

  
	
  SECTION 1.01.

  	
  GENERAL

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE II TRANSFER OF CONTRACTS; ASSIGNMENT OF
  AGREEMENT

  	
  1

  
	
   

  	
   

  	
   

  
	
  SECTION 2.01.

  	
  CLOSING

  	
  1

  
	
  SECTION 2.02.

  	
  CONDITIONS TO THE CLOSING

  	
  2

  
	
  SECTION 2.03.

  	
  ASSIGNMENT OF AGREEMENT

  	
  3

  
	
  SECTION 2.04.

  	
  SUBSEQUENT CONTRACTS

  	
  4

  
	
   

  	
   

  	
   

  
	
  ARTICLE III REPRESENTATIONS AND WARRANTIES

  	
  5

  
	
   

  	
   

  	
   

  
	
  SECTION 3.01.

  	
  REPRESENTATIONS AND
  WARRANTIES REGARDING SELLER

  	
  6

  
	
  SECTION 3.02.

  	
  REPRESENTATIONS AND
  WARRANTIES REGARDING EACH CONTRACT

  	
  7

  
	
  SECTION 3.03.

  	
  REPRESENTATIONS AND
  WARRANTIES REGARDING THE CONTRACTS IN THE AGGREGATE

  	
  11

  
	
  SECTION 3.04.

  	
  REPRESENTATIONS AND
  WARRANTIES REGARDING THE CONTRACT FILES

  	
  12

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV PERFECTION OF TRANSFER AND
  PROTECTION OF SECURITY INTERESTS

  	
  12

  
	
   

  	
   

  	
   

  
	
  SECTION 4.01.

  	
  CUSTODY OF CONTRACTS

  	
  12

  
	
  SECTION 4.02.

  	
  FILING

  	
  13

  
	
  SECTION 4.03.

  	
  NAME CHANGE OR RELOCATION

  	
  13

  
	
  SECTION 4.04.

  	
  COSTS AND EXPENSES

  	
  13

  
	
  SECTION 4.05

  	
  SALE TREATMENT

  	
  13

  
	
  SECTION 4.06

  	
  SEPARATENESS FROM TRUST
  DEPOSITOR

  	
  14

  
	
  SECTION 4.07

  	
  PROTECTION OF SECURITY
  INTERESTS

  	
  14

  
	
   

  	
   

  	
   

  
	
  ARTICLE V REMEDIES UPON MISREPRESENTATION

  	
  14

  
	
   

  	
   

  	
   

  
	
  SECTION 5.01.

  	
  REPURCHASES OF CONTRACTS FOR
  BREACH OF REPRESENTATIONS AND WARRANTIES

  	
  14

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI INDEMNITIES

  	
  15

  
	
   

  	
   

  	
   

  
	
  SECTION 6.01.

  	
  SELLER INDEMNIFICATION

  	
  15

  
	
  SECTION 6.02.

  	
  LIABILITIES TO OBLIGORS

  	
  15

  
	
  SECTION 6.03.

  	
  TAX INDEMNIFICATION

  	
  15

  
	
  SECTION 6.04.

  	
  OPERATION OF INDEMNITIES

  	
  15

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII MISCELLANEOUS

  	
  16

  
	
   

  	
   

  	
   

  
	
  SECTION 7.01.

  	
  PROHIBITED TRANSACTIONS WITH
  RESPECT TO THE TRUST

  	
  16

  
	
  SECTION 7.02.

  	
  MERGER OR CONSOLIDATION

  	
  16

  
	
  SECTION 7.03.

  	
  TERMINATION

  	
  16

  
	
  SECTION 7.04.

  	
  ASSIGNMENT OR DELEGATION BY
  SELLER

  	
  16

  
	
  SECTION 7.05.

  	
  AMENDMENT

  	
  17

  
	
  SECTION 7.06.

  	
  NOTICES

  	
  17

  
	
  SECTION 7.07.

  	
  MERGER AND INTEGRATION

  	
  18

  
	
  SECTION 7.08.

  	
  HEADINGS

  	
  18

  
	
  SECTION 7.09.

  	
  GOVERNING LAW

  	
  18

  

 

i

 

EXHIBITS

 

	
  Exhibit A

  	
  Form of Assignment

  	
   

  
	
  Exhibit B

  	
  Form of Officer’s Certificate

  	
   

  
	
  Exhibit C

  	
  Form of Subsequent Purchase Agreement

  	
   

  

 

ii

 

THIS AGREEMENT, dated as of August 1, 2005, is made by
and between Harley-Davidson Credit Corp., a Nevada corporation, as seller
hereunder (together with its successors and assigns “Harley-Davidson Credit” or
“Seller”), and Harley-Davidson Customer Funding Corp., a Nevada
corporation and wholly-owned subsidiary of Seller (together with its successors
and assigns “Trust Depositor”),
as purchaser hereunder.

 

WHEREAS, in the regular course of its business,
Seller purchases and services (i) motorcycle conditional sales contracts
from Harley-Davidson motorcycle retailers and (ii) motorcycle promissory
note and security agreements from Eaglemark Savings Bank, each of which
contracts provides for installment payment obligations by or on behalf of the
retailer’s customer/purchaser and grants a security interest in the related
motorcycle in order to secure such obligations;

 

WHEREAS, Seller and Trust Depositor wish to set forth
the terms and conditions pursuant to which Trust Depositor will acquire from
time to time the “Contract Assets,”
as hereinafter defined; and

 

WHEREAS, Trust Depositor intends concurrently with
its purchases from time to time of Contract Assets hereunder to convey all
right, title and interest in such Contract Assets to Harley-Davidson Motorcycle
Trust 2005-3 (the “Trust”)
pursuant to the Sale and Servicing Agreement dated as of August 1, 2005 by
and among Trust Depositor, Harley-Davidson Credit, as Servicer, the Trust, as
issuer (the “Issuer”) and The
Bank of New York Trust Company, N.A., as Indenture Trustee (as amended,
supplemented or otherwise modified from time to time, the “Sale and Servicing Agreement”), executed
concurrently herewith;

 

NOW, THEREFORE, in consideration of the premises and the
mutual agreements hereinafter set forth, Seller and Trust Depositor agree as
follows:

 

ARTICLE I

 

DEFINITIONS

 

Section 1.01.        General. 
Unless otherwise defined in this Agreement, capitalized terms used
herein (including in the preamble above) shall have the meanings assigned to
them in the Sale and Servicing Agreement.

 

ARTICLE II

 

TRANSFER OF CONTRACTS; ASSIGNMENT OF AGREEMENT

 

Section 2.01.        Closing. 
Subject to and upon the terms and conditions set forth in this
Agreement, Seller hereby sells, transfers, assigns, sets over and otherwise
conveys to Trust Depositor, in consideration of Trust Depositor’s payment of
$468,011,605.65 in cash as the purchase price therefor, (i) all the right,
title and interest of Seller in and to the Initial Contracts

 

 

listed on the initial List of Contracts in
effect on the Closing Date (including, without limitation, all security
interests and all rights to receive payments which are collected pursuant
thereto after the Initial Cutoff Date, including any liquidation proceeds
therefrom, but excluding any rights to receive payments which were collected
pursuant thereto on or prior to the Initial Cutoff Date), (ii) all rights
of Seller under any physical damage or other individual insurance policy
(including a “forced placed”
policy, if any), any debt insurance policy or any debt cancellation agreement
relating to any such Contract, an Obligor or a Motorcycle securing such
Contract, (iii) all security interests in each such Motorcycle,
(iv) all documents contained in the related Contract Files, (v) all
rights of Seller in the Lockbox, Lockbox Account and related Lockbox Agreement
to the extent they relate to the Contracts, (vi) all rights (but not the
obligations) of the Seller under any motorcycle dealer agreements between the
dealers (i.e. originators of certain Contracts) and the Seller, (vii) all
rights of Seller to certain rebates of premiums and other amounts relating to
insurance policies, debt cancellation agreements, extended service contracts or
other repair agreements and other items financed under such Contracts and
(viii) all proceeds and products of the foregoing (items (i) -
(viii), together with the additional assets referred to in Section 2.04
below which may be transferred from time to time in respect of Subsequent
Contracts, being collectively referred to herein as the “Contract Assets”).  Although Seller and Trust Depositor agree
that any such transfer is intended to be a sale of ownership in the Contract
Assets, rather than the mere granting of a security interest to secure a
borrowing, in the event such transfer is deemed to be of a mere security
interest to secure indebtedness, Seller shall be deemed to have granted Trust
Depositor a perfected first priority security interest in such Contract Assets
and this Agreement shall constitute a security agreement under applicable
law.  If such transfer is deemed to be
the mere granting of a security interest to secure a borrowing, Trust Depositor
may, to secure Trust Depositor’s own borrowing under the Sale and Servicing
Agreement (to the extent that the transfer of the Contract Assets thereunder is
deemed to be a mere granting of a security interest to secure a borrowing)
repledge and reassign (i) all or a portion of the Contract Assets pledged
to Trust Depositor and not released from the security interest of this
Agreement at the time of such pledge and assignment, and (ii) all proceeds
thereof.  Such repledge and reassignment
may be made by Trust Depositor with or without a repledge and reassignment by
Trust Depositor of its rights under this Agreement, and without further notice
to or acknowledgment from Seller.  Seller
waives, to the extent permitted by applicable law, all claims, causes of action
and remedies, whether legal or equitable (including any right of setoff),
against Trust Depositor or any assignee of Trust Depositor relating to such
action by Trust Depositor in connection with the transactions contemplated by
the Sale and Servicing Agreement.

 

Section 2.02.        Conditions to the Closing.  On or
before the Closing Date, Seller shall deliver or cause to be delivered to Trust
Depositor each of the documents, certificates and other items as follows:

 

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

 

2

 

(b)           A certificate of an officer of Seller
substantially in the form of Exhibit B
hereto.

 

(c)           An opinion of counsel for Seller
substantially in the form of Exhibit D to
the Sale and Servicing Agreement.

 

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

 

(e)           Copies of resolutions of the Board of
Directors of Seller or of the Executive Committee of the Board of Directors of
Seller approving the execution, delivery and performance of this Agreement and
the transactions contemplated hereunder, certified in each case by the
Secretary or an Assistant Secretary of Seller.

 

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

 

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

 

(h)           An Officer’s Certificate from Seller
certifying that the Seller, on or prior to the Closing Date, has indicated in
its computer files, in accordance with its customary standards, policies and
procedures, that the Contracts have been conveyed to the Trust Depositor
pursuant to this Agreement.

 

(i)            The documents, certificates and other items
described in Section 2.02 of the Sale and Servicing Agreement, to the
extent not already described above.

 

Section 2.03.        Assignment of Agreement.  Trust
Depositor has the right to assign its interest under this Agreement to the
Issuer as may be required to effect the purposes of the Sale and Servicing
Agreement, without further notice to, or consent of, Seller, and the Issuer
shall succeed to such of the rights of Trust Depositor hereunder as shall be so
assigned.  Seller acknowledges that,
pursuant to the Sale and Servicing Agreement, Trust Depositor will assign all
of its right, title and interest in and to the Contract Assets and its right to
exercise the remedies created by Section 5.01 hereof for breaches of
representations and warranties of Seller contained in Sections 3.01, 3.02, 3.03
and 3.04 hereof to the Issuer and the Indenture Trustee for the benefit of the
Noteholders.  Seller agrees that, upon
such assignment to the Issuer and the Indenture

 

3

 

Trustee, such representations will run to and
be for the benefit of the Issuer and the Indenture Trustee and the Issuer and
the Indenture Trustee may enforce directly without joinder of Trust Depositor,
the obligations of Seller set forth herein.

 

Section 2.04.        Subsequent Contracts. 
(a) Subject to and upon the terms and conditions set forth in
paragraph (b) below and in the related Subsequent Purchase Agreement,
Seller hereby agrees to sell, transfer, assign, set over and otherwise convey
to Trust Depositor, in consideration of Trust Depositor’s payment on the
related Subsequent Transfer Date of the purchase price therefor (as set forth
in the related Subsequent Purchase Agreement), and Trust Depositor hereby
agrees to purchase, (i) all the right, title and interest of Seller in and
to the Subsequent Contracts listed on the related Subsequent List of Contracts
(including, without limitation, all security interests and all rights to
receive payments which are collected pursuant thereto after the applicable
Subsequent Cutoff Date, including any liquidation proceeds therefrom, but
excluding any rights to receive payments which were collected pursuant thereto
on or prior to such Subsequent Cutoff Date), (ii) all rights of Seller
under any physical damage or other individual insurance policy (including a “forced placed” policy, if any), any debt
insurance policy or any debt cancellation agreement relating to any such
Subsequent Contract, an Obligor or a Motorcycle securing such Subsequent
Contract, (iii) all security interests in each such Motorcycle,
(iv) all documents contained in the related Contract Files, (v) all
rights of Seller in the Lockbox, Lockbox Account and related Lockbox Agreement
to the extent they relate to the Subsequent Contracts, (vi) all rights
(but not the obligations) of the Seller under any motorcycle dealer agreements
between the dealers (i.e.
originators of certain Subsequent Contracts) and the Seller, (vii) all
rights of Seller to certain rebates of premiums and other amounts relating to
insurance policies, debt cancellation agreements, extended service contracts or
other repair agreements and other items financed under such Subsequent
Contracts and (viii) all proceeds and products of the foregoing (items
(i) - (viii), upon consummation of any above-described purchase, becoming
part of the “Contract Assets”).  Seller agrees, subject to the terms and
conditions herein applicable to transfers of Subsequent Contracts, to sell an
aggregate Principal Balance of Subsequent Contracts at or prior to the end of
the Funding Period equal to the Pre-Funded Amount on the Closing Date.

 

(b)           Seller shall transfer to Trust Depositor, and
Trust Depositor shall purchase, the Subsequent Contracts and related assets to
be transferred on any Subsequent Transfer Date only upon the satisfaction of
each of the following conditions on or prior to the Subsequent Transfer Date:

 

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

 

(ii)           the Funding Period shall not have terminated;

 

(iii)          the Seller shall have delivered to the Trust
Depositor a duly executed Purchase Agreement in substantially the form of Exhibit C hereto (the “Subsequent

 

4

 

Purchase Agreement”), which shall include a Subsequent List of
Contracts listing the Subsequent Contracts being purchased;

 

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

 

(v)           each Rating Agency shall have notified the
Trust Depositor and the Trustees that following such transfer, and the transfer
immediately thereafter of the Subsequent Contracts to the Trust, the
Class A-1 Notes and the Class A-2 Notes will be rated in the highest
rating category by such Rating Agency and the Class B Notes will be rated
at least “A” by Standard & Poor’s and “A3” by Moody’s;

 

(vi)          such addition will not result in a material
adverse tax consequence to the Issuer or the Noteholders as evidenced by an
Opinion of Counsel to be delivered by the Seller to the Issuer, the Trustees,
and the Underwriters;

 

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

 

(viii)        the Seller shall have taken any action
necessary to maintain the first perfected ownership interest of the Trust in
the Trust Corpus and the first perfected security interest of the Trust
Depositor in the Contract Assets, the Trust in the Trust Corpus and the
Indenture Trustee in the Reserve Fund Deposits; and

 

(ix)           no selection procedures believed by the
Seller to be adverse to the interests of the Noteholders shall have been
utilized in selecting the Subsequent Contracts.

 

(c)           Seller agrees to pay all reasonable
out-of-pocket expenses in connection with any request for the conveyance of
Subsequent Contracts, whether or not such conveyance is actually consummated.

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES

 

Seller makes the following representations and
warranties, on which Trust Depositor will rely in purchasing the initial
Contract Assets on the Closing Date (and any Subsequent Contracts on the
related Subsequent Transfer Date) and concurrently reconveying the same to the
Trust, and on which the Trust, the Indenture Trustee and the Noteholders will
rely under the Sale and Servicing Agreement. 
Such representations speak as of the execution and delivery of this
Agreement and as of the Closing Date in the case of the Initial Contracts, and
as of the applicable

 

5

 

Subsequent Transfer Date in the case of
Subsequent Contracts, but shall survive the sale, transfer and assignment of
the Contracts to the Trust and the pledge of the Contracts to the Indenture
Trustee.  The repurchase obligation of
Seller set forth in Section 5.01 below and in Section 7.08 of the
Sale and Servicing Agreement constitutes the sole remedy available for a breach
of a representation or warranty of Seller set forth in Section 3.02, 3.03
or 3.04 of this Agreement.

 

Section 3.01.        Representations and
Warranties Regarding Seller.  Seller represents and warrants, as of the
execution and delivery of this Agreement and as of the Closing Date, in the
case of the Initial Contracts, and as of the applicable Subsequent Transfer
Date, in the case of Subsequent Contracts, that:

 

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

 

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

 

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

 

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

 

6

 

mortgage, indenture, contract or other agreement to
which Seller is a party or by which Seller or any of Seller’s properties may be
bound.

 

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

 

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

 

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

 

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

 

Section 3.02.        Representations and
Warranties Regarding Each Contract.  Seller represents and warrants
as to each Contract as of the execution and delivery of this Agreement and as
of the Closing Date, in the case of the Initial Contracts, and as of the
applicable Subsequent Transfer Date, in the case of Subsequent Contracts, that:

 

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

 

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

 

(c)           No Waivers.  As of the Closing Date (or the applicable
Subsequent Transfer Date, in the case of Subsequent Contracts), the terms of
the Contracts have not

 

7

 

been waived, altered or modified in any respect,
except by instruments or documents included in the related Contract File.

 

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

 

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

 

(f)            Insurance.  The Seller, in accordance with
its policies and procedures, has determined that, as of the date of origination
of each Contract, the related Obligor had obtained or agreed to obtain physical
damage insurance covering the Motorcycle. 
The terms of each Contract require that for the term of such Contract
the Motorcycle securing such Contract will be covered by physical damage
insurance.

 

(g)           Origination.  Each Contract (i) was originated by a
Harley-Davidson motorcycle dealer or by Eaglemark Savings Bank, in each case,
in the regular course of its business, (ii) was fully and properly
executed by the parties thereto, and (iii) has been purchased by Seller in
the regular course of its business.  Each
Contract was sold by such motorcycle dealer or Eaglemark Savings Bank, as the
case may be, to the Seller without any fraud or misrepresentation on the part
of such motorcycle dealer or Eaglemark Savings Bank.

 

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

 

(i)            Compliance with Law.  None of the Contracts, the
origination of the Contracts by Harley-Davidson motorcycle dealers or Eaglemark
Savings Bank, the purchase of the Contracts by the Seller, the sale of the
Contracts by the Seller to the Trust Depositor or by the Trust Depositor to the
Trust, or any combination of the foregoing, violated at the time of origination
or as of the Closing Date or as of any Subsequent Transfer Date, as applicable,
in any material respect any requirement of any federal, state or local law and
regulations thereunder, including, without limitation, usury, truth in lending,
motor vehicle installment loan and equal credit opportunity laws, applicable to
the Contracts and the sale of Motorcycles.

 

8

 

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

 

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

 

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

 

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

 

9

 

Date (or the applicable Subsequent Cutoff Date in
the case of Subsequent Contracts), no Motorcycle had been repossessed.

 

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

 

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

 

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

 

(q)           One Original.  Each Contract is evidenced by only one
original executed Contract, which original has been delivered to the Issuer or
its designee on or before the Closing Date (or the applicable Subsequent
Transfer Date in the case of Subsequent Contracts).

 

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

 

(s)           Lockbox Bank.  The Lockbox Bank is the only institution
holding any Lockbox Account for receipt of payments from Obligors, and all
Obligors have been instructed to make payments to the Lockbox Account (either
directly by remitting payments to the Lockbox, or indirectly by making payments
through direct debit, the telephone or the internet to an account of the
Servicer which payments will be subsequently transferred from such account to
one or more Lockbox Banks), and no person claiming through or under Seller has
any claim or interest in the Lockbox Account other than the Lockbox Bank; provided, however, that other “Trusts” (as
defined in the Lockbox Agreement) shall have an interest in certain other
collections therein not related to the Contracts.

 

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

 

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

 

10

 

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

 

(w)          Selection Criteria.  Each Contract is secured by a new or used Motorcycle.  No Contract has a Contract Rate less than
1.99%.  Each Contract amortizes the
amount financed over an original term no greater than 84 months.  Each Contract has a Principal Balance of at
least $500.00 as of the related Cutoff Date.

 

Section 3.03.        Representations and
Warranties Regarding the Contracts in the Aggregate. 
Seller represents and warrants, as of the execution and delivery of this
Agreement and as of the Closing Date, in the case of the Initial Contracts,
and, if applicable, as of the applicable Subsequent Transfer Date, in the case
of Subsequent Contracts, that:

 

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

 

(b)           Characteristics.  The Initial Contracts have the
following characteristics: (i) all the Contracts are secured by Motorcycles;
(ii) no Initial Contract has a remaining maturity of more than 84 months;
and (iii) the final scheduled payment on the Initial Contract with the
latest maturity is due no later than August 2012.  Approximately 80.11% of the Principal Balance
of the Initial Contracts as of the Initial Cutoff Date is attributable to loans
for purchases of new Motorcycles and approximately 19.89% is attributable to
loans for purchases of used Motorcycles. 
No Initial Contract was originated after the Initial Cutoff Date.  No Initial Contract has a Contract Rate less
than 3.987%.  The last scheduled payment
date of the Contracts (including any Subsequent Contracts) is due no later than
November 2012.  Approximately 98.38%
of the Principal Balance of the Initial Contracts as of the Initial Cutoff Date
is attributable to loans for purchases of Motorcycles manufactured by
Harley-Davidson or Buell and approximately 1.62% of the Principal Balance of
the Initial Contracts as of the Initial Cutoff Date is attributable to loans for
purchases of Motorcycles not manufactured by Harley-Davidson or Buell.

 

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

 

11

 

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

 

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

 

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

 

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

 

Section 3.04.        Representations and
Warranties Regarding the Contract Files.  Seller represents and warrants
as of the execution and delivery of this Agreement and as of the Closing Date,
in the case of the Initial Contracts, and as of the applicable Subsequent
Transfer Date, in the case of Subsequent Contracts, that:

 

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

 

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

 

ARTICLE IV

 

PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS

 

Section 4.01.        Custody of Contracts.  The
contents of each Contract File shall be held by the Servicer, or its custodian,
for the benefit of the Trust as the owner thereof in accordance with the Sale
and Servicing Agreement.

 

12

 

Section 4.02.        Filing.  On or
prior to the Closing Date and each Subsequent Transfer Date, Seller shall cause
the UCC financing statement(s) referred to in Section 2.02(g) hereof
and in Section 2.02(g) of the Sale and Servicing Agreement to be
filed and from time to time Seller shall take and cause to be taken such
actions and execute such documents as are necessary or desirable or as Trust
Depositor or the Trust may reasonably request to perfect and protect the Trust
Depositor’s and the Trust’s ownership interest in the Contract Assets against
all other persons, including, without limitation, the filing of financing statements,
amendments thereto and continuation statements, the execution of transfer
instruments and the making of notations on or taking possession of all records
or documents of title.  The Seller
authorizes the Trust Depositor to file financing statements describing the
Contract Assets as collateral.  All
financing statements filed or to be filed against the Seller in favor of the
Trust Depositor or the Trust in connection herewith describing the Contract
Assets as collateral shall contain a statement to the following effect: “A
purchase of or security interest in any collateral described in this financing
statement, except as permitted in the Transfer and Sale Agreement or Sale and
Servicing Agreement, will violate the rights of the Secured Party.”

 

Section 4.03.        Name Change or Relocation. 
(a) During the term of this Agreement, Seller shall not change its
name, identity or structure or state of incorporation without first giving at
least 30 days’ prior written notice to Trust Depositor and to the Trustees.

 

(b)           If any change in Seller’s name, identity or
structure or other action would make any financing or continuation statement or
notice of ownership interest or lien filed under this Agreement seriously
misleading within the meaning of applicable provisions of the UCC or any title
statute, Seller, no later than five days after the effective date of such
change, shall file such amendments as may be required to preserve and protect
the Trust Depositor’s and the Trust’s interests in the Contract Assets and proceeds
thereof.  In addition, Seller shall not
change its state of incorporation unless it has first taken such action as is
advisable or necessary to preserve and protect the Trust Depositor’s and the
Trusts’ interest in the Contract Assets. 
Promptly after taking any of the foregoing actions, Seller shall deliver
to Trust Depositor and the Trustees an opinion of counsel stating that, in the
opinion of such counsel, all financing statements or amendments necessary to
preserve and protect the interests of the Trust Depositor and the Trust in the
Contract Assets have been filed, and reciting the details of such filing.

 

Section 4.04.        Costs and Expenses. 
Seller agrees to pay all reasonable costs and disbursements in
connection with the perfection and the maintenance of perfection, as against
all third parties, of (i) Trust Depositor’s, the Issuer’s and the
Indenture Trustee’s right, title and interest in and to the Contract Assets
(including, without limitation, the security interest in the Motorcycles related
thereto) and (ii) the security interests provided for in the Indenture.

 

Section 4.05         Sale Treatment.  Each
of Seller and Trust Depositor shall treat the transfer of Contract Assets made
hereunder (including in respect of Subsequent Contracts) for all purposes
(including tax and financial accounting purposes) as a sale and purchase on all
of its relevant books, records, financial statements and other applicable
documents.

 

13

 

Section 4.06         Separateness from Trust
Depositor.  The Seller agrees to take or refrain from
taking or engaging in with respect to the Trust Depositor each of the actions
or activities specified in the “substantive consolidation” opinion of
Winston & Strawn LLP (or in any related certificate of Seller)
delivered on the Closing Date, upon which the conclusions expressed therein are
based.

 

Section 4.07         Protection of Security
Interests.  The Seller agrees to deliver an Officer’s
Certificate to the Owner Trustee and the Indenture Trustee, as promptly as
practicable after the Closing Date (or Subsequent Transfer Date, as the case
may be), and in any event within 60 days thereof, certifying that the Seller’s
compliance officer has reviewed the original of each Initial Contract and each
related Contract File, that each Initial Contract and related Contract File
conforms in all material respects with the initial List of Contracts and each
such Contract File is complete and that each document required be an original.

 

ARTICLE V

 

REMEDIES UPON MISREPRESENTATION

 

Section 5.01.        Repurchases of Contracts
for Breach of Representations and Warranties.  Seller hereby agrees, for the
benefit of the Issuer, the Indenture Trustee and the Trust Depositor, that it
shall repurchase a Contract including any Subsequent Contracts (together with
all related Contract Assets), at its Repurchase Price, not later than two
Business Days prior to the first Determination Date after Seller becomes aware,
or should have become aware, or receives written notice from Trust Depositor,
either of the Trustees or the Servicer of any breach of a representation or
warranty of Seller set forth in Article III of this Agreement that
materially adversely affects Trust Depositor’s or the Trust’s interest in such
Contract (without regard to the benefits of the Reserve Fund) and which breach
has not been cured; provided, however,
that with respect to any Contract described on the List of Contracts with
respect to an incorrect unpaid Principal Balance which Seller would otherwise
be required to repurchase pursuant to this Section 5.01 and
Section 7.08 of the Sale and Servicing Agreement, Seller may, in lieu of
repurchasing such Contract, deposit in the Collection Account not later than
two Business Days prior to such Determination Date cash in an amount sufficient
to cure any deficiency or discrepancy; and provided
further that with respect to a breach of a representation or
warranty relating to the Contracts in the aggregate and not to any particular
Contract, Seller may select Contracts (without adverse selection) to repurchase
such that had such Contracts not been reconveyed by Trust Depositor and
included as part of the Trust there would have been no breach of such
representation or warranty; provided further
that the failure to maintain perfection of the security interest in the
Motorcycle securing a Contract in accordance with the Sale and Servicing
Agreement, shall be deemed to be a breach materially and adversely affecting
the Trust’s interest in the Contracts or in the related Contract Assets.  Notwithstanding any other provision of this
Agreement, the obligation of Seller under this Section 5.01 and under
Section 7.08 of the Sale and Servicing Agreement shall not terminate upon
a Service Transfer pursuant to Article VIII of the Sale and Servicing
Agreement.

 

14

 

ARTICLE VI

 

INDEMNITIES

 

Section 6.01.        Seller Indemnification. 
Seller will defend and indemnify Trust Depositor, the Trust, the
Trustees, any agents of the Trustees and the Noteholders against any and all
costs, expenses, losses, damages, claims and liabilities, joint or several,
including reasonable fees and expenses of counsel and expenses of litigation
arising out of or resulting from (i) this Agreement or the use, ownership or
operation of any Motorcycle by Seller or the Servicer or any Affiliate of
either, (ii) any representation or warranty or covenant made by Seller in
this Agreement being untrue or incorrect (subject to the second sentence of the
preamble to Article III of this Agreement above), and (iii) any
untrue statement or alleged untrue statement of a material fact contained in
the Prospectus or in any amendment thereto or the omission or alleged omission
to state therein a material fact necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading, in each
case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement was made in conformity with information furnished to
Trust Depositor by Seller specifically for use therein.  Notwithstanding any other provision of this
Agreement, the obligation of Seller under this Section 6.01 shall not
terminate upon a Service Transfer pursuant to Article VIII of the Sale and
Servicing Agreement and shall survive any termination of that agreement or this
Agreement.

 

Section 6.02.        Liabilities to
Obligors.  No obligation or liability to any Obligor
under any of the Contracts is intended to be assumed by the Trustees, the Trust
or the Noteholders under or as a result of this Agreement and the transactions
contemplated hereby.

 

Section 6.03.        Tax Indemnification. 
Seller agrees to pay, and to indemnify, defend and hold harmless the
Trust Depositor, the Trust, the Trustees or the Noteholders from, any taxes which
may at any time be asserted with respect to, and as of the date of, the
transfer of the Contracts to Trust Depositor hereunder and the concurrent
reconveyance to the Trust and the further pledge by the Trust to the Indenture
Trustee, including, without limitation, any sales, gross receipts, general
corporation, personal property, privilege or license taxes (but not including
any federal, state or other taxes arising out of the creation of the Trust and
the issuance of the Notes) and costs, expenses and reasonable counsel fees in
defending against the same, whether arising by reason of the acts to be
performed by Seller under this Agreement or the Servicer under the Sale and
Servicing Agreement or imposed against the Trust, a Noteholder or otherwise.  Notwithstanding any other provision of this
Agreement, the obligation of Seller under this Section 6.03 shall not
terminate upon a Service Transfer pursuant to Article VIII of the Sale and
Servicing Agreement and shall survive any termination of this Agreement.

 

Section 6.04.        Operation of Indemnities. 
Indemnification under this Article VI shall include, without
limitation, reasonable fees and expenses of counsel and expenses of
litigation.  If Seller has made any
indemnity payments to Trust Depositor or the Trustees pursuant to this
Article VI and Trust Depositor or the Trustees thereafter collects any of
such amounts from others, Trust Depositor or the Trustees will repay such
amounts collected to Seller, except that

 

15

 

any payments received by Trust Depositor or
the Trustees from an insurance provider as a result of the events under which
the Seller’s indemnity payments arose shall be repaid prior to any repayment of
the Seller’s indemnity payment.

 

ARTICLE VII

 

MISCELLANEOUS

 

Section 7.01.        Prohibited Transactions
with Respect to the Trust.  Seller shall not:

 

(a)           Provide credit to any Noteholder for the
purpose of enabling such Noteholder to purchase Notes;

 

(b)           Purchase any Notes in an agency or trustee
capacity; or

 

(c)           Except in its capacity as Servicer as
provided in the Sale and Servicing Agreement, lend any money to the Trust.

 

Section 7.02.        Merger or Consolidation. 
(a) Except as otherwise provided in this Section 7.02, Seller
will keep in full force and effect its existence, rights and franchises as a
Nevada corporation, and will obtain and preserve its qualification to do
business as a foreign corporation in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Agreement and of any of the Contracts and to perform its
duties under this Agreement.

 

(b)           Any person into which Seller may be merged or
consolidated, or any corporation or other entity resulting from such merger or
consolidation to which Seller is a party, or any person succeeding to the
business of Seller, shall be the successor to Seller hereunder, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding.

 

(c)           Upon the merger or consolidation of the
Seller as described in this Section 7.02, the Seller shall provide
Standard & Poor’s and Moody’s notice of such merger or consolidation
within thirty (30) days after completion of the same.

 

Section 7.03.        Termination.  This
Agreement shall terminate (after distribution of any Note Distributable Amount
due pursuant to Section 7.05 of the Sale and Servicing Agreement) on the
Distribution Date on which the principal balance of the Class A-1 Notes,
Class A-2 Notes and the Class B Notes is reduced to zero; provided, that Seller’s representations
and warranties and indemnities by Seller shall survive termination.

 

Section 7.04.        Assignment or Delegation by
Seller.  Except as specifically authorized hereunder,
Seller may not convey and assign or delegate any of its rights or obligations
hereunder absent the prior written consent of Trust Depositor and the Trustees,
and any attempt to do so without such consent shall be void.

 

16

 

Section 7.05.        Amendment. 
(a) This Agreement may be amended from time to time by Seller and
Trust Depositor, with notice to the Rating Agencies, but without the consent of
the Trustees or any of the Noteholders to correct manifest error, to cure any
ambiguity, to correct or supplement any provisions herein or therein which may
be inconsistent with any other provisions herein, therein or in the Prospectus,
as the case may be, or to add any other provisions with respect to matters or
questions arising under this Agreement which shall not be inconsistent with the
provisions of this Agreement or the Prospectus; provided, however, that such action shall not, as evidenced
by an Opinion of Counsel for Seller acceptable to the Trustees, adversely
affect the interests of any Noteholder.

 

(b)           This Agreement may also be amended from time
to time by Seller and Trust Depositor, with the consent of the Required
Holders, for the purpose of adding any provisions to or changing in any manner
or eliminating any of the provisions of this Agreement or of modifying in any
manner the rights of the Indenture Trustee for the benefit of Noteholders; provided, however, that no such amendment
or waiver shall (a) reduce in any manner the amount of, or delay the
timing of, collections of payments on the Contracts or distributions which are
required to be made on any Note or (b) reduce the aforesaid percentage
required to consent to any such amendment, without the consent of the holders
of all Notes then outstanding.

 

(c)           Promptly after the execution of any amendment
or consent pursuant to this Section 7.05, Trust Depositor shall furnish
written notification of the substance of such amendment and a copy of such
amendment to each Trustee and each Rating Agency.

 

(d)           It shall not be necessary for the consent of
Noteholders under this Section 7.05 to approve the particular form of any
proposed amendment, but it shall be sufficient if such consent shall approve
the substance thereof.  The manner of
obtaining such consents and of evidencing the authorization of the execution
thereof by Noteholders shall be subject to such reasonable requirements as the
Trustees may prescribe.

 

(e)           Upon the execution of any amendment or
consent pursuant to this Section 7.05, this Agreement shall be modified in
accordance therewith, and such amendment or consent shall form a part of this
Agreement for all purposes, and every holder of Notes theretofore or thereafter
issued hereunder shall be bound thereby.

 

Section 7.06.        Notices.  All notices, demands, certificates, requests and communications
hereunder (“notices”) shall be in writing and shall be effective (a) upon
receipt when sent through the U.S. mails, registered or certified mail, return
receipt requested, postage prepaid, with such receipt to be effective the date
of delivery indicated on the return receipt, or (b) one Business Day after
delivery to an overnight courier, or (c) on the date personally delivered
to an Authorized Officer of the party to which sent, or (d) on the date
transmitted by legible telecopier transmission with a confirmation of receipt,
in all cases addressed to the recipient at the address for such recipient set
forth in the Sale and Servicing Agreement.

 

17

 

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

 

All communications and notices pursuant hereto to
Noteholders shall be in writing and delivered or mailed at the address shown in
the Note Register.

 

Section 7.07.        Merger and Integration. 
Except as specifically stated otherwise herein, this Agreement sets
forth the entire understanding of the parties relating to the subject matter hereof,
and all prior understandings, written or oral, are superseded by this
Agreement.  This Agreement may not be
modified, amended, waived, or supplemented except as provided herein.

 

Section 7.08.        Headings.  The
headings herein are for purposes of reference only and shall not otherwise
affect the meaning or interpretation of any provision hereof.

 

Section 7.09.        Governing Law.  This
Agreement shall be governed by, and construed and enforced in accordance with,
the internal laws of the State of Illinois.

 

Section 7.10.        No Bankruptcy Petition.  The Seller covenants and agrees
that, prior to the date that is one year and one day after the payment in full
of all amounts owing in respect of all outstanding Securities, as well as any
other amounts distributable or payable from the Trust Estate, together with any
other amounts owing in respect of obligations of the Trust Depositor, it will
not institute against, or solicit or join in or cooperate with or encourage any
Person to institute against, the Trust Depositor or the Trust, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings or other
similar proceedings under the laws of the United State or any State of the
United States.  This Section 7.10
shall survive termination of this Agreement.

 

[signature page follows]

 

18

 

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

 

 

	
   

  	
  HARLEY-DAVIDSON CUSTOMER
  FUNDING CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ PERRY A. GLASSGOW

  	
   

  
	
   

  	
   

  	
  Printed Name: Perry A. Glassgow

  
	
   

  	
   

  	
  Title: Vice President and Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HARLEY-DAVIDSON CREDIT
  CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ PERRY A. GLASSGOW

  	
   

  
	
   

  	
   

  	
  Printed Name: Perry A. Glassgow

  
	
   

  	
   

  	
  Title: Vice President and Treasurer

  

 

Signature
Page to Transfer and

Sale Agreement

 

 

Exhibit A

Transfer and Sale

Agreement

 

FORM OF
ASSIGNMENT

 

In accordance with the Transfer and Sale Agreement
(the “Agreement”) dated as of
August 1, 2005 made by and between the undersigned, as seller thereunder
(“Seller”), and Harley-Davidson
Customer Funding Corp., a Nevada corporation and wholly-owned subsidiary of
Seller (“Trust Depositor”), as
purchaser thereunder, the undersigned does hereby sell, transfer, convey and
assign, set over and otherwise convey to Trust Depositor (i) all the
right, title and interest of Seller in and to the Initial Contracts listed on
the initial List of Contracts in effect on the Closing Date (including, without
limitation, all security interests and all rights to receive payments which are
collected pursuant thereto after the Initial Cutoff Date, including any
liquidation proceeds therefrom, but excluding any rights to receive payments
which were collected pursuant thereto on or prior to the Initial Cutoff Date),
(ii) all rights of Seller under any physical damage or other individual
insurance policy (including a “forced
placed” policy, if any), any debt insurance policy or any debt
cancellation agreement relating to any such Contract, an Obligor or a
Motorcycle securing such Contract, (iii) all security interests in each
such Motorcycle, (iv) all documents contained in the related Contract
Files, (v) all rights of Seller in the Lockbox, Lockbox Account and related
Lockbox Agreement to the extent they relate to the Contracts, (vi) all
rights (but not the obligations) of the Seller under any motorcycle dealer
agreements between the dealers (i.e. originators of certain Contracts) and the
Seller, (vii) all rights of Seller to certain rebates of premiums and
other amounts relating to insurance policies, debt cancellation agreements,
extended service contracts or other repair agreements and other items financed
under such Contracts and (viii) all proceeds and products of the foregoing

 

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

 

Capitalized terms used herein but not otherwise
defined shall have the meanings assigned to such terms in the Sale and
Servicing Agreement dated as of August 1, 2005 made by and among the
undersigned, as servicer, the Trust Depositor, Harley-Davidson Motorcycle Trust
2005-3, as issuer, and The Bank of New York Trust Company, N.A., as indenture
trustee.

 

A-1

 

IN WITNESS WHEREOF, the undersigned has caused this
Assignment to be duly executed this        
day of August, 2005.

 

	
   

  	
  HARLEY-DAVIDSON CREDIT
  CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Printed Name:  Perry A.
  Glassgow

  
	
   

  	
   

  	
  Title: Vice President and Treasurer

  

 

A-2

 

Exhibit B

Transfer and Sale

Agreement

 

FORM OF
OFFICER’S CERTIFICATE

 

(See Exhibit C to the Sale and Servicing
Agreement)

 

B-1

 

Exhibit C

Transfer and Sale

Agreement

 

FORM OF
SUBSEQUENT PURCHASE AGREEMENT

 

SUBSEQUENT PURCHASE AGREEMENT (the “Agreement”), dated as of                      ,
             ,
by and among Harley-Davidson Customer Funding Corp., a Nevada corporation (the
“Trust Depositor”), and
Harley-Davidson Credit Corp., a Nevada corporation (the “Seller”), pursuant to the Transfer and
Sale Agreement referred to below.

 

WITNESSETH:

 

WHEREAS, the Trust Depositor and the Seller are parties
to the Transfer and Sale Agreement, dated as of August 1, 2005 (the “Transfer and Sale Agreement”);

 

WHEREAS, pursuant to the Transfer and Sale
Agreement, the Seller wishes to sell the Subsequent Contracts to the Trust
Depositor, and the Trust Depositor wishes to purchase the same, for the
purchase price set forth in Section 3
below; and

 

WHEREAS, the Seller has timely delivered an Addition
Notice related to such conveyance as required in the Sale and Servicing
Agreement dated as of August 1, 2005 among the Seller (in the capacity of
Servicer thereunder), the Issuer as defined therein, the Trust Depositor and
the Indenture Trustee as defined therein (the “Sale
and Servicing Agreement”).

 

NOW, THEREFORE, the Trust Depositor and the Seller
hereby agree as follows:

 

Section 1.              Capitalized
terms used herein shall have the meanings ascribed to them in the Sale and
Servicing Agreement unless otherwise defined herein.

 

“Subsequent
Cutoff Date” shall
mean, with respect to the Subsequent Contracts transferred hereby, [                    ].

 

“Subsequent
Contracts” shall
mean, for purposes of this Agreement, the Subsequent Contracts listed in the
Subsequent List of Contracts attached hereto as Exhibit A.

 

“Subsequent
Transfer Date” shall
mean, with respect to the Subsequent Contracts transferred hereby, [                    ].

 

Section 2.              Subsequent List of Contracts.  The Subsequent List of Contracts attached hereto as Exhibit A is a
supplement to the initial List of Contracts attached as Exhibit H to the Sale and Servicing
Agreement.  The Contracts listed in the
Subsequent List of Contracts

 

C-1

 

constitute the Subsequent Contracts to be
transferred pursuant to this Agreement on the subsequent Transfer Date.

 

Section 3.              Transfer of Subsequent Contracts. 
Subject to and upon the terms and conditions set forth in
Section 2.04(b) of the Transfer and Sale Agreement and this
Agreement, Seller hereby sells, transfers, assigns, sets over and otherwise
conveys to Trust Depositor, in consideration of Trust Depositor’s payment of $[                ]
as the purchase price therefor, (i) all the right, title and interest of
Seller in and to the Subsequent Contracts listed on the related Subsequent List
of Contracts (including, without limitation, all security interests and all
rights to receive payments which are collected pursuant thereto after the
applicable Subsequent Cutoff Date, including any liquidation proceeds
therefrom, but excluding any rights to receive payments which were collected
pursuant thereto on or prior to such Subsequent Cutoff Date), (ii) all
rights of Seller under any physical damage or other individual insurance policy
(including a “forced placed”
policy, if any), any debt insurance policy or any debt cancellation agreement
relating to any such Subsequent Contract, an Obligor or a Motorcycle securing
such Subsequent Contract, (iii) all security interests in each such
Motorcycle, (iv) all documents contained in the related Subsequent
Contract Files, (v) all rights of Seller in the Lockbox, Lockbox Account
and related Lockbox Agreement to the extent they relate to the Subsequent
Contracts, (vi) all rights (but not the obligations) of the Seller under
any motorcycle dealer agreements between the dealers (i.e. originators of certain Subsequent
Contracts) and the Seller, (vii) all rights of Seller to certain rebates
of premiums and other amounts relating to insurance policies, debt cancellation
agreements, extended service contracts or other repair agreements and other
items financed under such Subsequent Contracts and (viii) all proceeds and
products of the foregoing.  It is the
intention of the Seller and the Trust Depositor that the transfer contemplated
by this Agreement shall constitute a sale of the Subsequent Contracts from the
Seller to the Trust Depositor, conveying good title thereto free and clear of
any Liens, and that the Subsequent Contracts shall not be part of the Seller’s
estate in the event of the filing of a bankruptcy petition by or against Seller
under any bankruptcy or similar law.

 

Section 4.              Representations and Warranties of the Seller. 
(a) Seller hereby represents and warrants to the Trust Depositor
that the representations and warranties of Seller in Section 3.01 of the
Transfer and Sale Agreement are true and correct as of the Subsequent Transfer
Date.

 

(b)           Seller hereby repeats and remakes with
respect to the Subsequent Contracts as of the Subsequent Transfer Date
(i) the representations and warranties of Seller in Sections 3.02, 3.03
and 3.04 of the Transfer and Sale Agreement, except that, with respect to
subsection (b) of Section 3.03, (A) approximately [           ]%
of the Principal Balance of the Contracts as of the Subsequent Cutoff Date is
attributable to loans for purchases of new Motorcycles and approximately [           ]%
is attributable to loans for purchases of used Motorcycles, and (B) no
Contract was originated after the Subsequent Cutoff Date, as well as
(ii) covenants to provide the certificate required by
Section 2.02(h) (solely with respect to the Subsequent Contracts).

 

C-2

 

(c)           Seller hereby represents and warrants that
(a) the aggregate Principal Balance of the Subsequent Contracts listed on
the Subsequent List of Contracts and conveyed to the Trust Depositor pursuant
to this Agreement is $[                   ]
as of the Subsequent Cutoff Date, and (b) the conditions set forth in
Section 2.04(b) of the Transfer and Sale Agreement have been
satisfied as of the Subsequent Transfer Date.

 

Section 5.              Ratification of Agreement.  As
supplemented by this Agreement, the Transfer and Sale Agreement is in all
respects ratified and confirmed and, as so supplemented by this Agreement,
shall be read, taken and construed as one and the same instrument.

 

Section 6.              Counterparts.  This Agreement may be executed
in two or more counterparts (and by different parties in separate
counterparts), each of which shall be an original but all of which together
shall constitute one and the same instrument.

 

Section 7.              Governing Law.  This Agreement shall be
construed in accordance with the laws of the State of Illinois, without
reference to its conflict of law provisions, and the obligations, rights and
remedies of the parties hereunder shall be determined in accordance with such
laws.

 

C-3

 

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

 

 

	
   

  	
  HARLEY-DAVIDSON CUSTOMER
  FUNDING CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Printed
  Name:   Perry A. Glassgow

  	
   

  
	
   

  	
   

  	
  Title:
  Vice President and Treasurer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HARLEY-DAVIDSON CREDIT
  CORP.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Printed
  Name:   Perry A. Glassgow

  	
   

  
	
   

  	
   

  	
  Title:
  Vice President and TreasurerEXHIBIT 10.2

 

 

 

 

SALE AND SERVICING AGREEMENT

 

 

among

 

 

HARLEY-DAVIDSON MOTORCYCLE TRUST 2005-3,

as Issuer,

 

 

HARLEY-DAVIDSON CUSTOMER FUNDING CORP.,

as Trust Depositor,

 

 

HARLEY-DAVIDSON CREDIT CORP.,

as Servicer

 

and

 

 

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

as Indenture Trustee

 

 

Dated as of August 1, 2005

 

 

 

 

Table of Contents

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE ONE  DEFINITIONS

  	
   

  	
  1

  
	
  Section 1.01.

  	
  Definitions

  	
   

  	
  1

  
	
  Section 1.02.

  	
  Usage
  of Terms

  	
   

  	
  20

  
	
  Section 1.03.

  	
  Section References

  	
   

  	
  20

  
	
  Section 1.04.

  	
  Calculations

  	
   

  	
  20

  
	
  Section 1.05.

  	
  Accounting
  Terms

  	
   

  	
  20

  
	
  ARTICLE TWO  TRANSFER OF CONTRACTS

  	
   

  	
  20

  
	
  Section 2.01.

  	
  Closing

  	
   

  	
  20

  
	
  Section 2.02.

  	
  Conditions
  to the Closing

  	
   

  	
  21

  
	
  Section 2.03.

  	
  Conveyance
  of Subsequent Contracts

  	
   

  	
  23

  
	
  ARTICLE THREE  REPRESENTATIONS AND WARRANTIES

  	
   

  	
  25

  
	
  Section 3.01.

  	
  Representations
  and Warranties Regarding the Trust Depositor

  	
   

  	
  26

  
	
  Section 3.02.

  	
  Representations
  and Warranties Regarding the Servicer

  	
   

  	
  28

  
	
  ARTICLE FOUR  PERFECTION OF TRANSFER AND PROTECTION OF
  SECURITY INTERESTS

  	
   

  	
  29

  
	
  Section 4.01.

  	
  Custody
  of Contracts

  	
   

  	
  29

  
	
  Section 4.02.

  	
  Filing

  	
   

  	
  31

  
	
  Section 4.03.

  	
  Name Change
  or Relocation

  	
   

  	
  31

  
	
  Section 4.04.

  	
  Costs and
  Expenses

  	
   

  	
  31

  
	
  ARTICLE FIVE  SERVICING OF CONTRACTS

  	
   

  	
  32

  
	
  Section 5.01.

  	
  Responsibility
  for Contract Administration

  	
   

  	
  32

  
	
  Section 5.02.

  	
  Standard of
  Care

  	
   

  	
  32

  
	
  Section 5.03.

  	
  Records

  	
   

  	
  32

  
	
  Section 5.04.

  	
  Inspection

  	
   

  	
  32

  
	
  Section 5.05.

  	
  Trust
  Accounts

  	
   

  	
  33

  
	
  Section 5.06.

  	
  Enforcement

  	
   

  	
  34

  
	
  Section 5.07.

  	
  Trustees to
  Cooperate

  	
   

  	
  36

  
	
  Section 5.08.

  	
  Costs and
  Expenses

  	
   

  	
  36

  
	
  Section 5.09.

  	
  Maintenance
  of Security Interests in Motorcycles

  	
   

  	
  37

  
	
  Section 5.10.

  	
  Successor
  Servicer/Lockbox Agreements

  	
   

  	
  37

  
	
  Section 5.11.

  	
  Separate
  Entity Existence

  	
   

  	
  37

  
	
  ARTICLE SIX  THE TRUST DEPOSITOR

  	
   

  	
  37

  
	
  Section 6.01.

  	
  Covenants
  of the Trust Depositor

  	
   

  	
  37

  
	
  Section 6.02.

  	
  Liability
  of Trust Depositor; Indemnities

  	
   

  	
  40

  
	
  Section 6.03.

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

  	
   

  	
  41

  
	
  Section 6.04.

  	
  Limitation
  on Liability of Trust Depositor and Others

  	
   

  	
  42

  
	
  Section 6.05.

  	
  Trust
  Depositor Not to Resign

  	
   

  	
  42

  
	
  ARTICLE SEVEN  DISTRIBUTIONS; RESERVE FUND

  	
   

  	
  43

  
	
  Section 7.01.

  	
  Monthly
  Distributions

  	
   

  	
  43

  
	
  Section 7.02.

  	
  Fees

  	
   

  	
  43

  
	
  Section 7.03.

  	
  Advances;
  Realization of Carrying Charge

  	
   

  	
  43

  
	
  Section 7.04.

  	
  Interest
  Reserve Account

  	
   

  	
  44

  
	
  Section 7.05.

  	
  Distributions;
  Priorities

  	
   

  	
  44

  
	
  Section 7.06.

  	
  Reserve Fund

  	
   

  	
  47

  
	
  Section 7.07.

  	
  Establishment
  of Pre-Funding Account

  	
   

  	
  48

  
	
  Section 7.08.

  	
  Purchase of
  Contracts for Breach of Representations and Warranties

  	
   

  	
  49

  
	
  Section 7.09.

  	
  Reassignment
  of Reacquired Contracts

  	
   

  	
  49

  
	
  Section 7.10.

  	
  Servicer’s
  Purchase Option

  	
   

  	
  50

  
	
  Section 7.11.

  	
  Purchase of
  Contracts for Breach of Servicing Obligations

  	
   

  	
  50

  

 

i

 

	
  ARTICLE EIGHT  EVENTS OF TERMINATION; SERVICE TRANSFER

  	
   

  	
  51

  
	
  Section 8.01.

  	
  Events of
  Termination

  	
   

  	
  51

  
	
  Section 8.02.

  	
  Waiver of
  Event of Termination

  	
   

  	
  52

  
	
  Section 8.03.

  	
  Service
  Transfer

  	
   

  	
  52

  
	
  Section 8.04.

  	
  Successor
  Servicer to Act; Appointment of Successor Servicer

  	
   

  	
  52

  
	
  Section 8.05.

  	
  Notification
  to Securityholders

  	
   

  	
  53

  
	
  Section 8.06.

  	
  Effect of
  Transfer

  	
   

  	
  53

  
	
  Section 8.07.

  	
  Database
  File

  	
   

  	
  53

  
	
  Section 8.08.

  	
  Successor
  Servicer Indemnification

  	
   

  	
  54

  
	
  Section 8.09.

  	
  Responsibilities
  of the Successor Servicer

  	
   

  	
  54

  
	
  Section 8.10.

  	
  Limitation
  of Liability of Servicer

  	
   

  	
  54

  
	
  Section 8.11.

  	
  Merger or
  Consolidation of Servicer

  	
   

  	
  55

  
	
  Section 8.12.

  	
  Servicer
  Not to Resign

  	
   

  	
  55

  
	
  Section 8.13.

  	
  Appointment
  of Subservicer

  	
   

  	
  55

  
	
  ARTICLE NINE  REPORTS

  	
   

  	
  56

  
	
  Section 9.01.

  	
  Monthly
  Reports

  	
   

  	
  56

  
	
  Section 9.02.

  	
  Officer’s
  Certificate

  	
   

  	
  56

  
	
  Section 9.03.

  	
  Other Data

  	
   

  	
  56

  
	
  Section 9.04.

  	
  Annual
  Report of Accountants

  	
   

  	
  56

  
	
  Section 9.05.

  	
  Annual
  Statement of Compliance from Servicer

  	
   

  	
  57

  
	
  Section 9.06.

  	
  Monthly
  Reports to Noteholders

  	
   

  	
  57

  
	
  ARTICLE TEN  TERMINATION

  	
   

  	
  59

  
	
  Section 10.01.

  	
  Sale of Trust
  Assets

  	
   

  	
  59

  
	
  ARTICLE ELEVEN  MISCELLANEOUS

  	
   

  	
  59

  
	
  Section 11.01.

  	
  Amendment

  	
   

  	
  60

  
	
  Section 11.02.

  	
  Protection
  of Title to Trust

  	
   

  	
  61

  
	
  Section 11.03.

  	
  Governing
  Law

  	
   

  	
  63

  
	
  Section 11.04.

  	
  Notices

  	
   

  	
  63

  
	
  Section 11.05.

  	
  Severability
  of Provisions

  	
   

  	
  65

  
	
  Section 11.06.

  	
  Assignment

  	
   

  	
  65

  
	
  Section 11.07.

  	
  Third Party
  Beneficiaries

  	
   

  	
  65

  
	
  Section 11.08.

  	
  Counterparts

  	
   

  	
  65

  
	
  Section 11.09.

  	
  Headings

  	
   

  	
  65

  
	
  Section 11.10.

  	
  No
  Bankruptcy Petition; Disclaimer and Subordination

  	
   

  	
  65

  
	
  Section 11.11.

  	
  Limitation
  of Liability of Owner Trustee and Indenture Trustee

  	
   

  	
  66

  

 

ii

 

EXHIBITS

 

	
  Exhibit A

  	
  Form of Assignment

  	
  A-1

  
	
  Exhibit B

  	
  Form of Closing
  Certificate of Trust Depositor

  	
  B-1

  
	
  Exhibit C

  	
  Form of Closing
  Certificate of Seller/Servicer

  	
  C-1

  
	
  Exhibit D

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

  	
  D-1

  
	
  Exhibit E

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

  	
  E-1

  
	
  Exhibit F

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

  	
  F-1

  
	
  Exhibit G

  	
  Form of Certificate
  Regarding Reacquired Contracts

  	
  G-1

  
	
  Exhibit H

  	
  List of Contracts

  	
  H-1

  
	
  Exhibit I

  	
  Form of Monthly
  Report to Noteholders and the Certificateholder

  	
  I-1

  
	
  Exhibit J

  	
  Seller’s Representations
  and Warranties

  	
  J-1

  
	
  Exhibit K

  	
  Lockbox Bank and Lockbox
  Account

  	
  K-1

  
	
  Exhibit L

  	
  Form of Subsequent
  Transfer Agreement

  	
  L-1

  

 

iii

 

SALE AND SERVICING AGREEMENT, dated as of August 1,
2005, among Harley-Davidson Motorcycle Trust 2005-3 (together with its
successors and assigns, the “Issuer”
or the “Trust”), Harley-Davidson
Customer Funding Corp. (together with its successor and assigns, the “Trust Depositor”), The Bank of New York
Trust Company, N.A. (solely in its capacity as Indenture Trustee together with
its successors and assigns, the “Indenture
Trustee”) and Harley-Davidson Credit Corp. (solely in its capacity
as Servicer together with its successor and assigns, “Harley-Davidson Credit” or the “Servicer”).

 

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

 

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

 

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

 

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

 

ARTICLE ONE

DEFINITIONS

 

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

 

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

 

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

 

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

 

1

 

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

 

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

 

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

 

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

 

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

 

“Available Interest” means, with respect to any Distribution
Date, the total (without duplication) of the following amounts received by the
Servicer on or in respect of the Contracts during the related Due Period: (i) all
amounts received in respect of interest on the Contracts, (ii) the
interest component of all Net Liquidation Proceeds, (iii) the interest
component of the aggregate of the Purchase Prices for Contracts reacquired by
the Trust Depositor pursuant to Section 7.08, (iv) all Advances made
by the Servicer pursuant to Section 7.03, (v) the interest component
of all amounts paid by the Servicer in connection with an optional purchase of
the Contracts pursuant to Section 7.10, (vi) the interest component
of the aggregate of the Purchase Prices for Contracts purchased by the Servicer
pursuant to Section 7.11, (vii) all amounts received in respect of
Carrying Charges transferred from the Interest Reserve Account pursuant to Section 7.03,
and (viii) all amounts received in respect of interest, dividends, gains,
income and earnings on investment of funds in the Trust Accounts as
contemplated in Section 5.05(d).

 

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

 

2

 

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

 

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

 

“Base Prospectus” means the Prospectus dated August 19,
2005 relating to the Harley-Davidson Motorcycle Trusts.

 

“Buell” means Buell Motorcycle Company, LLC.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Class A-1 Final Distribution
Date” means the May 2010
Distribution Date.

 

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

 

3

 

“Class A-1 Rate” means 4.30% per annum (computed on the basis
of a 360-day year of twelve 30-day months).

 

 “Class A-2 Final Distribution Date” means the June 2012 Distribution Date.

 

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

 

“Class A-2 Rate” means 4.41% per annum (computed on the basis
of a 360-day year of twelve 30-day months).

 

“Class B Final Distribution
Date” means the May 2013
Distribution Date.

 

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

 

 “Class B Rate” means 4.60% per annum (computed on the basis
of a 360-day year of twelve 30-day months).

 

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

 

“Closing Date” means August 30, 2005.

 

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

 

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

 

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

 

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

 

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

 

“Contract File” means, as to each Contract, (a) the
original copy of the Contract, including the executed conditional sales
contract or promissory note and security agreement or other evidence of the
obligation of the Obligor, (b) the original title certificate to the
Motorcycle and, where applicable, the certificate of lien recordation, or, if
such title certificate has not yet been issued, an application for such title
certificate, or other appropriate evidence of a security

 

4

 

interest
in the covered Motorcycle; (c) the assignments of the Contract; (d) the
original copy of any agreement(s) modifying the Contract including, without
limitation, any extension agreement(s) and (e) documents evidencing the
existence of physical damage insurance covering such Motorcycle.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Delinquency Amount” means, as of any Distribution Date, the
Principal Balance of all Contracts that were delinquent 60 days or more as of
the end of the related Due Period (including

 

5

 

Contracts
in respect of which the related Motorcycles have been repossessed and are still
in inventory).

 

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

 

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

 

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

 

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

 

“Distribution Date” means the fifteenth day of each calendar
month during the term of this Agreement, or if such day is not a Business Day,
the next Business Day, with the first such Distribution Date hereunder being September 15,
2005.

 

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

 

“Due Period” means a calendar month during the term of
this Agreement, and the Due Period related to a Determination Date or
Distribution Date shall be the calendar month immediately preceding such date; provided, however, that with respect to
the Initial Determination Date or Initial Distribution Date, the Due Period
shall be the period from the Initial Cutoff Date to and including August 31,
2005.

 

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

 

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

 

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

 

6

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Funding Period” means the period beginning on the Closing
Date and ending on the first to occur of (a) the Distribution Date on
which the amount on deposit in the Pre-Funding Account (after giving effect to
any transfers therefrom in connection with the transfer of

 

7

 

Subsequent
Contracts to the Trust on such Distribution Date) is less than $150,000, (b) the
date on which an Event of Termination occurs, (c) the date on which an
Insolvency Event occurs with respect to the Trust Depositor and (d) the
close of business on the date which is 90 days from and including the Closing
Date.

 

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

 

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

 

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

 

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

 

“Indenture Trustee Fee” means, with respect to any Distribution
Date, one-twelfth of the product of .00185% and the sum of (i) the
Principal Balance of the Contracts as of the beginning of the related Due
Period and (ii) the Pre-Funded Amount as of the beginning of such period; provided, however, in no event shall such
fee be less than $200.00 per month.

 

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

 

“Initial Class A-1 Note
Balance” means
$402,000,000.

 

“Initial Class A-2 Note
Balance” means
$213,870,000.

 

“Initial Class B Note Balance”
means $34,130,000.

 

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

 

“Initial Cutoff Date” means as of the close of business on August 16,
2005.

 

“Insolvency Event” means, with respect to a specified Person, (i) the
entry of a decree or order for relief by a court or regulatory authority having
jurisdiction in respect of such Person in

 

8

 

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

 

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

 

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

 

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

 

“Interest Reserve Amount” means, as of any date of determination, the
amount on deposit in the Interest Reserve
Account on such date, and as of the Closing Date shall be $1,365,650.65.

 

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

 

“Issuer” means the Harley-Davidson Motorcycle Trust
2005-3.

 

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

 

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

 

9

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

10

 

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

 

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

 

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

 

“Monthly Servicing Fee” means, as to any Distribution Date, one-twelfth
of the product of 1.00% and the Principal Balance of the Contracts as of the
beginning of the related Due Period or, with respect to the first Distribution
Date of September 15, 2005, as of the Initial Cutoff Date.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

11

 

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

 

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

 

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

 

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

 

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

 

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

 

12

 

the
outstanding principal amount of the Class A-2 Notes to zero, and (iii) on
the Class B Final Distribution Date shall not be less than the amount that
is necessary (after giving effect to the other amounts to be deposited in the
Note Distribution Account for payment on the Class B Notes on such
Distribution Date and allocable to principal) to reduce the outstanding
principal amount on the Class B notes to zero.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

13

 

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

 

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

 

“Principal Balance” means (a) with respect to any Contract
as of any date, an amount equal to the unpaid principal balance of such
Contract as of the close of business on the Initial Cutoff Date or related
Subsequent Cutoff Date, as applicable, reduced by the sum of (x) all payments
received by the Servicer as of such date allocable to principal and (y) any
Cram Down Loss in respect of such Contract; provided,
however, that (i) if (x) a Contract is reacquired by the Seller
pursuant to Section 5.01 of the Transfer and Sale Agreement and Section 7.08
hereof because of a breach of representation or warranty or is purchased by the
Servicer pursuant to Section 7.11 hereof, or if (y) the Servicer gives
notice of its intent to purchase the Contracts in connection with an optional
termination of the Trust pursuant to Section 7.10 hereof, in each case the
Principal Balance of such Contract or Contracts shall be deemed as of the
related Determination Date to be zero for the Due Period in which such event
occurs and for each Due Period thereafter and (ii) from and after the Due
Period in which a Contract becomes a Liquidated Contract, the Principal Balance
of such Contract shall be deemed to be zero; and (b) where the context
requires, the aggregate of the Principal Balances described in clause (a) for
all such Contracts.

 

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

 

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

 

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

 

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

 

14

 

Indenture
Trustee and either registered by the issuer thereof in the name of the
Indenture Trustee or endorsed by effective endorsement to the Indenture Trustee
or in blank; (B) if uncertificated securities, the ownership of which has
been registered to the Indenture Trustee on the books of the issuer thereof (or
another person, other than a securities intermediary, either becomes the
registered owner of the uncertified security on behalf of the Indenture Trustee
or, having previously become the registered owner, acknowledges that it holds
for the Indenture Trustee); or (C) if securities entitlements (within the
meaning of Section 8-102 of the UCC as enacted in Illinois) representing
interests in securities or other financial assets (or interests therein) held
by a securities intermediary (within the meaning of said Section 8-102), a
securities intermediary indicates by book entry that a security or other
financial asset has been credited to the Indenture Trustee’s securities account
with such securities intermediary.  Any
such Qualified Eligible Investment may be purchased by or through the Indenture
Trustee or any of its affiliates.

 

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

 

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

 

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

 

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

 

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

 

“Reserve Fund Initial Deposit” means $3,510,087.04.

 

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

 

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

 

15

 

respect
to any Distribution Date which occurs within the period from the day after the
second anniversary of the Closing Date to, and inclusive of, the third anniversary
of the Closing Date or (d) 4.00% with respect to any Distribution Date
occurring after the third anniversary of the Closing Date; (ii) the
Average Loss Ratio for such Distribution Date is equal to or greater than (a) 3.00%
with respect to any Distribution Date which occurs within the period from the
Closing Date to, and inclusive of, the second anniversary of the Closing Date
or (b) 2.75% with respect to any Distribution Date which occurs following
the second anniversary of the Closing Date; 
or (iii) the Cumulative Loss Ratio for such Distribution Date is
equal to or greater than (a) 1.25% with respect to any Distribution Date
which occurs within the period from the Closing Date to, and inclusive of, the
first anniversary of the Closing Date, (b) 2.00% with respect to any
Distribution Date which occurs within the period from the day after the first
anniversary of the Closing Date to, and inclusive of, the second anniversary of
the Closing Date, (c) 2.50% with respect to any Distribution Date which
occurs within the period from the day after the second anniversary of the
Closing Date to, and inclusive of, the third anniversary of the Closing Date,
or (d) 2.75% with respect to any Distribution Date occurring after the
third anniversary of the Closing Date.

 

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

 

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

 

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

 

“Securityholders” means the Holders of the Notes.

 

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

 

“Servicer” means Harley-Davidson Credit Corp., a Nevada
corporation, or its successor, until any Service Transfer hereunder and
thereafter means the Successor Servicer appointed

 

16

 

pursuant
to Article VIII below with respect to the duties and obligations required
of the Servicer under this Agreement.

 

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

 

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

 

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

 

“Shortfall” means, with respect to a Distribution Date,
an amount equal to the excess (if any) of (a) the sum of the amounts
payable pursuant to (1) clauses (v) and (vi) of Section 7.05(a),
(2) clauses (i) and (ii) of Section 7.05(b) or (3) clauses
(i) through (iv) of Section 7.05(c), as applicable, over (b) Available
Monies for such Distribution Date minus the amounts payable pursuant to clauses
(i) through (iv) of Section 7.05(a) on such Distribution
Date.

 

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

 

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

 

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

 

17

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Subsequent Reserve Fund Amount” means the amount on each Subsequent Transfer
Date equal to 0.75% of the aggregate balance of the Subsequent Contracts
conveyed to the Trust.

 

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

 

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

 

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

 

“Supplement” means the Prospectus Supplement dated August 19,
2005.

 

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

 

18

 

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

 

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

 

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

 

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

 

“Trust Agreement” means the Trust Agreement, dated as of August 4,
2005, between the Trust Depositor and the Owner Trustee.

 

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

 

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

 

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

 

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

 

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

 

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

 

19

 

made
would be an Uncollectible Advance, shall be evidenced by an Officer’s
Certificate delivered to the Trustees.

 

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

 

“United States” means the United States of America.

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE TWO

TRANSFER OF CONTRACTS

 

Section 2.01.        Closing. 
(a)  On the Closing Date, the Trust Depositor shall transfer,
assign, set over and otherwise convey to the Trust by execution of an
assignment substantially in the form of Exhibit A
hereto, without recourse other than as expressly provided herein, (i) all
the right, title and interest of the Trust Depositor in and to the Initial
Contracts listed on the initial List of Contracts delivered on the Closing Date
(including, without limitation, all security interests and all rights to
receive payments which are collected pursuant thereto after the Initial

 

20

 

Cutoff Date, including any liquidation proceeds therefrom, but
excluding any rights to receive payments which were collected pursuant thereto
on or prior to the Initial Cutoff Date), (ii) all rights of the Trust
Depositor under any physical damage or other individual insurance policy (and
rights under a “forced placed”
policy, if any), any debt insurance policy or any debt cancellation agreement
relating to any such Contract, an Obligor or a Motorcycle securing such
Contract, (iii) all security interests in each such Motorcycle, (iv) all
documents contained in the related Contract Files, (v) all rights (but not
the obligations) of the Trust Depositor under any related motorcycle dealer
agreements between dealers (i.e., the originators of certain Contracts) and the
Seller, (vi) all rights of the Trust Depositor in the Lockbox, the Lockbox
Account and the related Lockbox Agreement to the extent they relate to the
Contracts, (vii) all rights (but not the obligations) of the Trust
Depositor under the Transfer and Sale Agreement, including but not limited to
the Trust Depositor’s rights under Article V thereof, (viii) the
remittances, deposits and payments made into the Trust Accounts from time to
time and amounts in the Trust Accounts from time to time (and any investments
of such amounts), (ix) all rights of the Trust Depositor to certain
rebates of premiums and other amounts relating to insurance policies, debt
cancellation agreements, extended service contracts or other repair agreements
and other items financed under such Contracts and (x) all proceeds and products
of the foregoing (the property in clauses (i)-(x) above, being the “Trust Corpus”).  Although the Trust Depositor and the Owner
Trustee agree that such transfer is intended to be a transfer of ownership of
the Trust Corpus, rather than the granting of a security interest to secure a
borrowing, and that the Trust Corpus shall not be property of the Trust
Depositor, in the event such transfer is deemed to be of a mere security
interest to secure a borrowing, the Trust Depositor shall be deemed to have
granted the Trust a perfected first priority security interest in such Trust
Corpus and this Agreement shall constitute a security agreement under
applicable law.

 

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

 

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

 

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

 

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

 

(d)           A letter or letters from Ernst &
Young LLP, or another nationally recognized accounting firm, addressed to the
Seller and the Underwriters and stating that such firm has reviewed a sample of
the Initial Contracts and performed specific

 

21

 

procedures for such sample with respect to
certain contract terms and which identifies those Initial Contracts which do
not conform.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(l)            A fully executed Transfer and Sale Agreement.

 

(m)          A fully executed Trust Agreement.

 

(n)           A fully executed Administration Agreement.

 

(o)           A fully executed Indenture.

 

22

 

Section 2.03.        Conveyance of Subsequent Contracts.  (a) Subject to the conditions set forth
in paragraph (b) below, the Trust Depositor shall transfer, assign, set
over and otherwise convey to the Trust, without recourse other than as
expressly provided herein and therein, (i) all the right, title and
interest of the Trust Depositor in and to the Subsequent Contracts listed on
the Subsequent List of Contracts (including, without limitation, all security
interests and all rights to receive payments which are collected pursuant
thereto after the related Subsequent Cutoff Date, including any liquidation
proceeds therefrom, but excluding any rights to receive payments which were
collected pursuant thereto on or prior to such Subsequent Cutoff Date), (ii) all
rights of the Trust Depositor under any physical damage or other individual
insurance policy (including a “forced placed”
policy, if any), any debt insurance policy or any debt cancellation agreement
relating to any such Subsequent Contract, an Obligor or a Motorcycle securing
such Subsequent Contract, (iii) all security interests in each such
Motorcycle, (iv) all documents contained in the related Contract Files, (v) all
rights (but not the obligations) of the Trust Depositor under any related
motorcycle dealer agreements between dealers (i.e., the originators of certain
Subsequent Contracts) and the Seller, (vi) all rights of the Trust
Depositor in the Lockbox, the Lockbox Account and the related Lockbox Agreement
to the extent they relate to such Subsequent Contracts, (vii) all rights
(but not the obligations) of the Trust Depositor under the Transfer and Sale
Agreement related to such Subsequent Contracts (to the extent not already
conveyed under Section 2.01(a)), including but not limited to the Trust
Depositor’s related rights under Article V thereof, as well as all rights,
but not the obligations, of the Trust Depositor under the Subsequent Purchase
Agreement related to such Subsequent Contracts, (viii) the remittances,
deposits and payments made into the Trust Accounts from time to time and
amounts in the Trust Accounts from time to time related to such Subsequent
Contracts (to the extent not already conveyed under Section 2.01(a)) (and
any investments of such amounts), (ix) all rights of the Trust Depositor
to certain rebates of premiums and other amounts relating to insurance
policies, debt cancellation agreements, extended service contracts or other
repair agreements and other items financed under such Subsequent Contracts and
(x) all proceeds and products of the foregoing (the property in clauses (i)-(x)
above, upon such transfer, becoming part of the “Trust Corpus”). 
Although the Trust Depositor and the Owner Trustee agree that such
transfer is intended to be a transfer of ownership, rather than the granting of
a security interest to secure a borrowing, and that the Trust Corpus following
such transfer shall not be property of the Trust Depositor, in the event such transfer
is deemed to be of a mere security interest to secure a borrowing, the Trust
Depositor shall be deemed to have granted the Owner Trustee for the benefit of
the Trust a perfected first priority security interest in such Trust Corpus and
this Agreement shall constitute a security agreement under applicable law.

 

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

 

(i)            The Trust Depositor shall have provided the
Owner Trustee, the Indenture Trustee, the Underwriters and the Rating Agencies
with a timely Addition Notice and

 

23

 

shall have provided any information
reasonably requested by any of the foregoing with respect to the Subsequent
Contracts;

 

(ii)           the Funding Period shall not have terminated;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

24

 

(xii)          the Trust Depositor shall have delivered to
the Rating Agencies evidence that (A) the weighted average contract rate
of the Contracts collectively, following the transfer of the Subsequent
Contracts, is not less than [10.61]% and (B) that the weighted average
calculated remaining term to maturity of the Contracts collectively, following
the transfer of the Subsequent Contracts, does not exceed 76 months;

 

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

 

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

 

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

 

(c)           The Trust Depositor covenants to transfer (at
or prior to the end of the Funding Period) to the Trust pursuant thereto
Subsequent Contracts with an aggregate Principal Balance equal to
$181,988,394.35; provided, however,
that in complying with such covenant, the Trust Depositor agrees to make no
more than one separate transfer of Subsequent Contracts per monthly period (as
measured by the corresponding Distribution Dates).  In the event that the Trust Depositor shall
fail to deliver and transfer to the Trust any or all of such Subsequent
Receivables by the date on which the Funding Period ends and the Pre-Funded
Amount is greater than $150,000 on such date, the Trust Depositor shall cause
to be deposited into the Collection Account the amount then on deposit in the
Pre-Funding Account; provided, however,
that the foregoing shall be the sole remedy of the Trust, the Owner Trustee,
the Indenture Trustee and the Securityholders with respect to a failure of the
Trust Depositor to comply with such covenant.

 

ARTICLE THREE

REPRESENTATIONS AND WARRANTIES

 

The Seller under the Transfer and Sale Agreement has
made, and upon execution of each Subsequent Purchase Agreement is deemed to
remake, each of the representations and warranties set forth in Exhibit J hereto and has consented to
the assignment by the Trust Depositor to the Issuer of the Trust Depositor’s
rights with respect thereto.  Such
representations speak as of the execution and delivery of this Agreement and as
of the Closing Date in the case of the Initial Contracts, and as of the
applicable Subsequent Transfer Date in the case of the Subsequent

 

25

 

Contracts,
but shall survive the transfer and assignment of the Contracts to the
Trust.  Pursuant to Section 2.01 of
this Agreement, the Trust Depositor has assigned, transferred and conveyed to
the Issuer as part of the Trust Corpus its rights under the Transfer and Sale
Agreement, including without limitation, the representations and warranties of
the Seller therein as set forth in Exhibit J
attached hereto, together with all rights of the Trust Depositor with respect
to any breach thereof including any right to require the Seller to reacquire
any Contract in accordance with the Transfer and Sale Agreement.  It is understood and agreed that the
representations and warranties set forth or referred to in this Section shall
survive delivery of the Contract Files to the Owner Trustee or any custodian.

 

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

 

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

 

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

 

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

 

(c)           Authorization; Valid Sale; Binding Obligations.  The
Trust Depositor has the power and authority to make, execute, deliver and
perform its obligations under this Agreement and the other Transaction
Documents to which it is a party and all of the transactions contemplated under
this Agreement and the other Transaction Documents to which it is a party, and
to create the Trust and cause it to make, execute, deliver and perform its
obligations under this Agreement and the other Transaction Documents to which
it is a party and has taken all necessary corporate action to authorize the
execution, delivery and performance of this Agreement and the other Transaction
Documents to

 

26

 

which it is a party and to cause the Trust to
be created.  This Agreement and the
related Subsequent Transfer Agreement, if any, shall effect a valid transfer
and assignment of the Trust Corpus, enforceable against the Trust Depositor and
creditors of and purchasers from the Trust Depositor.  This Agreement and the other Transaction
Documents to which the Trust Depositor is a party constitute the legal, valid
and binding obligation of the Trust Depositor enforceable in accordance with
their terms, except as enforcement of such terms may be limited by bankruptcy,
insolvency or similar laws affecting the enforcement of creditors’ rights
generally and by the availability of equitable remedies.

 

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

 

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

 

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

 

(g)           State of Incorporation; Name; No Changes.  The
Trust Depositor’s state of incorporation is the State of Nevada.  The Trust Depositor’s exact legal name is as
set forth in the first paragraph of this Agreement.  The Trust Depositor has not changed its name,
whether by amendment of its Articles of Incorporation, by reorganization or

 

27

 

otherwise, and has not changed the location
of its place of business, within the four months preceding the Closing Date.

 

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

 

Such
representations speak as of the execution and delivery of this Agreement and as
of the Closing Date in the case of the Initial Contracts, and as of the
applicable Subsequent Transfer Date in the case of the Subsequent Contracts,
but shall survive the transfer and assignment of the Contracts to the Trust.

 

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

 

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

 

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

 

(c)           No Consent Required.  The Servicer is not required
to obtain the consent of any other party or any consent, license, approval or
authorization from, or registration or declaration with, any governmental
authority, bureau or agency in connection with the

 

28

 

execution, delivery, performance, validity or
enforceability of this Agreement and the other Transaction Documents to which
the Servicer is a party.

 

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

 

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

 

ARTICLE FOUR

PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS

 

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

 

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

 

29

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

30

 

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

 

Section 4.02.        Filing. 
On or prior to the Closing Date, the Servicer shall cause the UCC
financing statement(s) referred to in Section 2.02(g) hereof to be filed
and from time to time the Servicer shall take and cause to be taken such
actions and execute such documents as are necessary or desirable or as the
Owner Trustee or Indenture Trustee may reasonably request to perfect and
protect the Trust’s first priority perfected interest in the Trust Corpus
against all other persons, including, without limitation, the filing of
financing statements, amendments thereto and continuation statements, the
execution of transfer instruments and the making of notations on or taking
possession of all records or documents of title.  All financing statements filed or to be filed
against the Seller in favor of the Trust Depositor or the Trust in connection
herewith describing the Contract Assets as collateral shall contain a statement
to the following effect: “A purchase of or security interest in any collateral
described in this financing statement, except as permitted in the Transfer and
Sale Agreement or Sale and Servicing Agreement, will violate the rights of the
Secured Party.”

 

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

 

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

 

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

 

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ARTICLE FIVE

SERVICING OF CONTRACTS

 

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

 

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

 

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

 

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

 

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

 

32

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(d)           If the Servicer so directs, in writing, the
Indenture Trustee shall invest the amounts in the Trust Accounts in Qualified
Eligible Investments that are payable on demand or that mature not later than
one Business Day prior to the next succeeding Distribution Date.  Once such funds are invested, the Indenture
Trustee shall not change the investment of such funds.  Any loss on such investments shall be
deposited in the applicable Trust Account by the Servicer

 

33

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 5.06.        Enforcement.  (a) The Servicer will, consistent with Section 5.02,
act with respect to the Contracts in such manner as will maximize the receipt
of all payments called for under the terms of the Contracts.  The Servicer shall use its best efforts to
cause Obligors to

 

34

 

make all payments on the Contracts to the Lockbox Account (either
directly by remitting payments to the Lockbox, or indirectly by making payments
through direct debit, the telephone or the internet to an account of the
Servicer which payments will be subsequently transferred from such account to
the Lockbox Account).  The Servicer will
act in a commercially reasonable manner with respect to the repossession and
disposition of a Motorcycle following a default under the related Contract with
a view to realizing proceeds at least equal to the Motorcycle’s fair market
value.  If the Servicer determines that
eventual payment in full of a Contract is unlikely, the Servicer will follow
its normal practices and procedures to recover all amounts due upon that
Contract, including repossessing and disposing of the related Motorcycle at a
public or private sale or taking other action permitted by applicable law.  The Servicer will be entitled to recover all
reasonable out-of-pocket expenses incurred by it in liquidating a Contract and
disposing of the related Motorcycle.

 

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

 

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

 

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

 

(e)           Subject to Section 5.02, the Servicer
may grant extensions, rebates or adjustments on a Contract; provided, however,
that if the Servicer extends the date for final payment by the Obligor of any
Contract beyond the Class B Final Distribution Date, it shall promptly
purchase such Contract pursuant to Section 7.11.

 

35

 

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

 

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

 

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

 

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

 

36

 

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

 

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

 

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

 

ARTICLE SIX

THE TRUST DEPOSITOR

 

Section 6.01.        Covenants
of the Trust Depositor.

 

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

 

37

 

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

 

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

 

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

 

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

 

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

 

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

 

38

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

39

 

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

 

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

 

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

 

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

 

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

 

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

 

40

 

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

 

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

 

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

 

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

 

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

 

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

 

41

 

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

 

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

 

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

 

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

 

42

 

ARTICLE SEVEN

DISTRIBUTIONS; RESERVE FUND

 

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

 

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

 

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

 

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

 

43

 

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

 

Section 7.04.        Interest
Reserve Account.

 

(a)           On or prior to the Closing Date, the Trust
Depositor shall establish with and in the name of the Indenture Trustee on
behalf of the Securityholders, an Eligible Account designated “Harley-Davidson Customer Funding Corp. Interest
Reserve Account - Harley Davidson Motorcycle Trust 2005-3 – The Bank of New
York Trust Company, N.A., as Indenture Trustee” (such account being
the “Interest Reserve Account”).

 

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

 

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

 

Section 7.05.        Distributions;
Priorities.

 

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

 

(i)            to the Mandatory Redemption Subaccount in the
Note Distribution Account to the Noteholders, the amount of any Mandatory
Redemption (which amounts are available for payment of such Mandatory
Redemptions and not for any other purpose) which amount shall be paid in the
following order of priority: first, to the Class A-1 Noteholders until the
Class A-1 Notes are paid in full, second, any remaining amount shall be
paid to the Class A-2 Noteholders until the Class A-2 Notes are paid
in full, and third, any remaining amount shall be paid to the Class B
Noteholders until the Class B Notes are paid in full;

 

44

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(viii)        to the Holder of the Certificate.

 

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

 

(i)            to the Note Distribution Account, together
with any amounts deposited therein pursuant to Section 7.06, the Note
Interest Distributable Amount with respect to

 

45

 

such Distribution Date for each Class of Notes
allocated in the following order of priority:

 

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

 

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

 

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

 

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

 

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

 

(iii)          to the Holder of the Certificate.

 

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

 

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

 

(ii)           to the Note Distribution Account, together
with any amounts deposited therein pursuant to Section 7.06, the Note
Principal Distributable Amount for distribution to the Class A-1
Noteholders and the Class A-2 Noteholders in reduction of the

 

46

 

outstanding principal amount of the Class A-1
Notes and Class A-2 Notes, as applicable, until the outstanding principal
balance of the Class A-1 Notes and the Class A-2 Notes has been
reduced to zero; provided, however, that if there are insufficient funds on
deposit in the Note Distribution Account to reduce the outstanding principal
balance of the Class A-1 Notes and the Class A-2 Notes to zero, the
amount in the Note Distribution Account shall be applied to the payment of
principal on the Class A-1 Notes and the Class A-2 Notes pro rata (based on outstanding principal
amount);

 

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

 

(iv)          to the Note Distribution Account, together
with any amounts deposited therein pursuant to Section 7.06, the remaining
Note Principal Distributable Amount with respect to such Distribution Date
after the outstanding principal balance of the Class A-2 Notes has been
reduced to zero, for distribution to the Class B Noteholders in reduction
of the outstanding principal amount of the Class B Notes until the
outstanding principal balance of the Class B Notes has been reduced to
zero; and

 

(v)           to the Holder of the Certificate.

 

Section 7.06.        Reserve
Fund.

 

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

 

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

 

(c)           The Indenture Trustee shall at the written
direction of the Servicer invest the funds in the Reserve Fund in Qualified
Eligible Investments.  Funds in the
Reserve Fund shall be invested in investments that are payable on demand or
mature on or before the Business Day prior to each Distribution Date.  Once such funds are invested, the Indenture
Trustee shall not change the investment of such funds prior to maturity.  Upon any such investment, the Indenture
Trustee shall, consistent with the definition of Qualified Eligible Investment
herein, make an appropriate notation of the security interest in such Qualified
Eligible Investment on the Indenture Trustee’s records, by book entry or
otherwise.  All income and gain realized
from any

 

47

 

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

 

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

 

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

 

Section 7.07.        Establishment
of Pre-Funding Account.

 

(a)           On or prior to the Closing Date, the Trust
Depositor shall establish with and in the name of the Indenture Trustee on
behalf of the Securityholders, an Eligible Account designated “Harley-Davidson Customer Funding Corp. Pre-Funding
Account - Harley Davidson Motorcycle Trust 2005-3 – The Bank of New York Trust
Company, N.A., as Indenture Trustee” (such account being the “Pre-Funding Account”).

 

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

 

(c)           If (x) the Pre-Funded Amount has not
been reduced to zero on the Distribution Date on which the Funding Period ends
(or, if the Funding Period does not end on a Distribution Date, on the first
Distribution Date following the end of the Funding Period) or (y) the
Pre-Funded Amount has been reduced to $150,000 or less on any Determination
Date, in either case after giving effect to any reductions in the Pre-Funded
Amount on such Distribution Date or Determination Date pursuant to
paragraph (b) above, the Trust Depositor shall instruct the

 

48

 

Indenture
Trustee to withdraw from the Pre-Funding Account the Pre-Funded Amount and, in
the case of (x), on such Distribution Date or, on the Determination Date,
deposit the Pre-Funded Amount in the Note Distribution Account for payment as
principal of the Class A-1 Notes up to the Outstanding Amount thereof,
then for payment of principal of the Class A-2 Notes up to the Outstanding
Amount thereof and then, for payment of principal of the Class B Notes up
to the Outstanding Amount thereof.

 

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

 

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

 

Section 7.09.        Reassignment of Reacquired Contracts.  Upon receipt by the Indenture Trustee for deposit
in the Collection Account of the Purchase Price as described in Section 7.08,

 

49

 

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

 

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

 

Section 7.11.        Purchase of Contracts for Breach of Servicing
Obligations.  Upon a discovery by the
Servicer or the Trustees of a breach of any of the covenants of the Servicer
set forth in Section 5.02, 5.06 or 5.09 that materially adversely affects
the Trust’s interest in a Contract (without regard to the benefits of the
Reserve Fund), the party discovering the breach shall give prompt written
notice to the other parties; provided,
that the Trustees shall have no duty or obligation to inquire or to investigate
the breach by the Servicer of any of such covenants.  The Servicer, in accordance with this Section 7.11,
shall purchase such Contract at its Purchase Price, two Business Days prior to
the first Determination Date after the Servicer becomes aware, or should have
become aware, or receives written notice from the Trustees of any breach
described in the preceding sentence which breach has not been cured; provided, however, that with respect to a
breach of any of the covenants of the Servicer set forth in Section 5.02,
5.06 or 5.09 relating to the Contracts in the aggregate and not to any
particular Contract the Servicer may select Contracts (without adverse
selection) to purchase such that had such Contracts not been included as part
of the Trust Corpus there would have been no breach of such covenant.  Notwithstanding any other provision of this
Agreement, the obligation of the Servicer described in this Section 7.11
shall not terminate or be deemed released by any party hereto upon a Service
Transfer pursuant to Article VIII. 
The purchase obligation described in this Section 7.11 is in no way
to be satisfied with monies in the Reserve Fund.  Upon Servicer’s payment of the Purchase Price
of the Contract, any Event of Termination pursuant to Section 8.01(b) arising
as a result of the Servicer’s breach of any of the covenants set forth in Section 5.02,
5.06 or 5.09 with respect to such Contract shall be deemed not to have
occurred.

 

50

 

ARTICLE EIGHT

EVENTS OF TERMINATION; SERVICE TRANSFER

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

51

 

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

 

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

 

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

 

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

 

Section 8.04.        Successor Servicer to Act; Appointment of
Successor Servicer.  On or after a
Service Transfer pursuant to Section 8.03, the Successor Servicer shall be
the successor in all respects to the Servicer in its capacity as servicer under
this Agreement and the transactions set forth or provided for herein and shall
be subject to all the responsibilities, duties and

 

52

 

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

 

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

 

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

 

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

 

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

 

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

 

53

 

commencement of servicing functions by the Successor Servicer following
the occurrence of a Service Transfer.

 

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

 

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

 

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

 

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

 

Section 8.10.        Limitation of Liability of Servicer.  (a)  Neither the Servicer nor any of the
directors, officers, employees or agents of the Servicer shall be under any
liability to the Trust, the Owner Trustee, the Indenture Trustee or the
Noteholders, except as provided under this Agreement, for any action taken or
for refraining from the taking of any action pursuant to this Agreement or for
errors in judgment; provided, however, that
this provision shall not protect the Servicer or any such person against any
liability that would otherwise be imposed by reason of willful misfeasance, bad
faith or negligence in the performance of duties or by reason of

 

54

 

reckless disregard of obligations and duties under this Agreement.  The Servicer and any director, officer,
employee or agent of the Servicer may rely in good faith on the advice of
counsel or on any document of any kind, prima facie properly executed and
submitted by any Person respecting any matters arising under this Agreement.

 

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

 

Section 8.11.        Merger or Consolidation of Servicer.  Any Person into which the Servicer may be
merged or consolidated, or any corporation, or other entity resulting from any
merger conversion or consolidation to which the Servicer shall be a party, or
any Person succeeding to all or substantially all of the business of the
Servicer (which Person assumes the obligations of the Servicer), shall be the
successor of the Servicer hereunder, without the execution or filing of any
paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding. 
The Servicer shall give prior written notice of any such merger or
consolidation to which it is a party to the Issuer, the Owner Trustee, the
Indenture Trustee and the Rating Agencies.

 

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

 

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

 

55

 

ARTICLE NINE

REPORTS

 

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

 

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

 

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

 

Section 9.04.        Annual
Report of Accountants.

 

(a)           The Servicer shall cause a firm of nationally
recognized independent certified public accountants (the “Independent  Accountants”), who may also render other services to the
Servicer, Harley-Davidson Financial or to the Trust Depositor, to deliver to
the Trustees, the Underwriters and each Rating Agency, on or before March 31
(or 90 days after the end of the Servicer’s fiscal year, if other than December 31)
of each year, beginning on March 31, 2006, a statement (the “Accountant’s  Report”) addressed to the Board of Directors of the Servicer
and to the Trustees to the effect that such firm has examined the assertion of
the management of the Servicer that Servicer maintained effective internal
control over the servicing requirements identified in Article V of this
Agreement, and reporting requirements identified in Article IX of this
Agreement and issued its report thereon and that such examination:

 

(1)           was based on the criteria established in “Internal
Control–Integrated Framework” issued by the Committee of Sponsoring
Organizations of the Treadway Commission;

 

(2)           was conducted in accordance with attestation
standards established by the American Institute of Certified Public
Accountants;

 

(3)           included obtaining an understanding of the
internal control over the servicing and reporting requirements identified in
this Agreement, testing and evaluating the design and operating effectiveness
of the internal control, and performing such other procedures as the
Independent Accountants considered necessary in the circumstances;

 

56

 

(4)           provides a reasonable basis for the
Independent Accountant’s opinion; and

 

(5)           except as described in the statement,
concluded that the assertion by the management of the Servicer that it
maintained effective internal control over the servicing requirements and
reporting requirements of this Agreement is fairly stated, in all material
respects, based on the criteria established in “Internal Control–Integrated
Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission.

 

(b)           In the event the Independent Accountants
require the Indenture Trustee to agree to the procedures performed by such
firm, the Servicer shall direct the Indenture Trustee in writing to so agree;
it being understood and agreed that the Indenture Trustee will deliver such
letter of agreement in conclusive reliance upon the direction of the Servicer,
and the Indenture Trustee shall not make any independent inquiry or
investigation as to, and shall have no obligation or liability in respect of,
the sufficiency, validity or correctness of such procedures.

 

Section 9.05.        Annual Statement of Compliance from Servicer.  The Servicer will deliver to the Trustees,
the Underwriters and each of the Rating Agencies, on or before January 31
of each year commencing January 31, 2006, an Officer’s Certificate stating
that (a) a review of the activities of the Servicer during the prior
calendar year and of its performance under this Agreement was made under the
supervision of the officer signing such certificate and (b) to such
officer’s knowledge, based on such review, the Servicer has fully performed all
its obligations under this Agreement, or, if there has been a default in the
performance of any such obligation, specifying each such default known to such
officer and the nature and status thereof. 
A copy of such certificate may be obtained (i) by any Noteholder by
a request in writing to the Indenture Trustee and (ii) by any
Certificateholder by a request in writing to the Owner Trustee.

 

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

 

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

 

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

 

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

 

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

 

57

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

58

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE TEN

TERMINATION

 

Section 10.01.      Sale
of Trust Assets.

 

(a)           [Intentionally Omitted].

 

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

 

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

 

59

 

ARTICLE ELEVEN

MISCELLANEOUS

 

Section 11.01.      Amendment.

 

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

 

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

 

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

 

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

 

60

 

by
Noteholders of the execution thereof shall be subject to such reasonable
requirements as the Owner Trustee or the Indenture Trustee may prescribe.

 

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

 

(f)            Notwithstanding anything to the contrary in
this Section 11.01, the Trust Depositor or the Servicer, acting on behalf
of the Trust Depositor, may request each Rating Agency to approve a formula for
determining the Specified Reserve Fund Balance that is different from the
formula or result determined from the current definition thereof contained
herein so as to result in a decrease in the amount of the Specified Reserve
Fund Balance or the manner by which such Reserve Fund is funded.  If each Rating Agency delivers to the
Indenture Trustee and Owner Trustee a written notice or letter stating that
such action will not result in a reduction or withdrawal of the rating of any
outstanding Class with respect to which a Rating Agency has previously
issued a rating as a result or such action, then the Specified Reserve Fund
Balance will be theretofore determined in accordance with such changed formula
or manner of funding, and an amendment to this Agreement effecting such change
may be executed without the consent of any Securityholder.

 

Section 11.02.      Protection
of Title to Trust.

 

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

 

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

 

(c)           The Seller and the Trust Depositor shall give
the Issuer, the Owner Trustee and the Indenture Trustee at least 30 days’ prior
written notice of any change in its state of

 

61

 

incorporation.  The Servicer shall at all times maintain each
office from which it shall service Contracts, and its principal executive
office, within the United States.

 

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

 

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

 

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

 

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

 

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

 

(i)            The Servicer shall deliver to the Owner
Trustee, the Indenture Trustee and each Rating Agency promptly after the
execution and delivery of this Agreement and of each amendment hereto, an
Opinion of Counsel either (A) stating that, in the opinion of such
counsel, all financing statements and continuation statements have been
executed and filed that are necessary fully to preserve and protect the
interest of the Owner Trustee and the Indenture Trustee and reciting the details
of each filings or referring to prior Opinions of Counsel in which

 

62

 

such
details are given, or (B) stating that, in the opinion of such counsel, no
such action shall be necessary to preserve and protect such interest.

 

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

 

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

 

(i)            If to the Servicer or Seller:

 

Harley-Davidson Credit Corp.

150 South Wacker Drive, Suite 3100

Chicago, Illinois 60606

Attention: Perry A. Glassgow

 

Telecopier No.: (312) 368-4372

 

(ii)           If to the Trust Depositor:

 

Harley-Davidson Customer Funding Corp.

3850 Arrowhead Drive

Carson City, Nevada 89706

Attention: 
Perry A. Glassgow

 

Telecopier No.: (775) 886-3490

 

with a copy to:

 

Harley-Davidson Credit Corp.

150 South Wacker Drive, Suite 3100

Chicago, Illinois 
60606

Attention: 
Perry A. Glassgow

Telecopier No.:  
(312) 368-4372

 

63

 

(iii)          If to the Indenture Trustee:

 

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

2 North LaSalle Street

Suite 1020

Chicago, Illinois 60602

Attention: 
Corporate Trust Administration

 

Telecopier No.: 
(312) 827-8562

 

(iv)          If to the Owner Trustee:

 

Wilmington Trust Company

Rodney Square North

1100 North Market Street

Wilmington, Delaware 19890-0001

Attention: Corporate Trust Administration

 

Telecopier No.: (302) 651-8882

 

(v)           If to Moody’s:

 

Moody’s Investors Service, Inc.

99 Church Street

New York, New York 10007

Attention: ABS Monitoring Department

 

Telecopier No.: (212) 553-1350

 

(vi)          If to Standard & Poor’s:

 

Standard & Poor’s Ratings Services, a

division of The McGraw Hill Companies, Inc.

55 Water Street

New York, New York 10004

Telecopier No.: (212) 438-2657

 

(vii)         If to the Underwriters:

 

c/o Citigroup Global Markets Inc.

390 Greenwich Street

6th Floor

New York, New York 
10013

Attention: 
Asset Backed Finance Division

 

Telecopier No.: 
(212) 723-8591

 

64

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(b)           The Trust acknowledges and agrees that the
Certificate represents a beneficial interest in the Trust and Trust Corpus only
and the Securities do not represent an interest in any assets (other than the
Trust Corpus) of the Trust Depositor (including by virtue of any deficiency

 

65

 

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

 

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

 

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

 

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

 

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

 

66

 

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

 

[signature page follows]

 

67

 

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

 

	
   

  	
  HARLEY-DAVIDSON MOTORCYCLE TRUST 2005-3

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

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

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ ANITA E. DALLAGO

  	
   

  
	
   

  	
   

  	
   

  	
  Printed Name: Anita E. Dallago

  
	
   

  	
   

  	
   

  	
  Title: Senior Financial Services Officer

  
	
   

  	
   

  
	
   

  	
  HARLEY-DAVIDSON CUSTOMER FUNDING CORP.,

  
	
   

  	
  as Trust Depositor

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ PERRY A. GLASSGOW

  	
   

  
	
   

  	
   

  	
   

  	
  Printed Name: Perry A. Glassgow

  
	
   

  	
   

  	
   

  	
  Title: Vice President and Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HARLEY-DAVIDSON CREDIT CORP., as Servicer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ PERRY A. GLASSGOW

  	
   

  
	
   

  	
   

  	
   

  	
  Printed Name: Perry A. Glassgow

  
	
   

  	
   

  	
   

  	
  Title: Vice President and Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

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

  
	
   

  	
  not in its individual capacity but solely as Indenture Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ CYNTHIA L. DAVIS

  	
   

  
	
   

  	
   

  	
   

  	
  Printed Name: Cynthia L. Davis

  
	
   

  	
   

  	
   

  	
  Title: Vice President

  
						

 

Signature
Page to Sale and Servicing Agreement

 

 

Exhibit A

 

[Form of Assignment]

 

In accordance with the Sale and Servicing Agreement
(the “Sale and Servicing Agreement”)
dated as of August 1, 2005 made by and between the undersigned, as Trust
Depositor (“Trust Depositor”),
Harley-Davidson Credit Corp., as Servicer (“HDCC”), The Bank of New York Trust Company,
N.A., as Indenture Trustee and Harley-Davidson Motorcycle Trust 2005-3 (the “Trust”), as assignee thereunder, the
undersigned does hereby sell, transfer, convey and assign, set over and
otherwise convey to the Trust (i) all the right, title and interest of the
Trust Depositor in and to the Initial Contracts listed on the initial List of
Contracts delivered on the Closing Date (including, without limitation, all
security interests and all rights to receive payments which are collected
pursuant thereto after the Initial Cutoff Date, including any liquidation
proceeds therefrom, but excluding any rights to receive payments which were
collected pursuant thereto on or prior to the Initial Cutoff Date), (ii) all
rights of the Trust Depositor under any physical damage or other individual
insurance policy (and rights under a “forced
placed” policy, if any), any debt insurance policy or any debt
cancellation agreement relating to any such Contract, an Obligor or a
Motorcycle securing such Contract, (iii) all security interests in each
such Motorcycle, (iv) all documents contained in the related Contract
Files, (v) all rights (but not the obligations) of the Trust Depositor
under any related motorcycle dealer agreements between dealers (i.e., the
originators of certain Contracts) and HDCC, (vi) all
rights of the Trust Depositor in the Lockbox, the Lockbox Account and related
Lockbox Agreement to the extent they relate to such Contracts, (vii) all
rights (but not the obligations) of the Trust Depositor under the Transfer and
Sale Agreement, including but not limited to the Trust Depositor’s rights under
Article V thereof, (viii) the remittances, deposits and payments made
into the Trust Accounts from time to time and amounts in the Trust Accounts
from time to time (and any investments of such amounts), (ix) all rights
of the Trust Depositor to certain rebates of premiums and other amounts
relating to insurance policies, debt cancellation agreements, extended service
contracts or other repair agreements and other items financed under such
Contracts, and (x) all proceeds and products of the foregoing.

 

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

 

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

 

IN WITNESS WHEREOF, the undersigned has caused this
Assignment to be duly executed this             
day of August, 2005.

 

	
   

  	
  HARLEY-DAVIDSON CUSTOMER FUNDING

  
	
   

  	
  CORP.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Printed Name: Perry A. Glassgow

  
	
   

  	
  Title:   Vice President and
  Treasurer

  

 

A-1

 

Exhibit B

 

[Form of Closing Certificate of Trust
Depositor]

 

Harley-Davidson
Customer Funding Corp.

 

Officer’s
Certificate

 

The undersigned certifies that he is Vice President,
Treasurer and Assistant Secretary of Harley-Davidson Customer Funding Corp., a
Nevada corporation (the “Trust Depositor”),
and that as such is duly authorized to execute and deliver this certificate on
behalf of the Trust Depositor in connection with the Sale and Servicing
Agreement (the “Agreement”) dated
as of August 1, 2005 (the “Effective
Date”) by and among the Trust Depositor, The Bank of New York Trust
Company, N.A. (the “Indenture Trustee”),
as Indenture Trustee,  Harley-Davidson
Credit Corp. (“Harley-Davidson Credit”),
as Servicer, and Harley-Davidson Motorcycle Trust 2005-3 (“Issuer”) (all capitalized terms used
herein without definition have the respective meanings set forth in the
Agreement), and further certifies as follows:

 

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

 

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

 

(3)           Attached hereto as Exhibit II is a Certificate of the Secretary of State
of the State of Nevada dated [                      ],
2005 stating that the Trust Depositor is duly incorporated under the laws of
the State of Nevada and is in good standing.

 

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

 

(5)           Attached hereto as Exhibit IV is a true and correct copy of resolutions
adopted pursuant to the unanimous written consent of the Board of Directors of
the Trust Depositor relating to the execution, delivery and performance of the
Agreement; the Transfer and Sale Agreement dated as of the Effective Date
between the Trust Depositor and Harley-Davidson Credit; the Trust Agreement
dated as of August 4, 2005 between the Trust Depositor and Wilmington
Trust Company (the “Owner Trustee”), as Owner Trustee; the Administration
Agreement dated as of the Effective Date between the Trust Depositor, the
Issuer, the Indenture Trustee, Harley-Davidson Credit, as Administrator; the
Underwriting Agreement dated August 19, 2005 among the Trust Depositor,
Harley-Davidson

 

B-1

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

B-2

 

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

 

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

 

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

 

*   
*    *    *

 

B-3

 

In Witness Whereof, I have affixed my signature hereto this       
day of August, 2005.

 

 

	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Printed Name: Perry A. Glassgow

  
	
   

  	
  Title: Vice President,
  Treasurer and

  Assistant Secretary

  

 

 

Exhibit C

 

[Form of Closing Certificate of
Servicer/Seller]

 

HARLEY-DAVIDSON
CREDIT CORP.

 

Officer’s
Certificate

 

The undersigned certifies that he is Vice President,
Treasurer and Assistant Secretary of Harley-Davidson Credit Corp. (“Harley-Davidson Credit”), and that as such
is duly authorized to execute and deliver this certificate on behalf of
Harley-Davidson Credit, as Servicer, in connection with the Sale and Servicing
Agreement (the “Sale and Servicing Agreement”)
dated as of August 1, 2005 (the “Effective
Date”) by and among Harley-Davidson Credit, as Servicer,
Harley-Davidson Customer Funding Corp. (“CFC”),
The Bank of New York Trust Company, N.A., as Indenture Trustee and
Harley-Davidson Motorcycle Trust 2005-3 (“Issuer”),
in connection with the Transfer and Sale Agreement dated as of the Effective
Date (the “Transfer and Sale Agreement”)
by and between Harley-Davidson Credit and CFC (all capitalized terms used
herein without definition having the respective meanings set forth in the Sale
and Servicing Agreement), and further certifies as follows:

 

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

 

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

 

(3)           Attached hereto as Exhibit II is a Certificate of the Secretary of State
of the State of Nevada dated [                 ],
2005 stating that Harley-Davidson Credit is duly incorporated under the laws of
the State of Nevada and is in good standing.

 

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

 

(5)           Attached hereto as Exhibit IV is a true and correct copy of resolutions
adopted pursuant to a unanimous written consent of the Board of Directors of
Harley-Davidson Credit and relating to the authorization, execution, delivery
and performance of the Transfer and Sale Agreement; the Sale and Servicing
Agreement; the Underwriting Agreement dated August 19, 2005 among
Harley-Davidson Credit, CFC and the Underwriters (the “Underwriting Agreement”); and the
Administration Agreement dated

 

C-1

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

C-2

 

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

 

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

 

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

 

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

 

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

 

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

 

*  
*   *   *  
*   *

 

C-3

 

In Witness Whereof, I have affixed my signature hereto this       
day of August, 2005.

 

 

	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Printed Name: Perry A. Glassgow

  
	
   

  	
  Title: Vice President,
  Treasurer and

  Assistant Secretary

  

 

 

Exhibit D

 

[Form of Opinion of Counsel for Trust
Depositor

Regarding General Corporate Matters

(Including Perfection Opinion)]

 

See Tab 23

 

D-1

 

Exhibit E

 

[Form of Opinion of Counsel for Trust

Depositor Regarding the “True Sale” Nature

of the Transaction]

 

See Tab 24

 

E-1

 

Exhibit F

 

[Form of Opinion of Counsel for Trust

Depositor Regarding Non-consolidation]

 

See Tab 25

 

F-1

 

Exhibit G

 

[Form of Certificate Regarding
Reacquired Contracts]

 

Harley-Davidson Credit Corp.

 

Certificate Regarding Reacquired Contracts

 

The undersigned certifies that he is the Treasurer
of Harley-Davidson Credit Corp., a Nevada corporation (the “Servicer”), and that as such is duly
authorized to execute and deliver this certificate on behalf of the Servicer
pursuant to Section 7.08 of the Sale and Servicing Agreement (the “Agreement”) dated as of August 1,
2005 by and among Harley-Davidson Customer Funding Corp., as Trust Depositor,
the Servicer, The Bank of New York Trust Company, N.A., as Indenture Trustee,
and Harley-Davidson Motorcycle Trust 2005-3 (all capitalized terms used herein
without definition having the respective meanings specified in the Agreement),
and further certifies that:

 

1.             The Contracts on the attached schedule are
to be reacquired by the [Seller/Servicer] on the date hereof pursuant to [Section 7.08
of the Agreement and Section 5.01 of the Transfer and Sale Agreement/Section 7.10
of the Agreement/Section 7.11 of the Agreement.]

 

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

 

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

 

	
   

  	
  Harley-Davidson Credit Corp.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Printed Name: Perry A.
  Glassgow

  
	
   

  	
   

  	
  Title: Vice President and
  Treasurer

  

 

G-1

 

Exhibit H

 

[List of Contracts]

 

See Tab 6

 

H-1

 

Exhibit I

 

[Form of Monthly Report to Noteholders
and the Certificateholder]

 

Harley-Davidson Motorcycle Trust 2005-3

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

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

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

 

Monthly Report

For the [         ]
Distribution Date

 

	
  A.            Calculation of Available Monies

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3.             Available Monies (l. plus 2.)

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  D.            Note Principal Distributable Amount

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1.             Priority of allocation of the Note
  Principal Distributable Amount

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  (a)           First, to the Class A-1 Notes until
  the Class A-1 Notes have been paid in full

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  (b)           Second, to the Class A-2 Notes until
  the Class A-2 Notes have been paid in full

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  (c)           Third, to the Class B Notes until the Class B
  Notes have been paid in full

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.             Principal Distributable Amount (from B)

  	
   

  	
  $

  	
   

  	
   

  

 

I-1

 

	
  3.                             Note principal distribution

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  (a)           Class A-1 Notes

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  (b)           Class A-2 Notes

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  (c)           Class B Notes

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  (d)           Note Principal Carryover Shortfall due from
  prior period

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  (f)            Aggregate note principal distributed (sum
  of (a) through (e))

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  4.                             Note Principal Carryover Shortfall

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  E.             Calculation of Note Monthly Interest
  Distributable Amount.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1.             Class A-l Interest Rate

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  2.             Class A-2 Interest Rate

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  3.             Class B Interest Rate

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  

 

I-2

 

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  7.             Interest Carryover Shortfall for such
  Distribution Date

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  G.            Fees

  	
   

  	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.             Indenture Trustee Fee for such Distribution
  Date excluding expense component (1/12 of the product of .00185% and the sum
  of (i) the Principal Balance of the Contracts as of the beginning of the
  related Due Period and (ii) the Pre-Funded Amount as of the beginning of
  such Period; provided, however, in no event shall such fee be less than
  $200.00 per month)

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  H.            CALCULATION OF THE AVAILABLE MONIES FOR
  SUCH DISTRIBUTION DATE

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  

 

I-3

 

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  b.             All Net Liquidation Proceeds

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  c.             The aggregate of the Purchase Prices for
  Contracts required to be reacquired by the Seller as described in Section 7.08
  of the Sale and Servicing Agreement or purchased by the Servicer as described
  in Section 7.11 of the Sale and Servicing Agreement

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  

 

I-4

 

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  

 

I-5

 

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  L.             Interest Earnings on the Reserve Fund.

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  O.            The Pool Factor

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
   

  	
   

  

 

I-6

 

	
  3.             The Class B Note Pool Factor
  immediately after such Distribution Date

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  6.             The Class B Note Pool Factor
  immediately after such Distribution Date

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  P.             Delinquent Contracts

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1.             31-59 Days

  	
  #

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.             60-89 Days

  	
  #

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3.             90 or More Days

  	
  #

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Q.            Liquidated Contracts

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1.             Total Liquidated Contracts          #

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.             Liquidation proceeds for the Due Period

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3.             Liquidation expenses for the Due Period

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  4.             Net Liquidation Proceeds for the Due Period

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  5.             Net Liquidation Losses for the Due Period

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  R.            Advances

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1.             Unreimbursed Advances prior to such
  Distribution Date

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3.             Amount of Delinquent Interest for such
  Distribution Date

  	
   

  	
  $

  	
   

  	
   

  

 

I-7

 

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  5.             Total of unreimbursed Advances after new
  Advances on such Distribution Date

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  S.             Reacquired Contracts

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1.             Number of Contracts to be reacquired by the
  Seller pursuant to Section 7.08 of the Sale and Servicing Agreement or
  purchased by the Servicer pursuant to Section 7.11 of the Sale and
  Servicing Agreement

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.             Principal Amount of such Contracts

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3.             Related Purchase Price of such Contracts

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  T.            Purchased Contracts

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1.             Number of Contracts to be purchased by the
  Servicer pursuant to Section 7.11 of the Sale and Servicing Agreement

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.             Principal Amount such Contracts

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3.             Related Purchase Price of such Contracts

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  U.            Contracts

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1.             Number of Contracts as of beginning of Due
  Period

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.             Principal Balance of Contracts as of
  beginning of Due Period

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  4.             Number of Contracts as of end of Due Period

  	
   

  	
  $

  	
   

  	
   

  

 

I-8

 

	
  5.             Principal Balance of Contracts as of end of
  Due Period

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  8.             Pre-Funded Amount as of beginning of Due
  Period

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  9.             Pre-Funded Amount as of end of Due Period

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  V.            Interest Reserve Account

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1.             Interest Reserve Amount as of previous
  Distribution Date

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.             Interest received into Interest Reserve
  Account

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  4.             Excess Funds remitted to Trust Depositor

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  5.             Interest Reserve Amount as of upcoming
  Distribution Date

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  W.           Ratios

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1.             Cumulative Loss Ratio

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  

 

I-9

 

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.             Average Delinquency Ratio for such
  Distribution Date

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  (c)           The Delinquency Ratio for the prior
  Distribution Date

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  3.             Average Loss Ratio for such Distribution
  Date

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  (a)           Net Liquidation Losses

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
   

  	
  %

  

 

I-10

 

	
  (c)           The Loss Ratio for the prior Distribution
  Date

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  4.             Computation of Specified Reserve Fund
  Balance

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Reserve Fund Trigger
  Events

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
   

  	
  %

  

 

I-11

 

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

  	
   

  	
   

  	
  %

  

 

I-12

 

Exhibit J

 

[Seller’s Representations and Warranties]

 

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

 

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

 

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

 

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

 

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

 

J-1

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

J-2

 

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

 

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

 

(f)            Insurance.  The Seller, in accordance with
its policies and procedures, has determined that, as of the date of origination
of each Contract, the related Obligor had obtained or agreed to obtain physical
damage insurance covering the Motorcycle. 
The terms of each Contract require that for the term of such Contract
the Motorcycle securing such Contract will be covered by physical damage
insurance.

 

(g)           Origination.  Each Contract (i) was originated by a
Harley-Davidson motorcycle dealer or by Eaglemark Savings Bank, in each case,
in the regular course of its business, (ii) was fully and properly
executed by the parties thereto, and (iii) has been purchased by Seller in
the regular course of its business.  Each
Contract was sold by such motorcycle dealer or Eaglemark Savings Bank, as the
case may be, to the Seller without any fraud or misrepresentation on the part
of such motorcycle dealer or Eaglemark Savings Bank.

 

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

 

(i)            Compliance with Law.  None of the Contracts, the
origination of the Contracts by Harley-Davidson motorcycle dealers or Eaglemark
Savings Bank, the purchase of the Contracts by the Seller, the sale of the
Contracts by the Seller to the Trust Depositor or by the Trust Depositor to the
Trust, or any combination of the foregoing, violated at the time of origination
or as of the Closing Date or as of any Subsequent Transfer Date, as applicable,
in any material respect any requirement of any federal, state or local law and
regulations thereunder, including, without limitation, usury, truth in lending,
motor vehicle installment loan and equal credit opportunity laws, applicable to
the Contracts and the sale of Motorcycles.

 

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

 

J-3

 

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

 

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

 

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

 

(n)           No Liens.  As of the Closing Date (or the applicable
Subsequent Transfer Date in the case of Subsequent Contracts) there are, to the
best of Seller’s knowledge, no liens or claims which have been filed for work,
labor or materials affecting the

 

J-4

 

Motorcycle securing any Contract which are liens
prior to, or equal with, the lien of such Contract.

 

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

 

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

 

(q)           One Original.  Each Contract is evidenced by only one
original executed Contract, which original has been delivered to the Issuer or
its designee on or before the Closing Date (or the applicable Subsequent
Transfer Date in the case of Subsequent Contracts).

 

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

 

(s)           Lockbox Bank.  The Lockbox Bank is the only institution
holding any Lockbox Account for receipt of payments from Obligors, and all
Obligors have been instructed to make payments to the Lockbox Account (either
directly by remitting payments to the Lockbox, or indirectly by making payments
through direct debit, the telephone or the internet to an account of the
Servicer which payments will be subsequently transferred from such account to
one or more Lockbox Banks), and no person claiming through or under Seller has
any claim or interest in the Lockbox Account other than the Lockbox Bank;
provided, however, that other “Trusts” (as defined in the Lockbox Agreement)
shall have an interest in certain other collections therein not related to the
Contracts.

 

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

 

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

 

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

 

(w)          Selection Criteria.  Each Contract is secured by a new or used Motorcycle.  No Contract has a Contract Rate less than
1.99%.  Each Contract amortizes the
amount

 

J-5

 

financed over an original term no greater than 84
months.  Each Contract has a Principal
Balance of at least $500.00 as of the related Cutoff Date.

 

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

 

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

 

(b)           Characteristics.  The
Initial Contracts have the following characteristics: (i) all the
Contracts are secured by Motorcycles; (ii) no Initial Contract has a
remaining maturity of more than 84 months; and (iii) the final scheduled
payment on the Initial Contract with the latest maturity is due not later than August 2012.  Approximately 80.11% of the Principal Balance
of the Initial Contracts as of the Initial Cutoff Date is attributable to loans
for purchases of new Motorcycles and approximately 19.89% is attributable to loans
for purchases of used Motorcycles.  No
Initial Contract was originated after the Initial Cutoff Date.  No Initial Contract has a Contract Rate less
than 3.987%.  The last scheduled payment
date of the Contracts (including any Subsequent Contracts) is due no later than
November 2012.  Approximately 98.38%
of the Principal Balance of the Initial Contracts as of the Initial Cutoff Date
is attributable to loans for purchases of Motorcycles manufactured by
Harley-Davidson or Buell and approximately 1.62% of the Principal Balance of
the Initial Contracts as of the Initial Cutoff Date is attributable to loans to
purchase Motorcycles not manufactured by Harley-Davidson or Buell.

 

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

 

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

 

(e)           True Sale.  The transactions contemplated by the Transfer
and Sale Agreement and this Agreement constitute valid sales, transfers and
assignments from Seller to Trust Depositor and from Trust Depositor to the
Trust of all of Seller’s right,

 

J-6

 

title and interest in the Contract Assets as of the
Closing Date and any Subsequent Transfer Date, as applicable.

 

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

 

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

 

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

 

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

 

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

 

J-7

 

Exhibit K

 

[Lockbox Bank and Lockbox Account]

 

Lockbox

 

Harley-Davidson Credit Corp.

135 South LaSalle Street, Dept. 8529

Chicago, Illinois 60674-8529

 

Lockbox Bank

 

LaSalle Bank National Association

135 South LaSalle Street

Chicago, Illinois 60674

 

K-1

 

Exhibit L

 

[Form of Subsequent Transfer Agreement]

 

[see Exhibit C
of the Transfer and Sale Agreement]

 

L-1

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