Document:

EXHIBIT
10.34

 

 

 

TRANSFER AND SALE
AGREEMENT

 

by and between

 

HARLEY-DAVIDSON
CREDIT CORP.,

as Seller

 

and

 

HARLEY-DAVIDSON
CUSTOMER FUNDING CORP.,

 

as Purchaser

 

Dated as of May 1,
2004

 

 

 

 

TABLE OF CONTENTS

 

	
  ARTICLE I  DEFINITION

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 1.01.

  	
  GENERAL.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE II TRANSFER OF CONTRACTS;
  ASSIGNMENT OF AGREEMENT

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 2.01.

  	
  CLOSING.

  	
   

  
	
  SECTION 2.02.

  	
  CONDITIONS TO THE CLOSING.

  	
   

  
	
  SECTION 2.03.

  	
  ASSIGNMENT OF AGREEMENT.

  	
   

  
	
  SECTION 2.04.

  	
  SUBSEQUENT CONTRACTS.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE III REPRESENTATIONS AND
  WARRANTIES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 3.01.

  	
  REPRESENTATIONS
  AND WARRANTIES REGARDING SELLER.

  	
   

  
	
  SECTION 3.02.

  	
  REPRESENTATIONS
  AND WARRANTIES REGARDING EACH CONTRACT.

  	
   

  
	
  SECTION 3.03.

  	
  REPRESENTATIONS
  AND WARRANTIES REGARDING THE CONTRACTS IN THE AGGREGATE.

  	
   

  
	
  SECTION 3.04.

  	
  REPRESENTATIONS
  AND WARRANTIES REGARDING THE CONTRACT FILES.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV PERFECTION OF TRANSFER AND
  PROTECTION OF SECURITY INTERESTS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 4.01.

  	
  CUSTODY OF CONTRACTS.

  	
   

  
	
  SECTION 4.02.

  	
  FILING.

  	
   

  
	
  SECTION 4.03.

  	
  NAME CHANGE OR RELOCATION.

  	
   

  
	
  SECTION 4.04.

  	
  COSTS AND EXPENSES

  	
   

  
	
  SECTION 4.05

  	
  SALE TREATMENT

  	
   

  
	
  SECTION 4.06

  	
  SEPARATENESS FROM
  TRUST DEPOSITOR

  	
   

  
	
  SECTION 4.07

  	
  PROTECTION OF SECURITY
  INTERESTS

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE V REMEDIES UPON
  MISREPRESENTATION

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 5.01.

  	
  REPURCHASES
  OF CONTRACTS FOR BREACH OF REPRESENTATIONS AND WARRANTIES.

  	
   

  
	
  SECTION 5.02.

  	
  SELLER’S REPURCHASE OPTION.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI INDEMNITIES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 6.01.

  	
  SELLER INDEMNIFICATION.

  	
   

  
	
  SECTION 6.02.

  	
  LIABILITIES TO OBLIGORS.

  	
   

  
	
  SECTION 6.03.

  	
  TAX INDEMNIFICATION

  	
   

  
	
  SECTION 6.04.

  	
  OPERATION OF INDEMNITIES.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 7.01.

  	
  PROHIBITED
  TRANSACTIONS WITH RESPECT TO THE TRUST

  	
   

  
	
  SECTION 7.02.

  	
  MERGER OR CONSOLIDATION.

  	
   

  
	
  SECTION 7.03.

  	
  TERMINATION.

  	
   

  
	
  SECTION 7.04.

  	
  ASSIGNMENT OR
  DELEGATION BY SELLER.

  	
   

  
	
  SECTION 7.05.

  	
  AMENDMENT.

  	
   

  
	
  SECTION 7.06.

  	
  NOTICES.

  	
   

  
	
  SECTION 7.07.

  	
  MERGER AND INTEGRATION.

  	
   

  
	
  SECTION 7.08.

  	
  HEADINGS.

  	
   

  
	
  SECTION 7.09.

  	
  GOVERNING LAW.

  	
   

  

 

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 May 1, 2004, 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 2004-2 (the “Trust”) pursuant to the Sale and Servicing
Agreement dated as of May 1, 2004 by and among Trust Depositor, Harley-Davidson
Credit, as Servicer, the Trust, as issuer (the “Issuer”) and BNY Midwest
Trust Company, 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 $388,240,349.60 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 Trustee, such representations
will run to and be for the benefit of the Issuer and the Indenture 

 

3

 

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

 

4

 

(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 “A2” 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 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 

 

5

 

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 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.

 

6

 

(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.

 

(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, 

 

7

 

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

 

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

 

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

 

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

 

(h)                                 Lawful
Assignment.  No Contract was
originated in or is subject to the laws of any jurisdiction whose laws would
make the 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 the dealers or Eaglemark Savings Bank, the
purchase of the Contracts by the Seller, the sale of the Contracts by the
Seller to the Trust Depositor or by the Trust Depositor to the Trust, or any
combination of the foregoing, violated at the time of origination or as of the
Closing Date or as of any Subsequent Transfer Date, as applicable, any
requirement of any federal, state or local law and regulations thereunder,
including, without limitation, usury, truth in lending, motor vehicle
installment loan and equal credit opportunity laws, applicable to the Contracts
and the sale of Motorcycles.  

 

8

 

Seller shall, for at
least the period of this Agreement, maintain in its possession, available for
the Trust Depositor’s and the Trustees’ 
inspection, and shall deliver to Trust Depositor or  the Trustee 
upon demand, evidence of compliance with all such requirements.

 

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

 

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

 

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

 

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

 

9

 

had full right to
transfer the Contract to Trust Depositor and to permit Trust Depositor to
transfer the same to the Issuer, and, as of the Closing Date (or the applicable
Subsequent Transfer Date in the case of Subsequent Contracts), the Issuer will
have a first priority perfected security interest therein.

 

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

 

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

 

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

 

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

 

(r)                                    One
Original.  Each Contract is
evidenced by only one original executed Contract, which original 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).

 

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

 

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

 

10

 

other than the Lockbox
Bank; provided,
however, that other “Trusts” (as defined in the Lockbox Agreement)
shall have an interest in certain other collections therein not related to the
Contracts.

 

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

 

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

 

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

 

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

 

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 May 2011.    Approximately
79.79% 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 20.21% is attributable to loans for purchases of used
Motorcycles.  No Initial Contract was
originated after the Initial Cutoff Date. 
No Initial Contract has a Contract Rate less than 4.489%.  The last scheduled payment date of the
Contracts (including any Subsequent Contracts) is due no later than
August 2011.  Approximately 97.94%
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 2.06% of the 

 

11

 

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.

 

(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 

 

12

 

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.

 

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.

 

13

 

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.

 

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 

 

14

 

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.

 

Section 5.02.                         Seller’s Repurchase Option.  On written
notice to the Owner Trustee and the Indenture Trustee at least 20 days prior to
a Distribution Date, provided the Pool Balance is then less than 10% of the
Aggregate Principal Balance as of the Closing Date, Seller may (but is not
required to) repurchase from the Trust 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 Indenture Trustee Fee to the date of such
repurchase.  Such price will be
deposited in the Collection Account not later than one Business Day before such
Distribution Date, against the Trustees’ release of the Contracts and Contract
Files as described in Section 7.10 of the Sale and Servicing Agreement.

 

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.

 

15

 

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 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 

 

16

 

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.

 

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 Modified
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.

 

17

 

(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.

 

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 

 

18

 

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]

 

19

 

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:
  Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  HARLEY-DAVIDSON CREDIT
  CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Perry A. Glassgow

  	
   

  
	
   

  	
   

  	
  Printed
  Name:  Perry A. Glassgow

  
	
   

  	
   

  	
  Title:
  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 May 1, 2004 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 May 1, 2004 made by and
among the undersigned, as servicer, the Trust Depositor, Harley-Davidson
Motorcycle Trust 2004-2, as issuer, and BNY Midwest Trust Company, as indenture
trustee.

 

A-1

 

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

 

	
   

  	
  HARLEY-DAVIDSON CREDIT
  CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Printed Name:  Perry A. Glassgow

  
	
   

  	
   

  	
  Title: 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 May 1, 2004 (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 May 1, 2004 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 constitute the Subsequent Contracts 

 

C-1

 

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)                                  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 

 

C-2

 

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:
  Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HARLEY-DAVIDSON CREDIT
  CORP.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Printed
  Name:  Perry A. Glassgow

  
	
   

  	
  Title:
  TreasurerEXHIBIT 10.35

 

 

SALE AND SERVICING AGREEMENT

 

 

among

 

HARLEY-DAVIDSON MOTORCYCLE TRUST 2004-2,

as Issuer,

 

HARLEY-DAVIDSON CUSTOMER FUNDING CORP.,

as Trust Depositor,

 

HARLEY-DAVIDSON CREDIT CORP.,

as Servicer

 

and

 

BNY MIDWEST TRUST COMPANY,

as Indenture Trustee

 

 

Dated as of May 1, 2004

 

 

 

Table of Contents

 

	
  ARTICLE
  ONE  DEFINITIONS

  	
   

  
	
   

  	
  Section 1.01.

  	
  Definitions

  	
   

  
	
   

  	
  Section 1.02.

  	
  Usage of Terms

  	
   

  
	
   

  	
  Section 1.03.

  	
  Section References

  	
   

  
	
   

  	
  Section 1.04.

  	
  Calculations

  	
   

  
	
   

  	
  Section 1.05.

  	
  Accounting Terms

  	
   

  
	
  ARTICLE
  TWO  TRANSFER OF CONTRACTS

  	
   

  
	
   

  	
  Section 2.01.

  	
  Closing

  	
   

  
	
   

  	
  Section 2.02.

  	
  Conditions to the Closing

  	
   

  
	
   

  	
  Section 2.03.

  	
  Conveyance of Subsequent Contracts

  	
   

  
	
  ARTICLE
  THREE  REPRESENTATIONS AND WARRANTIES

  	
   

  
	
   

  	
  Section 3.01.

  	
  Representations and Warranties Regarding
  the Trust Depositor

  	
   

  
	
   

  	
  Section 3.02.

  	
  Representations and Warranties Regarding
  the Servicer

  	
   

  
	
  ARTICLE
  FOUR  PERFECTION OF TRANSFER AND
  PROTECTION OF SECURITY INTERESTS

  	
   

  
	
   

  	
  Section 4.01.

  	
  Custody of Contracts

  	
   

  
	
   

  	
  Section 4.02.

  	
  Filing

  	
   

  
	
   

  	
  Section 4.03.

  	
  Name Change or Relocation

  	
   

  
	
   

  	
  Section 4.04.

  	
  Costs and Expenses

  	
   

  
	
  ARTICLE
  FIVE  SERVICING OF CONTRACTS

  	
   

  
	
   

  	
  Section 5.01.

  	
  Responsibility for Contract Administration

  	
   

  
	
   

  	
  Section 5.02.

  	
  Standard of Care

  	
   

  
	
   

  	
  Section 5.03.

  	
  Records

  	
   

  
	
   

  	
  Section 5.04.

  	
  Inspection

  	
   

  
	
   

  	
  Section 5.05.

  	
  Trust Accounts

  	
   

  
	
   

  	
  Section 5.06.

  	
  Enforcement

  	
   

  
	
   

  	
  Section 5.07.

  	
  Trustees to Cooperate

  	
   

  
	
   

  	
  Section 5.08.

  	
  Costs and Expenses

  	
   

  
	
   

  	
  Section 5.09.

  	
  Maintenance of Security Interests in
  Motorcycles

  	
   

  
	
   

  	
  Section 5.10.

  	
  Successor Servicer/Lockbox Agreements

  	
   

  
	
   

  	
  Section 5.11.

  	
  Separate Entity Existence

  	
   

  
	
  ARTICLE
  SIX  THE TRUST DEPOSITOR

  	
   

  
	
   

  	
  Section 6.01.

  	
  Covenants of the Trust Depositor.

  	
   

  
	
   

  	
  Section 6.02.

  	
  Liability of Trust Depositor; Indemnities

  	
   

  
	
   

  	
  Section 6.03.

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

  	
   

  
	
   

  	
  Section 6.04.

  	
  Limitation on Liability of Trust Depositor
  and Others

  	
   

  
	
   

  	
  Section 6.05.

  	
  Trust Depositor Not to Resign

  	
   

  
	
  ARTICLE
  SEVEN  DISTRIBUTIONS; RESERVE FUND

  	
   

  
	
   

  	
  Section 7.01.

  	
  Monthly Distributions

  	
   

  
	
   

  	
  Section 7.02.

  	
  Fees

  	
   

  
	
   

  	
  Section 7.03.

  	
  Advances; Realization of Carrying Charge

  	
   

  
	
   

  	
  Section 7.04.

  	
  Interest Reserve Account.

  	
   

  
	
   

  	
  Section 7.05.

  	
  Distributions; Priorities.

  	
   

  
	
   

  	
  Section 7.06.

  	
  Reserve Fund.

  	
   

  
	
   

  	
  Section 7.07.

  	
  Establishment of Pre-Funding Account.

  	
   

  
	
   

  	
  Section 7.08.

  	
  Reacquisition of Contracts for Breach of
  Representations and Warranties.

  	
   

  
	
   

  	
  Section 7.09.

  	
  Reassignment of Reacquired Contracts

  	
   

  
	
   

  	
  Section 7.10.

  	
  Seller’s Reacquisition Option

  	
   

  

 

i

 

	
  ARTICLE
  EIGHT  EVENTS OF TERMINATION; SERVICE
  TRANSFER

  	
   

  
	
   

  	
  Section 8.01.

  	
  Events of Termination

  	
   

  
	
   

  	
  Section 8.02.

  	
  Waiver of Event of Termination

  	
   

  
	
   

  	
  Section 8.03.

  	
  Service Transfer

  	
   

  
	
   

  	
  Section 8.04.

  	
  Successor Servicer to Act; Appointment of
  Successor Servicer

  	
   

  
	
   

  	
  Section 8.05.

  	
  Notification to Securityholders

  	
   

  
	
   

  	
  Section 8.06.

  	
  Effect of Transfer

  	
   

  
	
   

  	
  Section 8.07.

  	
  Database File

  	
   

  
	
   

  	
  Section 8.08.

  	
  Successor Servicer Indemnification

  	
   

  
	
   

  	
  Section 8.09.

  	
  Responsibilities of the Successor Servicer

  	
   

  
	
   

  	
  Section 8.10.

  	
  Limitation of Liability of Servicer

  	
   

  
	
   

  	
  Section 8.11.

  	
  Merger or Consolidation of Servicer

  	
   

  
	
   

  	
  Section 8.12.

  	
  Servicer Not to Resign

  	
   

  
	
   

  	
  Section 8.13.

  	
  Appointment of Subservicer

  	
   

  
	
  ARTICLE
  NINE  REPORTS

  	
   

  
	
   

  	
  Section 9.01.

  	
  Monthly Reports

  	
   

  
	
   

  	
  Section 9.02.

  	
  Officer’s Certificate

  	
   

  
	
   

  	
  Section 9.03.

  	
  Other Data

  	
   

  
	
   

  	
  Section 9.04.

  	
  Annual Report of Accountants.

  	
   

  
	
   

  	
  Section 9.05.

  	
  Annual Statement of Compliance from
  Servicer

  	
   

  
	
   

  	
  Section 9.06.

  	
  Monthly Reports to Noteholders

  	
   

  
	
  ARTICLE
  TEN  TERMINATION

  	
   

  
	
   

  	
  Section 10.01.

  	
  Sale of Trust Assets.

  	
   

  
	
  ARTICLE
  ELEVEN  MISCELLANEOUS

  	
   

  
	
   

  	
  Section 11.01.

  	
  Amendment.

  	
   

  
	
   

  	
  Section 11.02.

  	
  Protection of Title to Trust.

  	
   

  
	
   

  	
  Section 11.03.

  	
  Governing Law

  	
   

  
	
   

  	
  Section 11.04.

  	
  Notices

  	
   

  
	
   

  	
  Section 11.05.

  	
  Severability of Provisions

  	
   

  
	
   

  	
  Section 11.06.

  	
  Assignment

  	
   

  
	
   

  	
  Section 11.07.

  	
  Third Party Beneficiaries

  	
   

  
	
   

  	
  Section 11.08.

  	
  Counterparts

  	
   

  
	
   

  	
  Section 11.09.

  	
  Headings

  	
   

  
	
   

  	
  Section 11.10.

  	
  No Bankruptcy Petition; Disclaimer and
  Subordination

  	
   

  
	
   

  	
  Section 11.11.

  	
  Limitation of Liability of Owner Trustee
  and Indenture Trustee.

  	
   

  

 

ii

 

EXHIBITS

 

	
  Exhibit
  A

  	
  Form
  of Assignment

  	
   

  
	
  Exhibit
  B

  	
  Form
  of Closing Certificate of Trust Depositor

  	
   

  
	
  Exhibit
  C

  	
  Form
  of Closing Certificate of Seller/Servicer

  	
   

  
	
  Exhibit
  D

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

  	
   

  
	
  Exhibit
  E

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

  	
   

  
	
  Exhibit
  F

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

  	
   

  
	
  Exhibit
  G

  	
  Form
  of Certificate Regarding Reacquired Contracts

  	
   

  
	
  Exhibit
  H

  	
  List
  of Contracts

  	
   

  
	
  Exhibit
  I

  	
  Form
  of Monthly Report to Noteholders and the Certificateholder

  	
   

  
	
  Exhibit
  J

  	
  Seller’s
  Representations and Warranties

  	
   

  
	
  Exhibit
  K

  	
  Lockbox
  Bank and Lockbox Account

  	
   

  
	
  Exhibit
  L

  	
  Form
  of Subsequent Transfer Agreement

  	
   

  

 

iii

 

SALE AND
SERVICING AGREEMENT, dated as of May 1, 2004, among Harley-Davidson Motorcycle
Trust 2004-2 (together with its successors and assigns, the “Issuer” or the “Trust”),
Harley-Davidson Customer Funding Corp. (together with its successor and
assigns, the
“Trust Depositor”), BNY Midwest Trust Company (solely in its
capacity as Indenture Trustee together with its successors and assigns, the “Indenture
Trustee”) and Harley-Davidson Credit Corp. (solely in its capacity
as Servicer together with its successor and assigns, “Harley-Davidson Credit” or
the “Servicer”).

 

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

 

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

 

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

 

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

 

ARTICLE ONE

 

DEFINITIONS

 

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

 

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

 

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

 

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

 

1

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

2

 

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

 

“Base Prospectus” means the Prospectus dated
May 19, 2004 relating to the Harley-Davidson Motorcycle Trusts.

 

“Buell” means Buell Motorcycle Company.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Class
A Note Percentage” means, (i) for each Distribution Date to but
excluding the Distribution Date on which the principal amount of the Class A-2
Notes is reduced to zero, 94.50%; (ii) for the Distribution Date on which the
principal amount of the Class A-2 Notes is reduced to zero, such percentage
which represents the fraction of the Principal Distributable Amount necessary
to reduce the principal amount of the Class A-2 Notes to zero; and (iii) for
each Distribution Date thereafter, 0%.

 

3

 

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

 

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

 

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

 

“Class A-1 Final Distribution Date” means the
January 2009 Distribution Date.

 

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

 

“Class A-1 Rate” means 2.18% per annum
(computed on the basis of a 360-day year of twelve 30-day months).

 

“Class A-2 Final Distribution Date” means the
February 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 3.56% per annum
(computed on the basis of a 360-day year of twelve 30-day months).

 

“Class B Final Distribution Date” means the
February 2012 Distribution Date.

 

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

 

4

 

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

 

“Class
B Note Percentage” means, (i) for each Distribution Date to but
excluding the Distribution Date on which the principal amount of the Class A-2
Notes is reduced to zero, 5.50%; and (ii) for the Distribution Date on which
the principal amount of the Class A-2 Notes is reduced to zero, that percentage
that equals 100% minus the Class A Note Percentage for such Distribution Date;
and (iii) 100% thereafter.

 

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

 

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

 

“Class B Rate” means 2.96% 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 May 28, 2004.

 

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

 

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

 

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

 

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

 

5

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

6

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Due Period” means a calendar month during the
term of this Agreement, and the Due Period related to a Determination Date or
Distribution Date shall be the calendar month immediately preceding such date; provided,
however, that with respect to the Initial Determination Date or
Initial Distribution Date, the Due Period shall be the period from the Initial
Cutoff Date to and including May 31, 2004.

 

7

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

8

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Initial Class A-1 Note Balance” means
$388,000,000.

 

9

 

“Initial Class A-2 Note Balance” means
$203,570,000.

 

“Initial Class B Note Balance” means
$34,430,000.

 

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

 

“Initial Cutoff Date” means as of the close of
business on May 11, 2004.

 

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

 

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

 

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

 

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

 

“Interest Reserve Amount” means, as of any
date of determination, the amount on deposit in the Interest  Reserve
Account on such date, and as of the Closing Date shall be $978,281.23.

 

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

 

10

 

“Issuer” means the Harley-Davidson Motorcycle
Trust 2004-2.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

11

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

12

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

13

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

14

 

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

 

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

 

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

 

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

 

15

 

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

 

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

 

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

 

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

 

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

 

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

 

“Reserve Fund Initial Deposit” means
$3,882,403.50.

 

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

 

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

 

16

 

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

 

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

 

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

 

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

 

“Securityholders” means the Holders of the
Notes.

 

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

 

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

 

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

 

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

 

17

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

18

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Supplement” means the Prospectus Supplement
dated May 19, 2004.

 

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

 

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

 

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

 

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

 

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

 

19

 

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

 

“Trust Agreement” means the Trust Agreement,
dated as of May 1, 2004, between the Trust Depositor and the Owner Trustee.

 

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

 

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

 

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

 

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

 

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

 

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

 

“Underwriters” means Citigroup Global Markets
Inc., 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.

 

20

 

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

 

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

 

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

 

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

 

ARTICLE TWO

 

TRANSFER OF CONTRACTS

 

Section 2.01.        Closing.  (a) 
On the Closing Date, the Trust Depositor shall transfer, assign, set
over and otherwise convey to the Trust by execution of an assignment
substantially in the form of Exhibit A hereto, without recourse other
than as expressly provided herein, (i) all the right, title and interest of the
Trust Depositor in and to the Initial Contracts listed on the initial List of
Contracts delivered on the Closing Date (including, without limitation, all
security interests and all rights to receive payments which are collected
pursuant thereto after the Initial Cutoff Date, including any liquidation
proceeds therefrom, but excluding any rights to receive payments which were
collected pursuant thereto on or prior to the Initial Cutoff Date), (ii) all
rights of the Trust Depositor under any physical damage or other individual
insurance policy (and rights under a “forced placed” policy, if any), 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

 

21

 

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

 

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

 

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

 

22

 

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

 

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

 

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

 

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

 

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

 

(l)            A fully executed Transfer and Sale
Agreement.

 

(m)          A fully executed Trust Agreement.

 

(n)           A fully executed Administration Agreement.

 

(o)           A fully executed Indenture.

 

Section 2.03.        Conveyance of Subsequent
Contracts.  (a) Subject to the
conditions set forth in paragraph (b) below, the Trust Depositor, shall
transfer, assign, set over and otherwise convey to the Trust, without recourse
other than as expressly provided herein and therein, (i) all the right, title
and interest of the Trust Depositor in and to the Subsequent Contracts listed
on the Subsequent List of Contracts (including, without limitation, all
security interests and all rights to receive payments which are collected
pursuant thereto after the related Subsequent Cutoff Date, including any
liquidation proceeds therefrom, but excluding any rights to receive payments
which were collected pursuant thereto on or prior to such Subsequent Cutoff
Date), (ii) all rights of the Trust Depositor under any physical damage or
other individual insurance policy (including a “forced placed” policy, if
any), 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

 

23

 

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

 

(ii)           the Funding Period shall not have
terminated;

 

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

 

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

 

24

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(xii)          the Trust Depositor shall have delivered to
the Rating Agencies evidence that (A) the weighted average contract rate of the
Contracts collectively, following the transfer of the Subsequent Contracts, is
not less than 9.90% and (B) that the weighted average calculated remaining term
to maturity of the Contracts collectively, following the transfer of the
Subsequent Contracts, does not exceed 76 months;

 

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

 

25

 

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

 

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

 

(c)           The Trust Depositor
covenants to transfer (at or prior to the end of the Funding Period) to the
Trust pursuant thereto Subsequent Contracts with an aggregate Principal Balance
equal to $237,759,650.40; provided, however, that in complying with
such covenant, the Trust Depositor agrees to make no more than one separate
transfer of Subsequent Contracts per monthly period (as measured by the
corresponding Distribution Dates).  In
the event that the Trust Depositor shall fail to deliver and transfer to the
Trust any or all of such Subsequent Receivables by the date on which the
Funding Period ends and the Pre-Funded Amount is greater than $150,000 on such
date, the Trust Depositor shall cause to be deposited into the Collection
Account the amount then on deposit in the Pre-Funding Account; provided,
however, that the foregoing shall be the sole remedy of the Trust,
the Owner Trustee, the Indenture Trustee and the Securityholders with respect
to a failure of the Trust Depositor to comply with such covenant.

 

ARTICLE THREE

 

REPRESENTATIONS AND WARRANTIES

 

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

 

26

 

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

 

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

 

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

 

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

 

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

 

27

 

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

 

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

 

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

 

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

 

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

 

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

 

28

 

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

 

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

 

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

 

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

 

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

 

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

 

29

 

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

 

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

 

ARTICLE FOUR

 

PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS

 

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

 

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

 

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

 

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

 

30

 

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

 

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

 

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

 

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

 

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

 

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

 

31

 

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

 

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

 

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

 

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

 

ARTICLE FIVE

 

SERVICING OF CONTRACTS

 

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

 

32

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

33

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

34

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

35

 

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

 

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

 

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

 

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

 

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

 

36

(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.

 

37

 

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

 

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

 

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

 

ARTICLE SIX

 

THE TRUST DEPOSITOR

 

Section 6.01.        Covenants of the Trust Depositor.

 

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

 

38

 

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

 

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

 

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

 

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

 

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

 

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

 

39

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

40

 

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

 

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

 

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

 

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

 

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

 

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

 

41

 

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

 

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

 

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

 

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

 

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

 

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

 

42

 

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

 

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

 

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

 

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

 

43

 

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).

 

44

 

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

 

Section 7.04.        Interest
Reserve Account.

 

(a)           On or prior to the
Closing Date, the Trust Depositor shall establish with and in the name of the
Indenture Trustee on behalf of the Securityholders, an Eligible Account
designated “Harley-Davidson
Customer Funding Corp. Interest Reserve Account - Harley Davidson Motorcycle
Trust 2004-2 – BNY Midwest Trust Company, as Indenture Trustee”
(such account being the “Interest Reserve
Account”).

 

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

 

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

 

Section 7.05.        Distributions;
Priorities.

 

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

 

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

 

45

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(ix)           to the Holder of the Certificate.

 

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

 

46

 

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

 

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

 

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

 

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

 

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

 

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

 

(iii)          to the Holder of the Certificate.

 

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

 

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

 

47

 

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

 

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

 

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

 

(v)           to the Holder of the Certificate.

 

Section 7.06.        Reserve Fund.

 

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

 

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

 

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

 

48

 

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

 

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

 

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

 

Section 7.07.        Establishment of
Pre-Funding Account.

 

(a)           On or prior to the
Closing Date, the Trust Depositor shall establish with and in the name of the
Indenture Trustee on behalf of the Securityholders, an Eligible Account
designated “Harley-Davidson
Customer Funding Corp. Pre-Funding Account - Harley Davidson Motorcycle Trust
2004-2 – BNY Midwest Trust Company, as Indenture Trustee” (such
account being the “Pre-Funding Account”).

 

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

 

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

 

49

 

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

 

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

 

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

 

50

 

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

 

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

 

ARTICLE EIGHT

 

EVENTS OF TERMINATION; SERVICE TRANSFER

 

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

 

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

 

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

 

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

 

51

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

52

 

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

 

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

 

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

 

53

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

54

 

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

 

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

 

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

 

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

 

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

 

55

 

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

 

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

 

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

 

ARTICLE NINE

 

REPORTS

 

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

 

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

 

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

 

56

 

Section 9.04.        Annual Report of
Accountants.

 

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

 

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

 

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

 

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

 

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

 

The Accountant’s Report shall further state that:

 

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

 

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

 

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

 

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

 

57

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

58

 

(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 Reacquisition Price for such
Contracts;

 

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

 

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

 

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

 

59

 

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

 

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

 

ARTICLE TEN

 

TERMINATION

 

Section 10.01.      Sale of Trust Assets.

 

(a)           [Intentionally
Omitted].

 

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

 

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

 

ARTICLE ELEVEN

 

MISCELLANEOUS

 

Section 11.01.      Amendment.

 

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

 

60

 

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

 

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

 

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

 

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

 

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

 

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

 

61

 

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

 

Section 11.02.      Protection
of Title to Trust.

 

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

 

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

 

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

 

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

 

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

 

62

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

63

 

(i)                                     If to the Servicer
or Seller:

 

Harley-Davidson Credit Corp.

150 South Wacker Drive, Suite 3100

Chicago, Illinois 60606

Attention: Perry A. Glassgow

 

Telecopier No.: (312) 368-4372

 

(ii)                                  If to the Trust
Depositor:

 

Harley-Davidson Customer Funding Corp.

4150 Technology Way

Carson City, Nevada 89706

Attention:  Perry A. Glassgow

 

Telecopier No.: (775) 886-3490

 

with a copy to:

 

Harley-Davidson Credit Corp.

150 South Wacker Drive, Suite 3100

Chicago, Illinois  60606

Attention:  Perry A. Glassgow

Telecopier No.:   (312) 368-4372

 

(iii)                               If to the Indenture Trustee:

 

BNY Midwest Trust Company

2 North LaSalle Street

Suite 1020

Chicago, Illinois 60602

Attention:  Corporate Trust
Administration

 

Telecopier No.:  (312) 827-8562

 

(iv)                              If to the Owner Trustee:

 

Wilmington Trust Company

Rodney Square North

1100 North Market Street

Wilmington, Delaware 19890-0001

Attention: Corporate Trust Administration

 

Telecopier No.: (302) 651-8882

 

64

 

(v)                                 If to Moody’s:

 

Moody’s Investors Service, Inc.

99 Church Street

New York, New York 10007

Attention: ABS Monitoring Department

 

Telecopier No.: (212) 553-1350

 

(vi)                              If to Standard &
Poor’s:

 

Standard & Poor’s Ratings Services, a

division of The McGraw Hill Companies

55 Water Street

New York, New York 10004

 

Telecopier No.: (212) 438-2657

 

(vii)                           If to the Underwriters:

 

Citigroup Global Markets Inc.

390 Greenwich Street

6th Floor

New York, New York  10013

Attention:  Asset Backed Finance
Division

 

Telecopier No.:  (212) 723-8591

 

BNP Paribas Securities Corp.

787 Seventh Avenue

New York, New York 10019

Attention: Michael Gonik

 

Telecopier No: (212) 841-2689

 

J.P. Morgan Securities, Inc.

270 Park Avenue

10 th Floor

New York, New York 10017

Attention: General Counsel

 

Telecopier No.: (212) 834-6562

 

65

 

Wachovia Capital Markets, LLC

301 College Street

Charlotte, North Carolina 28288

Attention:  Curt Sidden

 

Telecopier No.:  (704) 383-9106

 

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.

 

66

 

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

 

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

 

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

 

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

 

(a)           Notwithstanding
anything contained herein to the contrary, this Agreement has been executed by
Wilmington Trust Company, not in its individual capacity but solely in its
capacity as Owner Trustee of the Issuer, and in no event shall Wilmington Trust
Company in its 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

 

67

 

Agreement, in the performance
of any duties or obligations of the Issuer hereunder, the Owner Trustee shall
be subject to, and entitled to the benefits of, the terms and provisions of
Articles Six, Seven and Eight of the Trust Agreement.

 

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

 

[signature page follows]

 

68

 

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

 

	
   

  	
  HARLEY-DAVIDSON MOTORCYCLE TRUST 2004-2

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Wilmington Trust Company, not in its

  
	
   

  	
   

  	
   

  	
  individual capacity but solely as Owner

  
	
   

  	
   

  	
   

  	
  Trustee on behalf of the Trust

  
	
   

  
	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ 
  Janel R. Havrilla

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Printed Name:  Janel R.
  Havrilla

  
	
   

  	
   

  	
   

  	
   

  	
  Title:  Financial Services
  Officer

  
	
   

  
	
   

  	
   

  
	
   

  	
  HARLEY-DAVIDSON CUSTOMER FUNDING CORP.,

  as Trust Depositor

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ 
  Perry A. Glassgow

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Printed Name: Perry A. Glassgow

  
	
   

  	
   

  	
   

  	
   

  	
  Title: Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HARLEY-DAVIDSON CREDIT CORP., as Servicer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ 
  Perry A. Glassgow

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Printed Name: Perry A. Glassgow

  
	
   

  	
   

  	
   

  	
   

  	
  Title: Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BNY MIDWEST TRUST COMPANY, not in its

  
	
   

  	
  individual capacity but solely as Indenture Trustee

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ 
  Cynthia Davis

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Printed Name:  Cynthia Davis

  
	
   

  	
   

  	
   

  	
   

  	
  Title:   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
May 1, 2004 made by and between the undersigned, as Trust Depositor  (“Trust Depositor”), Harley-Davidson Credit
Corp., as Servicer (“HDCC”), BNY Midwest Trust Company, as
Indenture Trustee and Harley-Davidson Motorcycle Trust 2004-2 (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 May, 2004.

 

	
   

  	
  HARLEY-DAVIDSON CUSTOMER FUNDING

  
	
   

  	
  CORP.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Printed Name: Perry A. Glassgow

  
	
   

  	
  Title:  Treasurer

  

 

A-1

 

Exhibit
B

 

[Form of Closing Certificate of Trust
Depositor]

 

Harley-Davidson Customer Funding Corp.

 

Officer’s Certificate

 

The
undersigned certifies that he is Vice President, Treasurer and Assistant
Secretary of Harley-Davidson Customer Funding Corp., a Nevada corporation (the
“Trust
Depositor”), and that as such is duly authorized to execute and
deliver this certificate on behalf of the Trust Depositor in connection with
the Sale and Servicing Agreement (the “Agreement”) dated as of May 1, 2004 (the “Effective
Date”) by and among the Trust Depositor, BNY Midwest Trust Company
(the “Indenture
Trustee”), as Indenture Trustee, 
Harley-Davidson Credit Corp. (“Harley-Davidson Credit”), as Servicer, and
Harley-Davidson Motorcycle Trust 2004-2 (“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 May 7, 2004 stating that
the Trust Depositor is duly incorporated under the laws of the State of Nevada
and is in good standing.

 

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

 

(5)           Attached hereto as Exhibit IV is a true and
correct copy of resolutions adopted pursuant to the unanimous written consent
of the Board of Directors of the Trust Depositor relating to the execution,
delivery and performance of the Agreement; the Transfer and Sale Agreement
dated as of the Effective Date between the Trust Depositor and Harley-Davidson
Credit; the Trust Agreement dated as of May 1, 2004 between the Trust Depositor
and Wilmington Trust Company (the “Owner Trustee”), as Owner Trustee; the
Administration Agreement dated as of the Effective Date between the Trust Depositor,
the Issuer, the Indenture Trustee, Harley-Davidson Credit, as Administrator;
the Underwriting Agreement dated May 19, 2004 among the Trust Depositor,

 

B-1

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

B-2

 

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

 

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

 

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

 

*     *     *     *

 

B-3

 

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

 

 

	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Printed Name:  Perry A.
  Glassgow

  
	
   

  	
  Title: Vice President, Treasurer and

  
	
   

  	
  Assistant
  Secretary

  

 

 

Exhibit
C

 

[Form of Closing Certificate of Servicer/Seller]

 

HARLEY-DAVIDSON CREDIT CORP.

 

Officer’s Certificate

 

The
undersigned certifies that he is Vice President, Treasurer and Assistant
Secretary of Harley-Davidson Credit Corp. (“Harley-Davidson Credit”), and that as such
is duly authorized to execute and deliver this certificate on behalf of
Harley-Davidson Credit, as Servicer, in connection with the Sale and Servicing
Agreement (the “Sale and Servicing Agreement”) dated as of May 1, 2004
(the “Effective
Date”) by and among Harley-Davidson Credit, as Servicer,
Harley-Davidson Customer Funding Corp. (“CFC”), BNY Midwest Trust Company, as
Indenture Trustee and Harley-Davidson Motorcycle Trust 2004-2 (“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 May 7, 2004 stating that
Harley-Davidson Credit is duly incorporated under the laws of the State of
Nevada and is in good standing.

 

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

 

(5)           Attached hereto as Exhibit IV is a true and
correct copy of resolutions adopted pursuant to a unanimous written consent of
the Board of Directors of Harley-Davidson Credit and relating to the
authorization, execution, delivery and performance of the Transfer and Sale
Agreement; the Sale and Servicing Agreement; the Underwriting Agreement dated
May 19 2004 among Harley-Davidson Credit, CFC and the Underwriters (the “Underwriting
Agreement”); and the Administration Agreement dated

 

C-1

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

C-2

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

 

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

 

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

 

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

 

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

 

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

 

*  
*   *   *   *   *

 

C-3

 

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

 

 

	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Printed Name:  Perry A.
  Glassgow

  
	
   

  	
  Title: Vice President, Treasurer and

  
	
   

  	
  Assistant Secretary

  

 

 

Exhibit
D

 

[Form of Opinion of Counsel for Trust
Depositor

Regarding General Corporate Matters

(Including Perfection Opinion)]

 

 

See Tab 23

 

D-1

 

Exhibit
E

 

[Form of Opinion of Counsel for Trust

Depositor Regarding the “True Sale” Nature

of the Transaction]

 

 

See Tab 24

 

E-1

 

Exhibit F

 

[Form of Opinion of Counsel for Trust

Depositor Regarding Non-consolidation]

 

 

See Tab 25

 

F-1

 

Exhibit
G

 

[Form of Certificate Regarding Reacquired
Contracts]

 

Harley-Davidson Credit Corp.

 

Certificate Regarding Reacquired Contracts

 

The
undersigned certifies that he is the Treasurer of Harley-Davidson Credit Corp.,
a Nevada corporation (the “Servicer”), and that as such is duly
authorized to execute and deliver this certificate on behalf of the Servicer
pursuant to Section 7.08 of the Sale and Servicing Agreement (the “Agreement”)
dated as of May 1, 2004 by and among Harley-Davidson Customer Funding Corp., as
Trust Depositor, the Servicer, BNY Midwest Trust Company, as Indenture Trustee,
and Harley-Davidson Motorcycle Trust 2004-2 (all capitalized terms used herein
without definition having the respective meanings specified in the Agreement),
and further certifies that:

 

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

 

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

 

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

 

 

	
   

  	
  Harley-Davidson Credit Corp.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Printed Name: Perry A. Glassgow

  
	
   

  	
  Title: Treasurer

  

 

G-1

 

Exhibit
H

 

[List of Contracts]

 

See Tab 6

 

H-1

 

Exhibit
I

 

[Form of Monthly Report to Noteholders and
the Certificateholder]

 

Harley-Davidson Motorcycle Trust 2004-2

$388,000,000  2.18% Harley-Davidson
Motorcycle Contract Backed Notes, Class A-1

$203,570,000  3.56% Harley-Davidson
Motorcycle Contract Backed Notes, Class A-2

$34,430,000  2.96% Harley-Davidson
Motorcycle Contract Backed Notes, Class B

 

Monthly Report

For the
[        ] Distribution Date

 

 

	
  A.

  	
   

  	
  Calculation of Available Monies

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.             Available Monies (l. plus 2.)

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B.

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C.

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  D.

  	
   

  	
  Calculation of Note Monthly Principal Distributable Amount

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1A.          Class A Note Percentage for such
  Distribution Date

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  94.50

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (b)           on the Distribution Date on which the
  principal amount of the Class A-1 Notes is reduced to zero, 94.50% until the
  principal amount of the Class A-2 Notes has been reduced to zero

  	
   

  	
  94.50

  	
  %

  

 

I-1

 

	
   

  	
   

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

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  0.00%

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1B.          Class B Note Percentage for such
  Distribution Date

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  5.50

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  100.00

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.             Principal Distributable Amount (from B)

  	
   

  	
  $

  	
   

  	
   

  
							

 

I-2

 

	
   

  	
   

  	
  3.                             Note Monthly Principal
  Distributable Amount for

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (d)           Note Principal Carryover Shortfall

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  

 

I-3

 

	
  E.

  	
   

  	
  Calculation
  of Note Monthly Interest Distributable Amount.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.             Class A-l Interest Rate

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.             Class A-2 Interest Rate

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.             Class B Interest Rate

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  7.             Interest Carryover Shortfall for such
  Distribution Date

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  F.

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  

 

I-4

 

	
  G.

  	
   

  	
  Fees

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  H.

  	
   

  	
  CALCULATION OF THE AVAILABLE MONIES FOR
  SUCH DISTRIBUTION DATE

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  b.             All Net Liquidation Proceeds

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  

 

I-5

 

	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  

 

I-6

 

	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  I.

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  J.

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  K.

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  L.

  	
   

  	
  Interest
  Earnings on the Reserve Fund.

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  M.

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  

 

I-7

 

	
  N.

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  O.

  	
   

  	
  The Pool Factor

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  P.

  	
   

  	
  Delinquent Contracts

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.             31-59 Days

  	
  #          

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.             60-89 Days

  	
  #          

  	
   

  	
  $

  	
   

  	
   

  

 

I-8

 

	
   

  	
   

  	
  3.             90 or More Days

  	
  #          

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Q.

  	
   

  	
  Liquidated Contracts

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.             Total Liquidated Contracts    
  #          

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.             Liquidation proceeds for the Due Period

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.             Liquidation expenses for the Due Period

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.             Net Liquidation Proceeds for the Due
  Period

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  5.             Net Liquidation Losses for the Due
  Period

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  R.

  	
   

  	
  Advances

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.             Unreimbursed Advances prior to such
  Distribution Date

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.             Amount of Delinquent Interest for such
  Distribution Date

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  S.

  	
   

  	
  Reacquired Contracts

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.             Principal Amount of such Contracts

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.             Related Reacquisition Price of such
  Contracts

  	
   

  	
  $

  	
   

  	
   

  

 

I-9

 

	
  T.

  	
   

  	
  Contracts

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.             Number of Contracts as of beginning of
  Due Period

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.             Number of Contracts as of end of Due
  Period

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  U.

  	
   

  	
  Interest Reserve Account

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.             Interest Reserve Amount as of previous
  Distribution Date

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.             Interest received into Interest Reserve
  Account

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.             Excess Funds remitted to Trust Depositor

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  5.             Interest Reserve Amount as of upcoming
  Distribution Date

  	
   

  	
  $

  	
   

  	
   

  

 

I-10

 

	
  V.

  	
   

  	
  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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  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.)

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

I-11

 

	
   

  	
   

  	
  3.             Average Loss Ratio for such Distribution
  Date

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (a)           Net Liquidation Losses

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (c)           The Loss Ratio for the prior Distribution
  Date

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.             Computation of Specified Reserve Fund
  Balance

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Reserve Fund Trigger Events

  	
   

  	
   

  	
   

  
							

 

I-12

 

	
   

  	
   

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

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
   

  	
  %

  

 

I-13

 

	
   

  	
   

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

  	
   

  	
   

  	
  %

  

 

I-14

 

Exhibit J

 

[Seller’s Representations and Warranties]

 

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

 

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

 

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

 

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

 

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

 

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.

 

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

 

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

 

J-2

 

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

 

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

 

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

 

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

 

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

 

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

 

J-3

 

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

 

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

 

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

 

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

 

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

 

J-4

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

J-5

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(b)           Characteristics.  The Initial Contracts have the following characteristics: (i) all
the Contracts are secured by Motorcycles; (ii) no Initial Contract has a
remaining maturity of more than 84 months; and (iii) the final scheduled
payment on the Initial Contract with the latest maturity is due not later than
May 2011.  Approximately 79.79% 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 20.21%
is attributable to loans for purchases of used Motorcycles.  No Initial Contract was originated after the
Initial Cutoff Date.  No Initial
Contract has a Contract Rate less than 4.489%. 
The last scheduled payment date of the Contracts (including any Subsequent
Contracts) is due no later than August 2011. 
Approximately 97.94% 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 2.06% of
the

 

J-6

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

J-7

 

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

 

J-8

 

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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