Document:

Exhibit
10.2

 

 

 

SALE AND SERVICING AGREEMENT

 

among

 

HARLEY-DAVIDSON MOTORCYCLE TRUST 200[   ] - [   ],

as Issuer,

 

HARLEY-DAVIDSON CUSTOMER FUNDING CORP.,

as Trust Depositor,

 

HARLEY-DAVIDSON CREDIT CORP.,

as Servicer

 

and

 

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

as Indenture Trustee

 

Dated as of [          ]

 

 

 

 

	
   

  	
   

  	
  Page

  
	
  Table of Contents

  
	
   

  	
   

  
	
  ARTICLE ONE DEFINITIONS

  	
  1

  
	
  Section 1.01.

  	
  Definitions

  	
  1

  
	
  Section 1.02.

  	
  Usage of Terms

  	
  20

  
	
  Section 1.03.

  	
  Section References

  	
  20

  
	
  Section 1.04.

  	
  Calculations

  	
  20

  
	
  Section 1.05.

  	
  Accounting Terms

  	
  21

  
	
   

  	
   

  	
   

  
	
  ARTICLE TWO TRANSFER OF
  CONTRACTS

  	
  21

  
	
  Section 2.01.

  	
  Closing

  	
  21

  
	
  Section 2.02.

  	
  Conditions to the Closing

  	
  21

  
	
  Section 2.03.

  	
  Conveyance of Subsequent Contracts

  	
  23

  
	
   

  	
   

  	
   

  
	
  ARTICLE THREE
  REPRESENTATIONS AND WARRANTIES

  	
  26

  
	
  Section 3.01.

  	
  Representations and Warranties Regarding the Trust
  Depositor

  	
  26

  
	
  Section 3.02.

  	
  Representations and Warranties Regarding the
  Servicer

  	
  28

  
	
   

  	
   

  	
   

  
	
  ARTICLE FOUR PERFECTION
  OF TRANSFER AND PROTECTION OF SECURITY INTERESTS

  	
  29

  
	
  Section 4.01.

  	
  Custody of Contracts

  	
  29

  
	
  Section 4.02.

  	
  Filing

  	
  31

  
	
  Section 4.03.

  	
  Name Change or Relocation

  	
  31

  
	
  Section 4.04.

  	
  Costs and Expenses

  	
  32

  
	
   

  	
   

  	
   

  
	
  ARTICLE FIVE SERVICING
  OF CONTRACTS

  	
  32

  
	
  Section 5.01.

  	
  Responsibility for Contract Administration

  	
  32

  
	
  Section 5.02.

  	
  Standard of Care

  	
  32

  
	
  Section 5.03.

  	
  Records

  	
  32

  
	
  Section 5.04.

  	
  Inspection

  	
  32

  
	
  Section 5.05.

  	
  Trust Accounts

  	
  33

  
	
  Section 5.06.

  	
  Enforcement

  	
  35

  
	
  Section 5.07.

  	
  Trustees to Cooperate

  	
  36

  
	
  Section 5.08.

  	
  Costs and Expenses

  	
  37

  
	
  Section 5.09.

  	
  Maintenance of Security Interests in Motorcycles

  	
  37

  
	
  Section 5.10.

  	
  Successor Servicer/Lockbox Agreements

  	
  37

  
	
  Section 5.11.

  	
  Separate Entity Existence

  	
  37

  
	
   

  	
   

  	
   

  
	
  ARTICLE SIX THE TRUST
  DEPOSITOR 38

  	
   

  
	
  Section 6.01.

  	
  Covenants of the Trust Depositor.

  	
  38

  
	
  Section 6.02.

  	
  Liability of Trust Depositor; Indemnities

  	
  40

  
	
  Section 6.03.

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

  	
  42

  
	
  Section 6.04.

  	
  Limitation on Liability of Trust Depositor and
  Others

  	
  42

  
	
  Section 6.05.

  	
  Trust Depositor Not to Resign

  	
  43

  
	
   

  	
   

  	
   

  
	
  ARTICLE SEVEN
  DISTRIBUTIONS; RESERVE FUND

  	
  43

  
	
  Section 7.01.

  	
  Monthly Distributions

  	
  43

  
	
  Section 7.02.

  	
  Fees

  	
  43

  
	
  Section 7.03.

  	
  Advances; Realization of Carrying Charge

  	
  43

  
	
  Section 7.04.

  	
  Interest Reserve Account.

  	
  44

  
	
  Section 7.05.

  	
  Distributions; Priorities.

  	
  45

  
	
  Section 7.06.

  	
  Reserve Fund.

  	
  47

  
	
  Section 7.07.

  	
  Establishment of Pre-Funding Account.

  	
  48

  
	
  Section 7.08.

  	
  Purchase of Contracts for Breach of Representations
  and Warranties.

  	
  49

  
	
  Section 7.09.

  	
  Reassignment of Reacquired Contracts

  	
  50

  
	
  Section 7.10.

  	
  Servicer’s Purchase Option

  	
  50

  
	
  Section 7.11.

  	
  Purchase of Contracts for Breach of Servicing
  Obligations

  	
  50

  
					

 

i

 

	
  ARTICLE EIGHT EVENTS OF
  TERMINATION; SERVICE TRANSFER 

  	
  51

  
	
  Section 8.01.

  	
  Events of Termination

  	
  51

  
	
  Section 8.02.

  	
  Waiver of Event of Termination

  	
  52

  
	
  Section 8.03.

  	
  Service Transfer

  	
  52

  
	
  Section 8.04.

  	
  Successor Servicer to Act; Appointment of Successor
  Servicer

  	
  53

  
	
  Section 8.05.

  	
  Notification to Securityholders

  	
  53

  
	
  Section 8.06.

  	
  Effect of Transfer

  	
  54

  
	
  Section 8.07.

  	
  Database File

  	
  54

  
	
  Section 8.08.

  	
  Successor Servicer Indemnification

  	
  54

  
	
  Section 8.09.

  	
  Responsibilities of the Successor Servicer

  	
  54

  
	
  Section 8.10.

  	
  Limitation of Liability of Servicer

  	
  55

  
	
  Section 8.11.

  	
  Merger or Consolidation of Servicer

  	
  55

  
	
  Section 8.12.

  	
  Servicer Not to Resign

  	
  56

  
	
  Section 8.13.

  	
  Appointment of Subservicer

  	
  56

  
	
   

  	
   

  	
   

  
	
  ARTICLE NINE REPORTS

  	
  56

  
	
  Section 9.01.

  	
  Monthly Reports

  	
  56

  
	
  Section 9.02.

  	
  Officer’s Certificate

  	
  56

  
	
  Section 9.03.

  	
  Other Data

  	
  56

  
	
  Section 9.04.

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

  	
  56

  
	
  Section 9.05.

  	
  Monthly Reports to Noteholders

  	
  58

  
	
   

  	
   

  	
   

  
	
  ARTICLE TEN TERMINATION

  	
  60

  
	
  Section 10.01.

  	
  Sale of Trust Assets.

  	
  60

  
	
   

  	
   

  	
   

  
	
  ARTICLE ELEVEN
  MISCELLANEOUS

  	
  60

  
	
  Section 11.01.

  	
  Amendment.

  	
  60

  
	
  Section 11.02.

  	
  Protection of Title to Trust.

  	
  62

  
	
  Section 11.03.

  	
  Governing Law

  	
  63

  
	
  Section 11.04.

  	
  Notices

  	
  63

  
	
  Section 11.05.

  	
  Severability of Provisions

  	
  65

  
	
  Section 11.06.

  	
  Assignment

  	
  65

  
	
  Section 11.07.

  	
  Third Party Beneficiaries

  	
  66

  
	
  Section 11.08.

  	
  Counterparts

  	
  66

  
	
  Section 11.09.

  	
  Headings

  	
  66

  
	
  Section 11.10.

  	
  No Bankruptcy Petition; Disclaimer and Subordination

  	
  66

  
	
  Section 11.11.

  	
  Limitation of Liability of Owner Trustee and
  Indenture Trustee.

  	
  67

  
				

 

ii

 

EXHIBITS

 

	
  Exhibit A

  	
  Form of Assignment

  	
  A-1

  
	
  Exhibit B

  	
  Form of Closing
  Certificate of Trust Depositor

  	
  B-1

  
	
  Exhibit C

  	
  Form of Closing
  Certificate of Seller/Servicer

  	
  C-1

  
	
  Exhibit D

  	
  [Intentionally
  Omitted]

  	
  D-1

  
	
  Exhibit E

  	
  [Intentionally
  Omitted]

  	
  E-1

  
	
  Exhibit F

  	
  [Intentionally
  Omitted]

  	
  F-1

  
	
  Exhibit G

  	
  Form of
  Certificate Regarding Reacquired Contracts

  	
  G-1

  
	
  Exhibit H

  	
  List of
  Contracts

  	
  H-1

  
	
  Exhibit I

  	
  Form of Monthly Report to Noteholders and the
  Certificateholder

  	
  I-1

  
	
  Exhibit J

  	
  Seller’s
  Representations and Warranties

  	
  J-1

  
	
  Exhibit K

  	
  Lockbox Bank and
  Lockbox Account

  	
  K-1

  
	
  Exhibit L

  	
  Form of
  Subsequent Transfer Agreement

  	
  L-1

  

 

iii

 

SALE AND SERVICING
AGREEMENT, dated as of [               ],
among Harley-Davidson Motorcycle Trust 200[     ] - [     ]
(together with its successors and assigns, the “Issuer”
or the “Trust”), Harley-Davidson Customer
Funding Corp. (together with its successor and assigns, the “Trust
Depositor”), The Bank of New York Trust Company, N.A. (solely in its
capacity as Indenture Trustee together with its successors and assigns, the “Indenture Trustee”) and Harley-Davidson Credit Corp.
(solely in its capacity as Servicer together with its successor and assigns, “Harley-Davidson Credit” or the “Servicer”).

 

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

 

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

 

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

 

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

 

ARTICLE ONE

DEFINITIONS

 

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

 

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

 

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

 

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

 

1

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

2

 

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

 

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

 

“Base Prospectus” means the Prospectus dated [               ]
relating to the Harley-Davidson Motorcycle Trusts.

 

“Buell”
means Buell Motorcycle Company, LLC.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Class A-1 Final Distribution
Date” means the [               ]
Distribution Date.

 

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

 

3

 

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

 

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

 

“Class B Final Distribution Date” means the [          ]
Distribution Date.

 

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

 

“Class B
Rate” means [          ]%
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 [               ].

 

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

 

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

 

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

 

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

 

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

 

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

 

4

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

5

 

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

 

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

 

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

 

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

 

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

 

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

 

“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 [               ].

 

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

 

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

 

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

 

6

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

7

 

“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 [               ]%
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 $[               ].

 

“Initial
Class A-2 Note Balance” means $[               ].

 

“Initial
Class B Note Balance” means $[               ].

 

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

 

“Initial
Cutoff Date” means as of the close of business on [               ].

 

8

 

“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 $[                ].

 

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

 

“Issuer” means
the Harley-Davidson Motorcycle Trust 200[     ] - [     ].

 

“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.

 

9

 

“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,
Bank One, National Association and The Bank of New York Trust Company, National
Association, with respect to the Lockbox Account, unless such agreement shall
be terminated in accordance with its terms, in which event “Lockbox Agreement” shall mean such other agreement, in form
and substance acceptable to the above-described parties.

 

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

 

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

 

10

 

“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 9.05.

 

“Monthly Servicing Fee” means, as to any Distribution Date, one-twelfth
of the product of [          ]%
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 [               ],
as of the Initial Cutoff Date.

 

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

 

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

 

“Net Liquidation Losses” means, as of any Distribution Date, with
respect to all Liquidated Contracts on an aggregate basis, the amount, if any,
by which (a) the outstanding Principal Balance of all Liquidated Contracts
exceeds (b) the Net Liquidation Proceeds for such Liquidated Contracts.

 

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

 

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

 

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

 

11

 

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

 

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

 

“Note Principal Distributable
Amount” means,
with respect to any Distribution Date, the sum of the Principal Distributable
Amount with respect to such Distribution Date and the Note Principal Carryover
Shortfall as of the close of the immediately preceding Distribution Date; provided, however, that the Note Principal Distributable
Amount shall not exceed the outstanding principal amount of the Notes; and provided, further, that the Note Principal Distributable
Amount (i) on the Class A-1 Final Distribution Date shall not be less than the 

 

12

 

amount that is necessary
(after giving effect to other amounts to be deposited in the Note Distribution
Account for payment on the Class A-1 Notes on such Distribution Date and
allocable to principal) to reduce the outstanding principal amount of the Class
A-1 Notes to zero, (ii) on the Class A-2 Final Distribution Date shall not be
less than the amount that is necessary (after giving effect to other amounts to
be deposited in the Note Distribution Account for payment on the Class A-2
Notes on such Distribution Date and allocable to principal) to reduce the
outstanding principal amount of the Class A-2 Notes to zero, and (iii) on the
Class B Final Distribution Date shall not be less than the amount that is
necessary (after giving effect to the other amounts to be deposited in the Note
Distribution Account for payment on the Class B Notes on such Distribution Date
and allocable to principal) to reduce the outstanding principal amount on the
Class B notes to zero.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

13

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Qualified Eligible Investments” means Eligible Investments acquired by
the Indenture Trustee in its name and in its capacity as Indenture Trustee,
which are held by the Indenture Trustee in any Trust Account and with respect
to which (a) the Indenture Trustee has noted its interest therein on its books
and records, and (b) the Indenture Trustee has purchased such investments for
value without notice of any adverse claim thereto (and, if such investments are

 

14

 

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

 

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

 

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

 

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

 

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

 

“Required Holders” means (i) prior to 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 $[               ].

 

15

 

“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) [          ]%
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) [          ]% 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) [          ]%
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) [          ]%
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) [          ]%
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) [          ]% 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) [          ]% 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) [          ]% 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) [          ]%
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) [          ]%
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.

 

16

 

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

 

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

 

“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.

 

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

 

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

 

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

 

17

 

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

 

(a)           [          ]%
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 [          ]%
of the Principal Balance of the Contracts in the Trust as of the last day of
the immediately preceding Due Period; and

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Subsequent Reserve Fund Amount” means the amount on each Subsequent
Transfer Date equal to [          ]%
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.

 

18

 

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

 

“Supplement”
means the Prospectus Supplement dated [               ].

 

“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 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 [               ],
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 

 

19

 

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 [                                             ].

 

“United
States” means the United States of America.

 

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

 

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

 

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

 

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

 

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

 

20

 

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 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:

 

21

 

(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 in form and substance
reasonably satisfactory to the Underwriters (and including as an addressee
thereof each Rating Agency).

 

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

 

(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.

 

22

 

(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 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 

 

23

 

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;

 

(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;

 

24

 

(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 [               ]%
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 [            ]
months;

 

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

 

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

 

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

 

(c)           The
Trust Depositor covenants to transfer (at or prior to the end of the Funding
Period) to the Trust pursuant thereto Subsequent Contracts with an aggregate
Principal Balance equal to $[                      ];
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

 

25

 

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.

 

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 

 

26

 

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.

 

(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 

 

27

 

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 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 

 

28

 

this
Agreement and the other Transaction Documents to which the Servicer is a party,
and has taken all necessary corporate action to authorize the execution,
delivery and performance of this Agreement and the other Transaction Documents
to which the Servicer is a party. This Agreement and the other Transaction
Documents to which the Servicer is a party constitute the legal, valid and
binding obligation of the Servicer enforceable in accordance with their terms,
except as enforcement of such terms may be limited by bankruptcy, insolvency or
similar laws affecting the enforcement of creditors’ rights generally and by
the availability of equitable remedies.

 

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

 

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

 

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

 

ARTICLE FOUR

 

PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS

 

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

 

29

 

(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;

 

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

 

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

 

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

 

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

 

(d)           In performing its duties under this
Section 4.01, the Servicer agrees to act with reasonable care, using that
degree of skill and care that it exercises with respect to similar contracts
for the installment purchase of consumer goods owned and/or serviced by it, and
in any 

 

30

 

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 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 

 

31

 

after taking any of the
foregoing actions, the Servicer shall deliver to the Owner Trustee and the
Indenture Trustee an opinion of counsel reasonably acceptable to the Owner
Trustee and the Indenture Trustee stating that, in the opinion of such counsel,
all financing statements or amendments necessary to preserve and protect the
interests of the Trust in the Trust Corpus and the Indenture Trustee in the
Collateral have been filed, and reciting the details of such filing.

 

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

 

ARTICLE FIVE

 

SERVICING OF CONTRACTS

 

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

 

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 

 

32

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

33

 

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

 

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

 

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

 

34

 

(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 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,

 

35

 

however, that notwithstanding the foregoing the
Servicer in its capacity as such may exercise such recourse only if such
Contract (i) was not required to be reacquired by the Seller pursuant to the
Transfer and Sale Agreement or (ii) was required to be reacquired by the Seller
and the Seller has defaulted on such reacquisition obligation.

 

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

 

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

 

(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 

 

36

 

described in Section 7.10. Upon request of a Servicing
Officer, the Indenture Trustee shall perform such other acts as reasonably
requested by the Servicer and otherwise cooperate with the Servicer in the
enforcement of the Certificateholder’s rights and remedies with respect to
Contracts.

 

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

 

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

 

Section 5.10.        Successor Servicer/Lockbox Agreements. 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.

 

37

 

ARTICLE SIX

 

THE TRUST DEPOSITOR

 

Section 6.01.        Covenants of the Trust Depositor.

 

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

 

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

 

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

 

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

 

(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 

 

38

 

credit to, or guarantee
(directly or indirectly or by an instrument having the effect of assuming
another’s payment or performance on any obligation or capability of so doing or
otherwise), endorse or otherwise become contingently liable, directly or
indirectly, in connection with the obligations, stocks or dividends of, or own,
purchase, repurchase or acquire (or agree contingently to do so) any stock,
obligations, assets or securities of, any other interest in, or make any
capital contribution to, any other Person.

 

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

 

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

 

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

 

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

 

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

 

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

 

39

 

(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.

 

(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

 

40

 

performance of the trusts
and duties herein and, in the case of the Owner Trustee, in the Trust Agreement
and, in the case of the Indenture Trustee, in the Indenture, except to the
extent that such cost, expense, loss, claim, damage or liability in the case of
(i) the Owner Trustee or WTC, as the case may be, shall be due to the willful
misfeasance, bad faith or negligence of the Owner Trustee or WTC, as the case
may be, or shall arise from the breach by the Owner Trustee or WTC, as the case
may be, of any of its representations or warranties set forth in Section 7.03
of the Trust Agreement, or (ii) the Indenture Trustee, shall be due to the
willful misfeasance, bad faith or negligence of the Indenture Trustee.

 

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

 

Indemnification under
this Section shall include, without limitation, reasonable fees and expenses of
counsel and expenses of litigation and shall survive the termination of the
Trust and the resignation or 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 

 

41

 

entity of any liability
they might otherwise have as a result of fraudulent actions or omissions taken
by them.

 

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

 

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

 

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

 

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

 

42

 

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

 

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

 

ARTICLE SEVEN

 

DISTRIBUTIONS; RESERVE FUND

 

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

 

(b)           The Indenture Trustee shall serve as
the paying agent hereunder (the “Paying Agent”)
and shall make the payments to or on behalf of the Noteholders and the
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 

 

43

 

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).

 

(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 200[    ]
- [    ] – The Bank of New York Trust Company, N.A., as
Indenture Trustee” (such account being the “Interest Reserve Account”).

 

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

 

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

 

44

 

(iv) all amounts
referred to in clause (ii) have been applied, then any amounts remaining in the
Interest Reserve Account shall be allocated and distributed to the Trust
Depositor.

 

Section 7.05.        Distributions; Priorities.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

45

 

such Distribution Date, first, to the Class A-1 Notes
until the Class A-1 Notes have been paid in full, second, to the Class A-2
Notes until the Class A-2 Notes have been paid in full, and third, to the Class
B Notes until the Class B Notes have been paid in full;

 

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

 

(viii)        to
the Holder of the Certificate.

 

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

 

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

 

46

 

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

 

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

 

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

 

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

 

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

 

(v)           to
the Holder of the Certificate.

 

Section 7.06.        Reserve Fund.

 

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

 

47

 

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

 

(c)           The Indenture Trustee shall at the
written direction of the Servicer invest the funds in the Reserve Fund in
Qualified Eligible Investments. Funds in the Reserve Fund shall be invested in
investments that are payable on demand or mature on or before the Business Day
prior to each Distribution Date. Once such funds are invested, the Indenture
Trustee shall not change the investment of such funds prior to maturity. Upon
any such investment, the Indenture Trustee shall, consistent with the
definition of Qualified Eligible Investment herein, make an appropriate
notation of the security interest in such Qualified Eligible Investment on the
Indenture Trustee’s records, by book entry or otherwise. All income and gain
realized from any 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 200[     ]
- [     ] – The Bank of New York Trust Company, N.A.,
as Indenture Trustee” (such account being the “Pre-Funding Account”).

 

(b)           During
the Funding Period, following receipt from the Trust Depositor of an Addition
Notice, and upon further receipt of a written demand from the Trust Depositor
for a 

 

48

 

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

 

(c)           If
(x) the Pre-Funded Amount has not been reduced to zero on the Distribution
Date on which the Funding Period ends (or, if the Funding Period does not end
on a Distribution Date, on the first Distribution Date following the end of the
Funding Period) or (y) the Pre-Funded Amount has been reduced to $150,000
or less on any Determination Date, in either case after giving effect to any
reductions in the Pre-Funded Amount on such Distribution Date or Determination
Date pursuant to paragraph (b) above, the Trust Depositor shall instruct
the Indenture Trustee to withdraw from the Pre-Funding Account the Pre-Funded
Amount and, in the case of (x), on such Distribution Date or, on the
Determination Date, deposit the Pre-Funded Amount in the Note Distribution
Account for payment as principal of the Class A-1 Notes up to the
Outstanding Amount thereof, then for payment of principal of the Class A-2
Notes up to the Outstanding Amount thereof and then, for payment of principal
of the Class B Notes up to the Outstanding Amount thereof.

 

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

 

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

 

49

 

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

 

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

 

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

 

Section
7.11.        Purchase of Contracts for
Breach of Servicing Obligations. Upon a discovery by the Servicer or the Trustees of a
breach of any of the covenants of the Servicer set forth in Section 5.02, 5.06
or 5.09 that materially adversely affects the Trust’s interest in a Contract (without
regard to the benefits of the Reserve Fund), the party discovering the breach
shall give prompt written notice to the other parties; provided,
that the Trustees shall have no duty or obligation to inquire or to investigate
the breach by the Servicer of any of such 

 

50

 

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

 

ARTICLE EIGHT

 

EVENTS OF TERMINATION; SERVICE TRANSFER

 

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

 

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

 

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

 

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

 

(d)           An involuntary case under any
applicable bankruptcy, insolvency or other similar law shall have been
commenced in respect of the Servicer or Trust Depositor and shall not have been
dismissed within 90 days, or a court having jurisdiction in the premises shall
have entered a decree or order for relief in respect of either the Servicer or
Trust Depositor in an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, 

 

51

 

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 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

 

52

 

appropriate to effect the
purposes of such notice of termination. The Servicer agrees to cooperate with
the Successor Servicer in effecting the termination of the responsibilities and
rights of the Servicer hereunder, including, without limitation, the transfer
to the Successor Servicer for administration by it of all cash amounts which
shall at the time be held by the Servicer for deposit, or have been deposited
by the Servicer, in the Collection Account, or for its own account in
connection with its services hereafter or thereafter received with respect to
the Contracts. The Servicer shall transfer to the Successor Servicer all
records held by the Servicer relating to the Contracts in such electronic form
as the Successor Servicer may reasonably request and (ii) any Contract Files in
the Servicer’s possession. In addition, the Servicer shall permit access to its
premises (including all computer records and programs) to the Successor
Servicer or its designee, and shall pay the reasonable transition expenses of
the Successor Servicer. Upon a Service Transfer, the Successor Servicer shall
also be entitled to receive the Monthly Servicing Fee for performing the
obligations of the Servicer.

 

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

 

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

 

(b)           Within 10 days following any
termination or appointment of a Successor Servicer pursuant to this Article
VIII, the Indenture Trustee shall give written notice thereof to each 

 

53

 

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) microfiche loan documentation, (ii) servicing
system tapes, (iii) Contract payment history, (iv)

 

54

 

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, anything herein to the contrary
notwithstanding. The Servicer shall give prior written notice of

 

55

 

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

 

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

 

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

 

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

 

56

 

(a) The Servicer will:

 

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

 

(ii)           cause
a firm of registered public accountants that is qualified and independent
within the meaning of Rule 2-01 of Regulation S-X under the Securities Act to
deliver to the Indenture Trustee and each Rating Agency within 90 days after
the end of each calendar year an attestation report that satisfies the
requirements of Rule 13a-18 or Rule 15d-18 under the Exchange Act and Item 1122
of Regulation AB, as applicable, on the Servicer’s assessment of compliance
with servicing criteria with respect to the prior calendar year. Such
attestation report will be addressed to the board of directors of the Servicer
and to the Trust, the Trust Depositor and the Indenture Trustee. Such
attestation report will be in accordance with Rules 1-02(a)(3) and 2-02(g) of
Regulation S-X under the Securities Act and the Exchange Act. Such registered
public accounting firm may render other services to the Servicer, the Depositor
or the Seller, but such firm must indicate in each attestation report that it
is qualified and independent within the meaning of Rule 2-01 of Regulation S-X
under the Securities Act; and

 

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

 

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

 

(c)           The parties hereto acknowledge that
interpretations of the requirements of Regulation AB may change over time,
whether due to interpretive guidance provided by the Securities and Exchange
Commission or its staff, consensus among participants in the asset backed
securities markets, advice of counsel, or otherwise, and agree to comply with
requests made by the Trust Depositor or the Servicer in good faith for delivery
of information under these

 

57

 

provisions on the basis
of evolving interpretations of Regulation AB. In connection therewith, the
Owner Trustee and the Indenture Trustee shall reasonably cooperate with the
Trust Depositor in connection with the satisfaction of the Trust Depositor’s
and the Trust’s reporting requirements under the Exchange Act.

 

Section
9.05.        Monthly Reports to
Noteholders. (a)
On or before two Business Days prior to each Distribution Date, the Servicer
shall prepare and, concurrently with each distribution 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 at least
the following information:

 

(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;

 

(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;

 

58

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

59

 

(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 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.

 

60

 

(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 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

 

61

 

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 or electronic mail
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.

  	
   

  	
   

  
	
   

  	
   

  	
  3850 Arrowhead
  Drive

  	
   

  	
   

  
	
   

  	
   

  	
  Carson City,
  Nevada 89706

  	
   

  	
   

  
	
   

  	
   

  	
  Attention: Perry
  A. Glassgow

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Telecopier No.:
  (775) 886-3490

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  with a copy to:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Harley-Davidson
  Credit Corp.

  	
   

  	
   

  
	
   

  	
   

  	
  150 South Wacker
  Drive, Suite 3100

  	
   

  	
   

  
	
   

  	
   

  	
  Chicago,
  Illinois 60606

  	
   

  	
   

  
	
   

  	
   

  	
  Attention: Perry
  A. Glassgow

  	
   

  	
   

  
	
   

  	
   

  	
  Telecopier No.:  (312)
  368-4372

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (iii)

  	
   

  	
  If to the
  Indenture Trustee:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
   

  
	
   

  	
   

  	
  2 North LaSalle
  Street

  	
   

  	
   

  
	
   

  	
   

  	
  Suite 1020

  	
   

  	
   

  
	
   

  	
   

  	
  Chicago,
  Illinois 60602

  	
   

  	
   

  
	
   

  	
   

  	
  Attention:
  Corporate Trust Administration

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Telecopier No.:
  (312) 827-8562

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (iv)

  	
   

  	
  If to the Owner
  Trustee:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Wilmington Trust
  Company

  	
   

  	
   

  
	
   

  	
   

  	
  Rodney Square
  North

  	
   

  	
   

  
	
   

  	
   

  	
  1100 North
  Market Street

  	
   

  	
   

  
	
   

  	
   

  	
  Wilmington,
  Delaware 19890-0001

  	
   

  	
   

  
	
   

  	
   

  	
  Attention:
  Corporate Trust Administration

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Telecopier No.:
  (302) 636-4140

  	
   

  	
   

  

 

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, Inc.

  	
   

  	
   

  
	
   

  	
   

  	
  55 Water Street

  	
   

  	
   

  
	
   

  	
   

  	
  New York, New
  York 10004

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Telecopier No.:
  (212) 438-2657

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (vii)

  	
   

  	
  If to the
  Underwriters:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [                                                 ] 

  	
   

  	
   

  
	
   

  	
   

  	
  [                                                 ] 

  	
   

  	
   

  
	
   

  	
   

  	
  [                                                 ] 

  	
   

  	
   

  
	
   

  	
   

  	
  [                                                 ] 

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attention:

  	
  [                             ] 

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Telecopier No.:

  	
  [                    ] 

  	
   

  	
   

  
							

 

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.

 

65

 

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

 

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

 

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

 

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

 

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

 

66

 

full of all obligations
and liabilities of the Trust Depositor which, under the terms of the documents relating
to the securitization of the Other Assets, are entitled to be paid from,
entitled to the benefits of, or otherwise secured by such Other Assets (whether
or not any such entitlement or security interest is legally perfected or
otherwise entitled to a priority of distribution under applicable law,
including Insolvency Laws, and whether asserted against the Trust Depositor or
any other Person owned by the Trust Depositor) including, without limitation,
the payment of post-petition interest on such other obligations and liabilities.
This subordination agreement shall be deemed a subordination agreement within
the meaning of Section 510(a) of the Bankruptcy Code. Each Securityholder is
deemed to have acknowledged and agreed that no adequate remedy at law exists
for a breach of this Section 11.10 and that the terms and provisions of this
Section 11.10 may be enforced by an action for specific performance.

 

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

 

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

 

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

 

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

 

[signature page
follows]

 

67

 

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

 

	
   

  	
  HARLEY-DAVIDSON
  MOTORCYCLE TRUST 200[    ] 

  
	
   

  	
  -[    ]
  

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

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

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Printed Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HARLEY-DAVIDSON
  CUSTOMER FUNDING CORP.,

  as Trust Depositor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Printed Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HARLEY-DAVIDSON
  CREDIT CORP., as Servicer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Printed Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

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

  not in its individual capacity but solely as Indenture Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Printed Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
								

 

Signature Page to Sale and Servicing Agreement

 

 

Exhibit A

 

[Form of Assignment]

 

In accordance with the
Sale and Servicing Agreement (the “Sale and Servicing
Agreement”) dated as of [                               ]
made by and between the undersigned, as Trust Depositor (“Trust
Depositor”), Harley-Davidson Credit Corp., as Servicer (“HDCC”), The Bank of New York Trust Company, N.A., as Indenture
Trustee and Harley-Davidson Motorcycle Trust 200[    ] - [      ]
(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 [                     ].

 

	
   

  	
  HARLEY-DAVIDSON
  CUSTOMER FUNDING CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Printed Name:

  	
  Perry A.
  Glassgow

  
	
   

  	
  Title:

  	
  Vice President
  and Treasurer

  
						

 

A-1

 

Exhibit B

 

[Form of Closing Certificate of Trust Depositor]

 

Harley-Davidson Customer Funding Corp.

 

Officer’s Certificate

 

The undersigned certifies
that he is Vice President, Treasurer and Assistant Secretary of Harley-Davidson
Customer Funding Corp., a Nevada corporation (the “Trust
Depositor”), and that as such is duly authorized to execute and
deliver this certificate on behalf of the Trust Depositor in connection with
the Sale and Servicing Agreement (the “Agreement”)
dated as of [                ]
(the “Effective Date”) by and among the Trust
Depositor, The Bank of New York Trust Company, N.A. (the “Indenture
Trustee”), as Indenture Trustee, Harley-Davidson Credit Corp. (“Harley-Davidson Credit”), as Servicer, and Harley-Davidson Motorcycle
Trust 200[    ] - [     ] (“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 [                     ]
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 [                     ]
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 [                     ]
among the Trust Depositor, Harley-

 

B-1

 

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 [           ].

 

	
   

  	
  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 [               ]
(the “Effective Date”) by and among
Harley-Davidson Credit, as Servicer, Harley-Davidson Customer Funding Corp. (“CFC”), The Bank of New York Trust Company, N.A., as
Indenture Trustee and Harley-Davidson Motorcycle Trust 200[     ]
- [    ] (“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 [               ],
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 [               ]
among Harley-Davidson Credit, CFC and the Underwriters (the “Underwriting Agreement”); and the Administration Agreement
dated as of the

 

C-1

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

C-2

 

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

 

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

 

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

 

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

 

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

 

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

 

*   *   *  
*   *   *

 

C-3

 

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

 

 

	
   

  	
  By:

  	
   

  
	
   

  	
  Printed Name:
  Perry A. Glassgow

  
	
   

  	
  Title: Vice President, Treasurer and

  Assistant Secretary

  

 

 

Exhibit D

 

[Intentionally Omitted]

 

D-1

 

Exhibit E

 

[Intentionally Omitted]

 

E-1

 

Exhibit F

 

[Intentionally Omitted]

 

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 [             ]
by and among Harley-Davidson Customer Funding Corp., as Trust Depositor, the
Servicer, The Bank of New York Trust Company, N.A., as Indenture Trustee, and
Harley-Davidson Motorcycle Trust 200[    ] - [    ]
(all capitalized terms used herein without definition having the respective
meanings specified in the Agreement), and further certifies that:

 

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

 

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

 

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

 

	
   

  	
  Harley-Davidson
  Credit Corp.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Printed Name:
  Perry A. Glassgow

  
	
   

  	
   

  	
  Title: Vice
  President and Treasurer

  
					

 

G-1

 

Exhibit H

 

[List of Contracts]

 

H-1

 

Exhibit I

 

[Form of Monthly Report to Noteholders and the Certificateholder]

 

 

	
  Harley-Davidson Motorcycle Trust 200[    ]-[    ]

  
	
  $                    % Motorcycle Contract Backed Notes, Class A-1

  
	
  $                    % Motorcycle Contract Backed Notes, Class A-2

  
	
  $                    % Motorcycle Contract Backed Notes, Class B

  
	
  Monthly Report

  
	
  For the                 
  Distribution Date

  

 

Capitalized terms are defined in the Sale and Servicing Agreement dated
as of                       ,
200[     ].

 

Beginning of Due Period

 

End of Due Period

 

Determination Date

 

Record Date

 

Distribution Date

 

Number of days in Interest Period (30/360 basis)

 

I-1

 

	
   

  	
   

  	
  Number

  	
   

  	
  Cut-Off

  	
   

  	
   

  	
   

  	
  Initial

  	
   

  
	
  Purchases

  	
   

  	
  of Contracts

  	
   

  	
  Date

  	
   

  	
  Closing Date

  	
   

  	
  Pool Balance

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Initial
  Contracts

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Subsequent
  Contracts

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

I-2

 

I. POOL BALANCE CALCULATION

 

 

Principal Balance of Contracts at beginning of Due Period

Pre-Funded Amount at beginning of Due Period

 

Purchase of Subsequent Contracts

Reduction of Pre-Funded Amount at end of Due Period

Mandatory Redemption amount

 

Monthly principal amounts

 

Principal collections on
Contracts outstanding at end of Due Period

Principal collections on
Contracts paid off in full during Due Period

Balance
of Contracts liquidated during Due Period

Balance of Contracts
purchased by Seller or Servicer during Due Period

Other
adjustments

Mandatory
Redemption amount

 

Aggregate Principal Balance
Decline

 

Aggregate Principal Balance at end of Due Period

 

Pool factor

 

I-3

 

II. NOTE PRINCIPAL BALANCE CALCULATION:

 

	
  Original Note Balance

  	
   

  	
  Class A-1

  	
   

  	
  Class A-2

  	
   

  	
  Class B

  	
   

  	
  Total

  	
   

  
	
   

  	
   

  	
  $

  	
   

  	
  $

  	
   

  	
  $

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Note balance at
  beginning of Due Period

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Principal
  Distributable Amount

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Amounts
  otherwise distributable to Class B that have been distributed to Class A

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Mandatory
  Redemption Amount

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Note Principal
  Carryover Shortfall

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total principal
  paid

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Note balance at
  end of Due Period

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Note factor at
  begininning of Due Period

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Note factor at
  end of Due Period

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

I-4

 

III.
NOTE INTEREST DISTRIBUTABLE CALCULATION

 

	
   

  	
   

  	
   

  	
   

  	
  Interest Carryover

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Note Monthly

  	
   

  	
  Interest Carryover

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Note Balance

  	
   

  	
  Shortfall

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Interest

  	
   

  	
  Interest

  	
   

  	
  Shortfall

  	
   

  	
  Note Interest

  	
   

  
	
   

  	
   

  	
  at Beginning of

  	
   

  	
  at Beginning of

  	
   

  	
  Interest

  	
   

  	
   

  	
   

  	
  Accrual

  	
   

  	
  Distributable

  	
   

  	
  at End of

  	
   

  	
  Distributable

  	
   

  
	
  Class

  	
   

  	
  Due Period

  	
   

  	
  Due Period

  	
   

  	
  Rate

  	
   

  	
  Days

  	
   

  	
  Basis

  	
   

  	
  Amount

  	
   

  	
  Due Period

  	
   

  	
  Amount

  	
   

  
	
  A-1

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A-2

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Totals

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

I-5

 

IV.CALCULATION OF AVAILABLE MONIES AND DISTRIBUTIONS

 

	
  Available
  Monies:

  	
   

  	
   

  	
   

  
	
  Principal
  collections on Contracts during Due Period

  	
   

  	
   

  	
   

  
	
  Interest
  collections on Contracts during Due Period

  	
   

  	
   

  	
   

  
	
  Net Liquidation
  Proceeds

  	
   

  	
   

  	
   

  
	
  Aggregate of
  Purchase Price for Contracts required to be purchased by Seller or Servicer

  	
   

  	
   

  	
   

  
	
  Advances made by
  Servicer

  	
   

  	
   

  	
   

  
	
  Amounts paid by
  Seller in connection with the optional repurchase of the Contracts

  	
   

  	
   

  	
   

  
	
  Carrying Charges
  from the Interest Reserve Account

  	
   

  	
   

  	
   

  
	
  Mandatory
  Redemption amount

  	
   

  	
   

  	
   

  
	
  Investment
  Earnings - Collection Account

  	
   

  	
   

  	
   

  
	
  Investment
  Earnings - Interest Reserve Account

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Total Available
  Monies

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Distribution of
  Available Monies in order of priority:

  	
   

  	
   

  	
   

  
	
  Mandatory
  Redemption amount to the Noteholders

  	
   

  	
   

  	
   

  
	
  Return of
  previous month’s Advances made by Servicer

  	
   

  	
   

  	
   

  
	
  Monthly
  Servicing Fee to the Servicer

  	
   

  	
   

  	
   

  
	
  Monthly
  Indenture Trustee Fee

  	
   

  	
   

  	
   

  
	
  Class A Note
  Interest Distributable Amount to the Class A Noteholders

  	
   

  	
   

  	
   

  
	
  Class B Note
  Interest Distributable Amount to the Class B Noteholders

  	
   

  	
   

  	
   

  

 

I-6

 

	
  Class A Note
  Principal Distributable Amount to the Class A Noteholders

  	
   

  	
   

  	
   

  
	
  Class B Note Principal
  Distributable Amount to the Class B Noteholders

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Total
  distribution of fees, interest and principal

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Excess Amounts
  (Shortfall)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Amount withdrawn
  from Reserve Fund to cover Shortfall

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Excess Amounts
  to Reserve Fund

  	
   

  	
   

  	
   

  
	
  Excess Amounts
  to Certificateholder

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Total
  distribution of Available Monies

  	
   

  	
   

  	
   

  

 

I-7

 

V.
ACCOUNT BALANCE INFORMATION

 

	
  Calculation
  of Specified Reserve Fund Balance:

  
	
   

  
	
   

  	
  The
  greater of:

  
	
   

  	
  a)
  [            ]%
  of the Principal Balance of the Contracts at the end of the Due Period

  
	
   

  	
  b)
  [            ]%
  of the aggregate initial note balance

  
	
   

  	
  c) If Reserve Fund Trigger Event has occurred, [            ]%
  of the Principal Balance of the Contracts at the end of the Due Period

  
	
   

  	
   

  
	
   

  	
  Specified
  Reserve Fund Balance

  
	
   

  	
   

  
	
   

  	
   

  
	
  Reserve
  Fund balance at beginning of Due Period

  
	
   

  	
   

  
	
  Additions
  to Reserve Fund:

  
	
   

  	
  Additional
  deposit - Subsequent Reserve Fund Amount deposit

  
	
   

  	
  Additional
  deposit - Excess Amounts to Reserve Fund

  
	
   

  	
  Investment
  Earnings - Reserve Fund

  
	
   

  	
   

  
	
   

  	
  Total
  additions

  
	
   

  	
   

  
	
  Withdrawals
  from Reserve Fund:

  
	
   

  	
  Amount
  withdrawn to cover Shortfall

  

 

I-8

 

	
   

  	
  Excess
  Reserve Fund balance to Servicer

  
	
   

  	
   

  
	
   

  	
  Total
  withdrawals

  
	
   

  	
   

  
	
  Reserve
  Fund balance at end of Due Period

  
	
   

  	
   

  
	
  Pre-Funding
  Account balance at beginning of Due Period

  
	
   

  	
   

  
	
  Withdrawals
  from Pre-Funding Account:

  
	
   

  	
  Subsequent
  Contracts purchased

  
	
   

  	
  Mandatory
  Redemption amount

  
	
   

  	
   

  
	
  Pre-Funding
  Account balance at end of Due Period

  
	
   

  	
   

  
	
  Interest
  Reserve Account balance at beginning of Due Period

  
	
   

  	
   

  
	
  Additions
  to the Interest Reserve Account:

  
	
   

  	
  Investment
  Earnings - Interest Reserve Account

  
	
   

  	
   

  
	
   

  	
   

  
	
  Withdrawals
  from the Interest Reserve Account:

  
	
   

  	
  Carrying
  Charges

  
	
   

  	
  Transfer
  of Investment Earnings to Collection Account

  
	
   

  	
  Excess
  Interest Reserve Amount to Depositor

  

 

I-9

 

	
  Interest
  Reserve Account balance at end of Due Period

  

 

I-10

 

VI.
CONTRACT PERFORMANCE INFORMATION

 

	
   

  	
   

  	
  Number
  of months since Closing Date

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Trigger
  Status?  Yes or No

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
									

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Number of %

  	
   

  	
   

  	
   

  	
  % of Principal Balance at

  	
   

  
	
   

  	
   

  	
  Monthly Losses

  	
   

  	
  Contracts

  	
   

  	
  Amount

  	
   

  	
  beginning of Due Period

  	
   

  
	
  Monthly Losses

  	
   

  	
  Principal Balance of Liquidated Contracts for the
  Due Period

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Less:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Net Liquidation Proceeds for the Due Period

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Net Liquidation Losses for the Due Period

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Annualized Net Liquidation Losses

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Average Loss Ratio

  	
   

  	
  Annualized Net Liquidation Losses - current
  Distribution Date

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Annualized Net Liquidation Losses - prior
  Distribution Date

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Annualized Net Liquidation Losses - second prior
  Distribution Date

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Three-month Average Loss Ratio

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Exceeds Reserve Fund Trigger Event threshold?  Yes or No

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

I-11

 

	
   

  	
   

  	
  Months

  	
   

  	
  Trigger Threshold

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1-24

  	
   

  	
   

  	
  %

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  25
  or greater

  	
   

  	
   

  	
  %

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cumulative Losses

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Cumulative
  Liquidated Contracts

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Cumulative
  Net Liquidation Proceeds

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Cumulative
  Net Liquidation Losses

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Average
  net loss (amount of cumulative Net Liquidation Losses / number of cumulative
  Liquidated Contracts)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cumulative Loss Ratio

  	
   

  	
  Cumulative
  Loss Ratio

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Exceeds
  Reserve Fund Trigger Event threshold? 
  Yes or No

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Months

  	
   

  	
  Trigger Threshold

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1-12

  	
   

  	
   

  	
  %

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  13-24

  	
   

  	
   

  	
  %

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  25-36

  	
   

  	
   

  	
  %

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  37
  or greater

  	
   

  	
   

  	
  %

  	
   

  	
   

  	
   

  	
   

  
																

 

I-12

 

	
  Delinquencies

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Days

  	
   

  	
  Number of

  	
   

  	
  Principal

  	
   

  	
  Delinquent

  	
   

  	
  % of Principal Balance of

  	
   

  
	
   

  	
   

  	
  Delinquent

  	
   

  	
  Contracts

  	
   

  	
  Balance

  	
   

  	
  Interest Amount

  	
   

  	
  Beginning of Due Period

  	
   

  
	
   

  	
   

  	
  31-59

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  60-89

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  90-119

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  120+

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Totals

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  60+ Delinquency Amount

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Average Delinquency 

  	
   

  	
  Delinquency
  Ratio - current Distribution Date

  
	
  Ratio

  	
   

  	
  Delinquency
  Ratio - prior Distribution Date

  
	
   

  	
   

  	
  Delinquency
  Ratio - second prior Distribution Date

  
	
   

  	
   

  	
  Three-month Average Delinquency Ratio

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Exceeds
  Reserve Fund Trigger Event threshold? 
  Yes or No

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Months

  	
   

  	
  Trigger Threshold %

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1-12

  	
   

  	
   

  	
  %

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  13-24

  	
   

  	
   

  	
  %

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  25-36

  	
   

  	
   

  	
  %

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  37
  or greater

  	
   

  	
   

  	
  %

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
																		

 

I-13

 

VII. ADDITIONAL CONTRACT INFORMATION

 

	
   

  	
   

  	
  Contract Data

  	
   

  	
  Beginning of Due Period

  	
   

  	
  End of Due Period

  	
   

  
	
   

  	
   

  	
  Number of
  Contracts

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Principal
  Balance of Contracts

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Weighted average
  original term

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Weighted average
  remaining term

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Weighted average
  life

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  One month
  prepayments (ABS)

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Weighted average
  Contract Rate

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Principal Balance

  	
   

  	
  % of Principal Balance

  	
   

  
	
   

  	
   

  	
  Contract Rate

  	
   

  	
  of Contracts

  	
   

  	
  at End of Due Period

  	
   

  
	
   

  	
   

  	
  0.000% - 5.000%

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  5.001% - 10.000%

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  10.001% -
  15.000%

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  15.001% -
  20.000%

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  20.001% or
  greater

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Advances
  made by Servicer in current Due Period

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Unreimbursed
  Advances due to Servicer

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Number
  of Contracts purchased by Seller or Servicer

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Principal
  Balance of Contracts purchased by Seller or Servicer

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Purchase
  Price of Contracts purchased by Seller or Servicer

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

I-14

 

VIII. OTHER INFORMATION
FOR NOTEHOLDERS

 

	
   

  	
  1.

  	
  Information regarding
  material changes to the definition or determination of delinquencies,
  charge-offs and uncollectible

  
	
   

  	
   

  	
  accounts:

  
	
   

  	
   

  	
  [None]

  
	
   

  	
   

  	
   

  
	
   

  	
  2.

  	
  Information regarding
  any material modifications, extensions or waivers to contract terms, fees,
  penalties or payments during the distribution period or that have
  cumulatively become material over time:

  
	
   

  	
   

  	
  [None]

  
	
   

  	
   

  	
   

  
	
   

  	
  3.

  	
  Information regarding
  material breaches of contract representations or warranties or transaction
  covenants:

  
	
   

  	
   

  	
  [None]

  
	
   

  	
   

  	
   

  
	
   

  	
  4.

  	
  Information regarding
  any new issuance of asset-backed securities backed by the same contracts:

  
	
   

  	
   

  	
  [None]

  
	
   

  	
   

  	
   

  
	
   

  	
  5.

  	
  Information regarding
  any contract changes (other than in connection with a contract converting
  into cash in accordance with its terms), such as additions or removals in
  connection with a prefunding period, including any material changes in the
  solicitation, credit-granting, underwriting, origination, acquisition or pool
  selection criteria or procedures, as applicable, used to originate, acquire or
  select the new pool of contracts:

  
	
   

  	
   

  	
  [None]

  
	
   

  	
   

  	
   

  
	
   

  	
  6.

  	
  During the pre-funding
  period, if applicable, information regarding originators, pool contracts or
  significant obligors pursuant to Item 1121(b) of Regulation AB:

  
	
   

  	
   

  	
  [Not
  applicable for period]

  
	
   

  	
   

  	
   

  
	
   

  	
  7.

  	
  Information regarding
  derivatives:

  
	
   

  	
   

  	
  [Not
  applicable]

  

 

I-15

 

Exhibit J

 

[Seller’s Representations and Warranties]

 

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

 

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

 

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

 

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

 

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

 

J-1

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

J-2

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

J-3

 

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

 

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

 

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

 

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

 

J-4

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

J-5

 

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

 

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

 

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

 

(b)           Characteristics. The Initial Contracts have the following
characteristics: (i) all the Contracts are secured by Motorcycles; (ii) no
Initial Contract has a remaining maturity of more than [      ]
months; and (iii) the final scheduled payment on the Initial Contract with the
latest maturity is due not later than [          ].
Approximately [          ]%
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 [          ]%
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 [          ]%.
The last scheduled payment date of the Contracts (including any Subsequent
Contracts) is due no later than [                        ].
Approximately [            ]%
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 [          ]%
of the Principal Balance of the Initial Contracts as of the Initial Cutoff Date
is attributable to loans to purchase Motorcycles not manufactured by
Harley-Davidson or Buell.

 

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

 

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

 

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

 

J-6

 

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

 

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

 

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

 

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

 

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

 

J-7

 

Exhibit K

 

[Lockbox Bank and Lockbox Account]

 

Lockbox

 

Harley-Davidson
Credit Corp.

8529
Innovation Way

Chicago,
Illinois 60682-0085

 

Lockbox Bank

 

LaSalle
Bank National Association

135
South LaSalle Street

Chicago,
Illinois 60674

 

K-1

 

Exhibit L

 

FORM OF SUBSEQUENT TRANSFER AGREEMENT

 

SUBSEQUENT TRANSFER
AGREEMENT (the “Agreement”), dated as of                             ,
by and among Harley-Davidson Motorcycle Trust [         ]
(the “Trust”), Harley-Davidson Customer
Funding Corp., a Nevada corporation (the “Trust Depositor”),
The Bank of New York Trust Company, N.A., as Indenture Trustee (the “Indenture Trustee”) and Harley-Davidson Credit Corp., a
Nevada corporation (the “Servicer”),
pursuant to the Sale and Servicing Agreement referred to below.

 

WITNESSETH:

 

WHEREAS, the Trust, the
Trust Depositor, the Servicer and the Indenture Trustee, are parties to the
Sale and Servicing Agreement, dated as of                          
(the “Sale and Servicing Agreement”);

 

WHEREAS, pursuant to the
Sale and Servicing Agreement, the Trust Depositor wishes to sell the Subsequent
Contracts to the Trust, and the Trust wishes to purchase the same, for the
consideration described in the Sale and Servicing Agreement; and

 

WHEREAS, the Seller, on
behalf of the Trust Depositor, has delivered an Addition Notice related to such
conveyance as required by Section 2.03(b) of the Sale and Servicing Agreement;

 

NOW,
THEREFORE, the parties hereto 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 to be transferred pursuant to this Agreement on the Subsequent
Transfer Date.

 

L-1

 

Section 3.              Transfer of Subsequent Contracts. Subject to and upon the terms and
conditions set forth in Section 2.03(b) of the Sale and Servicing Agreement and
this Agreement, the Trust Depositor hereby sells, transfers, assigns, sets over
and otherwise conveys to the Trust (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
Subsequent Cutoff Date, including any liquidation proceeds therefrom, but
excluding any rights to receive payments which were collected pursuant thereto
on or prior to the 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 motorcycle dealer agreements between the dealers (i.e., the
originators of certain Subsequent Contracts) and the Seller, (vi) all rights of
the Trust Depositor in the Lockbox, the Lockbox Account and 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) of the Sale and Servicing Agreement), 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) of the Sale and Servicing Agreement) (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. It is the intention of the Trust Depositor and Owner Trustee that
the transfer contemplated by this Agreement shall constitute a sale of the
Subsequent Contracts from the Trust Depositor to the Trust, conveying good
title thereto free and clear of any Liens.

 

Section 4.              Representations and Warranties of the Trust Depositor. (a) The Trust Depositor hereby represents
and warrants to the Trust, the Indenture Trustee and the Noteholders that the
representations and warranties of the Trust Depositor set forth in Section 3.01
of the Sale and Servicing Agreement are true and correct as of the Subsequent
Transfer Date.

 

(b)           The Trust Depositor hereby repeats
and remakes with respect to the Subsequent Contracts as of the Subsequent
Transfer Date the representations and warranties of the Servicer, as Seller of
the Subsequent Contracts, set forth in Exhibit J to the Sale and Servicing
Agreement, except that no representation or warranty is made herein with
respect to paragraph 3(b) thereof (other than with respect to clause (i) of
paragraph 3(b)).

 

(c)           The Trust Depositor 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
pursuant to this Agreement is $                 as of the Subsequent Cutoff

 

L-2

 

Date, and (b) the
conditions set forth in Section 2.03(b) of the Sale and Servicing Agreement
have been satisfied as of the Subsequent Transfer Date.

 

Section 5.              Representations and Warranties of the Servicer. (a) The Servicer hereby represents and
warrants to the Trust that the representations and warranties of the Servicer
set forth in Section 3.02 of the Sale and Servicing Agreement are true and
correct as of the Subsequent Transfer Date.

 

Section 6.              Ratification of Agreement. As supplemented by this Agreement, the
Sale and Servicing 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 7.              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 8.              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.

 

Section 9.              Authorization of Trustee. By its execution hereof, the Trust Depositor hereby
authorizes and directs the Owner Trustee to execute and deliver this Agreement
on behalf of the Trust.

 

[signature page follows]

 

L-3

 

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

 

	
   

  	
  HARLEY-DAVIDSON
  CUSTOMER

  
	
   

  	
   

  
	
   

  	
  FUNDING CORP.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Printed
  Name:  Perry A. Glassgow

  
	
   

  	
  Title: Vice
  President and Treasurer

  
	
   

  	
   

  
	
   

  	
  HARLEY-DAVIDSON
  CREDIT CORP.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Printed
  Name:  Perry A. Glassgow

  
	
   

  	
  Title: Vice
  President and Treasurer

  
	
   

  	
   

  
	
   

  	
  HARLEY-DAVIDSON

  
	
   

  	
  MOTORCYCLE TRUST
  [       ]

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Printed Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

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

  
	
   

  	
  not in its
  individual capacity but solely

  
	
   

  	
  as Indenture
  Trustee

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Printed Name:

  
	
   

  	
  Title:

  
						

 

L-4Exhibit 4.1

 

	
  

  	
  

  	
  

  
	
   

  	
  COMMON
  SHARES

  	
  

  	
  COMMON SHARES

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  THIS CERTIFICATE IS 

  	
   

  	
   

  
	
   

  	
  TRANSFERABLE IN THE

  	
   

  	
   

  
	
  WH00460

  	
   

  	
  CITY OF TORONTO,

  	
   

  	
   

  	
  SPECIMEN

  
	
  NUMBER

  	
   

  	
  ONTARIO OR NEW YORK,

  	
   

  	
   

  	
  SHARES

  
	
  

  	
   

  	
  NEW YORK

  	
   

  	
   

  	
  

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  INCORPORATED UNDER THE

  	
  SEE REVERSE FOR 

  	
   

  
	
   

  	
  LAWS OF CANADA

  	
  CERTAIN DEFINITIONS

  	
   

  
	
   

  	
  OF
  ONTARIO

  	
   

  
	
   

  	
   

  	
   

  	
  CUSIP 980905 20 2

  	
   

  
	
   

  	
  WORLD HEART CORPORATION

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  THIS
  CERTIFIES THAT

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SPECIMEN

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  SPECIMEN

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  is
  the owner of

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  FULLY
  PAID AND NON-ASSESSABLE COMMON SHARES, WITHOUT NOMINAL OR PAR VALUE, OF

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  WORLD HEART CORPORATION

  	
   

  
	
   

  	
  transferable
  on the books of the Corporation by the holder hereof in person or by duly
  authorized attorney, upon surrender of this Certificate duly endorsed. Holders
  may surrender this Certificate to the Transfer Agent and Registrar in Toronto
  or the Co-Transfer Agent and Co-Registrar, in New York.

  	
   

  
	
   

  	
  In Witness Whereof, the Corporation has caused
  this Certificate to be signed in facsimile by its duly authorized officers
  and a facsimile of its corporate seal to be affixed.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Dated:

  	
  SPECIMEN

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  COUNTERSIGNED AND REGISTERED:

  	
   

  	
  CHASE MELLON SHAREHOLDER

  	
   

  	
  

  	
   

  
	
   

  	
  CIBC MELLON TRUST COMPANY

  	
   

  	
  SERVICES LLC

  	
   

  	
  CHAIRMAN

  	
   

  
	
   

  	
  Transfer Agent and Registrar

  	
   

  	
  Co-Transfer Agent and Co-Registrar

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  BY:

  	
   

  	
   

  	
  BY:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  

   

  	
   

  
	
   

  	
  AUTHORIZED OFFICER

  	
   

  	
  AUTHORIZED OFFICER

  	
   

  	
  SECRETARY

  	
   

  
															

 

 

THE CLASS
OF SHARES THAT THIS CERTIFICATE REPRESENTS HAS RIGHTS, PRIVILEGES,
RESTRICTIONS AND CONDITIONS ATTACHED THERETO AND THE CORPORATION WILL FURNISH
TO A SHAREHOLDER, ON DEMAND AND WITHOUT CHARGE, A FULL COPY OF THE TEXT OF (i)
THE RIGHTS, PRIVILEGES, RESTRICTIONS AND CONDITIONS ATTACHED TO EACH CLASS
AUTHORIZED TO BE ISSUED AND TO EACH SERIES INSOFAR AS THE SAME HAVE BEEN FIXED
BY THE DIRECTORS, AND (ii) THE AUTHORITY OF THE DIRECTORS TO FIX THE RIGHTS,
PRIVILEGES, RESTRICTIONS AND CONDITIONS OF SUBSEQUENT SERIES.

 

The following abbreviations, when used in the
inscription on the face of this certificate, shall be construed as though they
were written out in full according to applicable laws or regulations:

 

	
  TEN COM

  	
  —

  	
  as tenants in common 

  	
   

  	
  UNIF TRAN MIN ACT                         

  	
  Custodian                 

  
	
  TEN ENT

  	
  —

  	
  as tenants by the entireties 

  	
   

  	
  (Cust)

  	
  (Minor)

  
	
  JT TEN

  	
  —

  	
  as joint tenants with right of

  	
   

  	
  under
  Uniform Transfers to Minors Act

  
	
   

  	
   

  	
  survivorship and not as
  tenants in common

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (State)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  UNIF GIFT MIN ACT                      

  	
  Custodian               

  
	
   

  	
   

  	
   

  	
   

  	
  (Cust)              

  	
  (Minor)

  
	
   

  	
   

  	
   

  	
   

  	
  under
  Uniform Gifts to Minors Act 

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (State)

  	
   

  
								

 

Additional
abbreviations may also be used though not in the above list.

 

	
  For Value
  Received,                                                             hereby
  sell, assign and transfer unto

  
	
   

  
	
  PLEASE
  INSERT SOCIAL SECURITY OR

  OTHER IDENTIFYING NUMBER OF ASSIGNEE

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  (PLEASE
  PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE OF ASSIGNEE)

  
	
   

  
	
   

  
	
   

  	
  Common Shares

  
	
  of the Corporation represented
  by the within Certificate, and do hereby irrevocably constitute and appoint

  
	
   

  
	
   

  	
  Attorney

  
	
  to transfer the said stock on
  the books of the within named Corporation with full power of substitution in
  the premises.

  
	
   

  
	
  Dated:

  	
   

  	
   

  
					

 

 

	
   

  	
   

  
	
   

  	
  NOTICE: The signature to this assignment must
  correspond with the name as written upon the face of this certificate in
  every particular, without alteration or enlargement or any change whatever.

  
	
   

  	
   

  
	
  SIGNATURE(S) GUARANTEED:

  	
   

  

 

 

	
  By

  	
   

  	
   

  
	
   

  	
  THE SIGNATURE(S) SHOULD BE
  GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (Banks, Stockbrokers, Savings
  and Loan Associations and Credit Unions) WITH MEMBERSHIP IN AN APPROVED
  SIGNATURE GUARANTEE MEDALLION PROGRAM, PURSUANT TO S.E.C. RULE 17Ad-15.

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