Document:

EXHIBIT
10.1

	
   

  

 

 

TRANSFER AND SALE
AGREEMENT

 

by and between

 

HARLEY-DAVIDSON
CREDIT CORP.,

as Seller

 

and

 

HARLEY-DAVIDSON
CUSTOMER FUNDING CORP.,

 

as Purchaser

 

Dated as of
[          ]

	
   

  

 

 

TABLE OF
CONTENTS

	
  ARTICLE I
  DEFINITION

  	
  1

  
	
   

  	
   

  	
   

  
	
  SECTION 1.01.

  	
  GENERAL

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE II
  TRANSFER OF CONTRACTS; ASSIGNMENT OF AGREEMENT

  	
  1

  
	
   

  	
   

  
	
  SECTION 2.01.

  	
  CLOSING

  	
  1

  
	
  SECTION 2.02.

  	
  CONDITIONS TO THE CLOSING

  	
  2

  
	
  SECTION 2.03.

  	
  ASSIGNMENT OF AGREEMEN

  	
  3

  
	
  SECTION 2.04.

  	
  SUBSEQUENT CONTRACTS

  	
  4

  
	
   

  	
   

  	
   

  
	
  ARTICLE III
  REPRESENTATIONS AND WARRANTIES

  	
  5

  
	
   

  	
   

  
	
  SECTION 3.01.

  	
  REPRESENTATIONS AND WARRANTIES
  REGARDING SELLER

  	
  6

  
	
  SECTION 3.02.

  	
  REPRESENTATIONS AND WARRANTIES
  REGARDING EACH CONTRACT

  	
  7

  
	
  SECTION 3.03.

  	
  REPRESENTATIONS AND WARRANTIES
  REGARDING THE CONTRACTS IN THE AGGREGATE

  	
  11

  
	
  SECTION 3.04.

  	
  REPRESENTATIONS AND WARRANTIES
  REGARDING THE CONTRACT FILES

  	
  12

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV
  PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS

  	
  12

  
	
   

  	
   

  
	
  SECTION 4.01.

  	
  CUSTODY OF CONTRACTS

  	
  12

  
	
  SECTION 4.02.

  	
  FILING

  	
  12

  
	
  SECTION 4.03.

  	
  NAME CHANGE OR RELOCATION

  	
  13

  
	
  SECTION 4.04.

  	
  COSTS AND EXPENSES

  	
  13

  
	
  SECTION 4.05

  	
  SALE TREATMENT

  	
  13

  
	
  SECTION 4.06

  	
  SEPARATENESS FROM TRUST
  DEPOSITOR

  	
  13

  
	
  SECTION 4.07

  	
  PROTECTION OF SECURITY INTERESTS

  	
  14

  
	
   

  	
   

  	
   

  
	
  ARTICLE V
  REMEDIES UPON MISREPRESENTATION

  	
  14

  
	
   

  	
   

  
	
  SECTION 5.01.

  	
  REPURCHASES OF CONTRACTS FOR
  BREACH OF REPRESENTATIONS AND WARRANTIES

  	
  14

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI
  INDEMNITIES

  	
  15

  
	
   

  	
   

  
	
  SECTION 6.01.

  	
  SELLER INDEMNIFICATION

  	
  15

  
	
  SECTION 6.02.

  	
  LIABILITIES TO OBLIGORS

  	
  15

  
	
  SECTION 6.03.

  	
  TAX INDEMNIFICATION

  	
  15

  
	
  SECTION 6.04.

  	
  OPERATION OF INDEMNITIES

  	
  15

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII
  MISCELLANEOUS

  	
  16

  
	
   

  	
   

  
	
  SECTION 7.01.

  	
  PROHIBITED TRANSACTIONS WITH
  RESPECT TO THE TRUST

  	
  16

  
	
  SECTION 7.02.

  	
  MERGER OR CONSOLIDATION

  	
  16

  
	
  SECTION 7.03.

  	
  TERMINATION

  	
  16

  
	
  SECTION 7.04.

  	
  ASSIGNMENT OR DELEGATION BY
  SELLER

  	
  16

  
	
  SECTION 7.05.

  	
  AMENDMENT

  	
  17

  
	
  SECTION 7.06.

  	
  NOTICES

  	
  17

  
	
  SECTION 7.07.

  	
  MERGER AND INTEGRATION

  	
  18

  
	
  SECTION 7.08.

  	
  HEADINGS

  	
  18

  
	
  SECTION 7.09.

  	
  GOVERNING LAW

  	
  18

  

 

i

 

	
  EXHIBITS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit A

  	
   

  	
  Form of Assignment

  
	
  Exhibit B

  	
   

  	
  Form of Officer’s
  Certificate

  
	
  Exhibit C

  	
   

  	
  Form of Subsequent
  Purchase Agreement

  

 

ii

 

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

 

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

 

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

 

WHEREAS, Trust Depositor intends concurrently
with its purchases from time to time of Contract Assets hereunder to convey all
right, title and interest in such Contract Assets to Harley-Davidson Motorcycle
Trust [          ] (the “Trust”) pursuant to the Sale and Servicing Agreement dated
as of [          ] by and
among Trust Depositor, Harley-Davidson Credit, as Servicer, the Trust, as
issuer (the “Issuer”) and
[          ], as Indenture
Trustee (as amended, supplemented or otherwise modified from time to time, the “Sale and Servicing Agreement”), executed concurrently
herewith;

 

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

 

ARTICLE I

 

DEFINITIONS

 

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

 

ARTICLE II

 

TRANSFER OF
CONTRACTS; ASSIGNMENT OF AGREEMENT

 

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

 

 

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

 

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

 

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

 

2

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

3

 

Trustee and the
Issuer and the Indenture Trustee may enforce directly without joinder of Trust
Depositor, the obligations of Seller set forth herein.

 

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

 

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

 

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

 

(ii)                                  the
Funding Period shall not have terminated;

 

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

 

4

 

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

 

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

 

(v)                                 each
Rating Agency shall have notified the Trust Depositor and the Trustees that
following such transfer, and the transfer immediately thereafter of the
Subsequent Contracts to the Trust, the Notes will be rated at least their
respective ratings as of the Closing Date by such Rating Agency.

 

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

 

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

 

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

 

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

 

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

 

ARTICLE III

 

REPRESENTATIONS
AND WARRANTIES

 

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

 

5

 

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

 

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

 

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

 

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

 

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

 

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

 

6

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

7

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

8

 

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

 

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

 

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

 

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

 

9

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

10

 

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

 

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

 

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

 

(a)           Amounts.  The sum of the aggregate Principal Balances
payable by Obligors under the Contracts as of the Initial Cutoff Date (or the
applicable Subsequent Cutoff Date in the case of Subsequent Contracts), plus
the Pre-Funded Amount as of such date,  equals or
exceeds the sum of the principal balance of the 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 for purchases of Motorcycles not manufactured by
Harley-Davidson or Buell.

 

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

 

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

 

11

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE IV

 

PERFECTION OF TRANSFER AND PROTECTION OF SECURITY
INTERESTS

 

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

 

Section 4.02.        Filing.  On or prior to
the Closing Date and each Subsequent Transfer Date, Seller shall cause the UCC
financing statement(s) referred to in Section 2.02(g) hereof and

 

12

 

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

 

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

 

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

 

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

 

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

 

Section 4.06         Separateness from Trust Depositor. 
The Seller agrees to take or refrain from taking or engaging in with
respect to the Trust Depositor each of the actions or activities 

 

13

 

specified in the “substantive
consolidation” opinion of Winston & Strawn LLP (or in any related
certificate of Seller) delivered on the Closing Date, upon which the
conclusions expressed therein are based.

 

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

 

ARTICLE V

 

REMEDIES UPON MISREPRESENTATION

 

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

 

14

 

ARTICLE VI

 

INDEMNITIES

 

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

 

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

 

Section 6.03.        Tax Indemnification.  Seller
covenants and agrees to pay, and to indemnify, defend and hold harmless the Trust
Depositor, the Trust, the Trustees or the Noteholders from, any taxes that may
at any time be asserted against any such Person as a result of or relating to
the transactions contemplated herein and in the other Transaction Documents,
including any sales, gross receipts, gross margin, general corporation,
tangible personal property, Illinois personal property replacement privilege or
license taxes (but not including any federal, state or other taxes arising out
of the creation of the Trust and the issuance of the Notes) and costs, expenses
and reasonable counsel fees in defending against the same, whether arising by
reason of the acts to be performed by Seller under this Agreement or the
Servicer under the Sale and Servicing Agreement or imposed against the Trust
Depositor, the Trust, a Noteholder or otherwise.  Notwithstanding any other provision of this
Agreement, the obligation of Seller under this Section 6.03 shall not
terminate upon a Service Transfer pursuant to Article VIII of the Sale and
Servicing Agreement and shall survive any termination of this Agreement.

 

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

 

15

 

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

 

ARTICLE VII

 

MISCELLANEOUS

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

16

 

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

 

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

 

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

 

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

 

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

 

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

 

17

 

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

 

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

 

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

 

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

 

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

 

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

 

[signature page follows]

 

18

 

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

 

 

	
   

  	
  HARLEY-DAVIDSON
  CUSTOMER FUNDING CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Printed
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HARLEY-DAVIDSON CREDIT
  CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Printed
  Name:

  
	
   

  	
   

  	
  Title:

  

 

Signature Page to
Transfer and 

Sale Agreement

 

 

 

Exhibit A

Transfer and Sale

Agreement

 

FORM OF ASSIGNMENT

 

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

 

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

 

Capitalized terms used
herein but not otherwise defined shall have the meanings assigned to such terms
in the Sale and Servicing Agreement dated as of [_______] made by and among the
undersigned, as servicer, the Trust Depositor, Harley-Davidson Motorcycle Trust
[_______], as issuer, and [_______], as indenture trustee.

 

A-1

 

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

 

	
   

  	
  HARLEY-DAVIDSON CREDIT
  CORP.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Printed
  Name:

  
	
   

  	
   

  	
  Title:

  

 

A-2

 

Exhibit B

Transfer and Sale

Agreement

 

FORM OF OFFICER’S CERTIFICATE

 

(See Exhibit C
to the Sale and Servicing Agreement)

 

B-1

 

Exhibit C

Transfer and Sale

Agreement

 

FORM OF SUBSEQUENT PURCHASE AGREEMENT

 

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

 

WITNESSETH:

 

WHEREAS, the Trust
Depositor and the Seller are parties to the Transfer and Sale Agreement, dated
as of [_______] (the “Transfer and Sale
Agreement”);

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

C-1

 

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

 

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

 

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

 

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

 

C-2

 

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

 

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

 

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

 

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

 

C-3

 

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

 

 

	
   

  	
  HARLEY-DAVIDSON
  CUSTOMER FUNDING CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Printed
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HARLEY-DAVIDSON CREDIT
  CORP.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Printed
  Name:

  
	
   

  	
   

  	
  Title:Exhibit 10.2

 

SALE AND SERVICING AGREEMENT

 

among

 

HARLEY-DAVIDSON MOTORCYCLE TRUST [        ],

as Issuer,

 

HARLEY-DAVIDSON CUSTOMER FUNDING CORP.,

as Trust Depositor,

 

HARLEY-DAVIDSON CREDIT CORP.,

as Servicer

 

and

 

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

as Indenture Trustee

 

Dated as of [                ]

 

 

Table of Contents

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  
	
  ARTICLE One DEFINITIONS

  	
  1

  
	
  Section 1.01.

  	
  Definitions

  	
  1

  
	
  Section 1.02.

  	
  Usage of Terms

  	
  21

  
	
  Section 1.03.

  	
  Section References

  	
  21

  
	
  Section 1.04.

  	
  Calculations

  	
  21

  
	
  Section 1.05.

  	
  Accounting Terms

  	
  22

  
	
  ARTICLE Two TRANSFER OF
  CONTRACTS

  	
  22

  
	
  Section 2.01.

  	
  Closing

  	
  22

  
	
  Section 2.02.

  	
  Conditions to the Closing

  	
  22

  
	
  ARTICLE Three
  REPRESENTATIONS AND WARRANTIES

  	
  26

  
	
  Section 3.01.

  	
  Representations and Warranties
  Regarding the Trust Depositor

  	
  27

  
	
  Section 3.02.

  	
  Representations and Warranties
  Regarding the Servicer

  	
  28

  
	
  ARTICLE Four PERFECTION
  OF TRANSFER AND PROTECTION OF SECURITY INTERESTS

  	
  29

  
	
  Section 4.01.

  	
  Custody of Contracts

  	
  29

  
	
  Section 4.02.

  	
  Filing

  	
  31

  
	
  Section 4.03.

  	
  Name Change or Relocation

  	
  31

  
	
  Section 4.04.

  	
  Costs and Expenses

  	
  31

  
	
  ARTICLE Five SERVICING
  OF CONTRACTS

  	
  31

  
	
  Section 5.01.

  	
  Responsibility for Contract
  Administration

  	
  31

  
	
  Section 5.02.

  	
  Standard of Care

  	
  32

  
	
  Section 5.03.

  	
  Records

  	
  32

  
	
  Section 5.04.

  	
  Inspection

  	
  32

  
	
  Section 5.05.

  	
  Trust Accounts

  	
  32

  
	
  Section 5.06.

  	
  Enforcement

  	
  34

  
	
  Section 5.07.

  	
  Trustees to Cooperate

  	
  35

  
	
  Section 5.08.

  	
  Costs and Expenses

  	
  35

  
	
  Section 5.09.

  	
  Maintenance of Security
  Interests in Motorcycles

  	
  35

  
	
  Section 5.10.

  	
  Successor Servicer/Lockbox
  Agreements

  	
  36

  
	
  Section 5.11.

  	
  Separate Entity Existence

  	
  36

  
	
  ARTICLE Six THE TRUST
  DEPOSITOR

  	
  36

  
	
  Section 6.01.

  	
  Covenants of the Trust
  Depositor

  	
  36

  
	
  Section 6.02.

  	
  Liability of Trust Depositor;
  Indemnities

  	
  37

  
	
  Section 6.03.

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

  	
   

  
	
  Limitations

  	
  39

  
	
  Section 6.04.

  	
  Limitation on Liability of
  Trust Depositor and Others

  	
  40

  
	
  Section 6.05.

  	
  Trust Depositor Not to Resign

  	
  40

  
	
  ARTICLE Seven
  DISTRIBUTIONS; RESERVE FUND

  	
  40

  
	
  Section 7.01.

  	
  Monthly Distributions

  	
  40

  
	
  Section 7.02.

  	
  Fees

  	
  40

  
	
  Section 7.03.

  	
  Advances

  	
  41

  
	
  Section 7.04.

  	
  Reserved

  	
  41

  
	
  Section 7.05.

  	
  Distributions; Priorities

  	
  42

  
	
  Section 7.06.

  	
  Reserve Fund

  	
  46

  
	
  Section 7.07.

  	
  Reserved

  	
  47

  
	
  Section 7.08.

  	
  Purchase of Contracts for
  Breach of Representations and Warranties

  	
  47

  
	
  Section 7.09.

  	
  Reassignment of Reacquired
  Contracts

  	
  48

  
	
  Section 7.10.

  	
  Servicer’s Purchase Option

  	
  48

  
	
  Section 7.11.

  	
  Purchase of Contracts for
  Breach of Servicing Obligations

  	
  48

  

 

i

 

	
  Section 7.12.

  	
  Interest Rate Swap Agreement

  	
  49

  
	
  ARTICLE Eight EVENTS OF
  TERMINATION; SERVICE TRANSFER

  	
  50

  
	
  Section 8.01.

  	
  Events of Termination

  	
  50

  
	
  Section 8.02.

  	
  Waiver of Event of Termination

  	
  51

  
	
  Section 8.03.

  	
  Service Transfer

  	
  51

  
	
  Section 8.04.

  	
  Successor Servicer to Act; Appointment
  of Successor Servicer

  	
  52

  
	
  Section 8.05.

  	
  Notification to Securityholders

  	
  52

  
	
  Section 8.06.

  	
  Effect of Transfer

  	
  52

  
	
  Section 8.07.

  	
  Database File

  	
  52

  
	
  Section 8.08.

  	
  Successor Servicer
  Indemnification

  	
  53

  
	
  Section 8.09.

  	
  Responsibilities of the
  Successor Servicer

  	
  53

  
	
  Section 8.10.

  	
  Limitation of Liability of
  Servicer

  	
  53

  
	
  Section 8.11.

  	
  Merger or Consolidation of
  Servicer

  	
  54

  
	
  Section 8.12.

  	
  Servicer Not to Resign

  	
  54

  
	
  Section 8.13.

  	
  Appointment of Subservicer

  	
  54

  
	
  ARTICLE Nine REPORTS

  	
  54

  
	
  Section 9.01.

  	
  Monthly Reports

  	
  54

  
	
  Section 9.02.

  	
  Officer’s Certificate

  	
  54

  
	
  Section 9.03.

  	
  Other Data

  	
  54

  
	
  Section 9.04.

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

  	
   

  
	
  Certificate

  	
  54

  
	
  Section 9.05.

  	
  Monthly Reports to Noteholders
  and the Swap Counterparty

  	
  55

  
	
  Section 9.06.

  	
  Regulation AB

  	
  57

  
	
  Section 9.07.

  	
  Information to Be Provided by
  the Indenture Trustee

  	
  57

  
	
  Section 9.08.

  	
  Exchange Act Reporting

  	
  58

  
	
  ARTICLE Ten TERMINATION

  	
  59

  
	
  Section 10.01.

  	
  Sale of Trust Assets

  	
  59

  
	
  ARTICLE Eleven MISCELLANEOUS

  	
  59

  
	
  Section 11.01.

  	
  Amendment

  	
  60

  
	
  Section 11.02.

  	
  Protection of Title to Trust

  	
  61

  
	
  Section 11.03.

  	
  Governing Law

  	
  61

  
	
  Section 11.04.

  	
  Notices

  	
  63

  
	
  Section 11.05.

  	
  Severability of Provisions

  	
  63

  
	
  Section 11.06.

  	
  Assignment

  	
  63

  
	
  Section 11.07.

  	
  Third Party Beneficiaries

  	
  63

  
	
  Section 11.08.

  	
  Counterparts

  	
  63

  
	
  Section 11.09.

  	
  Headings

  	
  63

  
	
  Section 11.10.

  	
  No Bankruptcy Petition;
  Disclaimer and Subordination

  	
  64

  
	
  Section 11.11.

  	
  Limitation of Liability of
  Owner Trustee and Indenture Trustee

  	
  64

  

 

ii

 

EXHIBITS

 

	
  Exhibit A

  	
  Form of Assignment

  	
  A-1

  
	
  Exhibit B

  	
  Form of
  Closing Certificate of Trust Depositor

  	
  B-1

  
	
  Exhibit C

  	
  Form of
  Closing Certificate of Seller/Servicer

  	
  C-1

  
	
  Exhibit D

  	
  Reserved

  	
  D-1

  
	
  Exhibit E

  	
  Servicing
  Criteria to be Addressed in Indenture Trustee’s

  	
   

  
	
   

  	
  Assessment
  of Compliance

  	
  E-1

  
	
  Exhibit F

  	
  Form of
  Indenture Trustee’s Annual Certificate

  	
  F-1

  
	
  Exhibit G

  	
  Form of
  Certificate Regarding Reacquired Contracts

  	
  G-1

  
	
  Exhibit H

  	
  List
  of Contracts

  	
  H-1

  
	
  Exhibit I

  	
  Form of Monthly
  Report to Noteholders and the Certificateholder

  	
  I-1

  
	
  Exhibit J

  	
  Seller’s
  Representations and Warranties

  	
  J-1

  
	
  Exhibit K

  	
  Lockbox
  Bank and Lockbox Account

  	
  K-1

  
	
  Exhibit L

  	
  Form of
  Subsequent Transfer Agreement

  	
  L-1

  

 

iii

 

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

 

WHEREAS
the Issuer desires to acquire from the Trust Depositor 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.

 

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

 

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

 

“Affiliate” of any specified Person means any other Person
controlling or controlled by, or under common control with, such specified
Person.  For the purposes of this
definition, “control” when used with respect
to any specified Person means the power to direct the management and policies
of such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms “controlling”
or “controlled” have meanings correlative to
the foregoing.

 

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

 

1

 

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 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) the Net Swap Receipt, if any,
received from the Swap Counterparty for such Distribution Date, and Swap
Termination Payments made by the Swap Counterparty (less any amounts used to
enter into a Replacement Swap Agreement), (viii) all amounts received in
respect of Carrying Charges transferred from the Interest Reserve Account
pursuant to Section 7.03, and (ix) all amounts received in respect of
interest, dividends, gains, income and earnings on investment of funds in the
Trust Accounts as contemplated in Section 5.05(d).

 

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

 

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

 

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

 

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

 

“Buell” means Buell Motorcycle Company, LLC.

 

2

 

“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 Agent” means The Bank of New York Mellon Trust
Company, N.A., acting in such capacity under the Indenture.

 

“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, the Class A-3 Rate, the Class A-4
Rate, the Class B Rate, the Class C Rate and the Class D Rate
for the related Interest Period (with each such rate being multiplied by the
number of days in the Interest Period related to the applicable Class of
Notes divided by 360) 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 Noteholder” means the Person in whose name a Class A
Note is registered in the Note Register, as such term is defined in the
Indenture.

 

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

 

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

 

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

 

“Class A-1 Notes” has the meaning set forth in the
Indenture.

 

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

 

“Class A-2 Final Distribution Date” means the [    ]
Distribution Date.

 

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

 

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

 

3

 

“Class A-2 Rate” means LIBOR plus [    ]%
per annum (computed on the basis of the actual number of days elapsed and a
360-day year).

 

 “Class A-3 Final
Distribution Date” means the [     ]
Distribution Date.

 

“Class A-3 Noteholder” means a Class A-3a
Noteholder or a Class A-3b Noteholder.

 

“Class A-3 Notes” means, collectively, the Class A-3a
Notes and the Class A-3b Notes.

 

“Class A-3a Noteholder” means the Person in whose name a
Class A-3a Note is registered in the Note Register.

 

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

 

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

 

“Class A-3b Noteholder” means the Person in whose name a
Class A-3b Note is registered in the Note Register.

 

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

 

“Class A-3b Rate” means LIBOR plus [     ]%
per annum (computed on the basis of the actual number of days elapsed and a
360-day year).

 

“Class A-4 Final Distribution Date” means the [     ]
Distribution Date.

 

“Class A-4 Noteholder” means the Person in whose name a Class A-4
Note is registered in the Note Register.

 

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

 

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

 

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

 

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

 

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

 

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

 

4

 

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

 

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

 

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

 

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

 

“Class D 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 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

 

5

 

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.

 

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

 

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

 

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

 

“Cumulative Loss Ratio” means, as of any Distribution Date,
the fraction (expressed as a percentage) computed by the Servicer by dividing (i) the
aggregate Net Liquidation Losses for all 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 Contracts in respect of which the
related Motorcycles have been repossessed and are still in inventory).

 

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

 

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

 

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

 

6

 

“Designated LIBOR Page” means the display on Reuters Screen
LIBOR01 Page or any successor service or any page as may replace the
designated page on that service or any successor service that displays the
London interbank rates of major banks for U.S. dollars.

 

“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;

 

(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);

 

7

 

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

 

(g)           any
other investment with respect to which the 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, the Class A-3
Final Distribution Date, the Class A-4 Final Distribution Date, the Class B
Final Distribution Date, the Class C Final Distribution Date or the Class D
Final Distribution Date, as the case may be.

 

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

 

“Fixed Rate
Notes” means the Class A-1 Notes, the Class A-3a Notes,
the Class A-4 Notes, the Class B Notes, the Class C Notes and
the Class D Notes.

 

“Floating Rate
Notes” means the Class A-2 Notes and the Class A-3b Notes.

 

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

 

“Form 10-K Disclosure Item” means with respect to any Person, (a) any Form 10-D
Disclosure Item, (b) any affiliations between such Person and the Seller,
the Servicer, the Trust Depositor, the Owner Trustee and the Indenture Trustee
(each, an “Item 1119 Party”), to the extent
such Person, or in the case of the Owner Trustee or Indenture Trustee, a
Responsible Officer of such Person, has actual knowledge thereof and (c) any
relationships or transactions between such Person and any Item 1119 Party that
are outside the ordinary course of business or on terms other than would be
obtained in an arm’s-length 

 

8

 

transaction with an unrelated third party, apart
from the transactions contemplated under the Transaction Documents, and that
are material to the investors’ understanding of the Notes, but only to the extent
such Person, or in the case of the Owner Trustee or Indenture Trustee, a
Responsible Officer of such Person, has actual knowledge of such relationships
or transactions.

 

“Funding Period” means the period beginning on the Closing
Date and ending on the first to occur of (a) the 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 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 A-3a Note Balance”  means
$[      ].

 

“Initial Class A-3b Note Balance”  means
$[      ].

 

“Initial Class A-4 Note Balance”  means
$[      ].

 

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

 

9

 

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

 

“Initial Class D 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
[                ].

 

“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 Determination Date” means, with respect to any
Interest Period with respect to the Floating Rate Notes, the day that is two
London Business Days prior to the related Interest Reset Date.

 

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

 

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

 

“Interest Rate Swap Agreement” means the 1992 ISDA Master
Agreement, the Schedule and the 1994 Credit Support Annex thereto, each dated
as of the Closing Date, between the Swap Counterparty and the Issuer, and the
Confirmations thereto, each dated as of the Closing Date, and entered into
pursuant to such ISDA Master Agreement, as the same may be amended or
supplemented from time to time in accordance with the terms thereof, and
includes any Replacement Interest Rate Swap Agreement.

 

“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
$[                ].

 

10

 

“Interest Reset Date” means, with respect to any Interest
Period with respect to each Class of Floating Rate Notes, the first day of
such Interest Period.

 

“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
[        ].

 

“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.

 

“LIBOR” means (i) in the case of the initial Interest
Period, [      ]%, and (ii) for any Interest
Period thereafter, the rate for deposits in U.S. Dollars having a maturity of
one month (commencing on the related Interest Reset Date) that appears on the
Designated LIBOR Page as of 11:00 a.m. London time, on the applicable
Interest Determination Date.  With
respect to an Interest Determination Date on which no rate appears on the
Designated LIBOR Page, LIBOR for the applicable Interest Determination Date
will be the rate calculated by the Calculation Agent as the arithmetic mean of
at least two quotations obtained by the Calculation Agent after requesting the
principal London offices of each of four major reference banks in the London
interbank market, which may include the Calculation Agent and its affiliates,
as selected by the Calculation Agent, to provide the Calculation Agent with its
offered quotations for deposits in U.S. Dollars for the period of one month,
commencing on the second London Business Day immediately following the
applicable Interest Determination Date, to prime banks in the London interbank
market at approximately 11:00 a.m., London time, on such Interest
Determination Date and in a principal amount that is representative of a single
transaction in U.S. Dollars in that market at that time.  If at least two such quotations are provided,
LIBOR determined on the applicable Interest Determination Date will be the
arithmetic mean of the quotations.  If
fewer than two quotations referred to in this paragraph are provided, LIBOR
determined on the applicable Interest Determination Date will be the rate
calculated by the Calculation Agent as the arithmetic mean of the rates quoted
at approximately 11:00 a.m., in New York, New York, on the applicable
Interest Determination Date by one or more banks, which may include the
Calculation Agent and its affiliates, in New York, New York selected by the
Calculation Agent for loans in U.S. Dollars to leading European banks in a
principal amount that is representative of a single transaction in U.S. Dollars
in that market at that time.  If the
banks so selected by the Calculation Agent are not quoting as mentioned in this
paragraph, LIBOR for the applicable Interest Determination Date will be LIBOR
in effect on the prior Interest Determination Date.

 

“London Business Day” means any day on which dealings in
deposits in U.S. Dollars are transacted in the London interbank market.

 

“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.

 

11

 

“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 Mellon 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 related Due Period.

 

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

 

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

 

“Modified Required Holders” means Noteholders evidencing at
least 66 2/3% of the aggregate Outstanding Amount of the Controlling Class.

 

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

 

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

 

12

 

“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.

 

“Net Swap Payment” means, for any
Distribution Date, the net amount owed by the Issuer to the Swap Counterparty,
if any, on such Distribution Date under the Interest Rate Swap Agreement,
excluding any Swap Termination Payment.

 

“Net Swap Receipt” means, for any
Distribution Date, the net amount owed by the Swap Counterparty to the Issuer,
if any, on such Distribution Date under the Interest Rate Swap Agreement,
excluding any Swap Termination Payment.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Note Pool Factor” means with respect to any Class of
Notes as of the close of business on any Distribution Date, a seven-digit
decimal figure equal to the outstanding principal amount of such Class of 

 

13

 

Notes
(after giving effect to any reductions thereof to be made on such Distribution
Date) divided by the original outstanding principal amount of such Class of
Notes.

 

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

 

“Note Principal Distributable Amount”  means,
with respect to any Distribution Date, the sum of (x) the Principal
Distributable Amount with respect to such Distribution Date and  (y) the Note Principal Carryover
Shortfall as of the close of the immediately preceding Distribution Date, minus
the aggregate amount of the First Priority Distributable Amount and the Second
Priority Distributable Amount distributed on such Distribution Date; provided, however, that the Note Principal Distributable
Amount shall not exceed the Outstanding Amount of the Notes (after giving
effect to the other amounts to be deposited in the Note Distribution Account in
respect of the First Priority Principal Distributable Amount and the Second
Priority Principal Distributable Amount on such Distribution Date); and provided, further, that the Note Principal Distributable
Amount (i) on the Class A-1 Final Distribution Date shall not be less
than the amount that is necessary (after giving effect to other amounts to be
deposited in the Note Distribution Account for payment on the Class A-1
Notes on such Distribution Date and allocable to principal) to reduce the
Outstanding Amount of the Class A-1 Notes to zero, (ii) on the Class A-2
Final Distribution Date shall not be less than the amount that is necessary
(after giving effect to other amounts to be deposited in the Note Distribution
Account for payment on the Class A-2 Notes on such Distribution Date and
allocable to principal) to reduce the Outstanding Amount of the Class A-2
Notes to zero, (iii) on the Class A-3 Final Distribution Date shall
not be less than the amount that is necessary (after giving effect to other
amounts to be deposited in the Note Distribution Account for payment on the Class A-3
Notes on such Distribution Date and allocable to principal) to reduce the
Outstanding Amount of the Class A-3 Notes to zero, (iv) on the Class A-4
Final Distribution Date shall not be less than the amount that is necessary
(after giving effect to other amounts to be deposited in the Note Distribution
Account for payment on the Class A-4 Notes on such Distribution Date and
allocable to principal) to reduce the Outstanding Amount of the Class A-4
Notes to zero, (v) on 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 Amount on the Class B Notes to zero, and (vi) on the Class C
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 C Notes on such Distribution
Date and allocable to principal) to reduce the Outstanding Amount on the Class C
notes to zero.

 

“Notes” means the Class A-1 Notes, the Class A-2
Notes, the Class A-3 Notes, the Class A-4 Notes, the Class B
Notes, the Class C Notes and the Class D 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 

 

14

 

Servicer,
at least one of the signing officers must be a Servicing Officer.  Unless otherwise specified, any reference
herein to an Officer’s Certificate shall be to an Officers’ Certificate of the
Servicer.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

15

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Replacement Interest Rate Swap Agreement” means any ISDA
Master Agreement, the Schedule and Credit Support Annex thereto, each dated
after the Closing Date, between a Replacement Swap Counterparty and the Issuer,
and the Confirmations thereto, each dated after the Closing Date, and entered 

 

16

 

into pursuant to such ISDA Master Agreement,
and pursuant to the conditions set forth in the Interest Rate Swap Agreement,
as the same may be amended or supplemented from time to time in accordance with
the terms thereof.

 

“Replacement Swap Counterparty” means any swap counterparty
under a Replacement Interest Rate Swap Agreement that is an “Eligible
Replacement” (as defined in the Interest Rate Swap Agreement).

 

“Required Holders” means Noteholders evidencing more than 50%
of the aggregate Outstanding Amount of the Controlling Class.

 

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

 

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

 

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

 

“Reserve Fund Initial Deposit” means
$[      ].

 

“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 12th Distribution
Date occurring after the Closing Date, (b) [      ]%
with respect to any Distribution Date which occurs within the period from the
day after the 12th Distribution Date occurring after the Closing
Date to, and inclusive of, the 24th Distribution
Date occurring after the Closing Date, or (c) [      ]%
with respect to any Distribution Date which occurs within the period from the
day after the 24th Distribution Date occurring after the Closing
Date to, and inclusive of, the 36th Distribution
Date occurring after the Closing Date or (d) [      ]%
with respect to any Distribution Date occurring thereafter; (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 24th Distribution
Date occurring after the Closing Date or (b) [      ]%
with respect to any Distribution Date occurring thereafter; 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 12th Distribution
Date occurring after the Closing Date, (b) [      ]%
with respect to any Distribution Date which occurs within the period from the
day after the 12th Distribution Date occurring after the Closing
Date to, and inclusive of, the 24th Distribution
Date occurring after the Closing Date, (c) [      ]%
with respect to any Distribution Date which occurs within the period from the
day after the 24th Distribution Date occurring after the Closing
Date to, and inclusive of, the 36th Distribution
Date occurring after the Closing Date, or (d) [      ]%
with respect to any Distribution Date occurring thereafter.

 

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

 

“Responsible Officer” means, with respect to the Owner
Trustee, any officer in its Corporate Trust Administration Department (or any
similar group of a successor Owner Trustee) and with respect to 

 

17

 

the
Indenture Trustee, the chairman and any vice chairman of the board of
directors, the president, the chairman and vice chairman of any executive
committee of the board of directors, every vice president, assistant vice
president, the secretary, every assistant secretary, cashier or any assistant
cashier, controller or assistant controller, the treasurer, every assistant
treasurer, every trust officer, assistant trust officer and every other
authorized officer or assistant officer of the Indenture Trustee customarily performing
functions similar to those performed by persons who at the time shall be such
officers, respectively, or to whom a corporate trust matter is referred because
of knowledge of, familiarity with, and authority to act with respect to a
particular matter.

 

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

 

“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.

 

“Senior Swap Termination Payment” means any Swap Termination
Payment owed by the Issuer to the Swap Counterparty under the Interest Rate Swap
Agreement except if the Swap Counterparty is the “defaulting party” or “sole
affected party” (other than in connection with a “tax event” or “illegality”)
under the Interest Rate Swap Agreement.

 

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

 

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

 

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

 

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

 

18

 

“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) through (xi) of Section 7.05(a), (2) clauses
(i) through (vii) of Section 7.05(b) or (3) clauses (i) through
(viii) of Section 7.05(c), as applicable, over (b) Available
Monies for such Distribution Date minus the amounts payable pursuant to clauses
(i) through (iv) of Section 7.05(a) on such Distribution
Date.

 

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

 

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

 

(a)           [        ]%
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, Initial Class A-3a Note Balance, Initial Class A-3b
Note Balance, Initial Class A-4 Note Balance, Initial Class B Note
Balance, Initial Class C Note Balance and Initial Class D 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.

 

“Subordinated Swap Termination Payment” means any Swap
Termination Payment owed by the Issuer to the Swap Counterparty under the
Interest Rate Swap Agreement other than a Senior Swap Termination Payment.

 

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

 

19

 

“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 (as of the related Subsequent Cutoff Dates) conveyed to
the Trust.

 

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

 

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

 

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

 

“Supplement” means the Prospectus
Supplement dated
[                ].

 

“Swap Collateral Account” means a trust
account as described in Section 7.12 maintained in the name of the
Indenture Trustee and which shall be an Eligible Account.

 

“Swap Counterparty” means
[                    ],
as the swap counterparty under the Interest Rate Swap Agreement, or any
successor or replacement swap counterparty from time to time.

 

“Swap Replacement Proceeds” means any
amounts received from a Replacement Swap Counterparty in consideration for
entering into a Replacement Interest Rate Swap Agreement for a terminated
Interest Rate Swap Agreement.

 

“Swap Termination Payment” means the
payment due to the Swap Counterparty by the Trust or to the Trust by the Swap
Counterparty under the Interest Rate Swap Agreement, as applicable, including
interest that may accrue thereon, arising from a termination of the Interest
Rate Swap Agreement in connection with the occurrence of an “event of default”
or “termination event” under the Interest Rate Swap Agreement.

 

“Swap Termination Payment Account” means
an Eligible Account maintained in the name of the Indenture Trustee pursuant to
Section 7.12.

 

“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, any Subsequent Purchase Agreement
and the Interest Rate Swap Agreement.

 

20

 

“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, the Interest Reserve Account and the Swap Termination Payment
Account (to the extent established in accordance with Section 7.12), 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 provisions hereof relating to such perfection or effect of perfection or
non-perfection or priority or availability of such remedy.

 

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

 

“Underwriters” has the meaning set forth
in the Underwriting Agreement.

 

“Underwriting Agreement” means the
Underwriting Agreement, dated
[                ],
by and among the Trust Depositor, the Seller and the Underwriters.

 

“United States” means the United States
of America.

 

21

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE TWO

 

TRANSFER
OF CONTRACTS

 

Section 2.01.        Closing.  (a)  On the Closing Date, the Trust
Depositor shall transfer, assign, set over and otherwise convey to the Trust by
execution of an assignment substantially in the form of Exhibit A
hereto, without recourse other than as expressly provided herein, for a
purchase price in cash of $[      ] (less fees
and expenses in connection with the offering and sale of the Class A Notes
and certain deposits to the Reserve Fund on the Closing Date) and the Trust’s
issuance of the Class B Notes, Class C Notes and Class D Notes
to the Trust Depositor, (i) all the right, title and interest of the Trust
Depositor in and to the Contracts listed on the List of Contracts delivered on
the Closing Date (including, without limitation, all security interests and all
rights to receive payments which are collected pursuant thereto after the
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 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 

 

22

 

agreements, extended service
contracts or other repair agreements and other items financed under such
Contracts and (x) all proceeds and products of the foregoing (the property
in clauses (i)-(x) above, being the “Trust Corpus”).  Although the Trust Depositor and the Owner
Trustee agree that such transfer is intended to be a transfer of ownership of
the Trust Corpus, rather than the granting of a security interest to secure a
borrowing, and that the Trust Corpus shall not be property of the Trust
Depositor, in the event such transfer is deemed to be of a mere security
interest to secure a borrowing, the Trust Depositor shall be deemed to have
granted the Trust a perfected first priority security interest in such Trust
Corpus and this Agreement shall constitute a security agreement under
applicable law.

 

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

 

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

 

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

 

(c)           Opinions of counsel for the Seller and the Trust Depositor
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.

 

23

 

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

 

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

 

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

 

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

 

(l)            A fully executed Transfer and Sale Agreement.

 

(m)          A fully executed Trust Agreement.

 

(n)           A fully executed Administration Agreement.

 

(o)           A fully executed Indenture.

 

(p)           A fully executed Interest Rate Swap Agreement.

 

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

 

24

 

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 Notes
will be rated at least their respective ratings as of the Closing Date by such
Rating Agency;

 

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

 

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

 

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

 

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

 

25

 

(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 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 

 

26

 

and warranties set forth or referred to in this Section shall
survive delivery of the Contract Files to the Owner Trustee or any custodian.

 

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

 

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

 

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

 

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

 

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

 

27

 

consummation
of the transactions contemplated hereby and thereby, will not violate any
provision of any existing law or regulation or any order or decree of any court
or of any Federal or state regulatory body or administrative agency having
jurisdiction over the Trust Depositor or any of its properties or the Articles
of Incorporation or Bylaws of the Trust Depositor, or constitute a material
breach of any mortgage, indenture, contract or other agreement to which the
Trust Depositor is a party or by which the Trust Depositor or any of the Trust
Depositor’s properties may be bound, or result in the creation or imposition of
any security interest, lien, charge, pledge, preference, equity or encumbrance
of any kind upon any of its properties pursuant to the terms of any such
mortgage, indenture, contract or other agreement, other than as contemplated by
the Transaction Documents.

 

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

 

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

 

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

 

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

 

28

 

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

 

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

 

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

 

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

 

ARTICLE FOUR

 

PERFECTION
OF TRANSFER AND PROTECTION OF SECURITY INTERESTS

 

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

 

(b)           The Servicer agrees
to maintain the related Contract Files at its offices 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 

 

29

 

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 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, 

 

30

 

Certificateholder, the Owner Trustee or the Indenture Trustee.  The Trustees shall have no duty to monitor or
otherwise oversee the Servicer’s performance as custodian hereunder.

 

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

 

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

 

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

 

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

 

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 

 

31

 

appointed the servicer hereunder until such
time as any Service Transfer may be effected under Article VIII.

 

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

 

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

 

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

 

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

 

Section 5.05.        Trust Accounts.  (a) On or before the Closing Date, the
Trust Depositor shall establish the Trust Accounts, each with and in the name
of the Indenture Trustee for the benefit of the Noteholders and the Swap
Counterparty.  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 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;

 

32

 

(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 received in respect of interest, dividends,
gains, income and earnings on investments of funds in the Trust Accounts
(except the Reserve Fund) as contemplated herein;

 

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

 

(ix)           All Net Swap Receipts and Swap Termination Payments
received by it under the Interest Rate Swap Agreement.

 

(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 “Prime-1” by Moody’s and “A-1” by Standard & Poor’s.

 

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

 

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

 

33

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

34

 

(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 D 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 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 

 

35

 

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

 

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

 

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

 

ARTICLE SIX

 

THE
TRUST DEPOSITOR

 

Section 6.01.        Covenants of the Trust Depositor.

 

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

 

(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 

 

36

 

“substantive
consolidation” analysis), in each case substantially similar to such terms and
conditions applicable to the Trust Depositor hereunder and under the other
Transaction Documents.

 

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

 

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

 

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

 

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

 

37

 

(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 as a result of or
relating to the transactions contemplated herein and in the other Transaction
Documents, including any sales, gross receipts, gross margin, general
corporation, tangible personal property, Illinois personal property replacement
privilege or license taxes (but, in the case of the Issuer, not including any
taxes asserted with respect to, and as of the date of, the transfer of the
Contracts to the Issuer or the issuance and original sale of the Securities, or
federal or other income taxes arising out of distributions on the Certificate
or the Notes) and costs and expenses in defending against the same.

 

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

 

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

 

The
Trust Depositor shall be liable directly to and will indemnify any injured
party or any other creditor of the Trust for all losses, claims, damages,
liabilities and expenses of the Trust to the extent that Trust Depositor would
be liable if the Trust were a partnership under the Delaware Revised Uniform
Limited Partnership Act in which Trust Depositor were a general partner; provided, however, that Trust 

 

38

 

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 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

 

39

 

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

 

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

 

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

 

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 

 

40

 

Depositor, Trustees, Servicer, or any of their respective Affiliates in
the event that amounts available under Section 7.05(a) are
insufficient for payment of the Indenture Trustee’s Fee and the Monthly
Servicing Fee.

 

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

 

(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 (or, in the case of the termination of the Funding
Period pursuant to clause (a) of the definition thereof, on the Business
Day prior to the date of such termination) 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)(vii) 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
[        ] – The Bank of New York
Mellon 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(b) 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 

 

41

 

both
(i) and (ii), and (iv) all amounts referred to in clause (ii) have
been applied, then any amounts remaining in the Interest Reserve Account shall
be allocated and distributed to the Trust Depositor; provided that,
notwithstanding the foregoing, on the date on which the Funding Period
terminates pursuant to clause (a) of the definition thereof, any amounts
remaining in the Interest Reserve Account (other than the amount specified in
respect of Carrying Charges in accordance with Section 7.03(b)) shall be
released to the Trust Depositor on such date.

 

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:

 

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, third, any remaining amount shall be paid to the Class A-3
Noteholders until the Class A-3 Notes are paid in full, fourth, any
remaining amount shall be paid to the Class A-4 Noteholders until the Class A-4
Notes are paid in full, fifth, any remaining amount shall be paid to the Class B
Noteholders until the Class B Notes are paid in full, sixth, any remaining
amount shall be paid to the Class C Noteholders until the Class C
Notes are paid in full and seventh, any remaining amount shall be paid to the Class D
Noteholders until the Class D Notes are paid in full;

 

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

 

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

 

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

 

(iv)         to the Swap Counterparty, any Net Swap Payment,

 

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

 

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

 

42

 

to the Class A-3 Noteholders (pro rata, to
the Class A-3a Noteholders and the Class A-3b Noteholders) until the Class A-3
Notes have been paid in full and, fourth, to the Class A-4 Noteholders
until the Class A-4 Notes have been paid in full;

 

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

 

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

 

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

 

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

 

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

 

(xii)         to the Swap Counterparty, any unpaid Subordinated Swap
Termination Payment; and

 

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

 

43

 

Distribution Account shall be applied to the Class A-1
Notes, the Class A-2 Notes, Class A-3 Notes (pro rata,
to the Class A-3a Noteholders and the Class A-3b Noteholders) and the
Class A-4 Notes, pro rata, on
the basis of the Note Interest Distributable Amount for each such Class of
Notes and (ii) to the Swap Counterparty, any unpaid Senior Swap
Termination Payment;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

44

 

(4)           to the Class D Notes, until the outstanding principal
balance of the Class D Notes has been paid in full;

 

(viii)        to the Swap Counterparty, any unpaid
Subordinated Swap Termination Payment; and

 

(ix)           to the Holder of the Certificate.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

45

 

(vii)         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 D Noteholders;

 

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

 

(ix)           to the Swap Counterparty, any unpaid Subordinated
Swap Termination Payment; and

 

(x)            to the Holder of the Certificate.

 

Section 7.06.          Reserve Fund.

 

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

 

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

 

46

 

(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
[        ] — The Bank of New York
Mellon Trust Company, N.A., as Indenture Trustee” (such account
being the “Pre-Funding Account”).

 

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

 

(c)           If (x) the
Pre-Funded Amount has not been reduced to zero on the Distribution Date on
which the Funding Period ends (or, if the Funding Period does not end on a
Distribution Date, on the first Distribution Date following the end of the
Funding Period) or (y) the Pre-Funded Amount has been reduced to $150,000
or less on any Determination Date, in either case after giving effect to any
reductions in the Pre-Funded Amount on such Distribution Date or Determination
Date pursuant to paragraph (b) above, the Trust Depositor shall
instruct the 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, then for payment of principal of
the Class A-3 Notes up to the Outstanding Amount thereof, then for payment
of principal of the Class A-4 Notes up to the Outstanding Amount thereof,
then for payment of principal of the Class B Notes up to the Outstanding
Amount thereof and then for payment of principal of the Class C 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, not
later than two Business Days prior to the first Distribution Date after the
last day of the calendar month in which the Seller becomes aware or receives 

 

47

 

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

 

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

 

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

 

Section 7.11.        Purchase
of Contracts for Breach of Servicing Obligations.  Upon a discovery by the Servicer or the
Trustees of a breach of any of the covenants of the Servicer set forth in Section 5.02,
5.06 or 5.09 that materially adversely affects the Trust’s interest in a
Contract (without regard to the benefits of the Reserve Fund), the party
discovering the breach shall give prompt written notice to the other parties; provided, that the Trustees shall have no duty or obligation
to inquire or to investigate the breach by the Servicer of any of such
covenants.  The Servicer, in accordance
with this Section 7.11, shall purchase such Contract at its Purchase
Price, two Business Days prior to the first Distribution Date after the last
day of the calendar month in which the Servicer becomes aware, or receives
written notice from 

 

48

 

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.

 

Section 7.12.        Interest Rate Swap Agreement.

 

(a)           The Issuer shall enter into
the Interest Rate Swap Agreement with the Swap Counterparty on the Closing
Date.  The Issuer shall deposit Net Swap
Receipts into the Note Distribution Account to be included as Available Monies
on the related Distribution Date. 
Subject to the requirements of this Section 7.12, the Issuer may
from time to time enter into one or more Replacement Interest Rate Swap
Agreements in the event that the Interest Rate Swap Agreement is terminated due
to certain “termination events” or “events of default” (each as defined in the
Interest Rate Swap Agreement) prior to its scheduled expiration and in
accordance with the terms of such Interest Rate Swap Agreement.  Other than any Replacement Interest Rate Swap
Agreement entered into pursuant to this Section 7.12(a), the Issuer may
not enter into any additional interest rate swap agreements.

 

(b)           In the event of any early
termination of the Interest Rate Swap Agreement, (i) upon written
direction and notification of such early termination, the Indenture Trustee
shall establish the Swap Termination Payment Account and (ii) any Swap
Termination Payments received from the Swap Counterparty will be remitted to
the Swap Termination Payment Account. 
Any Swap Replacement Proceeds received from any Replacement Swap
Counterparty pursuant to Section 7.12(c) will be remitted to the Swap
Termination Payment Account for payment of any Swap Termination Payment owed by
the Issuer to the Swap Counterparty.  To
the extent not fully paid from Swap Replacement Proceeds, any Swap Termination
Payment owed by the Issuer to the Swap Counterparty under the Interest Rate
Swap Agreement shall be payable to the Swap Counterparty in installments made
on each following Distribution Date until paid in full in accordance with the
order of priority specified in Section 7.05.

 

(c)           Following the early
termination of the Interest Rate Swap Agreement due to an “event of default” or
“termination event” (each as defined in the Interest Rate Swap Agreement) and
in accordance with the terms of such Interest Rate Swap Agreement, the Issuer
shall promptly enter into a Replacement Interest Rate Swap Agreement to the
extent possible and practicable using funds available in the Swap Termination
Payment Account.

 

(d)           To the extent that the funds
available in the Swap Termination Payment Account exceed the costs of entering
into a Replacement Interest Rate Swap Agreement, the amounts in the Swap
Termination Payment Account (other than funds used to pay the costs of entering
into a Replacement Interest Rate Swap Agreement, if applicable) shall be
allocated in accordance with the order of priority specified in Section 7.05
on the following Distribution Date.  In
any other situation, amounts on deposit in the Swap Termination Payment Account
at any time shall be invested in Eligible Investments and on each Distribution
Date after the creation of a Swap Termination Payment Account, the funds
therein shall be used to cover any shortfalls in the amounts payable under
clauses (i) through (x) of Section 7.05(a), under Section 7.05(b),
or under Section 7.05(c); provided, that
in no event will the amount withdrawn 

 

49

 

from
the Swap Termination Payment Account on such Distribution Date exceed the
amount of Net Swap Receipts that would have been required to be paid on such
Distribution Date under the terminated Interest Rate Swap Transaction had there
been no termination of such transaction.  Any amounts remaining in the Swap Termination
Payment Account after payment in full of the Class C Notes shall be
included in Available Monies and allocated in accordance with the order of
priority specified in Section 7.05 on the following Distribution Date.

 

(e)           If the Swap Counterparty is
required to post collateral under the terms of the Interest Rate Swap
Agreement, upon written direction and notification of such requirement the
Indenture Trustee shall establish the Swap Collateral Account (the “Swap Collateral Account”) over which the Indenture Trustee
shall have exclusive control and the sole right of withdrawal, and in which no
Person other than the Indenture Trustee, the Swap Counterparty and the
Noteholders shall have any legal or beneficial interest. The Indenture Trustee
shall deposit all “Eligible Collateral” (as defined in the Interest Rate Swap
Agreement) received from the Swap Counterparty into the Swap Collateral
Account.  Any and all funds at any time
on deposit in, or otherwise to the credit of, the Swap Collateral Account shall
be held in trust by the Indenture Trustee for the benefit of the Swap
Counterparty and the Noteholders.  The
only permitted withdrawal from or application of funds on deposit in, or
otherwise to the credit of, the Swap Collateral Account shall be (i) to
pay any Net Swap Receipts or Swap Termination Payments owed to the Issuer by
the Swap Counterparty in accordance with the terms of the Interest Rate Swap
Agreement or (ii) to return collateral to the Swap Counterparty when and
as required by the Interest Rate Swap Agreement.

 

(f)            The Issuer hereby grants to
the Indenture Trustee for the benefit of the Noteholders and the Swap
Counterparty a security interest in the Swap Collateral Account and all funds
in the Swap Collateral Account and the proceeds thereof to secure the payment
of interest on and principal of the Notes and the Swap Termination Payments to
the Swap Counterparty under the Interest Rate Swap Agreement, and the Indenture
Trustee shall have all of the rights of a secured party under the UCC with
respect thereto.  If for any reason the
Swap Collateral Account is no longer an Eligible Account, the Indenture Trustee
shall promptly cause the Swap Collateral Account to be moved to another
institution or otherwise changed so that the Swap Collateral Account becomes an
Eligible Account.

 

ARTICLE
EIGHT

 

EVENTS OF TERMINATION;
SERVICE TRANSFER

 

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

 

(a)           Any failure by the Servicer
to make any payment or deposit required to be made under the Notes hereunder or
in the Transfer and Sale Agreement (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 a Servicing Officer discovers
such failure or the Indenture Trustee provides written notice of such failure
to the Servicer;

 

(b)           Failure on the Servicer’s
part to observe or perform in any material respect any covenant or agreement in
this Agreement or in the Transfer and Sale Agreement  (other than a covenant or agreement, the
breach of which is specifically addressed elsewhere in this Section) which
failure shall (i) materially and adversely affect the rights of
Noteholders and (ii) continue unremedied for a period of 60 days after the
date on which written notice of such failure, requiring the same to be
remedied, shall have been given (A) to the Servicer by the Owner Trustee
or the Indenture Trustee or (B) to the Servicer, 

 

50

 

and
to the Indenture Trustee by the Holders of Notes, evidencing not less than 25%
of the Outstanding Amount of the Notes;

 

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

 

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

 

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

 

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

 

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

 

(b)           Upon receipt of the notice
required by Section 8.03(a) (or, if later, on a date designated
therein), all rights, benefits, fees, indemnities, authority and power of the
Servicer under this Agreement, whether with respect to the Contracts, the
Contract Files or otherwise, shall pass to and be vested in the Indenture
Trustee (the “Successor Servicer”) pursuant to
and under this Section 8.03; and, without limitation, the Successor
Servicer is authorized and empowered to execute and deliver on behalf of the
Servicer, as attorney-in-fact or otherwise, any and all documents and other
instruments, and to do any and all acts or things necessary or appropriate to
effect the purposes of such notice of termination.  The Servicer agrees to cooperate with the
Successor Servicer in effecting the termination of the responsibilities and
rights of the Servicer hereunder, including, without limitation, the transfer
to the Successor Servicer for administration by it of all cash amounts which
shall at the time be held by the Servicer for deposit, or have been deposited
by the Servicer, in the Collection Account, or for its own account in
connection with its services hereafter or thereafter received with respect to
the Contracts.  The Servicer shall
transfer to the Successor Servicer all records held by the Servicer relating to
the Contracts 

 

51

 

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

 

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

 

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

 

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

 

Section 8.07.        Database File.  The Servicer will provide the Successor
Servicer with a magnetic tape (in a format reasonably acceptable to the
Indenture Trustee and the Servicer) containing the database file for each
Contract (i) as of the Initial Cutoff Date, (ii) the Subsequent
Cutoff Dates, (iii) thereafter, as 

 

52

 

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) 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 

 

53

 

the
Transaction Documents and the interests of the Noteholders under the
Indenture.  In such event, the legal
expenses and costs of such action and any liability resulting therefrom shall
be expenses, costs and liabilities of the Servicer and the Servicer will not be
entitled to be reimbursed therefor.

 

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

 

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

 

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

 

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.

 

54

 

(a)  The Servicer will:

 

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

 

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

 

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

 

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

 

Section 9.05.        Monthly Reports to Noteholders
and the Swap Counterparty.  (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, to forward or otherwise make available via internet
to each Noteholder and the Swap Counterparty 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;

 

55

 

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

 

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

 

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

 

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

 

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

 

(viii)       the amount of any Net Swap Payments and
Net Swap Receipts;

 

(ix)         the amount of any unpaid Senior Swap Termination Payment and
Subordinated Swap Termination Payment;

 

(x)          LIBOR for such Distribution Date and the interest rate on
each Class of Floating Rate Notes;

 

(xi)         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;

 

(xii)        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;

 

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

 

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

 

(xv)        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);

 

(xvi)       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;

 

(xvii)      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;

 

56

 

(xviii)     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;

 

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

 

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

 

(xxi)        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

 

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

 

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

 

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

 

Section 9.06.        Regulation
AB.

 

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

 

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

 

(a)           As soon as available but no later
than March 15 of each calendar year for so long as the Issuer is required
to report under the Exchange Act, commencing in 2009, the Indenture Trustee
shall:

 

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

 

57

 

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

 

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

 

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

 

Section 9.08.        Exchange
Act Reporting.

 

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

 

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

 

(c)           Form 10-K Filings.  So long as the Issuer is required to report
under the Exchange Act, no later than March 15 of each year, commencing in
2009, the Indenture Trustee and the Owner Trustee shall notify the Servicer of
any Form 10-K Disclosure Item known to any Responsible Officer thereof or
relating to the Indenture Trustee or Owner Trustee, as applicable, together
with a description of any such Form 10-K Disclosure Item in form and
substance reasonably acceptable to the Servicer.

 

58

 

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

 

(b)           This
Agreement may also be amended from time to time by the Trust Depositor, the
Servicer, the Indenture Trustee and the Owner Trustee on behalf of the Issuer,
with the consent of the Required Holders and, to the extent the Swap
Counterparty is materially and adversely affected thereby, the Swap
Counterparty (which consent shall not be unreasonably withheld or delayed), 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, the Swap Counterparty 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 

 

59

 

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 amendment or consent pursuant to this Section 11.01,
the Indenture Trustee shall furnish written notification of the substance of
such amendment or consent, together with a copy thereof, to each Rating Agency
and the Swap Counterparty.

 

(d)           Promptly
after the execution of any such amendment or consent, the Owner Trustee and the
Indenture Trustee, as the case may be, shall furnish written notification of
the substance of such amendment or consent to each Noteholder and the Swap
Counterparty.  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 and, if applicable, the Swap
Counterparty of the execution thereof shall be subject to such reasonable
requirements as the Owner Trustee or the Indenture Trustee may prescribe.

 

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

 

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

 

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, the Swap
Counterparty 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.

 

60

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 11.04.      Notices.  All notices, demands, certificates, requests
and communications hereunder (“notices”) shall be in writing and shall be
effective (a) upon receipt when sent through the 

 

61

 

U.S. mails, registered or certified mail, return receipt requested,
postage prepaid, with such receipt to be effective the date of delivery
indicated on the return receipt, or (b) one Business Day after delivery to
an overnight courier, or (c) on the date personally delivered to an
Authorized Officer of the party to which sent, or (d) on the date
transmitted by legible telecopier or electronic mail transmission with a
confirmation of receipt, in all cases addressed to the recipient as follows:

 

	
   

  	
  (i)

  	
   

  	
  If
  to the Servicer or Seller:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Harley-Davidson
  Credit Corp.

  
	
   

  	
   

  	
   

  	
  222
  West Adams Street, Suite 2000

  
	
   

  	
   

  	
   

  	
  Chicago,
  Illinois 60606

  
	
   

  	
   

  	
   

  	
  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.

  
	
   

  	
   

  	
   

  	
  222
  West Adams Street, Suite 2000

  
	
   

  	
   

  	
   

  	
  Chicago,
  Illinois 60606

  
	
   

  	
   

  	
   

  	
  Attention:
  Perry A. Glassgow

  
	
   

  	
   

  	
   

  	
  Telecopier
  No.:  (312) 368-4372

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (iii)

  	
   

  	
  If
  to the Indenture Trustee:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

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

  
	
   

  	
   

  	
   

  	
  2 North LaSalle Street

  
	
   

  	
   

  	
   

  	
  Suite 1020

  
	
   

  	
   

  	
   

  	
  Chicago, Illinois 60602

  
	
   

  	
   

  	
   

  	
  Attention:
  Corporate Trust Administration

  
	
   

  	
   

  	
   

  	
  Telecopier
  No.:  (312) 827-8562

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (iv)

  	
   

  	
  If
  to the Owner Trustee:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Wilmington
  Trust Company

  
	
   

  	
   

  	
   

  	
  Rodney
  Square North

  
	
   

  	
   

  	
   

  	
  1100
  North Market Street

  
	
   

  	
   

  	
   

  	
  Wilmington,
  Delaware 19890-0001

  
	
   

  	
   

  	
   

  	
  Attention:
  Corporate Trust Administration

  
	
   

  	
   

  	
   

  	
  Telecopier
  No.: (302) 636-4140

  

 

62

 

	
   

  	
  (v)

  	
   

  	
  If
  to Moody’s:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Moody’s
  Investors Service, Inc.

  
	
   

  	
   

  	
   

  	
  7
  World Trade Center at 250 Greenwich Street

  
	
   

  	
   

  	
   

  	
  New
  York, New York 10007

  
	
   

  	
   

  	
   

  	
  Attention:
  ABS Monitoring Department

  
	
   

  	
   

  	
   

  	
  Telecopier
  No.: (212) 298-7139

  
	
   

  	
   

  	
   

  	
  Email:
  servicerreports@moodys.com

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (vi)

  	
   

  	
  If
  to Standard & Poor’s:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Standard & Poor’s Ratings Services, a

  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:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  At
  the address set forth in the Underwriting Agreement

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (viii)

  	
   

  	
  If
  to the Swap Counterparty:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  At
  the address set forth in the Interest Rate Swap Agreement

  

 

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

 

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

 

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

 

Section 11.07.      Third Party Beneficiaries.  The Swap Counterparty shall be a third-party
beneficiary to the provisions of this Agreement to the extent of any rights
specified in this Agreement.  Except as
otherwise specifically provided herein, no other third party shall be deemed a
third party beneficiary of this Agreement, and specifically that the Obligors
are not third party beneficiaries of this Agreement.

 

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

 

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

 

63

 

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 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 

 

64

 

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

 

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

 

[signature page follows]

 

65

 

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 [        ]

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  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 MELLON TRUST COMPANY,

  N.A., not in its individual capacity but solely as Indenture

  Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Printed
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
								

 

1

 

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 Mellon
Trust Company, N.A., as Indenture Trustee and Harley-Davidson Motorcycle Trust
[        ] (the “Trust”), as assignee thereunder, the undersigned does hereby
sell, transfer, convey and assign, set over and otherwise convey to the Trust (i) all
the right, title and interest of the Trust Depositor in and to the Contracts
listed on the List of Contracts delivered on the Closing Date (including,
without limitation, all security interests and all rights to receive payments
which are collected pursuant thereto after the Cutoff Date, including any
liquidation proceeds therefrom, but excluding any rights to receive payments
which were collected pursuant thereto on or prior to the Cutoff Date), (ii) all
rights of the Trust Depositor under any 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 Three of
the Sale and Servicing Agreement and no others.

 

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

 

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

 

	
   

  	
  HARLEY-DAVIDSON
  CUSTOMER FUNDING CORP.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Printed
  Name:

  
	
   

  	
  Title:

  

 

1

 

Exhibit B

 

[Form of Closing Certificate of Trust Depositor]

 

Harley-Davidson
Customer Funding Corp.

 

Officer’s Certificate

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

B-1

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

*    *    *   
*

 

B-2

 

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

 

 

	
   

  	
  By:

  	
   

  
	
   

  	
  Printed
  Name:

  
	
   

  	
  Title:

  

 

 

Exhibit C

 

[Form of Closing Certificate of Servicer/Seller]

 

HARLEY-DAVIDSON
CREDIT CORP.

 

Officer’s Certificate

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

C-1

 

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

 

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

 

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

 

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

 

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

 

(11)         Schedule A hereto contains a complete list of all
material agreements (other than the Transfer and Sale Agreement) or instruments
evidencing or governing indebtedness for money borrowed to which
Harley-Davidson Credit is a party or by which Harley-Davidson Credit or its
property is bound.  Neither Harley-Davidson
Credit’s transfer and assignment of the Contract Assets to CFC, CFC’s
concurrent transfer and assignment of the Trust Corpus to the Trust, nor the
concurrent pledge by the Trust of the Collateral to the Indenture Trustee, nor
the issuance and sale of the Notes or the Certificate or the entering into of
the Program Agreements, nor the consummation of any other of the transactions
contemplated therein, will violate or conflict with any agreement or instrument
to which Harley-Davidson Credit is a party or by which it is otherwise bound.

 

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

 

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

 

C-2

 

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

 

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

 

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

 

*   *   *  
*   *   *

 

C-3

 

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

 

 

	
   

  	
  By:

  	
   

  
	
   

  	
  Printed
  Name:

  
	
   

  	
  Title:

  

 

 

Exhibit D

 

[RESERVED]

 

D-1

 

Exhibit E

 

SERVICING CRITERIA TO BE ADDRESSED IN

INDENTURE TRUSTEE’S ASSESSMENT OF COMPLIANCE

 

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

 

Servicing Criteria

 

	
  Reference

  	
   

  	
  Criteria

  	
   

  	
  Applicable

  Servicing

  Criteria

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  General Servicing Considerations

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(1)(i)

  	
   

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

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(1)(ii)

  	
   

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

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(1)(iii)

  	
   

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

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(1)(iv)

  	
   

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

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Cash Collection and Administration

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(2)(i)

  	
   

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

  	
   

  	
  ü (2)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(2)(ii)

  	
   

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

  	
   

  	
  ü

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(2)(iii)

  	
   

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

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(2)(iv)

  	
   

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

  	
   

  	
  ü

  

 

(1)                          Each Assessment of compliance delivered by
the Indenture Trustee shall be made 

 

E-1

 

only toward such portion(s) of servicing
criteria applicable to the Indenture Trustee and not such other portion(s) applicable
to other persons.

 

(2)                          Solely with regard to deposits made by the
Indenture Trustee.

 

E-2

 

Servicing Criteria

 

	
   

  	
   

  	
   

  	
   

  	
  Applicable

  Servicing

  Criteria

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(2)(v)

  	
   

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

  	
   

  	
  ü (3)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(2)(vi)

  	
   

  	
  Unissued
  checks are safeguarded so as to prevent unauthorized access.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(2)(vii)

  	
   

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

  	
   

  	
   

  

 

	
  Reference

  	
   

  	
  Criteria

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Investor Remittances and Reporting

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(3)(i)

  	
   

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

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(3)(ii)

  	
   

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

  	
   

  	
  ü

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(3)(iii)

  	
   

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

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(3)(iv)

  	
   

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

  	
   

  	
  ü

  

 

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

 

E-3

 

	
   

  	
   

  	
  Pool Asset Administration

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(4)(i)

  	
   

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

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(4)(ii)

  	
   

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

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(4)(iii)

  	
   

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

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(4)(iv)

  	
   

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

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(4)(v)

  	
   

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

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(4)(vi)

  	
   

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

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(4)(vii)

  	
   

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

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(4)(viii)

  	
   

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

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(4)(ix)

  	
   

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

  	
   

  	
   

  

 

	
  Reference

  	
   

  	
  Criteria

  	
   

  	
   

  
	
  1122(d)(4)(x)

  	
   

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

  	
   

  	
   

  

 

E-4

 

	
   

  	
   

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

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(4)(xi)

  	
   

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

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(4)(xii)

  	
   

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

  	
   

  	
   

  

 

Servicing Criteria

 

	
   

  	
   

  	
   

  	
   

  	
  Applicable

  Servicing

  Criteria

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(4)(xiii)

  	
    

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

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(4)(xiv)

  	
    

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

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(4)(xv)

  	
    

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

  	
   

  	
   

  

 

E-5

 

Exhibit F

 

FORM OF
ANNUAL CERTIFICATION OF THE INDENTURE TRUSTEE

 

Dated:
                       

 

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

 

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

 

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

 

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

 

	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

F-1

 

Exhibit G

 

[Form of Certificate Regarding Reacquired Contracts]

 

Harley-Davidson Credit Corp.

 

Certificate Regarding Reacquired Contracts

 

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

 

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

 

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

 

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

 

	
   

  	
  Harley-Davidson
  Credit Corp.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Printed Name:

  
	
   

  	
  Title:

  

 

G-1

 

Exhibit H

 

[List of Contracts]

 

H-1

 

Exhibit I

 

[Form of Monthly Report to Noteholders and the Certificateholder]

 

[see attached]

 

 

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.

 

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

 

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

 

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

 

 

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

 

(h)                                 Lawful Assignment.  No
Contract was originated in or is subject to the laws of any jurisdiction whose
laws would make the sale, transfer and assignment of the Contract under 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.

 

(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
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 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 Notes on the Closing
Date or the related Subsequent Transfer Date, as applicable.

 

(b)                                 Characteristics.  The
Initial Contracts have the following characteristics: (i) all the
Contracts are secured by Motorcycles; (ii) no Initial Contract has a
remaining maturity of more than 84 months; and (iii) the final scheduled
payment on the Initial Contract with the latest maturity is due not later than
[                ].  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 not later than
[              ].  Approximately [      ]%
of the Principal Balance of the Initial Contracts as of the Initial Cutoff Date
is attributable to loans to purchase 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.

 

(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 [        ]% 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.

 

 

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

 

 

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 Mellon 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.

 

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 

 

L-1

 

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 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.

 

L-2

 

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:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  HARLEY-DAVIDSON CREDIT
  CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Printed Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  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
  MELLON TRUST COMPANY, N.A.

  
	
   

  	
   

  	
  not in its individual
  capacity but solely as Indenture Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Printed Name:

  
	
   

  	
   

  	
  Title:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00155-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00155-of-00352.parquet"}]]