Document:

EXHIBIT
10.28

 

 

 

TRANSFER AND SALE
AGREEMENT

by and between

HARLEY-DAVIDSON CREDIT CORP.,

as  Seller

and

HARLEY-DAVIDSON CUSTOMER FUNDING CORP.,

as Purchaser

Dated as of October 1, 2003

 

 

 

TABLE OF CONTENTS

 

	
  ARTICLE I  DEFINITION

  
	
   

  	
   

  
	
  SECTION 1.01.

  	
  GENERAL

  
	
   

  	
   

  
	
  ARTICLE II TRANSFER OF CONTRACTS;
  ASSIGNMENT OF AGREEMENT

  
	
   

  	
   

  
	
  SECTION 2.01.

  	
  CLOSING

  
	
  SECTION 2.02.

  	
  CONDITIONS TO THE CLOSING

  
	
  SECTION 2.03.

  	
  ASSIGNMENT
  OF AGREEMENT

  
	
  SECTION 2.04.

  	
  [INTENTIONALLY
  OMITTED]

  
	
   

  	
   

  
	
  ARTICLE III REPRESENTATIONS AND
  WARRANTIES

  
	
   

  	
   

  
	
  SECTION 3.01.

  	
  REPRESENTATIONS
  AND WARRANTIES REGARDING SELLER

  
	
  SECTION 3.02.

  	
  REPRESENTATIONS
  AND WARRANTIES REGARDING EACH CONTRACT

  
	
  SECTION 3.03.

  	
  REPRESENTATIONS
  AND WARRANTIES REGARDING THE CONTRACTS IN THE AGGREGATE

  
	
  SECTION 3.04.

  	
  REPRESENTATIONS
  AND WARRANTIES REGARDING THE CONTRACT FILES

  
	
   

  	
   

  
	
  ARTICLE IV PERFECTION OF TRANSFER
  AND PROTECTION OF SECURITY INTERESTS

  
	
   

  	
   

  
	
  SECTION 4.01.

  	
  CUSTODY
  OF CONTRACTS

  
	
  SECTION 4.02.

  	
  FILING

  
	
  SECTION 4.03

  	
  NAME CHANGE OR RELOCATION

  
	
  SECTION 4.04.

  	
  COSTS AND
  EXPENSES

  
	
  SECTION 4.05

  	
  SALE TREATMENT

  
	
  SECTION 4.06

  	
  SEPARATENESS FROM
  TRUST DEPOSITOR

  
	
  SECTION 4.07

  	
  PROTECTION OF SECURITY
  INTERESTS

  
	
   

  	
   

  
	
  ARTICLE V REMEDIES UPON
  MISREPRESENTATION

  
	
   

  	
   

  
	
  SECTION 5.01.

  	
  REPURCHASES
  OF CONTRACTS FOR BREACH OF REPRESENTATIONS AND WARRANTIES

  
	
  SECTION 5.02.

  	
  SELLER’S REPURCHASE OPTION

  
	
   

  	
   

  
	
  ARTICLE VI INDEMNITIES

  
	
   

  	
   

  
	
  SECTION 6.01.

  	
  SELLER
  INDEMNIFICATION

  
	
  SECTION 6.02.

  	
  LIABILITIES
  TO OBLIGORS

  
	
  SECTION 6.03.

  	
  TAX
  INDEMNIFICATION

  
	
  SECTION 6.04.

  	
  OPERATION OF INDEMNITIES

  
	
   

  	
   

  
	
  ARTICLE VII MISCELLANEOUS

  
	
   

  	
   

  
	
  SECTION 7.01.

  	
  PROHIBITED
  TRANSACTIONS WITH RESPECT TO THE TRUST

  
	
  SECTION 7.02.

  	
  MERGER
  OR CONSOLIDATION

  
	
  SECTION 7.03.

  	
  TERMINATION

  
	
  SECTION 7.04.

  	
  ASSIGNMENT OR DELEGATION
  BY SELLER

  
	
  SECTION 7.05.

  	
  AMENDMENT

  
	
  SECTION 7.06.

  	
  NOTICES

  
	
  SECTION 7.07.

  	
  MERGER
  AND INTEGRATION

  
	
  SECTION 7.08.

  	
  HEADINGS

  
	
  SECTION 7.09.

  	
  GOVERNING LAW

  

 

i

 

EXHIBITS

 

	
  Exhibit A

  	
  Form of Assignment

  
	
  Exhibit B

  	
  Form of Officer’s Certificate

  

 

ii

 

THIS AGREEMENT, dated as of October 1,
2003, 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 purchase of Contract Assets hereunder to convey all
right, title and interest in such Contract Assets to Harley-Davidson Motorcycle
Trust 2003-4 (the “Trust”) pursuant to the Sale and Servicing
Agreement dated as of October 1, 2003 by and among Trust Depositor,
Harley-Davidson Credit, as Servicer, the Trust, as issuer (the “Issuer”)
and BNY Midwest Trust Company, as Indenture Trustee (as amended, supplemented
or otherwise modified from time to time, the “Sale and Servicing Agreement”),
executed concurrently herewith;

 

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

 

ARTICLE I

DEFINITIONS

 

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

 

ARTICLE II

TRANSFER OF CONTRACTS; ASSIGNMENT OF AGREEMENT

 

Section 2.01.                         Closing.  Subject to and upon the terms and conditions
set forth in this Agreement, Seller hereby sells, transfers, assigns, sets over
and otherwise conveys to Trust Depositor, in consideration of Trust Depositor’s
payment of $300,000,002.53 in cash as the purchase price therefor, (i) all the
right, title and interest of Seller in and to the Contracts listed

 

 

on the 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 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 Seller under any physical damage or other individual insurance policy
(including a “forced placed” policy, if any) 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) 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
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.

 

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

 

2

 

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

 

(d)                                 A
letter or letters from Ernst & Young LLP, or another nationally recognized
accounting firm, addressed to Trust Depositor and the Issuer and the Trustees
and stating that such firm has reviewed a sample of the Contracts and performed
specific procedures for such sample with respect to certain contract terms and
identifying those 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 Trustee and the Issuer and the
Indenture Trustee may enforce directly without joinder of Trust Depositor, the
obligations of Seller set forth herein.

 

3

 

 Section 2.04.                      [Intentionally
Omitted].

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES

 

Seller makes the following representations and
warranties, on which Trust Depositor will rely in purchasing the Contract
Assets on the Closing 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, but shall survive the sale, transfer
and assignment of the Contracts to the Trust and the pledge of the Contracts to
the Indenture Trustee.  The repurchase
obligation of Seller set forth in Section 5.01 below and in
Section 7.08 of the Sale and Servicing Agreement constitutes the sole
remedy available for a breach of a representation or warranty of Seller set
forth in Section 3.02, 3.03 or 3.04 of this Agreement.

 

Section 3.01.                         Representations and Warranties
Regarding Seller.  Seller
represents and warrants, as of the execution and delivery of this Agreement and
as of the Closing Date, 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.

 

4

 

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

 

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

 

Section 3.02.                         Representations
and Warranties Regarding Each Contract. 
Seller represents and warrants as to each Contract as of the execution and
delivery of this Agreement and as of the Closing Date, that:

 

(a)                                  List
of Contracts.  The information set
forth in the List of Contracts is true, complete and correct in all material
respects as of the Cutoff Date.

 

(b)                                 Payments.  As of the Cutoff Date the most recent
scheduled payment with respect to any Contract either had been made or was not
delinquent for more than 30

 

5

 

days.  To the best of Seller’s knowledge, all
payments made on each Contract were made by the respective Obligor.

 

(c)                                  No
Waivers.  As of the Closing Date,
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.  As of the origination date of each Contract,
the related Motorcycle securing each Contract is covered by physical damage
insurance (i) in an amount not less than the value of the Motorcycle at the
time of origination of the Contract, (ii) naming Seller as a loss payee and
(iii) insuring against loss and damage due to fire, theft, transportation,
collision and other risks covered by comprehensive coverage, and all premiums
due on such insurance have been paid in full from the date of the Contract’s
origination.

 

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

 

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

 

6

 

(i)                                     Compliance
with Law.  None of the Contracts,
the origination of the Contracts by the dealers or Eaglemark Savings Bank, the
purchase of the Contracts by the Seller, the sale of the Contracts by the
Seller to the Trust Depositor or by the Trust Depositor to the Trust, or any
combination of the foregoing, violated at the time of origination or as of the
Closing Date, 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. 
Seller shall, for at least the period of this Agreement, maintain in its
possession, available for the Trust Depositor’s and the Trustees’  inspection, and shall deliver to Trust
Depositor or  the Trustee  upon demand, evidence of compliance with all
such requirements.

 

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

 

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

 

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

 

(m)                               Good
Title.  Each Contract was purchased
by Seller for value and taken into possession prior to the Cutoff Date in the
ordinary course of its business, without

 

7

 

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 to permit
Trust Depositor to transfer the same to the Issuer, and, as of the Closing
Date, the Issuer will have a first priority perfected security interest
therein.

 

(n)                                 No
Defaults.  As of the Cutoff Date, 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 Cutoff Date, no Motorcycle had been repossessed.

 

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

 

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

 

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

 

(r)                                    One
Original.  Each Contract is
evidenced by only one original executed Contract, which original has been
delivered to the Issuer or its designee on or before the Closing Date.

 

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

 

(t)                                    Lockbox
Bank.  The Lockbox Bank is the only
institution holding any Lockbox Account for receipt of payments from Obligors,
and all Obligors, and only such Obligors, have been instructed to make payments
to the Lockbox Account, 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.

 

8

 

(u)                                 Obligor
Bankruptcy.  At the Cutoff Date, no
Obligor was subject to a bankruptcy proceeding within the one year preceding
such Cutoff Date.

 

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

 

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

 

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

 

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

 

(a)                                  Amounts.  The sum of the aggregate Principal Balances
payable by Obligors under the Contracts as of the Cutoff Date equals or exceeds
the sum of the principal balance of  the
Class A-1 Notes, the Class A-2 Notes  and the Class B Notes on the Closing Date.

 

(b)                                 Characteristics.  The Contracts have the following
characteristics: (i) all the Contracts are secured by Motorcycles; (ii) no
Contract has a remaining maturity of more than 84 months; and (iii) the final
scheduled payment on the Contract with the latest maturity is due no later than
October 2010.  Approximately 77.59%
of the Principal Balance of the Contracts as of the Cutoff Date is attributable
to loans for purchases of new Motorcycles and approximately 22.41% is
attributable to loans for purchases of used Motorcycles.  No Contract was originated after the Cutoff
Date.  No Contract has a Contract Rate
less than 3.89%.  The first scheduled
payment date of the Contracts is due no later than January 2004.  Less than 0.01% of the Principal Balance of
the Contracts as of the 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,
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.

 

9

 

(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.

 

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

 

(g)                                 Delta
Loans.  No more than 11.00% of the
Principal Balance of the Contracts as of the Cutoff Date 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, that:

 

(a)                                  Possession.  Immediately prior to the Closing Date, the
Servicer will have possession of each original Contract and the related
complete Contract File, and there are and there will be no custodial agreements
relating to the same in effect.  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.

 

(b)                                 Bulk
Transfer Laws.  The transfer,
assignment and conveyance of the Contracts and the Contract Files by Seller
pursuant to this 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 in the custody of the Servicer 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, Seller
shall cause the UCC financing statement(s) referred to in Section 2.02(g)
hereof and in Section 2.02(g) of the Sale and Servicing Agreement to be
filed and from time to time Seller shall take and cause to be taken such
actions and execute such documents as are necessary or desirable or as Trust
Depositor or the Trust may reasonably request to perfect and protect the Trust
Depositor’s and the Trust’s ownership interest in the Contract Assets against
all other persons, including, without limitation,

 

10

 

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.

 

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 Trustees 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 for all purposes (including tax and financial accounting
purposes) as a sale and purchase on all of its relevant books, records,
financial statements and other applicable documents.

 

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

 

Section 4.07                            Protection of Security Interests.  The Seller agrees to deliver an Officer’s
Certificate to the Owner Trustee and the Indenture Trustee, as promptly as
practicable after the Closing Date, and in any event within 60 days thereof,
certifying that the Seller’s compliance officer has reviewed the original of
each Contract and each related Contract File, that each Contract and related
Contract File conforms in all material respects with the List of Contracts

 

11

 

and each such Contract File is complete, that each document required be
an original, and that the face of each original Contract has been stamped with
the following notation:

 

“This Contract/Note is
subject to a security interest granted to Harley-Davidson Motorcycle Trust
2003-4.  A UCC1 financing statement
covering this Contract/Note has been filed with the Secretary of State of the
State of Nevada.  Such lien will be released
only in connection with appropriate filings in such offices.  Consequently, potential purchasers of this
Contract/Note must refer to such filings to determine whether such lien has
been released.”

 

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

 

Section 5.02.                         Seller’s Repurchase Option.  On written notice to the Owner Trustee and
the Indenture Trustee at least 20 days prior to a Distribution Date, provided
the Pool Balance is then less than 10% of the Aggregate Principal Balance as of
the Cutoff Date, Seller may (but is not required to) repurchase from the Trust
on that Distribution Date all outstanding Contracts (and related Contract
Assets) at a price equal to the aggregate unpaid principal balance of the Notes
on the previous Distribution Date plus the aggregate of the Note Interest
Distributable

 

12

 

Amount for the current Distribution Date, the Reimbursement Amount (if
any) as well as accrued and unpaid Monthly Servicing Fees and Indenture Trustee
Fee to the date of such repurchase. 
Such price will be deposited in the Collection Account not later than
one Business Day before such Distribution Date, against the Trustees’ release
of the Contracts and Contract Files as described in Section 7.10 of the
Sale and Servicing Agreement.

 

ARTICLE VI

INDEMNITIES

 

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

 

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

 

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

 

13

 

Section 6.04.                         Operation of Indemnities.  Indemnification under this Article VI shall include, without
limitation, reasonable fees and expenses of counsel and expenses of
litigation.  If Seller has made any indemnity
payments to Trust Depositor or the Trustees pursuant to this Article VI
and Trust Depositor or the Trustees thereafter collects any of such amounts
from others, Trust Depositor or the Trustees will repay such amounts collected
to Seller, except that any payments received by Trust Depositor or the Trustees
from an insurance provider as a result of the events under which the Seller’s
indemnity payments arose shall be repaid prior to any repayment of the Seller’s
indemnity payment.

 

ARTICLE VII

MISCELLANEOUS

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

14

 

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

 

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

 

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

 

(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

 

15

 

transmission with a confirmation of receipt, in all cases addressed to
the recipient at the address for such recipient set forth in the Sale and
Servicing Agreement.

 

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

 

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

 

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

 

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

 

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

 

Section 7.10.                         No
Bankruptcy Petition.  The Seller
covenants and agrees that, prior to the date that is one year and one day after
the payment in full of all amounts owing in respect of all outstanding
Securities, as well as any other amounts distributable or payable from the
Trust 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]

 

16

 

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

 

	
   

  	
  HARLEY-DAVIDSON
  CUSTOMER FUNDING CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Perry A. Glassgow

  	
   

  
	
   

  	
   

  	
  Printed
  Name:  Perry A. Glassgow

  
	
   

  	
   

  	
  Title:
  Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  HARLEY-DAVIDSON CREDIT
  CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Perry A. Glassgow

  	
   

  
	
   

  	
   

  	
  Printed
  Name:  Perry A. Glassgow

  
	
   

  	
   

  	
  Title:
  Treasurer

  

 

Signature Page to
Transfer and

Sale Agreement

 

17

 

Exhibit
A

Transfer and Sale

Agreement

 

FORM OF
ASSIGNMENT

 

In accordance with the Transfer and Sale Agreement
(the “Agreement”)
dated as of October 1, 2003 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 Contracts listed on the 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 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 Seller
under any physical damage or other individual insurance policy (including a “forced
placed” policy, if any) 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 certain
Contracts, (vi) all rights (but not the obligations) of the Seller under any
motorcycle dealer agreements between the dealers (i.e. originators of the
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 October 1, 2003 made by and among the
undersigned, as servicer, the Trust Depositor, Harley-Davidson Motorcycle Trust
2003-4, as issuer, and BNY Midwest Trust Company, as indenture trustee.

 

A-1

 

IN WITNESS WHEREOF, the undersigned has caused this
Assignment to be duly executed this
         day of October 2003.

 

 

	
   

  	
  HARLEY-DAVIDSON CREDIT
  CORP.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Printed
  Name:  Perry A. Glassgow

  
	
   

  	
  Title:
  Treasurer

  
	
   

  

 

A-2

 

Exhibit B

Transfer and Sale

Agreement

FORM OF
OFFICER’S CERTIFICATE

 

(See Exhibit C to
the Sale and Servicing Agreement)EXHIBIT
10.29

 

 

 

SALE AND SERVICING
AGREEMENT

 

among

 

HARLEY-DAVIDSON
MOTORCYCLE TRUST 2003-4,

as Issuer,

 

HARLEY-DAVIDSON
CUSTOMER FUNDING CORP.,

as Trust
Depositor,

 

HARLEY-DAVIDSON
CREDIT CORP.,

as Servicer

 

and

 

BNY MIDWEST TRUST
COMPANY,

as Indenture Trustee

 

 

Dated as of
October 1, 2003

 

 

 

 

 

Table of Contents

 

	
  ARTICLE ONE  DEFINITIONS

  
	
  Section 1.01.

  	
  Definitions

  
	
  Section 1.02.

  	
  Usage of Terms

  
	
  Section 1.03.

  	
  Section References

  
	
  Section 1.04.

  	
  Calculations

  
	
  Section 1.05.

  	
  Accounting Terms

  
	
  ARTICLE TWO  TRANSFER OF CONTRACTS

  
	
  Section 2.01.

  	
  Closing

  
	
  Section 2.02.

  	
  Conditions to the
  Closing

  
	
  Section 2.03.

  	
  [Intentionally Omitted.]

  
	
  ARTICLE THREE  REPRESENTATIONS AND WARRANTIES

  
	
  Section 3.01.

  	
  Representations and
  Warranties Regarding the Trust Depositor

  
	
  Section 3.02.

  	
  Representations and
  Warranties Regarding the Servicer

  
	
  ARTICLE
  FOUR  PERFECTION OF TRANSFER AND
  PROTECTION OF SECURITY INTERESTS

  
	
  Section 4.01.

  	
  Custody of Contracts

  
	
  Section 4.02.

  	
  Filing

  
	
  Section 4.03.

  	
  Name Change or
  Relocation

  
	
  Section 4.04.

  	
  Costs and Expenses

  
	
  ARTICLE FIVE  SERVICING OF CONTRACTS

  
	
  Section 5.01.

  	
  Responsibility for
  Contract Administration

  
	
  Section 5.02.

  	
  Standard of Care

  
	
  Section 5.03.

  	
  Records

  
	
  Section 5.04.

  	
  Inspection

  
	
  Section 5.05.

  	
  Trust Accounts

  
	
  Section 5.06.

  	
  Enforcement

  
	
  Section 5.07.

  	
  Trustees to Cooperate

  
	
  Section 5.08.

  	
  Costs and Expenses

  
	
  Section 5.09.

  	
  Maintenance of
  Security Interests in Motorcycles

  
	
  Section 5.10.

  	
  Successor
  Servicer/Lockbox Agreements

  
	
  Section 5.11.

  	
  Separate Entity
  Existence

  
	
  ARTICLE SIX  THE TRUST DEPOSITOR

  
	
  Section 6.01.

  	
  Covenants of the Trust
  Depositor

  
	
  Section 6.02.

  	
  Liability of Trust
  Depositor; Indemnities

  
	
  Section 6.03.

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

  
	
  Section 6.04.

  	
  Limitation on
  Liability of Trust Depositor and Others

  
	
  Section 6.05.

  	
  Trust Depositor Not to
  Resign

  
	
  ARTICLE SEVEN  DISTRIBUTIONS; RESERVE FUND

  
	
  Section 7.01.

  	
  Monthly Distributions

  
	
  Section 7.02.

  	
  Fees

  
	
  Section 7.03.

  	
  Advances

  
	
  Section 7.04.

  	
  [Intentionally
  Omitted].

  
	
  Section 7.05.

  	
  Distributions;
  Priorities

  
	
  Section 7.06.

  	
  Reserve Fund

  
	
  Section 7.07.

  	
  [Intentionally
  Omitted].

  
	
  Section 7.08.

  	
  Reacquisition of
  Contracts for Breach of Representations and Warranties

  
	
  Section 7.09.

  	
  Reassignment of
  Reacquired Contracts

  
	
  Section 7.10.

  	
  Seller’s Reacquisition
  Option

  

 

i

 

	
  ARTICLE EIGHT  EVENTS OF TERMINATION; SERVICE TRANSFER

  
	
  Section 8.01.

  	
  Events of Termination

  
	
  Section 8.02.

  	
  Waiver of Event of
  Termination

  
	
  Section 8.03.

  	
  Service Transfer

  
	
  Section 8.04.

  	
  Successor Servicer to
  Act; Appointment of Successor Servicer

  
	
  Section 8.05.

  	
  Notification to
  Securityholders

  
	
  Section 8.06.

  	
  Effect of Transfer

  
	
  Section 8.07.

  	
  Database File

  
	
  Section 8.08.

  	
  Successor Servicer
  Indemnification

  
	
  Section 8.09.

  	
  Responsibilities of
  the Successor Servicer

  
	
  Section 8.10.

  	
  Limitation of Liability
  of Servicer

  
	
  Section 8.11.

  	
  Merger or
  Consolidation of Servicer

  
	
  Section 8.12.

  	
  Servicer Not to Resign

  
	
  Section 8.13.

  	
  Appointment of
  Subservicer

  
	
  ARTICLE NINE  REPORTS

  
	
  Section 9.01.

  	
  Monthly Reports

  
	
  Section 9.02.

  	
  Officer’s Certificate

  
	
  Section 9.03.

  	
  Other Data

  
	
  Section 9.04.

  	
  Annual Report of
  Accountants

  
	
  Section 9.05.

  	
  Annual Statement of
  Compliance from Servicer

  
	
  Section 9.06.

  	
  Monthly Reports to
  Noteholders

  
	
  ARTICLE TEN  TERMINATION

  
	
  Section 10.01.

  	
  Sale of Trust Assets

  
	
  ARTICLE ELEVEN  MISCELLANEOUS

  
	
  Section 11.01.

  	
  Amendment.

  
	
  Section 11.02.

  	
  Protection of Title
  to Trust

  
	
  Section 11.03.

  	
  Governing Law

  
	
  Section 11.04.

  	
  Notices

  
	
  Section 11.05.

  	
  Severability of
  Provisions

  
	
  Section 11.06.

  	
  Assignment

  
	
  Section 11.07.

  	
  Third Party
  Beneficiaries

  
	
  Section 11.08.

  	
  Counterparts

  
	
  Section 11.09.

  	
  Headings

  
	
  Section 11.10.

  	
  No Bankruptcy
  Petition; Disclaimer and Subordination

  
	
  Section 11.11.

  	
  Limitation of
  Liability of Owner Trustee and Indenture Trustee

  
	
  Section 11.12.

  	
  Nonconfidentiality
  of Tax Treatment and Tax Structure

  

 

ii

 

	
  EXHIBITS

  
	
   

  
	
  Exhibit
  A

  	
  Form
  of Assignment

  
	
  Exhibit B

  	
  Form of Closing Certificate of Trust
  Depositor

  
	
  Exhibit C

  	
  Form of Closing Certificate of
  Seller/Servicer

  
	
  Exhibit D

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

  
	
  Exhibit E

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

  
	
  Exhibit F

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

  
	
  Exhibit G

  	
  Form of Certificate Regarding Reacquired
  Contracts

  
	
  Exhibit H

  	
  List of Contracts

  
	
  Exhibit I

  	
  Form of Monthly
  Report to Noteholders and the Certificateholder

  
	
  Exhibit J

  	
  Seller’s Representations and Warranties

  
	
  Exhibit K

  	
  Lockbox Bank and Lockbox Account

  
	
  Exhibit L

  	
  Form of Contract Stamp

  

 

iii

 

SALE AND SERVICING AGREEMENT, dated as of October 1,
2003, among Harley-Davidson Motorcycle Trust 2003-4 (together with its
successors and assigns, the “Issuer” or the “Trust”), Harley-Davidson
Customer Funding Corp. (together with its successor and assigns, the “Trust
Depositor”), BNY Midwest Trust Company (solely in its capacity as
Indenture Trustee together with its successors and assigns, the “Indenture
Trustee”) and Harley-Davidson Credit Corp. (solely in its capacity
as Servicer together with its successor and assigns, “Harley-Davidson Credit” or
the “Servicer”).

 

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

 

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

 

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

 

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

 

ARTICLE ONE

 

DEFINITIONS

 

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

 

“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.  At the time of initial issuance of the
Securities, the initial aggregate principal amount of the Securities will equal
the initial Pool Balance.

 

1

 

“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 Reacquisition Prices for
Contracts reacquired by the Trust Depositor pursuant to Section 7.08, (iv) all
Advances made by the Servicer pursuant to Section 7.03, (v) the interest
component of all amounts paid by the Trust Depositor in connection with an
optional reacquisition of the Contracts pursuant to Section 7.10, and (vi) all
amounts received in respect of interest, dividends, gains, income and earnings
on investment of funds in the Trust Accounts as contemplated in Section
5.05(d).

 

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

 

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

 

 “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 October 16, 2003 relating to the Harley-Davidson Motorcycle
Trusts.

 

“Buell” means
Buell Motorcycle Company.

 

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 Day” means
the last day of each calendar month.

 

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

 

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

 

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

 

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

 

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

 

“Class A Note Percentage”
means, (i) for each Distribution Date to but excluding the Distribution Date on
which the principal amount of the Class A-2 Notes is reduced to zero, 95.00%;
(ii) for the Distribution Date on which the principal amount of the Class A-2
Notes is reduced to zero, such percentage which represents the fraction of the
Principal Distributable Amount necessary to reduce the principal amount of the
Class A-2 Notes to zero; and (iii) for each Distribution Date thereafter, 0%.

 

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

 

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

 

3

 

be less than the amount
that is necessary (after giving effect to other amounts to be deposited in the
Note Distribution Account for payment on the Class A-2 Notes on such
Distribution Date and allocable to principal) to reduce the outstanding
principal amount of the Class A-2 Notes to zero.

 

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

 

“Class
A-1 Final Distribution Date” means the April 2008 Distribution Date.

 

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

 

“Class A-1 Rate” means
1.47% per annum (computed on the basis of a 360-day year of twelve 30-day
months).

 

“Class
A-2 Final Distribution Date” means the April 2011 Distribution Date.

 

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

 

“Class A-2 Rate”
means 2.69% per annum (computed on the basis of a 360-day year of twelve 30-day
months).

 

“Class
B Final Distribution Date” means the April 2011 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 Note Monthly Principal Distributable Amount” means, with respect to any Distribution Date, the
Class B Note Percentage of the Principal Distributable Amount for such
Distribution Date.

 

“Class B Note Percentage” means, (i) for
each Distribution Date to but excluding the Distribution Date on which the
principal amount of the Class A-2 Notes is reduced to zero, 5.00%; and (ii) for
the Distribution Date on which the principal amount of the Class A-2 Notes is
reduced to zero, that percentage that equals 100% minus the Class A Note
Percentage for such Distribution Date; and (iii) 100% thereafter.

 

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

 

4

 

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

 

“Class B Rate” means
2.19% 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 October 24, 2003.

 

“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
transferred to the Trust by the Trust Depositor pursuant to this 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 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.

 

5

 

“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, and includes, without limitation, all related security
interests and any and all rights to receive payments which are collected
pursuant thereto after the Cutoff Date, but excluding any rights to receive
payments which are collected pursuant thereto on or prior to the Cutoff Date.

 

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

 

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

 

“Cumulative
Loss Ratio”
means, as of any Distribution Date, the fraction (expressed as a percentage)
computed by the Servicer by dividing (i) the aggregate Net Liquidation Losses
for all Contracts since the related Cutoff Date through the end of the related
Due Period by (ii)  the Principal
Balance of the Contracts as of the Cutoff Date.

 

“Cutoff
Date” means as of
the close of business on October 2, 2003.

 

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

 

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

 

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

 

“Delinquency
Ratio” means, for
any Distribution Date, the fraction (expressed as a percentage) computed by
dividing (a) the Delinquency Amount during the immediately

6

 

preceding Due Period by
(b) the Principal Balance of the Contracts as of the beginning of the related
Due Period.

 

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

 

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

 

“Distribution
Date” means the
fifteenth day of each calendar month during the term of this Agreement, or if
such day is not a Business Day, the next succeeding Business Day, with the
first such Distribution Date hereunder being November 17, 2003.

 

“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 Cutoff Date to and including October 31, 2003.

 

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

 

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

 

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

 

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

 

7

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“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.

 

8

 

“Indenture
Trustee Fee”
means, with respect to any Distribution Date, one-twelfth of the product
of 0.0035% and the Principal Balance of the Contracts as of the beginning of
the related Due 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
$187,000,000.

 

“Initial Class A-2 Note Balance” means
$98,000,000.

 

“Initial Class B Note Balance” means
$15,000,000.

 

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

 

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

 

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

 

9

 

“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 to be
deposited into the Collection Account on such Distribution Date pursuant to
Section 5.05(b).

 

“Issuer” means the
Harley-Davidson Motorcycle Trust 2003-4.

 

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

 

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

 

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

 

“List
of Contracts”
means the list identifying each Contract constituting part of the Trust Corpus,
which list shall consist of the List of Contracts reflecting the Contracts
transferred to the Trust on the Closing Date, and which list (a) identifies
each Contract and (b) sets forth as to each Contract (i) the Principal Balance
as of the 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 the
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, Servicer, the Trust Depositor,
Harley-Davidson Customer Funding Corp., The Bank of New York
(successor-in-interest to the corporate trust business of Harris Trust and
Savings Bank), BNY Midwest Trust Company and Bank One, National Association,
with respect to the Lockbox Account, unless such agreement shall be terminated
in accordance with its terms, in which event “Lockbox Agreement” shall
mean such other agreement, in form and substance acceptable to the
above-described parties.

 

10

 

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

 

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

 

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

 

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

 

“Monthly
Servicing Fee”
means, as to any Distribution Date, one-twelfth of the product of 1% and the Principal Balance of the
Contracts as of the beginning of the related Due Period or, with respect to the
first Distribution Date of November 17, 2003, as of the Cutoff Date.

 

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

 

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

 

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

 

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

 

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

 

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

 

11

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

12

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“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 Cutoff
Date, reduced by the sum of (x) all payments received by the Servicer as of
such date allocable to principal and (y) any Cram Down Loss in respect of such
Contract; provided,
however, that (i) if (x) a Contract is reacquired by the Seller
pursuant to Section 5.01 of the Transfer and Sale Agreement and Section 7.08
hereof because of a breach of representation or warranty, or if (y) the Seller
gives notice of its intent to reacquire the Contracts in connection with an
optional termination of the Trust pursuant to Section 5.02 of the Transfer and
Sale Agreement and Section 7.10 hereof, in each case the Principal Balance of
such Contract or Contracts shall be deemed as of the related Determination Date
to be zero for the Due Period in which such event occurs and

 

13

 

for each Due Period
thereafter and (ii) from and after the Due Period in which a Contract becomes a
Liquidated Contract, the Principal Balance of such Contract shall be deemed to
be zero; and (b) where the context requires, the aggregate of the Principal
Balances described in clause (a) for all such Contracts.

 

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

 

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

 

“Qualified
Eligible Investments” means Eligible Investments acquired by the Indenture Trustee in its
name and in its capacity as Indenture Trustee, which are held by the Indenture
Trustee in the Reserve Fund 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.

 

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

 

14

 

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

 

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

 

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

 

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

 

“Reserve Fund Initial Deposit”
means $3,000,000.00.

 

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

 

“Reserve
Fund Trigger Event”
means the occurrence with respect to any Distribution Date (i) the Average
Delinquency Ratio for such Distribution Date is equal to or greater than (a)
2.50% with respect to any Distribution Date which occurs within the period from
the Closing Date to, and inclusive of, the first anniversary of the Closing
Date, (b) 3.00% with respect to any Distribution Date which occurs within the
period from the day after the first anniversary of the Closing Date to, and
inclusive of, the second anniversary of the Closing Date, or (c) 3.50% with
respect to any Distribution Date which occurs within the period from the day
after the second anniversary of the Closing Date to, and inclusive of, the
third anniversary of the Closing Date or (d) 4.00% with respect to any
Distribution Date occurring after the third anniversary of the Closing Date;
(ii) the Average Loss Ratio for such Distribution Date is equal to or greater
than (a) 3.00% with respect to any Distribution Date which occurs within the
period from the Closing Date to, and inclusive of, the second anniversary of
the Closing Date or (b) 2.75% with respect to any Distribution Date which
occurs following the second anniversary of the Closing Date;  or (iii) the Cumulative Loss Ratio for such
Distribution Date is equal to or greater than (a) 1.25% with respect to any
Distribution Date which occurs within the period from the Closing Date to, and
inclusive of, the first anniversary of the Closing Date, (b) 2.00% with respect
to any Distribution Date which occurs within the period from the day after the
first anniversary of the Closing Date to, and inclusive of, the second
anniversary of the Closing Date, (c) 2.50% with respect to any Distribution
Date which occurs within the period from the day after the second anniversary
of the Closing Date to, and inclusive of, the third anniversary of the Closing
Date, or (d) 2.75% with respect to any Distribution Date occurring after the
third anniversary of the Closing Date.

 

15

 

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

 

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

 

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

 

“Securityholders”
means the Holders of the Notes.

 

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

 

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

 

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

 

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

 

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

 

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

 

16

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Supplement” means
the Prospectus Supplement dated October 16, 2003.

 

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

 

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

 

17

 

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

 

“Trust
Accounts” means,
collectively, the Collection Account, the Note Distribution Account and the
Reserve Fund, 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 October 1, 2003, between the Trust Depositor
and the Owner Trustee.

 

“Trust
Corpus” has the
meaning given to such term in Section 2.01(a) hereof.

 

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

 

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

 

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

 

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

 

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

 

“Underwriters” means Wachovia Capital Markets, LLC and
J.P. Morgan Securities Inc.

 

“United States”
means the United States of America.

 

18

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE TWO

 

TRANSFER OF
CONTRACTS

 

Section 2.01.        Closing.  (a)  On the Closing Date, the Trust Depositor
shall transfer, assign, set over and otherwise convey to the Trust by execution
of an assignment substantially in the form of Exhibit A hereto, without
recourse other than as expressly provided herein, (i) all the right, title and
interest of the Trust Depositor in and to the 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) 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

 

19

 

Depositor in the Lockbox, the Lockbox Account and the
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 (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 List of Contracts, certified by
the Chairman of the Board, President or any Vice President of the Trust
Depositor, together with an assignment substantially in the form of Exhibit A
hereto.

 

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

 

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

 

(d)           A letter or letters from Ernst &
Young LLP, or another nationally recognized accounting firm, addressed to the
Seller and the Underwriters and stating that such firm has reviewed a sample of
the Contracts and performed specific procedures for such sample with respect to
certain contract terms and which identifies those 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

 

20

 

and thereunder, certified
in each case by the Secretary or an Assistant Secretary of the Seller/Servicer and
the Trust Depositor.

 

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

 

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

 

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

 

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

 

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

 

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

 

(l)            A fully executed Transfer and Sale
Agreement.

 

(m)          A fully executed Trust Agreement.

 

(n)           A fully executed Administration
Agreement.

 

(o)           A fully executed Indenture.

 

Section 2.03.                [Intentionally Omitted.]

 

ARTICLE THREE

 

REPRESENTATIONS
AND WARRANTIES

 

The Seller under the Transfer and Sale Agreement has made
each of the representations and warranties set forth in Exhibit J hereto and has
consented to the assignment by the Trust

 

21

 

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

 

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

 

Section 3.01.        Representations and Warranties Regarding
the Trust Depositor.  By its execution of this Agreement, 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

 

22

 

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

 

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

 

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

 

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

 

(g)           State of Incorporation; Name; No
Changes.  The Trust
Depositor’s state of incorporation is the State of Nevada.  The Trust Depositor’s exact legal name is as
set

 

23

 

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, but shall survive the transfer and
assignment of the Contracts to the Trust.

 

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

 

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

 

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

 

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

 

24

 

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 in the
custody of the Servicer for the benefit of, and as agent for, the Trust as the
owner thereof and the Indenture Trustee.

 

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

 

25

 

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

 

(i)            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 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 the original of
the fully executed Contract and store such original Contract in a fireproof
vault except as may be necessary to conduct collection and servicing activities
in accordance with its customary practices and procedures;

 

(v)           stamp each Contract on both the first
and the signature page (if different) as promptly as practicable after the
Closing Date, and in any event within 60 days thereof, in the form attached
hereto as Exhibit
L; and

 

(vi)          as promptly as practicable after the
Closing Date, 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 it has conducted an inventory of the
Contract Files 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 note and security agreements.  The Servicer shall promptly report to the
Owner Trustee and the Indenture Trustee any failure by it 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

 

26

 

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

 

Section 4.02.        Filing. 
On or prior to the Closing Date, the Servicer shall cause the UCC
financing statement(s) referred to in Section 2.02(g) hereof to be filed and
from time to time the Servicer shall take and cause to be taken such actions
and execute such documents as are necessary or desirable or as the Owner
Trustee or Indenture Trustee may reasonably request to perfect and protect the
Trust’s first priority perfected interest in the Trust Corpus against all other
persons, including, without limitation, the filing of financing statements,
amendments thereto and continuation statements, the execution of transfer
instruments and the making of notations on or taking possession of all records
or documents of title.

 

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).

 

27

 

ARTICLE FIVE

 

SERVICING OF
CONTRACTS

 

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

 

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

 

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

 

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

 

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

 

28

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(c)           [Intentionally
Omitted].

 

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

 

29

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

30

 

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

 

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

 

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

 

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

 

(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.

 

31

 

(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 will notify the Trust Depositor on the next succeeding Distribution
Date by certification of a Servicing Officer (which certification shall include
a statement to the effect that all amounts received in connection with such
payments which are required to be deposited in the Collection Account pursuant
to Section 5.05 have been so deposited) and 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

 

32

 

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

 

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

 

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

 

ARTICLE SIX

 

THE TRUST DEPOSITOR

 

Section 6.01.        Covenants of
the Trust Depositor.

 

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

 

33

 

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

 

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

 

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

 

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

 

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

 

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

 

34

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

35

 

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

 

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

 

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

 

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

 

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

 

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

 

36

 

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

 

37

 

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

 

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

 

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

 

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

 

38

 

ARTICLE SEVEN

 

DISTRIBUTIONS;
RESERVE FUND

 

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

 

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

 

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

 

Section 7.03.        Advances. 
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)(i).

 

39

 

Section 7.04.        [Intentionally Omitted].

 

Section 7.05.        Distributions;
Priorities.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

40

 

(viii)        to the Holder of the Certificate.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(iii)          to the Holder of the Certificate.

 

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

 

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

 

41

 

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

 

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

 

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

 

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

 

(v)           to the Holder of the Certificate.

 

Section 7.06.        Reserve Fund.

 

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

 

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

 

42

 

(c)           The
Indenture Trustee shall at the written direction of the Servicer invest the
funds in the Reserve Fund in Qualified Eligible Investments.  Funds in the Reserve Fund shall be invested
in investments that are payable on demand or mature on or before the Business
Day prior to each Distribution Date. 
Once such funds are invested, the Indenture Trustee shall not change the
investment of such funds prior to maturity. 
Upon any such investment, the Indenture Trustee shall, consistent with
the definition of Qualified Eligible Investment herein, make an appropriate
notation of the security interest in such Qualified Eligible Investment on the
Indenture Trustee’s records, by book entry or otherwise.  All income and gain realized from any such
investments as well as any interest earned on Reserve Fund Deposits shall be
deposited and retained in the Reserve Fund (subject to Section 7.06(e)).  Losses, if any, realized on amounts in the
Reserve Fund invested pursuant to this paragraph shall first be credited
against undistributed investment earnings on amounts in the Reserve Fund
invested pursuant to this paragraph, and shall thereafter be deemed to reduce
the amount on deposit in the Reserve Fund. 
Neither the Trust Depositor nor the Indenture Trustee shall be liable
for the amount of any loss incurred in respect of any investment, or lack of
investment, of funds held in the Reserve Fund. 
All income or loss on funds held in the Reserve Fund shall be taxable to
the Trust Depositor.

 

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

 

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

 

Section 7.07.        [Intentionally Omitted].

 

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

 

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

 

43

 

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

 

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

 

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

 

ARTICLE EIGHT

 

EVENTS OF TERMINATION; SERVICE TRANSFER

 

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

 

44

 

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

 

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

 

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

 

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

 

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

 

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

 

(g)           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 or the Trust Depositor by
the Indenture Trustee, the circumstances or condition in respect of which such
representation, warranty or statement was incorrect shall not have been
eliminated or otherwise cured.

 

45

 

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

 

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

 

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

 

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

 

46

 

compensation therefor, the successor servicer shall be
entitled to receive reasonable compensation equal to the Monthly Servicing
Fee.  The Owner Trustee, Noteholders and
the Indenture Trustee and such successor shall take such action, consistent
with this Agreement, as shall be necessary to effectuate any such
succession.  To the extent the
terminated Servicer has made Advances, it shall be entitled to reimbursement of
the same notwithstanding its termination hereunder, to the same extent as if it
had continued to service the Contracts hereunder.

 

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

 

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

 

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

 

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

 

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

 

47

 

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

 

48

 

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

 

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

 

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

 

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

 

ARTICLE NINE

 

REPORTS

 

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

 

Section 9.02.        Officer’s
Certificate.  Each Monthly Report delivered pursuant to
Section 9.01 shall be accompanied by a certificate of a Servicing Officer substantially
in the

 

49

 

form of Exhibit C, certifying the accuracy of the
Monthly Report and that no Event of Termination or event that with notice or
lapse of time or both would become an Event of Termination has occurred, or if
such event has occurred and is continuing, specifying the event and its status.

 

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

 

Section 9.04.        Annual Report
of Accountants.

 

(a)           The
Servicer shall cause a firm of nationally recognized independent certified
public accountants (the “Independent  Accountants”), who may also
render other services to the Servicer, Harley-Davidson Financial or to the
Trust Depositor, to deliver to the Trustees, the Underwriters and each Rating
Agency, on or before March 31 (or 90 days after the end of the Servicer’s
fiscal year, if other than December 31) of each year, beginning on March 31,
2004, with respect to the twelve months ended the immediately preceding
December 31 (or other applicable date), a statement (the “Accountant’s  Report”)
addressed to the Board of Directors of the Servicer and to the Trustees to the
effect that such firm has audited the financial statements of Harley-Davidson
Financial and issued its report thereon and that such audit:

 

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

 

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

 

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

 

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

 

The Accountant’s Report
shall further state that:

 

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

 

50

 

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

 

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

 

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

 

Section 9.05.        Annual
Statement of Compliance from Servicer.  The Servicer
will deliver to the Trustees, the Underwriters and each of the Rating Agencies,
on or before January 31 of each year commencing January 31, 2004, an Officer’s
Certificate stating that (a) a review of the activities of the Servicer during
the prior calendar year and of its performance under this Agreement was made
under the supervision of the officer signing such certificate and (b) to such
officer’s knowledge, based on such review, the Servicer has fully performed all
its obligations under this Agreement, or, if there has been a default in the
performance of any such obligation, specifying each such default known to such
officer and the nature and status thereof. 
A copy of such certificate may be obtained (i) by any Noteholder by a
request in writing to the Indenture Trustee and (ii) by any Certificateholder
by a request in writing to the Owner Trustee.

 

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

 

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

 

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

 

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

 

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

 

51

 

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

 

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

 

(vii)         the remaining Principal Balance after
giving effect to the distribution of principal to each class of Notes to be
made on such Distribution Date;

 

(viii)        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;

 

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

 

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

 

(xi)           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);

 

(xii)          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 such Contracts
and the Reacquisition Price for such Contracts;

 

(xiii)         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;

 

(xiv)        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

 

(xv)         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

 

52

 

Noteholder of record at
any time during such year a report as to the aggregate amounts reported
pursuant to subsections (i), (ii), (iii) and (iv) of this Section, attributable
to such Noteholder.

 

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

 

ARTICLE TEN

 

TERMINATION

 

Section 10.01.      Sale of Trust
Assets.

 

(a)           [Intentionally
Omitted].

 

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

 

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

 

ARTICLE ELEVEN

 

MISCELLANEOUS

 

Section
11.01.      Amendment.

 

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

 

53

 

Rating Agency) to the
effect that such amendment will not cause its then-current rating on any Class
of Notes to be qualified, reduced or withdrawn.

 

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

 

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

 

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

 

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

 

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

 

54

 

Agency has previously
issued a rating as a result or such action, then the Specified Reserve Fund
Balance will be theretofore determined in accordance with such changed formula
or manner of funding, and an amendment to this Agreement effecting such change
may be executed without the consent of any Securityholder.

 

Section 11.02.      Protection of
Title to Trust.

 

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

 

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

 

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

 

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

 

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

 

55

 

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

 

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

 

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

 

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

 

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

 

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

 

	
   

  	
  (i)

  	
  If to the Servicer or
  Seller:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Harley-Davidson Credit
  Corp.

  
	
   

  	
   

  	
  150 South Wacker Drive,
  Suite 3100

  
	
   

  	
   

  	
  Chicago, Illinois 60606

  
	
   

  	
   

  	
  Attention: Perry A.
  Glassgow

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Telecopier No.: (312)
  368-4372

  

 

56

 

	
   

  	
   

  	
   

  
	
   

  	
  (ii)

  	
  If to the Trust
  Depositor:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Harley-Davidson Customer
  Funding Corp.

  
	
   

  	
   

  	
  4150 Technology Way

  
	
   

  	
   

  	
  Carson City, Nevada
  89706

  
	
   

  	
   

  	
  Attention:  Perry A. Glassgow

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Telecopier No.: (775)
  886-3490

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  with a copy to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Harley-Davidson Credit
  Corp.

  
	
   

  	
   

  	
  150 South Wacker Drive,
  Suite 3100

  
	
   

  	
   

  	
  Chicago, Illinois  60606

  
	
   

  	
   

  	
  Attention:  Perry A. Glassgow

  
	
   

  	
   

  	
  Telecopier
  No.:  (312) 368-4782

  
	
   

  	
   

  	
   

  
	
   

  	
  (iii)

  	
  If to the Indenture
  Trustee:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BNY Midwest Trust
  Company

  
	
   

  	
   

  	
  2 North LaSalle Street

  
	
   

  	
   

  	
  Suite 1020

  
	
   

  	
   

  	
  Chicago, Illinois 60602

  
	
   

  	
   

  	
  Attention:  Corporate Trust Administration

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Telecopier No.:  (312) 827-8562

  
	
   

  	
   

  	
   

  
	
   

  	
  (iv)

  	
  If to the Owner
  Trustee:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Wilmington Trust
  Company

  
	
   

  	
   

  	
  Rodney Square North

  
	
   

  	
   

  	
  1100 North Market
  Street

  
	
   

  	
   

  	
  Wilmington, Delaware
  19890-0001

  
	
   

  	
   

  	
  Attention: Corporate
  Trust Administration

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Telecopier No.: (302)
  651-8882

  

 

57

 

	
   

  	
  (v)

  	
  If to Moody’s:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Moody’s Investors
  Service, Inc.

  
	
   

  	
   

  	
  99 Church Street

  
	
   

  	
   

  	
  New York, New York
  10007

  
	
   

  	
   

  	
  Attention: ABS
  Monitoring Department

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Telecopier No.: (212)
  553-1350

  
	
   

  	
   

  	
   

  
	
   

  	
  (vi)

  	
  If to Standard &
  Poor’s:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Standard
  & Poor’s Ratings Services, a division of The McGraw Hill Companies

  
	
   

  	
   

  	
  55 Water Street

  
	
   

  	
   

  	
  New York, New York
  10004

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Telecopier No.: (212)
  438-2657

  
	
   

  	
   

  	
   

  
	
   

  	
  (vii)

  	
  If to the Underwriters:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Wachovia Capital
  Markets, LLC

  
	
   

  	
   

  	
  301 College Street

  
	
   

  	
   

  	
  Charlotte, North
  Carolina 28288

  
	
   

  	
   

  	
  Attention:  Curt Sidden

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Telecopier No.:  (704) 383-9106

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  J.P. Morgan Securities
  Inc.

  
	
   

  	
   

  	
  270 Park Avenue

  
	
   

  	
   

  	
  10th Floor

  
	
   

  	
   

  	
  New York, New York  10017

  
	
   

  	
   

  	
  Attention:  General Counsel

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Telecopier No.:  (212) 834-6562

  

 

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.

 

58

 

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

 

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

 

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

 

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

 

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

 

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

 

59

 

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

 

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

 

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

 

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

 

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

 

Section
11.12.      Nonconfidentiality
of Tax Treatment and Tax Structure.

 

The parties hereto agree that each of the Issuer, the
Owner Trustee, the Seller, the Servicer, the Trust Depositor, the Indenture
Trustee and the Noteholders (and the employees, representatives, and other
agents of such person) may disclose to any and all persons, without

 

60

 

limitation of any kind, the tax treatment and tax structure of the
transaction and all materials of any kind (including opinions or other tax
analyses) that are provided to any of them relating to such tax treatment and
tax structure.  “Tax treatment” and “tax
structure” shall have the same meaning as such terms have for purposes of
Treasury Regulation Section 1.6011-4.

 

[signature page follows]

 

61

 

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 2003-4

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

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

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/  Anita A. Dallago

  	
   

  
	
   

  	
   

  	
  Printed Name:  Anita E. Dallago

  
	
   

  	
   

  	
  Title:  Senior Financial Services Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HARLEY-DAVIDSON
  CUSTOMER FUNDING CORP.,

  as Trust Depositor

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/  Perry A. Glassgow

  	
   

  
	
   

  	
   

  	
  Printed Name: Perry A.
  Glassgow

  
	
   

  	
   

  	
  Title: Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HARLEY-DAVIDSON CREDIT
  CORP., as Servicer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/  Perry A. Glassgow

  	
   

  
	
   

  	
   

  	
  Printed Name: Perry A.
  Glassgow

  
	
   

  	
   

  	
  Title: Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BNY MIDWEST TRUST
  COMPANY, not in its

  individual capacity but solely as Indenture Trustee

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/  Cynthia Davis

  	
   

  
	
   

  	
   

  	
  Printed Name:  Cynthia Davis

  
	
   

  	
   

  	
  Title:  Assistant Vice President

  
						

 

Signature Page to Sale
and Servicing Agreement

 

 

Exhibit A

 

[Form of
Assignment]

 

In accordance with the Sale and Servicing Agreement
(the “Sale
and Servicing Agreement”) dated as of October 1, 2003 made by and
between the undersigned, as Trust Depositor 
(“Trust
Depositor”), Harley-Davidson Credit Corp., as Servicer (“HDCC”),
BNY Midwest Trust Company, as Indenture Trustee and Harley-Davidson Motorcycle
Trust 2003-4 (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) 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 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 (other than the Reserve Fund) from time
to time (and any investments of such amounts), (ix) all rights of the Trust
Depositor to certain rebates of premiums and other amounts relating to
insurance policies, debt cancellation agreements, extended service contracts or
other repair agreements and other items financed under such Contracts, and (x) all
proceeds and products of the foregoing.

 

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

 

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

 

IN WITNESS WHEREOF, the undersigned has caused this
Assignment to be duly executed this
            day of
October, 2003.

 

	
   

  	
  HARLEY-DAVIDSON
  CUSTOMER FUNDING

  CORP.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Printed Name: Perry A.
  Glassgow

  
	
   

  	
  Title:  Treasurer

  

 

A-1

 

Exhibit B

 

[Form of Closing
Certificate of Trust Depositor]

 

Harley-Davidson
Customer Funding Corp.

 

President’s
Certificate

 

The undersigned certifies that she is President 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 October 1, 2003
(the “Effective
Date”) by and among the Trust Depositor, BNY Midwest Trust Company
(the “Indenture
Trustee”), as Indenture Trustee, 
Harley-Davidson Credit Corp. (“Harley-Davidson Credit”), as Servicer, and
Harley-Davidson Motorcycle Trust 2003-4 (“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 October
6, 2003 stating that the Trust Depositor is duly incorporated under the laws of
the State of Nevada and is in good standing.

 

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

 

(5)           Attached hereto as Exhibit IV
is a true and correct copy of resolutions adopted pursuant to the unanimous
written consent of the Board of Directors of the Trust Depositor relating to
the execution, delivery and performance of the Agreement; the Transfer and Sale
Agreement dated as of the Effective Date between the Trust Depositor and
Harley-Davidson Credit; the Trust Agreement dated as of October 1, 2003 between
the Trust Depositor and Wilmington Trust Company (the “Owner Trustee”), as
Owner Trustee; the Administration Agreement dated as of the Effective Date
between the Trust Depositor, the Issuer, the Indenture Trustee, Harley-Davidson
Credit, as Administrator; the Underwriting Agreement dated October 16, 2003
among the Trust Depositor, Harley-Davidson Credit 

 

B-1

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

B-2

 

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

 

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

 

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

 

*    *   
*    *

 

B-3

 

In Witness Whereof,
I have affixed my signature hereto this      day of
October, 2003.

 

 

	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Printed Name:

  	
  Donna F. Zarcone

  
	
   

  	
  Title:

  	
  President

  
					

 

 

Exhibit C

 

[Form of Closing
Certificate of Servicer/Seller]

 

HARLEY-DAVIDSON
CREDIT CORP.

 

President’s
Certificate

 

The undersigned certifies that she is President 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 October 1, 2003
(the “Effective
Date”) by and among Harley-Davidson Credit, as Servicer,
Harley-Davidson Customer Funding Corp. (“CFC”), BNY Midwest Trust Company, as
Indenture Trustee and Harley-Davidson Motorcycle Trust 2003-4 (“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 October
6, 2003 stating that Harley-Davidson Credit is duly incorporated under the laws
of the State of Nevada and is in good standing.

 

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

 

(5)           Attached hereto as Exhibit IV
is a true and correct copy of resolutions adopted pursuant to a unanimous
written consent of the Board of Directors of Harley-Davidson Credit and
relating to the authorization, execution, delivery and performance of the
Transfer and Sale Agreement; the Sale and Servicing Agreement; the Underwriting
Agreement dated October 16, 2003 among Harley-Davidson Credit, CFC and the
Underwriters (the “Underwriting Agreement”); and the Administration Agreement
dated as of the Effective Date among Harley-Davidson Credit, CFC, the Issuer
and BNY

 

C-1

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

C-2

 

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

 

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

 

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

 

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

 

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

 

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

 

*   *  
*   *   *   *

 

C-3

 

In Witness Whereof,
I have affixed my signature hereto this
        day of October, 2003.

 

 

	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Printed Name:

  	
  Donna F. Zarcone

  
	
   

  	
  Title:

  	
  President

  
					

 

C-4

 

Exhibit D

 

[Form of Opinion
of Counsel for Trust Depositor

Regarding General
Corporate Matters

(Including
Perfection Opinion)]

 

 

See Tab 23

 

D-1

 

Exhibit E

 

[Form of Opinion
of Counsel for Trust

Depositor Regarding
the “True
Sale” Nature

of the
Transaction]

 

 

See Tab 24

 

E-1

 

Exhibit F

 

[Form of Opinion
of Counsel for Trust

Depositor
Regarding Non-consolidation]

 

 

See Tab 25

 

F-1

 

Exhibit G

 

[Form of
Certificate Regarding Reacquired Contracts]

 

Harley-Davidson
Credit Corp.

 

Certificate
Regarding Reacquired Contracts

 

The undersigned certifies that he is the Treasurer of
Harley-Davidson Credit Corp., a Nevada corporation (the “Servicer”), and that as
such is duly authorized to execute and deliver this certificate on behalf of
the Servicer pursuant to Section 7.08 of the Sale and Servicing Agreement (the “Agreement”)
dated as of October 1, 2003 by and among Harley-Davidson Customer Funding
Corp., as Trust Depositor, the Servicer, BNY Midwest Trust Company, as
Indenture Trustee, and Harley-Davidson Motorcycle Trust 2003-4 (all capitalized
terms used herein without definition having the respective meanings specified
in the Agreement), and further certifies that:

 

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

 

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

 

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

 

 

	
   

  	
  Harley-Davidson Credit
  Corp.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Printed
  Name: Perry A. Glassgow

  
	
   

  	
  Title:
  Treasurer

  

 

G-1

 

Exhibit H

 

[List of
Contracts]

 

 

See Tab 6

 

H-1

 

Exhibit I

 

[Form of Monthly
Report to Noteholders and the Certificateholder]

 

Harley-Davidson
Motorcycle Trust 2003-4

$187,000,000  1.47% Harley-Davidson Motorcycle Contract
Backed Notes, Class A-1

$98,000,000  2.69% Harley-Davidson Motorcycle Contract
Backed Notes, Class A-2

$15,000,000  2.19% Harley-Davidson Motorcycle Contract
Backed Notes, Class B

 

Monthly Report

For the [              ] Distribution Date

 

 

	
  A.

  	
   

  	
  Calculation of Available Monies

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.

  	
  Available Monies (l.  plus
  2.)

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B.

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C.

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  D.

  	
   

  	
  Calculation of Note
  Monthly Principal Distributable Amount

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1A.

  	
  Class A Note Percentage
  for such Distribution Date  

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  95.0

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (b)           on the Distribution Date on which
  the principal amount of the Class A-1 Notes is reduced to zero, 95.0% until
  the principal amount of the Class A-2 Notes has been reduced to zero

  	
   

  	
  95.0

  	
  %

  

 

I-1

 

	
   

  	
   

  	
   

  	
   

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

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  0.00

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1B.

  	
  Class B Note Percentage
  for such Distribution Date

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  5.0

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  100.00

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.

  	
  Principal Distributable
  Amount (from B)

  	
   

  	
  $

  	
   

  	
   

  
									

 

I-2

 

	
   

  	
   

  	
  3.

  	
   

  	
  Note Monthly Principal
  Distributable Amount for

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (d)           Note Principal Carryover Shortfall

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  

 

I-3

 

	
  E.

  	
   

  	
  Calculation of Note
  Monthly Interest Distributable Amount.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.

  	
  Class A-l Interest Rate

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.

  	
  Class A-2 Interest Rate

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.

  	
  Class B Interest Rate

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  5.

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  7.

  	
  Interest Carryover
  Shortfall for such Distribution Date

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  8.

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  F.

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  

 

I-4

 

	
  G.

  	
   

  	
  Fees

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.

  	
  Indenture Trustee Fee
  for such Distribution Date excluding expense component (1/12 of the product
  of .00225% and the Principal Balance of the Contracts as of the beginning of
  the related Due Period; provided, however, in no event shall such fee be less
  than $200.00 per month)

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  H.

  	
   

  	
  CALCULATION OF THE
  AVAILABLE MONIES FOR SUCH DISTRIBUTION DATE

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  b.             All Net Liquidation Proceeds

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  

 

I-5

 

	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  

 

I-6

 

	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  I.

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  J.

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  K.

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  L.

  	
   

  	
  Interest Earnings on the Reserve Fund.

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  M.

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  

 

I-7

 

	
  N.

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  O.

  	
   

  	
  The Pool Factor

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.

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

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.

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

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.

  	
  The Class B Note Pool Factor immediately after such
  Distribution Date

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.

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

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  5.

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

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.

  	
  The Class B Note Pool Factor immediately after such
  Distribution Date

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  P.

  	
   

  	
  Delinquent Contracts

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.

  	
  31-59 Days 

  	
  #

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.

  	
  60-89 Days

  	
  #

  	
   

  	
  $

  	
   

  	
   

  
										

 

I-8

 

	
   

  	
   

  	
  3.

  	
  90 or More Days

  	
  #

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Q.

  	
   

  	
  Liquidated Contracts

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.

  	
  Total Liquidated Contracts
        #

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.

  	
  Liquidation proceeds for the Due Period

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.

  	
  Liquidation expenses for the Due Period

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.

  	
  Net Liquidation Proceeds for the Due Period

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  5.

  	
  Net Liquidation Losses for the Due Period

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  R.

  	
   

  	
  Advances

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.

  	
  Unreimbursed Advances prior to such Distribution
  Date

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.

  	
  Amount of Delinquent Interest for such Distribution
  Date

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  5.

  	
  Total of unreimbursed Advances after new Advances on
  such Distribution Date

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  S.

  	
   

  	
  Reacquired Contracts

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.

  	
  Principal Amount of such Contracts

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.

  	
  Related Reacquisition Price of such Contracts

  	
   

  	
  $

  	
   

  	
   

  
										

 

I-9

 

	
  T.

  	
   

  	
  Contracts

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.

  	
  Number of Contracts as of beginning of Due Period

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.

  	
  Principal Balance of Contracts as of beginning of
  Due Period

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.

  	
  Number of Contracts as of end of Due Period

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  5.

  	
  Principal Balance of Contracts as of end of Due
  Period

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  7.

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  U.

  	
   

  	
  Ratios

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.

  	
  Cumulative Loss Ratio

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  a.

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  b.

  	
  The Principal Balance of the Contracts as of the
  Cutoff Date 

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  c.

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.

  	
  Average Delinquency Ratio for such Distribution Date

  	
   

  	
   

  	
   

  

 

I-10

 

	
   

  	
   

  	
   

  	
  (a)

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (b)

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

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (c)

  	
  The Delinquency Ratio for the prior Distribution
  Date

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (d)

  	
  The Delinquency Ratio for the second prior
  Distribution Date

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (e)

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

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.

  	
  Average Loss Ratio for such Distribution Date

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (a)

  	
  Net Liquidation Losses

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (b)

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

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (c)

  	
  The Loss Ratio for the prior Distribution Date

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (d)

  	
  The Loss Ratio for the second prior Distribution
  Date

  	
   

  	
   

  	
  %

  

 

I-11

 

	
   

  	
   

  	
   

  	
  (e)

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

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.

  	
  Computation of Specified Reserve Fund Balance

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Reserve Fund Trigger Events

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (1)

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

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (2)

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

  	
   

  	
   

  	
  %

  

 

I-12

 

	
   

  	
   

  	
   

  	
  (3)

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

  	
   

  	
   

  	
  %

  

 

I-13

 

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, 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

 

J-1

 

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, that:

 

(a)           List of Contracts.  The information set forth in the List of
Contracts is true, complete and correct in all material respects as of the
Cutoff Date.

 

(b)           Payments.  As of the Cutoff Date, 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.

 

(c)           No Waivers.  As of the Closing Date, 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

 

J-2

 

unenforceable in whole or
in part or subject to any right of rescission, setoff, counterclaim or defense,
including the defense of usury, and no such right of rescission, setoff, counterclaim
or defense has been asserted with respect thereto.

 

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

 

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

 

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

 

(i)            Compliance with Law.  None of the Contracts, the origination of
the Contracts by the dealers or Eaglemark Savings Bank, the purchase of the
Contracts by the Seller, the sale of the Contracts by the Seller to the Trust
Depositor or the transfer of the Contracts by the Trust Depositor to the Trust,
or any combination of the foregoing, violated at the time of origination or as
of the Closing Date, 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. 
Seller shall, for at least the period of this Agreement, maintain in its
possession, available for the Trust Depositor’s, and the Trustee’s inspection,
and shall deliver to Trust Depositor or 
the Trustee upon demand, evidence of compliance with all such
requirements.

 

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

 

J-3

 

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

 

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

 

(m)          Good Title.  Each Contract was purchased by Seller for
value and taken into possession prior to the Cutoff Date 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 to permit Trust Depositor to transfer the same
to the Issuer, and, as of the Closing Date, the Issuer will have a first
priority perfected security interest therein.

 

(n)           No Defaults.  As of the Cutoff Date, 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

 

J-4

 

Seller has not granted
any extension of payment terms on any Contract.  As of the Cutoff Date, no Motorcycle had been repossessed.

 

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

 

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

 

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

 

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

 

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

 

(t)            Lockbox Bank.  The Lockbox Bank is the only institution
holding any Lockbox Account for receipt of payments from Obligors, and all
Obligors, and only such Obligors, have been instructed to make payments to the
Lockbox Account, 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.

 

(u)           Obligor Bankruptcy.  At the Cutoff Date, no Obligor was subject
to a bankruptcy proceeding within the one year preceding such Cutoff Date.

 

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

 

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

 

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

 

J-5

 

(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, that:

 

(a)           Amounts.  The sum of the aggregate Principal Balances
payable by Obligors under the Contracts as of the Cutoff Date equals or exceeds
the sum of the principal balance of the Class A-1 Notes, the Class A-2 Notes and
the Class B Notes on the Closing Date.

 

(b)           Characteristics.  The Contracts have the following characteristics: (i) all the
Contracts are secured by Motorcycles; (ii) no Contract has a remaining maturity
of more than 84 months; and (iii) the final scheduled payment on the Contract
with the latest maturity is due not later than October 2010.  Approximately 77.59% of the Principal
Balance of the Contracts as of the Cutoff Date is attributable to loans for
purchases of new Motorcycles and approximately 22.41% is attributable to loans
for purchases of used Motorcycles.  No
Contract was originated after the Cutoff Date. 
No Contract has a Contract Rate less than 3.89%.  The first scheduled payment date of the
Contracts is due no later than January 2004. 
Less than 0.01% of the Principal Balance of the Contracts as of the
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, 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.

 

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

 

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

 

J-6

 

(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, that:

 

(a)           Possession.  Immediately prior to the Closing Date, the
Servicer will have possession of each original Contract and the related
complete Contract File, and there are and there will be no custodial agreements
relating to the same in effect.  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.

 

(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 and by Trust Depositor pursuant to the Sale and Servicing
Agreement is not subject to the bulk transfer or any similar statutory
provisions in effect in any applicable jurisdiction.

 

J-7

 

Exhibit
K

 

[Lockbox Bank and
Lockbox Account]

 

	
  Lockbox

  
	
   

  
	
  Harley-Davidson Credit
  Corp.

  
	
  135 South LaSalle
  Street

  
	
  Chicago, Illinois 60674

  
	
   

  
	
  Lockbox Bank

  
	
   

  
	
  LaSalle Bank National
  Association

  
	
  135 South LaSalle
  Street

  
	
  Chicago, Illinois 60674

  

 

K-1

 

Exhibit
L

 

[Form of Contract
Stamp]

 

This Contract/Note is subject to a security interest
granted to Harley-Davidson Motorcycle Trust 2003-4.  A UCC1 Financing Statement covering this Contract/Note has been
filed with the Secretary of State of the State of Nevada.  Such lien will be released only in
connection with appropriate filings in such offices.  Consequently, potential purchasers of this Contract/Note must
refer to such filings to determine whether such lien has been released.

 

M-1

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