Document:

Exhibit
10.1

 

 

 

TRANSFER AND SALE
AGREEMENT

 

 

by and between

 

 

HARLEY-DAVIDSON
CREDIT CORP.,

as Seller

 

 

and

 

 

HARLEY-DAVIDSON
CUSTOMER FUNDING CORP.,

 

 

as Purchaser

 

 

Dated as of May 1,
2004

 

 

 

 

TABLE OF CONTENTS

 

	
  ARTICLE
  I  DEFINITION

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  1.01.

  	
  GENERAL.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  II TRANSFER OF CONTRACTS; ASSIGNMENT OF AGREEMENT

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  2.01.

  	
  CLOSING.

  	
   

  
	
  SECTION
  2.02.

  	
  CONDITIONS TO THE CLOSING.

  	
   

  
	
  SECTION
  2.03.

  	
  ASSIGNMENT OF AGREEMENT.

  	
   

  
	
  SECTION
  2.04.

  	
  SUBSEQUENT CONTRACTS.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  III REPRESENTATIONS AND WARRANTIES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  3.01.

  	
  REPRESENTATIONS AND WARRANTIES REGARDING
  SELLER.

  	
   

  
	
  SECTION
  3.02.

  	
  REPRESENTATIONS AND WARRANTIES REGARDING
  EACH CONTRACT.

  	
   

  
	
  SECTION
  3.03.

  	
  REPRESENTATIONS AND WARRANTIES REGARDING
  THE CONTRACTS IN THE AGGREGATE.

  	
   

  
	
  SECTION
  3.04.

  	
  REPRESENTATIONS AND WARRANTIES REGARDING
  THE CONTRACT FILES.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  IV PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  4.01.

  	
  CUSTODY OF CONTRACTS.

  	
   

  
	
  SECTION
  4.02.

  	
  FILING.

  	
   

  
	
  SECTION
  4.03.

  	
  NAME CHANGE OR RELOCATION.

  	
   

  
	
  SECTION
  4.04.

  	
  COSTS AND EXPENSES

  	
   

  
	
  SECTION
  4.05

  	
  SALE TREATMENT

  	
   

  
	
  SECTION
  4.06

  	
  SEPARATENESS FROM TRUST DEPOSITOR

  	
   

  
	
  SECTION
  4.07

  	
  PROTECTION OF SECURITY INTERESTS

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  V REMEDIES UPON MISREPRESENTATION

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  5.01.

  	
  REPURCHASES OF CONTRACTS FOR BREACH OF
  REPRESENTATIONS AND WARRANTIES.

  	
   

  
	
  SECTION
  5.02.

  	
  SELLER’S REPURCHASE OPTION.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VI INDEMNITIES

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  6.01.

  	
  SELLER INDEMNIFICATION.

  	
   

  
	
  SECTION
  6.02.

  	
  LIABILITIES TO OBLIGORS.

  	
   

  
	
  SECTION
  6.03.

  	
  TAX INDEMNIFICATION

  	
   

  
	
  SECTION
  6.04.

  	
  OPERATION OF INDEMNITIES.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VII MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  7.01.

  	
  PROHIBITED TRANSACTIONS WITH RESPECT TO
  THE TRUST

  	
   

  
	
  SECTION
  7.02.

  	
  MERGER OR CONSOLIDATION.

  	
   

  
	
  SECTION
  7.03.

  	
  TERMINATION.

  	
   

  
	
  SECTION
  7.04.

  	
  ASSIGNMENT OR DELEGATION BY SELLER.

  	
   

  
	
  SECTION
  7.05.

  	
  AMENDMENT.

  	
   

  
	
  SECTION
  7.06.

  	
  NOTICES.

  	
   

  
	
  SECTION
  7.07.

  	
  MERGER AND INTEGRATION.

  	
   

  
	
  SECTION
  7.08.

  	
  HEADINGS.

  	
   

  
	
  SECTION
  7.09.

  	
  GOVERNING LAW.

  	
   

  

 

i

 

	
  EXHIBITS

  	
   

  
	
   

  	
   

  
	
  Exhibit A

  	
  Form of Assignment

  
	
  Exhibit B

  	
  Form of Officer’s Certificate

  
	
  Exhibit C

  	
  Form of Subsequent Purchase Agreement

  

 

ii

 

THIS AGREEMENT, dated as of May 1, 2004, is made by and
between Harley-Davidson Credit Corp., a Nevada corporation, as seller hereunder
(together with its successors and assigns “Harley-Davidson Credit” or “Seller”),
and Harley-Davidson Customer Funding Corp., a Nevada corporation and
wholly-owned subsidiary of Seller (together with its successors and assigns “Trust
Depositor”), as purchaser hereunder.

 

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

 

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

 

WHEREAS, Trust Depositor intends concurrently with its purchases from time to
time of Contract Assets hereunder to convey all right, title and interest in
such Contract Assets to Harley-Davidson Motorcycle Trust 2004-2 (the “Trust”)
pursuant to the Sale and Servicing Agreement dated as of May 1, 2004 by and
among Trust Depositor, Harley-Davidson Credit, as Servicer, the Trust, as issuer
(the “Issuer”)
and BNY Midwest Trust Company, as Indenture Trustee (as amended, supplemented
or otherwise modified from time to time, the “Sale and Servicing Agreement”),
executed concurrently herewith;

 

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

 

ARTICLE I

 

DEFINITIONS

 

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

 

ARTICLE II

 

TRANSFER
OF CONTRACTS; ASSIGNMENT OF AGREEMENT

 

Section
2.01.        Closing. 
Subject to and upon the terms and conditions set forth in this
Agreement, Seller hereby sells, transfers, assigns, sets over and otherwise
conveys to Trust Depositor, in consideration of Trust Depositor’s payment of
$388,240,349.60 in cash as the purchase price therefor, (i) all the right,
title and interest of Seller in and to the Initial Contracts

 

 

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

 

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

 

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

 

2

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

3

 

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

 

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

 

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

 

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

 

(ii)           the Funding Period shall not have
terminated;

 

(iii)          the Seller shall have delivered to the
Trust Depositor a duly executed Purchase Agreement in substantially the form of
Exhibit C
hereto (the “Subsequent Purchase Agreement”), which shall include a
Subsequent List of Contracts listing the Subsequent Contracts being purchased;

 

4

 

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

 

(v)           each Rating Agency shall have
notified the Trust Depositor and the Trustees that following such transfer, and
the transfer immediately thereafter of the Subsequent Contracts to the Trust,
the Class A-1 Notes and the Class A-2 Notes will be rated in the highest rating
category by such Rating Agency and the Class B Notes will be rated at least “A”
by Standard & Poor’s and “A2” by Moody’s;

 

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

 

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

 

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

 

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

 

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

 

ARTICLE III

 

REPRESENTATIONS
AND WARRANTIES

 

Seller makes the
following representations and warranties, on which Trust Depositor will rely in
purchasing the initial Contract Assets on the Closing Date (and any Subsequent
Contracts on the related Subsequent Transfer Date) and concurrently reconveying
the same to the Trust, and on which the Trust, the Indenture Trustee and the
Noteholders will rely under the Sale and Servicing Agreement.  Such representations speak as of the
execution and delivery of this Agreement and as of the Closing Date in the case
of the Initial Contracts, and as of the applicable Subsequent Transfer Date in
the case of Subsequent Contracts, but shall survive the sale, transfer and
assignment of the Contracts to the Trust and the pledge of the Contracts to the
Indenture Trustee.  The repurchase
obligation of Seller set forth in Section 5.01 below and in Section 7.08

 

5

 

of the Sale and Servicing Agreement constitutes the
sole remedy available for a breach of a representation or warranty of Seller
set forth in Section 3.02, 3.03 or 3.04 of this Agreement.

 

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

 

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

 

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

 

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

 

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

 

6

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

7

 

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

 

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

 

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

 

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

 

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

 

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

 

8

 

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

 

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

 

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

 

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

 

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

 

9

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

10

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(b)           Characteristics.  The Initial Contracts have the following
characteristics: (i) all the Contracts are secured by Motorcycles; (ii) no
Initial Contract has a remaining maturity of more than 84 months; and (iii) the
final scheduled payment on the Initial Contract with the latest maturity is due
no later than May 2011.    Approximately
79.79% of the Principal Balance of the Initial Contracts as of the Initial
Cutoff Date is attributable to loans for purchases of new Motorcycles and
approximately 20.21% is attributable to loans for purchases of used
Motorcycles.  No Initial Contract was
originated after the Initial Cutoff Date. 
No Initial Contract has a Contract Rate less than 4.489%.  The last scheduled payment date of the
Contracts (including any Subsequent Contracts) is due no later than August
2011.  Approximately 97.94% of the
Principal Balance of the Initial Contracts as of the Initial Cutoff Date is attributable
to loans for purchases of Motorcycles manufactured by Harley-Davidson or Buell
and approximately 2.06% of the

 

11

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

12

 

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

 

ARTICLE IV

 

PERFECTION
OF TRANSFER AND PROTECTION OF SECURITY INTERESTS

 

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

 

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

 

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

 

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

 

13

 

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

 

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

 

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

 

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

 

ARTICLE V

 

REMEDIES
UPON MISREPRESENTATION

 

Section
5.01.        Repurchases
of Contracts for Breach of Representations and Warranties. 
Seller hereby agrees, for the benefit of the Issuer, the Indenture
Trustee and the Trust Depositor, that it shall repurchase a Contract including
any Subsequent Contracts (together with all related Contract Assets), at its
Repurchase Price, not later than two Business Days prior to the first
Determination Date after Seller becomes aware, or should have become aware, or
receives written notice from Trust Depositor, either of the Trustees or the
Servicer of any breach of a representation or warranty of Seller set forth in
Article III of this Agreement that materially adversely affects Trust
Depositor’s or the Trust’s interest in such Contract (without regard to the
benefits of the Reserve Fund) and which breach has not been cured; provided,
however, that with respect to any Contract described on the List of
Contracts with respect to an incorrect unpaid Principal Balance which Seller
would otherwise be required to repurchase pursuant to this Section 5.01 and
Section 7.08 of the Sale and Servicing Agreement, Seller may, in lieu of
repurchasing such Contract, deposit in the Collection Account not later than
two Business Days prior to such Determination Date cash in an amount sufficient
to cure any deficiency or discrepancy; and provided further that with respect to a
breach of a representation or warranty relating to the Contracts in the
aggregate and not to any particular Contract, Seller may select

 

14

 

Contracts (without adverse selection) to repurchase
such that had such Contracts not been reconveyed by Trust Depositor and
included as part of the Trust there would have been no breach of such
representation or warranty; provided further that the failure to
maintain perfection of the security interest in the Motorcycle securing a
Contract in accordance with the Sale and Servicing Agreement, shall be deemed
to be a breach materially and adversely affecting the Trust’s interest in the
Contracts or in the related Contract Assets. 
Notwithstanding any other provision of this Agreement, the obligation of
Seller under this Section 5.01 and under Section 7.08 of the Sale and Servicing
Agreement shall not terminate upon a Service Transfer pursuant to Article VIII
of the Sale and Servicing Agreement.

 

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

 

ARTICLE VI

 

INDEMNITIES

 

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

 

15

 

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

 

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

 

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

 

ARTICLE VII

 

MISCELLANEOUS

 

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

 

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

 

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

 

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

 

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

 

16

 

enforceability of this Agreement and of any of the
Contracts and to perform its duties under this Agreement.

 

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

 

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

 

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

 

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

 

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

 

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

 

17

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

18

 

Estate, together with any other amounts owing in
respect of obligations of the Trust Depositor, it will not institute against,
or solicit or join in or cooperate with or encourage any Person to institute
against, the Trust Depositor or the Trust, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings or other similar proceedings
under the laws of the United State or any State of the United States.  This Section 7.10 shall survive termination
of this Agreement.

 

[signature page
follows]

 

19

 

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

 

 

	
   

  	
  HARLEY-DAVIDSON
  CUSTOMER FUNDING CORP.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/  Perry A. Glassgow

  	
   

  
	
   

  	
   

  	
  Printed
  Name:  Perry A. Glassgow

  	
   

  
	
   

  	
   

  	
  Title:
  Treasurer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HARLEY-DAVIDSON CREDIT
  CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/  Perry A. Glassgow

  	
   

  
	
   

  	
   

  	
  Printed
  Name:  Perry A. Glassgow

  	
   

  
	
   

  	
   

  	
  Title:
  Treasurer

  	
   

  
					

 

 

Signature Page to
Transfer and

Sale Agreement

 

 

Exhibit A

Transfer and Sale

Agreement

 

FORM
OF ASSIGNMENT

 

In accordance with the
Transfer and Sale Agreement (the “Agreement”) dated as of May 1, 2004 made
by and between the undersigned, as seller thereunder (“Seller”), and
Harley-Davidson Customer Funding Corp., a Nevada corporation and wholly-owned
subsidiary of Seller (“Trust Depositor”), as purchaser
thereunder, the undersigned does hereby sell, transfer, convey and assign, set
over and otherwise convey to Trust Depositor (i) all the right, title and
interest of Seller in and to the Initial Contracts listed on the initial List
of Contracts in effect on the Closing Date (including, without limitation, all
security interests and all rights to receive payments which are collected
pursuant thereto after the Initial Cutoff Date, including any liquidation
proceeds therefrom, but excluding any rights to receive payments which were
collected pursuant thereto on or prior to the Initial Cutoff Date), (ii) all rights
of Seller under any physical damage or other individual insurance policy
(including a “forced placed” policy, if any), any debt insurance policy or
any debt cancellation agreement relating to any such Contract, an Obligor or a
Motorcycle securing such Contract, (iii) all security interests in each such
Motorcycle, (iv) all documents contained in the related Contract Files, (v) all
rights of Seller in the Lockbox, Lockbox Account and related Lockbox Agreement
to the extent they relate to the Contracts, (vi) all rights (but not the
obligations) of the Seller under any motorcycle dealer agreements between the
dealers (i.e. originators of certain Contracts) and the Seller, (vii) all
rights of Seller to certain rebates of premiums and other amounts relating to
insurance policies, debt cancellation agreements, extended service contracts or
other repair agreements and other items financed under such Contracts and
(viii) all proceeds and products of the foregoing

 

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

 

Capitalized terms used
herein but not otherwise defined shall have the meanings assigned to such terms
in the Sale and Servicing Agreement dated as of May 1, 2004 made by and among
the undersigned, as servicer, the Trust Depositor, Harley-Davidson Motorcycle
Trust 2004-2, as issuer, and BNY Midwest Trust Company, as indenture trustee.

 

A-1

 

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

 

	
   

  	
  HARLEY-DAVIDSON CREDIT
  CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
   

  	
   

  
	
   

  	
   

  	
  Printed
  Name:  Perry A. Glassgow

  
	
   

  	
   

  	
  Title:
  Treasurer

  

 

A-2

 

Exhibit B

Transfer and Sale

Agreement

 

FORM
OF OFFICER’S CERTIFICATE

 

(See Exhibit C to
the Sale and Servicing Agreement)

 

B-1

 

Exhibit C

Transfer and Sale

Agreement

 

FORM
OF SUBSEQUENT PURCHASE AGREEMENT

 

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

 

WITNESSETH:

 

WHEREAS, the Trust
Depositor and the Seller are parties to the Transfer and Sale Agreement, dated
as of May 1, 2004 (the “Transfer and Sale Agreement”);

 

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

 

WHEREAS, the Seller has
timely delivered an Addition Notice related to such conveyance as required in
the Sale and Servicing Agreement dated as of May 1, 2004 among the Seller (in
the capacity of Servicer thereunder), the Issuer as defined therein, the Trust
Depositor and the Indenture Trustee as defined therein (the “Sale and
Servicing Agreement”).

 

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

 

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

 

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

 

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

 

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

 

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

 

C-1

 

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

 

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

 

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

 

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

 

(c)           Seller hereby represents and warrants
that (a) the aggregate Principal Balance of the Subsequent Contracts listed on
the Subsequent List of Contracts and conveyed to the Trust

 

C-2

 

Depositor pursuant to
this Agreement is
$[                 ]
as of the Subsequent Cutoff Date, and (b) the conditions set forth in Section
2.04(b) of the Transfer and Sale Agreement have been satisfied as of the
Subsequent Transfer Date.

 

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

 

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

 

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

 

C-3

 

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

 

 

	
   

  	
  HARLEY-DAVIDSON
  CUSTOMER FUNDING CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  	
   

  
	
   

  	
   

  	
  Printed
  Name:  Perry A. Glassgow

  	
   

  
	
   

  	
   

  	
  Title:
  Treasurer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HARLEY-DAVIDSON CREDIT
  CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  	
   

  
	
   

  	
   

  	
  Printed
  Name:  Perry A. Glassgow

  	
   

  
	
   

  	
   

  	
  Title:
  TreasurerEXHIBIT
10.2

 

 

 

SALE AND SERVICING
AGREEMENT

 

among

 

HARLEY-DAVIDSON
MOTORCYCLE TRUST 2004-2,

as Issuer,

 

HARLEY-DAVIDSON
CUSTOMER FUNDING CORP.,

as Trust
Depositor,

 

HARLEY-DAVIDSON
CREDIT CORP.,

as Servicer

 

and

 

 

BNY MIDWEST TRUST
COMPANY,

as Indenture Trustee

 

 

Dated as of May 1,
2004

 

 

 

 

 

Table of Contents

 

	
  ARTICLE ONE  DEFINITIONS

  	
   

  
	
  Section 1.01.

  	
  Definitions

  	
   

  
	
  Section 1.02.

  	
  Usage of Terms

  	
   

  
	
  Section 1.03.

  	
  Section References

  	
   

  
	
  Section 1.04.

  	
  Calculations

  	
   

  
	
  Section 1.05.

  	
  Accounting Terms

  	
   

  
	
  ARTICLE TWO  TRANSFER OF CONTRACTS

  	
   

  
	
  Section 2.01.

  	
  Closing

  	
   

  
	
  Section 2.02.

  	
  Conditions to the
  Closing

  	
   

  
	
  Section 2.03.

  	
  Conveyance of
  Subsequent Contracts

  	
   

  
	
  ARTICLE
  THREE  REPRESENTATIONS AND WARRANTIES

  	
   

  
	
  Section 3.01.

  	
  Representations and
  Warranties Regarding the Trust Depositor

  	
   

  
	
  Section 3.02.

  	
  Representations and
  Warranties Regarding the Servicer

  	
   

  
	
  ARTICLE
  FOUR  PERFECTION OF TRANSFER AND
  PROTECTION OF SECURITY INTERESTS

  	
   

  
	
  Section 4.01.

  	
  Custody of Contracts

  	
   

  
	
  Section 4.02.

  	
  Filing

  	
   

  
	
  Section 4.03.

  	
  Name Change or
  Relocation

  	
   

  
	
  Section 4.04.

  	
  Costs and Expenses

  	
   

  
	
  ARTICLE FIVE  SERVICING OF CONTRACTS

  	
   

  
	
  Section 5.01.

  	
  Responsibility for
  Contract Administration

  	
   

  
	
  Section 5.02.

  	
  Standard of Care

  	
   

  
	
  Section 5.03.

  	
  Records

  	
   

  
	
  Section 5.04.

  	
  Inspection

  	
   

  
	
  Section 5.05.

  	
  Trust Accounts

  	
   

  
	
  Section 5.06.

  	
  Enforcement

  	
   

  
	
  Section 5.07.

  	
  Trustees to Cooperate

  	
   

  
	
  Section 5.08.

  	
  Costs and Expenses

  	
   

  
	
  Section 5.09.

  	
  Maintenance of
  Security Interests in Motorcycles

  	
   

  
	
  Section 5.10.

  	
  Successor
  Servicer/Lockbox Agreements

  	
   

  
	
  Section 5.11.

  	
  Separate Entity Existence

  	
   

  
	
  ARTICLE SIX  THE TRUST DEPOSITOR

  	
   

  
	
  Section 6.01.

  	
  Covenants of the Trust
  Depositor.

  	
   

  
	
  Section 6.02.

  	
  Liability of Trust
  Depositor; Indemnities

  	
   

  
	
  Section 6.03.

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

  	
   

  
	
  Section 6.04.

  	
  Limitation on
  Liability of Trust Depositor and Others

  	
   

  
	
  Section 6.05.

  	
  Trust Depositor Not to
  Resign

  	
   

  
	
  ARTICLE
  SEVEN  DISTRIBUTIONS; RESERVE FUND

  	
   

  
	
  Section 7.01.

  	
  Monthly Distributions

  	
   

  
	
  Section 7.02.

  	
  Fees

  	
   

  
	
  Section 7.03.

  	
  Advances; Realization
  of Carrying Charge

  	
   

  
	
  Section 7.04.

  	
  Interest Reserve
  Account.

  	
   

  
	
  Section 7.05.

  	
  Distributions;
  Priorities.

  	
   

  
	
  Section 7.06.

  	
  Reserve Fund.

  	
   

  
	
  Section 7.07.

  	
  Establishment of
  Pre-Funding Account.

  	
   

  
	
  Section 7.08.

  	
  Reacquisition of
  Contracts for Breach of Representations and Warranties.

  	
   

  
	
  Section 7.09.

  	
  Reassignment of
  Reacquired Contracts

  	
   

  
	
  Section 7.10.

  	
  Seller’s Reacquisition
  Option

  	
   

  
	
  ARTICLE
  EIGHT  EVENTS OF TERMINATION; SERVICE
  TRANSFER

  	
   

  

 

i

 

	
  Section 8.01.

  	
  Events of
  Termination

  	
   

  
	
  Section 8.02.

  	
  Waiver of Event of
  Termination

  	
   

  
	
  Section 8.03.

  	
  Service Transfer

  	
   

  
	
  Section 8.04.

  	
  Successor Servicer to
  Act; Appointment of Successor Servicer

  	
   

  
	
  Section 8.05.

  	
  Notification to
  Securityholders

  	
   

  
	
  Section 8.06.

  	
  Effect of Transfer

  	
   

  
	
  Section 8.07.

  	
  Database File

  	
   

  
	
  Section 8.08.

  	
  Successor Servicer
  Indemnification

  	
   

  
	
  Section 8.09.

  	
  Responsibilities of
  the Successor Servicer

  	
   

  
	
  Section 8.10.

  	
  Limitation of
  Liability of Servicer

  	
   

  
	
  Section 8.11.

  	
  Merger or
  Consolidation of Servicer

  	
   

  
	
  Section 8.12.

  	
  Servicer Not to
  Resign

  	
   

  
	
  Section 8.13.

  	
  Appointment of
  Subservicer

  	
   

  
	
  ARTICLE NINE  REPORTS

  	
   

  
	
  Section 9.01.

  	
  Monthly Reports

  	
   

  
	
  Section 9.02.

  	
  Officer’s Certificate

  	
   

  
	
  Section 9.03.

  	
  Other Data

  	
   

  
	
  Section 9.04.

  	
  Annual Report of Accountants.

  	
   

  
	
  Section 9.05.

  	
  Annual Statement of
  Compliance from Servicer

  	
   

  
	
  Section 9.06.

  	
  Monthly Reports to
  Noteholders

  	
   

  
	
  ARTICLE TEN  TERMINATION

  	
   

  
	
  Section 10.01.

  	
  Sale of Trust
  Assets.

  	
   

  
	
  ARTICLE ELEVEN  MISCELLANEOUS

  	
   

  
	
  Section 11.01.

  	
  Amendment.

  	
   

  
	
  Section 11.02.

  	
  Protection of Title
  to Trust.

  	
   

  
	
  Section 11.03.

  	
  Governing Law

  	
   

  
	
  Section 11.04.

  	
  Notices

  	
   

  
	
  Section 11.05.

  	
  Severability of
  Provisions

  	
   

  
	
  Section 11.06.

  	
  Assignment

  	
   

  
	
  Section 11.07.

  	
  Third Party
  Beneficiaries

  	
   

  
	
  Section 11.08.

  	
  Counterparts

  	
   

  
	
  Section 11.09.

  	
  Headings

  	
   

  
	
  Section 11.10.

  	
  No Bankruptcy
  Petition; Disclaimer and Subordination

  	
   

  
	
  Section 11.11.

  	
  Limitation of
  Liability of Owner Trustee and Indenture Trustee.

  	
   

  

 

ii

 

EXHIBITS

 

	
  Exhibit A

  	
  Form of Assignment

  	
   

  
	
  Exhibit
  B

  	
  Form
  of Closing Certificate of Trust Depositor

  	
   

  
	
  Exhibit
  C

  	
  Form
  of Closing Certificate of Seller/Servicer

  	
   

  
	
  Exhibit
  D

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

  	
   

  
	
  Exhibit
  E

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

  	
   

  
	
  Exhibit
  F

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

  	
   

  
	
  Exhibit
  G

  	
  Form
  of Certificate Regarding Reacquired Contracts

  	
   

  
	
  Exhibit H

  	
  List of Contracts

  	
   

  
	
  Exhibit
  I

  	
  Form
  of Monthly Report to Noteholders and the Certificateholder

  	
   

  
	
  Exhibit
  J

  	
  Seller’s
  Representations and Warranties

  	
   

  
	
  Exhibit K

  	
  Lockbox
  Bank and Lockbox Account

  	
   

  
	
  Exhibit
  L

  	
  Form
  of Subsequent Transfer Agreement

  	
   

  

 

iii

 

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

 

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

 

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

 

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

 

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

 

ARTICLE ONE

DEFINITIONS

 

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

 

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

 

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

 

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

 

1

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

2

 

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

 

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

 

“Buell” means
Buell Motorcycle Company.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

3

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

4

 

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

 

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

 

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

 

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

 

“Class B Rate” means
2.96% per annum (computed on the basis of a 360-day year of twelve 30-day
months).

 

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

 

“Closing Date”
means May 28, 2004.

 

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

 

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

 

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

 

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

 

5

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

6

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

7

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

8

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

9

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

10

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

11

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

12

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

13

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

14

 

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

 

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

 

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

 

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

 

15

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

16

 

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

 

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

 

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

 

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

 

“Securityholders”
means the Holders of the Notes.

 

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

 

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

 

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

 

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

 

17

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

18

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

19

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“United States”
means the United States of America.

 

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

 

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

 

20

 

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

 

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

 

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

 

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

 

ARTICLE TWO

TRANSFER OF CONTRACTS

 

Section
2.01.        Closing.  (a)  On the Closing Date, the Trust Depositor
shall transfer, assign, set over and otherwise convey to the Trust by execution
of an assignment substantially in the form of Exhibit A hereto, without
recourse other than as expressly provided herein, (i) all the right, title and
interest of the Trust Depositor in and to the Initial Contracts listed on the
initial List of Contracts delivered on the Closing Date (including, without
limitation, all security interests and all rights to receive payments which are
collected pursuant thereto after the Initial Cutoff Date, including any
liquidation proceeds therefrom, but excluding any rights to receive payments
which were collected pursuant thereto on or prior to the Initial Cutoff Date),
(ii) all rights of the Trust Depositor under any physical damage or other
individual insurance policy (and rights under a “forced placed” policy, if
any), any debt insurance policy or any debt cancellation agreement relating to
any such Contract, an Obligor or a Motorcycle securing such Contract, (iii) all
security interests in each such Motorcycle, (iv) all documents contained in the
related Contract Files, (v) all rights (but not the obligations) of the Trust
Depositor under any related motorcycle dealer agreements between dealers (i.e.,
the originators of certain Contracts) and the Seller, (vi) all rights of the
Trust Depositor in the Lockbox, the Lockbox Account and the related Lockbox
Agreement to the extent they relate to the Contracts, (vii) all rights (but not
the obligations) of the Trust Depositor under the Transfer and Sale Agreement,
including but not limited to the Trust Depositor’s rights under Article V
thereof, (viii) the remittances, deposits and payments made into the Trust
Accounts from time to time and amounts in the Trust

 

21

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

22

 

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

 

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

 

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

 

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

 

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

 

(l)            A fully executed
Transfer and Sale Agreement.

 

(m)          A fully executed Trust
Agreement.

 

(n)           A fully executed
Administration Agreement.

 

(o)           A fully executed
Indenture.

 

Section
2.03.        Conveyance of Subsequent Contracts. 
(a) Subject to the conditions set forth in paragraph (b) below, the
Trust Depositor, shall transfer, assign, set over and otherwise convey to the
Trust, without recourse other than as expressly provided herein and therein,
(i) all the right, title and interest of the Trust Depositor in and to the
Subsequent Contracts listed on the Subsequent List of Contracts (including,
without limitation, all security interests and all rights to receive payments
which are collected pursuant thereto after the related Subsequent Cutoff Date,
including any liquidation proceeds therefrom, but excluding any rights to
receive payments which were collected pursuant thereto on or prior to such
Subsequent Cutoff Date), (ii) all rights of the Trust Depositor under any
physical damage or other individual insurance policy (including a “forced
placed” policy, if any), any debt insurance policy or any debt
cancellation agreement relating to any such Subsequent Contract, an Obligor or
a Motorcycle securing such Subsequent Contract, (iii) all security interests in
each such Motorcycle, (iv) all documents contained in the related Contract
Files, (v) all rights (but not the obligations) of the Trust Depositor under
any related motorcycle dealer agreements between dealers (i.e., the originators
of certain Subsequent

 

23

 

Contracts)
and the Seller, (vi) all rights of the Trust Depositor in the Lockbox, the
Lockbox Account and the related Lockbox Agreement to the extent they relate to
such Subsequent Contracts, (vii) all rights (but not the obligations) of the
Trust Depositor under the Transfer and Sale Agreement related to such
Subsequent Contracts (to the extent not already conveyed under Section
2.01(a)), including but not limited to the Trust Depositor’s related rights
under Article V thereof, as well as all rights, but not the obligations, of the
Trust Depositor under the Subsequent Purchase Agreement related to such
Subsequent Contracts, (viii) the remittances, deposits and payments made into the
Trust Accounts from time to time and amounts in the Trust Accounts from time to
time related to such Subsequent Contracts (to the extent not already conveyed
under Section 2.01(a)) (and any investments of such amounts), (ix) all rights
of the Trust Depositor to certain rebates of premiums and other amounts
relating to insurance policies, debt cancellation agreements, extended service
contracts or other repair agreements and other items financed under such
Subsequent Contracts and (x) all proceeds and products of the foregoing (the
property in clauses (i)-(x) above, upon such transfer, becoming part of the “Trust
Corpus”).  Although the Trust
Depositor and the Owner Trustee agree that such transfer is intended to be a
transfer of ownership, rather than the granting of a security interest to
secure a borrowing, and that the Trust Corpus following such transfer shall not
be property of the Trust Depositor, in the event such transfer is deemed to be
of a mere security interest to secure a borrowing, the Trust Depositor shall be
deemed to have granted the Owner Trustee for the benefit of the Trust a
perfected first priority security interest in such Trust Corpus and this
Agreement shall constitute a security agreement under applicable law.

 

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

 

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

 

(ii)           the Funding Period
shall not have terminated;

 

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

 

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

 

24

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

25

 

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

 

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

 

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

 

ARTICLE THREE

REPRESENTATIONS AND WARRANTIES

 

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

 

26

 

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

 

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

 

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

 

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

 

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

 

27

 

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

 

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

 

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

 

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

 

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

 

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

 

28

 

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

 

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

 

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

 

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

 

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

 

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

 

29

 

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

 

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

 

ARTICLE FOUR

PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS

 

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

 

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

 

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

 

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

 

30

 

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

 

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

 

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

 

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

 

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

 

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

 

31

 

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

 

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

 

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

 

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

 

ARTICLE FIVE

SERVICING OF CONTRACTS

 

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

 

32

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

33

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

34

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

35

 

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

 

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

 

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

 

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

 

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

 

36

 

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

 

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

 

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

 

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

 

37

 

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

 

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

 

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

 

ARTICLE SIX

THE TRUST DEPOSITOR

 

Section
6.01.        Covenants of the Trust Depositor.

 

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

 

38

 

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

 

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

 

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

 

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

 

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

 

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

 

39

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

40

 

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

 

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

 

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

 

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

 

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

 

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

 

41

 

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

 

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

 

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

 

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

 

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

 

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

 

42

 

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

 

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

 

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

 

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

 

43

 

ARTICLE SEVEN

DISTRIBUTIONS; RESERVE FUND

 

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

 

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

 

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

 

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

 

44

 

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

 

Section
7.04.        Interest Reserve Account.

 

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

 

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

 

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

 

Section
7.05.        Distributions; Priorities.

 

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

 

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

 

45

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(ix)           to the Holder of the Certificate.

 

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

 

46

 

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

 

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

 

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

 

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

 

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

 

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

 

(iii)          to the Holder of the Certificate.

 

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

 

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

 

47

 

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

 

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

 

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

 

(v)           to the Holder of the Certificate.

 

Section
7.06.        Reserve Fund.

 

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

 

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

 

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

 

48

 

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

 

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

 

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

 

Section
7.07.        Establishment of Pre-Funding Account.

 

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

 

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

 

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

 

49

 

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

 

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

 

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

 

50

 

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

 

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

 

ARTICLE EIGHT

EVENTS OF TERMINATION; SERVICE TRANSFER

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

52

 

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

 

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

 

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

 

53

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

54

 

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

 

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

 

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

 

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

 

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

 

55

 

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

 

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

 

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

 

ARTICLE NINE

REPORTS

 

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

 

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

 

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

 

56

 

Section
9.04.        Annual Report of Accountants.

 

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

 

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

 

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

 

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

 

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

 

The Accountant’s Report
shall further state that:

 

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

 

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

 

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

 

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

 

57

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

58

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

59

 

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

 

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

 

ARTICLE TEN

TERMINATION

 

Section
10.01.                  Sale of Trust Assets.

 

(a)                                  [Intentionally Omitted].

 

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

 

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

 

ARTICLE ELEVEN

MISCELLANEOUS

 

Section
11.01.                  Amendment.

 

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

 

60

 

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

 

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

 

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

 

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

 

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

 

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

 

61

 

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

 

Section
11.02.                  Protection of Title to Trust.

 

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

 

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

 

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

 

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

 

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

 

62

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

63

 

(i)                                     If
to the Servicer or Seller:

 

Harley-Davidson Credit
Corp.

150 South Wacker Drive,
Suite 3100

Chicago, Illinois 60606

Attention: Perry A.
Glassgow

 

Telecopier No.: (312)
368-4372

 

(ii)                                  If
to the Trust Depositor:

 

Harley-Davidson Customer
Funding Corp.

4150 Technology Way

Carson City,
Nevada 89706

Attention:  Perry A. Glassgow

 

Telecopier No.: (775)
886-3490

 

with a copy to:

 

Harley-Davidson Credit
Corp.

150 South Wacker Drive,
Suite 3100

Chicago, Illinois 60606

Attention:  Perry A. Glassgow

Telecopier No.:  (312) 368-4372

 

(iii)                               If
to the Indenture Trustee:

 

BNY Midwest Trust Company

2 North LaSalle Street

Suite 1020

Chicago, Illinois 60602

Attention:  Corporate Trust
Administration

 

Telecopier No.:  (312) 827-8562

 

(iv)                              If
to the Owner Trustee:

 

Wilmington Trust Company

Rodney Square North

1100 North Market Street

Wilmington, Delaware
19890-0001

Attention: Corporate
Trust Administration

 

Telecopier No.: (302)
651-8882

 

64

 

(v)                                 If
to Moody’s:

 

Moody’s Investors
Service, Inc.

99 Church Street

New York, New York 10007

Attention: ABS Monitoring
Department

 

Telecopier No.: (212)
553-1350

 

(vi)                              If
to Standard & Poor’s:

 

Standard
& Poor’s Ratings Services, a

division of The McGraw Hill Companies

55 Water Street

New York, New York 10004

 

Telecopier No.: (212)
438-2657

 

(vii)                           If to
the Underwriters:

 

Citigroup Global Markets
Inc.

390 Greenwich Street

6th Floor

New York, New York 10013

Attention:  Asset Backed Finance Division

 

Telecopier No.:  (212) 723-8591

 

BNP Paribas Securities
Corp.

787 Seventh Avenue

New York, New York 10019

Attention: Michael Gonik

 

Telecopier No: (212)
841-2689

 

J.P. Morgan Securities,
Inc.

270 Park Avenue

10 th Floor

New York, New York 10017

Attention: General
Counsel

 

Telecopier No.: (212)
834-6562

 

65

 

Wachovia Capital Markets,
LLC

301 College Street

Charlotte, North Carolina
28288

Attention:  Curt Sidden

 

Telecopier No.:  (704) 383-9106

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

66

 

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

 

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

 

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

 

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

 

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

 

67

 

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

 

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

 

[signature page
follows]

 

68

 

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

 

	
   

  	
  HARLEY-DAVIDSON
  MOTORCYCLE TRUST 2004-2

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

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

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Janel R. Havrilla

  	
   

  
	
   

  	
   

  	
   

  	
  Printed Name: Janel R.
  Havrilla

  
	
   

  	
   

  	
   

  	
  Title: Financial
  Services Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HARLEY-DAVIDSON
  CUSTOMER FUNDING CORP.,

  
	
   

  	
  as Trust Depositor

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Perry A. Glassgow

  	
   

  
	
   

  	
   

  	
   

  	
  Printed Name: Perry A.
  Glassgow

  
	
   

  	
   

  	
   

  	
  Title: Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HARLEY-DAVIDSON CREDIT
  CORP., as Servicer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Perry A. Glassgow

  	
   

  
	
   

  	
   

  	
   

  	
  Printed Name: Perry A.
  Glassgow

  
	
   

  	
   

  	
   

  	
  Title: Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BNY MIDWEST TRUST
  COMPANY, not in its individual capacity but solely as Indenture Trustee

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Cynthia Davis

  	
   

  
	
   

  	
   

  	
   

  	
  Printed Name: Cynthia
  Davis

  
	
   

  	
   

  	
   

  	
  Title: Vice President

  
						

 

Signature Page to
Sale and Servicing Agreement

 

 

Exhibit A

[Form of Assignment]

 

In accordance with the
Sale and Servicing Agreement (the “Sale and Servicing Agreement”) dated as of
May 1, 2004 made by and between the undersigned, as Trust Depositor (“Trust
Depositor”), Harley-Davidson Credit Corp., as Servicer (“HDCC”),
BNY Midwest Trust Company, as Indenture Trustee and Harley-Davidson Motorcycle
Trust 2004-2 (the “Trust”), as assignee thereunder, the undersigned does
hereby sell, transfer, convey and assign, set over and otherwise convey to the
Trust (i) all the right, title and interest of the Trust Depositor in and to
the Initial Contracts listed on the initial List of Contracts delivered on the
Closing Date (including, without limitation, all security interests and all
rights to receive payments which are collected pursuant thereto after the
Initial Cutoff Date, including any liquidation proceeds therefrom, but excluding
any rights to receive payments which were collected pursuant thereto on or
prior to the Initial Cutoff Date), (ii) all rights of the Trust Depositor under
any physical damage or other individual insurance policy (and rights under a “forced
placed” policy, if any), any debt insurance policy or any debt
cancellation agreement relating to any such Contract, an Obligor or a
Motorcycle securing such Contract, (iii) all security interests in each such
Motorcycle, (iv) all documents contained in the related Contract Files, (v) all
rights (but not the obligations) of the Trust Depositor under any related
motorcycle dealer agreements between dealers (i.e., the originators of certain
Contracts) and HDCC, (vi) all rights of the Trust Depositor in the Lockbox, the
Lockbox Account and related Lockbox Agreement to the extent they relate to such
Contracts, (vii) all rights (but not the obligations) of the Trust Depositor
under the Transfer and Sale Agreement, including but not limited to the Trust
Depositor’s rights under Article V thereof, (viii) the remittances, deposits
and payments made into the Trust Accounts from time to time and amounts in the
Trust Accounts from time to time (and any investments of such amounts), (ix)
all rights of the Trust Depositor to certain rebates of premiums and other
amounts relating to insurance policies, debt cancellation agreements, extended
service contracts or other repair agreements and other items financed under
such Contracts, and (x) all proceeds and products of the foregoing.

 

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

 

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

 

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

 

	
   

  	
  HARLEY-DAVIDSON
  CUSTOMER FUNDING CORP.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Printed Name: Perry A.
  Glassgow

  
	
   

  	
  Title:   Treasurer

  

 

A-1

 

Exhibit
B

[Form of Closing Certificate of Trust Depositor]

 

Harley-Davidson
Customer Funding Corp.

 

Officer’s
Certificate

 

The undersigned certifies
that he is Vice President, Treasurer and Assistant Secretary of Harley-Davidson
Customer Funding Corp., a Nevada corporation (the “Trust Depositor”), and that
as such is duly authorized to execute and deliver this certificate on behalf of
the Trust Depositor in connection with the Sale and Servicing Agreement (the “Agreement”)
dated as of May 1, 2004 (the “Effective Date”) by and among the Trust
Depositor, BNY Midwest Trust Company (the “Indenture Trustee”), as Indenture
Trustee, Harley-Davidson Credit Corp. (“Harley-Davidson Credit”), as Servicer, and
Harley-Davidson Motorcycle Trust 2004-2 (“Issuer”) (all capitalized terms used
herein without definition have the respective meanings set forth in the
Agreement), and further certifies as follows:

 

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

 

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

 

(3)                                  Attached
hereto as Exhibit
II is a Certificate of the Secretary of State of the State of Nevada
dated May 7, 2004 stating that the Trust Depositor is duly incorporated under
the laws of the State of Nevada and is in good standing.

 

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

 

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

 

B-1

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

B-2

 

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

 

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

 

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

 

*    *   
*    *

 

B-3

 

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

 

 

	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Printed Name: Perry A.
  Glassgow

  
	
   

  	
  Title: Vice President, Treasurer
  and Assistant Secretary

  

 

 

Exhibit
C

[Form of Closing Certificate of Servicer/Seller]

 

HARLEY-DAVIDSON
CREDIT CORP.

 

Officer’s
Certificate

 

The undersigned certifies
that he is Vice President, Treasurer and Assistant Secretary of Harley-Davidson
Credit Corp. (“Harley-Davidson Credit”), and that as such is duly
authorized to execute and deliver this certificate on behalf of Harley-Davidson
Credit, as Servicer, in connection with the Sale and Servicing Agreement (the “Sale and
Servicing Agreement”) dated as of May 1, 2004 (the “Effective
Date”) by and among Harley-Davidson Credit, as Servicer,
Harley-Davidson Customer Funding Corp. (“CFC”), BNY Midwest Trust Company, as
Indenture Trustee and Harley-Davidson Motorcycle Trust 2004-2 (“Issuer”),
in connection with the Transfer and Sale Agreement dated as of the Effective
Date (the “Transfer
and Sale Agreement”) by and between Harley-Davidson Credit and CFC
(all capitalized terms used herein without definition having the respective
meanings set forth in the Sale and Servicing Agreement), and further certifies
as follows:

 

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

 

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

 

(3)                                  Attached
hereto as Exhibit
II is a Certificate of the Secretary of State of the State of Nevada
dated May 7, 2004 stating that Harley-Davidson Credit is duly incorporated
under the laws of the State of Nevada and is in good standing.

 

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

 

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

 

C-1

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

C-2

 

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

 

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

 

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

 

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

 

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

 

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

 

*   *  
*   *   *   *

 

C-3

 

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

 

 

	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Printed Name: Perry A.
  Glassgow

  
	
   

  	
  Title: Vice President,
  Treasurer and Assistant Secretary

  

 

 

Exhibit
D

[Form of Opinion of Counsel for Trust Depositor

Regarding General Corporate Matters

(Including Perfection Opinion)]

 

See
Tab 23

 

D-1

 

Exhibit
E

[Form of Opinion of Counsel for Trust

Depositor Regarding the “True Sale” Nature

of the Transaction]

 

See
Tab 24

 

E-1

 

Exhibit F

[Form of Opinion of Counsel for Trust

Depositor Regarding Non-consolidation]

 

See
Tab 25

 

F-1

 

Exhibit
G

[Form of Certificate Regarding Reacquired Contracts]

 

Harley-Davidson
Credit Corp.

 

Certificate
Regarding Reacquired Contracts

 

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

 

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

 

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

 

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

 

	
   

  	
  Harley-Davidson Credit
  Corp.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Printed Name: Perry A.
  Glassgow

  
	
   

  	
   

  	
  Title: Treasurer

  
					

 

G-1

 

Exhibit H

[List of Contracts]

 

See
Tab 6

 

H-1

 

Exhibit
I

[Form of Monthly Report to Noteholders and the
Certificateholder]

 

Harley-Davidson
Motorcycle Trust 2004-2

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

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

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

 

Monthly Report

 

For the
[         ] Distribution Date

 

 

	
  A.

  	
   

  	
  Calculation of
  Available Monies

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.                                       Available
  Monies (l. plus 2.)

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B.

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C.

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  D.

  	
   

  	
  Calculation of Note
  Monthly Principal Distributable Amount

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1A.                             Class
  A Note Percentage for such Distribution Date

  	
   

  	
  94.50

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (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

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  94.50

  	
  %

  

 

I-1

 

	
   

  	
   

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

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  0.00

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1B.                               Class
  B Note Percentage for such Distribution Date

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  5.50

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  100.00

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.                                       Principal
  Distributable Amount (from B)

  	
   

  	
  $

  	
   

  	
   

  
							

 

I-2

 

	
   

  	
   

  	
  3.                                       Note
  Monthly Principal Distributable Amount for

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (d)                                 Note
  Principal Carryover Shortfall

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  

 

I-3

 

	
  E.

  	
   

  	
  Calculation of Note
  Monthly Interest Distributable Amount.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.                                       Class
  A-l Interest Rate

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.                                       Class
  A-2 Interest Rate

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.                                       Class
  B Interest Rate

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  7.                                       Interest
  Carryover Shortfall for such Distribution Date

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  F.

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  

 

I-4

 

	
  G.

  	
   

  	
  Fees

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  H.

  	
   

  	
  CALCULATION OF THE
  AVAILABLE MONIES FOR SUCH DISTRIBUTION DATE

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  b.                                      All
  Net Liquidation Proceeds

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  

 

I-5

 

	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  

 

I-6

 

	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  I.

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  J.

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  K.

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  L.

  	
   

  	
  Interest Earnings on
  the Reserve Fund.

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  M.

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  

 

I-7

 

	
  N.

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  O.

  	
   

  	
  The Pool Factor

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  P.

  	
   

  	
  Delinquent Contracts

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.                                       31-59
  Days

  	
  #

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.                                       60-89
  Days

  	
  #

  	
   

  	
  $

  	
   

  	
   

  

 

I-8

 

	
   

  	
   

  	
  3.                                       90
  or More Days

  	
  #

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Q.

  	
   

  	
  Liquidated Contracts

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.                                       Total
  Liquidated Contracts     #

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.                                       Liquidation
  proceeds for the Due Period

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.                                       Liquidation
  expenses for the Due Period

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.                                       Net
  Liquidation Proceeds for the Due Period

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  5.                                       Net
  Liquidation Losses for the Due Period

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  R.

  	
   

  	
  Advances

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.                                       Unreimbursed
  Advances prior to such Distribution Date

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.                                       Amount
  of Delinquent Interest for such Distribution Date

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  S.

  	
   

  	
  Reacquired Contracts

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.                                       Principal
  Amount of such Contracts

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.                                       Related
  Reacquisition Price of such Contracts

  	
   

  	
  $

  	
   

  	
   

  

 

I-9

 

	
  T.

  	
   

  	
  Contracts

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.                                       Number
  of Contracts as of beginning of Due Period

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.                                       Number
  of Contracts as of end of Due Period

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  U.

  	
   

  	
  Interest Reserve
  Account

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.                                       Interest
  Reserve Amount as of previous Distribution Date

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.                                       Interest
  received into Interest Reserve Account

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.                                       Excess
  Funds remitted to Trust Depositor

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  5.                                       Interest
  Reserve Amount as of upcoming Distribution Date

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  V.

  	
   

  	
  Ratios

  	
   

  	
   

  	
   

  

 

I-10

 

	
   

  	
   

  	
  1.                                       Cumulative
  Loss Ratio

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.                                       Average
  Delinquency Ratio for such Distribution Date

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (c)                                  The
  Delinquency Ratio for the prior Distribution Date

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.                                       Average
  Loss Ratio for such Distribution Date

  	
   

  	
   

  	
   

  

 

I-11

 

	
   

  	
   

  	
  (a)                                  Net
  Liquidation Losses

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (c)                                  The
  Loss Ratio for the prior Distribution Date

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.                                       Computation
  of Specified Reserve Fund Balance

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Reserve Fund Trigger
  Events

  	
   

  	
   

  	
   

  

 

I-12

 

	
   

  	
   

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

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
   

  	
  %

  

 

I-13

 

	
   

  	
   

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

  	
   

  	
   

  	
  %

  

 

I-14

 

Exhibit J

[Seller’s Representations and Warranties]

 

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

 

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

 

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

 

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

 

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

 

J-1

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

J-2

 

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

 

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

 

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

 

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

 

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

 

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

 

J-3

 

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

 

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

 

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

 

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

 

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

 

J-4

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

J-5

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

J-6

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

J-7

 

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

 

J-8

 

Exhibit K

[Lockbox Bank and Lockbox Account]

 

Lockbox

 

Harley-Davidson Credit
Corp.

135 South LaSalle Street,
Dept. 8529

Chicago, Illinois
60674-8529

 

Lockbox Bank

 

LaSalle Bank National
Association

135 South LaSalle Street

Chicago, Illinois 60674

 

K-1

 

Exhibit L

[Form of Subsequent Transfer Agreement]

 

[see Exhibit C
of the Transfer and Sale Agreement]

 

L-1

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