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, 2006

 

 

 

TABLE OF CONTENTS

 

	
  ARTICLE I DEFINITION

  	
  3

  
	
   

  	
   

  
	
  SECTION 1.01.

  	
  GENERAL

  	
  3

  
	
   

  	
   

  	
   

  
	
  ARTICLE II TRANSFER
  OF CONTRACTS; ASSIGNMENT OF AGREEMENT

  	
  4

  
	
   

  	
   

  	
   

  
	
  SECTION 2.01.

  	
  CLOSING

  	
  4

  
	
  SECTION 2.02.

  	
  CONDITIONS
  TO THE CLOSING

  	
  8

  
	
  SECTION 2.03.

  	
  ASSIGNMENT
  OF AGREEMENT

  	
  11

  
	
  SECTION 2.04.

  	
  SUBSEQUENT
  CONTRACTS

  	
  12

  
	
   

  	
   

  	
   

  
	
  ARTICLE III REPRESENTATIONS
  AND WARRANTIES

  	
  19

  
	
   

  	
   

  	
   

  
	
  SECTION 3.01.

  	
  REPRESENTATIONS
  AND WARRANTIES REGARDING SELLER

  	
  20

  
	
  SECTION 3.02.

  	
  REPRESENTATIONS
  AND WARRANTIES REGARDING EACH CONTRACT

  	
  26

  
	
  SECTION 3.03.

  	
  REPRESENTATIONS
  AND WARRANTIES REGARDING THE CONTRACTS IN THE AGGREGATE

  	
  40

  
	
  SECTION 3.04.

  	
  REPRESENTATIONS
  AND WARRANTIES REGARDING THE CONTRACT FILES

  	
  45

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV PERFECTION
  OF TRANSFER AND PROTECTION OF SECURITY INTERESTS

  	
  47

  
	
   

  	
   

  	
   

  
	
  SECTION 4.01.

  	
  CUSTODY
  OF CONTRACTS

  	
  47

  
	
  SECTION 4.02.

  	
  FILING

  	
  47

  
	
  SECTION 4.03.

  	
  NAME
  CHANGE OR RELOCATION

  	
  49

  
	
  SECTION 4.04.

  	
  COSTS AND
  EXPENSES

  	
  50

  
	
  SECTION 4.05

  	
  SALE TREATMENT

  	
  51

  
	
  SECTION 4.06

  	
  SEPARATENESS
  FROM TRUST DEPOSITOR

  	
  51

  
	
  SECTION 4.07

  	
  PROTECTION
  OF SECURITY INTERESTS

  	
  52

  
	
   

  	
   

  	
   

  
	
  ARTICLE V REMEDIES
  UPON MISREPRESENTATION

  	
  53

  
	
   

  	
   

  	
   

  
	
  SECTION 5.01.

  	
  REPURCHASES
  OF CONTRACTS FOR BREACH OF REPRESENTATIONS AND WARRANTIES

  	
  53

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI INDEMNITIES

  	
  55

  
	
   

  	
   

  	
   

  
	
  SECTION 6.01.

  	
  SELLER
  INDEMNIFICATION

  	
  55

  
	
  SECTION 6.02.

  	
  LIABILITIES
  TO OBLIGORS

  	
  57

  
	
  SECTION 6.03.

  	
  TAX
  INDEMNIFICATION

  	
  57

  
	
  SECTION 6.04.

  	
  OPERATION
  OF INDEMNITIES

  	
  59

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII MISCELLANEOUS

  	
  60

  
	
   

  	
   

  	
   

  
	
  SECTION 7.01.

  	
  PROHIBITED
  TRANSACTIONS WITH RESPECT TO THE TRUST

  	
  60

  
	
  SECTION 7.02.

  	
  MERGER
  OR CONSOLIDATION

  	
  60

  
	
  SECTION 7.03.

  	
  TERMINATION

  	
  62

  
	
  SECTION 7.04.

  	
  ASSIGNMENT
  OR DELEGATION BY SELLER

  	
  62

  
	
  SECTION 7.05.

  	
  AMENDMENT

  	
  63

  
	
  SECTION 7.06.

  	
  NOTICES

  	
  66

  
	
  SECTION 7.07.

  	
  MERGER
  AND INTEGRATION

  	
  67

  
	
  SECTION 7.08.

  	
  HEADINGS

  	
  67

  
	
  SECTION 7.09.

  	
  GOVERNING LAW

  	
  68

  

 

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, 2006, 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 2006-2 (the “Trust”)
pursuant to the Sale and Servicing Agreement dated as of May 1, 2006 by
and among Trust Depositor, Harley-Davidson Credit, as Servicer, the Trust, as
issuer (the “Issuer”) and The Bank of New York Trust
Company, N.A., 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
$503,275,266.36 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;

 

(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 5.00% of the aggregate principal
balance of contracts financed from time to time by the Seller are secured by
motorcycles manufactured by Buell.

 

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

 

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

 

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

 

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

 

(c)                                  No
Waivers. As of the Closing Date (or the applicable Subsequent Transfer
Date, in the case of Subsequent Contracts), the terms of the Contracts have not
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.
The Seller, in accordance with its policies and procedures, has determined
that, as of the date of origination of each Contract, the related Obligor had
obtained or agreed to obtain physical damage insurance covering the Motorcycle.
The terms of each Contract require that for the term of such Contract the
Motorcycle securing such Contract will be covered by physical damage insurance.

 

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

 

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

 

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

 

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

 

8

 

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

 

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

 

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

 

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

 

9

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(w)                               Selection Criteria. Each Contract is
secured by a new or used Motorcycle. No Contract has a Contract Rate less than
0.900%. Each Contract amortizes the amount

 

10

 

financed
over an original term no greater than 84 months. Each Contract has a Principal
Balance of at least $708.94 as of the related Cutoff Date.

 

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

 

(a)                                  Amounts.
The sum of the aggregate Principal Balances payable by Obligors under the
Contracts as of the Initial Cutoff Date (or the applicable Subsequent Cutoff
Date in the case of Subsequent Contracts), plus the Pre-Funded Amount as of
such date, equals or exceeds the sum of the principal balance of  the 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 October 2013.
Approximately 81.41% 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 18.59% 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 0.900%. The last
scheduled payment date of the Contracts (including any Subsequent Contracts) is
due no later than January 2014. Approximately 98.85% 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 1.15% of the Principal Balance of the Initial Contracts as of
the Initial Cutoff Date is attributable to loans for purchases of Motorcycles
not manufactured by Harley-Davidson or Buell.

 

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

 

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

 

(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

 

11

 

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
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

 

12

 

persons, including, without limitation, the filing of financing
statements, amendments thereto and continuation statements, the execution of
transfer instruments and the making of notations on or taking possession of all
records or documents of title. The Seller authorizes the Trust Depositor to
file financing statements describing the Contract Assets as collateral. All
financing statements filed or to be filed against the Seller in favor of the Trust
Depositor or the Trust in connection herewith describing the Contract Assets as
collateral shall contain a statement to the following effect: “A purchase of or
security interest in any collateral described in this financing statement,
except as permitted in the Transfer and Sale Agreement or Sale and Servicing
Agreement, will violate the rights of the Secured Party.”

 

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

 

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

 

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

 

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

 

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

 

13

 

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
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.

 

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

 

14

 

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

 

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

 

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

 

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

 

15

 

ARTICLE VII

 

MISCELLANEOUS

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

16

 

herein, therein or in the Prospectus, as the case may be, or to
add any other provisions with respect to matters or questions arising under
this Agreement which shall not be inconsistent with the provisions of this
Agreement or the Prospectus; provided, however,
that such action shall not, as evidenced by an Opinion of Counsel for Seller
acceptable to the Trustees, adversely affect the interests of any Noteholder.

 

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

 

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

 

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

 

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

 

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

 

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.

 

17

 

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

 

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

 

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

 

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

 

[signature page follows]

 

18

 

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

 

	
   

  	
  HARLEY-DAVIDSON
  CUSTOMER FUNDING CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ PERRY A.
  GLASSGOW

  	
   

  
	
   

  	
  Printed Name:
  Perry A. Glassgow

  
	
   

  	
  Title: Vice
  President and Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HARLEY-DAVIDSON
  CREDIT CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ PERRY A.
  GLASSGOW

  	
   

  
	
   

  	
  Printed Name:
  Perry A. Glassgow

  
	
   

  	
  Title: Vice
  President and 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, 2006 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, 2006 made by
and among the undersigned, as servicer, the Trust Depositor, Harley-Davidson
Motorcycle Trust 2006-2, as issuer, and The Bank of New York Trust Company,
N.A., as indenture trustee.

 

A-1

 

IN WITNESS
WHEREOF, the undersigned has caused this Assignment to be duly executed this 1st
day of May, 2006.

 

	
   

  	
  HARLEY-DAVIDSON
  CREDIT CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Printed Name: Perry A. Glassgow

  
	
   

  	
   

  	
  Title: Vice President and 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, 2006 (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, 2006 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 81.41% of the Principal Balance of
the Contracts as of the Subsequent Cutoff Date is attributable to loans for
purchases of new Motorcycles and approximately 18.59% 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 $296,724,733.64 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: Vice President and Treasurer

  
	
   

  	
   

  
	
   

  	
  HARLEY-DAVIDSON
  CREDIT CORP.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Printed Name:  
  Perry A. Glassgow

  
	
   

  	
   

  	
  Title: Vice President and TreasurerExhibit
10.2

 

 

SALE AND SERVICING AGREEMENT

 

among

 

HARLEY-DAVIDSON MOTORCYCLE TRUST 2006-2,

as Issuer,

 

HARLEY-DAVIDSON CUSTOMER FUNDING CORP.,

as Trust Depositor,

 

HARLEY-DAVIDSON CREDIT CORP.,

as Servicer

 

and

 

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

as Indenture Trustee

 

Dated as of May 1, 2006

 

 

 

Table of Contents

 

	
   

  	
  Page

  
	
   

  	
   

  
	
  ARTICLE
  One DEFINITIONS

  	
  3

  
	
  Section 1.01.

  	
  Definitions

  	
  3

  
	
  Section 1.02.

  	
  Usage of Terms

  	
  73

  
	
  Section 1.03.

  	
  Section References

  	
  74

  
	
  Section 1.04.

  	
  Calculations

  	
  74

  
	
  Section 1.05.

  	
  Accounting Terms

  	
  74

  
	
  ARTICLE
  Two TRANSFER
  OF CONTRACTS

  	
  75

  
	
  Section 2.01.

  	
  Closing

  	
  75

  
	
  Section 2.02.

  	
  Conditions to the Closing

  	
  78

  
	
  Section 2.03.

  	
  Conveyance of Subsequent
  Contracts

  	
  83

  
	
  ARTICLE Three REPRESENTATIONS AND WARRANTIES

  	
  94

  
	
  Section
  3.01.

  	
  Representations
  and Warranties Regarding the Trust Depositor

  	
  96

  
	
  Section
  3.02.

  	
  Representations
  and Warranties Regarding the Servicer

  	
  104

  
	
  ARTICLE Four PERFECTION OF TRANSFER AND PROTECTION OF SECURITY
  INTERESTS

  	
  109

  
	
  Section 4.01.

  	
  Custody of
  Contracts

  	
  109

  
	
  Section 4.02.

  	
  Filing

  	
  115

  
	
  Section
  4.03.

  	
  Name Change
  or Relocation

  	
  116

  
	
  Section 4.04.

  	
  Costs and
  Expenses

  	
  118

  
	
  ARTICLE Five SERVICING
  OF CONTRACTS

  	
  118

  
	
  Section
  5.01.

  	
  Responsibility
  for Contract Administration

  	
  118

  
	
  Section 5.02.

  	
  Standard of Care

  	
  119

  
	
  Section 5.03.

  	
  Records

  	
  120

  
	
  Section 5.04.

  	
  Inspection

  	
  120

  
	
  Section 5.05.

  	
  Trust Accounts

  	
  122

  
	
  Section 5.06.

  	
  Enforcement

  	
  129

  
	
  Section
  5.07.

  	
  Trustees to
  Cooperate

  	
  134

  
	
  Section 5.08.

  	
  Costs and
  Expenses

  	
  136

  
	
  Section
  5.09.

  	
  Maintenance
  of Security Interests in Motorcycles

  	
  137

  
	
  Section
  5.10.

  	
  Successor
  Servicer/Lockbox Agreements

  	
  138

  
	
  Section
  5.11.

  	
  Separate
  Entity Existence

  	
  139

  
	
  ARTICLE Six THE
  TRUST DEPOSITOR

  	
  140

  
	
  Section
  6.01.

  	
  Covenants
  of the Trust Depositor

  	
  140

  
	
  (a)

  	
  Existence

  	
  140

  
	
  Section
  6.02.

  	
  Liability
  of Trust Depositor; Indemnities

  	
  149

  
	
  Section
  6.03.

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

  	
  155

  
	
  Section
  6.04.

  	
  Limitation
  on Liability of Trust Depositor and Others

  	
  158

  
	
  Section
  6.05.

  	
  Trust
  Depositor Not to Resign

  	
  160

  
	
  ARTICLE Seven DISTRIBUTIONS; RESERVE FUND

  	
  160

  
	
  Section
  7.01.

  	
  Monthly
  Distributions

  	
  160

  
	
  Section 7.02.

  	
  Fees

  	
  161

  
	
  Section
  7.03.

  	
  Advances;
  Realization of Carrying Charge

  	
  162

  
	
  Section
  7.04.

  	
  Interest
  Reserve Account

  	
  164

  
	
  Section
  7.05.

  	
  Distributions;
  Priorities

  	
  166

  
	
  Section 7.06.

  	
  Reserve Fund

  	
  177

  
	
  Section
  7.07.

  	
  Establishment
  of Pre-Funding Account

  	
  181

  
	
  Section
  7.08.

  	
  Purchase of
  Contracts for Breach of Representations and Warranties

  	
  184

  
	
  Section
  7.09.

  	
  Reassignment
  of Reacquired Contracts

  	
  187

  
	
  Section
  7.10.

  	
  Servicer’s
  Purchase Option

  	
  188

  

 

i

 

	
  Section
  7.11.

  	
  Purchase of
  Contracts for Breach of Servicing Obligations

  	
  189

  
	
  ARTICLE
  Eight EVENTS OF TERMINATION; SERVICE TRANSFER

  	
  191

  
	
  Section
  8.01.

  	
  Events of
  Termination

  	
  191

  
	
  Section
  8.02.

  	
  Waiver of
  Event of Termination

  	
  196

  
	
  Section 8.03.

  	
  Service Transfer

  	
  196

  
	
  Section
  8.04.

  	
  Successor Servicer
  to Act; Appointment of Successor Servicer

  	
  198

  
	
  Section
  8.05.

  	
  Notification
  to Securityholders

  	
  200

  
	
  Section 8.06.

  	
  Effect of
  Transfer

  	
  201

  
	
  Section 8.07.

  	
  Database File

  	
  202

  
	
  Section
  8.08.

  	
  Successor
  Servicer Indemnification

  	
  203

  
	
  Section
  8.09.

  	
  Responsibilities
  of the Successor Servicer

  	
  204

  
	
  Section
  8.10.

  	
  Limitation
  of Liability of Servicer

  	
  206

  
	
  Section
  8.11.

  	
  Merger or
  Consolidation of Servicer

  	
  208

  
	
  Section
  8.12.

  	
  Servicer Not
  to Resign

  	
  209

  
	
  Section
  8.13.

  	
  Appointment
  of Subservicer

  	
  210

  
	
  ARTICLE
  Nine REPORTS

  	
  210

  
	
  Section 9.01.

  	
  Monthly Reports

  	
  210

  
	
  Section
  9.02.

  	
  Officer’s
  Certificate

  	
  211

  
	
  Section 9.03.

  	
  Other Data

  	
  211

  
	
  Section
  9.04.

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

  	
  212

  
	
  Section
  9.05.

  	
  Monthly
  Reports to Noteholders

  	
  215

  
	
  ARTICLE Ten
  TERMINATION

  	
  228

  
	
  Section
  10.01.

  	
  Sale of Trust
  Assets

  	
  229

  
	
  ARTICLE
  Eleven MISCELLANEOUS

  	
  230

  
	
  Section 11.01.

  	
  Amendment

  	
  230

  
	
  Section
  11.02.

  	
  Protection
  of Title to Trust

  	
  235

  
	
  Section 11.03.

  	
  Governing Law

  	
  241

  
	
  Section 11.04.

  	
  Notices

  	
  241

  
	
  Section
  11.05.

  	
  Severability
  of Provisions

  	
  248

  
	
  Section 11.06.

  	
  Assignment

  	
  248

  
	
  Section
  11.07.

  	
  Third Party
  Beneficiaries

  	
  249

  
	
  Section 11.08.

  	
  Counterparts

  	
  249

  
	
  Section 11.09.

  	
  Headings

  	
  249

  
	
  Section
  11.10.

  	
  No
  Bankruptcy Petition; Disclaimer and Subordination

  	
  250

  
	
  Section
  11.11.

  	
  Limitation
  of Liability of Owner Trustee and Indenture Trustee

  	
  254

  

 

ii

 

EXHIBITS

 

	
  Exhibit A

  	
  Form
  of Assignment

  	
  A-1

  
	
  Exhibit B

  	
  Form of Closing Certificate of Trust Depositor

  	
  B-1

  
	
  Exhibit C

  	
  Form of Closing Certificate of Seller/Servicer

  	
  C-1

  
	
  Exhibit D

  	
  Form of Attestation Report

  	
  D-1

  
	
  Exhibit E

  	
  Servicing Criteria to be Addressed in Indenture
  Trustee’s Assessment of Compliance

  	
  E-1

  
	
  Exhibit F

  	
  Form of Indenture Trustee’s Annual Certification

  	
  F-1

  
	
  Exhibit G

  	
  Form of Certificate Regarding Reacquired Contracts

  	
  G-1

  
	
  Exhibit H

  	
  List
  of Contracts

  	
  H-1

  
	
  Exhibit I

  	
  Form of Monthly Report to Noteholders and the
  Certificateholder

  	
  I-1

  
	
  Exhibit J

  	
  Seller’s Representations and Warranties

  	
  J-1

  
	
  Exhibit K

  	
  Lockbox Bank and Lockbox Account

  	
  K-1

  
	
  Exhibit L

  	
  Form of Subsequent Transfer Agreement

  	
  L-1

  

 

iii

 

SALE AND SERVICING
AGREEMENT, dated as of May 1, 2006, among Harley-Davidson Motorcycle Trust
2006-2 (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”), The Bank of New York Trust Company, N.A. (solely in its
capacity as Indenture Trustee together with its successors and assigns, the “Indenture Trustee”) and Harley-Davidson Credit Corp.
(solely in its capacity as Servicer together with its successor and assigns, “Harley-Davidson Credit” or the “Servicer”).

 

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

 

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

 

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

 

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

 

ARTICLE ONE

DEFINITIONS

 

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

 

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

 

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

 

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

 

1

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

2

 

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

 

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

 

“Base Prospectus” means the Prospectus dated May 23, 2006
relating to the Harley-Davidson Motorcycle Trusts.

 

“Buell”
means Buell Motorcycle Company, LLC.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Class A-1 Final Distribution
Date” means the
October 2010 Distribution Date.

 

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

 

3

 

“Class
A-1 Rate” means 5.36% per annum (computed on the basis of a
360-day year of twelve 30-day months).

 

 “Class A-2 Final Distribution Date” means the March 2013 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 5.35% per annum (computed on the basis of a
360-day year of twelve 30-day months).

 

“Class B Final Distribution Date” means the August 2014 Distribution Date.

 

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

 

 “Class B Rate” means 5.58%
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 31, 2006.

 

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

 

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

 

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

 

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

 

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

 

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

 

4

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

5

 

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

 

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

 

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

 

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

 

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

 

“Distribution Date” means the fifteenth day of each calendar
month during the term of this Agreement, or if such day is not a Business Day,
the next Business Day, with the first such Distribution Date hereunder being
June 15, 2006.

 

“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, 2006.

 

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

 

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

 

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

 

6

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

7

 

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

 

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

 

“Form 10-K Disclosure Item” means with
respect to any Person, (a) any Form 10-D Disclosure Item, (b) any affiliations
between such Person and the Seller, the Servicer, the Trust Depositor, the
Owner Trustee and the Indenture Trustee (each, an “Item 1119 Party”), to the
extent such Person, or in the case of the Owner Trustee or Indenture Trustee, a
Responsible Officer of such Person, has actual knowledge thereof and (c) any
relationships or transactions between such Person and any Item 1119 Party that
are outside the ordinary course of business or on terms other than would be
obtained in an arm’s-length transaction with an unrelated third party, apart
from the transactions contemplated under the Transaction Documents, and that
are material to the investors’ understanding of the Notes, but only to the
extent such Person, or in the case of the Owner Trustee or Indenture Trustee, a
Responsible Officer of such Person, has actual knowledge of such relationships
or transactions.

 

“Funding Period” means the period beginning on the
Closing Date and ending on the first to occur of (a) the 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.

 

8

 

“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 0.00215% 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 $450,000,000.

 

“Initial
Class A-2 Note Balance” means $302,000,000.

 

“Initial
Class B Note Balance” means $48,000,000.

 

“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 12,
2006.

 

“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.

 

9

 

“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 $2,237,443.58.

 

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

 

“Issuer” means
the Harley-Davidson Motorcycle Trust 2006-2.

 

“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

 

10

 

from the Obligor,
(iii) the Contract Rate and (iv) the maturity date, and which list (as in
effect on the Closing Date) is attached to this Agreement as Exhibit H.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

11

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“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.

 

12

 

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

 

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

 

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

 

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

 

“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.

 

13

 

“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.

 

“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

 

14

 

because of a
breach of representation or warranty or is purchased by the Servicer pursuant
to Section 7.11 hereof, or if (y) the Servicer gives notice of its intent to
purchase the Contracts in connection with an optional termination of the Trust
pursuant to Section 7.10 hereof, in each case the Principal Balance of such
Contract or Contracts shall be deemed as of the related Determination Date to
be zero for the Due Period in which such event occurs and for each Due Period
thereafter and (ii) from and after the Due Period in which a Contract becomes a
Liquidated Contract, the Principal Balance of such Contract shall be deemed to
be zero; and (b) where the context requires, the aggregate of the Principal
Balances described in clause (a) for all such Contracts.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Reserve
Fund Initial Deposit” means $3,774,564.50.

 

“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

 

16

 

(iii) the
Cumulative Loss Ratio for such Distribution Date is equal to or greater than
(a) 1.25% with respect to any Distribution Date which occurs within the period
from the Closing Date to, and inclusive of, the first anniversary of the
Closing Date, (b) 2.00% with respect to any Distribution Date which occurs
within the period from the day after the first anniversary of the Closing Date
to, and inclusive of, the second anniversary of the Closing Date, (c) 2.50%
with respect to any Distribution Date which occurs within the period from the
day after the second anniversary of the Closing Date to, and inclusive of, the
third anniversary of the Closing Date, or (d) 2.75% with respect to any
Distribution Date occurring after the third anniversary of the Closing Date.

 

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 Indenture Trustee customarily performing functions
similar to those performed by persons who at the time shall be such officers,
respectively, or to whom a corporate trust matter is referred because of
knowledge of, familiarity with, and authority to act with respect to a
particular matter.

 

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

 

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

 

“Securityholders”
means the Holders of the Notes.

 

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

 

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

 

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

 

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

 

17

 

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

 

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

 

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

 

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

 

“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

 

18

 

amount of funds
actually on deposit in the Reserve Fund may, in certain circumstances, be less
than the Specified Reserve Fund Balance.

 

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

 

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

 

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

 

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

 

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

 

“Subsequent Reserve Fund Amount” means the amount on each Subsequent
Transfer Date equal to 0.75% 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 23, 2006.

 

“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.

 

19

 

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

 

“Trust Account Property” means the Trust Accounts, all amounts
and investments held from time to time in any Trust Account (whether in the
form of deposit accounts, physical property, book-entry securities,
uncertificated securities or otherwise), including the Reserve Fund Initial
Deposit, and all proceeds of the foregoing.

 

“Trust Agreement” means the Trust Agreement, dated as of
May 2, 2006, 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 J.P. Morgan Securities Inc., ABN
AMRO Incorporated, BNP Paribas Securities Corp., Citigroup Global Markets Inc.
and Wachovia Capital Markets, LLC.

 

20

 

“Underwriting Agreement” means the Underwriting Agreement, dated
May 23, 2006, by and among the Trust Depositor, the Seller and the
Underwriters.

 

“United
States” means the United States of America.

 

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

 

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

 

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

 

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

 

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

 

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

 

21

 

(and rights under a “forced placed” policy, if any), any debt insurance policy or
any debt cancellation agreement relating to any such Contract, an Obligor or a
Motorcycle securing such Contract, (iii) all security interests in each such
Motorcycle, (iv) all documents contained in the related Contract Files, (v) all
rights (but not the obligations) of the Trust Depositor under any related
motorcycle dealer agreements between dealers (i.e., the originators of certain
Contracts) and the Seller, (vi) all rights of the Trust Depositor in the
Lockbox, the Lockbox Account and the related Lockbox Agreement to the extent
they relate to the Contracts, (vii) all rights (but not the obligations) of the
Trust Depositor under the Transfer and Sale Agreement, including but not
limited to the Trust Depositor’s rights under Article V thereof, (viii) the
remittances, deposits and payments made into the Trust Accounts from time to
time and amounts in the Trust Accounts from time to time (and any investments
of such amounts), (ix) all rights of the Trust Depositor to certain rebates of
premiums and other amounts relating to insurance policies, debt cancellation
agreements, extended service contracts or other repair agreements and other
items financed under such Contracts and (x) all proceeds and products of the
foregoing (the property in clauses (i)-(x) above, being the “Trust Corpus”). Although the Trust Depositor and the Owner
Trustee agree that such transfer is intended to be a transfer of ownership of
the Trust Corpus, rather than the granting of a security interest to secure a
borrowing, and that the Trust Corpus shall not be property of the Trust
Depositor, in the event such transfer is deemed to be of a mere security
interest to secure a borrowing, the Trust Depositor shall be deemed to have
granted the Trust a perfected first priority security interest in such Trust
Corpus and this Agreement shall constitute a security agreement under
applicable law.

 

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

 

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

 

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

 

(c)           Opinions
of counsel for the Seller and the Trust Depositor in form and substance
reasonably satisfactory to the Underwriters (and including as an addressee
thereof each Rating Agency).

 

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

 

22

 

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

 

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

 

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

 

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

 

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

 

(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

 

23

 

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

 

24

 

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

 

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

 

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

 

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

 

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

 

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

 

(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 11.71% and (B) that the weighted

 

25

 

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;

 

(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
$296,724,733.64; 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

 

26

 

without limitation,
the representations and warranties of the Seller therein as set forth in Exhibit J attached hereto, together with all rights of the
Trust Depositor with respect to any breach thereof including any right to
require the Seller to reacquire any Contract in accordance with the Transfer
and Sale Agreement. It is understood and agreed that the representations and
warranties set forth or referred to in this Section shall survive delivery of
the Contract Files to the Owner Trustee or any custodian.

 

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

 

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

 

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

 

(b)           Organization and Good Standing. The Trust
Depositor is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization and has the
corporate power to own its assets and to transact the business in which it is
currently engaged. The Trust Depositor is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction in which the
character of 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

 

27

 

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

 

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

 

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

 

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

 

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

 

28

 

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

 

Such representations speak as of the execution and
delivery of this Agreement and as of the Closing Date in the case of the
Initial Contracts, and as of the applicable Subsequent Transfer Date in the
case of the Subsequent Contracts, but shall survive the transfer and assignment
of the Contracts to the Trust.

 

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

 

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

 

(b)           Authorization; Binding Obligations. The
Servicer has the power and authority to make, execute, deliver and perform this
Agreement and the other Transaction Documents to which the Servicer is a party
and all of the transactions contemplated under 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.

 

29

 

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

 

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

 

ARTICLE FOUR

PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS

 

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

 

(b)           The Servicer agrees to maintain the
related Contract Files at its offices where they are currently maintained, or
at such other offices of the Servicer in the State of Nevada as shall from time
to time be identified to the Trustees  by
written notice. The Servicer may temporarily move individual Contract Files or
any portion thereof without notice as necessary to conduct collection and other
servicing activities in accordance with its customary practices and procedures;
provided, however, that the Servicer
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:

 

30

 

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

 

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

 

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

 

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

 

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

 

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

 

31

 

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

 

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

 

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

 

(b)           If any change in either the Seller’s
or the Trust Depositor’s name, identity or structure or other action would make
any financing or continuation statement or notice of lien filed under this
Agreement seriously misleading within the meaning of applicable provisions of
the UCC or any title statute, the Servicer, no later than five days after the
effective date of such change, shall file such amendments as may be required to
preserve and protect the Trust’s interests in the Trust Corpus and the proceeds
thereof. In addition, neither the Seller nor the Trust Depositor shall change
its state of incorporation unless it has first taken such action as is
advisable or necessary to preserve and protect the Trust’s interest in the
Trust Corpus. Promptly 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).

 

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ARTICLE FIVE

SERVICING OF CONTRACTS

 

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

 

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

 

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

 

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

 

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

 

33

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(d)           The Servicer shall direct the
Indenture Trustee, and the Indenture Trustee shall invest the amounts in the
Trust Accounts in Qualified Eligible Investments that are payable on demand or
that mature not later than one Business Day prior to the next succeeding
Distribution Date. Once such funds are invested, the Indenture Trustee shall
not change the investment of such funds. Any loss on such investments shall be
deposited in the applicable Trust Account by

 

34

 

the Servicer out
of its own funds immediately as realized. Funds in the Trust Accounts not so
invested must be insured to the extent permitted by law by the Bank Insurance
Fund or the Savings Association Insurance Fund of the Federal Deposit Insurance
Corporation. Subject to the restrictions herein, the Indenture Trustee may
purchase a Qualified Eligible Investment from itself or an Affiliate. Subject
to the other provisions hereof, the Indenture Trustee shall have sole control
over each such investment and the income thereon, and any certificate or other
instrument evidencing any such investment, if any, shall be delivered directly
to the Indenture Trustee or its agent, together with each document of transfer,
if any, necessary to transfer title to such investment to the Indenture Trustee
in a manner which complies with this Section 5.05(d). All interest, dividends,
gains upon sale and other income from, or earnings on, investments of funds in
the Trust Accounts (other than the Reserve Fund and the Pre-Funding Account)
shall be deposited in the Collection Account pursuant to Section 5.05(b) and
distributed on the next Distribution Date pursuant to Section 7.05. The Trust
Depositor and the Trust agree and acknowledge that the Indenture Trustee is to
have “control” (within the meaning of
Section 9-106 of the UCC) of collateral comprised of “Investment
Property” (within the meaning of Section 9-102 of the UCC) for all
purposes of this Agreement.

 

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

 

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

 

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

 

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

 

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

 

(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

 

35

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

The Trust Depositor shall
be liable directly to and will indemnify any injured party or any other
creditor of the Trust for all losses, claims, damages, liabilities and expenses
of the Trust to the extent that Trust Depositor would be liable if the Trust
were a partnership under the Delaware Revised Uniform Limited Partnership Act
in which Trust Depositor were a general partner; provided,
however, that Trust 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
2006-2 – The Bank of New York Trust Company, N.A., as Indenture Trustee”
(such account being the “Interest Reserve
Account”).

 

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

 

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

 

Section
7.05.        Distributions; Priorities.

 

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

 

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

 

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 applicable Note Interest Distributable Amount
with respect to such Distribution Date to the Class A-1 Noteholders and to the
Class A-2 Noteholders; provided, however,
that if there are insufficient funds on deposit in the Note Distribution
Account to pay the entire amount of the Note Interest Distributable Amount for
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;

 

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

 

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

 

(viii)        to
the Note Distribution Account, together with any amounts deposited therein
pursuant to Section 7.06, the 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, second, to the Class A-2 Notes until the Class
A-2 Notes have been paid in full, and third, to the Class B Notes until the
Class B Notes have been paid in full;

 

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

 

(x)            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 applicable Note Interest Distributable Amount
with respect to such Distribution Date to the Class A-1 Noteholders and to the
Class A-2 Noteholders; provided, however,
that if there are insufficient funds on deposit in the Note Distribution
Account to pay the entire amount of the Note Interest Distributable Amount for
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;

 

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

 

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

 

(iv)          to
the Note Distribution Account, together with any amounts deposited therein
pursuant to Section 7.06, all amounts remaining after distribution of amounts
in clauses (i), (ii) and (iii) above 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

 

(v)           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

 

47

 

Distribution Account shall be applied to the Class A-1
Notes and the Class A-2 Notes pro rata (on
the basis of the Note Interest Distributable Amount for each such Class);

 

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

 

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

 

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

 

(v)           to
the Holder of the Certificate.

 

Section
7.06.        Reserve Fund.

 

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

 

(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

 

48

 

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

 

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

 

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

 

Section
7.07.        Establishment of Pre-Funding
Account.

 

(a)           On
or prior to the Closing Date, the Trust Depositor shall establish with and in
the name of the Indenture Trustee on behalf of the Securityholders, an Eligible
Account designated “Harley-Davidson Customer
Funding Corp. Pre-Funding Account - Harley Davidson Motorcycle Trust 2006-2 –
The Bank of New York Trust Company, N.A., as Indenture Trustee”
(such account being the “Pre-Funding Account”).

 

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

 

49

 

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

 

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

 

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

 

50

 

Trustees or the
Noteholders against the Seller with respect to a breach of a representation or
warranty of the Seller shall be to require the Seller to reacquire the related Contract
pursuant to this Section 7.08.

 

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

 

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

 

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

 

51

 

the Purchase Price of the
Contract, any Event of Termination pursuant to Section 8.01(b) arising as a
result of the Servicer’s breach of any of the covenants set forth in Section
5.02, 5.06 or 5.09 with respect to such Contract shall be deemed not to have
occurred.

 

ARTICLE EIGHT

EVENTS OF TERMINATION; SERVICE TRANSFER

 

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

 

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

 

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

 

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

 

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

 

52

 

failed to, or
admitted in writing its inability to, pay its debts as they become due, or
shall have taken any corporate action in furtherance of the foregoing;

 

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

 

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

 

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

 

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

 

(b)           Upon receipt of the notice required
by Section 8.03(a) (or, if later, on a date designated therein), all rights,
benefits, fees, indemnities, authority and power of the Servicer under this
Agreement, whether with respect to the Contracts, the Contract Files or
otherwise, shall pass to and be vested in the Indenture Trustee (the “Successor Servicer”) pursuant to and under this Section
8.03; and, without limitation, the Successor Servicer is authorized and
empowered to execute and deliver on behalf of the Servicer, as attorney-in-fact
or otherwise, any and all documents and other instruments, and to do any and
all acts or things necessary or 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

 

53

 

Servicer. Upon a
Service Transfer, the Successor Servicer shall also be entitled to receive the
Monthly Servicing Fee for performing the obligations of the Servicer.

 

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

 

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

 

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

 

54

 

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

 

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

 

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

 

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

 

The Successor Servicer
will make arrangements with the Servicer for the prompt and safe transfer of,
and the Servicer shall provide to the Successor Servicer, all necessary
servicing files and records, including (as deemed necessary by the Successor
Servicer at such time): (i) microfiche loan documentation, (ii) servicing
system tapes, (iii) Contract payment history, (iv) 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,

 

55

 

unenforceability
of any Contract with applicable law or the breach or the inaccuracy of any
representation or warranty made with respect to any Contract.

 

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

 

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

 

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

 

56

 

become effective until
the Indenture Trustee shall have assumed the responsibilities and rights of the
predecessor Servicer in accordance with Section 8.04.

 

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

 

ARTICLE NINE

REPORTS

 

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

 

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

 

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

 

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

 

(a)  The Servicer
will:

 

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

 

(ii)           cause
a firm of registered public accountants that is qualified and independent
within the meaning of Rule 2-01 of Regulation S-X under the Securities Act to
deliver to the Indenture Trustee and each Rating Agency within 90 days after
the end

 

57

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

58

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

59

 

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

 

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

 

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

 

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

 

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

 

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

 

Section
9.06.        Regulation AB.

 

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

 

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

 

(a)           As soon as available but no later
than March 15 of each calendar year for so long as the Issuer is required
to report under the Exchange Act, commencing in 2007, the Indenture Trustee
shall:

 

(i)            deliver
to the Servicer a report regarding the Indenture Trustee’s assessment of
compliance with the Servicing Criteria during the immediately preceding

 

60

 

calendar
year, as required under paragraph (b) of Rule 13a-18, Rule 15d-18 of the
Exchange Act and Item 1122 of Regulation AB substantially in the form
attached hereto as Exhibit D, or
such other form as mutually agreed upon by the Servicer and the Indenture
Trustee. Such report shall be signed by an authorized officer of the Indenture
Trustee, and shall address each of the Servicing Criteria specified in Exhibit E or such criteria as mutually
agreed upon by the Servicer and the Indenture Trustee;

 

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

 

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

 

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

 

Section
9.08.        Exchange
Act Reporting.

 

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

 

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

 

(c)           Form 10-K Filings.
So long as the Issuer is required to report under the Exchange Act, no later
than March 15 of each year, commencing in 2007, the Indenture Trustee and the
Owner Trustee shall notify the Servicer of any Form 10-K Disclosure

 

61

 

Item, together with a description of any such Form
10-K Disclosure Item in form and substance reasonably acceptable to the
Servicer.

 

ARTICLE TEN

TERMINATION

 

Section
10.01.      Sale of Trust Assets.

 

(a)           [Intentionally
Omitted].

 

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

 

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

 

ARTICLE ELEVEN

MISCELLANEOUS

 

Section
11.01.      Amendment.

 

(a)           This
Agreement may be amended by the Trust Depositor, the Servicer, the Indenture
Trustee and the Owner Trustee on behalf of the Issuer, collectively, without
the consent of any Securityholders, (i) to cure any ambiguity, to correct or
supplement any provisions in this Agreement which are inconsistent with the
provisions herein or in the Prospectus, or to add any other provisions with
respect to matters or questions arising under this Agreement that shall not be
inconsistent with the provisions of this Agreement or the Prospectus, (ii) to
add or provide any credit enhancement for any Class of Notes and (iii) to
change any provision applicable for determining the Specified Reserve Fund
Balance or the manner in which the Reserve Fund is funded; provided,
however that any such action shall not, as evidenced by an Opinion
of Counsel, adversely affect in any material respect the interests of any
Securityholder and provided, further, that in connection with any amendment
pursuant to clause (iii) above, the Servicer shall deliver to the Owner Trustee
and the Indenture Trustee a letter from Standard & Poor’s (so long as
Standard & Poor’s is a Rating Agency) and Moody’s (so long as Moody’s is a
Rating Agency) to the effect that such amendment will not cause its
then-current rating on any Class of Notes to be qualified, reduced or
withdrawn.

 

62

 

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

 

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

 

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

 

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

 

(f)            Notwithstanding anything to the
contrary in this Section 11.01, the Trust Depositor or the Servicer, acting on
behalf of the Trust Depositor, may request each Rating Agency to approve a
formula for determining the Specified Reserve Fund Balance that is different
from the formula or result determined from the current definition thereof
contained herein so as to result in a decrease in the amount of the Specified
Reserve Fund Balance or the manner by which such Reserve Fund is funded. If each
Rating Agency delivers to the Indenture Trustee and Owner Trustee a written
notice or letter stating that such action will not result in a reduction or
withdrawal of the rating of any outstanding Class with respect to which a
Rating Agency has previously issued a rating as a result or such action, then
the Specified Reserve Fund Balance will be theretofore determined in accordance
with such changed formula or manner of

 

63

 

funding, and an
amendment to this Agreement effecting such change may be executed without the
consent of any Securityholder.

 

Section
11.02.      Protection of Title to Trust.

 

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

 

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

 

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

 

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

 

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

 

(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

 

64

 

promissory note
and security agreements to any prospective purchaser, lender or other
transferee, the Servicer shall give or cause to be given to such prospective
purchaser, lender or other transferee computer tapes, records or print-outs
(including any restored from back-up archives) that, if they shall refer in any
manner whatsoever to any Contract, shall indicate clearly that such Contract
has been transferred and is owned by the Issuer and has been pledged to the
Indenture Trustee.

 

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

 

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

 

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

 

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

 

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

 

	
   

  	
  (i)

  	
  If to the
  Servicer or Seller:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Harley-Davidson
  Credit Corp.

  
	
   

  	
   

  	
  150 South Wacker
  Drive, Suite 3100

  
	
   

  	
   

  	
  Chicago, Illinois
  60606

  
	
   

  	
   

  	
  Attention: Perry
  A. Glassgow

  

 

65

 

	
   

  	
   

  	
  Telecopier No.:
  (312) 368-4372

  
	
   

  	
   

  	
   

  
	
   

  	
  (ii)

  	
  If to the Trust
  Depositor:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Harley-Davidson
  Customer Funding Corp.

  
	
   

  	
   

  	
  3850 Arrowhead
  Drive

  
	
   

  	
   

  	
  Carson City, Nevada
  89706

  
	
   

  	
   

  	
  Attention: Perry
  A. Glassgow

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Telecopier No.:
  (775) 886-3490

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  with a copy to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Harley-Davidson
  Credit Corp.

  
	
   

  	
   

  	
  150 South Wacker
  Drive, Suite 3100

  
	
   

  	
   

  	
  Chicago,
  Illinois 60606

  
	
   

  	
   

  	
  Attention: Perry
  A. Glassgow

  
	
   

  	
   

  	
  Telecopier No.:  (312) 368-4372

  
	
   

  	
   

  	
   

  
	
   

  	
  (iii)

  	
  If to the
  Indenture Trustee:

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  
	
   

  	
   

  	
  2 North LaSalle
  Street

  
	
   

  	
   

  	
  Suite 1020

  
	
   

  	
   

  	
  Chicago,
  Illinois 60602

  
	
   

  	
   

  	
  Attention:
  Corporate Trust Administration

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Telecopier No.:
  (312) 827-8562

  
	
   

  	
   

  	
   

  
	
   

  	
  (iv)

  	
  If to the Owner
  Trustee:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Wilmington Trust
  Company

  
	
   

  	
   

  	
  Rodney Square
  North

  
	
   

  	
   

  	
  1100 North
  Market Street

  
	
   

  	
   

  	
  Wilmington,
  Delaware 19890-0001

  
	
   

  	
   

  	
  Attention:
  Corporate Trust Administration

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Telecopier No.:
  (302) 636-4140

  
	
   

  	
   

  	
   

  
	
   

  	
  (v)

  	
  If to Moody’s:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Moody’s
  Investors Service, Inc.

  
	
   

  	
   

  	
  99 Church Street

  
	
   

  	
   

  	
  New York, New
  York 10007

  

 

66

 

	
   

  	
   

  	
  Attention: ABS
  Monitoring Department

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Telecopier No.:
  (212) 553-1350

  
	
   

  	
   

  	
   

  
	
   

  	
  (vi)

  	
  If to Standard
  & Poor’s:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Standard &
  Poor’s Ratings Services, a

  
	
   

  	
   

  	
  division of The McGraw Hill Companies, Inc.

  
	
   

  	
   

  	
  55 Water Street

  
	
   

  	
   

  	
  New York, New
  York 10004

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Telecopier No.:
  (212) 438-2657

  
	
   

  	
   

  	
   

  
	
   

  	
  (vii)

  	
  If to the
  Underwriters:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  At the address
  set forth in the Underwriting Agreement

  

 

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

 

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

 

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

 

Section
11.07.      Third Party Beneficiaries. 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.

 

67

 

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

 

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

 

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

 

68

 

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

 

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

 

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

 

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

 

[signature page
follows]

 

69

 

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 2006-2

  
	
   

  
	
   

  	
  By:

  	
  Wilmington Trust
  Company, not in its

  individual capacity but solely as Owner

  Trustee on behalf of the Trust

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ JOANN A.
  ROZELL

  	
   

  
	
   

  	
   

  	
  Printed Name:

  	
  Joann A. Rozell

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Assistant Vice
  President

  	
   

  
	
   

  
	
   

  
	
   

  	
  HARLEY-DAVIDSON
  CUSTOMER FUNDING CORP.,

  as Trust Depositor

  
	
   

  
	
   

  	
  By:

  	
  /s/ PERRY A.
  GLASSGOW

  	
   

  
	
   

  	
   

  	
  Printed Name:

  	
  Perry A.
  Glassgow

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Vice President
  and Treasurer

  	
   

  
	
   

  
	
   

  
	
   

  	
  HARLEY-DAVIDSON
  CREDIT CORP., as Servicer

  
	
   

  
	
   

  
	
   

  	
  By:

  	
  /s/ PERRY A.
  GLASSGOW

  	
   

  
	
   

  	
   

  	
  Printed Name:

  	
  Perry A.
  Glassgow

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Vice President
  and Treasurer

  	
   

  
	
   

  
	
   

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

  
	
   

  	
  not in its
  individual capacity but solely as Indenture Trustee

  
	
   

  
	
   

  
	
   

  	
  By:

  	
  /s/ CYNTHIA L.
  DAVIS

  	
   

  
	
   

  	
   

  	
  Printed Name:

  	
  Cynthia L. 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, 2006 made by and between the
undersigned, as Trust Depositor  (“Trust Depositor”), Harley-Davidson Credit Corp., as Servicer
(“HDCC”), The Bank of New York Trust Company,
N.A., as Indenture Trustee and Harley-Davidson Motorcycle Trust 2006-2 (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, 2006.

 

	
   

  	
  HARLEY-DAVIDSON
  CUSTOMER FUNDING

  
	
   

  	
  CORP.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Printed Name: Perry
  A. Glassgow

  
	
   

  	
  Title: Vice
  President and Treasurer

  

 

A-1

 

Exhibit
B

 

[Form of Closing Certificate of Trust Depositor]

 

Harley-Davidson Customer Funding Corp.

 

Officer’s Certificate

 

The undersigned certifies
that he is Vice President, Treasurer and Assistant Secretary of Harley-Davidson
Customer Funding Corp., a Nevada corporation (the “Trust
Depositor”), and that as such is duly authorized to execute and deliver
this certificate on behalf of the Trust Depositor in connection with the Sale
and Servicing Agreement (the “Agreement”)
dated as of May 1, 2006 (the “Effective Date”)
by and among the Trust Depositor, The Bank of New York Trust Company, N.A. (the
“Indenture Trustee”), as Indenture
Trustee,  Harley-Davidson Credit Corp. (“Harley-Davidson Credit”), as Servicer, and Harley-Davidson
Motorcycle Trust 2006-2 (“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 as of a recent date stating
that the Trust Depositor is duly incorporated under the laws of the State of
Nevada and is in good standing.

 

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

 

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

 

B-1

 

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

 

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

 

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

 

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

 

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

 

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

 

B-2

 

(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, 2006.

 

 

	
   

  	
  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, 2006 (the “Effective
Date”) by and among Harley-Davidson Credit, as Servicer,
Harley-Davidson Customer Funding Corp. (“CFC”), The Bank
of New York Trust Company, N.A., as Indenture Trustee and Harley-Davidson
Motorcycle Trust 2006-2 (“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 as of a recent date, stating
that Harley-Davidson Credit is duly incorporated under the laws of the State of
Nevada and is in good standing.

 

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

 

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

 

C-1

 

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
Preliminary Prospectus (as defined in the Underwriting Agreement) or the
Prospectus and except as set forth therein.

 

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

 

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

 

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

 

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

 

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

 

C-2

 

any
other of the transactions contemplated therein, will violate or conflict with
any agreement or instrument to which Harley-Davidson Credit is a party or by
which it is otherwise bound.

 

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

 

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

 

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

 

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

 

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

 

*   *   *  
*   *   *

 

C-3

 

In
Witness Whereof, I have affixed my signature hereto this       
day of May, 2006.

 

	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Printed Name:

  	
  Perry A. Glassgow

  
	
   

  	
  Title:

  	
  Vice President, Treasurer and

  Assistant Secretary

  
						

 

 

Exhibit
D

 

FORM OF REPORT ON ASSESSMENT OF COMPLIANCE WITH
APPLICABLE 

SERVICING CRITERIA PURSUANT TO ITEM 1122 OF REGULATION AB UNDER THE

SECURITIES
EXCHANGE ACT OF 1934

 

Date:             

 

Re:         
Harley-Davidson Motorcycle Trust 2006-2

 

[Servicer][Indenture
Trustee] (the “Company”) hereby certifies that it is responsible for the
assessment of its compliance with the servicing criteria set forth in Item 1122
of Regulation AB applicable to it, as described on Schedule I attached hereto
(the “Applicable Servicing Criteria”), and further certifies as follows:

 

1.            
The Company used the criteria set forth in paragraph (d) of Item 1122 of
Regulation AB to assess compliance with the Applicable Servicing Criteria; and

 

2.            
The Company is in compliance with the Applicable Servicing Criteria as of and
for the period ending December 31,
         [except as described below:].

 

[Accountant], an
independent registered public accounting firm has issued an attestation report
on our assessment of compliance with the Applicable Servicing Criteria as of
and for the period ending December 31,
        , a copy of which is attached
hereto.

 

[                                            ]

 

	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

D-1

 

Exhibit
E

 

SERVICING
CRITERIA TO BE ADDRESSED IN

INDENTURE TRUSTEE’S ASSESSMENT OF COMPLIANCE

 

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

 

Servicing
Criteria

 

	
   

  	
   

  	
  Applicable

  Servicing

  Criteria

  	
   

  
	
  Reference

  	
   

  	
  Criteria

  	
   

  	
   

  
	
   

  	
   

  	
  General
  Servicing Considerations

  	
   

  	
   

  	
   

  
	
  1122(d)(1)(i)

  	
   

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

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(1)(ii)

  	
   

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

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(1)(iii)

  	
   

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

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(1)(iv)

  	
   

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

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Cash
  Collection and Administration

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(2)(i)

  	
   

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

  	
   

  	
  ý(2)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(2)(ii)

  	
   

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

  	
   

  	
  ý

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(2)(iii)

  	
   

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

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(2)(iv)

  	
   

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

  	
   

  	
  ý

  	
   

  

 

(1)          Each Assessment of compliance delivered by the
Indenture Trustee shall be made only toward such portion(s) of servicing
criteria applicable to the Indenture Trustee and not such other portion(s)
applicable to other persons.

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

 

E-1

 

Servicing
Criteria

 

	
   

  	
   

  	
  Applicable

  Servicing

  Criteria

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(2)(v)

  	
   

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

  	
   

  	
  ý(3)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(2)(vi)

  	
   

  	
  Unissued
  checks are safeguarded so as to prevent unauthorized access.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(2)(vii)

  	
   

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

  	
   

  	
   

  	
   

  

 

	
  Reference

  	
   

  	
  Criteria

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Investor Remittances and Reporting

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(3)(i)

  	
   

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

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(3)(ii)

  	
   

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

  	
   

  	
  ý

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(3)(iii)

  	
   

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

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(3)(iv)

  	
   

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

  	
   

  	
  ý

  	
   

  

 

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

 

E-2

 

	
   

  	
   

  	
  Pool Asset Administration

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(4)(i)

  	
   

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

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(4)(ii)

  	
   

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

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(4)(iii)

  	
   

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

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(4)(iv)

  	
   

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

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(4)(v)

  	
   

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

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(4)(vi)

  	
   

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

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(4)(vii)

  	
   

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

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(4)(viii)

  	
   

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

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(4)(ix)

  	
   

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

  	
   

  	
   

  	
   

  

 

	
  Reference

  	
   

  	
  Criteria

  	
   

  	
   

  	
   

  
	
  1122(d)(4)(x)

  	
   

  	
  Regarding
  any funds held in trust for an obligor (such as escrow accounts): (A) such
  funds are analyzed, in accordance with the obligor’s Account documents, on at
  least an annual basis, or such other period specified in the transaction
  agreements; (B) interest on such funds is paid, or credited, to obligors in
  accordance with applicable Account documents and state laws; and (C) such
  funds are returned to the obligor within 30 calendar days of full repayment
  of the related Accounts, or such other number of days specified in the
  transaction agreements.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(4)(xi)

  	
   

  	
  Payments
  made on behalf of an obligor (such as tax or insurance payments) are 

  	
   

  	
   

  	
   

  

 

E-3

 

	
   

  	
   

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

  	
   

  	
   

  	
   

  
	
  1122(d)(4)(xii)

  	
   

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

  	
   

  	
   

  	
   

  

 

Servicing
Criteria

 

	
   

  	
   

  	
  Applicable

  Servicing

  Criteria

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(4)(xiii)

  	
   

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

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(4)(xiv)

  	
   

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

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1122(d)(4)(xv)

  	
   

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

  	
   

  	
   

  	
   

  

 

E-4

 

Exhibit F

 

FORM OF
INDENTURE TRUSTEE’S ANNUAL CERTIFICATION

 

Re:          Harley-Davidson Motorcycle Trust
2006-2

 

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

 

(1)           It has reviewed the report on
assessment of the Indenture Trustee’s compliance provided in accordance with Rules
13a-18 and 15d-18 under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”) and Item 1122 of Regulation AB (the “Servicing Assessment”),
and the registered public accounting firm’s attestation report provided in
accordance with Rules 13a-18 and 15d-18 under the Exchange Act and
Section 1122(b) of Regulation AB (the “Attestation Report”) that
were delivered by the Indenture Trustee to the Seller pursuant to the Sale and
Servicing Agreement (the “Agreement”), dated as of May 1, 2006, by
and between Harley-Davidson Customer Funding Corp., the Servicer, the Indenture
Trustee and Harley-Davidson Motorcycle Trust 2006-2 (collectively, the “Indenture
Trustee Information”);

 

(2)               To
the best of its knowledge, the Indenture Trustee Information, taken as a whole,
does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in the light of the
circumstances under which such statements were made, not misleading with
respect to the period of time covered by the Indenture Trustee Information; and

 

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

 

	
   

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

  
	
   

  	
  not in its
  individual capacity but solely as Indenture Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Printed Name:

  
	
   

  	
   

  	
  Title:

  
					

 

F-1

 

Exhibit
G

 

[Form of Certificate Regarding Reacquired Contracts]

 

Harley-Davidson Credit Corp.

 

Certificate Regarding Reacquired Contracts

 

The undersigned certifies
that he is the 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, 2006 by and among
Harley-Davidson Customer Funding Corp., as Trust Depositor, the Servicer, The
Bank of New York Trust Company, N.A., as Indenture Trustee, and Harley-Davidson
Motorcycle Trust 2006-2 (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/Servicer] on the date hereof pursuant to [Section 7.08 of the Agreement
and Section 5.01 of the Transfer and Sale Agreement/Section 7.10 of the
Agreement/Section 7.11 of the Agreement.]

 

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

 

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

 

	
   

  	
  Harley-Davidson
  Credit Corp.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Printed Name: Perry A. Glassgow

  
	
   

  	
   

  	
  Title: Vice President and Treasurer

  

 

G-1

 

Exhibit
H

 

[List of Contracts]

 

H-1

 

Exhibit
I

 

[Form of Monthly Report to Noteholders and the
Certificateholder]

 

Harley-Davidson Motorcycle Trust 2006-2

$                            
          % Motorcycle
Contract Backed Notes, Class A-1

$                          
            %
Motorcycle Contract Backed Notes, Class A-2

$                          
              %
Motorcycle Contract Backed Notes, Class B

Monthly Report

For the
                                
Distribution Date

 

Capitalized terms are defined in the Sale and
Servicing Agreement dated as of May 1, 2006.

 

Beginning of Due Period

End of Due Period

Determination Date

Record Date

Distribution Date

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

 

I-1

 

	
  Purchases

  	
   

  	
  Number

  of Contracts

  	
   

  	
  Cut-Off

  Date

  	
   

  	
  Closing Date

  	
   

  	
  Initial

  Pool Balance

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Initial Contracts

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Subsequent Contracts

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

I-2

 

I. POOL BALANCE CALCULATION

 

Principal Balance of Contracts at beginning
of Due Period

Pre-Funded Amount at beginning of Due Period

 

Purchase of Subsequent Contracts

Reduction of Pre-Funded Amount at end of Due
Period

Mandatory Redemption amount

 

Monthly principal amounts

 

Principal collections on
Contracts outstanding at end of Due Period

Principal collections on
Contracts paid off in full during Due Period

Balance of Contracts
liquidated during Due Period

Balance of Contracts
purchased by Seller or Servicer during Due Period

Other adjustments

Mandatory Redemption amount

 

Aggregate Principal Balance
Decline

 

Aggregate Principal Balance at end of Due
Period

 

Pool factor

 

I-3

 

II. NOTE PRINCIPAL BALANCE CALCULATION:

 

	
   

  	
   

  	
  Class A-1

  	
   

  	
  Class A-2

  	
   

  	
  Class B

  	
   

  	
  Total

  	
   

  
	
  Original Note Balance

  	
   

  	
  $

  	
   

  	
  $

  	
   

  	
  $

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Note balance at beginning of Due Period

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Principal Distributable Amount

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

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

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Mandatory Redemption Amount

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Note Principal Carryover Shortfall

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total principal paid

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Note balance at end of Due Period

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Note factor at begininning of Due Period

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Note factor at end of Due Period

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

I-4

 

III. NOTE INTEREST DISTRIBUTABLE CALCULATION

 

 

	
   

  	
   

  	
   

  	
   

  	
  Interest Carryover

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Note Monthly

  	
   

  	
  Interest Carryover

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Note Balance

  	
   

  	
  Shortfall

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Interest

  	
   

  	
  Interest

  	
   

  	
  Shortfall

  	
   

  	
  Note Interest

  	
   

  
	
   

  	
   

  	
  at Beginning of

  	
   

  	
  at Beginning of

  	
   

  	
  Interest

  	
   

  	
   

  	
   

  	
  Accrual

  	
   

  	
  Distributable

  	
   

  	
  at End of

  	
   

  	
  Distributable

  	
   

  
	
  Class

  	
   

  	
  Due Period

  	
   

  	
  Due Period

  	
   

  	
  Rate

  	
   

  	
  Days

  	
   

  	
  Basis

  	
   

  	
  Amount

  	
   

  	
  Due Period

  	
   

  	
  Amount

  	
   

  
	
  A-1

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A-2

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Totals

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

I-5

 

IV.CALCULATION OF AVAILABLE MONIES AND
DISTRIBUTIONS

 

Available Monies:

Principal collections on
Contracts during Due Period

Interest collections on
Contracts during Due Period

Net Liquidation Proceeds

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

Advances made by Servicer

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

Carrying Charges from the
Interest Reserve Account

Mandatory  Redemption amount

Investment Earnings -
Collection Account

Investment Earnings -
Interest Reserve Account

 

Total Available Monies

 

Distribution of Available Monies in order of
priority:

Mandatory Redemption amount
to the Noteholders

Return of previous month’s
Advances made by Servicer

Monthly Servicing Fee to the
Servicer, including any unpaid Servicing Fees

Monthly Indenture Trustee
Fee, including any unpaid Indenture Trustee fees

Class A Note Interest
Distributable Amount

First Priority Principal
Distributable Amount

 

I-6

 

Class B Note Interest
Distributable Amount

Class A Note Principal
Distributable Amount

Class B Note Principal
Distributable Amount

 

Total distribution of fees,
interest and principal

 

Excess Amounts (Shortfall)

 

Amount withdrawn from
Reserve Fund to cover Shortfall

 

Excess Amounts to Reserve
Fund

Excess Amounts to Certificateholder

 

Total distribution of
Available Monies

 

I-7

 

V. ACCOUNT BALANCE INFORMATION

 

Calculation of Specified Reserve Fund
Balance:

The
greater of:

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

b)
[            ]% of
the aggregate initial note balance

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

at the end of the Due Period

Specified Reserve Fund Balance

 

Reserve Fund balance at beginning of Due
Period

 

Additions to Reserve Fund:

Additional deposit -
Subsequent Reserve Fund Amount deposit

Additional deposit - Excess
Amounts to Reserve Fund

Investment Earnings -
Reserve Fund

 

Total additions

 

Withdrawals from Reserve Fund:

Amount withdrawn to cover
Shortfall

 

I-8

 

Excess Reserve Fund balance
to Servicer

 

Total withdrawals

 

Reserve Fund balance at end of Due Period

 

Pre-Funding Account balance at beginning of
Due Period

 

Withdrawals from Pre-Funding Account:

Subsequent Contracts
purchased

Mandatory Redemption amount

 

Pre-Funding Account balance at end of Due
Period

 

Interest Reserve Account balance at beginning
of Due Period

 

Additions to the Interest Reserve Account:

Investment Earnings -
Interest Reserve Account

 

 

Withdrawals from the Interest Reserve
Account:

Carrying Charges

Transfer of Investment
Earnings to Collection Account

Excess Interest Reserve
Amount to Depositor

 

I-9

 

Interest Reserve Account balance at end of
Due Period

 

I-10

 

VI. CONTRACT PERFORMANCE INFORMATION

 

Number of months since
Closing Date

Trigger Status?  Yes or No

 

Monthly Losses

 

	
  Monthly Losses

  	
   

  	
  Number of

  Contracts

  	
   

  	
  Amount

  	
   

  	
  % of Principal Balance at

  beginning of Due Period

  	
   

  
	
  Principal
  Balance of Liquidated Contracts for the Due Period

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Less:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Net Liquidation Proceeds for the Due Period

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Net Liquidation Losses for the Due Period

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Annualized Net Liquidation Losses

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Average Loss Ratio

 

Annualized Net Liquidation
Losses - current Distribution Date

Annualized Net Liquidation
Losses - prior Distribution Date

Annualized Net Liquidation
Losses - second prior Distribution Date

   Three-month
Average Loss Ratio

Exceeds Reserve Fund Trigger
Event threshold?  Yes or No

 

I-11

 

	
  Months

  	
   

  	
  Trigger Threshold

  	
   

  
	
  1-24

  	
   

  	
   

  	
  %

  
	
  25 or greater

  	
   

  	
   

  	
  %

  

 

Cumulative Losses

 

	
   

  	
   

  	
  Number of

  Contracts

  	
   

  	
  Amount

  	
   

  	
  % of Initial

  Principal Balance

  	
   

  
	
  Cumulative Liquidated Contracts

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cumulative Net Liquidation Proceeds

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cumulative Net Liquidation Losses

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

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

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Cumulative Loss Ratio

 

Cumulative Loss Ratio

Exceeds Reserve Fund Trigger
Event threshold?  Yes or No

 

	
  Months

  	
   

  	
  Trigger Threshold

  	
   

  
	
  1-12

  	
   

  	
   

  	
  %

  
	
  13-24

  	
   

  	
   

  	
  %

  
	
  25-36

  	
   

  	
   

  	
  %

  
	
  37 or greater

  	
   

  	
   

  	
  %

  

 

I-12

 

Delinquencies

 

	
  Days

  Delinquent

  	
   

  	
  Number of

  Contracts

  	
   

  	
  Principal

  Balance

  	
   

  	
  Delinquent

  Interest Amount

  	
   

  	
  % of
  Principal Balance at

  Beginning of Due Period

  	
   

  
	
  30-59

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  60-89

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  90-119

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  120+

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Totals

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  60+ Delinquency Amount

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Average Delinquency Ratio

 

Delinquency Ratio - current
Distribution Date

Delinquency Ratio - prior
Distribution Date

Delinquency Ratio - second
prior Distribution Date

    Three-month
Average Delinquency Ratio

 

Exceeds Reserve Fund Trigger
Event threshold?  Yes or No

 

	
  Months

  	
   

  	
  Trigger Threshold %

  	
   

  
	
  1-12

  	
   

  	
   

  	
  %

  
	
  13-24

  	
   

  	
   

  	
  %

  
	
  25-36

  	
   

  	
   

  	
  %

  
	
  37 or greater

  	
   

  	
   

  	
  %

  

 

I-13

 

VII. ADDITIONAL CONTRACT INFORMATION

 

	
  Contract Data

  	
   

  	
  Beginning of Due Period

  	
   

  	
  End of Due Period

  	
   

  
	
  Number of Contracts

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Principal Balance of Contracts

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Weighted average original term

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Weighted average remaining term

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Weighted average life

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  One month prepayments (ABS)

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Weighted average Contract Rate

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

	
  Contract Rate

  	
   

  	
  Principal Balance

  of Contracts

  	
   

  	
  % of Principal Balance

  at End of Due Period

  	
   

  
	
  0.000% - 5.000%

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.001% - 10.000%

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.001% - 15.000%

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  15.001% - 20.000%

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  20.001% or greater

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

	
  Advances made by Servicer in current Due Period

  
	
  Unreimbursed Advances due to Servicer

  
	
  Number of Contracts purchased by Seller or Servicer

  
	
  Principal Balance of Contracts purchased by Seller
  or Servicer

  
	
  Purchase Price of Contracts purchased by Seller or
  Servicer

  

 

I-14

 

VIII. OTHER INFORMATION FOR NOTEHOLDERS

 

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

 

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

 

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

 

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

 

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

 

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

 

]

 

7.                         Information
regarding derivatives:

 

I-15

 

Exhibit J

 

[Seller’s Representations and Warranties]

 

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

 

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

 

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

 

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

 

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

 

J-1

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

J-2

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

J-3

 

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

 

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

 

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

 

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

 

J-4

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(w)          Selection Criteria. Each Contract is
secured by a new or used Motorcycle. No Contract has a Contract Rate less than
0.90%. Each Contract amortizes the amount

 

J-5

 

financed
over an original term no greater than 84 months. Each Contract has a Principal
Balance of at least $708.94 as of the related Cutoff Date.

 

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

 

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

 

(b)           Characteristics. The Initial Contracts have the following
characteristics: (i) all the Contracts are secured by Motorcycles; (ii) no
Initial Contract has a remaining maturity of more than 84 months; and (iii) the
final scheduled payment on the Initial Contract with the latest maturity is due
not later than October 2013. Approximately 81.41% 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 18.59% 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 0.900%. The last scheduled payment date of the Contracts (including any
Subsequent Contracts) is due no later than January 2014. Approximately 98.85%
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 1.15% of the Principal Balance of
the Initial Contracts as of the Initial Cutoff Date is attributable to loans to
purchase Motorcycles not manufactured by Harley-Davidson or Buell.

 

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

 

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

 

(e)           True Sale. The transactions contemplated by the
Transfer and Sale Agreement and this Agreement constitute valid sales,
transfers and assignments from Seller to Trust Depositor and from Trust
Depositor to the Trust of all of Seller’s right,

 

J-6

 

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

 

J-7

 

Exhibit K

 

[Lockbox Bank and Lockbox Account]

 

Lockbox

 

Harley-Davidson
Credit Corp.

8529
Innovation Way

Chicago,
Illinois 60682-0085

 

Lockbox Bank

 

LaSalle
Bank National Association

135
South LaSalle Street

Chicago,
Illinois 60674

 

J-1

 

Exhibit L

 

FORM OF SUBSEQUENT TRANSFER AGREEMENT

 

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

 

WITNESSETH:

 

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

 

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

 

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

 

NOW,
THEREFORE, the parties hereto agree as follows:

 

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

 

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

 

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

 

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

 

Section 2.              Subsequent List of Contracts. The Subsequent List of Contracts attached
hereto as Exhibit A is a supplement to the initial
List of Contracts attached as Exhibit H to the Sale and Servicing Agreement. The
Contracts listed in the Subsequent List of Contracts constitute the Subsequent
Contracts to be transferred pursuant to this Agreement on the Subsequent
Transfer Date.

 

L-1

 

Section 3.              Transfer of Subsequent Contracts. Subject to and upon the terms and
conditions set forth in Section 2.03(b) of the Sale and Servicing Agreement and
this Agreement, the Trust Depositor hereby sells, transfers, assigns, sets over
and otherwise conveys to the Trust (i) all the right, title and interest of the
Trust Depositor in and to the Subsequent Contracts listed on the Subsequent
List of Contracts (including, without limitation, all security interests and
all rights to receive payments which are collected pursuant thereto after the
Subsequent Cutoff Date, including any liquidation proceeds therefrom, but
excluding any rights to receive payments which were collected pursuant thereto
on or prior to the Subsequent Cutoff Date), (ii) all rights of the Trust
Depositor under any physical damage or other individual insurance policy
(including a “forced placed” policy, if any), any debt insurance policy or any
debt cancellation agreement relating to any such Subsequent Contract, an
Obligor or a Motorcycle securing such Subsequent Contract, (iii) all security
interests in each such Motorcycle, (iv) all documents contained in the related
Contract Files, (v) all rights (but not the obligations) of the Trust Depositor
under any motorcycle dealer agreements between the dealers (i.e., the
originators of certain Subsequent Contracts) and the Seller, (vi) all rights of
the Trust Depositor in the Lockbox, the Lockbox Account and related Lockbox
Agreement to the extent they relate to such Subsequent Contracts, (vii) all
rights (but not the obligations) of the Trust Depositor under the Transfer and
Sale Agreement related to such Subsequent Contracts (to the extent not already
conveyed under Section 2.01(a) of the Sale and Servicing Agreement), including
but not limited to the Trust Depositor’s related rights under Article V
thereof, as well as all rights, but not the obligations, of the Trust Depositor
under the Subsequent Purchase Agreement related to such Subsequent Contracts,
(viii) the remittances, deposits and payments made into the Trust Accounts from
time to time and amounts in the Trust Accounts from time to time related to
such Subsequent Contracts (to the extent not already conveyed under Section 2.01(a)
of the Sale and Servicing Agreement) (and any investments of such amounts),
(ix) all rights of the Trust Depositor to certain rebates of premiums and other
amounts relating to insurance policies, debt cancellation agreements, extended
service contracts or other repair agreements and other items financed under
such Subsequent Contracts and (x) all proceeds and products of the foregoing. It
is the intention of the Trust Depositor and Owner Trustee that the transfer
contemplated by this Agreement shall constitute a sale of the Subsequent
Contracts from the Trust Depositor to the Trust, conveying good title thereto
free and clear of any Liens.

 

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

 

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

 

(c)           The Trust Depositor hereby represents
and warrants that (a) the aggregate Principal Balance of the Subsequent
Contracts listed on the Subsequent List of Contracts and conveyed to the Trust
pursuant to this Agreement is $                    
as of the Subsequent Cutoff

 

L-2

 

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

 

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

 

Section 6.              Ratification of Agreement. As supplemented by this Agreement, the
Sale and Servicing Agreement is in all respects ratified and confirmed and, as
so supplemented by this Agreement, shall be read, taken and construed as one
and the same instrument.

 

Section 7.              Counterparts. This Agreement may be executed in two or more
counterparts (and by different parties in separate counterparts), each of which
shall be an original but all of which together shall constitute one and the
same instrument.

 

Section 8.              Governing Law. This Agreement shall be construed in accordance with
the laws of the State of Illinois, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
shall be determined in accordance with such laws.

 

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

 

[signature page follows]

 

L-3

 

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

 

 

	
   

  	
  HARLEY-DAVIDSON
  CUSTOMER

  
	
   

  	
  FUNDING CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Printed Name:
  Perry A. Glassgow

  
	
   

  	
  Title: Vice
  President and Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HARLEY-DAVIDSON
  CREDIT CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Printed Name:
  Perry A. Glassgow

  
	
   

  	
  Title: Vice
  President and Treasurer

  
	
   

  	
   

  
	
   

  	
  HARLEY-DAVIDSON

  
	
   

  	
  MOTORCYCLE TRUST
  [        ]

  
	
   

  	
   

  
	
   

  	
  By:          Wilmington Trust Company, not in its

  individual capacity but solely as Owner Trustee on

  behalf of the Trust

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Printed Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THE BANK OF NEW
  YORK TRUST

  COMPANY, N.A.

  
	
   

  	
  not in its
  individual capacity but solely

  
	
   

  	
  as Indenture
  Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Printed Name:

  
	
   

  	
  Title:

  
								

 

L-4

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00105-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00105-of-00352.parquet"}]]