Document:

EXHIBIT 10.2

 

 

 

 

 

 

 

SALE AND SERVICING AGREEMENT

among

HARLEY-DAVIDSON
MOTORCYCLE TRUST 2005-1,

as Issuer,

HARLEY-DAVIDSON
CUSTOMER FUNDING CORP.,

as Trust Depositor,

HARLEY-DAVIDSON
CREDIT CORP.,

as Servicer

and

BNY MIDWEST TRUST
COMPANY,

as Indenture Trustee

 

 

 

 

Dated as of
February 1, 2005

 

 

 

 

 

 

	
   

  	
   

  	
   

  
	
  Table of Contents

  	
   

  
	
  ARTICLE ONE DEFINITIONS

  	
   

  
	
  Section 1.01.

  	
  Definitions

  	
   

  
	
  Section 1.02.

  	
  Usage of Terms

  	
   

  
	
  Section 1.03.

  	
  Section
  References

  	
   

  
	
  Section 1.04.

  	
  Calculations

  	
   

  
	
  Section 1.05.

  	
  Accounting
  Terms

  	
   

  
	
  ARTICLE TWO TRANSFER
  OF CONTRACTS

  	
   

  
	
  Section 2.01.

  	
  Closing

  	
   

  
	
  Section 2.02.

  	
  Conditions to
  the Closing

  	
   

  
	
  Section 2.03.

  	
  Conveyance of
  Subsequent Contracts

  	
   

  
	
  ARTICLE
  THREE REPRESENTATIONS AND WARRANTIES

  	
   

  
	
  Section 3.01.

  	
  Representations
  and Warranties Regarding the Trust Depositor

  	
   

  
	
  Section 3.02.

  	
  Representations
  and Warranties Regarding the Servicer

  	
   

  
	
  ARTICLE
  FOUR PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS

  	
   

  
	
  Section 4.01.

  	
  Custody of
  Contracts

  	
   

  
	
  Section 4.02.

  	
  Filing

  	
   

  
	
  Section 4.03.

  	
  Name Change
  or Relocation

  	
   

  
	
  Section 4.04.

  	
  Costs and
  Expenses

  	
   

  
	
  ARTICLE FIVE
  SERVICING OF CONTRACTS

  	
   

  
	
  Section 5.01.

  	
  Responsibility
  for Contract Administration

  	
   

  
	
  Section 5.02.

  	
  Standard of
  Care

  	
   

  
	
  Section 5.03.

  	
  Records

  	
   

  
	
  Section 5.04.

  	
  Inspection

  	
   

  
	
  Section 5.05.

  	
  Trust
  Accounts

  	
   

  
	
  Section 5.06.

  	
  Enforcement

  	
   

  
	
  Section 5.07.

  	
  Trustees to
  Cooperate

  	
   

  
	
  Section 5.08.

  	
  Costs and
  Expenses

  	
   

  
	
  Section 5.09.

  	
  Maintenance
  of Security Interests in Motorcycles

  	
   

  
	
  Section 5.10.

  	
  Successor
  Servicer/Lockbox Agreements

  	
   

  
	
  Section 5.11.

  	
  Separate
  Entity Existence

  	
   

  
	
  ARTICLE SIX THE TRUST
  DEPOSITOR

  	
   

  
	
  Section 6.01.

  	
  Covenants of
  the Trust Depositor

  	
   

  
	
  Section 6.02.

  	
  Liability of
  Trust Depositor; Indemnities

  	
   

  
	
  Section 6.03.

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

  	
   

  
	
   

  	
  Limitations

  	
   

  
	
  Section 6.04.

  	
  Limitation on
  Liability of Trust Depositor and Others

  	
   

  
	
  Section 6.05.

  	
  Trust Depositor
  Not to Resign

  	
   

  
	
  ARTICLE
  SEVEN DISTRIBUTIONS; RESERVE FUND

  	
   

  
	
  Section 7.01.

  	
  Monthly
  Distributions

  	
   

  
	
  Section 7.02.

  	
  Fees

  	
   

  
	
  Section 7.03.

  	
  Advances;
  Realization of Carrying Charge

  	
   

  
	
  Section 7.04.

  	
  Interest
  Reserve Account

  	
   

  
	
  Section 7.05.

  	
  Distributions;
  Priorities

  	
   

  
	
  Section 7.06.

  	
  Reserve Fund

  	
   

  
	
  Section 7.07.

  	
  Establishment
  of Pre-Funding Account

  	
   

  
	
  Section 7.08.

  	
  Reacquisition
  of Contracts for Breach of Representations and Warranties

  	
   

  
	
  Section 7.09.

  	
  Reassignment
  of Reacquired Contracts

  	
   

  
	
  Section 7.10.

  	
  Seller’s
  Reacquisition Option

  	
   

  
	
  ARTICLE
  EIGHT EVENTS OF TERMINATION; SERVICE TRANSFER

  	
   

  
				

 

i

 

	
  Section 8.01.

  	
  Events of
  Termination

  	
   

  
	
  Section 8.02.

  	
  Waiver of Event
  of Termination

  	
   

  
	
  Section 8.03.

  	
  Service
  Transfer

  	
   

  
	
  Section 8.04.

  	
  Successor
  Servicer to Act; Appointment of Successor Servicer

  	
   

  
	
  Section 8.05.

  	
  Notification
  to Securityholders

  	
   

  
	
  Section 8.06.

  	
  Effect of
  Transfer

  	
   

  
	
  Section 8.07.

  	
  Database File

  	
   

  
	
  Section 8.08.

  	
  Successor
  Servicer Indemnification

  	
   

  
	
  Section 8.09.

  	
  Responsibilities
  of the Successor Servicer

  	
   

  
	
  Section 8.10.

  	
  Limitation of
  Liability of Servicer

  	
   

  
	
  Section 8.11.

  	
  Merger or
  Consolidation of Servicer

  	
   

  
	
  Section 8.12.

  	
  Servicer Not to
  Resign

  	
   

  
	
  Section 8.13.

  	
  Appointment
  of Subservicer

  	
   

  
	
  ARTICLE NINE REPORTS

  	
   

  
	
  Section 9.01.

  	
  Monthly
  Reports

  	
   

  
	
  Section 9.02.

  	
  Officer’s
  Certificate

  	
   

  
	
  Section 9.03.

  	
  Other Data

  	
   

  
	
  Section 9.04.

  	
  Annual Report
  of Accountants

  	
   

  
	
  Section 9.05.

  	
  Annual
  Statement of Compliance from Servicer

  	
   

  
	
  Section 9.06.

  	
  Monthly
  Reports to Noteholders

  	
   

  
	
  ARTICLE TEN TERMINATION

  	
   

  
	
  Section
  10.01.

  	
  Sale of
  Trust Assets

  	
   

  
	
  ARTICLE ELEVEN
  MISCELLANEOUS

  	
   

  
	
  Section
  11.01.

  	
  Amendment

  	
   

  
	
  Section
  11.02.

  	
  Protection
  of Title to Trust

  	
   

  
	
  Section
  11.03.

  	
  Governing Law

  	
   

  
	
  Section
  11.04.

  	
  Notices

  	
   

  
	
  Section
  11.05.

  	
  Severability
  of Provisions

  	
   

  
	
  Section
  11.06.

  	
  Assignment

  	
   

  
	
  Section
  11.07.

  	
  Third Party
  Beneficiaries

  	
   

  
	
  Section
  11.08.

  	
  Counterparts

  	
   

  
	
  Section
  11.09.

  	
  Headings

  	
   

  
	
  Section
  11.10.

  	
  No
  Bankruptcy Petition; Disclaimer and Subordination

  	
   

  
	
  Section
  11.11.

  	
  Limitation of
  Liability of Owner Trustee and Indenture Trustee

  	
   

  

 

ii

 

	
  EXHIBITS

  
	
   

  
	
  Exhibit A

  	
  Form of Assignment

  	
  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 Opinion of
  Counsel for Trust Depositor regarding

  	
   

  
	
   

  	
  general corporate
  matters (including perfection opinion)

  	
  D-1

  
	
  Exhibit E

  	
  Form of Opinion of
  Counsel for Trust Depositor regarding

  	
   

  
	
   

  	
  the “true sale” nature of the transaction

  	
  E-1

  
	
  Exhibit F

  	
  Form of Opinion of
  Counsel for Trust Depositor regarding

  	
   

  
	
   

  	
  non-consolidation

  	
  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 February 1, 2005, among Harley-Davidson Motorcycle Trust
2005-1 (together with its successors and assigns, the “Issuer”
or the “Trust”), Harley-Davidson Customer
Funding Corp. (together with its successor and assigns, the “Trust
Depositor”), BNY Midwest Trust Company (solely in its capacity as
Indenture Trustee together with its successors and assigns, the “Indenture Trustee”) and Harley-Davidson Credit Corp.
(solely in its capacity as Servicer together with its successor and assigns, “Harley-Davidson Credit” or the “Servicer”).

WHEREAS the Issuer
desires to acquire from the Trust Depositor an initial and 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 Reacquisition Prices for
Contracts reacquired by the Trust Depositor pursuant to Section 7.08, (iv) all
Advances made by the Servicer pursuant to Section 7.03, (v) the interest
component of all amounts paid by the Trust Depositor in connection with an optional
reacquisition of the Contracts pursuant to Section 7.10, (vi) all amounts
received in respect of Carrying Charges transferred from the Interest Reserve
Account pursuant to Section 7.03, and (vii) all amounts received in respect of
interest, dividends, gains, income and earnings on investment of funds in the
Trust Accounts as contemplated in Section 5.05(d).

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

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

 

2

 

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

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

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

“Class A Note Percentage” means, (i) for each Distribution
Date to but excluding the Distribution Date on which the principal amount of
the Class A-2 Notes is reduced to zero, 94.00%; (ii) for the Distribution Date
on which the principal amount of the Class A-2 Notes is reduced to zero, such
percentage which represents the fraction of the Principal Distributable Amount
necessary to reduce the principal amount of the Class A-2 Notes to zero; and
(iii) for each Distribution Date thereafter, 0%.

 

3

 

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

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

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

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

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

“Class
A-1 Rate” means
3.28% per annum (computed on the basis of a 360-day year of twelve 30-day
months).

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

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

“Class
A-2 Rate” means
3.76% per annum (computed on the basis of a 360-day year of twelve 30-day
months).

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

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

 

4

 

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

“Class B Note Percentage” means, (i) for each Distribution
Date to but excluding the Distribution Date on which the principal amount of
the Class A-2 Notes is reduced to zero, 6.00%; and (ii) for the Distribution
Date on which the principal amount of the Class A-2 Notes is reduced to zero,
that percentage that equals 100% minus the Class A Note Percentage for such
Distribution Date; and (iii) 100% thereafter.

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

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

“Class B
Rate” means 3.66%
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
February 8, 2005.

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

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

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

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

 

5

 

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

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

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

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

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

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

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

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

 

6

 

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

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

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

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

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

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

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

“Distribution
Date” means the
fifteenth day of each calendar month during the term of this Agreement, or if
such day is not a Business Day, the next succeeding Business Day, with the
first such Distribution Date hereunder being March 15, 2005.

“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 February 28, 2005.

 

7

 

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

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

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

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

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

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

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

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

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

 

8

 

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

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

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

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

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

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

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

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

“Indenture
Trustee Fee”
means, with respect to any Distribution Date, one-twelfth of the product
of .00185% 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 $437,000,000.

 

9

 

“Initial
Class A-2 Note Balance” means $249,200,000.

“Initial
Class B Note Balance” means $43,800,000.

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

“Initial
Cutoff Date”
means as of the close of business on January 29, 2005.

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

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

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

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

“Interest
Reserve Amount”
means, as of any date of determination, the amount on deposit in the Interest Reserve Account on such date, and as of the Closing Date
shall be $1,800,172.46.

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

 

10

 

“Issuer” means the Harley-Davidson Motorcycle
Trust 2005-1.

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

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

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

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

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

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

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

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

 

11

 

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

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

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

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

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

“Monthly
Servicing Fee”
means, as to any Distribution Date, one-twelfth of the product of 1.00% and the Principal Balance of the
Contracts as of the beginning of the related Due Period or, with respect to the
first Distribution Date of March 15, 2005, 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 plus accrued and unpaid interest thereon at
the Contract Rate to the date on which such Liquidated Contracts became
Liquidated Contracts exceeds (b) the Net Liquidation Proceeds for such
Liquidated Contracts.

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

 

12

 

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

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

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

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

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

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

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

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

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

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

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

 

13

 

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

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

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

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

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

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

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

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

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

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

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

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

 

14

 

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

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

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

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

 

15

 

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

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

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

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

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

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

“Reserve
Fund Initial Deposit” means $4,840,708.63.

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

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

 

16

 

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

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

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

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

“Securityholders” means the Holders of the Notes.

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

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

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

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

 

17

 

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

“Shortfall” means, with respect to a Distribution
Date, the excess (if any), of the sum of the amounts payable pursuant to
clauses (v) through (viii) of Section 7.05(a) over 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 amount of
funds actually on deposit in the Reserve Fund may, in certain circumstances, be
less than the Specified Reserve Fund Balance.

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

 

18

 

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

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

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

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

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

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

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

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

“Supplement” means the Prospectus Supplement dated
January 31, 2005.

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

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

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

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

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

 

19

 

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

“Trust
Agreement” means
the Trust Agreement, dated as of January 25, 2005, 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 Wachovia Capital Markets, LLC, ABN
AMRO Incorporated, BNP Paribas Securities Corp, Citigroup Global Markets Inc.
and J.P. Morgan Securities Inc.

“United
States” means the
United States of America.

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

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

 

20

 

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

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

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

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

ARTICLE TWO

TRANSFER OF CONTRACTS

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

 

21

 

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

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

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

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

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

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

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

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

 

22

 

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

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

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

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

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

(l)            A fully executed Transfer and Sale
Agreement.

(m)          A fully executed Trust Agreement.

(n)           A fully executed Administration
Agreement.

(o)           A fully executed Indenture.

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

 

23

 

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

 

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

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

(ii)           the Funding Period shall not have
terminated;

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

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

 

24

 

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

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

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

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

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

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

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

(xii)          the Trust Depositor shall have
delivered to the Rating Agencies evidence that (A) the weighted average
contract rate of the Contracts collectively, following the transfer of the
Subsequent Contracts, is not less than 10.20% and (B) that the weighted average
calculated remaining term to maturity of the Contracts collectively, following
the transfer of the Subsequent Contracts, does not exceed 76 months;

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

 

25

 

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

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

(c)           The Trust Depositor covenants to
transfer (at or prior to the end of the Funding Period) to the Trust pursuant
thereto Subsequent Contracts with an aggregate Principal Balance equal to
$245,929,136.88; provided, however, that in
complying with such covenant, the Trust Depositor agrees to make no more than
one separate transfer of Subsequent Contracts per monthly period (as measured
by the corresponding Distribution Dates). 
In the event that the Trust Depositor shall fail to deliver and transfer
to the Trust any or all of such Subsequent Receivables by the date on which the
Funding Period ends and the Pre-Funded Amount is greater than $150,000 on such
date, the Trust Depositor shall cause to be deposited into the Collection
Account the amount then on deposit in the Pre-Funding Account; provided, however, that the foregoing shall be the sole
remedy of the Trust, the Owner Trustee, the Indenture Trustee and the
Securityholders with respect to a failure of the Trust Depositor to comply with
such covenant.

ARTICLE
THREE

REPRESENTATIONS AND WARRANTIES

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

 

26

 

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

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

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

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

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

 

27

 

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

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

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

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

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

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

 

28

 

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

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

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

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

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

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

 

29

 

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

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

ARTICLE
FOUR

PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS

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

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

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

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

 

30

 

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

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

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

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

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

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

 

31

 

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

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

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

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

ARTICLE
FIVE

SERVICING OF CONTRACTS

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

 

32

 

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

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

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

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

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

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

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

 

33

 

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

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

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

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

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

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

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

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

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

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

 

34

 

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

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

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

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

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

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

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

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

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

 

35

 

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

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

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

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

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

 

36

 

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

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

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

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

 

37

 

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

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

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

ARTICLE SIX

THE TRUST DEPOSITOR

Section 6.01.               Covenants
of the Trust Depositor.

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

 

38

 

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

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

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

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

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

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

 

39

 

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

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

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

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

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

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

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

 

40

 

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

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

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

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

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

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

 

41

 

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

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

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

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

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

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

 

42

 

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

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

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

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

 

43

 

ARTICLE
SEVEN

DISTRIBUTIONS; RESERVE FUND

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

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

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

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

 

44

 

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

Section 7.04.               Interest
Reserve Account.

(a)           On
or prior to the Closing Date, the Trust Depositor shall establish with and in
the name of the Indenture Trustee on behalf of the Securityholders, an Eligible
Account designated “Harley-Davidson Customer
Funding Corp. Interest Reserve Account - Harley Davidson Motorcycle Trust
2005-1 — BNY Midwest Trust Company, as Indenture Trustee” (such
account being the “Interest Reserve Account”).

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

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

Section 7.05.               Distributions;
Priorities.

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

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

 

45

 

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

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

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

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

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

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

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

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

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

(ix)           to the Holder of the Certificate.

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

 

46

 

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

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

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

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

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

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

(iii)          to the Holder of the Certificate.

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

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

 

47

 

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

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

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

(v)           to the Holder of the Certificate.

Section 7.06.               Reserve
Fund.

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

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

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

 

48

 

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

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

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

Section 7.07.               Establishment
of Pre-Funding Account.

(a)           On
or prior to the Closing Date, the Trust Depositor shall establish with and in
the name of the Indenture Trustee on behalf of the Securityholders, an Eligible
Account designated “Harley-Davidson Customer
Funding Corp. Pre-Funding Account - Harley Davidson Motorcycle Trust 2005-1 —
BNY Midwest Trust Company, as Indenture Trustee” (such account being
the “Pre-Funding Account”).

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

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

 

49

 

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

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

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

 

50

 

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

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

ARTICLE
EIGHT

EVENTS OF TERMINATION; SERVICE TRANSFER

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

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

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

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

 

51

 

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

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

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

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

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

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

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

 

52

 

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

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

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

 

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

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

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

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

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

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

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

 

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

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

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

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

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

 

55

 

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

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

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

ARTICLE NINE

REPORTS

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

 

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(a)           The Servicer shall cause a firm of
nationally recognized independent certified public accountants (the “Independent  Accountants”),
who may also render other services to the Servicer, Harley-Davidson Financial or
to the Trust Depositor, to deliver to the Trustees, the Underwriters and each
Rating Agency, on or before March 31 (or 90 days after the end of the Servicer’s
fiscal year, if other than December 31) of each year, beginning on March 31,
2006, with respect to the twelve months ended the immediately preceding
December 31 (or other applicable date), a statement (the “Accountant’s
Report”) addressed to the Board of
Directors of the Servicer and to the Trustees to the effect that such firm has
audited the financial statements of Harley-Davidson Financial and issued its
report thereon and that such audit:

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

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

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

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

The Accountant’s
Report shall further state that:

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

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

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

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

 

57

 

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

Section 9.05.               Annual
Statement of Compliance from Servicer.  The Servicer
will deliver to the Trustees, the Underwriters and each of the Rating Agencies,
on or before January 31 of each year commencing January 31, 2006, an Officer’s
Certificate stating that (a) a review of the activities of the Servicer during
the prior calendar year and of its performance under this Agreement was made
under the supervision of the officer signing such certificate and (b) to such
officer’s knowledge, based on such review, the Servicer has fully performed all
its obligations under this Agreement, or, if there has been a default in the
performance of any such obligation, specifying each such default known to such
officer and the nature and status thereof. 
A copy of such certificate may be obtained (i) by any Noteholder by a request
in writing to the Indenture Trustee and (ii) by any Certificateholder by a
request in writing to the Owner Trustee.

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

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

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

 

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

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

ARTICLE TEN

TERMINATION

Section 10.01.            Sale
of Trust Assets.

(a)           [Intentionally
Omitted].

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

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

ARTICLE ELEVEN

 

MISCELLANEOUS

Section
11.01.            Amendment.

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

 

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

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

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

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

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

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

 

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

Section 11.02.            Protection
of Title to Trust.

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

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

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

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

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

 

62

 

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

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

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

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

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

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

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

(i)            If to the Servicer
or Seller:

 

63

 

Harley-Davidson Credit
Corp.

150 South Wacker Drive,
Suite 3100

Chicago, Illinois 60606

Attention:
Perry A. Glassgow

Telecopier
No.: (312) 368-4372

(ii)           If to the Trust
Depositor:

Harley-Davidson Customer
Funding Corp.

3850 Arrowhead Drive

Carson City, Nevada 89706

Attention:  Perry A. Glassgow

 

Telecopier
No.: (775) 886-3490

with a
copy to:

Harley-Davidson Credit Corp.

150 South Wacker Drive,
Suite 3100

Chicago, Illinois  60606

Attention:  Perry A. Glassgow

 

Telecopier No.:   (312) 368-4372

 

(iii)          If to the Indenture
Trustee:

BNY Midwest Trust Company

2 North LaSalle Street

Suite 1020

Chicago, Illinois 60602

Attention:  Corporate Trust
Administration

 

Telecopier
No.:  (312) 827-8562

(iv)          If to the Owner
Trustee:

Wilmington Trust Company

Rodney Square North

1100 North Market Street

Wilmington, Delaware
19890-0001

Attention:
Corporate Trust Administration

Telecopier
No.: (302) 651-8882

 

64

 

(v)           If to Moody’s:

Moody’s Investors
Service, Inc.

99 Church Street

New York, New York 10007

Attention:
ABS Monitoring Department

Telecopier
No.: (212) 553-1350

(vi)          If to Standard &
Poor’s:

Standard & Poor’s
Ratings Services, a

division of The McGraw
Hill Companies

55 Water Street

New
York, New York 10004

Telecopier
No.: (212) 438-2657

(vii)         If to the
Underwriters:

Wachovia Capital Markets,
LLC

301 College Street

Charlotte, North Carolina
28288

Attention: Curt Sidden

Telecopier No.: (704) 383-9106

 

ABN AMRO Incorporated

135 South LaSalle Street

Suite 725

Chicago, Illinois 60603

Attention: Erik Ford

Telecopier No.: (312) 904 3028

 

BNP Paribas Securities
Corp.

787 Seventh Avenue

New York, New York 10019

Attention: Michael Gonik

Telecopier No.: (212) 841-2689

 

65

 

Citigroup Global Markets Inc.

390 Greenwich Street

6th Floor

New York, New York  10013

Attention:  Asset Backed Finance Division

Telecopier No.: 
(212) 723-8591

 

J.P. Morgan Securities
Inc.

270 Park Avenue

10 th Floor

New York, New York 10017

Attention: General
Counsel

 

Telecopier No.: (212) 834-6562

 

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

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

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.

 

66

 

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

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

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

To the extent that
notwithstanding the agreements contained in this Section, the Trust or any
Securityholder, either (i) asserts an interest in or claim to, or benefit from
any Other Assets, whether asserted against or through the Trust Depositor or
any other Person owned by the Trust Depositor, or (ii) is deemed to have any
interest, claim or benefit in or from any Other Assets, whether by operation of
law, legal process, pursuant to applicable provisions of Insolvency Laws or
otherwise (including without limitation pursuant to Section 1111(b) of the
federal Bankruptcy Code, as amended) and whether deemed asserted against or
through the Trust Depositor or any other Person owned by the Trust Depositor,
then the Trust and each Securityholder by accepting a Note or Certificate
further acknowledges and agrees that any such interest, claim or benefit in or
from the Other Assets is and shall be expressly subordinated to the
indefeasible payment in 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

 

67

 

adequate
remedy at law exists for a breach of this Section 11.10 and that the terms and
provisions of this Section 11.10 may be enforced by an action for specific
performance.

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

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

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

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

[signature page follows]

 

68

 

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

	
  HARLEY-DAVIDSON
  MOTORCYCLE TRUST 2005-1

  
	
   

  	
   

  
	
  By:

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

  
	
   

  	
   

  
	
  By: 

  	
  /s/ JANEL R. HAVRILA

  
	
   

  	
  Printed
  Name: Janel R. Havrilla

  
	
   

  	
  Title:
  Financial Services Officer

  
	
   

  	
   

  
	
  HARLEY-DAVIDSON CUSTOMER
  FUNDING CORP., as Trust Depositor

  
	
   

  	
   

  
	
  By: 

  	
  /s/ PERRY A. GLASSGOW

  
	
   

  	
  Printed
  Name: Perry A. Glassgow

  
	
   

  	
  Title:
  Treasurer

  
	
   

  	
   

  
	
  HARLEY-DAVIDSON CREDIT
  CORP., as Servicer

  
	
   

  
	
  By: 

  	
  /s/ PERRY A. GLASSGOW

  
	
   

  	
  Printed
  Name: Perry A. Glassgow

  
	
   

  	
  Title:
  Treasurer

  
	
   

  	
   

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

  
	
   

  
	
  By: 

  	
  /s/ CYNTHIA DAVIS

  
	
   

  	
  Printed
  Name: Cynthia Davis

  
	
   

  	
  Title:
  Vice President

  

 

Signature
Page to Sale and Servicing Agreement

 

 

 

Exhibit
A

[Form of Assignment]

 

In accordance with
the Sale and Servicing Agreement (the “Sale and Servicing
Agreement”) dated as of February 1, 2005 made by and between the
undersigned, as Trust Depositor  (“Trust Depositor”), Harley-Davidson Credit Corp., as Servicer
(“HDCC”), BNY Midwest Trust Company, as
Indenture Trustee and Harley-Davidson Motorcycle Trust 2005-1 (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 February, 2005.

HARLEY-DAVIDSON CUSTOMER
FUNDING

CORP.

 

	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Printed Name: 

  	
  Perry A. Glassgow

  
	
   

  	
   

  	
   

  	
  Title: 

  	
  Treasurer

  
							

 

 

A-1

 

Exhibit B

[Form of Closing Certificate of Trust Depositor]

Harley-Davidson Customer Funding Corp.

Officer’s Certificate

The undersigned
certifies that he is Vice President, Treasurer and Assistant Secretary of
Harley-Davidson Customer Funding Corp., a Nevada corporation (the “Trust Depositor”), and that as such is duly authorized to
execute and deliver this certificate on behalf of the Trust Depositor in
connection with the Sale and Servicing Agreement (the “Agreement”)
dated as of February 1, 2005 (the “Effective Date”)
by and among the Trust Depositor, BNY Midwest Trust Company (the “Indenture Trustee”), as Indenture Trustee,  Harley-Davidson Credit Corp. (“Harley-Davidson Credit”), as Servicer, and Harley-Davidson
Motorcycle Trust 2005-1 (“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 [                 ],
2005 stating that the Trust Depositor is duly incorporated under the laws of
the State of Nevada and is in good standing.

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

(5)           Attached hereto as Exhibit IV is a true and correct copy of resolutions adopted
pursuant to the unanimous written consent of the Board of Directors of the
Trust Depositor relating to the execution, delivery and performance of the
Agreement; the Transfer and Sale Agreement dated as of the Effective Date
between the Trust Depositor and Harley-Davidson Credit; the Trust Agreement
dated as of January 25, 2005 between the Trust Depositor and Wilmington Trust
Company (the “Owner Trustee”), as Owner Trustee; the Administration Agreement
dated as of the Effective Date between the Trust Depositor, the Issuer, the
Indenture Trustee, Harley-Davidson Credit, as Administrator; the Underwriting
Agreement dated January 31, 2005 among the Trust Depositor, Harley-

 

B-1

 

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

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

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

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

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

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

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

 

B-2

 

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

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

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

*    *   
*    *

 

B-3

 

In
Witness Whereof,
I have affixed my signature hereto this        
day of February, 2005.

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  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 February 1, 2005 (the “Effective
Date”) by and among Harley-Davidson Credit, as Servicer,
Harley-Davidson Customer Funding Corp. (“CFC”), BNY
Midwest Trust Company, as Indenture Trustee and Harley-Davidson Motorcycle
Trust 2005-1 (“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 [_________], 2005 stating that Harley-Davidson Credit is
duly incorporated under the laws of the State of Nevada and is in good
standing.

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

(5)           Attached hereto as Exhibit IV is a true and correct copy of resolutions adopted
pursuant to a unanimous written consent of the Board of Directors of
Harley-Davidson Credit and relating to the authorization, execution, delivery
and performance of the Transfer and Sale Agreement; the Sale and Servicing
Agreement; the Underwriting Agreement dated January 31, 2005 among
Harley-Davidson Credit, CFC and the Underwriters (the “Underwriting
Agreement”); and the Administration Agreement dated

 

C-1

 

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

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

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

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

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

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

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

 

C-2

 

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

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

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

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

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

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

*   *  
*   *   *   *

 

C-3

 

In
Witness Whereof,
I have affixed my signature hereto this       
day of February, 2005.

	
  By:

  	
   

  
	
   

  	
  Printed Name: Perry A.
  Glassgow

  
	
   

  	
  Title: Vice President,
  Treasurer and

  
	
   

  	
  Assistant
  Secretary

  
			

 

 

 

 

Exhibit
D

[Form of Opinion
of Counsel for Trust Depositor

Regarding General
Corporate Matters

(Including
Perfection Opinion)]

 

 

See Tab
23

 

D-1

 

Exhibit
E

[Form of Opinion
of Counsel for Trust

Depositor
Regarding the “True Sale” Nature

of the
Transaction]

 

 

See Tab
24

 

E-1

 

Exhibit F

[Form of Opinion
of Counsel for Trust

Depositor
Regarding Non-consolidation]

 

 

See Tab
25

 

F-1

 

Exhibit G

[Form of Certificate Regarding Reacquired Contracts]

Harley-Davidson Credit Corp.

Certificate Regarding Reacquired Contracts

The undersigned
certifies that he is the Treasurer of Harley-Davidson Credit Corp., a Nevada
corporation (the “Servicer”), and that as such is
duly authorized to execute and deliver this certificate on behalf of the
Servicer pursuant to Section 7.08 of the Sale and Servicing Agreement (the “Agreement”) dated as of February 1, 2005 by and among
Harley-Davidson Customer Funding Corp., as Trust Depositor, the Servicer, BNY
Midwest Trust Company, as Indenture Trustee, and Harley-Davidson Motorcycle
Trust 2005-1 (all capitalized terms used herein without definition having the
respective meanings specified in the Agreement), and further certifies that:

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

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

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

Harley-Davidson
Credit Corp.

	
  By: 

  	
   

  
	
   

  	
  Printed
  Name: Perry A. Glassgow

  
	
   

  	
  Title:
  Treasurer

  

 

G-1

 

Exhibit H

[List of
Contracts]

 

 

See Tab 6

 

H-1

 

Exhibit I

[Form of Monthly Report to Noteholders and the Certificateholder]

Harley-Davidson
Motorcycle Trust 2005-1

	
  $437,000,000

  	
   

  	
  3.28% Harley-Davidson
  Motorcycle Contract Backed Notes, Class A-1

  
	
  $249,200,000

  	
   

  	
  3.76% Harley-Davidson
  Motorcycle Contract Backed Notes, Class A-2

  
	
  $43,800,000

  	
   

  	
  3.66% Harley-Davidson
  Motorcycle Contract Backed Notes, Class B

  

 

 Monthly Report

For the [              ] Distribution Date

	
  A.

  	
  Calculation of Available Monies

  	
   

  
	
   

  	
   

  	
   

  
	
   

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

  	
  $

  
	
   

  	
   

  	
   

  
	
   

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

  	
  $

  
	
   

  	
   

  	
   

  
	
   

  	
  3.             Available Monies (l. plus 2.)

  	
  $

  
	
   

  	
   

  	
   

  
	
  B.

  	
  Calculation of
  Principal Distributable Amount (as defined in

  Article I of the Sale and Servicing Agreement)

  	
  $

  
	
   

  	
   

  	
   

  
	
  C.

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

  	
  $

  
	
   

  	
   

  	
   

  
	
  D.

  	
  Calculation of Note
  Monthly Principal Distributable Amount

  	
  $

  
	
   

  	
   

  	
   

  
	
   

  	
  1A.          Class A Note Percentage for such
  Distribution Date

  	
   

  
	
   

  	
   

  	
   

  
	
   

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

  	
  94.00%

  
	
   

  	
   

  	
   

  
	
   

  	
                                  (b)           on the Distribution Date on which
  the principal amount of the Class A-1 Notes is reduced to zero, 94.00% until
  the principal amount of the Class A-2 Notes has been reduced to zero

  	
  94.00%

  

 

 

I-1

 

	
   

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

  	
        

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
  0.00%

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1B.

  	
                  Class
  B Note Percentage for such Distribution Date

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
  6.00%

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
        

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
  100%

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
                  Principal Distributable Amount
  (from B)

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  

 

I-2

 

	
  3.

  	
                  Note
  Monthly Principal Distributable Amount for

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
                  (d)           Note
  Principal Carryover Shortfall

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

I-3

 

	
  E.

  	
  Calculation of Note Monthly Interest Distributable
  Amount.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.             Class
  A-l Interest Rate

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.             Class
  A-2 Interest Rate

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.             Class
  B Interest Rate

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.             Interest Carryover Shortfall for
  such Distribution Date

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  F.

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
					

 

I-4

 

	
  G.

  	
  Fees

  	
   

  	
   

  
	
   

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  H.

  	
  CALCULATION OF THE
  AVAILABLE MONIES FOR SUCH DISTRIBUTION DATE

   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
                                  b.             All Net Liquidation Proceeds

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
  $

  	
   

  

 

 

I-5

 

	
   

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

I-6

 

	
   

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  I.

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  J.

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  K.

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  L.

  	
  Interest Earnings on
  the Reserve Fund.

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  M.

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

I-7

 

	
  N.

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

  	
  $

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  O.

  	
  The Pool Factor

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  P.

  	
  Delinquent Contracts

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.             31-59
  Days

  	
  #

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.             3160-89
  Days

  	
  #

  	
   

  	
  $

  	
   

  

 

I-8

 

	
   

  	
  3.             90 or More Days

  	
  #

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Q.

  	
  Liquidated Contracts

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.             Total
  Liquidated Contracts                                #______

  	
  $

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.             Liquidation
  proceeds for the Due Period

  	
  $

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.             Liquidation
  expenses for the Due Period

  	
  $

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.             Net
  Liquidation Proceeds for the Due Period

  	
  $

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.             Net
  Liquidation Losses for the Due Period

  	
  $

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  R.

  	
  Advances

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.             Unreimbursed
  Advances prior to such Distribution Date

  	
  $

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
  $

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.             Amount
  of Delinquent Interest for such Distribution Date

  	
  $

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
  $

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
  $

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  S.

  	
  Reacquired Contracts

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
  $

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.             Principal Amount of such
  Contracts

  	
  $

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.             Related Reacquisition Price of
  such Contracts

  	
  $

  	
   

  	
   

  	
   

  

 

 

I-9

 

	
  T.

  	
  Contracts

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.             Number
  of Contracts as of beginning of Due Period

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.             Number of Contracts as of end of
  Due Period

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  U.

  	
  Interest Reserve Account

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.             Interest Reserve Amount as of
  previous Distribution Date

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.             Interest received into Interest
  Reserve Account

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.             Excess Funds remitted to Trust
  Depositor

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.             Interest
  Reserve Amount as of upcoming Distribution Date

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  V.

  	
  Ratios

  	
   

  	
   

  

 

 

I-10

 

	
   

  	
  1.             Cumulative
  Loss Ratio

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.             Average
  Delinquency Ratio for such Distribution Date

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (c)           The Delinquency Ratio for the prior
  Distribution Date

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.             Average
  Loss Ratio for such Distribution Date

  	
   

  	
   

  
						

 

I-11

 

	
   

  	
  (a)           Net
  Liquidation Losses

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (c)           The
  Loss Ratio for the prior Distribution Date

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.             Computation
  of Specified Reserve Fund Balance

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Reserve Fund Trigger Events

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
						

 

I-12

 

	
   

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

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
   

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

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  

 

I-13

 

	
   

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

  	
   

  	
  %

  

 

 

I-14

 

Exhibit J

[Seller’s Representations and Warranties]

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

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

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

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

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

 

J-1

 

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

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

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

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

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

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

(b)           Payments.  As of the Initial Cutoff Date or applicable
Subsequent Cutoff Date, as the case may be, the most recent scheduled payment
with respect to any Contract either had been made or was not delinquent for
more than 30 days.  To the best of Seller’s
knowledge, all payments made on each Contract were made by the respective
Obligor or under a debt insurance policy 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.  As of the origination date of each Contract
(or the applicable Subsequent Transfer Date in the case of Subsequent
Contracts), the related Motorcycle securing each Contract is covered by
physical damage insurance (i) in an amount not less than the value of the
Motorcycle at the time of origination of the Contract, (ii) naming Seller as a
loss payee and (iii) insuring against loss and damage due to fire, theft,
transportation, collision and other risks covered by comprehensive coverage,
and all premiums due on such insurance have been paid in full from the date of
the Contract’s origination.

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

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

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

 

J-3

 

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

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

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

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

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

 

J-4

 

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

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

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

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

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

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

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

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

 

J-5

 

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

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

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

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

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

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

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

(b)           Characteristics.  The Initial Contracts have the following
characteristics: (i) all the Contracts are secured by Motorcycles; (ii) no
Initial Contract has a remaining maturity of more than 84 months; and (iii) the
final scheduled payment on the Initial Contract with the latest maturity is due
not later than February 2012. 
Approximately 76.96% 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 23.04% 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 3.962%.  The last scheduled payment date of the Contracts
(including any Subsequent Contracts) is due no later than May 2012.  Approximately 99.14% 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

 

J-6

 

0.86% of the Principal Balance of the Initial
Contracts as of the Initial Cutoff Date is attributable to loans to purchase
Motorcycles not manufactured by Harley-Davidson or Buell.

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

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

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

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

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

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

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

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

 

J-7

 

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

 

J-8

 

Exhibit K

[Lockbox Bank and Lockbox Account]

Lockbox

Harley-Davidson Credit
Corp.

135 South LaSalle Street,
Dept. 8529

Chicago,
Illinois 60674-8529

Lockbox Bank

LaSalle Bank National
Association

135 South LaSalle Street

Chicago, Illinois 60674

 

 

K-1

 

Exhibit L

[Form of Subsequent Transfer Agreement]

[see Exhibit C of the Transfer and
Sale Agreement]

 

 

 

L-1EXHIBIT 10.3

 

 

 

 

_____________________________________________________________________________

 

 

ADMINISTRATION AGREEMENT

among

HARLEY-DAVIDSON MOTORCYCLE TRUST 2005-1,

as Issuer,

HARLEY-DAVIDSON CREDIT CORP.,

as Administrator,

HARLEY-DAVIDSON CUSTOMER FUNDING CORP.,

as Trust Depositor,

and

BNY MIDWEST TRUST COMPANY,

as Indenture Trustee

 

Dated as of February 1, 2005

____________________________________________________________________________

 

 

 

 

TABLE OF CONTENTS

 

	
  SECTION 1.

  	
  DUTIES OF THE
  ADMINISTRATOR.

  	
   

  
	
  SECTION
  2.

  	
  RECORDS

  	
   

  
	
  SECTION 3.

  	
  COMPENSATION

  	
   

  
	
  SECTION
  4.

  	
  ADDITIONAL
  INFORMATION TO BE FURNISHED TO THE ISSUER

  	
   

  
	
  SECTION
  5.

  	
  INDEPENDENCE
  OF THE ADMINISTRATOR

  	
   

  
	
  SECTION 6.

  	
  NO JOINT VENTURE

  	
   

  
	
  SECTION 7.

  	
  OTHER
  ACTIVITIES OF ADMINISTRATOR

  	
   

  
	
  SECTION
  8.

  	
  TERM
  OF AGREEMENT; RESIGNATION AND REMOVAL OF ADMINISTRATOR

  	
   

  
	
  SECTION
  9.

  	
  ACTION
  UPON TERMINATION, RESIGNATION OR REMOVAL

  	
   

  
	
  SECTION
  10.

  	
  NOTICES

  	
   

  
	
  SECTION 11.

  	
  AMENDMENTS

  	
   

  
	
  SECTION 12.

  	
  SUCCESSORS AND
  ASSIGNS

  	
   

  
	
  SECTION 13.

  	
  GOVERNING LAW

  	
   

  
	
  SECTION
  14.

  	
  HEADINGS

  	
   

  
	
  SECTION 15.

  	
  COUNTERPARTS

  	
   

  
	
  SECTION 16.

  	
  SEVERABILITY

  	
   

  
	
  SECTION
  17.

  	
  NOT
  APPLICABLE TO HARLEY-DAVIDSON CREDIT IN OTHER CAPACITIES

  	
   

  
	
  SECTION
  18. 

  	
  LIMITATION
  OF LIABILITY OF OWNER TRUSTEE AND

  INDENTURE
  TRUSTEE

  	
   

  
	
  SECTION 19.

  	
  THIRD-PARTY
  BENEFICIARY

  	
   

  
	
  SECTION 20.

  	
  SURVIVABILITY

  	
   

  

 

 

 

This
Administration Agreement, dated as of February 1, 2005, among Harley-Davidson
Motorcycle Trust 2005-1 (the “Issuer”),
Harley-Davidson Credit Corp. (together with its successors and assigns “Harley-Davidson Credit”) in its capacity as administrator,
the “Administrator”), Harley-Davidson
Customer Funding Corp. (the “Trust Depositor”)
and BNY Midwest Trust Company, not in its individual capacity but solely as
Indenture Trustee (together with its successors and assigns, the “Indenture Trustee”).

 

W I T N E S S E T H:

WHEREAS, the
Issuer is issuing 3.28% Harley-Davidson Motorcycle Contract Backed Notes, Class
A-1 Notes, 3.76% Harley-Davidson Motorcycle Contract Backed Notes, Class A-2
Notes and 3.66% Harley-Davidson Motorcycle Contract Backed Notes, Class B Notes
(collectively, the “Notes”)
pursuant to the Indenture, dated as of the date hereof (the “Indenture”),
between the Issuer and the Indenture Trustee (capitalized terms used herein
that are not otherwise defined shall have the meanings ascribed thereto in the
Indenture);

WHEREAS, the
Issuer has entered into certain agreements in connection with the issuance of
the Notes including (i) a Sale and Servicing Agreement, dated as of the date
hereof (the “Sale and Servicing Agreement”), among
the Issuer, the Indenture Trustee, the Trust Depositor and Harley-Davidson
Credit, as servicer (in such capacity, the “Servicer”),
and (ii) the Indenture (collectively referred to hereinafter as the “Transaction Documents”);

WHEREAS, pursuant
to the Transaction Documents, the Issuer and the Owner Trustee are required to
perform certain duties in connection with (i) the Notes and the collateral
therefor pledged pursuant to the Indenture (the “Collateral”)
and (ii) the beneficial ownership interest in the Issuer (the registered holder
of such interest being referred to herein as the “Owner”);

WHEREAS, the
Issuer and the Owner Trustee desire to have the Administrator perform certain
of the duties of the Issuer and the Owner Trustee referred to in the preceding
clause and to provide such additional services consistent with the terms of
this Agreement and the Transaction Documents as the Issuer and the Owner
Trustee may from time to time request; and

WHEREAS, the
Administrator has the capacity to provide the services required hereby and is
willing to perform such services for the Issuer and the Owner Trustee on the
terms set forth herein;

NOW, THEREAFTER,
in consideration of the mutual covenants contained herein, and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:

 

2

 

Section
1.              Duties of the
Administrator.

(a)           Duties with respect to the Indenture.

(i)            The
Administrator agrees to perform all its duties as Administrator and the duties
of the Issuer and the Owner Trustee under the Transaction Documents.  In addition, the Administrator shall consult
with the Owner Trustee regarding the duties of the Issuer or the Owner Trustee
under the Indenture.  The Administrator
shall monitor the performance of the Issuer and shall advise the Owner Trustee
when action is necessary to comply with the respective duties of the Issuer and
the Owner Trustee under the Indenture. 
The Administrator shall prepare for execution by the Issuer or shall
cause the preparation by other appropriate persons of, all such documents,
reports, filings, instruments, certificates and opinions that it shall be the
duty of the Issuer or the Owner Trustee to prepare, file or deliver pursuant to
the Indenture.  In furtherance of the
foregoing, the Administrator shall take all appropriate action that the Issuer
or the Owner Trustee is required to take pursuant to the Indenture including,
without limitation, such of the foregoing as are required with respect to the
following matters under the Indenture (references are to Sections of the
Indenture):

(A)          the
duty to cause the Note Register to be kept and to give the Indenture Trustee
notice of any appointment of a new Note Registrar and the location, or change
in location, of the Note Register (Section 2.04);

(B)           the
notification of Noteholders of the final principal payment on their Notes
(Section 2.07(b));

(C)           the
fixing or causing to be fixed of any special record date and the notification
of the Indenture Trustee and Noteholders with respect to special payment dates,
if any (Section 2.07(c));

(D)          the
preparation of or obtaining of the documents and instruments required for
execution and authentication of the Notes and delivery of the same to the
Indenture Trustee (Section 2.02);

(E)           the
preparation, obtaining or filing of the instruments, opinions and certificates
and other documents required for the release of Collateral (Section 2.12);

(F)           the
maintenance of an office in the City of Wilmington, Delaware, for registration
of transfer or exchange of Notes (Section 3.02);

(G)           the
duty to cause newly appointed Paying Agents, if any, to deliver to the
Indenture Trustee the instrument specified in the Indenture regarding funds
held in trust (Section 3.03);

 

3

 

(H)          the
direction to the Indenture Trustee to deposit monies with Paying Agents, if
any, other than the Indenture Trustee (Section 3.03);

(I)            the
obtaining and preservation of the Issuer’s qualification to do business in each
jurisdiction in which such qualification is or shall be necessary to protect
the validity and enforceability of the Indenture, the Notes, the Collateral and
each other instrument and agreement included in the Collateral (Section 3.04);

(J)            the
preparation of all supplements and amendments to the Indenture and all
financing statements, continuation statements, instruments of further assurance
and other instruments and the taking of such other action as is necessary or
advisable to protect the Collateral other than as prepared by the Servicer
(Section 3.05);

(K)          the
delivery of the Opinion of Counsel on the Closing Date and certain other
statements as to compliance with the Indenture (Sections 3.06 and 3.09);

(L)           the
identification to the Indenture Trustee in an Officer’s Certificate of a Person
with whom the Issuer has contracted to perform its duties under the Indenture
(Section 3.07(b));

(M)         the
notification of the Indenture Trustee and each Rating Agency of an Event of
Termination under the Sale and Servicing Agreement;

(N)          the
duty to cause the Servicer to comply with Article Five and Article Nine of the
Sale and Servicing Agreement (Section 3.14);

(O)          the
preparation and obtaining of documents and instruments required for the release
of the Issuer from its obligations under the Indenture (Section 3.10(b) and
Section 3.11(b));

(P)           the
delivery of written notice to the Indenture Trustee and each Rating Agency of
each Event of Default under the Indenture and each Event of Termination by the
Servicer under the Sale and Servicing Agreement (Section 3.18);

(Q)          the
monitoring of the Issuer’s obligations as to the satisfaction and discharge of
the Indenture and the preparation of an Officer’s Certificate and the obtaining
of the Opinion of Counsel and the Independent Certificate relating thereto
(Section 4.01);

(R)           the
compliance with any written directive of the Indenture Trustee with respect to
the sale of the Collateral in a commercially reasonable manner if an Event of
Default shall have occurred and be continuing (Section 5.04);

 

4

 

(S)           the
preparation and delivery of notice to Noteholders of the removal of the
Indenture Trustee and the appointment of a successor Indenture Trustee (Section
6.08);

(T)           the
preparation of any written instruments required to confirm more fully the
authority of any co-trustee or separate trustee and any written instruments
necessary in connection with the resignation or removal of the Indenture
Trustee or any co-trustee or separate trustee (Sections 6.08 and 6.10);

(U)          the
furnishing of the Indenture Trustee with the names and addresses of Noteholders
during any period when the Indenture Trustee is not the Note Registrar (Section
7.01);

(V)           the
opening of one or more accounts in the Indenture Trustee’s name, the
preparation and delivery of Issuer Orders, Officer’s Certificates and Opinions
of Counsel and all other actions necessary with respect to investment and
reinvestment of funds in the Trust Accounts (Sections 8.02 and 8.03);

(W)         the
preparation of an Issuer Request and Officer’s Certificate and the obtaining of
an Opinion of Counsel and Independent Certificates, if necessary, for the
release of the Collateral (Sections 8.04 and 8.05);

(X)          the
preparation of Issuer Orders and the obtaining of Opinions of Counsel with
respect to the execution of supplemental indentures and the mailing to the
Noteholders of notices with respect to such supplemental indentures (Sections
9.01, 9.02 and 9.03);

(Y)           the
execution and delivery of new Notes conforming to any supplemental indenture
(Section 9.06);

(Z)           the
duty to notify Noteholders of redemption of the Notes or to cause the Indenture
Trustee to provide such notification (Section 10.02);

(AA)       the
preparation and delivery of all Officer’s Certificates, Opinions of Counsel and
Independent Certificates with respect to any requests by the Issuer to the
Indenture Trustee to take any action under the Indenture (Section 11.01(a));

(BB)        the
preparation and delivery of Officer’s Certificates and the obtaining of
Independent Certificates, if necessary, for the release of property from the
lien of the Indenture (Section 11.01(b));

(CC)        the
notification of the Rating Agencies, upon the failure of the Issuer, the Owner
Trustee or the Indenture Trustee to provide notification;

 

5

 

(DD)       the
preparation and delivery to Noteholders and the Indenture Trustee of any
agreements with respect to alternate payment and notice provisions (Section
11.06);

(EE)         the
recording of the Indenture, if applicable (Section 11.14); and

(FF)         the
appointment of a successor Indenture Trustee.

(ii)           The
Administrator will:

(A)          except
as otherwise expressly provided in the Indenture, pay the Indenture Trustee’s
fees and reimburse the Indenture Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Indenture Trustee
in accordance with any provision of the Indenture (including the reasonable
compensation, expenses and disbursements of its agents and counsel), except any
such expense, disbursement or advance as may be attributable to its negligence
or bad faith;

(B)           indemnify
the Indenture Trustee and its agents for, and hold them harmless against, any
loss, liability or expense incurred without negligence or bad faith on their
part, arising out of or in connection with the acceptance or administration of
the transactions contemplated by the Indenture, including the reasonable costs
and expenses of defending themselves against any claim or liability in
connection with the exercise or performance of any of their powers or duties
under the Indenture; and

(C)           indemnify
the Owner Trustee and its agents for, and hold them harmless against, any loss,
liability or expense incurred without negligence or bad faith on their part,
arising out of or in connection with the acceptance or administration of the
transactions contemplated by the Trust Agreement, including the reasonable
costs and expenses of defending themselves against any claim or liability in
connection with the exercise or performance of any of their powers or duties
under the Trust Agreement.

(b)           Additional Duties.

(i)            In
addition to the duties set forth in Section 1(a)(i), the Administrator shall
perform such calculations and shall prepare or shall cause the preparation by
other appropriate persons of, and shall execute on behalf of the Issuer or the
Owner Trustee, all such documents, reports, filings, instruments, certificates
and opinions that the Issuer or the Owner Trustee are required to prepare, file
or deliver pursuant to the Transaction Documents or under Section 5.03 of the
Trust Agreement, and at the request of the Owner Trustee shall take all
appropriate action that the Issuer or the Owner Trustee are required to take pursuant
to the Transaction Documents.  In
furtherance thereof, the Owner Trustee shall, on behalf of the Issuer, execute
and deliver to the Administrator

 

6

 

and to each successor Administrator appointed pursuant
to the terms hereof, one or more powers of attorney substantially in the form
of Exhibit A hereto, appointing the
Administrator the attorney-in-fact of the Issuer for the purpose of executing
on behalf of the Owner Trustee and the Issuer all such documents, reports,
filings, instruments, certificates and opinions.  Subject to Section 5, and in accordance with
the directions of the Issuer, the Administrator shall administer, perform or
supervise the performance of such other activities in connection with the
Collateral (including the Transaction Documents) as are not covered by any of
the foregoing provisions and as are expressly requested by the Issuer and are
reasonably within the capability of the Administrator.

(ii)           Notwithstanding
anything in this Agreement or the Transaction Documents to the contrary, the
Administrator shall be responsible for promptly notifying the Owner Trustee in
the event that any withholding tax is imposed on the Trust’s payments (or
allocations of income) to the Owner as contemplated in Section 5.01(c) of the
Trust Agreement.  Any such notice shall
specify the amount of any withholding tax required to be withheld by the Owner
Trustee pursuant to such provision.

(iii)          Notwithstanding
anything in this Agreement or the Transaction Documents to the contrary, the
Administrator shall be responsible for performance of the duties of the Owner
Trustee set forth in Section 5.03(a), (b), (c) and (d), the penultimate
sentence of Section 5.03 and Section 5.04(a) of the Trust Agreement with respect
to, among other things, accounting and reports to the Owner; provided, however, that the Owner Trustee shall retain
responsibility for the distribution of information forms necessary to enable
the Owner to prepare its federal and state income tax returns.

(iv)          The
Administrator shall satisfy its obligations with respect to clauses (ii) and
(iii) above by retaining, at the expense of the Trust payable by the
Administrator, a firm of independent public accountants (the “Accountants”) acceptable to the Owner Trustee, which shall
perform the obligations of the Administrator thereunder.

(v)           The
Administrator shall perform the duties of the Administrator specified in
Section 10.02 of the Trust Agreement required to be performed in connection
with the resignation or removal of the Owner Trustee, and any other duties
expressly required to be performed by the Administrator under the Trust
Agreement.

(vi)          In
carrying out the foregoing duties or any of its other obligations under this
Agreement, the Administrator may enter into transactions or otherwise deal with
any of its Affiliates; provided, however,
that the terms of any such transactions or dealings shall be in accordance with
any directions received from the Issuer and shall be, in the Administrator’s
opinion, no less favorable to the Issuer than would be available from
unaffiliated parties.

 

7

 

(c)           Non-Ministerial Matters.

(i)            With
respect to matters that in the reasonable judgment of the Administrator are
non-ministerial, the Administrator shall not take any action unless within a
reasonable time before the taking of such action, the Administrator shall have
notified the Owner Trustee of the proposed action and the Owner Trustee shall
not have withheld consent or provided an alternative direction.  For the purpose of the preceding sentence, “non-ministerial matters” shall include, without limitation:

(A)          the
amendment of or any supplement to the Indenture;

(B)           the
initiation of any claim or lawsuit by the Issuer and the compromise of any
action, claim or lawsuit brought by or against the Issuer (other than in
connection with the collection of the Contracts);

(C)           the
amendment, change or modification of any other Transaction Documents;

(D)          the
appointment of successor Note Registrars, successor Paying Agents and successor
Indenture Trustees pursuant to the Indenture or the appointment of successor
Administrators or a successor Servicer, or the consent to the assignment by the
Note Registrar, Paying Agent or Indenture Trustee of its obligations under the
Indenture; and

(E)           the
removal of the Indenture Trustee.

(ii)           Notwithstanding
anything to the contrary in this Agreement, the Administrator shall not be
obligated to, and shall not, (A) make any payments to the Noteholders under the
Transaction Documents, (B) sell the Collateral pursuant to clause (iv) of
Section 5.04 of the Indenture, (C) take any other action that the Issuer
directs the Administrator not to take on its behalf or (D) take any other
action which may be construed as having the effect of varying the investment of
the Holders.

Section 2.              Records.  The
Administrator shall maintain appropriate books of account and records relating
to services performed hereunder, which books of account and records shall be accessible
for inspection by the Issuer and the Owner Trustee at any time during normal
business hours.

Section
3.              Compensation.  As
compensation for the performance of the Administrator’s obligations under this
Agreement and as reimbursement for its expenses related thereto, the
Administrator shall be entitled to a monthly fee which shall be solely an
obligation of the Trust Depositor and shall be in an amount as shall be
agreeable to the Trust Depositor and the Administrator.

 

8

 

Section
4.              Additional Information to
be Furnished to the Issuer.  The
Administrator shall furnish to the Issuer from time to time such additional
information regarding the Collateral as the Issuer shall reasonably request.

Section
5.              Independence of the
Administrator. 
For all purposes of this Agreement, the Administrator shall be an
independent contractor and shall not be subject to the supervision of the
Issuer or the Owner Trustee with respect to the manner in which it accomplishes
the performance of its obligations hereunder. 
Unless expressly authorized by the Issuer, the Administrator shall have
no authority to act for or represent the Issuer or the Owner Trustee in any way
and shall not otherwise be deemed an agent of the Issuer or the Owner Trustee.

Section
6.              No Joint Venture.  Nothing
contained in this Agreement (i) shall constitute the Administrator and either
of the Issuer or the Owner Trustee as members of any partnership, joint
venture, association, syndicate, unincorporated business or other separate
entity, (ii) shall be construed to impose any liability as such on any of them
or (iii) shall be deemed to confer on any of them any express, implied or
apparent authority to incur any obligation or liability on behalf of the others.

Section
7.              Other Activities of
Administrator.  Nothing herein shall prevent the
Administrator or its Affiliates from engaging in other business or, in its sole
discretion, from acting in a similar capacity as an administrator for any other
Person or entity even though such person or entity may engage in business
activities similar to those of the Issuer, the Owner Trustee or the Indenture
Trustee.

Section
8.              Term of Agreement;
Resignation and Removal of Administrator.  This Agreement
shall continue in force until the termination of the Issuer, upon which event
this Agreement shall automatically terminate.

(a)           Subject to Section 8(d) and Section
8(e), the Administrator may resign its duties hereunder by providing the Issuer
with at least 60 days’ prior written notice.

(b)           Subject to Section 8(d) and Section
8(e), the Issuer may remove the Administrator without cause by providing the
Administrator with at least 60 days’ prior written notice.

(c)           Subject to Section 8(d) and Section
8(e), at the sole option of the Issuer, the Administrator may be removed
immediately upon written notice of termination from the Issuer to the
Administrator if any of the following events shall occur:

(i)            the Administrator shall default in
the performance of any of its duties under this Agreement and, after notice of
such default, shall not cure such default within ten days (or, if

 

9

 

such default cannot be
cured in such time, shall not give within ten days such assurance of cure as
shall be reasonably satisfactory to the Issuer);

(ii)           a court having jurisdiction in the
premises shall enter a decree or order for relief, and such decree or order
shall not have been vacated within 60 days, in respect of the Administrator in
any involuntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect or appoint a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official for the
Administrator or any substantial part of its property or order the winding-up
or liquidation of its affairs; or

(iii)          the Administrator shall commence a
voluntary case under any applicable bankruptcy, insolvency or other similar law
now or hereafter in effect, shall consent to the entry of an order for relief
in an involuntary case under any such law, or shall consent to the appointment
of a receiver, liquidator, assignee, trustee, custodian, sequestrator or
similar official for the Administrator or any substantial part of its property,
shall consent to the taking of possession by any such official of any
substantial part of its property, shall make any general assignment for the
benefit of creditors or shall fail generally to pay its debts as they become
due.

The Administrator
agrees that if any of the events specified in clauses (ii) or (iii) above shall
occur, it shall give written notice thereof to the Issuer and the Indenture
Trustee within seven days after the occurrence of such event.

(d)           No resignation or removal of the
Administrator pursuant to this Section shall be effective until (i) a successor
Administrator shall have been appointed by the Issuer and (ii) such successor
Administrator shall have agreed in writing to be bound by the terms of this
Agreement in the same manner as the Administrator is bound hereunder.

(e)           The appointment of any successor
Administrator shall be effective only after the satisfaction of the Rating
Agency Condition with respect to the proposed appointment.

(f)            Subject to Section 8(d) and 8(e),
the Administrator acknowledges that upon the appointment of a Successor
Servicer pursuant to the Sale and Servicing Agreement, the Administrator shall
immediately resign and such Successor Servicer shall automatically become the
Administrator under this Agreement.

Section
9.              Action upon Termination,
Resignation or Removal. 
Promptly upon the effective date of termination of this Agreement
pursuant to Section 8 or the resignation or removal of the Administrator
pursuant to Section 8(a), (b) or (c) respectively, the Administrator shall be
entitled to be paid all fees and reimbursable expenses accruing to it to the
date of such termination, resignation or removal.  The Administrator shall forthwith upon such
termination pursuant to Section 8 deliver to the Issuer all property and documents
of or relating to the

 

10

 

Collateral then in the
custody of the Administrator.  In the
event of the resignation or removal of the Administrator pursuant to Section
(a), (b) or (c), respectively, the Administrator shall cooperate with the
Issuer and take all reasonable steps requested to assist the Issuer in making
an orderly transfer of the duties of the Administrator.

Section 10.            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.

Section
11.            Amendments.  This Agreement
may be amended from time to time by a written amendment duly executed and
delivered by the parties hereto, with the written consent of the Owner Trustee
but without the consent of the Noteholders, 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;
provided that such amendment will not, in the Opinion of Counsel satisfactory
to the Indenture Trustee, materially and adversely affect the interest of any
Noteholder.  This Agreement may also be
amended by the parties hereto with the written consent of the Owner Trustee and
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 Noteholders; provided, however, that no
such amendment may (i) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, collections of payments on the Contracts or
distributions that are required to be made for the benefit of the Noteholders
or (ii) reduce the aforesaid percentage of the holders of Notes which are
required to consent to any such amendment, without the consent of the holders
of all outstanding Notes. 
Notwithstanding the foregoing, the Administrator may not amend this
Agreement without the permission of the Trust Depositor, which permission shall
not be unreasonably withheld.

Section
12.            Successors and Assigns.  This Agreement
may not be assigned by the Administrator unless such assignment is previously
consented to in writing by the Issuer, the Indenture Trustee and the Owner Trustee
and subject to the satisfaction of the Rating Agency Condition in respect
thereof.  An assignment with such consent
and satisfaction, if accepted by the assignee, shall bind the assignee
hereunder in the same manner as the Administrator is bound hereunder.  Notwithstanding the foregoing, this Agreement
may be assigned by the

 

11

 

Administrator
without the consent of the Issuer or the Owner Trustee to a corporation or
other organization that is a successor (by merger, consolidation or purchase of
assets) to the Administrator; provided that such successor organization
executes and delivers to the Issuer, the Owner Trustee and the Indenture
Trustee an agreement, in form and substance reasonably satisfactory to the
Owner Trustee and the Indenture Trustee, in which such corporation or other
organization agrees to be bound hereunder by the terms of said assignment in
the same manner as the Administrator is bound hereunder.  Subject to the foregoing, this Agreement
shall bind any successors or assigns of the parties hereto.

Section 13.            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 14.            Headings.  The section
and subsection headings hereof have been inserted for convenience of reference
only and shall not be construed to affect the meaning, construction or effect
of this Agreement.

Section 15.            Counterparts.  This Agreement
may be executed in several counterparts, each of which shall be an original and
all of which shall constitute but one and the same agreement.

Section 16.            Severability.  Any provision
of this Agreement that is prohibited or unenforceable in any jurisdiction shall
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof and any such prohibition or unenforceability
in any jurisdiction shall not invalidate or render unenforceable such provision
in any other jurisdiction.

Section 17.            Not Applicable to Harley-Davidson
Credit in Other Capacities.  Nothing in
this Agreement shall affect any obligation Harley-Davidson Credit may have in
any other capacity.

Section 18.            Limitation of Liability of Owner
Trustee and Indenture Trustee.

(a)           Notwithstanding anything contained
herein to the contrary, this instrument has been countersigned 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

 

12

 

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
countersigned by BNY Midwest Trust Company not in its individual capacity but
solely as Indenture Trustee and in no event shall BNY Midwest Trust Company
have any liability for the representations, warranties, covenants, agreements
or other obligations of the Issuer hereunder or in any of the certificates,
notices or agreements delivered pursuant hereto, as to all of which recourse
shall be had solely to the assets of the Issuer.

Section 19.            Third-party Beneficiary.  The Owner
Trustee is a third-party beneficiary to this Agreement and is entitled to the
rights and benefits hereunder and may enforce the provisions hereof as if it
were a party hereto.

Section 20.            Survivability.  The
obligations of the Administrator described in Section 1(a)(ii) hereof shall
survive termination of this Agreement.

[signature page follows]

 

13

 

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

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  HARLEY-DAVIDSON
  MOTORCYCLE TRUST

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  2005-1

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  By: 

  	
  Wilmington Trust
  Company, not in its

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  individual capacity but
  solely as Owner

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Trustee

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  By: 

  	
  /s/ JANEL R. HAVRILLA

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Printed Name: Janel R. Havrilla

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title: Financial Services Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  HARLEY-DAVIDSON
  CUSTOMER FUNDING

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  CORP., as Trust
  Depositor

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  By: 

  	
  /s/ PERRY A. GLASSGOW

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Printed Name: Perry A. Glassgow

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title: Treasurer

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  BNY MIDWEST TRUST
  COMPANY, not in

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  its individual capacity
  but solely as Indenture

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Trustee

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  By: 

  	
  /s/ CYNTHIA DAVIS

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Printed Name: Cynthia Davis

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title: Vice President

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  HARLEY-DAVIDSON CREDIT
  CORP.,

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  as Administrator

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  By: 

  	
  /s/ PERRY A. GLASSGOW

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Printed Name: Perry A. Glassgow

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title: Treasurer

  
									

 

 

 

Signature Page to Administration Agreement

 

 

 

LIMITED POWER OF ATTORNEY

 

State
of Illinois                    )

                                             )  SS.

County
of Cook                   )

 

KNOW ALL PERSONS
BY THESE PRESENTS, that Wilmington Trust Company, a Delaware banking
corporation (the “Owner Trustee”), whose principal
executive office is located at Wilmington Trust Company, Rodney Square North,
1100 North Market Street, Wilmington, Delaware Attention:  Trust Administration, by and through its duly
elected and authorized officer, JANEL R. HAVRILLA,  a FINANCIAL SERVICES OFFICER,  on behalf of itself and of Harley-Davidson
Motorcycle Trust 2005-1 (the “Trust”) as
Issuer under the Administration Agreement, dated as of February 1, 2005 (the “Administration Agreement”), among the Trust,
Harley-Davidson Customer Funding Corp., BNY Midwest Trust Company, as Indenture
Trustee, and Harley-Davidson Credit Corp., as Administrator, does hereby
nominate, constitute and appoint Harley-Davidson Credit Corp., a Nevada
corporation, each of its officers from time to time and each of its employees
authorized by it from time to time to act hereunder, jointly and each of them
severally, together or acting alone, its true and lawful attorney-in-fact, for
the Owner Trustee and the Issuer in their name, place and stead, in the sole
discretion of such attorney-in-fact, to perform such calculations and prepare
or cause the preparation by other appropriate persons of, and to execute on
behalf of the Issuer or the Owner Trustee, all such documents, reports,
filings, instruments, certificates and opinions that the Issuer or the Owner
Trustee is required to prepare, file or deliver pursuant to the Administration
Agreement, and to take any and all other action, as such attorney-in-fact may
deem necessary or desirable in accordance with the directions of the Owner
Trustee and in connection with its duties as Administrator or successor
Administrator under the Administration Agreement.  Capitalized terms used herein that are not
otherwise defined shall have the meanings ascribed thereto in the
Administration Agreement.

The Owner Trustee
hereby ratifies and confirms the execution, delivery and performance (whether
before or after the date hereof) of the above-mentioned documents, reports,
filings, instruments, certificates and opinions, by the attorney-in-fact and
all that the attorney-in-fact shall lawfully do or cause to be done by virtue
hereof.

 

 

The Owner Trustee
hereby agrees that no person or other entity dealing with the attorney-in-fact
shall be bound to inquire into such attorney-in-fact’s power and authority
hereunder and any such person or entity shall be fully protected in relying on
such power of authority.

This Limited Power
of Attorney may not be assigned without the prior written consent of the Owner
Trustee.  It is effective immediately and
will continue until it is revoked.

This Limited Power
of Attorney shall be governed and construed in accordance with the laws of the
State of Illinois without reference to principles of conflicts of law.

Executed as of
this 8th day of February, 2005.

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
  Wilmington Trust Company, not in its
  individual

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	
  capacity but solely as Owner Trustee

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  By: /s/ JANEL R. HAVRILLA

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Printed Name: Janel R.
  Havrilla

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title: Financial Services
  Officer

  	 

 

 

 

CERTIFICATE OF ACKNOWLEDGMENT OF

NOTARY PUBLIC

 

State
of Delaware                           )

                                                       
)  SS.

County
of New Castle                    )

 

On February  2 , 2005 before me, Kathleen A.
Pedelini, Financial Services Officer

                                                                                           [Insert name and title of notary]

personally appeared            Janel
R. Havrilla.

 

ý            personally known to me, or

o            proved to me on the basis of
satisfactory evidence to be the person(s) whose name(s) is/are

subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ties), and that by his/her/their signature(s)
on the instrument the person(s), or the entity upon behalf of which person(s)
acted, executed the instrument.

                                                                WITNESS
my hand and official seal.

 

 

	
  Signature:

  	
  /s/ KATHLEEN A. PEDELINI

  
	
   

  My Commission expires 10/31/06  [SEAL]

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