Harley-Davidson
Annual Report 2017

Plain-text annual report

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D. C. 20549FORM 10-KýANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934For the fiscal year ended: December 31, 2017¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934For the transition period from to Commission file number 1-9183Harley-Davidson, Inc.(Exact name of registrant as specified in its charter)Wisconsin 39-1382325(State of organization) (I.R.S. Employer Identification No.)3700 West Juneau AvenueMilwaukee, Wisconsin 53208(Address of principal executive offices) (Zip code)Registrants telephone number: (414) 342-4680Securities registered pursuant to Section 12(b) of the Act:Title of each class Name of each exchange on which registeredCOMMON STOCK, $.01 PAR VALUE PER SHARE NEW YORK STOCK EXCHANGESecurities registered pursuant to Section 12(g) of the Act: NONEIndicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ý No ¨Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No ýIndicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months and (2) has been subject to such requirements for the past 90 days. Yes ý No ¨Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submittedand posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submitand post such files). Yes ý No ¨Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of theregistrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ýIndicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growthcompany. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.Large accelerated filer ý Accelerated filer ¨Non-accelerated filer ¨ Smaller reporting company ¨Emerging growth company ¨ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financialaccounting standards provided pursuant to Section 13(a) of the Exchange Act ¨Indicate by check mark whether the registrant is a shell company, as defined in Rule 12b-2 of the Exchange Act. Yes ¨ No ýAggregate market value of the voting stock held by non-affiliates of the registrant at June 25, 2017: $9,561,795,781Number of shares of the registrant’s common stock outstanding at February 2, 2018: 168,413,679 sharesDocuments Incorporated by ReferencePart III of this report incorporates information by reference from registrant’s Proxy Statement for the annual meeting of its shareholders to be held on May 10, 2018. Harley-Davidson, Inc.Form 10-KFor The Year Ended December 31, 2017 PagePart I Item 1.Business3Item 1A.Risk Factors9Item 1B.Unresolved Staff Comments17Item 2.Properties18Item 3.Legal Proceedings18Item 4.Mine Safety Disclosures20 Part II Item 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities20Item 6.Selected Financial Data22Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations23Item 7A.Quantitative and Qualitative Disclosures about Market Risk45Item 8.Consolidated Financial Statements and Supplementary Data47Item 9.Changes in and Disagreements With Accountants on Accounting and Financial Disclosure109Item 9A.Controls and Procedures109Item 9B.Other Information110 Part III Item 10.Directors, Executive Officers and Corporate Governance110Item 11.Executive Compensation110Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters110Item 13.Certain Relationships and Related Transactions, and Director Independence111Item 14.Principal Accounting Fees and Services111 Part IV Item 15.Exhibits and Financial Statements Schedules112Item 16.Form 10-K Summary112 Signatures119PART I(1) Note regarding forward-looking statementsThe Company intends that certain matters discussed by the Company are “forward-looking statements” intended to qualify for the safe harbor fromliability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements can generally be identified as such becausethe context statement will include words such as the Company “believes,” “anticipates,” “expects,” “plans,” “estimates,” or words of similar meaning.Similarly, statements that describe future plans, objectives, outlooks, targets, guidance or goals are also forward-looking statements. Such forward-lookingstatements are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated as of the date of this report.Certain of such risks and uncertainties are described in close proximity to such statements or elsewhere in this report, including under the caption “RiskFactors” in Item 1A of this report and under “Cautionary Statements” in Item 7 of this report. Shareholders, potential investors, and other readers are urged toconsider these factors in evaluating the forward-looking statements and cautioned not to place undue reliance on such forward-looking statements. Theforward-looking statements included in the Overview and Outlook section of Management's Discussion and Analysis of Financial Condition and Results ofOperations are only made as of January 30, 2018 and the remaining forward-looking statements in this report are made as of the date indicated or, if a date isnot indicated, as of the date of the filing of this report (February 21, 2018), and the Company disclaims any obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances. Item 1. BusinessGeneralHarley-Davidson Motor Company was founded in 1903. Harley-Davidson, Inc. was incorporated in 1981, at which time it purchased the Harley-Davidson® motorcycle business from AMF Incorporated in a management buyout. In 1986, Harley-Davidson, Inc. became publicly held. Unless the contextotherwise requires, all references to the “Company” include Harley-Davidson, Inc. and all of its subsidiaries. Harley-Davidson, Inc. is the parent company forthe groups of companies doing business as Harley-Davidson Motor Company (HDMC) and Harley-Davidson Financial Services (HDFS). The Company hastwo reportable segments: the Motorcycles & Related Products (Motorcycles) segment and the Financial Services segment.See Note 18 of the Notes to Consolidated Financial Statements for financial information related to the Company’s reportable segments and revenue bygeographic area. Motorcycles and Related Products SegmentThe Motorcycles segment consists of HDMC which designs, manufactures and sells at wholesale on-road Harley-Davidson motorcycles as well asmotorcycle parts, accessories, general merchandise and related services. The Company’s products are sold to retail customers through a network ofindependent dealers. The Company conducts business on a global basis, with sales in the United States, Canada, Latin America, Europe/Middle East/Africa(EMEA) and Asia Pacific.The following table includes Motorcycles segment revenue by product line as a percent of total revenue for the last three fiscal years: 2017 2016 2015Motorcycles 77.8% 78.2% 77.8%Parts & Accessories 16.4% 16.0% 16.2%General Merchandise 5.3% 5.4% 5.5%Other 0.5% 0.4% 0.5% 100.0% 100.0% 100.0%Motorcycles - The Company's Harley-Davidson motorcycles include cruiser and touring models that feature classic styling, innovative design,distinctive sound, and superior quality with the ability to customize. Harley-Davidson motorcycles generally have engines with displacements that aregreater than 601cc's, up to a maximum displacement of approximately 1900cc's.3The Company's motorcycles compete in the cruiser and touring categories of the market which were pioneered by the Company. The total on-roadmotorcycle market is comprised of the following categories:•Cruiser (emphasizes styling and owner customization);•Touring (emphasizes rider comfort and load capacity and incorporates features such as fairings and luggage compartments);•Standard (a basic motorcycle which usually features upright seating for one or two passengers);•Sportbike (incorporates racing technology, aerodynamic styling, low handlebars with a “sport” riding position and high performance tires); and•Dual (designed with the capability for use on public roads as well as for some off-highway recreational use).Competition in the categories of the motorcycle market in which the Company competes is based upon a number of factors, including productcapabilities and features, styling, price, quality, reliability, warranty, availability of financing, and quality of dealer network. The Company believes itsmotorcycles continue to generally command a premium price at retail relative to competitors’ motorcycles. The Company emphasizes remarkable styling,customization, innovation, sound, quality, and reliability in its products and generally offers a two-year warranty for its motorcycles. The Company considersthe availability of a line of motorcycle parts and accessories and general merchandise, the availability of financing through HDFS and its global network ofpremium dealers to be competitive advantages.In 2017, the U.S. and European markets accounted for approximately 77% of the total annual independent dealer retail sales of new Harley-Davidsonmotorcycles. The most significant other markets for the Company, based on the Company's 2017 retail sales data, were Australia, Japan and Canada.Harley-Davidson has been the historical market share leader in the U.S. 601+cc portion of the motorcycle market. According to the Motorcycle IndustryCouncil (MIC), the cruiser and touring categories accounted for approximately 73% of total 2017 601+cc retail unit registrations in the U.S. During 2017, the601+cc portion of the market represented approximately 82% of the total U.S. motorcycle market in terms of new units registered.The following chart includes U.S. retail registration data for 601+cc motorcycles for the years 2015 through 2017:U.S. Motorcycle Registration Data(a)(b) 601+cc (Units in thousands) 2017 2016 2015Total new motorcycle registrations 288.8 311.7 328.8Harley-Davidson new registrations 146.5 159.5 165.1 50.7% 51.2% 50.2%(a)Data includes on-road 601+cc models. On-road 601+cc models include dual purpose models, three-wheeled vehicles and autocycles. Registration datafor Harley-Davidson Street® 500 motorcycles is not included in this table.(b)U.S. industry data is derived from information provided by the Motorcycle Industry Council (MIC). This third-party data is subject to revision andupdate. The retail registration data for Harley-Davidson motorcycles presented in this table will differ from the Harley-Davidson retail sales datapresented in Item 7 of this report. The Company’s source for retail sales data in Item 7 of this report is sales and warranty registrations provided byHarley-Davidson dealers as compiled by the Company. The retail sales data in Item 7 includes sales of Harley-Davidson Street® 500 motorcycles whichare excluded from the 601+cc units included in the retail registration data in this table. In addition, small differences may arise related to the timing ofdata submissions to the independent sources.The European 601+cc motorcycle market is larger than the U.S. market and customer preferences differ from those of U.S. customers. The touring andcruiser categories represented approximately 52% of the European 601+cc market in 2017 compared to approximately 73% of the 601+ cc market in the U.S.4The following chart includes European retail registration data for 601+cc motorcycles for the years 2015 through 2017:European Motorcycle Registration Data(a)(b) 601+cc (Units in thousands) 2017 2016 2015Total new motorcycle registrations 390.6 391.9 351.8Harley-Davidson new registrations 38.1 42.3 37.0 9.8% 10.8% 10.5% (a)On-road 601+cc models include dual purpose models, three-wheeled vehicles and autocycles. Registration data for Harley-Davidson Street® 500motorcycles is not included in this table.(b)Europe data includes retail sales in Austria, Belgium, Denmark, Finland, France, Germany, Greece, Italy, Luxembourg, Netherlands, Norway, Portugal,Spain, Sweden, Switzerland, and the United Kingdom. Industry retail motorcycle registration data is derived from information provided by theAssociation des Constructeurs Europeens de Motocycles (ACEM), an independent agency. This third-party data is subject to revision and update. Theretail registration data for Harley-Davidson motorcycles presented in this table will differ from the Harley-Davidson retail sales data presented in Item 7of this report. The Company’s source for retail sales data in Item 7 of this report is sales and warranty registrations provided by Harley-Davidson dealersas compiled by the Company. The retail sales data in Item 7 includes sales of Harley-Davidson Street® 500 motorcycles which are excluded from the601+cc units included in the retail registration data in this table. In addition, some differences may arise related to the timing of data collected by theindependent sources.Parts and Accessories (P&A) and General Merchandise – The Company offers a complete line of Harley-Davidson P&A and General Merchandise.P&A products are comprised of replacement parts (Genuine Motor Parts) and mechanical and cosmetic accessories (Genuine Motor Accessories). GeneralMerchandise includes MotorClothes® apparel and riding gear.Licensing – The Company creates an awareness of the Harley-Davidson brand among its customers and the non-riding public through a wide range ofproducts for enthusiasts by licensing the name “Harley-Davidson” and other trademarks owned by the Company. Royalty revenues from licensing, includedin Motorcycles revenue, were $35.5 million, $38.1 million and $46.5 million in 2017, 2016 and 2015, respectively.Patents and Trademarks – The Company strategically manages its portfolio of patents, trade secrets, copyrights, trademarks and other intellectualproperty.The Company and its subsidiaries own, and continue to obtain, patent rights that relate to its motorcycles and related products and processes for theirproduction. Certain technology-related intellectual property is also protected, where appropriate, by license agreements, confidentiality agreements or otheragreements with suppliers, employees and other third parties. The Company diligently protects its intellectual property, including patents and trade secrets,and its rights to innovative and proprietary technology and designs. This protection, including enforcement, is important as the Company moves forwardwith investments in new products, designs and technologies. While the Company believes patents are important to its business operations and in theaggregate constitute a valuable asset, the success of the business is not dependent on any one patent or group of patents. The Company’s active patentportfolio has an average age for patents of approximately seven and a half years. A patent review committee manages the patent strategy and portfolio of theCompany.Trademarks are important to the Company’s motorcycle business and licensing activities. The Company has a vigorous worldwide program oftrademark registration and enforcement to maintain and strengthen the value of the trademarks and prevent the unauthorized use of those trademarks. TheHARLEY-DAVIDSON trademark and the Bar and Shield trademark are each highly recognizable to the public and are very valuable assets. Additionally, theCompany uses numerous other trademarks, trade names and logos which are registered worldwide. The following are among the Company’s trademarks:HARLEY-DAVIDSON, H-D, HARLEY, the Bar & Shield Logo, MOTORCLOTHES, the MotorClothes Logo, HARLEY OWNERS GROUP, H.O.G., the H.O.G.Logo, SOFTAIL, SPORTSTER and V-ROD. The HARLEY-DAVIDSON trademark has been used since 1903 and the Bar and Shield trademark since at least1910. Substantially all of the Company’s trademarks are owned by H-D U.S.A., LLC, a subsidiary of the Company, which also manages the Company’strademark strategy and portfolio.Marketing and Customer Experiences – The Company’s products are marketed to retail customers worldwide primarily through digital and experientialactivities as well as through more traditional promotional and advertising activities. Additionally, the Company's independent dealers engage in a widerange of local marketing and experiential activities in part supported by cooperative programs with the Company.5Customer experiences have traditionally been at the center of much of the Company’s marketing. To attract customers and achieve its goals, theCompany participates in motorcycle rallies around the world and also in major motorcycle consumer shows, racing activities, music festivals, mixed martialarts activities and other special promotional events.The Harley Owners Group (H.O.G.®) also promotes Harley-Davidson products and the related lifestyle and sponsors motorcycle events, including ralliesand rides for Harley-Davidson motorcycle enthusiasts throughout the world.The Company's Harley-Davidson® Riding Academy offers a series of rider education experiences that provide both new and experienced riders withdeeper engagement in the sport of motorcycling by teaching basic and advanced motorcycling skills and knowledge. The courses are conducted by anetwork of participating Harley-Davidson dealerships in the U.S., Canada, China, and Mexico, enabling students to experience the Harley-Davidson lifestyle,environment, people and products as they learn.Through the Company's agreement with EagleRider, riders in the U.S. can rent Harley-Davidson motorcycles and participate in motorcycle tours.EagleRider is the exclusive provider of Harley-Davidson touring and cruiser motorcycle rentals and has locations throughout the U.S., including at selectHarley-Davidson dealerships. Outside the U.S., riders can rent Harley-Davidson motorcycles from participating dealers through the Company's AuthorizedRental Program and participate in tours through the Company's Harley-Davidson Authorized Tours Program.The Company's Harley-Davidson Museum (Museum) in Milwaukee, Wisconsin is a unique destination that the Company believes builds andstrengthens bonds between riders and Harley-Davidson and enhances the Harley-Davidson brand among the public at large.Distribution – The Company’s products are retailed through a network of independent dealers, of which the majority sell Harley-Davidson motorcyclesexclusively. These dealerships stock and sell the Company’s motorcycles, P&A, general merchandise and licensed products, and perform service on Harley-Davidson motorcycles. The Company believes the quality retail experience that its independent dealers provide is a differentiating and strategic advantagefor the Company.The Company distributes its motorcycles and related products to a network of independent dealers located in approximately 100 countries worldwide.The following table includes the number of worldwide Harley-Davidson independent dealerships by geographic location as of December 31, 2017: United States Canada Latin America EMEA Asia Pacific TotalDealerships 698 68 58 398 276 1,498P&A, general merchandise and licensed products are also retailed through eCommerce channels in certain markets. In the U.S., the eCommerce model isoperated by the Company through participating authorized U.S. Harley-Davidson dealers. In China and India, the eCommerce sites are operated by third-parties.Retail Customer and Dealer Financing – The Company believes that HDFS, as well as other third-party financial institutions, provide access tofinancing for Harley-Davidson dealers and their retail customers. HDFS provides financing to Harley-Davidson independent dealers and retail customers ofindependent dealers in the U.S. and Canada. The Company’s independent dealers and their retail customers in EMEA, Asia Pacific and Latin America are notdirectly financed by HDFS, but have access to financing through other established financial services companies, some of which have licensing or brandingagreements with HDFS.Seasonality – The timing of retail sales made by the Company’s independent dealers tracks closely with regional riding seasons. The seasonality of theCompany’s wholesale motorcycle shipments primarily correlates with the timing of retail sales. The Company utilizes flexible or surge manufacturingcapabilities to help align the production and wholesale shipment of motorcycles with the retail selling season. This provides the Company the ability tooptimize inventory levels in the U.S. and Canada. In EMEA, Asia Pacific and Latin America, the Company utilizes a distribution process whereby Company-owned inventory is maintained locally at a level sufficient to fulfill dealer orders as needed.Motorcycle Manufacturing – The Company has a flexible manufacturing process designed to help ensure it is well-positioned to meet customerdemand in a timely and cost-effective manner.(1) This flexible or surge manufacturing capability allows the Company to increase the production ofmotorcycles ahead of and during the peak retail selling season to more closely correlate the timing of production and wholesale shipments to the retailselling season. It also allows the Company to respond to the desired model mix to meet customer demand.The majority of the Company's motorcycles are manufactured at facilities located in the U.S. The Company's U.S. manufacturing facilities supply theU.S. market as well as certain international markets. Additionally, the Company operates6facilities in Brazil, India and Australia. In Brazil, the Company operates a CKD (Complete Knock Down) assembly facility, which assembles motorcycles soldin Brazil from component kits sourced from the Company’s U.S. plants and its suppliers. In India, the Company operates a manufacturing facility thatincludes both CKD assembly of certain motorcycles for sale in India and production of the Company’s Street 750® motorcycles for distribution to marketsoutside of North America. Like its U.S. manufacturing facilities, the Company’s Brazil and India operations are focused on driving world-class performance.The motorcycles assembled at the Company's international facilities have the same authentic look, sound, feel and quality of a motorcycle manufactured bythe Company's U.S. facilities. These international facilities enable the Company to be close to the customer, provide quality products at a competitive priceand grow its overall international business. The Company also operates a manufacturing facility in Australia for the purpose of producing certain complex,high-finish wheels for its motorcycles.Raw Materials and Purchased Components – The Company continues to establish and reinforce long-term, mutually beneficial relationships with itssuppliers. Through these collaborative relationships, the Company gains access to technical and commercial resources for application directly to productdesign, development and manufacturing initiatives. In addition, through a continued focus on collaboration and strong supplier relationships, the Companybelieves it will be positioned to achieve strategic objectives and deliver cost and quality improvements over the long-term.(1) The Company's principal raw materials that are purchased include steel and aluminum castings, forgings, steel sheet and bar. The Company alsopurchases certain motorcycle components, including, but not limited to, electronic fuel injection systems, batteries, certain wheels, tires, seats, electricalcomponents and instruments. The Company closely monitors the overall viability of its supply base. At this time, the Company does not anticipatedifficulties in obtaining raw materials or components.(1) Research and Development – The Company incurred research and development expenses of $175.2 million, $172.3 million and $161.2 million during2017, 2016 and 2015, respectively.Regulation – International, federal, state and local authorities have various environmental control requirements relating to air, water and noise thataffect the business and operations of the Company. The Company strives to ensure that its facilities and products comply with all applicable environmentalregulations and standards.The Company’s motorcycles and certain other products that are sold in the United States are subject to certification by the U.S. EnvironmentalProtection Agency (EPA) and the California Air Resources Board (CARB) for compliance with applicable emissions and noise standards. Certain Harley-Davidson products are designed to comply with EPA and CARB standards and the Company believes it will comply with future requirements when they gointo effect.(1) Additionally, certain of the Company’s products must comply with the motorcycle emissions, noise and safety standards of Canada, theEuropean Union, Japan, Brazil and certain other foreign markets where they are sold, and the Company believes its products currently comply with thosestandards. Because the Company expects that environmental standards will become more stringent over time, the Company will continue to incur research,development and production costs in this area for the foreseeable future.(1) The Company, as a manufacturer of motorcycle products, is subject to the U.S. National Traffic and Motor Vehicle Safety Act, which is administered bythe U.S. National Highway Traffic Safety Administration (NHTSA). The Company has certified to NHTSA that certain of its motorcycle products comply fullywith all applicable federal motor vehicle safety standards and related regulations. The Company has from time to time initiated certain voluntary recalls.During the last three years, the Company has accrued $86.8 million associated with 12 voluntary recalls related to Harley-Davidson motorcycles. Thisincludes $29.4 million recorded in 2017 associated with the previously disclosed NHTSA investigation opened in 2016 related to certain motorcyclesequipped with anti-lock breaking systems.Employees – As of December 31, 2017, the Motorcycles segment had approximately 5,200 employees.Approximately 2,100 unionized employees at the U.S. manufacturing facilities are represented as follows:•York, Pennsylvania - represented by International Association of Machinist and Aerospace Workers (IAM), and the collective bargaining agreementwill expire on October 15, 2022•Kansas City, Missouri - represented by United Steelworkers of America (USW) and IAM, and the respective collective bargaining agreements willexpire on July 31, 2018•Milwaukee, Wisconsin - represented by USW and IAM, and the respective collective bargaining agreements will expire on March 31, 2019•Tomahawk, Wisconsin - represented by USW, and the collective bargaining agreement will expire on March 31, 20197Financial Services SegmentThe Financial Services segment consists of HDFS which is engaged in the business of financing and servicing wholesale inventory receivables andretail consumer loans, primarily for the purchase of Harley-Davidson motorcycles. HDFS also works with certain unaffiliated insurance companies to providemotorcycle insurance and protection products to motorcycle owners. HDFS conducts business principally in the U.S. and Canada. The Company’sindependent dealers and their retail customers in EMEA, Asia Pacific and Latin America are not financed by HDFS, but have access to financing throughother third-party financial institutions, some of which have licensing or branding agreements with the Company or HDFS.Wholesale Financial Services – HDFS provides wholesale financial services to Harley-Davidson dealers, including floorplan and open accountfinancing of motorcycles and motorcycle parts and accessories. HDFS offers wholesale financial services to Harley-Davidson dealers in the United States andCanada, and during 2017, all of such dealers utilized those services at some point during the year.Retail Financial Services – HDFS provides retail financing to consumers, consisting primarily of installment lending for the purchase of new and usedHarley-Davidson motorcycles. HDFS’ retail financial services are available through most Harley-Davidson dealerships in the United States and Canada.Insurance Services – HDFS works with certain unaffiliated insurance companies which offer point-of-sale protection products through most Harley-Davidson dealers in both the U.S. and Canada, including motorcycle insurance, extended service contracts and motorcycle maintenance protection. HDFSalso direct-markets motorcycle insurance and extended service contracts to owners of Harley-Davidson motorcycles. In addition, HDFS markets acomprehensive package of business insurance coverages and services to owners of Harley-Davidson dealerships.Licensing – HDFS has licensing arrangements with third-party financial institutions that issue credit cards bearing the Harley-Davidson brand in U.S.and international markets. Internationally, HDFS licenses the Harley-Davidson brand to local third-party financial institutions that offer products to theCompany’s retail customers such as financing and insurance.Funding – The Company believes a diversified and cost-effective funding strategy is important to meet HDFS’ goal of providing credit whiledelivering appropriate returns and profitability. Financial Services operations have been funded with unsecured debt, unsecured commercial paper, asset-backed commercial paper conduit facilities, committed unsecured bank facilities and asset-backed securitizations.Competition – The Company regards its ability to offer a package of wholesale and retail financial services in the U.S. and Canada as a significantcompetitive advantage. Competitors in the financial services industry compete for business based largely on price and, to a lesser extent, service. HDFScompetes on convenience, service, brand association, dealer relations, industry experience, terms and price.In the United States, HDFS financed 61.2% of new Harley-Davidson motorcycles retailed by independent dealers during 2017, compared to 61.7% in2016. In Canada, HDFS financed 41.9% of new Harley-Davidson motorcycles retailed by independent dealers during 2017, compared to 45.3% in 2016.Competitors for retail motorcycle finance business are primarily banks, credit unions and other financial institutions. In the motorcycle insurance business,competition primarily comes from national insurance companies and from insurance agencies serving local or regional markets. For insurance-relatedproducts such as extended service contracts, HDFS faces competition from certain regional and national industry participants as well as dealer in-houseprograms. Competition for the wholesale motorcycle finance business primarily consists of banks and other financial institutions providing wholesalefinancing to Harley-Davidson dealers in their local markets.Trademarks – HDFS uses various trademarks and trade names for its financial services and products which are licensed from H-D U.S.A., LLC, includingHARLEY-DAVIDSON, H-D and the Bar & Shield logo.Seasonality – HDFS experiences seasonal variations in retail financing activities based on the timing of regional riding seasons in the U.S. and Canada.In general, from mid-March through August, retail financing volume is greatest. HDFS wholesale financing volume is affected by inventory levels at Harley-Davidson dealers. Dealers generally have higher inventory levels of new and used motorcycles in the winter than during the spring and summer riding season.As a result, wholesale financing volume is generally higher during the winter as compared to the rest of the year.Regulation – Operations of HDFS (both U.S. and foreign) are subject, in certain instances, to supervision and regulation by state and federaladministrative agencies and various foreign governmental authorities. Many of the requirements imposed by such entities are in place to provide consumerprotection as it pertains to the selling and servicing of financial products and services. Therefore, HDFS operations may be subject to limitations imposed byregulations, laws and judicial and/or8administrative decisions. In the U.S. for example, applicable laws include the federal Truth-in-Lending Act, Equal Credit Opportunity Act and Fair CreditReporting Act.Depending on the specific facts and circumstances involved, non-compliance with these laws may result in consequences such as limiting the ability ofHDFS to collect all or part of the principal or interest on applicable loans, entitling the borrower to rescind the loan or to obtain a refund of amountspreviously paid, or could subject HDFS to the payment of damages or penalties and administrative sanctions, including “cease and desist” orders, and couldlimit the number of loans eligible for HDFS securitization programs.The Dodd-Frank Wall Street Reform and Consumer Protection Act granted the federal Consumer Financial Protection Bureau (CFPB) significantsupervisory, enforcement, and rule-making authority in the area of consumer financial products and services. Certain CFPB actions and regulations willdirectly impact HDFS and its operations. For example, the CFPB has supervisory authority over non-bank larger participants in the vehicle financing market,which includes a non-bank subsidiary of HDFS.Such regulatory requirements and associated supervision also could limit the discretion of HDFS in operating its business. Noncompliance withapplicable statutes or regulations could result in the suspension or revocation of any charter, license or registration at issue, as well as the imposition of civilfines, criminal penalties and administrative sanctions.A subsidiary of HDFS, Eaglemark Savings Bank (ESB), is a Nevada state thrift chartered as an Industrial Loan Company (ILC). The activities of thissubsidiary are governed by federal laws and regulations as well as State of Nevada banking laws, and are subject to examination by the Federal DepositInsurance Corporation (FDIC) and Nevada state bank examiners. ESB originates retail loans and sells the loans to a non-banking subsidiary of HDFS. Thisprocess allows HDFS to offer retail products with many common characteristics across the United States and to similarly service loans to U.S. retail customers.Employees – As of December 31, 2017, the Financial Services segment had approximately 600 employees.Internet AccessThe Company’s website address for investor relations is http://investor.harley-davidson.com/.The Company’s Annual Report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and any amendments to those reports,are available on its website free of charge as soon as reasonably practicable after it electronically files such material with, or furnishes such material to, theUnited States Securities and Exchange Commission (SEC).In addition, the Company makes available, through its website, the following corporate governance materials: (a) the Company’s CorporateGovernance Policy; (b) Committee Charters approved by the Company’s Board of Directors for the Audit and Finance Committee, Human ResourcesCommittee, Nominating and Corporate Governance Committee and Sustainability Committee; (c) the Company’s Financial Code of Ethics; (d) theCompany’s Code of Business Conduct (the Code of Conduct) in nine languages including English; (e) the Conflict of Interest Process for Directors,Executive Officers and Other Employees (the Conflict Process); (f) a list of the Company’s Board of Directors; (g) the Company’s Bylaws; (h) the Company’sEnvironmental and Energy Policy; (i) the Company’s Policy for Managing Disclosure of Material Information; (j) the Company’s Supplier Code of Conductin four languages including English; (k) the Sustainability Strategy Report; (l) the list of compensation survey participants used as market reference pointsfor various components of compensation as reported in the Company’s Notice of Annual Meeting and Proxy Statement filed with the SEC on March 20,2017, which compensation relates to the Company’s named executive officers; (m) the California Transparency in Supply Chain Act Disclosure; (n)Statement on Conflict Minerals; (o) Political Engagement and Contributions 2016-2017; and (p) the Company's Clawback Policy.The Company satisfies the disclosure requirements under the Code of Conduct, the Conflict Process and applicable New York Stock Exchange listingrequirements regarding waivers of the Code of Conduct or the Conflict Process by disclosing the information in the Company’s proxy statement for its annualmeeting of shareholders or on the Company’s website. The Company is not including the information contained on or available through its website as a partof, or incorporating such information by reference into, this Annual Report on Form 10-K.Item 1A. Risk FactorsAn investment in Harley-Davidson, Inc. involves risks, including those discussed below. These risk factors should be considered carefully beforedeciding whether to invest in the Company.9•The Company may not be able to successfully execute its long-term business strategy. There is no assurance that the Company will be able todrive growth and increase ridership to the extent desired through its focus of efforts and resources on its long-term business strategy and the Harley-Davidson brand, or to enhance productivity and profitability to the extent desired through pricing and continuous improvement.•The Company’s strategy to grow ridership may not be successful. The Company has been successful in marketing its products in large part bypromoting the experience of Harley-Davidson motorcycling. To sustain and grow the business over the long-term, the Company must grow the sportof motorcycling and continue to be successful selling products and promoting the experience of motorcycling to new customers, including newriders, competitive riders and those who have motorcycle licenses but do not currently ride. The Company’s efforts toward building two millionriders in the U.S. between 2017 and 2027 and growing ridership internationally may not be successful, and achieving such growth in ridership maystill not adequately meet the desired result of driving unit sales growth. Further, growing ridership in the U.S. may be challenging because themotorcycle market in the U.S. has been stagnant or declining, and the Company expects those conditions to continue. Failure to successfully drivedemand for the Company's products may have a material adverse effect on the Company's business and results of operations.•The Company must effectively execute its manufacturing optimization plan within expected costs and timing. In January 2018, the Companyannounced a multi-year manufacturing optimization plan anchored by the consolidation of its final assembly plant in Kansas City, Missouri, into itsYork, Pennsylvania plant, and the closure of its wheel operations in Australia. These actions are designed to eliminate excess capacity and reduceproduction costs and component supply costs. Effectively executing these plans within expected costs and realizing expected benefits will dependupon a number of factors, including the time required to complete planned actions and effective collaboration with the unions representing theCompany’s employees, the absence of material issues associated with workforce reductions, availability of and effective use of third-party serviceproviders to assist in implementing the actions, the ability and effectiveness of current suppliers to take on additional component productionvolume, avoidance of unexpected disruptions in production, retention of key employees involved in implementing the restructuring plans and theability of the Company to dispose of vacated facilities in a cost effective manner.•The Company’s ability to remain competitive is dependent upon its capability to develop and successfully introduce new, innovative andcompliant products. The motorcycle market continues to change in terms of styling preferences and advances in new technology and, at the sametime, be subject to increasing regulations related to safety and emissions. The Company must continue to distinguish its products from itscompetitors’ products with unique styling and new technologies. The Company may not be able to achieve its goal of introducing 100 new, high-impact motorcycle models between 2017 and 2027, and introducing those models may still not lead to the desired result of driving unit salesgrowth. As the Company incorporates new and different features and technology into its products, the Company must protect its intellectualproperty from imitators and ensure its products do not infringe the intellectual property of other companies. In addition, these new products mustcomply with applicable regulations worldwide and satisfy the potential demand for products that produce lower emissions and achieve better fueleconomy. The Company must make product advancements to respond to changing consumer preferences and market demands while maintaining theclassic look, sound and feel associated with Harley-Davidson products, and development of electric vehicles will present challenges to theCompany’s ability to maintain such look, sound and feel. The Company must also be able to design and manufacture these products and deliverthem to a global marketplace in an efficient and timely manner and at prices that are attractive to customers. There can be no assurances that theCompany will be successful in these endeavors or that existing and prospective customers will like or want the Company’s new products.•Increased supply of and/or declining prices for used motorcycles and excess supply of new motorcycles may adversely impact retail sales ofnew motorcycles by the Company’s independent dealers. The Company has observed that when the supply of used motorcycles increases or theprices for used Harley-Davidson motorcycles decline, there can be reduced demand among retail purchasers for new Harley-Davidson motorcycles (ator near manufacturer’s suggested retail prices). Further, the Company and its independent dealers can and do take actions that influence the marketsfor new and used Harley-Davidson motorcycles. For example, introduction of new motorcycle models with significantly different functionality,technology or other customer satisfiers can result in increased supply of used motorcycles, which could result in declining prices for usedmotorcycles and prior model-year new motorcycles. Also, while the Company has taken steps designed to balance production volumes for its newmotorcycles with demand, those steps may not be effective, or the Company’s competitors could choose to supply new motorcycles to the market inexcess of demand at reduced prices which could also have the effect of reducing demand for new Harley-Davidson motorcycles (at or nearmanufacturer’s suggested retail prices). Ultimately, reduced demand among retail purchasers for new Harley-Davidson motorcycles leads to reducedshipments by the Company.10•The motorcycle industry has become increasingly competitive. Many of the Company’s competitors are more diversified than the Company, andthey may compete in all segments of the motorcycle market, other powersports markets and/or the automotive market. Certain competitors appear tobe increasing their investment in products that compete with the Company's products. Also, the Company’s manufacturer’s suggested retail price forits motorcycles is generally higher than its competitors, and as price becomes a more important competitive factor for consumers in the markets inwhich the Company competes, the Company may be at a competitive disadvantage. Furthermore, many competitors headquartered outside the U.S.experience a financial benefit from a strengthening in the U.S. dollar relative to their home currency that can enable them to reduce prices to U.S.consumers. In addition, the Company’s financial services operations face competition from various banks, insurance companies and other financialinstitutions that may have access to additional sources of capital at more competitive rates and terms, particularly for borrowers in higher credit tiers.The Company's responses to these competitive pressures, or its failure to adequately address and respond to these competitive pressures, may have amaterial adverse effect on the Company’s business and results of operations.•Changes in general economic and business conditions, tightening of credit and retail markets, political events or other factors may adverselyimpact dealers’ retail sales. The motorcycle industry is impacted by general economic conditions over which motorcycle manufacturers have littlecontrol. These factors can weaken the retail environment and lead to weaker demand for discretionary purchases such as motorcycles. Weakenedeconomic conditions in certain business sectors and geographic areas, such as oil-dependent areas, can also result in reduced demand for theCompany's products. Tightening of credit can limit the availability of funds from financial institutions and other lenders and sources of capitalwhich could adversely affect the ability of retail consumers to obtain loans for the purchase of motorcycles from lenders, including HDFS. Shouldgeneral economic conditions or motorcycle industry demand decline, the Company’s results of operations and financial condition may besubstantially adversely affected. The motorcycle industry can also be affected by political conditions and other factors over which motorcyclemanufacturers have little control.•Expanding international sales and operations subjects the Company to risks that may have a material adverse effect on its business. Expandinginternational sales and operations is a part of the Company’s long-term business strategy, particularly in light of the U.S. market conditions. There isno assurance that the Company will accomplish this successfully. Further, to support that strategy, the Company must increase its presence outsidethe U.S., including additional employees and investment in business infrastructure and operations. International operations and sales are subject tovarious risks, including political and economic instability, local labor market conditions, the imposition of foreign tariffs and other trade barriers,the impact of foreign government laws and regulations and U.S. laws and regulations that apply to international operations, and the effects of incomeand withholding taxes, governmental expropriation and differences in business practices. The Company may incur increased costs and experiencedelays or disruptions in product deliveries and payments in connection with international operations and sales that could cause loss of revenues andearnings. Unfavorable changes in the political, regulatory and business climate could have a material adverse effect on the Company’s net sales,financial condition, profitability or cash flows. Business practices that may be accepted in other countries can violate U.S. or other laws that apply tothe Company. Violations of laws that apply to the Company's foreign operations, such as the U.S. Foreign Corrupt Practices Act, could result insevere criminal or civil sanctions, could disrupt the Company's business and result in an adverse effect on the Company's reputation, business andresults of operations.•The Company may not be able to successfully execute its manufacturing strategy. The Company’s manufacturing strategy is designed tocontinuously improve product quality and increase productivity, while reducing costs and increasing flexibility to respond to ongoing changes inthe marketplace. Based on the Company’s strategy, the Company may, from time to time, open, close, expand, contract or restructure one or more ofits manufacturing facilities. The Company believes flexible manufacturing, including flexible supply chains and flexible labor agreements, is thekey element to enable improvements in the Company’s ability to respond to customers in a cost effective manner. To execute this strategy, theCompany must be successful in its implementation of facility changes and in its continuous improvement efforts, all of which are dependent on theinvolvement of management, production employees and suppliers. To execute this strategy, the Company must be successful in its continuousimprovement efforts which are dependent on the involvement of management, production employees and suppliers. Any inability to achieve theseobjectives could adversely impact the profitability of the Company’s products and its ability to deliver the right product at the right time to thecustomer.•The Company must prevent and detect issues with its products, components purchased from suppliers, and its suppliers’ manufacturingprocesses to reduce the risk of recall campaigns, increased warranty costs or11litigation, increased product liability claims or litigation, delays in new model launches, and inquiries or investigations by regulatoryagencies. The Company must also complete any recall campaigns within cost expectations. The Company must continually improve and adhereto product development and manufacturing processes, and ensure that its suppliers and their sub-tier suppliers adhere to product development andmanufacturing processes, to ensure high quality products are sold to retail customers. If product designs or manufacturing processes are defective, theCompany could experience delays in new model launches, field actions such as product programs and product recalls, inquiries or investigationsfrom regulatory agencies, warranty claims, and product liability claims, which may involve purported class actions. While the Company usesreasonable methods to estimate the cost of warranty, recall and product liability costs and appropriately reflects those in its financial statements,there is a risk the actual costs could exceed estimates and result in damages that are not covered by insurance. Further, selling products with poorquality, the announcement of recalls, and the filing of product liability claims (whether or not successful), may also adversely affect the Company’sreputation and brand strength.•The Company’s Motorcycles segment is dependent upon unionized labor. Substantially all of the hourly production employees working in theMotorcycles segment are represented by unions and covered by collective bargaining agreements. Harley-Davidson Motor Company is currently aparty to five collective bargaining agreements with local affiliates of the International Association of Machinists and Aerospace Workers and theUnited Steelworkers of America. Current collective bargaining agreements with hourly employees in Missouri, Wisconsin and Pennsylvania willexpire in 2018, 2019 and 2022, respectively. There is no certainty that the Company will be successful in negotiating new agreements with theseunions that extend beyond the current expiration dates or that these new agreements will be on terms that will allow the Company to be competitiveor that allow the Company to execute its manufacturing optimization as planned. The Company’s decisions regarding opening, closing, expanding,contracting or restructuring its facilities may require changes to existing or new bargaining agreements. The Company will need to negotiate anextension of its bargaining agreements covering its Kansas City, Missouri facility as part of its manufacturing optimization plan. Failure to extendthe KC bargaining agreements, or renew other agreements when they expire or to establish new collective bargaining agreements on termsacceptable to the Company and the unions could result in the relocation of production facilities, work stoppages or other labor disruptions whichmay have a material adverse effect on the Company’s business and results of operations.•The Company is exposed to market risk from changes in foreign exchange rates, commodity prices and interest rates. The Company sells itsproducts internationally and in most markets those sales are made in the foreign country’s local currency. As a result, a weakening in those foreigncurrencies relative to the U.S. dollar can adversely affect the Company's revenue and margin, and cause volatility in results of operations.Furthermore, many competitors headquartered outside the U.S. experience a financial benefit from a strengthening in the U.S. dollar relative to theirhome currency that can enable them to reduce prices to U.S. consumers. The Company is also subject to risks associated with changes in prices ofcommodities. Earnings from the Company’s financial services business are affected by changes in interest rates. Although the Company usesderivative financial instruments to some extent to attempt to manage a portion of its exposure to foreign currency exchange rates and commodityprices, the Company does not attempt to manage its entire expected exposure, and these instruments generally do not extend beyond one year andmay expose the Company to credit risk in the event of counterparty default to the derivative financial instruments. There can be no assurance that inthe future the Company will successfully manage these risks.•The Financial Services operations are exposed to credit risk on its retail and wholesale receivables. Credit risk is the risk of loss arising from afailure by a customer, including the Company's independent dealers, to meet the terms of any contract with the Company’s financial servicesoperations. Credit losses are influenced by general business and economic conditions, including unemployment rates, bankruptcy filings and otherfactors that negatively affect household incomes, as well as contract terms and customer credit profiles. Credit losses are also influenced by themarkets for new and used motorcycles, and the Company and its independent dealers can and do take actions that impact those markets. Forexample, the introduction of new models by the Company that represent significant upgrades on previous models may result in increased supply ordecreased demand in the market for used Harley-Davidson branded motorcycles, including those motorcycles that serve as collateral or security forcredit that HDFS has extended. This in turn could adversely impact the prices at which those motorcycles may be sold, which may lead to increasedcredit losses for HDFS. Negative changes in general business, economic or market factors may have an additional adverse impact on the Company’sfinancial services credit losses and future earnings. The Company believes HDFS' retail credit losses may continue to increase over time due tochanging consumer credit behavior and HDFS' efforts to increase prudently structured loan approvals to sub-prime borrowers, as well as actions thatthe Company has taken and could take that impact motorcycle values. Increases in the frequency of loss and decreases in the value of repossessedHarley-Davidson branded motorcycles also adversely impact credit losses. If there are adverse circumstances that involve a material decline in valuesof Harley-Davidson branded motorcycles, those12circumstances or any related decline in resale values for Harley-Davidson branded motorcycles could contribute to increased delinquencies andcredit losses.•The Company’s operations are dependent upon attracting and retaining skilled employees, including skilled labor, executive officers and othersenior leaders. The Company’s future success depends on its continuing ability to identify, hire, develop, motivate, retain and promote skilledpersonnel for all areas of its organization, and to effectively execute reorganization actions within expected costs and realize the expectedbenefits of those actions. The Company’s current and future total compensation arrangements, which include benefits and incentive awards, may notbe successful in attracting new employees and retaining and motivating the Company’s existing employees. In addition, the Company mustcultivate and sustain a work environment where employees are engaged and energized in their jobs to maximize their performance, and theCompany must effectively execute reorganization actions. If the Company does not succeed in attracting new personnel, retaining existingpersonnel, implementing effective succession plans and motivating and engaging personnel, including executive officers, the Company may beunable to develop and distribute products and services and effectively execute its plans and strategies.•A cybersecurity breach may adversely affect the Company’s reputation, revenue and earnings. The Company and certain of its third-partyservice providers and vendors receive, store, and transmit digital personal information in connection with the Company’s human resourcesoperations, financial services operations, e-commerce, the Harley Owners Group, dealer management, and other aspects of its business. TheCompany’s information systems, and those of its third-party service providers and vendors, are vulnerable to the increasing threat of continuallyevolving cybersecurity risks. Unauthorized parties have attempted to and may attempt in the future to gain access to these systems or the informationthe Company and its third-party service providers and vendors maintain and use through fraud or other means of deceiving our employees and third-party service providers and vendors. Hardware, software or applications the Company develops or obtains from third-parties may contain defects indesign or manufacture or other problems that could unexpectedly compromise information security and/or the Company’s operations. The methodsused to obtain unauthorized access, disable or degrade service or sabotage systems are constantly evolving and may be difficult to anticipate ordetect. The Company has implemented and regularly reviews and updates processes and procedures to protect against unauthorized access to or useof secured data and to prevent data loss. However, the ever-evolving threats mean the Company and third-party service providers and vendors mustcontinually evaluate and adapt systems and processes, and there is no guarantee that they will be adequate to safeguard against all data securitybreaches or misuses of data. The Company has experienced information security attacks, but to date they have not compromised the Company’scomputing environment or resulted in a material impact on the Company’s business or operations or the release of confidential information aboutemployees, customers, dealers, suppliers or other third parties. Any future significant compromise or breach of the Company’s data security, whetherexternal or internal, or misuse of customer, employee, dealer, supplier or Company data could result in disruption to the Company’s operations,significant costs, lost sales, fines and lawsuits, and/or damage to the Company’s reputation. In addition, as the regulatory environment related toinformation security, data collection and use, and privacy becomes increasingly rigorous, with new and evolving requirements, compliance couldalso result in the Company being required to incur additional costs.•The Company sells its products at wholesale and must rely on a network of independent dealers to manage the retail distribution of its products.The Company depends on the capability of its independent dealers to develop and implement effective retail sales plans to create demand amongretail purchasers for the motorcycles and related products and services that the dealers purchase from the Company. If the Company’s independentdealers are not successful in these endeavors, then the Company will be unable to maintain or grow its revenues and meet its financial expectations.Further, independent dealers may experience difficulty in funding their day-to-day cash flow needs and paying their obligations resulting fromadverse business conditions such as weakened retail sales and tightened credit. If dealers are unsuccessful, they may exit or be forced to exit thebusiness or, in some cases, the Company may seek to terminate relationships with certain dealerships. As a result, the Company could face additionaladverse consequences related to the termination of dealer relationships. Additionally, liquidating a former dealer’s inventory of new and usedmotorcycles can add downward pressure on new and used motorcycle prices. Further, the unplanned loss of any of the Company’s independentdealers may lead to inadequate market coverage for retail sales of new motorcycles and for servicing previously sold motorcycles, create negativeimpressions of the Company with its retail customers, and adversely impact the Company’s ability to collect wholesale receivables that areassociated with that dealer.•The Company must comply with governmental laws and regulations that are subject to change and involve significant costs. The Company’ssales and operations in areas outside the U.S. may be subject to foreign laws, regulations and the legal systems of foreign courts or tribunals. Theselaws and policies governing operations of foreign-based companies may result in increased costs or restrictions on the ability of the Company to sellits products13in certain countries. U.S. laws and policies affecting foreign trade and taxation may also adversely affect the Company's international salesoperations.The Company’s domestic sales and operations are subject to governmental policies and regulatory actions of agencies of the United StatesGovernment, including the Environmental Protection Agency (EPA), SEC, National Highway Traffic Safety Administration, Department of Laborand Federal Trade Commission. In addition, the Company’s sales and operations are also subject to laws and actions of state legislatures and otherlocal regulators, including dealer statutes and licensing laws. Changes in regulations or the imposition of additional regulations may have a materialadverse effect on the Company’s business and results of operations.Tax - The Company is subject to income and non-income based taxes in the U.S. and in various foreign jurisdictions. Significant judgment isrequired in determining the Company's worldwide income tax liabilities and other tax liabilities including the impact of the 2017 Tax Cuts and JobsAct (2017 Tax Act). The Company believes that it complies with applicable tax law. If the governing tax authorities have a different interpretationof the applicable law or if there is a change in tax law, the Company's financial condition and/or results of operations may be adversely affected. Tothe extent there are considerable changes to tax laws, the Company may need to readjust its tax strategy, and may not be able to take full advantageof such changes. Furthermore, given the complexity and timing of the 2017 Tax Act, future guidance, interpretations and pronouncements may addclarity to the numerous aspects of the 2017 Tax Act that impact the Company. Future clarifications may give rise to additional unanticipated mattersthat could impact the Company’s tax liabilities and effective tax rate that result in revisions to the Company’s provisional estimates related to the2017 Tax Act included in the Company’s 2017 income tax provision, which could in turn adversely impact future operating results.Environmental - The Company’s motorcycle products use internal combustion engines. These motorcycle products are subject to statutory andregulatory requirements governing emissions and noise, including standards imposed by the EPA, state regulatory agencies, such as California AirResources Board, and regulatory agencies in certain foreign countries where the Company’s motorcycle products are sold. The Company is alsosubject to statutory and regulatory requirements governing emissions and noise in the conduct of the Company’s manufacturing operations. Anysignificant change to the regulatory requirements governing emissions and noise may substantially increase the cost of manufacturing theCompany’s products. If the Company fails to meet existing or new requirements, then the Company may be unable to sell certain products or may besubject to fines or penalties. Further, in response to concerns about global climate changes and related changes in consumer preferences, theCompany may face greater regulatory or customer pressure to develop products that generate less emissions. This may require the Company to spendadditional funds on research, product development, and implementation costs and subject the Company to the risk that the Company’s competitorsmay respond to these pressures in a manner that gives them a competitive advantage.Financial Services - The Company’s financial services operations are governed by a wide range of foreign, federal and state laws that regulatefinancial and lending institutions, and financial services activities. In the U.S. for example, these laws include the federal Truth-in-Lending Act,Equal Credit Opportunity Act and Fair Credit Reporting Act. The financial services operations originate the majority of its consumer loans throughits subsidiary, Eaglemark Savings Bank, a Nevada state thrift chartered as an industrial loan company. Federal and state bodies may in the futureimpose additional laws, regulation and supervision over the financial services industry.Violations of, or non-compliance with, relevant laws and regulations may limit the ability of HDFS to collect all or part of the principal or interest onapplicable loans, may entitle the borrower to rescind the loan or obtain a refund of amounts previously paid, could subject HDFS to payment ofdamages, civil fines, or criminal penalties and administrative sanctions and could limit the number of loans eligible for HDFS securitizationsprograms. Such regulatory requirements and associated supervision also could limit the discretion of HDFS in operating its business, such as throughthe suspension or revocation of any charter, license or registration at issue, as well as the imposition of administrative sanctions, including "ceaseand desist" orders. The Company cannot assure that the applicable laws or regulations will not be amended or construed in ways that are adverse toHDFS, that new laws and regulations will not be adopted in the future, or that laws and regulations will not attempt to limit the interest rates chargedby HDFS, any of which may adversely affect the business of HDFS or its results of operations.The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) is a sweeping piece of legislation impacting financial servicesand the full effect will not be fully known for years, as regulations that are intended to implement the Dodd-Frank Act are adopted, and the text ofthe Dodd-Frank Act is analyzed by stakeholders and possibly the courts. The Dodd-Frank Act also created the Consumer Financial ProtectionBureau (CFPB). The CFPB has significant enforcement and rule-making authority in the area of consumer financial products and services. Thedirection that the CFPB will take, the regulations it will adopt, and its interpretation of existing laws14and regulations are all elements that are not yet fully known. Compliance may be costly and could affect operating results as the implementation ofnew forms, processes, procedures and controls and infrastructure may be required. Compliance may create operational constraints and place limits onpricing. Failure to comply, as well as changes to laws and regulations, or the imposition of additional laws and regulations, could affect HDFS’earnings, limit its access to capital, limit the number of loans eligible for HDFS securitization programs and have a material adverse effect on HDFS’business and results of operations. The CFPB also has supervisory authority over certain non-bank larger participants in the vehicle financingmarket, which includes a non-bank subsidiary of HDFS, allowing the CFPB to conduct comprehensive and rigorous on-site examinations that couldresult in enforcement actions, fines, changes to processes and procedures, product-related changes or consumer refunds, or other actions.U.S. Public Company - The Company is also subject to policies and actions of the SEC and New York Stock Exchange (NYSE). Many majorcompetitors of the Company are not subject to the requirements of the SEC or the NYSE rules. As a result, the Company may be required to disclosecertain information that may put the Company at a competitive disadvantage to its principal competitors.•Weather may impact retail sales by the Company's independent dealers. The Company has observed that abnormally cold and/or wet conditionsin a region, including impacts from hurricanes or unusual storms, could have the effect of reducing demand or changing the timing for purchases ofnew Harley-Davidson motorcycles. Reduced demand for new Harley-Davidson motorcycles ultimately leads to reduced shipments by the Company.•The Company relies on third party suppliers to obtain raw materials and provide component parts for use in the manufacture of itsmotorcycles. The Company may experience supply problems relating to raw materials and components such as unfavorable pricing, poor quality, oruntimely delivery. In certain circumstances, the Company relies on a single supplier to provide the entire requirement of a specific part, and a changein this established supply relationship may cause disruption in the Company’s production schedule. In addition, the price and availability of rawmaterials and component parts from suppliers can be adversely affected by factors outside of the Company’s control such as the supply of anecessary raw material or natural disasters. Further, Company suppliers may experience difficulty in funding their day-to-day cash flow needsbecause of tightening credit caused by financial market disruption. In addition, adverse economic conditions and related pressure on select suppliersdue to difficulties in the global manufacturing arena could adversely affect their ability to supply the Company. Changes in laws and policiesrelating to trade and taxation may also adversely impact the Company's foreign suppliers. These supplier risks may have a material adverse effect onthe Company’s business and results of operations.•The Company must invest in and successfully implement new information systems and technology. The Company is continually modifying andenhancing its systems and technology to increase productivity and efficiency and to mitigate failure risks from older/aged technologies currently inits portfolio. The Company has several large, strategic information system projects in process. As new systems and technologies (and relatedstrategies) are implemented, the Company could experience unanticipated difficulties resulting in unexpected costs and adverse impacts to itsmanufacturing and other business processes. When implemented, the systems and technology may not provide the benefits anticipated and couldadd costs and complications to ongoing operations and older technologies may fail, which may have a material adverse effect on the Company’sbusiness and results of operations.•The ability of the Company to expand international sales may be impacted by existing or new laws and regulations that impose motorcyclelicensing restrictions and limit access to roads and highways. Expanding international sales is a part of the Company’s long-term businessstrategy. A number of countries have tiered motorcycle licensing requirements that limit the ability of new and younger riders to obtain licenses tooperate the Company’s motorcycles, and many countries are considering the implementation of such requirements. These requirements only allownew and/or younger riders to operate smaller motorcycles for certain periods of time. Riders typically are only permitted to obtain a license to ridelarger motorcycles upon reaching certain ages and/or having been licensed to ride smaller motorcycles for a certain period of time, and only afterpassing additional tests and paying additional fees. These requirements pose obstacles to large displacement motorcycle ownership. Other countrieshave laws and regulations that prohibit motorcycles from being operated on certain roads and highways. These types of laws and regulations couldadversely impact the Company’s plans to expand international sales.•The Company is and may in the future become subject to legal proceedings and commercial or contractual disputes. The uncertainty associatedwith substantial unresolved claims and lawsuits may harm the Company’s business, financial condition, reputation and brand. The defense of thelawsuits may result in the expenditures of significant financial resources and the diversion of management’s time and attention away from businessoperations.15In addition, although the Company is unable to determine the amount, if any, that it may be required to pay in connection with the resolution of thelawsuits by settlement or otherwise, any such payment may have a material adverse effect on the Company’s business and results of operations. Referto the Company’s disclosures concerning legal proceedings in this Form 10-K and in the other periodic reports that the Company files with theSecurities and Exchange Commission (SEC) for additional detail regarding lawsuits and other claims against the Company.•The Company, its suppliers, and its independent dealers must successfully accommodate a seasonal retail motorcycle sales pattern. TheCompany records the wholesale sale of a motorcycle when it is shipped to the Company’s independent dealers. The Company's flexible productioncapability allows it to more closely correlate motorcycle production and wholesale shipments with the retail selling season. Any difficulties inexecuting flexible production could result in lost production or sales. The Company, its suppliers, and its independent dealers must be able tosuccessfully manage changes in production rates, inventory levels and other business processes associated with flexible production. Failure by theCompany, its suppliers, or its independent dealers to make such adjustments may have a material adverse effect on the Company’s business andresults of operations.•The Financial Services operations rely on external sources to finance a significant portion of its operations. Liquidity is essential to theCompany’s Financial Services business. Disruptions in financial markets may cause lenders and institutional investors to reduce or cease to loanmoney to borrowers, including financial institutions. The Company’s Financial Services operations may be negatively affected by difficulty inraising capital in the long-term and short-term capital markets. These negative consequences may in turn adversely affect the Company’s businessand results of operations in various ways, including through higher costs of capital, reduced funds available through its financial services operationsto provide loans to independent dealers and their retail customers, and dilution to existing share value through the use of alternative sources ofcapital.•The Financial Services operations are highly dependent on accessing capital markets to fund their operations at competitive interest rates, theCompany’s access to capital and its cost of capital are highly dependent upon its credit ratings, and any negative credit rating actions willadversely affect its earnings and results of operations. The ability of the Company and its Financial Services operations to access unsecuredcapital markets is influenced by their short-term and long-term credit ratings. If the Company’s credit ratings are downgraded or its ratings outlook isnegatively changed, the Company’s cost of borrowing could increase, resulting in reduced earnings and interest margins, or the Company’s access tocapital may be disrupted or impaired. The Company borrowed $750,000,000 in 2015 to fund the repurchase of its Common Stock, which increasedthe Company's leverage. Having increased leverage increases the risk of a downgrade in the Company's credit ratings.•The Company incurs substantial costs with respect to employee pension and healthcare benefits. The Company’s cash funding requirements andits estimates of liabilities and expenses for pensions and healthcare benefits for both active and retired employees are based on several factors thatare outside the Company’s control. These factors include funding requirements of the Pension Protection Act of 2006, the rate used to discount thefuture estimated liability, the rate of return on plan assets, current and projected healthcare costs, healthcare reform or legislation, retirement age andmortality. Changes in these factors can impact the expense, liabilities and cash requirements associated with these benefits which could have amaterial adverse effect on future results of operations, liquidity or shareholders’ equity. In addition, costs associated with these benefits put theCompany under significant cost pressure as compared to its competitors that may not bear the costs of similar benefit plans. Furthermore, costsassociated with complying with the Patient Protection and Affordable Care Act may produce additional cost pressure on the Company and its healthcare plans.•The Company’s success depends upon the continued strength of the Harley-Davidson brand. The Company believes that the Harley-Davidsonbrand has significantly contributed to the success of its business and that maintaining and enhancing the brand is critical to expanding its customerbase. Failure to protect the brand from infringers or to grow the value of the Harley-Davidson brand may have a material adverse effect on theCompany’s business and results of operations.•The Company must maintain stakeholder confidence in its operating ethics and corporate governance practices. The Company believes it has ahistory of good corporate governance and operating ethics.The Company has a Code of Business Conduct that defines how employees interact withvarious Company stakeholders and addresses issues such as confidentiality, conflict of interest and fair dealing. Failure to maintain its reputation forgood corporate governance and strong operating ethics may have a material adverse effect on the Company’s business and results of operations.16•The Company’s operations may be affected by greenhouse emissions and climate change and related regulations. Climate change is receivingincreasing attention worldwide. Many scientists, legislators and others attribute climate change to increased levels of greenhouse gases, includingcarbon dioxide, which has led to significant legislative and regulatory efforts to limit greenhouse gas emissions. Congress has previously consideredand may in the future implement restrictions on greenhouse gas emissions. In addition, several states, including states where the Company hasmanufacturing plants, have previously considered and may in the future implement greenhouse gas registration and reduction programs. Energysecurity and availability and its related costs affect all aspects of the Company’s manufacturing operations in the United States, including theCompany’s supply chain. The Company’s manufacturing plants use energy, including electricity and natural gas, and certain of the Company’splants emit amounts of greenhouse gas that may be affected by these legislative and regulatory efforts. Greenhouse gas regulation could increase theprice of the electricity the Company purchases, increase costs for use of natural gas, potentially restrict access to or the use of natural gas, require theCompany to purchase allowances to offset the Company’s own emissions or result in an overall increase in costs of raw materials, any one of whichcould increase the Company’s costs, reduce competitiveness in a global economy or otherwise negatively affect the Company’s business, operationsor financial results. Many of the Company’s suppliers face similar circumstances. Physical risks to the Company’s business operations as identifiedby the Intergovernmental Panel on Climate Change and other expert bodies include scenarios such as sea level rise, extreme weather conditions andresource shortages. Extreme weather may disrupt the production and supply of component parts or other items such as natural gas, a fuel necessaryfor the manufacture of motorcycles and their components. Supply disruptions would raise market rates and jeopardize the continuity of motorcycleproduction.•Regulations related to conflict minerals and other materials that the Company purchases to use in its products will cause the Company to incuradditional expenses and may have other adverse consequences. The SEC adopted inquiry, diligence and disclosure requirements related to certainminerals sourced from the Democratic Republic of Congo and surrounding countries, or "conflict minerals," that are necessary to the functionality ofa product manufactured, or contracted to be manufactured, by an SEC reporting company. Compliance with the disclosure requirements could affectthe sourcing and availability of some of the minerals that the Company uses in the manufacturing of its products. The Company's supply chain iscomplex, and if it is not able to determine the source and chain of custody for all conflict minerals used in its products that are sourced from theDemocratic Republic of Congo and surrounding countries or determine that its products are "conflict free," then the Company may face reputationalchallenges with customers, investors or others. Additionally, as there may be only a limited number of suppliers offering "conflict free" minerals, ifthe Company chooses to use only conflict minerals that are "conflict free," the Company cannot be sure that it will be able to obtain necessarymaterials from such suppliers in sufficient quantities or at competitive prices. Further, other laws or regulations impacting our supply chain, such asthe UK Modern Slavery Act, may have similar consequences. For example, many countries in which the Company distributes its products arebeginning to introduce regulations that require knowledge and disclosure of virtually all materials and chemicals in the Company’s products.Accordingly, the Company could incur significant costs related to the process of complying with these laws, including potential difficulty or addedcosts in satisfying the disclosure requirements.•The Company relies on third parties to perform certain operating and administrative functions for the Company. Similar to suppliers of rawmaterials and components, the Company may experience problems with outsourced services, such as unfavorable pricing, untimely delivery ofservices, or poor quality. Also, these suppliers may experience adverse economic conditions due to difficulties in the global economy that couldlead to difficulties supporting the Company's operations. In light of the amount and types of functions that the Company has outsourced, theseservice provider risks may have a material adverse effect on the Company's business and results of operations.The Company disclaims any obligation to update these Risk Factors or any other forward-looking statements. The Company assumes no obligation(and specifically disclaims any such obligation) to update these Risk Factors or any other forward-looking statements to reflect actual results, changes inassumptions or other factors affecting such forward-looking statements. Item 1B. Unresolved Staff CommentsNone.17Item 2. PropertiesThe following is a summary of the principal operating properties of the Company as of December 31, 2017:Motorcycles & Related Products SegmentType of Facility Location ApproximateSquare Feet StatusCorporate Office Milwaukee, WI 515,000 OwnedMuseum Milwaukee, WI 130,000 OwnedManufacturing(1) Menomonee Falls, WI 915,000 OwnedProduct Development Center Wauwatosa, WI 409,000 OwnedManufacturing(2) Tomahawk, WI 226,000 OwnedManufacturing(3) York, PA 571,000 OwnedManufacturing(4) Kansas City, MO 456,000 OwnedManufacturing(5) Manaus, Brazil 108,000 Lease expiring 2019Regional Office Oxford, England 39,000 Lease expiring 2022Manufacturing(6) Bawal, India 68,000 Lease expiring 2019Regional Office Singapore 24,000 Lease expiring 2020Manufacturing(7) Adelaide, Australia 485,000 Lease expiring 2020(1)Motorcycle powertrain production.(2)Plastic parts production and painting.(3)Motorcycle parts fabrication, painting and Softail® and touring model assembly.(4)Motorcycle parts fabrication, painting and Dyna®, Sportster®, Softail® and Street platform assembly.(5)Assembly of select models for the Brazilian market.(6)Assembly of select models for the Indian market and production of the Street platform for non-North American markets.(7)Motorcycle wheel production.Financial Services Segment Type of Facility Location ApproximateSquare Feet StatusOffice Chicago, IL 26,000 Lease expiring 2022Office Plano, TX 69,000 Lease expiring 2025Office Carson City, NV 100,000 OwnedThe Financial Services segment has three office facilities: Chicago, Illinois (corporate headquarters); Plano, Texas (wholesale and retail operations);and Carson City, Nevada (retail operations). Item 3. Legal ProceedingsThe Company is subject to lawsuits and other claims related to environmental, product and other matters. In determining costs to accrue related to theseitems, the Company carefully analyzes cases and considers the likelihood of adverse judgments or outcomes, as well as the potential range of possible loss.Any amounts accrued for these matters are monitored on an ongoing basis and are updated based on new developments or new information as it becomesavailable for each matter.18Environmental Protection Agency Notice:In December 2009, the Company received formal, written requests for information from the United States Environmental Protection Agency (EPA)regarding: (i) certificates of conformity for motorcycle emissions and related designations and labels, (ii) aftermarket parts, and (iii) warranty claims onemissions related components. The Company promptly submitted written responses to the EPA’s inquiry and has engaged in information exchanges anddiscussions with the EPA. In August 2016, the Company entered into a consent decree with the EPA regarding these issues, and the consent decree wassubsequently revised in July 2017 (the Settlement). In the Settlement, the Company agreed to, among other things, pay a fine, and not sell tuning productsunless they are approved by the EPA or California Air Resources Board. In December 2017, the EPA filed the Settlement with the U.S. District Court for theDistrict of Columbia for the purpose of obtaining court approval of the Settlement. Three amicus briefs opposing portions of the Settlement were filed withthe court by the deadline of January 31, 2018. The Company anticipates the court will make a decision whether or not to finalize the Settlement in thefollowing months. The Company has an accrual associated with this matter which is included in accrued liabilities in the Consolidated Balance Sheets, andas a result, if it is finalized, the Settlement would not have a material adverse effect on the Company's financial condition or results of operations. TheSettlement is not final until it is approved by the court, and if it is not approved by the court, the Company cannot reasonably estimate the impact of anyremedies the EPA might seek beyond the Company's current reserve for this matter.York Environmental Matters:The Company is involved with government agencies and groups of potentially responsible parties related to a matter involving the cleanup of soil andgroundwater contamination at its York, Pennsylvania facility. The York facility was formerly used by the U.S. Navy and AMF prior to the purchase of theYork facility by the Company from AMF in 1981. Although the Company is not certain as to the full extent of the environmental contamination at the Yorkfacility, it has been working with the Pennsylvania Department of Environmental Protection (PADEP) since 1986 in undertaking environmental investigationand remediation activities, including a site-wide remedial investigation/feasibility study (RI/FS).In January 1995, the Company entered into a settlement agreement (the Agreement) with the Navy, and the parties amended the Agreement in 2013 toaddress ordnance and explosive waste. The Agreement calls for the Navy and the Company to contribute amounts into a trust equal to 53% and 47%,respectively, of costs associated with environmental investigation and remediation activities at the York facility (Response Costs). The trust administers thepayment of the Response Costs incurred at the York facility as covered by the Agreement.The Company has an accrual for its estimate of its share of the future Response Costs at the York facility which is included in other long-term liabilitiesin the Consolidated Balance Sheets. While much of the work on the RI/FS is complete, it is still under agency review and given the uncertainty that existsconcerning the nature and scope of additional environmental investigation and remediation that may ultimately be required under the RI/FS that is finallyapproved or otherwise at the York facility, the Company is unable to make a reasonable estimate of those additional costs, if any, that may result.The estimate of the Company's future Response Costs that will be incurred at the York facility is based on reports of independent environmentalconsultants retained by the Company, the actual costs incurred to date and the estimated costs to complete the necessary investigation and remediationactivities.Product Liability Matters:The Company is involved in product liability suits related to the operation of its business. The Company accrues for claim exposures that are probableof occurrence and can be reasonably estimated. The Company also maintains insurance coverage for product liability exposures. The Company believes thatits accruals and insurance coverage are adequate and that product liability suits will not have a material adverse effect on the Company’s consolidatedfinancial statements.National Highway Traffic Safety Administration Matters:In July 2016, the National Highway Traffic Safety Administration (NHTSA) began an investigation into certain of the Company's motorcycles equippedwith anti-lock braking systems (ABS). NHTSA’s investigation is in response to rider complaints related to brake failures and applies to model-year 2008-2013 Touring and model-year 2008-2017 V-ROD® motorcycles. NHTSA noted that Harley-Davidson has a two-year brake fluid replacement interval thatowners either are unaware of or ignore. During 2017, the Company estimated and recorded a $29.4 million accrual associated with the NHTSA matter whichis included in accrued liabilities. On January 30, 2018, the Company announced a voluntary recall which offers a free brake fluid flush for model-year 2008-2011 Touring and V-ROD® motorcycles. The Company believes the accrued liability it has recorded will adequately cover the cost of the recall.19Item 4. Mine Safety Disclosures Not ApplicablePART II Item 5.Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchase of Equity SecuritiesHarley-Davidson, Inc. common stock is traded on the New York Stock Exchange, Inc. The high and low market prices for the common stock, reported asNew York Stock Exchange, Inc. Composite Transactions, were as follows: 2017 Low High 2016 Low HighFirst quarter $54.75 $63.40 First quarter $36.36 $49.99Second quarter $51.61 $62.95 Second quarter $42.99 $52.00Third quarter $45.53 $56.55 Third quarter $41.63 $57.33Fourth quarter $44.52 $52.30 Fourth quarter $48.55 $62.35The Company paid the following dividends per share: 2017 2016 2015First quarter $0.365 $0.350 $0.310Second quarter 0.365 0.350 0.310Third quarter 0.365 0.350 0.310Fourth quarter 0.365 0.350 0.310Total $1.460 $1.400 $1.240As of February 2, 2018, there were 72,285 shareholders of record of Harley-Davidson, Inc. common stock.The Company’s share repurchases include discretionary share repurchases and shares of common stock that employees surrendered to satisfywithholding taxes in connection with the vesting of restricted stock awards. The following table contains detail related to the Company's repurchase of itscommon stock based on the date of trade during the quarter ended December 31, 2017:2017 Fiscal Month Total Number ofShares Purchased Average PricePaid per Share Total Number of SharesPurchased as Part ofPublicly AnnouncedPlans or Programs Maximum Number ofShares that May Yet BePurchased Under thePlans or ProgramsSeptember 25 to October 29 635 $49 635 10,594,144October 30 to November 26 731 $49 731 10,594,144November 27 to December 31 619 $49 619 10,594,144Total 1,985 $49 1,985 In February 2016, the Company's Board of Directors authorized the Company to repurchase up to 20.0 million shares of its common stock with nodollar limit or expiration date. As of December 31, 2017, 10.6 million shares remained under this authorization. In February 2018, the Company's Board ofDirectors authorized the Company to repurchase up to 15.0 million additional shares of its common stock with no dollar limit or expiration date.Under the share repurchase authorizations, the Company’s common stock may be purchased through any one or more of a Rule 10b5-1 trading plan anddiscretionary purchases on the open market, block trades, accelerated share repurchases or privately negotiated transactions. The number of sharesrepurchased, if any, and the timing of repurchases will depend on a number of factors, including share price, trading volume and general market conditions, aswell as on working capital requirements, general business conditions and other factors. The repurchase authority has no expiration date but may besuspended, modified or discontinued at any time.The Harley-Davidson, Inc. 2014 Incentive Stock Plan and predecessor stock plans permit participants to satisfy all or a portion of the statutory federal,state and local withholding tax obligations arising in connection with plan awards by electing to (a) have the Company withhold shares otherwise issuableunder the award, (b) tender back shares received in connection with such award or (c) deliver other previously owned shares, in each case having a valueequal to the amount to be withheld.20During the fourth quarter of 2017, the Company acquired 1,985 shares of common stock that employees presented to the Company to satisfy withholdingtaxes in connection with the vesting of restricted stock awards.Item 12 of this Annual Report on Form 10-K contains certain information relating to the Company’s equity compensation plans.The following information in this Item 5 is not deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14Cunder the Securities Exchange Act of 1934 or to the liabilities of Section 18 of the Securities Exchange Act of 1934, and will not be deemed to beincorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent the Companyspecifically incorporates it by reference into such a filing: the SEC requires the Company to include a line graph presentation comparing cumulative fiveyear Common Stock returns with a broad-based stock index and either a nationally recognized industry index or an index of peer companies selected by theCompany. The Company has chosen to use the Standard & Poor’s 500 Index as the broad-based index and the Standard & Poor’s MidCap 400 Index as amore specific comparison. The Standard & Poor’s MidCap 400 Index was chosen because the Company does not believe that any other published industry orline-of-business index adequately represents the current operations of the Company. The graph assumes a beginning investment of $100 on December 31,2012 and that all dividends are reinvested. 2012 ($) 2013 ($) 2014 ($) 2015 ($) 2016 ($) 2017 ($)Harley-Davidson, Inc. 100 144 139 98 130 116Standard & Poor’s MidCap 400 Index 100 132 142 137 165 192Standard & Poor’s 500 Index 100 132 151 153 171 20821 Item 6. Selected Financial Data(In thousands, except per share amounts) 2017 2016 2015 2014 2013Statement of income data: Revenue: Motorcycles & Related Products $4,915,027 $5,271,376 $5,308,744 $5,567,681 $5,258,290Financial Services 732,197 725,082 686,658 660,827 641,582Total revenue $5,647,224 $5,996,458 $5,995,402 $6,228,508 $5,899,872Net income $521,759 $692,164 $752,207 $844,611 $733,993Weighted-average common shares: Basic 171,995 179,676 202,681 216,305 222,475Diluted 172,932 180,535 203,686 217,706 224,071Earnings per common share: Basic $3.03 $3.85 $3.71 $3.90 $3.30Diluted $3.02 $3.83 $3.69 $3.88 $3.28Dividends paid per common share $1.46 $1.40 $1.24 $1.10 $0.84Balance sheet data: Total assets(a) $9,972,672 $9,890,240 $9,972,977 $9,515,870 $9,394,765Total debt(a) $6,988,009 $6,807,567 $6,872,198 $5,492,402 $5,248,895Total equity $1,844,277 $1,920,158 $1,839,654 $2,909,286 $3,009,486 (a)The Company adopted ASU No. 2015-03 and ASU No. 2015-15 on January 1, 2016. Upon adoption, the Company reclassified debt issuance cost, otherthan debt issuance costs related to line of credit arrangements (which include its asset-backed commercial paper and commercial paper programs and itscredit facilities), from other assets to debt.22Item 7. Management's Discussion and Analysis of Financial Condition and Results of OperationsHarley-Davidson, Inc. is the parent company of the groups of companies doing business as Harley-Davidson Motor Company (HDMC) and Harley-Davidson Financial Services (HDFS). Unless the context otherwise requires, all references to the "Company" include Harley-Davidson, Inc. and all itssubsidiaries. The Company operates in two reportable segments: Motorcycles & Related Products (Motorcycles) and Financial Services.The “% Change” figures included in the “Results of Operations” section were calculated using unrounded dollar amounts and may differ fromcalculations using the rounded dollar amounts presented. (1) Note Regarding Forward-Looking StatementsThe Company intends that certain matters discussed in this report are “forward-looking statements” intended to qualify for the safe harbor from liabilityestablished by the Private Securities Litigation Reform Act of 1995. These forward-looking statements can generally be identified as such by reference to thisfootnote or because the context of the statement will include words such as the Company “believes,” “anticipates,” “expects,” “plans,” or “estimates” orwords of similar meaning. Similarly, statements that describe future plans, objectives, outlooks, targets, guidance or goals are also forward-lookingstatements. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially, unfavorably orfavorably, from those anticipated as of the date of this report. Certain of such risks and uncertainties are described in close proximity to such statements orelsewhere in this report, including under the caption “Risk Factors” in Item 1A and under “Cautionary Statements” in Item 7 of this report. Shareholders,potential investors, and other readers are urged to consider these factors in evaluating the forward-looking statements and cautioned not to place unduereliance on such forward-looking statements. The forward-looking statements included in the Outlook section are only made as of January 30, 2018 and theremaining forward-looking statements in this report are only made as of the date of the filing of this report (February 21, 2018), and the Company disclaimsany obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.Overview(1) The Company’s net income for 2017 was $521.8 million, or $3.02 per diluted share, compared to $692.2 million, or $3.83 per diluted share, in 2016.Operating income from the Motorcycles segment was down $157.4 million compared to 2016 primarily due to a 7.9% decrease in wholesale motorcycleshipments. Operating income from the Financial Services segment in 2017 was slightly lower than the prior year, decreasing $0.2 million, or 0.1%.Worldwide independent dealer retail sales of new Harley-Davidson motorcycles decreased 6.7% in 2017 compared to the prior year. U.S. retail salesfell 8.5% and international retail sales decreased 3.9% compared to 2016. In the U.S., the 601+cc motorcycle industry continued to face significantchallenges and international retail sales finished below the Company's expectations. In 2017, the Company remained committed to a disciplined supply management approach focused on allowing U.S. dealers to achieve the rightquantity and model-year mix of motorcycle inventory. The Company also focused on positioning its cost structure to better compete in the currentenvironment. At the same time, the Company remained grounded in its long-term strategy and made good progress on its long-term objective to build ridersglobally. In 2017, the Company finished the year with a net increase of over 32,000 Harley-Davidson riders in the U.S. compared to the prior year. (Source:IHS Markit Motorcycles in Operation (MIO) data for On-Highway and Dual Purpose bikes in the U.S. as of January 1, 2018) In 2018, the Company expects new Harley-Davidson motorcycle retail sales to grow internationally, but continues to expect challenges in the U.S. TheCompany's global retail expectations and disciplined supply strategy are reflected in its expectation for reduced wholesale shipments in 2018. In addition, tofurther improve its cost structure and maintain its world-class manufacturing operations, the Company is commencing a significant, multi-year manufacturingoptimization plan anchored by the consolidation of its final assembly plant in Kansas City, Missouri into its plant in York, Pennsylvania. As the operationsare consolidated, the Company expects approximately 800 jobs will be eliminated with the closure of Kansas City operations and approximately 450 jobswill be added in York by 2019. As part of this manufacturing optimization plan the Company will also close its wheel operations in Adelaide, Australia.Refer to the "Manufacturing Optimization Costs and Savings" below for further information.As the Company looks forward, it will continue to focus on its long-term strategy of growing ridership in the U.S. and growing its reach and impactinternationally, while growing market share and profitability globally. In 2018, the Company will continue to expand its independent dealer network outsidethe U.S. In addition, operations will begin at the Company's new facility in Thailand. This plant, like the Company's facility in Brazil, will support morecompetitive retail pricing in some of the23emerging markets that this plant will serve by reducing the tax and tariff burden that fully assembled imports carry in those markets.In 2018, the Company will also continue to invest in new products. A portion of the benefit from the 2017 Tax Cuts and Jobs Act (2017 Tax Act)enacted in the U.S. in late 2017 will support the Company's objective to invest in high-impact product by redefining product in traditional spaces andexpanding into new spaces such as the rapidly evolving electric vehicle landscape. The Company plans to bring Project Livewire, an electric Harley-Davidson motorcycle, to market within 18 months and will increase its investment in electric motorcycle technology, products and infrastructure in 2018 andbeyond. The Company expects its increased commitment and investment will help accelerate the development of this market and assure its leadership inelectric motorcycles.Outlook(1)On January 30, 2018 the Company announced the following expectations for 2018.The Company expects to ship between 231,000 and 236,000 motorcycles to dealers in 2018, which is down approximately 2% to 4% from 2017. TheCompany's shipment expectation assumes that U.S. dealer retail sales will be down, partially offset by growth in international retail sales. The Companyexpects 2018 year-end U.S. retail inventory to be flat to 2017 and flat to up in international markets as it continues to add new dealers.During 2018, the Company expects retail sales to be positively impacted by:•Increased focus and investment on growing global ridership•New product momentum with model-year 2018 motorcycles and the addition of new high-impact models yet to be introduced•A rebound in emerging-market retail sales performance•Expansion of the international dealer networkHowever, these positive impacts are expected to be more than offset by strong headwinds including:•A very weak U.S. industry for new motorcycles driven by flat to declining total demand for combined new and used motorcycles and soft,but improving, Harley-Davidson used motorcycle prices•Competitive pressure from continued new product introductions throughout markets globally, particularly in lower price, smallerdisplacement motorcycles Operating income as a percent of revenue for the Motorcycles segment is expected to be approximately 9.5% to 10.5% for the full year 2018. Thisreduction of approximately 2 to 3 percentage points compared to 2017, is primarily due to expected manufacturing optimization plan costs of $120 to $140million. Also, operating margin will be reduced by approximately 0.2 percentage points due to the adoption of an accounting standard update that willrequire the Company to present the non-service cost components of its pension and postretirement plan expense as non-operating income. The Companyestimates this will result in approximately $10 million of non-operating income in 2018 that would have been included in operating income under existingaccounting standards. The new presentation will be applied retrospectively to prior periods in the Company's results for 2018 and forward.Gross margin as a percent of revenue in 2018 is expected to benefit from pricing on model-year 2018 and 2019 motorcycles, a more favorable foreigncurrency exchange environment than 2017 and positive mix. However, the Company expects these positive impacts to be more than offset by rising steel andaluminum costs and increased manufacturing expense.Manufacturing expense is expected to be higher than in 2017, due in part to increased depreciation from recent capital investments related to the newmodel-year 2018 Softail motorcycles. However, the larger driver of increased manufacturing costs in 2018, as compared to 2017, will be higher costs of $20to $25 million due to temporary inefficiencies related to the manufacturing optimization plan.The Company expects selling, administrative and engineering expense to be higher in 2018 compared to 2017, but level with 2017 when expressed as apercent of revenue. The Company expects selling, administrative and engineering expense to be up behind increased investments in marketing and productdevelopment as the Company works to grow ridership globally. In the first quarter of 2018, the Company expects to ship 60,000 to 65,000 motorcycles to dealers, which is down approximately 8% to 15% percentfrom 2017. While the Company expects U.S. retail inventory will be tighter than in the first quarter of 2017, it believes the composition of previous andcurrent model-year motorcycles will be considerably improved from last year. The Company expects Motorcycles segment operating income as a percent ofrevenue in the first quarter of242018 to be down approximately 5 percentage points due to approximately $57 million of restructuring expense related to the manufacturing optimizationplan, lost absorption from lower production and higher selling, administrative and engineering expense as marketing and product development expensesincrease.Additionally, as the Company increases its investment in electric motorcycle technology, products and infrastructure it expects to spend an incremental$25 to $50 million per year over the next several years.The Company expects operating income from Financial Services to be down in 2018 compared to 2017 due to lower net interest income, partially offsetby a lower provision for credit losses.Capital expenditures in 2018 are expected to be $250 to $270 million, which includes approximately $50 million to support the manufacturingoptimization plan. The Company anticipates it will have the ability to fund all capital expenditures in 2018 with cash flows generated by operations.Finally, the Company expects its full year effective tax rate will be approximately 23.5% to 25%, down approximately 10 percentage points from therate that would have been expected excluding the impact of the 2017 Tax Act. This guidance excludes the effect of potential future adjustments associatedwith revisions to the $53.1 million tax expense recorded in the fourth quarter of 2017 related to the 2017 Tax Act, other new tax legislation or auditsettlements. Given the complexity and timing of the 2017 Tax Act, the Company has recorded the impact of the 2017 Tax Act in the fourth quarter of 2017based on reasonable estimates and considers these estimates to be provisional under SEC Staff Accounting Bulletin No. 118, Income Tax AccountingImplications of the Tax Cuts and Jobs Act (SAB 118). Future guidance, interpretations and pronouncements may add clarity to the numerous aspects of the2017 Tax Act. This future clarification may give rise to additional unanticipated considerations and revisions to the Company’s provisional estimates relatedto the 2017 Tax Act included in the Company’s 2017 income tax provision. Any such adjustments will be recorded as discrete income tax expenses orbenefits in future periods.Manufacturing Optimization Plan Costs and Savings(1) The following table summarizes the expected costs and savings associated with the Company's manufacturing optimization plan which is described inmore detail in the "Overview" above. The restructuring costs relate to employee termination benefits, accelerated depreciation and other projectimplementation costs.(in millions)2018 2019 2020 Total Cost related to temporary inefficiencies$ 20 - $ 25 $15 - $20 n/a $ 35 - $ 45Restructuring expenses$100 - $115 $35 - $40 n/a $135 - $155 $120 - $140 $50 - $60 $170 - $200% cash70% 75% 70% 2018 2019 2020 AnnualOn-goingAnnual cash savings- $25 - $30 $45 - $50 $65 - $75The Company expects total capital expenditures of $75 million associated with the manufacturing optimization plan through 2019.25Results of Operations 2017 Compared to 2016Consolidated Results (in thousands, except earnings per share) 2017 2016 (Decrease)Increase %ChangeOperating income from Motorcycles & Related Products $615,958 $773,406 $(157,448) (20.4)%Operating income from Financial Services 275,305 275,530 (225) (0.1)Operating income 891,263 1,048,936 (157,673) (15.0)Investment income 3,580 4,645 (1,065) (22.9)Interest expense 31,004 29,670 1,334 4.5Income before income taxes 863,839 1,023,911 (160,072) (15.6)Provision for income taxes 342,080 331,747 10,333 3.1Net income $521,759 $692,164 $(170,405) (24.6)%Diluted earnings per share $3.02 $3.83 $(0.81) (21.1)%Consolidated operating income was down 15.0% in 2017 driven by a decrease in operating income from the Motorcycles segment which was down$157.4 million compared to 2016. Operating income for the Financial Services segment decreased by $0.2 million during 2017 as compared to 2016. Pleaserefer to the “Motorcycles and Related Products Segment” and “Financial Services Segment” discussions following for a more detailed discussion of thefactors affecting operating income.The effective income tax rate for 2017 was 39.6% compared to 32.4% for 2016. The higher effective income tax rate was primarily due to the impact ofthe 2017 Tax Act enacted in December 2017. The 2017 Tax Act reduces the federal corporate income tax rate beginning in 2018 from 35% to 21%; however,because the 2017 Tax Act was enacted in 2017, the Company was required to remeasure its net deferred tax assets in the fourth quarter. The impact ofremeasuring the deferred tax asset balances combined with other adjustments related to the 2017 Tax Act resulted in a non-cash income tax charge of $53.1million in the fourth quarter of 2017.Diluted earnings per share were $3.02 in 2017, down 21.1% compared to 2016. Diluted earnings per share were adversely impacted by the 24.6%decrease in net income, but benefited from lower diluted weighted average shares outstanding. Diluted weighted average shares outstanding decreased from180.5 million in 2016 to 172.9 million in 2017 driven by the Company's repurchases of common stock. Please refer to "Liquidity and Capital Resources" foradditional information concerning the Company's share repurchase activity.26Motorcycle Retail Sales and Registration DataHarley-Davidson Motorcycle Retail Sales(a) The following table includes retail unit sales of new Harley-Davidson motorcycles: 2017 2016 Decrease %ChangeUnited States 147,972 161,658 (13,686) (8.5)% Europe(b) 39,773 39,942 (169) (0.4)EMEA - Other 5,162 5,896 (734) (12.4) Total EMEA 44,935 45,838 (903) (2.0) Japan 9,506 10,279 (773) (7.5)Asia Pacific - Other 20,842 22,610 (1,768) (7.8)Total Asia Pacific 30,348 32,889 (2,541) (7.7) Latin America 9,452 9,701 (249) (2.6)Canada 10,081 10,203 (122) (1.2) Total International Retail Sales 94,816 98,631 (3,815) (3.9) Total Worldwide Retail Sales 242,788 260,289 (17,501) (6.7)% (a)Data source for retail sales figures shown above is new sales warranty and registration information provided by Harley-Davidson dealers and compiledby the Company. The Company must rely on information that its dealers supply concerning new retail sales, and the Company does not regularlyverify the information that its dealers supply. This information is subject to revision.(b)Includes Austria, Belgium, Denmark, Finland, France, Germany, Greece, Italy, Luxembourg, Netherlands, Norway, Portugal, Spain, Sweden, Switzerlandand the United Kingdom.In the U.S., retail sales of new Harley-Davidson motorcycles were lower than in 2016 driven by ongoing industry weakness and limited availability ofmodel-year 2018 product. The Company believes the industry for new motorcycles continued to be adversely impacted by soft used motorcycle prices,although prices did improve in the fourth quarter of 2017 on a year-over-year basis. In addition, retail sales of used Harley-Davidson motorcycles in the U.S.,which the Company believes is an important indicator of overall demand for the Company's motorcycles, were up through November 2017 year-to-date.Combined retail sales of new and used Harley-Davidson motorcycles in the U.S. were down slightly on a year-to-date basis through November 2017, ascompared to the same period in 2016. However, the Company's 2017 November year-to-date share of combined new and used motorcycles registeredincreased for the ninth consecutive year. (Source for used data: IHS Markit Used Registrations for On-Highway and Dual Purpose motorcycles with engines601 and greater in the U.S. from 2008 through November 2017).Strong prices for used Harley-Davidson motorcycles in the U.S. are key to the Company's focus on driving value for its riders, dealers and the brand. Inthe fourth quarter of 2017, positive momentum in used motorcycle pricing continued from the third quarter. Used Harley-Davidson motorcycle wholesaleprices at auction remained above year-ago levels, and third-party pricing services continued to publish higher retail values year-over-year for used Harley-Davidson motorcycles. Finally, for the second consecutive quarter, dealership data in the fourth quarter indicated that prices for used Harley-Davidsonmotorcycles in the broader used motorcycle market were up in aggregate, particularly in the Harley-Davidson dealer network.The Company's U.S. market share of 601+cc motorcycles for 2017 was 50.7%, down 0.5 percentage points compared to 2016 (Source: MotorcycleIndustry Council). International retail sales in 2017 were below expectations; however, the Company continues to believe that its strong brand, products and expandeddistribution will drive growth in international markets over time. In EMEA, retail sales in Europe were down slightly from 2016 while other EMEA marketsdecreased 12.4% behind softness in emerging markets including Russia, Middle East and South Africa. In Asia Pacific, retail sales were down compared to2016 on softness in Japan and Australia and lower retail sales in emerging markets compared to 2016. Retail sales in Latin America during 2017 were downon softness in Mexico partially offset by an increase in Brazil. Canada retail sales were down slightly from the prior year.27Despite the difficult year in international markets, there were positive developments. The Company believes its new model-year 2018 Softailmotorcycles are being very well received by customers internationally. In the fourth quarter of 2017, the Company experienced strong sell-through rates withlimited availability throughout the quarter. The Company believes the strong customer response to the new Softail models, coupled with the fact thatinternational retail sales generally include a greater mix of Softail models than in the U.S., is a good early indicator of the potential impact of these newmodels.(1) Additionally, in line with the Company's strategy to increase brand access internationally, it continued to expand the international dealer network.The Company added 57 and 40 new international dealers during 2017 and 2016, respectively. The Company plans to add a total of 150 to 200 newinternational dealerships from 2016 through 2020.(1) The Company remains committed to its long-term international growth strategy and expects to return tointernational retail sales growth in 2018.(1) Motorcycle Registration Data - 601+cc(a) The following table includes industry retail motorcycle registration data: 2017 2016 Decrease %ChangeUnited States(b) 288,802 311,710 (22,908) (7.3)%Europe(c) 390,619 391,936 (1,317) (0.3)%(a)Data includes on-road 601+cc models. On-road 601+cc models include dual purpose models, three-wheeled motorcycles and autocycles. Registrationdata for Harley-Davidson Street® 500 motorcycles is not included in this table.(b)United States industry data is derived from information provided by Motorcycle Industry Council (MIC). This third-party data is subject to revisionand update.(c)Europe data includes Austria, Belgium, Denmark, Finland, France, Germany, Greece, Italy, Luxembourg, Netherlands, Norway, Portugal, Spain,Sweden, Switzerland, and the United Kingdom. Industry retail motorcycle registration data includes 601+cc models derived from information providedby Association des Constructeurs Europeens de Motocycles (ACEM), an independent agency. This third-party data is subject to revision and update.Motorcycles and Related Products SegmentMotorcycle Unit ShipmentsThe following table includes wholesale motorcycle unit shipments for the Motorcycles segment: 2017 2016 Unit Unit Units Mix % Units Mix % Decrease %ChangeUnited States 144,893 60.0% 161,839 61.7% (16,946) (10.5)%International 96,605 40.0% 100,382 38.3% (3,777) (3.8)Harley-Davidson motorcycle units 241,498 100.0% 262,221 100.0% (20,723) (7.9)%Touring motorcycle units 99,745 41.3% 107,410 41.0% (7,665) (7.1)%Cruiser motorcycle units 87,344 36.2% 93,422 35.6% (6,078) (6.5)Sportster® / Street motorcycle units 54,409 22.5% 61,389 23.4% (6,980) (11.4)Harley-Davidson motorcycle units 241,498 100.0% 262,221 100.0% (20,723) (7.9)%During 2017, wholesale shipments of Harley-Davidson motorcycles were down 7.9% compared to the prior year, slightly more than the 6.7% decreasein dealer retail sales of new Harley-Davidson motorcycles. International shipments as a percentage of the total were up slightly in 2017 as compared to 2016.Shipments of Cruiser motorcycles increased as a percentage of total shipments in 2017 behind the launch of the new model-year 2018 Softail motorcycles.The Softail motorcycle platform was completely redesigned for model-year 2018 and merged the former Softail and Dyna platforms.Dealer inventory of new Harley-Davidson motorcycles in the U.S. at the end of 2017 was down approximately 3,000 motorcycles compared to the endof 2016. The Company believes its supply management discipline delivered the intended results and the dealer network is well-positioned for 2018.(1) 28Segment ResultsThe following table includes the condensed statement of operations for the Motorcycles segment (in thousands): 2017 2016 (Decrease)Increase %ChangeRevenue: Motorcycles $3,825,206 $4,122,113 $(296,907) (7.2)%Parts & Accessories 804,363 842,637 (38,274) (4.5)General Merchandise 262,776 284,583 (21,807) (7.7)Other 22,682 22,043 639 2.9Total revenue 4,915,027 5,271,376 (356,349) (6.8)Cost of goods sold 3,261,683 3,419,710 (158,027) (4.6)Gross profit 1,653,344 1,851,666 (198,322) (10.7)Selling & administrative expense 866,083 907,059 (40,976) (4.5)Engineering expense 171,303 171,201 102 0.1Operating expense 1,037,386 1,078,260 (40,874) (3.8)Operating income from Motorcycles $615,958 $773,406 $(157,448) (20.4)%The following table includes the estimated impact of significant factors affecting the comparability of net revenue, cost of goods sold and gross profitfrom 2016 to 2017 (in millions): NetRevenue Cost ofGoodsSold GrossProfit2016 $5,272 $3,420 $1,852Volume (435) (264) (171)Price, net of related costs 120 59 61Foreign currency exchange rates and hedging 13 (3) 16Shipment mix (55) (18) (37)Raw material prices — 17 (17)Manufacturing and other costs — 51 (51)Total (357) (158) (199)2017 $4,915 $3,262 $1,653The following factors affected the comparability of net revenue, cost of goods sold and gross profit from 2016 to 2017:•The decrease in volume was due to lower wholesale motorcycle shipments, as well as lower P&A and general merchandise sales. P&A and generalmerchandise sales were down due in large part to lower motorcycle shipments and lower retail motorcycle sales.•On average, wholesale prices for motorcycles shipped in 2017 were higher than in the prior year resulting in a favorable impact on revenue. Thepositive impact on revenue was partially offset by increased costs related to the additional content added to motorcycles shipped in 2017 ascompared to last year.•Revenue was positively impacted by slightly stronger weighted-average foreign currency rates, relative to the U.S. dollar, as compared to last year. Inaddition, cost was favorably impacted by a higher net gain resulting from the remeasurement of foreign-denominated balance sheet accounts net oflosses incurred on hedging activities, as compared to last year.•Shipment mix changes resulted in a negative impact on gross profit resulting from unfavorable changes in the mix ofmodels within motorcycle families as well as changes in P&A product mix.•Raw material prices were higher due primarily to increased steel and aluminum costs.•Manufacturing costs were negatively impacted by lower fixed cost absorption due to lower production volumes, higher model-year startup costs andhigher depreciation.Operating expense which consists of selling, administrative and engineering expenses, was down compared to 2016. The decrease in spending was duein large part to aggressive cost management, lower employee costs following a 2016 reorganization and the non-recurrence of related employee terminationcosts recorded in the fourth quarter of 2016.29During the fourth quarter of 2017, the Company recorded a $29.4 million charge associated with the previously disclosed NHTSA investigation openedin 2016 related to certain motorcycles equipped with anti-lock breaking systems. In January 2018, the Company announced a voluntary recall of model-year2008-2011 Touring and V-ROD® motorcycles which the Company believes addresses the NHTSA investigation. Despite this charge, overall warranty andrecall costs in 2017 were favorable compared to 2016 driven by lower year-over-year warranty expense.Financial Services SegmentSegment ResultsThe following table includes the condensed statement of operations for the Financial Services segment (in thousands): 2017 2016 Increase(Decrease) %ChangeInterest income $633,113 $628,432 $4,681 0.7 %Other income 97,151 85,788 11,363 13.2Securitization and servicing income 1,933 10,862 (8,929) (82.2)Financial services revenue 732,197 725,082 7,115 1.0Interest expense 180,193 173,756 6,437 3.7Provision for credit losses 132,444 136,617 (4,173) (3.1)Operating expenses 144,255 139,179 5,076 3.6Financial Services expense 456,892 449,552 7,340 1.6Operating income from Financial Services $275,305 $275,530 $(225) (0.1)%Interest income was favorable in 2017 due to higher average retail receivables partially offset by lower average wholesale receivables and lower averageyields across the portfolios. Other income was favorable due to increased licensing revenue and investment income. Securitization and servicing income waslower primarily due to a $9.3 million gain on the sale of finance receivables recognized as a result of the second quarter 2016 off-balance sheet asset-backedsecuritization. There was no comparable transaction in the current year.Interest expense increased due to a higher cost of funds, partially offset by lower average outstanding debt.The provision for credit losses decreased $4.2 million compared to 2016. The retail motorcycle provision decreased $6.5 million during 2017 as a resultof a smaller increase in the retail reserve rate and lower receivables partially offset by higher retail credit losses. Credit losses were higher as a result ofunfavorable performance across the retail motorcycle portfolio. The wholesale provision increased $1.0 million due to a smaller decrease in the wholesalereserve rate compared to 2016.Annual losses on the Company's retail motorcycle loans were 1.90% during 2017 compared to 1.83% in 2016. The 30-day delinquency rate for retailmotorcycle loans at December 31, 2017 decreased to 4.21% from 4.25% at December 31, 2016.Changes in the allowance for credit losses on finance receivables were as follows (in thousands): 2017 2016Balance, beginning of period $173,343 $147,178Provision for credit losses 132,444 136,617Charge-offs, net of recoveries (113,316) (107,161)Other (a) — (3,291)Balance, end of period $192,471 $173,343(a)Related to the sale of finance receivables during the second quarter of 2016 with a principal balance of $301.8 million through an off-balance sheetasset-backed securitization transaction (see Note 10 of the Notes to Consolidated Financial Statements for additional information).At December 31, 2017, the allowance for credit losses on finance receivables was $186.3 million for retail receivables and $6.2 million for wholesalereceivables. At December 31, 2016, the allowance for credit losses on finance receivables was $166.8 million for retail receivables and $6.5 million forwholesale receivables.30The Company's periodic evaluation of the adequacy of the allowance for credit losses on finance receivables is generally based on the Company's pastloan loss experience, known and inherent risks in the portfolio, current economic conditions and the estimated value of any underlying collateral. Please referto Note 5 of the Notes to Consolidated Financial Statements for further discussion regarding the Company’s allowance for credit losses on financereceivables. Results of Operations 2016 Compared to 2015Consolidated Results (in thousands, except earnings per share) 2016 2015 (Decrease)Increase %ChangeOperating income from Motorcycles & Related Products $773,406 $875,490 $(102,084) (11.7)%Operating income from Financial Services 275,530 280,205 (4,675) (1.7)Operating income 1,048,936 1,155,695 (106,759) (9.2)Investment income 4,645 6,585 (1,940) (29.5)Interest expense 29,670 12,117 17,553 144.9Income before income taxes 1,023,911 1,150,163 (126,252) (11.0)Provision for income taxes 331,747 397,956 (66,209) (16.6)Net income $692,164 $752,207 $(60,043) (8.0)%Diluted earnings per share $3.83 $3.69 $0.14 3.8 %Consolidated operating income was down 9.2% in 2016 driven by a decrease in operating income from the Motorcycles segment which decreased by$102.1 million compared to 2015. Operating income for the Financial Services segment decreased by $4.7 million during 2016 as compared to 2015. Pleaserefer to the “Motorcycles and Related Products Segment” and “Financial Services Segment” discussions following for a more detailed discussion of thefactors affecting operating income.Corporate interest expense was higher in 2016 compared to 2015 due to the issuance of corporate debt in the third quarter of 2015. The Companyissued $750.0 million of senior unsecured notes in the third quarter of 2015 and utilized the proceeds to fund the repurchase of common stock in the thirdand fourth quarters of 2015.The effective income tax rate for 2016 was 32.4% compared to 34.6% for 2015. The lower effective income tax rate was primarily driven by thesuccessful closure of various tax audits in 2016.Diluted earnings per share were $3.83 in 2016, up 3.8% compared to 2015. Diluted earnings per share were adversely impacted by the 8.0% decrease innet income, but benefited from lower diluted weighted average shares outstanding. Diluted weighted average shares outstanding decreased from 203.7million in 2015 to 180.5 million in 2016 driven by the Company's repurchases of common stock. Please refer to "Liquidity and Capital Resources" foradditional information concerning the Company's share repurchase activity.31Motorcycles Retail Sales and Registration DataHarley-Davidson Motorcycle Retail Sales(a) The following table includes retail unit sales of Harley-Davidson motorcycles: 2016 2015 (Decrease)Increase %ChangeUnited States 161,658 168,240 (6,582) (3.9)% Europe(b) 39,942 36,894 3,048 8.3EMEA - Other 5,896 6,393 (497) (7.8) Total EMEA 45,838 43,287 2,551 5.9 Japan 10,279 9,700 579 6.0Asia Pacific - Other 22,610 22,558 52 0.2Total Asia Pacific 32,889 32,258 631 2.0 Latin America 9,701 11,173 (1,472) (13.2)Canada 10,203 9,669 534 5.5 Total International Retail Sales 98,631 96,387 2,244 2.3 Total Worldwide Retail Sales 260,289 264,627 (4,338) (1.6)%(a)Data source for retail sales figures shown above is new sales warranty and registration information provided by Harley-Davidson dealers and compiledby the Company. The Company must rely on information that its dealers supply concerning new retail sales and the Company does not regularly verifythe information that its dealers supply. This information is subject to revision.(b)Includes Austria, Belgium, Denmark, Finland, France, Germany, Greece, Italy, Luxembourg, Netherlands, Norway, Portugal, Spain, Sweden, Switzerlandand the United Kingdom.Worldwide independent dealer retail sales of Harley-Davidson motorcycles decreased 1.6% during 2016 compared to 2015. Retail sales of Harley-Davidson motorcycles decreased 3.9% in the United States and increased 2.3% internationally in 2016. The Company believes its spending to drive demandmitigated the effects of the intense global competitive environment, including the expanded price gaps to the competition in the U.S. and the impact of newproduct introductions. For example, the positive response to its Milwaukee-EightTM engine drove significantly improved touring motorcycle sales and U.S.Harley-Davidson market share gains in the fourth quarter of 2016.The Company believes 2016 U.S. retail sales of its motorcycles were negatively impacted by intense competitive activity behind discounting and newcompetitor products. The Company believes the U.S. industry was also adversely affected by weakness in oil-dependent areas and soft used motorcyclevalues, compounded by economic uncertainty. The Company also believes 2016 retail sales in the U.S. were negatively impacted by lower wholesaleshipments of Harley-Davidson motorcycles in the fourth quarter. The Company's shipments of its model-year 2017 motorcycles were limited during thefourth quarter as U.S. dealers focused on selling model-year 2016 motorcycles.The Company's U.S. market share of 601+cc motorcycles for 2016 was 51.2%, up 1.0 percentage point compared to 2015 (Source: Motorcycle IndustryCouncil). The Company believes its U.S. market share growth was driven by its demand driving spending focused on growing product awareness andridership and the favorable response to its model-year 2016 S-model cruisers and its new model-year 2017 motorcycles featuring the Milwaukee-EightTM engine.In EMEA, retail sales of Harley-Davidson motorcycles for 2016 increased 5.9% compared to the prior year due in part to a positive reception to itsmodel-year 2016 S-model cruisers and its new model-year 2017 motorcycles featuring the Milwaukee-EightTM engine. In Asia Pacific, retail sales of Harley-Davidson motorcycles for 2016 increased 2.0% compared to the prior year. Overall growth in Asia Pacific waspartially offset by lower sales in India and Indonesia. In India, the Company believes retail sales of Harley-Davidson motorcycles were negatively impactedby India's currency demonetization in the fourth quarter of 2016. In32Indonesia, retail sales of Harley-Davidson motorcycles were lower as the Company is reestablishing its dealer network in that market. Retail sales of Harley-Davidson motorcycles in Latin America for 2016 decreased 13.2% compared to the prior year. The Company believes retail salesin Brazil continued to be negatively impacted by a price increase on its motorcycles initiated in the first quarter of 2016 and by a slowing economy,consumer uncertainty and aggressive price competition. Retail sales of Harley-Davidson motorcycles in Canada increased 5.5% in 2016 compared to 2015. The Company believes the market respondedfavorably to the change to a direct distribution model implemented in July 2015 and pricing adjustments that were implemented with the model-year 2016motorcycles.International retail sales as a percent of total retail sales in 2016 were 37.9% compared to 36.4% in 2015.Motorcycle Registration Data - 601+cc(a) The following table includes industry retail motorcycle registration data: 2016 2015 (Decrease)Increase %ChangeUnited States(b) 311,710 328,818 (17,108) (5.2)%Europe(c) 391,936 351,773 40,163 11.4 % (a)Data includes on-road 601+cc models. On-road 601+cc models include dual purpose models, three-wheeled motorcycles and autocycles. Registrationdata for Harley-Davidson Street® 500 motorcycles is not included in this table.(b)United States industry data is derived from information provided by Motorcycle Industry Council (MIC). This third-party data is subject to revisionand update.(c)Europe data includes Austria, Belgium, Denmark, Finland, France, Germany, Greece, Italy, Luxembourg, Netherlands, Norway, Portugal, Spain,Sweden, Switzerland, and the United Kingdom. Industry retail motorcycle registration data includes 601+cc models derived from information providedby Association des Constructeurs Europeens de Motocycles (ACEM), an independent agency. This third-party data is subject to revision and update.Motorcycles and Related Products SegmentMotorcycle Unit ShipmentsThe following table includes wholesale motorcycle unit shipments for the Motorcycles segment: 2016 2015 Unit Unit Units Mix % Units Mix % (Decrease)Increase %ChangeUnited States 161,839 61.7% 170,688 64.1% (8,849) (5.2)%International 100,382 38.3% 95,694 35.9% 4,688 4.9Harley-Davidson motorcycle units 262,221 100.0% 266,382 100.0% (4,161) (1.6)%Touring motorcycle units 107,410 41.0% 114,768 43.1% (7,358) (6.4)%Cruiser motorcycle units 93,422 35.6% 89,207 33.5% 4,215 4.7Sportster® / Street motorcycle units 61,389 23.4% 62,407 23.4% (1,018) (1.6)Harley-Davidson motorcycle units 262,221 100.0% 266,382 100.0% (4,161) (1.6)%During 2016, wholesale shipments of Harley-Davidson motorcycles were down 1.6% compared to the prior year in line with the 1.6% decrease in dealerretail sales of new Harley-Davidson motorcycles. International shipments as a percentage of the total were up in 2016 as compared to 2015. In addition,shipments of Cruiser motorcycles as a percentage of total shipments increased in 2016 compared to the prior year driven by the strong acceptance of themodel-year 2016 S-model motorcycles. Touring motorcycle shipments were down in 2016; however, in the fourth quarter of 2016, the shipment mix ofTouring motorcycles increased reflecting the high demand for the new 2017 Touring motorcycles featuring the Milwaukee-EightTM engine. Dealer retailinventory of new Harley-Davidson motorcycles in the U.S. at the end of 2016 was approximately flat compared to the end of 2015.33Segment ResultsThe following table includes the condensed statement of operations for the Motorcycles segment (in thousands): 2016 2015 (Decrease)Increase %ChangeRevenue: Motorcycles $4,122,113 $4,127,739 $(5,626) (0.1)%Parts & Accessories 842,637 862,645 (20,008) (2.3)General Merchandise 284,583 292,310 (7,727) (2.6)Other 22,043 26,050 (4,007) (15.4)Total revenue 5,271,376 5,308,744 (37,368) (0.7)Cost of goods sold 3,419,710 3,356,284 63,426 1.9Gross profit 1,851,666 1,952,460 (100,794) (5.2)Selling & administrative expense 907,059 916,669 (9,610) (1.0)Engineering expense 171,201 160,301 10,900 6.8Operating expense 1,078,260 1,076,970 1,290 0.1Operating income from Motorcycles $773,406 $875,490 $(102,084) (11.7)%The following table includes the estimated impact of the significant factors affecting the comparability of net revenue, cost of goods sold and grossprofit from 2015 to 2016 (in millions): NetRevenue Cost ofGoodsSold GrossProfit2015 $5,309 $3,357 $1,952Volume (109) (62) (47)Price, net of related costs 93 39 54Foreign currency exchange rates and hedging (3) 45 (48)Shipment mix (18) (5) (13)Raw material prices — (18) 18Manufacturing and other costs — 64 (64)Total (37) 63 (100)2016 $5,272 $3,420 $1,852The following factors affected the comparability of net revenue, cost of goods sold and gross profit from 2015 to 2016:•Volume decreases were driven by lower wholesale motorcycle shipments, as well as decreases in sales of parts and accessories and generalmerchandise.•On average, wholesale prices on the Company’s 2016 and 2017 model-year motorcycles are higher than the prior model-years resulting in thefavorable impact on revenue during the period. The impact of revenue favorability resulting from model-year price increases on gross profit waspartially offset by increases in cost related to the additional content added to the 2016 and 2017 model-year motorcycles.•Gross profit was negatively impacted by foreign currency due to lower hedge gains, given the significant gains experienced in the prior year, andlower revenues behind a slightly stronger U.S. dollar relative to its foreign currency exposures.•Shipment mix changes negatively impacted gross profit primarily due to changes in motorcycle family mix, driven by strong customer demand forthe Company's model-year 2016 S-model cruiser motorcycles, and model mix within its motorcycle families.•Manufacturing costs for 2016 were negatively impacted by higher costs related to retooling and start-up costs at its Pilgrim Road manufacturingfacility associated with the Milwaukee-EightTM engine, the implementation of the Company's ERP system at the Company's Kansas Citymanufacturing facility and a higher fixed cost per unit due to lower volumes, partially offset by favorable costs related to parts and accessories.Operating expense, which consists of selling, administrative and engineering expenses, was largely flat in 2016 compared to 2015. In 2016, theCompany significantly increased spending on marketing and product development to drive demand.34However, these expense increases were mostly offset by decreases related to other items, including lower employee costs on fewer employees and lowerreorganization costs. Reorganization costs, included in selling and administrative expenses, in the fourth quarters of 2016 and 2015, were $18.2 million and$23.3 million, respectively.Financial Services SegmentSegment ResultsThe following table includes the condensed statements of operations for the Financial Services segment (in thousands): 2016 2015 Increase(Decrease) %ChangeInterest income $628,432 $605,770 $22,662 3.7 %Other income 85,788 80,888 4,900 6.1Securitization and servicing income 10,862 — 10,862 —Financial services revenue 725,082 686,658 38,424 5.6Interest expense 173,756 161,983 11,773 7.3Provision for credit losses 136,617 101,345 35,272 34.8Operating expense 139,179 143,125 (3,946) (2.8)Financial Services expense 449,552 406,453 43,099 10.6Operating income from Financial Services $275,530 $280,205 $(4,675) (1.7)% Interest income was favorable in 2016 due to higher average receivables in the retail and wholesale portfolios. Other income was favorable primarilydue to increased revenue from credit card licensing, insurance and protection products and international licensing revenue. Securitization and servicingincome was higher primarily due to a $9.3 million gain on the sale of finance receivables with a principal balance of $301.8 million through an off-balancesheet asset-backed securitization during the second quarter of 2016. There was no comparable transaction in the prior year.Interest expense increased due to a higher cost of funds and higher average debt outstanding, partially offset by a lower loss on the extinguishment of aportion of the Company's 6.80% medium-term notes than in 2015.The provision for credit losses increased $35.3 million compared to 2015. The retail motorcycle provision increased $39.8 million during 2016 as aresult of higher credit losses and increases in the retail reserve rate. Credit losses were higher as a result of deteriorating performance across the portfolio,lower used motorcycle values at auction, and continued unfavorable performance in oil-dependent areas.Annual losses on the Company's retail motorcycle loans were 1.83% during 2016 compared to 1.42% in 2015. The 30-day delinquency rate for retailmotorcycle loans at December 31, 2016 increased to 4.25% from 3.78% at December 31, 2015.Changes in the allowance for credit losses on finance receivables were as follows (in thousands): 2016 2015Balance, beginning of period $147,178 $127,364Provision for credit losses 136,617 101,345Charge-offs, net of recoveries (107,161) (81,531)Other (a) (3,291) —Balance, end of period $173,343 $147,178(a)Related to the sale of finance receivables during the second quarter of 2016 with a principal balance of $301.8 million through an off-balance sheetasset-backed securitization transaction (see Note 10 of the Notes to Consolidated Financial Statements for additional information).At December 31, 2016, the allowance for credit losses on finance receivables was $166.8 million for retail receivables and $6.5 million for wholesalereceivables. At December 31, 2015, the allowance for credit losses on finance receivables was $139.3 million for retail receivables and $7.9 million forwholesale receivables. 35The Company's periodic evaluation of the adequacy of the allowance for credit losses on finance receivables is generally based on the Company's pastloan loss experience, known and inherent risks in the portfolio, current economic conditions and the estimated value of any underlying collateral. Please referto Note 5 of the Notes to Consolidated Financial Statements for further discussion regarding the Company’s allowance for credit losses on financereceivables. Other MattersNew Accounting Standards Not Yet AdoptedRefer to Note 1. Summary of Significant Accounting Policies of the Notes to the Financial Statements for a discussion of new accounting standards thatwill become effective for the Company in 2018, 2019 and 2020.Critical Accounting EstimatesThe Company’s financial statements are based on the selection and application of significant accounting policies, which require management to makesignificant estimates and assumptions. Management believes that the following are some of the more critical judgment areas in the application of accountingpolicies that currently affect the Company’s financial condition and results of operations. Management has discussed the development and selection of thesecritical accounting estimates with the Audit and Finance Committee of the Board of Directors.Allowance for Credit Losses on Finance Receivables – The allowance for uncollectible accounts is maintained at a level management believes isadequate to cover the losses of principal in the existing finance receivables portfolio.The retail portfolio consists of a large number of small balance, homogeneous finance receivables. The Company performs a periodic and systematiccollective evaluation of the adequacy of the retail allowance. The Company utilizes loss forecast models which consider a variety of factors including, butnot limited to, historical loss trends, origination or vintage analysis, known and inherent risks in the portfolio, the value of the underlying collateral, recoveryrates and current economic conditions including items such as unemployment rates.The wholesale portfolio is primarily composed of large balance, non-homogeneous finance receivables. The Company's wholesale allowanceevaluation is first based on a loan-by-loan review. A specific allowance is established for wholesale finance receivables determined to be individuallyimpaired when management concludes that the borrower will not be able to make full payment of contractual amounts due based on the original terms of theloan agreement. The impairment is determined based on the cash that the Company expects to receive discounted at the loan’s original interest rate or the fairvalue of the collateral, if the loan is collateral-dependent. Finance receivables in the wholesale portfolio that are not individually evaluated for impairmentare segregated, based on similar risk characteristics, according to the Company’s internal risk rating system and collectively evaluated for impairment. Therelated allowance is based on factors such as the Company’s past loan loss experience, the specific borrower’s financial performance as well as ability torepay, current economic conditions as well as the value of the underlying collateral.Product Warranty and Recalls – Estimated warranty costs are accrued at the time of sale and are based on a combination of historical claim cost dataand other known factors that may affect future warranty claims. The estimated costs associated with voluntary recalls are accrued in the period thatmanagement approves and commits to the recall. The accrued cost of a recall is based on an estimate of the cost to repair each affected motorcycle and thenumber of motorcycles expected to be repaired based on historical data concerning the percentage of affected customers that take advantage of recall offers.In the case of both warranty and recall costs, as actual experience becomes available it is used to update the accruals.The factors affecting actual warranty and recall costs can be volatile. As a result, actual warranty claims experience and recall costs may differ fromestimates, which could lead to material changes in the Company’s accrued warranty and recall costs. The Company’s warranty and recall liabilities arediscussed further in Note 1 of the Notes to Consolidated Financial Statements.Pensions and Other Postretirement Healthcare Benefits – The Company has a defined benefit pension plan and several postretirement healthcarebenefit plans, which cover employees of the Motorcycles segment. The Company also has unfunded supplemental employee retirement plan agreements(SERPA) with certain employees, which were instituted to replace benefits lost under the Tax Revenue Reconciliation Act of 1993.U.S. GAAP requires that companies recognize in their statement of financial position a liability for defined benefit pension and postretirement plansthat are underfunded or an asset for defined benefit pension and postretirement benefit plans that are overfunded.36Pension, SERPA and postretirement healthcare obligations and costs are calculated through actuarial valuations. The valuation of benefit obligationsand net periodic benefit costs relies on key assumptions including discount rates, mortality, long-term expected return on plan assets, future compensationand healthcare cost trend rates.The Company determines its discount rate assumptions by referencing high-quality long-term bond rates that are matched to the duration of its ownbenefit obligations. Based on this analysis, the Company decreased the weighted-average discount rate for pension and SERPA obligations from 4.30% as ofDecember 31, 2016 to 3.71% as of December 31, 2017. The Company decreased the weighted-average discount rate for postretirement healthcare obligationsfrom 4.03% to 3.52%. The Company determines its healthcare trend assumption for the postretirement healthcare obligation by considering factors such asestimated healthcare inflation, the utilization of healthcare benefits and changes in the health of plan participants. Based on the Company’s assessment ofthis data as of December 31, 2017, the Company set its healthcare cost trend rate at 7.00% as of December 31, 2017. The Company expects the healthcarecost trend rate to reach its ultimate rate of 5.00% by 2026.(1) These assumption changes were reflected immediately in the benefit obligation and will beamortized into net periodic benefit costs over future periods.Plan assets are measured at fair value and are subject to market volatility. In estimating the expected return on plan assets, the Company considers thehistorical returns on plan assets, adjusted to reflect the current view of the long-term investment market.Changes in the funded status of defined benefit pension and postretirement benefit plans resulting from the difference between assumptions and actualresults are initially recognized in other comprehensive income and amortized to expense over future periods. The following information is provided toillustrate the sensitivity of pension and postretirement healthcare obligations and costs to changes in these major assumptions (in thousands): Amounts basedon currentassumptions Impact of a 1%decrease in thediscount rate Impact of a 1%decrease in theexpectedreturn on assets Impact of a 1%increase in thehealthcarecost trend rate2017 Net periodic benefit costs Pension and SERPA $20,286 $27,460 $19,507 n/aPostretirement healthcare $9,615 $1,162 $1,741 $1,6872017 Benefit obligations Pension and SERPA $2,201,021 $358,953 n/a n/aPostretirement healthcare $338,488 $31,824 n/a $11,984This information should not be viewed as predictive of future amounts. The analysis of the impact of a 1% change in the table above does not take intoaccount the cost related to special termination benefits. The calculation of pension, SERPA and postretirement healthcare obligations and costs is based onmany factors in addition to those discussed here. This information should be considered in combination with the information provided in Note 12 of theNotes to Consolidated Financial Statements.Income Taxes – The Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes (Topic 740). Deferred tax assets andliabilities are recognized for the future tax consequences attributable to differences between financial statement carrying amounts of existing assets andliabilities and their respective tax bases and operating loss and other loss carryforwards. Deferred tax assets and liabilities are measured using enacted taxrates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.The Company is subject to income taxes in the U.S. and numerous foreign jurisdictions. These tax laws and regulations are complex and significantjudgment is required in determining the Company’s worldwide provision for income taxes and recording the related deferred tax assets and liabilities. InDecember 2017, the 2017 Tax Act was enacted into law introducing significant changes to the U.S. tax code including a reduction in the U.S. corporateincome tax rate from 35% to 21%. In accordance with Topic 740, the Company's 2017 financial statements reflect the impacts of the 2017 Tax Act based onreasonable estimates, and the Company considers these estimates to be provisional under SAB 118. Future guidance, interpretations and pronouncementsmay add clarity to the numerous aspects of the 2017 Tax Act that may impact the Company. Future clarifications may give rise to additional unanticipatedimpacts on the Company's tax liabilities or effective tax rate and revisions to the Company’s provisional estimates related to the 2017 Tax Act included inthe Company’s 2017 income tax provision. Any such adjustments will be recorded as discrete income tax expenses or benefits in future periods. Theprovisional amount recorded in the 2017 provision for income taxes related to the enactment of the 2017 Tax Act was $53.1 million.37In the ordinary course of the Company’s business, there are transactions and calculations where the ultimate tax determination is uncertain. Accruals forunrecognized tax benefits are provided for in accordance with the requirements of Topic 740. An unrecognized tax benefit represents the difference betweenthe recognition of benefits related to items for income tax reporting purposes and financial reporting purposes. The unrecognized tax benefit is includedwithin other long-term liabilities in the Consolidated Balance Sheets. The Company has a liability for interest and penalties on exposure items, if applicable,which is recorded as a component of the overall income tax provision. The Company is regularly audited by tax authorities as a normal course of business.Although the outcome of tax audits is always uncertain, the Company believes that it has appropriate support for the positions taken on its tax returns andthat its annual tax provision includes amounts sufficient to pay any assessments. Nonetheless, the amounts ultimately paid, if any, upon resolution of theissues raised by the taxing authorities may differ materially from the amounts accrued for each year.Contractual ObligationsA summary of the Company’s expected payments for significant contractual obligations as of December 31, 2017 is as follows (in thousands): 2018 2019-2020 2021-2022 Thereafter TotalPrincipal payments on debt $2,405,569 $2,693,007 $1,159,715 $750,000 $7,008,291Interest payments on debt 160,265 182,093 79,803 366,375 788,536Operating lease payments 15,074 23,826 14,715 8,379 61,994 $2,580,908 $2,898,926 $1,254,233 $1,124,754 $7,858,821Interest for floating rate instruments assumes December 31, 2017 rates remain constant.As of December 31, 2017, the Company generally had no significant purchase obligations, other than those created in the ordinary course of business.Purchase orders issued for inventory and supplies used in product manufacturing generally do not become firm commitments until 90 days prior to expecteddelivery and can be modified to a certain extent until 30 days prior to expected delivery.The Company has long-term obligations related to its pension, SERPA and postretirement healthcare plans at December 31, 2017. The Company’sretirement plan obligations and expected future contributions and payments related to these plans are provided in Note 12 of the Notes to ConsolidatedFinancial Statements.As described in Note 11 of the Notes to Consolidated Financial Statements, the Company has unrecognized tax benefits of $72.2 million and accruedinterest and penalties of $30.9 million as of December 31, 2017. However, the Company cannot make a reasonably reliable estimate of the period of cashsettlement for either the liability for unrecognized tax benefits or accrued interest and penalties.Commitments and ContingenciesThe Company is subject to lawsuits and other claims related to environmental, product and other matters. In determining costs to accrue related to theseitems, the Company carefully analyzes cases and considers the likelihood of adverse judgments or outcomes, as well as the potential range of possible loss.Any amounts accrued for these matters are monitored on an ongoing basis and are updated based on new developments or new information as it becomesavailable for each matter.38Environmental Protection Agency Notice:In December 2009, the Company received formal, written requests for information from the United States Environmental Protection Agency (EPA)regarding: (i) certificates of conformity for motorcycle emissions and related designations and labels, (ii) aftermarket parts, and (iii) warranty claims onemissions related components. The Company promptly submitted written responses to the EPA’s inquiry and has engaged in information exchanges anddiscussions with the EPA. In August 2016, the Company entered into a consent decree with the EPA regarding these issues, and the consent decree wassubsequently revised in July 2017 (the Settlement). In the Settlement, the Company agreed to, among other things, pay a fine, and not sell tuning productsunless they are approved by the EPA or California Air Resources Board. In December 2017, the EPA filed the Settlement with the U.S. District Court for theDistrict of Columbia for the purpose of obtaining court approval of the Settlement. Three amicus briefs opposing portions of the Settlement were filed withthe court by the deadline of January 31, 2018. The Company anticipates the court will make a decision whether or not to finalize the Settlement in thefollowing months. The Company has an accrual associated with this matter which is included in accrued liabilities in the Consolidated Balance Sheets, andas a result, if it is finalized, the Settlement would not have a material adverse effect on the Company's financial condition or results of operations. TheSettlement is not final until it is approved by the court, and if it is not approved by the court, the Company cannot reasonably estimate the impact of anyremedies the EPA might seek beyond the Company's current reserve for this matter.York Environmental Matters:The Company is involved with government agencies and groups of potentially responsible parties related to a matter involving the cleanup of soil andgroundwater contamination at its York, Pennsylvania facility. The York facility was formerly used by the U.S. Navy and AMF prior to the purchase of theYork facility by the Company from AMF in 1981. Although the Company is not certain as to the full extent of the environmental contamination at the Yorkfacility, it has been working with the Pennsylvania Department of Environmental Protection (PADEP) since 1986 in undertaking environmental investigationand remediation activities, including a site-wide remedial investigation/feasibility study (RI/FS).In January 1995, the Company entered into a settlement agreement (the Agreement) with the Navy, and the parties amended the Agreement in 2013 toaddress ordnance and explosive waste. The Agreement calls for the Navy and the Company to contribute amounts into a trust equal to 53% and 47%,respectively, of costs associated with environmental investigation and remediation activities at the York facility (Response Costs). The trust administers thepayment of the Response Costs incurred at the York facility as covered by the Agreement.The Company has an accrual for its estimate of its share of the future Response Costs at the York facility which is included in other long-term liabilitiesin the Consolidated Balance Sheets. While much of the work on the RI/FS is complete, it is still under agency review and given the uncertainty that existsconcerning the nature and scope of additional environmental investigation and remediation that may ultimately be required under the RI/FS that is finallyapproved or otherwise at the York facility, the Company is unable to make a reasonable estimate of those additional costs, if any, that may result.The estimate of the Company's future Response Costs that will be incurred at the York facility is based on reports of independent environmentalconsultants retained by the Company, the actual costs incurred to date and the estimated costs to complete the necessary investigation and remediationactivities.Product Liability Matters:The Company is involved in product liability suits related to the operation of its business. The Company accrues for claim exposures that are probableof occurrence and can be reasonably estimated. The Company also maintains insurance coverage for product liability exposures. The Company believes thatits accruals and insurance coverage are adequate and that product liability suits will not have a material adverse effect on the Company’s consolidatedfinancial statements.(1) National Highway Traffic Safety Administration Matters:In July 2016, the National Highway Traffic Safety Administration (NHTSA) began an investigation into certain of the Company's motorcycles equippedwith anti-lock braking systems (ABS). NHTSA’s investigation is in response to rider complaints related to brake failures and applies to model-year 2008-2013 Touring and model-year 2008-2017 V-ROD® motorcycles. NHTSA noted that Harley-Davidson has a two-year brake fluid replacement interval thatowners either are unaware of or ignore. During 2017, the Company estimated and recorded a $29.4 million accrual associated with the NHTSA matter whichis included in accrued liabilities. On January 30, 2018, the Company announced a voluntary recall, which offers a free brake fluid flush for model-year 2008-2011 Touring and V-ROD® motorcycles. The Company believes the accrued liability it has recorded will adequately cover the cost of the recall.39Off-Balance Sheet ArrangementsThe Company participates in asset-backed financing both through asset-backed securitization transactions and through asset-backed commercial paperconduit facilities. In the Company's asset-backed financing programs, the Company transfers retail motorcycle finance receivables to special purpose entities(SPE), which are considered Variable Interest Entities (VIE) under U.S. GAAP. Each SPE then converts those assets into cash, through the issuance of debt.The Company retains servicing rights for all of the retail motorcycle finance receivables transferred to SPEs as part of an asset-backed financing.The SPEs are separate legal entities that assume the risks and rewards of ownership of the retail motorcycle finance receivables they hold. The assets ofthe VIEs are not available to pay other obligations or claims of the Company’s creditors. The Company’s economic exposure related to the VIEs is generallylimited to restricted cash reserve accounts, retained interests and ordinary representations and warranties and related covenants. The VIEs have a limited lifeand generally terminate upon final distribution of amounts owed to investors.The accounting treatment for asset-backed financings depends on the terms of the related transaction and the Company’s continuing involvement withthe VIE. Most of the Company’s asset-backed financings do not meet the criteria to be treated as a sale for accounting purposes because, in addition toretaining servicing rights, the Company retains a financial interest in the VIE in the form of a debt security. These transactions are treated as securedborrowings. As secured borrowings, the retail motorcycle finance receivables remain on the balance sheet with a corresponding obligation reflected as debt.During the second quarter of 2016, the Company sold finance receivables with a principal balance of $301.8 million into a securitization VIE. Thetransaction met the criteria to be treated as a sale for accounting purposes and resulted in an off-balance sheet arrangement because the Company did notretain any financial interest in the VIE beyond servicing rights and ordinary representations and warranties and related covenants. Upon sale, the retailmotorcycle finance receivables were removed from the Company’s balance sheet and a gain of $9.3 million was recognized in Financial Services Revenue.For more information see Note 10 of the Notes to Consolidated Financial Statements.Liquidity and Capital Resources as of December 31, 2017Over the long-term, the Company expects that its business model will continue to generate cash that will allow it to invest in the business, fund futuregrowth opportunities and return value to shareholders.(1) The Company believes the Motorcycles operations will continue to be primarily funded throughcash flows generated by operations.(1) The Company’s Financial Services operations will continue to be funded with unsecured debt, unsecured commercialpaper, asset-backed commercial paper conduit facilities, committed unsecured bank facilities and asset-backed securitizations.The Company’s strategy is to maintain a minimum of twelve months of its projected liquidity needs through a combination of cash and cashequivalents and availability under credit facilities. The following table summarizes the Company’s cash and cash equivalents and availability under creditand conduit facilities (in thousands): December 31, 2017Cash and cash equivalents $687,521 Credit facilities (a) 291,518Asset-backed U.S. commercial paper conduit facilities (a) 620,543Asset-backed Canadian commercial paper conduit facility (a) 491Total availability under credit and conduit facilities 912,552Total $1,600,073(a)Includes facilities expiring in the next twelve months some of which the Company expects to renew prior to expiration.(1) The Company recognizes that it must continue to adjust its business to changes in the lending environment. The Company intends to continue with adiversified funding profile through a combination of short-term and long-term funding vehicles and to pursue a variety of sources to obtain cost-effectivefunding.(1) The Financial Services operations could be negatively affected by higher costs of funding and the increased difficulty of raising, or potentialinability to raise, funding in the short-term and long-term capital markets.(1) These negative consequences could in turn adversely affect the Company’sbusiness and results of operations in various ways, including through higher costs of capital, reduced funds available through its Financial Services40operations to provide loans to independent dealers and their retail customers, and dilution to existing shareholders through the use of alternative sources ofcapital.Cash Flow ActivityThe following table summarizes the cash flow activity of continuing operations for the years ended December 31, 2017, 2016 and 2015 (in thousands): 2017 2016 2015Net cash provided by operating activities $1,005,061 $1,174,339 $1,100,118Net cash used by investing activities (562,468) (392,731) (915,848)Net cash used by financing activities (541,803) (734,390) (354,064)Effect of exchange rate changes on cash and cash equivalents 26,747 (9,443) (14,677)Net (decrease) increase in cash and cash equivalents $(72,463) $37,775 $(184,471)Operating ActivitiesThe decrease in operating cash flow in 2017 compared to 2016 was due primarily to lower net income, unfavorable changes in working capital andhigher retirement plan contributions. These negative impacts were partially offset by lower net cash outflows for wholesale lending.The increase in operating cash flow in 2016 compared to 2015 was due primarily to lower net cash outflows from wholesale lending and favorablechanges in working capital driven by a reduction in inventory during 2016. These favorable impacts were partially offset by the impact of a retirement plancontribution and lower net income.During 2017, the Company voluntarily contributed $25.0 million to its qualified pension plan and $15.0 million to its postretirement healthcare plans.This compares to a qualified pension plan contribution of $25.0 million in 2016 and no contributions in 2015. The Company expects that no qualifiedpension contributions will be required in 2018.(1) The Company also expects that 2018 postretirement healthcare plan benefits and benefits due under theSERPA will be paid by the Company or funded with plan assets.(1) The Company’s expected future contributions and benefit payments related to these plansare provided in Note 12 of the Notes to Consolidated Financial Statements.(1) Investing ActivitiesThe Company’s investing activities consist primarily of capital expenditures, net changes in retail finance receivables and short-term investmentactivity. Capital expenditures were $206.3 million, $256.3 million and $260.0 million during 2017, 2016 and 2015, respectively.Net cash outflows for finance receivables in 2017, which consisted primarily of retail finance receivables, were $125.8 million lower than 2016primarily as a result of a decrease in retail motorcycle loan originations during 2017. Similarly, 2016 net cash outflows for finance receivables were $125.5million lower than 2015 primarily due to lower retail motorcycle loan originations during 2016.Cash inflows from maturities of marketable securities were $6.9 million, $40.0 million and $11.5 million in 2017, 2016 and 2015, respectively.During 2016, the Company completed a sale of finance receivables through an off-balance sheet asset-backed securitization. The proceeds from the saleof finance receivables, which positively impacted cash flow, were $312.6 million. There were no comparable transactions in 2017 or 2015.During 2015, the Company purchased certain assets and liabilities from Fred Deeley Imports, Ltd. resulting in a $59.9 million cash outflow. There wereno business acquisitions in 2017 or 2016.Financing ActivitiesThe Company’s financing activities consist primarily of dividend payments, share repurchases and debt activity.The Company paid dividends of $1.46 per share totaling $251.9 million during 2017, $1.40 per share totaling $252.3 million during 2016 and $1.24per share totaling $249.3 million during 2015.Cash outflows from share repurchases were $465.3 million, $465.3 million and $1,537.0 million for 2017, 2016 and 2015, respectively. Sharerepurchases during 2017, 2016 and 2015 included 8.8 million, 9.9 million and 28.0 million shares of41common stock, respectively, related to discretionary share repurchases and shares of common stock that employees surrendered to satisfy withholding taxesin connection with the vesting of restricted stock awards. In February 2016, the Company's Board of Directors separately authorized the Company to buyback up to an additional 20.0 million shares of its common stock with no dollar limit or expiration date of which 10.6 million shares remained available atDecember 31, 2017. In February 2018, the Company's Board of Directors authorized the Company to repurchase up to 15.0 million additional shares of itscommon stock with no dollar limit or expiration date.Financing cash flows related to debt activity resulted in net cash inflows / (outflows) of $155.5 million , ($78.3) million and $1.40 billion for 2017,2016 and 2015 respectively. The Company’s total outstanding debt consisted of the following as of December 31, 2017, 2016 and 2015 (in thousands): 2017 2016 2015Unsecured commercial paper $1,273,482 $1,055,708 $1,201,380Asset-backed Canadian commercial paper conduit facility 174,779 149,338 153,839Asset-backed U.S. commercial paper conduit facilities 279,457 — —Medium-term notes, net 4,165,706 4,064,940 3,316,949Senior unsecured notes, net 741,961 741,306 740,653Asset-backed securitization debt, net 352,624 796,275 1,459,377Total debt $6,988,009 $6,807,567 $6,872,198To access the debt capital markets, the Company relies on credit rating agencies to assign short-term and long-term credit ratings. Generally, lowercredit ratings result in higher borrowing costs and reduced access to debt capital markets. A credit rating agency may change or withdraw the Company’sratings based on its assessment of the Company’s current and future ability to meet interest and principal repayment obligations. The Company’s short-termdebt ratings affect its ability to issue unsecured commercial paper. The Company’s short- and long-term debt ratings as of January 2018 were as follows: Short-Term Long-Term OutlookMoody’s P2 A3 StableStandard & Poor’s A2 A- NegativeFitch F1 A StableCredit Facilities – In May 2017, the Company entered into a $100.0 million 364-day credit facility which matures in April 2018. The Company alsohas a $675.0 million five-year credit facility which matures in April 2019 and a $765.0 million five-year credit facility which matures in April 2021. The new364-day credit facility and the five-year credit facilities (together, the Global Credit Facilities) bear interest at variable interest rates, which may be adjustedupward or downward depending on certain criteria, such as credit ratings. The Global Credit Facilities also require the Company to pay a fee based on theaverage daily unused portion of the aggregate commitments under the Global Credit Facilities. The Global Credit Facilities are committed facilities primarilyused to support the Company's unsecured commercial paper program. Additionally, during the second quarter of 2017, the Company renewed its $25.0million credit facility which had expired in May 2017. The $25.0 million credit facility bears interest at variable interest rates, and the Company must pay afee based on the unused portion of the $25.0 million commitment. The credit facility expires in May 2018.Unsecured Commercial Paper – Subject to limitations, the Company could issue unsecured commercial paper of up to $1.54 billion as of December 31,2017 supported by the Global Credit Facilities, as discussed above. Outstanding unsecured commercial paper may not exceed the unused portion of theGlobal Credit Facilities. Maturities may range up to 365 days from the issuance date. The Company intends to repay unsecured commercial paper as itmatures with additional unsecured commercial paper or through other means, such as borrowing under the Global Credit Facilities, borrowing under its asset-backed U.S. commercial paper conduit facilities or through the use of operating cash flow and cash on hand.(1) 42Medium-Term Notes – The Company has the following medium-term notes (collectively, the Notes) issued and outstanding at December 31, 2017 (inthousands): Principal Amount Rate Issue Date Maturity Date$877,488 6.80% May 2008 June 2018$600,000 2.25% January 2016 January 2019$150,000 Floating-rate(a) March 2017 March 2019$600,000 2.40% September 2014 September 2019$600,000 2.15% February 2015 February 2020$350,000 2.40% March 2017 June 2020$600,000 2.85% January 2016 January 2021$400,000 2.55% June 2017 June 2022(a) Floating interest rate based on LIBOR plus 35 bps.The Notes provide for semi-annual interest payments and principal due at maturity.Senior Unsecured Notes – In July 2015, the Company issued $750.0 million of senior unsecured notes in an underwritten offering. The seniorunsecured notes provide for semi-annual interest payments and principal due at maturity. $450.0 million of the senior unsecured notes mature in July 2025and have an interest rate of 3.50%, and $300.0 million of the senior unsecured notes mature in July 2045 and have an interest rate of 4.625%. The Companyused the proceeds from the debt to repurchase shares of its common stock in 2015.On-Balance Sheet Asset-Backed Canadian Commercial Paper Conduit Facility – The Company has a revolving facility agreement (Canadian Conduit)with a Canadian bank-sponsored asset-backed commercial paper conduit. Under the agreement, the Canadian Conduit is contractually committed, at theCompany's option, to purchase from the Company eligible Canadian retail motorcycle finance receivables for proceeds up to C$220.0 million. Thetransferred assets are restricted as collateral for the payment of the debt. The terms for this facility provide for interest on the outstanding principal based onprevailing market interest rates plus a specified margin. The Canadian Conduit also provides for a program fee and an unused commitment fee based on theunused portion of the total aggregate commitment of C$220.0 million. There is no amortization schedule; however, the debt is reduced monthly as availablecollections on the related finance receivables are applied to outstanding principal. Upon expiration of the Canadian Conduit, any outstanding principal willcontinue to be reduced monthly through available collections. Unless earlier terminated or extended by mutual agreement of the Company and the lenders,as of December 31, 2017, the Canadian Conduit has an expiration date of June 30, 2018. The contractual maturity of the debt is approximately 5 years.During 2017 and 2016, the Company transferred $105.4 million and $71.1 million, respectively, of Canadian retail motorcycle finance receivables tothe Canadian Conduit for proceeds of $87.0 million and $62.4 million, respectively. On-Balance Sheet Asset-Backed U.S. Commercial Paper Conduit Facilities VIE – On December 13, 2017, the Company renewed its existing $300.0million and $600.0 million revolving facility agreements with a third-party bank-sponsored asset-backed U.S. commercial paper conduit. Availability underthe revolving facilities (together, the U.S. Conduit Facilities) is based on, among other things, the amount of eligible U.S. retail motorcycle receivables heldby the relevant SPE as collateral.During 2017, the Company transferred $429.7 million of U.S. retail motorcycle finance receivables to an SPE which, in turn, issued $383.3 million ofdebt under the U.S. Conduit Facilities. The VIE did not borrow under the U.S. Conduit Facilities during 2016 and did not have an outstanding balance atDecember 31, 2016. The contractual maturity of the debt is approximately 5 years.The terms for this debt provide for interest on the outstanding principal based on prevailing commercial paper rates or LIBOR to the extent the advanceis not funded by a conduit lender through the issuance of commercial paper plus, in each case, a program fee based on outstanding principal. The U.S.Conduit Facilities also provide for an unused commitment fee based on the unused portion of the total aggregate commitment of $900.0 million. There is noamortization schedule; however, the debt will be reduced monthly as available collections on the related finance receivables are applied to outstandingprincipal. Upon expiration of the U.S. Conduit Facilities, any outstanding principal will continue to be reduced monthly through available collections.Unless earlier terminated or extended by mutual agreement of the Company and the lenders, the U.S. Conduit Facilities have an expiration date ofDecember 12, 2018.43Asset-Backed Securitization VIEs – For all of its asset-backed securitization transactions, the Company transfers U.S. retail motorcycle financereceivables to separate VIEs, which in turn issue secured notes with various maturities and interest rates to investors. All of the notes held by the VIEs aresecured by future collections of the purchased U.S. retail motorcycle finance receivables. The U.S. retail motorcycle finance receivables included in the asset-backed securitization transactions are not available to pay other obligations or claims of the Company's creditors until the associated debt and otherobligations are satisfied. Restricted cash balances held by the VIEs are used only to support the asset-backed securitizations.The accounting treatment for asset-backed securitizations depends on the terms of the related transaction and the Company’s continuing involvementwith the VIE. Most of the Company’s asset-backed securitizations do not meet the criteria to be accounted for as a sale because, in addition to retainingservicing rights, the Company retains a financial interest in the VIE in the form of a debt security. These transactions are treated as secured borrowings. Assecured borrowings, the retail motorcycle finance receivables remain on the balance sheet with a corresponding obligation reflected as debt. There is noamortization schedule for the secured notes; however, the debt is reduced monthly as available collections on the related retail motorcycle financereceivables are applied to outstanding principal. The secured notes’ contractual lives have various maturities ranging from 2019 to 2022.There were no on or off-balance sheet asset-backed securitization transactions during 2017. During the second quarter 2016, the Company sold U.S.retail motorcycle finance receivables with a principal balance of $301.8 million into an asset-backed securitization VIE, and the transaction met the criteriato be accounted for as a sale because the Company did not retain any financial interest in the VIE beyond servicing rights and ordinary representations andwarranties and related covenants. Upon the sale, the retail motorcycle finance receivables were removed from the Company’s balance sheet and a gain of $9.3million was recognized in Financial Services revenue.For more information see Note 10 of the Notes to Consolidated Financial Statements.Support Agreement - The Company has a support agreement with HDFS whereby, if required, the Company agrees to provide HDFS with financialsupport to maintain HDFS’ fixed-charge coverage at 1.25 and minimum net worth of $40.0 million. Support may be provided at the Company’s option ascapital contributions or loans. Accordingly, certain debt covenants may restrict the Company’s ability to withdraw funds from HDFS outside the normalcourse of business. No amount has ever been provided to HDFS under the support agreement.Operating and Financial Covenants – HDFS and the Company are subject to various operating and financial covenants related to the credit facilitiesand various operating covenants under the Notes and the U.S. and Canadian asset-backed commercial paper conduit facilities. The more significantcovenants are described below.The operating covenants limit the Company’s and HDFS’ ability to:•assume or incur certain liens;•participate in certain mergers or consolidations; and•purchase or hold margin stock.Under the current financial covenants of the Global Credit Facilities, the consolidated debt to equity ratio of HDFS cannot exceed 10.00 to 1.00 as ofthe end of any fiscal quarter. In addition, the ratio of the Company's consolidated debt to the Company's consolidated debt and equity, in each caseexcluding the debt of HDFS and its subsidiaries, cannot exceed 0.70 to 1.00 as of the end of any fiscal quarter. No financial covenants are required under theNotes or the U.S. or Canadian asset-backed commercial paper conduit facilities.At December 31, 2017, 2016 and 2015, HDFS and the Company remained in compliance with all of the then existing covenants.Cautionary StatementsThe Company's ability to meet the targets and expectations noted depends upon, among other factors, the Company's ability to (i) execute its businessstrategy, (ii) execute its strategy of growing ridership, globally, (iii) effectively execute its manufacturing optimization plan within expected costs andtiming, (iv) develop and introduce products, services and experiences that are successful in the marketplace, (v) manage the impact that prices for and supplyof used motorcycles may have on its business, including on retail sales of new motorcycles, (vi) balance production volumes for its new motorcycles withconsumer demand, including in circumstances where competitors may be supplying new motorcycles to the market in excess of demand at reduced prices,(vii) manage through changes in general economic and business conditions, including changing capital, credit and retail markets, and the changing politicalenvironment, (viii) manage risks that arise through expanding international manufacturing, operations and sales, (ix) successfully execute the Company'smanufacturing strategy, including its flexible production strategy, (x) prevent and detect any issues with its motorcycles or any associated44manufacturing processes to avoid delays in new model launches, recall campaigns, regulatory agency investigations, increased warranty costs or litigationand adverse effects on its reputation and brand strength, and carry out any product programs or recalls within expected costs and timing, (xi) continue tomanage the relationships and agreements that the Company has with its labor unions to help drive long-term competitiveness, (xii) accurately estimate andadjust to fluctuations in foreign currency exchange rates, interest rates and commodity prices, (xiii) manage the credit quality, the loan servicing andcollection activities, and the recovery rates of HDFS' loan portfolio, (xiv) retain and attract talented employees, (xv) prevent a cybersecurity breach involvingconsumer, employee, dealer, supplier, or Company data and respond to evolving regulatory requirements regarding data security, (xvi) continue to developthe capabilities of its distributors and dealers and manage the risks that its independent dealers may have difficulty obtaining capital and managing throughchanging economic conditions and consumer demand, (xvii) adjust to tax reform, healthcare inflation and reform and pension reform, and successfullyestimate the impact of any such reform on the Company's business, (xviii) manage through the effects inconsistent and unpredictable weather patterns mayhave on retail sales of motorcycles, (xix) manage supply chain issues, including quality issues and any unexpected interruptions or price increases caused byraw material shortages or natural disasters, (xx) implement and manage enterprise-wide information technology systems, including systems at itsmanufacturing facilities, (xxi) manage changes and prepare for requirements in legislative and regulatory environments for its products, services andoperations, (xxii) manage its exposure to product liability claims and commercial or contractual disputes, and (xxiii) successfully access the capital and/orcredit markets on terms (including interest rates) that are acceptable to the Company and within its expectations.In addition, the Company could experience delays or disruptions in its operations as a result of work stoppages, strikes, natural causes, terrorism or otherfactors. Other factors are described in risk factors that the Company has disclosed in documents previously filed with the Securities and ExchangeCommission. The Company's ability to sell its motorcycles and related products and services and to meet its financial expectations also depends on the ability of theCompany's independent dealers to sell its motorcycles and related products and services to retail customers. The Company depends on the capability andfinancial capacity of its independent dealers and distributors to develop and implement effective retail sales plans to create demand for the motorcycles andrelated products and services they purchase from the Company. In addition, the Company's independent dealers and distributors may experience difficultiesin operating their businesses and selling Harley-Davidson motorcycles and related products and services as a result of weather, economic conditions or otherfactors.Item 7A. Quantitative and Qualitative Disclosures About Market RiskThe Company is exposed to market risk from changes in foreign exchange rates, commodity prices and interest rates. To reduce such risks, theCompany selectively uses derivative financial instruments. All hedging transactions are authorized and executed pursuant to regularly reviewed policies andprocedures, which prohibit the use of financial instruments for speculative trading purposes. Sensitivity analysis is used to manage and monitor foreignexchange and interest rate risk.The Company sells its products internationally and in most markets those sales are made in the foreign country’s local currency. As a result, theCompany’s earnings are affected by fluctuations in the value of the U.S. dollar relative to foreign currency. The Company’s most significant foreign currencyrisk relates to the Euro, the Australian dollar, the Japanese yen, the Brazilian real, the Canadian dollar, the British pound and the Mexican peso. TheCompany utilizes foreign currency contracts to mitigate the effect of certain currencies' fluctuations on earnings. The foreign currency contracts are enteredinto with banks and allow the Company to exchange a specified amount of foreign currency for U.S. dollars at a future date, based on a fixed exchange rate.At December 31, 2017 and December 31, 2016, the notional U.S. dollar value of outstanding Euro, Australian dollar, Japanese yen, Brazilian real, Canadiandollar and Mexican peso foreign currency contracts was $675.7 million and $554.6 million, respectively. The Company estimates that a uniform 10%weakening in the value of the U.S. dollar relative to the currencies underlying these contracts would result in a decrease in the fair value of the contracts ofapproximately $67.2 million and $52.2 million as of December 31, 2017 and December 31, 2016, respectively. Further disclosure relating to the fair value ofderivative financial instruments is included in Note 7 of the Notes to Consolidated Financial Statements.The Company's earnings are affected by changes in the prices of commodities used in the production of motorcycles. The Company uses derivativeinstruments on a limited basis to hedge the prices of certain commodities. At December 31, 2017, the notional value of these instruments was $5.4 millionand their fair value was a net asset of $0.3 million. As of December 31, 2016, the notional value of these instruments was $6.0 million and their fair value wasa net asset of $0.5 million. The potential decrease in fair value of these contracts from a 10% adverse change in the underlying commodity prices would notbe significant.HDFS’ earnings are affected by changes in interest rates. HDFS’ interest-rate sensitive financial instruments include finance receivables and debt. Withthe exception of short-term commercial paper and debt issued through the commercial paper45conduit facilities, the majority of HDFS' debt instruments at December 31, 2017 have fixed interest rates. A one-percentage point increase in the interest rateon commercial paper and debt issued through the commercial paper conduit facilities would increase Financial Services interest expense in 2018 byapproximately $15 million. This analysis does not consider the effects of the reduced level of overall economic activity that could exist in such anenvironment. Further, in the event of a change in interest rates, HDFS may take actions to mitigate its exposure to the change. However, due to theuncertainty of the specific actions that would be taken and their possible effects, the sensitivity analysis does not account for these impacts. 46 Item 8. Consolidated Financial Statements and Supplementary Data PageReports of Independent Registered Public Accounting Firm48Consolidated statements of income50Consolidated statements of comprehensive income51Consolidated balance sheets52Consolidated statements of cash flows54Consolidated statements of shareholders’ equity55Notes to consolidated financial statements56Supplementary data Quarterly financial data (unaudited)10947REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMTo the Shareholders and Board of Directors of Harley-Davidson, Inc.Opinion on Internal Control over Financial ReportingWe have audited Harley-Davidson, Inc.’s internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control -Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In ouropinion, Harley-Davidson, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31,2017, based on the COSO criteria.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidatedbalance sheets of Harley-Davidson, Inc. as of December 31, 2017 and 2016, and the related consolidated statements of income, comprehensive income,shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2017, and the related notes and financial statement schedulelisted in the Index at item 15(a) and our report dated February 21, 2018 expressed an unqualified opinion thereon.Basis for OpinionThe Company’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness ofinternal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Ourresponsibility is to express an opinion on the company’s internal control over financial reporting based on our audit. We are a public accounting firmregistered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and theapplicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether effective internal control over financial reporting was maintained in all material respects.Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing andevaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considerednecessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.Definitions and Limitations of Internal Control Over Financial ReportingA company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal controlover financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are beingmade only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention ortimely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate./s/ Ernst & Young LLPMilwaukee, WisconsinFebruary 21, 201848REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMTo the Shareholders and Board of Directors of Harley-Davidson, Inc.Opinion on the Financial StatementsWe have audited the accompanying consolidated balance sheets of Harley-Davidson, Inc. as of December 31, 2017 and 2016, and the related consolidatedstatements of income, comprehensive income, shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2017, and therelated notes and financial statement schedule listed in the Index at item 15(a) (collectively referred to as the “consolidated financial statements”). In ouropinion, the consolidated financial statements present fairly, in all material respects, the financial position of Harley-Davidson, Inc. at December 31, 2017and 2016, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2017, in conformity with U.S.generally accepted accounting principles.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’sinternal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework issued by theCommittee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 21, 2018 expressed an unqualifiedopinion thereon.Basis for OpinionThese financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statementsbased on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company inaccordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement, whether due to fraud or error. Our audits included performing proceduresto assess the risks of material misstatement of the financial statements, whether due to fraud or error, and performing procedures that respond to those risks.Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also includedevaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financialstatements. We believe that our audits provide a reasonable basis for our opinion./s/ Ernst & Young LLPWe have served as the Company’s auditor since 1982Milwaukee, WisconsinFebruary 21, 201849HARLEY-DAVIDSON, INC.CONSOLIDATED STATEMENTS OF INCOMEYears ended December 31, 2017, 2016 and 2015(In thousands, except per share amounts) 2017 2016 2015Revenue: Motorcycles and Related Products $4,915,027 $5,271,376 $5,308,744Financial Services 732,197 725,082 686,658Total revenue 5,647,224 5,996,458 5,995,402Costs and expenses: Motorcycles and Related Products cost of goods sold 3,261,683 3,419,710 3,356,284Financial Services interest expense 180,193 173,756 161,983Financial Services provision for credit losses 132,444 136,617 101,345Selling, administrative and engineering expense 1,181,641 1,217,439 1,220,095Total costs and expenses 4,755,961 4,947,522 4,839,707Operating income 891,263 1,048,936 1,155,695Investment income 3,580 4,645 6,585Interest expense 31,004 29,670 12,117Income before provision for income taxes 863,839 1,023,911 1,150,163Provision for income taxes 342,080 331,747 397,956Net income $521,759 $692,164 $752,207Earnings per common share: Basic $3.03 $3.85 $3.71Diluted $3.02 $3.83 $3.69Cash dividends per common share $1.46 $1.40 $1.24The accompanying notes are an integral part of the consolidated financial statements.50HARLEY-DAVIDSON, INC.CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMEYears ended December 31, 2017, 2016 and 2015(In thousands) 2017 2016 2015Net income $521,759 $692,164 $752,207Other comprehensive income (loss), net of tax: Foreign currency translation adjustments 46,280 (9,288) (55,362) Derivative financial instruments (29,778) 6,638 (13,156) Marketable securities 1,194 (100) (394) Pension and postretirement benefit plans 47,636 52,574 (31,350)Total other comprehensive income (loss), net of tax 65,332 49,824 (100,262)Comprehensive income $587,091 $741,988 $651,945The accompanying notes are an integral part of the consolidated financial statements.51HARLEY-DAVIDSON, INC.CONSOLIDATED BALANCE SHEETSDecember 31, 2017 and 2016(In thousands, except share amounts) 2017 2016ASSETS Current assets: Cash and cash equivalents $687,521 $759,984Marketable securities — 5,519Accounts receivable, net 329,986 285,106Finance receivables, net 2,105,662 2,076,261Inventories 538,202 499,917Restricted cash 47,518 52,574Other current assets 175,853 174,491Total current assets 3,884,742 3,853,852Finance receivables, net 4,859,424 4,759,197Property, plant and equipment, net 967,781 981,593Prepaid pension costs 19,816 —Goodwill 55,947 53,391Deferred income taxes 109,073 167,729Other long-term assets 75,889 74,478 $9,972,672 $9,890,240LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable $227,597 $235,318Accrued liabilities 529,822 486,652Short-term debt 1,273,482 1,055,708Current portion of long-term debt, net 1,127,269 1,084,884Total current liabilities 3,158,170 2,862,562Long-term debt, net 4,587,258 4,666,975Pension liability 54,606 84,442Postretirement healthcare liability 118,753 173,267Other long-term liabilities 209,608 182,836Commitments and contingencies (Note 14) Shareholders’ equity: Preferred stock, none issued — —Common stock, 181,286,547 and 180,595,054 shares issued, respectively 1,813 1,806Additional paid-in-capital 1,422,808 1,381,862Retained earnings 1,607,570 1,337,673Accumulated other comprehensive loss (500,049) (565,381)Treasury stock (13,195,731 and 4,647,345 shares, respectively), at cost (687,865) (235,802)Total shareholders’ equity 1,844,277 1,920,158 $9,972,672 $9,890,24052HARLEY-DAVIDSON, INC.CONSOLIDATED BALANCE SHEETS (continued)December 31, 2017 and 2016(In thousands, except share amounts) 2017 2016Balances held by consolidated variable interest entities (Note 10) Current finance receivables, net $194,813 $225,289Other assets $2,148 $2,781Non-current finance receivables, net $521,940 $643,047Restricted cash - current and non-current $48,706 $57,057Current portion of long-term debt, net $209,247 $241,396Long-term debt, net $422,834 $554,879The accompanying notes are an integral part of the consolidated financial statements.53HARLEY-DAVIDSON, INC.CONSOLIDATED STATEMENTS OF CASH FLOWSYears ended December 31, 2017, 2016 and 2015(In thousands) 2017 2016 2015Net cash provided by operating activities (Note 2) $1,005,061 $1,174,339 $1,100,118Cash flows from investing activities: Capital expenditures (206,294) (256,263) (259,974)Origination of finance receivables (3,591,948) (3,664,495) (3,751,830)Collections on finance receivables 3,228,311 3,175,031 3,136,885Proceeds from finance receivables sold — 312,571 —Sales and redemptions of marketable securities 6,916 40,014 11,507Acquisition of business — — (59,910)Other 547 411 7,474Net cash used by investing activities (562,468) (392,731) (915,848)Cash flows from financing activities: Proceeds from issuance of medium-term notes 893,668 1,193,396 595,386Repayments of medium-term notes (800,000) (451,336) (610,331)Proceeds from issuance of senior unsecured notes — — 740,385Proceeds from securitization debt — — 1,195,668Repayments of securitization debt (444,671) (665,400) (1,008,135)Borrowings of asset-backed commercial paper 469,932 62,396 87,442Repayments of asset-backed commercial paper (176,227) (71,500) (72,727)Net increase (decrease) in credit facilities and unsecured commercial paper 212,809 (145,812) 469,473Net change in restricted cash 8,458 43,495 11,410Dividends paid (251,862) (252,321) (249,262)Purchase of common stock for treasury (465,263) (465,341) (1,537,020)Excess tax benefits from share-based payments — 2,251 3,468Issuance of common stock under employee stock option plans 11,353 15,782 20,179Net cash used by financing activities (541,803) (734,390) (354,064)Effect of exchange rate changes on cash and cash equivalents 26,747 (9,443) (14,677)Net (decrease) increase in cash and cash equivalents $(72,463) $37,775 $(184,471)Cash and cash equivalents: Cash and cash equivalents—beginning of period $759,984 $722,209 $906,680Net (decrease) increase in cash and cash equivalents (72,463) 37,775 (184,471)Cash and cash equivalents—end of period $687,521 $759,984 $722,209The accompanying notes are an integral part of the consolidated financial statements.54HARLEY-DAVIDSON, INC.CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITYYears ended December 31, 2017, 2016 and 2015(In thousands, except share amounts) Common Stock AdditionalPaid-inCapital RetainedEarnings AccumulatedOtherComprehensiveLoss TreasuryBalance Total IssuedShares Balance Balance December 31, 2014 344,174,653 $3,442 $1,265,257 $8,459,040 $(514,943) $(6,303,510) $2,909,286Net income — — — 752,207 — — 752,207Total other comprehensive loss, net of tax (Note 8) — — — — (100,262) — (100,262)Dividends — — — (249,262) — — (249,262)Repurchase of common stock — — — — — (1,537,020) (1,537,020)Share-based compensation and 401(k) match madewith Treasury shares — — 39,457 — — 1,394 40,851Issuance of nonvested stock 162,193 2 (2) — — — —Exercise of stock options 518,858 5 20,174 — — — 20,179Tax benefit of equity awards — — 3,675 — — — 3,675Balance December 31, 2015 344,855,704 $3,449 $1,328,561 $8,961,985 $(615,205) $(7,839,136) $1,839,654Net income — — — 692,164 — — 692,164Total other comprehensive income, net of tax (Note 8) — — — — 49,824 — 49,824Dividends — — — (252,321) — — (252,321)Repurchase of common stock — — — — — (465,341) (465,341)Share-based compensation and 401(k) match madewith Treasury shares — — 36,956 — — 2,870 39,826Issuance of nonvested stock 272,479 2 (2) — — — —Exercise of stock options 466,871 5 15,777 — — — 15,782Tax benefit of equity awards — — 570 — — — 570Retirement of treasury stock (165,000,000) (1,650) — (8,064,155) — 8,065,805 —Balance December 31, 2016 180,595,054 $1,806 $1,381,862 $1,337,673 $(565,381) $(235,802) $1,920,158Net income — — — 521,759 — — 521,759Total other comprehensive income, net of tax (Note 8) — — — — 65,332 — 65,332Dividends — — — (251,862) — — (251,862)Repurchase of common stock — — — — — (465,263) (465,263)Share-based compensation and 401(k) match madewith Treasury shares — — 29,600 — — 13,200 42,800Issuance of nonvested stock 408,950 4 (4) — — — —Exercise of stock options 282,543 3 11,350 — — — 11,353Balance December 31, 2017 181,286,547 $1,813$1,422,808 $1,607,570 $(500,049) $(687,865) $1,844,277 The accompanying notes are an integral part of the consolidated financial statements.55HARLEY-DAVIDSON, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS1. Summary of Significant Accounting PoliciesPrinciples of Consolidation and Basis of Presentation – The consolidated financial statements include the accounts of Harley-Davidson, Inc. and itswholly-owned subsidiaries (the Company), including the accounts of the groups of companies doing business as Harley-Davidson Motor Company (HDMC)and Harley-Davidson Financial Services (HDFS). In addition, certain variable interest entities (VIEs) related to secured financing are consolidated as theCompany is the primary beneficiary. All intercompany accounts and transactions are eliminated.All of the Company’s subsidiaries are wholly owned and are included in the consolidated financial statements. Substantially all of the Company’sinternational subsidiaries use their respective local currency as their functional currency. Assets and liabilities of international subsidiaries have beentranslated at period-end exchange rates, and revenues and expenses have been translated using average exchange rates for the period. Monetary assets andliabilities denominated in a currency that is different from an entity's functional currency are remeasured from the transactional currency to the entity'sfunctional currency on a monthly basis. The effect of this remeasurement is reported in Motorcycle and Related Products cost of goods sold. The pre-tax gainfor foreign currency remeasurements was $15.0 million for the year ended 2017. The pre-tax loss for foreign currency remeasurements was $15.1 million and$21.5 million for the years ended 2016 and 2015, respectively.The Company operates in two reportable segments: Motorcycles & Related Products (Motorcycles) and Financial Services.Use of Estimates – The preparation of financial statements in conformity with U.S. generally accepted accounting principles (U.S. GAAP) requiresmanagement to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results coulddiffer from those estimates.Cash and Cash Equivalents – The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cashequivalents.Marketable Securities – The Company’s marketable securities consisted of the following at December 31 (in thousands): 2017 2016Available-for-sale securities: corporate bonds $— $5,519Trading securities: mutual funds 48,006 38,119Total marketable securities $48,006 $43,638The Company’s available-for-sale securities were carried at fair value with any unrealized gains or losses reported in other comprehensive income.During 2017 and 2016, unrealized losses were not material. There were no available-for-sale securities outstanding at December 31, 2017.The Company's trading securities relate to investments held by the Company to fund certain deferred compensation obligations. The trading securitiesare carried at fair value with gains and losses recorded in net income and investments are included in other long-term assets on the consolidated balancesheets.Accounts Receivable, Net – The Company’s motorcycles and related products are sold to independent dealers outside the U.S. and Canada generally onopen account and the resulting receivables are included in accounts receivable in the Company’s consolidated balance sheets. The allowance for doubtfulaccounts deducted from total accounts receivable was $4.1 million and $2.7 million as of December 31, 2017 and 2016, respectively. Accounts receivable arewritten down once management determines that the specific customer does not have the ability to repay the balance in full. The Company’s sales ofmotorcycles and related products in the U.S. and Canada are financed by the purchasing dealers through HDFS and the related receivables are included infinance receivables in the consolidated balance sheets.Finance Receivables, Net – Finance receivables include both retail and wholesale finance receivables, net, including amounts held by consolidatedVIEs. Finance receivables are recorded in the financial statements at amortized cost net of an allowance for credit losses. The provision for credit losses onfinance receivables is charged to earnings in amounts sufficient to maintain the allowance for credit losses at a level that is adequate to cover estimated lossesof principal inherent in the existing portfolio. Portions of the allowance for credit losses are specified to cover estimated losses on finance receivablesspecifically identified for impairment. The unspecified portion of the allowance covers estimated losses on finance receivables which are collectivelyreviewed for impairment. Finance receivables are considered impaired when management determines it is probable that the Company will be unable tocollect all amounts due according to the terms of the loan agreement.56The retail portfolio primarily consists of a large number of small balance, homogeneous finance receivables. The Company performs a periodic andsystematic collective evaluation of the adequacy of the retail allowance for credit losses. The Company utilizes loss forecast models which consider a varietyof factors including, but not limited to, historical loss trends, origination or vintage analysis, known and inherent risks in the portfolio, the value of theunderlying collateral, recovery rates and current economic conditions including items such as unemployment rates. Retail finance receivables are notevaluated individually for impairment prior to charge-off and therefore are not reported as impaired loans.The wholesale portfolio is primarily composed of large balance, non-homogeneous loans. The Company’s wholesale allowance evaluation is first basedon a loan-by-loan review. A specific allowance for credit losses is established for wholesale finance receivables determined to be individually impaired whenmanagement concludes that the borrower will not be able to make full payment of contractual amounts due based on the original terms of the loan agreement.The impairment is determined based on the cash that the Company expects to receive discounted at the loan’s original interest rate or the fair value of thecollateral, if the loan is collateral-dependent. Finance receivables in the wholesale portfolio that are not individually evaluated for impairment aresegregated, based on similar risk characteristics, according to the Company’s internal risk rating system and collectively evaluated for impairment. Therelated allowance is based on factors such as the Company’s past loan loss experience, the specific borrower’s financial performance as well as ability torepay, current economic conditions as well as the value of the underlying collateral.Impaired finance receivables also include loans that have been modified in troubled debt restructurings as a concession to borrowers experiencingfinancial difficulty. Generally, it is the Company’s policy not to change the terms and conditions of finance receivables. However, to minimize the economicloss, the Company may modify certain impaired finance receivables in troubled debt restructurings. Total restructured finance receivables are not significant.Repossessed inventory representing recovered collateral on impaired finance receivables is recorded at the lower of cost or net realizable value. In theperiod during which the collateral is repossessed, the related finance receivable is adjusted to the fair value of the collateral through a charge to the allowancefor credit losses and reclassified to repossessed inventory. Repossessed inventory is included in other current assets and was $19.6 million and $19.3 millionat December 31, 2017 and 2016, respectively.Asset-Backed Financing – The Company participates in asset-backed financing both through asset-backed securitization transactions and throughasset-backed commercial paper conduit facilities. In the Company's asset-backed financing programs, the Company transfers retail motorcycle financereceivables to special purpose entities (SPE), which are considered VIEs under U.S. GAAP. Each SPE then converts those assets into cash, through theissuance of debt. The Company retains servicing rights for all of the retail motorcycle finance receivables transferred to SPEs as part of an asset-backedfinancing. The accounting treatment for asset-backed financings depends on the terms of the related transaction and the Company’s continuing involvementwith the VIE.In transactions where the Company has power over the significant activities of the VIE and has an obligation to absorb losses or the right to receivebenefits from the VIE that are potentially significant to the VIE, the Company is the primary beneficiary of the VIE and consolidates the VIE within itsconsolidated financial statements. On a consolidated basis, the asset-backed financing is treated as a secured borrowing in this type of transaction and isreferred to as an on-balance sheet asset-backed financing.In transactions where the Company is not the primary beneficiary of the VIE, the Company must determine whether it can achieve a sale for accountingpurposes under ASC Topic 860, "Transfers and Servicing." To achieve a sale for accounting purposes, the assets being transferred must be legally isolated,not be constrained by restrictions from further transfer, and be deemed to be beyond the Company’s control. If the Company does not meet all these criteriafor sale accounting, then the transaction is accounted for as a secured borrowing and is referred to as an on-balance sheet asset-backed financing.If the Company meets all three of the sale criteria above, the transaction is recorded as a sale for accounting purposes and is referred to as an off-balancesheet asset-backed financing. Upon sale, the retail motorcycle finance receivables are removed from the Company’s balance sheet and a gain or loss isrecognized for the difference between the cash proceeds received, the assets derecognized, and the liabilities recognized as part of the transaction. The gain orloss on sale is included in Financial Services revenue in the Consolidated Statement of Income.The Company is not required, and does not currently intend, to provide any additional financial support to the on or off-balance sheet VIEs associatedwith these transactions. Investors and creditors in these transactions only have recourse to the assets held by the VIEs.57Inventories – Substantially all inventories located in the United States are valued using the last-in, first-out (LIFO) method. Other inventories totaling$234.9 million at December 31, 2017 and $221.7 million at December 31, 2016 are valued at the lower of cost or net realizable value using the first-in, first-out (FIFO) method.Property, Plant and Equipment – Property, plant and equipment is recorded at cost. Depreciation is determined on the straight-line basis over theestimated useful lives of the assets. The following useful lives are used to depreciate the various classes of property, plant and equipment: buildings – 30years; building equipment and land improvements – 7 years; machinery and equipment – 3 to 10 years; furniture and fixtures – 5 years; and software – 3 to 7years. Accelerated methods of depreciation are used for income tax purposes.Goodwill – Goodwill represents the excess of acquisition cost over the fair value of the net assets purchased. Goodwill is tested for impairment, basedon financial data related to the reporting unit to which it has been assigned, at least annually or whenever events or changes in circumstances indicate thatthe carrying value may not be recoverable. The impairment test involves comparing the estimated fair value of the reporting unit associated with thegoodwill to its carrying amount, including goodwill. If the carrying amount of the reporting unit exceeds its fair value, goodwill must be adjusted to itsimplied fair value. During 2017 and 2016, the Company performed a quantitative test on its goodwill balances for impairment and no adjustments wererecorded to goodwill as a result of those reviews.Long-lived Assets – The Company periodically evaluates the carrying value of long-lived assets to be held and used when events and circumstanceswarrant such review. If the carrying value of a long-lived asset is considered impaired, a loss is recognized based on the amount by which the carrying valueexceeds the fair value of the long-lived asset for assets to be held and used. The Company also reviews the useful life of its long-lived assets when events andcircumstances indicate that the actual useful life may be shorter than originally estimated. In the event that the actual useful life is deemed to be shorter thanthe original useful life, depreciation is adjusted prospectively so that the remaining book value is depreciated over the revised useful life.Asset groups classified as held for sale are measured at the lower of carrying amount or fair value less cost to sell, and a loss is recognized for any initialadjustment required to reduce the carrying amount to the fair value less cost to sell in the period the held for sale criteria are met. The fair value less cost tosell must be assessed each reporting period the asset group remains classified as held for sale. Gains or losses not previously recognized resulting from thesale of an asset group will be recognized on the date of sale.Product Warranty and Recall – The Company currently provides a standard two-year limited warranty on all new motorcycles sold worldwide, exceptfor Japan, where the Company provides a standard three-year limited warranty on all new motorcycles sold. In addition, the Company offers a one-yearwarranty for Parts & Accessories (P&A). The warranty coverage for the retail customer generally begins when the product is sold to a retail customer. TheCompany accrues for future warranty claims using an estimated cost based primarily on historical Company claim information. Additionally, the Companyhas from time to time initiated certain voluntary recall campaigns. The Company accrues for the estimated cost associated with voluntary recalls in the periodthat management approves and commits to the recall.Changes in the Company’s warranty and recall liability were as follows (in thousands): 2017 2016 2015Balance, beginning of period $79,482 $74,217 $69,250Warranties issued during the period 57,834 60,215 59,259Settlements made during the period (82,554) (99,298) (96,529)Recalls and changes to pre-existing warranty liabilities 39,438 44,348 42,237Balance, end of period $94,200 $79,482 $74,217The liability associated with recalls, including the amount recorded in 2017 in connection with the NHTSA matter discussed in Note 14, was $35.3million, $13.6 million and $10.2 million at December 31, 2017, 2016 and 2015, respectively.Derivative Financial Instruments – The Company is exposed to certain risks such as foreign currency exchange rate risk, interest rate risk andcommodity price risk. To reduce its exposure to such risks, the Company selectively uses derivative financial instruments. All derivative transactions areauthorized and executed pursuant to regularly reviewed policies and procedures, which prohibit the use of financial instruments for speculative tradingpurposes.All derivative instruments are recognized on the balance sheet at fair value (see Note 6). In accordance with ASC Topic 815, “Derivatives andHedging,” the accounting for changes in the fair value of a derivative instrument depends on whether it has been designated and qualifies as part of ahedging relationship and, further, on the type of hedging relationship. Changes in58the fair value of derivatives that are designated as fair value hedges, along with the gain or loss on the hedged item, are recorded in current period earnings.For derivative instruments that are designated as cash flow hedges, the effective portion of gains and losses that result from changes in the fair value ofderivative instruments is initially recorded in other comprehensive income (OCI) and subsequently reclassified into earnings when the hedged item affectsincome. The Company assesses, at both the inception of each hedge and on an on-going basis, whether the derivatives that are used in its hedgingtransactions are highly effective in offsetting changes in cash flows of the hedged items. Any ineffective portion is immediately recognized in earnings. Nocomponent of a hedging derivative instrument’s gain or loss is excluded from the assessment of hedge effectiveness. Derivative instruments that do notqualify for hedge accounting are recorded at fair value and any changes in fair value are recorded in current period earnings. Refer to Note 7 for a detaileddescription of the Company’s derivative instruments.Motorcycles and Related Products Revenue Recognition – Sales are recorded when title and ownership is transferred, which is generally when productsare shipped to wholesale customers (independent dealers). The Company may offer sales incentive programs to both wholesale and retail customers designedto promote the sale of motorcycles and related products. The total costs of these programs are generally recognized as revenue reductions and are accrued atthe later of the date the related sales are recorded or the date the incentive program is both approved and communicated.Financial Services Revenue Recognition – Interest income on finance receivables is recorded as earned and is based on the average outstanding dailybalance for wholesale and retail receivables. Accrued and uncollected interest is classified with finance receivables. Certain loan origination costs related tofinance receivables, including payments made to dealers for certain retail loans, are deferred and recorded within finance receivables, and amortized over theestimated life of the contract.Retail finance receivables are contractually delinquent if the minimum payment is not received by the specified due date. Retail finance receivables aregenerally charged-off when the receivable is 120 days or more delinquent, the related asset is repossessed or the receivable is otherwise deemed uncollectible.All retail finance receivables accrue interest until either collected or charged-off. Accordingly, as of December 31, 2017 and 2016, all retail financereceivables are accounted for as interest-earning receivables.Wholesale finance receivables are delinquent if the minimum payment is not received by the contractual due date. Wholesale finance receivables arewritten down once management determines that the specific borrower does not have the ability to repay the loan in full. Interest continues to accrue on pastdue finance receivables until the date the finance receivable becomes uncollectible and the finance receivable is placed on non-accrual status. The Companywill resume accruing interest on these accounts when payments are current according to the terms of the loans and future payments are reasonably assured.While on non-accrual status, all cash received is applied to principal or interest as appropriate.Insurance and protection product revenue, including revenue from the sale of extended service contracts, is recognized when contractually earned.Deferred revenue related to extended service contracts was $4.7 million and $4.5 million as of December 31, 2017 and 2016, respectively.Research and Development Expenses – Expenditures for research activities relating to product development and improvement are charged againstincome as incurred and included within selling, administrative and engineering expenses in the consolidated statement of income. Research anddevelopment expenses were $175.2 million, $172.3 million and $161.2 million for 2017, 2016 and 2015, respectively.Advertising Costs – The Company expenses the production cost of advertising the first time the advertising takes place. Advertising costs relate to theCompany’s efforts to promote its products and brands through the use of media. During 2017, 2016 and 2015, the Company incurred $135.5 million, $137.4million and $119.8 million in advertising costs, respectively.Shipping and Handling Costs – The Company classifies shipping and handling costs as a component of cost of goods sold.Share-Based Award Compensation Costs – The Company recognizes the cost of its share-based awards in its statement of income. The cost of eachshare-based equity award is based on the grant date fair value and the cost of each share-based cash-settled award is based on the settlement date fair value.Share-based award expense is recognized on a straight-line basis over the service or performance periods of the awards. The expense recognized reflects thenumber of awards that are ultimately expected to vest based on the service and, if applicable, performance requirements of each award. Total share-basedaward compensation expense recognized by the Company during 2017, 2016 and 2015 was $32.5 million, $32.3 million and $29.4 million, respectively, or$20.5 million, $20.4 million and $18.5 million net of taxes, respectively.Income Tax Expense – The Company recognizes interest and penalties related to unrecognized tax benefits in the provision for income taxes.59New Accounting StandardsAccounting Standards Recently AdoptedIn March 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-09 Compensation – StockCompensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (ASU 2016-09). ASU 2016-09 amends the guidance on severalaspects of accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities,accounting for forfeitures, and classification on the statement of cash flows. The Company adopted ASU 2016-09 on January 1, 2017. The Company electedto apply the amendments related to the classification of excess tax benefits on the statement of cash flows on a prospective basis, and prior periods were notadjusted. The adoption of ASU 2016-09 did not have a material impact on the Company's consolidated financial statements.In July 2015, the FASB issued ASU No. 2015-11 Inventory (Topic 330): Simplifying the Measurement of Inventory (ASU 2015-11). ASU 2015-11simplifies the subsequent measurement of inventory by using only the lower of cost or net realizable value. ASU 2015-11 does not apply to inventorymeasured using the last-in, first-out method. The Company adopted ASU 2015-11 on January 1, 2017. The adoption of ASU 2015-11 did not have a materialimpact on the Company’s consolidated financial statements.Accounting Standards Not Yet AdoptedIn May 2014, the FASB issued ASU No. 2014-09 Revenue from Contracts with Customers (ASU 2014-09). ASU 2014-09 is a comprehensive newrevenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects theconsideration to which the company expects to be entitled in exchange for those goods or services. In August 2015, the FASB issued ASU No. 2015-14Revenue from Contracts with Customers: Deferral of Effective Date (ASU 2015-14) to defer the effective date of the new revenue recognition standard by oneyear to fiscal years beginning after December 15, 2017 and interim periods therein. The Company will adopt the new revenue recognition guidance onJanuary 1, 2018 using the modified retrospective method by recording the cumulative effect of initially applying the new standard as an increase ofapproximately $6 million to the opening balance of retained earnings. The on-going application of the new guidance is not expected to have a materialimpact on the Company's financial statements.In January 2016, the FASB issued ASU No. 2016-01 Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of FinancialAssets and Financial Liabilities (ASU 2016-01). ASU 2016-01 enhances the existing financial instruments reporting model by modifying fair valuemeasurement tools, simplifying impairment assessments for certain equity instruments and modifying overall presentation and disclosure requirements. TheCompany is required to adopt ASU 2016-01 for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017 on aprospective basis. The Company does not expect the adoption of ASU 2016-01 to have a material impact on its financial statements.In February 2016, the FASB issued ASU No. 2016-02 Leases (Topic 842) (ASU 2016-02). ASU 2016-02 amends the existing lease accounting model byrequiring a lessee to recognize the rights and obligations resulting from certain leases as assets and liabilities on the balance sheet. ASU 2016-02 also requiresa company to disclose key information about their leasing arrangements. The Company is required to adopt ASU 2016-02 for fiscal years, and interim periodswithin those fiscal years, beginning after December 15, 2018 using a modified retrospective approach. Early adoption is permitted. The Company is currentlyin the process of gathering and analyzing information necessary to quantify the impact of adopting ASU 2016-02 and evaluating the transition practicalexpedients it will apply upon adoption.In July 2016, the FASB issued ASU No. 2016-13 Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on FinancialInstruments (ASU 2016-13). ASU 2016-13 changes how to recognize expected credit losses on financial assets. The standard requires a more timelyrecognition of credit losses on loans and other financial assets and also provides additional transparency about credit risk. The current credit loss standardgenerally requires that a loss actually be incurred before it is recognized, while the new standard will require recognition of full lifetime expected losses uponinitial recognition of the financial instrument. The Company is required to adopt ASU 2016-13 for fiscal years, and for interim periods within those fiscalyears, beginning after December 15, 2019 on a modified retrospective basis. Early adoption is permitted for fiscal years beginning after December 15, 2018.An entity should apply the standard by recording a cumulative effect adjustment to retained earnings upon adoption. Adoption of this standard will impacthow the Company recognizes credit losses on its financial instruments. The Company is currently evaluating the impact of adoption of ASU 2016-13 butanticipates the adoption of ASU 2016-13 will result in an increase in the annual provision for credit losses and the related allowance for credit losses.In August 2016, the FASB issued ASU No. 2016-15 Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments(ASU 2016-15). ASU 2016-15 addresses eight specific cash flow issues with the objective of60reducing diversity in practice regarding how certain cash receipts and cash payments are presented in the statement of cash flows. The standard providesguidance on the classification of the following items: (1) debt prepayment or debt extinguishment costs, (2) settlement of zero-coupon debt instruments, (3)contingent consideration payments made after a business combination, (4) proceeds from the settlement of insurance claims, (5) proceeds from the settlementof corporate-owned life insurance policies, (6) distributions received from equity method investments, (7) beneficial interests in securitization transactions,and (8) separately identifiable cash flows. The Company is required to adopt ASU 2016-15 for fiscal years, and for interim periods within those fiscal years,beginning after December 15, 2017 on a retrospective basis. Early adoption is permitted, including adoption in an interim period. The Company does notexpect the adoption of ASU 2016-15 to have a material impact on its financial statements.In October 2016, the FASB issued ASU No. 2016-16 Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory (ASU 2016-16).ASU 2016-16 states that an entity should recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transferoccurs. Two common assets included in the scope of the ASU are intellectual property and property, plant and equipment. The Company is required to adoptASU 2016-16 for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017 using a modified retrospective approachwith a cumulative-effect adjustment to retained earnings. The Company does not expect the adoption of ASU 2016-16 to have a material impact on itsfinancial statements.In November 2016, the FASB issued ASU No. 2016-18 Statement of Cash Flows (Topic 230): Restricted Cash (ASU 2016-18). ASU 2016-18 requiresthat a statement of cash flows explain the change during the period in the total of cash, cash equivalents and amounts generally described as restricted cash orrestricted cash equivalents. As such, restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling thebeginning-of-period and end-of-period total amounts shown on the statement of cash flows. The Company is required to adopt ASU 2016-18 for fiscal years,and for interim periods within those fiscal years, beginning after December 15, 2017 on a retrospective basis. Early adoption is permitted, including adoptionin an interim period. Subsequent to the adoption of ASU 2016-18, the change in restricted cash will be excluded from financing activities and included in thechange in total cash which will include restricted cash in addition to cash and cash equivalents.In January 2017, the FASB issued ASU No. 2017-04 Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (ASU2017-04). ASU 2017-04 simplifies the subsequent measurement of goodwill by eliminating the requirement to calculate the implied fair value of goodwill.Rather, the goodwill impairment is calculated by comparing the fair value of a reporting unit to its carrying value, and an impairment loss is recognized forthe amount by which the carrying amount exceeds the fair value, limited to the total goodwill allocated to the reporting unit. All reporting units apply thesame impairment test under the new standard. The Company is required to adopt ASU 2017-04 for its annual and any interim goodwill impairment tests infiscal years beginning after December 15, 2019 on a prospective basis. Early adoption is permitted for interim or annual goodwill impairment tests performedon testing dates after January 1, 2017.In March 2017, the FASB issued ASU No. 2017-07 Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net PeriodicPension Cost and Net Periodic Postretirement Benefit Cost (ASU 2017-07). ASU 2017-07 amends ASC 715, Compensation - Retirement Benefits by requiringemployers to present the service cost component of net periodic benefit cost in the same income statement line item as other employee compensation costsarising from services rendered during the period. Other components of the net periodic benefit cost will be presented separately from the line item thatincludes the service cost and outside of any subtotal of operating income. The guidance also limits the components that are eligible for capitalization inassets. The Company is required to adopt ASU 2017-07 for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2017.Early adoption is permitted as of the beginning of an annual period for which interim or annual financial statements have not been issued or made availablefor issuance. The amendments related to the presentation of the components of net periodic benefit cost should be applied retrospectively. The amendmentsrelated to the capitalization of certain components in assets should be applied prospectively. The Company's net periodic benefit cost components aredisclosed in Note 12.In August 2017, the FASB issued ASU No. 2017-12 Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for HedgingActivities (ASU 2017-12). ASU 2017-12 amends ASC 815, Derivatives and Hedging to improve the financial reporting of hedging relationships and tosimplify the application of the hedge accounting guidance. The ASU makes various updates to the hedge accounting model, including changing therecognition and presentation of changes in the fair value of the hedging instrument and amending disclosure requirements, among other things. TheCompany is required to adopt ASU 2017-12 for fiscal years beginning after December 15, 2018, and for interim periods within those fiscal years. Earlyadoption is permitted in any interim period after issuance of the ASU. For cash flow and net investment hedges existing at the date of adoption, the Companymust apply a cumulative-effect adjustment as of the beginning of the fiscal year in which the standard61is adopted. The amendments related to presentation and disclosure are required prospectively. The Company is currently evaluating the impact of adoptionof ASU 2017-12.In February 2018, the FASB issued ASU No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (ASU2018-02). Under existing U.S. GAAP, the effects of changes in tax rates and laws on deferred tax balances are recorded as a component of income tax expensein the period in which the law was enacted. When deferred tax balances related to items originally recorded in accumulated other comprehensive income areadjusted, certain tax effects become stranded in accumulated other comprehensive income. The amendments in ASU 2018-02 allow a reclassification fromaccumulated other comprehensive income to retained earnings for stranded tax effects resulting from the 2017 Tax Cuts and Jobs Act. The amendments inthis ASU also require certain disclosures about stranded tax effects. The guidance is effective for fiscal years beginning after December 15, 2018, and interimperiods within those fiscal years. Early adoption in any period is permitted. The Company’s provisional adjustments recorded in 2017 to account for theimpact of the 2017 Tax Cuts and Jobs Act resulted in stranded tax effects. The Company is currently evaluating the timing and impact of adopting ASU2018-02.2. Additional Balance Sheet and Cash Flow InformationThe following information represents additional detail for selected line items included in the consolidated balance sheets at December 31, and thestatements of cash flows for the years ended December 31.Balance Sheet Information:Inventories, net (in thousands): 2017 2016Raw materials and work in process $161,664 $140,639Motorcycle finished goods 289,530 285,281Parts and accessories and general merchandise 139,363 122,264Inventory at lower of FIFO cost or net realizable value 590,557 548,184Excess of FIFO over LIFO cost (52,355) (48,267)Total inventories, net $538,202 $499,917Inventory obsolescence reserves deducted from FIFO cost were $38.7 million and $39.9 million as of December 31, 2017 and 2016, respectively.Property, plant and equipment, at cost (in thousands): 2017 2016Land and related improvements $70,256 $65,533Buildings and related improvements 464,454 464,200Machinery and equipment 1,890,126 1,887,269Software 660,090 630,114Construction in progress 200,396 214,409 3,285,322 3,261,525Accumulated depreciation (2,317,541) (2,279,932)Total property, plant and equipment, net $967,781 $981,59362Accrued liabilities (in thousands): 2017 2016Payroll, employee benefits and related expenses $124,093 $148,221Warranty and recalls 75,089 57,698Sales incentive programs 48,309 43,218Tax-related accruals 25,944 26,140Fair value of derivative financial instruments 21,308 142Accrued interest 40,347 42,788Other 194,732 168,445Total accrued liabilities $529,822 $486,652 63Cash Flow Information:The reconciliation of net income to net cash provided by operating activities of continuing operations is as follows (in thousands): 2017 2016 2015Cash flows from operating activities: Net income $521,759 $692,164 $752,207Adjustments to reconcile net income to net cash provided by operatingactivities: Depreciation and amortization of intangibles 222,188 209,555 198,074Amortization of deferred loan origination costs 82,911 86,681 93,546Amortization of financing origination fees 8,045 9,252 9,975Provision for long-term employee benefits 29,900 38,273 60,824Employee benefit plan contributions and payments (63,277) (55,809) (28,490)Stock compensation expense 32,491 32,336 29,433Net change in wholesale finance receivables related to sales 35,172 (3,233) (113,970)Provision for credit losses 132,444 136,617 101,345Gain on off-balance sheet asset-backed securitization — (9,269) —Loss on debt extinguishment — 118 1,099Deferred income taxes 50,855 (165) (16,484)Other, net 8,559 (6,907) 20,913Changes in current assets and liabilities: Accounts receivable, net (18,149) (45,934) (13,665)Finance receivables – accrued interest and other (1,313) (1,489) (3,046)Inventories (20,584) 85,072 (155,222)Accounts payable and accrued liabilities 10,128 38,237 138,823Derivative instruments 1,866 (3,413) (5,615)Other (27,934) (27,747) 30,371Total adjustments 483,302 482,175 347,911Net cash provided by operating activities $1,005,061 $1,174,339 $1,100,118Cash paid during the period for interest and income taxes (in thousands): 2017 2016 2015Interest $204,866 $185,804 $148,654Income taxes $300,113 $356,553 $371,547Interest paid represents interest payments of HDFS (included in financial services interest expense) and interest payments of the Company (included ininterest expense).3. AcquisitionOn August 4, 2015, the Company completed its purchase of certain assets and liabilities from Fred Deeley Imports, Ltd. (Deeley Imports) including,among other things, the acquisition of the exclusive right to distribute the Company's motorcycles and other products in Canada (Transaction) for totalconsideration of $59.9 million. The majority equity owner of Deeley Imports, prior to the transaction closing, was also a member of the Board of Directors ofthe Company. The acquisition of the Canadian distribution rights allowed the Company to align its distribution in Canada with its global go-to-marketapproach.The financial impact of the acquisition, which was part of the Motorcycles segment, has been included in the Company's consolidated financialstatements from the date of acquisition. Proforma information reflecting this acquisition has not been disclosed as the proforma impact on consolidated netincome was not material.64The following table summarizes the fair values of the Deeley Imports assets acquired and liabilities assumed at the date of acquisition (in thousands): August 4, 2015Current assets$11,088Property, plant and equipment144Intangible assets20,842Goodwill28,567 Total assets60,641Current liabilities731Net assets acquired$59,910As noted above, in conjunction with the acquisition of certain assets and assumption of certain liabilities of Deeley Imports, the Company recordedgoodwill of $28.6 million, all of which the Company believes is tax deductible, and intangible assets with an initial fair value of $20.8 million. Of the totalintangible assets acquired, $13.3 million was assigned to reacquired distribution rights with a useful life of two years and $7.5 million was assigned tocustomer relationships with a useful life of twenty years. The Company agreed to reimburse Deeley Imports for certain severance costs associated with theTransaction resulting in $3.3 million of expense included in selling, administrative and engineering expense in the third quarter of 2015. The Company didnot acquire any cash as part of the Transaction.4. Goodwill and Intangible AssetsThe following table summarizes changes in the carrying amount of goodwill in the Motorcycles segment for the following years ended December 31 (inthousands): 2017 2016 2015Balance, beginning of period $53,391 $54,182 $27,752Business acquisitions — — 28,567Currency translation 2,556 (791) (2,137)Balance, end of period $55,947 $53,391 $54,182The following table summarizes the Motorcycles segment intangible assets other than goodwill at December 31 (in thousands): 2017 Gross CarryingAmount AccumulatedAmortization Net Estimated usefullife (years)Intangible assets other than goodwill Reacquired distribution rights $13,933 $(13,933) $— 2 Customer relationships 7,860 (950) 6,910 20Total other intangible assets $21,793 $(14,883) $6,910 2016 Gross CarryingAmount AccumulatedAmortization Net Estimated usefullife (years)Intangible assets other than goodwill Reacquired distribution rights $12,928 $(9,157) $3,771 2 Customer relationships 7,293 (517) 6,776 20Total other intangible assets $20,221 $(9,674) $10,547 Intangible assets other than goodwill are included in other long-term assets on the Company's consolidated balance sheets. The gross carrying amountsat December 31 differ from the acquisition date amounts due to changes in foreign currency exchange rates.65Total amortization expense of other intangible assets was $4.2 million, $7.0 million and $2.8 million for 2017, 2016 and 2015, respectively. TheCompany estimates future amortization to be as follows (in thousands): Estimated Amortization2018 $3842019 3842020 3842021 3842022 384Thereafter 4,990Total $6,910The Financial Services segment had no goodwill or intangible assets at December 31, 2017 and 2016.5. Finance ReceivablesFinance receivables, net at December 31 for the past five years were as follows (in thousands): 2017 2016 2015 2014 2013Wholesale United States $939,621 $961,150 $965,379 $903,380 $800,491Canada 77,336 65,440 58,481 48,941 44,721Total wholesale 1,016,957 1,026,590 1,023,860 952,321 845,212Retail United States 5,901,002 5,769,410 5,803,071 5,398,006 5,051,245Canada 239,598 212,801 188,400 209,918 213,799Total retail 6,140,600 5,982,211 5,991,471 5,607,924 5,265,044 7,157,557 7,008,801 7,015,331 6,560,245 6,110,256Allowance for credit losses (192,471) (173,343) (147,178) (127,364) (110,693)Total finance receivables, net $6,965,086 $6,835,458 $6,868,153 $6,432,881 $5,999,563 The Company offers wholesale financing to the Company’s independent dealersWholesale loans to dealers are generally secured by financed inventory or property and are originated in the U.S. and Canada. Wholesale financereceivables are related primarily to motorcycles and related parts and accessories sales.The Company provides retail financial services to customers of the Company’s independent dealers in the U.S. and Canada. The origination of retailloans is a separate and distinct transaction between the Company and the retail customer, unrelated to the Company’s sale of product to its dealers. Retailfinance receivables consist of secured promissory notes and secured installment contracts and are primarily related to sales of motorcycles to the dealers’customers. The Company holds either titles or liens on titles to vehicles financed by promissory notes and installment sales contracts. As of December 31,2017 and 2016, approximately 11% of gross outstanding retail finance receivables were originated in Texas; there were no other states that accounted formore than 10% of gross outstanding retail finance receivables.Unused lines of credit extended to the Company's wholesale finance customers totaled $1.27 billion and $1.32 billion at December 31, 2017 and 2016,respectively. Approved but unfunded retail finance loans totaled $166.3 million and $177.9 million at December 31, 2017 and 2016, respectively.66Wholesale finance receivables are generally contractually due within one year. On December 31, 2017, contractual maturities of finance receivableswere as follows (in thousands): United States Canada Total2018 $2,018,646 $126,345 $2,144,9912019 1,160,372 51,764 1,212,1362020 1,251,444 56,173 1,307,6172021 1,250,821 60,957 1,311,7782022 1,144,281 21,695 1,165,976Thereafter 15,059 — 15,059Total $6,840,623 $316,934 $7,157,557The allowance for credit losses on finance receivables is comprised of individual components relating to wholesale and retail financereceivables. Changes in the allowance for credit losses on finance receivables by portfolio for the year ended December 31 were as follows (in thousands): 2017Retail Wholesale TotalBalance, beginning of period $166,810 $6,533 $173,343Provision for credit losses 132,760 (316) 132,444Charge-offs (160,972) — (160,972)Recoveries 47,656 — 47,656Balance, end of period $186,254 $6,217 $192,471 2016Retail Wholesale TotalBalance, beginning of period $139,320 $7,858 $147,178Provision for credit losses 137,942 (1,325) 136,617Charge-offs (148,566) — (148,566)Recoveries 41,405 — 41,405Other (a) (3,291) — (3,291)Balance, end of period $166,810 $6,533 $173,343 2015Retail Wholesale TotalBalance, beginning of period $122,025 $5,339 $127,364Provision for credit losses 98,826 2,519 101,345Charge-offs (123,911) — (123,911)Recoveries 42,380 — 42,380Balance, end of period $139,320 $7,858 $147,178(a)Related to the sale of finance receivables during the second quarter of 2016 with a principal balance of $301.8 million through an off-balance sheetasset-backed securitization transaction (see Note 10 for additional information).67There were no finance receivables individually evaluated for impairment on December 31, 2017 or 2016. The allowance for credit losses and financereceivables by portfolio, collectively evaluated for impairment, at December 31 was as follows (in thousands): 2017 Retail Wholesale TotalAllowance for credit losses, ending balance: Individually evaluated for impairment $— $— $—Collectively evaluated for impairment 186,254 6,217 192,471Total allowance for credit losses $186,254 $6,217 $192,471Finance receivables, ending balance: Individually evaluated for impairment $— $— $—Collectively evaluated for impairment 6,140,600 1,016,957 7,157,557Total finance receivables $6,140,600 $1,016,957 $7,157,557 2016 Retail Wholesale TotalAllowance for credit losses, ending balance: Individually evaluated for impairment $— $— $—Collectively evaluated for impairment 166,810 6,533 173,343Total allowance for credit losses $166,810 $6,533 $173,343Finance receivables, ending balance: Individually evaluated for impairment $— $— $—Collectively evaluated for impairment 5,982,211 1,026,590 7,008,801Total finance receivables $5,982,211 $1,026,590 $7,008,801Finance receivables are considered impaired when management determines it is probable that the Company will be unable to collect all amounts dueaccording to the loan agreement. As retail finance receivables are collectively and not individually reviewed for impairment, this portfolio does not havespecifically impaired finance receivables. At December 31, 2017 and 2016, there were no wholesale finance receivables that were on non-accrual status orindividually deemed to be impaired under ASC Topic 310, “Receivables.”An analysis of the aging of past due finance receivables at December 31 was as follows (in thousands): 2017 Current 31-60 DaysPast Due 61-90 DaysPast Due Greater than90 DaysPast Due TotalPast Due TotalFinanceReceivablesRetail $5,913,473 $139,629 $47,539 $39,959 $227,127 $6,140,600Wholesale 1,016,000 595 245 117 957 1,016,957Total $6,929,473 $140,224 $47,784 $40,076 $228,084 $7,157,557 2016 Current 31-60 DaysPast Due 61-90 DaysPast Due Greater than90 DaysPast Due TotalPast Due TotalFinanceReceivablesRetail $5,760,818 $131,302 $49,642 $40,449 $221,393 $5,982,211Wholesale 1,024,995 1,000 319 276 1,595 1,026,590Total $6,785,813 $132,302 $49,961 $40,725 $222,988 $7,008,80168The recorded investment of retail and wholesale finance receivables, excluding non-accrual status finance receivables, that were contractually past due90 days or more at December 31 for the past five years was as follows (in thousands): 2017 2016 2015 2014 2013United States $39,051 $39,399 $31,677 $27,800 $23,770Canada 1,025 1,326 1,192 1,118 1,031Total $40,076 $40,725 $32,869 $28,918 $24,801A significant part of managing the Company's finance receivable portfolios includes the assessment of credit risk associated with each borrower. As thecredit risk varies between the retail and wholesale portfolios, the Company utilizes different credit risk indicators for each portfolio.The Company manages retail credit risk through its credit approval policy and ongoing collection efforts. The Company uses FICO scores, a standardcredit rating measurement, to differentiate the expected default rates of retail credit applicants, enabling the Company to better evaluate credit applicants forapproval and to tailor pricing according to this assessment. Retail loans with a FICO score of 640 or above at origination are considered prime, and loans witha FICO score below 640 are considered sub-prime. These credit quality indicators are determined at the time of loan origination and are not updatedsubsequent to the loan origination date.The recorded investment of retail finance receivables, by credit quality indicator, at December 31 was as follows (in thousands): 2017 2016Prime $4,966,193 $4,768,420Sub-prime 1,174,407 1,213,791Total $6,140,600 $5,982,211The Company's credit risk on the wholesale portfolio is different from that of the retail portfolio. Whereas the retail portfolio represents a relativelyhomogeneous pool of retail finance receivables that exhibit more consistent loss patterns, the wholesale portfolio exposures are less consistent. TheCompany utilizes an internal credit risk rating system to manage credit risk exposure consistently across wholesale borrowers and evaluates credit risk factorsfor each borrower. The Company uses the following internal credit quality indicators, based on an internal risk rating system, listed from highest level of riskto lowest level of risk, for the wholesale portfolio: Doubtful, Substandard, Special Mention, Medium Risk and Low Risk. Based upon management’s review,the dealers classified in the Doubtful category are the dealers with the greatest likelihood of being charged-off, while the dealers classified as Low Risk areleast likely to be charged-off. The internal rating system considers factors such as the specific borrower's ability to repay and the estimated value of anycollateral. Dealer risk rating classifications are reviewed and updated on a quarterly basis.The recorded investment of wholesale finance receivables, by internal credit quality indicator, at December 31 was as follows (in thousands): 2017 2016Doubtful $688 $1,333Substandard 3,837 1,773Special Mention 26,866 30,152Medium Risk 9,917 14,620Low Risk 975,649 978,712Total $1,016,957 $1,026,5906. Fair ValueThe Company assesses the inputs used to measure fair value using a three-tier hierarchy.Level 1 inputs include quoted prices for identical instruments and are the most observable.Level 2 inputs include quoted prices for similar assets and observable inputs such as interest rates, foreign currency exchange rates, and commodityprices. The Company uses the market approach to derive the fair value for its level 2 fair value69measurements. Forward contracts for foreign currency and commodities are valued using current quoted forward rates and prices; and investments inmarketable securities and cash equivalents are valued using publicly quoted prices.Level 3 inputs are not observable in the market and include management's judgments about the assumptions market participants would use in pricingthe asset or liability.Recurring Fair Value MeasurementsThe following tables present information about the Company’s assets and liabilities measured at fair value on a recurring basis as of December 31 (inthousands): 2017 Quoted Prices inActive Markets forIdentical Assets(Level 1) SignificantOtherObservableInputs(Level 2) SignificantUnobservableInputs(Level 3)Assets: Cash equivalents $488,432 $358,500 $129,932 $—Marketable securities 48,006 48,006 — —Derivatives 1,769 — 1,769 —Total $538,207 $406,506 $131,701 $—Liabilities: Derivatives $21,308 $— $21,308 $— 2016 Quoted Prices inActive Markets forIdentical Assets(Level 1) SignificantOtherObservableInputs(Level 2) SignificantUnobservableInputs(Level 3)Assets: Cash equivalents $531,519 $426,266 $105,253 $—Marketable securities 43,638 38,119 5,519 —Derivatives 29,034 — 29,034 —Total $604,191 $464,385 $139,806 $—Liabilities: Derivatives $142 $— $142 $—Nonrecurring Fair Value MeasurementsRepossessed inventory is recorded at the lower of cost or net realizable value through a nonrecurring fair value measurement. Repossessed inventorywas $19.6 million and $19.3 million at December 31, 2017 and 2016, for which the fair value adjustment was $9.0 million and $9.3 million at December 31,2017 and 2016, respectively. Fair value is estimated using Level 2 inputs based on the recent market values of repossessed inventory.Fair Value of Financial Instruments Measured at CostThe carrying value of the Company’s cash and cash equivalents and restricted cash approximates their fair values.70The following table summarizes the fair value and carrying value of the Company’s remaining financial instruments that are measured at cost oramortized cost at December 31 (in thousands): 2017 2016 Fair Value Carrying Value Fair Value Carrying ValueAssets: Finance receivables, net $7,021,549 $6,965,086 $6,921,037 $6,835,458Liabilities: Unsecured commercial paper $1,273,482 $1,273,482 $1,055,708 $1,055,708Asset-backed U.S. commercial paper conduitfacilities $279,457 $279,457 $— $—Asset-backed Canadian commercial paper conduitfacility $174,779 $174,779 $149,338 $149,338Medium-term notes $4,189,092 $4,165,706 $4,139,462 $4,064,940Senior unsecured notes $784,433 $741,961 $744,552 $741,306Asset-backed securitization debt $351,767 $352,624 $797,688 $796,275Finance Receivables, Net – The carrying value of retail and wholesale finance receivables in the financial statements is amortized cost less anallowance for credit losses. The fair value of retail finance receivables is generally calculated by discounting future cash flows using an estimated discountrate that reflects current credit, interest rate and prepayment risks associated with similar types of instruments. Fair value is determined based on Level 3inputs. The amortized cost basis of wholesale finance receivables approximates fair value because they either are short-term or have interest rates that adjustwith changes in market interest rates.Debt – The carrying value of debt in the financial statements is generally amortized cost, net of discounts and debt issuance costs. The carrying value ofunsecured commercial paper calculated using Level 2 inputs approximates fair value due to its short maturity. The carrying value of debt provided under theU.S. conduit facilities and Canadian conduit facility calculated using Level 2 inputs approximates fair value since the interest rates charged under the facilityare tied directly to market rates and fluctuate as market rates change. The fair values of the medium-term notes and senior unsecured notes are estimated basedupon rates currently available for debt with similar terms and remaining maturities (Level 2 inputs). The fair value of the debt related to on-balance sheetasset-backed securitization transactions is estimated based on pricing currently available for transactions with similar terms and maturities (Level 2 inputs).7. Derivative Instruments and Hedging ActivitiesThe Company is exposed to certain risks such as foreign currency exchange rate risk, interest rate risk and commodity price risk. To reduce its exposureto such risks, the Company selectively uses derivative financial instruments. All derivative transactions are authorized and executed pursuant to regularlyreviewed policies and procedures, which prohibit the use of financial instruments for speculative trading purposes.All derivative instruments are recognized on the balance sheet at fair value. In accordance with ASC Topic 815, "Derivatives and Hedging," theaccounting for changes in the fair value of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationshipand, further, on the type of hedging relationship. Changes in the fair value of derivatives that are designated as fair value hedges, along with the gain or losson the hedged item, are recorded in current period earnings. For derivative instruments that are designated as cash flow hedges, the effective portion of gainsand losses that result from changes in the fair value of derivative instruments is initially recorded in other comprehensive income (OCI) and subsequentlyreclassified into earnings when the hedged item affects income. The Company assesses, both at the inception of each hedge and on an on-going basis,whether the derivatives that are used in its hedging transactions are highly effective in offsetting changes in cash flows of the hedged items. Any ineffectiveportion is immediately recognized in earnings. No component of a hedging derivative instrument’s gain or loss is excluded from the assessment of hedgeeffectiveness. Derivative instruments that do not qualify for hedge accounting are recorded at fair value and any changes in fair value are recorded in currentperiod earnings.The Company sells its products internationally, and in most markets those sales are made in the foreign country’s local currency. As a result, theCompany’s earnings can be affected by fluctuations in the value of the U.S. dollar relative to foreign currency. The Company utilizes foreign currencyexchange contracts to mitigate the effects of the Euro, the Australian dollar, the Japanese yen, the Brazilian real, the Canadian dollar and the Mexican peso.The foreign currency exchange contracts are entered into with banks and allow the Company to exchange a specified amount of foreign currency for U.S.dollars at a future date, based on a fixed exchange rate.71The Company utilizes commodity contracts to hedge portions of the cost of certain commodities consumed in the Company’s motorcycle productionand distribution operations.The Company’s foreign currency exchange contracts and commodity contracts generally have maturities of less than one year.The Company entered into treasury rate lock contracts to fix the interest rate on a portion of the principal related to the issuance of long-term debt. Thetreasury rate lock contracts have since settled and the loss at settlement was recorded in accumulated other comprehensive loss which is being reclassifiedinto earnings over the life of the debt.The following tables summarize the fair value of the Company’s derivative financial instruments at December 31 (in thousands): 2017 2016 Derivatives Designated As HedgingInstruments Under ASC Topic 815 NotionalValue AssetFair Value(a) LiabilityFair Value(b) NotionalValue AssetFair Value(a) LiabilityFair Value(b) Foreign currency contracts(c) $675,724 $1,388 $21,239 $554,551 $28,528 $142 Commodities contracts(c) 915 — 69 992 177 — Total $676,639 $1,388 $21,308 $555,543 $28,705 $142 2017 2016 Derivatives Not Designated As HedgingInstruments Under ASC Topic 815 NotionalValue AssetFair Value(a) LiabilityFair Value(b) NotionalValue AssetFair Value(a) LiabilityFair Value(b) Commodities contracts $4,532 $381 $— $5,025 $329 $— Total $4,532 $381 $— $5,025 $329 $— (a)Included in other current assets(b)Included in accrued liabilities(c)Derivative designated as a cash flow hedgeThe following tables summarize the amount of gains and losses for the following years ended December 31 related to derivative financial instrumentsdesignated as cash flow hedges (in thousands): Amount of Gain/(Loss)Recognized in OCI, before taxCash Flow Hedges 2017 2016 2015Foreign currency contracts $(53,964) $28,099 $45,810Commodities contracts (246) 77 (421)Treasury rate locks (719) — (7,381)Total $(54,929) $28,176 $38,008 Amount of Gain/(Loss)Reclassified from AOCL into Income Cash Flow Hedges 2017 2016 2015 Expected to be ReclassifiedOver the Next Twelve Months Foreign currency contracts(a) $(7,202) $18,253 $59,730 $(20,178) Commodities contracts(a) — (258) (677) (69) Treasury rate locks(b) (442) (362) (151) (506) Total $(7,644) $17,633 $58,902 $(20,753) (a)Gain/(loss) reclassified from accumulated other comprehensive loss (AOCL) to income is included in cost of goods sold(b)Gain/(loss) reclassified from AOCL to income is included in interest expenseFor the years ended December 31, 2017 and 2016, the cash flow hedges were highly effective and, as a result, the amount of hedge ineffectiveness wasnot material. No amounts were excluded from effectiveness testing.72The following table summarizes the amount of gains and losses for the years ended December 31 related to derivative financial instruments notdesignated as hedging instruments (in thousands): Amount of Gain/(Loss)Recognized in Income on DerivativeDerivatives not Designated as Hedges 2017 2016 2015Commodities contracts(a) $503 $167 $(648)Total $503 $167 $(648) (a)Gain/(loss) recognized in income is included in cost of goods sold8. Accumulated Other Comprehensive LossThe following table sets forth the changes in accumulated other comprehensive loss (AOCL) for the years ended December 31 (in thousands): 2017 Foreign currencytranslationadjustments Marketable securities Derivative financialinstruments Pension andpostretirement benefitplans TotalBalance, beginning of period $(68,132) $(1,194) $12,524 $(508,579) $(565,381)Other comprehensive income (loss) beforereclassifications 52,145 1,896 (54,929) 24,321 23,433Income tax (5,865) (702) 20,338 (5,711) 8,060Net other comprehensive income (loss) beforereclassifications 46,280 1,194 (34,591) 18,610 31,493Reclassifications: Realized (gains) losses - foreign currencycontracts(a) — — 7,202 — 7,202Realized (gains) losses - treasury ratelocks(b) — — 442 — 442Prior service credits(c) — — — (1,153) (1,153)Actuarial losses(c) — — — 47,254 47,254Total before tax — — 7,644 46,101 53,745Income tax benefit — — (2,831) (17,075) (19,906)Net reclassifications — — 4,813 29,026 33,839Other comprehensive income (loss) 46,280 1,194 (29,778) 47,636 65,332Balance, end of period $(21,852) $— $(17,254) $(460,943) $(500,049)73 2016 Foreign currencytranslationadjustments Marketable securities Derivative financialinstruments Pension andpostretirement benefitplans TotalBalance, beginning of period $(58,844) $(1,094) $5,886 $(561,153) $(615,205)Other comprehensive (loss) income beforereclassifications (7,591) (159) 28,176 33,937 54,363Income tax (1,697) 59 (10,436) (12,570) (24,644)Net other comprehensive (loss) income beforereclassifications (9,288) (100) 17,740 21,367 29,719Reclassifications: Realized (gains) losses - foreign currencycontracts(a) — — (18,253) — (18,253)Realized (gains) losses - commoditiescontracts(a) — — 258 — 258Realized (gains) losses - treasury ratelock(b) — — 362 — 362Prior service credits(c) — — — (1,784) (1,784)Actuarial losses(c) — — — 49,888 49,888Curtailment and settlement losses(c) — — — 1,463 1,463Total before tax — — (17,633) 49,567 31,934Income tax expense (benefit) — — 6,531 (18,360) (11,829)Net reclassifications — — (11,102) 31,207 20,105Other comprehensive (loss) income (9,288) (100) 6,638 52,574 49,824Balance, end of period $(68,132) $(1,194) $12,524 $(508,579) $(565,381) 2015 Foreign currencytranslationadjustments Marketable securities Derivative financialinstruments Pension andpostretirement benefitplans TotalBalance, beginning of period $(3,482) $(700) $19,042 $(529,803) $(514,943)Other comprehensive (loss) income beforereclassifications (48,309) (626) 38,008 (106,059) (116,986)Income tax (7,053) 232 (14,079) 39,284 18,384Net other comprehensive (loss) income beforereclassifications (55,362) (394) 23,929 (66,775) (98,602)Reclassifications: Realized (gains) losses - foreign currencycontracts(a) — — (59,730) — (59,730)Realized (gains) losses - commoditiescontracts(a) — — 677 — 677Realized (gains) losses - treasury ratelock(b) — — 151 — 151Prior service credits(c) — — — (2,782) (2,782)Actuarial losses(c) — — — 58,680 58,680Curtailment and settlement losses(c) — — — 368 368Total before tax — — (58,902) 56,266 (2,636)Income tax expense (benefit) — — 21,817 (20,841) 976Net reclassifications — — (37,085) 35,425 (1,660)Other comprehensive loss (55,362) (394) (13,156) (31,350) (100,262)Balance, end of period $(58,844) $(1,094) $5,886 $(561,153) $(615,205)(a)Amounts reclassified to net income are included in Motorcycles and Related Products cost of goods sold.(b)Amounts reclassified to net income are presented in interest expense.74(c)Amounts reclassified are included in the computation of net periodic benefit cost. See Note 12 for information related to pension and postretirementbenefit plans.9. DebtDebt with a contractual term less than one year is generally classified as short-term debt and consisted of the following as of December 31 (inthousands): 2017 2016Unsecured commercial paper $1,273,482 $1,055,708Total short-term debt $1,273,482 $1,055,708Debt with a contractual term greater than one year is generally classified as long-term debt and consisted of the following as of December 31 (inthousands): 2017 2016Secured debt (Note 10) Asset-backed Canadian commercial paper conduit facility $174,779 $149,338Asset-backed U.S. commercial paper conduit facilities 279,457 —Asset-backed securitization debt 353,085 797,755Less: unamortized discount and debt issuance costs (461) (1,480)Total secured debt 806,860 945,613 Unsecured notes (at par value) 2.70% Medium-term notes due in 2017, issued January 2012 — 400,0001.55% Medium-term notes due in 2017, issued November 2014 — 400,0006.80% Medium-term notes due in 2018, issued May 2008 877,488 877,4882.25% Medium-term notes due in 2019, issued January 2016 600,000 600,000 Floating-rate Medium-term notes due in 2019, issued March 2017(a) 150,000 —2.40% Medium-term notes due in 2019, issued September 2014 600,000 600,0002.15% Medium-term notes due in 2020, issued February 2015 600,000 600,0002.40% Medium-term notes due in 2020, issued March 2017 350,000 —2.85% Medium-term notes due in 2021, issued January 2016 600,000 600,0002.55% Medium-term notes due in 2022, issued June 2017 400,000 —3.50% Senior unsecured notes due in 2025, issued July 2015 450,000 450,0004.625% Senior unsecured notes due in 2045, issued July 2015 300,000 300,000Less: unamortized discount and debt issuance costs (19,821) (21,242)Gross long-term debt 5,714,527 5,751,859Less: current portion of long-term debt, net of unamortized discount and issuance costs (1,127,269) (1,084,884)Total long-term debt $4,587,258 $4,666,975(a) Floating interest rate based on LIBOR plus 35 bps.A summary of the Company’s expected principal payments for debt obligations as of December 31, 2017 is as follows (in thousands): 752018 $2,405,5692019 1,594,5182020 1,098,4892021 721,7052022 438,010Thereafter 750,000Total $7,008,291Commercial paper maturities may range up to 365 days from the issuance date. The weighted-average interest rate of outstanding commercial paperbalances was 1.48% and 0.93% at December 31, 2017 and 2016, respectively.In May 2017, the Company entered into a $100.0 million 364-day credit facility which matures in April 2018. The Company also has a $675.0 millionfive-year credit facility which matures in April 2019 and a $765.0 million five-year credit facility which matures in April 2021. The new 364-day creditfacility and the five-year credit facilities (together, the Global Credit Facilities) bear interest at variable interest rates, which may be adjusted upward ordownward depending on certain criteria, such as credit ratings. The Global Credit Facilities also require the Company to pay a fee based on the average dailyunused portion of the aggregate commitments under the Global Credit Facilities. The Global Credit Facilities are committed facilities and primarily used tosupport the Company's unsecured commercial paper program. Additionally, during the second quarter of 2017, the Company renewed its $25.0 million creditfacility which expired in May 2017. The $25.0 million credit facility bears interest at variable interest rates, and the Company must pay a fee based on theunused portion of the $25.0 million commitment. The credit facility expires in May 2018.All of the Company's unsecured notes provide for semi-annual interest payments and principal due at maturity.During 2017, the Company did not repurchase any of its medium-term notes. During 2016 and 2015, the Company repurchased an aggregate of $1.2million and $9.3 million, respectively, of its 6.80% medium-term notes which mature in June 2018. As a result, the Company recognized in financial servicesinterest expense $0.1 million and $1.1 million of loss on extinguishment of debt, respectively, which included unamortized discounts and fees. DuringMarch and November 2017, $400.0 million of 2.70% and $400.0 million of 1.55% medium-term notes matured, respectively, and the principal and accruedinterest were paid in full.HDFS and the Company are subject to various operating and financial covenants related to the credit facilities and various operating covenants underthe Notes and the U.S. and Canadian asset-backed commercial paper conduit facilities. The more significant covenants are described below.The operating covenants limit the Company’s and HDFS’ ability to:•Assume or incur certain liens;•Participate in certain mergers or consolidations; and•Purchase or hold margin stock.Under the current financial covenants of the Global Credit Facilities, the consolidated debt to equity ratio of HDFS cannot exceed 10.00 to 1.00 as ofthe end of any fiscal quarter. In addition, the ratio of the Company's consolidated debt to the Company's consolidated debt and equity, in each caseexcluding the debt of HDFS and its subsidiaries, cannot exceed 0.70 to 1.00 as of the end of any fiscal quarter. No financial covenants are required under theNotes or the U.S. or Canadian asset-backed commercial paper conduit facilities. At December 31, 2017 and 2016, HDFS and the Company remained incompliance with all of these covenants.10. Asset-Backed FinancingThe Company participates in asset-backed financing both through asset-backed securitization transactions and through asset-backed commercial paperconduit facilities. See Note 1 for more information on the Company's accounting for asset-backed financings and VIEs.76The following table shows the assets and liabilities related to the on-balance sheet asset-backed financings included in the financial statements atDecember 31 (in thousands): 2017 Financereceivables Allowance forcredit losses Restrictedcash Other assets Totalassets Asset-backeddebtOn-balance sheet assets and liabilities Consolidated VIEs Asset-backed securitizations$439,301 $(13,686) $34,919 $1,260 $461,794 $352,624Asset-backed U.S. commercial paper conduit facilities300,530 (9,392) 13,787 888 305,813 279,457Unconsolidated VIEs Asset-backed Canadian commercial paper conduitfacility203,691 (3,746) 9,983 470 210,398 174,779Total on-balance sheet assets and liabilities$943,522 $(26,824) $58,689 $2,618 $978,005 $806,860 2016 Financereceivables Allowance forcredit losses Restrictedcash Other assets Totalassets Asset-backeddebtOn-balance sheet assets and liabilities Consolidated VIEs Asset-backed securitizations$893,804 $(25,468) $57,057 $2,452 $927,845 $796,275Asset-backed U.S. commercial paper conduit facilities— — — 329 329 —Unconsolidated VIEs Asset-backed Canadian commercial paper conduitfacility165,719 (3,573) 10,090 426 172,662 149,338Total on-balance sheet assets and liabilities$1,059,523 $(29,041) $67,147 $3,207 $1,100,836 $945,613On-Balance Sheet Asset-Backed Securitization VIEsThe Company transfers U.S. retail motorcycle finance receivables to SPEs which in turn issue secured notes to investors, with various maturities andinterest rates, secured by future collections of the purchased U.S. retail motorcycle finance receivables. Each on-balance sheet asset-backed securitization SPEis a separate legal entity and the U.S. retail motorcycle finance receivables included in the asset-backed securitizations are only available for payment of thesecured debt and other obligations arising from the asset-backed securitization transactions and are not available to pay other obligations or claims of theCompany’s creditors until the associated secured debt and other obligations are satisfied. Restricted cash balances held by the SPEs are used only to supportthe securitizations. There are no amortization schedules for the secured notes; however, the debt is reduced monthly as available collections on the relatedU.S. retail motorcycle finance receivables are applied to outstanding principal. The secured notes’ contractual lives have various maturities ranging from2019 to 2022.The Company is the primary beneficiary of its on-balance sheet asset-backed securitization VIEs because it retains servicing rights and a residualinterest in the VIEs in the form of a debt security. As the servicer, the Company is the variable interest holder with the power to direct the activities of the VIEthat most significantly impact the VIE’s economic performance. As a residual interest holder, the Company has the obligation to absorb losses and the rightto receive benefits which could potentially be significant to the VIE.There were no on-balance sheet asset-backed securitization transactions during 2017 or 2016. At December 31, 2017, the Company's consolidatedbalance sheet included outstanding balances related to the following secured notes with the related maturity dates and interest rates (in thousands): Issue Date PrincipalAmount at Date ofIssuance Weighted-AverageRate at Date ofIssuance Contractual Maturity DateMay 2015 $500,000 0.88% May 2016 - December 2022January 2015 $700,000 0.89% February 2016 - August 2022April 2014 $850,000 0.66% April 2015 - October 202177In addition, outstanding balances related to the following secured notes included in the Company's consolidated balance sheet at December 31, 2016were repaid during 2017 (in thousands): Issue Date PrincipalAmount at Date ofIssuance Weighted-AverageRate at Date ofIssuance Contractual Maturity Date April 2013 $650,000 0.57% May 2014 - December 2020For the years ended December 31, 2017 and 2016, interest expense on the secured notes was $7.9 million and $13.1 million, respectively, which isincluded in financial services interest expense. The weighted average interest rate of the outstanding on-balance sheet asset-backed securitizationtransactions was 1.53% and 1.31% at December 31, 2017 and 2016, respectively.On-Balance Sheet Asset-Backed U.S. Commercial Paper Conduit Facilities VIEOn December 13, 2017, the Company renewed its existing $300.0 million and $600.0 million revolving facility agreements with a third party bank-sponsored asset-backed U.S. commercial paper conduit. Availability under the revolving facilities (together, the U.S. Conduit Facilities) is based on, amongother things, the amount of eligible U.S. retail motorcycle finance receivables held by the SPE as collateral.Under the U.S. Conduit Facilities, the Company may transfer U.S. retail motorcycle finance receivables to an SPE, which in turn may issue debt to thethird party bank-sponsored asset-backed commercial paper conduit. The assets of the SPE are restricted as collateral for the payment of the debt or otherobligations arising in the transaction and are not available to pay other obligations or claims of the Company’s creditors. The terms for this debt provide forinterest on the outstanding principal based on prevailing commercial paper rates or LIBOR to the extent the advance is not funded by a conduit lenderthrough the issuance of commercial paper plus, in each case, a program fee based on outstanding principal. The U.S. Conduit Facilities also provide for anunused commitment fee based on the unused portion of the total aggregate commitment of $900.0 million. There is no amortization schedule; however, thedebt will be reduced monthly as available collections on the related finance receivables are applied to outstanding principal. Upon expiration of the U.S.Conduit Facilities, any outstanding principal will continue to be reduced monthly through available collections. Unless earlier terminated or extended bymutual agreement of the Company and the lenders, the U.S. Conduit Facilities have an expiration date of December 12, 2018.The Company is the primary beneficiary of its U.S. Conduit Facilities VIE because it retains servicing rights and a residual interest in the VIE in theform of a debt security. As the servicer, the Company is the variable interest holder with the power to direct the activities of the VIE that most significantlyimpact the VIE’s economic performance. As a residual interest holder, the Company has the obligation to absorb losses and the right to receive benefits whichcould potentially be significant to the VIE.During 2017, the Company transferred $429.7 million of U.S. retail motorcycle finance receivables to an SPE which, in turn, issued $383.3 million ofdebt under the U.S. Conduit Facilities. The VIE did not borrow under the U.S. Conduit Facilities during 2016 and did not have an outstanding balance atDecember 31, 2016. The contractual maturity of the debt is approximately 5 years.For the year ended December 31, 2017, the Company recorded interest expense of $7.1 million under the U.S. Conduit Facilities. The weighted averageinterest rate of the outstanding U.S. Conduit Facilities was 2.33% at December 31, 2017. For the year ended December 31, 2016, interest expense was $1.3million related to the unused portion of the total aggregate commitment. Interest expense on the U.S. Conduit Facilities is included in financial servicesinterest expense.On-Balance Sheet Asset-Backed Canadian Commercial Paper Conduit FacilityIn June 2017, the Company amended its facility agreement (Canadian Conduit) with a Canadian bank-sponsored asset-backed commercial paperconduit. Under the agreement, the Canadian Conduit is contractually committed, at the Company's option, to purchase eligible Canadian retail motorcyclefinance receivables for proceeds up to C$220.0 million. The transferred assets are restricted as collateral for the payment of debt. The terms for this debtprovide for interest on the outstanding principal based on prevailing market interest rates plus a specified margin. The Canadian Conduit also provides for aprogram fee and an unused commitment fee based on the unused portion of the total aggregate commitment of C$220.0 million. There is no amortizationschedule; however, the debt is reduced monthly as available collections on the related finance receivables are applied to outstanding principal. Uponexpiration of the Canadian Conduit, any outstanding principal will continue to be reduced monthly through available collections. The contractual maturityof the debt is approximately 5 years. Unless earlier terminated or extended by mutual agreement of the Company and the lenders, the Canadian Conduitexpires on June 30, 2018.78During 2017 and 2016, the Company transferred $105.4 million and $71.1 million, respectively, of Canadian retail motorcycle finance receivables tothe Canadian Conduit for proceeds of $87.0 million and $62.4 million, respectively. For the years ended December 31, 2017 and 2016, the Company recorded interest expense of $2.6 million and $2.7 million, respectively, on the securednotes. Interest expense on the Canadian Conduit is included in financial services interest expense. The weighted average interest rate of the outstandingCanadian Conduit was 1.96% and 1.84% at December 31, 2017 and 2016.The Company is not the primary beneficiary of the Canadian bank-sponsored, multi-seller conduit VIE; therefore, the Company doesn’t consolidate theVIE. However, the Company treats the conduit facility as a secured borrowing as it maintains effective control over the assets transferred to the VIE andtherefore doesn’t meet the requirements for sale accounting.As the Company participates in and does not consolidate the Canadian bank-sponsored, multi-seller conduit VIE, the maximum exposure to lossassociated with this VIE, which would only be incurred in the unlikely event that all the finance receivables and underlying collateral have no residual value,is $35.6 million at December 31, 2017. The maximum exposure is not an indication of the Company's expected loss exposure.Off-Balance Sheet Asset-Backed Securitization VIEThere were no off-balance sheet asset-backed securitization transactions during the year ended December 31, 2017. During the second quarter of 2016,the Company sold retail motorcycle finance receivables with a principal balance of $301.8 million into a securitization VIE that was not consolidated,recognized a gain of $9.3 million and received cash proceeds of $312.6 million. Similar to an on-balance sheet asset-backed securitization, the Companytransferred U.S. retail motorcycle finance receivables to an SPE which in turn issued secured notes to investors, with various maturities and interest rates,secured by future collections of the purchased U.S. retail motorcycle finance receivables. The off-balance sheet asset-backed securitization SPE is a separatelegal entity, and the U.S. retail motorcycle finance receivables included in the term asset-backed securitization are only available for payment of the secureddebt and other obligations arising from the asset-backed securitization transaction and are not available to pay other obligations or claims of the Company’screditors. In an on-balance sheet asset-backed securitization, the Company retains a financial interest in the VIE in the form of a debt security. As part of thisoff-balance sheet securitization, the Company did not retain any financial interest in the VIE beyond servicing rights and ordinary representations andwarranties and related covenants.The Company is not the primary beneficiary of the off-balance sheet asset-backed securitization VIE because it only retained servicing rights and doesnot have the obligation to absorb losses or the right to receive benefits from the VIE which could potentially be significant to the VIE. Accordingly, thistransaction met the accounting sale requirements under ASC Topic 860 and was recorded as a sale for accounting purposes. Upon the sale, the retailmotorcycle finance receivables were removed from the Company’s balance sheet and a gain was recognized for the difference between the cash proceedsreceived, the assets derecognized and the liabilities recognized as part of the transaction. The gain on sale was included in financial services revenue in theConsolidated Statement of Income.At December 31, 2017, the assets of this off-balance sheet asset-backed securitization VIE were $146.4 million and represented the current unpaidprincipal balance of the retail motorcycle finance receivables, which was the Company’s maximum exposure to loss in the off-balance sheet VIE atDecember 31, 2017. This is based on the unlikely event that all the receivables have underwriting defects or other defects that trigger a violation of certaincovenants and that the underlying collateral has no residual value. This maximum exposure is not an indication of expected losses.Servicing ActivitiesThe Company services all retail motorcycle finance receivables that it originates. When the Company transfers retail motorcycle finance receivables toSPEs through asset-backed financings, the Company retains the right to service the finance receivables and receives servicing fees based on the securitizedfinance receivables balance and certain ancillary fees. In on-balance sheet asset-backed financing, servicing fees are eliminated in consolidation andtherefore are not recorded on a consolidated basis. In off-balance sheet asset-backed financings, servicing fees and ancillary fees are recorded in FinancialServices revenue in the Consolidated Statement of Income. The fees the Company is paid for servicing represent adequate compensation, and, consequently,the Company does not recognize a servicing asset or liability. The Company recognized servicing fee income of $1.9 million and $1.6 million for the yearsended December 31, 2017 and December 31, 2016, respectively.79The unpaid principal balance of serviced retail motorcycle finance receivables at December 31 was as follows (in thousands): 2017 2016On-balance sheet retail motorcycle finance receivables$5,993,185 $5,839,467Off-balance sheet retail motorcycle finance receivables146,425 236,706Total serviced retail motorcycle finance receivables$6,139,610 $6,076,173The balance of serviced finance receivables 30 days or more delinquent at December 31 was as follows (in thousands): Amount 30 days or more past due: 2017 2016On-balance sheet retail motorcycle finance receivables$227,127 $221,393Off-balance sheet retail motorcycle finance receivables2,106 1,858Total serviced retail motorcycle finance receivables$229,233 $223,251Credit losses, net of recoveries for the serviced finance receivables for the years ended December 31 were as follows (in thousands): 2017 2016On-balance sheet retail motorcycle finance receivables$113,316 $107,161Off-balance sheet retail motorcycle finance receivables1,191 820Total serviced retail motorcycle finance receivables$114,507 $107,98111. Income TaxesOn December 22, 2017, "H.R.1", also known as the "Tax Cuts and Jobs Act" (2017 Tax Act) was signed into law. The 2017 Tax Act resulted in anincome tax charge of $53.1 million, all of which the Company regards as provisional. Given the complexity and timing of the 2017 Tax Act, the Companyhas recorded the impact of the 2017 Tax Act based on reasonable estimates and considers these estimates to be provisional under SEC Staff AccountingBulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (SAB 118). The Company was impacted by the following aspects of the2017 Tax Act: the remeasurement of net deferred tax assets resulting from the federal income tax rate change from 35% to 21%, a one-time transition taxrelated to the inclusion of deferred foreign earnings in U.S. taxable income, the write-off of foreign tax credit deferred tax assets related to withholding tax onforeign dividend payments, state tax estimates related to the conformity of federal tax law changes (notably the transition tax and 100% expensing of certainqualified property acquired and placed in service after September 27, 2017), and other smaller items.The 2017 Tax Act requires companies to include in taxable income the earnings of certain foreign subsidiaries that were previously deferred for U.S. taxpurposes. This inclusion results in a one-time transition tax and creates new deferred tax liabilities related to foreign earnings. The Company has made areasonable estimate of the effects of this foreign inclusion in its 2017 U.S. taxable income and to its deferred tax balances based on the Company’sinterpretation of the computations and intent of Congress as defined in the 2017 Tax Act. The one-time transition tax which is based on the Company’saccumulated post-1986 deferred foreign earnings did not have a significant impact on income tax expense. Uncertainty concerning the transition tax existsdue to the lack of guidance within the 2017 Tax Act regarding certain highly technical aspects of the current year tax calculation as well as the deferred taximpacts. It is expected that future guidance will be issued that will enable the Company to refine these calculations. U.S. federal taxable income is the base starting point for determining most state jurisdictions’ taxable income. Each of the 50 states is free toindividually adopt a potentially different level of conformity to federal tax law each time it changes. This variability creates significant uncertainty for stateincome tax purposes, especially with regard to states that do not have “rolling conformity” to follow enacted federal tax law. It is expected that each state willprovide guidance related to their conformity to the Act in the future that will enable the Company to refine the state tax current year and deferred tax impacts.Finally, the Company believes future guidance, interpretations and pronouncements will add clarity to the numerous aspects of the 2017 Tax Act thatmay impact the Company. Future clarifications may give rise to additional unanticipated80impacts on the Company’s tax liabilities or effective tax rate and revisions to the Company’s provisional estimates related to the impacts of the 2017 Tax Acton the Company’s income tax provision.Provision for income taxes for the years ended December 31 consists of the following (in thousands): 2017 2016 2015Current: Federal $245,189 $284,489 $363,803State 24,898 28,406 37,811Foreign 21,138 19,017 12,826 291,225 331,912 414,440Deferred: Federal 47,046 (4,250) (15,474)State 2,688 7,038 (2,264)Foreign 1,121 (2,953) 1,254 50,855 (165) (16,484)Total $342,080 $331,747 $397,956The components of income before income taxes for the years ended December 31 were as follows (in thousands): 2017 2016 2015Domestic $788,878 $954,138 $1,101,427Foreign 74,961 69,773 48,736Total $863,839 $1,023,911 $1,150,163The provision for income taxes differs from the amount that would be provided by applying the statutory U.S. corporate income tax rate due to thefollowing items for the years ended December 31: 2017 2016 2015Provision at statutory rate 35.0 % 35.0 % 35.0 %State taxes, net of federal benefit 1.9 1.8 1.8Foreign rate differential (0.8) (0.6) (0.4)Domestic manufacturing deduction (2.2) (2.1) (2.1)Research and development credit (0.7) (0.4) (0.4)Unrecognized tax benefits including interest and penalties 2.3 (1.3) 1.1Valuation allowance adjustments (0.1) 0.1 (0.1)Deferred remeasurement for rate change 5.5 — —Tax reform territorial tax (0.1) — —Adjustments for previously accrued taxes (1.2) 0.2 (0.1)Other — (0.3) (0.2)Provision for income taxes 39.6 % 32.4 % 34.6 %81The principal components of the Company’s deferred tax assets and liabilities as of December 31 include the following (in thousands): 2017 2016Deferred tax assets: Accruals not yet tax deductible $92,158 $141,961Pension and postretirement benefit plan obligations 37,357 88,741Stock compensation 12,669 19,051Net operating loss carryforward 33,171 33,587Valuation allowance (21,561) (30,953)Other, net 52,422 56,903 206,216 309,290Deferred tax liabilities: Depreciation, tax in excess of book (88,989) (139,268)Other (8,154) (2,293) (97,143) (141,561)Total $109,073 $167,729The Company reviews its deferred tax asset valuation allowances on a quarterly basis, or whenever events or changes in circumstances indicate that areview is required. In determining the requirement for a valuation allowance, the historical and projected financial results of the legal entity or consolidatedgroup recording the net deferred tax asset is considered, along with any positive or negative evidence including tax law changes. Since future financialresults and tax law may differ from previous estimates, periodic adjustments to the Company’s valuation allowances may be necessary.At December 31, 2017, the Company had approximately $291.1 million gross state operating loss carryforwards expiring in 2031. At December 31,2017 the Company also had Wisconsin research and development credit carryforwards of $11.3 million expiring in 2028. The Company had a deferred taxasset of $27.1 million as of December 31, 2017 for the benefit of these losses and credits. A valuation allowance of $4.5 million has been established againstthe deferred tax asset, which is a decrease of $0.1 million from the prior year.The Company has foreign net operating losses (NOL) totaling $6.1 million as of December 31, 2017. It has a valuation allowance of $17.1 millionagainst both the NOLs and other deferred tax assets of $11.0 million. The valuation allowance on foreign net operating losses decreased by $9.2 million,reflecting movement related to realizability assessment on additional earnings and loss, as well as movements related to foreign currency rates.The Company recognizes interest and penalties related to unrecognized tax benefits in the provision for income taxes. Changes in the Company’s grossliability for unrecognized tax benefits, excluding interest and penalties, were as follows (in thousands): 2017 2016Unrecognized tax benefits, beginning of period $55,539 $73,100Increase in unrecognized tax benefits for tax positions taken in a prior period 9,513 2,828Decrease in unrecognized tax benefits for tax positions taken in a prior period (3,749) (21,061)Increase in unrecognized tax benefits for tax positions taken in the current period 13,779 7,402Statute lapses — (1,907)Settlements with taxing authorities (2,852) (4,823)Unrecognized tax benefits, end of period $72,230 $55,539The amount of unrecognized tax benefits as of December 31, 2017 that, if recognized, would affect the effective tax rate was $63.1 million.The total gross amount of expense related to interest and penalties associated with unrecognized tax benefits recognized during 2017 in the Company’sConsolidated Statements of Income was $2.8 million.The total gross amount of interest and penalties associated with unrecognized tax benefits recognized at December 31, 2017 in the Company’sConsolidated Balance Sheets was $30.9 million.82The Company does not expect a significant increase or decrease to the total amounts of unrecognized tax benefits related to continuing operationsduring the fiscal year ending December 31, 2018. However, the Company is under regular audit by tax authorities. The Company believes that it hasappropriate support for the positions taken on its tax returns and that its annual tax provision includes amounts sufficient to pay any assessments.Nonetheless, the amounts ultimately paid, if any, upon resolution of the issues raised by the taxing authorities may differ materially from the amountsaccrued for each year.The Company or one of its subsidiaries files income tax returns in the U.S. federal and Wisconsin state jurisdictions and various other state and foreignjurisdictions. The Company is no longer subject to income tax examinations for Wisconsin state income taxes before 2013 or for U.S. federal income taxesbefore 2014.12. Employee Benefit Plans and Other Postretirement BenefitsThe Company has a qualified defined benefit pension plan and several postretirement healthcare benefit plans, which cover employees of theMotorcycles segment. The Company also has unfunded supplemental employee retirement plan agreements (SERPA) with certain employees which wereinstituted to replace benefits lost under the Tax Revenue Reconciliation Act of 1993.Pension benefits are based primarily on years of service and, for certain plans, levels of compensation. Employees are eligible to receive postretirementhealthcare benefits upon attaining age 55 after rendering at least 10 years of service to the Company. Some of the plans require employee contributions topartially offset benefit costs.83Obligations and Funded Status:The following table provides the changes in the benefit obligations, fair value of plan assets and funded status of the Company’s pension, SERPA andpostretirement healthcare plans as of the Company’s December 31, 2017 and 2016 measurement dates (in thousands): Pension and SERPA Benefits PostretirementHealthcare Benefits 2017 2016 2017 2016Change in benefit obligation: Benefit obligation, beginning of period $1,986,435 $2,009,000 $346,431 $354,739Service cost 31,584 33,437 7,500 7,478Interest cost 85,076 90,827 13,648 14,814Actuarial losses (gains) 195,444 13,481 (8,408) (4,647)Plan participant contributions — — 2,525 2,669Plan amendments (13,227) — — —Benefits paid (84,291) (160,310) (23,208) (28,622)Benefit obligation, end of period 2,201,021 1,986,435 338,488 346,431Change in plan assets: Fair value of plan assets, beginning of period 1,899,889 1,841,967 170,092 156,765Actual return on plan assets 320,144 188,376 32,445 13,327Company contributions 25,000 25,000 15,000 —Plan participant contributions — — 2,525 2,669Benefits paid (82,148) (155,454) (2,525) (2,669)Fair value of plan assets, end of period 2,162,885 1,899,889 217,537 170,092Funded status of the plans, December 31 $(38,136) $(86,546) $(120,951) $(176,339)Amounts recognized in the Consolidated Balance Sheets,December 31: Prepaid benefit costs (long-term assets) $19,816 $— $— $—Accrued benefit liability (current liabilities) (3,346) (2,104) (2,198) (3,072)Accrued benefit liability (long-term liabilities) (54,606) (84,442) (118,753) (173,267)Net amount recognized $(38,136) $(86,546) $(120,951) $(176,339)The funded status of the qualified pension plan and the SERPA plans are combined above. Plan level information for plans with projected benefitobligations (PBO) or accumulated benefit obligations (ABO) in excess of the fair value of plan assets at December 31 is presented below (in millions): 2017 2016Plans with PBOs in excess of fair value of plan assets: PBO $58.0 $1,986.4Fair value of plan assets $— $1,899.9 Plans with ABOs in excess of fair value of plan assets: PBO $58.0 $52.3ABO $42.1 $38.4Fair value of plan assets $— $—The total ABO for all the Company's pension and SERPA plans combined was $2.10 billion and $1.90 billion as of December 31, 2017 and 2016,respectively.84Benefit Costs:Components of net periodic benefit costs for the years ended December 31 (in thousands): Pension andSERPA Benefits PostretirementHealthcare Benefits 2017 2016 2015 2017 2016 2015Service cost $31,584 $33,437 $40,039 $7,500 $7,478 $8,259Interest cost 85,076 90,827 87,345 13,648 14,814 14,166Special early retirement benefits — — 10,563 — — 622Expected return on plan assets (141,385) (145,781) (144,929) (12,623) (12,069) (11,506)Amortization of unrecognized: Prior service cost (credit) 1,018 1,019 435 (2,171) (2,803) (3,217)Net loss 43,993 46,351 54,709 3,261 3,537 3,971Settlement loss — 1,463 368 — — —Net periodic benefit cost $20,286 $27,316 $48,530 $9,615 $10,957 $12,295Net periodic benefit costs are allocated among selling, administrative and engineering expense, cost of goods sold and inventory.The expected return on plan assets is calculated based on the market-related value of plan assets. The market-related value of plan assets is differentfrom the fair value in that asset gains/losses are smoothed over a five year period. Unrecognized gains and losses related to plan obligations and assets are initially recorded in other comprehensive income and result from actualexperience that differs from assumed or expected results, and the impacts of changes in assumptions. Unrecognized plan asset gains and losses not yetreflected in the market-related value of plan assets are not subject to amortization. Remaining unrecognized gains and losses that exceed 10% of the greaterof the projected benefit obligation or the market-related value of plan assets are amortized to earnings over the estimated future service period of active planparticipants. The impacts of plan amendments, if any, are amortized over the estimated future service period of plan participants at the time of theamendment.Amounts included in accumulated other comprehensive loss, net of tax, at December 31, 2017 which have not yet been recognized in net periodicbenefit cost are as follows (in thousands): Pension andSERPA Benefits PostretirementHealthcare Benefits TotalPrior service credit $(4,136) $(5,871) $(10,007)Net actuarial loss 450,754 20,196 470,950Total $446,618 $14,325 $460,943Amounts expected to be recognized in net periodic benefit cost, net of tax, during the year ended December 31, 2018 are as follows (in thousands): Pension andSERPA Benefits PostretirementHealthcare Benefits TotalPrior service credit $(329) $(1,409) $(1,738)Net actuarial loss 45,364 1,391 46,755Total $45,035 $(18) $45,01785Assumptions:Weighted-average assumptions used to determine benefit obligations and net periodic benefit cost at December 31 were as follows: Pension andSERPA Benefits PostretirementHealthcare Benefits 2017 2016 2015 2017 2016 2015Assumptions for benefit obligations: Discount rate 3.71% 4.30% 4.53% 3.52% 4.03% 4.29%Rate of compensation 3.43% 3.50% 3.50% n/a n/a n/aAssumptions for net periodic benefit cost: Discount rate 4.30% 4.53% 4.21% 4.03% 4.29% 3.99%Expected return on plan assets 7.25% 7.50% 7.75% 7.25% 7.50% 7.70%Rate of compensation increase 3.50% 3.50% 4.00% n/a n/a n/aPlan Assets:Pension Plan Assets - The Company’s investment objective is to ensure assets are sufficient to pay benefits while mitigating the volatility of retirementplan assets or liabilities recorded in the balance sheet. The Company mitigates volatility through asset diversification and partial asset/liability matching.The investment portfolio for the Company's pension plan assets contains a diversified blend of equity and fixed-income investments. The Company’s currentoverall targeted asset allocation as a percentage of total market value was approximately 63% equities and 37% fixed-income and cash. Assets are rebalancedregularly to keep the actual allocation in line with targets. Equity holdings primarily include investments in small-, medium- and large-cap companies in theU.S. (including Company stock), investments in developed and emerging foreign markets and other investments such as private equity and real estate. Fixed-income holdings consist of U.S. government and agency securities, state and municipal bonds, corporate bonds from diversified industries and foreignobligations. In addition, cash equivalent balances are maintained at levels adequate to meet near-term plan expenses and benefit payments. Investment risk ismeasured and monitored on an ongoing basis through quarterly investment portfolio reviews.Postretirement Healthcare Plan Assets - The Company's investment objective is to maximize the return on assets to help pay the benefits by prudentlyinvesting in equities, fixed income and alternative assets. The Company's current overall targeted asset allocation as a percentage of total market value wasapproximately 69% equities and 31% fixed-income and cash. Equity holdings primarily include investments in small-, medium-, and large-cap companies inthe U.S., investments in developed and emerging foreign markets and other investments such as private equity and real estate. Fixed-income holdings consistof U.S. government and agency securities, state and municipal bonds, corporate bonds from diversified industries and foreign obligations. In addition, cashequivalent balances are maintained at levels adequate to meet near-term plan expenses and benefit payments. Investment risk is measured and monitored onan ongoing basis through quarterly investment portfolio reviews.86The following tables present the fair values of the plan assets related to the Company’s pension and postretirement healthcare plans within the fairvalue hierarchy as defined in Note 6.The fair values of the Company’s pension plan assets as of December 31, 2017 were as follows (in thousands): Balance as of December31, 2017 Quoted Prices inActive Markets forIdentical Assets(Level 1) SignificantOtherObservableInputs(Level 2)Cash and cash equivalents $51,082 $1,057 $50,025Equity holdings: U.S. companies 722,527 705,111 17,416Foreign companies 78,765 78,765 —Harley-Davidson common stock 64,800 64,800 —Pooled equity funds 416,881 416,881 —Other 119 119 —Total equity holdings 1,283,092 1,265,676 17,416Fixed-income holdings: U.S. Treasuries 39,866 39,866 —Federal agencies 29,188 — 29,188Corporate bonds 462,563 — 462,563Pooled fixed income funds 189,361 61,875 127,486Foreign bonds 81,732 — 81,732Municipal bonds 11,800 — 11,800Total fixed-income holdings 814,510 101,741 712,769Total assets in the fair value hierarchy 2,148,684 $1,368,474 $780,210Assets measured at net asset value as a practical expedient: Limited partnership interests 9,099 Real estate investment trust 5,102 Total pension plan assets $2,162,885 Included in the pension plan assets are 1,273,592 shares of the Company’s common stock with a market value of $64.8 million at December 31, 2017.87The fair values of the Company’s postretirement healthcare plan assets as of December 31, 2017 were as follows (in thousands): Balance as of December31, 2017 Quoted Prices inActive Markets forIdentical Assets(Level 1) SignificantOtherObservableInputs(Level 2)Cash and cash equivalents $19,317 $— $19,317Equity holdings: U.S. companies 101,720 101,720 —Foreign companies 19,498 19,495 3Pooled equity funds 23,563 23,563 —Other 14 14 —Total equity holdings 144,795 144,792 3Fixed-income holdings: U.S. Treasuries 6,803 6,803 —Federal agencies 5,060 — 5,060Corporate bonds 6,756 — 6,756Pooled fixed income funds 27,461 27,461 —Foreign bonds 311 — 311Municipal bonds 284 — 284Total fixed-income holdings 46,675 34,264 12,411Total assets in the fair value hierarchy 210,787 $179,056 $31,731Assets measured at net asset value as a practical expedient: Real estate investment trust 6,750 Total postretirement healthcare plan assets $217,537 88The fair values of the Company’s pension plan assets as of December 31, 2016 were as follows (in thousands): Balance as of December31, 2016 Quoted Prices inActive Markets forIdentical Assets(Level 1) SignificantOtherObservableInputs(Level 2)Cash and cash equivalents $84,548 $1,284 $83,264Equity holdings: U.S. companies 603,568 586,302 17,266Foreign companies 50,256 50,256 —Harley-Davidson common stock 74,301 74,301 —Pooled equity funds 316,225 316,225 —Other 105 105 —Total equity holdings 1,044,455 1,027,189 17,266Fixed-income holdings: U.S. Treasuries 41,089 41,089 —Federal agencies 36,210 — 36,210Corporate bonds 418,522 — 418,522Pooled fixed income funds 170,741 57,543 113,198Foreign bonds 69,871 — 69,871Municipal bonds 12,509 — 12,509Total fixed-income holdings 748,942 98,632 650,310Total assets in the fair value hierarchy 1,877,945 $1,127,105 $750,840Assets measured at net asset value as a practical expedient: Limited partnership interests 9,321 Real estate investment trust 12,623 Total pension plan assets $1,899,889 Included in the pension plan assets are 1,273,592 shares of the Company’s common stock with a market value of $74.3 million at December 31, 2016.89The fair values of the Company’s postretirement healthcare plan assets as of December 31, 2016 were as follows (in thousands): Balance as of December31, 2016 Quoted Prices inActive Markets forIdentical Assets(Level 1) SignificantOtherObservableInputs(Level 2)Cash and cash equivalents $4,442 $1,180 $3,262Equity holdings: U.S. companies 84,643 84,643 —Foreign companies 14,190 13,995 195Pooled equity funds 19,132 19,132 —Other 9 9 —Total equity holdings 117,974 117,779 195Fixed-income holdings: U.S. Treasuries 12,262 12,262 —Federal agencies 7,364 — 7,364Corporate bonds 11,750 — 11,750Pooled fixed income funds 9,690 — 9,690Foreign bonds 633 — 633Municipal bonds 459 — 459Total fixed-income holdings 42,158 12,262 29,896Total assets in the fair value hierarchy 164,574 $131,221 $33,353Assets measured at net asset value as a practical expedient: Real estate investment trust 5,518 Total postretirement healthcare plan assets $170,092 No plan assets are expected to be returned to the Company during the fiscal year ending December 31, 2018.For 2018, the Company’s overall expected long-term rate of return is 7.25% for pension assets and 7.25% for postretirement healthcare plan assets. Theexpected long-term rate of return is based on the portfolio as a whole and not on the sum of the returns on individual asset categories. The return is based onhistorical returns adjusted to reflect the current view of the long-term investment market.Postretirement Healthcare Cost:The weighted-average healthcare cost trend rate used in determining the accumulated postretirement benefit obligation of the healthcare plans was asfollows: 2017 2016Healthcare cost trend rate for next year 7.00% 7.25%Rate to which the cost trend rate is assumed to decline (the ultimate rate) 5.00% 5.00%Year that the rate reaches the ultimate trend rate 2026 2021This healthcare cost trend rate assumption can have a significant effect on the amounts reported. A one-percentage-point change in the assumedhealthcare cost trend rate would have the following effects (in thousands): OnePercentIncrease OnePercentDecreaseTotal of service and interest cost components in 2017 $648 $(623)Accumulated benefit obligation as of December 31, 2017 $11,984 $(10,940)90Future Contributions and Benefit Payments:During 2017, the Company voluntarily contributed $25.0 million to its qualified pension plan and $15.0 million to its postretirement healthcare plans.No pension plan contributions are required in 2018. The Company expects that 2018 postretirement healthcare plan benefits and benefits due under theSERPA plans will be paid by the Company or funded with plan assets.The expected benefit payments for the next five years and thereafter were as follows (in thousands): PensionBenefits SERPABenefits PostretirementHealthcareBenefits2018 $90,510 $3,346 $28,4462019 $92,694 $2,325 $28,3092020 $95,930 $2,843 $27,3512021 $98,109 $3,294 $26,1752022 $102,258 $3,528 $25,0962023-2027 $574,745 $27,719 $120,438Defined Contribution Plans:The Company has various defined contribution benefit plans that in total cover substantially all full-time employees. Employees can make voluntarycontributions in accordance with the provisions of their respective plan, which includes a 401(k) tax deferral option. The Company expensed $19.0 million,$18.2 million and $18.0 million for Company contributions during 2017, 2016 and 2015, respectively.13. LeasesThe Company operates certain administrative, manufacturing, warehouse and testing facilities and equipment under lease arrangements that areaccounted for as operating leases. Total rental expense was $15.1 million, $14.4 million and $15.0 million for 2017, 2016 and 2015, respectively.Future minimum operating lease payments at December 31, 2017 were as follows (in thousands): 2018 $15,0742019 14,2252020 9,6012021 8,5232022 6,192Thereafter 8,379Total operating lease payments $61,99414. Commitments and ContingenciesThe Company is subject to lawsuits and other claims related to environmental, product and other matters. In determining costs to accrue related to theseitems, the Company carefully analyzes cases and considers the likelihood of adverse judgments or outcomes, as well as the potential range of possible loss.Any amounts accrued for these matters are monitored on an ongoing basis and are updated based on new developments or new information as it becomesavailable for each matter.91Environmental Protection Agency Notice:In December 2009, the Company received formal, written requests for information from the United States Environmental Protection Agency (EPA)regarding: (i) certificates of conformity for motorcycle emissions and related designations and labels, (ii) aftermarket parts, and (iii) warranty claims onemissions related components. The Company promptly submitted written responses to the EPA’s inquiry and has engaged in information exchanges anddiscussions with the EPA. In August 2016, the Company entered into a consent decree with the EPA regarding these issues, and the consent decree wassubsequently revised in July 2017 (the Settlement). In the Settlement, the Company agreed to, among other things, pay a fine, and not sell tuning productsunless they are approved by the EPA or California Air Resources Board. In December 2017, the EPA filed the Settlement with the U.S. District Court for theDistrict of Columbia for the purpose of obtaining court approval of the Settlement. Three amicus briefs opposing portions of the Settlement were filed withthe court by the deadline of January 31, 2018. The Company anticipates the court will make a decision whether or not to finalize the Settlement in thefollowing months. The Company has an accrual associated with this matter which is included in accrued liabilities in the Consolidated Balance Sheets, andas a result, if it is finalized, the Settlement would not have a material adverse effect on the Company's financial condition or results of operations. TheSettlement is not final until it is approved by the court, and if it is not approved by the court, the Company cannot reasonably estimate the impact of anyremedies the EPA might seek beyond the Company's current reserve for this matter.York Environmental Matters:The Company is involved with government agencies and groups of potentially responsible parties related to a matter involving the cleanup of soil andgroundwater contamination at its York, Pennsylvania facility. The York facility was formerly used by the U.S. Navy and AMF prior to the purchase of theYork facility by the Company from AMF in 1981. Although the Company is not certain as to the full extent of the environmental contamination at the Yorkfacility, it has been working with the Pennsylvania Department of Environmental Protection (PADEP) since 1986 in undertaking environmental investigationand remediation activities, including a site-wide remedial investigation/feasibility study (RI/FS).In January 1995, the Company entered into a settlement agreement (the Agreement) with the Navy, and the parties amended the Agreement in 2013 toaddress ordnance and explosive waste. The Agreement calls for the Navy and the Company to contribute amounts into a trust equal to 53% and 47%,respectively, of costs associated with environmental investigation and remediation activities at the York facility (Response Costs). The trust administers thepayment of the Response Costs incurred at the York facility as covered by the Agreement.The Company has an accrual for its estimate of its share of the future Response Costs at the York facility which is included in other long-term liabilitiesin the Consolidated Balance Sheets. While much of the work on the RI/FS is complete, it is still under agency review and given the uncertainty that existsconcerning the nature and scope of additional environmental investigation and remediation that may ultimately be required under the RI/FS that is finallyapproved or otherwise at the York facility, the Company is unable to make a reasonable estimate of those additional costs, if any, that may result.The estimate of the Company's future Response Costs that will be incurred at the York facility is based on reports of independent environmentalconsultants retained by the Company, the actual costs incurred to date and the estimated costs to complete the necessary investigation and remediationactivities.Product Liability Matters:The Company is involved in product liability suits related to the operation of its business. The Company accrues for claim exposures that are probableof occurrence and can be reasonably estimated. The Company also maintains insurance coverage for product liability exposures. The Company believes thatits accruals and insurance coverage are adequate and that product liability suits will not have a material adverse effect on the Company’s consolidatedfinancial statements.National Highway Traffic Safety Administration Matters:In July 2016, the National Highway Traffic Safety Administration (NHTSA) began an investigation into certain of the Company's motorcycles equippedwith anti-lock braking systems (ABS). NHTSA’s investigation is in response to rider complaints related to brake failures and applies to model-year 2008-2013 Touring and model-year 2008-2017 V-ROD® motorcycles. NHTSA noted that Harley-Davidson has a two-year brake fluid replacement interval thatowners either are unaware of or ignore. During 2017, the Company estimated and recorded a $29.4 million accrual associated with the NHTSA matter whichis included in accrued liabilities. On January 30, 2018, the Company announced a voluntary recall which offers a free brake fluid flush for model-year 2008-2011 Touring and V-ROD® motorcycles. The Company believes the accrued liability it has recorded will adequately cover the cost of the recall.9215. Capital StockCommon Stock:The Company is authorized to issue 800,000,000 shares of common stock of $0.01 par value. There were 168.1 million and 175.9 million commonshares outstanding as of December 31, 2017 and 2016, respectively. During 2016, the Company retired 165.0 million shares of its treasury stock.During 2017, the Company repurchased 8.8 million shares of its common stock at a weighted-average price of $53. This includes 0.2 million shares ofcommon stock that were repurchased from employees that surrendered stock to satisfy withholding taxes in connection with the vesting of restricted stockawards. The remaining repurchases were made pursuant to the following authorizations (in millions of shares): Shares Repurchased Authorization Remainingat December 31, 2017Board of Directors’ Authorization 2017 2016 2015 1997 Authorization — — 0.9 —2007 Authorization — — 0.9 —2014 Authorization — — 20.0 —2015 Authorization — 9.0 6.0 —2016 Authorization 8.7 0.7 — 10.6Total 8.7 9.7 27.8 10.61997 Authorization – The Company had an authorization from its Board of Directors (originally adopted December 1997) to repurchase shares of itsoutstanding common stock under which the cumulative number of shares repurchased, at the time of any repurchase, shall not exceed the sum of (1) thenumber of shares issued in connection with the exercise of stock options occurring on or after January 1, 2004, and (2) 1% of the issued and outstandingcommon stock of the Company on January 1 of the current year, adjusted for any stock split.2007 Authorization – In December 2007, the Company’s Board of Directors separately authorized the Company to buy back up to 20.0 million sharesof its common stock with no dollar limit or expiration date.2014 Authorization – In February 2014, the Company’s Board of Directors separately authorized the Company to buy back up to 20.0 million shares ofits common stock with no dollar limit or expiration date.2015 Authorization – In June 2015, the Company’s Board of Directors separately authorized the Company to buy back up to 15.0 million shares of itscommon stock with no dollar limit or expiration date.2016 Authorization – In February 2016, the Company’s Board of Directors separately authorized the Company to buy back up to 20.0 million shares ofits common stock with no dollar limit or expiration date.Preferred Stock:The Company is authorized to issue 2,000,000 shares of preferred stock of $1.00 par value, none of which is outstanding.16. Share-Based AwardsThe Company has a share-based compensation plan which was approved by its shareholders in April 2014 (Plan) under which the Board of Directorsmay grant to employees share-based awards including restricted stock units (RSUs), performance shares, nonqualified stock options and stock appreciationrights (SARs). Performance shares include a three-year performance period with vesting based on achievement of internal performance targets. Forfeitures areestimated at the grant date and adjusted when it is likely to change. RSUs granted under the Plan vest ratably over a three-year period with the first one-thirdof the grant vesting one year after the date of grant. Dividends are paid on RSUs settled with stock and performance shares settled with stock. Dividendequivalents are paid on RSUs and performance shares settled with cash. The options and SARs granted under the Plan have an exercise price equal to the fairmarket value of the underlying stock at the date of grant and vest ratably over a three-year period with the first one-third of the grant becoming exercisableone year after the date of grant. The options and SARs expire 10 years from the date of grant. At December 31, 2017, there were 10.8 million shares ofcommon stock available for future awards under the Plan.93Restricted Stock Units and Performance Shares Settled in Stock:The fair value of RSUs and performance shares settled in stock is determined based on the market price of the Company’s shares on the grant date. Thefollowing table summarizes the activity for these awards for the year ended December 31, 2017 (in thousands except for per share amounts): Shares / Units Grant DateFair ValuePer ShareNonvested, beginning of period 1,371 $46Granted 730 $56Vested (408) $51Forfeited (92) $50Nonvested, end of period 1,601 $49As of December 31, 2017, there was $33.9 million of unrecognized compensation cost related to RSUs and performance shares settled in stock (net ofestimated forfeitures) that is expected to be recognized over a weighted-average period of 1.7 years.Restricted Stock Units and Performance Shares Settled in Cash:RSUs and performance shares that are settled in cash are recorded in the Company’s consolidated balance sheets as a liability until vested. The fairvalue is determined based on the market price of the Company’s stock and is remeasured at each balance sheet date. The following table summarizes theactivity for these awards for the year ended December 31, 2017 (in thousands except for per share amounts): Units Weighted-AverageGrant DateFair ValuePer ShareNonvested, beginning of period 124 $54Granted 56 $52Vested (49) $60Forfeited (30) $59Nonvested, end of period 101 $53Stock Options:There were no stock options granted in 2017 and 2016. In 2015, the Company estimated the grant date fair value of its option awards granted using alattice-based option valuation model. The Company believes that the lattice-based option valuation model provided a more precise estimate of fair valuethan the Black-Scholes option pricing model. Lattice-based option valuation models utilize ranges of assumptions over the expected term of the options. TheCompany used implied volatility to determine the expected volatility of its stock. The Company used historical data to estimate option exercise andemployee termination within the valuation model. The expected term of options granted was derived from the output of the option valuation model andrepresents the average period of time that options granted are expected to be outstanding. The risk-free rate for periods within the contractual life of theoption is based on the U.S. Treasury yield curve in effect at the time of grant. Assumptions used in calculating the lattice-based fair value of options grantedduring 2015 were as follows: 2015Expected average term (in years) 6.0Expected volatility 24% - 30%Weighted average volatility 28%Expected dividend yield 2.0%Risk-free interest rate 0.1% - 2.0%94The following table summarizes the stock option transactions for the year ended December 31, 2017 (in thousands except for per share amounts): Options Weighted-Average PriceOptions outstanding, beginning of period 1,878 $49Options exercised (282) $40Options forfeited (192) $68Options outstanding, end of period 1,404 $48Exercisable, end of period 1,309 $47The weighted-average fair value of options granted during the year ended December 31, 2015 was $13.As of December 31, 2017, there was $0.1 million of unrecognized compensation cost related to stock options that is expected to be recognized over aweighted-average period of 0.1 year.The following table summarizes the aggregate intrinsic value related to options outstanding, exercisable and exercised as of and for the years endedDecember 31 (in thousands): 2017 2016 2015Exercised $4,051 $9,595 $9,890Outstanding $11,711 $22,383 $16,605Exercisable $11,711 $22,383 $16,605The Company’s policy is to issue new shares of common stock upon the exercise of employee stock options.Stock options outstanding at December 31, 2017 were as follows (options in thousands): Price Range Weighted-AverageContractual Life Options Weighted-AverageExercise Price$10.01 to $20 1.2 151 $13$20.01 to $30 2.1 145 $24$30.01 to $40 0.1 37 $39$40.01 to $50 3.6 239 $44$50.01 to $60 4.6 193 $52$60.01 to $70 5.2 639 $63Options outstanding 4.0 1,404 $48Options exercisable 3.7 1,309 $47Stock Appreciation Rights (SARs):There were no SARs granted in 2017 or 2016. SARs vest under the same terms and conditions as options; however, they are settled in cash equal totheir settlement date fair value. As a result, SARs are recorded in the Company’s consolidated balance sheets as a liability until the date of exercise. The fairvalue of each SAR award is estimated using a lattice-based valuation model. In accordance with ASC Topic 718, “Stock Compensation,” the fair value ofeach SAR award is recalculated at the end of each reporting period and the liability and expense adjusted based on the new fair value and the percent vested.The assumptions used to determine the fair value of the SAR awards at December 31, 2017 and 2016 were as follows: 2017 2016Expected average term (in years) 5.7 5.2 - 5.7Expected volatility 28% - 31% 28% - 31%Expected dividend yield 2.9% 2.4%Risk-free interest rate 1.3% - 2.5% 0.5% - 2.6%95The following table summarizes the SAR transactions for the year ended December 31, 2017 (in thousands except for per share amounts): SARs Weighted-AveragePriceOutstanding, beginning of period 75 $37Granted — $—Exercised (32) $31Forfeited (16) $62Outstanding, end of period 27 $30Exercisable, end of period 27 $30The weighted-average fair value of SARs granted during the year ended December 31, 2015 was $13.17. Earnings Per ShareThe following table sets forth the computation of basic and diluted earnings per share from continuing operations for the years ended December 31 (inthousands except per share amounts): 2017 2016 2015Numerator: Income used in computing basic and diluted earnings per share $521,759 $692,164 $752,207Denominator: Denominator for basic earnings per share-weighted-average common shares 171,995 179,676 202,681Effect of dilutive securities – employee stock compensation plan 937 859 1,005Denominator for diluted earnings per share- adjusted weighted-average sharesoutstanding 172,932 180,535 203,686Earnings per common share: Basic $3.03 $3.85 $3.71Diluted $3.02 $3.83 $3.69Options to purchase 0.8 million, 1.4 million and 1.0 million weighted-average shares of common stock outstanding during 2017, 2016 and 2015,respectively, were not included in the Company’s computation of dilutive securities because the exercise price was greater than the market price andtherefore the effect would have been anti-dilutive.The Company has a share-based compensation plan under which employees may be granted share-based awards, including restricted stock units(RSUs). Non-forfeitable dividend equivalents are paid on unvested RSUs. As such, RSUs are considered participating securities under the two-class method ofcalculating earnings per share as described in ASC Topic 260, “Earnings per Share.” The two-class method of calculating earnings per share did not have amaterial impact on the Company’s earnings per share calculation as of December 31, 2017, 2016 and 2015.18. Reportable Segments and Geographic InformationReportable Segments:Harley-Davidson, Inc. is the parent company for the groups of companies doing business as Harley-Davidson Motor Company (HDMC) and Harley-Davidson Financial Services (HDFS). The Company operates in two segments: the Motorcycles & Related Products (Motorcycles) segment and the FinancialServices segment. The Company’s reportable segments are strategic business units that offer different products and services and are managed separately basedon the fundamental differences in their operations.The Motorcycles segment consists of HDMC which designs, manufactures and sells at wholesale on-road Harley-Davidson motorcycles as well asmotorcycle parts, accessories, general merchandise and related services. The Company’s products are sold to retail customers through a network ofindependent dealers. The Company conducts business on a global basis, with sales in the United States, Canada, Latin America, Europe/Middle East/Africa(EMEA) and Asia Pacific.96The Financial Services segment consists of HDFS which provides wholesale and retail financing and provides insurance and insurance-related programsprimarily to Harley-Davidson dealers and their retail customers. HDFS conducts business principally in the United States and Canada.Information by segment is set forth below for the years ended December 31 (in thousands): 2017 2016 2015Motorcycles net revenue $4,915,027 $5,271,376 $5,308,744Gross profit 1,653,344 1,851,666 1,952,460Selling, administrative and engineering expense 1,037,386 1,078,260 1,076,970Operating income from Motorcycles 615,958 773,406 875,490Financial Services revenue 732,197 725,082 686,658Financial Services expense 456,892 449,552 406,453Operating income from Financial Services 275,305 275,530 280,205Operating income $891,263 $1,048,936 $1,155,695Financial Services revenue includes $6.9 million, $4.4 million and $6.9 million of interest that HDMC paid to HDFS on wholesale finance receivablesin 2017, 2016 and 2015, respectively. The offsetting cost of these interest incentives was recorded as a reduction to Motorcycles revenue.Information by segment is set forth below as of December 31 (in thousands): Motorcycles FinancialServices Consolidated2017 Total assets $2,449,603 $7,523,069 $9,972,672Depreciation and amortization $215,639 $6,549 $222,188Capital expenditures $193,204 $13,090 $206,2942016 Total assets $2,490,450 $7,399,790 $9,890,240Depreciation and amortization $202,122 $7,433 $209,555Capital expenditures $245,316 $10,947 $256,2632015 Total assets $2,522,249 $7,450,728 $9,972,977Depreciation and amortization $188,926 $9,148 $198,074Capital expenditures $249,772 $10,202 $259,97497 Geographic Information:Included in the consolidated financial statements are the following amounts relating to geographic locations for the years ended December 31 (inthousands): 2017 2016 2015Revenue from Motorcycles(a): United States $3,215,513 $3,579,129 $3,768,069EMEA 790,725 798,489 728,198Japan 180,938 200,309 162,675Canada 232,883 212,099 178,042Australia and New Zealand 168,670 181,809 165,854Other foreign countries 326,298 299,541 305,906Total revenue from Motorcycles $4,915,027 $5,271,376 $5,308,744Revenue from Financial Services(a): United States $698,383 $692,784 $656,888Europe 6,845 6,528 5,373Canada 22,580 21,626 21,180Other foreign countries 4,389 4,144 3,217Total revenue from Financial Services $732,197 $725,082 $686,658Long-lived assets(b): United States $912,032 $943,479 $915,509International 55,749 38,114 26,909Total long-lived assets $967,781 $981,593 $942,418(a)Revenue is attributed to geographic regions based on location of customer.(b)Long-lived assets include all long-term assets except those specifically excluded under ASC Topic 280, “Segment Reporting,” such as deferred incometaxes and finance receivables.19. Related Party TransactionsA former director of the Company was Chairman and Chief Executive Officer and an equity owner of Fred Deeley Imports Ltd. (Deeley Imports) whencertain of its assets and liabilities were acquired by the Company in 2015. Deeley Imports was the exclusive distributor of the Company’s motorcycles inCanada until August 2015 when the Company completed its purchase of certain assets and liabilities from Deeley Imports including, among other things, theacquisition of the exclusive right to distribute the Company's motorcycles and other products in Canada. The Company recorded Motorcycles and RelatedProducts revenue and Financial Services revenue from Deeley Imports during 2015 of $117.3 million prior to the acquisition. As a result of the acquisition,the Company no longer does business with Deeley Imports. Refer to Note 3 for further details.Upon the termination of the distribution agreement between the Company and Deeley Imports, the Company entered into dealer agreements withapproximately 66 dealers in Canada, all of which had preexisting dealer agreements with Deeley Imports. These new Canadian dealer agreements included anagreement with Trev Deeley Motorcycles for the operation of a Harley-Davidson dealership located in Richmond, British Columbia. Trev DeeleyMotorcycles is owned by the Darren James 2014 Trust, of which a former director of the Company is the sole trustee and his son is the beneficiary. The formerdirector of the Company retired from the Board of Directors in April 2017 at which time he was no longer considered a related party.The Company recorded Motorcycles and Related Products revenue and Financial Services revenue from Trev Deeley Motorcycles during 2017 and2016 of $5.8 million and $5.3 million, respectively, and had finance receivables balances due from Trev Deeley Motorcycles of $0.3 million and $0.5million at December 31, 2017 and 2016, respectively.20. Supplemental Consolidating DataThe supplemental consolidating data for the periods noted is presented for informational purposes. The supplemental consolidating data may bedifferent than segment information presented elsewhere due to the allocation of intercompany eliminations to reporting segments. All supplemental data ispresented in thousands. 98 Year Ended December 31, 2017 HDMCEntities HDFSEntities Eliminations ConsolidatedRevenue: Motorcycles and Related Products $4,925,003 $— $(9,976) $4,915,027Financial Services — 734,008 (1,811) 732,197Total revenue 4,925,003 734,008 (11,787) 5,647,224Costs and expenses: Motorcycles and Related Products cost of goods sold 3,261,683 — — 3,261,683Financial Services interest expense — 180,193 — 180,193Financial Services provision for credit losses — 132,444 — 132,444Selling, administrative and engineering expense 1,038,994 154,232 (11,585) 1,181,641Total costs and expenses 4,300,677 466,869 (11,585) 4,755,961Operating income 624,326 267,139 (202) 891,263Investment income 199,580 — (196,000) 3,580Interest expense 31,004 — — 31,004Income before provision for income taxes 792,902 267,139 (196,202) 863,839Provision for income taxes 214,175 127,905 — 342,080Net income $578,727 $139,234 $(196,202) $521,759 Year Ended December 31, 2016 HDMCEntities HDFSEntities Eliminations ConsolidatedRevenue: Motorcycles and Related Products $5,281,355 $— $(9,979) $5,271,376Financial Services — 726,736 (1,654) 725,082Total revenue 5,281,355 726,736 (11,633) 5,996,458Costs and expenses: Motorcycles and Related Products cost of goods sold 3,419,710 — — 3,419,710Financial Services interest expense — 173,756 — 173,756Financial Services provision for credit losses — 136,617 — 136,617Selling, administrative and engineering expense 1,080,020 149,157 (11,738) 1,217,439Total costs and expenses 4,499,730 459,530 (11,738) 4,947,522Operating income 781,625 267,206 105 1,048,936Investment income 187,645 — (183,000) 4,645Interest expense 29,670 — — 29,670Income before provision for income taxes 939,600 267,206 (182,895) 1,023,911Provision for income taxes 231,986 99,761 — 331,747Net income $707,614 $167,445 $(182,895) $692,164 99 Year Ended December 31, 2015 HDMCEntities HDFSEntities Eliminations ConsolidatedRevenue: Motorcycles and Related Products $5,318,850 $— $(10,106) $5,308,744Financial Services — 688,211 (1,553) 686,658Total revenue 5,318,850 688,211 (11,659) 5,995,402Costs and expenses: Motorcycles and Related Products cost of goods sold 3,356,284 — — 3,356,284Financial Services interest expense — 161,983 — 161,983Financial Services provision for credit losses — 101,345 — 101,345Selling, administrative and engineering expense 1,078,525 153,229 (11,659) 1,220,095Total costs and expenses 4,434,809 416,557 (11,659) 4,839,707Operating income 884,041 271,654 — 1,155,695Investment income 106,585 — (100,000) 6,585Interest expense 12,117 — — 12,117Income before provision for income taxes 978,509 271,654 (100,000) 1,150,163Provision for income taxes 300,499 97,457 — 397,956Net income $678,010 $174,197 $(100,000) $752,207100 December 31, 2017 HDMCEntities HDFSEntities Eliminations ConsolidatedASSETS Current assets: Cash and cash equivalents $338,186 $349,335 $— $687,521Accounts receivable, net 483,709 — (153,723) 329,986Finance receivables, net — 2,105,662 — 2,105,662Inventories 538,202 — — 538,202Restricted cash — 47,518 — 47,518Other current assets 132,999 48,521 (5,667) 175,853Total current assets 1,493,096 2,551,036 (159,390) 3,884,742Finance receivables, net — 4,859,424 — 4,859,424Property, plant and equipment, net 922,280 45,501 — 967,781Prepaid pension costs 19,816 — — 19,816Goodwill 55,947 — — 55,947Deferred income taxes 66,877 43,515 (1,319) 109,073Other long-term assets 138,344 23,593 (86,048) 75,889 $2,696,360 $7,523,069 $(246,757) $9,972,672LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable $214,263 $167,057 $(153,723) $227,597Accrued liabilities 444,028 90,942 (5,148) 529,822Short-term debt — 1,273,482 — 1,273,482Current portion of long-term debt, net — 1,127,269 — 1,127,269Total current liabilities 658,291 2,658,750 (158,871) 3,158,170Long-term debt, net 741,961 3,845,297 — 4,587,258Pension liability 54,606 — — 54,606Postretirement healthcare liability 118,753 — — 118,753Other long-term liabilities 171,200 35,503 2,905 209,608Commitments and contingencies (Note 14) Shareholders’ equity 951,549 983,519 (90,791) 1,844,277 $2,696,360 $7,523,069 $(246,757) $9,972,672101 December 31, 2016 HDMCEntities HDFSEntities Eliminations ConsolidatedASSETS Current assets: Cash and cash equivalents $425,540 $334,444 $— $759,984Marketable securities 5,019 500 — 5,519Accounts receivable, net 450,186 — (165,080) 285,106Finance receivables, net — 2,076,261 — 2,076,261Inventories 499,917 — — 499,917Restricted cash — 52,574 — 52,574Other current assets 127,606 46,934 (49) 174,491Total current assets 1,508,268 2,510,713 (165,129) 3,853,852Finance receivables, net — 4,759,197 — 4,759,197Property, plant and equipment, net 942,634 38,959 — 981,593Goodwill 53,391 — — 53,391Deferred income taxes 103,487 66,152 (1,910) 167,729Other long-term assets 132,835 24,769 (83,126) 74,478 $2,740,615 $7,399,790 $(250,165) $9,890,240LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable $219,353 $181,045 $(165,080) $235,318Accrued liabilities 395,907 90,910 (165) 486,652Short-term debt — 1,055,708 — 1,055,708Current portion of long-term debt, net — 1,084,884 — 1,084,884Total current liabilities 615,260 2,412,547 (165,245) 2,862,562Long-term debt, net 741,306 3,925,669 — 4,666,975Pension liability 84,442 — — 84,442Postretirement healthcare liability 173,267 — — 173,267Other long-term liabilities 150,391 29,697 2,748 182,836Commitments and contingencies (Note 14) Shareholders’ equity 975,949 1,031,877 (87,668) 1,920,158 $2,740,615 $7,399,790 $(250,165) $9,890,240102 Year Ended December 31, 2017 HDMCEntities HDFSEntities Eliminations ConsolidatedCash flows from operating activities: Net income $578,727 $139,234 $(196,202) $521,759Adjustments to reconcile net income to net cash provided by operatingactivities: Depreciation and amortization of intangibles 215,639 6,549 — 222,188Amortization of deferred loan origination costs — 82,911 — 82,911Amortization of financing origination fees 655 7,390 — 8,045Provision for long-term employee benefits 29,900 — — 29,900Employee benefit plan contributions and payments (63,277) — — (63,277)Stock compensation expense 29,570 2,921 — 32,491Net change in wholesale finance receivables related to sales — — 35,172 35,172Provision for credit losses — 132,444 — 132,444Deferred income taxes 29,949 21,497 (591) 50,855Other, net 4,858 3,498 203 8,559Changes in current assets and liabilities: Accounts receivable, net (6,792) — (11,357) (18,149)Finance receivables—accrued interest and other — (1,313) — (1,313)Inventories (20,584) — — (20,584)Accounts payable and accrued liabilities 9,753 (11,497) 11,872 10,128Derivative instruments 1,785 81 — 1,866Other (31,868) (1,684) 5,618 (27,934)Total adjustments 199,588 242,797 40,917 483,302Net cash provided by operating activities 778,315 382,031 (155,285) 1,005,061Cash flows from investing activities: Capital expenditures (193,204) (13,090) — (206,294)Origination of finance receivables — (7,109,624) 3,517,676 (3,591,948)Collections on finance receivables — 6,786,702 (3,558,391) 3,228,311Sales and redemptions of marketable securities 6,916 — — 6,916Other 547 — — 547Net cash used by investing activities (185,741) (336,012) (40,715) (562,468)103 Year Ended December 31, 2017 HDMCEntities HDFSEntities Eliminations ConsolidatedCash flows from financing activities: Proceeds from issuance of medium-term notes — 893,668 — 893,668Repayments of medium-term notes — (800,000) — (800,000)Repayments of securitization debt — (444,671) — (444,671)Borrowings of asset-backed commercial paper — 469,932 — 469,932Repayments of asset-backed commercial paper — (176,227) — (176,227)Net increase in credit facilities and unsecured commercial paper — 212,809 — 212,809Net change in restricted cash — 8,458 — 8,458Dividends paid (251,862) (196,000) 196,000 (251,862)Purchase of common stock for treasury (465,263) — — (465,263)Issuance of common stock under employee stock option plans 11,353 — — 11,353Net cash used by financing activities (705,772) (32,031) 196,000 (541,803)Effect of exchange rate changes on cash and cash equivalents 25,844 903 — 26,747Net (decrease) increase in cash and cash equivalents $(87,354) $14,891 $— $(72,463)Cash and cash equivalents: Cash and cash equivalents—beginning of period $425,540 $334,444 $— $759,984Net (decrease) increase in cash and cash equivalents (87,354) 14,891 — (72,463)Cash and cash equivalents—end of period $338,186 $349,335 $— $687,521104 Year Ended December 31, 2016 HDMCEntities HDFSEntities Eliminations ConsolidatedCash flows from operating activities: Net income $707,614 $167,445 $(182,895) $692,164Adjustments to reconcile net income to net cash provided by operatingactivities: Depreciation and amortization of intangibles 202,122 7,433 — 209,555Amortization of deferred loan origination costs — 86,681 — 86,681Amortization of financing origination fees 654 8,598 — 9,252Provision for long-term employee benefits 38,273 — — 38,273Employee benefit plan contributions and payments (55,809) — — (55,809)Stock compensation expense 29,811 2,525 — 32,336Net change in wholesale finance receivables related to sales — — (3,233) (3,233)Provision for credit losses — 136,617 — 136,617Gain on off-balance sheet asset-backed securitization — (9,269) — (9,269)Loss on debt extinguishment — 118 — 118Deferred income taxes 7,772 (7,705) (232) (165)Other, net (7,041) 239 (105) (6,907)Changes in current assets and liabilities: Accounts receivable, net (67,621) — 21,687 (45,934)Finance receivables – accrued interest and other — (1,489) — (1,489)Inventories 85,072 — — 85,072Accounts payable and accrued liabilities 26,005 25,027 (12,795) 38,237Derivative instruments (3,413) — — (3,413)Other (25,415) (2,332) — (27,747)Total adjustments 230,410 246,443 5,322 482,175Net cash provided by operating activities 938,024 413,888 (177,573) 1,174,339Cash flows from investing activities: Capital expenditures (245,316) (10,947) — (256,263)Origination of finance receivables — (7,420,177) 3,755,682 (3,664,495)Collections on finance receivables — 6,936,140 (3,761,109) 3,175,031Proceeds from finance receivables sold — 312,571 — 312,571Sales and redemptions of marketable securities 40,014 — — 40,014Other 411 — — 411Net cash used by investing activities (204,891) (182,413) (5,427) (392,731)105 Year Ended December 31, 2016 HDMCEntities HDFSEntities Eliminations ConsolidatedCash flows from financing activities: Proceeds from issuance of medium-term notes — 1,193,396 — 1,193,396Repayments of medium-term notes — (451,336) — (451,336)Repayments of securitization debt — (665,400) — (665,400)Borrowings of asset-backed commercial paper — 62,396 — 62,396Repayments of asset-backed commercial paper — (71,500) — (71,500)Net decrease in credit facilities and unsecured commercial paper — (145,812) — (145,812)Net change in restricted cash — 43,495 — 43,495Dividends paid (252,321) (183,000) 183,000 (252,321)Purchase of common stock for treasury (465,341) — — (465,341)Excess tax benefits from share-based payments 2,251 — — 2,251Issuance of common stock under employee stock option plans 15,782 — — 15,782Net cash used by financing activities (699,629) (217,761) 183,000 (734,390)Effect of exchange rate changes on cash and cash equivalents (8,407) (1,036) — (9,443)Net increase in cash and cash equivalents $25,097 $12,678 $— $37,775Cash and cash equivalents: Cash and cash equivalents – beginning of period $400,443 $321,766 $— $722,209Net increase in cash and cash equivalents 25,097 12,678 — 37,775Cash and cash equivalents – end of period $425,540 $334,444 $— $759,984106 Year Ended December 31, 2015 HDMCEntities HDFSEntities Eliminations ConsolidatedCash flows from operating activities: Net income $678,010 $174,197 $(100,000) $752,207Adjustments to reconcile net income to net cash provided by operatingactivities: Depreciation and amortization of intangibles 188,926 9,148 — 198,074Amortization of deferred loan origination costs — 93,546 — 93,546Amortization of financing origination fees 267 9,708 — 9,975Provision for long-term employee benefits 60,824 — — 60,824Employee benefit plan contributions and payments (28,490) — — (28,490)Stock compensation expense 26,775 2,658 — 29,433Net change in wholesale finance receivables related to sales — — (113,970) (113,970)Provision for credit losses — 101,345 — 101,345Loss on debt extinguishment — 1,099 — 1,099Deferred income taxes (4,792) (11,692) — (16,484)Other, net 19,625 1,288 — 20,913Changes in current assets and liabilities: Accounts receivable, net 4,055 — (17,720) (13,665)Finance receivables – accrued interest and other — (3,046) — (3,046)Inventories (155,222) — — (155,222)Accounts payable and accrued liabilities 81,929 18,539 38,355 138,823Derivative instruments (5,615) — — (5,615)Other 33,658 (3,287) — 30,371Total adjustments 221,940 219,306 (93,335) 347,911Net cash provided by operating activities 899,950 393,503 (193,335) 1,100,118Cash flows from investing activities: Capital expenditures (249,772) (10,202) — (259,974)Origination of finance receivables — (7,836,279) 4,084,449 (3,751,830)Collections on finance receivables — 7,127,999 (3,991,114) 3,136,885Sales and redemptions of marketable securities 11,507 — — 11,507Acquisition of business (59,910) — — (59,910)Other 7,474 — — 7,474Net cash used by investing activities (290,701) (718,482) 93,335 (915,848)107 Year Ended December 31, 2015 HDMCEntities HDFSEntities Eliminations ConsolidatedCash flows from financing activities: Proceeds from issuance of medium-term notes — 595,386 — 595,386Repayments of medium-term notes — (610,331) — (610,331)Proceeds from issuance of senior unsecured notes 740,385 — — 740,385Intercompany borrowing activity 250,000 (250,000) — —Proceeds from securitization debt — 1,195,668 — 1,195,668Repayments of securitization debt — (1,008,135) — (1,008,135)Borrowings of asset-backed commercial paper — 87,442 — 87,442Repayments of asset-backed commercial paper — (72,727) — (72,727)Net increase in credit facilities and unsecured commercial paper — 469,473 — 469,473Net change in restricted cash — 11,410 — 11,410Dividends paid (249,262) (100,000) 100,000 (249,262)Purchase of common stock for treasury (1,537,020) — — (1,537,020)Excess tax benefits from share-based payments 3,468 — — 3,468Issuance of common stock under employee stock option plans 20,179 — — 20,179Net cash (used by) provided by financing activities (772,250) 318,186 100,000 (354,064)Effect of exchange rate changes on cash and cash equivalents (10,451) (4,226) — (14,677)Net decrease in cash and cash equivalents $(173,452) $(11,019) $— $(184,471)Cash and cash equivalents: Cash and cash equivalents – beginning of period $573,895 $332,785 $— $906,680Net decrease in cash and cash equivalents (173,452) (11,019) — (184,471)Cash and cash equivalents – end of period $400,443 $321,766 $— $722,20921. Subsequent EventsOn January 25, 2018, the Board of Directors of the Company approved a plan to further improve its manufacturing operations and cost structure bycommencing a multi-year manufacturing optimization plan anchored by the consolidation of its motorcycle assembly plant in Kansas City, Missouri, into itsplant in York, Pennsylvania. The Company expects to incur restructuring and other consolidation costs of $170 to $200 million related to this plan through2019, of which approximately 70% will be cash charges. In February 2018, HDFS issued $350.0 million of medium-term notes that mature in February 2023 and have an annual interest rate of 3.35%.108SUPPLEMENTARY DATAQuarterly financial data (unaudited)(In millions, except per share data) 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Mar 26, 2017 Mar 27,2016 June 25,2017 June 26,2016 Sep 24, 2017 Sep 25, 2016 Dec 31, 2017 Dec 31, 2016Motorcycles: Revenue $1,328.7 $1,576.6 $1,577.1 $1,670.1 $962.1 $1,091.6 $1,047.0 $933.0Operating income $238.8 $332.5 $319.6 $322.7 $19.6 $108.9 $37.8 $9.3Financial Services: Revenue $173.2 $173.4 $188.0 $191.0 $189.1 $183.2 $181.9 $177.6Operating income $52.6 $56.4 $81.9 $89.6 $77.1 $69.4 $63.7 $60.1Consolidated: Income before taxes $284.7 $382.4 $394.4 $405.9 $89.9 $173.0 $94.8 $62.6Net income $186.4 $250.5 $258.9 $280.4 $68.2 $114.1 $8.3 $47.2Earnings per common share: Basic $1.06 $1.37 $1.48 $1.55 $0.40 $0.64 $0.05 $0.27Diluted $1.05 $1.36 $1.48 $1.55 $0.40 $0.64 $0.05 $0.27Item 9. Changes in and Disagreements with Accountants on Accounting and Financial DisclosureNone. Item 9A. Controls and ProceduresEvaluation of Disclosure Controls and ProceduresIn accordance with Rule 13a-15(b) of the Securities Exchange Act of 1934 (the Exchange Act), as of the end of the period covered by this AnnualReport on Form 10-K, the Company’s management evaluated, with the participation of the Company’s President and Chief Executive Officer and the SeniorVice President and Chief Financial Officer, the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined inRule 13a-15(e) under the Exchange Act). Based upon their evaluation of these disclosure controls and procedures, the President and Chief Executive Officerand the Senior Vice President and Chief Financial Officer have concluded that the disclosure controls and procedures were effective as of the end of theperiod covered by this Annual Report on Form 10-K to ensure that information required to be disclosed by the Company in the reports it files or submitsunder the Exchange Act is recorded, processed, summarized and reported, within the time period specified in the Securities and Exchange Commission rulesand forms, and to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is accumulatedand communicated to the Company’s management, including its President and Chief Executive Officer and its Senior Vice President and Chief FinancialOfficer, as appropriate, to allow timely decisions regarding disclosure.Management’s Report on Internal Control over Financial ReportingThe Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is definedin Exchange Act Rules 13a-15(f). Under the supervision and with the participation of management, including the principal executive officer and principalfinancial officer, management conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting based on the criteriaestablished in Internal Control – Integrated Framework (2013 Framework) issued by the Committee of Sponsoring Organizations of the TreadwayCommission. Based on management’s evaluation under the framework in Internal Control – Integrated Framework, management has concluded that theCompany’s internal control over financial reporting was effective as of December 31, 2017. Ernst & Young LLP, an independent registered public accountingfirm, has audited the Consolidated Financial Statements included in this Annual Report on Form 10-K and, as part of its audit, has issued an attestationreport, included herein, on the effectiveness of the Company’s internal control over financial reporting. 109Attestation Report of Independent Registered Public Accounting FirmThe attestation report required under this Item 9A is contained in Item 8 of Part II of this Annual Report on Form 10-K under the heading “Report ofIndependent Registered Public Accounting Firm.”Changes in Internal ControlsThere were no changes in the Company’s internal control over financial reporting that occurred during the quarter ended December 31, 2017 that havematerially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.Item 9B. Other InformationOn February 20, 2018, the Company entered into a Transition Agreement with Michelle A. Kumbier, who is the Chief Operating Officer of HDMC. TheTransition Agreement becomes effective upon a change of control of the Company (as defined in the Transition Agreement). It provides for certain benefitsupon the termination of Ms. Kumbier’s employment following a change of control. This agreement is substantially the same as the Transition Agreements towhich the Company is a party with its Chief Executive Officer and its Chief Financial Officer.PART III Item 10. Directors, Executive Officers and Corporate GovernanceThe information to be included in the Company’s definitive proxy statement for the 2018 annual meeting of shareholders, which will be filed on orabout March 26, 2018 (the Proxy Statement), under the captions “Questions and Answers about the Company – Who are our Executive Officers for SECPurposes?,” “Corporate Governance Principles and Board Matters – Audit and Finance Committee,” “Proposal I – Election of Directors,” “Section 16(a)Beneficial Ownership Reporting Compliance,” “Audit and Finance Committee Report,” and “Corporate Governance Principles and Board Matters –Independence of Directors” is incorporated by reference herein.The Company has adopted the Harley-Davidson, Inc. Financial Code of Ethics applicable to the Company’s chief executive officer, the chief financialofficer, the principal accounting officer and the controller and other persons performing similar finance functions. The Company has posted a copy of theHarley-Davidson, Inc. Financial Code of Ethics on the Company’s website at http://investor.harley-davidson.com/. The Company intends to satisfy thedisclosure requirements under Item 5.05 of the Securities and Exchange Commission’s Current Report on Form 8-K regarding amendments to, or waiversfrom, the Harley-Davidson, Inc. Financial Code of Ethics by posting such information on its website at www.harley-davidson.com. The Company is notincluding the information contained on or available through its website as a part of, or incorporating such information by reference into, this Annual Reporton Form 10-K. Item 11. Executive CompensationThe information to be included in the Proxy Statement under the captions “Executive Compensation” and “Human Resources Committee Report onExecutive Compensation” is incorporated by reference herein. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersInformation to be included in the Proxy Statement under the caption “Common Stock Ownership of Certain Beneficial Owners and Management” isincorporated by reference herein.110The following table provides information about the Company’s equity compensation plans (including individual compensation arrangements) as ofDecember 31, 2017:Plan Category Number of securitiesto be issued upon theexercise ofoutstanding options Weighted-averageexerciseprice ofoutstandingoptions Number of securitiesremaining available forfuture issuance underequity compensationplans (excludingsecurities reflected inthe first column)Equity compensation plans approved by shareholders: Management employees 1,404,287 $48.13 10,768,576Equity compensation plans not approved by shareholders: Union employees: Kansas City, MO — $— 26,718York, PA — $— 96,770Non employees: Board of Directors — $— 33,466 — $— 156,954Total all plans 1,404,287 10,925,530Plan documents for each of the Company’s equity compensation plans have been filed with the Securities and Exchange Commission on a timely basisand are included in the list of exhibits to this annual report on Form 10-K. Equity compensation plans not submitted to shareholders for approval wereadopted prior to current regulations requiring such approval and have not been materially altered since adoption.The material features of the union employees’ stock option awards are the same as those of the management employees’ stock option awards. Under theCompany’s management and union plans, stock options have an exercise price equal to the fair market value of the underlying stock at the date of grant andexpire ten years from the date of grant. Stock options vest ratably over a three-year period with the first one-third of the grant becoming exercisable one yearafter the date of grant.The Director Compensation Policy provides non-employee Directors with compensation that includes an annual retainer as well as a grant of shareunits. The payment of share units is deferred until a director ceases to serve as a director and the share units are payable at that time in actual shares ofcommon stock. The Director Compensation Policy also provides that a non-employee Director may elect to receive 50% or 100% of the annual retainer to bepaid in each calendar year in the form of common stock based upon the fair market value of the common stock at the time of the annual meeting ofshareholders. Each Director must receive a minimum of one-half of his or her annual retainer in common stock until the Director reaches the Director stockownership guidelines defined below.In May 2016, the Board approved “Board of Directors and Senior Executive Stock Ownership Guidelines” (Ownership Guidelines). The OwnershipGuidelines stipulate that all Directors hold five times their annual retainer in shares of Common Stock and Vice Presidents, General Managers or higher(Senior Executives) hold from two times to six times of their base salary in shares of common stock, or certain rights to acquire common stock, depending ontheir level. The Directors and Senior Executives have five years from the date they are elected a Director or become a senior executive to accumulate theappropriate number of shares of common stock. Restricted stock, restricted stock units, shares held in 401(k) accounts, shares issuable under vestedunexercised stock options, performance shares and performance share units (at target amount), stock appreciation rights, deferred stock units and shares ofcommon stock held directly count toward satisfying the guidelines for common stock ownership.Item 13. Certain Relationships and Related Transactions, and Director IndependenceThe information to be included in the Proxy Statement under the caption “Certain Transactions” and “Corporate Governance Principles and BoardMatters – Independence of Directors” is incorporated by reference herein.Item 14. Principal Accounting Fees and ServicesThe information to be included in the Proxy Statement under the caption “Ratification of Selection of Independent Registered Public Accounting Firm– Fees Paid to Ernst & Young LLP” is incorporated by reference herein.111PART IVItem 15. Exhibits and Financial Statements(a) The following documents are filed as part of this Form 10-K: (1) Financial Statements Consolidated statements of income for each of the three years in the period ended December 31, 201750 Consolidated statements of comprehensive income for each of the three years in the period ended December 31, 201751 Consolidated balance sheets at December 31, 2017 and December 31, 201652 Consolidated statements of cash flows for each of the three years in the period ended December 31, 201754 Consolidated statements of shareholders’ equity for each of the three years in the period ended December 31, 201755 Notes to consolidated financial statements56(2) Financial Statement Schedule Schedule II – Valuation and qualifying accounts113(3) Exhibits114Reference is made to the separate Index to Exhibits contained on pages 114 through 118 filed herewith.All other schedules are omitted since the required information is not present or is not present in amounts sufficient to require submission of theschedules.Item 16. Form 10-K SummaryNone. 112Schedule IIHARLEY-DAVIDSON, INC.CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTSYears ended December 31, 2017, 2016 and 2015(In thousands) 2017 2016 2015Accounts receivable – allowance for doubtful accounts Balance, beginning of period $2,741 $2,905 $3,458Provision charged to expense 1,328 (101) 266Reserve adjustments 99 (63) (276)Write-offs, net of recoveries (77) — (543)Balance, end of period $4,091 $2,741 $2,905Finance receivables – allowance for credit losses Balance, beginning of period $173,343 $147,178 $127,364Provision for credit losses 132,444 136,617 101,345Charge-offs, net of recoveries (113,316) (107,161) (81,531)Other(a) — (3,291) —Balance, end of period $192,471 $173,343 $147,178Inventories – allowance for obsolescence(b) Balance, beginning of period $39,873 $26,740 $17,775Provision charged to expense 16,940 21,137 19,564Reserve adjustments 306 (88) (1,028)Write-offs, net of recoveries (18,450) (7,916) (9,571)Balance, end of period $38,669 $39,873 $26,740Deferred tax assets – valuation allowance Balance, beginning of period $30,953 $20,659 $25,462Adjustments (9,392) 10,294 (4,803)Balance, end of period $21,561 $30,953 $20,659 (a)Related to the sale of finance receivables during the second quarter of 2016 with a principal balance of $301.8 millionthrough an off-balance sheet asset-backed securitization transaction (see Note 10 for additional information).(b)Inventory obsolescence reserves deducted from cost determined on first-in, first-out (FIFO) basis, before deductions for last-in, first-out (LIFO)valuation reserves.113INDEX TO EXHIBITS[Items 15(a)(3) and 15(c)] Exhibit No. Description2.1 Asset Purchase Agreement, dated April 30, 2015, among Harley-Davidson Canada LP, Fred Deeley Imports Ltd. and Harley-Davidson Motor Company,Inc., as amended (incorporated herein by reference to Exhibit 2.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 28, 2015(File No. 1-9183))3.1 Restated Articles of Incorporation as amended through April 27, 2015 (incorporated herein by reference to Exhibit 3.1 to the Registrant’s Quarterly Reporton Form 10-Q for the quarter ended March 29, 2015 (File No. 1-9183))3.2 Harley-Davidson, Inc. By-Laws, as amended through April 27, 2015 (incorporated herein by reference by reference to Exhibit 3.2 to the Registrant'sQuarterly Report on Form 10-Q for the quarter ended March 29, 2015 (File No. 1-9183))4.1 Indenture to provide for the issuance of indebtedness dated as of November 21, 2003 between Harley-Davidson Funding Corp., Issuer, Harley-DavidsonFinancial Services, Inc. and Harley-Davidson Credit Corp., Guarantors, to BNY Midwest Trust Company, Trustee (incorporated herein by reference toExhibit 4.4 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2005 (File No. 1-9183))4.2 5-Year Credit Agreement, dated as of April 7, 2014, among the Company, certain subsidiaries of the Company, the financial institutions parties thereto andJPMorgan Chase Bank, N.A., as among other things, global administrative agent (incorporated herein by reference to Exhibit 4.1 to the Registrant’sQuarterly Current on Form 10-Q for the quarter ended March 30, 2014 (File No. 1-9183))4.3 Officers’ Certificate, dated May 22, 2008, pursuant to Sections 102 and 301 of the Indenture, dated November 21, 2003, with the forms of 6.80% Medium-Term Notes, Series C due 2018 (incorporated herein by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K dated May 15, 2008 (FileNo. 1-9183))4.4 Indenture, dated as of March 4, 2011, among Harley-Davidson Financial Services, Inc., Issuer, Harley-Davidson Credit Corp., Guarantor, and Bank ofNew York Mellon Trust Company, N.A., Trustee (incorporated herein by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K datedMarch 1, 2011 (File No. 1-9183))4.5 Officers' Certificate, dated September 16, 2014, pursuant to Sections 102 and 301 of the Indenture, dated March 4, 2011, with the forms of 2.400%Medium-Term Notes due 2019 (incorporated herein by reference to Exhibit 4.14 to the Registrant’s Annual Report of Form 10-K for the year endedDecember 31, 2014 (File No. 1-9183))4.6 Officers' Certificate, dated February 26, 2015, pursuant to Sections 102 and 301 of the Indenture, dated March 4, 2011, with the form of 2.150% Medium-Term Notes due 2020 (incorporated herein by reference to Exhibit 4.10 to the Registrant’s Annual Report of Form 10-K for the year ended December 31,2015 (File No. 1-9183))4.7 Indenture, dated July 28, 2015, by and between Harley-Davidson, Inc. and The Bank of New York Mellon Trust Company, N.A., as Trustee. (incorporatedherein by reference to Exhibit 4.1 to the Registrant's Current Report on Form 8-K dated July 28, 2015 (File No. 1-9183))4.8 Officers' Certificate, dated July 28, 2015 establishing the form of 3.500% Senior Notes due 2025 and 4.625% Senior Notes due 2045 (incorporated hereinby reference to Exhibit 4.2 to the Registrant's Current Report on From 8-K dates July 28, 2015 (File No. 1-9183))4.9 Officers' Certificate dated January 8, 2016, pursuant to Sections 102 and 301 of the Indenture, dated March 4, 2011, with the form of 2.250% Medium-Term Notes due 2019 (incorporated herein by reference to Exhibit 4.2 to the Registrant's Current Report on Form 8-K dated January 5, 2016 (File No. 1-9183))4.10 Officers' Certificate, dated January 8, 2016, pursuant to Sections 102 and 301 of the Indenture, dated March 4, 2011, with the form of 2.850% Medium-Term Notes due 2021 (incorporated herein by reference to Exhibit 4.3 to the Registrant's Current Report on Form 8-K dated January 5, 2016 (File No. 1-9183))4.11 Amendment No. 2 to 5-Year Credit Agreement, dated as of April 7, 2014, among the Company, certain subsidiaries of the Company, the financialinstitutions parties thereto and JPMorgan Chase Bank, N.A., as, among other things, global administrative agent, relating to the 5-Year Credit Agreement,dates as of April 13, 2012, among the Company, certain subsidiaries of the Company, the financial institutions parties thereto and JPMorgan Chase Bank,N.A., as among other things, global administrative agent. (incorporated herein by reference to Exhibit 4.15 to the Registrant’s Annual Report of Form 10-Kfor the year ended December 31, 2015 (File No. 1-9183))4.12 5-Year Credit Agreement, dated as of April 7, 2016 among the Company, certain subsidiaries of the Company, the financial institutions parties thereto andJPMorgan Chase Bank, N.A., as among other things, global administrative agent (incorporated herein by reference to Exhibit 4.1 to the Registrant’sQuarterly Report on Form 10-Q for the quarter ended March 27, 2016 (File No. 1-9183))Various instruments relating to the Company’s long-term debt described in this report need not be filed herewith pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K. Theregistrant, by signing this report, agrees to furnish the Securities and Exchange Commission, upon its request, with a copy of any such instrument.*Represents a management contract or compensatory plan, contract or arrangement in which a director or named executive officer of the Company participated.114INDEX TO EXHIBITS[Items 15(a)(3) and 15(c)] Exhibit No. Description4.13 Amendment No. 1 5-year Credit Agreement, dated as of April 7, 2016, among the Company, certain subsidiaries of the Company, the financial institutionsparties thereto, and JPMorgan Chase Bank, N.A., as, among other things, global administrative agent, relating to the 5-year Credit Agreement, dated as ofApril 7, 2014 among the Company, certain subsidiaries of the Company, the financial institutions parties thereto and JPMorgan Chase Bank, N.A., asamong other things, global administrative agent (incorporated herein by reference to Exhibit 4.2 to the Registrant's Quarterly Report on Form 10-Q for thequarter ended March 27, 2016 (File No. 1-9183))4.14 Officers' Certificate, dated March 10, 2017, pursuant to Sections 102 and 301 of the Indenture, dated March 4, 2011, with the form of 2.400% Medium-Term Notes due 20204.15 Officers' Certificate, dated March 10, 2017, pursuant to Sections 102 and 301 of the Indenture, dated March 4, 2011, with the form of Floating RateMedium-Term Notes due 20194.16 364-Day Credit Agreement, dated as of May 1, 2017, among the Company, certain subsidiaries of the Company, the financial institutions parties thereto andJPMorgan Chase Bank, N.A., as, among other things, global administrative agent4.17 Officers' Certificate, dated June 9, 2017, pursuant to Sections 102 and 301 of the Indenture, dated March 4, 2011, with the form of 2.550% Medium-TermNotes due 202210.1* Harley-Davidson, Inc. 2004 Incentive Stock Plan as amended through April 28, 2007 (incorporated herein by reference to Exhibit 10.4 to the Registrant’sQuarterly Report on Form 10-Q for the quarter ended April 1, 2007 (File No. 1-9183))10.2* Harley-Davidson, Inc. 2009 Incentive Stock Plan (incorporated herein by reference to Appendix A to the Company’s definitive proxy statement on Schedule14A for the Company’s Annual Meeting of Shareholders held on April 25, 2009 filed on April 3, 2009 (File No. 1-9183))10.3* Harley-Davidson, Inc. 2014 Incentive Stock Plan (incorporated herein by reference to Appendix A to the Company’s definitive proxy statement on Schedule14A for the Company’s Annual Meeting of Shareholders held on April 26, 2014 filed on March 14, 2014 (File No. 1-9183))10.4* Amended and Restated Harley-Davidson, Inc. Director Stock Plan as amended effective December 1, 2014 (incorporated herein by reference to Exhibit 10.6to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2014 (File No. 1-9183))10.5* Director Compensation Policy approved April 29, 2016 (incorporated herein by reference from Exhibit 10.1 to the Registrant’s Quarterly Report on Form10-Q for the quarter ended June 26, 2016 (File No. 1-9183))10.6* Deferred Compensation Plan for Nonemployee Directors as amended and restated effective January 1, 2009 (incorporated herein by reference to Exhibit10.14 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 1-9183))10.7* Harley-Davidson Management Deferred Compensation Plan as amended and restated effective January 1, 2017 (incorporated herein by reference to Exhibit10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 25, 2016 (File No. 1-9183))10.8* Harley-Davidson, Inc. Employee Incentive Plan (incorporated herein by reference to the Appendix to the Company’s definitive proxy statement on Schedule14A for the Company’s Annual Meeting of Shareholders held April 25, 2015 (File No. 1-9183))10.9* Harley-Davidson, Inc. Short-Term Incentive Plan for Senior Executives (incorporated herein by reference to Appendix D to the Company’s definitive proxystatement on Schedule 14A for the Company’s Annual Meeting of Shareholders held April 30, 2011 (File No. 1-9183))10.10* Harley-Davidson Pension Benefit Restoration Plan as amended and restated effective January 1, 2009 (incorporated herein by reference to Exhibit 10.9 tothe Registrant’s Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 1-9183))10.11* Form of Notice of Grant of Stock Options and Option Agreement of Harley-Davidson, Inc. under the Harley-Davidson, Inc. 2009 Incentive Stock Plan(incorporated herein by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 28, 2010 (File No. 1-9183))10.12* Form of Notice of Grant of Stock Options and Option Agreement (Transition Agreement) of Harley-Davidson, Inc. under the Harley-Davidson, Inc. 2009Incentive Stock Plan (incorporated herein by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 28,2010 (File No. 1-9183))10.13* Form of Notice of Special Grant of Stock Options and Option Agreement (Transition Agreement) of Harley-Davidson, Inc. under the Harley-Davidson,Inc. 2009 Incentive Stock Plan (incorporated herein by reference to Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q for the quarter endedMarch 28, 2010 (File No. 1-9183))10.14* Form of Notice of Award of Restricted Stock and Restricted Stock Agreement of Harley-Davidson, Inc. under the Harley-Davidson, Inc. 2009 IncentiveStock Plan (incorporated herein by reference to Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 28, 2010 (FileNo. 1-9183))*Represents a management contract or compensatory plan, contract or arrangement in which a director or named executive officer of the Company participated.115INDEX TO EXHIBITS[Items 15(a)(3) and 15(c)] Exhibit No. Description10.15* Form of Notice of Award of Restricted Stock and Restricted Stock Agreement (Transition Agreement) of Harley-Davidson, Inc. under the Harley-Davidson, Inc. 2009 Incentive Stock Plan (incorporated herein by reference to Exhibit 10.6 to the Registrant’s Quarterly Report on Form 10-Q for thequarter ended March 28, 2010 (File No. 1-9183))10.16* Form of Notice of Grant of Stock Appreciation Rights and Stock Appreciation Rights Agreement of Harley-Davidson, Inc. under the Harley-Davidson, Inc.2009 Incentive Stock Plan (incorporated herein by reference to Exhibit 10.10 to the Registrant’s Quarterly Report on Form 10-Q for the quarter endedMarch 28, 2010 (File No. 1-9183))10.17* Form of Notice of Award of Restricted Stock Units and Restricted Stock Unit Agreement of Harley-Davidson, Inc. under the Harley-Davidson, Inc. 2009Incentive Stock Plan (incorporated herein by reference to Exhibit 10.7 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 28,2010 (File No. 1-9183))10.18* Form of Notice of Award of Restricted Stock Units and Restricted Stock Unit Agreement (Transition Agreement) of Harley-Davidson, Inc. under theHarley-Davidson, Inc. 2009 Incentive Stock Plan (incorporated herein by reference to Exhibit 10.8 to the Registrant’s Quarterly Report on Form 10-Q forthe quarter ended March 28, 2010 (File No. 1-9183))10.19* Form of Notice of Award of Restricted Stock Units and Restricted Stock Unit Agreement (International) of Harley-Davidson, Inc. under the Harley-Davidson, Inc. 2009 Incentive Stock Plan (incorporated herein by reference to Exhibit 10.9 to the Registrant’s Quarterly Report on Form 10-Q for thequarter ended March 28, 2010 (File No. 1-9183))10.20* Form of Notice of Grant of Stock Options and Option Agreement of Harley-Davidson, Inc. under the Harley-Davidson, Inc. 2009 Incentive Stock Plan toeach of Messrs. Hund, Levatich and Olin (incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K dated May 1,2009 (File No. 1-9183))10.21* Form of Notice of Grant of Restricted Stock and Restricted Stock Agreement of Harley-Davidson, Inc. under the Harley-Davidson, Inc. 2009 IncentiveStock Plan to Mr. Hund (incorporated herein by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K dated May 1, 2009 (File No. 1-9183))10.22* Form of Notice of Grant of Stock Options and Option Agreement of Harley-Davidson, Inc. under the Harley-Davidson Inc. 1995 Stock Option Plan andthe Harley-Davidson, Inc. 2004 Incentive Stock Plan (incorporated herein by reference to Exhibit 10.21 to the Registrant’s Annual Report on Form 10-K forthe year ended December 31, 2005 (File No. 1-9183))10.23* Form of Notice of Special Grant of Stock Options and Option Agreement of Harley-Davidson, Inc. under the Harley-Davidson Inc. 1995 Stock OptionPlan and the Harley-Davidson, Inc. 2004 Incentive Stock Plan (incorporated herein by reference to Exhibit 10.22 to the Registrant’s Annual Report on Form10-K for the year ended December 31, 2005 (File No. 1-9183))10.24* Form of Notice of Award of Restricted Stock and Restricted Stock Agreement of Harley-Davidson, Inc. under the Harley-Davidson, Inc. 2004 IncentiveStock Plan (incorporated herein by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 29, 2009 (FileNo. 1-9183))10.25* Form of Notice of Special Award of Restricted Stock and Restricted Stock Agreement of Harley-Davidson, Inc. under the Harley-Davidson, Inc. 2004Incentive Stock Plan (incorporated herein by reference to Exhibit 10.6 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended April 1,2007 (File No. 1-9183))10.26* Form of Notice of Award of Restricted Stock Unit and Restricted Stock Unit Agreement of Harley-Davidson, Inc. under the Harley-Davidson, Inc. 2004Incentive Stock Plan (incorporated herein by reference to Exhibit 10.7 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended April 1,2007 (File No. 1-9183))10.27* Form of Notice of Grant Award of Stock Options and Stock Option Agreement (Standard) of Harley-Davidson, Inc. under the Harley-Davidson, Inc. 2014Incentive Stock Plan (incorporated herein by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 29,2015 (File No. 1-9183))10.28* Form of Notice of Grant Award of Stock Options and Stock Option Agreement (Transition Agreement) of Harley-Davidson, Inc. under the Harley-Davidson, Inc. 2014 Incentive Stock Plan (incorporated herein by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for thequarter ended March 29, 2015 (File No. 1-9183))10.29* Form of Notice of Grant Award of Restricted Stock Units and Restricted Stock Unit Agreement (Deferred) of Harley-Davidson, Inc. under the Harley-Davidson, Inc. 2014 Incentive Stock Plan (incorporated herein by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q for thequarter ended March 29, 2015 (File No. 1-9183))10.30* Form of Notice of Grant Award of Restricted Stock Units and Restricted Stock Unit Agreement (International) of Harley-Davidson, Inc. under the Harley-Davidson, Inc. 2014 Incentive Stock Plan (incorporated herein by reference to Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q for thequarter ended March 29, 2015 (File No. 1-9183))10.31* Form of Notice of Grant Award of Restricted Stock Units and Restricted Stock Unit Agreement (Special) of Harley-Davidson, Inc. under the Harley-Davidson, Inc. 2014 Incentive Stock Plan (incorporated herein by reference to Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10-Q for thequarter ended March 29, 2015 (File No. 1-9183))10.32* Form of Notice of Grant Award of Restricted Stock Units and Restricted Stock Unit Agreement (Standard) of Harley-Davidson, Inc. under the Harley-Davidson, Inc. 2014 Incentive Stock Plan (incorporated herein by reference to Exhibit 10.6 to the Registrant’s Quarterly Report on Form 10-Q for thequarter ended March 29, 2015 (File No. 1-9183))*Represents a management contract or compensatory plan, contract or arrangement in which a director or named executive officer of the Company participated.116INDEX TO EXHIBITS[Items 15(a)(3) and 15(c)] Exhibit No. Description10.33* Form of Notice of Grant Award of Restricted Stock Units and Restricted Stock Unit Agreement (Transition Agreement) of Harley-Davidson, Inc. under theHarley-Davidson, Inc. 2014 Incentive Stock Plan (incorporated herein by reference to Exhibit 10.7 to the Registrant’s Quarterly Report on Form 10-Q forthe quarter ended March 29, 2015 (File No. 1-9183))10.34* Form of Notice of Grant Award of Restricted Stock Units and Restricted Stock Unit Agreement (Deferred) of Harley-Davidson, Inc. under the Harley-Davidson, Inc. 2014 Incentive Stock Plan (incorporated herein by reference to Exhibit 10.8 to the Registrant’s Quarterly Report on Form 10-Q for thequarter ended March 29, 2015 (File No. 1-9183))10.35* Form of Notice of Grant Award of Stock Appreciation Rights and Stock Appreciation Rights Agreement of Harley-Davidson, Inc. under the Harley-Davidson, Inc. 2014 Incentive Stock Plan (incorporated herein by reference to Exhibit 10.9 to the Registrant’s Quarterly Report on Form 10-Q for thequarter ended March 29, 2015 (File No. 1-9183))10.36* Form of Executive Severance Plan between the Registrant and each of Messrs. Hund, Jones, Levatich and Olin10.37* Form of Transition Agreement between the Registrant and each of Messrs. Levatich and Olin (incorporated herein by reference to Exhibit 10.4 to theRegistrant’s Annual Report on Form 10-K for the year ended December 31, 2009 (File No. 1-9183))10.38* Transition Agreement between the Registrant and Mr. Hund dated November 30, 2009 (incorporated herein by reference to Exhibit 10.5 to the Registrant’sAnnual Report on Form 10-K for the year ended December 31, 2009 (File No. 1-9183))10.39* Form of Aircraft Time Sharing Agreement between the Registrant and each of Messrs. Levatich, Olin, Jones and Hund and Madame Bischmann(incorporated herein by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 (File No. 1-9183))10.40* Form of Non-competition and Non-solicitation Agreement between Harley-Davidson Canada LP, Fred Deeley Imports Ltd. and Harley-Davidson MotorCompany, Inc., as amended (incorporated herein by reference to exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June28, 2015 (File No. 1-9183))10.41* Form of Notice of Award of Performance Shares and Performance Shares Agreement (Standard) of Harley-Davidson, Inc. under the Harley-Davidson, Inc.2014 Incentive Stock Plan (incorporated herein by reference to Exhibit 10.43 to the Registrant’s Annual Report on Form 10-K for the year ended December31, 2015 (File No. 1-9183))10.42* Form of Notice of Award of Performance Share Units and Performance Share Unit Agreement (Standard International) of Harley-Davidson, Inc. under the Harley-Davidson, Inc. 2014 Incentive Stock Plan (incorporated herein by reference to Exhibit 10.44 to the Registrant’sAnnual Report on Form 10-K for the year ended December 31, 2015 (File No. 1-9183))10.43* Form of Notice of Award of Performance Shares and Performance Shares Agreement (Transition Agreement) of Harley-Davidson, Inc. under the Harley-Davidson, Inc. 2014 Incentive Stock Plan (incorporated herein by reference to Exhibit 10.45 to the Registrant’s Annual Report on Form 10-K for the yearended December 31, 2015 (File No. 1-9183))10.44* Harley-Davidson Retiree Insurance Allowance Plan, as amended and restated effective January 1, 2016 (incorporated herein by reference to Exhibit 10.44 tothe Registrant’s Annual Report on Form 10-K for the year ended December 31, 2016 (File No. 1-9183))10.45* Form of Notice of Award of Performance Shares and Performance Share Agreement (Standard) of Harley-Davidson, Inc. under the Harley-Davidson, Inc.2014 Incentive Stock Plan first approved for use in February 2017 (incorporated herein by reference to Exhibit 10.1 to the Registrant’s Annual Report onForm 10-Q for the quarter ended March 26, 2017 (File No. 1-9183))10.46* Form of Notice of Award of Performance Shares and Performance Share Agreement (Standard International) of Harley-Davidson, Inc. under the Harley-Davidson, Inc. 2014 Incentive Stock Plan first approved for use in February 2017(incorporated herein by reference to Exhibit 10.2 to the Registrant’sAnnual Report on Form 10-Q for the quarter ended March 26, 2017 (File No. 1-9183))10.47* Form of Notice of Award of Performance Shares and Performance Share Agreement (Transition Agreement) of Harley-Davidson, Inc. under the Harley-Davidson, Inc. 2014 Incentive Stock Plan first approved for use in February 2017 (incorporated herein by reference to Exhibit 10.3 to the Registrant’sAnnual Report on Form 10-Q for the quarter ended March 26, 2017 (File No. 1-9183))10.48* Form of Notice of Award of Performance Shares and Performance Share Agreement (Special Retention) of Harley-Davidson, Inc. under the Harley-Davidson, Inc. 2014 Incentive Stock Plan first approved for use in February 2017 (incorporated herein by reference to Exhibit 10.4 to the Registrant’sAnnual Report on Form 10-Q for the quarter ended March 26, 2017 (File No. 1-9183))21 List of Subsidiaries23 Consent of Independent Registered Public Accounting Firm31.1 Chief Executive Officer Certification pursuant to Rule 13a-14(a)31.2 Chief Financial Officer Certification pursuant to Rule 13a-14(a)*Represents a management contract or compensatory plan, contract or arrangement in which a director or named executive officer of the Company participated.117INDEX TO EXHIBITS[Items 15(a)(3) and 15(c)] Exhibit No. Description32 Written Statement of the Chief Executive Officer and the Chief Financial Officer pursuant to 18 U.S.C. §1350101.INS XBRL Instance Document101.SCH XBRL Taxonomy Extension Schema Document101.CAL XBRL Taxonomy Extension Calculation Linkbase Document101.DEF XBRL Taxonomy Extension Definition Linkbase Document101.LAB XBRL Taxonomy Extension Label Linkbase Document101.PRE XBRL Taxonomy Extension Presentation Linkbase DocumentVarious instruments relating to the Company’s long-term debt described in this report need not be filed herewith pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K. Theregistrant, by signing this report, agrees to furnish the Securities and Exchange Commission, upon its request, with a copy of any such instrument.*Represents a management contract or compensatory plan, contract or arrangement in which a director or named executive officer of the Company participated.118SIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on itsbehalf by the undersigned, thereunto duly authorized, on February 21, 2018. HARLEY-DAVIDSON, INC. By: /S/ Matthew S. Levatich Matthew S. Levatich President and Chief Executive Officer119Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of theregistrant and in the capacities indicated on February 21, 2018. Name Title /S/ Matthew S. Levatich President and Chief Executive OfficerMatthew S. Levatich (Principal executive officer) /S/ John A. Olin Senior Vice President and Chief Financial OfficerJohn A. Olin (Principal financial officer) /S/ Mark R. Kornetzke Chief Accounting OfficerMark R. Kornetzke (Principal accounting officer) /S/ Troy Alstead DirectorTroy Alstead /S/ R. John Anderson DirectorR. John Anderson /S/ Michael J. Cave Non-Executive ChairmanMichael J. Cave /S/ Allan Golston DirectorAllan Golston /S/ Sara L. Levinson DirectorSara L. Levinson /S/ N. Thomas Linebarger DirectorN. Thomas Linebarger /S/ Brian Niccol DirectorBrian Niccol /S/ Maryrose Sylvester DirectorMaryrose Sylvester /S/ Jochen Zeitz DirectorJochen Zeitz 120Exhibit 4.14OFFICERS’ CERTIFICATE OF HARLEY-DAVIDSON FINANCIAL SERVICES, INC.Pursuant to Sections 102 and 301 of the IndentureReference is made to the Indenture dated as of March 4, 2011 (the “Indenture”) among Harley-Davidson FinancialServices, Inc. (the “Company”), Harley-Davidson Credit Corp. (the “Guarantor”) and The Bank of New York Mellon TrustCompany, N.A., as trustee (“Trustee”). Terms used and not otherwise defined herein shall have the meanings ascribed thereto in theIndenture.Pursuant to Sections 102 and 301 of the Indenture, the undersigned, Ryan Green and James Darrell Thomas, in theirrespective capacities as Vice President and Chief Financial Officer of the Company, and Vice President and Treasurer of theCompany, hereby certify that:(1) There is hereby established a new series of Securities under the Indenture titled 2.400% Medium-Term Notes due2020 (the “Notes”).(2) The Notes shall be in substantially the form of Exhibit A hereto.(3) In addition to the terms provided in, or established pursuant to, the Indenture and the offering memorandum and thepricing supplement, both dated as of March 7, 2017, relating to the Notes (together referred to as the “Offering Memorandum”), theNotes, as authenticated and delivered, shall have the terms set forth in Exhibit A hereto (which terms are incorporated herein byreference and deemed to be set forth herein in full); provided, however, that in the event of a conflict between the provisions of theNotes and the Offering Memorandum, the provisions of the Notes shall prevail.(4) The Notes shall be registered in the name set forth on Exhibit A hereto and the Notes shall be delivered in themanner specified in the Administrative Procedures attached as Exhibit A to the Company Order delivered as of the date hereof and asdescribed in the Private Placement Agency Agreement dated as of March 1, 2011, among the Company, the Guarantor and the agentsparty thereto.(5) The issuance of Notes designated as 2.400% Medium-Term Notes due 2020, in an initial aggregate principalamount of $350,000,000, has been approved and authorized in accordance with the provisions of the Indenture pursuant to resolutionsadopted by the Board of Directors of the Company by unanimous written consent dated as of February 20, 2017 and by this Officers’Certificate; provided, however, that the Company shall have the right to reopen the series of the Notes and issue additional Securities,which shall be part of the same series as the Notes initially issued (except for the issue date, the public offering price and, in somecases, the first interest payment date).4832-1552-8003.3(6) All covenants and conditions precedent provided for in the Indenture relating to the establishment of the Notes, theterms of the Notes and the authentication and issuance of the Notes have been complied with.(7) No Event of Default has occurred and is continuing and the execution and delivery of the Indenture will not resultin a breach or violation of any of the terms and provisions of, or constitute a default under, the certificate of incorporation or bylaws ofthe Company, or any order of any court or administrative agency entered in any proceeding to which the Company is a party or bywhich it is bound or to which it is subject.Each of the undersigned officers of the Company further states (a) that he has read the applicable provisions of theIndenture, including but not limited to Section 301 thereof, and the definitions relating thereto in each case relating to the issuance,authentication and delivery of the Notes, (b) that the statements made in this certificate are based upon an investigation andexamination of the provisions of the Indenture and upon the relevant books and records of the Company, (c) in the opinion of suchofficer, he has made such examination or investigation as is necessary to enable such officer to express an informed opinion as towhether or not the covenants and conditions set forth in the Indenture relating to the issuance, authentication and delivery of the Noteshave been complied with and (d) in the opinion of such officer, such covenants and conditions relating to the issuance, authenticationand delivery of the Notes have been complied with.[Signature page follows]2IN WITNESS WHEREOF, each of the undersigned officers of the Company has affixed his signature this 10th dayMarch, 2017./s/ Ryan O. Green Name: Ryan GreenTitle: Vice President and Chief Financial Officer of Harley-Davidson FinancialServices, Inc./s/ J. Darrell Thomas Name: J. Darrell ThomasTitle: Vice President and Treasurerof Harley-Davidson Financial Services, Inc.[HDFS Officers’ Certificate Pursuant to Sections 102 and 301 of the Indenture – Fixed Rate Notes]Exhibit A to Officers’ Certificate Pursuant to Sections 102 and 301 of the Indenture HARLEY-DAVIDSON FINANCIAL SERVICES, INC. 2.400% MEDIUM-TERM NOTES DUE 2020Fully and Unconditionally Guaranteed by Harley-Davidson Credit Corp.THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTERREFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY (AS DEFINED IN THE INDENTURE) OR ANOMINEE THEREOF. THIS GLOBAL SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THENAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE ONLY IN THE LIMITEDCIRCUMSTANCES DESCRIBED IN THE INDENTURE AND, UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE ORIN PART FOR SECURITIES IN DEFINITIVE FORM, THIS GLOBAL SECURITY MAY NOT BE TRANSFERREDEXCEPT AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY, OR BY A NOMINEE OF THEDEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY, OR BY THE DEPOSITORYOR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITORY.UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORYTRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (“DTC”), TO THE COMPANY OR ITS AGENT FORREGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED INTHE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZEDREPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BEREQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USEHEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTEREDOWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE“SECURITIES ACT”) OR THE SECURITIES LAWS OF ANY OTHER JURISDICTION, AND, ACCORDINGLY, NEITHERTHIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCHREGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATIONREQUIREMENTS OF THE SECURITIES ACT AND ANY OTHER APPLICABLE JURISDICTION. BY ITS ACCEPTANCEHEREOF, THE HOLDER OF THIS SECURITY OR ANY INTEREST OR PARTICIPATION HEREIN (1) REPRESENTSTHAT (A) IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIESACT), OR (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTIONWITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, AND (2) AGREES TO OFFER, SELL OROTHERWISE TRANSFERSUCH SECURITY, PRIOR TO THE DATE (THE “RESALE RESTRICTION TERMINATION DATE”) WHICH IS ONEYEAR AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THECOMPANY OR ANY AFFILIATE THEREOF WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OFSUCH SECURITY) ONLY (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO ANEFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIESARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS AQUALIFIED INSTITUTIONAL BUYER THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF AQUALIFIED INSTITUTIONAL BUYER TO WHICH NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE INRELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS IN OFFSHORETRANSACTIONS WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO ANACCREDITED INVESTOR WITHIN THE MEANING OF SUBPARAGRAPH (a)(1), (2), (3) OR (7) OF RULE 501 OFREGULATION D UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS SECURITY OR ANY INTEREST ORPARTICIPATION HEREIN FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN ACCREDITEDINVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE INCONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT OR (F) PURSUANT TOANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,SUBJECT TO THE COMPANY’S AND THE TRUSTEE’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER(i) PURSUANT TO CLAUSES (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND (ii) IN EACH OF THEFOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THEOTHER SIDE OF THIS SECURITY BE COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE.THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTIONTERMINATION DATE.THE HOLDER OF THIS SECURITY WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANYPURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTHABOVE.2HARLEY-DAVIDSON FINANCIAL SERVICES, INC. 2.400% MEDIUM-TERM NOTES DUE 2020Fully and Unconditionally Guaranteed by Harley-Davidson Credit Corp.No. Principal Amount $CUSIP No. as revised by the Schedule of ISIN No. Increases and Decreases in GlobalNote attached heretoIssue Price: 99.972%Maturity Date: June 15, 2020Original Issue Date: March 10, 2017Index Maturity: [ ] Original Issue Discount Note Total Amount of OID: Yield to Maturity: % Initial Accrual Period OID:[X] Fixed Rate Interest Rate: 2.400% [ ] Floating Rate Interest Rate Basis: ___ CD RateSpecified Currency (if other than U.S. dollars): N/A___ CMT Rate [ ] CMT Reuters Page FRBCMT: [ ] CMT Reuters Page FEDCMT:Option To Receive Payments In Specified Currency (non-U.S. dollar denominated Note): N/A___ Commercial Paper Rate ___ Federal Funds Rate ___ LIBORAuthorized Denomination: Minimum denominations of$2,000 and integral multiples of $1,000 in excess thereof ___ Prime RatePlace of Payment (if other than as set forth in the Indenture):N/A3___ Treasury Rate ___ Other Spread (Plus Or Minus):Initial Redemption Date: Initial Redemption Percentage: Annual Redemption Percentage Reduction: Repayment Date:Spread Multiplier: %Renewable: [ ] Yes [ ] No Extendible: [ ] Yes [ ] NoInterest Category: [ ] Regular Floating Rate NoteFinal Maturity Date:[ ] Floating Rate/Fixed Rate Note Fixed Rate Commencement Date: Fixed Interest Rate: % [ ] Inverse Floating Rate NoteInitial Interest Rate:Initial Interest Reset Date:Maximum Interest Rate: %Interest Reset Dates:Minimum Interest Rate: %Interest Payment Dates (in the case of a Floating Rate Note and, in thecase of a Fixed Rate Note, other than as set forth below): N/A Regular Record Dates (if other than as set forth below): N/A Interest Determination Dates (if other than as set forth below): N/A Additional Amounts applicable for Company: [ ] Yes [X] No Additional Amounts applicable for Guarantor: [ ] Yes [X] No Addendum AttachedOther Provisions:[ ] Yes 4[X] No Authorized Denomination (only if non-U.S. dollar denominated Note):N/A Calculation Agent (if other than the Trustee): N/A Interest Payment Period: N/A Harley-Davidson Financial Services, Inc., a corporation duly organized under the laws of the State of Delaware (herein calledthe “Company,” which term includes any successor corporation under the Indenture hereinafter referred to), for value received, herebypromises to pay to Cede & Co., or registered assigns, the Principal Amount specified above, as revised by the Schedule of Increasesand Decreases in Global Note attached hereto, on the Maturity Date specified above and to pay to the registered holder of this Note(the “Holder”) interest on said Principal Amount at a rate per annum specified above and upon the terms provided below under eitherthe heading “Provisions Applicable to Fixed Rate Notes Only” or “Provisions Applicable to Floating Rate Notes Only.”This Note is one of the Company’s duly authorized issue of notes in the series titled 2.400% Medium-Term Notes due 2020(herein referred to as the “Notes”), all issued or to be issued under an indenture, dated as of March 4, 2011 (as may be supplementedfrom time to time, the “Indenture”), among the Company, Harley-Davidson Credit Corp. (the “Guarantor”) and The Bank of NewYork Mellon Trust Company, N.A., as trustee (the “Trustee,” which term includes any successor trustee under the Indenture), to whichIndenture reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of theTrustee, the Company, the Guarantor and the Holders of the Notes and of the terms upon which the Notes are, and are to be,authenticated and delivered. The Notes of this series are limited (except as otherwise provided in the Indenture) to the aggregateprincipal amount established from time to time by the Company Board of Directors. The Notes of this series may be issued at varioustimes with different maturity dates and different principal repayment provisions, may bear interest at different rates and may otherwisevary, all as provided in the Indenture. The Notes of this series may be subject to redemption upon notice and in accordance with theprovisions of this Note and the Indenture. The Company and the Guarantor may defease the Notes of this series in accordance with theprovisions of the Indenture.To secure the due and punctual payment of principal, any premium, any interest and Additional Amounts (as defined in theIndenture) on this Note by the Company under the Indenture, when and as the same shall become due and payable, whether at theMaturity Date, by declaration of acceleration, call for redemption or otherwise, the Guarantor has unconditionally guaranteed this Notepursuant to the terms of the Guarantee endorsed hereon and in Section 1401 of the Indenture (the “Guarantee”).As used herein, the term “Business Day” means any day, other than a Saturday or Sunday, that is neither a legal holiday nor aday on which commercial banks are authorized or5required by law, regulation or executive order to close in the City of New York; provided, however, that if a Specified Currency isspecified above, the day is also not a day on which commercial banks are authorized or required by law, regulation or executive orderto close in the Principal Financial Center (as defined below) of the country issuing such Specified Currency or, if such SpecifiedCurrency is the Euro, the day is also a day on which the Trans-European Automated Real-Time Gross Settlement Express Transfer(TARGET) System is open; provided further that if LIBOR is indicated above to be an applicable Interest Rate Basis, the day is also aLondon Banking Day (as defined below).“Principal Financial Center” means, unless otherwise provided in this Note, the capital city of the country issuing the SpecifiedCurrency; except that with respect to United States dollars, Australian dollars, Canadian dollars, South African rand and Swiss francs,the “Principal Financial Center” will be the City of New York, Sydney and (solely in the case of the Specified Currency) Melbourne,Toronto, Johannesburg and Zurich, respectively.“London Banking Day” means a day which commercial banks are open for business, including dealings in U.S. dollars, inLondon.Provisions Applicable To Fixed Rate Notes Only:If the “Fixed Rate” line above is checked, unless otherwise specified above, the Company will pay interest semiannually onJune 15 and December 15 of each year (each such date fixed for the payment of interest, an “Interest Payment Date”) commencing onDecember 15, 2017, and ending on the Maturity Date or upon earlier redemption or repayment to the person to whom principal ispayable. Interest shall accrue from the Original Issue Date, or from the most recent Interest Payment Date to which interest has beenpaid or duly provided for on this Note to, but excluding, the next following Interest Payment Date, Maturity Date, or earlier date ofredemption or repayment, as the case may be. Interest on Fixed Rate Notes will be computed by the Company on the basis of a 360-day year consisting of twelve 30-day months.If any Interest Payment Date or the Maturity Date (or the date of earlier redemption or repayment) of this Fixed Rate Note fallson a day that is not a Business Day, the payment will be made on the next Business Day as if it were made on the date such paymentwas due, and no interest will accrue on the amount so payable for the period from and after such Interest Payment Date or the MaturityDate (or the date of earlier redemption or repayment), as the case may be.Provisions Applicable To Floating Rate Notes Only:If the “Floating Rate” line above is checked, the Company will pay interest on the Interest Payment Dates shown specifiedabove at the Initial Interest Rate specified above until the first Interest Reset Date specified above following the Original Issue Datespecified above and thereafter at a rate determined in accordance with the provisions hereinafter set forth under the headings“Determination of CD Rate,” “Determination of CMT Rate,” “Determination of Commercial Paper Rate,” “Determination of FederalFunds Rate,” “Determination of LIBOR,” “Determination of Prime Rate” or “Determination of Treasury Rate,” depending on whetherthe6Interest Rate Basis is the CD Rate, the CMT Rate, the Commercial Paper Rate, the Federal Funds Rate, LIBOR, the Prime Rate, theTreasury Rate or other Interest Rate Basis.An interest payment shall be the amount of interest accrued from and including the Original Issue Date, or from and includingthe last Interest Payment Date to which interest has been paid, to, but excluding, the next following Interest Payment Date, MaturityDate, or date of earlier redemption or repayment, as the case may be (an “Interest Period”). Notwithstanding any provision herein tothe contrary, the interest rate hereon shall not be greater than the Maximum Interest Rate, if any, or less than the Minimum InterestRate, if any, specified above.If any Interest Payment Date for any Floating Rate Note, other than an Interest Payment Date at maturity, would fall on a daythat is not a Business Day, such Interest Payment Date will be the following day that is a Business Day, and interest will continue toaccrue to the following Business Day, except that if LIBOR is the applicable Interest Rate Basis, if such Business Day is in the nextsucceeding calendar month, such Interest Payment Date will be the immediately preceding day that is a Business Day. If the MaturityDate (or date of earlier redemption or repayment) of any Floating Rate Note would fall on a day that is not a Business Day, thepayment of interest and principal (and premium, if any) may be made on the next succeeding Business Day, and no interest on suchpayment will accrue for the period from and after the Maturity Date (or the date of earlier redemption or repayment).Commencing with the first Interest Reset Date specified above following the Original Issue Date, the rate at which interest onthis Note is payable shall be adjusted daily, weekly, monthly, quarterly, semi-annually or annually as specified above under “InterestReset Dates.”The interest rate borne by this Note will be determined as follows:(i) Unless the Interest Category of this Note is specified above as a “Floating Rate/Fixed Rate Note” or an “Inverse FloatingRate Note” or in the event either “Other Provisions” or an Addendum hereto applies, in each case, relating to a different interest rateformula, this Note shall be designated as a “Regular Floating Rate Note” and, except as set forth below or specified above under“Other Provisions” or in an Addendum hereto, shall bear interest at the rate determined by reference to the applicable Interest RateBasis or Bases (a) plus or minus the applicable Spread, if any, and/or (b) multiplied by the applicable Spread Multiplier, if any; in eachcase as specified above. Commencing on the Initial Interest Reset Date, the rate at which interest on this Note shall be payable shall bereset as of each Interest Reset Date specified above; provided, however, that the interest rate in effect for the period, if any, from theOriginal Issue Date to the Initial Interest Reset Date shall be the Initial Interest Rate.(ii) If the Interest Category of this Note is specified above as a “Floating Rate/Fixed Rate Note” then, except as set forthbelow or specified above under “Other Provisions” or in an Addendum hereto, this Note shall bear interest at the rate determined byreference to the applicable Interest Rate Basis or Bases (a) plus or minus the applicable Spread, if any, and/or (b) multiplied by theSpread Multiplier, if any, in each case as specified above. Commencing on the Initial Interest Reset Date, the rate at which interest onthis Note shall be payable shall be reset as of each Interest Reset Date; provided, however, that (y) the interest rate in effect for the7period, if any, from the Original Issue Date to the Initial Interest Reset Date shall be the Initial Interest Rate and (z) the interest rate ineffect for the period commencing on, and including, the Fixed Rate Commencement Date specified above to the Maturity Date (or dateof earlier redemption or repayment) shall be the Fixed Interest Rate specified above or, if no Fixed Interest Rate is so specified, theinterest rate in effect on the day immediately preceding the Fixed Rate Commencement Date.(iii) If the Interest Category of this Note is specified above as an “Inverse Floating Rate Note” then, except as set forth belowor specified above under “Other Provisions” or in an Addendum hereto, this Note shall bear interest at (a) the Fixed Interest Ratespecified above minus (b) the rate determined by reference to the applicable Interest Rate Basis or Bases:(x) plus or minus the applicable Spread, if any, and/or(y) multiplied by the applicable Spread Multiplier, if any, in each case as specified above;provided, however, that, unless otherwise specified above under “Other Provisions” or in an Addendum hereto, the interest rate hereonshall not be less than zero. Commencing on the Initial Interest Reset Date, the rate at which interest on this Note shall be payable shallbe reset on each Interest Reset Date; provided, however, that the interest rate in effect for the period, if any, from the Original IssueDate to the Initial Interest Reset Date shall be the Initial Interest Rate set forth above.The “Spread” is the number of basis points (one basis point equals one-hundredth of a percentage point) specified above to beadded to or subtracted from the Interest Rate Basis for a Floating Rate Note, and the “Spread Multiplier” is the percentage specifiedabove by which the Interest Rate Basis for such Floating Rate Note will be multiplied. Both a Spread and/or a Spread Multiplier maybe applicable to the Interest Rate Basis for a particular Floating Rate Note, as set forth above.Each such adjusted Interest Rate Basis shall be applicable on and after the Interest Reset Date to which it relates but notincluding the next succeeding Interest Reset Date. If any Interest Reset Date is a day that is not a Business Day, such Interest ResetDate shall be postponed to the next day that is a Business Day, except that if the rate of interest on this Note shall be determined byreference to LIBOR and such Business Day is in the next succeeding calendar month, such Interest Reset Date shall be theimmediately preceding Business Day. In addition, if the Treasury Rate is the applicable Interest Rate Basis and the InterestDetermination Date would otherwise fall on an Interest Reset Date, then the Interest Reset Date will be postponed to the nextsucceeding Business Day. Subject to applicable provisions of law (including usury laws) and except as specified in this Note, on eachInterest Reset Date, the rate of interest on this Note shall be the rate determined in accordance with the provisions of the applicableheading below.With respect to a Floating Rate Note, accrued interest shall be calculated by multiplying the principal amount thereof by anaccrued interest factor. Such accrued interest factor will be computed by adding the interest factors calculated for each day in theInterest Period or from the8last date from which accrued interest is being calculated. The interest factor for each such day is computed by dividing the interest rateapplicable to such day by 360, in the cases of CD Rate Notes, Commercial Paper Rate Notes, Federal Funds Rate Notes, LIBORNotes and Prime Rate Notes or by the actual number of days in the year, in the cases of CMT Rate Notes and Treasury Rate Notes.The interest rate applicable to any day that is an Interest Reset Date will be the interest rate effective on such Interest Reset Date. Theinterest rate applicable to any other day will be the interest rate for the immediately preceding Interest Reset Date (or, if none, the InitialInterest Rate, as specified above).The “Calculation Date,” where applicable, pertaining to an Interest Determination Date will be the earlier of (i) the tenthcalendar day after such Interest Determination Date or, if any such day is not a Business Day, the next succeeding Business Day or(ii) the Business Day preceding the applicable Interest Payment Date or the Maturity Date (or the date of earlier redemption orrepayment), as the case may be.For Floating Rate Notes, The Bank of New York Mellon Trust Company, N.A. shall be the calculation agent unless anothercalculation agent is specified above (the “Calculation Agent”). The interest rate applicable to each interest period will be determined bythe Calculation Agent on or prior to the applicable Calculation Date. At the request of the Holder, the Calculation Agent will providethe interest rate then in effect and, if determined, the interest rate which will become effective on the next Interest Reset Date.All percentages resulting from any calculation of the rate of interest on a Floating Rate Note will be rounded, if necessary, tothe nearest one hundred-thousandth of a percent (.0000001), with five one-millionths of a percentage point rounded upward, and alldollar amounts used in or resulting from such calculation on Floating Rate Notes will be rounded to the nearest cent (with one-half centbeing rounded upward).Determination of CD Rate. If the Interest Rate Basis, as specified above, is, or is calculated by reference to, the CD Rate,unless otherwise specified above, the “CD Rate” for each Interest Reset Date will be determined by the Calculation Agent as of thesecond Business Day prior to such Interest Reset Date (a “CD Interest Determination Date”) and shall be the rate on the applicable CDInterest Determination Date for negotiable United States dollar certificates of deposit having the Index Maturity specified above aspublished in H.15(519) (as defined below) on such CD Interest Determination Date under the heading “CDs (secondary market).” Ifthe rate referred to in the preceding sentence is not so published by 3:00 p.m., New York City time, on the applicable Calculation Date,the CD Rate shall be the rate on the applicable CD Interest Determination Date for negotiable United States dollar certificates ofdeposit of the Index Maturity specified above as published in H.15 Daily Update (as defined below), or other recognized electronicsource used for the purpose of displaying the applicable rate, under the caption “CDs (secondary market).” If the rate referred to in thepreceding sentence is not so published by 3:00 p.m., New York City time, on the applicable Calculation Date, the CD Rate shall be therate on the applicable CD Interest Determination Date calculated by the Calculation Agent on the Notes as the arithmetic mean of thesecondary market offered rates as of 10:00 a.m., New York City time, on the applicable CD Interest Determination Date, of threeleading9non-bank dealers in negotiable United States dollar certificates of deposit in the City of New York (which may include an agent or itsaffiliates) selected by the Company for negotiable United States dollar certificates of deposit of major United States money marketbanks with a remaining maturity closest to the Index Maturity specified above in an amount that is representative for a singletransaction in that market at that time. If the dealers selected by the Company as provided in the preceding sentence are not quoting asmentioned in such sentence, the CD Rate shall be the CD Rate in effect on the applicable CD Interest Determination Date.“H.15(519)” means the weekly statistical release designated as H.15(519), or any successor publication, published by theBoard of Governors of the Federal Reserve System.“H.15 Daily Update” means the daily update of H.15(519), available through the world-wide-web site of the Board ofGovernors of the Federal Reserve System at http://www.federalreserve.gov/releases/h15/update, or any successor site or publication.Determination of CMT Rate. If the Interest Rate Basis, as specified above, is, or is calculated by reference to, the CMT Rate,unless otherwise specified above, the “CMT Rate” for each Interest Reset Date will be determined by the Calculation Agent as of thesecond Business Day prior to such Interest Reset Date (a “CMT Interest Determination Date”) and shall be, if “CMT Reuters PageFRBCMT” is specified above, the percentage equal to the yield for United States Treasury securities at “constant maturity” having theIndex Maturity specified above, as the yield is displayed on Reuters, Inc. (or any successor or similar service), on page FRBCMT (orany other page as may replace the specified page on that service under the caption “Treasury Constant Maturities”) (“Reuters PageFRBCMT”). If the rate referred to in the preceding sentence does not appear on Reuters Page FRBCMT, the CMT Rate for suchCMT Interest Determination Date will be a percentage equal to the yield for United States Treasury securities at “constant maturity”having the Index Maturity specified above, and for the applicable CMT Interest Determination Date as published in H.15(519) underthe caption “Treasury Constant Maturities.” In the event the rate referred to in the preceding sentence does not appear in H.15(519),then the CMT Rate for such CMT Interest Determination Date will be the rate on the applicable CMT Interest Determination Date forthe period of the Index Maturity specified above, as may then be published by either the Board of Governors of the Federal ReserveSystem or the United States Department of the Treasury that the Calculation Agent determines to be comparable to the rate whichwould otherwise have been published in H.15(519). In the event the rate referred to in the preceding sentence is not published, theCMT Rate on the applicable CMT Interest Determination Date will be calculated by the Calculation Agent as a yield-to-maturity basedon the arithmetic mean of the secondary market bid prices at approximately 3:30 p.m., New York City time, on the applicable CMTInterest Determination Date of three leading primary United States government securities dealers in the City of New York, which mayinclude an agent of the Company or such agent’s affiliates (each a “Reference Dealer”), selected by the Company (from five ReferenceDealers selected by the Company and eliminating the highest quotation (or, in the event of equality, one of the highest), and the lowestquotation (or, in the event of equality, one of the lowest)), for United States Treasury securities with an original maturity equal to theIndex Maturity specified above, a remaining term to maturity no more than one year shorter than the Index Maturity specified aboveand in a principal amount that is10representative for a single transaction in the securities in the market at that time. If fewer than five but more than two of the pricesreferred to in the above sentence are provided as requested, the CMT Rate on the applicable CMT Interest Determination Date will becalculated by the Calculation Agent based on the arithmetic mean of the bid prices obtained, and neither the highest nor the lowest ofthe quotations shall be eliminated; provided, however, that if fewer than three prices referred to above are provided as requested, theCMT Rate on the applicable CMT Interest Determination Date will be calculated by the Calculation Agent as a yield-to-maturity basedon the arithmetic mean of the secondary market bid prices as of approximately 3:30 p.m., New York City time, on the applicable CMTInterest Determination Date of three Reference Dealers selected by the Company from five Reference Dealers selected by theCompany and eliminating the highest quotation or, in the event of equality, one of the highest and the lowest quotation or, in the eventof equality, one of the lowest, for United States Treasury securities with an original maturity greater than the Index Maturity specifiedabove, and a remaining term to maturity closest to the Index Maturity specified above, and in a principal amount that is representativefor a single transaction in the securities in the market at that time. However, if fewer than five but more than two prices referred toabove are provided as requested, the CMT Rate on the applicable CMT Interest Determination Date will be calculated by theCalculation Agent based on the arithmetic mean of the bid prices obtained, and neither the highest nor the lowest of the quotations willbe eliminated. If fewer than three prices referred to above are provided as requested, the CMT Rate on the applicable CMT InterestDetermination Date will be the CMT Rate in effect on the applicable CMT Interest Determination Date. If the CMT Reuters PageFEDCMT is specified above, the CMT Rate for such CMT Interest Determination Date will be a percentage equal to the one-week orone-month, as specified above, and will be the average yield for United States Treasury securities at “constant maturity” having theIndex Maturity specified above, as the yield is displayed on Reuters, Inc. (or any successor service) on page FEDCMT (or any otherpage as may replace that specified page on that service) (“Reuters Page FEDCMT”), for the week or month, as applicable, endedimmediately preceding the week or month, as applicable, in which the related CMT Interest Determination Date falls. If the ratereferred to in the preceding sentence does not appear on Reuters Page FEDCMT, then the CMT Rate for such CMT InterestDetermination Date will be a percentage equal to the one-week or one-month, as specified above, average yield for United StatesTreasury securities at “constant maturity” having the Index Maturity specified above, and for the week or month, as applicable,preceding the applicable CMT Interest Determination Date as published in H.15(519) opposite the caption “Treasury ConstantMaturities.” If the rate referred to in the preceding sentence does not appear in H.15(519), then the CMT Rate for such CMT InterestDetermination Date will be the one-week or one-month, as specified above, average yield for United States Treasury securities at“constant maturity” having the Index Maturity specified above, as otherwise announced by the Federal Reserve Bank of New York forthe week or month, as applicable, ended immediately preceding the week or month, as applicable, in which the related CMT InterestDetermination Date falls. If the Federal Reserve Bank of New York does not publish the rate referred to above, the rate on theapplicable CMT Interest Determination Date will be calculated by the Calculation Agent as a yield-to-maturity based on the arithmeticmean of the secondary market bid prices at approximately 3:30 p.m., New York City time, on the applicable CMT InterestDetermination Date of three Reference Dealers selected by the Company (from five Reference Dealers selected by the Company andeliminating the highest quotation (or, in the11event of equality, one of the highest), and the lowest quotation (or, in the event of equality, one of the lowest)), for United StatesTreasury securities with an original maturity equal to the Index Maturity specified above, and a remaining term to maturity no morethan one year shorter than the Index Maturity specified above, and in a principal amount that is representative for a single transaction inthe securities in the market at that time. If fewer than five but more than two of the prices referred to above are provided as requested,the rate on the applicable CMT Interest Determination Date will be calculated by the Calculation Agent based on the arithmetic meanof the bid prices obtained, and neither the highest nor the lowest of the quotations shall be eliminated. If fewer than three prices referredto above are provided as requested, the rate on the applicable CMT Interest Determination Date will be calculated by the CalculationAgent as a yield-to-maturity based on the arithmetic mean of the secondary market bid prices as of approximately 3:30 p.m., NewYork City time, on the applicable CMT Interest Determination Date of three Reference Dealers selected by the Company (from fiveReference Dealers selected by the Company and eliminating the highest quotation or (in the event of equality, one of the highest) andthe lowest quotation (or, in the event of equality, one of the lowest)), for United States Treasury securities with an original maturitygreater than the Index Maturity specified above, and a remaining term to maturity closest to the Index Maturity specified above and willbe in a principal amount that is representative for a single transaction in the securities in the market at that time. If fewer than five butmore than two prices referred to above are provided as requested, the rate will be calculated by the Calculation Agent based on thearithmetic mean of the bid prices obtained, and neither the highest nor the lowest of the quotations will be eliminated, or if fewer thanthree prices referred to above are provided as requested, the CMT Rate will be the CMT Rate in effect on the applicable CMT InterestDetermination Date. If two United States Treasury securities with an original maturity greater than the Index Maturity as specifiedabove have remaining terms to maturity equally close to the Index Maturity specified above, the quotes for the United States Treasurysecurity with the shorter original remaining term to maturity will be used.Determination of Commercial Paper Rate. If the Interest Rate Basis, as specified above, is, or is calculated by reference to,the Commercial Paper Rate, unless otherwise specified above, the “Commercial Paper Rate” for each Interest Reset Date will bedetermined by the Calculation Agent as of the second Business Day prior to such Interest Reset Date (a “Commercial Paper InterestDetermination Date”) and shall be the Money Market Yield (as defined below) on such date of the rate for commercial paper havingthe Index Maturity as indicated above, as such rate shall be published in H.15(519) under the caption “Commercial Paper-Nonfinancial.” In the event that such rate is not published prior to 3:00 p.m., New York City time, on the applicable Calculation Date,then the Commercial Paper Rate shall be calculated by the Calculation Agent as the Money Market Yield of the Commercial PaperRate on the applicable Commercial Paper Interest Determination Date for commercial paper having the Index Maturity specifiedabove, published in H.15 Daily Update, or other recognized electronic source used for the purpose of displaying the applicable rate,under the caption “Commercial Paper-Nonfinancial.” If by 3:00 p.m., New York City time, on the applicable Calculation Date, suchrate is not yet published as provided in the preceding sentence, then the Commercial Paper Rate on the applicable Commercial PaperInterest Determination Date shall be calculated by the Calculation Agent as the Money Market Yield of the arithmetic mean of the12offered rates at approximately 11:00 a.m., New York City time, on the applicable Commercial Paper Interest Determination Date ofthree leading dealers of United States dollar commercial paper in the City of New York, which may include an agent of the Companyor such agent’s affiliates, selected by the Calculation Agent for commercial paper having the Index Maturity specified above, placedfor industrial issuers whose bond rating is “Aa,” or the equivalent, from a nationally recognized statistical rating organization; provided,however, that if the dealers selected as aforesaid by the Company are not quoting offered rates as mentioned in this sentence, theCommercial Paper Rate will be the Commercial Paper Rate in effect on the applicable Commercial Paper Interest Determination Date.“Money Market Yield” shall be a yield calculated in accordance with the following formula and expressed as a percentage:Money market yield =D × 360× 100360 - (D × M)where “D” refers to the applicable per annum rate for commercial paper quoted on a bank discount basis and expressed as a decimal;and “M” refers to the actual number of days in the interest period for which interest is being calculated.Determination of Federal Funds Rate. If the Interest Rate Basis, as specified above, is, or is calculated by reference to theFederal Funds Rate, unless otherwise specified above, the “Federal Funds Rate” with respect to each Interest Reset Date will bedetermined by the Calculation Agent as of the first Business Day prior to such Interest Reset Date (a “Federal Funds InterestDetermination Date”) and shall be the rate on that date for United States dollar Federal Funds as published in H.15(519) under theheading “Federal Funds (Effective),” as displayed on Reuters, Inc. (or any successor service) on page FEDFUND01 (or any otherpage as may replace the applicable page on that service) (“Reuters Page FEDFUND01”) or, if such rate does not appear on ReutersPage FEDFUND01, or is not so published by 3:00 p.m., New York City time, on the applicable Calculation Date, the rate on theapplicable Federal Funds Interest Determination Date for United States dollar Federal Funds will be the rate on such Federal FundsInterest Determination Date as published in H.15 Daily Update, or other recognized electronic source used for the purpose ofdisplaying the applicable rate, under the caption “Federal Funds (Effective).” If such rate is not so published by 3:00 p.m., New YorkCity time, on the applicable Calculation Date, the Federal Funds Rate will be calculated by the Calculation Agent and will be thearithmetic mean of the rates for the last transaction in overnight United States dollar Federal Funds arranged by three leading brokers ofUnited States dollar Federal Funds transactions in the City of New York, which may include an agent of the Company or such agent’saffiliates, selected by the Company before 9:00 a.m., New York City time, on the applicable Federal Funds Interest DeterminationDate; provided, however, that if the brokers selected as aforesaid by the Company are not quoting as mentioned in this sentence, theFederal Funds Rate will be the Federal Funds Rate in effect on the applicable Federal Funds Interest Determination Date.Determination of LIBOR. If the Interest Rate Basis, as specified above, is, or is calculated by reference to, LIBOR, unlessotherwise specified above, “LIBOR” for each Interest13Reset Date will be determined by the Calculation Agent as of the second London Banking Day prior to such Interest Reset Date (a“LIBOR Interest Determination Date”) and shall be the rate (express as a percentage per annum) for deposits in U.S. dollars having athree-month maturity that appears on Reuters LIBOR01 at approximately 11:00 a.m., London time, on the applicable LIBOR InterestDetermination Date, or if Reuters LIBOR01 is not available on such date, the Calculation Agent will obtain such rate fromBloomberg’s page “BBAM.” If such rate does not appear on Reuters LIBOR01 or Bloomberg’s page “BBAM” on such LIBORInterest Determination Date at approximately 11:00 a.m., London time, then the Calculation Agent will request the principal Londonoffice of each of four major banks in the London interbank market, as selected by the Company, to provide a quotation of the rate(expressed as a percentage per annum) offered by it to prime banks in the London interbank market for three‑month deposits in U.S.dollars in a principal amount of at least $1,000,000 at approximately 11:00 a.m., London time, on such LIBOR Interest DeterminationDate. If at least two such offered quotations are so provided, LIBOR determined on the applicable LIBOR Interest Determination Datecalculated by the Calculation Agent will be the arithmetic mean of such quotations. If fewer than two such quotations are so provided,the Company will request each of three major banks in New York City, as selected by the Company, to provide a quotation of the rate(expressed as a percentage per annum), offered by it for loans in U.S. dollars to leading European banks having a three‑month maturityin a principal amount of at least $1,000,000 at approximately 11:00 a.m., New York City time, on such LIBOR Interest DeterminationDate. If at least two such rates are so provided, LIBOR determined on the applicable LIBOR Interest Determination Date calculated bythe Calculation Agent will be the arithmetic mean of such rates. If fewer than two such rates are so provided, then LIBOR determinedon the applicable LIBOR Interest Determination Date calculated by the Calculation Agent will be the rate in effect on the applicableLIBOR Interest Determination Date.“Reuters LIBOR01” means the Capital Markets Report Screen LIBOR01 of Reuters, Inc. (or any successor or similar serviceor page), for the purpose of displaying the London interbank rates of major banks for U.S. dollars.Determination of Prime Rate. If the Interest Rate Basis, as specified above, is, or is calculated by reference to, the PrimeRate, unless otherwise specified above, the “Prime Rate” with respect to each Interest Reset Date will be determined by the CalculationAgent as of the first Business Day prior to such Interest Reset Date (a “Prime Interest Determination Date”) and shall be the rate setforth on such date as published in H.15(519) under the caption “Bank Prime Loan,” or if not so published prior to 3:00 p.m., NewYork City time, on the applicable Calculation Date pertaining to such Prime Interest Determination Date, then the Prime Rate. will beas published in H.15 Daily Update, or such other recognized electronic source used for the purpose of displaying the applicable rateunder the caption “Bank Prime Loan,” or if not so published prior to 3:00 p.m., New York City time, on the applicable CalculationDate pertaining to such Prime Interest Determination Date, then the Prime Rate will be determined by the Calculation Agent as thearithmetic mean of the rates of interest publicly announced by each bank that appears on the Reuters Screen US PRIME 1 Page (asdefined below) as the particular bank’s prime rate or base lending rate as of 11:00 a.m., New York City time, on the applicable PrimeInterest Determination Date. If fewer than four such rates are so published by 3:00 p.m.,14New York City time, on the applicable Calculation Date as shown on the Reuters Screen US PRIME 1 Page for the Prime InterestDetermination Date, the Prime Rate will be determined by the Calculation Agent as the arithmetic mean of the prime rates or baselending rates quoted on the basis of the actual number of days in the year divided by a 360-day year as of the close of business on theapplicable Prime Interest Determination Date by three major banks, which may include an agent of the Company or such agent’saffiliates, in the City of New York selected by the Company. However, if the banks selected by the Company are not quoting asmentioned in the preceding sentence, the Prime Rate will be the Prime Rate in effect on the applicable Prime Interest DeterminationDate.“Reuters Screen US PRIME 1 Page” means the display on the Reuter Money 3000 Service or any successor service on the“US PRIME 1 Page” or other page as may replace US PRIME 1 Page on that service for the purpose of displaying prime rates or baselending rates of major United States banks).Determination of Treasury Rate. If the Interest Rate Basis, as specified above, is, or is calculated by reference to theTreasury Rate, unless otherwise specified above, the “Treasury Rate” for each Interest Reset Date will be the rate from the auction heldon the applicable Interest Determination Date (the “Auction”) of direct obligations of the United States (“Treasury Bills”) having theIndex Maturity, as specified above, as published under the caption “INVESTMENT RATE” on the display on Reuters, Inc. or anysuccessor or similar service on page USAUCTION 10 or any other page as may replace page USAUCTION 10 on that service(“Reuters Page USAUCTION 10”) or page USAUCTION 11 on that service (“Reuters Page USAUCTION 11”), or, if the rate is notso published by 3:00 p.m., New York City time, on the applicable Calculation Date pertaining to such Treasury Rate DeterminationDate (as defined below), the Bond Equivalent Yield of the rate for the applicable Treasury Bills as published in H.15 Daily Update, orother recognized electronic source used for the purpose of displaying the applicable rate, under the caption “U.S. GovernmentSecurities/Treasury Bills/Auction High,” or, if the rate is not so published by 3:00 p.m., New York City time, on the applicableCalculation Date pertaining to such Treasury Rate Determination Date, the Bond Equivalent Yield of the auction rate of the applicableTreasury Bills announced by the United States Department of the Treasury, or, if the rate is not announced by the United StatesDepartment of the Treasury, or if the Auction is not held, the Bond Equivalent Yield of the rate on the applicable Treasury RateDetermination Date of Treasury Bills having the Index Maturity specified above, published in H.15(519) under the caption “U.S.Government Securities/Treasury Bills/Secondary Market,” or, if the rate is not so published by 3:00 p.m., New York City time, on theapplicable Calculation Date pertaining to such Treasury Rate Determination Date, the rate on the applicable Treasury RateDetermination Date of the applicable Treasury Bills as published in H.15 Daily Update, or other recognized electronic source used forthe purpose of displaying the applicable rate, under the caption “U.S. Government Securities/Treasury Bills/Secondary Market.” In theevent that the results of the auction of Treasury Bills having the applicable Index Maturity specified above are not published orreported, as provided above, by 3:00 p.m., New York City time, on the applicable Calculation Date or if no such auction is held onsuch Treasury Rate Determination Date, then the Treasury Rate on the applicable Treasury Rate Determination Date shall becalculated by the Calculation Agent and shall be the Bond Equivalent Yield of the arithmetic15mean of the secondary market bid rates, as of approximately 3:30 p.m., New York City time, on the applicable Treasury RateDetermination Date, of three primary United States government securities dealers, which may include the agent or its affiliates, selectedby the Company, for the issue of Treasury Bills with a remaining maturity closest to the Index Maturity specified above; provided,however, that if the dealers selected as aforesaid by the Company are not quoting as mentioned in this sentence, the Treasury Rate willbe the Treasury Rate in effect on the applicable Treasury Rate Determination Date.The “Treasury Rate Determination Date” for any Interest Reset Date will be the day of the week in which such Interest ResetDate falls on which Treasury Bills would normally be auctioned. Treasury Bills are normally sold at auction on Monday of each week,unless that day is a legal holiday, in which case the auction is normally held on the following Tuesday, except such auction may beheld on the preceding Friday. If, as the result of a legal holiday, an auction is so held on the preceding Friday, such Friday will be theTreasury Rate Determination Date pertaining to the Interest Reset Date occurring in the next succeeding week.“Bond Equivalent Yield” means a yield calculated in accordance with the following formula and expressed as a percentage:Bond Equivalent Yield =D × N× 100360 - (D × M)where “D” refers to the applicable per annum rate for Treasury Bills quoted on a bank discount basis and expressed as a decimal; “N”refers to 365 or 366, as the case may be, and “M” refers to the actual number of days in the interest period for which interest is beingcalculated.Provisions Applicable To Both Fixed Rate Notes And Floating Rate Notes:The interest so payable on any Interest Payment Date will, subject to certain exceptions in the Indenture hereinafter referred to,be paid to the person in whose name this Note is registered at the close of business on the Regular Record Date (as defined below)immediately preceding such Interest Payment Date or, if the Interest Payment Date is the Maturity Date or the date of earlierredemption or repayment, to the person in whose name this Note is registered at the close of business on the Maturity Date or suchearlier date of redemption or repayment; provided, however, that if the Original Issue Date is between a Regular Record Date and anInterest Payment Date or on an Interest Payment Date, interest for the period from and including the Original Issue Date to, butexcluding, the Interest Payment Date relating to such Regular Record Date shall be paid on the next succeeding Interest Payment Dateto the person in whose name this Note is registered on the close of business on the Regular Record Date preceding such InterestPayment Date. If this Note bears interest at a Fixed Rate, as specified above, unless otherwise specified above, the “Regular RecordDate” with respect to any Interest Payment Date shall be the first day of June and December, preceding such Interest Payment Date,whether or not such date shall be a Business Day. If this Note bears interest at a Floating Rate, as specified above, the “Regular RecordDate” with respect to any Interest Payment Date shall be the16fifteenth calendar day next preceding such Interest Payment Date, whether or not such date shall be a Business Day.Payment of principal, premium, if any, and interest in respect of this Note due on the Maturity Date or any earlier redemption orrepayment date will be made in immediately available funds upon presentation and surrender of this Note; provided, however, that if aSpecified Currency is specified above and such payment is to be made in such Specified Currency in accordance with the provisionsset forth below, such payment will be made by wire transfer of immediately available funds to an account with a bank designated bythe Holder hereof at least 15 calendar days prior to the Maturity Date or such earlier redemption or repayment date, as the case may be,provided that such bank has appropriate facilities therefor and that this Note is presented and surrendered at the Place of Paymentspecified above in time for the Trustee to make such payment in such funds in accordance with its normal procedures. Payment ofinterest due on any Interest Payment Date, other than the Maturity Date or any earlier redemption or repayment date, will be made atthe Place of Payment specified above.Whenever in this Note or in the Indenture there is a reference, in any context, to the payment of the principal of, or interest, ifany, on, or in respect of, the Notes, such payment shall be deemed to include the payment of Additional Amounts to the extent that, insuch context, Additional Amounts are, were or would be payable in respect of such payment pursuant to the provisions hereof orthereof and express mention of the payment of Additional Amounts (if applicable) in any provision hereof or thereof shall not beconstrued as excluding Additional Amounts in those provisions hereof where such express mention is not made.The Company is obligated to make payment of principal, premium, if any, and interest in respect of this Note in United Statesdollars or, if a Specified Currency is indicated above, in such Specified Currency (or, if such Specified Currency is not at the time ofsuch payment legal tender for the payment of public and private debts of the country issuing such currency or, in the case of the Euro,in the member states of the European Union that have adopted the single currency in accordance with the Treaty Establishing theEuropean Community, as amended by the Treaty on European Union, such other currency which is then such legal tender in suchcountry or in the adopting member states of the European Union, as the case may be). If a Specified Currency is specified above,except as otherwise provided below, any such amounts so payable by the Company will be converted by a New York clearing housebank designated by the Company (the “Exchange Rate Agent”) into United States dollars for payment to the Holder of this Note.If a Specified Currency is specified above, the Holder of this Note may elect to receive any amount payable hereunder in suchSpecified Currency. If the Holder of this Note shall not have duly made an election to receive all or a specified portion of any paymentof principal, premium, if any, and/or interest in respect of this Note in such Specified Currency, any United States dollar amount to bereceived by the Holder of this Note will be based on the highest bid quotation in the City of New York received by the Exchange RateAgent at approximately 11:00 a.m., New York City time, on the second Business Day preceding the applicable payment date fromthree recognized foreign exchange dealers (one of whom may be the Exchange Rate Agent)17selected by the Exchange Rate Agent and approved by the Company for the purchase by the quoting dealer of the Specified Currencyfor United States dollars for settlement on such payment date in the aggregate amount of the Specified Currency payable to all Holdersof Notes scheduled to receive United States dollar payments and at which the applicable dealer commits to execute a contract. Allcurrency exchange costs will be borne by the Holder of this Note by deductions from such payments. If three such bid quotations arenot available, payments on this Note will be made in the Specified Currency.If a Specified Currency is specified above, the Holder of this Note may elect to receive all or a specified portion of anypayment of principal, premium, if any, and/or interest in respect of this Note in such Specified Currency by submitting a written requestfor such payment to the Trustee at the Place of Payment on or prior to the applicable Record Date or at least 15 calendar days prior tothe Maturity Date (or any earlier redemption or repayment date), as the case may be. Such written request may be mailed or handdelivered or sent by facsimile transmission. The Holder of this Note may elect to receive all or a specified portion of all futurepayments in the Specified Currency in respect of such principal, premium, if any, and/or interest and need not file a separate electionfor each payment. Such election will remain in effect until revoked by written notice to the Trustee, but written notice of any suchrevocation must be received by the Trustee on or prior to the applicable Record Date or at least 15 calendar days prior to the MaturityDate (or any earlier redemption or repayment date), as the case may be.If a Specified Currency is specified above and the Holder of this Note shall have duly made an election to receive all or aspecified portion of any payment of principal, premium, if any, and/or interest in respect of this Note in such Specified Currency, butsuch Specified Currency is not available for such payment due to the imposition of exchange controls or other circumstances beyondthe control of the Company, the Company will be entitled to satisfy its obligations to the Holder of this Note by making such paymentin United States dollars on the basis of the Market Exchange Rate (as defined below) determined by the Exchange Rate Agent on thesecond Business Day prior to such payment date or, if such Market Exchange Rate is not then available, on the basis of the mostrecently available Market Exchange Rate on or before the date on which such payment is due. The “Market Exchange Rate” for theSpecified Currency means the noon dollar buying rate in the City of New York for cable transfers of the Specified Currency ascertified for customs purposes (or, if not so certified, as otherwise determined) by the Federal Reserve Bank of New York. Anypayment made in United States dollars under such circumstances shall not constitute an Event of Default (as defined in the Indenture).All determinations referred to above made by the Exchange Rate Agent shall be at its sole discretion and shall, in the absenceof manifest error, be conclusive for all purposes and binding on the Holder of this Note.In case an Event of Default (as defined in the Indenture) with respect to Notes of this series shall occur and be continuing, theprincipal amount (or, if the Note is an Original Issue Discount Note, such lesser portion of the principal amount as may be applicable)of the Notes of this series may be declared due and payable, and, with respect to certain Events of Default, shall automatically becomedue and payable, in each case in the manner and with the effect provided18in the Indenture. If this Note is an Original Issue Discount Note, in the event of an acceleration of the Maturity Date hereof, the amountpayable to the Holder of this Note upon such acceleration will be determined by this Note but will be an amount less than the amountpayable at the Maturity Date of this Note.The Indenture permits, with certain exceptions as therein provided, the modification of the rights and obligations of theCompany and the Guarantor and the rights of the Holders of the Securities (as defined in the Indenture) of each series to be affected bysuch modification under the Indenture at any time by the Company and the Guarantor with the consent of the holders of not less than amajority in aggregate principal amount of the Outstanding Securities (as defined in the Indenture) of each series to be affected by suchmodification. The Indenture also contains provisions permitting the Holders of specified percentages in aggregate principal amount ofthe Outstanding Securities of each series, on behalf of the Holders of all Securities of such series, to waive compliance by theCompany and the Guarantor with certain provisions of the Indenture and certain past defaults under the Indenture and theirconsequences.This Note is issuable only in registered form without coupons in minimum denominations of $2,000 and integral multiples of$1,000 in excess thereof or other Authorized Denomination specified above.As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Note may be registered in theSecurity Register of this series upon surrender of this Note for registration of transfer at the Place of Payment specified above, dulyendorsed by or accompanied by, a written instrument of transfer in form satisfactory to the Company and the Trustee, duly executed bythe Holder hereof or his attorney duly authorized in writing, and thereupon a new Note or Notes of this series of AuthorizedDenomination and for the same aggregate principal amount, with the Guarantee endorsed thereon, will be issued to the designatedtransferee or transferees.No service charge shall be made for any such registration of transfer, exchange or redemption of the Notes, but the Companymay require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.The Trustee, and any agent of the Company or the Trustee may treat the person in whose name this Note is registered in theSecurity Register as the owner of this Note for all purposes (other than for the determination of any Additional Amounts payable) andneither the Company nor the Trustee nor any such agent shall be affected by any notice to the contrary.If so specified above, this Note will be redeemable at the Company’s option on the date or dates specified prior to the MaturityDate at a price or prices, each as specified above, together with accrued interest to the date of redemption. This Note will not be subjectto any sinking fund. If so redeemable, the Company may redeem this Note either in whole or from time to time in part, upon not lessthan 30, nor more than 60, days’ notice before the date of redemption. If less than all of the Notes with like tenor and terms are to beredeemed, the Notes to be redeemed shall be selected by the Trustee by such method as the Trustee shall deem fair and appropriate.19This Note will be subject to redemption at the option of the Company, in whole or in part at any time prior to the MaturityDate, at a redemption price equal to the greater of (i) 100% of the principal amount of this Note to be redeemed, and (ii) as determinedby the Quotation Agent (as defined below), the sum of the present values of the remaining scheduled payments of principal and intereston this Note to be redeemed (exclusive of interest accrued to the date of redemption) discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as defined below) plus 15 basispoints, plus accrued interest on the principal amount redeemed to, but not including, the date of redemption.If any redemption date falls on a day that is not a Business Day, the related payment of the redemption price and interest will bemade on the next Business Day as if it were made on the date such payment was due, and no interest will accrue on the amounts sopayable for the period from and after such date to the next Business Day.“Comparable Treasury Issue” means the U.S. Treasury security selected by the Quotation Agent as having a maturity comparableto the remaining term of the Notes to be redeemed that would be utilized, at the time of selection and in accordance with customaryfinancial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Notes.“Comparable Treasury Price” means, with respect to any redemption date, (i) the average of the Reference Treasury DealerQuotations for such redemption date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (ii) iffewer than five such Reference Treasury Dealer Quotations are obtained by the Quotation Agent, the average of all such quotations.“Quotation Agent” means the Reference Treasury Dealer appointed by the Company.“Reference Treasury Dealer” means (i) (1) each of Barclays Capital Inc., Citigroup Global Markets Inc. and Goldman, Sachs &Co. (and their respective successors) and (2) two other nationally recognized investment banking firms that are Primary TreasuryDealers specified from time to time by the Company; provided, however, that if any of the foregoing shall cease to be a primary U.S.Government securities dealer in New York City (a “Primary Treasury Dealer”), the Company shall substitute therefor another PrimaryTreasury Dealer; and (ii) any other Primary Treasury Dealer selected by the Company.“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any redemption date, theaverage, as determined by the Quotation Agent, of the bid and asked prices for the Comparable Treasury Issue (expressed in each caseas a percentage of its principal amount) quoted in writing to the Quotation Agent by such Reference Treasury Dealer at 5:00 p.m.,New York City time, on the third Business Day preceding such redemption date.“Treasury Rate” means, with respect to any redemption date, the rate per annum equal to the semi-annual equivalent yield-to-maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of itsprincipal amount) equal to the Comparable Treasury Price for such redemption date.20Notice of any redemption will be delivered at least 30 days but not more than 60 days before the redemption date to the Holderhereof at its address as such address shall appear in the Security Register of the Company, except that redemption notices may beprovided more than 60 days prior to the redemption date if the notice is issued in connection with the defeasance or discharge of theNotes and/or the Indenture. Unless the Company defaults in the payment of the redemption price on and after the redemption date,interest will cease to accrue on the principal amount of this Note called for redemption. Notwithstanding anything to the contrary in theforegoing, notice of any redemption to the Holder hereof may, in the Company’s discretion, be subject to one or more conditionsprecedent, including completion of a corporate transaction. In such event, the related notice of redemption will describe each suchcondition and, if applicable, will state that, in the Company’s discretion, the date of redemption may be delayed until such time as anyor all such conditions shall be satisfied or waived, or such redemption may not occur and such notice may be rescinded in the eventthat any or all such conditions shall not have been satisfied or waived by the date of redemption, or by the date of redemption as sodelayed.Subject to Section 403 of the Indenture, if an HDI Change of Control Triggering Event (as defined below) occurs, unless theCompany has exercised its option to redeem this Note as described above, the Company will be required to make an offer (the“Change of Control Offer”) to each Holder of the Notes to repurchase all or any part (equal to $2,000 or an integral multiple of $1,000in excess thereof) of such Holder’s Notes on the terms set forth herein. In the Change of Control Offer, the Company will be requiredto offer payment in cash equal to 101% of the aggregate principal amount of Notes repurchased, plus accrued and unpaid interest, ifany, on the Notes repurchased to the date of repurchase (the “Change of Control Payment”).Subject to Section 403 of the Indenture, within 30 days following any HDI Change of Control Triggering Event or, at theCompany’s option, prior to any HDI Change of Control (as defined below), but after public announcement by HDI (as defined below)of the transaction that constitutes, or would constitute upon consummation thereof, an HDI Change of Control, a notice will bedelivered to Holders of the Notes describing the transaction that constitutes, or would constitute upon consummation thereof, the HDIChange of Control Triggering Event and offering to repurchase such Notes on the date specified in the notice. Such date will be noearlier than 30 days and no later than 60 days from the date such notice is delivered, other than as may be required by law (the“Change of Control Payment Date”). The notice will, if delivered prior to the date of consummation of the HDI Change of Control,state that the offer to purchase is conditioned on the HDI Change of Control Triggering Event occurring on or prior to the Change ofControl Payment Date.If any Change of Control Payment Date falls on a day that is not a Business Day, the related payment of the Change of ControlPayment will be made on the next Business Day as if it were made on the date such payment was due, and no interest will accrue onthe amounts so payable for the period from and after such date to the next Business Day.On the Change of Control Payment Date, the Company will, to the extent lawful, (i) accept for payment all Notes or portionsof Notes properly tendered and not validly withdrawn pursuant to the Change of Control Offer; (ii) deposit with the paying agent anamount equal to21the Change of Control Payment in respect of all such Notes or portions of Notes properly tendered and not validly withdrawn; and (iii)deliver or cause to be delivered to the Trustee such Notes properly accepted together with a Company Officers’ Certificate (as definedin the Indenture) stating the aggregate principal amount of such Notes or portions of Notes being repurchased.The Company will not be required to comply with the obligations relating to repurchasing the Notes if a third-party insteadsatisfies them.The Company must comply with the requirements of Rule 14e-1 under the Securities Exchange Act of 1934, as amended (the“Exchange Act”), and any other securities laws and regulations applicable to the repurchase of the Notes. To the extent that theprovisions of any such securities laws or regulations conflict with the Change of Control Offer provisions of the Notes, the Companywill comply with those securities laws and regulations and will not be deemed to have breached its obligations under the Change ofControl Offer provisions of the Notes by virtue of any such compliance.If Holders of not less than 95% in aggregate principal amount of the outstanding Notes properly tender and do not validlywithdraw such amount of the Notes in a Change of Control Offer, and the Company, or any third-party making an offer to purchasethe Notes in connection with an HDI Change of Control Triggering Event in lieu of the Company, purchase such amount of the Notesproperly tendered and not validly withdrawn by such Holders, then the Company will have the right, upon notice described above,given not more than 30 days following the Change of Control Payment Date, to redeem all (but not less than all) of the aggregateprincipal amount of the Notes that remains outstanding following such purchase at a redemption price in cash equal to 101% of theprincipal amount thereof, plus accrued and unpaid interest, if any, to the redemption date (subject to the right of Holders of record as ofthe close of business on the relevant Regular Record Date to receive interest on the applicable Interest Payment Date). If theredemption date falls on a day that is not a Business Day, the related payment of the redemption price and interest will be made on thenext Business Day as if it were made on the date such payment was due, and no interest will accrue on the amounts so payable for theperiod from and after such date to the next Business Day.For purposes of the Change of Control Offer provisions of the Notes, the following terms will be applicable:“Below Investment Grade Rating Event” means the Notes cease to be rated an Investment Grade Rating by each of the RatingAgencies on any day within the 60-day period after the earlier of (1) the occurrence of an HDI Change of Control and (2) the firstpublic announcement by Harley-Davidson, Inc. (“HDI”) of the intention of HDI to effect an HDI Change of Control (which 60-dayperiod will be extended for so long as any of the Rating Agencies has publicly announced that it is considering a possible downgradeof the rating of the notes of such series); provided that a Below Investment Grade Rating Event otherwise arising by virtue of aparticular reduction in rating shall not be deemed to have occurred in respect of a particular HDI Change of Control (and thus shall notbe deemed a Below Investment Grade Rating Event for purposes of the definition of HDI Change of Control Triggering Event22hereunder) if any of the Rating Agencies making the reduction in rating to which this definition would otherwise apply do notannounce or publicly confirm or inform the Trustee in writing at the Company’s or its request that the reduction was the result, inwhole or in part, of any event or circumstance comprised of or arising as a result of, or in respect of, the applicable HDI Change ofControl (whether or not the applicable HDI Change of Control shall have occurred at the time of the Below Investment Grade RatingEvent). The Trustee has no obligation to monitor the ratings of the Notes for purposes of determining the occurrence of a BelowInvestment Grade Rating Event.“Fitch” means Fitch Ratings, Inc. and its successors.“HDI Change of Control” means the occurrence of any of the following: (1) the consummation of any transaction (including,without limitation, any merger or consolidation) the result of which is that any “person” (as that term is used in Section 13(d)(3) of theExchange Act), other than HDI or one of its subsidiaries, becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 underthe Exchange Act), directly or indirectly, of more than 50% of the Voting Stock of HDI or other Voting Stock into which the VotingStock of HDI is reclassified, consolidated, exchanged or changed, measured by voting power rather than number of shares; or (2) thedirect or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation or as a pledge forsecurity purposes only), in one or a series of related transactions, of all or substantially all of the assets of HDI and the assets of thesubsidiaries of HDI, taken as a whole, to one or more “persons” (as that term is defined in the Indenture), other than HDI or one of itssubsidiaries and other than any such transaction or series of related transactions where holders of Voting Stock of HDI outstandingimmediately prior thereto hold voting stock of the transferee person representing a majority of the voting power of the transfereeperson’s voting stock immediately after giving effect thereto. Notwithstanding the foregoing, a transaction will not be deemed to be anHDI Change of Control if (1) HDI becomes a direct or indirect wholly-owned subsidiary of a holding company and (2)(A) the director indirect holders of the Voting Stock of such holding company immediately following that transaction are substantially the same asthe holders of the Voting Stock of HDI immediately prior to that transaction or (B) immediately following that transaction no “person”(as that term is used in Section 13(d)(3) of the Exchange Act) (other than a holding company satisfying the requirements of thissentence) is the beneficial owner, directly or indirectly, of more than 50% of the Voting Stock of such holding company.“HDI Change of Control Triggering Event” means the occurrence of both an HDI Change of Control and a Below InvestmentGrade Rating Event. Notwithstanding anything to the contrary, no HDI Change of Control Triggering Event will be deemed to haveoccurred in connection with any particular HDI Change of Control unless and until such HDI Change of Control has actually beenconsummated.“Investment Grade Rating” means a rating equal to or higher than Baa3 by Moody’s (or its equivalent under any successorrating category of Moody’s), BBB− by S&P (or its equivalent under any successor rating category of S&P) and BBB− by Fitch (or itsequivalent under any23successor rating category of Fitch), and the equivalent investment grade credit rating from any replacement Rating Agency or RatingAgencies selected by the Company.“Moody’s” means Moody’s Investors Service, Inc., a subsidiary of Moody’s Corporation, and its successors.“Rating Agencies” means (1) each of Moody’s, S&P and Fitch, and (2) if any of Moody’s, S&P or Fitch (or in each case anyreplacement thereof appointed pursuant to this definition) ceases to rate the Notes or fails to make a rating of the Notes publiclyavailable for reasons outside of the Company’s control, a “nationally recognized statistical rating organization” as defined underSection 3(a)(62) of the Exchange Act selected by the Company as a replacement agency for Moody’s, S&P and/or Fitch, as the casemay be; provided that the Company shall give notice of any such replacement to the Trustee.“S&P” means S&P Global Ratings, a division of S&P Global Inc. and its successors.“Voting Stock” means, with respect to any specified “person” (as that term is used in Section 13(d)(3) of the Exchange Act), asof any date, the capital stock of such person that is at the time entitled to vote generally in the election of the board of directors of suchperson.In lieu of Section 1005 of the Indenture, the following covenant shall apply:Limitation on Liens. The Company and the Guarantor will not, nor will they permit any Subsidiary of the Company or theGuarantor to, issue or assume any Indebtedness secured by a Lien upon any Property (now owned or hereinafter acquired) of theCompany or the Guarantor or any such Subsidiary without in any such case effectively providing concurrently with the issuance orassumption of any such Indebtedness that the Notes (together with, if the Company or the Guarantor shall so determine, any otherIndebtedness of the Company or the Guarantor or any such Subsidiary ranking equally with the Notes then existing or thereaftercreated) shall be secured equally and ratably with such Indebtedness. The restrictions set forth in the immediately preceding sentencewill not, however, apply if the aggregate amount of Indebtedness issued or assumed by the Company, the Guarantor or suchSubsidiaries and so secured by Liens, together with all other Indebtedness of the Company, the Guarantor or such Subsidiaries which(if originally issued or assumed at such time) would otherwise be subject to such restrictions, but not including Indebtedness permittedto be secured under clauses (i) through (xiv) of the immediately following paragraph, does not at the time such secured Indebtedness isincurred exceed 15% of the Consolidated Net Tangible Assets.The restrictions set forth above shall not apply to Indebtedness secured by:(i) Liens existing on the date of the original issuance of the Notes;(ii) Liens on any Property of any company existing at the time such company becomes a Subsidiary of the Company or theGuarantor, which Liens are not created in contemplation of such company becoming a Subsidiary of the Company or the Guarantor;24(iii) Liens on any Property existing at the time such Property is acquired by the Company, the Guarantor or a Subsidiary of theCompany or the Guarantor, or Liens to secure the payment of all or any part of the purchase price of such Property upon theacquisition of such Property by the Company, the Guarantor or a Subsidiary of the Company or the Guarantor or to secure anyIndebtedness incurred prior to, at the time of, or within 180 days after, the later of the date of acquisition of such Property and the datesuch Property is placed in service, for the purpose of financing all or any part of the purchase price thereof, or Liens to secure anyIndebtedness incurred for the purpose of financing the cost to the Company, the Guarantor or a Subsidiary of the Company or theGuarantor of improvements to such acquired Property or to secure any Indebtedness incurred for the purpose of financing all or anypart of the purchase price of the cost of construction of the Property subject to such Liens;(iv) Liens securing any Indebtedness of the Company, a Subsidiary of the Company or the Guarantor owing to the Company,the Guarantor or to another Subsidiary of the Company or the Guarantor;(v) Liens created in connection with a securitization or other asset-based financing;(vi) Liens with respect to the payment of taxes, assessments or governmental charges in all cases which are not yet due orwhich are being contested in good faith;(vii) statutory Liens of landlords and Liens of suppliers, mechanics, carriers, materialmen, warehousemen or workmen andother similar Liens imposed by law created in the ordinary course of business for amounts not yet due or which are being contested ingood faith;(viii) Liens incurred or deposits made in the ordinary course of business in connection with worker’s compensation,unemployment insurance or other types of social security benefits or to secure the performance of bids, tenders, sales, contracts (otherthan for the repayment of borrowed money), surety, appeal and performance bonds;(ix) Liens arising with respect to zoning restrictions, easements, licenses, reservations, covenants, rights-of-way, utilityeasements, building restrictions and other similar charges or encumbrances on the use of real property which do not interfere with theordinary conduct of the business of the Company, the Guarantor or any of their respective Subsidiaries;(x) Liens of attachment or judgment with respect to judgments, writs or warrants of attachment, or similar process against theCompany, the Guarantor or any of their respective Subsidiaries;(xi) Liens arising from leases, subleases or licenses granted to others which do not interfere in any material respect with thebusiness of the Company, the Guarantor or any of their respective Subsidiaries;(xii) any interest or title of the lessor in the Property subject to any operating lease (as determined in accordance with GAAP asin effect as of the date of the Indenture) entered into by the Company, the Guarantor or any of their respective Subsidiaries in theordinary course of business;25(xiii) Liens, if any, in connection with any sale/leaseback transaction;(xiv) Liens on assets pledged in respect of Indebtedness that has been defeased in accordance with the provisions thereofthrough the deposit of cash, cash equivalents or marketable securities (it being understood that cash collateral shall be deemed toinclude cash deposited with a trustee with respect to third party indebtedness); and(xv) any extension, renewal or replacement (or successive extensions, renewals or replacements) in whole or in part of anyLien referred to in the foregoing clauses (i) - (xiv); provided, however, that such new Lien is limited to the Property which was subjectto the prior Lien immediately before such extension, renewal or replacement, and provided, further, that the principal amount ofIndebtedness secured by the prior Lien immediately before such extension, renewal or replacement is not increased.The Company may “reopen” a previously issued tranche of Notes and issue additional Notes of such tranche or establishadditional terms of such tranche or issue notes with the same terms as previously issued Notes (except for the Original Issue Date, IssuePrice and, if applicable, the initial Interest Payment Date).The Company may at any time purchase this Note at any price in the open market or otherwise. Notes so purchased by theCompany may be held or resold or, at the discretion of the Company, may be surrendered to the Trustee for cancellation.For the avoidance of doubt, Article 4 of the Indenture, including without limitation Section 403 thereof, shall apply to theNotes.No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligations of theCompany and the Guarantor, which are absolute and unconditional, to pay the principal of, premium, if any, and interest on this Note,at the times, place and rate, and in the coin or currency, herein and in the Indenture prescribed.This Note shall be governed by and construed in accordance with the laws of the State of New York.By acceptance of this Note, the Holder hereof agrees to be bound by the provisions of the Indenture. Terms used herein whichare defined in the Indenture shall have the respective meanings assigned thereto in the Indenture. This Note shall not be valid orbecome obligatory for any purpose until the certificate of authentication hereon shall have been signed by or on behalf of the Trusteeunder the Indenture.26IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed, manually or by facsimile by anauthorized signatory.HARLEY-DAVIDSON FINANCIAL SERVICES, INC.By: Name: Title: By: Name: Title: Dated:TRUSTEE’S CERTIFICATE OF AUTHENTICATIONThis is one of the Securities of the series designated herein and referred to in the within-mentioned Indenture.THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,as TrusteeBy: Authorized SignatoryGUARANTEEFor value received, undersigned hereby fully, irrevocably and unconditionally guarantees, pursuant to the terms of theGuarantee contained in Article Fourteen of the Indenture, to the Holder of this Note and to the Trustee, on behalf of the Holder, thedue and punctual payment of the principal of, and any premium, interest and any Additional Amounts on, this Note, when and as thesame shall become due and payable, whether at the stated maturity, by declaration of acceleration, call for redemption or otherwise, inaccordance with the terms of this Note and the Indenture. This Guarantee will not be valid or obligatory for any purpose until theTrustee duly executes the certificate of authentication on the Note upon which this Guarantee is endorsed.Dated: HARLEY-DAVIDSON CREDIT CORP., a Nevada corporation By: Name: Title: Attest: By: Name: Title: ABBREVIATIONSThe following abbreviations, when used in the inscription on this certificate, shall be construed as though they were written out in fullaccording to applicable laws or regulations:TEN COM - as tenants in commonUNIF GIFT MIN ACT - _______ Custodian ______ (Cust) (Minor)TEN ENT - as tenants by the entiretiesunder Uniform Gifts to Minors ActJT TEN - as joint tenants with right of survivorship and not as tenant in common (State)Additional abbreviations may also be used though not in the above list.ASSIGNMENTFOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto:(Please insert social security or other identifying number of assignee)(Name and address of assignee, including zip code, must be printed or typewritten)the within Note, and all rights thereunder, hereby irrevocably constituting and appointing___________________________________________ attorney to transfer said Note on the books of the within Company, with fullpower of substitution in the premises.Dated: NOTICE: The signature to this assignment must correspond with the name as itappears upon the within Note in every particular, without alteration orenlargement or any change whatever and must be guaranteed.SIGNATURE(S) GUARANTEED:THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS,STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN ANAPPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM) PURSUANT TO SEC RULE 17Ad-15.SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTEThe following increases or decreases in this Global Note have been madeDate of ExchangeAmount of increase inPrincipal Amount of thisGlobal NoteAmount of decrease inPrincipal Amount of thisGlobal NotePrincipal Amount of thisGlobal Note following eachdecrease or increaseSignature of authorizedsignatory of Trustee Exhibit 4.15OFFICERS’ CERTIFICATE OF HARLEY-DAVIDSON FINANCIAL SERVICES, INC.Pursuant to Sections 102 and 301 of the IndentureReference is made to the Indenture dated as of March 4, 2011 (the “Indenture”) among Harley-Davidson FinancialServices, Inc. (the “Company”), Harley-Davidson Credit Corp. (the “Guarantor”) and The Bank of New York Mellon TrustCompany, N.A., as trustee (“Trustee”). Terms used and not otherwise defined herein shall have the meanings ascribed thereto in theIndenture.Pursuant to Sections 102 and 301 of the Indenture, the undersigned, Ryan Green and James Darrell Thomas, in theirrespective capacities as Vice President and Chief Financial Officer of the Company, and Vice President and Treasurer of theCompany, hereby certify that:(1) There is hereby established a new series of Securities under the Indenture titled Floating Rate Medium-Term Notesdue 2019 (the “Notes”).(2) The Notes shall be in substantially the form of Exhibit A hereto.(3) In addition to the terms provided in, or established pursuant to, the Indenture and the offering memorandum and thepricing supplement, both dated as of March 7, 2017, relating to the Notes (together referred to as the “Offering Memorandum”), theNotes, as authenticated and delivered, shall have the terms set forth in Exhibit A hereto (which terms are incorporated herein byreference and deemed to be set forth herein in full); provided, however, that in the event of a conflict between the provisions of theNotes and the Offering Memorandum, the provisions of the Notes shall prevail.(4) The Notes shall be registered in the name set forth on Exhibit A hereto and the Notes shall be delivered in themanner specified in the Administrative Procedures attached as Exhibit A to the Company Order delivered as of the date hereof and asdescribed in the Private Placement Agency Agreement dated as of March 1, 2011, among the Company, the Guarantor and the agentsparty thereto.(5) The issuance of Notes designated as Floating Rate Medium-Term Notes due 2019, in an initial aggregate principalamount of $150,000,000, has been approved and authorized in accordance with the provisions of the Indenture pursuant to resolutionsadopted by the Board of Directors of the Company by unanimous written consent dated as of February 20, 2017 and by this Officers’Certificate; provided, however, that the Company shall have the right to reopen the series of the Notes and issue additional Securities,which shall be part of the same series as the Notes initially issued (except for the issue date, the public offering price and, in somecases, the first interest payment date).4829-7481-4275.3(6) All covenants and conditions precedent provided for in the Indenture relating to the establishment of the Notes, theterms of the Notes and the authentication and issuance of the Notes have been complied with.(7) No Event of Default has occurred and is continuing and the execution and delivery of the Indenture will not resultin a breach or violation of any of the terms and provisions of, or constitute a default under, the certificate of incorporation or bylaws ofthe Company, or any order of any court or administrative agency entered in any proceeding to which the Company is a party or bywhich it is bound or to which it is subject.Each of the undersigned officers of the Company further states (a) that he has read the applicable provisions of theIndenture, including but not limited to Section 301 thereof, and the definitions relating thereto in each case relating to the issuance,authentication and delivery of the Notes, (b) that the statements made in this certificate are based upon an investigation andexamination of the provisions of the Indenture and upon the relevant books and records of the Company, (c) in the opinion of suchofficer, he has made such examination or investigation as is necessary to enable such officer to express an informed opinion as towhether or not the covenants and conditions set forth in the Indenture relating to the issuance, authentication and delivery of the Noteshave been complied with and (d) in the opinion of such officer, such covenants and conditions relating to the issuance, authenticationand delivery of the Notes have been complied with.[Signature page follows]2IN WITNESS WHEREOF, each of the undersigned officers of the Company has affixed his signature this 10th dayMarch, 2017./s/ Ryan O. Green Name: Ryan GreenTitle: Vice President and Chief Financial Officer of Harley-Davidson FinancialServices, Inc./s/ J. Darrell Thomas Name: J. Darrell ThomasTitle: Vice President and Treasurerof Harley-Davidson Financial Services, Inc.[HDFS Officers’ Certificate Pursuant to Sections 102 and 301 of the Indenture – Floating Rate Notes]Exhibit A to Officers’ Certificate Pursuant to Sections 102 and 301 of the Indenture HARLEY-DAVIDSON FINANCIAL SERVICES, INC. FLOATING RATE MEDIUM-TERM NOTES DUE 2019Fully and Unconditionally Guaranteed by Harley-Davidson Credit Corp.THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTERREFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY (AS DEFINED IN THE INDENTURE) OR ANOMINEE THEREOF. THIS GLOBAL SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THENAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE ONLY IN THE LIMITEDCIRCUMSTANCES DESCRIBED IN THE INDENTURE AND, UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE ORIN PART FOR SECURITIES IN DEFINITIVE FORM, THIS GLOBAL SECURITY MAY NOT BE TRANSFERREDEXCEPT AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY, OR BY A NOMINEE OF THEDEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY, OR BY THE DEPOSITORYOR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITORY.UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORYTRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (“DTC”), TO THE COMPANY OR ITS AGENT FORREGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED INTHE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZEDREPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BEREQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USEHEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTEREDOWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE“SECURITIES ACT”) OR THE SECURITIES LAWS OF ANY OTHER JURISDICTION, AND, ACCORDINGLY, NEITHERTHIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCHREGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATIONREQUIREMENTS OF THE SECURITIES ACT AND ANY OTHER APPLICABLE JURISDICTION. BY ITS ACCEPTANCEHEREOF, THE HOLDER OF THIS SECURITY OR ANY INTEREST OR PARTICIPATION HEREIN (1) REPRESENTSTHAT (A) IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIESACT), OR (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTIONWITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, AND (2) AGREES TO OFFER, SELL OROTHERWISE TRANSFERSUCH SECURITY, PRIOR TO THE DATE (THE “RESALE RESTRICTION TERMINATION DATE”) WHICH IS ONEYEAR AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THECOMPANY OR ANY AFFILIATE THEREOF WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OFSUCH SECURITY) ONLY (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO ANEFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIESARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS AQUALIFIED INSTITUTIONAL BUYER THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF AQUALIFIED INSTITUTIONAL BUYER TO WHICH NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE INRELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS IN OFFSHORETRANSACTIONS WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO ANACCREDITED INVESTOR WITHIN THE MEANING OF SUBPARAGRAPH (a)(1), (2), (3) OR (7) OF RULE 501 OFREGULATION D UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS SECURITY OR ANY INTEREST ORPARTICIPATION HEREIN FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN ACCREDITEDINVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE INCONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT OR (F) PURSUANT TOANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,SUBJECT TO THE COMPANY’S AND THE TRUSTEE’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER(i) PURSUANT TO CLAUSES (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND (ii) IN EACH OF THEFOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THEOTHER SIDE OF THIS SECURITY BE COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE.THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTIONTERMINATION DATE.THE HOLDER OF THIS SECURITY WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANYPURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTHABOVE.2HARLEY-DAVIDSON FINANCIAL SERVICES, INC. FLOATING RATE MEDIUM-TERM NOTES DUE 2019Fully and Unconditionally Guaranteed by Harley-Davidson Credit Corp.No. Principal Amount $CUSIP No. as revised by the Schedule of ISIN No. Increases and Decreases in GlobalNote attached heretoIssue Price: 100.000%Maturity Date: March 8, 2019Original Issue Date: March 10, 2017Index Maturity: [ ] Original Issue Discount Note Total Amount of OID: Yield to Maturity: % Initial Accrual Period OID:[ ] Fixed Rate Interest Rate: [X] Floating Rate Interest Rate Basis: ___ CD RateSpecified Currency (if other than U.S. dollars): N/A___ CMT Rate [ ] CMT Reuters Page FRBCMT: [ ] CMT Reuters Page FEDCMT:Option To Receive Payments In Specified Currency (non-U.S. dollar denominated Note): N/A___ Commercial Paper Rate ___ Federal Funds Rate _X_ LIBORAuthorized Denomination: Minimum denominations of$2,000 and integral multiples of $1,000 in excess thereof ___ Prime RatePlace of Payment (if other than as set forth in the Indenture):N/A3___ Treasury Rate ___ Other Spread (Plus Or Minus): +35 basis pointsInitial Redemption Date: Initial Redemption Percentage: Annual Redemption Percentage Reduction: Repayment Date:Spread Multiplier: %Renewable: [ ] Yes [ ] No Extendible: [ ] Yes [ ] NoInterest Category: [X] Regular Floating Rate NoteFinal Maturity Date:[ ] Floating Rate/Fixed Rate Note Fixed Rate Commencement Date: Fixed Interest Rate: % [ ] Inverse Floating Rate NoteInitial Interest Rate: 3-month LIBOR on March 8, 2017 plus35 basis pointsInitial Interest Reset Date: June 8, 2017Maximum Interest Rate: %Interest Reset Dates: March 8, June 8, September 8 and December 8Minimum Interest Rate: %Interest Payment Dates (in the case of a Floating Rate Note and, in thecase of a Fixed Rate Note, other than as set forth below): March 8, June8, September 8 and December 8 Regular Record Dates (if other than as set forth below): February 21,May 24, August 24 and November 23 Interest Determination Dates (if other than as set forth below): for anyinterest period, the second London Business Day preceding suchinterest period, which, in the case of the initial interest period, isMarch 8, 2017 Additional Amounts applicable for Company: [ ] Yes [X] No Additional Amounts applicable for Guarantor: [ ] Yes 4[X] No Addendum AttachedOther Provisions: The optional redemption provisionsdescribed below shall not apply to this Note[ ] Yes [X] No Authorized Denomination (only if non-U.S. dollar denominated Note):N/A Calculation Agent (if other than the Trustee): N/A Interest Payment Period: N/A Harley-Davidson Financial Services, Inc., a corporation duly organized under the laws of the State of Delaware (herein calledthe “Company,” which term includes any successor corporation under the Indenture hereinafter referred to), for value received, herebypromises to pay to Cede & Co., or registered assigns, the Principal Amount specified above, as revised by the Schedule of Increasesand Decreases in Global Note attached hereto, on the Maturity Date specified above and to pay to the registered holder of this Note(the “Holder”) interest on said Principal Amount at a rate per annum specified above and upon the terms provided below under eitherthe heading “Provisions Applicable to Fixed Rate Notes Only” or “Provisions Applicable to Floating Rate Notes Only.”This Note is one of the Company’s duly authorized issue of notes in the series titled Floating Rate Medium-Term Notes due2019 (herein referred to as the “Notes”), all issued or to be issued under an indenture, dated as of March 4, 2011 (as may besupplemented from time to time, the “Indenture”), among the Company, Harley-Davidson Credit Corp. (the “Guarantor”) and TheBank of New York Mellon Trust Company, N.A., as trustee (the “Trustee,” which term includes any successor trustee under theIndenture), to which Indenture reference is hereby made for a statement of the respective rights, limitations of rights, duties andimmunities thereunder of the Trustee, the Company, the Guarantor and the Holders of the Notes and of the terms upon which theNotes are, and are to be, authenticated and delivered. The Notes of this series are limited (except as otherwise provided in theIndenture) to the aggregate principal amount established from time to time by the Company Board of Directors. The Notes of thisseries may be issued at various times with different maturity dates and different principal repayment provisions, may bear interest atdifferent rates and may otherwise vary, all as provided in the Indenture. The Notes of this series may be subject to redemption uponnotice and in accordance with the provisions of this Note and the Indenture. The Company and the Guarantor may defease the Notesof this series in accordance with the provisions of the Indenture.To secure the due and punctual payment of principal, any premium, any interest and Additional Amounts (as defined in theIndenture) on this Note by the Company under the Indenture, when and as the same shall become due and payable, whether at theMaturity Date, by5declaration of acceleration, call for redemption or otherwise, the Guarantor has unconditionally guaranteed this Note pursuant to theterms of the Guarantee endorsed hereon and in Section 1401 of the Indenture (the “Guarantee”).As used herein, the term “Business Day” means any Monday, Tuesday, Wednesday, Thursday or Friday which is not a daywhen banking institutions in the Place of Payment are authorized or obligated by law or executive order to be closed that is also aLondon Business Day (as defined below).“London Business Day” means any day on which dealings in United States dollars are transacted in the London interbankmarket.Provisions Applicable To Fixed Rate Notes Only:If the “Fixed Rate” line above is checked, unless otherwise specified above, the Company will pay interest semiannually onJune 15 and December 15 of each year (each such date fixed for the payment of interest, an “Interest Payment Date”) commencing onDecember 15, 2017, and ending on the Maturity Date or upon earlier redemption or repayment to the person to whom principal ispayable. Interest shall accrue from the Original Issue Date, or from the most recent Interest Payment Date to which interest has beenpaid or duly provided for on this Note to, but excluding, the next following Interest Payment Date, Maturity Date, or earlier date ofredemption or repayment, as the case may be. Interest on Fixed Rate Notes will be computed by the Company on the basis of a 360-day year consisting of twelve 30-day months.If any Interest Payment Date or the Maturity Date (or the date of earlier redemption or repayment) of this Fixed Rate Note fallson a day that is not a Business Day, the payment will be made on the next Business Day as if it were made on the date such paymentwas due, and no interest will accrue on the amount so payable for the period from and after such Interest Payment Date or the MaturityDate (or the date of earlier redemption or repayment), as the case may be.Provisions Applicable To Floating Rate Notes Only:If the “Floating Rate” line above is checked, the Company will pay interest on the Interest Payment Dates shown specifiedabove at the Initial Interest Rate specified above until the first Interest Reset Date specified above following the Original Issue Datespecified above and thereafter at a rate determined in accordance with the provisions hereinafter set forth under the headings“Determination of CD Rate,” “Determination of CMT Rate,” “Determination of Commercial Paper Rate,” “Determination of FederalFunds Rate,” “Determination of LIBOR,” “Determination of Prime Rate” or “Determination of Treasury Rate,” depending on whetherthe Interest Rate Basis is the CD Rate, the CMT Rate, the Commercial Paper Rate, the Federal Funds Rate, LIBOR, the Prime Rate,the Treasury Rate or other Interest Rate Basis.An interest payment shall be the amount of interest accrued from and including the Original Issue Date, or from and includingthe last Interest Payment Date to which interest has been paid, to, but excluding, the next following Interest Payment Date, MaturityDate, or date of earlier redemption or repayment, as the case may be (an “Interest Period”). Notwithstanding any6provision herein to the contrary, (a) the interest rate hereon shall not be greater than the Maximum Interest Rate, if any, or less than theMinimum Interest Rate, if any, specified above, and (b) the interest rate will in no event be higher than the maximum rate permitted byNew York law as the same may be modified by United States laws of general application. The Calculation Agent will, upon therequest of any Holder, provide the interest rate then in effect. All calculations made by the Calculation Agent in the absence ofmanifest error will be conclusive for all purposes and binding on the Company and the Holders.If any Interest Payment Date for any Floating Rate Note, other than an Interest Payment Date at maturity, would fall on a daythat is not a Business Day, such Interest Payment Date will be the following day that is a Business Day, and interest will continue toaccrue to the following Business Day, except that if LIBOR is the applicable Interest Rate Basis, if such Business Day is in the nextsucceeding calendar month, such Interest Payment Date will be the immediately preceding day that is a Business Day. If the MaturityDate (or date of earlier redemption or repayment) of any Floating Rate Note would fall on a day that is not a Business Day, thepayment of interest and principal (and premium, if any) may be made on the next succeeding Business Day, and no interest on suchpayment will accrue for the period from and after the Maturity Date (or the date of earlier redemption or repayment).Commencing with the first Interest Reset Date specified above following the Original Issue Date, the rate at which interest onthis Note is payable shall be adjusted daily, weekly, monthly, quarterly, semi-annually or annually as specified above under “InterestReset Dates.”The interest rate borne by this Note will be determined as follows:(i) Unless the Interest Category of this Note is specified above as a “Floating Rate/Fixed Rate Note” or an “Inverse FloatingRate Note” or in the event either “Other Provisions” or an Addendum hereto applies, in each case, relating to a different interest rateformula, this Note shall be designated as a “Regular Floating Rate Note” and, except as set forth below or specified above under“Other Provisions” or in an Addendum hereto, shall bear interest at the rate determined by reference to the applicable Interest RateBasis or Bases (a) plus or minus the applicable Spread, if any, and/or (b) multiplied by the applicable Spread Multiplier, if any; in eachcase as specified above. Commencing on the Initial Interest Reset Date, the rate at which interest on this Note shall be payable shall bereset as of each Interest Reset Date specified above; provided, however, that the interest rate in effect for the period, if any, from theOriginal Issue Date to the Initial Interest Reset Date shall be the Initial Interest Rate.(ii) If the Interest Category of this Note is specified above as a “Floating Rate/Fixed Rate Note” then, except as set forthbelow or specified above under “Other Provisions” or in an Addendum hereto, this Note shall bear interest at the rate determined byreference to the applicable Interest Rate Basis or Bases (a) plus or minus the applicable Spread, if any, and/or (b) multiplied by theSpread Multiplier, if any, in each case as specified above. Commencing on the Initial Interest Reset Date, the rate at which interest onthis Note shall be payable shall be reset as of each Interest Reset Date; provided, however, that (y) the interest rate in effect for theperiod, if any, from the Original Issue Date to the Initial Interest Reset Date shall be the Initial Interest Rate and (z) the interest rate ineffect for the period commencing on, and including, the7Fixed Rate Commencement Date specified above to the Maturity Date (or date of earlier redemption or repayment) shall be the FixedInterest Rate specified above or, if no Fixed Interest Rate is so specified, the interest rate in effect on the day immediately preceding theFixed Rate Commencement Date.(iii) If the Interest Category of this Note is specified above as an “Inverse Floating Rate Note” then, except as set forth belowor specified above under “Other Provisions” or in an Addendum hereto, this Note shall bear interest at (a) the Fixed Interest Ratespecified above minus (b) the rate determined by reference to the applicable Interest Rate Basis or Bases:(x) plus or minus the applicable Spread, if any, and/or(y) multiplied by the applicable Spread Multiplier, if any, in each case as specified above;provided, however, that, unless otherwise specified above under “Other Provisions” or in an Addendum hereto, the interest rate hereonshall not be less than zero. Commencing on the Initial Interest Reset Date, the rate at which interest on this Note shall be payable shallbe reset on each Interest Reset Date; provided, however, that the interest rate in effect for the period, if any, from the Original IssueDate to the Initial Interest Reset Date shall be the Initial Interest Rate set forth above.The “Spread” is the number of basis points (one basis point equals one-hundredth of a percentage point) specified above to beadded to or subtracted from the Interest Rate Basis for a Floating Rate Note, and the “Spread Multiplier” is the percentage specifiedabove by which the Interest Rate Basis for such Floating Rate Note will be multiplied. Both a Spread and/or a Spread Multiplier maybe applicable to the Interest Rate Basis for a particular Floating Rate Note, as set forth above.Each such adjusted Interest Rate Basis shall be applicable on and after the Interest Reset Date to which it relates but notincluding the next succeeding Interest Reset Date. If any Interest Reset Date is a day that is not a Business Day, such Interest ResetDate shall be postponed to the next day that is a Business Day, except that if the rate of interest on this Note shall be determined byreference to LIBOR and such Business Day is in the next succeeding calendar month, such Interest Reset Date shall be theimmediately preceding Business Day. In addition, if the Treasury Rate is the applicable Interest Rate Basis and the InterestDetermination Date would otherwise fall on an Interest Reset Date, then the Interest Reset Date will be postponed to the nextsucceeding Business Day. Subject to applicable provisions of law (including usury laws) and except as specified in this Note, on eachInterest Reset Date, the rate of interest on this Note shall be the rate determined in accordance with the provisions of the applicableheading below.With respect to a Floating Rate Note, accrued interest shall be calculated by multiplying the principal amount thereof by anaccrued interest factor. Such accrued interest factor will be computed by adding the interest factors calculated for each day in theInterest Period or from the last date from which accrued interest is being calculated. The interest factor for each such day is computedby dividing the interest rate applicable to such day by 360, in the cases of CD Rate8Notes, Commercial Paper Rate Notes, Federal Funds Rate Notes, LIBOR Notes and Prime Rate Notes or by the actual number ofdays in the year, in the cases of CMT Rate Notes and Treasury Rate Notes. The interest rate applicable to any day that is an InterestReset Date will be the interest rate effective on such Interest Reset Date. The interest rate applicable to any other day will be theinterest rate for the immediately preceding Interest Reset Date (or, if none, the Initial Interest Rate, as specified above).The “Calculation Date,” where applicable, pertaining to an Interest Determination Date will be the earlier of (i) the tenthcalendar day after such Interest Determination Date or, if any such day is not a Business Day, the next succeeding Business Day or(ii) the Business Day preceding the applicable Interest Payment Date or the Maturity Date (or the date of earlier redemption orrepayment), as the case may be.For Floating Rate Notes, The Bank of New York Mellon Trust Company, N.A. shall be the calculation agent unless anothercalculation agent is specified above (the “Calculation Agent”). The interest rate applicable to each interest period will be determined bythe Calculation Agent on or prior to the applicable Calculation Date. At the request of the Holder, the Calculation Agent will providethe interest rate then in effect and, if determined, the interest rate which will become effective on the next Interest Reset Date.All percentages resulting from any calculation of the rate of interest on a Floating Rate Note will be rounded, if necessary, tothe nearest one hundred thousandth of a percentage point, with five one-millionths of a percentage point being rounded upwards (e.g.,8.986865% (or 0.08986865) being rounded to 8.98687% (or 0.0898687)) and all dollar amounts used in or resulting from suchcalculations will be rounded to the nearest cent (with one-half cent being rounded upwards).Determination of CD Rate. If the Interest Rate Basis, as specified above, is, or is calculated by reference to, the CD Rate,unless otherwise specified above, the “CD Rate” for each Interest Reset Date will be determined by the Calculation Agent as of thesecond Business Day prior to such Interest Reset Date (a “CD Interest Determination Date”) and shall be the rate on the applicable CDInterest Determination Date for negotiable United States dollar certificates of deposit having the Index Maturity specified above aspublished in H.15(519) (as defined below) on such CD Interest Determination Date under the heading “CDs (secondary market).” Ifthe rate referred to in the preceding sentence is not so published by 3:00 p.m., New York City time, on the applicable Calculation Date,the CD Rate shall be the rate on the applicable CD Interest Determination Date for negotiable United States dollar certificates ofdeposit of the Index Maturity specified above as published in H.15 Daily Update (as defined below), or other recognized electronicsource used for the purpose of displaying the applicable rate, under the caption “CDs (secondary market).” If the rate referred to in thepreceding sentence is not so published by 3:00 p.m., New York City time, on the applicable Calculation Date, the CD Rate shall be therate on the applicable CD Interest Determination Date calculated by the Calculation Agent on the Notes as the arithmetic mean of thesecondary market offered rates as of 10:00 a.m., New York City time, on the applicable CD Interest Determination Date, of threeleading non-bank dealers in negotiable United States dollar certificates of deposit in the City of New9York (which may include an agent or its affiliates) selected by the Company for negotiable United States dollar certificates of depositof major United States money market banks with a remaining maturity closest to the Index Maturity specified above in an amount thatis representative for a single transaction in that market at that time. If the dealers selected by the Company as provided in the precedingsentence are not quoting as mentioned in such sentence, the CD Rate shall be the CD Rate in effect on the applicable CD InterestDetermination Date.“H.15(519)” means the weekly statistical release designated as H.15(519), or any successor publication, published by theBoard of Governors of the Federal Reserve System.“H.15 Daily Update” means the daily update of H.15(519), available through the world-wide-web site of the Board ofGovernors of the Federal Reserve System at http://www.federalreserve.gov/releases/h15/update, or any successor site or publication.Determination of CMT Rate. If the Interest Rate Basis, as specified above, is, or is calculated by reference to, the CMT Rate,unless otherwise specified above, the “CMT Rate” for each Interest Reset Date will be determined by the Calculation Agent as of thesecond Business Day prior to such Interest Reset Date (a “CMT Interest Determination Date”) and shall be, if “CMT Reuters PageFRBCMT” is specified above, the percentage equal to the yield for United States Treasury securities at “constant maturity” having theIndex Maturity specified above, as the yield is displayed on Reuters, Inc. (or any successor or similar service), on page FRBCMT (orany other page as may replace the specified page on that service under the caption “Treasury Constant Maturities”) (“Reuters PageFRBCMT”). If the rate referred to in the preceding sentence does not appear on Reuters Page FRBCMT, the CMT Rate for suchCMT Interest Determination Date will be a percentage equal to the yield for United States Treasury securities at “constant maturity”having the Index Maturity specified above, and for the applicable CMT Interest Determination Date as published in H.15(519) underthe caption “Treasury Constant Maturities.” In the event the rate referred to in the preceding sentence does not appear in H.15(519),then the CMT Rate for such CMT Interest Determination Date will be the rate on the applicable CMT Interest Determination Date forthe period of the Index Maturity specified above, as may then be published by either the Board of Governors of the Federal ReserveSystem or the United States Department of the Treasury that the Calculation Agent determines to be comparable to the rate whichwould otherwise have been published in H.15(519). In the event the rate referred to in the preceding sentence is not published, theCMT Rate on the applicable CMT Interest Determination Date will be calculated by the Calculation Agent as a yield-to-maturity basedon the arithmetic mean of the secondary market bid prices at approximately 3:30 p.m., New York City time, on the applicable CMTInterest Determination Date of three leading primary United States government securities dealers in the City of New York, which mayinclude an agent of the Company or such agent’s affiliates (each a “Reference Dealer”), selected by the Company (from five ReferenceDealers selected by the Company and eliminating the highest quotation (or, in the event of equality, one of the highest), and the lowestquotation (or, in the event of equality, one of the lowest)), for United States Treasury securities with an original maturity equal to theIndex Maturity specified above, a remaining term to maturity no more than one year shorter than the Index Maturity specified aboveand in a principal amount that is representative for a single transaction in the securities in the market at that time. If fewer than10five but more than two of the prices referred to in the above sentence are provided as requested, the CMT Rate on the applicable CMTInterest Determination Date will be calculated by the Calculation Agent based on the arithmetic mean of the bid prices obtained, andneither the highest nor the lowest of the quotations shall be eliminated; provided, however, that if fewer than three prices referred toabove are provided as requested, the CMT Rate on the applicable CMT Interest Determination Date will be calculated by theCalculation Agent as a yield-to-maturity based on the arithmetic mean of the secondary market bid prices as of approximately 3:30p.m., New York City time, on the applicable CMT Interest Determination Date of three Reference Dealers selected by the Companyfrom five Reference Dealers selected by the Company and eliminating the highest quotation or, in the event of equality, one of thehighest and the lowest quotation or, in the event of equality, one of the lowest, for United States Treasury securities with an originalmaturity greater than the Index Maturity specified above, and a remaining term to maturity closest to the Index Maturity specifiedabove, and in a principal amount that is representative for a single transaction in the securities in the market at that time. However, iffewer than five but more than two prices referred to above are provided as requested, the CMT Rate on the applicable CMT InterestDetermination Date will be calculated by the Calculation Agent based on the arithmetic mean of the bid prices obtained, and neitherthe highest nor the lowest of the quotations will be eliminated. If fewer than three prices referred to above are provided as requested,the CMT Rate on the applicable CMT Interest Determination Date will be the CMT Rate in effect on the applicable CMT InterestDetermination Date. If the CMT Reuters Page FEDCMT is specified above, the CMT Rate for such CMT Interest Determination Datewill be a percentage equal to the one-week or one-month, as specified above, and will be the average yield for United States Treasurysecurities at “constant maturity” having the Index Maturity specified above, as the yield is displayed on Reuters, Inc. (or any successorservice) on page FEDCMT (or any other page as may replace that specified page on that service) (“Reuters Page FEDCMT”), for theweek or month, as applicable, ended immediately preceding the week or month, as applicable, in which the related CMT InterestDetermination Date falls. If the rate referred to in the preceding sentence does not appear on Reuters Page FEDCMT, then the CMTRate for such CMT Interest Determination Date will be a percentage equal to the one-week or one-month, as specified above, averageyield for United States Treasury securities at “constant maturity” having the Index Maturity specified above, and for the week ormonth, as applicable, preceding the applicable CMT Interest Determination Date as published in H.15(519) opposite the caption“Treasury Constant Maturities.” If the rate referred to in the preceding sentence does not appear in H.15(519), then the CMT Rate forsuch CMT Interest Determination Date will be the one-week or one-month, as specified above, average yield for United StatesTreasury securities at “constant maturity” having the Index Maturity specified above, as otherwise announced by the Federal ReserveBank of New York for the week or month, as applicable, ended immediately preceding the week or month, as applicable, in which therelated CMT Interest Determination Date falls. If the Federal Reserve Bank of New York does not publish the rate referred to above,the rate on the applicable CMT Interest Determination Date will be calculated by the Calculation Agent as a yield-to-maturity based onthe arithmetic mean of the secondary market bid prices at approximately 3:30 p.m., New York City time, on the applicable CMTInterest Determination Date of three Reference Dealers selected by the Company (from five Reference Dealers selected by theCompany and eliminating the highest quotation (or, in the event of equality, one of the highest), and the lowest quotation (or, in theevent of equality, one of11the lowest)), for United States Treasury securities with an original maturity equal to the Index Maturity specified above, and aremaining term to maturity no more than one year shorter than the Index Maturity specified above, and in a principal amount that isrepresentative for a single transaction in the securities in the market at that time. If fewer than five but more than two of the pricesreferred to above are provided as requested, the rate on the applicable CMT Interest Determination Date will be calculated by theCalculation Agent based on the arithmetic mean of the bid prices obtained, and neither the highest nor the lowest of the quotations shallbe eliminated. If fewer than three prices referred to above are provided as requested, the rate on the applicable CMT InterestDetermination Date will be calculated by the Calculation Agent as a yield-to-maturity based on the arithmetic mean of the secondarymarket bid prices as of approximately 3:30 p.m., New York City time, on the applicable CMT Interest Determination Date of threeReference Dealers selected by the Company (from five Reference Dealers selected by the Company and eliminating the highestquotation or (in the event of equality, one of the highest) and the lowest quotation (or, in the event of equality, one of the lowest)), forUnited States Treasury securities with an original maturity greater than the Index Maturity specified above, and a remaining term tomaturity closest to the Index Maturity specified above and will be in a principal amount that is representative for a single transaction inthe securities in the market at that time. If fewer than five but more than two prices referred to above are provided as requested, the ratewill be calculated by the Calculation Agent based on the arithmetic mean of the bid prices obtained, and neither the highest nor thelowest of the quotations will be eliminated, or if fewer than three prices referred to above are provided as requested, the CMT Rate willbe the CMT Rate in effect on the applicable CMT Interest Determination Date. If two United States Treasury securities with anoriginal maturity greater than the Index Maturity as specified above have remaining terms to maturity equally close to the IndexMaturity specified above, the quotes for the United States Treasury security with the shorter original remaining term to maturity will beused.Determination of Commercial Paper Rate. If the Interest Rate Basis, as specified above, is, or is calculated by reference to,the Commercial Paper Rate, unless otherwise specified above, the “Commercial Paper Rate” for each Interest Reset Date will bedetermined by the Calculation Agent as of the second Business Day prior to such Interest Reset Date (a “Commercial Paper InterestDetermination Date”) and shall be the Money Market Yield (as defined below) on such date of the rate for commercial paper havingthe Index Maturity as indicated above, as such rate shall be published in H.15(519) under the caption “Commercial Paper-Nonfinancial.” In the event that such rate is not published prior to 3:00 p.m., New York City time, on the applicable Calculation Date,then the Commercial Paper Rate shall be calculated by the Calculation Agent as the Money Market Yield of the Commercial PaperRate on the applicable Commercial Paper Interest Determination Date for commercial paper having the Index Maturity specifiedabove, published in H.15 Daily Update, or other recognized electronic source used for the purpose of displaying the applicable rate,under the caption “Commercial Paper-Nonfinancial.” If by 3:00 p.m., New York City time, on the applicable Calculation Date, suchrate is not yet published as provided in the preceding sentence, then the Commercial Paper Rate on the applicable Commercial PaperInterest Determination Date shall be calculated by the Calculation Agent as the Money Market Yield of the arithmetic mean of theoffered rates at approximately 11:00 a.m., New York City time, on the applicable Commercial12Paper Interest Determination Date of three leading dealers of United States dollar commercial paper in the City of New York, whichmay include an agent of the Company or such agent’s affiliates, selected by the Calculation Agent for commercial paper having theIndex Maturity specified above, placed for industrial issuers whose bond rating is “Aa,” or the equivalent, from a nationally recognizedstatistical rating organization; provided, however, that if the dealers selected as aforesaid by the Company are not quoting offered ratesas mentioned in this sentence, the Commercial Paper Rate will be the Commercial Paper Rate in effect on the applicable CommercialPaper Interest Determination Date.“Money Market Yield” shall be a yield calculated in accordance with the following formula and expressed as a percentage:Money market yield =D × 360× 100360 - (D × M)where “D” refers to the applicable per annum rate for commercial paper quoted on a bank discount basis and expressed as a decimal;and “M” refers to the actual number of days in the interest period for which interest is being calculated.Determination of Federal Funds Rate. If the Interest Rate Basis, as specified above, is, or is calculated by reference to theFederal Funds Rate, unless otherwise specified above, the “Federal Funds Rate” with respect to each Interest Reset Date will bedetermined by the Calculation Agent as of the first Business Day prior to such Interest Reset Date (a “Federal Funds InterestDetermination Date”) and shall be the rate on that date for United States dollar Federal Funds as published in H.15(519) under theheading “Federal Funds (Effective),” as displayed on Reuters, Inc. (or any successor service) on page FEDFUND01 (or any otherpage as may replace the applicable page on that service) (“Reuters Page FEDFUND01”) or, if such rate does not appear on ReutersPage FEDFUND01, or is not so published by 3:00 p.m., New York City time, on the applicable Calculation Date, the rate on theapplicable Federal Funds Interest Determination Date for United States dollar Federal Funds will be the rate on such Federal FundsInterest Determination Date as published in H.15 Daily Update, or other recognized electronic source used for the purpose ofdisplaying the applicable rate, under the caption “Federal Funds (Effective).” If such rate is not so published by 3:00 p.m., New YorkCity time, on the applicable Calculation Date, the Federal Funds Rate will be calculated by the Calculation Agent and will be thearithmetic mean of the rates for the last transaction in overnight United States dollar Federal Funds arranged by three leading brokers ofUnited States dollar Federal Funds transactions in the City of New York, which may include an agent of the Company or such agent’saffiliates, selected by the Company before 9:00 a.m., New York City time, on the applicable Federal Funds Interest DeterminationDate; provided, however, that if the brokers selected as aforesaid by the Company are not quoting as mentioned in this sentence, theFederal Funds Rate will be the Federal Funds Rate in effect on the applicable Federal Funds Interest Determination Date.Determination of LIBOR. If the Interest Rate Basis, as specified above, is, or is calculated by reference to, LIBOR, unlessotherwise specified above, “LIBOR” for each Interest Reset Date will be determined by the Calculation Agent as of the secondLondon Business Day13prior to such Interest Reset Date (a “LIBOR Interest Determination Date”) and shall be the rate for deposits in United States dollarshaving a maturity of three months commencing on the first day of the applicable interest period that appears on Reuters ScreenLIBOR01 Page as of 11:00 a.m., London time, on that Interest Determination Date. If no rate appears, then LIBOR, in respect of thatInterest Determination Date, will be determined in accordance with the provisions described below. With respect to an InterestDetermination Date on which no rate appears on Reuters Screen LIBOR01 Page, as specified above, the Company will request theprincipal London offices of each of four major reference banks in the London interbank market, as selected by the Company, toprovide the Calculation Agent with its offered quotation for deposits in United States dollars for the period of three months,commencing on the first day of the applicable interest period, to prime banks in the London interbank market at approximately 11:00a.m., London time, on that Interest Determination Date and in a principal amount that is representative for a single transaction in UnitedStates dollars in that market at that time. If at least two quotations are provided, then LIBOR on that Interest Determination Date willbe the arithmetic mean of those quotations. If fewer than two quotations are provided, then LIBOR on the Interest Determination Datewill be the arithmetic mean of the rates quoted at approximately 11:00 a.m., New York City time, on the Interest Determination Dateby three major banks in New York City selected by the Company for loans in United States dollars to leading European banks, havinga three-month maturity and in a principal amount that is representative for a single transaction in United States dollars in that market atthat time; provided that if the banks selected by the Company are not providing quotations in the manner described by this sentence,LIBOR will be the same as the rate determined for the immediately preceding Interest Reset Date or if there is no immediatelypreceding Interest Reset Date, LIBOR will be the same as the rate determined for the initial Interest Period.“Reuters LIBOR01” means the display designated on page “LIBOR01” on Reuters(or such other page as may replace the LIBOR01 page on that service or any successor or similarservice for the purpose of displaying London interbank offered rates for U.S. dollar deposits of major banks).Determination of Prime Rate. If the Interest Rate Basis, as specified above, is, or is calculated by reference to, the PrimeRate, unless otherwise specified above, the “Prime Rate” with respect to each Interest Reset Date will be determined by the CalculationAgent as of the first Business Day prior to such Interest Reset Date (a “Prime Interest Determination Date”) and shall be the rate setforth on such date as published in H.15(519) under the caption “Bank Prime Loan,” or if not so published prior to 3:00 p.m., NewYork City time, on the applicable Calculation Date pertaining to such Prime Interest Determination Date, then the Prime Rate. will beas published in H.15 Daily Update, or such other recognized electronic source used for the purpose of displaying the applicable rateunder the caption “Bank Prime Loan,” or if not so published prior to 3:00 p.m., New York City time, on the applicable CalculationDate pertaining to such Prime Interest Determination Date, then the Prime Rate will be determined by the Calculation Agent as thearithmetic mean of the rates of interest publicly announced by each bank that appears on the Reuters Screen US PRIME 1 Page (asdefined below) as the particular bank’s prime rate or base lending rate as of 11:00 a.m., New York City time, on the applicable PrimeInterest Determination Date. If fewer than four such rates are so published by 3:00 p.m.,14New York City time, on the applicable Calculation Date as shown on the Reuters Screen US PRIME 1 Page for the Prime InterestDetermination Date, the Prime Rate will be determined by the Calculation Agent as the arithmetic mean of the prime rates or baselending rates quoted on the basis of the actual number of days in the year divided by a 360-day year as of the close of business on theapplicable Prime Interest Determination Date by three major banks, which may include an agent of the Company or such agent’saffiliates, in the City of New York selected by the Company. However, if the banks selected by the Company are not quoting asmentioned in the preceding sentence, the Prime Rate will be the Prime Rate in effect on the applicable Prime Interest DeterminationDate.“Reuters Screen US PRIME 1 Page” means the display on the Reuter Money 3000 Service or any successor service on the“US PRIME 1 Page” or other page as may replace US PRIME 1 Page on that service for the purpose of displaying prime rates or baselending rates of major United States banks).Determination of Treasury Rate. If the Interest Rate Basis, as specified above, is, or is calculated by reference to theTreasury Rate, unless otherwise specified above, the “Treasury Rate” for each Interest Reset Date will be the rate from the auction heldon the applicable Interest Determination Date (the “Auction”) of direct obligations of the United States (“Treasury Bills”) having theIndex Maturity, as specified above, as published under the caption “INVESTMENT RATE” on the display on Reuters, Inc. or anysuccessor or similar service on page USAUCTION 10 or any other page as may replace page USAUCTION 10 on that service(“Reuters Page USAUCTION 10”) or page USAUCTION 11 on that service (“Reuters Page USAUCTION 11”), or, if the rate is notso published by 3:00 p.m., New York City time, on the applicable Calculation Date pertaining to such Treasury Rate DeterminationDate (as defined below), the Bond Equivalent Yield of the rate for the applicable Treasury Bills as published in H.15 Daily Update, orother recognized electronic source used for the purpose of displaying the applicable rate, under the caption “U.S. GovernmentSecurities/Treasury Bills/Auction High,” or, if the rate is not so published by 3:00 p.m., New York City time, on the applicableCalculation Date pertaining to such Treasury Rate Determination Date, the Bond Equivalent Yield of the auction rate of the applicableTreasury Bills announced by the United States Department of the Treasury, or, if the rate is not announced by the United StatesDepartment of the Treasury, or if the Auction is not held, the Bond Equivalent Yield of the rate on the applicable Treasury RateDetermination Date of Treasury Bills having the Index Maturity specified above, published in H.15(519) under the caption “U.S.Government Securities/Treasury Bills/Secondary Market,” or, if the rate is not so published by 3:00 p.m., New York City time, on theapplicable Calculation Date pertaining to such Treasury Rate Determination Date, the rate on the applicable Treasury RateDetermination Date of the applicable Treasury Bills as published in H.15 Daily Update, or other recognized electronic source used forthe purpose of displaying the applicable rate, under the caption “U.S. Government Securities/Treasury Bills/Secondary Market.” In theevent that the results of the auction of Treasury Bills having the applicable Index Maturity specified above are not published orreported, as provided above, by 3:00 p.m., New York City time, on the applicable Calculation Date or if no such auction is held onsuch Treasury Rate Determination Date, then the Treasury Rate on the applicable Treasury Rate Determination Date shall becalculated by the Calculation Agent and shall be the Bond Equivalent Yield of the arithmetic15mean of the secondary market bid rates, as of approximately 3:30 p.m., New York City time, on the applicable Treasury RateDetermination Date, of three primary United States government securities dealers, which may include the agent or its affiliates, selectedby the Company, for the issue of Treasury Bills with a remaining maturity closest to the Index Maturity specified above; provided,however, that if the dealers selected as aforesaid by the Company are not quoting as mentioned in this sentence, the Treasury Rate willbe the Treasury Rate in effect on the applicable Treasury Rate Determination Date.The “Treasury Rate Determination Date” for any Interest Reset Date will be the day of the week in which such Interest ResetDate falls on which Treasury Bills would normally be auctioned. Treasury Bills are normally sold at auction on Monday of each week,unless that day is a legal holiday, in which case the auction is normally held on the following Tuesday, except such auction may beheld on the preceding Friday. If, as the result of a legal holiday, an auction is so held on the preceding Friday, such Friday will be theTreasury Rate Determination Date pertaining to the Interest Reset Date occurring in the next succeeding week.“Bond Equivalent Yield” means a yield calculated in accordance with the following formula and expressed as a percentage:Bond Equivalent Yield =D × N× 100360 - (D × M)where “D” refers to the applicable per annum rate for Treasury Bills quoted on a bank discount basis and expressed as a decimal; “N”refers to 365 or 366, as the case may be, and “M” refers to the actual number of days in the interest period for which interest is beingcalculated.Provisions Applicable To Both Fixed Rate Notes And Floating Rate Notes:The interest so payable on any Interest Payment Date will, subject to certain exceptions in the Indenture hereinafter referred to,be paid to the person in whose name this Note is registered at the close of business on the Regular Record Date (as defined below)immediately preceding such Interest Payment Date or, if the Interest Payment Date is the Maturity Date or the date of earlierredemption or repayment, to the person in whose name this Note is registered at the close of business on the Maturity Date or suchearlier date of redemption or repayment; provided, however, that if the Original Issue Date is between a Regular Record Date and anInterest Payment Date or on an Interest Payment Date, interest for the period from and including the Original Issue Date to, butexcluding, the Interest Payment Date relating to such Regular Record Date shall be paid on the next succeeding Interest Payment Dateto the person in whose name this Note is registered on the close of business on the Regular Record Date preceding such InterestPayment Date. If this Note bears interest at a Fixed Rate, as specified above, unless otherwise specified above, the “Regular RecordDate” with respect to any Interest Payment Date shall be the first day of June and December, preceding such Interest Payment Date,whether or not such date shall be a Business Day. If this Note bears interest at a Floating Rate, as specified above, the “Regular RecordDate” with respect to any Interest Payment Date shall be the16fifteenth calendar day next preceding such Interest Payment Date, whether or not such date shall be a Business Day.Payment of principal, premium, if any, and interest in respect of this Note due on the Maturity Date or any earlier redemption orrepayment date will be made in immediately available funds upon presentation and surrender of this Note; provided, however, that if aSpecified Currency is specified above and such payment is to be made in such Specified Currency in accordance with the provisionsset forth below, such payment will be made by wire transfer of immediately available funds to an account with a bank designated bythe Holder hereof at least 15 calendar days prior to the Maturity Date or such earlier redemption or repayment date, as the case may be,provided that such bank has appropriate facilities therefor and that this Note is presented and surrendered at the Place of Paymentspecified above in time for the Trustee to make such payment in such funds in accordance with its normal procedures. Payment ofinterest due on any Interest Payment Date, other than the Maturity Date or any earlier redemption or repayment date, will be made atthe Place of Payment specified above.Whenever in this Note or in the Indenture there is a reference, in any context, to the payment of the principal of, or interest, ifany, on, or in respect of, the Notes, such payment shall be deemed to include the payment of Additional Amounts to the extent that, insuch context, Additional Amounts are, were or would be payable in respect of such payment pursuant to the provisions hereof orthereof and express mention of the payment of Additional Amounts (if applicable) in any provision hereof or thereof shall not beconstrued as excluding Additional Amounts in those provisions hereof where such express mention is not made.The Company is obligated to make payment of principal, premium, if any, and interest in respect of this Note in United Statesdollars or, if a Specified Currency is indicated above, in such Specified Currency (or, if such Specified Currency is not at the time ofsuch payment legal tender for the payment of public and private debts of the country issuing such currency or, in the case of the Euro,in the member states of the European Union that have adopted the single currency in accordance with the Treaty Establishing theEuropean Community, as amended by the Treaty on European Union, such other currency which is then such legal tender in suchcountry or in the adopting member states of the European Union, as the case may be). If a Specified Currency is specified above,except as otherwise provided below, any such amounts so payable by the Company will be converted by a New York clearing housebank designated by the Company (the “Exchange Rate Agent”) into United States dollars for payment to the Holder of this Note.If a Specified Currency is specified above, the Holder of this Note may elect to receive any amount payable hereunder in suchSpecified Currency. If the Holder of this Note shall not have duly made an election to receive all or a specified portion of any paymentof principal, premium, if any, and/or interest in respect of this Note in such Specified Currency, any United States dollar amount to bereceived by the Holder of this Note will be based on the highest bid quotation in the City of New York received by the Exchange RateAgent at approximately 11:00 a.m., New York City time, on the second Business Day preceding the applicable payment date fromthree recognized foreign exchange dealers (one of whom may be the Exchange Rate Agent)17selected by the Exchange Rate Agent and approved by the Company for the purchase by the quoting dealer of the Specified Currencyfor United States dollars for settlement on such payment date in the aggregate amount of the Specified Currency payable to all Holdersof Notes scheduled to receive United States dollar payments and at which the applicable dealer commits to execute a contract. Allcurrency exchange costs will be borne by the Holder of this Note by deductions from such payments. If three such bid quotations arenot available, payments on this Note will be made in the Specified Currency.If a Specified Currency is specified above, the Holder of this Note may elect to receive all or a specified portion of anypayment of principal, premium, if any, and/or interest in respect of this Note in such Specified Currency by submitting a written requestfor such payment to the Trustee at the Place of Payment on or prior to the applicable Record Date or at least 15 calendar days prior tothe Maturity Date (or any earlier redemption or repayment date), as the case may be. Such written request may be mailed or handdelivered or sent by facsimile transmission. The Holder of this Note may elect to receive all or a specified portion of all futurepayments in the Specified Currency in respect of such principal, premium, if any, and/or interest and need not file a separate electionfor each payment. Such election will remain in effect until revoked by written notice to the Trustee, but written notice of any suchrevocation must be received by the Trustee on or prior to the applicable Record Date or at least 15 calendar days prior to the MaturityDate (or any earlier redemption or repayment date), as the case may be.If a Specified Currency is specified above and the Holder of this Note shall have duly made an election to receive all or aspecified portion of any payment of principal, premium, if any, and/or interest in respect of this Note in such Specified Currency, butsuch Specified Currency is not available for such payment due to the imposition of exchange controls or other circumstances beyondthe control of the Company, the Company will be entitled to satisfy its obligations to the Holder of this Note by making such paymentin United States dollars on the basis of the Market Exchange Rate (as defined below) determined by the Exchange Rate Agent on thesecond Business Day prior to such payment date or, if such Market Exchange Rate is not then available, on the basis of the mostrecently available Market Exchange Rate on or before the date on which such payment is due. The “Market Exchange Rate” for theSpecified Currency means the noon dollar buying rate in the City of New York for cable transfers of the Specified Currency ascertified for customs purposes (or, if not so certified, as otherwise determined) by the Federal Reserve Bank of New York. Anypayment made in United States dollars under such circumstances shall not constitute an Event of Default (as defined in the Indenture).All determinations referred to above made by the Exchange Rate Agent shall be at its sole discretion and shall, in the absenceof manifest error, be conclusive for all purposes and binding on the Holder of this Note.In case an Event of Default (as defined in the Indenture) with respect to Notes of this series shall occur and be continuing, theprincipal amount (or, if the Note is an Original Issue Discount Note, such lesser portion of the principal amount as may be applicable)of the Notes of this series may be declared due and payable, and, with respect to certain Events of Default, shall automatically becomedue and payable, in each case in the manner and with the effect provided18in the Indenture. If this Note is an Original Issue Discount Note, in the event of an acceleration of the Maturity Date hereof, the amountpayable to the Holder of this Note upon such acceleration will be determined by this Note but will be an amount less than the amountpayable at the Maturity Date of this Note.The Indenture permits, with certain exceptions as therein provided, the modification of the rights and obligations of theCompany and the Guarantor and the rights of the Holders of the Securities (as defined in the Indenture) of each series to be affected bysuch modification under the Indenture at any time by the Company and the Guarantor with the consent of the holders of not less than amajority in aggregate principal amount of the Outstanding Securities (as defined in the Indenture) of each series to be affected by suchmodification. The Indenture also contains provisions permitting the Holders of specified percentages in aggregate principal amount ofthe Outstanding Securities of each series, on behalf of the Holders of all Securities of such series, to waive compliance by theCompany and the Guarantor with certain provisions of the Indenture and certain past defaults under the Indenture and theirconsequences.This Note is issuable only in registered form without coupons in minimum denominations of $2,000 and integral multiples of$1,000 in excess thereof or other Authorized Denomination specified above.As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Note may be registered in theSecurity Register of this series upon surrender of this Note for registration of transfer at the Place of Payment specified above, dulyendorsed by or accompanied by, a written instrument of transfer in form satisfactory to the Company and the Trustee, duly executed bythe Holder hereof or his attorney duly authorized in writing, and thereupon a new Note or Notes of this series of AuthorizedDenomination and for the same aggregate principal amount, with the Guarantee endorsed thereon, will be issued to the designatedtransferee or transferees.No service charge shall be made for any such registration of transfer, exchange or redemption of the Notes, but the Companymay require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.The Trustee, and any agent of the Company or the Trustee may treat the person in whose name this Note is registered in theSecurity Register as the owner of this Note for all purposes (other than for the determination of any Additional Amounts payable) andneither the Company nor the Trustee nor any such agent shall be affected by any notice to the contrary.If so specified above, this Note will be redeemable at the Company’s option on the date or dates specified prior to the MaturityDate at a price or prices, each as specified above, together with accrued interest to the date of redemption. This Note will not be subjectto any sinking fund. If so redeemable, the Company may redeem this Note either in whole or from time to time in part, upon not lessthan 30, nor more than 60, days’ notice before the date of redemption. If less than all of the Notes with like tenor and terms are to beredeemed, the Notes to be redeemed shall be selected by the Trustee by such method as the Trustee shall deem fair and appropriate.19This Note will be subject to redemption at the option of the Company, in whole or in part at any time prior to the MaturityDate, at a redemption price equal to the greater of (i) 100% of the principal amount of this Note to be redeemed, and (ii) as determinedby the Quotation Agent (as defined below), the sum of the present values of the remaining scheduled payments of principal and intereston this Note to be redeemed (exclusive of interest accrued to the date of redemption) discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as defined below) plus 15 basispoints, plus accrued interest on the principal amount redeemed to, but not including, the date of redemption.If any redemption date falls on a day that is not a Business Day, the related payment of the redemption price and interest will bemade on the next Business Day as if it were made on the date such payment was due, and no interest will accrue on the amounts sopayable for the period from and after such date to the next Business Day.“Comparable Treasury Issue” means the U.S. Treasury security selected by the Quotation Agent as having a maturity comparableto the remaining term of the Notes to be redeemed that would be utilized, at the time of selection and in accordance with customaryfinancial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Notes.“Comparable Treasury Price” means, with respect to any redemption date, (i) the average of the Reference Treasury DealerQuotations for such redemption date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (ii) iffewer than five such Reference Treasury Dealer Quotations are obtained by the Quotation Agent, the average of all such quotations.“Quotation Agent” means the Reference Treasury Dealer appointed by the Company.“Reference Treasury Dealer” means (i) (1) each of Barclays Capital Inc., Citigroup Global Markets Inc. and Goldman, Sachs &Co. (and their respective successors) and (2) two other nationally recognized investment banking firms that are Primary TreasuryDealers specified from time to time by the Company; provided, however, that if any of the foregoing shall cease to be a primary U.S.Government securities dealer in New York City (a “Primary Treasury Dealer”), the Company shall substitute therefor another PrimaryTreasury Dealer; and (ii) any other Primary Treasury Dealer selected by the Company.“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any redemption date, theaverage, as determined by the Quotation Agent, of the bid and asked prices for the Comparable Treasury Issue (expressed in each caseas a percentage of its principal amount) quoted in writing to the Quotation Agent by such Reference Treasury Dealer at 5:00 p.m.,New York City time, on the third Business Day preceding such redemption date.“Treasury Rate” means, with respect to any redemption date, the rate per annum equal to the semi-annual equivalent yield-to-maturity of the Comparable Treasury Issue, assuming a price for20the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for suchredemption date.Notice of any redemption will be delivered at least 30 days but not more than 60 days before the redemption date to the Holderhereof at its address as such address shall appear in the Security Register of the Company, except that redemption notices may beprovided more than 60 days prior to the redemption date if the notice is issued in connection with the defeasance or discharge of theNotes and/or the Indenture. Unless the Company defaults in the payment of the redemption price on and after the redemption date,interest will cease to accrue on the principal amount of this Note called for redemption. Notwithstanding anything to the contrary in theforegoing, notice of any redemption to the Holder hereof may, in the Company’s discretion, be subject to one or more conditionsprecedent, including completion of a corporate transaction. In such event, the related notice of redemption will describe each suchcondition and, if applicable, will state that, in the Company’s discretion, the date of redemption may be delayed until such time as anyor all such conditions shall be satisfied or waived, or such redemption may not occur and such notice may be rescinded in the eventthat any or all such conditions shall not have been satisfied or waived by the date of redemption, or by the date of redemption as sodelayed.Subject to Section 403 of the Indenture, if an HDI Change of Control Triggering Event (as defined below) occurs, unless theCompany has exercised its option to redeem this Note as described above, the Company will be required to make an offer (the“Change of Control Offer”) to each Holder of the Notes to repurchase all or any part (equal to $2,000 or an integral multiple of $1,000in excess thereof) of such Holder’s Notes on the terms set forth herein. In the Change of Control Offer, the Company will be requiredto offer payment in cash equal to 101% of the aggregate principal amount of Notes repurchased, plus accrued and unpaid interest, ifany, on the Notes repurchased to the date of repurchase (the “Change of Control Payment”).Subject to Section 403 of the Indenture, within 30 days following any HDI Change of Control Triggering Event or, at theCompany’s option, prior to any HDI Change of Control (as defined below), but after public announcement by HDI (as defined below)of the transaction that constitutes, or would constitute upon consummation thereof, an HDI Change of Control, a notice will bedelivered to Holders of the Notes describing the transaction that constitutes, or would constitute upon consummation thereof, the HDIChange of Control Triggering Event and offering to repurchase such Notes on the date specified in the notice. Such date will be noearlier than 30 days and no later than 60 days from the date such notice is delivered, other than as may be required by law (the“Change of Control Payment Date”). The notice will, if delivered prior to the date of consummation of the HDI Change of Control,state that the offer to purchase is conditioned on the HDI Change of Control Triggering Event occurring on or prior to the Change ofControl Payment Date.If any Change of Control Payment Date falls on a day that is not a Business Day, the related payment of the Change of ControlPayment will be made on the next Business Day as if it were made on the date such payment was due, and no interest will accrue onthe amounts so payable for the period from and after such date to the next Business Day.21On the Change of Control Payment Date, the Company will, to the extent lawful, (i) accept for payment all Notes or portionsof Notes properly tendered and not validly withdrawn pursuant to the Change of Control Offer; (ii) deposit with the paying agent anamount equal to the Change of Control Payment in respect of all such Notes or portions of Notes properly tendered and not validlywithdrawn; and (iii) deliver or cause to be delivered to the Trustee such Notes properly accepted together with a Company Officers’Certificate (as defined in the Indenture) stating the aggregate principal amount of such Notes or portions of Notes being repurchased.The Company will not be required to comply with the obligations relating to repurchasing the Notes if a third-party insteadsatisfies them.The Company must comply with the requirements of Rule 14e-1 under the Securities Exchange Act of 1934, as amended (the“Exchange Act”), and any other securities laws and regulations applicable to the repurchase of the Notes. To the extent that theprovisions of any such securities laws or regulations conflict with the Change of Control Offer provisions of the Notes, the Companywill comply with those securities laws and regulations and will not be deemed to have breached its obligations under the Change ofControl Offer provisions of the Notes by virtue of any such compliance.If Holders of not less than 95% in aggregate principal amount of the outstanding Notes properly tender and do not validlywithdraw such amount of the Notes in a Change of Control Offer, and the Company, or any third-party making an offer to purchasethe Notes in connection with an HDI Change of Control Triggering Event in lieu of the Company, purchase such amount of the Notesproperly tendered and not validly withdrawn by such Holders, then the Company will have the right, upon notice described above,given not more than 30 days following the Change of Control Payment Date, to redeem all (but not less than all) of the aggregateprincipal amount of the Notes that remains outstanding following such purchase at a redemption price in cash equal to 101% of theprincipal amount thereof, plus accrued and unpaid interest, if any, to the redemption date (subject to the right of Holders of record as ofthe close of business on the relevant Regular Record Date to receive interest on the applicable Interest Payment Date). If theredemption date falls on a day that is not a Business Day, the related payment of the redemption price and interest will be made on thenext Business Day as if it were made on the date such payment was due, and no interest will accrue on the amounts so payable for theperiod from and after such date to the next Business Day.For purposes of the Change of Control Offer provisions of the Notes, the following terms will be applicable:“Below Investment Grade Rating Event” means the Notes cease to be rated an Investment Grade Rating by each of the RatingAgencies on any day within the 60-day period after the earlier of (1) the occurrence of an HDI Change of Control and (2) the firstpublic announcement by Harley-Davidson, Inc. (“HDI”) of the intention of HDI to effect an HDI Change of Control (which 60-dayperiod will be extended for so long as any of the Rating Agencies has publicly announced that it is considering a possible downgradeof the rating of the notes of such series); provided that a Below Investment Grade Rating Event otherwise arising by22virtue of a particular reduction in rating shall not be deemed to have occurred in respect of a particular HDI Change of Control (andthus shall not be deemed a Below Investment Grade Rating Event for purposes of the definition of HDI Change of Control TriggeringEvent hereunder) if any of the Rating Agencies making the reduction in rating to which this definition would otherwise apply do notannounce or publicly confirm or inform the Trustee in writing at the Company’s or its request that the reduction was the result, inwhole or in part, of any event or circumstance comprised of or arising as a result of, or in respect of, the applicable HDI Change ofControl (whether or not the applicable HDI Change of Control shall have occurred at the time of the Below Investment Grade RatingEvent). The Trustee has no obligation to monitor the ratings of the Notes for purposes of determining the occurrence of a BelowInvestment Grade Rating Event.“Fitch” means Fitch Ratings, Inc. and its successors.“HDI Change of Control” means the occurrence of any of the following: (1) the consummation of any transaction (including,without limitation, any merger or consolidation) the result of which is that any “person” (as that term is used in Section 13(d)(3) of theExchange Act), other than HDI or one of its subsidiaries, becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 underthe Exchange Act), directly or indirectly, of more than 50% of the Voting Stock of HDI or other Voting Stock into which the VotingStock of HDI is reclassified, consolidated, exchanged or changed, measured by voting power rather than number of shares; or (2) thedirect or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation or as a pledge forsecurity purposes only), in one or a series of related transactions, of all or substantially all of the assets of HDI and the assets of thesubsidiaries of HDI, taken as a whole, to one or more “persons” (as that term is defined in the Indenture), other than HDI or one of itssubsidiaries and other than any such transaction or series of related transactions where holders of Voting Stock of HDI outstandingimmediately prior thereto hold voting stock of the transferee person representing a majority of the voting power of the transfereeperson’s voting stock immediately after giving effect thereto. Notwithstanding the foregoing, a transaction will not be deemed to be anHDI Change of Control if (1) HDI becomes a direct or indirect wholly-owned subsidiary of a holding company and (2)(A) the director indirect holders of the Voting Stock of such holding company immediately following that transaction are substantially the same asthe holders of the Voting Stock of HDI immediately prior to that transaction or (B) immediately following that transaction no “person”(as that term is used in Section 13(d)(3) of the Exchange Act) (other than a holding company satisfying the requirements of thissentence) is the beneficial owner, directly or indirectly, of more than 50% of the Voting Stock of such holding company.“HDI Change of Control Triggering Event” means the occurrence of both an HDI Change of Control and a Below InvestmentGrade Rating Event. Notwithstanding anything to the contrary, no HDI Change of Control Triggering Event will be deemed to haveoccurred in connection with any particular HDI Change of Control unless and until such HDI Change of Control has actually beenconsummated.23“Investment Grade Rating” means a rating equal to or higher than Baa3 by Moody’s (or its equivalent under any successorrating category of Moody’s), BBB− by S&P (or its equivalent under any successor rating category of S&P) and BBB− by Fitch (or itsequivalent under any successor rating category of Fitch), and the equivalent investment grade credit rating from any replacementRating Agency or Rating Agencies selected by the Company.“Moody’s” means Moody’s Investors Service, Inc., a subsidiary of Moody’s Corporation, and its successors.“Rating Agencies” means (1) each of Moody’s, S&P and Fitch, and (2) if any of Moody’s, S&P or Fitch (or in each case anyreplacement thereof appointed pursuant to this definition) ceases to rate the Notes or fails to make a rating of the Notes publiclyavailable for reasons outside of the Company’s control, a “nationally recognized statistical rating organization” as defined underSection 3(a)(62) of the Exchange Act selected by the Company as a replacement agency for Moody’s, S&P and/or Fitch, as the casemay be; provided that the Company shall give notice of any such replacement to the Trustee.“S&P” means S&P Global Ratings, a division of S&P Global Inc. and its successors.“Voting Stock” means, with respect to any specified “person” (as that term is used in Section 13(d)(3) of the Exchange Act), asof any date, the capital stock of such person that is at the time entitled to vote generally in the election of the board of directors of suchperson.In lieu of Section 1005 of the Indenture, the following covenant shall apply:Limitation on Liens. The Company and the Guarantor will not, nor will they permit any Subsidiary of the Company or theGuarantor to, issue or assume any Indebtedness secured by a Lien upon any Property (now owned or hereinafter acquired) of theCompany or the Guarantor or any such Subsidiary without in any such case effectively providing concurrently with the issuance orassumption of any such Indebtedness that the Notes (together with, if the Company or the Guarantor shall so determine, any otherIndebtedness of the Company or the Guarantor or any such Subsidiary ranking equally with the Notes then existing or thereaftercreated) shall be secured equally and ratably with such Indebtedness. The restrictions set forth in the immediately preceding sentencewill not, however, apply if the aggregate amount of Indebtedness issued or assumed by the Company, the Guarantor or suchSubsidiaries and so secured by Liens, together with all other Indebtedness of the Company, the Guarantor or such Subsidiaries which(if originally issued or assumed at such time) would otherwise be subject to such restrictions, but not including Indebtedness permittedto be secured under clauses (i) through (xiv) of the immediately following paragraph, does not at the time such secured Indebtedness isincurred exceed 15% of the Consolidated Net Tangible Assets.The restrictions set forth above shall not apply to Indebtedness secured by:(i) Liens existing on the date of the original issuance of the Notes;24(ii) Liens on any Property of any company existing at the time such company becomes a Subsidiary of the Company or theGuarantor, which Liens are not created in contemplation of such company becoming a Subsidiary of the Company or the Guarantor;(iii) Liens on any Property existing at the time such Property is acquired by the Company, the Guarantor or a Subsidiary of theCompany or the Guarantor, or Liens to secure the payment of all or any part of the purchase price of such Property upon theacquisition of such Property by the Company, the Guarantor or a Subsidiary of the Company or the Guarantor or to secure anyIndebtedness incurred prior to, at the time of, or within 180 days after, the later of the date of acquisition of such Property and the datesuch Property is placed in service, for the purpose of financing all or any part of the purchase price thereof, or Liens to secure anyIndebtedness incurred for the purpose of financing the cost to the Company, the Guarantor or a Subsidiary of the Company or theGuarantor of improvements to such acquired Property or to secure any Indebtedness incurred for the purpose of financing all or anypart of the purchase price of the cost of construction of the Property subject to such Liens;(iv) Liens securing any Indebtedness of the Company, a Subsidiary of the Company or the Guarantor owing to the Company,the Guarantor or to another Subsidiary of the Company or the Guarantor;(v) Liens created in connection with a securitization or other asset-based financing;(vi) Liens with respect to the payment of taxes, assessments or governmental charges in all cases which are not yet due orwhich are being contested in good faith;(vii) statutory Liens of landlords and Liens of suppliers, mechanics, carriers, materialmen, warehousemen or workmen andother similar Liens imposed by law created in the ordinary course of business for amounts not yet due or which are being contested ingood faith;(viii) Liens incurred or deposits made in the ordinary course of business in connection with worker’s compensation,unemployment insurance or other types of social security benefits or to secure the performance of bids, tenders, sales, contracts (otherthan for the repayment of borrowed money), surety, appeal and performance bonds;(ix) Liens arising with respect to zoning restrictions, easements, licenses, reservations, covenants, rights-of-way, utilityeasements, building restrictions and other similar charges or encumbrances on the use of real property which do not interfere with theordinary conduct of the business of the Company, the Guarantor or any of their respective Subsidiaries;(x) Liens of attachment or judgment with respect to judgments, writs or warrants of attachment, or similar process against theCompany, the Guarantor or any of their respective Subsidiaries;(xi) Liens arising from leases, subleases or licenses granted to others which do not interfere in any material respect with thebusiness of the Company, the Guarantor or any of their respective Subsidiaries;25(xii) any interest or title of the lessor in the Property subject to any operating lease (as determined in accordance with GAAP asin effect as of the date of the Indenture) entered into by the Company, the Guarantor or any of their respective Subsidiaries in theordinary course of business;(xiii) Liens, if any, in connection with any sale/leaseback transaction;(xiv) Liens on assets pledged in respect of Indebtedness that has been defeased in accordance with the provisions thereofthrough the deposit of cash, cash equivalents or marketable securities (it being understood that cash collateral shall be deemed toinclude cash deposited with a trustee with respect to third party indebtedness); and(xv) any extension, renewal or replacement (or successive extensions, renewals or replacements) in whole or in part of anyLien referred to in the foregoing clauses (i) - (xiv); provided, however, that such new Lien is limited to the Property which was subjectto the prior Lien immediately before such extension, renewal or replacement, and provided, further, that the principal amount ofIndebtedness secured by the prior Lien immediately before such extension, renewal or replacement is not increased.The Company may “reopen” a previously issued tranche of Notes and issue additional Notes of such tranche or establishadditional terms of such tranche or issue notes with the same terms as previously issued Notes (except for the Original Issue Date, IssuePrice and, if applicable, the initial Interest Payment Date).The Company may at any time purchase this Note at any price in the open market or otherwise. Notes so purchased by theCompany may be held or resold or, at the discretion of the Company, may be surrendered to the Trustee for cancellation.For the avoidance of doubt, Article 4 of the Indenture, including without limitation Section 403 thereof, shall apply to theNotes.No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligations of theCompany and the Guarantor, which are absolute and unconditional, to pay the principal of, premium, if any, and interest on this Note,at the times, place and rate, and in the coin or currency, herein and in the Indenture prescribed.This Note shall be governed by and construed in accordance with the laws of the State of New York.By acceptance of this Note, the Holder hereof agrees to be bound by the provisions of the Indenture. Terms used herein whichare defined in the Indenture shall have the respective meanings assigned thereto in the Indenture. This Note shall not be valid orbecome obligatory for any purpose until the certificate of authentication hereon shall have been signed by or on behalf of the Trusteeunder the Indenture.26IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed, manually or by facsimile by anauthorized signatory.HARLEY-DAVIDSON FINANCIAL SERVICES, INC.By: Name: Title: By: Name: Title: Dated:TRUSTEE’S CERTIFICATE OF AUTHENTICATIONThis is one of the Securities of the series designated herein and referred to in the within-mentioned Indenture.THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,as TrusteeBy: Authorized SignatoryGUARANTEEFor value received, undersigned hereby fully, irrevocably and unconditionally guarantees, pursuant to the terms of theGuarantee contained in Article Fourteen of the Indenture, to the Holder of this Note and to the Trustee, on behalf of the Holder, thedue and punctual payment of the principal of, and any premium, interest and any Additional Amounts on, this Note, when and as thesame shall become due and payable, whether at the stated maturity, by declaration of acceleration, call for redemption or otherwise, inaccordance with the terms of this Note and the Indenture. This Guarantee will not be valid or obligatory for any purpose until theTrustee duly executes the certificate of authentication on the Note upon which this Guarantee is endorsed.Dated: HARLEY-DAVIDSON CREDIT CORP., a Nevada corporation By: Name: Title: Attest: By: Name: Title: ABBREVIATIONSThe following abbreviations, when used in the inscription on this certificate, shall be construed as though they were written out in fullaccording to applicable laws or regulations:TEN COM - as tenants in commonUNIF GIFT MIN ACT - _______ Custodian ______ (Cust) (Minor)TEN ENT - as tenants by the entiretiesunder Uniform Gifts to Minors ActJT TEN - as joint tenants with right of survivorship and not as tenant in common (State)Additional abbreviations may also be used though not in the above list.ASSIGNMENTFOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto:(Please insert social security or other identifying number of assignee)(Name and address of assignee, including zip code, must be printed or typewritten)the within Note, and all rights thereunder, hereby irrevocably constituting and appointing___________________________________________ attorney to transfer said Note on the books of the within Company, with fullpower of substitution in the premises.Dated: NOTICE: The signature to this assignment must correspond with the name as itappears upon the within Note in every particular, without alteration orenlargement or any change whatever and must be guaranteed.SIGNATURE(S) GUARANTEED:THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS,STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN ANAPPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM) PURSUANT TO SEC RULE 17Ad-15.SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTEThe following increases or decreases in this Global Note have been madeDate of ExchangeAmount of increase inPrincipal Amount of thisGlobal NoteAmount of decrease inPrincipal Amount of thisGlobal NotePrincipal Amount of thisGlobal Note following eachdecrease or increaseSignature of authorizedsignatory of Trustee Exhibit 4.16EXECUTION COPY364-DAY CREDIT AGREEMENTDated as of May 1, 2017 amongHARLEY-DAVIDSON, INC. and HARLEY-DAVIDSON FINANCIAL SERVICES, INC.,as the U.S. Borrowers, HARLEY-DAVIDSON CREDIT CORP. as the Guarantor,THE INSTITUTIONS FROM TIME TO TIME PARTY HERETO, as Lenders, JPMORGAN CHASE BANK, N.A., as Global Administrative Agent andCITIBANK, N.A.,U.S. BANK NATIONAL ASSOCIATION andTHE BANK OF TOKYO-MITSUBISHI UFJ, LTD., as Syndication Agents ______________________________________________________________________________ JPMORGAN CHASE BANK, N.A., CITIGROUP GLOBAL MARKETS, INC., U.S. BANK NATIONAL ASSOCIATION andTHE BANK OF TOKYO-MITSUBISHI UFJ, LTD., as Co-Lead Arrangers and JPMORGAN CHASE BANK, N.A., CITIGROUP GLOBAL MARKETS, INC., U.S. BANK NATIONAL ASSOCIATION andTHE BANK OF TOKYO-MITSUBISHI UFJ, LTD.,as Joint Book Runners US-DOCS\85806594.6TABLE OF CONTENTSPageARTICLE I DEFINITIONS ......................................................................................................................... 11.1 Certain Defined Terms ........................................................................................................ 1ARTICLE II THE CREDITS ......................................................................................................................202.1 Syndicated Global Loans ..................................................................................................202.2 [Reserved] .........................................................................................................................212.3 Optional Payments of Loans .............................................................................................212.4 Reduction of Commitments ...............................................................................................212.5 Method of Borrowing Syndicated Global Advances .........................................................212.6 Method of Selecting Types and Interest Periods for Syndicated Global Advances. .........222.7 Minimum Amount of Each Syndicated Global Advance ..................................................222.8 Method of Selecting Types and Interest Periods for Conversion and Continuationof Syndicated Global Advances .................................................................................222.9 [Reserved] .........................................................................................................................232.10 The Bid Rate Advances ...................................................................................................232.11 Default Rate .....................................................................................................................262.12 Method of Payment .........................................................................................................262.13 Notes, Telephonic Notices .............................................................................................. 262.14 Promise to Pay; Interest and Fees; Interest Payment Dates; Interest and FeeBasis; Loan Accounts .................................................................................................272.15 Notification of Advances, Interest Rates, Prepayments and AggregateCommitment Reductions ............................................................................................282.16 Lending Installations .......................................................................................................282.17 Non-Receipt of Funds by the Global Administrative Agent ...........................................282.18 Maturity Date ..................................................................................................................282.19 Term-Out Option .............................................................................................................28ARTICLE III CHANGE IN CIRCUMSTANCES ..................................................................................... 293.1 Yield Protection .................................................................................................................293.2 Changes in Capital Adequacy Regulations ....................................................................... 303.3 Availability of Types of Advances .................................................................................... 313.4 Funding Indemnification ...................................................................................................313.5 Taxes ................................................................................................................................. 313.6 Mitigation; Lender Statements; Survival of Indemnity .....................................................343.7 [Reserved] .........................................................................................................................353.8 Replacement of Affected Lenders .....................................................................................353.9 Removal of Lenders ..........................................................................................................35ARTICLE IV CONDITIONS PRECEDENT .............................................................................................364.1 Initial Loans .......................................................................................................................364.2 Each Loan ..........................................................................................................................37iARTICLE V REPRESENTATIONS AND WARRANTIES ..................................................................... 375.1 Representations and Warranties ........................................................................................ 37ARTICLE VI COVENANTS ..................................................................................................................... 396.1 Affirmative Covenants ...................................................................................................... 396.2 Negative Covenants ...........................................................................................................426.3 Financial Covenants ..........................................................................................................45ARTICLE VII DEFAULTS ........................................................................................................................ 467.1 Defaults .............................................................................................................................46ARTICLE VIII ACCELERATION, DEFAULTING LENDERS; WAIVERS, AMENDMENTS ANDREMEDIES ..............................................................................................................488.1 Remedies. ..........................................................................................................................488.2 Defaulting Lender ..............................................................................................................488.3 Amendments ......................................................................................................................498.4 Preservation of Rights .......................................................................................................51ARTICLE IX GENERAL PROVISIONS .................................................................................................. 519.1 Survival of Representations ...............................................................................................519.2 Governmental Regulation ..................................................................................................519.3 Headings ............................................................................................................................519.4 Entire Agreement .............................................................................................................. 519.5 Several Obligations; Benefits of this Agreement ..............................................................519.6 Expenses; Indemnification ................................................................................................519.7 Numbers of Documents .....................................................................................................539.8 Accounting ........................................................................................................................ 539.9 Severability of Provisions .................................................................................................539.10 Nonliability of Lenders ...................................................................................................539.11 CHOICE OF LAW AND SUBMISSION TO JURISDICTION ..................................... 539.12 WAIVER OF JURY TRIAL ........................................................................................... 549.13 No Strict Construction .....................................................................................................549.14 USA PATRIOT ACT ...................................................................................................... 549.15 Service of Process ...........................................................................................................54ARTICLE X THE GLOBAL ADMINISTRATIVE AGENT .................................................................... 5510.1 Appointment; Nature of Relationship ............................................................................. 5510.2 Powers .............................................................................................................................5510.3 General Immunity ............................................................................................................5610.4 No Responsibility for Loans, Creditworthiness, Recitals, Etc ........................................5610.5 Action on Instructions of Lenders ...................................................................................5610.6 Employment of the Global Administrative Agent and Counsel ......................................5610.7 Reliance on Documents; Counsel ....................................................................................57ii10.8 The Global Administrative Agent’s Reimbursement and Indemnification .....................5710.9 Rights as a Lender ...........................................................................................................5710.10 Lender Credit Decision.................................................................................................. 5710.11 Successor Global Administrative Agent ....................................................................... 5710.12 Co-Agents, Documentation Agent, Syndication Agent, etc .......................................... 8ARTICLE XI SETOFF; RATABLE PAYMENTS .................................................................................... 5811.1 Setoff ...............................................................................................................................5811.2 Ratable Payments ............................................................................................................58ARTICLE XII GUARANTEE ....................................................................................................................58ARTICLE XIII BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS .......................... 6213.1 Successors and Assigns ...................................................................................................6213.2 Participations. ..................................................................................................................6213.3 Assignments. ................................................................................................................... 6313.4 Confidentiality .................................................................................................................6513.5 Dissemination of Information..........................................................................................6713.6 Non-Use of HDFS’ Licensed Marks ...............................................................................67ARTICLE XIV NOTICES ..........................................................................................................................6714.1 Giving Notice ..................................................................................................................6714.2 Change of Address .......................................................................................................... 68ARTICLE XV COUNTERPARTS ............................................................................................................. 6815.1 Counterparts; Effectiveness; Electronic Execution .........................................................68iiiEXHIBITS AND SCHEDULESExhibitsEXHIBIT A-- Commitments (Definitions)EXHIBIT B-1-- Form of Syndicated Global Note (Definitions)EXHIBIT B-2-- Form of Bid Rate Note (Definitions)EXHIBIT C-- Form of Assignment Agreement (§13.3)EXHIBIT D-- List of Closing Documents (§ 4.1)ivSchedulesSchedule I-- Funding Protocols re: Syndicated Global Loans (Definitions, § 2.6)Schedule II-- Intercompany Subordination Terms (Definitions)Schedule 6.2.2(c)-- Liens (§ 6.2.2(c))v364-DAY CREDIT AGREEMENTThis 364-Day Credit Agreement dated as of May 1, 2017 is entered into among Harley-Davidson, Inc., a Wisconsincorporation, Harley-Davidson Financial Services, Inc., a Delaware corporation, Harley-Davidson Credit Corp., a Nevada corporation,the institutions from time to time a party hereto as Lenders, whether by execution of this Agreement or an assignment and assumptionpursuant to Section 13.3, JPMorgan Chase Bank, N.A., as the Global Administrative Agent and Citibank, N.A., U.S. Bank NationalAssociation and The Bank of Tokyo-Mitsubishi UFJ, Ltd., each in its capacity as a Syndication Agent. The parties hereto agree asfollows:ARTICLE I DEFINITIONS1.1 Certain Defined Terms. In addition to the terms defined in other sections of this Agreement, the following termsused in this Agreement shall have the following meanings, applicable both to the singular and the plural forms of the termsdefined:As used in this Agreement:“Absolute Rate Auction” has the meaning specified in Section 2.10(b)(i) hereof.“Advance” means a Bid Rate Advance or Syndicated Global Advance.“Affiliate” of any Person means any other Person directly or indirectly controlling, controlled by or under commoncontrol with such Person. A Person shall be deemed to control another Person if the controlling Person possesses, directly orindirectly, the power to direct or cause the direction of the management or policies of the controlled Person, whether throughownership of stock, membership, ownership or other equity interests, by contract or otherwise.“Agent Party” has the meaning assigned to such term in Section 14.1(c).“Aggregate Commitment” means the aggregate of the Commitments of all the Syndicated Global Lenders, as reducedfrom time to time pursuant to the terms hereof. The initial Aggregate Commitment is $100,000,000.“Agreement” means this 364-Day Credit Agreement, as it may be amended, restated or otherwise modified and in effectfrom time to time.“Agreement Accounting Principles” means, subject to Section 9.8, generally accepted accounting principles as in effectfrom time to time in the United States, applied in a manner consistent with that used by Harley in its preparation of its auditedfinancial statements for the year ended December 31, 2016 (except for changes to such application as are concurred on byHarley’s independent public accountants); provided that, if Harley notifies the Global Administrative Agent that Harley wishesto amend Section 6.3 to eliminate the effect of any change in Agreement Accounting Principles (or in the application thereof) onthe operation of such covenant (or if the Global Administrative Agent notifies Harley that the Required Lenders wish to amendSection 6.3 for such purpose), then Harley’s compliance with such section shall be determined on the basis of AgreementAccounting Principles in effect immediately before the relevant change in Agreement Accounting Principles became effective,until either such notice is withdrawn or such Section is amended in a manner satisfactory to Harley and the Required Lenders.1“Alternate Base Rate” means, for any day, a fluctuating interest rate per annum as shall be in effect from time to time,which rate per annum shall at all times be equal to the greatest of (a) the Prime Rate in effect on such day; (b) the sum of one-half of one percent (0.50%) and the NYFRB Rate in effect on such day; and (c) the Eurodollar Rate for a one month InterestPeriod on such day (or, if such day is not a Business Day, the immediately preceding Business Day) plus 1%; provided, further,that if any of the aforesaid rates shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement.Any change in the Alternate Base Rate due to a change in the Prime Rate, the NYFRB Rate or the Eurodollar Rate shall beeffective on the effective date of such change.“Anti-Corruption Laws” means all laws, rules, and regulations of any jurisdiction applicable to any Company or itsSubsidiaries from time to time concerning or relating to bribery or corruption.“Applicable Commitment Fee Rate” means 0.07%.“Applicable Margin” means 1.00%.“Approved Fund” means any Person (other than a natural person) that is engaged in making, purchasing, holding orinvesting in bank loans and similar extensions of credit in the ordinary course of its business and that is administered ormanaged by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages aLender.“Arranger” means JPMorgan Chase Bank, N.A., Citigroup Global Markets, Inc., U.S. Bank National Association orThe Bank of Tokyo-Mitsubishi UFJ, Ltd. and “Arrangers” means, collectively, JPMorgan Chase Bank, N.A., Citigroup GlobalMarkets, Inc., U.S. Bank National Association and The Bank of Tokyo-Mitsubishi UFJ, Ltd.“Authorized Officer” means any of the chief executive officer, chief financial officer, any vice president, controller,treasurer or any other officer of the relevant Borrower from time to time designated by an Authorized Officer in writing to theGlobal Administrative Agent as an Authorized Officer, acting singly.“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable EEA ResolutionAuthority in respect of any liability of an EEA Financial Institution.“Bail-In Legislation” means, with respect to any EEA Member Country implementing Article 55 of Directive2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEAMember Country from time to time which is described in the EU Bail-In Legislation Schedule.“Bankruptcy Code” is defined in Article XII hereof.“Base Rate Advance” means a Syndicated Global Advance which bears interest at the Alternate Base Rate.“Base Rate Loan” means a Syndicated Global Loan, or portion thereof, which bears interest at the Alternate Base Rate.“Bid Rate Advance” means a borrowing consisting of simultaneous Bid Rate Loans to a Global Borrower from each ofthe Syndicated Global Lenders whose offer to make a Bid Rate Loan2as part of such borrowing has been accepted by such Global Borrower under the applicable auction bidding proceduredescribed in Section 2.10.“Bid Rate Advance Borrowing Notice” is defined in Section 2.10(b)(i) hereof.“Bid Rate Loan” means a loan by a Syndicated Global Lender to a Global Borrower as part of a Bid Rate Advanceresulting from the applicable auction bidding procedure described in Section 2.10.“Bid Rate Note” means a promissory note of a Global Borrower payable to any Syndicated Global Lender, insubstantially the form of Exhibit B-2 hereto, evidencing the indebtedness of such Global Borrower to such Syndicated GlobalLender resulting from the Bid Rate Loans made by such Syndicated Global Lender to such Global Borrower.“Bid Rate Reduction” means the reduction in availability under the Aggregate Commitment as a result of outstandingBid Rate Loans.“Borrower” means any of the U.S. Borrowers, and “Borrowers” means, collectively, the U.S. Borrowers.“Borrowing Date” means a date on which an Advance or a Loan is made hereunder.“Borrowing Notice” means a Syndicated Global Advance Borrowing Notice or a Bid Rate Advance Borrowing Notice.“Business Day” means (i) with respect to any borrowing, payment or rate selection of Loans bearing interest at theEurodollar Rate, a day (other than a Saturday or Sunday) on which banks are generally open for commercial banking businessin New York, New York and on which dealings in United States Dollars are carried on in the London interbank market; and (ii)for all other purposes a day (other than a Saturday or Sunday) on which banks are generally open for commercial bankingbusiness in New York, New York.“Capitalized Lease” of a Person means any lease of Property by such Person as lessee which would be capitalized on abalance sheet of such Person prepared in accordance with Agreement Accounting Principles.“Capitalized Lease Obligations” of a Person means the amount of the obligations of such Person under CapitalizedLeases which would be capitalized on a balance sheet of such Person prepared in accordance with Agreement AccountingPrinciples in effect as of the Closing Date.“Change” is defined in Section 3.2 hereof.“Change of Control” means any transaction or event as a result of which: (a) (i) any Person or two or more Personsacting in concert (other than any Related Person) shall have acquired beneficial ownership (within the meaning of Rule 13d-3 ofthe Commission under the Securities Exchange Act of 1934), directly or indirectly, of Voting Stock of Harley (or othersecurities convertible into such Voting Stock) representing 30% or more of the combined voting power of all Voting Stock ofHarley; or (ii) during any period of up to 12 consecutive calendar months, commencing after the Closing Date, individuals whoat the beginning of such 12-month period were directors of Harley shall cease for any reason to constitute a majority of theboard of directors of3Harley (except to the extent that individuals who, at the beginning of such 12-month period, were directors of Harley werereplaced by individuals (x) elected by a majority of the remaining members of the board of directors of Harley or (y) nominatedfor election by a majority of the remaining members of the board of directors of Harley and thereafter elected as directors by theshareholders of Harley or (z) approved or appointed by a majority of the remaining members of the board of directors ofHarley) or (b) in each case other than as a result of a transaction permitted under Section 6.2.3, (i) Harley, directly or throughone or more Subsidiaries, shall cease to own of record and beneficially, with sole voting power, in the aggregate, at least fifty-one percent (51%) of the issued and outstanding class or classes of Voting Stock of HDFS (such percentage measured by votingpower rather than number of shares) or (ii) HDFS, directly or through one or more Subsidiaries, shall cease to own of record andbeneficially, with sole voting power, all of the issued and outstanding Voting Stock of HDCC.“Closing Date” means May 1, 2017.“Code” means the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated andrulings issued thereunder.“Commission” means the Securities and Exchange Commission and any Person succeeding to the functions thereof.“Commitment” means, for each Syndicated Global Lender, the obligation of such Syndicated Global Lender to makeSyndicated Global Loans in an amount not exceeding the amount set forth on Exhibit A to this Agreement opposite its namethereon under the heading “Commitment” or contained in the assignment and assumption by which it became a Lender, as suchamount may be modified from time to time pursuant to the terms of this Agreement or to give effect to any applicableassignment and assumption.“Communications” has the meaning assigned to such term in Section 14.1(c).“Company” means any Borrower or the Guarantor, individually, and “Companies” means each of the Borrowers andthe Guarantor, collectively.“Consolidated” refers to the consolidation of accounts (or Subsidiaries, as applicable) in accordance with AgreementAccounting Principles.“Consolidated Equity” is defined in Section 6.3(A) hereof.“Consolidated Finco Debt” is defined in Section 6.3(A) hereof.“Consolidated Net Income” of any Person for any period means the Consolidated net income (or loss) of such Personfor such period, as shall be determined in accordance with Agreement Accounting Principles.“Consolidated Net Worth” of any Person means such Person’s Consolidated shareholders’ equity, as shall bedetermined in accordance with Agreement Accounting Principles.“Consolidated Opco Debt” is defined in Section 6.3(A) hereof.“Consolidated Tangible Net Worth” is defined in Section 6.3(A) hereof.4“Consolidated Total Assets” means, as of the date of any determination thereof, the Consolidated total assets of Harleyand its Subsidiaries as of such date, as shall be determined in accordance with Agreement Accounting Principles.“Contingent Obligation”, as applied to any Person, means any Contractual Obligation, contingent or otherwise, of thatPerson with respect to any Indebtedness of another or other obligation or liability of another, including, without limitation, anysuch Indebtedness, obligation or liability of another directly or indirectly guaranteed, endorsed (otherwise than for collection ordeposit in the ordinary course of business), co-made or discounted or sold with recourse by that Person, or in respect of whichthat Person is otherwise directly or indirectly liable, including Contractual Obligations (contingent or otherwise) arising throughany agreement to purchase, repurchase, or otherwise acquire such Indebtedness, obligation or liability or any security therefor,or to provide funds for the payment or discharge thereof (whether in the form of loans, advances, stock purchases, capitalcontributions or otherwise), or to maintain solvency, assets, level of income, or other financial condition, or to make paymentother than for value received. It is understood and agreed that the amount of liability in respect of any Contingent Obligation ofany Person shall be deemed to be the lower of (a) an amount equal to the stated or determinable amount of the primaryobligation in respect of which such Contingent Obligation exists and (b) the maximum amount for which such Person may beliable pursuant to the terms of the instrument embodying such Contingent Obligation, unless such primary obligation and themaximum amount for which such Person may be liable are not stated or determinable, in which case the amount of suchContingent Obligation shall be such Person’s maximum reasonably anticipated liability in respect thereof as reasonablydetermined by Harley in good faith.“Contractual Obligation”, as applied to any Person, means any provision of any equity or debt securities issued by thatPerson or any indenture, mortgage, deed of trust, security agreement, pledge agreement, guaranty, contract, undertaking,agreement or instrument, in any case in writing, to which that Person is a party or by which it or any of its properties is bound,or to which it or any of its properties is subject.“Conversion/Continuation Notice” is defined in Section 2.8(D) hereof.“Cure Loan” is defined in Section 8.2 hereof.“Default” means an event described in Article VII hereof.“Defaulting Lender” means any Lender, as determined by the Global Administrative Agent, that has (a) within three (3)Business Days of the date required to be funded or paid failed to (i) fund its Pro Rata Share of any Advance or Loan or (ii) payover to the Global Administrative Agent or any Lender any other amount required to be paid by it hereunder, unless, in the caseof clause (i) above, such Lender notifies the Global Administrative Agent in writing that such failure is the result of suchLender’s good faith determination that a condition precedent to funding (specifically identified and including the particulardefault, if any) has not been satisfied, (b) notified any Company, the Global Administrative Agent or any Lender in writing thatit does not intend to comply with any of its funding obligations under this Agreement or has made a public statement to theeffect that it does not intend to comply with its funding obligations under this Agreement (unless such writing or publicstatement states that such position is based on such Lender’s good faith determination that a condition precedent to funding(specifically identified and including the particular default, if any) cannot be satisfied) or generally under other agreements inwhich it commits to extend credit, (c)5failed, within three (3) Business Days after written request by the Global Administrative Agent, to provide a certification inwriting from an authorized officer of such Lender that it will comply with the terms of this Agreement relating to its obligationsto fund prospective Loans (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon theGlobal Administrative Agent’s receipt of such certification in form and substance reasonably satisfactory to it), (d) otherwisefailed to pay over to the Global Administrative Agent or any other Lender any other amount required to be paid by it hereunderwithin three (3) Business Days of the date when due, unless the subject of a good faith dispute, (e) become the subject of abankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, administrator, assignee for the benefit ofcreditors or similar Person charged with reorganization or liquidation of its business or custodian, appointed for it, or has takenany action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment orhas a direct or indirect parent company that has become the subject of a bankruptcy or insolvency proceeding, or has had areceiver, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganizationor liquidation of its business or custodian appointed for it, or has taken any action in furtherance of, or indicating its consent to,approval of or acquiescence in any such proceeding or appointment and/or (f) become the subject of a Bail-In Action; provided,that a Lender shall not become a Defaulting Lender solely as the result of (x) the acquisition or maintenance of an ownershipinterest in such Lender or a Person controlling such Lender or (y) the exercise of control over a Lender or a Person controllingsuch Lender, in each case, by a Governmental Authority or an instrumentality thereof.“Disqualified Institutions” means (a)(i) those Persons that are reasonably determined by Harley to be (A) a competitorof any of the Companies or (B) a Person that is, or is owned or controlled by, a participant in the transportation industry and/or acredit union in the business of providing commercial and/or consumer financing for the purchase of products of a type sold byone or more of the Companies and/or their Affiliates (the entities in this clause (B) being referred to as “transportation industryentities”), and (ii) those banks, financial institutions and other institutional lenders that, in the case of each of the foregoingclauses (a)(i) and (a)(ii), have been specifically identified by Harley to the Global Administrative Agent and the Lenders inwriting prior to the Closing Date; provided that, Harley, by notice to the Global Administrative Agent and the Lenders after theClosing Date, shall be permitted to supplement from time to time in writing by name the list of Persons that are DisqualifiedInstitutions to the extent that the Persons added by such supplements are competitors of the Companies or are transportationindustry entities, and each such supplement shall become effective three (3) Business Days after delivery thereof to the GlobalAdministrative Agent and the Lenders (including through an Electronic System), but which shall not apply retroactively todisqualify any Persons that have previously acquired an assignment or participation interest in the Loans (but solely with respectto such Loans) in accordance with this Agreement and (b) any Affiliate of a Person described in the immediately precedingclause (a), to the extent such Affiliate (i) is clearly identifiable as an affiliate of the applicable competitor, transportation industryentity, bank, financial institution or institutional lender solely by similarity of such Affiliate’s name and (ii) is not a bona fidedebt investment fund that is an Affiliate of the applicable competitor, transportation industry entity, bank, financial institution orinstitutional lender. It is understood and agreed that (i) the Global Administrative Agent shall have no responsibility or liabilityto determine or monitor whether any Lender or potential Lender is a Disqualified Institution and (ii) Harley’s failure to deliversuch list (or supplement thereto) in accordance with Section 14.1 shall render such list (or supplement thereto) not received andnot effective.6“Disregarded Entity” means an entity that, pursuant to Treas. Reg. § 301.7701-2(c)(2), is disregarded for U.S. federalincome tax purposes as an entity separate from its owner.“Dollar” and “$” means dollars in the lawful currency of the United States of America.“DQ List” has the meaning specified in Section 13.3(D)(iv) hereof.“Earnouts” means any “earnouts” or similar obligations accrued in connection with any acquisition determined inaccordance with generally accepted accounting principles.“EEA Financial Institution” means (a) any institution established in any EEA Member Country which is subject to thesupervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of aninstitution described in clause (a) of this definition, or (c) any institution established in an EEA Member Country which is asubsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with itsparent.“EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.“EEA Resolution Authority” means any public administrative authority or any Person entrusted with publicadministrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of anyEEA Financial Institution.“Electronic Signature” means an electronic sound, symbol, or process attached to, or associated with, a contract orother record and adopted by a Person with the intent to sign, authenticate or accept such contract or record.“Electronic System” means any electronic system, including e-mail, e-fax, Intralinks®, ClearPar®, Syndtrak, DebtDomain and any other Internet or extranet-based site, whether such electronic system is owned, operated or hosted by theGlobal Administrative Agent and any of its Affiliates, and each of such Person’s respective officers, directors, employees,attorneys and agents, providing for access to data protected by passcodes or other security system.“Environmental Action” means any action, suit, demand, demand letter, claim, notice of non-compliance or violation,notice of liability or potential liability, investigation, proceeding, consent order or consent agreement relating in any way to anyEnvironmental Law, Environmental Permit or Hazardous Materials or arising from alleged injury or threat of injury to theenvironment, including, without limitation, (a) by any governmental or regulatory authority for enforcement, cleanup, removal,response, remedial or other actions or damages and (b) by any governmental or regulatory authority or any third party fordamages, contribution, indemnification, cost recovery, compensation or injunctive relief.“Environmental Law” means any federal, state, local or foreign statute, law, ordinance, rule, regulation, code, order,judgment, decree or judicial or agency interpretation, policy or guidance relating to pollution or protection of the environmentor natural resources, including, without limitation, those relating to the use, handling, transportation, treatment, storage,disposal, release or discharge of Hazardous Materials.7“Environmental Permit” means any permit, approval, identification number, license or other authorization requiredunder any Environmental Law.“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and theregulations promulgated and rulings issued thereunder.“ERISA Affiliate” means any Person that for purposes of Title IV of ERISA is a member of Harley’s controlled group,or under common control with Harley, within the meaning of Section 414 of the Code.“ERISA Event” means (a) (i) the occurrence of a reportable event, within the meaning of Section 4043 of ERISA, withrespect to any Plan unless the 30-day notice requirement with respect to such event has been waived by the PBGC, or (ii) therequirements of subsection (1) of Section 4043(b) of ERISA (without regard to subsection (2) of such Section) are met with acontributing sponsor, as defined in Section 4001(a)(13) of ERISA, of a Plan, and an event described in paragraph (9), (10), (11),(12) or (13) of Section 4043(c) of ERISA is reasonably expected to occur with respect to such Plan within the following 30days; (b) the application for a minimum funding waiver with respect to a Plan; (c) the provision by the administrator of any Planof a notice of intent to terminate such Plan pursuant to Section 4041(a)(2) of ERISA (including any such notice with respect to aplan amendment referred to in Section 4041(e) of ERISA); (d) the cessation of operations at a facility of Harley or any ERISAAffiliate in the circumstances described in Section 4062(e) of ERISA; (e) the withdrawal by Harley or any ERISA Affiliate froma Multiple Employer Plan during a plan year for which it was a substantial employer, as defined in Section 4001(a)(2) of ERISA;(f) the conditions for the imposition of a lien under Section 302(f) of ERISA shall have been met with respect to any Plan; (g)the adoption of an amendment to a Plan requiring the provision of security to such Plan pursuant to Section 307 of ERISA; or(h) the institution by the PBGC of proceedings to terminate a Plan pursuant to Section 4042 of ERISA, or the occurrence of anyevent or condition described in Section 4042 of ERISA that constitutes grounds for the termination of, or the appointment of atrustee to administer, a Plan.“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan MarketAssociation (or any successor Person), as in effect from time to time.“Eurodollar Base Rate” means, with respect to any Eurodollar Rate Advance for any specified Interest Period, or a BidRate Advance pursuant to an Indexed Rate Auction for an Interest Period designated by the relevant Borrower, LIBOR.“Eurodollar Rate” means, with respect a Eurodollar Rate Loan and a Eurodollar Rate Advance for the relevant InterestPeriod, the sum of (i) the quotient of (a) the Eurodollar Base Rate applicable to such Interest Period, divided by (b) one minusthe Reserve Requirement (expressed as a decimal) applicable to such Interest Period, plus (ii) the Applicable Margin.“Eurodollar Rate Advance” means a Syndicated Global Advance which bears interest at the Eurodollar Rate.“Eurodollar Rate Loan” means a Syndicated Global Loan, or portion thereof, which bears interest at the EurodollarRate.“Excluded Taxes” means, with respect to the Global Administrative Agent, any Lender, or any other recipient of apayment made under this Agreement or any Note by a Borrower or the8Guarantor: (a) Taxes imposed on (or measured by) the overall net income of such recipient, and franchise Taxes imposed onsuch recipient, by the jurisdiction under the laws of which such recipient is organized or the jurisdiction in which suchrecipient’s principal executive office is located, or, in the case of a Lender, Taxes imposed on (or measured by) its overall netincome, and franchise Taxes imposed on it, by the jurisdiction in which such Lender’s applicable lending office is located; (b)any branch profits Taxes imposed by the United States or, in the case of a Lender, any similar Taxes imposed by any otherjurisdiction in which such Lender’s applicable lending office is located; and (c) any U.S. federal withholding Taxes imposedunder FATCA.“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended orsuccessor version that is substantively comparable and not materially more onerous to comply with), any current or futureregulations or official interpretations thereof and any agreements entered into pursuant to Section 1471(b)(1) of the Code.“Federal Funds Effective Rate” shall mean, for any day, the rate calculated by the NYFRB based on such day’s federalfunds transactions by depository institutions (as determined in such manner as the NYFRB shall set forth on its public websitefrom time to time) and published on the next succeeding Business Day by the NYFRB as the federal funds effective rate.“Finance Receivables” means dealer wholesale receivables, retail installment contracts, promissory notes, retail leases,charge accounts or other receivables, chattel paper or other similar financial assets originated, acquired or serviced in theordinary course of business by any of the Companies or their Subsidiaries and shall include all related collateral and assets andany retained assets in respect of any of the foregoing.“Finance Receivables Subsidiary” means a special purpose, bankruptcy remote corporation, partnership, limitedliability company or trust which is wholly-owned, directly or indirectly, by any one or more of the Companies, and which isformed for the sole and exclusive purpose of (i) purchasing or otherwise acquiring Finance Receivables from one or more of theCompanies or their respective Subsidiaries, (ii) financing such purchases or otherwise facilitating a Permitted FinanceReceivables Securitization and (iii) conducting activities related thereto.“Finco Guarantor” means HDCC and its successors and permitted assigns.“Finco Leverage Ratio” is defined in Section 6.3(A) hereof.“Fixed Rate Advance” means a Eurodollar Rate Advance.“Fixed Rate Loan” means a Eurodollar Rate Loan.“Floating Rate” means the Alternate Base Rate.“Floating Rate Advance” means a Base Rate Advance.“Floating Rate Loan” means a Syndicated Global Loan, or portion thereof, which bears interest at the Alternate BaseRate or any other floating rate, as applicable, plus the Floating Rate Margin (if any).“Floating Rate Margin” means a rate per annum equal to the amount (if any) by which the Applicable Margin exceeds1.00%.9“Global Administrative Agent” means JPMorgan Chase Bank, N.A. (including any office, branch or affiliate ofJPMorgan Chase Bank, N.A.) in its capacity as contractual representative for itself and the Lenders pursuant to Article X hereofand any successor Global Administrative Agent appointed pursuant to Article X hereof.“Global Borrower” means either of the U.S. Borrowers and “Global Borrowers” means, collectively, the U.S.Borrowers, in each case together with its respective successors and permitted assigns.“Global Rate Option” means the Eurodollar Rate or Alternate Base Rate.“Governmental Authority” means any nation or government, any monetary authority, any federal, state, provincial,local or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrativefunctions of or pertaining to government (including any supra-national bodies such as the European Union or the EuropeanCentral Bank) and any group or body charged with setting financial accounting or regulatory capital rules or standards(including, without limitation, the Financial Accounting Standards Board, the Bank for International Settlements or the BaselCommittee on Banking Supervision or any successor or similar authority to any of the foregoing).“Guarantee” is defined in Article XII hereof.“Guarantor” means the Finco Guarantor and its successors and permitted assigns.“Harley” means Harley‑Davidson, Inc., a Wisconsin corporation, and its successors and assigns.“Hazardous Materials” means (a) petroleum and petroleum products, byproducts or breakdown products, radioactivematerials, asbestos-containing materials, polychlorinated biphenyls and radon gas and (b) any other chemicals, materials orsubstances designated, classified or regulated as hazardous or toxic or as a pollutant or contaminant under any EnvironmentalLaw.“HDCC” means Harley-Davidson Credit Corp., a Nevada corporation, and its successors and permitted assigns.“HDFS” means Harley-Davidson Financial Services, Inc., a Delaware corporation, and its successors and permittedassigns.“Hedging Obligations” of a Person means any and all obligations of such Person, whether absolute or contingent andhowsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modificationsthereof and substitutions therefor), under (i) any and all agreements, devices or arrangements designed to protect at least one ofthe parties thereto from the fluctuations of interest rates, commodity prices, exchange rates or forward rates applicable to suchparty’s assets, liabilities or exchange transactions, including, but not limited to, dollar-denominated or cross-currency interestrate exchange agreements, forward currency exchange agreements, interest rate cap or collar protection agreements, forwardrate currency or interest rate options, puts and warrants, and (ii) any and all cancellations, buy backs, reversals, terminations orassignments of any of the foregoing.10“Impacted Interest Period” has the meaning assigned to such term in the definition of “LIBOR”.“Indebtedness” of any Person means, without duplication, (a) the principal of all obligations of such Person forborrowed money (whether or not the recourse of the lender is to the whole of the assets of such Person or only to a portionthereof), (b) the principal of all obligations of such Person evidenced by bonds, notes, acceptances, debentures or otherinstruments or letters of credit (other than obligations in respect of (x) trade letters of credit and (y) standby letters of credit(excluding any standby letter of credit (1) supporting Indebtedness of any Person or (2) obtained for any purpose not in theordinary course of business)) (or reimbursement obligations with respect thereto) or representing the balance deferred andunpaid of the purchase price of any Property (including pursuant to Capitalized Leases) or services, if and to the extent any ofthe foregoing indebtedness would appear as a liability upon a balance sheet of such Person prepared in accordance withAgreement Accounting Principles (except that any such balance that constitutes a trade payable and/or an accrued liabilityarising in the ordinary course of business shall not be considered Indebtedness), (c) the net capitalized amount of all CapitalizedLease Obligations of such Person, (d) Indebtedness, whether or not assumed, secured by Liens or payable out of the proceeds orproduction from Property now or hereafter owned or acquired by such Person (excluding in any event obligations in respect ofPermitted Finance Receivables Securitizations to the extent such obligations would not appear as a liability upon a balance sheetof such Person prepared in accordance with Agreement Accounting Principles), (e) Contingent Obligations of such Person inrespect of Indebtedness of others and (f) net Hedging Obligations of such Person. The amount of Indebtedness of any Person atany date shall be without duplication (i) the outstanding balance at such date of all uncontingent obligations as described aboveand the liability with respect to any such Contingent Obligations at such date as calculated in accordance with the definition of“Contingent Obligation” and (ii) in the case of Indebtedness of others secured by a Lien to which the Property or assets ownedor held by such Person is subject, the lesser of the fair market value at such date of any asset subject to a Lien securing theIndebtedness of others and the amount of the Indebtedness secured (provided that if such Person has not assumed or becomeliable for the payment of such Indebtedness, it shall be taken into account only to the extent of the book value or fair marketvalue, whichever is greater, of the Property subject to such Indebtedness). Notwithstanding the foregoing, Indebtedness shallexclude (i) obligations in respect of Permitted Finance Receivables Securitizations to the extent such obligations would notappear as a liability upon a balance sheet of such Person prepared in accordance with Agreement Accounting Principles, (ii) allintercompany indebtedness, obligations and Contingent Obligations, all to the extent owing by and among one or more of theCompanies and their Subsidiaries, (iii) all obligations under the Support Agreement or other support agreements among one ormore of the Companies, (iv) Earnouts and (v) any Indebtedness that has been defeased and/or discharged, provided that fundsin an amount equal to all such Indebtedness (including interest and any other amounts required to be paid to the holders thereofin order to give effect to such defeasance and/or discharge) have been irrevocably deposited with a trustee for the benefit of therelevant holders of such Indebtedness. The amount of Indebtedness of Harley and any Subsidiary hereunder shall be calculatedwithout duplication of guaranty obligations of Harley or any Subsidiary in respect thereof.“Indemnified Matters” is defined in Section 9.6(B) hereof.“Indemnified Taxes” means Taxes, other than Excluded Taxes, imposed on or with respect to any payment made byany Company under any Loan Document.“Indemnitees” is defined in Section 9.6(B) hereof.11“Indexed Rate Auction” is defined in Section 2.10(b)(i) hereof.“Ineligible Institution” means (a) a natural person, (b) a Defaulting Lender or its Lender Parent, (c) Harley, any of itsSubsidiaries or any of its Affiliates, (d) a company, investment vehicle or trust for, or owned and operated for the primarybenefit of, a natural person or relative(s) thereof or (e) a Disqualified Institution.“Interest Period” means, with respect to a Eurodollar Rate Loan, a period of one (1) week or one (1), two (2), three (3)or six (6) months (or such other period of time as is consented to by each of the Lenders) commencing on a Business Dayselected by the applicable Borrower pursuant to this Agreement. For Eurodollar Rate Loans, such Interest Period shall end on(but exclude) the day which corresponds numerically to such date one (1) week or one (1), two (2), three (3) or six (6) monthsthereafter (or such other period of time as is consented to by each of the Lenders); provided, however, that if there is no suchnumerically corresponding day in such next, second, third or sixth (or other applicable) succeeding month, such Interest Periodshall end on the last Business Day of such next, second, third or sixth (or other applicable) succeeding month. If an InterestPeriod would otherwise end on a day which is not a Business Day, such Interest Period shall end on the next succeedingBusiness Day; provided, however, that for Eurodollar Rate Loans, if said next succeeding Business Day falls in a new calendarmonth, such Interest Period shall end on the immediately preceding Business Day.“Interpolated Rate” means, at any time, the rate per annum determined by the Global Administrative Agent (whichdetermination shall be conclusive and binding absent manifest error) to be equal to the rate that results from interpolating on alinear basis between: (a) the LIBOR Screen Rate for the longest period (for which the LIBOR Screen Rate is available) that isshorter than the Impacted Interest Period and (b) the LIBOR Screen Rate for the shortest period (for which the LIBOR ScreenRate is available) that exceeds the Impacted Interest Period, in each case, at such time.“IRS” means the Internal Revenue Service and any Person succeeding to the functions thereof.“Lender Parent” means, with respect to any Lender, any Person as to which such Lender is, directly or indirectly, asubsidiary.“Lenders” means the lending institutions listed on the signature pages of this Agreement, including each SyndicatedGlobal Lender and their respective successors and assigns.“Lending Installation” means, with respect to a Lender or the Global Administrative Agent, any office, branch,subsidiary or affiliate of such Lender or the Global Administrative Agent.“LIBOR” means, for any Eurodollar Rate Loan for any applicable Interest Period, the London interbank offered rateadministered by ICE Benchmark Administration (or any other Person that takes over the administration of such rate) appearingon the applicable LIBOR Reference Page for Dollars as of the applicable LIBOR Fixing Time and, in each case, having amaturity approximately equal to the requested Interest Period (in each case the “LIBOR Screen Rate”); provided that, if theLIBOR Screen Rate shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement.Notwithstanding the foregoing, (A) if a LIBOR Screen Rate shall not be available at such time for such Interest Period (the“Impacted Interest Period”), then LIBOR for such Interest Period shall be the Interpolated Rate and (B) if any InterpolatedRate shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement. It is understood and12agreed that all of the terms and conditions of this definition of “LIBOR” shall be subject to Section 3.3.“LIBOR Fixing Time” means the relevant fixing date and/or time described in Schedule I.“LIBOR Reference Page” means, with respect to any London interbank offered rate as administered by ICEBenchmark Administration (or any other Person that takes over the administration of such rate) for Dollars, page LIBOR01 ofthe Reuters screen or, in the event such rate does not appear on such Reuters page, any successor or substitute page on suchscreen that displays such rate, or on the appropriate page of such other information service that publishes such rate as shall beselected by the Global Administrative Agent from time to time in its reasonable discretion (and consistent with any suchselection by the Global Administrative Agent generally under substantially similar credit facilities for which it acts asadministrative agent) at approximately 11:00 a.m., London time, at the LIBOR Fixing Time for such Interest Period.“LIBOR Screen Rate” has the meaning assigned to such term in the definition of “LIBOR”.“Lien” means any security interest, lien (statutory or other) or other similar charge or encumbrance of any kind or naturewhatsoever (including, without limitation, the interest of a vendor or lessor under any conditional sale, Capitalized Lease orother title retention agreement (excluding operating leases)).“Loan” means a Syndicated Global Loan or a Bid Rate Loan.“Loan Account” is defined in Section 2.14(E) hereof.“Loan Documents” means this Agreement, the Notes, the Support Agreement and all other documents, instruments andagreements executed pursuant thereto or contemplated thereby, in each case as the same may be amended, restated or otherwisemodified and in effect from time to time.“Material Adverse Change” means any material adverse change in the business, assets, operations or financialcondition of Harley and its Subsidiaries taken as a whole (excluding changes or effects in connection with specific events (andnot general economic or industry conditions) applicable specifically to Harley and/or its Subsidiaries as disclosed in any AnnualReport on Form 10-K, Quarterly Report on Form 10-Q or Current Report on Form 8-K filed with or furnished to theCommission prior to the Closing Date).“Material Adverse Effect” means any event, development or circumstance that has had a material adverse effect on (a)the business, assets, operations or financial condition of Harley and its Subsidiaries taken as a whole (excluding changes oreffects in connection with specific events (and not general economic or industry conditions) applicable specifically to Harleyand/or its Subsidiaries as disclosed in any Annual Report on Form 10-K, Quarterly Report on Form 10-Q or Current Report onForm 8-K filed with or furnished to the Commission prior to the Closing Date) or (b) the validity or enforceability against theCompanies of any of the Loan Documents or the rights or remedies of the Global Administrative Agent and the Lenders againstthe Companies thereunder.“Material Subsidiary” means, at any time, any Subsidiary of Harley with a Net Worth (after elimination ofintercompany assets) equal to or greater than 10% of Consolidated Net Worth13of Harley (as of the end of the most recent fiscal quarter), or Net Income (after elimination of intercompany revenues) for theperiod of four consecutive fiscal quarters then most recently ended during which the Consolidated Net Income of Harley wasnot a loss equal to or greater than 10% of Consolidated Net Income (for such period) of Harley; provided that, if at any time theaggregate amount of Harley’s Consolidated Net Income for such period attributable to Subsidiaries that are not MaterialSubsidiaries exceeds thirty percent (30%) of Harley’s Consolidated Net Income for such period, Harley shall designatesufficient Subsidiaries as “Material Subsidiaries” to eliminate such excess, and such designated Subsidiaries shall for allpurposes of this Agreement constitute Material Subsidiaries until such designation is no longer necessary to comply with thisproviso; provided further, that no Subsidiary of Harley that is not a Consolidated Subsidiary of Harley shall be deemed to be a“Material Subsidiary”.“Maturity Date” means the Termination Date or, if applicable, the date to which the Maturity Date shall have beenextended in accordance with Section 2.19.“Moody’s” means Moody’s Investors Service, Inc.“Multiemployer Plan” means a multiemployer plan, as defined in Section 4001(a)(3) of ERISA, to which Harley or anyERISA Affiliate is making or accruing an obligation to make contributions, or has within any of the preceding five plan yearsmade or accrued an obligation to make contributions.“Multiple Employer Plan” means a single employer plan, as defined in Section 4001(a)(15) of ERISA, that (a) ismaintained for employees of Harley or any ERISA Affiliate and at least one Person other than Harley and the ERISA Affiliatesor (b) was so maintained and in respect of which Harley or any ERISA Affiliate could have liability under Section 4064 or 4069of ERISA in the event such plan has been or were to be terminated.“Net Income” of any Person for any period means the net income (or loss) of such Person for such period, as shall bedetermined in accordance with Agreement Accounting Principles.“Net Worth” of any Person means such Person’s consolidated shareholders’ equity, as shall be determined inaccordance with Agreement Accounting Principles.“Non Pro Rata Loan” is defined in Section 8.2 hereof.“Non-U.S. Lender” means (i) a Lender that is neither a Disregarded Entity nor a U.S. Person, and (ii) a Lender that is aDisregarded Entity and that is treated for U.S. federal income tax purposes as having as its sole member a Person that is not aU.S. Person.“Notes” means the Syndicated Global Notes and the Bid Rate Notes.“Notice of Assignment” is defined in Section 13.3(B) hereof.“NYFRB” means the Federal Reserve Bank of New York.“NYFRB Rate” means, for any day, the greater of (a) the Federal Funds Effective Rate in effect on such day and (b) theOvernight Bank Funding Rate in effect on such day (or for any day that is not a Business Day, for the immediately precedingBusiness Day); provided that if both such rates are not so published for any day that is a Business Day, the term “NYFRB Rate”means the14rate quoted for such day for a federal funds transaction at 11:00 a.m., New York City time, on such day received by the GlobalAdministrative Agent from a Federal funds broker unaffiliated with the Global Administrative Agent of recognized standingselected by it.“Obligations” means all Loans, advances, debts, liabilities, obligations, covenants and duties owing by any Borrower tothe Global Administrative Agent, any Arranger, any Lender, any Affiliate of any of the foregoing or any Indemnitee, of anykind or nature, present or future, arising under this Agreement, the Notes or any other Loan Document, whether or notevidenced by any note, guaranty or other instrument, whether or not for the payment of money, whether arising by reason of anextension of credit, loan, guaranty, indemnification, or in any other manner, whether direct or indirect (including those acquiredby assignment), absolute or contingent, due or to become due, now existing or hereafter arising and however acquired. Theterm includes, without limitation, all interest, charges, expenses, fees, attorneys’ fees and disbursements, paralegals’ fees (ineach case whether or not allowed), and any other sum chargeable to any Borrower under this Agreement or any other LoanDocument.“OFAC” means the Office of Foreign Assets Control of the U.S. Department of Treasury.“Other Taxes” is defined in Section 3.5 hereof.“Overnight Bank Funding Rate” means, for any day, the rate comprised of both overnight federal funds and overnighteurodollar borrowings by U.S.-managed banking offices of depository institutions (as such composite rate shall be determinedby the NYFRB as set forth on its public website from time to time) and published on the next succeeding Business Day by theNYFRB as an overnight bank funding rate (from and after such date as the NYFRB shall commence to publish such compositerate).“Participant Register” is defined in Section 13.2(A) hereof.“Participants” is defined in Section 13.2(A) hereof.“Payment Date” means the last Business Day of each calendar quarter.“PBGC” means the Pension Benefit Guaranty Corporation, or any successor thereto.“Permitted Finance Receivables Securitization” means any financial asset financing program or facility providing forthe sale, conveyance, pledge or other transfer of Finance Receivables by any of the Companies or their respective Subsidiariesto a trust or to one or more limited purpose finance companies, special purpose entities or financial institutions or other thirdparty investors or financiers, either directly or through one or more Subsidiaries.“Permitted Liens” means such of the following as to which no enforcement, collection, execution, levy or foreclosureproceeding shall have been commenced: (a) Liens for taxes, assessments and governmental charges or levies to the extent notrequired to be paid under Section 6.1.2 hereof; (b) Liens imposed by law, such as materialmen’s, mechanics’, carriers’,landlords’, workmen’s and repairmen’s Liens and other similar Liens arising in the ordinary course of business securingobligations that are either (i) not overdue for a period of more than forty-five (45) days or (ii) being contested in good faith andby proper actions and as to which appropriate reserves are being maintained; (c) pledges or deposits to secure obligations underworkers’ compensation laws, unemployment insurance or similar legislation or to secure public or statutory obligations and/or15securing liability for reimbursement or indemnification obligations to insurance carriers providing property, casualty or liabilityinsurance to one or more of the Companies and/or the Material Subsidiaries; (d)(i) easements, rights of way and otherencumbrances on title to real Property, (ii) zoning, building, entitlement and other land use regulations and (iii) any zoning orsimilar law, rule, regulation or requirement or right reserved to, or vested in, any Governmental Authority to control or regulatethe use of any real property, in each of the foregoing cases that does not render title to the Property encumbered therebyunmarketable or materially adversely affect the use of such Property for its present purposes; (e) Liens of attachment orjudgment with respect to judgments, writs or warrants of attachment, or similar process against any of the Companies or any oftheir Subsidiaries which do not constitute a Default under Section 7.1(f); (f) Liens arising from leases, subleases, licenses orsublicenses granted to others which do not interfere in any material respect with the business of the Companies or any of theirSubsidiaries; (g) any interest or title of the lessor in the Property subject to any operating lease entered into by any of theCompanies or any of their Subsidiaries in the ordinary course of business; (h) Liens in respect of an agreement to dispose of anyasset, to the extent such disposal is permitted by this Agreement; (i) Liens arising under any retention of title arrangementsentered into in the ordinary course of business or over goods or documents of title to goods arising in the ordinary course ofdocumentary credit transactions; (j) Liens arising due to any cash pooling, netting or composite account arrangements betweenany one or more of the Borrowers and any of their Subsidiaries or between any one or more of such entities and one or morebanks or other financial institutions where any such entity maintains deposits; (k) customary rights of set off, revocation, refundor chargeback or similar rights under deposit disbursement, concentration account agreements or under the UCC (or comparableforeign law) or arising by operation of law of banks or other financial institutions where any Borrower or any of its Subsidiariesmaintains deposit, disbursement or concentration accounts in the ordinary course of business; (l) any Lien that may from time totime be created under any Loan Document; (m) any Lien on any landlord’s estate or interest in any property that is leased byany Company or Material Subsidiary; (n) Liens securing the non-delinquent performance of bids, trade contracts (other than forborrowed money), leases and statutory obligations, Contingent Obligations in connection with surety bonds, appeal bonds andsimilar instruments and other non-delinquent obligations of a like nature, in each case incurred in the ordinary course ofbusiness; (o) Liens securing reimbursement obligations incurred in the ordinary course of business for letters of credit orbanker’s acceptances, which Liens encumber only goods, or documents of title covering goods, which are purchased intransactions for which such letters of credit or banker’s acceptances are issued; and (p) contractual rights of set-off and similarrights securing Hedging Obligations.“Permitted Securitization Recourse Obligations” of a Person means recourse obligations of such Person with respectto Finance Receivables sold, pledged or otherwise transferred pursuant to a Permitted Finance Receivables Securitization, if andonly if such recourse obligations constitute performance guarantees and/or indemnification or repurchase obligations arising asa result of the breach by such Person of a representation, warranty or covenant in respect of such Finance Receivables orotherwise in respect of losses, costs or expenses arising as a result of such Permitted Finance Receivables Securitizations, ineach case other than (A) recourse for Finance Receivables uncollectible because of bankruptcy, insolvency, lack ofcreditworthiness or other mere failure to pay on the part of the obligor with respect to such Finance Receivable, and (B)indemnification or repurchase obligations arising from a representation, warranty or covenant relating to the payment of anyIndebtedness incurred or securities issued in connection with such Permitted Finance Receivables Securitization.16“Person” means any natural person, corporation, firm, company, joint venture, partnership, association, enterprise, trustor other entity or organization, or any government or political subdivision or any agency, department or instrumentality thereof.“Plan” means a Single Employer Plan or a Multiple Employer Plan.“Prime Rate” means the rate of interest per annum announced from time to time by JPMorgan Chase Bank, N.A. or itsparent as its prime rate (which is not necessarily the lowest rate charged to any customers) in effect at its principal office in NewYork City, changing when and as said prime rate changes. Each change in the Prime Rate shall be effective on the date suchchange is announced as being effective.“Pro Rata Share” means, with respect to any Syndicated Global Lender, the percentage obtained by dividing (A) suchSyndicated Global Lender’s Commitment at such time (in each case, as adjusted from time to time in accordance with theprovisions of this Agreement) by (B) the Aggregate Commitment at such time; provided, however, that, if the Commitmentshave been terminated pursuant to the terms of this Agreement, “Pro Rata Share” means, with respect to any Syndicated GlobalLender, the percentage obtained by dividing (A) the aggregate outstanding principal amount of such Syndicated GlobalLender’s Syndicated Global Loans by (B) the aggregate outstanding principal amount of all Syndicated Global Loans.“Property” of a Person means any and all property, whether real, personal, tangible, intangible, or mixed, of suchPerson, or other assets owned, leased or operated by such Person.“Purchasers” is defined in Section 13.3(A) hereof.“Register” is defined in Section 13.3(C) hereof.“Regulation D” means Regulation D of the Board of Governors of the Federal Reserve System as from time to time ineffect and any successor thereto or other regulation or official interpretation of said Board of Governors relating to reserverequirements applicable to member banks of the Federal Reserve System.“Related Person” means each of the following: (a) Harley, (b) any Subsidiary of Harley or (c) any employee benefitplan of Harley or of any Subsidiary of Harley or any Person organized, appointed or established by Harley for or pursuant to theterms of any such plan.“Release” means any release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal,leaching or migration into the indoor or outdoor environment, including the movement of contaminants through or in the air,soil, surface water or groundwater.“Required Lenders” means, in all cases subject to Section 8.2(v) hereof, Lenders whose Pro Rata Shares, in theaggregate, are greater than fifty percent (50%); provided, however, that, if any of the Lenders shall have failed to fund its ProRata Share of any Loan requested by the applicable Borrower which such Lenders are obligated to fund under the terms of thisAgreement and any such failure has not been cured, then for so long as such failure continues, “Required Lenders” meansLenders (excluding all Lenders whose failure to fund their respective Pro Rata Shares of such Loans has not been so cured)whose Pro Rata Shares represent greater than fifty percent (50%) of the aggregate Pro Rata Shares of such Lenders; provided,further, however, that, if the Commitments have been terminated pursuant to the terms of this Agreement, “Required Lenders”means Lenders17(without regard to such Lenders’ performance of their respective obligations hereunder) whose Pro Rata Shares, in theaggregate, are greater than fifty percent (50%).“Reserve Requirement” means, with respect to an Interest Period, the maximum aggregate reserve requirement(including all basic, supplemental, marginal and other reserves) which is imposed under Regulation D on eurocurrencyliabilities.“S&P” means S&P Global Ratings, a division of S&P Global Inc.“Sanctioned Country” means, at any time, a country or territory which is the subject of any Sanctions (at the time ofthis Agreement, Crimea, Cuba, Iran, North Korea, Sudan and Syria).“Sanctioned Person” means, at any time, (a) any Person listed in any Sanctions-related list of designated Personsmaintained by OFAC, the U.S. Department of State, the United Nations Security Council, the European Union, any EU memberstate or other relevant sanctions authority, (b) any Person organized or resident in a Sanctioned Country or (c) any Personcontrolled by any such Person or Persons.“Sanctions” means economic or financial sanctions or trade embargoes imposed, administered or enforced from time totime by (a) the U.S. government, including those administered by OFAC or the U.S. Department of State or (b) the UnitedNations Security Council, the European Union, Her Majesty’s Treasury of the United Kingdom or other relevant sanctionsauthority.“Single Employer Plan” means a single employer plan, as defined in Section 4001(a)(15) of ERISA, that (a) ismaintained for employees of Harley or any ERISA Affiliate and no Person other than Harley and the ERISA Affiliates or (b) wasso maintained and in respect of which Harley or any ERISA Affiliate could have liability under Section 4069 of ERISA in theevent such plan has been or were to be terminated.“Subordinated Indebtedness” is defined in Section 6.3(A) hereof.“Subordinated Intercompany Indebtedness” means Indebtedness arising from intercompany loans; provided if theobligor on such Indebtedness is one or more of the Companies (whether as a primary obligor or a secondary obligor), suchIndebtedness shall be subordinated to the Obligations pursuant to the subordination terms attached as Schedule II.“Subsidiary” of a Person means (i) any corporation more than 50% of the outstanding securities having ordinary votingpower of which shall at the time be owned or controlled, directly or indirectly, by such Person or by one or more of itsSubsidiaries or by such Person and one or more of its Subsidiaries, or (ii) any company, partnership, association, trust, jointventure or similar business organization more than 50% of the ownership interests having ordinary voting power of which shallat the time be so owned or controlled. Unless otherwise expressly provided, all references herein to a “Subsidiary” shall mean adirect or indirect Subsidiary of Harley.“Support Agreement” means the Support Agreement dated as of September 26, 1996 between Harley and HDFSevidencing Harley’s agreement to support certain debts of HDFS and its Subsidiaries, together with and as supplemented by theletter agreement dated as of May 1, 2017 to the Global Administrative Agent from Harley and HDFS pursuant to which certainmodifications to the above‑referenced Support Agreement were agreed to for the benefit of the Global Administrative Agent andthe Lenders.18“Syndicated Global Advance” means a borrowing consisting of simultaneous Syndicated Global Loans of the sameType made to a Global Borrower by each of the Syndicated Global Lenders pursuant to Section 2.1, and in the case ofEurodollar Rate Advances, for the same Interest Period.“Syndicated Global Advance Borrowing Notice” is defined in Section 2.6 hereof.“Syndicated Global Lender” means any Lender (or any Affiliate, branch or agency thereof) party hereto with acommitment to make Syndicated Global Loans to each Global Borrower.“Syndicated Global Loan” means a loan by a Syndicated Global Lender to a Global Borrower as part of a SyndicatedGlobal Advance.“Syndicated Global Note” means, to the extent requested, a promissory note of a Global Borrower payable to anyrequesting Syndicated Global Lender, in substantially the form of Exhibit B-1 hereto, evidencing the aggregate indebtedness ofsuch Global Borrower to such Syndicated Global Lender resulting from the Syndicated Global Loans made by such SyndicatedGlobal Lender to such Global Borrower.“Taxes” means any and all present or future taxes, duties, levies, imposts, deductions, assessments, fees, charges orwithholdings, and any and all liabilities with respect to the foregoing.“Tax Credit” means a credit against, relief or remission of, or repayment of any Taxes or Other Taxes.“Termination Date” means the earlier of (a) April 30, 2018 and (b) the date of termination of the Commitmentspursuant to Section 2.4 or Section 8.1.“Term-Out Date” has the meaning specified in Section 2.19 hereof.“Term-Out Option” has the meaning specified in Section 2.19 hereof.“Trade Date” has the meaning specified in Section 13.3(D)(i) hereof.“Transactions” means the execution, delivery and performance by the Companies of this Agreement and the otherLoan Documents, the borrowing of Loans and the use of the proceeds thereof.“Transferee” is defined in Section 13.5 hereof.“Type” means, (a) with respect to any Syndicated Global Loan, its nature as a Base Rate Loan or Eurodollar Rate Loan,and (b) with respect to any Syndicated Global Advance, its nature as a Base Rate Advance or Eurodollar Rate Advance.“Unmatured Default” means an event which, but for the lapse of time or the giving of notice, or both, would constitutea Default.“U.S. Borrower” means Harley or HDFS, and “U.S. Borrowers” means, collectively, Harley and HDFS.19“U.S. Person” means a “United States person” within the meaning of Section 7701(a)(30) of the Code.“Voting Stock” means capital stock issued by a corporation, or equivalent interests in any other Person, the holders ofwhich are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similarfunctions) of such Person, even if the right so to vote has been suspended by the happening of such a contingency.“Write-Down and Conversion Powers” means, with respect to any EEA Resolution Authority, the write-down andconversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEAMember Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule.The foregoing definitions shall be equally applicable to both the singular and plural forms of the defined terms. Any accountingterms used in this Agreement which are not specifically defined herein shall be interpreted in accordance with Section 9.8 hereof.Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or other document in any LoanDocument shall be construed as referring to such agreement, instrument or other document as amended, restated, supplemented orotherwise modified from time to time (subject to any restrictions on such amendments, restatements, supplements or modifications setforth herein or in any other Loan Document), (ii) any reference to any Person in any Loan Document shall be construed to include suchPerson’s successors and assigns (subject to any restrictions on assignments set forth herein or in any other Loan Document) and(iii) any reference in any Loan Document to any law shall include all statutory and regulatory provisions consolidating, amending,replacing or interpreting such law, and any reference in any Loan Document to any law or regulation shall, unless otherwise specified,refer to such law or regulation as amended, modified or supplemented from time to time.ARTICLE II THE CREDITS2.1 Syndicated Global Loans. Upon the satisfaction of the conditions precedent set forth in Sections 4.1 and 4.2 hereof,from and including the date of this Agreement and prior to the Termination Date, each Syndicated Global Lender severallyand not jointly agrees, on the terms and conditions set forth in this Agreement, to make Syndicated Global Loans to theGlobal Borrowers from time to time, in Dollars, in an amount not to exceed in the aggregate at any one time outstanding anamount equal to such Syndicated Global Lender’s Pro Rata Share of the Aggregate Commitment; provided, however(i) that the sum of (a) the aggregate amount of the Syndicated Global Loans then outstanding and (b) the aggregateamount of the Bid Rate Loans then outstanding, shall not exceed the Aggregate Commitment;(i) that the aggregate outstanding amount of all Loans at any time shall not exceed the Aggregate Commitment; and(ii) that, notwithstanding anything contained in this Agreement, the aggregate amount of all Syndicated Global Loansmade by a Syndicated Global Lender shall not at any time exceed the amount of such Syndicated Global Lender’s Commitment.Each Syndicated Global Advance under this Section 2.1 shall consist of Syndicated Global Loans made by each SyndicatedGlobal Lender ratably in proportion to such Syndicated Global Lender’s respective20Pro Rata Share; provided that, the Global Administrative Agent may allocate any Syndicated Global Advance on a non-pro rata basis tothe extent the failure to so allocate would cause a Syndicated Global Lender’s Loans to exceed such Syndicated Global Lender’sCommitment. Subject to the terms of this Agreement, each Global Borrower may borrow, repay and reborrow Syndicated Global Loansat any time prior to the Termination Date. Each Global Borrower may select, in accordance with Sections 2.6 and 2.8 and subject to theother conditions and limitations therein set forth and set forth in this Article II, Global Rate Options and Interest Periods applicable toportions of the Syndicated Global Advances. On the Maturity Date, the outstanding principal balance of the Syndicated Global Loansshall be paid in full by the Global Borrowers.2.2 [Reserved]2.3 Optional Payments of Loans. Subject to Section 3.4 and the requirements of Section 2.7, each relevant GlobalBorrower may (a) prepay Floating Rate Loans following irrevocable notice given to the Global Administrative Agent by suchBorrower, by not later than 12:00 noon (New York time) on the date of the proposed prepayment, such notice specifying theaggregate principal amount of and the proposed date of the prepayment, and if such notice is given such Borrower shallprepay the outstanding principal amounts of the specified Floating Rate Loans comprising part of the same Syndicated GlobalAdvance in whole or ratably in part and (b) prepay any Fixed Rate Loans following notice given to the Global AdministrativeAgent by such Borrower by not later than 12:00 noon (New York time) on the date that is not less than one (1) Business Daypreceding the date of the proposed prepayment, such notice specifying the Syndicated Global Advance to be prepaid and theproposed date of the prepayment, and, if such notice is given, such Borrower shall, prepay the outstanding principal amountsof the Fixed Rate Loans comprising an Advance in whole (and not in part), together with accrued interest to the date of suchprepayment on the principal amount prepaid; provided that any notice of optional prepayment of the Loans delivered byHarley may state that such notice is conditioned upon the effectiveness of other credit facilities or other transactions specifiedtherein, in which case such notice may be revoked by Harley (by notice to the Global Administrative Agent on or prior to thespecified effective date) if such condition is not satisfied. With respect to Floating Rate Advances, each partial prepaymentshall be in an aggregate principal amount not less than $1,000,000 and integral multiples of $100,000.2.4 Reduction of Commitments. Harley may permanently reduce the Aggregate Commitment in whole, or in partratably among the Lenders, in an aggregate minimum amount of $10,000,000 and integral multiples of $5,000,000 in excess ofthat amount, upon at least five (5) Business Days’ prior written notice to the Global Administrative Agent, which notice shallspecify the amount of any such reduction; provided, however, that the amount of the Aggregate Commitment may not bereduced below the sum of the aggregate principal amount of the outstanding Advances; provided further that any such noticedelivered by Harley may state that such notice is conditioned upon the effectiveness of other credit facilities or othertransactions specified therein, in which case such notice may be revoked by Harley (by notice to the Global AdministrativeAgent on or prior to the specified effective date) if such condition is not satisfied. All accrued and unpaid commitment feesshall be payable on the effective date of any termination of the obligations of the Lenders to make Loans hereunder. TheGlobal Administrative Agent shall promptly distribute to the relevant Lenders any notices received by it under this Section2.4.212.5 Method of Borrowing Syndicated Global Advances.2.6 Method of Selecting Types and Interest Periods for Syndicated Global Advances.2.7 Minimum Amount of Each Syndicated Global Advance. Each Syndicated Global Advance shall be in the applicableminimum amounts specified in Schedule I; provided, however, that any Base Rate Advance may be in the amount of theunused Aggregate Commitment.2.8 Method of Selecting Types and Interest Periods for Conversion and Continuation of Syndicated Global Advances.(A) Right to Convert. The applicable Borrower may elect from time to time, subject to the provisions of Section 2.6, Section2.7 and this Section 2.8, to convert all or any part of an Advance of any Type into any other Type or Types of Advance; provided thatany conversion of any Fixed Rate Advance or Fixed Rate Loan shall be made on, and only on, the last day of the Interest Periodapplicable thereto.(A) Automatic Conversion and Continuation. Floating Rate Loans shall continue as Floating Rate Loans of the same Typeunless and until such Floating Rate Loans are converted into Fixed Rate Loans. Fixed Rate Loans shall continue as Fixed Rate Loansuntil the end of the then applicable Interest Period therefor, at which time such Fixed Rate Loans shall be automatically converted intoBase Rate Loans unless the applicable Borrower shall have given the Global Administrative Agent notice in accordance with Section2.8(D) requesting that, at the end of such Interest Period, such Fixed Rate Loans continue as Fixed Rate Loans.(B) No Conversion Post-Default. Notwithstanding anything to the contrary contained in Section 2.8(A) or Section 2.8(B), noSyndicated Global Loan may be converted into or continued as a Fixed Rate Loan except with the consent of the Required Lenderswhen any Default has occurred and is continuing.(C) Conversion/Continuation Notice. The applicable Borrower shall give the Global Administrative Agent irrevocable notice(a “Conversion/Continuation Notice”) of each conversion of a Floating Rate Loan into a Fixed Rate Loan or continuation of a FixedRate Loan not later than the time prior to the date of the requested conversion or continuation which is consistent with the requisite timeand notice required in connection with Section 2.6, specifying: (1) the requested date (which shall be a Business Day) of suchconversion or continuation; (2) the amount and Type of the Syndicated Global Loan to be converted or continued; and (3) the amountsof Fixed Rate Loan(s) into which such Syndicated Global Loan is to be converted or continued and the duration of the Interest Periodsapplicable thereto.2.9 [Reserved]2.10 The Bid Rate Advances. (a) Each Syndicated Global Lender severally agrees that, on the terms and conditions setforth in this Agreement, any Global Borrower may request and receive Bid Rate Advances in Dollars under this Section 2.10from time to time on any Business Day during the period from the date hereof until the date occurring 30 days prior to theTermination Date in the manner set forth below; provided, however, that, following the making of each Bid Rate Advance,the aggregate amount of the Advances then outstanding shall not exceed the Aggregate Commitment.(a) The procedures for the solicitation and acceptance of Bid Rate Loans are set forth below:22(i) The applicable Global Borrower may request a Bid Rate Advance under this Section 2.10(b) by giving the GlobalAdministrative Agent irrevocable notice at the office and location specified by the Global Administrative Agent, in a formreasonably acceptable to the Global Administrative Agent (a “Bid Rate Advance Borrowing Notice”), specifying the date andaggregate amount of the proposed Bid Rate Advance, the maturity date for repayment of each Bid Rate Loan to be made as partof such Bid Rate Advance (which maturity date may not be earlier than, in the case of an Absolute Rate Auction, the dateoccurring thirty days, and in the case of an Indexed Rate Auction, the date occurring one month after the date of the related BidRate Advance or later than, in the case of an Absolute Rate Auction, the earlier of the day occurring 180 days after the date ofsuch Bid Rate Advance and the Termination Date, and in the case of an Indexed Rate Auction, the earlier of the day occurringsix months after the date of such Bid Rate Advance and the Termination Date), the interest payment date or dates relatingthereto, and any other terms to be applicable to such Bid Rate Advance, not later than 10:00 a.m. (New York time) (A) oneBusiness Day prior to the date of the proposed Bid Rate Advance, if the applicable Global Borrower shall specify in the BidRate Advance Borrowing Notice that the rates of interest to be offered by the Syndicated Global Lenders shall be absolute ratesper annum (such type of solicitation being an “Absolute Rate Auction”) and (B) five (5) Business Days prior to the date of theproposed Bid Rate Advance, if the applicable Global Borrower shall specify in the Bid Rate Advance Borrowing Notice that therates of interest to be offered by the Syndicated Global Lenders shall be based on the Eurodollar Base Rate (such type ofsolicitation being an “Indexed Rate Auction”). The Global Administrative Agent shall, promptly following its receipt of a BidRate Advance Borrowing Notice under this Section 2.10(b), notify each Syndicated Global Lender of such request by sendingsuch Syndicated Global Lender a copy of such Bid Rate Advance Borrowing Notice.(ii) Each Syndicated Global Lender may, if, in its sole discretion, it elects to do so, irrevocably offer to make one ormore Bid Rate Loans to the applicable Global Borrower as part of such proposed Bid Rate Advance at a rate or rates of interestspecified by such Syndicated Global Lender in its sole discretion, by notifying the Global Administrative Agent (which shallgive prompt notice thereof to the applicable Global Borrower), before 11:00 a.m. (New York time) (or if such SyndicatedGlobal Lender is the Global Administrative Agent, before 10:45 a.m. (New York time)) (A) on the date of such proposed BidRate Advance, in the case of an Absolute Rate Auction, and (B) four Business Days before the date of such proposed Bid RateAdvance, in the case of an Indexed Rate Auction of the minimum amount and maximum amount of each Bid Rate Loan whichsuch Syndicated Global Lender would be willing to make as part of such proposed Bid Rate Advance (which amounts may,subject to the proviso to the first sentence of Section 2.10(a), exceed such Syndicated Global Lender’s Commitment), the rate orrates of interest, in the case of an Absolute Rate Auction, or the spread or spreads with respect to the Eurodollar Base Rate, inthe case of an Indexed Rate Auction, therefor and such Syndicated Global Lender’s Lending Installation with respect to suchBid Rate Loan.(iii) The applicable Global Borrower shall, in turn, before (A) 12:00 noon (New York time) on the date of suchproposed Bid Rate Advance, in the case of an Absolute Rate Auction, and (B) 11:00 a.m. (New York time) three Business Daysbefore the date of such proposed Bid Rate Advance, in the case of an Indexed Rate Auction for a Bid Rate Advance, either:(x)cancel such Bid Rate Advance by giving the Global Administrative Agent notice to that effect; or23(y) accept, subject to Section 2.10(d), one or more of the offers made by any Syndicated Global Lender orSyndicated Global Lenders pursuant to Section 2.10(b)(ii), in its sole discretion, by giving notice to the GlobalAdministrative Agent of the amount of each Bid Rate Loan (which amount shall be equal to or greater than theminimum amount, and equal to or less than the maximum amount, notified to the applicable Global Borrower by theGlobal Administrative Agent on behalf of such Syndicated Global Lender for such Bid Rate Loan pursuant to Section2.10(b)(ii)) to be made by each Syndicated Global Lender as part of such Bid Rate Advance, and reject any remainingoffers made by Syndicated Global Lenders pursuant to Section 2.10(b)(ii) by giving the Global Administrative Agentnotice to that effect.(iv) If the applicable Global Borrower notifies the Global Administrative Agent that such Bid Rate Advance iscanceled pursuant to Section 2.10(b)(iii)(x), the Global Administrative Agent shall give prompt notice thereof to the SyndicatedGlobal Lenders and such Bid Rate Advance shall not be made.(v) If the applicable Global Borrower accepts one or more of the offers made by any Syndicated Global Lender orSyndicated Global Lenders pursuant to Section 2.10(b)(iii)(y), the Global Administrative Agent shall in turn promptly notify (A)each Syndicated Global Lender that has made an offer as described in Section 2.10(b)(ii) of the date, and aggregate amount ofsuch Bid Rate Advance and whether or not any offer or offers made by such Syndicated Global Lender pursuant to Section2.10(b)(ii) have been accepted by the applicable Global Borrower and (B) each Syndicated Global Lender that is to make a BidRate Loan as part of such Bid Rate Advance, of the amount of each Bid Rate Loan to be made by such Syndicated GlobalLender as part of such Bid Rate Advance. Each Syndicated Global Lender that is to make a Bid Rate Loan as part of such BidRate Advance shall, not later than 3:00 p.m. (New York time) on the date of such Bid Rate Advance specified in the noticereceived from the Global Administrative Agent pursuant to clause (A) of the preceding sentence, make available for the accountof its Lending Installation to the Global Administrative Agent at the Lending Installation of the Global Administrative Agentmost recently designated by the Global Administrative Agent for this purpose, such Syndicated Global Lender’s portion of suchBid Rate Advance, in same day funds in Dollars. Upon fulfillment of the applicable conditions set forth in Article IV and afterreceipt by the Global Administrative Agent of such funds, the Global Administrative Agent will make such funds available tothe applicable Global Borrower at the Global Administrative Agent’s aforesaid address. Promptly after each Bid Rate Advance,the Global Administrative Agent will notify each Syndicated Global Lender of the amount of such Bid Rate Advance, theconsequent Bid Rate Reduction and the dates upon which such Bid Rate Reduction commenced and will terminate.(vi) Notwithstanding the other provisions of this Section 2.10(b), the applicable Global Borrower may elect at its owndiscretion to assume the responsibilities of the Global Administrative Agent in connection with the solicitation and acceptanceof Bid Rate Loans as described in this section. In the event that the applicable Global Borrower makes the election described inthis subsection, all notices to be given by such Borrower to the Global Administrative Agent pursuant to this Section 2.10(b)shall be given by such Borrower directly to the Global Administrative Agent and the Syndicated Global Lenders, all notices tobe given by the Global Administrative Agent to the Syndicated Global Lenders pursuant to this Section 2.10(b) shall be givenby such Borrower to the Syndicated Global Lenders, and all notices to be given by the Syndicated Global Lenders to the GlobalAdministrative Agent pursuant to this Section 2.10(b) shall be given by the Syndicated Global Lenders to such Borrower andthe Global Administrative Agent. In addition, any fee payable to the24Global Administrative Agent in connection with the Bid Rate Loans in connection with such Bid Rate Loans solicited andaccepted by any Global Borrower pursuant to this clause (vi) is hereby waived.(b) Each Bid Rate Advance shall be in an aggregate amount not less than $10,000,000 or an integral multiple ofapproximately $1,000,000 in excess thereof, and, following the making of each Bid Rate Advance, the Borrowers shall be incompliance with the limitation set forth in the proviso to the first sentence of Section 2.10(a).(c) Each acceptance by the applicable Global Borrower pursuant to Section 2.10(b)(iii)(y) of the offers made in responseto a Bid Rate Advance Borrowing Notice shall be treated as an acceptance of such offers in ascending order of the rates or margins,as applicable, at which the same were made but if, as a result thereof, two or more offers at the same such rate or margin would bepartially accepted, then the amounts of the Bid Rate Loans in respect of which such offers are accepted shall be treated as being theamounts which bear the same proportion to one another as the respective amounts of the Bid Rate Loans so offered bear to oneanother but, in each case, rounded as the Global Administrative Agent (or the applicable Global Borrower in the event suchBorrower runs the bid rate process under clause (b)(vi) above) may consider necessary to ensure that the amount of each such BidRate Loan is approximately $500,000 or an integral multiple thereof.(d) Within the limits and on the conditions set forth in this Section 2.10, each Global Borrower may from time to timeborrow under this Section 2.10, repay pursuant to Section 2.10(f), and reborrow under this Section 2.10.(e) The applicable Global Borrower shall repay to the Global Administrative Agent, for the account of each SyndicatedGlobal Lender which has made a Bid Rate Loan to it, on the maturity date of such Bid Rate Loan (such maturity date being thatspecified by such Borrower for repayment of such Bid Rate Loan in the related Bid Rate Advance Borrowing Notice), or, if earlier,the acceleration of the Obligations pursuant to Section 8.1, the then unpaid principal amount of such Bid Rate Loan. No Borrowershall have the right to prepay any principal amount of any Bid Rate Loan without the consent of the applicable Syndicated GlobalLender.(f) The applicable Global Borrower shall pay interest on the unpaid principal amount of each Bid Rate Loan made to it,from the date of such Bid Rate Loan to the date the principal amount of such Bid Rate Loan is repaid in full, at the rate of interestfor such Bid Rate Loan specified by the Syndicated Global Lender making such Bid Rate Loan in the related notice submitted bysuch Syndicated Global Lender pursuant to Section 2.10(b)(ii), payable on the interest payment date or dates specified by suchBorrower for such Bid Rate Loan in the related Bid Rate Advance Borrowing Notice and on any date on which such Bid Rate Loanis prepaid, whether by acceleration or otherwise. In the event the term of any Bid Rate Loan shall be longer than three months,interest thereon shall be payable not less frequently than once each three-month period during such term. Unless otherwise specifiedin the applicable Bid Rate Advance Borrowing Notice, interest on Bid Rate Advances shall be calculated (a) for actual days elapsedon the basis of a 365-day year or, when appropriate, 366-day year for Bid Rate Advances made pursuant to an Indexed RateAuction and (b) for actual days elapsed on the basis of a 360-day year for Bid Rate Advances made pursuant to an Absolute RateAuction.(g) Except as provided in clause (b)(vi) above, in connection with each Bid Rate Loan, the applicable Global Borrowershall pay to the Global Administrative Agent the fee with respect thereto25set forth in the relevant fee letter dated as of even date herewith between the Borrowers and the Global Administrative Agent.2.11 Default Rate. Notwithstanding anything contained herein to the contrary, if any principal of or interest on anyLoan or any fee or other amount payable by any Borrower hereunder is not paid when due, whether at stated maturity, uponacceleration or otherwise, the Global Administrative Agent may with the consent, and shall upon the request, of the RequiredLenders require that such overdue amount shall bear interest, after as well as before judgment, at a rate per annum equal to(i) in the case of overdue principal of any Loan, 2% plus the rate otherwise applicable to such Loan as provided herein or (ii)in the case of any other amount, 2% plus the rate applicable to Base Rate Advances as provided herein.2.12 Method of Payment. All payments of principal, interest, and fees hereunder to the Global Administrative Agentshall be made, without setoff, deduction or counterclaim (a) at the Global Administrative Agent’s office at the applicablelocation at which such Advance was made in immediately available funds or at any other Lending Installation of the GlobalAdministrative Agent specified in writing (by 11:00 a.m. (New York time) on the day before the date when due) by the GlobalAdministrative Agent to the applicable Borrower, by 12:00 noon local time in New York, New York on the date when dueand shall be made ratably among the relevant Lenders (unless such amount is not to be shared ratably in accordance with theterms hereof). Each Advance shall be repaid or prepaid in Dollars in the amount borrowed and interest payable thereon shallbe paid in Dollars. Notwithstanding anything in this Agreement, the obligation of any Borrower in respect of any Advanceshall not be discharged by an amount paid in any currency other than Dollars or at another location other than the locationdesignated by the Global Administrative Agent, whether pursuant to a judgment or otherwise, to the extent the amount sopaid, on prompt conversion into Dollars and transfer to the relevant Lenders under normal banking procedure, does notyield the amount of Dollars due under the Loan Documents. In the event that any payment, whether pursuant to a judgmentor otherwise, upon conversion and transfer, does not result in payment of the amount of Dollars due under the LoanDocuments, such Lender shall have an independent cause of action against the applicable Borrower(s) for the currencydeficit. Each payment delivered to the Global Administrative Agent for the account of any Lender shall be delivered promptlyby the Global Administrative Agent to such Lender in the same type of funds which the Global Administrative Agent receivedat its address specified pursuant to Article XIV or at any Lending Installation specified in a notice received by the GlobalAdministrative Agent from such Lender.2.13 Notes, Telephonic Notices. Any Lender may request that the Loans made by it each be evidenced by theapplicable Notes to evidence such Lender’s Loans. In such event, each applicable Borrower shall prepare, execute and deliverto such Lender such Note(s) for such Loans payable to such Lender. Thereafter, such Loans evidenced by such Note(s) andinterest thereon shall at all times be represented by one or more Notes, except to the extent that any such Lender subsequentlyreturns any such Note for cancellation. Each Borrower authorizes the applicable Lenders and the Global AdministrativeAgent to extend Advances, effect selections of Types of Advances and to transfer funds based on telephonic notices made26by any person or persons that the Global Administrative Agent or Lender in good faith believes to be acting on behalf of suchBorrower. Each Borrower agrees to deliver promptly to the Global Administrative Agent a written confirmation, signed byan Authorized Officer, if such confirmation is requested by the Global Administrative Agent or any Lender, of eachtelephonic notice. If the written confirmation differs in any material respect from the action taken by the GlobalAdministrative Agent and Lenders, (i) the telephonic notice shall govern absent manifest error and (ii) the GlobalAdministrative Agent or Lender, as applicable, shall promptly notify the Authorizing Officer who provided such confirmationof such difference.2.14 Promise to Pay; Interest and Fees; Interest Payment Dates; Interest and Fee Basis; Loan Accounts.(A) Promise to Pay. Each Borrower unconditionally promises to pay when due the principal amount of each Loan made to itand all other Obligations incurred by it, and to pay all unpaid interest accrued thereon, in accordance with the terms of this Agreement.(B) Interest Payment Dates. Interest accrued on each Floating Rate Loan shall be payable on each Payment Date, commencingwith the first such date to occur after the date hereof, and at maturity (whether by acceleration or otherwise). Interest accrued on eachFixed Rate Loan shall be payable on the last day of its applicable Interest Period, on any date on which the Fixed Rate Loan is prepaid,whether by acceleration or otherwise, and at maturity. Interest accrued on each Fixed Rate Loan having an Interest Period longer thanthree months shall also be payable on the last day of each three-month interval during such Interest Period. Interest accrued on each BidRate Loan shall be payable as provided in Section 2.10(g). Interest accrued on the principal balance of all other Obligations shall bepayable in arrears (i) upon repayment thereof in full, (ii) if not theretofore paid in full, at the time such other Obligation becomes dueand payable (whether by acceleration or otherwise) and (iii) if not theretofore paid in full, on demand, commencing on the first suchday following the date such Obligation became payable pursuant to the terms of this Agreement or the other Loan Documents.(C) Fees. The relevant Borrowers shall, or shall cause their respective Subsidiaries to, pay to the Global Administrative Agent,for the account of each relevant Lender in accordance with their Pro Rata Shares, on arrangements satisfactory to Harley and the GlobalAdministrative Agent, a commitment fee accruing at the rate of the Applicable Commitment Fee Rate per annum from and after the datehereof until the Termination Date on the average daily unused amount of the Aggregate Commitment during a given calendar quartercalculated on the last Business Day of such calendar quarter. All such commitment fees payable under this clause (C) shall be payablequarterly in arrears on the last Business Day of each March, June, September and December occurring after the date hereof and, inaddition, on the Termination Date.(D) Interest and Fee Basis. Interest on all Loans (other than Base Rate Loans with respect to which interest is calculated byreference to the Alternate Base Rate) and all fees shall be calculated for actual days elapsed on the basis of a 360-day year. Interest onBase Rate Loans with respect to which interest is calculated by reference to the Alternate Base Rate shall be calculated for actual dayselapsed on the basis of a 365-day year or, when appropriate, 366-day year. Interest shall be payable for the day an Obligation isincurred but not for the day of any payment on the amount paid if payment is received by the times and in the offices required underSection 2.12. If any payment of principal of or interest on a Loan or any payment of any other Obligations shall become due on a daywhich is not a Business Day, such payment shall be made on the next succeeding Business Day and, in the case of a principal payment,such extension of time shall be included in computing interest in connection with such payment.27(E) Loan Account. Each Lender shall maintain in accordance with its usual practice an account or accounts (a “LoanAccount”) evidencing the Obligations of the Borrowers to such Lender owing to such Lender from time to time, including the amountof principal and interest payable and paid to such Lender from time to time hereunder.(F) Entries Binding. The entries made in the Register and each Loan Account shall be conclusive and binding for all purposes,absent manifest error, unless any Borrower objects to information contained in the Register and each Loan Account within thirty (30)days of such Borrower’s receipt of such information.2.15 Notification of Advances, Interest Rates, Prepayments and Aggregate Commitment Reductions. Promptly after receiptthereof, the Global Administrative Agent will notify each relevant Lender of the contents of each Aggregate Commitmentreduction notice, Borrowing Notice, Continuation/Conversion Notice and repayment notice received by it hereunder. TheGlobal Administrative Agent will notify each relevant Lender of the interest rate applicable to each Fixed Rate Loanpromptly upon determination of such interest rate.2.16 Lending Installations. Each Lender may book its Loans at any Lending Installation reasonably selected by suchLender and may change its Lending Installation from time to time. All terms of this Agreement shall apply to any suchLending Installation and any Notes shall be deemed held by each Lender for the benefit of such Lending Installation. EachLender may, by written or facsimile notice to the Global Administrative Agent and Harley, designate a Lending Installationthrough which Loans will be made by it and for whose account Loan payments are to be made.2.17 Non-Receipt of Funds by the Global Administrative Agent. Unless a Borrower or a Lender, as the case may be,notifies the Global Administrative Agent prior to the date (or time, in the case of a Floating Rate Loan) on which it isscheduled to make payment to the Global Administrative Agent of (i) in the case of a Lender, the proceeds of a Loan or (ii) inthe case of a Borrower, a payment of principal, interest or fees to the Global Administrative Agent for the account of therelevant Lenders, that it does not intend to make such payment, the Global Administrative Agent may assume that suchpayment has been made. The Global Administrative Agent may, but shall not be obligated to, make the amount of suchpayment available to the intended recipient in reliance upon such assumption. If such Lender or Borrower, as the case maybe, has not in fact made such payment to the Global Administrative Agent, the recipient of such payment shall, on demand bythe Global Administrative Agent, repay to the Global Administrative Agent the amount so made available together withinterest thereon in respect of each day during the period commencing on the date such amount was so made available by theGlobal Administrative Agent until the date the Global Administrative Agent recovers such amount at a rate per annum equalto (i) in the case of payment by a Lender, the Federal Funds Effective Rate for such day or (ii) in the case of payment by aBorrower, the interest rate applicable to the relevant Loan (including without limitation pursuant to Section 2.11 ifapplicable).2.18 Maturity Date. This Agreement shall be effective until the Maturity Date. Notwithstanding the termination of thisAgreement on the Maturity Date, until all of the Obligations (other than contingent indemnity and reimbursement obligations,to the extent28such obligations have not accrued) shall have been fully paid and satisfied and all financing arrangements under the LoanDocuments among the Borrowers and the Lenders shall have been terminated, all of the rights and remedies under thisAgreement and the other Loan Documents shall survive.2.19 Term-Out Option. Harley may, by irrevocable written notice to the Global Administrative Agent given not fewerthan ten (10) Business Days prior to the Termination Date, elect (such election, the “Term-Out Option”), effective as of theTermination Date (the “Term-Out Date”), to extend the Maturity Date for all or a ratable portion of the Advancesoutstanding on such date to April 30, 2019; provided that such extension of the Maturity Date shall become effective only if,on the Term-Out Date, (a) no Default or Unmatured Default shall have occurred and be continuing on the Term-Out Dateand immediately after giving effect to the exercise of the Term-Out Option, (b) the representations and warranties of Harleyset forth in this Agreement are true and correct in all material respects (or in all respects if the applicable representation orwarranty is qualified by Material Adverse Effect or materiality) on and as of the Term-Out Date and immediately after givingeffect to the exercise of the Term-Out Option, as though made on and as of such date (or, if any such representation orwarranty is expressly stated to have been made as of a specific date, as of such specific date), (c) the Global AdministrativeAgent shall have received a certificate from Harley signed by an Authorized Officer of Harley (1) certifying the accuracy ofthe foregoing clauses (a) and (b) and (2) certifying and attaching the resolutions adopted by Harley approving or consenting tosuch extension of the Maturity Date, (d) Harley shall pay to the Global Administrative Agent, for the account of each Lender,a term-out fee equal to 0.75% of the aggregate principal amount of such Lender’s outstanding Advances the Maturity Date inrespect of which is being extended on the Termination Date pursuant to the exercise of the Term-Out Option in accordancewith this Section 2.19, and (e) Harley shall not have previously exercised the Term-Out Option. In the event the Maturity Dateshall be so extended, (i) all Advances that are subject to such extension and outstanding on the Termination Date shallcontinue to constitute Advances following such date, (ii) all Advances that are not subject to such extension but areoutstanding on the Termination Date shall be repaid on such date, (iii) the aggregate Commitments will terminate on theTermination Date and the commitment fee pursuant to Section 2.14(C) shall cease to accrue on the Termination Date, and (iv)no Borrower may borrow or reborrow any additional Advances on or after the Termination Date.ARTICLE III CHANGE IN CIRCUMSTANCES3.1 Yield Protection. If any law or any governmental or quasi-governmental rule, regulation, policy, guideline ordirective (whether or not having the force of law, but excluding those that are merely proposed and not in effect) adoptedafter the Closing Date (or with respect to any Lender, if later, the date on which such Lender becomes a Lender) and havinggeneral applicability to all banks (or a Lender’s holding company or applicable Lending Installation for purposes of thisAgreement) within the jurisdiction in which such Lender operates (excluding, for the avoidance of doubt, the effect of andphasing in of capital requirements or other regulations or guidelines passed prior to the Closing Date (or with respect to anyLender, if later, the date on which such Lender becomes a Lender)), or any29interpretation or application thereof by any Governmental Authority charged with the interpretation or application thereof,or the compliance of any Lender therewith (any of the foregoing, a “Change in Law”; provided, however, thatnotwithstanding anything herein to the contrary, except to the extent they are merely proposed and not in effect, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines, requirements and directivesthereunder or issued in connection therewith by any Governmental Authority charged with the interpretation or applicationthereof and (ii) all requests, rules, guidelines, requirements and directives promulgated by the Bank for InternationalSettlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States orforeign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”,regardless of the date enacted, adopted or issued to the extent having general applicability to all banks (or a Lender’s holdingcompany or applicable Lending Installation for purposes of this Agreement) within the jurisdiction in which the applicableLender (or its holding company or such Lending Installation) operates),(i) subjects the Global Administrative Agent, any Lender or any applicable Lending Installation to any Taxes on itsloans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capitalattributable thereto (other than (A) Indemnified Taxes, (B) Excluded Taxes, and (C) Other Taxes),(ii) imposes or increases or deems applicable any reserve, assessment, insurance charge, special deposit or similarrequirement against assets of, deposits with or for the account of, or credit extended by, any Lender or any applicable LendingInstallation with respect to its Fixed Rate Loans, or(iii) imposes any other condition the result of which is to increase the cost to any Lender or any applicable LendingInstallation of making, funding or maintaining the Fixed Rate Loans or reduces any amount received by any Lender or anyapplicable Lending Installation in connection with Fixed Rate Loans, or requires any Lender or any applicable LendingInstallation to make any payment calculated by reference to the amount of Loans held or interest or fee received by it, by anamount deemed material by such Lender;and the result of any of the foregoing is to increase the cost to that Person of making, renewing or maintaining its Commitmentor Loans or to reduce any amount received under this Agreement, then, within 30 days after receipt by the relevant Borrower of writtendemand by such Person pursuant to Section 3.6, such Borrower shall pay such Person that portion of such increased expense incurredor reduction in an amount received which such Person determines is necessary to compensate such Person for such additional costsincurred or reduction suffered as reasonably determined by such Person (which determination shall be made in good faith (and not onan arbitrary or capricious basis) and consistent with similarly situated customers of such Person under agreements having provisionssimilar to this Section 3.1 after consideration of such factors as such Person then reasonably determines to be relevant).3.2 Changes in Capital Adequacy Regulations. If a Lender determines (i) the amount of capital or liquidity required orexpected to be maintained by such Lender, any Lending Installation of such Lender or any corporation controlling suchLender is increased as a result of a “Change” (as defined below), and (ii) such increase in capital or liquidity will result in anincrease in the cost to such Lender of maintaining its Loans or its obligation to make Loans30hereunder, then, within 30 days after receipt by the relevant Borrower of written demand by such Lender pursuant toSection 3.6, such Borrower shall pay such Lender the amount necessary to compensate for any shortfall in the rate of returnon the portion of such increased capital or liquidity which such Lender determines is attributable to this Agreement, its Loansor its obligation to make Loans hereunder (after taking into account such Lender’s policies as to capital adequacy andliquidity) as such amount is reasonably determined by such Lender (which determination shall be made in good faith (and noton an arbitrary or capricious basis) and consistent with similarly situated customers of the applicable Lender underagreements having provisions similar to this Section 3.2 after consideration of such factors as such Lender then reasonablydetermines to be relevant). “Change” means any adoption of or change in any other law, governmental or quasi-governmental rule, regulation, policy, guideline, interpretation, or directive (whether or not having the force of law, butexcluding those that are merely proposed and not in effect) after the Closing Date (or with respect to any Lender, if later, thedate on which such Lender becomes a Lender) and having general applicability to all banks and financial institutions withinthe jurisdiction in which such Lender operates which affects the amount of capital or liquidity required or expected to bemaintained by any Lender or any Lending Installation or any corporation controlling any Lender (provided, however, thatnotwithstanding anything herein to the contrary, except to the extent they are merely proposed and not in effect, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines, requirements and directivesthereunder or issued in connection therewith by any Governmental Authority charged with the interpretation or applicationthereof and (ii) all requests, rules, guidelines, requirements and directives promulgated by the Bank for InternationalSettlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States orforeign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change”, regardless ofthe date enacted, adopted or issued to the extent having general applicability to all banks (or a Lender’s holding company orapplicable Lending Installation for purposes of this Agreement) within the jurisdiction in which the applicable Lender (or itsholding company or such Lending Installation) operates).3.3 Availability of Types of Advances. If (i) any Lender determines that maintenance of any of its Fixed Rate Loans ata suitable Lending Installation would violate any applicable law, rule, regulation or directive, whether or not having the forceof law, (ii) prior to the commencement of any Interest Period for a Fixed Rate Advance, the Global Administrative Agentdetermines (which determination shall be conclusive and binding absent demonstrable error) that adequate and reasonablemeans do not exist for ascertaining the Eurodollar Rate or LIBOR, as applicable, for a Loan for the applicable InterestPeriod or (iii) the Required Lenders with respect to Fixed Rate Advances determine that (x) deposits of a type, currency andmaturity appropriate to match fund Fixed Rate Advances are not available or (y) the interest rate, Eurodollar Rate orLIBOR applicable to a Fixed Rate Advance does not accurately reflect the cost of making or maintaining such a Fixed RateAdvance, then the Global Administrative Agent shall give notice thereof to the Borrowers and the Lenders by telephone ortelecopy as promptly as practicable thereafter and, until the Global Administrative Agent notifies the Borrowers and theLenders that the circumstances giving rise to such notice no longer exist (which notice shall be given by the GlobalAdministrative31Agent promptly after such circumstances cease to exist), (A) the availability of Fixed Rate Advances of the affected Type shallbe suspended and (B) and, in the case of any occurrence set forth in clause (i), the Global Administrative Agent shall requireany affected Fixed Rate Advances to be repaid or, in the case of Eurodollar Rate Loans, at the option of the applicable U.S.Borrower, converted to Base Rate Advances.3.4 Funding Indemnification. If any payment of a Fixed Rate Advance or Bid Rate Advance occurs on a date which isnot the last day of the applicable Interest Period in the case of a Fixed Rate Advance or the applicable maturity date in thecase of a Bid Rate Advance, whether because of acceleration, prepayment, assignment (to the extent such assignment iseffected pursuant to Section 3.8) or otherwise, or a Fixed Rate Advance or Bid Rate Advance is not made or continued on thedate specified by any Borrower for any reason other than default by the Lenders, Harley and such Borrower agrees toindemnify each Lender for any loss or cost (including lost profits) incurred by it resulting therefrom, including, withoutlimitation, any loss or cost in liquidating or employing deposits acquired to fund or maintain the Fixed Rate Advance or BidRate Advance, as the case may be.3.5 Taxes. (i) Unless such deduction is required by applicable law, all payments by any Borrower or the Guarantor toor for the account of any Lender or the Global Administrative Agent hereunder or under any Note shall be made free andclear of and without deduction for any and all Taxes. If any Borrower or the Guarantor or the Global Administrative Agentshall be required by applicable law to deduct any Indemnified Taxes from or in respect of any sum payable hereunder to anyLender or the Global Administrative Agent, then, except as otherwise specifically provided in this Section 3.5, (a) the sumpayable by such Borrower or the Guarantor shall be increased as necessary so that after making all required deductions(including deductions applicable to additional sums payable under this Section 3.5) such Lender or the Global AdministrativeAgent (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (b)such Borrower or the Guarantor, as applicable, shall make such deductions, (c) such Borrower or the Guarantor, asapplicable, shall pay the full amount deducted to the relevant authority in accordance with applicable law and (d) suchBorrower or the Guarantor, as applicable, shall furnish to the Global Administrative Agent the original or a certified copy ofa receipt evidencing payment thereof, or other evidence of such payment that is reasonably satisfactory to the GlobalAdministrative Agent.(ii)In addition, except as otherwise specifically provided in this Section 3.5, each Borrower and the Guarantor hereby agrees topay any present or future stamp or documentary taxes and any other excise or property taxes, charges or similar levies which arise fromany payment made hereunder by the relevant Borrower or the Guarantor to the relevant Lender, or under any Note (but excluding anysuch taxes, charges or levies in respect of any assignment, sale or transfer or participation by any Lender or the Global AdministrativeAgent) or from the execution or delivery of, or otherwise with respect to, this Agreement or any Note (“Other Taxes”).(iii)Each Borrower and the Guarantor hereby agree to indemnify the Global Administrative Agent and each Lender for the fullamount of Indemnified Taxes or Other Taxes (including, without limitation, any Indemnified Taxes or Other Taxes imposed onamounts payable under this Section 3.5) paid by the32Global Administrative Agent or such Lender and any liability (including penalties, interest and expenses) arising therefrom or withrespect thereto; provided that each Borrower and the Guarantor shall not be required to so indemnify to the extent any relevant amountis actually compensated for under any other provision of this Agreement. Payments due under this indemnification shall be made within30 days of the date the Global Administrative Agent or such Lender makes demand therefor pursuant to Section 3.6.(iv)At the time or times reasonably requested by a Borrower, the Guarantor, or the Global Administrative Agent, any Lenderthat is entitled to an exemption from, or reduction of, any applicable withholding Tax with respect to any payments under thisAgreement or under a Note shall deliver to such Borrower, the Guarantor, or the Global Administrative Agent, such properly completedand executed documentation reasonably requested by such Borrower, the Guarantor, or the Global Administrative Agent as will permitsuch payments to be made without, or at a reduced rate of, withholding. In addition, any Lender, if requested by a Borrower, theGuarantor, or the Global Administrative Agent, shall deliver such other documentation prescribed by law or reasonably requested bysuch Borrower, the Guarantor, or the Global Administrative Agent as will enable such Borrower, the Guarantor, or the GlobalAdministrative Agent to determine whether or not such Lender is subject to any withholding (including backup withholding) orinformation reporting requirements. Upon the reasonable request of a Borrower, the Guarantor, or the Global Administrative Agent, anyLender shall update any form or certification previously delivered pursuant to this Section 3.5(iv). If any form or certificationpreviously delivered pursuant to this Section expires or becomes obsolete or inaccurate in any respect with respect to a Lender, suchLender shall promptly (and in any event within 10 days after such expiration, obsolescence or inaccuracy) notify each Borrower, theGuarantor, and the Global Administrative Agent in writing of such expiration, obsolescence or inaccuracy and update the form orcertification if it is legally eligible to do so. Without limiting the generality of the foregoing, each Lender shall deliver to each Borrower,the Guarantor, and the Global Administrative Agent (in such number of copies reasonably requested by such Borrower, the Guarantor,or the Global Administrative Agent) on or prior to the date on which such Lender becomes a party hereto, duly completed and executedcopies of whichever of the following is applicable:(a) in the case of a Lender other than a Non-U.S. Lender, IRS Form W-9 certifying that payments made to such Lenderunder this Agreement or under a Note are exempt from U.S. Federal backup withholding tax;(b) in the case of a Non-U.S. Lender claiming the benefits of an income tax treaty to which the United States is a party(1) with respect to payments of interest under this Agreement or under a Note, IRS Form W-8BEN or IRS Form W-8BEN-E, asapplicable, establishing an exemption from, or reduction of, U.S. Federal withholding Tax pursuant to the “interest” article ofsuch tax treaty, and (2) with respect to any other applicable payments under this Agreement or under a Note, IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable, establishing an exemption from, or reduction of, U.S. Federal withholding Taxpursuant to the “business profits” or “other income” article of such tax treaty;(c) in the case of a Non-U.S. Lender for whom payments under this Agreement or under a Note constitute income that iseffectively connected with the conduct of a trade or business in the United States by such Lender (or, in the event that suchLender is a Disregarded Entity, by the owner of such Lender), IRS Form W-8ECI;(d) in the case of a Non-U.S. Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) ofthe Code both (1) IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable, and (2) a certificate to the effect that such Lender(or, in the event that such Lender is a33Disregarded Entity, the owner of such Lender) is neither (A) a “bank” within the meaning of Section 881(c)(3)(A) of the Code,(B) a “10 percent shareholder” (within the meaning of Section 881(c)(3)(B) of the Code) of the applicable Borrower, nor (C) a“controlled foreign corporation” described in Section 881(c)(3)(C) of the Code;(e) in the case of a Non-U.S. Lender (or, in the event that the Non-U.S. Lender is a Disregarded Entity, the owner ofsuch Non-U.S. Lender) that (for U.S. federal income tax purposes) is not the beneficial owner of payments made under thisAgreement or under a Note (including a partnership or a participating Lender), (1) an IRS Form W-8IMY on behalf of itself, and(2) the relevant forms prescribed in clauses (a), (b), (c), (d), (e) and (f) of this Section 3.5(iv) that would be required of eachsuch beneficial owner or partner of such partnership if such beneficial owner or partner were a Lender; provided, however, thatif the Lender is a partnership and one or more of its partners are claiming the exemption for portfolio interest under Section881(c) of the Code, such Lender may provide, on behalf of such partners, a certificate of the type described in clause (d)(2) ofthis Section 3.5(iv); or(f) any other form prescribed by law as a basis for claiming exemption from, or a reduction of, U.S. Federal withholdingTax together with such supplementary documentation necessary to enable each Borrower, the Guarantor, and the GlobalAdministrative Agent to determine the amount of Tax (if any) required by law to be withheld.(v)Except as provided in clause (xii) below, for any period during which a Non-U.S. Lender has failed to provide a Borrower orthe Guarantor with the documentation required by Section 3.5(iv) (unless such failure is due to a change in treaty, law or regulation, orany change in the interpretation or administration thereof by any governmental authority, occurring subsequent to the date on whichsuch documentation originally was required to be provided), such Non-U.S. Lender shall not be entitled to additional amounts orindemnification under this Section 3.5 with respect to Indemnified Taxes imposed by the United States; provided that, should a Non-U.S. Lender which is otherwise exempt from or subject to a reduced rate of withholding tax become subject to Taxes because of itsfailure to deliver the documentation required by Section 3.5(iv), the applicable Borrower or the Guarantor shall take such steps as suchNon-U.S. Lender shall reasonably request to assist such Non-U.S. Lender to recover such Taxes.(vi)If a payment made to a Lender under this Agreement or under a Note would be subject to U.S. Federal withholding taximposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including thosecontained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to each Borrower, the Guarantor, and theGlobal Administrative Agent, at the time or times prescribed by law and at such time or times reasonably requested by a Borrower, theGuarantor or the Global Administrative Agent, such documentation prescribed by applicable law (including as prescribed bySection 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by such Borrower or the Guarantor orthe Global Administrative Agent as may be necessary for such Person to comply with its obligations under FATCA, to determine thatsuch Lender has or has not complied with such Lender’s obligations under FATCA and, as necessary, to determine the amount todeduct and withhold from such payment. Solely for purposes of this Section 3.5(vi), “FATCA” shall include any amendments made toFATCA after the Closing Date, whether or not such amendments are included in the definition set forth in Article I.(vii)Each Lender shall severally indemnify the Global Administrative Agent for (i) any Indemnified Taxes or Other Taxesattributable to such Lender (but only to the extent that the Companies have not already indemnified the Global Administrative Agent forsuch Indemnified Taxes or Other Taxes34and without limiting the obligation of Companies to do so), (ii) any Taxes attributable to such Lender's failure to comply with theprovisions of Section 13.2 relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender,in each case that are paid or payable by the Global Administrative Agent in connection with any Loan Document and any reasonableexpenses arising therefrom or with respect thereto, whether or not such amounts were correctly or legally imposed or asserted by therelevant Governmental Authority. The indemnity under this Section 3.5(vii) shall be paid within 10 days after the Global AdministrativeAgent delivers to the applicable Lender a certificate stating the amount so paid or payable by the Global Administrative Agent. Suchcertificate shall be conclusive of the amount so paid or payable absent manifest error. Each Lender hereby authorizes the GlobalAdministrative Agent to set off and apply any and all amounts at any time owing to such Lender under any Loan Document orotherwise payable by the Global Administrative Agent to the Lender from any other source against any amount due to the GlobalAdministrative Agent under this Section 3.5(vii).(viii)[Reserved](ix)[Reserved](x)[Reserved](xi)If a Borrower or the Guarantor pays an amount under this Section 3.5, or is required to make a deduction or withholding inrelation to a payment hereunder or under any Note and account for the same to the relevant tax authority, which gives or may give riseto a Tax Credit for the recipient of that payment (the “Recipient”), the Recipient shall, promptly upon utilisation or receipt of such TaxCredit, pay an amount to such Borrower or the Guarantor which will leave it (after that payment) in the same after-Tax position as itwould have been in had the original amount paid under this Section 3.5 (or withheld or deducted pursuant to applicable law) not beenrequired to have been made, withheld or deducted; provided that nothing in this clause (xi) shall require any Lender to make availableits tax return (or any other information relating to its taxes which it deems confidential).(xii)If (i) a Lender or the Global Administrative Agent assigns, transfers or sells all or any portion of its rights and/or delegatesall or any portion of its obligations under this Agreement and the other Loan Documents or under a Note or changes its LendingInstallation for the purposes of this Agreement, and (ii) as a direct result of circumstances existing at the date of the assignment,transfer, sale, delegation or change, any Borrower or the Guarantor would be obliged to pay any incremental amount under this Section3.5, then the transferee or Lender acting through its new Lending Installation shall only be entitled to receive payment under thisSection 3.5 to the same extent that the previous Lender or the Lender acting through its previous Lending Installation would have beenentitled if no such transaction had taken place. If a Lender sells a participation in all or any part of its rights or obligations under thisAgreement and the other Loan Documents, the participant shall only be entitled to receive payment under this Section 3.5 to the extentthat the Lender selling the participation would have been entitled if no such participation had taken place.3.6 Mitigation; Lender Statements; Survival of Indemnity. To the extent reasonably possible, each Lender shall designatean alternate Lending Installation with respect to its Fixed Rate Loans to reduce any liability of the relevant Borrower or theGuarantor to such Lender under Sections 3.1 and 3.2 or to avoid the unavailability of a Type of Advance under Section 3.3,so long as such designation is not materially disadvantageous to such Lender. Each Lender requiring compensation pursuantto this Article III shall notify the relevant Borrower and the Global Administrative Agent in writing of any Change, law,policy, rule, guideline or directive giving rise to such demand for compensation; provided that the relevant35Borrower or the Guarantor shall not be required to pay such amounts to the extent such amounts accrued prior to the datethat is 90 days prior to the date of such notice; provided further that, if the circumstances giving rise to such amounts areretroactive, then such 90-day period shall be extended to include the period of retroactive effect thereof. Any demand forcompensation pursuant to this Article III shall be in writing and shall state the amount due, if any, under Section 3.1, 3.2, 3.4or 3.5 and shall set forth in reasonable detail the calculations upon which such Lender determined such amount. Such writtendemand shall be rebuttably presumed correct for all purposes. Determination of amounts payable under such Sections inconnection with a Fixed Rate Loan shall be calculated as though each Lender funded its Fixed Rate Loan through thepurchase of a deposit of the type, currency and maturity corresponding to the deposit used as a reference in determining theapplicable fixed rate of interest with respect to such Loan, whether in fact that is the case or not. The obligations of theBorrowers and the Guarantor under Sections 3.1, 3.2, 3.4 and 3.5 shall survive payment of the Obligations and termination ofthis Agreement.3.7 [Reserved]3.8 Replacement of Affected Lenders. (a) If any Lender (or any Participant holding interests in any Loan owing to suchLender or in any Commitment of such Lender or in any other interest of such Lender under the Loan Documents) requestscompensation under Section 3.1 or 3.2, or (b) if any Borrower is required to pay any additional amount pursuant toSection 3.5, or (c) if any Lender becomes a Defaulting Lender or (d) if any Lender (1) shall at any time have (or have a parentthat has) a long-term credit rating of lower than BBB from S&P, lower than Baa2 from Moody’s or lower than the equivalentrating from any other nationally recognized statistical rating organization, or shall at any time not have a long-term creditrating from S&P, Moody’s or any other nationally recognized statistical rating organization (in each case under this clause (d)(1) regardless of whether any such circumstances existed at the time such Lender became a Lender), (2) is an IneligibleInstitution, (3) enters into, or purports to enter into, an assignment or a participation with an Ineligible Institution in violationof this Agreement or (4) has become the subject of a Bail-In Action (or any case or other proceeding in which a Bail-In Actionmay occur), then Harley may, at its sole expense and effort, upon notice to such Lender and the Global Administrative Agent,require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained inSection 13.3), all its interests, rights and obligations under this Agreement (other than any outstanding Bid Rate Loans heldby it) to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts suchassignment); provided that (i) in the case of an assignment to an assignee which is not a Lender, Harley shall have received theprior written consent of the Global Administrative Agent, which consent shall not unreasonably be withheld, (ii) such Lendershall have received payment of an amount equal to the outstanding principal of its Loans (other than Bid Rate Loans) andparticipations in the relevant Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder,from the assignee (to the extent of such outstanding principal and accrued interest and fees) or Harley (in the case of all otheramounts), (iii) in the case of any such assignment resulting from a claim for compensation under Sections 3.1 or 3.2 orpayments required to be made pursuant to Section 3.5, such assignment will result in a36reduction in such compensation or payments with respect to the assignee Lender and (iv) in the case of any such assignmentarising under clause (d)(1) above, the assignee shall have a credit rating greater than or equal to BBB from S&P, and/orgreater than or equal to Baa2 from Moody’s.3.9 Removal of Lenders. (i) Notwithstanding any other provision of this Agreement to the contrary, if a Lender (orany Participant holding interests in any Loan owing to such Lender or in any Commitment of such Lender or in any otherinterest of such Lender under the Loan Documents) (each, a “Demanding Lender”) demands any payment of any amountpursuant to this Article III and the amount so demanded is disproportionately greater than the amount of compensation (ifany) that the Borrowers generally are obligated to pay to other Lenders arising out of the same event or circumstance givingrise to such demand (a “Trigger Event”), then Harley may terminate such Demanding Lender’s Commitment hereunder,provided that (A) no Unmatured Default or Default shall have occurred and be continuing at the time of such Commitmenttermination, (B) in the case of a Demanding Lender, Harley shall concurrently terminate the Commitment of each otherLender that has made a demand for payment under this Article III that arises out of such Trigger Event and that is similarlydisproportionate to the amount the Borrowers are generally obligated to pay to other Lenders arising out of such TriggerEvent, (C) the Global Administrative Agent and the Required Lenders shall have consented to each such Commitmenttermination (such consents not to be unreasonably withheld or delayed, but may include consideration of the adequacy of theliquidity of Harley and its Subsidiaries) and (D) such Demanding Lender shall have been paid all amounts then due to itunder this Agreement and each other Loan Document (which, for the avoidance of doubt, the respective Borrowers may payin connection with any such termination without making ratable payments to any other Lender (other than another Lenderthat has a Commitment that concurrently is being terminated under this Section 3.9(i))). In no event shall the termination of aLender’s Commitment in accordance with this Section 3.9(i) impair or otherwise affect the obligation of the Borrowers tomake any payment demanded by such Lender in accordance with this Article III. (ii) Notwithstanding any other provision ofthis Agreement to the contrary, if a Lender has become the subject of a Bail-In Action (or any case or other proceeding inwhich a Bail-In Action may occur) (each, a “Bail-In Lender”), then Harley may terminate such Bail-In Lender’s Commitmenthereunder, provided that (A) no Unmatured Default or Default shall have occurred and be continuing at the time of suchCommitment termination, (B) in the case of a Bail-In Lender, Harley shall concurrently terminate the Commitment of eachother Lender that is a Bail-In Lender at such time, (C) the Global Administrative Agent and the Required Lenders shall haveconsented to each such Commitment termination (such consents not to be unreasonably withheld or delayed, but may includeconsideration of the adequacy of the liquidity of Harley and its Subsidiaries) and (D) such Bail-In Lender shall have been paidall amounts then due to it under this Agreement and each other Loan Document (which, for the avoidance of doubt, therespective Borrowers may pay in connection with any such termination without making ratable payments to any otherLender (other than another Lender that has a Commitment that concurrently is being terminated under this Section 3.9(ii))).37ARTICLE IV CONDITIONS PRECEDENT4.1 Initial Loans. This Agreement shall not become effective nor shall the Lenders be required to make the initialLoans unless (i) since December 31, 2016, no event, development or circumstance shall have occurred that has had, or couldreasonably be expected to have, a material adverse effect on the business, assets, operations or financial condition of Harleyand its subsidiaries taken as a whole and (ii) the Borrowers shall have (a) paid all fees required to be paid, and all expensesrequired to be paid for which invoices have been presented reasonably in advance of the Closing Date, in connection with theexecution of this Agreement, (b) furnished to the Global Administrative Agent such documents as the Global AdministrativeAgent or any Lender or its counsel may have reasonably requested, including, without limitation, all of the documentsreflected on the List of Closing Documents attached as Exhibit D to this Agreement, (c) obtained all governmental and thirdparty approvals necessary in connection with the financing contemplated hereby and the continuing operations of Harley andits Subsidiaries (including the Borrowers) and such approvals remain in full force and effect and (d) delivered to the Lenders(1) audited consolidated financial statements of Harley (on a Consolidated basis) and (2) audited Consolidated financialstatements of HDFS and its Subsidiaries (on a Consolidated basis), in the case of each of the foregoing clauses (1) and (2), forthe two most recent fiscal years ended prior to the Closing Date as to which such financial statements are available.4.2 Each Loan. No Lender shall be required to make any Loan unless on the applicable Borrowing Date:(i) at the time of and immediately after giving effect to such Advance or Loan, no Default or Unmatured Default shallhave occurred and be continuing; and(ii) the representations and warranties contained in Article V are true and correct in all material respects as of suchBorrowing Date, except for representations and warranties made with reference solely to an earlier date, which representationsand warranties shall be true and correct as of such earlier date; provided, that the representations set forth in Sections 5.1.6 and5.1.7 shall be deemed to be made only (1) on and as of the Closing Date and (2) pursuant to the terms of Section 2.19, on andas of the Term-Out Date (if any).Each Borrowing Notice with respect to each Loan or Advance shall constitute a representation and warranty by the applicableBorrower that the conditions contained in Sections 4.2(i) and (ii) will have been satisfied as of the date of such Loan or Advance.ARTICLE V REPRESENTATIONS AND WARRANTIES5.1 Representations and Warranties. Each of the Companies represents and warrants to the Lenders and the GlobalAdministrative Agent as follows as of the Closing Date and thereafter on each date as and to the extent required by Section4.2:5.1.1 Corporate Existence and Standing. Each of the Companies and each Material Subsidiary is a corporationduly organized, validly existing and in good standing under the laws of its jurisdiction of organization.385.1.2 Corporate Power and Authority; No Conflict. The execution, delivery and performance by each of theCompanies of this Agreement and the other Loan Documents to be delivered by it, and the consummation of thetransactions contemplated hereby, are within such Company’s corporate powers, have been duly authorized by allnecessary corporate action, and do not contravene (i) such Company’s charter or by-laws or (ii) law or any indenture orother agreement evidencing debt for borrowed money in an outstanding principal balance in excess of $50,000,000 or anymaterial contractual restriction binding on or affecting any Company.5.1.3 No Authorization or Approval. No authorization or approval or other action by, and no notice to or filingwith, any governmental authority or regulatory body or any other third party is required as a condition to the dueexecution, delivery and performance by the Companies of this Agreement or the other Loan Documents to be delivered byit.5.1.4 Execution, Delivery and Enforceability. This Agreement has been, and each of the other Loan Documentsto be delivered by each Company when delivered hereunder will have been, duly executed and delivered by suchCompany. This Agreement is, and each of the other Loan Documents when delivered hereunder will be, the legal, validand binding obligation of each Company enforceable against such Company in accordance with their respective terms(subject to the effect of bankruptcy and other similar laws affecting creditors’ rights generally and general principles ofequity).5.1.5 Financial Statements. The Consolidated balance sheet of Harley and its Subsidiaries as at December 31,2016, and the related Consolidated statements of income and cash flows of Harley and its Subsidiaries for the fiscal yearthen ended, accompanied by an opinion of Ernst & Young LLP, independent public accountants copies of which havebeen furnished to each Lender, fairly present in all material respects the Consolidated financial condition of Harley and itsSubsidiaries as at such date and the Consolidated results of the operations of Harley and its Subsidiaries for the periodsended on such date, all in accordance with generally accepted accounting principles consistently applied.5.1.6 Material Adverse Change. Since December 31, 2016, there has been no Material Adverse Change.5.1.7 Litigation. There is no action, suit, investigation, litigation or proceeding, including, without limitation, anyEnvironmental Action, pending or threatened in writing against Harley or any of its Subsidiaries before any court,governmental agency or arbitrator that (i) would be reasonably likely to have a Material Adverse Effect or (ii) purports toaffect the legality, validity or enforceability of this Agreement or any other Loan Document or the consummation of thetransactions contemplated hereby.5.1.8 Regulations T, U and X. No Borrower is engaged in the business of extending credit for the purpose ofpurchasing or carrying margin stock (within the meaning of Regulations T, U and X issued by the Board of Governors ofthe Federal Reserve System), and no proceeds of any Advance will be used, directly or indirectly, to purchase or carry anymargin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock that entails a violationof any of the Regulations of such Board of Governors.395.1.9 Investment Company Status. No Borrower is an “investment company”, or a company “controlled” by an“investment company”, within the meaning of the Investment Company Act of 1940, as amended.5.1.10 Disclosure. The reports, financial statements, certificates or other written information furnished by or onbehalf of the Companies or any Subsidiary to the Global Administrative Agent or any Lender in connection with thenegotiation of this Agreement or delivered hereunder (as modified or supplemented by other information so furnished),collectively and taken as a whole, did not when furnished contain any untrue statement of a material fact or omit to state amaterial fact necessary in order to make the statements contained therein not materially misleading in light of thecircumstances under which statements are made; provided that, with respect to projected financial information containedtherein, the Companies represent only that such information was prepared in good faith based upon assumptions believedby them to be reasonable (it being understood and agreed that projected financial information is simply an estimate, andthere is no guarantee that projected results will in fact be achieved).5.1.11 No Default. No Unmatured Default or Default has occurred and is continuing.5.1.12 Anti-Corruption Laws and Sanctions. The Companies have implemented and maintain in effect policiesand procedures designed to promote and achieve compliance by the Companies, their Subsidiaries and their respectivedirectors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions, and the Companies, theirSubsidiaries and their respective officers and employees and, to the knowledge of each Company, its directors and agents,are in compliance with Anti-Corruption Laws and applicable Sanctions, in each case in all material respects (it beingunderstood that no Unmatured Default or Default shall be deemed to exist in respect of the representation and warranty inthis sentence if it becomes inaccurate due to an assignment to, or participation to, a Lender or Participant, as the case maybe, that is a Sanctioned Person). None of (a) any Company, any Subsidiary or to the knowledge of such Company or suchSubsidiary any of their respective directors, officers or employees, or (b) to the knowledge of each Company, any agent ofsuch Company or any of its Subsidiaries that, in the case of any such director, officer, employee or agent (with respect tothis clause (b)), will act in any capacity in connection with or directly benefit from the credit facility established hereby, is aSanctioned Person. No Loan or Advance, use of proceeds of any Loan or Advance or other Transactions by the Companiesand their Subsidiaries will violate Anti-Corruption Laws or applicable Sanctions.ARTICLE VI COVENANTS6.1 Affirmative Covenants. So long as any Advance shall remain unpaid or any Lender shall have any Commitmenthereunder, each Company will:6.1.1 Compliance with Laws, Etc. Comply, and cause each of its Material Subsidiaries to comply, with allapplicable laws, rules, regulations and orders, such compliance to include, without limitation, compliance with ERISA andEnvironmental Laws, in each case the violation of which would have a Material Adverse Effect. The Companies willmaintain in effect and enforce policies and procedures designed to promote and achieve compliance by40the Companies, their Subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Lawsand applicable Sanctions, in each case in all material respects.6.1.2 Payment of Taxes, Etc. Pay and discharge, and cause each of its Material Subsidiaries to pay and discharge,before the same shall become delinquent, all income and other taxes, assessments and governmental charges or leviesimposed upon it or upon its Property; provided, however, that neither Harley nor any of its Material Subsidiaries shall berequired to pay or discharge any such tax, assessment or charge (a) that is being contested in good faith and by properactions and as to which appropriate reserves are being maintained in accordance with Agreement Accounting Principles or(b) to the extent that the failure to do so could not reasonably be expected to result in a Material Adverse Effect.6.1.3 Maintenance of Insurance. Maintain, and cause each of its Material Subsidiaries to maintain, insurance withinsurance companies or associations in such amounts and covering such risks as is usually carried by companies engagedin similar businesses and owning similar properties in the same general areas in which Harley or such Subsidiary operates(provided, however, that Harley and its Subsidiaries may self-insure to the same extent as other companies engaged insimilar businesses and owning similar properties in the same general areas in which Harley or such Subsidiary operates andto the extent consistent with prudent business practice), except to the extent that the failure to do so could not reasonablybe expected to have a Material Adverse Effect.6.1.4 Preservation of Corporate Existence, Etc. Preserve and maintain, and cause each of its Material Subsidiariesto preserve and maintain, its corporate existence, rights (charter and statutory) and franchises; provided, however, thatHarley and such Subsidiaries may consummate any transaction permitted under Section 6.2.3 and provided further thatneither Harley nor any of its Material Subsidiaries shall be required to preserve any right or franchise if the failure to do socould not reasonably be expected to have a Material Adverse Effect.6.1.5 Visitation Rights. At any reasonable time and from time to time and upon reasonable notice, permit theGlobal Administrative Agent (or, if a Default has occurred and is continuing, any of the Lenders) or any agents orrepresentatives thereof, to examine (and, if a Default has occurred and is continuing, make copies of and abstracts from)the records and books of account of, and visit the properties of, Harley and any of its Material Subsidiaries, and to discussthe affairs, finances and accounts of Harley and any of its Material Subsidiaries with any of their officers and, with one ormore representatives of Harley present if requested by Harley, with their independent certified public accountants; providedthat, notwithstanding any provision hereof to the contrary, unless a Default has occurred and is continuing, Harley shallonly be required to permit, and reimburse the Global Administrative Agent for the expenses incurred by the GlobalAdministrative Agent for, one such examination and visit by the Global Administrative Agent in any calendar year andshall have no obligation to reimburse any Lender for expenses relating to any examination or visit. Notwithstanding anyother provision of this Agreement to the contrary, no Company shall be required to disclose or discuss, or permit theinspection, examination or making of extracts of, any records, books or account or other matter (i) in respect of whichdisclosure to the Global Administrative Agent, any Lender or their representatives is then prohibited by applicable law orany agreement binding on such Company or its Subsidiaries or (ii) that is protected from disclosure by the attorney-clientprivilege or the attorney work product privilege.416.1.6 [Reserved].6.1.7 Maintenance of Properties, Etc. Maintain and preserve, and cause its Material Subsidiaries to maintain andpreserve, all of its properties that are used or useful in the conduct of its business in good working order and condition,ordinary wear and tear excepted, except to the extent the failure to do so could not reasonably be expected to have aMaterial Adverse Effect.6.1.8 [Reserved].6.1.9 Reporting Requirements. Furnish to the Global Administrative Agent for distribution to each Lender:(a) as soon as available and in any event no later than the date which is the earlier of (i) sixty (60) days after the end ofeach of the first three quarters of each fiscal year of Harley and (ii) the date the Quarterly Report on Form 10-Q for such quarter ofHarley would have been required to have been filed under the rules and regulations of the Commission giving effect to anyautomatic extension available thereunder for filing of such form, the Consolidated balance sheet of Harley and its Subsidiaries andthe Consolidated balance sheet of HDFS and its Subsidiaries, in each case as of the end of such quarter and Consolidated statementsof income and cash flows of Harley and its Subsidiaries and Consolidated statements of income and cash flows of HDFS and itsSubsidiaries, in each case for the period commencing at the end of the previous fiscal year and ending with the end of such quarter,duly certified (subject to the absence of footnotes and to year-end audit adjustments) by the chief financial officer or treasurer ofHarley (on behalf of Harley and HDFS) as having been prepared in accordance with generally accepted accounting principles andcertificates of the chief financial officer or treasurer of Harley as to compliance with the terms of this Agreement and setting forth inreasonable detail the calculations necessary to demonstrate compliance with Section 6.3;(b) as soon as available and in any event no later than the date which is the earlier of (i) one hundred twenty (120) daysafter the end of each fiscal year of Harley and (ii) the date the Annual Report on Form 10-K for such fiscal year of Harley wouldhave been required to have been filed under the rules and regulations of the Commission giving effect to any automatic extensionavailable thereunder for filing of such form, a copy of the annual audit report for such year for Harley and its Subsidiaries,containing the Consolidated balance sheet of Harley and its Subsidiaries and the Consolidated balance sheet of HDFS and itsSubsidiaries, in each case as of the end of such fiscal year and Consolidated statements of income and cash flows of Harley and itsSubsidiaries and Consolidated statements of income and cash flows of HDFS and its Subsidiaries, in each case for such fiscal year,and in each case accompanied by an opinion ((1) without a “going concern” or like qualification or like exception and (2) otherthan a qualification permitted by the Commission regarding the internal controls of a company acquired during such periodpursuant to a material acquisition by Harley or any Subsidiary, without any qualification or exception as to the scope of such audit;provided that such opinion may contain references (excluding formal qualifications) regarding audits performed by other auditorsas contemplated by AU Section 543, Part of Audit Performed by Other Independent Auditors (or any successor or similar standardunder Agreement Accounting Principles)) of Ernst & Young LLP or other independent public accountants of recognized nationalstanding and certificates of the chief financial officer or treasurer of Harley (on behalf of Harley and HDFS) as to compliance withthe terms of this Agreement and setting forth in reasonable detail the calculations necessary to demonstrate compliance with Section6.3;42(c) as soon as possible and in any event within five (5) Business Days after an executive officer of Harley knows orshould have known of the occurrence of each Default or Unmatured Default continuing, a statement of the chief financial officer ortreasurer of Harley setting forth details of such Default or Unmatured Default and the action that Harley has taken and proposes totake with respect thereto;(d) promptly after the sending or filing thereof, copies of all reports that Harley sends to any of its securityholders as such,and copies of all reports on Forms 10-K, 10-Q and 8-K (or their equivalents) and registration statements (other than the exhibitsthereto and any registration statements on Form S-8 or its equivalent) that Harley or any Subsidiary files with the Commission orany national securities exchange, excluding any of the foregoing to the extent related solely to a Permitted Finance ReceivablesSecuritization (unless such report constitutes a notice of default or acceleration);(e) promptly after the commencement thereof, notice of all actions and proceedings before any court, governmentalagency or arbitrator affecting Harley or any of its Subsidiaries of the type described in Section 5.1.7(ii); and(f) such other information respecting Harley or any of its Subsidiaries as any Lender through the Global AdministrativeAgent may from time to time reasonably request (it being understood and agreed that neither Harley nor any of its Subsidiaries shallbe required to provide any of the materials described in the last sentence of Section 6.1.5).Financial statements (other than the certificate of the chief financial officer or the treasurer) required to be delivered pursuant to clauses(a), (b) and (d) of this Section 6.1.9 may be delivered electronically and if so delivered, shall be deemed to have been delivered on thedate on which (i) such financial statements are filed for public availability on the Commission’s Electronic Data Gathering and RetrievalSystem or (ii) Harley notifies (which may be by facsimile or electronic mail) the Global Administrative Agent that such financialstatements have been posted at a site (the address of which shall be contained in such notice) on the world wide web, which site isaccessible by a widely held nationally recognized web browser, from which such financial statements may be readily viewed andprinted.6.1.10 Use of Proceeds.(a) Each Borrower shall use the proceeds of the Loans to provide funds for the general corporate purposes of suchBorrower and its Subsidiaries.(b) No Borrower will request any Loan or Advance, and no Borrower shall use, and each Borrower shall procure that itsSubsidiaries and its or their respective directors, officers, employees and agents shall not use, the proceeds of any Loan or Advance(i) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else ofvalue, to any Person in violation of any Anti-Corruption Laws, (ii) for the purpose of funding or financing any activities, business ortransaction of or with any Sanctioned Person, or in any Sanctioned Country, in each case in violation of Sanctions, or (iii) in anyother manner that would result in liability to the Global Administrative Agent or any Lender under any applicable Sanctions or abreach by the Global Administrative Agent or any Lender of Sanctions.6.2 Negative Covenants. So long as any Advance shall remain unpaid or any Lender shall have any Commitment hereunder,each of the Companies will not:6.2.1 [Reserved].436.2.2 Liens, Etc. Create or suffer to exist, or permit any Material Subsidiaries to create or suffer to exist, any Lienon or with respect to any of its properties, whether now owned or hereafter acquired, or assign for security purposes, orpermit any Material Subsidiaries to assign for security purposes, any right to receive income, other than:(a) Permitted Liens;(b) purchase money Liens (including Liens securing Capitalized Lease Obligations) upon or in any real Property or goodsacquired or held by any of the Companies or any Material Subsidiary in the ordinary course of business to secure the purchase priceof such Property or goods or to secure Indebtedness and/or other obligations incurred solely for the purpose of financing theacquisition of such real Property or goods, or Liens existing on such real Property or goods at the time of its acquisition (other thanany such Liens created in contemplation of such acquisition that were not incurred to finance the acquisition of such Property) andextensions, renewals or replacements of any of the foregoing to the extent the principal amount secured is not increased; provided,however, that no such Lien shall extend to or cover any properties of any character other than the real Property or goods beingacquired (and related Property), and no such extension, renewal or replacement shall extend to or cover any properties nottheretofore subject to the Lien being extended, renewed or replaced (it being understood that individual financings permitted by thissubsection provided by one Person (or an Affiliate thereof) may be cross-collateralized to other financings provided by such Personand its Affiliates that are permitted under this subsection); provided, further that the aggregate principal amount of the Indebtednesssecured by the Liens referred to in this clause (b) shall not exceed the greater of (i) $150,000,000 and (ii) an amount equal to 1.5%of Consolidated Total Assets (determined by reference to the most recent financial statements of Harley delivered pursuant toSection 6.1.9(a) or 6.1.9(b) or, if prior to the date of the delivery of the first financial statements to be delivered pursuant to Section6.1.9(a) or 6.1.9(b), the most recent financial statements referred to in Section 5.1.5) as determined at the time of, and immediatelyafter giving effect to, the incurrence of such Lien (for the purposes of this Section 6.2.2(b), “goods” has the meaning set forth inSection 9-102(44) of the Uniform Commercial Code as in effect in the State of New York);(c) the Liens existing on the Closing Date and described on Schedule 6.2.2(c) hereto;(d) Liens on (or assignments of) Property of a Person existing at the time such Person is merged into or consolidated withany of the Companies or any Material Subsidiary of any of the Companies or becomes a Material Subsidiary of any of theCompanies or at the time any of the Companies or any Material Subsidiary of any of the Companies otherwise acquires suchProperty from such Person; provided that such Liens or assignments were not created in contemplation of such merger,consolidation or acquisition, or such Person becoming a Material Subsidiary, and do not extend to any assets other than those of thePerson so merged into or consolidated with any of the Companies or such Subsidiary or acquired by any of the Companies or suchSubsidiary or those of such Person becoming a Material Subsidiary;(e) other Liens or assignments securing Indebtedness and other obligations in an aggregate principal amount not to exceedat any time outstanding the greater of (i) $250,000,000 and (ii) an amount equal to 2.5% of the Consolidated Total Assets(determined by reference to the most recent financial statements of Harley delivered pursuant to Section 6.1.9(a) or 6.1.9(b) or, ifprior to the date of the delivery of the first financial statements to be delivered pursuant to Section 6.1.9(a) or 6.1.9(b), the mostrecent financial statements referred to in Section 5.1.5) as determined at the time of, and immediately after giving effect to, theincurrence of such Lien or the making of such assignment;44(f) Liens (A) consisting of sales, assignments, pledges or other transfers of Finance Receivables in connection with aPermitted Finance Receivables Securitization, and (B) on Finance Receivables and on any interest in Finance Receivables retainedby Harley or any of its Subsidiaries (including a Finance Receivables Subsidiary), whether directly or through the ownership of acertificate or other interest in another Person, provided to secure Permitted Securitization Recourse Obligations of Harley or any ofits Subsidiaries;(g) the replacement, extension or renewal of any Lien or assignment permitted by clause (c) or (d) above upon or in thesame Property theretofore subject thereto or the replacement, extension or renewal (to the extent the principal amount secured is notincreased) of the Indebtedness or other obligation secured thereby;(h) Liens incurred in connection with sale and leaseback transactions securing assets or other Property with a value of notin excess of the greater of (i) $150,000,000 and (ii) an amount equal to 1.5% of Consolidated Total Assets (determined by referenceto the most recent financial statements of Harley delivered pursuant to Section 6.1.9(a) or 6.1.9(b) or, if prior to the date of thedelivery of the first financial statements to be delivered pursuant to Section 6.1.9(a) or 6.1.9(b), the most recent financial statementsreferred to in Section 5.1.5) as determined at the time of, and immediately after giving effect to, the incurrence of such Lien;(i) Liens on proceeds of any of the assets permitted to be the subject of any Lien or assignment permitted by this Section6.2.2;(j) options, put and call arrangements, rights of first refusal and similar rights relating to investments in joint ventures,partnerships and other similar investments not prohibited by this Agreement, and Liens on equity interests of joint ventures securingobligations of such joint ventures; and(k) Liens on assets in order to secure defeased and/or discharged indebtedness.6.2.3 Mergers, Etc. Merge or consolidate with or into, or convey, transfer, lease or otherwise dispose of (butexcluding, for the avoidance of doubt, the following transactions: (w) any transfer of cash, cash equivalents or marketablesecurities in the ordinary course of business, (x) any issuance by a Person of its own equity interests, (y) any transfer forsecurity purposes that is permitted by Section 6.2.2 and (z) any casualty loss, governmental taking or similar disposition)(whether in one transaction or in a series of related transactions) all or substantially all of the assets (whether now owned orhereafter acquired) of any Borrower or of any Borrower and its Subsidiaries (taken as a whole) to, any Person, or permitany of its Material Subsidiaries to do so, except that (i) any Subsidiary (other than any Company) may merge or consolidatewith or into, or transfer, convey or dispose of assets to, any other Person so long as such transaction or series of relatedtransactions does not result in the transfer, conveyance or other disposal of all or substantially all of the assets (whethernow owned or hereafter acquired) of any Borrower or of any Borrower and its Subsidiaries (taken as a whole), (ii) any ofthe Companies and any Material Subsidiary may merge into or transfer, convey or dispose of assets to any Person in atransaction in which a Company or a Material Subsidiary is the surviving or transferee entity (provided that any suchtransaction involving a Company must result in a Company as the surviving or transferee entity), (iii) Harley may mergeinto a wholly-owned Subsidiary that has no material assets or liabilities for the sole purpose of changing the state ofincorporation of Harley if the surviving corporation shall expressly assume45the liabilities of Harley under this Agreement and the other Loan Documents and (iv) the Guarantor may merge orconsolidate with a Person (other than a Borrower) in a transaction in which the Guarantor is the surviving entity; provided,in each case, that no Unmatured Default shall have occurred and be continuing at the time of such proposed transaction orwould result after giving effect thereto and provided, further, that the foregoing shall not restrict any of the Companies orany Material Subsidiaries in respect of dispositions of inventory, cash or obsolete, used or surplus equipment or otherProperty in the ordinary course of business or in respect of any Permitted Finance Receivables Securitization and provided,further, that the foregoing shall not restrict any of the Companies or any Material Subsidiaries from selling or disposing ofany Property the contemplated disposition of which Harley has disclosed in any Annual Report on Form 10-K, QuarterlyReport on Form 10-Q or Current Report on Form 8-K filed with or furnished to the Commission prior to the Closing Date.6.2.4 [Reserved].6.2.5 [Reserved].6.2.6 Margin Regulations. Permit more than 25% of the “value” (within the meaning of Regulation U issued bythe Board of Governors of the Federal Reserve System) of the assets of Harley and its Subsidiaries, both before and aftergiving effect to any Advance hereunder, to constitute “margin stock” as defined in Regulations T, U and X issued by theBoard of Governors of the Federal Reserve System.6.2.7 Amendments to Support Agreement. Allow or suffer to exist any amendment, supplement or othermodification to the Support Agreement (if the foregoing adversely affects, or could reasonably be expected to adverselyaffect, the Lenders but in no event shall any amendment reduce, or effectively reduce, the amount of support under theSupport Agreement) without the prior written consent of the Required Lenders.6.3 Financial Covenants. So long as any Advance shall remain unpaid or any Lender shall have any Commitment hereunder,the Companies shall comply with the following:(A) Defined Terms for Financial Covenants. The following terms used in this Agreement shall have the following meanings(such meanings to be applicable, except to the extent otherwise indicated in a definition of a particular term, both to the singular and theplural forms of the terms defined):“Consolidated Equity” means and refers to, as of the end of any period of determination, the sum, without duplication,of (i) Consolidated Tangible Net Worth of HDFS, (ii) preferred stock and (iii) Subordinated Indebtedness.“Consolidated Finco Debt” means, at any time, all Indebtedness for borrowed money of HDFS and its ConsolidatedSubsidiaries as reflected in the most recent Consolidated balance sheet of HDFS in accordance with Agreement AccountingPrinciples; provided, there shall be excluded from such amounts (i) Subordinated Indebtedness and (ii) SubordinatedIntercompany Indebtedness.“Consolidated Opco Debt” means, at any time, all Indebtedness for borrowed money of Harley and its ConsolidatedSubsidiaries as reflected in the most recent Consolidated balance sheet of Harley in accordance with Agreement AccountingPrinciples; provided, there shall be excluded from such amounts any Indebtedness of HDFS and its Consolidated Subsidiaries.46“Consolidated Shareholders’ Equity” means, as of the end of any fiscal quarter, the consolidated shareholders’ equityof Harley at the end of such fiscal quarter of Harley (determined by reference to the financial statements of Harley deliveredwith respect to such fiscal quarter pursuant to Section 6.1.9(a) or 6.1.9(b)), determined on a Consolidated basis in accordancewith Agreement Accounting Principles.“Consolidated Tangible Net Worth” of HDFS means its consolidated shareholders’ equity net of (a) intangible assetsand (b) financing and organizational costs net of amortization, in each case as shall be determined in accordance withAgreement Accounting Principles.“Finco Leverage Ratio” means the ratio of (a) Consolidated Finco Debt to (b) Consolidated Equity.“Opco Leverage Ratio” means the ratio of (a) Consolidated Opco Debt to (b) the sum of (i) Consolidated Opco Debtplus (ii) Consolidated Shareholders’ Equity.“Subordinated Indebtedness” means Indebtedness of Harley or its Subsidiaries, whether direct or indirect, to non-affiliated Persons which is subordinated to the Obligations on a basis acceptable to the Global Administrative Agent.(B) Maximum Finco Leverage Ratio. The Companies shall not permit the Finco Leverage Ratio, as of the end of any fiscalquarter, to exceed 10.00 to 1.00.(C) Maximum Opco Leverage Ratio. The Companies shall not permit the Opco Leverage Ratio, as of the end of any fiscalquarter, to exceed 0.70 to 1.00.ARTICLE VII DEFAULTS7.1 Defaults. Each of the following occurrences shall constitute a Default under this Agreement:(a) Failure to Make Payments When Due. Any Borrower (i) shall fail to pay any principal of any Advance when the samebecomes due and payable or (ii) shall fail to pay any interest on any Advance or make any other payment of fees or other amountspayable under this Agreement or any other Loan Document within five (5) Business Days after the same becomes due and payable.(b) Breach of Representation or Warranty. Any representation or warranty made by any Company herein or by anyCompany (or any of their respective officers) in connection with this Agreement shall prove to have been incorrect in any materialrespect when made.(c) Breach of Certain Covenants. (i) Any of the Companies shall fail to perform or observe any term, covenant oragreement under Section 6.1.4, 6.1.5, 6.1.9(c), 6.1.9(e), 6.1.10(b), 6.2, or 6.3 or (ii) any of the Companies shall fail to perform orobserve any other term, covenant or agreement contained in this Agreement or any other Loan Document on its part to beperformed or observed if such failure shall remain unremedied for thirty (30) days after written notice thereof shall have been givento the applicable Company by the Global Administrative Agent or any Lender.47(d) Default as to Other Indebtedness. (i) Any Borrower or any Material Subsidiary shall fail to pay any principal of orpremium or interest on any Indebtedness (other than Indebtedness owed to any Borrower or any Material Subsidiaries) that isoutstanding in a principal or net amount of at least $125,000,000 in the aggregate (but excluding (1) Indebtedness outstandinghereunder and (2) Indebtedness under a Permitted Finance Receivables Securitization) of such Borrower or such Material Subsidiary(as the case may be), when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration,demand or otherwise), and such failure shall continue after the applicable grace period, if any, specified in the agreement orinstrument relating to such Indebtedness; or (ii) or any event shall occur or condition shall exist under any agreement or instrumentrelating to any such Indebtedness (including, for the avoidance of doubt, such Indebtedness under a Permitted Finance ReceivablesSecuritization to the extent such Indebtedness appears as a liability or indebtedness on the balance sheet of any Borrower or anyMaterial Subsidiary in accordance with Agreement Accounting Principles – “Balance Sheet ABS Debt”) and shall continue after theapplicable grace period, if any, specified in such agreement or instrument, if the effect of such event or condition is to enable orpermit the holder or holders of any such Indebtedness to cause such Indebtedness to become due, or require the prepayment,repurchase, redemption or defeasance thereof, prior to its stated maturity date (other than by a regularly scheduled requiredprepayment or redemption); or any such Indebtedness (including Balance Sheet ABS Debt) shall be declared to be due and payable,or required to be prepaid or redeemed (other than by a regularly scheduled required prepayment or redemption), purchased ordefeased, or an offer to prepay, redeem, purchase or defease such Indebtedness (including Balance Sheet ABS Debt) shall berequired to be made, in each case prior to the stated maturity thereof. Notwithstanding the foregoing, none of the following eventsshall constitute a Default under this clause (d) unless such event results in the acceleration of other Indebtedness of a Borrower orany Material Subsidiary in an aggregate principal amount of more than $125,000,000: (i) any secured Indebtedness becoming dueas a result of the voluntary sale or transfer of the property or assets securing such Indebtedness, (ii) any change of control offermade within 60 days after an acquisition with respect to, and effectuated pursuant to, Indebtedness of an acquired business, (iii) anydefault under Indebtedness of an acquired business if such default is cured, or such Indebtedness is repaid, within 60 days after theacquisition of such business so long as no other creditor accelerates or commences any kind of enforcement action in respect ofsuch Indebtedness or (iv) mandatory prepayment requirements arising from the receipt of net cash proceeds from debt, dispositions(including casualty losses, governmental takings and other involuntary dispositions), equity issues or excess cash flow, in each casepursuant to Indebtedness of an acquired business.(e) Bankruptcy Events, Etc. Any Borrower or any Material Subsidiary shall generally not pay its debts as such debtsbecome due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit ofcreditors; or any proceeding shall be instituted by or against any Borrower or any Material Subsidiaries seeking to adjudicate it abankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, orcomposition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking theentry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantialpart of its Property and, in the case of any such proceeding instituted against it (but not instituted by it), either such proceeding shallremain undismissed for a period of sixty (60) days, or any of the actions sought in such proceeding (including, without limitation,the entry of an order for relief against, or the appointment of a receiver, trustee, custodian or other similar official for, it or for anysubstantial part of its Property) shall occur; or any such Borrower or any such Material Subsidiary shall take any corporate action toauthorize any of the actions set forth above in this Section 7.1(e).48(f) Monetary Judgments. Judgments or orders for the payment of money in excess of $125,000,000 in the aggregate shallbe rendered against any Borrower or any Material Subsidiary with respect to which (i) enforcement proceedings shall have beencommenced by any creditor upon such judgments or orders or (ii) there shall be any period of ten (10) consecutive days duringwhich a stay of enforcement of such judgments or orders, by reason of a pending appeal or otherwise, shall not be in effect;provided, however, that any such judgment or order shall not be a Default or included in the calculation of the aggregate amount ofjudgments or orders under this Section 7.1(f) if and for so long as (i) the amount of such judgment or order is covered by a validand binding policy of insurance between the defendant and the insurer covering payment thereof and (ii) such insurer, which shallbe rated at least “A” by A.M. Best Company, has been notified of, and has not disputed the claim made for payment of, the amountof such judgment or order.(g) Non-Monetary Judgments. Any non-monetary judgment or order shall be rendered against any Borrower or anyMaterial Subsidiary that would be reasonably expected to have a Material Adverse Effect, and there shall be any period of ten (10)consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shallnot be in effect.(h) Change of Control. A Change of Control shall occur.(i) ERISA. (i) The occurrence of any ERISA Event; (ii) the partial or complete withdrawal of Harley or any of its ERISAAffiliates from a Multiemployer Plan; or (iii) the reorganization or termination of a Multiemployer Plan, and in each such case underthis Section 7.1(i) such event or circumstance has occurred or could reasonably be expected to result in a Material Adverse Effect.(j) Guaranty Default. Unless the Guarantor has merged or consolidated with another Company as permitted under Section6.2.3, the Guarantor shall terminate, revoke, refuse to perform or otherwise breach any of its guaranty and other obligationscontained in Article XII, or such guaranty shall otherwise become unenforceable for any reason.(k) Support Agreement Default. Harley shall terminate, revoke, refuse to perform or otherwise breach any of itsobligations contained in the Support Agreement or such Support Agreement or any part thereof shall terminate or otherwise becomeunenforceable for any reason.A Default shall be deemed “continuing” until cured or until waived in writing in accordance with Section 8.3.ARTICLE VIII ACCELERATION, DEFAULTING LENDERS; WAIVERS, AMENDMENTS AND REMEDIES8.1 Remedies.(a) Termination of Commitments; Acceleration. If any Default described in Section 7.1(e) occurs with respect to anyBorrower, the obligations of the Lenders to make Loans hereunder shall automatically terminate and the Obligations shallimmediately become due and payable without any election or action on the part of the Global Administrative Agent or any Lender.If any other Default occurs, the Required Lenders may (i) terminate the obligations of the Lenders to make Loans hereunder or (ii)declare the Obligations to be due and payable, or both, and upon any declaration under clause (ii), the Commitments shall terminateand the Obligations shall become immediately due and payable, without presentment, demand, protest or notice of any kind, all ofwhich each Borrower expressly waives.49(b) Rescission. If, at any time after termination of the Lenders’ obligations to make Loans but before acceleration of thematurity of the Loans, the relevant Borrower shall pay all arrears of interest and all payments on account of principal of the Loanswhich shall have become due otherwise than by acceleration (with interest on principal and, to the extent permitted by law, onoverdue interest, at the rates specified in this Agreement) and all Defaults and Unmatured Defaults (other than nonpayment ofprincipal of and accrued interest on the Loans due and payable solely by virtue of acceleration) shall be remedied or waivedpursuant to Section 8.3, then upon the written consent of the Required Lenders and written notice to Harley, the termination ofLenders’ respective obligations to make Loans or the aforesaid acceleration and its consequences may be rescinded and annulled;but such action shall not affect any subsequent Default or Unmatured Default or impair any right or remedy consequent thereon.The provisions of the preceding sentence are intended merely to bind the Lenders to a decision which may be made at the electionof the Required Lenders; they are not intended to benefit any Borrower and do not give any Borrower the right to require theLenders to rescind or annul any termination of the aforesaid obligations of the Lenders or any acceleration hereunder, even if theconditions set forth herein are met.8.2 Defaulting Lender. In the event that any Lender fails to fund its Pro Rata Share of any Syndicated GlobalAdvance requested or deemed requested by the applicable Borrower which such Lender is obligated to fund under the termsof this Agreement (the funded portion of such Advance being hereinafter referred to as a “Non Pro Rata Loan”) or anyLender otherwise becomes a Defaulting Lender, until the earlier of such Lender’s cure of such failure and the termination ofthe Commitments, the proceeds of all amounts thereafter repaid to the Global Administrative Agent by any Borrower andotherwise required to be applied to such Lender’s share of all other Obligations pursuant to the terms of this Agreement shallbe advanced to the applicable Borrower by the Global Administrative Agent (“Cure Loans”) on behalf of such Lender tocure, in full or in part, such failure by such Lender, but shall nevertheless be deemed to have been paid to such Lender insatisfaction of such other Obligations. Notwithstanding anything in this Agreement to the contrary:(i) the foregoing provisions of this Section 8.2 shall apply only with respect to the proceeds of payments ofObligations and shall not affect the conversion or continuation of Loans pursuant to Section 2.8;(ii) any Defaulting Lender shall be deemed to have cured its failure to fund its Pro Rata Share of any SyndicatedGlobal Advance at such time as an amount equal to such Defaulting Lender’s original Pro Rata Share of the requested principalportion of such Advance is fully funded to the applicable Borrower, whether made by such Defaulting Lender itself or byoperation of the terms of this Section 8.2, and whether or not the Non Pro Rata Loan with respect thereto has been repaid,converted or continued;(iii) amounts advanced to any Borrower to cure, in full or in part, any such Defaulting Lender’s failure to fund its ProRata Share of any Syndicated Global Advance shall bear interest at the rate applicable to Syndicated Global Loans which areBase Rate Loans, in effect from time to time, and for all other purposes of this Agreement shall be treated as if they were BaseRate Loans;(iv) regardless of whether or not a Default has occurred or is continuing, and notwithstanding the instructions of anyBorrower as to its desired application, all repayments of principal which, in accordance with the other terms of this Agreement,would be applied to the50outstanding Base Rate Loans shall be applied first, ratably to all Base Rate Loans constituting Non Pro Rata Loans, second,ratably to Base Rate Loans other than those constituting Non Pro Rata Loans or Cure Loans and, third, ratably to Base RateLoans constituting Cure Loans;(v) for so long as and until the earlier of any such Defaulting Lender’s cure of all matters that caused such Lender tobe a Defaulting Lender and the termination of the Commitments, the term “Required Lenders” for purposes of this Agreementshall mean Lenders (excluding all Defaulting Lenders) whose Pro Rata Shares represent greater than fifty percent (50%) of theaggregate Pro Rata Shares of such Lenders; and(vi) for so long as and until any such Defaulting Lender’s cure of all matters that caused such Lender to be aDefaulting Lender, such Defaulting Lender shall not be entitled to any fees, and no fees shall accrue, with respect to itsCommitment.8.3 Amendments. Subject to the provisions of this Article VIII, the Required Lenders (or the Global AdministrativeAgent with the consent in writing of the Required Lenders) and the Borrowers may enter into agreements supplementalhereto for the purpose of adding or modifying any provisions to the Loan Documents or changing in any manner the rights ofthe Lenders or the Borrowers hereunder or waiving any Default hereunder; provided, however, that no such supplementalagreement shall, without the consent of each Lender directly affected thereby:(i) postpone or extend the Termination Date, the Maturity Date (except as permitted under Section 2.19) or any otherdate fixed for any payment of principal of, or interest on, the Loans or any fees or other amounts payable to such Lender(except with respect to a waiver of the application of the default rate of interest pursuant to Section 2.11 hereof) or postpone thescheduled date of expiration of any Commitment of such Lender;(ii) reduce the principal amount of any Loans, or reduce the rate or amount of or extend the time of payment ofinterest or fees thereon or other amounts payable hereunder (except with respect to a waiver of the application of the default rateof interest pursuant to Section 2.11 hereof);(iii) reduce the percentage specified in the definition of Required Lenders or any other provision hereof specifying thepercentage or number of Lenders to be the applicable percentage or number in this Agreement to act on specified matters oramend the definitions of “Required Lenders” or “Pro Rata Share”;(iv) increase the amount of the Commitment of any Syndicated Global Lender or increase any Lender’s Pro RataShare;(v) permit any Borrower to assign its rights under this Agreement;(vi) notwithstanding anything to the contrary in the Support Agreement, release Harley from any of its obligationsunder the Support Agreement or otherwise terminate the Support Agreement;(vii) release the Guarantor other than in accordance with the terms of the Loan Documents;51(viii) alter the manner in which payments or prepayments of principal, interest or other amounts under the LoanDocuments shall be applied as among the Lenders; or(ix) amend this Section 8.3.No amendment of any provision of this Agreement relating to the Global Administrative Agent shall be effective without thewritten consent of the Global Administrative Agent. The Global Administrative Agent may waive payment of the fee required underSection 13.3(B) without obtaining the consent of any of the Lenders or Borrowers.If, in connection with any proposed amendment, waiver or consent requiring the consent of “the Lenders”, “each Lender” or“each Lender directly affected thereby,” the consent of the Required Lenders is obtained, but the consent of other necessary Lenders isnot obtained (any such Lender whose consent is necessary but not obtained being referred to herein as a “Non-Consenting Lender”),then Harley may (at its sole cost and expense) elect to replace a Non-Consenting Lender as a Lender party to this Agreement; providedthat, concurrently with such replacement, (i) another bank or other entity which is reasonably satisfactory to Harley and the GlobalAdministrative Agent shall agree, as of such date, to purchase for cash the Loans and other Obligations due to the Non-ConsentingLender pursuant to an assignment and assumption and to become a Lender for all purposes under this Agreement and to assume allobligations of the Non-Consenting Lender to be terminated as of such date and to comply with the requirements of Section 13.3(A), andwith Harley or such replacement Lender paying the $3,500 processing fee required in Section 13.3(B) and (ii) Harley shall pay to suchNon-Consenting Lender in same day funds on the day of such replacement (1) all principal, interest, fees and other amounts thenaccrued but unpaid to such Non-Consenting Lender by any Borrower hereunder to and including the date of termination, includingwithout limitation payments due to such Non-Consenting Lender under Sections 3.1, 3.2 and 3.5, and (2) an amount, if any, equal tothe payment which would have been due to such Lender on the day of such replacement under Section 3.4 had the Loans of such Non-Consenting Lender been prepaid on such date rather than sold to the replacement Lender.Notwithstanding anything herein to the contrary, as to any amendment or amendment and restatement otherwise approved inaccordance with this Section, it shall not be necessary to obtain the consent or approval of any Lender that, upon giving effect to suchamendment or amendment and restatement, would have no Commitment or outstanding Loans so long as such Lender receivespayment in full of the principal of and interest accrued on each Loan made by, and all other amounts owing to, such Lender or accruedfor the account of such Lender under this Agreement and the other Loan Documents at the time such amendment, amendment andrestatement or other modification becomes effective.8.4 Preservation of Rights. No delay or omission of the Lenders or the Global Administrative Agent to exercise anyright under the Loan Documents shall impair such right or be construed to be a waiver of any Default or an acquiescencetherein, and the making of a Loan notwithstanding the existence of a Default or the inability of any Borrower to satisfy theconditions precedent to such Loan shall not constitute any waiver or acquiescence. Any single or partial exercise of any suchright shall not preclude other or further exercise thereof or the exercise of any other right, and no waiver, amendment orother variation of the terms, conditions or provisions of the Loan Documents whatsoever shall be valid unless in writingsigned by the Lenders required pursuant to Section 8.3, and then only to the extent in such writing specifically set forth. Allremedies contained in the Loan Documents or by law afforded52shall be cumulative and all shall be available to the Global Administrative Agent and the Lenders until the Obligations havebeen paid in full.ARTICLE IX GENERAL PROVISIONS9.1 Survival of Representations. All representations and warranties of the relevant Companies contained in thisAgreement shall survive delivery of any Notes and the making of the Loans herein contemplated.9.2 Governmental Regulation. Anything contained in this Agreement to the contrary notwithstanding, no Lender shallbe obligated to extend credit to any Borrower in violation of any limitation or prohibition provided by any applicable statuteor regulation.9.3 Headings. Section headings in the Loan Documents are for convenience of reference only, and shall not govern theinterpretation of any of the provisions of the Loan Documents.9.4 Entire Agreement. The Loan Documents embody the entire agreement and understanding among the Companies,the Global Administrative Agent and the Lenders and supersede all prior agreements and understandings among theCompanies, the Global Administrative Agent and the Lenders relating to the subject matter thereof.9.5 Several Obligations; Benefits of this Agreement. The respective obligations of the Lenders hereunder are several andnot joint and no Lender shall be the partner or agent of any other. The failure of any Lender to perform any of its obligationshereunder shall not relieve any other Lender from any of its obligations hereunder. This Agreement shall not be construed soas to confer any right or benefit upon any Person other than the parties to this Agreement and their respective successors andassigns.9.6 Expenses; Indemnification.(A) Expenses. The Borrowers shall reimburse the Global Administrative Agent and the Arrangers for any reasonable costs,internal charges and out-of-pocket expenses (including attorneys’ and paralegals’ fees and time charges of attorneys and paralegals foreach such Person, which attorneys and paralegals may be employees of such Persons) paid or incurred by such Persons in connectionwith the preparation, negotiation, execution, delivery, syndication, distribution (including via the internet), review, amendment,modification, and administration of the Loan Documents. The Borrowers also agree to reimburse the Global Administrative Agent andthe Lenders for any costs, internal charges and out-of-pocket expenses (including attorneys’ and paralegals’ fees and time charges ofattorneys and paralegals for each such Person, which attorneys and paralegals may be employees of such Persons) paid or incurred byeach such Person in connection with the collection of the Obligations and enforcement of the Loan Documents; provided that theBorrowers shall not be obligated to so reimburse for more than one primary law firm (and, in addition to such primary law firm, onelocal counsel engaged in each relevant jurisdiction by such primary law firm) as counsel for the Global Administrative Agent and morethan one primary law firm (and, in addition to such primary law firm, one local counsel engaged in each relevant jurisdiction by suchprimary law firm) as counsel for the Lenders in connection with such collection or enforcement.53(B) Indemnity. Each of the Borrowers further agrees to defend, protect, indemnify, and hold harmless the GlobalAdministrative Agent, the Arrangers, each and all of the Lenders, and each of their respective Affiliates, and each of such Person’srespective officers, directors, employees, attorneys and agents (including, without limitation, those retained in connection with thesatisfaction or attempted satisfaction of any of the conditions set forth in Article IV) (collectively, the “Indemnitees”) from and againstany and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, costs, expenses of any kind or naturewhatsoever (including, without limitation, the fees and disbursements of counsel for such Indemnitees in connection with anyinvestigative, administrative or judicial proceeding, whether or not such Indemnitees shall be designated a party thereto), imposed on,incurred by, or asserted against such Indemnitees in any manner relating to or arising out of:(i) this Agreement, the other Loan Documents, or any act, event or transaction related or attendant thereto, the makingof the Loans hereunder, the management of such Loans or the use or intended use of the proceeds of the Loans; or(ii) any liabilities, obligations, responsibilities, losses, damages, personal injury, death, punitive damages, economicdamages, consequential damages, treble damages, intentional, willful or wanton injury, damage or threat to the environment,natural resources or public health or welfare, costs and expenses (including, without limitation, attorney, expert and consultingfees and costs of investigation, feasibility or remedial action studies), fines, penalties and monetary sanctions, interest, direct orindirect, known or unknown, absolute or contingent, past, present or future relating to violation of any Environmental Lawarising from or in connection with the past, present or future operations of the Companies, their Subsidiaries or any of theirrespective predecessors in interest, or, the past, present or future environmental, health or safety condition of any respectiveProperty of the Companies or their Subsidiaries, the presence of asbestos‑containing materials at any respective Property of theCompanies or their Subsidiaries or the Release or threatened Release of any contaminant into the environment (collectively, the“Indemnified Matters”);provided, however, no Borrower shall have any obligation to an Indemnitee hereunder with respect to Indemnified Matters tothe extent caused solely by or resulting solely from the bad faith, willful misconduct or gross negligence of such Indemnitee or suchIndemnitee’s material breach of its obligations under this Agreement, in each case as determined by the final non-appealable judgmentof a court of competent jurisdiction. If the undertaking to indemnify, pay and hold harmless set forth in the preceding sentence may beunenforceable because it is violative of any law or public policy, the Borrowers shall contribute the maximum portion which it ispermitted to pay and satisfy under applicable law, to the payment and satisfaction of all Indemnified Matters incurred by theIndemnitees.(C) Waiver of Certain Claims; Settlement of Claims. Each of the Companies further agrees to assert no claim against any of theIndemnitees on any theory of liability for consequential, special, indirect, exemplary or punitive damages. No settlement shall beentered into by any Company or any of their Subsidiaries with respect to any claim, litigation, arbitration or other proceeding relating toor arising out of the transaction evidenced by this Agreement or the other Loan Documents (whether or not the Global AdministrativeAgent, any Lender or any Indemnitee is a party thereto) unless such settlement releases all Indemnitees from any and all liability withrespect thereto.(D) Survival of Agreements. The obligations and agreements of the Companies under this Section 9.6 shall survive thetermination of this Agreement. Any demand for payment pursuant to this Section 9.6 shall be accompanied by a statement setting forthsuch amounts due in reasonable detail.549.7 Numbers of Documents. All statements, notices, closing documents, and requests hereunder shall be furnished tothe Global Administrative Agent with sufficient counterparts so that the Global Administrative Agent may furnish one to eachof the relevant Lenders.9.8 Accounting. Except as provided to the contrary herein, all accounting terms used herein shall be interpreted andall accounting determinations hereunder shall be made in accordance with Agreement Accounting Principles.Notwithstanding any other provision contained herein, all terms of an accounting or financial nature used herein shall beconstrued, and all computations of amounts and ratios referred to herein shall be made (i) without giving effect to any electionunder Accounting Standards Codification 825-10-25 (or any other Accounting Standards Codification or FinancialAccounting Standard having a similar result or effect) to value any Indebtedness or other liabilities of Harley or anySubsidiary of Harley at “fair value”, as defined therein, (ii) without giving effect to any treatment of Indebtedness in respect ofconvertible debt instruments under Accounting Standards Codification 470-20 (or any other Accounting StandardsCodification or Financial Accounting Standard having a similar result or effect) to value any such Indebtedness in a reducedor bifurcated manner as described therein, and such Indebtedness shall at all times be valued at the full stated principalamount thereof and (iii) for purposes of calculating shareholders’ equity, by excluding all accumulated other comprehensiveincome (or loss) as shown on the most recent Consolidated balance sheet of Harley or HDFS, as applicable, delivered pursuantto Section 6.1.9(a) or 6.1.9(b) or, if prior to the date of the delivery of the first financial statements to be delivered pursuant toSection 6.1.9(a) or 6.1.9(b), the most recent financial statements referred to in Section 5.1.5. Notwithstanding any otherprovision of this Agreement to the contrary, except for the purpose of preparing financial statements in accordance withAgreement Accounting Principles, the determination of whether a lease constitutes a capital or finance lease, on the one hand,or an operating lease, on the other hand, and whether obligations arising under a lease are required to be capitalized on thebalance sheet of the lessee thereunder and/or recognized as interest expense, shall be determined by reference to AgreementAccounting Principles as in effect on the Closing Date without giving effect to the phase-in of the effectiveness of anyamendments to Agreement Accounting Principles that have been adopted as of the Closing Date.9.9 Severability of Provisions. Any provision in any Loan Document that is held to be inoperative, unenforceable, orinvalid in any jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable, or invalid without affecting theremaining provisions in that jurisdiction or the operation, enforceability, or validity of that provision in any other jurisdiction,and to this end the provisions of all Loan Documents are declared to be severable.9.10 Nonliability of Lenders. The relationship among the Companies and the Lenders and the Global AdministrativeAgent shall be solely that of borrower or guarantor and lender. Neither the Global Administrative Agent nor any Lendershall have any fiduciary responsibilities to any of the Companies. Neither the Global Administrative Agent nor any Lenderundertakes any responsibility to any of the Companies to review or inform any of the Companies of any matter in connectionwith any phase of any of the Companies’ business or operations.559.11 CHOICE OF LAW AND SUBMISSION TO JURISDICTION. THE LOAN DOCUMENTS (OTHER THAN THOSECONTAINING A CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED INACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, BUT GIVING EFFECTTO FEDERAL LAWS APPLICABLE TO BANKS. EACH COMPANY HEREBY IRREVOCABLY ANDUNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTIONOF THE SUPREME COURT OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY, BOROUGH OFMANHATTAN, AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEWYORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISINGOUT OF OR RELATING TO THIS AGREEMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANYJUDGMENT, AND EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLYAGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD ANDDETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE EXTENT PERMITTED BY LAW, IN SUCHFEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCHACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONSBY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THISAGREEMENT SHALL AFFECT ANY RIGHT THAT THE GLOBAL ADMINISTRATIVE AGENT OR ANY LENDERMAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENTAGAINST ANY COMPANY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.9.12 WAIVER OF JURY TRIAL. EACH OF THE COMPANIES, THE GLOBAL ADMINISTRATIVE AGENTAND EACH LENDER HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING,DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE)IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THERELATIONSHIP ESTABLISHED THEREUNDER. EACH OF THE PARTIES HERETO AGREES AND CONSENTSTHAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIALWITHOUT A JURY AND THAT ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPYOF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIESHERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.9.13 No Strict Construction. The parties hereto have participated jointly in the negotiation and drafting of thisAgreement and the other Loan Documents. In the event an ambiguity or question of intent or interpretation arises, thisAgreement and the other Loan Documents shall be construed as if drafted jointly by the parties hereto and no presumptionor burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of thisAgreement or any of the other Loan Documents.569.14 USA PATRIOT ACT. Each Lender that is subject to the requirements of the USA Patriot Act (Title III of Pub. L.107-56 (signed into law October 26, 2001)) (the “Act”) hereby notifies each Company that pursuant to the requirements of theAct, it is required to obtain, verify and record information that identifies such Company, which information includes thename and address of such Company and other information that will allow such Lender to identify such Company inaccordance with the Act.9.15 Service of Process. Each party to this Agreement irrevocably consents to service of process in the mannerprovided for notices in Article XIV. Nothing in this Agreement or any other Loan Document will affect the right of any partyto this Agreement to serve process in any other manner permitted by law.9.16 Acknowledgement and Consent to Bail-In of EEA Financial Institutions. Notwithstanding anything to the contrary in anyLoan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges thatany liability of any EEA Financial Institution arising under any Loan Document may be subject to the Write-Down and ConversionPowers of an EEA Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:(A) the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liabilities arisinghereunder which may be payable to it by any party hereto that is an EEA Financial Institution; and(B) the effects of any Bail-In Action on any such liability, including, if applicable:(i) a reduction in full or in part or cancellation of any such liability;(ii) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEAFinancial Institution, its parent entity, or a bridge institution that may be issued to it or otherwise conferred on it, and that suchshares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under thisAgreement or any other Loan Document; or(iii) the variation of the terms of such liability in connection with the exercise of the write-down and conversionpowers of any EEA Resolution Authority.To the extent not prohibited by applicable law, rule or regulation, each Lender shall notify Harley and the Global Administrative Agentif it has become the subject of a Bail-In Action (or any case or other proceeding in which a Bail-In Action may occur).ARTICLE X THE GLOBAL ADMINISTRATIVE AGENT10.1 Appointment; Nature of Relationship. JPMorgan Chase Bank, N.A. is appointed by the Lenders (each reference inthis Article X to a Lender being in its capacity as a Lender) as the Global Administrative Agent hereunder and under eachother Loan Document, and each of the Lenders irrevocably authorizes the Global Administrative Agent to act as thecontractual representative of such Lender with the rights and duties expressly set forth herein and in the other LoanDocuments. The Global Administrative Agent agrees to act as such contractual representative upon the express conditionscontained in this Article X. Notwithstanding the57use of the defined term “Global Administrative Agent”, it is expressly understood and agreed that the Global AdministrativeAgent shall not have any fiduciary responsibilities to any Lender by reason of this Agreement and that the GlobalAdministrative Agent is merely acting as the representative of the Lenders with only those duties as are expressly set forth inthis Agreement and the other Loan Documents. In its capacity as the Lenders’ contractual representative, the GlobalAdministrative Agent (i) does not assume any fiduciary duties to any of the Lenders, and (ii) is acting as an independentcontractor, the rights and duties of which are limited to those expressly set forth in this Agreement and the other LoanDocuments. Each of the Lenders agrees to assert no claim against the Global Administrative Agent on any agency theory orany other theory of liability for breach of fiduciary duty, all of which claims each Lender waives.10.2 Powers. The Global Administrative Agent shall have and may exercise such powers under the Loan Documentsas are specifically delegated to the Global Administrative Agent by the terms of each thereof, together with such powers as arereasonably incidental thereto. The Global Administrative Agent shall have no implied duties or fiduciary duties to theLenders, or any obligation to the Lenders to take any action hereunder or under any of the other Loan Documents exceptany action specifically provided by the Loan Documents required to be taken by the Global Administrative Agent. The GlobalAdministrative Agent shall have and may exercise such powers under the Loan Documents as are specifically delegated to theGlobal Administrative Agent by the terms of each thereof, together with such powers as are reasonably incidental thereto.The Global Administrative Agent shall have no implied duties or fiduciary duties to the Lenders, or any obligation to theLenders to take any action hereunder or under any of the other Loan Documents except any action specifically provided bythe Loan Documents required to be taken by the Global Administrative Agent. Without limiting the foregoing, the GlobalAdministrative Agent hereby agrees to provide the notice contemplated by Section 7.1(b) if so requested by the RequiredLenders.10.3 General Immunity. Neither the Global Administrative Agent nor any of its directors, officers, agents or employeesshall be liable to any of the Borrowers or Lenders for any action taken or omitted to be taken by it or them hereunder orunder any other Loan Document or in connection herewith or therewith except to the extent such action or inaction is foundin a final non-appealable judgment by a court of competent jurisdiction to have arisen solely from (i) the gross negligence orwillful misconduct of such Person or (ii) breach of contract by such Person with respect to the Loan Documents.10.4 No Responsibility for Loans, Creditworthiness, Recitals, Etc. Neither the Global Administrative Agent nor any of itsdirectors, officers, agents or employees shall be responsible for or have any duty to ascertain, inquire into, or verify (i) anystatement, warranty or representation made in connection with any Loan Document or any borrowing hereunder; (ii) theperformance or observance of any of the covenants or agreements of any obligor under any Loan Document; (iii) thesatisfaction of any condition specified in Article IV (other than to confirm receipt of items expressly required to be delivered tothe Global Administrative Agent on the Closing Date pursuant to Section 4.1); (iv) the existence or possible existence of anyDefault or (v) the validity, effectiveness or genuineness of any Loan Document or any58other instrument or writing furnished in connection therewith. The Global Administrative Agent shall not be responsible toany Lender for any recitals, statements, representations or warranties herein or in any of the other Loan Documents, for theexecution, effectiveness, genuineness, validity, legality, enforceability, collectibility, or sufficiency of this Agreement or any ofthe other Loan Documents or the transactions contemplated thereby, or for the financial condition of Harley, any guarantorof any or all of the Obligations, any Company or any of their Subsidiaries.10.5 Action on Instructions of Lenders. The Global Administrative Agent shall in all cases be fully protected in acting,or in refraining from acting, hereunder and under any other Loan Document in accordance with written instructions signedby the Required Lenders (except with respect to actions that require the consent of all of the Lenders as provided in Section8.3), and such instructions and any action taken or failure to act pursuant thereto shall be binding on all of the Lenders andon all holders of Notes. The Global Administrative Agent shall be fully justified in failing or refusing to take any actionhereunder and under any other Loan Document unless it shall first be indemnified to its satisfaction by the Lenders pro rataagainst any and all liability, cost and expense that it may incur by reason of taking or continuing to take any such action.10.6 Employment of the Global Administrative Agent and Counsel. The Global Administrative Agent may execute any ofits duties hereunder and under any other Loan Document by or through employees, agents, affiliates and attorneys-in-fact,and shall not be answerable to the Lenders, except as to money or securities received by it or its authorized agents, for thedefault or misconduct of any such agents or attorneys-in-fact selected by it with reasonable care. The Global AdministrativeAgent shall be entitled to advice of counsel concerning the contractual arrangement among the Global Administrative Agentand the Lenders and all matters pertaining to the Global Administrative Agent’s duties hereunder and under any other LoanDocument.10.7 Reliance on Documents; Counsel. The Global Administrative Agent shall be entitled to rely upon any Note, notice,consent, certificate, affidavit, letter, telegram, statement, paper or document believed by it to be genuine and correct and tohave been signed or sent by the proper person or persons, and, in respect to legal matters, upon the opinion of counselselected by the Global Administrative Agent, which counsel may be employees of the Global Administrative Agent.10.8 The Global Administrative Agent’s Reimbursement and Indemnification. The Lenders agree to reimburse andindemnify the Global Administrative Agent ratably in proportion to their respective Pro Rata Shares (determined at the timesuch indemnity is sought) (i) for any amounts not reimbursed by any Borrower for which the Global Administrative Agent isentitled to reimbursement or indemnification by any Borrower under the Loan Documents, (ii) for any other expensesincurred by the Global Administrative Agent on behalf of the Lenders in connection with the preparation, execution, delivery,administration, distribution (including via the internet) and enforcement of the Loan Documents, including as a result of adispute among the Lenders or between any Lender and the Global Administrative Agent,59and (iii) for any liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements ofany kind and nature whatsoever which may be imposed on, incurred by or asserted against the Global Administrative Agentin any way relating to or arising out of the Loan Documents or any other document delivered in connection therewith or thetransactions contemplated thereby, or the enforcement of any of the terms thereof or of any such other documents, includingas a result of a dispute among the Lenders or between any Lender and the Global Administrative Agent; provided that noLender shall be liable for any of the foregoing to the extent any of the foregoing is found in a final non-appealable judgmentby a court of competent jurisdiction to have arisen solely from the gross negligence or willful misconduct of the GlobalAdministrative Agent.10.9 Rights as a Lender. With respect to its Commitment, Loans made by it and any Notes issued to it, the GlobalAdministrative Agent shall have the same rights and powers hereunder and under any other Loan Document as any Lenderand may exercise the same as though it were not the Global Administrative Agent, as applicable, and the term “Lender” or“Lenders”, as applicable, shall, unless the context otherwise indicates, include the Global Administrative Agent in itsindividual capacity. The Global Administrative Agent may accept deposits from, lend money to and generally engage in anykind of trust, debt, equity or other transaction, in addition to those contemplated by this Agreement or any other LoanDocument, with Harley, any Company or any of their Subsidiaries in which such Person is not prohibited hereby fromengaging with any other Person.10.10 Lender Credit Decision. Each Lender acknowledges that it has, independently and without reliance upon theGlobal Administrative Agent or any other Lender and based on the financial statements prepared by the Borrowers and suchother documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into thisAgreement and the other Loan Documents. Each Lender also acknowledges that it will, independently and without relianceupon the Global Administrative Agent or any other Lender and based on such documents and information as it shall deemappropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement and theother Loan Documents.10.11 Successor Global Administrative Agent. The Global Administrative Agent may resign at any time by givingwritten notice thereof to the Lenders and the Borrowers. Upon any such resignation, the Required Lenders shall have theright to appoint, on behalf of the Lenders, a successor Global Administrative Agent. If no successor Global AdministrativeAgent shall have been so appointed by the Required Lenders and shall have accepted such appointment within thirty daysafter the retiring Global Administrative Agent’s giving notice of resignation, then the retiring Global Administrative Agentmay appoint, on behalf of the Lenders, a successor Global Administrative Agent. Notwithstanding anything herein to thecontrary, so long as no Default has occurred and is continuing, each such successor Global Administrative Agent shall besubject to approval by Harley, which approval shall not be unreasonably withheld. Such successor Global AdministrativeAgent shall be a commercial bank (including a branch thereof) having capital and retained earnings of at least $500,000,000.Upon the acceptance of any appointment as the Global Administrative Agent60hereunder by a successor Global Administrative Agent, such successor Global Administrative Agent shall thereupon succeedto and become vested with all the rights, powers, privileges and duties of the retiring Global Administrative Agent, and theretiring Global Administrative Agent shall be discharged from its duties and obligations hereunder and under the other LoanDocuments. After any retiring Global Administrative Agent’s resignation hereunder as the Global Administrative Agent, theprovisions of this Article X shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by itwhile it was acting as the Global Administrative Agent hereunder and under the other Loan Documents.10.12 Co-Agents, Documentation Agent, Syndication Agent, etc. None of the Lenders, if any, identified in this Agreementas a “co-agent”, “documentation agent” or “syndication agent” shall have any right, power, obligation, liability, responsibilityor duty under this Agreement other than those applicable to all Lenders as such. Without limiting the foregoing, none of suchLenders shall have or be deemed to have a fiduciary relationship with any Lender. Each Lender hereby makes the sameacknowledgments with respect to such Lenders as it makes with respect to the Global Administrative Agent in Section 10.10.ARTICLE XI SETOFF; RATABLE PAYMENTS11.1 Setoff. In addition to, and without limitation of, any rights of the Lenders under applicable law, if any Defaultoccurs and is continuing, any indebtedness from any Lender to any Company (including all account balances, whetherprovisional or final and whether or not collected or available, but excluding deposits held in a trustee, fiduciary, agency orsimilar capacity or otherwise for the benefit of a third party) may be offset and applied toward the payment of the Obligationsowing to such Lender and the other Obligations, whether or not the Obligations, or any part hereof, shall then be due. EachLender agrees promptly to notify the Borrowers and the Global Administrative Agent after any such set-off and applicationmade by such Lender; provided further that any failure to give such notice shall not affect the validity of such offset andapplication under this Section 11.1.11.2 Ratable Payments. If any Syndicated Global Lender, whether by setoff or otherwise, has payment made to it uponits Syndicated Global Loans (other than payments received pursuant to Sections 3.1, 3.2, 3.4 or 3.5) in a greater proportionthan that received by any other Syndicated Global Lender, such Syndicated Global Lender agrees, promptly upon demand,to purchase a portion of the Syndicated Global Loans held by the other Syndicated Global Lenders so that after suchpurchase each Syndicated Global Lender will hold its ratable proportion of Syndicated Global Loans. If any SyndicatedGlobal Lender, whether in connection with setoff or amounts which might be subject to setoff or otherwise, receives collateralor other protection for its Obligations or such amounts which may be subject to setoff, such Syndicated Global Lender agrees,promptly upon demand, to take such action necessary such that all Syndicated Global Lenders share in the benefits of suchcollateral ratably in proportion to their Syndicated Global Loans. In case any such payment is disturbed by legal process, orotherwise, appropriate further adjustments shall be made.ARTICLE XII GUARANTEE61In order to induce the Lenders to extend credit hereunder, but subject to the provisions of the final paragraph of this Article XII,the Guarantor fully and unconditionally and irrevocably guarantees, as a primary obligor and not merely as a surety, the Obligations(including, without limitation, interest accruing hereunder after the commencement of any case under the Bankruptcy Code or any otherbankruptcy-related rules or legislation in any country in which a Company is organized, whether or not allowed as a claim in suchcase). The obligations of the Guarantor under this Article XII are sometimes referred to as the “Guarantee”. The Guarantor furtheragrees that the Obligations may be extended or renewed, in whole or in part, without notice to or further assent from it, and that it willremain bound upon its Guarantee hereunder notwithstanding any such extension or renewal of any Obligation.The Guarantor waives presentment to, demand of payment from and protest to any Borrower of any of the Obligations, and alsowaives notice of acceptance of its obligations and notice of protest for nonpayment. The obligations of the Guarantor hereunder shallnot be affected by the failure of any Lender or the Global Administrative Agent to assert any claim or demand or to enforce any right orremedy against any Borrower under the provisions of this Agreement or any of the other Loan Documents or otherwise, or, except asspecifically provided therein, by any rescission, waiver, amendment or modification of any of the terms or provisions of thisAgreement, any of the other Loan Documents or any other agreement.The Guarantor further agrees that its Guarantee hereunder constitutes a promise of payment when due and not merely ofcollection, and waives any right to require that any resort be had by any Lender to any balance of any deposit account or credit on thebooks of any Lender in favor of any Borrower or any other person.The Guarantor agrees that its obligations under this Guarantee shall be unconditional, irrespective of:(i) the validity, enforceability, avoidance, novation or subordination of any of the Obligations or any of the LoanDocuments;(ii) the absence of any attempt by, or on behalf of, any Lender or the Global Administrative Agent to collect, or to takeany other action to enforce, all or any part of the Obligations whether from or against any Borrower, any other guarantor of theObligations or any other Person;(iii) the election of any remedy by, or on behalf of, any Lender or the Global Administrative Agent with respect to allor any part of the Obligations;(iv) the waiver, consent, extension, forbearance or granting of any indulgence by, or on behalf of, any Lender or theGlobal Administrative Agent with respect to any provision of any of the Loan Documents;(v) the failure of the Global Administrative Agent to take any steps to perfect and maintain its security interest in, or topreserve its rights to, any security or collateral for the Obligations;(vi) the election by, or on behalf of, any one or more of the Lenders or the Global Administrative Agent in anyproceeding instituted under Chapter 11 of Title 11 of the United States Code (11 U.S.C. 101 et seq.) (the “Bankruptcy Code”)or other bankruptcy-related rules or legislation in any country in which a Company is organized, of the application ofSection 1111(b)(2) of the Bankruptcy Code;62(vii) any borrowing or grant of a security interest by any Company, as debtor‑in‑possession, under Section 364 of theBankruptcy Code or any other bankruptcy-related rules or regulations in any country in which a Borrower is organized;(viii) the disallowance, under Section 502 of the Bankruptcy Code or any other bankruptcy-related rules or regulationsin any country in which a Company is organized, of all or any portion of the claims of any of the Lenders or the GlobalAdministrative Agent for repayment of all or any part of the Obligations; or(ix) any other circumstance which might otherwise constitute a legal or equitable discharge or defense of anyBorrower or the Guarantor.The obligations of the Guarantor hereunder shall not be subject to any reduction, limitation, impairment or termination for anyreason, and shall not be subject to any defense or setoff, counterclaim, recoupment or termination whatsoever, by reason of theinvalidity, illegality or unenforceability of the Obligations, any impossibility in the performance of the Obligations or otherwise. TheLenders, either themselves or acting through the Global Administrative Agent, are authorized, without notice or demand and withoutaffecting the liability of the Guarantor hereunder, from time to time, (a) to renew, extend, accelerate or otherwise change the time forpayment of, or other terms relating to, all or any part of the Obligations, or to otherwise modify, amend or change the terms of any ofthe Loan Documents; (b) to accept partial payments on all or any part of the Obligations; (c) to take and hold security or collateral forthe payment of all or any part of the Obligations, this Guarantee, or any other guaranties of all or any part of the Obligations, (d) toexchange, enforce, waive and release any such security or collateral; (e) to apply such security or collateral and direct the order ormanner of sale thereof as in their discretion they may determine; (f) to settle, release, exchange, enforce, waive, compromise or collector otherwise liquidate all or any part of the Obligations, this Guarantee, any other guaranty of all or any part of the Obligations, and anysecurity or collateral for the Obligations or for any such guaranty.The Guarantor consents and agrees that none of the Lenders nor the Global Administrative Agent nor any Person acting for oron behalf of the Lenders or the Global Administrative Agent shall be under any obligation to marshall any assets in favor of theGuarantor or against or in payment of any or all of the Obligations. The Guarantor further agrees that, to the extent that any Borrower orany other guarantor of all or any part of the Obligations makes a payment or payments to any Lender or the Global AdministrativeAgent, or any Lender or the Global Administrative Agent receives any proceeds of collateral for all or any part of the Obligations,which payment or payments or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/orrequired to be repaid to any Borrower, the Guarantor, such other guarantor or any other Person, or their respective estates, trustees,receivers or any other party, under any bankruptcy law, state, provincial or federal law, common law or equitable cause, then, to theextent of such payment or repayment, the part of the Obligations which has been paid, reduced or satisfied by such amount shall bereinstated and continued in full force and effect as of the time immediately preceding such initial payment, reduction or satisfaction.In furtherance of the foregoing and not in limitation of any other right which the Global Administrative Agent or any Lendermay have at law or in equity against the Guarantor by virtue hereof, upon the failure of any Borrower to pay any of the Obligationswhen and as the same shall become due, whether at maturity, by acceleration, after notice of prepayment or otherwise, the Guarantorpromises to and will, upon receipt of written demand by the Global Administrative Agent, forthwith pay, or cause to be paid, in cash,the amount of such unpaid Obligations. The Guarantor further agrees that if payment in respect of any of the Obligations owed to anyLender shall be due at a place of payment other than as designated in63this Agreement and if, by reason of any Change in Law (as defined in Section 3.1), war or civil disturbance or other event, such placeof payment shall be impossible or, in the judgment of such Lender, not consistent with the protection of its rights or interests, then, atthe election of such Lender, the Guarantor shall make payment of such Obligation in the applicable place designated in this Agreement,and shall indemnify such Lender against any losses or expenses that it shall sustain as a result of such alternative payment.Until the Obligations have been paid in full in cash and the Maturity Date shall have occurred, the Guarantor (i) shall have noright of subrogation with respect to such Obligations and (ii) waive any right to enforce any remedy which the Lenders or the GlobalAdministrative Agent (or any of them) now have or may hereafter have against any Borrower, any endorser or any guarantor of all orany part of the Obligations or any other Person, and the Guarantor waives any benefit of, and any right to participate in, any security orcollateral given to the Lenders and the Global Administrative Agent (or any of them) to secure the payment or performance of all or anypart of the Obligations or any other liability of any Borrower to the Lenders or the Global Administrative Agent (or any of them).This Guarantee shall continue in full force and effect and may not be terminated or otherwise revoked until the Obligations shallhave been fully paid (in cash) and discharged and this Agreement and all financing arrangements between any Borrower, the GlobalAdministrative Agent and the Lenders pursuant to this Agreement shall have been terminated; provided that if the Guarantor is mergedor consolidated with another Company pursuant to Section 6.2.3 or if the capital stock of the Guarantor is sold, transferred or otherwisedisposed of in a transaction permitted pursuant to the terms of this Agreement (as in effect on the Closing Date), the Guarantor shall bereleased from its obligations under this Agreement without further action. If, notwithstanding the foregoing, the Guarantor shall haveany right under applicable law to terminate or revoke this Guarantee, the Guarantor agrees that such termination or revocation shall notbe effective until a written notice of such revocation or termination, specifically referring hereto, signed by the Guarantor, is actuallyreceived by the Global Administrative Agent. Such notice shall not affect the right and power of any of the Lenders or the GlobalAdministrative Agent to enforce rights arising prior to receipt thereof by the Global Administrative Agent. If any Lender grants loans ortakes other action after the Guarantor terminates or revokes this Guarantee but before the Global Administrative Agent receives suchwritten notice, the rights of such Lender with respect thereto shall be the same as if such termination or revocation had not occurred.The provisions of this Article XII shall remain in full force and effect, notwithstanding any termination of this Agreement, until theObligations shall have been fully paid (in cash) and discharged.Notwithstanding anything contained in this Article XII to the contrary, (i) the obligations of the Finco Guarantor under thisArticle XII shall be solely in respect of the Loans made to, and any other Obligations of, HDFS and (ii) the Guarantor shall not have anyobligations under this Article XII in respect of the Loans made to, or any other Obligations of, Harley.ARTICLE XIII BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS13.1 Successors and Assigns. The terms and provisions of the Loan Documents shall be binding upon and inure to thebenefit of the Companies, the Lenders and the Global Administrative Agent and their respective successors and assigns,except that (i) the Companies shall not have the right to assign their rights or obligations under the Loan Documents and (ii)any assignment by any Lender must be made in compliance with Section 13.3 hereof. Notwithstanding clause (ii) of thisSection 13.1, any Lender may at any time, without the consent of any Borrower or the Global Administrative Agent, assign allor any portion of its rights under this Agreement and any Notes to a Federal Reserve Bank or other central bankingauthority with authority over such Lender; provided, however, that no such64assignment shall release the transferor Lender from its obligations hereunder. The Global Administrative Agent may treatany Lender as the owner of the Loans for all purposes hereof unless and until such Lender complies with Section 13.3 hereofin the case of an assignment thereof or, in the case of any other transfer, a written notice of the transfer is filed with the GlobalAdministrative Agent. Any such assignee or transferee agrees by acceptance thereof to be bound by all the terms andprovisions of the Loan Documents. Any request, authority or consent of any Person, who at the time of making such requestor giving such authority or consent is the holder of any Loan, shall be conclusive and binding on any subsequent holder,transferee or assignee of such Loan.13.2 Participations.Permitted Participants; Effect. Subject to the terms set forth in this Section 13.2, any Lender may, in theordinary course of its business and in accordance with applicable law, at any time sell to one or more banks or other entities(“Participants”) which is not an Ineligible Institution participating interests in any Loan owing to such Lender or any Commitment ofsuch Lender or any other interest of such Lender under the Loan Documents. In the event of any such sale by a Lender of participatinginterests to a Participant, such Lender’s obligations under the Loan Documents shall remain unchanged, such Lender shall remain solelyresponsible to the other parties hereto for the performance of such obligations, such Lender shall remain the owner of all Loans for allpurposes under the Loan Documents, all amounts payable by any Borrower under this Agreement shall be determined as if such Lenderhad not sold such participating interests, and such Borrower and the Global Administrative Agent shall continue to deal solely anddirectly with such Lender in connection with such Lender’s rights and obligations under the Loan Documents except that, for purposesof Article III hereof, the Participants shall be entitled to the same rights as if they were Lenders (subject to the requirements andlimitations set forth in Article III, including the requirements under Section 3.5(iv) (it being understood that the documentation requiredunder Section 3.5(iv) shall be delivered to the participating Lender)) and had acquired its interest by assignment pursuant to Section13.3; provided however that no Participant shall be entitled to receive any greater payment under Article III than the Lender would havebeen entitled to receive with respect to the rights participated. Each Lender that sells a participation shall, acting solely for this purposeas an agent of the Companies, maintain a register on which it enters the name and address of each Participant and the principal amounts(and stated interest) of each Participant's interest in the obligations under the Loan Documents (the “Participant Register”); providedthat no Lender shall have any obligation to disclose all or any portion of the Participant Register to any Person (including the identity ofany Participant or any information relating to a Participant's interest in the obligations under any Loan Document) except to the extentthat such disclosure is necessary to establish that such interest is in registered form under Section 5f.103-1(c) of the United StatesTreasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat eachperson whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreementnotwithstanding any notice to the contrary. For the avoidance of doubt, the Global Administrative Agent (in its capacity as GlobalAdministrative Agent) shall have no responsibility for maintaining a Participant Register.(A) Voting Rights. Each Lender shall retain the sole right to approve, without the consent of any Participant, any amendment,modification or waiver of any provision of the Loan Documents, other than any amendment, modification or waiver with respect to anyLoan or Commitment in which such Participant has an interest which involves an amendment, modification or waiver with respect to amatter which, if such Participant were a Lender hereunder, would require the consent of such Lender under clauses (i) through (viii) ofSection 8.3 hereof.65(B) Benefit of Setoff. The Companies agree that each Participant shall be deemed to have the right of setoff provided inSection 11.1 hereof in respect to its participating interest in amounts owing under the Loan Documents to the same extent as if theamount of its participating interest were owing directly to it as a Lender under the Loan Documents; provided that each Lender shallretain the right of setoff provided in Section 11.1 hereof with respect to the amount of participating interests sold to each Participantexcept to the extent such Participant exercises its right of set off. The Lenders agree to share with each Participant, and each Participant,by exercising the right of setoff provided in Section 11.1 hereof, agrees to share with each Lender, any amount received pursuant to theexercise of its right of setoff, such amounts to be shared in accordance with Section 11.2 as if each Participant were a Lender.13.3 Assignments.(A) Permitted Assignments. Any Lender may, in the ordinary course of its business and in accordance with applicable law, atany time assign to one or more banks or other entities (“Purchasers”) which is not an Ineligible Institution all or a portion of its rightsand obligations under this Agreement (including, without limitation, its Commitment and all Loans owing to it) in accordance with theprovisions of this Section 13.3. Each assignment shall be of a constant, and not a varying, ratable percentage of all of the rights andobligations of any assigning Lender under this Agreement. Such assignment shall be substantially in the form of Exhibit C hereto andshall not be permitted hereunder unless such assignment is either for all of such Lender’s rights and obligations under the LoanDocuments or, except for assignments to another Lender, an Affiliate thereof or an Approved Fund, involves loans and commitments inan aggregate amount of at least $5,000,000. Notice to the Global Administrative Agent shall be required prior to any assignmentbecoming effective and the consent of the Global Administrative Agent (which consent will not be unreasonably withheld or delayed)shall be required prior to any assignment becoming effective with respect to a Purchaser which is not a Lender and the consent ofHarley (which consent will not be unreasonably withheld or delayed; provided that Harley shall be deemed to have consented to anysuch assignment (excluding, for the avoidance of doubt, any assignment or purported assignment to an Ineligible Institution) unless itshall object thereto by written notice to the Global Administrative Agent within ten (10) Business Days after having received writtennotice thereof from the Global Administrative Agent) shall be required prior to an assignment becoming effective unless (A) a Defaultshall have occurred and be continuing at such time or (B) the Purchaser which is a Lender, an Affiliate thereof or an Approved Fund;provided that, notwithstanding the preceding clause (B), (1) the Purchaser with respect to any assignment that does not require Harley’sconsent under the preceding clause (B) shall nevertheless provide written notice to Harley thereof prior to, or promptly after, suchassignment and (2) the consent of Harley shall be required prior to any assignment resulting in the applicable Purchaser, collectivelywith its Affiliates and affiliated Approved Funds, holding Commitments in an aggregate amount greater than 15% of the AggregateCommitment at such time (or, if the Commitments shall have been terminated, such Purchaser, collectively with its Affiliates andaffiliated Approved Funds, would hold Loans aggregating to more than 15% in principal amount of all outstanding Loans at such time).It is understood and agreed that it shall be reasonable for Harley to consider a proposed Purchaser’s right to require reimbursement forincremental increased costs pursuant to Article III when determining whether to consent to any applicable assignment.(B) Effect; Effective Date. Subject to acceptance and recording thereof pursuant to clause (C) below, upon (i) delivery to theGlobal Administrative Agent of a notice of assignment, substantially in the form attached as Appendix I to Exhibit C hereto (a “Noticeof Assignment”), together with any consents required by Section 13.3(A) hereof, and (ii) payment of a $3,500 fee to the GlobalAdministrative Agent for processing such assignment, such assignment shall become effective on the effective date specified in suchNotice of Assignment. The Notice of Assignment shall contain a representation by the Purchaser to the effect that none of theconsideration used to make the purchase of the Commitment and Loans under the66applicable assignment agreement are “plan assets” as defined under ERISA and that the rights and interests of the Purchaser in andunder the Loan Documents will not be “plan assets” under ERISA. On and after the effective date of such assignment, such Purchaser,if not already a Lender, shall for all purposes be a Lender party to this Agreement and any other Loan Documents executed by theLenders and shall have all the rights and obligations of a Lender under the Loan Documents, to the same extent as if it were an originalparty hereto, and no consent or action by any of the Borrowers or the Lenders and no further consent or action by the GlobalAdministrative Agent shall be required to release the transferor Lender with respect to the percentage of the Aggregate Commitmentand Loans assigned to such Purchaser. Upon the consummation of any assignment to a Purchaser pursuant to this Section 13.3(B), thetransferor Lender, the Global Administrative Agent and Harley shall, if requested by such transferor Lender or Purchaser, makeappropriate arrangements so that replacement Notes are issued to such transferor Lender and new Notes or, as appropriate, replacementNotes, are issued to such Purchaser.(C) The Register. The Global Administrative Agent shall maintain at its address referred to in Section 14.1 a copy of eachassignment delivered to and accepted by it pursuant to this Section 13.3 and a register (the “Register”) for the recordation of the namesand addresses of the Lenders and the Commitment of and principal amount (and stated interest) of the Loans owing to, each Lenderfrom time to time and whether such Lender is an original Lender or the assignee of another Lender pursuant to an assignment under thisSection 13.3. The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and each Borrower andeach of its Subsidiaries, the Global Administrative Agent and the Lenders may treat each Person whose name is recorded in the Registeras a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by any Borrower or any Lenderat any reasonable time and from time to time upon reasonable prior notice.(D) Disqualified Institutions.(i) No assignment or participation shall be made to any Person that was a Disqualified Institution as of the date (the“Trade Date”) on which the assigning Lender entered into a binding agreement to sell and assign or grant a participation in allor a portion of its rights and obligations under this Agreement to such Person (unless Harley has consented to such assignmentor participation in writing in its sole and absolute discretion, in which case such Person will not be considered a DisqualifiedInstitution for the purpose of such assignment or participation). For the avoidance of doubt, with respect to any Purchaser orParticipant that becomes a Disqualified Institution after the applicable Trade Date (including as a result of the delivery of anotice pursuant to, and/or the expiration of the notice period referred to in, the definition of “Disqualified Institution”), (x) suchPurchaser or Participant shall not retroactively be disqualified from becoming a Lender or Participant and (y) the execution byHarley of an assignment agreement with respect to such Purchaser will not by itself result in such Purchaser no longer beingconsidered a Disqualified Institution. Any assignment or participation in violation of this clause (D)(i) shall not be void, but theother provisions of this clause (D) shall apply.(ii) If any assignment or participation is made to any Disqualified Institution without Harley’s prior written consent inviolation of clause (i) above, or if any Person becomes a Disqualified Institution after the applicable Trade Date, Harley may, atits sole expense and effort, upon notice to the applicable Disqualified Institution and the Global Administrative Agent, requiresuch Disqualified Institution to assign, without recourse (in accordance with and subject to the restrictions contained in thisSection 13.3), all of its interest, rights and obligations under this Agreement to one or more Persons (other than an IneligibleInstitution) at the lesser of (x) the principal amount thereof and (y) the amount that such Disqualified Institution paid to acquiresuch interests, rights and67obligations in each case plus accrued interest, accrued fees and all other amounts (other than principal amounts) payable to ithereunder.(iii) Notwithstanding anything to the contrary contained in this Agreement, Disqualified Institutions to whom anassignment or participation is made in violation of clause (i) above (A) will not have the right to (x) receive information, reportsor other materials provided to Lenders by Harley, the Global Administrative Agent or any other Lender, (y) attend or participatein meetings attended by the Lenders (or any of them) and the Global Administrative Agent, or (z) access any electronic siteestablished for the Lenders or confidential communications from counsel to or financial advisors of the Global AdministrativeAgent or the Lenders and (B) for purposes of any consent to any amendment, waiver or modification of, or any action under,and for the purpose of any direction to the Global Administrative Agent or any Lender to undertake any action (or refrain fromtaking any action) under this Agreement or any other Loan Document, each Disqualified Institution will be deemed to haveconsented in the same proportion as the Lenders that are not Disqualified Institutions consented to such matter.(iv) The Global Administrative Agent shall have the right, and Harley hereby expressly authorizes the GlobalAdministrative Agent, to (A) post the list of Disqualified Institutions provided by Harley and any updates thereto from time totime (collectively, the “DQ List”) on Debt Domain, Intralinks, Syndtrak, ClearPar or a substantially similar Electronic System,including that portion of such platform that is designated for “public side” Lenders and/or (B) provide the DQ List to eachLender requesting the same. The DQ List shall be subject to the requirements of Section 13.4.(v) The Global Administrative Agent shall not be responsible or have any liability for, or have any duty to ascertain,inquire into, monitor or enforce, compliance with the provisions hereof relating to Disqualified Institutions. Without limiting thegenerality of the foregoing, the Global Administrative Agent shall not (x) be obligated to ascertain, monitor or inquire as towhether any Lender or Participant or prospective Lender or Participant is a Disqualified Institution or (y) have any liability withrespect to or arising out of any assignment or participation of Loans, or disclosure of confidential information, by any otherPerson to any ​Disqualified Institution.(E) EEA Financial Institutions. Notwithstanding anything to the contrary in this Section 13.3, or elsewhere in this Agreement,the consent of Harley shall be required (such consent not to be unreasonably withheld or delayed) for an assignment to an assignee thatis an EEA Financial Institution unless a Default shall have occurred and be continuing at the time of such assignment.13.4 Confidentiality. (i) Subject to Section 13.5, the Global Administrative Agent and the Lenders shall holdconfidential (A) all nonpublic information obtained pursuant to the requirements of this Agreement and (B) except asotherwise permitted by Harley, all information related to the Licensed Marks (as defined in Section 13.6)) and all otherinformation which a reasonable person would deem to be confidential and/or proprietary in light of the nature of theinformation and the manner in which it was disclosed; provided that the Global Administrative Agent and the Lenders mayeach make disclosure (1) to its and its Affiliates’ directors, officers, employees and agents, including accountants, legal counseland other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidentialnature of such information and instructed to keep such information confidential and the Global Administrative Agent andeach Lender, as applicable, shall be responsible for breach by its respective affiliated Persons to which the Global68Administrative Agent or such Lender made such disclosure), (2) to the extent requested by any regulatory authority, (3) to theextent required by applicable laws or regulations or by any subpoena or similar legal process, (4) to any other party to thisAgreement, (5) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to thisAgreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (6) subject to a writtenagreement containing provisions substantially the same as those of this Section, to (a) any assignee of or Participant in, or anyprospective assignee of or Participant in, any of its rights or obligations under this Agreement (it being understood that theDQ List may be disclosed to any assignee or Participant, or prospective assignee or Participant, in reliance on and subject tothe terms of this clause (6)) or (b) any actual or prospective counterparty (or its advisors) to any swap or derivativetransaction relating to any Borrower and its obligations, (7) with the prior written consent of Harley, (8) to the extent suchinformation (a) becomes publicly available other than as a result of a breach of this Section or (b) becomes available to theGlobal Administrative Agent or any Lender on a nonconfidential basis from a source other than the Companies, (9) to anyrating agency when required by it, provided that, prior to any disclosure, such rating agency shall undertake in writing topreserve the confidentiality of any such information relating to the Companies received by it from the Global AdministrativeAgent or any Lender or (10) on a confidential basis to the CUSIP Service Bureau or any similar agency in connection with theissuance and monitoring of CUSIP numbers with respect to the Loans. In no event shall the Global Administrative Agent orany Lender be obligated or required to return any materials furnished by Harley, the Companies or any of their Subsidiaries;provided, however, each prospective Transferee shall be required to agree that if it does not become a participant or assigneeit shall return all materials furnished to it by or on behalf of Harley or any Company in connection with this Agreement.(ii)(A) To the extent that the Gramm-Leach-Bliley Act, Title V/Privacy (collectively with the related implementingregulations, the “GLBA”), shall be applicable to the transactions contemplated herein, each of the parties hereto agrees that (1) it shalluse all non-public personal information obtained pursuant to the requirements of this Agreement solely for the purposes for which theinformation is disclosed or as otherwise permitted in conformance with the requirements of the GLBA and (2) it shall maintain theconfidentiality of such information to the same extent as described in Section 13.4(i). This clause shall survive the termination of thisAgreement.(B) In the event that the Global Administrative Agent or any Lender reasonably believes that any physical and/or electronicsafeguards have been breached, and that non-public personal information has been obtained by persons and/or entities withoutauthority to use or view such non-public personal information, the Global Administrative Agent or such Lender, as applicable, willnotify HDFS and Harley, in writing, as soon as reasonably practicable. The Global Administrative Agent and each Lender shall alsomaintain commercially reasonable processes and procedures for the storage, retention, and disposal of documents and storage mediacontaining nonpublic personal information. Nothing in this clause shall be construed to create any third-party beneficiary rights in anyconsumer or other holder of nonpublic personal information. This clause shall survive the termination of this Agreement.(iii)Each of the parties hereto acknowledges that any breach of the aforesaid confidentiality obligations in this Section13.4 is likely to cause or threaten irreparable harm to HDFS and Harley. Therefore, HDFS and Harley shall be entitled to seek equitablerelief to protect its interests, including but not limited69to preliminary and permanent injunctive relief, as well as monetary damages. Nothing stated herein will be construed to limit any otherremedies available to the parties hereto. This section shall survive the termination of this Agreement.13.5 Dissemination of Information. Each of the Companies authorizes each Lender to disclose to any Participant orPurchaser or any other Person acquiring an interest in the Loan Documents by operation of law (each a “Transferee”) andany prospective Transferee any and all information in such Lender’s possession concerning the Companies and theirSubsidiaries; provided that prior to any such disclosure, such prospective Transferee shall agree in writing to preserve inaccordance with Section 13.4 the confidentiality of any non-public information described therein.13.6 Non-Use of HDFS’ Licensed Marks. (i) HDFS, Harley and their affiliates have the right pursuant to licenses orotherwise to use certain trademark(s), logo(s), etc. relating to Harley-Davidson Motorcycles, HDFS and their affiliates (the“Licensed Marks”). Except as permitted by the following sentences, none of the Global Administrative Agent, the Lenders ortheir Affiliates are authorized to use such Licensed Marks or Harley’s or HDFS’s (i) text name and logo(s) (together) and/or(ii) logo(s) on forms, in legal documents, in advertising, marketing materials, in press releases or any other document ormaterial. In the event the Global Administrative Agent, any Lender or any of their Affiliates wish to use said Licensed Marks,such Person must obtain HDFS’s and Harley’s prior written approval, which said approval is at HDFS’s and Harley’s soleand absolute discretion and subject to subsequent periodic review of such use and to such reasonable specifications of HDFSand Harley to the extent such specifications are directly related to the legal maintenance, whether such is before or after lapseor termination of this Agreement. The Harley-Davidson and/or HDFS (i) text name, logo(s) and registered trademark(s)(together) and/or (ii) logo(s) and/or (iii) registered trademark(s) are not to be used by the Global Administrative Agent, anyLender or any of their Affiliates in any way before, during or after the term of this Agreement, unless prior written consent isobtained from HDFS and Harley. This section shall survive the termination of this Agreement.(ii) Each of the parties hereto acknowledges that any breach of the aforestated non-use obligations in this Section 13.6 is likelyto cause or threaten irreparable harm to HDFS and Harley. Therefore, in the event of any such breach, HDFS and Harley shall beentitled to seek equitable relief to protect its interests, including but not limited to preliminary and permanent injunctive relief, as well asmonetary damages. Nothing stated in this Section 13.6 shall be construed to limit any other remedies available to any party hereto.ARTICLE XIV NOTICES14.1 Giving Notice. (a) Except as otherwise permitted by Article II with respect to Borrowing Notices and Section6.1.9, all notices and other communications provided to any party hereto under this Agreement or any other Loan Documentsshall be in writing or by telex or by facsimile and addressed or delivered to such party at its address set forth below itssignature hereto or at such other address as may be designated by such party in a notice to the other parties (provided thatany notification of the DQ List to the Global Administrative70Agent shall be made via email to the following address: JPMDQ_Contact@jpmorgan.com). Any notice, if mailed andproperly addressed with postage prepaid, shall be deemed given when received; any notice, if transmitted by telex orfacsimile, shall be deemed given when transmitted (answerback confirmed in the case of telexes); or, if by courier, one (1)Business Day after deposit with a reputable overnight carrier service; with all charges paid.(b) Notices and other communications to the Lenders hereunder may be delivered or furnished by using ElectronicSystems pursuant to procedures approved by the Global Administrative Agent; provided that the foregoing shall not apply tonotices pursuant to Article II unless otherwise agreed by the Global Administrative Agent and the applicable Lender. TheGlobal Administrative Agent or the Companies may, in their respective discretion, agree to accept notices and othercommunications to it hereunder by electronic communications pursuant to procedures approved by it; provided thatapproval of such procedures may be limited to particular notices or communications.Unless the Global Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail addressshall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receiptrequested” function, as available, return e-mail or other written acknowledgement), and (ii) notices or communications posted to anInternet or intranet website shall be deemed received upon the deemed receipt by the intended recipient, at its e-mail address asdescribed in the foregoing clause (i), of notification that such notice or communication is available and identifying the website addresstherefor; provided that, for both clauses (i) and (ii) above, if such notice, email or other communication is not sent during the normalbusiness hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the nextbusiness day for the recipient.(c) Electronic Systems.(i) Each Borrower agrees that the Global Administrative Agent may, but shall not be obligated to, makeCommunications (as defined below) available to the other Lenders by posting the Communications on Debt Domain, Intralinks,Syndtrak, ClearPar or a substantially similar Electronic System.(ii) Any Electronic System used by the Global Administrative Agent is provided “as is” and “as available.” The AgentParties (as defined below) do not warrant the adequacy of such Electronic Systems and expressly disclaim liability for errors oromissions in the Communications. No warranty of any kind, express, implied or statutory, including, without limitation, anywarranty of merchantability, fitness for a particular purpose, non-infringement of third-party rights or freedom from viruses orother code defects, is made by any Agent Party in connection with the Communications or any Electronic System. In no eventshall the Global Administrative Agent or any of its Affiliates, and each of such Person’s respective officers, directors,employees, attorneys and agents (collectively, the “Agent Parties”), have any liability to any Company, any Lender or anyother Person or entity for damages of any kind, including, without limitation, direct or indirect, special, incidental orconsequential damages, losses or expenses (whether in tort, contract or otherwise) arising out of any Company’s or the GlobalAdministrative Agent’s transmission of Communications through an Electronic System, except to the extent determined by acourt of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willfulmisconduct of the Global Administrative Agent or the Agent Parties. “Communications” means, collectively, any notice,demand, communication, information,71document or other material provided by or on behalf of any Company pursuant to any Loan Document or the transactionscontemplated therein which is distributed by the Global Administrative Agent or any Lender by means of electroniccommunications pursuant to this Section, including through an Electronic System.(iii) For the avoidance of doubt, nothing in this Section 14.1(c) shall affect any obligations arising under Section 13.4.14.2 Change of Address. Any of the Companies, the Global Administrative Agent and any Lender may each changethe address for service of notice upon it by a notice in writing to the other parties hereto (or, in the case of any Lender, bynotice in writing to Harley and the Global Administrative Agent).ARTICLE XV COUNTERPARTS15.1 Counterparts; Effectiveness; Electronic Execution. This Agreement may be executed in any number of counterparts,all of which taken together shall constitute one agreement, and any of the parties hereto may execute this Agreement bysigning any such counterpart. Except as provided in Section 4.1, this Agreement shall become effective when it shall have beenexecuted by the Global Administrative Agent and when the Global Administrative Agent shall have received counterpartshereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be bindingupon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Delivery of anexecuted counterpart of a signature page of this Agreement by telecopy, e-mailed .pdf or any other electronic means thatreproduces an image of the actual executed signature page shall be effective as delivery of a manually executed counterpart ofthis Agreement. The words “execution,” “signed,” “signature,” “delivery,” and words of like import in or relating to anydocument to be signed in connection with this Agreement and the transactions contemplated hereby shall be deemed toinclude Electronic Signatures, deliveries or the keeping of records in electronic form, each of which shall be of the same legaleffect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a paper-basedrecordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the FederalElectronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, orany other similar state laws based on the Uniform Electronic Transactions Act.[Remainder of This Page Intentionally Blank]72IN WITNESS WHEREOF, the Companies, the Lenders and the Global Administrative Agent have executed this Agreement asof the date first above written.HARLEY-DAVIDSON, INC.,as a U.S. Borrower By: /s/ J. Darrell Thomas Name: J. Darrell Thomas Title: Vice President and Treasurer Address: Harley-Davidson, Inc.3700 West Juneau AvenueMilwaukee, Wisconsin 53208Attention: J. Darrell Thomas, Vice-President andTreasurerTelephone No.: (414) 343-7863 Facsimile No.: (414) 343-4990with copy to (in the case of a notice of Default):Harley-Davidson, Inc.3700 West Juneau Avenue Milwaukee, Wisconsin 53208Attention: Paul J. Jones, Vice-President, Strategy& Sustainability, Chief Legal Officer andSecretary Telephone No.: (414) 343-4885Facsimile No.: (414) 343-4990 Signature Page to 364-Day Credit AgreementHarley-Davidson, Inc. et alHARLEY-DAVIDSON FINANCIALSERVICES, INC.,as a U.S. Borrower By:/s/ J. DarrellThomas_____________________ Name: J. Darrell Thomas Title: Vice President and Treasurer Address: 3700 West Juneau AvenueMilwaukee, Wisconsin 53208Attention: J. Darrell Thomas, Vice-President andTreasurerTelephone No.: (414) 343-7863 Facsimile No.: (414) 343-4990Signature Page to 364-Day Credit AgreementHarley-Davidson, Inc. et alHARLEY-DAVIDSON CREDIT CORP.,as the Guarantor By:/s/ J. Darrell Thomas__________________ Name: J. Darrell Thomas Title: Vice President and Treasurer Address: 3700 West Juneau AvenueMilwaukee, Wisconsin 53208Attention: J. Darrell Thomas, Vice-President andTreasurerTelephone No.: (414) 343-7863 Facsimile No.: (414) 343-4990Signature Page to 364-Day Credit AgreementHarley-Davidson, Inc. et alJPMORGAN CHASE BANK, N.A.,as the Global Administrative Agent and as aLender By:/s/ Robert P. Kellas_____________________Name: Robert P. Kellas Title: Executive Director Address: 383 Madison Avenue, Floor 24 New York, New York 10179 Attention: Robert Kellas Telephone No.: (212) 270-3560 Facsimile No.: (212) 270-5100In the case of Borrowing Notices500 Stanton Christiana RoadOps Building 2, 3rd FloorNewark, Delaware 19713-2107Attention: Christine AngusFacsimile No.: (302) 634-4250In the case of a notification of the DQ List:JPMDQ_Contact@jpmorgan.comSignature Page to 364-Day Credit AgreementHarley-Davidson, Inc. et alCITIBANK, N.A.,as Syndication Agent and as a Lender By:/s/ Susan Manuelle____________________ Name: Susan Manuelle Title: Managing Director Address: 388 Greenwich Street, Floor 32 New York, New York 10013 Attention: KC Clark Telephone No.: (212) 816-2878 Facsimile No.: (646) 441-4504 In the case of Borrowing Notices 1615 Brett Rd.Bldg. IIINew Castle, DE 19720 Attention: Praveen ParasuramanPhn#: 201 472 4414Email: GLOriginationOps@citi.comSignature Page to 364-Day Credit AgreementHarley-Davidson, Inc. et alU.S. BANK NATIONAL ASSOCIATION,as a Syndication Agent and as a Lender By:/s/ Caroline V. Krider__________________ Name: Caroline V. Krider Title: Senior Vice President Address: 777 E. Wisconsin Avenue Milwaukee, WI 53202 Attention: Caroline V. Krider Telephone No.: 414-765-5971 Facsimile No.: 414-765-4632Signature Page to 364-Day Credit AgreementHarley-Davidson, Inc. et alTHE BANK OF TOKYO-MITSUBISHI UFJ,LTD.,as a Syndication Agent and as a Lender By:/s/ Thomas Danielson__________________ Name: Thomas Danielson Title: Authorized Signatory Address: 1251 Avenue of the Americas New York, New York 10020-1104 Attention: U.S. Wholesale Banking Christina Schuschel Telephone No.: 312-696-4663 Facsimile No.: 212-782-6440 with aCopy to: 312-696-4535Signature Page to 364-Day Credit AgreementHarley-Davidson, Inc. et alSCHEDULE IFUNDING PROTOCOLS re: SYNDICATED GLOBAL LOANSHarley-Davidson $100million Global Credit Facility LocationTenorNotice to Ad AgentMinimum AmountsBorrowing/IncrementsRate fixingScreenComment U.S. Borrower - Syndicate Borrowing – US or IBF Nassau Houston Loan &Agency ABRovernightsame day/3PM NYT $5mm/500mNot ApplicableNotApplicable Eurodollar30, 60, 90,1802 Business Days/12noon NYT $5mm/500mNot ApplicableReutersLIBOR01NY fixing _____________________________________________ 1 For each option which is offered with a tenor of 30, 60, 90 and 180, such tenor may also be for such other period as may be agreed to by each Lender.SCHEDULE IIINTERCOMPANY SUBORDINATION TERMS(i) The Borrowers agree that any and all claims of the Borrowers against any Guarantor with respect to any “GuarantorIntercompany Indebtedness” (as hereinafter defined), any endorser, obligor or any other guarantor of all or any part of the Obligations,or against any of its properties shall be subordinate and subject in right of payment to the prior payment, in full and in cash, of allObligations; provided that, and not in contravention of the foregoing, so long as no Default has occurred and is continuing theBorrowers may make loans to and receive payments in the ordinary course with respect to such Guarantor Intercompany Indebtednessfrom any Guarantor to the extent permitted by the terms of the Agreement and the other Loan Documents. Notwithstanding any rightof the Borrowers to ask, demand, sue for, take or receive any payment from any Guarantor, all rights, liens and security interests of theBorrowers, whether now or hereafter arising and howsoever existing, in any assets of any Guarantor shall be and are subordinated tothe rights of the holders of the Obligations and the Global Administrative Agent in those assets. Except as otherwise permitted above,the Borrowers shall not have any right to possession of any such asset or to foreclose upon any such asset, whether by judicial actionor otherwise, unless and until all of the Obligations (other than contingent indemnity obligations) and the Hedging Obligations owingto any Lender or any Affiliate thereof (such Hedging Obligations, the “Hedging Liabilities”) shall have been fully paid and satisfied(in cash) and all financing arrangements pursuant to any Loan Document among the Borrowers and the holders of the Obligations (orany affiliate thereof) have been terminated. If all or any part of the assets of any Guarantor, or the proceeds thereof, are subject to anydistribution, division or application to the creditors of such Guarantor, whether partial or complete, voluntary or involuntary, andwhether by reason of liquidation, bankruptcy, arrangement, receivership, assignment for the benefit of creditors or any other action orproceeding, or if the business of such Guarantor is dissolved or if substantially all of the assets of such Guarantor are sold, then, and inany such event (such events being herein referred to as an “Insolvency Event”), any payment or distribution of any kind or character,either in cash, securities or other property, which shall be payable or deliverable upon or with respect to any indebtedness (exceptingindebtedness for fees and other administrative charges, if any, as may from time to time accrue in the ordinary course of business) ofany Guarantor to the Borrowers (“Guarantor Intercompany Indebtedness”) shall be paid or delivered directly to the GlobalAdministrative Agent for application on any of the Obligations and Hedging Liabilities, due or to become due, until such Obligationsand Hedging Liabilities (other than contingent indemnity obligations) shall have first been fully paid and satisfied (in cash). Should anypayment, distribution, security or instrument or proceeds thereof be received by the Borrowers upon or with respect to any GuarantorIntercompany Indebtedness after an Insolvency Event prior to the satisfaction of all of the Obligations (other than contingent indemnityobligations) and Hedging Liabilities and the termination of all financing arrangements pursuant to any Loan Document among theBorrowers and the holders of the Obligations (and their affiliates), the Borrowers shall receive and hold the same in trust, as trustee, forthe benefit of the holders of the Obligations and such Hedging Liabilities and shall forthwith deliver the same to the GlobalAdministrative Agent, for the benefit of such Persons, in precisely the form received (except for the endorsement or assignment of theBorrowers where necessary), for application to any of the Obligations and such Hedging Liabilities, due or not due, and, until sodelivered, the same shall be4848-5135-1111.2held in trust by the Borrowers as the property of the holders of the Obligations and such Hedging Liabilities. If the Borrowers fail tomake any such endorsement or assignment to the Global Administrative Agent, the Global Administrative Agent or any of its officersor employees are irrevocably authorized to make the same. The Borrowers agree that until the Obligations (other than the contingentindemnity obligations) and such Hedging Liabilities have been paid in full (in cash) and satisfied and all financing arrangementspursuant to any Loan Document among the Borrowers and the holders of the Obligations (and their affiliates) have been terminated,the Borrowers will not assign or transfer to any Person (other than the Global Administrative Agent) any claim the Borrowers have ormay have against any Guarantor.(ii) Each Guarantor agrees that any and all claims of such Guarantor against the Borrowers with respect to any “BorrowerIntercompany Indebtedness” (as hereinafter defined), any endorser, obligor or any other guarantor of all or any part of the Obligations,or against any of its properties shall be subordinate and subject in right of payment to the prior payment, in full and in cash, of allObligations; provided that, and not in contravention of the foregoing, so long as no Default has occurred and is continuing eachGuarantor may make loans to and receive payments in the ordinary course with respect to such Borrower Intercompany Indebtednessfrom the Borrowers to the extent permitted by the terms of the Agreement and the other Loan Documents. Notwithstanding any rightof any Guarantor to ask, demand, sue for, take or receive any payment from the Borrowers, all rights, liens and security interests ofsuch Guarantor, whether now or hereafter arising and howsoever existing, in any assets of the Borrowers shall be and are subordinatedto the rights of the holders of the Obligations and the Global Administrative Agent in those assets. Except as otherwise permittedabove, no Guarantor shall have any right to possession of any such asset or to foreclose upon any such asset, whether by judicial actionor otherwise, unless and until all of the Obligations (other than contingent indemnity obligations) and the Hedging Liabilities shall havebeen fully paid and satisfied (in cash) and all financing arrangements pursuant to any Loan Document among the Borrowers and theholders of Obligations (or any affiliate thereof) have been terminated. If all or any part of the assets of the Borrowers, or the proceedsthereof, are subject to any distribution, division or application to the creditors of the Borrowers, whether partial or complete, voluntaryor involuntary, and whether by reason of liquidation, bankruptcy, arrangement, receivership, assignment for the benefit of creditors orany other action or proceeding, or if the business of any of the Borrowers is dissolved or if substantially all of the assets of any of theBorrowers are sold, then, and in any such event (such events being herein referred to as an “Insolvency Event”), any payment ordistribution of any kind or character, either in cash, securities or other property, which shall be payable or deliverable upon or withrespect to any indebtedness (excepting indebtedness for fees and other administrative charges, if any, as may from time to time accruein the ordinary course of business) of the Borrowers to any Guarantor (“Borrower Intercompany Indebtedness”) shall be paid ordelivered directly to the Global Administrative Agent for application on any of the Obligations and Hedging Liabilities, due or tobecome due, until such Obligations and Hedging Liabilities (other than contingent indemnity obligations) shall have first been fullypaid and satisfied (in cash). Should any payment, distribution, security or instrument or proceeds thereof be received by any Guarantorupon or with respect to any Borrower Intercompany Indebtedness after an Insolvency Event prior to the satisfaction of all of theObligations (other than contingent indemnity obligations) and Hedging Liabilities and the termination of all financing arrangementspursuant to any Loan Document among the Borrowers and the holders of the Obligations (and their affiliates),4848-5135-1111.2the applicable Guarantor shall receive and hold the same in trust, as trustee, for the benefit of the holders of the Obligations and suchHedging Liabilities and shall forthwith deliver the same to the Global Administrative Agent, for the benefit of such Persons, inprecisely the form received (except for the endorsement or assignment of such Guarantor where necessary), for application to any ofthe Obligations and such Hedging Liabilities, due or not due, and, until so delivered, the same shall be held in trust by such Guarantoras the property of the holders of the Obligations and such Hedging Liabilities. If any Guarantor fails to make any such endorsement orassignment to the Global Administrative Agent, the Global Administrative Agent or any of its officers or employees are irrevocablyauthorized to make the same. Each Guarantor agrees that until the Obligations (other than the contingent indemnity obligations) andsuch Hedging Liabilities have been paid in full (in cash) and satisfied and all financing arrangements pursuant to any Loan Documentamong the Borrowers and the holders of the Obligations (and their affiliates) have been terminated, such Guarantor will not assign ortransfer to any Person (other than the Global Administrative Agent) any claim such Guarantor has or may have against the Borrowers.4848-5135-1111.2SCHEDULE 6.2.2(c)LIENSLiens from time to time securing the following industrial revenue bonds and related agreements, instruments, and documents:$2,273,000 Missouri Development Finance Board BUILD Missouri Revenue Bonds Series 2002 (Harley-Davidson Project),including extensions, renewals, and replacements thereof.Harley-Davidson, Inc.JURISDICTIONSECURED PARTYFILENUMBERFILINGDATESUMMARYCOLLATERALDESCRIPTIONADDITIONALFILINGSWisconsinDie-Tech andEngineering, Inc.16000606922305/05/16Certain equipmentN/AWisconsinGrand Die Engravers,Inc.16000804642206/15/16Certain equipmentN/AWisconsinDie-Tech andEngineering, Inc.16001423792610/31/16Certain equipmentN/AWisconsinDie-Tech andEngineering, Inc.17000013631301/04/17Certain equipmentN/AHarley-Davidson Credit Corp.4848-5135-1111.2JURISDICTIONSECURED PARTYFILENUMBERFILING DATESUMMARY COLLATERALDESCRIPTIONADDITIONALFILINGSNevadaHarley-DavidsonMotorcycle Trust2011-1;Harley-DavidsonCustomer FundingCorp.2011021582-208/12/11(i) All right, title and interest ofDebtor in and to the Contractslisted on the List of Contractsin effect on the closing date(including without limitation allsecurity interests and all rightsto receive certain payments),(ii) all rights of Debtor underany theft, physical damage,credit life, disability or otherindividual insurance policy,any debt insurance policy orany debt cancellationagreement relating to any suchContract, an Obligor or aMotorcycle securing suchContract, (iii) all securityinterests in each suchMotorcycle, (iv) all documentscontained in the relatedContract Files, (v) all rights tocertain lockboxes, (vi) all rightsunder certain dealeragreements, (vii) all ofDebtor’s rights to certainrebates and other amountsrelating to insurance policies,debt cancellation agreements,extended service contracts andrepair agreements, and (viii) allproceeds and products of theforegoing.N/A4848-5135-1111.2JURISDICTIONSECURED PARTYFILENUMBERFILING DATESUMMARY COLLATERALDESCRIPTIONADDITIONALFILINGSNevadaHarley-DavidsonMotorcycle Trust2011-2;Harley-DavidsonCustomer FundingCorp.2011029894-111/09/11(i) All right, title and interest ofDebtor in and to the Contractslisted on the List of Contractsin effect on the closing date(including without limitation allsecurity interests and all rightsto receive certain payments),(ii) all rights of Debtor underany theft, physical damage,credit life, disability or otherindividual insurance policy,any debt insurance policy orany debt cancellationagreement relating to any suchContract, an Obligor or aMotorcycle securing suchContract, (iii) all securityinterests in each suchMotorcycle, (iv) all documentscontained in the relatedContract Files, (v) all rightsunder certain dealeragreements, (vi) all rights tocertain lockboxes, (vii) allrights of Debtor under theTransfer and Sale Agreement,(viii) certain amounts paid intothe Trust Accounts from timeto time, (ix) all of Debtor’srights to certain rebates andother amounts relating toinsurance policies, debtcancellation agreements,extended service contracts andrepair agreements, and (x) allproceeds and products of theforegoing.N/A4848-5135-1111.2JURISDICTIONSECURED PARTYFILENUMBERFILING DATESUMMARY COLLATERALDESCRIPTIONADDITIONALFILINGSNevadaHarley-DavidsonMotorcycle Trust2012-1;Harley-DavidsonCustomer FundingCorp.2012020276-407/25/12(i) All right, title and interest ofDebtor in and to the Contractslisted on the List of Contractsin effect on the closing date(including without limitation allsecurity interests and all rightsto receive certain payments),(ii) all rights of Secured Partyto payments which arecollected, including liquidationproceeds, (iii) all rights ofDebtor under any theft,physical damage, credit life,disability or other individualinsurance policy, any debtinsurance policy or any debtcancellation agreement relatingto any such Contract, anObligor or a Motorcyclesecuring such Contract, (iv) allsecurity interests in each suchMotorcycle, (v) all documentscontained in the relatedContract Files, (vi) all rights tocertain lockboxes, (vii) allrights under certain dealeragreements, (viii) all ofDebtor’s rights to certainrebates and other amountsrelating to insurance policies,debt cancellation agreements,extended service contracts andrepair agreements, and (ix) allproceeds and products of theforegoing.N/A4848-5135-1111.2JURISDICTIONSECURED PARTYFILENUMBERFILING DATESUMMARY COLLATERALDESCRIPTIONADDITIONALFILINGSNevadaHarley-DavidsonMotorcycle Trust2013-1;Harley-DavidsonCustomer FundingCorp.; andThe Bank of NewYork Mellon TrustCompany, N.A., asIndenture Trustee2013010510-204/24/13(i) All right, title and interest ofDebtor in and to the Contractslisted on the List of Contractsin effect on the closing date(including without limitation allsecurity interests and all rightsto receive certain payments),(ii) all rights of Debtor topayments which are collected,including liquidation proceeds,(iii) all rights of Debtor underany theft, physical damage,credit life, disability or otherindividual insurance policy,any debt insurance policy orany debt cancellationagreement relating to any suchContract, an Obligor or aMotorcycle securing suchContract, (iv) all securityinterests in each suchMotorcycle, (v) all documentscontained in the relatedContract Files, (vi) all rights tocertain lockboxes, (vii) allrights under certain dealeragreements, (viii) all ofDebtor’s rights to certainrebates and other amountsrelating to insurance policies,debt cancellation agreements,extended service contracts andrepair agreements, and (ix) allproceeds and products of theforegoing.N/A4848-5135-1111.2JURISDICTIONSECURED PARTYFILENUMBERFILING DATESUMMARY COLLATERALDESCRIPTIONADDITIONALFILINGSNevadaHarley-DavidsonMotorcycle Trust2014-1;Harley-DavidsonCustomer FundingCorp.; andThe Bank of NewYork Mellon TrustCompany, N.A., asIndenture Trustee2014009535-304/16/14(i) All right, title and interest ofDebtor in and to the Contractslisted on the List of Contractsin effect on the closing date(including without limitation allsecurity interests and all rightsto receive certain payments),(ii) all rights of Debtor topayments which are collected,including liquidation proceeds,(iii) all rights of Debtor underany theft, physical damage,credit life, disability or otherindividual insurance policy,any debt insurance policy orany debt cancellationagreement relating to any suchContract, an Obligor or aMotorcycle securing suchContract, (iv) all securityinterests in each suchMotorcycle, (v) all documentscontained in the relatedContract Files, (vi) all rights tocertain lockboxes, (vii) allrights under certain dealeragreements, (viii) all ofDebtor’s rights to certainrebates and other amountsrelating to insurance policies,debt cancellation agreements,extended service contracts andrepair agreements, and (ix) allproceeds and products of theforegoing.N/A4848-5135-1111.2JURISDICTIONSECURED PARTYFILENUMBERFILING DATESUMMARY COLLATERALDESCRIPTIONADDITIONALFILINGSNevadaHarley-DavidsonMotorcycle Trust2015-1;Harley-DavidsonCustomer FundingCorp.; andThe Bank of NewYork Mellon TrustCompany, N.A., asIndenture Trustee2015002666-501/28/15(i) All right, title and interest ofDebtor in and to the Contractslisted on the List of Contractsin effect on the closing date(including without limitation allsecurity interests and all rightsto receive certain payments),(ii) all rights of Debtor topayments which are collected,including liquidation proceeds,(iii) all rights of Debtor underany theft, physical damage,credit life, disability or otherindividual insurance policy,any debt insurance policy orany debt cancellationagreement relating to any suchContract, an Obligor or aMotorcycle securing suchContract, (iv) all securityinterests in each suchMotorcycle, (v) all documentscontained in the relatedContract Files, (vi) all rights tocertain lockboxes, (vii) allrights under certain dealeragreements, (viii) all ofDebtor’s rights to certainrebates and other amountsrelating to insurance policies,debt cancellation agreements,extended service contracts andrepair agreements, and (ix) allproceeds and products of theforegoing.N/A4848-5135-1111.2JURISDICTIONSECURED PARTYFILENUMBERFILING DATESUMMARY COLLATERALDESCRIPTIONADDITIONALFILINGSNevadaHarley-DavidsonMotorcycle Trust2015-2;Harley-DavidsonCustomer FundingCorp.; andThe Bank of NewYork Mellon TrustCompany, N.A., asIndenture Trustee2015013857-305/27/15(i) All right, title and interest ofDebtor in and to the Contractslisted on the List of Contractsin effect on the closing date(including without limitation allsecurity interests and all rightsto receive certain payments),(ii) all rights of Debtor topayments which are collected,including liquidation proceeds,(iii) all rights of Debtor underany theft, physical damage,credit life, disability or otherindividual insurance policy,any debt insurance policy orany debt cancellationagreement relating to any suchContract, an Obligor or aMotorcycle securing suchContract, (iv) all securityinterests in each suchMotorcycle, (v) all documentscontained in the relatedContract Files, (vi) all rights tocertain lockboxes, (vii) allrights under certain dealeragreements, (viii) all ofDebtor’s rights to certainrebates and other amountsrelating to insurance policies,debt cancellation agreements,extended service contracts andrepair agreements, and (ix) allproceeds and products of theforegoing.N/A4848-5135-1111.2JURISDICTIONSECURED PARTYFILENUMBERFILING DATESUMMARY COLLATERALDESCRIPTIONADDITIONALFILINGSNevadaTD Securities Inc., asAdministrative Agent;Harley-DavidsonWarehouse FundingCorp.2015034785-512/16/15All Debtor’s right, title andinterest in and to the retailinstallment sale contracts,promissory notes and securityagreements and related assetsand interests in propertypurportedly conveyed toHarley-Davidson WarehouseFunding Corp pursuant to thatcertain Amended and Restated2015 Receivables SaleAgreement dated as ofDecember 14, 2016.Amendment #216034831-6 filed12/14/2016amending collateral.4848-5135-1111.2JURISDICTIONSECURED PARTYFILENUMBERFILING DATESUMMARY COLLATERALDESCRIPTIONADDITIONALFILINGSNevadaHarley-DavidsonMotorcycle GrantorTrust 2016-A;Harley-DavidsonCustomer FundingCorp2016016884-506/15/16All Debtor’s right, title andinterest in and to the Contractsin effect on the closing date(including without limitation allsecurity interests createdthereunder), (ii) all rights ofDebtor to payments which arecollected, including liquidationproceeds, (iii) all rights ofDebtor under any theft,physical damage, credit life,disability or other individualinsurance policy, any debtinsurance policy or any debtcancellation agreement relatingto any such Contract, anObligor or a Motorcyclesecuring such Contract, (iv) allsecurity interests in each suchMotorcycle, (v) all documentscontained in the relatedContract Files, (vi) all rights tocertain lockboxes, (vii) allrights under certain dealeragreements, (viii) all ofDebtor’s rights to certainrebates and other amountsrelating to insurance policies,debt cancellation agreements,extended service contracts andrepair agreements, and (ix) allproceeds and products of theforegoing.N/A4848-5135-1111.2JURISDICTIONSECURED PARTYFILENUMBERFILING DATESUMMARY COLLATERALDESCRIPTIONADDITIONALFILINGSNevadaTD Securities Inc., asAdministrative Agent;Harley-DavidsonWarehouse FundingCorp.2016034830-412/14/16All Debtor’s right, title andinterest in and to the retailinstallment sale contracts,promissory notes and securityagreements and related assetsand interests in propertypurportedly conveyed toHarley-Davidson WarehouseFunding Corp pursuant to thatcertain 2016 Receivables SaleAgreement dated as ofDecember 14, 2016.N/A4848-5135-1111.2EXHIBIT ATOCREDIT AGREEMENTCommitmentsLenderCommitmentJPMorgan Chase Bank, N.A.$25,000,000.00Citibank, N.A.$25,000,000.00U.S. Bank National Association$25,000,000.00The Bank of Tokyo-Mitsubishi UFJ, Ltd.$25,000,000.00Aggregate Commitment$100,000,000.00US-DOCS\85806584.4EXHIBIT B-1TOCREDIT AGREEMENTForm of Syndicated Global Note__________ ___, 20___[HARLEY-DAVIDSON, INC., a Wisconsin corporation] [HARLEY-DAVIDSON FINANCIAL SERVICES, INC., aDelaware corporation] (the “Global Borrower”), promises to pay to the order of [ ] (the “Syndicated GlobalLender”) the aggregate unpaid principal amount of all Syndicated Global Loans made by the Syndicated Global Lender to the GlobalBorrower pursuant to Article II of the Credit Agreement hereinafter referred to (as the same may be amended, restated, supplemented orotherwise modified from time to time, the “Agreement”; capitalized terms used herein and not otherwise defined herein shall have themeanings ascribed to such terms in the Agreement), in immediately available funds on the dates and at the offices of JPMorgan ChaseBank, N.A., as Global Administrative Agent, specified in the Agreement, together with interest on the unpaid principal amount hereof atthe rates and on the dates determined in accordance with the Agreement. The Global Borrower shall pay the outstanding principal ofand accrued and unpaid interest on the Syndicated Global Loans in full on the Maturity Date.The Syndicated Global Lender shall, and is hereby authorized to, record on the schedule attached hereto, or otherwiserecord in accordance with its usual practice, the date and amount of each Syndicated Global Loan and the date and amount of eachprincipal payment hereunder.This Note is one of the Syndicated Global Notes issued pursuant to, and is entitled to the benefits of, the 364-Day CreditAgreement dated as of May 1, 2017 entered into among the Global Borrower, [Harley-Davidson, Inc., a Wisconsin corporation,][Harley-Davidson Financial Services, Inc., a Delaware corporation,] Harley-Davidson Credit Corp., a Nevada corporation, as theGuarantor and JPMorgan Chase Bank, N.A., as the Global Administrative Agent, and the institutions from time to time party thereto asLenders, including the Syndicated Global Lender, to which Agreement, as it may be amended from time to time, reference is herebymade for a statement of the terms and conditions governing this Syndicated Global Note, including the terms and conditions underwhich this Syndicated Global Note may be prepaid or its maturity date accelerated. The Agreement, among other things, provides forthe making of “Syndicated Global Loans” by the Syndicated Global Lender to the Global Borrower from time to time in an aggregateamount not to exceed at any time outstanding the Syndicated Global Lender’s Commitment, except as otherwise contemplated in theAgreement.Except as otherwise provided in the Agreement, the Global Borrower hereby waives presentment, demand, protest andnotice of any kind. No failure to exercise, and no delay in exercising, any rights hereunder on the part of the holder hereof shall operateas a waiver of such rights.THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THESTATE OF NEW YORK, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO BANKS.[HARLEY-DAVIDSON, INC.][HARLEY-DAVIDSON FINANCIAL SERVICES, INC.]B-1-1By: _____________________________Name:Title:B-1-2Schedule of Syndicated Global Loans and Payments of PrincipaltoSyndicated Global Note of [Insert relevant Global Borrower]Dated __________ ____, 20___DatePrincipal amount andcurrency of SyndicatedLoanMaturity of InterestPeriodPrincipal Amount PaidUnpaid Balance B-1-3EXHIBIT B-2TOCREDIT AGREEMENTForm of Bid Rate Note__________ ___, 20___[HARLEY-DAVIDSON, Inc., a Wisconsin corporation] [HARLEY-DAVIDSON FINANCIAL SERVICES, INC., aDelaware corporation] (the “Global Borrower”), promises to pay to the order of [ ] (the “Syndicated GlobalLender”) the aggregate unpaid principal amount of all Bid Rate Loans made by the Syndicated Global Lender to the Global Borrowerpursuant to Article II of the Credit Agreement hereinafter referred to (as the same may be amended, restated, supplemented or otherwisemodified from time to time, the “Agreement”; capitalized terms used herein and not otherwise defined herein shall have the meaningsascribed to such terms in the Agreement), in immediately available funds on the dates and at the offices of JPMorgan Chase Bank,N.A., as Global Administrative Agent, specified in the Agreement, together with interest on the unpaid principal amount hereof at therates and on the dates determined in accordance with the Agreement. The Global Borrower shall pay the outstanding principal of andaccrued and unpaid interest on each Bid Rate Loan in full on the maturity date for such Bid Rate Loan determined in accordance withthe Agreement.The Syndicated Global Lender shall, and is hereby authorized to, record on the schedule attached hereto, or otherwiserecord in accordance with its usual practice, the date, amount, maturity date and other pertinent terms of, and the interest rate andinterest payment dates applicable to, each Bid Rate Loan, and the date and amount of each principal payment hereunder.This Bid Rate Note is one of the Bid Rate Notes issued pursuant to, and is entitled to the benefits of, the 364-Day CreditAgreement dated as of May 1, 2017 entered into among the Global Borrower, [Harley-Davidson, Inc., a Wisconsin corporation,][Harley-Davidson Financial Services, Inc., a Delaware corporation,] Harley-Davidson Credit Corp., a Nevada corporation, as theGuarantor and JPMorgan Chase Bank, N.A., as the Global Administrative Agent, and the institutions from time to time party thereto asLenders, including the Syndicated Global Lender, to which Agreement, as it may be amended from time to time, reference is herebymade for a statement of the terms and conditions governing this Bid Rate Note, including the terms and conditions under which this BidRate Note may be prepaid or its maturity date accelerated.Except as otherwise provided in this Agreement, the Global Borrower hereby waives presentment, demand, protest andnotice of any kind. No failure to exercise, and no delay in exercising, any rights hereunder on the part of the holder hereof shall operateas a waiver of such rights.THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THESTATE OF NEW YORK, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO BANKS.[HARLEY-DAVIDSON, INC.]B-2-1[HARLEY-DAVIDSON FINANCIAL SERVICES, INC.]By: _____________________________Name:Title:B-2-2Schedule of Bid Rate Loans and Payments of PrincipaltoBid Rate Note of [Insert relevant Global Borrower]Dated __________ ____, 20___DatePrincipal amountand currency ofBid Rate LoanMaturity Dateof LoanInterest Rate andBasis forCalculationInterest PaymentDatesOther PertinentTermsPrincipalAmount Paid B-2-3EXHIBIT CTOCREDIT AGREEMENTForm of Assignment AgreementASSIGNMENT AND ASSUMPTIONThis Assignment and Assumption (the “Assignment and Assumption”) is dated as of the Effective Date set forth belowand is entered into by and between [Insert name of Assignor] (the “Assignor”) and [Insert name of Assignee] (the “Assignee”).Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement (as defined below),receipt of a copy of which is hereby acknowledged by the Assignee. The Standard Terms and Conditions set forth in Annex 1 attachedhereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forthherein in full.For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee herebyirrevocably purchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and theCredit Agreement, as of the Effective Date inserted by the Global Administrative Agent as contemplated below (i) all of the Assignor’srights and obligations in its capacity as a Lender under the Credit Agreement and any other documents or instruments deliveredpursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights andobligations of the Assignor under the respective facilities identified below (including any letters of credit and guarantees included insuch facilities) and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other rightof the Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising under or in connection with theCredit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in anyway based on or related to any of the foregoing, including contract claims, tort claims, malpractice claims, statutory claims and all otherclaims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligationssold and assigned pursuant to clauses (i) and (ii) above being referred to herein collectively as the “Assigned Interest”). Such sale andassignment is without recourse to the Assignor and, except as expressly provided in this Assignment and Assumption, withoutrepresentation or warranty by the Assignor.C-11.Assignor: 2.Assignee: [and is an Affiliate/Approved Fund of [identify Lender]1] 3.Borrowers:Harley-Davidson, Inc.Harley-Davidson Financial Services, Inc. 4.Global Administrative Agent:JPMorgan Chase Bank, N.A., as the Global Administrative Agent under the Credit Agreement 5.Credit Agreement:The 364-Day Credit Agreement dated as of May 1, 2017 among the Borrowers, Harley-Davidson Credit Corp., as the Guarantor, the Lenders parties thereto and JPMorgan ChaseBank, N.A., as Global Administrative Agent (as the same may be amended, restated,supplemented or otherwise modified from time to time, the “Credit Agreement”)6.Assigned Interest:Facility AssignedAggregate Amount ofCommitment/Loans for all LendersAmount of Commitment/ Loans AssignedPercentage Assigned ofCommitment/Loans2 $$% $$% $$% Effective Date: _____________ ____, 20___ [TO BE INSERTED BY GLOBAL ADMINISTRATIVE AGENT AND WHICH SHALLBE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]The terms set forth in this Assignment and Assumption are hereby agreed to:__________________________1 Select as applicable.2 Set forth, so at least 9 decimals, as a percentage of the Commitment/Loans of all Lenders thereunder.C-2 ASSIGNOR [NAME OF ASSIGNOR] By: Title: ASSIGNEE [NAME OF ASSIGNEE] By: Title: [Consented to and]3 Accepted: JPMORGAN CHASE BANK, N.A., as Global Administrative Agent By: Title: [Consented to:]4 [HARLEY-DAVIDSON, INC.] By: Title: ____________________________3 To be added only if the consent of the Global Administrative Agent is required by the terms of the Credit Agreement.4 To be added only if the consent of Harley is required by the terms of the Credit Agreement.C-3ANNEX ISTANDARD TERMS AND CONDITIONS FORASSIGNMENT AND ASSUMPTION1. Representations and Warranties.1.1 Assignor. The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the AssignedInterest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power andauthority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate thetransactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or representationsmade in or in connection with the Credit Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability,genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial condition of the Borrowers, anyof their respective Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document or (iv) the performance orobservance by the Borrowers, any of their respective Subsidiaries or Affiliates or any other Person of any of their respective obligationsunder any Loan Document.1.2. Assignee. The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all actionnecessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and tobecome a Lender under the Credit Agreement, (ii) it satisfies the requirements, if any, specified in the Credit Agreement that arerequired to be satisfied by it in order to acquire the Assigned Interest and become a Lender, (iii) from and after the Effective Date, itshall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of the Assigned Interest, shall havethe obligations of a Lender thereunder, (iv) it has received a copy of the Credit Agreement, together with copies of the most recentfinancial statements delivered pursuant to Section 6.1 thereof, as applicable, and such other documents and information as it hasdeemed appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase theAssigned Interest on the basis of which it has made such analysis and decision independently and without reliance on the GlobalAdministrative Agent or any other Lender, and (v) attached to the Assignment and Assumption is any documentation required to bedelivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by the Assignee; and (b) agrees that (i) itwill, independently and without reliance on the Global Administrative Agent, the Assignor or any other Lender, and based on suchdocuments and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not takingaction under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of theLoan Documents are required to be performed by it as a Lender.2. Payments. From and after the Effective Date, the Global Administrative Agent shall make all payments in respect ofthe Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignor for amounts which haveaccrued to but excluding the Effective Date and to the Assignee for amounts which have accrued from and after the Effective Date.3. General Provisions. This Assignment and Assumption shall be binding upon, and inure to the benefit of, the partieshereto and their respective successors and assigns. This Assignment and Assumption may be executed in any number of counterparts,which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment andAssumption by telecopy, e-mailed .pdf or any other electronic means that reproduces an image of the actual executed signature pageshall be effective as delivery of a manually executed counterpart of this Assignment and Assumption. TheC-4words “execution,” “signed,” “signature,” “delivery,” and words of like import in or relating to any document to be signed inconnection with this Assignment and Assumption and the transactions contemplated hereby shall be deemed to include ElectronicSignatures, deliveries or the keeping of records in electronic form, each of which shall be of the same legal effect, validity orenforceability as a manually executed signature, physical delivery thereof or the use of a paper-based recordkeeping system, as the casemay be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and NationalCommerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the UniformElectronic Transactions Act. This Assignment and Assumption shall be governed by, and construed in accordance with, the laws of thestate of New York, but giving effect to Federal laws applicable to banks.C-5APPENDIX I to Assignment and Assumption AgreementFORM OF NOTICE OF ASSIGNMENT[Date]To: Harley-Davidson, Inc.[Address] Attention:JPMorgan Chase Bank, N.A. as Global Administrative Agent[Address]Attention:From: [NAME OF ASSIGNOR] (the “Assignor”)[NAME OF ASSIGNEE] (the “Assignee”)1. We refer to the 364-Day Credit Agreement (as it may be amended, modified, renewed or extended from time to time, the“Credit Agreement”) described in Item 5 of the Assignment Agreement defined below. Capitalized terms used herein and not otherwisedefined herein shall have the meanings attributed to them in the Credit Agreement.2. This Notice of Assignment (this “Notice”) is given and delivered to the Global Administrative Agent pursuant to Section13.3(B) of the Credit Agreement.3. The Assignor and the Assignee have entered into an Assignment and Assumption Agreement, dated as of _________ ___,20___ (the “Assignment Agreement”), pursuant to which, among other things, the Assignor has sold, assigned, delegated andtransferred to the Assignee, and the Assignee has purchased, accepted and assumed from the Assignor the Assigned Interest defined inthe Assignment Agreement. The Effective Date of the Assignment Agreement shall be as specified in the Assignment Agreement.4. The Assignor and the Assignee hereby give to Harley and the Global Administrative Agent notice of the assignment anddelegation referred to herein.5. The Assignee hereby represents and warrants that none of the funds, monies, assets or other consideration being used tomake the purchase pursuant to the Assignment Agreement are “plan assets” as defined under ERISA and that its rights, benefits, andinterests in and under the Loan Documents will not be “plan assets” under ERISA.C-66. The Assignee authorizes the Administrative Agent to act as its contractual representative under the Loan Documents inaccordance with the terms thereof.NAME OF ASSIGNORNAME OF ASSIGNEEBy:_____________________________Name:Title:By:_____________________________Name:Title: Acknowledged and consented to by:JPMORGAN CHASE BANK, N.A., as Global AdministrativeAgentAcknowledged and consented to by:HARLEY-DAVIDSON, INC.By:_____________________________Name:Title:By:_____________________________Name:Title:C-7EXHIBIT DTOCREDIT AGREEMENTList of Closing DocumentsAttachedD-1364-DAY CREDIT FACILITYTOHARLEY-DAVIDSON, INC. and HARLEY-DAVIDSON FINANCIAL SERVICES, INC., as the U.S. BorrowersMay 1, 2017LIST OF CLOSING DOCUMENTSA. CREDIT AGREEMENT1.364-Day Credit Agreement (the “Credit Agreement”) dated as of May 1, 2017 entered into among Harley-Davidson, Inc., aWisconsin Corporation (“Harley”), Harley-Davidson Financial Services, Inc., a Delaware corporation (“HDFS” and togetherwith Harley, the “Borrowers”), Harley-Davidson Credit Corp., a Nevada corporation (“HDCC”), the institutions from time totime a party thereto (the “Lenders”) and JPMorgan Chase Bank, N.A., as the Global Administrative Agent, evidencing a 364-day revolving credit facility in the original aggregate amount of $100,000,000.EXHIBITSEXHIBIT A -- Commitments (Definitions)EXHIBIT B-1 -- Form of Syndicated Global Note (Definitions)EXHIBIT B-2 -- Form of Bid Rate Note (Definitions)EXHIBIT C -- Form of Assignment Agreement (§13.3)EXHIBIT D -- List of Closing Documents (§4.1)SCHEDULESSchedule I -- Funding Protocols re: Syndicated Global LoansSchedule II -- Intercompany Subordination TermsSchedule 6.2.2(c) -- Liens2.Syndicated Global Notes executed by the applicable Borrower pursuant to the Credit Agreement in favor of requesting Lenders.3.Bid Rate Notes executed by the applicable Borrower pursuant to the Credit Agreement in favor of the requesting Lenders.B. CORPORATE DOCUMENTS4.Certificate of the Secretary or an Assistant Secretary of each Borrower certifying (i) that attached thereto is a true and correctcopy of resolutions of the Board of Directors (or comparable governing body) of such Borrower approving and authorizingthe execution, delivery and performance of each1 Each capitalized term used herein and not defined herein shall have the meaning assigned to such term in the above-defined Credit Agreement. Itemsappearing in bold and italics shall be prepared and/or provided by the Borrowers and/or their counsel.1US-DOCS\85806567.3document to which it is a party, (ii) that there have been no changes in the Certificate of Incorporation (or comparableconstituent document) of such Borrower since the date of the most recent certification thereof by the appropriate governmentalauthority in its jurisdiction of organization delivered to the Global Administrative Agent, (iii) Good Standing certificate of suchBorrower from the office of the Secretary of State (or analogous governmental body) of its jurisdiction of organization (to theextent such concept is applicable in such jurisdiction), (iv) the By-Laws (or other comparable governing document) attachedthereto of such Borrower as in effect on the date of such certification, and (v) the names and true signatures of the incumbentofficers of such Borrower authorized to sign the Loan Documents to which such Borrower is a party.5.Certificate of the Secretary or an Assistant Secretary of HDCC certifying (i) that attached thereto is a true and correct copy ofresolutions of the Board of Directors of HDCC approving and authorizing the execution, delivery and performance of eachdocument to which it is a party, (ii) that there have been no changes in the Certificate of Incorporation (or comparableconstituent document) of HDCC since the date of the most recent certification thereof by the Secretary of State of Nevadadelivered to the Global Administrative Agent, (iii) Good Standing certificate for HDCC from the office of the Secretary of Stateof Nevada, (iv) the By-Laws attached thereto of HDCC as in effect on the date of such certification, and (v) the names and truesignatures of the incumbent officers of HDCC authorized to sign the Loan Documents to which HDCC is a party.C. OPINIONS6.Opinion letter of Foley & Lardner LLP, U.S. counsel to Harley, HDFS and HDCC addressed to the Global Administrative Agentand the Lenders.7.Opinion letter of Paul J. Jones, general counsel of Harley, HDFS and HDCC addressed to the Global Administrative Agent andthe Lenders.D. DOCUMENTATION RELATING TO HARLEY-DAVIDSON, INC.8.Support Agreement, dated as of September 26, 1996 between Harley and HDFS evidencing Harley’s agreement to supportcertain debts of HDFS and its Subsidiaries, together with and as supplemented by the letter agreement dated as of May 1, 2017to the Global Administrative Agent from Harley and HDFS.9.Subordination Agreement from Harley for the benefit of the Global Administrative Agent.2Exhibit 4.17OFFICERS’ CERTIFICATE OF HARLEY-DAVIDSON FINANCIAL SERVICES, INC.Pursuant to Sections 102 and 301 of the IndentureReference is made to the Indenture dated as of March 4, 2011 (the “Indenture”) among Harley-Davidson FinancialServices, Inc. (the “Company”), Harley-Davidson Credit Corp. (the “Guarantor”) and The Bank of New York Mellon TrustCompany, N.A., as trustee (“Trustee”). Terms used and not otherwise defined herein shall have the meanings ascribed thereto in theIndenture.Pursuant to Sections 102 and 301 of the Indenture, the undersigned, Ryan Green and James Darrell Thomas, in theirrespective capacities as Vice President and Chief Financial Officer of the Company, and Vice President and Treasurer of theCompany, hereby certify that:(1) There is hereby established a new series of Securities under the Indenture titled 2.550% Medium-Term Notes due2022 (the “Notes”).(2) The Notes shall be in substantially the form of Exhibit A hereto.(3) In addition to the terms provided in, or established pursuant to, the Indenture and the offering memorandum and thepricing supplement, both dated as of June 6, 2017, relating to the Notes (together referred to as the “Offering Memorandum”), theNotes, as authenticated and delivered, shall have the terms set forth in Exhibit A hereto (which terms are incorporated herein byreference and deemed to be set forth herein in full); provided, however, that in the event of a conflict between the provisions of theNotes and the Offering Memorandum, the provisions of the Notes shall prevail.(4) The Notes shall be registered in the name set forth on Exhibit A hereto and the Notes shall be delivered in themanner specified in the Administrative Procedures attached as Exhibit A to the Company Order delivered as of the date hereof and asdescribed in the Private Placement Agency Agreement dated as of March 1, 2011, among the Company, the Guarantor and the agentsparty thereto.(5) The issuance of Notes designated as 2.550% Medium-Term Notes due 2022, in an initial aggregate principalamount of $400,000,000, has been approved and authorized in accordance with the provisions of the Indenture pursuant to resolutionsadopted by the Board of Directors of the Company by unanimous written consent dated as of May 22, 2017 and by this Officers’Certificate; provided, however, that the Company shall have the right to reopen the series of the Notes and issue additional Securities,which shall be part of the same series as the Notes initially issued (except for the issue date, the public offering price and, in somecases, the first interest payment date).14835-3401-6329.3(6) All covenants and conditions precedent provided for in the Indenture relating to the establishment of the Notes, theterms of the Notes and the authentication and issuance of the Notes have been complied with.(7) No Event of Default has occurred and is continuing and the execution and delivery of the Indenture will not resultin a breach or violation of any of the terms and provisions of, or constitute a default under, the certificate of incorporation or bylaws ofthe Company, or any order of any court or administrative agency entered in any proceeding to which the Company is a party or bywhich it is bound or to which it is subject.Each of the undersigned officers of the Company further states (a) that he has read the applicable provisions of theIndenture, including but not limited to Section 301 thereof, and the definitions relating thereto in each case relating to the issuance,authentication and delivery of the Notes, (b) that the statements made in this certificate are based upon an investigation andexamination of the provisions of the Indenture and upon the relevant books and records of the Company, (c) in the opinion of suchofficer, he has made such examination or investigation as is necessary to enable such officer to express an informed opinion as towhether or not the covenants and conditions set forth in the Indenture relating to the issuance, authentication and delivery of the Noteshave been complied with and (d) in the opinion of such officer, such covenants and conditions relating to the issuance, authenticationand delivery of the Notes have been complied with.[Signature page follows]2IN WITNESS WHEREOF, each of the undersigned officers of the Company has affixed his signature this 9th day June,2017./s/ Ryan O. Green Name: Ryan GreenTitle: Vice President and Chief Financial Officer of Harley-Davidson FinancialServices, Inc./s/ J. Darrell Thomas Name: J. Darrell ThomasTitle: Vice President and Treasurerof Harley-Davidson Financial Services, Inc.[HDFS Officers’ Certificate Pursuant to Sections 102 and 301 of the Indenture]Exhibit A to Officers’ Certificate Pursuant to Sections 102 and 301 of the Indenture HARLEY-DAVIDSON FINANCIAL SERVICES, INC. 2.550% MEDIUM-TERM NOTES DUE 2022Fully and Unconditionally Guaranteed by Harley-Davidson Credit Corp.THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTERREFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY (AS DEFINED IN THE INDENTURE) OR ANOMINEE THEREOF. THIS GLOBAL SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THENAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE ONLY IN THE LIMITEDCIRCUMSTANCES DESCRIBED IN THE INDENTURE AND, UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE ORIN PART FOR SECURITIES IN DEFINITIVE FORM, THIS GLOBAL SECURITY MAY NOT BE TRANSFERREDEXCEPT AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY, OR BY A NOMINEE OF THEDEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY, OR BY THE DEPOSITORYOR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITORY.UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORYTRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (“DTC”), TO THE COMPANY OR ITS AGENT FORREGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED INTHE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZEDREPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BEREQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USEHEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTEREDOWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE“SECURITIES ACT”) OR THE SECURITIES LAWS OF ANY OTHER JURISDICTION, AND, ACCORDINGLY, NEITHERTHIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCHREGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATIONREQUIREMENTS OF THE SECURITIES ACT AND ANY OTHER APPLICABLE JURISDICTION. BY ITS ACCEPTANCEHEREOF, THE HOLDER OF THIS SECURITY OR ANY INTEREST OR PARTICIPATION HEREIN (1) REPRESENTSTHAT (A) IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIESACT), OR (B) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTIONWITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, AND (2) AGREES TO OFFER, SELL OROTHERWISE TRANSFERSUCH SECURITY, PRIOR TO THE DATE (THE “RESALE RESTRICTION TERMINATION DATE”) WHICH IS ONEYEAR AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THECOMPANY OR ANY AFFILIATE THEREOF WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OFSUCH SECURITY) ONLY (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO ANEFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIESARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS AQUALIFIED INSTITUTIONAL BUYER THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF AQUALIFIED INSTITUTIONAL BUYER TO WHICH NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE INRELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS IN OFFSHORETRANSACTIONS WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO ANACCREDITED INVESTOR WITHIN THE MEANING OF SUBPARAGRAPH (a)(1), (2), (3) OR (7) OF RULE 501 OFREGULATION D UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS SECURITY OR ANY INTEREST ORPARTICIPATION HEREIN FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN ACCREDITEDINVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE INCONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT OR (F) PURSUANT TOANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,SUBJECT TO THE COMPANY’S AND THE TRUSTEE’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER(i) PURSUANT TO CLAUSES (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND (ii) IN EACH OF THEFOREGOING CASES, TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THEOTHER SIDE OF THIS SECURITY BE COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE.THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTIONTERMINATION DATE.THE HOLDER OF THIS SECURITY WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANYPURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTHABOVE.2HARLEY-DAVIDSON FINANCIAL SERVICES, INC. 2.550% MEDIUM-TERM NOTES DUE 2022Fully and Unconditionally Guaranteed by Harley-Davidson Credit Corp.No. Principal Amount $CUSIP No. as revised by the Schedule of ISIN Increases and Decreases in GlobalCommon Code No. Note attached heretoIssue Price: 99.841%Maturity Date: June 9, 2022Original Issue Date: June 9, 2017Index Maturity: [ ] Original Issue Discount Note Total Amount of OID: Yield to Maturity: % Initial Accrual Period OID:[X] Fixed Rate Interest Rate: 2.550% [ ] Floating Rate Interest Rate Basis: ___ CD RateSpecified Currency (if other than U.S. dollars): N/A___ CMT Rate [ ] CMT Reuters Page FRBCMT: [ ] CMT Reuters Page FEDCMT:Option To Receive Payments In Specified Currency (non-U.S. dollar denominated Note): N/A___ Commercial Paper Rate ___ Federal Funds Rate ___ LIBORAuthorized Denomination: Minimum denominations of$2,000 and integral multiples of $1,000 in excess thereof ___ Prime RatePlace of Payment (if other than as set forth in the Indenture):N/A3___ Treasury Rate ___ Other Spread (Plus Or Minus):Initial Redemption Date: Initial Redemption Percentage: Annual Redemption Percentage Reduction: Repayment Date:Spread Multiplier: %Renewable: [ ] Yes [ ] No Extendible: [ ] Yes [ ] NoInterest Category: [ ] Regular Floating Rate NoteFinal Maturity Date:[ ] Floating Rate/Fixed Rate Note Fixed Rate Commencement Date: Fixed Interest Rate: % [ ] Inverse Floating Rate NoteInitial Interest Rate:Initial Interest Reset Date:Maximum Interest Rate: %Interest Reset Dates:Minimum Interest Rate: %Interest Payment Dates (in the case of a Floating Rate Note and, in thecase of a Fixed Rate Note, other than as set forth below): N/A Regular Record Dates (if other than as set forth below): N/A Interest Determination Dates (if other than as set forth below): N/A Additional Amounts applicable for Company: [ ] Yes [X] No Additional Amounts applicable for Guarantor: [ ] Yes [X] No Addendum AttachedOther Provisions:[ ] Yes 4[X] No Authorized Denomination (only if non-U.S. dollar denominated Note):N/A Calculation Agent (if other than the Trustee): N/A Interest Payment Period: N/A Harley-Davidson Financial Services, Inc., a corporation duly organized under the laws of the State of Delaware (herein calledthe “Company,” which term includes any successor corporation under the Indenture hereinafter referred to), for value received, herebypromises to pay to Cede & Co., or registered assigns, the Principal Amount specified above, as revised by the Schedule of Increasesand Decreases in Global Note attached hereto, on the Maturity Date specified above and to pay to the registered holder of this Note(the “Holder”) interest on said Principal Amount at a rate per annum specified above and upon the terms provided below under eitherthe heading “Provisions Applicable to Fixed Rate Notes Only” or “Provisions Applicable to Floating Rate Notes Only.”This Note is one of the Company’s duly authorized issue of notes in the series titled 2.550% Medium-Term Notes due 2022(herein referred to as the “Notes”), all issued or to be issued under an indenture, dated as of March 4, 2011 (as may be supplementedfrom time to time, the “Indenture”), among the Company, Harley-Davidson Credit Corp. (the “Guarantor”) and The Bank of NewYork Mellon Trust Company, N.A., as trustee (the “Trustee,” which term includes any successor trustee under the Indenture), to whichIndenture reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of theTrustee, the Company, the Guarantor and the Holders of the Notes and of the terms upon which the Notes are, and are to be,authenticated and delivered. The Notes of this series are limited (except as otherwise provided in the Indenture) to the aggregateprincipal amount established from time to time by the Company Board of Directors. The Notes of this series may be issued at varioustimes with different maturity dates and different principal repayment provisions, may bear interest at different rates and may otherwisevary, all as provided in the Indenture. The Notes of this series may be subject to redemption upon notice and in accordance with theprovisions of this Note and the Indenture. The Company and the Guarantor may defease the Notes of this series in accordance with theprovisions of the Indenture.To secure the due and punctual payment of principal, any premium, any interest and Additional Amounts (as defined in theIndenture) on this Note by the Company under the Indenture, when and as the same shall become due and payable, whether at theMaturity Date, by declaration of acceleration, call for redemption or otherwise, the Guarantor has unconditionally guaranteed this Notepursuant to the terms of the Guarantee endorsed hereon and in Section 1401 of the Indenture (the “Guarantee”).As used herein, the term “Business Day” means any day, other than a Saturday or Sunday, that is neither a legal holiday nor aday on which commercial banks are authorized or5required by law, regulation or executive order to close in the City of New York; provided, however, that if a Specified Currency isspecified above, the day is also not a day on which commercial banks are authorized or required by law, regulation or executive orderto close in the Principal Financial Center (as defined below) of the country issuing such Specified Currency or, if such SpecifiedCurrency is the Euro, the day is also a day on which the Trans-European Automated Real-Time Gross Settlement Express Transfer(TARGET) System is open; provided further that if LIBOR is indicated above to be an applicable Interest Rate Basis, the day is also aLondon Banking Day (as defined below).“Principal Financial Center” means, unless otherwise provided in this Note, the capital city of the country issuing the SpecifiedCurrency; except that with respect to United States dollars, Australian dollars, Canadian dollars, South African rand and Swiss francs,the “Principal Financial Center” will be the City of New York, Sydney and (solely in the case of the Specified Currency) Melbourne,Toronto, Johannesburg and Zurich, respectively.“London Banking Day” means a day which commercial banks are open for business, including dealings in U.S. dollars, inLondon.Provisions Applicable To Fixed Rate Notes Only:If the “Fixed Rate” line above is checked, unless otherwise specified above, the Company will pay interest semiannually onJune 9 and December 9 of each year (each such date fixed for the payment of interest, an “Interest Payment Date”) commencing onDecember 9, 2017, and ending on the Maturity Date or upon earlier redemption or repayment to the person to whom principal ispayable. Interest shall accrue from the Original Issue Date, or from the most recent Interest Payment Date to which interest has beenpaid or duly provided for on this Note to, but excluding, the next following Interest Payment Date, Maturity Date, or earlier date ofredemption or repayment, as the case may be. Interest on Fixed Rate Notes will be computed by the Company on the basis of a 360-day year consisting of twelve 30-day months.If any Interest Payment Date or the Maturity Date (or the date of earlier redemption or repayment) of this Fixed Rate Note fallson a day that is not a Business Day, the payment will be made on the next Business Day as if it were made on the date such paymentwas due, and no interest will accrue on the amount so payable for the period from and after such Interest Payment Date or the MaturityDate (or the date of earlier redemption or repayment), as the case may be.Provisions Applicable To Floating Rate Notes Only:If the “Floating Rate” line above is checked, the Company will pay interest on the Interest Payment Dates shown specifiedabove at the Initial Interest Rate specified above until the first Interest Reset Date specified above following the Original Issue Datespecified above and thereafter at a rate determined in accordance with the provisions hereinafter set forth under the headings“Determination of CD Rate,” “Determination of CMT Rate,” “Determination of Commercial Paper Rate,” “Determination of FederalFunds Rate,” “Determination of LIBOR,” “Determination of Prime Rate” or “Determination of Treasury Rate,” depending on whetherthe6Interest Rate Basis is the CD Rate, the CMT Rate, the Commercial Paper Rate, the Federal Funds Rate, LIBOR, the Prime Rate, theTreasury Rate or other Interest Rate Basis.An interest payment shall be the amount of interest accrued from and including the Original Issue Date, or from and includingthe last Interest Payment Date to which interest has been paid, to, but excluding, the next following Interest Payment Date, MaturityDate, or date of earlier redemption or repayment, as the case may be (an “Interest Period”). Notwithstanding any provision herein tothe contrary, the interest rate hereon shall not be greater than the Maximum Interest Rate, if any, or less than the Minimum InterestRate, if any, specified above.If any Interest Payment Date for any Floating Rate Note, other than an Interest Payment Date at maturity, would fall on a daythat is not a Business Day, such Interest Payment Date will be the following day that is a Business Day, and interest will continue toaccrue to the following Business Day, except that if LIBOR is the applicable Interest Rate Basis, if such Business Day is in the nextsucceeding calendar month, such Interest Payment Date will be the immediately preceding day that is a Business Day. If the MaturityDate (or date of earlier redemption or repayment) of any Floating Rate Note would fall on a day that is not a Business Day, thepayment of interest and principal (and premium, if any) may be made on the next succeeding Business Day, and no interest on suchpayment will accrue for the period from and after the Maturity Date (or the date of earlier redemption or repayment).Commencing with the first Interest Reset Date specified above following the Original Issue Date, the rate at which interest onthis Note is payable shall be adjusted daily, weekly, monthly, quarterly, semi-annually or annually as specified above under “InterestReset Dates.”The interest rate borne by this Note will be determined as follows:(i) Unless the Interest Category of this Note is specified above as a “Floating Rate/Fixed Rate Note” or an “Inverse FloatingRate Note” or in the event either “Other Provisions” or an Addendum hereto applies, in each case, relating to a different interest rateformula, this Note shall be designated as a “Regular Floating Rate Note” and, except as set forth below or specified above under“Other Provisions” or in an Addendum hereto, shall bear interest at the rate determined by reference to the applicable Interest RateBasis or Bases (a) plus or minus the applicable Spread, if any, and/or (b) multiplied by the applicable Spread Multiplier, if any; in eachcase as specified above. Commencing on the Initial Interest Reset Date, the rate at which interest on this Note shall be payable shall bereset as of each Interest Reset Date specified above; provided, however, that the interest rate in effect for the period, if any, from theOriginal Issue Date to the Initial Interest Reset Date shall be the Initial Interest Rate.(ii) If the Interest Category of this Note is specified above as a “Floating Rate/Fixed Rate Note” then, except as set forthbelow or specified above under “Other Provisions” or in an Addendum hereto, this Note shall bear interest at the rate determined byreference to the applicable Interest Rate Basis or Bases (a) plus or minus the applicable Spread, if any, and/or (b) multiplied by theSpread Multiplier, if any, in each case as specified above. Commencing on the Initial Interest Reset Date, the rate at which interest onthis Note shall be payable shall be reset as of each Interest Reset Date; provided, however, that (y) the interest rate in effect for the7period, if any, from the Original Issue Date to the Initial Interest Reset Date shall be the Initial Interest Rate and (z) the interest rate ineffect for the period commencing on, and including, the Fixed Rate Commencement Date specified above to the Maturity Date (or dateof earlier redemption or repayment) shall be the Fixed Interest Rate specified above or, if no Fixed Interest Rate is so specified, theinterest rate in effect on the day immediately preceding the Fixed Rate Commencement Date.(iii) If the Interest Category of this Note is specified above as an “Inverse Floating Rate Note” then, except as set forth belowor specified above under “Other Provisions” or in an Addendum hereto, this Note shall bear interest at (a) the Fixed Interest Ratespecified above minus (b) the rate determined by reference to the applicable Interest Rate Basis or Bases:(x) plus or minus the applicable Spread, if any, and/or(y) multiplied by the applicable Spread Multiplier, if any, in each case as specified above;provided, however, that, unless otherwise specified above under “Other Provisions” or in an Addendum hereto, the interest rate hereonshall not be less than zero. Commencing on the Initial Interest Reset Date, the rate at which interest on this Note shall be payable shallbe reset on each Interest Reset Date; provided, however, that the interest rate in effect for the period, if any, from the Original IssueDate to the Initial Interest Reset Date shall be the Initial Interest Rate set forth above.The “Spread” is the number of basis points (one basis point equals one-hundredth of a percentage point) specified above to beadded to or subtracted from the Interest Rate Basis for a Floating Rate Note, and the “Spread Multiplier” is the percentage specifiedabove by which the Interest Rate Basis for such Floating Rate Note will be multiplied. Both a Spread and/or a Spread Multiplier maybe applicable to the Interest Rate Basis for a particular Floating Rate Note, as set forth above.Each such adjusted Interest Rate Basis shall be applicable on and after the Interest Reset Date to which it relates but notincluding the next succeeding Interest Reset Date. If any Interest Reset Date is a day that is not a Business Day, such Interest ResetDate shall be postponed to the next day that is a Business Day, except that if the rate of interest on this Note shall be determined byreference to LIBOR and such Business Day is in the next succeeding calendar month, such Interest Reset Date shall be theimmediately preceding Business Day. In addition, if the Treasury Rate is the applicable Interest Rate Basis and the InterestDetermination Date would otherwise fall on an Interest Reset Date, then the Interest Reset Date will be postponed to the nextsucceeding Business Day. Subject to applicable provisions of law (including usury laws) and except as specified in this Note, on eachInterest Reset Date, the rate of interest on this Note shall be the rate determined in accordance with the provisions of the applicableheading below.With respect to a Floating Rate Note, accrued interest shall be calculated by multiplying the principal amount thereof by anaccrued interest factor. Such accrued interest factor will be computed by adding the interest factors calculated for each day in theInterest Period or from the8last date from which accrued interest is being calculated. The interest factor for each such day is computed by dividing the interest rateapplicable to such day by 360, in the cases of CD Rate Notes, Commercial Paper Rate Notes, Federal Funds Rate Notes, LIBORNotes and Prime Rate Notes or by the actual number of days in the year, in the cases of CMT Rate Notes and Treasury Rate Notes.The interest rate applicable to any day that is an Interest Reset Date will be the interest rate effective on such Interest Reset Date. Theinterest rate applicable to any other day will be the interest rate for the immediately preceding Interest Reset Date (or, if none, the InitialInterest Rate, as specified above).The “Calculation Date,” where applicable, pertaining to an Interest Determination Date will be the earlier of (i) the tenthcalendar day after such Interest Determination Date or, if any such day is not a Business Day, the next succeeding Business Day or(ii) the Business Day preceding the applicable Interest Payment Date or the Maturity Date (or the date of earlier redemption orrepayment), as the case may be.For Floating Rate Notes, The Bank of New York Mellon Trust Company, N.A. shall be the calculation agent unless anothercalculation agent is specified above (the “Calculation Agent”). The interest rate applicable to each interest period will be determined bythe Calculation Agent on or prior to the applicable Calculation Date. At the request of the Holder, the Calculation Agent will providethe interest rate then in effect and, if determined, the interest rate which will become effective on the next Interest Reset Date.All percentages resulting from any calculation of the rate of interest on a Floating Rate Note will be rounded, if necessary, tothe nearest one hundred-thousandth of a percent (.0000001), with five one-millionths of a percentage point rounded upward, and alldollar amounts used in or resulting from such calculation on Floating Rate Notes will be rounded to the nearest cent (with one-half centbeing rounded upward).Determination of CD Rate. If the Interest Rate Basis, as specified above, is, or is calculated by reference to, the CD Rate,unless otherwise specified above, the “CD Rate” for each Interest Reset Date will be determined by the Calculation Agent as of thesecond Business Day prior to such Interest Reset Date (a “CD Interest Determination Date”) and shall be the rate on the applicable CDInterest Determination Date for negotiable United States dollar certificates of deposit having the Index Maturity specified above aspublished in H.15(519) (as defined below) on such CD Interest Determination Date under the heading “CDs (secondary market).” Ifthe rate referred to in the preceding sentence is not so published by 3:00 p.m., New York City time, on the applicable Calculation Date,the CD Rate shall be the rate on the applicable CD Interest Determination Date for negotiable United States dollar certificates ofdeposit of the Index Maturity specified above as published in H.15 Daily Update (as defined below), or other recognized electronicsource used for the purpose of displaying the applicable rate, under the caption “CDs (secondary market).” If the rate referred to in thepreceding sentence is not so published by 3:00 p.m., New York City time, on the applicable Calculation Date, the CD Rate shall be therate on the applicable CD Interest Determination Date calculated by the Calculation Agent on the Notes as the arithmetic mean of thesecondary market offered rates as of 10:00 a.m., New York City time, on the applicable CD Interest Determination Date, of threeleading9non-bank dealers in negotiable United States dollar certificates of deposit in the City of New York (which may include an agent or itsaffiliates) selected by the Company for negotiable United States dollar certificates of deposit of major United States money marketbanks with a remaining maturity closest to the Index Maturity specified above in an amount that is representative for a singletransaction in that market at that time. If the dealers selected by the Company as provided in the preceding sentence are not quoting asmentioned in such sentence, the CD Rate shall be the CD Rate in effect on the applicable CD Interest Determination Date.“H.15(519)” means the weekly statistical release designated as H.15(519), or any successor publication, published by theBoard of Governors of the Federal Reserve System.“H.15 Daily Update” means the daily update of H.15(519), available through the world-wide-web site of the Board ofGovernors of the Federal Reserve System at http://www.federalreserve.gov/releases/h15/update, or any successor site or publication.Determination of CMT Rate. If the Interest Rate Basis, as specified above, is, or is calculated by reference to, the CMT Rate,unless otherwise specified above, the “CMT Rate” for each Interest Reset Date will be determined by the Calculation Agent as of thesecond Business Day prior to such Interest Reset Date (a “CMT Interest Determination Date”) and shall be, if “CMT Reuters PageFRBCMT” is specified above, the percentage equal to the yield for United States Treasury securities at “constant maturity” having theIndex Maturity specified above, as the yield is displayed on Reuters, Inc. (or any successor or similar service), on page FRBCMT (orany other page as may replace the specified page on that service under the caption “Treasury Constant Maturities”) (“Reuters PageFRBCMT”). If the rate referred to in the preceding sentence does not appear on Reuters Page FRBCMT, the CMT Rate for suchCMT Interest Determination Date will be a percentage equal to the yield for United States Treasury securities at “constant maturity”having the Index Maturity specified above, and for the applicable CMT Interest Determination Date as published in H.15(519) underthe caption “Treasury Constant Maturities.” In the event the rate referred to in the preceding sentence does not appear in H.15(519),then the CMT Rate for such CMT Interest Determination Date will be the rate on the applicable CMT Interest Determination Date forthe period of the Index Maturity specified above, as may then be published by either the Board of Governors of the Federal ReserveSystem or the United States Department of the Treasury that the Calculation Agent determines to be comparable to the rate whichwould otherwise have been published in H.15(519). In the event the rate referred to in the preceding sentence is not published, theCMT Rate on the applicable CMT Interest Determination Date will be calculated by the Calculation Agent as a yield-to-maturity basedon the arithmetic mean of the secondary market bid prices at approximately 3:30 p.m., New York City time, on the applicable CMTInterest Determination Date of three leading primary United States government securities dealers in the City of New York, which mayinclude an agent of the Company or such agent’s affiliates (each a “Reference Dealer”), selected by the Company (from five ReferenceDealers selected by the Company and eliminating the highest quotation (or, in the event of equality, one of the highest), and the lowestquotation (or, in the event of equality, one of the lowest)), for United States Treasury securities with an original maturity equal to theIndex Maturity specified above, a remaining term to maturity no more than one year shorter than the Index Maturity specified aboveand in a principal amount that is10representative for a single transaction in the securities in the market at that time. If fewer than five but more than two of the pricesreferred to in the above sentence are provided as requested, the CMT Rate on the applicable CMT Interest Determination Date will becalculated by the Calculation Agent based on the arithmetic mean of the bid prices obtained, and neither the highest nor the lowest ofthe quotations shall be eliminated; provided, however, that if fewer than three prices referred to above are provided as requested, theCMT Rate on the applicable CMT Interest Determination Date will be calculated by the Calculation Agent as a yield-to-maturity basedon the arithmetic mean of the secondary market bid prices as of approximately 3:30 p.m., New York City time, on the applicable CMTInterest Determination Date of three Reference Dealers selected by the Company from five Reference Dealers selected by theCompany and eliminating the highest quotation or, in the event of equality, one of the highest and the lowest quotation or, in the eventof equality, one of the lowest, for United States Treasury securities with an original maturity greater than the Index Maturity specifiedabove, and a remaining term to maturity closest to the Index Maturity specified above, and in a principal amount that is representativefor a single transaction in the securities in the market at that time. However, if fewer than five but more than two prices referred toabove are provided as requested, the CMT Rate on the applicable CMT Interest Determination Date will be calculated by theCalculation Agent based on the arithmetic mean of the bid prices obtained, and neither the highest nor the lowest of the quotations willbe eliminated. If fewer than three prices referred to above are provided as requested, the CMT Rate on the applicable CMT InterestDetermination Date will be the CMT Rate in effect on the applicable CMT Interest Determination Date. If the CMT Reuters PageFEDCMT is specified above, the CMT Rate for such CMT Interest Determination Date will be a percentage equal to the one-week orone-month, as specified above, and will be the average yield for United States Treasury securities at “constant maturity” having theIndex Maturity specified above, as the yield is displayed on Reuters, Inc. (or any successor service) on page FEDCMT (or any otherpage as may replace that specified page on that service) (“Reuters Page FEDCMT”), for the week or month, as applicable, endedimmediately preceding the week or month, as applicable, in which the related CMT Interest Determination Date falls. If the ratereferred to in the preceding sentence does not appear on Reuters Page FEDCMT, then the CMT Rate for such CMT InterestDetermination Date will be a percentage equal to the one-week or one-month, as specified above, average yield for United StatesTreasury securities at “constant maturity” having the Index Maturity specified above, and for the week or month, as applicable,preceding the applicable CMT Interest Determination Date as published in H.15(519) opposite the caption “Treasury ConstantMaturities.” If the rate referred to in the preceding sentence does not appear in H.15(519), then the CMT Rate for such CMT InterestDetermination Date will be the one-week or one-month, as specified above, average yield for United States Treasury securities at“constant maturity” having the Index Maturity specified above, as otherwise announced by the Federal Reserve Bank of New York forthe week or month, as applicable, ended immediately preceding the week or month, as applicable, in which the related CMT InterestDetermination Date falls. If the Federal Reserve Bank of New York does not publish the rate referred to above, the rate on theapplicable CMT Interest Determination Date will be calculated by the Calculation Agent as a yield-to-maturity based on the arithmeticmean of the secondary market bid prices at approximately 3:30 p.m., New York City time, on the applicable CMT InterestDetermination Date of three Reference Dealers selected by the Company (from five Reference Dealers selected by the Company andeliminating the highest quotation (or, in the11event of equality, one of the highest), and the lowest quotation (or, in the event of equality, one of the lowest)), for United StatesTreasury securities with an original maturity equal to the Index Maturity specified above, and a remaining term to maturity no morethan one year shorter than the Index Maturity specified above, and in a principal amount that is representative for a single transaction inthe securities in the market at that time. If fewer than five but more than two of the prices referred to above are provided as requested,the rate on the applicable CMT Interest Determination Date will be calculated by the Calculation Agent based on the arithmetic meanof the bid prices obtained, and neither the highest nor the lowest of the quotations shall be eliminated. If fewer than three prices referredto above are provided as requested, the rate on the applicable CMT Interest Determination Date will be calculated by the CalculationAgent as a yield-to-maturity based on the arithmetic mean of the secondary market bid prices as of approximately 3:30 p.m., NewYork City time, on the applicable CMT Interest Determination Date of three Reference Dealers selected by the Company (from fiveReference Dealers selected by the Company and eliminating the highest quotation or (in the event of equality, one of the highest) andthe lowest quotation (or, in the event of equality, one of the lowest)), for United States Treasury securities with an original maturitygreater than the Index Maturity specified above, and a remaining term to maturity closest to the Index Maturity specified above and willbe in a principal amount that is representative for a single transaction in the securities in the market at that time. If fewer than five butmore than two prices referred to above are provided as requested, the rate will be calculated by the Calculation Agent based on thearithmetic mean of the bid prices obtained, and neither the highest nor the lowest of the quotations will be eliminated, or if fewer thanthree prices referred to above are provided as requested, the CMT Rate will be the CMT Rate in effect on the applicable CMT InterestDetermination Date. If two United States Treasury securities with an original maturity greater than the Index Maturity as specifiedabove have remaining terms to maturity equally close to the Index Maturity specified above, the quotes for the United States Treasurysecurity with the shorter original remaining term to maturity will be used.Determination of Commercial Paper Rate. If the Interest Rate Basis, as specified above, is, or is calculated by reference to,the Commercial Paper Rate, unless otherwise specified above, the “Commercial Paper Rate” for each Interest Reset Date will bedetermined by the Calculation Agent as of the second Business Day prior to such Interest Reset Date (a “Commercial Paper InterestDetermination Date”) and shall be the Money Market Yield (as defined below) on such date of the rate for commercial paper havingthe Index Maturity as indicated above, as such rate shall be published in H.15(519) under the caption “Commercial Paper-Nonfinancial.” In the event that such rate is not published prior to 3:00 p.m., New York City time, on the applicable Calculation Date,then the Commercial Paper Rate shall be calculated by the Calculation Agent as the Money Market Yield of the Commercial PaperRate on the applicable Commercial Paper Interest Determination Date for commercial paper having the Index Maturity specifiedabove, published in H.15 Daily Update, or other recognized electronic source used for the purpose of displaying the applicable rate,under the caption “Commercial Paper-Nonfinancial.” If by 3:00 p.m., New York City time, on the applicable Calculation Date, suchrate is not yet published as provided in the preceding sentence, then the Commercial Paper Rate on the applicable Commercial PaperInterest Determination Date shall be calculated by the Calculation Agent as the Money Market Yield of the arithmetic mean of the12offered rates at approximately 11:00 a.m., New York City time, on the applicable Commercial Paper Interest Determination Date ofthree leading dealers of United States dollar commercial paper in the City of New York, which may include an agent of the Companyor such agent’s affiliates, selected by the Calculation Agent for commercial paper having the Index Maturity specified above, placedfor industrial issuers whose bond rating is “Aa,” or the equivalent, from a nationally recognized statistical rating organization; provided,however, that if the dealers selected as aforesaid by the Company are not quoting offered rates as mentioned in this sentence, theCommercial Paper Rate will be the Commercial Paper Rate in effect on the applicable Commercial Paper Interest Determination Date.“Money Market Yield” shall be a yield calculated in accordance with the following formula and expressed as a percentage:Money market yield =D × 360× 100360 - (D × M)where “D” refers to the applicable per annum rate for commercial paper quoted on a bank discount basis and expressed as a decimal;and “M” refers to the actual number of days in the interest period for which interest is being calculated.Determination of Federal Funds Rate. If the Interest Rate Basis, as specified above, is, or is calculated by reference to theFederal Funds Rate, unless otherwise specified above, the “Federal Funds Rate” with respect to each Interest Reset Date will bedetermined by the Calculation Agent as of the first Business Day prior to such Interest Reset Date (a “Federal Funds InterestDetermination Date”) and shall be the rate on that date for United States dollar Federal Funds as published in H.15(519) under theheading “Federal Funds (Effective),” as displayed on Reuters, Inc. (or any successor service) on page FEDFUND01 (or any otherpage as may replace the applicable page on that service) (“Reuters Page FEDFUND01”) or, if such rate does not appear on ReutersPage FEDFUND01, or is not so published by 3:00 p.m., New York City time, on the applicable Calculation Date, the rate on theapplicable Federal Funds Interest Determination Date for United States dollar Federal Funds will be the rate on such Federal FundsInterest Determination Date as published in H.15 Daily Update, or other recognized electronic source used for the purpose ofdisplaying the applicable rate, under the caption “Federal Funds (Effective).” If such rate is not so published by 3:00 p.m., New YorkCity time, on the applicable Calculation Date, the Federal Funds Rate will be calculated by the Calculation Agent and will be thearithmetic mean of the rates for the last transaction in overnight United States dollar Federal Funds arranged by three leading brokers ofUnited States dollar Federal Funds transactions in the City of New York, which may include an agent of the Company or such agent’saffiliates, selected by the Company before 9:00 a.m., New York City time, on the applicable Federal Funds Interest DeterminationDate; provided, however, that if the brokers selected as aforesaid by the Company are not quoting as mentioned in this sentence, theFederal Funds Rate will be the Federal Funds Rate in effect on the applicable Federal Funds Interest Determination Date.Determination of LIBOR. If the Interest Rate Basis, as specified above, is, or is calculated by reference to, LIBOR, unlessotherwise specified above, “LIBOR” for each Interest13Reset Date will be determined by the Calculation Agent as of the second London Banking Day prior to such Interest Reset Date (a“LIBOR Interest Determination Date”) and shall be the rate (express as a percentage per annum) for deposits in U.S. dollars having athree-month maturity that appears on Reuters LIBOR01 at approximately 11:00 a.m., London time, on the applicable LIBOR InterestDetermination Date, or if Reuters LIBOR01 is not available on such date, the Calculation Agent will obtain such rate fromBloomberg’s page “BBAM.” If such rate does not appear on Reuters LIBOR01 or Bloomberg’s page “BBAM” on such LIBORInterest Determination Date at approximately 11:00 a.m., London time, then the Calculation Agent will request the principal Londonoffice of each of four major banks in the London interbank market, as selected by the Company, to provide a quotation of the rate(expressed as a percentage per annum) offered by it to prime banks in the London interbank market for three‑month deposits in U.S.dollars in a principal amount of at least $1,000,000 at approximately 11:00 a.m., London time, on such LIBOR Interest DeterminationDate. If at least two such offered quotations are so provided, LIBOR determined on the applicable LIBOR Interest Determination Datecalculated by the Calculation Agent will be the arithmetic mean of such quotations. If fewer than two such quotations are so provided,the Company will request each of three major banks in New York City, as selected by the Company, to provide a quotation of the rate(expressed as a percentage per annum), offered by it for loans in U.S. dollars to leading European banks having a three‑month maturityin a principal amount of at least $1,000,000 at approximately 11:00 a.m., New York City time, on such LIBOR Interest DeterminationDate. If at least two such rates are so provided, LIBOR determined on the applicable LIBOR Interest Determination Date calculated bythe Calculation Agent will be the arithmetic mean of such rates. If fewer than two such rates are so provided, then LIBOR determinedon the applicable LIBOR Interest Determination Date calculated by the Calculation Agent will be the rate in effect on the applicableLIBOR Interest Determination Date.“Reuters LIBOR01” means the Capital Markets Report Screen LIBOR01 of Reuters, Inc. (or any successor or similar serviceor page), for the purpose of displaying the London interbank rates of major banks for U.S. dollars.Determination of Prime Rate. If the Interest Rate Basis, as specified above, is, or is calculated by reference to, the PrimeRate, unless otherwise specified above, the “Prime Rate” with respect to each Interest Reset Date will be determined by the CalculationAgent as of the first Business Day prior to such Interest Reset Date (a “Prime Interest Determination Date”) and shall be the rate setforth on such date as published in H.15(519) under the caption “Bank Prime Loan,” or if not so published prior to 3:00 p.m., NewYork City time, on the applicable Calculation Date pertaining to such Prime Interest Determination Date, then the Prime Rate. will beas published in H.15 Daily Update, or such other recognized electronic source used for the purpose of displaying the applicable rateunder the caption “Bank Prime Loan,” or if not so published prior to 3:00 p.m., New York City time, on the applicable CalculationDate pertaining to such Prime Interest Determination Date, then the Prime Rate will be determined by the Calculation Agent as thearithmetic mean of the rates of interest publicly announced by each bank that appears on the Reuters Screen US PRIME 1 Page (asdefined below) as the particular bank’s prime rate or base lending rate as of 11:00 a.m., New York City time, on the applicable PrimeInterest Determination Date. If fewer than four such rates are so published by 3:00 p.m.,14New York City time, on the applicable Calculation Date as shown on the Reuters Screen US PRIME 1 Page for the Prime InterestDetermination Date, the Prime Rate will be determined by the Calculation Agent as the arithmetic mean of the prime rates or baselending rates quoted on the basis of the actual number of days in the year divided by a 360-day year as of the close of business on theapplicable Prime Interest Determination Date by three major banks, which may include an agent of the Company or such agent’saffiliates, in the City of New York selected by the Company. However, if the banks selected by the Company are not quoting asmentioned in the preceding sentence, the Prime Rate will be the Prime Rate in effect on the applicable Prime Interest DeterminationDate.“Reuters Screen US PRIME 1 Page” means the display on the Reuter Money 3000 Service or any successor service on the“US PRIME 1 Page” or other page as may replace US PRIME 1 Page on that service for the purpose of displaying prime rates or baselending rates of major United States banks).Determination of Treasury Rate. If the Interest Rate Basis, as specified above, is, or is calculated by reference to theTreasury Rate, unless otherwise specified above, the “Treasury Rate” for each Interest Reset Date will be the rate from the auction heldon the applicable Interest Determination Date (the “Auction”) of direct obligations of the United States (“Treasury Bills”) having theIndex Maturity, as specified above, as published under the caption “INVESTMENT RATE” on the display on Reuters, Inc. or anysuccessor or similar service on page USAUCTION 10 or any other page as may replace page USAUCTION 10 on that service(“Reuters Page USAUCTION 10”) or page USAUCTION 11 on that service (“Reuters Page USAUCTION 11”), or, if the rate is notso published by 3:00 p.m., New York City time, on the applicable Calculation Date pertaining to such Treasury Rate DeterminationDate (as defined below), the Bond Equivalent Yield of the rate for the applicable Treasury Bills as published in H.15 Daily Update, orother recognized electronic source used for the purpose of displaying the applicable rate, under the caption “U.S. GovernmentSecurities/Treasury Bills/Auction High,” or, if the rate is not so published by 3:00 p.m., New York City time, on the applicableCalculation Date pertaining to such Treasury Rate Determination Date, the Bond Equivalent Yield of the auction rate of the applicableTreasury Bills announced by the United States Department of the Treasury, or, if the rate is not announced by the United StatesDepartment of the Treasury, or if the Auction is not held, the Bond Equivalent Yield of the rate on the applicable Treasury RateDetermination Date of Treasury Bills having the Index Maturity specified above, published in H.15(519) under the caption “U.S.Government Securities/Treasury Bills/Secondary Market,” or, if the rate is not so published by 3:00 p.m., New York City time, on theapplicable Calculation Date pertaining to such Treasury Rate Determination Date, the rate on the applicable Treasury RateDetermination Date of the applicable Treasury Bills as published in H.15 Daily Update, or other recognized electronic source used forthe purpose of displaying the applicable rate, under the caption “U.S. Government Securities/Treasury Bills/Secondary Market.” In theevent that the results of the auction of Treasury Bills having the applicable Index Maturity specified above are not published orreported, as provided above, by 3:00 p.m., New York City time, on the applicable Calculation Date or if no such auction is held onsuch Treasury Rate Determination Date, then the Treasury Rate on the applicable Treasury Rate Determination Date shall becalculated by the Calculation Agent and shall be the Bond Equivalent Yield of the arithmetic15mean of the secondary market bid rates, as of approximately 3:30 p.m., New York City time, on the applicable Treasury RateDetermination Date, of three primary United States government securities dealers, which may include the agent or its affiliates, selectedby the Company, for the issue of Treasury Bills with a remaining maturity closest to the Index Maturity specified above; provided,however, that if the dealers selected as aforesaid by the Company are not quoting as mentioned in this sentence, the Treasury Rate willbe the Treasury Rate in effect on the applicable Treasury Rate Determination Date.The “Treasury Rate Determination Date” for any Interest Reset Date will be the day of the week in which such Interest ResetDate falls on which Treasury Bills would normally be auctioned. Treasury Bills are normally sold at auction on Monday of each week,unless that day is a legal holiday, in which case the auction is normally held on the following Tuesday, except such auction may beheld on the preceding Friday. If, as the result of a legal holiday, an auction is so held on the preceding Friday, such Friday will be theTreasury Rate Determination Date pertaining to the Interest Reset Date occurring in the next succeeding week.“Bond Equivalent Yield” means a yield calculated in accordance with the following formula and expressed as a percentage:Bond Equivalent Yield =D × N× 100360 - (D × M)where “D” refers to the applicable per annum rate for Treasury Bills quoted on a bank discount basis and expressed as a decimal; “N”refers to 365 or 366, as the case may be, and “M” refers to the actual number of days in the interest period for which interest is beingcalculated.Provisions Applicable To Both Fixed Rate Notes And Floating Rate Notes:The interest so payable on any Interest Payment Date will, subject to certain exceptions in the Indenture hereinafter referred to,be paid to the person in whose name this Note is registered at the close of business on the Regular Record Date (as defined below)immediately preceding such Interest Payment Date or, if the Interest Payment Date is the Maturity Date or the date of earlierredemption or repayment, to the person in whose name this Note is registered at the close of business on the Maturity Date or suchearlier date of redemption or repayment; provided, however, that if the Original Issue Date is between a Regular Record Date and anInterest Payment Date or on an Interest Payment Date, interest for the period from and including the Original Issue Date to, butexcluding, the Interest Payment Date relating to such Regular Record Date shall be paid on the next succeeding Interest Payment Dateto the person in whose name this Note is registered on the close of business on the Regular Record Date preceding such InterestPayment Date. If this Note bears interest at a Fixed Rate, as specified above, unless otherwise specified above, the “Regular RecordDate” with respect to any Interest Payment Date shall be the 25th day of May and the 24th day of November, whether or not aBusiness Day, immediately preceding the related Interest Payment Date. If this Note bears interest at a Floating Rate, as specifiedabove, the “Regular Record Date” with respect to any Interest Payment Date16shall be the fifteenth calendar day next preceding such Interest Payment Date, whether or not such date shall be a Business Day.Payment of principal, premium, if any, and interest in respect of this Note due on the Maturity Date or any earlier redemption orrepayment date will be made in immediately available funds upon presentation and surrender of this Note; provided, however, that if aSpecified Currency is specified above and such payment is to be made in such Specified Currency in accordance with the provisionsset forth below, such payment will be made by wire transfer of immediately available funds to an account with a bank designated bythe Holder hereof at least 15 calendar days prior to the Maturity Date or such earlier redemption or repayment date, as the case may be,provided that such bank has appropriate facilities therefor and that this Note is presented and surrendered at the Place of Paymentspecified above in time for the Trustee to make such payment in such funds in accordance with its normal procedures. Payment ofinterest due on any Interest Payment Date, other than the Maturity Date or any earlier redemption or repayment date, will be made atthe Place of Payment specified above.Whenever in this Note or in the Indenture there is a reference, in any context, to the payment of the principal of, or interest, ifany, on, or in respect of, the Notes, such payment shall be deemed to include the payment of Additional Amounts to the extent that, insuch context, Additional Amounts are, were or would be payable in respect of such payment pursuant to the provisions hereof orthereof and express mention of the payment of Additional Amounts (if applicable) in any provision hereof or thereof shall not beconstrued as excluding Additional Amounts in those provisions hereof where such express mention is not made.The Company is obligated to make payment of principal, premium, if any, and interest in respect of this Note in United Statesdollars or, if a Specified Currency is indicated above, in such Specified Currency (or, if such Specified Currency is not at the time ofsuch payment legal tender for the payment of public and private debts of the country issuing such currency or, in the case of the Euro,in the member states of the European Union that have adopted the single currency in accordance with the Treaty Establishing theEuropean Community, as amended by the Treaty on European Union, such other currency which is then such legal tender in suchcountry or in the adopting member states of the European Union, as the case may be). If a Specified Currency is specified above,except as otherwise provided below, any such amounts so payable by the Company will be converted by a New York clearing housebank designated by the Company (the “Exchange Rate Agent”) into United States dollars for payment to the Holder of this Note.If a Specified Currency is specified above, the Holder of this Note may elect to receive any amount payable hereunder in suchSpecified Currency. If the Holder of this Note shall not have duly made an election to receive all or a specified portion of any paymentof principal, premium, if any, and/or interest in respect of this Note in such Specified Currency, any United States dollar amount to bereceived by the Holder of this Note will be based on the highest bid quotation in the City of New York received by the Exchange RateAgent at approximately 11:00 a.m., New York City time, on the second Business Day preceding the applicable payment date fromthree recognized foreign exchange dealers (one of whom may be the Exchange Rate Agent)17selected by the Exchange Rate Agent and approved by the Company for the purchase by the quoting dealer of the Specified Currencyfor United States dollars for settlement on such payment date in the aggregate amount of the Specified Currency payable to all Holdersof Notes scheduled to receive United States dollar payments and at which the applicable dealer commits to execute a contract. Allcurrency exchange costs will be borne by the Holder of this Note by deductions from such payments. If three such bid quotations arenot available, payments on this Note will be made in the Specified Currency.If a Specified Currency is specified above, the Holder of this Note may elect to receive all or a specified portion of anypayment of principal, premium, if any, and/or interest in respect of this Note in such Specified Currency by submitting a written requestfor such payment to the Trustee at the Place of Payment on or prior to the applicable Record Date or at least 15 calendar days prior tothe Maturity Date (or any earlier redemption or repayment date), as the case may be. Such written request may be mailed or handdelivered or sent by facsimile transmission. The Holder of this Note may elect to receive all or a specified portion of all futurepayments in the Specified Currency in respect of such principal, premium, if any, and/or interest and need not file a separate electionfor each payment. Such election will remain in effect until revoked by written notice to the Trustee, but written notice of any suchrevocation must be received by the Trustee on or prior to the applicable Record Date or at least 15 calendar days prior to the MaturityDate (or any earlier redemption or repayment date), as the case may be.If a Specified Currency is specified above and the Holder of this Note shall have duly made an election to receive all or aspecified portion of any payment of principal, premium, if any, and/or interest in respect of this Note in such Specified Currency, butsuch Specified Currency is not available for such payment due to the imposition of exchange controls or other circumstances beyondthe control of the Company, the Company will be entitled to satisfy its obligations to the Holder of this Note by making such paymentin United States dollars on the basis of the Market Exchange Rate (as defined below) determined by the Exchange Rate Agent on thesecond Business Day prior to such payment date or, if such Market Exchange Rate is not then available, on the basis of the mostrecently available Market Exchange Rate on or before the date on which such payment is due. The “Market Exchange Rate” for theSpecified Currency means the noon dollar buying rate in the City of New York for cable transfers of the Specified Currency ascertified for customs purposes (or, if not so certified, as otherwise determined) by the Federal Reserve Bank of New York. Anypayment made in United States dollars under such circumstances shall not constitute an Event of Default (as defined in the Indenture).All determinations referred to above made by the Exchange Rate Agent shall be at its sole discretion and shall, in the absenceof manifest error, be conclusive for all purposes and binding on the Holder of this Note.In case an Event of Default (as defined in the Indenture) with respect to Notes of this series shall occur and be continuing, theprincipal amount (or, if the Note is an Original Issue Discount Note, such lesser portion of the principal amount as may be applicable)of the Notes of this series may be declared due and payable, and, with respect to certain Events of Default, shall automatically becomedue and payable, in each case in the manner and with the effect provided18in the Indenture. If this Note is an Original Issue Discount Note, in the event of an acceleration of the Maturity Date hereof, the amountpayable to the Holder of this Note upon such acceleration will be determined by this Note but will be an amount less than the amountpayable at the Maturity Date of this Note.The Indenture permits, with certain exceptions as therein provided, the modification of the rights and obligations of theCompany and the Guarantor and the rights of the Holders of the Securities (as defined in the Indenture) of each series to be affected bysuch modification under the Indenture at any time by the Company and the Guarantor with the consent of the holders of not less than amajority in aggregate principal amount of the Outstanding Securities (as defined in the Indenture) of each series to be affected by suchmodification. The Indenture also contains provisions permitting the Holders of specified percentages in aggregate principal amount ofthe Outstanding Securities of each series, on behalf of the Holders of all Securities of such series, to waive compliance by theCompany and the Guarantor with certain provisions of the Indenture and certain past defaults under the Indenture and theirconsequences.This Note is issuable only in registered form without coupons in minimum denominations of $2,000 and integral multiples of$1,000 in excess thereof or other Authorized Denomination specified above.As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Note may be registered in theSecurity Register of this series upon surrender of this Note for registration of transfer at the Place of Payment specified above, dulyendorsed by or accompanied by, a written instrument of transfer in form satisfactory to the Company and the Trustee, duly executed bythe Holder hereof or his attorney duly authorized in writing, and thereupon a new Note or Notes of this series of AuthorizedDenomination and for the same aggregate principal amount, with the Guarantee endorsed thereon, will be issued to the designatedtransferee or transferees.No service charge shall be made for any such registration of transfer, exchange or redemption of the Notes, but the Companymay require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.The Trustee, and any agent of the Company or the Trustee may treat the person in whose name this Note is registered in theSecurity Register as the owner of this Note for all purposes (other than for the determination of any Additional Amounts payable) andneither the Company nor the Trustee nor any such agent shall be affected by any notice to the contrary.If so specified above, this Note will be redeemable at the Company’s option on the date or dates specified prior to the MaturityDate at a price or prices, each as specified above, together with accrued interest to the date of redemption. This Note will not be subjectto any sinking fund. If so redeemable, the Company may redeem this Note either in whole or from time to time in part, upon not lessthan 30, nor more than 60, days’ notice before the date of redemption. If less than all of the Notes with like tenor and terms are to beredeemed, the Notes to be redeemed shall be selected by the Trustee by such method as the Trustee shall deem fair and appropriate.19This Note will be subject to redemption at the option of the Company, in whole or in part at any time prior to May 9, 2022, at aredemption price equal to the greater of (i) 100% of the principal amount of this Note to be redeemed, and (ii) as determined by theQuotation Agent (as defined below), the sum of the present values of the remaining scheduled payments of principal and interest onthis Note to be redeemed (exclusive of interest accrued to the date of redemption) discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as defined below) plus 15 basispoints, plus accrued interest on the principal amount redeemed to, but not including, the date of redemption. In addition, this Note willbe subject to redemption at the option of the Company, in whole or in part, at any time on or after May 9, 2022 until the Maturity Dateat a redemption price equal to 100% of the principal amount of this Note, plus accrued interest on the principal amount redeemed to,but not including, the date of redemption.If any redemption date falls on a day that is not a Business Day, the related payment of the redemption price and interest will bemade on the next Business Day as if it were made on the date such payment was due, and no interest will accrue on the amounts sopayable for the period from and after such date to the next Business Day.“Comparable Treasury Issue” means the U.S. Treasury security selected by the Quotation Agent as having a maturity comparableto the remaining term of the Notes to be redeemed that would be utilized, at the time of selection and in accordance with customaryfinancial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Notes.“Comparable Treasury Price” means, with respect to any redemption date, (i) the average of the Reference Treasury DealerQuotations for such redemption date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (ii) iffewer than five such Reference Treasury Dealer Quotations are obtained by the Quotation Agent, the average of all such quotations.“Quotation Agent” means the Reference Treasury Dealer appointed by the Company.“Reference Treasury Dealer” means (i) (1) each of Citigroup Global Markets Inc. and J.P. Morgan Securities LLC (and theirrespective successors), (2) one Primary Treasury Dealer (as defined herein) selected by each of MUFG Securities Americas Inc. andU.S. Bancorp Investments, Inc. (and their respective successors) and (3) one other nationally recognized investment banking firm thatis a Primary Treasury Dealer specified from time to time by the Company; provided, however, that if any of the foregoing shall ceaseto be a primary U.S. Government securities dealer in New York City (a ‘‘Primary Treasury Dealer’’), the Company shall substitutetherefor another Primary Treasury Dealer.“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any redemption date, theaverage, as determined by the Quotation Agent, of the bid and asked prices for the Comparable Treasury Issue (expressed in each caseas a percentage of its principal amount) quoted in writing to the Quotation Agent by such Reference Treasury Dealer at 5:00 p.m.,New York City time, on the third Business Day preceding such redemption date.20“Treasury Rate” means, with respect to any redemption date, the rate per annum equal to the semi-annual equivalent yield-to-maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of itsprincipal amount) equal to the Comparable Treasury Price for such redemption date.Notice of any redemption will be delivered at least 30 days but not more than 60 days before the redemption date to the Holderhereof at its address as such address shall appear in the Security Register of the Company, except that redemption notices may beprovided more than 60 days prior to the redemption date if the notice is issued in connection with the defeasance or discharge of theNotes and/or the Indenture. Unless the Company defaults in the payment of the redemption price on and after the redemption date,interest will cease to accrue on the principal amount of this Note called for redemption. Notwithstanding anything to the contrary in theforegoing, notice of any redemption to the Holder hereof may, in the Company’s discretion, be subject to one or more conditionsprecedent, including completion of a corporate transaction. In such event, the related notice of redemption will describe each suchcondition and, if applicable, will state that, in the Company’s discretion, the date of redemption may be delayed until such time as anyor all such conditions shall be satisfied or waived, or such redemption may not occur and such notice may be rescinded in the eventthat any or all such conditions shall not have been satisfied or waived by the date of redemption, or by the date of redemption as sodelayed.Subject to Section 403 of the Indenture, if an HDI Change of Control Triggering Event (as defined below) occurs, unless theCompany has exercised its option to redeem this Note as described above, the Company will be required to make an offer (the“Change of Control Offer”) to each Holder of the Notes to repurchase all or any part (equal to $2,000 or an integral multiple of $1,000in excess thereof) of such Holder’s Notes on the terms set forth herein. In the Change of Control Offer, the Company will be requiredto offer payment in cash equal to 101% of the aggregate principal amount of Notes repurchased, plus accrued and unpaid interest, ifany, on the Notes repurchased to the date of repurchase (the “Change of Control Payment”).Subject to Section 403 of the Indenture, within 30 days following any HDI Change of Control Triggering Event or, at theCompany’s option, prior to any HDI Change of Control (as defined below), but after public announcement by HDI (as defined below)of the transaction that constitutes, or would constitute upon consummation thereof, an HDI Change of Control, a notice will bedelivered to Holders of the Notes describing the transaction that constitutes, or would constitute upon consummation thereof, the HDIChange of Control Triggering Event and offering to repurchase such Notes on the date specified in the notice. Such date will be noearlier than 30 days and no later than 60 days from the date such notice is delivered, other than as may be required by law (the“Change of Control Payment Date”). The notice will, if delivered prior to the date of consummation of the HDI Change of Control,state that the offer to purchase is conditioned on the HDI Change of Control Triggering Event occurring on or prior to the Change ofControl Payment Date.If any Change of Control Payment Date falls on a day that is not a Business Day, the related payment of the Change of ControlPayment will be made on the next Business Day as if it21were made on the date such payment was due, and no interest will accrue on the amounts so payable for the period from and after suchdate to the next Business Day.On the Change of Control Payment Date, the Company will, to the extent lawful, (i) accept for payment all Notes or portionsof Notes properly tendered and not validly withdrawn pursuant to the Change of Control Offer; (ii) deposit with the paying agent anamount equal to the Change of Control Payment in respect of all such Notes or portions of Notes properly tendered and not validlywithdrawn; and (iii) deliver or cause to be delivered to the Trustee such Notes properly accepted together with a Company Officers’Certificate (as defined in the Indenture) stating the aggregate principal amount of such Notes or portions of Notes being repurchased.The Company will not be required to comply with the obligations relating to repurchasing the Notes if a third-party insteadsatisfies them.The Company must comply with the requirements of Rule 14e-1 under the Securities Exchange Act of 1934, as amended (the“Exchange Act”), and any other securities laws and regulations applicable to the repurchase of the Notes. To the extent that theprovisions of any such securities laws or regulations conflict with the Change of Control Offer provisions of the Notes, the Companywill comply with those securities laws and regulations and will not be deemed to have breached its obligations under the Change ofControl Offer provisions of the Notes by virtue of any such compliance.If Holders of not less than 95% in aggregate principal amount of the outstanding Notes properly tender and do not validlywithdraw such amount of the Notes in a Change of Control Offer, and the Company, or any third-party making an offer to purchasethe Notes in connection with an HDI Change of Control Triggering Event in lieu of the Company, purchase such amount of the Notesproperly tendered and not validly withdrawn by such Holders, then the Company will have the right, upon notice described above,given not more than 30 days following the Change of Control Payment Date, to redeem all (but not less than all) of the aggregateprincipal amount of the Notes that remains outstanding following such purchase at a redemption price in cash equal to 101% of theprincipal amount thereof, plus accrued and unpaid interest, if any, to the redemption date (subject to the right of Holders of record as ofthe close of business on the relevant Regular Record Date to receive interest on the applicable Interest Payment Date). If theredemption date falls on a day that is not a Business Day, the related payment of the redemption price and interest will be made on thenext Business Day as if it were made on the date such payment was due, and no interest will accrue on the amounts so payable for theperiod from and after such date to the next Business Day.For purposes of the Change of Control Offer provisions of the Notes, the following terms will be applicable:“Below Investment Grade Rating Event” means the Notes cease to be rated an Investment Grade Rating by each of the RatingAgencies on any day within the 60-day period after the earlier of (1) the occurrence of an HDI Change of Control and (2) the firstpublic announcement by Harley-Davidson, Inc. (“HDI”) of the intention of HDI to effect an HDI22Change of Control (which 60-day period will be extended for so long as any of the Rating Agencies has publicly announced that it isconsidering a possible downgrade of the rating of the notes of such series); provided that a Below Investment Grade Rating Eventotherwise arising by virtue of a particular reduction in rating shall not be deemed to have occurred in respect of a particular HDIChange of Control (and thus shall not be deemed a Below Investment Grade Rating Event for purposes of the definition of HDIChange of Control Triggering Event hereunder) if any of the Rating Agencies making the reduction in rating to which this definitionwould otherwise apply do not announce or publicly confirm or inform the Trustee in writing at the Company’s or its request that thereduction was the result, in whole or in part, of any event or circumstance comprised of or arising as a result of, or in respect of, theapplicable HDI Change of Control (whether or not the applicable HDI Change of Control shall have occurred at the time of the BelowInvestment Grade Rating Event). The Trustee has no obligation to monitor the ratings of the Notes for purposes of determining theoccurrence of a Below Investment Grade Rating Event.“Fitch” means Fitch Ratings, Inc. and its successors.“HDI Change of Control” means the occurrence of any of the following: (1) the consummation of any transaction (including,without limitation, any merger or consolidation) the result of which is that any “person” (as that term is used in Section 13(d)(3) of theExchange Act), other than HDI or one of its subsidiaries, becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 underthe Exchange Act), directly or indirectly, of more than 50% of the Voting Stock of HDI or other Voting Stock into which the VotingStock of HDI is reclassified, consolidated, exchanged or changed, measured by voting power rather than number of shares; or (2) thedirect or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation or as a pledge forsecurity purposes only), in one or a series of related transactions, of all or substantially all of the assets of HDI and the assets of thesubsidiaries of HDI, taken as a whole, to one or more “persons” (as that term is defined in the Indenture), other than HDI or one of itssubsidiaries and other than any such transaction or series of related transactions where holders of Voting Stock of HDI outstandingimmediately prior thereto hold voting stock of the transferee person representing a majority of the voting power of the transfereeperson’s voting stock immediately after giving effect thereto. Notwithstanding the foregoing, a transaction will not be deemed to be anHDI Change of Control if (1) HDI becomes a direct or indirect wholly-owned subsidiary of a holding company and (2)(A) the director indirect holders of the Voting Stock of such holding company immediately following that transaction are substantially the same asthe holders of the Voting Stock of HDI immediately prior to that transaction or (B) immediately following that transaction no “person”(as that term is used in Section 13(d)(3) of the Exchange Act) (other than a holding company satisfying the requirements of thissentence) is the beneficial owner, directly or indirectly, of more than 50% of the Voting Stock of such holding company.“HDI Change of Control Triggering Event” means the occurrence of both an HDI Change of Control and a Below InvestmentGrade Rating Event. Notwithstanding anything to the contrary, no HDI Change of Control Triggering Event will be deemed to haveoccurred in23connection with any particular HDI Change of Control unless and until such HDI Change of Control has actually been consummated.“Investment Grade Rating” means a rating equal to or higher than Baa3 by Moody’s (or its equivalent under any successorrating category of Moody’s), BBB− by S&P (or its equivalent under any successor rating category of S&P) and BBB− by Fitch (or itsequivalent under any successor rating category of Fitch), and the equivalent investment grade credit rating from any replacementRating Agency or Rating Agencies selected by the Company.“Moody’s” means Moody’s Investors Service, Inc., a subsidiary of Moody’s Corporation, and its successors.“Rating Agencies” means (1) each of Moody’s, S&P and Fitch, and (2) if any of Moody’s, S&P or Fitch (or in each case anyreplacement thereof appointed pursuant to this definition) ceases to rate the Notes or fails to make a rating of the Notes publiclyavailable for reasons outside of the Company’s control, a “nationally recognized statistical rating organization” as defined underSection 3(a)(62) of the Exchange Act selected by the Company as a replacement agency for Moody’s, S&P and/or Fitch, as the casemay be; provided that the Company shall give notice of any such replacement to the Trustee.“S&P” means S&P Global Ratings, a division of S&P Global Inc. and its successors.“Voting Stock” means, with respect to any specified “person” (as that term is used in Section 13(d)(3) of the Exchange Act), asof any date, the capital stock of such person that is at the time entitled to vote generally in the election of the board of directors of suchperson.In lieu of Section 1005 of the Indenture, the following covenant shall apply:Limitation on Liens. The Company and the Guarantor will not, nor will they permit any Subsidiary of the Company or theGuarantor to, issue or assume any Indebtedness secured by a Lien upon any Property (now owned or hereinafter acquired) of theCompany or the Guarantor or any such Subsidiary without in any such case effectively providing concurrently with the issuance orassumption of any such Indebtedness that the Notes (together with, if the Company or the Guarantor shall so determine, any otherIndebtedness of the Company or the Guarantor or any such Subsidiary ranking equally with the Notes then existing or thereaftercreated) shall be secured equally and ratably with such Indebtedness. The restrictions set forth in the immediately preceding sentencewill not, however, apply if the aggregate amount of Indebtedness issued or assumed by the Company, the Guarantor or suchSubsidiaries and so secured by Liens, together with all other Indebtedness of the Company, the Guarantor or such Subsidiaries which(if originally issued or assumed at such time) would otherwise be subject to such restrictions, but not including Indebtedness permittedto be secured under clauses (i) through (xiv) of the immediately following paragraph, does not at the time such secured Indebtedness isincurred exceed 15% of the Consolidated Net Tangible Assets.The restrictions set forth above shall not apply to Indebtedness secured by:24(i) Liens existing on the date of the original issuance of the Notes;(ii) Liens on any Property of any company existing at the time such company becomes a Subsidiary of the Company or theGuarantor, which Liens are not created in contemplation of such company becoming a Subsidiary of the Company or the Guarantor;(iii) Liens on any Property existing at the time such Property is acquired by the Company, the Guarantor or a Subsidiary of theCompany or the Guarantor, or Liens to secure the payment of all or any part of the purchase price of such Property upon theacquisition of such Property by the Company, the Guarantor or a Subsidiary of the Company or the Guarantor or to secure anyIndebtedness incurred prior to, at the time of, or within 180 days after, the later of the date of acquisition of such Property and the datesuch Property is placed in service, for the purpose of financing all or any part of the purchase price thereof, or Liens to secure anyIndebtedness incurred for the purpose of financing the cost to the Company, the Guarantor or a Subsidiary of the Company or theGuarantor of improvements to such acquired Property or to secure any Indebtedness incurred for the purpose of financing all or anypart of the purchase price of the cost of construction of the Property subject to such Liens;(iv) Liens securing any Indebtedness of the Company, a Subsidiary of the Company or the Guarantor owing to the Company,the Guarantor or to another Subsidiary of the Company or the Guarantor;(v) Liens created in connection with a securitization or other asset-based financing;(vi) Liens with respect to the payment of taxes, assessments or governmental charges in all cases which are not yet due orwhich are being contested in good faith;(vii) statutory Liens of landlords and Liens of suppliers, mechanics, carriers, materialmen, warehousemen or workmen andother similar Liens imposed by law created in the ordinary course of business for amounts not yet due or which are being contested ingood faith;(viii) Liens incurred or deposits made in the ordinary course of business in connection with worker’s compensation,unemployment insurance or other types of social security benefits or to secure the performance of bids, tenders, sales, contracts (otherthan for the repayment of borrowed money), surety, appeal and performance bonds;(ix) Liens arising with respect to zoning restrictions, easements, licenses, reservations, covenants, rights-of-way, utilityeasements, building restrictions and other similar charges or encumbrances on the use of real property which do not interfere with theordinary conduct of the business of the Company, the Guarantor or any of their respective Subsidiaries;(x) Liens of attachment or judgment with respect to judgments, writs or warrants of attachment, or similar process against theCompany, the Guarantor or any of their respective Subsidiaries;25(xi) Liens arising from leases, subleases or licenses granted to others which do not interfere in any material respect with thebusiness of the Company, the Guarantor or any of their respective Subsidiaries;(xii) any interest or title of the lessor in the Property subject to any operating lease (as determined in accordance with GAAP asin effect as of the date of the Indenture) entered into by the Company, the Guarantor or any of their respective Subsidiaries in theordinary course of business;(xiii) Liens, if any, in connection with any sale/leaseback transaction;(xiv) Liens on assets pledged in respect of Indebtedness that has been defeased in accordance with the provisions thereofthrough the deposit of cash, cash equivalents or marketable securities (it being understood that cash collateral shall be deemed toinclude cash deposited with a trustee with respect to third party indebtedness); and(xv) any extension, renewal or replacement (or successive extensions, renewals or replacements) in whole or in part of anyLien referred to in the foregoing clauses (i) - (xiv); provided, however, that such new Lien is limited to the Property which was subjectto the prior Lien immediately before such extension, renewal or replacement, and provided, further, that the principal amount ofIndebtedness secured by the prior Lien immediately before such extension, renewal or replacement is not increased.The Company may “reopen” a previously issued tranche of Notes and issue additional Notes of such tranche or establishadditional terms of such tranche or issue notes with the same terms as previously issued Notes (except for the Original Issue Date, IssuePrice and, if applicable, the initial Interest Payment Date).The Company may at any time purchase this Note at any price in the open market or otherwise. Notes so purchased by theCompany may be held or resold or, at the discretion of the Company, may be surrendered to the Trustee for cancellation.For the avoidance of doubt, Article 4 of the Indenture, including without limitation Section 403 thereof, shall apply to theNotes.No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligations of theCompany and the Guarantor, which are absolute and unconditional, to pay the principal of, premium, if any, and interest on this Note,at the times, place and rate, and in the coin or currency, herein and in the Indenture prescribed.This Note shall be governed by and construed in accordance with the laws of the State of New York.By acceptance of this Note, the Holder hereof agrees to be bound by the provisions of the Indenture. Terms used herein whichare defined in the Indenture shall have the respective meanings assigned thereto in the Indenture. This Note shall not be valid orbecome obligatory for26any purpose until the certificate of authentication hereon shall have been signed by or on behalf of the Trustee under the Indenture.27IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed, manually or by facsimile by anauthorized signatory.HARLEY-DAVIDSON FINANCIAL SERVICES, INC.By: Name: Title: By: Name: Title: Dated:TRUSTEE’S CERTIFICATE OF AUTHENTICATIONThis is one of the Securities of the series designated herein and referred to in the within-mentioned Indenture.THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,as TrusteeBy: Authorized SignatoryGUARANTEEFor value received, undersigned hereby fully, irrevocably and unconditionally guarantees, pursuant to the terms of theGuarantee contained in Article Fourteen of the Indenture, to the Holder of this Note and to the Trustee, on behalf of the Holder, thedue and punctual payment of the principal of, and any premium, interest and any Additional Amounts on, this Note, when and as thesame shall become due and payable, whether at the stated maturity, by declaration of acceleration, call for redemption or otherwise, inaccordance with the terms of this Note and the Indenture. This Guarantee will not be valid or obligatory for any purpose until theTrustee duly executes the certificate of authentication on the Note upon which this Guarantee is endorsed.Dated: HARLEY-DAVIDSON CREDIT CORP., a Nevada corporation By: Name: Title: Attest: By: Name: Title: ABBREVIATIONSThe following abbreviations, when used in the inscription on this certificate, shall be construed as though they were written out in fullaccording to applicable laws or regulations:TEN COM - as tenants in commonUNIF GIFT MIN ACT - _______ Custodian ______ (Cust) (Minor)TEN ENT - as tenants by the entiretiesunder Uniform Gifts to Minors ActJT TEN - as joint tenants with right of survivorship and not as tenant in common (State)Additional abbreviations may also be used though not in the above list.ASSIGNMENTFOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto:(Please insert social security or other identifying number of assignee)(Name and address of assignee, including zip code, must be printed or typewritten)the within Note, and all rights thereunder, hereby irrevocably constituting and appointing___________________________________________ attorney to transfer said Note on the books of the within Company, with fullpower of substitution in the premises.Dated: NOTICE: The signature to this assignment must correspond with the name as itappears upon the within Note in every particular, without alteration orenlargement or any change whatever and must be guaranteed.SIGNATURE(S) GUARANTEED:THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS,STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN ANAPPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM) PURSUANT TO SEC RULE 17Ad-15.SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTEThe following increases or decreases in this Global Note have been madeDate of ExchangeAmount of increase inPrincipal Amount of thisGlobal NoteAmount of decrease inPrincipal Amount of thisGlobal NotePrincipal Amount of thisGlobal Note following eachdecrease or increaseSignature of authorizedsignatory of Trustee Personal & ConfidentialExhibit 10.36HARLEY-DAVIDSON, INC.EXECUTIVE SEVERANCE PLAN(With Amendments Through November 30, 2017)1.Establishment of Plan. Harley-Davidson, Inc. has established the Harley-Davidson, Inc. Executive Severance Plan toprovide financial assistance through severance payments and other benefits to Executives whose employment with the HDI Group isterminated in a Covered Termination. This Plan is generally effective as of September 1, 2013; provided that the Plan shall becomeeffective with respect to an Executive who on September 1, 2013 is covered under an executed Severance Benefits Agreement only ifthe Executive, prior to January 1, 2014 (or such later date authorized by the Plan Administrator), has agreed, in a form and in substanceacceptable to the Company, to cancellation of his or her Severance Benefits Agreement.2. Definitions. As used in this Plan, the following terms shall have the respective meanings set forth below, and, when themeaning is intended, the initial letter of the word is capitalized.(a) “Cause” means:(i) The conviction of Executive of a felony or a crime involving moral turpitude, theft or fraud; or(ii) Executive’s refusal to perform duties as directed in good faith by Executive’s supervisor, whichfailure is not cured within ten (10) days after written notice thereof from the HDI Group to Executive; or(iii) Executive’s engaging in sexual harassment or any act involving theft or fraud with respect to anHDI Group Employer, as determined by the Chief Executive Officer of the Company; or(iv) Executive’s reckless conduct or willful misconduct which results in substantial harm (in relation toExecutive’s annual compensation), as determined by the Chief Executive Officer of the Company, whetherfinancial, reputational or otherwise, to the HDI Group.(b) “COBRA” means the provisions regarding healthcare continuation coverage set forth in Section 601 et seq. ofERISA and Code Section 4980B.(c) “Code” means the Internal Revenue Code of 1986 and the rulings and regulations promulgated pursuant thereto,all as amended and in effect from time to time.(d) “Committee” means the Human Resources Committee of the Board of Directors of the Company.(e) “Company” means Harley-Davidson, Inc., a Wisconsin Company, or any successor thereto.(f) “Covered Termination” means the involuntary termination of an Executive’s employment with the HDI Groupother than (i) for Cause, or (ii) as a result of the death or Disability of the Executive. Notwithstanding the foregoing, the transferof an Executive’s employment within the HDI Group shall not be a Covered Termination.(g) “Date of Termination” means the date an Executive’s employment with the HDI Group terminates in a CoveredTermination, which date shall not be less than twenty-five (25) days after the date on which notice of termination is delivered toExecutive.(h) “Disability” has the meaning ascribed under the long-term disability insurance policy then provided or madeavailable to the Executive by or through the HDI Group. If there is no such policy or such term is not defined therein, then“Disability” shall mean the Executive’s incapacity due to physical or mental illness causing the Executive to be absent from thefull-time performance of his or her duties with the HDI Group Employer for at least sixty (60) consecutive days.(i) “ERISA” means the Employee Retirement Income Security Act of 1974 and the rulings and regulationspromulgated pursuant thereto, all as amended and in effect from time to time.(j) “Executive” means a person who, on such person’s Date of Termination, is classified by any member of the HDIGroup as a common-law employee assigned to the organizational level of Senior Leader or above (or any successor to suchorganizational levels).(k) “HDI Group” means the Company and its direct or indirect subsidiaries; provided that for purposes of Section2(p), the term “HDI Group” means the Company and each other corporation, trade or business that, with the Company,constitutes a controlled group of corporations or group of trades or businesses under common control within the meaning ofCode Sections 414(b) or (c), applied by substituting “at least 50 percent” for “at least 80 percent” each place it appears.(l) “HDI Group Employer” means the member of the HDI Group that employed the Executive immediately prior tothe Covered Termination.(m) “Monthly Base Salary” means the amount of the Executive’s average monthly base salary during either (i) ifExecutive has been employed by the HDI Group for twelve (12) or more consecutive months immediately prior to theExecutive’s Date of Termination, the twelve (12) consecutive months immediately prior to the Executive’s2Date of Termination, or (ii) if the Executive has been employed by the HDI Group for less than twelve (12) consecutivemonths immediately prior to the Executive’s Date of Termination, the consecutive months of Executive’s employment withHDI Group immediately prior to the Date of Termination.(n) “Plan” means the Harley-Davidson, Inc. Executive Severance Plan, as set forth in this document, together withany amendments that may be adopted from time to time.(o) “Plan Administrator” means the Committee or the Company with respect to the matters delegated to the Companypursuant to Section 8 of the Plan.(p) “Separation from Service” means the date on which an Executive separates from service (within the meaning ofCode Section 409A) from the HDI Group. A Separation from Service occurs when the HDI Group and the Executivereasonably anticipate that no further services will be performed by the Executive for the HDI Group after that date or that thelevel of bona fide services the Executive will perform after such date as an employee of the HDI Group will permanentlydecrease to no more than 20% of the average level of bona fide services performed by the Executive (whether as an employeeor independent contractor) for the HDI Group over the immediately preceding thirty-six (36) month period (or, if the Executivehas not provided services for the HDI Group for the entirety of the immediately preceding thirty-six (36) month period, oversuch lesser period during which the Executive actually provided services). An Executive is not considered to have incurred aSeparation from Service if the Executive is absent from active employment due to military leave, sick leave or other bona fidereason if the period of such leave does not exceed the greater of (i) six (6) months, or (ii) the period during which theExecutive’s right to reemployment by the HDI Group is provided either by statute or by contract; provided that if the leave ofabsence is due to a medically determinable physical or mental impairment that can be expected to result in death or last for acontinuous period of not less than six (6) months, where such impairment causes the Executive to be unable to perform theduties of his or her position of employment or any substantially similar position of employment, the maximum leave periodunder clause (i) may be extended by up to twenty-three (23) additional months without causing the Executive to have incurreda Separation from Service.(q) “Severance Benefits” means the Severance Payment and any other benefit payable or that may be providedpursuant to this Plan.(r) “Severance Payment” means the lump sum cash payment made to an Executive pursuant to Section 4(a) of thisPlan.(s) “Stock Plans” means the Harley-Davidson, Inc. 2014 Incentive Stock Plan, the Harley-Davidson, Inc. 2009Incentive Stock Plan, the Harley-Davidson, Inc. 2004 Incentive Stock Plan, the Harley-Davidson, Inc. 1995 Stock OptionPlan, and any other existing or future plans for the issuance of stock options, stock appreciation rights, restricted stock,restricted stock units, performance shares or similar equity-based awards.33. Eligibility for Severance Benefits.(a) Core Eligibility Conditions. An Executive shall be entitled to Severance Benefits if each of the followingconditions is satisfied:(i) The Executive incurs a Covered Termination;(ii) The Executive, on his or her Date of Termination, is classified by any member of the HDI Group as acommon-law employee assigned to the organizational level of Senior Leader or above (or any successor to suchorganizational levels);(iii) During the twenty-one (21) day period following the Executive’s Date of Termination, or within suchlonger period required by law as a condition of the Executive providing a valid release and waiver of age discriminationclaims (collectively, the “Release Period”), the Executive executes (and does not revoke during any permittedrevocation period) a release and waiver, in a form and in substance acceptable to the Company, of any and all claimsthat the Executive has or may have against the HDI Group (and its past or present executives, directors, officers,employees, successors, executors, assigns or representatives) arising out of the Executive’s employment or terminationof employment (the “Claims”), including, but not limited to any and all claims arising out of contract (written, oral, orimplied in laws or in fact), tort (including negligent and intentional acts), or state, federal or local laws (includingdiscrimination on any basis whatsoever);(iv) The Executive executes (or, in the case of an agreement or agreements that the Executive previouslyexecuted, reaffirms), in a form and in substance acceptable to the Company, a confidentiality agreement, an agreementregarding non-solicitation of other employees, and a non-compete agreement in favor of the HDI Group; and(v) The Executive is not entitled to severance, termination or similar benefits pursuant to the terms of anindividual agreement in effect between the Executive and any member of the HDI Group.(b) On-Going Eligibility Requirements. If the Executive satisfies the core eligibility requirements in Section 3(a) butsubsequently takes any action that the Company reasonably determines violates the terms of one or more of the agreementsspecified in Section 3(a)(iv), the HDI Group, in its sole discretion, may discontinue any Severance Benefits, in addition towhatever other remedies may be available to the HDI Group with respect to breach of one or more of the agreements.4. Severance Benefits. An Executive who is entitled to Severance Benefits in accordance with Section 3 shall receive thefollowing benefits:(a) Lump Sum Severance Payment.4The Executive will receive a lump sum cash payment, based upon the Executive’s salary band immediately prior to theExecutive’s Date of Termination, as determined in accordance with the following schedule:Organization LevelSeverance PaymentH-D Leadership Team24x Monthly Base SalaryAll other Senior Leaders12x Monthly Base SalaryThe lump sum payment will be paid within two and one half (2 ½) months following the last day of the month in whichoccurs the Executive’s Date of Termination.(b) Prorated Annual Incentive Plans Payment. The Executive will be entitled to receive a pro-rated payment under theHarley-Davidson, Inc. Employee Incentive Plan (annual plan) or the Harley-Davidson, Inc. Senior Executive Incentive Plan(annual plan), whichever is applicable to the Executive for the performance period in which occurs the Executive’s Date ofTermination, calculated as follows:(i) For an Executive participating in the Harley-Davidson, Inc. Employee Incentive Plan (STIP), the pro-ratapayment for the Executive shall equal (A) the percentage (based on actual performance results for the full performanceperiod determined following the conclusion of the performance period) that would have been applicable to theExecutive with respect to any financial performance goal under the Harley-Davidson, Inc. Employee Incentive Plan ifthe Executive’s employment had continued through the last day of the performance period (taking into accountmaximum plan payment limits and any exercise of the Committee’s retained discretion to reduce the amount of thepayout to the extent that such discretion is uniformly applied by the Committee with respect to similarly situatedparticipants in the Harley-Davidson, Inc. Employee Incentive Plan as a group, multiplied by (B) the base salary actuallypaid to the Executive during the portion of the performance period (and prior to the Date of Termination) during whichthe Executive was employed in an eligible employment position by any member of the HDI Group. No amount shall bepayable with respect to any component of the Harley-Davidson, Inc. Employee Incentive Plan that is based onsubjective performance criteria.(ii) For an Executive in the Harley-Davidson, Inc. Senior Executive Incentive Plan (LSTIP), the pro-ratapayment for the Executive shall equal the lesser of (A) the portion of the performance pool that has been allocated to theExecutive for the performance period (taking into account maximum plan payment limits and any exercise of theCommittee’s retained discretion to reduce the amount of the payout to the extent that such discretion is uniformlyapplied by the Committee with respect to the participants in the Harley-Davidson, Inc. Senior Executive Incentive Planas a group, but without regard to the Committee’s retained discretion to reduce the amount of the payout on anindividualized basis)5multiplied by a fraction, the numerator of which is the number of complete months of employment completed by theExecutive during the performance period and the denominator of which is the total number of months in theperformance period, or (B) the product obtained when the payout percentage (based on actual performance results forthe full performance period determined following the conclusion of the performance period) that would have beenapplicable to the Executive with respect to the Financial STIP component of the Harley-Davidson, Inc. SeniorExecutive Incentive Plan if the Executive’s employment had continued through the last day of the performance period(calculated by taking into account maximum plan payment limits and any exercise of the Committee’s retaineddiscretion to reduce the amount of the payout to the extent that such discretion is uniformly applied by the Committeewith respect to the participants in the Financial STIP component of the Harley-Davidson, Inc. Senior ExecutiveIncentive Plan as a group, but without regard to the Committee’s retained discretion to reduce the amount of the payouton an individualized basis), is multiplied by the base salary actually paid to the Executive during the portion of theperformance period (and prior to the Date of Termination) during which the Executive was employed in an eligibleemployment position by any member of the HDI Group. No amount shall be payable with respect to any component ofthe Harley-Davidson, Inc. Senior Executive Incentive Plan that is based on subjective performance criteria.The prorated payment under this Section 4(b) will be made at the same time that similar such payments are made to activeemployees, but in no event later than two and one-half (2 ½) months following the close of the year in which occurs theExecutive’s Date of Termination.The prorated payout applies only to the annual incentive programs designated above. The Plan does not provide for specialvesting or payout rules for long-term cash awards or awards made pursuant to the Stock Plans.(c) Continued Eligibility for Medical, Dental, Vision and Life Insurance/Death Benefit Plans. For the eighteen (18)month period from the Executive’s Date of Termination, (i) the HDI Group Employer shall make available to the Executive(and the Executive’s eligible dependents) coverage under the HDI Group Employer’s medical, dental and vision plans, and (ii)the HDI Group Employer will make available to the Executive coverage under the HDI Group Employer’s life insurance/deathbenefit (but not short or long term disability or other benefit) plans. Coverage shall be made available on the same terms as suchplans are made available to the HDI Group Employer’s salaried employees generally; provided that the Executive may havetaxable income, in accordance with applicable Code requirements, with respect to the continued coverage, and provided furtherthat any period for which medical, dental and vision benefits are provided under this Section 4(c) shall be credited against(reduce) the maximum period of continuation coverage that the Executive (or qualified beneficiary of the Executive) ispermitted to elect in accordance with COBRA, or any successor provision thereto.6Notwithstanding the foregoing, if the provision of any medical, dental or vision coverage or benefits under a fully insured planwould subject the HDI Group to an excise tax, then this Section 4(c) shall cease to apply and the parties shall negotiate in goodfaith to determine an alternative method of providing comparable benefits to the Executive.(d) Death of the Executive. If the Executive dies prior to the payments of amounts due to the Executive under thisPlan, then any amounts that otherwise would have been paid to the Executive will be paid to the Executive’s estate.(e) Payment in Lieu of Outplacement. The Executive will receive a payment of $10,000 USD (subject to applicabletax withholding) for his or her use in securing outplacement services. The Company will not offer any other form ofoutplacement assistance. The lump sum payment will be paid within two and one half (2 ½) months following the last day ofthe month in which occurs the Executive’s Date of Termination.(f) Payment for Financial Planning Assistance. The Executive will receive a lump sum cash payment (subject toapplicable tax withholding) for his or her use in securing financial planning assistance, based upon the Executive’s salary bandimmediately prior to the Executive’s Date of Termination, as determined in accordance with the following schedule:Organization LevelPaymentH-D Leadership Team$20,000All other Senior Leaders$10,000The lump sum payment will be paid within two and one half (2 ½) months following the last day of the month in which occursthe Executive’s Date of Termination.(g) No Duplication of Benefits. Except as otherwise expressly provided pursuant to this Plan, this Plan shall beconstrued and administered in a manner which avoids duplication of compensation and benefits which may be provided underany other plan, program, contract, policy, or other individual agreement or arrangement. In the event an Executive is covered,as of his or her Date of Termination, by any other plan, program, contract, policy, or individual agreement or arrangement, thatmay duplicate the payments or benefits provided for in this Section 4, the Company or HDI Group Employer may reduce oreliminate benefits provided for under this Plan to the extent of the duplication.(h) No Effect on Other Benefits. Other than Severance Benefits, which are governed by this Plan, this Plan does notabrogate (or enlarge) any of the usual entitlements which an Executive has or will have, first, while a regular employee, andsubsequently, after termination, and thus, such Executive shall be entitled to receive all (but only such) benefits payable to himor her under each and every qualified plan, welfare plan, and any other plan, program, contract, or practice relating to benefitsand deriving from his or her employment with the HDI Group, including, without limitation, benefits payable pursuant to theStock Plans and applicable agreements thereunder (if7applicable to the Executive), pension (if applicable to the Executive), pension restoration (if applicable to the Executive),401(k), payment in lieu of post-retirement life insurance (insurance allowance program), and deferred compensation, but ineach case solely in accordance with the terms and provisions of the applicable plan, program, contract or practice.5. Code Section 409A. This Section 5 addresses the application of Code Section 409A to the Severance Benefits providedunder the Plan.(a) The Severance Payment under Section 4(a) and the prorated bonus under Section 4(b) are intended to constitute“short term deferrals” that are exempt from Code Section 409A in accordance with Section 1.409A-1(b)(4) of the Income TaxRegulations (or any successor thereto). However, and notwithstanding any provision in this Plan to the contrary, if theSeverance Payment or any other Severance Benefit is determined to be subject to the mandatory delay rule of Code Section409A(a)(2)(B)(i), payment of such benefit shall be delayed for such period of time as may be necessary to meet therequirements of the Code. Subject to earlier payment in the event of the Executive’s death, the delayed payment amount shallbe paid to the Executive, in a single sum cash payment, on the later of (i) the date on which payment would otherwise be madeunder this Plan, or (ii) the date which is six (6) months following the Executive’s Separation from Service.(b) The medical, dental and vision continuation under Section 4(c) is intended to be exempt from Section 409A inaccordance with Section 1.409A-1(b)(9)(v)(B) of the Income Tax Regulations (or any successor thereto).(c) Any payment which is deferred following the Executive’s Separation from Service to comply with Code Section409A(a)(2)(B)(i) shall, when paid, include interest, calculated at the reference rate or the prime rate, as the case may be, of USBank Milwaukee, Wisconsin, as such rate is in effect from time to time during the period beginning on the last date on whichthe amount would otherwise have been paid to the date on which payment is actually made.(d) The Executive’s termination of employment does not affect any deferral or distribution elections that an Executivemay have in place with respect to the deferral or payment of any benefits that are subject to Code Section 409A, and deferral orpayment of such amounts will be made pursuant to the terms of the applicable plan or program under which such deferral ordistribution election was made.(e) To the extent any provision of this Plan or any omission from this Plan would (absent this provision) causeamounts to be includable in income under Code Section 409A(a)(1), this Plan shall be deemed amended to the extent necessaryto comply with the requirements of Code Section 409A; provided, however, that this provision shall not apply and shall not beconstrued to amend any provision of this Plan to the extent this provision or any amendment required thereby would itselfcause any amounts to be includable in income under Code Section 409A(a)(1).86. Payment Limitation.(a) Notwithstanding any other provision of this Plan, with respect to any Executive who the Plan Administrator, in itsdiscretion, determines to be a “disqualified individual” for purposes of Code Sections 280G and 4999, if any portion of thepayments or benefits under this Plan, or under any other agreement with or plan of the HDI Group (in the aggregate, the “TotalPayments”), would constitute an “excess parachute payment” that is subject to the tax imposed by Code Section 4999, then theTotal Payments to be made to the Executive shall be reduced such that the value of the aggregate Total Payments that theExecutive is entitled to receive shall be One Dollar ($1) less than the maximum amount which the Executive may receivewithout becoming subject to the tax imposed by Code Section 4999; provided that the foregoing reduction in the amount ofTotal Payments shall not apply if the after-tax value to the Executive of the Total Payments prior to reduction in accordancewith this subsection (a) (including the tax imposed by Code Section 4999) is greater than one hundred ten percent (110%) ofthe after-tax value to the Executive if the Total Payments are reduced in accordance with this subsection (a).(b) For purposes of this Section, the terms “excess parachute payment” and “parachute payments” shall have themeanings assigned to them in Code Section 280G, and such “parachute payments” shall be valued as provided therein. Presentvalue shall be calculated in accordance with Code Section 280G(d)(4). The Executive and the HDI Group Employer, at theHDI Group Employer’s expense, shall obtain the opinion (which need not be unqualified) of nationally recognized tax counsel(“National Tax Counsel”) selected by the HDI Group Employer’s independent auditors and acceptable to the Executive, whichopinion sets forth:(i) the amount of the Base Period Income,(ii) the amount and present value of the Total Payments,(iii) the amount and present value of any excess parachute payments determined without regard to thelimitations of this Section 6,(iv) the after-tax value of the Total Payments if the reduction in Total Payments contemplated under subsection(a) of this Section 6 did not apply, and(v) the after-tax value of the Total Payments taking into account the reduction in Total Payments contemplatedunder subsection (a) of this Section 6.(c) The term “Base Period Income” means an amount equal to the Executive’s “annualized included compensation forthe base period” as defined in Code Section 280G(d)(1) (or any successor provision). For purposes of such opinion of NationalTax Counsel, the value of any noncash benefits or any deferred payment or benefit shall be determined by the HDI GroupEmployer’s independent auditors in accordance with the principles of Code Sections 280G(d)(3) and (4), which determinationshall be evidenced9in a certificate of such auditors addressed to the HDI Group Employer and the Executive. For purposes of determining theafter-tax value of the Total Payments, the Executive shall be deemed to pay federal income taxes and employment taxes at thehighest stated rate of federal income and employment taxation on the date on which the determination is being made and stateand local income taxes at the highest stated rates of taxation in the state and locality of the Executive’s domicile for income taxpurposes on the date on which the determination is being made, net of the maximum reduction in federal income taxes that maybe obtained from deduction of such state and local taxes. The opinion of National Tax Counsel shall be dated as of the date ofthe Executive’s Covered Termination and addressed to the HDI Group Employer and the Executive and shall be binding uponthe HDI Group Employer and the Executive. If such opinion determines that there would be an excess parachute payment (andthat the after-tax value of the Total Payments if the reduction in the Total Payments contemplated under subsection (a) of thisSection 6 did not apply is not greater than one hundred ten percent (110%) of the after-tax value of the Total Payments takinginto account the reduction contemplated under subsection (a) of this Section 6), then the payments and benefits hereunder orany other payment or benefit determined by such counsel to be included in the Total Payments shall be reduced or eliminatedso that under the bases of calculations set forth in such opinion there will be no excess parachute payment. If such National TaxCounsel so requests in connection with its opinion, the Executive and the HDI Group Employer shall obtain, at the HDI GroupEmployer’s expense, and the National Tax Counsel may rely on in providing the opinion, the advice of a firm of recognizedexecutive compensation consultants as to the reasonableness of any item of compensation to be received by the Executive. Ifthe provisions of Code Sections 280G and 4999 are repealed without succession, then this Section 6 shall be of no further forceor effect.7. Other Termination. In the event the Executive’s employment terminates other than pursuant to a Covered Termination,including, without limitation, a termination for Cause, termination by reason of the Executive’s death, Disability or a voluntaryretirement or termination by the Executive, the Executive shall be entitled to no benefits or rights under this Plan. Notwithstandinganything herein to the contrary, an otherwise involuntary termination of the Executive’s employment will not be treated as a voluntarytermination or as a voluntary retirement solely because the Executive’s termination is characterized as a voluntary resignation orretirement in connection with any public announcement concerning the Executive’s departure or because the Executive receivesretirement benefits.8. Plan Administration. The Committee shall be the fiduciary for this Plan and, as such, shall have full and discretionaryresponsibility and authority to interpret, control and administer this Plan and to determine eligibility for and the amount of benefitspursuant to this Plan, including the power to amend this Plan as provided in Section 11, the power to promulgate rules of Planadministration, the power to investigate and settle any disputes as to rights or benefits arising under this Plan, the power to appointagents, accountants and consultants, the power to delegate the Committee’s duties, and the power to make such other decisions or takesuch other actions as the Committee, in its sole discretion, deems necessary or advisable to aid in the proper administration of this Plan.Actions and determinations by the Committee (or its10delegate) shall be final, binding and conclusive for all purposes of this Plan unless determined by a court of competent jurisdiction to bearbitrary and capricious. The Committee has delegated to the Company, acting through its authorized executives and other employees,the power to administer the day-to-day operations of this Plan, including without limitation the calculation of benefits payable underthis Plan.9. Required Tender Back of Benefits. If the Executive has or claims or have any Claims (as defined in Section 3), Executivemay elect to assert such Claims. If, however, Executive does formally assert one or more Claims in a writing submitted to the HDIGroup, or in a writing submitted to or filed with an appropriate body to determine such Claims, for the legal enforcement of suchClaims, such writing shall constitute an irrevocable waiver and disclaimer of the Executive’s benefits and rights under this Plan.Further, If the Executive has received benefits under the Plan for a Covered Termination and thereafter asserts any Claims (as definedin Section 3), other than an ERISA appeal pursuant to Section 10 below, the Executive shall, notwithstanding any other plan oragreement to the contrary, return to the HDI Group all benefits received under this Plan. If for any reason Executive cannot legally becompelled to return such benefits, the HDI Group shall be given, to the maximum extent allowed by law, credit for all amountsreceived by Executive under the Plan against amounts otherwise due to Executive arising out of any such Claims. Notwithstanding theforegoing, this Section 9 shall not be construed to limit or otherwise modify the terms of any release executed by Executive pursuant toSection 3 or otherwise.10. ERISA Appeal Procedure.(a) This Section 10 applies only in the limited circumstances in which an Executive has been determined either (i) tonot satisfy the requirements for Severance Benefits set forth in Section 3 and the Executive believes that he or she is entitled toSeverance Benefits under the Plan, or (ii) to be entitled to Severance Benefits in accordance with the rules set forth in Section 3but the Executive believes that the amount of Severance Benefits received is less than the amount of benefits provided underthe Plan.(b) An appeal may be filed within ninety (90) days after the Executive’s Date of Termination, and must set forth thebenefits claimed and the reason therefor. The Committee will notify the Executive of its decision within ninety (90) days ofreceipt of the appeal. If special circumstances require an extension of time (not to exceed an additional ninety (90) days) forprocessing the appeal, the Plan Administrator will notify the Executive in writing of the extension prior to the expiration of theinitial ninety (90) day period. If the Plan Administrator denies the claim, in whole or in part, such denial notice shall include allinformation required by law.(c) Within sixty (60) days of notice of a denied appeal, the Executive may file a request for additional review. Uponrequest and free of charge, the Plan Administrator shall provide the Executive with reasonable access to, and copies of, alldocuments, records and other information relevant to the Executive’s request. If the Executive timely requests further review,the Plan Administrator will again review all of the comments,11documents, records and other information submitted by the Executive, will render its final decision and provide this decision tothe Executive within sixty (60) days of its receipt of the request for review. If special circumstances require an extension oftime (not to exceed an additional sixty (60) days) for processing the review, the Plan Administrator will notify the Executive inwriting of the extension prior to the expiration of the initial sixty (60) day period. If the Plan Administrator denies the claim, inwhole or in part, such denial notice will include the information required by law. (d) Any person claiming entitlement to a benefit under this Plan must exhaust the appeal and review proceduresdescribed above prior to pursuing any other remedy. Any suit or legal action initiated by or on behalf of the Executive or otherperson claiming entitlement to a benefit under this Plan must be brought no later than one (1) year following the PlanAdministrator’s final decision under subsection (c) above. This (1) one year limitation period on suits for benefits applies inany forum where the Executive or other person claiming entitlement to a benefit under this Plan (or any other person on behalfof the Executive or such person) initiates such suit or legal action.11. Amendment and Termination. The Company, by action of the Committee, reserves the right to amend this Plan from timeto time or to terminate this Plan; provided, however, that no such amendment or termination shall reduce the amount of SeveranceBenefits payable to any Executive whose Date of Termination has already occurred. In addition, the Vice President – General Counselof the Company may amend or modify the terms of this Plan to the extent necessary or advisable to comply with or obtain the benefitsof or advantages under the provisions of applicable law, regulations or rulings or requirements (including, without limitation, anyamendment necessary to comply with or secure an exemption from Code Section 409A).12. Plan Document Controls. This document is the official plan document for this Plan. In the event of any conflict betweenthis document and any other document, instrument, or communication describing the policies or procedures with respect to SeveranceBenefits, the terms of this document are controlling.13. Plan Not a Guarantee of Employment. Nothing in this Plan shall be construed to prevent the HDI Group Employer fromterminating the Executive’s employment either for Cause or without Cause.14. Plan Funding. No Executive or beneficiary thereof shall acquire by reason of this Plan any right in or title to any assets,funds, or property of the HDI Group. Any Severance Benefits that become payable or will be provided under this Plan are unfundedobligations of the applicable HDI Group Employer, and shall be paid from the general assets of such entity. No past or presentexecutive, employee, officer, director, executor, assign, representative, or agent of the HDI Group guarantees in any manner thepayment or provision of any Severance Benefits.15. Governing Law. This Plan shall be governed by and construed in accordance with ERISA, and to the extent notpreempted thereby, by the laws of the State of Wisconsin, without regard to conflict of law principles.1216. Venue. As a condition of becoming a participant in and potentially receiving benefits under this Plan, the Executiveconsents and agrees that in the event of any dispute arising from or in connection with this Plan, the Executive consents and agrees toin personam jurisdiction and to venue exclusively in either the Circuit Court for Milwaukee County, Wisconsin, or the United StatesDistrict Court for the Eastern District of Wisconsin, located in Milwaukee, Wisconsin.17. No Requirement of Mitigation. The Executive shall not be required to mitigate damages or the amount of any payment tothe Executive provided for under this Plan by seeking other employment or otherwise, nor shall the amount of any payment providedfor under this Plan be reduced by any compensation earned by the Executive as a result of employment by another employer after aCovered Termination.18. Headings. The headings in this Plan are for convenience of reference and shall not be given substantive effect.19. Withholding. The HDI Group shall be entitled to withhold from amounts to be paid to the Executive hereunder anyfederal, state or local withholding or other taxes or charges which it is from time to time required to withhold; provided that the amountso withheld shall not exceed the minimum amount required to be withheld by law. In addition, if prior to the date of payment of thebenefits hereunder, the Federal Insurance Contributions Act (FICA) tax imposed under Code Sections 3101, 3121(a) and 3121(v)(2),where applicable, becomes due, the HDI Group may provide for an immediate payment of the amount needed to pay the Executive’sportion of such tax (plus an amount equal to the income taxes that will be due on such amount) and the Executive’s remaining benefitsunder this Plan shall be reduced accordingly.20. Successors. This Plan shall be binding upon, inure to the benefit of and be enforceable by the HDI Group and theExecutive and their respective heirs, legal representatives, successors and assigns. If the HDI Group or any member of the HDI Groupshall be merged into or consolidated with another entity, the provisions of this Plan shall be binding upon and inure to the benefit of theentity surviving such merger or resulting from such consolidation.21. Severability. Any provision of this Plan which is held to be unenforceable or invalid in any respect in any jurisdiction shallbe ineffective in such jurisdiction to the extent that it is unenforceable or invalid without affecting the remaining provisions hereof,which shall continue in full force and effect. The unenforceability or invalidity of a provision of this Plan in one jurisdiction shall notinvalidate or render unenforceable such provision in any other jurisdiction.22. Nonassignment. The Severance Benefits under this Plan may not be sold, assigned, transferred, pledged, anticipated,mortgaged, or otherwise encumbered, transferred, hypothecated, or conveyed in advance of actual receipt of the Severance Benefits, ifany, or any part thereof by the Executive.13Exhibit 21HARLEY-DAVIDSON, INC.SUBSIDIARIES State/Country Of Name IncorporationH-D U.S.A., LLCWisconsinHarley-Davidson Motor Company Group, LLCWisconsinHarley-Davidson Motor Company Operations, Inc.WisconsinH-D Franklin, LLCWisconsinH-D Tomahawk Somo, LLCWisconsinH-D Tomahawk Industrial Park, LLCWisconsinH-D Tomahawk Kaphaem Road, LLCWisconsinH-D Capitol Drive, LLCWisconsinH-D Pilgrim Road, LLCWisconsinHarley-Davidson Motor Company, Inc.WisconsinHarley-Davidson Museum, LLCWisconsinBuell Distribution Company, LLCWisconsinH-D F&R, LLCWisconsinHarley-Davidson Latin America, LLCWisconsinHarley-Davidson Asia Pacific, LLCWisconsinBuell Motorcycle Company, LLCWisconsinHDWA, LLCWisconsinHarley-Davidson Dealer Systems, Inc.OhioH-D International Holding Co., Inc.WisconsinHarley-Davidson Holding Co., Inc.DelawareHarley-Davidson Benelux B.V.NetherlandsHarley-Davidson France SASFranceHarley-Davidson Germany GmbHGermanyHarley-Davidson Italia S.r.l.ItalyHarley-Davidson Japan KKJapanHarley-Davidson Europe LimitedEnglandHarley-Davidson do Brazil Ltda.BrazilHarley-Davidson do Brazil Fabricacao De Componentes Ltda.BrazilHarley-Davidson Australia Pty. LimitedAustraliaHarley-Davidson (Shanghai) Commercial and Trading Co., Ltd.ChinaH-D Hong Kong LimitedHong KongHarley-Davidson Espana S.L.SpainHarley-Davidson Switzerland GmbHSwitzerlandNew Castalloy Pty. LimitedAustraliaHarley-Davidson De Mexico, S. De R.L. De C.V.MexicoHarley-Davidson De Mexico Management, S. De R.L. De C.V.MexicoHarley-Davidson Africa (Pty) LimitedSouth AfricaHarley-Davidson Asia Pacific Pte. Ltd.SingaporeHarley-Davidson Central and Eastern Europe s.r.o.Czech RepublicH-D Motor Company India Private LimitedIndiaHarley-Davidson Austria GmbHAustriaHarley-Davidson RUS LLCRussiaHarley-Davidson MENA DMCCDubaiHarley-Davidson South East Europe Single Member E.P.E.GreeceHarley-Davidson (Thailand) Company LimitedThailandHDMC (Thailand) Ltd.ThailandH-D Motorcycle (Thailand) LimitedThailandHarley-Davidson Indonesia PTIndonesiaHarley-Davidson Canada GP Inc.CanadaHarley-Davidson Canada Holdings ULCCanadaHarley-Davidson Canada LPCanadaRenovation Realty Investment Services, Inc.WisconsinHR, LLCIndianaHR Holding Corp.WisconsinHarley-Davidson Financial Services, Inc.DelawareHarley-Davidson Insurance Services, Inc.NevadaHarley-Davidson Credit Corp.NevadaHarley-Davidson Insurance Services of Illinois, Inc.IllinoisHarley-Davidson Customer Funding CorpNevadaHarley-Davidson Motorcycle Trust 2014-1DelawareHarley-Davidson Motorcycle Trust 2015-1DelawareHarley-Davidson Motorcycle Trust 2015-2DelawareEaglemark Savings BankNevadaHarley-Davidson Leasing, Inc.NevadaHarley-Davidson Warehouse Funding Corp.NevadaHarley-Davidson Financial Services International, Inc.DelawareHarley-Davidson Financial Services Europe LimitedEnglandHarley-Davidson Financial Services Canada, Inc.Canada Exhibit 23Consent of Independent Registered Public Accounting FirmWe consent to the incorporation by reference in the following Registration Statements: (1)Registration Statement (Form S-8 No. 333-51741) pertaining to the Harley-Davidson, Inc. Director Stock Plan;(2)Registration Statement (Form S-8 No. 333-75347) pertaining to the Harley-Davidson, Inc. 1998 Non-Exempt Employee StockOption Plan;(3)Registration Statement (Form S-8 No. 333-60840) pertaining to the Harley-Davidson, Inc. 2001 York Hourly-Paid EmployeesStock Option Plan;(4)Registration Statement (Form S-8 No. 333-123405) pertaining to the Harley-Davidson, Inc. 2004 Incentive Stock Plan;(5)Registration Statement (Form S-8 No. 333-166549) pertaining to the Harley-Davidson, Inc. 2009 Incentive Stock Plan;(6)Registration Statement (Form S-8 No. 333-171813) pertaining to the Harley-Davidson, Inc. Stock Purchase Plan;(7)Registration Statement (Form S-8 Nos. 333-181761) of Harley-Davidson, Inc. pertaining to the Harley-Davidson RetirementSavings Plan for Salaried Employees, the Harley-Davidson Retirement Savings Plan for Milwaukee and Tomahawk HourlyBargaining Unit Employees, the Harley-Davidson Retirement Savings Plan for Kansas City Hourly Bargaining Unit Employees,the Harley-Davidson Retirement Savings Plan for York Hourly Bargaining Unit Employees, and the Harley-Davidson FinancialServices, Inc. 401(k) Profit Sharing Plan;(8)Registration Statement (Form S-8 No. 333-199972) pertaining to the Harley-Davidson, Inc. 2014 Incentive Stock Plan; and(9)Registration Statement (Form S-3 No. 333-202491) of Harley-Davidson, Inc. and the related Prospectus;of our reports dated February 21, 2018, with respect to the consolidated financial statements and schedule of Harley-Davidson, Inc. andthe effectiveness of internal control over financial reporting of Harley-Davidson, Inc., included in this Annual Report (Form 10-K) ofHarley-Davidson for the year ended December 31, 2017./s/ Ernst & Young LLPMilwaukee, WisconsinFebruary 21, 2018Exhibit 31.1Chief Executive Officer CertificationPursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934I, Matthew S. Levatich, certify that:1.I have reviewed this annual report on Form 10-K of Harley-Davidson, Inc.;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessaryto make the statements made, in light of the circumstances under which such statements were made, not misleading with respect tothe period covered by this report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all materialrespects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in thisreport;4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (asdefined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange ActRules 13a-15(f) and 15d-15(f))for the registrant and have:a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known tous by others within those entities, particularly during the period in which this report is being prepared;b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designedunder our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation offinancial statements for external purposes in accordance with generally accepted accounting principles;c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusionsabout the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on suchevaluation; andd)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’smost recent fiscal quarter (the registrant’s fourth quarter in case of an annual report) that has materially affected, or is reasonablylikely to materially affect, the registrant’s internal control over financial reporting; and5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financialreporting, to the registrant's auditors and the audit committee of registrant's board of directors:a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting whichare reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information;andb)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant'sinternal control over financial reporting. Date: February 21, 2018/S/ Matthew S. Levatich Matthew S. Levatich President and Chief Executive Officer Exhibit 31.2Chief Financial Officer CertificationPursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934I, John A. Olin, certify that:1.I have reviewed this annual report on Form 10-K of Harley-Davidson, Inc.;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessaryto make the statements made, in light of the circumstances under which such statements were made, not misleading with respect tothe period covered by this report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all materialrespects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in thisreport;4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (asdefined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange ActRules 13a-15(f) and 15d-15(f))for the registrant and have:a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known tous by others within those entities, particularly during the period in which this report is being prepared;b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designedunder our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation offinancial statements for external purposes in accordance with generally accepted accounting principles;c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusionsabout the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on suchevaluation; andd)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’smost recent fiscal quarter (the registrant’s fourth quarter in case of an annual report) that has materially affected, or is reasonablylikely to materially affect, the registrant’s internal control over financial reporting; and5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financialreporting, to the registrant's auditors and the audit committee of registrant's board of directors:a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting whichare reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; andb)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant'sinternal control over financial reporting. Date: February 21, 2018/S/ John A. Olin John A. Olin Senior Vice President and Chief Financial OfficerExhibit 32Written Statement of the Chief Executive Officer and Chief Financial OfficerPursuant to 18 U.S.C. sec. 1350Solely for the purpose of complying with 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, we,the undersigned President and Chief Executive Officer and the Senior Vice President and Chief Financial Officer of Harley-Davidson,Inc. (the “Company”), hereby certify, based on our knowledge, that the Annual Report on Form 10-K of the Company for the yearended December 31, 2017 (the “Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations ofthe Company.Date: February 21, 2018 /S/ Matthew S. Levatich Matthew S. Levatich President and Chief Executive Officer /S/ John A. Olin John A. Olin Senior Vice President and Chief Financial Officer

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