Exhibit
4.2


 


Execution
Copy


 


AMENDED AND
RESTATED


 


TRUST AGREEMENT


 


between


 


HSBC AUTO
RECEIVABLES CORPORATION,


 


and


 


U.S. BANK TRUST NATIONAL ASSOCIATION


Owner Trustee


 


Dated as of July 26,
2006


 

















 


TABLE OF CONTENTS


 


	
   

  	
   

  	
  Page

  	 

	 
	
   

  	
   

  
	 
	
  ARTICLE I Definitions

  	
  1

  
	 
	
   

  	
   

  
	 
	
   

  	
  Section 1.1.

  	
  Capitalized Terms

  	
  1

  
	 
	
   

  	
  Section 1.2.

  	
  Other Definitional Provisions

  	
  3

  
	 
	
   

  	
  Section 1.3.

  	
  Action by or Consent of Noteholders and
  Certificateholders

  	
  3

  
	 
	
   

  	
  Section 1.4.

  	
  Material Adverse Effect

  	
  4

  
	 
	
   

  	
   

  	
   

  	
   

  
	 
	
  ARTICLE II Organization

  	
  4

  
	 
	
   

  	
   

  
	 
	
   

  	
  Section 2.1.

  	
  Name

  	
  4

  
	 
	
   

  	
  Section 2.2.

  	
  Office

  	
  4

  
	 
	
   

  	
  Section 2.3.

  	
  Purposes and Powers

  	
  4

  
	 
	
   

  	
  Section 2.4.

  	
  Appointment of Owner Trustee

  	
  5

  
	 
	
   

  	
  Section 2.5.

  	
  Initial Capital Contribution of Owner Trust Estate

  	
  5

  
	 
	
   

  	
  Section 2.6.

  	
  Declaration of Trust

  	
  5

  
	 
	
   

  	
  Section 2.7.

  	
  Liability

  	
  6

  
	 
	
   

  	
  Section 2.8.

  	
  Title to Owner Trust Estate

  	
  6

  
	 
	
   

  	
  Section 2.9.

  	
  Situs of Owner Trust Estate

  	
  6

  
	 
	
   

  	
  Section 2.10.

  	
  Representations and Warranties of the Depositor

  	
  6

  
	 
	
   

  	
  Section 2.11.

  	
  Federal Income Tax Allocations

  	
  8

  
	 
	
   

  	
  Section 2.12.

  	
  Covenants of the Depositor

  	
  8

  
	 
	
   

  	
  Section 2.13.

  	
  Covenants of the Certificateholders

  	
  9

  
	 
	
   

  	
   

  	
   

  	
   

  
	 
	
  ARTICLE III Certificates and Transfer of Interests

  	
  10

  
	 
	
   

  	
   

  	
   

  	
   

  
	 
	
   

  	
  Section 3.1.

  	
  Initial Ownership

  	
  10

  
	 
	
   

  	
  Section 3.2.

  	
  The Certificates

  	
  10

  
	 
	
   

  	
  Section 3.3.

  	
  Authentication of Certificates

  	
  11

  
	 
	
   

  	
  Section 3.4.

  	
  Registration of Transfer and Exchange of
  Certificates

  	
  11

  
	 
	
   

  	
  Section 3.5.

  	
  Mutilated, Destroyed, Lost or Stolen Certificates

  	
  12

  
	 
	
   

  	
  Section 3.6.

  	
  Persons Deemed Certificateholders

  	
  13

  
	 
	
   

  	
  Section 3.7.

  	
  Access to List of Certificateholders’ Names and
  Addresses

  	
  13

  
	 
	
   

  	
  Section 3.8.

  	
  Maintenance of Office or Agency

  	
  13

  
	 
	
   

  	
  Section 3.9.

  	
  ERISA Restrictions

  	
  13

  
	 
	
   

  	
  Section 3.10.

  	
  Securities Matters

  	
  14

  
	 
	
   

  	
  Section 3.11.

  	
  Distributions

  	
  14

  
	 
	
   

  	
  Section 3.12.

  	
  Certificate Paying Agent

  	
  14

  
	 
	
   

  	
   

  	
   

  	
   

  
	 
	
  ARTICLE IV Voting Rights and Other Actions

  	
  14

  
	 
	
   

  	
   

  	
   

  	
   

  
	 
	
   

  	
  Section 4.1.

  	
  Prior Notice to Holders with Respect to Certain
  Matters

  	
  14

  
	 
	
   

  	
  Section 4.2.

  	
  Action by Certificateholders with Respect to Certain
  Matters

  	
  15

  
	 
	
   

  	
  Section 4.3.

  	
  Action by Certificateholders with Respect to
  Bankruptcy

  	
  15

  
	 
	
   

  	
  Section 4.4.

  	
  Restrictions on Certificateholders’ Power

  	
  15

  
	 
	
   

  	
  Section 4.5.

  	
  Majority Control

  	
  16

  
						



 

















 


	
   

  	
  Section 4.6.

  	
  [Reserved]

  	
  16

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V Certain Duties

  	
  16

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 5.1.

  	
  Accounting and Records to the Noteholders,
  Certificateholders, the Internal Revenue Service and Others

  	
  16

  
	
   

  	
  Section 5.2.

  	
  Signature on Returns; Tax Matters Partner

  	
  17

  
	
   

  	
   

  
	
  ARTICLE VI Authority and Duties of Owner Trustee

  	
  17

  
	
   

  	
   

  
	
   

  	
  Section 6.1.

  	
  General Authority

  	
  17

  
	
   

  	
  Section 6.2.

  	
  General Duties

  	
  18

  
	
   

  	
  Section 6.3.

  	
  Action upon Instruction

  	
  18

  
	
   

  	
  Section 6.4.

  	
  No Duties Except as Specified in this Agreement or
  in Instructions

  	
  19

  
	
   

  	
  Section 6.5.

  	
  No Action Except under Specified Documents or
  Instructions

  	
  19

  
	
   

  	
  Section 6.6.

  	
  Restrictions

  	
  19

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII Concerning the Owner Trustee

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 7.1.

  	
  Acceptance of Trust and Duties

  	
  20

  
	
   

  	
  Section 7.2.

  	
  Furnishing of Documents

  	
  21

  
	
   

  	
  Section 7.3.

  	
  Representations and Warranties

  	
  21

  
	
   

  	
  Section 7.4.

  	
  Reliance; Advice of Counsel

  	
  22

  
	
   

  	
  Section 7.5.

  	
  Not Acting in Individual Capacity

  	
  22

  
	
   

  	
  Section 7.6.

  	
  Owner Trustee Not Liable for Certificates or
  Receivables

  	
  23

  
	
   

  	
  Section 7.7.

  	
  Owner Trustee May Own Certificates and Notes

  	
  23

  
	
   

  	
  Section 7.8.

  	
  Payments from Owner Trust Estate

  	
  23

  
	
   

  	
  Section 7.9.

  	
  Doing Business in Other Jurisdictions

  	
  23

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII Compensation of Owner Trustee

  	
  24

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 8.1.

  	
  Owner Trustee’s Fees and Expenses

  	
  24

  
	
   

  	
  Section 8.2.

  	
  Indemnification

  	
  24

  
	
   

  	
  Section 8.3.

  	
  Payments to the Owner Trustee

  	
  24

  
	
   

  	
  Section 8.4.

  	
  Non-recourse Obligations

  	
  25

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX Termination of Agreement

  	
  25

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 9.1.

  	
  Termination of Agreement

  	
  25

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X Successor Owner Trustees and Additional
  Owner Trustees

  	
  26

  
	
   

  	
   

  
	
   

  	
  Section 10.1.

  	
  Eligibility Requirements for Owner Trustee

  	
  26

  
	
   

  	
  Section 10.2.

  	
  Resignation or Removal of Owner Trustee

  	
  27

  
	
   

  	
  Section 10.3.

  	
  Successor Owner Trustee

  	
  28

  
	
   

  	
  Section 10.4.

  	
  Merger or Consolidation of Owner Trustee

  	
  29

  
	
   

  	
  Section 10.5.

  	
  Appointment of Co-Trustee or Separate Trustee

  	
  29

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XI Miscellaneous

  	
  31

  



 


ii

















 


	
   

  	
  Section 11.1.

  	
  Supplements and Amendments

  	
  31

  
	
   

  	
  Section 11.2.

  	
  No Legal Title to Owner Trust Estate in
  Certificateholders

  	
  32

  
	
   

  	
  Section 11.3.

  	
  Limitations on Rights of Others

  	
  32

  
	
   

  	
  Section 11.4.

  	
  Notices

  	
  32

  
	
   

  	
  Section 11.5.

  	
  Severability

  	
  33

  
	
   

  	
  Section 11.6.

  	
  Separate Counterparts

  	
  33

  
	
   

  	
  Section 11.7.

  	
  Assignments; Support Provider

  	
  33

  
	
   

  	
  Section 11.8.

  	
  Covenants of the Depositor

  	
  33

  
	
   

  	
  Section 11.9.

  	
  No Petition

  	
  33

  
	
   

  	
  Section 11.10.

  	
  No Recourse

  	
  33

  
	
   

  	
  Section 11.11.

  	
  Headings

  	
  34

  
	
   

  	
  Section 11.12.

  	
  GOVERNING LAW

  	
  34

  
	
   

  	
  Section 11.13.

  	
  Servicer

  	
  34

  
	
   

  	
  Section 11.14.

  	
  [Reserved].

  	
  34

  
	
   

  	
  Section 11.15.

  	
  Regulation AB

  	
  34

  
	
   

  	
  Section 11.16.

  	
   

  	
  35

  



 


EXHIBITS


 


	
  Exhibit A

  	
  Form of Certificate

  
	
  Exhibit B

  	
  Form of Certificate of
  Trust

  



 


iii

















 


THIS AMENDED AND RESTATED TRUST AGREEMENT, dated as of
July 26, 2006, between HSBC AUTO RECEIVABLES CORPORATION, a Nevada corporation
(the “Depositor”), and U.S.
BANK TRUST NATIONAL ASSOCIATION, a national banking association, as
Owner Trustee (the “Owner Trustee”), amends and restates in its entirety that
certain Trust Agreement, dated as of June 26, 2006, between the Depositor and
the Owner Trustee.


 


ARTICLE I


 


Definitions


 


Section 1.1.            Capitalized
Terms. For all purposes of this Agreement, the following terms shall have
the meanings set forth below:


 


“Administrator” shall mean HSBC Bank USA, National
Association, or its successors, not in its individual capacity but solely as
administrator under the Transaction Documents to which it is a party, and any
successor administrator thereunder.


 


“Agreement” shall mean this Amended and Restated Trust
Agreement, as the same may be amended and supplemented from time to time.


 


“Benefit Plan” shall have the meaning assigned to such
term in Section 3.9.


 


“Certificates” means, if the Depositor elects (i) to
evidence its interest in certificated form pursuant to Section 3.2, the
certificate substantially in the form of Exhibit A or (ii) to have its interest
be uncertificated pursuant to Section 3.2, such uncertificated interest.


 


“Certificate Majority” shall have the meaning assigned
to such term in Section 4.1.


 


“Certificate Paying Agent” means the Administrator.


 


“Certificate Register” and “Certificate Registrar”
shall mean the register mentioned and the registrar appointed pursuant to
Section 3.4.


 


“Certificate of Trust” shall mean the Certificate of
Trust in the form of Exhibit B which was filed on June 26, 2006 pursuant to
§ 3810(a) of the Statutory Trust Statute.


 


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


 


“Corporate Trust Office” shall mean, with respect to
the Owner Trustee, the office of the Owner Trustee located at 209 South LaSalle
Street, Suite 300, Chicago, Illinois 60604, Attention: Corporate Trust Services,
or at such other address as the Owner Trustee may designate by notice to the
Certificateholders and the Depositor, or the 


 

















 


principal corporate trust office of any successor
Owner Trustee (the address of which the successor owner trustee will notify the
Certificateholders and the Depositor).


 


“Depositor” shall mean HSBC Auto Receivables
Corporation in its capacity as Depositor hereunder.


 


“ERISA” shall have the meaning assigned to such term
in Section 3.9.


 


“Expenses” shall have the meaning assigned to such
term in Section 8.2.


 


“Form 8-K”  shall mean a current report pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended.


 


“Holder” or “Certificateholder” shall mean a Person in
whose name a Certificate is registered on the Certificate Register.


 


“HSBC Finance” shall mean HSBC Finance Corporation.


 


“Indemnified Parties” shall have the meaning assigned
to such term in Section 8.2.


 


“Owner Trust Estate” shall mean all right, title and
interest of the Trust in and to the property and rights assigned to the Trust
pursuant to Article II of the Sale and Servicing Agreement, all funds on
deposit from time to time in the Trust Accounts and all other property of the
Trust from time to time, including any rights of the Owner Trustee and the
Trust pursuant to the Sale and Servicing Agreement and each Related Document.


 


“Owner Trustee” shall mean U.S. Bank Trust National
Association, a national banking association, not in its individual capacity but
solely as Owner Trustee under this Agreement, and any successor Owner Trustee
hereunder.


 


“Percentage Interest” shall mean, with respect to a
Certificate, the portion of the interests in the Trust represented by a
Certificate, as reflected in the Certificate Register.


 


“Sale and Servicing Agreement” means the Sale and
Servicing Agreement dated as of July 26, 2006, among the Issuer, the Seller,
the Servicer, the Indenture Trustee and the Administrator, as such agreement
may be amended or supplemented from time to time.


 


“Secretary of State” shall mean the Secretary of State
of the State of Delaware.


 


“Securities Act” shall have the meaning assigned to
such term in the Indenture.


 


“Series Trust Estate” shall mean the property granted
to the Indenture Trustee on behalf of the Trust pursuant to Section 1.02 of the
Series Supplement.


 


2

















 


“Statutory Trust Statute” shall mean Chapter 38 of
Title 12 of the Delaware Code, 12 Del. Code § 3801 et seq. as the
same may be amended from time to time.


 


“Treasury Regulations” shall mean regulations,
including proposed or temporary regulations, promulgated under the Code. References
herein to specific provisions of proposed or temporary regulations shall
include analogous provisions of final Treasury Regulations or other successor
Treasury Regulations.


 


“Trust” shall mean the trust established by this
Agreement.


 


Section 1.2.            Other
Definitional Provisions.  (a)  Capitalized
terms used herein and not otherwise defined have the meanings assigned to them
in the Sale and Servicing Agreement or, if not defined therein, in the
Indenture; provided  that, as used herein, Series means only the
Series of Notes and Series of Certificates with respect to which the Trust is
the Issuer and only such Series Trust Estates included in the Owner Trust
Estate.


 


(b)           All
terms defined in this Agreement shall have the defined meanings when used in
any Certificate or other document made or delivered pursuant hereto unless
otherwise defined therein.


 


(c)           As
used in this Agreement and in any Certificate or other document made or
delivered pursuant hereto or thereto, accounting terms not defined in this
Agreement or in any such certificate or other document, and accounting terms
partly defined in this Agreement or in any such certificate or other document
to the extent not defined, shall have the respective meanings given to them
under generally accepted accounting principles as in effect on the date of this
Agreement or any such certificate or other document, as applicable. To the
extent that the definitions of accounting terms in this Agreement or in any
such certificate or other document are inconsistent with the meanings of such
terms under generally accepted accounting principles, the definitions contained
in this Agreement or in any such certificate or other document shall control.


 


(d)           The
words “hereof,” “herein,” “hereunder” and words of similar import when used in
this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement; Section and Exhibit references
contained in this Agreement are references to Sections and Exhibits in or to
this Agreement unless otherwise specified; and the term “including” shall mean “including
without limitation.”


 


(e)           The
definitions contained in this Agreement are applicable to the singular as well
as the plural forms of such terms and to the masculine as well as to the
feminine and neuter genders of such terms.


 


Section 1.3.            Action
by or Consent of Noteholders and Certificateholders. Whenever any provision
of this Agreement refers to action to be taken, or consented to, by Noteholders
or Certificateholders, such provision shall be deemed to refer to the
Certificateholder or Noteholder, as the case may be, of record as of the Record
Date immediately preceding the date on which such action is to be taken, or 


 


3

















 


consent given, by Noteholders or Certificateholders. Solely for the
purposes of any action to be taken, or consented to, by Noteholders, any Note
registered in the name of the Depositor or any Affiliate thereof shall be
deemed not to be outstanding; provided, however, that, solely for
the purpose of determining whether the Indenture Trustee is entitled to rely
upon any such action or consent, only Notes that a Responsible Officer of the
Owner Trustee or the Indenture Trustee, as the case may be, either actually
knows to be so owned or has received written notice thereof shall be so
disregarded.


 


Section 1.4.            Material
Adverse Effect. Whenever a determination is to be made under this Agreement
as to whether a given event, action, course of conduct or set of facts or
circumstances could or would have a material adverse effect on the Noteholders
or Certificateholders (or any similar or analogous determination), such
determination shall be made without taking into account the funds available
from claims under any policy or other Series Support.


 


ARTICLE II


 


Organization


 


Section 2.1.            Name.
There is hereby formed a trust to be known as “HSBC Automotive Trust (USA) 2006-2”,
in which name the Owner Trustee may conduct the business of the Trust, make and
execute contracts and other instruments on behalf of the Trust and sue and be
sued.


 


Section 2.2.            Office.
The principal place of business of the Trust for purposes of Delaware law shall
be in care of the Owner Trustee at the Corporate Trust Office of the Owner Trustee
or at such other address as the Owner Trustee may designate by written notice
to the Certificateholders and the Depositor. The Trust may establish additional
offices located at such place or places inside or outside the State of Delaware
as the Owner Trustee may designate from time to time by written notice to the
Certificateholders and the Depositor.


 


Section
2.3.            Purposes and Powers.
 (a)  The purpose of the Trust
is, and the Trust shall have the power and authority, to engage in the
following activities:


 


(i)            to
issue the Notes pursuant to the Indenture and the Series Supplement and the
Certificates pursuant to this Agreement and the Series Supplement, and to sell
the Notes;


 


(ii)           with
the proceeds of the sale of the Notes, to fund the expense of obtaining any
Series Support and to pay the organizational, start-up and transactional
expenses of the Trust and to pay the balance to the Depositor pursuant to the
Sale and Servicing Agreement;


 


(iii)          with
respect to the Series Trust Estate, to assign, grant, transfer, pledge,
mortgage and convey the Series Trust Estate to the Indenture Trustee pursuant
to the Indenture and the Series Supplement for the benefit of the Secured
Parties;


 


4

















 


(iv)          to
enter into and perform its obligations under the Basic Documents and the
Related Documents, in each case, to which it is a party;


 


(v)           to
acquire, hold and manage the Owner Trust Estate;


 


(vi)          to
make distributions on the Certificates in accordance with their respective
terms;


 


(vii)         to
own Class SV Preferred Stock of the Depositor;


 


(viii)        to
engage in those activities, including entering into agreements, that are
necessary, suitable or convenient to accomplish the foregoing or are incidental
thereto or connected therewith; and


 


(ix)           subject
to compliance with the Basic Documents and the Related Documents, to engage in
such other activities as may be required in connection with conservation of the
Owner Trust Estate and the making of distributions to the Certificateholders
and the Noteholders.


 


(b)           The
Trust is hereby authorized to engage in the foregoing activities. The Trust
shall not engage in any activity other than in connection with the foregoing or
other than as required or authorized by the terms of this Agreement, the Basic
Documents or any Related Documents.


 


Section
2.4.            Appointment of Owner
Trustee. The Depositor hereby appoints the Owner Trustee as trustee of the
Trust effective as of the date hereof, to have all the respective rights,
powers and duties set forth herein.


 


Section
2.5.            Initial Capital
Contribution of Owner Trust Estate. The Depositor hereby sells, assigns,
transfers, conveys and sets over to the Owner Trustee, on behalf of the Trust,
as of the date hereof, the sum of $1,000 and one share of Class SV Preferred
Stock of the Depositor. The Owner Trustee hereby acknowledges receipt in trust
from the Depositor, as of the date hereof, of the foregoing contribution, which
shall constitute the initial Owner Trust Estate. The Depositor shall pay
organizational expenses of the Trust as they may arise.


 


Section 2.6.            Declaration
of Trust. The Owner Trustee hereby declares that it will hold the Owner
Trust Estate in trust upon and subject to the conditions set forth herein, on
behalf of the Trust, for the use and benefit of the Certificateholders, subject
to the obligations of the Trust under the Basic Documents. It is the intention
of the parties hereto that the Trust constitute a statutory trust under the Statutory
Trust Statute and that this Agreement constitute the governing instrument of
such statutory trust. It is the intention of the parties hereto that, solely
for federal income tax purposes, the Trust shall be disregarded as an entity
separate from the Certificateholder; provided, however, that in
the event Certificates are owned by more than one Certificateholder, it is the
intention of the parties hereto that, solely for federal income tax purposes,
the Trust shall then be treated as a partnership and that, unless otherwise
required by appropriate tax authorities, only after such time the Trust will
file or cause to be filed annual or other 


 


5

















 


necessary returns, reports and other forms consistent with the
characterization of the Trust as a partnership for such tax purposes. Effective
as of the date hereof, the Owner Trustee shall have all rights, powers and
duties set forth herein and to the extent not inconsistent herewith, in the Statutory
Trust Statute with respect to accomplishing the purposes of the Trust. The
Owner Trustee shall file the Certificate of Trust with the Secretary of State.


 


Section
2.7.            Liability.  (a)  The Depositor shall pay
organizational expenses of the Trust as they may arise or shall, upon the
request of the Owner Trustee, promptly reimburse the Owner Trustee for any such
expenses paid by the Owner Trustee.


 


(b)           No
Holder, other than to the extent set forth in clause (a), shall have any
personal liability for any liability or obligation of the Trust.


 


Section
2.8.            Title to Owner Trust
Estate.  (a)  Legal title
to all of the Owner Trust Estate shall be vested at all times in the Trust as a
separate legal entity except where applicable law in any jurisdiction requires
title to any part of the Owner Trust Estate to be vested in a trustee or
trustees, in which case title shall be deemed to be vested in the Owner
Trustee, a co-trustee and/or a separate trustee, as the case may be.


 


(b)           The
holders of the Certificates shall not have legal title to any part of the
Series Trust Estate. The Holders of the Certificates shall be entitled to
receive distributions with respect to their undivided ownership interest
therein in accordance with the terms hereof and the Series Supplement. No
transfer, by operation of law or otherwise, of any right, title or interest by
any Certificateholder of its ownership interest in the Owner Trust Estate shall
operate to terminate this Agreement or the trusts hereunder or entitle any
transferee to an accounting or to the transfer to it of legal title to any part
of the Series Trust Estate.


 


Section
2.9.            Situs of Owner Trust
Estate. The Trust will be located in the State of Delaware and administered
in the State of Delaware and the State of Illinois. All bank accounts
maintained by the Owner Trustee on behalf of the Trust shall be located with
the Certificate Paying Agent in the State of New York. Payments will be
received by the Certificate Paying Agent on behalf of the Trust in New York and
payments will be made by the Trust from New York. The Trust shall not have any
employees in any state other than Delaware; provided, however,
that nothing herein shall restrict or prohibit the Owner Trustee, the Servicer
or any agent of the Trust from having employees within or without the State of
Delaware. The principal office of the Trust will be at the Corporate Trust
Office of the Owner Trustee.


 


Section
2.10.          Representations and
Warranties of the Depositor. The Depositor makes the following
representations and warranties on which the Owner Trustee relies in accepting
the Owner Trust Estate in trust and executing the Certificates and Notes and
upon which any Support Provider relies in providing any Series Support. Each of
the following representations and warranties shall be deemed to be made on each
date on which a Series Trust Estate is pledged under the Indenture.


 


6

















 


(a)           Organization
and Good Standing. The Depositor is duly organized and validly existing as
a Nevada corporation with power and authority to own its properties and to
conduct its business as such properties are currently owned and such business
is presently conducted and is proposed to be conducted pursuant to this
Agreement and the Basic Documents.


 


(b)           Due
Qualification. It is duly qualified to do business as a foreign corporation
in good standing, and has obtained all necessary licenses and approvals, in all
jurisdictions in which the ownership or lease of its property, the conduct of
its business and the performance of its obligations under this Agreement and
the Basic Documents requires such qualification and in which the failure to so
qualify would have a material adverse effect on the business, properties,
assets or condition (financial or otherwise) of the Depositor.


 


(c)           Power
and Authority. The Depositor has the corporate power and authority to execute
and deliver this Agreement and to carry out its terms; the Depositor has full
power and authority to sell and assign the property to be sold and assigned to
and deposited with the Trust; the Depositor has duly authorized such sale,
assignment and deposit to the Trust by all necessary corporate action; and the
execution, delivery and performance of this Agreement has been duly authorized
by the Depositor by all necessary corporate action.


 


(d)           Binding
Obligations. This Agreement, when duly executed and delivered, shall
constitute legal, valid and binding obligations of the Depositor enforceable
against the Depositor in accordance with its terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors’ rights generally and by equitable
limitations on the availability of specific remedies, regardless of whether
such enforceability is considered in a proceeding in equity or at law.


 


(e)           No
Consent Required. To the best knowledge of the Depositor, no consent,
license, approval or authorization or registration or declaration with, any
Person or with any governmental authority, bureau or agency is required in
connection with the execution, delivery or performance of this Agreement and
the Related Documents, except for such as have been obtained, effected or made
or as to which a failure to obtain, effect or make would not have a material
adverse effect on the business, properties, assets or condition (financial or
other) of the Depositor.


 


(f)            No
Violation. The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof do not conflict with, result
in any breach of any of the terms and provisions of, or constitute (with or
without notice or lapse of time) a default under, the articles of incorporation
or by-laws of the Depositor, or any material indenture, agreement or other
instrument to which the Depositor is a party or by which it is bound; nor
result in the creation or imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, agreement or other instrument
(other than pursuant to the Basic Documents or any applicable Related
Documents); nor violate any law or, to the best of the Depositor’s knowledge,
any order, rule or regulation 


 


7

















 


applicable to the
Depositor of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality having jurisdiction
over the Depositor or its properties, provided, however, that the
Receivables will not satisfy the Eligibility Criteria set forth in Schedule I
to the Series Supplement until the date on which such Receivables are
transferred to the Issuer.


 


(g)           No
Proceedings. To the best of the Depositor’s knowledge, there are no
proceedings or investigations pending or, to its knowledge threatened against
it before any court, regulatory body, administrative agency or other tribunal
or governmental instrumentality having jurisdiction over it or its properties
(A) asserting the invalidity of this Agreement or any of the Basic Documents,
(B) seeking to prevent the issuance of the Certificates or the Notes or the
consummation of any of the transactions contemplated by this Agreement or any
of the Basic Documents, (C) seeking any determination or ruling that might
materially and adversely affect its performance of its obligations under, or
the validity or enforceability of, this Agreement or any Related Documents, or
(D) seeking to adversely affect the federal income tax or other federal, state
or local tax attributes of any of the Notes or Certificates.


 


Section
2.11.          Federal Income Tax
Allocations.  (a)  For so
long as the Trust has a single owner for federal income tax purposes, it will,
pursuant to Treasury Regulations promulgated under section 7701 of the Code, be
disregarded as an entity separate from the Certificateholder for all federal
income tax purposes. Accordingly, for federal income tax purposes, the
Certificateholder will be treated as (i) owning all assets owned by the Trust,
(ii) having incurred all liabilities incurred by the Trust, and (iii) all
transactions between the Trust and the Certificateholder will be disregarded.


 


(b)           Neither
the Owner Trustee nor any Certificateholder will, under any circumstances, and
at any time, make an election on IRS Form 8832 or otherwise, to classify the
Trust as an association taxable as a corporation for federal, state or any
other applicable tax purpose.


 


(c)           In
the event that the Trust has two or more equity owners for federal income tax
purposes, the Trust will be treated as a partnership. At any such time that the
Trust has two or more equity owners, this Agreement will be amended, in
accordance with Section 11.1 herein, and appropriate provisions will be added
so as to provide for treatment of the Trust as a partnership.


 


Section
2.12.          Covenants of the
Depositor. The Depositor agrees and covenants for the benefit of the Owner
Trustee and the Indenture Trustee for the benefit of the Secured Parties,
during the term of this Agreement, and to the fullest extent permitted by
applicable law, that:


 


(a)           (i)
it shall not create, incur or suffer to exist any indebtedness or (ii) engage
in any business, except (x) as permitted by its articles of incorporation and
the Related Documents and (y) in connection with a securitization transaction
(including warehousing transactions) and the related documents in which the
related indebtedness is issued pursuant to an indenture having a provision
substantially similar to Section 11.18 


 


8

















 


of the Indenture; provided,
however, that no other Series shall be issued under the Basic Documents
so long as the Notes are outstanding;


 


(b)           it
shall not, for any reason, institute proceedings for the Trust to be
adjudicated bankrupt or insolvent, or consent to the institution of bankruptcy
or insolvency proceedings against the Trust, or file a petition seeking or
consenting to reorganization or relief under any applicable federal or state
law relating to the bankruptcy of the Trust, or consent to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of the Trust or a substantial part of the property of the Trust or cause
or permit the Trust to make any assignment for the benefit of creditors, or
admit in writing the inability of the Trust to pay its debts generally as they
become due, or declare or effect a moratorium on the debt of the Trust or take
any action in furtherance of any such action;


 


(c)           it
shall obtain from each counterparty to each Basic Document to which it or the
Trust is a party and each other agreement entered into on or after the date
hereof to which it or the Trust is a party, an agreement by each such
counterparty that prior to the occurrence of the event specified in
Section 9.1(e) such counterparty shall not institute against, or join any
other Person in instituting against, it or the Trust, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings or other
similar proceedings under the laws of the United States or any state of the
United States; and


 


(d)           it
shall not, for any reason, withdraw or attempt to withdraw from this Agreement,
dissolve, institute proceedings for it to be adjudicated a bankrupt or
insolvent, or consent to the institution of bankruptcy or insolvency
proceedings against it, or file a petition seeking or consenting to
reorganization or relief under any applicable federal or state law relating to
bankruptcy, or consent to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of it or a substantial part
of its property, or make any assignment for the benefit of creditors, or admit
in writing its inability to pay its debts generally as they become due, or
declare or effect a moratorium on its debt or take any action in furtherance of
any such action.


 


Section
2.13.          Covenants of the
Certificateholders. Each Certificateholder agrees:


 


(a)           to
be bound by the terms and conditions of the related Certificates, of this
Agreement and, with respect to the holders of Certificates, of the Series
Supplement, including any supplements or amendments hereto and to perform the
obligations of a Certificateholder as set forth therein or herein, in all
respects as if it were a signatory hereto. This undertaking is made for the
benefit of the Trust, the Owner Trustee and the Secured Parties;


 


(b)           to
hereby appoint the Owner Trustee as such Certificateholder’s agent and attorney-in-fact
to sign any federal income tax information return filed on behalf of the Trust,
if any, and agree that, if requested by the Trust, it will sign such federal
income tax information return in its capacity as holder of an interest in the
Trust. 


 


9

















 


Each
Certificateholder also hereby agrees that in its tax returns it will not take
any position inconsistent with those taken in any tax returns that may be filed
by the Trust;


 


(c)           if
such Certificateholder is other than an individual or other entity holding its
Certificate through a broker who reports securities sales on Form 1099-B, to
notify the Owner Trustee of any transfer by it of a Certificate in a taxable
sale or exchange, within 30 days of the date of the transfer;


 


(d)           until
the completion of the events specified in Section 9.1(e), not to, for any
reason, institute proceedings for the Trust or the Depositor to be adjudicated
a bankrupt or insolvent, or consent to the institution of bankruptcy or insolvency
proceedings against the Trust, or file a petition seeking or consenting to
reorganization or relief under any applicable federal or state law relating to
bankruptcy, or consent to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of the Trust or a substantial
part of its property, or cause or permit the Trust to make any assignment for
the benefit of its creditors, or admit in writing its inability to pay its
debts generally as they become due, or declare or effect a moratorium on its
debt or take any action in furtherance of any such action; and


 


(e)           that
there shall not be more than 98 other holders of Certificates.


 


ARTICLE III


 


Certificates and Transfer
of Interests


 


Section 3.1.            Initial
Ownership. Upon the formation of the Trust by the contribution by the
Depositor pursuant to Section 2.5, the Trust shall issue an uncertificated
ownership interest in the Trust (the “Uncertificated Certificate”) to the
Depositor. Unless and until the Depositor transfers all or a portion of the
Percentage Interest represented by such Uncertificated Certificate, such
Uncertificated Certificate shall represent one hundred percent (100%) of the
Percentage Interest. Upon issuance, the Certificates shall be fully paid and
nonassessable.


 


Section 3.2.            The
Certificates.  (a)   The
Certificates shall be in uncertificated form with records of interest ownership
maintained by the Certificate Registrar in the Certificate Register. If, on or
after the Closing Date, the holder of any Uncertificated Certificate delivers
to the Owner Trustee a written request that the Uncertificated Certificate
specified in such request be issued in certificated form (a related “Certification
Request”), the Owner Trustee shall promptly issue such Certificate to the
holder thereof in certificated form. If a Certification Request has been
delivered, the Certificate will be issued in registered form, substantially in
the form of Exhibit A, and shall upon issue, be executed and delivered by the
Depositor to the Owner Trustee for authentication and redelivery as provided in
Section 3.3.


 


(b)           If
the Certificates are in certificated form, they shall be executed on behalf of
the Trust by manual or facsimile signature of an authorized officer of the
Owner Trustee. Certificates bearing the manual or facsimile signatures of
individuals 


 


10

















 


who were, at the
time when such signatures shall have been affixed, authorized to sign on behalf
of the Trust, shall be validly issued and entitled to the benefit of this
Agreement, notwithstanding that such individuals or any of them shall have
ceased to be so authorized prior to the authentication and delivery of such
Certificates or did not hold such offices at the date of authentication and
delivery of such Certificates.


 


(c)           A
transferee of a Certificate (whether in certificated or uncertificated form)
shall become a Certificateholder, and shall be entitled to the rights and
subject to the obligations of a Certificateholder hereunder, upon due
registration of such Certificate in such transferee’s name pursuant to
Section 3.4. Any transfer of a Certificate (whether in certificated or
uncertificated form) shall satisfy each of the transfer restrictions set forth
herein and other requirements set forth in the form of Certificate attached
hereto as Exhibit A.


 


(d)           No
Certificates shall be issued under this Agreement unless such Certificates have
been authorized pursuant to the Series Supplement and all conditions precedent
to the issuance thereof, as specified in the Series Supplement shall have been
satisfied. All Certificates issued under this Agreement shall be in all
respects entitled to the benefits hereof and of the Owner Trust Estate.


 


Section 3.3.            Authentication
of Certificates. If the Certificates are in certificated form, the Owner
Trustee shall cause the related Certificates to be executed on behalf of the
Trust, authenticated and delivered to or upon the written order of the
Depositor, signed by its chairman of the board, its president or any vice
president, its treasurer or any assistant treasurer without further corporate
action by the Depositor, in authorized denominations. No Certificate shall
entitle its holder to any benefit under this Agreement or, with respect to a
Series, the Series Supplement, or shall be valid for any purpose, unless there
shall appear on such Certificate a certificate of authentication substantially
in the form set forth in Exhibit A, executed by the Owner Trustee or its
authenticating agent, by manual signature; such authentication shall constitute
conclusive evidence that such Certificate shall have been duly authenticated
and delivered hereunder. All Certificates shall be dated the date of their
authentication.


 


Section 3.4.            Registration
of Transfer and Exchange of Certificates.  (a)  The Certificate Registrar shall
keep or cause to be kept, at the office or agency maintained pursuant to
Section 3.8, a Certificate Register in which, subject to such reasonable
regulations as it may prescribe, the Owner Trustee shall provide for the
registration of Certificates (whether in certificated or uncertificated form)
and of transfers and exchanges of Certificates (whether in certificated or
uncertificated form) as herein provided. The Owner Trustee shall be the initial
Certificate Registrar.


 


(b)           The
Certificate Registrar shall provide the Indenture Trustee and the Administrator
with a list of the names and addresses of the Certificateholders on the Closing
Date in the form which such information is provided to the Certificate
Registrar by the Depositor. Upon any transfers of Certificates, the Certificate
Registrar shall notify the Indenture Trustee and the Administrator of the name
and address of the transferee in writing, by facsimile, on the day of such transfer.


 


11

















 


(c)           If
a Certificate is in certificated form, upon surrender for registration of
transfer of any Certificate to the Certificate Registrar at the office or
agency maintained pursuant to Section 3.8, the Owner Trustee shall
execute, authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Certificates of the same Series in the aggregate
Percentage Interest to be transferred, dated the date of authentication by the
Owner Trustee or any authenticating agent. If a Certificate is in
uncertificated form, upon representation of such Certificate in accordance with
Section 3.2, the Certificate Registrar shall reflect in the Certificate
Register the transfer of the relevant Percentage Interest. If a Certificate is
in certificated form, at the option of the Holder thereof, such Certificate may
be exchanged for one or more other Certificates of the same Series in
authorized denominations of a like Percentage Interest upon surrender of the
Certificates of the same Series, to be exchanged at the office or agency
maintained pursuant to Section 3.8. Certificates may be issued in any
Percentage Interest not to exceed 100%.


 


(d)           Every
Certificate presented or, in the case of certificated Certificates, surrendered
for registration of transfer or exchange shall be accompanied by a written
instrument of transfer in form satisfactory to the Owner Trustee and the
Certificate Registrar duly executed by the Certificateholder or his attorney
duly authorized in writing, with such signature guaranteed by an “eligible
guarantor institution” meeting the requirements of the Certificate Registrar,
which requirements include membership or participation in the Securities
Transfer Agent’s Medallion Program (“STAMP”) or such other “signature guarantee
program” as may be determined by the Certificate Registrar in addition to, or
in substitution for, STAMP, all in accordance with the Exchange Act. Each
certificated Certificate surrendered for registration of transfer or exchange
shall be canceled and subsequently disposed of by the Owner Trustee in
accordance with its customary practice.


 


(e)           No
service charge shall be made for any registration of transfer or exchange of
Certificates, but the Owner Trustee or the Certificate Registrar may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.


 


Section 3.5.            Mutilated,
Destroyed, Lost or Stolen Certificates. If (a) any mutilated Certificate
shall be surrendered to the Certificate Registrar, or if the Certificate
Registrar shall receive evidence to its satisfaction of the destruction, loss
or theft of any Certificate and (b) there shall be delivered to the Certificate
Registrar and the Owner Trustee, such security or indemnity as may be required
by them to hold each of them harmless, then in the absence of notice that such
Certificate shall have been acquired by a bona fide purchaser, the Owner
Trustee on behalf of the Trust shall execute and the Owner Trustee or its
authenticating agent shall authenticate and deliver, in exchange for or in lieu
of any such mutilated, destroyed, lost or stolen Certificate, a new Certificate
of like Series principal balance. In connection with the issuance of any new
Certificate under this Section, the Owner Trustee or the Certificate Registrar
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith. Any duplicate
Certificate issued pursuant to this section shall constitute conclusive
evidence of an ownership interest in the Trust, as if 


 


12

















 


originally issued, whether or not the lost, stolen or destroyed
Certificate shall be found at any time.


 


Section 3.6.            Persons
Deemed Certificateholders. Every Person by virtue of becoming a
Certificateholder in accordance with this Agreement and the rules and
regulations of the Certificate Registrar shall be deemed to be bound by the
terms of this Agreement. Prior to due presentation of a Certificate for
registration of transfer, the Owner Trustee and the Certificate Registrar and
any agent of the Owner Trustee and the Certificate Registrar may treat the
Person in whose name any Certificate shall be registered in the Certificate
Register as the owner of such Certificate for the purpose of receiving
distributions pursuant hereto, the Indenture or the Series Supplement (in the
case of a Certificate) and for all other purposes whatsoever, and none of the
Owner Trustee, the Certificate Registrar nor any agent of the Owner Trustee or
the Certificate Registrar shall be bound by any notice to the contrary.


 


Section 3.7.            Access
to List of Certificateholders’ Names and Addresses. The Owner Trustee or
the Certificate Registrar shall furnish or cause to be furnished to the Servicer,
the Depositor, the Indenture Trustee or the Administrator within 15 days after
receipt by the Owner Trustee or the Certificate Registrar of a request therefor
from such Person in writing, a list, of the names and addresses of the
Certificateholders as of the most recent Record Date. If three or more Holders
of Certificates or one or more Holders of Certificates evidencing not less than
25% of the Percentage Interest apply in writing to the Owner Trustee or the
Certificate Registrar, and such application states that the applicants desire
to communicate with other Certificateholders with respect to their rights under
this Agreement, under the Certificates of such Series or under the Series
Supplement and such application is accompanied by a copy of the communication
that such applicants propose to transmit, then the Owner Trustee or the
Certificate Registrar shall, within five Business Days after the receipt of
such application, afford such applicants access during normal business hours to
the current list of Certificateholders of such Series. Each Holder, by
receiving and holding a Certificate, shall be deemed to have agreed not to hold
any of the Depositor, the Servicer, the Owner Trustee or any agent thereof
accountable by reason of the disclosure of its name and address, regardless of
the source from which such information was derived.


 


Section 3.8.            Maintenance
of Office or Agency. The Owner Trustee or the Certificate Registrar shall
maintain in Chicago, Illinois, an office or offices or agency or agencies where
Certificates may be surrendered for registration of transfer or exchange and
where notices and demands to or upon the Owner Trustee in respect of the
Certificates and the Basic Documents may be served. The Owner Trustee initially
designates its Corporate Trust Office for such purposes. The Owner Trustee
shall give prompt written notice to the Depositor, the Certificateholders and
any Support Provider of any change in the location of the Certificate Register
or any such office or agency.


 


Section 3.9.            ERISA
Restrictions. The Certificates may not be acquired by or for the account of
(i) an employee benefit plan (as defined in § 3(3) of the Employee Retirement
Income Security Act of 1974, as amended (“ERISA”)) that is subject to the
provisions of Title I of ERISA, (ii) a plan (as defined in § 4975(e)(1) of
the 


 


13

















 


Code) that is subject to Section 4975 of the Code or (iii) any entity
whose underlying assets include assets of a plan described in (i) or (ii) by
reason of such plan’s investment in the entity (each, a “Benefit Plan”). The
Certificate Registrar shall not register the transfer of a Certificate unless
the transferee has delivered to the Owner Trustee a representation letter in
form and substance satisfactory to the Owner Trustee to the effect that the
transferee is not, and is not acquiring the Certificate for the account of, a
Benefit Plan.


 


Section 3.10.          Securities
Matters. Notwithstanding anything contained herein to the contrary, the
Owner Trustee shall not be responsible for ascertaining whether any transfer
complies with the registration provisions or exemptions from the Securities
Act, the Exchange Act, applicable state securities law or the Investment
Company Act; provided, however, that if a certificate is
specifically required to be delivered to the Owner Trustee by a purchaser or
transferee of a Certificate, the Owner Trustee shall be under a duty to examine
the same to determine whether it conforms to the requirements of this Agreement
and shall promptly notify the party delivering the same if such certificate
does not so conform.


 


Section 3.11.          Distributions.
Distributions shall be made from time to time by the Owner Trustee or the
Certificate Paying Agent in accordance with the Percentage Interests of the
Certificateholders.


 


Section 3.12.          Certificate
Paying Agent. Distributions to be made in respect of the Certificates
pursuant to this Agreement, or the Series Supplement shall be made by the
Certificate Paying Agent, by wire transfer or check mailed to the
Certificateholder of record in the Certificate Register without the
presentation or surrender of the Certificate or the making of any notation
thereon, except as provided in Section 9.1(c) with respect to the final
distribution on a Certificates.


 


ARTICLE IV


 


Voting Rights and Other
Actions


 


Section 4.1.            Prior
Notice to Holders with Respect to Certain Matters. With respect to the
following matters, the Owner Trustee shall not take action unless at least 30
days before the taking of such action, the Owner Trustee shall have notified
the Certificateholders in writing of the proposed action and Certificateholders
holding, in the aggregate, greater than 50% of the Percentage Interests (a “Certificate
Majority”) shall not have notified the Owner Trustee in writing prior to the
30th day after such notice is given that such Certificateholders have withheld
consent or provided alternative direction:


 


(a)           the
election by the Trust to file an amendment to the Certificate of Trust, which
amendment shall have satisfied the Rating Agency Condition (unless such
amendment is required to be filed under the Statutory Trust Statute or unless
such amendment would not materially and adversely affect the interests of the
Holders);


 


14

















 


(b)           the
amendment of the Indenture by a supplemental indenture in circumstances where
the consent of any Noteholder is required;


 


(c)           the
amendment of the Indenture by a supplemental indenture in circumstances where
the consent of any Noteholder is not required and such amendment materially
adversely affects the interest of the Certificateholders;


 


(d)           except
pursuant to Section 13.1(b) of the Sale and Servicing Agreement, the
amendment, change or modification of the Sale and Servicing Agreement, except
to cure any ambiguity or defect or to amend or supplement any provision in a
manner that would not materially adversely affect the interests of the
Certificateholders; or


 


(e)           the
Depositor shall not, without the unanimous consent of the holders of the Class
SV Preferred Stock of the Depositor, institute proceedings to be adjudicated
insolvent, or consent to the institution of any bankruptcy or insolvency case
or proceedings against it, or file or consent to a petition under any
applicable federal or state law relating to bankruptcy, seeking the Depositor’s
liquidation or reorganization or any other relief for the Corporation as
debtor, or consent to the appointment of a receiver, liquidator, assignee,
trustee, custodian or sequestrator (or other similar official) of the
Corporation or a substantial part of its property, or make any assignment for
the benefit of creditors, or admit in writing its inability to pay its debts
generally as they become due, or take any corporate action in furtherance of
such action.


 


The Owner Trustee shall notify the Certificateholders
in writing of any appointment of a successor Note Registrar or Certificate
Registrar within five Business Days thereof.


 


Section 4.2.            Action
by Certificateholders with Respect to Certain Matters. The Owner Trustee
shall not have the power (a) to remove the Servicer under the Sale and
Servicing Agreement or (b) except as expressly provided in the Indenture and
the Series Supplement and at the written direction of the Certificateholders,
sell the Receivables after the termination of the Indenture. The Owner Trustee
shall take the actions referred to in the preceding sentence only upon written
instructions signed by the Certificateholders and the furnishing of
indemnification satisfactory to the Owner Trustee by the Certificateholders.


 


Section 4.3.            Action
by Certificateholders with Respect to Bankruptcy. Until one year and one
day following the date of payment in full of the Notes, the Owner Trustee shall
not have the power to, and shall not, commence any proceeding or other actions
contemplated by Section 2.13(d) hereof relating to the Trust without the
prior written consent of all the Certificateholders and the delivery to the
Owner Trustee by each such Certificateholder of a certificate certifying that
such Certificateholder reasonably believes that the Trust is insolvent.


 


Section 4.4.            Restrictions
on Certificateholders’ Power.  (a)  The
Certificateholders shall not direct the Owner Trustee to take or refrain from
taking any


 


15

















 


action if such action or inaction would be contrary to any obligation
of the Trust or the Owner Trustee under this Agreement or any of the Basic
Documents or would be contrary to Section 2.3 or otherwise contrary to law
nor shall the Owner Trustee be obligated to follow any such direction, if
given.


 


(b)           No
Certificateholder shall have any right by virtue or by availing itself of any
provisions of this Agreement to institute any suit, action, or proceeding in
equity or at law upon or under or with respect to this Agreement or any Basic
Document, unless there are no outstanding Notes and unless the Certificate Majority
previously shall have given to the Owner Trustee a written notice of default
and of the continuance thereof, as provided in this Agreement, and also unless
the Certificate Majority shall have made written request upon the Owner Trustee
to institute such action, suit or proceeding in its own name as Owner Trustee
under this Agreement and shall have offered to the Owner Trustee such
reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby, and the Owner Trustee, for 30
days after its receipt of such notice, request, and offer of indemnity, shall
have neglected or refused to institute any such action, suit, or proceeding,
and during such 30-day period no request or waiver inconsistent with such
written request has been given to the Owner Trustee pursuant to and in
compliance with this section or Section 6.3; it being understood and
intended, and being expressly covenanted by each Certificateholder with every
other Certificateholder and the Owner Trustee, that no one or more Holders of
Certificates shall have any right in any manner whatever by virtue or by
availing itself or themselves of any provisions of this Agreement to affect,
disturb, or prejudice the rights of the Holders of any other of the
Certificates, or to obtain or seek to obtain priority over or preference to any
other such Holder, or to enforce any right under this Agreement, except in the
manner provided in this Agreement and for the equal, ratable, and common
benefit of all Certificateholders. For the protection and enforcement of the
provisions of this Section 4.4, each and every Certificateholder and the
Owner Trustee shall be entitled to such relief as can be given either at law or
in equity.


 


Section 4.5.            Majority
Control. No Certificateholder shall have any right to vote or in any manner
otherwise control the operation and management of the Trust except as expressly
provided in this Agreement. Except as expressly provided herein, any action
that may be taken by the Certificateholders under this Agreement may be taken
by the Certificate Majority. Except as expressly provided herein, any written
notice of the Certificateholders delivered pursuant to this Agreement shall be
effective if signed by the Certificate Majority at the time of the delivery of
such notice.


 


Section 4.6.            [Reserved]


 


ARTICLE V


 


Certain Duties


 


Section 5.1.            Accounting
and Records to the Noteholders, Certificateholders, the Internal Revenue
Service and Others. Subject to Sections 12.1(b)(iii) and 12.1(c) of the Sale
and Servicing Agreement, the Servicer, on behalf of the Trust and Depositor,
shall (a) maintain or cause to be maintained the books of the Trust on a
calendar year basis on the accrual method of accounting, including, without 


 


16

















 


limitation, the allocations of net income under Section 2.11, (b)
deliver (or cause to be delivered) to each Certificateholder, as may be
required by the Code and applicable Treasury Regulations, such information as
may be required (including Schedule K-1, if applicable) to enable each
Certificateholder to prepare its federal and state income tax returns, (c) file
or cause to be filed, if necessary, such tax returns relating to the Trust
(including a partnership information return, Form 1065, if applicable), and
direct the Owner Trustee to or may itself, as the case may be, make such
elections as may from time to time be required or appropriate under any
applicable state or federal statute or rule or regulation thereunder so as to
maintain the Trust’s characterization as a disregarded entity, or if
applicable, as a partnership, for federal income tax purposes and (d) collect
or cause to be collected any withholding tax as described in and in accordance
with the Sale and Serving Agreement or the Series Supplement with respect to
income or distributions to Certificateholders and the appropriate forms
relating thereto. The Owner Trustee or the Servicer, as the case may be, shall
make all elections pursuant to this Section 5.1 as directed in writing by
the Depositor. The Owner Trustee shall sign all tax information returns, if
any, filed pursuant to this Section 5.1 and any other returns as may be
required by law, and in doing so shall rely entirely upon, and shall have no
liability for information provided by, or calculations provided by, the
Depositor or the Servicer. The Owner Trustee shall elect under
Section 1278 of the Code to include in income currently any market
discount that accrues with respect to the Receivables. The Owner Trustee shall
not make the election provided under Section 754 of the Code unless
required by law.


 


Section 5.2.            Signature
on Returns; Tax Matters Partner.  (a)  Notwithstanding
the provisions of Section 5.1 and in the event that the Trust is
characterized as a partnership for federal income tax purposes, the Owner
Trustee shall sign on behalf of the Trust the tax returns of the Trust, unless
applicable law requires a Certificateholder to sign such documents, in which
case such documents shall be signed by the Depositor.


 


(b)           In
the event that the Trust is characterized as a partnership for federal income
tax purposes, the Depositor shall be the “tax matters partner” of the Trust
pursuant to the Code.


 


ARTICLE VI


 


Authority and Duties of
Owner Trustee


 


Section 6.1.            General
Authority. The Owner Trustee is authorized and directed to execute and
deliver on behalf of the Trust the Basic Documents to which the Trust is named
as a party and each certificate or other document attached as an exhibit to or
contemplated by the Basic Documents to which the Trust is named as a party and
any amendment thereto, in each case, in such form as the Depositor shall
approve as evidenced conclusively by the Owner Trustee’s execution thereof, and
on behalf of the Trust, to direct the Administrator to authenticate and deliver
the Notes. In addition to the foregoing, the Owner Trustee is authorized, but
shall not be obligated, to take all actions required of the Trust pursuant to
the Basic Documents. The Owner Trustee is also 


 


17

















 


authorized to execute and deliver on behalf of the Trust, at the
Depositor’s or the Servicer’s direction, any documents that may be required to
be executed by the Trust in connection with any state business licenses (and
any renewal thereof) required to be obtained or maintained by the Trust. The
Owner Trustee is further authorized from time to time to take such action as
the Certificate Majority recommends with respect to the Basic Documents so long
as such activities are consistent with the terms of the Basic Documents.


 


Section 6.2.            General
Duties. It shall be the duty of the Owner Trustee to discharge (or cause to
be discharged) all of its responsibilities pursuant to the terms of this
Agreement and to administer the Trust in accordance with the provisions of this
Agreement and in the interest of the Holders, subject to the Basic Documents. Notwithstanding
the foregoing, the Owner Trustee shall be deemed to have discharged its duties
and responsibilities hereunder and under the Basic Documents to the extent the Servicer
has agreed in the Sale and Servicing Agreement to perform any act or to
discharge any duty of the Trust or the Owner Trustee hereunder or under any
Basic Document and the Owner Trustee shall not be liable for the default or
failure of the Servicer to carry out its obligations under the Sale and
Servicing Agreement.


 


Section 6.3.            Action
upon Instruction.  (a)  Subject to Article IV, the Certificate
Majority shall have the exclusive right to direct the actions of the Owner
Trustee in the management of the Trust, so long as such instructions are not
inconsistent with the express terms set forth herein or in any Basic Document. The
Certificate Majority shall not instruct the Owner Trustee in a manner inconsistent
with this Agreement or the Basic Documents.


 


(b)           The
Owner Trustee shall not be required to take any action hereunder or under any
Basic Document if the Owner Trustee shall have reasonably determined, or shall
have been advised by counsel, that such action is likely to result in liability
on the part of the Owner Trustee or is contrary to the terms hereof or of any
Basic Document or is otherwise contrary to law.


 


(c)           Whenever
the Owner Trustee is unable to decide between alternative courses of action
permitted or required by the terms of this Agreement or any Basic Document, the
Owner Trustee shall promptly give notice (in such form as shall be appropriate
under the circumstances) to the Certificate Majority requesting instruction as
to the course of action to be adopted, and to the extent the Owner Trustee acts
in good faith in accordance with any written instruction of the Certificate
Majority, the Owner Trustee shall not be liable on account of such action to
any Person. If the Owner Trustee shall not have received appropriate
instruction within ten days of such notice (or within such shorter period of
time as reasonably may be specified in such notice or may be necessary under
the circumstances) it may, but shall be under no duty to, take or refrain from
taking such action, not inconsistent with this Agreement or the Basic Documents
or as it shall deem to be in the best interests of the Certificateholders, and
shall have no liability to any Person for such action or inaction.


 


18

















 


(d)           In
the event that the Owner Trustee is unsure as to the application of any
provision of this Agreement or any Basic Document or any such provision is
ambiguous as to its application, or is, or appears to be, in conflict with any
other applicable provision, or in the event that this Agreement permits any
determination by the Owner Trustee or is silent or is incomplete as to the
course of action that the Owner Trustee is required to take with respect to a
particular set of facts, the Owner Trustee may give notice (in such form as
shall be appropriate under the circumstances) to the Certificate Majority
requesting instruction and, to the extent that the Owner Trustee acts or
refrains from acting in good faith in accordance with any such instruction
received, the Owner Trustee shall not be liable, on account of such action or
inaction, to any Person. If the Owner Trustee shall not have received
appropriate instruction within 10 days of such notice (or within such shorter
period of time as reasonably may be specified in such notice or may be
necessary under the circumstances) it may, but shall be under no duty to, take
or refrain from taking such action, not inconsistent with this Agreement or the
Basic Documents, as it shall deem to be in the best interests of the
Certificateholders, and shall have no liability to any Person for such action
or inaction.


 


Section 6.4.            No
Duties Except as Specified in this Agreement or in Instructions. The Owner
Trustee shall not have any duty or obligation to manage, make any payment with
respect to, register, record, sell, dispose of, or otherwise deal with the
Owner Trust Estate, or to otherwise take or refrain from taking any action
under, or in connection with, any document contemplated hereby to which the
Owner Trustee is a party, except as expressly provided by the terms of this
Agreement or in any document or written instruction received by the Owner
Trustee pursuant to Section 6.3; and no implied duties or obligations
shall be read into this Agreement or any Basic Document against the Owner
Trustee. The Owner Trustee shall have no responsibility for filing any
financing or continuation statement in any public office at any time or to
otherwise perfect or maintain the perfection of any security interest or lien
granted to it hereunder or to prepare or file any Commission filing for the
Trust or to record this Agreement or any Basic Document. The Owner Trustee
nevertheless agrees that it will, at its own cost and expense, promptly take
all action as may be necessary to discharge any Liens on any part of the Owner
Trust Estate that result from actions by, or claims against, the Owner Trustee
(solely in its individual capacity) and that are not related to the ownership
or the administration of the Owner Trust Estate.


 


Section 6.5.            No
Action Except under Specified Documents or Instructions. The Owner Trustee
shall not manage, control, use, sell, dispose of or otherwise deal with any
part of the Owner Trust Estate except (i) in accordance with the powers granted
to and the authority conferred upon the Owner Trustee pursuant to this
Agreement, (ii) in accordance with the Basic Documents or any Related Document
and (iii) in accordance with any document or instruction delivered to the Owner
Trustee pursuant to Section 6.3.


 


Section 6.6.            Restrictions.
The Owner Trustee shall not take any action (a) that is inconsistent with the
purposes of the Trust set forth in Section 2.3 or (b) that, to the actual
knowledge of the Owner Trustee, would result in the Trust being treated as an
association or publicly traded partnership taxable as a corporation for federal
income tax 


 


19

















 


purposes. The Certificateholders shall not direct the Owner Trustee to
take action that would violate the provisions of this Section.


 


ARTICLE VII


 


Concerning the Owner
Trustee


 


Section 7.1.            Acceptance
of Trust and Duties. The Owner Trustee accepts the trust hereby created and
agrees to perform its duties hereunder with respect to such trust but only upon
the terms of this Agreement. The Owner Trustee and the Certificate Paying Agent
also agree to disburse all monies actually received by it constituting part of
the Owner Trust Estate upon the terms of this Agreement or the Basic Documents.
The Owner Trustee shall not be answerable or accountable hereunder or under any
Basic Document under any circumstances, except (i) for its own willful
misconduct, bad faith or negligence, (ii) in the case of the inaccuracy of any
representation or warranty contained in Section 7.3 expressly made by the
Owner Trustee in its individual capacity, (iii) for liabilities arising from
the failure of the Owner Trustee to perform obligations expressly undertaken by
it in the last sentence of Section 6.4 hereof, (iv) for any investments
issued by the Owner Trustee or any branch or affiliate thereof in its
commercial capacity or (v) for taxes, fees or other charges on, based on or
measured by, any fees, commissions or compensation received by the Owner
Trustee. In particular, but not by way of limitation (and subject to the
exceptions set forth in the preceding sentence):


 


(a)           the
Owner Trustee shall not be liable for any error of judgment made by a
Responsible Officer of the Owner Trustee;


 


(b)           the
Owner Trustee shall not be liable with respect to any action taken or omitted
to be taken by it in accordance with the instructions of the Certificate
Majority, the Depositor, the Servicer or any Certificateholder;


 


(c)           no
provision of this Agreement or any Basic Document shall require the Owner
Trustee to expend or risk funds or otherwise incur any financial liability in
the performance of any of its rights or powers hereunder or under any Basic
Document if the Owner Trustee shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured or provided to it;


 


(d)           under
no circumstances shall the Owner Trustee be liable for indebtedness evidenced
by or arising under any of the Basic Documents or any Related Document,
including the principal of and interest on the Notes;


 


(e)           the
Owner Trustee shall not be responsible for or in respect of the validity or
sufficiency of this Agreement or for the due execution hereof by the Depositor
or for the form, character, genuineness, sufficiency, value or validity of any
of the Owner Trust Estate or for or in respect of the validity or sufficiency
of the Basic Documents or any Related Document, other than the certificate of
authentication on the Certificates, and 


 


20

















 


the Owner Trustee
shall in no event assume or incur any liability, duty or obligation to the
Depositor, any Support Provider, the Indenture Trustee, the Administrator, the
Certificate Paying Agent, any Noteholder or to any Certificateholder, other
than as expressly provided for herein or in the Basic Documents;


 


(f)            the
Owner Trustee shall not be liable for the default or misconduct of the
Depositor, any Support Provider, the Indenture Trustee, the Administrator or
the Servicer under any of the Basic Documents or otherwise and the Owner
Trustee shall have no obligation or liability to perform the obligations under
this Agreement or the Basic Documents that are required to be performed by the
Depositor or the Certificate Paying Agent under this Agreement, by the
Indenture Trustee or the Administrator under the Indenture, the Series
Supplement or any Related Document or the Servicer under the Sale and Servicing
Agreement or the Series Supplement; and


 


(g)           the Owner Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Agreement, or to institute,
conduct or defend any litigation under this Agreement or otherwise or in
relation to this Agreement or any Basic Document at the request, order or
direction of the Certificate Majority or any of the Certificateholders, unless
such Certificate Majority or Certificateholders have offered to the Owner
Trustee security or indemnity satisfactory to it against the costs, expenses
and liabilities that may be incurred by the Owner Trustee therein or thereby.
The right of the Owner Trustee to perform any discretionary act enumerated in
this Agreement or in any Basic Document shall not be construed as a duty, and
the Owner Trustee shall not be answerable for other than its negligence, bad
faith or willful misconduct in the performance of any such act.


 


Section 7.2.            Furnishing of Documents. The
Owner Trustee shall furnish to the Certificateholders promptly upon receipt of
a written request therefor, duplicates or copies of all reports, notices,
requests, demands, certificates, financial statements and any other instruments
furnished to the Owner Trustee under the Basic Documents.


 


Section 7.3.            Representations and Warranties.
The Owner Trustee hereby represents and warrants, in its individual capacity,
to the Depositor, the Holders and any Support Provider (which shall have relied
on such representations and warranties in issuing any policy relating to Series
Support), that:


 


(a)           It
is a national banking association, duly organized, validly existing and in good
standing under the laws of the United States. It has all requisite power and
authority to execute, deliver and perform its obligations under this Agreement.


 


(b)           It
has taken all actions necessary to authorize the execution and delivery by it
of this Agreement, and this Agreement will be executed and delivered by one of
its officers who is duly authorized to execute and deliver this Agreement on
its behalf.


 


(c)           Neither
the execution nor the delivery by it of this Agreement, nor the consummation by
it of the transactions contemplated hereby nor compliance by it 


 


21

















 


with any of the
terms or provisions hereof will contravene any federal or Delaware state law,
governmental rule or regulation governing the banking or trust powers of it or
any judgment or order binding on it, or constitute any default under its
charter documents or by-laws or any indenture, mortgage, contract, agreement or
instrument to which it is a party or by which any of its properties may be
bound.


 


(d)           This
Agreement constitutes the legal, valid and binding obligation of the Owner
Trustee, enforceable against it in accordance with its terms except as the
enforceability thereof may be limited by bankruptcy, insolvency, moratorium,
reorganization or other similar laws affecting the enforcement of creditors’
rights generally and by general principles of equity.


 


(e)           It
is authorized to exercise trust powers in the State of Delaware as and to the
extent contemplated herein and it has a principal place of business in the
State of Delaware.


 


Section 7.4.            Reliance; Advice of Counsel.  (a)  The Owner Trustee shall incur
no liability to anyone in acting upon any signature, instrument, notice,
resolution, request, consent, order, certificate, report, opinion, bond or
other document or paper believed by it to be genuine and believed by it to be
signed by the proper party or parties. The Owner Trustee may accept a certified
copy of a resolution of the board of directors or other governing body of any
corporate party as conclusive evidence that such resolution has been duly
adopted by such body and that the same is in full force and effect. As to any
fact or matter the method of the determination of which is not specifically
prescribed herein, the Owner Trustee may for all purposes hereof rely on a
certificate, signed by the president or any vice president or by the treasurer,
secretary or other authorized officers of the relevant party, as to such fact
or matter, and such certificate shall constitute full protection to the Owner
Trustee for any action taken or omitted to be taken by it in good faith in
reliance thereon.


 


(b)           In
the exercise or administration of the trusts hereunder and in the performance
of its duties and obligations under this Agreement or the Basic Documents, the
Owner Trustee (i) may act directly or through its agents or attorneys pursuant
to agreements entered into with any of them, and the Owner Trustee shall not be
liable for the conduct or misconduct of such agents or attorneys if such agents
or attorneys shall have been selected by the Owner Trustee with reasonable
care, and (ii) may consult with counsel, accountants and other skilled persons
to be selected with reasonable care and employed by it. The Owner Trustee shall
not be liable for anything done, suffered or omitted in good faith by it in
accordance with the written opinion or advice of any such counsel, accountants
or other such persons and according to such opinion not contrary to this
Agreement or any Basic Document.


 


Section 7.5.            Not Acting in Individual Capacity.
Except as provided in this Article VII, in accepting the trusts hereby created
the Owner Trustee acts solely as Owner Trustee hereunder and not in its
individual capacity and all Persons having any claim against the Owner Trustee
by reason of the transactions contemplated by this 


 


22

















 


Agreement or any Basic Document shall look
only to the Owner Trust Estate for payment or satisfaction thereof.


 


Section 7.6.            Owner Trustee Not Liable for
Certificates or Receivables. The recitals contained herein and in
certificated Certificates (other than the signature and countersignature of the
Owner Trustee on such Certificates) shall be taken as the statements of the
Depositor and the Owner Trustee assumes no responsibility for the correctness
thereof. The Owner Trustee makes no representations as to the validity or
sufficiency of this Agreement, of any Basic Document or of the Certificates
(other than the signature and countersignature of the Owner Trustee on
certificated Certificates) or the Notes, or of any Receivable or related
documents. The Owner Trustee shall at no time have any responsibility or
liability for or with respect to the legality, validity and enforceability of
any Receivable, or the perfection and priority of any security interest created
by any Receivable in any Financed Vehicle or the maintenance of any such
perfection and priority, or for or with respect to the sufficiency of the Owner
Trust Estate or its ability to generate the payments to be distributed to
Certificateholders under this Agreement or the Noteholders under the Indenture,
including, without limitation:  the
existence, condition and ownership of any Financed Vehicle; the existence and
enforceability of any insurance thereon; the existence and contents of any
Receivable on any computer or other record thereof; the validity of the
assignment of any Receivable to the Trust or of any intervening assignment; the
completeness of any Receivable; the performance or enforcement of any
Receivable; the compliance by the Depositor, the Servicer or any other Person
with any warranty or representation made under any Basic Document or in any
related document or the accuracy of any such warranty or representation or any
action of the Indenture Trustee, the Administrator or the Servicer or any
subservicer taken in the name of the Owner Trustee.


 


Section 7.7.            Owner Trustee May Own
Certificates and Notes. The Owner Trustee in its individual or any other capacity
may become the owner or pledgee of Certificates or Notes and may deal with the
Depositor, the Indenture Trustee, the Administrator and the Servicer in banking
transactions with the same rights as it would have if it were not Owner
Trustee.


 


Section 7.8.            Payments from Owner Trust Estate
All payments to be made by the Owner Trustee or any Certificate Paying Agent
under this Agreement or any of the Basic Documents shall be made only from the
income and proceeds of the Owner Trust Estate and only to the extent that the
Owner Trustee shall have received income or proceeds from the Owner Trust
Estate to make such payments in accordance with the terms hereof. The Owner
Trustee, or any successor thereto, in its individual capacity, shall not be
liable for any amounts payable under this Agreement or any of the Basic
Documents.


 


Section 7.9.            Doing Business in Other
Jurisdictions. Notwithstanding anything contained herein to the contrary,
the Owner Trustee (in its individual and trustee capacities) shall not be
required to take any action in any jurisdiction other than in the State of
Delaware if the taking of such action will, even after the appointment of a
co-trustee or separate trustee in accordance with Section 10.5 hereof, (i)
require the consent 


 


23

















 


or approval or authorization or order of or
the giving of notice to, or the registration with or the taking of any other
action in respect of, any state or other governmental authority or agency of
any jurisdiction other than the State of Delaware; (ii) result in any fee, tax
or other governmental charge under the laws of the State of Delaware becoming
payable by the Owner Trustee (in its individual capacity); or (iii) subject the
Owner Trustee (in its individual capacity) to personal jurisdiction in any
jurisdiction other than the State of Delaware for causes of action arising from
acts unrelated to the consummation of the transactions by the Owner Trustee (in
its individual and trustee capacities) contemplated hereby.


 


ARTICLE
VIII


 


Compensation
of Owner Trustee


 


Section 8.1.            Owner Trustee’s Fees and Expenses.
The Owner Trustee shall receive as compensation for its services hereunder such
fees as have been separately agreed upon before the date hereof between HSBC
Finance and the Owner Trustee, and the Owner Trustee shall be entitled to be
reimbursed by the Depositor for its other reasonable expenses hereunder,
including the reasonable compensation, expenses and disbursements of such
agents, representatives, experts and counsel as the Owner Trustee may employ in
connection with the exercise and performance of its respective rights and
duties hereunder or under the Basic Documents.


 


Section 8.2.            Indemnification. To the
fullest extent permitted by applicable law, the Depositor shall be liable as
primary obligor for, and shall indemnify the Owner Trustee (in its individual
and trustee capacities) and its officers, directors, successors, assigns,
agents and servants (collectively, the “Indemnified Parties”) from and against,
any and all liabilities, obligations, losses, damages, taxes, claims, actions
and suits, and any and all reasonable costs, expenses and disbursements
(including reasonable legal fees and expenses) of any kind and nature
whatsoever (collectively, “Expenses”) which may at any time be imposed on,
incurred by, or asserted against the Owner Trustee (in its trust or individual
capacities) or any Indemnified Party in any way relating to or arising out of
this Agreement or the Basic Documents, the Owner Trust Estate, the
administration of the Owner Trust Estate or the action or inaction of the Owner
Trustee hereunder, except only that the Depositor shall not be liable for or
required to indemnify the Owner Trustee from and against Expenses arising or
resulting from any of the matters described in the third sentence of
Section 7.1 with respect to the Owner Trustee. The indemnities contained
in this Section 8.2 and the rights under Section 8.1 shall survive
the resignation or termination of the Owner Trustee or the termination of this
Agreement. In any event of any claim, action or proceeding for which indemnity
will be sought pursuant to this Section, the Owner Trustee’s choice of legal
counsel shall be subject to the approval of the Depositor which approval shall
not be unreasonably withheld.


 


Section 8.3.            Payments to the Owner Trustee.
Any amounts paid to the Owner Trustee in its trustee capacity pursuant to this
Article VIII shall be deemed not to be a part of the Owner Trust Estate
immediately after such payment and any amounts so 


 


24

















 


paid to the Owner Trustee in its individual
capacity shall not be so paid out of the Owner Trust Estate but shall be the
property of the Owner Trustee in its individual capacity.


 


Section 8.4.            Non-recourse Obligations.
Notwithstanding anything in this Agreement or any Basic Document, the Owner
Trustee agrees in its individual capacity and in its capacity as Owner Trustee
for the Trust that all obligations of the Trust to the Owner Trustee
individually or as Owner Trustee for the Trust shall be recourse to the Owner
Trust Estate only and specifically shall not be recourse to the assets of any
Certificateholder.


 


ARTICLE
IX


 


Termination
of Agreement


 


Section 9.1.            Termination of Agreement.  (a)  This Agreement shall terminate
and the Trust shall dissolve, wind up, terminate and be of no further force or
effect upon the latest to occur of (i) the maturity or other liquidation of the
last Receivable (including the optional purchase by the Depositor or the
Servicer of the corpus of the Trust as described in Section 11.1 of the
Sale and Servicing Agreement) and the subsequent distribution of amounts in
respect of such Receivables as provided in the Basic Documents and, with
respect to amounts released from the Lien of the Indenture, distribution
thereof to the Certificateholders, or (ii) the payment to Noteholders and
Certificateholders of all amounts required to be paid to them pursuant to the
Indenture and this Agreement, including, with respect to amounts released from
the Lien of the Indenture, distribution thereof to the Certificateholders and
the payment to any Support Provider of all amounts payable or reimbursable to
it pursuant to the Series Supplement; provided, however, that the
rights to indemnification under Section 8.2 and the rights under
Section 8.1 shall survive the termination of the Trust. The Servicer shall
promptly notify the Owner Trustee of any prospective termination pursuant to
this Section 9.1. The bankruptcy, liquidation, dissolution, death or
incapacity of any Certificateholder shall not (x) operate to terminate this
Agreement or the Trust, nor (y) entitle such Certificateholder’s legal
representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of all or any part of the
Trust or Owner Trust Estate nor (z) otherwise affect the rights, obligations
and liabilities of the parties hereto.


 


(b)           Except
as provided in clause (a), neither the Depositor nor any other
Certificateholder shall be entitled to revoke or terminate the Trust.


 


(c)           If
any Certificates are in certificated form, notice of any termination of a
Series Trust Estate, specifying the Distribution Date upon which the
Certificateholders of such Series shall surrender their Certificates to the
Certificate Paying Agent for payment of the final distribution and
cancellation, shall be given by the Owner Trustee by letter to
Certificateholders of such Series mailed within five Business Days of receipt of
notice of such termination given pursuant to Section 9.1(a) hereof, stating (i)
the Distribution Date upon or with respect to which final payment of the
Certificates of such Series shall be made upon presentation and surrender of
the 


 


25

















 


Certificates of
such Series at the office of the Certificate Paying Agent therein designated,
(ii) the amount of any such final payment, (iii) that the Record Date otherwise
applicable to such Distribution Date is not applicable, payments being made
only upon presentation and surrender of the Certificates of such Series at the
office of the Certificate Paying Agent therein specified and (iv) interest will
cease to accrue on the Certificates of such Series. The Owner Trustee shall
give such notice to the Certificate Registrar (if other than the Owner Trustee)
and the Certificate Paying Agent at the time such notice is given to
Certificateholders. Upon presentation and surrender of the Certificates of such
Series, the Certificate Paying Agent shall cause to be distributed to
Certificateholders of such Series amounts distributable pursuant to the Series
Supplement.


 


(d)           If
any Certificates are in certificated form, in the event that all of the
Certificateholders holding certificated Certificates of such Series shall not
surrender their Certificates for cancellation within six months after the date
specified in the above-mentioned written notice, the Certificate Paying Agent
shall give a second written notice to the remaining Certificateholders holding
certificated Certificates of such Series to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
one year after the second notice all the certificated Certificates of such Series
shall not have been surrendered for cancellation, the Certificate Paying Agent
may take appropriate steps, or may appoint an agent to take appropriate steps,
to contact the remaining Certificateholders holding certificated Certificates
concerning surrender of their Certificates, and the cost thereof shall be paid
out of the funds and other Series Trust Estate assets that shall remain subject
to this Agreement. Any funds remaining in the Trust after exhaustion of such
remedies shall be distributed, subject to applicable escheat laws, by the
Certificate Paying Agent to the Depositor and Holders shall look solely to the
Depositor for payment.


 


(e)           Any
funds remaining in the Trust after funds for final distribution have been
distributed or set aside for distribution in accordance with Section 3808 of
the Statutory Trust Statute shall be distributed by the Certificate Paying
Agent to the Depositor.


 


(f)            Upon
the winding up of the Trust and its termination, the Owner Trustee shall cause
the Certificate of Trust to be canceled by filing a certificate of cancellation
with the Secretary of State in accordance with the provisions of
Section 3810 of the Statutory Trust Statute.


 


ARTICLE
X


 


Successor
Owner Trustees and Additional Owner Trustees


 


Section 10.1.          Eligibility Requirements for Owner
Trustee. The Owner Trustee shall at all times be a corporation or national
banking association (i) satisfying the provisions of Section 3807(a) of the
Statutory Trust Statute, (ii) authorized to exercise corporate trust powers; (iii)
having a combined capital and surplus of at least $50,000,000 and subject to
supervision or examination by federal or state authorities; (iv) having (or
having a parent which has) a rating of at least Baa3 by Moody’s or A-1 by
Standard & 


 


26

















 


Poor’s; and (v) acceptable to the
Certificateholders. If such corporation shall publish reports of condition at
least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purpose of this Section, the
combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published. In case at any time the Owner Trustee shall cease to be
eligible in accordance with the provisions of this Section, the Owner Trustee
shall resign immediately in the manner and with the effect specified in
Section 10.2.


 


Section 10.2.          Resignation or Removal of Owner
Trustee. The Owner Trustee may at any time resign and be discharged from
the trusts hereby created by giving written notice thereof to the Depositor (or
in the event that the Depositor is not the sole Certificateholder, the
Certificate Majority), any Support Provider and the Servicer. As a condition
precedent to the effectiveness of any such resignation, the Owner Trustee
shall, at least 30 calendar days prior to the effective date of such
resignation, provide to the Depositor and the Servicer written notice of any
successor owner trustee pursuant to this Section, in form and substance
reasonably satisfactory to the Depositor and the Servicer, containing all
information reasonably requested by the Depositor and Servicer in order for the
Depositor to comply with its reporting obligations under Item 6.02 of Form 8-K
with respect to the resignation of the Owner Trustee. Upon receiving such
notice of resignation, the Depositor shall promptly appoint a successor Owner
Trustee meeting the qualifications set forth in Section 10.1 herein, by written
instrument, in duplicate, one copy of which instrument shall be delivered to
the resigning Owner Trustee and one copy to the successor Owner Trustee; provided
that the Depositor shall have received written confirmation from each of
the Rating Agencies that the proposed appointment will not result in an
increased capital charge to any Support Provider by either of the Rating
Agencies. If no successor Owner Trustee shall have been so appointed and have
accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Owner Trustee or any Support Provider may petition
any court of competent jurisdiction for the appointment of a successor Owner
Trustee.


 


If at any time the Owner Trustee shall cease to be
eligible in accordance with the provisions of Section 10.1 and shall fail
to resign after written request therefor by the Depositor, or if at any time
the Owner Trustee shall be legally unable to act, or shall be adjudged bankrupt
or insolvent, or a receiver of the Owner Trustee or of its respective property
shall be appointed, or any public officer shall take charge or control of the
Owner Trustee or of its respective property or affairs for the purpose of
rehabilitation, conservation or liquidation, then the Depositor may remove the
Owner Trustee. If the Depositor shall remove the Owner Trustee under the
authority of the immediately preceding sentence, the Depositor shall promptly
appoint a successor Owner Trustee meeting the qualifications set forth in
Section 10.1 herein, by written instrument, in triplicate, one copy of
which instrument shall be delivered to the outgoing Owner Trustee so removed,
one copy to any Support Provider and one copy to the successor Owner Trustee.
As a condition precedent to such removal and appointment described in the two
preceding sentences, the Owner Trustee shall provide to the Depositor and the
Servicer, at least 30 calendar days prior to the effective date of such removal
and appointment, written notice to the Depositor and the Servicer, in form and
substance 


 


27

















 


reasonably satisfactory to the Depositor and the
Servicer, containing all information reasonably requested by the Depositor and
the Servicer in order for the Depositor to comply with its reporting obligation
under Item 6.02 of Form 8-K with respect to the removal of the outgoing Owner
Trustee and the appointment of a successor Owner Trustee.


 


In addition, if the Owner Trustee shall fail to
fulfill its obligations under Section 10.2 (with respect to notice to the
Depositor or the Servicer), and such failure continues for the lesser of 10
calendar days or such period in which the applicable report under the Exchange
Act can be filed timely (without taking into account any extensions), then the
Depositor may remove the Owner Trustee. If the Depositor removes the Owner
Trustee under the authority of the immediately preceding sentence, the
Depositor shall promptly appoint a successor Owner Trustee by written
instrument in duplicate, one copy of which shall be delivered to the Owner
Trustee so removed and one copy to the successor Owner Trustee.


 


Any resignation or removal of the Owner Trustee and
appointment of a successor Owner Trustee pursuant to any of the provisions of
this Section 10.2 shall not become effective until acceptance of appointment by
the successor Owner Trustee pursuant to Section 10.3 and payment of all
fees and expenses owed to the outgoing Owner Trustee. The Depositor shall
provide notice of such resignation or removal of the Owner Trustee to each of
the Rating Agencies.


 


In connection with its resignation or removal, the
Owner Trustee agrees to cooperate with any successor Owner Trustee in effecting
the termination of the Owner Trustee’s responsibilities and rights hereunder
and shall promptly provide such successor Owner Trustee all documents and
records reasonably requested by it to enable it to assume the Owner Trustee’s
functions hereunder; provided however, the
Owner Trustee shall not be required to incur any expenses for which it will not
be promptly reimbursed.


 


Section 10.3.          Successor Owner Trustee. Any
successor Owner Trustee appointed pursuant to Section 10.2 shall execute,
acknowledge and deliver to the Depositor, the Servicer, any Support Provider
and to its predecessor Owner Trustee an instrument accepting such appointment
under this Agreement, and thereupon the resignation or removal of its
predecessor shall become effective and the successor Owner Trustee, without any
further act, deed or conveyance, shall become fully vested with all the rights,
powers, duties and obligations of its predecessor under this Agreement, with
like effect as if originally named as Owner Trustee. The predecessor Owner
Trustee shall upon payment of its fees and expenses deliver to the successor
Owner Trustee all documents and statements and monies held by it under this
Agreement; and the Depositor and the predecessor Owner Trustee shall execute
and deliver such instruments and do such other things as may reasonably be
required for fully and certainly vesting and confirming in the successor Owner
Trustee all such rights, powers, duties and obligations.


 


28

















 


No successor Owner Trustee shall accept appointment as
provided in this Section 10.3 unless at the time of such acceptance such
successor Owner Trustee shall be eligible pursuant to Section 10.1.


 


Upon acceptance of appointment by a successor Owner
Trustee pursuant to this Section, the Servicer shall mail notice of the
successor of such Owner Trustee to all Certificateholders, the Indenture
Trustee, the Administrator, the Noteholders and the Rating Agencies. If the
Servicer shall fail to mail such notice within 10 days after acceptance of
appointment by the successor Owner Trustee, the successor Owner Trustee shall
cause such notice to be mailed at the expense of the Servicer.


 


Any successor Owner Trustee appointed pursuant to this
Section 10.3 shall promptly file an amendment to the Certificate of Trust with
the Secretary of State identifying the name and principal place of business of
such successor Owner Trustee in the State of Delaware.


 


Section 10.4.          Merger or Consolidation of Owner
Trustee. Any corporation into which the Owner Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Owner Trustee shall
be a party, or any corporation succeeding to all or substantially all of the
corporate trust business of the Owner Trustee, shall be the successor of the
Owner Trustee hereunder, provided such corporation shall be eligible pursuant
to Section 10.1, without the execution or filing of any instrument or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding; provided, further, that the Owner
Trustee shall mail notice of such merger or consolidation to the Rating
Agencies, the Depositor and the Servicer.


 


In addition, as a condition precedent to the
effectiveness of any merger or consolidation of the Owner Trustee, the Owner
Trustee shall deliver to the Depositor and the Servicer, at least 30 calendar
days prior to the effective date of any merger or consolidation of the Owner
Trustee, written notice thereof, in form and substance reasonably satisfactory
to the Depositor and the Servicer, containing all information reasonably
requested by the Depositor and the Servicer in order for the Depositor to
comply with its reporting obligations under Item 6.02 of Form 8-K with respect
to a successor Owner Trustee. If the Owner Trustee shall fail to fulfill its
obligations under Section 10.4 (with respect to notice to the Depositor or the
Servicer), and such failure continues for the lesser of 10 calendar days or
such period in which the applicable report under the Exchange Act can be filed
timely (without taking into account any extensions), then the Depositor may
remove the Owner Trustee. If the Depositor removes the Owner Trustee under the
authority of the immediately preceding sentence, the Depositor shall promptly
appoint a successor Owner Trustee by written instrument in duplicate, one copy
of which shall be delivered to the Owner Trustee so removed and one copy to the
successor Owner Trustee.


 


Section 10.5.          Appointment of Co-Trustee or
Separate Trustee. Notwithstanding any other provisions of this Agreement,
at any time, for the purpose of meeting any legal requirements of any
jurisdiction in which any part of the Owner Trust 


 


29

















 


Estate or any Financed Vehicle may at the
time be located, the Servicer and the Owner Trustee acting jointly shall have
the power and shall execute and deliver all instruments to appoint one or more
Persons approved by the Owner Trustee and any Support Provider to act as
co-trustee, jointly with the Owner Trustee, or separate trustee or separate
trustees, of all or any part of the Owner Trust Estate, and to vest in such
Person, in such capacity, such title to the Trust, or any part thereof, and,
subject to the other provisions of this Section, such powers, duties,
obligations, rights and trusts as the Servicer and the Owner Trustee may
consider necessary or desirable. If the Servicer shall not have joined in such
appointment within 15 days after the receipt by it of a request so to do, the
Owner Trustee, subject to the approval of the Certificate Majority (which
approval shall not be unreasonably withheld), shall have the power to make such
appointment. No co-trustee or separate trustee under this Agreement shall be
required to meet the terms of eligibility as a successor trustee pursuant to
Section 10.1 and no notice of the appointment of any co-trustee or
separate trustee shall be required pursuant to Section 10.3.


 


Each separate trustee and co-trustee shall, to the
extent permitted by law, be appointed and act subject to the following
provisions and conditions:


 


(i)            all
rights, powers, duties and obligations conferred or imposed upon the Owner
Trustee shall be conferred upon and exercised or performed by the Owner Trustee
and such separate trustee or co-trustee jointly (it being understood that such
separate trustee or co-trustee is not authorized to act separately without the
Owner Trustee joining in such act), except to the extent that under any law of
any jurisdiction in which any particular act or acts are to be performed, the
Owner Trustee shall be incompetent or unqualified to perform such act or acts,
in which event such rights, powers, duties and obligations (including the
holding of title to the Trust or any portion thereof in any such jurisdiction)
shall be exercised and performed singly by such separate trustee or co-trustee,
but solely at the direction of the Owner Trustee;


 


(ii)           no
trustee under this Agreement shall be personally liable by reason of any act or
omission of any other trustee under this Agreement; and


 


(iii)          the
Servicer and the Owner Trustee acting jointly may at any time accept the
resignation of or remove any separate trustee or co-trustee.


 


Any notice, request or other writing given to the
Owner Trustee shall be deemed to have been given to each of the then separate
trustees and co-trustees, as effectively as if given to each of them. Every
instrument appointing any separate trustee or co-trustee shall refer to this
Agreement and the conditions of this Article. Each separate trustee and
co-trustee, upon its acceptance of the trusts conferred, shall be vested with
the estates or property specified in its instrument of appointment, either
jointly with the Owner Trustee or separately, as may be provided therein,
subject to all the provisions of this Agreement, specifically including every
provision of this Agreement relating to the conduct of, affecting the liability
of, or affording protection to, the Owner Trustee. Each such instrument shall
be filed with the Owner Trustee and a copy thereof given to the Servicer.


 


30

















 


Any separate trustee or co-trustee may at any time
appoint the Owner Trustee, its agent or attorney-in-fact with full power and
authority, to the extent not prohibited by law, to do any lawful act under or
in respect of this Agreement on its behalf and in its name. If any separate
trustee or co-trustee shall die, become incapable of acting, resign or be
removed, all of its estates, properties, rights, remedies and trusts shall vest
in and be exercised by the Owner Trustee, to the extent permitted by law,
without the appointment of a new or successor trustee.


 


ARTICLE
XI


 


Miscellaneous


 


Section 11.1.          Supplements and Amendments.  (a) 
This Agreement may be amended from time to time by the parties hereto by
a written instrument signed by each of them, without the consent of any of the
Securityholders; provided that an Opinion of Counsel for the Depositor
(which Opinion of Counsel may, as to factual matters, rely upon Officer’s
Certificates of the Depositor) is addressed and delivered to the Owner Trustee,
dated the date of any such amendment, to the effect that the conditions
precedent to any such amendment have been satisfied and the Depositor shall have
delivered to the Owner Trustee an Officer’s Certificate dated the date of any
such Amendment, stating that the Depositor reasonably believes that such
Amendment will not have a material adverse effect on the Securityholders.


 


(b)           This
Agreement may also be amended from time to time with the consent of the
Noteholders evidencing not less than a majority of the Outstanding Amount of
the Notes, and the consent of the Certificateholders representing at least a
50% Percentage Interest, for which the Seller has not delivered an Officer’s
Certificate stating that there is no material adverse effect, for the purpose
of adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights of the
Securityholders; provided, however, that no such amendment shall
(i) reduce in any manner the amount of, or delay the timing of, payments
received that are required to be distributed on any Security without the
consent of the related Securityholder, or (ii) reduce the aforesaid
percentage of Securities the Holder of which are required to consent to any
such amendment, without the consent of the Holders of all such Certificates
then outstanding or (iii) for federal income tax purposes, cause the Trust to
be treated as an association or publicly traded partnership taxable as a
corporation, or the Notes to fail to be treated as indebtedness.


 


Prior to the execution of any such amendment or
consent, the Owner Trustee shall furnish written notification of the substance
of such amendment or consent to each Certificateholder, the Indenture Trustee,
the Administrator and each of the Rating Agencies.


 


It shall not be necessary for the consent of
Certificateholders, the Noteholders or the Indenture Trustee pursuant to this
Section to approve the particular form of any proposed amendment or consent,
but it shall be sufficient if such consent shall approve the substance thereof.
The manner of obtaining such consents (and any 


 


31

















 


other consents of Certificateholders provided for in
this Agreement or in any other Basic Document) and of evidencing the
authorization of the execution thereof by Certificateholders shall be subject
to such reasonable requirements as the Owner Trustee may prescribe. Promptly
after the execution of any amendment to the Certificate of Trust, including,
without limitation, amendments pursuant this Section, the Owner Trustee shall
cause the filing of such amendment with the Secretary of State.


 


(c)           The
Owner Trustee shall not be required to enter into any amendment to this
Agreement which adversely affects their respective rights, duties or immunities
under this Agreement.


 


Section 11.2.          No Legal Title to Owner Trust
Estate in Certificateholders. The Certificateholders shall not have legal
title to any part of the Series Trust Estate. The Certificateholders shall be
entitled to receive distributions with respect to their undivided ownership
interest therein only in accordance with Articles III, V and IX. No transfer,
by operation of law or otherwise, of any right, title or interest of the
Certificateholders to and in their ownership interest in the Series Trust
Estate shall operate to terminate this Agreement or the trusts hereunder or
entitle any transferee to an accounting or to the transfer to it of legal title
to any part of the Series Trust Estate.


 


Section 11.3.          Limitations on Rights of Others.
The provisions of this Agreement are solely for the benefit of the Owner
Trustee, the Depositor, the Certificateholders, the Servicer and any Support
Provider, the Indenture Trustee, the Administrator and the Noteholders, and
nothing in this Agreement, whether express or implied, shall be construed to
give to any other Person any legal or equitable right, remedy or claim in the
Owner Trust Estate or under or in respect of this Agreement or any covenants,
conditions or provisions contained herein.


 


Section 11.4.          Notices.  (a)  Unless otherwise expressly
specified or permitted by the terms hereof, all notices shall be in writing and
shall be deemed given upon receipt personally delivered, delivered by overnight
courier or mailed first class mail or certified mail, in each case return
receipt requested, and shall be deemed to have been duly given upon receipt, if
to the Owner Trustee, addressed to its Corporate Trust Office; if to the
Depositor, addressed to HSBC Auto Receivables Corporation, 1111 Town Center
Drive, Las Vegas, Nevada 89144, with a copy to HSBC Finance Corporation, 2700
Sanders Road, Prospect Heights, Illinois 60070, Attn: Treasurer; if to any
Support Provider, at the address of such Support Provider as set forth in the
Series Supplement; or, as to each party, at such other address as shall be
designated by such party in a written notice to each other party.


 


(b)           Any
notice required or permitted to be given to a Certificateholder shall be given
by first-class mail, postage prepaid, at the address of such Holder as shown in
the Certificate Register. Any notice so mailed within the time prescribed in this
Agreement shall be conclusively presumed to have been duly given, whether or
not the Certificateholder receives such notice.


 


32

















 


Section 11.5.          Severability. Any provision of
this Agreement that is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.


 


Section 11.6.          Separate Counterparts. This
Agreement may be executed by the parties hereto in separate counterparts, each
of which when so executed and delivered shall be an original, but all such
counterparts shall together constitute but one and the same instrument.


 


Section 11.7.          Assignments; Support Provider.
This Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective successors and permitted assigns. This Agreement
shall also inure to the benefit of any Support Provider. Without limiting the
generality of the foregoing, all covenants and agreements in this Agreement
which confer rights upon any Support Provider shall be for the benefit of and
run directly to any Support Provider, and any Support Provider shall be
entitled to rely on and enforce such covenants, subject, however, to the
limitations on such rights provided in this Agreement and the Basic Documents.
The Support Provider, if any, may disclaim any of its rights and powers under
this Agreement (but not its duties and obligations under any Series Support)
upon delivery of a written notice to the Owner Trustee.


 


Section 11.8.          Covenants of the Depositor. The
Depositor will not at any time institute against the Trust any bankruptcy
proceedings under any United States federal or state bankruptcy or similar law
in connection with any obligations relating to the Certificates, the Notes,
this Agreement or any of the Basic Documents.


 


Section 11.9.          No Petition. To the fullest
extent permitted by applicable law, the Owner Trustee (not in its individual
capacity but solely as Owner Trustee), by entering into this Agreement, each
Certificateholder, by accepting a Certificate, and the Indenture Trustee, the
Administrator and each Noteholder by accepting the benefits of this Agreement,
hereby covenants and agrees that they will not at any time institute against
the Depositor, or join in any institution against the Depositor of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings under any United States federal or state bankruptcy or
similar law in connection with any obligations relating to the Certificates,
the Notes, this Agreement, any of the Basic Documents, the Series Supplement or
any Related Documents.


 


Section 11.10.        No Recourse. Each
Certificateholder by accepting a Certificate acknowledges that such
Certificateholder’s Certificates represent beneficial interests in the Owner
Trust Estate only and do not represent interests in or obligations of the
Servicer, the Depositor, the Owner Trustee, the Indenture Trustee, the
Administrator, any Support Provider or any Affiliate thereof and no recourse
may be had against such parties or their assets, except as may be expressly set
forth or contemplated in this Agreement, the Certificates, the Basic Documents,
the Series Supplement or any Related Documents.


 


33

















 


Section 11.11.        Headings. The headings of the
various Articles and Sections herein are for convenience of reference only and
shall not define or limit any of the terms or provisions hereof.


 


Section 11.12.        GOVERNING LAW. THIS AGREEMENT
SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE,
WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS,
RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE
WITH SUCH LAWS.


 


Section 11.13.        Servicer. The Servicer is
authorized to prepare, or cause to be prepared, execute and deliver on behalf
of the Trust all such documents, reports, filings, instruments, certificates
and opinions as it shall be the duty of the Trust or the Owner Trustee to
prepare, file or deliver pursuant to the Basic Documents, the Series Supplement
or any Related Documents. Upon written request, the Owner Trustee shall execute
and deliver to the Servicer a limited power of attorney appointing the Servicer
the Trust’s agent and attorney-in-fact to prepare, or cause to be prepared,
execute and deliver all such documents, reports, filings, instruments,
certificates and opinions.


 


Section
11.14.        [Reserved].


 


Section 11.15. Regulation
AB. The Seller, the Servicer and the Owner Trustee
acknowledge and agree that the purpose of this Section 11.15 is to facilitate
compliance by the Seller with the provisions of Regulation AB and related rules
and regulations of the Commission. The Seller shall not exercise its right to
request delivery of information or other performance under these provisions
other than in good faith, or for purposes other than compliance with the
Securities Act, the Exchange Act and the rules and regulations of the
Commission under the Securities Act and the Exchange Act. The Owner Trustee
acknowledges that interpretations of the requirements of Regulation AB may
change over time, whether due to interpretive guidance provided by the
Commission or its staff, consensus among participants in the asset-backed
securities markets, advice of counsel, or otherwise, and agrees to comply with
requests made by the Seller or the Servicer in good faith for delivery of
information under these provisions on the basis of evolving interpretations of
Regulation AB. The Owner Trustee shall cooperate fully with the Seller and the
Issuer to deliver to the Seller and the Issuer (including the Servicer and any
other assignees or designees) any and all information regarding the Owner
Trustee that is necessary in the good faith determination of the Seller or the
Issuer to permit the Seller to comply with the provisions of Items 1109(a),
1109(b), 1117 and 1119 of Regulation AB. Without limiting the generality of the
foregoing, for so long as the Issuer is required to report under the
Exchange Act, the Owner Trustee shall (i) on or before the fifth Business Day
of each month, provide to the Servicer, in writing, such information regarding
the Owner Trustee as is requested by the Servicer for the purpose of compliance
with Items 1117 and 1119 of Regulation AB; provided,
however, that the Owner Trustee
shall not be required to provide such information in the event that there has
been no change to the information previously provided by the Owner Trustee to
the Servicer, and (ii) as promptly as practicable following notice to or
discovery by a Responsible Officer of the Owner Trustee of any 


 


34

















 


changes to such information, provide to the
Servicer, in writing, such updated information.


 


Section 11.16. Waiver of
Jury Trial.  Each party to this
Agreement hereby irrevocably waives, to the fullest extent permitted by
applicable law, any and all right to trial by jury in any legal proceeding
arising out of or relating to this Agreement, the Notes or the transactions
contemplated hereby.


 


35

















 


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


 


 


	
   

  	
  U.S. BANK TRUST
  NATIONAL 

  
	
   

  	
  ASSOCIATION,

  
	
   

  	
    as Owner Trustee

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Patricia M.
  Child

  
	
   

  	
   

  	
  Name: Patricia
  M. Child

  
	
   

  	
   

  	
  Title: Vice
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HSBC AUTO
  RECEIVABLES 

  
	
   

  	
  CORPORATION,

  
	
   

  	
  as Depositor

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Steven H.
  Smith

  
	
   

  	
   

  	
  Name: Steven H.
  Smith

  
	
   

  	
   

  	
  Title: Vice
  President and Assistant

  
	
   

  	
   

  	
  Treasurer

  
	
   

  	
   

  
	
  Acknowledged
  and Agreed:

  	
   

  
	
  HSBC
  FINANCE CORPORATION,

  	
   

  
	
  as
  Servicer

  	
   

  
	
   

  	
   

  
	
  By:
  

  	
  /s/
  Dennis J. Mickey

  	
   

  	
   

  
	
   

  	
  Name:
  Dennis J. Mickey

  	
   

  
	
   

  	
  Title:
  Vice President and Assistant Treasurer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  HSBC
  BANK USA, NATIONAL ASSOCIATION,

  	
   

  
	
  not
  in its individual capacity

  	
   

  
	
  but
  solely as Certificate Paying Agent

  	
   

  
	
   

  	
   

  
	
  By:
  

  	
  /s/
  Susie Moy

  	
   

  	
   

  
	
   

  	
  Name:
  Susie Moy

  	
   

  
	
   

  	
  Title:
  Vice President

  	
   

  



 


[Signature
Page for Amended and Restated Trust Agreement]


 


36

















 


EXHIBIT A


 


[FORM OF CERTIFICATE]


NUMBER


HSBC AUTOMOTIVE TRUST (USA) 2006-2

CERTIFICATE


 


SEE REVERSE FOR CERTAIN DEFINITIONS


 


THIS
CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE IN RELIANCE
UPON EXEMPTIONS PROVIDED BY THE SECURITIES ACT AND SUCH STATE SECURITIES LAWS.
NO RESALE OR OTHER TRANSFER OF THIS CERTIFICATE MAY BE MADE UNLESS SUCH RESALE
OR TRANSFER (A) IS MADE IN ACCORDANCE WITH SECTION 3.4 OF THE AMENDED AND
RESTATED TRUST AGREEMENT PERTAINING TO THE HSBC AUTOMOTIVE TRUST (USA) 2006-2
(THE “AGREEMENT”) AND (B) IS MADE (i) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT, (ii) IN A TRANSACTION EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES
LAWS, (iii) TO THE SELLER OR (iv) TO A PERSON WHO THE TRANSFEROR REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A
UNDER THE SECURITIES ACT THAT IS AWARE THAT THE RESALE OR OTHER TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A AND (C) UPON THE SATISFACTION OF CERTAIN
OTHER REQUIREMENTS SPECIFIED IN THE AGREEMENT. NEITHER THE DEPOSITOR, THE
SERVICER, THE TRUST NOR THE OWNER TRUSTEE IS OBLIGATED TO REGISTER THE CERTIFICATES
UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS.


 


CERTIFICATE


 


evidencing a beneficial ownership interest in the
assets of the Trust relating to the Series Trust Estate, which includes a pool
of motor vehicle retail installment sale contracts sold to the Trust by HSBC
Auto Receivables Corporation.


 


(This Certificate does not represent an interest in or
obligation of HSBC Auto Receivables Corporation or any of its Affiliates,
except to the extent described below.)


 


THIS CERTIFIES THAT HSBC
Auto Receivables Corporation is the registered owner of a fully-paid and, to
the fullest extent permitted by applicable law, nonassessable beneficial
ownership interest representing a 100% Percentage Interest in the assets of
HSBC Automotive Trust (USA) 2006-2 (the “Trust”) formed by HSBC Auto 


 


A-1

















 


Receivables Corporation, a Nevada corporation
(the “Depositor”) and the Series Trust Estate.


 


OWNER TRUSTEE’S CERTIFICATE OF AUTHENTICATION


 


This is one of the Certificates referred to in the within-mentioned
Agreement.


 


U.S.
BANK TRUST NATIONAL ASSOCIATION,


not
in its individual


capacity
but solely as


Owner
Trustee


 


	
  by

  	
   

  	
  Authenticating
  Agent

  
	
  by

  	
   

  



 


HSBC Automotive Trust (USA) 2006-2 (the “Trust”), was
created pursuant to a Trust Agreement, dated as of June 26, 2006 (the
“Agreement”), between the Depositor and U.S. Bank Trust National Association,
as owner trustee (the “Owner Trustee”), as amended and restated as of July 26,
2006 and as supplemented by a Series Supplement dated as of July 26, 2006 (the
“Series Supplement”). A summary of certain of the pertinent provisions of the
Agreement and Series Supplement is set forth below. To the extent not otherwise
defined herein, the capitalized terms used herein have the meanings assigned to
them in the Agreement and the Series Supplement.


 


This certificate is one of the duly authorized
certificates of Trust of HSBC Automotive Trust (USA) 2006-2 designated as
Certificates.


 


This Certificate is issued under and is subject to the
terms, provisions and conditions of the Agreement and the Series Supplement, to
which Agreement the holder of this Certificate by virtue of the acceptance
hereof assents and by which such holder is bound. The property of the Trust
consists of the Series Trust Estate which includes a pool of motor vehicle
retail installment sale contracts (the “Receivables”), all monies due
thereunder on or after specified Cut-off Dates, security interests in the
vehicles financed thereby, certain bank accounts and the proceeds thereof,
proceeds from claims on certain insurance policies and certain other rights
under the Agreement and the Sale and Servicing Agreement and each related
Transfer Agreement, all right, to and interest of, the Depositor in and to (i)
the Master Receivables Purchase Agreement dated as of December 18, 2001 between
HSBC Auto Finance Inc. (“HAFI”) and the Depositor, as such agreement may be
amended or supplemented from time to time, (ii) the Master Receivables Purchase
Agreement dated as of November 18, 2002 between HAFI and the Depositor, as such
agreement may be amended or supplemented from time to time, (iii) the Master
Receivables Purchase Agreement dated as of June 24, 2002 between HSBC Auto
Credit Inc. (“HACI”) and the Depositor, as such agreement may be amended or
supplemented from time to time, and (iv) the Master Receivables Purchase
Agreement 


 


A-2

















 


dated as of August 8, 2002, between HACI and the
Depositor, as such agreement may be amended or supplemented from time to time.


 


The Notes have been issued pursuant to an Indenture
dated as of July 26, 2006 (the “Indenture”), among the Trust, HSBC Bank USA,
National Association, as Administrator and The Bank of New York, as Indenture
Trustee and the Series Supplement.


 


Under the Series Supplement, there will be distributed
on the 17th day of each month or, if such 17th day is not a Business Day, the
next Business Day (the “Distribution Date”), commencing on August 17, 2006, to
the Person in whose name this Certificate is registered at the close of
business on the Business Day preceding such Distribution Date (the “Record
Date”) such Certificateholder’s fractional undivided interest in any amount to
be distributed to Certificateholders on such Distribution Date.


 


The holder of this Certificate acknowledges and agrees
that its rights to receive distributions in respect of this Certificate are
subordinated to the rights of the Noteholders as described in the Sale and
Servicing Agreement, the Indenture, the Agreement and the Series Supplement, as
applicable.


 


Distributions on this Certificate will be made as
provided in the Agreement by the Owner Trustee by wire transfer or check mailed
to the Certificateholder of record in the Certificate Register without the
presentation or surrender of this Certificate or the making of any notation
hereon. Except as otherwise provided in the Agreement and notwithstanding the
above, the final distribution on this Certificate will be made after due notice
by the Owner Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency
maintained for the purpose by the Owner Trustee in the Corporate Trust Office.


 


Reference is hereby made to the further provisions of
this Certificate set forth on the reverse hereof, which further provisions
shall for all purposes have the same effect as if set forth at this place.


 


Unless the certificate of authentication hereon shall
have been executed by an authorized officer of the Owner Trustee, by manual
signature, this Certificate shall not entitle the holder hereof to any benefit
under the Agreement or the Sale and Servicing Agreement or be valid for any
purpose.


 


THIS
CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED
IN ACCORDANCE WITH SUCH LAWS.


 


A-3

















 


IN WITNESS WHEREOF, the Owner Trustee, on behalf of
the Trust and not in its individual capacity, has caused this Certificate to be
duly executed.


 


 


	
   

  	
  HSBC
  AUTOMOTIVE TRUST (USA) 2006-2

  
	
   

  	
   

  
	
   

  	
  By:
  U.S. Bank Trust National Association,

  
	
   

  	
  not
  in its individual capacity but solely as 

  
	
   

  	
  Owner
  Trustee

  
	
   

  	
   

  
	
  Dated:

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 


A-4

















 


(Reverse of Certificate)


 


The Certificates do not represent an obligation of, or
an interest in, the Depositor, the Servicer, the Owner Trustee or any
Affiliates of any of them and no recourse may be had against such parties or
their assets, except as may be expressly set forth or contemplated herein or in
the Agreement, the Indenture, the Basic Documents or any Related Documents. In
addition, this Certificate is not guaranteed by any governmental agency or
instrumentality and is limited in right of payment to certain collections with
respect to the Receivables, as more specifically set forth herein and in the
Sale and Servicing Agreement. A copy of each of the Sale and Servicing
Agreement, the Agreement and the Series Supplement may be examined during
normal business hours at the principal office of the Depositor, and at such
other places, if any, designated by the Depositor, by any Certificateholder
upon written request.


 


As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies of the Certificate Registrar maintained
by the Owner Trustee in the Corporate Trust Office, accompanied by a written
instrument of transfer in form satisfactory to the Owner Trustee and the
Certificate Registrar duly executed by the holder hereof or such holder’s
attorney duly authorized in writing, and thereupon one or more new Certificates
in authorized denominations evidencing the same aggregate interest in the Trust
will be issued to the designated transferee. The initial Certificate Registrar
appointed under the Agreement is the Owner Trustee.


 


The Certificates are issuable as registered
Certificates in any Percentage Interest not to exceed 100%. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates
are exchangeable for new Certificates in authorized denominations evidencing
the same aggregate Percentage Interest, as requested by the holder surrendering
the same. No service charge will be made for any such registration of transfer
or exchange, but the Owner Trustee or the Certificate Registrar may require
payment of a sum sufficient to cover any tax or governmental charge payable in
connection therewith.


 


The Owner Trustee and the Certificate Registrar and
any agent of the Owner Trustee or the Certificate Registrar may treat the
person in whose name this Certificate is registered as the owner hereof for all
purposes, and none of the Owner Trustee, the Certificate Registrar nor any such
agent shall be affected by any notice to the contrary.


 


The Certificates may not be acquired by or for the
account of (a) an employee benefit plan (as defined in § 3(3) of ERISA)
that is subject to the provisions of Title I of ERISA, (b) a plan (as defined
in § 4975(e) (1) of the Code) that is subject to § 4975 of the Code
or (c) any entity whose underlying assets include plan assets by reason of such
plan’s investment in the entity (each, a “Benefit Plan”). The Certificate
Registrar shall not register the transfer of a Certificate unless the
transferee has delivered to the Owner Trustee a representation letter in form
and substance satisfactory to the 


 


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Owner Trustee to the effect that the transferee is
not, and is not acquiring the Certificate for the account of, a Benefit Plan.


 


The recitals contained herein shall be taken as the
statements of the Depositor or the Servicer, as the case may be, and the Owner
Trustee assumes no responsibility for the correctness thereof. The Owner Trustee
makes no representations as to the validity or sufficiency of this Certificate
or of any Receivable or related document.


 


Unless the certificate of authentication hereon shall
have been executed by an authorized officer of the Owner Trustee, by manual or
facsimile signature, this Certificate shall not entitle the holder hereof to
any benefit under the Agreement or the Sale and Servicing Agreement or be valid
for any purpose.


 


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ASSIGNMENT


 


FOR
VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto


PLEASE
INSERT SOCIAL SECURITY


OR
OTHER IDENTIFYING NUMBER


OF
ASSIGNEE


 


(Please
print or type name and address, including postal zip code, of assignee)


 


the
within Certificate, and all rights thereunder, hereby irrevocably constituting
and appointing


 


	
   

  
	
   

  
	
   

  
	
   

  
	
   

  
	
   

  
	
   

  	
   Attorney
  to transfer said Certificate on the books of the Certificate Registrar, with
  full power of substitution in the

  
	
  premises.

  



 


Dated:


 


	
   

  	
   

  	
  *

  
	
   

  	
  Signature
  Guaranteed:

  
	
   

  	
   

  	
  *

  



 






*              NOTICE:  The signature to this assignment must
correspond with the name of the registered owner as it appears on the face of
the within Certificate in every particular, without alteration, enlargement or
any change whatever. Such signature must be guaranteed by an “eligible
guarantor institution” meeting the requirements of the Certificate Registrar,
which requirements include membership or participation in STAMP or such other
“signature guarantee program” as may be determined by the Certificate Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.


 


A-7

















 


EXHIBIT B


 


[FORM OF CERTIFICATE OF TRUST]


 


CERTIFICATE OF TRUST


OF


HSBC AUTOMOTIVE TRUST (USA) 2006-2


 


THIS Certificate of Trust of HSBC Automotive Trust
(USA) 2006-2 (the “Trust”) is being duly executed and filed on behalf of the
Trust by the undersigned, as trustee, to form a statutory trust under the
Delaware Statutory Trust Act (12 Del. C. § 3801 et seq.)
(the “Act”).


 


1.             Name.
The name of the statutory trust formed by this Certificate of Trust is HSBC
Automotive Trust (USA) 2006-2.


 


2.             Delaware
Trustee. The name and business address of the trustee of the Trust with a
principal place of business in the State of Delaware are U.S. Bank Trust
National Association, 300 Delaware Avenue, 8th Floor, Wilmington, Delaware
19801.


 


3.             Effective
Date. This Certificate of Trust shall be effective upon filing.


 


IN
WITNESS WHEREOF, the
undersigned have duly executed this Certificate of Trust in accordance with
Section 3811(a)(1) of the Act.


 


 


	
   

  	
  U.S.
  BANK TRUST NATIONAL 

  
	
   

  	
  ASSOCIATION,

  
	
   

  	
  not
  in its individual capacity but solely as 

  
	
   

  	
  Owner
  Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 


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