Exhibit
4.4


 


Execution
Version


 




 





HSBC FINANCE
CORPORATION,


as Servicer,


 


HSBC AUTOMOTIVE
TRUST (USA) 2006-2,


as Issuer,


 


HSBC AUTO
RECEIVABLES CORPORATION,


as Seller,


 


THE BANK OF NEW
YORK,


as Indenture
Trustee,


 


U.S. BANK TRUST
NATIONAL ASSOCIATION,


as Owner Trustee,


 


HSBC BANK USA,
NATIONAL ASSOCIATION,


as Administrator


 


SERIES SUPPLEMENT


 


Dated as of July
26, 2006


 


to the


 


INDENTURE


 


Dated as of July
26, 2006


 


to the


 


SALE AND SERVICING
AGREEMENT


 


Dated as of July
26, 2006


 


and to the


 


AMENDED AND RESTATED
TRUST AGREEMENT


 


Dated as of July
26, 2006




 





 

















 


TABLE OF
CONTENTS


 


	
   

  	
   

  	
  Page

  
	
  ARTICLE I CREATION OF
  THE NOTES 

  	
  1
  

  
	
   

  	
   

  	
   

  
	
   

  	
  SECTION 1.01. 

  	
  DESIGNATION. 

  	
  1 

  
	
   

  	
  SECTION 1.02. 

  	
  PLEDGE OF SERIES TRUST ESTATE. 

  	
  1 

  
	
   

  	
  SECTION 1.03. 

  	
  PAYMENTS AND COMPUTATIONS. 

  	
  3 

  
	
   

  	
  SECTION 1.04. 

  	
  DENOMINATIONS. 

  	
  3 

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II
  DEFINITIONS

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 2.01.

  	
  DEFINITIONS.

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III
  DISTRIBUTIONS AND STATEMENTS TO NOTEHOLDERS; SERIES SPECIFIC COVENANTS

  	
  10

  
	
   

  	
   

  
	
   

  	
  SECTION 3.01.

  	
  TRUST ACCOUNTS.

  	
  10

  
	
   

  	
  SECTION 3.02.

  	
  RESERVE ACCOUNT.

  	
  11

  
	
   

  	
  SECTION 3.03.

  	
  DISTRIBUTIONS.

  	
  11

  
	
   

  	
  SECTION 3.04.

  	
  STATEMENTS TO NOTEHOLDERS.

  	
  13

  
	
   

  	
  SECTION 3.05.

  	
  REPORTING REQUIREMENTS.

  	
  16

  
	
   

  	
  SECTION 3.06.

  	
  COMPLIANCE WITH WITHHOLDING REQUIREMENTS.

  	
  16

  
	
   

  	
  SECTION 3.07.

  	
  SPECIAL COVENANTS AND ACKNOWLEDGEMENTS.

  	
  16

  
	
   

  	
  SECTION 3.08.

  	
  INCOME TAX CHARACTERIZATION.

  	
  16

  
	
   

  	
   

  
	
  ARTICLE IV EVENTS OF
  DEFAULT; REMEDIES

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 4.01.

  	
  EVENTS OF DEFAULT.

  	
  17

  
	
   

  	
  SECTION 4.02.

  	
  RIGHTS UPON EVENT OF DEFAULT.

  	
  18

  
	
   

  	
  SECTION 4.03.

  	
  REMEDIES.

  	
  19

  
	
   

  	
  SECTION 4.04.

  	
  PRIORITIES.

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V PREPAYMENT,
  REDEMPTION AND SUBSTITUTION

  	
  21

  
	
   

  	
   

  
	
   

  	
  SECTION 5.01.

  	
  OPTIONAL “CLEAN-UP” REDEMPTION.

  	
  21

  
	
   

  	
  SECTION 5.02.

  	
  OPTIONAL SUBSTITUTION.

  	
  21

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI
  MISCELLANEOUS

  	
  22

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 6.01.

  	
  RATIFICATION OF BASIC DOCUMENTS.

  	
  22

  
	
   

  	
  SECTION 6.02.

  	
  COUNTERPARTS.

  	
  22

  
	
   

  	
  SECTION 6.03.

  	
  GOVERNING LAW.

  	
  22

  
	
   

  	
  SECTION 6.04.

  	
  AMENDMENTS WITHOUT CONSENT OF NOTEHOLDERS.

  	
  22

  
	
   

  	
  SECTION 6.05.

  	
  AMENDMENTS WITH CONSENT OF THE NOTEHOLDERS.

  	
  24

  
	
   

  	
  SECTION 6.06.

  	
  AUTHORITY TO REGISTER NOTES AND FILE REPORTS.

  	
  26

  
	
   

  	
  SECTION 6.07.

  	
  AUTHORITY TO PERFORM DUTIES OF THE ISSUER.

  	
  26

  
	
   

  	
  SECTION 6.08.

  	
  NOTICES.

  	
  26

  
	
   

  	
  SECTION 6.09.

  	
  [RESERVED].

  	
  27

  
	
   

  	
   

  	
   

  	
   

  
	
  Schedule I

  	
  Eligibility
  Criteria

  	
   

  
	
  Schedule II

  	
  Schedule
  of Receivables

  	
   

  
	
  Exhibit A

  	
  Form
  of Servicer’s Certificate

  	
   

  
	
  Exhibit B

  	
  Forms
  of Notes

  	
   

  
					



 

















 


This Series Supplement, dated as of July 26, 2006, is
by and among HSBC Finance Corporation, a Delaware corporation, as Servicer (the
“Servicer”), HSBC Automotive Trust (USA) 2006-2, a Delaware statutory
trust, as Issuer (the “Issuer” or the “Trust”), HSBC Auto
Receivables Corporation, a Nevada corporation, as Seller (the “Seller”),
The Bank of New York, a New York banking corporation, as trustee for the
Noteholders (the “Indenture Trustee”), U.S. Bank Trust National
Association, a national banking association, as owner trustee for the
Certificateholders (the “Owner Trustee”), and HSBC Bank USA, National
Association, a national banking association, as administrator (the “Administrator”).


 


RECITALS


 


This Series Supplement is executed and delivered by
the parties hereto pursuant to Section 9.3 of the Indenture (the “Indenture”)
dated as of July 26, 2006 among the Issuer, the Indenture Trustee and the
Administrator and pursuant to Section 3.2 of the Trust Agreement between the
Seller and the Owner Trustee. In the event that any term or provision contained
herein shall conflict with or be inconsistent with any term or provision
contained in the Indenture or the Trust Agreement, the terms and provisions of
this Series Supplement shall govern.


 


ARTICLE I

CREATION OF THE NOTES


 


SECTION 1.01.      Designation.


 


(a)           There
is hereby created a series of Notes, substantially in the form of Exhibit B
hereto, to be issued pursuant to the Indenture and this Series Supplement to be
known as “HSBC Automotive Trust (USA) 2006-2, Series 2006-2 Notes” (as used
herein, the “Notes”). The Notes shall be issued in four classes (each, a
“Class”):  Class A-1 Notes in an
aggregate initial principal amount of $296,500,000 (the “Class A-1 Notes”),
Class A-2 Notes in an aggregate initial principal amount of $229,100,000 (the “Class
A-2 Notes”), Class A-3 Notes in an aggregate initial principal amount of $416,800,000
(the “Class A-3 Notes”), and Class A-4 Notes in an aggregate initial
principal amount of $117,700,000 (the “Class A-4 Notes” and, together
with the Class A-1 Notes, the Class A-2 Notes and the Class A-3 Notes, the “Class
A Notes”).


 


(b)           There
is hereby created a series of Certificates to be issued pursuant to the Trust
Agreement and this Series Supplement to be known as the “HSBC Automotive Trust (USA)
2006-2, Series 2006-2 Certificates” (as used herein, the “Certificates”).


 


SECTION 1.02.      Pledge
of Series Trust Estate.


 


The Issuer hereby Grants to the Indenture Trustee, for
the benefit of the Secured Parties, all of the Issuer’s right, title and
interest (but none of its obligations) in and to all personal property, whether
now owned or hereafter acquired and whether general intangibles, accounts,
chattel paper, claims and causes of action, deposit accounts, documents, goods,
instruments, money or constituting other personal property of any nature
whatsoever, including, without limitation: 
(a) each and every Receivable listed as a Receivable on the Schedule of
Receivables attached hereto as Schedule II and all monies paid or payable thereon
or in respect thereof after the applicable Cut-off Date (including amounts due
on or before the applicable Cut-


 

















 


off Date but received by HAFI, HACI, HSBC Finance, the Seller, the Servicer
or the Issuer after the applicable Cut-off Date); (b) all security interests in
the related Financed Vehicles granted by Obligors pursuant to such Receivables
and any other interest of the Issuer in the related Financed Vehicles; (c) all
rights of HAFI against Dealers pursuant to Dealer Agreements or Dealer Assignments
and against Alliance Relationships pursuant to Alliance Agreements and Alliance
Assignments related to such Receivables; (d) any proceeds and the right to
receive proceeds with respect to such Receivables repurchased by a Dealer
pursuant to a Dealer Agreement or by an Alliance Relationship pursuant to an
Alliance Agreement; (e) all rights under any Service Contracts on the related
Financed Vehicles; (f) any proceeds and the right to receive proceeds with
respect to such Receivables from claims under any Insurance Policies covering
the related Financed Vehicles or Obligors; (g) all funds on deposit from time
to time in the Trust Accounts (including all investments and proceeds thereof);
(h) all rights of the Seller in and to the Master Receivables Purchase
Agreements and related Receivables Purchase Agreement Supplements, including
all delivery requirements and representations and warranties and the cure and
repurchase obligations of HAFI, HACI or HSBC Finance, as applicable, under the
Master Receivables Purchase Agreements and such Receivables Purchase Agreement
Supplements; (i) all property (including the right to receive future Net
Liquidation Proceeds) that secures such Receivables and that has been, or at
any time is, acquired by or on behalf of the Issuer pursuant to liquidation of
such Receivables; (j) all items contained in the Receivable Files with respect
to such Receivables and any and all other documents that the Servicer, the
Seller, HAFI or HACI keeps on file in accordance with its customary procedures
relating to such Receivables, the related Financed Vehicles or Obligors; (k)
all rights of the Issuer in and to the Sale and Servicing Agreement and the
Transfer Agreement or Transfer Agreements (including all rights of the Seller
under the Master Receivables Purchase Agreements and related Receivables
Purchase Agreement Supplements assigned to the Issuer pursuant to the Sale and
Servicing Agreement and the related Transfer Agreement or Transfer Agreements);
(l) one share of the Class SV Preferred Stock of the Seller together with the
exclusive right to vote such share; and (m) all present and future (i) claims,
demands, causes and choses in action in respect of any or all of the foregoing,
and (ii) payments on or under, and all proceeds of every kind and nature
whatsoever in respect of, any or all of the foregoing, including all proceeds
of the conversion thereof, whether voluntary or involuntary, into cash or other
liquid property, cash proceeds, accounts, accounts receivable, notes, drafts, acceptances,
chattel paper, checks, investment property, deposit accounts, insurance
proceeds, condemnation awards, rights to payment of any and every kind and
other forms of obligations and receivables, instruments and other property
which at any time constitute all or part of or are included in the proceeds of
any of the foregoing (collectively, the “Series Trust Estate”).


 


The foregoing Grant is made in trust to the Indenture
Trustee for the benefit of the Secured Parties. The Indenture Trustee hereby
acknowledges such Grant, accepts the trust under the Indenture and this Series
Supplement in accordance with the provisions of the Indenture and this Series
Supplement and agrees to perform its duties required in the Indenture and in
this Series Supplement in accordance with the provisions hereof and of the
Indenture to the best of its ability to the end that the interests of such
parties, recognizing the priorities of their respective interests, may be
adequately and effectively protected.


 


2

















 


SECTION 1.03.      Payments
and Computations.


 


All amounts to be paid or deposited by any Person
hereunder shall be paid or deposited in accordance with the terms hereof no
later than 12:00 noon (New York City time) on the day when due in immediately
available funds. Notwithstanding the foregoing, any amounts required to be paid
by the Indenture Trustee or the Administrator hereunder shall be paid in
accordance with the terms hereof no later than 3:00 p.m. (New York City time) on
the day when due, in immediately available funds.


 


SECTION 1.04.      Denominations.


 


The Notes of each Class shall be issued in
denominations of $25,000 and integral multiples of $1,000 in excess thereof,
except that one Note of each Class may be issued in a denomination other than
an integral multiple of $1,000.


 


ARTICLE II

DEFINITIONS


 


SECTION 2.01.      Definitions.


 


(a)           Whenever
used in this Series Supplement and when used in the Related Documents, the
following words and phrases shall have the following meanings, and the
definitions of such terms 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. Unless otherwise defined in this Series Supplement,
terms defined in the Basic Documents are used herein as therein defined. References
to sections, unless otherwise indicated, are to sections of this Series
Supplement. References to any Basic Document, or to any other agreement,
document or other record defined herein, shall mean such Basic Document or
other record as from time to time amended or supplemented.


 


“Aggregate Note Principal Balance” means, (i) with
respect to all of the Notes, as of any date, the aggregate outstanding
principal amount of all of the Notes on such date and (ii) with respect to any
Class of the Notes, as of any date, the aggregate outstanding principal amount
of all of the Notes of such Class on such date.


 


“Aggregate Optimal Note Principal Balance” means, with
respect to any Distribution Date, the product of (x) 62% and (y) the
Pool Balance as of the close of business on the last day of the prior
Collection Period.


 


“Available Funds” means, with respect to any
Distribution Date and the related Collection Period, the sum of (i) the Collections
for such Collection Period, (ii) investment earnings realized on the Collection
Account and the Reserve Account during such Collection Period, (iii) all
Repurchase Amounts deposited in the Collection Account during such Collection
Period and (iv) all proceeds of any liquidation, in whole or in part, of
the assets of the Trust.


 


“Basic Documents” means this Series Supplement, the
Sale and Servicing Agreement, the Certificate of Trust, the Trust Agreement,
the Indenture, the Control Agreement, the Master Receivables Purchase
Agreements, each Transfer Agreement related to the Owner 


 


3

















 


Trust Estate and all other documents and certificates
delivered therewith or pursuant thereto in connection with the Notes or the
Certificates.


 


“Business Day” means a day other than a Saturday, a
Sunday or other day on which commercial banks located in the states of Illinois
or New York are authorized or obligated by law to be closed.


 


“Certificate of Trust” shall mean the Certificate of
Trust filed for the Trust.


 


“Certificateholders” means the holders of the
Certificates.


 


“Class A Interest Carryover Shortfall” means, with
respect to any Distribution Date and each class of Class A Notes, the sum
of:  (i) the excess of (a) the related
Class A Interest Distributable Amount for the preceding Distribution Date, over
(b) the amount actually paid as interest to the Class A Noteholders on such
preceding Distribution Date (under the Indenture), plus
(ii) interest on such excess, to the extent permitted by law, at a rate per
annum equal to the related Note Rate with respect to the Class A Notes from
such preceding Distribution Date to but excluding the current Distribution
Date.


 


“Class A Interest Distributable Amount” means, with
respect to any Distribution Date and each class of Class A Notes, an amount
equal to the sum of:  (i) the aggregate
amount of interest accrued on the Class A Notes at the related Note Rate from
and including the preceding Distribution Date (or, in the case of the initial
Distribution Date, from and including the Closing Date) to but excluding the
current Distribution Date plus (ii) the
related Class A Interest Carryover Shortfall for the current Distribution Date.


 


“Class A Noteholders” means the Holders of the Class A
Notes.


 


“Class A Additional Principal Distributable Amount”
means, with respect to a Distribution Date, the positive excess, if any, of (i)
the Aggregate Note Principal Balance after giving effect to distribution of the
Class A Minimum Principal Distributable Amount on such Distribution Date
pursuant to Section 3.03(a)(iv) over (ii) the Aggregate Optimal Note Principal
Balance for such Distribution Date.


 


“Class A Minimum Principal Distributable Amount”
means, with respect to any Distribution Date, the greatest of (i) the
least of (A) the Optimal Principal Distributable Amount for such
Distribution Date, (B) the excess of the aggregate of the Principal
Balances of the Receivables as of the last day of the second preceding
Collection Period, over the aggregate of the Principal Balances of the
Receivables as of the last day of the immediately preceding Collection Period,
and (C) the Aggregate Note Principal Balance, (ii) on the Scheduled
Maturity Date for any Class of the Notes, the amount necessary to reduce the
Aggregate Note Principal Balance of such Class to zero, and (iii) the
positive excess, if any, of the Aggregate Note Principal Balance prior to
making any distribution on such Distribution Date over the Pool Balance as of
the last day of the preceding Collection Period.


 


“Class A-1 Noteholders” means the Holders of the Class
A-1 Notes.


 


“Class A-1 Scheduled Maturity Date” means August 17,
2007.


 


4

















 


“Class A-2 Noteholders” means the Holders of the Class
A-2 Notes.


 


“Class A-2 Scheduled Maturity Date” means June 17,
2009.


 


“Class A-3 Noteholders” means the Holders of the Class
A-3 Notes.


 


“Class A-3 Scheduled Maturity Date” means August 17,
2011.


 


“Class A-4 Noteholders” means the Holders of the Class
A-4 Notes.


 


“Class A-4 Scheduled Maturity Date” means June 17,
2013.


 


“Closing Date” means July 26, 2006.


 


“Collection Account” means the Eligible Account
created pursuant to Section 3.01, which shall be account no. 10-879533 reference
HSBC Auto 2006-2 Collection Account at the Administrator, ABA No. 021001088.


 


“Collections” has the meaning assigned to such term in
the Sale and Servicing Agreement.


 


“Control Agreement” means the deposit account control
agreement dated as of July 26, 2006 among the Issuer, the Indenture Trustee and
the Administrator.


 


“Controlling Party” means the Indenture Trustee for
the benefit of and acting solely at the direction of the Holders of a majority
of the Outstanding Amount of the Notes.


 


“Corporate Trust Office” means, (i) with respect to
the Owner Trustee, the office of the Owner Trustee, which at the time of
execution of this Series Supplement is 209 South LaSalle Street, Suite 300,
Chicago, Illinois 60604, Attention: Corporate Trust Services, (ii) with respect
to the Indenture Trustee, the corporate trust office of the Indenture Trustee,
which at the time of execution of this Series Supplement is 101 Barclay Street,
8 West ABS, New York, New York 10286, and (iii) with respect to the
Administrator, the corporate trust office of the Administrator, which at the
time of execution of this Series Supplement is 452 Fifth Avenue, New York, New
York 10018.


 


“Cut-off Date” means, with respect to the Receivables
transferred and assigned to the Issuer on the Closing Date, the close of business
on July 9, 2006.


 


“Definitive Notes” means the Notes that have been
certificated and fully registered in accordance with Section 2.12 of the
Indenture.


 


“Determination Date” has the meaning assigned to such
term in the Sale and Servicing Agreement.


 


“Distribution Date” means, with respect to each
Collection Period, the seventeenth day of the calendar month next commencing
after the last day of such Collection 


 


5

















 


Period, or if such day is not a Business Day, the
immediately following Business Day, commencing August 17, 2006.


 


“Eligibility Criteria” means the criteria for
eligibility for Eligible Receivables set forth on Schedule I hereto.


 


“Eligible Investments” means, with respect to funds in
the Collection Account and Reserve Account, “Eligible Investments” as defined
in the Sale and Servicing Agreement, except that (i) all references in such
definition to “rating satisfactory to the Rating Agency” or words of similar
import shall mean ratings of not less than “A-1+” or “AAA” by Standard &
Poor’s, “P-1” or “Aaa” by Moody’s Investors Service, “F1” or “AAA” by Fitch,
Inc., or the equivalent such ratings by another Rating Agency (whichever is
applicable), and (ii) unless otherwise agreed in writing by the Rating Agencies,
all such investments shall have maturities at the time of the acquisition
thereof occurring no later than the Business Day immediately preceding the
Distribution Date following such date of acquisition.


 


“Eligible Receivable” means a Receivable that
satisfies the Eligibility Criteria.


 


“Eligible Substitute Receivable” means a Receivable
substituted by the Servicer or HAFI pursuant to Section 5.02, which on the date
of such substitution must:


 


(i) have a Principal
Balance not substantially greater or less than the Principal Balance of such
elected substituted Receivable;


 


(ii) have a current Annual
Percentage Rate of not less than the Annual Percentage Rate of such elected
substituted Receivable and not substantially greater than the Annual Percentage
Rate of such elected substituted Receivable;


 


(iii) have a (A)
remaining term to maturity not more than six months earlier or later than the
remaining term to maturity of such elected substituted Receivable and (B)
maturity date not later than the last day of the Collection Period immediately
preceding the month in which the Final Scheduled Distribution Date occurs;


 


(iv) satisfy the Eligibility
Criteria, to the extent such criteria do not pertain exclusively to the Receivables
transferred on the Closing Date; and


 


(v) be the obligation of
an Obligor whose credit profile is substantially similar to that of the Obligor
under the elected substituted Receivable;


 


provided, however, that notwithstanding
(i) through (v) above, an auto loan may qualify as an Eligible Substitute Receivable
if each of the Rating Agencies confirms such substitution.


 


“Event of Default” shall have the meaning assigned to
such term in Section 4.01.


 


“Final Scheduled Distribution Date” means June 17,
2013.


 


“HACI” means HSBC Auto Credit Inc., a Delaware
corporation.


 


6

















 


“HAFI” means HSBC Auto Finance Inc., a Delaware
corporation.


 


“HSBC Finance” means HSBC Finance Corporation, a
Delaware corporation.


 


“Indenture” means the indenture dated as of July 26,
2006 among the Issuer, the Indenture Trustee and the Administrator, as
supplemented by this Series Supplement.


 


“Initial Reserve Account Deposit” means 1% of the Pool
Balance as of the Cut-off Date.


 


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


 


“Master Receivables Purchase Agreements” means,
collectively, (i) the Master Receivables Purchase Agreement dated as of
December 18, 2001, between HAFI and the Seller, 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 Seller, 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 HACI and the
Seller, as such agreement may be amended or supplemented from time to time, and
(iv) the Master Receivables Purchase Agreement dated as of August 8, 2002,
between HACI and the Seller, as such agreement may be amended or supplemented
from time to time.


 


“Note Rate” means the per annum rate of interest due
with respect to each Class of Notes as set forth below for the respective Class
of Notes:


 


Class A-1 Notes:  5.50313%


Class A-2 Notes:  5.61%


Class A-3 Notes:  5.61%


Class A-4 Notes:  5.67%


 


Interest on the Class A-1
Notes will be calculated on the basis of a 360-day year and the actual number
of days elapsed in an applicable Interest Period. Interest on the Class A-2, Class
A-3 and Class A-4 Notes will be calculated on the basis of a 360-day year
consisting of twelve 30-day months.


 


“Notes” or “Class A Notes” means, collectively, the
Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and the Class A-4
Notes.


 


“Optimal Principal Distributable Amount” means, with
respect to any Distribution Date, the excess, if any, of (i) the Aggregate
Note Principal Balance immediately prior to such Distribution Date over
(ii) the Aggregate Optimal Note Principal Balance for such Distribution
Date.


 


“Original Pool Balance” means the aggregate of the
Principal Balances of the Receivables as of the Cut-off Date.


 


7

















 


“Overcollaterization Amount” means, as of any date of
determination, the positive excess, if any, of the Pool Balance over the
Aggregate Note Principal Balance.


 


“Owner Trust Estate” has the meaning assigned to such
term in the Trust Agreement.


 


“Owner Trustee” means U.S. Bank Trust National
Association, not in its individual capacity but solely as trustee under the
Trust Agreement, its successors-in-interest or any successor Owner Trustee
under the Trust Agreement.


 


“Pledge” means the Grant by the Issuer hereunder to
the Indenture Trustee for the benefit of the Secured Parties in accordance with
Section 1.02 in and to the Series Trust Estate.


 


“Pool Balance” means, as of any date of determination,
the aggregate of the outstanding Principal Balances of the Receivables, unless
otherwise specified, as of the close of business on the preceding Business Day.


 


“Principal Balance Shortfall” means, (i) with respect
to a Distribution Date, the positive excess, if any, of the Aggregate Note
Principal Balance (after giving effect to the distribution pursuant to Section
3.03(a)(iv) on such Distribution Date and prior to making any distribution
pursuant to Section 3.03(b) on such Distribution Date) over the Pool Balance as
of the close of business on the last day of the preceding Collection Period and
(ii) with respect to the Scheduled Maturity Date for any Class of the Notes,
the outstanding principal balance of such Class of the Notes (after giving effect
to the distribution pursuant to Section 3.03(a)(iv)).


 


“Rating Agencies” means Standard & Poor’s, Moody’s
Investors Service and Fitch, Inc. If any such organization or a successor does
not maintain a rating on the Notes, “Rating Agency” shall be a nationally
recognized statistical rating organization or other comparable Person
designated by the Seller, notice of which designation shall be given to the
Administrator, the Indenture Trustee, the Owner Trustee and the Servicer.


 


“Rating Agency Condition” means, with respect to any
action, written confirmation from each Rating Agency rating the Notes that such
action will not result in a reduction or withdrawal of its then current rating
of the Notes.


 


“Receivables” means each receivable listed on the
Schedule of Receivables, which (a) has not been released from the Series Trust
Estate as provided herein or in the Indenture and (b) is not a Liquidated
Receivable.


 


“Redemption Price” has the meaning specified in
Section 5.01.


 


“Related Documents” means the Basic Documents and the
Revolving Credit Agreement.


 


“Reserve Account” means the Reserve Account, which
shall be an Eligible Account created pursuant to Section 3.01 and which shall
be account no. 10-879534, reference HSBC Auto 2006-2 Reserve Account at the Administrator,
ABA No. 021001088.


 


8

















 


“Reserve Account Balance” means, with respect to a
Distribution Date, the amount on deposit in the Reserve Account as of the close
of business on the Business Day immediately preceding such Distribution Date; provided,
however, that such determination shall be made immediately after the
deposit to the Collection Account effected pursuant to Section 5.1(c) of the
Sale and Servicing Agreement.


 


“Reserve Account Shortfall Amount” means, with respect
to any Distribution Date, the excess of: 
(x) the Targeted Reserve Account Balance for such Distribution Date over
(y) the Reserve Account Balance for such Distribution Date.


 


“Revolving Credit Agreement” means the Revolving
Credit Agreement, dated as of March 1, 1998, between HSBC Finance Corporation
and the Seller.


 


“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.


 


“Scheduled Maturity Date” means, with respect to the
Class A-1 Notes, the Class A-1 Scheduled Maturity Date, with respect to the
Class A-2 Notes, the Class A-2 Scheduled Maturity Date, with respect to the
Class A-3 Notes, the Class A-3 Scheduled Maturity Date and, with respect to the
Class A-4 Notes, the Class A-4 Scheduled Maturity Date.


 


“Schedule of Receivables” means, as to any date, the
schedule of all retail installment sales contracts and motor vehicle
installment loans held as part of the Series Trust Estate on such date. The
initial Schedule of Receivables is attached hereto as Schedule II. The Schedule
of Receivables will be amended from time to time to reflect the removal of
Receivables and the addition of any Eligible Substitute Receivables to the Series
Trust Estate.


 


“Secured Parties” means, collectively, the Holders
from time to time of the Notes.


 


“Securities” means the Notes and the Certificates.


 


“Series Supplement” means this Series Supplement to
the Indenture, Sale and Servicing Agreement and the Trust Agreement.


 


“Series Support” means, with respect to the Notes, the
Certificates and the Reserve Account.


 


“Series Trust Estate” means the property Granted to
the Indenture Trustee pursuant to Section 1.02.


 


“Servicer’s Certificate” means, with respect to the
Notes and Certificates, a report in substantially the form of Exhibit A
hereto (appropriately completed), furnished by the Servicer to the
Administrator, the Indenture Trustee and the Owner Trustee pursuant to the Sale
and Servicing Agreement.


 


“Servicing Fee” means, (i) with respect to the initial
Collection Period, the fee payable to the Servicer for servicing rendered
during such Collection Period, which shall be 


 


9

















 


equal to $2,082,340.05, and (ii) with respect to any
other Collection Period, the fee payable to the Servicer for services rendered
during such Collection Period, which shall be equal to one-twelfth of the
Servicing Fee Rate multiplied by the Aggregate Principal Balances of the
Receivables determined as of the first day of such Collection Period. For the
avoidance of doubt, the Servicing Fee does not include any administrative fees,
expenses or charges paid by or on behalf of Obligors during any Collection
Period.


 


“Servicing Fee Rate” means 2.25% per annum.


 


“Substitution
Adjustment Amount” means, as to any Receivable for which the Servicer elects to
substitute pursuant to Section 5.02(a) and the date on which a substitution
thereof occurs pursuant to Section 5.02, the sum of:


 


(i) the excess, if any,
of (a) the Principal Balance of such elected Receivable plus
any amounts charged off by the Servicer with respect to such elected Receivable
as of the end of the related Collection Period preceding the date of
substitution (after the application of any principal payments received on such
elected Receivable on or before the date of the substitution of the applicable
Eligible Substitute Receivable or Receivables) over (b) the aggregate Principal
Balance of the applicable Eligible Substitute Receivable or Receivables, plus


 


(ii) accrued and unpaid interest to the end of such
Collection Period computed on a daily basis at the Annual Percentage Rate on the
Principal Balance of such elected Receivable outstanding from time to time.


 


“Targeted Reserve Account Balance” means, with respect
to any Distribution Date, the lesser of: (i) the greater of (a) 3% of the
outstanding Pool Balance as of the end of the related Collection Period, and
(b) $30,288,582.58 (2% of the Pool Balance as of the Cut-off Date) and (ii) the
Aggregate Note Principal Balance.


 


“Trust Accounts” means the Collection Account and the
Reserve Account.


 


“Trust Agreement” means the Trust Agreement, dated as
of June 26, 2006, between the Seller and the Owner Trustee, as amended and
restated as of July 26, 2006 and as supplemented by this Series Supplement.


 


“Underwriter” means HSBC Securities (USA) Inc., as
representative of the underwriters named in the Underwriting Agreement.


 


ARTICLE III

DISTRIBUTIONS AND STATEMENTS TO

NOTEHOLDERS; SERIES SPECIFIC COVENANTS


 


SECTION 3.01.      Trust
Accounts.


 


(a)           The
Administrator, for the benefit of the Secured Parties, shall establish and
maintain an account (the “Collection Account”) as a segregated trust
account in the Administrator’s corporate trust department, identified as the “Collection
Account for HSBC 


 


10

















 


Automotive Trust (USA)
2006-2, in trust for the Secured Parties.” 
The Administrator shall make or permit withdrawals from the Collection
Account only as provided in this Series Supplement.


 


(b)           The
Administrator, for the benefit of the Secured Parties, shall establish and
maintain an account (the “Reserve Account”) as a segregated trust
account in the Administrator’s corporate trust department, identified as the “Reserve
Account for HSBC Automotive Trust (USA) 2006-2, in trust for the Secured
Parties.”  The Administrator shall make
or permit withdrawals from the Reserve Account only as provided in this Series
Supplement. On the Closing Date, the Reserve Account will be funded with the
Initial Reserve Account Deposit.


 


(c)           In
the event that any Trust Account ceases to be an Eligible Account, the Administrator,
within five Business Days, shall establish such Trust Account as a new account
which is an Eligible Account. No withdrawals may be made of funds in any Trust
Account except as provided in this Series Supplement. Except as specifically
provided in this Series Supplement, funds in the Trust Accounts shall not be
commingled with any other moneys. All moneys deposited from time to time in
each of the Trust Accounts shall be invested and reinvested by the Administrator
in Eligible Investments selected in writing by the Servicer (pursuant to
standing instructions or otherwise) which, absent any instruction, shall be
investments of the type specified in clause (d) of the definition of Eligible
Investments. The provisions of Section 5.1 of the Sale and Servicing Agreement
shall apply to the investment of funds in the Trust Accounts.


 


SECTION 3.02.      Reserve
Account.


 


On the earlier of (x) the maturity date of the Notes
(whether by acceleration or otherwise), and (y) the Final Scheduled
Distribution Date, the amount on deposit in the Reserve Account shall be
withdrawn from the Reserve Account and distributed in accordance with Section
4.04.


 


SECTION 3.03.      Distributions.


 


(a)           On
each Distribution Date, the Administrator shall (based solely on the
information contained in the Servicer’s Certificate delivered with respect to
such Distribution Date) distribute the following amounts from and, to the
extent of, Available Funds with respect to the Collection Period immediately
preceding such Distribution Date, in the following order of priority:


 


(i)            to
the Servicer, if HSBC Finance is no longer acting as Servicer, the Servicing
Fee for the related Collection Period;


 


(ii)           to
the Administrator, the Indenture Trustee and the Owner Trustee, any accrued and
unpaid fees and any unreimbursed costs and expenses (including to any successor
Servicer, reasonable transition expenses in an amount not to exceed $100,000 per
servicing transfer), in each case, to the extent such fees have not been
previously paid by the Servicer or the Seller;


 


(iii)          to
the Class A Noteholders in proportion to the interest due on each Class of
Notes, the Class A Interest Distributable Amount;


 


11

















 


(iv)          to
the Class A Noteholders, the Class A Minimum Principal Distributable Amount;


 


(v)           to
the Reserve Account, the Reserve Account Shortfall Amount, if any;


 


(vi)          to
the Class A Noteholders, the Class A Additional Principal Distributable Amount;


 


(vii)         to
the Administrator, the Indenture Trustee and the Owner Trustee, any accrued and
unpaid indemnity amounts, in each case, to the extent such amounts have not
been previously paid by the Servicer or the Seller;


 


(viii)        if
HSBC Finance is acting as the Servicer, the Servicing Fee for the related
Collection Period (unless the Servicer has retained such amount in accordance
with Section 4.8 of the Sale and Servicing Agreement) or if a successor Servicer
has been appointed, reasonable transition expenses in excess of the amounts
paid in priority (i) above; and


 


(ix)           to
the holders of the Certificates, any remaining Available Funds.


 


Amounts to be distributed in reduction of the
outstanding principal balance of the Class A Notes pursuant to Section 3.03(a)(iv)
or (vi) or Section 3.03(b) shall be distributed in reduction of the outstanding
principal balance of the Class A-1 Notes until the principal balance of
the Class A-1 Notes is reduced to zero; thereafter such amount shall be
distributed in reduction of the outstanding principal balance of the
Class A-2 Notes until the principal balance of the Class A-2 Notes is
reduced to zero; thereafter such amount shall be distributed in reduction of
the outstanding principal balance of the Class A-3 Notes until the
principal balance of the Class A-3 Notes is reduced to zero; and thereafter
such amount shall be distributed in reduction of the outstanding principal
balance of the Class A-4 Notes until the principal balance of the
Class A-4 Notes is reduced to zero.


 


(b)           If
on a Determination Date, the Servicer’s Certificate delivered with respect to
the related Distribution Date indicates that (i) the amount of Available Funds
with respect to such Distribution Date is not sufficient, when distributed in
accordance with Section 3.03(a), to cause the amounts specified in Section
3.03(a)(i), (ii) and (iii) with respect to such Distribution Date to be paid in
full; or (ii) if after giving effect to the distribution of Available Funds
pursuant to Section 3.03(a)(iv) on a Distribution Date there exists a Principal
Balance Shortfall, the Administrator shall withdraw from the Reserve Account
and distribute as follows an amount up to the amount which when distributed, first in accordance with Section 3.03(a)(i), (ii) and (iii);
and second, in reduction of the outstanding
principal balance of the Class A Notes, but only to the extent necessary to
eliminate the Principal Balance Shortfall, shall cause the amounts specified in
Section 3.03(a)(i), (ii) and (iii) to be paid in full and such Principal
Balance Shortfall to be eliminated.


 


(c)           [Reserved].


 


(d)           [Reserved].


 


12

















 


(e)           Each
Certificateholder, by its acceptance of its Certificate will be deemed to have
consented to the provisions of paragraph (a) above relating to the priority of
distributions, and will be further deemed to have acknowledged that no property
rights in any amount or the proceeds of any such amount shall vest in such
Certificateholder until such amounts have been distributed to such
Certificateholder in accordance with the terms of the Trust Agreement and this
Series Supplement; provided, that the foregoing shall not
restrict the right of any Certificateholder, upon compliance with the
provisions hereof, from seeking to compel the performance of the provisions
hereof by the parties hereto. Each Certificateholder, by acceptance of its
Certificate, further specifically acknowledges that it has no right to or
interest in any monies at any time held in the Reserve Account, such monies
being held in trust for the benefit of the Secured Parties.


 


(f)            Amounts
on deposit in the Reserve Account on any Distribution Date (after giving effect
to all distributions made on such Distribution Date) in excess of the Targeted
Reserve Account Balance for such Distribution Date shall be released first, to
the Servicer for any Servicing Fees then due and unpaid pursuant to Section
3.03(a)(viii), and any remainder shall be paid to the holders of the
Certificates.


 


(g)           In
the event that the Reserve Account is maintained with an institution other than
the Administrator, the Servicer shall instruct and cause such institution to
transfer the amounts to be distributed therefrom in accordance with Section
3.03(b) to the Administrator for distribution pursuant to Section 3.03(a) one
Business Day prior to the related Distribution Date.


 


(h)           Unless
Definitive Notes are issued pursuant to Section 2.12 of the Indenture, with
respect to Notes registered on the related Record Date in the name of a nominee
of the Clearing Agency, payment will be made by wire transfer to an account
designated by such nominee, without presentation or surrender of the Notes or
the making of any notation thereon.


 


(i)            If
not theretofore paid in full, all amounts outstanding with respect to the Class
A-1 Notes shall be due and payable on the Class A-1 Scheduled Maturity Date; if
not theretofore paid in full, all amounts outstanding with respect to the Class
A-2 Notes shall be due and payable on the Class A-2 Scheduled Maturity Date; if
not theretofore paid in full, all amounts outstanding with respect to the Class
A-3 Notes shall be due and payable on the Class A-3 Scheduled Maturity Date; and
if not theretofore paid in full, all amounts outstanding with respect to the
Class A-4 Notes shall be due and payable on the Class A-4 Scheduled Maturity
Date.


 


SECTION 3.04.      Statements
to Noteholders.


 


(a)           On
or prior to each Determination Date, the Servicer shall deliver to the
Administrator (with an instruction for the Administrator to forward to each
Noteholder of record and to each Certificateholder of record), and make
available (via access to its or its Affiliate’s website address) to the Rating
Agencies, the Indenture Trustee and any other interested party, a statement
setting forth at least the following information as to the Notes to the extent
applicable:


 


(i)            the
amount of such distribution allocable to interest on or with respect to each
Class of Notes;


 


13

















 


(ii)           the amount
of such distribution allocable to principal of each Class of Notes;


 


(iii)          the
aggregate outstanding principal amount of each Class of the Notes after giving
effect to payments allocated to principal reported under (ii) above;


 


(iv)          the current
Note Rate applicable to each Class of Notes;


 


(v)           the Class
A Interest Carryover Shortfall, if any, with respect to each Class of Notes;


 


(vi)          the Pool
Balance at the beginning of the related Collection Period;


 


(vii)         the
Pool Balance at the end of the related Collection Period;


 


(viii)        the
amount of Collections for the related Collection Period;


 


(ix)           the amount
of Collections allocable to principal payments on the Receivables for the
related Collection Period;


 


(x)            the Net
Liquidation Proceeds for such Collection Period;


 


(xi)           the
principal amount of Receivables which were repurchased during the related
Collection Period;


 


(xii)          the
Substitution Adjustment Amount for the related Collection Period;


 


(xiii)         the
weighted average coupon of the Receivables;


 


(xiv)        the
weighted average remaining maturity of the Receivables;


 


(xv)         the Collection
Account and Reserve Account investment income for the related Collection Period;


 


(xvi)        the
beginning Reserve Account Balance;


 


(xvii)       the
Targeted Reserve Account Balance;


 


(xviii)      the
Reserve Account Shortfall Amount, if any, for such Distribution Date;


 


(xix)         the
Reserve Account deposit, if any, for such Distribution Date;


 


(xx)          the release
from the Reserve Account pursuant to Sections 3.03(b) and (f), if any, for such
Distribution Date;


 


(xxi)         the
ending Reserve Account Balance;


 


14

















 


(xxii)        the
Overcollateralization Amount prior to payments allocated to principal under (ii)
above;


 


(xxiii)       the
Overcollateralization Amount after giving effect to payments allocated to
principal under (ii) above;


 


(xxiv)       the
amount of the Servicing Fee paid to the Servicer with respect to the related
Collection Period;


 


(xxv)        the
Principal Balance and percentage of the Pool Balance of Receivables that are
one payment delinquent;


 


(xxvi)       the
Principal Balance and percentage of the Pool Balance of Receivables that are
two payments delinquent;


 


(xxvii)      the
Principal Balance and percentage of the Pool Balance of Receivables that are
three or more payments delinquent;


 


(xxviii)     the
Principal Balance and percentage of the Pool Balance of Receivables that are
two or more payments delinquent;


 


(xxix)       the
Principal Balance and percentage of the Pool Balance of repossessed vehicles;


 


(xxx)        the
Principal Balance of Receivables that were extended or modified (and
delinquency reset) during the related Collection Period; and


 


(xxxi)       the
Principal Balance of Receivables that were extended or modified (and
delinquency reset) during the related Collection Period as a percentage of the
Pool Balance at the end of such Collection Period.


 


Each amount set forth pursuant to paragraphs (i) and
(ii) above shall be expressed as a dollar amount per $1,000 of the initial
principal balance of the applicable Class of Notes.


 


(b)           The
Administrator may, but is not obligated to, make available to the parties
hereto and to each of the Noteholders, via the Administrator’s internet
website, all information referred to in this Section 3.04 available each month
and, with the consent or at the direction of the Seller, such other information
regarding the Notes and/or the Receivables as the Administrator may have in its
possession, but only with the use of a password provided by the Administrator.


 


The Administrator’s internet website, if applicable, shall
be specified by the Administrator from time to time in writing to the parties
hereto and the Noteholders. In connection with providing access to the Administrator’s
internet website, the Administrator may require registration and the acceptance
of a disclaimer. The Administrator shall not be liable for its dissemination of
information in accordance with this Series Supplement.


 


15

















 


SECTION 3.05.      Reporting
Requirements.


 


(a)           The
Servicer’s Certificate shall be in the form attached as Exhibit A
hereto.


 


(b)           By
January 31 of each calendar year, commencing January 31, 2007, the Servicer on
behalf of the Issuer shall prepare and distribute to the Administrator and the
Indenture Trustee a statement containing such information as is required to be
provided by an issuer of indebtedness under the Code and such other customary
information as is necessary to enable the Noteholders to prepare their tax
returns.


 


(c)           If
an Event of Default occurs and is continuing and if it is either known by, or
written notice of the existence thereof has been delivered to, a Responsible
Officer of the Administrator or the Indenture Trustee, the Administrator or the
Indenture Trustee, as the case may be, shall mail to each Noteholder notice of
the Default within 30 days after such knowledge or notice occurs.


 


SECTION 3.06.      Compliance
With Withholding Requirements.


 


Notwithstanding any other provisions of this Series
Supplement or the Indenture to the contrary, the Administrator and the
Indenture Trustee shall comply with all federal withholding requirements
respecting payments (or advances thereof) to the Noteholders as may be
applicable to instruments constituting indebtedness for federal income tax
purposes. Any amounts so withheld shall be treated as having been paid to the
applicable Noteholders for all purposes of the Indenture. In no event shall the
consent of any Noteholder be required for any such withholding.


 


SECTION 3.07.      Special
Covenants and Acknowledgements.


 


With respect to the Notes, the Issuer hereby
represents and warrants, as of the Closing Date:


 


(i)            Valid
Pledge. It is the intention of the Issuer that the Pledge herein
contemplated hereby constitutes the Grant of a perfected, first priority
security interest in the Series Trust Estate to the Indenture Trustee for the
benefit of the Secured Parties.


 


(ii)           Governmental
Authorization. Other than the filing of the financing statements required
hereunder, no authorization or approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body is required for the
due execution, delivery and performance by the Issuer of this Series
Supplement, the Indenture, and each Related Document to which it is a party.


 


SECTION 3.08.      Income
Tax Characterization.


 


For purposes of federal
income, state and local income and franchise and any other income taxes, the
parties to this Series Supplement, and each owner of a beneficial interest 


 


16

















 


in the Notes by acceptance of such interest, agree to treat the Notes
as indebtedness and hereby instruct the Indenture Trustee to treat the Notes as
indebtedness for federal and state tax reporting purposes.


 


ARTICLE IV

EVENTS OF DEFAULT; REMEDIES


 


SECTION 4.01.      Events
of Default.


 


“Event of Default”, wherever used herein, means any
one of the following events (whatever the reason for such Event of Default and
whether it shall be voluntary or involuntary or be effected by operation of law
or pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):


 


(i)            default
in the payment of any interest on any Note when the same becomes due and
payable, and such default shall continue for a period of five calendar days; or


 


(ii)           default
in the payment of the outstanding principal balance of any Class of Notes on
the related Scheduled Maturity Date, which default shall continue for a period
of five calendar days; or


 


(iii)          the
Aggregate Note Principal Balance on any Distribution Date exceeds the Pool
Balance as of the last day of the prior Collection Period after the application
of all Available Funds and after making any distribution pursuant to Section
3.03(b); or


 


(iv)          default
in the observance or performance of any covenant or agreement of the Issuer
made in the Related Documents (other than a covenant or agreement, a default in
the observance or performance of which is elsewhere in this Section
specifically dealt with), or any representation or warranty of the Issuer made
in the Related Documents or in any certificate or other writing or record
delivered pursuant thereto or in connection therewith proving to have been
incorrect in any material respect as of the time when the same shall have been
made and has a material adverse effect on the Noteholders, and such default
shall continue or not be cured, or the circumstance or condition in respect of
which such misrepresentation or warranty was incorrect shall not have been
eliminated or otherwise cured, for a period of 60 days after there shall have
been given, by registered or certified mail, to the Issuer by the Indenture
Trustee or the Administrator or to the Issuer and the Indenture Trustee by the
Holders of at least 25% of the Outstanding Amount of the Notes, a written
notice specifying such default or incorrect representation or warranty and
requiring it to be remedied and stating that such notice is a “Notice of
Default” hereunder; or


 


(v)           the
filing of a decree or order for relief by a court having jurisdiction in the
premises in respect of the Issuer or any substantial part of the Series Trust
Estate in an involuntary case under any applicable federal or state bankruptcy,
insolvency or other similar law now or hereafter in effect, or 


 


17

















 


appointing a
receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official of the Issuer or for any substantial part of the Series Trust Estate,
or ordering the winding-up or liquidation of the Issuer’s affairs, and such
decree or order shall remain unstayed and in effect for a period of 60
consecutive days; or


 


(vi)          the
commencement by the Issuer of a voluntary case under any applicable federal or
state bankruptcy, insolvency or other similar law now or hereafter in effect,
or the consent by the Issuer to the entry of an order for relief in an
involuntary case under any such law, or the consent by the Issuer to the
appointment or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of the Issuer or for any
substantial part of the Series Trust Estate, or the making by the Issuer of any
general assignment for the benefit of creditors, or the failure by the Issuer
generally to pay its debts as such debts become due, or the taking of action by
the Issuer in furtherance of any of the foregoing.


 


SECTION 4.02.      Rights
Upon Event of Default.


 


(a)           If
an Event of Default shall have occurred and be continuing, the Indenture
Trustee may, or if so requested in writing by Holders holding Notes
representing at least 66 2/3% of the Outstanding Amount of the Notes shall,
declare by written notice to the Issuer that the Notes have become due and
payable, whereupon they shall become, immediately due and payable at 100% of
the outstanding principal balance of the Notes and accrued interest thereon
(together with interest accrued at the relevant Note Rate on such overdue
interest).


 


(b)           At
any time after such declaration of acceleration of maturity has been made and
before a judgment or decree for payment of the money due has been obtained by
the Indenture Trustee, the Controlling Party, by written notice to the Issuer
and the Servicer, may rescind and annul such declaration and its consequences
if:


 


(i)            the
Issuer has paid or deposited with the Indenture Trustee (or the Administrator
on behalf of the Indenture Trustee) a sum sufficient to pay:


 


(A)          all
payments of principal and interest on all Notes and all other amounts that
would then be due hereunder or upon such Notes if the Event of Default giving
rise to such acceleration had not occurred; and


 


(B)           all
sums paid or advanced by the Indenture Trustee hereunder and the reasonable
compensation, expenses, disbursements and advances of the Indenture Trustee and
its agents and counsel; and


 


(ii)           all
Events of Default, other than the nonpayment of the principal of the Notes that
has become due solely by such acceleration, have been cured or waived as
provided in Section 5.9 of the Indenture.


 


No such rescission shall affect any subsequent default or impair any
right consequent thereto.


 


18

















 


SECTION 4.03.      Remedies.


 


If an Event of Default shall have occurred and be
continuing, the Indenture Trustee, subject to Section 11.17 of the Indenture,
may exercise any of the remedies specified in Article V of the Indenture and,
in addition, may do one or more of the following:


 


(i)            institute
Proceedings in its own name and as trustee of an express trust for the
collection of all amounts then payable on the Notes or under the Indenture with
respect thereto, whether by declaration or otherwise, enforce any judgment
obtained, and collect from the Issuer and any other obligor upon such Notes
moneys adjudged due;


 


(ii)           institute
Proceedings from time to time for the complete or partial foreclosure of the
Indenture with respect to the Series Trust Estate;


 


(iii)          exercise
any remedies of a secured party under the UCC and take any other appropriate
action to protect and enforce the rights and remedies of the Indenture Trustee
and the Holders of the Notes; and


 


(iv)          sell
the Series Trust Estate or any portion thereof or rights or interest therein,
at one or more public or private sales called and conducted in any manner
permitted by law; provided, however, that the Indenture Trustee
may not sell or otherwise liquidate the Series Trust Estate following an Event
of Default unless:


 


(x)            the
proceeds of such sale or liquidation distributable to the Noteholders are
sufficient to discharge in full all amounts then due and unpaid upon such Notes
for principal and interest, or


 


(y)           the
Indenture Trustee determines that the Series Trust Estate will not continue to
provide sufficient funds for the payment of principal of and interest on the
Notes as they would have become due if the Notes had not been declared due and
payable, and the Indenture Trustee obtains the consent of the Holders of 66 2/3%
of the Outstanding Amount of the Notes, or


 


(z)            if
the provisions of neither subparagraph (x) nor subparagraph (y) are satisfied,
if the Indenture Trustee obtains the consent of the Holders of 100% of the Outstanding
Amount of the Notes.


 


In determining such sufficiency or insufficiency with
respect to clause (y), the Indenture Trustee may, but need not, obtain and rely
upon an opinion of an independent investment banking or accounting firm of
national reputation as to the feasibility of such proposed action and as to the
sufficiency of the Series Trust Estate for such purpose. Any reasonable costs
and expenses incurred by the Indenture Trustee in obtaining such opinion shall
be costs and expenses of the Indenture Trustee pursuant to Section 3.03(a)(ii)
of this Series Supplement.


 


19

















 


SECTION 4.04.      Priorities.


 


(a)           On
and after the maturity date of the Notes (by acceleration or otherwise),
including, without limitation, on and after the Final Scheduled Distribution
Date, all Available Funds, all amounts on deposit in the Reserve Account
withdrawn in accordance with Section 3.02 and any proceeds of the liquidation
of all or any portion of the Series Trust Estate pursuant to Section 4.03(iv) (which
proceeds the Indenture Trustee shall remit to the Administrator), shall be
applied by the Administrator, based upon information most recently provided to
it by the Servicer, on the date of distribution in the following order of
priority:


 


FIRST:                    to
the Servicer, if HSBC Finance is no longer acting as Servicer, the Servicing
Fee for the related Collection Period;


 


SECOND:               to
the Administrator, the Indenture Trustee and the Owner Trustee, any accrued and
unpaid fees and any unreimbursed costs and expenses (including to any successor
Servicer, reasonable transition expenses in an amount not to exceed $100,000
per servicing transfer), in each case, to the extent such fees have not been
previously paid by the Servicer or the Seller;


 


THIRD:                  to
Class A Noteholders for amounts due and unpaid on the Class A Notes for
interest, pro  rata, in accordance with the amounts due and
payable on the Class A Notes on the date of distribution for interest without
preference or priority of any kind;


 


FOURTH:              to
the Class A Noteholders for amounts due and unpaid on the Class A Notes for
principal, pro  rata, in accordance with the respective aggregate
outstanding principal balance of each Class of Class A Notes without preference
or priority of any kind;


 


FIFTH:                   to
the Administrator, the Indenture Trustee and the Owner Trustee, any accrued and
unpaid indemnity amounts, in each case, to the extent such fees have not been
previously paid by the Servicer or the Seller;


 


SIXTH:                   to
the Servicer, if HSBC Finance is acting as Servicer, for any Servicing Fees
then due and unpaid; and


 


SEVENTH:             to
the Certificateholders, any remaining Available Funds.


 


(b)           The
Administrator may fix a record date and distribution date for any payment to
Noteholders pursuant to this Section 4.04. At least 15 days before such record
date, the Administrator shall mail to the Noteholders a notice that states the
record date, the distribution date and the amount to be paid.


 


20

















 


ARTICLE V

PREPAYMENT, REDEMPTION AND SUBSTITUTION


 


SECTION 5.01.      Optional
“Clean-Up” Redemption.


 


On any Distribution Date occurring on or after the
date upon which the Pool Balance shall have been reduced to an amount which is
less than or equal to 10% of the Original Pool Balance, the Servicer, HAFI and
HACI shall each have the option to purchase the outstanding Receivables at a
price equal to the aggregate Repurchase Amount for such Receivables; provided,
however, such aggregate Repurchase Amount shall not be less than the
then Aggregate Note Principal Balance, plus all accrued and unpaid interest
thereon and all fees and other amounts owing to the Administrator, the
Indenture Trustee, the Owner Trustee and the Servicer (if other than HSBC
Finance) under the Related Documents (the “Redemption Price”). The Servicer,
HAFI or HACI shall give the Servicer (if other than HSBC Finance), the
Administrator, the Indenture Trustee and the Owner Trustee at least 10 days
irrevocable prior written notice of the date on which the Servicer, HAFI or
HACI, as applicable, intends to exercise such option to purchase. Not later
than 12:00 P.M., New York City time, on the day prior to such Distribution
Date, the Servicer, HAFI or HACI, as applicable, shall deposit such amount in
the Collection Account in immediately available funds for distribution pursuant
to Section 3.03. Such purchase option is subject to payment in full of the aggregate
Repurchase Amount described herein.


 


SECTION 5.02.      Optional
Substitution.


 


(a)           At
any time the Servicer and HAFI shall each have the right, in their respective
sole discretion, but not the obligation, to elect (by written notice sent to
the Indenture Trustee and the Owner Trustee) to substitute in the place of any
Receivable an Eligible Substitute Receivable or Receivables; provided that the
aggregate Principal Balance of all Eligible Substitute Receivables substituted
pursuant to this Section shall not exceed 2% of the Pool Balance as of the
initial Cut-off Date; provided further that prior to any such substitution the Servicer
shall give written notice to each Rating Agency of any such substitution.


 


(b)           For
any Collection Period during which the Servicer or HAFI substitutes one or more
Eligible Substitute Receivables, the Servicer shall determine the Substitution
Adjustment Amount. The Servicer or HAFI, as applicable, shall deposit the
Substitution Adjustment Amount in the Collection Account no later than the
Business Day immediately preceding the Distribution Date in the month following
the end of the Collection Period in which such substitution occurs. The Servicer
shall amend the Schedule of Receivables to reflect the removal of any
Receivable for which the Servicer or HAFI has made a substitution election
pursuant to Section 5.02(a) from the terms of this Agreement and the
substitution of the Eligible Substitute Receivable or Receivables. Upon such
substitution, the Eligible Substitute Receivable or Receivables shall be
subject to the terms of this Agreement in all respects, and the Seller shall be
deemed to have represented that each such Eligible Substitute Receivable or
Receivables, as of the date of substitution, satisfies the Eligibility Criteria,
to the extent such criteria do not pertain exclusively to the Receivables
transferred on the Closing Date. The Indenture Trustee and the Owner Trustee shall,
upon receipt by each of the Indenture Trustee and the Owner Trustee of an
officer’s certificate from an officer of the Servicer certifying that the
conditions in 


 


21

















 


this Section 5.02(b)
have been satisfied, take any action requested by the Servicer or HAFI, as the
case may be, to effect the reconveyance of such Receivable for which the Servicer
or HAFI, as the case may be, has made a substitution election so removed from
the Series Trust Estate to the Servicer or HAFI, as the case may be. The
procedures applied by the Servicer or HAFI in selecting each Eligible
Substitute Receivable shall not be adverse to the interests of the Noteholders
and shall be comparable to the selection procedures applicable to the
Receivables originally conveyed hereunder.


 


(c)           In
the case of a substitution pursuant to this Section, upon receipt by the
Indenture Trustee of (i) a Servicer’s Certificate to the effect that the
Substitution Adjustment Amount, if any, has been so deposited in the Collection
Account and (ii) an Officer’s Certificate reciting the transfer and assignment
of the Eligible Substitute Receivable(s) to the Indenture Trustee, the
Indenture Trustee shall execute and deliver such instrument of transfer or
assignment presented to it by the Servicer, in each case without recourse, as
shall be necessary to vest in the Servicer or HAFI, as applicable, legal and
beneficial ownership of such Receivable for which the Servicer has made a
substitution election (including any property acquired in respect thereof or
proceeds of any insurance policy with respect thereto).


 


ARTICLE VI

MISCELLANEOUS


 


SECTION 6.01.      Ratification
of Basic Documents.


 


Each of the Basic Documents (to the extent
appropriate, as supplemented by this Series Supplement) is in all respects
ratified and confirmed and each of the Basic Documents, as so supplemented by
this Series Supplement shall be read, taken and construed as one and the same
instrument.


 


SECTION 6.02.      Counterparts.


 


This Series Supplement may be executed in one or more
counterparts, each of which so executed shall be deemed to be an original, but
all of which shall together constitute but one and the same instrument.


 


SECTION 6.03.      GOVERNING
LAW.


 


THIS SERIES SUPPLEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REFERENCE TO ITS CONFLICT OF LAWS PROVISIONS WHICH WOULD REQUIRE THE
APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION, AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS.


 


SECTION 6.04.      Amendments
Without Consent of Noteholders.


 


(a)           Without
the consent of the Noteholders and with prior written notice to the Rating
Agencies, as evidenced in writing to the Administrator, the Indenture Trustee
and the Issuer, when authorized by an Issuer Order, at any time and from time
to time, the parties hereto 


 


22

















 


may enter into one
or more amendments hereto, in form satisfactory to the Administrator, the
Indenture Trustee, the Owner Trustee, for any of the following purposes:


 


(i)            to
correct or amplify the description of any property at any time subject to the
lien of the Indenture as supplemented by this Series Supplement, or better to
assure, convey and confirm unto the Indenture Trustee, if any, any property
subject or required to be subjected to the lien of the Indenture as
supplemented by this Series Supplement, or subject to the lien of the Indenture
as supplemented by this Series Supplement additional property;


 


(ii)           to
evidence the succession, in compliance with the applicable provisions hereof,
of another person to the Issuer, and the assumption by any such successor of
the covenants of the Issuer herein and in the Notes contained;


 


(iii)          to
add to the covenants of the Issuer, for the benefit of the Noteholders, or to
surrender any right or power herein conferred upon the Issuer;


 


(iv)          to
convey, transfer, assign, mortgage or pledge any property to or with the
Indenture Trustee, if any;


 


(v)           to
cure any ambiguity, to correct or supplement any provision herein which may be
inconsistent with any other provision herein or to make any other provisions
with respect to matters or questions arising under the Indenture, the Trust
Agreement or in this Series Supplement; provided that such action shall
not adversely affect the interests of the Noteholders;


 


(vi)          to
evidence and provide for the acceptance of the appointment hereunder and under
the Indenture by a successor indenture trustee with respect to the Notes and to
add to or change any of the provisions of the Indenture or of this Series
Supplement as shall be necessary to facilitate the administration of the trusts
hereunder by more than one indenture trustee, pursuant to the requirements of
Article V of the Indenture; or


 


(vii)         to
modify, eliminate or add to the provisions of the Indenture or of this Series
Supplement to such extent as shall be necessary to effect the qualification of
the Indenture under the TIA or under any similar federal statute hereafter
enacted and to add to the Indenture such other provisions as may be expressly
required by the TIA.


 


Each of the Administrator, the Indenture Trustee and
the Owner Trustee is hereby authorized to join in the execution of any
amendment and to make any further appropriate agreements and stipulations that
may be therein contained.


 


(b)           Except
as otherwise provided herein, the Issuer, the Indenture Trustee and the Administrator,
when authorized by an Issuer Order, may, also without the consent of any of the
Noteholders and with prior written notice to the Rating Agencies by the Issuer,
as evidenced in writing to the Indenture Trustee and the Administrator, enter
into an amendment hereto for the purpose of adding any provisions to, or
changing in any manner or eliminating any of the 


 


23

















 


provisions of, the
Indenture or of this Series Supplement of modifying in any manner the rights of
the Noteholders under the Indenture or under this Series Supplement; provided,
however, that such action shall not, as evidenced by an Opinion of
Counsel, adversely affect in any material respect the interests of any
Noteholder; provided, further, that with respect to tax matters,
such action shall not be deemed to adversely affect in any material respect the
interests of any Noteholder if, for federal income tax purposes, the action
does not cause the issuing entity to be treated as an association or publicly
traded partnership taxable as a corporation, or the Notes that were
characterized as debt at the time of issuance to fail to qualify as debt.


 


SECTION 6.05.      Amendments
With Consent of the Noteholders.


 


Except as otherwise provided herein, the Issuer, the
Indenture Trustee and the Administrator, when authorized by an Issuer Order
provided by the Servicer, also may, with prior written notice to the Rating
Agencies and with the consent of the Holders of not less than a majority of the
Outstanding Amount of each Class of affected Notes, by Act of such Holders
delivered to the Issuer, the Indenture Trustee and the Administrator, enter
into an amendment hereto for the purpose of adding any provisions to, or
changing in any manner or eliminating any of the provisions of, this Series
Supplement or of modifying in any manner the rights of the Noteholders under
the Indenture or under this Series Supplement; provided, however,
that no such amendment shall, without the consent of the Holder of each Outstanding
Note affected thereby:


 


(i)            change
the date of payment of any installment of principal of or interest on any Note,
or reduce the principal amount thereof, the interest rate thereon, change the
provision of the Indenture relating to the application of collections on, or
the proceeds of the sale of, all or any portion of any Series Trust Estate to
payment of principal of or interest on the Notes, or change any place of
payment where, or the coin or currency in which, any Note or the interest
thereon is payable;


 


(ii)           impair
the right to institute suit for the enforcement of the provisions of the
Indenture requiring the application of funds available therefor, as provided in
Article V of the Indenture, to the payment of any such amount due on the Notes
on or after the respective due dates thereof;


 


(iii)          reduce
the percentage of the Outstanding Amount of the Notes, the consent of the
Holders of which is required for this Series Supplement, or the consent of the
Holders of which is required for any waiver of compliance with certain
provisions of the Indenture or certain defaults hereunder and their
consequences provided for in the Indenture;


 


(iv)          modify
or alter the provisions of the proviso to the definition of the term “Outstanding”;


 


(v)           reduce
the percentage of the Outstanding Amount of the Notes required to direct the
Indenture Trustee to direct the Issuer to sell or liquidate the Series Trust
Estate pursuant to the Indenture;


 


24

















 


(vi)          modify
any provision of this Section except to increase any percentage specified
herein or to provide that certain additional provisions of the Indenture or the
Basic Documents cannot be modified or waived without the consent of the Holder
of each Outstanding Note affected thereby;


 


(vii)         modify
any of the provisions of the Indenture in such manner as to affect the
calculation of the amount of any payment of interest or principal due on any
Note on any Distribution Date (including the calculation of any of the
individual components of such calculation) or to affect the rights of the
Holders of Notes to the benefit of any provisions for the mandatory redemption
of the Notes contained herein; or


 


(viii)        permit
the creation of any lien ranking prior to or on a parity with the lien of the
Indenture with respect to any part of the Series Trust Estate or, except as
otherwise permitted or contemplated herein or the Related Documents, terminate
the lien of the Indenture on any property at any time subject hereto or deprive
the Holder of any Note of the security provided by the lien of the Indenture.


 


It shall not be necessary for any Act of Noteholders
under this Section to approve the particular form of an amendment to this
Series Supplement, but it shall be sufficient if such Act shall approve the
substance thereof.


 


Promptly after the execution by the Issuer, the
Indenture Trustee and the Administrator of an amendment to this Series
Supplement, the Administrator shall, upon written instruction from the Issuer
or the Indenture Trustee, mail to the Noteholders a notice setting forth in
general terms the substance hereof. Any failure of the Administrator to mail
such notice, or any defect therein, shall not, however, in any way impair or
affect the validity of any amendment to this Series Supplement.


 


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


 


By its acceptance of its interest in the Notes, each
owner of a beneficial interest in a Note shall be deemed to have agreed that
prior to the date which is one year and one day after the termination of the
Indenture, such Person shall not acquiesce, petition or otherwise invoke or
cause the Issuer or the Seller to invoke the process of any governmental
authority for the purpose of commencing or sustaining a case against the Seller
or Issuer under any federal or state bankruptcy, insolvency or similar law or
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator
or other similar official of or for the Issuer or the Seller or any substantial
part of its property or ordering the winding-up or liquidation of the affairs
of the Issuer or the Seller.


 


25

















 


SECTION 6.06.      Authority
to Register Notes and File Reports.


 


The Issuer hereby authorizes the Seller (and, at the
Seller’s direction, the Servicer) to prepare and execute on behalf of the
Issuer, filings with the Securities and Exchange Commission and any applicable
state agencies of documents required to register or qualify the Notes for
public distribution and to file, on a periodic basis or as otherwise may be
required, such documents or records as may be required by rules and regulations
prescribed by such authorities.


 


SECTION 6.07.      Authority
to Perform Duties of the Issuer.


 


(a)           The
Issuer hereby designates the Servicer its agent and attorney-in-fact to execute
or otherwise authenticate any financing statement, continuation statement or
other instrument or record required by the Indenture Trustee pursuant to
Section 3.5 of the Indenture; provided that such designation shall
not be deemed to create a duty in the Indenture Trustee to monitor the
compliance of the Servicer with respect to its duties under Section 3.5 of
the Indenture or the adequacy of any financing statement, continuation
statement or other instrument or record prepared by the Servicer.


 


(b)           The
Issuer hereby appoints the Servicer to assist the Issuer in performing its
duties under the Related Documents, including, but not limited to,
Sections 2.13 and 3.9 of the Indenture, and the Servicer hereby accepts
such appointment.


 


SECTION 6.08.      Notices.


 


All demands, notices and communications upon or to the
Seller, the Servicer, the Owner Trustee, the Indenture Trustee or the
Administrator shall be in writing, personally delivered, or mailed by certified
mail, or sent by confirmed telecopier transmission and shall be deemed to have
been duly given upon receipt (a) in the case of the Seller, 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, Attention:  Treasurer, Telecopier
# (847) 205-7538, (b) in the case of the Servicer, if HSBC Finance Corporation
is the Servicer, to HSBC Finance Corporation, 2700 Sanders Road, Prospect
Heights, Illinois 60070,  Attention:
Treasurer, Telecopier # (847) 205-7538, (c) in the case of the Issuer, at the
Corporate Trust Office of the Owner Trustee, Telecopier # (312) 325-8905, (d) in
the case of the Owner Trustee, at its Corporate Trust Office, Telecopier # (312)
325-8905, (e) in the case of the Indenture Trustee, at the Corporate Trust
Office of the Indenture Trustee, Attention: Corporate Trust Office-HSBC
Automotive Trust (USA) 2006-2, Telecopier # (212) 815-2493, (f) in the case of the
Administrator, at the Corporate Trust Office of the Administrator, Attention:
Corporate Trust/ABS Group, Telecopier # (212) 525-1300. Any notice required or
permitted to be mailed to a Noteholder or Certificateholder shall be given by
first class mail, postage prepaid, at the address of such Holder as shown in
the Certificate Register or Note Register, as applicable. Any notice so mailed
within the time prescribed in the Agreement shall be conclusively presumed to
have been duly given, whether or not the Certificateholder or Noteholder shall
receive such notice.


 


26

















 


SECTION 6.09.      [Reserved].


 


[Reminder of page
intentionally left blank]


 


27

















 


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


 


	
   

  	
  HSBC
  FINANCE CORPORATION,

  
	
   

  	
  as Servicer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Dennis J. Mickey

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Dennis
  J. Mickey

  
	
   

  	
   

  	
  Title:

  	
  Vice
  President and Assistant Treasurer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  HSBC
  AUTOMOTIVE TRUST (USA) 2006-2,

  
	
   

  	
  as Issuer

  
	
   

  	
  by U.S. Bank Trust National Association, not in its

  
	
   

  	
  individual capacity but solely as Owner Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Patricia M. Child

  	
   

  
	
   

  	
   

  	
  Name:
  Patricia M. Child

  
	
   

  	
   

  	
  Title:
  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HSBC
  AUTO RECEIVABLES CORPORATION,

  
	
   

  	
  as Seller

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Steven H. Smith

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Steven
  H. Smith

  
	
   

  	
   

  	
  Title:

  	
  Vice
  President and Assistant Treasurer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  THE
  BANK OF NEW YORK,

  
	
   

  	
  as Indenture Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Alan Li

  	
   

  
	
   

  	
   

  	
  Name:
  Alan Li

  
	
   

  	
   

  	
  Title:
  Assistant Treasurer

  
					



 

















 


	
   

  	
  U.S.
  BANK TRUST NATIONAL ASSOCIATION,

  
	
   

  	
  not in its individual capacity but solely as Owner

  
	
   

  	
  Trustee

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Patricia M. Child

  	
   

  
	
   

  	
   

  	
  Name:
  Patricia M. Child

  
	
   

  	
   

  	
  Title:
   Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HSBC
  BANK USA, NATIONAL ASSOCIATION,

  
	
   

  	
  as Administrator

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Susie Moy

  	
   

  
	
   

  	
   

  	
  Name:
  Susie Moy

  
	
   

  	
   

  	
  Title:
  Vice President

  



 


[Signature Page for
Series Supplement]


 

















 


Schedule
I


 


Eligibility
Criteria


 


“Eligible Receivable” means a Receivable with
respect to which each of the following is true as of the Closing Date:


 


(a)           that
(i) was originated directly by HACI or HAFI with the consumer, was originated
by a Dealer for the retail sale of a Financed Vehicle in the ordinary course of
such Dealer’s business, or was originated by an Alliance Relationship and sold
to HACI or HAFI and (A) in the case of a receivable originated by HACI or
HAFI, such entity had all necessary licenses and permits to originate
receivables in the state where such entity was located, and (B) in the case of
a Dealer originated receivable, such Dealer had all necessary licenses and
permits to originate receivables in the state where such Dealer was located,
and such receivable was purchased by HAFI from such Dealer under an existing
Dealer Agreement or Dealer Assignment with HAFI, and (C) in the case of a
receivable originated by an Alliance Relationship, such Alliance Relationship
had all necessary licenses and permits to originate receivables in the state
where such Alliance Relationship was located, and such receivable was purchased
by HACI or HAFI from such Alliance Relationship under an existing Alliance
Agreement and Alliance Assignment with HACI or HAFI, as applicable, and (D) in
the case of a Dealer originated receivable or a receivable originated by HACI,
HAFI or an Alliance Relationship, such receivable was purchased (x) by
HARC pursuant to the terms of the Master Receivables Purchase Agreements and
(y) by the Issuer pursuant to the Sale and Servicing Agreement; and each
Receivable was validly assigned (1) if Dealer originated, by such Dealer
to HAFI, (2) if originated by an Alliance Relationship, by such Alliance
Relationship to HAFI or HACI, as applicable, (3) by HAFI or HACI, as
applicable, to HARC pursuant to the terms of the Master Receivables Purchase
Agreements, (4) by HARC to the Issuer
pursuant to the Sale and Servicing Agreement and (5) by the Issuer to the
Indenture Trustee pursuant to the Indenture, (ii) was fully and properly
executed by the parties thereto, (iii) contains customary and enforceable
provisions such as to render the rights and remedies of the holder thereof
adequate for realization against the collateral security, and (iv) is fully
amortizing and provides for level monthly payments (provided that the
payment in the first Collection Period and the final Collection Period of the
term of the Receivable may be minimally different from the level payment)
which, if made when due, shall fully amortize the Amount Financed over the
original term;


 


(b)           that
was originated without any fraud or material misrepresentation on the part of a
Dealer, an Alliance Relationship, the Obligor, HAFI or HACI, as applicable;


 


(c)           with
respect to which all requirements of applicable federal, state and local laws,
and regulations thereunder (including, without limitation, usury laws, the federal
Truth-in-Lending Act, the Equal Credit Opportunity Act, the Fair Credit Billing
Act, the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the
Federal Trade Commission Act, the Magnuson-Moss Warranty Act, the Federal
Reserve Board’s Regulations “B” and “Z”, the Servicemembers Civil Relief Act,
as amended, and state adaptations of the National Consumer Act and of the
Uniform Consumer Credit Code and other consumer credit laws and equal credit
opportunity and disclosure laws) in respect of all of the Receivables, each and
every sale of Financed Vehicles and the sale of any physical damage, loss,
credit life and credit accident and 


 


I-1

















 


health insurance and any extended service contracts,
have been complied with in all material respects, and each Receivable and the
sale of the Financed Vehicle evidenced by each Receivable and the sale of any
physical damage, loss, credit life and credit accident and health insurance and
any extended service contracts complied at the time it was originated or made
and now complies in all material respects with all applicable legal
requirements;


 


(d)           that
was originated in, and the related Obligor is a resident of, the United States
of America and, at the time of origination materially conformed to all
underwriting and funding guidelines of HAFI applicable thereto and that has
been serviced in material conformity with procedures applicable to receivables
that are serviced by the Servicer for its own account;


 


(e)           which
represents the genuine, legal, valid and binding payment obligation of the
Obligor thereon, enforceable by the holder thereof in accordance with its
terms, except (A) as enforceability may be limited by bankruptcy, insolvency,
reorganization or 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 and (B) as such Receivable may be modified by
the application of the Servicemembers Civil Relief Act, as amended, or similar
state regulation; and all parties thereto had full legal capacity to execute
and deliver such Receivable and all other documents related thereto and to
grant the security interest purported to be granted thereby;


 


(f)            which
is not due from the United States of America or any state or from any agency,
department, subdivision or instrumentality thereof;


 


(g)           which,
as of the Cut-off Date, (i) had an original term of not more than 72 months,
(ii) has a remaining term of not more than 72 months, (iii) had a remaining
Amount Financed of at least $3,000 and not more than $50,000, (iv) had an
Annual Percentage Rate of at least 6.50% and not more than 27.00%, (v) was not
more than 30 days contractually delinquent, (vi) no funds have been advanced by
the Issuer, the Servicer, HAFI, HACI, any Dealer, any Alliance Relationship or
anyone acting on behalf of any of them in order to cause such Receivable to
qualify under subclause (iv) of this clause (g) and (vii) had no
provision thereof waived, altered or modified in any respect since its
origination;


 


(h)           with
respect to which the information pertaining to such Receivable set forth in
each Schedule of Receivables is true and correct in all material respects;


 


(i)            with
respect to which HAFI will have caused the portions of HAFI’s and the Servicer’s
servicing records relating to such Receivable to be clearly and unambiguously
marked to show that such Receivable has been transferred by HAFI or HACI to
HARC in accordance with the terms of the Master Receivables Purchase Agreements
and by HARC to the Issuer pursuant to the Sale and Servicing Agreement, and by
the Issuer to the Indenture Trustee pursuant to the Indenture;


 


(j)            with
respect to which the computer tape or listing to be made available by HAFI to
HARC, the Servicer or the Indenture Trustee is complete and accurate and
includes a description of the same Receivables that are, or will be, described
in the related Schedule of Receivables;


 


I-2

















 


(k)           which
constitutes tangible chattel paper within the meaning of the UCC;


 


(l)            of
which there is only one original executed copy;


 


(m)          with
respect to which there exists a Receivable File and such Receivable File
contains, without limitation, (a) a fully executed original of the Contract or
an electronic copy thereof, (b) a certificate of insurance, application form
for insurance signed by the Obligor, or a signed representation letter from the
relevant Obligor named pursuant to which the Obligor has agreed to obtain
physical damage insurance for the related Financed Vehicle, (c) the original
Lien Certificate or application therefor, or a physical or electronic copy
thereof, showing HAFI, HACI or an Alliance Relationship assigning its interest
in the Lien Certificate, as applicable, as first lienholder (which, for
Financed Vehicles registered in states that issue confirmation of the
lienholder’s interest electronically, the “Lien Certificate” may consist of
notification of an electronic recordation, by either a third party service
provider or the relevant Registrar of Titles of the applicable state, which
indicates that the lien of the secured party on the Financed Vehicle is
recorded on the original certificate of title on the electronic lien and title
system of the applicable state) and (d) an original credit application, or a
physical or electronic copy thereof, signed by the Obligor; and (x) each of the
documents relating thereto which is required to be signed by the Obligor has
been signed by the Obligor in the appropriate spaces and (y) all blanks on
any form relating thereto to be completed have been properly filled in and each
form has otherwise been correctly prepared; and, notwithstanding the above,
with respect to which, a copy of the complete Receivable File for such
Receivable, which fulfills the documentation requirements of HAFI as in effect
at the time of purchase is in the possession of the Servicer or Subservicer;


 


(n)           which
has not been satisfied, subordinated or rescinded, and the Financed Vehicle
securing such Receivable has not been released from the lien of such Receivable
in whole or in part;


 


(o)           which
was not originated in, and is not subject to the laws of, any jurisdiction the
laws of which would make unlawful, void or voidable the sale, transfer and
assignment of such Receivable and with respect to which there is no agreement
with any account debtor that prohibits, restricts or conditions the assignment
of any portion of such Receivable;


 


(p)           which
has not been sold, transferred, assigned or pledged to any Person other than to
(i) HAFI by a Dealer, (ii) HACI or HAFI, as applicable, by an
Alliance Relationship, (iii) HARC by HAFI or HACI, as applicable, pursuant to
the terms of the Master Receivables Purchase Agreements, (iv) the Issuer
by HARC pursuant to the terms of the Sale and Servicing Agreement, (v) the
Indenture Trustee by the Issuer pursuant to the terms of the Indenture, (vi)
the Household Automotive Warehouse Trust by HARC pursuant to the terms of the master
sale and servicing agreement, dated as of December 18, 2001 and amended and
restated as of June 26, 2002, among HSBC Finance Corporation, HARC, Household
Automotive Warehouse Trust and Wells Fargo Bank, National Association and (vii)
Wells Fargo Bank, National Association by Household Automotive Warehouse Trust
pursuant to the terms of the indenture, dated as of December 18, 2001, among
Household Automotive Warehouse Trust, HSBC Finance Corporation and Wells Fargo
Bank, National Association. No Dealer nor Alliance Relationship has a
participation in, or other right to receive, proceeds of any 


 


I-3

















 


Receivable. Neither HAFI nor HACI, as applicable, HARC
nor the Issuer has taken any action to convey any right to any Person that
would result in such Person having a right to payments received under the
related Insurance Policy, the related Dealer Agreement or Dealer Assignment, or
the related Alliance Agreement and Alliance Assignment, as applicable, or to
payments due under such Receivable;


 


(q)           which
creates a valid, binding and enforceable first priority security interest in
favor of HAFI or HACI, as applicable, in the Financed Vehicle;


 


(r)            which
is secured by an enforceable and perfected first priority security interest in
the Financed Vehicle in favor of HAFI or HACI, as applicable, as secured party,
which security interest is prior to all other Liens upon and security interests
in such Financed Vehicle which now exist or may hereafter arise or be created
(except, as to priority, for any Lien for taxes, labor or materials affecting a
Financed Vehicle); and, with respect to which there are no Liens or claims for
taxes, work, labor or materials affecting the related Financed Vehicle which
are or may be Liens prior or equal to the lien of such Receivable;


 


(s)           as
to which the Seller has not authorized the filing of, and is not aware of any
financing statements against the Seller that include a description of the
collateral covering such Receivable, other than any financing statements (i) relating
to the sale of such Receivable by HARC to the Issuer pursuant to the terms of
the Sale and Servicing Agreement, (ii) that have been terminated, or (iii) that
have been amended to release such Receivable;


 


(t)            as
to which all filings (including, without limitation, UCC filings) required to
be made by any Person and actions required to be taken or performed by any
Person in any jurisdiction to give the Indenture Trustee a first priority
perfected lien on, or ownership interest in, the Receivables and the proceeds
thereof have been made, taken or performed;


 


(u)           as
to which, immediately prior to the transfer and assignment of such Receivable
by the Seller pursuant to the Sale and Servicing Agreement, the Seller has good
and marketable title thereto, free and clear of any and all liens, claims or
encumbrances of any person;


 


(v)           as
to which HAFI or HACI, as applicable, HARC or the Issuer has not done anything
to convey any right to any Person that would result in such Person having a
right to payments due under such Receivable or otherwise to impair the rights
of the Indenture Trustee, the Noteholders or the Certificateholders in such
Receivable or the proceeds thereof;


 


(w)          which
is not assumable by another Person in a manner which would release the Obligor
thereof from such Obligor’s obligations with respect to such Receivable;


 


(x)            which
is not subject to any right of rescission, setoff, counterclaim or defense and
no such right has been asserted or threatened with respect thereto;


 


(y)           except
for payment delinquencies continuing for a period of not more than 30 days as
of the applicable Cut-Off Date, the Seller has no knowledge that a default,
breach, violation or event permitting acceleration under the terms of the
Receivable existed as of the applicable Cut-Off Date or that any
continuing condition that with notice or lapse of time, or 


 


I-4

















 


both, would constitute a default, breach, violation or
event permitting acceleration under the terms of the Receivable had arisen as
of the applicable Cut-Off Date and the Seller has not waived any of the
foregoing;


 


(z)            at
the time of the origination of which, the related Financed Vehicle was covered
by a comprehensive and collision insurance policy (i) in an amount at
least equal to the lesser of (a) its maximum insurable value and
(b) the principal amount due from the Obligor thereunder, (ii) naming
HAFI or HACI, as applicable, and its successors and assigns as loss payee and
(iii) insuring against loss and damage due to fire, theft, transportation,
collision and other risks generally covered by comprehensive and collision
coverage and with respect to which the Obligor is required to maintain physical
loss and damage insurance, naming HAFI or HACI, as applicable, and its
successors and assigns as additional insured parties, and such Receivable
permits the holder thereof to obtain physical loss and damage insurance at the
expense of the Obligor if the Obligor fails to do so;


 


(aa)         with
respect to which the following is true:


 


The Lien Certificate for the related Financed Vehicle
shows, or if a new or replacement Lien Certificate is being applied for with
respect to such Financed Vehicle the Lien Certificate will be received within 270
days of the Closing Date and will show, HAFI, HACI or an Alliance Relationship
assigning its interest in the Lien Certificate, as applicable, named as the
original secured party under such Receivable and, accordingly, HAFI, HACI or
such Alliance Relationship, as applicable, will be the holder of a first
priority security interest in such Financed Vehicle. With respect to each
Receivable for which the Lien Certificate has not yet been returned from the
Registrar of Titles, HAFI has either applied for or received written evidence
from the related Dealer or the Obligor that such Lien Certificate showing HAFI,
HACI or an Alliance Relationship assigning its interest in the Lien Certificate,
as applicable, as first lienholder has been applied for. If the Receivable was
originated in a state in which a filing or recording is required of the secured
party to perfect a security interest in motor vehicles, such filings or
recordings have been duly made to show HAFI, HACI or an Alliance Relationship
assigning its interest in the Lien Certificate, as applicable, named as the
original secured party under the related Receivable;


 


(bb)         with
respect to which the related Contract contains no mark or notation indicating
that such Contract has been sold or pledged by the Seller to any person other
than the Issuer;


 


(cc)         as
to which no selection procedures adverse to the Noteholders or the
Certificateholder have been utilized in selecting such Receivable from all
other similar Receivables purchased or originated by HAFI or originated by HACI;


 


(dd)         as
to which, as of the Cut-off Date, no Obligor had been identified on the records
of HAFI as being the subject of a current bankruptcy proceeding; and


 


(ee)         as to which all funds have been fully advanced to or
on behalf of the related Obligor in accordance with its terms.


 


I-5

















 


Schedule II


 


Schedule of Receivables
on File in Electronic Form

at Dewey Ballantine LLP


 


II-1

















 


Exhibit A



Form of Servicer’s Certificate


 


HSBC
Automotive Trust (USA)  2006-2


 


Class A-1
Notes:  5.50313 %


Class A-2
Notes:  5.61%


Class A-3
Notes:  5.61%


Class A-4
Notes:  5.67%


 


Servicer’s
Certificate


(Delivered
pursuant to Section 4.9 of


the Sale and
Servicing Agreement)


 


Collection Period
Beginning


Collection Period Ending


Previous Distribution
Date


Distribution Date


Days in Interest Period


Months Since Closing


 


I. COLLECTION
PERIOD POOL BALANCE CALCULATION:


 


Beginning of Collection
Period Pool Balance


Principal Receivables
Added


Monthly Principal
Amounts:


Principal Payments
Received for the Collection Period


Liquidated Receivables
for the Collection Period


Principal Amount of
Repurchased Receivables for the Collection Period


End of Collection Period
Pool Balance


End of Collection Period
Pool Factor


 


II. COLLECTION
PERIOD NOTEHOLDER CALCULATIONS:


 


(a)
Class A-1


A. Information regarding
distributions


1. Total distribution per
$1,000


2. Principal distribution
per $1,000


3. Interest distribution
per $1,000


B. Calculation of Class
A-1 interest due


1. Class A-1 related Note
Rate


2. Class A-1 note balance
- beginning of period


3. Interest accrual
convention


4. Days in Interest
Period


5. Class A-1 interest due
- current period


 


A-1

















 


6. Class A Interest
Carryover Shortfall with respect to Class A-1


7. Class A-1 interest
paid


8. Class A-1 unpaid
interest with respect to the Distribution Date


 


C. Calculation of Class
A-1 principal balance


1. Class A-1 note balance
- beginning of period


2. Class A-1 minimum
principal distributable amount - due


3. Class A-1 additional
principal distributable amount - due


4. Class A-1 minimum
principal distributable amount - paid


5. Class A-1 additional
principal distributable amount - paid


6. Class A-1 note balance
- end of period


7. Class A-1 notes as a
percentage of the total Notes outstanding on the Distribution Date


8. Class A-1 notes as a
percentage of the Pool Balance on the Distribution Date


 


(b)
Class A-2


A. Information Regarding
Distributions


1. Total distribution per
$1,000


2. Principal distribution
per $1,000


3. Interest distribution
per $1,000


 


B. Calculation of Class
A-2 interest due


1. Class A-2 related Note
Rate


2. Class A-2 note balance
- beginning of period


3. Interest accrual
convention


4. Days in Interest
Period


5. Class A-2 interest due
- current period


6. Class A Interest
Carryover Shortfall with respect to Class A-2


7. Class A-2 interest
paid


8. Class A-2 unpaid
interest with respect to the Distribution Date


 


C. Calculation of Class
A-2 principal balance


1. Class A-2 note balance
- beginning of period


2. Class A-2 minimum
principal distributable amount - due


3. Class A-2 additional
principal distributable amount - due


4. Class A-2 minimum
principal distributable amount - paid


5. Class A-2 additional
principal distributable amount - paid


6. Class A-2 note balance
- end of period


7. Class A-2 notes as a
percentage of the total Notes outstanding on the Distribution Date


8. Class A-2 notes as a
percentage of the Pool Balance on the Distribution Date


9. Class A-1 and A-2
notes as a percentage of the Pool Balance on the Distribution Date


 


(c)
Class A-3


A. Information Regarding
Distributions


1. Total distribution per
$1,000


2. Principal distribution
per $1,000


3. Interest distribution
per $1,000


 


A-2

















 


B. Calculation of Class
A-3 interest Due


1. Class A-3 related Note
Rate


2. Class A-3 note balance
- beginning of period


3. Interest accrual
convention


4. Days in Interest
Period


5. Class A-3 interest due
- current period


6. Class A Interest
Carryover Shortfall with respect to Class A-3


7. Class A-3 interest
paid


8. Class A-3 unpaid interest
with respect to the Distribution Date


 


C. Calculation of Class
A-3 principal balance


1. Class A-3 note balance
- beginning of period


2. Class A-3 minimum
principal distributable amount - due


3. Class A-3 additional
principal distributable amount - due


4. Class A-3 minimum
principal distributable amount - paid


5. Class A-3 additional
principal distributable amount - paid


6. Class A-3 note balance
- end of period


7. Class A-3 notes as a
percentage of the total Notes outstanding on the Distribution Date


8. Class A-3 notes as a
percentage of the Pool Balance on the Distribution Date


9. Class A-1, A-2 and A-3
notes as a percentage of the Pool Balance on the Distribution Date


 


(d)
Class A-4


A. Information Regarding
Distributions


1. Total distribution per
$1,000


2. Principal distribution
per $1,000


3. Interest distribution
per $1,000


 


B. Calculation of Class
A-4 Interest Due


1. Class A-4 related Note
Rate


2. Class A-4 principal
balance - beginning of period


3. Interest accrual
convention


4. Days in Interest Period


5. Class A-4 interest due
- current period


6. Class A Interest
Carryover Shortfall with respect to Class A-4


7. Class A-4 interest
paid


8. Class A-4 unpaid
interest with respect to the Distribution Date


 


C. Calculation of Class
A-4 principal balance


1. Class A-4 note balance
- beginning of period


2. Class A-4 minimum
principal distributable amount - due


3. Class A-4 additional
principal distributable amount - due


4. Class A-4 minimum
principal distributable amount - paid


5. Class A-4 additional
principal distributable amount - paid


6. Class A-4 note balance
- end of period


7. Class A-4. notes as a
percentage of the total Notes outstanding on the Distribution Date


 


A-3

















 


8. Class A-4 Notes as a
percentage of the Pool Balance on the Distribution Date


9. Class A-1, A-2, A-3
and A-4 notes as a percentage of the Pool Balance on the Distribution Date


 


III. PRINCIPAL
DISTRIBUTABLE AMOUNT CALCULATION


 Aggregate
Optimal Note Principal Balance for the Distribution Date:


Pool Balance as of the
end of the Collection Period Factor


Aggregate Optimal Note Principal Balance for the Distribution Date


Optimal
Principal Distributable Amount for the Distribution Date:


The excess, if any, of


(x) Aggregate Note
Principal Balance over


(y) Aggregate Optimal
Note Principal Balance for such Distribution Date


Optimal Principal
Distributable Amount


Class A
Minimum Principal Distributable Amount:


Greater of (a), (b), or
(c):


(a) The lesser of:


(i) Optimal Principal
Distributable Amount


(ii) BOM Principal
Balance less EOM Principal Balance


(iii) Aggregate Note
Principal Balance


(b) The amount necessary
on a Note’s Scheduled Maturity Date to bring the Note’s


Aggregate Note Principal
Balance to zero


(c) The excess of the
Aggregate Note Principal Balance over the


Pool Balance


Class A Minimum Principal
Distributable Amount


Class A
Additional Principal Distributable Amount


Excess of:


(i) Aggregate Note
Principal Balance


 Less:  Class A Minimum Principal Distributable
Amount paid over


(ii) Aggregate Optimal
Note Principal Balance


Class A Additional
Principal Distributable Amount


 


IV. RESERVE
ACCOUNT RECONCILIATION


Beginning Reserve Account
Balance


Targeted Reserve Account
Balance


Reserve Account Shortfall


Reserve Account Deposit


Reserve Account Release


Ending Reserve Account
Balance


Ending Reserve Account
Balance as a percentage of the Ending Pool Balance


 


V. OVERCOLLATERALIZATION
CALCULATION


Overcollateralization
Amount prior to payments allocated to principal


 Overcollateralization Amount after giving
effect to payments allocated to principal


Ending Overcollateralization
Amount as a percentage of the Ending Pool Balance


 


A-4

















 


VI. RECONCILIATION
OF COLLECTION ACCOUNT


 (A)
Available Funds (Sect. 2.01(a))


i. Collected Funds


(a)  Collections On Receivables


(b)  Net Liquidation Proceeds


(c)  Substitution Adjustment Amounts


Total Collected Funds


ii. Collection and
Reserve Account investment income


iii. Repurchase Amounts
deposited in the Collection Account


iv. Proceeds of any
liquidation of the Trust


Available Funds for
distribution


 


Distributions (Sect.
3.03)


(A) Available Funds


 


(B) Servicing Fee


i. Servicing Fee (If HSBC
Finance no longer the Servicer)


 


(C) Unpaid Administrator,
and Indenture and Owner Trustee fees


Remaining available funds
for interest distribution


 


(D) Class A Interest
Distributable Amount paid


i. Class A-1 interest
paid


ii. Class A-2 interest
paid


iii. Class A-3 interest
paid


iv. Class A-4 interest
paid


Total Class A Interest
Distributable Amount paid


Remaining Available Funds
for principal distribution


 


(E) Class A Minimum
Principal Distributable Amount paid


i. Class A-1 minimum
principal paid


ii. Class A-2 minimum
principal paid


iii. Class A-3 minimum
principal paid


iv. Class A-4 minimum
principal paid


Class A Minimum Principal
Distributable Amount paid


Remaining funds


 


(F) Reserve Account
Shortfall Amount - deposited 


Remaining funds


 


(G) Class A Additional
Principal Distributable Amount


i. Class A-1 additional
principal distributable amount


ii. Class A-2 additional
principal distributable amount


iii. Class A-3 additional
principal distributable amount


iv. Class A-4 additional
principal distributable amount


Class A Additional
Principal Distributable Amount - paid


 


A-5

















 


Remaining funds


 


(H) Amount released from
Reserve Account


Remaining funds


 


(I) Unpaid Administrator,
and Indenture and Owner Trustee indemnity expenses


Remaining funds


 


(J) Servicing Fee (If HSBC
Finance Is Servicer)


 


(K) Remaining Available
Funds for distribution to Certificateholders


 


VII. OTHER
STATISTICS


 


Delinquency


A. One payment delinquent  - $


% of Principal
Receivables


B. Two payments
delinquent - $


% of Principal
Receivables


C. Three or more payments
delinquent - $


% of Principal
Receivables


D. Two or more payments
delinquent - $


% of Principal
Receivables


 


E. Principal Balance of Receivables that were extended
or modified (and delinquency reset) during  
the related Collection Period - $


 


F. Principal Balance of Receivables that were extended
or modified (and delinquency reset) during the related Collection Period as a
percent of the Pool Balance at the end of such Collection Period -      %


 


G. Repossessed Vehicles


% of Principal
Receivables


H. Cumulative Net Loss
Percentage


I. The weighted average
coupon (WAC) was equal to


J. The weighted average
remaining maturity (WARM) was equal to


 


A-6

















 


Exhibit B


 


Forms of Notes


 


	
  REGISTERED

  	
  $296,500,000

  
	
  No. A-1

  	
   

  



 


SEE REVERSE FOR
CERTAIN DEFINITIONS


 


CUSIP NO. 404286 AA 4


 


Unless this Note is presented by an authorized
representative of The Depository Trust Company, a New York corporation (“DTC”),
to the Issuer or its agent for registration of transfer, exchange or payment,
and any Note issued is registered in the name of Cede & Co. or in such
other name as is requested by an authorized representative of DTC (and any
payment is made to Cede & Co. or to such other entity as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered
owner hereof, Cede & Co., has an interest herein.


 


THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS
AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE
AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.


 


HSBC AUTOMOTIVE TRUST (USA) 2006-2


 


CLASS A-1 5.50313% NOTE


 


HSBC Automotive Trust (USA) 2006-2, a statutory trust
organized and existing under the laws of the State of Delaware (herein referred
to as the “Issuer”), for value received, hereby promises to pay to CEDE &
CO., or registered assigns, the principal sum of TWO HUNDRED NINETY-SIX MILLION
FIVE HUNDRED THOUSAND DOLLARS payable on each Distribution Date in an amount
equal to the result obtained by multiplying (i) a fraction the numerator of
which is $296,500,000 and the denominator of which is $296,500,000 by (ii) the
aggregate amount, if any, payable from Available Funds in respect of principal
on the Class A-1 Notes pursuant to the Indenture; provided, however,
that the entire unpaid principal amount of this Note shall be due and payable
on August 17, 2007 (the “Class A-1 Scheduled Maturity Date”). The Issuer will
pay interest on this Note at the rate per annum shown above on each
Distribution Date until the principal of this Note is paid or made available
for payment. Interest on this Note will accrue for each Distribution Date from
the most recent Distribution Date on which interest has been paid to but
excluding such Distribution Date or, if no interest has yet been paid, from
July 26, 2006. Interest will be computed on the basis of a 360-day year and the
actual number of days elapsed in an applicable Interest Period. Such principal
of and interest on this Note shall be paid in the manner specified on the
reverse hereof.


 


The principal of and interest on this Note are payable
in such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts. All payments
made by the Issuer with respect to this Note shall be applied first to 


 


B-1

















 


interest due and payable
on this Note as provided above and then to the unpaid principal of this Note.


 


Reference is made to the further provisions of this
Note set forth on the reverse hereof, which shall have the same effect as
though fully set forth on the face of this Note.


 


Unless the certificate of authentication hereon has
been executed by the Administrator whose name appears below by manual
signature, this Note shall not be entitled to any benefit under the Indenture
referred to on the reverse hereof, or be valid or obligatory for any purpose.


 


B-2

















 


IN WITNESS WHEREOF, the Issuer has caused this
instrument to be signed, manually or in facsimile, by its Authorized Officer as
of the date set forth below.


 


	
  Date: July 26, 2006

  	
  HSBC AUTOMOTIVE TRUST
  (USA) 2006-2

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:          U.S. BANK TRUST NATIONAL 

  
	
   

  	
  ASSOCIATION, not in its
  individual capacity but 

  
	
   

  	
  solely as Owner Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  



 


B-3

















 


ADMINISTRATOR’S CERTIFICATE OF AUTHENTICATION


 


This is one of the Notes designated above and referred
to in the within-mentioned Indenture.


 


	
  Date:  July 26, 2006

  	
  HSBC BANK USA, NATIONAL
  ASSOCIATION,

  
	
   

  	
  not in its individual
  capacity but solely as 

  
	
   

  	
  Administrator

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  by

  	
   

  	
   

  
	
   

  	
  Authorized Signatory

  



 


B-4

















 


[REVERSE OF NOTE]


 


This Note is one of a duly authorized issue of Notes
of the Issuer, designated as its Class A-1 5.50313% Notes (herein called the
“Class A-1 Notes”), all issued under an Indenture dated as of July 26, 2006
(such indenture, as supplemented or amended, is herein called the “Indenture”),
among the Issuer, The Bank of New York, as indenture trustee (the “Indenture
Trustee”, which term includes any successor Indenture Trustee under the
Indenture) and HSBC Bank USA, National Association, as administrator (the
“Administrator”, which term includes any successor Administrator under the
Indenture) to which Indenture and all indentures supplemental thereto reference
is hereby made for a statement of the respective rights and obligations thereunder
of the Issuer, the Indenture Trustee, the Administrator and the Holders of the
Notes. The Notes are subject to all terms of the Indenture. All terms used in
this Note that are defined in the Indenture, as supplemented or amended, shall
have the meanings assigned to them in or pursuant to the Indenture, as so
supplemented or amended.


 


The Class A-1 Notes, the Class A-2 Notes, the Class
A-3 Notes and the Class A-4 Notes (together, the “Notes”) are and will be
equally and ratably secured by the collateral pledged as security therefor as
provided in the Indenture.


 


Principal of the Class A-1 Notes will be payable on
each Distribution Date in an amount described on the face hereof. “Distribution
Date” means the seventeenth day of each month, or, if any such date is not a
Business Day, the next succeeding Business Day, commencing on August 17, 2006.
The term “Distribution Date” shall be deemed to include the Class A-1 Scheduled
Maturity Date.


 


As described above, the entire unpaid principal amount
of this Note shall be due and payable on the Class A-1 Scheduled Maturity Date.
This Note is also subject to redemption when the Pool Balance is reduced to an
amount that is less than or equal to 10% of the original Pool Balance.
Notwithstanding the foregoing, the entire unpaid principal amount of the Notes
shall be due and payable on any date on or after which an Event of Default
shall have occurred and be continuing if the Indenture Trustee in its
discretion or if requested by Holders of the Notes representing at least 66
2/3% of the Outstanding Amount of the Notes have declared the Notes to be
immediately due and payable in the manner provided in the Indenture. All
principal payments on the Class A-1 Notes shall be made pro rata to the Class
A-1 Noteholders entitled thereto.


 


Payments of interest on this Note due and payable on
each Distribution Date, together with the installment of principal, if any, to
the extent not in full payment of this Note, shall be made by check mailed to
the Person whose name appears as the Holder of this Note (or one or more
Predecessor Notes) on the Note Register as of the close of business on each
Record Date, except that with respect to Notes registered on the Record Date in
the name of the nominee of the Clearing Agency (initially, such nominee to be
Cede & Co.), payments will be made by wire transfer in immediately
available funds to the account designated by such nominee. Such checks shall be
mailed to the Person entitled thereto at the address of such Person as it
appears on the Note Register as of the applicable Record Date without requiring
that this Note be submitted for notation of payment. Any reduction in the
principal amount of this Note (or any one or more Predecessor Notes) effected
by any payments made on any Distribution Date shall be binding upon all future
Holders of this Note and of any Note issued upon the registration of 


 


B-5

















 


transfer hereof or in exchange hereof or in lieu
hereof, whether or not noted hereon. If funds are expected to be available, as
provided in the Indenture, for payment in full of the then remaining unpaid
principal amount of this Note on a Distribution Date, then the Administrator,
in the name of and on behalf of the Issuer, will notify the Person who was the
Holder hereof as of the Record Date preceding such Distribution Date by notice
mailed prior to such Distribution Date and the amount then due and payable
shall be payable only upon presentation and surrender of this Note at the
Administrator’s principal Corporate Trust Office or at the office of the
Administrator’s agent appointed for such purposes located in New York, New
York.


 


The Issuer shall pay interest on overdue installments
of interest at the Class A-1 Note Rate to the extent lawful.


 


As provided in the Indenture and subject to certain
limitations set forth therein, the transfer of this Note may be registered on
the Note Register upon surrender of this Note for registration of transfer at
the office or agency designated by the Issuer pursuant to the Indenture, (i)
duly endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Indenture Trustee duly executed by, the Holder hereof or
his attorney duly authorized in writing, with such signature guaranteed by an “eligible
guarantor institution” meeting the requirements of the Note Registrar which
requirements include membership or participation in Securities Transfer Agents
Medallion Program (“Stamp”) or such other “signature guarantee program” as may
be determined by the Note Registrar in addition to, or in substitution for,
Stamp, all in accordance with the Exchange Act, and (ii) accompanied by such
other documents as the Indenture Trustee may require, and thereupon one or more
new Notes of authorized denominations and in the same aggregate principal
amount will be issued to the designated transferee or transferees. No service
charge will be charged for any registration of transfer or exchange of this
Note, but the transferor may be required to pay a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection with any
such registration of transfer or exchange.


 


Each Noteholder or Note Owner, by acceptance of a Note
or, in the case of a Note Owner, a beneficial interest in a Note covenants and
agrees that no recourse may be taken, directly or indirectly, with respect to
the obligations of the Issuer, the Owner Trustee, the Administrator or the
Indenture Trustee on the Notes or under the Indenture or any certificate or
other writing delivered in connection therewith, against (i) the Seller,
the Servicer, the Indenture Trustee, the Administrator or the Owner Trustee in
its individual capacity, (ii) any owner of a beneficial interest in the Issuer
or (iii) any partner, owner, beneficiary, agent, officer, director or employee
of the Seller, the Servicer, the Indenture Trustee, the Administrator or the
Owner Trustee in its individual capacity, any holder of a beneficial interest
in the Issuer, the Seller, the Servicer, the Owner Trustee, the Administrator
or the Indenture Trustee or of any successor or assign of the Seller, the
Servicer, the Indenture Trustee, the Administrator or the Owner Trustee in its
individual capacity, except as any such Person may have expressly agreed (it
being understood that the Indenture Trustee and the Owner Trustee have no such
obligations in their individual capacity) and except that any such partner,
owner or beneficiary shall be fully liable, to the extent provided by
applicable law, for any unpaid consideration for stock, unpaid capital
contribution or failure to pay any installment or call owing to such entity.


 


Prior to the due presentment for registration of
transfer of this Note, the Issuer, the Indenture Trustee and the Administrator
and any agent of the Issuer, the Indenture Trustee or the 


 


B-6

















 


Administrator may treat the Person in whose name this
Note (as of the day of determination or as of such other date as may be
specified in the Indenture) is registered as the owner hereof for all purposes,
whether or not this Note be overdue, and none of the Issuer, the Indenture
Trustee, the Administrator nor any such agent shall be affected by notice to
the contrary.


 


The Indenture permits, with certain exceptions as
therein provided, the amendment thereof and the modification of the rights and
obligations of the Issuer and the rights of the Holders of the Notes under the
Indenture at any time by the Issuer with the consent of the Noteholders
representing a majority of the Outstanding Amount of all Notes at the time
Outstanding.


 


The term “Issuer” as used in this Note includes any
successor to the Issuer under the Indenture.


 


The Issuer is permitted by the Indenture, under
certain circumstances, to merge or consolidate, subject to the rights of the
Indenture Trustee and the Noteholders under the Indenture.


 


The Notes are issuable only in registered form in
denominations as provided in the Indenture, subject to certain limitations
therein set forth.


 


This Note and the Indenture shall be construed in
accordance with the laws of the State of New York, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder and thereunder shall be determined in accordance with such
laws.


 


No reference herein to the Indenture and no provision
of this Note or of the Indenture shall alter or impair the obligation of the
Issuer, which is absolute and unconditional, to pay the principal of and
interest on this Note at the times, place, and rate, and in the coin or
currency herein prescribed.


 


Anything herein to the contrary notwithstanding,
except as expressly provided in the Indenture or the Basic Documents, neither
U.S. Bank Trust National Association in its individual capacity, any owner of a
beneficial interest in the Issuer, nor any of their respective partners,
beneficiaries, agents, officers, directors, employees or successors or assigns
shall be personally liable for, nor shall recourse be had to any of them for,
the payment of principal of or interest on, or performance of, or omission to
perform, any of the covenants, obligations or indemnifications contained in
this Note or the Indenture, it being expressly understood that said covenants,
obligations and indemnifications have been made by the Owner Trustee for the
sole purposes of binding the interests of the Owner Trustee in the assets of
the Issuer. The Holder of this Note by the acceptance hereof agrees that except
as expressly provided in the Indenture or the Basic Documents, in the case of
an Event of Default under the Indenture, the Holder shall have no claim against
any of the foregoing for any deficiency, loss or claim therefrom; provided,
however, that nothing contained herein shall be taken to prevent
recourse to, and enforcement against, the assets of the Issuer for any and all
liabilities, obligations and undertakings contained in the Indenture or in this
Note.


 


B-7

















 


ASSIGNMENT


 


Social Security or taxpayer I.D. or other identifying
number of assignee


 


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


	
   

  	
   

  
	
   

  	
  (name and address of
  assignee)

  
			



 


the within Note and all
rights thereunder, and hereby irrevocably constitutes and appoints, attorney,
to transfer said Note on the books kept for registration thereof, with full
power of substitution in the premises.


 


	
  Dated

  	
   

  	
  (1)

  	
   

  	
   

  
	
   

  	
   

  	
  Signature Guaranteed:

  



 






(1)  NOTE: The signature to this assignment must
correspond with the name of the registered owner as it appears on the face of
the within Note in every particular, without alteration, enlargement or any
change whatsoever.


 


B-8

















 


	
  REGISTERED

  	
  $229,100,000

  
	
  No. A-2

  	
   

  



 


SEE REVERSE FOR
CERTAIN DEFINITIONS


 


CUSIP NO. 404286 AB 2


 


Unless this Note is presented by an authorized
representative of The Depository Trust Company, a New York corporation (“DTC”),
to the Issuer or its agent for registration of transfer, exchange or payment,
and any Note issued is registered in the name of Cede & Co. or in such
other name as is requested by an authorized representative of DTC (and any
payment is made to Cede & Co. or to such other entity as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered
owner hereof, Cede & Co., has an interest herein.


 


THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS
AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE
AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.


 


HSBC AUTOMOTIVE TRUST (USA) 2006-2


 


CLASS A-2 5.61% NOTE


 


HSBC Automotive Trust (USA) 2006-2, a statutory trust
organized and existing under the laws of the State of Delaware (herein referred
to as the “Issuer”), for value received, hereby promises to pay to CEDE &
CO., or registered assigns, the principal sum of TWO HUNDRED TWENTY-NINE
MILLION ONE HUNDRED THOUSAND DOLLARS payable on each Distribution Date in an
amount equal to the result obtained by multiplying (i) a fraction the numerator
of which is $229,100,000 and the denominator of which is $229,100,000 by (ii)
the aggregate amount, if any, payable from Available Funds in respect of
principal on the Class A-2 Notes pursuant to the Indenture; provided, however,
that the entire unpaid principal amount of this Note shall be due and payable
on June 17, 2009 (the “Class A-2 Scheduled Maturity Date”). The Issuer will pay
interest on this Note at the rate per annum shown above on each Distribution
Date until the principal of this Note is paid or made available for payment.
Interest on this Note will accrue for each Distribution Date from the most
recent Distribution Date on which interest has been paid to but excluding such
Distribution Date or, if no interest has yet been paid, from July 26, 2006.
Interest will be computed on the basis of a 360-day year consisting of twelve
30-day months.


 


The principal of and interest on this Note are payable
in such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts. All payments
made by the Issuer with respect to this Note shall be applied first to interest
due and payable on this Note as provided above and then to the unpaid principal
of this Note.


 


B-9

















 


Reference is made to the further provisions of this
Note set forth on the reverse hereof, which shall have the same effect as
though fully set forth on the face of this Note.


 


Unless the certificate of authentication hereon has
been executed by the Administrator whose name appears below by manual
signature, this Note shall not be entitled to any benefit under the Indenture
referred to on the reverse hereof, or be valid or obligatory for any purpose.


 


B-10

















 


IN WITNESS WHEREOF, the Issuer has caused this
instrument to be signed, manually or in facsimile, by its Authorized Officer as
of the date set forth below.


 


	
  Date: July 26, 2006

  	
  HSBC AUTOMOTIVE TRUST
  (USA) 2006-2

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:          U.S. BANK TRUST NATIONAL 

  
	
   

  	
  ASSOCIATION, not in its
  individual capacity but 

  
	
   

  	
  solely as Owner Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  



 


B-11

















 


ADMINISTRATOR’S CERTIFICATE OF AUTHENTICATION


 


This is one of the Notes designated above and referred
to in the within-mentioned Indenture.


 


	
  Date:  July 26, 2006

  	
  HSBC BANK USA, NATIONAL
  ASSOCIATION, 

  
	
   

  	
  not in its individual
  capacity but solely as 

  
	
   

  	
  Administrator

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  by

  	
   

  	
   

  
	
   

  	
  Authorized Signatory

  



 


B-12

















 


[REVERSE OF NOTE]


 


This Note is one of a duly authorized issue of Notes
of the Issuer, designated as its Class A-2 5.61% Notes (herein called the
“Class A-2 Notes”), all issued under an Indenture dated as of July 26, 2006
(such indenture, as supplemented or amended, is herein called the “Indenture”),
among the Issuer, The Bank of New York, as indenture trustee (the “Indenture
Trustee”, which term includes any successor Indenture Trustee under the
Indenture) and HSBC Bank USA, National Association, as administrator (the
“Administrator”, which term includes any successor Administrator under the
Indenture) to which Indenture and all indentures supplemental thereto reference
is hereby made for a statement of the respective rights and obligations
thereunder of the Issuer, the Indenture Trustee, the Administrator and the
Holders of the Notes. The Notes are subject to all terms of the Indenture. All
terms used in this Note that are defined in the Indenture, as supplemented or
amended, shall have the meanings assigned to them in or pursuant to the
Indenture, as so supplemented or amended.


 


The Class A-1 Notes, the Class A-2 Notes, the Class
A-3 Notes and the Class A-4 Notes (together, the “Notes”) are and will be
equally and ratably secured by the collateral pledged as security therefor as
provided in the Indenture.


 


Principal of the Class A-2 Notes will be payable on
each Distribution Date in an amount described on the face hereof. “Distribution
Date” means the seventeenth day of each month, or, if any such date is not a
Business Day, the next succeeding Business Day, commencing on August 17, 2006.
The term “Distribution Date” shall be deemed to include the Class A-2 Scheduled
Maturity Date.


 


As described above, the entire unpaid principal amount
of this Note shall be due and payable on the Class A-2 Scheduled Maturity Date.
This Note is also subject to redemption when the Pool Balance is reduced to an
amount that is less than or equal to 10% of the original Pool Balance.
Notwithstanding the foregoing, the entire unpaid principal amount of the Notes
shall be due and payable on any date on or after which an Event of Default
shall have occurred and be continuing if the Indenture Trustee in its
discretion or if requested by Holders of the Notes representing at least 66
2/3% of the Outstanding Amount of the Notes have declared the Notes to be
immediately due and payable in the manner provided in the Indenture. All
principal payments on the Class A-2 Notes shall be made pro rata to the Class
A-2 Noteholders entitled thereto.


 


Payments of interest on this Note due and payable on
each Distribution Date, together with the installment of principal, if any, to
the extent not in full payment of this Note, shall be made by check mailed to
the Person whose name appears as the Holder of this Note (or one or more
Predecessor Notes) on the Note Register as of the close of business on each
Record Date, except that with respect to Notes registered on the Record Date in
the name of the nominee of the Clearing Agency (initially, such nominee to be
Cede & Co.), payments will be made by wire transfer in immediately
available funds to the account designated by such nominee. Such checks shall be
mailed to the Person entitled thereto at the address of such Person as it
appears on the Note Register as of the applicable Record Date without requiring
that this Note be submitted for notation of payment. Any reduction in the
principal amount of this Note (or any one or more Predecessor Notes) effected
by any payments made on any Distribution Date shall be binding upon all future
Holders of this Note and of any Note issued upon the registration of 


 


B-13

















 


transfer hereof or in exchange hereof or in lieu
hereof, whether or not noted hereon. If funds are expected to be available, as
provided in the Indenture, for payment in full of the then remaining unpaid
principal amount of this Note on a Distribution Date, then the Administrator,
in the name of and on behalf of the Issuer, will notify the Person who was the
Holder hereof as of the Record Date preceding such Distribution Date by notice
mailed prior to such Distribution Date and the amount then due and payable
shall be payable only upon presentation and surrender of this Note at the
Administrator’s principal Corporate Trust Office or at the office of the
Administrator’s agent appointed for such purposes located in New York, New
York.


 


The Issuer shall pay interest on overdue installments
of interest at the Class A-2 Note Rate to the extent lawful.


 


As provided in the Indenture and subject to certain
limitations set forth therein, the transfer of this Note may be registered on
the Note Register upon surrender of this Note for registration of transfer at
the office or agency designated by the Issuer pursuant to the Indenture, (i)
duly endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Indenture Trustee duly executed by, the Holder hereof or
his attorney duly authorized in writing, with such signature guaranteed by an
“eligible guarantor institution” meeting the requirements of the Note Registrar
which requirements include membership or participation in Securities Transfer
Agents Medallion Program (“Stamp”) or such other “signature guarantee program”
as may be determined by the Note Registrar in addition to, or in substitution
for, Stamp, all in accordance with the Exchange Act, and (ii) accompanied by
such other documents as the Indenture Trustee may require, and thereupon one or
more new Notes of authorized denominations and in the same aggregate principal
amount will be issued to the designated transferee or transferees. No service
charge will be charged for any registration of transfer or exchange of this
Note, but the transferor may be required to pay a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection with any
such registration of transfer or exchange.


 


Each Noteholder or Note Owner, by acceptance of a Note
or, in the case of a Note Owner, a beneficial interest in a Note covenants and
agrees that no recourse may be taken, directly or indirectly, with respect to
the obligations of the Issuer, the Owner Trustee, the Administrator or the
Indenture Trustee on the Notes or under the Indenture or any certificate or
other writing delivered in connection therewith, against (i) the Seller,
the Servicer, the Indenture Trustee, the Administrator or the Owner Trustee in
its individual capacity, (ii) any owner of a beneficial interest in the Issuer
or (iii) any partner, owner, beneficiary, agent, officer, director or employee
of the Seller, the Servicer, the Indenture Trustee, the Administrator or the
Owner Trustee in its individual capacity, any holder of a beneficial interest
in the Issuer, the Seller, the Servicer, the Owner Trustee, the Administrator
or the Indenture Trustee or of any successor or assign of the Seller, the
Servicer, the Indenture Trustee, the Administrator or the Owner Trustee in its
individual capacity, except as any such Person may have expressly agreed (it
being understood that the Indenture Trustee and the Owner Trustee have no such
obligations in their individual capacity) and except that any such partner,
owner or beneficiary shall be fully liable, to the extent provided by
applicable law, for any unpaid consideration for stock, unpaid capital
contribution or failure to pay any installment or call owing to such entity.


 


Prior to the due presentment for registration of
transfer of this Note, the Issuer, the Indenture Trustee and the Administrator
and any agent of the Issuer, the Indenture Trustee or the 


 


B-14

















 


Administrator may treat the Person in whose name this
Note (as of the day of determination or as of such other date as may be
specified in the Indenture) is registered as the owner hereof for all purposes,
whether or not this Note be overdue, and none of the Issuer, the Indenture
Trustee, the Administrator nor any such agent shall be affected by notice to
the contrary.


 


The Indenture permits, with certain exceptions as
therein provided, the amendment thereof and the modification of the rights and
obligations of the Issuer and the rights of the Holders of the Notes under the
Indenture at any time by the Issuer with the consent of the Noteholders
representing a majority of the Outstanding Amount of all Notes at the time
Outstanding.


 


The term “Issuer” as used in this Note includes any
successor to the Issuer under the Indenture.


 


The Issuer is permitted by the Indenture, under
certain circumstances, to merge or consolidate, subject to the rights of the
Indenture Trustee and the Noteholders under the Indenture.


 


The Notes are issuable only in registered form in
denominations as provided in the Indenture, subject to certain limitations
therein set forth.


 


This Note and the Indenture shall be construed in
accordance with the laws of the State of New York, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder and thereunder shall be determined in accordance with such
laws.


 


No reference herein to the Indenture and no provision
of this Note or of the Indenture shall alter or impair the obligation of the
Issuer, which is absolute and unconditional, to pay the principal of and
interest on this Note at the times, place, and rate, and in the coin or
currency herein prescribed.


 


Anything herein to the contrary notwithstanding,
except as expressly provided in the Indenture or the Basic Documents, neither
U.S. Bank Trust National Association in its individual capacity, any owner of a
beneficial interest in the Issuer, nor any of their respective partners,
beneficiaries, agents, officers, directors, employees or successors or assigns
shall be personally liable for, nor shall recourse be had to any of them for,
the payment of principal of or interest on, or performance of, or omission to
perform, any of the covenants, obligations or indemnifications contained in
this Note or the Indenture, it being expressly understood that said covenants,
obligations and indemnifications have been made by the Owner Trustee for the
sole purposes of binding the interests of the Owner Trustee in the assets of
the Issuer. The Holder of this Note by the acceptance hereof agrees that except
as expressly provided in the Indenture or the Basic Documents, in the case of
an Event of Default under the Indenture, the Holder shall have no claim against
any of the foregoing for any deficiency, loss or claim therefrom; provided,
however, that nothing contained herein shall be taken to prevent
recourse to, and enforcement against, the assets of the Issuer for any and all
liabilities, obligations and undertakings contained in the Indenture or in this
Note.


 


B-15

















 


ASSIGNMENT


 


Social Security or taxpayer I.D. or other identifying
number of assignee


 


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


	
   

  	
   

  
	
   

  	
  (name and address of
  assignee)

  
			



 


the within Note and all
rights thereunder, and hereby irrevocably constitutes and appoints, attorney,
to transfer said Note on the books kept for registration thereof, with full
power of substitution in the premises.


 


	
  Dated

  	
   

  	
  (1)

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Signature Guaranteed:

  



 






(1)  NOTE: The signature to this assignment must
correspond with the name of the registered owner as it appears on the face of
the within Note in every particular, without alteration, enlargement or any
change whatsoever.


 


B-16