Document:

Exhibit
4.5

 

EXECUTION
COPY

 

 

HOUSEHOLD FINANCE
CORPORATION,

as Master Servicer,

 

HOUSEHOLD
AUTOMOTIVE TRUST 2003-2,

as Issuer,

 

HOUSEHOLD AUTO
RECEIVABLES CORPORATION,

as Seller,

 

WELLS FARGO BANK
MINNESOTA, NATIONAL ASSOCIATION,

as Indenture Trustee,

 

U.S. BANK TRUST
NATIONAL ASSOCIATION,

as Owner Trustee

 

 

SERIES SUPPLEMENT

 

Dated as of
November 26, 2003

to the

 

INDENTURE

 

Dated as of
November 26, 2003

 

MASTER SALE AND
SERVICING AGREEMENT

 

Dated as of
November 26, 2003

 

and to the

 

AMENDED AND
RESTATED TRUST AGREEMENT

 

Dated as of
November 26, 2003

 

 

 

TABLE OF CONTENTS

 

	
  ARTICLE I
  CREATION OF THE NOTES

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 1.01.

  	
  DESIGNATION

  	
   

  
	
   

  	
  SECTION 1.02.

  	
  PLEDGE
  OF SERIES TRUST ESTATE.

  	
   

  
	
   

  	
  SECTION 1.03.

  	
  PAYMENTS
  AND COMPUTATIONS.

  	
   

  
	
   

  	
  SECTION 1.04.

  	
  DENOMINATIONS.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II DEFINITIONS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 2.01.

  	
  DEFINITIONS.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III
  DISTRIBUTIONS AND STATEMENTS TO NOTEHOLDERS; SERIES SPECIFIC COVENANTS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 3.01.

  	
  TRUST ACCOUNTS.

  	
   

  
	
   

  	
  SECTION 3.02.

  	
  RESERVE ACCOUNT.

  	
   

  
	
   

  	
  SECTION 3.03.

  	
  DISTRIBUTIONS.

  	
   

  
	
   

  	
  SECTION 3.04.

  	
  STATEMENTS
  TO NOTEHOLDERS.

  	
   

  
	
   

  	
  SECTION 3.05.

  	
  REPORTING
  REQUIREMENTS.

  	
   

  
	
   

  	
  SECTION 3.06.

  	
  COMPLIANCE
  WITH WITHHOLDING REQUIREMENTS

  	
   

  
	
   

  	
  SECTION 3.07.

  	
  SPECIAL
  COVENANTS AND ACKNOWLEDGEMENTS

  	
   

  
	
   

  	
  SECTION 3.08.

  	
  TAX
  CHARACTERIZATION.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV
  EVENTS OF DEFAULT; REMEDIES

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 4.01.

  	
  EVENTS OF
  DEFAULT.

  	
   

  
	
   

  	
  SECTION 4.02.

  	
  RIGHTS
  UPON EVENT OF DEFAULT

  	
   

  
	
   

  	
  SECTION 4.03.

  	
  REMEDIES.

  	
   

  
	
   

  	
  SECTION 4.04.

  	
  PRIORITIES.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V
  PREPAYMENT AND REDEMPTION

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 5.01.

  	
  OPTIONAL
  “CLEAN-UP” REDEMPTION

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SECTION 6.01.

  	
  RATIFICATION
  OF BASIC DOCUMENTS.

  	
   

  
	
   

  	
  SECTION 6.02.

  	
  COUNTERPARTS.

  	
   

  
	
   

  	
  SECTION 6.03.

  	
  GOVERNING LAW.

  	
   

  
	
   

  	
  SECTION 6.04.

  	
  AMENDMENTS
  WITHOUT CONSENT OF NOTEHOLDERS.

  	
   

  
	
   

  	
  SECTION 6.05.

  	
  AMENDMENTS
  WITH CONSENT OF THE NOTEHOLDERS.

  	
   

  
	
   

  	
  SECTION 6.06.

  	
  AUTHORITY
  TO REGISTER NOTES AND FILE REPORTS.

  	
   

  
	
   

  	
  SECTION 6.07.

  	
  AUTHORITY
  TO PERFORM DUTIES OF THE ISSUER.

  	
   

  
	
   

  	
  SECTION 6.08.

  	
  NOTICES.

  	
   

  
	
   

  	
  SECTION 6.09.

  	
  THIRD-PARTY
  BENEFICIARY

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Schedule I

  	
  Eligibility Criteria

  	
   

  
	
  Schedule II-A

  	
  Schedule of Receivables (New
  -HAFC)

  	
   

  
	
  Schedule II-B

  	
  Schedule of
  Receivables (New -HACC)

  	
   

  
	
  Schedule II-C

  	
  Schedule of
  Receivables (Warehouse Trust)

  	
   

  
	
  Exhibit
  A

  	
  Form of
  Master Servicer's Certificate

  	
   

  
	
  Exhibit B

  	
  Forms of Notes

  	
   

  
	
  Exhibit C

  	
  [Reserved]

  	
   

  
					

 

 

This Series Supplement,
dated as of November 26, 2003, is by and among Household Finance
Corporation, a Delaware corporation, as Master Servicer (the “Master
Servicer”), Household Automotive Trust 2003-2, a Delaware statutory trust,
as Issuer (the “Issuer” or the “Trust”), Household Auto
Receivables Corporation, a Nevada corporation, as Seller (the “Seller”),
Wells Fargo Bank Minnesota, National Association, a national banking
association, as trustee for the Noteholders (the “Indenture Trustee”)
and U.S. Bank Trust National Association, a national banking association, as
owner trustee (the “Owner Trustee”) for the Certificateholders.

 

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 November 26, 2003
between the Issuer and the Indenture Trustee and pursuant to Section 3.2
of the Amended and Restated Trust Agreement  (the “Trust Agreement”) dated as of
November 26, 2003 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 “Household Automotive Trust 2003-2, Series 2003-2 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 $159,000,000 (the “Class A-1 Notes”), Class A-2
Notes in an aggregate initial principal amount of $205,000,000 (the “Class
A-2 Notes”), Class A-3 Notes in an aggregate initial principal amount of
$190,000,000 (the “Class A-3 Notes”), and Class A-4 Notes in an
aggregate initial principal amount of $196,000,000 (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 “Household Automotive
Trust 2003-2, Series 2003-2 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, investment property, letter-of-credit
rights, letters of credit, money, minerals before extraction 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-A, Schedule II-B and Schedule II-C and all monies
paid or payable thereon or in respect thereof after the Cutoff Date (including
amounts due on or before the Cutoff Date but received by HAFC or any Affiliate
of HAFC that is the seller under a Master Receivables Purchase Agreement, HFC,
the Seller, the Master Servicer or the Issuer after the Cutoff 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 HAFC or any Affiliate of HAFC that
is the seller under a Master Receivables Purchase Agreement against Dealers
pursuant to Dealer Agreements or Dealer 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; (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 physical damage, loss, credit life or disability
insurance policies covering the related Financed Vehicles or Obligors,
including rebates of insurance premiums relating to such Receivables; (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 HAFC or any Affiliate
of HAFC that is the seller under a Master Receivables Purchase Agreement or
HFC, 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 Master Servicer, the Seller, HAFC or any Affiliate of HAFC
that is the seller under a Master Receivables Purchase Agreement 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 Master 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 Master 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

 

2

 

ability to the end that the interests of such parties, recognizing the
priorities of their respective interests, may be adequately and effectively
protected.

 

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 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 $100,000 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) 82% 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 Collected Funds 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.

 

3

 

“Basic Documents” means
this Series Supplement, the Master Sale and Servicing Agreement, the
Certificate of Trust, the Trust Agreement, the Insurance Agreement, the
Indemnification Agreement, the Indenture, the Master Receivables Purchase
Agreements, each Transfer Agreement related to the Owner 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, 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 or the Note Policy), 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 lesser 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.

 

4

 

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

 

“Class A-1 Scheduled
Maturity Date” means December 17, 2004.

 

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

 

“Class A-2 Scheduled
Maturity Date” means December 18, 2006.

 

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

 

“Class A-3 Scheduled
Maturity Date” means April 17, 2008.

 

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

 

“Class A-4 Scheduled
Maturity Date” means December 17, 2010.

 

“Closing Date” means
November 26, 2003.

 

“Collection Account”
means the Eligible Account created pursuant to Section 3.01, which
initially shall be account no. 0001038377, for further credit, account no.
15267700, reference Household Auto 2003-2 Collection Account at the Indenture
Trustee, ABA No. 121000248.

 

“Collected Funds” has the
meaning assigned to such term in the Master Sale and Servicing Agreement.

 

“Controlling Party” means
the Insurer, so long as no Insurer Default shall have occurred and be continuing
and the Indenture Trustee for the benefit of and acting solely at the direction
of the Noteholders, in the event an Insurer Default shall have occurred and be
continuing.

 

“Corporate Trust Office”
means, (i) with respect to the Owner Trustee, the principal corporate trust
office of the Owner Trustee, which at the time of execution of this Series
Supplement is 300 Delaware Avenue, 8th Floor, Wilmington Delaware 19801, and
(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 MAC
N9311-161 Sixth Street and Marquette Avenue, Minneapolis, Minnesota 55479.

 

“Cutoff Date” means the
close of business on November 16, 2003.

 

“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 Master 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 on January 19, 2004.

 

“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 Master 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 and the Insurer, 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.

 

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

 

“Final Scheduled
Distribution Date” means December 17, 2010.

 

“HACC” means Household
Automotive Credit Corporation, a Delaware corporation.  For the avoidance of doubt, HACC is an
Affiliate of HAFC.

 

“HAFC” means Household
Automotive Finance Corporation, a Delaware corporation.

 

“HFC” means Household
Finance Corporation.

 

“Indemnification
Agreement” means the indemnification agreement dated as of November 18,
2003, among HFC, the Seller, the Insurer and the Underwriter.

 

“Indenture” means the
indenture dated as of November 26, 2003 between the Issuer and Wells Fargo
Bank Minnesota, National Association, as indenture trustee, as supplemented by
this Series Supplement.

 

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

 

“Insurance Agreement”
means the Insurance Agreement, dated as of November 26, 2003, among the
Insurer, HAFC, HACC, the Seller and HFC.

 

“Insured Principal Balance
Shortfall” shall mean, with respect to a Distribution Date, the positive
excess, if any, of the Aggregate Note Principal Balance with respect to the
Class A Notes (after giving effect to the distribution of the Class A Minimum
Principal Distributable Amount pursuant to Section 3.03(a)(iv) on such
Distribution Date and after making

 

6

 

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.

 

“Insurer” means MBIA
Insurance Corporation, a New York stock insurance company, or any successor
thereto, as issuer of the Note Policy. 
The Insurer shall be the Support Provider for the Series 2003-2 Notes.

 

“Insurer Default” means
the occurrence and continuance of any of the following events:

 

(a)                                  the
Insurer shall have failed to make a payment required under the Note Policy in
accordance with its terms;

 

(b)                                 the
Insurer shall have (i) filed a petition or commenced any case or proceeding
under any provision or chapter of the United States Bankruptcy Code or any
other similar federal or state law relating to insolvency, bankruptcy,
rehabilitation, liquidation or reorganization, (ii) made a general assignment
for the benefit of its creditors, or (iii) had an order for relief entered
against it under the United States Bankruptcy Code or any other similar federal
or state law relating to insolvency, bankruptcy, rehabilitation, liquidation or
reorganization which is final and nonappealable; or

 

(c)                                  a
court of competent jurisdiction, the New York Department of Insurance or other
competent regulatory authority shall have entered a final and nonappealable
order, judgment or decree (i) appointing a custodian, trustee, agent or
receiver for the Insurer or for all or any material portion of its property or
(ii) authorizing the taking of possession by a custodian, trustee, agent or
receiver of the Insurer (or the taking of possession of all or any material
portion of the property of the Insurer).

 

“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 HAFC and the Seller, as
such agreement may be amended or supplemented from time to time, (ii) the
Master Receivables Purchase Agreement dated as of June 24, 2002, between
the Seller and HACC, as such agreement may be amended or supplemented from time
to time, (iii) the Master Receivables Purchase Agreement dated as of
August 8, 2002, between the Seller and HACC, as such agreement may be
amended or supplemented from time to time and (iv) the Master Receivables
Purchase Agreement dated as of November 18, 2002, between the Seller and
HAFC, as such agreement may be amended or supplemented from time to time.

 

“Master Sale and
Servicing Agreement” means the Master Sale and Servicing Agreement dated as of
November 26, 2003, among the Issuer, the Seller, the Master Servicer and
the Indenture Trustee, as such agreement may be amended or supplemented from
time to time.

 

7

 

“Master 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 Master Servicer to the Insurer, the Indenture Trustee and the
Owner Trustee pursuant to the Master Sale and Servicing Agreement.

 

“Note Policy” means the
financial guarantee insurance policy issued by the Insurer to the Indenture Trustee
for the benefit of the Noteholders.

 

“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:  1.14%

Class A-2 Notes:  1.56%

Class A-3 Notes:  2.31%

Class A-4 Notes:  3.02%

 

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.  The amount of interest payable
on the Class A-2, Class A-3 and Class A-4 Notes for the initial Interest
Period, however, will be computed on the basis of a 360-day year and the actual
number of days elapsed in the initial Interest Period.

 

“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
Cutoff Date.

 

“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.

 

8

 

“Premium” has the meaning
specified in the Insurance Agreement.

 

“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
Insurer, the Indenture Trustee, the Owner Trustee and the Master 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 (without consideration of the Note
Policy).

 

“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 initially shall be account no. 0001038377 for
further credit, account no. 15267701,
reference Household Auto 2003-2 Reserve Account at the Indenture Trustee, ABA
No. 121000248.

 

“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 Master 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 Household Finance Corporation and the Seller.

 

9

 

“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, collectively, the schedules of all retail installment sales
contracts originally held as part of the Series Trust Estate attached hereto as
Schedule II-A, Schedule II-B and Schedule II-C.

 

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

 

“Securities” means the
Notes and the Certificates.

 

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

 

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

 

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

 

“Servicing Fee” means,
(i) with respect to the initial Collection Period, the fee payable to the Master Servicer for servicing rendered
during such Collection Period, which shall be equal to $1,929,506.85, and (ii)
with respect to any other Collection Period, the fee payable to the Master
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 Accounting Date
immediately preceding 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.

 

“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) $17,151,171.99 (2% of the Pool Balance as of the
Cutoff Date) and (ii) the Aggregate Note Principal Balance; provided, however, that
(A) upon the occurrence and during the continuance of a Portfolio
Performance Event (as defined in the Insurance Agreement), the Targeted Reserve
Account Balance shall equal the greater of (x) 6% of the outstanding Pool
Balance as of the end of the related Collection Period and (y) 4% of the
Pool Balance as of the Cutoff Date, and (B) upon the occurrence and during
the continuance of an Event of Default (as defined in the Insurance Agreement),
the Targeted Reserve Account Balance shall equal the Aggregate Note Principal
Balance.

 

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

 

10

 

“Trust Agreement” means
the Trust Agreement, dated as of November 19, 2003, between the Seller and
the Owner Trustee, as amended and restated as of November 26, 2003 and as
supplemented by this Series Supplement.

 

“Underwriter” means
Credit Suisse First Boston LLC, 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
Indenture Trustee, for the benefit of the Secured Parties, shall establish and
maintain an account (the “Collection Account”) as a segregated trust
account in the Indenture Trustee's corporate trust department, identified as
the “Collection Account for Household Automotive Trust 2003-2, in trust for the
Secured Parties.”  The Indenture Trustee
shall make or permit withdrawals from the Collection Account only as provided
in this Series Supplement.

 

(b)                                 The
Indenture Trustee, for the benefit of the Secured Parties, shall establish and
maintain an account (the “Reserve Account”) as a segregated trust
account in the Indenture Trustee's corporate trust department, identified as
the “Reserve Account for Household Automotive Trust 2003-2, in trust for the
Secured Parties.”  The Indenture Trustee
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
Indenture Trustee, as applicable, 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 Indenture Trustee in Eligible Investments selected in writing by the Master
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 Master Sale and Servicing Agreement shall
apply to the investment of funds in the Trust Accounts to the same extent as
they apply to the Collection Account.

 

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.

 

11

 

SECTION 3.03.                 Distributions.

 

(a)                                  On
each Distribution Date, the Indenture Trustee shall (based solely on the
information contained in the Master 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 Master Servicer, if HFC is no longer acting as Master Servicer, the
Servicing Fee for the related Collection Period;

 

(ii)                                  to
the Indenture Trustee and the Owner Trustee, any accrued and unpaid trustees'
fees and any unreimbursed costs and expenses (including to any successor Master
Servicer, reasonable transition expenses in an amount not to exceed $100,000 per
servicing transfer and provided that, with respect to any extraordinary costs
and expenses, the Insurer (for so long as it is the Controlling Party) shall
have consented to the activity for which such extraordinary costs and expenses
were incurred) (in each case, to the extent such fees have not been previously
paid by the Master Servicer);

 

(iii)                               to the Class A
Noteholders, the Class A Interest Distributable Amount;

 

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

 

(v)                                 to
the Insurer, any amounts owing to the Insurer under the Insurance Agreement
that have not yet been paid, including, without limitation, the Premium (as
defined in the Insurance Agreement);

 

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

 

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

 

(viii)                        if HFC is acting as the Master
Servicer, the Servicing Fee for the related Collection Period (unless the
Master Servicer has retained such amount in accordance with Section 4.8 of
the Master Sale and Servicing Agreement) or if a successor Master 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 (vii) 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

 

12

 

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 Master 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), (iii) and (v) 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 Indenture
Trustee 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); 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; and third in accordance with
Section 3.03(a)(v), shall cause the amounts specified in
Section 3.03(a)(i)-(iii) and (a)(v) to be paid in full and such Principal
Balance Shortfall to be eliminated.

 

(c)                                  If
on a Determination Date, the Master 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 together with amounts to
be distributed pursuant to Section 3.03(b) is less than the sum of the
amounts required to be distributed pursuant to clauses (i) through (iii) of
paragraph (a) above on such Distribution Date or (ii) there exists an Insured
Principal Balance Shortfall on such Distribution Date, the Indenture Trustee
shall present a notice for payment to the Insurer pursuant to the terms of the
Note Policy to (A) in the case of (i), ensure timely payment in full on such Distribution
Date of the Class A Interest Distributable Amount for such Distribution Date
and (B) in the case of (ii), reduce the outstanding principal balance of the
Class A Notes on such Distribution Date to the extent necessary to eliminate
the Insured Principal Balance Shortfall for such Distribution Date.  If on the Determination Date immediately
preceding a Scheduled Maturity Date, the Master Servicer's Certificate
delivered with respect to such Scheduled Maturity Date indicates that Available
Funds with respect to such Distribution Date when distributed in accordance
with Section 3.03(a), together with amounts to be distributed pursuant to
Section 3.03(b) are insufficient to (A) pay the outstanding principal
balance of the Class A-1 Notes on the Class A-1 Scheduled Maturity Date, (B)
pay the outstanding principal balance of the Class A-2 Notes on the Class A-2
Scheduled Maturity Date, (C) pay the outstanding principal balance of the Class
A-3 Notes on the Class A-3 Scheduled Maturity Date or (D) pay the outstanding
principal balance of the Class A-4 Notes on the Class A-4 Scheduled Maturity
Date, the Indenture Trustee shall present a notice for payment to the Insurer
pursuant to the terms of the Note Policy to ensure timely payment in full of
all principal with respect to (A) the Class A-1 Notes on the Class A-1
Scheduled Maturity Date, (B) the Class A-2 Notes on the Class A-2 Scheduled
Maturity Date, (C) the Class A-3 Notes on the Class A-3 Scheduled Maturity Date
and (D) the Class A-4 Notes on the Class A-4 Scheduled Maturity Date.  Amounts paid by the Insurer to the Indenture
Trustee pursuant to a notice for payment submitted under this paragraph shall
be paid by the Indenture Trustee to the Noteholders on the related Distribution
Date.  The Indenture Trustee shall
enforce on behalf of the Noteholders the

 

13

 

obligations of the Insurer under the Note Policy.  Notwithstanding any other provision of this
Series Supplement or any other Basic Document, the Noteholders are not entitled
to institute proceedings directly against the Insurer.

 

(d)                                 If
the Indenture Trustee has received a Final Order (as defined in the Note
Policy) that any amount guaranteed by the Note Policy paid on the Notes has
been avoided in whole or in part as a preference payment under applicable
bankruptcy law, the Indenture Trustee shall so notify the Insurer, shall comply
with the provisions of the Note Policy to obtain payment by the Insurer of such
avoided payment, and shall, at the time it provides notice to the Insurer,
notify the Noteholders by mail that, in the event that any Noteholder's payment
is so recoverable, such Noteholder will be entitled to payment pursuant to the
terms of the Note Policy.  Pursuant to
the terms of the Note Policy and in accordance with the Final Order (as defined
in the Note Policy), the Insurer will make such payment on behalf of the
Noteholder to the receiver, conservator, debtor-in-possession or trustee in
bankruptcy named in the Final Order (as defined in the Note Policy) and not to
the Indenture Trustee or any Noteholder directly (unless a Noteholder has
previously paid such payment to the receiver, conservator, debtor-in-possession
or trustee in bankruptcy, in which case the Insurer will make such payment to
the Indenture Trustee for distribution to such Noteholder upon proof of such
payment reasonably satisfactory to the Insurer).

 

(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 Master 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 Indenture Trustee, the Master Servicer shall instruct and cause such
institution to transfer the amounts to be distributed therefrom in accordance
with Section 3.03(b) to the Indenture Trustee 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

 

14

 

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 Master Servicer shall deliver, and
cause to be delivered via access to its or its Affiliate's web-site address, to
the Indenture Trustee and the Insurer (with a copy to the Rating Agencies) for
the Indenture Trustee to forward to each Noteholder of record, and to each
Certificateholder of record, 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 principal of each Class of Notes;

 

(ii)                                  the
amount of such distribution allocable to interest on or with respect to 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 (i) above;

 

(iv)                              the
Class A Interest Carryover Shortfall, if any, and the change in such amount
from the preceding statement;

 

(v)                                 the
positive excess, if any, of the Aggregate Note Principal Balance over the Pool
Balance after giving effect to payments allocated to principal reported under
(i) above and the change in such amount from the preceding statement;

 

(vi)                              the
amount of the Servicing Fee paid to the Master Servicer with respect to such
Collection Period; and

 

(vii)                           the Targeted Reserve Account
Balance and the amount on deposit in the Reserve Account at the end of such
Distribution Date.

 

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

 

15

 

(b)                                 The
Indenture Trustee may, but is not obligated to, make available to the parties
hereto and to each of the Noteholders, via the Indenture Trustee'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 Indenture Trustee may have in
its possession, but only with the use of a password provided by the Indenture
Trustee.

 

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

 

SECTION 3.05.                 Reporting Requirements.

 

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

 

(b)                                 By
January 31 of each calendar year, commencing January 31, 2004, the
Master Servicer on behalf of the Issuer shall prepare and distribute to 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 Indenture Trustee, the Indenture Trustee shall mail to each
Noteholder and the Insurer 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
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.

 

16

 

(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.                 Tax Characterization.

 

It is the intent of the
parties hereto that, for all Federal, state, local and foreign taxes, the Notes
will be evidence of indebtedness.  To
the extent permitted by law, the parties hereto, and each owner of a beneficial
interest in the Notes by acceptance of such interest, agrees to treat the Notes
for purposes of all Federal, state, local and foreign taxes as indebtedness
secured by the Series Trust Estate.

 

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 or the Insurer,
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

 

17

 

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 to the
Issuer and the Indenture Trustee by the Holders of at least 25% of the Outstanding
Amount of the Notes or the Insurer, 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 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, (i) so long as no
Insurer Default has occurred and is continuing, the Indenture Trustee, if so
instructed by the Insurer shall and (ii) in the event an Insurer Default shall
have occurred and be continuing, the Indenture Trustee in its discretion 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 Indenture Trustee, may rescind and annul such declaration and its
consequences if:

 

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

 

18

 

(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.

 

SECTION 4.03.                 Remedies.

 

If an Event of
Default shall have occurred and be continuing, or, if at such time as there are
no Notes Outstanding there remain sums due to the Insurer pursuant to the
Insurance Agreement (a) so long as no Insurer Default has occurred and is
continuing, the Indenture Trustee, if so instructed by the Insurer, subject to
Section 11.17 of the Indenture, shall and (b) in the event an Insurer
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

 

19

 

(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 Insurer (if the
Insurer is the Controlling Party) or, if an Insurer Default shall have occurred
and be continuing, 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 or at the direction of the
Insurer (for so long as the Insurer is the Controlling Party), or the Holders
of 100% of the Outstanding Amount of the Notes, if the Insurer is not the
Controlling Party.

 

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.

 

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), shall be applied by the Indenture Trustee on the date of
distribution in the following order of priority:

 

FIRST:            amounts
due and owing and required to be distributed to the Master Servicer, if HFC is
no longer acting as Master Servicer, the Owner Trustee and the Indenture
Trustee, respectively, pursuant to priorities (i) and (ii) of
Section 3.03(a) and not previously distributed, in the order of such
priorities and without preference or priority of any kind within such
priorities;

 

SECOND:        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;

 

THIRD:            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;

 

FOURTH:        to
the Insurer for amounts due and unpaid under the Insurance Agreement pursuant
to priority (v) of Section 3.03(a);

 

20

 

FIFTH:            to
the Master Servicer, if HFC is acting as Master Servicer, for any Servicing
Fees then due and unpaid; and

 

SIXTH:            to
the Certificateholders, any remaining Available Funds.

 

(b)                                 The
Indenture Trustee 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 Indenture Trustee
shall mail to the Noteholders a notice that states the record date, the
distribution date and the amount to be paid.

 

ARTICLE V

PREPAYMENT AND REDEMPTION

 

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 Master Servicer and HAFC on behalf of the Issuer, shall each have
the option to redeem the outstanding Notes at a redemption price (the “Redemption
Price”) which is not less than the then Aggregate Note Principal Balance,
plus all accrued and unpaid interest thereon and all fees and other amounts
owing to the Indenture Trustee, the Owner Trustee and the Master Servicer (if
other than HFC) under the Related Documents and the Insurer under the Insurance
Agreement.  The Master Servicer and
HAFC, on behalf of the Issuer, shall give the Master Servicer (if other than
HFC), the Insurer, the Indenture Trustee, and the Owner Trustee at least 10
days irrevocable prior written notice of the date on which the Master Servicer
or HAFC, 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 Master Servicer or HAFC,
as applicable, shall deposit such amount in the Collection Account in
immediately available funds for distribution pursuant to Section 3.03
against the presentment of the Notes for cancellation.  Such purchase option is subject to payment
in full of the Redemption Price.

 

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.

 

21

 

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 but with the prior written consent of the
Insurer (for so long as it is the Controlling Party) and with prior written
notice to the Rating Agencies, as evidenced to the Indenture Trustee and the
Issuer, when authorized by an Issuer Order, at any time and from time to time,
the parties hereto may enter into one or more amendments hereto, in form
satisfactory to the Indenture Trustee, the Owner Trustee and the Insurer (so
long as no Insurer Default has occurred and is continuing), 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 or the Insurer;

 

(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

 

22

 

(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 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 and the Indenture Trustee, when
authorized by an Issuer Order, may, also without the consent of any of the
Noteholders but with the prior written consent of the Insurer (for so long as
it is the Controlling Party) and with prior written notice to the Rating
Agencies by the Issuer, as evidenced to the Indenture Trustee, enter into an
amendment hereto in form satisfactory to the Insurer (for so long as it is the
Controlling Party) for the purpose of adding any provisions to, or changing in
any manner or eliminating any of the 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 or the Insurer.

 

SECTION 6.05.                 Amendments With Consent of the
Noteholders.

 

Except as otherwise
provided herein, the Issuer and the Indenture Trustee, when authorized by an
Issuer Order provided by the Master Servicer, also may, with prior written
notice to the Rating Agencies and with the consent of the Insurer (so long as
no Insurer Default has occurred and is continuing) and 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 and the Indenture Trustee, 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 materially and adversely affect the Insurer
without the prior written consent of the Insurer and 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;

 

23

 

(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;

 

(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 and the Indenture Trustee of an amendment to this
Series Supplement, the Indenture Trustee shall mail to the Noteholders a notice
setting forth in general terms the substance hereof.  Any failure of the Indenture Trustee 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 shall be
entitled to receive and rely upon an Opinion of Counsel stating that the
execution of such amendment is authorized or permitted by this Series
Supplement.  The Indenture Trustee may,
but shall not be obligated to, enter into any such amendment which affects the
Indenture Trustee's own rights, duties or immunities under this Series Supplement.

 

24

 

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.

 

SECTION 6.06.                 Authority to Register Notes and
File Reports.

 

The Issuer hereby
authorizes the Seller 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 Master 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 Master 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 Master
Servicer.

 

(b)                                 The
Issuer hereby appoints the Master 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 Master Servicer hereby
accepts such appointment.

 

SECTION 6.08.                 Notices.

 

All demands, notices and
communications upon or to the Seller, the Master Servicer, the Owner Trustee,
the Insurer or the Indenture Trustee 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 Household Auto Receivables Corporation, 1111 Town Center Drive, Las
Vegas, Nevada 89134, with a copy to Household Finance Corporation, 2700 Sanders
Road, Prospect Heights, Illinois, 60070, Attn: Treasurer (Telecopier # (847)
205-7538), (b) in the case of the Master Servicer, if Household Finance
Corporation is the Master Servicer, to Household Finance Corporation, 2700
Sanders Road, Prospect Heights, Illinois 60070,  Attention: Treasurer, Telecopier # (847) 205-7538, (c) in the
case of the Issuer or the Owner Trustee, at the Corporate Trust Office of the
Owner Trustee, Telecopier # (302) 622-8166, with a copy to U.S. Bank Corporate
Trust Services, 400 North Michigan Avenue, 2nd Floor, Chicago, Illinois 60611,
Telecopier # (302) 836-6701, (d) in the case of the Insurer, to MBIA Insurance
Corporation, 113 King Street, Armonk, New York

 

25

 

10504, Attention: Insured Portfolio Management - Structured Finance
(IPM-SF), Household Automotive Trust 2003-2, Telecopier # (914) 765-3810, and
(e) in the case of the Indenture Trustee, at the Corporate Trust Office,
Attention: Asset Backed Administration, Telecopier # (612) 667-3539.  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.

 

SECTION 6.09.                 Third-Party Beneficiary.

 

The parties hereto agree
that the Insurer is a third-party beneficiary hereof and the Insurer shall be
entitled to rely upon and directly enforce the provisions of this Series
Supplement.  Nothing in this Series
Supplement, express or implied, shall give to any Person, other than the
parties hereto and their successors hereunder and the Insurer and its successors
any benefit or any legal or equitable right, remedy or claim under this Series
Supplement.

 

26

 

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.

 

	
   

  	
  HOUSEHOLD FINANCE CORPORATION,

  as Master Servicer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ B. B. Moss, Jr.

  	
   

  
	
   

  	
  Name:  B.B. Moss, Jr.

  
	
   

  	
  Title:  Vice President and Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HOUSEHOLD AUTOMOTIVE TRUST 2003-2,

  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

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HOUSEHOLD AUTO RECEIVABLES

  CORPORATION,

  as Seller

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Steven H. Smith

  	
   

  
	
   

  	
  Name:  Steven H. Smith

  
	
   

  	
  Title:  Vice President and Assistant Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WELLS FARGO BANK MINNESOTA,

  NATIONAL ASSOCIATION,
  as Indenture Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Joe Nardi

  	
   

  
	
   

  	
  Name:
  Joe Nardi

  
	
   

  	
  Title:  Vice President

  

 

 

	
   

  	
  U.S. BANK TRUST NATIONAL ASSOCIATION,

  as Owner Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Patricia M. Child

  	
   

  
	
   

  	
  Name:
  Patricia M. Child

  
	
   

  	
  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 HAFC (or any predecessor or Affiliate of HAFC,
as applicable) with the consumer or was originated by a Dealer for the retail sale
of a Financed Vehicle in the ordinary course of such Dealer's business and
(A) in the case of a receivable originated by HAFC (or any predecessor or
Affiliate of HAFC, as applicable), 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 HAFC (or any
predecessor or Affiliate of HAFC, as applicable) from such Dealer under an
existing Dealer Agreement with HAFC (or any predecessor or Affiliate of HAFC,
as applicable), and (C) in the case of a Dealer originated receivable or a
receivable originated by HAFC (or any predecessor or Affiliate of HAFC, as
applicable) such receivable was purchased (x) by HARC pursuant to the
terms of the Master Receivables Purchase Agreements, (y) by the Issuer
pursuant to the Master Sale and Servicing Agreement; and each Receivable was
validly assigned (1) if Dealer originated, by such Dealer to HAFC (or any
predecessor or Affiliate of HAFC, as applicable), (2) by HAFC (or any
predecessor or Affiliate of HAFC, as applicable) to HARC pursuant to the terms
of the Master Receivables Purchase Agreements, (3) by HARC to the Issuer
pursuant to the Master Sale and Servicing Agreement and (4) 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, the Obligor, HAFC or HACC, 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 Soldiers' and Sailors'
Civil Relief Act of 1940 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 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

 

SCH-I-1

 

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 HAFC (or of any predecessor or Affiliate
of HAFC, as applicable) applicable thereto and that has been serviced in material
conformity with procedures applicable to receivables that are serviced by the
Master 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 Soldiers' and Sailors' Civil Relief Act of 1940, as amended; 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 Cutoff 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 $40,000, (iv) had an
Annual Percentage Rate of at least 8.50% and not more than 24.95%, (v) was not
more than 30 days contractually delinquent, (vi) no funds have been advanced by
the Issuer, the Master Servicer, HAFC, any predecessor or Affiliate of HAFC,
any Dealer, 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 HAFC (or any predecessor or Affiliate of HAFC, as applicable)
will have caused the portions of HAFC's (or any HAFC predecessor's or HAFC
Affiliate's, as applicable) and the Master Servicer's servicing records
relating to such Receivable to be clearly and unambiguously marked to show that
such Receivable has been transferred by HAFC (or any predecessor or Affiliate
of HAFC, as applicable) to HARC in accordance with the terms of the Master
Receivables Purchase Agreements and by HARC to the Issuer pursuant to the
Master 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 HAFC (or
any predecessor or Affiliate of HAFC, as applicable) to HARC, the Insurer, the

 

SCH-I-2

 

Master 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;

 

(k)                                  which
constitutes 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 such Receivable,
(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 showing HAFC (or any predecessor or Affiliate of HAFC, as
applicable) as first lienholder and (d) an original credit application 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 HAFC (or any predecessor or Affiliate of HAFC, as applicable)
as in effect at the time of purchase is in the possession of the Master
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) HAFC (or any predecessor or Affiliate of HAFC, as applicable) by a
Dealer, (ii) HARC by HAFC (or any predecessor or Affiliate of HAFC, as
applicable) pursuant to the terms of the Master Receivables Purchase
Agreements, (iii) the Issuer by HARC pursuant to the terms of the Master
Sale and Servicing Agreement and (iv) the Indenture Trustee by the Issuer
pursuant to the terms of the Indenture. 
No Dealer has a participation in, or other right to receive, proceeds of
any Receivable.  Neither HAFC (nor any
predecessor or Affiliate of HAFC, 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 or the
related Dealer Agreement or Dealer Assignment or to payments due under such
Receivable;

 

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

 

SCH-I-3

 

(r)                                    which
is secured by an enforceable and perfected first priority security interest in
the Financed Vehicle in favor of HAFC (or any predecessor or Affiliate of HAFC,
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 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;

 

(t)                                    as
to which HAFC (or any predecessor or Affiliate of HAFC, 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, the
Insurer or the Certificateholders in such Receivable or the proceeds thereof;

 

(u)                                 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;

 

(v)                                 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;

 

(w)                               as
to which there has been no default, breach, violation or event permitting acceleration
under the terms of such Receivable (other than payment delinquencies permitted
by clause (g)(iv) above) and no condition exists or event has occurred and is
continuing that with notice, the lapse of time or both would constitute a
default, breach, violation or event permitting acceleration under the terms of
such Receivable, and there has been no waiver of any of the foregoing, and with
respect to which the related Financed Vehicle had not been repossessed;

 

(x)                                   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
HAFC (or any predecessor or Affiliate of HAFC, 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 HAFC
(or any predecessor or Affiliate of HAFC, 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;

 

(y)                                 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

 

SCH-I-4

 

Certificate will be received within 180 days of the Closing Date and
will show, HAFC (or any predecessor or Affiliate of HAFC, as applicable) named
as the original secured party under such Receivable and, accordingly, HAFC (or
any predecessor or Affiliate of HAFC, 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,
HAFC has either applied for or received written evidence from the related
Dealer or the Obligor that such Lien Certificate showing HAFC (or any
predecessor or Affiliate of HAFC, 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 HAFC (or any predecessor or Affiliate of
HAFC, as applicable) named as the original secured party under the related
Receivable;

 

(z)                                   as
to which no selection procedures adverse to the Noteholders, the Insurer or the
Certificateholder have been utilized in selecting such Receivable from all
other similar Receivables purchased by HAFC or any predecessor or Affiliate of
HAFC;

 

(aa)                            as to
which, as of the Cutoff Date, no Obligor had been identified on the records of
HAFC (or any predecessor or Affiliate of HAFC, as applicable) as being the
subject of a current bankruptcy proceeding; and

 

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

 

SCH-I-5

 

Schedule II-A

 

Schedule of
Receivables (New - HAFC) on File in Electronic Form

at Dewey Ballantine LLP

 

 

Schedule II-B

Schedule of Receivables (New - HACC) on File in Electronic Form

at Dewey Ballantine LLP

 

 

Schedule II-C

Schedule of Receivables (Warehouse Trust) on File in Electronic Form

at Dewey Ballantine LLP

 

 

Exhibit A

 

Form of Master
Servicer's Certificate

 

 

MASTER SERVICER'S
CERTIFICATE

(Delivered pursuant to Section 4.9

of the Master Sale and Servicing Agreement)

 

HOUSEHOLD FINANCE
CORPORATION,

Master Servicer

HOUSEHOLD AUTO RECEIVABLES CORPORATION

 

HOUSEHOLD AUTOMOTIVE
TRUST 2003-2

Class A Notes

 

1.  This
Certificate relates to the Distribution Date occurring on

 

2.  Series
2003-2 Information

 

(a)  The amount
of Collected Funds with respect to the Collection Period was equal to

 

(b)  The amount
of Available Funds with respect to the Collection Period was equal to

 

(c)  The  Liquidated Receivables for the Collection
Period was equal to

 

(d)  Net
Liquidation Proceeds for the Collection Period was equal to

 

(e)  The Pool
Balance at the beginning of the Collection Period was equal to

 

(f)  The Pool
Balance on the last day of the Collection Period was equal to

 

(g)  The aggregate outstanding  balance of the Receivables which were one
payment delinquent as of the close of business on the last day of the
Collection Period with respect to such Distribution Date was equal to

 

(h)  The aggregate outstanding  balance of the Receivables which were two
payments delinquent as of the close of business on the last day of the
Collection Period with respect to such Distribution Date was equal to

 

(i)  The aggregate outstanding  balance of the Receivables which were three
or more payments delinquent as of the close of business on the last day of the

 

 

Collection Period with
respect to such Distribution Date was equal to

 

(j)  The
Servicing Fee paid on the Distribution Date was equal to

 

(k)  The
Aggregate Note Principal Balance immediately prior to the Distribution Date was
equal to

 

(l)  The
Aggregate Optimal Note Principal Balance for the Distribution Date was equal to

 

(m)  The
Optimal Principal Distributable Amount for the Distribution Date was equal to

 

(n)  The Class
A Minimum Principal Distributable Amount for the Distribution Date was equal to

 

(o)  The Class
A Additional Principal Distributable Amount for the Distribution Date was equal
to

 

(p)  The
Aggregate Note Principal Balance as of the Distribution Date was equal to

 

(q)  The
Reserve Account Balance for the Distribution Date

 

(r)  The
Targeted Reserve Account Balance was equal to

 

(s)  The
Reserve Account Shortfall Amount for the Distribution Date

 

(t)  The amount
on deposit in the Reserve Account after distributions was equal to

 

(u)  The amount on deposit in the Reserve Account
as a percentage of the Pool Balance on the Distribution Date was equal to

 

(v)   The
ending Certificate Balance was equal to

 

(w)  The ending
Certificate balance as a percentage of the Pool Balance on the

Distribution Date was equal to

 

(x)  The
weighted average coupon (WAC) was equal to

 

(y)  The
weighted average remaining maturity (WARM) was equal to

 

3.  Noteholder
Information

(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.   Accrual
convention

4.   Days in
Interest Period

5.   Class A-1
interest due - current period

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

7.   Class A-1
interest paid

8.   Class A-1
interest paid by Insurer

9.   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.   Accrual
convention

4.   Days

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
interest paid by Insurer

9.   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

 

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.   Accrual
convention

4.   Days

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
interest paid by Insurer

9.   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.   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
interest paid by Insurer

9.   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

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

 

 

Exhibit B

 

Forms of Notes

 

 

Exhibit B

 

Forms of Notes

 

	
  REGISTERED

  	
   

  	
  $                        

  
	
  No.                

  	
   

  	
   

  

 

SEE REVERSE FOR
CERTAIN DEFINITIONS

 

CUSIP
NO.                        

 

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.

 

HOUSEHOLD AUTOMOTIVE TRUST 2003-2

 

CLASS [A-1]
       % NOTE

 

Household Automotive Trust 2003-2, 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
                                    
payable on each Distribution Date in an amount equal to the result obtained by
multiplying (i) a fraction the numerator of which is
$                 
and the denominator of which is $                 
by (ii) the aggregate amount, if any, payable from Available Funds in respect
of principal on the Class
           Notes pursuant to
the Indenture; provided, however, that the entire unpaid
principal amount of this Note shall be due and payable on
               
(the “Class           
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 November 26, 2003.  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.

 

B-1

 

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.

 

The Notes are entitled to the benefits of a financial
guarantee insurance policy (the “Note Policy”) issued by MBIA Insurance
Corporation (the “Insurer”), pursuant to which the Insurer has unconditionally
guaranteed timely payment of interest, payment of any Insured Principal Balance
Shortfall and ultimate payment of principal due on the Notes, as more fully set
forth in the Indenture referred to on the reverse hereof and the related Series
Supplement.

 

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 Indenture Trustee 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: November 26, 2003

  	
  HOUSEHOLD AUTOMOTIVE
  TRUST 2003-2

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  U.S. BANK TRUST
  NATIONAL 

  
	
   

  	
  ASSOCIATION , not in
  its individual capacity but

  solely as Owner Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
					

 

B-3

 

INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION

 

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

 

	
  Date:  November 26, 2003

  	
  WELLS FARGO BANK MINNESOTA,

  NATIONAL ASSOCIATION, not in its individual

  capacity but solely as Indenture Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  by

  	
   

  	
   

  
	
   

  	
  Authorized Signer

  

 

B-4

 

[REVERSE OF NOTE]

 

This Note is one of a duly authorized issue of Notes
of the Issuer, designated as its Class
                      
          % Notes (herein
called the “Class           
Notes”), all issued under an Indenture dated as of November 26, 2003 (such
indenture, as supplemented or amended, is herein called the “Indenture”),
between the Issuer and Wells Fargo Bank Minnesota, National Association, as
indenture trustee (the “Indenture Trustee”, which term includes any successor
Indenture Trustee 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 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
           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 January
17, 2004.  The term “Distribution Date”
shall be deemed to include the Class
           Scheduled Maturity
Date.

 

As described above, the entire unpaid principal amount
of this Note shall be due and payable on the Class
           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, at the direction of the Insurer (for so
long as it is the Controlling Party) or, if the Insurer is not the Controlling
Party, 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
           Notes shall be
made pro rata to the Class           
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 Indenture
Trustee, 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 Indenture Trustee's principal Corporate Trust Office or at the office of
the Indenture Trustee's agent appointed for such purposes located in
Minneapolis, Minnesota.

 

The Issuer shall pay interest on overdue installments
of interest at the Class
           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 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 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 or the Owner Trustee in its individual capacity, any
holder of a beneficial interest in the Issuer, the Seller, the Servicer, the
Owner Trustee or the Indenture Trustee or of any successor or assign of the
Seller, the Servicer, the Indenture Trustee 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 Insurer and
any agent of the Issuer, the Indenture Trustee or the Insurer may treat the
Person in whose name this Note (as of the day of determination or as of

 

B-6

 

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 Insurer 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 Insurer (for so
long as it is the Controlling Party) and 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

  	
   

  	
  $                       

  
	
  No.             

  	
   

  	
   

  

 

SEE REVERSE FOR
CERTAIN DEFINITIONS

 

CUSIP NO.
                           

 

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.

 

HOUSEHOLD AUTOMOTIVE TRUST 2003-2

 

CLASS [A-2] [A-3] [A-4]
       % NOTE

 

Household Automotive Trust 2003-2, 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
                                                  
payable on each Distribution Date in an amount equal to the result obtained by
multiplying (i) a fraction the numerator of which is
$                 
and the denominator of which is $                 
by (ii) the aggregate amount, if any, payable from Available Funds in respect
of principal on the Class           
Notes pursuant to the Indenture; provided, however, that the
entire unpaid principal amount of this Note shall be due and payable on
               
(the “Class           
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 November 26, 2003.  Interest will be computed on the basis of a 360-day year
consisting of twelve 30-day months; provided, however, that
interest for the initial Interest Period will be computed on the basis of a
360-day year and the actual number of days elapsed in the initial 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-9

 

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

 

The Notes are entitled to the benefits of a financial
guarantee insurance policy (the “Note Policy”) issued by MBIA Insurance
Corporation (the “Insurer”), pursuant to which the Insurer has unconditionally
guaranteed timely payment of interest, payment of any Insured Principal Balance
Shortfall and ultimate payment of principal due on the Notes, as more fully set
forth in the Indenture referred to on the reverse hereof and the related Series
Supplement.

 

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 Indenture Trustee 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: November 26, 2003

  	
  HOUSEHOLD AUTOMOTIVE
  TRUST 2003-2

  	 

	 
	
   

  	
   

  	 

	 
	
   

  	
   

  	 

	 
	
   

  	
  By:

  	
  U.S. BANK TRUST
  NATIONAL

  	 

	 
	
   

  	
  ASSOCIATION, not in its
  individual capacity but

  solely as Owner Trustee

  	 

	 
	
   

  	
   

  	
   

  	 

	 
	
   

  	
   

  	
   

  	 

	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
							

 

B-11

 

INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION

 

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

 

	
  Date:  November 26, 2003

  	
  WELLS FARGO BANK MINNESOTA,

  NATIONAL ASSOCIATION, not in its individual

  capacity but solely as Indenture Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  by

  	
   

  	
   

  
	
   

  	
  Authorized Signer

  

 

B-12

 

[REVERSE OF NOTE]

 

This Note is one of a duly authorized issue of Notes
of the Issuer, designated as its Class
                                 %
Notes (herein called the “Class
           Notes”), all
issued under an Indenture dated as of November 26, 2003 (such indenture, as
supplemented or amended, is herein called the “Indenture”), between the Issuer
and Wells Fargo Bank Minnesota, National Association, as indenture trustee (the
“Indenture Trustee”, which term includes any successor Indenture Trustee 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 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
           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
January 17, 2004.  The term
“Distribution Date” shall be deemed to include the Class
           Scheduled Maturity
Date.

 

As described above, the entire unpaid principal amount
of this Note shall be due and payable on the Class
           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, at the direction of the Insurer (for so
long as it is the Controlling Party) or, if the Insurer is not the Controlling
Party, 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
           Notes shall be
made pro rata to the Class
           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

 

B-13

 

be binding upon all
future Holders of this Note and of any Note issued upon the registration of
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
Indenture Trustee, 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 Indenture Trustee's principal Corporate Trust
Office or at the office of the Indenture Trustee's agent appointed for such
purposes located in Minneapolis, Minnesota.

 

The Issuer shall pay interest on overdue installments
of interest at the Class
           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 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 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 or the Owner Trustee in its individual capacity, any
holder of a beneficial interest in the Issuer, the Seller, the Servicer, the
Owner Trustee or the Indenture Trustee or of any successor or assign of the
Seller, the Servicer, the Indenture Trustee 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.

 

B-14

 

Prior to the due presentment for registration of
transfer of this Note, the Issuer, the Indenture Trustee and the Insurer and
any agent of the Issuer, the Indenture Trustee or the Insurer 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 Insurer 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 Insurer (for so
long as it is the Controlling Party) and 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

 

B-15

 

against, the assets of
the Issuer for any and all liabilities, obligations and undertakings contained
in the Indenture or in this Note.

 

B-16

 

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-17

 

Exhibit C

 

[Reserved]<Page>

                                                                   Exhibit 10.87

                      [LETTERHEAD OF UNITEDGLOBALCOM, INC.]

                                 April 17, 2003

Mr. Gene W. Schneider
UnitedGlobalCom, Inc.
4643 South Ulster Street, Suite 1300
Denver, CO 80237

     Re:   Split-Dollar Insurance Agreement

Dear Mr. Schneider:

     Effective July 30, 2002, the Sarbanes-Oxley Act of 2002 (the "Act") made it
illegal for any public company to make loans to any of its directors or
executive officers. UnitedGlobalCom, Inc. (the "Company") has been advised by
counsel that it cannot pay premiums on your behalf under that certain
Split-Dollar Agreement between you and the Company, dated February 15, 2001 (the
"Split-Dollar Agreement"), without violating the Act. Accordingly, I am writing
to advise you that, until further notice to you and except as otherwise provided
in this letter, the Company will make no further premium payments on Lincoln
policy number 4818556 and John Hancock policy number 020061875.

     It is likely that the coverage provided to you under the policies will
remain in force for some time. Accordingly, each year that either or both of the
above-referenced policies remains in force, you should continue to reimburse the
Company in an amount equal to the "annual economic benefit" of this coverage.
For 2003, the combined annual economic benefit of the policies is $12,451. Once
the Company receives payment in this amount from you, it will forward these
funds to the insurance companies to be applied toward the policies. The
remainder of the premiums will be paid out of the cash value of the policy.

     If at any time in the future the Company is able to fulfill its contractual
obligations and resume its payments under our split-dollar agreement without the
risk of violating federal or state laws, it will do so.

                                        Sincerely,

                                        /s/ ELLEN SPANGLER

                                        Ellen Spangler, Esq.

cc: Jim Butler

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