SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report March 12, 1997
HOUSEHOLD CONSUMER LOAN TRUST 1997-1
(Exact name of registrant as specified in its charter)
HOUSEHOLD FINANCE CORPORATION
(Administrator of the Trust)
(Exact name as specified in Administrator's charter)
To be
Delaware 333-20147 Applied For
(State or other juris- (Commission File Numbers) (IRS Employer
diction of incorpora- Identification
tion of Administrator) Number of
Registrant)
2700 Sanders Road, Prospect Heights, Illinois 60070
(Address of principal executive offices of (Zip Code)
Administrator)
Administrator's telephone number, including area code 847/564-5000
<PAGE>
Item 5. OTHER EVENTS
On March 12, 1997, the Registrant issued and sold its Household
Consumer Loan Asset Backed Notes, Series 1997-1, Class A-1, Class
A-2 and Class A-3. Attached as exhibits hereto are copies of
certain of the executed principal agreements relating to the
issuance, offering and sale of the Notes, forms of which were filed
as exhibits to the Registration Statement (File Nos. 333-20147,
333-20147-01 and 333-20147-02).
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
1. Underwriting Agreement
4.1 Trust Agreement.
4.2 Indenture.
10.3 Series 1997-1 Supplement.
10.4 Administration Agreement.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Administrator has duly caused this report to be signed on behalf of the
undersigned hereunto duly authorized.
HOUSEHOLD FINANCE CORPORATION,
as Administrator of and on behalf of the
HOUSEHOLD CONSUMER LOAN TRUST 1997-1
(Registrant)
By: /s/ P. D. Schwartz
P. D. Schwartz
Authorized Representative
Dated: March 19, 1997
-3-<PAGE>
EXHIBIT INDEX
Exhibit
Number Exhibit Page
1. Underwriting Agreement 5
4.1 Trust Agreement. 41
4.2 Indenture. 135
10.3 Series 1997-1 Supplement. 263
10.4 Administration Agreement. 307
U:\WP\HFS088\8K\HCLT97-1.8K
-4-
EXECUTION COPY
HOUSEHOLD CONSUMER LOAN TRUST 1997-1
HOUSEHOLD CONSUMER LOAN ASSET BACKED NOTES,
Series 1997-1, Class A-1, Class A-2 and Class A-3
HOUSEHOLD FINANCE CORPORATION
(Servicer)
HOUSEHOLD CONSUMER LOAN CORPORATION
(Seller)
UNDERWRITING AGREEMENT
March 4, 1997
LEHMAN BROTHERS INC.,
as Representative of the Underwriters
3 World Financial Center
New York, New York 10285
Ladies and Gentlemen:
Household Consumer Loan Corporation, a Nevada corporation (the
"Seller") and a wholly-owned, special purpose subsidiary of
Household Finance Corporation ("HFC"), has entered into a Trust
Agreement dated as of March 1, 1997 (the "Trust Agreement") with
Chase Manhattan Bank Delaware (the "Owner Trustee"), creating
Household Consumer Loan Trust 1997-1 (the "Issuer"), a statutory
business trust established under the laws of the State of Delaware.
The Seller proposes to direct the Owner Trustee under the Trust
Agreement to cause the Issuer to issue Household Consumer Loan
Asset Backed Notes, Series 1997-1, Class A-1 Notes, Class A-2
Notes, Class A-3 Notes and Class B Notes (collectively, the
"Notes") and Household Consumer Loan Asset Backed Certificates,
Series 1997-1 (the "Certificates" and, together with the Notes, the
"Securities"). The Class A-1, Class A-2 and Class A-3 Notes are
collectively referred to herein as the "Class A Notes". Only the
Class A Notes are being purchased by the underwriters named in
Schedule A hereto (the "Underwriters") for whom Lehman Brothers
Inc. is acting as representative (the "Representative"). The
Seller and HFC understand that the Underwriters propose to make a
public offering of the Class A Notes as soon as the Underwriters
deem advisable after the date hereof.
The Notes will be issued pursuant to an Indenture dated as of
March 1, 1997 (the "Indenture") between the Issuer and The Bank of
New York (the "Indenture Trustee") and will represent indebtedness
of the Issuer. The Certificates will be issued pursuant to the
Trust Agreement. The Notes will be secured by (i) a participation
interest (the "Series 1997-1 Participation Interest") in (a)
receivables held in Household Consumer Loan Deposit Trust I (the
"Deposit Trust") arising under certain fixed and variable rate
revolving unsecured consumer credit lines (the "Credit Lines") and
(b) the preferred stock of the Seller held by the Deposit Trustee
(as defined herein), (ii) amounts on deposit in certain accounts of
the Issuer held for the benefit of the holders of the Securities
and (iii) an assignment of the Issuer's rights under the Series
1997-1 Supplement (as defined below) (collectively, the "Trust
Assets"). The Deposit Trust was formed pursuant to a Pooling and
Servicing Agreement dated as of September 1, 1995 (the "Base
Pooling and Servicing Agreement") among the Seller, HFC, as
Servicer (the "Servicer"), and Texas Commerce Bank National
Association as successor trustee to The Chase Manhattan Bank, N.A.,
as Deposit Trustee (the "Deposit Trustee"). The Series 1997-1
Participation Interest was issued pursuant to the Supplement for
Series 1997-1 dated as of March 1, 1997 among the Seller, the
Servicer and the Deposit Trustee (the "Supplement" and, together
with the Base Pooling and Servicing Agreement, the "Pooling and
Servicing Agreement"). The Pooling and Servicing Agreement,
together with the Trust Agreement, the Certificate of Trust
thereto, the Indenture, the Receivables Purchase Agreement, the
Administration Agreement and this Agreement, constitute the "Basic
Documents" herein. Capitalized terms used but not defined herein
shall have the meanings assigned to such terms in the Indenture.
The Notes are more fully described in the Registration
Statement (as defined below) which the Seller has furnished to the
Underwriters.
SECTION 1. Representations and Warranties of the Seller
and the Credit Line Owners. Each of the Credit Line Owners (as
defined in the Pooling and Servicing Agreement) and the Seller,
each as to itself, represents and warrants to, and agrees with the
Underwriters that:
(a) A registration statement on Form S-3 (Nos. 333-20147-01
and 333-20147-02) in respect of the Notes and a registration
statement on Form S-1 (No. 333-20147) in respect of the Series
1997-1 Participation Interest, including a prospectus and such
amendments thereto as may have been required on the date hereof,
relating to the Notes and the Series 1997-1 Participation Interest,
have been filed with the Securities and Exchange Commission (the
"Commission"). The conditions to the use of a registration
statement on Form S-3 and Form S-1 under the Securities Act of
1933, as amended (the "Act"), as set forth in the General
Instructions to Form S-3 and Form S-1, as applicable, have been, or
will prior to the effective date of the Registration Statement
(defined herein) be, satisfied in all material respects with
respect to the Seller and the Registration Statement. The
Commission has not issued any order preventing or suspending the
use of the Preliminary Prospectus. There are no contracts or
documents of the Seller which are required to be filed as exhibits
to the Registration Statement pursuant to the Act or the Rules and
Regulations (defined herein) which have not been so filed or
incorporated by reference therein on or prior to the Effective Date
of the Registration Statement, assuming compliance by each
Underwriter with Section 2(a) hereof.
(b) The Seller will next file with the Commission either, (i)
prior to the effectiveness of the Registration Statement, a further
amendment thereto (including the form of final prospectus) or (ii)
after effectiveness of the Registration Statement, a final
prospectus in accordance with Rules 430A and 424(b)(1) or (4) of
the Rules and Regulations. In the case of clause (ii), the Seller
has included in such Registration Statement, as amended at the
Effective Date (defined herein), all information (other than Rule
430A Information (defined herein)) required by the Act and the
rules and regulations thereunder (the "Rules and Regulations") to
be included in the Registration Statement with respect to the
Series 1997-1 Participation Interest and the Notes and the offering
of the Notes. As filed, such amendment and form of final
prospectus, or such final prospectus, shall include all Rule 430A
Information and, except to the extent the Underwriters shall agree
in writing to a modification, shall be in all substantive respects
in the form furnished to the Underwriters prior to the Execution
Time (defined herein) or, to the extent not completed at the Execu-
tion Time, shall contain only such specific additional information
and other changes (beyond that contained in the Preliminary
Prospectus which has previously been furnished to the Underwriters)
as the Seller has advised the Underwriters, prior to the Execution
Time, will be included or made therein.
The terms which follow, when used in this Agreement, shall
have the meanings indicated. The term "Effective Date" shall mean
each date that the Registration Statement and any post-effective
amendment or amendments thereto became or become effective under
the Act. "Execution Time" shall mean the date and time that this
Agreement is executed and delivered by the parties hereto.
"Preliminary Prospectus" shall mean any preliminary prospectus
included in the Registration Statement, or amendments thereof,
which, as completed, is proposed to be used in connection with the
sale of the Class A Notes and any prospectus subsequently filed
with the Commission by the Seller with the consent of the Under-
writers pursuant to Rule 424(a) of the Rules and Regulations.
"Prospectus" shall mean the prospectus relating to the Notes that
is first filed with the Commission pursuant to Rule 424(b) and any
prospectus subsequently filed pursuant to Rule 424 or, if no filing
pursuant to Rule 424(b) is required, shall mean the form of final
prospectus included in the Registration Statement at the Effective
Date. Reference made herein to the Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include any documents
incorporated by reference therein pursuant to Item 12 of Form S-3
under the Act, as of the date of the Preliminary Prospectus or the
Prospectus, as the case may be, and any reference to any amendment
or supplement to the Preliminary Prospectus or the Prospectus shall
be deemed to refer to and include any document filed under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
after the date of the Preliminary Prospectus or the Prospectus and
incorporated by reference in the Preliminary Prospectus or the
Prospectus; and any reference to any amendment to the Registration
Statement shall be deemed to include any report of the Seller filed
with the Commission pursuant to Section 13(a) or 15(d) of the
Exchange Act after the Effective Time that is incorporated by
reference in the Registration Statement. "Registration Statement"
shall mean both registration statements referred to in Section 1(a)
hereof and any registration statements required to be filed under
the Act or the Rules and Regulations, including incorporated docu-
ments, exhibits and financial statements, in the form in which it
has or shall become effective and, in the event of any post-
effective amendment thereto which becomes effective prior to the
Closing Date (defined herein), shall also mean such Registration
Statement as so amended and including the Rule 430A Information
deemed to be included therein at the Effective Date as provided by
Rule 430A. "Rule 424" and "Rule 430A" refer to such rules and
regulations under the Act. "Rule 430A Information" means
information with respect to the Class A Notes and the offering
thereof permitted to be omitted from the Registration Statement
when it becomes effective pursuant to Rule 430A.
(c) On the Effective Date, the Registration Statement did or
will comply in all material respects with the applicable
requirements of the Act and the Rules and Regulations; assuming
compliance by each Underwriter with Section 2(a), 2(b) and 2(c)
hereof when the Prospectus is first filed (if required) in
accordance with Rule 424(b), as of its date and on the Closing
Date, the Prospectus (and any supplements thereto) will comply in
all material respects with the applicable requirements of the Act
and the Rules and Regulations; on the Effective Date, the Regis-
tration Statement, did or will not contain any untrue statement of
a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading; and, as of its date and on the date of any filing
pursuant to Rule 424(b) (if required) and on the Closing Date, the
Prospectus (together with any supplement thereto) will not, include
any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading; provided, however, that the Seller makes no repre-
sentations or warranties as to the information contained in or
omitted from the Registration Statement or the Prospectus (or any
supplements thereto) in reliance upon and in conformity with
information furnished in writing to the Seller by or on behalf of
the Underwriters specifically for use in connection with the
preparation of the Registration Statement or the Prospectus (or any
supplements thereto).
(d) Since the respective dates as of which information is
given in the Prospectus, or the Prospectus, as amended and
supplemented at the Closing Time, there has not been any material
adverse change in the general affairs, management, financial
condition, or results of operations of any of the Credit Line
Owners or the Seller or of their subsidiaries, otherwise than as
set forth or contemplated in the Prospectus or the Prospectus as
amended and supplemented at the Closing Time.
(e) Each of the Credit Line Owners and the Seller has been
duly incorporated and is validly existing as a corporation in good
standing under the laws of its respective jurisdiction of
incorporation, with the full right, power and authority (corporate
and other) to own, lease and operate its properties and conduct its
business as described in the Prospectus and to enter into and
perform its obligations under the Basic Documents to which each is
a party, and with respect to the Seller, to authorize the
execution, delivery and performance of the Indenture and the
issuance of the Notes and the Certificates, respectively, by the
Issuer; each of the Credit Line Owners and the Seller is duly
qualified as a foreign corporation to transact business and is in
good standing in each jurisdiction which requires such
qualification, except where failure to be so qualified would not
have a material adverse effect on the business or financial
condition of any such Credit Line Owner or the Seller; and each
Credit Line Owner is duly authorized under the statutes which
regulate the business of making loans or of financing the sale of
goods (commonly called "small loan laws," "consumer finance laws,"
or "sales finance laws"), or is permitted under the general
interest statutes and related laws and court decisions, to conduct
in the various jurisdictions in which any of them do business the
businesses as currently conducted therein by any of them.
(f) There are no legal or governmental proceedings pending to
which any Credit Line Owner or the Seller is a party or of which
any property of any Credit Line Owner or the Seller is the subject,
which if determined adversely to any Credit Line Owner or the
Seller would individually or in the aggregate have a material
adverse effect on the financial position, shareholders' equity or
results of operations of such Credit Line Owner or the Seller; and
to the best knowledge of the Credit Line Owners and the Seller, no
such proceedings are threatened or contemplated by governmental
authorities or threatened by others.
(g) Each of the Basic Documents to which the Seller or the
Credit Line Owners are a party, when executed and delivered as
contemplated thereby, will have been duly authorized, executed and
delivered by the Seller and the Credit Line Owners, as applicable,
and the Basic Documents to which the Seller or the Credit Line
Owners are a party when executed and delivered as contemplated
herein will constitute, legal, valid and binding instruments
enforceable against the Seller or the Credit Line Owners, as
applicable, in accordance with their respective terms, subject as
to enforceability (i) to applicable bankruptcy, reorganization,
insolvency, moratorium or other similar laws affecting creditors'
rights generally, (ii) to general principles of equity (regardless
of whether enforcement is sought in a proceeding in equity or at
law) and (iii) with respect to rights of indemnity under this
Agreement, to limitations of public policy under applicable
securities laws.
(h) The issuance and delivery of the Securities, the
consummation of any other of the transactions contemplated herein
or in the Basic Documents, or the fulfillment of the terms of the
Basic Documents, do not and will not conflict with or violate any
term or provision of the Certificate or Articles of Incorporation
or Bylaws of any of the Credit Line Owners or the Seller, any
statute, order or regulation applicable to any of the Credit Line
Owners or the Seller of any court, regulatory body, administrative
agency or governmental body having jurisdiction over any of the
Credit Line Owners or the Seller and do not and will not conflict
with, result in a breach or violation or the acceleration of or
constitute a default under or result in the creation or imposition
of any lien, charge or encumbrance upon any of the property or
assets of any of the Credit Line Owners or the Seller pursuant to
the terms of, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which any of the
Credit Line Owners or the Seller is a party or by which any of the
Credit Line Owners or the Seller may be bound or to which any of
the property or assets of any of the Credit Line Owners or the
Seller may be subject except for conflicts, violations, breaches,
accelerations and defaults which would not, individually or in the
aggregate, be materially adverse to any of the Credit Line Owners
or the Seller or materially adverse to the transactions
contemplated by this Agreement.
(i) Arthur Andersen LLP is an independent public accountant
with respect to the Credit Line Owners and the Seller as required
by the Act and the Rules and Regulations.
(j) The direction by the Seller to the Deposit Trustee to
execute, countersign, issue and deliver the Series 1997-1
Participation Interest has been duly authorized by the Seller, and
assuming the Deposit Trustee has been duly authorized to do so,
when executed, countersigned, issued and delivered by the Deposit
Trustee in accordance with Pooling and Servicing Agreement, the
Series 1997-1 Participation Interest will be validly issued and
outstanding and will be entitled to the benefits provided by the
Pooling and Servicing Agreement.
(k) The Seller has directed the Issuer to execute, issue and
deliver the Notes and the Issuer has directed the Indenture Trustee
to authenticate the Notes and assuming such direction has been duly
authorized by the Issuer, and assuming the Indenture Trustee has
been duly authorized to do so, when executed, countersigned, issued
and delivered in accordance with the Indenture, the Notes will be
validly issued and outstanding and will be entitled to the benefits
provided by the Indenture.
(l) No consent, approval, authorization, order, registration
or qualification of or with any court or governmental agency or
body of the United States is required for the issue and sale of the
Class A Notes to the Underwriters, or the consummation by any of
the Credit Line Owners, the Seller or the Issuer of the other
transactions contemplated by the Basic Documents, except the
registration under the Act of the Class A Notes and such consents,
approvals, authorizations, registrations or qualifications as may
be required under state securities or Blue Sky laws in connection
with the purchase and distribution of the Class A Notes by the
Underwriters or as have been obtained.
(m) Each of the Credit Line Owners and the Seller possesses
all material licenses, certificates, authorities or permits issued
by the appropriate state, federal or foreign regulatory agencies or
bodies necessary to conduct the business now conducted by it and as
described in the Prospectus and none of the Credit Line Owners or
the Seller has received notice of proceedings relating to the
revocation or modification of any such license, certificate,
authority or permit which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would
materially and adversely affect the conduct of its business,
operations or financial condition.
(n) As of the date any Receivables are transferred to the
Deposit Trustee, (i) each Credit Line Owner will have good and
marketable title to the Receivables being transferred by it to the
Seller free and clear of any lien, mortgage, pledge, charge,
encumbrance, adverse claim or other security interest
(collectively, "Liens"), (ii) each Credit Line Owner will not have
assigned to any person any of its right, title or interest in such
Receivables or in the Receivables Purchase Agreement and (iii) each
Credit Line Owner will have the power and authority to sell such
Receivables to the Seller; and upon the consummation of the sale
and the assignment provided for pursuant to the terms of the
Receivables Purchase Agreement, the Seller will have acquired all
the related Credit Line Owners' right, title and interest in and to
the Receivables.
(o) As of the date any Receivables are transferred to the
Deposit Trustee, the Seller (i) will have good and marketable title
to the Receivables being transferred by it to the Deposit Trustee
pursuant to the Pooling and Servicing Agreement, free and clear of
any Liens, (ii) will not have assigned to any person any of its
right, title or interest in such Receivables or in the Receivables
Purchase Agreement, and (iii) will have the power and authority to
sell such Receivables to the Deposit Trustee and assuming due
execution and delivery of the Pooling and Servicing Agreement and
any Assignment of Receivables in Credit Lines by the Deposit
Trustee, the Deposit Trustee will have acquired all of the Seller's
right, title and interest in and to the Receivables. As of the
Closing Date, the Seller (i) will not have assigned to any person
other than the Issuer any of its right, title or interest in the
Series 1997-1 Participation Interest being issued pursuant to the
Pooling and Servicing Agreement and (ii) will have the power and
authority to convey the Series 1997-1 Participation Interest to the
Issuer pursuant to the Trust Agreement.
(p) At the Closing Time, the Seller will (i) have good and
marketable title to the Series 1997-1 Participation Interest, free
and clear of any Lien and (ii) have the power and authority to sell
the Series 1997-1 Participation Interest to the Issuer and to
authorize the Issuer to issue the Securities. Upon execution and
delivery of the Trust Agreement by the Seller and the conveyance of
the Series 1997-1 Participation Interest from the Seller to the
Issuer, the Issuer will have acquired ownership of all of the
Seller's right, title and interest in and to the Series 1997-1
Participation Interest.
(q) As of the Closing Time, each of the Initial Receivables
will meet the eligibility criteria described in the Prospectus and
Pooling and Servicing Agreement.
(r) None of the Credit Line Owners, the Seller, the Deposit
Trust or the Issuer will conduct its operations while any of the
Securities are outstanding in a manner that would require any
Credit Line Owner, the Seller, the Deposit Trust or the Issuer to
be registered as an "investment company" under the Investment
Company Act of 1940, as amended (the "1940 Act"), as in effect on
the date hereof.
(s) At the Closing Time, the Securities and the Basic
Documents that are described in the Prospectus will conform in all
material respects to the descriptions thereof.
(t) At the Closing Time, Moody's and Standard & Poor's each
shall have assigned to each class of the Notes the respective
ratings for the Notes as set forth in the Prospectus.
(u) Any taxes, fees and other governmental charges in
connection with the execution and delivery of the Basic Documents
and the issuance of the Securities have been paid or will be paid
at or prior to the Closing Time.
(v) At the Closing Time, each of the representations and
warranties of the Seller and the Credit Line Owners set forth in
this Agreement will be true and correct in all material respects.
Any certificate signed by an officer of any Credit Line Owner
or the Seller and delivered to the Underwriter or counsel for the
Underwriter in connection with an offering of the Securities shall
be deemed, and shall state that it is, a representation and
warranty as to the matters covered thereby to each person to whom
the representations and warranties in this Section 1 are made.
SECTION 2. Representations and Warranties of the
Underwriters. Each Underwriter severally, and not jointly,
represents and warrants to, and agrees with the other Underwriters,
the Credit Line Owners, the Seller, the Servicer and HFC that:
(a) Such Underwriter has not furnished and will not furnish,
in writing or by electronic transmission, any Derived Information
relating to the Class A Notes to any such prospective investor,
except as otherwise contained in the Preliminary Prospectus dated
February 28, 1997 relating to the Class A Notes.
For purposes of this Agreement, "Derived Information" means
the type of information defined as Collateral Term Sheets,
Structural Term Sheets or Computational Materials (as such terms
are interpreted in the No-Action Letters (as defined below)), if
any, that have been distributed to prospective investors in written
form or by electronic transmission that:
(i) is not contained in the Prospectus without taking
into account information incorporated therein by reference;
and
(ii) does not constitute Seller-Provided Information.
"Seller-Provided Information" means the information contained on
any computer tape furnished to the Underwriters by the Seller
concerning the assets comprising the Issuer.
The terms "Collateral Term Sheet" and "Structural Term Sheet"
shall have the respective meanings assigned to them in the
February 13, 1995 letter (the "PSA Letter") of Cleary, Gottlieb,
Steen & Hamilton on behalf of the Public Securities Association
(which letter, and the Commission staff's response thereto, were
publicly available February 17, 1995). The term "Collateral Term
Sheet" as used herein includes any subsequent Collateral Term Sheet
that reflects a substantive change in the information presented.
The term "Computational Materials" has the meaning assigned to it
in the May 17, 1994 letter (the "Kidder Letter" and together with
the PSA Letter, the "No-Action Letters") of Brown & Wood on behalf
of Kidder, Peabody & Co., Inc. (which letter, and the Commission
staff's response thereto, were publicly available May 20, 1994).
(b) Each Underwriter acknowledges that the Credit Line
Owners, the Seller or HFC will not be deemed to have breached any
representation and warranty or to have failed to satisfy any other
agreement contained herein, to the extent any such breach or
failure on the part of such party resulted solely from an
Underwriter's breach of the representation and warranty set forth
in subsection (a) above; provided, however, that the rights and
obligations otherwise available to an Underwriter pursuant to
Sections 9 and 10 hereof are not limited solely as a result of an
Underwriter's breach of the representation and warranty set forth
in subsection (a) above.
SECTION 3. Purchase and Sale. The commitment of the
Underwriters to purchase and of the Seller to sell the Class A
Notes pursuant to this Agreement shall be deemed to have been made
on the basis of the respective representations and warranties of
each of the parties herein contained and shall be subject to the
terms and conditions herein set forth. The Seller agrees to
instruct the Issuer to issue and agrees to sell to the
Underwriters, and the Underwriters agree, severally and not jointly
(except as provided in Section 12 hereof), to purchase from the
Seller, at a purchase price for each Class of the Notes set forth
on Schedule A hereto, the respective principal amount of each Class
of the Notes set forth opposite the name of such Underwriter on
Schedule A hereto.
SECTION 4. Delivery and Payment. Payment of the purchase
price for, and delivery of, any of the Class A Notes to be
purchased by the Underwriters shall be made at the office of Katten
Muchin & Zavis, of Chicago, Illinois or at such other place as
shall be agreed upon by the Underwriters, the Seller and HFC at
10:00 a.m. eastern time on March 12, 1997 or at such other time or
date as shall be agreed upon in writing by the Underwriters, the
Seller and HFC (the "Closing Time"). The Class A Notes will be
delivered in book-entry form through the facilities of the
Depository Trust Company, Cedel Bank Societe Anonyme and the
Euroclear System. Payment shall be made to the Seller by wire
transfer of same day funds payable to the account of the Seller.
Delivery of the Class A Notes shall be made to the Underwriters for
the respective accounts of the Underwriters against payment of the
purchase price thereof. Such Notes shall be in such denominations
and registered in such names as the Underwriters may request in
writing at least one business day prior to the applicable Closing
Time. Such Notes, which may be in temporary form, will be made
available for examination and packaging by the Underwriters no
later than 3:00 p.m. central time on the first business day prior
to the Closing Time.
SECTION 5. Offering by the Underwriters. It is understood
that the Underwriters propose to offer the Class A Notes for sale
to the public as set forth in the Prospectus.
SECTION 6. Covenants of the Seller and HFC. The Seller
and HFC covenant with each of the Underwriters as follows:
(a) If at any time when the Prospectus as amended or
supplemented is required by the Act to be delivered in connection
with sales of the Class A Notes by the Underwriters, any event
shall occur or condition exist as a result of which it is
necessary, in the opinion of counsel to the Underwriters or counsel
for the Seller, to further amend or supplement the Prospectus as
then amended or supplemented in order that the Prospectus as
amended or supplemented will not include an untrue statement of a
material fact or omit to state any material fact necessary to make
the statements therein, in the light of circumstances under which
they were made, not misleading or if it shall be necessary, in the
opinion of any such counsel, at any such time to amend or
supplement the Registration Statement or the Prospectus as then
amended or supplemented in order to comply with the requirements of
the Act or the Rules and Regulations, or if required by such Rules
and Regulations, including Rule 430A thereunder, to file a
post-effective amendment to such Registration Statement (including
an amended Prospectus), the Seller will promptly prepare and file
with the Commission such amendment or supplement as may be
necessary to correct such untrue statement or omission or to make
the Registration Statement comply with such requirements, and
within two business days will furnish to the Underwriters as many
copies of the Prospectus, as amended or supplemented, as the
Underwriters shall reasonably request.
(b) The Seller will give the Underwriters reasonable notice
of its intention to file any amendment to the Registration
Statement, the Prospectus or the Prospectus as amended or
supplemented, pursuant to the Act, will furnish the Underwriters
with copies of any such amendment or supplement proposed to be
filed a reasonable time in advance of filing, and will not file any
such amendment or supplement to which the Underwriters or counsel
to the Underwriters shall object.
(c) The Seller will notify the Underwriters immediately, and
confirm the notice in writing, (i) of the effectiveness of any
amendment to the Registration Statement, (ii) of the mailing or the
delivery to the Commission for filing of any supplement to the
Prospectus or the Prospectus as amended or supplemented, (iii) of
the receipt of any comments from the Commission with respect to the
Registration Statement or the Prospectus or the Prospectus as
amended or supplemented, (iv) of any request by the Commission for
any amendment to the Registration Statement or any amendment or
supplement to the Prospectus or for additional information and (v)
of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the initiation of
any proceedings for that purpose. The Seller will make every
reasonable effort to prevent the issuance of any stop order and, if
any stop order is issued, to obtain the lifting thereof at the
earliest possible moment.
(d) The Seller will deliver to the Underwriters as many
signed and as many conformed copies of the Registration Statement
(as originally filed) and of each amendment thereto (including
exhibits filed therewith or incorporated by reference therein and
documents incorporated by reference in the Prospectus) as you may
reasonably request.
(e) The Seller will make generally available to holders of
the Notes as soon as practicable, but in any event not later than
120 days after the close of the period covered thereby, an earning
statement of the Issuer (which need not be audited) complying with
Section 11(a) of the Act and the Rules and Regulations (including,
at the option of the Seller, Rule 158) and covering a period of at
least twelve consecutive months beginning not later than the first
day of the first fiscal quarter following the Closing Time.
(f) The Seller will endeavor, in cooperation with you, to
qualify the Class A Notes for offering and sale under the
applicable securities laws of such states and other jurisdictions
of the United States as you may designate, and will maintain or
cause to be maintained such qualifications in effect for as long as
may be required for the distribution of the Class A Notes. The
Seller will file or cause the filing of such statements and reports
as may be required by the laws of each jurisdiction in which the
Class A Notes have been qualified as above provided.
(g) Neither the Seller nor HFC will, without your prior
written consent, publicly offer or sell or contract to sell any
asset-backed securities or participation interests or other similar
securities representing interests in or secured by other consumer
loan-related assets originated or owned by the Seller or HFC for a
period of five days following the commencement of the offering of
the Class A Notes to the public.
(h) So long as the Class A Notes shall be outstanding, the
Seller will cause the Issuer to deliver to the Underwriters the
annual statement as to compliance delivered to the Indenture
Trustee pursuant to Section 3.10 of the Indenture and each monthly
report delivered pursuant to Section 3.23 of the Indenture. So
long as the Class A Notes are outstanding, the Servicer will
deliver to the Underwriters the annual statement of a firm of
independent public accountants furnished to the Deposit Trustee
pursuant to Section 3.06 of the Pooling and Servicing Agreement and
the monthly servicing report delivered pursuant to Article V of the
Pooling and Servicing Agreement.
(i) The Seller will apply the net proceeds from the sale of
the Class A Notes in the manner set forth in the Prospectus.
(j) If, between the date hereof and the Closing Time, to the
knowledge of HFC or the Seller there are any legal or governmental
proceedings instituted or threatened against HFC or the Seller
which, if determined adversely to HFC or the Seller would
individually or in the aggregate have a material adverse effect on
the financial condition, shareholders' equity or results of
operations of HFC or the Seller, and HFC and the Seller, as
applicable, will give prompt written notice thereof to the
Underwriters.
SECTION 7. Conditions to Underwriters' Obligations. The
respective obligations of the Underwriters to purchase, and of the
Seller to sell, the Class A Notes pursuant to this Agreement are
subject to the accuracy on and as of the Closing Time of the
representations and warranties on the part of the Credit Line
Owners and the Seller on the one hand and the Underwriters on the
other, each as herein contained, and to the material accuracy of
the statements of officers of the Credit Line Owners, the Seller
and HFC, respectively, made pursuant hereto, to the performance by
the Credit Line Owners, the Seller and HFC of all of their
respective obligations hereunder and to the following conditions at
the Closing Time:
(a) If the Registration Statement has not become effective
prior to the date of this Agreement, unless the Underwriters agree
in writing to a later time, the Registration Statement shall have
become effective not later than (i) 6:00 p.m. New York City time on
the date of determination of the public offering price, if such
determination occurred at or prior to 10:00 a.m. New York City time
on such date, or (ii) 3:00 p.m. on the business day following the
day on which the public offering price was determined, if such
determination occurred after 10:00 a.m. New York City time on such
date; if filing of the Prospectus, or any supplement thereto, is
required pursuant to Rule 424(b), the Prospectus shall be filed in
the manner and within the time period required by Rule 424(b); and
no stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that
purpose shall have been instituted or threatened.
(b) There shall not have come to the Underwriters' attention
any facts that would cause the Underwriters to believe that the
Prospectus, at the time it was required to be delivered to a
purchaser of the Class A Notes, contained an untrue statement of a
material fact or omitted to state a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(c) The Underwriters shall have received the favorable
opinion, dated the date of the Closing Time, of John W. Blenke,
Esq., Vice President--Corporate Law of Household International,
Inc., the parent company of HFC, in the form attached hereto as
Exhibit A.
(d) The Underwriters shall have received the favorable
opinion, dated the date of the Closing Time, of John W. Blenke,
Esq., Vice President--Corporate Law of Household International,
Inc., the parent company of HFC, in form and substance satisfactory
to the Underwriters, to the effect that:
(i) HFC has been duly incorporated and is validly
existing as a corporation in good standing under the laws of
the State of Delaware, with corporate power to own its
properties, to conduct its business as described in the
Prospectus and to enter into and perform its obligations under
the Basic Documents to which it is a party.
(ii) The Seller has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the State of Delaware, with corporate power to own its
properties, to conduct its business as described in the
Prospectus and to enter into and perform its obligations under
the Basic Documents to which it is a party.
(iii) Each of the Credit Line Owners has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of its jurisdiction of incorporation,
with corporate power to own its properties, to conduct its
business as described in the Prospectus and to enter into and
perform its obligations under the Basic Documents to which it
is a party.
(iv) HFC has full corporate power and authority to serve
in the capacity of servicer of the Receivables as contemplated
by the Pooling and Servicing Agreement.
(v) Each of the Credit Line Owners, the Seller and HFC
is duly authorized under related statutes, laws and court
decisions, to conduct in the various jurisdictions in which
they do business the respective businesses therein currently
conducted by them, except where failure to be so permitted or
failure to be so authorized will not have a material adverse
effect on the business or financial condition of the Credit
Line Owners, the Seller or HFC, and the Credit Line Owners are
duly authorized under the statutes which regulate the business
of making loans or of financing the sale of goods (commonly
called "small loan laws," "consumer finance laws," or "sales
finance laws"), or are permitted under the general interest
statutes and related laws and court decisions, to conduct in
the various jurisdictions in which any of them do business the
businesses as currently conducted therein by any of them.
(vi) None of the Credit Line Owners, the Seller or HFC
is in violation of its Certificate or Articles of
Incorporation or Bylaws or, to the best of such counsel's
knowledge, in default in the performance or observance of any
material obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, loan
agreement, note, lease or other instrument known to such
counsel to which any of the Credit Line Owners, the Seller or
HFC is a party or by which it or its properties may be bound,
which default might result in any material adverse changes in
the financial condition, earnings, affairs or business of any
of the Credit Line Owners, the Seller or HFC or which might
materially and adversely affect the properties or assets,
taken as a whole, of any of the Credit Line Owners, the Seller
or of HFC.
(vii) Each of the Basic Documents to which HFC, the
Seller and the Credit Line Owners are a party has been duly
authorized, executed and delivered by HFC, the Seller and the
Credit Line Owners, as applicable, and, assuming the due
authorization, execution and delivery of such agreements by
the other parties thereto, such agreements constitute the
valid and binding obligation of each of the Seller, HFC and
the Credit Line Owners, enforceable against each of the
Seller, HFC and the Credit Line Owners, in accordance with its
terms, except that in each case as to enforceability (A) such
enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally,
(B) the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any
proceeding therefor may be brought and (C) the enforceability
as to rights to indemnification under this Agreement (to the
extent indemnification under this Agreement relates to
liability under the Act) may be subject to limitations of
public policy under applicable securities laws.
(viii) The issuance and delivery of the Securities and the
Series 1997-1 Participation Interest, the consummation of any
other of the transactions contemplated hereby or by the Basic
Documents, or the fulfillment of the terms of such agreements
do not and will not conflict with or violate any term or
provision of the Certificate or Articles of Incorporation or
Bylaws of the Seller or, to the best of such counsel's
knowledge, any statute, order or regulation applicable to the
Seller of any court, regulatory body, administrative agency or
governmental body having jurisdiction over the Seller and do
not and will not conflict with, result in a breach or
violation or the acceleration of or constitute a default under
or result in the creation or imposition of any lien, charge or
encumbrance upon any of the property or assets of the Seller
pursuant to the terms of any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument known
to such counsel to which the Seller is a party or by which the
Seller may be bound or to which any of the property or assets
of the Seller may be subject except for conflicts, violations,
breaches, accelerations and defaults which would not,
individually or in the aggregate, be materially adverse to the
Seller or materially adverse to the transactions contemplated
by this Agreement.
(ix) The consummation of any of the transactions
contemplated by the Basic Documents to which the Credit Line
Owners are a party and the fulfillment of the terms of such
documents, do not and will not conflict with or violate any
terms or provision of the Certificate or Articles of
Incorporation or Bylaws of any of the Credit Line Owners or,
to the best of such counsel's knowledge, any statute, order or
regulation applicable to any of the Credit Line Owners or, to
the best of such counsel's knowledge, any statute, order or
regulation applicable to any of the Credit Line Owners and do
not and will not conflict with, result in a breach or
violation or the acceleration of or constitute a default under
or result in the creation or imposition of any lien, charge or
encumbrance upon any of the property or assets of any of the
Credit Line Owners pursuant to the terms of, any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument known to such counsel to which any of the Credit
Line Owners may be bound or to which any of the property or
assets of any of the Credit Line Owners may be subject except
for conflicts, violations, breaches, accelerations and
defaults which would not, individually or in the aggregate, be
materially adverse to the applicable Credit Line Owners or
materially adverse to the transactions contemplated by this
Agreement.
(x) The consummation of any of the transactions
contemplated herein or the fulfillment of the terms of the
Basic Documents do not and will not conflict with or violate
any term or provision of the Certificate or Articles of
Incorporation or By-laws of HFC or, to the best of such
counsel's knowledge, any statute, order or regulation
applicable to HFC and do not and will not conflict with,
result in a breach or violation or the acceleration of or
constitute a default under or result in the creation or
imposition of any lien, charge or encumbrance upon any of the
property or assets of HFC pursuant to the terms of, any
indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument known to such counsel to which HFC is
a party or by which HFC may be bound or to which any of the
property or assets of HFC may be subject except for conflicts,
violations, breaches, accelerations and defaults which would
not, individually or in the aggregate, be materially adverse
to HFC or materially adverse to the transactions contemplated
by this Agreement.
(xi) The direction by the Seller to the Deposit Trustee
to execute, issue, countersign and deliver the Series 1997-1
Participation Interest has been duly authorized by the Seller
and, assuming that the Deposit Trustee has been duly
authorized to do so and when executed and countersigned and
delivered by the Deposit Trustee in accordance with the
Pooling and Servicing Agreement, the Series 1997-1
Participation Interest will be validly issued and outstanding
and will be entitled to the benefits of the Pooling and
Servicing Agreement.
(xii) The direction by the Seller to the Owner Trustee
to execute, issue, countersign and deliver the Certificates on
behalf of the Issuer has been duly authorized by the Seller
and, assuming that the Owner Trustee has been duly authorized
to do so and when executed and countersigned and delivered by
the Owner Trustee in accordance with the Trust Agreement, the
Certificates will be validly issued and outstanding and will
be entitled to the benefits of the Trust Agreement.
(xiii) To the best of such counsel's knowledge, no
consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or
body of the United States is required for the issuance of the
Securities and the sale of the Securities to the Underwriters,
or the consummation by the Credit Line Owners, the Seller and
HFC of the other transactions contemplated by the Basic
Documents, except the registration under the Act of the
Securities and such consents, approvals, authorizations,
registrations or qualifications as may be required under state
securities or Blue Sky laws in connection with the purchase
and distribution of the Securities by the Underwriters or as
have been obtained.
(xiv) The Registration Statement is effective under the
Act and to the best of such counsel's knowledge and
information, no stop order suspending the effectiveness of the
Registration Statement has been issued under the Act or
proceedings therefor initiated or threatened by the
Commission.
(xv) The conditions to the use by the Seller of a
registration statement on Form S-3 and Form S-1 under the Act,
as set forth in the General Instructions to Form S-3 and Form
S-1, have been satisfied with respect to the Registration
Statement and the Prospectus. To the best of such counsel's
knowledge, there are no contracts or documents of the Seller
which are required to be filed as exhibits to the Registration
Statement pursuant to the Act or the Rules and Regulations
thereunder which have not been so filed. The statements in
the Prospectus under the caption "Risk Factors--Legal
Considerations" and under the caption "Certain Legal Aspects
of the Receivables", to the extent that statements in such
sections constitute matters of law or legal conclusions with
respect thereto, have been reviewed by attorneys under such
counsel's supervision and are complete and correct in all
material respects.
(xvi) There are no actions, proceedings or investigations
pending before or, to the best knowledge of such counsel,
threatened by any court, administrative agency or other
tribunal to which any of the Credit Line Owners, HFC or the
Seller is a party or of which any of their respective
properties is the subject (A) which if determined adversely to
any of the Credit Line Owners, HFC or the Seller would have a
material adverse effect on the business or financial condition
of any of the Credit Line Owners, HFC or the Seller, (B)
asserting the invalidity of any of the Basic Documents, or the
Securities, (C) seeking to prevent the issuance of the
Securities or the consummation by any of the Credit Line
Owners, HFC or the Seller of any of the transactions
contemplated by any of the Basic Documents, as the case may
be, or (D) which might materially and adversely affect the
performance by any of the Credit Line Owners, HFC or the
Seller of their respective obligations under, or the validity
or enforceability of any of the Basic Documents or the
Securities.
(xvii) The Registration Statement at the time it became
effective, and any amendment thereto at the time such
amendment becomes effective, complied as to form in all
material respects with the applicable requirements of the Act
and the Rules and Regulations.
(xviii) Such counsel has no reason to believe that (A) the
Registration Statement and the Prospectus, as of the date the
Registration Statement became effective, or the Registration
Statement (excluding the exhibits thereto) as of the date that
the most recent post-effective amendment thereto became
effective, contained or contains any untrue statement of a
material fact or omitted or omits to state any material fact
required to be stated therein or necessary in order to make
the statements therein not misleading or (B) assuming
compliance by each of the Underwriters with Section 2(a)
hereof, the Prospectus, as of its date and the date of such
opinion, contained or contains any untrue statement of a
material fact or omitted or omits to state any material fact
necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading (it being understood that such counsel need express
no opinion as to information set forth in the financial
statements or other financial and statistical data contained
or incorporated by reference in the Registration Statement).
Such opinion may express its reliance as to factual matters on
the representations and warranties made by the parties hereto, and
on certificates or other documents furnished by officers of such
parties to the instruments and documents referred to therein. Such
opinion may be qualified, insofar as it concerns the enforceability
of the documents referred to therein, to the extent that such
enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of
creditors' rights in general, or by general principles of equity
(regardless of whether such enforcement is considered in a
proceeding in equity or at law) and no opinion need be given as to
the enforceability of Section 9 of this Agreement.
(e) The Underwriters shall have received the favorable
opinion of counsel to the Indenture Trustee, dated the date of the
Closing Time, addressed to the Underwriters and in form and scope
satisfactory to counsel to the Underwriters, to the effect that:
(i) The Indenture Trustee has duly authorized, executed
and delivered the Indenture which constitute the valid and
legally binding agreements of the Indenture Trustee, are
enforceable against the Indenture Trustee in accordance with
its terms, subject, as to enforcement of remedies, (A) to
applicable bankruptcy, insolvency, reorganization, and other
similar laws affecting the rights of creditors generally and
(B) to general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or
at law).
(ii) The Indenture Trustee has duly countersigned the
Notes issued on the date hereof on behalf of the Issuer.
(iii) The execution and delivery by the Indenture Trustee
of the Indenture and the performance by the Indenture Trustee
of its obligations thereunder do not conflict with or result
in a violation of the organizational charter or Bylaws of the
Indenture Trustee.
(iv) The Indenture Trustee has full power and authority
to execute and deliver the Indenture and to perform its
obligations thereunder.
(v) To the best of such counsel's knowledge, there are
no actions, proceedings or investigations pending or
threatened against or affecting the Indenture Trustee before
or by any court, arbitrator, administrative agency or other
governmental authority which, if adversely decided, would
materially and adversely affect the ability of the Indenture
Trustee to carry out the transactions contemplated by the
Indenture.
No consent, approval or authorization of, or
registration, declaration or filing with, any court or
governmental agency or body of the United States of America or
any state thereof is required for the execution, delivery or
performance by the Indenture Trustee of the Indenture.
(f) The Underwriters shall have received the favorable
opinion of counsel to the Owner Trustee, dated the Closing Date,
addressed to the Underwriters, satisfactory to counsel to the
Underwriters, to the effect that:
(i) The Owner Trustee is duly incorporated and
validly existing as a banking corporation under the laws
of the State of Delaware and has the power and authority
to execute and deliver the Basic Documents to which it is
a party;
(ii) The Basic Documents to which it is a party have
been duly authorized, executed and delivered to the Owner
Trustee and constitutes the legal, valid and binding
agreements of the Owner Trustee, enforceable against the
Owner Trustee in accordance with its respective terms;
(iii) The Securities have been duly authorized,
executed and delivered by Owner Trustee on behalf of the
Issuer;
(iv) No consent, approval or other authorization of,
or registration, declaration or filing with, any court or
governmental agency or commission of the State of
Delaware is required by or with respect to the Owner
Trustee or the Issuer for the issuance and sale of the
Securities or the valid execution and delivery of the
Trust Agreement, or for the validity and enforceability
thereof, or for the payment of any amounts by the Issuer
thereunder;
(v) Neither the execution and delivery by the Owner
Trustee of the Basic Documents to which it is a party,
nor the issuance, execution and delivery by the Issuer of
the Securities, nor the consummation of the transactions
contemplated thereby, nor compliance with the terms
thereof, (i) conflicts with or results in a breach of, or
constitutes a default under, the provisions of the Trust
Agreement or the Certificate of Incorporation of the
Owner Trustee or any law, rule or regulation of the State
of Delaware applicable to the Owner Trustee or, to such
counsel's knowledge, any judgment or order applicable to
the Owner Trustee or their respective properties or, to
such counsel's knowledge, any indenture, mortgage,
contract or other agreement or instrument to which the
Owner Trustee is a party or by which it is bound or (ii)
to such counsel's knowledge, results in the creation or
imposition or any lien, charge or encumbrance upon the
Owner Trustee's properties or the Owner Trust Estate
(except as permitted by the Trust Agreement);
(vi) To such counsel's knowledge, there are no
pending or threatened actions, suits or proceedings
affecting the Issuer or the Owner Trustee before any
court or other governmental authority which, if adversely
decided, would materially and adversely affect the
ability of the Issuer or the Owner Trustee, as the case
may be, to carry out the transactions contemplated in the
Trust Agreement;
(vii) The Issuer has been duly formed and is validly
existing as a business trust under the Delaware Business
Trust Act 12 Del. C. Section 3801 et seq.
(g) The Underwriters shall have received the favorable
opinion of counsel to the Deposit Trustee, dated the Closing Date,
addressed to the Underwriters, satisfactory to counsel to the
Underwriters, to the effect that:
(i) The Deposit Trustee is duly incorporated and
validly existing as a banking corporation under the laws
of the United States and has the power and authority to
execute and deliver the Pooling and Servicing Agreement;
(ii) The Pooling and Servicing Agreement has been
duly authorized, executed and delivered to the Deposit
Trustee and constitutes the legal, valid and binding
agreements of the Deposit Trustee, enforceable against
the Deposit Trustee in accordance with its respective
terms;
(iii) The Series 1997-1 Participation Interest has
been duly authorized, executed and delivered by the
Deposit Trust, and, when authenticated in accordance with
the provisions of the Pooling and Servicing Agreement,
and when delivered to and paid for by the Seller, will be
entitled to the benefits and security afforded by the
Pooling and Servicing Agreement, and will constitute
legal, valid and binding obligations of the Deposit
Trust, enforceable against the Deposit Trust in
accordance with the terms of the Pooling and Servicing
Agreement;
(iv) No consent, approval or other authorization of,
or registration, declaration or filing with, any court or
governmental agency or commission is required by or with
respect to the Deposit Trustee or the Deposit Trust for
the issuance and sale of the Series 1997-1 Participation
Interest or the valid execution and delivery of the
Pooling and Servicing Agreement, or for the validity and
enforceability thereof, or for the payment of any amounts
by the Deposit Trust thereunder;
(v) Neither the execution and delivery by the
Deposit Trustee of the Pooling and Servicing Agreement,
nor the issuance, execution and delivery by the Deposit
Trustee of the Series 1997-1 Participation Interest, nor
the consummation of the transactions contemplated
thereby, nor compliance with the terms thereof, (i)
conflicts with or results in a breach of, or constitutes
a default under, the provisions of the Pooling and
Servicing Agreement or the certificate of incorporation
of the Deposit Trustee or any law, rule or regulation of
the United States applicable to the Deposit Trustee or,
to such counsel's knowledge, any judgment or order
applicable to the Deposit Trustee or their respective
properties or, to such counsel's knowledge, any
indenture, mortgage, contract or other agreement or
instrument to which the Deposit Trustee is a party or by
which it is bound or (ii) to such counsel's knowledge,
results in the creation or imposition or any lien, charge
or encumbrance upon the Deposit Trustee's properties or
the Deposit Trust's properties (except as permitted by
the Pooling and Servicing Agreement); and
(vi) To such counsel's knowledge, there are no
pending or threatened actions, suits or proceedings
affecting the Deposit Trust or the Deposit Trustee before
any court or other governmental authority which, if
adversely decided, would materially and adversely affect
the ability of the Deposit Trust or the Deposit Trustee,
as the case may be, to carry out the transactions
contemplated in the Basic Documents.
(h) The Underwriters shall have received the favorable
opinion or opinions, dated the date of the Closing Time, of Brown
& Wood LLP, as counsel for the Underwriters, with respect to the
issue and sale of the Notes, the Registration Statement, this
Agreement, the Prospectus and such other related matters as the
Underwriters may require.
(i) The Underwriters shall have received opinions, dated the
date of the Closing Time, of Katten Muchin & Zavis, as special
counsel to the Seller and HFC, addressed to the Indenture Trustee,
the Seller and the Underwriters relating to certain matters
specified in Section 2.03(iii) of the Indenture.
(j) The Underwriters shall have received an opinion, dated
the date of the Closing Time, of Katten Muchin & Zavis, as special
counsel to the Seller and HFC addressed to the Seller and
satisfactory to the Rating Agencies relating to (i) the sale of the
Receivables to the Seller, (ii) the transfer of the Receivables to
the Deposit Trustee and (iii) the transfer of the Series 1997-1
Participation Interest from the Seller to the Issuer and such
counsel shall have consented to reliance by the Rating Agencies and
the Underwriters on such opinion as though such opinion had been
addressed to each such party.
(k) Each of the Credit Line Owners, the Seller and HFC shall
have furnished to the Underwriters a certificate signed on behalf
of the Credit Line Owners, the Seller and HFC by the respective
principal accounting or principal financial officer thereof, dated
the date of the Closing Time, as to (i) the accuracy of the
representations and warranties (except for the representations made
in Section 1(f) hereof) of the Credit Line Owners and the Seller
herein at and as of the Closing Time, (ii) there being no legal or
governmental proceedings pending, other than those, if any,
referred to in the Prospectus to which any of the Credit Line
Owners, the Seller or HFC is a party or of which any property of
any of the Credit Line Owners, the Seller or HFC is the subject,
which, in the judgment of any of the Credit Line Owners, the Seller
or HFC, as applicable, have a reasonable likelihood of resulting in
a material adverse change in the financial condition, shareholders'
equity or results of operations of the Credit Line Owners, the
Seller or HFC; and to the best knowledge of each of the Credit Line
Owners, the Seller or HFC, as applicable, no such proceedings are
threatened or contemplated by governmental authorities or
threatened by others, (iii) the performance by the Credit Line
Owners, the Seller and HFC of all of their respective obligations
hereunder to be performed at or prior to the Closing Time, and (iv)
such other matters as the Underwriters may reasonably request.
(l) The Indenture Trustee shall have furnished to the
Underwriters a certificate of the Indenture Trustee, signed by one
or more duly authorized officers of the Indenture Trustee, dated
the Closing Time, as to the due authorization, execution and
delivery of the Indenture by the Indenture Trustee and the
acceptance by the Indenture Trustee of the trusts created by the
Indenture and the due execution and delivery of the Notes by the
Indenture Trustee thereunder and such other matters as the
Underwriters shall reasonably request.
(m) The Owner Trustee shall have furnished to the
Underwriters a certificate of the Owner Trustee, signed by one or
more duly authorized officers of the Owner Trustee, dated the
Closing Time, as to the due authorization, execution and delivery
of the Trust Agreement by the Owner Trustee and the acceptance by
the Owner Trustee of the trusts created by the Trust Agreement and
the due execution and delivery of the Notes by the Issuer under the
Indenture and such other matters as the Underwriters shall
reasonably request.
(n) The Deposit Trustee shall have furnished to the
Underwriters a certificate of the Deposit Trustee, signed by one or
more duly authorized officers of the Deposit Trustee, dated the
Closing Time, as to the due authorization, execution and delivery
of the Pooling and Servicing Agreement by the Deposit Trustee and
the acceptance by the Deposit Trustee of the trusts created by the
Pooling and Servicing Agreement and the due execution and delivery
of the Series 1997-1 Participation Interest by the Deposit Trustee
thereunder and such other matters as the Underwriters shall
reasonably request.
(o) The Class A-1 Notes, the Class A-2 Notes and the Class
A-3 Notes shall have been rated at least "AAA", "AA" and "A",
respectively, by at least two nationally recognized rating
organizations, two of which shall be Standard & Poor's and Moody's.
(p) Counsel and special counsel to HFC and the Seller shall
have furnished to the Underwriters any opinions supplied to the
Rating Agencies relating to certain matters with respect to the
Notes.
(q) The Underwriters shall have received from Arthur Andersen
LLP, or other independent certified public accountants acceptable
to the Underwriters, a letter, dated as of the date of this
Agreement in the form heretofore agreed to.
(r) Prior to the Closing Time, Brown & Wood LLP, as counsel
for the Underwriters, shall have been furnished with such documents
and opinions as they may reasonably require for the purpose of
enabling them to pass upon the issuance and sale of the Class A
Notes as herein contemplated and related proceedings or in order to
evidence the accuracy and completeness of any of the
representations and warranties, or the fulfillment of any of the
conditions, herein contained; and all proceedings taken by the
Seller and HFC in connection with the issuance and sale of the
Class A Notes as herein contemplated shall be satisfactory in form
and substance to the Underwriters and Brown & Wood LLP.
(s) Since the respective dates as of which information is
given in the Prospectus, there shall not have been any change, or
any development involving a prospective change, in or affecting the
general affairs, management, financial condition, stockholders'
equity or results of operations of the Seller, any of the Credit
Line Owners or HFC otherwise than as set forth or contemplated in
the Prospectus, the effect of which is in the judgment of the
Underwriters so material and adverse as to make it impracticable or
inadvisable to proceed with the public offering or the delivery of
the Notes on the terms and in the manner contemplated in the
Prospectus.
(t) Prior to the Closing Time, the Credit Line Owners, the
Seller and HFC shall have furnished to the Underwriters such
further information, certificates and documents as the Underwriters
may reasonably request.
If any condition specified in this Section 7 shall not have
been fulfilled when and as required to be fulfilled, this Agreement
may be terminated by the Underwriters by notice to the Seller at
any time at or prior to the Closing Time, and such termination
shall be without liability of any party to any other party except
as provided in Section 7.
SECTION 8. Payment of Expenses. The Seller, the Credit Line
Owners and HFC jointly and severally agree to pay all expenses
incident to the performance of their obligations under this
Agreement, including without limitation those related to (i) the
filing of the Registration Statement and all amendments thereto,
(ii) the preparation, issuance and delivery of the Notes, (iii) the
fees and disbursements of Katten Muchin & Zavis, as special counsel
for the Seller and HFC, and Arthur Andersen LLP, accountants of the
Seller and HFC, (iv) the qualification of the Class A Notes under
securities and Blue Sky laws and the determination of the
eligibility of the Class A Notes for investment in accordance with
the provisions of Section 6(f) including filing fees, and the fees
and disbursements of Brown & Wood LLP, as counsel for the
Underwriters (not to exceed $28,000), in connection therewith and
in connection with the preparation of any Blue Sky Survey, (v) the
printing and delivery to the Underwriters, in such quantities as
the Underwriters may reasonably request, of copies of the
Registration Statement and Prospectus and all amendments and
supplements thereto, and of any Blue Sky Survey, (vi) the delivery
to the Underwriters, in such quantities as the Underwriters may
reasonably request, of copies of the Basic Documents and (vii) the
fees charged by nationally recognized statistical rating agencies
for rating the Notes, and (viii) the fees and expenses of the
Deposit Trustee, the Indenture Trustee and the Owner Trustee and
their counsel, respectively.
If this Agreement is terminated by the Underwriters in
accordance with the provisions of Section 7, the Seller, the Credit
Line Owners and HFC shall reimburse the Underwriters for all
reasonable out-of-pocket expenses, including the fees and
disbursements of Brown & Wood LLP, as counsel for the Underwriters.
SECTION 9. Indemnification. (a) HFC and the Seller jointly
and severally agree to indemnify and hold harmless the Underwriters
and each person, if any, who controls the Underwriters within the
meaning of Section 15 of the Act as follows:
(i) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, arising out of any untrue
statement or alleged untrue statement of a material fact
contained in the Registration Statement (or any amendment
thereto), including the information deemed to be a part of the
Registration Statement pursuant to Rule 430A under the Act, if
applicable, or the omission or alleged omission therefrom of
a material fact required to be stated therein or necessary to
make the statements therein not misleading or arising out of
any untrue statement or alleged untrue statement of a material
fact contained in the Prospectus (or any amendment or
supplement thereto) or the omission or alleged omission
therefrom of a material fact necessary in order to make the
statements therein, in light of the circumstances under which
they were made, not misleading, unless (a) such untrue
statement or omission or alleged untrue statement or omission
was made in reliance upon and in conformity with written
information furnished to the Seller, or information, if any,
electronically transmitted to the Seller by the Underwriters
expressly for use in the Registration Statement (or any
amendment thereof) or (b) such loss, liability, claim, damage
or expense is incurred by an Underwriter solely as a result of
the dissemination by it of Derived Information in violation of
Section 2(a) hereof;
(ii) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, to the extent of the
aggregate amount paid in settlement of any litigation, or
investigation or proceeding by any governmental agency or
body, commenced or threatened, or of any claim whatsoever
based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, if such settlement is
effected with the written consent of the Seller; and
(iii) against any and all expense whatsoever (including
the fees and disbursements of counsel chosen by the
Underwriters) as reasonably incurred in investigating,
preparing to defend or defending against or appearing as a
third party witness with respect to any litigation, or
investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based
upon any such untrue statement or omission, as such expense is
incurred and to the extent that any such expense is not paid
under (i) or (ii) above.
This indemnity agreement will be in addition to any liability
which the Seller may otherwise have.
(b) Each of the Underwriters severally agree to indemnify and
hold harmless the Seller, each of its directors, each of its
officers who signed the Registration Statement, and each person, if
any, who controls the Seller within the meaning of Section 15 of
the Act (each, an "Indemnified Party") against any and all loss,
liability, claim, damage and expense, as incurred, described in the
indemnity contained in subsection (a) of this Section 9, arising
out of any untrue statements or omissions, or alleged untrue
statements or omissions, made in the Registration Statement (or any
amendment thereto) or the Prospectus (or any amendment or
supplement thereto) in reliance upon and in conformity with written
information furnished to the Seller by such Underwriter expressly
for use in the Registration Statement (or any amendment thereto) or
the Prospectus (or any amendment or supplement thereto). The
parties hereto acknowledge that the only information supplied to
the Seller by the Underwriter expressly for use in the Registration
Statement or the Prospectus is limited to the information set forth
in the last paragraph on the cover, the first paragraph on page 2
and the second paragraph under the caption "Underwriting" in the
Prospectus. This indemnity agreement will be in addition to any
liability which the Underwriters may otherwise have.
(c) [Reserved].
(d) Each indemnified party shall give prompt notice to each
indemnifying party of any action commenced against it with respect
to which indemnity may be sought hereunder but failure to so notify
an indemnifying party shall not relieve it from any liability which
it may have hereunder unless it has been materially prejudiced by
such failure to notify or from any liability which it may have
otherwise than on account of this indemnity agreement. An
indemnifying party may participate at its own expense in the
defense of such action. In no event shall the indemnifying parties
be liable for the fees and expenses of more than one counsel for
all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances,
unless (i) if the defendants in any such action include one or more
of the indemnified parties and the indemnifying party, one or more
of the indemnified parties shall have employed separate counsel
after having reasonably concluded that there may be legal defenses
available to it or them that are different from or additional to
those available to the indemnifying party or to one or more of the
other indemnified parties or (ii) the indemnifying party shall not
have employed counsel reasonably satisfactory to the indemnified
party to represent the indemnified party within a reasonable time
after notice of the commencement of the action.
SECTION 10. Contribution. In order to provide for just and
equitable contribution in circumstances in which the indemnity
agreement provided for in Section 9 is for any reason held to be
unenforceable by the indemnified parties although applicable in
accordance with its terms, HFC and the Seller on the one hand, and
the Underwriters (or Underwriter, if such loss, liability, claim,
damage or expense arises solely as a result of such Underwriter's
breach of a representation and warranty set forth in Section 2(a)
hereof) on the other, shall contribute to the aggregate losses,
liabilities, claims, damages and expenses of the nature
contemplated by said indemnity agreement incurred by the Seller and
one or more of the Underwriters (i) except for any Underwriter's
indemnification arising solely from a breach of its representation
and warranty set forth in Section 2(a) hereof, in such proportion
as is appropriate to reflect the relative benefits to HFC and the
Seller on the one hand and the Underwriters or such Underwriter in
the case of a breach of a representation or warranty set forth in
Section 2(a) hereof on the other in connection with the matter to
which the indemnification relates, which relative benefits shall be
deemed to be in such proportions that the Underwriters are
responsible for that portion represented by the percentage that the
underwriting discount on the cover of the Prospectus as amended or
supplemented bears to the initial public offering price as set
forth thereon, and HFC and the Seller shall be jointly and
severally responsible for the balance or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law or
otherwise prohibited hereby, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of HFC and the Seller on the one
hand and the Underwriters or Underwriter, as applicable, on the
other in connection with the statements or omissions that resulted
in such losses, claims, damages or liabilities, or actions in
respect thereof, as well as any other relevant equitable
considerations; provided, however, that no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f)
of the Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. Relative
fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact
relates to information supplied by HFC or the Seller, on the one
hand, or the Underwriters, on the other hand, and the parties'
relative intent, knowledge, access to information and opportunity
to correct or prevent such untrue statement or omission. HFC, the
Seller and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section 10 were to be
determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of
allocation which does not take into account the equitable
considerations referred to in the first sentence of this Section
10. The amount paid by an indemnified party as a result of the
losses, claims, damages or liabilities (or actions in respect
thereof) referred to in the first sentence of this Section 10 shall
be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with
investigating, preparing to defend or defending against any action
or claim which is the subject of this Section 10. Notwithstanding
the provisions of this Section 10, except for any loss, claim,
damage, liability or expense resulting solely from a breach of any
Underwriter's breach of the representation and warranty set forth
in Section 2(a) hereof, no Underwriter shall be required to
contribute any amount in excess of the amount by which the total
price at which the Notes underwritten by such Underwriter and
distributed to the public were offered to the public exceeds the
amount of any damages which such Underwriter has otherwise been
required to pay in respect of such losses, liabilities, claims,
damages and expenses. The Underwriters' obligations in this
Section 10 to contribute are several in proportion to their
respective underwriting obligations and not joint and no
Underwriter shall be required to contribute to any loss, liability,
claim, damage or expense as a result of another Underwriter's
breach of the representation and warranty set forth in Section 2(a)
hereof. Each party entitled to contribution agrees that upon the
service of a summons or other initial legal process upon it in any
action instituted against it in respect to which contribution may
be sought, it shall promptly give written notice of such service to
the party or parties from whom contribution may be sought, but the
omission so to notify such party or parties of any such service
shall not relieve the party from whom contribution may be sought
for any obligation it may have hereunder or otherwise (except as
specifically provided in Section 9 hereof). For purposes of this
Section 10, each person, if any, who controls any Underwriter
within the meaning of Section 15 of the Act shall have the same
rights to contribution as such Underwriter and each respective
director of the Seller, each respective officer of the Seller who
signed the Registration Statement, and each person, if any, who
controls the Seller within the meaning of Section 15 of the Act
shall have the same rights to contribution as the Seller.
SECTION 11. Representations, Warranties and Agreements to
Survive Delivery. All representations, warranties and agreements
contained in this Agreement or contained in certificates of
officers of the Credit Line Owners, the Seller or HFC submitted
pursuant hereto shall remain operative and in full force and
effect, regardless of any investigation made by or on behalf of the
Underwriters or controlling person thereof, or by or on behalf of
the Credit Line Owners, the Seller or HFC and shall survive
delivery of any Class A Notes to the Underwriters.
SECTION 12. Termination of Agreement. You, as representative
of the Underwriters, may terminate this Agreement, immediately upon
notice to the Seller, at any time at or prior to the Closing Time
(i) if there has been an outbreak or material escalation of
hostilities involving the United States of America where armed
conflict appears imminent, or the declaration by the United States
of America of a national emergency or war, if the effect of any
such event in the Underwriter's reasonable judgment makes it
impracticable or inadvisable to proceed with the public offering of
the Notes or (ii) if trading generally on the New York Stock
Exchange has been suspended, or minimum prices have been
established by the exchange or by order of the Commission or any
other governmental authority, or if a banking moratorium has been
declared by either federal or New York State authorities. In the
event of any such termination, the covenant set forth in subsection
6(b), the provisions of Section 8, the indemnity agreement set
forth in Section 9, and the provisions of Sections 10 and 15 shall
remain in effect.
SECTION 13. Default by One or More of the Underwriters. If
one or more of the Underwriters participating in the public
offering of the Class A Notes shall fail at the Closing Time to
purchase the Notes which it is (or they are) obligated to purchase
hereunder (the "Defaulted Notes"), then such of the non-defaulting
Underwriters shall have the right, within 24 hours thereafter, to
make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not
less than all, of the Defaulted Notes in such amounts as may be
agreed upon and upon the terms herein set forth. If, however, the
Underwriters have not completed such arrangements within such
24-hour period, then:
(i) if the aggregate principal amount of Defaulted
Notes does not exceed 10% of the aggregate principal amount of
the Class A Notes to be purchased pursuant to this Agreement,
the non-defaulting Underwriters named in this Agreement shall
be obligated to purchase the full amount thereof in the
proportions that their respective underwriting obligations
hereunder bear to the underwriting obligations of all such
non-defaulting Underwriters, or
(ii) if the aggregate principal amount of Defaulted
Notes exceeds 10% of the aggregate principal amount of the
Notes to be purchased pursuant to this Agreement, this
Agreement shall terminate, without any liability on the part
of any non-defaulting Underwriters.
No action taken pursuant to this Section 13 shall relieve any
defaulting Underwriter from the liability with respect to any
default of such Underwriter under this Agreement.
In the event of a default by the Underwriters as set forth in
this Section 13, either the Underwriters or the Seller shall have
the right to postpone the Closing Time for a period not exceeding
five Business Days in order that any required changes in the
Registration Statement or Prospectus or in any other documents or
arrangements may be effected.
SECTION 14. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly
given if mailed or transmitted by any standard form of
telecommunication. Notices to the Underwriters shall be directed
to them at the address set forth on the first page hereof. Notices
to the Seller or HFC shall be directed to Household Finance
Corporation, 2700 Sanders Road, Prospect Heights, Illinois 60070,
to the attention of the Secretary, with a copy to the Treasurer.
SECTION 15. Parties. This Agreement shall inure to the
benefit of and be binding upon the Underwriter, the Credit Line
Owners, the Seller and HFC, and their respective successors.
Nothing expressed or mentioned in this Agreement is intended nor
shall it be construed to give any person, firm or corporation,
other than the parties hereto or thereto and their respective
successors and the controlling persons and officers and directors
referred to in Sections 9 and 10 and their heirs and legal
representatives any legal or equitable right, remedy or claim under
or with respect to this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof
are intended to be for the sole and exclusive benefit of the
parties and their respective successors and said controlling
persons and officers and directors and their heirs and legal
representatives (to the extent of their rights as specified herein
and therein) and except as provided above for the benefit of no
other person, firm or corporation. No purchaser of Class A Notes
from the Underwriter shall be deemed to be a successor by reason
merely of such purchase.
SECTION 16. Governing Law and Time. This Agreement shall be
governed by the law of the State of New York and shall be construed
in accordance with such law. Specified times of day refer to New
York City time.
SECTION 17. Counterparts. This Agreement may be executed in
counterparts, each of which shall constitute an original of any
party whose signature appears on it, and all of which shall
together constitute a single instrument.<PAGE>
If the foregoing is in accordance
with the Underwriters'
understanding of our agreement, please sign and return to us a
counterpart hereof, whereupon this instrument along with all
counterparts will become a binding agreement among the
Underwriters, the Seller, HFC and the Credit Line Owners in
accordance with its terms.
Very truly yours,
HOUSEHOLD CONSUMER LOAN CORPORATION
By:
Name:
Title:
HOUSEHOLD FINANCE CORPORATION
By:
Name:
Title:
<PAGE>
HOUSEHOLD REALTY CORPORATION,
HOUSEHOLD FINANCE CORPORATION OF
CALIFORNIA,
HOUSEHOLD FINANCE CORPORATION II,
HOUSEHOLD FINANCE CORPORATION III,
HOUSEHOLD FINANCE INDUSTRIAL LOAN
COMPANY,
HOUSEHOLD FINANCE REALTY CORPORATION
OF NEW YORK,
HOUSEHOLD FINANCIAL CENTER, INC.,
HOUSEHOLD FINANCE CORPORATION OF
NEVADA,
HOUSEHOLD FINANCE REALTY CORPORATION
OF NEVADA,
HOUSEHOLD INDUSTRIAL LOAN COMPANY
OF KENTUCKY,
HOUSEHOLD FINANCE INDUSTRIAL LOAN
COMPANY OF IOWA,
HOUSEHOLD FINANCE CONSUMER DISCOUNT
COMPANY,
HOUSEHOLD INDUSTRIAL FINANCE
COMPANY, AND
MORTGAGE ONE CORPORATION
By:
Name:
Title:
CONFIRMED AND ACCEPTED, as of
the date first above written:
LEHMAN BROTHERS INC.,
as Representative of the Underwriters
By:
Name:
Title:
<PAGE>
Schedule A
Underwriting
Class A-1 Notes Purchase Price
Lehman Brothers Inc. . . . . . . . . . . . . . . . . $182,400,000
Bear, Stearns & Co. Inc. . . . . . . . . . . . . . . .182,400,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated . . . . . . . . . . . . . . .182,400,000
J.P. Morgan Securities Inc.. . . . . . . . . . . . . 182,400,000
Total. . . . . . . . . . . . . . . . . . . . . . $729,600,000
Class A-2 Notes
Lehman Brothers Inc. . . . . . . . . . . . . . . . . .$12,000,000
Bear, Stearns & Co. Inc. . . . . . . . . . . . . . . . 12,000,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated . . . . . . . . . . . . . . . 12,000,000
J.P. Morgan Securities Inc.. . . . . . . . . . . . . . 12,000,000
Total. . . . . . . . . . . . . . . . . . . . . . .$48,000,000
Class A-3 Notes
Lehman Brothers Inc. . . . . . . . . . . . . . . . . .$15,600,000
Bear, Stearns & Co. Inc. . . . . . . . . . . . . . . . 15,600,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated . . . . . . . . . . . . . . . 15,600,000
J.P. Morgan Securities Inc.. . . . . . . . . . . . . . 15,600,000
Total. . . . . . . . . . . . . . . . . . . . . . .$62,400,000<PAGE>
EXHIBIT A
Opinion of John W. Blenke, Esq.
Section 7(c) of the Underwriting Agreement
March ___, 1997
LEHMAN BROTHERS INC.,
as Representative of the Underwriters
World Financial Center
Three World Financial Center
New York, New York 10285
Re: Household Consumer Loan Asset
Backed Notes and Certificates,
Series 1997-1
Ladies and Gentlemen:
I address this opinion to the Underwriters pursuant to Section
7(c) of the Underwriting Agreement dated March 4, 1997 (the
"Underwriting Agreement") among Household Consumer Loan Corporation
(the "Seller"), Household Finance Corporation, a Delaware
corporation (the "Company"), Household Realty Corporation,
Household Finance Corporation of California, Household Finance
Corporation II, Household Finance Corporation III, Household
Finance Industrial Loan Company, Household Finance Realty
Corporation of New York, Household Financial Center, Inc.,
Household Finance Corporation of Nevada, Household Finance Realty
Corporation of Nevada, Household Industrial Loan Company of
Kentucky, Household Finance Industrial Loan Company of Iowa,
Household Finance Consumer Discount Company, Household Industrial
Finance Company, and Mortgage One Corporation (collectively, the
"Credit Line Owners" and each individually, a "Credit Line Owner")
and the underwriters referred to therein (together, the
"Underwriters"). The Seller has entered into a Trust Agreement
dated as of March 1, 1997 (the "Trust Agreement") with Chase
Manhattan Bank Delaware (the "Owner Trustee"), creating Household
Consumer Loan Trust 1997-1 (the "Issuer"), a statutory business
trust established under the laws of the State of Delaware. The
Seller proposes to direct the Owner Trustee pursuant to the Trust
Agreement to cause the Issuer to issue Household Consumer Loan
Asset Backed Notes, Series 1997-1, Class A and Class B (the
"Notes") and Household Consumer Loan Asset Backed Certificates,
Series 1997-1 (the "Certificates" and, together with the Notes, the
"Securities"). Only the Class A Notes are being purchased by the
Underwriters.
The Notes will be issued pursuant to an Indenture dated as of
March 1, 1997 (the "Indenture") between the Issuer and The Bank of
New York (the "Indenture Trustee") and will represent indebtedness
of the Issuer. The Certificates will be issued pursuant to the
Trust Agreement. The Notes will be secured by (i) a participation
interest (the "Series 1997-1 Participation Interest") in (a)
receivables held in Household Consumer Loan Deposit Trust I (the
"Deposit Trust") arising under certain fixed and variable rate
revolving secured and unsecured consumer credit lines (the "Credit
Lines") and the proceeds thereof and (b) the preferred stock of the
Seller held by the Deposit Trustee (as defined herein), (ii)
amounts on deposit in certain accounts of the Issuer held for the
benefit of the holders of the Securities and (iii) an assignment of
the Issuer's rights under the Series 1997-1 Supplement (as defined
below) (collectively, the "Trust Assets"). The Deposit Trust was
formed pursuant to a Pooling and Servicing Agreement dated as of
September 1, 1995 (the "Base Pooling and Servicing Agreement")
among the Seller, the Company, as Servicer (the "Servicer") and
Texas Commerce Bank National Association as successor trustee to
The Chase Manhattan Bank, N.A., as Deposit Trustee (the "Deposit
Trustee"). The Series 1997-1 Participation Interest was issued
pursuant to the Supplement for Series 1997-1 dated as of March 1,
1997 among the Seller, the Servicer and the Deposit Trustee (the
"Supplement" and together with the Base Pooling and Servicing
Agreement, the "Pooling and Servicing Agreement"). The Pooling and
Servicing Agreement, together with the Trust Agreement, the
Certificate of Trust thereto, the Indenture, the Receivables
Purchase Agreement, the Administration Agreement and the
Underwriting Agreement constitute the "Basic Documents" herein.
Capitalized terms used herein shall have the meanings ascribed to
them in the Underwriting Agreement unless herein otherwise defined.
As Vice President--Corporate Law and the Secretary of
Household International, Inc., a Delaware corporation, the ultimate
parent corporation of the Company, the Seller and each of the
Credit Line Owners, I, or the attorneys under my supervision have,
among other things (i) participated in the preparation of the
Pooling and Servicing Agreement and (ii) cooperated with officers
of the Seller and the Company, representatives of the Underwriters
and independent accountants in the preparation of the Registration
Statement on Form S-3 and S-1 (Registration Nos. 333-20147 and
333-20147-02) filed with the Securities and Exchange Commission
(the "Commission") under the Securities Act of 1933, as amended
(the "Act"), and the Prospectus dated March 4, 1997 in the form in
which it was transmitted for filing with the Commission pursuant to
Rule 424(b) of the Rules and Regulations under the Act (the "Final
Prospectus").
I advise you that in my opinion:
(i) The Pooling and Servicing Agreement is not required
to be qualified and the Indenture has been duly qualified under the
Trust Indenture Act;
(ii) None of the Seller, the Deposit Trust or the Owner
Trust is an "investment company" or under the "control" of an
"investment company" as such terms are defined in the Investment
Company Act of 1940; and
(iii) The Notes and the Basic Documents that are described
in the Final Prospectus conform in all material respects to the
respective descriptions thereof in the Final Prospectus.
The opinions set forth herein are subject to the following
qualifications:
No opinion is expressed as to the effect of the compliance or
noncompliance of the Seller, Credit Line Owners, Servicer, Deposit
Trustee, Owner Trustee or Indenture Trustee with any state or
federal laws or regulations applicable to them because of their
legal or regulatory status or the nature of their respective
businesses and to the extent that the opinions set forth herein
relate to the due authorization, execution and delivery of the
Pooling and Servicing Agreement and the Certificates.
I, or the attorneys under my supervision, have examined
originals, or copies of originals certified to my satisfaction, of
such agreements, documents, certificates and other statements of
public officials and responsible officers of each of the Seller,
Company, Deposit Trustee, Owner Trustee and Indenture Trustee and
other papers and matters of fact and law as I have deemed relevant
and necessary as a basis for the opinions I expressed herein. I
have relied, with respect to factual matters, on representations
and warranties made by, and on certificates and other documents
furnished by responsible officers of each of the Deposit Trustee,
Owner Trustee, Indenture Trustee, the Seller and the Servicer. In
expressing the foregoing opinions, I have assumed, with the
Underwriters' permission, (i) the authenticity of all documents
submitted to me as originals and the conformity with the original
documents of any copies of such documents submitted to me for my
examination, (ii) that each of the Seller, Deposit Trustee, Owner
Trustee and Indenture Trustee has been duly organized and is
validly existing and in good standing under the laws of its
jurisdiction of incorporation and (iii) the due execution and
delivery, pursuant to due authorization, of the agreements and
documents referred to above by each of the Deposit Trustee, Owner
Trustee and Indenture Trustee.
The opinions expressed herein are only with respect to federal
laws of the United States and the laws of the State of Illinois.
I consent to the reliance on this opinion by Standard & Poor's
Ratings Services, a Division of The McGraw-Hill Companies, Inc.,
and Moody's Investors Service, Inc. Subject to the foregoing
sentence, this opinion is solely for the Underwriters' benefit and
may not be relied upon by, nor copies be delivered to, any other
person without my prior written consent.
Very truly yours,
HOUSEHOLD CONSUMER LOAN CORPORATION,
as Seller and
as Holder of the
Designated Certificate
and
CHASE MANHATTAN BANK DELAWARE,
as Owner Trustee
_________________________________________
TRUST AGREEMENT
Dated as of March 1, 1997
__________________________________________
Consumer Loan Asset Backed Certificates,
Series 1997-1
<PAGE>
Table of Contents
Section Page
ARTICLE I
Definitions
1.01. Definitions . . . . . . . . . . . . . . . . . . 1
1.02. Other Definitional Provisions . . . . . . . . . 1
ARTICLE II
Organization
2.01. Name. . . . . . . . . . . . . . . . . . . . . . 3
2.02. Office. . . . . . . . . . . . . . . . . . . . . 3
2.03. Purposes and Powers . . . . . . . . . . . . . . 3
2.04. Appointment of Owner Trustee. . . . . . . . . . 4
2.05. Initial Capital Contribution of Owner Trust
Estate . . . . . . . . . . . . . . . . . . . . 4
2.06. Declaration of Trust. . . . . . . . . . . . . . 4
2.07. Liability of the Holder of the Designated
Certificate. . . . . . . . . . . . . . . . . . 5
2.08. Title to Trust Property . . . . . . . . . . . . 5
2.09. Location of Corporate Trust Office. . . . . . . 5
2.10. Representations and Warranties and Covenants
of HCLC. . . . . . . . . . . . . . . . . . . . 6
ARTICLE III
Conveyance of the Series 1997-1 Participation Interest;
Certificates
3.01. Conveyance of the Series 1997-1 Participation
Interest . . . . . . . . . . . . . . . . . . . 8
3.02. Initial Ownership . . . . . . . . . . . . . . . 8
3.03. The Certificates. . . . . . . . . . . . . . . . 8
3.04. Authentication of Certificates. . . . . . . . . 9
3.05. Registration of and Limitations on Transfer
and Exchange of Certificates . . . . . . . . . 9
3.06. Mutilated, Destroyed, Lost or Stolen Certif-
icates . . . . . . . . . . . . . . . . . . . . 12
3.07. Persons Deemed Certificateholders . . . . . . . 12
3.08. Access to List of Certificateholders' Names
and Addresses. . . . . . . . . . . . . . . . . 13
3.09. Maintenance of Office or Agency . . . . . . . . 13
3.10. Certificate Paying Agent. . . . . . . . . . . . 13
3.11. Ownership by HCLC . . . . . . . . . . . . . . . 14
3.12. RESERVED. . . . . . . . . . . . . . . . . . . . 15
3.13. Optional Repurchase of the Series 1997-1
Participation Interest . . . . . . . . . . . . 15
ARTICLE IV
Actions by Owner Trustee
4.01. Prior Notice to Certificateholders with
Respect to Certain Matters . . . . . . . . . . 16
4.02. Action by Certificateholders with Respect to
Certain Matters. . . . . . . . . . . . . . . . 17
4.03. Action by Certificateholders with Respect to
Bankruptcy . . . . . . . . . . . . . . . . . . 17
4.04. Restrictions on Certificateholders' Power . . . 17
4.05. Majority Control. . . . . . . . . . . . . . . . 17
ARTICLE V
Application of Trust Funds
5.01. Distributions . . . . . . . . . . . . . . . . . 18
5.02. Method of Payment . . . . . . . . . . . . . . . 18
5.03. Signature on Returns. . . . . . . . . . . . . . 19
5.04. Statements to Certificateholders. . . . . . . . 19
5.05. Tax Reporting; Tax Elections. . . . . . . . . . 19
5.06. Capital Accounts. . . . . . . . . . . . . . . . 19
ARTICLE VI
Authority and Duties of Owner Trustee
6.01. General Authority . . . . . . . . . . . . . . . 22
6.02. General Duties. . . . . . . . . . . . . . . . . 22
6.03. Action upon Instruction . . . . . . . . . . . . 22
6.04. No Duties Except as Specified in this Trust
Agreement or in Instructions . . . . . . . . . 23
6.05. No Action Except Under Specified Documents or
Instructions . . . . . . . . . . . . . . . . . 24
6.06. Restrictions. . . . . . . . . . . . . . . . . . 24
ARTICLE VII
Concerning the Owner Trustee
7.01. Acceptance of Trusts and Duties . . . . . . . . 25
7.02. Furnishing of Documents . . . . . . . . . . . . 26
7.03. Representations and Warranties. . . . . . . . . 26
7.04. Reliance; Advice of Counsel . . . . . . . . . . 27
7.05. Not Acting in Individual Capacity . . . . . . . 27
7.06. Owner Trustee Not Liable for Certificates . . . 28
7.07. Owner Trustee May Own Certificates and Notes. . 28
ARTICLE VIII
Compensation of Owner Trustee
8.01. Owner Trustee's Fees and Expenses . . . . . . . 29
8.02. Indemnification . . . . . . . . . . . . . . . . 29
ARTICLE IX
Termination of Trust Agreement
9.01. Termination of Trust Agreement. . . . . . . . . 31
9.02. Dissolution upon Bankruptcy of the Holder of
the Designated Certificate . . . . . . . . . . 32
ARTICLE X
Successor Owner Trustees and Additional Owner Trustees
10.01. Eligibility Requirements for Owner Trustee. . . 34
10.02. Resignation or Removal of Owner Trustee . . . . 34
10.03. Successor Owner Trustee . . . . . . . . . . . . 35
10.04. Merger or Consolidation of Owner Trustee. . . . 35
10.05. Appointment of Co-Trustee or Separate
Trustee. . . . . . . . . . . . . . . . . . . . 36
ARTICLE XI
Miscellaneous
11.01. Amendments. . . . . . . . . . . . . . . . . . . 38
11.02. No Legal Title to Owner Trust Estate in
Certificateholders . . . . . . . . . . . . . . 39
11.03. Limitations on Rights of Others . . . . . . . . 39
11.04. Notices . . . . . . . . . . . . . . . . . . . . 39
11.05. Severability. . . . . . . . . . . . . . . . . . 40
11.06. Separate Counterparts . . . . . . . . . . . . . 40
11.07. Successors and Assigns. . . . . . . . . . . . . 40
11.08. Covenants of the Seller . . . . . . . . . . . . 40
11.09. No Petition . . . . . . . . . . . . . . . . . . 41
11.10. No Recourse . . . . . . . . . . . . . . . . . . 41
11.11. Headings. . . . . . . . . . . . . . . . . . . . 41
11.12. Governing Law . . . . . . . . . . . . . . . . . 41
11.13. Integration . . . . . . . . . . . . . . . . . . 41
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . 42
<PAGE>
EXHIBITS
Exhibit A - Form of Certificate. . . . . . . . . . . . . . . .A-1
Exhibit B - RESERVED . . . . . . . . . . . . . . . . . . . . .B-1
Exhibit C - Certificate of Trust of Household
Consumer Loan Trust 1997-1 . . . . . . . . . . . .C-1
Exhibit D - Form of 144A Investment Letter . . . . . . . . . .D-1
Exhibit E - Definitions. . . . . . . . . . . . . . . . . . . .E-1
Exhibit F - Form of Certificate of Non-Foreign Status. . . . .F-1
Exhibit G - Form of Investment Letter
for Accredited Investors . . . . . . . . . . . . .G-1<PAGE>
This Trust Agreement, dated as of March 1, 1997 (as amended
from time to time, this "Trust Agreement"), between HOUSEHOLD
CONSUMER LOAN CORPORATION, a Nevada corporation, as Seller and as
Holder of the Designated Certificate ("HCLC", the "Seller", and
the "Designated Certificateholder" as the context requires) and
CHASE MANHATTAN BANK DELAWARE, a Delaware banking corporation, as
Owner Trustee (the "Owner Trustee"),
WITNESSETH THAT:
In consideration of the mutual agreements herein contained,
HCLC and the Owner Trustee agree as follows:
ARTICLE I
Definitions
Section 1.01. Definitions. For all purposes of this Trust
Agreement, except as otherwise expressly provided herein or
unless the context otherwise requires, capitalized terms not
otherwise defined herein shall have the meanings assigned to such
terms in the Definitions attached hereto as Exhibit E, which is
incorporated by reference herein. All other capitalized terms
used herein shall have the meanings specified herein.
SECTION 1.02. Other Definitional Provisions.
(a) All terms defined in this Trust Agreement shall have
the defined meanings when used in any certificate or other docu-
ment made or delivered pursuant hereto unless otherwise defined
therein.
(b) As used in this Trust Agreement and in any certificate
or other document made or delivered pursuant hereto or thereto,
accounting terms not defined in this Trust Agreement or in any
such certificate or other document, and accounting terms partly
defined in this Trust Agreement or in any such certificate or
other document to the extent not defined, shall have the respec-
tive meanings given to them under generally accepted accounting
principles. To the extent that the definitions of accounting
terms in this Trust Agreement or in any such certificate or other
document are inconsistent with the meanings of such terms under
generally accepted accounting principles, the definitions con-
tained in this Trust Agreement or in any such certificate or
other document shall control.
(c) The words "hereof," "herein," "hereunder" and words of
similar import when used in this Trust Agreement shall refer to
this Trust Agreement as a whole and not to any particular pro-
vision of this Trust Agreement; Section and Exhibit references
contained in this Trust Agreement are references to Sections and
Exhibits in or to this Trust Agreement unless otherwise speci-
fied; and the term "including" shall mean "including without
limitation".
(d) The definitions contained in this Trust Agreement are
applicable to the singular as well as the plural forms of such
terms and to the masculine as well as to the feminine and neuter
genders of such terms.
(e) Any agreement, instrument or statute defined or
referred to herein or in any instrument or certificate delivered
in connection herewith means such agreement, instrument or
statute as from time to time amended, modified or supplemented
and includes (in the case of agreements or instruments)
references to all attachments thereto and instruments incorpo-
rated therein; references to a Person are also to its permitted
successors and assigns.
<PAGE>
ARTICLE II
Organization
Section 2.01. Name. The trust created hereby (the
"Issuer") shall be known as "Household Consumer Loan Trust
1997-1," in which name the Owner Trustee may conduct the business
of the Issuer, make and execute contracts and other instruments
on behalf of the Issuer and sue and be sued.
Section 2.02. Office. An office of the Issuer shall be in
care of the Owner Trustee at the Corporate Trust Office or at
such other address in Delaware as the Owner Trustee may designate
by written notice to the Certificateholders and the Seller.
Section 2.03. Purposes and Powers. The purpose of the
Issuer is to engage in the following activities:
(i) to issue the Notes pursuant to the Indenture and
the Certificates pursuant to this Trust Agreement and to
sell the Notes and the Certificates;
(ii) to purchase the Series 1997-1 Participation
Interest and to pay or cause to be paid its organizational,
start-up and transactional expenses;
(iii) to assign, grant, transfer, pledge, mortgage and
convey the Indenture Trust Estate pursuant to the Indenture
and to hold, manage and distribute to the Certificateholders
pursuant to Section 5.01 any portion of the Indenture Trust
Estate released from the Lien of, and remitted to the Issuer
pursuant to the Indenture;
(iv) to enter into and perform its obligations under
the Basic Documents to which it is to be a party;
(v) to engage in those activities, including entering
into agreements, that are necessary, suitable or convenient
to accomplish the foregoing or are incidental thereto or
connected therewith, including, without limitation, to
accept additional contributions of equity that are not
subject to the Lien of the Indenture; and
(vi) subject to compliance with the Basic Documents, to
engage in such other activities as may be required in
connection with conservation of the Owner Trust Estate and
the making of distributions to the Certificateholders and
the Noteholders.
The Issuer is hereby authorized to engage in the foregoing activ-
ities. The Issuer shall not engage in any activity other than in
connection with the foregoing or other than as required or autho-
rized by the terms of this Trust Agreement or the Basic Docu-
ments.
Section 2.04. Appointment of Owner Trustee. The Seller
hereby appoints the Owner Trustee as trustee of the Issuer
effective as of the date hereof, to have all the rights, powers
and duties set forth herein.
Section 2.05. Initial Capital Contribution of Owner Trust
Estate. The Seller hereby sells, assigns, transfers, conveys and
sets over to the Issuer, as of the date hereof, the sum of $1.
The Owner Trustee hereby acknowledges on behalf of the Issuer,
receipt in trust from the Seller, as of the date hereof, of the
foregoing contribution, which shall constitute the initial corpus
of the Issuer and shall be deposited in the Payment Account. The
Owner Trustee also acknowledges on behalf of the Issuer receipt
of the other property transferred and assigned to the Issuer
pursuant to Section 3.01, which shall constitute the Owner Trust
Estate. The Seller shall pay or cause to be paid organizational
expenses of the Issuer as they may arise or shall, upon the
request of the Owner Trustee, promptly reimburse the Owner
Trustee for any such expenses paid by the Owner Trustee. The
Seller shall execute and deliver any necessary state or federal
securities law filings on behalf of the Issuer.
Section 2.06. Declaration of Trust. The Owner Trustee
hereby declares that it will hold the Owner Trust Estate on
behalf of the Issuer in trust upon and subject to the conditions
set forth herein for the use and benefit of the Certificate-
holders, subject to the obligations of the Issuer under the Basic
Documents. It is the intention of the parties hereto that the
Issuer constitute a business trust under the Business Trust
Statute and that this Trust Agreement constitute the governing
instrument of such business trust. It is the intention of the
parties hereto that, for income and franchise tax purposes, the
Issuer shall be treated as a partnership, with the assets of the
partnership being the Owner Trust Estate, the partners of the
partnership being the Certificateholders, and the Notes being
debt of the partnership. Except as otherwise provided in this
Trust Agreement, the rights of the Certificateholders (other than
the Holder of the Designated Certificate) will be those of
limited partners and the rights of the Holder of the Designated
Certificate, subject to Section 6.03 hereof, will be those of a
general partner in a partnership formed under the Delaware
Revised Uniform Limited Partnership Act. The parties agree that,
unless otherwise required by appropriate tax authorities, the
Issuer will file or cause to be filed annual or other necessary
returns, reports and other forms consistent with the
characterization of the Issuer as a partnership for such tax
purposes. Effective as of the date hereof, the Owner Trustee
shall have all rights, powers and duties set forth herein and in
the Business Trust Statute with respect to accomplishing the
purposes of the Issuer. The Owner Trustee has filed with the
Secretary of State of the State of Delaware a Certificate of
Trust of the Issuer.
Section 2.07. Liability of the Holder of the Designated
Certificate. (a) The Holder of the Designated Certificate shall
be liable directly to and will indemnify any injured party for
all losses, claims, damages, liabilities and expenses of the
Issuer (including Expenses, to the extent not paid out of the
Owner Trust Estate) to the extent that the Holder of the Desig-
nated Certificate would be liable if the Issuer were a partner-
ship under the Delaware Revised Uniform Limited Partnership Act
in which the Holder of the Designated Certificate were a general
partner; provided, however, that the Holder of the Designated
Certificate shall not be liable for payments required to be made
on the Notes or the Certificates, or for any losses incurred by a
Certificateholder in the capacity of an investor in the Certifi-
cates or a Noteholder in the capacity of an investor in the
Notes. In addition, any third party creditors of the Issuer
(other than in connection with the obligations described in the
preceding sentence for which the Holder of the Designated Certif-
icate shall not be liable) shall be deemed third party benefici-
aries of this subsection (a). The obligations of the Holder of
the Designated Certificate under this subsection (a) shall be
evidenced by the Designated Certificate.
(b) Subject to subsection (a) above, the Certificateholders
shall be entitled to the same limitation of personal liability
extended to stockholders of private corporations for profit
organized under the General Corporation Law of the State of
Delaware.
Section 2.08. Title to Trust Property. Legal title to the
Owner Trust Estate shall be vested at all times in the Issuer as
a separate legal entity except where applicable law in any juris-
diction requires title to any part of the Owner Trust Estate to
be vested in a trustee or trustees, in which case title shall be
deemed to be vested in the Owner Trustee, a co-trustee and/or a
separate trustee, as the case may be.
Section 2.09. Location of Corporate Trust Office. All bank
accounts maintained by the Owner Trustee on behalf of the Issuer
shall be located in the State of Delaware or the State of New
York. The Issuer shall not have any employees; provided,
however, that nothing herein shall restrict or prohibit the Owner
Trustee from having employees within or without the State of
Delaware or taking actions outside the State of Delaware in order
to comply with Section 2.03. Payments will be received by the
Issuer only in Delaware or New York, and payments will be made by
the Issuer only from Delaware or New York. The Owner Trustee
shall maintain its Corporate Trust Office in the State of
Delaware.
Section 2.10. Representations and Warranties and Covenants
of HCLC. (a) The Seller hereby represents and warrants to the
Owner Trustee that:
(i) The Seller is duly organized and validly existing
as a corporation in good standing under the laws of the
State of Nevada, with power and authority to own its proper-
ties and to conduct its business as such properties are
currently owned and such business is presently conducted.
(ii) The Seller is duly qualified to do business as a
foreign corporation in good standing and has obtained all
necessary licenses and approvals in all jurisdictions in
which the ownership or lease of its property or the conduct
of its business shall require such qualifications and in
which the failure to so qualify would have a material
adverse effect on the business, properties, assets or
condition (financial or other) of the Seller.
(iii) The Seller has the power and authority to execute
and deliver this Trust Agreement and to carry out its terms;
the Seller has full power and authority to sell and assign
the property to be sold and assigned to and deposited with
the Issuer, and the Seller has duly authorized such sale and
assignment and deposit to the Issuer by all necessary
corporate action; and the execution, delivery and
performance of this Trust Agreement have been duly
authorized by the Seller by all necessary corporate action.
(iv) The consummation of the transactions contemplated
by this Trust Agreement and the fulfillment of the terms
hereof do not conflict with, result in any breach of any of
the terms and provisions of, or constitute (with or without
notice or lapse of time) a default under, the articles of
incorporation or bylaws of the Seller, or any indenture,
agreement or other instrument to which the Seller is a party
or by which it is bound; nor result in the creation or
imposition of any Lien upon any of its properties pursuant
to the terms of any such indenture, agreement or other
instrument (other than pursuant to the Basic Documents); nor
violate any law or, to the best of the Seller's knowledge,
any order, rule or regulation applicable to the Seller of
any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality
having jurisdiction over the Seller or its properties.
(v) To the Seller's best knowledge, there are no
proceedings or investigations pending or threatened before
any court, regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the
Seller or its properties: (A) asserting the invalidity of
this Trust Agreement, (B) seeking to prevent the consum-
mation of any of the transactions contemplated by this Trust
Agreement or (C) seeking any determination or ruling that
might materially and adversely affect the performance by the
Seller of its obligations under, or the validity or
enforceability of, this Trust Agreement.
(vi) Immediately prior to the conveyance by the Seller
to the Issuer of the Series 1997-1 Participation Interest as
contemplated by Section 3.01 hereof, the Seller owned the
Series 1997-1 Participation Interest free and clear of any
Lien.
<PAGE>
ARTICLE III
Conveyance of the Series 1997-1 Participation Interest;
Certificates
Section 3.01. Conveyance of the Series 1997-1 Participation
Interest. The Seller, concurrently with the execution and
delivery hereof, does hereby transfer, convey, sell and assign to
the Issuer, on behalf of the Holders of the Notes and the Certif-
icates, without recourse, all its right, title and interest in
and to the Series 1997-1 Participation Interest free and clear of
any Liens, and all monies and the collections and proceeds due
thereon and any part thereof which consists of general intan-
gibles (as defined in the UCC) (the "Owner Trust Estate").
Simultaneous therewith and in consideration thereof, the Seller
shall receive from the Issuer the Securities, including the
Designated Certificate, and the obligation of the Issuer to pay
an amount equal to a deferred stream of payments represented by
the Holdback Amount in accordance with Section 3.05 of the
Indenture.
The parties hereto intend that the transaction set forth
herein be a sale by the Seller to the Issuer of all of its right,
title and interest in and to the Series 1997-1 Participation
Interest and the other property described above. In the event
that the transaction set forth herein is not deemed to be a sale,
the Seller hereby grants to the Issuer a security interest in all
of its right, title and interest in, to and under the Owner Trust
Estate, all distributions thereon and all proceeds thereof, and
this Trust Agreement shall constitute a security agreement under
applicable law.
Section 3.02. Initial Ownership. Upon the formation of the
Issuer by the contribution by the Seller pursuant to Section 2.05
and until the conveyance of the Series 1997-1 Participation
Interest pursuant to Section 3.01 and the issuance of the
Certificates, the Seller shall be the sole beneficiary of the
Issuer.
Section 3.03. The Certificates. The Certificates shall be
issued in minimum denominations of $1,000,000 and in integral
multiples of $100,000 in excess thereof; except for one
Certificate that may not be in an integral multiple of $100,000;
provided, however, that the Designated Certificate issued
pursuant to Section 3.11 may be issued in the amount of $336,000.
The Certificates may not be subdivided for resale into units that
had a Security Balance of less than $1,000,000 upon the Closing
Date. The Certificates shall be executed on behalf of the Issuer
by manual or facsimile signature of an authorized officer of the
Owner Trustee and authenticated in the manner provided in Section
3.04. Certificates bearing the manual or facsimile signatures of
individuals who were, at the time when such signatures shall have
been affixed, authorized to sign on behalf of the Issuer, shall
be validly issued and entitled to the benefit of this Trust
Agreement, notwithstanding that such individuals or any of them
shall have ceased to be so authorized prior to the authentication
and delivery of such Certificates or did not hold such offices at
the date of authentication and delivery of such Certificates. A
Person shall become a Certificateholder and shall be entitled to
the rights and subject to the obligations of a Certificateholder
hereunder upon such Person's acceptance of a Certificate duly
registered in such Person's name, pursuant to Section 3.05. Each
Person who shall become a Certificateholder shall establish its
non-foreign status by submitting to the Certificate Paying Agent
an IRS Form W-9 and the Certificate of Non-Foreign Status set
forth in Exhibit F hereto.
A transferee of a Certificate shall become a Certificate-
holder and shall be entitled to the rights and subject to the
obligations of a Certificateholder hereunder upon such trans-
feree's acceptance of a Certificate duly registered in such
transferee's name pursuant to and upon satisfaction of the
conditions set forth in Section 3.05.
Section 3.04. Authentication of Certificates. Concurrently
with the acquisition of the Series 1997-1 Participation Interest
by the Issuer, the Owner Trustee shall cause the Certificates in
an aggregate principal amount equal to the Initial Principal
Balance of the Certificates to be executed on behalf of the
Issuer, authenticated and delivered to or upon the written order
of the Seller, signed by its chairman of the board, its
president, any vice president, secretary, treasurer or any
assistant treasurer, without further corporate action by the
Seller, in authorized denominations. No Certificate shall
entitle its Holder to any benefit under this Trust Agreement or
be valid for any purpose unless there shall appear on such
Certificate a certificate of authentication substantially in the
form set forth in Exhibit A, executed by the Owner Trustee or The
Bank of New York, as the Issuer's authenticating agent, by manual
signature; such authentication shall constitute conclusive
evidence that such Certificate shall have been duly authenticated
and delivered hereunder. All Certificates shall be dated the
date of their authentication.
Section 3.05. Registration of and Limitations on Transfer
and Exchange of Certificates. The Certificate Registrar shall
keep or cause to be kept, at the office or agency maintained
pursuant to Section 3.09, a Certificate Register in which, sub-
ject to such reasonable regulations as it may prescribe, the
Issuer shall provide for the registration of Certificates and of
transfers and exchanges of Certificates as herein provided. The
Bank of New York shall be the initial Certificate Registrar.
Subject to satisfaction of the conditions set forth below
and to the provisions of Section 3.11 with respect to the Desig-
nated Certificate, upon surrender for registration of transfer of
any Certificate at the office or agency maintained pursuant to
Section 3.09, the Issuer shall execute, authenticate and deliver
(or shall cause The Bank of New York as its authenticating agent
to authenticate and deliver) in the name of the designated trans-
feree or transferees, one or more new Certificates in authorized
denominations of a like aggregate amount dated the date of
authentication by the Owner Trustee or any authenticating agent.
At the option of a Holder, Certificates may be exchanged for
other Certificates of authorized denominations of a like aggre-
gate amount upon surrender of the Certificates to be exchanged at
the office or agency maintained pursuant to Section 3.09.
Every Certificate presented or surrendered for registration
of transfer or exchange shall be accompanied by a written instru-
ment of transfer in form satisfactory to the Certificate Regis-
trar duly executed by the Holder or such Holder's attorney duly
authorized in writing. Each Certificate surrendered for regis-
tration of transfer or exchange shall be cancelled and subse-
quently disposed of by the Certificate Registrar in accordance
with its customary practice.
No service charge shall be made for any registration of
transfer or exchange of Certificates, but the Owner Trustee or
the Certificate Registrar may require payment of a sum sufficient
to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.
No transfer of a Certificate shall be made unless such
transfer is exempt from the registration requirements of the
Securities Act and any applicable state securities laws or is
made in accordance with said Securities Act and laws. In the
event of any such transfer, the Certificate Registrar or the
Seller shall require the transferee to execute (i) (a) an
investment letter (in substantially the form attached hereto as
Exhibit D) in form and substance reasonably satisfactory to the
Certificate Registrar and the Seller certifying to the Issuer,
the Owner Trustee, the Certificate Registrar and the Seller that
such transferee is a "qualified institutional buyer" under Rule
144A under the Securities Act, or (b) an investment letter (in
substantially the form attached hereto as Exhibit G), acceptable
to and in form and substance reasonably satisfactory to the
Certificate Registrar, which investment letters shall not be an
expense of the Issuer, the Owner Trustee, the Certificate Regis-
trar, the Servicer or the Seller and (ii) the Certificate of Non-
Foreign Status (in substantially the form attached hereto as
Exhibit F) acceptable to and in form and substance reasonably
satisfactory to the Certificate Registrar, which certificate
shall not be an expense of the Issuer, the Owner Trustee, the
Certificate Registrar, the Servicer, the Administrator or the
Seller. The Holder of a Certificate desiring to effect such
transfer shall, and does hereby agree to, indemnify the Issuer,
the Owner Trustee, the Certificate Registrar, the Servicer and
the Seller against any liability that may result if the transfer
is not so exempt or is not made in accordance with such federal
and state laws.
No transfer of a Certificate shall be made unless the
Certificate Registrar shall have received either (i) a repre-
sentation letter from the proposed transferee of such Certificate
to the effect that such proposed transferee is not an employee
benefit plan subject to the fiduciary responsibility provisions
of ERISA, or Section 4975 of the Code, or a Person acting on
behalf of any such plan or using the assets of any such plan, or
if the proposed transferee is an insurance company, a
representation that the proposed transferee is an insurance
company which is purchasing such certificates with funds
contained in an "insurance company general account" (as such term
is defined in section v(e) of prohibited transaction class
exemption 95-60 ("ptce 95-60")), that the purchase and holding of
such certificates are covered under ptce 95-60 and that ptce 95-
60 remains a valid and available exemption, which representation
letter shall not be an expense of the Issuer, Owner Trustee, the
Certificate Registrar, the Servicer or the Seller or (ii) in the
case of any such certificate presented for registration in the
name of an employee benefit plan subject to the fiduciary
responsibility provisions of ERISA, or Section 4975 of the Code
(or comparable provisions of any subsequent enactments), or a
trustee of any such plan, or any other Person who is using the
assets of any such plan to effect such acquisition, an Opinion of
Counsel, in form and substance reasonably satisfactory to, and
addressed and delivered to, the Issuer, the Certificate Registrar
and the Seller, to the effect that the purchase or holding of
such Certificate will not result in the assets of the Owner Trust
Estate being deemed to be "plan assets" and subject to the
fiduciary responsibility provisions of ERISA or the prohibited
transaction provisions of the Code, will not constitute or result
in a prohibited transaction within the meaning of Section 406 or
Section 407 of ERISA or Section 4975 of the Code, and will not
subject the Issuer, the Owner Trustee, the Certificate Registrar,
the Servicer or the Seller to any obligation or liability
(including obligations or liabilities under ERISA or Section 4975
of the Code) in addition to those explicitly undertaken in this
Trust Agreement which Opinion of Counsel shall not be an expense
of the Issuer, the Owner Trustee, the Certificate Registrar, the
Servicer or Seller.
The Certificates shall not be listed for trading on an
established securities market, nor be readily tradeable on a
secondary market, nor be transferable through the substantial
equivalent of a secondary market, nor shall the Issuer be
permitted to have more than 100 partners, for income tax
purposes, all within the meaning of Code Section 7704, and its
attendant regulations, as applicable. If requested, in the
discretion of the Seller, transfer of a Certificate shall be made
only if accompanied by an Opinion of Counsel satisfactory to the
Owner Trustee, which Opinion of Counsel shall not be an expense
of the Issuer, the Owner Trustee, the Servicer or the Seller, to
the effect such transfer will not cause the Issuer to be a
publicly traded partnership taxable as a corporation, and will
not cause the termination of the Issuer under the federal income
tax rules applicable to partnerships in a manner having a
material adverse tax impact to any existing Certificateholder
(unless such Certificateholder provides its written consent to
such transfer).
Each Certificateholder agrees to provide information to the
Administrator when so requested concerning the beneficial owner-
ship of its Certificates as necessary for the Issuer to assure
its compliance with the requirements for avoiding taxation at the
entity level as a publicly traded partnership or otherwise. Each
Certificateholder agrees to restrict the transfer of record
ownership and beneficial ownership of its Certificates as
requested by the Administrator based upon applicable governmental
regulation, rulings or notices and any judicial decisions as may
exist from time to time, as necessary or advisable for avoiding
the Issuer's treatment as a publicly-traded partnership taxable
as a corporation, or its termination for federal income tax
purposes under Code Section 708 in a manner having a material
adverse tax impact on any non-consenting existing
Certificateholder.
Section 3.06. Mutilated, Destroyed, Lost or Stolen Certif-
icates. If (a) any mutilated Certificate shall be surrendered to
the Certificate Registrar, or if the Certificate Registrar shall
receive evidence to its satisfaction of the destruction, loss or
theft of any Certificate and (b) there shall be delivered to the
Issuer, the Certificate Registrar and the Owner Trustee such
security or indemnity as may be required by them to save each of
them harmless, then in the absence of notice that such Certif-
icate has been acquired by a bona fide purchaser, the Owner
Trustee on behalf of the Issuer shall execute and the Owner
Trustee or The Bank of New York, as the Issuer's authenticating
agent, shall authenticate and deliver, in exchange for or in lieu
of any such mutilated, destroyed, lost or stolen Certificate, a
new Certificate of like tenor and denomination. In connection
with the issuance of any new Certificate under this Section 3.06,
the Owner Trustee or the Certificate Registrar may require the
payment of a sum sufficient to cover any tax or other govern-
mental charge that may be imposed in connection therewith. Any
duplicate Certificate issued pursuant to this Section 3.06 shall
constitute conclusive evidence of ownership in the Issuer, as if
originally issued, whether or not the lost, stolen or destroyed
Certificate shall be found at any time.
Section 3.07. Persons Deemed Certificateholders. Prior to
due presentation of a Certificate for registration of transfer,
the Owner Trustee, the Certificate Registrar or any Certificate
Paying Agent may treat the Person in whose name any Certificate
is registered in the Certificate Register as the owner of such
Certificate for the purpose of receiving distributions pursuant
to Section 5.02 and for all other purposes whatsoever, and none
of the Issuer, the Owner Trustee, the Certificate Registrar or
any Paying Agent shall be bound by any notice to the contrary.
Section 3.08. Access to List of Certificateholders' Names
and Addresses. The Certificate Registrar shall furnish or cause
to be furnished to the Seller or the Owner Trustee, within
15 days after receipt by the Certificate Registrar of a written
request therefor from the Seller or the Owner Trustee, a list, in
such form as the Seller or the Owner Trustee, as the case may be,
may reasonably require, of the names and addresses of the
Certificateholders as of the most recent Record Date. If three
or more Certificateholders or one or more Holders of Certificates
representing not less than 25% of the Security Balance of the
Certificates apply in writing to the Certificate Registrar, and
such application states that the applicants desire to communicate
with other Certificateholders with respect to their rights under
the Basic Documents or under the Certificates and such applica-
tion is accompanied by a copy of the communication that such
applicants propose to transmit, then the Certificate Registrar
shall, within five Business Days after the receipt of such
application, afford such applicants access during normal business
hours to the current list of Certificateholders. Each Holder, by
receiving and holding a Certificate, shall be deemed to have
agreed not to hold any of the Issuer, the Seller, the Holder of
the Designated Certificate, the holder of the Holdback Amount,
the Certificate Registrar or the Owner Trustee accountable by
reason of the disclosure of its name and address, regardless of
the source from which such information was derived.
Section 3.09. Maintenance of Office or Agency. The Certif-
icate Registrar, on behalf of the Issuer, shall maintain in the
city of New York, an office or offices or agency or agencies
where Certificates may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the
Owner Trustee in respect of the Certificates and the Basic
Documents may be served. The Issuer initially designates the
Corporate Trust Office of the Indenture Trustee as its office for
such purposes. The Certificate Registrar shall give prompt
written notice to the Seller, the Owner Trustee, the Holder of
the Designated Certificate and the Certificateholders of any
change in the location of the Certificate Register or any such
office or agency. The Certificate Registrar shall immediately
furnish to the Owner Trustee any notices or demands to the Owner
Trustee received by the Certificate Registrar at the office
maintained by it pursuant to this Section.
Section 3.10. Certificate Paying Agent. The Certificate
Paying Agent shall make distributions to Certificateholders from
the Payment Account pursuant to Section 3.05 of the Indenture.
The Issuer may revoke such power and remove the Certificate
Paying Agent if the Administrator determines in its sole discre-
tion that the Certificate Paying Agent shall have failed to
perform its obligations under this Trust Agreement or as set
forth in Section 3.03 of the Indenture in any material respect;
provided that at the time of such removal, the Paying Agent shall
also be removed by the Issuer under the Indenture. The Bank of
New York shall be permitted to resign as Certificate Paying Agent
upon 30 days written notice to the Owner Trustee; provided that
The Bank of New York is also resigning as Paying Agent under the
Indenture at such time. In the event that The Bank of New York
shall no longer be the Certificate Paying Agent and Paying Agent
under the Indenture, the Administrator shall appoint a successor
to act as Certificate Paying Agent (which shall be a bank or
trust company) and which shall also be the successor Paying Agent
under the Indenture. The Administrator shall cause such succes-
sor Certificate Paying Agent or any additional Certificate Paying
Agent appointed by the Administrator to execute and deliver to
the Owner Trustee an instrument to the effect set forth in
Section 3.03 of the Indenture as it relates to the Certificate
Paying Agent. The Certificate Paying Agent shall return all
unclaimed funds to the Issuer and upon removal of a Certificate
Paying Agent such Certificate Paying Agent shall also return all
funds in its possession to the Issuer. The provisions of
Sections 7.01, 7.03, 7.04 and 8.01 shall apply to the Certificate
Paying Agent to the extent applicable. Any reference in this
Agreement to the Certificate Paying Agent shall include any co-
paying agent unless the context requires otherwise.
Section 3.11. Ownership by HCLC. (a) HCLC shall receive
on the Closing Date, in partial consideration for the transfer of
the Series 1997-1 Participation Interest, a Certificate repre-
senting at least 1% of the Initial Principal Balance of the
Certificates (the "Designated Certificate") and the right to the
entire payment stream represented by the Holdback Amount. The
Owner Trustee shall cause the Designated Certificate and any
Successor Designated Certificate created pursuant to Section 9.02
to contain a legend stating "THIS CERTIFICATE IS NOT TRANSFERABLE
EXCEPT UPON SATISFACTION OF THE CONDITIONS IN SECTION 3.11(b) OF
THE TRUST AGREEMENT." For purposes of the Business Trust
Statute, the Designated Certificate and any Successor Designated
Certificate shall be deemed to be a separate class of
Certificates from all other Certificates issued by the Issuer;
provided that the rights and obligations evidenced by all
Certificates, regardless of class, shall, except as provided in
this Section, be identical.
(b) The Designated Certificate and Holdback Amount shall,
for income and franchise tax purposes, be treated as the general
partnership interest of the Issuer. The Designated Certificate
shall at all times represent an investment in the Issuer of not
less than 1.00% of the capital represented by all Certificates.
The Designated Certificate and Holdback Amount shall not be
separately transferable. HCLC may transfer the Designated
Certificate to an Affiliate of HCLC if, (a) the applicable
provisions of Section 3.05 are satisfied and (b) the Certificate
Registrar receives an Opinion of Counsel to the effect that the
transfer of the Designated Certificate shall not cause the Issuer
to be subject to an entity level tax. Otherwise, HCLC may
transfer the Designated Certificate if, (a) the conditions in
clauses (a) and (b) in the preceding sentence are satisfied, (b)
a majority in interest by Security Balance of the Certificates
(exclusive of the Designated Certificate) approves such transfer,
which will not be unreasonably withheld, and (c) the Rating
Agencies shall consent to such transfer.
Section 3.12. RESERVED
Section 3.13. Optional Repurchase of the Series 1997-1
Participation Interest. (a) The Seller may, with 10 days prior
written notice to the Owner Trustee, Servicer and the Indenture
Trustee, purchase the entire Series 1997-1 Participation
Interest, on any Payment Date in which the Aggregate Security
Balance is equal to or less than ten percent of the initial
Aggregate Security Balance. The Seller shall deposit into the
Payment Account on the Business Day prior to the Payment Date on
which such purchase is to occur, an amount equal to the principal
balance of the Series 1997-1 Participation Interest and the
amount of interest and Certificate Yield to be distributed to the
Security holders pursuant to Section 3.05(a) of the Indenture as
of such Payment Date.<PAGE>
ARTICLE IV
Actions by Owner Trustee
Section 4.01. Prior Notice to Certificateholders with
Respect to Certain Matters. With respect to the following
matters, the Owner Trustee shall not take action unless at least
30 days before the taking of such action, the Owner Trustee shall
have notified the Certificateholders in writing of the proposed
action and the Certificateholders shall not have notified the
Owner Trustee in writing prior to the 30th day after such notice
is given that such Certificateholders have withheld consent or
provided alternative direction:
(a) the initiation of any claim or lawsuit by the Issuer
(except claims or lawsuits brought in connection with the collec-
tion of the Series 1997-1 Participation Interest) and the com-
promise of any action, claim or lawsuit brought by or against the
Issuer (except with respect to the aforementioned claims or
lawsuits for collection of the Series 1997-1 Participation
Interest);
the election by the Issuer to file an amendment to the
Certificate of Trust (unless such amendment is required to be
filed under the Business Trust Statute);
(c) the amendment of the Indenture by a supplemental inden-
ture in circumstances where the consent of any Noteholder is
required;
(d) (i) the amendment of the Indenture by a supplemental
indenture in circumstances where the consent of any Noteholder is
not required and such amendment materially adversely affects the
interest of the Certificateholders or (ii) the amendment of the
Pooling and Servicing Agreement under circumstances where the
consent of the holder of Series Participation Interests is
required;
(e) the amendment, change or modification of the Adminis-
tration Agreement, except to cure any ambiguity or to amend or
supplement any provision in a manner or add any provision that
would not materially adversely affect the interests of the
Certificateholders; or
(f) the appointment pursuant to the Indenture of a succes-
sor Note Registrar, Paying Agent or Indenture Trustee or pursuant
to this Trust Agreement of a successor Certificate Registrar,
Certificate Paying Agent or Administrator or the consent to the
assignment by the Note Registrar, Paying Agent, Indenture
Trustee, Certificate Registrar, Certificate Paying Agent or
Administrator of its obligations under the Indenture or this
Trust Agreement, as applicable.
Section 4.02. Action by Certificateholders with Respect to
Certain Matters. The Owner Trustee shall not have the power,
except upon the direction of the Certificateholders, to
(a) remove the Administrator under the Administration Agreement
pursuant to Section 8 thereof, (b) appoint a successor Adminis-
trator pursuant to Section 8 of the Administration Agreement,
(c) remove the Servicer under the Pooling and Servicing Agreement
pursuant to Article X thereof or (d) except as expressly provided
in the Basic Documents, sell the Series 1997-1 Participation
Interest after the termination of the Indenture. The Owner
Trustee shall take the actions referred to in the preceding
sentence only upon written instructions signed by the Certifi-
cateholders.
Section 4.03. Action by Certificateholders with Respect to
Bankruptcy. The Owner Trustee shall not have the power to com-
mence a voluntary proceeding in bankruptcy relating to the Issuer
without the unanimous prior approval of all Certificateholders
and the delivery to the Owner Trustee by each such Certificate-
holder of a certificate certifying that such Certificateholder
reasonably believes that the Issuer is insolvent.
Section 4.04. Restrictions on Certificateholders' Power.
The Certificateholders shall not direct the Owner Trustee to take
or to refrain from taking any action if such action or inaction
would be contrary to any obligation of the Issuer or the Owner
Trustee under this Trust Agreement or any of the Basic Documents
or would be contrary to Section 2.03, nor shall the Owner Trustee
be obligated to follow any such direction, if given.
Section 4.05. Majority Control. Except as expressly pro-
vided herein, any action that may be taken by the Certificate-
holders under this Trust Agreement may be taken by the Holders of
Certificates evidencing not less than a majority of the outstand-
ing Security Balance of the Certificates. Except as expressly
provided herein, any written notice of the Certificateholders
delivered pursuant to this Trust Agreement shall be effective if
signed by Holders of Certificates evidencing not less than a
majority of the outstanding Security Balance of the Certificates
at the time of the delivery of such notice.
<PAGE>
ARTICLE V
Application of Trust Funds
Section 5.01. Distributions. (a) On each Payment Date,
the Certificate Paying Agent shall distribute out of the Payment
Account to the extent of funds on deposit therein and available
therefor, distributions on the Certificates and in payment of the
Holdback Amount as provided in Section 3.05 of the Indenture.
(b) In the event that any withholding tax is imposed on the
distributions (or allocations of income) to a Certificateholder,
such tax shall reduce the amount otherwise distributable to the
Certificateholder in accordance with Section 3.05 of the Inden-
ture. The Certificate Paying Agent is hereby authorized and
directed to retain or cause to be retained from amounts otherwise
distributable to the Certificateholders sufficient funds for the
payment of any tax that is legally owed by the Issuer (but such
authorization shall not prevent the Issuer or the effected
Certificateholder with the consent of the Designated
Certificateholder), from contesting any such tax in appropriate
proceedings, and withholding payment of such tax, if permitted by
law, pending the outcome of such proceedings). The amount of any
withholding tax imposed with respect to a Certificateholder shall
be treated as cash distributed to such Certificateholder at the
time it is withheld by the Certificate Paying Agent and remitted
to the appropriate taxing authority. If there is a possibility
that withholding tax is payable with respect to a distribution
(such as a distribution to a non-U.S. Certificateholder), the
Certificate Paying Agent may in its sole discretion withhold such
amounts in accordance with this paragraph (b).
(c) All calculations of the Certificate Yield on the
Certificates shall be made on the basis of the actual number of
days in an Interest Period and a year assumed to consist of 360
days.
Section 5.02. Method of Payment. Subject to Section
9.01(c), distributions required to be made to Certificateholders
on any Payment Date as provided in Section 3.05 of the Indenture
shall be made to each Certificateholder of record on the preced-
ing Record Date either by, in the case of any Certificateholder
owning Certificates, other than the Designated Certificate, hav-
ing denominations aggregating at least $1,000,000, wire transfer,
in immediately available funds, to the account of such Holder at
a bank or other entity having appropriate facilities therefor, if
such Certificateholder shall have provided to the Certificate
Registrar appropriate written instructions at least five Business
Days prior to such Payment Date or, if not, by check mailed to
such Certificateholder at the address of such Holder appearing in
the Certificate Register. All distributions in respect of the
initial Designated Certificate and the Holdback Amount shall be
made to HCLC, the initial Holder of the Designated Certificate or
its permitted transferee, as the case may be, by wire transfer,
in immediately available funds, to the account of such entity at
a bank or other entity having appropriate facilities therefor, as
specified in written instructions to the Certificate Paying Agent
on the fifth Business Day prior to the first Payment Date.
Section 5.03. Signature on Returns. The Holder of the
Designated Certificate shall sign on behalf of the Issuer the tax
returns of the Issuer.
Section 5.04. Statements to Certificateholders. No later
than the second Business Day prior to each Payment Date, the
Owner Trustee on behalf of the Issuer shall cause to be delivered
to the Certificate Paying Agent and the Indenture Trustee the
Monthly Security Report for such Payment Date prepared by the
Administrator substantially in the form set forth on Exhibit B to
the Indenture. On each Payment Date, the Certificate Paying
Agent shall send to each Certificateholder the statement or
statements provided to the Owner Trustee, the Certificate Paying
Agent and the Indenture Trustee by the Servicer pursuant to
Article V of the Pooling and Servicing Agreement with respect to
such Payment Date.
Section 5.05. Tax Reporting; Tax Elections. The Holder of
the Designated Certificate shall cause the Issuer to file federal
and state income tax returns and information statements as a
partnership for each of its taxable years. Within 90 days after
the end of each calendar year, the Holder of the Designated
Certificate shall cause the Issuer to provide to each Certifi-
cateholder an Internal Revenue Service form "K-1" or any succes-
sor schedule and supplemental information, if required by law, to
enable each Certificateholder to file its federal and state
income tax returns. The Holder of the Designated Certificate may
from time to time make and revoke such tax elections with respect
to the Issuer as it deems necessary or desirable in its sole
discretion to carry out the business of the Issuer or the pur-
poses of this Trust Agreement if permitted by applicable law.
Notwithstanding the foregoing, an election under Section 754 of
the Code shall not be made without the written consent of the
Holder of the Designated Certificate, which consent shall be
given in the sole discretion of the Holder of the Designated
Certificate. The Holder of the Designated Certificate shall
serve as tax matters partner for the Issuer.
Section 5.06. Capital Accounts. Separate capital accounts
shall be maintained for each Certificateholder in accordance with
tax accounting principles. Each such account shall initially
equal the amount paid to the Issuer by the Certificateholder for
its Certificate and shall be (i) increased by the distributive
share of profits and capital gains of such Certificateholder, and
(ii) decreased by the amount of any cash and the fair market
value of any non-cash assets distributed to such Certificate-
holder by the Issuer pursuant to this Trust Agreement, and by
such Certificateholder's distributive share of losses.
The fiscal year of the Issuer shall end on the 31st day of
December in each year, unless otherwise required by the Code.
For each fiscal year of the Issuer, net profits shall be allo-
cated among the Certificateholders (including the Holder of the
Designated Certificate to which the payments in respect of the
Holdback Amount will be made to the extent possible) in such
manner as to cause their ending capital accounts (prior to any
reduction for distributions for such year and to the extent
possible) to reflect their respective rights to current and
future distributions with respect to income and the return of
their investment. Such allocation shall be made to the Cer-
tificateholders in the order of their right to such distributions
and proportionately among Certificateholders having equal prior-
ity. For each fiscal year of the Issuer, net losses shall be
allocated among the Certificateholders in such manner as to
reflect the order and amount in which they would respectively
bear the economic burden of such losses, and then in accordance
with their relative Percentage Interests.
The partnership tax returns of the Issuer shall be prepared
in such a manner as to fairly reflect the respective interest in
the Issuer of each Certificateholder in accordance with the prin-
ciples of the regulations under Code Section 704(b). Items of
income and gain shall be allocated in proportion to the overall
allocation of income to each Certificateholder, and items of
loss, expense and deduction shall be allocated in proportion to
the overall allocation of loss to each Certificateholder. Any
unexpected adjustments, allocations or distributions shall be
offset by allocations of items of income and gain as quickly as
possible in accordance with the qualified income offset provi-
sions of the Code Section 704(b) regulations.
If during any fiscal year of the Issuer there is a change in
any Certificateholder's interest as a result of the issuance,
transfer or redemption of any Certificates, profits and losses
shall be allocated among the Certificateholders so as to reflect
their varying interest in the Issuer during the period. The
allocation shall be made using the "interim closing of the books"
method or any other method permissible under Code Section 706
selected by the Administrator. The Administrator shall determine
when any transferee of a Certificate shall be deemed admitted to
the "partnership" for federal income tax purposes. Any trans-
feree shall succeed to that portion of the assignor's capital
account attributable to the interest so transferred.
The maintenance of capital accounts by the Issuer is solely
for the preparation of its income tax returns, and is not
intended to confer rights upon any third parties. No Certifi-
cateholder shall have, by reason of its capital account, any
right to demand or receive any property or cash from the Issuer
or any obligation to contribute such items to the Issuer. No
creditor of the Issuer shall be deemed a third party beneficiary
of any obligation of any Certificateholder by reason of its
capital account to contribute capital or make loans or advances
to the Issuer.<PAGE>
ARTICLE VI
Authority and Duties of Owner Trustee
Section 6.01. General Authority. The Owner Trustee is
authorized and directed to execute and deliver the Basic Docu-
ments to which the Issuer is to be a party and each certificate
or other document attached as an exhibit to or contemplated by
the Basic Documents to which the Issuer is to be a party and any
amendment or other agreement or instrument described herein, in
each case, in such form as the Administrator shall approve, as
evidenced conclusively by the Owner Trustee's execution thereof.
In addition to the foregoing, the Owner Trustee is authorized,
but shall not be obligated, to take all actions required of the
Issuer pursuant to the Basic Documents. The Owner Trustee is
further authorized from time to time to take such action as the
Administrator directs with respect to the Basic Documents.
Section 6.02. General Duties. It shall be the duty of the
Owner Trustee to discharge (or cause to be discharged) all of its
responsibilities pursuant to the terms of this Trust Agreement
and the Basic Documents to which the Issuer is a party and to
administer the Issuer in the interest of the Certificateholders,
subject to the Basic Documents and in accordance with the pro-
visions of this Trust Agreement. Notwithstanding the foregoing,
the Owner Trustee shall be deemed to have discharged its duties
and responsibilities hereunder and under the Basic Documents to
the extent the Administrator has agreed in the Administration
Agreement to perform such acts or to discharge such duties of the
Owner Trustee or the Issuer hereunder or under any Basic Docu-
ment, and the Owner Trustee shall not be held liable for the
default or failure of the Administrator to carry out its obliga-
tions under the Administration Agreement. The Designated
Certificateholder may delegate its duties hereunder, provided,
however, that such delegation of duties shall not relieve the
Designated Certificateholder of its obligations hereunder.
Section 6.0 Action upon Instruction. (a) Unless the
Owner Trustee has actual knowledge that an Insolvency Event or
breach of representation or violation of any material obligation
under the Basic Documents has occurred in respect of the
Designated Certificateholder or of any Affiliate thereof, the
Designated Certificateholder may by written instruction direct
the Owner Trustee in the management of the Issuer. In the event
the Owner Trustee has actual knowledge that an Insolvency Event
or breach of representation or violation of any material
obligation under the Basic Documents has occurred in respect of
the Designated Certificateholder or any Affiliate thereof, the
Certificateholders may by written instruction direct the Owner
Trustee in the management of the Issuer. Such direction may be
exercised at any time by written instruction of the Designated
Certificateholder or the Certificateholders as the case may be
pursuant to Article IV.
(b) The Owner Trustee shall not be required to take any
action hereunder or under any Basic Document if the Owner Trustee
shall have reasonably determined, or shall have been advised by
counsel, that such action is likely to result in liability on the
part of the Owner Trustee or is contrary to the terms hereof or
of any Basic Document or is otherwise contrary to law.
(c) Whenever the Owner Trustee is unable to decide between
alternative courses of action permitted or required by the terms
of this Trust Agreement or under any Basic Document, the Owner
Trustee shall promptly give notice (in such form as shall be
appropriate under the circumstances) to the Certificateholders
requesting instruction as to the course of action to be adopted,
and to the extent the Owner Trustee acts in good faith in accor-
dance with any written instruction of the Certificateholders
received, the Owner Trustee shall not be liable on account of
such action to any Person. If the Owner Trustee shall not have
received appropriate instruction within 10 days of such notice
(or within such shorter period of time as reasonably may be
specified in such notice or may be necessary under the circum-
stances) it may, but shall be under no duty to, take or refrain
from taking such action not inconsistent with this Trust
Agreement or the Basic Documents, as it shall deem to be in the
best interests of the Certificateholders, and shall have no
liability to any Person for such action or inaction.
(d) In the event that the Owner Trustee is unsure as to the
application of any provision of this Trust Agreement or any Basic
Document or any such provision is ambiguous as to its applica-
tion, or is, or appears to be, in conflict with any other appli-
cable provision, or in the event that this Trust Agreement per-
mits any determination by the Owner Trustee or is silent or is
incomplete as to the course of action that the Owner Trustee is
required to take with respect to a particular set of facts, the
Owner Trustee may give notice (in such form as shall be appro-
priate under the circumstances) to the Certificateholders
requesting instruction and, to the extent that the Owner Trustee
acts or refrains from acting in good faith in accordance with any
such instruction received, the Owner Trustee shall not be liable,
on account of such action or inaction, to any Person. If the
Owner Trustee shall not have received appropriate instruction
within 10 days of such notice (or within such shorter period of
time as reasonably may be specified in such notice or may be
necessary under the circumstances) it may, but shall be under no
duty to, take or refrain from taking such action not inconsistent
with this Trust Agreement or the Basic Documents, as it shall
deem to be in the best interests of the Certificateholders, and
shall have no liability to any Person for such action or
inaction.
Section 6.0 No Duties Except as Specified in this Trust
Agreement or in Instructions. The Owner Trustee shall not have
any duty or obligation to manage, make any payment with respect
to, register, record, sell, dispose of, or otherwise deal with
the Owner Trust Estate, or to otherwise take or refrain from
taking any action under, or in connection with, any document
contemplated hereby to which the Owner Trustee is a party, except
as expressly provided by the terms of this Trust Agreement or in
any document or written instruction received by the Owner Trustee
pursuant to Section 6.03; and no implied duties or obligations
shall be read into this Trust Agreement or any Basic Document
against the Owner Trustee. The Owner Trustee shall have no
responsibility for filing any financing or continuation statement
in any public office at any time or to otherwise perfect or main-
tain the perfection of any security interest or lien granted to
it hereunder or to prepare or file any Securities and Exchange
Commission filing for the Trust or to record this Trust Agreement
or any Basic Document. The Owner Trustee nevertheless agrees
that it will, at its own cost and expense, promptly take all
action as may be necessary to discharge any liens on any part of
the Owner Trust Estate that result from actions by, or claims
against, the Owner Trustee that are not related to the ownership
or the administration of the Owner Trust Estate.
Section 6.05. No Action Except Under Specified Documents or
Instructions. The Owner Trustee shall not manage, control, use,
sell, dispose of or otherwise deal with any part of the Owner
Trust Estate except (1) in accordance with the powers granted to
and the authority conferred upon the Owner Trustee pursuant to
this Trust Agreement, (2) in accordance with the Basic Documents
and (3) in accordance with any document or instruction delivered
to the Owner Trustee pursuant to Section 6.03.
Section 6.06. Restrictions. The Owner Trustee shall not
take any action (i) that is inconsistent with the purposes of the
Issuer set forth in Section 2.03 or (ii) that, to the actual
knowledge of the Owner Trustee, would result in the Issuer becom-
ing taxable as a corporation for federal income tax purposes.
The Certificateholders shall not direct the Owner Trustee to take
action that would violate the provisions of this Section 6.06.
<PAGE>
ARTICLE VII
Concerning the Owner Trustee
Section 7.01. Acceptance of Trusts and Duties. The Owner
Trustee accepts the trust hereby created and agrees to perform
its duties hereunder with respect to such trusts but only upon
the terms of this Trust Agreement. The Owner Trustee and the
Certificate Paying Agent also agree to disburse all moneys
actually received by it constituting part of the Owner Trust
Estate upon the terms of the Basic Documents and this Trust
Agreement. The Owner Trustee shall not be answerable or account-
able hereunder or under any Basic Document under any circum-
stances, except (i) for its own willful misconduct, negligence or
bad faith or (ii) in the case of the inaccuracy of any represen-
tation or warranty contained in Section 7.03 expressly made by
the Owner Trustee. In particular, but not by way of limitation
(and subject to the exceptions set forth in the preceding
sentence):
(a) The Owner Trustee shall not be liable for any error of
judgment made by a responsible officer of the Owner Trustee;
(b) The Owner Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in accordance with
the instructions of the Administrator, Holder of the Designated
Certificate or the Certificateholders;
(c) No provision of this Trust Agreement or any Basic Docu-
ment shall require the Owner Trustee to expend or risk funds or
otherwise incur any financial liability in the performance of any
of its rights, duties or powers hereunder or under any Basic
Document if the Owner Trustee shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity
against such risk or liability is not reasonably assured or
provided to it;
(d) Under no circumstances shall the Owner Trustee be
liable for indebtedness evidenced by or arising under any of the
Basic Documents, including the principal of and interest on the
Notes;
(e) The Owner Trustee shall not be responsible for or in
respect of the validity or sufficiency of this Trust Agreement or
for the due execution hereof by the Seller or the Holder of the
Designated Certificate or for the form, character, genuineness,
sufficiency, value or validity of any of the Owner Trust Estate,
or for or in respect of the validity or sufficiency of the Basic
Documents, other than the certificate of authentication on the
Certificates, if executed by the Owner Trustee and the Owner
Trustee shall in no event assume or incur any liability, duty, or
obligation to any Noteholder or to any Certificateholder, other
than as expressly provided for herein or expressly agreed to in
the Basic Documents;
(f) The Owner Trustee shall not be liable for the default
or misconduct of the Administrator, the Certificate Paying Agent,
the Certificate Registrar, the Holder of the Designated Certifi-
cate, the Seller, the Indenture Trustee or the Servicer under any
of the Basic Documents or otherwise and the Owner Trustee shall
have no obligation or liability to perform the obligations of the
Issuer under this Trust Agreement or the Basic Documents that are
required to be performed by the Administrator under the Adminis-
tration Agreement, the Indenture Trustee, the Certificate Paying
Agent, the Certificate Registrar under this Trust Agreement or
the Indenture or the Seller under the Receivables Purchase
Agreement; and
(g) The Owner Trustee shall be under no obligation to exer-
cise any of the rights or powers vested in it or duties imposed
by this Trust Agreement, or to institute, conduct or defend any
litigation under this Trust Agreement or otherwise or in relation
to this Trust Agreement or any Basic Document, at the request,
order or direction of any of the Certificateholders, unless such
Certificateholders have offered to the Owner Trustee security or
indemnity satisfactory to it against the costs, expenses and
liabilities that may be incurred by the Owner Trustee therein or
thereby. The right of the Owner Trustee to perform any discre-
tionary act enumerated in this Trust Agreement or in any Basic
Document shall not be construed as a duty, and the Owner Trustee
shall not be answerable for other than its negligence or willful
misconduct in the performance of any such act.
Section 7.02. Furnishing of Documents. The Issuer shall
furnish to the Certificateholders promptly upon receipt of a
written reasonable request therefor, duplicates or copies of all
reports, notices, requests, demands, certificates, financial
statements and any other instruments furnished to the Issuer
under the Basic Documents.
Section 7.03. Representations and Warranties. The Owner
Trustee hereby represents and warrants to the Seller, for the
benefit of the Certificateholders, that:
(a) It is a banking corporation duly organized and validly
existing in good standing under the laws of the State of
Delaware. It has all requisite corporate power and authority to
execute, deliver and perform its obligations under this Trust
Agreement.
(b) It has taken all corporate action necessary to autho-
rize the execution and delivery by it of this Trust Agreement,
and this Trust Agreement will be executed and delivered by one of
its officers who is duly authorized to execute and deliver this
Trust Agreement on its behalf.
(c) Neither the execution nor the delivery by it of this
Trust Agreement, nor the consummation by it of the transactions
contemplated hereby nor compliance by it with any of the terms or
provisions hereof will contravene any federal or Delaware law,
governmental rule or regulation governing the banking or trust
powers of the Owner Trustee or any judgment or order binding on
it, or constitute any default under its charter documents or
bylaws or any indenture, mortgage, contract, agreement or instru-
ment to which it is a party or by which any of its properties may
be bound.
Section 7.04. Reliance; Advice of Counsel. (a) The Owner
Trustee shall incur no liability to anyone in acting upon any
signature, instrument, notice, resolution, request, consent,
order, certificate, report, opinion, bond, or other document or
paper believed by it to be genuine and believed by it to be
signed by the proper party or parties. The Owner Trustee may
accept a certified copy of a resolution of the board of directors
or other governing body of any corporate party as conclusive
evidence that such resolution has been duly adopted by such body
and that the same is in full force and effect. As to any fact or
matter the method of determination of which is not specifically
prescribed herein, the Owner Trustee may for all purposes hereof
rely on a certificate, signed by the president or any vice presi-
dent or by the treasurer or any assistant treasurer or other
authorized officers of the relevant party, as to such fact or
matter and such certificate shall constitute full protection to
the Owner Trustee for any action taken or omitted to be taken by
it in good faith in reliance thereon.
(b) In the exercise or administration of the trusts here-
under and in the performance of its duties and obligations under
this Trust Agreement or the Basic Documents, the Owner Trustee
(1) may act directly or through its agents, attorneys or
administrators pursuant to agreements entered into with any of
them, and the Owner Trustee shall not be liable for the conduct
or misconduct of such agents or attorneys if such agents or
attorneys shall have been selected by the Owner Trustee with
reasonable care, and (2) may consult with counsel, accountants
and other skilled persons to be selected with reasonable care and
employed by it. The Owner Trustee shall not be liable for
anything done, suffered or omitted in good faith by it in
accordance with the written opinion or advice of any such
counsel, accountants or other such Persons and not contrary to
this Trust Agreement or any Basic Document.
Section 7.05. Not Acting in Individual Capacity. Except as
provided in this Article VII, in accepting the trusts hereby cre-
ated, Chase Manhattan Bank Delaware acts solely as Owner Trustee
hereunder and not in its individual capacity, and all Persons
having any claim against the Owner Trustee by reason of the
transactions contemplated by this Trust Agreement or any Basic
Document shall look only to the Owner Trust Estate for payment or
satisfaction thereof.
Section 7.06. Owner Trustee Not Liable for Certificates.
The recitals contained herein and in the Certificates (other than
the signatures of the Owner Trustee on the Certificates) shall be
taken as the statements of the Seller, and the Owner Trustee
assumes no responsibility for the correctness thereof. The Owner
Trustee makes no representations as to the validity or suffici-
ency of this Trust Agreement, of any Basic Document or of the
Certificates (other than the signatures of the Owner Trustee on
the Certificates) or the Notes. The Owner Trustee shall at no
time have any responsibility or liability for or with respect to
the sufficiency of the Owner Trust Estate or its ability to
generate the payments to be distributed to Certificateholders
under this Trust Agreement or the Noteholders under the Inden-
ture, including, the compliance by the Seller with any warranty
or representation made under any Basic Document or in any related
document or the accuracy of any such warranty or representation,
or any action of the Administrator, the Certificate Paying Agent,
the Certificate Registrar or the Indenture Trustee taken in the
name of the Owner Trustee.
Section 7.07. Owner Trustee May Own Certificates and Notes.
The Owner Trustee in its individual or any other capacity may
become the owner or pledgee of Certificates or Notes and may deal
with the Seller, the Certificate Paying Agent, the Certificate
Registrar, the Administrator and the Indenture Trustee in banking
transactions with the same rights as it would have if it were not
Owner Trustee.
<PAGE>
ARTICLE VIII
Compensation of Owner Trustee
Section 8.01. Owner Trustee's Fees and Expenses. The Owner
Trustee shall receive as compensation for its services hereunder
such fees as have been separately agreed upon before the date
hereof, and the Owner Trustee shall be reimbursed by HCLC, the
initial Holder of the Designated Certificate for its reasonable
expenses hereunder and under the Basic Documents, including the
reasonable compensation, expenses and disbursements of such
agents, representatives, experts and outside counsel as the Owner
Trustee may reasonably employ in connection with the exercise and
performance of its rights and its duties hereunder and under the
Basic Documents.
Section 8.02. Indemnification. The Holder of the Desig-
nated Certificate shall be liable as primary obligor for, and
shall indemnify the Owner Trustee and its successors, assigns,
agents and servants (collectively, the "Indemnified Parties")
from and against, any and all liabilities, obligations, losses,
damages, taxes, claims, actions and suits, and any and all
reasonable costs, expenses and disbursements (including reason-
able legal fees and expenses) of any kind and nature whatsoever
(collectively, "Expenses") which may at any time be imposed on,
incurred by, or asserted against the Owner Trustee or any
Indemnified Party in any way relating to or arising out of this
Trust Agreement, the Basic Documents, the Owner Trust Estate, the
administration of the Owner Trust Estate or the action or inac-
tion of the Owner Trustee hereunder; provided that:
(i) the Holder of the Designated Certificate shall not
be liable for or required to indemnify an Indemnified Party
from and against Expenses arising or resulting from the
Owner Trustee's willful misconduct, negligence or bad faith
or as a result of any inaccuracy of a representation or
warranty contained in Section 7.03 expressly made by the
Owner Trustee;
(ii) with respect to any such claim, the Indemnified
Party shall have given the Holder of the Designated Certif-
icate written notice thereof promptly after the Indemnified
Party shall have actual knowledge thereof;
(iii) while maintaining control over its own defense,
the Holder of the Designated Certificate shall consult with
the Indemnified Party in preparing such defense; and
(iv) notwithstanding anything in this Agreement to the
contrary, the Holder of the Designated Certificate shall not
be liable for settlement of any claim by an Indemnified
Party entered into without the prior consent of the Holder
of the Designated Certificate which consent shall not be
unreasonably withheld.
The indemnities contained in this Section shall survive the
resignation or termination of the Owner Trustee or the termina-
tion of this Trust Agreement. In the event of any claim, action
or proceeding for which indemnity will be sought pursuant to this
Section, the Owner Trustee's choice of legal counsel, if other
than the legal counsel retained by the Owner Trustee in connec-
tion with the execution and delivery of this Trust Agreement,
shall be subject to the approval of the Holder of the Designated
Certificate, which approval shall not be unreasonably withheld.
In addition, upon written notice to the Owner Trustee and with
the consent of the Owner Trustee which consent shall not be
unreasonably withheld, the Holder of the Designated Certificate
has the right to assume the defense of any claim, action or
proceeding against the Owner Trustee.<PAGE>
ARTICLE IX
Termination of Trust Agreement
Section 9.01. Termination of Trust Agreement. (a) This
Trust Agreement (other than Article VIII) and the Issuer shall
terminate and be of no further force or effect upon the earliest
of (i) upon the final distribution of all moneys or other prop-
erty or proceeds of the Owner Trust Estate in accordance with the
terms of the Indenture and this Trust Agreement, (ii) the Payment
Date in March 2007 or (iii) at the time provided for in Section
9.02. The bankruptcy, liquidation, dissolution, death or inca-
pacity of any Certificateholder, other than the Holder of the
Designated Certificate, shall not (x) operate to terminate this
Trust Agreement or the Issuer or (y) entitle such Certificate-
holder's legal representatives or heirs to claim an accounting or
to take any action or proceeding in any court for a partition or
winding up of all or any part of the Issuer or the Owner Trust
Estate or (z) otherwise affect the rights, obligations and
liabilities of the parties hereto.
(b) Except as provided in Section 9.01(a), none of the
Seller, the Holder of the Designated Certificate or any other
Certificateholder shall be entitled to revoke or terminate the
Trust.
(c) Notice of any termination of the Issuer, specifying the
Payment Date upon which Certificateholders shall surrender their
Certificates to the Certificate Paying Agent for payment of the
final distribution and cancellation, shall be given by the
Certificate Paying Agent by letter to Certificateholders mailed
within five Business Days of receipt of notice of such termina-
tion from the Administrator, stating (i) the Payment Date upon or
with respect to which final payment of the Certificates shall be
made upon presentation and surrender of the Certificates at the
office of the Certificate Paying Agent therein designated,
(ii) the amount of any such final payment and (iii) that the
Record Date otherwise applicable to such Payment Date is not
applicable, payments being made only upon presentation and
surrender of the Certificates at the office of the Certificate
Payment Agent therein specified. The Certificate Paying Agent
shall give such notice to the Owner Trustee and the Certificate
Registrar at the time such notice is given to Certificateholders.
Upon presentation and surrender of the Certificates, the Certifi-
cate Paying Agent shall cause to be distributed to Certificate-
holders amounts distributable on such Payment Date pursuant to
Section 5.01.
In the event that all of the Certificateholders shall not
surrender their Certificates for cancellation within six months
after the date specified in the above mentioned written notice,
the Certificate Paying Agent shall give a second written notice
to the remaining Certificateholders to surrender their Certifi-
cates for cancellation and receive the final distribution with
respect thereto. Subject to applicable laws with respect to
escheat of funds, if within two years following the Payment Date
on which final payment of the Certificates was to have been made
all the Certificates shall not have been surrendered for cancel-
lation, the Certificate Paying Agent may take appropriate steps,
or may appoint an agent to take appropriate steps, to contact the
remaining Certificateholders concerning surrender of their
Certificates, and the cost thereof shall be paid out of the funds
and other assets that shall remain subject to this Trust Agree-
ment. Any funds remaining in the Payment Account after exhaus-
tion of such remedies shall be distributed by the Certificate
Paying Agent to the Holder of the Designated Certificate.
(d) Upon the winding up of the Issuer and its termination,
the Owner Trustee shall cause the Certificate of Trust to be
cancelled by filing a certificate of cancellation with the
Secretary of State in accordance with the provisions of Section
3810(c) of the Business Trust Statute.
Section 9.02. Dissolution upon Bankruptcy of the Holder of
the Designated Certificate. In the event that an Insolvency
Event shall occur with respect to the Holder of the Designated
Certificate, this Agreement shall be terminated in accordance
with Section 9.01, 90 days after the date of such Insolvency
Event, unless, before the end of such 90-day period, the Owner
Trustee shall have received written instructions from Holders of
Certificates (other than the Holder of the Designated Certif-
icate) representing more than 50% of the Security Balance of the
Certificates (not including the Security Balance of the Desig-
nated Certificate or any other Certificates held by HCLC or any
Affiliate thereof), to the effect that such Holders disapprove of
the termination of the Issuer and have elected or appointed any
one of such Holders or a transferee of Certificates meeting the
requisite conditions set forth in an Opinion of Counsel delivered
to the Owner Trustee as a new Designated Certificateholder (the
"Successor Designated Certificateholder") for the continuation of
the tax treatment of the Issuer. Such Successor Designated
Certificate shall represent at least 1% of the Initial Principal
Balance of the Certificates. The appointment of a Successor
Designated Certificateholder will not deprive HCLC or its
transferee of its economic interest in the Designated Certificate
or Holdback Amount, its Certificates or otherwise in the Owner
Trust Estate. Promptly after the occurrence of any Insolvency
Event with respect to any Holder of the Designated Certificate
(A) the Holder of such Designated Certificate or Successor
Designated Certificate shall give the Indenture Trustee and the
Owner Trustee written notice of such Insolvency Event, (B) the
Owner Trustee shall, upon the receipt of such written notice from
the Holder of such Designated Certificate, give prompt written
notice to the Certificateholders of the occurrence of such event
and (C) the Indenture Trustee shall give prompt written notice of
such event to the Noteholders; provided, however, that any
failure to give a notice required by this sentence shall not
prevent or delay, in any manner, a termination of the Issuer
pursuant to the first sentence of this Section 9.02. Upon a
termination pursuant to this Section, the Owner Trustee shall
direct the Indenture Trustee promptly to sell the assets of the
Issuer (other than the Payment Account) in a commercially
reasonable manner and on commercially reasonable terms. The
proceeds of such a sale of the assets of the Issuer shall be
deposited to the Payment Account for distribution in accordance
with Section 5.03(a) of the Indenture.<PAGE>
ARTICLE X
Successor Owner Trustees and Additional Owner Trustees
Section 10.01. Eligibility Requirements for Owner Trustee.
The Owner Trustee shall at all times be a corporation satisfying
the provisions of Section 3807(a) of the Business Trust Statute;
authorized to exercise corporate trust powers; having a combined
capital and surplus of at least $50,000,000 and subject to super-
vision or examination by federal or state authorities; and having
(or having a parent that has) a rating of at least Baa3 by
Moody's (or a rating otherwise acceptable to Moody's). If such
corporation shall publish reports of condition at least annually
pursuant to law or to the requirements of the aforesaid supervis-
ing or examining authority, then for the purpose of this Section,
the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its
most recent report of condition so published. In case at any
time the Owner Trustee shall cease to be eligible in accordance
with the provisions of this Section 10.01, the Owner Trustee
shall resign immediately in the manner and with the effect
specified in Section 10.02.
Section 10.02. Resignation or Removal of Owner Trustee.
The Owner Trustee may at any time resign and be discharged from
the trusts hereby created by giving written notice thereof to the
Administrator and the Designated Certificateholder. Upon
receiving such notice of resignation, the Designated
Certificateholder shall promptly appoint a successor Owner
Trustee, by written instrument, in duplicate, one copy of which
instrument shall be delivered to the resigning Owner Trustee and
one copy to the successor Owner Trustee. If no successor Owner
Trustee shall have been so appointed and have accepted
appointment within 30 days after the giving of such notice of
resignation, the resigning Owner Trustee may petition any court
of competent jurisdiction for the appointment of a successor
Owner Trustee.
If at any time the Owner Trustee shall cease to be eligible
in accordance with the provisions of Section 10.01 and shall fail
to resign after written request therefor by the Designated
Certificateholder or if at any time the Owner Trustee shall be
legally unable to act, or shall be adjudged bankrupt or
insolvent, or a receiver of the Owner Trustee or of its property
shall be appointed, or any public officer shall take charge or
control of the Owner Trustee or of its property or affairs for
the purpose of rehabilitation, conservation or liquidation, then
the Designated Certificateholder may remove the Owner Trustee.
If the Designated Certificateholder shall remove the Owner
Trustee under the authority of the immediately preceding
sentence, the Designated Certificateholder shall promptly appoint
a successor Owner Trustee by written instrument, in duplicate,
one copy of which instrument shall be delivered to the outgoing
Owner Trustee so removed and one copy to the successor Owner
Trustee, and shall pay all fees owed to the outgoing Owner
Trustee.
Any resignation or removal of the Owner Trustee and appoint-
ment of a successor Owner Trustee pursuant to any of the pro-
visions of this Section shall not become effective until accep-
tance of appointment by the successor Owner Trustee pursuant to
Section 10.03 and payment of all fees and expenses owed to the
outgoing Owner Trustee. The Administrator shall provide notice
of such resignation or removal of the Owner Trustee to each of
the Rating Agencies.
Section 10.03. Successor Owner Trustee. Any successor
Owner Trustee appointed pursuant to Section 10.02 shall execute,
acknowledge and deliver to the Designated Certificateholder and
to its predecessor Owner Trustee an instrument accepting such
appointment under this Trust Agreement, and thereupon the
resignation or removal of the predecessor Owner Trustee shall
become effective, and such successor Owner Trustee, without any
further act, deed or conveyance, shall become fully vested with
all the rights, powers, duties and obligations of its predecessor
under this Trust Agreement, with like effect as if originally
named as Owner Trustee. The predecessor Owner Trustee shall upon
payment of its fees and expenses deliver to the successor Owner
Trustee all documents and statements and monies held by it under
this Trust Agreement; and the Designated Certificateholder and
the predecessor Owner Trustee shall execute and deliver such
instruments and do such other things as may reasonably be
required for fully and certainly vesting and confirming in the
successor Owner Trustee all such rights, powers, duties and
obligations.
No successor Owner Trustee shall accept appointment as
provided in this Section 10.03 unless at the time of such accep-
tance such successor Owner Trustee shall be eligible pursuant to
Section 10.01.
Upon acceptance of appointment by a successor Owner Trustee
pursuant to this Section 10.03, the Administrator shall mail
notice thereof to all Certificateholders, the Indenture Trustee,
the Noteholders and the Rating Agencies. If the Administrator
shall fail to mail such notice within 10 days after acceptance of
such appointment by the successor Owner Trustee, the successor
Owner Trustee shall cause such notice to be mailed at the expense
of the Administrator.
Section 10.04. Merger or Consolidation of Owner Trustee.
Any Person into which the Owner Trustee may be merged or convert-
ed or with which it may be consolidated, or any Person resulting
from any merger, conversion or consolidation to which the Owner
Trustee shall be a party, or any Person succeeding to all or
substantially all of the corporate trust business of the Owner
Trustee, shall be the successor of the Owner Trustee hereunder,
without the execution or filing of any instrument or any further
act on the part of any of the parties hereto, anything herein to
the contrary notwithstanding; provided that such Person shall be
eligible pursuant to Section 10.01 and, provided, further, that
the Owner Trustee shall mail notice of such merger or consolida-
tion to the Rating Agencies.
Section 10.05. Appointment of Co-Trustee or Separate
Trustee. Notwithstanding any other provisions of this Trust
Agreement, at any time, for the purpose of meeting any legal
requirements of any jurisdiction in which any part of the Owner
Trust Estate may at the time be located, the Designated
Certificateholder and the Owner Trustee acting jointly shall have
the power and shall execute and deliver all instruments to
appoint one or more Persons approved by the Designated
Certificateholder and Owner Trustee to act as co-trustee, jointly
with the Owner Trustee, or as separate trustee or separate
trustees, of all or any part of the Owner Trust Estate, and to
vest in such Person, in such capacity, such title to the Owner
Trust Estate or any part thereof and, subject to the other
provisions of this Section, such powers, duties, obligations,
rights and trusts as the Designated Certificateholder and the
Owner Trustee may consider necessary or desirable. If the
Designated Certificateholder shall not have joined in such
appointment within 15 days after the receipt by it of a request
so to do, the Owner Trustee alone shall have the power to make
such appointment. No co-trustee or separate trustee under this
Trust Agreement shall be required to meet the terms of
eligibility as a successor Owner Trustee pursuant to
Section 10.01 and no notice of the appointment of any co-trustee
or separate trustee shall be required pursuant to Section 10.03.
Each separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following
provisions and conditions:
(a) All rights, powers, duties and obligations conferred or
imposed upon the Owner Trustee shall be conferred upon and exer-
cised or performed by the Owner Trustee and such separate trustee
or co-trustee jointly (it being understood that such separate
trustee or co-trustee is not authorized to act separately without
the Owner Trustee joining in such act), except to the extent that
under any law of any jurisdiction in which any particular act or
acts are to be performed, the Owner Trustee shall be incompetent
or unqualified to perform such act or acts, in which event such
rights, powers, duties and obligations (including the holding of
title to the Owner Trust Estate or any portion thereof in any
such jurisdiction) shall be exercised and performed singly by
such separate trustee or co-trustee, but solely at the direction
of the Owner Trustee;
(b) No trustee under this Trust Agreement shall be
personally liable by reason of any act or omission of any other
trustee under this Trust Agreement; and
(c) The Designated Certificateholder and the Owner Trustee
acting jointly may at any time accept the resignation of or
remove any separate trustee or co-trustee.
Any notice, request or other writing given to the Owner
Trustee shall be deemed to have been given to each of the then
separate trustees and co-trustees, as effectively as if given to
each of them. Every instrument appointing any separate trustee
or co-trustee shall refer to this Trust Agreement and the condi-
tions of this Article. Each separate trustee and co-trustee,
upon its acceptance of the trusts conferred, shall be vested with
the estates or property specified in its instrument of appoint-
ment, either jointly with the Owner Trustee or separately, as may
be provided therein, subject to all the provisions of this Trust
Agreement, specifically including every provision of this Trust
Agreement relating to the conduct of, affecting the liability of,
or affording protection to, the Owner Trustee. Each such instru-
ment shall be filed with the Owner Trustee and a copy thereof
given to the Administrator.
Any separate trustee or co-trustee may at any time appoint
the Owner Trustee as its agent or attorney-in-fact with full
power and authority, to the extent not prohibited by law, to do
any lawful act under or in respect of this Trust Agreement on its
behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all
of its estates, properties, rights, remedies and trusts shall
vest in and be exercised by the Owner Trustee, to the extent
permitted by law, without the appointment of a new or successor
co-trustee or separate trustee.<PAGE>
ARTICLE XI
Miscellaneous
Section 11.01. Amendments. (a) This Trust Agreement may
be amended from time to time by the parties hereto, by a written
instrument signed by each of them, without the consent of any of
the Securityholders; provided that an Opinion of Counsel for the
Seller (which Opinion of Counsel may, as to factual matters, rely
upon Officer's Certificates of the Seller) is addressed and
delivered to the Owner Trustee, dated the date of any such amend-
ment, to the effect that the conditions precedent to any such
amendment have been satisfied and the Seller shall have delivered
to the Owner Trustee an Officer's Certificate, dated the date of
any such Amendment, stating that the Seller reasonably believes
that such amendment will not have a material adverse effect on
the Securityholders. Notwithstanding the foregoing, the Trust
Agreement may be amended by the parties hereto, without delivery
of the foregoing Opinion of Counsel or Officer's Certificates, to
amend the per annum percentage that is added to LIBOR to
calculate the Certificate Rate related to the Certificates to an
amount not exceeding 1.25% per annum.
(b) This Agreement may also be amended from time to time
with the consent of the Holders of the Securities evidencing not
less than 66-2/3% of the aggregate unpaid principal amount of the
Security Balance of all affected Securityholders for which the
Seller has not delivered an Officer's Certificate stating that
there is no material adverse effect, for the purpose of adding
any provisions to or changing in any manner or eliminating any of
the provisions of this Agreement or of modifying in any manner
the rights of the Securityholders; provided, however, that no
such amendment shall (i) reduce in any manner the amount of, or
delay the timing of, payments received that are required to be
distributed on any Certificate without the consent of the related
Certificateholder, or (ii) reduce the aforesaid percentage of
Certificates the Holders of which are required to consent to any
such amendment, without the consent of the Holders of all such
Certificates then outstanding or cause any material adverse tax
consequences to any Certificateholders or Noteholders.
(c) If the purpose of the amendment is to (i) prevent the
imposition of any federal or state taxes at any time that any
Security is outstanding (i.e., technical in nature), or (ii)
eliminate the provisions for termination of this Trust Agreement
and replacement of the Holder of the Designated Certificate upon
an Insolvency Event with respect to the Holder, and eliminate
Section 2.07(a) so that Section 2.07(b) applies as well to the
Holder of the Designated Certificate, or (iii) permit the
election or qualification of the Issuer as a "FASIT" or other
similar form of entity for federal income tax purposes pursuant
to FASIT legislation, it shall not be necessary to obtain the
consent of any Holder, but the Owner Trustee shall be furnished
with an Opinion of Counsel that in the case of (i) above such
amendment is necessary or helpful to prevent the imposition of
such taxes, or in the case of (ii) or (iii) above such amendment
will not cause the Issuer to be subject to an entity level tax
and the Seller shall deliver an Officer's Certificate to the
Owner Trustee stating that the Seller reasonably believes that
such amendment will not have a material adverse effect on
Securityholders.
(d) Promptly after the execution of any such amendment or
consent (other than an amendment pursuant to paragraph (a)), the
Owner Trustee shall furnish notification of the substance of such
amendment to each Certificateholder, and to each Rating Agency.
(e) It shall not be necessary for the consent of Certifi-
cateholders under this Section to approve the particular form of
any proposed amendment, but it shall be sufficient if such
consent shall approve the substance thereof. The manner of
obtaining such consents and of evidencing the authorization of
the execution thereof by Certificateholders shall be subject to
such reasonable requirements as the Owner Trustee may prescribe.
Promptly after the execution of any amendment to the Certif-
icate of Trust, the Owner Trustee shall cause the filing of such
amendment with the Secretary of State of the State of Delaware.
Section 11.02. No Legal Title to Owner Trust Estate in
Certificateholders. The Certificateholders shall not have legal
title to any part of the Owner Trust Estate. The Certificate-
holders shall be entitled to receive distributions with respect
to their undivided beneficial interest therein only in accordance
with Articles V and IX. No transfer, by operation of law or
otherwise, of any right, title or interest of the Certificate-
holders to and in their ownership interest in the Owner Trust
Estate shall operate to terminate this Trust Agreement or the
trusts hereunder or entitle any transferee to an accounting or to
the transfer to it of legal title to any part of the Owner Trust
Estate.
Section 11.03. Limitations on Rights of Others. Except for
Section 2.07, the provisions of this Trust Agreement are solely
for the benefit of the Owner Trustee, the Seller, the Holder of
the Designated Certificate, the Certificateholders, the Adminis-
trator and, to the extent expressly provided herein, the Inden-
ture Trustee and the Noteholders, and nothing in this Trust
Agreement (other than Section 2.07), whether express or implied,
shall be construed to give to any other Person any legal or
equitable right, remedy or claim in the Owner Trust Estate or
under or in respect of this Trust Agreement or any covenants,
conditions or provisions contained herein.
Section 11.04. Notices. (a) Unless otherwise expressly
specified or permitted by the terms hereof, all notices shall be
in writing and shall be deemed given upon receipt by the intended
recipient or three Business Days after mailing if mailed by cer-
tified mail, postage prepaid (except that notice to the Owner
Trustee shall be deemed given only upon actual receipt by the
Owner Trustee), if to the Owner Trustee, addressed to the
Corporate Trust Office; if to the Seller, addressed to Household
Consumer Loan Corporation, 1111 Town Center Drive, Las Vegas,
Nevada 89134, Attn: Compliance Officer, with a copy to Household
Finance Corporation, 2700 Sanders Road, Prospect Heights,
Illinois 60070, Attn: Treasurer; or, as to each party, at such
other address as shall be designated by such party in a written
notice to each other party.
(b) Any notice required or permitted to be given to a
Certificateholder shall be given by first-class mail, postage
prepaid, at the address of such Holder as shown in the Certif-
icate Register. Any notice so mailed within the time prescribed
in this Trust Agreement shall be conclusively presumed to have
been duly given, whether or not the Certificateholder receives
such notice.
(c) A copy of any notice delivered to the Owner Trustee or
the Issuer shall also be delivered to the Seller, the
Administrator and The Chase Manhattan Bank, 450 West 33rd Street,
15th Floor, New York, New York 10001, Attn: Global Trust
Services.
Section 11.05. Severability. Any provision of this Trust
Agreement that is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unen-
forceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Section 11.06. Separate Counterparts. This Trust Agreement
may be executed by the parties hereto in separate counterparts,
each of which when so executed and delivered shall be an origi-
nal, but all such counterparts shall together constitute but one
and the same instrument.
Section 11.07. Successors and Assigns. All representa-
tions, warranties, covenants and agreements contained herein
shall be binding upon, and inure to the benefit of, each of the
Seller, the Owner Trustee and its successors and each Certif-
icateholder and its successors and permitted assigns. Any
request, notice, direction, consent, waiver or other instrument
or action by a Certificateholder shall bind the successors and
assigns of such Certificateholder.
Section 11.08. Covenants of the Seller. Neither the Seller
nor the Holder of the Designated Certificate will at any time
institute against the Issuer any bankruptcy proceedings under any
United States federal or state bankruptcy or similar law in con-
nection with any obligations relating to the Certificates, the
Notes, this Trust Agreement or any of the Basic Documents.
Section 11.09 No Petition. The Owner Trustee, by entering
into this Trust Agreement, and each Certificateholder, by accept-
ing a Certificate, hereby covenant and agree that they will not
at any time institute against the Seller or the Issuer, or join
in any institution against the Seller or the Issuer of any
bankruptcy proceedings under any United States federal or state
bankruptcy or similar law in connection with any obligations to
the Certificates, the Notes, this Trust Agreement or any of the
Basic Documents.
Section 11.10. No Recourse. Each Certificateholder by
accepting a Certificate acknowledges that such Certificate-
holder's Certificates represent beneficial interests in the
Issuer only and do not represent interests in or obligations of
the Seller, the Holder of the Designated Certificate, the
Administrator, the Owner Trustee, the Indenture Trustee or any
Affiliate thereof and no recourse may be had against such parties
or their assets, except as may be expressly set forth or contem-
plated in this Trust Agreement, the Certificates or the Basic
Documents.
Section 11.11. Headings. The headings of the various
Articles and Sections herein are for convenience of reference
only and shall not define or limit any of the terms or provisions
hereof.
Section 11.12. Governing Law. THIS TRUST AGREEMENT SHALL
BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS,
AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 11.13. Integration. This Trust Agreement consti-
tutes the entire agreement among the parties hereto pertaining to
the subject matter hereof and supersedes all prior agreements and
understanding pertaining thereto.<PAGE>
IN WITNESS WHEREOF, the Seller and the Owner Trustee have
caused their names to be signed hereto by their respective
officers thereunto duly authorized, all as of the day and year
first above written.
HOUSEHOLD CONSUMER LOAN CORPORATION,
as Seller and Holder of the
Designated Certificate
By:________________________________
Name:
Title:
CHASE MANHATTAN BANK DELAWARE, not in
its individual capacity but solely
as Owner Trustee
By:________________________________
Name: John J. Cashin
Title: Senior Trust Officer
Acknowledged and Agreed:
THE BANK OF NEW YORK, as Certificate
Registrar and Certificate
Paying Agent
By:_________________________
Name:
Title:<PAGE>
EXHIBIT A
[FORM OF CERTIFICATE]
[Face]
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF
ANY STATE AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS
REGISTERED PURSUANT TO SUCH ACT AND LAWS OR IS SOLD OR TRANS-
FERRED IN TRANSACTIONS WHICH ARE EXEMPT FROM REGISTRATION UNDER
SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 3.05 OF THE TRUST
AGREEMENT REFERRED TO HEREIN.
NO TRANSFER OF THIS CERTIFICATE SHALL BE MADE UNLESS THE CERTIFI-
CATE REGISTRAR SHALL HAVE RECEIVED (I) A REPRESENTATION LETTER
FROM THE TRANSFEREE OF THIS CERTIFICATE TO THE EFFECT THAT SUCH
TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE
FIDUCIARY RESPONSIBILITY PROVISIONS OF THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION
4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE"), OR A PERSON ACTING ON BEHALF OF ANY SUCH PLAN OR USING
THE ASSETS OF ANY SUCH PLAN, (II) IF THIS CERTIFICATE IS
PRESENTED FOR REGISTRATION IN THE NAME OF A PLAN SUBJECT TO THE
FIDUCIARY RESPONSIBILITY PROVISIONS OF ERISA, OR SECTION 4975 OF
THE CODE (OR COMPARABLE PROVISIONS OF ANY SUBSEQUENT ENACTMENTS),
OR A TRUSTEE OF ANY SUCH PLAN, OR ANY OTHER PERSON WHO IS USING
THE ASSETS OF ANY SUCH PLAN TO EFFECT SUCH ACQUISITION, AN
OPINION OF COUNSEL TO THE EFFECT THAT THE PURCHASE OR HOLDING OF
THIS CERTIFICATE WILL NOT RESULT IN THE ASSETS OF THE OWNER TRUST
ESTATE BEING DEEMED TO BE "PLAN ASSETS" AND SUBJECT TO THE
FIDUCIARY RESPONSIBILITY PROVISIONS OF ERISA OR THE PROHIBITED
TRANSACTION PROVISIONS OF THE CODE, WILL NOT CONSTITUTE OR RESULT
IN A PROHIBITED TRANSACTION WITHIN THE MEANING OF SECTION 406 OR
SECTION 407 OF ERISA OR SECTION 4975 OF THE CODE, AND WILL NOT
SUBJECT THE OWNER TRUSTEE OR THE SELLER TO ANY OBLIGATION OR
LIABILITY, (III) OR IF THE PURCHASER IS AN INSURANCE COMPANY, A
REPRESENTATION THAT THE PURCHASER IS AN INSURANCE COMPANY WHICH
IS PURCHASING SUCH CERTIFICATES WITH FUNDS CONTAINED IN AN
"INSURANCE COMPANY GENERAL ACCOUNT" (AS SUCH TERM IS DEFINED IN
SECTION V(e) OF PROHIBITED TRANSACTION CLASS EXEMPTION 95-60
("PTCE 95-60")), THAT THE PURCHASE AND HOLDING OF SUCH
CERTIFICATES ARE COVERED UNDER PTCE 95-60 AND THAT PTCE 95-60
REMAINS A VALID AND AVAILABLE EXEMPTION, OR (IV) IN THE CASE OF
ANY SUCH PROPOSED TRANSFEREE WHICH IS A PLAN, AN OPINION OF
COUNSEL SATISFACTORY TO THE OWNER TRUSTEE AND THE SELLER TO THE
EFFECT SET FORTH IN THE TRUST AGREEMENT.
NO TRANSFER OF THIS CERTIFICATE SHALL BE MADE UNLESS THE CERTIFI-
CATE REGISTRAR SHALL HAVE RECEIVED A CERTIFICATE OF NON-FOREIGN
STATUS CERTIFYING AS TO THE TRANSFEREE'S STATUS AS A U.S. PERSON
OR CORPORATION OR PARTNERSHIP UNDER U.S. LAW.
THIS CERTIFICATE DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION
OF THE SELLER, THE SERVICER, THE INDENTURE TRUSTEE, THE
ADMINISTRATOR OR THE OWNER TRUSTEE OR ANY OF THEIR RESPECTIVE
AFFILIATES, EXCEPT AS EXPRESSLY PROVIDED IN THE TRUST AGREEMENT
OR THE BASIC DOCUMENTS.<PAGE>
Certificate No. ___
Original principal amount ("Denomination")
of this Certificate: $____________
Aggregate Denominations of all Certificates:
$33,600,000
Certificate Rate: Floating
Closing Date: March 12, 1997
First Payment Date
April 15, 1997
CUSIP NO. _________
HOUSEHOLD CONSUMER LOAN TRUST 1997-1
Evidencing a fractional undivided interest in the Owner
Trust Estate, the property of which consists primarily of the
Series 1997-1 Participation Interest in the Receivables, sold by
HOUSEHOLD CONSUMER LOAN CORPORATION, AS SELLER
This certifies that [name of Holder] is the registered owner
of the Percentage Interest represented hereby in the Household
Consumer Loan Trust 1997-1 (the "Issuer").
The Issuer was created pursuant to a Trust Agreement dated
as of March 1, 1997 (as amended and supplemented from time to
time, the "Trust Agreement") among the Seller, as seller and as
holder of the Designated Certificate, and Chase Manhattan Bank
Delaware, as owner trustee (the "Owner Trustee"), a summary of
certain of the pertinent provisions of which is set forth
hereinafter. This Certificate is issued under and is subject to
the terms, provisions and conditions of the Trust Agreement, to
which Trust Agreement the Holder of this Certificate by virtue of
the acceptance hereof assents and by which such Holder is bound.
This Certificate is one of a duly authorized issue of
Consumer Loan Asset Backed Certificates, Series 1997-1 (the
"Certificates") issued under the Trust Agreement to which
reference is hereby made for a statement of the respective rights
thereunder of the Seller, the Designated Certificateholder, the
Owner Trustee and the Holders of the Certificates and the terms
upon which the Certificates are executed and delivered. All
terms used in this Certificate which are defined in the Trust
Agreement shall have the meanings assigned to them in the Trust
Agreement. The Owner Trust Estate consists of the Series 1997-1
Participation Interest and all monies and the collections and
proceeds due thereon and any part thereof which consists of
general intangibles (as defined in the UCC). The rights of the
Holders of the Certificates are subordinated to the rights of the
Holders of the Notes, as set forth in the Indenture (as defined
herein).
There will be distributed on the fifteenth day of each month
or, if such fifteenth day is not a Business Day, the next Busi-
ness Day (each, a "Payment Date"), commencing in April 1997, to
the Person in whose name this Certificate is registered at the
close of business on the last Business Day of the month preceding
the month of such Payment Date (the "Record Date"), such Certif-
icateholder's Percentage Interest (obtained by dividing the
Denomination of this Certificate by the aggregate Denominations
of all Certificates) in the amount to be distributed to Certifi-
cateholders on such Payment Date.
The Certificateholder, by its acceptance of this Certifi-
cate, agrees that it will look solely to the funds on deposit in
the Payment Account that have been released from the Lien of the
Indenture for payment hereunder and that neither the Owner
Trustee in its individual capacity nor the Seller is personally
liable to the Certificateholders for any amount payable under
this Certificate or the Trust Agreement or, except as expressly
provided in the Trust Agreement, subject to any liability under
the Trust Agreement.
The Holder of this Certificate acknowledges and agrees that
its rights to receive distributions in respect of this Certifi-
cate are subordinated to the rights of the Noteholders as
described in the Indenture, dated as of March 1, 1997, between
the Issuer and The Bank of New York, as Indenture Trustee (the
"Indenture").
It is the intent of the Seller and the Certificateholders
that, for purposes of federal income, state and local income and
single business tax and any other income taxes, the Issuer will
be treated as a partnership. The Seller and the other Certif-
icateholders, by acceptance of a Certificate, agree to treat, and
to take no action inconsistent with the treatment of, the Certif-
icates for such tax purposes as an equity interest in a partner-
ship.
Each Certificateholder, by its acceptance of a Certificate,
covenants and agrees that such Certificateholder will not at any
time institute against the Seller or the Issuer, or join in any
institution against the Seller or the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation
proceedings, or other proceedings under any United States federal
or state bankruptcy or similar law in connection with any
obligations relating to the Certificates, the Notes, the Trust
Agreement or any of the Basic Documents.
Distributions on this Certificate will be made as provided
in the Trust Agreement by the Certificate Paying Agent to each
Certificateholder of record on the preceding Record Date either
by, in the case of any Certificateholder owning Certificates hav-
ing denominations aggregating at least $1,000,000, wire transfer,
in immediately available funds, to the account of such Holder at
a bank or other entity having appropriate facilities therefor, if
such Certificateholder shall have provided to the Certificate
Registrar appropriate written instructions at least five Business
Days prior to such Payment Date or, if not, by check mailed to
such Certificateholder at the address of such Holder appearing in
the Certificate Register. Except as otherwise provided in the
Trust Agreement and notwithstanding the above, the final
distribution on this Certificate will be made after due notice by
the Certificate Paying Agent of the pendency of such distribution
and only upon presentation and surrender of this Certificate at
the office or agency maintained by the Certificate Registrar for
that purpose by the Issuer in the Borough of Manhattan, The City
of New York.
Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof, which further
provisions shall for all purposes have the same effect as if set
forth at this place.
Unless the certificate of authentication hereon shall have
been executed by an authorized officer of the Owner Trustee, or
an authenticating agent by manual signature, this Certificate
shall not entitle the Holder hereof to any benefit under the
Trust Agreement or be valid for any purpose.
THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT
OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF
THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.
<PAGE>
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the
Issuer and not in its individual capacity, has caused this
Certificate to be duly executed.
HOUSEHOLD CONSUMER LOAN TRUST
1997-1
By: Chase Manhattan Bank
Delaware, not in its
individual capacity but
solely as Owner Trustee
Dated: March ___, 1997
Name: John J. Cashin
Title: Senior Trust Officer
Certificate of Authentication
This is one of the Certificates referred to in the within men-
tioned Trust Agreement.
Chase Manhattan Bank Delaware,
not in its individual capacity
but solely as Owner Trustee
By:______________________________
Name:
Title:
or
The Bank of New York,
as Authenticating Agent of the Issuer
By:______________________________
Name:
Title:<PAGE>
[REVERSE OF CERTIFICATE]
The Certificates do not represent an obligation of, or an
interest in, the Seller, the Servicer, the Indenture Trustee, the
Owner Trustee or any Affiliates of any of them and no recourse
may be had against such parties or their assets, except as
expressly set forth or contemplated herein or in the Trust
Agreement or the Basic Documents. In addition, this Certificate
is not guaranteed by any governmental agency or instrumentality
and is limited in right of payment to certain collections and
recoveries with respect to the Series 1997-1 Participation
Interest (and certain other amounts), all as more specifically
set forth herein. A copy of the Trust Agreement may be examined
by any Certificateholder upon written request during normal
business hours at the principal office of the Seller and at such
other places, if any, designated by the Seller.
The Trust Agreement permits the amendment thereof as speci-
fied below; provided that any amendment be accompanied by an
Opinion of Counsel for the Seller (which Opinion of Counsel may,
as to factual matters, rely upon Officer's Certificates of the
Seller) addressed and delivered to the Owner Trustee, to the
effect that the conditions precedent in the Trust Agreement to
any such amendment have been satisfied and the Seller shall have
delivered to the Owner Trustee an Officer's Certificate, stating
that the Seller reasonably believes that such amendment will not
have a material adverse effect on the Securityholders. If the
purpose of the amendment is to (i) prevent the imposition of any
federal or state taxes at any time that any Security is
outstanding (i.e., technical in nature), or (ii) eliminate or
modify certain provisions relating to the Designated Certificate
or to permit the election or qualification of the Issuer as a
"FASIT" or other similar form of entity for federal income tax
purposes pursuant to FASIT legislation, it shall not be necessary
to obtain the consent of any Holder, but the Owner Trustee shall
be furnished with an Opinion of Counsel that in the case of (i)
above such amendment is necessary or helpful to prevent the
imposition of such taxes, or in the case of (ii) above such
amendment will not cause the Issuer to be subject to an entity
level tax. If the purpose of the amendment is to add or
eliminate or change any provision of the Trust Agreement, other
than as specified in the preceding two sentences, the amendment
shall require the consent of the Holders of the Certificates
evidencing not less than 66-2/3% of the aggregate unpaid Security
Balance of all affected Certificateholders; provided, however,
that no such amendment shall (i) reduce in any manner the amount
of, or delay the timing of, payments received that are required
to be distributed on any Certificate without the consent of the
related Certificateholder, or (ii) reduce the aforesaid
percentage of Certificates the Holders of which are required to
consent to any such amendment, without the consent of the Holders
of all such Certificates then outstanding or cause any material
adverse tax consequences to any Certificateholders or
Noteholders.
As provided in the Trust Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate
is registerable in the Certificate Register upon surrender of
this Certificate for registration of transfer at the offices or
agencies of the Certificate Registrar maintained by the Issuer in
the Borough of Manhattan, The City of New York, accompanied by a
written instrument of transfer in form satisfactory to the
Certificate Registrar duly executed by the Holder hereof or such
Holder's attorney duly authorized in writing, and thereupon one
or more new Certificates of authorized denominations evidencing
the same aggregate interest in the Issuer will be issued to the
designated transferee. The initial Certificate Registrar
appointed under the Trust Agreement is The Bank of New York.
Except as provided in the Trust Agreement, the Certificates
are issuable only in minimum denominations of $1,000,000 and in
integral multiples of $100,000 in excess thereof, except for one
Certificate issued in a denomination of $336,000 which will be
held by the Seller and one other Certificate that may not be in
an integral multiple of $100,000. As provided in the Trust
Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates of authorized
denominations evidencing the same aggregate denomination, as
requested by the Holder surrendering the same. No service charge
will be made for any such registration of transfer or exchange,
but the Owner Trustee or the Certificate Registrar may require
payment of a sum sufficient to cover any tax or governmental
charge payable in connection therewith.
The Owner Trustee, the Certificate Paying Agent, the Certif-
icate Registrar and any agent of the Owner Trustee, the Certifi-
cate Paying Agent, or the Certificate Registrar may treat the
Person in whose name this Certificate is registered as the owner
hereof for all purposes, and none of the Owner Trustee, the
Certificate Paying Agent, the Certificate Registrar or any such
agent shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Trust
Agreement and the Issuer created thereby shall terminate (i) upon
the final distribution of all moneys or other property or pro-
ceeds of the Owner Trust Estate in accordance with the terms of
the Indenture and the Trust Agreement, (ii) the Payment Date in
March 2007, or (iii) upon the bankruptcy or insolvency of the
Holder of the Designated Certificate and the satisfaction of
other conditions specified in Section 9.01 of the Trust Agree-
ment.<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and
transfers unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
(Please print or type name and address, including postal zip
code, of assignee)
the within Certificate, and all rights thereunder, hereby
irrevocably constituting and appointing
to transfer said Certificate on the books of the Certificate
Registrar, with full power of substitution in the premises.
Dated:
___________________________________________*/
Signature Guaranteed:
____________________________*/
_________________
*/ NOTICE: The signature to this assignment must correspond with
the name as it appears upon the face of
the within Certificate in every particular, without alteration,
enlargement or any change whatever. Such
signature must be guaranteed by a member firm of the New York Stock
Exchange or a commercial bank or
trust company.<PAGE>
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for the infor-
mation of the Certificate Paying Agent:
Distribution shall be made by wire transfer in immediately
available funds to
for the account of ,
account number , or, if mailed by check,
to .
Applicable statements should be mailed to
.
______________________________
Signature of assignee or agent
(for authorization of wire
transfer only)
<PAGE>
EXHIBIT B
[RESERVED]
<PAGE>
EXHIBIT C
CERTIFICATE OF TRUST OF
HOUSEHOLD CONSUMER LOAN TRUST 1997-1
This Certificate of Trust of HOUSEHOLD CONSUMER LOAN
TRUST 1997-1 (the "Trust"), dated as of March ___, 1997, is being
duly executed and filed by Chase Manhattan Bank Delaware, a
Delaware banking corporation, as trustee, to form a business
trust under the Delaware Business Trust Act (12 Del. Code, Section 3801
et seq.).
1. Name. The name of the business trust formed hereby
is HOUSEHOLD CONSUMER LOAN TRUST 1997-1.
2. Delaware Trustee. The name and business address of
the trustee of the Trust in the State of Delaware is Chase
Manhattan Bank Delaware, 1201 Market Street, Wilmington, Delaware
19801, Attention: Corporate Trustee Administration.
3. Effective Date. This Certificate of Trust shall be
effective on March ___, 1997.
IN WITNESS WHEREOF, the undersigned, being the sole
trustee of the Trust, has executed this Certificate of Trust as
of the date first above written.
Chase Manhattan Bank Delaware,
as Owner Trustee
By:
Name:
Title: <PAGE>
EXHIBIT D
[FORM OF RULE 144A INVESTMENT REPRESENTATION]
Description of Rule 144A Securities, including numbers:
_______________________________________________
_______________________________________________
_______________________________________________
_______________________________________________
The undersigned seller, as registered holder (the
"Seller"), intends to transfer the Rule 144A Securities described
above to the undersigned buyer (the "Buyer").
1. In connection with such transfer and in accordance
with the agreements pursuant to which the Rule 144A Securities
were issued, the Seller hereby certifies the following facts:
Neither the Seller nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of the Rule 144A
Securities, any interest in the Rule 144A Securities or any other
similar security to, or solicited any offer to buy or accept a
transfer, pledge or other disposition of the Rule 144A Securi-
ties, any interest in the Rule 144A Securities or any other
similar security from, or otherwise approached or negotiated with
respect to the Rule 144A Securities, any interest in the Rule
144A Securities or any other similar security with, any person in
any manner, or made any general solicitation by means of general
advertising or in any other manner, or taken any other action,
that would constitute a distribution of the Rule 144A Securities
under the Securities Act of 1933, as amended (the "1933 Act"), or
that would render the disposition of the Rule 144A Securities a
violation of Section 5 of the 1933 Act or require registration
pursuant thereto, and that the Seller has not offered the Rule
144A Securities to any person other than the Buyer or another
"qualified institutional buyer" as defined in Rule 144A under the
1933 Act.
2. The Buyer warrants and represents to, and covenants
with, the Owner Trustee, and the Seller (as defined in the Trust
Agreement (the "Agreement"), dated as of March 1, 1997 among
Household Consumer Loan Corporation, as Seller, and as Holder of
the Designated Certificate and Chase Manhattan Bank Delaware, as
Owner Trustee pursuant to Section 3.05 of the Agreement and The
Bank of New York as Indenture Trustee, as follows:
a. The Buyer understands that the Rule 144A
Securities have not been registered under the 1933 Act or
the securities laws of any state.
b. The Buyer considers itself a substantial,
sophisticated institutional investor having such knowledge
and experience in financial and business matters that it is
capable of evaluating the merits and risks of investment in
the Rule 144A Securities.
c. The Buyer has been furnished with all informa-
tion regarding the Rule 144A Securities that it has request-
ed from the Seller, the Indenture Trustee, the Owner Trustee
or the Servicer.
d. Neither the Buyer nor anyone acting on its
behalf has offered, transferred, pledged, sold or otherwise
disposed of the Rule 144A Securities, any interest in the
Rule 144A Securities or any other similar security to, or
solicited any offer to buy or accept a transfer, pledge or
other disposition of the Rule 144A Securities, any interest
in the Rule 144A Securities or any other similar security
from, or otherwise approached or negotiated with respect to
the Rule 144A Securities, any interest in the Rule 144A
Securities or any other similar security with, any person in
any manner, or made any general solicitation by means of
general advertising or in any other manner, or taken any
other action, that would constitute a distribution of the
Rule 144A Securities under the 1933 Act or that would render
the disposition of the Rule 144A Securities a violation of
Section 5 of the 1933 Act or require registration pursuant
thereto, nor will it act, nor has it authorized or will it
authorize any person to act, in such manner with respect to
the Rule 144A Securities.
e. The Buyer is a "qualified institutional buyer"
as that term is defined in Rule 144A under the 1933 Act and
has completed either of the forms of certification to that
effect attached hereto as Annex 1 or Annex 2. The Buyer is
aware that the sale to it is being made in reliance on Rule
144A. The Buyer is acquiring the Rule 144A Securities for
its own account or the accounts of other qualified institu-
tional buyers, understands that such Rule 144A Securities
may be resold, pledged or transferred only (i) to a person
reasonably believed to be a qualified institutional buyer
that purchases for its own account or for the account of a
qualified institutional buyer to whom notice is given that
the resale, pledge or transfer is being made in reliance on
Rule 144A, or (ii) pursuant to another exemption from regis-
tration under the 1933 Act.
[3. The Buyer warrants and represents to, and
covenants with, the Seller, the Indenture Trustee, Owner Trustee,
Servicer and the Seller that either (1) the Buyer is (A) not an
employee benefit plan (within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended
("ERISA")), or a plan (within the meaning of Section 4975(e)(1)
of the Internal Revenue Code of 1986 ("Code")), which (in either
case) is subject to ERISA or Section 4975 of the Code (both a
"Plan"), and (B) is not directly or indirectly purchasing the
Rule 144A Securities on behalf of, as investment manager of, as
named fiduciary of, as trustee of, or with "plan assets" of a
Plan, or (2) the Buyer understands that registration of transfer
of any Rule 144A Securities to any Plan, or to any Person acting
on behalf of any Plan, will not be made unless such Plan delivers
an opinion of its counsel, addressed and satisfactory to the
Certificate Registrar and the Seller, to the effect that the
purchase and holding of the Rule 144A Securities by, on behalf of
or with "plan assets" of any Plan would not constitute or result
in a prohibited transaction under Section 406 of ERISA or Section
4975 of the Code, and would not subject the Seller, the Servicer,
the Indenture Trustee or the Issuer to any obligation or
liability (including liabilities under ERISA or Section 4975 of
the Code) in addition to those undertaken in the Agreement or any
other liability.]
4. This document may be executed in one or more
counterparts and by the different parties hereto on separate
counterparts, each of which, when so executed, shall be deemed to
be an original; such counterparts, together, shall constitute one
and the same document.
IN WITNESS WHEREOF, each of the parties has executed
this document as of the date set forth below.
Print Name of Seller Print Name of Buyer
By: By:
Name: Name:
Title: Title:
Taxpayer Identification: Taxpayer Identification:
No. No.
Date: Date: <PAGE>
Annex 1 to Exhibit D
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Buyers Other Than Registered Investment Companies]
The undersigned hereby certifies as follows in connection with
the Rule 144A Investment Representation to which this
Certification is attached:
1. As indicated below, the undersigned is the President,
Chief Financial Officer, Senior Vice President or other executive
officer of the Buyer.
2. In connection with purchases by the Buyer, the Buyer
is a "qualified institutional buyer" as that term is defined in
Rule 144A under the Securities Act of 1933 ("Rule 144A") because
(i) the Buyer owned and/or invested on a discretionary basis
$______________________ in securities (except for the excluded
securities referred to below) as of the end of the Buyer's most
recent fiscal year (such amount being calculated in accordance
with Rule 144A) and (ii) the Buyer satisfies the criteria in the
category marked below.
___ Corporation, etc. The Buyer is a corporation (other than
a bank, savings and loan association or similar
institution), Massachusetts or similar business trust,
partnership, or charitable organization described in
Section 501(c)(3) of the Internal Revenue Code.
___ Bank. The Buyer (a) is a national bank or banking
institution organized under the laws of any State,
territory or the District of Columbia, the business of
which is substantially confined to banking and is
supervised by the State or territorial banking commission
or similar official or is a foreign bank or equivalent
institution, and (b) has an audited net worth of at least
$25,000,000 as demonstrated in its latest annual
financial statements, a copy of which is attached hereto.
<PAGE>
___ Savings and Loan. The Buyer (a) is a savings and loan
association, building and loan association, cooperative
bank, homestead association or similar institution, which
is supervised and examined by a State or Federal
authority having supervision over any such institutions
or is a foreign savings and loan association or
equivalent institution and (b) has an audited net worth
of at least $25,000,000 as demonstrated in its latest
annual financial statements.
___ Broker-Dealer. The Buyer is a dealer registered pursuant
to Section 15 of the Securities Exchange Act of 1934.
___ Insurance Company. The Buyer is an insurance company
whose primary and predominant business activity is the
writing of insurance or the reinsuring of risks
underwritten by insurance companies and which is subject
to supervision by the insurance commissioner or a similar
official or agency of a State or territory or the
District of Columbia.
___ State or Local Plan. The Buyer is a plan established and
maintained by a State, its political subdivisions, or any
agency or instrumentality of the State or its political
subdivisions, for the benefit of its employees.
___ ERISA Plan. The Buyer is an employee benefit plan within
the meaning of Title I of the Employee Retirement Income
Security Act of 1974.
___ Investment Adviser. The Buyer is an investment adviser
registered under the Investment Advisers Act of 1940.
___ SBIC. The Buyer is a Small Business Investment Company
licensed by the U.S. Small Business Administration under
Section 301(c) or (d) of the Small Business Investment
Act of 1958.
___ Business Development Company. The Buyer is a business
development company as defined in Section 202(a)(22) of
the Investment Advisers Act of 1940.
___ Trust Fund. The Buyer is a trust fund whose trustee is a
bank or trust company and whose participants are
exclusively (a) plans established and maintained by a
State, its political subdivisions, or any agency or
instrumentality of the State or its political
subdivisions, for the benefit of its employees, or
(b) employee benefit plans within the meaning of Title I
of the Employee Retirement Income Security Act of 1974,
but is not a trust fund that includes as participants
individual retirement accounts or H.R. 10 plans.
3. The term "securities" as used herein does not
include (i) securities of issuers that are affiliated with the
Buyer, (ii) securities that are part of an unsold allotment to or
subscription by the Buyer, if the Buyer is a dealer, (iii) bank
deposit notes and certificates of deposit, (iv) loan
participations, (v) repurchase agreements, (vi) securities owned
but subject to a repurchase agreement and (vii) currency,
interest rate and commodity swaps.
4. For purposes of determining the aggregate amount
of securities owned and/or invested on a discretionary basis by
the Buyer, the Buyer used the cost of such securities to the
Buyer and did not include any of the securities referred to in
the preceding paragraph. Further, in determining such aggregate
amount, the Buyer may have included securities owned by
subsidiaries of the Buyer, but only if such subsidiaries are
consolidated with the Buyer in its financial statements prepared
in accordance with generally accepted accounting principles and
if the investments of such subsidiaries are managed under the
Buyer's direction. However, such securities were not included if
the Buyer is a majority-owned, consolidated subsidiary of another
enterprise and the Buyer is not itself a reporting company under
the Securities Exchange Act of 1934.
5. The Buyer acknowledges that it is familiar with
Rule 144A and understands that the seller to it and other parties
related to the Certificates are relying and will continue to rely
on the statements made herein because one or more sales to the
Buyer may be in reliance on Rule 144A.
___ ___ Will the Buyer be purchasing the Rule 144A
Yes No Securities only for the Buyer's own account?
6. If the answer to the foregoing question is "no",
the Buyer agrees that, in connection with any purchase of
securities sold to the Buyer for the account of a third party
(including any separate account) in reliance on Rule 144A, the
Buyer will only purchase for the account of a third party that at
the time is a "qualified institutional buyer" within the meaning
of Rule 144A. In addition, the Buyer agrees that the Buyer will
not purchase securities for a third party unless the Buyer has
obtained a current representation letter from such third party or
taken other appropriate steps contemplated by Rule 144A to
conclude that such third party independently meets the definition
of "qualified institutional buyer" set forth in Rule 144A.
7. The Buyer will notify each of the parties to which
this certification is made of any changes in the information and
conclusions herein. Until such notice is given, the Buyer's
purchase of Rule 144A Securities will constitute a reaffirmation
of this certification as of the date of such purchase.
Print Name of Buyer
By:
Name:
Title:
Date: <PAGE>
Annex 2 to Exhibit D
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Buyers That Are Registered Investment Companies]
The undersigned hereby certifies as follows in
connection with the Rule 144A Investment Representation to which
this Certification is attached:
1. As indicated below, the undersigned is the
President, Chief Financial Officer or Senior Vice President of
the Buyer or, if the Buyer is a "qualified institutional buyer"
as that term is defined in Rule 144A under the Securities Act of
1933 ("Rule 144A") because Buyer is part of a Family of
Investment Companies (as defined below), is such an officer of
the Adviser.
2. In connection with purchases by Buyer, the Buyer is
a "qualified institutional buyer" as defined in SEC Rule 144A
because (i) the Buyer is an investment company registered under
the Investment Company Act of 1940, and (ii) as marked below, the
Buyer alone, or the Buyer's Family of Investment Companies, owned
at least $100,000,000 in securities (other than the excluded
securities referred to below) as of the end of the Buyer's most
recent fiscal year. For purposes of determining the amount of
securities owned by the Buyer or the Buyer's Family of
Investment Companies, the cost of such securities was used.
____ The Buyer owned $___________________ in securities
(other than the excluded securities referred to below)
as of the end of the Buyer's most recent fiscal year
(such amount being calculated in accordance with
Rule 144A).
____ The Buyer is part of a Family of Investment Companies
which owned in the aggregate $______________ in
securities (other than the excluded securities referred
to below) as of the end of the Buyer's most recent
fiscal year (such amount being calculated in accordance
with Rule 144A).
3. The term "Family of Investment Companies" as used
herein means two or more registered investment companies (or
series thereof) that have the same investment adviser or
investment advisers that are affiliated (by virtue of being
majority owned subsidiaries of the same parent or because one
investment adviser is a majority owned subsidiary of the other).
4. The term "securities" as used herein does not
include (i) securities of issuers that are affiliated with the
Buyer or are part of the Buyer's Family of Investment Companies,
(ii) bank deposit notes and certificates of deposit, (iii) loan
participations, (iv) repurchase agreements, (v) securities owned
but subject to a repurchase agreement and (vi) currency, interest
rate and commodity swaps.
5. The Buyer is familiar with Rule 144A and
understands that each of the parties to which this certification
is made are relying and will continue to rely on the statements
made herein because one or more sales to the Buyer will be in
reliance on Rule 144A. In addition, the Buyer will only purchase
for the Buyer's own account.
6. The undersigned will notify each of the parties to
which this certification is made of any changes in the
information and conclusions herein. Until such notice, the
Buyer's purchase of Rule 144A Securities will constitute a
reaffirmation of this certification by the undersigned as of the
date of such purchase.
Print Name of Buyer
By:
Name:
Title:
IF AN ADVISER:
Print Name of Buyer
Date:
<PAGE>
EXHIBIT E
DEFINITIONS
The definitions contained herein are incorporated into and
made a part of the Trust Agreement and Indenture, each as defined
below.
Accelerated Principal Payment Amount: With respect to any
Payment Date, the lesser of (i) the Excess Interest reduced by
the amount of the Net Charge-Off and (ii) one-twelfth of the
Series 1997-1 Participation Interest Invested Amount as of the
beginning of the related Interest Period multiplied for each
Payment Date occurring prior to April 1998, by 0.75%, and for
each Payment Date occurring in April 1998 or thereafter, by
0.25%.
Act: The meaning assigned to such term in Section 10.03 of
the Indenture.
Adjusted Principal Balance: With respect to the Class A-1
Notes, Class A-2 Notes, Class A-3 Notes and Class B Notes, the
Class A-1 Adjusted Principal Balance, Class A-2 Adjusted
Principal Balance, Class A-3 Adjusted Principal Balance and Class
B Adjusted Principal Balance, respectively.
Adjusted Security Balance: With respect to any Payment
Date, the sum of the Class A Adjusted Principal Balance, the
Class B Adjusted Principal Balance and the Certificate Adjusted
Security Balance.
Administration Agreement: The Administration Agreement
dated as of March 1, 1997 among the Issuer, the Indenture Trustee
and HFC, as Administrator, as it may be amended from time to
time.
Administrator: HFC, as administrator under the
Administration Agreement or any successor Administrator appointed
pursuant to the terms of the Administration Agreement.
Affiliate: The meaning assigned to such term in the Pooling
and Servicing Agreement.
Aggregate Security Balance: With respect to any Payment
Date, the aggregate of the Principal Balances of all Securities
as of such date.
Amortization Event: The meaning assigned to such term in
the Pooling and Servicing Agreement.
Authorized Newspaper: A newspaper of general circulation in
the Borough of Manhattan, The City of New York, printed in the
English language and customarily published on each Business Day,
whether or not published on Saturdays, Sundays or holidays.
Authorized Officer: With respect to the Issuer, any officer
of the Owner Trustee who is authorized to act for the Owner
Trustee in matters relating to the Issuer and who is identified
on the list of Authorized Officers delivered by the Owner Trustee
to the Indenture Trustee on the Closing Date (as such list may be
modified or supplemented from time to time thereafter) and, so
long as the Administration Agreement is in effect, any
Responsible Officer of the Administrator who is authorized to act
for the Administrator in matters relating to the Issuer and to be
acted upon by the Administrator pursuant to the Administration
Agreement and who is identified on the list of Authorized
Officers delivered by the Administrator to the Indenture Trustee
on the Closing Date (as such list may be modified or supplemented
from time to time thereafter).
Available Investor Principal Collections: The meaning
assigned to such term in the Pooling and Servicing Agreement.
Basic Documents: The Trust Agreement, the Certificate of
Trust, the Indenture, Receivables Purchase Agreement, the Admin-
istration Agreement, the Pooling and Servicing Agreement, and the
other documents and certificates delivered in connection with any
of the above.
Beneficial Owner: With respect to any Note, the Person who
is the beneficial owner of such Note as reflected on the books of
the Depositary or on the books of a Person maintaining an account
with such Depositary (directly as a Depositary Participant or
indirectly through a Depositary Participant, in accordance with
the rules of such Depositary).
Book-Entry Notes: Beneficial interests in the Notes, owner-
ship and transfers of which shall be made through book entries by
the Seller as described in Section 4.06 of the Indenture.
Business Day: Any day other than (i) a Saturday or a Sunday
or (ii) a day on which banking institutions in the State of New
York or Illinois are required or authorized by law to be closed.
Business Trust Statute: Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code Sections 3801 et seq., as the same may be
amended from time to time.
Certificate Adjusted Security Balance: With respect to any
Payment Date, the Certificate Balance after giving effect to any
distributions thereon pursuant to Section 3.05(a)(iii) and (vi)
of the Indenture on all Payment Dates including the current
Payment Date less all Net Charge-Offs allocated to the
Certificates after giving effect to any such allocation to be
made on such Payment Date.
Certificate Balance: With respect to any Payment Date, the
Initial Certificate Balance, reduced by all distributions thereon
other than distributions in respect of the Certificate Yield,
prior to such Payment Date.
Certificate of Trust: The Certificate of Trust filed for
the Trust pursuant to Section 3810(a) of the Business Trust
Statute.
Certificateholder: The Person in whose name a Certificate
is registered in the Certificate Register except that, any
Certificate registered in the name of the Seller, the Owner
Trustee or the Indenture Trustee or any Affiliate of any of them
shall be deemed not to be outstanding and the registered holder
will not be considered a Certificateholder or a holder for
purposes of giving any request, demand, authorization, direction,
notice, consent or waiver under the Indenture or the Trust
Agreement provided that, in determining whether the Indenture
Trustee or the Owner Trustee shall be protected in relying upon
any such request, demand, authorization, direction, notice,
consent or waiver, only Certificates that the Indenture Trustee
or the Owner Trustee knows to be so owned shall be so
disregarded. Owners of Certificates that have been pledged in
good faith may be regarded as Holders if the pledgee establishes
to the satisfaction of the Indenture Trustee or the Owner
Trustee, as the case may be, the pledgee's right so to act with
respect to such Certificates and that the pledgee is not the
Seller, any other obligor upon the Certificates or any Affiliate
of any of the foregoing Persons.
Certificate Minimum Adjusted Balance: $11,200,000.
Certificate Minimum Balance: With respect to any Payment
Date the Series 1997-1 Participation Interest Invested Amount,
after giving effect to the distribution made on the Series 1997-1
Participation Interest on such Payment Date, multiplied by
1.0101%.
Certificate Paying Agent: The meaning specified in Section
3.03 of the Indenture.
Certificate Rate: With respect to any Interest Period, the
per annum rate equal to the sum of (i) LIBOR and (ii) 1.0% (or
such other percentage determined pursuant to an amendment to the
Trust Agreement pursuant to Section 11.01 thereof not to exceed
1.25%), but in no event greater than 15.0% per annum.
Certificate Register: The register maintained by the
Certificate Registrar in which the Certificate Registrar shall
provide for the registration of Certificates and of transfers and
exchanges of Certificates.
Certificate Registrar: Initially, The Bank of New York, in
its capacity as Certificate Registrar, or any successor to the
Indenture Trustee in such capacity as appointed pursuant to
Section 3.05 of the Trust Agreement.
Certificates: The Consumer Loan Asset Backed Certificates,
Series 1997-1, each evidencing undivided beneficial interests in
the Issuer and executed by the Owner Trustee in substantially the
form set forth in Exhibit A to the Trust Agreement.
Certificate Targeted Balance: An amount equal to (i) the
Series 1997-1 Participation Interest Invested Amount multiplied
by 91.5%, less (ii) the Class A Adjusted Principal Balance and
the Class B Adjusted Principal Balance immediately prior to such
Payment Date and after giving effect to payments of principal on
the Class A Notes and Class B Notes pursuant to Section
3.05(a)(ii) of the Indenture on such Payment Date.
Certificate Yield: The sum of (a) the amount accrued during
the related Interest Period at the Certificate Rate on the sum of
(i) the Certificate Balance immediately prior to such Payment
Date and (ii) any previously accrued and unpaid amount at the
Certificate Rate for prior Payment Dates, and (b) any previously
accrued and unpaid amount at the Certificate Rate for prior
Payment Dates.
Class: Any of class of the Class A Notes and Class B Notes
issued pursuant to Article II of the Indenture.
Class A Adjusted Principal Balance: The sum of the Class A-
1 Adjusted Principal Balance, Class A-2 Adjusted Principal
Balance and Class A-3 Adjusted Principal Balance.
Class A Notes: Any of the Class A-1 Notes, Class A-2 Notes
and Class A-3 Notes issued pursuant to Article II of the
Indenture.
Class A Targeted Principal Balance: The sum of the Class A-
1 Targeted Principal Balance, Class A-2 Targeted Principal
Balance, and Class A-3 Targeted Principal Balance.
Class A-1 Adjusted Principal Balance: With respect to any
Payment Date, the Principal Balance of the Class A-1 Notes after
giving effect to any distributions thereon pursuant to Section
3.05(a)(ii), (v) and (vi) of the Indenture on all Payment Dates
including the current Payment Date less any Net Charge-Off allo-
cated to the Class A-1 Notes after giving effect to any such
allocation to be made on such Payment Date.
Class A-1 Notes: The Class A-1 Notes issued pursuant to
Article II of the Indenture.
Class A-1 Targeted Principal Balance: The Series 1997-1
Participation Interest Invested Amount multiplied by 52.0%.
Class A-2 Adjusted Principal Balance: With respect to any
Payment Date, the Principal Balance of the Class A-2 Notes after
giving effect to any distributions thereon pursuant to Section
3.05(a)(ii), (v) and (vi) of the Indenture on all Payment Dates
including the current Payment Date less any Net Charge-Off allo-
cated to the Class A-2 Notes after giving effect to any such
allocation to be made on such Payment Date.
Class A-2 Notes: The Class A-2 Notes issued pursuant to
Article II of the Indenture.
Class A-2 Targeted Principal Balance: With respect to any
Payment Date an amount equal to (i) the Series 1997-1
Participation Interest Invested Amount multiplied by 62.0%, less
(ii) the Class A-1 Adjusted Principal Balance immediately prior
to such Payment Date and after giving effect to payments of
principal on the Class A-1 Notes pursuant to Section
3.05(a)(ii)(a) of the Indenture on such Payment Date.
Class A-3 Adjusted Principal Balance: With respect to any
Payment Date, the Principal Balance of the Class A-3 Notes after
giving effect to any distributions thereon pursuant to Section
3.05(a)(ii), (v) and (vi) of the Indenture on all Payment Dates
including the current Payment Date less any Net Charge-Off allo-
cated to the Class A-3 Notes after giving effect to any such
allocation to be made on such Payment Date.
Class A-3 Notes: The Class A-3 Notes issued pursuant to
Article II of the Indenture.
Class A-3 Targeted Principal Balance: With respect to any
Payment Date an amount equal to (i) the Series 1997-1
Participation Interest Invested Amount multiplied by 75.0%, less
(ii) the sum of the Class A-1 Adjusted Principal Balance and
Class A-2 Adjusted Principal Balance immediately prior to such
Payment Date and after giving effect to payments of principal on
the Class A-1 Notes and Class A-2 Notes pursuant to Section
3.05(a)(ii) of the Indenture on such Payment Date.
Class B Adjusted Principal Balance: With respect to any
Payment Date, the Principal Balance of the Class B Notes, after
giving effect to any distributions thereon pursuant to Section
3.05(a)(ii), (v) and (vi) of the Indenture on all Payments Dates
including the current Payment Date less all Net Charge-Off allo-
cated to the Class B Notes after giving effect to any such
allocation to be made on such Payment Date.
Class B Notes: The Class B Notes issued pursuant to Article
II of the Indenture.
Class B Targeted Principal Balance: With respect to any
Payment Date an amount equal to (i) the Series 1997-1
Participation Interest Invested Amount multiplied by 84.5%, less
(ii) the Class A Adjusted Principal Balance immediately prior to
such Payment Date and after giving effect to payments of
principal on the Class A Notes pursuant to Section 3.05(a)(ii) of
the Indenture on such Payment Date.
Class Interest Distribution: With respect to any Payment
Date and Class of Notes, the sum of (a) the amount of interest
accrued during the Interest Period relating to such Payment Date
at the related Note Rate for such Class of Notes on the sum of
(i) the Principal Balance of such Class of Notes immediately
prior to such Payment Date and (ii) any previously accrued and
unpaid interest on such Class of Notes for prior Payment Dates,
and (b) any previously accrued and unpaid interest on such Class
of Notes for prior Payment Dates.
Class Percentage: With respect to each Class of Notes and
Payment Date, the ratio, expressed as a percentage, of the aggre-
gate Principal Balance of such Class of Notes to the aggregate
Principal Balance of the Notes, in each case immediately prior to
such Payment Date.
Closing Date: March 12, 1997.
Code: The Internal Revenue Code of 1986, as amended, and
the rules and regulations promulgated thereunder.
Corporate Trust Office: With respect to the Indenture
Trustee, Certificate Registrar, Certificate Paying Agent and
Paying Agent, the principal corporate trust office of the
Indenture Trustee and Note Registrar at which at any particular
time its corporate trust business shall be principally admin-
istered, which office at the date of the execution of this in-
strument is located at 101 Barclay Street, Floor 12 East, New
York, New York 10286, Attention: Corporate Trust Administration
Asset-Backed Unit. With respect to the Owner Trustee, the
principal corporate trust office of the Owner Trustee at which at
any particular time its corporate trust business shall be admin-
istered, which office at the date of the execution of the Trust
Agreement is located at 1201 Market Street, Wilmington, Delaware
19801, Attention: Corporate Trustee Administration.
Default: Any occurrence which is or with notice or the
lapse of time or both would become an Event of Default.
Definitive Notes: The meaning specified in Section 4.06 of
the Indenture.
Deposit Trust: The trust created pursuant to the Pooling
and Servicing Agreement.
Deposit Trustee: Texas Commerce Bank National Association,
as successor trustee to The Chase Manhattan Bank, N.A., and any
successor thereto under the Pooling and Servicing Agreement.
Depository or Depository Agency: The Depository Trust
Company or a successor appointed by the Indenture Trustee with
the approval of the Seller. Any successor to the Depository
shall be an organization registered as a "clearing agency"
pursuant to Section 17A of the Exchange Act and the regulations
of the Securities and Exchange Commission thereunder.
Depository Participant: A Person for whom, from time to
time, the Depository effects book-entry transfers and pledges of
securities deposited with the Depository.
Designated Certificate: The meaning specified in Section
3.11 of the Trust Agreement.
Determination Date: With respect to any Payment Date, the
5th Business Day prior to such Payment Date occurs or if such day
is not a Business Day, the next succeeding Business Day.
Distribution Date: The meaning specified in the Supplement.
Due Period: The meaning assigned to such term in the
Pooling and Servicing Agreement.
Eligible Deposit Account: The meaning assigned to such term
in the Pooling and Servicing Agreement.
Eligible Investments: The meaning assigned to such term in
the Pooling and Servicing Agreement.
ERISA: The meaning assigned to such term in the Pooling and
Servicing Agreement.
Event of Default: With respect to the Indenture, 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. a default in the payment on any related Payment
Date of any interest accrued on any Note during the related
Interest Period, and such default shall continue for a
period of five days;
ii. a default in the payment of the principal of or any
installment of the principal of any Note when the same
becomes due and payable;
iii. default in the observance or performance of any
covenant or agreement of the Issuer made in the Indenture,
or any representation or warranty of the Issuer made in the
Indenture or in any certificate or other writing 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 shall have had a material
adverse effect on any Noteholders, and such default shall
continue or not be cured, or the circumstance or condition
in respect of which such representation or warranty was
incorrect shall not have been eliminated or otherwise cured,
for a period of 30 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% in principal amount of the
Notes then outstanding, 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;
iv. 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 Indenture 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 Indenture 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
v. 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 Indenture 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
any action by the Issuer in furtherance of any of the
foregoing.
Excess Interest: With respect to any Payment Date the
amount if any by which Series 1997-1 Participation Interest
Monthly Interest exceeds the sum of (a) the amount to be
distributed pursuant to Section 3.05(a)(i) of the Indenture on
such Payment Date and (b) Series 1997-1 Participation Interest
Charge-Offs for the related Due Period.
Exchange Act: The Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
Expenses: The meaning specified in Section 8.02 of the
Trust Agreement.
FASIT: Financial Asset Securitization Investment Trust as
passed by Congress in the Small Business Tax Bill, H.R. 3448, in
August 1996, and as enacted and amended from time to time.
FDIC: The Federal Deposit Insurance Corporation or any
successor thereto.
Final Scheduled Payment Date: To the extent not previously
paid, the principal balance of each Class of Notes will be due on
the Payment Date in March 2007.
Grant: Mortgage, pledge, bargain, sell, warrant, alienate,
remise, release, convey, assign, transfer, create, and grant a
lien upon and a security interest in and right of set-off
against, deposit, set over and confirm pursuant to the Indenture.
A Grant of the Indenture Collateral or of any other agreement or
instrument shall include all rights, powers and options (but none
of the obligations) of the granting party thereunder, including
the immediate and continuing right to claim for, collect, receive
and give receipt for principal and interest payments in respect
of such collateral or other agreement or instrument and all other
moneys payable thereunder, to give and receive notices and other
communications, to make waivers or other agreements, to exercise
all rights and options, to bring proceedings in the name of the
granting party or otherwise, and generally to do and receive
anything that the granting party is or may be entitled to do or
receive thereunder or with respect thereto.
HFC: Household Finance Corporation, a Delaware corporation
and a subsidiary of Household International, Inc.
Holdback Amount: An amount initially equal to the excess of
(i) the Series 1997-1 Participation Interest Initial Invested
Amount over (ii) the aggregate Initial Principal Balances of the
Class A Notes, the Class B Notes and the Certificates. Such
amount will be reduced through payments made pursuant to Section
3.05(a)(iv) and 3.05(a)(vi) of the Indenture and will be reduced
or increased through the allocation of Series 1997-1
Participation Interest Charge-Offs and Reversals pursuant to
Section 3.05(c) and (d) of the Indenture.
Holder: Any of the Noteholders or Certificateholders.
Indemnified Party: The meaning specified in Section 8.02 of
the Trust Agreement.
Indenture: The Indenture dated as of March 1, 1997 between
the Issuer, as debtor, and the Indenture Trustee, as Indenture
Trustee, as may be amended from time to time.
Indenture Collateral: The meaning specified in the Granting
Clause of the Indenture.
Indenture Trustee: The Bank of New York, and its successors
and assigns or any successor indenture trustee appointed pursuant
to the terms of the Indenture.
Indenture Trust Estate: The meaning specified in the
Granting Clause of the Indenture.
Independent: When used with respect to any specified
Person, the Person (i) is in fact independent of the Issuer, any
other obligor on the Notes, the Seller, the Servicer and any
Affiliate of any of the foregoing Persons, (ii) does not have any
direct financial interest or any material indirect financial
interest in the Issuer, any such other obligor, the Seller, the
Servicer or any Affiliate of any of the foregoing Persons and
(iii) is not connected with the Issuer, any such other obligor,
the Seller, the Servicer or any Affiliate of any of the foregoing
Persons as an officer, employee, promoter, underwriter, trustee,
partner, director or person performing similar functions.
Independent Certificate: A certificate or opinion to be
delivered to the Indenture Trustee under the circumstances
described in, and otherwise complying with, the applicable
requirements of Section 10.01 of the Indenture, made by an
Independent appraiser or other expert appointed by the Issuer and
approved by the Indenture Trustee in the exercise of reasonable
care, and such opinion or certificate shall state that the signer
has read the definition of "Independent" in this Indenture and
that the signer is Independent within the meaning thereof.
Initial Certificate Balance: $33,600,000.
Initial Principal Balance: With respect to the Class A-1
Notes, Class A-2 Notes, Class A-3 Notes and Class B Notes,
$729,600,000, $48,000,000, $62,400,000 and $45,600,000, respec-
tively.
Insolvency Event: With respect to a specified Person, (a)
the filing of a decree or order for relief by a court having
jurisdiction in the premises in respect of such Person or any
substantial part of its property in an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or appointing a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official
for such Person or for any substantial part of its property, or
ordering the winding-up or liquidation of such Person's affairs,
and such decree or order shall remain unstayed and in effect for
a period of 60 consecutive days; or (b) the commencement by such
Person of a voluntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or
the consent by such Person to the entry of an order for relief in
an involuntary case under any such law, or the consent by such
Person to the appointment of or taking possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar
official for such Person or for any substantial part of its
property, or the making by such Person of any general assignment
for the benefit of creditors, or the failure by such Person
generally to pay its debts as such debts become due or the
admission by such Person in writing (as to which the Indenture
Trustee shall have notice) of its inability to pay its debts
generally, or the adoption by the Board of Directors or managing
member of such Person of a resolution which authorizes action by
such Person in furtherance of any of the foregoing.
Interest Period: With respect to any Payment Date other
than the first Payment Date, the period beginning on the preced-
ing Payment Date and ending on the day preceding such Payment
Date, and in the case of the first Payment Date, the period
beginning on the Closing Date and ending on the day preceding the
first Payment Date.
Issuer: The Household Consumer Loan Trust 1997-1, a
Delaware business trust, or its successor in interest.
Issuer Request: A written order or request signed in the
name of the Issuer by any one of its Authorized Officers and
delivered to the Indenture Trustee.
LIBOR: For any Interest Period other than the first
Interest Period, the rate for United States dollar deposits for
one month which appears on the Telerate Screen Page 3750 as of
11:00 A.M., London time, on the second LIBOR Business Day prior
to the first day of such Interest Period. With respect to the
first Interest Period, the rate for United States dollar deposits
for one month which appears on the Telerate Screen Page 3750 as
of 11:00 A.M., London time, two LIBOR Business Days prior to the
Closing Date. If such rate does not appear on such page (or such
other page as may replace that page on that service, or if such
service is no longer offered, such other service for displaying
LIBOR or comparable rates as may be reasonably selected by the
Indenture Trustee after consultation with the Servicer), the rate
will be the Reference Bank Rate. If no such quotations can be
obtained and no Reference Bank Rate is available, LIBOR will be
LIBOR applicable to the preceding Payment Date.
LIBOR Business Day: Any day other than (i) a Saturday or a
Sunday or (ii) a day on which banking institutions in the State
of New York or Illinois, or in the city of London, England are
required or authorized by law to be closed.
Lien: Any mortgage, deed of trust, pledge, conveyance,
hypothecation, assignment, participation, deposit arrangement,
encumbrance, lien (statutory or other), preference, priority
right or interest or other security agreement or preferential
arrangement of any kind or nature whatsoever, including, without
limitation, any conditional sale or other title retention agree-
ment, any financing lease having substantially the same economic
effect as any of the foregoing and the filing of any financing
statement under the UCC (other than any such financing statement
filed for informational purposes only) or comparable law of any
jurisdiction to evidence any of the foregoing; provided, however,
that any assignment pursuant to Section 6.02 of the Pooling and
Servicing Agreement shall not be deemed to constitute a Lien.
Minimum Adjusted Principal Balance: With respect to the
Class A-2 Notes, Class A-3 Notes and Class B Notes, $16,000,000,
$20,800,000, and $15,200,000, respectively.
Monthly Security Report: The report attached as Exhibit C
to the Indenture.
Monthly Servicer's Certificate: The Monthly Servicer's
Certificate attached to the Supplement for Series 1997-1 as
Exhibit B.
Moody's: Moody's Investors Service, Inc. or its successor
in interest.
Net Charge-Off: With respect to any Payment Date, the
aggregate amount of Optimum Monthly Principal not distributed on
such Payment Date and all prior Payment Dates less the aggregate
amount of Reversals allocated on such Payment Date and prior
Payment Dates.
Note Depositary Agreement: The DTC Letter of
Representations dated as of the Closing Date by and among, The
Depository Trust Company, the Indenture Trustee and the Issuer.
Note Owner: The Beneficial Owner of a Note.
Note Rate: With respect to any Interest Period, a per annum
rate equal to the sum of (a) LIBOR and (b) 0.125% with respect to
the Class A-1 Notes, 0.250% with respect to the Class A-2 Notes,
0.350% with respect to the Class A-3 Notes, and 0.65% (or such
other percentage determined pursuant to an amendment to the
Indenture adopted pursuant to Section 9.02 thereof not to exceed
0.875%) with respect to the Class B Notes but in no event greater
than 12.5%, 14.0%, 14.0% and 14.0% per annum, respectively.
Note Register: The register maintained by the Note
Registrar in which the Note Registrar shall provide for the
registration of Notes and of transfers and exchanges of Notes.
Note Registrar: The Indenture Trustee, in its capacity as
Note Registrar.
Noteholder: The Person in whose name a Note is registered
in the Note Register, except that, any Note registered in the
name of the Seller, the Issuer or the Indenture Trustee or any
Affiliate of any of them shall be deemed not to be outstanding
and the registered holder will not be considered a Noteholder or
holder for purposes of giving any request, demand, authorization,
direction, notice, consent or waiver under the Indenture or the
Trust Agreement provided that, in determining whether the
Indenture Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or
waiver, only Notes that the Indenture Trustee or the Owner
Trustee knows to be so owned shall be so disregarded. Owners of
Notes that have been pledged in good faith may be regarded as
Holders if the pledgee establishes to the satisfaction of the
Indenture Trustee or the Owner Trustee the pledgee's right so to
act with respect to such Notes and that the pledgee is not the
Issuer, any other obligor upon the Notes or any Affiliate of any
of the foregoing Persons.
Notes: Each of the Class A Notes and Class B Notes.
Officer's Certificate: With respect to the Servicer, a
certificate signed by the President, Treasurer or Assistant
Treasurer, a Vice President or an Assistant Vice President, of
the Servicer and delivered to the Indenture Trustee. With
respect to the Issuer, a certificate signed by any Authorized
Officer of the Issuer, under the circumstances described in, and
otherwise complying with, the applicable requirements of Section
10.01 of the Indenture, and delivered to the Indenture Trustee.
Unless otherwise specified, any reference in the Indenture to an
Officer's Certificate shall be to an Officer's Certificate of any
Authorized Officer of the Issuer.
Opinion of Counsel: A written opinion of counsel who may be
in-house counsel for the Servicer, Seller or Household Inter-
national, Inc. if acceptable to the Indenture Trustee, and the
Rating Agencies or counsel for the Seller, as the case may be.
Optimum Monthly Principal: As to any Payment Date, the sum
of Available Investor Principal Collections, any Series 1997-1
Participation Interest Charge-Offs during the preceding Due
Period and the lesser of Excess Interest and the Net Charge-Off
as of the end of the preceding Payment Date.
Outstanding: With respect to the Notes, as of the date of
determination, all Notes theretofore executed, authenticated and
delivered under this Indenture except:
(i) Notes theretofore cancelled by the Note Registrar
or delivered to the Indenture Trustee for cancellation; and
(ii) Notes in exchange for or in lieu of which other
Notes have been executed, authenticated and delivered pur-
suant to the Indenture unless proof satisfactory to the
Indenture Trustee is presented that any such Notes are held
by a holder in due course.
Overcollateralization Amount: As to any Payment Date, the
amount by which the Series 1997-1 Participation Interest Invested
Amount exceeds the Aggregate Security Balances in each case after
giving effect to distributions on such Payment Date.
Overcollateralization Minimum Amount: $13,600,000.
Owner Trust Estate: The corpus of the Issuer created by the
Trust Agreement.
Owner Trustee: Chase Manhattan Bank Delaware and its
successors and assigns or any successor owner trustee appointed
pursuant to the terms of the Trust Agreement.
Paying Agent: Any paying agent or co-paying agent appointed
pursuant to Section 3.03 of the Indenture and Section 3.10 of the
Trust Agreement, which initially shall be the Indenture Trustee.
Payment Account: The account established by the Indenture
Trustee pursuant to Section 8.02 of the Indenture. The Payment
Account shall be an Eligible Deposit Account.
Payment Date: The 15th day of each month, or if such day is
not a Business Day, then the next Business Day.
Percentage Interest: With respect to any Payment Date and
any Note, the percentage obtained by dividing the Security
Balance of such Note prior to distributions on such Payment Date
by the aggregate of the Security Balances of all Notes of the
same Class. With respect to any Certificate, the percentage
obtained by dividing the denomination specified on such
Certificate by the Initial Principal Balance of the Certificates.
Person: The meaning assigned to such term in the Pooling
and Servicing Agreement.
Pooling and Servicing Agreement: The Pooling and Servicing
Agreement dated as of September 1, 1995, as supplemented by the
Supplement for Series 1997-1 dated as of March 1, 1997, by and
among the Seller, the Servicer and the Deposit Trustee, as each
of the foregoing may be amended from time to time.
Principal Balance: With respect to any Payment Date and
each Note, the Initial Principal Balance thereof, reduced by all
distributions of principal thereon prior to such Payment Date.
Proceeding: Any suit in equity, action at law or other
judicial or administrative proceeding.
Rating Agency: The meaning assigned to such term in the
Pooling and Servicing Agreement.
Receivables: The meaning assigned to such term in the
Pooling and Servicing Agreement.
Receivables Purchase Agreement: The meaning assigned to
such term in the Pooling and Servicing Agreement.
Record Date: With respect to the Notes and any Payment
Date, the Business Day next preceding such Payment Date and with
respect to the Certificates and any Payment Date, the last
Business Day of the month preceding the month of such Payment
Date.
Reference Bank Rate: With respect to any Interest Period,
as follows: the arithmetic mean (rounded upwards, if necessary,
to the nearest one sixteenth of a percent) of the offered rates
for United States dollar deposits for one month which are offered
by the Reference Banks as of 11:00 A.M., London time, on the
second LIBOR Business Day prior to the first day of such Interest
Period to prime banks in the London interbank market for a period
of one month in amounts approximately equal to the Aggregate
Security Balance; provided that at least two such Reference Banks
provide such rate. If fewer than two offered rates appear, the
Reference Bank Rate will be the arithmetic mean of the rates
quoted by one or more major banks in New York City, selected by
the Indenture Trustee after consultation with the Servicer, as of
11:00 A.M., New York City time, on such date for loans in U.S.
Dollars to leading European Banks for a period of one month in
amounts approximately equal to the Aggregate Security Balance.
If no such quotations can be obtained, the Reference Bank Rate
shall be the Reference Bank Rate applicable to the preceding
Interest Period.
Reference Banks: Three money center banks as selected by
the Indenture Trustee after consultation with the Servicer.
Registered Holder: The Person in whose name a Note is
registered in the Note Register on the applicable Record Date.
Responsible Officer: With respect to the Indenture Trustee,
any officer of the Indenture Trustee with direct responsibility
for the administration of the Indenture and also, with respect to
a particular matter, any other officer to whom such matter is
referred because of such officer's knowledge of and familiarity
with the particular subject.
Reversals: With respect to any Payment Date the sum of (i)
the Net Charge-Off previously allocated, to the extent of Excess
Interest for such Payment Date and (ii) the amounts treated as
Available Investor Principal Collections pursuant to Section
4.11(a)(iv) of the Supplement for the related Distribution Date;
provided however, in no event will such Reversals exceed the Net
Charge-Off.
Sale: The meaning assigned to such term in Section 5.15 of
the Indenture.
Securities Act: The Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
Security: Any of the Certificates or Notes.
Security Balance: The Principal Balance of the Notes, or
the Certificate Balance, as the case may be.
Security Collections: With respect to any Payment Date the
sum of Series 1997-1 Participation Interest Monthly Interest and
Series 1997-1 Participation Interest Monthly Principal for such
Payment Date.
Securityholder or Holder: Any Noteholder or a Certificate-
holder.
Seller: Household Consumer Loan Corporation, a Nevada
corporation and a wholly-owned, special purpose subsidiary of
Household Finance Corporation, or its successor in interest.
Seller's Trust Amount: The meaning assigned to such term in
the Pooling and Servicing Agreement.
Series Participation Interest: The meaning assigned to such
term in the Pooling and Servicing Agreement.
Series 1997-1 Participation Interest: The Series 1997-1
Participation Interest issued pursuant to the Pooling and
Servicing Agreement.
Series 1997-1 Participation Interest Charge-Offs: The
meaning assigned to such term in the Pooling and Servicing
Agreement.
Series 1997-1 Participation Interest Invested Amount: The
meaning assigned to such term in the Pooling and Servicing Agree-
ment.
Series 1997-1 Participation Interest Monthly Interest: The
meaning assigned to such term in the Pooling and Servicing Agree-
ment.
Series 1997-1 Participation Interest Monthly Principal: The
meaning assigned to such term in the Pooling and Servicing Agree-
ment.
Servicer: HFC and its successors and assigns.
Servicer Default: An event specified in Section 10.01 of
the Pooling and Servicing Agreement.
Single Certificate: A Certificate in the denomination of
$1,000,000.
Single Note: A Note in the denomination of $100,000.
Standard & Poor's: Standard & Poor's Ratings Services, a
Division of The McGraw-Hill Companies, Inc., or its successor in
interest.
Successor Designated Certificateholder: The meaning
assigned to such term in Section 9.02 of the Trust Agreement.
Telerate Screen Page 3750: The display designated as page
3750 on the Telerate Service (or such other page as may replace
page 3750 on that service for the purpose of displaying London
interbank offered rates of major banks).
Treasury Regulations: Regulations, including proposed or
temporary Regulations, promulgated under the Code. References
herein to specific provisions of proposed or temporary regula-
tions shall include analogous provisions of final Treasury
Regulations or other successor Treasury Regulations.
Trust Agreement: The Trust Agreement dated as of March 1,
1997 between the Owner Trustee and the Seller, as amended from
time to time.
Trust Indenture Act or TIA: The Trust Indenture Act of
1939, as amended from time to time, as in effect on any relevant
date.
UCC: The Uniform Commercial Code, as amended from time to
time, as in effect in any specified jurisdiction.
<PAGE>
EXHIBIT F
CERTIFICATE OF NON-FOREIGN STATUS
This Certificate of Non-Foreign Status ("certificate") is
delivered pursuant to Section 3.03 of the Trust Agreement, dated
as of March 1, 1997 (the "Trust Agreement"), among the Household
Consumer Loan Corporation, as seller and the entity who is the
general partner for tax purposes (the "Designated Holder") and
Chase Manhattan Bank Delaware, as Owner Trustee, in connection
with the acquisition of, transfer to or possession by the
undersigned, whether as beneficial owner (the "Beneficial
Owner"), or nominee on behalf of the Beneficial Owner of the
Household Consumer Loan Asset Backed Certificates, Series 1997-1
(the "Certificate"). Capitalized terms used but not defined in
this certificate have the respective meanings given them in the
Trust Agreement.
Each holder must complete Part I, Part II (if the holder is a
nominee), and in all cases sign and otherwise complete Part III.
In addition, each holder shall submit with the Certificate an IRS
Form W-9 relating to such holder.
To confirm to the Issuer that the provisions of Section 1446 of
the Internal Revenue Code (relating to withholding tax on foreign
partners) do not apply in respect of the Certificate held by the
undersigned, the undersigned hereby certifies:
Part I - Complete Either A or B
A. Individual as Beneficial Owner
1. I am (The Beneficial Owner is) not a non-
resident alien for purposes of U.S. income
taxation;
2. My (The Beneficial Owner's) name and home
address are:
;
and
3. My (The Beneficial Owner's) U.S. taxpayer
identification number (Social Security
Number) is .
B. Corporate, Partnership or Other Entity as
Beneficial Owner
1. (Name of the
Beneficial Owner) is not a foreign
corporation, foreign partnership, foreign
trust or foreign estate (as those terms are
defined in the Code and Treasury
Regulations);
2. The Beneficial Owner's office address and
place of incorporation (if applicable) is
; and
3. The Beneficial Owner's U.S. employer
identification number is .
Part II - Nominees
If the undersigned is the nominee for the Beneficial Owner,
the undersigned certifies that this certificate has been made in
reliance upon information contained in:
an IRS Form W-9
a form such as this or substantially similar
provided to the undersigned by an appropriate person and (i) the
undersigned agrees to notify the Issuer at least thirty (30) days
prior to the date that the form relied upon becomes obsolete, and
(ii) in connection with change in Beneficial Owners, the
undersigned agrees to submit a new Certificate of Non-Foreign
Status to the Issuer promptly after such change.
Part III - Declaration
The undersigned, as the Beneficial Owner or a nominee
thereof, agrees to notify the Issuer within sixty (60) days of
the date that the Beneficial Owner becomes a foreign person. The
undersigned understands that this certificate may be disclosed to
the Internal Revenue Service by the Issuer and any false
statement contained therein could be punishable by fines,
imprisonment or both.
<PAGE>
Under penalties of perjury, I declare that I have examined
this certificate and to the best of my knowledge and belief it is
true, correct and complete and will further declare that I will
inform the Issuer of any change in the information provided
above, and, if applicable, I further declare that I have the
authority* to sign this document.
Name
Title (if applicable)
Signature and Date
*NOTE: If signed pursuant to a power of attorney, the power of
attorney must accompany this certificate.
<PAGE>
EXHIBIT G
FORM OF INVESTMENT LETTER [NON-RULE 144A]
[DATE]
[Certificate Registrar]
Re: Household Consumer Loan Trust 1997-1
Consumer Loan Asset Backed Certificates,
Series 1997-1 (the "Certificates")
Ladies and Gentlemen:
In connection with our acquisition of the above-captioned
Certificates, we certify that (a) we understand that the
Certificates are not being registered under the Securities Act of
1933, as amended (the "Act"), or any state securities laws and
are being transferred to us in a transaction that is exempt from
the registration requirements of the Act and any such laws, (b)
we are an "accredited investor," as defined in Regulation D under
the Act, and have such knowledge and experience in financial and
business matters that we are capable of evaluating the merits and
risks of investments in the Certificates, (c) we have had the
opportunity to review the Trust Agreement, Indenture and Pooling
and Servicing Agreement and we have had the opportunity to ask
questions of and receive answers from the Seller concerning the
purchase of the Certificates and all matters relating thereto or
any additional information deemed necessary to our decision to
purchase the Certificates, (d) we are not an employee benefit
plan that is subject to the Employee Retirement Income Security
Act of 1974, as amended, or a plan that is subject to Section
4975 of the Internal Revenue Code of 1986, as amended, nor are we
acting on behalf of or using the assets of any such plan, [or if
the Purchaser is an insurance company, a representation that the
Purchaser is an insurance company which is purchasing such
certificates with funds contained in an "insurance company
general account" (as such term is defined in section v(e) of
prohibited transaction class exemption 95-60 ("ptce 95-60")),
that the purchase and holding of such certificates are covered
under ptce 95-60 and that ptce 95-60 is a valid and available
exemption,] or (iv) in the case of any such proposed transferee
which is a plan, an opinion of counsel satisfactory to the Owner
Trustee and the Seller to the effect set forth in the agreement
(e) we are acquiring the Certificates for investment for our own
account and not with a view to any distribution of such
Certificates (but without prejudice to our right at all times to
sell or otherwise dispose of the Certificates in accordance with
clause (g) below), (f) we have not offered or sold any
Certificates to, or solicited offers to buy any Certificates
from, any person, or otherwise approached or negotiated with any
person with respect thereto, or taken any other action which
would result in a violation of Section 5 of the Act, (g) we will
not sell, transfer or otherwise dispose of any Certificates
unless (1) such sale, transfer or other disposition is made
pursuant to an effective registration statement under the Act or
is exempt from such registration requirements, and if such
transfer is made pursuant to an exemption other than Rule 144A,
we will, if requested, at our expense provide an opinion of
counsel satisfactory to the addressees of this certificate that
such sale, transfer or other disposition may be made pursuant to
an exemption from the Act, (2) the purchaser or transferee of
such Certificate has executed and delivered to you a certificate
to substantially the same effect as this certificate, and (3) the
purchaser or transferee has otherwise complied with any
conditions for transfer set forth in the Trust Agreement, and
(h), either (i) we are a "C Corporation" under the Internal
Revenue Code of 1986, as amended, or (ii) we have provided such
disclosure concerning our status for federal income tax purposes
and the status and economic interest of our beneficial owners, as
the Issuer or its representatives have reasonably requested to
determine that our acquisition of the Certificates will not
subject the Issuer to an entity level tax.
Very truly yours,
[TRANSFEREE]
By:
Authorized Officer
EXECUTION COPY
HOUSEHOLD CONSUMER LOAN TRUST 1997-1,
as Issuer
AND
THE BANK OF NEW YORK,
as Indenture Trustee
_________________________________________
INDENTURE
Dated as of March 1, 1997
__________________________________________
HOUSEHOLD CONSUMER LOAN ASSET BACKED NOTES
SERIES 1997-1
<PAGE>
TABLE OF CONTENTS
Section Page
ARTICLE I
Definitions
1.01. Definitions . . . . . . . . . . . . . . . . . . . 2
1.02. Incorporation by Reference of Trust Indenture
Act . . . . . . . . . . . . . . . . . . . . . . . 2
1.03. Rules of Construction.. . . . . . . . . . . . . . 2
ARTICLE II
Original Issuance of Notes
2.01. Form . . . . . . . . . . . . . . . . . . . . . . . 4
2.02. Execution, Authentication and Delivery . . . . . . 4
2.03. Opinions of Counsel. . . . . . . . . . . . . . . . 5
ARTICLE III
Covenants
3.01. Collection of Payments on the Series 1997-1
Participation Interest. . . . . . . . . . . . . . 6
3.02. Maintenance of Office or Agency. . . . . . . . . . 6
3.03. Money for Payments To Be Held in Trust; Paying
Agent; Certificate Paying Agent . . . . . . . . . 6
3.04. Existence. . . . . . . . . . . . . . . . . . . . . 9
3.05. Payment of Principal and Interest; Defaulted
Interest. . . . . . . . . . . . . . . . . . . . . 9
3.06. Protection of Indenture Trust Estate . . . . . . . 14
3.07. Opinions as to Indenture Trust Estate. . . . . . . 15
3.08. Performance of Obligations . . . . . . . . . . . . 16
3.09. Negative Covenants . . . . . . . . . . . . . . . . 16
3.10. Annual Statement as to Compliance. . . . . . . . . 17
3.11. Indenture Trust Estate; Related Documents. . . . . 17
3.12. Amendments to Pooling and Servicing Agreement. . . 18
3.13. Investment Company Act . . . . . . . . . . . . . . 18
3.14. Existence of Issuer; Issuer May Consolidate,
etc., Only on Certain Terms . . . . . . . . . . . 18
3.15. Successor or Transferee. . . . . . . . . . . . . . 20
3.16. No Other Business. . . . . . . . . . . . . . . . . 20
3.17. No Borrowing . . . . . . . . . . . . . . . . . . . 20
3.18. Guarantees, Loans, Advances and Other Liabil-
ities . . . . . . . . . . . . . . . . . . . . . . 21
3.19. Capital Expenditures . . . . . . . . . . . . . . . 21
3.20. Restricted Payments. . . . . . . . . . . . . . . . 21
3.21. Notice of Events of Default. . . . . . . . . . . . 21
3.22. Further Instruments and Acts . . . . . . . . . . . 21
3.23. Statements to Noteholders. . . . . . . . . . . . . 21
3.24. Determination of Note Rate and Certificate
Rate. . . . . . . . . . . . . . . . . . . . . . . 21
3.25. Optional Repurchase of the Series 1997-1
Participation Interest. . . . . . . . . . . . . . 22
ARTICLE IV
The Notes; Satisfaction and Discharge of Indenture
4.01. The Notes. . . . . . . . . . . . . . . . . . . . . 23
4.02. Registration of and Limitations on Transfer and
Exchange of Notes; Appointment of Certificate
Registrar . . . . . . . . . . . . . . . . . . . . 23
4.03. Mutilated, Destroyed, Lost or Stolen Notes . . . . 24
4.04. Persons Deemed Owners. . . . . . . . . . . . . . . 25
4.05. Cancellation . . . . . . . . . . . . . . . . . . . 26
4.06. Book-Entry Notes . . . . . . . . . . . . . . . . . 26
4.07. Notices to Depository. . . . . . . . . . . . . . . 27
4.08. Definitive Notes . . . . . . . . . . . . . . . . . 27
4.09. Tax Treatment. . . . . . . . . . . . . . . . . . . 28
4.10. Satisfaction and Discharge of Indenture. . . . . . 28
4.11. Application of Trust Money . . . . . . . . . . . . 29
4.12. Repayment of Moneys Held by Paying Agent . . . . . 29
ARTICLE V
Remedies
5.01. Event of Default; Acceleration of Maturity;
Rescission and Annulment. . . . . . . . . . . . . 30
5.02. Collection of Indebtedness and Suits for
Enforcement by Indenture Trustee. . . . . . . . . 30
5.03. Remedies; Priorities . . . . . . . . . . . . . . . 33
5.04. Optional Preservation of the Indenture Trust
Estate. . . . . . . . . . . . . . . . . . . . . . 35
5.05. Limitation of Suits. . . . . . . . . . . . . . . . 35
5.06. Unconditional Rights of Noteholders to Receive
Principal and Interest. . . . . . . . . . . . . . 36
5.07. Restoration of Rights and Remedies . . . . . . . . 36
5.08. Rights and Remedies Cumulative . . . . . . . . . . 36
5.09. Delay or Omission Not a Waiver . . . . . . . . . . 37
5.10. Control by Noteholders . . . . . . . . . . . . . . 37
5.11. Waiver of Past Defaults. . . . . . . . . . . . . . 37
5.12. Undertaking for Costs. . . . . . . . . . . . . . . 38
5.13. Waiver of Stay or Extension Laws . . . . . . . . . 38
5.14. Sale of Indenture Trust Estate . . . . . . . . . . 39
5.15. Action on Notes. . . . . . . . . . . . . . . . . . 40
5.16. Performance and Enforcement of Certain Obli-
gations . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE VI
The Indenture Trustee
6.01. Duties of Indenture Trustee. . . . . . . . . . . . 42
6.02. Rights of Indenture Trustee. . . . . . . . . . . . 43
6.03. Individual Rights of Indenture Trustee . . . . . . 44
6.04. Indenture Trustee's Disclaimer . . . . . . . . . . 44
6.05. Notice of Event of Default . . . . . . . . . . . . 44
6.06. Reports by Indenture Trustee . . . . . . . . . . . 44
6.07. Compensation and Indemnity . . . . . . . . . . . . 44
6.08. Replacement of Indenture Trustee . . . . . . . . . 45
6.09. Successor Indenture Trustee by Merger. . . . . . . 46
6.10. Appointment of Co-Indenture Trustee or Separate
Indenture Trustee . . . . . . . . . . . . . . . . 47
6.11. Eligibility; Disqualification. . . . . . . . . . . 48
6.12. Preferential Collection of Claims Against
Issuer. . . . . . . . . . . . . . . . . . . . . . 48
6.13. Representation and Warranty. . . . . . . . . . . . 49
6.14. Directions to Indenture Trustee. . . . . . . . . . 49
6.15. No Consent to Certain Acts of Seller . . . . . . . 49
ARTICLE VII
Noteholders' Lists and Reports
7.01. Issuer To Furnish Indenture Trustee Names and
Addresses of Noteholders. . . . . . . . . . . . . 50
7.02. Preservation of Information; Communications to
Noteholders . . . . . . . . . . . . . . . . . . . 50
7.03. Reports by Issuer. . . . . . . . . . . . . . . . . 50
7.04. Reports by Indenture Trustee . . . . . . . . . . . 51
ARTICLE VIII
Accounts, Disbursements and Releases
8.01. Collection of Money. . . . . . . . . . . . . . . . 52
8.02. Trust Accounts . . . . . . . . . . . . . . . . . . 52
8.03. Opinion of Counsel . . . . . . . . . . . . . . . . 52
8.04. Termination Upon Distribution to Noteholders . . . 53
8.05. Release of Indenture Trust Estate. . . . . . . . . 53
8.06. Surrender of Notes Upon Final Payment. . . . . . . 54
ARTICLE IX
Supplemental Indentures
9.01. Supplemental Indentures Without Consent of
Noteholders . . . . . . . . . . . . . . . . . . . 55
9.02. Supplemental Indentures With Consent of Note-
holders . . . . . . . . . . . . . . . . . . . . . 56
9.03. Execution of Supplemental Indentures . . . . . . . 58
9.04. Effect of Supplemental Indenture . . . . . . . . . 58
9.05. Conformity with Trust Indenture Act. . . . . . . . 59
9.06. Reference in Notes to Supplemental Indentures. . . 59
ARTICLE X
Miscellaneous
10.01. Compliance Certificates and Opinions, etc . . . . 60
10.02. Form of Documents Delivered to Indenture
Trustee . . . . . . . . . . . . . . . . . . . . . 61
10.03. Acts of Noteholders . . . . . . . . . . . . . . . 62
10.04. Notices, etc. to Indenture Trustee, Issuer, and
Rating Agencies . . . . . . . . . . . . . . . . . 63
10.05. Notices to Noteholders; Waiver. . . . . . . . . . 64
10.06. Alternate Payment and Notice Provisions . . . . . 64
10.07. Conflict with Trust Indenture Act . . . . . . . . 65
10.08. Effect of Headings. . . . . . . . . . . . . . . . 65
10.09. Successors and Assigns. . . . . . . . . . . . . . 65
10.10. Separability. . . . . . . . . . . . . . . . . . . 65
10.11. Benefits of Indenture . . . . . . . . . . . . . . 65
10.12. GOVERNING LAW . . . . . . . . . . . . . . . . . . 65
10.13. Counterparts. . . . . . . . . . . . . . . . . . . 65
10.14. Recording of Indenture. . . . . . . . . . . . . . 66
10.15. Issuer Obligation . . . . . . . . . . . . . . . . 66
10.16. No Petition . . . . . . . . . . . . . . . . . . . 66
10.17. Inspection. . . . . . . . . . . . . . . . . . . . 66
10.18. Authority of the Administrator. . . . . . . . . . 67
Signatures and Seals . . . . . . . . . . . . . . . . . . . . . 68
Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . 69
EXHIBITS
Exhibit A-1 - Form of Class A-1 Note
Exhibit A-2 - Form of Class A-2 Note
Exhibit A-3 - Form of Class A-3 Note
Exhibit B - Form of Class B Note
Appendix A - Definitions<PAGE>
This Indenture, dated as of March 1, 1997, between HOUSEHOLD
CONSUMER LOAN TRUST 1997-1, a Delaware business trust, as Issuer
(the "Issuer"), and The Bank of New York, a New York banking
corporation, as Indenture Trustee (the "Indenture Trustee"),
WITNESSETH THAT:
Each party hereto agrees as follows for the benefit of the
other party and for the benefit of the Holders of the Household
Consumer Loan Asset Backed Notes, Series 1997-1, Class A and
Class B Notes (collectively, the "Notes").
GRANTING CLAUSE
The Issuer hereby Grants to the Indenture Trustee at the
Closing Date, as Indenture Trustee for the benefit of the Holders
of the Notes, all of the Issuer's right, title and interest in
and to whether now existing or hereafter created (a) the Series
1997-1 Participation Interest free and clear of any Liens, and
all monies and the collections and proceeds due thereon and any
part thereof which consists of general intangibles (as defined in
the UCC), (b) all rights of the Issuer as holder of the Series
1997-1 Participation Interest in and to the Pooling and Servicing
Agreement including without limitation, rights to consent,
receive notices and vote thereunder, (c) all funds on deposit
from time to time in the Payment Account and all proceeds
thereof, and (d) all present and future claims, demands, causes
and chooses in action in respect of any or all of the foregoing
and all payments on or under, and all proceeds of every kind and
nature whatsoever in respect of, any or all of the foregoing and
all payments on or under, and all proceeds of every kind and
nature whatsoever in the conversion thereof, voluntary or
involuntary, into cash or other liquid property, all cash
proceeds, accounts, accounts receivable, notes, drafts, accep-
tances, checks, deposit accounts, 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 fore-
going (collectively, the "Indenture Trust Estate" or the
"Indenture Collateral").
The foregoing Grant is made in trust to secure the payment
of principal of and interest on, and any other amounts owing in
respect of, the Notes, and to secure compliance with the pro-
visions of this Indenture, all as provided in this Indenture.
The Indenture Trustee, as Indenture Trustee on behalf of the
Holders of the Notes, acknowledges such Grant, accepts the trust
under this Indenture in accordance with the provisions hereof and
agrees to perform its duties as Indenture Trustee as required
herein.
ARTICLE I
Definitions
Section 1.01. Definitions. For all purposes of this Inden-
ture, except as otherwise expressly provided herein or unless the
context otherwise requires, capitalized terms not otherwise
defined herein shall have the meanings assigned to such terms in
the Definitions attached hereto as Appendix A which is incorpo-
rated by reference herein. All other capitalized terms used
herein shall have the meanings specified herein.
Section 1.02. Incorporation by Reference of Trust Indenture
Act. Whenever this Indenture refers to a provision of the TIA,
the provision is incorporated by reference in and made a part of
this Indenture. The following TIA terms used in this Indenture
have the following meanings:
"Commission" means the Securities and Exchange
Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means
the Indenture Trustee.
"obligor" on the indenture securities means the Issuer
and any other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined
by the TIA, defined by TIA reference to another statute or
defined by Commission rule have the meaning assigned to them by
such definitions.
Section 1.03. Rules of Construction. Unless the context
otherwise requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the
meaning assigned to it in accordance with generally accepted
accounting principles as in effect from time to time;
(iii) "or" is not exclusive;
(iv) "including" means including without limitation;
(v) words in the singular include the plural and
words in the plural include the singular; and
(vi) any agreement, instrument or statute defined or
referred to herein or in any instrument or certificate
delivered in connection herewith means such agreement,
instrument or statute as from time to time amended, modified
or supplemented and includes (in the case of agreements or
instruments) references to all attachments thereto and
instruments incorporated therein; references to a Person are
also to its permitted successors and assigns.
<PAGE>
ARTICLE II
Original Issuance of Notes
Section 2.01. Form. The Class A-1, Class A-2, Class A-3
and Class B Notes, together with the Indenture Trustee's certif-
icate of authentication, shall be in substantially the forms set
forth in Exhibits A-1, A-2, A-3 and B, respectively, with such
appropriate insertions, omissions, substitutions and other varia-
tions as are required or permitted by this Indenture and may have
such letters, numbers or other marks of identification and such
legends or endorsements placed thereon as may, consistently here-
with, be determined by the officers executing such Notes, as
evidenced by their execution of the Notes. Any portion of the
text of any Note may be set forth on the reverse thereof, with an
appropriate reference thereto on the face of the Note.
The Notes shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods (with or
without steel engraved borders), all as determined by the Autho-
rized Officers executing such Notes, as evidenced by their execu-
tion of such Notes.
The terms of the Notes set forth in Exhibits A-1, A-2, A-3
and B are part of the terms of this Indenture.
Section 2.02. Execution, Authentication and Delivery. The
Notes shall be executed on behalf of the Issuer by any of its
Authorized Officers. The signature of any such Authorized
Officer on the Notes may be manual or facsimile.
Notes bearing the manual or facsimile signature of individ-
uals who were at any time Authorized Officers of the Issuer shall
bind the Issuer, notwithstanding that such individuals or any of
them have ceased to hold such offices prior to the authentication
and delivery of such Notes or did not hold such offices at the
date of such Notes.
The Indenture Trustee shall upon Issuer Request authenticate
and deliver the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes
and Class B Notes for original issue in aggregate initial prin-
cipal amounts of $729,600,000, $48,000,000, $62,400,000 and
$45,600,000, respectively.
Each Note shall be dated the date of its authentication.
The Notes shall be issuable as registered Notes and the Notes
shall be issuable in the minimum initial Security Balances of
$100,000 and in integral multiples of $1,000 in excess thereof.
No Note shall be entitled to any benefit under this Inden-
ture or be valid or obligatory for any purpose, unless there
appears on such Note a certificate of authentication substan-
tially in the form provided for herein executed by the Indenture
Trustee by the manual signature of one of its authorized signa-
tories, and such certificate upon any Note shall be conclusive
evidence, and the only evidence, that such Note has been duly
authenticated and delivered hereunder.
Section 2.03. Opinions of Counsel. On the Closing Date,
the Indenture Trustee shall have received: (i) an Opinion of
Counsel, in form and substance reasonably satisfactory to the
Indenture Trustee and its counsel, with respect to securities law
matters; (ii) an Opinion of Counsel, in form and substance
reasonably satisfactory to the Indenture Trustee and its counsel,
with respect to the tax status of the arrangement created by the
Indenture; (iii) an Opinion of Counsel to the Issuer, in form and
substance reasonably satisfactory to the Indenture Trustee and
its counsel, with respect to the due authorization, valid
execution and delivery of this Indenture and with respect to its
binding effect on the Issuer; and (iv) an Opinion of Counsel to
the Issuer, in form and substance reasonably satisfactory to the
Indenture Trustee and its counsel, to the effect that the
Indenture creates in favor of the Indenture Trustee a first
priority perfected security interest in the Series 1997-1
Participation Interest and the other assets of the Indenture
Trust Estate.
<PAGE>
ARTICLE III
Covenants
Section 3.01. Collection of Payments on the Series 1997-1
Participation Interest. The Indenture Trustee shall establish
and maintain with itself a trust account (the "Payment Account")
in which the Indenture Trustee shall, subject to the terms of
this paragraph, deposit, on the same day as it is received from
the Deposit Trustee, each remittance received by the Indenture
Trustee with respect to the Series 1997-1 Participation Interest.
The Indenture Trustee shall make all payments of principal of and
interest on the Notes, subject to Section 3.03 as provided in
Section 3.05 herein from moneys on deposit in the Payment
Account.
Section 3.02. Maintenance of Office or Agency. The Issuer
will maintain in the Borough of Manhattan, The City of New York,
an office or agency where, subject to satisfaction of conditions
set forth herein, Notes may be surrendered for registration of
transfer or exchange, and where notices and demands to or upon
the Issuer in respect of the Notes and this Indenture may be
served. The Issuer hereby initially appoints the Indenture
Trustee to serve as its agent for the foregoing purposes. If at
any time the Issuer shall fail to maintain any such office or
agency or shall fail to furnish the Indenture Trustee with the
address thereof, such surrenders, notices and demands may be made
or served at the Corporate Trust Office of the Indenture Trustee,
and the Issuer hereby appoints the Indenture Trustee as its agent
to receive all such surrenders, notices and demands.
Section 3.03. Money for Payments To Be Held in Trust;
Paying Agent; Certificate Paying Agent. (a) As provided in
Section 3.01, all payments of amounts due and payable with
respect to any Notes that are to be made from amounts withdrawn
from the Payment Account pursuant to Section 3.01 shall be made
on behalf of the Issuer by the Indenture Trustee or by the Paying
Agent, and no amounts so withdrawn from the Payment Account for
payments of Notes shall be paid over to the Issuer except as
provided in this Section 3.03.
The Issuer will cause each Paying Agent other than the
Indenture Trustee to execute and deliver to the Indenture Trustee
an instrument in which such Paying Agent shall agree with the
Indenture Trustee (and if the Indenture Trustee acts as Paying
Agent it hereby so agrees), subject to the provisions of this
Section 3.03, that such Paying Agent will:
(i) hold all sums held by it for the payment of
amounts due with respect to the Notes in trust for the
benefit of the Persons entitled thereto until such sums
shall be paid to such Persons or otherwise disposed of as
herein provided and pay such sums to such Persons as herein
provided;
(ii) give the Indenture Trustee notice of any default
by the Issuer of which it has actual knowledge in the making
of any payment required to be made with respect to the
Notes;
(iii) at any time during the continuance of any such
default, upon the written request of the Indenture Trustee,
forthwith pay to the Indenture Trustee all sums so held in
trust by such Paying Agent;
(iv) immediately resign as Paying Agent and forthwith
pay to the Indenture Trustee all sums held by it in trust
for the payment of Notes if at any time it ceases to meet
the standards required to be met by a Paying Agent at the
time of its appointment; and
(v) comply with all requirements of the Code with
respect to the withholding from any payments made by it on
any Notes of any applicable withholding taxes imposed there-
on and with respect to any applicable reporting requirements
in connection therewith.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other
purpose, by Issuer Request direct any Paying Agent to pay to the
Indenture Trustee all sums held in trust by such Paying Agent,
such sums to be held by the Indenture Trustee upon the same
trusts as those upon which the sums were held by such Paying
Agent; and upon such payment by any Paying Agent to the Indenture
Trustee, such Paying Agent shall be released from all further
liability with respect to such money.
Subject to applicable laws with respect to escheat of funds,
any money held by the Indenture Trustee or any Paying Agent in
trust for the payment of any amount due with respect to any Note
and remaining unclaimed for two years after such amount has
become due and payable shall be discharged from such trust and be
paid to the Issuer on Issuer Request; and the Holder of such Note
shall thereafter, as an unsecured general creditor, look only to
the Issuer for payment thereof (but only to the extent of the
amounts so paid to the Issuer), and all liability of the Inden-
ture Trustee or such Paying Agent with respect to such trust
money shall thereupon cease; provided, however, that the Inden-
ture Trustee or such Paying Agent, before being required to make
any such repayment, shall at the expense and direction of the
Issuer cause to be published once, in an Authorized Newspaper
published in the English language, notice that such money remains
unclaimed and that, after a date specified therein, which shall
not be less than 30 days from the date of such publication, any
unclaimed balance of such money then remaining will be repaid to
the Issuer. The Indenture Trustee shall also adopt and employ,
at the expense and direction of the Issuer, any other reasonable
means of notification of such repayment (including, but not
limited to, mailing notice of such repayment to Holders whose
Notes have been called but have not been surrendered for redemp-
tion or whose right to or interest in moneys due and payable but
not claimed is determinable from the records of the Indenture
Trustee or of any Paying Agent, at the last address of record for
each such Holder).
The Issuer hereby appoints The Bank of New York as
Certificate Paying Agent to make payments to Certificateholders
on behalf of the Issuer in accordance with the provisions of the
Certificates, Section 3.05 hereof and the provisions of the Trust
Agreement, and The Bank of New York hereby accepts such
appointment and further agrees that it will be bound by the
provisions of the Trust Agreement relating to the Certificate
Paying Agent and will:
(i) hold all sums held by it for the payment of
amounts due with respect to the Certificates in trust for
the benefit of the Persons entitled thereto until such sums
shall be paid to such Persons or otherwise disposed of as
herein provided and as provided in the Trust Agreement and
pay such sums to such Persons as herein and therein
provided;
(ii) give the Owner Trustee notice of any default by
the Issuer of which it has actual knowledge in the making of
any payment required to be made with respect to the
Certificates;
(iii) at any time during the continuance of any such
default, upon the written request of the Owner Trustee
forthwith pay to the Owner Trustee on behalf of the Issuer
all sums so held in Trust by such Certificate Paying Agent;
(iv) immediately resign as Certificate Paying Agent
and forthwith pay to the Owner Trustee on behalf of the
Issuer all sums held by it in trust for the payment of
Certificates if at any time it ceases to meet the standards
required to be met by the Certificate Paying Agent at the
time of its appointment;
(v) comply with all requirements of the Code with
respect to the withholding from any payments made by it on
any Certificates of any applicable withholding taxes imposed
thereon and with respect to any applicable reporting
requirements in connection therewith; and
(vi) deliver to the Owner Trustee a copy of the
report to Certificateholders prepared with respect to each
Payment Date by the Servicer pursuant to Article V of the
Pooling and Servicing Agreement.
Section 3.04. Existence. The Issuer will keep in full
effect its existence, rights and franchises as a business trust
under the laws of the State of Delaware (unless it becomes, or
any successor Issuer hereunder is or becomes, organized under the
laws of any other state or of the United States of America, in
which case the Issuer will keep in full effect its existence,
rights and franchises under the laws of such other jurisdiction)
and will obtain and preserve its qualification to do business in
each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of this
Indenture, the Notes, the Series 1997-1 Participation Interest
and each other instrument or agreement included in the Indenture
Trust Estate.
Section 3.05. Payment of Principal and Interest; Defaulted
Interest. (a) On each Payment Date from amounts on deposit in
the Payment Account, the Paying Agent, on behalf of the Issuer,
shall pay to the Noteholders and the Certificate Paying Agent, on
behalf of the Issuer, shall pay to the Certificateholders and the
Indenture Trustee, in its capacity as agent for the Issuer, shall
pay to other Persons the amounts to which they are entitled as
set forth below:
(i) sequentially (a) to the Holders of the Class A-1
Notes, the related Class Interest Distribution, (b) to the
Holders of the Class A-2 Notes, the related Class Interest
Distribution, (c) to the Holders of the Class A-3 Notes, the
related Class Interest Distribution, (d) to the Holders of
the Class B Notes, the related Class Interest Distribution
and (e) subject to the proviso set forth following clause
(vii) below, to the Holders of the Certificates, the
Certificate Yield;
(ii) sequentially, up to the Optimum Monthly
Principal:
(a) to the Holders of the Class A-1 Notes, until
the Principal Balance of the Class A-1 Notes equals the
Class A-1 Targeted Principal Balance,
(b) to the Holders of the Class A-2 Notes, until
the Principal Balance of the Class A-2 Notes equals the
Class A-2 Targeted Principal Balance, to the extent the
related Adjusted Principal Balance for the Class A-2
Notes is not thereby reduced below the related Minimum
Adjusted Principal Balance for such Class of Notes,
(c) to the Holders of the Class A-3 Notes, until
the Principal Balance of the Class A-3 Notes equals the
Class A-3 Targeted Principal Balance, to the extent the
related Adjusted Principal Balance for the Class A-3
Notes is not thereby reduced below the related Minimum
Adjusted Principal Balance for such Class of Notes, and
(d) to the Holders of the Class B Notes, until
the Principal Balance of the Class B Notes equals the
Class B Targeted Principal Balance, to the extent the
related Adjusted Principal Balance for the Class B
Notes is not thereby reduced below the related Minimum
Adjusted Principal Balance for such Class of Notes;
(iii) to the Holders of the Certificates, up to the
remaining balance of the Optimum Monthly Principal, until
the Certificate Balance equals the Certificate Targeted
Balance, to the extent the Certificate Adjusted Security
Balance would not thereby be reduced below the Certificate
Minimum Adjusted Balance;
(iv) to HCLC, the initial Holder of the Designated
Certificate, or its transferee, up to the remaining balance
of the Optimum Monthly Principal; provided the
Overcollateralization Amount is not less than the
Overcollateralization Minimum Amount;
(v) sequentially, up to the Accelerated Principal
Payment Amount:
(a) to the Holders of the Class A-1 Notes, until
the Principal Balance of the Class A-1 Notes equals the
Class A-1 Targeted Principal Balance,
(b) to the Holders of the Class A-2 Notes, until
the Principal Balance of the Class A-2 Notes equals the
Class A-2 Targeted Principal Balance, to the extent the
related Adjusted Principal Balance for the Class A-2
Notes is not thereby reduced below the related Minimum
Adjusted Principal Balance for such Class of Notes,
(c) to the Holders of the Class A-3 Notes, until
the Principal Balance of the Class A-3 Notes equals the
Class A-3 Targeted Principal Balance, to the extent the
related Adjusted Principal Balance for the Class A-3
Notes is not thereby reduced below the related Minimum
Adjusted Principal Balance for such Class of Notes,
(d) to the Holders of the Class B Notes, until
the Principal Balance of the Class B Notes equals the
Class B Targeted Principal Balance, to the extent the
related Adjusted Principal Balance for the Class B
Notes is not thereby reduced below the related Minimum
Adjusted Principal Balance for such Class of Notes,
(e) to the Holders of the Class A-1 Notes, until
the Principal Balance on the Class A-1 Notes equals
zero,
(f) to the Holders of the Class A-2 Notes, until
the Principal Balance on the Class A-2 Notes equals
zero,
(g) to the Holders of the Class A-3 Notes, until
the Principal Balance on the Class A-3 Notes equals
zero, and
(h) to the Holders of the Class B Notes, until
the Principal Balance on the Class B Notes equals zero;
(vi) sequentially, up to the remaining balance of the
Optimum Monthly Principal:
(a) to the Holders of the Class A-1 Notes, until
the Principal Balance on the Class A-1 Notes equals
zero,
(b) to the Holders of the Class A-2 Notes, until
the Principal Balance on the Class A-2 Notes equals
zero,
(c) to the Holders of the Class A-3 Notes, until
the Principal Balance on the Class A-3 Notes equals
zero,
(d) to the Holders of the Class B Notes, until
the Principal Balance on the Class B Notes equals zero,
(e) to the Holders of the Certificates, until the
Certificate Balance equals the Certificate Minimum
Balance, or if the Series 1997-1 Participation Interest
Invested Amount is zero, then to the Holders of the
Certificates, until the Certificate Balance equals
zero, and
(f) to HCLC, the initial Holder of the Designated
Certificate, or its transferee provided the
Overcollateralization Amount is greater than zero; and
any remaining amounts to HCLC, the initial
Holder of the Designated Certificate or its transferee;
provided that, in the event (a) an Event of Default shall have
occurred and be continuing, (b) immediately prior to any
Distribution Date the Series 1997-1 Participation Interest
Invested Amount is less than the aggregate Security Balance of
the Class A and Class B Notes immediately prior to such related
Payment Date, or (c) the remittances on the Series 1997-1
Participation Interest for such Payment Date is less than the
aggregate amount to be paid pursuant to clause (i) above, the
amount to be paid pursuant to clause (i)(e) above will be paid
only after payments are made on the Notes pursuant to clause (ii)
for such Payment Date.
Amounts distributed pursuant to clauses (iv) and (vi)(f)
above shall be paid in the following order in respect of the
following amounts: (a) first to HCLC, the initial Holder of the
Designated Certificate, or its transferee to the extent of
Accelerated Principal Payments made on the Notes, and (b) second
to HCLC, the initial Holder of the Designated Certificate, or its
transferee in reduction of the Holdback Amount and (c) third,
once the Holdback Amount is reduced to zero, any remaining amount
to HCLC, as the initial Holder of the Designated Certificate, or
its transferee.
The amounts paid to Noteholders shall be paid to each Class
in accordance with the Class Percentage as set forth in paragraph
(b) below. Interest will accrue on the Notes during an Interest
Period on the basis of the actual number of days in such Interest
Period and a year assumed to consist of 360 days.
Any installment of interest or principal, if any, payable on
any Note that is punctually paid or duly provided for by the
Issuer on the applicable Payment Date shall, if such Holder holds
Notes of an aggregate initial Principal Balance of at least
$5,000,000 be paid to each Holder of record on the preceding
Record Date, by wire transfer to an account specified in writing
by such Holder reasonably satisfactory to the Indenture Trustee
as of the preceding Record Date or in all other cases or if no
such instructions have been delivered to the Indenture Trustee,
by check to such Noteholder mailed to such Holder's address as it
appears in the Note Register the amount required to be
distributed to such Holder on such Payment Date pursuant to such
Holder's Securities. Amounts to be paid to Certificateholders
and the owner of the Holdback Amount shall be paid by the
Certificate Paying Agent in the manner provided in the Trust
Agreement.
Neither the Indenture Trustee nor the Issuer shall pay to
such Holders any amount required to be withheld from a payment to
such Holder by the Code and any amounts so withheld shall be
deemed to have been paid.
(b) The principal of each Note shall be due and payable in
full on the Final Scheduled Payment Date as provided in the
related form of Note set forth in Exhibits A-1, A-2, A-3 and B.
All principal payments on each Class of Notes shall be made to
the Noteholders of such Class entitled thereto in accordance with
the Percentage Interests represented by such Notes. Upon notice
to the Indenture Trustee by the Issuer, the Indenture Trustee
shall notify the Person in whose name a Note is registered at the
close of business on the Record Date preceding the Final
Scheduled Payment Date or other final Payment Date. Such notice
shall be mailed no later than five Business Days prior to such
Final Scheduled Payment Date or other final Payment Date and
shall specify that payment of the principal amount and any
interest due with respect to such Note at the Final Scheduled
Payment Date or other final Payment Date will be payable only
upon presentation and surrender of such Note and shall specify
the place where such Note may be presented and surrendered for
such final payment.
(c) On any Payment Date with respect to which Series 1997-1
Participation Interest Charge-Offs were incurred during the
preceding Due Period and less than the Optimum Monthly Principal
is distributed in respect of principal on such Payment Date, such
amount that was not distributed shall be allocated in the
following order:
(i) (A) to HCLC, the initial Holder of the
Designated Certificate or its transferee to the extent of
Accelerated Principal Payments made on the Notes, and (B) to
HCLC, the initial Holder of the Designated Certificate or
its transferee to the extent of the Holdback Amount until
such amount equals zero.
(ii) to the Certificate Adjusted Security Balance
until the Certificate Adjusted Security Balance equals zero;
(iii) to the Class B Adjusted Principal Balance until
the Class B Adjusted Principal Balance equals zero; and
(iv) to the Class A-3 Adjusted Principal Balance
until the Class A-3 Adjusted Principal Balance equals zero;
(v) to the Class A-2 Adjusted Principal Balance
until the Class A-2 Adjusted Principal Balance equals zero;
and
(vi) to the Class A-1 Adjusted Principal Balance
until the Class A-1 Adjusted Principal Balance equals zero.
(d) On to any Payment Date in which a Reversal exists, it
shall be allocated in the following order of priority:
(i) to the Class A-1 Adjusted Principal Balance
until the Class A-1 Adjusted Principal Balance equals the
Principal Balance of the Class A-1 Notes;
(ii) to the Class A-2 Adjusted Principal Balance
until the Class A-2 Adjusted Principal Balance equals the
Principal Balance of the Class A-2 Notes;
(iii) to the Class A-3 Adjusted Principal Balance
until the Class A-3 Adjusted Principal Balance equals the
Principal Balance of the Class A-3 Notes;
(iv) to the Class B Adjusted Principal Balance until
the Class B Adjusted Principal Balance equals the Principal
Balance of the Class B Notes;
(v) to the Certificate Adjusted Security Balance
until the Certificate Adjusted Security Balance equals the
amount of the Security Balance of the Certificates; and
(vi) (A) first to the Holdback Amount to the extent
of any Series 1997-1 Participation Charge-Offs allocated to
the Holdback Amount pursuant to Section 3.05(c)(i) on prior
Payment Dates, and (B) second to HCLC, as the initial Holder
of the Designated Certificates, or its transferee to the
extent of any Series 1997-1 Participation Charge-Offs
allocated to the HCLC, the initial Holder of Designated
Certificate or its transferee pursuant to Section 3.05(c)(i)
on prior Payment Dates.
Section 3.06. Protection of Indenture Trust Estate. (a)
The Issuer will from time to time execute and deliver all such
supplements and amendments hereto and all such financing
statements, continuation statements, instruments of further
assurance and other instruments, and will take such other action
necessary or advisable to:
(i) in the case of the Series 1997-1 Participation
Interest, take physical delivery of the Series 1997-1
Participation Interest and cause it to be registered in the
name of the Indenture Trustee for the benefit of the Holders
of the Notes;
(ii) maintain or preserve the lien and security
interest (and the priority thereof) of this Indenture or
carry out more effectively the purposes hereof;
(iii) perfect, publish notice of or protect the
validity of any Grant made or to be made by this Indenture;
(iv) enforce Series 1997-1 Participation Interest in
the manner contemplated by Section 5.16; and
(v) preserve and defend title to the Indenture Trust
Estate and the rights of the Indenture Trustee and the
Noteholders in such Indenture Trust Estate against the
claims of all persons and parties.
(b) Except as otherwise provided in this Indenture, the
Indenture Trustee shall not remove any portion of the Indenture
Trust Estate that consists of money or is evidenced by an
instrument, certificate or other writing from the jurisdiction in
which it was held at the date of the most recent Opinion of
Counsel delivered pursuant to Section 3.07(b) (or from the
jurisdiction in which it was held as described in the Opinion of
Counsel delivered at the Closing Date pursuant to Section
3.07(a), if no Opinion of Counsel has yet been delivered pursuant
to Section 3.07(b)) unless the Trustee shall have first received
an Opinion of Counsel to the effect that the lien and security
interest created by this Indenture with respect to such property
will continue to be maintained after giving effect to such action
or actions.
The Issuer hereby designates the Indenture Trustee its agent
and attorney-in-fact to execute any financing statement, continu-
ation statement or other instrument required to be executed pur-
suant to this Section 3.06.
For so long as the Indenture Trustee holds the Indenture
Collateral, it shall also hold it as bailee for the Issuer for
the purpose of perfecting the Issuer's security interest in the
Indenture Collateral; provided that nothing in this sentence
shall limit any rights or remedies of the Indenture Trustee or
the Noteholders against the Issuer or the Indenture Collateral
under this Indenture.
Section 3.07. Opinions as to Indenture Trust Estate. (a)
On or promptly following the Closing Date, the Issuer shall
furnish to the Indenture Trustee, the Owner Trustee and to the
Administrator an Opinion of Counsel either stating that, in the
opinion of such counsel, such action has been taken with respect
to the delivery of the Series 1997-1 Participation Interest, the
recording and filing of this Indenture, any indentures
supplemental hereto, and any other requisite documents, and with
respect to the execution and filing of any financing statements
and continuation statements, as are necessary to perfect and make
effective the lien and security interest of this Indenture and
reciting the details of such action, or stating that, in the
opinion of such counsel, no such action is necessary to make such
lien and security interest effective.
(b) On or before December 31 in each calendar year,
beginning in 1997, the Issuer shall furnish to the Indenture
Trustee and to the Administrator an Opinion of Counsel at the
expense of Issuer either stating that, in the opinion of such
counsel, such action has been taken with respect to the Series
1997-1 Participation Interest, the recording, filing, re-record-
ing and refiling of this Indenture, any indentures supplemental
hereto and any other requisite documents and with respect to the
execution and filing of any financing statements and continuation
statements as is necessary to maintain the lien and security
interest created by this Indenture and reciting the details of
such action or stating that in the opinion of such counsel no
such action is necessary to maintain such lien and security
interest. Such Opinion of Counsel shall also describe the
recording, filing, re-recording and refiling of this Indenture,
any indentures supplemental hereto and any other requisite
documents and the execution and filing of any financing
statements and continuation statements that will, in the opinion
of such counsel, be required to maintain the lien and security
interest of this Indenture until December 31 in the following
calendar year.
Section 3.08. Performance of Obligations. (a) The Issuer
will punctually perform and observe all of its obligations and
agreements contained in this Indenture, the Basic Documents and
in the instruments and agreements included in the Indenture Trust
Estate. Except as otherwise expressly provided therein, the
Issuer shall not waive, amend, modify, supplement or terminate
any Basic Document, without the consent of the Indenture Trustee
or the Holders of at least a majority of the Security Balances of
the Notes. Upon the taking of any such action with respect to
any Basic Document the Issuer shall give written notice thereof
to the Rating Agencies.
(b) The Issuer may contract with other Persons to assist it
in performing its duties under this Indenture, and any perfor-
mance of such duties by a Person identified to the Indenture
Trustee in an Officer's Certificate of the Issuer shall be deemed
to be action taken by the Issuer. Initially, the Issuer has con-
tracted with the Administrator to assist the Issuer in performing
its duties under this Indenture.
(c) The Issuer will not take any action or permit any
action to be taken by others which would release any Person from
any of such Person's covenants or obligations under any of the
documents relating to the Series 1997-1 Participation Interest or
under any instrument included in the Indenture Trust Estate, or
which would result in the amendment, hypothecation,
subordination, termination or discharge of, or impair the
validity or effectiveness of, any of the documents relating to
the Series 1997-1 Participation Interest or any such instrument.
(d) The Issuer shall at all times retain an Administrator
and may enter into contracts with other Persons for the
performance of the Issuer's obligations hereunder, and perfor-
mance of such obligations by such Persons shall be deemed to be
performance of such obligations by the Issuer.
Section 3.09. Negative Covenants. So long as any Notes are
Outstanding, the Issuer shall not:
(i) claim any credit on, or make any deduction from
the principal or interest payable in respect of, the Notes
(other than amounts properly withheld from such payments
under the Code) or assert any claim against any present or
former Noteholder by reason of the payment of the taxes
levied or assessed upon any part of the Indenture Trust
Estate; or
(A) permit the validity or effectiveness of
this Indenture to be impaired, or permit the lien of this
Indenture to be amended, hypothecated, subordinated,
terminated or discharged, or permit any Person to be
released from any covenants or obligations with respect to
the Notes under this Indenture except as may be expressly
permitted hereby, (B) permit any lien, charge, excise,
claim, security interest, mortgage or other encumbrance
(other than the lien of this Indenture) to be created on or
extend to or otherwise arise upon or burden the Indenture
Trust Estate or any part thereof or any interest therein or
the proceeds thereof or (C) permit the lien of this
Indenture not to constitute a valid first priority security
interest in the Indenture Trust Estate.
Section 3.10. Annual Statement as to Compliance. The
Issuer will deliver to the Indenture Trustee and the Rating
Agencies within 120 days after the end of each fiscal year of the
Issuer (commencing with the fiscal year 1997), an Officer's
Certificate stating, as to the Authorized Officer signing such
Officer's Certificate, that:
(i) a review of the activities of the Issuer during
such year and of its performance under this Indenture has
been made under such Authorized Officer's supervision; and
(ii) to the best of such Authorized Officer's knowl-
edge, based on such review, the Issuer has complied with all
conditions and covenants under this Indenture throughout
such year, or, if there has been a default in its compliance
with any such condition or covenant, specifying each such
default known to such Authorized Officer and the nature and
status thereof.
Section 3.11. Indenture Trust Estate; Related Documents.
(a) When required by the provisions of this Indenture, the
Indenture Trustee shall execute instruments to release property
from the lien of this Indenture, or convey the Indenture
Trustee's interest in the same, in a manner and under circum-
stances which are not inconsistent with the provisions of this
Indenture. No party relying upon an instrument executed by the
Indenture Trustee as provided in this Article III shall be bound
to ascertain the Indenture Trustee's authority, inquire into the
satisfaction of any conditions precedent or see to the applica-
tion of any moneys.
(b) The Indenture Trustee shall, at such time as there are
no Notes Outstanding, release all of the Indenture Trust Estate
to the Issuer (other than any cash held for the payment of the
Notes pursuant to Section 3.03 or 4.11), subject, however, to the
rights of the Indenture Trustee under Section 6.07.
Section 3.12. Amendments to Pooling and Servicing
Agreement. The Indenture Trustee may consent to any amendment or
supplement to the Pooling and Servicing Agreement only in
accordance with Section 13.01 of the Pooling and Servicing
Agreement if (i) it has received a letter from each Rating Agency
to the effect that such amendment will not result in the
reduction or withdrawal of the ratings then assigned to the Notes
or (ii) a majority in interest of Noteholders (by Security
Balance of the Notes) have instructed the Indenture Trustee to
consent to such amendment and if an Opinion of Counsel is
required to be delivered pursuant to Section 13.01 of the Pooling
and Servicing Agreement, such opinion shall be delivered to the
Indenture Trustee. The Indenture Trustee may, in its discretion,
decline to enter into or consent to any such supplement or
amendment if its own rights, duties or immunities shall be
adversely affected.
Section 3.13. Investment Company Act. The Issuer shall not
become an "investment company" or under the "control" of an
"investment company" as such terms are defined in the Investment
Company Act of 1940, as amended (or any successor or amendatory
statute), and the rules and regulations thereunder (taking into
account not only the general definition of the term "investment
company" but also any available exceptions to such general
definition); provided, however, that the Issuer shall be in
compliance with this Section 3.13 if it shall have obtained an
order exempting it from regulation as an "investment company" so
long as it is in compliance with the conditions imposed in such
order.
Section 3.14. Existence of Issuer; Issuer May Consolidate,
etc., Only on Certain Terms. (a) The Issuer shall at all times
while any Notes are outstanding maintain its existence except as
otherwise permitted by Subsections (b) or (c) below.
(b) The Issuer shall not consolidate or merge with or into
any other Person, unless:
(i) the Person (if other than the Issuer) formed by
or surviving such consolidation or merger shall be a Person
organized and existing under the laws of the United States
of America or any state or the District of Columbia and
shall expressly assume, by an indenture supplemental hereto,
executed and delivered to the Indenture Trustee, in form
reasonably satisfactory to the Indenture Trustee, the due
and punctual payment of the principal of and interest on all
Notes and the performance or observance of every agreement
and covenant of this Indenture on the part of the Issuer to
be performed or observed, all as provided herein;
(ii) immediately after giving effect to such trans-
action, no Event of Default shall have occurred and be
continuing;
(iii) each Rating Agency shall have notified the
Issuer that such transaction shall not cause the rating of
the Notes to be reduced, suspended or withdrawn;
(iv) the Issuer shall have received an Opinion of
Counsel (and shall have delivered copies thereof to the
Indenture Trustee) to the effect that such transaction will
not have any material adverse tax consequence to the Issuer
or any Noteholder;
(v) any action that is necessary to maintain the
lien and security interest created by this Indenture shall
have been taken; and
(vi) the Issuer shall have delivered to the Indenture
Trustee an Officer's Certificate and an Opinion of Counsel
each stating that such consolidation or merger and such
supplemental indenture comply with this Article III and that
all conditions precedent herein provided for relating to
such transaction have been complied with (including any
filing required by the Exchange Act).
(c) The Issuer shall not convey or transfer any of its
properties or assets, including those included in the Indenture
Trust Estate, to any Person, unless:
(i) the Person that acquires by conveyance or
transfer the properties and assets of the Issuer the
conveyance or transfer of which is hereby restricted shall
(A) be a United States citizen or a Person organized and
existing under the laws of the United States of America or
any state, (B) expressly assumes, by an indenture supple-
mental hereto, executed and delivered to the Indenture
Trustee, in form satisfactory to the Indenture Trustee, the
due and punctual payment of the principal of and interest on
all Notes and the performance or observance of every agree-
ment and covenant of this Indenture on the part of the
Issuer to be performed or observed, all as provided herein,
(C) expressly agrees by means of such supplemental indenture
that all right, title and interest so conveyed or trans-
ferred shall be subject and subordinate to the rights of
Holders of the Notes, (D) unless otherwise provided in such
supplemental indenture, expressly agrees to indemnify,
defend and hold harmless the Issuer against and from any
loss, liability or expense arising under or related to this
Indenture and the Notes and (E) expressly agrees by means of
such supplemental indenture that such Person (or if a group
of Persons, then one specified Person) shall make all fil-
ings with the Commission (and any other appropriate Person)
required by the Exchange Act in connection with the Notes;
(ii) immediately after giving effect to such trans-
action, no Default or Event of Default shall have occurred
and be continuing;
(iii) each Rating Agency shall have notified the
Issuer that such transaction shall not cause the rating of
the Notes to be reduced, suspended or withdrawn;
(iv) the Issuer shall have received an Opinion of
Counsel (and shall have delivered copies thereof to the
Indenture Trustee) to the effect that such transaction will
not have any material adverse tax consequence to the Issuer
or any Noteholder;
(v) any action that is necessary to maintain the
lien and security interest created by this Indenture shall
have been taken; and
(vi) the Issuer shall have delivered to the Indenture
Trustee an Officer's Certificate and an Opinion of Counsel
each stating that such conveyance or transfer and such
supplemental indenture comply with this Article III and that
all conditions precedent herein provided for relating to
such transaction have been complied with (including any
filing required by the Exchange Act).
Section 3.15. Successor or Transferee. (a) Upon any
consolidation or merger of the Issuer in accordance with Section
3.14(b), the Person formed by or surviving such consolidation or
merger (if other than the Issuer) shall succeed to, and be sub-
stituted for, and may exercise every right and power of, the
Issuer under this Indenture with the same effect as if such
Person had been named as the Issuer herein.
(b) Upon a conveyance or transfer of all the assets and
properties of the Issuer pursuant to Section 3.14(c), the Issuer
will be released from every covenant and agreement of this
Indenture to be observed or performed on the part of the Issuer
with respect to the Notes immediately upon the delivery of
written notice to the Indenture Trustee is to be so released.
Section 3.16. No Other Business. The Issuer shall not
engage in any business other than financing, purchasing, owning
and selling and managing the Series 1997-1 Participation Interest
in the manner contemplated by this Indenture and the Basic
Documents and all activities incidental thereto.
Section 3.17. No Borrowing. The Issuer shall not issue,
incur, assume, guarantee or otherwise become liable, directly or
indirectly, for any indebtedness except for the Notes.
Section 3.18. Guarantees, Loans, Advances and Other Liabil-
ities. Except as contemplated by this Indenture, the Issuer
shall not make any loan or advance or credit to, or guarantee
(directly or indirectly or by an instrument having the effect of
assuring another's payment or performance on any obligation or
capability of so doing or otherwise), endorse or otherwise become
contingently liable, directly or indirectly, in connection with
the obligations, stocks or dividends of, or own, purchase,
repurchase or acquire (or agree contingently to do so) any stock,
obligations, assets or securities of, or any other interest in,
or make any capital contribution to, any other Person.
Section 3.19. Capital Expenditures. The Issuer shall not
make any expenditure (by long-term or operating lease or other-
wise) for capital assets (either realty or personalty).
Section 3.20. Restricted Payments. The Issuer shall not,
directly or indirectly, (i) pay any dividend or make any distri-
bution (by reduction of capital or otherwise), whether in cash,
property, securities or a combination thereof, to the Owner
Trustee or any owner of a beneficial interest in the Issuer or
otherwise with respect to any ownership or equity interest or
security in or of the Issuer, (ii) redeem, purchase, retire or
otherwise acquire for value any such ownership or equity interest
or security or (iii) set aside or otherwise segregate any amounts
for any such purpose; provided, however, that the Issuer may
make, or cause to be made, (x) distributions to the Owner Trustee
and the Certificateholders as contemplated by, and to the extent
funds are available for such purpose under the Trust Agreement,
and (y) payments to the Indenture Trustee.
Section 3.21. Notice of Events of Default. The Issuer
shall give the Indenture Trustee and the Rating Agencies prompt
written notice of each Event of Default hereunder and under the
Trust Agreement.
Section 3.22. Further Instruments and Acts. Upon request
of the Indenture Trustee, the Issuer will execute and deliver
such further instruments and do such further acts as may be
reasonably necessary or proper to carry out more effectively the
purpose of this Indenture.
Section 3.23. Statements to Noteholders. The Indenture
Trustee and the Certificate Registrar shall forward by mail to
each Noteholder and Certificateholder, respectively, the Monthly
Servicing Report and the Monthly Security Statement delivered to
them pursuant to Article V of the Pooling and Servicing Agreement
and Section 6.06(b) hereof, respectively.
Section 3.24. Determination of Note Rate and Certificate
Rate. On the second LIBOR Business Day immediately preceding (i)
the Closing Date in the case of the first Interest Period and
(ii) the first day of each succeeding Interest Period, the Inden-
ture Trustee after consultation with the Servicer shall determine
LIBOR and the Note Rate and the Certificate Rate for such
Interest Period and shall inform the Issuer and the Seller at
their respective facsimile numbers given to the Indenture Trustee
in writing thereof.
Section 3.25. Optional Repurchase of the Series 1997-1
Participation Interest. (a) The Seller may, with 10 days prior
written notice to the Owner Trustee, Servicer and the Indenture
Trustee, purchase the entire Series 1997-1 Participation
Interest, on any Payment Date in which the Aggregate Security
Balance is equal to or less than ten percent of the initial
Aggregate Security Balance. The Seller shall deposit into the
Payment Account on the Business Day prior to the Payment Date on
which such purchase is to occur, an amount equal to the principal
balance of the Series 1997-1 Participation Interest and the
amount of interest and Certificate Yield to be distributed to the
Security holders pursuant to Section 3.05(a) as of such Payment
Date.
<PAGE>
ARTICLE IV
The Notes; Satisfaction and Discharge of Indenture
Section 4.01. The Notes. (a) The Notes shall be
registered in the name of a nominee designated by the Depository.
Beneficial Owners will hold interests in the Notes through the
book-entry facilities of the Depository in minimum initial
Principal Balances of $100,000 and integral multiples of $1,000
in excess thereof.
The Indenture Trustee may for all purposes (including the
making of payments due on the Notes) deal with the Depository as
the authorized representative of the Beneficial Owners with
respect to the Notes for the purposes of exercising the rights of
Holders of Notes hereunder. Except as provided in the next
succeeding paragraph of this Section 4.01, the rights of
Beneficial Owners with respect to the Notes shall be limited to
those established by law and agreements between such Beneficial
Owners and the Depository and Depository Participants. Except as
provided in Section 4.08, Beneficial Owners shall not be entitled
to definitive certificates for the Notes as to which they are the
Beneficial Owners. Requests and directions from, and votes of,
the Depository as Holder of the Notes shall not be deemed
inconsistent if they are made with respect to different
Beneficial Owners. The Indenture Trustee may establish a
reasonable record date in connection with solicitations of
consents from or voting by Noteholders and give notice to the
Depository of such record date. Without the consent of the
Issuer and the Indenture Trustee, no Note may be transferred by
the Depository except to a successor Depository that agrees to
hold such Note for the account of the Beneficial Owners.
In the event the Depository Trust Company resigns or is
removed as Depository, the Indenture Trustee with the approval of
the Issuer may appoint a successor Depository. If no successor
Depository has been appointed within 30 days of the effective
date of the Depository's resignation or removal, each Beneficial
Owner shall be entitled to certificates representing the Notes it
beneficially owns in the manner prescribed in Section 4.08.
The Notes shall, on original issue, be executed on behalf of
the Issuer by the Owner Trustee, not in its individual capacity
but solely as Owner Trustee, authenticated by the Note Registrar
and delivered by the Indenture Trustee to or upon the order of
the Issuer.
Section 4.02. Registration of and Limitations on Transfer
and Exchange of Notes; Appointment of Certificate Registrar. The
Note Registrar shall cause to be kept at its Corporate Trust
Office a Note Register in which, subject to such reasonable regu-
lations as it may prescribe, the Note Registrar shall provide for
the registration of Notes and of transfers and exchanges of Notes
as herein provided.
Subject to the restrictions and limitations set forth below,
upon surrender for registration of transfer of any Note at the
Corporate Trust Office, the Owner Trustee on behalf of the Issuer
shall execute and the Note Registrar shall authenticate and
deliver, in the name of the designated transferee or transferees,
one or more new Notes in authorized initial Security Balances
evidencing the same aggregate Percentage Interests.
Subject to the foregoing, at the option of the Noteholders,
Notes may be exchanged for other Notes of like tenor or, in each
case in authorized initial Principal Balances evidencing the same
aggregate Percentage Interests upon surrender of the Notes to be
exchanged at the Corporate Trust Office of the Note Registrar.
Whenever any Notes are so surrendered for exchange, the Issuer
shall execute and the Note Registrar shall authenticate and
deliver the Notes which the Noteholder making the exchange is
entitled to receive. Each Note presented or surrendered for
registration of transfer or exchange shall (if so required by the
Note Registrar) be duly endorsed by, or be accompanied by a
written instrument of transfer in form reasonably satisfactory to
the Note Registrar duly executed by, the Holder thereof or his
attorney duly authorized in writing. Notes delivered upon any
such transfer or exchange will evidence the same obligations, and
will be entitled to the same rights and privileges, as the Notes
surrendered.
No service charge shall be made for any registration of
transfer or exchange of Notes, but the Note Registrar shall re-
quire payment of a sum sufficient to cover any tax or governmen-
tal charge that may be imposed in connection with any registra-
tion of transfer or exchange of Notes.
All Notes surrendered for registration of transfer and
exchange shall be cancelled by the Note Registrar and delivered
to the Indenture Trustee for subsequent destruction without
liability on the part of either.
The Issuer hereby appoints The Bank of New York as
Certificate Registrar to keep at its Corporate Trust Office a
Certificate Register pursuant to Section 3.09 of the Trust
Agreement in which, subject to such reasonable regulations as it
may prescribe, the Certificate Registrar shall provide for the
registration of Certificates, and of transfers and exchanges
thereof pursuant to Section 3.05 of the Trust Agreement. The
Bank of New York hereby accepts such appointment.
Section 4.03. Mutilated, Destroyed, Lost or Stolen Notes.
If (i) any mutilated Note is surrendered to the Indenture
Trustee, or the Indenture Trustee receives evidence to its satis-
faction of the destruction, loss or theft of any Note, and (ii)
there is delivered to the Indenture Trustee such security or
indemnity as may be required by it to hold the Issuer and the
Indenture Trustee harmless, then, in the absence of notice to the
Issuer, the Note Registrar or the Indenture Trustee that such
Note has been acquired by a bona fide purchaser, and provided
that the requirements of Section 8-405 of the UCC are met, the
Issuer shall execute, and upon its request the Indenture Trustee
shall authenticate and deliver, in exchange for or in lieu of any
such mutilated, destroyed, lost or stolen Note, a replacement
Note of the same Class; provided, however, that if any such
destroyed, lost or stolen Note, but not a mutilated Note, shall
have become or within seven days shall be due and payable,
instead of issuing a replacement Note, the Issuer may pay such
destroyed, lost or stolen Note when so due or payable without
surrender thereof. If, after the delivery of such replacement
Note or payment of a destroyed, lost or stolen Note pursuant to
the proviso to the preceding sentence, a bona fide purchaser of
the original Note in lieu of which such replacement Note was
issued presents for payment such original Note, the Issuer and
the Indenture Trustee shall be entitled to recover such replace-
ment Note (or such payment) from the Person to whom it was
delivered or any Person taking such replacement Note from such
Person to whom such replacement Note was delivered or any
assignee of such Person, except a bona fide purchaser, and shall
be entitled to recover upon the security or indemnity provided
therefor to the extent of any loss, damage, cost or expense
incurred by the Issuer or the Indenture Trustee in connection
therewith.
Upon the issuance of any replacement Note under this Section
4.03, the Issuer may require the payment by the Holder of such
Note of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other
reasonable expenses (including the fees and expenses of the
Indenture Trustee) connected therewith.
Every replacement Note issued pursuant to this Section 4.03
in replacement of any mutilated, destroyed, lost or stolen Note
shall constitute an original additional contractual obligation of
the Issuer, whether or not the mutilated, destroyed, lost or
stolen Note shall be at any time enforceable by anyone, and shall
be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued here-
under.
The provisions of this Section 4.03 are exclusive and shall
preclude (to the extent lawful) all other rights and remedies
with respect to the replacement or payment of mutilated, destroy-
ed, lost or stolen Notes.
Section 4.04. Persons Deemed Owners. Prior to due present-
ment for registration of transfer of any Note, the Issuer, the
Indenture Trustee and any agent of the Issuer or the Indenture
Trustee may treat the Person in whose name any Note is registered
(as of the day of determination) as the owner of such Note for
the purpose of receiving payments of principal of and interest,
if any, on such Note and for all other purposes whatsoever,
whether or not such Note be overdue, and neither the Issuer, the
Indenture Trustee nor any agent of the Issuer or the Indenture
Trustee shall be affected by notice to the contrary.
Section 4.05. Cancellation. All Notes surrendered for
payment, registration of transfer, exchange or redemption shall,
if surrendered to any Person other than the Indenture Trustee, be
delivered to the Indenture Trustee and shall be promptly
cancelled by the Indenture Trustee. The Issuer may at any time
deliver to the Indenture Trustee for cancellation any Notes
previously authenticated and delivered hereunder which the Issuer
may have acquired in any manner whatsoever, and all Notes so
delivered shall be promptly cancelled by the Indenture Trustee.
No Notes shall be authenticated in lieu of or in exchange for any
Notes cancelled as provided in this Section 4.05, except as
expressly permitted by this Indenture. All cancelled Notes may
be held or disposed of by the Indenture Trustee in accordance
with its standard retention or disposal policy as in effect at
the time unless the Issuer shall direct by an Issuer Request that
they be returned to it; provided that such Issuer Request is
timely and the Notes have not been previously disposed of by the
Indenture Trustee.
Section 4.06. Book-Entry Notes. The Notes, upon original
issuance, will be issued in the form of typewritten Notes
representing the Book-Entry Notes, to be delivered to The
Depository Trust Company, the initial Depository, by, or on
behalf of, the Issuer. Such Notes shall initially be registered
on the Note Register in the name of Cede & Co., the nominee of
the initial Depository, and no Beneficial Owner will receive a
definitive Note representing such Beneficial Owner's interest in
such Note, except as provided in Section 4.08. Unless and until
definitive, fully registered Notes (the "Definitive Notes") have
been issued to Beneficial Owners pursuant to Section 4.08:
(i) the provisions of this Section 4.06 shall be in
full force and effect;
(ii) the Note Registrar and the Indenture Trustee
shall be entitled to deal with the Depository for all
purposes of this Indenture (including the payment of prin-
cipal of and interest on the Notes and the giving of
instructions or directions hereunder) as the sole holder of
the Notes, and shall have no obligation to the Noteholders;
(iii) to the extent that the provisions of this
Section 4.06 conflict with any other provisions of this
Indenture, the provisions of this Section 4.06 shall
control;
(iv) the rights of Beneficial Owners shall be
exercised only through the Depository and shall be limited
to those established by law and agreements between such
Beneficial Owners and the Depository and/or the Depository
Participants pursuant to the Note Depository Agreement.
Unless and until Definitive Notes are issued pursuant to
Section 4.08, the initial Depository will make book-entry
transfers among the Depository Participants and receive and
transmit payments of principal of and interest on the Notes
to such Depository Participants; and
(v) whenever this Indenture requires or permits
actions to be taken based upon instructions or directions of
Noteholders evidencing a specified percentage of the
Security Balances of the Notes, the Depository shall be
deemed to represent such percentage only to the extent that
it has received instructions to such effect from Beneficial
Owners and/or Depository Participants owning or represent-
ing, respectively, such required percentage of the benefi-
cial interest in the Notes and has delivered such instruc-
tions to the Indenture Trustee.
Section 4.07. Notices to Depository. Whenever a notice or
other communication to the Noteholders is required under this
Indenture, unless and until Definitive Notes shall have been
issued to Beneficial Owners pursuant to Section 4.08, the
Indenture Trustee shall give all such notices and communications
specified herein to be given to Holders of the Notes to the
Depository, and shall have no obligation to the Beneficial
Owners.
Section 4.08. Definitive Notes. If (i) the Administrator
advises the Indenture Trustee in writing that the Depository is
no longer willing or able to properly discharge its responsibil-
ities with respect to the Notes and the Administrator is unable
to locate a qualified successor, (ii) the Administrator at its
option advises the Indenture Trustee in writing that it elects to
terminate the book-entry system through the Depository or
(iii) after the occurrence of an Event of Default, Beneficial
Owners representing beneficial interests aggregating at least a
majority of the Security Balances of the Notes advise the
Depository in writing that the continuation of a book-entry
system through the Depository is no longer in the best interests
of the Beneficial Owners, then the Depository shall notify all
Beneficial Owners and the Indenture Trustee of the occurrence of
any such event and of the availability of Definitive Notes to
Beneficial Owners requesting the same. Upon surrender to the
Indenture Trustee of the typewritten Notes representing the Book-
Entry Notes by the Depository, accompanied by registration
instructions, the Issuer shall execute and the Indenture Trustee
shall authenticate the Definitive Notes in accordance with the
instructions of the Depository. None of the Issuer, the Note
Registrar or the Indenture Trustee shall be liable for any delay
in delivery of such instructions and may conclusively rely on,
and shall be protected in relying on, such instructions. Upon
the issuance of Definitive Notes, the Indenture Trustee shall
recognize the Holders of the Definitive Notes as Noteholders.
Section 4.09. Tax Treatment. The Issuer has entered into
this Indenture, and the Notes will be issued, with the intention
that, for all purposes, including, federal, state and local
income, single business and franchise tax purposes, the Notes
will qualify as indebtedness of the Issuer. The Issuer, by
entering into this Indenture, and each Noteholder, by its
acceptance of its Note (and each Beneficial Owner by its
acceptance of an interest in the applicable Book-Entry Note),
agree to treat the Notes for federal, state and local income,
single business and franchise tax purposes as indebtedness of the
Issuer.
Section 4.10. Satisfaction and Discharge of Indenture.
This Indenture shall cease to be of further effect with respect
to the Notes except as to (i) rights of registration of transfer
and exchange, (ii) substitution of mutilated, destroyed, lost or
stolen Notes, (iii) rights of Noteholders to receive payments of
principal thereof and interest thereon, (iv) Sections 3.03, 3.04,
3.06, 3.09, 3.14, 3.16 and 3.17, (v) the rights, obligations and
immunities of the Indenture Trustee hereunder (including the
rights of the Indenture Trustee under Section 6.07 and the obli-
gations of the Indenture Trustee under Section 4.11) and (vi) the
rights of Noteholders as beneficiaries hereof with respect to the
property so deposited with the Indenture Trustee payable to all
or any of them, and the Indenture Trustee, on demand of and at
the expense of the Issuer, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture with
respect to the Notes, when
(A) either
(1) all Notes theretofore authenticated and delivered
(other than (i) Notes that have been destroyed, lost or
stolen and that have been replaced or paid as provided in
Section 4.03 and (ii) Notes for whose payment money has
theretofore been deposited in trust or segregated and held
in trust by the Issuer and thereafter repaid to the Issuer
or discharged from such trust, as provided in Section 3.03)
have been delivered to the Indenture Trustee for cancella-
tion; or
all Notes not theretofore delivered to the Inden-
ture Trustee for cancellation
a. have become due and payable, or
b. will become due and payable at the Final
Scheduled Payment Date within one year,
and the Issuer, in the case of a. or b. above, has
irrevocably deposited or caused to be irrevocably deposited
with the Indenture Trustee cash or direct obligations of or
obligations guaranteed by the United States of America
(which will mature prior to the date such amounts are pay-
able), in trust for such purpose, in an amount sufficient to
pay and discharge the entire indebtedness on such Notes then
outstanding not theretofore delivered to the Indenture
Trustee for cancellation when due on the Final Scheduled
Payment Date;
(B) the Issuer has paid or caused to be paid all other
sums payable hereunder by the Issuer.
Section 4.11. Application of Trust Money. All moneys
deposited with the Indenture Trustee pursuant to Section 4.10
hereof shall be held in trust and applied by it, in accordance
with the provisions of the Notes and this Indenture, to the pay-
ment, either directly or through any Paying Agent, as the Inden-
ture Trustee may determine, to the Holders of Notes, of all sums
due and to become due thereon for principal and interest; but
such moneys need not be segregated from other funds except to the
extent required herein or required by law.
Section 4.12. Repayment of Moneys Held by Paying Agent. In
connection with the satisfaction and discharge of this Indenture
with respect to the Notes, all moneys then held by any Admini-
strator other than the Indenture Trustee under the provisions of
this Indenture with respect to such Notes shall, upon demand of
the Issuer, be paid to the Indenture Trustee to be held and
applied according to Section 3.05 and thereupon such Paying Agent
shall be released from all further liability with respect to such
moneys.<PAGE>
ARTICLE V
Remedies
Section 5.01. Event of Default; Acceleration of Maturity;
Rescission and Annulment. The Issuer shall deliver to the
Indenture Trustee, within five days after the occurrence of any
event, which with the giving of notice and the lapse of time
would become an Event of Default under clause (iii) of the
definition of "Event of Default", written notice in the form of
an Officer's Certificate of such event, its status and what
action the Issuer is taking or proposes to take with respect
thereto. If an Event of Default should occur and be continuing,
then and in every such case the Indenture Trustee or the Holders
of Notes representing not less than a majority of the Security
Balances of all Notes may declare the Notes to be immediately due
and payable, by a notice in writing to the Issuer (and to the
Indenture Trustee if given by Noteholders), and upon any such
declaration the unpaid principal amount of such Notes, together
with accrued and unpaid interest thereon through the date of
acceleration, shall become immediately due and payable.
At any time after such declaration of acceleration of
maturity has been made and before a judgment or decree for pay-
ment of the money due has been obtained by the Indenture Trustee
as hereinafter in this Article V provided, the Holders of Notes
representing a majority of the Security Balances of all Notes, 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:
(A) all payments of principal of and interest on
the Notes and all other amounts that would then be due
hereunder or upon the 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 outside 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 5.11.
No such rescission shall affect any subsequent default or
impair any right consequent thereto.
Section 5.02. Collection of Indebtedness and Suits for
Enforcement by Indenture Trustee. (a) The Issuer covenants that
if (i) default is made in the payment of any interest on any Note
when the same becomes due and payable, and such default continues
for a period of five days, or (ii) default is made in the payment
of the principal of or any installment of the principal of any
Note when the same becomes due and payable, the Issuer will, upon
demand of the Indenture Trustee, pay to it, for the benefit of
the Holders of Notes, the whole amount then due and payable on
the Notes for principal and interest, with interest upon the
overdue principal, and in addition thereto such further amount as
shall be sufficient to cover the costs and expenses of collec-
tion, including the reasonable compensation, expenses, disburse-
ments and advances of the Indenture Trustee and its agents and
outside counsel.
(b) In case the Issuer shall fail forthwith to pay such
amounts upon such demand, the Indenture Trustee, in its own name
and as trustee of an express trust, subject to the provisions of
Section 10.16 hereof may institute a Proceeding for the collec-
tion of the sums so due and unpaid, and may prosecute such
Proceeding to judgment or final decree, and may enforce the same
against the Issuer or other obligor upon the Notes and collect in
the manner provided by law out of the property of the Issuer or
other obligor the Notes, wherever situated, the moneys adjudged
or decreed to be payable.
(c) If an Event of Default occurs and is continuing, the
Indenture Trustee, subject to the provisions of Section 10.16
hereof may, as more particularly provided in Section 5.03, in its
discretion, proceed to protect and enforce its rights and the
rights of the Noteholders, by such appropriate Proceedings as the
Indenture Trustee shall deem most effective to protect and
enforce any such rights, whether for the specific enforcement of
any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other
proper remedy or legal or equitable right vested in the Indenture
Trustee by this Indenture or by law.
(d) In case there shall be pending, relative to the Issuer
or any other obligor upon the Notes or any Person having or
claiming an ownership interest in the Indenture Trust Estate,
Proceedings under Title 11 of the United States Code or any other
applicable federal or state bankruptcy, insolvency or other
similar law, or in case a receiver, assignee or trustee in
bankruptcy or reorganization, liquidator, sequestrator or similar
official shall have been appointed for or taken possession of the
Issuer or its property or such other obligor or Person, or in
case of any other comparable judicial Proceedings relative to the
Issuer or other obligor upon the Notes, or to the creditors or
property of the Issuer or such other obligor, the Indenture
Trustee, irrespective of whether the principal of any Notes shall
then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Indenture Trustee shall
have made any demand pursuant to the provisions of this Section,
shall be entitled and empowered, by intervention in such Proceed-
ings or otherwise:
(i) to file and prove a claim or claims for the
whole amount of principal and interest owing and unpaid in
respect of the Notes and to file such other papers or
documents as may be necessary or advisable in order to have
the claims of the Indenture Trustee (including any claim for
reasonable compensation to the Indenture Trustee and each
predecessor Indenture Trustee, and their respective agents,
and outside counsel, and for reimbursement of all expenses
and liabilities incurred, and all advances made, by the
Indenture Trustee and each predecessor Indenture Trustee,
except as a result of negligence or bad faith) and of the
Noteholders allowed in such Proceedings;
(ii) unless prohibited by applicable law and regula-
tions, to vote on behalf of the Holders of Notes in any
election of a trustee, a standby trustee or Person perform-
ing similar functions in any such Proceedings;
(iii) to collect and receive any moneys or other
property payable or deliverable on any such claims and to
distribute all amounts received with respect to the claims
of the Noteholders and of the Indenture Trustee on their
behalf; and
(iv) to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have
the claims of the Indenture Trustee or the Holders of Notes
allowed in any judicial proceedings relative to the Issuer,
its creditors and its property;
and any trustee, receiver, liquidator, custodian or other similar
official in any such Proceeding is hereby authorized by each of
such Noteholders to make payments to the Indenture Trustee, and,
in the event that the Indenture Trustee shall consent to the
making of payments directly to such Noteholders, to pay to the
Indenture Trustee such amounts as shall be sufficient to cover
reasonable compensation to the Indenture Trustee, each predeces-
sor Indenture Trustee and their respective agents, and outside
counsel, and all other expenses and liabilities incurred, and all
advances made, by the Indenture Trustee and each predecessor
Indenture Trustee except as a result of negligence or bad faith.
(e) Nothing herein contained shall be deemed to authorize
the Indenture Trustee to authorize or consent to or vote for or
accept or adopt on behalf of any Noteholder any plan of reorgani-
zation, arrangement, adjustment or composition affecting the
Notes or the rights of any Holder thereof or to authorize the
Indenture Trustee to vote in respect of the claim of any Note-
holder in any such proceeding except, as aforesaid, to vote for
the election of a trustee in bankruptcy or similar Person.
(f) All rights of action and of asserting claims under this
Indenture, or under any of the Notes, may be enforced by the
Indenture Trustee without the possession of any of the Notes or
the production thereof in any trial or other Proceedings relative
thereto, and any such action or proceedings instituted by the
Indenture Trustee shall be brought in its own name as trustee of
an express trust, and any recovery of judgment, subject to the
payment of the expenses, disbursements and compensation of the
Indenture Trustee, each predecessor Indenture Trustee and their
respective agents and attorneys, shall be for the ratable benefit
of the Holders of the Notes.
In any Proceedings brought by the Indenture Trustee
(and also any Proceedings involving the interpretation of any
provision of this Indenture to which the Indenture Trustee shall
be a party), the Indenture Trustee shall be held to represent all
the Holders of the Notes, and it shall not be necessary to make
any Noteholder a party to any such Proceedings.
Section 5.03. Remedies; Priorities. (a) If an Event of
Default shall have occurred and be continuing, the Indenture
Trustee, subject to the provisions of Section 10.16 hereof, may
do one or more of the following (subject to Section 5.04):
(i) institute Proceedings from time to time for the
complete or partial foreclosure of this Indenture with
respect to the Indenture Trust Estate;
(ii) 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
(iii) sell the Indenture 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 Indenture Trust Estate following an Event
of Default, unless (A) the Holders of 100% of the Security
Balances of the Notes consent thereto, (B) the proceeds of such
sale or liquidation distributable to Holders of the Notes are
sufficient to discharge in full all amounts then due and unpaid
upon the Notes for principal and interest or (C) the Indenture
Trustee determines that the Series 1997-1 Participation Interest
will not continue to provide sufficient funds for the payment of
principal of and interest on the Notes, as they would have become
due if the Notes had not been declared due and payable, and the
Indenture Trustee obtains the consent of the Holders of not less
than 66-2/3% of the Security Balances of the Notes. In deter-
mining such sufficiency or insufficiency with respect to clause
(B) and (C), 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 Indenture
Trust Estate for such purpose.
(b) If the Indenture Trustee collects any money or property
pursuant to this Article V, it shall deposit such money into the
Payment Account and pay out the money in the following order:
FIRST: to the Indenture Trustee for amounts due
hereunder;
SECOND: to Holders of Class A-1 Notes for amounts due
and unpaid on such Class of Notes first for interest
and then for principal, and to each Noteholder of such
Class in each case ratably, without preference or
priority of any kind, according to the amounts due and
payable on such Class of Notes for interest and then
for principal, until all amounts of interest due have
been paid and the Security Balance of such Class of
Notes is reduced to zero;
THIRD: to Holders of Class A-2 Notes for amounts due
and unpaid on such Class of Notes first for interest
and then for principal, and to each Noteholder of such
Class in each case ratably, without preference or
priority of any kind, according to the amounts due and
payable on such Class of Notes for interest and then
for principal, until all amounts of interest due have
been paid and the Security Balance of such Class of
Notes is reduced to zero;
FOURTH: to Holders of Class A-3 Notes for amounts due
and unpaid on such Class of Notes first for interest
and then for principal, and to each Noteholder of such
Class in each case ratably, without preference or
priority of any kind, according to the amounts due and
payable on such Class of Notes for interest and then
for principal, until all amounts of interest due have
been paid and the Security Balance of such Class of
Notes is reduced to zero;
FIFTH: to Holders of Class B Notes for amounts due and
unpaid on such Class of Notes first for interest and
then for principal, and to each Noteholder of such
Class in each case ratably, without preference or
priority of any kind, according to the amounts due and
payable on such Class of Notes for interest and then
for principal, until all amounts of interest due have
been paid and the Security Balance of such Class of
Notes is reduced to zero;
SIXTH: to the Issuer for amounts required to be
distributed to the Certificateholders in respect of
Certificate Yield and reduction of the Certificate
Balance pursuant to the Trust Agreement;
SEVENTH: to the Issuer for amounts due under Article
VIII of the Trust Agreement; and
EIGHTH: to the payment of the remainder, if any to
HCLC, the initial Holder of the Designated Certificate
or its transferee.
The Indenture Trustee may fix a record date and payment date
for any payment to Noteholders pursuant to this Section 5.03. At
least 15 days before such record date, the Issuer shall mail to
each Noteholder and the Indenture Trustee a notice that states
the record date, the payment date and the amount to be paid.
Section 5.04. Optional Preservation of the Indenture Trust
Estate. If the Notes have been declared to be due and payable
under Section 5.01 following an Event of Default and such
declaration and its consequences have not been rescinded and
annulled, the Indenture Trustee may, but need not, elect to
maintain possession of the Indenture Trust Estate. It is the
desire of the parties hereto and the Noteholders that there be at
all times sufficient funds for the payment of principal of and
interest on the Notes and other obligations of the Issuer and the
Indenture Trustee shall take such desire into account when deter-
mining whether or not to maintain possession of the Indenture
Trust Estate. In determining whether to maintain possession of
the Indenture Trust Estate, 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 Indenture Trust Estate for such purpose.
Section 5.05. Limitation of Suits. No Holder of any Note
shall have any right to institute any Proceeding, judicial or
otherwise, with respect to this Indenture, or for the appointment
of a receiver or trustee, or for any other remedy hereunder,
unless and subject to the provisions of Section 10.16 hereof:
(i) such Holder has previously given written notice
to the Indenture Trustee of a continuing Event of Default;
(ii) the Holders of not less than 25% of the Security
Balances of the Notes have made written request to the
Indenture Trustee to institute such Proceeding in respect of
such Event of Default in its own name as Indenture Trustee
hereunder;
(iii) such Holder or Holders have offered to the
Indenture Trustee reasonable indemnity against the costs,
expenses and liabilities to be incurred in complying with
such request;
the Indenture Trustee for 60 days after its
receipt of such notice, request and offer of indemnity has
failed to institute such Proceedings; and
(v) no direction inconsistent with such written
request has been given to the Indenture Trustee during such
60-day period by the Holders of a majority of the Security
Balances of the Notes.
It is understood and intended that no one or more Holders of
Notes shall have any right in any manner whatever by virtue of,
or by availing of, any provision of this Indenture to affect,
disturb or prejudice the rights of any other Holders of Notes or
to obtain or to seek to obtain priority or preference over any
other Holders or to enforce any right under this Indenture,
except in the manner herein provided.
In the event the Indenture Trustee shall receive conflicting
or inconsistent requests and indemnity from two or more groups of
Holders of Notes, each representing less than a majority of the
Security Balances of the Notes, the Indenture Trustee in its sole
discretion may determine what action, if any, shall be taken,
notwithstanding any other provisions of this Indenture.
Section 5.06. Unconditional Rights of Noteholders to
Receive Principal and Interest. Notwithstanding any other pro-
visions in this Indenture, the Holder of any Note shall have the
right, which is absolute and unconditional, to receive payment of
the principal of and interest, if any, on such Note on or after
the respective due dates thereof expressed in such Note or in
this Indenture and to institute suit for the enforcement of any
such payment, and such right shall not be impaired without the
consent of such Holder.
Section 5.07. Restoration of Rights and Remedies. If the
Indenture Trustee or any Noteholder has instituted any Proceeding
to enforce any right or remedy under this Indenture and such
Proceeding has been discontinued or abandoned for any reason or
has been determined adversely to the Indenture Trustee or to such
Noteholder, then and in every such case the Issuer, the Indenture
Trustee and the Noteholders shall, subject to any determination
in such Proceeding, be restored severally and respectively to
their former positions hereunder, and thereafter all rights and
remedies of the Indenture Trustee and the Noteholders shall
continue as though no such Proceeding had been instituted.
Section 5.08. Rights and Remedies Cumulative. No right or
remedy herein conferred upon or reserved to the Indenture Trustee
or to the Noteholders is intended to be exclusive of any other
right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other
right and remedy given hereunder or now or hereafter existing at
law or in equity or otherwise. The assertion or employment of
any right or remedy hereunder, or otherwise, shall not prevent
the concurrent assertion or employment of any other appropriate
right or remedy.
Section 5.09. Delay or Omission Not a Waiver. No delay or
omission of the Indenture Trustee or any Holder of any Note to
exercise any right or remedy accruing upon any Event of Default
shall impair any such right or remedy or constitute a waiver of
any such Event of Default or an acquiescence therein. Every
right and remedy given by this Article V or by law to the Inden-
ture Trustee or to the Noteholders may be exercised from time to
time, and as often as may be deemed expedient, by the Indenture
Trustee or by the Noteholders, as the case may be.
Section 5.10. Control by Noteholders. The Holders of a
majority of the Security Balances of Notes shall have the right
to direct the time, method and place of conducting any Proceeding
for any remedy available to the Indenture Trustee with respect to
the Notes or exercising any trust or power conferred on the
Indenture Trustee; provided that:
(i) such direction shall not be in conflict with any
rule of law or with this Indenture;
(ii) subject to the express terms of Section 5.03,
any direction to the Indenture Trustee to sell or liquidate
the Indenture Trust Estate shall be by Holders of Notes
representing not less than 100% of the Security Balances of
Notes;
(iii) if the conditions set forth in Section 5.04 have
been satisfied and the Indenture Trustee elects to retain
the Indenture Trust Estate pursuant to such Section, then
any direction to the Indenture Trustee by Holders of Notes
representing less than 100% of the Security Balances of
Notes to sell or liquidate the Indenture Trust Estate shall
be of no force and effect; and
(iv) the Indenture Trustee may take any other action
deemed proper by the Indenture Trustee that is not incon-
sistent with such direction.
Notwithstanding the rights of Noteholders set forth in this
Section, subject to Section 6.01, the Indenture Trustee need not
take any action that it determines might involve it in liability
or might materially adversely affect the rights of any Note-
holders not consenting to such action.
Section 5.11. Waiver of Past Defaults. Prior to the
declaration of the acceleration of the maturity of the Notes as
provided in Section 5.01, the Holders of Notes of not less than a
majority of the Security Balances of the Notes may waive any past
Event of Default and its consequences except an Event of Default
(a) with respect to payment of principal of or interest on any of
the Notes or (b) in respect of a covenant or provision hereof
which cannot be modified or amended without the consent of the
Holder of each Note. In the case of any such waiver, the Issuer,
the Indenture Trustee and the Holders of the Notes shall be
restored to their former positions and rights hereunder, respec-
tively; but no such waiver shall extend to any subsequent or
other Event of Default or impair any right consequent thereto.
Upon any such waiver, any Event of Default arising therefrom
shall be deemed to have been cured and not to have occurred, for
every purpose of this Indenture; but no such waiver shall extend
to any subsequent or other Event of Default or impair any right
consequent thereto. The Indenture Trustee shall notify the
Rating Agencies of any such waiver pursuant to this Section 5.11.
Section 5.12. Undertaking for Costs. All parties to this
Indenture agree, and each Holder of any Note by such Holder's
acceptance thereof shall be deemed to have agreed, that any court
may in its discretion require, in any suit for the enforcement of
any right or remedy under this Indenture, or in any suit against
the Indenture Trustee for any action taken, suffered or omitted
by it as Indenture Trustee, the filing by any party litigant in
such suit of an undertaking to pay the costs of such suit, and
that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant
in such suit, having due regard to the merits and good faith of
the claims or defenses made by such party litigant; but the
provisions of this Section 5.12 shall not apply to (a) any suit
instituted by the Indenture Trustee, (b) any suit instituted by
any Noteholder, or group of Noteholders, in each case holding in
the aggregate more than 10% of the Security Balances of the Notes
or (c) any suit instituted by any Noteholder for the enforcement
of the payment of principal of or interest on any Note on or
after the respective due dates expressed in such Note and in this
Indenture.
Section 5.13. Waiver of Stay or Extension Laws. The Issuer
covenants (to the extent that it may lawfully do so) that it will
not at any time insist upon, or plead or in any manner whatso-
ever, claim or take the benefit or advantage of, any stay or
extension law wherever enacted, now or at any time hereafter in
force, that may affect the covenants or the performance of this
Indenture; and the Issuer (to the extent that it may lawfully do
so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Indenture Trustee,
but will suffer and permit the execution of every such power as
though no such law had been enacted.
Section 5.14. Sale of Indenture Trust Estate. (a) The
power to effect any sale or other disposition (a "Sale") of any
portion of the Indenture Trust Estate pursuant to Section 5.03 is
expressly subject to the provisions of Section 5.04 and this
Section 5.14. The power to effect any such Sale shall not be
exhausted by any one or more Sales as to any portion of the
Indenture Trust Estate remaining unsold, but shall continue
unimpaired until the entire Indenture Trust Estate shall have
been sold or all amounts payable on the Notes and under this
Indenture shall have been paid. The Indenture Trustee may from
time to time postpone any public Sale by public announcement made
at the time and place of such Sale. The Indenture Trustee hereby
expressly waives its right to any amount fixed by law as
compensation for any Sale.
(b) The Indenture Trustee shall not in any private Sale
sell the Indenture Trust Estate, or any portion thereof, unless
(1) the Holders of all Notes consent to or direct the
Indenture Trustee to make, such Sale, or
(2) the proceeds of such Sale would be not less than
the entire amount which would be payable to the Noteholders under
the Notes in full payment thereof in accordance with Section
5.01, on the Payment Date next succeeding the date of such Sale,
or
(3) The Indenture Trustee determines or is advised
that the conditions for retention of the Indenture Trust Estate
set forth in Section 5.04 cannot be satisfied (in making any such
determination, the Indenture Trustee may rely upon an opinion of
an Independent investment banking firm obtained and delivered as
provided in Section 5.04), and the Holders representing at least
66-2/3% of the Note Balances of the Notes consent to such Sale.
The purchase by the Indenture Trustee of all or any portion of
the Indenture Trust Estate at a private Sale shall not be deemed
a Sale or other disposition thereof for purposes of this Section
5.14(b).
(c) Unless the Holders of the Notes have otherwise consent-
ed or directed the Indenture Trustee, at any public Sale of all
or any portion of the Indenture Trust Estate at which a minimum
bid equal to or greater than the amount described in paragraph
(2) of subsection (b) of this Section 5.14 has not been estab-
lished by the Indenture Trustee and no Person bids an amount
equal to or greater than such amount, the Indenture Trustee shall
bid an amount at least $1.00 more than the highest other bid.
(d) In connection with a Sale of all or any portion of the
Indenture Trust Estate
(1) any Holder or Holders of Notes may bid for and
purchase the property offered for sale, and upon compliance with
the terms of sale may hold, retain and possess and dispose of
such property, without further accountability, and may, in paying
the purchase money therefor, deliver any Notes or claims for
interest thereon in lieu of cash up to the amount which shall,
upon distribution of the net proceeds of such sale, be payable
thereon, and such Notes, in case the amounts so payable thereon
shall be less than the amount due thereon, shall be returned to
the Holders thereof after being appropriately stamped to show
such partial payment;
(2) the Indenture Trustee may bid for and acquire the
property offered for Sale in connection with any Sale thereof,
and, subject to any requirements of, and to the extent permitted
by, applicable law in connection therewith, may purchase all or
any portion of the Indenture Trust Estate in a private sale, and,
in lieu of paying cash therefor, may make settlement for the
purchase price by crediting the gross Sale price against the sum
of (A) the amount which would be distributable to the Holders of
the Notes in accordance with Section 5.03 on the Payment Date
next succeeding the date of such Sale and (B) the expenses of the
Sale and of any Proceedings in connection therewith which are
reimbursable to it, without being required to produce the Notes
in order to complete any such Sale or in order for the net Sale
price to be credited against such Notes, and any property so
acquired by the Indenture Trustee shall be held and dealt with by
it in accordance with the provisions of this Indenture;
(3) the Indenture Trustee shall execute and deliver an
appropriate instrument of conveyance transferring its interest in
any portion of the Indenture Trust Estate in connection with a
Sale thereof;
(4) the Indenture Trustee is hereby irrevocably
appointed the agent and attorney-in-fact of the Issuer to trans-
fer and convey its interest in any portion of the Indenture Trust
Estate in connection with a Sale thereof, and to take all action
necessary to effect such Sale; and
(5) no purchaser or transferee at such a Sale shall be
bound to ascertain the Indenture Trustee's authority, inquire
into the satisfaction of any conditions precedent or see to the
application of any moneys.
Section 5.15. Action on Notes. The Indenture Trustee's
right to seek and recover judgment on the Notes or under this
Indenture shall not be affected by the seeking, obtaining or
application of any other relief under or with respect to this
Indenture. Neither the lien of this Indenture nor any rights or
remedies of the Indenture Trustee or the Noteholders shall be
impaired by the recovery of any judgment by the Indenture Trustee
against the Issuer or by the levy of any execution under such
judgment upon any portion of the Indenture Trust Estate or upon
any of the assets of the Issuer. Any money or property collected
by the Indenture Trustee shall be applied in accordance with
Section 5.03(b).
Section 5.16. Performance and Enforcement of Certain Obli-
gations. (a) Promptly following a request from the Indenture
Trustee to do so and at the Administrator's expense, the Issuer
shall take all such lawful action as the Indenture Trustee may
request to compel or secure the performance and observance by the
Deposit Trust in its obligations to the Issuer under or in
connection with the Pooling and Servicing Agreement, and upon the
occurrence and continuance of a "Servicer Default" under the
Pooling and Servicing Agreement to exercise any and all rights,
remedies, powers and privileges lawfully available to the Issuer
under or in connection with the Pooling and Servicing Agreement
to the extent and in the manner directed by the Indenture
Trustee, including the transmission of notices of default on the
part of the Seller or the Servicer thereunder and the institution
of legal or administrative actions or proceedings to compel or
secure performance by the Seller or the Servicer of each of their
obligations under the Receivables Purchase Agreement and the
Pooling and Servicing Agreement.
(b) If an Event of Default has occurred and is continuing,
the Indenture Trustee may, and at the direction (which direction
shall be in writing or by telephone (confirmed in writing
promptly thereafter)) of the Holders of 66-2/3% of the Security
Balances of the Notes shall, exercise all rights, remedies,
powers, privileges and claims of the Issuer against the Deposit
Trust under or in connection with the Pooling and Servicing
Agreement, including the right or power to take any action to
compel or secure performance or observance by the Deposit
Trustee, of its obligations to the Issuer thereunder and to give
any consent, request, notice, direction, approval, extension or
waiver under the Pooling and Servicing Agreement and any right of
the Issuer to take such action shall not be suspended.
<PAGE>
ARTICLE VI
The Indenture Trustee
Section 6.01. Duties of Indenture Trustee. (a) If an
Event of Default has occurred and is continuing, the Indenture
Trustee shall exercise the rights and powers vested in it by this
Indenture and use the same degree of care and skill in their
exercise as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Indenture Trustee undertakes to perform such
duties and only such duties as are specifically set forth in
this Indenture and no implied covenants or obligations shall
be read into this Indenture against the Indenture Trustee;
and
(ii) in the absence of bad faith on its part, the
Indenture Trustee may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the
Indenture Trustee and conforming to the requirements of this
Indenture; however, the Indenture Trustee shall examine the
certificates and opinions to determine whether or not they
conform to the requirements of this Indenture.
(c) The Indenture Trustee may not be relieved from liabil-
ity for its own negligent action, its own negligent failure to
act or its own willful misconduct, except that:
(i) this paragraph (c) does not limit the effect of
paragraph (b) of this Section 6.01;
(ii) the Indenture Trustee shall not be liable for
any error of judgment made in good faith by a Responsible
Officer unless it is proved that the Indenture Trustee was
negligent in ascertaining the pertinent facts; and
(iii) the Indenture Trustee shall not be liable with
respect to any action it takes or omits to take in good
faith in accordance with a direction received by it pursuant
to Section 5.10.
(d) Every provision of this Indenture that in any way
relates to the Indenture Trustee is subject to paragraphs (a),
(b), (c) and (g) of this Section 6.01.
(e) The Indenture Trustee shall not be liable for interest
on any money received by it except as the Indenture Trustee may
agree in writing with the Issuer.
Money held in trust by the Indenture Trustee need not
be segregated from other funds except to the extent required by
law or the terms of this Indenture.
(g) No provision of this Indenture shall require the
Indenture Trustee to expend or risk its own funds or otherwise
incur financial liability in the performance of any of its duties
hereunder or in the exercise of any of its rights or powers, if
it shall have reasonable grounds to believe that repayment of
such funds or adequate indemnity against such risk or liability
is not reasonably assured to it.
(h) Every provision of this Indenture relating to the
conduct or affecting the liability of or affording protection to
the Indenture Trustee shall be subject to the provisions of this
Section and to the provisions of the TIA.
Section 6.02. Rights of Indenture Trustee. (a) The Inden-
ture Trustee may rely on any document believed by it to be
genuine and to have been signed or presented by the proper
person. The Indenture Trustee need not investigate any fact or
matter stated in the document.
(b) Before the Indenture Trustee acts or refrains from
acting, it may require an Officer's Certificate or an Opinion of
Counsel. The Indenture Trustee shall not be liable for any
action it takes or omits to take in good faith in reliance on an
Officer's Certificate or Opinion of Counsel.
(c) The Indenture Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly
or by or through agents or attorneys or a custodian or nominee,
and the Indenture Trustee shall not be responsible for any
misconduct or negligence on the part of, or for the supervision
of, any such agent, attorney, custodian or nominee appointed with
due care by it hereunder.
(d) The Indenture Trustee shall not be liable for any
action it takes or omits to take in good faith which it believes
to be authorized or within its rights or powers; provided,
however, that the Indenture Trustee's conduct does not constitute
willful misconduct, negligence or bad faith.
(e) The Indenture Trustee may consult with counsel, and the
advice or opinion of counsel with respect to legal matters relat-
ing to this Indenture and the Notes shall be full and complete
authorization and protection from liability in respect to any
action taken, omitted or suffered by it hereunder in good faith
and in accordance with the advice or opinion of such counsel.
Section 6.03. Individual Rights of Indenture Trustee. The
Indenture Trustee in its individual or any other capacity may
become the owner or pledgee of Notes and may otherwise deal with
the Issuer or its Affiliates with the same rights it would have
if it were not Indenture Trustee. Any Administrator, Note Regis-
trar, co-registrar or co-paying agent may do the same with like
rights. However, the Indenture Trustee must comply with Sections
6.11 and 6.12.
Section 6.04. Indenture Trustee's Disclaimer. The Inden-
ture Trustee shall not be responsible for and makes no represen-
tation as to the validity or adequacy of this Indenture or the
Notes, it shall not be accountable for the Issuer's use of the
proceeds from the Notes, and it shall not be responsible for any
statement of the Issuer in the Indenture or in any document
issued in connection with the sale of the Notes or in the Notes
other than the Indenture Trustee's certificate of authentication.
Section 6.05. Notice of Event of Default. If an Event of
Default occurs and is continuing and if it is known to a Respon-
sible Officer of the Indenture Trustee, the Indenture Trustee
shall mail to each Noteholder notice of the Event of Default
within 90 days after it occurs. Except in the case of an Event
of Default in payment of principal of or interest on any Note,
the Indenture Trustee may withhold the notice if and so long as a
committee of its Responsible Officers in good faith determines
that withholding the notice is in the interests of Noteholders.
Section 6.06. Reports by Indenture Trustee. (a) The
Indenture Trustee shall deliver to each Noteholder such
information as may be required to enable such holder to prepare
its federal and state income tax returns. In addition, upon the
Issuer's written request, the Indenture Trustee shall promptly
furnish information reasonably requested by the Issuer that is
reasonably available to the Indenture Trustee to enable the
Issuer to perform its federal and state income tax reporting
obligations.
(b) Within 10 days of each Payment Date, the Indenture
Trustee will prepare and forward to each Holder of the Notes and
each Rating Agency, a Monthly Security Report, a form of which is
attached hereto as Exhibit C.
Section 6.07. Compensation and Indemnity. The Issuer shall
or shall cause the Administrator to pay to the Indenture Trustee
from time to time compensation for its services as previously
agreed to by the Administrator on behalf of the Issuer and the
Indenture Trustee. The Indenture Trustee's compensation shall
not be limited by any law on compensation of a trustee of an
express trust. The Issuer shall or shall cause the Administrator
to reimburse the Indenture Trustee for all reasonable out-of-
pocket expenses incurred or made by it, including costs of
collection, in addition to the compensation for its services.
Such expenses shall include the reasonable compensation and
expenses, disbursements and advances of the Indenture Trustee's
agents, outside counsel, accountants and experts. The Issuer
shall or shall cause the Administrator to indemnify the Indenture
Trustee against any and all loss, liability, damages or claims or
expense (including attorneys' fees) incurred by it in connection
with the administration of this trust and the performance of its
duties hereunder. The Indenture Trustee shall notify the Issuer
and the Administrator promptly of any claim for which it may seek
indemnity. Failure by the Indenture Trustee to so notify the
Issuer and the Administrator shall not relieve the Issuer or the
Administrator of its obligations hereunder. The Issuer shall or
shall cause the Administrator to defend any such claim, and the
Indenture Trustee may have separate counsel and the Issuer shall
or shall cause the Administrator to pay the fees and expenses of
such counsel. Neither the Issuer nor the Administrator need
reimburse any expense or indemnify against any loss, liability or
expense incurred by the Indenture Trustee through the Indenture
Trustee's own willful misconduct, negligence or bad faith.
The Issuer's payment obligations to the Indenture Trustee
pursuant to this Section 6.07 shall survive the discharge of this
Indenture and the resignation or removal of the Indenture
Trustee. When the Indenture Trustee incurs expenses after the
occurrence of an Event of Default with respect to the Issuer, the
expenses are intended to constitute expenses of administration
under Title 11 of the United States Code or any other applicable
federal or state bankruptcy, insolvency or similar law.
Section 6.08. Replacement of Indenture Trustee. No resig-
nation or removal of the Indenture Trustee and no appointment of
a successor Indenture Trustee shall become effective until the
acceptance of appointment by the successor Indenture Trustee
pursuant to this Section 6.08. The Indenture Trustee may resign
at any time by so notifying the Seller and the Issuer. The
Holders of a majority of Security Balances of the Notes may
remove the Indenture Trustee by so notifying the Indenture
Trustee and may appoint a successor Indenture Trustee. The
Issuer shall remove the Indenture Trustee if:
(i) the Indenture Trustee fails to comply with
Section 6.11;
(ii) the Indenture Trustee is adjudged a bankrupt or
insolvent;
(iii) a receiver or other public officer takes charge
of the Indenture Trustee or its property; or
(iv) the Indenture Trustee otherwise becomes
incapable of acting.
If the Indenture Trustee resigns or is removed or if a
vacancy exists in the office of Indenture Trustee for any reason
(the Indenture Trustee in such event being referred to herein as
the retiring Indenture Trustee), the Issuer shall promptly
appoint a successor Indenture Trustee by notice thereof to the
Noteholders.
A successor Indenture Trustee shall deliver a written
acceptance of its appointment to the retiring Indenture Trustee
and to the Issuer. Thereupon the resignation or removal of the
retiring Indenture Trustee shall become effective, and the
successor Indenture Trustee shall have all the rights, powers and
duties of the Indenture Trustee under this Indenture. The
successor Indenture Trustee shall mail a notice of its succession
to Noteholders. The retiring Indenture Trustee shall promptly
transfer all property held by it as Indenture Trustee to the
successor Indenture Trustee.
If a successor Indenture Trustee does not take office within
30 days after the retiring Indenture Trustee resigns or is
removed, the retiring Indenture Trustee, the Issuer or the
Holders of a majority of Security Balances of the Notes may
petition any court of competent jurisdiction for the appointment
of a successor Indenture Trustee.
If the Indenture Trustee fails to comply with Section 6.11,
any Noteholder may petition any court of competent jurisdiction
for the removal of the Indenture Trustee and the appointment of a
successor Indenture Trustee.
Notwithstanding the replacement of the Indenture Trustee
pursuant to this Section, the Issuer's and the Administrator's
obligations under Section 6.07 shall continue for the benefit of
the retiring Indenture Trustee.
Section 6.09. Successor Indenture Trustee by Merger. If
the Indenture Trustee consolidates with, merges or converts into,
or transfers all or substantially all its corporate trust busi-
ness or assets to, another corporation or banking association,
the resulting, surviving or transferee corporation without any
further act shall be the successor Indenture Trustee; provided
that such corporation or banking association shall be otherwise
qualified and eligible under Section 6.11 and shall not be an
Affiliate of the Owner Trustee. The Indenture Trustee shall
provide the Rating Agencies prior written notice of any such
transaction.
In case at the time such successor or successors by merger,
conversion or consolidation to the Indenture Trustee shall
succeed to the trusts created by this Indenture any of the Notes
shall have been authenticated but not delivered, any such
successor to the Indenture Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Notes
so authenticated; and in case at that time any of the Notes shall
not have been authenticated, any successor to the Indenture
Trustee may authenticate such Notes either in the name of any
predecessor hereunder or in the name of the successor to the
Indenture Trustee; and in all such cases such certificates shall
have the full force which it is anywhere in the Notes or in this
Indenture provided that the certificate of the Indenture Trustee
shall have.
Section 6.10. Appointment of Co-Indenture Trustee or
Separate Indenture Trustee. (a) Notwithstanding any other pro-
visions of this Indenture, at any time, for the purpose of meet-
ing any legal requirement of any jurisdiction in which any part
of the Indenture Trust Estate may at the time be located, the
Indenture Trustee shall have the power and may execute and
deliver all instruments to appoint one or more Persons to act as
a co-trustee or co-trustees, or separate trustee or separate
trustees, of all or any part of the Trust, and to vest in such
Person or Persons, in such capacity and for the benefit of the
Noteholders, such title to the Indenture Trust Estate, or any
part hereof, and, subject to the other provisions of this
Section, such powers, duties, obligations, rights and trusts as
the Indenture Trustee may consider necessary or desirable. No
co-trustee or separate trustee hereunder shall be required to
meet the terms of eligibility as a successor trustee under
Section 6.11 and no notice to Noteholders of the appointment of
any co-trustee or separate trustee shall be required under
Section 6.08 hereof.
(b) Every separate trustee and co-trustee shall, to the
extent permitted by law, be appointed and act subject to the
following provisions and conditions:
(i) all rights, powers, duties and obligations
conferred or imposed upon the Indenture Trustee shall be
conferred or imposed upon and exercised or performed by the
Indenture Trustee and such separate trustee or co-trustee
jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the
Indenture Trustee joining in such act), except to the extent
that under any law of any jurisdiction in which any particu-
lar act or acts are to be performed the Indenture Trustee
shall be incompetent or unqualified to perform such act or
acts, in which event such rights, powers, duties and obli-
gations (including the holding of title to the Indenture
Trust Estate or any portion thereof in any such
jurisdiction) shall be exercised and performed singly by
such separate trustee or co-trustee, but solely at the
direction of the Indenture Trustee;
(ii) no trustee hereunder shall be personally liable
by reason of any act or omission of any other trustee
hereunder; and
(iii) the Indenture Trustee may at any time accept the
resignation of or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the
Indenture Trustee shall be deemed to have been given to each of
the then separate trustees and co-trustees, as effectively as if
given to each of them. Every instrument appointing any separate
trustee or co-trustee shall refer to this Agreement and the
conditions of this Article VI. Each separate trustee and co-
trustee, upon its acceptance of the trusts conferred, shall be
vested with the estates or property specified in its instrument
of appointment, either jointly with the Indenture Trustee or
separately, as may be provided therein, subject to all the pro-
visions of this Indenture, specifically including every provision
of this Indenture relating to the conduct of, affecting the
liability of, or affording protection to, the Indenture Trustee.
Every such instrument shall be filed with the Indenture Trustee.
(d) Any separate trustee or co-trustee may at any time
constitute the Indenture Trustee, its agent or attorney-in-fact
with full power and authority, to the extent not prohibited by
law, to do any lawful act under or in respect of this Agreement
on its behalf and in its name. If any separate trustee or co-
trustee shall die, become incapable of acting, resign or be
removed, all of its estates, properties, rights, remedies and
trusts shall vest in and be exercised by the Indenture Trustee,
to the extent permitted by law, without the appointment of a new
or successor trustee.
Section 6.11. Eligibility; Disqualification. The Indenture
Trustee shall at all times satisfy the requirements of TIA
Section 310(a). The Indenture Trustee shall not be an affiliate of the
Owner Trustee. The Indenture Trustee shall have a combined
capital and surplus of at least $50,000,000 as set forth in its
most recent published annual report of condition and it or its
parent shall have a long-term debt rating of Baa3 or better by
Moody's. The Indenture Trustee shall comply with TIA Section 310(b),
including the optional provision permitted by the second sentence
of TIA Section 310(b)(9); provided, however, that there shall be
excluded from the operation of TIA Section 310(b)(1) any indenture or
indentures under which other securities of the Issuer are
outstanding if the requirements for such exclusion set forth in
TIA Section 310(b)(1) are met.
Section 6.12. Preferential Collection of Claims Against
Issuer. The Indenture Trustee shall comply with TIA Section 311(a),
excluding any creditor relationship listed in TIA Section 311(b). An
Indenture Trustee who has resigned or been removed shall be
subject to TIA Section 311(a) to the extent indicated.
Section 6.13. Representation and Warranty. The Indenture
Trustee represents and warrants to the Issuer, for the benefit of
the Noteholders, that this Indenture has been executed and
delivered by one of its Responsible Officers who is duly autho-
rized to execute and deliver such document in such capacity on
its behalf.
Section 6.14. Directions to Indenture Trustee. The Inden-
ture Trustee is hereby directed:
(a) to accept assignment of the Series 1997-1 Participation
Interest and hold the assets of the Indenture Trust Estate in
trust for the Noteholders;
(b) to authenticate the Notes on behalf of the Issuer sub-
stantially in the forms prescribed by Exhibits A-1, A-2, A-3 and
B in accordance with the terms of this Indenture; and
(c) to take all other actions as shall be required to be
taken by the terms of this Indenture.
Section 6.15. No Consent to Certain Acts of Seller. The
Seller shall not request that the Indenture Trustee consent to,
nor shall the Indenture Trustee consent to any action proposed to
be taken by the Seller pursuant to Article FOURTEENTH or Article
FIFTEENTH of the Seller's Articles of Incorporation.
<PAGE>
ARTICLE VII
Noteholders' Lists and Reports
Section 7.01. Issuer To Furnish Indenture Trustee Names and
Addresses of Noteholders. The Issuer will furnish or cause to be
furnished to the Indenture Trustee (a) not more than five days
after each Record Date, a list, in such form as the Indenture
Trustee may reasonably require, of the names and addresses of the
Holders of Notes as of such Record Date, (b) at such other times
as the Indenture Trustee may request in writing, within 30 days
after receipt by the Issuer of any such request, a list of
similar form and content as of a date not more than 10 days prior
to the time such list is furnished; provided, however, that so
long as the Indenture Trustee is the Note Registrar, no such list
shall be required to be furnished.
Section 7.02. Preservation of Information; Communications
to Noteholders. (a) The Indenture Trustee shall preserve, in as
current a form as is reasonably practicable, the names and
addresses of the Holders of Notes contained in the most recent
list furnished to the Indenture Trustee as provided in Section
7.01 and the names and addresses of Holders of Notes received by
the Indenture Trustee in its capacity as Note Registrar. The
Indenture Trustee may destroy any list furnished to it as pro-
vided in such Section 7.01 upon receipt of a new list so
furnished.
(b) Noteholders may communicate pursuant to TIA Section 312(b)
with other Noteholders with respect to their rights under this
Indenture or under the Notes.
(c) The Issuer, the Indenture Trustee and the Note Regis-
trar shall have the protection of TIA Section 312(c).
Section 7.03. Reports by Issuer. (a) The Issuer shall:
(i) file with the Indenture Trustee, within 15 days
after the Issuer is required to file the same with the
Commission, copies of the annual reports and of the informa-
tion, documents and other reports (or copies of such
portions of any of the foregoing as the Commission may from
time to time by rules and regulations prescribe) that the
Issuer may be required to file with the Commission pursuant
to Section 13 or 15(d) of the Exchange Act;
(ii) file with the Indenture Trustee, and the Commis-
sion in accordance with rules and regulations prescribed
from time to time by the Commission such additional infor-
mation, documents and reports with respect to compliance by
the Issuer with the conditions and covenants of this Inden-
ture as may be required from time to time by such rules and
regulations; and
(iii) supply to the Indenture Trustee (and the
Indenture Trustee shall transmit by mail to all Noteholders
described in TIA Section 313(c)) such summaries of any
information, documents and reports required to be filed by
the Issuer pursuant to clauses (i) and (ii) of this Section
7.03(a) and by rules and regulations prescribed from time to
time by the Commission.
(b) Unless the Issuer otherwise determines, the fiscal year
of the Issuer shall end on December 31 of each year.
Section 7.04. Reports by Indenture Trustee. If required by
TIA Section 313(a), within 60 days after each January 1 beginning with
January 1, 1998, the Indenture Trustee shall mail to each Note-
holder as required by TIA Section 313(c) a brief report dated as of
such date that complies with TIA Section 313(a). The Indenture Trustee
also shall comply with TIA Section 313(b).
A copy of each report at the time of its mailing to Note-
holders shall be filed by the Indenture Trustee with the Commis-
sion and each stock exchange, if any, on which the Notes are
listed. The Issuer shall notify the Indenture Trustee if and
when the Notes are listed on any stock exchange.
<PAGE>
ARTICLE VIII
Accounts, Disbursements and Releases
Section 8.01. Collection of Money. Except as otherwise
expressly provided herein, the Indenture Trustee may demand
payment or delivery of, and shall receive and collect, directly
and without intervention or assistance of any fiscal agent or
other intermediary, all money and other property payable to or
receivable by the Indenture Trustee pursuant to this Indenture.
The Indenture Trustee shall apply all such money received by it
as provided in this Indenture. Except as otherwise expressly
provided in this Indenture, if any default occurs in the making
of any payment or performance under any agreement or instrument
that is part of the Indenture Trust Estate, the Indenture Trustee
may take such action as may be appropriate to enforce such
payment or performance, including the institution and prosecution
of appropriate Proceedings. Any such action shall be without
prejudice to any right to claim a Default or Event of Default
under this Indenture and any right to proceed thereafter as
provided in Article V.
Section 8.02. Trust Accounts. (a) On or prior to the
Closing Date, the Issuer shall (i) cause the Indenture Trustee to
establish and maintain, in the name of the Indenture Trustee, for
the benefit of the Noteholders, the Payment Account as provided
in Section 3.01 of this Indenture and (ii) pursuant to Article V
of the Supplement for Series 1997-1, irrevocably direct the
Deposit Trustee to make all payments in respect of the Series
1997-1 Participation Interest into the Payment Account for so
long as the Notes are outstanding.
(b) All moneys deposited from time to time in the Payment
Account are for the benefit of the Noteholders.
On each Payment Date, the Indenture Trustee shall distribute
all amounts on deposit in the Payment Account (including any
investment income thereon) to Noteholders in respect of the Notes
and in its capacity as Certificate Paying Agent to
Certificateholders in the order of priority set forth in Section
3.05.
The Designated Certificateholder may direct the Indenture
Trustee to invest any funds in the Payment Account in Eligible
Investments maturing no later than each Payment Date and such
Eligible Investments shall not be sold or disposed of prior to
the maturity.
Section 8.03. Opinion of Counsel. The Indenture Trustee
shall receive at least seven days notice when requested by the
Issuer to take any action pursuant to Section 8.05(a), accom-
panied by copies of any instruments to be executed, and the
Indenture Trustee shall also require, as a condition to such
action, an Opinion of Counsel, in form and substance satisfactory
to the Indenture Trustee, stating the legal effect of any such
action, outlining the steps required to complete the same, and
concluding that all conditions precedent to the taking of such
action have been complied with and such action will not material-
ly and adversely impair the security for the Notes or the rights
of the Noteholders in contravention of the provisions of this
Indenture; provided, however, that such Opinion of Counsel shall
not be required to express an opinion as to the fair value of the
Indenture Trust Estate. Counsel rendering any such opinion may
rely, without independent investigation, on the accuracy and
validity of any certificate or other instrument delivered to the
Indenture Trustee in connection with any such action.
Section 8.04. Termination Upon Distribution to Noteholders.
This Indenture and the respective obligations and responsibili-
ties of the Issuer and the Indenture Trustee created hereby shall
terminate upon the distribution to Noteholders, Certificate-
holders, and the Indenture Trustee of all amounts required to be
distributed pursuant to Article III; provided, however, that in
no event shall the trust created hereby continue beyond the
expiration of 21 years from the death of the survivor of the
descendants of Joseph P. Kennedy, the late ambassador of the
United States to the Court of St. James, living on the date
hereof.
Section 8.05. Release of Indenture Trust Estate. (a)
Subject to the payment of its fees and expenses, the Indenture
Trustee may, and when required by the provisions of this
Indenture shall, execute instruments to release property from the
lien of this Indenture, or convey the Indenture Trustee's
interest in the same, in a manner and under circumstances that
are not inconsistent with the provisions of this Indenture. No
party relying upon an instrument executed by the Indenture
Trustee as provided in Article IV hereunder shall be bound to
ascertain the Indenture Trustee's authority, inquire into the
satisfaction of any conditions precedent, or see to the
application of any moneys.
(b) The Indenture Trustee shall, at such time as (i) there
are no Notes Outstanding and (ii) all sums due the Indenture
Trustee pursuant to this Indenture have been paid, release any
remaining portion of the Indenture Trust Estate that secured the
Notes from the lien of this Indenture. The Indenture Trustee
shall release property from the lien of this Indenture pursuant
to this Section 8.05 only upon receipt of an request from the
Issuer accompanied by an Officers' Certificate, an Opinion of
Counsel, and (if required by the TIA) Independent Certificates in
accordance with TIA Section 314(c) and 314(d)(1) meeting the applicable
requirements as described herein.
Section 8.06. Surrender of Notes Upon Final Payment. By
acceptance of any Note, the Holder thereof agrees to surrender
such Note to the Indenture Trustee promptly, prior to such Note-
holder's receipt of the final payment thereon.<PAGE>
ARTICLE IX
Supplemental Indentures
Section 9.01. Supplemental Indentures Without Consent of
Noteholders. (a) Without the consent of the Holders of any
Notes but with prior notice to the Rating Agencies, the Issuer
and the Indenture Trustee, when authorized by an Issuer Request,
at any time and from time to time, may enter into one or more
indentures supplemental hereto (which shall conform to the
provisions of the Trust Indenture Act as in force at the date of
the execution thereof), in form satisfactory to the Indenture
Trustee, for any of the following purposes:
(i) to correct or amplify the description of any
property at any time subject to the lien of this Indenture,
or better to assure, convey and confirm unto the Indenture
Trustee any property subject or required to be subjected to
the lien of this Indenture, or to subject to the lien of
this Indenture 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 Holders of the Notes, 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;
(v) to cure any ambiguity, to correct or supplement
any provision herein or in any supplemental indenture that
may be inconsistent with any other provision herein or in
any supplemental indenture or to make any other provisions
with respect to matters or questions arising under this
Indenture or in any supplemental indenture; provided that
such action shall not adversely affect the interests of the
Holders of the Notes;
(vi) to evidence and provide for the acceptance of
the appointment hereunder by a successor trustee with
respect to the Notes and to add to or change any of the
provisions of this Indenture as shall be necessary to
facilitate the administration of the trusts hereunder by
more than one trustee, pursuant to the requirements of
Article VI; or
(vii) to modify, eliminate or add to the provisions of
this Indenture to such extent as shall be necessary to
effect the qualification of this Indenture under the TIA or
under any similar federal statute hereafter enacted and to
add to this Indenture such other provisions as may be
expressly required by the TIA;
provided, however, that no such indenture supplements shall be
entered into unless the Indenture Trustee shall have received an
Opinion of Counsel that entering into such indenture supplement
will not have any material adverse tax consequences to the Note-
holders.
The Indenture Trustee is hereby authorized to join in the
execution of any such supplemental indenture and to make any
further appropriate agreements and stipulations that may be
therein contained.
(b) The Issuer and the Indenture Trustee, when authorized
by an Issuer Request, may, also without the consent of any of the
Holders of the Notes but with prior notice to the Rating
Agencies, enter into an indenture or indentures supplemental
hereto for the purpose of adding any provisions to, or changing
in any manner or eliminating any of the provisions of, this
Indenture or of modifying in any manner the rights of the Holders
of the Notes under this Indenture; provided, however, that such
action shall not, as evidenced by an Opinion of Counsel, (i)
adversely affect in any material respect the interests of any
Noteholder or (ii) cause the Issuer to be subject to an entity
level tax or be classified as a taxable mortgage pool within the
meaning of Section 7701(i) of the Code.
Section 9.02. Supplemental Indentures With Consent of Note-
holders. (a) The Issuer and the Indenture Trustee, when autho-
rized by an Issuer Request, also may, with prior notice to the
Rating Agencies and with the consent of the Holders of not less
than a majority of the Security Balances of each Class of Notes
affected thereby, or if all Classes are affected, by majority of
the aggregate of Security Balances of the Notes, by act of such
Holders delivered to the Issuer and the Indenture Trustee, enter
into an indenture or indentures supplemental hereto for the pur-
pose of adding any provisions to, or changing in any manner or
eliminating any of the provisions of, this Indenture or of
modifying in any manner the rights of the Holders of the Notes
under this Indenture; provided, however, except in the limited
circumstances described in paragraph (b) below, that no such
supplemental indenture shall, without the consent of the Holder
of each Note affected thereby:
(i) change the date of payment of any installment of
principal of or interest on any Note, or reduce the prin-
cipal amount thereof or the interest rate thereon, change
the provisions of this Indenture relating to the application
of collections on, or the proceeds of the sale of, the
Indenture Trust Estate to payment of principal of or inter-
est 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, or impair the right to institute suit
for the enforcement of the provisions of this Indenture
requiring the application of funds available therefor, as
provided in Article V, to the payment of any such amount due
on the Notes on or after the respective due dates thereof;
(ii) reduce the percentage of the Security Balances
of the Notes, the consent of the Holders of which is
required for any such supplemental indenture, or the consent
of the Holders of which is required for any waiver of
compliance with certain provisions of this Indenture or
certain defaults hereunder and their consequences provided
for in this Indenture;
(iii) modify or alter the provisions of the proviso to
the definition of the term "Outstanding" or modify or alter
the exception in the definition of the term "Holder";
(iv) reduce the percentage of the Security Balances
of the Notes required to direct the Indenture Trustee to
direct the Issuer to sell or liquidate the Indenture Trust
Estate pursuant to Section 5.03;
(v) modify any provision of this Section 9.02 except
to increase any percentage specified herein or to provide
that certain additional provisions of this Indenture or the
Basic Documents cannot be modified or waived without the
consent of the Holder of each Note affected thereby;
(vi) modify any of the provisions of this 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
Payment Date (including the calculation of any of the
individual components of such calculation); or
(vii) permit the creation of any lien ranking prior to
or on a parity with the lien of this Indenture with respect
to any part of the Indenture Trust Estate or, except as
otherwise permitted or contemplated herein, terminate the
lien of this Indenture on any property at any time subject
hereto or deprive the Holder of any Note of the security
provided by the lien of this Indenture; provided, that such
action shall not, as evidenced by an Opinion of Counsel,
cause the Issuer to be subject to an entity level tax or be
classified as a taxable mortgage pool within the meaning of
Section 7701(i) of the Code.
(b) At the time of any sale of any Class B Note to a Person
that is not an Affiliate of the Seller, the Class B Noteholders
and the Issuer may agree, without the consent of any Class A
Noteholder, to amend the per annum percentage that is added to
LIBOR to calculate the Note Rate related to the Class B Notes to
an amount not exceeding 0.875% per annum.
(c) The Indenture Trustee may in its discretion determine
whether or not any Notes would be affected by any supplemental
indenture and any such determination shall be conclusive upon the
Holders of all Notes, whether theretofore or thereafter authen-
ticated and delivered hereunder. The Indenture Trustee shall not
be liable for any such determination made in good faith.
It shall not be necessary for any Act of Noteholders under
this Section 9.02 to approve the particular form of any proposed
supplemental indenture, 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 any supplemental indenture pursuant to this Section
9.02, the Indenture Trustee shall mail to the Holders of the
Notes to which such amendment or supplemental indenture relates a
notice setting forth in general terms the substance of such
supplemental indenture. 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 such supplemental
indenture.
Section 9.03. Execution of Supplemental Indentures. In
executing, or permitting the additional trusts created by, any
supplemental indenture permitted by this Article IX or the modi-
fication thereby of the trusts created by this Indenture, the
Indenture Trustee shall be entitled to receive, and subject to
Sections 6.01 and 6.02, shall be fully protected in relying upon,
an Opinion of Counsel stating that the execution of such supple-
mental indenture is authorized or permitted by this Indenture.
The Indenture Trustee may, but shall not be obligated to, enter
into any such supplemental indenture that affects the Indenture
Trustee's own rights, duties, liabilities or immunities under
this Indenture or otherwise.
Section 9.04. Effect of Supplemental Indenture. Upon the
execution of any supplemental indenture pursuant to the pro-
visions hereof, this Indenture shall be and shall be deemed to be
modified and amended in accordance therewith with respect to the
Notes affected thereby, and the respective rights, limitations of
rights, obligations, duties, liabilities and immunities under
this Indenture of the Indenture Trustee, the Issuer and the
Holders of the Notes shall thereafter be determined, exercised
and enforced hereunder subject in all respects to such modifica-
tions and amendments, and all the terms and conditions of any
such supplemental indenture shall be and be deemed to be part of
the terms and conditions of this Indenture for any and all
purposes.
Section 9.05. Conformity with Trust Indenture Act. Every
amendment of this Indenture and every supplemental indenture
executed pursuant to this Article IX shall conform to the require-
ments of the Trust Indenture Act as then in effect so long as
this Indenture shall then be qualified under the Trust Indenture
Act.
Section 9.06. Reference in Notes to Supplemental Inden-
tures. Notes authenticated and delivered after the execution of
any supplemental indenture pursuant to this Article IX may, and
if required by the Indenture Trustee shall, bear a notation in
form approved by the Indenture Trustee as to any matter provided
for in such supplemental indenture. If the Issuer or the Inden-
ture Trustee shall so determine, new Notes so modified as to
conform, in the opinion of the Indenture Trustee and the Issuer,
to any such supplemental indenture may be prepared and executed
by the Issuer and authenticated and delivered by the Indenture
Trustee in exchange for Outstanding Notes.
<PAGE>
ARTICLE X
Miscellaneous
Section 10.01. Compliance Certificates and Opinions, etc.
(a) Upon any application or request by the Issuer to the Inden-
ture Trustee to take any action under any provision of this
Indenture, the Issuer shall furnish to the Indenture Trustee
(i) an Officer's Certificate stating that all conditions
precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with, (ii) an Opinion of
Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with and
(iii) (if required by the TIA) an Independent Certificate from a
firm of certified public accountants meeting the applicable
requirements of this Section 10.01, except that, in the case of
any such application or request as to which the furnishing of
such documents is specifically required by any provision of this
Indenture, no additional certificate or opinion need be
furnished.
Every certificate or opinion with respect to compliance with
a condition or covenant provided for in this Indenture shall
include:
(1) a statement that each signatory of such certif-
icate or opinion has read or has caused to be read such
covenant or condition and the definitions herein relating
thereto;
(2) a brief statement as to the nature and scope of
the examination or investigation upon which the statements
or opinions contained in such certificate or opinion are
based;
(3) a statement that, in the opinion of each such
signatory, such signatory has made such examination or
investigation as is necessary to enable such signatory to
express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(4) a statement as to whether, in the opinion of each
such signatory, such condition or covenant has been complied
with; and
(5) if the signer of such Certificate or Opinion is
required to be Independent, the Statement required by the
definition of the term "Independent".
(b) (i) Prior to the deposit of any Indenture Collateral
or other property or securities with the Indenture Trustee that
is to be made the basis for the release of any property or
securities subject to the lien of this Indenture, the Issuer
shall, in addition to any obligation imposed in Section 10.01(a)
or elsewhere in this Indenture, furnish to the Indenture Trustee
an Officer's Certificate certifying or stating the opinion of
each person signing such certificate as to the fair value (within
90 days of such deposit) to the Issuer of the Indenture
Collateral or other property or securities to be so deposited.
(ii) Whenever the Issuer is required to furnish to
the Indenture Trustee an Officer's Certificate certifying or
stating the opinion of any signer thereof as to the matters
described in clause (i) above, the Issuer shall also deliver to
the Indenture Trustee an Independent Certificate as to the same
matters, if the fair value to the Issuer of the securities to be
so deposited and of all other such securities made the basis of
any such withdrawal or release since the commencement of the
then-current fiscal year of the Issuer, as set forth in the
certificates delivered pursuant to clause (i) above and this
clause (ii), is 10% or more of the Security Balances of the
Notes, but such a certificate need not be furnished with respect
to any securities so deposited, if the fair value thereof to the
Issuer as set forth in the related Officer's Certificate is less
than $25,000 or less than one percent of the Security Balances of
the Notes.
(iii) Whenever any property or securities are to be
released from the lien of this Indenture, the Issuer shall also
furnish to the Indenture Trustee an Officer's Certificate
certifying or stating the opinion of each person signing such
certificate as to the fair value (within 90 days of such release)
of the property or securities proposed to be released and stating
that in the opinion of such person the proposed release will not
impair the security under this Indenture in contravention of the
provisions hereof.
(iv) Whenever the Issuer is required to furnish to
the Indenture Trustee an Officer's Certificate certifying or
stating the opinion of any signer thereof as to the matters
described in clause (iii) above, the Issuer shall also furnish to
the Indenture Trustee an Independent Certificate as to the same
matters if the fair value of the property or securities and of
all other property, other than property as contemplated by clause
(v) below or securities released from the lien of this Indenture
since the commencement of the then-current calendar year, as set
forth in the certificates required by clause (iii) above and this
clause (iv), equals 10% or more of the Security Balances of the
Notes, but such certificate need not be furnished in the case of
any release of property or securities if the fair value thereof
as set forth in the related Officer's Certificate is less than
$25,000 or less than one percent of the then Security Balances of
the Notes.
Section 10.02. Form of Documents Delivered to Indenture
Trustee. In any case where several matters are required to be
certified by, or covered by an opinion of, any specified Person,
it is not necessary that all such matters be certified by, or
covered by the opinion of, only one such Person, or that they be
so certified or covered by only one document, but one such Person
may certify or give an opinion with respect to some matters and
one or more other such Persons as to other matters, and any such
Person may certify or give an opinion as to such matters in one
or several documents.
Any certificate or opinion of an Authorized Officer of the
Issuer may be based, insofar as it relates to legal matters, upon
a certificate or opinion of, or representations by, counsel,
unless such officer knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion
is based are erroneous. Any such certificate of an Authorized
Officer or Opinion of Counsel may be based, insofar as it relates
to factual matters, upon a certificate or opinion of, or repre-
sentations by, an officer or officers of the Seller, the Issuer
or the Administrator, stating that the information with respect
to such factual matters is in the possession of the Seller, the
Issuer or the Administrator, unless such counsel knows, or in the
exercise of reasonable care should know, that the certificate or
opinion or representations with respect to such matters are
erroneous.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements,
opinions or other instruments under this Indenture, they may, but
need not, be consolidated and form one instrument.
Whenever in this Indenture, in connection with any applica-
tion or certificate or report to the Indenture Trustee, it is
provided that the Issuer shall deliver any document as a condi-
tion of the granting of such application, or as evidence of the
Issuer's compliance with any term hereof, it is intended that the
truth and accuracy, at the time of the granting of such applica-
tion or at the effective date of such certificate or report (as
the case may be), of the facts and opinions stated in such docu-
ment shall in such case be conditions precedent to the right of
the Issuer to have such application granted or to the sufficiency
of such certificate or report. The foregoing shall not, however,
be construed to affect the Indenture Trustee's right to rely upon
the truth and accuracy of any statement or opinion contained in
any such document as provided in Article VI.
Section 10.03. Acts of Noteholders. (a) Any request,
demand, authorization, direction, notice, consent, waiver or
other action provided by this Indenture to be given or taken by
Noteholders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Note-
holders in person or by agents duly appointed in writing; and
except as herein otherwise expressly provided such action shall
become effective when such instrument or instruments are deliver-
ed to the Indenture Trustee, and, where it is hereby expressly
required, to the Issuer. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein some-
times referred to as the "Act" of the Noteholders signing such
instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Indenture and (subject to
Section 6.01) conclusive in favor of the Indenture Trustee and
the Issuer, if made in the manner provided in this Section 10.03.
(b) The fact and date of the execution by any person of any
such instrument or writing may be proved in any manner that the
Indenture Trustee deems sufficient.
(c) The ownership of Notes shall be proved by the Note
Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Holder of any Notes shall
bind the Holder of every Note issued upon the registration
thereof or in exchange therefor or in lieu thereof, in respect of
anything done, omitted or suffered to be done by the Indenture
Trustee or the Issuer in reliance thereon, whether or not
notation of such action is made upon such Note.
Section 10.04. Notices, etc. to Indenture Trustee, Issuer,
and Rating Agencies. Any request, demand, authorization,
direction, notice, consent, waiver or Act of Noteholders or other
documents provided or permitted by this Indenture shall be in
writing and if such request, demand, authorization, direction,
notice, consent, waiver or act of Noteholders is to be made upon,
given or furnished to or filed with:
(i) the Indenture Trustee by any Noteholder or by
the Issuer shall be sufficient for every purpose hereunder
if made, given, furnished or filed in writing to or with the
Indenture Trustee at the Corporate Trust Office, or
(ii) the Issuer by the Indenture Trustee or by any
Noteholder shall be sufficient for every purpose hereunder
if in writing and mailed first-class, postage prepaid to the
Issuer addressed to: Household Consumer Loan Trust 1997-1,
in care of the Administrator, Owner Trustee and the Seller,
or at any other address previously furnished in writing to
the Indenture Trustee by the Issuer or the Administrator.
The Issuer shall promptly transmit any notice received by it
from the Noteholders to the Indenture Trustee.
Notices required to be given to the Rating Agencies by the
Issuer, the Indenture Trustee or the Owner Trustee shall be in
writing, personally delivered or mailed by certified mail, return
receipt requested, to (i) in the case of Moody's, at the follow-
ing address: Moody's Investors Service, Inc., ABS Monitoring
Department, 99 Church Street, New York, New York 10007, (ii) in
the case of Standard & Poor's, at the following address:
Standard & Poor's, 26 Broadway (15th Floor), New York, New York
10004, Attention of Asset Backed Surveillance Department, (iii)
in the case of Duff & Phelps, at the following address: Duff &
Phelps Credit Rating Co., 17 State Street, New York, New York,
10004, and (iv) in the case of Fitch at the following address:
Fitch Investors Service LP, One State Street Plaza, New York, New
York 10004, Attention: Giovanni Pini or as to each of the
foregoing, at such other address as shall be designated by
written notice to the other parties.
Section 10.05. Notices to Noteholders; Waiver. Where this
Indenture provides for notice to Noteholders of any event, such
notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and mailed, first-class, post-
age prepaid to each Noteholder affected by such event, at his
address as it appears on the Note Register, not later than the
latest date, and not earlier than the earliest date, prescribed
for the giving of such notice. In any case where notice to
Noteholders is given by mail, neither the failure to mail such
notice nor any defect in any notice so mailed to any particular
Noteholder shall affect the sufficiency of such notice with
respect to other Noteholders, and any notice that is mailed in
the manner herein provided shall conclusively be presumed to have
been duly given.
Where this Indenture provides for notice in any manner, such
notice may be waived in writing by any Person entitled to receive
such notice, either before or after the event, and such waiver
shall be the equivalent of such notice. Waivers of notice by
Noteholders shall be filed with the Indenture Trustee but such
filing shall not be a condition precedent to the validity of any
action taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service
as a result of a strike, work stoppage or similar activity, it
shall be impractical to mail notice of any event to Noteholders
when such notice is required to be given pursuant to any pro-
vision of this Indenture, then any manner of giving such notice
as shall be satisfactory to the Indenture Trustee shall be deemed
to be a sufficient giving of such notice.
Where this Indenture provides for notice to the Rating
Agencies, failure to give such notice shall not affect any other
rights or obligations created hereunder, and shall not under any
circumstance constitute an Event of Default.
Section 10.06. Alternate Payment and Notice Provisions.
Notwithstanding any provision of this Indenture or any of the
Notes to the contrary, the Issuer may enter into any agreement
with any Holder of a Note providing for a method of payment, or
notice by the Indenture Trustee or any Administrator to such
Holder, that is different from the methods provided for in this
Indenture for such payments or notices. The Issuer will furnish
to the Indenture Trustee a copy of each such agreement and the
Indenture Trustee will cause payments to be made and notices to
be given in accordance with such agreements.
Section 10.07. Conflict with Trust Indenture Act. If any
provision hereof limits, qualifies or conflicts with another
provision hereof that is required to be included in this Inden-
ture by any of the provisions of the Trust Indenture Act, such
required provision shall control.
The provisions of TIA Sections 310 through 317 that impose duties
on any person (including the provisions automatically deemed
included herein unless expressly excluded by this Indenture) are
a part of and govern this Indenture, whether or not physically
contained herein.
Section 10.08. Effect of Headings. The Article and Section
headings herein are for convenience only and shall not affect the
construction hereof.
Section 10.09. Successors and Assigns. All covenants and
agreements in this Indenture and the Notes by the Issuer shall
bind its successors and assigns, whether so expressed or not.
All agreements of the Indenture Trustee in this Indenture shall
bind its successors, co-trustees and agents.
Section 10.10. Separability. In case any provision in this
Indenture or in the Notes shall be invalid, illegal or unenforce-
able, the validity, legality, and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
Section 10.11. Benefits of Indenture. Nothing in this
Indenture or in the Notes, express or implied, shall give to any
Person, other than the parties hereto and their successors
hereunder, and the Noteholders, and any other party secured
hereunder, and any other Person with an ownership interest in any
part of the Indenture Trust Estate, any benefit or any legal or
equitable right, remedy or claim under this Indenture.
Section 10.12. GOVERNING LAW. THIS 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 SHALL
BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 10.13. Counterparts. This Indenture may be
executed in any number of counterparts, each of which so executed
shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
Section 10.14. Recording of Indenture. If this Indenture
is subject to recording in any appropriate public recording
offices, such recording is to be effected by the Issuer and at
its expense accompanied by an Opinion of Counsel (which may be
counsel to the Indenture Trustee or any other counsel reasonably
acceptable to the Indenture Trustee) to the effect that such
recording is necessary either for the protection of the Note-
holders or any other Person secured hereunder or for the enforce-
ment of any right or remedy granted to the Indenture Trustee
under this Indenture.
Section 10.15. Issuer Obligation. No recourse may be
taken, directly or indirectly, with respect to the obligations of
the Issuer, the Seller, the Owner Trustee or the Indenture
Trustee on the Notes or under this Indenture or any certificate
or other writing delivered in connection herewith or therewith,
against (i) the Indenture Trustee or the Owner Trustee in its
individual capacity, (ii) the Seller or any other owner of a
beneficial interest in the Issuer or the Seller or (iii) any
partner, owner, beneficiary, agent, officer, director, employee
or agent of the Indenture Trustee or the Owner Trustee in its
individual capacity, any holder of a beneficial interest in the
Issuer, the Owner Trustee or the Indenture Trustee or of any
successor or assign of 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. For all purposes of this Indenture, in the
performance of any duties or obligations of the Issuer hereunder,
the Owner Trustee shall be subject to, and entitled to the
benefits of, the terms and provisions of Article VI, VII and VIII
of the Trust Agreement.
Section 10.16. No Petition. The Indenture Trustee, by
entering into this Indenture, and each Noteholder, by accepting a
Note, hereby covenant and agree that they will not at any time
institute against the Seller, the Issuer, the Administrator or
the Servicer, or join in any institution against the Seller or
the Issuer of, any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or other proceedings under
any United States federal or state bankruptcy or similar law in
connection with any obligations relating to the Notes, this
Indenture or any of the Basic Documents.
Section 10.17. Inspection. The Issuer agrees that, on
reasonable prior notice, it will permit any representative of the
Indenture Trustee, during the Issuer's normal business hours, to
examine all the books of account, records, reports and other
papers of the Issuer, to make copies and extracts therefrom, to
cause such books to be audited by Independent certified public
accountants, and to discuss the Issuer's affairs, finances and
accounts with the Issuer's officers, employees, and Independent
certified public accountants, all at such reasonable times and as
often as may be reasonably requested. The Indenture Trustee
shall and shall cause its representatives to hold in confidence
all such information except to the extent disclosure may be
required by law (and all reasonable applications for confidential
treatment are unavailing) and except to the extent that the
Indenture Trustee may reasonably determine that such disclosure
is consistent with its obligations hereunder.
Section 10.18. Authority of the Administrator. Each of the
parties to this Indenture acknowledges that the Issuer has
appointed the Administrator to act as its agent to perform the
duties and obligations of the Issuer hereunder. Unless otherwise
instructed by the Owner Trustee, copies of all notices, requests,
demands and other documents to be delivered to the Issuer or the
Owner Trustee pursuant to the terms hereof also shall be
delivered to the Administrator. Unless otherwise instructed by
the Owner Trustee, all notices, requests, demands and other
documents to be executed or delivered, and any action to be
taken, by the Issuer pursuant to the terms hereof may be
executed, delivered and/or taken by the Administrator pursuant to
the Administration Agreement.<PAGE>
IN WITNESS WHEREOF, the Issuer and the Indenture Trustee
have caused their names to be signed hereto by their respective
officers thereunto duly authorized, all as of the day and year
first above written.
HOUSEHOLD CONSUMER LOAN TRUST 1997-1,
as Issuer
By: CHASE MANHATTAN BANK DELAWARE,
not in its individual capacity
but solely as Owner Trustee
By:___________________________________
Name: John J. Cashin
Title: Senior Trust Officer
THE BANK OF NEW YORK,
as Indenture Trustee, as Paying Agent
and as Note Registrar
By:___________________________________
Name:
Title:
THE BANK OF NEW YORK,
hereby accepts the appointment
as Certificate Paying Agent
pursuant to Section 3.03 hereof
and as Certificate Registrar
pursuant to Section 4.02 hereof.
By:______________________________
Name:
Title:<PAGE>
STATE OF DELAWARE )
) ss.:
COUNTY OF )
On this _______ day of March 1997, before me personally ap-
peared John Cashin, to me known, who being by me duly sworn, did
depose and say, that he resides at ____________________________,
____________________, that he is the ________________________ of
Chase Manhattan Bank Delaware, as Owner Trustee, one of the
corporations described in and which executed the above instru-
ment; that he knows the seal of said corporation; that the seal
affixed to said instrument is such corporate seal; that it was so
affixed by order of the Board of Directors of said corporation;
and that he signed his name thereto by like order.
___________________________
Notary Public
[NOTARIAL SEAL]
<PAGE>
STATE OF ILLINOIS )
) ss.:
COUNTY OF COOK )
On this _______ day of March 1997, before me personally ap-
peared to me known, who
being by me duly sworn, did depose and say, that he resides at
, that he is the
of The Bank of New York, as
Indenture Trustee, one of the corporations described in and which
executed the above instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such
corporate seal; that it was so affixed by order of the Board of
Directors of said corporation; and that he signed his/her name
thereto by like order.
___________________________
Notary Public
[NOTARIAL SEAL]
STATE OF ILLINOIS )
) ss.:
COUNTY OF COOK )
On this _______ day of March 1997, before me personally ap-
peared to me known, who
being by me duly sworn, did depose and say, that he resides at
, that he is the
of The Bank of New York, as
Indenture Trustee, one of the corporations described in and which
executed the above instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such
corporate seal; that it was so affixed by order of the Board of
Directors of said corporation; and that he signed his/her name
thereto by like order.
___________________________
Notary Public
[NOTARIAL SEAL]
<PAGE>
Exhibit A-1
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 regis-
tered 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 CONSUMER LOAN TRUST 1997-1
Household Consumer Loan Asset Backed Notes, Series 1997-1
Class: Class A-1
Registered Principal Amount: $[ ]
Percentage Interest: [ ]%
Note Rate: Floating
No.
CUSIP No.
Household Consumer Loan Trust 1997-1, a business trust
duly 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 [ ]
DOLLARS, payable on each Payment Date in an amount equal to the
Percentage Interest specified above of the aggregate amount, if
any, payable from the Payment Account in respect of principal on
the Class A-1 Notes pursuant Section 3.05 of the Indenture dated as
of March 1, 1997 (the "Indenture") between the Issuer and The Bank
of New York, as Indenture Trustee (the "Indenture Trustee");
provided, however, that the entire unpaid principal amount of this
Note shall be due and payable on the March 2007 Payment Date.
Capitalized terms used but not defined herein are defined in
Article I of the Indenture, which also contains rules as to
construction that shall be applicable herein.
The Issuer will pay interest on this Note on each Payment
Date at a rate per annum equal to LIBOR plus 0.125% on the
principal amount of this Class A-1 Note on the preceding Payment
Date (after giving effect to all payments of principal made on such
preceding Payment Date); provided, however, that in no event shall
the Note Rate on this Note with respect to any Interest Period
exceed 12.5% for such Interest Period. LIBOR for each applicable
Interest Period will be determined on the second LIBOR Business Day
prior to the first day of such Interest Period or in the case of
the first Interest Period, two days prior to the Closing Date as
set forth in the Indenture. All determinations of LIBOR by the
Indenture Trustee shall, in the absence of manifest error, be
conclusive for all purposes, and each holder of this Class A-1
Note, by accepting this Class A-1 Note, agrees to be bound by such
determination. Interest on this Class A-1 Note will accrue for
each Payment Date from the most recent Payment Date on which
interest has been paid (in the case of the first Payment Date, from
the Closing Date) to but excluding such Payment Date. Interest
will be computed on the basis of the actual number of days in each
Interest Period and a year assumed to consist of 360 days.
Principal of and interest on this Class A-1 Note shall be paid in
the manner specified on the reverse hereof.
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.
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.
<PAGE>
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the
Issuer and not in its individual capacity, has caused this Note to
be duly executed.
HOUSEHOLD CONSUMER LOAN TRUST 1997-1
By CHASE MANHATTAN BANK DELAWARE,
not in its individual capacity
but solely as Owner Trustee
By
Authorized Signatory
Certificate of Authentication
This is one of the Class A-1 Notes referred to in the within men-
tioned Indenture.
THE BANK OF NEW YORK,
not in its individual capacity but
solely as Indenture Trustee
Dated: March ___, 1997
By
Authorized Signatory
<PAGE>
[REVERSE OF NOTE]
This Class A-1 Note is one of a duly authorized issue of
Class A-1 Notes of the Issuer, designated as its Household Consumer
Loan Asset Backed Notes, Series 1997-1 (herein called the "Class
A-1 Notes"), all issued 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.
The Class A-1 Notes and the Class A-2 Notes, the Class
A-3 Notes and the Class B Notes, also issued under the Indenture
(collectively, the "Notes") are and will be secured by the
collateral pledged as security therefor as provided in the
Indenture.
Principal of and interest on this Class A-1 Note will be
payable on each Payment Date, commencing on April 15, 1997, as
described in the Indenture. "Payment Date" means the fifteenth day
of each month, or, if any such day is not a Business Day, then the
next Business Day.
The entire unpaid principal amount of this Class A-1 Note
shall be due and payable in full on the Payment Date in March 2007
pursuant to the Indenture. Notwithstanding the foregoing, if an
Event of Default shall have occurred and be continuing, then the
Indenture Trustee or the holders of Notes representing not less
than a majority of the Security Balances of all the Notes may
declare the Notes to be immediately due and payable in the manner
provided in Section 5.01 of the Indenture. On each Payment Date,
principal payments on the Class A-1 Notes shall be payable in the
amounts as provided in Section 3.05 of the Indenture.
Payments of interest on this Class A-1 Note due and
payable on each Payment 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 Registered Holder of this Note 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 Depository 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 effected by any payments made on any Payment Date shall 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
Payment Date, then the Indenture Trustee, in the name of and on
behalf of the Issuer, will notify the Person who was the Registered
Holder hereof as of the Record Date preceding such Payment Date by
notice mailed or transmitted by facsimile prior to such Payment
Date, and the amount then due and payable shall be payable only
upon presentation and surrender of this Note at the address
specified in such notice of final payment.
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 Corporate Trust Office, 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 such holder's attorney duly authorized in writing,
with such signature guaranteed by an "eligible guarantor institu-
tion" meeting the requirements of the Note Registrar, which
requirements include membership or participation in the Securities
Transfer Agent's Medallion Program ("STAMP") or such other
"signature guarantee program" as may be determined by the Note
Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended,
and thereupon one or more new Notes in 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 Note Registrar shall require payment of a sum sufficient to
cover any tax or governmental charge that may be imposed in
connection with any registration of transfer or exchange of this
Note.
Each holder or Beneficial Owner of a Note, by acceptance
of a Note or, in the case of a Beneficial Owner of a Note, a
beneficial interest in a Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer, the Owner Trustee, the Administrator,
the Seller, the Servicer or the Indenture Trustee on the Notes or
under the Indenture or any certificate or other writing delivered
in connection therewith, against (i) 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 Indenture
Trustee or the Owner Trustee in its individual capacity, any holder
of a beneficial interest in the Issuer, the Owner Trustee, the
Administrator or the Indenture Trustee or of any successor or
assign of 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.
Each holder or Beneficial Owner of a Note, by acceptance
of a Note or, in the case of a Beneficial Owner of a Note, a
beneficial interest in a Note, covenants and agrees by accepting
the benefits of the Indenture that such holder or Beneficial Owner
of a Note will not at any time institute against the Seller, the
Administrator, the Servicer or the Issuer, or join in any institu-
tion against the Seller, the Administrator, the Servicer or the
Issuer of, any bankruptcy, reorganization, arrangement, insolvency
or liquidation proceedings under any United States federal or state
bankruptcy or similar law in connection with any obligations
relating to the Notes, the Indenture or the Basic Documents.
The Issuer has entered into the Indenture and this Note
is issued with the intention that, for federal, state and local
income, single business and franchise tax purposes, the Notes will
qualify as indebtedness of the Issuer. Each holder of a Note, by
acceptance of a Note (and each Beneficial Owner of a Note by
acceptance of a beneficial interest in a Note), agrees to treat the
Notes for federal, state and local income, single business and
franchise tax purposes as indebtedness of the Issuer.
Prior to the due presentment for registration of transfer
of this Note, the Issuer, the Indenture Trustee and any agent of
the Issuer or the Indenture Trustee 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 or 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 holders of Notes representing a majority of the
Security Balances of all Notes at the time Outstanding. The
Indenture also contains provisions permitting the holders of Notes
representing specified percentages of the Security Balances of all
Notes, on behalf of the holders of all the Notes, to waive
compliance by the Issuer with certain provisions of the Indenture
and certain past defaults under the Indenture and their consequenc-
es. Any such consent or waiver by the holder of this Note shall be
conclusive and binding upon such holder and 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 notation of such consent or waiver is made upon this Note. The
Indenture also permits the Indenture Trustee to amend or waive
certain terms and conditions set forth in the Indenture without the
consent of holders of the Notes issued thereunder.
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 holders of Notes 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 Basic Documents, none of Chase
Manhattan Bank Delaware in its individual capacity, The Bank of New
York in its individual capacity, any owner of a beneficial interest
in the Issuer, or 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 this Note or
performance of, or omission to perform, any of the covenants,
obligations or indemnifications contained in the Indenture. The
holder of this Note by its acceptance hereof agrees that, except as
expressly provided in 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.
<PAGE>
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: */
Signature Guaranteed:
*/
________________________
*/ NOTICE: The signature to this assignment must correspond with
the name of the registered owner as it
appears on the face of the within Note in every particular,
without alteration, enlargement or any change
whatever. Such signature must be guaranteed by an "eligible
guarantor institution" meeting the
requirements of the Note Registrar, which requirements include
membership or participation in 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
Securities Exchange Act of 1934, as amended.
<PAGE>
Exhibit A-2
Unless this Note is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to
the Issuer or its agent for registration of transfer, exchange or
payment, and any Note issued is registered in the name of Cede &
Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative
of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the regis-
tered 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.
THIS CLASS A-2 NOTE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE
CLASS A-1 NOTES AS DESCRIBED IN THE INDENTURE REFERRED TO BELOW.
HOUSEHOLD CONSUMER LOAN TRUST 1997-1
Household Consumer Loan Asset Backed Notes, Series 1997-1
Class: Class A-2
Registered Principal Amount: $[ ]
Percentage Interest: [ ]%
Note Rate: Floating
No.
CUSIP No.
Household Consumer Loan Trust 1997-1, a business trust
duly 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 [ ]
DOLLARS, payable on each Payment Date in an amount equal to the
Percentage Interest specified above of the aggregate amount, if
any, payable from the Payment Account in respect of principal on
the Class A-2 Notes pursuant Section 3.05 of the Indenture dated as
of March 1, 1997 (the "Indenture") between the Issuer and The Bank
of New York, as Indenture Trustee (the "Indenture Trustee");
provided, however, that the entire unpaid principal amount of this
Note shall be due and payable on the March 2007 Payment Date.
Capitalized terms used but not defined herein are defined in
Article I of the Indenture, which also contains rules as to
construction that shall be applicable herein.
The Issuer will pay interest on this Note on each Payment
Date at a rate per annum equal to LIBOR plus 0.250% on the
principal amount of this Class A-2 Note on the preceding Payment
Date (after giving effect to all payments of principal made on such
preceding Payment Date); provided, however, that in no event shall
the Note Rate on this Note with respect to any Interest Period
exceed 14.0% for such Interest Period. LIBOR for each applicable
Interest Period will be determined on the second LIBOR Business Day
prior to the first day of such Interest Period or in the case of
the first Interest Period, two days prior to the Closing Date as
set forth in the Indenture. All determinations of LIBOR by the
Indenture Trustee shall, in the absence of manifest error, be
conclusive for all purposes, and each holder of this Class A-2
Note, by accepting this Class A-2 Note, agrees to be bound by such
determination. Interest on this Class A-2 Note will accrue for
each Payment Date from the most recent Payment Date on which
interest has been paid (in the case of the first Payment Date, from
the Closing Date) to but excluding such Payment Date. Interest
will be computed on the basis of the actual number of days in each
Interest Period and a year assumed to consist of 360 days.
Principal of and interest on this Class A-2 Note shall be paid in
the manner specified on the reverse hereof.
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.
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.
<PAGE>
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the
Issuer and not in its individual capacity, has caused this Note to
be duly executed.
HOUSEHOLD CONSUMER LOAN TRUST 1997-1
By CHASE MANHATTAN BANK DELAWARE,
not in its individual capacity
but solely as Owner Trustee
By
Authorized Signatory
Certificate of Authentication
This is one of the Class A-2 Notes referred to in the within men-
tioned Indenture.
THE BANK OF NEW YORK,
not in its individual capacity but
solely as Indenture Trustee
Dated: March ___, 1997
By
Authorized Signatory
<PAGE>
[REVERSE OF NOTE]
This Class A-2 Note is one of a duly authorized issue of
Class A-2 Notes of the Issuer, designated as its Household Consumer
Loan Asset Backed Notes, Series 1997-1 (herein called the "Class
A-2 Notes"), all issued 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.
The Class A-2 Notes and the Class A-1 Notes, the Class
A-3 Notes and the Class B Notes, also issued under the Indenture
(collectively, the "Notes") are and will be secured by the
collateral pledged as security therefor as provided in the
Indenture.
Principal of and interest on this Class A-2 Note will be
payable on each Payment Date, commencing on April 15, 1997, as
described in the Indenture. "Payment Date" means the fifteenth day
of each month, or, if any such day is not a Business Day, then the
next Business Day.
The entire unpaid principal amount of this Class A-2 Note
shall be due and payable in full on the Payment Date in March 2007
pursuant to the Indenture. Notwithstanding the foregoing, if an
Event of Default shall have occurred and be continuing, then the
Indenture Trustee or the holders of Notes representing not less
than a majority of the Security Balances of all the Notes may
declare the Notes to be immediately due and payable in the manner
provided in Section 5.01 of the Indenture. On each Payment Date,
principal payments on the Class A-2 Notes shall be payable in the
amounts as provided in Section 3.05 of the Indenture.
Payments of interest on this Class A-2 Note due and
payable on each Payment 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 Registered Holder of this Note 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 Depository 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 effected by any payments made on any Payment Date shall 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
Payment Date, then the Indenture Trustee, in the name of and on
behalf of the Issuer, will notify the Person who was the Registered
Holder hereof as of the Record Date preceding such Payment Date by
notice mailed or transmitted by facsimile prior to such Payment
Date, and the amount then due and payable shall be payable only
upon presentation and surrender of this Note at the address
specified in such notice of final payment.
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 Corporate Trust Office, 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 such holder's attorney duly authorized in writing,
with such signature guaranteed by an "eligible guarantor institu-
tion" meeting the requirements of the Note Registrar, which
requirements include membership or participation in the Securities
Transfer Agent's Medallion Program ("STAMP") or such other
"signature guarantee program" as may be determined by the Note
Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended,
and thereupon one or more new Notes in 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 Note Registrar shall require payment of a sum sufficient to
cover any tax or governmental charge that may be imposed in
connection with any registration of transfer or exchange of this
Note.
Each holder or Beneficial Owner of a Note, by acceptance
of a Note or, in the case of a Beneficial Owner of a Note, a
beneficial interest in a Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer, the Owner Trustee, the Administrator,
the Seller, the Servicer or the Indenture Trustee on the Notes or
under the Indenture or any certificate or other writing delivered
in connection therewith, against (i) 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 Indenture
Trustee or the Owner Trustee in its individual capacity, any holder
of a beneficial interest in the Issuer, the Owner Trustee, the
Administrator or the Indenture Trustee or of any successor or
assign of 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.
Each holder or Beneficial Owner of a Note, by acceptance
of a Note or, in the case of a Beneficial Owner of a Note, a
beneficial interest in a Note, covenants and agrees by accepting
the benefits of the Indenture that such holder or Beneficial Owner
of a Note will not at any time institute against the Seller, the
Administrator, the Servicer or the Issuer, or join in any institu-
tion against the Seller, the Administrator, the Servicer or the
Issuer of, any bankruptcy, reorganization, arrangement, insolvency
or liquidation proceedings under any United States federal or state
bankruptcy or similar law in connection with any obligations
relating to the Notes, the Indenture or the Basic Documents.
The Issuer has entered into the Indenture and this Note
is issued with the intention that, for federal, state and local
income, single business and franchise tax purposes, the Notes will
qualify as indebtedness of the Issuer. Each holder of a Note, by
acceptance of a Note (and each Beneficial Owner of a Note by
acceptance of a beneficial interest in a Note), agrees to treat the
Notes for federal, state and local income, single business and
franchise tax purposes as indebtedness of the Issuer.
Prior to the due presentment for registration of transfer
of this Note, the Issuer, the Indenture Trustee and any agent of
the Issuer or the Indenture Trustee 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 or 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 holders of Notes representing a majority of the
Security Balances of all Notes at the time Outstanding. The
Indenture also contains provisions permitting the holders of Notes
representing specified percentages of the Security Balances of all
Notes, on behalf of the holders of all the Notes, to waive
compliance by the Issuer with certain provisions of the Indenture
and certain past defaults under the Indenture and their consequenc-
es. Any such consent or waiver by the holder of this Note shall be
conclusive and binding upon such holder and 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 notation of such consent or waiver is made upon this Note. The
Indenture also permits the Indenture Trustee to amend or waive
certain terms and conditions set forth in the Indenture without the
consent of holders of the Notes issued thereunder.
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 holders of Notes 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 Basic Documents, none of Chase
Manhattan Bank Delaware in its individual capacity, The Bank of New
York in its individual capacity, any owner of a beneficial interest
in the Issuer, or 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 this Note or
performance of, or omission to perform, any of the covenants,
obligations or indemnifications contained in the Indenture. The
holder of this Note by its acceptance hereof agrees that, except as
expressly provided in 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.
<PAGE>
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: */
Signature Guaranteed:
*/
________________________
*/ NOTICE: The signature to this assignment must correspond with
the name of the registered owner as it
appears on the face of the within Note in every particular,
without alteration, enlargement or any change
whatever. Such signature must be guaranteed by an "eligible
guarantor institution" meeting the
requirements of the Note Registrar, which requirements include
membership or participation in 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
Securities Exchange Act of 1934, as amended.
<PAGE>
Exhibit A-3
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 regis-
tered 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.
THIS CLASS A-3 NOTE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE
CLASS A-1 AND CLASS A-2 NOTES AS DESCRIBED IN THE INDENTURE
REFERRED TO BELOW.
HOUSEHOLD CONSUMER LOAN TRUST 1997-1
Household Consumer Loan Asset Backed Notes, Series 1997-1
Class: Class A-3
Registered Principal Amount: $[ ]
Percentage Interest: [ ]%
Note Rate: Floating
No.
CUSIP No.
Household Consumer Loan Trust 1997-1, a business trust
duly 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 [ ]
DOLLARS, payable on each Payment Date in an amount equal to the
Percentage Interest specified above of the aggregate amount, if
any, payable from the Payment Account in respect of principal on
the Class A-3 Notes pursuant Section 3.05 of the Indenture dated as
of March 1, 1997 (the "Indenture") between the Issuer and The Bank
of New York, as Indenture Trustee (the "Indenture Trustee");
provided, however, that the entire unpaid principal amount of this
Note shall be due and payable on the March 2007 Payment Date.
Capitalized terms used but not defined herein are defined in
Article I of the Indenture, which also contains rules as to
construction that shall be applicable herein.
The Issuer will pay interest on this Note on each Payment
Date at a rate per annum equal to LIBOR plus 0.350% on the
principal amount of this Class A-3 Note on the preceding Payment
Date (after giving effect to all payments of principal made on such
preceding Payment Date); provided, however, that in no event shall
the Note Rate on this Note with respect to any Interest Period
exceed 14.0% for such Interest Period. LIBOR for each applicable
Interest Period will be determined on the second LIBOR Business Day
prior to the first day of such Interest Period or in the case of
the first Interest Period, two days prior to the Closing Date as
set forth in the Indenture. All determinations of LIBOR by the
Indenture Trustee shall, in the absence of manifest error, be
conclusive for all purposes, and each holder of this Class A-3
Note, by accepting this Class A-3 Note, agrees to be bound by such
determination. Interest on this Class A-3 Note will accrue for
each Payment Date from the most recent Payment Date on which
interest has been paid (in the case of the first Payment Date, from
the Closing Date) to but excluding such Payment Date. Interest
will be computed on the basis of the actual number of days in each
Interest Period and a year assumed to consist of 360 days.
Principal of and interest on this Class A-3 Note shall be paid in
the manner specified on the reverse hereof.
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.
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.
<PAGE>
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the
Issuer and not in its individual capacity, has caused this Note to
be duly executed.
HOUSEHOLD CONSUMER LOAN TRUST 1997-1
By CHASE MANHATTAN BANK DELAWARE,
not in its individual capacity
but solely as Owner Trustee
By
Authorized Signatory
Certificate of Authentication
This is one of the Class A-3 Notes referred to in the within men-
tioned Indenture.
THE BANK OF NEW YORK,
not in its individual capacity but
solely as Indenture Trustee
Dated: March ___, 1997
By
Authorized Signatory
<PAGE>
[REVERSE OF NOTE]
This Class A-3 Note is one of a duly authorized issue of
Class A-3 Notes of the Issuer, designated as its Household Consumer
Loan Asset Backed Notes, Series 1997-1 (herein called the "Class
A-3 Notes"), all issued 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.
The Class A-3 Notes and the Class A-1 Notes, the Class
A-2 Notes and the Class B Notes, also issued under the Indenture
(collectively, the "Notes") are and will be secured by the
collateral pledged as security therefor as provided in the
Indenture.
Principal of and interest on this Class A-3 Note will be
payable on each Payment Date, commencing on April 15, 1997, as
described in the Indenture. "Payment Date" means the fifteenth day
of each month, or, if any such day is not a Business Day, then the
next Business Day.
The entire unpaid principal amount of this Class A-3 Note
shall be due and payable in full on the Payment Date in March 2007
pursuant to the Indenture. Notwithstanding the foregoing, if an
Event of Default shall have occurred and be continuing, then the
Indenture Trustee or the holders of Notes representing not less
than a majority of the Security Balances of all the Notes may
declare the Notes to be immediately due and payable in the manner
provided in Section 5.01 of the Indenture. On each Payment Date,
principal payments on the Class A-3 Notes shall be payable in the
amounts as provided in Section 3.05 of the Indenture.
Payments of interest on this Class A-3 Note due and
payable on each Payment 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 Registered Holder of this Note 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 Depository 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 effected by any payments made on any Payment Date shall 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
Payment Date, then the Indenture Trustee, in the name of and on
behalf of the Issuer, will notify the Person who was the Registered
Holder hereof as of the Record Date preceding such Payment Date by
notice mailed or transmitted by facsimile prior to such Payment
Date, and the amount then due and payable shall be payable only
upon presentation and surrender of this Note at the address
specified in such notice of final payment.
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 Corporate Trust Office, 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 such holder's attorney duly authorized in writing,
with such signature guaranteed by an "eligible guarantor institu-
tion" meeting the requirements of the Note Registrar, which
requirements include membership or participation in the Securities
Transfer Agent's Medallion Program ("STAMP") or such other
"signature guarantee program" as may be determined by the Note
Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended,
and thereupon one or more new Notes in 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 Note Registrar shall require payment of a sum sufficient to
cover any tax or governmental charge that may be imposed in
connection with any registration of transfer or exchange of this
Note.
Each holder or Beneficial Owner of a Note, by acceptance
of a Note or, in the case of a Beneficial Owner of a Note, a
beneficial interest in a Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer, the Owner Trustee, the Administrator,
the Seller, the Servicer or the Indenture Trustee on the Notes or
under the Indenture or any certificate or other writing delivered
in connection therewith, against (i) 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 Indenture
Trustee or the Owner Trustee in its individual capacity, any holder
of a beneficial interest in the Issuer, the Owner Trustee, the
Administrator or the Indenture Trustee or of any successor or
assign of 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.
Each holder or Beneficial Owner of a Note, by acceptance
of a Note or, in the case of a Beneficial Owner of a Note, a
beneficial interest in a Note, covenants and agrees by accepting
the benefits of the Indenture that such holder or Beneficial Owner
of a Note will not at any time institute against the Seller, the
Administrator, the Servicer or the Issuer, or join in any institu-
tion against the Seller, the Administrator, the Servicer or the
Issuer of, any bankruptcy, reorganization, arrangement, insolvency
or liquidation proceedings under any United States federal or state
bankruptcy or similar law in connection with any obligations
relating to the Notes, the Indenture or the Basic Documents.
The Issuer has entered into the Indenture and this Note
is issued with the intention that, for federal, state and local
income, single business and franchise tax purposes, the Notes will
qualify as indebtedness of the Issuer. Each holder of a Note, by
acceptance of a Note (and each Beneficial Owner of a Note by
acceptance of a beneficial interest in a Note), agrees to treat the
Notes for federal, state and local income, single business and
franchise tax purposes as indebtedness of the Issuer.
Prior to the due presentment for registration of transfer
of this Note, the Issuer, the Indenture Trustee and any agent of
the Issuer or the Indenture Trustee 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 or 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 holders of Notes representing a majority of the
Security Balances of all Notes at the time Outstanding. The
Indenture also contains provisions permitting the holders of Notes
representing specified percentages of the Security Balances of all
Notes, on behalf of the holders of all the Notes, to waive
compliance by the Issuer with certain provisions of the Indenture
and certain past defaults under the Indenture and their consequenc-
es. Any such consent or waiver by the holder of this Note shall be
conclusive and binding upon such holder and 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 notation of such consent or waiver is made upon this Note. The
Indenture also permits the Indenture Trustee to amend or waive
certain terms and conditions set forth in the Indenture without the
consent of holders of the Notes issued thereunder.
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 holders of Notes 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 Basic Documents, none of Chase
Manhattan Bank Delaware in its individual capacity, The Bank of New
York in its individual capacity, any owner of a beneficial interest
in the Issuer, or 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 this Note or
performance of, or omission to perform, any of the covenants,
obligations or indemnifications contained in the Indenture. The
holder of this Note by its acceptance hereof agrees that, except as
expressly provided in 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.
<PAGE>
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: */
Signature Guaranteed:
*/
________________________
*/ NOTICE: The signature to this assignment must correspond with
the name of the registered owner as it
appears on the face of the within Note in every particular,
without alteration, enlargement or any change
whatever. Such signature must be guaranteed by an "eligible
guarantor institution" meeting the
requirements of the Note Registrar, which requirements include
membership or participation in 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
Securities Exchange Act of 1934, as amended.
<PAGE>
Exhibit B
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 regis-
tered 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.
THIS CLASS B NOTE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS
A-1, CLASS A-2 AND CLASS A-3 NOTES AS DESCRIBED IN THE INDENTURE
REFERRED TO BELOW.
HOUSEHOLD CONSUMER LOAN TRUST 1997-1
Household Consumer Loan Asset Backed Notes, Series 1997-1
Class: Class B
Registered Principal Amount: $[ ]
Percentage Interest: [ ]%
Note Rate: Floating
No.
CUSIP No.
Household Consumer Loan Trust 1997-1, a business trust
duly 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 [ ]
DOLLARS, payable on each Payment Date in an amount equal to the
Percentage Interest specified above of the aggregate amount, if
any, payable from the Payment Account in respect of principal on
the Class B Notes pursuant Section 3.05 of the Indenture dated as
of March 1, 1997 (the "Indenture") between the Issuer and The Bank
of New York, as Indenture Trustee (the "Indenture Trustee");
provided, however, that the entire unpaid principal amount of this
Note shall be due and payable on the March 2007 Payment Date.
Capitalized terms used but not defined herein are defined in
Article I of the Indenture, which also contains rules as to
construction that shall be applicable herein.
The Issuer will pay interest on this Note on each Payment
Date at a rate per annum equal to LIBOR plus an amount specified in
the Indenture not to exceed 0.875% on the principal amount of this
Class B Note on the preceding Payment Date (after giving effect to
all payments of principal made on such preceding Payment Date);
provided, however, that in no event shall the Note Rate on this
Note with respect to any Interest Period exceed 14.0% for such
Interest Period. LIBOR for each applicable Interest Period will be
determined on the second LIBOR Business Day prior to the first day
of such Interest Period or in the case of the first Interest
Period, two days prior to the Closing Date as set forth in the
Indenture. All determinations of LIBOR by the Indenture Trustee
shall, in the absence of manifest error, be conclusive for all
purposes, and each holder of this Class B Note, by accepting this
Class B Note, agrees to be bound by such determination. Interest
on this Class B Note will accrue for each Payment Date from the
most recent Payment Date on which interest has been paid (in the
case of the first Payment Date, from the Closing Date) to but
excluding such Payment Date. Interest will be computed on the
basis of the actual number of days in each Interest Period and a
year assumed to consist of 360 days. Principal of and interest on
this Class B Note shall be paid in the manner specified on the
reverse hereof.
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.
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.
<PAGE>
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the
Issuer and not in its individual capacity, has caused this Note to
be duly executed.
HOUSEHOLD CONSUMER LOAN TRUST 1997-1
By CHASE MANHATTAN BANK DELAWARE,
not in its individual capacity
but solely as Owner Trustee
By
Authorized Signatory
Certificate of Authentication
This is one of the Class B Notes referred to in the within men-
tioned Indenture.
THE BANK OF NEW YORK,
not in its individual capacity but
solely as Indenture Trustee
Dated: March ___, 1997
By
Authorized Signatory
<PAGE>
[REVERSE OF NOTE]
This Class B Note is one of a duly authorized issue of
Class B Notes of the Issuer, designated as its Household Consumer
Loan Asset Backed Notes, Series 1997-1 (herein called the "Class B
Notes"), all issued 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.
The Class B Notes and the Class A-1 Notes, Class A-2
Notes and Class A-3 Notes, also issued under the Indenture
(collectively, the "Notes") are and will be secured by the
collateral pledged as security therefor as provided in the
Indenture.
Principal of and interest on this Class B Note will be
payable on each Payment Date, commencing on April 15, 1997, as
described in the Indenture. "Payment Date" means the fifteenth day
of each month, or, if any such day is not a Business Day, then the
next Business Day.
The entire unpaid principal amount of this Class B Note
shall be due and payable in full on the Payment Date in March 2007
pursuant to the Indenture. Notwithstanding the foregoing, if an
Event of Default shall have occurred and be continuing, then the
Indenture Trustee or the holders of Notes representing not less
than a majority of the Security Balances of all the Notes may
declare the Notes to be immediately due and payable in the manner
provided in Section 5.01 of the Indenture. On each Payment Date,
principal payments on the Class B Notes shall be payable in the
amounts as provided in Section 3.05 of the Indenture.
Payments of interest on this Class B Note due and payable
on each Payment 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
Registered Holder of this Note 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
Depository 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 effected by any payments made on any Payment Date shall 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
Payment Date, then the Indenture Trustee, in the name of and on
behalf of the Issuer, will notify the Person who was the Registered
Holder hereof as of the Record Date preceding such Payment Date by
notice mailed or transmitted by facsimile prior to such Payment
Date, and the amount then due and payable shall be payable only
upon presentation and surrender of this Note at the address
specified in such notice of final payment.
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 Corporate Trust Office, 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 such holder's attorney duly authorized in writing,
with such signature guaranteed by an "eligible guarantor institu-
tion" meeting the requirements of the Note Registrar, which
requirements include membership or participation in the Securities
Transfer Agent's Medallion Program ("STAMP") or such other
"signature guarantee program" as may be determined by the Note
Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended,
and thereupon one or more new Notes in 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 Note Registrar shall require payment of a sum sufficient to
cover any tax or governmental charge that may be imposed in
connection with any registration of transfer or exchange of this
Note.
Each holder or Beneficial Owner of a Note, by acceptance
of a Note or, in the case of a Beneficial Owner of a Note, a
beneficial interest in a Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer, the Owner Trustee, the Administrator,
the Seller, the Servicer or the Indenture Trustee on the Notes or
under the Indenture or any certificate or other writing delivered
in connection therewith, against (i) 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 Indenture
Trustee or the Owner Trustee in its individual capacity, any holder
of a beneficial interest in the Issuer, the Owner Trustee, the
Administrator or the Indenture Trustee or of any successor or
assign of 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.
Each holder or Beneficial Owner of a Note, by acceptance
of a Note or, in the case of a Beneficial Owner of a Note, a
beneficial interest in a Note, covenants and agrees by accepting
the benefits of the Indenture that such holder or Beneficial Owner
of a Note will not at any time institute against the Seller, the
Administrator, the Servicer or the Issuer, or join in any institu-
tion against the Seller, the Administrator, the Servicer or the
Issuer of, any bankruptcy, reorganization, arrangement, insolvency
or liquidation proceedings under any United States federal or state
bankruptcy or similar law in connection with any obligations
relating to the Notes, the Indenture or the Basic Documents.
The Issuer has entered into the Indenture and this Note
is issued with the intention that, for federal, state and local
income, single business and franchise tax purposes, the Notes will
qualify as indebtedness of the Issuer. Each holder of a Note, by
acceptance of a Note (and each Beneficial Owner of a Note by
acceptance of a beneficial interest in a Note), agrees to treat the
Notes for federal, state and local income, single business and
franchise tax purposes as indebtedness of the Issuer.
Prior to the due presentment for registration of transfer
of this Note, the Issuer, the Indenture Trustee and any agent of
the Issuer or the Indenture Trustee 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 or 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 holders of Notes representing a majority of the
Security Balances of all Notes at the time Outstanding. The
Indenture also contains provisions permitting the holders of Notes
representing specified percentages of the Security Balances of all
Notes, on behalf of the holders of all the Notes, to waive
compliance by the Issuer with certain provisions of the Indenture
and certain past defaults under the Indenture and their consequenc-
es. Any such consent or waiver by the holder of this Note shall be
conclusive and binding upon such holder and 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 notation of such consent or waiver is made upon this Note. The
Indenture also permits the Indenture Trustee to amend or waive
certain terms and conditions set forth in the Indenture without the
consent of holders of the Notes issued thereunder.
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 holders of Notes 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 Basic Documents, none of Chase
Manhattan Bank Delaware, in its individual capacity, The Bank of
New York in its individual capacity, any owner of a beneficial
interest in the Issuer, or 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
this Note or performance of, or omission to perform, any of the
covenants, obligations or indemnifications contained in the
Indenture. The holder of this Note by its acceptance hereof agrees
that, except as expressly provided in 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.
<PAGE>
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: */
Signature Guaranteed:
*/
________________________
*/ NOTICE: The signature to this assignment must correspond with
the name of the registered owner as it
appears on the face of the within Note in every particular,
without alteration, enlargement or any change
whatever. Such signature must be guaranteed by an "eligible
guarantor institution" meeting the
requirements of the Note Registrar, which requirements include
membership or participation in 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
Securities Exchange Act of 1934, as amended.
<PAGE>
Exhibit C
FORM OF MONTHLY SECURITY REPORT
Date:
To:
From: [INDENTURE TRUSTEE]
Series 1997-1 Participation Interest Balance . . . . . $_________
Prime minus 1.50%. . . . . . . . . . . . . . . . . . . .________%
Series 1997-1 Participation Interest
Distribution Amount. . . . . . . . . . . . . . . . . . $_________
Securities Interest Distribution Amount
- Class A-1 . . . . . . . . . . . . . . . . . . . . . $_________
- Class A-2 . . . . . . . . . . . . . . . . . . . . . $_________
- Class A-3 . . . . . . . . . . . . . . . . . . . . . $_________
- Class B . . . . . . . . . . . . . . . . . . . . . . $_________
- Certificates. . . . . . . . . . . . . . . . . . . . $_________
Amounts per $1,000
Accelerated Principal Distribution Amount. . . . . . . $_________
Series 1997-1 Principal Distribution Amount. . . . . . $_________
Optimal principal distribution amount. . . . . . . . . $_________
Class A-1 principal distribution . . . . . . . . . . . $_________
Class A-2 principal distribution . . . . . . . . . . . $_________
Class A-3 principal distribution . . . . . . . . . . . $_________
Class B principal distribution . . . . . . . . . . . . $_________
Certificate distribution . . . . . . . . . . . . . . . $_________
OC Distribution. . . . . . . . . . . . . . . . . . . . $_________
Balance of Class A-1 . . . . . . . . . . . . . . . . . $_________
Balance of Class A-2 . . . . . . . . . . . . . . . . . $_________
Balance of Class A-3 . . . . . . . . . . . . . . . . . $_________
Balance of Class B . . . . . . . . . . . . . . . . . . $_________
Balance of Certificates. . . . . . . . . . . . . . . . $_________
Balance of OC. . . . . . . . . . . . . . . . . . . . . $_________
Net Charge-Offs applied to each class. . . . . . . . . $_________
Reversals applied to each class. . . . . . . . . . . . $_________
Excess to Issuer . . . . . . . . . . . . . . . . . . . $_________
Subordination available to each class. . . . . . . . . $_________
Overcollateralization as %
of Participation Interest
Invested Amount. . . . . . . . . . . . . . . . . . . . $_________<PAGE>
APPENDIX A
EXECUTION COPY
DEFINITIONS
The definitions contained herein are incorporated into and
made a part of the Trust Agreement and Indenture, each as defined
below.
Accelerated Principal Payment Amount: With respect to any
Payment Date, the lesser of (i) the Excess Interest reduced by the
amount of the Net Charge-Off and (ii) one-twelfth of the Series
1997-1 Participation Interest Invested Amount as of the beginning
of the related Interest Period multiplied for each Payment Date
occurring prior to April 1998, by 0.75%, and for each Payment Date
occurring in April 1998 or thereafter, by 0.25%.
Act: The meaning assigned to such term in Section 10.03 of
the Indenture.
Adjusted Principal Balance: With respect to the Class A-1
Notes, Class A-2 Notes, Class A-3 Notes and Class B Notes, the
Class A-1 Adjusted Principal Balance, Class A-2 Adjusted Principal
Balance, Class A-3 Adjusted Principal Balance and Class B Adjusted
Principal Balance, respectively.
Adjusted Security Balance: With respect to any Payment Date,
the sum of the Class A Adjusted Principal Balance, the Class B
Adjusted Principal Balance and the Certificate Adjusted Security
Balance.
Administration Agreement: The Administration Agreement dated
as of March 1, 1997 among the Issuer, the Indenture Trustee and
HFC, as Administrator, as it may be amended from time to time.
Administrator: HFC, as administrator under the Administration
Agreement or any successor Administrator appointed pursuant to the
terms of the Administration Agreement.
Affiliate: The meaning assigned to such term in the Pooling
and Servicing Agreement.
Aggregate Security Balance: With respect to any Payment Date,
the aggregate of the Principal Balances of all Securities as of
such date.
Amortization Event: The meaning assigned to such term in the
Pooling and Servicing Agreement.
Authorized Newspaper: A newspaper of general circulation in
the Borough of Manhattan, The City of New York, printed in the
English language and customarily published on each Business Day,
whether or not published on Saturdays, Sundays or holidays.
Authorized Officer: With respect to the Issuer, any officer
of the Owner Trustee who is authorized to act for the Owner Trustee
in matters relating to the Issuer and who is identified on the list
of Authorized Officers delivered by the Owner Trustee to the Inden-
ture Trustee on the Closing Date (as such list may be modified or
supplemented from time to time thereafter) and, so long as the
Administration Agreement is in effect, any Responsible Officer of
the Administrator who is authorized to act for the Administrator in
matters relating to the Issuer and to be acted upon by the Adminis-
trator pursuant to the Administration Agreement and who is identi-
fied on the list of Authorized Officers delivered by the Adminis-
trator to the Indenture Trustee on the Closing Date (as such list
may be modified or supplemented from time to time thereafter).
Available Investor Principal Collections: The meaning
assigned to such term in the Pooling and Servicing Agreement.
Basic Documents: The Trust Agreement, the Certificate of
Trust, the Indenture, Receivables Purchase Agreement, the Admin-
istration Agreement, the Pooling and Servicing Agreement, and the
other documents and certificates delivered in connection with any
of the above.
Beneficial Owner: With respect to any Note, the Person who is
the beneficial owner of such Note as reflected on the books of the
Depositary or on the books of a Person maintaining an account with
such Depositary (directly as a Depositary Participant or indirectly
through a Depositary Participant, in accordance with the rules of
such Depositary).
Book-Entry Notes: Beneficial interests in the Notes, owner-
ship and transfers of which shall be made through book entries by
the Seller as described in Section 4.06 of the Indenture.
Business Day: Any day other than (i) a Saturday or a Sunday
or (ii) a day on which banking institutions in the State of New
York or Illinois are required or authorized by law to be closed.
Business Trust Statute: Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code Sections 3801 et seq., as the same may be
amended from time to time.
Certificate Adjusted Security Balance: With respect to any
Payment Date, the Certificate Balance after giving effect to any
distributions thereon pursuant to Section 3.05(a)(iii) and (vi) of
the Indenture on all Payment Dates including the current Payment
Date less all Net Charge-Offs allocated to the Certificates after
giving effect to any such allocation to be made on such Payment
Date.
Certificate Balance: With respect to any Payment Date, the
Initial Certificate Balance, reduced by all distributions thereon
other than distributions in respect of the Certificate Yield, prior
to such Payment Date.
Certificate of Trust: The Certificate of Trust filed for the
Trust pursuant to Section 3810(a) of the Business Trust Statute.
Certificateholder: The Person in whose name a Certificate is
registered in the Certificate Register except that, any Certificate
registered in the name of the Seller, the Owner Trustee or the
Indenture Trustee or any Affiliate of any of them shall be deemed
not to be outstanding and the registered holder will not be
considered a Certificateholder or a holder for purposes of giving
any request, demand, authorization, direction, notice, consent or
waiver under the Indenture or the Trust Agreement provided that, in
determining whether the Indenture Trustee or the Owner Trustee
shall be protected in relying upon any such request, demand, autho-
rization, direction, notice, consent or waiver, only Certificates
that the Indenture Trustee or the Owner Trustee knows to be so
owned shall be so disregarded. Owners of Certificates that have
been pledged in good faith may be regarded as Holders if the
pledgee establishes to the satisfaction of the Indenture Trustee or
the Owner Trustee, as the case may be, the pledgee's right so to
act with respect to such Certificates and that the pledgee is not
the Seller, any other obligor upon the Certificates or any Affil-
iate of any of the foregoing Persons.
Certificate Minimum Adjusted Balance: $11,200,000.
Certificate Minimum Balance: With respect to any Payment Date
the Series 1997-1 Participation Interest Invested Amount, after
giving effect to the distribution made on the Series 1997-1 Partic-
ipation Interest on such Payment Date, multiplied by 1.0101%.
Certificate Paying Agent: The meaning specified in Section
3.03 of the Indenture.
Certificate Rate: With respect to any Interest Period, the
per annum rate equal to the sum of (i) LIBOR and (ii) 1.0% (or such
other percentage determined pursuant to an amendment to the Trust
Agreement pursuant to Section 11.01 thereof not to exceed 1.25%),
but in no event greater than 15.0% per annum.
Certificate Register: The register maintained by the Certif-
icate Registrar in which the Certificate Registrar shall provide
for the registration of Certificates and of transfers and exchanges
of Certificates.
Certificate Registrar: Initially, The Bank of New York, in
its capacity as Certificate Registrar, or any successor to the
Indenture Trustee in such capacity as appointed pursuant to Section
3.05 of the Trust Agreement.
Certificates: The Consumer Loan Asset Backed Certificates,
Series 1997-1, each evidencing undivided beneficial interests in
the Issuer and executed by the Owner Trustee in substantially the
form set forth in Exhibit A to the Trust Agreement.
Certificate Targeted Balance: An amount equal to (i) the
Series 1997-1 Participation Interest Invested Amount multiplied by
91.5%, less (ii) the Class A Adjusted Principal Balance and the
Class B Adjusted Principal Balance immediately prior to such Pay-
ment Date and after giving effect to payments of principal on the
Class A Notes and Class B Notes pursuant to Section 3.05(a)(ii) of
the Indenture on such Payment Date.
Certificate Yield: The sum of (a) the amount accrued during
the related Interest Period at the Certificate Rate on the sum of
(i) the Certificate Balance immediately prior to such Payment Date
and (ii) any previously accrued and unpaid amount at the Certif-
icate Rate for prior Payment Dates, and (b) any previously accrued
and unpaid amount at the Certificate Rate for prior Payment Dates.
Class: Any of class of the Class A Notes and Class B Notes
issued pursuant to Article II of the Indenture.
Class A Adjusted Principal Balance: The sum of the Class A-1
Adjusted Principal Balance, Class A-2 Adjusted Principal Balance
and Class A-3 Adjusted Principal Balance.
Class A Notes: Any of the Class A-1 Notes, Class A-2 Notes
and Class A-3 Notes issued pursuant to Article II of the Indenture.
Class A Targeted Principal Balance: The sum of the Class A-1
Targeted Principal Balance, Class A-2 Targeted Principal Balance,
and Class A-3 Targeted Principal Balance.
Class A-1 Adjusted Principal Balance: With respect to any
Payment Date, the Principal Balance of the Class A-1 Notes after
giving effect to any distributions thereon pursuant to Section
3.05(a)(ii), (v) and (vi) of the Indenture on all Payment Dates
including the current Payment Date less any Net Charge-Off allo-
cated to the Class A-1 Notes after giving effect to any such
allocation to be made on such Payment Date.
Class A-1 Notes: The Class A-1 Notes issued pursuant to
Article II of the Indenture.
Class A-1 Targeted Principal Balance: The Series 1997-1
Participation Interest Invested Amount multiplied by 52.0%.
Class A-2 Adjusted Principal Balance: With respect to any
Payment Date, the Principal Balance of the Class A-2 Notes after
giving effect to any distributions thereon pursuant to Section
3.05(a)(ii), (v) and (vi) of the Indenture on all Payment Dates
including the current Payment Date less any Net Charge-Off allo-
cated to the Class A-2 Notes after giving effect to any such
allocation to be made on such Payment Date.
Class A-2 Notes: The Class A-2 Notes issued pursuant to
Article II of the Indenture.
Class A-2 Targeted Principal Balance: With respect to any
Payment Date an amount equal to (i) the Series 1997-1 Participation
Interest Invested Amount multiplied by 62.0%, less (ii) the Class
A-1 Adjusted Principal Balance immediately prior to such Payment
Date and after giving effect to payments of principal on the Class
A-1 Notes pursuant to Section 3.05(a)(ii)(a) of the Indenture on
such Payment Date.
Class A-3 Adjusted Principal Balance: With respect to any
Payment Date, the Principal Balance of the Class A-3 Notes after
giving effect to any distributions thereon pursuant to Section
3.05(a)(ii), (v) and (vi) of the Indenture on all Payment Dates
including the current Payment Date less any Net Charge-Off allo-
cated to the Class A-3 Notes after giving effect to any such
allocation to be made on such Payment Date.
Class A-3 Notes: The Class A-3 Notes issued pursuant to
Article II of the Indenture.
Class A-3 Targeted Principal Balance: With respect to any
Payment Date an amount equal to (i) the Series 1997-1 Participation
Interest Invested Amount multiplied by 75.0%, less (ii) the sum of
the Class A-1 Adjusted Principal Balance and Class A-2 Adjusted
Principal Balance immediately prior to such Payment Date and after
giving effect to payments of principal on the Class A-1 Notes and
Class A-2 Notes pursuant to Section 3.05(a)(ii) of the Indenture on
such Payment Date.
Class B Adjusted Principal Balance: With respect to any Pay-
ment Date, the Principal Balance of the Class B Notes, after giving
effect to any distributions thereon pursuant to Section
3.05(a)(ii), (v) and (vi) of the Indenture on all Payments Dates
including the current Payment Date less all Net Charge-Off allo-
cated to the Class B Notes after giving effect to any such alloca-
tion to be made on such Payment Date.
Class B Notes: The Class B Notes issued pursuant to Article
II of the Indenture.
Class B Targeted Principal Balance: With respect to any Pay-
ment Date an amount equal to (i) the Series 1997-1 Participation
Interest Invested Amount multiplied by 84.5%, less (ii) the Class
A Adjusted Principal Balance immediately prior to such Payment Date
and after giving effect to payments of principal on the Class A
Notes pursuant to Section 3.05(a)(ii) of the Indenture on such
Payment Date.
Class Interest Distribution: With respect to any Payment Date
and Class of Notes, the sum of (a) the amount of interest accrued
during the Interest Period relating to such Payment Date at the
related Note Rate for such Class of Notes on the sum of (i) the
Principal Balance of such Class of Notes immediately prior to such
Payment Date and (ii) any previously accrued and unpaid interest on
such Class of Notes for prior Payment Dates, and (b) any previously
accrued and unpaid interest on such Class of Notes for prior Pay-
ment Dates.
Class Percentage: With respect to each Class of Notes and
Payment Date, the ratio, expressed as a percentage, of the aggre-
gate Principal Balance of such Class of Notes to the aggregate
Principal Balance of the Notes, in each case immediately prior to
such Payment Date.
Closing Date: March 12, 1997.
Code: The Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder.
Corporate Trust Office: With respect to the Indenture
Trustee, Certificate Registrar, Certificate Paying Agent and Paying
Agent, the principal corporate trust office of the Indenture
Trustee and Note Registrar at which at any particular time its
corporate trust business shall be principally administered, which
office at the date of the execution of this instrument is located
at 101 Barclay Street, Floor 12 East, New York, New York 10286,
Attention: Corporate Trust Administration Asset-Backed Unit. With
respect to the Owner Trustee, the principal corporate trust office
of the Owner Trustee at which at any particular time its corporate
trust business shall be administered, which office at the date of
the execution of the Trust Agreement is located at 1201 Market
Street, Wilmington, Delaware 19801, Attention: Corporate Trustee
Administration.
Default: Any occurrence which is or with notice or the lapse
of time or both would become an Event of Default.
Definitive Notes: The meaning specified in Section 4.06 of
the Indenture.
Deposit Trust: The trust created pursuant to the Pooling and
Servicing Agreement.
Deposit Trustee: Texas Commerce Bank National Association, as
successor trustee to The Chase Manhattan Bank, N.A., and any
successor thereto under the Pooling and Servicing Agreement.
Depository or Depository Agency: The Depository Trust Company
or a successor appointed by the Indenture Trustee with the approval
of the Seller. Any successor to the Depository shall be an
organization registered as a "clearing agency" pursuant to Section
17A of the Exchange Act and the regulations of the Securities and
Exchange Commission thereunder.
Depository Participant: A Person for whom, from time to time,
the Depository effects book-entry transfers and pledges of securi-
ties deposited with the Depository.
Designated Certificate: The meaning specified in Section 3.11
of the Trust Agreement.
Determination Date: With respect to any Payment Date, the 5th
Business Day prior to such Payment Date occurs or if such day is
not a Business Day, the next succeeding Business Day.
Distribution Date: The meaning specified in the Supplement.
Due Period: The meaning assigned to such term in the Pooling
and Servicing Agreement.
Eligible Deposit Account: The meaning assigned to such term
in the Pooling and Servicing Agreement.
Eligible Investments: The meaning assigned to such term in
the Pooling and Servicing Agreement.
ERISA: The meaning assigned to such term in the Pooling and
Servicing Agreement.
Event of Default: With respect to the Indenture, 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) a default in the payment on any related Payment Date
of any interest accrued on any Note during the related
Interest Period, and such default shall continue for a period
of five days;
(ii) a default in the payment of the principal of or any
installment of the principal of any Note when the same becomes
due and payable;
(iii) default in the observance or performance of any
covenant or agreement of the Issuer made in the Indenture, or
any representation or warranty of the Issuer made in the
Indenture or in any certificate or other writing 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 shall have had a material
adverse effect on any Noteholders, and such default shall
continue or not be cured, or the circumstance or condition in
respect of which such representation or warranty was incorrect
shall not have been eliminated or otherwise cured, for a
period of 30 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% in principal amount of the Notes then
outstanding, 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;
(iv) 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 Indenture 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 Indenture 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
(v) 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 Indenture 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 any action by the Issuer in
furtherance of any of the foregoing.
Excess Interest: With respect to any Payment Date the amount
if any by which Series 1997-1 Participation Interest Monthly
Interest exceeds the sum of (a) the amount to be distributed
pursuant to Section 3.05(a)(i) of the Indenture on such Payment
Date and (b) Series 1997-1 Participation Interest Charge-Offs for
the related Due Period.
Exchange Act: The Securities Exchange Act of 1934, as amend-
ed, and the rules and regulations promulgated thereunder.
Expenses: The meaning specified in Section 8.02 of the Trust
Agreement.
FASIT: Financial Asset Securitization Investment Trust as
passed by Congress in the Small Business Tax Bill, H.R. 3448, in
August 1996, and as enacted and amended from time to time.
FDIC: The Federal Deposit Insurance Corporation or any
successor thereto.
Final Scheduled Payment Date: To the extent not previously
paid, the principal balance of each Class of Notes will be due on
the Payment Date in March 2007.
Grant: Mortgage, pledge, bargain, sell, warrant, alienate,
remise, release, convey, assign, transfer, create, and grant a lien
upon and a security interest in and right of set-off against,
deposit, set over and confirm pursuant to the Indenture. A Grant
of the Indenture Collateral or of any other agreement or instrument
shall include all rights, powers and options (but none of the
obligations) of the granting party thereunder, including the
immediate and continuing right to claim for, collect, receive and
give receipt for principal and interest payments in respect of such
collateral or other agreement or instrument and all other moneys
payable thereunder, to give and receive notices and other communi-
cations, to make waivers or other agreements, to exercise all
rights and options, to bring proceedings in the name of the grant-
ing party or otherwise, and generally to do and receive anything
that the granting party is or may be entitled to do or receive
thereunder or with respect thereto.
HFC: Household Finance Corporation, a Delaware corporation
and a subsidiary of Household International, Inc.
Holdback Amount: An amount initially equal to the excess of
(i) the Series 1997-1 Participation Interest Initial Invested
Amount over (ii) the aggregate Initial Principal Balances of the
Class A Notes, the Class B Notes and the Certificates. Such amount
will be reduced through payments made pursuant to Section
3.05(a)(iv) and 3.05(a)(vi) of the Indenture and will be reduced or
increased through the allocation of Series 1997-1 Participation
Interest Charge-Offs and Reversals pursuant to Section 3.05(c) and
(d) of the Indenture.
Holder: Any of the Noteholders or Certificateholders.
Indemnified Party: The meaning specified in Section 8.02 of
the Trust Agreement.
Indenture: The Indenture dated as of March 1, 1997 between
the Issuer, as debtor, and the Indenture Trustee, as Indenture
Trustee, as may be amended from time to time.
Indenture Collateral: The meaning specified in the Granting
Clause of the Indenture.
Indenture Trustee: The Bank of New York, and its successors
and assigns or any successor indenture trustee appointed pursuant
to the terms of the Indenture.
Indenture Trust Estate: The meaning specified in the Granting
Clause of the Indenture.
Independent: When used with respect to any specified Person,
the Person (i) is in fact independent of the Issuer, any other
obligor on the Notes, the Seller, the Servicer and any Affiliate of
any of the foregoing Persons, (ii) does not have any direct finan-
cial interest or any material indirect financial interest in the
Issuer, any such other obligor, the Seller, the Servicer or any
Affiliate of any of the foregoing Persons and (iii) is not
connected with the Issuer, any such other obligor, the Seller, the
Servicer or any Affiliate of any of the foregoing Persons as an
officer, employee, promoter, underwriter, trustee, partner,
director or person performing similar functions.
Independent Certificate: A certificate or opinion to be
delivered to the Indenture Trustee under the circumstances
described in, and otherwise complying with, the applicable require-
ments of Section 10.01 of the Indenture, made by an Independent
appraiser or other expert appointed by the Issuer and approved by
the Indenture Trustee in the exercise of reasonable care, and such
opinion or certificate shall state that the signer has read the
definition of "Independent" in this Indenture and that the signer
is Independent within the meaning thereof.
Initial Certificate Balance: $33,600,000.
Initial Principal Balance: With respect to the Class A-1
Notes, Class A-2 Notes, Class A-3 Notes and Class B Notes,
$729,600,000, $48,000,000, $62,400,000 and $45,600,000, respec-
tively.
Insolvency Event: With respect to a specified Person, (a) the
filing of a decree or order for relief by a court having juris-
diction in the premises in respect of such Person or any substan-
tial part of its property in an involuntary case under any applic-
able bankruptcy, insolvency or other similar law now or hereafter
in effect, or appointing a receiver, liquidator, assignee, custo-
dian, trustee, sequestrator or similar official for such Person or
for any substantial part of its property, or ordering the winding-
up or liquidation of such Person's affairs, and such decree or
order shall remain unstayed and in effect for a period of 60 con-
secutive days; or (b) the commencement by such Person of a volun-
tary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or the consent by such
Person to the entry of an order for relief in an involuntary case
under any such law, or the consent by such Person to the appoint-
ment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official for such
Person or for any substantial part of its property, or the making
by such Person of any general assignment for the benefit of
creditors, or the failure by such Person generally to pay its debts
as such debts become due or the admission by such Person in writing
(as to which the Indenture Trustee shall have notice) of its
inability to pay its debts generally, or the adoption by the Board
of Directors or managing member of such Person of a resolution
which authorizes action by such Person in furtherance of any of the
foregoing.
Interest Period: With respect to any Payment Date other than
the first Payment Date, the period beginning on the preceding Pay-
ment Date and ending on the day preceding such Payment Date, and in
the case of the first Payment Date, the period beginning on the
Closing Date and ending on the day preceding the first Payment
Date.
Issuer: The Household Consumer Loan Trust 1997-1, a Delaware
business trust, or its successor in interest.
Issuer Request: A written order or request signed in the name
of the Issuer by any one of its Authorized Officers and delivered
to the Indenture Trustee.
LIBOR: For any Interest Period other than the first Interest
Period, the rate for United States dollar deposits for one month
which appears on the Telerate Screen Page 3750 as of 11:00 A.M.,
London time, on the second LIBOR Business Day prior to the first
day of such Interest Period. With respect to the first Interest
Period, the rate for United States dollar deposits for one month
which appears on the Telerate Screen Page 3750 as of 11:00 A.M.,
London time, two LIBOR Business Days prior to the Closing Date. If
such rate does not appear on such page (or such other page as may
replace that page on that service, or if such service is no longer
offered, such other service for displaying LIBOR or comparable
rates as may be reasonably selected by the Indenture Trustee after
consultation with the Servicer), the rate will be the Reference
Bank Rate. If no such quotations can be obtained and no Reference
Bank Rate is available, LIBOR will be LIBOR applicable to the
preceding Payment Date.
LIBOR Business Day: Any day other than (i) a Saturday or a
Sunday or (ii) a day on which banking institutions in the State of
New York or Illinois, or in the city of London, England are
required or authorized by law to be closed.
Lien: Any mortgage, deed of trust, pledge, conveyance,
hypothecation, assignment, participation, deposit arrangement,
encumbrance, lien (statutory or other), preference, priority right
or interest or other security agreement or preferential arrangement
of any kind or nature whatsoever, including, without limitation,
any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as
any of the foregoing and the filing of any financing statement
under the UCC (other than any such financing statement filed for
informational purposes only) or comparable law of any jurisdiction
to evidence any of the foregoing; provided, however, that any
assignment pursuant to Section 6.02 of the Pooling and Servicing
Agreement shall not be deemed to constitute a Lien.
Minimum Adjusted Principal Balance: With respect to the Class
A-2 Notes, Class A-3 Notes and Class B Notes, $16,000,000,
$20,800,000, and $15,200,000, respectively.
Monthly Security Report: The report attached as Exhibit C to
the Indenture.
Monthly Servicer's Certificate: The Monthly Servicer's
Certificate attached to the Supplement for Series 1997-1 as Exhibit
B.
Moody's: Moody's Investors Service, Inc. or its successor in
interest.
Net Charge-Off: With respect to any Payment Date, the aggre-
gate amount of Optimum Monthly Principal not distributed on such
Payment Date and all prior Payment Dates less the aggregate amount
of Reversals allocated on such Payment Date and prior Payment
Dates.
Note Depositary Agreement: The DTC Letter of Representations
dated as of the Closing Date by and among, The Depository Trust
Company, the Indenture Trustee and the Issuer.
Note Owner: The Beneficial Owner of a Note.
Note Rate: With respect to any Interest Period, a per annum
rate equal to the sum of (a) LIBOR and (b) 0.125% with respect to
the Class A-1 Notes, 0.250% with respect to the Class A-2 Notes,
0.350% with respect to the Class A-3 Notes, and 0.65% (or such
other percentage determined pursuant to an amendment to the
Indenture adopted pursuant to Section 9.02 thereof not to exceed
0.875%) with respect to the Class B Notes but in no event greater
than 12.5%, 14.0%, 14.0% and 14.0% per annum, respectively.
Note Register: The register maintained by the Note Registrar
in which the Note Registrar shall provide for the registration of
Notes and of transfers and exchanges of Notes.
Note Registrar: The Indenture Trustee, in its capacity as
Note Registrar.
Noteholder: The Person in whose name a Note is registered in
the Note Register, except that, any Note registered in the name of
the Seller, the Issuer or the Indenture Trustee or any Affiliate of
any of them shall be deemed not to be outstanding and the regis-
tered holder will not be considered a Noteholder or holder for
purposes of giving any request, demand, authorization, direction,
notice, consent or waiver under the Indenture or the Trust Agree-
ment provided that, in determining whether the Indenture Trustee
shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Notes
that the Indenture Trustee or the Owner Trustee knows to be so
owned shall be so disregarded. Owners of Notes that have been
pledged in good faith may be regarded as Holders if the pledgee
establishes to the satisfaction of the Indenture Trustee or the
Owner Trustee the pledgee's right so to act with respect to such
Notes and that the pledgee is not the Issuer, any other obligor
upon the Notes or any Affiliate of any of the foregoing Persons.
Notes: Each of the Class A Notes and Class B Notes.
Officer's Certificate: With respect to the Servicer, a
certificate signed by the President, Treasurer or Assistant
Treasurer, a Vice President or an Assistant Vice President, of the
Servicer and delivered to the Indenture Trustee. With respect to
the Issuer, a certificate signed by any Authorized Officer of the
Issuer, under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 10.01 of the
Indenture, and delivered to the Indenture Trustee. Unless
otherwise specified, any reference in the Indenture to an Officer's
Certificate shall be to an Officer's Certificate of any Authorized
Officer of the Issuer.
Opinion of Counsel: A written opinion of counsel who may be
in-house counsel for the Servicer, Seller or Household Inter-
national, Inc. if acceptable to the Indenture Trustee, and the
Rating Agencies or counsel for the Seller, as the case may be.
Optimum Monthly Principal: As to any Payment Date, the sum of
Available Investor Principal Collections, any Series 1997-1 Partic-
ipation Interest Charge-Offs during the preceding Due Period and
the lesser of Excess Interest and the Net Charge-Off as of the end
of the preceding Payment Date.
Outstanding: With respect to the Notes, as of the date of
determination, all Notes theretofore executed, authenticated and
delivered under this Indenture except:
(i) Notes theretofore cancelled by the Note Registrar or
delivered to the Indenture Trustee for cancellation; and
(ii) Notes in exchange for or in lieu of which other
Notes have been executed, authenticated and delivered pursuant
to the Indenture unless proof satisfactory to the Indenture
Trustee is presented that any such Notes are held by a holder
in due course.
Overcollateralization Amount: As to any Payment Date, the
amount by which the Series 1997-1 Participation Interest Invested
Amount exceeds the Aggregate Security Balances in each case after
giving effect to distributions on such Payment Date.
Overcollateralization Minimum Amount: $13,600,000.
Owner Trust Estate: The corpus of the Issuer created by the
Trust Agreement.
Owner Trustee: Chase Manhattan Bank Delaware and its
successors and assigns or any successor owner trustee appointed
pursuant to the terms of the Trust Agreement.
Paying Agent: Any paying agent or co-paying agent appointed
pursuant to Section 3.03 of the Indenture and Section 3.10 of the
Trust Agreement, which initially shall be the Indenture Trustee.
Payment Account: The account established by the Indenture
Trustee pursuant to Section 8.02 of the Indenture. The Payment
Account shall be an Eligible Deposit Account.
Payment Date: The 15th day of each month, or if such day is
not a Business Day, then the next Business Day.
Percentage Interest: With respect to any Payment Date and any
Note, the percentage obtained by dividing the Security Balance of
such Note prior to distributions on such Payment Date by the aggre-
gate of the Security Balances of all Notes of the same Class. With
respect to any Certificate, the percentage obtained by dividing the
denomination specified on such Certificate by the Initial Principal
Balance of the Certificates.
Person: The meaning assigned to such term in the Pooling and
Servicing Agreement.
Pooling and Servicing Agreement: The Pooling and Servicing
Agreement dated as of September 1, 1995, as supplemented by the
Supplement for Series 1997-1 dated as of March 1, 1997, by and
among the Seller, the Servicer and the Deposit Trustee, as each of
the foregoing may be amended from time to time.
Principal Balance: With respect to any Payment Date and each
Note, the Initial Principal Balance thereof, reduced by all distri-
butions of principal thereon prior to such Payment Date.
Proceeding: Any suit in equity, action at law or other
judicial or administrative proceeding.
Rating Agency: The meaning assigned to such term in the Pool-
ing and Servicing Agreement.
Receivables: The meaning assigned to such term in the Pooling
and Servicing Agreement.
Receivables Purchase Agreement: The meaning assigned to such
term in the Pooling and Servicing Agreement.
Record Date: With respect to the Notes and any Payment Date,
the Business Day next preceding such Payment Date and with respect
to the Certificates and any Payment Date, the last Business Day of
the month preceding the month of such Payment Date.
Reference Bank Rate: With respect to any Interest Period, as
follows: the arithmetic mean (rounded upwards, if necessary, to
the nearest one sixteenth of a percent) of the offered rates for
United States dollar deposits for one month which are offered by
the Reference Banks as of 11:00 A.M., London time, on the second
LIBOR Business Day prior to the first day of such Interest Period
to prime banks in the London interbank market for a period of one
month in amounts approximately equal to the Aggregate Security
Balance; provided that at least two such Reference Banks provide
such rate. If fewer than two offered rates appear, the Reference
Bank Rate will be the arithmetic mean of the rates quoted by one or
more major banks in New York City, selected by the Indenture
Trustee after consultation with the Servicer, as of 11:00 A.M., New
York City time, on such date for loans in U.S. Dollars to leading
European Banks for a period of one month in amounts approximately
equal to the Aggregate Security Balance. If no such quotations can
be obtained, the Reference Bank Rate shall be the Reference Bank
Rate applicable to the preceding Interest Period.
Reference Banks: Three money center banks as selected by the
Indenture Trustee after consultation with the Servicer.
Registered Holder: The Person in whose name a Note is regis-
tered in the Note Register on the applicable Record Date.
Responsible Officer: With respect to the Indenture Trustee,
any officer of the Indenture Trustee with direct responsibility for
the administration of the Indenture and also, with respect to a
particular matter, any other officer to whom such matter is
referred because of such officer's knowledge of and familiarity
with the particular subject.
Reversals: With respect to any Payment Date the sum of (i)
the Net Charge-Off previously allocated, to the extent of Excess
Interest for such Payment Date and (ii) the amounts treated as
Available Investor Principal Collections pursuant to Section
4.11(a)(iv) of the Supplement for the related Distribution Date;
provided however, in no event will such Reversals exceed the Net
Charge-Off.
Sale: The meaning assigned to such term in Section 5.15 of
the Indenture.
Securities Act: The Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
Security: Any of the Certificates or Notes.
Security Balance: The Principal Balance of the Notes, or the
Certificate Balance, as the case may be.
Security Collections: With respect to any Payment Date the
sum of Series 1997-1 Participation Interest Monthly Interest and
Series 1997-1 Participation Interest Monthly Principal for such
Payment Date.
Securityholder or Holder: Any Noteholder or a Certificate-
holder.
Seller: Household Consumer Loan Corporation, a Nevada corpo-
ration and a wholly-owned, special purpose subsidiary of Household
Finance Corporation, or its successor in interest.
Seller's Trust Amount: The meaning assigned to such term in
the Pooling and Servicing Agreement.
Series Participation Interest: The meaning assigned to such
term in the Pooling and Servicing Agreement.
Series 1997-1 Participation Interest: The Series 1997-1
Participation Interest issued pursuant to the Pooling and Servicing
Agreement.
Series 1997-1 Participation Interest Charge-Offs: The meaning
assigned to such term in the Pooling and Servicing Agreement.
Series 1997-1 Participation Interest Invested Amount: The
meaning assigned to such term in the Pooling and Servicing Agree-
ment.
Series 1997-1 Participation Interest Monthly Interest: The
meaning assigned to such term in the Pooling and Servicing Agree-
ment.
Series 1997-1 Participation Interest Monthly Principal: The
meaning assigned to such term in the Pooling and Servicing Agree-
ment.
Servicer: HFC and its successors and assigns.
Servicer Default: An event specified in Section 10.01 of the
Pooling and Servicing Agreement.
Single Certificate: A Certificate in the denomination of
$1,000,000.
Single Note: A Note in the denomination of $100,000.
Standard & Poor's: Standard & Poor's Ratings Services, a
Division of The McGraw-Hill Companies, Inc., or its successor in
interest.
Successor Designated Certificateholder: The meaning assigned
to such term in Section 9.02 of the Trust Agreement.
Telerate Screen Page 3750: The display designated as page
3750 on the Telerate Service (or such other page as may replace
page 3750 on that service for the purpose of displaying London
interbank offered rates of major banks).
Treasury Regulations: Regulations, including proposed or
temporary Regulations, promulgated under the Code. References
herein to specific provisions of proposed or temporary regulations
shall include analogous provisions of final Treasury Regulations or
other successor Treasury Regulations.
Trust Agreement: The Trust Agreement dated as of March 1,
1997 between the Owner Trustee and the Seller, as amended from time
to time.
Trust Indenture Act or TIA: The Trust Indenture Act of 1939,
as amended from time to time, as in effect on any relevant date.
UCC: The Uniform Commercial Code, as amended from time to
time, as in effect in any specified jurisdiction.
EXECUTION COPY
HOUSEHOLD CONSUMER LOAN CORPORATION,
Seller,
HOUSEHOLD FINANCE CORPORATION,
Servicer,
and
TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
Deposit Trustee
SUPPLEMENT FOR SERIES 1997-1
Dated as of March 1, 1997
to the
POOLING AND SERVICING AGREEMENT
Dated as of September 1, 1995
HOUSEHOLD CONSUMER LOAN DEPOSIT TRUST I
Series 1997-1
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1. Designation and Covenant to Exclude
Participation Interests. . . . . . . . . . . . 1
Section 1.01 Designation . . . . . . . . . . . . . . . . . . 1
Section 1.02 Covenant to Exclude Participation Interests . . 1
SECTION 2. Definitions. . . . . . . . . . . . . . . . . . . . 2
SECTION 3. Servicing Compensation.. . . . . . . . . . . . . . 10
SECTION 4. Article IV of Agreement. . . . . . . . . . . . . . 11
Section 4.07. Allocations. . . . . . . . . . . . . . . . 11
Section 4.08. Determination of Monthly Interest. . . . . 11
Section 4.09. Determination of Monthly Principal . . . . 12
Section 4.10. [RESERVED] . . . . . . . . . . . . . . . . 12
Section 4.11. Application of Investor Finance Charge
and Administrative Collections on
Deposit in Collection Account . . . . . . 12
Section 4.12. Investor Charge-Offs . . . . . . . . . . . 13
Section 4.13. [RESERVED] . . . . . . . . . . . . . . . . 13
SECTION 5. Distributions. . . . . . . . . . . . . . . . . . . 13
SECTION 6. Statements to Series 1997-1 Participants . . . . . 14
SECTION 7. Additional Amortization Events . . . . . . . . . . 15
SECTION 8. Optional Repurchase. . . . . . . . . . . . . . . . 16
SECTION 9. Sale of Series 1997-1 Participants' Interest
pursuant to Section 2.06 or 10.01 of
Agreement. . . . . . . . . . . . . . . . . . . 16
SECTION 10. Distributions pursuant to Section 8 or 9 of
this Series Supplement and Section 2.06,
10.01 or 12.02(c) of Agreement . . . . . . . . 17
SECTION 11. Distribution of Proceeds of Sale, Disposition
or Liquidation of Receivables pursuant to
Section 9.02 of Agreement. . . . . . . . . . . 17
SECTION 12. Rating Agency Notice. . . . . . . . . . . . . . . 18
SECTION 13. [RESERVED]. . . . . . . . . . . . . . . . . . . . 18
SECTION 14. [RESERVED]. . . . . . . . . . . . . . . . . . . . 18
SECTION 15. Delivery of Series 1997-1 Participation
Interest . . . . . . . . . . . . . . . . . . . 18
SECTION 16. Ratification of Agreement . . . . . . . . . . . . 18
SECTION 17. Counterparts. . . . . . . . . . . . . . . . . . . 18
SECTION 18. Governing Law . . . . . . . . . . . . . . . . . . 18
SECTION 19. Forms of Certificates and Monthly Servicer's
Certificate. . . . . . . . . . . . . . . . . . 18
SECTION 20. Transfer Restrictions . . . . . . . . . . . . . . 19
EXHIBITS
Exhibit A-1 Series 1997-1 Participation Interest
Exhibit B Monthly Servicing Report
Exhibit C Investment Letter<PAGE>
SERIES 1997-1 SUPPLEMENT, dated as of March 1, 1997 (this
"Series Supplement"), by and among Household Consumer Loan Corpo-
ration, a Nevada corporation, as seller (the "Seller"), Household
Finance Corporation, a Delaware corporation, as servicer (the
"Servicer"), and Texas Commerce Bank National Association, a
national banking association, as successor trustee to The Chase
Manhattan Bank, N.A. (together with successors in trust there-
under as provided in the Pooling and Servicing Agreement referred
to below, the "Deposit Trustee"), under the Pooling and Servicing
Agreement, by and among the Seller, the Servicer and the Deposit
Trustee dated as of September 1, 1995.
RECITALS
Section 6.03 of the Agreement provides, among other things,
that the Seller and the Deposit Trustee may at any time and from
time to time enter into a supplement to the Agreement for the
purpose of authorizing the issuance by the Deposit Trustee to the
Seller for execution and redelivery to the Deposit Trustee for
authentication one or more Series of Series Participation Inter-
ests. The Seller has tendered the notice of issuance required by
Section 6.03(b)(i) of the Agreement and hereby enters into this
Series Supplement with the Servicer and the Deposit Trustee as
required by such Section 6.03 to provide for the issuance,
authentication and delivery of the Series Participation Interest,
Series 1997-1 (the "Series 1997-1 Participation Interest") and to
specify the Principal Terms thereof.
In the event that any term or provision contained herein
shall conflict with or be inconsistent with any term or provision
contained in the Agreement, the terms and provisions of this
Series Supplement shall govern.
SECTION 1. Designation and Covenant to Exclude Participation
Interests.
Section 1.01 Designation. The Series 1997-1 Partic-
ipation Interest shall be deemed to be a "Series Participa-
tion Interest" for all purposes under the Agreement and this
Series Supplement. Notwithstanding any provision to the
contrary in the Agreement or in this Series Supplement, the
first Distribution Date with respect to Series 1997-1 shall
be April 14, 1997.
Section 1.02 Covenant to Exclude Participation
Interests. Notwithstanding any provisions to the contrary
in the Agreement, for so long as the Series 1997-1 Partic-
ipation Interest is outstanding, each of the Seller and the
Servicer covenants and agrees not to enter into a Participa-
tion Interest Agreement, and the Trust shall not acquire or
hold any interest in a Participation Interest. The entering
into of any such Participation Interest Agreement in viola-
tion of this Section 1.02 will be deemed to have an "Adverse
Effect".
SECTION 2. Definitions.
(a) Whenever used in this Series Supplement and when used
in the Agreement with respect to the Series 1997-1 Participation
Interest, the following words and phrases shall have the follow-
ing 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.
"Accelerated Amortization Date" shall mean February 28,
2002.
"Additional Balances" shall mean, with respect to any
Credit Line, amounts drawn under such Credit Line subsequent
to the date such Credit Line is designated to the Deposit
Trust.
"Additional Interest" shall have the meaning set forth
in Section 4.08(a) hereof.
"Adverse Effect" shall have the meaning assigned to
such term in the Pooling and Servicing Agreement as supple-
mented by Section 1.02 hereof.
"Agreement" shall mean, for purposes of this Series
Supplement, the Pooling and Servicing Agreement, dated as of
September 1, 1995, as such agreement may be amended from
time to time, by and among the Seller, the Servicer and the
Deposit Trustee (without regard to this Series Supplement or
supplements for other Series).
"Amortization Event" shall mean any of the events
enumerated in Section 9.01 of the Agreement or in Section 7
of this Series Supplement.
"Available Investor Principal Collections" shall mean,
with respect to any Distribution Date, the sum of (a)
Investor Principal Collections, (b) the Series 1997-1
Participation Interest Net Default Payment Amount, and (c)
the portion paid by the Seller pursuant to Section 9 hereof
that is included in clause (i) of the definition of
Reassignment Amount.
"Calculation Date" shall mean the first day of the
Interest Period.
"Closing Date" shall mean March 12, 1997.
"Distribution Date" shall mean, with respect to Series
1997-1, the 14th day of each calendar month, or if such day
is not a Business Day, the next preceding Business Day,
provided that the first Distribution Date shall be April 14,
1997.
"Due Period" shall mean, with respect to the first Due
Period, the period from and including March 1, 1997 through
March 31, 1997, and thereinafter the meaning specified in
the Agreement.
"Early Amortization Period" shall mean the period
commencing with an Amortization Event pursuant to Section 7
hereof or Section 9.01 of the Agreement (after giving effect
to any grace periods) and terminating upon termination of
the Trust pursuant to Section 12.01 of the Agreement.
"Eligible Investments" shall mean, with respect to
funds allocable to the Series 1997-1 Participation Interest
in the Collection Account, "Eligible Investments" as defined
in the Agreement, except that all references in such defini-
tion to "rating satisfactory to the Rating Agency" shall
mean ratings of not less than A-1 by Standard & Poor's, P-1
by Moody's, F-1 by Fitch (if rated by Fitch) and D-1 by Duff
& Phelps (if rated by Duff & Phelps).
"Eligible Institution" shall mean any "Eligible Insti-
tution" as defined in the Agreement, except that all refer-
ences in such definition to "rating satisfactory to the
Rating Agency" shall mean long-term ratings of not less than
AAA by Standard and Poor's or Aaa by Moody's, respectively,
or short-term unsecured debt ratings of at least A-1 by
Standard and Poor's and P-1 by Moody's, respectively, except
that no such rating shall be required of an institution
which maintains such Account or such funds as a fully segre-
gated trust account or subaccount with the corporate trust
department of such institution as long as such institution
maintains the credit rating of each Rating Agency in one of
its generic credit rating categories which signifies invest-
ment grade.
"Final Scheduled Payment Date" shall mean the Payment
Date in March 2007.
"Fixed Allocation Percentage" shall mean, with respect
to any Distribution Date, the percentage equivalent of a
fraction, the numerator of which is the Series 1997-1
Participation Interest Invested Amount as of the last day
immediately preceding the commencement of an Early Amortiza-
tion Period that is continuing or preceding the Accelerated
Amortization Date, as applicable, and the denominator of
which is the greater of (x) the aggregate Principal Receiv-
ables as of the first day of the related Due Period and the
then outstanding amount of any Participation Interests in
the Deposit Trust as of the first day of the related Due
Period and (y) the sum of the numerators used to calculate
the Allocation Percentage for allocations with respect to
Principal Receivables or Finance Charge and Administrative
Receivables, as applicable, for all outstanding Series for
such Distribution Date; provided, however, that, with
respect to the first Due Period, the Fixed Allocation
Percentage shall mean the percentage equivalent of a frac-
tion, the numerator of which is the Series 1997-1 Partici-
pation Interest Initial Invested Amount and the denominator
of which is the total amount of Principal Receivables in the
Deposit Trust as of the Closing Date; provided, further,
that, with respect to any Due Period in which Aggregate
Additional Credit Lines or Participation Interest are added
to the Trust or a removal of Credit Lines pursuant to
Section 2.10 of the Agreement occurs, the amount of Prin-
cipal Receivables and Participation Interests referred to in
clause (x) above shall be the average amount of Principal
Receivables and Participation Interests in the Deposit Trust
on each Business Day during such Due Period based upon the
assumptions that (1) the aggregate amount of Principal
Receivables in the Deposit Trust at the end of the day on
the last day of the prior Due Period is the aggregate amount
of Principal Receivables and Participation Interests in the
Deposit Trust on each Business Day of the period from and
including the first day of such Due Period to but excluding
the related Addition Date or Removal Date and (2) the aggre-
gate amount of Principal Receivables in the Deposit Trust at
the end of the day on the related Addition Date or Removal
Date is the aggregate amount of Principal Receivables and
Participation Interests in the Deposit Trust on each Busi-
ness Day of the period from and including the related Addi-
tion Date or Removal Date to and including the last day of
such Due Period.
"Floating Allocation Percentage" shall mean with
respect to any Distribution Date the percentage equivalent
of a fraction, the numerator of which is the Series 1997-1
Participation Interest Invested Amount as of the last day of
the related Due Period and the denominator of which is the
greater of (x) the aggregate Principal Receivables as of the
first day of the related Due Period and the then outstanding
amount of any Participation Interests in the Deposit Trust
as of the first day of the related Due Period and (y) the
sum of the numerators used to calculate the Allocation
Percentage for allocations with respect to Principal Receiv-
ables, Default Amounts, or Finance Charge and Administrative
Receivables, as applicable, for all outstanding Series for
such Distribution Date; provided, however, that, with
respect to the first Due Period, the Floating Allocation
Percentage shall mean the percentage equivalent of a frac-
tion, the numerator of which is the Series 1997-1 Participa-
tion Interest Initial Invested Amount and the denominator of
which is the total amount of Principal Receivables in the
Deposit Trust as of the first day of the related Due Period;
provided, further, that, with respect to any Due Period in
which Aggregate Additional Credit Lines or Participation
Interest are added to the Trust or a removal of Credit Lines
pursuant to Section 2.10 of the Agreement occurs, the amount
of Principal Receivables and Participation Interests
referred to in clause (x) above shall be the average amount
of Principal Receivables and Participation Interests in the
Deposit Trust on each Business Day during such Due Period
based upon the assumptions that (1) the aggregate amount of
Principal Receivables in the Deposit Trust at the end of the
day on the last day of the prior Due Period is the aggregate
amount of Principal Receivables and Participation Interests
in the Deposit Trust on each Business Day of the period from
and including the first day of such Due Period to but
excluding the related Addition Date or Removal Date and (2)
the aggregate amount of Principal Receivables in the Deposit
Trust at the end of the day on the related Addition Date or
Removal Date is the aggregate amount of Principal
Receivables and Participation Interests in the Deposit Trust
on each Business Day of the period from and including the
related Addition Date or Removal Date to and including the
last day of such Due Period.
"HCLC" shall mean Household Consumer Loan Corporation,
a Nevada corporation.
"Indenture" shall mean the indenture dated as of March
1, 1997 between the Issuer, as debtor, and The Bank of New
York, as Indenture Trustee, as may be amended from time to
time.
"Interest Period" shall mean, with respect to any
Distribution Date, the period from and including the Distri-
bution Date immediately preceding such Distribution Date
(or, in the case of the first Distribution Date, from and
including the Closing Date) to but excluding such Distribu-
tion Date.
"Invested Amount" as defined in the Agreement shall
mean the Series 1997-1 Participation Interest Invested
Amount as defined herein.
"Investor Finance Charge and Administrative Collec-
tions" shall mean with respect to any Distribution Date an
amount equal to the sum of (a) (i) if such Distribution Date
is not during an Early Amortization Period, the product of
(x) the Floating Allocation Percentage for the related Due
Period and (y) Finance Charge and Administrative Collections
during the related Due Period and (ii) if such Distribution
Date is during an Early Amortization Period the product of
(x) the Fixed Allocation Percentage for the related Due
Period and (y) Finance Charge and Administrative Collections
during the related Due Period and (b) the portion paid by
the Seller pursuant to Section 9 hereof that is included in
clauses (ii) and (iii) of the definition of Reassignment
Amount.
"Investor Principal Collections" shall mean, with
respect to any Due Period prior to the Accelerated Amorti-
zation Date and not during an Early Amortization Period, the
Floating Allocation Percentage of Net Principal Collections
for the related Due Period (or any partial Due Period which
occurs as the first Due Period during the Early Amortization
Period); provided that if Net Principal Collections for such
Due Period is less than the Minimum Principal Amount, then
Investor Principal Collections shall mean the Minimum Prin-
cipal Amount. On and after the Accelerated Amortization
Date and during an Early Amortization Period, Investor Prin-
cipal Collections shall mean the Fixed Allocation Percentage
of Collections in respect of Principal Receivables for the
related Due Period.
"Issuer" shall mean the Household Consumer Loan Trust
1997-1, a Delaware business trust, or its successor in
interest.
"Minimum Principal Amount" shall mean, with respect to
any Distribution Date, the lesser of (a) the Floating Allo-
cation Percentage of Principal Collections for such Distri-
bution Date and (b) the amount by which 2.20% of the Series
1997-1 Participation Interest Invested Amount exceeds the
Series 1997-1 Participation Interest Net Default Payment
Amount for such Distribution Date to the extent of the
amount of Investor Finance Charge and Administrative
Collections treated as principal pursuant to Section
4.11(a)(iii) for such Distribution Date.
"Net Principal Collections" shall mean, with respect to
any Due Period prior to the Accelerated Amortization Date
and not during an Early Amortization Period, Collections in
respect of Principal Receivables during the related Due
Period reduced by Additional Balances created during such
Due Period.
"Optional Repurchase Amount" shall mean, with respect
to any Distribution Date, after giving effect to any
deposits and distributions otherwise to be made on such
Distribution Date, the sum of (i) the unpaid principal
balance of the Series 1997-1 Participation Interest, plus
(ii) accrued and unpaid interest on the unpaid principal
balance of the Series 1997-1 Series Participation Interest
through the day preceding such Distribution Date, plus (iii)
the amount of Additional Interest, if any, for such Distri-
bution Date and any Additional Interest previously due but
not distributed to the Series 1997-1 Participants, as
applicable, on a prior Distribution Date.
"Overcollateralization Amount" shall have the meaning
set forth in the Indenture.
"Performance Amortization Event" shall mean any of an
Additional Amortization Event pursuant to Section 7(a), (b)
or (d) hereof.
"Prime" shall mean the rate set forth in H.15(519)
opposite the caption "Bank Prime Loan" for such day; pro-
vided, however, that the Prime Rate with respect to any day
which in the period beginning on the Calculation Date
through and including the calendar day first preceding a
Distribution Date, shall be the rate as described above in
effect on such Calculation Date. The Prime Rate is also
available on Telerate, currently at page 125. If any
discrepancy arises between Telerate and the printed version
of H.15 (519), the printed version of H.15 (519) will take
precedence.
If, by the Calculation Date, the Prime Rate is not yet
published in H.15 (519), then the Prime Rate will be deter-
mined by calculating the arithmetic mean of the rates of
interest publicly announced by each bank named on Telerate
under the heading "Prime Rate Top 30 U.S. Banks," currently
at page 38, as such bank's U.S. dollar prime rate or base
lending rate as in effect on such day at 3:30 p.m. (New York
City time). If fewer than four such rates appear on Tele-
rate for such Reset Date, then the Prime Rate shall be the
arithmetic mean of the rate of interest publicly announced
by three major banks in New York City, selected by the
Servicer, as their U.S. dollar prime rate or base lending
rate as in effect for such day.
"Rating Agency" shall mean Duff & Phelps, Fitch,
Moody's, and Standard & Poor's.
"Reassignment Amount" shall mean, with respect to any
Distribution Date, after giving effect to any deposits and
distributions otherwise to be made on such Distribution
Date, the sum of (i) the unpaid principal balance of the
Series 1997-1 Participation Interest on such Distribution
Date, plus (ii) amounts accrued and unpaid at the Series
1997-1 Participation Interest Pass-Through Rate on the
unpaid principal balance of the Series 1997-1 Participation
Interest through the day preceding such Distribution Date,
plus (iii) the amount of Additional Interest, if any, for
such Distribution Date and any Additional Interest pre-
viously due but not distributed to the Series 1997-1
Participants on a prior Distribution Date.
"Required Seller Amount" shall mean an amount equal to
1.01% of the Series 1997-1 Participation Interest Invested
Amount.
"Securities" shall have the meaning assigned to such
term in the Indenture.
"Security Balance" shall have the meaning assigned to
such term in the Indenture.
"Series Cut-Off Date" shall mean the close of business
on February 28, 1997.
"Series 1997-1 Participant" shall mean the Issuer.
"Series 1997-1 Participants' Interest" shall mean 100%
of the interest evidenced by the Series 1997-1 Participation
Interest.
"Series 1997-1 Participation Interest" shall be a
Series Participation Interest for the purposes of the Agree-
ment and shall mean the Series Participation Interest
executed by the Seller and authenticated by or on behalf of
the Deposit Trustee, substantially in the form of Exhibit
A-1.
"Series 1997-1 Participation Interest Charge-Offs"
shall have the meaning specified in Section 4.12(a) hereof.
"Series 1997-1 Participation Interest Default Amount"
shall mean, with respect to each Distribution Date, an
amount equal to the product of the Defaulted Amount for the
related Due Period and the Floating Allocation Percentage
for such Distribution Date.
"Series 1997-1 Participation Interest Initial Invested
Amount" shall mean the initial principal amount represented
by the Series 1997-1 Participation Interest on the Issuance
Date, which amount is $960,000,000.
"Series 1997-1 Participation Interest Interest Short-
fall" shall have the meaning specified in Section 4.08(a)
hereof.
"Series 1997-1 Participation Interest Invested Amount"
shall mean, when used with respect to any date, an amount
equal to (a) the Series 1997-1 Participation Interest
Initial Invested Amount, minus (b) the amount of principal
payments made to the Series 1997-1 Series Participants prior
to and including such date, minus (c) the excess, if any, of
the aggregate amount of Series 1997-1 Participation Interest
Charge-Offs over Series 1997-1 Participation Interest
Charge-Offs reimbursed pursuant to Section 4.11(a) hereof
prior to and including such date.
"Series 1997-1 Participation Interest Monthly Interest"
shall mean the monthly interest distributable in respect of
the Series 1997-1 Participation Interest as calculated in
accordance with Section 4.08(a) hereof.
"Series 1997-1 Participation Interest Monthly Prin-
cipal" shall mean the monthly principal distributable in
respect of the Series 1997-1 Participation Interest as
calculated in accordance with Section 4.09(a) hereof.
"Series 1997-1 Participation Interest Net Default
Payment Amount" shall mean with respect to any Distribution
Date the Series 1997-1 Participation Interest Default Amount
for such Distribution Date to the extent of the amount of
Investor Finance Charge and Administrative Collections
treated as principal pursuant to clauses (iii) and (iv) of
Section 4.11(a) for such Distribution Date.
"Series 1997-1 Participation Interest Pass-Through
Rate" shall mean as to each Interest Period the Prime Rate
minus 1.50%; provided that the Series 1997-1 Participation
Interest Pass-Through Rate for any Interest Period shall not
be less than the sum of (i) a per annum rate which will
result in an amount of Series 1997-1 Monthly Interest for
such Interest Period which will be sufficient to pay the
amount of interest due on the Notes and to make a full
distribution on the Trust Certificates in respect of the
Certificate Rate on the related Payment Date and (ii) 0.75%
per annum of the Series 1997-1 Participation Interest
Invested Amount for Distribution Dates occurring prior to
April 1998 and 0.25% per annum of the Series 1997-1 Partic-
ipation Interest Invested Amount for Distribution Dates
occurring in April 1998 and thereafter, in each case, calcu-
lated on the basis of a year consisting of twelve months
each consisting of 30 days.
"Series 1997-1 Participation Interest Pool Factor"
shall mean, with respect to any Record Date, a number
carried out to eight decimals representing the ratio of the
Series 1997-1 Participation Interest Invested Amount as of
such Record Date (determined after taking into account any
increases or decreases in the Series 1997-1 Participation
Interest Invested Amount which will occur on the following
Distribution Date) to the Series 1997-1 Participation
Interest Initial Invested Amount.
"Series 1997-1 Servicing Fee" shall have the meaning
specified in Section 3 hereof.
"Series 1997-1 Termination Date" shall mean the earlier
of the date the Securities are paid in full and the date the
Deposit Trust is terminated pursuant to Section 12.01 of the
Agreement.
"Servicing Fee Rate" shall mean 2% per annum.
"Telerate Page 3750" shall mean the display page so
designated on the Dow Jones Telerate Service (or such other
page as may replace that page on that service for the pur-
pose of displaying comparable rates or prices).
"Termination Proceeds" shall mean any Termination
Proceeds arising out of a sale of Receivables (or interests
therein) pursuant to Section 12.02(c) of the Agreement with
respect to Series 1997-1.
"Trust Agreement" shall mean the trust agreement dated
as of March 1, 1997 between HCLC, as Seller and holder of
the Designated Certificate, and Chase Manhattan Bank
Delaware, as Owner Trustee.
"Trust Certificates" shall mean the certificates,
issued pursuant to the Trust Agreement.
(b) All capitalized terms used herein and not otherwise
defined herein have the meanings ascribed to them in the Agree-
ment.
(c) The words "hereof", "herein" and "hereunder" and words
of similar import when used in this Series Supplement shall refer
to this Series Supplement as a whole and not to any particular
provision of this Series Supplement; references herein to any
Article, Section or Exhibit are references to Articles, Sections
and Exhibits in or to this Series Supplement unless otherwise
specified; and the term "including" means "including without
limitation".
(d) The following defined terms used herein are used with
the meanings assigned thereto in the Trust Agreement or the
Indenture, as applicable: "Notes", "Note Rate", "Security
Balance", "Owner Trustee", "Overcollateralization Amount",
"Initial Overcollateralization Percentage", "Payment Date" and
"Indenture Trustee".
SECTION 3. Servicing Compensation.
The monthly servicing fee (the "Series 1997-1 Servicing
Fee") shall be payable to the Servicer, in arrears, on each
Distribution Date in respect of any Due Period (or portion
thereof) occurring prior to the first Distribution Date on which
the Series 1997-1 Series Participation Interest Invested Amount
is zero, in an amount equal to 1/12th of, or with respect to the
first Due Period, 19/360th of the product of (i) the Servicing
Fee Rate and (ii) the Series 1997-1 Invested Amount on the last
day of the related Due Period or with respect to the first Due
Period, the Closing Date.
SECTION 4. Article IV of Agreement.
Sections 4.01 through 4.06 of the Agreement shall be read in
their entirety as provided in the Agreement. Article IV of the
Agreement (except for Sections 4.01 through 4.06 thereof) shall,
with respect to the Series 1997-1 Participation Interest, be read
in its entirety as follows:
ARTICLE IV
RIGHTS OF SERIES 1997-1 PARTICIPANTS AND
ALLOCATION AND APPLICATION OF COLLECTIONS
Section 4.07. Allocations. Collections of Finance
Charge and Administrative Receivables, Principal Receivables
and Defaulted Receivables allocated to the Series 1997-1
Participation Interest pursuant to Article IV of the Agree-
ment shall be allocated and distributed as set forth in this
Article.
Section 4.08. Determination of Monthly Interest.
(a) The amount of collections of Finance Charge and Admin-
istrative Receivables distributable from the Collection
Account with respect to the Series 1997-1 Participation
Interest on any Distribution Date shall be an amount equal
to the product of (i) the Series 1997-1 Participation
Interest Pass-Through Rate and (ii) the unpaid principal
balance of the Series 1997-1 Participation Interest on the
first day of the related Interest Period determined on the
basis of the actual number of days in such Interest Period
and a 360-day year ("Series 1997-1 Participation Interest
Monthly Interest").
On the Determination Date preceding each Distribution
Date, the Servicer shall determine an amount (the "Series
1997-1 Participation Interest Interest Shortfall") equal to
the sum of (a) (x) the Series 1997-1 Participation Interest
Monthly Interest for the Interest Period applicable to such
Distribution Date minus (y) the amount of collections of
Finance Charge and Administrative Receivables which will be
on deposit in the Collection Account and allocable to the
Series 1997-1 Participation Interest on such Distribution
Date and (b) the sum of the amounts calculated pursuant to
clause (a) on each preceding Distribution Date. If the
Series 1997-1 Participation Interest Interest Shortfall with
respect to any Distribution Date is greater than zero, on
each subsequent Distribution Date until such Series 1997-1
Participation Interest Interest Shortfall is fully paid,
pursuant to Section 4.11(a), an additional amount ("Addi-
tional Interest") shall be payable as provided herein with
respect to the Series 1997-1 Participation Interest Monthly
Interest on each Distribution Date following such Distribu-
tion Date, excluding the Distribution Date on which the
Series 1997-1 Participation Interest Interest Shortfall is
paid to the Series 1997-1 Participants equal to the product
of (i) the Series 1997-1 Participation Interest Pass-Through
Rate and (ii) such Series 1997-1 Participation Interest
Interest Shortfall (or the portion thereof which has not
been paid to the Series 1997-1 Participants) determined on
the basis of the actual number of days in the related
Interest Period and a 360-day year. Notwithstanding any-
thing to the contrary herein, Additional Interest shall be
payable or distributed to the Series 1997-1 Participants.
Section 4.09. Determination of Monthly Principal.
(a) The amount of monthly principal ("Series 1997-1
Participation Interest Monthly Principal") distributable
from the Collection Account with respect to the Series
1997-1 Participation Interest shall be an amount equal to
the Available Investor Principal Collections on deposit in
the Collection Account with respect to such Distribution
Date.
Section 4.10. [RESERVED]
Section 4.11. Application of Investor Finance Charge
and Administrative Collections on Deposit in Collection
Account. With respect to the Series 1997-1 Participation
Interest, prior to 12:00 noon, New York City time, on each
Distribution Date, the Servicer shall provide written
directions to the Deposit Trustee to apply Investor Finance
Charge and Administrative Collections on deposit in the
Collection Account with respect to such Distribution Date in
the following manner:
(a) An amount equal to Investor Finance Charge
and Administrative Collections with respect to such Distri-
bution Date, plus any other funds available to the Deposit
Trust for application pursuant to this clause will be
distributed in the following priority:
(i) if HFC is not the Servicer under this Agree-
ment, an amount equal to the Series 1997-1 Servicing
Fee for such date (to the extent such amount has not
been netted from deposits made in the related Due
Period), plus any unpaid Series 1997-1 Servicing Fee
(but only with respect to the then current Servicer)
shall be paid to the Servicer.
(ii) an amount equal to the Series 1997-1 Partic-
ipation Interest Monthly Interest for such Distribution
Date, plus the amount of any Series 1997-1 Participa-
tion Interest Interest Shortfall, plus the amount of
any Additional Interest for such Distribution Date;
(iii) an amount equal to the Series 1997-1 Partici-
pation Interest Default Amount for such Distribution
Date shall be treated as a portion of Available
Investor Principal Collections for such Distribution
Date;
(iv) an amount equal to the aggregate amount of
the Series 1997-1 Participation Interest Charge-Offs
which have not been previously reimbursed shall be
treated as a portion of Available Investor Principal
Collections with respect to such Distribution Date.
(v) so long as HFC is the Servicer under the
Agreement, an amount equal to the Series 1997-1 Servic-
ing Fee for such date (to the extent such amount has
not been netted from deposits to cover losses in the
related Due Period), plus any previously unpaid Series
1997-1 Servicing Fee (but only with respect to the then
current Servicer) shall be paid to the Servicer; and
(vi) the balance, if any, shall be paid to the
Seller with respect to the HCLC Seller Participation
Interest and the Designated HCLC Seller Participation
Interest, pro rata.
Section 4.12. Investor Charge-Offs. (a) If on any
Distribution Date, the amount to be distributed on the
Series 1997-1 Participation Interest pursuant to Section
4.11(a)(iii) exceeds the amount of Investor Finance Charge
and Administrative Collections for the related Due Period
(net of any portion thereof to be paid pursuant to Section
4.11(a)(i) and (ii)), then the Series 1997-1 Participation
Interest Invested Amount shall be reduced by the amount of
such excess ("Series 1997-1 Participation Interest Charge-
Offs"), but not more than the Series 1997-1 Participation
Interest Default Amount for such Distribution Date.
(b) Notwithstanding any other provision of this Series
Supplement, the Series 1997-1 Participation Interest Invest-
ed Amount shall never be reduced below zero.
Section 4.13. [RESERVED]
SECTION 5. Distributions.
(a) On each Distribution Date, the Paying Agent shall
distribute to each Series 1997-1 Participant of record on the
Record Date for such Distribution Date (other than as provided in
Section 12.02 of the Agreement respecting a final distribution)
such Series 1997-1 Participant's pro rata share (based on the
aggregate fractional undivided interests represented by the
Series 1997-1 Participation Interest held by such Series 1997-1
Participant) of the amounts on deposit in the Collection Account
pursuant to Section 4.11(a)(ii).
(b) On each Distribution Date, the Paying Agent shall
distribute to each Series 1997-1 Participant of record on the
Record Date for such Distribution Date (other than as provided in
Section 12.02 of the Agreement respecting a final distribution)
such Series 1997-1 Participant's pro rata share (based on the
aggregate fractional undivided interests represented by the
Series 1997-1 Participation Interest held by such Series 1997-1
Participant) of the amounts on deposit in the Collection Account
with respect to Available Investor Principal Collections.
(c) Except as provided in Section 12.02 of the Agreement
with respect to a final distribution, distributions to each
Series 1997-1 Participant hereunder shall be made in immediately
available funds by wire transfer to the account designated by
such Series 1997-1 Participant.
SECTION 6. Statements to Series 1997-1 Participants.
(a) On each Distribution Date, the Paying Agent, on behalf
of the Deposit Trustee, shall forward to each Series 1997-1
Participant a statement substantially in the form of Exhibit B
prepared by the Servicer setting forth certain information relat-
ing to the Deposit Trust and the Series 1997-1 Participation
Interest.
(b) On or before January 31 of each calendar year, begin-
ning January 31, 1998, the Paying Agent, on behalf of the Deposit
Trustee, shall furnish or cause to be furnished to each Person
who at any time during the preceding calendar year was a Series
1997-1 Participant, a statement prepared by the Servicer contain-
ing the information which is required to be contained in the
statement to the Series 1997-1 Participants, as set forth in
subsection (a) above, aggregated for such preceding calendar year
or the applicable portion thereof (the initial statement shall
cover the period beginning on the Closing Date and ending on
December 31, 1997) during which such Person was a Series 1997-1
Participant, together with such other customary information as is
necessary to enable the Series 1997-1 Participants to prepare
their tax returns. Such obligation of the Servicer shall be
deemed to have been satisfied to the extent that substantially
comparable information shall be provided by the Paying Agent
pursuant to any requirements of the Internal Revenue Code, as
from time to time in effect.
(c) The form of the Monthly Servicer's Report set forth as
Exhibit B hereto may be modified as the Servicer may determine to
be necessary or desirable; provided, however, that no such modi-
fication shall serve to exclude information required by this
Section 6. The Servicer shall, upon making such determination,
deliver to the Deposit Trustee an Officer's Certificate to which
shall be annexed the form of Exhibit B, as so changed. Upon the
delivery of such Officer's Certificate to the Deposit Trustee,
Exhibit B, as so changed, shall for all purposes of this Agree-
ment constitute Exhibit B. The Deposit Trustee may conclusively
rely upon such Officer's Certificate as to such change conforming
to the requirements of the Agreement.
SECTION 7. Additional Amortization Events. If any one of the
following shall occur:
(a) failure on the part of the Seller (i) to make any pay-
ment or deposit required under the Agreement within five Business
Days after the date such payment or deposit is required to be
made or (ii) to observe or perform in any material respect any
other covenants or agreements of the Seller set forth in the
Agreement, which failure has a material adverse effect on the
Series 1997-1 Participation Interest and which continues unrem-
edied for a period of 60 days after written notice;
(b) any representation or warranty made by the Seller in
the Agreement proves to have been incorrect in any material
respect when made, as a result of which the interests of holders
of interest in the Deposit Trust are materially and adversely
affected, and which continues to be incorrect in any material
respect and continues to materially and adversely affect the
interests of holders of interest in the Deposit Trust for a
period of 60 days after written notice; provided, however, that
an Amortization Event shall not be deemed to occur if the Seller
has repurchased the related Receivables, during such period (or
within an additional 60 days with the consent of the Deposit
Trustee) in accordance with the provisions of the Agreement;
(c) the Deposit Trust or the Issuer becomes subject to
regulation by the Commission as an investment company within the
meaning of the Investment Company Act of 1940, as amended;
(d) a Servicer Default shall occur which has a material
adverse effect on the Series 1997-1 Participants;
(e) the average, for any three consecutive Payment Dates
(after making all distributions on such Payment Dates), of the
percentage equivalent of (i) the Overcollateralization Amount
divided by (ii) the unpaid principal balance of the Series 1997-1
Participation Interest, is less than 4.25%; and
(f) the Seller's Trust Amount owned by HCLC is reduced
below the Aggregate Required Seller Amount,
then, in the case of any event described in (a), (b) or (d),
an Amortization Event will be deemed to have occurred only if,
after any applicable grace period described in such clauses,
either the Deposit Trustee or holders of Series Participation
Interests evidencing more than 50% of the unpaid principal
balance of the Series 1997-1 Participation Interest, by written
notice to the Seller and the Servicer (and to the Deposit
Trustee, if given by the Series 1997-1 Participants) declare that
an Amortization Event has occurred as of the date of such notice.
In the case of any event described in clauses (c), (e) or (f), an
Amortization Event will be deemed to have occurred and an Early
Amortization Period will occur without any notice or other action
on the part of the Deposit Trustee or the Series 1997-1 Partici-
pants immediately upon the occurrence of such event.
SECTION 8. Optional Repurchase.
On the Distribution Date occurring on or after the date on
which the aggregate of the Security Balances is reduced to
$91,920,000 (10% of the aggregate of the Security Balances on the
Closing Date) or less, the Seller shall have the option to
purchase the Series 1997-1 Participants' Interest at a purchase
price equal to the Optional Repurchase Amount. The Seller shall
give the Servicer, the Rating Agency and the Deposit Trustee at
least 10 days prior written notice of the date on which the
Seller intends to exercise such option to purchase. Not later
than 10:00 A.M., New York City time, on such Distribution Date,
the Seller shall deposit the Optional Repurchase Amount into the
Collection Account in immediately available funds. Such purchase
option is subject to payment in full of the Optional Repurchase
Amount. The Optional Repurchase Amount shall be distributed as
set forth in Section 10 hereof.
SECTION 9. Sale of Series 1997-1 Participants' Interest pursuant
to Section 2.06 or 10.01 of Agreement.
(a) The amount to be paid by the Seller with respect to the
Series 1997-1 Participants' Interest in connection with a repur-
chase of the Series 1997-1 Participants' Interest pursuant to
Section 2.06 of the Agreement shall equal the Reassignment Amount
for the first Distribution Date following the Due Period in which
the reassignment obligation arises under the Agreement.
(b) The amount to be paid by the Seller with respect to
Series 1997-1 Participants' Interest in connection with a repur-
chase of the Series 1997-1 Participant's Interest pursuant to
Section 10.01 of the Agreement shall equal the sum of (x) the
Reassignment Amount for the Distribution Date of such repurchase
and (y) the excess, if any, of (I) a price equivalent to the
average of bids quoted on the Record Date preceding the date of
repurchase or, if not a Business Day, on the next succeeding
Business Day by at least two recognized dealers selected by the
Deposit Trustee (which may be selected from the list attached as
Schedule 1), for the purchase by such dealers of a security which
is similar to the Series 1997-1 Participation Interest with a
remaining maturity approximately equal to the remaining maturity
of the Series 1997-1 Participation Interest over (II) the portion
of the Reassignment Amount attributable to the Series 1997-1
Participation Interest.
SECTION 10. Distributions pursuant to Section 8 or 9 of this
Series Supplement and Section 2.06, 10.01 or 12.02(c) of Agree-
ment.
(a) With respect to the Optional Repurchase Amount
deposited into the Collection Account pursuant to Section 8, the
Reassignment Amount deposited into the Collection Account pur-
suant to Section 9 or any Termination Proceeds deposited into the
Collection Account pursuant to Section 12.02(c) of the Agreement,
the Deposit Trustee shall, not later than 1:00 P.M., New York
City time, on the date of deposit, make deposits of the following
amounts (in the priority set forth below and, in each case, after
giving effect to any deposits and distributions otherwise to be
made on such date) in immediately available funds as follows:
the Series 1997-1 Participation Interest Invested Amount on such
date and the amount of accrued and unpaid interest on the unpaid
balance of the Series 1997-1 Participation Interest, plus the
amount of the Series 1997-1 Participation Interest Additional
Interest previously due but not paid on any prior Distribution
Date, for distribution to the Series 1997-1 Participants.
(b) Notwithstanding anything to the contrary in this Series
Supplement or the Agreement, the entire amount deposited in the
Collection Account pursuant to Section 8 or Sections 9(a) or (b)
and 10(a) hereof and all other amounts on deposit therein for
distribution to the Series 1997-1 Participants shall be distrib-
uted in full to the Series 1997-1 Participants on such date and
shall be deemed to be a final distribution pursuant to Section
12.02 of the Agreement.
SECTION 11. Distribution of Proceeds of Sale, Disposition or
Liquidation of Receivables pursuant to Section 9.02 of Agreement.
(a) Not later than 1:00 P.M., New York City time, on the
Distribution Date following the date on which the Insolvency
Proceeds are received, such proceeds shall be deposited into the
Collection Account pursuant to Section 9.02(b) of the Agreement.
(b) [RESERVED]
(c) Notwithstanding anything to the contrary in this Series
Supplement or the Agreement, the entire amount deposited in the
Collection Account pursuant to this Section 11 and all other
amounts on deposit therein for distribution for the Series 1997-1
Participants shall be distributed in full to the Series 1997-1
Participants on the Distribution Date on which funds are deposit-
ed pursuant to this Section (or, if not so deposited on a Distri-
bution Date, on the immediately following Distribution Date) and
shall be deemed to be a final distribution pursuant to Section
12.02 of the Agreement.
SECTION 12. Rating Agency Notice.
In the event a Tax Opinion is delivered pursuant to Section
2.09(e)(vi) of the Agreement and the Series 1997-1 Participation
Interest is outstanding, such opinion shall be also delivered to
Moody's.
SECTION 13. [RESERVED]
SECTION 14. [RESERVED]
SECTION 15. Delivery of Series 1997-1 Participation Interest.
The Deposit Trustee shall deliver the Series 1997-1 Partici-
pation Interest to the Seller when authenticated in accordance
with Section 6.02 of the Agreement.
SECTION 16. Ratification of Agreement.
As supplemented by this Series Supplement, the Agreement is
in all respects ratified and confirmed and the Agreement, as so
supplemented by this Series Supplement shall be read, taken and
construed as one and the same instrument.
SECTION 17. Counterparts.
This Series Supplement may be executed in two or more
counterparts, each of which when so executed shall be deemed to
be an original, but all of which shall together constitute but
one and the same instrument.
SECTION 18. Governing Law.
THIS SERIES SUPPLEMENT SHALL BE CONSTRUED AND THE OBLIGA-
TIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT PREFERENCE TO ITS CONFLICT OF LAW PROVISIONS.
SECTION 19. Forms of Certificates and Monthly Servicer's Certif-
icate.
The Series 1997-1 Participation Interest and Monthly
Servicer's Certificate with respect to Series 1997-1 shall be in
substantially the respective forms attached hereto as Exhibits
A-1 and B, respectively.
SECTION 20. Transfer Restrictions.
Registration of transfer of any Series 1997-1 Participation
Interest containing the legend set forth on the Series 1997-1
Participation Interest attached hereto as Exhibit A-1 shall be
effected only if such transfer is made to a Person that certifies
to the Transfer Agent in writing that it is not an employee bene-
fit plan, trust or account, including an individual retirement
account, that is subject to ERISA or that is described in Section
4975(e)(1) of the Code or an entity whose underlying assets
include plan assets by reason of a plan's investment in such
entity (each a "Benefit Plan"). By accepting and holding a
Series 1997-1 Participation Interest, a Series 1997-1 Participant
shall be deemed to have represented and warranted that it is not
a Benefit Plan and is not purchasing a Series 1997-1 Participa-
tion Interest on behalf of a Benefit Plan. By acquiring any
interest in a Book-Entry Certificate representing a Series 1997-1
Participation Interest, a Certificate Owner shall be deemed to
have represented and warranted that it is not a Benefit Plan and
is not purchasing a Series 1997-1 Participation Interest on
behalf of a Benefit Plan.
No transfer of a Series 1997-1 Participation Interest shall
be made unless a Tax Opinion is delivered and such transfer is
exempt from the registration requirements of the Securities Act
of 1933, as amended, and any applicable state securities laws or
is made in accordance with said Act and laws. In the event of
any such transfer, (i) unless such transfer is made in reliance
upon Rule 144A under the 1933 Act, the Deposit Trustee or the
Seller may require a written Opinion of Counsel (which may be in-
house counsel) acceptable to and in form and substance reasonably
satisfactory to the Deposit Trustee and the Seller that such
transfer may be made pursuant to an exemption, describing the
applicable exemption and the basis therefor, from said Act and
laws or is being made pursuant to said Act and laws, which
Opinion of Counsel shall not be an expense of the Deposit Trustee
or the Seller and (ii) the Deposit Trustee shall require the
transferee to execute an investment letter (in substantially the
form attached hereto as Exhibit C) acceptable to and in form and
substance reasonably satisfactory to the Seller and the Deposit
Trustee certifying to the Seller and the Deposit Trustee the
facts surrounding such transfer, which investment letter shall
not be an expense of the Deposit Trustee or the Seller. A Series
1997-1 Participant desiring to effect such transfer shall, and
does hereby agree to indemnify the Deposit Trustee and the Seller
against any liability that may result if the transfer is not so
exempt or is not made in accordance with such federal and state
laws.
<PAGE>
IN WITNESS WHEREOF, the Seller, the Servicer and the
Deposit Trustee have caused this Series Supplement to be fully
executed by their respective officers as of the day and year
first above written.
HOUSEHOLD CONSUMER LOAN
CORPORATION, as Seller
By:
Name:
Title:
HOUSEHOLD FINANCE CORPORATION,
as Servicer
By:
Name:
Title:
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, as Deposit Trustee
By:
Name:
Title:<PAGE>
EXHIBIT A-1
FORM OF SERIES 1997-1 PARTICIPATION INTEREST
THIS SERIES 1997-1 PARTICIPATION INTEREST HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. NEITHER
THIS SERIES 1997-1 PARTICIPATION INTEREST NOR ANY PORTION HEREOF
MAY BE OFFERED OR SOLD EXCEPT IN COMPLIANCE WITH THE REGISTRATION
PROVISIONS OF SUCH ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM
SUCH REGISTRATION PROVISIONS.
THIS SERIES 1997-1 PARTICIPATION INTEREST IS NOT PERMITTED
TO BE TRANSFERRED, ASSIGNED, EXCHANGED OR OTHERWISE PLEDGED OR
CONVEYED EXCEPT IN COMPLIANCE WITH THE TERMS OF THE POOLING AND
SERVICING AGREEMENT AND THE SERIES 1997-1 SUPPLEMENT THERETO,
BOTH REFERRED TO HEREIN.
No. R-__ One Unit
HOUSEHOLD CONSUMER LOAN DEPOSIT TRUST I
SERIES 1997-1 PARTICIPATION INTEREST
THIS CERTIFICATE REPRESENTS AN INTEREST
IN CERTAIN ASSETS OF
HOUSEHOLD CONSUMER LOAN DEPOSIT TRUST I
Evidencing an interest in a trust, the corpus of which consists
primarily of participation interests and receivables generated
from time to time in the ordinary course of business in a port-
folio of credit lines provided by Household Consumer Loan
Corporation.
(Not an interest in or obligation of Household Consumer Loan
Corporation or any affiliate thereof)
This certifies that _______________, is the registered owner
of a fractional interest in the assets of a trust (the "Trust")
pursuant to the Pooling and Servicing Agreement dated as of
September 1, 1995 (the "Agreement"), by and among Household
Consumer Loan Corporation, as seller (the "Seller"), Household
Finance Corporation, as servicer (the "Servicer"), and Texas
Commerce Bank National Association, the successor to The Chase
Manhattan Bank, N.A., as deposit trustee (the "Trustee"), as
supplemented by the Supplement for Series 1997-1 dated as of
March 1, 1997 (the "Supplement"), by and among the Seller, the
Servicer and the Trustee. The corpus of the Trust consists of
(a) receivables originated under certain fixed and variable rate
revolving unsecured consumer credit lines (the "Credit Lines"),
(b) the preferred stock of the Seller and (c) certain monies
constituting Recoveries allocated to the Trust pursuant to the
Agreement and any Supplement. Although a summary of certain
provisions of the Agreement and the Supplement is set forth
below, this Series 1997-1 Participation Interest does not purport
to summarize the Agreement or the Supplement and reference is
made to the Agreement and the Supplement for information with
respect to the interests, rights, benefits, obligations, proceeds
and duties evidenced hereby and the rights, duties and obliga-
tions of the Trustee. A copy of the Agreement and the Supplement
may be requested from the Trustee by writing to the Trustee at
the Corporate Trust Office. To the extent not defined herein,
the capitalized terms used herein have the meanings ascribed to
them in the Agreement or the Supplement, as applicable.
This Series 1997-1 Participation Interest is issued under
and is subject to the terms, provisions and conditions of the
Agreement and the Supplement, to which the holder of this Series
1997-1 Participation Interest by virtue of the acceptance hereof
assents and is bound.
The Receivables consist of amounts payable by obligors on
the Credit Lines from time to time, including amounts payable for
Principal Receivables and Finance Charge and Administrative
Receivables.
This Certificate is the Series 1997-1 Participation Interest
which represents an interest in certain assets of the Trust,
which includes the right to receive a portion of the Collections
and other amounts at the times and in the amounts specified in
the Agreement and Supplement. The aggregate interest represented
by the Series 1997-1 Participation Interest at any time in the
Receivables in the Trust shall not exceed the Series 1997-1
Participation Interest Invested Amount at such time. In addition
to the Series 1997-1 Participation Interest, (i) Investor Certif-
icates and additional Series Participation Interests may be
issued to investors pursuant to the Agreement, which will repre-
sent the Certificateholders' Interest and (ii) Supplemental
Seller Participation Interests may be issued pursuant to the
Agreement, which will represent that portion of the Seller's
Interest not allocated to the Seller.
In general, this Series 1997-1 Participation Interest is
entitled to receive distributions in respect of the collections
of the Trust in accordance with the terms of the Agreement and
Supplement on the 14th day of each calendar month or if such day
is not a business day then on the next preceding business day,
commencing in April 1997.
Unless the certificate of authentication hereon has been
executed by or on behalf of the Trustee, by manual or facsimile
signature, this Series 1997-1 Participation Interest shall not be
entitled to any benefit under the Agreement or the Supplement, or
be valid for any purpose.
IN WITNESS WHEREOF, the Seller has caused this Series 1997-1
Participation Interest to be duly executed.
HOUSEHOLD CONSUMER LOAN CORPORATION
By:
Name:
Title:
Dated: March ___, 1997
TRUSTEE'S CERTIFICATE OF AUTHORIZATION
This is one of the Series 1997-1 Participation Interests
described in the within-mentioned
Pooling and Servicing Agreement and Supplement.
TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
as Trustee
By:
Authorized Signatory<PAGE>
HOUSEHOLD CONSUMER LOAN DEPOSIT TRUST I
SERIES 1997-1 PARTICIPATION INTEREST
Summary of Terms and Conditions
The Series 1997-1 Participation Interest constitutes an
undivided beneficial interest in the Receivables held in the
Trust. The holder of the Series 1997-1 Participation Interest
shares on the basis of a specified percentage of the principal
balance of the Receivables held as assets of the Trust. The
Series 1997-1 Participation Interest initially represents a prin-
cipal balance of $960,000,000. Thereafter, the Series 1997-1
Participation Interest Invested Amount with respect to any date
will be an amount equal to the Series 1997-1 Participation
Interest Initial Invested Amount minus the sum of the Series
1997-1 Participation Interest Principal Distribution Amount paid
for all Distribution Dates and the Defaulted Amounts allocated to
the Series 1997-1 Participation Interest during the related and
all prior Due Periods that have not been included in the Series
1997-1 Participation Interest Principal Distribution Amount on
the current or any prior Distribution Date.
On each Distribution Date, the Paying Agent shall distribute
to each Series 1997-1 Participant of record on the Record Date
for such Distribution Date (other than as provided in Section
12.02 of the Agreement respecting a final distribution) such
Series 1997-1 Participant's pro rata share (based on the aggre-
gate fractional undivided interests represented by Series 1997-1
Participation Interests held by such Series 1997-1 Participant)
of the amounts on deposit in the Collection Account pursuant to
the Agreement and the Supplement.
Except as provided in the Agreement with respect to a final
distribution, distributions to Series Participants shall be made
in immediately available funds by wire transfer to the account
designated by such Series 1997-1 Participant.
The Seller shall have the option to purchase the Series
1997-1 Participation Interest at a purchase price equal to the
Optional Repurchase Amount in accordance with the provisions of
Section 8 of the Supplement. Such purchase option is subject to
payment in full of the Optional Repurchase Amount. The Optional
Repurchase Amount shall be distributed as set forth in the
Agreement and Supplement.
This Series 1997-1 Participation Interest does not represent
an obligation of, or an interest in, the Seller, the Servicer or
any affiliate of any of them and is not insured or guaranteed by
any other governmental agency or instrumentality. This Series
1997-1 Participation Interest is limited in right of payment to
certain collections representing the Receivables and any Partic-
ipation Interests (and certain other amounts) all as more specif-
ically set forth herein above and in the Agreement and the
Supplement.
The Agreement and the Supplement may be amended by the
Seller, the Servicer and the Trustee, without the consent of the
Series 1997-1 Participants. The Trustee may, but shall not be
obligated to, enter into any such amendment which affects the
Trustee's rights, duties or immunities under the Agreement or
otherwise.
The Agreement and the Supplement may be amended by the
Seller, the Servicer and the Trustee with the consent of the
Holders of Investor Certificates evidencing not less than 66-2/3%
of the aggregate unpaid principal amount of the Investor Certifi-
cates and the Series Participants of all adversely affected
Series for which the Seller has not delivered an Officer's
Certificate stating that there is no Adverse Effect, for the
purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of the Agreement or any
Supplement or of modifying in any manner the rights of Investor
Certificateholders or Series Participants; provided, however,
that no such amendment shall (a) reduce in any manner the amount
of, or delay the timing of, distributions to Investor Certifi-
cateholders or holder of any Series Participation Interest with-
out the consent of each such Holder, (b)(i) change the definition
of or the manner of calculating the interest of any Investor
Certificateholder or Series Participant without the consent of
each affected Investor Certificateholder or Series Participant or
(ii) reduce the aforesaid percentage required to consent to any
such amendment, in either case without the consent of each
Investor Certificateholder or Series Participant. Any such
amendment and any such consent by the holder of the Series 1997-1
Participants shall be conclusive and binding on such Series 1997-
1 Participants and upon all future holders of this Series 1997-1
Participation Interest and of any Series 1997-1 Participation
Interest issued in exchange hereof or in lieu hereof whether or
not notation thereof is made upon this Series 1997-1 Participa-
tion Interest.
As set forth in Section 6.05 of the Agreement, the transfer
of this Series 1997-1 Participation Interest shall be registered
in the Certificate Register upon surrender of this Series 1997-1
Participation Interest for registration of transfer at any office
or agency maintained by the Transfer Agent and Registrar accom-
panied by a written instrument of transfer, in a form satisfac-
tory to the Trustee or the Transfer Agent and Registrar, duly
executed by the Series 1997-1 Participant or such Series 1997-1
Participant's attorney, and duly authorized in writing with such
signature guaranteed, and thereupon one or more new Series 1997-1
Participation Interests of authorized denominations and for the
same aggregate Fractional Undivided Interest will be issued to
the designated transferee or transferees.
As provided in the Agreement and subject to certain limita-
tions therein set forth, the Series 1997-1 Participation
Interests are exchangeable for new Series 1997-1 Participation
Interests evidencing like aggregate fractional undivided
interests as requested by the holder surrendering such Series
1997-1 Participation Interest. No service charge may be imposed
for any such exchange but the Servicer or Transfer Agent and
Registrar may require payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in
connection therewith.
The Seller, the Servicer, the Trustee, the Paying Agent and
the Transfer Agent and Registrar and any agent of any of them,
may treat the person in whose name this Series 1997-1 Participa-
tion Interest is registered as the owner hereof for all purposes,
and neither the Servicer nor the Seller, the Trustee, the Paying
Agent, the Transfer Agent and Registrar, nor any agent of any of
them, shall be affected by notice to the contrary except in
certain circumstances described in the Agreement.
THIS SERIES 1997-1 PARTICIPATION INTEREST SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK.<PAGE>
ASSIGNMENT
Social Security or other identifying number of assignee
FOR VALUE RECEIVED, the undersigned hereby sells, assigns
and transfers unto
(name and address of assignee)
the within certificate and all rights thereunder, and hereby
irrevocably constitutes and appoints attorney,
to transfer said certificate on the books kept for registration
thereof, with full power of substitution in the premises.
Dated:
(1) A Non-U.S. Person as
defined in the Internal
Revenue Code of 1986, as
amended, must certify to
the Trustee in writing
as to its Non-U.S.
Person status and such
further information as
may be required under
the Code or reasonably
requested by the
Trustee.<PAGE>
Note: The signature(s)
to this Assign-
ment must corres-
pond with the
name(s) as writ-
ten on the face
of the within
certificate in
every particular
without altera-
tion or enlarge-
ment or any
change what-
soever.<PAGE>
EXHIBIT B
FORM OF MONTHLY SERVICER'S CERTIFICATE
(To be delivered pursuant to Section 3.04(b)
of the Amended and Restated Pooling and Servicing
Agreement not later than the second Business
Day preceding each Distribution Date)
HOUSEHOLD FINANCE CORPORATION
HOUSEHOLD CONSUMER LOAN CORPORATION
HOUSEHOLD CONSUMER LOAN TRUST 1997-1
Consumer Loan Asset Backed Notes, Series 1997-1,
Class A-1, Class A-2, Class A-3 and Class B
The undersigned, a duly authorized representative of
Household Finance Corporation, as servicer (the "Servicer"),
pursuant to the Pooling and Servicing Agreement dated as of
September 1, 1995 (the "Pooling and Servicing Agreement") by and
among Household Consumer Loan Corporation, as seller (the
"Seller"), the Servicer, and Texas Commerce Bank National Associ-
ation, the successor to The Chase Manhattan Bank, N.A., as
deposit trustee (the "Deposit Trustee"), does hereby certify with
respect to the information set forth below as follows:
1. Capitalized terms used in this Certificate
shall have the respective meanings set forth
in the Pooling and Servicing Agreement.
2. Household Finance Corporation is, as of the
date hereof, the Servicer under the Pooling
and Servicing Agreement.
3. The undersigned is a Servicing Officer.
4. This Certificate relates to the Distribution
Date occurring on .
5. Deposit Trust Information.
(a) Total Pool Balance of the
Receivables for the Due Period
preceding such Distribution Date
was equal to . . . . . . . . . . . . . . $
(b) Amount of Sub-total Unsecured
Consumer Loans for the Due Period
preceding such Distribution Date
was equal to . . . . . . . . . . . . . . $
(c) Amount of Sub-total Personal
Homeowner Lines for the Due Period
preceding such Distribution Date
was equal to. . . . . . . . . . . . . . . $
(d) Amount of Series 1997-1 Principal
Collections for the preceding Due
Period is . . . . . . . . . . . . . . . . $
(e) Amount of Series 1997-1 Finance
Charge and Administrative
Collections as of the last day of
the immediately preceding Due
Period is . . . . . . . . . . . . . . . . $
(f) Amount of Additional Balances for
such Distribution Date is . . . . . . . . $
(g) Amount of New Credit Lines is . . . . . . $
(h) Amount of Additional Credit Lines
is. . . . . . . . . . . . . . . . . . . . $
(i) Amount of Removed Credit Lines is . . . . $
(j) Defaulted Amount is . . . . . . . . . . . $
(k) Amount of Repurchased Credit Lines
pursuant to Section 2.10 of the
Agreement is. . . . . . . . . . . . . . . $
(l) Applicable allocation percentages
for principal and interest for such
Distribution Date are . . . . . . . . . . %
%
(m) Series 1997-1 Participation
Interest Distribution Amount is . . . . . $
(n) Accelerated Principal Distribution
Amount is . . . . . . . . . . . . . . . . $
(o) Series 1997-1 Participation
Interest Principal Distribution
Amount is . . . . . . . . . . . . . . . . $
(p) Net Charge-Off Amounts (monthly and
cumulative) are . . . . . . . . . . . . . $
$
(q) Reversals (monthly and cumulative)
are . . . . . . . . . . . . . . . . . . . $
$
(r) Servicing Fee . . . . . . . . . . . . . . $
IN WITNESS WHEREOF, the undersigned has duly executed and
delivered this Certificate this day of , 199 .
HOUSEHOLD FINANCE CORPORATION,
as Servicer
By:
Name:
Title:<PAGE>
EXHIBIT C
[FORM OF RULE 144A INVESTMENT REPRESENTATION]
Description of Rule 144A Securities, including numbers:
_______________________________________________
_______________________________________________
_______________________________________________
_______________________________________________
The undersigned seller, as registered holder (the "Seller"),
intends to transfer the Rule 144A Securities described above to
the undersigned buyer (the "Buyer").
1. In connection with such transfer and in accordance with
the agreements pursuant to which the Rule 144A Securities were
issued, the Seller hereby certifies the following facts: Neither
the Seller nor anyone acting on its behalf has offered, trans-
ferred, pledged, sold or otherwise disposed of the Rule 144A
Securities, any interest in the Rule 144A Securities or any other
similar security to, or solicited any offer to buy or accept a
transfer, pledge or other disposition of the Rule 144A Securi-
ties, any interest in the Rule 144A Securities or any other
similar security from, or otherwise approached or negotiated with
respect to the Rule 144A Securities, any interest in the Rule
144A Securities or any other similar security with, any person in
any manner, or made any general solicitation by means of general
advertising or in any other manner, or taken any other action,
that would constitute a distribution of the Rule 144A Securities
under the Securities Act of 1933, as amended (the "1933 Act"), or
that would render the disposition of the Rule 144A Securities a
violation of Section 5 of the 1933 Act or require registration
pursuant thereto, and that the Seller has not offered the Rule
144A Securities to any person other than the Buyer or another
"qualified institutional buyer" as defined in Rule 144A under the
1933 Act.
2. The Buyer warrants and represents to, and covenants
with, the Deposit Trustee, and the Seller (as defined in the
Pooling and Servicing Agreement (the "Agreement") dated as of
September 1, 1995 among Household Consumer Loan Corporation, as
Seller and as Holder of the Designated Certificate, and Texas
Commerce Bank National Association, the successor to The Chase
Manhattan Bank, N.A., as Deposit Trustee) as follows:
a. The Buyer understands that the Rule 144A
Securities have not been registered under the 1933 Act or
the securities laws of any state.
b. The Buyer considers itself a substantial, sophis-
ticated institutional investor having such knowledge and
experience in financial and business matters that it is
capable of evaluating the merits and risks of investment in
the Rule 144A Securities.
c. The Buyer has been furnished with all information
regarding the Rule 144A Securities that it has requested
from the Seller and the Deposit Trustee or the Servicer.
d. Neither the Buyer nor anyone acting on its behalf
has offered, transferred, pledged, sold or otherwise
disposed of the Rule 144A Securities, any interest in the
Rule 144A Securities or any other similar security to, or
solicited any offer to buy or accept a transfer, pledge or
other disposition of the Rule 144A Securities, any interest
in the Rule 144A Securities or any other similar security
from, or otherwise approached or negotiated with respect to
the Rule 144A Securities, any interest in the Rule 144A
Securities or any other similar security with, any person in
any manner, or made any general solicitation by means of
general advertising or in any other manner, or taken any
other action, that would constitute a distribution of the
Rule 144A Securities under the 1933 Act or that would render
the disposition of the Rule 144A Securities a violation of
Section 5 of the 1933 Act or require registration pursuant
thereto, nor will it act, nor has it authorized or will it
authorize any person to act, in such manner with respect to
the Rule 144A Securities.
e. The Buyer is a "qualified institutional buyer" as
that term is defined in Rule 144A under the 1933 Act and has
completed either of the forms of certification to that
effect attached hereto as Annex 1 or Annex 2. The Buyer is
aware that the sale to it is being made in reliance on Rule
144A. The Buyer is acquiring the Rule 144A Securities for
its own account or the accounts of other qualified institu-
tional buyers, understands that such Rule 144A Securities
may be resold, pledged or transferred only (i) to a person
reasonably believed to be a qualified institutional buyer
that purchases for its own account or for the account of a
qualified institutional buyer to whom notice is given that
the resale, pledge or transfer is being made in reliance on
Rule 144A, or (ii) pursuant to another exemption from regis-
tration under the 1933 Act.
[3. The Buyer warrants and represents to, and covenants
with, the Seller, the Deposit Trustee, Servicer and the Seller
that either (1) the Buyer is (A) not an employee benefit plan
(within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")), or a plan
(within the meaning of Section 4975(e)(1) of the Internal Revenue
Code of 1986 ("Code")), which (in either case) is subject to
ERISA or Section 4975 of the Code (both a "Plan"), and (B) is not
directly or indirectly purchasing the Rule 144A Securities on
behalf of, as investment manager of, as named fiduciary of, as
trustee of, or with "plan assets" of a Plan, or (2) the Buyer
understands that registration of transfer of any Rule 144A
Securities to any Plan, or to any Person acting on behalf of any
Plan, will not be made unless such Plan delivers an opinion of
its counsel, addressed and satisfactory to the Certificate Regis-
trar and the Seller, to the effect that the purchase and holding
of the Rule 144A Securities by, on behalf of or with "plan
assets" of any Plan would not constitute or result in a
prohibited transaction under Section 406 of ERISA or Section 4975
of the Code, and would not subject the Seller, the Servicer, the
Indenture Trustee or the Issuer to any obligation or liability
(including liabilities under ERISA or Section 4975 of the Code)
in addition to those undertaken in the Agreement or any other
liability.]
4. The Buyer has otherwise complied with any conditions
for transfer set forth in the Trust Agreement, and (h), either
(i) is a "C Corporation" under the Internal Revenue Code of 1986,
as amended, or (ii) has provided such disclosure concerning our
status for federal income tax purposes and the status and
economic interest of our beneficial owners, as the Issuer or its
representatives have reasonably requested to determine that the
Buyer's acquisition of the Certificates will not subject the
Issuer to an entity level tax.
5. This document may be executed in one or more counter-
parts and by the different parties hereto on separate
counterparts, each of which, when so executed, shall be deemed to
be an original; such counterparts, together, shall constitute one
and the same document.
IN WITNESS WHEREOF, each of the parties has executed this
document as of the date set forth below.
Print Name of Seller Print Name of Buyer
By: By:
Name: Name:
Title: Title:
Taxpayer Identification: Taxpayer Identification:
No. No.
Date: Date: <PAGE>
ANNEX 1 TO EXHIBIT C
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Buyers Other Than Registered Investment Companies]
The undersigned hereby certifies as follows in connection
with the Rule 144A Investment Representation to which this
Certification is attached:
1. As indicated below, the undersigned is the President,
Chief Financial Officer, Senior Vice President or other executive
officer of the Buyer.
2. In connection with purchases by the Buyer, the Buyer is
a "qualified institutional buyer" as that term is defined in Rule
144A under the Securities Act of 1933 ("Rule 144A") because (i)
the Buyer owned and/or invested on a discretionary basis
$______________________ in securities (except for the excluded
securities referred to below) as of the end of the Buyer's most
recent fiscal year (such amount being calculated in accordance
with Rule 144A) and (ii) the Buyer satisfies the criteria in the
category marked below.
___ Corporation, etc. The Buyer is a corporation (other
than a bank, savings and loan association or similar
institution), Massachusetts or similar business trust,
partnership, or charitable organization described in
Section 501(c)(3) of the Internal Revenue Code.
___ Bank. The Buyer (a) is a national bank or banking
institution organized under the laws of any State,
territory or the District of Columbia, the business of
which is substantially confined to banking and is
supervised by the State or territorial banking
commission or similar official or is a foreign bank or
equivalent institution, and (b) has an audited net
worth of at least $25,000,000 as demonstrated in its
latest annual financial statements, a copy of which is
attached hereto.
___ Savings and Loan. The Buyer (a) is a savings and loan
association, building and loan association, cooperative
bank, homestead association or similar institution,
which is supervised and examined by a State or Federal
authority having supervision over any such institutions
or is a foreign savings and loan association or
equivalent institution and (b) has an audited net worth
of at least $25,000,000 as demonstrated in its latest
annual financial statements.
___ Broker-Dealer. The Buyer is a dealer registered
pursuant to Section 15 of the Securities Exchange Act
of 1934.
___ Insurance Company. The Buyer is an insurance company
whose primary and predominant business activity is the
writing of insurance or the reinsuring of risks
underwritten by insurance companies and which is
subject to supervision by the insurance commissioner or
a similar official or agency of a State or territory or
the District of Columbia.
___ State or Local Plan. The Buyer is a plan established
and maintained by a State, its political subdivisions,
or any agency or instrumentality of the State or its
political subdivisions, for the benefit of its
employees.
___ ERISA Plan. The Buyer is an employee benefit plan
within the meaning of Title I of the Employee
Retirement Income Security Act of 1974.
___ Investment Adviser. The Buyer is an investment
adviser registered under the Investment Advisers Act of
1940.
___ SBIC. The Buyer is a Small Business Investment Company
licensed by the U.S. Small Business Administration
under Section 301(c) or (d) of the Small Business
Investment Act of 1958.
___ Business Development Company. The Buyer is a business
development company as defined in Section 202(a)(22) of
the Investment Advisers Act of 1940.
___ Trust Fund. The Buyer is a trust fund whose trustee is
a bank or trust company and whose participants are
exclusively (a) plans established and maintained by a
State, its political subdivisions, or any agency or
instrumentality of the State or its political
subdivisions, for the benefit of its employees, or
(b) employee benefit plans within the meaning of Title
I of the Employee Retirement Income Security Act of
1974, but is not a trust fund that includes as
participants individual retirement accounts or H.R. 10
plans.
3. The term "securities" as used herein does not include
(i) securities of issuers that are affiliated with the Buyer,
(ii) securities that are part of an unsold allotment to or
subscription by the Buyer, if the Buyer is a dealer, (iii) bank
deposit notes and certificates of deposit, (iv) loan
participations, (v) repurchase agreements, (vi) securities owned
but subject to a repurchase agreement and (vii) currency,
interest rate and commodity swaps.
4. For purposes of determining the aggregate amount of
securities owned and/or invested on a discretionary basis by the
Buyer, the Buyer used the cost of such securities to the Buyer
and did not include any of the securities referred to in the
preceding paragraph. Further, in determining such aggregate
amount, the Buyer may have included securities owned by
subsidiaries of the Buyer, but only if such subsidiaries are
consolidated with the Buyer in its financial statements prepared
in accordance with generally accepted accounting principles and
if the investments of such subsidiaries are managed under the
Buyer's direction. However, such securities were not included if
the Buyer is a majority-owned, consolidated subsidiary of another
enterprise and the Buyer is not itself a reporting company under
the Securities Exchange Act of 1934.
5. The Buyer acknowledges that it is familiar with Rule
144A and understands that the seller to it and other parties
related to the Certificates are relying and will continue to rely
on the statements made herein because one or more sales to the
Buyer may be in reliance on Rule 144A.
___ ___ Will the Buyer be purchasing the Rule 144A
Yes No Securities only for the Buyer's own account?
6. If the answer to the foregoing question is "no", the
Buyer agrees that, in connection with any purchase of securities
sold to the Buyer for the account of a third party (including any
separate account) in reliance on Rule 144A, the Buyer will only
purchase for the account of a third party that at the time is a
"qualified institutional buyer" within the meaning of Rule 144A.
In addition, the Buyer agrees that the Buyer will not purchase
securities for a third party unless the Buyer has obtained a
current representation letter from such third party or taken
other appropriate steps contemplated by Rule 144A to conclude
that such third party independently meets the definition of
"qualified institutional buyer" set forth in Rule 144A.
7. The Buyer will notify each of the parties to which this
certification is made of any changes in the information and
conclusions herein. Until such notice is given, the Buyer's
purchase of Rule 144A Securities will constitute a reaffirmation
of this certification as of the date of such purchase.
8. The Buyer has otherwise complied with any conditions
for transfer set forth in the Trust Agreement, and, either (i) is
a "C Corporation" under the Internal Revenue Code of 1986, as
amended, or (ii) has provided such disclosure concerning our
status for federal income tax purposes and the status and
economic interest of our beneficial owners, as the Issuer or its
representatives have reasonably requested to determine that the
Buyer's acquisition of the Certificates will not subject the
Issuer to an entity level tax.
Print Name of Buyer
By:
Name:
Title:
Date: <PAGE>
ANNEX 2 TO EXHIBIT C
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Buyers That Are Registered Investment Companies]
The undersigned hereby certifies as follows in connection
with the Rule 144A Investment Representation to which this
Certification is attached:
1. As indicated below, the undersigned is the President,
Chief Financial Officer or Senior Vice President of the Buyer or,
if the Buyer is a "qualified institutional buyer" as that term is
defined in Rule 144A under the Securities Act of 1933
("Rule 144A") because Buyer is part of a Family of Investment
Companies (as defined below), is such an officer of the Adviser.
2. In connection with purchases by Buyer, the Buyer is a
"qualified institutional buyer" as defined in SEC Rule 144A
because (i) the Buyer is an investment company registered under
the Investment Company Act of 1940, and (ii) as marked below, the
Buyer alone, or the Buyer's Family of Investment Companies, owned
at least $100,000,000 in securities (other than the excluded
securities referred to below) as of the end of the Buyer's most
recent fiscal year. For purposes of determining the amount of
securities owned by the Buyer or the Buyer's Family of
Investment Companies, the cost of such securities was used.
____ The Buyer owned $___________________ in securities
(other than the excluded securities referred to below)
as of the end of the Buyer's most recent fiscal year
(such amount being calculated in accordance with
Rule 144A).
____ The Buyer is part of a Family of Investment Companies
which owned in the aggregate $______________ in
securities (other than the excluded securities referred
to below) as of the end of the Buyer's most recent
fiscal year (such amount being calculated in accordance
with Rule 144A).
3. The term "Family of Investment Companies" as used
herein means two or more registered investment companies (or
series thereof) that have the same investment adviser or
investment advisers that are affiliated (by virtue of being
majority owned subsidiaries of the same parent or because one
investment adviser is a majority owned subsidiary of the other).
4. The term "securities" as used herein does not include
(i) securities of issuers that are affiliated with the Buyer or
are part of the Buyer's Family of Investment Companies, (ii) bank
deposit notes and certificates of deposit, (iii) loan
participations, (iv) repurchase agreements, (v) securities owned
but subject to a repurchase agreement and (vi) currency, interest
rate and commodity swaps.
5. The Buyer is familiar with Rule 144A and understands
that each of the parties to which this certification is made are
relying and will continue to rely on the statements made herein
because one or more sales to the Buyer will be in reliance on
Rule 144A. In addition, the Buyer will only purchase for the
Buyer's own account.
6. The undersigned will notify each of the parties to
which this certification is made of any changes in the
information and conclusions herein. Until such notice, the
Buyer's purchase of Rule 144A Securities will constitute a
reaffirmation of this certification by the undersigned as of the
date of such purchase.
7. The Buyer has otherwise complied with any conditions
for transfer set forth in the Trust Agreement, and (h), either
(i) is a "C Corporation" under the Internal Revenue Code of 1986,
as amended, or (ii) has provided such disclosure concerning our
status for federal income tax purposes and the status and
economic interest of our beneficial owners, as the Issuer or its
representatives have reasonably requested to determine that the
Buyer's acquisition of the Certificates will not subject the
Issuer to an entity level tax.
Print Name of Buyer
By:
Name:
Title:
IF AN ADVISER:
Print Name of Buyer
Date:
EXECUTION COPY
This ADMINISTRATION AGREEMENT dated as of March 1, 1997
(as amended from time to time, this "Agreement"), among HOUSEHOLD
CONSUMER LOAN CORPORATION, a Nevada corporation ("HCLC"),
HOUSEHOLD CONSUMER LOAN TRUST 1997-1, a Delaware business trust
(the "Issuer"), CHASE MANHATTAN BANK DELAWARE, a Delaware banking
corporation, as owner trustee (the "Owner Trustee"), and
HOUSEHOLD FINANCE CORPORATION, a Delaware corporation, as
administrator (the "Administrator"),
W I T N E S S E T H :
WHEREAS, the Issuer is issuing the Household Consumer
Loan Asset Backed Notes, Series 1997-1, Class A-1 Notes, Class
A-2 Notes, Class A-3 Notes and Class B Notes (collectively, the
"Notes") pursuant to the Indenture dated as of March 1, 1997 (as
amended and supplemented from time to time, the "Indenture"),
between the Issuer and The Bank of New York, a New York banking
corporation, as indenture trustee (the "Indenture Trustee") and
the Household Consumer Loan Asset Backed Certificates, Series
1997-1 (the "Certificates" and together with the Notes, the
"Securities") pursuant to the Trust Agreement dated as of March
1, 1997 (the "Trust Agreement") among HCLC, as Seller and as
Holder of the Designated Certificate (with any successor Holder
of the Designated Certificate, the "Seller"), and the Owner
Trustee. (Capitalized terms used and not otherwise defined
herein shall have the meanings assigned such terms in the Trust
Agreement); and
WHEREAS, pursuant to the Basic Documents, the Seller,
the Issuer and the Owner Trustee are required to perform certain
duties in connection with (a) the Notes and the collateral there-
for pledged pursuant to the Indenture (the "Collateral") and (b)
the Certificates (the registered holders of such interests being
referred to herein as the "Certificateholders"); and
WHEREAS, the Seller, the Issuer and the Owner Trustee
desire to have the Administrator perform certain of the duties of
the Seller under the Trust Agreement and of the Issuer under the
Trust Agreement and the Indenture, (collectively, the "Related
Agreements"), and to provide such additional services consistent
with the terms of this Agreement and the Related Agreements as
the Seller, the Issuer and the Owner Trustee may from time to
time request (and the Indenture Trustee is executing this Agree-
ment to acknowledge its consent to the Administrator's perfor-
mance of those duties and services); and
WHEREAS, the Administrator has the capacity to provide
the services required hereby and is willing to perform such
services for the Seller, the Issuer and the Owner Trustee on the
terms set forth herein;
NOW, THEREFORE, in consideration of the mutual cove-
nants contained herein, and other good and valuable considera-
tion, the receipt and adequacy of which are hereby acknowledged,
the parties agree as follows:
1. Duties of the Administrator.
(a) Duties with Respect to the Related Agreements.
(i) The Administrator agrees to perform all its
duties as Administrator and the duties of the Issuer under
the Related Agreements and the Seller under the Trust Agree-
ment. In addition, the Administrator shall consult with the
Owner Trustee regarding the duties of the Issuer under the
Related Agreements. The Administrator shall monitor the
performance of the Issuer and shall advise the Owner Trustee
when action is necessary to comply with the Issuer's duties
under the Related Agreements. The Administrator shall
prepare for execution by the Issuer or the Seller, as the
case may be, or shall cause the preparation by other appro-
priate persons or entities of, all such documents, reports,
filings, instruments, certificates and opinions that it
shall be the duty of the Issuer or the Seller to prepare,
file or deliver pursuant to the Related Agreements. In
furtherance of the foregoing, the Administrator shall take
all appropriate action that is the duty of the Issuer to
take pursuant to the Indenture including, without limita-
tion, such of the foregoing as are required with respect to
the following matters under the Indenture (references are to
sections of the Indenture):
(A) the duty to cause newly appointed Paying
Agents, if any, to deliver to the Indenture Trustee the
instrument specified in the Indenture regarding funds
held in trust (Section 3.03);
(B) the direction to the Indenture Trustee
to deposit moneys with Paying Agents, if any, other
than the Indenture Trustee (Section 3.03);
(C) the preparation and delivery to the
Owner Trustee for execution, and to the authenticating
agent for authentication and delivery, of new Certifi-
cates for transfers and replacements of Certificates
(Sections 3.05 and 3.06);
(D) the preparation of the Issuer's annual
statement as to compliance with the Indenture (Section
3.10);
(E) the preparation and obtaining of docu-
ments and instruments required for the release of the
Issuer from its obligations under the Indenture
(Section 3.15);
(F) the delivery of written notice to the
Indenture Trustee and the Rating Agencies of each Event
of Default under the Indenture (Section 3.21);
(G) the administration of the Issuer's obli-
gations as to the satisfaction and discharge of the
Indenture and the preparation of an Officer's Certifi-
cate and the obtaining of the Opinion of Counsel and
the Independent Certificate relating thereto
(Section 10.01);
(H) the preparation and delivery of notice
to Noteholders and each Rating Agency of the removal of
the Indenture Trustee and the appointment of a succes-
sor Indenture Trustee (Section 6.08);
(I) subject to Section 1(b)(i) hereof, the
preparation and, after execution by the Seller on
behalf of the Issuer, the filing with the Commission,
any applicable state agencies and the Indenture Trustee
of documents required to be filed on a periodic basis
with, and summaries thereof as may be required by rules
and regulations prescribed by, the Commission and any
applicable state agencies and the transmission of such
summaries, as necessary, to the Noteholders
(Section 7.03);
(J) the preparation of an Issuer Request and
Officer's Certificate and the obtaining of an Opinion
of Counsel and Independent Certificates, if necessary,
for the release of the Trust Estate (Sections 8.05 and
8.03);
(K) the preparation of Issuer Requests and
the obtaining of Opinions of Counsel with respect to
the execution of supplemental indentures and the
mailing to the Noteholders of notices with respect to
such supplemental indentures (Sections 9.01, 9.02 and
9.03);
(L) the execution and delivery of new Notes
conforming to any supplemental indenture
(Section 9.06);
(M) the preparation and delivery of
Officer's Certificates and the obtaining of Independent
Certificates, if necessary, for the release of property
from the lien of the Indenture (Section 10.01(b));
(N) the recording of the Indenture, if
applicable (Section 10.14); and
(O) the obtaining of the opinion referred to
in Section 3.07(b) of the Indenture.
(ii) The Administrator will:
(A) indemnify the Indenture Trustee and its
agents for, and hold them harmless against, any losses,
liability or expense, including reasonable attorneys
fees and expenses, incurred without willful misconduct,
negligence or bad faith on their part, arising out of
the willful misconduct, gross negligence or bad faith
of the Administrator in the performance of the
transactions contemplated by this Agreement;
(B) indemnify the Owner Trustee and its
agents for, and hold them harmless against, any losses,
liability or expense, including reasonable attorneys
fees and expenses, incurred without willful misconduct,
negligence or bad faith on their part, arising out of
the willful misconduct, gross negligence or bad faith
of the Administrator in the performance of the trans-
actions contemplated by this Agreement;
(C) indemnify the Seller and its agents
for, and hold them harmless against, any losses,
liability or expense, including reasonable attorneys
fees and expenses, incurred without willful misconduct,
gross negligence or bad faith on their part, arising
out of the willful misconduct, gross negligence or bad
faith of the Administrator in the performance of the
transactions contemplated by this Agreement;
(D) pay the Owner Trustee, as compensation
for its services, such fees as have been separately
agreed upon before the date hereof, and the Adminis-
trator will reimburse the Owner Trustee for its
reasonable expenses under the Basic Documents,
including the reasonable compensation, expenses and
disbursements of such agents, representatives, experts
and outside counsel as the Owner Trustee may reasonably
employ in connection with the exercise and performance
of its rights and its duties under the Basic Documents;
and
(E) be liable as primary obligor for, and
will indemnify the Owner Trustee and its successors,
assigns, agents and servants (collectively, the
"Indemnified Parties") from and against, any and all
liabilities, obligations, losses, damages, taxes,
claims, actions and suits, and any and all reasonable
costs, expenses and disbursements (including reasonable
legal fees and expenses) of any kind and nature what-
soever (collectively, "Expenses") which may at any time
be imposed on, incurred by, or asserted against the
Owner Trustee or any Indemnified Party in any way
relating to or arising out of the Trust Agreement, the
Basic Documents, the Owner Trust Estate, the adminis-
tration of the Owner Trust Estate or the action or
inaction of the Owner Trustee thereunder, provided,
that:
(1) the Administrator shall not be liable
for or required to indemnify an Indemnified Party
from and against Expenses arising or resulting
from the Owner Trustee's willful misconduct,
negligence or bad faith or as a result of any
inaccuracy of a representation or warranty
contained in Section 7.03 expressly made by the
Owner Trustee;
(2) with respect to any such claim, the
Indemnified Party shall have given the Adminis-
trator written notice thereof promptly after the
Indemnified Party shall have actual knowledge
thereof;
(3) while maintaining control over its own
defense, the Administrator shall consult with the
Indemnified Party in preparing such defense; and
(4) notwithstanding anything in this Agree-
ment to the contrary, the Administrator shall not
be liable for settlement of any claim by an
Indemnified Party entered into without the prior
consent of the Administrator, which consent shall
not be unreasonably withheld.
The indemnities contained in this Section shall
survive the resignation or termination of the Owner Trustee,
of the Seller, as Holder of the Designated Certificate, and
of the Indenture Trustee, and the termination of this Agree-
ment. In the event of any claim, action or proceeding for
which indemnity will be sought pursuant to this Section, the
indemnitee's choice of legal counsel, if other than the
legal counsel retained by such indemnitee in connection with
the execution and delivery of the Related Agreements, shall
be subject to the approval of the Administrator, which
approval shall not be unreasonably withheld. In addition,
upon written notice to the indemnitee and with the consent
of the indemnitee, which consent shall not be unreasonably
withheld, the Administrator has the right to assume the
defense of any claim, action or proceeding against the
Indemnitee.
(b) Additional Duties.
(i) In addition to the duties of the Adminis-
trator set forth above, the Administrator shall perform, or
cause to be performed, the duties and obligations of the
Seller, Designated Certificateholder and the Issuer under
the Trust Agreement. These duties and obligations include,
without limitation, the following (references are to
sections of the Trust Agreement):
(A) preparing, filing or delivering tax
returns, reports and forms and performing the other
duties of the Issuer under Sections 2.06 and 5.05;
(B) removing the Certificate Paying Agent
under Section 3.10 and appointing a successor, subject
to compliance with Section 4.01;
(C) directing the Owner Trustee to take
action under the Basic Documents pursuant to Section
6.01;
(D) furnishing documents to the Certifi-
cateholders under Section 7.02;
(E) delivering notice of termination of the
Issuer under Section 9.01 and notices of such termina-
tion or of any Insolvency Event with respect to the
Holder of the Designated Certificate under Section
9.02;
(F) appointing a successor Owner Trustee,
removing the Owner Trustee and providing notices
regarding such action under Section 10.02 and executing
instruments and providing notices in connection with
such appointment under Section 10.03;
(G) appointing co-trustees or separate
trustees under Section 10.05, and removing same
thereunder; and
(H) obtaining any opinion of counsel
required by Section 11.01 and furnishing notice or any
obtaining execution by Certificateholders of any
amendment to the Trust Agreement thereunder.
In furtherance thereof, the Seller and the Issuer
shall execute and deliver to the Administrator and to each
successor Administrator appointed pursuant to the terms
hereof, one or more powers of attorney substantially in the
form of Exhibit A hereto, appointing the Administrator the
attorney-in-fact of the Issuer for the purpose of executing
on behalf of the Issuer all such documents, reports, fil-
ings, instruments, certificates and opinions. Subject to
Section 4 of this Agreement, and in accordance with the
directions of the Issuer, the Administrator shall admin-
ister, perform or supervise the performance of such other
activities in connection with the Collateral (including the
Related Agreements) as are not covered by any of the fore-
going provisions and as are expressly requested by the
Seller or the Owner Trustee and are reasonably within the
capability of the Administrator. The Administrator shall be
responsible for any filings required by the Issuer under the
Securities Exchange Act of 1934, as amended.
(ii) In carrying out the foregoing duties or any
of its other obligations under this Agreement, the Adminis-
trator may enter into transactions or otherwise deal with
any of its affiliates; provided, however, that the terms of
any such transactions or dealings shall be in accordance
with any directions received from the Seller and the Owner
Trustee and shall be, in the Administrator's opinion, no
less favorable to the Seller and the Issuer than would be
available from unaffiliated parties.
(iii) In carrying out any of its obligations under
this Agreement, the Administrator may act either directly or
through agents, attorneys, accountants, independent contrac-
tors and auditors and enter into agreements with any of
them.
(c) Non-Ministerial Matters.
(i) With respect to matters that in the reason-
able judgment of the Administrator are non-ministerial, the
Administrator shall not be under any obligation to take any
action, and in any event shall not take any action unless
the Administrator shall have received instructions from the
Seller or the Owner Trustee or the Certificateholders in
accordance with the Trust Agreement. For the purpose of the
preceding sentence, "non-ministerial matters" shall include,
without limitation:
(A) the amendment of or any supplement to
the Related Agreements;
(B) the initiation of any claim or lawsuit
by the Issuer and the compromise of any action, claim
or lawsuit brought by or against the Issuer;
(C) the appointment of successor Note
Registrars, successor Administrators and successor
Indenture Trustees pursuant to the Indenture, or the
consent to the assignment by the Note Registrar,
Administrator or Indenture Trustee of its obligations
under the Indenture; and
(D) the removal of the Indenture Trustee.
(ii) Notwithstanding anything to the contrary in
this Agreement, the Administrator shall not be obligated to,
and shall not (x) make any payments to the Noteholders under
the Related Agreements, (y) sell the Trust Estate pursuant
to the Indenture or (z) take any action that either the
Seller or the Owner Trustee directs the Administrator not to
take on its behalf or on the behalf of the Issuer.
2. Records. The Administrator shall maintain appropriate
books of account and records relating to services performed here-
under, which books of account and records shall be accessible for
inspection by the Seller and the Owner Trustee at any time, after
reasonable notice to the Administrator of such inspection, during
normal business hours.
3. Compensation. As compensation for the performance of
the Administrator's obligations under this Agreement, the Admin-
istrator shall be entitled to a fee of not more than $500.00 per
month which shall be paid by the Holder of the Designated Certif-
icate pursuant to Section 2.07(a) of the Trust Agreement; pro-
vided, however, the Administrator may with prior written notice
to the Seller, Servicer, Issuer, Owner Trustee and Indenture
Trustee, waive its rights to compensation hereunder and Household
Finance Corporation as the initial Administrator hereby gives
written notice to the Seller, Servicer, Issuer, Owner Trustee and
Indenture Trustee that until further written notice to the
contrary, Household Finance Corporation waives its right to
receive such fee. As reimbursement for its expenses related to
the performance of the Administrator's obligations hereunder, the
Administrator shall receive payment from the Seller.
4. Additional Information To Be Furnished. The Adminis-
trator shall furnish to the Seller and the Owner Trustee from
time to time such additional information regarding the Collateral
as the Seller and the Owner Trustee shall reasonably request.
5. Independence of the Administrator. For all purposes of
this Agreement, the Administrator shall be an independent
contractor and shall not be subject to the supervision of the
Seller or the Owner Trustee with respect to the manner in which
it accomplishes the performance of its obligations hereunder.
Unless expressly authorized by this Agreement, the Administrator
shall have no authority to act for or represent the Seller, the
Issuer or the Owner Trustee in any way and shall not otherwise be
deemed an agent of the Seller, the Issuer or the Owner Trustee.
6. No Joint Venture. Nothing contained in this Agreement
(i) shall constitute the Administrator and either of the Issuer
or the Owner Trustee or the Seller as members of any partnership,
joint venture, association, syndicate, unincorporated business or
other separate entity, (ii) shall be construed to impose any
liability as such on any of them or (iii) shall be deemed to
confer on any of them any express, implied or apparent authority
to incur any obligation or liability on behalf of the others.
7. Other Activities of the Administrator. Nothing herein
shall prevent the Administrator or its Affiliates from engaging
in other businesses or, in its sole discretion, from acting in a
similar capacity as an administrator for any other person or
entity even though such person or entity may engage in business
activities similar to those of the Issuer, the Owner Trustee or
the Indenture Trustee.
8. Term of Agreement; Resignation and Removal of Admin-
istrator. (a) This Agreement shall continue in force until the
dissolution of the Issuer, upon which event this Agreement shall
automatically terminate.
(b) Subject to Section 8(e) of this Agreement, the
Administrator may resign its duties hereunder by providing the
Issuer with at least 60 days' prior written notice.
(c) Subject to Section 8(e) of this Agreement, the
Seller may remove the Administrator without cause by providing
the Administrator with at least 60 days' prior written notice.
(d) Subject to Section 8(e) of this Agreement, at the
sole option of the Owner Trustee, the Administrator may be
removed immediately upon written notice of termination from the
Owner Trustee to the Administrator and each Rating Agency if any
of the following events shall occur:
(i) the Administrator shall default in the
performance of any of its duties under this Agreement in any
material respect and, after notice of such default, shall
not cure such default within ten days (or, if such default
cannot be cured in such time, shall not give within ten days
such assurance of cure as shall be reasonably satisfactory
to the Owner Trustee);
(ii) a court having jurisdiction in the premises
shall enter a decree or order for relief, and such decree or
order shall not have been vacated within 60 days, in respect
of the Administrator in any involuntary case under any appli-
cable bankruptcy, insolvency or other similar law now or
hereafter in effect or appoint a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar
official for the Administrator or any substantial part of
its property or order the winding-up or liquidation of its
affairs;
(iii) the Administrator shall commence a voluntary
case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, shall consent to the
entry of an order for relief in an involuntary case under
any such law, or shall consent to the appointment of a
receiver, liquidator, assignee, trustee, custodian,
sequestrator or similar official for the Administrator or
any substantial part of its property, shall consent to the
taking of possession by any such official of any substantial
part of its property, shall make any general assignment for
the benefit of creditors or shall fail generally to pay its
debts as they become due; or
(iv) HCLC or an Affiliate ceases to be the Holder
of the Designated Certificate under the Trust Agreement.
The Administrator agrees that if any of the events
specified in clauses (ii) or (iii) of this Section shall occur,
it shall give written notice thereof to the Owner Trustee and the
Indenture Trustee within seven days after the happening of such
event.
(e) No resignation or removal of the Administrator
pursuant to this Section shall be effective until (i) a successor
Administrator shall have been appointed by the Seller (with the
consent of the Owner Trustee and the Indenture Trustee) and (ii)
such successor Administrator shall have agreed in writing to be
bound by the terms of this Agreement in the same manner as the
Administrator is bound hereunder.
(f) The appointment of any successor Administrator
shall be effective only after each Rating Agency, after having
been given 10 days prior notice of such proposed appointment,
shall have declared in writing that such appointment will not
result in a reduction or withdrawal of the then current rating of
the Notes or Certificates.
9. Action upon Termination, Resignation or Removal.
Promptly upon the effective date of termination of this Agreement
pursuant to Section 8(a) of this Agreement or the resignation or
removal of the Administrator pursuant to Section 8(b) or (c) of
this Agreement, respectively, the Administrator shall be entitled
to be paid all fees and reimbursable expenses accruing to it to
the date of such termination, resignation or removal. The Admin-
istrator shall forthwith upon such termination pursuant to
Section 8(a) of this Agreement deliver to the Seller, Owner
Trustee or Indenture Trustee, as appropriate, all property and
documents of or relating to the Collateral then in the custody of
the Administrator. In the event of the resignation or removal of
the Administrator pursuant to Section 8(b) or (c) of this Agree-
ment, respectively, the Administrator shall cooperate with the
Seller, the Owner Trustee and the Indenture Trustee and take all
reasonable steps requested to assist them in making an orderly
transfer of the duties of the Administrator.
10. Notices. Any notice, report or other communication
given hereunder shall be in writing and addressed as follows:
(a) if to the Issuer, to:
Household Consumer Loan Trust 1997-1
c/o Chase Manhattan Bank Delaware
1201 Market Street
Wilmington, DE 19801
Attention: Corporate Trust Administration
with a copy to:
The Chase Manhattan Bank
450 West 33rd Street, 15th Floor
New York, NY 10001
Attention: Global Trust Services
(b) If to the Administrator, to:
Household Finance Corporation
2700 Sanders Road
Prospect Heights, IL 60070
Attention: Treasurer
(c) If to the Indenture Trustee, to:
The Bank of New York
101 Barclay Street, Floor 12 East
New York, NY 10286
Attention: Corporate Trust Asset-Backed Unit
(d) If to the Owner Trustee, to:
Chase Manhattan Bank Delaware
1201 Market Street
Wilmington, DE 19801
Attention: Corporate Trust Administration
with a copy to:
The Chase Manhattan Bank
450 West 33rd Street, 15th Floor
New York, NY 10001
Attention: Global Trust Services
(e) If to the Seller, to:
Household Consumer Loan Corporation
111 Town Center Drive
Las Vegas, NV 89134
Attention: Compliance Officer
with a copy to:
Household Finance Corporation
2700 Sanders Road
Prospect Heights, IL 60070
Attention: Treasurer
or to such other address as any party shall have provided to the
other parties in writing. Any notice required to be in writing
hereunder shall be deemed given if such notice is mailed by
certified mail, postage prepaid, or hand-delivered to the address
of such party as provided above.
11. Amendments. (a) This Agreement may be amended from
time to time by the parties hereto, with written notice and
acknowledgment by the Indenture Trustee, by a written instrument
signed by each of them, without the consent of any of the
Securityholders, provided that an Opinion of Counsel for the
Seller (which Opinion of Counsel may, as to factual matters, rely
upon Officer's Certificates of the Seller) is addressed and
delivered to the Owner Trustee, the Indenture Trustee and each
Rating Agency, dated the date of any such amendment, to the
effect that the conditions precedent to any such amendment have
been satisfied and the Seller shall have delivered to the Owner
Trustee and the Indenture Trustee an Officer's Certificate, dated
the date of any such Amendment, stating that the Seller reason-
ably believes that such amendment will not have a material
adverse effect on the Securityholders.
(b) This Agreement may also be amended from time to
time with the consent of the Holders of the Certificates
evidencing not less than 66-2/3% of the aggregate unpaid prin-
cipal amount of the Securities of all affected Certificateholders
for which the Seller has not delivered an Officer's Certificate
stating that there is no material adverse effect, for the purpose
of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement or of modify-
ing in any manner the rights of the Certificateholders; provided,
however, that no such amendment shall (i) reduce in any manner
the amount of, or delay the timing of, payments received that are
required to be distributed on any Certificate without the consent
of the related Certificateholder, or (ii) reduce the aforesaid
percentage of Certificates the Holders of which are required to
consent to any such amendment, without the consent of the Holders
of all such Certificates then outstanding or cause any material
adverse tax consequences to any Certificateholders or Note-
holders.
(c) Promptly after the execution of any such amendment
or consent (other than an amendment pursuant to paragraph (a)),
the Administrator shall direct the Certificate Registrar to
furnish notification of the substance of such amendment to each
Certificateholder, and to each Rating Agency.
(d) It shall not be necessary for the consent of
Certificateholders under this Section to approve the particular
form of any proposed amendment, but it shall be sufficient if
such consent shall approve the substance thereof. The manner of
obtaining such consents and of evidencing the authorization of
the execution thereof by Certificateholders shall be subject to
such reasonable requirements as the Owner Trustee may prescribe.
12. Successors and Assigns. This Agreement may not be
assigned by the Administrator (except to a Person who also
becomes the successor Servicer in accordance with the Pooling and
Servicing Agreement) unless such assignment is previously con-
sented to in writing by the Seller, the Owner Trustee and the
Indenture Trustee and unless each Rating Agency, after having
been given 10 days prior notice of such assignment, shall have
declared in writing that such assignment will not result in a
reduction or withdrawal of the then current rating of the Notes
or Certificates. An assignment with such consent and satisfac-
tion, if accepted by the assignee, shall bind the assignee here-
under in the same manner as the Administrator is bound hereunder.
Notwithstanding the foregoing, this Agreement may be assigned by
the Administrator without the consent of the Seller, the Owner
Trustee and the Indenture Trustee if the assignment is to (i) a
corporation or other organization that is a successor (by merger,
consolidation or purchase of assets) to the Administrator or (ii)
to an Affiliate of the Administrator; provided that (x) the
obligations of the Administrator under Section 1(a)(ii) are not
assignable and (y) such successor organization executes and
delivers to the Seller, the Owner Trustee and the Indenture
Trustee an agreement in which such corporation or other organiza-
tion agrees to be bound hereunder by the terms of said assignment
in the same manner as the Administrator is bound hereunder.
Subject to the foregoing, this Agreement shall bind any succes-
sors or assigns of the parties hereto.
13. GOVERNING LAW. THIS AGREEMENT 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 SHALL BE DETERMINED
IN ACCORDANCE WITH SUCH LAWS.
14. Headings. The section headings hereof have been
inserted for convenience of reference only and shall not be
construed to affect the meaning, construction or effect of this
Agreement.
15. Counterparts. This Agreement may be executed in
counterparts, each of which when so executed shall together
constitute but one and the same agreement.
16. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall be ineffec-
tive to the extent of such prohibition or unenforceability with-
out invalidating the remaining provisions hereof and any such
prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
17. Limitation of Liability of the Owner Trustee. Notwith-
standing anything contained herein to the contrary, this instru-
ment has been executed by Chase Manhattan Bank Delaware, not in
its individual capacity but solely in its capacity as Owner
Trustee of the Issuer, and in no event shall Chase Manhattan Bank
Delaware in its individual capacity or any beneficial owner of
the Issuer have any liability for the representations, warran-
ties, covenants, agreements or other obligations of the Issuer
hereunder, as to all of which recourse shall be had solely to the
assets of the Issuer. For all purposes of this Agreement, in the
performance of any duties or obligations of the Issuer hereunder,
the Owner Trustee shall be subject to, and entitled to the bene-
fits of, the terms and provisions of Articles VI, VII and VIII of
the Trust Agreement.
18. Third-Party Beneficiary. The Indenture Trustee is a
third-party beneficiary to this Agreement and is entitled to the
rights and benefits hereunder and may enforce the provisions
hereof as if it were a party hereto.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agree-
ment to be duly executed and delivered as of the day and year
first above written.
HOUSEHOLD CONSUMER LOAN TRUST 1997-1
By: CHASE MANHATTAN BANK DELAWARE, not
in its individual capacity but
solely as Owner Trustee
By:___________________________
Name:
Title:
HOUSEHOLD FINANCE CORPORATION,
in its individual capacity as
Administrator
By:___________________________
Name:
Title:
HOUSEHOLD CONSUMER LOAN CORPORATION
By:___________________________
Name:
Title:
CONSENTED TO BY:
THE BANK OF NEW YORK,
as Indenture Trustee
By:___________________________
Name:
Title:
<PAGE>
EXHIBIT A
POWER OF ATTORNEY
STATE OF NEW YORK )
)
COUNTY OF NEW YORK )
KNOW ALL MEN BY THESE PRESENTS, that Household Consumer Loan
Trust 1997-1 (the "Issuer"), does hereby make, constitute and
appoint Household Finance Corporation, as administrator (the
"Administrator") under the Administration Agreement dated as of
March 1, 1997 (the "Administration Agreement"), among the Issuer,
Chase Manhattan Bank Delaware, as the Owner Trustee, Household
Consumer Loan Corporation, as the Seller, and Household Finance
Corporation, as the Administrator, as the same may be amended
from time to time, and its agents and attorneys, as Attorneys-in-
Fact to execute on behalf of the Issuer all such documents,
reports, filings, instruments, certificates and opinions as it
shall be the duty of the Issuer to prepare, file or deliver
pursuant to the Related Agreements, including, without limita-
tion, to appear for and represent the Issuer in connection with
the preparation, filing and audit of federal, state and local tax
returns pertaining to the Issuer, and with full power to perform
any and all acts associated with such returns and audits that the
Issuer could perform, including without limitation, the right to
distribute and receive confidential information, defend and
assert positions in response to audits, initiate and defend
litigation, and to execute waivers of restrictions on assessments
of deficiencies, consents to the extension of any statutory or
regulatory time limit, and settlements.
All powers of attorney for this purpose heretofore filed or
executed by the Issuer are hereby revoked.
Capitalized terms that are used and not otherwise defined
herein shall have the meanings ascribed thereto in the Admin-
istration Agreement.
<PAGE>
EXECUTED this 12th day of March, 1997.
HOUSEHOLD CONSUMER LOAN TRUST 1997-1
By: CHASE MANHATTAN BANK DELAWARE,
not in its individual capacity but
solely as Owner Trustee
By: _________________________________
Name:
Title:
HOUSEHOLD CONSUMER LOAN CORPORATION,
as Seller
By: __________________________________
Name:
Title:
