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 November 19, 1997
HOUSEHOLD CONSUMER LOAN TRUST 1997-2
(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 333-36405-02 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 November 19, 1997, the Registrant issued and sold its Household
Consumer Loan Asset Backed Notes, Series 1997-2, 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. 333-36405,
333-36405-01, 333-36405-02).
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
1. Underwriting Agreement
4.1 Trust Agreement.
4.2 Indenture.
10.3 Series 1997-2 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 1997-2
(Registrant)
By: /s/ J. W. Blenke
J. W. Blenke
Authorized Representative
Dated: November 25, 1997
-3-<PAGE>
EXHIBIT INDEX
Exhibit
Number Exhibit Page
1. Underwriting Agreement 5
4.1 Trust Agreement. 40
4.2 Indenture. 110
10.3 Series 1997-2 Supplement. 227
10.4 Administration Agreement. 267
U:\WP\HFS088\8K\HCLT97-2.8K
-4-
EXHIBIT 1
EXECUTION COPY
HOUSEHOLD CONSUMER LOAN TRUST 1997-2
HOUSEHOLD CONSUMER LOAN ASSET BACKED NOTES,
Series 1997-2, Class A-1, Class A-2 and Class A-3
HOUSEHOLD FINANCE CORPORATION
(Servicer)
HOUSEHOLD CONSUMER LOAN CORPORATION
(Seller)
UNDERWRITING AGREEMENT
November 7, 1997
J.P. MORGAN SECURITIES INC.
as Representative of the several Underwriters
60 Wall Street
New York, New York 10260-0060
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 November 1, 1997 (the "Trust Agreement") with
Chase Manhattan Bank Delaware (the "Owner Trustee"), creating
Household Consumer Loan Trust 1997-2 (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 1997-2, 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 1997-2 (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 J.P. Morgan
Securities 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
November 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 1997-2 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 1997-2 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
1997-2 Participation Interest was issued pursuant to the Supplement
for Series 1997-2 dated as of November 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, 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. 333-36405-01
and 333-36405-02) in respect of the Notes and a registration
statement on Form S-1 (No. 333-36405) in respect of the Series
1997-2 Participation Interest, including a prospectus and such
amendments thereto as may have been required on the date hereof,
relating to the Class A Notes and the Series 1997-2 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 1997-2 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 1997-2
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 1997-2 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 1997-2 Participation Interest being issued pursuant to the
Pooling and Servicing Agreement and (ii) will have the power and
authority to convey the Series 1997-2 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 1997-2 Participation Interest, free
and clear of any Lien and (ii) have the power and authority to sell
the Series 1997-2 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 1997-2 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 1997-2
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
November 5, 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 November 19, 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 1997-2 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 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 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
1997-2 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 1997-2
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.
(vi) 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 1997-2 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 1997-2
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 1997-2 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 1997-2
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 1997-2 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 ALABAMA,
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:
J.P. MORGAN SECURITIES INC.,
as Representative of the several Underwriters
By:
Name: Robert W. Flanigan
Title: Vice President
<PAGE>
Schedule A
Underwriting
Class A-1 Notes Purchase Price
J.P. Morgan Securities Inc. . . . . . . . . . . . . .$228,000,000
Lehman Brothers Inc.. . . . . . . . . . . . . . . . 228,000,000
Morgan Stanley & Co. Incorporated . . . . . . . . . 228,000,000
Salomon Brothers Inc. . . . . . . . . . . . . . . . 228,000,000
Total . . . . . . . . . . . . . . . . . . . . . .$912,000,000
Class A-2 Notes
J.P. Morgan Securities Inc. . . . . . . . . . . . . . $12,000,000
Lehman Brothers Inc.. . . . . . . . . . . . . . . . . 12,000,000
Morgan Stanley & Co. Incorporated . . . . . . . . . . 12,000,000
Salomon Brothers Inc. . . . . . . . . . . . . . . . . 12,000,000
Total . . . . . . . . . . . . . . . . . . . . . . $48,000,000
Class A-3 Notes
J.P. Morgan Securities Inc. . . . . . . . . . . . . . $22,500,000
Lehman Brothers Inc.. . . . . . . . . . . . . . . . . 22,500,000
Morgan Stanley & Co. Incorporated . . . . . . . . . . 22,500,000
Salomon Brothers Inc. . . . . . . . . . . . . . . . . 22,500,000
Total . . . . . . . . . . . . . . . . . . . . . . $90,000,000<PAGE>
EXHIBIT A
Opinion of John W. Blenke, Esq.
Section 7(c) of the Underwriting Agreement
November ___, 1997
J.P. MORGAN SECURITIES INC.
as Representative of the several Underwriters
60 Wall Street
New York, New York 10260-0060
Re: Household Consumer Loan Asset
Backed Notes and Certificates,
Series 1997-2
Ladies and Gentlemen:
I address this opinion to the Underwriters pursuant to Section
7(c) of the Underwriting Agreement dated November ___, 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 Alabama, 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 November 1, 1997 (the
"Trust Agreement") with Chase Manhattan Bank Delaware (the "Owner
Trustee"), creating Household Consumer Loan Trust 1997-2 (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 1997-2,
Class A and Class B (the "Notes") and Household Consumer Loan Asset
Backed Certificates, Series 1997-2 (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
November 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 1997-2 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 1997-2
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 1997-2 Participation
Interest was issued pursuant to the Supplement for Series 1997-2
dated as of November 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-1 and S-3 (Registration Nos. 333-36405, 333-
36405-01 and 333-36405-02) filed with the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Act"), and the Prospectus dated November ___, 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,
EXHIBIT 4.1
EXECUTION COPY
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 November 1, 1997
__________________________________________
Consumer Loan Asset Backed Certificates,
Series 1997-2
<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 1997-2 Participation Interest;
Certificates
3.01. Conveyance of the Series 1997-2 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 1997-2
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 1997-2. . . . . . . . . . . . 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 November 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 document
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 respective
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 contained
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 provision
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 specified; 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 incorporated 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 1997-2," 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 1997-2 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 connec-
tion 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 activi-
ties. 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 Documents.
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 Certificateholders, 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 Designated Certificate
would be liable if the Issuer were a partnership 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 Certificates 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 Certificate shall not be liable) shall be
deemed third party beneficiaries 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 properties 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 consummation
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 1997-2 Participation Interest as
contemplated by Section 3.01 hereof, the Seller owned the
Series 1997-2 Participation Interest free and clear of any
Lien.
ARTICLE III
Conveyance of the Series 1997-2 Participation Interest;
Certificates
Section 3.01. Conveyance of the Series 1997-2 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 Certificates,
without recourse, all its right, title and interest in and to the
Series 1997-2 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) (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 1997-2 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 1997-2 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 $420,000. 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 Certificateholder
and shall be entitled to the rights and subject to the obligations
of a Certificateholder hereunder upon such transferee'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 1997-2 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, subject 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 Designated
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 transferee
or transferees, one or more new Certificates in authorized
denominations of a like aggregate amount dated the date of authen-
tication 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 aggregate 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 instrument
of transfer in form satisfactory to the Certificate Registrar duly
executed by the Holder or such Holder's attorney duly authorized in
writing. Each Certificate surrendered for registration of transfer
or exchange shall be cancelled and subsequently 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 Registrar, 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 Certif-
icate Registrar shall have received either (i) a representation
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 ownership
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 owner-
ship 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 Certificate
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 governmental 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 application 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 discretion 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 successor 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 1997-2 Participation Interest, a Certificate representing 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% 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 1997-2
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 1997-2 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-
2 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.
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 1997-2 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 1997-2 Participation
Interest);
(b) 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 successor
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 Administrator 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 1997-2 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 Certificateholders.
Section 4.03. Action by Certificateholders with Respect to
Bankruptcy. The Owner Trustee shall not have the power to commence
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 Certificateholder 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 provided
herein, any action that may be taken by the Certificateholders
under this Trust Agreement may be taken by the Holders of
Certificates evidencing not less than a majority of the outstanding
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.
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 Indenture.
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 pro-
ceedings). 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 preceding Record
Date either by, in the case of any Certificateholder owning
Certificates, other than the Designated Certificate, having
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 part-
nership 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 Certificateholder an
Internal Revenue Service form "K-1" or any successor 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 purposes 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 allocated
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 Certificateholders in the order of
their right to such distributions and proportionately among
Certificateholders having equal priority. 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 principles
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 provisions 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 transferee
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 Certificateholder
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.
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 Documents
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 Document, and
the Owner Trustee shall not be held liable for the default or
failure of the Administrator to carry out its obligations 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 6.03. 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.
(calternative 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 accordance 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 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.
(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 application,
or is, or appears to be, in conflict with any other applicable
provision, or in the event that this Trust Agreement permits any
determination by the Owner Trustee or is silent or is incomplete as
to the course of action that the Owner Trustee is required to take
with respect to a particular set of facts, the Owner Trustee may
give notice (in such form as shall be appropriate under the
circumstances) to the 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 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.
Section 6.04. 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 maintain 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 becoming 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.
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 accountable hereunder or under
any Basic Document under any circumstances, except (i) for its own
willful misconduct, negligence or bad faith or (ii) in the case of
the inaccuracy of any representation 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 Certificate,
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 Administration
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 authorize
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 instrument 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 president 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 hereunder
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 sufficiency 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 Indenture, 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.
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 perfor-
mance of its rights and its duties hereunder and under the Basic
Documents.
Section 8.02. Indemnification. The Holder of the Designated
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 reasonable legal fees and
expenses) of any kind and nature whatsoever (collectively,
"Expenses") which may at any time be imposed on, incurred by, or
asserted against the Owner Trustee 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 inaction 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 termination
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 connection 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 unreason-
ably withheld, the Holder of the Designated Certificate has the
right to assume the defense of any claim, action or proceeding
against the Owner Trustee.
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 property or
proceeds of the Owner Trust Estate in accordance with the terms of
the Indenture and this Trust Agreement, (ii) the Payment Date in
November 2007 or (iii) at the time provided for in Section 9.02.
The bankruptcy, liquidation, dissolution, death or incapacity 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 Certificateholder's
legal representatives or heirs to claim an accounting or to take
any action or proceeding in any court for a partition or winding up
of all or any part of the 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 termination
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 Certificate Paying Agent shall cause to be
distributed to Certificateholders 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 Certificates 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 cancellation, 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 Agreement. Any funds
remaining in the Payment Account after exhaustion 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 Certificate)
representing more than 50% of the Security Balance of the
Certificates (not including the Security Balance of the Designated
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.
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 supervising or
examining authority, then for the purpose of this Section, the
combined capital and surplus of such corporation shall be deemed to
be its combined capital and surplus as set forth in its most recent
report of condition so published. In case at any time the Owner
Trustee shall cease to be eligible in accordance with the
provisions of this Section 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 appoint-
ment 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 provisions
of this Section shall not become effective until acceptance 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 converted 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 consolidation 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 conditions
of this Article. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with the
estates or property specified in its instrument of appointment,
either jointly with the Owner Trustee or separately, as may be
provided therein, subject to all the provisions of this 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.
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 Certificateholders 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 Administrator
and, to the extent expressly provided herein, the Indenture 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 Certificate
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 unenforce-
ability 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 original,
but all such counterparts shall together constitute but one and the
same instrument.
Section 11.07. Successors and Assigns. All representations,
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 Certificateholder 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 accepting
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 Certificateholder'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 contemplated 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 constitutes
the entire agreement among the parties hereto pertaining to the
subject matter hereof and supersedes all prior agreements and
understanding pertaining thereto.
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: Steven H. Smith
Title: Vice President and Assistant
Treasurer
CHASE MANHATTAN BANK DELAWARE, not in
its individual capacity but solely
as Owner Trustee
By:________________________________
Name:
Title:
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 TRANSFERRED 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:
$42,000,000
Certificate Rate: Floating
Closing Date: November 19, 1997
First Payment Date
December 15, 1997
CUSIP NO. _________
HOUSEHOLD CONSUMER LOAN TRUST 1997-2
Evidencing a fractional undivided interest in the Owner Trust
Estate, the property of which consists primarily of the Series
1997-2 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 1997-2 (the "Issuer").
The Issuer was created pursuant to a Trust Agreement dated as
of November 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 1997-2 (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 1997-2 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 Business
Day (each, a "Payment Date"), commencing in December 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 Certificateholder'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 Certificateholders on such Payment
Date.
The Certificateholder, by its acceptance of this Certificate,
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 Certificate
are subordinated to the rights of the Noteholders as described in
the Indenture, dated as of November 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 having
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
1997-2
By: Chase Manhattan Bank
Delaware, not in its
individual capacity but
solely as Owner Trustee
Dated: November ___, 1997
Name:
Title:
Certificate of Authentication
This is one of the Certificates referred to in the within mentioned
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 1997-2 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 specified
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 Certif-
icate 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 $420,000 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 Certificate
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 proceeds
of the Owner Trust Estate in accordance with the terms of the
Indenture and the Trust Agreement, (ii) the Payment Date in
November 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 Agreement.<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 of the registered owner as it appears on the face of the
within Certificate in every particular, without alteration,
enlargement or any change whatever. Such signature must be
guaranteed by an "eligible guarantor institution" meeting the
requirements of the Certificate Registrar, which requirements
include membership or participation in STAMP or such other "signature
guarantee program" as may be determined by the Certificate Registrar in
addition to, or in substitution for, STAMP, all in accordance
with the Securities Exchange Act of 1934, as amended.<PAGE>
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for the information
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 1997-2
This Certificate of Trust of HOUSEHOLD CONSUMER LOAN
TRUST 1997-2 (the "Trust"), dated as of November ___, 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 1997-2.
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 November ___, 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, 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 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 Securi-
ties 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 consti-
tute a distribution of the Rule 144A Securities under the Securi-
ties 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 November 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, 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 requested
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 dispo-
sition of the Rule 144A Securities, any interest in the Rule
144A Securities or any other similar security from, or other-
wise 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 con-
stitute 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 institutional
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 institu-
tional 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 registration 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 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 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.
___ 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
[See Appendix A attached to the Indenture]
<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 November 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 1997-2 (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 1997-2
Consumer Loan Asset Backed Certificates,
Series 1997-2 (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
EXHIBIT 4.2
EXECUTION COPY
HOUSEHOLD CONSUMER LOAN TRUST 1997-2,
as Issuer
AND
THE BANK OF NEW YORK,
as Indenture Trustee
_________________________________________
INDENTURE
Dated as of November 1, 1997
__________________________________________
HOUSEHOLD CONSUMER LOAN ASSET BACKED NOTES
SERIES 1997-2
<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 1997-2
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
Liabilities . . . . . . . . . . . . . . . . . . . . 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 1997-2
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. . . . 25
4.04. Persons Deemed Owners . . . . . . . . . . . . . . 26
4.05. Cancellation. . . . . . . . . . . . . . . . . . . 26
4.06. Book-Entry Notes. . . . . . . . . . . . . . . . . 26
4.07. Notices to Depository . . . . . . . . . . . . . . 27
4.08. Definitive Notes. . . . . . . . . . . . . . . . . 28
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. . . . . 30
ARTICLE V
Remedies
5.01. Event of Default; Acceleration of Maturity;
Rescission and Annulment. . . . . . . . . . . . . . 31
5.02. Collection of Indebtedness and Suits for
Enforcement by Indenture Trustee. . . . . . . . . . 31
5.03. Remedies; Priorities. . . . . . . . . . . . . . . 34
5.04. Optional Preservation of the Indenture Trust
Estate. . . . . . . . . . . . . . . . . . . . . . . 36
5.05. Limitation of Suits . . . . . . . . . . . . . . . 36
5.06. Unconditional Rights of Noteholders to Receive
Principal and Interest. . . . . . . . . . . . . . . 37
5.07. Restoration of Rights and Remedies. . . . . . . . 37
5.08. Rights and Remedies Cumulative. . . . . . . . . . 37
5.09. Delay or Omission Not a Waiver. . . . . . . . . . 38
5.10. Control by Noteholders. . . . . . . . . . . . . . 38
5.11. Waiver of Past Defaults . . . . . . . . . . . . . 38
5.12. Undertaking for Costs . . . . . . . . . . . . . . 39
5.13. Waiver of Stay or Extension Laws. . . . . . . . . 39
5.14. Sale of Indenture Trust Estate. . . . . . . . . . 40
5.15. Action on Notes . . . . . . . . . . . . . . . . . 41
5.16. Performance and Enforcement of Certain Obli-
gations . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE VI
The Indenture Trustee
6.01. Duties of Indenture Trustee . . . . . . . . . . . 43
6.02. Rights of Indenture Trustee . . . . . . . . . . . 44
6.03. Individual Rights of Indenture Trustee. . . . . . 45
6.04. Indenture Trustee's Disclaimer. . . . . . . . . . 45
6.05. Notice of Event of Default. . . . . . . . . . . . 45
6.06. Reports by Indenture Trustee. . . . . . . . . . . 45
6.07. Compensation and Indemnity. . . . . . . . . . . . 45
6.08. Replacement of Indenture Trustee. . . . . . . . . 46
6.09. Successor Indenture Trustee by Merger . . . . . . 47
6.10. Appointment of Co-Indenture Trustee or Separate
Indenture Trustee . . . . . . . . . . . . . . . . . 48
6.11. Eligibility; Disqualification . . . . . . . . . . 49
6.12. Preferential Collection of Claims Against
Issuer. . . . . . . . . . . . . . . . . . . . . . . 49
6.13. Representation and Warranty . . . . . . . . . . . 50
6.14. Directions to Indenture Trustee . . . . . . . . . 50
6.15. No Consent to Certain Acts of Seller. . . . . . . 50
ARTICLE VII
Noteholders' Lists and Reports
7.01. Issuer To Furnish Indenture Trustee Names and
Addresses of Noteholders. . . . . . . . . . . . . . 51
7.02. Preservation of Information; Communications to
Noteholders . . . . . . . . . . . . . . . . . . . . 51
7.03. Reports by Issuer . . . . . . . . . . . . . . . . 51
7.04. Reports by Indenture Trustee. . . . . . . . . . . 52
ARTICLE VIII
Accounts, Disbursements and Releases
8.01. Collection of Money . . . . . . . . . . . . . . . 53
8.02. Trust Accounts. . . . . . . . . . . . . . . . . . 53
8.03. Opinion of Counsel. . . . . . . . . . . . . . . . 53
8.04. Termination Upon Distribution to Noteholders. . . 54
8.05. Release of Indenture Trust Estate . . . . . . . . 54
8.06. Surrender of Notes Upon Final Payment . . . . . . 55
ARTICLE IX
Supplemental Indentures
9.01. Supplemental Indentures Without Consent of
Noteholders . . . . . . . . . . . . . . . . . . . . 56
9.02. Supplemental Indentures With Consent of Note-
holders . . . . . . . . . . . . . . . . . . . . . . 57
9.03. Execution of Supplemental Indentures. . . . . . . 59
9.04. Effect of Supplemental Indenture. . . . . . . . . 59
9.05. Conformity with Trust Indenture Act . . . . . . . 60
9.06. Reference in Notes to Supplemental Indentures . . 60
ARTICLE X
Miscellaneous
10.01. Compliance Certificates and Opinions, etc. . . . 61
10.02. Form of Documents Delivered to Indenture
Trustee. . . . . . . . . . . . . . . . . . . . . . 62
10.03. Acts of Noteholders. . . . . . . . . . . . . . . 63
10.04. Notices, etc. to Indenture Trustee, Issuer, and
Rating Agencies. . . . . . . . . . . . . . . . . . 64
10.05. Notices to Noteholders; Waiver . . . . . . . . . 65
10.06. Alternate Payment and Notice Provisions. . . . . 65
10.07. Conflict with Trust Indenture Act. . . . . . . . 66
10.08. Effect of Headings . . . . . . . . . . . . . . . 66
10.09. Successors and Assigns . . . . . . . . . . . . . 66
10.10. Separability . . . . . . . . . . . . . . . . . . 66
10.11. Benefits of Indenture. . . . . . . . . . . . . . 66
10.12. GOVERNING LAW. . . . . . . . . . . . . . . . . . 66
10.13. Counterparts . . . . . . . . . . . . . . . . . . 66
10.14. Recording of Indenture . . . . . . . . . . . . . 67
10.15. Issuer Obligation. . . . . . . . . . . . . . . . 67
10.16. No Petition. . . . . . . . . . . . . . . . . . . 67
10.17. Inspection . . . . . . . . . . . . . . . . . . . 67
10.18. Authority of the Administrator . . . . . . . . . 68
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
Exhibit C - Form of Monthly Security Report
Exhibit D - Form of Rule 144A Investment Representation
Exhibit E - Form of Investment Letter [Non-Rule 144A]
Appendix A - Definitions<PAGE>
This Indenture, dated as of November 1, 1997, between
HOUSEHOLD CONSUMER LOAN TRUST 1997-2, 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 1997-2, 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 1997-2
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 1997-2
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, acceptances, 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 foregoing (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 provisions
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 incorporated 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, instru-
ment 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 certificate 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 variations 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 herewith, 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 individuals
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 principal
amounts of $912,000,000 $48,000,000, $90,000,000 and $57,000,000
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 Indenture
or be valid or obligatory for any purpose, unless there appears on
such Note a certificate of authentication substantially in the form
provided for herein executed by the Indenture Trustee by the manual
signature of one of its authorized signatories, and such
certificate upon any Note shall be conclusive evidence, and the
only evidence, that such Note has been duly authenticated and
delivered hereunder.
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 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 1997-2 Participation Interest and the other assets of
the Indenture Trust Estate.
<PAGE>
ARTICLE III
Covenants
Section 3.01. Collection of Payments on the Series 1997-2
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 1997-2 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 thereon 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 Indenture Trustee
or such Paying Agent with respect to such trust money shall
thereupon cease; provided, however, that the Indenture 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 redemption 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 1997-2 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 1997-2 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
(vii) 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 1997-2 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 1997-2 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 instruc-
tions 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 1997-2
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 1997-2 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 1997-2 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 1997-2 Participation
Interest, take physical delivery of the Series 1997-2
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 1997-2 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 1997-2 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 1997-2 Participation
Interest, the recording, filing, re-recording 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 performance
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 contracted 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 1997-2 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 1997-2 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 performance 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
(ii) (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 circumstances 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 Inden-
ture 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 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 defini-
tion); 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 supplemental 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 agreement 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 transferred 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 filings 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 1997-2 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 otherwise)
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 Indenture
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 1997-2
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 1997-2 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-
2 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 Class A Notes shall be
registered in the name of a nominee designated by the Depository.
Beneficial Owners will hold interests in the Class A 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 Class A Notes for the purposes of exercising the rights of
Holders of Class A Notes hereunder. Except as provided in the next
succeeding paragraph of this Section 4.01, the rights of Beneficial
Owners with respect to the Class A 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 Class A Notes as to which they are
the Beneficial Owners. Requests and directions from, and votes of,
the Depository as Holder of the Class A 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
Class A Note may be transferred by the Depository except to a
successor Depository that agrees to hold such Class A 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 Class A Notes it
beneficially owns in the manner prescribed in Section 4.08.
(b) The Class B Notes shall be registered in the name of the
Holders thereof in minimum initial Principal Balances of $100,000
and integral multiples of $1,000 in excess thereof. The Class B
Notes will be issued on the Closing Date in the form of a single
typewritten Definitive Note, which will be purchased by and
registered in the name of Household Finance Corporation.
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 regulations 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 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 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 Class B Notes have not been and will not be registered
under the Securities Act and will not be listed on any exchange.
No transfer of a Class B Note 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 Note Registrar or the Issuer shall require the transferee to
execute (a) an investment letter (in substantially the form
attached hereto as Exhibit D) in form and substance reasonably
satisfactory to the Note Registrar and the Issuer certifying to the
Indenture Trustee, the Owner Trustee, the Note Registrar and the
Issuer 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 E),
acceptable to and in form and substance reasonably satisfactory to
the Note Registrar, which investment letters shall not be an
expense of the Issuer, the Owner Trustee, the Indenture Trustee,
the Note Registrar, the Servicer or the Seller. The Holder of a
Class B Note desiring to effect such transfer shall, and does
hereby agree to, indemnify the Issuer, the Owner Trustee, the
Indenture Trustee, the Note 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. The Owner Trustee shall cause each Class B Note to contain
a legend stating that the transfer of the Class B Notes is subject
to certain restrictions and referring prospective purchasers of the
Class B Notes to this Section 4.02 with respect to such
restrictions.
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 satisfaction 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 replacement 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 hereunder.
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, destroyed, 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 (other than the
Class B 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. The Class A 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 principal of and
interest on the Class A Notes and the giving of instructions
or directions hereunder) as the sole holder of the Class A
Notes, and shall have no obligation to the Beneficial Owners;
(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 Class A 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 representing,
respectively, such required percentage of the beneficial
interest in the Class A Notes and has delivered such instruc-
tions to the Indenture Trustee.
Section 4.0IN Notices to Depository. Whenever a notice or
other communication to the Class A 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 Class A 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 responsibilities
with respect to the Book-Entry 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 Book-Entry 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 obligations 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 cancellation; or
(2) all Notes not theretofore delivered to the Indenture
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 payable), 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 cancella-
tion 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 here-
of shall be held in trust and applied by it, in accordance with the
provisions of the Notes and this Indenture, to the payment, either
directly or through any Paying Agent, as the Indenture 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 payment 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 collection, including the
reasonable compensation, expenses, disbursements 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 collection
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 reorgani-
zation, 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 Proceedings 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 performing
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 predecessor 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 reorganization,
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 Noteholder 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.
(g) 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 1997-2 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 determining 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 bank-
ing 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;
(iv) 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 provisions 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 Indenture 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 Noteholders not
consenting to such action.
Section 5.11. Waiver of Past Defaults. Prior to the declara-
tion 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, respectively; 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 whatsoever,
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 consented
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 established 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 appoint-
ed the agent and attorney-in-fact of the Issuer to transfer 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 applica-
tion 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 liability
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.
(f) 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 relating
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 Registrar,
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 Indenture
Trustee shall not be responsible for and makes no representation 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 succes-
sor 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 business 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 provisions of
this Indenture, at any time, for the purpose of meeting 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 particular
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 obligations
(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 provisions 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 authorized
to execute and deliver such document in such capacity on its
behalf.
Section 6.14. Directions to Indenture Trustee. The Indenture
Trustee is hereby directed:
(a) to accept assignment of the Series 1997-2 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 provided 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 Registrar
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 information,
documents and reports with respect to compliance by the Issuer
with the conditions and covenants of this Indenture 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
Noteholder 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 Commission
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 1997-2, irrevocably direct the Deposit
Trustee to make all payments in respect of the Series 1997-2
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), accompanied
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 materially 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 responsibilities
of the Issuer and the Indenture Trustee created hereby shall termi-
nate upon the distribution to Noteholders, Certificateholders, 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 Sections 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 Noteholder'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 purpose
of adding any provisions to, or changing in any manner or
eliminating any of the provisions of, this Indenture or of modify-
ing 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 principal
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 interest on the
Notes, or change any place of payment where, or the coin or
currency in which, any Note or the interest thereon is pay-
able, or impair the right to institute suit for the enforce-
ment of the provisions of this Indenture requiring the appli-
cation 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 provisions
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 modifications 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 Indentures.
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 Indenture
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 Indenture
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 certificate
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 represen-
tations 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 application
or certificate or report to the Indenture Trustee, it is provided
that the Issuer shall deliver any document as a condition 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 application or at the
effective date of such certificate or report (as the case may be),
of the facts and opinions stated in such document 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 delivered
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 sometimes
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 1997-2, 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 following
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, postage
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 provision
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 Indenture
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 Noteholders or any other Person
secured hereunder or for the enforcement 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 1997-2,
as Issuer
By: CHASE MANHATTAN BANK DELAWARE,
not in its individual capacity
but solely as Owner Trustee
By:___________________________________
Name:
Title:
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 November 1997, before me personally ap-
peared to me known, who being
by me duly sworn, did depose and say, that he/she resides at
, that he/she is the
of Chase Manhattan Bank
Delaware, as Owner Trustee, one of the corporations described in
and which executed the above instrument; that he/she 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/she signed his/her
name thereto by like order.
___________________________
Notary Public
[NOTARIAL SEAL]
<PAGE>
STATE OF ILLINOIS )
) ss.:
COUNTY OF COOK )
On this _______ day of November 1997, before me personally ap-
peared to me known, who being
by me duly sworn, did depose and say, that he/she resides at
, that he/she 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/she 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/she signed his/her name
thereto by like order.
___________________________
Notary Public
[NOTARIAL SEAL]
STATE OF ILLINOIS )
) ss.:
COUNTY OF COOK )
On this _______ day of November 1997, before me personally ap-
peared to me known, who being
by me duly sworn, did depose and say, that he/she resides at
, that he/she is the
of The Bank of New York, as
Certificate Paying Agent and Certificate Registrar, one of the
corporations described in and which executed the above instrument;
that he/she 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/she 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 1997-2
Household Consumer Loan Asset Backed Notes, Series 1997-2
Class: Class A-1
Registered Principal Amount: $[ ]
Percentage Interest: [ ]%
Note Rate: Floating
No.
CUSIP No. 441806 AQ9
Household Consumer Loan Trust 1997-2, 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 November 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 November 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 0.18% 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 1997-2
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: November ___, 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 1997-2 (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 December 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 November
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 1997-2
Household Consumer Loan Asset Backed Notes, Series 1997-2
Class: Class A-2
Registered Principal Amount: $[ ]
Percentage Interest: [ ]%
Note Rate: Floating
No.
CUSIP No. 441806 AR7
Household Consumer Loan Trust 1997-2, 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 November 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 November 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 0.29% 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 1997-2
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: November ___, 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 1997-2 (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 December 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 November
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 1997-2
Household Consumer Loan Asset Backed Notes, Series 1997-2
Class: Class A-3
Registered Principal Amount: $[ ]
Percentage Interest: [ ]%
Note Rate: Floating
No.
CUSIP No. 441806 AS5
Household Consumer Loan Trust 1997-2, 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 November 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 November 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 0.40% 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 1997-2
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: November ___, 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 1997-2 (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 December 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 November
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
THIS NOTE 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 TRANSFERRED 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 4.02 OF THE INDENTURE REFERRED TO 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 1997-2
Household Consumer Loan Asset Backed Notes, Series 1997-2
Class: Class B
Registered Principal Amount: $[ ]
Percentage Interest: [ ]%
Note Rate: Floating
No.
CUSIP No. 441806 AT3
Household Consumer Loan Trust 1997-2, 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 _______________ 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 November 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 November 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
<PAGE>
APPENDIX A
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
1997-2 Participation Interest Invested Amount as of the beginning
of the related Interest Period multiplied for each Payment Date
occurring prior to December 1998, by 1.50%, and for each Payment
Date occurring in December 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 November 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 Book-Entry Note, the
Person who is the beneficial owner of such Book-Entry Note as re-
flected on the books of the Depository or on the books of a Person
maintaining an account with such Depository (directly as a
Depository Participant or indirectly through a Depository Parti-
cipant, in accordance with the rules of such Depository).
Book-Entry Notes: Beneficial interests in the Class A Notes,
ownership and transfers of which shall be made through book entries
by the Depository Agency 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: $14,000,000.
Certificate Minimum Balance: With respect to any Payment Date
the Series 1997-2 Participation Interest Invested Amount, after
giving effect to the distribution made on the Series 1997-2 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 1997-2, 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 1997-2 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 1997-2
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 1997-2 Participation
Interest Invested Amount multiplied by 63.0%, 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 1997-2 Participation
Interest Invested Amount multiplied by 76.0%, 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 1997-2 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: November 19, 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 1997-2 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 1997-2 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 November 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 1997-2 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 1997-2 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 November 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: $42,000,000.
Initial Principal Balance: With respect to the Class A-1
Notes, Class A-2 Notes, Class A-3 Notes and Class B Notes,
$912,000,000, $48,000,000, $90,000,000 and $57,000,000, 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 1997-2, 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,
$30,000,000 and $19,000,000, 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 1997-2 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) 0.18% with respect to
the Class A-1 Notes, 0.29% with respect to the Class A-2 Notes,
0.40% 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 1997-2 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 1997-2 Participation Interest Invested
Amount exceeds the Aggregate Security Balances in each case after
giving effect to distributions on such Payment Date.
Overcollateralization Minimum Amount: $17,000,000.
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 1997-2 dated as of November 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 1997-2 Participation Interest Monthly Interest and
Series 1997-2 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 1997-2 Participation Interest: The Series 1997-2
Participation Interest issued pursuant to the Pooling and Servicing
Agreement.
Series 1997-2 Participation Interest Charge-Offs: The meaning
assigned to such term in the Pooling and Servicing Agreement.
Series 1997-2 Participation Interest Invested Amount: The
meaning assigned to such term in the Pooling and Servicing Agree-
ment.
Series 1997-2 Participation Interest Monthly Interest: The
meaning assigned to such term in the Pooling and Servicing Agree-
ment.
Series 1997-2 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 November 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.
EXHIBIT 10.3
EXECUTION COPY
HOUSEHOLD CONSUMER LOAN CORPORATION,
Seller,
HOUSEHOLD FINANCE CORPORATION,
Servicer,
and
TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
Deposit Trustee
----------------------------------------------
SUPPLEMENT FOR SERIES 1997-2
Dated as of November 1, 1997
to the
POOLING AND SERVICING AGREEMENT
Dated as of September 1, 1995
----------------------------------------------
HOUSEHOLD CONSUMER LOAN DEPOSIT TRUST I
Series 1997-2
<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 1997-2 Participants. . . . . 14
SECTION 7. Additional Amortization Events. . . . . . . . . . 15
SECTION 8. Optional Repurchase . . . . . . . . . . . . . . . 16
SECTION 9. Sale of Series 1997-2 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 1997-2 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 1997-2 Participation Interest
Exhibit B Monthly Servicing Report
Exhibit C Investment Letter<PAGE>
SERIES 1997-2 SUPPLEMENT, dated as of November 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 thereunder
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, authen-
tication and delivery of the Series Participation Interest, Series
1997-2 (the "Series 1997-2 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 1997-2 Partic-
ipation Interest shall be deemed to be a "Series Participation
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 1997-2 shall be
December 12, 1997.
Section 1.02 Covenant to Exclude Participation
Interests. Notwithstanding any provisions to the contrary in
the Agreement, for so long as the Series 1997-2 Participation
Interest is outstanding, each of the Seller and the Servicer
covenants and agrees not to enter into a Participation
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 violation 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 1997-2 Participation
Interest, the following words and phrases shall have the following
meanings, and the definitions of such terms are applicable to the
singular as well as the plural forms of such terms and to the
masculine as well as to the feminine and neuter genders of such
terms.
"Accelerated Amortization Date" shall mean October 31,
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 Agreement as supplemented 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 1997-2 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 November 19, 1997.
"Distribution Date" shall mean, with respect to Series
1997-
2, 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 December 12, 1997.
"Due Period" shall mean, with respect to the first Due
Period, the period from and including November 1, 1997 through
November 30, 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 1997-2 Participation Interest in the
Collection Account, "Eligible Investments" as defined in the
Agreement, except that all references in such definition 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 segregated
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 November 2007.
"Fixed Allocation Percentage" shall mean, with respect to
any Distribution Date, the percentage equivalent of a frac-
tion, the numerator of which is the Series 1997-2
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 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 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 fraction, the numerator of
which is the Series 1997-2 Participation 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 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 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 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.
"Floating Allocation Percentage" shall mean with respect
to any Distribution Date the percentage equivalent of a frac-
tion, the numerator of which is the Series 1997-2
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 Receivables, 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 fraction, the numerator of which is
the Series 1997-2 Participation 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 November
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 Distri-
bution Date, the period from and including the Distribution
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 Distribution Date.
"Invested Amount" as defined in the Agreement shall mean
the Series 1997-2 Participation Interest Invested Amount as
defined herein.
"Investor Finance Charge and Administrative Collections"
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 Amortization 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 Principal Amount.
On and after the Accelerated Amortization Date and during an
Early Amortization Period, Investor Principal 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
1997-2, 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 (i) for Distribution
Dates occurring prior to December 1998, 2.50% of the Series
1997-2 Participation Interest Invested Amount, and (ii) for
Distribution Dates occurring in December 1998 or thereafter,
2.20% of the Series 1997-2 Participation Interest Invested
Amount, in each case, exceeds the Series 1997-2 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
1997-2 Participation Interest, plus (ii) accrued and unpaid
interest on the unpaid principal balance of the Series 1997-2
Series 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 previously due but not distributed to the
Series 1997-2 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; provided,
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 Telerate 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
1997-2 Participation Interest on such Distribution Date, plus
(ii) amounts accrued and unpaid at the Series 1997-2
Participation Interest Pass-Through Rate on the unpaid
principal balance of the Series 1997-2 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 previously due
but not distributed to the Series 1997-2 Participants on a
prior Distribution Date.
"Required Seller Amount" shall mean an amount equal to
1.01% of the Series 1997-2 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
September 30, 1997.
"Series 1997-2 Participant" shall mean the Issuer.
"Series 1997-2 Participants' Interest" shall mean 100% of
the interest evidenced by the Series 1997-2 Participation
Interest.
"Series 1997-2 Participation Interest" shall be a Series
Participation Interest for the purposes of the Agreement 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 1997-2 Participation Interest Charge-Offs" shall
have the meaning specified in Section 4.12(a) hereof.
"Series 1997-2 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 1997-2 Participation Interest Initial Invested
Amount" shall mean the initial principal amount represented by
the Series 1997-2 Participation Interest on the Issuance Date,
which amount is $1,200,000,000.
"Series 1997-2 Participation Interest Interest Shortfall"
shall have the meaning specified in Section 4.08(a) hereof.
"Series 1997-2 Participation Interest Invested Amount"
shall mean, when used with respect to any date, an amount
equal to (a) the Series 1997-2 Participation Interest Initial
Invested Amount, minus (b) the amount of principal payments
made to the Series 1997-2 Series Participants prior to and
including such date, minus (c) the excess, if any, of the
aggregate amount of Series 1997-2 Participation Interest
Charge-Offs over Series 1997-2 Participation Interest
Charge-Offs reimbursed pursuant to Section 4.11(a) hereof
prior to and including such date.
"Series 1997-2 Participation Interest Monthly Interest"
shall mean the monthly interest distributable in respect of
the Series 1997-2 Participation Interest as calculated in
accordance with Section 4.08(a) hereof.
"Series 1997-2 Participation Interest Monthly Principal"
shall mean the monthly principal distributable in respect of
the Series 1997-2 Participation Interest as calculated in
accordance with Section 4.09(a) hereof.
"Series 1997-2 Participation Interest Net Default Payment
Amount" shall mean with respect to any Distribution Date the
Series 1997-2 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 1997-2 Participation Interest Pass-Through Rate"
shall mean as to each Interest Period the Prime Rate minus
1.50%; provided that the Series 1997-2 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 1997-2 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) 1.50% per annum of the Series 1997-2
Participation Interest Invested Amount for Distribution Dates
occurring prior to December 1998 and 0.25% per annum of the
Series 1997-2 Participation Interest Invested Amount for
Distribution Dates occurring in December 1998 and thereafter,
in each case, calculated on the basis of a year consisting of
twelve months each consisting of 30 days.
"Series 1997-2 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 1997-2
Participation Interest Invested Amount as of such Record Date
(determined after taking into account any increases or
decreases in the Series 1997-2 Participation Interest Invested
Amount which will occur on the following Distribution Date) to
the Series 1997-2 Participation Interest Initial Invested
Amount.
"Series 1997-2 Servicing Fee" shall have the meaning
specified in Section 3 hereof.
"Series 1997-2 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 purpose
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 1997-2.
"Trust Agreement" shall mean the trust agreement dated as
of November 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 Agreement.
(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 1997-2 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 1997-2
Series Participation Interest Invested Amount is zero, in an amount
equal to 1/12th of, or with respect to the first Due Period,
12/360th of the product of (i) the Servicing Fee Rate and (ii) the
Series 1997-2 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 1997-2 Participation Interest, be read
in its entirety as follows:
ARTICLE IV
RIGHTS OF SERIES 1997-2 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 1997-2
Participation Interest pursuant to Article IV of the Agreement
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 1997-2 Participation
Interest on any Distribution Date shall be an amount equal to
the product of (i) the Series 1997-2 Participation Interest
Pass-Through Rate and (ii) the unpaid principal balance of the
Series 1997-2 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 1997-2 Participation Interest Monthly Interest").
On the Determination Date preceding each Distribution
Date, the Servicer shall determine an amount (the "Series
1997-2 Participation Interest Interest Shortfall") equal to
the sum of (a) (x) the Series 1997-2 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
1997-2 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 1997-2
Participation Interest Interest Shortfall with respect to any
Distribution Date is greater than zero, on each subsequent
Distribution Date until such Series 1997-2 Participation
Interest Interest Shortfall is fully paid, pursuant to Section
4.11(a), an additional amount ("Additional Interest") shall be
payable as provided herein with respect to the Series 1997-2
Participation Interest Monthly Interest on each Distribution
Date following such Distribution Date, excluding the
Distribution Date on which the Series 1997-2 Participation
Interest Interest Shortfall is paid to the Series 1997-2
Participants equal to the product of (i) the Series 1997-2
Participation Interest Pass-Through Rate and (ii) such Series
1997-2 Participation Interest Interest Shortfall (or the
portion thereof which has not been paid to the Series 1997-2
Participants) determined on the basis of the actual number of
days in the related Interest Period and a 360-day year.
Notwithstanding anything to the contrary herein, Additional
Interest shall be payable or distributed to the Series 1997-2
Participants.
Section 4.09. Determination of Monthly Principal.
(a) The amount of monthly principal ("Series 1997-2
Participation Interest Monthly Principal") distributable from
the Collection Account with respect to the Series
1997-2 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 1997-2 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 Distribution
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 1997-2 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 1997-2 Servicing Fee (but only
with respect to the then current Servicer) shall be paid
to the Servicer.
(ii) an amount equal to the Series 1997-2 Partic-
ipation Interest Monthly Interest for such Distribution
Date, plus the amount of any Series 1997-2 Participation
Interest Interest Shortfall, plus the amount of any
Additional Interest for such Distribution Date;
(iii) an amount equal to the Series 1997-2 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 1997-2 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 1997-2 Servicing
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 1997-2
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
1997-2 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 1997-2 Participation Interest
Invested Amount shall be reduced by the amount of such excess
("Series 1997-2 Participation Interest Charge-Offs"), but not
more than the Series 1997-2 Participation Interest Default
Amount for such Distribution Date.
(b) Notwithstanding any other provision of this Series
Supplement, the Series 1997-2 Participation Interest Invested
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 1997-2 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 1997-2 Participant's pro rata share (based on the
aggregate fractional undivided interests represented by the Series
1997-2 Participation Interest held by such Series 1997-2
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 1997-2 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 1997-2 Participant's pro rata share (based on the
aggregate fractional undivided interests represented by the Series
1997-2 Participation Interest held by such Series 1997-2
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-
2 Participant hereunder shall be made in immediately available
funds by wire transfer to the account designated by such Series
1997-2 Participant.
SECTION 6. Statements to Series 1997-2 Participants.
(a) On each Distribution Date, the Paying Agent, on behalf of
the Deposit Trustee, shall forward to each Series 1997-2
Participant a statement substantially in the form of Exhibit B
prepared by the Servicer setting forth certain information relating
to the Deposit Trust and the Series 1997-2 Participation Interest.
(b) On or before January 31 of each calendar year, beginning
January 31, 1999, 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 1997-2
Participant, a statement prepared by the Servicer containing the
information which is required to be contained in the statement to
the Series 1997-2 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 January 1, 1998 and ending on December 31,
1998) during which such Person was a Series 1997-2 Participant,
together with such other customary information as is necessary to
enable the Series 1997-2 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 Agreement
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 payment
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 1997-2
Participation Interest and which continues unremedied 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 1997-2 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 1997-2
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 1997-2 Participation Interest, by written notice to the
Seller and the Servicer (and to the Deposit Trustee, if given by
the Series 1997-2 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 1997-2 Participants 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
$114,900,000 (10% of the aggregate of the Security Balances on the
Closing Date) or less, the Seller shall have the option to purchase
the Series 1997-2 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 1997-2 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 1997-2 Participants' Interest in connection with a repur-
chase of the Series 1997-2 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 1997-2 Participants' Interest in connection with a repur-
chase of the Series 1997-2 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 1997-2 Participation Interest with a
remaining maturity approximately equal to the remaining maturity of
the Series 1997-2 Participation Interest over (II) the portion of
the Reassignment Amount attributable to the Series 1997-2
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 Agreement.
(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 pursuant 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 1997-2
Participation Interest Invested Amount on such date and the amount
of accrued and unpaid interest on the unpaid balance of the Series
1997-2 Participation Interest, plus the amount of the Series 1997-2
Participation Interest Additional Interest previously due but not
paid on any prior Distribution Date, for distribution to the Series
1997-2 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 1997-2 Participants shall be distributed
in full to the Series 1997-2 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 ratable portion (based on the
respective Invested Amounts of each Outstanding Series) of the
amount deposited in the Collection Account pursuant to this Section
11 and all other amounts on deposit therein shall be distributed in
full to the Series 1997-2 Participants on the Distribution Date on
which funds are deposited pursuant to this Section (or, if not so
deposited on a Distribution 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 1997-2 Participation
Interest is outstanding, such opinion shall be also delivered to
Moody's.
SECTION 13. [RESERVED]
SECTION 14. [RESERVED]
SECTION 15. Delivery of Series 1997-2 Participation Interest.
The Deposit Trustee shall deliver the Series 1997-2 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 counter-
parts, 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 OBLIGATIONS,
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 1997-2 Participation Interest and Monthly
Servicer's Certificate with respect to Series 1997-2 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 1997-2 Participation
Interest containing the legend set forth on the Series 1997-2
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 benefit
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 1997-2
Participation Interest, a Series 1997-2 Participant shall be deemed
to have represented and warranted that it is not a Benefit Plan and
is not purchasing a Series 1997-2 Participation Interest on behalf
of a Benefit Plan. By acquiring any interest in a Book-Entry
Certificate representing a Series 1997-2 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 1997-2
Participation Interest on behalf of a Benefit Plan.
No transfer of a Series 1997-2 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 (the "1933 Act") 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 1997-2
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: Steven H. Smith
Title: Vice President and
Assistant Treasurer
HOUSEHOLD FINANCE CORPORATION,
as Servicer
By:
Name: B. B. Moss, Jr.
Title: Vice President and
Treasurer
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, as Deposit Trustee
By:
Name:
Title:<PAGE>
EXHIBIT A-1
FORM OF SERIES 1997-2 PARTICIPATION INTEREST
THIS SERIES 1997-2 PARTICIPATION INTEREST HAS NOT BEEN REGIS-
TERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. NEITHER THIS
SERIES 1997-2 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 1997-2 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 1997-2 SUPPLEMENT THERETO, BOTH
REFERRED TO HEREIN.
No. R-__ One Unit
HOUSEHOLD CONSUMER LOAN DEPOSIT TRUST I
SERIES 1997-2 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 portfolio 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 1997-2 dated as of
November 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 1997-2 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 obligations 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 1997-2 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 1997-2
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 1997-2 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 1997-2 Participation Interest at any time in the
Receivables in the Trust shall not exceed the Series 1997-2
Participation Interest Invested Amount at such time. In addition
to the Series 1997-2 Participation Interest, (i) Investor Certif-
icates and additional Series Participation Interests may be issued
to investors pursuant to the Agreement, which will represent 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 1997-2 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 December 1997.
Unless the certificate of authentication hereon has been
executed by or on behalf of the Trustee, by manual or facsimile
signature, this Series 1997-2 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 1997-2
Participation Interest to be duly executed.
HOUSEHOLD CONSUMER LOAN CORPORATION
By:
Name: Steven H. Smith
Title: Vice President and
Assistant Treasurer
Dated: November ___, 1997
TRUSTEE'S CERTIFICATE OF AUTHORIZATION
This is one of the Series 1997-2 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 1997-2 PARTICIPATION INTEREST
Summary of Terms and Conditions
The Series 1997-2 Participation Interest constitutes an
undivided beneficial interest in the Receivables held in the Trust.
The holder of the Series 1997-2 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 1997-2
Participation Interest initially represents a principal balance of
$1,200,000,000. Thereafter, the Series 1997-2 Participation
Interest Invested Amount with respect to any date will be an amount
equal to the Series 1997-2 Participation Interest Initial Invested
Amount minus the sum of the Series 1997-2 Participation Interest
Principal Distribution Amount paid for all Distribution Dates and
the Defaulted Amounts allocated to the Series 1997-2 Participation
Interest during the related and all prior Due Periods that have not
been included in the Series 1997-2 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 1997-2 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 1997-2
Participant's pro rata share (based on the aggregate fractional
undivided interests represented by Series 1997-2 Participation
Interests held by such Series 1997-2 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 1997-2 Participant.
The Seller shall have the option to purchase the Series 1997-2
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 1997-2 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
1997-2 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 Supple-
ment.
The Agreement and the Supplement may be amended by the Seller,
the Servicer and the Trustee, without the consent of the Series
1997-2 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 Certificates 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 Certificateholders or holder of any
Series Participation Interest without 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 1997-2 Participants shall be conclusive
and binding on such Series 1997-2 Participants and upon all future
holders of this Series 1997-2 Participation Interest and of any
Series 1997-2 Participation Interest issued in exchange hereof or
in lieu hereof whether or not notation thereof is made upon this
Series 1997-2 Participation Interest.
As set forth in Section 6.05 of the Agreement, the transfer of
this Series 1997-2 Participation Interest shall be registered in
the Certificate Register upon surrender of this Series 1997-2
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 satisfactory
to the Trustee or the Transfer Agent and Registrar, duly executed
by the Series 1997-2 Participant or such Series 1997-2
Participant's attorney, and duly authorized in writing with such
signature guaranteed, and thereupon one or more new Series 1997-2
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 1997-2 Participation Interests
are exchangeable for new Series 1997-2 Participation Interests
evidencing like aggregate fractional undivided interests as
requested by the holder surrendering such Series 1997-2
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 1997-2 Participation
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 1997-2 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 1997-2
Consumer Loan Asset Backed Notes, Series 1997-2,
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 Association, 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 1997-2 Principal
Collections for the preceding Due
Period is. . . . . . . . . . . . . . . . .$
(e) Amount of Series 1997-2 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
Pooling and Servicing Agreement is . . . .$
(l) Applicable allocation percentages
for principal and interest for such
Distribution Date are. . . . . . . . . . . %
%
(m) Series 1997-2 Participation Interest
Distribution Amount is . . . . . . . . . .$
(n) Accelerated Principal Distribution
Amount is. . . . . . . . . . . . . . . . .$
(o) Series 1997-2 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 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 Securi-
ties 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 consti-
tute a distribution of the Rule 144A Securities under the Securi-
ties 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 con-
stitute 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 institutional
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 institu-
tional 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 registration 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 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. 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 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 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, as amended ("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, as amended
("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:
EXHIBIT 10.4
EXECUTION COPY
This ADMINISTRATION AGREEMENT dated as of November 1,
1997 (as amended from time to time, this "Agreement"), among
HOUSEHOLD CONSUMER LOAN CORPORATION, a Nevada corporation ("HCLC"),
HOUSEHOLD CONSUMER LOAN TRUST 1997-2, 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 1997-2, 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 November 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 1997-2
(the "Certificates" and together with the Notes, the "Securities")
pursuant to the Trust Agreement dated as of November 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 therefor
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 Agreement to
acknowledge its consent to the Administrator's performance 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 covenants
contained herein, and other good and valuable consideration, 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 Agreement.
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 appropriate persons or
entities of, all such documents, reports, filings, instru-
ments, 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 limitation, 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 Certificates 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 documents
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 obliga-
tions as to the satisfaction and discharge of the Inden-
ture and the preparation of an Officer's Certificate 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 successor
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 transactions
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 each of the Owner Trustee and the
Indenture Trustee, as compensation for its services, such
fees as have been separately agreed upon before the date
hereof, and the Administrator will reimburse each of the
Owner Trustee and the Indenture 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 or the Indenture Trustee, as
the case may be, 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 the Indenture Trustee and
their respective successors, assigns, agents and servants
(collectively, the "Indemnified Parties") from and
against, any and all liabilities, obligations, losses,
damages, taxes, claims, actions and suits, and any and
all reasonable costs, expenses and disbursements
(including reasonable legal fees and expenses) of any
kind and nature whatsoever (collectively, "Expenses")
which may at any time be imposed on, incurred by, or
asserted against the Owner Trustee or the Indenture
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 administration of
the Owner Trust Estate or the action or inaction of the
Owner Trustee or the Indenture 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 or the Indenture 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 Agreement.
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 Administrator
set forth above, the Administrator shall perform, or cause to
be performed, the duties and obligations of the Seller, the
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 termination
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, filings,
instruments, certificates and opinions. Subject to Section 4
of this Agreement, and in accordance with the directions of
the Issuer, the Administrator shall administer, perform or
supervise the performance of such other activities in connec-
tion with the Collateral (including the Related Agreements) as
are not covered by any of the foregoing 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 Administrator
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 reasonable
judgment of the Administrator are non-ministerial, the Admin-
istrator shall not be under any obligation to take any action,
and in any event shall not take any action unless the Admin-
istrator 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 Administrator
shall be entitled to a fee of not more than $500.00 per month which
shall be paid by the Holder of the Designated Certificate pursuant
to Section 2.07(a) of the Trust Agreement; provided, 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 contrac-
tor 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 any 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 speci-
fied 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 Agreement,
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 1997-2
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 reasonably believes that
such amendment will not have a material adverse effect on the
Securityholders.
(b) This Agreement may also be amended from time to time
with the consent of the Holders of the Certificates evidencing not
less than 66-2/3% of the aggregate unpaid principal 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 modifying 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 Noteholders.
(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 Certifi-
cateholder, 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 consented 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 satisfaction, if accepted by the
assignee, shall bind the assignee hereunder in the same manner as
the Administrator is bound hereunder. Notwithstanding the fore-
going, 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 organization 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 successors 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 without
invalidating the remaining provisions hereof and any such
prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
17. Limitation of Liability of the Owner Trustee. Notwith-
standing anything contained herein to the contrary, this instrument
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, warranties, 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 benefits 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 1997-2
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: B. B. Moss, Jr.
Title: Vice President and Treasurer
HOUSEHOLD CONSUMER LOAN CORPORATION
By:___________________________
Name: Steven H. Smith
Title: Vice President and Assistant
Treasurer
CONSENTED TO BY:
THE BANK OF NEW YORK,
as Indenture Trustee
By:___________________________
Name:
Title:
