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 December 3, 1998
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HOUSEHOLD AUTOMOBILE REVOLVING TRUST I, SERIES 1998-1
- -----------------------------------------------------------------
(Exact name of registrant as specified in its charter)
HOUSEHOLD FINANCE CORPORATION
(Master Servicer of the Trust)
(Exact name as specified in Master Servicer's charter)
Delaware 333-59837 and 333-59837-01 Not Applicable
- ---------------------- -------------------------- --------------
(State or other juris- (Commission File Numbers) (IRS Employer
diction of incorpora- Identification
tion of Master Servicer) Number of
Registrant)
2700 Sanders Road, Prospect Heights, Illinois 60070
- ------------------------------------------------------------------
(Address of principal executive offices of (Zip Code)
Master Servicer)
Master Servicer's telephone number,
including area code 847/564-5000
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<PAGE>
Item 5. OTHER EVENTS
On December 3, 1998, the Registrant issued and sold its Series
1998-1 Notes, Class A-1, A-2, A-3, A-4, A-5 and B-1. 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. 333-59837 and 333-59837-01).
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
--------
1. Underwriting Agreement.
4.1 Trust Agreement.
4.2 Indenture between the Issuer, Master Servicer and
the Indenture Trustee.
4.3 Series 1998-1 Supplement to the Indenture and the
Trust Agreement.
4.4 Sale and Servicing Agreement among the Seller,
the Master Servicer, the Issuer and the Indenture
Trustee.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Master Servicer has duly caused this report to be signed on
behalf of the undersigned hereunto duly authorized.
HOUSEHOLD FINANCE CORPORATION,
as Master Servicer of and on behalf of the
HOUSEHOLD AUTOMOBILE REVOLVING TRUST I,
SERIES 1998-1
-----------------------------------------
(Registrant)
By: /s/ P. D. Schwartz
P. D. Schwartz
Authorized Representative
Dated: January 21, 1999
-3-<PAGE>
EXHIBIT INDEX
Exhibit
Number Exhibit
- ------- -------
1. Underwriting Agreement
4.1 Trust Agreement.
4.2 Indenture between the Issuer, Master Servicer and the
Indenture Trustee.
4.3 Series 1998-1 Supplement to the Indenture and the Trust
Agreement.
4.4 Sale and Servicing Agreement among the Seller, the Master
Servicer, the Issuer and the Indenture Trustee.
U:\WP\HFS088\8K\AUTO.8K
-4-
<PAGE>
32
NY-255974.3
EXECUTION COPY
HOUSEHOLD AUTOMOBILE REVOLVING TRUST I
SERIES 1998-1
$139,370,000 5.33% Class A-1 Notes
$54,000,000 5.514% Class A-2 Notes
$143,000,000 Floating Rate Class A-3 Notes
$80,832,000 Floating Rate Class A-4 Notes
$100,000,000 5.65% Class A-5 Notes
$99,303,000 6.30% Class B-1 Notes
UNDERWRITING AGREEMENT
CREDIT SUISSE FIRST BOSTON CORPORATION
As Representative of the Underwriters
Eleven Madison Avenue
New York, New York 10010 November 20, 1998
Dear Sirs:
Household Finance Corporation, a corporation organized
and existing under the laws of Delaware, individually ("HFC") and
as Master Servicer (the "Master Servicer"), Household Auto
Receivables Corporation, a corporation organized and existing
under the laws of Nevada and a wholly owned subsidiary of HFC,
individually ("HARC") and as Seller (the "Seller"), and Household
Automotive Finance Corporation, a corporation organized and
existing under the laws of Delaware and wholly owned subsidiary
of HFC ("HAFC"), agree with you as follows:
Section 1. Issuance and Sale of Series 1998-1
Notes. The Seller has authorized the issuance and sale of
$139,370,000 5.33% Class A-1 Notes, $54,000,000 5.514% Class A-2
Notes, $143,000,000 Floating Rate Class A-3 Notes, $80,832,000
Floating Rate Class A-4 Notes, $100,000,000 5.65% Class A-5 Notes
and $99,303,000 6.30% Class B-1 Notes (collectively, the
"Series 1998-1 Notes"). The Series 1998-1 Notes are to be issued
by Household Automobile Revolving Trust I (the "Trust") pursuant
to an Indenture, dated as of October 1, 1998, as supplemented by
a Series 1998-1 Supplement (the "Indenture") by and among HFC,
the Master Servicer, the Trust and The Chase Manhattan Bank, a
New York Banking Corporation, as indenture trustee (the
"Indenture Trustee"). In addition to the Series 1998-1 Notes,
the Trust will also issue the $94,338,000 6.40% Class B-2 Notes
(the "Class B-2 Notes") and the $60,823,000 6.50% Class C Notes
(the "Class C Notes") pursuant to the Indenture and Series 1998-1
Certificates (the "Series 1998-1 Certificates") pursuant to a
Trust Agreement, dated as of March 1, 1998, between the Seller
and the Owner Trustee as supplemented by a Series 1998-1
Supplement (the "Trust Agreement"). The Series 1998-1 Notes, the
Class B-2 Notes, the Class C Notes and the Series 1998-1
Certificates are referred to herein collectively as the
"Series 1998-1 Securities." The assets of the Trust will include
a pool of non-prime retail installment sales contracts secured by
new or used automobiles, light duty trucks and vans (the
"Receivables") and certain monies due thereunder on or after
October 31, 1998 (the "Cut-Off Date").
As used herein, the term "Seller Agreements" means the
Master Sale and Servicing Agreement dated as of March 1, 1998
among the Trust, the Seller, the Master Servicer and Norwest Bank
Minnesota, National Association, as trustee (the "Master Sale and
Servicing Agreement"), the Master Receivables Purchase Agreement
dated as of March 1, 1998 between the Seller and HAFC (the
"Master Receivables Purchase Agreement"), the Trust Agreement and
this Underwriting Agreement (this "Agreement"); the term "HAFC
Agreements" means the Master Receivables Purchase Agreement and
this Agreement; the term "HFC Agreements" means the Master Sale
and Servicing Agreement, the Indenture and this Agreement.
HFC, the Seller and HAFC are direct or indirect
subsidiaries of Household International, Inc. ("Household").
HFC, the Seller and HAFC are collectively referred to herein as
the "Household Entities").
The Series 1998-1 Notes are being purchased by the
Underwriters named in Schedule 1 hereto, and the Underwriters are
purchasing, severally, only the Series 1998-1 Notes set forth
opposite their names in Schedule 1, except that the amounts
purchased by the Underwriters may change in accordance with
Section 10 of this Agreement. Credit Suisse First Boston
Corporation is acting as representative of the Underwriters and
in such capacity, is hereinafter referred to as the
"Representative."
The offering of the Series 1998-1 Notes will be made by
the Underwriters and the Household Entities understand that the
Underwriters propose to make a public offering of the Series 1998-
1 Notes for settlement on December 3, 1998, as the Underwriters
deem advisable.
None of the Class B-2 Notes, Class C Notes nor the
Series 1998-1 Certificates are being purchased by the
Underwriters hereby.
Defined terms used herein and not otherwise defined
shall have their respective meanings as set forth in Section 2.01
of the Series 1998-1 Supplement dated as of November 1, 1998
among the Master Servicer, the Trust, the Seller, the Indenture
Trustee and Wilmington Trust Company, as Owner Trustee (the
"Series 1998-1 Supplement").
Section 2. Representations and Warranties.
A. HAFC and the Seller, individually, represent and
warrant to, and agree with, the Underwriters as set forth in this
Section 2(A). Certain terms used in this Section 2(A) are
defined in the second paragraph of subsection 2(A)(i) below.
(i) The Seller meets the requirements for
use of Form S-3 under the Securities Act of 1933, as
amended (the "Act"), and has filed with the United
States Securities and Exchange Commission (the
"Commission") a registration statement (Registration
No. 333-59837), relating to the Series 1998-1 Notes,
on such Form S-3 for the registration under the Act of
the Series 1998-1 Notes. The Seller may have filed one
or more amendments thereto, each of which has
previously been furnished to you. The Seller will next
file with the Commission either, (A) prior to the
effectiveness of such registration statement, a further
amendment thereto (including the form of final
prospectus) or, (B) after effectiveness of such
registration statement, a final prospectus in
accordance with Rules 430A and 424(b)(1) or (4). In
the case of clause (B), the Seller has included in such
registration statement, as amended at the Effective
Date, all information (other than Rule 430A
Information) required by the Act and the rules
thereunder to be included in the prospectuses with
respect to the Series 1998-1 Notes and the offering
thereof. 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 you prior to the Execution Time or, to the
extent not completed at the Execution Time, shall
contain only such specific additional information and
other changes as the Seller has advised you, 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.
"Prospectus" shall mean the prospectus relating to the Series
1998-1 Notes that is first filed with the Commission pursuant to
Rule 424(b) and any prospectuses 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. "Registration
Statement" shall mean the registration statement referred to in
the preceding paragraph and any registration statement required
to be filed under the Act or rules thereunder, including
amendments, all documents incorporated or deemed to be
incorporated by reference therein, exhibits and financial
statements, in the form in which it has or shall become effective
and, in the event that any post-effective amendment thereto
becomes effective prior to the Closing Date (as hereinafter
defined), shall also mean such registration statement as amended
or supplemented pursuant to the Act or rules thereunder or the
Exchange Act or rules thereunder. Such term shall include 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 under the Act. "Rule 430A Information" means
information with respect to the Series 1998-1 Notes and the
offering thereof permitted to be omitted from the Registration
Statement when it becomes effective pursuant to Rule 430A. The
"Rules and Regulations" shall mean the rules and regulations of
the commission. All references in this Agreement to financial
statements and schedules and other information which is
"contained," included" or "stated" in the Registration Statement
or the Prospectus (and all other references of like import) shall
be deemed to mean and include all such financial statements and
schedules and other information which is or is deemed to be
incorporated by reference in the Registration Statement or the
Prospectus, as the case may be; and all references in this
Agreement to amendments or supplements to the Registration
Statement or the Prospectus shall be deemed to mean and include
the filing of any document under the Exchange Act which is or is
deemed to be incorporated by reference in the Registration
Statement or the Prospectus, as the case may be.
(ii) 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 thereunder; assuming compliance
by each Underwriter with Sections 3(a), 3(b) and 3c
hereof on the Effective Date and when the Prospectus is
first filed (if required) in accordance with Rule
424(b) and on the Closing Date, the Prospectus will
comply in all material respects with the applicable
requirements of the Act and the Rules and Regulations;
on the Effective Date, the Registration Statement did
not or will not contain any untrue statement of a
material fact or omit to state any material fact
required to be stated therein or necessary in order to
make the statements therein not misleading; and, on the
Effective Date, the Prospectus, if not filed pursuant
to Rule 424(b), did not or will not, and on the date of
any filing pursuant to Rule 424(b) 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 HAFC and
the Seller make no representations or warranties as to
the information contained in or omitted from the
Registration Statement or the Prospectus in reliance
upon and in conformity with information furnished in
writing to HAFC or the Seller by the Representative
specifically for use in connection with the preparation
of the Registration Statement or the Prospectus. The
documents incorporated or deemed to be incorporated by
reference in the Prospectus, at the time they were or
hereafter are filed with the Commission, complied and
will comply in all material respects with the
requirements of the Exchange Act and the Rules and
Regulations of the Commission under the Exchange Act,
and, when read together with the other information in
the Prospectus, at the time the Registration Statement
and any amendments thereto become effective and at the
Closing Date, will not contain an 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, in the light of the circumstances
under which they were made, not misleading.
(iii) Each of HAFC and the Seller is a
corporation duly organized and validly existing and in
good standing under the laws of its jurisdiction of
incorporation. Each of HAFC and the Seller has all
requisite power and authority to own its properties and
conduct its business as presently conducted and 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
have such requisite power and authority or to be so
qualified would not have a material adverse effect on
the business or consolidated financial condition of
HAFC or the Seller.
(iv) Neither HAFC nor the Seller is in
violation of its certificate of incorporation or 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 to which it
is a party or by which it may be bound, or to which any
of the property or assets of the Seller or HAFC, as the
case may be, is subject, except where any such
violation or default would not have a material adverse
effect on the transactions contemplated by this
Agreement.
(v) The execution, delivery and performance
by the Seller of each Seller Agreement, the issuance of
the Series 1998-1 Securities and the consummation of
the transactions contemplated hereby and thereby have
been duly and validly authorized by all necessary
action or proceedings and will not conflict with or
constitute a breach of, or default under, or, other
than as contemplated in the Registration Statement,
result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of
the Seller pursuant to, any contract, indenture,
mortgage, loan agreement, note, lease or other
instrument to which the Seller is a party or by which
it may be bound, or to which any of the property or
assets of the Seller is subject, nor will such action
result in any violation of the provisions of the
certificate of incorporation or by-laws of the Seller
or any applicable law, administrative regulation or
administrative or court decree, except where any such
conflict, breach, default, encumbrance or violation
would not have a material adverse effect on the
transactions contemplated by this Agreement.
(vi) The execution, delivery and performance
by HAFC of each HAFC Agreement, the issuance of the
Series 1998-1 Securities and the consummation of the
transactions contemplated hereby and thereby have been
duly and validly authorized by all necessary action or
proceedings and will not conflict with or constitute a
breach of, or default under, or result in the creation
or imposition of any lien, charge or encumbrance upon
any property or, other than as contemplated by the
Registration Statement, assets of HAFC pursuant to, any
contract, indenture, mortgage, loan agreement, note,
lease or other instrument to which HAFC is a party or
by which it may be bound, or to which any of the
property or assets of HAFC is subject, nor will such
action result in any violation of the provisions of the
charter or by-laws of HAFC or any applicable law,
administrative regulation or administrative or court
decree, except where any such conflict, breach,
default, encumbrance or violation would not have a
material adverse effect on the transactions
contemplated by this Agreement.
(vii) Each Seller Agreement has been, or
when executed and delivered, will have been, duly
executed and delivered by the Seller; and each Seller
Agreement constitutes, or, when executed and delivered,
will constitute, legal, valid and binding instruments
enforceable against the Seller in accordance with their
respective terms, subject as to enforceability (A) to
applicable bankruptcy, reorganization, insolvency,
moratorium or other similar laws affecting creditors'
rights generally, (B) to general principles of equity
(regardless of whether enforcement is sought in a
proceeding in equity or at law) and c with respect to
rights of indemnity under this Agreement, to
limitations of public policy under applicable
securities laws.
(viii) Each HAFC Agreement has been, or,
when executed and delivered, will have been duly
executed and delivered by HAFC; and each Seller
Agreement constitutes, or, when executed and delivered,
will constitute, legal, valid and binding instruments
enforceable against HAFC in accordance with their
respective terms, subject as to the enforceability
(A) to applicable bankruptcy, reorganization,
insolvency, moratorium or other similar laws affecting
creditors' rights generally, (B) to general principles
of equity (regardless of whether enforcement is sought
in a proceeding in equity or at law) and c with respect
to rights of indemnity under this Agreement, to
limitations of public policy under applicable
securities law.
(ix) HAFC has authorized the conveyance of
the Receivables to the Seller; the Seller has
authorized the conveyance of the Receivables to the
Trust; and the Seller has directed the Trust to issue
and sell the Series 1998-1 Securities.
(x) Each of HAFC and the Seller is solvent
and will not become insolvent after giving effect to
the transactions contemplated by this Agreement and the
other Series 1998-1 Related Documents. The Seller has
no indebtedness to any Person other than pursuant to
this Agreement, the other Series 1998-1 Related
Documents, the Series 1998-A Related Documents and, in
the case of the Seller, the Revolving Credit Agreement.
Each of the Issuer, HAFC and the Seller, after giving
effect to the transactions contemplated by this
Agreement and the other Series 1998-1 Related
Documents, will have an adequate amount of capital to
conduct its business in the foreseeable future.
(xi) Any taxes, fees and other governmental
charges in connection with the execution, delivery and
performance of any Seller Agreement, the Indenture and
the Securities shall have been paid or will be paid by
the Seller at or prior to the Closing Date.
(xii) The Series 1998-1 Notes have been
duly and validly authorized, and, when validly
executed, authenticated, issued and delivered in
accordance with the Indenture and as provided herein
will conform in all material respects to the
description thereof contained in the Prospectus and
will be validly issued and outstanding and entitled to
the benefits of the Indenture.
(xiii) There are no legal or governmental
proceedings pending, or to the knowledge of HAFC or the
Seller threatened, to which HAFC or the Seller is a
party or of which any property of any of them is the
subject, other than proceedings which are not
reasonably expected, individually or in the aggregate,
to have a material adverse effect on the shareholder's
equity or consolidated financial position of such
person and its subsidiaries taken as a whole, or which
would have a material adverse effect upon the
consummation of this Agreement.
(xiv) Arthur Andersen LLP is an
independent public accountant with respect to HAFC and
Seller as required by the Act and the Rules and
Regulations.
(xv) No consent, approval, authorization,
order, registration, filing, qualification, license or
permit of or with any court or governmental agency or
body of the United States is required for the issue and
sale of the Series 1998-1 Notes, or the consummation by
HAFC or the Seller of the other transactions
contemplated by this Agreement, the Master Receivables
Purchase Agreement, the Master Sale and Servicing
Agreement, the Trust Agreement or the Indenture, except
for (A) the registration under the Act of the
Series 1998-1 Notes, (B) such consents, approvals,
authorizations, orders, registrations, qualifications,
licenses or permits as have been obtained or as may be
required under State securities or Blue Sky laws in
connection with the purchase of the Series 1998-1 Notes
and the subsequent distribution of the Series 1998-1
Notes by the Underwriters or c where the failure to
obtain such consents, approvals, authorizations,
orders, registrations, filings, qualifications,
licenses or permits would not have a material adverse
effect on the business or consolidated financial
condition of HAFC and its subsidiaries taken as a whole
or the Seller or the transactions contemplated by such
agreements.
(xvi) (a) HAFC has the power and
authority to sell the Receivables to the Trust, and
(b) following the conveyance of the Receivables to the
Trust pursuant to the Master Sale and Servicing
Agreement, the Trust will own the Receivables free and
clear of any lien, mortgage, pledge, charge,
encumbrance, adverse claim or other security interest
(collectively, "Liens") other than Liens created by the
Master Sale and Servicing Agreement.
(xvii) As of the Cut-Off Date, each of the
Receivables will meet the eligibility criteria
described in the Prospectus.
(xviii) Neither HAFC nor the Seller will
conduct their operations while any of the Securities
are outstanding in a manner that would require the
Seller or the Trust 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.
(xix) Each of the Seller and HAFC
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 on The Prospectus and neither the
Seller nor HAFC has received notice of any proceedings
relating to the revocation or modification of such
license, certificate, authority or permit which, singly
or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, is likely to materially
and adversely affect the conduct of its business,
operations, financial condition or income.
(xx) At the Closing Date, each of the
representations and warranties of HAFC set forth in the
HAFC Agreements or of the Seller set forth in the
Seller Agreements will be true and correct in all
material respects.
(xxi) Since the respective dates as of
which information is given in the Prospectus, (x) there
has not been any material adverse change in or
affecting the general affairs, business, management,
financial condition, stockholder's equity, results of
operations, regulatory situation or business prospects
of HAFC and (y) HAFC has not entered into any
transaction or agreement (whether or not in the
ordinary course of business) material to HAFC that, in
either case, would reasonably be expected to materially
adversely affect the interests of the holders of the
Series 1998-1 Notes, otherwise than as set forth or
contemplated in the Prospectus.
B. HFC represents, warrants and agrees with the
Underwriters, that:
(i) HFC is a corporation duly organized and
validly existing and in good standing under the laws of
its jurisdiction of incorporation. HFC has all
requisite power and authority to own its properties and
conduct its business as presently conducted and is duly
qualified as a foreign corporation to transact business
and is in good standing in each jurisdiction which
requires such qualification, except where the failure
to have such power and authority or to be so qualified
would not have a material adverse effect on the
business or consolidated financial condition of HFC and
its subsidiaries taken as a whole.
(ii) HFC is not in violation of its
certificate of incorporation or 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 to which HFC is a party or by
which it may be bound, or to which any of the property
or assets of HFC is subject except where any such
violation or default would not have a material adverse
effect on the transactions contemplated by this
Agreement.
(iii) The execution, delivery and
performance by HFC of the HFC Agreements, and the
consummation of the transactions contemplated hereby
and thereby have been duly and validly authorized by
all necessary action or proceedings and will not
conflict with or constitute a breach of, or default
under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets
of HFC pursuant to, any contract, indenture, mortgage,
loan agreement, note, lease or other instrument to
which HFC is a party or by which it may be bound, or to
which any of the property or assets of HFC is subject,
nor will such action result in any violation of the
provisions of the certificate of incorporation or
by-laws of HFC or any applicable law, administrative
regulation or administrative or court decree, except
where any such conflict, breach, default, encumbrance
or violation would not have a material adverse effect
on the transactions contemplated by this Agreement.
(iv) Each HFC Agreement has been, or, when
executed and delivered, will have been, duly executed
and delivered by HFC; and each HFC Agreement
constitutes, or, when executed and delivered, will
constitute, legal, valid and binding instruments
enforceable against HFC in accordance with their
respective terms, subject as to enforceability (A) to
applicable bankruptcy, reorganization, insolvency,
moratorium or other similar laws affecting creditors'
rights generally, (B) to general principles of equity
(regardless of whether enforcement is sought in a
proceeding in equity or at law) and c with respect to
rights of indemnity under this Agreement to limitations
of public policy under applicable securities laws.
(v) HFC will, upon request by any
Underwriter, provide to such Underwriter complete and
correct copies of all reports filed by it with the
Commission pursuant to the Securities Exchange Act of
1934, as amended (the "Exchange Act"), during 1996,
1997 and 1998. Except as set forth in or contemplated
in such reports, there has been no material adverse
change in the consolidated financial condition of HFC
and its subsidiaries taken as a whole.
(vi) There are no legal or governmental
proceedings pending, or to the knowledge of HFC
threatened, to which HFC is a party or of which any of
its property is the subject, other than proceedings
which are not reasonably expected, individually or in
the aggregate, to have a material adverse effect on the
shareholder's equity or consolidated financial position
of HFC and its subsidiaries taken as a whole or which
would have a material adverse effect upon the
consummation of this Agreement.
(vii) No consent, approval,
authorization, order, registration, filing,
qualification, license or permit of or with any court
or governmental agency or body of the United States is
required for the consummation by HFC of the
transactions contemplated by the HFC Agreements, except
for (A) the registration under the Act of the
Series 1998-1 Notes, (B) such consents, approvals,
authorizations, orders, registrations, filings,
qualifications, licenses or permits as have been
obtained or as may be required under State securities
or Blue Sky laws in connection with the purchase of the
Series 1998-1 Notes and the subsequent distribution of
the Series 1998-1 Notes by the Underwriters or c where
the failure to obtain such consents, approvals,
authorizations, orders, registrations, filings,
qualifications, licenses or permits would not have a
material adverse effect on the business or consolidated
financial condition of HFC and its subsidiaries taken
as a whole or the transactions contemplated by such
agreements.
(viii) Arthur Andersen LLP is an
independent public accountant with respect to HFC as
required by the Act and the Rules and Regulations.
Section 3. Representations and Warranties of the
Underwriters. Each Underwriter severally, and not jointly,
represents and warrants to, and agrees with the other
Underwriters, HAFC, the Seller and HFC that:
(a) Prior to the Effective Date, such Underwriter has not
furnished and will not furnish, in writing or by electronic
transmission, any Derived Information relating to the Series
1998-1 Notes to any prospective investor.
(b) Such Underwriter shall provide the Seller no later than
one Business Day after any Collateral Term Sheet is delivered
to a prospective investor, or in the case of any Structural
Term Sheets and Computational Materials no later than one
Business Day before the date on which the Prospectus is
required to be filed pursuant to Rule 424, all such Derived
Information delivered to a prospective investor by it during
the period commencing on the Effective Date and ending on the
date the Prospectus is filed with the Commission. Such
Underwriter shall deliver to the Seller a hard copy and, in a
mutually agreed upon format, a disk or electronic
transmission of such Derived Information.
(c) Assuming the accuracy of the Seller-Provider Information
used in the preparation of Derived Information, the Derived
Information, delivered by such Underwriter, as of the date
thereof, is accurate in all material respects, taking into
account the assumptions set forth in such Derived
Information, but without making any representations as to the
appropriateness of such assumptions.
(d) Each Underwriter acknowledges that none of HAFC, the
Seller or HFC will 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), (b) or c above,
provided, however, that the rights and obligations otherwise
available to an Underwriter pursuant to Section 10 and 11
hereof are not limited solely as a result of an Underwriter's
breach of the representation and warranty set forth in
subsection (a) above.
(e) 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). 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),
and with respect to "Collateral Term Sheet" 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).
"Seller-Provided Information" means the information contained
on any computer tape furnished to the Underwriters by the
Seller concerning the assets comprising the Issuer.
Section 4. Purchase and Sale. The Underwriters'
commitment to purchase the Series 1998-1 Notes pursuant to this
Agreement shall be deemed to have been made on the basis of the
representations and warranties of the Household Entities herein
contained and shall be subject to the terms and conditions herein
set forth. The Seller agrees to instruct the Trust to issue the
Series 1998-1 Notes to the Underwriters, and the Underwriters
agree to purchase the Series 1998-1 Notes on the date of issuance
thereof. The purchase prices for the Series 1998-1 Notes shall
be as set forth on Schedule 1 hereto.
Section 5. Delivery and Payment. Payment of the
purchase price for, and delivery of, any Series 1998-1 Notes to
be purchased by the Underwriters shall be made at the office of
Dewey Ballantine LLP, 1301 Avenue of the Americas, New York, New
York, or at such other place as shall be agreed upon by the
Representative and the Household Entities, at 10:00 a.m. New York
City time on December 3, 1998 (the "Closing Date"), or at such
other time or date as shall be agreed upon in writing by the
Representative and the Household Entities. Payment shall be made
by wire transfer of same day funds payable to the account
designated by HAFC. Each of the Series 1998-1 Notes so to be
delivered shall be represented by one or more global Series 1998-
1 Notes registered in the name of Cede & Co., as nominee for The
Depository Trust Company.
The Household Entities agree to have the Series 1998-1
Notes available for inspection, checking and packaging by the
Representative in New York, New York, not later than 12:00 P.M.
New York City time on the business day prior to the Closing Date.
Section 6. Offering by Underwriters.
(a) It is understood that the Underwriters propose to
offer the Series 1998-1 Notes for sale to the public as set forth
in the Prospectus.
(b) Each Underwriter represents and agrees that
(i) it has not offered or sold and, prior to the expiry of six
months from the Closing Date, will not offer or sell any
Series 1998-1 Notes to persons in the United Kingdom except to
persons whose ordinary activities involve them in acquiring,
holding, managing or disposing of investments (as principal or
agent) for the purpose of their businesses or otherwise in
circumstances which have not resulted and will not result in an
offer to the public in the United Kingdom within the meaning of
the Public Offers of Securities Regulations 1995; (ii) it has
complied and will comply with all applicable provisions of the
Financial Services Act 1986 with respect to anything done by it
in relation to the Series 1998-1 Notes in, from or otherwise
involving the United Kingdom; and (iii) it has only issued or
passed on, and will only issue or pass on, in the United Kingdom
any document received by it in connection with the issue of the
Series 1998-1 Notes, to a person who is of a kind described in
the Article 11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1995 or to a person to whom
such document may otherwise lawfully be issued, distributed or
passed on.
Section 7. Covenants of the Household Entities.
The Household Entities, covenant with the Underwriters as
follows:
A. The Seller will use its best efforts to cause the
Registration Statement and any amendment thereto, if not
effective at the Execution Time, to become effective. If the
Registration Statement has become or becomes effective pursuant
to Rule 430A, or filing of the Prospectus is otherwise required
under Rule 424(b), the Seller will file the Prospectus properly
completed, pursuant to Rule 424(b) within the time period
prescribed and will promptly evidence satisfactory to the
Underwriters of such timely filing. The Seller will promptly
advise the Underwriters (i) when the Registration Statement shall
have become effective, (ii) when any amendment thereof shall have
become effective, (iii) of any request by the Commission for any
amendment or supplement of the Registration Statement or the
Prospectus or for any additional information, (iv) of the
issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the institution or
threatening of any proceeding for that purpose, and (v) of the
receipt by the Seller of any modification with respect to the
suspension of the qualification of the Series 1998-1 Notes for
sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose. The Seller will not file any
amendment of the Registration Statement or supplement to the
Prospectus to which the Underwriters reasonably object. The
Seller will use its best efforts to prevent the issuance of any
such stop order and if issued, to obtain as soon as possible the
withdrawal thereof.
B. If, at any time when a Prospectus relating to the
Series 1998-1 Notes is required to be delivered under the Act,
any event occurs as a result of which the Prospectus as then
supplemented would include any untrue statement of a material
fact or omit to state any material fact necessary to make the
statements therein in the light of the circumstances under which
they were made not misleading, or if it shall be necessary to
supplement such Prospectus to comply with the Act or the rules
thereunder, the Seller shall be required to notify the
Underwriters and upon the Underwriters' request to prepare and
furnish without charge to the Underwriters as many copies as the
Underwriters may from time to time reasonably request of an
amended Prospectus or a supplement to the Prospectus which shall
correct such statement or omission or effect such compliance.
C. As soon as practicable, but in any event within
120 days of the close of the period covered thereby, the Seller
will make generally available to Noteholders and to the
Underwriters an earnings statement or statements of the Trust
which will satisfy the provisions of Section 11(a) of the Act and
Rule 158 under the Act.
D. The Seller will furnish to the Underwriters and
counsel for the Underwriters, without charge, signed copies of
the Registration Statement (including exhibits thereto) and, so
long as delivery of a prospectus by the Underwriters or dealer
may be required by the Act, as many copies of the Prospectus and
any supplement thereto as the Underwriters may reasonably
request.
E. The Household Entities, jointly and severally,
agree to pay all expenses incidental to the performance of their
obligations under this Agreement, including without limitation
(i) expenses of preparing, printing and reproducing the
Registration Statement, the Prospectus, and any document
incorporated by reference in the Prospectus (including exhibits
thereto), (ii) any fees charged by any rating agency for the
rating of the Series 1998-1 Notes, (iii) any expenses (including
reasonable fees and disbursements of counsel not to exceed
$10,000) incurred by the Underwriters in connection with
qualification of the Series 1998-1 Notes for sale under the laws
of such jurisdictions as the Underwriters designate, (iv) the
fees and expenses of (A) Dewey Ballantine LLP as special counsel
for the Household Entities and (B) Arthur Andersen LLP, (v) the
fees and expenses of the Indenture Trustee and any agent of the
Indenture Trustee and the fees and disbursements of counsel for
the Indenture Trustee in connection with the Indenture, the Trust
Agreement and the Series 1998-1 Notes, (vi) the fees and expenses
of the Owner Trustee and any agent of the Owner Trustee and the
fees and disbursements of counsel for the Owner Trustee in
connection with the Indenture, the Trust Agreement and the
Series 1998-1 Notes, and (vii) the cost of delivering the
Series 1998-1 Notes to the offices of the Underwriters, insured
to the satisfaction of the Underwriters (it being understood
that, except as provided in this paragraph (E) and in Sections 9
and 10 hereof, each Underwriter will pay its own expenses,
including the expense of preparing, printing and reproducing this
Agreement, the fees and expenses of counsel for the Underwriters,
any transfer taxes on resale of any of the Series 1998-1 Notes by
it and advertising expenses connected with any offers that the
Underwriters may make).
F. The Seller will take all reasonable actions
requested by the Underwriters to arrange for the qualification of
the Series 1998-1 Notes for sale under the laws of such
jurisdictions within the United States or as necessary to qualify
for the Euroclear System or Cedel Bank, societe anonyme and as
the Underwriters may designate, will maintain such qualifications
in effect so long as required for the distribution of the
Series 1998-1 Notes and will arrange for the determination of the
legality of the Series 1998-1 Notes for purchase by institutional
investors.
G. For so long as the Series 1998-1 Notes are
outstanding, the Household Entities will furnish to the
Underwriters (i) as soon as practicable after the end of each
fiscal year of the Trust, all documents required to be
distributed to Noteholders under the Master Sale and Servicing
Agreement or the Indenture and (ii) as soon as practicable after
filing, any other information concerning the Household Entities
filed with any government or regulatory authority which is
otherwise publicly available, as the Underwriters may reasonably
request.
H. To apply the net proceeds from the sale of the
Series 1998-1 Notes in the manner set forth in the Prospectus.
I. If, between the date hereof or, if earlier, the
dates as of which information is given in the Prospectus and the
Closing Date, to the knowledge of the Seller, there shall have
been any material change, or any development involving a
prospective material change in or affecting the general affairs,
management, financial position, shareholders' equity or results
of operations of any of the Household Entities, the Seller will
give prompt written notice thereof to the Underwriters.
J. The Seller, during the period when the Prospectus
is required to be delivered under the Act or the Exchange Act,
will file all documents required to be filed with the Commission
pursuant to Section 13, 14 or 15 of the Exchange Act within the
time periods required by the Act and the Rules and Regulations
thereunder.
K. To the extent, if any, that the ratings provided
with respect to the Series 1998-1 Notes by the Rating Agency that
initially rate the Series 1998-1 Notes are conditional upon the
furnishing of documents or the taking of any other actions by the
Seller or HAFC, the Seller shall use its best efforts to furnish
or cause to be furnished such documents and take any such other
actions.
L. Neither HAFC nor the Seller will, with the prior
written consent of the Representative, contract to sell any
automobile receivable-backed certificates or notes or other
similar securities either directly or indirectly for a period of
five (5) business days after the later of the termination of the
underwriting syndicate or the Closing Date.
M. So long as any of the Series 1998-1 Notes are
outstanding, the Household Entities shall furnish to the
Underwriters as soon as such statements are furnished to the
Trustee: (i) the annual statement as to compliance of the Master
Servicer delivered to the Trustee pursuant to Section 4.10(a) of
the Master Sale and Servicing Agreement, and (ii) the annual
statement of a firm of independent public accountants furnished
to the Trustee pursuant to Section 4.11(a) of the Master Sale and
Servicing Agreement with respect to the Master Servicer.
Section 8. Conditions of the Obligations of the
Underwriters. The obligations of the Underwriters to purchase
the Series 1998-1 Notes on the Closing Date pursuant to this
Agreement are subject to (i) the material accuracy of the
representations and warranties on the part of the Household
Entities herein contained as of the Execution Time, (ii) the
material accuracy of the statements of officers of the Household
Entities made pursuant hereto, (iii) the performance by the
Household Entities of all of their respective obligations
hereunder, and the performance by the Household Entities of all
of their respective obligations under the Seller Agreements, HAFC
Agreements and the HFC Agreements and (iv) the following
conditions as of the Closing Date:
A. If the Registration Statement has not become
effective prior to the Execution Time, unless the Underwriters
agree in writing to a later time, the Registration Statement
shall have become effective not later than 12:00 Noon New York
City time on the business day following the day on which the
public offering price was determined; if filing of the
Prospectus, or any supplement thereto, is required pursuant to
Rule 424(b), the Prospectus shall have been 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. Each of the Household Entities shall have
delivered a certificate, dated the Closing Date signed by its
President or any Vice President and its principal financial or
principal accounting officer or its Treasurer or any Assistant
Treasurer or its Secretary or any Assistant Secretary to the
effect that the signers of such certificate, on behalf of the
named Household Entity, have carefully examined Series 1998-1
Related Documents, the Prospectus (and any supplements thereto)
and the Registration Statement, stating that:
(i) the representations and warranties of
such Household Entity in this Agreement are true and
correct in all material respects at and as of the date
of such certificate as if made on and as of such date
(except to the extent they expressly relate to an
earlier date);
(ii) such Household Entity has complied, in
all material respects, with all the agreements and
satisfied, in all material respects, all the conditions
on its part to be performed or satisfied at or prior to
the date of such certificate;
(iii) nothing has come to the attention
of such Household Entity that would lead it to believe
that the Registration Statement contains any untrue
statement of a material fact 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; and
(iv) no stop order suspending the
effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been
instituted. or, to the knowledge of the signor,
threatened.
C. John Blenke, Vice President - Corporate Law and
Assistant Secretary of Household International, Inc., shall have
delivered a favorable opinion with respect to clauses (i) through
(x) of this paragraph c, and Dewey Ballantine LLP, special
counsel to the Household Entities, shall have delivered a
favorable opinion with respect to clauses (xi) through (xiii) of
this paragraph c each opinion shall be dated the Closing Date and
shall be satisfactory in form and substance to the Underwriters
and counsel for the Underwriters, to the effect that:
(i) each of HFC, HAFC and the Seller is duly
incorporated and validly existing as a corporation in
good standing under the laws of its jurisdiction of
incorporation with corporate power and authority to own
its properties and to conduct its business, except
where failure to have such power and authority do not
have a material adverse effect, as applicable, on the
business or consolidated financial condition of HFC and
its subsidiaries, taken as a whole, or HFC, HAFC, or
the Seller, to enter into and perform its obligation
under the HFC Agreements, the HAFC Agreements or the
Seller Agreements, as applicable, and to consummate the
transactions contemplated hereby and thereby;
(ii) each of the HFC Agreements, the HAFC
Agreements or the Seller Agreements has been duly
authorized, executed and delivered by HFC, HAFC or the
Seller, as applicable, and constitute the legal, valid
and binding agreement of HFC, HAFC or the Seller, as
applicable, enforceable in accordance with its terms
subject, as to enforceability (A) to applicable
bankruptcy, reorganization, insolvency, moratorium or
other similar laws affecting creditors' rights
generally and the rights, (B) to general principles of
equity (regardless of whether enforcement is sought in
a proceedings in equity or at law) and c with respect
to rights of indemnity to limitations of public policy
under applicable securities laws;
(iii) the issuance and sale of the
Series 1998-1 Notes have been duly authorized and, when
executed and authenticated in accordance with the terms
of the Indenture and delivered to and paid for by the
Underwriters pursuant to this Agreement, will be
validly issued and outstanding, entitled to the
benefits of the Indenture, enforceable in accordance
with their terms subject, as to enforceability (A) to
applicable bankruptcy, reorganization, insolvency,
moratorium or other similar laws affecting creditors'
rights generally and the rights and remedies of
creditors of thrifts, savings institutions or national
banking associations and (B) to general principles of
equity (regardless of whether enforcement is sought in
a proceeding in equity or at law);
(iv) neither the execution nor the delivery
of the Underwriting Agreement, the Master Receivables
Purchase Agreement, the Trust Agreement, the Indenture,
the Master Sale and Servicing Agreement or the
Series 1998-1 Supplement nor the issuance or delivery
of the Series 1998-1 Notes, nor the consummation of any
of the transactions contemplated herein or therein, nor
the fulfillment of the terms of the Series 1998-1
Notes, the Underwriting Agreement, the Master
Receivables Purchase Agreement, the Trust Agreement,
the Indenture, the Master Sale and Servicing Agreement
or the Series 1998-1 Supplement will conflict with or
violate any term or provision of the charter or by-laws
of the Household Entities, or result in a breach or
violation of, or default under, or result in the
creation or imposition of any lien, charge or
encumbrance upon any property or assets of any of the
Household Entities pursuant to, any material statute
currently applicable to any of them or the Trust or any
order or regulation known to such counsel to be
currently applicable to any of them or the Trust of any
court, regulatory body, administrative agency or
governmental body having jurisdiction over the
Household Entities or the Trust, as the case may be, or
the terms of any indenture or other agreement or
instrument known to such counsel to which the Household
Entities or the Trust is a party or by which any of
them or any of their properties are bound, except where
any such conflict, breach, violation, default or
encumbrance would not have a material adverse effect on
the transactions contemplated by this Agreement.
(v) to the best knowledge of such counsel,
there is no pending or threatened action, suit or
proceeding before any court or governmental agency,
authority or body or any arbitrator with respect to the
Underwriting Agreement, the Trust, the Series 1998-1
Notes, the Master Receivables Purchase Agreement, the
Trust Agreement, the Indenture, the Master Sale and
Servicing Agreement or the Series 1998-1 Supplement or
any of the transactions contemplated herein or therein
or with respect to the Household Entities which, in the
case of any such action, suit or proceeding with
respect to any of them, would have a material adverse
effect on the Noteholders or the Trust or upon the
ability of any of the Household Entities to perform
their obligations under any of such agreements, and
there is no material contract, franchise or document
relating to the Trust or property conveyed to the Trust
which is not disclosed in the Registration Statement or
Prospectus; and the statements included in the
Registration Statement and Prospectus describing
statutes (other than those relating to tax and ERISA
matters), legal proceedings, contracts and other
documents fairly summarize the matters therein
described;
(vi) the Registration Statement has become
effective under the Act; any required filing of the
Prospectus or any supplement thereto pursuant to Rule
424 has been made in the manner and within the time
period required by Rule 424; to the best knowledge of
such counsel, no stop order suspending the
effectiveness of the Registration Statement his been
issued, no proceedings for that purpose have been
instituted or threatened; the Registration Statement
and the Prospectus (and any supplements thereto) (other
than financial and statistical information contained
therein as to which such counsel need express no
opinion) comply as to form in all material respects
with the applicable requirements of the Act and the
rules thereunder;
(vii) such counsel has no reason to
believe that at the Effective Date the Registration
Statement contained any untrue statement of a material
fact or omitted to state any material fact required to
be stated therein or necessary to make the statements
therein not misleading or that the Prospectus, as of
its date, includes any untrue statement of a material
fact or omits to state a material fact necessary to
make the statements therein, in light of the
circumstances under which they were made, not
misleading (other than financial and statistical
information contained therein as to which such counsel
need express no opinion);
(viii) to the best knowledge of such
counsel, no consent, approval, authorization, order,
registration, filing, qualification, license or permit
of or with any court or governmental agency or
regulatory body under the federal law of the United
States or the laws of the State of New York is required
in connection with the consummation of the transactions
contemplated in the Underwriting Agreement, the Trust
Agreement, the Indenture, the Master Receivables
Purchase Agreement, the Master Sale and Servicing
Agreement or the Series 1998-1 Supplement, except (A)
such consents, approvals, authorizations, orders,
registrations, filings, qualifications, licenses or
permits as have been made or obtained or as may be
required under the State securities or blue sky laws of
any jurisdiction in connection. with the purchase of
the Series 1998-1 Notes by the Underwriters and the
subsequent distribution of the Series 1998-1 Notes by
the Underwriters or (B) where the failure to have such
consents, approvals, authorizations, orders,
registrations, filings, qualifications, licenses or
permits would not have a material adverse effect on the
Trust's interests in the Receivables or the
transactions contemplated by such agreements;
(ix) the Series 1998-1 Notes, the
Underwriting Agreement, the Master Receivables Purchase
Agreement, the Trust Agreement, the Master Sale and
Servicing Agreement and the Indenture conform in all
material respects to the descriptions thereof contained
in the Registration Statement and the Prospectus;
(x) the Indenture has been duly qualified
under the Trust Indenture Act of 1939 and the Issuer is
not required to be registered under the Investment
Company Act of 1940;
(xi) the statements in the Prospectus under
the captions "Summary of Terms _ Tax Status," "Summary
of Terms _ ERISA Considerations," "ERISA
Considerations" and "Material Federal Income Tax
Consequences," "Certain Legal Aspects of the
Receivables" to the extent that they constitute matters
of law or legal conclusions with respect thereto, have
been reviewed by counsel and represent a fair and
accurate summary of the matters addressed therein,
under existing law and the assumptions stated therein.
(xii) no other filings or other actions,
with respect to the Indenture Trustee's interest in the
Receivables, are necessary to perfect the interest of
the Indenture Trustee in the Receivables, and proceeds
thereof, against third parties, except that appropriate
continuation statements must be filed in accordance
with the applicable state's requirements, which is
presently at least every five years; and
(xiii) the conditions to the use of a
registration statement on Form S-3 under the Act, as
set forth in the General Instructions to Form S-3, have
been satisfied with respect to the Registration
Statement and the Prospectus. There are no contracts
or documents 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 filed.
In rendering such opinion, counsel may rely (A) as to
matters involving the application of the law of any jurisdiction
other than, in the case of John W. Blenke, the laws of the State
of Illinois, and in the case of Dewey Ballantine L.L.P., the laws
of the State of New York, the corporate law of the State of
Delaware and the United States Federal laws, to the extent deemed
proper and stated in such opinion, upon the opinion of other
counsel of good standing believed by such counsel to be reliable
and acceptable to you and your counsel, and (B) as to matters of
fact, to the extent deemed proper and as stated therein, on the
certificates of responsible officers of the Trust, Household
Entities and public officials. References to the Prospectus in
this paragraph C include any supplements thereto.
D. Dewey Ballantine LLP, counsel for the
Underwriters, shall have delivered a favorable opinion dated the
Closing Date with respect to the validity of the Series 1998-1
Notes, the Underwriting Agreement, the Series 1998-1 Supplement,
the Registration Statement, the Prospectus and such other related
matters as the Underwriters may reasonably require and the
Household Entities shall have furnished to such counsel such
documents as they reasonably request for the purpose of enabling
them to pass on such matters. In giving their opinion, Dewey
Ballantine LLP may rely (i) as to matters of California,
Illinois, Nevada and Delaware law (other than Delaware
corporation law) upon the opinions of counsel delivered pursuant
to subsection c above, (ii) as to matters involving the
application of laws of any jurisdiction other than the State of
New York, the United States Federal laws or the corporation law
of the State of Delaware, to the extent deemed proper and
specified in such opinion, upon the opinion of other counsel of
good standing believed to be reliable, and (iii) as to matters of
fact, to the extent deemed proper and as stated therein on
certificates of responsible officers of the Trust. Household
Entities and public officials.
E. Counsel to the Indenture Trustee shall have
delivered a favorable opinion, dated the Closing Date, and
satisfactory in form and substance to the Underwriters and
counsel for the Underwriters, the Household Entities and their
counsel, to the effect that:
(i) The Indenture Trustee has been duly incorporated
and is validly existing as a banking corporation in good
standing under the laws of the United States of America.
(ii) The Indenture Trustee has full corporate trust
power and authority to enter into and perform its
obligations under the Indenture, including, but not limited
to, its obligation to serve in the capacity of the Indenture
Trustee and to execute, issue, countersign and deliver the
Series 1998-1 Notes.
(iii) The Indenture has been duly authorized,
executed and delivered by the Indenture Trustee and
constitutes a legal, valid and binding obligation of the
Indenture Trustee enforceable against the Indenture Trustee,
in accordance with its terms, except that as to
enforceability such enforcement may (A) be subject to
applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the rights of
creditors generally and (B) be limited by general principles
of equity (whether considered in a proceeding at law or in
equity).
(iv) The Series 1998-1 Notes have been duly authorized,
executed and authenticated by the Indenture Trustee on the
date hereof on behalf of the Trust in accordance with the
Indenture.
(v) The execution, delivery and performance of the
Indenture and the Series 1998-1 Notes by the Indenture
Trustee will not conflict with or result in a breach of any
of the terms or provisions 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 Indenture Trustee pursuant to the terms of the articles
of association or the by-laws of the Indenture Trustee or
any statute, rule, regulation or order of any governmental
agency or body, or any court having jurisdiction over the
Indenture Trustee or its property or assets or any
agreement or instrument known to such counsel, to which the
Indenture Trustee is a party or by which the Indenture
Trustee or any of its respective property or assets is
bound.
(vi) No authorization, approval, consent or order of,
or filing with, any state or federal court or governmental
agency or authority is necessary in connection with the
execution, delivery and performance by the Indenture Trustee
of the Indenture and the Series 1998-1 Notes.
F. Counsel to the Owner Trustee shall have delivered
a favorable opinion, dated the Closing Date and satisfactory in
form and substance to the Underwriters and counsel for the
Underwriters, the Household Entities and their counsel, to the
effect that:
(i) The Owner Trustee has been duly incorporated and
is validly existing as a banking corporation in good
standing under the laws of the United States of America.
(ii) The Owner Trustee has full corporate trust power
and authority to enter into and perform its obligations
under the Trust Agreement, as the case may be, including,
but not limited to, its obligation to serve in the capacity
of Owner Trustee and to execute, issue, countersign and
deliver the Note.
(iii) The Trust Agreement has been duly authorized,
executed and delivered by the Owner Trustee and constitutes
a legal, valid and binding obligation of the Owner Trustee
enforceable against the Owner Trustee, in accordance with
its terms, except that as to enforceability such enforcement
may (A) be subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting
the rights of creditors generally and (B) be limited by
general principles of equity (whether considered in a
proceeding at law or in equity).
(iv) The execution, delivery and performance of the
Trust Agreement by the Owner Trustee will not conflict with
or result in a breach of any of the terms or provisions 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 Owner Trustee pursuant to the
terms of the articles of association or the by-laws of the
Owner Trustee or any statute, rule, regulation or order of
any governmental agency or body, or any court having
jurisdiction over the Owner Trustee or its property or
assets or any agreement or instrument known to such counsel,
to which the Owner Trustee is a party or by which the Owner
Trustee or any of its respective property or assets is
bound.
(v) No authorization, approval, consent or order of,
or filing with, any state or federal court or governmental
agency or authority is necessary in connection with the
execution, delivery and performance by the Owner Trustee of
the Trust Agreement and the Note, as applicable.
G. Wilmington Trust Company ("WLT") shall have
furnished to the Underwriters and the Household Entities a
certificate of WLT, signed by one or more duly authorized
officers of WLT, dated the Closing Date, as to the due
authorization, execution and delivery of the Trust Agreement by
WLT and the acceptance by the Owner Trustee of the trusts created
thereby and the due execution and such other matters as the
Underwriters and the Household Entities shall reasonably request.
H. The Chase Manhattan Bank ("Chase") shall have
furnished to the Underwriters and the Household Entities a
certificate of Chase, signed by one or more duly authorized
officers of Chase, dated the Closing Date, as to the due
authorization, execution and delivery of the Indenture and the
Master Sale and Servicing Agreement by Chase and the acceptance
by the Indenture Trustee of the trusts created thereby and the
due execution and delivery of the Series 1998-1 Notes by the
Indenture Trustee under the Indenture and such other matters as
the Underwriters shall reasonably request.
I. The Class A-1 Notes shall have been rated "A-1" or
its equivalent, and the Class A-2 Notes, Class A-3 Notes, the
Class A-4 Notes and Class A-5 Notes shall have been rated "AAA"
or its equivalent, in each case, by at least two nationally
recognized Ratings Agencies, the Class B-1 Notes have been rated
"AA" or its equivalent by at least two nationally recognized
Ratings Agencies and the Class B-2 Notes shall have been rated
"A" or its equivalent by at least two nationally recognized
Rating Agencies.
J. The Underwriters shall have received copies of
letters dated as of the Closing Date, from the Ratings Agencies
stating the current ratings of the Series 1998-1 Notes as set
forth in Section I above.
K. The Underwriters shall have received from Dewey
Ballantine LLP, counsel to the Household Entities, a favorable
opinion, dated the Closing Date and satisfactory in form and
substance to the Underwriters and counsel for the Underwriters,
as to true sale matters relating to the transaction, and the
Underwriters shall be addressees of any opinions of counsel
supplied to the rating organizations relating to the Series 1998-
1 Notes.
L. All proceedings in connection with the
transactions contemplated by this Agreement, and all documents
incident hereto, shall be reasonably satisfactory in form and
substance to the Underwriters and counsel for the Underwriters,
and the Underwriters and counsel for the Underwriters shall have
received such other information, opinions, certificates and
documents as they may reasonably request in writing.
M. The Prospectus and any supplements thereto shall
have been filed (if required) with the Commission in accordance
with the rules and regulations under the Act and Section 2
hereof, and prior to the Closing Date, 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 shall be contemplated by the Commission or by any
authority administering any state securities or Blue Sky law.
N. At the Execution Time and at the Closing Date,
Arthur Andersen LLP shall have furnished to the Underwriters a
letter or letters, dated respectively as of the date of this
Agreement and the date of the Closing Date, in form and substance
satisfactory to the Underwriters and counsel for the
Underwriters.
If any condition specified in this Section 8 shall not
have been fulfilled when and as required to be fulfilled, (i)
this Agreement may be terminated by the Representative by notice
to both of the Household Entities at any time at or prior to the
Closing Date, and such termination shall be without liability of
any party to any other party except as provided in Section 9 and
(ii) the provisions of Section 9, the indemnity set forth in
Section 10, the contribution provisions set forth in Section 10
and the provisions of Sections 13 and 16 shall remain in effect.
Section 9. Reimbursement of Expenses. If the sale
of the Series 1998-1 Notes provided for herein is not consummated
because any condition to the Underwriter's obligations set forth
in Section 8 hereof is not satisfied, because of any termination
pursuant to Section 12 hereof or because of any refusal,
inability or failure on the part of the Indenture Trustee or the
Household Entities to perform any agreement herein or comply with
any provision hereof other than by reason of a default by the
Underwriters, the Household Entities, jointly and severally, will
reimburse the Underwriters upon demand for all out-of-pocket
expenses (including reasonable fees and disbursements of counsel)
that shall have been incurred by it in connection with the
proposed purchase and Sale of the Series 1998-1 Notes.
Section 10. Indemnification.
A. The Household Entities jointly and severally agree
to indemnify and hold harmless the Underwriters and each person,
if any, who controls the Underwriters within the meaning of the
Act or the Exchange Act, from and against any and all loss,
claim, damage or liability, joint or several, or any action in
respect thereof (including, but not limited to, any loss, claim,
damage, liability or action relating to purchases and sales of
the Series 1998-1 Notes), to which the Underwriters or any such
controlling person may become subject, under the Act or the
Exchange Act or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any
untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or the Prospectus, (ii)
the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading or (iii) the omission or alleged omission
to state therein a material fact required to be stated or
necessary to make the statements therein, in the 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 3(a) hereof; and shall reimburse the Underwriters and
each such controlling person promptly upon demand for any
documented legal or documented other expenses reasonably incurred
by the Underwriters or such controlling person in connection with
investigating or defending or preparing to defend against any
such loss, claim, damage, liability or action as such expenses
are incurred; provided, however, that the foregoing indemnity
with respect to any untrue statement contained in or omission
from the Prospectus shall not inure to the benefit of the
Underwriters if a Household Entity shall sustain the burden of
proving that the person asserting against the Underwriters the
loss, liability, claim, damage or expense purchased any of the
Series 1998-1 Notes which are the subject thereof and was not
sent or given a copy of the appropriate Prospectus (or the
appropriate Prospectus as amended or supplemented) (the term
Prospectus as used in this clause shall not include documents
incorporated by reference thereto), if required by law, at or
prior to the written confirmation of the sale of such Series 1998-
1 Notes (unless such Prospectus is amended or supplemented after
the Prospectus has been delivered pursuant to Rule 424(b)) to
such person and the untrue statement contained in or omission
from such preliminary prospectus was corrected in the appropriate
Prospectus (or the appropriate Prospectus as amended or
supplemented).
The foregoing indemnity agreement is in addition to any
liability which a Household Entity may otherwise have to the
Underwriters or any controlling person of any of the
Underwriters.
B. Each of the Underwriters agrees to severally and
not jointly indemnify and hold harmless the Household Entities,
the directors and the officers of the Household Entities who
signed the Registration Statement, and each person, if any, who
controls any Household Entity within the meaning of the Act or
the Exchange Act against any and all loss, claim, damage or
liability, or any action in respect thereof, to which a Household
Entity or any such director, officer or controlling person
thereof may become subject, under the Act or the Exchange Act or
otherwise, insofar as such loss, claim, damage, liability or
action arises out of, or is based upon, (i) any untrue statement
or alleged untrue statement of a material fact contained in the
Underwriter Information (as defined below) or (ii) the omission
or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading, and shall reimburse the applicable Household Entity,
promptly on demand, and any such director, officer or controlling
person for any documented legal or other documented expenses
reasonably incurred by such Household Entity, or any director,
officer or controlling person in connection with investigating or
defending or preparing to defend against any such loss, claim,
damage, liability or action as such expenses are incurred.
Underwriter Information means the information set forth under the
caption "Underwriting" in the Prospectus.
The foregoing indemnity agreement is in addition to any
liability which the Underwriters may otherwise have to any
Household Entity or any such director, officer or controlling
person.
C. Promptly after receipt by any indemnified party
under this Section 10 of notice of any claim or the commencement
of any action, such indemnified party shall, if a claim in
respect thereof is to be made against any indemnifying party
under this Section 10, promptly notify the indemnifying party in
writing of the claim or the commencement of that action;
provided, however, that the failure to notify an indemnifying
party shall not relieve it from any liability which it may have
under this Section 10 except to the extent it has been materially
prejudiced by such failure; and provided, further, that the
failure to notify any indemnifying party shall not relieve it
from any liability which it may have to any indemnified party
otherwise than under this Section 10.
If any such claim or action shall be brought against an
indemnified party, and it shall notify the indemnifying party
thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense
thereof with counsel reasonably satisfactory to the indemnified
party, unless such indemnified party reasonably objects to such
assumption on the ground that there may be legal defenses
available to it which are different from or in addition to those
available to such indemnifying party. After notice from the
indemnifying party to the indemnified party of its election to
assume the defense of such claim or action, except to the extent
provided in the next following paragraph, the indemnifying party
shall not be liable to the indemnified party under this Section
10 for any fees and expenses of counsel subsequently incurred by
the indemnified party in connection with the defense thereof
other than reasonable costs of investigation.
Any indemnified party shall have the right to employ
separate counsel in any such action and to participate in the
defense thereof, but the fees and expenses of such counsel shall
be at the expense of such indemnified party unless: (i) the
employment thereof has been specifically authorized by the
indemnifying party in writing; (ii) such indemnified party shall
have been advised by such counsel that there may be one or more
legal defenses available to it which are different from or
additional to those available to the indemnifying party and in
the reasonable judgment of such counsel it is advisable for such
indemnified party to employ separate counsel; or (iii) the
indemnifying party has failed to assume the defense of such
action and employ counsel reasonably satisfactory to the
indemnified party, in which case, if such indemnified party
notifies the indemnifying party in writing that it elects to
employ separate counsel at the expense of the indemnifying party,
the indemnifying party shall not have the right to assume the
defense of such action on behalf of such indemnified party, it
being understood, however, the indemnifying party shall not, in
connection with any one such action or separate but substantially
similar or related actions in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for
the reasonable fees and expenses of more than one separate firm
of attorneys (in addition to local counsel) at any time for all
such indemnified parties, which firm shall be designated in
writing by the Representative, if the indemnified parties under
this Section 9 consist of the Underwriters or any of their
controlling persons, or by the Household Entities, if the
indemnified parties under this Section 9 consist of any of the
Household Entities or any of the Household Entities' directors,
officers or controlling persons, but in either case reasonably
satisfactory to the indemnified party.
Each indemnified party, as a condition of the indemnity
agreements contained in Sections 10A and B, shall use its best
efforts to cooperate with the indemnifying party in the defense
of any such action or claim. No indemnifying party shall be
liable for any settlement of any such action effected without its
written consent (which consent shall not be unreasonably
withheld), but if settled with its written consent or if there be
a final judgment for the plaintiff in any such action, the
indemnifying party agrees to indemnify and hold harmless any
indemnified party from and against any loss or liability by
reason of such settlement or judgment. No indemnifying party
shall, without prior written consent of the indemnified party,
effect any settlement of any pending or threatened action in
respect of which such indemnified party is or could have been a
party and indemnity could have been sought hereunder by such
indemnified party unless such settlement includes an
unconditional release of such indemnified party from all
liability on any claims that are the subject matter of such
action.
Notwithstanding the foregoing, if (x) the indemnified
party has made a proper request to the indemnifying party for the
payment of the indemnified party's legal fees and expenses, as
permitted hereby, and (y) such request for payment has not been
honored within thirty days, then, for so long as such request
thereafter remains unhonored, the indemnifying party shall be
liable for any settlement entered into by the indemnified party
whether or not the indemnifying party consents thereto.
D. If the indemnification provided for in this
Section 10 shall for any reason be unavailable to hold harmless
an indemnified party under Section 10A or B in respect of any
loss, claim, damage or liability, or any action in respect
thereof, referred to therein, then each indemnifying party shall,
in lieu of indemnifying such indemnified party, contribute to the
amount paid or payable by such indemnified party as a result of
such loss, claim, damage or liability, or action in respect
thereof, (i) in such proportion as shall be appropriate to
reflect the relative benefits received by the Household Entities
on the one hand and the Underwriters on the other from the
offering of the Notes or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, 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 the Household Entities on the one hand and the
Underwriters on the other with respect to the statements or
omissions which resulted in such loss, claim, damage or
liability, or action in respect thereof, as well as any other
relevant equitable considerations.
The relative benefits of the Underwriters and the
Household Entities shall be deemed to be in such proportion so
that the Underwriters are responsible for that portion
represented by the percentage that the underwriting discount
appearing on the cover page of the Prospectus bears to the public
offering price appearing on the cover page of the Prospectus.
The relative fault of the Underwriters and the
Household Entities shall be determined by reference to whether
the untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to
information supplied by the Household Entities or by one of the
Underwriters, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or
prevent such statement or omission and other equitable
considerations.
The Household Entities and the Underwriters agree that
it would not be just and equitable if contributions pursuant to
this Section 10D were to be determined by pro rata allocation or
by any other method of allocation which does not take into
account the equitable considerations referred to herein. The
amount paid or payable by an indemnified party as a result of the
loss, claim, damage or liability, or action in respect thereof,
referred to above in this Section 10D shall be deemed to include,
for purposes of this Section 10D, any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim.
Each person, if any, who controls each Underwriter
within the meaning of the Act or the Exchange Act shall have the
same rights to contribution as each of the Underwriters and each
director of a Household Entity, each officer of a Household
Entity who signed the Registration Statement, and each person, if
any, who controls a Household Entity within the meaning of the
Act or the Exchange Act shall have the same rights to
contribution as the applicable Household Entity.
Except in the case of any loss, claim, damage,
liability or expense resulting solely from a breach of the
Underwriter's representation and warranty set forth in Section
3(a), (b) or c hereof, in no case shall any Underwriter be
responsible for any amount in excess of the underwriting discount
applicable to the Series 1998-1 Notes purchased by such
Underwriter hereunder. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
E. The Underwriters severally confirm that the
information set forth (i) in the Prospectus relating to market
making and (ii) under the caption "Underwriting" in the
Prospectus is correct and constitutes the only information
furnished in writing to a Household Entity by or on behalf of the
Underwriters specifically for inclusion in the Registration
Statement and the Prospectus.
Section 11. Default by One or More of the
Underwriters. If one or more of the Underwriters participating
in the public offering of the Series 1998-1 Notes shall fail at
the Closing Date to purchase the Series 1998-1 Notes which it is
obligated to purchase hereunder (the "Defaulted Securities"),
then the non-defaulting Underwriter shall have the right, within
24 hours thereafter, to make arrangements to purchase all, but
not less than all, of the Defaulted Securities in such amounts as
may be agreed upon and upon the terms herein set forth. If,
however, the Underwriter have not completed such arrangements
within such 24-hour period, then:
(i) if the aggregate principal amount of
Defaulted Securities does not exceed 10% of the
aggregate principal amount of the Series 1998-1 Notes
to be purchased pursuant to this Agreement, the non-
defaulting Underwriter shall be obligated to purchase
the full amount thereof, or
(ii) if the aggregate principal amount of
Defaulted Securities exceeds 10% of the aggregate
principal amount of the Series 1998-1 Notes to be
purchased pursuant to this Agreement, this Agreement
shall terminate, without any liability on the part of
any non- defaulting Underwriter.
No action taken pursuant to this Section shall relieve
the defaulting Underwriter from the liability with respect to any
default of such Underwriter under this Agreement.
In the event of a default by an Underwriter as set
forth in this Section, each of the Underwriters and the Seller
shall have the right to postpone the Closing Date 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 12. Termination. This Agreement shall be
subject to termination in the absolute discretion of the
Representative, by notice given to the Seller and HAFC prior to
delivery of and payment for the Series 1998-1 Notes if prior to
such time (i) trading in securities generally on the New York
Stock Exchange or the National Association of Securities Dealers
National Market System shall have been suspended or limited, or
minimum prices shall have been established on such exchange or
market system; a banking moratorium shall have been declared by
either Federal, New York State authorities or the State of
California; or (ii) there shall have occurred any outbreak or
material escalation of hostilities involving the United States of
America where armed conflict or the declaration of war appears
imminent, if, the effect of such event makes it, in the
reasonable judgment of the Representative, impractical or
inadvisable to proceed with the completion of the sale and
payment for the Series 1998-1 Notes. Upon such notice being
given, the parties to this Agreement shall (except for any
liability arising before or in relation to such termination) be
released and discharged from their respective obligations under
this Agreement.
Section 13. Representations, Warranties and
Agreements to Survive Delivery. All representations, warranties
and agreements contained in this Agreement or contained in
certificates of officers of the Household Entities submitted
pursuant hereto, shall remain operative and in full force and
effect, regardless of any investigation made by or on behalf of
the Representative or controlling person of the Representative,
or by or on behalf of the Household Entities or any officers,
directors or controlling persons and shall survive delivery of
any certificates to the Representative or any controlling person.
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 to the Underwriters at Credit Suisse
First Boston Corporation, Eleven Madison Avenue, New York, New
York 10010, attention: Asset Finance Department, Fax: (212)
325-6677; if sent to any Household Entity to 2700 Sanders Road,
Prospect Heights, Illinois 60070, attention of General Counsel,
Fax: (847) 564-6366.
Section 15. Parties. This Agreement shall inure to
the benefit of and be binding upon the Representative and the
Household Entities, and their respective successors or assigns.
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 Section 9 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 Series
1998-1 Notes from the Representative 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 LAWS OF THE STATE OF NEW YORK AND SHALL
BE CONSTRUED IN ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO THE
CONFLICT OF LAWS PROVISIONS THEREOF. SPECIFIED TIMES OF DAY
REFER TO NEW YORK CITY TIME.
17. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original,
but together they shall constitute but one instrument.
18. Headings. The headings herein are inserted for convenience
of reference only and are not intended to be part of or affect
the meaning or interpretation of, this Agreement.
If the foregoing is in accordance with the
Representative's 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
between the Representative, the Seller, HAFC and HFC in
accordance with its terms.
Very truly yours,
HOUSEHOLD FINANCE CORPORATION
By:
Name:
Title:
HOUSEHOLD AUTO RECEIVABLES CORPORATION
By:
Name:
Title:
HOUSEHOLD AUTOMOTIVE FINANCE
CORPORATION
By:
Name:
Title:
CONFIRMED AND ACCEPTED, as of
the date first above written:
CREDIT SUISSE FIRST BOSTON CORPORATION
Acting on its own behalf and as Representative of the
Underwriters referred to in the foregoing Agreement
By:
Name:
Title: Authorized Signatory
[Underwriting Agreement]
<TABLE>
Schedule 1
Purchase Price (excluding accrued interest)
<S> <C> <S> <C> <S> <C> <S> <C> <S> <C>
Class A-1 Class A-2 Class A-3 Class A-4 Class A-5 Class B-1
<S> <C> <C> <C> <C> <C> <C>
Credit Suisse First Boston 99.835000 99.775000 99.750000% 99.730000% 99.733750% 99.605625%
Corporation % %
J.P. Morgan Securities Inc. 99.835000 99.775000 99.750000% 99.730000% 99.733750% 99.605625%
% %
Morgan Stanley & Co. 99.835000 99.775000 99.750000% 99.730000% 99.733750% 99.605625%
Incorporated % %
Salomon Smith Barney Inc. 99.835000 99.775000 99.750000% 99.730000% 99.733750% 99.605625%
% %
</TABLE>
Notional Principal Amount
Class A-1 Class A-2 Class A-3
Credit Suisse
First Boston Corporation $111,496,000 $37,800,000 $100,100,000
J.P. Morgan Securities Inc. 0 5,400,000 14,300,000
Morgan Stanley & Co. Incorporated 13,937,000 5,400,000 14,300,000
Salomon Smith Barney Inc. 13,937,000 5,400,000 14,300,000
Total $139,370,000 $54,000,000 $143,000,000
Class A-4 Class A-5 Class B-1
Credit Suisse
First Boston Corporation $56,583,000 $70,000,000 $69,513,000
J. P. Morgan Securities Inc. 8,083,000 10,000,000 9,930,000
Morgan Stanley & Co. Incorporated 8,083,000 10,000,000 9,930,000
Salomon Smith Barney Inc. 8,083,000 10,000,000 9,930,000
Total $80,832,000 $100,000,000 $99,303,000
Proceeds (excluding accrued interest)
Class A-1 Class A-2 Class A-3
Credit Suisse
First Boston Corporation $97,398,028 $37,714,950 $99,849,750
J.P. Morgan Securities Inc. 0 5,387,850 14,264,250
Morgan Stanley & Co.
Incorporated 13,914,000 5,387,850 14,264,250
Salomon Smith Barney Inc. 13,914,000 5,387,850 14,264,250
Total $139,140,000 $53,878,500 $142,642,500
Class A-4 Class A-5 Class B-1
Credit Suisse
First Boston Corporation $56,430,000 $69,813,625 $69,238,858
J.P. Morgan Securities Inc. 8,061,176 9,973,375 9,890,839
Morgan Stanley & Co.
Incorporated 8,061,176 9,973,375 9,890,839
Salomon Smith Barney Inc. 8,061,176 9,973,375 9,890,839
Total $80,613,754 $99,733,750 $98,911,374
EXECUTION COPY
(8)
NY_116326.1
TRUST AGREEMENT
between
HOUSEHOLD AUTO RECEIVABLES CORPORATION
and
WILMINGTON TRUST COMPANY
Owner Trustee
Dated as of March 1, 1998
TABLE OF CONTENTS
Page
ARTICLE I Definitions 1
Section 1.1. Capitalized Terms 1
Section 1.2. Other Definitional Provisions 3
Section 1.3. Action by or Consent of Noteholders and Certificate-holders3
Section 1.4. Material Adverse Effect 4
ARTICLE II Organization 4
Section 2.1. Name 4
Section 2.2. Office 4
Section 2.3. Purposes and Powers 4
Section 2.4. Appointment of Owner Trustee 5
Section 2.5. Initial Capital Contribution of Trust Estate 5
Section 2.6. Declaration of Trust 5
Section 2.7. Liability 6
Section 2.8. Title to Trust Property 6
Section 2.9. Situs of Trust 6
Section 2.10. Representations and Warranties of the Depositor 6
Section 2.11. Federal Income Tax Allocations 8
Section 2.12. Covenants of the Depositor 9
Section 2.13. Covenants of the Certificateholders 9
ARTICLE III Certificates and Transfer of Interests 10
Section 3.1. Initial Ownership 10
Section 3.2. The Certificates; Issuable in Series 10
Section 3.3. Authentication of Certificates 11
Section 3.4. Registration of Transfer and Exchange of Certificates 11
Section 3.5. Mutilated, Destroyed, Lost or Stolen Certificates13
Section 3.6. Persons Deemed Certificateholders 14
Section 3.7. Access to List of Certificateholders' Names and Addresses 14
Section 3.8. Maintenance of Office or Agency 14
Section 3.9. ERISA Restrictions 15
Section 3.10. Securities Matters 15
Section 3.11. Payments on Owner Trust Certificates 15
Section 3.12. Paying Agent 15
ARTICLE IV Voting Rights and Other Actions 15
Section 4.1. Prior Notice to Holders with Respect to Certain Matters 15
Section 4.2. Action by Certificateholders with Respect to Certain Matters
16
Section 4.3. Action by Certificateholders with Respect to Bankruptcy 17
Section 4.4. Restrictions on Certificateholders' Power 17
Section 4.5. Majority Control 17
ARTICLE V Certain Duties 18
Section 5.1. Accounting and Records to the Noteholders, Certificate-holders,
the Internal Revenue Service and Others 18
Section 5.2. Signature on Returns; Tax Matters Partner 18
Section 5.3. Note Purchase Agreements 18
ARTICLE VI Authority and Duties of Owner Trustee 19
Section 6.1. General Authority 19
Section 6.2. General Duties 19
Section 6.3. Action upon Instruction 19
Section 6.4. No Duties Except as Specified in this Agreement or in
Instructions 21
Section 6.5. No Action Except under Specified Documents or Instructions 21
Section 6.6. Restrictions 21
ARTICLE VII Concerning the Owner Trustee 21
Section 7.1. Acceptance of Trusts and Duties 21
Section 7.2. Furnishing of Documents 23
Section 7.3. Representations and Warranties 23
Section 7.4. Reliance; Advice of Counsel 24
Section 7.5. Not Acting in Individual Capacity 24
Section 7.6. Owner Trustee Not Liable for Certificates or Receivables 24
Section 7.7. Owner Trustee May Own Certificates and Notes 25
Section 7.8. Payments from Owner Trust Estate 25
Section 7.9. Doing Business in Other Jurisdictions 25
ARTICLE VIII Compensation of Owner Trustee 26
Section 8.1. Owner Trustee's Fees and Expenses 26
Section 8.2. Indemnification 26
Section 8.3. Payments to the Owner Trustee 27
Section 8.4. Non-recourse Obligations 27
ARTICLE IX Termination of Trust Agreement 27
Section 9.1. Termination of Trust Agreement 27
ARTICLE X Successor Owner Trustees and Additional Owner
Trustees 29
Section 10.1. Eligibility Requirements for Owner Trustee 29
Section 10.2. Resignation or Removal of Owner Trustee 29
Section 10.3. Successor Owner Trustee 30
Section 10.4. Merger or Consolidation of Owner Trustee 31
Section 10.5. Appointment of Co-Trustee or Separate Trustee 31
ARTICLE XI Miscellaneous 32
Section 11.1. Supplements and Amendments 32
Section 11.2. No Legal Title to Owner Trust Estate in Certificateholders33
Section 11.3. Limitations on Rights of Others 33
Section 11.4. Notices 34
Section 11.5. Severability 34
Section 11.6. Separate Counterparts 34
Section 11.7. Assignments; Series Support Provider 34
Section 11.8. Covenants of the Depositor 35
Section 11.9. No Petition 35
Section 11.10. No Recourse 35
Section 11.11. Headings 35
Section 11.12. GOVERNING LAW 35
Section 11.13. Master Servicer 36
EXHIBITS
Exhibit A-1 Form of Owner Trust Certificate
Exhibit A-2 Form of Series Trust Certificate
Exhibit B Form of Certificate of Trust
Exhibit C Form of Purchaser Representation Letter
Exhibit D Form of Transferee Representation Letter
TRUST AGREEMENT dated as of March 1, 1998 between
HOUSEHOLD AUTO RECEIVABLES CORPORATION, a Nevada corporation
(the "Depositor"), and WILMINGTON TRUST COMPANY, a Delaware
banking corporation, as Owner Trustee (the "Owner Trustee").
ARTICLE I
Definitions
Section 1.1. Capitalized Terms
. For all purposes of this Agreement, the following terms
shall have the meanings set forth below:
"Agreement" shall mean this Trust Agreement, as
the same may be amended and supplemented from time to time.
"Benefit Plan" shall have the meaning assigned to such
term in 3.9.
"Business Trust Statute" shall mean Chapter 38 of
Title 12 of the Delaware Code, 12 Del. Code 3801 et seq.
as the same may be amended from time to time.
"Certificate" means either an Owner Trust
Certificate or a Series Trust Certificate.
"Certificate Majority" means Certificateholders
representing more than fifty percent of the principal amount
of the Certificates. For the purpose of this definition the
principal amount of the Owner Trust Certificates shall equal
the Principal Balance of the Receivables included in the
Unpledged Trust Estate.
"Certificate Paying Agent" means Norwest Bank
Minnesota, National Association.
"Certificate Register" and "Certificate Registrar"
shall mean the register mentioned and the registrar
appointed pursuant to 3.4.
"Certificate of Trust" shall mean the Certificate
of Trust in the form of Exhibit B to be filed for the Trust
pursuant to 3810(a) of the Business Trust Statute.
"Corporate Trust Office" shall mean, with respect
to the Owner Trustee, the principal corporate trust office
of the Owner Trustee located at Rodney Square North, 1100
North Market Street, Wilmington, Delaware 19890-0001,
Attention: Corporate Trust Administration, or at such other
address as the Owner Trustee may designate by notice to the
Certificateholders and the Depositor, or the principal
corporate trust office of any successor Owner Trustee (the
address of which the successor owner trustee will notify the
Certificateholders and the Depositor).
"Definitive Certificates" shall mean Certificates
issued in certificated, fully registered form.
"Depositor" shall mean Household Auto Receivables
Corporation in its capacity as Depositor hereunder.
"ERISA" shall have the meaning assigned to such term in
3.9.
"Expenses" shall have the meaning assigned to such term in
8.2.
"Holder" or "Certificateholder" shall mean the
Person in whose name a Certificate is registered on the
Certificate Register.
"Household" shall mean Household Finance Corporation.
"Indemnified Parties" shall have the meaning
assigned to such term in 8.2.
"Owner Trust Certificate" means a trust
certificate evidencing the beneficial ownership interest of
a Certificateholder in the entire Unpledged Trust Estate,
substantially in the form of Exhibit A-1 attached hereto.
"Owner Trust Estate" shall mean all right, title
and interest of the Trust in and to the property and rights
assigned to the Trust pursuant to Article II of the Master
Sale and Servicing Agreement, all funds on deposit from time
to time in the Trust Accounts and all other property of the
Trust from time to time, including any rights of the Owner
Trustee and the Trust pursuant to the Master Sale and
Servicing Agreement, each Basic Document and each Series
Related Document.
"Owner Trustee" shall mean Wilmington Trust
Company, a Delaware banking corporation, not in its
individual capacity but solely as owner trustee under this
Agreement, and any successor Owner Trustee hereunder.
"Secretary of State" shall mean the Secretary of
State of the State of Delaware.
"Securities Act" shall have the meaning assigned
to such term in Section 3.4.
"Series Certificate Distribution Account" shall
mean each account for each Series of Certificates designated
as such and established and maintained pursuant to the
relevant Series Supplement.
"Series Trust Certificate" means a trust
certificate evidencing the beneficial ownership interest of
a Certificateholder in a Series Trust Estate, substantially
in the form of Exhibit A-2 attached hereto.
"Treasury Regulations" shall mean regulations,
including proposed or temporary regulations, promulgated
under the Code. References herein to specific provisions of
proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor
Treasury Regulations.
"Trust" shall mean the trust established by this
Agreement.
"Unpledged Trust Estate" means all of the Owner
Trust Estate which is not pledged with respect to a Series.
Section 1.2. Other Definitional Provisions
(a) . (a) Capitalized terms used herein
and not otherwise defined have the meanings assigned to them
in the Master Sale and Servicing Agreement or, if not
defined therein, in the Indenture, provided that, as used
herein, Series means only those Series of Notes and Series
of Certificates with respect to which the Trust is the
Issuer and only such Series Trust Estates included in the
Owner Trust Estate.
(b) All terms defined in this Agreement
shall have the defined meanings when used in any Certificate
or other document made or delivered pursuant hereto unless
otherwise defined therein.
(c) As used in this Agreement and in any
Certificate or other document made or delivered pursuant
hereto or thereto, accounting terms not defined in this
Agreement or in any such certificate or other document, and
accounting terms partly defined in this Agreement or in any
such certificate or other document to the extent not
defined, shall have the respective meanings given to them
under generally accepted accounting principles as in effect
on the date of this Agreement or any such certificate or
other document, as applicable. To the extent that the
definitions of accounting terms in this Agreement or in any
such certificate or other document are inconsistent with the
meanings of such terms under generally accepted accounting
principles, the definitions contained in this Agreement or
in any such certificate or other document shall control.
(d) The words "hereof," "herein,"
"hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not
to any particular provision of this Agreement; Section and
Exhibit references contained in this Agreement are
references to Sections and Exhibits in or to this Agreement
unless otherwise specified; and the term "including" shall
mean "including without limitation."
(e) The definitions contained in this
Agreement are applicable to the singular as well as the
plural forms of such terms and to the masculine as well as
to the feminine and neuter genders of such terms.
Section 1.3. Action by or Consent of Noteholders
and Certificate-holders
. Whenever any provision of this Agreement refers to action
to be taken, or consented to, by Noteholders or
Certificateholders, such provision shall be deemed to refer
to the Certificateholder or Noteholder, as the case may be,
of record as of the Record Date immediately preceding the
date on which such action is to be taken, or consent given,
by Noteholders or Certificateholders. Solely for the
purposes of any action to be taken, or consented to, by
Noteholders, any Note registered in the name of the
Depositor or any Affiliate thereof shall be deemed not to be
outstanding; provided, however, that, solely for the purpose
of determining whether the Trustee or the Trust Collateral
Agent, if any, is entitled to rely upon any such action or
consent, only Notes which the Owner Trustee, the Trustee or
the Trust Collateral Agent, if any, respectively, knows to
be so owned shall be so disregarded.
Section 1.4. Material Adverse Effect
. Whenever a determination is to be made under this
Agreement as to whether a given event, action, course of
conduct or set of facts or circumstances could or would have
a material adverse effect on the Noteholders or
Certificateholders (or any similar or analogous
determination), such determination shall be made without
taking into account the funds available from claims under
any policy or other Series Support.
ARTICLE II
Organization
Section 2.1. Name
. There is hereby formed a trust to be known as "Household
Automobile Revolving Trust I", in which name the Owner
Trustee may conduct the business of the Trust, make and
execute contracts and other instruments on behalf of the
Trust and sue and be sued.
Section 2.2. Office
. The office of the Trust shall be in care of the Owner
Trustee at the Corporate Trust Office or at such other
address as the Owner Trustee may designate by written notice
to the Certificateholders and the Depositor.
Section 2.3. Purposes and Powers
(a) . (a) The purpose of the Trust is, and
the Trust shall have the power and authority, to engage in
the following activities:
(i) to issue the Notes pursuant to the Indenture
and each Series Supplement and the Certificates
pursuant to this Agreement and each Series Supplement,
and to sell the Notes;
(ii) with the proceeds of the sale of the Notes,
to fund the expense of obtaining any Series Support and
to pay the organizational, start-up and transactional
expenses of the Trust and to pay the balance to the
Depositor pursuant to the Master Sale and Servicing
Agreement;
(iii) with respect to each Series Trust
Estate, to assign, grant, transfer, pledge, mortgage
and convey each Series Trust Estate to the Trustee or
Trust Collateral Agent, as the case may be, pursuant to
the Indenture and the related Series Supplement for the
benefit of the Series Secured Parties;
(iv) to enter into and perform its obligations
under the Basic Documents and the Series Related
Documents with respect to each Series, in each case, to
which it is a party;
(v) to acquire, hold and manage the Owner Trust
Estate;
(vi) to make distributions on the Certificates in
accordance with their respective terms;
(vii) to own Class SV Preferred Stock of the
Depositor;
(viii) to engage in those activities, including
entering into agreements, that are necessary, suitable
or convenient to accomplish the foregoing or are
incidental thereto or connected therewith; and
(ix) subject to compliance with the Basic
Documents and the Series Related Documents with respect
to each Series, to engage in such other activities as
may be required in connection with conservation of the
Owner Trust Estate and the making of distributions to
the Certificateholders and the Noteholders.
(b) The Trust is hereby authorized to engage
in the foregoing activities. The Trust shall not engage in
any activity other than in connection with the foregoing or
other than as required or authorized by the terms of this
Agreement, the Basic Documents or any Series Related
Documents.
Section 2.4. Appointment of Owner Trustee
. The Depositor hereby appoints the Owner Trustee as
trustee of the Trust effective as of the date hereof, to
have all the rights, powers and duties set forth herein.
Section 2.5. Initial Capital Contribution of
Trust Estate
. The Depositor hereby sells, assigns, transfers, conveys
and sets over to the Owner Trustee, as of the date hereof,
the sum of $1 and one share of Class SV Preferred Stock of
the Depositor. The Owner Trustee hereby acknowledges
receipt in trust from the Depositor, as of the date hereof,
of the foregoing contribution, which shall constitute the
initial Owner Trust Estate. The Depositor shall pay
organizational expenses of the Trust as they may arise.
Section 2.6. Declaration of Trust
. The Owner Trustee hereby declares that it will hold the
Owner Trust Estate in trust upon and subject to the
conditions set forth herein for the use and benefit of the
Certificateholders, subject to the obligations of the Trust
under the Basic Documents and the Series Related Documents
with respect to each Series. It is the intention of the
parties hereto that the Trust constitute a business trust
under the Business Trust Statute and that this Agreement
constitute the governing instrument of such business trust.
It is the intention of the parties hereto that, solely for
income tax purposes, the Trust shall be treated as a branch;
provided, however, that in the event Certificates are owned
by more than one Certificateholder, it is the intention of
the parties hereto that, solely for income and franchise tax
purposes, the Trust shall then be treated as a partnership
and that, unless otherwise required by appropriate tax
authorities, only after such time the Trust will file or
cause to be filed annual or other necessary returns, reports
and other forms consistent with the characterization of the
Trust as a partnership for such tax purposes. Effective as
of the date hereof, the Owner Trustee shall have all rights,
powers and duties set forth herein and to the extent not
inconsistent herewith, in the Business Trust Statute with
respect to accomplishing the purposes of the Trust. The
Owner Trustee shall file the Certificate of Trust with the
Secretary of State.
Section 2.7. Liability
(a) . (a) The Depositor shall pay
organizational expenses of the Trust as they may arise or
shall, upon the request of the Owner Trustee, promptly
reimburse the Owner Trustee for any such expenses paid by
the Owner Trustee.
(b) No Holder, other than to the extent set
forth in clause (a), shall have any personal liability for
any liability or obligation of the Trust.
Section 2.8. Title to Trust Property
(a) . (a) Legal title to all the Owner
Trust Estate shall be vested at all times in the Trust as a
separate legal entity except where applicable law in any
jurisdiction requires title to any part of the Owner Trust
Estate to be vested in a trustee or trustees, in which case
title shall be deemed to be vested in the Owner Trustee, a
co-trustee and/or a separate trustee, as the case may be.
(b) The holders of the Series Trust
Certificates shall not have legal title to any part of the
related Series Trust Estate. The Holders of the Series
Trust Certificates shall be entitled to receive
distributions with respect to their undivided ownership
interest therein in accordance with the terms hereof and the
related Series Supplement. No transfer, by operation of law
or otherwise, of any right, title or interest by any
Certificateholder of its ownership interest in the Owner
Trust Estate shall operate to terminate this Agreement or
the trusts hereunder or entitle any transferee to an
accounting or to the transfer to it of legal title to any
part of any Series Trust Estate.
Section 2.9. Situs of Trust
. The Trust will be located and administered in the State
of Delaware. All bank accounts maintained by the Owner
Trustee on behalf of the Trust shall be located in the State
of Minnesota. Payments will be received by the Trust in
Minnesota and payments will be made by the Trust from
Minnesota. The Trust shall not have any employees in any
state other than Delaware; provided, however, that nothing
herein shall restrict or prohibit the Owner Trustee, the
Master Servicer or any agent of the Trust from having
employees within or without the State of Delaware. The only
office of the Trust will be at the Corporate Trust Office in
Delaware.
Section 2.10. Representations and Warranties of
the Depositor
. The Depositor makes the following representations and
warranties on which the Owner Trustee relies in accepting
the Owner Trust Estate in trust and issuing the Certificates
and Notes and upon which any Series Support Provider relies
in providing any Series Support. Each of the following
representations and warranties shall be deemed to be made on
each date on which a Series Trust Estate is pledged under
the Indenture.
(a) Organization and Good Standing. The
Depositor is duly organized and validly existing as a Nevada
corporation with power and authority to own its properties
and to conduct its business as such properties are currently
owned and such business is presently conducted and is
proposed to be conducted pursuant to this Agreement and the
Basic Documents.
(b) Due Qualification. It is duly qualified
to do business as a foreign corporation in good standing,
and has obtained all necessary licenses and approvals, in
all jurisdictions in which the ownership or lease of its
property, the conduct of its business and the performance of
its obligations under this Agreement and the Basic Documents
requires such qualification and in which the failure to so
qualify would have a material adverse effect on the
business, properties, assets or condition (financial or
otherwise) of the Depositor.
(c) Power and Authority. The Depositor has
the corporate power and authority to execute and deliver
this Agreement and to carry out its terms; the Depositor has
full power and authority to sell and assign the property to
be sold and assigned to and deposited with the Trust; the
Depositor has duly authorized such sale, assignment and
deposit to the Trust by all necessary corporate action; and
the execution, delivery and performance of this Agreement
has been duly authorized by the Depositor by all necessary
corporate action.
(d) Binding Obligations. This Agreement,
when duly executed and delivered, shall constitute legal,
valid and binding obligations of the Depositor enforceable
against the Depositor in accordance with its terms, except
as enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting the
enforcement of creditors' rights generally and by equitable
limitations on the availability of specific remedies,
regardless of whether such enforceability is considered in a
proceeding in equity or at law.
(e) No Consent Required. To the best
knowledge of the Depositor, no consent, license, approval or
authorization or registration or declaration with, any
Person or with any governmental authority, bureau or agency
is required in connection with the execution, delivery or
performance of this Agreement, the Basic Documents and the
applicable Series Related Documents, except for such as have
been obtained, effected or made or as to which a failure to
obtain, effect or make would not have a material adverse
effect on the business, properties, assets or condition
(financial or other) of the Depositor.
(f) No Violation. The consummation of the
transactions contemplated by this Agreement and the
fulfillment of the terms hereof do not conflict with, result
in any breach of any of the terms and provisions of, or
constitute (with or without notice or lapse of time) a
default under, the articles of incorporation or by-laws of
the Depositor, or any material indenture, agreement or other
instrument to which the Depositor is a party or by which it
is bound; nor result in the creation or imposition of any
Lien upon any of its properties pursuant to the terms of any
such indenture, agreement or other instrument (other than
pursuant to the Basic Documents or any applicable Series
Related Documents); nor violate any law or, to the best of
the Depositor's knowledge, any order, rule or regulation
applicable to the Depositor of any court or of any Federal
or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the
Depositor or its properties.
(g) No Proceedings. To the best of the
Depositor's knowledge, there are no proceedings or
investigations pending or, to its knowledge threatened
against it before any court, regulatory body, administrative
agency or other tribunal or governmental instrumentality
having jurisdiction over it or its properties (A) asserting
the invalidity of this Agreement or any of the Basic
Documents, (B) seeking to prevent the issuance of the
Certificates or the Notes or the consummation of any of the
transactions contemplated by this Agreement or any of the
Basic Documents, c seeking any determination or ruling that
might materially and adversely affect its performance of its
obligations under, or the validity or enforceability of,
this Agreement, any of the Basic Documents or any Series
Related Documents, or (D) seeking to adversely affect the
federal income tax or other federal, state or local tax
attributes of any of the Notes or Certificates.
Section 2.11. Federal Income Tax Allocations
. In the event that the Trust is treated as a partnership
for Federal income tax purposes, net income of the Trust for
any month as determined for Federal income tax purposes (and
each item of income, gain, loss, credit and deduction
entering into the computation thereof) shall be allocated:
(a) with respect to each Series, to the
extent of available net income with respect to the related
Series Trust Estate, among the Certificateholders of such
Series as of the first Record Date following the end of such
month, in proportion to their ownership of principal amount
of Certificates of such Series on such date, an amount of
net income up to the sum of (i) the Certificateholders'
Monthly Interest Distributable Amount for such month with
respect to such Series, (ii) Certificateholders' Interest
Carryover Shortfall for such month with respect to such
Series, and (iii) the portion of the market discount on the
related Receivables accrued during such month that is
allocable to the excess of the initial aggregate principal
amount of the Certificates of such Series over their initial
aggregate issue price;
(b) (b) with respect to the Owner Trust Certificates,
available net income with respect to the Unpledged Trust
estate among the Holders of the Owner Trust Certificates
as of the first Record Date following the end of such
month; and
(c) to the Depositor, to the extent of any
remaining net income.
If the net income of the Trust with respect to any Series
for any month is insufficient for the allocations described
in clause (a) above, subsequent net income shall first be
allocated to make up such shortfall before being allocated
as provided in clause c. Net losses of the Trust with
respect to any Series (or with respect to the Unpledged
Trust Estate), if any, for any month as determined for
Federal income tax purposes (and each item of income, gain,
loss, credit and deduction entering into the computation
thereof) shall be allocated among the Certificateholders of
such Series, or the Holders of the Owner Trust Certificates,
as the case may be, as of the Record Date in proportion to
their ownership of principal amount of Certificates of such
Series on such Record Date until the principal balance of
the Certificates is reduced to zero. The Depositor is
authorized to modify the allocations in this paragraph if
necessary or appropriate, in its sole discretion, for the
allocations to fairly reflect the economic income, gain or
loss to the Certificateholders of such Series, or as
otherwise required by the Code.
Section 2.12. Covenants of the Depositor
. The Depositor agrees and covenants for the benefit of
each Series Secured Party and the Owner Trustee and the
Trustee for the benefit of the Noteholders, during the term
of this Agreement, and to the fullest extent permitted by
applicable law, that:
(a) it shall not create, incur or suffer to
exist any indebtedness or engage in any business, except, in
each case, as permitted by its certificate of incorporation,
the Basic Documents and the Series Related Documents;
(b) it shall not, for any reason, institute
proceedings for the Trust to be adjudicated a bankrupt or
insolvent, or consent to the institution of bankruptcy or
insolvency proceedings against the Trust, or file a petition
seeking or consenting to reorganization or relief under any
applicable federal or state law relating to the bankruptcy
of the Trust, or consent to the appointment of a receiver,
liquidator, assignee, trustee, sequestrator (or other
similar official) of the Trust or a substantial part of the
property of the Trust or cause or permit the Trust to make
any assignment for the benefit of creditors, or admit in
writing the inability of the Trust to pay its debts
generally as they become due, or declare or effect a
moratorium on the debt of the Trust or take any action in
furtherance of any such action;
(c) it shall obtain from each counterparty
to each Basic Document to which it or the Trust is a party
and each other agreement entered into on or after the date
hereof to which it or the Trust is a party, an agreement by
each such counterparty that prior to the occurrence of the
event specified in 9.1(e) such counterparty shall not
institute against, or join any other Person in instituting
against, it or the Trust, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings or other
similar proceedings under the laws of the United States or
any state of the United States; and
(d) it shall not, for any reason, withdraw
or attempt to withdraw from this Agreement, dissolve,
institute proceedings for it to be adjudicated a bankrupt or
insolvent, or consent to the institution of bankruptcy or
insolvency proceedings against it, or file a petition
seeking or consenting to reorganization or relief under any
applicable federal or state law relating to bankruptcy, or
consent to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator (or other similar official)
of it or a substantial part of its property, or make any
assignment for the benefit of creditors, or admit in writing
its inability to pay its debts generally as they become due,
or declare or effect a moratorium on its debt or take any
action in furtherance of any such action.
Section 2.13. Covenants of the Certificateholders
. Each Certificateholder agrees:
(a) to be bound by the terms and conditions
of the related Certificates, of this Agreement and, with
respect to the holders of Series Trust Certificates, of the
related Series Supplement, including any supplements or
amendments hereto and to perform the obligations of a
Certificateholder as set forth therein or herein, in all
respects as if it were a signatory hereto. This undertaking
is made for the benefit of the Trust, the Owner Trustee and
any related Series Secured Parties;
(b) to hereby appoint the Depositor as such
Certificateholder's agent and attorney-in-fact to sign any
federal income tax information return filed on behalf of the
Trust, if any, and agree that, if requested by the Trust, it
will sign such federal income tax information return in its
capacity as holder of an interest in the Trust. Each
Certificateholder also hereby agrees that in its tax returns
it will not take any position inconsistent with those taken
in any tax returns that may be filed by the Trust;
(c) if such Certificateholder is other than
an individual or other entity holding its Certificate
through a broker who reports securities sales on Form 1099-
B, to notify the Owner Trustee of any transfer by it of a
Certificate in a taxable sale or exchange, within 30 days of
the date of the transfer;
(d) until the completion of the events
specified in 9.1(e), not to, for any reason, institute
proceedings for the Trust or the Depositor to be adjudicated
a bankrupt or insolvent, or consent to the institution of
bankruptcy or insolvency proceedings against the Trust, or
file a petition seeking or consenting to reorganization or
relief under any applicable federal or state law relating to
bankruptcy, or consent to the appointment of a receiver,
liquidator, assignee, trustee, sequestrator (or other
similar official) of the Trust or a substantial part of its
property, or cause or permit the Trust to make any
assignment for the benefit of its creditors, or admit in
writing its inability to pay its debts generally as they
become due, or declare or effect a moratorium on its debt or
take any action in furtherance of any such action; and
(e) that there shall not be more than 98
other holders of Certificates.
ARTICLE III
Certificates and Transfer of Interests
Section 3.1. Initial Ownership
. Upon the formation of the Trust by the contribution by
the Depositor pursuant to 2.5, the Trust shall issue an
Owner Trust Certificate to the Depositor having an initial
principal amount of $1, and thereafter shall have a
principal amount equal to the Principal Balance of the
Receivables included in the Unpledged Trust Estate.
Section 3.2. The Certificates; Issuable in
Series
(a) . (a) The Series Certificates shall be
issued in denominations of $100,000 and integral multiples
of $1,000 in excess thereof. The Owner Trust Certificates
shall have no restrictions as to denomination. The
Certificates shall be executed on behalf of the Trust by
manual or facsimile signature of an authorized officer of
the Owner Trustee. Certificates bearing the manual or
facsimile signatures of individuals who were, at the time
when such signatures shall have been affixed, authorized to
sign on behalf of the Trust, shall be validly issued and
entitled to the benefit of this Agreement, notwithstanding
that such individuals or any of them shall have ceased to be
so authorized prior to the authentication and delivery of
such Certificates or did not hold such offices at the date
of authentication and delivery of such Certificates. 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 due registration of such Certificate in such
transferee's name pursuant to 3.4.
(b) No Series Trust Certificates shall be
issued under this Agreement unless such Certificates have
been authorized pursuant to a Series Supplement and all
conditions precedent to the issuance thereof, as specified
in the related Series Supplement shall have been satisfied.
All Series Trust Certificates of each Series issued under
this Agreement shall be in all respects entitled to the
benefits hereof and of the related Series Trust Estate. All
Owner Trust Certificates issued under this Agreement shall
be in all respects entitled to the benefits hereof and of
the Unpledged Trust Estate.
Section 3.3. Authentication of Certificates
. Concurrently with each initial pledge of Receivables
under the Indenture and a related Series Supplement, the
Trust shall issue Certificates of the related Series, in an
aggregate principal amount equal to the initial Certificate
Balance of such Series. The Owner Trustee shall cause the
related Certificates to be executed on behalf of the Trust,
authenticated and delivered to or upon the written order of
the Depositor, signed by its chairman of the board, its
president or any vice president, its treasurer or any
assistant treasurer without further corporate action by the
Depositor, in authorized denominations. No Certificate
shall entitle its holder to any benefit under this Agreement
or, with respect to a Series, the related Series Supplement,
or shall be valid for any purpose, unless there shall appear
on such Certificate a certificate of authentication
substantially in the form set forth in Exhibit A, executed
by the Owner Trustee or its authenticating agent, by manual
signature; such authentication shall constitute conclusive
evidence that such Certificate shall have been duly
authenticated and delivered hereunder. All Certificates
shall be dated the date of their authentication.
Section 3.4. Registration of Transfer and
Exchange of Certificates
. The Certificate Registrar shall keep or cause to be kept,
at the office or agency maintained pursuant to 3.8, a
Certificate Register in which, subject to such reasonable
regulations as it may prescribe, the Owner Trustee shall
provide for the registration of Certificates and of
transfers and exchanges of Certificates as herein provided.
The Owner Trustee shall be the initial Certificate
Registrar.
The Certificates have not been registered under the
Securities Act of 1933, as amended (the "Securities Act") or
any state securities law. The Certificate Registrar shall
not register the transfer of any Certificate unless such
resale or transfer is pursuant to an effective registration
statement under the Securities Act or is to the Depositor or
unless it shall have received (i) a representation letter
substantially in the form of Exhibit D hereto or (ii) such
other representations (or an Opinion of Counsel)
satisfactory to the Owner Trustee to the effect that such
resale or transfer is made (A) in a transaction exempt from
the registration requirements of the Securities Act and
applicable state securities laws, or (B) to a person who the
transferor of the Certificate reasonably believes is a
qualified institutional buyer (within the meaning of Rule
144A under the Securities Act) that is aware that such
resale or other transfer is being made in reliance upon Rule
144A. Until the earlier of (i) such time as the
Certificates shall be registered pursuant to a registration
statement filed under the Securities Act and (ii) the date
three years from the later of the date of the original
authentication and delivery of the Certificates and the date
any Certificate was acquired from the Seller or any
affiliate of the Seller, the Certificates shall bear a
legend as follows:
THIS CERTIFICATE HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"),
OR THE SECURITIES LAWS OF ANY STATE IN
RELIANCE UPON EXEMPTIONS PROVIDED BY THE
SECURITIES ACT AND SUCH STATE SECURITIES
LAWS. NO RESALE OR OTHER TRANSFER OF
THIS CERTIFICATE MAY BE MADE UNLESS SUCH
RESALE OR TRANSFER (A) IS MADE IN
ACCORDANCE WITH 3.4 OF THE OWNER TRUST
AGREEMENT PERTAINING TO THE HOUSEHOLD
AUTO RECEIVABLES TRUST I (THE
"AGREEMENT") AND (B) IS MADE (i)
PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT, (ii)
IN A TRANSACTION EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS, (iii) TO THE SELLER OR
(iv) TO A PERSON WHO THE TRANSFEROR
REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING
OF RULE 144A UNDER THE SECURITIES ACT
THAT IS AWARE THAT THE RESALE OR OTHER
TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A AND c UPON THE SATISFACTION OF
CERTAIN OTHER REQUIREMENTS SPECIFIED IN
THE AGREEMENT. NEITHER THE SELLER, THE
MASTER SERVICER, THE TRUST NOR THE OWNER
TRUSTEE IS OBLIGATED TO REGISTER THE
CERTIFICATES UNDER THE SECURITIES ACT OR
ANY APPLICABLE STATE SECURITIES LAWS.
The Certificate Registrar shall not register the
initial placement of the Certificates unless it shall have
received a Purchaser Representation Letter in the form of
Exhibit C.
The Certificate Registrar shall provide the
Trustee Collateral Agent with a list of the names and
addresses of the Certificateholders on each Series Closing
Date in the form which such information is provided to the
Certificate Registrar by the Depositor. Upon any transfers
of Certificates, the Certificate Registrar shall notify the
Trust Collateral Agent of the name and address of the
transferee in writing, by facsimile, on the day of such
transfer.
Upon surrender for registration of transfer of any
Certificate at the office or agency maintained pursuant to
3.8, the Owner Trustee shall execute, authenticate and
deliver, in the name of the designated transferee or
transferees, one or more new Certificates of the same Series
in authorized denominations and aggregate principal amount,
dated the date of authentication by the Owner Trustee or any
authenticating agent. At the option of a Holder,
Certificates may be exchanged for other Certificates of the
same Series in authorized denominations of a like aggregate
principal amount upon surrender of the Certificates of the
same Series, to be exchanged at the office or agency
maintained pursuant to 3.8.
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
Owner Trustee and the Certificate Registrar duly executed by
the Certificateholder or his attorney duly authorized in
writing, with such signature guaranteed by an "eligible
guarantor institution" meeting the requirements of the
Certificate Registrar, which requirements include membership
or participation in the Securities Transfer Agent's
Medallion Program ("STAMP") or such other "signature
guarantee program" as may be determined by the Certificate
Registrar in addition to, or in substitution for, STAMP, all
in accordance with the Exchange Act. Each Certificate
surrendered for registration of transfer or exchange shall
be canceled and subsequently disposed of by the Owner
Trustee in accordance with its customary practice.
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.
Notwithstanding the preceding provisions of this
Section, the Owner Trustee shall not be required to make,
and the Certificate Registrar shall not be required to
register, transfers and exchanges of Certificates for a
period of 15 days preceding the due date for any payment
with respect to the Certificate.
Section 3.5. Mutilated, Destroyed, Lost or
Stolen Certificates
. If (a) any mutilated Certificate shall be
surrendered to the Certificate Registrar, or if the
Certificate Registrar shall receive evidence to its
satisfaction of the destruction, loss or theft of any
Certificate and (b) there shall be delivered to the
Certificate Registrar and the Owner Trustee, such security
or indemnity as may be required by them to save each of them
harmless, then in the absence of notice that such
Certificate shall have been acquired by a bona fide
purchaser, the Owner Trustee on behalf of the Trust shall
execute and the Owner Trustee or its authenticating agent
shall authenticate and deliver, in exchange for or in lieu
of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like Series principal
balance. In connection with the issuance of any new
Certificate under this Section, the Owner Trustee or the
Certificate Registrar may require the payment of a sum
sufficient to cover any tax or other governmental charge
that may be imposed in connection therewith. Any duplicate
Certificate issued pursuant to this section shall constitute
conclusive evidence of an ownership interest in the Trust,
as if originally issued, whether or not the lost, stolen or
destroyed Certificate shall be found at any time.
Section 3.6. Persons Deemed Certificateholders
. Every Person by virtue of becoming a Certificateholder in
accordance with this Agreement and the rules and regulations
of the Certificate Registrar shall be deemed to be bound by
the terms of this Agreement. Prior to due presentation of a
Certificate for registration of transfer, the Owner Trustee,
the Certificate Registrar and any agent of the Owner Trustee
and the Certificate Registrar may treat the Person in whose
name any Certificate shall be registered in the Certificate
Register as the owner of such Certificate for the purpose of
receiving distributions pursuant hereto, the Indenture or
any Series Supplement (in the case of a Series Trust
Certificate) and for all other purposes whatsoever, and none
of the Owner Trustee, the Certificate Registrar, nor any
agent of the Owner Trustee or the Certificate Registrar
shall be bound by any notice to the contrary.
Section 3.7. Access to List of
Certificateholders' Names and Addresses
. The Owner Trustee or the Certificate Registrar shall
furnish or cause to be furnished to the Master Servicer, the
Depositor or Owner Trustee within 15 days after receipt by
the Owner Trustee or the Certificate Registrar of a request
therefor from such Person in writing, a list, of the names
and addresses of the Certificateholders as of the most
recent Record Date. If three or more Holders of
Certificates or one or more Holders of Certificates
evidencing not less than 25% of the Certificate Balance
apply in writing to the Owner Trustee or the Certificate
Registrar, and such application states that the applicants
desire to communicate with other Certificateholders with
respect to their rights under this Agreement, under the
Certificates of such Series or under the related Series
Supplement and such application is accompanied by a copy of
the communication that such applicants propose to transmit,
then the Owner Trustee or the Certificate Registrar shall,
within five Business Days after the receipt of such
application, afford such applicants access during normal
business hours to the current list of Certificateholders of
such Series. Each Holder, by receiving and holding a
Certificate, shall be deemed to have agreed not to hold any
of the Depositor, the Master Servicer, the Owner Trustee or
any agent thereof accountable by reason of the disclosure of
its name and address, regardless of the source from which
such information was derived.
Section 3.8. Maintenance of Office or Agency
. The Owner Trustee or the Certificate Registrar shall
maintain in Wilmington, Delaware, an office or offices or
agency or agencies where Certificates may be surrendered for
registration of transfer or exchange and where notices and
demands to or upon the Owner Trustee in respect of the
Certificates and the Basic Documents may be served. The
Owner Trustee initially designates its Corporate Trust
Office for such purposes. The Owner Trustee shall give
prompt written notice to the Depositor, the
Certificateholders and (unless a Support Default shall have
occurred and be continuing) any Series Support Provider of
any change in the location of the Certificate Register or
any such office or agency.
Section 3.9. ERISA Restrictions
. The Certificates may not be acquired by or for the
account of (i) an employee benefit plan (as defined in
3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")) that is subject to the
provisions of Title I of ERISA, (ii) a plan described in
4975(e)(1) of the Internal Revenue Code of 1985, as
amended, or (iii) any entity whose underlying assets include
plan assets by reason of a plan's investment in the entity
(each, a "Benefit Plan"). By accepting and holding its
beneficial ownership interest in its Certificate, the Holder
thereof shall be deemed to have represented and warranted
that it is not a Benefit Plan.
Section 3.10. Securities Matters
. Notwithstanding anything contained herein to the
contrary, the Owner Trustee shall not be responsible for
ascertaining whether any transfer complies with the
registration provisions or exemptions from the Securities
Act, the Exchange Act, applicable state securities law or
the Investment Company Act; provided, however, that if a
certificate is specifically required to be delivered to the
Owner Trustee by a purchaser or transferee of a Certificate,
the Owner Trustee shall be under a duty to examine the same
to determine whether it conforms to the requirements of this
Trust Agreement and shall promptly notify the party
delivering the same if such certificate does not so conform.
Section 3.11. Payments on Owner Trust
Certificates
.
On each Distribution Date the Certificate Paying
Agent shall distribute pro rata to the Holders of the Owner
Trust Certificates amounts received pursuant to Section 5.5
of the Master Sale and Servicing Agreement representing
Collected Funds with respect to the Unpledged Trust Estate.
Section 3.12. Paying Agent
. Distributions to be made in respect of the Certificates
pursuant to this Agreement, or any Series Supplement shall
be made by the Certificate Paying Agent, by wire transfer or
check mailed to the Certificateholder of record in the
Certificate Register without the presentation or surrender
of the Certificate or the making of any notation thereon,
except as provided in Section 9.1c with respect to the final
distribution on a Series Trust Certificates or the Owner
Trust Certificates.
ARTICLE IV
Voting Rights and Other Actions
Section 4.1. Prior Notice to Holders with
Respect to Certain Matters
. With respect to the following matters, the Owner Trustee
shall not take action unless at least 30 days before the
taking of such action, the Owner Trustee shall have notified
the Certificateholders in writing of the proposed action and
the Certificate Majority shall not have notified the Owner
Trustee in writing prior to the 30th day after such notice
is given that such Certificateholders have withheld consent
or provided alternative direction
(a) the election by the Trust to file an
amendment to the Certificate of Trust, which amendment shall
have satisfied the Rating Agency Condition (unless such
amendment is required to be filed under the Business Trust
Statute or unless such amendment would not materially and
adversely affect the interests of the Holders);
(b) the amendment of the Indenture by a
supplemental indenture in circumstances where the consent of
any Noteholder is required;
(c) the amendment of the Indenture by a
supplemental indenture in circumstances where the consent of
any Noteholder is not required and such amendment materially
adversely affects the interest of the Certificateholders; or
(d) except pursuant to 13.1(b) of the
Master Sale and Servicing Agreement, the amendment, change
or modification of the Master Sale and Servicing Agreement,
except to cure any ambiguity or defect or to amend or
supplement any provision in a manner that would not
materially adversely affect the interests of the
Certificateholders.
(e) the Depositor shall not, without the
unanimous consent of the holders of the Class SV Preferred
Stock of the Depositor, institute proceedings to be
adjudicated insolvent, or consent to the institution of any
bankruptcy or insolvency case or proceedings against it, or
file or consent to a petition under any applicable federal
or state law relating to bankruptcy, seeking the Depositor's
liquidation or reorganization or any other relief for the
Corporation as debtor, or consent to the appointment of a
receiver, liquidator, assignee, trustee, custodian or
sequestrator (or other similar official) of the Corporation
or a substantial part of its property, or make any
assignment for the benefit of creditors, or admit in writing
its inability to pay its debts generally as they become due,
or take any corporate action in furtherance of such action.
The Owner Trustee shall notify the Certificateholders in
writing of any appointment of a successor Note Registrar,
Trust Collateral Agent or Certificate Registrar within five
Business Days thereof.
Section 4.2. Action by Certificateholders with
Respect to Certain Matters
. The Owner Trustee shall not have the power (a) to remove
the Master Servicer under the Master Sale and Servicing
Agreement or (b) except as expressly provided in the
Indenture and the related Series Supplement and at the
direction of the Certificateholders, sell the Receivables
after the termination of the Indenture. The Owner Trustee
shall take the actions referred to in the preceding sentence
only upon written instructions signed by the
Certificateholders and the furnishing of indemnification
satisfactory to the Owner Trustee by the Certificateholders.
Section 4.3. Action by Certificateholders with
Respect to Bankruptcy
. Until one year and one day following the date of payment
in full of the Notes of each Series have been paid in full,
the Owner Trustee shall not have the power to, and shall
not, commence any proceeding or other actions contemplated
by 2.13(d) hereof relating to the Trust without the prior
written consent of all the Series Secured Parties and of all
the Certificateholders and the delivery to the Owner Trustee
by each such Certificateholder of a certificate certifying
that such Certificateholder reasonably believes that the
Trust is insolvent.
Section 4.4. Restrictions on Certificateholders'
Power
(a) . (a) The Certificateholders shall not
direct the Owner Trustee to take or refrain from taking any
action if such action or inaction would be contrary to any
obligation of the Trust or the Owner Trustee under this
Agreement, any of the Basic Documents or any Series Related
Documents or would be contrary to 2.3 or otherwise
contrary to law nor shall the Owner Trustee be obligated to
follow any such direction, if given.
(b) No Certificateholder shall have any
right by virtue or by availing itself of any provisions of
this Agreement to institute any suit, action, or proceeding
in equity or at law upon or under or with respect to this
Agreement or any Basic Document, unless there are no
outstanding notes of any Series and unless the Certificate
Majority previously shall have given to the Owner Trustee a
written notice of default and of the continuance thereof, as
provided in this Agreement, and also unless the Certificate
Majority shall have made written request upon the Owner
Trustee to institute such action, suit or proceeding in its
own name as Owner Trustee under this Agreement and shall
have offered to the Owner Trustee such reasonable indemnity
as it may require against the costs, expenses and
liabilities to be incurred therein or thereby, and the Owner
Trustee, for 30 days after its receipt of such notice,
request, and offer of indemnity, shall have neglected or
refused to institute any such action, suit, or proceeding,
and during such 30-day period no request or waiver
inconsistent with such written request has been given to the
Owner Trustee pursuant to and in compliance with this
section or 6.3; it being understood and intended, and
being expressly covenanted by each Certificateholder with
every other Certificateholder and the Owner Trustee, that no
one or more Holders of Certificates shall have any right in
any manner whatever by virtue or by availing itself or
themselves of any provisions of this Agreement to affect,
disturb, or prejudice the rights of the Holders of any other
of the Certificates, or to obtain or seek to obtain priority
over or preference to any other such Holder, or to enforce
any right under this Agreement, except in the manner
provided in this Agreement and for the equal, ratable, and
common benefit of all Certificateholders. For the
protection and enforcement of the provisions of this 4.4,
each and every Certificateholder and the Owner Trustee shall
be entitled to such relief as can be given either at law or
in equity.
Section 4.5. Majority Control
. No Certificateholder shall have any right to vote or in
any manner otherwise control the operation and management of
the Trust except as expressly provided in this Agreement.
Except as expressly provided herein, any action that may be
taken by the Certificateholders under this Agreement may be
taken by the Certificate Majority. Except as expressly
provided herein, any written notice of the
Certificateholders delivered pursuant to this Agreement
shall be effective if signed by the Certificate Majority at
the time of the delivery of such notice.
ARTICLE V
Certain Duties
Section 5.1. Accounting and Records to the
Noteholders, Certificate-holders, the Internal Revenue
Service and Others
. Subject to Sections 12.1(b)(iii) and 12.1c of the Master
Sale and Servicing Agreement, the Holder of the Owner Trust
Certificate shall (a) maintain (or cause to be maintained)
the books of the Trust on a calendar year basis on the
accrual method of accounting, including, without limitation,
the allocations of net income under 2.11, (b) deliver (or
cause to be delivered) to each Certificateholder, as may be
required by the Code and applicable Treasury Regulations,
such information as may be required (including Schedule K-1,
if applicable) to enable each Certificateholder to prepare
its Federal and state income tax returns, c file or cause to
be filed, if necessary, such tax returns relating to the
Trust (including a partnership information return, Form
1065), and direct the Owner Trustee or the Master Servicer,
as the case may be, to make such elections as may from time
to time be required or appropriate under any applicable
state or Federal statute or rule or regulation thereunder so
as to maintain the Trust's characterization as a branch, or
if applicable, as a partnership, for Federal income tax
purposes and (d) collect or cause to be collected any
withholding tax as described in and in accordance with the
Master Sale and Serving Agreement or any Series Supplement
with respect to income or distributions to
Certificateholders and the appropriate forms relating
thereto. The Owner Trustee or the Master Servicer, as the
case may be, shall make all elections pursuant to this 5.1
as directed in writing by the Depositor. The Owner Trustee
shall sign all tax information returns, if any, filed
pursuant to this 5.1 and any other returns as may be
required by law, and in doing so shall rely entirely upon,
and shall have no liability for information provided by, or
calculations provided by, the Depositor or the Master
Servicer. The Owner Trustee shall elect under 1278 of the
Code to include in income currently any market discount that
accrues with respect to the Receivables. The Owner Trustee
shall not make the election provided under 754 of the
Code.
Section 5.2. Signature on Returns; Tax Matters
Partner
(a) . (a) Notwithstanding the provisions
of 5.1 and in the event that the Trust is characterized as
a partnership, the Owner Trustee shall sign on behalf of the
Trust the tax returns of the Trust, unless applicable law
requires a Certificateholder to sign such documents, in
which case such documents shall be signed by the Depositor.
(b) In the event that the Trust is
characterized as a partnership, the Depositor shall be the
"tax matters partner" of the Trust pursuant to the Code.
Section 5.3. Note Purchase Agreements
. The Master Servicer is hereby authorized to execute and
deliver on behalf of the Trust one or more Note Purchase
Agreements with respect to the Notes.
ARTICLE VI
Authority and Duties of Owner Trustee
Section 6.1. General Authority
. The Owner Trustee is authorized and directed to execute
and deliver the Basic Documents and each Series Supplement
and the related Series Related Documents to which the Trust
is named as a party and each certificate or other document
attached as an exhibit to or contemplated by the Basic
Documents and each Series Supplement and the related Series
Related Documents to which the Trust is named as a party and
any amendment thereto, in each case, in such form as the
Holder of the Owner Trust Certificate shall approve as
evidenced conclusively by the Owner Trustee's execution
thereof, and on behalf of the Trust, to direct the Trustee
to authenticate and deliver each Series of Notes (or Class
of such Series). In addition to the foregoing, the Owner
Trustee is authorized, but shall not be obligated, to take
all actions required of the Trust pursuant to the Basic
Documents and each Series Supplement and the related Series
Related Documents. The Owner Trustee is further authorized
from time to time to take such action as the Certificate
Majority recommends with respect to the Basic Documents and
each Series Supplement and the related Series Related
Documents so long as such activities are consistent with the
terms of the Basic Documents and each Series Supplement and
the related Series Related Documents.
Section 6.2. General Duties
. It shall be the duty of the Owner Trustee to discharge
(or cause to be discharged) all of its responsibilities
pursuant to the terms of this Agreement and to administer
the Trust in accordance with the provisions of this
Agreement and in the interest of the Holders, subject to the
Basic Documents and, with respect to Series Trust
Certificates, each Series Supplement and the related Series
Related Documents. Notwithstanding the foregoing, the Owner
Trustee shall be deemed to have discharged its duties and
responsibilities hereunder and under the Basic Documents
and, with respect to Series Trust Certificates, each Series
Supplement and the related Series Related Documents to the
extent the Master Servicer has agreed in the Master Sale and
Servicing Agreement to perform any act or to discharge any
duty of the Trust or the Owner Trustee hereunder or under
any Basic Document and, with respect to Series Trust
Certificates, each Series Supplement and the related Series
Related Documents, and the Owner Trustee shall not be liable
for the default or failure of the Master Servicer to carry
out its obligations under the Master Sale and Servicing
Agreement.
Section 6.3. Action upon Instruction
(a) . (a) Subject to Article IV, the
Certificate Majority shall have the exclusive right to
direct the actions of the Owner Trustee in the management of
the Trust, so long as such instructions are not inconsistent
with the express terms set forth herein, in any Basic
Document or, with respect to Series Trust Certificates, in
any Series Supplement or in any Series Related Document.
The Certificate Majority shall not instruct the Owner
Trustee in a manner inconsistent with this Agreement or the
Basic Documents or, with respect to Series Trust
Certificates, any Series Supplement or any Series Related
Document.
(b) The Owner Trustee shall not be required
to take any action hereunder or under any Basic Document or,
with respect to Series Trust Certificates, any Series
Supplement or any Series Related 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, with respect
to Series Trust Certificates, any Series Supplement or any
Series Related Document or is otherwise contrary to law.
(c) Whenever the Owner Trustee is unable to
decide between alternative courses of action permitted or
required by the terms of this Agreement or any Basic
Document or, with respect to Series Trust Certificates, any
Series Supplement or any Series Related Document, the Owner
Trustee shall promptly give notice (in such form as shall be
appropriate under the circumstances) to the Certificate
Majority requesting instruction as to the course of action
to be adopted, and to the extent the Owner Trustee acts in
good faith in accordance with any written instruction of the
Certificate Majority, the Owner Trustee shall not be liable
on account of such action to any Person. If the Owner
Trustee shall not have received appropriate instruction
within ten days of such notice (or within such shorter
period of time as reasonably may be specified in such notice
or may be necessary under the circumstances) it may, but
shall be under no duty to, take or refrain from taking such
action, not inconsistent with this Agreement or the Basic
Documents or, with respect to Series Trust Certificates, any
Series Supplement or any Series Related Document, 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
Agreement or any Basic Document or, with respect to Series
Trust Certificates, any Series Supplement or any Series
Related Document or any such provision is ambiguous as to
its application, or is, or appears to be, in conflict with
any other applicable provision, or in the event that this
Agreement permits any determination by the Owner Trustee or
is silent or is incomplete as to the course of action that
the Owner Trustee is required to take with respect to a
particular set of facts, the Owner Trustee may give notice
(in such form as shall be appropriate under the
circumstances) to the Certificate Majority requesting
instruction and, to the extent that the Owner Trustee acts
or refrains from acting in good faith in accordance with any
such instruction received, the Owner Trustee shall not be
liable, on account of such action or inaction, to any
Person. If the Owner Trustee shall not have received
appropriate instruction within 10 days of such notice (or
within such shorter period of time as reasonably may be
specified in such notice or may be necessary under the
circumstances) it may, but shall be under no duty to, take
or refrain from taking such action, not inconsistent with
this Agreement, the Basic Documents or any Series Related
Document, as it shall deem to be in the best interests of
the Certificateholders, and shall have no liability to any
Person for such action or inaction.
Section 6.4. No Duties Except as Specified in
this Agreement or in Instructions
. The Owner Trustee shall not have any duty or obligation
to manage, make any payment with respect to, register,
record, sell, dispose of, or otherwise deal with the Owner
Trust Estate, or to otherwise take or refrain from taking
any action under, or in connection with, any document
contemplated hereby to which the Owner Trustee is a party,
except as expressly provided by the terms of this Agreement
or in any document or written instruction received by the
Owner Trustee pursuant to 6.3; and no implied duties or
obligations shall be read into this Agreement or any Basic
Document or, with respect to Series Trust Certificates, any
Series Supplement or any Series Related Document against the
Owner Trustee. The Owner Trustee shall have no
responsibility for filing any financing or continuation
statement in any public office at any time or to otherwise
perfect or maintain the perfection of any security interest
or lien granted to it hereunder or to prepare or file any
Commission filing for the Trust or to record this Agreement
or any Basic Document or, with respect to Series Trust
Certificates, any Series Supplement or any Series Related
Document. The Owner Trustee nevertheless agrees that it
will, at its own cost and expense, promptly take all action
as may be necessary to discharge any Liens on any part of
the Owner Trust Estate that result from actions by, or
claims against, the Owner Trustee (solely in its individual
capacity) and that are not related to the ownership or the
administration of the Owner Trust Estate.
Section 6.5. No Action Except under Specified
Documents or Instructions
. The Owner Trustee shall not manage, control, use, sell,
dispose of or otherwise deal with any part of the Owner
Trust Estate except (i) in accordance with the powers
granted to and the authority conferred upon the Owner
Trustee pursuant to this Agreement, (ii) in accordance with
the Basic Documents or any Series Related Document and (iii)
in accordance with any document or instruction delivered to
the Owner Trustee pursuant to 6.3.
Section 6.6. Restrictions
. The Owner Trustee shall not take any action (a) that is
inconsistent with the purposes of the Trust set forth in
2.3 or (b) that, to the actual knowledge of the Owner
Trustee, would result in the Trust's becoming taxable as a
corporation or a publicly traded partnership for Federal
income tax purposes. The Certificateholders shall not
direct the Owner Trustee to take action that would violate
the provisions of this Section.
ARTICLE VII
Concerning the Owner Trustee
Section 7.1. Acceptance of Trusts and Duties
. The Owner Trustee accepts the trusts hereby created and
agrees to perform its duties hereunder with respect to such
trusts but only upon the terms of this Agreement. The Owner
Trustee and the Certificate Paying Agent also agree to
disburse all monies actually received by it constituting
part of the Owner Trust Estate upon the terms of this
Agreement or the Basic Documents or, with respect to Series
Trust Certificates, any Series Supplement or any Series
Related Document. The Owner Trustee shall not be answerable
or accountable hereunder or under any Basic Document or,
with respect to Series Trust Certificates, any Series
Supplement or any Series Related Document under any
circumstances, except (i) for its own willful misconduct,
bad faith or negligence, (ii) in the case of the inaccuracy
of any representation or warranty contained in 7.3
expressly made by the Owner Trustee in its individual
capacity, (iii) for liabilities arising from the failure of
the Owner Trustee to perform obligations expressly
undertaken by it in the last sentence of 6.4 hereof, (iv)
for any investments issued by the Owner Trustee or any
branch or affiliate thereof in its commercial capacity or
(v) for taxes, fees or other charges on, based on or
measured by, any fees, commissions or compensation received
by the Owner Trustee. In particular, but not by way of
limitation (and subject to the exceptions set forth in the
preceding sentence):
(a) the Owner Trustee shall not be liable
for any error of judgment made by a Responsible Officer of
the Owner Trustee;
(b) the Owner Trustee shall not be liable
with respect to any action taken or omitted to be taken by
it in accordance with the instructions of the Certificate
Majority, the Depositor, the Master Servicer or any
Certificateholder;
(c) no provision of this Agreement or any
Basic Document or, with respect to Series Trust
Certificates, any Series Supplement or any Series Related
Document shall require the Owner Trustee to expend or risk
funds or otherwise incur any financial liability in the
performance of any of its rights or powers hereunder or
under any Basic Document or, with respect to Series Trust
Certificates, any Series Supplement or any Series Related
Document if the Owner Trustee shall have reasonable grounds
for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably
assured or provided to it;
(d) under no circumstances shall the Owner
Trustee be liable for indebtedness evidenced by or arising
under any of the Basic Documents or, with respect to Series
Trust Certificates, any Series Supplement or any Series
Related Document, including the principal of and interest on
the Notes;
(e) the Owner Trustee shall not be
responsible for or in respect of the validity or sufficiency
of this Agreement or for the due execution hereof by the
Depositor or for the form, character, genuineness,
sufficiency, value or validity of any of the Owner Trust
Estate or for or in respect of the validity or sufficiency
of the Basic Documents or, with respect to Series Trust
Certificates, any Series Supplement or any Series Related
Document, other than the certificate of authentication on
the Certificates, and the Owner Trustee shall in no event
assume or incur any liability, duty or obligation to the
Depositor, any Series Support Provider, Trustee, Trust
Collateral Agent, the Collateral Agent, any Noteholder or to
any Certificateholder, other than as expressly provided for
herein, in the Basic Documents or, with respect to Series
Trust Certificates, any Series Supplement or any Series
Related Document;
(f) the Owner Trustee shall not be liable
for the default or misconduct of the Depositor, any Series
Support Provider, the Trustee, the Trust Collateral Agent or
the Master Servicer under any of the Basic Documents or
otherwise and the Owner Trustee shall have no obligation or
liability to perform the obligations under this Agreement,
the Basic Documents or, with respect to Series Trust
Certificates, any Series Supplement or any Series Related
Document that are required to be performed by the Depositor
under this Agreement, by the Trustee under the Indenture,
any Series Supplement or any Series Related Document or the
Trust Collateral Agent or the Master Servicer under the
Master Sale and Servicing Agreement or any Series Supplement
or any Series Related Document; and
(g) the Owner Trustee shall be under no
obligation to exercise any of the rights or powers vested in
it by this Agreement, or to institute, conduct or defend any
litigation under this Agreement or otherwise or in relation
to this Agreement or any Basic Document or, with respect to
Series Trust Certificates, any Series Supplement or any
Series Related Document, at the request, order or direction
of the Certificate Majority or any of the
Certificateholders, unless such Certificate Majority or
Certificateholders have offered to the Owner Trustee
security or indemnity satisfactory to it against the costs,
expenses and liabilities that may be incurred by the Owner
Trustee therein or thereby. The right of the Owner Trustee
to perform any discretionary act enumerated in this
Agreement or in any Basic Document shall not be construed as
a duty, and the Owner Trustee shall not be answerable for
other than its negligence, bad faith or willful misconduct
in the performance of any such act.
Section 7.2. Furnishing of Documents
. The Owner Trustee shall furnish to the Certificateholders
promptly upon receipt of a written request therefor,
duplicates or copies of all reports, notices, requests,
demands, certificates, financial statements and any other
instruments furnished to the Owner Trustee under the Basic
Documents or, with respect to Series Trust Certificates, any
Series Supplement or any Series Related Document.
Section 7.3. Representations and Warranties
. The Owner Trustee hereby represents and warrants, in its
individual capacity, to the Depositor, the Holders and any
Series Support Provider (which shall have relied on such
representations and warranties in issuing any policy
relating to Series Support), that:
(a) It is a Delaware 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 Agreement.
(b) It has taken all corporate action
necessary to authorize the execution and delivery by it of
this Agreement, and this Agreement will be executed and
delivered by one of its officers who is duly authorized to
execute and deliver this Agreement on its behalf.
(c) Neither the execution nor the delivery
by it of this Agreement, nor the consummation by it of the
transactions contemplated hereby nor compliance by it with
any of the terms or provisions hereof will contravene any
federal or Delaware state law, governmental rule or
regulation governing the banking or trust powers of the
Owner Trustee or any judgment or order binding on it, or
constitute any default under its charter documents or by-
laws or any indenture, mortgage, contract, agreement or
instrument to which it is a party or by which any of its
properties may be bound.
Section 7.4. Reliance; Advice of Counsel
(a) . (a) The Owner Trustee shall incur no
liability to anyone in acting upon any signature,
instrument, notice, resolution, request, consent, order,
certificate, report, opinion, bond or other document or
paper believed by it to be genuine and believed by it to be
signed by the proper party or parties. The Owner Trustee
may accept a certified copy of a resolution of the board of
directors or other governing body of any corporate party as
conclusive evidence that such resolution has been duly
adopted by such body and that the same is in full force and
effect. As to any fact or matter the method of the
determination of which is not specifically prescribed
herein, the Owner Trustee may for all purposes hereof rely
on a certificate, signed by the president or any vice
president or by the treasurer, secretary or other authorized
officers of the relevant party, as to such fact or matter,
and such certificate shall constitute full protection to the
Owner Trustee for any action taken or omitted to be taken by
it in good faith in reliance thereon.
(b) In the exercise or administration of the
trusts hereunder and in the performance of its duties and
obligations under this Agreement or the Basic Documents, the
Owner Trustee (i) may act directly or through its agents or
attorneys pursuant to agreements entered into with any of
them, and the Owner Trustee shall not be liable for the
conduct or misconduct of such agents or attorneys if such
agents or attorneys shall have been selected by the Owner
Trustee with reasonable care, and (ii) may consult with
counsel, accountants and other skilled persons to be
selected with reasonable care and employed by it. The Owner
Trustee shall not be liable for anything done, suffered or
omitted in good faith by it in accordance with the written
opinion or advice of any such counsel, accountants or other
such persons and according to such opinion not contrary to
this Agreement or any Basic Document or, with respect to
Series Trust Certificates, any Series Supplement or any
Series Related Document.
Section 7.5. Not Acting in Individual Capacity
. Except as provided in this Article VII, in accepting the
trusts hereby created Wilmington Trust Company 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
Agreement or any Basic Document or, with respect to Series
Trust Certificates, any Series Supplement or any Series
Related Document shall look only to the Owner Trust Estate
for payment or satisfaction thereof.
Section 7.6. Owner Trustee Not Liable for
Certificates or Receivables
. The recitals contained herein and in the Certificates
(other than the signature and countersignature of the Owner
Trustee on the Certificates) shall be taken as the
statements of the Depositor and the Owner Trustee assumes no
responsibility for the correctness thereof. The Owner
Trustee makes no representations as to the validity or
sufficiency of this Agreement, of any Basic Document or of
the Certificates (other than the signature and
countersignature of the Owner Trustee on the Certificates)
or the Notes, or of any Receivable or related documents.
The Owner Trustee shall at no time have any responsibility
or liability for or with respect to the legality, validity
and enforceability of any Receivable, or the perfection and
priority of any security interest created by any Receivable
in any Financed Vehicle or the maintenance of any such
perfection and priority, or for or with respect to the
sufficiency of the Owner Trust Estate or its ability to
generate the payments to be distributed to
Certificateholders under this Agreement or the Noteholders
under the Indenture, including, without limitation: the
existence, condition and ownership of any Financed Vehicle;
the existence and enforceability of any insurance thereon;
the existence and contents of any Receivable on any computer
or other record thereof; the validity of the assignment of
any Receivable to the Trust or of any intervening
assignment; the completeness of any Receivable; the
performance or enforcement of any Receivable; the compliance
by the Depositor, the Master Servicer or any other Person
with any warranty or representation made under any Basic
Document or in any related document or the accuracy of any
such warranty or representation or any action of the Trustee
or the Master Servicer or any subservicer taken in the name
of the Owner Trustee.
Section 7.7. Owner Trustee May Own Certificates
and Notes
. The Owner Trustee in its individual or any other capacity
may become the owner or pledgee of Certificates or Notes and
may deal with the Depositor, the Trustee and the Master
Servicer in banking transactions with the same rights as it
would have if it were not Owner Trustee.
Section 7.8. Payments from Owner Trust Estate
All payments to be made by the Owner Trustee or the Trust
Collateral Agent under this Agreement or any of the Basic
Documents or, with respect to Series Trust Certificates, any
Series Supplement or any Series Related Document to which
the Trust or the Owner Trustee is a party shall be made only
from the income and proceeds of the Owner Trust Estate and
only to the extent that the Owner Trust shall have received
income or proceeds from the Owner Trust Estate to make such
payments in accordance with the terms hereof. Wilmington
Trust Company, or any successor thereto, in its individual
capacity, shall not be liable for any amounts payable under
this Agreement or any of the Basic Documents or, with
respect to Series Trust Certificates, any Series Supplement
or any Series Related Document to which the Trust or the
Owner Trustee is a party.
Section 7.9. Doing Business in Other
Jurisdictions
. Notwithstanding anything contained to the contrary,
neither Wilmington Trust Company or any successor thereto,
nor the Owner Trustee shall be required to take any action
in any jurisdiction other than in the State of Delaware if
the taking of such action will, even after the appointment
of a co-trustee or separate trustee in accordance with
10.5 hereof, (i) require the consent or approval or
authorization or order of or the giving of notice to, or the
registration with or the taking of any other action in
respect of, any state or other governmental authority or
agency of any jurisdiction other than the State of Delaware;
(ii) result in any fee, tax or other governmental charge
under the laws of the State of Delaware becoming payable by
Wilmington Trust Company (or any successor thereto); or
(iii) subject Wilmington Trust Company (or any successor
thereto) to personal jurisdiction in any jurisdiction other
than the State of Delaware for causes of action arising from
acts unrelated to the consummation of the transactions by
Wilmington Trust Company (or any successor thereto) or the
Owner Trustee, as the case may be, contemplated hereby.
ARTICLE VIII
Compensation of Owner Trustee
Section 8.1. Owner Trustee's Fees and Expenses
. The Owner Trustee shall receive as compensation for its
services hereunder such fees as have been separately agreed
upon before the date hereof between Household and the Owner
Trustee, and the Owner Trustee shall be entitled to be
reimbursed by the Depositor for its other reasonable
expenses hereunder, including the reasonable compensation,
expenses and disbursements of such agents, representatives,
experts and counsel as the Owner Trustee may employ in
connection with the exercise and performance of its rights
and its duties hereunder or under the Basic Documents or,
with respect to Series Trust Certificates, under any Series
Supplement or under any Series Related Documents.
Section 8.2. Indemnification
. The Depositor shall be liable as primary obligor for, and
shall indemnify the Owner Trustee (in its individual and
trust capacities) and its officers, directors, successors,
assigns, agents and servants (collectively, the "Indemnified
Parties") from and against, any and all liabilities,
obligations, losses, damages, taxes, claims, actions and
suits, and any and all reasonable costs, expenses and
disbursements (including reasonable legal fees and expenses)
of any kind and nature whatsoever (collectively, "Expenses")
which may (in its trust or individual capacities) 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 Agreement or the Basic Documents
or, with respect to Series Trust Certificates, any Series
Supplement, any series Related Documents, the Owner Trust
Estate, the administration of the Owner Trust Estate or the
action or inaction of the Owner Trustee hereunder, except
only that the Depositor shall not be liable for or required
to indemnify the Owner Trustee from and against Expenses
arising or resulting from any of the matters described in
the third sentence of 7.1. The indemnities contained in
this 8.2 and the rights under 8.1 shall survive the
resignation or termination of the Owner Trustee or the
termination of this Agreement. In any event of any claim,
action or proceeding for which indemnity will be sought
pursuant to this Section, the Owner Trustee's choice of
legal counsel shall be subject to the approval of the
Depositor which approval shall not be unreasonably withheld.
Section 8.3. Payments to the Owner Trustee
. Any amounts paid to the Owner Trustee in its Trust
Capacity pursuant to this Article VIII shall be deemed not
to be a part of the Owner Trust Estate immediately after
such payment and any amounts so paid to the Owner Trustee,
in its individual capacity shall not be so paid out of the
Owner Trust Estate but shall be the property of the Owner
Trustee in its individual capacity.
Section 8.4. Non-recourse Obligations
. Notwithstanding anything in this Agreement or any Basic
Document or, with respect to Series Trust Certificates, any
Series Supplement or any Series Related Document, the Owner
Trustee agrees in its individual capacity and in its
capacity as Owner Trustee for the Trust that all obligations
of the Trust to the Owner Trustee individually or as Owner
Trustee for the Trust shall be recourse to the Owner Trust
Estate only and specifically shall not be recourse to the
assets of any Certificateholder.
ARTICLE IX
Termination of Trust Agreement
Section 9.1. Termination of Trust Agreement
(a) . (a) This Agreement and the Trust
shall terminate and be of no further force or effect upon
the latest of (i) the maturity or other liquidation of the
last Receivable (including the purchase by the Master
Servicer at its option of the corpus of the Trust as
described in 11.1 of the Master Sale and Servicing
Agreement) and the subsequent distribution of amounts in
respect of such Receivables as provided in the Basic
Documents or, with respect to Series Trust Certificates, any
Series Supplement or any Series Related Document or (ii) the
payment to Noteholders and Certificateholders of each Series
of all amounts required to be paid to them pursuant to the
Indenture and this Agreement and the payment to any Series
Support Provider of all amounts payable or reimbursable to
it pursuant to the related Series Supplement; provided,
however, that the rights to indemnification under 8.2 and
the rights under 8.1 shall survive the termination of the
Trust. The Master Servicer shall promptly notify the Owner
Trustee of any prospective termination pursuant to this
9.1. The bankruptcy, liquidation, dissolution, death or
incapacity of any Certificateholder shall not (x) operate to
terminate this Agreement or the Trust, nor (y) entitle such
Certificateholder's legal representatives or heirs to claim
an accounting or to take any action or proceeding in any
court for a partition or winding up of all or any part of
the Trust or Owner Trust Estate nor (z) otherwise affect the
rights, obligations and liabilities of the parties hereto.
(b) Except as provided in clause (a),
neither the Depositor nor any other Certificateholder shall
be entitled to revoke or terminate the Trust.
(c) Notice of any termination of a Series
Trust Estate, specifying the Distribution Date upon which
the Certificateholders of such Series shall surrender their
Series Trust Certificates to the Certificate Paying Agent
for payment of the final distribution and cancellation,
shall be given by the Owner Trustee by letter to
Certificateholders of such Series mailed within five
Business Days of receipt of notice of such termination given
pursuant to Section 9.1(a) hereof, stating (i) the
Distribution Date upon or with respect to which final
payment of the Series Trust Certificates of such Series
shall be made upon presentation and surrender of the Series
Trust Certificates of such Series at the office of the
Certificate Paying Agent therein designated, (ii) the amount
of any such final payment, (iii) that the Record Date
otherwise applicable to such Distribution Date is not
applicable, payments being made only upon presentation and
surrender of the Certificates of such Series at the office
of the Certificate Paying Agent therein specified and (iv)
interest will cease to accrue on the Certificates of such
Series. The Owner Trustee shall give such notice to the
Certificate Registrar (if other than the Owner Trustee) and
the Certificate Paying Agent at the time such notice is
given to Certificateholders. Upon presentation and
surrender of the Certificates of such Series, the
Certificate Paying Agent shall cause to be distributed to
Certificateholders of such Series amounts distributable
pursuant to the related Series Supplement.
(d) In the event that all of the
Certificateholders of such Series shall not surrender their
Series Trust 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 of such
Series to surrender their Series Trust Certificates for
cancellation and receive the final distribution with respect
thereto. If within one year after the second notice all the
Certificates of such Series shall not have been surrendered
for cancellation, the Certificate Paying Agent may take
appropriate steps, or may appoint an agent to take
appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Series
Trust Certificates, and the cost thereof shall be paid out
of the funds and other Series Trust Estate assets that shall
remain subject to this Agreement. Any funds remaining in
the Trust after exhaustion of such remedies shall be
distributed, subject to applicable escheat laws, by the
Certificate Paying Agent to the Depositor and Holders shall
look solely to the Depositor for payment.
(e) (d) Notice of termination of the Owner Trust
Certificates, specifying the Distribution Date upon
which the Certificateholders of such Owner Trust
Certificates shall surrender their Owner Trust
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 such
Certificateholders mailed within five Business Days of
receipt of notice of such termination from the Master
Servicer given pursuant to 11.1c of the Master Sale
and Servicing Agreement. Upon presentation and surrender
of the Owner Trust Certificates, the Certificate Paying
Agent shall cause to be distributed to such
Certificateholders amounts representing the final
Collected Funds or other proceeds of the Unpledged Trust
Estate.
In the event that all of the holders of the Owner Trust
Certificates shall not surrender their Owner
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 holders of the Owner
Trust Certificates to surrender their Owner Trust
Certificates for cancellation and receive the final
distribution with respect thereto. If within one year
after the second notice all the Owner Trust 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 holders of the Owner Trust
Certificates concerning surrender of their Owner Trust
Certificates, and the cost thereof shall be paid out of
the funds and other assets that shall remain subject to
this Agreement. Any funds remaining in the Trust after
exhaustion of such remedies shall be distributed,
subject to applicable escheat laws, by the Certificate
Paying Agent to the Depositor and Holders shall look
solely to the Depositor for payment.
(f) Any funds remaining in the Trust after
funds for final distribution have been distributed or set
aside for distribution shall be distributed by the
Certificate Paying Agent to the Depositor.
(g) Upon the winding up of the Trust and its
termination, the Owner Trustee shall cause the Certificate
of Trust to be canceled by filing a certificate of
cancellation with the Secretary of State in accordance with
the provisions of 3810 of the Business Trust Statute.
ARTICLE X
Successor Owner Trustees and Additional Owner Trustees
Section 10.1. Eligibility Requirements for Owner
Trustee
. The Owner Trustee shall at all times be a corporation (i)
satisfying the provisions of 3807(a) of the Business Trust
Statute; (ii) authorized to exercise corporate trust powers;
(iii) having a combined capital and surplus of at least
$50,000,000 and subject to supervision or examination by
Federal or State authorities; (iv) having (or having a
parent which has) a rating of at least Baa3 by Moody's or A-
1 by Standard & Poors; and (v) acceptable to the
Certificateholders. If such corporation shall publish
reports of condition at least annually, pursuant to law or
to the requirements of the aforesaid supervising or
examining authority, then for the purpose of this Section,
the combined capital and surplus of such corporation shall
be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published.
In case at any time the Owner Trustee shall cease to be
eligible in accordance with the provisions of this Section,
the Owner Trustee shall resign immediately in the manner and
with the effect specified in 10.2.
Section 10.2. Resignation or Removal of Owner
Trustee
. The Owner Trustee may at any time resign and be
discharged from the trusts hereby created by giving written
notice thereof to the Depositor (or in the event that the
Depositor is not the sole Certificateholder, the Holders of
Certificates evidencing not less than a majority of the
Certificate Balance), any Series Support Provider and the
Master Servicer. Upon receiving such notice of resignation,
the Depositor shall promptly appoint a successor Owner
Trustee, meeting the qualifications set forth in 10.1
herein, by written instrument, in duplicate, one copy of
which instrument shall be delivered to the resigning Owner
Trustee and one copy to the successor Owner Trustee,
provided that the Depositor shall have received written
confirmation from each of the Rating Agencies that the
proposed appointment will not result in an increased capital
charge to any Series Support Provider by either of the
Rating Agencies. If no successor Owner Trustee shall have
been so appointed and have accepted appointment within 30
days after the giving of such notice of resignation, the
resigning Owner Trustee or any Series Support Provider may
petition any court of competent jurisdiction for the
appointment of a successor Owner Trustee.
If at any time the Owner Trustee shall cease to be
eligible in accordance with the provisions of 10.1 and
shall fail to resign after written request therefor by the
Depositor, or if at any time the Owner Trustee shall be
legally unable to act, or shall be adjudged bankrupt or
insolvent, or a receiver of the Owner Trustee or of its
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 Depositor may remove
the Owner Trustee. If the Depositor shall remove the Owner
Trustee under the authority of the immediately preceding
sentence, the Depositor shall promptly appoint a successor
Owner Trustee, meeting the qualifications set forth in
10.1 herein, by written instrument, in duplicate, one copy
of which instrument shall be delivered to the outgoing Owner
Trustee so removed, one copy to any Series Support Provider
and one copy to the successor Owner Trustee and payment of
all fees owed to the outgoing Owner Trustee.
Any resignation or removal of the Owner Trustee
and appointment of a successor Owner Trustee pursuant to any
of the provisions of this section shall not become effective
until acceptance of appointment by the successor Owner
Trustee pursuant to 10.3 and payment of all fees and
expenses owed to the outgoing Owner Trustee. The Depositor
shall provide notice of such resignation or removal of the
Owner Trustee to each of the Rating Agencies.
Section 10.3. Successor Owner Trustee
. Any successor Owner Trustee appointed pursuant to 10.2
shall execute, acknowledge and deliver to the Depositor, the
Master Servicer, each Series Support Provider and to its
predecessor Owner Trustee an instrument accepting such
appointment under this 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 Agreement, with
like effect as if originally named as Owner Trustee. The
predecessor Owner Trustee shall upon payment of its fees and
expenses deliver to the successor Owner Trustee all
documents and statements and monies held by it under this
Agreement; and the Depositor and the predecessor Owner
Trustee shall execute and deliver such instruments and do
such other things as may reasonably be required for fully
and certainly vesting and confirming in the successor Owner
Trustee all such rights, powers, duties and obligations.
No successor Owner Trustee shall accept
appointment as provided in this section unless at the time
of such acceptance such successor Owner Trustee shall be
eligible pursuant to 10.1.
Upon acceptance of appointment by a successor
Owner Trustee pursuant to this Section, the Master Servicer
shall mail notice of the successor of such Owner Trustee to
all Certificateholders, the Trustee, the Noteholders and the
Rating Agencies. If the Master Servicer shall fail to mail
such notice within 10 days after acceptance of appointment
by the successor Owner Trustee, the successor Owner Trustee
shall cause such notice to be mailed at the expense of the
Master Servicer.
Any successor Owner Trustee appointed pursuant to
this Section 10.3 shall promptly file an amendment to the
Certificate of Trust with the Secretary of State identifying
the name and principal place of business of such successor
Owner Trustee in the State of Delaware.
Section 10.4. Merger or Consolidation of Owner
Trustee
. Any corporation into which the Owner Trustee may be
merged or converted or with which it may be consolidated, or
any corporation resulting from any merger, conversion or
consolidation to which the Owner Trustee shall be a party,
or any corporation succeeding to all or substantially all of
the corporate trust business of the Owner Trustee, shall be
the successor of the Owner Trustee hereunder, provided such
corporation shall be eligible pursuant to 10.1, without
the execution or filing of any instrument or any further act
on the part of any of the parties hereto, anything herein to
the contrary notwithstanding; provided further that the
Owner Trustee shall mail notice of such merger or
consolidation to the Rating Agencies.
Section 10.5. Appointment of Co-Trustee or
Separate Trustee
. Notwithstanding any other provisions of this Agreement,
at any time, for the purpose of meeting any legal
requirements of any jurisdiction in which any part of the
Owner Trust Estate or any Financed Vehicle may at the time
be located, the Master Servicer and the Owner Trustee acting
jointly shall have the power and shall execute and deliver
all instruments to appoint one or more Persons approved by
the Owner Trustee and any Series Support Provider to act as
co-trustee, jointly with the Owner Trustee, or separate
trustee or separate trustees, of all or any part of the
Owner Trust Estate, and to vest in such Person, in such
capacity, such title to the Trust, or any part thereof, and,
subject to the other provisions of this Section, such
powers, duties, obligations, rights and trusts as the Master
Servicer and the Owner Trustee may consider necessary or
desirable. If the Master Servicer shall not have joined in
such appointment within 15 days after the receipt by it of a
request so to do, the Owner Trustee, subject to the approval
of the Certificate Majority (which approval shall not be
unreasonably withheld), shall have the power to make such
appointment. No co-trustee or separate trustee under this
Agreement shall be required to meet the terms of eligibility
as a successor trustee pursuant to 10.1 and no notice of
the appointment of any co-trustee or separate trustee shall
be required pursuant to 10.3.
Each separate trustee and co-trustee shall, to the
extent permitted by law, be appointed and act subject to the
following provisions and conditions:
(i) all rights, powers, duties and obligations
conferred or imposed upon the Owner Trustee shall be
conferred upon and exercised or performed by the Owner
Trustee and such separate trustee or co-trustee jointly
(it being understood that such separate trustee or co-
trustee is not authorized to act separately without the
Owner Trustee joining in such act), except to the
extent that under any law of any jurisdiction in which
any particular act or acts are to be performed, the
Owner Trustee shall be incompetent or unqualified to
perform such act or acts, in which event such rights,
powers, duties and obligations (including the holding
of title to the Trust or any portion thereof in any
such jurisdiction) shall be exercised and performed
singly by such separate trustee or co-trustee, but
solely at the direction of the Owner Trustee;
(ii) no trustee under this Agreement shall be
personally liable by reason of any act or omission of
any other trustee under this Agreement; and
(iii) the Master Servicer and the Owner
Trustee acting jointly may at any time accept the
resignation of or remove any separate trustee or co-
trustee.
Any notice, request or other writing given to the
Owner Trustee shall be deemed to have been given to each of
the then separate trustees and co-trustees, as effectively
as if given to each of them. Every instrument appointing
any separate trustee or co-trustee shall refer to this
Agreement and the conditions of this Article. Each separate
trustee and co-trustee, upon its acceptance of the trusts
conferred, shall be vested with the estates or property
specified in its instrument of appointment, either jointly
with the Owner Trustee or separately, as may be provided
therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement
relating to the conduct of, affecting the liability of, or
affording protection to, the Owner Trustee. Each such
instrument shall be filed with the Owner Trustee and a copy
thereof given to the Master Servicer.
Any separate trustee or co-trustee may at any time
appoint the Owner Trustee, its agent or attorney-in-fact
with full power and authority, to the extent not prohibited
by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate
trustee or co-trustee shall die, become incapable of acting,
resign or be removed, all of its estates, properties,
rights, remedies and trusts shall vest in and be exercised
by the Owner Trustee, to the extent permitted by law,
without the appointment of a new or successor trustee.
ARTICLE XI
Miscellaneous
Section 11.1. Supplements and Amendments
(a) . (a) This Agreement may be amended
from time to time by the parties hereto, by a written
instrument signed by each of them, without the consent of
any of the Securityholders; provided that an Opinion of
Counsel for the Depositor (which Opinion of Counsel may, as
to factual matters, rely upon Officer's Certificates of the
Depositor) is addressed and delivered to the Owner Trustee,
dated the date of any such amendment, to the effect that the
conditions precedent to any such amendment have been
satisfied and the Depositor shall have delivered to the
Owner Trustee an Officer's Certificate dated the date of any
such Amendment, stating that the Depositor reasonably
believes that such Amendment will not have a material
adverse effect on the Securityholders.
(b) This Agreement may also be amended from
time to time with the consent of the Holders of the
Certificates and Notes evidencing not less than 50% 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 Security without the
consent of the related Securityholder, or (ii) reduce the
aforesaid percentage of Securities the Holder of which are
required to consent to any such amendment, without the
consent of the Holders of all such Certificates then
outstanding or cause any material adverse tax consequences
to any Certificateholders or Noteholders.
Promptly after the execution of any such amendment or
consent, the Owner Trustee shall furnish written
notification of the substance of such amendment or
consent to each Certificateholder, the Trustee and each
of the Rating Agencies.
It shall not be necessary for the consent of
Certificateholders, the Noteholders or the Trustee
pursuant to this section to approve the particular form
of any proposed amendment or consent, but it shall be
sufficient if such consent shall approve the substance
thereof. The manner of obtaining such consents (and any
other consents of Certificateholders provided for in
this Agreement or in any other Basic Document) and of
evidencing the authorization of the execution thereof by
Certificateholders shall be subject to such reasonable
requirements as the Owner Trustee may prescribe.
Promptly after the execution of any amendment to the
Certificate of Trust, the Owner Trustee shall cause the
filing of such amendment with the Secretary of State.
(c) The Owner Trustee shall not be required
to enter into any amendment to this Agreement which affects
its own rights, duties or immunities under this Agreement.
Section 11.2. No Legal Title to Owner Trust
Estate in Certificateholders
. The Certificateholders shall not have legal title to any
part of the related Series Trust Estate. The
Certificateholders shall be entitled to receive
distributions with respect to their undivided ownership
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 related Series Trust Estate shall
operate to terminate this Agreement or the trusts hereunder
or entitle any transferee to an accounting or to the
transfer to it of legal title to any part of the related
Series Trust Estate.
Section 11.3. Limitations on Rights of Others
. Except for 2.7, the provisions of this Agreement are
solely for the benefit of the Owner Trustee, the Depositor,
the Certificateholders, the Master Servicer and, to the
extent expressly provided herein, any Series Support
Provider, the Trustee and the Noteholders, and nothing in
this Agreement, whether express or implied, shall be
construed to give to any other Person any legal or equitable
right, remedy or claim in the Owner Trust Estate or under or
in respect of this Agreement or any covenants, conditions or
provisions contained herein.
Section 11.4. Notices
(a) . (a) Unless otherwise expressly
specified or permitted by the terms hereof, all notices
shall be in writing and shall be deemed given upon receipt
personally delivered, delivered by overnight courier or
mailed first class mail or certified mail, in each case
return receipt requested, and shall be deemed to have been
duly given upon receipt, if to the Owner Trustee, addressed
to the Corporate Trust Office; if to the Depositor,
addressed to Household Auto Receivables Corporation, 1111
Town Center Drive, Las Vegas, Nevada 89134, with a copy to
Household Finance Corporation, 2700 Sanders Road, Prospect
Heights, Illinois 60070, Attn: Treasurer; if to any Series
Support Provider, at the address of such Series Support
Provider as set forth in the related Series Supplement; or,
as to each party, at such other address as shall be
designated by such party in a written notice to each other
party.
(b) Any notice required or permitted to be
given to a Certificateholder shall be given by first-class
mail, postage prepaid, at the address of such Holder as
shown in the Certificate Register. Any notice so mailed
within the time prescribed in this Agreement shall be
conclusively presumed to have been duly given, whether or
not the Certificateholder receives such notice.
Section 11.5. Severability
. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other
jurisdiction.
Section 11.6. Separate Counterparts
. This Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts
shall together constitute but one and the same instrument.
Section 11.7. Assignments; Series Support
Provider
. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective
successors and permitted assigns. This Agreement shall also
inure to the benefit of any Series Support Provider for so
long as a Support Default shall not have occurred and be
continuing. Without limiting the generality of the
foregoing, all covenants and agreements in this Agreement
which confer rights upon any Series Support Provider shall
be for the benefit of and run directly to any Series Support
Provider, and any Series Support Provider shall be entitled
to rely on and enforce such covenants, subject, however, to
the limitations on such rights provided in this Agreement
and the Basic Documents. The Series Support Provider, if
any, may disclaim any of its rights and powers under this
Agreement (but not its duties and obligations under any
Series Support Provider) upon delivery of a written notice
to the Owner Trustee.
Section 11.8. Covenants of the Depositor
. The Depositor will not at any time institute against the
Trust any bankruptcy proceedings under any United States
federal or state bankruptcy or similar law in connection
with any obligations relating to the Certificates, the
Notes, this Agreement or any of the Basic Documents.
Section 11.9. No Petition
. The Owner Trustee (not in its individual capacity but
solely as Owner Trustee), by entering into this Agreement,
each Certificateholder, by accepting a Certificate, and the
Trustee and each Noteholder by accepting the benefits of
this Agreement, hereby covenants and agrees that they will
not at any time institute against the Depositor, or join in
any institution against the Depositor of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation
proceedings, or other proceedings under any United States
Federal or state bankruptcy or similar law in connection
with any obligations relating to the Certificates, the
Notes, this Agreement, any of the Basic Documents, any
Series Supplement or any Series Related Documents.
Section 11.10. No Recourse
. Each Certificateholder by accepting a Certificate
acknowledges that such Certificateholder's Certificates
represent beneficial interests in the related Series Trust
Estate only and do not represent interests in or obligations
of the Master Servicer, the Depositor, the Owner Trustee,
the Trustee, any Series Support Provider or any Affiliate
thereof and no recourse may be had against such parties or
their assets, except as may be expressly set forth or
contemplated in this Agreement, the Certificates, the Basic
Documents, any Series Supplement or any Series Related
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 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. Master Servicer
. The Master Servicer is authorized to prepare, or cause to
be prepared, execute and deliver on behalf of the Trust all
such documents, reports, filings, instruments, certificates
and opinions as it shall be the duty of the Trust or Owner
Trustee to prepare, file or deliver pursuant to the Basic
Documents, any Series Supplement or any Series Related
Documents. Upon written request, the Owner Trustee shall
execute and deliver to the Master Servicer a limited power
of attorney appointing the Master Servicer the Trust's agent
and attorney-in-fact to prepare, or cause to be prepared,
execute and deliver all such documents, reports, filings,
instruments, certificates and opinions.
IN WITNESS WHEREOF, the parties hereto have caused
this Trust Agreement to be duly executed by their respective
officers hereunto duly authorized as of the day and year
first above written.
WILMINGTON TRUST COMPANY
Owner Trustee
By:_________________________________
Name:
Title:
HOUSEHOLD AUTO RECEIVABLES
CORPORATION
Depositor
By:_________________________________
Name:
Title:
Acknowledged and Agreed:
HOUSEHOLD FINANCE CORPORATION
Master Servicer
By:____________________________
Name:
Title:
NORWEST BANK MINNESOTA,
National Association
not in its individual capacity
but solely as Certificate Paying Agent
By:____________________________
Name:
Title:
EXHIBIT A-1
[FORM OF OWNER TRUST CERTIFICATE]
NUMBER
HOUSEHOLD AUTOMOBILE REVOLVING TRUST I
OWNER TRUST CERTIFICATE
SEE REVERSE FOR CERTAIN DEFINITIONS
THIS OWNER TRUST CERTIFICATE HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE IN
RELIANCE UPON EXEMPTIONS PROVIDED BY THE SECURITIES ACT AND
SUCH STATE SECURITIES LAWS. NO RESALE OR OTHER TRANSFER OF
THIS CERTIFICATE MAY BE MADE UNLESS SUCH RESALE OR TRANSFER
(A) IS MADE IN ACCORDANCE WITH 3.4 OF THE TRUST AGREEMENT
PERTAINING TO THE HOUSEHOLD AUTO REVOLVING TRUST I (THE
"AGREEMENT") AND (B) IS MADE (i) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (ii) IN A
TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, (iii)
TO THE SELLER OR (iv) TO A PERSON WHO THE TRANSFEROR
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT
THAT IS AWARE THAT THE RESALE OR OTHER TRANSFER IS BEING
MADE IN RELIANCE ON RULE 144A AND c UPON THE SATISFACTION OF
CERTAIN OTHER REQUIREMENTS SPECIFIED IN THE AGREEMENT.
NEITHER THE DEPOSITOR, THE MASTER SERVICER, THE TRUST NOR
THE OWNER TRUSTEE IS OBLIGATED TO REGISTER THE OWNER TRUST
CERTIFICATES UNDER THE SECURITIES ACT OR ANY APPLICABLE
STATE SECURITIES LAWS.
_________________________________
OWNER TRUST CERTIFICATE
evidencing a beneficial ownership interest in the assets of
the Trust relating to the Unpledged Trust Estate, which
includes a pool of motor vehicle retail installment sale
contracts sold from time to time to the Trust by Household
Auto Receivables Corporation.
(This Owner Trust Certificate does not represent an interest
in or obligation of Household Auto Receivables Corporation
or any of its Affiliates, except to the extent described
below.)
THIS CERTIFIES THAT Household Auto Receivables
Corporation is the registered owner of a nonassessable,
fully-paid, beneficial ownership interest in the assets of
Household Automobile Revolving Trust I (the "Trust") formed
by Household Auto Receivables Corporation, a Nevada
corporation (the "Depositor") and the Unpledged Trust
Estate.
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-
mentioned Trust Agreement.
WILMINGTON TRUST COMPANY
not in its individual
capacity but solely as
Owner Trustee
by Authenticating Agent
by
Household Automobile Revolving Trust I (the
"Trust"), was created pursuant to a Trust Agreement dated as
of March 1, 1998 (the "Trust Agreement"), between the
Depositor and Wilmington Trust Company, as owner trustee
(the "Owner Trustee"). A summary of certain of the
pertinent provisions of the Trust Agreement is set forth
below. To the extent not otherwise defined herein, the
capitalized terms used herein have the meanings assigned to
them in the Trust Agreement and the Master Sale and
Servicing Agreement dated as of March 1, 1998 among the
Trust, the Depositor, Household Finance Corporation, as
master servicer and Norwest Bank National Association, as
trustee and trust collateral agent.
This certificate is one of the duly authorized
certificates of Trust of Household Automobile Revolving
Trust I designated as Owner Trust Certificates.
This Owner Trust 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
Owner Trust Certificate by virtue of the acceptance hereof
assents and by which such holder is bound. The property of
the Trust consists of (i) the Series Trust Estates and (ii)
the Unpledged Trust Estate, which includes a pool of motor
vehicle retail installment sale contracts (the
"Receivables"), all monies due thereunder on or after
specified Cutoff Dates, security interests in the vehicles
financed thereby, certain bank accounts and the proceeds
thereof, proceeds from claims on certain insurance policies
and certain other rights under the Trust Agreement and the
Master Sale and Servicing Agreement and each related
Transfer Agreement, all right, to and interest of, the
Depositor in and to the Master Receivables Purchase
Agreement dated as of March 1, 1998 between Household
Automotive Finance Corporation and the Depositor and each
Receivables Purchase Agreement Supplement and all proceeds
of the foregoing that have not been pledged with respect to
a Series.
Pursuant to Section 3.11 of the Trust Agreement,
there will be distributed on the 17th day of each month or,
if such 17th day is not a Business Day, the next Business
Day (the "Distribution Date"), commencing on April 17, 1998,
to the Person in whose name this Owner Trust Certificate is
registered at the close of business on the Business Day
preceding such Distribution Date (the "Record Date") such
Owner Trust Certificateholder's fractional undivided
interest in amounts, if any, representing collections with
respect to the Unpledged Trust Estate to be distributed on
such Distribution Date.
It is the intent of the Depositor, the Master
Servicer, and the Owner Trust Certificateholders that, for
purposes of Federal income taxes, the Trust will be treated
as a branch. In the event that the Certificates are held by
more than one Holder, it is the intent of the Depositor, the
Master Servicer, and the Owner Trust Certificateholders
that, for purposes of Federal income taxes, the Trust will
be treated as a partnership and the Certificateholders will
be treated as partners in that partnership. The Depositor
and any other Owner Trust Certificateholders, by acceptance
of an Owner Trust Certificate, agree to treat, and to take
no action inconsistent with the treatment of, the Owner
Trust Certificates for such tax purposes as partnership
interests in the Trust. Each Owner Trust Certificateholder,
by its acceptance of an Owner Trust Certificate, covenants
and agrees that such Owner Trust Certificateholder will not
at any time institute against the Trust or the Depositor, or
join in any institution against the Trust or the Depositor
of, any bankruptcy, reorganization, arrangement, insolvency
or liquidation proceedings, or other proceedings under any
United States Federal or state bankruptcy or similar law in
connection with any obligations relating to the Owner Trust
Certificates, the Trust Agreement or any of the Basic
Documents.
Distributions on this Owner Trust Certificate will
be made as provided in the Trust Agreement by the Trustee or
Trust Collateral Agent, if any, by wire transfer or check
mailed to the Owner Trust Certificateholder of record in the
Certificate Register without the presentation or surrender
of this Certificate or the making of any notation hereon.
Except as otherwise provided in the Trust Agreement and
notwithstanding the above, the final distribution on this
Owner Trust Certificate will be made after due notice by the
Owner Trustee of the pendency of such distribution and only
upon presentation and surrender of this Owner Trust
Certificate at the office or agency maintained for the
purpose by the Owner Trustee in the Corporate Trust Office.
Reference is hereby made to the further provisions
of this Owner Trust Certificate set forth on the reverse
hereof, which further provisions shall for all purposes have
the same effect as if set forth at this place.
Unless the certificate of authentication hereon
shall have been executed by an authorized officer of the
Owner Trustee, by manual signature, this Owner Trust
Certificate shall not entitle the holder hereof to any
benefit under the Trust Agreement or the Master Sale and
Servicing Agreement or be valid for any purpose.
THIS OWNER TRUST 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.
IN WITNESS WHEREOF, the Owner Trustee, on behalf
of the Trust and not in its individual capacity, has caused
this Owner Trust Certificate to be duly executed.
HOUSEHOLD AUTOMOBILE
REVOLVING TRUST I
By: WILMINGTON TRUST COMPANY
not in its individual capacity
but solely as Owner Trustee
Dated: By:_____________________________
_
By: ____________________________
Name:
Title:
(Reverse of Certificate)
The Owner Trust Certificates do not represent an
obligation of, or an interest in, the Depositor, the Master
Servicer, the Owner Trustee or any Affiliates of any of them
and no recourse may be had against such parties or their
assets, except as may be expressly set forth or contemplated
herein or in the Trust Agreement, the Indenture, the Basic
Documents. In addition, this Owner Trust Certificate is not
guaranteed by any governmental agency or instrumentality and
is limited in right of payment to certain collections with
respect to the Receivables, as more specifically set forth
herein and in the Master Sale and Servicing Agreement. A
copy of each of the Master Sale and Servicing Agreement and
the Trust Agreement may be examined during normal business
hours at the principal office of the Depositor, and at such
other places, if any, designated by the Depositor, by any
Owner Trust Certificateholder upon written request.
The Trust Agreement permits, with certain
exceptions therein provided, the amendment thereof and the
modification of the rights and obligations of the Depositor
and the rights of the Owner Trust Certificateholders under
the Trust Agreement at any time by the Depositor and the
Owner Trustee and with the consent of the holders of the
Owner Trust Certificates evidencing not less than a majority
of the outstanding Owner Trust Certificates. Any such
consent by the holder of this Owner Trust Certificate shall
be conclusive and binding on such holder and on all future
holders of this Owner Trust Certificate and of any
certificate issued upon the transfer hereof or in exchange
hereof or in lieu hereof whether or not notation of such
consent is made upon this Owner Trust Certificate. The
Trust Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the
holders of any of the Owner Trust Certificates (other than
the Depositor).
As provided in the Trust Agreement and subject to
certain limitations therein set forth, the transfer of this
Owner Trust Certificate is registrable in the Certificate
Register upon surrender of this Owner Trust Certificate for
registration of transfer at the offices or agencies of the
Certificate Registrar maintained by the Owner Trustee in the
Corporate Trust Office, accompanied by a written instrument
of transfer in form satisfactory to the Owner Trustee and
the Certificate Registrar duly executed by the holder hereof
or such holder's attorney duly authorized in writing, and
thereupon one or more new Owner Trust Certificates in
authorized denominations evidencing the same aggregate
interest in the Trust will be issued to the designated
transferee. The initial Certificate Registrar appointed
under the Trust Agreement is Wilmington Trust Company.
As provided in the Trust Agreement and subject to
certain limitations therein set forth, Owner Trust
Certificates are exchangeable for new Owner Trust
Certificates in 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 Registrar and
any agent of the Owner Trustee or the Certificate Registrar
may treat the person in whose name this Owner Trust
Certificate is registered as the owner hereof for all
purposes, and none of the Owner Trustee, the Certificate
Registrar nor any such agent shall be affected by any notice
to the contrary.
The Owner Trust Certificates may not be acquired
by (a) an employee benefit plan (as defined in 3(3) of
ERISA) that is subject to the provisions of Title I of
ERISA, (b) a plan described in 4975(e) (1) of the Code or
c any entity whose underlying assets include plan assets by
reason of a plan's investment in the entity (each, a
"Benefit Plan"). By accepting and holding this Owner Trust
Certificate, the Holder hereof shall be deemed to have
represented and warranted that it is not a Benefit Plan.
The recitals contained herein shall be taken as
the statements of the Depositor or the Master Servicer, as
the case may be, and the Owner Trustee assumes no
responsibility for the correctness thereof. The Owner
Trustee makes no representations as to the validity or
sufficiency of this Owner Trust Certificate or of any
Receivable or related document.
Unless the certificate of authentication hereon
shall have been executed by an authorized officer of the
Owner Trustee, by manual or facsimile signature, this Owner
Trust Certificate shall not entitle the holder hereof to any
benefit under the Trust Agreement or the Master Sale and
Servicing Agreement or be valid for any purpose.
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and
transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
(Please print or type name and address, including
postal zip code, of assignee)
the within Certificate, and all rights thereunder,
hereby irrevocably constituting and appointing
____________________ Attorney to transfer said
Certificate on the books of the Certificate Registrar, with
full power of substitution in the premises.
Dated:
*
Signature Guaranteed:
*
NOTICE: The signature to this assignment must
correspond with the name of the registered owner as it
appears on the face of the within Certificate in every
particular, without alteration, enlargement or any change
whatever. Such signature must be guaranteed by an "eligible
guarantor institution" meeting the requirements of the
Certificate Registrar, which requirements include membership
or participation in STAMP or such other "signature guarantee
program" as may be determined by the Certificate Registrar
in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as
amended.
EXHIBIT A-2
[FORM OF SERIES 1998-A TRUST CERTIFICATE]
NUMBER
HOUSEHOLD AUTOMOBILE REVOLVING TRUST I
SERIES 1998-A CERTIFICATE
SEE REVERSE FOR CERTAIN DEFINITIONS
THIS SERIES 1998-A CERTIFICATE HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE IN
RELIANCE UPON EXEMPTIONS PROVIDED BY THE SECURITIES ACT AND
SUCH STATE SECURITIES LAWS. NO RESALE OR OTHER TRANSFER OF
THIS CERTIFICATE MAY BE MADE UNLESS SUCH RESALE OR TRANSFER
(A) IS MADE IN ACCORDANCE WITH 3.4 OF THE TRUST AGREEMENT
PERTAINING TO THE HOUSEHOLD AUTO REVOLVING TRUST I (THE
"AGREEMENT") AND (B) IS MADE (i) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (ii) IN A
TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, (iii)
TO THE SELLER OR (iv) TO A PERSON WHO THE TRANSFEROR
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT
THAT IS AWARE THAT THE RESALE OR OTHER TRANSFER IS BEING
MADE IN RELIANCE ON RULE 144A AND c UPON THE SATISFACTION OF
CERTAIN OTHER REQUIREMENTS SPECIFIED IN THE AGREEMENT.
NEITHER THE DEPOSITOR, THE MASTER SERVICER, THE TRUST NOR
THE OWNER TRUSTEE IS OBLIGATED TO REGISTER THE SERIES 1998-A
CERTIFICATES UNDER THE SECURITIES ACT OR ANY APPLICABLE
STATE SECURITIES LAWS.
THE PRINCIPAL OF THIS SERIES 1998-A CERTIFICATE IS
DISTRIBUTABLE IN INSTALLMENTS AS SET FORTH IN THE TRUST
AGREEMENT AND THE SERIES 1998-A SUPPLEMENT. ACCORDINGLY,
THE OUTSTANDING PRINCIPAL OF THIS SERIES 1998-A CERTIFICATE
AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE
HEREOF.
_________________________________
SERIES 1998-A CERTIFICATE
evidencing a beneficial ownership interest in the assets of
the Trust relating to the Series 1998-A Trust Estate, which
includes a pool of motor vehicle retail installment sale
contracts sold to the Trust by Household Auto Receivables
Corporation.
(This Series 1998-A Certificate does not represent an
interest in or obligation of Household Auto Receivables
Corporation or any of its Affiliates, except to the extent
described below.)
THIS CERTIFIES THAT Household Auto Receivables
Corporation is the registered owner of a $_____________
nonassessable, fully-paid, beneficial ownership interest in
the assets of Household Automobile Revolving Trust I (the
"Trust") formed by Household Auto Receivables Corporation, a
Nevada corporation (the "Depositor") and the Series 1998-A
Trust Estate. The Certificates shall bear interest at the
Series 1998-A Certificate Interest Rate.
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-
mentioned Trust Agreement.
WILMINGTON TRUST COMPANY
not in its individual
capacity but solely as
Owner Trustee
by Authenticating Agent
by
Household Automobile Revolving Trust I (the
"Trust"), was created pursuant to a Trust Agreement dated as
of March 1, 1998 (the "Trust Agreement"), between the
Depositor and Wilmington Trust Company, as owner trustee
(the "Owner Trustee") as supplemented by a Series 1998-A
Supplement dated as of March 1, 1998 (the "Series 1998-A
Supplement"). A summary of certain of the pertinent
provisions of the Trust Agreement and Series 1998-A
Supplement is set forth below. To the extent not otherwise
defined herein, the capitalized terms used herein have the
meanings assigned to them in the Trust Agreement and the
Series 1998-A Supplement.
This certificate is one of the duly authorized
certificates of Trust of Household Automobile Revolving
Trust I designated as Series 1998-A Certificates.
This Series 1998-A Certificate is issued under and
is subject to the terms, provisions and conditions of the
Trust Agreement and the Series 1998-A Supplement, to which
Trust Agreement the holder of this Series 1998-A Certificate
by virtue of the acceptance hereof assents and by which such
holder is bound. The property of the Trust consists of the
Series 1998-A Trust Estate which includes a pool of motor
vehicle retail installment sale contracts (the
"Receivables"), all monies due thereunder on or after
specified Cutoff Dates, security interests in the vehicles
financed thereby, certain bank accounts and the proceeds
thereof, proceeds from claims on certain insurance policies
and certain other rights under the Trust Agreement and the
Master Sale and Servicing Agreement and each related
Transfer Agreement, all right, to and interest of, the
Depositor in and to the Master Receivables Purchase
Agreement dated as of March 1, 1998 between Household
Automotive Finance Corporation and the Depositor and each
Receivables Purchase Agreement Supplement and all proceeds
of the foregoing.
Series 1998-A Notes have been issued pursuant to
an Indenture dated as of March 1, 1998 (the "Indenture"),
among the Trust, Household Finance Corporation, as master
servicer and Norwest Bank Minnesota, National Association,
as trustee and trust collateral agent and the Series 1998-A
Supplement.
The Certificate Balance hereof shall consist from
time to time of .18 times the principal balance of
Receivables transferred to the Trust pursuant to Section
1.03(a) of the Series 1998-A Supplement and 100 per cent of
the principal balance of receivables transferred to the
Trust pursuant to Section 1.03(b) of the Series 1998-A
Supplement, less distributions in reduction of the
Certificate Balance pursuant to Section 3.03(a) of the
Series 1998-A Supplement. The Trust will pay interest on
this Series 1998-A Certificate on the daily average of the
Certificate Balance calculated over the related Interest
Period in the Series 1998-A Certificate Interest Rate on
each Distribution Date until the principal of this Series
1998-A Certificate is paid or made available for payment.
The holder of this Certificate is entitled to additional
interest in respect of interest on the Certificate's
pursuant to Section 3.03(a)(viii) of the Series 1998-A
Supplement.
Under the Series 1998-A Supplement, there will be
distributed on the 17th day of each month or, if such 17th
day is not a Business Day, the next Business Day (the
"Distribution Date"), commencing on April 17, 1998, to the
Person in whose name this Series 1998-A Certificate is
registered at the close of business on the Business Day
preceding such Distribution Date (the "Record Date") such
Series 1998-A Certificateholder's fractional undivided
interest in any amount to be distributed to Series 1998-A
Certificateholders on such Distribution Date.
The holder of this Series 1998-A Certificate
acknowledges and agrees that its rights to receive
distributions in respect of this Series 1998-A Certificate
are subordinated to the rights of the Series 1998-A
Noteholders as described in the Master Sale and Servicing
Agreement, the Indenture, the Trust Agreement and the Series
1998-A Supplement, as applicable.
It is the intent of the Depositor, the Master
Servicer, and the Series 1998-A Certificateholders that, for
purposes of Federal income taxes, the Trust will be treated
as a branch. In the event that the Series 1998-A
Certificates are held by more than one Holder, it is the
intent of the Depositor, the Master Servicer, and the Series
1998-A Certificateholders that, for purposes of Federal
income taxes, the Trust will be treated as a partnership and
the Certificateholders will be treated as partners in that
partnership. The Depositor and any other Series 1998-A
Certificateholders, by acceptance of a Series 1998-A
Certificate, agree to treat, and to take no action
inconsistent with the treatment of, the Series 1998-A
Certificates for such tax purposes as partnership interests
in the Trust. Each Series 1998-A Certificateholder, by its
acceptance of a Series 1998-A Certificate, covenants and
agrees that such Series 1998-A Certificateholder will not at
any time institute against the Trust or the Depositor, or
join in any institution against the Trust or the Depositor
of, any bankruptcy, reorganization, arrangement, insolvency
or liquidation proceedings, or other proceedings under any
United States Federal or state bankruptcy or similar law in
connection with any obligations relating to the Series 1998-
A Certificates, the Series 1998-A Notes, the Trust
Agreement, any of the Basic Documents or any Series Related
Documents.
Distributions on this Series 1998-A Certificate
will be made as provided in Section 3.03(a) of the Series
1998-A Supplement by the Trust Collateral Agent by wire
transfer or check mailed to the Series 1998-A
Certificateholder of record in the Certificate Register
without the presentation or surrender of this Certificate or
the making of any notation hereon. Except as otherwise
provided in the Trust Agreement and notwithstanding the
above, the final distribution on this Series 1998-A
Certificate will be made after due notice by the Owner
Trustee of the pendency of such distribution and only upon
presentation and surrender of this Series 1998-A Certificate
at the office or agency maintained for the purpose by the
Owner Trustee in the Corporate Trust Office.
Reference is hereby made to the further provisions
of this Series 1998-A Certificate set forth on the reverse
hereof, which further provisions shall for all purposes have
the same effect as if set forth at this place.
Unless the certificate of authentication hereon
shall have been executed by an authorized officer of the
Owner Trustee, by manual signature, this Series 1998-A
Certificate shall not entitle the holder hereof to any
benefit under the Trust Agreement or the Master Sale and
Servicing Agreement or be valid for any purpose.
THIS SERIES 1998-A 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.
IN WITNESS WHEREOF, the Owner Trustee, on behalf
of the Trust and not in its individual capacity, has caused
this Series 1998-A Certificate to be duly executed.
HOUSEHOLD AUTOMOBILE
REVOLVING TRUST I
By: WILMINGTON TRUST COMPANY
not in its individual capacity
but solely as Owner Trustee
Dated: By:_____________________________
_
By: ____________________________
Name:
Title:
(Reverse of Certificate)
The Series 1998-A Certificates do not represent an
obligation of, or an interest in, the Depositor, the Master
Servicer, the Owner Trustee or any Affiliates of any of them
and no recourse may be had against such parties or their
assets, except as may be expressly set forth or contemplated
herein or in the Trust Agreement, the Indenture, the Basic
Documents or any Series Related Documents. In addition,
this Series 1998-A Certificate is not guaranteed by any
governmental agency or instrumentality and is limited in
right of payment to certain collections with respect to the
Receivables, as more specifically set forth herein and in
the Master Sale and Servicing Agreement. A copy of each of
the Master Sale and Servicing Agreement, the Trust Agreement
and the Series 1998-A Supplement may be examined during
normal business hours at the principal office of the
Depositor, and at such other places, if any, designated by
the Depositor, by any Series 1998-A Certificateholder upon
written request.
The Trust Agreement permits, with certain
exceptions therein provided, the amendment thereof and the
modification of the rights and obligations of the Depositor
and the rights of the Series 1998-A Certificateholders under
the Trust Agreement at any time by the Depositor and the
Owner Trustee and with the consent of the holders of the
Series 1998-A Notes and the Series 1998-A Certificates
evidencing not less than a majority of the outstanding
Series 1998-A Notes and the Certificate Balance. Any such
consent by the holder of this Series 1998-A Certificate
shall be conclusive and binding on such holder and on all
future holders of this Series 1998-A Certificate and of any
certificate issued upon the transfer hereof or in exchange
hereof or in lieu hereof whether or not notation of such
consent is made upon this Series 1998-A Certificate. The
Trust Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the
holders of any of the Series 1998-A Certificates (other than
the Depositor).
As provided in the Trust Agreement and subject to
certain limitations therein set forth, the transfer of this
Series 1998-A Certificate is registrable in the Certificate
Register upon surrender of this Series 1998-A Certificate
for registration of transfer at the offices or agencies of
the Certificate Registrar maintained by the Owner Trustee in
the Corporate Trust Office, accompanied by a written
instrument of transfer in form satisfactory to the Owner
Trustee and the Certificate Registrar duly executed by the
holder hereof or such holder's attorney duly authorized in
writing, and thereupon one or more new Series 1998-A
Certificates in authorized denominations evidencing the same
aggregate interest in the Trust will be issued to the
designated transferee. The initial Certificate Registrar
appointed under the Trust Agreement is Wilmington Trust
Company.
Except for Certificates issued to the Depositor,
the Certificates are issuable only as registered
Certificates without coupons in denominations of $100,000 or
integral multiples of $1,000 in excess thereof. As provided
in the Trust Agreement and subject to certain limitations
therein set forth, Series 1998-A Certificates are
exchangeable for new Series 1998-A Certificates in
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 Registrar and
any agent of the Owner Trustee or the Certificate Registrar
may treat the person in whose name this Series 1998-A
Certificate is registered as the owner hereof for all
purposes, and none of the Owner Trustee, the Certificate
Registrar nor any such agent shall be affected by any notice
to the contrary.
The Series 1998-A Certificates may not be acquired
by (a) an employee benefit plan (as defined in 3(3) of
ERISA) that is subject to the provisions of Title I of
ERISA, (b) a plan described in 4975(e) (1) of the Code or
c any entity whose underlying assets include plan assets by
reason of a plan's investment in the entity (each, a
"Benefit Plan"). By accepting and holding this Series
1998-A Certificate, the Holder hereof shall be deemed to
have represented and warranted that it is not a Benefit
Plan.
The recitals contained herein shall be taken as
the statements of the Depositor or the Master Servicer, as
the case may be, and the Owner Trustee assumes no
responsibility for the correctness thereof. The Owner
Trustee makes no representations as to the validity or
sufficiency of this Series 1998-A Certificate or of any
Receivable or related document.
Unless the certificate of authentication hereon
shall have been executed by an authorized officer of the
Owner Trustee, by manual or facsimile signature, this Series
1998-A Certificate shall not entitle the holder hereof to
any benefit under the Trust Agreement or the Master Sale and
Servicing Agreement or be valid for any purpose.
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and
transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
(Please print or type name and address, including
postal zip code, of assignee)
the within Certificate, and all rights thereunder,
hereby irrevocably constituting and appointing
____________________ Attorney to transfer said
Certificate on the books of the Certificate Registrar, with
full power of substitution in the premises.
Dated:
*
Signature Guaranteed:
*
NOTICE: The signature to this assignment must
correspond with the name of the registered owner as it
appears on the face of the within Certificate in every
particular, without alteration, enlargement or any change
whatever. Such signature must be guaranteed by an "eligible
guarantor institution" meeting the requirements of the
Certificate Registrar, which requirements include membership
or participation in STAMP or such other "signature guarantee
program" as may be determined by the Certificate Registrar
in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as
amended.
iv
151252.12
EXECUTION COPY
____________________________________________________________
HOUSEHOLD AUTOMOBILE REVOLVING TRUST I
Issuer
INDENTURE
Dated as of November 1, 1998
HOUSEHOLD FINANCE CORPORATION
Master Servicer
THE CHASE MANHATTAN BANK
Trustee
____________________________________________________________
TABLE OF CONTENTS
Page
ARTICLE I. Definitions and Incorporation by Reference 1
SECTION 1.1 Definitions 1
SECTION 1.2 Incorporation by Reference of the
Trust Indenture Act 6
SECTION 1.3 Rules of Construction 7
SECTION 1.4 Action by or Consent of Noteholders
and Certificateholders 7
SECTION 1.5 Conflict with TIA 7
ARTICLE II. The Notes 7
SECTION 2.1 Form; Amount Limited; Issuable in
Series 7
SECTION 2.2 Execution, Authentication and Delivery 8
SECTION 2.3 Temporary Notes 9
SECTION 2.4 Registration; Registration of Transfer
and Exchange 9
SECTION 2.5 Mutilated, Destroyed, Lost or Stolen
Notes 11
SECTION 2.6 Persons Deemed Owner 12
SECTION 2.7 Payment of Principal and Interest;
Defaulted Interest 13
SECTION 2.8 Cancellation 14
SECTION 2.9 Release of Collateral 14
SECTION 2.10 Book-Entry Notes 14
SECTION 2.11 Notices to Clearing Agency 15
SECTION 2.12 Definitive Notes 15
SECTION 2.13 Final Distribution 16
ARTICLE III. Covenants 17
SECTION 3.1 Payment of Principal and Interest 17
SECTION 3.2 Maintenance of Office or Agency 17
SECTION 3.3 Money for Payments to be Held in Trust 17
SECTION 3.4 Existence 19
SECTION 3.5 Protection of Trust Property 19
SECTION 3.6 Opinions as to Trust Property 20
SECTION 3.7 Performance of Obligations; Servicing
of Receivables 20
SECTION 3.8 Negative Covenants 21
SECTION 3.9 Annual Statement as to Compliance 22
SECTION 3.10 Issuer May Consolidate, Etc. Only on
Certain Terms 22
SECTION 3.11 Successor or Transferee 24
SECTION 3.12 No Other Business 24
SECTION 3.13 No Borrowing 25
SECTION 3.14 Master Servicer's Obligations 25
SECTION 3.15 Guarantees, Loans, Advances and Other
Liabilities 25
SECTION 3.16 Capital Expenditures 25
SECTION 3.17 Compliance with Laws 25
SECTION 3.18 Restricted Payments 25
SECTION 3.19 Notice of Events of Default 26
SECTION 3.20 Further Instruments and Acts 26
SECTION 3.21 Amendments of Master Sale and
Servicing Agreement and Trust
Agreement 26
SECTION 3.22 Income Tax Characterization 26
SECTION 3.23 No Borrowing 26
SECTION 3.24 Guarantees, Loans, Advances and Other
Liabilities 26
SECTION 3.25 Capital Expenditures 26
SECTION 3.26 Restricted Payments 26
ARTICLE IV. Satisfaction and Discharge 27
SECTION 4.1 Satisfaction and Discharge of
Indenture 27
SECTION 4.2 Application of Trust Money 28
SECTION 4.3 Repayment of Monies Held by Note
Paying Agent 28
ARTICLE V. Remedies 28
SECTION 5.1 Events of Default 28
SECTION 5.2 Collection of Indebtedness and Suits
for Enforcement by Trustee 28
SECTION 5.3 Limitation of Suits 30
SECTION 5.4 Unconditional Rights of Noteholders To
Receive Principal and Interest 31
SECTION 5.5 Restoration of Rights and Remedies 31
SECTION 5.6 Rights and Remedies Cumulative 31
SECTION 5.7 Delay or Omission Not a Waiver 32
SECTION 5.8 Control by Noteholders 32
SECTION 5.9 Waiver of Past Defaults 32
SECTION 5.10 Undertaking for Costs 32
SECTION 5.11 Waiver of Stay or Extension Laws 33
SECTION 5.12 Action on Notes 33
SECTION 5.13 Performance and Enforcement of Certain
Obligations 33
ARTICLE VI. The Trustee 34
SECTION 6.1 Duties of Trustee 34
SECTION 6.2 Rights of Trustee 36
SECTION 6.3 Individual Rights of Trustee 37
SECTION 6.4 Trustee's Disclaimer 37
SECTION 6.5 Notice of Defaults 38
SECTION 6.6 Reports by Trustee to Holders 38
SECTION 6.7 Compensation and Indemnity 38
SECTION 6.8 Replacement of Trustee 39
SECTION 6.9 Successor Trustee by Merger 40
SECTION 6.10 Appointment of Co-Trustee or Separate
Trustee 41
SECTION 6.11 Eligibility: Disqualification 42
SECTION 6.12 Preferential Collection of Claims
Against Issuer 42
SECTION 6.13 Representations and Warranties of the
Trustee 42
SECTION 6.14 Waiver of Setoffs 43
SECTION 6.15 No Consent to Certain Acts of Seller 43
ARTICLE VII. Noteholders' Lists and Reports 43
SECTION 7.1 Issuer To Furnish To Trustee Names and
Addresses of Noteholders 43
SECTION 7.2 Preservation of Information;
Communications to Noteholders 43
SECTION 7.3 Reports by Issuer 44
SECTION 7.4 Reports by Trustee 44
ARTICLE VIII. Accounts, Disbursements and Releases 44
SECTION 8.1 Collection of Money 44
SECTION 8.2 Release of Trust Property 45
SECTION 8.3 Opinion of Counsel 45
ARTICLE IX. Amendments; Series Supplements 46
SECTION 9.1 Amendments Without Consent of
Noteholders 46
SECTION 9.2 Amendments With Consent of Noteholders 47
SECTION 9.3 Supplements Authorizing a Series of
Notes 48
SECTION 9.4 Execution of Series Supplements 49
SECTION 9.5 Effect of Series Supplement 49
SECTION 9.6 Conformity With Trust Indenture Act 49
SECTION 9.7 Reference in Notes to Series
Supplements 49
ARTICLE X. Reserved 49
ARTICLE XI. Miscellaneous 49
SECTION 11.1 Compliance Certificates and Opinions,
etc. 49
SECTION 11.2 Form of Documents Delivered to Trustee 51
SECTION 11.3 Acts of Noteholders 52
SECTION 11.4 Notices, etc., to Trustee, Issuer and
Rating Agencies 53
SECTION 11.5 Notices to Noteholders; Waiver 53
SECTION 11.6 Alternate Payment and Notice
Provisions 54
SECTION 11.7 Conflict with Trust Indenture Act 54
SECTION 11.8 Effect of Headings and Table of
Contents 54
SECTION 11.9 Successors and Assigns 54
SECTION 11.10 Separability 54
SECTION 11.11 Benefits of Indenture 55
SECTION 11.12 Legal Holidays 55
SECTION 11.13 Governing Law 55
SECTION 11.14 Counterparts 55
SECTION 11.15 Recording of Indenture 55
SECTION 11.16 Trust Obligation 55
SECTION 11.17 No Petition 56
SECTION 11.18 Inspection 56
SECTION 11.19 Limitation of Liability 56
INDENTURE dated as of November 1, 1998, between
HOUSEHOLD AUTOMOBILE REVOLVING TRUST I, a Delaware business
trust (the "Issuer"), HOUSEHOLD FINANCE CORPORATION, a
Delaware corporation (the "Master Servicer") and THE CHASE
MANHATTAN BANK, a New York banking corporation, as trustee
(the "Trustee").
In consideration of the mutual agreements
contained herein, and of other good and valuable
consideration the receipt and adequacy of which are hereby
acknowledged, the parties agree as follows:
GRANTING CLAUSE
In order to secure the due and punctual payment of
the principal of and interest on the Notes of the related
Series when and as the same shall become due and payable,
whether as scheduled, by declaration of acceleration,
prepayment or otherwise, according to the terms of this
Indenture, the related Series Supplement and the related
Notes, the Issuer, pursuant to the related Series
Supplement, shall pledge the related Series Trust Estate to
the Trustee, all for the benefit of the Trustee for the
benefit of the Holders of the related Series.
ARTICLE I.
Definitions and Incorporation by Reference
SECTION 1.1 Definitions
. Except as otherwise specified herein, the
following terms have the respective meanings set forth below
for all purposes of this Indenture.
"Act" has the meaning specified in Section
11.3(a).
"Authorized Officer" means, with respect to the
Issuer and the Master Servicer, any officer or agent acting
pursuant to a power of attorney of the Owner Trustee or the
Master Servicer, as applicable, who is authorized to act for
the Owner Trustee or the Master Servicer, as applicable, in
matters relating to the Issuer and who is identified on the
list of Authorized Officers delivered by each of the Owner
Trustee and the Master Servicer to the Trustee on the
Closing Date (as such list may be modified or supplemented
from time to time thereafter).
"Book Entry Notes" means any beneficial interest
in the Notes, ownership and transfers of which shall be made
through book entries by a Clearing Agency as described in
Section 2.10.
"Certificate of Trust" means the certificate of
trust of the Issuer substantially in the form of Exhibit B
to the Trust Agreement.
"Class" means, with respect to any Series, all the
Notes of such Series having the same specified payment terms
and priority of payment.
"Class SV Preferred Stock" means the preferred
stock of the Seller.
"Clearing Agency" means an organization registered
as a "clearing agency" pursuant to Section 17A of the
Exchange Act.
"Clearing Agency Participant" means a broker,
dealer, bank, other financial institution or other Person
for whom from time to time a Clearing Agency effects book-
entry transfers and pledges of securities deposited with the
Clearing Agency.
"Code" means the Internal Revenue Code of 1986, as
amended from time to time, and Treasury Regulations
promulgated thereunder.
"Corporate Trust Office" means the principal
office of the Trustee at which at any particular time its
corporate trust business shall be administered which office
at date of the execution of this Agreement is located at 450
West 33rd Street, 8th Floor, New York, New York 10001,
Attention: Structured Finance Services or at such other
address as the Trustee may designate from time to time by
notice to the Noteholders, the Master Servicer and the
Issuer, or the principal corporate trust office of any
successor Trustee (the address of which the successor
Trustee will notify the Noteholders and the Issuer).
"Default" means any occurrence that is, or with
notice or the lapse of time or both would become, an Event
of Default.
"Definitive Notes" has the meaning specified in
Section 2.12.
"Event of Default" has the meaning specified in
Section 5.1.
"Exchange Act" means the Securities Exchange Act
of 1934, as amended.
"Executive Officer" means, with respect to any
corporation, the Chief Executive Officer, Chief Operating
Officer, Chief Financial Officer, President, Executive Vice
President, any Vice President, the Secretary, the Treasurer,
or any Assistant Treasurer of such corporation.
"Grant" means mortgage, pledge, bargain, sell,
warrant, alienate, remise, release, convey, assign,
transfer, create, grant a lien upon and a security interest
in and right of set-off against, deposit, set over and
confirm pursuant to this Indenture. A Grant of a Series
Trust Estate 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 a Series Trust Estate and all other monies
payable thereunder, to give and receive notices and other
communications, to make waivers or other agreements, to
exercise all rights and options, to bring proceedings in the
name of the Granting party or otherwise and generally to do
and receive anything that the Granting party is or may be
entitled to do or receive thereunder or with respect
thereto.
"Holder" or "Noteholder" means the Person in whose
name a Note is registered on the Note Register.
"Indebtedness" means, with respect to any Person
at any time, (a) indebtedness or liability of such Person
for borrowed money whether or not evidenced by bonds,
debentures, notes or other instruments, or for the deferred
purchase price of property or services (including trade
obligations); (b) obligations of such Person as lessee under
leases which should have been or should be, in accordance
with generally accepted accounting principles, recorded as
capital leases; c current liabilities of such Person in
respect of unfunded vested benefits under plans covered by
Title IV of ERISA; (d) obligations issued for or liabilities
incurred on the account of such Person; (e) obligations or
liabilities of such Person arising under acceptance
facilities; (f) obligations of such Person under any
guarantees, endorsements (other than for collection or
deposit in the ordinary course of business) and other
contingent obligations to purchase, to provide funds for
payment, to supply funds to invest in any Person or
otherwise to assure a creditor against loss; (g) obligations
of such Person secured by any lien on property or assets of
such Person, whether or not the obligations have been
assumed by such Person; or (h) obligations of such Person
under any interest rate or currency exchange agreement.
"Independent" means, when used with respect to any
specified Person, that the person (a) is in fact independent
of the Issuer, any other obligor upon the Notes, the Seller
and any Affiliate of any of the foregoing persons, (b) does
not have any direct financial interest or any material
indirect financial interest in the Issuer, any such other
obligor, the Seller or any Affiliate of any of the foregoing
Persons and c is not connected with the Issuer, any such
other obligor, the Seller 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" means a certificate or
opinion to be delivered to the Trustee under the
circumstances described in, and otherwise complying with,
the applicable requirements of Section 11.1, prepared by an
Independent appraiser or other expert appointed pursuant to
an Issuer Order and approved by the 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.
"Issuer Order" and "Issuer Request" means a
written order or request signed in the name of the Issuer by
any one of its Authorized Officers and delivered to the
Trustee.
"Master Sale and Servicing Agreement" means the
Master Sale and Servicing Agreement dated as of March 1,
1998, among the Issuer, the Seller, the Master Servicer and
the Trustee, as the same may be amended or supplemented from
time to time.
"Note" means any Note authenticated and delivered
under this Indenture.
"Note Owner" means, with respect to a Book-Entry
Note, the person who is the owner of such Book-Entry Note,
as reflected on the books of the Clearing Agency, or on the
books of a Person maintaining an account with such Clearing
Agency (directly as a Clearing Agency Participant or as an
indirect participant, in each case in accordance with the
rules of such Clearing Agency).
"Note Paying Agent" means the Trustee or any other
Person that meets the eligibility standards for the Trustee
specified in Section 6.11 and is authorized by the Issuer to
make payments to and distributions from the Master
Collection Account and the Note Distribution Account,
including payment of principal of or interest on the Notes
on behalf of the Issuer.
"Note Register" and "Note Registrar" have the
respective meanings specified in Section 2.4.
"Officer's Certificate" means a certificate signed
by any Authorized Officer of the Issuer, under the
circumstances described in, and otherwise complying with,
the applicable requirements of Section 11.1 and TIA 314,
and delivered to the Trustee. Unless otherwise specified,
any reference in this Indenture to an Officer's Certificate
shall be to an Officer's Certificate of any Authorized
Officer of the Issuer. Each certificate with respect to
compliance with a condition or covenant provided for in this
Agreement shall include (1) a statement that the Authorized
Officer signing the certificate has read such covenant or
condition; (2) a brief statement as to the nature and scope
of the examination or investigation upon which the
statements contained in such certificate are based; (3) a
statement that in the opinion of such person, he has made
such examination or investigation as is necessary to enable
him 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 or not, in the opinion of such
person, such condition or covenant has been complied with.
"Outstanding" means, as of the date of
determination, all Notes theretofore authenticated and
delivered under this Indenture except:
(i) Notes theretofore canceled by the Note Registrar or
delivered to the Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which
money in the necessary amount has been theretofore
deposited with the Trustee or any Note Paying Agent in
trust for the Holders of such Notes (provided, however,
that if such Notes are to be redeemed, notice of such
redemption has been duly given pursuant to a Series
Supplement or provision therefor, satisfactory to the
Trustee, has been made); and
(iii) Notes in exchange for or in lieu of other Notes
which have been authenticated and delivered pursuant to
this Indenture unless proof satisfactory to the Trustee
is presented that any such Notes are held by a bona fide
purchaser;
provided, however, that in determining whether the
Holders of the requisite Outstanding Amount of the Notes
have given any request, demand, authorization, direction,
notice, consent or waiver hereunder or under any Basic
Document, Notes owned by the Issuer, any other obligor upon
the Notes, the Seller or any Affiliate of any of the
foregoing Persons shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee
shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only
Notes that a Responsible Officer of the Trustee either
actually knows to be so owned or has received written notice
thereof shall be so disregarded. Notes so owned that have
been pledged in good faith may be regarded as Outstanding if
the pledgee establishes to the satisfaction of the 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, the Seller or any Affiliate of any of the
foregoing Persons.
"Outstanding Amount" means the aggregate principal
amount of all Notes, or Class of Notes, as applicable,
Outstanding at the date of determination.
"Predecessor Note" means, with respect to any
particular Note, every previous Note evidencing all or a
portion of the same debt as that evidenced by such
particular Note; and, for the purpose of this definition,
any Note authenticated and delivered under Section 2.5 in
lieu of a mutilated, lost, destroyed or stolen Note shall be
deemed to evidence the same debt as the mutilated, lost,
destroyed or stolen Note.
"Proceeding" means any suit in equity, action at
law or other judicial or administrative proceeding.
"Record Date" means, with respect to a
Distribution Date, the close of business on the Business Day
immediately preceding such Distribution Date.
"Registration Statement" has the meaning specified
therefor in the Securities Act.
"Responsible Officer" means, with respect to the
Trustee or the Owner Trustee (as defined in the Trust
Agreement), any officer within the Corporate Trust Office of
the Trustee or the Owner Trustee, as the case may be,
including any Vice President, Assistant Vice President,
Assistant Treasurer, Assistant Secretary, Financial Services
Officer or any other officer of the Trustee or the Owner
Trustee, as the case may be, customarily performing
functions similar to those performed by any of the above
designated officers and having direct responsibility for the
administration of this Indenture.
"Securities Act" means the Securities Act of 1933, as
amended.
"Series Termination Date" with respect to a
Series, has the meaning ascribed in the related Series
Supplement.
"State" means any one of the 50 states of the
United States of America or the District of Columbia.
"Support Default" with respect to a Series, shall
have the meaning assigned to such term and the related
Series Supplement.
"Tranche" means all of the Notes of a Series (or a
Class within a Series) having the same date of
authentication.
"Trust Property" means all money, instruments,
rights and other property that are subject or intended to be
subject to the lien and security interest of this Indenture
for the benefit of the Noteholders (including all property
and interests Granted to the Trustee), including all
proceeds thereof.
"Trust Indenture Act" or "TIA" means the Trust
Indenture Act of 1939, as amended and as in force on the
date hereof, unless otherwise specifically provided.
"Trustee" means, initially, The Chase Manhattan
Bank, a New York banking corporation, not in its individual
capacity but as trustee under this Indenture, or any
successor trustee under this Indenture.
"Trustee Fee" means the fees due to the Trustee,
as may be set forth in that certain fee letter, dated as of
the date hereof between the Master Servicer and The Chase
Manhattan Bank.
"UCC" means, unless the context otherwise
requires, the Uniform Commercial Code, as in effect in the
relevant jurisdiction, as amended from time to time.
"Unregistered Note" means a Note which is not
being offered for sale hereunder pursuant to a Registration
Statement.
Capitalized terms used herein and not otherwise
defined herein shall have the meanings assigned to them in
the Master Sale and Servicing Agreement or the Trust
Agreement.
SECTION 1.2 Incorporation by Reference of the
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 Trustee.
"obligor" on the indenture securities means the
Issuer.
All other TIA terms used in this Indenture that
are defined by the TIA, or defined by Commission rule have
the meaning assigned to them by such definitions.
SECTION 1.3 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; and
(v) words in the singular include the plural
and words in the plural include the singular.
SECTION 1.4 Action by or Consent of Noteholders
and Certificateholders
. Whenever any provision of this Agreement refers
to action to be taken, or consented to, by Noteholders or
Certificateholders, such provision shall be deemed to refer
to the Certificateholder or Noteholder, as the case may be,
of record as of the Record Date immediately preceding the
date on which such action is to be taken, or consent given,
by Noteholders or Certificateholders. Solely for the
purposes of any action to be taken, or consented to, by
Noteholders or Certificateholders, any Note or Certificate
registered in the name of Seller or any Affiliate thereof
shall be deemed not to be outstanding (except in the event
that the Seller and/or an Affiliate thereof then owns all
outstanding Notes and Certificates); provided, however,
that, solely for the purpose of determining whether the
Trustee is entitled to rely upon any such action or consent,
only Notes or Certificates which the Owner Trustee or the
Trustee, respectively, knows to be so owned shall be so
disregarded.
SECTION 1.5 Conflict with TIA
. If this Indenture is qualified under the TIA,
and if any provision hereof limits, qualifies or conflicts
with a provision of the TIA that is required under the TIA
to be part of and govern this Indenture, the latter
provision shall control. If any provision of this Indenture
modifies or excludes any provision of the TIA that may be so
modified or excluded, the latter provisions shall be deemed
to apply to this Indenture as so modified or to be excluded,
as the case may be.
ARTICLE II.
The Notes
SECTION 2.1 Form; Amount Limited; Issuable in
Series
.
(a) Notes of each Series, together with the
Trustee's certificate of authentication, shall be in
substantially the form set forth in the related Series
Supplement, with such appropriate insertions, omissions,
substitutions and other variations as are required or
permitted by this Indenture or the related Series Supplement
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 Definitive 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 officers executing
such Notes, as evidenced by their execution of such
Notes.
Each Note shall be dated the date of its authentication.
The terms of the Notes set forth in the related Series
Supplement are part of the terms of this Indenture.
(b) The aggregate principal amount of Notes
which may be authenticated and delivered and Outstanding at
any time under this Indenture is not limited; provided that
any Series Supplement may so limit the aggregate principal
amount of Notes of the related Series. The Notes shall be
issued in one or more Series, and may be issued in Classes
and/or Tranches within a Series (and Tranches within a
Class).
No Series of Notes shall be issued under this Indenture
unless such Notes have been authorized pursuant to a
Series Supplement, and all conditions precedent to the
issuance thereof, as specified in the related Series
Supplement, shall have been satisfied.
All Notes of each Series issued under this Indenture
shall be in all respects equally and ratably entitled to
the benefits hereof and secured by the related Series
Trust Estate without preference, priority or distinction
on account of the actual time or times of authentication
and delivery, all in accordance with the terms and
provisions hereof and the related Series Supplement.
SECTION 2.2 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 original or
facsimile.
Notes bearing the original 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.
At any time and from time to time after the
execution and delivery of this Indenture and the related
Series Supplement, and upon satisfaction of all the
conditions set forth in the related Series Supplement, the
Trustee shall, upon receipt of an Issuer Order and an
Officer's Certificate prepared and delivered by the Master
Servicer that all conditions precedent for such issuance
have been satisfied, deliver Notes of the related Series
(including Notes of any Class or Tranche within such
Series.)
The Notes of a Series shall be issuable in the
denominations specified in the related Series Supplement.
No Note shall be entitled to any benefit under
this Indenture or any Series Supplement or be valid or
obligatory for any purpose, unless there appears attached to
such Note a certificate of authentication substantially in
the form provided for herein executed by the Trustee by the
manual signature of one of its authorized signatories, and
such certificate attached to any Note shall be conclusive
evidence, and the only evidence, that such Note has been
duly authenticated and delivered hereunder.
SECTION 2.3 Temporary Notes
. Pending the preparation of Definitive Notes of
any Series (or of any Class or Tranche within a Series), the
Issuer may execute, and upon receipt of an Issuer Order
prepared and delivered by the Master Servicer, the Trustee
shall authenticate and deliver, temporary Notes which are
printed, lithographed, typewritten, mimeographed or
otherwise produced, of the tenor of the Definitive Notes in
lieu of which they are issued and with such variations not
inconsistent with the terms of this Indenture as the
officers executing such Notes may determine, as evidenced by
their execution of such Notes.
If temporary Notes of any Series (or of any Class
or Tranche within a Series) are issued, the Issuer will
cause Definitive Notes of such Series (or Class or Tranche)
to be prepared without unreasonable delay. After the
preparation of Definitive Notes of such Series (or Class or
Tranche), the temporary Notes shall be exchangeable for
Definitive Notes of such Series (or Class or Tranche) upon
surrender of the temporary Notes at the office or agency of
the Issuer to be maintained as provided in Section 3.2,
without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Notes, the Issuer
shall execute and the Trustee shall authenticate and deliver
in exchange therefor a like principal amount of Definitive
Notes of such Series (or Class or Tranche) of authorized
denominations. Until so exchanged, the temporary Notes of
any Series (or Class or Tranche) shall in all respects be
entitled to the same benefits under this Indenture and the
related Series Supplement as Definitive Notes of such Series
(or Class or Tranche).
SECTION 2.4 Registration; Registration of
Transfer and Exchange
. (a) The Issuer shall cause to be kept a
register (the "Note Register") in which, subject to such
reasonable regulations as it may prescribe, the Issuer shall
provide for the registration of Notes and the registration
of transfers of Notes. The Trustee shall be "Note
Registrar" for the purpose of registering Notes and
transfers of Notes as herein provided. Upon any resignation
of any Note Registrar, the Issuer shall promptly appoint a
successor or, if it elects not to make such an appointment,
assume the duties of Note Registrar.
If a Person other than the Trustee is appointed by
the Issuer as Note Registrar, the Issuer will give the
Trustee prompt written notice of the appointment of such
Note Registrar and of the location, and any change in the
location, of the Note Register, and the Trustee shall have
the right to inspect the Note Register at all reasonable
times and to obtain copies thereof. The Trustee shall have
the right to rely upon a certificate executed on behalf of
the Note Registrar by an Authorized Officer thereof as to
the names and addresses of the Holders of the Notes and the
principal amounts and number of such Notes.
Upon surrender for registration or transfer of any
Note at the office or agency of the Issuer to be maintained
as provided in Section 3.2, and if the requirements of
Section 8-401(1) of the UCC are met, the Issuer shall
execute and cause the Trustee to authenticate one or more
new Notes, in any authorized denominations, of the same
class and a like aggregate principal amount. A Noteholder
may also obtain from the Trustee, in the name of the
designated transferee or transferees one or more new Notes,
in any authorized denominations, of the same Class and
Tranche, as applicable, and a like aggregate principal
amount. Such requirements shall not be deemed to create a
duty in the Trustee to monitor the compliance by the Issuer
with Section 8-401 of the UCC.
At the option of the Holder, Notes of a Series (or
Class or Tranche) may be exchanged for other Notes of such
Series (or Class or Tranche) in any authorized
denominations, of the same Class (and Tranche, if
applicable) and a like aggregate principal amount, upon
surrender of the Notes to be exchanged at such office or
agency. Whenever any Notes are so surrendered for exchange,
and if the requirements of Section 8-401(1) of the UCC are
met, the Issuer shall execute and upon its written request
the Trustee shall authenticate the Notes which the
Noteholder making the exchange is entitled to receive. Such
requirements shall not be deemed to create a duty in the
Trustee to monitor the compliance by the Issuer with Section
8-401 of the UCC.
All Notes issued upon any registration of transfer
or exchange of Notes shall be the valid obligations of the
Issuer, evidencing the same debt, and entitled to the same
benefits under this Indenture and the related Series
Supplement, as the Notes surrendered upon such registration
of transfer or exchange.
Unless specified in a Series Supplement, every
Note presented or surrendered for registration of transfer
or exchange shall, unless specified in a Series Supplement,
be (i) duly endorsed by, or be accompanied by a written
instrument of transfer in the form attached as an exhibit to
the Note duly executed by the Holder thereof or such
Holder's attorney duly authorized in writing, with such
signature guaranteed by an "eligible guarantor institution"
meeting the requirements of the Note Registrar which
requirements include membership or participation in
Securities Transfer Agents Medallion Program ("Stamp") or
such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in
substitution for, Stamp, all in accordance with the Exchange
Act, and (ii) accompanied by such other documents as the
Note Registrar may require.
No service charge shall be made to a Holder for
any registration of transfer or exchange of Notes, but the
Note Registrar may require payment of a sum sufficient to
cover any tax or other governmental charge that may be
imposed in connection with any registration of transfer or
exchange of Notes.
Notwithstanding, the preceding provisions of this
section, the Issuer shall not be required to make, and the
Note Registrar shall not register, transfers or exchanges of
Notes selected for redemption for a period of 15 days
preceding the Distribution Date.
Any Noteholder using the assets of (i) an employee
benefit plan (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended
("ERISA")) that is subject to the provisions of Title I of
ERISA, (ii) a plan described in Section 4975(e)(1) of the
Internal Revenue Code of 1986, as amended, or (iii) any
entity whose underlying assets include plan assets by reason
of a plan's investment in the entity to purchase the Notes,
or to whom the Notes are transferred, will be deemed to have
represented that the acquisition and continued holding of
the Notes will be covered by a U.S. Department of Labor
Class Exemption.
(b) No Holder of an Unregistered Note shall
transfer its Note, unless (i) such transfer is made in
accordance with Rule 144A under the Securities Act or (ii)
pursuant to an exemption from registration provided by Rule
144 under the Securities Act (if available) and the
registration and qualification requirements under applicable
state securities laws.
Each Unregistered Note issued hereunder will contain the
following legend limiting sales to "Qualified
Institutional Buyers" within the meaning of Rule 144A
under the Securities Act:
THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER
THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND HAS NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR
REGULATORY AUTHORITY OF ANY STATE. THIS NOTE HAS BEEN
OFFERED AND SOLD PRIVATELY. THE HOLDER HEREOF
ACKNOWLEDGES THAT THESE SECURITIES ARE "RESTRICTED
SECURITIES" THAT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT AND AGREES FOR THE BENEFIT OF THE OBLIGORS
AND ITS AFFILIATES THAT THESE SECURITIES MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A)
TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE
144A UNDER THE SECURITIES ACT IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A OR (B) PURSUANT TO AN EXEMPTION
FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE), IN EACH CASE IN ACCORDANCE
WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY OTHER JURISDICTION.
SECTION 2.5 Mutilated, Destroyed, Lost or
Stolen Notes
. If (i) any mutilated Note is surrendered to the
Trustee, or the Trustee receives evidence to its
satisfaction of the destruction, loss or theft of any Note,
and (ii) there is delivered to each of the Issuer and the
Trustee such security or indemnity as may be required by it
to hold the Issuer and the Trustee harmless, then, in the
absence of notice to the Issuer, the Note Registrar or the
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 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 Series
(or Class or Tranche) (such requirement shall not be deemed
to create a duty in the Trustee to monitor the compliance by
the Issuer with Section 8-405); 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, or shall have been called for redemption
pursuant to the terms of the related Series Supplement, the
Issuer may, instead of issuing a replacement Note, direct
the Trustee, in writing, to pay such destroyed, lost or
stolen Note when so due or payable or upon the redemption
date 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 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 Trustee in connection therewith.
Upon the issuance of any replacement Note under
this Section, 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 Trustee) connected therewith.
Every replacement Note of any Series issued
pursuant to this Section 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 and the related Series
Supplement equally and proportionately with any and all
other Notes of the same Series duly issued hereunder.
The provisions of this Section 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 2.6 Persons Deemed Owner
. Prior to due presentment for registration of
transfer of any Note, the Issuer, the Trustee and any agent
of Issuer or the Trustee may treat the Person in whose name
any Note is registered (as of the Record Date) 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 none of the Issuer, the Trustee nor any agent
of the Issuer or the Trustee shall be affected by notice to
the contrary.
SECTION 2.7 Payment of Principal and Interest;
Defaulted Interest
.
(a) The Notes shall accrue interest as
provided in the form of Note set forth in the related Series
Supplement or in such Series Supplement and such interest
shall be due and payable on each Distribution Date as
specified therein. Any installment of interest or
principal, if any, payable on any Note which is punctually
or duly provided for by the Issuer on the applicable
Distribution Date shall be paid, as provided in the related
Series Supplement, or if not so provided to the Person in
whose name such Note (or one or more Predecessor Notes) is
registered on the Record Date, by check mailed first-class,
postage prepaid, to such Person's address as it appears on
the Note Register on such Record Date, except that, if the
Notes of a Series are Book Entry Notes, unless Definitive
Notes have been issued for such Series pursuant to Section
2.12, with respect to Notes of such Series registered on the
Record Date in the name of the nominee of the Clearing
Agency (initially, such nominee to be Cede & Co.), payment
will be made by wire transfer in immediately available funds
to the account designated by such nominee and except for the
final installment of principal payable with respect to such
Note on a Distribution Date or on the Final Scheduled
Distribution Date with respect to a Series as set forth in
the relevant Series Supplement which shall be payable as
provided below. The funds represented by any such checks
returned undelivered shall be held in accordance with
Section 3.3.
(b) The principal of each Note shall be
payable in installments on each Distribution Date as
provided in the form of Note set forth in the related Series
Supplement or in such Series Supplement. Notwithstanding
the foregoing, the entire unpaid principal amount of the
Notes shall be due and payable, if not previously paid, on
the date on which an Event of Default shall have occurred
and be continuing, if the Notes are declared to be
immediately due and payable in the manner provided in the
related Series Supplement. Upon written notice from the
Master Servicer on behalf of the Issuer, the Trustee shall
notify the Person in whose name a Note is registered at the
close of business on the Record Date preceding the
Distribution Date on which the Issuer expects that the final
installment of principal of and interest on such Note will
be paid. Such notice may be mailed or transmitted by
facsimile prior to such final Distribution Date and may
specify that such final installment 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 payment of such installment.
(c) If the Issuer defaults in a payment of
interest on the Notes, the Issuer shall pay defaulted
interest (plus interest on such defaulted interest to the
extent lawful) at the applicable Interest Rate to the extent
lawful. Unless otherwise provided in the related Series
Supplements, the Issuer may pay such defaulted interest to
the Persons who are Noteholders on a subsequent special
record date, which date shall be at least five Business Days
prior to the payment date. The Issuer shall fix or cause to
be fixed any such special record date and payment date, and,
at least 15 days before any such special record date, the
Issuer shall mail to each Noteholder and the Trustee a
notice that states the special record date, the payment date
and the amount of defaulted interest to be paid.
SECTION 2.8 Cancellation
. All Notes surrendered for payment, registration
of transfer, exchange or redemption shall, if surrendered to
any Person other than the Trustee, be delivered to the
Trustee and shall be promptly canceled by the Trustee in
accordance with its customary procedures. The Issuer may at
any time deliver to the 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 canceled by the Trustee
in accordance with its customary procedures. No Notes shall
be authenticated in lieu of or in exchange for any Notes
canceled as provided in this Section, except as expressly
permitted by this Indenture. All canceled Notes may be held
or disposed of by the Trustee in accordance with its
standard retention or disposal policy as in effect at the
time.
SECTION 2.9 Release of Collateral
. The Trustee shall, on or after a Series
Termination Date, release any remaining portion of the
related Series Trust Estate from the lien created by this
Indenture and deposit in the applicable Series Collection
Account any funds then on deposit in any other Trust
Account. The Trustee shall release property from the lien
created by this Indenture pursuant to this Section 2.9 only
upon receipt of an Issuer Request by it and the Trustee
accompanied by an Officer's Certificate, an Opinion of
Counsel and (if required by the TIA) Independent
Certificates in accordance with TIA 314c and 314(d)(1)
meeting the applicable requirements of Section 11.1.
SECTION 2.10 Book-Entry Notes
. The Notes, upon original issuance, may be
issued in the form of typewritten Notes representing the
Book-Entry Notes, to be delivered to The Depository Trust
Company, the initial Clearing Agency, by, or on behalf of,
the Issuer. Such Notes may initially be registered on the
Note Register in the name of Cede & Co., the nominee of the
initial Clearing Agency, and no Note Owner will receive a
Definitive Note representing such Note Owner's interest in
such Note, except as provided in Section 2.12. Unless and
until definitive, fully registered Notes (the "Definitive
Notes") have been issued to Note Owners pursuant to Section
2.12:
(i) the provisions of this Section shall be in
full force and effect;
(ii) the Note Registrar and the Trustee shall be
entitled to deal with the Clearing Agency for all
purposes of this Indenture (including the payment of
principal of and interest on the Notes and the giving
of instructions or directions hereunder) as the sole
Holder of the Notes, and shall have no obligation to
the Note Owners;
(iii) to the extent that the provisions of
this Section conflict with any other provisions of this
Indenture, the provisions of this Section shall
control;
(iv) the rights of Note Owners shall be
exercised only through the Clearing Agency and shall be
limited to those established by law and agreements
between such Note Owners and the Clearing Agency and/or
the Clearing Agency Participants. Unless and until
Definitive Notes are issued pursuant to Section 2.12,
the initial Clearing Agency will make book-entry
transfers among the Clearing Agency Participants and
receive and transmit payments of principal of and
interest on the Notes to such Clearing Agency
Participants;
(v) whenever this Indenture requires or permits
actions to be taken based upon instructions or
directions of Holders of Notes evidencing a specified
percentage of the Outstanding Amount of the Notes, the
Clearing Agency shall be deemed to represent such
percentage only to the extent that it has received
instructions to such effect from Note Owners and/or
Clearing Agency Participants owning or representing,
respectively, such required percentage of the
beneficial interest in the Notes or in the Notes of a
Class, as the case maybe, and has delivered such
instructions to the Trustee; and
(vi) Note Owners may receive copies of any
reports sent to Noteholders pursuant to this Indenture,
upon written request, together with a certification
that they are Note Owners and payment of reproduction
and postage expenses associated with the distribution
of such reports, from the Trustee at the Corporate
Trust Office.
SECTION 2.11 Notices to Clearing Agency
. With respect to each Series of Notes which are
Book Entry Notes, whenever a notice or other communication
to the Noteholders of such Series is required under this
Indenture, unless and until Definitive Notes shall have been
issued to Note Owners pursuant to Section 2.12, the Trustee
shall give all such notices and communications specified
herein to be given to Holders of the Notes to the Clearing
Agency, and shall have no obligation to the Note Owners.
SECTION 2.12 Definitive Notes
. If the Notes of a Series are Book-Entry Notes
and if (i) the Master Servicer advises the Trustee in
writing that the Clearing Agency is no longer willing or
able to properly discharge its responsibilities with respect
to the Notes of such Series, and the Master Servicer is
unable to locate a qualified successor, (ii) the Master
Servicer at its option advises the Trustee in writing that
it elects to terminate the book-entry system through the
Clearing Agency or (iii) after the occurrence of an Event of
Default with respect to such Series, Note Owners
representing beneficial interests aggregating at least a
majority of the Outstanding Amount of the Notes advise the
Trustee through the Clearing Agency in writing that the
continuation of a book entry system through the Clearing
Agency is no longer in the best interests of the Note
Owners, then the Clearing Agency shall notify all Note
Owners and the Trustee of the occurrence of any such event
and of the availability of Definitive Notes to Note Owners
requesting the same. Upon surrender to the Trustee of the
typewritten Note or Notes representing the Book-Entry Notes
by the Clearing Agency, accompanied by registration
instructions, the Issuer shall execute and upon the written
direction of the Issuer the Trustee shall authenticate the
Definitive Notes in accordance with the instructions of the
Clearing Agency. None of the Issuer, the Note Registrar or
the 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 Trustee shall recognize
the Holders of the Definitive Notes as Noteholders.
SECTION 2.13 Final Distribution
.
(a) The Master Servicer shall give the
Trustee at least 15 days prior notice of the Distribution
Date on which the Noteholders of any Series or Class may
surrender their Notes for payment of the final distribution
on and cancellation of such Notes. Not later than the fifth
day of the month in which the final distribution in respect
of such Series or Class is payable to Noteholders, the
Trustee shall provide notice to the Noteholders of such
Series or Class specifying (i) the date upon which final
payment of such Series or Class will be made upon
presentation and surrender of Notes (if required) of such
Series or Class at the office or offices 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 such Notes at the office or offices therein
specified. The Trustee shall give such notice to the
Registrar and the Note Paying Agent at the time such notice
is given to Noteholders.
(b) Notwithstanding a final distribution to
the Noteholders of any Series or Class, except as otherwise
provided in this paragraph, all funds then on deposit in the
Master Collection Account and any Series Trust Account
allocated to such Noteholders shall continue to be held in
trust for the benefit of such Noteholders, and the Note
Paying Agent or the Trustee shall pay such funds to such
Noteholders upon surrender of their Notes. In the event
that all such Noteholders shall not surrender their Notes
for cancellation within six months after the date specified
in the notice from the Trustee described in paragraph (a),
the Trustee shall give a second notice to the remaining such
Noteholders to surrender their Notes for cancellation and
receive the final distribution with respect thereto. If
within one year after the second notice all such Notes shall
not have been surrendered for cancellation, the Trustee may
take appropriate steps, or may appoint an agent to take
appropriate steps, to contact the remaining such Noteholders
concerning surrender of their Notes, and the cost thereof
shall be paid out of the funds in the account held for the
benefit of such Noteholders. The Trustee and the Note
Paying Agent shall upon written request pay to the related
Issuer any moneys held by them for the payment of principal
or interest that remains unclaimed for two years. After
payment to the related Issuers, Noteholders entitled to the
money must look to the related Issuers for payment as
general unsecured creditors unless an applicable abandoned
property law designates another Person and all liability of
the Trustee or such Note Paying Agent with respect to such
trust money shall thereupon cease.
(c) Any notice required or permitted to be
given to a Holder of Registered Notes shall be given by
first-class mail, postage prepaid, at the address of such
Holder as shown in the Note Register.
ARTICLE III.
Covenants
SECTION 3.1 Payment of Principal and Interest
. The Issuer will duly and punctually pay or
cause to be paid the principal of and interest on the Notes
in accordance with the terms of the Notes, this Indenture
and the related Series Supplement. Amounts properly
withheld under the Code by any Person from a payment to any
Noteholder of interest and/or principal shall be considered
as having been paid by the Issuer to such Noteholder for all
purposes of this Indenture.
SECTION 3.2 Maintenance of Office or Agency
. The Issuer will maintain in New York an office
or agency where Notes may be surrendered for registration,
transfer or exchange of the Notes, 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 Trustee to serve as its agent for the foregoing
purposes. The Issuer will give prompt written notice to the
Trustee of the location, and of any change in the location,
of any such office or agency. If at any time the Issuer
shall fail to maintain any such office or agency or shall
fail to furnish the Trustee with the address thereof, such
surrenders, notices and demands may be made or served at the
Corporate Trust Office, and the Issuer hereby appoints the
Trustee as its agent to receive all such surrenders, notices
and demands.
SECTION 3.3 Money for Payments to be Held in
Trust
. One Business Day prior to each Distribution
Date, the Issuer shall deposit or cause to be deposited to
the related Series Collection Account Available Funds (which
shall be immediately available) with respect to the related
Collection Period. Such sum shall be held in trust for the
benefit of the Persons entitled thereto and (unless the Note
Paying Agent is the Trustee), the Issuer shall promptly
notify the Trustee of its action or failure so to act.
The Issuer will cause each Note Paying Agent other
than the Trustee to execute and deliver to the Trustee an
instrument in which such Note Paying Agent shall agree with
the Trustee (and if the Trustee acts as Note Paying Agent
with respect to clauses (i) and (v), it hereby so agrees),
subject to the provisions of this Section, that such Note
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 Trustee written notice of any
default by the Issuer of which a Responsible Officer of
the Trustee has actual knowledge (or any other obligor
upon the Notes) 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
Trustee, forthwith pay to the Trustee all sums so held
in trust by such Note Paying Agent;
(iv) immediately resign as a Note Paying Agent
and forthwith pay to the 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 Note
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
and any Series Supplement or for any other purpose, by
Issuer Order direct any Note Paying Agent to pay to the
Trustee all sums held in trust by such Note Paying Agent,
such sums to be held by the Trustee upon the same trusts as
those upon which the sums were held by such Note Paying
Agent; and upon such a payment by any Note Paying Agent to
the Trustee, such Note Paying Agent shall be released from
all further liability with respect to such money.
The Trust hereby appoints The Chase Manhattan Bank
as Certificate Paying Agent to make payments to
Certificateholders on behalf of the Issuer in accordance
with the provisions of the Certificates, this Agreement and
the Trust Agreement, and The Chase Manhattan Bank hereby
accepts such appointment (subject to removal in the event it
not longer serves as Trustee pursuant to Section 6.8) 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 a Responsible Officer of
the Trustee 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 a 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 a Note 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 Certificates of any applicable withholding
taxes imposed thereon and with respect to any
applicable reporting requirements in connection
therewith.
SECTION 3.4 Existence
. Except as otherwise permitted by the provisions
of Section 3.10, 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, each Series
Supplement, the Notes and each other instrument or agreement
included in the related Series Trust Estate.
SECTION 3.5 Protection of Trust Property
. The Issuer intends the security interest
Granted pursuant to this Indenture and the related Series
Supplement in favor of the Holders to be prior to all other
liens in respect of the related Series Trust Estate, and the
Issuer shall take all actions necessary to obtain and
maintain, in favor of the Trustee for the benefit of the
Holders a first lien on and a first priority, perfected
security interest in the related Series Trust Estate. The
Issuer will from time to time prepare (or shall cause to be
prepared), 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) Grant more effectively all or any portion
of the related Series Trust Estate;
(ii) maintain or preserve the lien and security
interest (and the priority thereof) in favor of the
Trustee for the benefit of the Holders created by this
Indenture and the related Series Supplement 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 and the related Series Supplement ;
(iv) enforce any of the related Series Trust
Estate;
(v) preserve and defend title to the related
Series Trust Estate and the rights of the Trustee in
such Trust Property against the claims of all persons
and parties; and
(vi) pay all taxes or assessments levied or
assessed upon the related Series Trust Estate when due.
The Issuer hereby designates the Master Servicer its agent
and attorney-in-fact to execute any financing statement,
continuation statement or other instrument required by the
Trustee pursuant to this Section; provided that, such
designation shall not be deemed to create a duty in the
Trustee to monitor the compliance of the Master Servicer
with respect to its duties under this Section 3.5 or the
adequacy of any financing statement, continuation statement
or other instrument prepared by the Master Servicer.
SECTION 3.6 Opinions as to Trust Property
.
(a) On the Closing Date, the Issuer shall
furnish to the Trustee an Opinion of Counsel either stating
that, in the opinion of such counsel, such action has been
taken with respect to the recording and filing of this
Indenture, Series Supplement, 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 first priority
lien and security interest in favor of the Trustee for the
benefit of the Holders, created by this Indenture and the
related Series Supplement 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) Within 90 days after the beginning of
each calendar year, beginning with 2000, the Master Servicer
on behalf of the Issuer shall furnish to the Trustee an
Opinion of Counsel either stating that, in the opinion of
such counsel, such action has been taken with respect to the
recording, filing, re-recording and refiling of this
Indenture, any Series Supplement and any other requisite
documents and with respect to the execution and filing of
any financing statements and continuation statements as are
necessary to maintain the lien and security interest created
by this Indenture and the related Series Supplement 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 and the related Series Supplement
until December 31 of the following calendar year.
SECTION 3.7 Performance of Obligations;
Servicing of Receivables
.
(a) The Issuer will not take any action and
will use its best efforts not to permit any action to be
taken by others that would release any Person from any of
such Person's material covenants or obligations under any
instrument or agreement included in the related Series Trust
Estate or that would result in the amendment, hypothecation,
subordination, termination or discharge of, or impair the
validity or effectiveness of, any such instrument or
agreement, except as ordered by any bankruptcy or other
court or as expressly provided in this Indenture, the Basic
Documents and the related Series Related Documents or such
other instrument or agreement.
(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 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 Master
Servicer to assist the Issuer in performing its duties under
this Indenture and each Series Supplement. The Master
Servicer hereby agrees to service the Receivables in each
Series Trust Estate in the manner set forth in the Master
Sale and Servicing Agreement, this Indenture and each Series
Supplement and to perform its duties as may be set forth in
the Master Sale and Servicing Agreement, this Indenture and
in each Series Supplement.
(c) The Issuer will punctually perform and
observe all of its obligations and agreements contained in
this Indenture, the Basic Documents, all Series Related
Documents and in the instruments and agreements included in
the related Series Trust Estate, including, but not limited,
to preparing (or causing to be prepared) and filing (or
causing to be filed) all UCC financing statements and
continuation statements required to be filed by the terms of
this Indenture, the related Series Supplement and the Master
Sale and Servicing Agreement in accordance with and within
the time periods provided for herein and therein. Except as
otherwise expressly provided therein, the Issuer shall not
waive, amend, modify, supplement or terminate any Basic
Document or any provision thereof without the consent of the
Trustee.
(d) If a Responsible Officer of the Owner
Trustee shall have actual knowledge of the occurrence of a
Master Servicer Termination Event under the Master Sale and
Servicing Agreement, the Issuer shall promptly notify the
Trustee and the Rating Agencies thereof in accordance with
Section 11.4, and shall specify in such notice the action,
if any, the Issuer is taking in respect of such default. If
a Master Servicer Termination Event shall arise from the
failure of the Master Servicer to perform any of its duties
or obligations under the Master Sale and Servicing Agreement
with respect to the Receivables, the Issuer shall take all
reasonable steps available to it to remedy such failure.
SECTION 3.8 Negative Covenants
. So long as any Notes are Outstanding, the
Issuer shall not:
(i) except as expressly permitted by this
Indenture or the Basic Documents or the related Series
Related Documents, sell, transfer, exchange or
otherwise dispose of any of the properties or assets of
the Issuer, including those included in the related
Series Trust Estate;
(ii) claim any credit on, or make any deduction
from the principal or interest payable in respect of,
the Notes of a Series (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 related Series Trust Estate; or
(iii) (A) permit the validity or effectiveness
of this Indenture or any Series Supplement to be
impaired, or permit the lien in favor of the Trustee
created by 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 or any
Series Supplement 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 and the related Series
Supplement) to be created on or extend to or otherwise
arise upon or burden the related Series Trust Estate or
any part thereof or any interest therein or the
proceeds thereof (other than tax liens, mechanics'
liens and other liens that arise by operation of law,
in each case on a Financed Vehicle and arising solely
as a result of an action or omission of the related
Obligor), c permit the lien of this Indenture and the
related Series Supplement not to constitute a valid
first priority (other than with respect to any such
tax, mechanics' or other lien) security interest in the
related Series Trust Estate, (D) except as expressly
permitted therein, amend, modify or fail to comply with
the provisions of the Basic Documents or (E) except as
expressly permitted therein, amend, modify or fail to
comply with the provisions of the Series Related
Documents.
SECTION 3.9 Annual Statement as to Compliance
. The Master Servicer on behalf of the Issuer
will deliver to the Trustee, within 90 days after the end of
each fiscal year of the Issuer (commencing with the fiscal
year ended December 31, 1999), and otherwise in compliance
with the requirements of TIA Section 314(a)(4) 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 performance under this
Indenture has been made under such Authorized Officer's
supervision; and
(ii) to the best of such Authorized Officer's
knowledge, based on such review, the Issuer has
complied with all conditions and covenants under this
Indenture and each Series Supplement throughout such
year, or, if there has been a default in the compliance
of any such condition or covenant, specifying each such
default known to such Authorized Officer and the nature
and status thereof.
SECTION 3.10 Issuer May Consolidate, Etc. Only
on Certain Terms
.
(a) 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 and shall
expressly assume, by an indenture supplemental hereto,
executed and delivered to the Trustee, in form
satisfactory to the 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 and each Series
Supplement on the part of the Issuer to be performed or
observed, all as provided herein;
(ii) immediately after giving effect to such
transaction, no Default or Event of Default shall have
occurred and be continuing under any Series Supplement;
(iii) the Rating Agency Condition shall have
been satisfied with respect to such transaction;
(iv) the Issuer shall have received an Opinion
of Counsel (and shall have delivered copies thereof to
the Trustee and the Owner Trustee) to the effect that
such transaction will not have any material adverse tax
consequence to the Trust, any Noteholder or any
Certificateholder;
(v) any action as is necessary to maintain the
lien and security interest created by this Indenture
and each Series Supplement shall have been taken; and
(vi) the Issuer shall have delivered to the
Trustee an Officer's Certificate and an Opinion of
Counsel each stating that such consolidation or merger
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).
(b) The Issuer shall not convey or transfer
all or substantially all of its properties or assets,
including those included in each Series 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 assume,
by an indenture supplemental hereto, executed and
delivered to the Trustee, in form satisfactory to the
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, each Supplement, each of the Basic Documents
and each of the Series Related Documents on the part of
the Issuer to be performed or observed, all as provided
herein, c expressly agree by means of such Indenture
Supplement 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 Series Supplement,
expressly agree to indemnify, defend and hold harmless
the Issuer against and from any loss, liability or
expense arising under or related to this Indenture,
each Series Supplement and the Notes and (E) expressly
agree by means of such Series Supplement that such
Person (or if a group of persons, then one specified
Person) shall prepare (or cause to be prepared) and
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
transaction, no Default or Event of Default shall have
occurred and be continuing under any Series Supplement;
(iii) the Rating Agency Condition shall have
been satisfied with respect to such transaction;
(iv) the Issuer shall have received an Opinion
of Counsel (and shall have delivered copies thereof to
the Trustee) to the effect that such transaction will
not have any material adverse tax consequence to the
Trust, any Noteholder or any Certificateholder;
(v) any action as is necessary to maintain the
lien and security interest created by this Indenture
and each Series Supplement shall have been taken; and
(vi) the Issuer shall have delivered to the
Trustee an Officers' Certificate and an Opinion of
Counsel each stating that such conveyance or transfer
and such Indenture Supplement complies 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 3.11 Successor or Transferee
.
(a) Upon any consolidation or merger of the
Issuer in accordance with Section 3.10(a), the Person formed
by or surviving such consolidation or merger (if other than
the Issuer) shall succeed to, and be substituted for, and
may exercise every right and power of, the Issuer under this
Indenture and each Series Supplement with the same effect as
if such Person had been named as each Issuer herein.
(b) Upon a conveyance or transfer of all the
assets and properties of the Issuer pursuant to Section 3.10
(b), Household Automobile Revolving Trust I will be released
from every covenant and agreement of this Indenture and each
Series Supplement 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 Trustee stating that
Household Automobile Revolving Trust I is to be so released.
SECTION 3.12 No Other Business
. The Issuer shall not engage in any business
other than financing, purchasing, owning, selling and
managing the Receivables, entering and maintaining any
ancillary agreement related to issuance of the Notes and
owning the Class SV Preferred Stock of the Seller in the
manner contemplated by this Indenture, the Basic Documents
and each Series Supplement and all Series Related Documents
and activities incidental thereto.
SECTION 3.13 No Borrowing
. The Issuer shall not issue, incur, assume,
guarantee or otherwise become liable, directly or
indirectly, for any Indebtedness except for (i) the Notes,
(ii) obligations owing from time to time to a related Series
Support Provider under the related agreement regarding
Series Support, if any and (iii) any other Indebtedness
permitted by or arising under the Basic Documents and each
Series Supplement. The proceeds of the Notes and the
Certificates of a Series shall be used exclusively to fund
the Issuer's purchase of the Receivables of such Series, or
to obtain release of the lien relating to the pledge of the
Receivables for a prior series of notes issued by the
Issuer, the purchase of related property of the Series Trust
Estate, to fund any trust account and to pay the Issuer's
organizational, transactional and start-up expenses.
SECTION 3.14 Master Servicer's Obligations
. The Issuer shall enforce the provisions of
Sections 4.9, 4.10 and 4.11 of the Master Sale and Servicing
Agreement with respect to the duties of Master Service
thereunder.
SECTION 3.15 Guarantees, Loans, Advances and
Other Liabilities
. Except as contemplated by the Master Sale and
Servicing Agreement or this Indenture or any Series
Supplement, 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 continently
liable, directly or indirectly, in connection with the
obligations, stocks or dividends of, or own, purchase,
repurchase or acquire (or agree continently 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 3.16 Capital Expenditures
. The Issuer shall not make any expenditure (by
long-term or operating lease or otherwise) for capital
assets (either realty or personally).
SECTION 3.17 Compliance with Laws
. The Issuer shall comply with the requirements
of all applicable laws, the non-compliance with which would,
individually or in the aggregate, materially and adversely
affect the ability of the Issuer to perform its obligations
under the Notes, this Indenture, or any Basic Document, any
Series Supplement or any Series Related Document.
SECTION 3.18 Restricted Payments
. The Issuer shall not, directly or indirectly,
(i) pay any dividend or make any distribution (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 or to the Seller, (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, distributions to the Seller, Master
Servicer, the Owner Trustee, the Trustee and the
Certificateholders as permitted by, and to the extent funds
are available for such purpose under, the Master Sale and
Servicing Agreement or Trust Agreement. The Issuer will not,
directly or indirectly, make payments to or distributions
from the Master Collection Account except in accordance with
this Indenture, the Basic Documents, any Series Supplement
or any Series Related Document.
SECTION 3.19 Notice of Events of Default
. Upon a Responsible Officer of the Owner Trustee
having actual knowledge thereof, the Issuer agrees to give
the Trustee and the Rating Agencies prompt written notice of
each Event of Default under any Series Supplement and each
default on the part of the Master Servicer or the Seller of
its obligations under the Master Sale and Servicing
Agreement.
SECTION 3.20 Further Instruments and Acts
. Upon request of the 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 3.21 Amendments of Master Sale and
Servicing Agreement and Trust Agreement
. The Issuer shall not agree to any amendment to
Section 13.1 of the Master Sale and Servicing Agreement or
Section 13.1 of the Trust Agreement to eliminate the
requirements thereunder that the Trustee or the Holders of
the Notes consent to amendments thereto as provided therein.
SECTION 3.22 Income Tax Characterization
. For purposes of federal income, state and local
income and franchise and any other income taxes, the Issuer,
the Noteholders, the Certificateholders and the Trustee will
treat the Notes as indebtedness and hereby instructs the
Trustee to treat the Notes as indebtedness for federal and
state tax reporting purposes.
SECTION 3.23 No Borrowing
. The Issuer shall not issue, incur, assume,
guarantee or otherwise become liable, directly or
indirectly, for any Indebtedness except for (i) the Notes
and (ii) any other Indebtedness permitted by or arising
under the Basic Documents.
SECTION 3.24 Guarantees, Loans, Advances and
Other Liabilities
. Except as contemplated by the Master Sale and
Servicing Agreement or 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 3.25 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 3.26 Restricted Payments
. The Issuer shall not, directly or indirectly,
(i) pay any dividend or make any distribution (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 or to the Master Servicer,
(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, distributions to the Servicer, the Owner
Trustee, the Trustee and the Certificateholders as permitted
by, and to the extent funds are available for such purpose
under the Master Sale and Servicing Agreement or Trust
Agreement.
ARTICLE IV.
Satisfaction and Discharge
SECTION 4.1 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 3.3, 3.4, 3.5, 3.8, 3.10,
3.12, 3.13, 3.20, 3.21 and 3.22, (v) the rights and
immunities of the Trustee hereunder (including the rights of
the Trustee under Section 6.7 and the obligations of the
Trustee under Section 4.2) and (vi) the rights of
Noteholders as beneficiaries hereof with respect to the
related Series Trust Estate so deposited with the Trustee
payable to all or any of them, and the 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 2.5 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 3.3) have been delivered to the Trustee
for cancellation and the related Series Support,
if any, has been returned to the related Series
Support Provider; or
(2) all Notes not theretofore delivered
to the Trustee for cancellation
(i) have become due and payable,
(ii) will become due and payable at their respective
Final Scheduled Distribution Dates within one year, or
(iii) are to be called for redemption within one year
under arrangements satisfactory to the Trustee for the
giving of notice of redemption by the Trustee in the
name, and at the expense, of the Issuer,
and the Issuer, in the case of (i), (ii) or (iii) above,
has irrevocably deposited or caused to be irrevocably
deposited with the 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 not theretofore delivered to the Trustee for
cancellation when due on the Final Scheduled Distribution
Date or tender date (if Notes shall have been called for
redemption or tender pursuant to the related Series
Supplement, as the case may be; and
(B) the Issuer has paid or caused to be paid
all other amounts owing to all Holders.
SECTION 4.2 Application of Trust Money
. All monies deposited with the Trustee pursuant
to Section 4.1 hereof shall be held in trust and applied by
it, in accordance with the provisions of the Notes, this
Indenture and the related Series Supplement, to the payment,
either directly or through any Note Paying Agent, as the
Trustee may determine, to the Holders of the particular
Notes for the payment or redemption of which such monies
have been deposited with the Trustee, of all sums due and to
become due thereon for principal and interest; but such
monies need not be segregated from other funds except to the
extent required herein or in the Master Sale and Servicing
Agreement or required by law.
SECTION 4.3 Repayment of Monies Held by Note
Paying Agent
. In connection with the satisfaction and
discharge of this Indenture with respect to the Notes, all
monies then held by any Note Paying Agent other than the
Trustee under the provisions of this Indenture with respect
to such Notes shall, upon demand of the Issuer, be paid to
the Trustee to be held and applied according to Section 3.3
and thereupon such Note Paying Agent shall be released from
all further liability with respect to such monies.
ARTICLE V.
Remedies
SECTION 5.1 Events of Default
. The definition of "Event of Default" with
respect to a Series, together with certain rights and
remedies consequent thereto, shall be set forth in the
related Series Supplement.
SECTION 5.2 Collection of Indebtedness and
Suits for Enforcement by Trustee
.
(a) Subject to the terms of the related
Series Supplement, 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,
and such default continues for a period of five days, the
Issuer will, upon demand of the Trustee, pay to it, for the
benefit of the Holders of the Notes, the whole amount then
due and payable on such Notes for principal and interest,
with interest upon the overdue principal, and, to the extent
payment at such rate of interest shall be legally
enforceable, upon overdue installments of interest, at the
applicable Interest Rate 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
Trustee and its agents and outside counsel.
(b) If an Event of Default occurs and is
continuing with respect to a Series, the Trustee may in its
discretion proceed to protect and enforce the rights of the
Noteholders of each Series by such appropriate Proceedings
as the 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 the related Series Supplement 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 Trustee by
this Indenture, the related Series Supplement or by law.
(c) 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
related Series Trust Estate, proceedings under Title 11 of
the United States Code or any other applicable Federal or
state bankruptcy, insolvency or other similar law, or in
case a receiver, assignee or trustee in bankruptcy or
reorganization, liquidator, sequestrator or similar official
shall have been appointed for or taken possession of the
Issuer or its property or such other obligor or Person, or
in case of any other comparable judicial proceedings
relative to the Issuer or other obligor upon the Notes of
such Series, or to the creditors or property of the Issuer
or such other obligor, the Trustee, irrespective of whether
the principal of any Notes of such Series shall then be due
and payable as therein expressed or by declaration or
otherwise and irrespective of whether the 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 such Notes and to file such other papers
or documents as may be necessary or advisable in order
to have the claims of the Trustee against the related
Series Trust Estate (including any claim for reasonable
compensation to the Trustee and each predecessor
Trustee, and their respective agents, attorneys and
outside counsel, and for reimbursement of all expenses
and liabilities incurred, and all advances made, by the
Trustee and each predecessor Trustee, except as a
result of negligence, bad faith or willful misconduct)
and of the Noteholders allowed in such Proceedings;
(ii) unless prohibited by applicable law and
regulations, to vote on behalf of the Holders of Notes
of such Series in any election of a trustee, a standby
trustee or person performing similar functions in any
such proceedings;
(iii) to collect and receive any monies or
other property payable or deliverable on any such
claims and received with respect to the related Series
Trust Estate and to distribute all amounts received
with respect to the claims of the Noteholders and of
the 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 Trustee or the Holders
of Notes of such Series, in each case against the
related Series Trust Estate 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 Trustee,
and, in the event that the Trustee shall consent to the
making of payments directly to such Noteholders, to pay to
the Trustee such amounts as shall be sufficient to cover
reasonable compensation to the Trustee, each predecessor
Trustee and their respective agents, attorneys and counsel,
and all other expenses and liabilities incurred, and all
advances made, by the Trustee and each predecessor Trustee
except as a result of negligence or bad faith.
(d) Nothing herein contained shall be deemed
to authorize the 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 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.
(e) All rights of action and of asserting
claims under this Indenture, the related Series Supplement
or under any of the Notes, may be enforced by the 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 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
Trustee, each predecessor Trustee and their respective
agents and attorneys, shall be for the ratable benefit of
the Holders of the Notes.
(f) In any proceedings brought by the
Trustee (and also any proceedings involving the
interpretation of any provision of this Indenture or the
related Series Supplement), the 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 5.3 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 the related Series Supplement,
or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless:
(i) such Holder has previously given written
notice to the Trustee of a continuing Event of Default
with respect to the Notes of the related Series;
(ii) the Holders of not less than 25% of the
Outstanding Amount of the Notes of the related Series
have made written request to the Trustee to institute
such proceeding in respect of such Event of Default in
its own name as Trustee hereunder;
(iii) such Holder or Holders have offered to
the Trustee indemnity reasonably satisfactory to it
against the costs, expenses and liabilities to be
incurred in complying with such request;
(iv) the 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 Trustee during such 60-
day period by the Holders of a majority of the
Outstanding Amount of the Notes of such Series.
it being understood and intended that no Holders of Notes
shall have any right in any manner whatsoever 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.
SECTION 5.4 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 or the related Series Supplement
(or, in the case of redemption or tender pursuant to any
Series Supplement, on or after the related redemption or
tender date) 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 5.5 Restoration of Rights and Remedies
. If the Trustee or any Noteholder has instituted
any Proceeding to enforce any right or remedy under this
Indenture or the related Series Supplement and such
Proceeding has been discontinued or abandoned for any
reason, then and in every such case the Issuer, the Trustee,
and the related 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 Trustee, and the
related Noteholders shall continue as though no such
proceeding had been instituted.
SECTION 5.6 Rights and Remedies Cumulative
. No right or remedy herein conferred upon or
reserved to the related 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 5.7 Delay or Omission Not a Waiver
. No delay or omission of the Trustee or any
Holder of any related Note to exercise any right or remedy
accruing upon any Default or Event of Default shall impair
any such right or remedy or constitute a waiver of any such
Default or Event of Default or an acquiescence therein.
Every right and remedy given by this Article V or by law to
the Trustee, the Trustee or to the related Noteholders may
be exercised from time to time, and as often as may be
deemed expedient, by the Trustee or by the related
Noteholders, as the case may be.
SECTION 5.8 Control by Noteholders
. The Holders of a majority of the Outstanding
Amount of the Notes with respect to such Series shall have
the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee with
respect to the Notes of such Series or exercising any trust
or power conferred on the Trustee; provided that
(i) such direction shall not be in conflict
with any rule of law or with this Indenture or with the
related Series Supplement; and
(ii) the Trustee may take any other action
deemed proper by the Trustee that is not inconsistent
with such direction;
provided, however, that, subject to Section 6.1, the 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 5.9 Waiver of Past Defaults
. Unless otherwise provided in the related Series
Related Documents, a majority of the Noteholders of a Series
may waive any past Default or Event of Default relating to
such Series and its consequences except a Default relating
to such Series (a) in payment of principal of or interest on
any of the Notes of the related Series 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 of
the related Series. In the case of any such waiver, the
Issuer, the Trustee and the Holders of the Notes of the
related Series shall be restored to their former positions
and rights hereunder, respectively; but no such waiver shall
extend to any subsequent or other Default or impair any
right consequent thereto.
Upon any such waiver, such Default shall cease to
exist and be deemed to have been cured and not to have
occurred, and any Event of Default arising therefrom shall
be deemed to have been cured and not to have occurred, for
every purpose of this Indenture and the related Series
Supplement; but no such waiver shall extend to any
subsequent or other Default or Event of Default or impair
any right consequent thereto.
SECTION 5.10 Undertaking for Costs
. All parties to this Indenture and the related
Series Supplement 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 and the related Series Supplement, or in any suit
against the Trustee for any action taken, suffered or
omitted by it as 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
shall not apply to (a) any suit instituted by the Trustee,
(b) any suit instituted by any Noteholder, or group of
Noteholders, in each case holding in the aggregate more than
10% of the Outstanding Amount of the Notes of the related
Series 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 and the related Series
Supplement.
SECTION 5.11 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
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 related Series
Supplement; and the Issuer (to the extent that it may
lawfully do so) hereby expressly waives all benefit of any
such law, and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every
such power as though no such law had been enacted.
SECTION 5.12 Action on Notes
. The Trustee's right to seek and recover
judgment on the Notes or under this Indenture or any Series
Supplement shall not be affected by the seeking, obtaining
or application of any other relief under or with respect to
this Indenture or the related Series Supplement. Neither
the lien of this Indenture or the related Series Supplement
nor any rights or remedies of the Trustee or the Noteholders
shall be impaired by the recovery of any judgment by the
Trustee against the Issuer or by the levy of any execution
under such judgment upon any portion of the related Series
Trust Estate or upon any of the assets of the Issuer.
SECTION 5.13 Performance and Enforcement of
Certain Obligations
.
(a) Promptly following a request from the
Trustee to do so and at the Master Servicer's expense, the
Issuer agrees to take all such lawful action as the Trustee
may request to compel or secure the performance and
observance by the Seller and the Master Servicer, as
applicable, of each of their obligations to the Issuer under
or in connection with the Master Sale and Servicing
Agreement in accordance with the terms thereof, and to
exercise any and all rights, remedies, powers and privileges
lawfully available to the Issuer under or in connection with
the Master Sale and Servicing Agreement to the extent and in
the manner directed by the Trustee, including the
transmission of notices of default on the part of the Seller
or the Master Servicer thereunder and the institution of
legal or administrative actions or proceedings to compel or
secure performance by the Seller or the Master Servicer of
each of their obligations under the Master Sale and
Servicing Agreement.
(b) If an Event of Default has occurred and
is continuing with respect to a Series, the Trustee may,
and, at the written direction of the Holders of 66-2/3% of
the Outstanding Amount of the Notes of such Series shall,
exercise all rights, remedies, powers, privileges and claims
of the Issuer against the Seller or the Master Servicer
under or in connection with the Master Sale and Servicing
Agreement, including the right or power to take any action
to compel or secure performance or observance by the Seller
or the Master Servicer of each of their obligations to the
Issuer thereunder and to give any consent, request, notice,
direction, approval, extension or waiver under the Master
Sale and Servicing Agreement, and any right of the Issuer to
take such action shall be suspended.
ARTICLE VI.
The Trustee
SECTION 6.1 Duties of Trustee
.
(a) If an Event of Default has occurred and
is continuing of which Responsible Officer of the Trustee
has actual knowledge, the Trustee shall exercise the rights
and powers vested in it by this Indenture and the Basic
Documents and use the same degree of care and skill in its
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 with respect to a Series of which a
Responsible Officer of the Trustee has actual knowledge:
(i) the Trustee undertakes to perform with
respect to such Series such duties and only such duties
as are specifically set forth in this Indenture and the
related Series Supplement and no implied covenants or
obligations shall be read into this Indenture or the
related Series Supplement against the Trustee; and
(ii) in the absence of bad faith on its part,
the 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 Trustee as the case may be and
conforming to the requirements of this Indenture and
the related Series Supplement; however, the Trustee
shall examine the certificates and opinions to
determine whether or not they conform on their face to
the requirements of this Indenture or the related
Series Supplement provided, further, that the Trustee
shall not be responsible for the accuracy or content of
any resolution, certificate, statement, opinion,
report, document, order or other instrument furnished
to it, including, without limitation, any statistical,
numerical or financial data contained therein.
(c) The 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 does not limit the effect of
paragraph (b) of this Section;
(ii) the Trustee shall not be liable for any
error of judgment made in good faith by a Responsible
Officer unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(iii) the 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 5.8.
(d) The Trustee shall not be liable for
interest on any money received by it except as such Person
may agree in writing with the Issuer.
(e) Money held in trust by the Trustee need
not be segregated from other funds except to the extent
required by law or the terms of this Indenture, the related
Series Supplement or the Master Sale and Servicing
Agreement.
(f) No provision of this Indenture or the
related Series Supplement shall require the 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 indemnity reasonably satisfactory to it
against such risk or liability is not reasonably assured to
it.
(g) Every provision of this Indenture and
the related Series Supplement relating to the conduct or
affecting the liability of or affording protection to the
Trustee shall be subject to the provisions of this Section
and to the provisions of the TIA.
(h) The Trustee shall, and hereby agrees
that it will, perform all of the obligations and duties
required of it under the Master Sale and Servicing
Agreement.
(i) Without limiting the generality of this
Section 6.1, the Trustee shall have no duty (i) to see to
any recording, filing or depositing of this Indenture, any
Series Supplement or any agreement referred to herein or any
financing statement evidencing a security interest in the
Financed Vehicles, or to see to the maintenance of any such
recording or filing or depositing or to any recording,
refiling or redepositing of any thereof, (ii) to see to any
insurance of the Financed Vehicles or Obligors or to effect
or maintain any such insurance, (iii) to see to the payment
or discharge of any tax, assessment or other governmental
charge or any Lien or encumbrance of any kind owing with
respect to, assessed or levied against any part of the
Trust, (iv) to confirm or verify the contents of any reports
or certificates delivered to the Trustee pursuant to this
Indenture, any Series Supplement or the Master Sale and
Servicing Agreement believed by the Trustee to be genuine
and to have been signed or presented by the proper party or
parties, or (v) to inspect the Financed Vehicles at any time
or ascertain or inquire as to the performance of observance
of any of the Issuer's, the Seller's or the Master
Servicer's representations, warranties or covenants or the
Master Servicer's duties and obligations as Master Servicer
and as custodian of the Receivable Files under the Master
Sale and Servicing Agreement.
(j) In no event shall The Chase Manhattan
Bank, in any of its capacities hereunder, be deemed to have
assumed any duties of the Owner Trustee under the Delaware
Business Trust Statute, common law, or the Trust Agreement.
SECTION 6.2 Rights of Trustee
.
(a) The Trustee may rely on any document
believed by it to be genuine and to have been signed or
presented by the proper person. The Trustee need not
investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from
acting, it may require an Officer's Certificate or an
Opinion of Counsel. The Trustee shall not be liable for any
action it takes or omits to take in good faith in reliance
on the Officer's Certificate or Opinion of Counsel.
(c) The 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 Trustee shall not be
responsible for any misconduct or negligence on the part of,
or for the supervision of the Master Servicer or any other
agent, attorney, custodian or nominee appointed with due
care by it hereunder.
(d) The 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 Trustee's conduct does not
constitute willful misconduct, negligence or bad faith.
(e) The Trustee may consult with counsel,
and the advice or opinion of counsel with respect to legal
matters relating to this Indenture, the Basic Documents, any
Series Supplement, any Series Related Documents and the
Notes and such advice or opinion of counsel 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.
(f) The Trustee shall be under no obligation
to institute, conduct or defend any litigation under this
Indenture or any Series Supplement or in relation to this
Indenture or any Series Supplement, at the request, order or
direction of any of the Holders of Notes, pursuant to the
provisions of this Indenture or any Series Supplement,
unless such Holders of Notes shall have offered to the
Trustee reasonable security or indemnity against the costs,
expenses and liabilities that may be incurred therein or
thereby; provided, however, that the Trustee shall, upon the
occurrence of an Event of Default (that has not been cured),
exercise the rights and powers vested in it by this
Indenture and any Series Supplement with reasonable care and
skill customary for the care and skill exercised by trustees
under similar circumstances.
(g) The Trustee shall not be bound to make
any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion,
report, notice, request, consent, order, approval, bond or
other paper or document, provided, however, that if the
payment within a reasonable time to the Trustee of the
costs, expenses or liabilities likely to be incurred by it
in the making of such investigation is, in the opinion of
the Trustee not reasonably assured to the Trustee by the
security afforded to it by the terms of this Indenture, any
Series Supplement or the Master Sale and Servicing
Agreement, the Trustee may require indemnity reasonably
satisfactory to it against such cost, expense or liability
as a condition to so proceeding; the reasonable expense of
every such examination shall be paid by the Person making
such request, or, if paid by the Trustee shall be reimbursed
by the Person making such request upon demand.
(h) The right of the Trustee to perform any
discretionary act enumerated in this Agreement shall not be
construed as a duty, and the Trustee shall not be answerable
for other than its negligence or willful misconduct in the
performance of such act.
(i) The Trustee shall not be required to
give any bond or surety in respect of the execution of the
Trust Estate created hereby or the powers granted hereunder.
(j) Anything in this Indenture or any
Supplement hereto to the contrary notwithstanding, in no
event shall the Trustee be liable for special, indirect or
consequential loss or damage of any kind whatsoever
(including but not limited to lost profits), even if the
Trustee has been advised of the likelihood of such loss or
damage and regardless of the form of action.
(k) The Trustee shall not be required to
take notice or be deemed to have notice or knowledge of any
default, Event of Default, Master Servicer Termination Event
unless a Responsible Officer of the Trustee shall have
actual notice thereof.
(l) The Trustee shall not in any way be held
liable by reason of any insufficiency in any Trust Account
(including, without limitation, the Master Collection
Account, the Reserve Account and the 1998-1 Note Account or
any subaccount thereof) held by or on behalf of the Trustee
resulting from any investment loss on any Eligible
Investment included therein.
SECTION 6.3 Individual Rights of Trustee
. The 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 Trustee. Any Note
Paying Agent, Note Registrar, co-registrar or co-paying
agent may do the same with like rights. However, the
Trustee must comply with Sections 6.11 and 6.12.
SECTION 6.4 Trustee's Disclaimer
. The Trustee shall not be responsible for and
makes no representation as to the validity or adequacy of
this Indenture, any Series Supplement, the related Series
Trust Estate 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, in any Series Supplement or in any document
issued in connection with the sale of the Notes or in the
Notes other than the Trustee's certificate of
authentication.
SECTION 6.5 Notice of Defaults
. If an Event of Default occurs and is continuing
and if it is either actually known by, or written notice of
the existence thereof has been delivered to, a Responsible
Officer of the Trustee, the Trustee shall mail to each
Noteholder notice of the Default within 90 days after such
knowledge or notice occurs. Except in the case of a Default
in payment of principal of or interest on any Note, the
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 6.6 Reports by Trustee to Holders
. Upon written request, the Note Paying Agent or
the Master Servicer shall on behalf of the Issuer deliver to
each Noteholder such information as may be reasonably
required to enable such Holder to prepare its Federal and
state income tax returns required by law.
SECTION 6.7 Compensation and Indemnity
.
(a) As payable in each Series Supplement,
the Issuer shall, or shall cause the Master Servicer to, pay
to the Trustee from time to time the Trustee Fee as
compensation for its services. The 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
Master Servicer to reimburse the 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
Trustee's agents, outside counsel, accountants and experts.
The Issuer shall or shall cause the Master Servicer to
indemnify the Trustee, and its respective officers,
directors, employees and agents against any and all loss,
liability or expense (including attorneys' fees and
expenses) incurred by each of them in connection with the
acceptance or the administration of this trust and the
performance of its duties hereunder. The Trustee shall
notify the Issuer and the Master Servicer promptly of any
claim for which it may seek indemnity. Failure by the
Trustee to so notify the Issuer and the Master Servicer
shall not relieve the Issuer of its obligations hereunder or
the Master Servicer of its obligations under Article XII of
the Master Sale and Servicing Agreement. The Issuer shall
defend or shall cause the Master Servicer to defend any
claim for indemnity that may arise against the Trustee, or
the Trustee may have separate counsel and the Issuer shall
or shall cause the Master Servicer to pay the fees and
expenses of such counsel. Neither the Issuer nor the Master
Servicer need reimburse any expense or indemnify against any
loss, liability or expense incurred by the Trustee through
such Person's own willful misconduct, negligence or bad
faith.
(b) The Issuer's payment obligations to the
Trustee pursuant to this Section shall survive the
resignation or removal of the Trustee and the discharge of
this Indenture. When the Trustee incurs expenses after the
occurrence of an Insolvency Event 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. Notwithstanding anything else set forth in
this Indenture, the Basic Documents, any Series Supplement
or any Series Related Documents, the Trustee agrees that the
obligations of the Issuer (but not the Master Servicer) to
the Trustee hereunder and under any Series Supplement or any
Series Related Documents, shall be recourse to the related
Series Trust Estate only and specifically shall not be
recourse to the assets of the Issuer or any Securityholder.
In addition, the Trustee agrees that its recourse to the
Issuer, the related Series Trust Estate, the Seller and
amounts held pursuant to the related Series Support shall be
limited to the right to receive the distributions as
provided for in the payment priority provisions of the
related Series Supplement.
SECTION 6.8 Replacement of Trustee
. The Trustee may, and in the circumstances
specified in subparagraph (i) shall, resign at any time upon
60 days' prior written notice by so notifying the Issuer.
Holders of a majority of Outstanding Amount of the Notes and
the Master Servicer may remove the Trustee by so notifying
the Trustee upon 60 days' written notice. The Issuer may
and, at the request of the Noteholders shall, remove the
Trustee, if:
(i) the Trustee fails to comply with Section
6.11;
(ii) a court having jurisdiction in the premises
in respect of the Trustee in an involuntary case or
proceeding under federal or state banking or bankruptcy
laws, as now or hereafter constituted, or any other
applicable federal or state bankruptcy, insolvency or
other similar law, shall have entered a decree or order
granting relief or appointing a receiver, liquidator,
assignee, custodian, trustee, conservator, sequestrator
(or similar official) for the Trustee or for any
substantial part of the Trustee's property, or ordering
the winding-up or liquidation of the Trustee's affairs;
(iii) an involuntary case under the federal
bankruptcy laws, as now or hereafter in effect, or
another present or future federal or state bankruptcy,
insolvency or similar law is commenced with respect to
the Trustee and such case is not dismissed within 60
days;
(iv) the Trustee commences a voluntary case
under any federal or state banking or bankruptcy laws,
as now or hereafter constituted, or any other
applicable federal or state bankruptcy, insolvency or
other similar law, or consents to the appointment of or
taking possession by a receiver, liquidator, assignee,
custodian, trustee, conservator, sequestrator (or other
similar official) for the Trustee or for any
substantial part of the Trustee's property, or makes
any assignment for the benefit of creditors or fails
generally to pay its debts as such debts become due or
takes any corporate action in furtherance of any of the
foregoing;
(v) the Trustee otherwise becomes incapable of
acting; or
(vi) the rating assigned to the long-term
unsecured debt obligations of the Trustee by the Rating
Agencies shall be lowered below the rating of "BBB",
"Baa3" or equivalent rating or be withdrawn by either
of the Rating Agencies.
If the Trustee resigns or is removed or if a
vacancy exists in the office of Trustee for any reason (the
Trustee in such event being referred to herein as the
retiring Trustee), the Issuer shall promptly deliver a
notice of such removal, resignation or vacancy to the Master
Servicer and the Master Servicer may appoint a successor
Trustee. If the Master Servicer fails to appoint such a
successor Trustee, the Issuer or a resigning Trustee may
petition any court of competent jurisdiction to appoint a
successor Trustee. If the Trustee resigns or is removed,
the Trustee shall also resign or be removed, as the case may
be, as Certificate Paying Agent.
A successor Trustee shall deliver a written
acceptance of its appointment to the retiring Trustee and to
the Issuer. Thereupon the resignation or removal of the
retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the
retiring Trustee under this Indenture and the Series
Supplement. The successor Trustee shall mail a notice of
its succession to Noteholders. The retiring Trustee shall
promptly transfer all property held by it as Trustee to the
successor Trustee.
If the Trustee fails to comply with Section 6.11,
any Noteholder may petition any court of competent
jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to
this Section, the Issuer's and the Master Servicer's
obligations under Section 6.7 shall continue for the benefit
of the retiring Trustee.
SECTION 6.9 Successor Trustee by Merger
. If the 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 entity without any further act shall be the
successor Trustee; provided that such corporation or banking
association shall otherwise be eligible under Section 6.11
hereof. The Trustee shall provide the Rating Agencies with
written notice of any such transaction as soon as practical
thereafter.
In case at the time such successor or successors
by merger, conversion or consolidation to the 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 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 Trustee may authenticate such Notes either in the name
of any predecessor hereunder or in the name of the successor
to the 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
Trustee shall have.
SECTION 6.10 Appointment of Co-Trustee or
Separate 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 Trust may at the time be located, the 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 related Series Trust Estate, and to vest
in such Person or Persons, in such capacity and for the
benefit of the Noteholders, such title to the related Series
Trust Estate, or any part hereof, and, subject to the other
provisions of this Section, such powers, duties,
obligations, rights and trusts as the 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 6.8 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 Trustee shall be
conferred or imposed upon and exercised or performed by
the 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 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
Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers,
duties and obligations (including the holding of title
to the Trust or any portion thereof in any such
jurisdiction) shall be exercised and performed singly
by such separate trustee or co-trustee, but solely at
the direction of the Trustee;
(ii) no trustee hereunder shall be personally
liable by reason of any act or omission of any other
trustee hereunder, including acts or omissions of
predecessor or successor trustees; and
(iii) the 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 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 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 Trustee. Every such instrument
shall be filed with the Trustee.
(d) Any separate trustee or co-trustee may
at any time constitute the 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, dissolve, become
insolvent, 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 Trustee, to the extent
permitted by law, without the appointment of a new or
successor trustee.
SECTION 6.11 Eligibility: Disqualification
. The Trustee shall at all times: satisfy TIA
310(a), 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 have a long-term debt rating of at
least "BBB", "Baa3" or equivalent rating from each of the
Rating Agencies. The Trustee shall comply with TIA
310(b), including the optional provision permitted by the
second sentence of TIA 310(b)(9); provided, however, that
there shall be excluded from the operation of TIA
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 310(b)(1) are met.
SECTION 6.12 Preferential Collection of Claims
Against Issuer
. The Trustee shall comply with TIA 311(a),
excluding any creditor relationship listed in TIA 311(b).
A Trustee who has resigned or been removed shall be subject
to TIA 311(a) to the extent indicated.
SECTION 6.13 Representations and Warranties of
the Trustee
. The Trustee represents and warrants to the
Issuer as follows:
(a) Due Organization. The Trustee is a New
York banking corporation, duly organized, validly existing
and in good standing under the laws of the State of New York
and is duly authorized and licensed under applicable law to
conduct its business as presently conducted.
(b) Corporate Power. The Trustee has all
requisite right, power and authority to execute and deliver
this Indenture and each Series Supplement and to perform all
of its duties as the Trustee hereunder.
(c) Due Authorization. The execution and
delivery by the Trustee of this Indenture, each Series
Supplement and the other Series Related Transaction
Documents to which it is a party, and the performance by the
Trustee of its duties hereunder and thereunder, have been
duly authorized by all necessary corporate proceedings which
are required for the valid execution and delivery by the
Trustee, or the performance by the Trustee, of this
Indenture, each Series Supplement and such other Series
Related Documents.
(d) Valid and Binding Indenture. The
Trustee has duly executed and delivered this Indenture, each
Series Supplement, each other Basic Document and each Series
Related Document to which it is a party, and each of this
Indenture, any Series Supplement, each other Basic Document
and each other Series Related Document constitutes the
legal, valid and binding obligation of the Trustee
enforceable against the Trustee in accordance with its
terms, except as (i) such enforceability may be limited by
bankruptcy, insolvency, reorganization and similar laws
relating to or affecting the enforcement of creditors'
rights generally and (ii) the availability of equitable
remedies may be limited by equitable principles of general
applicability.
SECTION 6.14 Waiver of Setoffs
. The Trustee hereby expressly waives any and all
rights of setoff that the Trustee may otherwise at any time
have under applicable law with respect to any Trust Account
and Series Trust Account and agrees that amounts in the
Trust Accounts and Series Trust Accounts shall at all times
be held and applied solely in accordance with the provisions
hereof.
SECTION 6.15 No Consent to Certain Acts of
Seller
. The Seller shall not request that the Trustee
consent to, nor shall the Trustee consent to any action
proposed to be taken by the Seller pursuant to Article
FIFTEENTH of the Seller's Articles of Incorporation.
ARTICLE VII.
Noteholders' Lists and Reports
SECTION 7.1 Issuer To Furnish To Trustee Names
and Addresses of Noteholders
. The Issuer will furnish or cause to be
furnished to the Trustee with respect to each Series of
Notes (a) not more than five days after the earlier of (i)
each Record Date with respect to such Series and (ii) three
months after the last Record Date, a list, in such form as
the Trustee may reasonably require, of the names and
addresses of the Holders with respect to such Series as of
such Record Date, (b) at such other times as the 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 Trustee is the Note Registrar, no such list shall be
required to be furnished.
SECTION 7.2 Preservation of Information;
Communications to Noteholders
. The Trustee shall preserve, in as current a
form as is reasonably practicable, the names and addresses
of the Holders contained in the most recent list furnished
to the Trustee as provided in Section 7.1 and the names and
addresses of Holders received by the Trustee in its capacity
as Note Registrar. The Trustee may destroy any list
furnished to it as provided in such Section 7.1 upon receipt
of a new list so furnished.
(a) Noteholders may communicate pursuant to
TIA 312(b) with other Noteholders with respect to their
rights under this Indenture or under the Notes.
(b) The Issuer, the Trustee and the Note
Registrar shall have the protection of TIA 312c.
SECTION 7.3 Reports by Issuer
.
If this Indenture is qualified under the TIA, the Issuer
shall:
(i) file with the Trustee, within 15 days after
the Issuer is required to file the same with the
Commission, copies of the annual reports and copies of
the information, 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) which 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 Trustee and the Commission 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 Trustee (and the Trustee
shall transmit by mail to all Noteholders described in
TIA 313c) such summaries of any information,
documents and reports required to be filed by the
Issuer pursuant to clauses (i) and (ii) of this Section
7.3(a) as may be required 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.
(c) The Trustee shall not have any duty or
obligation with respect to any reports or other information
delivered to it pursuant to this Section 7.3.
SECTION 7.4 Reports by Trustee
. If required by TIA 313(a), within 60 days
after each March 31 beginning with March 31, 1999 the
Trustee shall mail to each Noteholder as required by TIA
313c a brief report dated as of such date that complies
with TIA 313(a). The Trustee also shall comply with TIA
313(b).
A copy of each report at the time of its mailing
to Noteholders shall be filed by the Trustee with the
Commission and each stock exchange, if any, on which the
Notes are listed. The Issuer shall notify the Trustee if
and when the Notes are listed on any stock exchange.
ARTICLE VIII.
Accounts, Disbursements and Releases
SECTION 8.1 Collection of Money
. Except as otherwise expressly provided herein,
the 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
Trustee pursuant to this Indenture and the Master Sale and
Servicing Agreement. The Trustee shall apply all such money
received by it as provided in this Indenture and the Series
Supplement. Except as otherwise expressly provided in this
Indenture or in the Master Sale and Servicing Agreement, if
any default occurs in the making of any payment or
performance under any agreement or instrument that is part
of the Series Trust Estate, the 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 8.2 Release of Trust Property
.
(a) Subject to the payment of its fees and
expenses pursuant to Section 6.7, the Trustee may, and when
required by the Issuer and the provisions of this Indenture
shall, execute instruments to release property from the lien
of this Indenture, 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 Trustee
as provided in this Article VIII shall be bound to ascertain
the Trustee's authority, inquire into the satisfaction of
any conditions precedent or see to the application of any
monies.
(b) The Trustee shall, at such time as there
are no Notes outstanding and all sums due the Trustee
pursuant to Section 6.7 have been paid, release any
remaining portion of the related Series Trust Estate that
secured the Notes from the lien of this Indenture and
release to the Issuer or any other Person entitled thereto
any funds then on deposit in the Trust Accounts. The
Trustee shall release property from the lien of this
Indenture pursuant to this Section 8.2(b) only upon receipt
of an Issuer Request accompanied by an Officer's
Certificate, an Opinion of Counsel and (if required by the
TIA) Independent Certificates in accordance with TIA 314c
and 314(d)(1) meeting the applicable requirements of Section
11.1.
SECTION 8.3 Opinion of Counsel
. The Trustee shall receive at least seven days'
notice when requested by the Issuer to take any action
pursuant to Section 8.2(a), accompanied by copies of any
instruments involved, and the Trustee shall also require as
a condition to such action, an Opinion of Counsel, 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 related Series 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 Trustee in
connection with any such action.
ARTICLE IX.
Amendments; Series Supplements
SECTION 9.1 Amendments Without Consent of
Noteholders
.
(a) Except as otherwise provided in the
Series Supplement, without the consent of the Holders of any
Notes but with prior written notice to the Rating Agencies,
as evidenced to the Trustee and the Issuer, when authorized
by an Issuer Order, at any time and from time to time, the
parties hereto may enter into one or more amendments hereto,
in form satisfactory to the 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 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 Trustee;
(v) to cure any ambiguity, to correct or
supplement any provision herein or in any Series
Supplement which may be inconsistent with any other
provision herein or in any Series Supplement or to make
any other provisions with respect to matters or
questions arising under this Indenture or in any Series
Supplement; 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.
The Trustee is hereby authorized to join in the
execution of any amendment and to make any further
appropriate agreements and stipulations that may be therein
contained.
(b) Except as otherwise provided in the
Series Supplement, the Issuer and the Trustee, when
authorized by an Issuer Order, may, also without the consent
of any of the Holders of the Notes but with prior written
notice to the Rating Agencies by the Issuer, as evidenced to
the Trustee, enter into an amendment hereto for the purpose
of adding any provisions to, or changing in any manner or
eliminating any of the provisions of, this 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,
adversely affect in any material respect the interests of
any Noteholder.
SECTION 9.2 Amendments With Consent of
Noteholders
. Except as otherwise provided in the Series
Supplement, the Issuer and the Trustee, when authorized by
an Issuer Order provided by the Master Servicer, also may,
upon satisfaction of the Rating Agency Condition and with
the consent of the Holders of not less than a majority of
the Outstanding Amount of each class of Notes affected
thereby, by Act of such Holders delivered to the Issuer and
the Trustee, enter into an amendment hereto for the purpose
of adding any provisions to, or changing in any manner or
eliminating any of the provisions of, this Indenture or of
modifying in any manner the rights of the Holders of the
Notes under this Indenture; provided, however, that no such
amendment shall, without the consent of the Holder of each
Outstanding Note affected thereby:
(i) change the date of payment of any installment of
principal of or interest on any Note, or reduce
the principal amount thereof, the interest rate
thereon, change the provision of this Indenture
relating to the application of collections on, or
the proceeds of the sale of, any Series Trust
Estate to payment of principal of or interest on
the Notes, or change any place of payment where,
or the coin or currency in which, any Note or the
interest thereon is payable;
(ii) impair the right to institute suit for the
enforcement of the provisions of this Indenture
requiring the application of funds available
therefor, as provided in Article V, to the payment
of any such amount due on the Notes on or after
the respective due dates thereof;
(iii) reduce the percentage of the Outstanding Amount of
the Notes, the consent of the Holders of which is
required for any such Series Supplement, 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;
(iv) modify or alter the provisions of the proviso to
the definition of the term "Outstanding";
(v) reduce the percentage of the Outstanding Amount of
the Notes required to direct the Trustee to direct
the Issuer to sell or liquidate the Series Trust
Estate pursuant to Section 5.4;
(vi) modify any provision of this Section 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 Outstanding Note affected thereby;
(vii) 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 Distribution Date (including
the calculation of any of the individual
components of such calculation) or to affect the
rights of the Holders of Notes to the benefit of
any provisions for the mandatory redemption of the
Notes contained in the Series Supplement; or
(viii) 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 Series Trust
Estate or, except as otherwise permitted or
contemplated herein or in the Series Supplement or
the Series Related Documents, 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.
It shall not be necessary for any Act of
Noteholders under this Section to approve the particular
form of any proposed amendment, but it shall be sufficient
if such Act shall approve the substance thereof.
Promptly after the execution by the Issuer and the
Trustee of any amendment pursuant to this Section, the
Trustee shall mail to the Holders of the Notes to which such
amendment relates a notice setting forth in general terms
the substance of such amendment. Any failure of the Trustee
to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any
such amendment.
Prior to the execution of any amendment to this
Indenture, the Indenture Trustee shall be entitled to
receive and rely upon an Opinion of Counsel stating that the
execution of such amendment is authorized or permitted by
this Indenture. The Indenture Trustee may, but shall not be
obligated to, enter into any such amendment which affects
the Indenture Trustee's own rights, duties or immunities
under this Indenture.
SECTION 9.3 Supplements Authorizing a Series of
Notes
.
(a) Each Series of Notes issued hereunder
shall be issued pursuant to a Series Supplement, which shall
set forth the terms and provisions of such Series.
(b) Amendments to Series Supplements shall
be governed by the provisions of the relevant Series
Supplement. The Trustee may conclusively rely on an Opinion
of Counsel as to which Series Supplements relate to which
Series, or to this Indenture (and thus all Series) as a
whole.
SECTION 9.4 Execution of Series Supplements
. In executing, or permitting the additional
trusts created by, any Series Supplement permitted by this
Article IX or the modifications thereby of the trusts
created by this Indenture, the Trustee shall be entitled to
receive, and subject to Sections 6.1 and 6.2, shall be fully
protected in relying upon, an Opinion of Counsel (and, if
requested, an Officer's Certificate) stating that the
execution of such Series Supplement is authorized or
permitted by this Indenture. The Trustee may, but shall not
be obligated to, enter into any such Series Supplement that
affects the Trustee's own rights, duties, liabilities or
immunities under this Indenture or otherwise.
SECTION 9.5 Effect of Series Supplement
. Upon the execution of any Series Supplement or
amendment pursuant to the provisions of such Series
Supplement or hereof, this Indenture shall be and 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
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
Series Supplement or Amendment shall be and be deemed to be
part of the terms and conditions of this Indenture for any
and all purposes.
SECTION 9.6 Conformity With Trust Indenture Act
. Every amendment of this Indenture and every
Series Supplement executed pursuant to this Article IX shall
conform to the requirements of the Trust Indenture Act as
then in effect so long as this Indenture shall then be
qualified under the Trust Indenture Act.
SECTION 9.7 Reference in Notes to Series
Supplements
. Notes authenticated and delivered after the
execution of any Series Supplement pursuant to this Article
IX may, and if required by the Issuer shall, bear a notation
as to any matter provided for in such Series Supplement. If
the Issuer shall so determine, new Notes so modified as to
conform, in the opinion of the Issuer, to any such Series
Supplement may be prepared and executed by the Issuer and
authenticated and delivered by the Trustee in exchange for
Outstanding Notes.
ARTICLE X.
Reserved
ARTICLE XI.
Miscellaneous
SECTION 11.1 Compliance Certificates and
Opinions, etc.
(a) Upon any application or request by the
Issuer to the Trustee to take any action under any provision
of this Indenture or any Series Supplement, the Issuer shall
furnish to the Trustee (i) an Officer's Certificate stating
that all conditions precedent, if any, provided for in this
Indenture or any Series Supplement 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, 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 or any Series Supplement, 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 or any Series Supplement shall include:
(i) 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;
(ii) 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;
(iii) 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
(iv) a statement as to whether, in the opinion
of each such signatory such condition or covenant has
been complied with.
(b) (i) Prior to the deposit of any
property or securities with the Trustee that is to be
made the basis for the release of any property or
securities subject to the lien of this Indenture and
the related Series Supplement, the Issuer shall, in
addition to any obligation imposed in Section 11.1(a)
or elsewhere in this Indenture or the related Series
Supplement, furnish to the 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
property or securities to be so deposited.
(ii) Whenever the Issuer is required to furnish
to the 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 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 Outstanding
Amount of the Notes; provided, that 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 1% percent of the Outstanding
Amount of the Notes.
(iii) Other than with respect to the release
of any Repurchased Receivables or Liquidated
Receivables (as such terms are defined in the Master
Sale and Servicing Agreement), whenever any property or
securities are to be released from the lien of this
Indenture and the related Series Supplement, the Issuer
shall also furnish to the 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 and the
related Series Supplement in contravention of the
provisions hereof.
(iv) Whenever the Issuer is required to furnish
to the 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 furnish to the 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 Repurchased Receivables and Defaulted Receivables
(as such terms are defined in the Master Sale and
Servicing Agreement), 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 (ii) above and this
clause (iii), equals 10% or more of the Outstanding
Amount of the Notes; provided, that 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 1 percent of the then Outstanding
Amount of the Notes.
(v) Notwithstanding Section 2.9 or any other
provision of this Section, the Issuer may (A) collect,
liquidate, sell or otherwise dispose of Receivables as
and to the extent permitted or required by the Basic
Documents and (B) make cash payments out of the Trust
Accounts as and to the extent permitted or required by
the Basic Documents.
SECTION 11.2 Form of Documents Delivered to
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 or her 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 representations by, an officer or officers of the
Master Servicer, the Seller or the Issuer, stating that the
information with respect to such factual matters is in the
possession of the Master Servicer, the Seller or the Issuer,
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 or any Series
Supplement, in connection with any application or
certificate or report to the 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 Trustee's right to conclusively rely
upon the truth and accuracy of any statement or opinion
contained in any such document as provided in Article VI.
SECTION 11.3 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 Noteholders 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 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 6.1) conclusive in favor of the
Trustee and the Issuer, if made in the manner provided in
this Section.
(b) The fact and date of the execution by
any person of any such instrument or writing may be proved
in any customary manner of the Trustee.
(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 Trustee or the Issuer in reliance
thereon, whether or not notation of such action is made upon
such Note.
SECTION 11.4 Notices, etc., to 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 or any
Series Supplement to be made upon, given or furnished to or
filed with:
(a) The Trustee by any Noteholder or by the
Issuer shall be sufficient for every purpose hereunder if
personally delivered, delivered by overnight courier or
mailed first-class and shall be deemed to have been duly
given upon receipt to the Trustee at its Corporate Trust
Office, or
(b) The Issuer by the Trustee or by any
Noteholder shall be sufficient for every purpose hereunder
if personally delivered, delivered by facsimile or overnight
courier or mailed first class, and shall deemed to have been
duly given upon receipt to the Issuer addressed to:
Household Automobile Revolving Trust I, in care of
Wilmington Trust Company, Rodney Square North, 1100 North
Market Street, Wilmington, DE 19890-0001 Attention:
Corporate Trust Administration, or at any other address
previously furnished in writing to the Trustee by Issuer.
The Issuer shall promptly transmit any notice received by it
from the Noteholders to the Trustee.
Notices required to be given to the Rating
Agencies by the Issuer, the Trustee or the Owner Trustee
shall be in writing, personally delivered, delivered by
overnight courier or first class or via facsimile to (i) in
the case of Moody's, at the following address: Moody's
Investors Service, Inc., 99 Church Street, New York, New
York 10004, Fax No: (212) 553-0355 and (ii) in the case of
S&P, at the following address: Standard & Poor's Ratings
Group, 26 Broadway (15th Floor), New York, New York 10004,
Attention: Asset Backed Surveillance Department, Fax No:
(212) 412-0224; or as to each of the foregoing, at such
other address as shall be designated by written notice to
the other parties.
SECTION 11.5 Notices to Noteholders; Waiver
. Where this Indenture or any Series Supplement
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 or any Series Supplement
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 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
Trustee shall be deemed to be a sufficient giving of such
notice.
Where this Indenture or any Series Supplement
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 a Default or Event of Default.
SECTION 11.6 Alternate Payment and Notice
Provisions
. Notwithstanding any provision of this
Indenture, any Series Supplement 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 Trustee or any Note Paying Agent to such
Holder, that is different from the methods provided for in
this Indenture or the related Series Supplement for such
payments or notices, provided that such methods are
reasonable and consented to by the Trustee (which consent
shall not be unreasonably withheld). The Issuer will furnish
to the Trustee a copy of each such agreement and the Trustee
will cause payments to be made and notices to be given in
accordance with such agreements.
SECTION 11.7 Conflict with Trust Indenture Act
. If this Indenture is qualified under the Trust
Indenture Act and 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 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 11.8 Effect of Headings and Table of
Contents
. The Article and Section headings herein and the
Table of Contents are for convenience only and shall not
affect the construction hereof.
SECTION 11.9 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
Trustee in this Indenture, any Series Supplement shall bind
its successors. All agreements of the Master Servicer in
this Indenture or any Series Supplement shall bind its
successors and assigns.
SECTION 11.10 Separability
. In case any provision in this Indenture or in
the Notes shall be invalid, illegal or unenforceable, the
validity, legality, and enforceability of the remaining
provisions shall not in any way be affected or impaired
thereby.
SECTION 11.11 Benefits of Indenture
. Nothing in this Indenture or any Series
Supplement 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 related Series Trust
Estate, any benefit or any legal or equitable right, remedy
or claim under this Indenture.
SECTION 11.12 Legal Holidays
. In any case where the date on which any payment
is due shall not be a Business Day, then (notwithstanding
any other provision of the Notes, this Indenture or any
Series Supplement) payment need not be made on such date,
but may be made on the next succeeding Business Day with the
same force and effect as if made on the date an which
nominally due, and no interest shall accrue for the period
from and after any such nominal date.
SECTION 11.13 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 11.14 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 11.15 Recording of Indenture
. If this Indenture or any Series Supplement 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 Trust or any other counsel reasonably
acceptable to the 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 Trustee under this
Indenture or any Series Supplement.
SECTION 11.16 Trust Obligation
. No recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer,
the Seller, the Master Servicer, the Owner Trustee or the
Trustee on the Notes or under this Indenture or any Series
Supplement or any certificate or other writing delivered in
connection herewith or therewith, against (i) the Seller,
the Master Servicer, the 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, employee or agent of the Seller,
the Master Servicer, the Trustee or the Owner Trustee in its
individual capacity, any holder of a beneficial interest in
the Issuer, the Seller, the Master Servicer, the Owner
Trustee or the Trustee or of any successor or assign of the
Seller, the Master Servicer, the Trustee or the Owner
Trustee in its individual capacity, except as any such
Person may have expressly agreed (it being understood that
the Trustee and the Owner Trustee have no such obligations
in their individual capacity) and except that any such 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 Articles VI, VII, and VIII of the Trust
Agreement.
SECTION 11.17 No Petition
. The 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, 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 Notes, this Indenture
or any of the Basic Documents or any of the Series Related
Documents.
SECTION 11.18 Inspection
. The Issuer agrees that, on reasonable prior
notice, it will permit any representative of the 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 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 Trustee may
reasonably determine that such disclosure is consistent with
its Obligations hereunder.
SECTION 11.19 Limitation of Liability
. It is expressly understood and agreed by the
parties hereto that (a) this Agreement is executed and
delivered by Wilmington Trust Company, not individually or
personally but solely as Owner Trustee of the Issuer under
the Trust Agreement, in the exercise of the powers and
authority conferred and vested in it, (b) each of the
representations, undertakings and agreements herein made on
the part of the Issuer is made and intended not as personal
representations, undertakings and agreements by Wilmington
Trust Company but is made and intended for the purpose for
binding only the Issuer, c nothing herein contained shall be
construed as creating any liability on Wilmington Trust
Company individually or personally, to perform any covenant
either expressed or implied contained herein, all such
liability, if any, being expressly waived by the parties to
this Agreement and by any person claiming by, through or
under them and (d) under no circumstances shall Wilmington
Trust Company be personally liable for the payment of any
indebtedness or expenses of the Issuer or be liable for the
breach or failure of any obligation, representation,
warranty or covenant made or undertaking by the Issuer under
this Agreement or any related documents.
[Signature Page Follows]
IN WITNESS WHEREOF, the Issuer, the Master
Servicer and the Trustee have caused this Indenture to be
duly executed by their respective officers, hereunto duly
authorized, all as of the day and year first above written.
HOUSEHOLD AUTOMOBILE
REVOLVING TRUST I
By: WILMINGTON TRUST COMPANY, not
in its individual capacity but
solely as Owner Trustee
By:_______________________________
Name:
Title:
HOUSEHOLD FINANCE CORPORATION.
as Master Servicer
By:_______________________________
Name:
Title:
THE CHASE MANHATTAN BANK, not in its
individual capacity but solely as Trustee
By:_______________________________
Name:
Title:
[Signature Page for the Indenture]
NY_220368.6
EXECUTION COPY
HOUSEHOLD FINANCE CORPORATION,
as the Master Servicer,
together with
HOUSEHOLD AUTOMOBILE REVOLVING TRUST I,
as Issuer,
HOUSEHOLD AUTO RECEIVABLES CORPORATION,
as Seller,
and
THE CHASE MANHATTAN BANK,
as Indenture Trustee
and
WILMINGTON TRUST COMPANY,
as Owner Trustee
SERIES 1998-1 SUPPLEMENT
Dated as of November 1, 1998
to the
INDENTURE
Dated as of November 1, 1998
and to the
TRUST AGREEMENT
Dated as of March 1, 1998
TABLE OF CONTENTS
Page
ARTICLE I CREATION OF THE SERIES 1998-1 NOTES 1
SECTION 1.01. DESIGNATION. 1
SECTION 1.02. PLEDGE OF SERIES 1998-1 TRUST ESTATE. 2
SECTION 1.03. PAYMENTS AND COMPUTATIONS. 3
SECTION 1.04. DENOMINATIONS. 3
ARTICLE II DEFINITIONS 3
SECTION 2.01. DEFINITIONS. 3
ARTICLE III DISTRIBUTIONS AND STATEMENTS TO SERIES 1998-1
NOTEHOLDERS; SERIES SPECIFIC COVENANTS 15
SECTION 3.01. SERIES 1998-1 TRUST ACCOUNTS. 15
SECTION 3.02. RESERVE ACCOUNT. 16
SECTION 3.03. DISTRIBUTIONS. 16
SECTION 3.04. STATEMENTS TO NOTEHOLDERS. 19
SECTION 3.05. REPORTING REQUIREMENTS. 19
SECTION 3.06. COMPLIANCE WITH WITHHOLDING REQUIREMENTS. 20
SECTION 3.07. SPECIAL COVENANTS AND ACKNOWLEDGEMENTS. 20
SECTION 3.08. TAX CHARACTERIZATION. 20
SECTION 3.09. DETERMINATION OF LIBOR. 20
SECTION 3.10. INTEREST RATE CAP. 21
ARTICLE IV EVENTS OF DEFAULT; REMEDIES 21
SECTION 4.01. EVENTS OF DEFAULT. 21
SECTION 4.02. RIGHTS UPON EVENT OF DEFAULT. 22
SECTION 4.03. REMEDIES. 23
SECTION 4.04. PRIORITIES. 24
ARTICLE V PREPAYMENT AND REDEMPTION 25
SECTION 5.01. OPTIONAL "CLEAN-UP" REDEMPTION. 25
ARTICLE VI MISCELLANEOUS 26
SECTION 6.01. RATIFICATION OF BASIC DOCUMENTS. 26
SECTION 6.02. COUNTERPARTS. 26
SECTION 6.03. GOVERNING LAW. 26
SECTION 6.04. AMENDMENTS WITHOUT CONSENT OF NOTEHOLDERS. 26
SECTION 6.05. AMENDMENTS WITH CONSENT OF THE SERIES 1998-
1 NOTEHOLDERS. 27
SECTION 6.06. AUTHORITY TO REGISTER NOTES AND FILE
REPORTS. 29
Schedule I Schedule of Eligibility Criteria
Schedule II Schedule of Receivables
Exhibit A Form of Master Servicer's Certificate
Exhibit B Form of Interest Rate Cap
This Series 1998-1 Supplement, dated as of November 1,
1998, is by and among Household Finance Corporation, a Delaware
corporation, as master servicer (the "Master Servicer"),
Household Automobile Revolving Trust I, a Delaware business
trust, as Issuer (the "Issuer"), Household Auto Receivables
Corporation, a Nevada corporation, as Seller ("Seller"), The
Chase Manhattan Bank, a New York banking corporation ("Chase"),
as trustee for the Noteholders (the "Indenture Trustee") and
Wilmington Trust Company, a Delaware banking corporation, as
owner trustee (the "Owner Trustee") for the Certificateholders.
RECITALS
This Series 1998-1 Supplement, is executed and
delivered by the parties hereto pursuant to Section 9.3 of the
Indenture dated as of November 1, 1998 (the "Indenture") among
the Issuer, the Master Servicer and the Indenture Trustee and
pursuant to Section 3.2 of the Trust Agreement (the "Trust
Agreement") dated as of March 1, 1998 between the Seller and the
Owner Trustee. In the event that any term or provision contained
herein shall conflict with or be inconsistent with any term or
provision contained in the Indenture or the Trust Agreement, the
terms and provisions of this Series 1998-1 Supplement shall
govern with respect to Series 1998-1.
ARTICLE I
CREATION OF THE SERIES 1998-1 NOTES
SECTION 1.01. Designation.
(a) There is hereby created a Series of Notes to
be issued pursuant to the Indenture and this Series 1998-1
Supplement to be known as "Household Automobile Revolving Trust
I, Series 1998-1 Notes." The Series 1998-1 Notes shall be issued
in eight classes (each, a "Class"). The Class A-1 Notes in an
aggregate initial principal amount of $139,370,000 (the "Class A-
1 Notes"), the Class A-2 Notes in an aggregate initial principal
amount of $54,000,000 (the "Class A-2 Notes"), the Class A-3
Notes in an aggregate initial principal amount of $143,000,000
(the "Class A-3 Notes"), the Class A-4 Notes in an aggregate
initial principal amount of $80,832,000 (the "Class A-4 Notes"),
the Class A-5 Notes in an aggregate initial principal amount of
$100,000,000 (the "Class A-5 Notes", and together with Class A-1
Notes, the Class A-2 Notes, the Class A-3 Notes and the Class A-4
Notes, the "Class A Notes"), the Class B-1 Notes in an aggregate
initial principal amount of $99,303,000 (the "Class B-1 Notes"),
the Class B-2 Notes in an aggregate initial principal amount of
$94,338,000 (the "Class B-2 Notes", and together with the Class B-
1 Notes, the "Class B Notes") and the Class C Notes in an
aggregate initial principal amount of $60,823,000 (the "Class C
Notes").
(b) There is hereby created a Series of Series
Trust Certificates to be issued pursuant to the Trust Agreement
and this Series 1998-1 Supplement to be known as the "Household
Automobile Revolving Trust I, Series 1998-1 Certificates."
SECTION 1.02. Pledge of Series 1998-1 Trust
Estate.
The Issuer hereby Grants to the Indenture Trustee, for
the benefit of the Holders of the Notes all of the Issuer's
right, title and interest (but none of its obligations) in and to
(a) each and every Receivable listed as a Series 1998-1
Receivable on the Schedule of Receivables attached hereto as
Schedule I and all monies paid or payable thereon or in respect
thereof after the Cutoff Date (including amounts due on or before
the Cutoff Date but received by HAFC, the Seller, the Master
Servicer or the Issuer after the Cutoff Date); (b) an assignment
of the security interests in the related Financed Vehicles
granted by Obligors pursuant to such Series 1998-1 Receivables
and any other interest of the Issuer in the related Financed
Vehicles; c all rights of HAFC against Dealers pursuant to Dealer
Agreements or Dealer Assignments related to such Series 1998-1
Receivables; (d) any proceeds and the right to receive proceeds
with respect to such Series 1998-1 Receivables repurchased by a
Dealer, pursuant to a Dealer Agreement as a result of a breach of
representation or warranty in the related Dealer Agreement; (e)
all rights under any Service Contracts on the related Financed
Vehicles; (f) any proceeds and the right to receive proceeds with
respect to such Series 1998-1 Receivables from claims on any
physical damage, credit life or disability insurance policies
covering the related Financed Vehicles or Obligors including
rebates of insurance premiums relating to such Series 1998-1
Receivables; (g) all funds on deposit from time to time in the
Series 1998-1 Trust Accounts (including all investments and
proceeds thereof from time to time allocable to the Series 1998-1
Reserve Account, but excluding all investments and proceeds
thereof allocable to the other Series 1998-1 Trust Accounts or
allocable to the Master Collection Account); (h) all rights of
the Seller in and to the Purchase Agreement and the Purchase
Agreement Supplement or Purchase Agreement Supplements related to
Series 1998-1, including the delivery requirements,
representations and warranties and the cure and repurchase
obligations of HAFC under the Purchase Agreement and such
Purchase Agreement Supplement, or Purchase Agreement Supplements;
(i) all property (including the right to receive future Net
Liquidation Proceeds) that secures such Series 1998-1 Receivables
and that has been acquired by or on behalf of the Issuer pursuant
to liquidation of such Series 1998-1 Receivables; (j) all items
contained in the Receivable Files with respect such Series 1998-1
Receivables and any and all other documents that the Master
Servicer or HAFC keeps on file in accordance with its customary
procedures relating to such Series 1998-1 Receivables, or the
related Financed Vehicles or Obligors; (k) the Master Sale and
Servicing Agreement and the Transfer Agreement or Transfer
Agreements related to Series 1998-1 (including all rights of the
Seller under the Purchase Agreement and the related Purchase
Agreement Supplement or Purchase Agreement Supplements, assigned
to the Issuer pursuant to the Master Sale and Servicing Agreement
and the related Transfer Agreement or Transfer Agreements); (l)
one share of the Preferred Stock of the Seller; (m) all rights of
the Issuer in and to the Interest Rate Cap, including all
proceeds and the right to receive proceeds with respect thereto;
and (n) 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,
including all proceeds of the conversion, voluntary or
involuntary, into cash or other liquid property, all cash
proceeds, accounts, accounts receivable, notes, drafts,
acceptances, chattel paper, checks, deposit accounts, insurance
proceeds, condemnation awards, rights to payment of any and every
kind and other forms of obligations and receivables, instruments
and other property which at any time constitute all or part of or
are included in the proceeds of any of the foregoing
(collectively, the "Series 1998-1 Trust Estate").
The foregoing Grant is made in trust to the Indenture
Trustee for the benefit of the Holders of the Notes. The
Indenture Trustee hereby acknowledges such Grant, accepts the
trusts under the Indenture and this Series 1998-1 Supplement in
accordance with the provisions of the Indenture and this Series
1998-1 Supplement and agrees to perform its duties required in
the Indenture and in this Series 1998-1 Supplement in accordance
with the provisions hereof and of the Indenture to the best of
its ability to the end that the interests of such parties,
recognizing the priorities of their respective interests may be
adequately and effectively protected.
SECTION 1.03. Payments and Computations.
All amounts to be paid or deposited by any Person
hereunder shall be paid or deposited in accordance with the terms
hereof no later than 12:00 noon (New York City time) on the day
when due in immediately available funds.
SECTION 1.04. Denominations.
The Notes of each Class will be issued in denominations
of $100,000 and integral multiples of $1,000 in excess thereof,
except for one Note of each Class which may be issued in a
denomination other than an integral multiple of $1,000.
ARTICLE II
DEFINITIONS
SECTION 2.01. Definitions.
(a) Whenever used in this Series 1998-1
Supplement and when used in the Series 1998-1 Related Documents
with respect to the Series 1998-1 Notes or the Series 1998-1
Certificates, the following words and phrases shall have the
following meanings, and the definitions of such terms are
applicable to the singular as well as the plural forms of such
terms and to the masculine as well as to the feminine and neuter
genders of such terms. Unless otherwise defined in this Series
1998-1 Supplement, terms defined in the Basic Documents are used
herein as therein defined. A term used herein preceded by the
designation "Series 1998-1" but not defined herein, shall have
the meaning specified for such term in the Basic Documents as
such term relates to Series 1998-1.
"Aggregate Note Principal Balance" means, as of any
date, the aggregate outstanding principal amount of all the Notes
on such date.
"Aggregate Optimal Note Principal Balance" means, with
respect to any Distribution Date, the excess, if any, of (x) the
Pool Balance as of the close of business on the last day of the
prior Collection Period over (y) the Targeted
Overcollateralization Amount for such Distribution Date.
"Available Funds" means, with respect to any Collection
Period, and the related Distribution Date, the sum of (i) the
Collected Funds for such Collection Period, (ii) investment
earnings realized on the Collection Account during the related
Collection Period, (iii) all Repurchase Amounts deposited in the
Collection Account during such Collection Period, (iv) any
proceeds of any liquidation, in whole or in part, of the assets
of the Trust and (v) the lesser of (a) the excess, if any, of the
aggregate amount distributable pursuant to Section 3.03(a)(i) -
(x) on such Distribution Date, over the aggregate of the amounts
specified in clauses (i), (ii) and (iii) hereof with respect to
such Collection Period and (b) the Reserve Account Balance.
"Base Servicing Fee" means, with respect to any
Collection Period, the fee payable to the Master Servicer for
services rendered during such Collection Period, which shall be
equal to one-twelfth of the Servicing Fee Rate multiplied by the
Aggregate Principal Balances of the Series 1998-1 Receivables, as
of the Accounting Date immediately preceding such Collection
Period.
"Basic Documents" means the Master Sale and Servicing
Agreement, the Indenture, the Trust Agreement, the Purchase
Agreement, and other documents and certificates delivered
therewith or pursuant thereto in connection with Series 1998-1.
"Book Entry Notes" means any beneficial interest in the
Notes, ownership and transfers of which shall be made through
book entries by a Clearing Agency as described in Section 2.10 of
the Indenture.
"Certificateholders" means the holders of Series 1998-1
Certificates.
"Certificateholders' Distributable Amount" means, with
respect to any Distribution Date, the amount payable pursuant to
Section 3.03 (a)(xiii) hereof.
"Class A Distributable Amount" means, with respect to
any Distribution Date and each class of Class A Notes, the sum of
(i) the Class A Interest Distributable Amount for such
Distribution Date and (ii) the Class A Principal Distributable
Amount for such Distribution Date.
"Class A Interest Carryover Shortfall" means, with
respect to any Distribution Date and each Class of Class A Notes,
the sum of: (i) excess of (a) the related Class A Interest
Distributable Amount for the preceding Distribution Date, over
(b) the amount actually paid as interest to the Class A
Noteholders on such preceding Distribution Date, plus (ii)
interest on such excess, to the extent permitted by law, at a
rate per annum equal to the related Note Rate with respect to the
Class A Notes from such preceding Distribution Date to but
excluding the current Distribution Date.
"Class A Interest Distributable Amount" means, with
respect to any Distribution Date and each class of Class A Notes,
an amount equal to the sum of: (i) the aggregate amount of
interest accrued on the Class A Notes at the related Note Rate
from and including the preceding Distribution Date (or, in the
case of the initial Distribution Date, from and including the
Closing Date) to but excluding the current Distribution Date plus
(ii) the related Class A Interest Carryover Shortfall for the
current Distribution Date.
"Class A Monthly Principal Distributable Amount" means
(i) with respect to any Distribution Date, prior to the
Distribution Date on which the principal balance of the Class A-1
Notes is reduced to zero, 100% of the Principal Distributable
Amount, (ii) with respect to the Distribution Date on which the
principal balance of the Class A-1 Notes is reduced to zero, the
sum of (x) the Class A-5 Monthly Principal Distributable Amount,
plus (y) 100% of the Principal Distributable Amount with respect
to that portion of the Principal Distributable Amount required to
reduce the principal balance of the Class A-1 Notes to zero, plus
(z) the excess of the amount described in clause (iii) of this
definition for such Distribution Date over the sum of the amounts
described in clauses (ii)(x) (taking into account payment of the
principal balance of the Class
A-1 Notes on such Distribution Date) and (ii)(y) for such
Distribution Date, (iii) with respect to any Distribution Date
after the Distribution Date on which the Principal Balance of the
Class A-1 Notes is reduced to zero until the Distribution Date on
which the Principal Balance of the Class A Notes is reduced to
zero, the greater of (1) the Class A-5 Monthly Principal
Distributable Amount and (2) the excess of (x) the aggregate
outstanding principal balance of the Class A Notes over (y) (A)
the product of 69.25% and the Pool Balance as of the end of the
related Collection Period minus (B) the Targeted
Overcollateralization Amount for such Distribution Date.
"Class A Noteholders" means the Holders of the Class A
Notes.
"Class A Principal Carryover Shortfall" means, with
respect to any Distribution Date after the Distribution Date on
which the principal balance of the Class A-1 Notes is reduced to
zero, the excess of the Class A Principal Distributable Amount
for the preceding Distribution Date over the amount that was
actually distributed in respect of principal of the Class A Notes
on such preceding Distribution Date.
"Class A Principal Distributable Amount" means, with
respect to any Distribution Date, the sum of: (i) the Class A
Monthly Principal Distributable Amount for such Distribution Date
and (ii) the Class A Principal Carryover Shortfall for such
Distribution Date; provided, however, that (x) the sum of clauses
(i) and (ii) shall not exceed the outstanding principal amount of
the Class A Notes, and (y) on the Class A-2 Scheduled Maturity
Date, the Class A Principal Distributable Amount will include the
amount, to the extent of the remaining Available Funds, necessary
(after giving effect to other amounts having a higher or pari
passu payment priority on such Distribution Date) to reduce the
outstanding principal amount of the Class A-2 Notes to zero, on
the Class A-3 Scheduled Maturity Date, the Class A Principal
Distributable Amount will include the amount, to the extent of
the remaining Available Funds, necessary (after giving effect to
other amounts having a higher or pari passu payment priority on
such Distribution Date) to reduce the outstanding principal
amount of the Class A-3 Notes to zero, on the Final Scheduled
Distribution Date, the Class A Principal Distributable Amount
will include the amount, to the extent of the remaining Available
Funds, necessary (after giving effect to other amounts having a
higher payment priority on such Distribution Date) to reduce the
outstanding principal amount of the Class A Notes to zero.
"Class A-1 Noteholders" means the Holders of the Class
A-1 Notes.
"Class A-1 Scheduled Maturity Date" means with respect
to the Class A-1 Notes, December 17, 1999.
"Class A-2 Noteholders" means the Holders of the Class
A-2 Notes.
"Class A-2 Scheduled Maturity Date" means with respect
to the Class A-2 Notes, November 19, 2001.
"Class A-3 Noteholders" means the Holders of the Class
A-3 Notes.
"Class A-3 Scheduled Maturity Date" means with respect
to the Class A-3 Notes, July 17, 2003.
"Class A-4 Noteholders" means the Holders of the Class
A-4 Notes.
"Class A-5 Monthly Principal Distributable Amount"
means, with respect to any Distribution Date, the product of (i)
a fraction, the numerator of which is the original principal
balance of the Class A-5 Notes and the denominator of which is
the Original Pool Balance, and (ii) the excess of the outstanding
Pool Balance as of the close of business on the last day of the
second preceding Collection Period over the outstanding Pool
Balance as of the close of business on the last day of the
related Collection Period.
"Class A-5 Noteholders" means the Holders of the Class
A-5 Notes.
"Class A-5 Principal Carryover Shortfall" means, with
respect to any Distribution Date, the excess of the Class A-5
Principal Distributable Amount for the preceding Distribution
Date over the amount that was actually distributed in respect of
principal of the Class A-5 Notes on such preceding Distribution
Date.
"Class A-5 Principal Distributable Amount" means, with
respect to any Distribution Date, the sum of: (i) the Class A-5
Monthly Principal Distributable Amount for such Distribution Date
and (ii) the Class A-5 Principal Carryover Shortfall for such
Distribution Date; provided however, that the sum of clauses (i)
and (ii) shall not exceed the outstanding principal amount of the
Class A-5 Notes, and on the Final Scheduled Distribution Date,
the Class A-5 Principal Distributable Amount will include the
amount, to the extent of the remaining Available Funds, necessary
(after giving effect to other amounts having a higher payment
priority on such Distribution Date) to reduce the outstanding
principal amount of the Class A-5 Notes to zero.
"Class B-1 Distributable Amount" means, with respect to
any Distribution Date, the sum of (i) the Class B-1 Interest
Distributable Amount for such Distribution Date and (ii) the
Class B-1 Principal Distributable Amount for such Distribution
Date.
"Class B-1 Interest Carryover Shortfall" means, with
respect to any Distribution Date, the sum of: (i) the excess of
(a) the Class B-1 Interest Distributable Amount for the preceding
Distribution Date, over (b) the amount actually paid as interest
to the Class B-1 Noteholders on such preceding Distribution Date,
plus (ii) interest on such excess, to the extent permitted by
law, at a rate per annum equal to the Note Rate with respect to
the Class B-1 Notes from such preceding Distribution Date to but
excluding the current Distribution Date.
"Class B-1 Interest Distributable Amount" means, with
respect to any Distribution Date, an amount equal to the sum of:
(i) the aggregate amount of interest accrued on the Class B-1
Notes at the Note Rate with respect to the Class B-1 Notes from
and including the preceding Distribution Date (or, in the case of
the initial Distribution Date, from and including the Closing
Date) to but excluding the current Distribution Date plus (ii)
the Class B-1 Interest Carryover Shortfall for the current
Distribution Date.
"Class B-1 Monthly Principal Distributable Amount"
means, with respect to each Distribution Date on and after the
Distribution Date on which the principal balance of the Class A-1
Notes is reduced to zero, until the Distribution Date on which
the outstanding principal amount of the Class B-1 Notes has been
reduced to zero, an amount equal to the excess of: (i) the sum
of (x) the outstanding principal balance of the Class A Notes on
such Distribution Date (after giving effect to distribution of
the Class A Principal Distributable Amount for such Distribution
Date) plus (y) the outstanding principal balance of the Class B-1
Notes prior to such Distribution Date over (ii) (A) the product
of 81.25% and the outstanding Pool Balance as of the end of the
related Collection Period minus (B) the Targeted
Overcollateralization Amount.
"Class B-1 Noteholders" means the Holders of the Class
B-1 Notes."
"Class B-1 Principal Carryover Shortfall" means, with
respect to any Distribution Date, the excess of the Class B-1
Principal Distributable Amount for the preceding Distribution
Date over the amount that was actually distributed in respect of
principal of the Class B-1 Notes on such Preceding Distribution
Date.
"Class B-1 Principal Distributable Amount" means, with
respect to any Distribution Date, the sum of: (i) the Class B-1
Monthly Principal Distributable Amount for such Distribution Date
and (ii) the Class B-1 Principal Carryover Shortfall for such
Distribution Date; provided, however, that the sum of clauses (i)
and (ii) shall not exceed the outstanding principal amount of the
Class B-1 Notes, and on the Final Scheduled Distribution Date,
the Class B-1 Principal Distributable Amount will include the
amount, to the extent of the remaining Available Funds, necessary
(after giving effect to other amounts having a higher payment
priority on such Distribution Date) to reduce the outstanding
principal amount of the Class B-1 Notes to zero.
"Class B-2 Distributable Amount" means, with respect to
any Distribution Date, the sum of (i) the Class B-2 Interest
Distributable Amount for such Distribution Date and (ii) the
Class B-2 Principal Distributable Amount for such Distribution
Date.
"Class B-2 Interest Carryover Shortfall" means, with
respect to any Distribution Date, the sum of: (i) the excess of
(a) the Class B-2 Interest Distributable Amount for the preceding
Distribution Date, over (b) the amount actually paid as interest
to the Class B-2 Noteholders on such preceding Distribution Date,
plus (ii) interest on such excess, to the extent permitted by
law, at a rate per annum equal to the Note Rate with respect to
the Class B-2 Notes from such preceding Distribution Date to but
excluding the current Distribution Date.
"Class B-2 Interest Distributable Amount" means, with
respect to any Distribution Date, an amount equal to the sum of:
(i) the aggregate amount of interest accrued on the Class B-2
Notes at the Note Rate with respect to the Class B-2 Notes from
and including the preceding Distribution Date (or, in the case of
the initial Distribution Date, from and including the Closing
Date) to but excluding the current Distribution Date plus (ii)
the Class B-2 Interest Carryover Shortfall for the current
Distribution Date.
"Class B-2 Monthly Principal Distributable Amount"
means, with respect to each Distribution Date on and after the
Distribution Date on which the principal balance of the Class A-1
Notes is reduced to zero, until the Distribution Date on which
the outstanding principal amount of the Class B-2 Notes has been
reduced to zero, an amount equal to the excess of: (i) the sum
of (x) the outstanding principal balance of the Class A Notes on
such Distribution Date (after giving effect to distribution of
the Class A Principal Distributable Amount for such Distribution
Date) plus (y) the outstanding principal balance of the Class B-1
Notes (after giving effect to distribution of the Class B-1
Principal Distributable Amount for such Distribution Date) and
(z) the outstanding principal balance of the Class B-2 Notes over
(ii) (A) the product of 92.65% and the outstanding Pool Balance
as of the end of the related Collection Period minus (B) the
Targeted Overcollateralization Amount.
"Class B-2 Noteholders" means the Holders of the Class
B-2 Notes.
"Class B-2 Principal Carryover Shortfall" means, with
respect to any Distribution Date, the excess of the Class B-2
Principal Distributable Amount for the preceding Distribution
Date over the amount that was actually distributed in respect of
principal of the Class B-2 Notes on such Preceding Distribution
Date.
"Class B-2 Principal Distributable Amount" means, with
respect to any Distribution Date, the sum of: (i) the Class B-2
Monthly Principal Distributable Amount for such Distribution Date
and (ii) the Class B-2 Principal Carryover Shortfall for such
Distribution Date; provided, however, that the sum of clauses (i)
and (ii) shall not exceed the outstanding principal amount of the
Class B-2 Notes, and on the Final Scheduled Distribution Date,
the Class B-2 Principal Distributable Amount will include the
amount, to the extent of the remaining Available Funds, necessary
(after giving effect to other amounts having a higher payment
priority on such Distribution Date) to reduce the outstanding
principal amount of the Class B-2 Notes to zero.
"Class C Distributable Amount" means, with respect to
any Distribution Date, the sum of (i) the Class C Interest
Distributable Amount and (ii) the Class C Principal Distributable
Amount.
"Class C Interest Carryover Shortfall" means, with
respect to any Distribution Date the sum of: (i) excess of (a)
the Class C Interest Distributable Amount for the preceding
Distribution Date, over (b) the amount actually paid as interest
to the Class C Noteholders on such preceding Distribution Date,
plus (ii) interest on such excess, to the extent permitted by
law, at a rate per annum equal to the Note Rate with respect to
the Class C Notes from such preceding Distribution Date to but
excluding the current Distribution Date.
"Class C Interest Distributable Amount" means, with
respect to any Distribution Date an amount equal to the sum of:
(i) the aggregate amount of interest accrued on the Class C Notes
at the Note Rate with respect to the Class C Notes from and
including the preceding Distribution Date (or, in the case of the
initial Distribution Date, from and including the Closing Date)
to but excluding the current Distribution Date plus (ii) the
Class C Interest Carryover Shortfall for the current Distribution
Date.
"Class C Monthly Principal Distributable Amount" means,
with respect to each Distribution Date on and after the
Distribution Date on which the outstanding principal amount of
the Class A-1 Notes is reduced to zero, until the Distribution
Date on which the outstanding principal amount of the Class C
Notes has been reduced to zero, an amount equal to the excess, if
any of: (i) the sum of (x) the outstanding principal balance of
the Class A Notes on such Distribution Date (after giving effect
to distribution of the Class A Principal Distributable Amount for
such Distribution Date), plus (y) the outstanding principal
balance of the Class B Notes on such Distribution Date (after
giving effect to distribution of the Class B-1 Principal
Distributable Amount and the Class B-2 Principal Distributable
Amount for such Distribution Date), plus (z) the outstanding
principal balance of the Class C Notes immediately prior to such
Distribution Date and (ii) (A) the product of 100% and the
outstanding Pool Balance as of the end of the related Collection
Period minus (B) the Targeted Overcollateralization Amount for
such Distribution Date.
"Class C Noteholders" means the Holders of the Class C
Notes.
"Class C Principal Carryover Shortfall" means, with
respect to any Distribution Date, the excess of the Class C
Principal Distributable Amount for the preceding Distribution
Date over the amount that was actually distributed in respect of
principal of the Class C Notes on such Preceding Distribution
Date.
"Class C Principal Distributable Amount" means, with
respect to any Distribution Date, the sum of: (i) the Class C
Monthly Principal Distributable Amount for such Distribution Date
and (ii) the Class C Principal Carryover Shortfall for such
Distribution Date; provided, however, that the sum of clauses (i)
and (ii) shall not exceed the outstanding principal amount of the
Class C Notes, and on the Final Scheduled Distribution Date, the
Class C Principal Distributable Amount will include the amount,
to the extent of the remaining Available Funds, necessary (after
giving effect to other amounts having a higher payment priority
on such Distribution Date) to reduce the outstanding principal
amount of the Class C Notes to zero.
"Collected Funds" means, with respect to any Collection
Period, the amount of funds in the Collection Account
representing collections on the Receivables during such
Collection Period, including all Net Liquidation Proceeds
collected during such Collection Period (but excluding any
Purchase Amounts) and funds deposited into the Collection Account
representing payments pursuant to the Interest Rate Cap.
"Cutoff Date" means October 31, 1998.
"Definitive Notes" means the Notes that have been
certificated and fully registered in accordance with Section 2.12
of the Indenture.
"Distribution Date" means, with respect to each
Collection Period, the seventeenth day of the following calendar
month, or if such day is not a Business Day, the immediately
following Business Day, commencing on December 17, 1998.
"Eligibility Criteria" means the criteria for
eligibility for Eligible Receivables set forth on Schedule I
hereto.
"Eligible Receivable" or "Series 1998-1 Eligible
Receivable" means a Series 1998-1 Receivable that satisfies the
Eligibility Criteria set forth in Schedule I hereto.
"Event of Default" shall have the meaning assigned to
such term in Section 4.01.
"Final Scheduled Distribution Date" means May 17, 2005.
"HAFC " means Household Automotive Finance Corporation.
"HFC" means Household Finance Corporation.
"Indenture" means the indenture dated as of November 1,
1998 among the Issuer, the Master Servicer and The Chase
Manhattan Bank, as indenture trustee, as supplemented by the
Series 1998-1 Supplement.
"Initial Reserve Account Deposit" means 1% of the Pool
Balance as of the Cutoff Date.
"Interest Period" means, with respect to any
Distribution Date, the period from and including the prior
Distribution Date (or, in the case of the first Distribution
Date, from and including the Series 1998-1 Closing Date) through
(and including) the day preceding such Distribution Date.
"Interest Rate Cap" means the agreement dated as of
December 3, 1998 between the Issuer and the Interest Rate Cap
Provider, substantially in the form set forth in Exhibit B
hereto, and any replacement Interest Rate Cap entered into by the
Issuer pursuant to Section 3.10.
"Interest Rate Cap Provider" means initially
Westdeutsche Landesbank Girozentrale, New York Branch, and any
successor thereto or replacement therefor under the Interest Rate
Cap.
"LIBOR" means, for any 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
related LIBOR Determination Date, or if such rate does not appear
on such page, the Reference Bank Rate.
"LIBOR Business Day" means any day other than (i) a
Saturday or a Sunday or (ii) a day on which banking institutions
in the States of New York or Illinois or in the City of London,
England are required or authorized by law to be closed.
"LIBOR Determination Date" for each Interest Period
will be the second LIBOR Business Day prior to the first day of
such Interest Period.
"Master Servicer's Certificate" means, with respect to
Series 1998-1, a report in substantially the form of Exhibit A
hereto (appropriately completed), furnished by the Master
Servicer to the Indenture Trustee and the Owner Trustee pursuant
to the Master Sale and Servicing Agreement.
"Maximum Reserve Account Deposit Amount" for any
Distribution Date is equal to that portion of Collected Funds
representing interest collections on the Receivables (including
amounts representing Net Liquidation Proceeds for such Collection
Period) for the related Collection Period less the sum of: the
Base Servicing Fee paid to any Master Servicer other than HFC,
the fees due to the Interest Rate Cap Provider, the Indenture
Trustee and Owner Trustee, to the extent not paid by the
Servicer, plus, the aggregate of the Class A, Class B-1, Class B-
2 and Class C Interest Distributable Amounts for such
Distribution Date, plus the aggregate Principal Balances of all
Receivables which became Liquidated Receivables during the
related Collection Period, plus the aggregate amount of Cram Down
Losses during such Collection Period.
"Noteholders' Distributable Amount" means, with respect
to any Distribution Date, the sum of the Class A Distributable
Amount, the Class B-1 Distributable Amount, the Class B-2
Distributable Amount and the Class C Distributable Amount.
"Noteholders' Interest Distributable Amount" means with
respect to any Distribution Date, the sum of the Class A Interest
Distributable Amount, the Class B-1 Interest Distributable
Amount, the Class B-2 Interest Distributable Amount, and the
Class C Interest Distributable Amount.
"Note Rate" means the per annum rate of interest due
with respect to each Class of Notes as set forth below for the
respective Class of Note:
Class A-1 Notes: 5.330%
Class A-2 Notes: 5.514%
Class A-3 Notes: LIBOR plus 0.45%
Class A-4 Notes: LIBOR plus 0.50%
Class A-5 Notes: 5.650%
Class B-1 Notes: 6.300%
Class B-2 Notes: 6.400%
Class C Notes: 6.500%
Interest (including interest calculated with respect to
Interest Carryover Shortfalls) on the Class A-1, Class A-2, Class
A-3 and Class A-4 Notes will be calculated on the basis of a 360-
day year and the actual number of days elapsed in an applicable
Interest Period. Interest (including interest calculated with
respect to Interest Carryover Shortfalls) on the Class A-5, Class
B-1, Class B-2 and Class C Notes will be calculated on the basis
of a 360-day year consisting of twelve 30-day months.
"Notes" means the Class A Notes, the Class B-1 Notes,
the Class B-2 and the Class C Notes, collectively.
"Notional Amount" means with respect to any date of
determination, the sum of the aggregate principal amount of the
Class A-3 Notes plus the aggregate outstanding principal amount
of the Class A-4 Notes on such date.
"Original Pool Balance" means the aggregate of the
Principal Balance of the Receivables as of the Cutoff Date.
"Owner Trust Estate" has the meaning assigned to such
term in the Trust Agreement.
"Owner Trustee" means Wilmington Trust Company, not in
its individual capacity.
"Pledge" means the Grant by the Issuer hereunder to the
Indenture Trustee for the benefit of the Holders of Notes in
accordance with Section 1.02 hereof in and to specified Pledged
Property related thereto.
"Pledged Property" means, with respect to the Series
1998-1 Trust Estate, each Series 1998-1 Receivable, together with
all associated property and rights with respect thereto described
in the definition of Series 1998-1 Trust Estate.
"Pool Balance" means, as of any date of determination,
the aggregate of the outstanding Principal Balances of the
Receivables, unless otherwise specified, as of the close of
business on the preceding Business Day.
"Principal Amount Available" means, with respect to any
Distribution Date, the amount remaining in the Note Account on
such Distribution Date after the payment of the amounts required
to be paid pursuant to clause (i) through (vi) of Section 3.03(a)
on such Distribution Date minus the Reserve Account Deposit
Amount for such Distribution Date.
"Principal Distributable Amount" means, with respect to
any Distribution Date, the lesser of (A) the Principal Amount
Available for such Distribution Date and (B) the greater of (x)
the excess, if any, of (i) the Aggregate Note Principal Balance
immediately prior to such Distribution Date over (ii) the
Aggregate Optimal Note Balance for such Distribution Date and (y)
the Class A-5 Principal Distributable Amount.
"Rating Agencies" means Standard & Poor's and Moody's.
If such organization or a successor does not maintain a rating on
the Notes, "Rating Agency" shall be a nationally recognized
statistical rating organization or other comparable Person
designated by the Seller, notice of which designation shall be
given to the Indenture Trustee, the Owner Trustee and the Master
Servicer.
"Redemption Price" has the meaning specified in Section
5.01 hereof.
"Reference Bank Rate" will be determined on the basis
of the rates at which deposits in U.S. Dollars are offered by the
reference banks (which shall be three major banks that are
engaged in transactions in the London interbank market, selected
by the Indenture Trustee after consultation with the Master
Servicer) as of 11:00 A.M., London time, such LIBOR Determination
Date to prime banks in the London interbank market for a period
of one month in amounts approximately equal to the Notional
Amount as of the immediately succeeding Distribution Date. The
Indenture Trustee will request the principal London office of
each of the reference banks to provide a quotation of its rate.
If at least two such quotations are provided as requested, the
rate will be the arithmetic mean of the quotation. If on such
date fewer than two quotations are provided as requested, the
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 Master 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 Notional Amount as of the immediately
succeeding Distribution Date. If no such quotations can be
obtained, the rate will be LIBOR for the prior Distribution Date.
"Reserve Account" means the Series 1998-1 Reserve
Account which shall be an Eligible Deposit Account created
pursuant to Section 3.01 hereof, which initially shall be account
no. 9102758076 for further credit, account no. C70647C, reference
Household Automobile Revolving Trust I, Series 1998-1, at the
Indenture Trustee, ABA No. 021000021.
"Reserve Account Balance" means, with respect to a
Distribution Date, the amount on deposit in the Reserve Account
as of the opening of business on such Distribution Date.
"Reserve Account Deposit Amount" means, with respect to
any Distribution Date, the lesser of: (x) the Maximum Reserve
Account Deposit Amount for such Distribution Date and (y) the
Reserve Account Shortfall Amount for such Distribution Date.
"Reserve Account Shortfall Amount" means, with respect
to any Distribution Date, the excess of: (x) the Targeted
Reserve Account Balance for such Distribution Date over (y) the
Reserve Account Balance for such Distribution Date.
"Schedule of Receivables" means the schedule of all
retail installment sales contracts and promissory notes held as
part of the Series 1998-1 Trust Estate attached hereto as
Schedule II.
"Series 1998-1 Certificate" means the Series Trust
Certificate (as defined in the Trust Agreement) designated as the
"Series 1998-1 Certificate".
"Series 1998-1 Closing Date" means December 3, 1998.
"Series 1998-1 Collected Funds" means, with respect to
a date of determination, the amount of Collected Funds with
respect to the Collection Period immediately preceding such date
of determination, including all Net Liquidation Proceeds
collected during the related Collection Period (but excluding any
Purchase Amounts) and any funds deposited therein by the Interest
Rate Cap Provider pursuant to the Interest Rate Cap.
"Series 1998-1 Collection Account" means the Eligible
Deposit Account created pursuant to Section 3.01 hereof which
initially shall be account no. 9102758076, for further credit,
account no. C70647A, reference Household Automobile Revolving
Trust I, Series 1998-1, at the Indenture Trustee, ABA No.
021000021.
"Series 1998-1 Eligible Investments" means, with
respect to funds in the Series 1998-1 Collection Account and
Reserve Account, "Eligible Investments" as defined in the Master
Sale and Servicing Agreement, except that (i) all references in
such definition to "rating satisfactory to the Rating Agency" or
words of similar import shall mean ratings of not less than "A-
1+" by Standard & Poor's and "P-1" by Moody's (whichever is
applicable)(except if such investment is in commercial paper
issued by HFC, the required rating shall mean not less than "A-
1"), and (ii) all such investments shall have maturities at the
time of the acquisition thereof occurring no later than the
Business Day immediately preceding the Distribution Date
following such date of acquisition.
"Series 1998-1 Note Account" means the Eligible Deposit
Account created pursuant to Section 3.01 hereof, which initially
shall be account no. 9102758076, for further credit, account no.
C70647B, reference Household Automobile Revolving Trust I, Series
1998-1 at the Indenture Trustee, ABA No. 021000021.
"Series 1998-1 Receivables" means each Receivable
listed on the Schedule of Receivables, which (a) has not been
released from the Series 1998-1 Trust Estate as provided herein
or in the Indenture and (b) is not a Liquidated Receivable.
"Series 1998-1 Related Documents" means the Basic
Documents, this Series 1998-1 Supplement, each Purchase Agreement
Supplement related to the Series 1998-1 Trust Estate, each
Transfer Agreement related to the Series 1998-1 Trust Estate, the
Series 1998-1 Notes, the Series 1998-1 Certificates, the Interest
Rate Cap and other documents and certificates delivered in
connection therewith.
"Series 1998-1 Reserve Account" means the Reserve
Account.
"Series 1998-1 Secured Obligations" means all amounts
and obligations which the Issuer may at any time owe to the
Holders of the Series 1998-1 Notes.
"Series 1998-1 Securities" means the Series 1998-1
Notes and the Series 1998-1 Certificates.
"Series 1998-1 Supplement" means this Series 1998-1
Supplement to the Indenture and the Trust Agreement.
"Series 1998-1 Support" means, with respect to the
Series 1998-1 Notes, the Series 1998-1 Certificates.
"Series 1998-1 Trust Accounts" means the Series 1998-1
Collection Account, the Series 1998-1 Reserve Account, and the
Series 1998-1 Note Account.
"Series 1998-1 Trust Estate" means the property Granted
to the Indenture Trustee pursuant to Section 1.02.
"Servicing Fee Rate" means 3% per annum.
"Supplemental Servicing Fee" means, with respect to any
Collection Period, (i) all administrative fees, expenses and
charges actually paid by or on behalf of Obligors, including late
fees, prepayment fees and liquidation fees collected on the
Series 1998-1 Receivables during such Collection Period, and (ii)
the net realized investment earnings of funds on deposit in the
Series 1998-1 Collection Account or on deposit in the Master
Collection Account and allocable to the investment of Available
Funds with respect to Series 1998-1.
"Targeted Credit Enhancement Amount" means, with
respect to any Distribution Date, 13.75% of the Pool Balance as
of the of last day of the related Collection Period.
"Targeted Overcollateralization Amount" means, with
respect to any Distribution Date, the excess (but not less than
zero), if any, of: (i) the Targeted Credit Enhancement Amount
over (ii) the Targeted Reserve Account Balance.
"Targeted Reserve Account Balance" means, with respect
to any Distribution Date, the lesser of: (i) the greater of (a)
3.0% of the outstanding Pool Balance as of the end of the related
Collection Period, and (b) 2.0% of the Original Pool Balance, and
(ii) the Aggregate Note Principal Balance.
"Telerate Screen Page 3750" means 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), or if
such service is no longer offered, such other service for
displaying LIBOR or comparable rates as may be selected by the
Indenture Trustee after consultation with the Master Servicer).
"Trust" means the Issuer.
"Trust Agreement" means the Trust Agreement dated as of
March 1, 1998 between the Seller and the Owner Trustee, as
supplemented by the Series 1998-1 Supplement.
ARTICLE III
DISTRIBUTIONS AND STATEMENTS TO
SERIES 1998-1 NOTEHOLDERS; SERIES SPECIFIC COVENANTS
SECTION 3.01. Series 1998-1 Trust Accounts.
(a) The Indenture Trustee, for the benefit of the
Holders of the Series 1998-1 Securities, shall establish and
maintain an account (the "Series 1998-1 Collection Account") as a
segregated trust account in the Indenture Trustee's corporate
trust department, identified as the "Collection Account for
Household Automobile Revolving Trust I, in trust for the
registered Holders of the Series 1998-1 Securities." The
Indenture Trustee shall make or permit withdrawals from the
Series 1998-1 Collection Account only as provided in this Series
1998-1 Supplement. Notwithstanding anything in the Series 1998-1
Related Documents to the contrary, at least one Business Day
prior to each Distribution Date the Master Servicer and the
Issuer shall deposit Collected Funds (which shall be immediately
available) directly into the Series 1998-1 Collection Account
without any prior deposit into the Master Collection Account.
(b) The Indenture Trustee for the benefit of the
Holders of the Series 1998-1 Notes shall establish and maintain
an account (the "Series 1998-1 Reserve Account") as a segregated
trust account in the Indenture Trustee's corporate trust
department, identified as the "Series 1998-1 Reserve Account for
Household Automobile Revolving Trust I, in trust for the
registered Holders of the Series 1998-1 Notes." The Indenture
Trustee shall make or permit withdrawals from the Reserve Account
only as provided in this Series 1998-1 Supplement. On the Series
1998-1 Closing Date, the Series 1998-1 Reserve Account will be
funded with the Initial Reserve Account Deposit.
(c) The Indenture Trustee, for the benefit of the
Holders of Series 1998-1 Notes, shall establish and maintain an
account (the "Series 1998-1 Note Account") as a segregated trust
account in the Indenture Trustee's corporate trust department,
identified as the "Note Account for Household Automobile
Revolving Trust I, in trust for the registered Holders of the
Series 1998-1 Notes." The Indenture Trustee shall make or permit
withdrawals from the Series 1998-1 Note Account only as provided
in this Series 1998-1 Supplement.
(d) On each Distribution Date, the Indenture
Trustee shall transfer Available Funds for such Distribution Date
from the Series 1998-1 Collection Account and from the Series
1998-1 Reserve Account, if applicable, to the Series 1998-1 Note
Account.
(e) In the event that any Series 1998-1 Trust
Account ceases to be an Eligible Deposit Account, the Indenture
Trustee, as applicable, within five Business Days, shall
establish a new Eligible Deposit Account. No withdrawals may be
made of funds in any Series 1998-1 Trust Account except as
provided in this Series 1998-1 Supplement. Except as
specifically provided in this Series 1998-1 Supplement, funds in
the Series 1998-1 Trust Accounts shall not be commingled with any
other moneys. All moneys deposited from time to time in each of
the Series 1998-1 Trust Accounts shall be invested and reinvested
by the Indenture Trustee in Series 1998-1 Eligible Investments
selected in writing by the Master Servicer (pursuant to standing
instructions or otherwise) which, absent any instruction shall be
the investments specified in clause (d) of the definition of
Eligible Investment. The provisions of Section 5.1 of the Master
Sale and Servicing Agreement shall apply to the investment of
funds in the Series 1998-1 Trust Accounts to the same extent as
they apply to the Master Collection Account.
SECTION 3.02. Reserve Account.
On the earlier of (x) the maturity date of the Series
1998-1 Notes (whether by acceleration or otherwise) or (y) the
Final Scheduled Distribution Date, the amount on deposit in the
Reserve Account shall be withdrawn from the Reserve Account and
distributed in accordance with Section 4.04.
SECTION 3.03. Distributions.
(a) On each Distribution Date, the Indenture
Trustee shall (based solely on the information contained in the
Master Servicer's Certificate delivered with respect to such
Distribution Date) distribute the following amounts from
Available Funds with respect to such Distribution Date, and in
the following order of priority:
(i) to the Master Servicer, any Supplemental
Servicing Fees for the related Collection Period and,
if HFC is no longer acting as Master Servicer, the Base
Servicing Fee for the related Collection Period;
(ii) to the Interest Rate Cap Provider, the
fee for maintaining the Interest Rate Cap and to the
Indenture Trustee and the Owner Trustee, any accrued
and unpaid trustees' fees (in each case, to the extent
such fees have not been previously paid by the Master
Servicer);
(iii) to the Class A Noteholders, the Class A
Interest Distributable Amount;
(iv) to the Class B-1 Noteholders, the Class
B-1 Interest Distributable Amount;
(v) to the Class B-2 Noteholders, the Class
B-2 Interest Distributable Amount;
(vi) to the Class C Noteholders, the Class C
Interest Distributable Amount;
(vii) (i) to the Class A-5 Noteholders, the
Class A-5 Principal Distributable Amount and to the
Class A-1 Noteholders, 100% of the Class A Principal
Distributable Amount remaining after distribution of
the Class A-5 Principal Distributable Amount, until the
outstanding principal amount of the Class A-1 Notes has
been reduced to zero; and (ii) on and after the
Distribution Date on which the outstanding principal
amount of the Class A-1 Notes has been reduced to zero,
the Class A Principal Distributable Amount will be
allocated to payment of the Class A-5 Principal
Distributable Amount to the Class A-5 Noteholders and
the remaining portion of the Class A Principal
Distributable Amount will be allocated to payment of
the Class A-2, Class A-3 and Class A-4 Notes, in
"sequential pay" fashion, beginning with the Class A-2
Notes, in each case until the respective outstanding
principal amount of the Class A-2, Class A-3 and Class
A-4 Notes are paid in full;
(viii) to the Class B-1 Noteholders, the Class
B-1 Principal Distributable Amount;
(ix) to the Class B-2 Noteholders, the Class
B-2 Principal Distributable Amount;
(x) to the Class C Noteholders, the Class C
Principal Distributable Amount;
(xi) to the Reserve Account, the Reserve
Account Deposit Amount, if any, required to increase
the amount therein to the Targeted Reserve Account
Balance;
(xii) if HFC is acting as the Master Servicer,
the Base Servicing Fee for the related Collection
period; and
(xiii) to the holders of the Series 1998-1
Certificates, any remaining Available Funds.
In the event that on any Distribution Date after the
Distribution Date on which the principal balance of the Class A-1
Notes is reduced to zero, Available Funds, available to be
distributed in accordance with clause (vii) of Section 3.03(a),
are less than the Class A Monthly Principal Distributable Amount
for such Distribution Date, such Available Funds shall be
allocated pro rata (based on the ratio between the respective
amounts of the Class A-5 Principal Distributable Amount for such
Distribution Date and the amount specified in clause (iii)(2) of
the definition of Class A Monthly Principal Distributable Amount
for such Distribution Date).
(b) If on a Distribution Date, the Master
Servicer's Certificate delivered with respect to such
Distribution Date indicates that the amount specified in clauses
(i) through (iv) of the definition of Available Funds with
respect to such Distribution Date is less than the sum of the
amounts required to be distributed pursuant to clauses (i)
through (x) of paragraph (a) above on such Distribution Date, the
Indenture Trustee shall withdraw from the Series 1998-1 Reserve
Account an amount up to the amount of such deficiency and
distribute such amount as a component of Available Funds.
(c) Each Series 1998-1 Certificateholder by its
acceptance of its Certificate will be deemed to have consented to
the provisions of paragraph (a) above relating to the priority of
distributions, and will be further deemed to have acknowledged
that no property rights in any amount or the proceeds of any such
amount shall vest in such Certificateholder until such amounts
have been distributed to such Certificateholder pursuant to such
provisions; provided, that the foregoing shall not restrict the
right of any Certificateholder, upon compliance with the
provisions hereof, from seeking to compel the performance of the
provisions hereof by the parties hereto. Each Series 1998-1
Certificateholder, by acceptance of its Certificate, further
specifically acknowledges that it has no right to or interest in
any monies at any time held in the Series 1998-1 Reserve Account,
such monies being held in trust for the benefit of the Series
1998-1 Noteholders.
(d) In the event that the Series 1998-1
Collection Account is maintained with an institution other than
the Indenture Trustee, the Master Servicer shall instruct and
cause such institution to transfer the amounts to be withdrawn
therefrom in accordance with Section 3.03(a) or 3.03(b) to the
Indenture Trustee for distribution pursuant to Section 3.03(a) or
Section 3.03(b), as the case may be, one Business Day Prior to
the related Distribution Date.
(e) Unless Definitive Notes are issued pursuant
to Section 2.12 of the Indenture, with respect to Notes
registered on the related Record Date in the name of a nominee of
the Clearing Agency, payment will be made by wire transfer to an
account designated by such nominee, without presentation or
surrender of the Series 1998-1 Notes or the making of any
notation thereon.
(f) If not theretofore paid in full, all amounts
outstanding with respect to the Class A-1 Notes shall be due and
payable on the Class A-1 Scheduled Maturity Date, if not
theretofore paid in full, all amounts outstanding with respect to
the Class A-2 Notes shall be due and payable on the Class A-2
Scheduled Maturity Date, if not theretofore paid in full, all
amounts outstanding with respect to the Class A-3 Notes shall be
due and payable on the Class A-3 Scheduled Maturity Date, and if
not theretofore paid in full, all amounts outstanding with
respect to the Class A-4 Notes, the Class A-5 Notes, the Class B-
1 Notes, the Class B-2 Notes and the Class C Notes shall be due
and payable on the Final Scheduled Distribution Date.
SECTION 3.04. Statements to Noteholders.
On or prior to each Determination Date, the Master
Servicer shall provide to the Indenture Trustee (with a copy to
the Rating Agencies) for the Indenture Trustee to forward to each
Noteholder of record, and to each Certificateholder of record, a
statement setting forth at least the following information as to
the Notes to the extent applicable:
(i) the amount of such distribution
allocable to principal of each Class of Notes;
(ii) the amount of such distribution
allocable to interest on or with respect to each Class
of Notes;
(iii) the aggregate outstanding principal
amount of each Class of the Notes after giving effect
to payments allocated to principal reported under (i)
above;
(iv) the Class A Interest Carryover
Shortfall, the Class B-1 Interest Carryover Shortfall,
the Class B-2 Interest Carryover Shortfall, the Class C
Interest Carryover Shortfall, the Class A Principal
Carryover Shortfall, the Class A-5 Principal Carryover
Shortfall, the Class B-1 Principal Carryover Shortfall,
the Class B-2 Principal Carryover Shortfall, the Class
C Principal Carryover Shortfall, if any, and the change
in such amounts from the preceding statement.
(v) the amount of the Base Servicing Fee
paid to the Master Servicer with respect to such
Collection Period;
(vi) the Notional Amount of the Interest Rate
Cap, the amount of the distribution attributable to a
payment under the Interest Rate Cap and the current
LIBOR; and
(vii) the Targeted Reserve Account Balance and
the amount on deposit in the Reserve Account at the end
of such Distribution Date.
Each amount set forth pursuant to paragraph (i)through (iv) above
shall be expressed as a dollar amount per $1,000 of the initial
principal balance of the applicable Class of Notes.
SECTION 3.05. Reporting Requirements.
(a) The Master Servicer's Certificate shall be in
the form attached as Exhibit A hereto.
(b) By January 31 of each calendar year,
commencing January 31, 1999, the Master Servicer on behalf of the
Issuer shall prepare and distribute to the Indenture Trustee a
statement containing such information as is required to be
provided by an issuer of indebtedness under the Code and such
other customary information as is necessary to enable the
Noteholders to prepare their tax returns.
(c) If an Event of Default occurs and is
continuing and if it is either known by, or written notice of the
existence thereof has been delivered to, a Responsible Officer of
the Indenture Trustee, the Indenture Trustee shall mail to each
Noteholder notice of the Default within 30 days after such
knowledge or notice occurs.
SECTION 3.06. Compliance With Withholding
Requirements.
Notwithstanding any other provisions of this Series
1998-1 Supplement or the Indenture to the contrary, the Indenture
Trustee, shall comply with all Federal withholding requirements
respecting payments (or advances thereof) to the Noteholders as
may be applicable to instruments constituting indebtedness for
Federal income tax purposes. Any amounts so withheld shall be
treated as having been paid to the applicable Noteholders for all
purposes of the Indenture. In no event shall the consent of any
Noteholder be required for any such withholding.
SECTION 3.07. Special Covenants and
Acknowledgements.
With respect to the Series 1998-1 Notes, the Issuer
hereby represents and warrants, as of the Series 1998-1 Closing
Date:
(i) Valid Pledge. It is the intention of
the Issuer that each pledge herein contemplated
constitutes the Grant of a perfected, first priority
security interest in all Pledged Property to the
Indenture Trustee for the benefit of the Series 1998-1
Noteholders.
(ii) Governmental Authorization. Other than
the filing of the financing statements required
hereunder, no authorization or approval or other action
by, and no notice to or filing with, any governmental
authority or regulatory body is required for the due
execution, delivery and performance by the Issuer of
this Series 1998-1 Supplement, the Indenture, and each
Series 1998-1 Related Document to which it is a party.
SECTION 3.08. Tax Characterization.
It is the intent of the parties hereto that, for all
Federal, state, local and foreign taxes, the Series 1998-1 Notes
will be evidence of indebtedness. To the extent permitted by
law, the parties hereto, and each owner of a beneficial interest
in the Series 1998-1 Notes by acceptance of such interest, agrees
to treat the Series 1998-1 Notes for purposes of all Federal,
state, local and foreign taxes as indebtedness secured by the
Series 1998-1 Trust Estate.
SECTION 3.09. Determination of LIBOR.
The Indenture Trustee will determine LIBOR for purposes
of calculating the Interest Rate for Class A-3, and the Class A-4
Notes for each Interest Period.
SECTION 3.10. Interest Rate Cap.
(a) The Issuer shall enter into the Interest Rate
Cap with the Interest Rate Cap Provider on the Closing Date.
Notwithstanding any other provision of the Basic Documents and
the Series 1998-1 Related Documents, none of the execution,
delivery and performance by the Issuer of the Interest Rate Cap
shall conflict with the Basic Documents nor the Series 1998-1
Related Documents.
(b) In the event that the short-term debt rating
of the Interest Rate Cap Provider is withdrawn or reduced below A-
1+ by Standard & Poor's or the long-term debt rating is withdrawn
or reduced below Aa3 by Moody's (either, a "Downgrade"), the then
Interest Rate Cap Provider shall at the expense of the Interest
Rate Cap Provider and within thirty days of the Downgrade either
(i) obtain a substitute cap provider that (A) is reasonably
acceptable to the Issuer, (B) has a counterparty or long-term
unsecured debt or long-term certificate of deposit rating of at
least Aa3 (or its equivalent) by Moody's and a short-term debt
rating of A-1+ by Standard & Poor's, and c assumes the
outstanding Interest Rate Cap or replaces the outstanding
Interest Rate Cap with a cap on identical terms except that the
substitute cap provider shall be "Party A", or (ii) establish any
other arrangement reasonably satisfactory to the Trust and the
Rating Agencies, such that the then ratings of the respective
classes of Notes will not be withdrawn or reduced.
(c) On each Determination Date, the Master
Servicer will notify the Interest Rate Cap Provider of the
Notional Amount as of the next succeeding Distribution Date and
will set forth such Notional Amount in the Master Servicer's
Certificate.
ARTICLE IV
EVENTS OF DEFAULT; REMEDIES
SECTION 4.01. Events of Default.
"Event of Default", wherever used herein, means any one
of the following events (whatever the reason for such Event of
Default and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree
or order of any court or any order, rule or regulation of any
administrative or governmental body):
(i) default in the payment of any interest
on any Note when the same becomes due and payable, and
such default shall continue for a period of five
calendar days; or
(ii) default in the payment of the principal
of or any installment of the principal of any Note when
the same becomes due and payable, and such default
shall continue for a period of five calendar days; or
(iii) default in the observance or performance
of any covenant or agreement of the Issuer made in the
Series 1998-1 Related Documents (other than a covenant
or agreement, a default in the observance or
performance of which is elsewhere in this Section
specifically dealt with), or any representation or
warranty of the Issuer made in the Series 1998-1
Related Documents 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 has a material adverse effect on the
Noteholders, and such default shall continue or not be
cured, or the circumstance or condition in respect of
which such misrepresentation or warranty was incorrect
shall not have been eliminated or otherwise cured, for
a period of 60 days after there shall have been given,
by registered or certified mail, to the Issuer by the
Indenture Trustee or to the Issuer and the Indenture
Trustee by the Holders of at least 25% of the
Outstanding Amount of the Notes, a written notice
specifying such default or incorrect representation or
warranty and requiring it to be remedied and stating
that such notice is a "Notice of Default" hereunder; or
(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
Trust Assets 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 Trust Property, 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 Trust Assets, or the making by
the Issuer of any general assignment for the benefit of
creditors, or the failure by the Issuer generally to
pay its debts as such debts become due, or the taking
of action by the Issuer in furtherance of any of the
foregoing.
SECTION 4.02. Rights Upon Event of Default.
(a) If an Event of Default shall have occurred
and be continuing, the Indenture Trustee in its discretion may,
or if so requested in writing by Holders holding Notes
representing at least 66 2/3% of the Outstanding Amount of the
Notes shall, declare by written notice to the Issuer that the
Notes have become due and payable, whereupon they shall become,
immediately due and payable at 100% of the outstanding principal
balance of the Notes, and accrued interest thereon (together with
interest accrued at the relevant Note Rate on such overdue
interest).
(b) At any time after such declaration of
acceleration of maturity has been made and before a judgment or
decree for payment of the money due has been obtained by the
Indenture Trustee, the Holders of Notes representing a majority
of the Outstanding Amount of the 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 all Notes and all other amounts that would
then be due hereunder or upon such Notes if the Event
of Default giving rise to such acceleration had not
occurred; and
(B) all sums paid or advanced by the
Indenture Trustee hereunder and the reasonable
compensation, expenses, disbursements and advances of
the Indenture Trustee and its agents and counsel; and
(ii) all Events of Default, other than the
nonpayment of the principal of the Notes that has
become due solely by such acceleration, have been cured
or waived as provided in Section 5.9 of the Indenture.
No such rescission shall affect any subsequent default or impair
any right consequent thereto.
SECTION 4.03. Remedies.
If an Event of Default shall have occurred and be
continuing, the Indenture Trustee, subject to Section 11.17 of
the Indenture, may exercise any of the remedies specified in
Article V of the Indenture and, in addition, may do one or more
of the following.
(i) institute Proceedings in its own name
and as trustee of an express trust for the collection
of all amounts then payable on the Notes or under the
Indenture with respect thereto, whether by declaration
or otherwise, enforce any judgment obtained, and
collect from the Issuer and any other obligor upon such
Notes moneys adjudged due;
(ii) institute Proceedings from time to time
for the complete or partial foreclosure of the
Indenture with respect to the Trust Assets;
(iii) exercise any remedies of a secured party
under the UCC and take any other appropriate action to
protect and enforce the rights and remedies of the
Indenture Trustee and the Holders of the Notes; and
(iv) sell the Trust Assets 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 Trust Assets following an Event of Default unless
(x) the proceeds of such sale or liquidation
distributable to the Noteholders are sufficient to
discharge in full all amounts then due and unpaid
upon such Notes for principal and interest, or
(y) the Indenture Trustee determines that
the Trust Assets 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 Holders of 66-2/3% of the Outstanding
Amount of the Notes, or
(z) the Indenture Trustee has not determined
that the Trust Assets will not continue to provide
sufficient funds for the principal of and interest
on the Notes and the proceeds of such sale or
liquidation distributable to the Noteholders are
not sufficient to discharge in full all amounts
then due and unpaid upon such Notes for principal
and interest, and the Indenture Trustee obtains
the consent of Holders of 100% of the Outstanding
Amount of the Notes.
In determining such sufficiency or insufficiency with
respect to clause (y) and (z), 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 Trust Assets for such purpose.
SECTION 4.04. Priorities.
(a) On and after the maturity date of the Series
1998-1 Notes (by acceleration or otherwise) all Available Funds,
all amounts on deposit in the Reserve Account withdrawn in
accordance with Section 3.02 and any proceeds of the liquidation
of all or any portion of the Series 1998-1 Trust Estate pursuant
to Section 4.03(iv), shall be applied by the Indenture Trustee on
the related Distribution Date in the following order of priority:
FIRST: amounts due and owing and required to be
distributed to the Master Servicer, the Rate Cap
Provider, the Owner Trustee and the Indenture Trustee,
respectively, pursuant to priorities (i) and (ii) of
Section 3.03 hereof and not previously distributed, in
the order of such priorities and without preference or
priority of any kind within such priorities;
SECOND: to Class A Noteholders for amounts
due and unpaid on the Class A Notes for interest,
ratably, without preference or priority of any kind,
according to the amounts due and payable on the Class A
Notes for interest;
THIRD: to the Class A Noteholders for amounts
due and unpaid on the Class A Notes for principal,
ratably, without preference or priority of any kind,
according to the amounts due and payable on the Class A
Notes for principal.
FOURTH: to the Class B-1 Noteholders for
amounts due and unpaid on the Class B-1 Notes for
interest, ratably, without preference or priority of
any kind, according to the amounts due and payable on
the Class B-1 Notes for interest.
FIFTH: to the Class B-1 Noteholders for amounts
due and unpaid on the Class B-1 Notes for principal,
ratably, without preference or priority of any kind,
according to the amounts due and payable on the Class B-
1 Notes for principal.
SIXTH: to the Class B-2 Noteholders for amounts
due and unpaid on the Class B-2 Notes for interest,
ratably, without preference or priority of any kind,
according to the amounts due and payable on the Class B-
2 Notes for interest.
SEVENTH: to the Class B-2 Noteholders for
amounts due and unpaid on the Class B-2 Notes for
principal, ratably, without preference or priority of
any kind, according to the amounts due and payable on
the Class B-2 Notes for principal.
EIGHTH: to the Class C Noteholders for
amounts due and unpaid on the Class C Notes for
interest, ratably, without preference or priority of
any kind, according to the amounts due and payable on
the Class C Notes for interest.
NINTH: to the Class C Noteholders for amounts
due and unpaid on the Class C Notes for principal,
ratably, without preference or priority of any kind,
according to the amounts due and payable on the Class C
Notes for principal.
TENTH: to the Series 1998-1 Certificateholders,
any remaining Available Funds.
(b) The Indenture Trustee may fix a record date
and distribution date for any payment to Series 1998-1
Noteholders pursuant to this Section 4.04. At least 15 days
before such record date, the Indenture Trustee shall mail to the
Noteholders a notice that states the record date, the
Distribution Date and the amount to be paid.
ARTICLE V
PREPAYMENT AND REDEMPTION
SECTION 5.01. Optional "Clean-Up" Redemption.
On any Distribution Date occurring on or after the date
upon which the aggregate outstanding principal balance of the
Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the
Class A-4 Notes, the Class A-5 Notes and the Class B-1 Notes
shall have been reduced to an amount which is less than or equal
to 10% of the aggregate outstanding principal balance of such
Classes of Notes as of the Series 1998-1 Closing Date, the Master
Servicer and the Seller on behalf of the Issuer, shall each have
the option to redeem the outstanding Series 1998-1 Notes at a
redemption price (the "Redemption Price") which is not less than
the then Aggregate Note Principal Balance, plus all accrued and
unpaid interest thereon and all fees and other amounts owing to
the Indenture Trustee, the Interest Rate Cap Provider, the Owner
Trustee and the Master Servicer (if other than HFC) under the
Series 1998-1 Related Documents. The Master Servicer and the
Seller, on behalf of the Issuer, shall give the Master Servicer
(if other than HFC), the Indenture Trustee, and the Owner Trustee
at least 10 days' irrevocable prior written notice of the date on
which the Master Servicer or the Seller, as applicable intends to
exercise such option to purchase. Not later than 12:00 P.M., New
York City time, on such Distribution Date, the Master Servicer or
the Seller, as applicable, shall deposit such amount in the
Collection Account in immediately available funds for
distribution pursuant to Section 3.03 against the presentment of
the Notes for cancellation. Such purchase option is subject to
payment in full of the Redemption Price.
ARTICLE VI
MISCELLANEOUS
SECTION 6.01. Ratification of Basic Documents.
Each of the Basic Documents, and to the extent
appropriate, as supplemented by this Series 1998-1 Supplement, is
in all respects ratified and confirmed and each of the Basic
Documents, as so supplemented by this Series 1998-1 Supplement
shall be read, taken and construed as one and the same
instrument.
SECTION 6.02. Counterparts.
This Series 1998-1 Supplement may be executed in one or
more counterparts, each of which so executed shall be deemed to
be an original, but all of which shall together constitute but
one and the same instrument.
SECTION 6.03. GOVERNING LAW.
THIS SERIES 1998-1 SUPPLEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 6.04. Amendments Without Consent of
Noteholders.
(a) Without the consent of the Noteholders but
with prior written notice to the Rating Agencies, as evidenced to
the Indenture Trustee and the Issuer, when authorized by an
Issuer Order, at any time and from time to time, the parties
hereto may enter into one or more amendments hereto, in form
satisfactory to the Indenture Trustee and the Owner Trustee, for
any of the following purposes:
(i) to correct or amplify the description of
any property at any time subject to the lien of the
Indenture as supplemented by this Series 1998-1
Supplement, or better to assure, convey and confirm
unto the Indenture Trustee, if any, any property
subject or required to be subjected to the lien of the
Indenture as supplemented by this Series 1998-1
Supplement, or to subject to the lien of the Indenture
as supplemented by this Series 1998-1 Supplement
additional property;
(ii) to evidence the succession, in
compliance with the applicable provisions hereof, of
another person to the Issuer, and the assumption by any
such successor of the covenants of the Issuer herein
and in the Notes contained;
(iii) to add to the covenants of the Issuer,
for the benefit of the Noteholders, or to surrender any
right or power herein conferred upon the Issuer;
(iv) to convey, transfer, assign, mortgage or
pledge any property to or with the Indenture Trustee,
if any;
(v) to cure any ambiguity, to correct or
supplement any provision herein which may be
inconsistent with any other provision herein or to make
any other provisions with respect to matters or
questions arising under the Indenture, the Trust
Agreement or in this Series 1998-1 Supplement; provided
that such action shall not adversely affect the
interests of the Series 1998-1 Noteholders;
(vi) to evidence and provide for the
acceptance of the appointment hereunder and under the
Indenture by a successor indenture trustee with respect
to the Notes and to add to or change any of the
provisions of the Indenture or of this Series 1998-1
Supplement as shall be necessary to facilitate the
administration of the trusts hereunder by more than one
indenture trustee, pursuant to the requirements of
Article VI of the Indenture; or
(vii) to modify, eliminate or add to the
provisions of the Indenture or of this Series 1998-1
Supplement to such extent as shall be necessary to
effect the qualification of the Indenture under the TIA
or under any similar federal statute hereafter enacted
and to add to the Indenture such other provisions as
may be expressly required by the TIA.
Each of the Indenture Trustee and the Owner Trustee is
hereby authorized to join in the execution of any amendment and
to make any further appropriate agreements and stipulations that
may be therein contained.
(b) Except as otherwise provided herein, the
Issuer and the Indenture Trustee, when authorized by an Issuer
Order, may, also without the consent of any of the Series 1998-1
Noteholders but with prior written notice to the Rating Agencies
by the Issuer, as evidenced to the Indenture Trustee, enter into
an amendment hereto for the purpose of adding any provisions to,
or changing in any manner or eliminating any of the provisions
of, the Indenture or of this Series 1998-1 Supplement of
modifying in any manner the rights of the Series 1998-1
Noteholders under the Indenture or under this Series 1998-1
Supplement; provided, however, that such action shall not, as
evidenced by an Opinion of Counsel, adversely affect in any
material respect the interests of any Series 1998-1 Noteholder.
SECTION 6.05. Amendments With Consent of the
Series 1998-1 Noteholders.
Except as otherwise provided herein, the Issuer and the
Indenture Trustee, when authorized by an Issuer Order provided by
the Master Servicer, also may, upon satisfaction of the Rating
Agency Condition and with the consent of the Holders of not less
than a majority of the Outstanding Amount of each Class of
affected Series 1998-1 Notes, by Act of such Holders delivered to
the Issuer and the Indenture Trustee, enter into an amendment
hereto for the purpose of adding any provisions to, or changing
in any manner or eliminating any of the provisions of, this
Series 1998-1 Supplement or of modifying in any manner the rights
of the Series 1998-1 Noteholders under the Indenture or under
this Series 1998-1 Supplement; provided, however, that no such
amendment shall, without the consent of the Holder of each
Outstanding Series 1998-1 Note affected thereby:
(i) change the date of payment of any
installment of principal of or interest on any Series
1998-1 Note, or reduce the principal amount thereof,
the interest rate thereon, change the provision of the
Indenture relating to the application of collections
on, or the proceeds of the sale of, all or any portion
of any Series 1998-1 Trust Estate to payment of
principal of or interest on the Series 1998-1 Notes, or
change any place of payment where, or the coin or
currency in which, any Series 1998-1 Note or the
interest thereon is payable;
(ii) impair the right to institute suit for
the enforcement of the provisions of the Indenture
requiring the application of funds available therefor,
as provided in Article V of the Indenture, to the
payment of any such amount due on the Series 1998-1
Notes on or after the respective due dates thereof;
(iii) reduce the percentage of the Outstanding
Amount of the Series 1998-1 Notes, the consent of the
Holders of which is required for this Series 1998-1
Supplement, or the consent of the Holders of which is
required for any waiver of compliance with certain
provisions of the Indenture or certain defaults
hereunder and their consequences provided for in the
Indenture;
(iv) modify or alter the provisions of the
proviso to the definition of the term "Outstanding";
(v) reduce the percentage of the Outstanding
Amount of the Notes required to direct the Trustee to
direct the Issuer to sell or liquidate the Series 1998-
1 Trust Estate pursuant to Section 5.4 of the
Indenture;
(vi) modify any provision of this Section
except to increase any percentage specified herein or
to provide that certain additional provisions of the
Indenture or the Basic Documents cannot be modified or
waived without the consent of the Holder of each
Outstanding Series 1998-1 Note affected thereby;
(vii) modify any of the provisions of the
Indenture in such manner as to affect the calculation
of the amount of any payment of interest or principal
due on any Series 1998-1 Note on any Distribution Date
(including the calculation of any of the individual
components of such calculation) or to affect the rights
of the Holders of Series 1998-1 Notes to the benefit of
any provisions for the mandatory redemption of the
Series 1998-1 Notes contained herein; or
(viii) permit the creation of any lien ranking
prior to or on a parity with the lien of the Indenture
with respect to any part of the a Series 1998-1 Trust
Estate or, except as otherwise permitted or
contemplated herein or the Series 1998-1 Related
Documents, terminate the lien of the Indenture on any
property at any time subject hereto or deprive the
Holder of any Series 1998-1 Note of the security
provided by the lien of the Indenture.
It shall not be necessary for any Act of Noteholders
under this Section to approve the particular form of an amendment
to this Series 1998-1 Supplement, but it shall be sufficient if
such Act shall approve the substance thereof.
Promptly after the execution by the Issuer and the
Indenture Trustee of an amendment to this Series 1998-1
Supplement, the Indenture Trustee shall mail to the Series 1998-1
Noteholders a notice setting forth in general terms the substance
hereof. Any failure of the Indenture Trustee to mail such
notice, or any defect therein, shall not, however, in any way
impair or affect the validity of any amendment to the Series 1998-
1 Supplement.
Prior to the execution of any amendment to this
Supplement, the Indenture Trustee shall be entitled to receive
and rely upon an Opinion of Counsel stating that the execution of
such amendment is authorized or permitted by this Supplement.
The Indenture Trustee may, but shall not be obligated to, enter
into any such amendment which affects the Indenture Trustee's own
rights, duties or immunities under this Supplement.
By its acceptance of its interest in the Series 1998-1
Notes, each owner of a beneficial interest in a Note shall be
deemed to have agreed that prior to the date which is one year
and one day after the termination of the Indenture, such Person
shall not acquiesce, petition or otherwise invoke or cause the
Issuer or the Seller to invoke the process of any governmental
authority for the purpose of commencing or sustaining a case
against the Seller or Issuer under any Federal or state
bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other
similar official of or for the Issuer or the Seller or any
substantial part of its property or ordering the winding-up or
liquidation of the affairs of the Issuer or the Seller.
SECTION 6.06. Authority to Register Notes and
File Reports.
The Issuer hereby authorizes the Seller to prepare and
execute on behalf of the Issuer, filings with the Securities and
Exchange Commission and any applicable state agencies of
documents required to register or qualify the Notes for public
distribution and to file on a periodic basis, such documents as
may be required by rules and regulations prescribed by such
authorities.
(a)
IN WITNESS WHEREOF, the parties hereto have caused this
Series 1998-1 Supplement to be fully executed by their respective
officers as of the day and year first above written.
HOUSEHOLD FINANCE CORPORATION,
as Master Servicer
By
Name:
Title:
HOUSEHOLD AUTOMOBILE REVOLVING
TRUST I,
as Issuer
By WILMINGTON TRUST COMPANY
Not in its individual capacity but
solely as Owner Trustee
By
Name:
Title:
HOUSEHOLD AUTO RECEIVABLES
CORPORATION,
By
Name:
Title:
THE CHASE MANHATTAN BANK,
as Indenture Trustee
By
Name:
Title:
WILMINGTON TRUST COMPANY,
as Owner Trustee
By
Name:
Title:
Schedule I
Eligibility Criteria
"Eligible Receivable" means a Series 1998-A Receivable with
respect to which each of the following is true as of the Cutoff
Date:
(a) that (i) was originated directly by HAFC (or any
predecessor or Affiliate of HAFC) with the consumer or was
originated by a Dealer for the retail sale of a Financed Vehicle
in the ordinary course of such Dealer's business and (A) in the
case of a Dealer originated receivable, such Dealer had all
necessary licenses and permits to originate receivables in the
state where such Dealer was located, and such receivable was
purchased by HAFC (or any predecessor or Affiliate of HAFC) from
such Dealer under an existing Dealer Agreement with HAFC (or any
predecessor or Affiliate of HAFC), and (B) in the case of a
Dealer originated receivable or a receivable originated by HAFC
(or any predecessor or Affiliate of HAFC) such receivable was
purchased (x) by HARC pursuant to the terms of the Master
Receivables Purchase Agreement, (y) by the Issuer pursuant to the
Master Sale and Servicing Agreement; and each Series 1998-1
Receivable was validly assigned (1) if Dealer originated, by such
Dealer to HAFC (or any predecessor or Affiliate of HAFC), (2) by
HAFC to HARC pursuant to the terms of the Master Receivables
Purchase Agreement, (3) by HARC to the Issuer pursuant to the
Master Sale and Servicing Agreement and (4) by the Issuer to the
Trustee pursuant to the Indenture, (ii) was fully and properly
executed by the parties thereto, (iii) contains customary and
enforceable provisions such as to render the rights and remedies
of the holder thereof adequate for realization against the
collateral security, and (iv) is fully amortizing and provides
for level monthly payments (provided that the payment in the
first Collection Period and the final Collection Period of the
term of the Series 1998-1 Receivable may be minimally different
from the level payment) which, if made when due, shall fully
amortize the Amount Financed over the original term;
(b) that if originated by a Dealer, was sold by the
Dealer to HAFC (or any predecessor or Affiliate of HAFC) without
any fraud or material misrepresentation on the part of such
Dealer in either case or on the part of the Obligor;
(c) with respect to which all requirements of
applicable federal, state and local laws, and regulations
thereunder (including, without limitation, usury laws, the
Federal Truth-in-Lending Act, the Equal Credit Opportunity Act,
the Fair Credit Billing Act, the Fair Credit Reporting Act, the
Fair Debt Collection Practices Act, the Federal Trade Commission
Act, the Magnuson-Moss Warranty Act, the Federal Reserve Board's
Regulations "B" and "Z", the Soldiers' and Sailors' Civil Relief
Act of 1940 and state adaptations of the National Consumer Act
and of the Uniform Consumer Credit Code and other consumer credit
laws and equal credit opportunity and disclosure laws) in respect
of all of the Series 1998-1 Receivables, each and every sale of
Financed Vehicles and the sale of any physical damage, credit
life and credit accident and health insurance and any extended
service contracts, have been complied with in all material
respects, and each Series 1998-1 Receivable and the sale of the
Financed Vehicle evidenced by each Series 1998-1 Receivable and
the sale of any physical damage, credit life and credit accident
and health insurance and any extended service contracts complied
at the time it was originated or made and now complies in all
material respects with all applicable legal requirements;
(d) that was originated in the United States of
America and, at the time of origination materially conformed to
all requirements of the Dealer Underwriting Guides and HAFC's
Funding Department Guidelines (or such similar guidelines of any
predecessor or affiliate of HAFC) applicable thereto;
(e) which represents the genuine, legal, valid and
binding payment obligation of the Obligor thereon, enforceable by
the holder thereof in accordance with its terms, except (A) as
enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting the enforcement of
creditors' rights generally and by equitable limitations on the
availability of specific remedies, regardless of whether such
enforceability is considered in a proceeding in equity or at law
and (B) as such Receivable may be modified by the application of
the Soldiers' and Sailors' Civil Relief Act of 1940, as amended;
and all parties thereto had full legal capacity to execute and
deliver such Receivable and all other documents related thereto
and to grant the security interest purported to be granted
thereby;
(f) which is not due from the United States of America
or any State or from any agency, department, subdivision or
instrumentality thereof;
(g) which, as of the relevant Pledge Date, (i) had an
original maturity of at least 18 months but not more than 72
months, (ii) had an original Amount Financed of at least $3,000
and not more than $27,000, (iii) had an Annual Percentage Rate of
at least 10.50% and not more than 27%, (iv) was not more than 30
days past due, (v) no funds have been advanced by the Issuer, the
Master Servicer, HAFC, any predecessor or Affiliate of HAFC, any
Dealer, or anyone acting on behalf of any of them in order to
cause such Series 1998-1 Receivable to qualify under subclause
(iv) of this clause (g) and (vi) had no provision thereof waived,
altered or modified in any respect since its origination;
(h) with respect to which the information pertaining
to such Series 1998-1 Receivable set forth in each Schedule of
Receivables is true and correct in all material respects;
(i) with respect to which, by the related Pledge Date
and on each relevant date thereafter, HAFC will have caused the
portions of HAFC's and the Master Servicer's servicing records
relating to such Series 1998-1 Receivable to be clearly and
unambiguously marked to show that such Series 1998-1 Receivable
has been transferred by HAFC to HARC in accordance with the terms
of the Master Receivables Purchase Agreement and by HARC to the
Issuer pursuant to the Master Sale and Servicing Agreement and by
the Issuer to the Trustee pursuant to the Indenture;
(j) with respect to which the computer tape or listing
to be made available by HAFC to HARC, the Master Servicer or the
Trustee from time to time was, or will be, complete and accurate
as of the related Pledge Date and includes a description of the
same Series 1998-1 Receivables that are, or will be, described in
the related Schedule of Receivables;
(k) which constitutes chattel paper within the meaning
of the UCC;
(l) of which there is only one original executed copy;
(m) with respect to which there exists a Receivable
File and such Receivable File contains, without limitation, (a) a
fully executed original of such Receivable, (b) a certificate of
insurance, application form for insurance signed by the Obligor,
or a signed representation letter from the relevant Obligor named
pursuant to which the Obligor has agreed to obtain physical
damage insurance for the related Financed Vehicle, c the original
Lien Certificate or application therefor showing HAFC (or any
predecessor or Affiliate of HAFC) or, pursuant to (bb) below, an
Unaffiliated Originator as first lienholder (as such Lien was
assigned by the Unaffiliated Originator to HAFC (if applicable)
and by HAFC (or any predecessor or Affiliate of HAFC) to HARC and
by HARC to the Issuer and by the Issuer to the Trustee) and (d)
an original credit application signed by the Obligor; and (x)
each of the documents relating thereto which is required to be
signed by the Obligor has been signed by the Obligor in the
appropriate spaces and (y) all blanks on any form relating
thereto by HAFC (or any predecessor or Affiliate of HAFC) to be
completed have been properly filled in and each form has
otherwise been correctly prepared; and, notwithstanding the
above, with respect to which, a copy of the complete Receivable
File for such Series 1998-1 Receivable, which fulfills the
documentation requirements of the Dealer Underwriting Guides as
in effect at the time of purchase is in the possession of the
Master Servicer or Sub-Servicer;
(n) which has not been satisfied, subordinated or
rescinded, and the Financed Vehicle securing such Series 1998-1
Receivable has not been released from the lien of such Series
1998-1 Receivable in whole or in part;
(o) which was not originated in, and is not subject to
the laws of, any jurisdiction the laws of which would make
unlawful, void or voidable the sale, transfer and assignment of
such Series 1998-1 Receivable and with respect to which neither
HAFC (nor any predecessor or affiliate of HAFC) nor the Issuer
has entered into any agreement with any account debtor that
prohibits, restricts or conditions the assignment of any portion
of such Series 1998-1 Receivable;
(p) which has not been sold, transferred, assigned or
pledged to any Person other than to (i) HAFC (or any predecessor
or Affiliate of HAFC) by a Dealer or Unaffiliated Originator,
(ii) HARC by HAFC pursuant to the terms of the Master Receivables
Purchase Agreement, (iii) the Issuer by HARC pursuant to the
terms of the Master Sale and Servicing Agreement and (iv) the
Trustee by the Issuer pursuant to the terms of the Indenture. No
Dealer or Unaffiliated Originator has a participation in, or
other right to receive, proceeds of any Series 1998-1 Receivable
and with respect to which neither HAFC (nor any predecessor or
Affiliate of HAFC), HARC nor the Issuer has taken any action to
convey any right to any Person that would result in such Person
having a right to payments received under the related Insurance
Policy or the related Dealer Agreement or Dealer Assignment or
Unaffiliated Originator Receivables Purchase Agreement or to
payments due under such Series 1998-1 Receivable;
(q) which creates or shall create a valid, binding and
enforceable first priority security interest in favor of HAFC in
the Financed Vehicle;
(r) which is secured by an enforceable and perfected
first priority security interest in the Financed Vehicle in favor
of HAFC as secured party, which security interest is prior to all
other Liens upon and security interests in such Financed Vehicle
which now exist or may hereafter arise or be created (except, as
to priority, for any Lien for taxes, labor or materials affecting
a Financed Vehicle); and, with respect to which there are no
Liens or claims for taxes, work, labor or materials affecting the
related Financed Vehicle which are or may be Liens prior or equal
to the lien of such Receivable;
(s) as to which all filings (including, without
limitation, UCC filings) required to be made by any Person and
actions required to be taken or performed by any Person in any
jurisdiction to give the Trustee a first priority perfected lien
on, or ownership interest in, the Series 1998-1 Receivables and
the proceeds thereof have been made, taken or performed;
(t) as to which HAFC (or any predecessor or Affiliate
of HAFC), HARC or the Issuer has not done anything to convey any
right to any Person that would result in such Person having a
right to payments due under such Series 1998-1 Receivable or
otherwise to impair the rights of the Trustee, the Noteholders or
the Certificateholders in such Series 1998-1 Receivable or the
proceeds thereof;
(u) which is not assumable by another Person in a
manner which would release the Obligor thereof from such
Obligor's obligations with respect to such Receivable;
(v) which is not subject to any right of rescission,
setoff, counterclaim or defense and no such right has been
asserted or threatened with respect thereto;
(w) as to which there has been no default, breach,
violation or event permitting acceleration under the terms of
such Series 1998-1 Receivable (other than payment delinquencies
of not more than 30 days) and no condition exists or event has
occurred and is continuing that with notice, the lapse of time or
both would constitute a default, breach, violation or event
permitting acceleration under the terms of such Series 1998-1
Receivable, and there has been no waiver of any of the foregoing,
and with respect to which the related Financed Vehicle had not
been repossessed;
(x) at the time of the origination of which, the
related Financed Vehicle was covered by a comprehensive and
collision insurance policy (i) in an amount at least equal to the
lesser of (a) its maximum insurable value and (b) the principal
amount due from the Obligor thereunder, (ii) naming HAFC and its
successors and assigns as loss payee and (iii) insuring against
loss and damage due to fire, theft, transportation, collision and
other risks generally covered by comprehensive and collision
coverage and with respect to which the Obligor is required to
maintain physical loss and damage insurance, naming HAFC and its
successors and assigns as additional insured parties, and such
Receivable permits the holder thereof to obtain physical loss and
damage insurance at the expense of the Obligor if the Obligor
fails to do so;
(y) with respect to which the following is true:
The Lien Certificate for the related Financed Vehicle
shows, or if a new or replacement Lien Certificate is being
applied for with respect to such Financed Vehicle the Lien
Certificate will be received within 180 days of the Series 1998-1
Closing Date and will show, HAFC (or any predecessor or Affiliate
of HAFC) named as the original secured party under such Series
1998-1 Receivable and, accordingly, HAFC will be the holder of a
first priority security interest in such Financed Vehicle. With
respect to each Series 1998-1 Receivable for which the Lien
Certificate has not yet been returned from the Registrar of
Titles, HAFC has received written evidence from the related
Dealer, Unaffiliated Originator or the Obligor that such Lien
Certificate showing HAFC as first lienholder has been applied
for. If the Series 1998-1 Receivable was originated in a state
in which a filing or recording is required of the secured party
to perfect a security interest in motor vehicles, such filings or
recordings have been duly made to show HAFC named as the original
secured party under the related Series 1998-1 Receivable;
(z) as to which no selection procedures adverse to the
Noteholders or the Certificateholder have been utilized in
selecting such Series 1998-1 Receivable from all other similar
Receivables originated by HAFC or any predecessor or Affiliate of
HAFC;
(aa) that, as of the last day of the immediately
preceding Collection Period, is not a Defaulted Receivable; and
(bb) that, if acquired from an Unaffiliated Originator,
will not result in more than 5% of the aggregate principal
balance of the Series 1998-1 Receivables having been originated
by Unaffiliated Originators.
Schedule II
Schedule of Receivables on File in Electronic Form
at Dewey Ballantine
Exhibit A
Form of Master Servicer's Certificate
Exhibit B
Form of Interest Rate Cap
(See Swap Documentation at Tab 9)
EXECUTION COPY
MASTER SALE AND SERVICING AGREEMENT
among
HOUSEHOLD AUTOMOBILE REVOLVING TRUST I,
HOUSEHOLD AUTO RECEIVABLES CORPORATION,
Seller,
HOUSEHOLD FINANCE CORPORATION,
Master Servicer
and
THE CHASE MANHATTAN BANK,
Trustee
Amended and Restated as of November 1, 1998
TABLE OF CONTENTS
Page
ARTICLE I
Definitions
SECTION 1.1. Definitions 1
SECTION 1.2. Other Interpretive Provisions 19
SECTION 1.3. Usage of Terms 20
SECTION 1.4. Certain References 20
SECTION 1.5. No Recourse 20
SECTION 1.6. Action by or Consent of Noteholders 20
SECTION 1.7. Material Adverse Effect 21
ARTICLE II
Conveyance of Receivables
SECTION 2.1. Conveyance of Receivables 21
SECTION 2.2. Further Encumbrance of Series Trust
Estate 24
ARTICLE III
The Receivables
SECTION 3.1. Representations and Warranties of Seller 25
SECTION 3.2. Repurchase upon Breach 25
SECTION 3.3. Custody of Receivables Files 26
ARTICLE IV
Administration and Servicing of Receivables
SECTION 4.1. Duties of the Master Servicer 26
SECTION 4.2. Collection of Receivable Payments;
Modifications of Receivables 28
SECTION 4.3. Realization Upon Receivables 29
SECTION 4.4. Insurance 31
SECTION 4.5. Maintenance of Security Interests in
Vehicles 31
SECTION 4.6. Covenants, Representations, and
Warranties of Master Servicer 32
SECTION 4.7. Repurchase of Receivables Upon Breach of
Covenant 33
SECTION 4.8. Total Servicing Fee; Payment of Certain
Expenses by Master Servicer 33
SECTION 4.9. Master Servicer's Certificate 33
SECTION 4.10.Annual Statement as to Compliance, Notice
of Master Servicer Termination Event 34
SECTION 4.11.Annual Independent Accountants' Report 34
SECTION 4.12.Access to Certain Documentation and
Information Regarding Receivables 35
SECTION 4.13.Fidelity Bond and Errors and Omissions
Policy 35
SECTION 4.14.Year 2000 Compliance 35
ARTICLE V
Trust Accounts; Distributions;
Statements to Certificateholders and Noteholders
SECTION 5.1. Establishment of Trust Accounts 36
SECTION 5.2. Certain Reimbursements to the Master
Servicer 38
SECTION 5.3. Application of Collections 38
SECTION 5.4. Additional Deposits 38
SECTION 5.5. Distributions 38
ARTICLE VI
RESERVED
ARTICLE VII
RESERVED
ARTICLE VIII
The Seller
SECTION 8.1. Representations of Seller 39
SECTION 8.2. Corporate Existence 41
SECTION 8.3. Liability of Seller; Indemnities 42
SECTION 8.4. Merger or Consolidation of, or Assumption
of the Obligations of, Seller 43
SECTION 8.5. Limitation on Liability of Seller and
Others 43
SECTION 8.6. Seller May Own Certificates or Notes 43
ARTICLE IX
The Master Servicer
SECTION 9.1. Representations of Master Servicer 44
SECTION 9.2. Liability of Master Servicer; Indemnities 46
SECTION 9.3. Merger or Consolidation of, or Assumption
of the Obligations of the Master Servicer 47
SECTION 9.4. Limitation on Liability of Master
Servicer and Others 48
SECTION 9.5. Delegation of Duties 49
SECTION 9.6. Master Servicer Not to Resign 49
SECTION 9.7. Sub-Servicing Agreements Between Master
Servicer and Sub-Servicers 49
SECTION 9.8. Successor Sub-Servicers 50
ARTICLE X
Default
SECTION 10.1.Master Servicer Termination Event 50
SECTION 10.2.Consequences of a Master Servicer
Termination Event 52
SECTION 10.3.Appointment of Successor 52
SECTION 10.4.Notification to Noteholders and
Certificateholders 53
SECTION 10.5.Waiver of Past Defaults 54
SECTION 10.6.Successor to Master Servicer 54
ARTICLE XI
Termination
SECTION 11.1.Optional Purchase of All Receivables 54
ARTICLE XII
Administrative Duties of the Master Servicer
SECTION 12.1.Administrative Duties. 55
SECTION 12.2.Records 57
SECTION 12.3.Additional Information to be Furnished to
the Issuer 57
ARTICLE XIII
Miscellaneous Provisions
SECTION 13.1. Amendments 58
SECTION 13.2. Protection of Title to Trust 59
SECTION 13.3. Notices 61
SECTION 13.4. Assignment 61
SECTION 13.5. Limitations on Rights of Others 61
SECTION 13.6. Severability 62
SECTION 13.7. Separate Counterparts 62
SECTION 13.8. Headings 62
SECTION 13.9. Governing Law 62
SECTION 13.10. Assignment to Trustee 62
SECTION 13.11. Nonpetition Covenants 62
SECTION 13.12. Limitation of Liability of Owner Trustee 63
SECTION 13.13. Independence of the Master Servicer 63
SECTION 13.14. No Joint Venture 63
EXHIBITS
Exhibit A - Form of Servicer's Certificate
Exhibit B - Form of Transfer Agreement
Exhibit C - Form of Request for Release and Receipt of Documents
Exhibit D - Form of Trustee's Acknowledgement
AMENDED AND RESTATED MASTER SALE AND SERVICING
AGREEMENT dated as of November 1, 1998, among HOUSEHOLD
AUTOMOBILE REVOLVING TRUST I, a Delaware business trust (the
"Issuer"), HOUSEHOLD AUTO RECEIVABLES CORPORATION, a Nevada
corporation (the "Seller"), HOUSEHOLD FINANCE CORPORATION, a
Delaware corporation (the "Master Servicer") and THE CHASE
MANHATTAN BANK, a New York banking corporation, in its
capacity as Trustee.
WHEREAS the Issuer desires to purchase from time
to time Receivables arising in connection with motor vehicle
retail installment sale contracts acquired by Household
Automotive Finance Corporation or any of its subsidiaries;
WHEREAS the Seller will purchase from time to time
Receivables from Household Automotive Finance Corporation
and is willing to sell Receivables to the Issuer;
WHEREAS the Master Servicer is willing to service
all such receivables;
NOW, THEREFORE, in consideration of the promises
and the mutual covenants herein contained, the parties
hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.1. Definitions
. Whenever used in this Agreement, the following words and
phrases shall have the following meanings:
"Accountants' Report" means the report of a firm
of nationally recognized independent accountants described
in Section 4.11.
"Accounting Date" means, with respect to a
Distribution Date, the last day of the Collection Period
immediately preceding such Distribution Date.
"Actuarial Method" means the method of allocating
a fixed level monthly payment on an obligation between
principal and interest, pursuant to which the portion of
such payment that is allocated to interest is equal to the
product of (a) 1/12, (b) the fixed annual rate of interest
on such obligation and c the outstanding principal balance
of such obligation.
"Actuarial Receivable" means a Receivable under
which the portion of the payment allocated to interest and
the portion allocable to principal is determined in
accordance with the Actuarial Method.
"Addition Notice" means, with respect to any
transfer of Receivables to the Trust pursuant to Section 2.1
of this Agreement, notice of the Seller's election to
transfer Receivables to the Trust, such notice to designate
the related Transfer Date, the related Series Trust Estate,
if any, and the approximate principal amount of Receivables
to be transferred on such Transfer Date.
"Affiliate" means, with respect to any specified
Person, any other Person controlling or controlled by or
under common control with such specified Person. For the
purposes of this definition, "control" when used with
respect to any Person means the power to direct the
management and policies of such Person, directly or
indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to
the foregoing.
"Aggregate Principal Balance" means, with respect
to any date of determination, the sum of the Principal
Balances for all Receivables (other than (i) any Receivable
that has become a Liquidated Receivable and (ii) any
Receivable that has become a Repurchased Receivable as of
the date of determination).
"Agreement" means this Master Sale and Servicing
Agreement, as the same may be amended and supplemented from
time to time.
"Amount Financed" means, with respect to a
Receivable, the aggregate amount advanced under such
Receivable toward the purchase price of the Financed Vehicle
and any related costs, including amounts advanced in respect
of accessories, insurance premiums, service and warranty
contracts, other items customarily financed as part of
retail automobile installment sale contracts or promissory
notes, and related costs.
"Annual Percentage Rate" or "APR" of a Receivable
means the annual percentage rate of finance charges or
service charges, as stated in the related Contract.
"Base Servicing Fee" means, with respect to each
Series Trust Estate and with respect to any Collection
Period, the fee payable to the Master Servicer for services
rendered during such Collection Period, which, unless
otherwise specified in the related Series Supplement, shall
be equal to one-twelfth of the Servicing Fee Rate multiplied
by the daily average Pool Balance for such Series Trust
Estate determined with respect to the preceding Collection
Period.
"Basic Documents" means this Agreement, the
Certificate of Trust, the Trust Agreement, the Indenture,
the Purchase Agreement and other documents and certificates
delivered in connection therewith.
"Business Day" means a day other than a Saturday,
a Sunday or other day on which commercial banks located in
the states of Illinois, California or New York are
authorized or obligated to be closed.
"Certificate" has the meaning assigned to such
term in the Trust Agreement and, with respect to a Series,
the meaning specified in the relevant Series Supplement.
"Certificateholder" has the meaning assigned to
such term in the Trust Agreement.
"Class" means a class of Notes or Certificates, as
the context requires.
"Closing Date" means March 31, 1998.
"Collected Funds" means, with respect to any
Distribution Date, the amount of funds in the Master
Collection Account representing collections on Receivables
during the related Collection Period, including all Net
Liquidation Proceeds collected during the related Collection
Period (but excluding any Repurchase Amounts) and funds
deposited into the Collection Account representing payments
pursuant to the Interest Rate Cap.
"Collection Period" means, for each Series, with
respect to the first Distribution Date in such Series, the
period beginning on the opening of business on the related
Cutoff Date and ending on the close of business on the last
day of the calendar month preceding such Distribution Date.
With respect to each subsequent Distribution Date, the
preceding calendar month. Any amount stated "as of the
close of business of the last day of a Collection Period"
shall give effect to all applications of collections on such
day.
"Collection Records" means all manually prepared
or computer generated records relating to collection efforts
or payment histories with respect to the Receivables.
"Computer Tape" means the computer tapes or other
electronic media furnished by the Seller to the Issuer and
its assigns describing certain characteristics of the
Receivables.
"Contract" means a motor vehicle retail
installment sale contract.
"Corporate Trust Office" means (i) with respect to
the Owner Trustee, the principal corporate trust office of
the Owner Trustee, which at the time of execution of this
agreement is Rodney Square North, 1100 North Market Street,
Wilmington, Delaware 19890-0001, Attention: Corporate Trust
Administration, and (ii) with respect to the Trustee, the
principal corporate trust office of The Chase Manhattan
Bank, which at the time of execution of this agreement is
450 West 33rd Street, New York, New York, 10001, Attention:
Structured Finance Services.
"Covenant Receivable" means, with respect to any
Collection Period, a Receivable which the Master Servicer is
required to purchase pursuant to Section 4.7.
"Cram Down Loss" means, with respect to a
Receivable, if a court of appropriate jurisdiction in an
insolvency proceeding shall have issued a Final Order
reducing the amount owed on a Receivable or otherwise
modifying or restructuring the scheduled payments to be made
on a Receivable, an amount equal to (i) the excess of the
principal balance of such Receivable immediately prior to
such order over the principal balance of such Receivable as
so reduced and/or (ii) if such court shall have issued an
order reducing the effective rate of interest on such
Receivable, the excess of the principal balance of such
Receivable immediately prior to such order over the net
present value (using as the discount rate the higher of the
APR on such Receivable or the rate of interest, if any,
specified by the court in such order) of the scheduled
payments as so modified or restructured. A "Cram Down Loss"
shall be deemed to have occurred on the date of issuance of
such order.
"Cutoff Date" means, with respect to a Receivable
and the Transfer Date as of which such Receivable is
transferred to the Trust, (i) the Accounting Date
immediately preceding such Transfer Date or (ii) if such
Receivable is originated in the month of the related
Transfer Date, the date of origination.
"Dealer" means a dealer who sold a Financed
Vehicle and who originated and assigned the respective
Receivable, directly or indirectly, to HAFC or one of its
subsidiaries or an Unaffiliated Originator under a Dealer
Agreement or pursuant to a Dealer Assignment.
"Dealer Agreement" means any agreement between an
Unaffiliated Originator and a Dealer relating to the
acquisition of Receivables from a Dealer by an Unaffiliated
Originator.
"Dealer Assignment" means, with respect to a
Receivable, the executed assignment executed by a Dealer
conveying such Receivable to an Unaffiliated Originator.
"Dealer Underwriting Guide" means either, (i) the
underwriting guidelines used by or on behalf of HAFC or one
of its subsidiaries in the origination and purchase of
Receivables as amended from time to time or (ii) the
underwriting guidelines used in the origination of
Receivables as reviewed by HAFC or one of its subsidiaries
prior to the purchase of Receivables by HAFC.
"Defaulted Receivable" means, unless otherwise
provided in a Series Supplement, with respect to any
Distribution Date, a Receivable with respect to which: (i)
10% or more of a Scheduled Payment is 60 or more days
delinquent, (ii) the Servicer has repossessed the related
Financed Vehicle (and any applicable redemption period has
expired), (iii) such Receivable is delinquent and the Master
Servicer has determined in good faith that payments
thereunder are not likely to be resumed or (iv) the Obligor
has been identified on the records of the Master Servicer as
being the subject of a current bankruptcy proceeding.
"Delivery" means with respect to the Trust Account
Property:
(1) the perfection and priority of a
security interest in which is governed by the law of a
jurisdiction which has adopted the 1978 Revision to Article
Eight of the UCC:
(a) with respect to bankers' acceptances, commercial
paper, negotiable certificates of deposit and other
obligations that constitute "instruments" within the
meaning of Section 9-105(1)(i) of the UCC (other than
certificated securities) and are susceptible of physical
delivery, transfer thereof to the Trustee by physical
delivery to the Trustee, endorsed to, or registered in
the name of, the Trustee or its nominee or endorsed in
blank and such additional or alternative procedures as
may hereafter become appropriate to effect the complete
transfer of ownership of any such Collateral to the
Trustee free and clear of any adverse claims, consistent
with changes in applicable law or regulations or the
interpretation thereof;
(b) with respect to a "certificated security" (as
defined in Section 8-102(1)(a) of the UCC), transfer
thereof:
(i) by physical delivery of such certificated
security to the Trustee, provided that if the
certificated security is in registered form, it shall
be endorsed to, or registered in the name of, the
Trustee or endorsed in blank;
(ii) by physical delivery of such certificated
security to a "financial intermediary" (as defined in
Section 8-313(4) of the UCC) of the Trustee specially
endorsed to or issued in the name of the Trustee;
(iii) by the sending by a financial intermediary, not a
"clearing corporation" (as defined in Section 8-102(3)
of the UCC), of a confirmation of the purchase and the
making by such financial intermediary of entries on
its books and records identifying as belonging to the
Trustee of (A) a specific certificated security in the
financial intermediary's possession, (B) a quantity of
securities that constitute or are part of a fungible
bulk of certificated securities in the financial
intermediary's possession, or c a quantity of
securities that constitute or are part of a fungible
bulk of securities shown on the account of the
financial intermediary on the books of another
financial intermediary; or
(iv) by the making by a clearing corporation of
appropriate entries on its books reducing the
appropriate securities account of the transferor and
increasing the appropriate securities account of the
Trustee or a Person designated by the Trustee by the
amount of such certificated security, provided that in
each case: (A) the clearing corporation identifies
such certificated security for the sole and exclusive
account of the Trustee or the Person designated by the
Trustee, (B) such certificated security shall be
subject to the clearing corporation's exclusive
control, c such certificated security is in bearer
form or endorsed in blank or registered in the name of
the clearing corporation or custodian bank or a
nominee of either of them, (D) custody of such
certificated security shall be maintained by such
clearing corporation or a "custodian bank" (as defined
in Section 8-102(4) of the UCC) or the nominee of
either subject to the control of the clearing
corporation and (E) such certificated security is
shown on the account of the transferor thereof on the
books of the clearing corporation prior to the making
of such entries; and such additional or alternative
procedures as may hereafter become appropriate to
effect the complete transfer of ownership of any such
Collateral to the Trustee free and clear of any
adverse claims, consistent with changes in applicable
law or regulations or the interpretation thereof;
(c) with respect to any security issued by the U.S.
Treasury, the Federal Home Loan Mortgage Corporation or
by the Federal National Mortgage Association that is a
book-entry security held through the Federal Reserve
System pursuant to Federal book entry regulations, the
following procedures, all in accordance with applicable
law, including applicable Federal regulations and
Articles 8 and 9 of the UCC: book-entry registration of
such property to an appropriate book-entry account
maintained with a Federal Reserve Bank by a financial
intermediary which is also a "depositary" pursuant to
applicable Federal regulations and issuance by such
financial intermediary of a deposit advice or other
written confirmation of such book-entry registration to
the Trustee of the purchase by the financial
intermediary on behalf of the Trustee of such book-entry
security; the making by such financial intermediary of
entries in its books and records identifying such book-
entry security held through the Federal Reserve System
pursuant to Federal book-entry regulations as belonging
to the Trustee and indicating that such financial
intermediary holds such book-entry security solely an
agent for the Trustee; and such additional or
alternative procedures as may hereafter become
appropriate to effect complete transfer of ownership of
any such Collateral to the Trustee free of any adverse
claims, consistent with changes in applicable law or
regulations or the interpretation thereof;
(d) with respect to any Trust Account Property that is
an "uncertificated security" (as defined in Section
8-102(1)(b) of the UCC) and that is not governed by
clause c above, transfer thereof:
(i) by registration of the transfer thereof to the
Trustee, on the books and records of the issuer
thereof;
(ii) by the sending of a confirmation by a financial
intermediary of the purchase, and the making by such
financial intermediary of entries on its books and
records identifying as belonging to the Trustee (A) a
quantity of securities which constitute or are part of
a fungible bulk of uncertificated securities
registered in the name of the financial intermediary
or (B) a quantity of securities which constitute or
are part of a fungible bulk of securities shown on the
account of the financial intermediary on the books of
another financial intermediary; or
(iii) by the making by a clearing corporation of
appropriate entries on its books reducing the
appropriate account of the transferor and increasing
the account of the Trustee or a person designated by
the Trustee by the amount of such uncertificated
security, provided that in each case: (A) the
clearing corporation identifies such uncertificated
security for the sole and exclusive use of the Trustee
or the Person designated by the Trustee, (B) such
uncertificated security is registered in the name of
the clearing corporation or a custodian bank or a
nominee of either, and c such uncertificated security
is shown on the account of the transferor on the books
of the clearing corporation prior to the making of
such entries; and
(e) in each case of delivery contemplated herein, the
Trustee shall make appropriate notations on its records,
and shall cause same to be made of the records of its
nominees, indicating that such securities are held in
trust pursuant to and as provided in this Agreement.
(2) the perfection and priority of a
security interest in which is governed by the law of a
jurisdiction which has adopted the 1994 Revision to Article
8 of the UCC:
(a) with respect to bankers' acceptances, commercial
paper, negotiable certificates of deposit and other
obligations that constitute "instruments" within the
meaning of Section 9-105(1)(i) of the UCC (other than
certificated securities) and are susceptible of physical
delivery, transfer thereof to the Trustee by physical
delivery to the Trustee, endorsed to, or registered in
the name of, the Trustee or its nominee or endorsed in
blank and such additional or alternative procedures as
may hereafter become appropriate to effect the complete
transfer of ownership of any such Collateral to the
Trustee free and clear of any adverse claims, consistent
with changes in applicable law or regulations or the
interpretation thereof;
(b) with respect to a "certificated security" (as
defined in Section 8-102(a)(4) of the UCC), transfer
thereof:
(i) by physical delivery of such certificated
security to the Trustee, provided that if the
certificated security is in registered form, it shall
be endorsed to, or registered in the name of, the
Trustee or endorsed in blank;
(ii) by physical delivery of such certificated
security in registered form to a "securities
intermediary" (as defined in Section 8-102(a)(14) of
the UCC) acting on behalf of the Trustee if the
certificated security has been specially endorsed to
the Trustee by an effective endorsement.
(c) with respect to any security issued by the U.S.
Treasury, the Federal Home Loan Mortgage Corporation or
by the Federal National Mortgage Association that is a
book-entry security held through the Federal Reserve
System pursuant to Federal book entry regulations, the
following procedures, all in accordance with applicable
law, including applicable federal regulations and
Articles 8 and 9 of the UCC: book-entry registration of
such property to an appropriate book-entry account
maintained with a Federal Reserve Bank by a securities
intermediary which is also a "depositary" pursuant to
applicable federal regulations and issuance by such
securities intermediary of a deposit advice or other
written confirmation of such book-entry registration to
the Trustee of the purchase by the securities
intermediary on behalf of the Trustee of such book-entry
security; the making by such securities intermediary of
entries in its books and records identifying such book-
entry security held through the Federal Reserve System
pursuant to Federal book-entry regulations as belonging
to the Trustee and indicating that such securities
intermediary holds such book-entry security solely as
agent for the Trustee; and such additional or
alternative procedures as may hereafter become
appropriate to effect complete transfer of ownership of
any such Collateral to the Trustee free of any adverse
claims, consistent with changes in applicable law or
regulations or the interpretation thereof;
(d) with respect to any Trust Account Property that is
an "uncertificated security" (as defined in Section
8-102(a)(18) of the UCC) and that is not governed by
clause c above, transfer thereof:
(i) (A) by registration to the Trustee as the
registered owner thereof, on the books and records of
the issuer thereof.
(B) by another Person (not a securities intermediary)
either becomes the registered owner of the
uncertificated security on behalf of the Trustee, or
having become the registered owner acknowledges that
it holds for the Trustee.
(ii) the issuer thereof has agreed that it will comply
with instructions originated by the Trustee without
further consent of the registered owner thereof.
(e) in each case of delivery contemplated herein, the
Trustee shall make appropriate notations on its records,
and shall cause same to be made of the records of its
nominees, indicating that securities are held in trust
pursuant to and as provided in this Agreement.
(f) with respect to a "security entitlement" (as
defined in Section 8-102(a)(17) of the UCC)
(i) if a securities intermediary (A) indicates by
book entry that a "financial asset" (as defined in Section
8-102(a)(9) of the UCC) has been credited to be the
Trustee's "securities account" (as defined in Section
8-501(a) of the UCC), (B) receives a financial asset (as so
defined) from the Trustee or acquires a financial asset for
the Trustee, and in either case, accepts it for credit to
the Trustee's securities account (as so defined), c becomes
obligated under other law, regulation or rule to credit a
financial asset to the Trustee's securities account, or (D)
has agreed that it will comply with "entitlement orders" (as
defined in Section 8-102(a)(8) of the UCC) originated by the
Trustee without further consent by the "entitlement holder"
(as defined in Section 8-102(a)(7) of the UCC), of a
confirmation of the purchase and the making by such
securities intermediary of entries on its books and records
identifying as belonging to the Trustee or (I) specific
certificated security in the securities intermediary's
possession, (II) a quantity of securities that constitute or
are part of a fungible bulk of certificated securities in
the securities intermediary's possession, or (III) a
quantity of securities that constitute or are part of a
fungible bulk of securities shown on the account of the
securities intermediary on the books of another securities
intermediary.
"Depositor" shall mean the Seller in its capacity
as Depositor under the Trust Agreement.
"Determination Date" means, unless otherwise
provided in a Series Supplement, the earlier of the fifth
calendar day (or if such day is not a Business Day, the next
preceding Business Day) or the third Business Day preceding
each Distribution Date.
"Distribution Date" means, unless otherwise
provided in a Series Supplement, with respect to each
Collection Period, the seventeenth day of the following
calendar month, or if such day is not a Business Day, the
immediately following Business Day.
"Electronic Ledger" means the electronic master
record of the retail installment sales contracts or
installment loans serviced by the Master Servicer.
"Eligibility Criteria" means with respect to a
Series, the criteria set forth in the related Schedule of
Eligibility Criteria.
"Eligible Bank" means, except as otherwise
provided in a Series Supplement, any depository institution
(which shall initially be the Trustee) organized under the
laws of the United States of America or any one of the
states thereof or the District of Columbia (or any United
States branch or agency of a foreign bank), which is subject
to supervision and examination by federal or state banking
authorities and which at all times (a) has a net worth in
excess of $50,000,000 and (b) has either (i) a rating of P-1
from Moody's and A-1 from Standard & Poor's with respect to
short-term deposit obligations, or such other lower ratings
acceptable to the Rating Agency, or (ii) if such institution
has issued long-term unsecured debt obligations, a rating
acceptable to the Rating Agency with respect to long-term
unsecured debt obligations.
"Eligible Deposit Account" means, except as
otherwise provided in a Series Supplement, either (a) a
segregated account with an Eligible Bank or (b) a segregated
trust account with the corporate trust department of a
depository institution with corporate trust powers organized
under the laws of the United States of America or any state
thereof or the District of Columbia (or any United States
branch or agency of a foreign bank), provided that such
institution also must have a rating of Baa3 or higher from
Moody's and a rating of BBB- or higher from Standard &
Poor's with respect to long-term deposit obligations, or
such other lower ratings acceptable to the Rating Agency.
"Eligible Investments" shall mean, except as
otherwise provided in a Series Supplement, negotiable
instruments or securities represented by instruments in
bearer or registered form, or, in the case of deposits
described below, deposit accounts held in the name of the
Trustee in trust for the benefit of the Holders of the
Securities of the relevant Series, subject to the exclusive
custody and control of the Trustee and for which the Trustee
has sole signature authority, which evidence:
(a) direct obligations of, or obligations fully
guaranteed as to timely payment by, the United States of
America;
(b) demand deposits, time deposits or
certificates of deposit (having original maturities of no
more than 365 days) of depositary institutions or trust
companies incorporated under the laws of the United States
of America or any state thereof (or domestic branches of
foreign banks) and subject to supervision and examination by
federal or state banking or depositary institution
authorities; provided, that at the time of the Trust's
investment or contractual commitment to invest therein, the
short-term debt rating of such depository institution or
trust company shall be satisfactory to the Rating Agency;
(c) commercial paper (having original or
remaining maturities of not more than 30 days) having, at
the time of the Trust's investment or contractual commitment
to invest therein, a rating satisfactory to the Rating
Agency;
(d) investments in money market funds having, at
the time of the Trust's investment therein, a rating
acceptable to the Rating Agency;
(e) demand deposits, time deposits and
certificates of deposit which are fully insured by the FDIC
having, at the time of the Trust's investment therein, a
rating satisfactory to the Rating Agency;
(f) bankers' acceptances (having original
maturities of no more than 365 days) issued by a depository
institution or trust company referred to in (b) above;
(g) (x) time deposits (having maturities not
later than the succeeding Distribution Date) other than as
referred to in clause (e) above, with a Person the
commercial paper of which has a credit rating satisfactory
to the Rating Agency or (y) notes which are payable on
demand issued by Household; provided such notes will
constitute Eligible Investments only if the commercial paper
of Household has, at the time of the Trust's investment in
such notes, a rating satisfactory to the Rating Agency; or
(h) any other investment of a type or rating that
is acceptable to the Rating Agency.
Any of the foregoing Eligible Investments may be
purchased on or through the Trustee or through any Affiliate
of either of them.
"Eligible Servicer" means Household Finance
Corporation or any Person which at the time of its
appointment as Servicer, (i) is servicing a portfolio of
motor vehicle retail installment sales contracts and/or
motor vehicle installment loans, (ii) is legally qualified
and has the capacity to service the Receivables, (iii) has
demonstrated the ability professionally and competently to
service a portfolio of motor vehicle retail installment
sales contracts and/or motor vehicle installment loans
similar to the Receivables with reasonable skill and care,
(iv) is qualified and entitled to use, pursuant to a license
or other written agreement, and agrees to maintain the
confidentiality of, the software which the Master Servicer
uses in connection with performing its duties and
responsibilities under this Agreement or otherwise has
available software which is adequate to perform its duties
and responsibilities under this Agreement and (v) has a net
worth of at least $50,000,000.
"Eligible Sub-Servicer" means Household Automotive
Finance Corporation or any wholly owned subsidiary of
Household or any Person which at the time of its appointment
as Sub-Servicer, (i) is servicing a portfolio of motor
vehicle retail installment sales contracts and/or motor
vehicle installment loans, (ii) is legally qualified and has
the capacity to service the Receivables, (iii) has
demonstrated the ability professionally and competently to
service a portfolio of motor vehicle retail installment
sales contracts and/or motor vehicle installment loans
similar to the Receivables with reasonable skill and care,
and (iv) is qualified and entitled to use, pursuant to a
license or other written agreement, and agrees to maintain
the confidentiality of, the software which the Master
Servicer uses in connection with performing its duties and
responsibilities under this Agreement or otherwise has
available software which is adequate to perform its duties
and responsibilities under this Agreement.
"Insolvency Event" means, with respect to a
specified Person, (a) the filing of a petition against such
Person or the entry of a decree or order for relief by a
court having jurisdiction in the premises in respect of such
Person or any substantial part of its property in an
involuntary case under any applicable 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 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 petition, decree or order shall remain
unstayed and in effect for a period of 60 consecutive days;
or (b) the commencement by such Person of a voluntary case
under any applicable federal or state bankruptcy, insolvency
or other similar law now or hereafter in effect, or the
consent by such Person to the entry of an order for relief
in an involuntary case under any such law, or the consent by
such Person to the appointment of or taking possession by, a
receiver, liquidator, assignee, custodian, trustee,
sequestrator, or similar official for such Person or for any
substantial part of its property, or the making by such
Person of any general assignment for the benefit of
creditors, or the failure by such Person generally to pay
its debts as such debts become due, or the taking of action
by such Person in furtherance of any of the foregoing.
"Insurance Policy" means, with respect to a
Receivable, any insurance policy (including the insurance
policies described in Section 4.4 hereof) benefiting the
holder of the Receivable providing loss or physical damage,
credit life, credit disability, theft, mechanical breakdown
or similar coverage with respect to the Financed Vehicle or
the Obligor.
"Interest Period" for any Class or Series of Notes
or Certificates, the meaning set forth in the related Series
Supplement.
"Interest Rate" for any Class or Series of Notes
or Certificates, the meaning set forth in the related Series
Supplement.
"Investment Earnings" means, with respect to any
Distribution Date and Trust Account, the investment earnings
(net of investment losses and expenses) on amounts on
deposit in such Trust Account on such Distribution Date.
"Issuer" means Household Automobile Revolving
Trust I, together with each other Trust designated as an
Issuer hereunder pursuant to a Series Supplement, in each
case so long as such Trust has not been terminated in
accordance with the terms of the related Trust Agreements.
"Lien" means a security interest, lien, charge,
pledge, equity, or encumbrance of any kind, other than tax
liens, mechanics' liens and any liens that attach to the
respective Receivable by operation of law as a result of any
act or omission by the related Obligor, provided that, any
assignment permitted by Section 2.1 hereof and the lien
created by this Agreement or the Indenture shall not be
deemed to constitute a Lien.
"Lien Certificate" means, with respect to a
Financed Vehicle, an original certificate of title,
certificate of lien or other notification issued by the
Registrar of Titles of the applicable state to a secured
party which indicates that the lien of the secured party on
the Financed Vehicle is recorded on the original certificate
of title. In any jurisdiction in which the original
certificate of title is required to be given to the Obligor,
the term "Lien Certificate" shall mean only a certificate or
notification issued to a secured party.
"Liquidated Receivable" means, with respect to any
Collection Period, a Receivable as to which (i) such
Receivable has been liquidated by the Master Servicer
through the sale of the Financed Vehicle, (ii) 90 days have
elapsed since the Master Servicer repossessed the Financed
Vehicle, (iii) proceeds have been received in respect of
such Receivable which, in the Master Servicer's reasonable
judgment, constitute the final amounts recoverable in
respect of such Receivable or (iv) 10% or more of a
Scheduled Payment shall have become 150 or more days
delinquent (or, in the case where the Obligor of such
Receivable is subject to an Insolvency Event, 10% or more of
a Scheduled Payment shall have become 210 or more days
delinquent), except in the case of a repossessed Financed
Vehicle. Any Receivable that becomes a Repurchased
Receivable on or before the related Accounting Date shall
not be a Liquidated Receivable.
"Master Collection Account" means the account
designated as such, established and maintained pursuant to
Section 5.1.
"Master Servicer" means Household Finance
Corporation, as the servicer of the Receivables, and each
successor Master Servicer pursuant to Section 10.3.
"Master Servicer Credit Facility" means the credit
facility maintained by the Master Servicer with a Master
Servicer Credit Facility Issuer pursuant to Section 4.2(d).
"Master Servicer Credit Facility Issuer" means a
depository institution or insurance company that qualifies
pursuant to Section 4.2(d).
"Master Servicer Termination Event" means an event
specified in Section 10.1.
"Master Servicer's Certificate" means an Officers'
Certificate of the Master Servicer delivered pursuant to
Section 4.9, substantially in the form of Exhibit A hereto.
"Monthly Records" means all records and data
maintained by the Master Servicer with respect to the
Receivables, including the following with respect to each
Receivable: the account number; the originating Dealer;
Obligor name; Obligor address; Obligor home phone number;
Obligor business phone number; original Principal Balance;
original term; Annual Percentage Rate; current Principal
Balance; current remaining term; origination date; first
payment date; final scheduled payment date; next payment due
date; date of most recent payment; new/used classification;
collateral description; days currently delinquent; number of
contract extensions (months) to date; amount of Scheduled
Payment; current Insurance Policy expiration date; and past
due late charges.
"Moody's" means Moody's Investors Service, Inc.,
or its successor.
"Net Liquidation Proceeds" means, with respect to
a Liquidated Receivable, all amounts realized with respect
to such Receivable (other than amounts withdrawn from any
Series Support) net of (i) reasonable expenses, which
expenses shall not include any deficiency balances or post-
disposition recoveries collected, incurred by the Master
Servicer in connection with the collection of such
Receivable and the repossession and disposition of the
Financed Vehicle and (ii) amounts that are required to be
refunded to the Obligor on such Receivable; provided,
however, that the Liquidation Proceeds with respect to any
Receivable shall in no event be less than zero; provided,
further, that, so long as amounts cannot be traced to
specific Receivables the Master Servicer shall reasonably
estimate, on or prior to each Accounting Date, the amount of
Net Liquidation Proceeds attributable to each Series Trust
Estate.
"Noteholder" means the Person in whose name a Note
is registered on the Note Register.
"Noteholders' Distributable Amount" means, with
respect to any Distribution Date, the sum of the
Noteholders' Principal Distributable Amount and the
Noteholders' Interest Distributable Amount.
"Noteholders' Interest Distributable Amount" has
the meaning assigned to such term in the related Series
Supplement.
"Noteholders' Principal Distributable Amount" has
the meaning assigned to such term in the related Series
Supplement.
"Notes" has the meaning assigned to such term in
the Indenture.
"Obligor" on a Receivable means the purchaser or
co-purchasers of the Financed Vehicle and any other Person
who owes payments under the Receivable.
"Officers' Certificate" means a certificate signed
by the chairman of the board, the president, any executive
vice president or any vice president, any treasurer,
assistant treasurer, secretary or assistant secretary of the
Seller or the Master Servicer, as appropriate.
"Opinion of Counsel" means an opinion of counsel
who may be counsel to the Master Servicer or the Seller,
acceptable to the Trustee.
""Other Conveyed Property" means all property
conveyed by the Seller to the Trust pursuant to Section
2.1(a)(ii) through (x) of this Agreement.
"Outstanding" has the meaning assigned to such
term in the Indenture.
"Outstanding Amount" means, with respect to any
Series, the aggregate principal amount of all Notes of such
Series which are Outstanding at the date of determination
after giving effect to all distributions of principal on
such date of determination.
"Owner Trust Estate" has the meaning assigned to
such term in the Trust Agreement.
"Owner Trustee" means Wilmington Trust Company,
not in its individual capacity but solely as Owner Trustee
under the Trust Agreement, its successors-in-interest or any
successor Owner Trustee under the Trust Agreement.
"Payment Record" means the record maintained by
the Master Servicer for the Trust as provided in Section
4.2(d) hereof.
"Person" means any individual, corporation,
estate, partnership, joint venture, association, joint stock
company, trust (including any beneficiary thereof),
unincorporated organization or government or any agency or
political subdivision thereof.
"Physical Property" has the meaning assigned to
such term in the definition of "Delivery" above.
"Principal Balance" means, with respect to any
Receivable, as of any date, the Amount Financed minus (i)
that portion of all amounts received on or prior to such
date and allocable to principal in accordance with the
Actuarial Method, or the Simple Interest Method, as
appropriate, and (ii) any Cram Down Loss in respect of such
Receivable. The "Principal Balance" of a Repurchased
Receivable or Liquidated Receivable shall be deemed to be
zero.
"Purchase Agreement" means the Master Receivables
Purchase Agreement between the Seller and HAFC, dated as of
March 1, 1998, pursuant to which the Seller acquired the
Receivables, as such agreement may be amended or
supplemented from time to time.
"Purchase Agreement Supplement" means any
Receivables Purchase Agreement Supplement to the Purchase
Agreement.
"Rating Agency" means, with respect to any
outstanding Series or Class, each Rating Agency specified in
the Series Supplement.
"Rating Agency Condition" means, with respect to
any action with respect to a Series, that each Rating Agency
shall have received prior notice thereof and that each
Rating Agency shall have notified the Master Servicer in
writing (who shall then immediately notify the Seller, the
Owner Trustee and the Trustee in writing) that such action
will not result in a reduction or withdrawal of the then
current rating of any Class of Notes.
"Realized Losses" means, with respect to any
Receivable that becomes a Liquidated Receivable, the excess
of the Principal Balance of such Liquidated Receivable over
Net Liquidation Proceeds to the extent allocable to
principal.
"Receivable" means any Contract listed on Schedule
A to a Transfer Agreement (which Schedule may be in an
acceptable electronic format), except Liquidated Receivables
and Receivables released from the Owner Trust Estate.
"Receivable Files" means the documents specified
in Section 3.3.
"Record Date" with respect to each Distribution
Date means the Business Day immediately preceding such
Distribution Date, unless otherwise specified in the
applicable Series Supplement.
"Registrar of Titles" means, with respect to any
state, the governmental agency or body responsible for the
registration of, and the issuance of certificates of title
relating to, motor vehicles and liens thereon.
"Repurchase Amount" means, with respect to a
Receivable, the Principal Balance and all accrued and unpaid
interest on the Receivable, after giving effect to the
receipt of any moneys collected (from whatever source) on
such Receivable, if any, as of the date of purchase,
provided that, reductions in the Principal Balance resulting
from such Receivable becoming a Liquidated Receivable shall
be disregarded.
"Repurchased Receivable" means a Receivable
purchased by the Master Servicer pursuant to Section 4.7 or
repurchased by the Seller pursuant to Section 3.2 or the
Seller or HAFC pursuant to Section 11.1(a).
"Schedule of Eligibility Criteria" means the
Schedule of Eligibility Criteria attached as Schedule 1 to a
Series Supplement.
"Schedule of Receivables" means, with respect to
each Series Trust Estate, the schedule of all retail
installment sales contracts and promissory notes originally
held as part of the Trust which is attached as Schedule A to
the Transfer Agreements relating to such Series Trust
Estate.
"Scheduled Payment" means, with respect to any
Collection Period for any Receivable, the amount set forth
in such Receivable as required to be paid by the Obligor in
such Collection Period. If after the Closing Date, the
Obligor's obligation under a Receivable with respect to a
Collection Period has been modified so as to differ from the
amount specified in such Receivable as a result of (i) the
order of a court in an insolvency proceeding involving the
Obligor, (ii) pursuant to the Soldiers' and Sailors' Civil
Relief Act of 1940, as amended, or (iii) modifications or
extensions of the Receivable permitted by Sections 4.2(b)
and c, the Scheduled Payment with respect to such Collection
Period shall refer to the Obligor's payment obligation with
respect to such Collection Period as so modified.
"Securities" means the Notes and the Certificates.
"Securityholders" means the Noteholders and the
Certificateholders.
"Seller" means Household Auto Receivables
Corporation, a Nevada corporation, and its successors in
interest to the extent permitted hereunder.
"Series" means, with respect to any Notes, Notes
issued pursuant to the same Series Supplement and with
respect to any Certificates, Certificates issued pursuant to
the same Series Supplement, or the Notes and Certificates
issued pursuant to the same Series Supplement, as the
context may require.
"Series Closing Date" means, with respect to any
Series, the date designated in the related Series Supplement
as the closing date for such Series.
"Series Collection Account" means, with respect to
any Series, the collection account designated in the related
Series Supplement.
"Series of Certificates" means the Certificates
issued in connection with a Series of Notes.
"Series Related Documents" with respect to a
Series, has the meaning specified therefor in the related
Series Supplement.
"Series Supplement" means, with respect to any
Series, a Series Supplement to the Indenture and the Trust
Agreement, executed and delivered in connection with the
original issuance of the Notes and Certificates of such
Series, and all amendments thereof and supplements thereto.
"Series Support" means the rights and benefits
provided to the Trustee or the Noteholders of any Series or
Class pursuant to any letter of credit, surety bond, cash
collateral account, spread account, guaranteed rate
agreement, maturity liquidity facility, interest rate swap
agreement, tax protection agreement or other similar
arrangement. The subordination of any Series or Class to
another Series or Class shall be deemed to be a Series
Support. Notwithstanding that such Series Support may be
held by or in favor of the Trustee for the benefit of any
Series or Class, only those Series or Classes to which such
Series Support relates shall have any rights with respect
thereto and all payments thereunder received by the Trustee
shall be distributed exclusively as prescribed in the Series
Supplement relating to such Series or Class.
"Series Support Provider" means the Person, if
any, designated in the related Series Supplement, as
providing any Series Support, other than Household or any of
its Affiliates or the Noteholders of any Series or Class
which is subordinated to another Class or Series.
"Series Trust Accounts" has the meaning with
respect to each Series specified in the related Series
Supplement.
"Series Termination Date" has the meaning with
respect to each Series specified in the related Series
Supplement.
"Series Trust Estate" has the meaning with respect
to each Series specified in the related Series Supplement.
"Service Contract" means, with respect to a
Financed Vehicle, the agreement, if any, financed under the
related Receivable that provides for the repair of such
Financed Vehicle.
"Servicing Fee Rate" means 3% per annum unless
otherwise specified in a Series Supplement with respect to
the related Series Trust Estate.
"Simple Interest Method" means the method of
allocating a fixed level payment on an obligation between
principal and interest, pursuant to which the portion of
such payment that is allocated to interest is equal to the
product of the fixed rate of interest on such obligation
multiplied by the period of time (expressed as a fraction of
a year, based on the actual number of days in the calendar
month and 365 days in the calendar year) elapsed since the
preceding payment under the obligation was made.
"Simple Interest Receivable" means a Receivable
under which the portion of the payment allocable to interest
and the portion allocable to principal is determined in
accordance with the Simple Interest Method.
"Standard & Poor's" means Standard & Poor's
Ratings Services, or its successor.
"Sub-Servicer" means any Eligible Sub-Servicer
with whom the Master Servicer has entered into an agreement
relating to subservicing the Receivables. Initially, the
Sub-Servicer will be HAFC.
"Supplemental Servicing Fee" means, with respect
to any Collection Period, (i) all administrative fees,
expenses and charges paid by or on behalf of Obligors,
including late fees, prepayment fees and liquidation fees
collected on the Receivables during such Collection Period,
and (ii) the net realized Investment Earnings of funds on
deposit in the Master Collection Account.
"Support Default" shall mean a default relating to
the Insolvency or performance of a Series Support Provider.
"Transfer Agreement" means the agreement among the
Issuer, the Seller and the Master Servicer, substantially in
the form of Exhibit B.
"Transfer Date" means, with respect to
Receivables, any date on which Receivables are to be
transferred to a Trust pursuant to this Agreement and a
related Transfer Agreement.
"Trust" means the respective Issuers,
individually.
"Trust Account Property" means the Trust Accounts
and each Series Trust Account, all amounts and investments
held from time to time in any Trust Account and each Series
Trust Account (whether in the form of deposit accounts,
Physical Property, book-entry securities, uncertificated
securities or otherwise), and all proceeds of the foregoing.
"Trust Accounts" has the meaning assigned thereto
in Section 5.1.
"Trust Agreement" means the Trust Agreement dated
as of March 1, 1998, between the Seller and the Owner
Trustee, as the same may be amended and supplemented from
time to time.
"Trust Officer" means, (i) in the case of the
Trustee, the chairman or vice-chairman of the board of
directors, the chairman or vice-chairman of the executive
committee of the board of directors, the president, any vice
president, assistant vice-president or managing director,
the secretary, any assistant secretary or any other officer
of the Trustee customarily performing functions similar to
those performed by any of the above designated officers and
also means, with respect to a particular corporate trust
matter and having direct responsibility for the
Administration of this Agreement, and (ii) in the case of
the Owner Trustee, any officer in the corporate trust office
of the Owner Trustee or any agent of the Owner Trustee under
a power of attorney with direct responsibility for the
administration of this Agreement or any of the Basic
Documents or Series Related Documents on behalf of the Owner
Trustee.
"Trustee" means the Person acting as Trustee under
the Indenture, its successors in interest and any successor
trustee under the Indenture.
"Trustee Fee" means the fees due to the Trustee as
may be set forth in that certain fee agreement dated as of
the date hereof between the Master Servicer and The Chase
Manhattan Bank.
"Unaffiliated Originator" means a third-party
originator or owner of Receivables not affiliated with the
Seller or HAFC.
"Unaffiliated Originator Receivables Purchase
Agreements" means, collectively, the agreements pursuant to
which HAFC acquired certain of the Receivables, directly or
indirectly, from Unaffiliated Originators, as any of such
agreements may be amended, supplemented or otherwise
modified from time to time in accordance with the terms
thereof.
"UCC" means the Uniform Commercial Code as in
effect in the relevant jurisdiction on the date of the
Agreement.
"Warranty Receivable" With respect to any
Collection Period, a Receivable which the Seller has become
obligated to repurchase pursuant to Section 3.2.
SECTION 1.2. Other Interpretive Provisions
(a) . (a) Capitalized terms used
herein and not otherwise defined herein have the meanings
assigned to them in the Indenture, or, if not defined
therein, in the Trust Agreement. Cross referenced
definitions may include a Series designation.
(b) All terms defined in this Agreement
shall have the defined meanings when used in any instrument
governed hereby and in any certificate or other document
made or delivered pursuant hereto unless otherwise defined
therein.
(c) As used in this Agreement, in any
instrument governed hereby and in any certificate or other
document made or delivered pursuant hereto or thereto,
accounting terms not defined in this Agreement or in any
such instrument, certificate or other document, and
accounting terms partly defined in this Agreement or in any
such instrument, certificate or other document to the extent
not defined, shall have the respective meanings given to
them under generally accepted accounting principles as in
effect on the date of this Agreement or any such instrument,
certificate or other document, as applicable. To the extent
that the definitions of accounting terms in this Agreement
or in any such instrument, certificate or other document are
inconsistent with the meanings of such terms under generally
accepted accounting principles, the definitions contained in
this Agreement or in any such instrument, certificate or
other document shall control.
(d) 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.
(e) Any term defined herein, which is
otherwise defined in a Series Supplement, shall have the
meaning with respect to such Series specified therefor in
such Series Supplement, whether or not the definition in
this Agreement includes a phrase to the effect that such
term may be otherwise defined in a Series Supplement.
(f) In the event that with respect to a
Series there is no Series Support Provider, any references
herein or in any other of the Basic Documents to the consent
of, or acceptability to, the Series Support Provider shall
be deemed to be deleted.
SECTION 1.3. Usage of Terms
. With respect to all terms used in this Agreement, the
singular includes the plural and the plural includes the
singular; words importing any gender include the other
gender; references to "writing" include printing, typing,
lithography, and other means of reproducing words in a
visible form; references to agreements and other contractual
instruments include all subsequent amendments thereto or
changes therein entered into in accordance with their
respective terms and not prohibited by this Agreement;
references to Persons include their permitted successors and
assigns; the terms "include" or "including" mean "include
without limitation" or "including without limitation;" the
words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to
any particular Article, Section or other subdivision, and
Article, Section, Schedule and Exhibit references, unless
otherwise specified, refer to Articles and Sections of
Schedules and Exhibits to this Agreement.
SECTION 1.4. Certain References
. All references to the Principal Balance of a Receivable
as of any date of determination shall refer to the close of
business on such day, or as of the first day of an Interest
Period shall refer to the opening of business on such day.
All references to the last day of an Interest Period shall
refer to the close of business on such day.
SECTION 1.5. No Recourse
. Without limiting the obligations of the Master Servicer
or Seller hereunder, no recourse may be taken, directly or
indirectly, under this Agreement or any certificate or other
writing delivered in connection herewith or therewith,
against any stockholder, officer or director, as such, of
the Master Servicer or Seller, or of any of their respective
Affiliates, predecessors or successors.
SECTION 1.6. Action by or Consent of
Noteholders
. Whenever any provision of this Agreement refers to action
to be taken, or consented to, by Noteholders, such provision
shall be deemed to refer to the Noteholders of record as of
the Record Date immediately preceding the date on which such
action is to be taken, or consent given, by Noteholders.
Solely for the purposes of any action to be taken, or
consented to, by Noteholders, any Note registered in the
name of HAFC or any Affiliate thereof shall be deemed not to
be outstanding; provided, however, that, solely for the
purpose of determining whether the Trustee is entitled to
rely upon any such action or consent, only Notes which the
Trust Officer of the Trustee actually knows to be so owned
shall be so disregarded.
SECTION 1.7. Material Adverse Effect
. Whenever a determination is to be made under this
Agreement as to whether a given event, action, course of
conduct or set of facts or circumstances could or would have
a material adverse effect on the Noteholders (or any similar
or analogous determination), such determination shall be
made without taking into account any Series Support.
ARTICLE II
Conveyance of Receivables
SECTION 2.1. Conveyance of Receivables
(a) . (a) Subject to the conditions
set forth in paragraph (b) below, in consideration of the
Issuer's delivery to or upon the order of the Seller on a
Transfer Date of the net proceeds from the sale of a Series
of Notes and any Additional Principal Amount thereunder and
the other amounts to be distributed from time to time to the
Seller in accordance with the terms of this Agreement and
the related Series Supplement, the Seller shall, from time
to time, sell, transfer, assign, set over and otherwise
convey to the Issuer, without recourse (subject to the
obligations set forth herein), all right, title and interest
of the Seller in and to:
(i) each and every Receivables listed
on Schedule A to the related Transfer
Agreement and all monies paid or payable
thereon or in respect thereof after the
related Transfer Date (including amounts due
on or before the Cutoff Date but received by
HAFC, the Seller or the Issuer on or after
the Cutoff Date);
(ii) the security interests in the
related Financed Vehicles granted by Obligors
pursuant to the related Receivables and any
other interest of the Seller in such Financed
Vehicles;
(iii) all rights of the Seller
against the Dealers pursuant to Dealer
Agreements; or Unaffiliated Originator
Receivables Purchase Agreements (as may be
limited with respect to a Series in the
applicable Series Related Documents);
(iv) any proceeds and the right to
receive proceeds with respect to such
Receivables repurchased by either (i) a
Dealer, pursuant to a Dealer Agreement, or
(ii) an Unaffiliated Originator, pursuant to
an Unaffiliated Originator Receivables
Purchase Agreement as a result of a breach of
representation or warranty in the related
Dealer Agreement or Unaffiliated Originator
Receivables Purchase Agreement, as
applicable;
(v) all rights under any Service
Contracts on the related Financed Vehicles:
(vi) any proceeds and the right to
receive proceeds with respect to such
Receivables from claims on any physical
damage, credit life or disability insurance
policies covering the related Financed
Vehicles or Obligors, including rebates of
insurance premiums relating to the
Receivables;
(vii) all items contained in the
related Receivables Files with respect to the
Receivables; and any and all other documents
that HAFC keeps on file in accordance with
its customary procedures relating to the
related Receivables, the Obligors or the
Financed Vehicles;
(viii) all funds on deposit from time
to time in the Trust Accounts (including all
investments and proceeds thereof);
(ix) property (including the right to
receive future Net Liquidation Proceeds) that
secures a Receivable and that has been
acquired by or on behalf of the Trust
pursuant to liquidation of such Receivable;
(x) all of the Seller's right, title
and interest in its rights and benefits, but
none of its obligations or burdens, under
each of the Purchase Agreements and Purchase
Agreement Supplements, including the delivery
requirements, representations and warranties
and the cure and repurchase obligations of
HAFC under each of the Purchase Agreements
and Purchase Agreement Supplements, on or
after the related Cutoff Date; and
(xi) 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, including all
proceeds of the conversion, voluntary or
involuntary, into cash or other liquid
property, all cash proceeds, accounts,
accounts receivable, notes, drafts,
acceptances, chattel paper, checks, deposit
accounts, insurance proceeds, condemnation
awards, rights to payment of any and every
kind and other forms of obligations and
receivables, instruments and other property
which at any time constitute all or part of
or are included in the proceeds of any of the
foregoing.
(b) The Seller shall transfer to the
Issuer the Receivables and the other property and rights
related thereto described in paragraph (a) above only upon
the satisfaction of each of the following conditions on or
prior to the related Transfer Date:
(i) the Seller shall have provided the
Trustee and the Owner Trustee with an
Addition Notice not later than five days
prior to such Transfer Date (which Addition
Notice will designate the Series Trust Estate
which the Receivables will be a part of, if
any) and shall have provided any information
reasonably requested by any of the foregoing
with respect to the related Receivables;
(ii) the Seller shall have delivered to
the Owner Trustee and the Trustee a duly
executed Transfer Agreement which shall
include supplements to Schedule A (which may
be in electronic format), listing the
Receivables to be transferred;
(iii) the Seller shall, to the
extent required by Section 4.2, have
deposited in the Master Collection Account
all collections received after the related
Cutoff Date in respect of the Receivables to
be transferred;
(iv) as of each Transfer Date, (A) the
Seller shall not be insolvent and shall not
become insolvent as a result of the transfer
of Receivables on such Transfer Date, (B) the
Seller shall not intend to incur or believe
that it shall incur debts that would be
beyond its ability to pay as such debts
mature, c such transfer shall not have been
made with actual intent to hinder, delay or
defraud any Person and (D) the assets of the
Seller shall not constitute unreasonably
small capital to carry out its business as
conducted;
(v) each of the representations and
warranties made by the Seller pursuant to
Section 3.1 with respect to the Receivables
to be transferred on such Transfer Date shall
be true and correct as of the related
Transfer Date, and the Seller shall have
performed all obligations to be performed by
it hereunder on or prior to such Transfer
Date;
(vi) the Seller shall, at its own
expense, on or prior to the Transfer Date
indicate in its computer files that the
Receivables identified in the Transfer
Agreement have been sold to the Trust
pursuant to this Agreement;
(vii) the Seller shall have taken
any action necessary or, if required by the
Trustee, advisable to maintain the first
priority perfected ownership interest of the
Trust in the Owner Trust Estate and the first
perfected security interest of the Trustee in
the Series Trust Estate;
(viii) no selection procedures
adverse to the interests of the related
Series shall have been utilized in selecting
the related Receivables;
(ix) the addition of any such
Receivables shall not result in a material
adverse tax consequence to the Trust or the
Noteholders;
(x) if required by any of the related
Series Related Documents, the Seller shall
simultaneously transfer to the Trustee any
amounts required to be deposited in the
related Trust Accounts with respect to the
Receivables transferred on such Transfer
Date; and
(xi) the Seller shall have delivered to
the Trustee an Officers' Certificate
confirming the satisfaction of each condition
precedent specified in this paragraph (b).
The Seller covenants that in the event any of the
foregoing conditions precedent are not satisfied with
respect to any Receivable on the date required as specified
above, the Seller will immediately repurchase such
Receivable from the Trust, at a price equal to the
Repurchase Amount thereof, in the manner specified in
Section 3.2.
It is the intention of the Seller that the
transfer and assignment contemplated by this Agreement and
each related Transfer Agreement shall constitute a sale of
the related Series Trust Estate from the Seller to the
Issuer and the beneficial interest in and title to the
related Series Trust Estate shall not be part of the
Seller's estate in the event of the filing of a bankruptcy
petition by or against the Seller under any bankruptcy law.
In the event that, notwithstanding the intent of the Seller,
the transfer and assignment contemplated hereby and thereby
is held not to be a sale, this Agreement and the related
Transfer Agreement shall constitute a grant of a security
interest in the property referred to in this Section 2.1 for
the benefit of the Noteholders.
SECTION 2.2. Further Encumbrance of Series
Trust Estate
(a) . (a) Immediately upon the
conveyance to the Trust by the Seller of any item of the
related Series Trust Estate pursuant to Section 2.1, all
right, title and interest of the Seller in and to such
Series Trust Estate shall terminate, and all such right,
title and interest shall vest in the Issuer, in accordance
with the Trust Agreement and Sections 3802 and 3805 of the
Business Trust Statute (as defined in the Trust Agreement).
(b) Immediately upon the vesting of the
related Series Trust Estate in the Trust, the Trust shall
have the sole right to pledge or otherwise encumber, such
related Series Trust Estate. Pursuant to the Indenture and
a Series Supplement, the Trust will grant a security
interest in the Series Trust Estate to secure the repayment
of a related Series of Notes. The related Series of
Certificates shall represent the beneficial ownership
interest in the related Series Trust Estate, and the related
Series of Certificateholders shall be entitled to receive
distributions with respect thereto as set forth in the
related Series Supplement.
(c) The Trustee shall hold the related
Series Trust Estate for the benefit of the related Series
Securityholders. Following the payment in full of the
related Series of Notes and the release and discharge of the
Indenture and the related Series Supplement, all covenants
of the Issuer under Article III of the Indenture and the
related Series Supplement shall, until payment in full of
the Certificates, remain as covenants of the Issuer for the
benefit of the related Series of Certificateholders,
enforceable by the related Series of Certificateholders to
the same extent as such covenants were enforceable by the
related Series of Noteholders prior to the discharge of the
Indenture. Any rights of the Trustee under Article III of
the Indenture and the related Series Supplement, following
the discharge of the Indenture and the related Series
Supplement, shall vest in related Series of
Certificateholders.
(d) The Trustee shall, at such time as
there are no Securities of a Series outstanding and all sums
due to the Trustee or any agent or counsel thereof pursuant
to the Indenture as supplemented by the related Series
Supplement, have been paid, pursuant to Section 4.1 of the
Indenture, and subject to satisfaction of the conditions set
forth therein, release the Lien of the related Series
Supplement and the Indenture with respect to the related
Series Trust Estate.
ARTICLE III
The Receivables
SECTION 3.1. Representations and Warranties
of Seller
. The Seller represents and warrants as to the related
Receivables that the representations and warranties set
forth on the Schedule of Eligibility Criteria with respect
to a Series are, or will be, true and correct as of the
respective dates specified in such Schedule. The Issuer is
deemed to have relied on such representations and warranties
in acquiring the related Receivables and the related
Securityholders shall be deemed to rely on such
representations and warranties in purchasing the Notes
including any Additional Principal Amounts. Such
representations and warranties shall survive the sale,
transfer and assignment of the related Series Trust Estate
to the Issuer and any pledge thereof to the Trustee pursuant
to the Indenture and the related Series Supplement.
SECTION 3.2. Repurchase upon Breach
(a) . (a) The Seller, the Master
Servicer, any Trust Officer of the Trustee or the Owner
Trustee, as the case may be, shall inform each of the other
parties to this Agreement promptly, in writing, upon the
discovery of any breach of the Seller's representations and
warranties made pursuant to Section 3.1; provided, however,
that the failure to give any such notice shall not derogate
from any obligations of the Seller under this Section 3.2.
As of the last day of the second (or, if the Seller so
elects, the first, or with respect to any exceptions
appearing on any exception report delivered by the Trustee,
the first) month following the discovery by the Seller or
receipt by the Seller of notice of such breach (or such
longer period not in excess of 120 days, as may be agreed
upon by the Trustee and the Master Servicer), unless such
breach is cured by such date, the Seller shall have an
obligation to repurchase or cause HAFC to repurchase any
Receivable in which the interests of the related Series
Securityholders are materially and adversely affected by any
such breach. In consideration of and simultaneously with
the repurchase of the Receivables, the Seller shall remit,
or cause HAFC to remit, to the related Series Collection
Account the Repurchase Amount in the manner specified in
Section 5.4 and the Issuer shall execute such assignments
and other documents reasonably requested by such person in
order to effect such repurchase. The sole remedy of the
Issuer, the Owner Trustee, the Trustee and the related
Series Securityholders with respect to a breach of
representations and warranties pursuant to Section 3.1 and
the agreement contained in this Section shall be the
repurchase of the Receivables pursuant to this Section,
subject to the conditions contained herein or to enforce the
obligation of HAFC to the Seller to repurchase such
Receivables pursuant to the Purchase Agreement. Neither the
Owner Trustee nor the Trustee shall have a duty to conduct
any affirmative investigation as to the occurrence of any
conditions requiring the repurchase of any Receivable
pursuant to this Section.
(b) Pursuant to Section 2.1 of this
Agreement and pursuant to the related Transfer Agreement,
the Seller conveyed to the Trust all of the Seller's right,
title and interest in its rights and benefits, but none of
its obligations or burdens, under the Purchase Agreement and
the related Purchase Agreement Supplement, including the
Seller's rights under the Purchase Agreement and the
delivery requirements, representations and warranties and
the cure or repurchase obligations of HAFC thereunder. The
Seller hereby represents and warrants to the Trust that such
assignment is valid, enforceable and effective to permit the
Trust to enforce such obligations of HAFC under the Purchase
Agreement.
SECTION 3.3. Custody of Receivables Files
. In connection with the sale, transfer and assignment of
the Receivables, if any, to the Trust pursuant to this
Agreement and pursuant to the related Transfer Agreement,
the Master Servicer shall act as custodian for the benefit
of the Trustee of the following documents or instruments
with respect to each Receivable:
(i) The fully executed original of the
Receivable (together with any agreements
modifying the Receivable, including, without
limitation, any extension agreements);
(ii) The original credit application, or
a copy thereof, of each Obligor, fully
executed by each such Obligor on HAFC's or
the applicable Unaffiliated Originator's
customary form, or on a form approved by
HAFC, for such application; and
(iii) The original certificate of
title (when received) and otherwise such
documents, if any, that HAFC keeps on file in
accordance with its customary procedures
indicating that the Financed Vehicle is owned
by the Obligor and subject to the interest of
(x) HAFC (or any predecessor corporation to
HAFC, or any Affiliate of HAFC or such
predecessor corporation) as first lienholder
or secured party (including any Lien
Certificate received by HAFC), or, (y) an
Unaffiliated Originator as first lienholder
or secured party or, if such original
certificate of title has not yet been
received, a copy of the application therefor,
showing either HAFC (or any predecessor
corporation to HAFC, or any Affiliate of HAFC
or such predecessor corporation), or an
Unaffiliated Originator as secured party; and
(iv) Documents evidencing or relating to
any Insurance Policy, to the extent such
documents are maintained by or on behalf of
the Seller or HAFC.
Notwithstanding the foregoing, the Master Servicer may
appoint a Sub-Servicer as subcustodian, which subcustodian
may hold physical possession of some or all of the
Receivable Files. The Trustee shall have no liability for
the acts or omissions of any such custodian or subcustodian.
ARTICLE IV
Administration and Servicing of Receivables
SECTION 4.1. Duties of the Master Servicer
. The Master Servicer is hereby authorized to act as agent
for the Trust (and also on behalf of the Trustee and the
Noteholders) and in such capacity shall manage, service,
administer and make collections on the Receivables, and
perform the other actions required by the Master Servicer
under this Agreement. The Master Servicer agrees that its
servicing of the Receivables shall be carried out in
accordance with customary and usual procedures of
institutions which service motor vehicles retail installment
sales contracts and, to the extent more exacting, the degree
of skill and attention that the Master Servicer exercises
with respect to all comparable motor vehicle receivables
that it services for itself or others. In performing such
duties, so long as Household is the Master Servicer, it
shall comply with the standard and customary procedures for
servicing all of its comparable motor vehicle receivables.
The Master Servicer's duties shall include, without
limitation, collection and posting of all payments,
responding to inquiries of Obligors on the Receivables,
investigating delinquencies, sending payment coupons to
Obligors, reporting any required tax information to
Obligors, monitoring the collateral, accounting for
collections and furnishing monthly and annual statements to
the Trustee with respect to distributions, monitoring the
status of Insurance Policies with respect to the Financed
Vehicles and performing the other duties specified herein.
The Master Servicer shall also administer and enforce all
rights and responsibilities of the holder of the Receivables
provided for in the Dealer Agreements (and Household shall
make efforts to obtain possession of the Dealer Agreements,
to the extent it is necessary to do so), the Dealer
Assignments, the Purchase Agreements, the Unaffiliated
Originator Receivables Purchase Agreements and the Insurance
Policies, to the extent that such Dealer Agreements, Dealer
Assignments, the Purchase Agreements, Unaffiliated
Originator Receivables Purchase Agreements and Insurance
Policies relate to the Receivables, the Financed Vehicles or
the Obligors. To the extent consistent with the standards,
policies and procedures otherwise required hereby, the
Master Servicer shall follow its customary standards,
policies, and procedures and shall have full power and
authority, acting alone, to do any and all things in
connection with such managing, servicing, administration and
collection that it may deem necessary or desirable. Without
limiting the generality of the foregoing, the Master
Servicer is hereby authorized and empowered by the Trust to
execute and deliver, on behalf of the Trust, any and all
instruments of satisfaction or cancellation, or of partial
or full release or discharge, and all other comparable
instruments, with respect to the Receivables and with
respect to the Financed Vehicles; provided, however, that
notwithstanding the foregoing and subject to Section 4.3
hereof, the Master Servicer shall not, except pursuant to an
order from a court of competent jurisdiction, release an
Obligor from payment of any unpaid amount under any
Receivable or waive the right to collect the unpaid balance
of any Receivable from the Obligor. The Master Servicer is
hereby authorized to commence, in it's own name or in the
name of the Trust, a legal proceeding to enforce a
Receivable pursuant to Section 4.3 or to commence or
participate in any other legal proceeding (including,
without limitation, a bankruptcy proceeding) relating to or
involving a Receivable, an Obligor or a Financed Vehicle.
If the Master Servicer commences or participates in such a
legal proceeding in its own name, the Trust shall thereupon
be deemed to have automatically assigned such Receivable to
the Master Servicer solely for purposes of commencing or
participating in any such proceeding as a party or claimant,
and the Master Servicer is authorized and empowered by the
Trust to execute and deliver in the Master Servicer's name
any notices, demands, claims, complaints, responses,
affidavits or other documents or instruments in connection
with any such proceeding. The Trustee and the Owner Trustee
shall furnish the Master Servicer with any powers of
attorney and other documents which the Master Servicer may
reasonably request and which the Master Servicer deems
necessary or appropriate and take any other steps which the
Master Servicer may deem reasonably necessary or appropriate
to enable the Master Servicer to carry out its servicing and
administrative duties under this Agreement.
SECTION 4.2. Collection of Receivable
Payments; Modifications of Receivables
(a) . (a) Consistent with the
standards, policies and procedures required by this
Agreement, the Master Servicer shall make reasonable efforts
to collect all payments called for under the terms and
provisions of the Receivables as and when the same shall
become due, and shall follow such collection procedures as
it follows with respect to all comparable automobile
receivables that it services for itself or others and
otherwise act with respect to the Receivables, the Dealer
Agreements, the Dealer Assignments, the Purchase Agreements,
the Unaffiliated Originator Receivables Purchase Agreements,
the Insurance Policies and the Other Conveyed Property in
such manner as will, in the reasonable judgment of the
Master Servicer, maximize the amount to be received by the
Trust with respect thereto. The Master Servicer is
authorized in its discretion to waive any prepayment charge,
late payment charge or any other similar fees that may be
collected in the ordinary course of servicing any
Receivable.
(b) The Master Servicer may at any time
agree to a modification or amendment of a Receivable in
order to (i) change the Obligor's regular due date to a date
within 30 days of when such due date occurs or (ii) re-
amortize the scheduled payments on the Receivable following
a partial prepayment of principal; provided, however, that
no such change shall extend the maturity date of any
Receivable.
(c) The Master Servicer may grant
payment extensions on, or other modifications or amendments
to, a Receivable (including those modifications permitted by
Section 4.2(b)) in accordance with its customary procedures
if the Master Servicer believes in good faith that such
extension, modification or amendment is necessary to avoid a
default on such Receivable, will maximize the amount to be
received with respect to such Receivable, and is otherwise
in the best interests of the Trust; provided, however, that
unless otherwise specified in any Series Supplement:
(i) The aggregate period of all
extensions on a Receivable shall not exceed
six months; provided, however, that not more
than two months can be in any consecutive
twelve month period;
(ii) In no event may a Receivable be
extended by the Master Servicer beyond the
Collection Period immediately preceding the
Final Scheduled Distribution Date of the
Notes with respect to the related Series; and
(iii) As of any Determination Date
the number of Receivables included in a
Series Trust Estate the term of which have
been extended during the preceding 12-month
period shall not exceed 8% of the number of
Receivables in such Series Trust Estate at
the beginning of the preceding 12-month
period.
(d) Except as otherwise provided below,
the Master Servicer shall deposit collections on or with
respect to Receivables into the Master Collection Account as
promptly as possible after the date of processing of such
collections, but in no event later than the second Business
Day following the date of processing. Subject to the
express terms of any Series Supplement, but notwithstanding
anything else in this Agreement to the contrary, for so long
as (i) Household remains the Master Servicer and maintains a
commercial paper rating of not less than A-1 by Standard &
Poor's and P-1 by Moody's (or such other rating below A-1 or
P-1, as the case may be, which is satisfactory to the Rating
Agency) and for five Business Days following any reduction
of any such rating or (ii) a Master Servicer Credit Facility
is maintained in effect by the Master Servicer acceptable in
form and substance to the Rating Agency (such acceptability
to be evidenced in writing by the Rating Agency to the
effect that failure to make the aforementioned deposit on
the basis of the maintenance of the Master Servicer Credit
Facility will not adversely affect the then current rating
of the Notes), issued by a depository institution or
insurance having a rating on its (A) short-term obligations
of at least P-1 by Moody's and A-1 by Standard & Poor's and
(B) long term obligations of at least A2 by Moody's and A by
Standard & Poor's or other ratings approved by the Rating
Agency, the Master Servicer shall not be required to make
deposits of collections on or with respect to Receivables as
provided in the preceding sentence, but may make one or more
deposits of such collections with respect to a Collection
Period into the Master Collection Account in immediately
available funds not later than 1:00 P.M., Central time, on
the Business Day immediately preceding the related
Distribution Date. In the event that a Master Servicer
Credit Facility is maintained, the Master Servicer shall
within two Business Days of the date of processing of
collections on or with respect to Receivables notify the
Trustee and the Master Servicer Credit Facility Issuer in
writing of the amounts that would otherwise be deposited in
the Collection Account and the Master Servicer shall
establish and maintain for the Trust a Payment Record in
which the payments on or with respect to the Receivables
shall be credited and the Master Servicer shall notify the
Trustee and the Master Servicer Credit Facility Issuer in
writing as promptly as practicable (but in any event prior
to the Determination Date for the following Distribution
Date) of the amounts so credited on or with respect to the
Receivables that are to be included in Collected Funds for
the related Distribution Date and of the amounts so credited
which will constitute a part of Collected Funds for the
second following Distribution Date. The Payment Record
shall be made available for inspection during normal
business hours of the Master Servicer upon request of the
Trustee, or any Master Servicer Credit Facility Issuer. The
Master Servicer shall give written notice to the Trustee if
it is required to deposit funds in accordance with the first
sentence of this paragraph.
SECTION 4.3. Realization Upon Receivables
(a) . (a) Consistent with the
standards, policies and procedures required by this
Agreement, the Master Servicer shall use its best efforts to
repossess (or otherwise comparably convert the ownership of)
and liquidate any Financed Vehicle securing a Receivable
with respect to which the Master Servicer has determined
that payments thereunder are not likely to be resumed, as
soon as is practicable after default on such Receivable but
in no event later than the date on which 10% or more of a
Scheduled Payment has become 120 days delinquent (other than
in the case of Financed Vehicles where neither the Financed
Vehicle nor the Obligor can be physically located by the
Master Servicer (using procedures consistent with the
standards, policies and procedures of the Master Servicer
required by this Agreement) and other than in the case of an
Obligor who is subject to a bankruptcy proceeding);
provided, however, that the Master Servicer may elect not to
repossess a Financed Vehicle within such time period if in
its good faith judgment it determines that the proceeds
ultimately recoverable with respect to such Receivable would
be increased by forbearance. The Master Servicer is
authorized to follow such customary practices and procedures
as it shall deem necessary or advisable, consistent with the
standard of care required by Section 4.1, which practices
and procedures may include reasonable efforts to realize
upon any recourse to Dealers, the sale of the related
Financed Vehicle at public or private sale, the submission
of claims under an Insurance Policy and other actions,
including, without limitation, entering into settlements
with Obligors, by the Master Servicer in order to realize
upon such a Receivable. The foregoing is subject to the
provision that, in any case in which the Financed Vehicle
shall have suffered damage, the Master Servicer shall not
expend funds in connection with any repair or towards the
repossession of such Financed Vehicle unless it shall
determine in its discretion that such repair and/or
repossession shall increase the proceeds of liquidation of
the related Receivable by an amount greater than the amount
of such expenses. The Master Servicer shall be entitled to
recover all reasonable expenses incurred by it in the course
of repossessing and liquidating a Financed Vehicle but only
from the liquidation proceeds of the vehicle or under the
related Dealer Agreement. The Master Servicer shall recover
such reasonable expenses based on the information contained
in the Master Servicer's Certificate delivered on the
related Determination Date. The Master Servicer shall pay
on behalf of the Trust any personal property taxes assessed
on repossessed Financed Vehicles. The Master Servicer shall
be entitled to reimbursement of any such tax from Net
Liquidation Proceeds with respect to such Receivable.
(b) If the Master Servicer elects to
commence a legal proceeding to enforce a Dealer Agreement,
Dealer Assignment or Unaffiliated Originator Receivables
Purchase Agreement, the act of commencement shall be deemed
to be an automatic assignment from the Trust to the Master
Servicer of the rights under such Dealer Agreement and
Dealer Assignment for purposes of collection only. If,
however, in any enforcement suit or legal proceeding it is
held that the Master Servicer may not enforce a Dealer
Agreement, Dealer Assignment or Unaffiliated Originator
Receivables Purchase Agreement on the grounds that it is not
a real party in interest or a Person entitled to enforce the
Dealer Agreement, Dealer Assignment or Unaffiliated
Receivables Purchase Agreement, the Owner Trustee, at the
Master Servicer's written direction and expense, or the
Seller, at the Seller's expense, shall take such steps as
the Master Servicer deems reasonably necessary to enforce
the Dealer Agreement, Dealer Assignment or Unaffiliated
Originator Receivables Purchase Agreement, including
bringing suit in its name or the name of the Seller or of
the Trust and the Owner Trustee for the benefit of the
Securityholders. All amounts recovered shall be remitted
directly by the Master Servicer as provided in Section
4.2(d).
(c) The Master Servicer agrees that
prior to delivering any repossessed Finance Vehicle for sale
to any dealer, it shall make such filings and effect such
notices as are necessary under Section 9-114(1) of the UCC
to preserve the Trust's ownership interest (or security
interest, as the case may be) in such repossessed Financed
Vehicle.
SECTION 4.4. Insurance
(a) . (a) The Master Servicer shall
require, in accordance with its customary servicing policies
and procedures, that each Financed Vehicle be insured by the
related Obligor under an insurance policy covering physical
loss and damage to the related Financed Vehicle and shall
monitor the status of such physical loss and damage
insurance coverage thereafter, in accordance with its
customary servicing procedures. Each Receivable requires
the Obligor to obtain such physical loss and damage
insurance, naming HAFC and its successors and assigns as
loss payee, and with respect to liability coverage,
additional insureds, and permits the holder of such
Receivable to obtain physical loss and damage insurance at
the expense of the Obligor if the Obligor fails to maintain
such insurance. If the Master Servicer shall determine that
an Obligor has failed to obtain or maintain a physical loss
and damage Insurance Policy covering the related Financed
Vehicle which satisfies the conditions set forth in the
related Eligibility Criteria (including, without limitation,
during the repossession of such Financed Vehicle) the Master
Servicer shall be diligent in carrying out its customary
servicing procedures to enforce the rights of the holder of
the Receivable under the Receivable to require the Obligor
to obtain such physical loss and damage insurance in
accordance with its customary servicing policies and
procedures.
(b) The Master Servicer may sue to
enforce or collect upon the Insurance Policies, in its own
name, if possible, or as agent of the Trust. If the Master
Servicer elects to commence a legal proceeding to enforce an
Insurance Policy, the act of commencement shall be deemed to
be an automatic assignment of the rights of the Trust under
such Insurance Policy to the Master Servicer for purposes of
collection only. If, however, in any enforcement suit or
legal proceeding it is held that the Master Servicer may not
enforce an Insurance Policy on the grounds that it is not a
real party in interest or a holder entitled to enforce the
Insurance Policy, the Owner Trustee, at the Master
Servicer's written direction and expense, or the Seller, at
the Seller's expense, shall take such steps as the Master
Servicer deems reasonably necessary to enforce such
Insurance Policy, including bringing suit in its name or the
name of the Trust and the Owner Trustee for the benefit of
the Noteholders.
SECTION 4.5. Maintenance of Security
Interests in Vehicles
. Consistent with the policies and procedures required by
this Agreement, the Master Servicer shall take such steps on
behalf of the Trust as are necessary to maintain perfection
of the security interest created by each Receivable in the
related Financed Vehicle on behalf of the Trust as the
Trustee shall reasonably request, including, but not limited
to, obtaining the execution by the Obligors and the
recording, registering, filing, re-recording, re-filing, and
re-registering of all security agreements, financing
statements and continuation statements as are necessary to
maintain the security interest granted by the Obligors under
the respective Receivables. The Owner Trustee, on behalf of
the Trust, hereby authorizes the Master Servicer, and the
Master Servicer agrees, to take any and all steps necessary
to re-perfect such security interest on behalf of the Trust
as necessary because of the relocation of a Financed Vehicle
or for any other reason. In the event that the assignment
of a Receivable to the Trust is insufficient, without a
notation on the related Financed Vehicle's certificate of
title, or without fulfilling any additional administrative
requirements under the laws of the state in which the
Financed Vehicle is located, to perfect a security interest
in the related Financed Vehicle in favor of the Trust, HAFC
hereby agrees that the designation of any of HAFC, a
predecessor company to HAFC, or any Affiliate of any of the
foregoing as the secured party on the certificate of title
is in its capacity as agent of the Trust for such limited
purpose.
SECTION 4.6. Covenants, Representations,
and Warranties of Master Servicer
. By its execution and delivery of this Agreement, the
Master Servicer makes the following representations,
warranties and covenants on which the Trustee relies in
accepting the related Receivables, on which the Trustee
relies in authenticating each Series of Notes, on which the
Noteholders rely on in purchasing a Series of Notes and any
Additional Principal Amount thereon on which the Owner
Trustee relies in executing each Series of Certificates.
The Master Servicer covenants as follows:
(i) Liens in Force. The Financed
Vehicle securing each Receivable shall not be
released in whole or in part from the
security interest granted by the Receivable,
except upon payment in full of the Receivable
or as otherwise contemplated herein;
(ii) No Impairment. The Master Servicer
shall do nothing to impair the rights of the
Trust or the related Series of Noteholders
in the Receivables, the Dealer Agreements,
the Dealer Assignments, the Purchase
Agreements, the Unaffiliated Originator
Receivables Purchase Agreements, the
Insurance Policies or the Other Conveyed
Property;
(iii) No Amendments. The Master
Servicer shall not extend or otherwise amend
the terms of any Receivable, except in
accordance with Section 4.2;
(iv) Restrictions on Liens. The Master
Servicer shall not (i) create, incur or
suffer to exist, or agree to create, incur or
suffer to exist, or consent to cause or
permit in the future (upon the happening of a
contingency or otherwise) the creation,
incurrence or existence of any Lien or
restriction on transferability of the
Receivables except for the Lien in favor of
the Trustee for the benefit of the related
Series Securityholders, and the restrictions
on transferability imposed by this Agreement
or (ii) sign or file under the Uniform
Commercial Code of any jurisdiction any
financing statement which names HAFC, the
Master Servicer or any Affiliate thereof as a
debtor, or sign any security agreement
authorizing any secured party thereunder to
file such financing statement, with respect
to the Receivables, except in each case any
such instrument solely securing the rights
and preserving the Lien of the Trustee;
(v) Servicing of Receivables. The
Master Servicer shall service the Receivables
as required by the terms of this Agreement
and in material compliance with its standard
and customary procedures for servicing all
its other comparable motor vehicle
receivables and in compliance with applicable
law; and
(vi) The Master Servicer shall notify
the Trustee of any relocation of the Master
Servicer's principal office set forth in
Section 13.3 hereof and all Receivables Files
shall be maintained by the Master Servicer in
the United States.
SECTION 4.7. Repurchase of Receivables Upon
Breach of Covenant
. Upon discovery by any of the Master Servicer, the Seller,
a Trust Officer of the Owner Trustee or of the Trustee of a
breach of any of the covenants set forth in Sections 4.5 or
4.6, the party discovering such breach shall give prompt
written notice to the others; provided, however, that the
failure to give any such notice shall not affect any
obligation of the Master Servicer under this Section 4.7.
As of the second Accounting Date following its discovery or
receipt of notice of any breach of any covenant set forth in
Sections 4.5 or 4.6 which materially and adversely affects
the interests of the related Series Securityholders in any
Receivable (including any Liquidated Receivable) (or, at the
Master Servicer's election, the first Accounting Date so
following) or the related Financed Vehicle, the Master
Servicer shall, unless such breach shall have been cured in
all material respects, repurchase from the Trust the
Receivable affected by such breach and, on the date
specified in Section 5.4, the Master Servicer shall pay the
related Repurchase Amount and deposit such Repurchase
Amounts into the Master Collection Account in accordance
with Section 5.3 hereof. It is understood and agreed that
the obligation of the Master Servicer to repurchase any
Receivable (including any Liquidated Receivable) with
respect to which such a breach has occurred and is
continuing shall, if such obligation is fulfilled,
constitute the sole remedy against the Master Servicer for
such breach;
SECTION 4.8. Total Servicing Fee; Payment
of Certain Expenses by Master Servicer
. As compensation for its activities, the Master Servicer
shall be entitled to retain out of amounts otherwise to be
deposited in the Master Collection Account with respect to a
Collection Period, the Base Servicing Fee and any
Supplemental Servicing Fee for each Series for such
Collection Period. The Master Servicer shall be required to
pay all expenses incurred by it in connection with its
activities under this Agreement (including taxes imposed on
the Master Servicer, expenses incurred in connection with
distributions and reports made by the Master Servicer to
Securityholders and all fees and expenses of the Owner
Trustee or the Trustee), except taxes levied or assessed
against the Trust, and claims against the Trust in respect
of indemnification, which taxes and claims in respect of
indemnification against the Trust are expressly stated to be
for the account of Household. The Master Servicer shall be
liable for the fees, charges and expenses of the Owner
Trustee, the Trustee, any Sub-Servicer and their respective
agents.
SECTION 4.9. Master Servicer's Certificate
. No later than 10:00 a.m. Central time on each
Determination Date, the Master Servicer shall deliver, or
cause to be delivered, to the Trustee and the Owner Trustee,
a Master Servicer's Certificate executed by a responsible
officer or agent of the Master Servicer containing among
other things, all information necessary to enable the
Trustee to make the allocations required by Section 5.5 and
the distributions with respect to such Distribution Date
pursuant to each Series Supplement. Upon request, the
Master Servicer will also provide a listing of all Warranty
Receivables and Covenant Receivables repurchased as of the
related Determination Date, identifying the Receivables so
purchased. Such list will identify Receivables repurchased
by the Master Servicer or by the Seller on the related
Determination Date and each Receivable which became a
Liquidated Receivable or which was paid in full during the
related Collection Period by account number. In addition to
the information set forth in the preceding sentence, the
Master Servicer's Certificate shall also contain the
information required by any Series Supplement.
SECTION 4.10. Annual Statement as to
Compliance, Notice of Master Servicer Termination Event
(a) . (a) The Master Servicer shall
deliver or cause to be delivered to the Trustee and the
Owner Trustee on or before April 30 (or 120 days after the
end of the Master Servicer's fiscal year, if other than
December 31) of each year, beginning on April 30, 2000, an
Officer's Certificate signed by any responsible officer of
the Master Servicer, or such Eligible Sub-Servicer who is
performing the servicing duties of the Master Servicer,
dated as of December 31 (or other applicable date) of the
immediately preceding year, stating that (i) a review of the
activities of the Master Servicer, or such Eligible Sub-
Servicer who is performing the servicing duties of the
Master Servicer, during the preceding 12-month period and of
its performance under this Agreement has been made under
such officer's supervision, and (ii) to such officer's
knowledge, based on such review, the Master Servicer, or
such Eligible Sub-Servicer who is performing the servicing
duties of the Master Servicer, has in all material respects
fulfilled all its obligations under this Agreement
throughout such period, or, if there has been a default in
the fulfillment of any such obligation, specifying each such
default known to such officer and the nature and status
thereof.
(b) The Master Servicer, or such
Eligible Sub-Servicer who is performing the servicing duties
of the Master Servicer, shall deliver to the Trustee and the
Owner Trustee and, in the event that such notice is
delivered by the Sub-Servicer, to the Master Servicer,
promptly after having obtained knowledge thereof, but in no
event later than two (2) Business Days thereafter, written
notice in an Officer's Certificate of any event which with
the giving of notice or lapse of time, or both, would become
a Master Servicer Termination Event under Section 10.1(a).
The Seller or the Master Servicer shall deliver to the
Trustee, the Owner Trustee, the Master Servicer or the
Seller (as applicable) promptly after having obtained
knowledge thereof, but in no event later than two (2)
Business Days thereafter, written notice in an Officer's
Certificate of any event which with the giving of notice or
lapse of time, or both, would become a Master Servicer
Termination Event under any other clause of Section 10.1.
SECTION 4.11. Annual Independent
Accountants' Report
(a) . (a) The Master Servicer shall
cause a firm of nationally recognized independent certified
public accountants (the "Independent Accountants"), who may
also render other services to the Master Servicer or to the
Seller, to deliver to the Trustee and the Owner Trustee on
or before April 30 (or 120 days after the end of the Master
Servicer's fiscal year, if other than December 31) of each
year, beginning on April 30, 2000, with respect to the
twelve months ended the immediately preceding December 31
(or other applicable date), a report to the effect that they
have examined certain documents and records relating to the
servicing of Receivables under this Agreement and each
Series Supplement, compared the information contained in the
Master Servicer's Certificates delivered pursuant to Section
4.9 during the period covered by such report with such
documents and records and that, on the basis of such
examination, such accountants are of the opinion that the
servicing has been conducted in compliance with the terms
and conditions as set forth in Articles IV and V of this
Agreement and the applicable provisions of each Series
Supplement, except for such exceptions as they believe to be
immaterial and such other exceptions as shall be set forth
in such statement. Such report shall acknowledge that the
Trustee shall be a "non-participating party" with respect to
such report, or words to similar effect. The Trustee shall
have no duty to make any independent inquiry or
investigation as to, and shall have no obligation or
liability in respect of, the sufficiency of such procedures.
(b) On or before April 30 of each
calendar year, beginning with April 30, 2000, the Master
Servicer shall cause a firm of nationally recognized
independent public accountants (who may also render other
services to the Master Servicer or Seller) to furnish a
report to the Trustee, the Master Servicer and each Rating
Agency to the effect that they have compared the
mathematical calculations of each amount set forth in the
Master Servicer's Certificates delivered pursuant to Section
4.9 during the period covered by such report with the Master
Servicer's computer reports which were the source of such
amounts and that on the basis of such comparison, such
accountants are of the opinion that such amounts are in
agreement, except for such exceptions as they believe to be
immaterial and such other exceptions as shall be set forth
in such statement. Such report shall acknowledge that the
Trustee shall be a "non-participating party" with respect to
such report, or words to similar effect. The Trustee shall
have no duty to make any independent inquiry or
investigation as to, and shall have no obligation or
liability in respect of, the sufficiency of such procedures.
SECTION 4.12. Access to Certain
Documentation and Information Regarding Receivables
. The Master Servicer shall provide to representatives of
the Trustee and the Owner Trustee reasonable access to the
documentation regarding the Receivables. In each case, such
access shall be afforded without charge but only upon
reasonable request and during normal business hours.
Nothing in this Section shall derogate from the obligation
of the Master Servicer to observe any applicable law
prohibiting disclosure of information regarding the
Obligors, and the failure of the Master Servicer to provide
access as provided in this Section as a result of such
obligation shall not constitute a breach of this Section.
SECTION 4.13. Fidelity Bond and Errors and
Omissions Policy
. The Master Servicer or such Eligible Sub-Servicer that is
performing the servicing duties of the Master Servicer, has
obtained, and shall continue to maintain in full force and
effect, a Fidelity Bond and Errors and Omissions Policy of a
type and in such amount as is customary for servicers
engaged in the business of servicing automobile receivables.
SECTION 4.14. Year 2000 Compliance
. The Master Servicer covenants that its computer and other
systems used in servicing the Receivables will be modified
to operate in a manner such that on and after January 1,
2000 (i) the Master Servicer can service the Receivables in
accordance with the terms of this Agreement and (ii) the
Master Servicer can operate its business in the same manner
as it is operating on the date hereof.
ARTICLE V
Trust Accounts; Distributions;
Statements to Certificateholders and Noteholders
SECTION 5.1. Establishment of Trust
Accounts
(a) . (a) (i) The Master Servicer,
on behalf of the Noteholders with respect to each Series,
the holders of the Series Trust Certificates of each Series
and the holders of the Owner Trust Certificates, shall
establish and maintain in the name of the Trustee, a trust
account which is an Eligible Deposit Account (the "Master
Collection Account"), bearing a designation clearly
indicating that the funds deposited therein are held for the
benefit of the Series Noteholders with respect to the
Household Automobile Revolving Trusts, holders of the Series
Trust Certificates of each Series and the holders of the
Owner Trust Certificates. The Master Collection Account
shall initially be established with the Trustee. The
Trustee shall possess all right, title and interest in all
funds on deposit from time to time in, and shall have sole
dominion and control with respect to, the Master Collection
Account and in all proceeds thereof for the benefit of the
Series Noteholders, the holders of the Series Trust
Certificates of each Series and the holders of the Owner
Trust Certificates. Except as expressly provided in this
Agreement, the Master Servicer agrees that it shall have no
right of setoff or banker's lien against, and no right to
otherwise deduct from, any funds held in the Master
Collection Account for any amount owed to it by the Trust.
(ii) With respect to each Series, the Master
Servicer shall establish and maintain the Series Trust
Accounts required to be established and maintained pursuant
to the related Series Supplement.
(b) Funds on deposit in the Master
Collection Account and any Series Trust Accounts
(collectively, the "Trust Accounts") shall be invested by
Trustee (or any custodian with respect to funds on deposit
in any such account) in Eligible Investments selected in
writing by the Master Servicer (pursuant to standing
instructions or otherwise) which absent any instruction
shall be the investments specified in clause (d) of the
definition of Eligible Investments set forth herein. Funds
on deposit in any Trust Account shall be invested in
Eligible Investments that will mature so that such funds
will be available at the close of business on the Business
Day immediately preceding the following Distribution Date.
Funds deposited in a Trust Account on the day immediately
preceding a Distribution Date and representing the proceeds
of Eligible Investments are not required to be invested
overnight. All Eligible Investments will be held to
maturity.
(c) All investment earnings of monies
deposited in the Trust Accounts shall be deposited (or
caused to be deposited) by the Trustee in the Master
Collection Account or the related Series Collection Account
no later than the close of business on the Business Day
immediately preceding the related Distribution Date, and any
loss resulting from such investments shall be charged to the
Master Collection Account. The Master Servicer will not
direct the Trustee to make any investment of any funds held
in any of the Trust Accounts unless the security interest
granted and perfected in such account will continue to be
perfected in such investment, in either case without any
further action by any Person, and, in connection with any
direction to the Trustee to make any such investment, if
necessary, the Master Servicer shall deliver to the Trustee
an Opinion of Counsel to such effect.
(d) The Trustee shall not in any way be
held liable by reason of any insufficiency in any of the
Trust Accounts resulting from any loss on any Eligible
Investment included therein except for losses attributable
to the Trustee's negligence or bad faith or its failure to
make payments on such Eligible Investments issued by the
Trustee in its commercial capacity as principal obligor and
not as Trustee in accordance with their terms.
(e) If (i) the Master Servicer shall
have failed to give investment directions for any funds on
deposit in the Trust Accounts to the Trustee by 2:00 p.m.
Eastern Time (or such other time as may be agreed by the
Issuer and the Trustee) on any Business Day; or (ii) an
Event of Default shall have occurred and be continuing with
respect to a Series of Notes, the Trustee shall, to the
fullest extent practicable, invest and reinvest funds in the
Trust Accounts in one or more Eligible Investments in
accordance with paragraph (b) above; provided that, if
following an Event of Default amounts are to be distributed
to Securityholders other than on a Distribution Date,
investments shall mature on the Business Day preceding any
such proposed date of distribution.
(f) The Trustee, in its respective
capacities with respect to the various Series shall possess
all right, title and interest in all funds on deposit from
time to time in the Trust Accounts and in all proceeds
thereof (excluding all Investment Earnings on the Master
Collection Account and the Series Collection Accounts) and
all such funds, investments, proceeds and income shall be
part of the Owner Trust Estate. Except as otherwise
provided herein, the Trust Accounts shall be under the sole
dominion and control of the Trustee for the benefit of the
related Noteholders. If, at any time, any of the Trust
Accounts ceases to be an Eligible Deposit Account, the
Trustee (or the Master Servicer on its behalf) shall within
five Business Days (or such longer period as to which each
Rating Agency may consent) establish a new Trust Account as
an Eligible Deposit Account and shall transfer any cash
and/or any investments to such new Trust Account. In
connection with the foregoing, the Master Servicer agrees
that, in the event that any of the Trust Accounts are not
accounts with the Trustee, the Master Servicer shall notify
the Trustee in writing promptly upon any of such Trust
Accounts ceasing to be an Eligible Deposit Account.
Pursuant to the authority granted to the Master Servicer
under this Agreement, the Master Servicer shall have the
revocable power, granted by the Trustee to make withdrawals
and payments from the Master Collection Account and to
instruct the Trustee to make withdrawals and payments from
the Master Collection Account for the purposes of carrying
out the Master Servicer's duties hereunder. The Master
Servicer may net against any deposits required to be made to
the Master Collection Account on the Business Day before any
Determination Date amounts that the Seller, as
Certificateholder or otherwise, is entitled to receive as
distributions directly or indirectly from the Master
Collection Account on such Determination Date.
SECTION 5.2. Certain Reimbursements to the
Master Servicer
. The Master Servicer shall be entitled to withhold from
amounts otherwise required to be remitted to the Master
Collection Account with respect to a Collection Period an
amount in respect of funds deposited with respect to prior
Collection Periods in the Master Collection Account but
later determined by the Master Servicer to have resulted
from mistaken deposits or postings or checks returned for
insufficient funds; provided, that, such withholding may be
made only following certification by the Master Servicer of
such amounts and the provision of such information to the
Trustee, as may be necessary in the opinion of the Trustee
to verify the accuracy of such certification.
SECTION 5.3. Application of Collections
. All collections for the Collection Period shall be
applied by the Master Servicer as follows:
With respect to each Simple Interest Receivable
(other than a Repurchased Receivable), payments by or on
behalf of the Obligor, (other than Supplemental Servicing
Fees with respect to such Receivable, to the extent
collected) shall be applied to interest and principal in
accordance with the Simple Interest Method. With respect to
each Actuarial Receivable, (other than a Repurchased
Receivable), payments by or on behalf of the Obligor, (other
than Supplemental Servicing Fees with respect to such
Receivable, to the extent collected) shall be applied to
interest and principal in accordance with the Actuarial
Method.
SECTION 5.4. Additional Deposits
. HAFC and the Seller, as applicable, shall deposit or
cause to be deposited in the Master Collection Account for
distribution to the appropriate Series Collection Account on
the Business Day preceding the Determination Date following
the date on which such obligations are due the aggregate
Repurchase Amount with respect to Repurchased Receivables.
SECTION 5.5. Distributions
(a) . (a) On each Distribution Date,
the Trustee, shall transfer Collected Funds with respect to
a Series Trust Estate in the respective amounts set forth in
the Master Servicer's Certificates with respect to each
Series from the Master Collection Account to the related
Series Collection Account for further application and
distribution as set forth in the related Series Supplement.
On each Distribution Date, the Trustee shall also distribute
to the Certificate Paying Agent, amounts on deposit in the
Master Collection Account representing Collected Funds with
respect to the Unpledged Trust Estate for further
application and distribution pursuant to Section 3.11 of the
Trust Agreement.
(b) In the event that the Master
Collection Account is maintained with an institution other
than the Trustee, the Master Servicer shall instruct and
cause such institution to make all deposits and
distributions pursuant to Section 5.5(a) on the related
Distribution Date.
ARTICLE VI
RESERVED
ARTICLE VII
RESERVED
ARTICLE VIII
The Seller
SECTION 8.1. Representations of Seller
. The Seller makes the following representations on which
each Series Support Provider shall be deemed to have relied
in providing the Series Support and on which the Issuer is
deemed to have relied in acquiring the Receivables and on
which the Noteholders are deemed to have relied on in the
purchasing of Notes and any Additional Principal Amount in
connection with the Series Trust Estate. The
representations speak as of the execution and delivery of
this Agreement and each Transfer Agreement and as of each
Transfer Date and each Series Closing Date and shall survive
each sale of the Receivables to the Issuer and each pledge
thereof to the Trustee pursuant to the Indenture and each
Series Supplement.
(a) Schedule of Representations. The
representations and warranties set forth on the Schedule of
Representations attached as Schedule B to the related
Transfer Agreement are true and correct.
(b) Organization and Good Standing.
The Seller has been duly organized and is 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 currently
conducted, and had at all relevant times, and now has,
power, authority and legal right to acquire, own and sell
each Series Trust Estate transferred to the Trust.
(c) Due Qualification. 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 where the failure to do so
would materially and adversely affect Seller's ability to
transfer the Receivables and the Other Conveyed Property to
the Trust pursuant to this Agreement, or the validity or
enforceability of the Series Trust Estate or to perform
Seller's obligations hereunder and under the Basic Documents
to which the Seller is a party.
(d) Power and Authority. The Seller
has the power and authority to execute and deliver this
Agreement and its Basic Documents and to carry out its terms
and their terms, respectively; the Seller has full power and
authority to sell and assign each Series Trust Estate to be
sold and assigned to and deposited with the Trust by it and
has duly authorized such sale and assignment to the Trust by
all necessary corporate action; and the execution, delivery
and performance of this Agreement and the Basic Documents to
which the Seller is a party have been duly authorized by the
Seller by all necessary corporate action.
(e) Valid Sale, Binding Obligations.
This Agreement and each related Transfer Agreement effects a
valid sale, transfer and assignment of the related Series
Trust Estate, enforceable against the Seller and creditors
of and purchasers from the Seller; and this Agreement and
the Basic Documents to which the Seller is a party, when
duly executed and delivered, shall constitute legal, valid
and binding obligations of the Seller enforceable in
accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting the
enforcement of creditors' rights generally and by equitable
limitations on the availability of specific remedies,
regardless of whether such enforceability is considered in a
proceeding in equity or at law.
(f) No Violation. The consummation of
the transactions contemplated by this Agreement and the
Basic Documents and the fulfillment of the terms of this
Agreement and the Basic Documents shall not conflict with,
result in any breach of any of the terms and provisions of
or constitute (with or without notice, lapse of time or
both) a material default under the certificate of
incorporation or by-laws of the Seller, or any indenture,
agreement, mortgage, deed of trust or other instrument to
which the Seller is a party or by which it is bound, or
result in the creation or imposition of any Lien upon any of
its properties pursuant to the terms of any such indenture,
agreement, mortgage, deed of trust or other instrument,
other than this Agreement, or violate any law, 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 any of its properties.
(g) No Proceedings. There are no
proceedings or investigations pending or, to the Seller's
knowledge, threatened against the Seller, before any court,
regulatory body, administrative agency or other tribunal or
governmental instrumentality having jurisdiction over the
Seller or its properties (A) asserting the invalidity of
this Agreement or any of the Basic Documents, (B) seeking to
prevent the issuance of any Securities or the consummation
of any of the transactions contemplated by this Agreement or
any of the Basic Documents, c seeking any determination or
ruling that might materially and adversely affect the
performance by the Seller of its obligations under, or the
validity or enforceability of, this Agreement or any of the
Basic Documents, or (D) seeking to adversely affect the
federal income tax or other federal, state or local tax
attributes of the Securities.
(h) Approvals. All approvals,
authorizations, consents, orders or other actions of any
person, corporation or other organization, or of any court,
governmental agency or body or official, required in
connection with the execution and delivery by the Seller of
this Agreement and the consummation of the transactions
contemplated hereby have been or will be taken or obtained
on or prior to the Closing Date and each Transfer Date.
(i) No Consents. The Seller is not
required to obtain the consent of any other party or any
consent, license, approval or authorization, or registration
or declaration with, any governmental authority, bureau or
agency in connection with the execution, delivery,
performance, validity or enforceability of this Agreement
which has not already been obtained.
(j) Chief Executive Office. The chief
executive office of the Seller is at 1111 Town Center Drive,
Las Vegas, Nevada 89134.
SECTION 8.2. Corporate Existence
(a) . (a) During the term of this
Agreement, the Seller will keep in full force and effect its
existence, rights and franchises as a corporation under the
laws of the jurisdiction of its incorporation 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
Agreement, the Basic Documents and each other instrument or
agreement necessary or appropriate to the proper
administration of this Agreement and the transactions
contemplated hereby.
(b) During the term of this Agreement,
the Seller shall observe the applicable legal requirements
for the recognition of the Seller as a legal entity separate
and apart from its Affiliates, including as follows:
(i) the Seller shall not engage in any
other business other than as provided in
Article THIRD of Seller's Articles of
Incorporation;
(ii) the Seller shall maintain corporate
records and books of account separate from
those of its Affiliates;
(iii) except as otherwise provided
in this Agreement, the Seller shall not
commingle its assets and funds with those of
its Affiliates;
(iv) the Seller shall hold such
appropriate meetings of its Board of
Directors as are necessary to authorize all
the Seller's corporate actions required by
law to be authorized by the Board of
Directors, shall keep minutes of such
meetings and of meetings of its
stockholder(s) and observe all other
customary corporate formalities (and any
successor Seller not a corporation shall
observe similar procedures in accordance with
its governing documents and applicable law);
(v) the Seller shall at all times hold
itself out to the public under the Seller's
own name as a legal entity separate and
distinct from its Affiliates;
(vi) the Seller shall not become
involved in the day-to-day management of any
other Person;
(vii) the Seller shall not guarantee
any other Person's obligations or advance
funds to any other Person for the payment of
expenses or otherwise;
(viii) the Seller shall not act as an
agent of any other Person in any capacity;
(ix) the Seller shall not dissolve or
liquidate, in whole or in part; and
(x) all transactions and dealings
between the Seller and its Affiliates will be
conducted on an arm's-length basis.
(c) During the term of this Agreement,
the Seller will comply with the limitations on its business
and activities, as set forth in its Certificates of
Incorporation, and will not incur indebtedness other than
pursuant to or as expressly permitted by the Basic Documents
or the Series Related Documents with respect to each Series.
SECTION 8.3. Liability of Seller;
Indemnities
. The Seller shall be liable in accordance herewith only to
the extent of the obligations specifically undertaken under
this Agreement by the Seller and the representations made by
the Seller under this Agreement.
(a) The Seller shall indemnify, defend
and hold harmless the Issuer, the Owner Trustee, the Trust
and the Trustee from and against any taxes that may at any
time be asserted against any such Person with respect to the
transactions contemplated in this Agreement and any of the
Basic Documents (except any income taxes arising out of fees
paid to the Owner Trustee, the Trustee and each Series
Support Provider and except any taxes to which the Owner
Trustee or the Trustee may otherwise be subject to),
including any sales, gross receipts, general corporation,
tangible personal property, privilege or license taxes (but,
in the case of the Issuer, not including any taxes asserted
with respect to, federal or other income taxes arising out
of distributions on the Certificates and the Notes) and
costs and expenses in defending against the same.
(b) The Seller shall indemnify, defend
and hold harmless the Issuer, the Owner Trustee and the
Trustee against any loss, liability or expense incurred by
reason of (i) the Seller's willful misfeasance, bad faith or
negligence in the performance of its duties under this
Agreement, or by reason of reckless disregard of its
obligations and duties under this Agreement and (ii) the
Seller's or the Issuer's violation of Federal or state
securities laws in connection with the offering and sale of
the Notes.
(c) The Seller shall indemnify, defend
and hold harmless the Owner Trustee and the Trustee and
their respective officers, directors, employees and agents
from and against any and all costs, expenses, losses,
claims, damages and liabilities arising out of, or incurred
in connection with, the acceptance or performance of the
trusts and duties set forth herein and in the Basic
Documents, except to the extent that such cost, expense,
loss, claim, damage or liability shall be due to the willful
misfeasance, bad faith or negligence (except for errors in
judgment) of the Person seeking indemnification.
Indemnification under this Section shall survive
the resignation or removal of the Owner Trustee or the
Trustee and the termination of this Agreement or the
Indenture or the Trust Agreement, as applicable, and shall
include reasonable fees and expenses of counsel and other
expenses of litigation. If the Seller shall have made any
indemnity payments pursuant to this Section and the Person
to or on behalf of whom such payments are made thereafter
shall collect any of such amounts from others, such Person
shall promptly repay such amounts to the Seller, without
interest.
SECTION 8.4. Merger or Consolidation of, or
Assumption of the Obligations of, Seller
. Any Person (a) into which the Seller may be merged or
consolidated, (b) which may result from any merger or
consolidation to which the Seller shall be a party or c
which may succeed to the properties and assets of the Seller
substantially as a whole, which Person in any of the
foregoing cases (x) has a certificate of incorporation
containing provisions relating to limitations on business
and other matters substantially identical to those contained
in the Seller's certificate of incorporation and (y)
executes an agreement of assumption to perform every
obligation of the Seller under this Agreement, the other
Basic Documents and the applicable Series Related Documents
shall be the successor to the Seller hereunder without the
execution or filing of any document or any further act by
any of the parties to this Agreement; provided, however,
that the Rating Agency Condition shall have been satisfied
with respect to such transaction.
SECTION 8.5. Limitation on Liability of
Seller and Others
. (a) The Seller and any director or officer or employee
or agent of the Seller may rely in good faith on the written
advice of counsel or on any document of any kind, prima
facie properly executed and submitted by any Person
respecting any matters arising under any Basic Document.
The Seller shall not be under any obligation to appear in,
prosecute or defend any legal action that shall not be
incidental to its obligations under this Agreement, and that
in its opinion may involve it in any expense or liability.
Except as provided in Section 8.3 hereof, neither the Seller
nor any of the directors, officers, employees or agents of
the Seller acting in such capacities shall be under any
liability to the Trust, the Securityholders, any Series
Support Provider or any other Person for any action taken or
for refraining from the taking of any action in good faith
in such capacities pursuant to this Agreement; provided,
however, that this provision shall not protect the Seller or
any such person against any liability which would otherwise
be imposed by reason of willful misfeasance, bad faith or
negligence in the performance of duties or by reason of
reckless disregard of obligations and duties hereunder.
(b) All obligations of the Seller under this
Agreement (including, but not limited to, repurchase and
indemnification obligations) and under any of the Basic
Documents shall be limited in recourse to property, if any,
which the Seller may hold from time to time, not subject to
any Lien.
SECTION 8.6. Seller May Own Certificates or
Notes
. The Seller and any Affiliate thereof may in its
individual or any other capacity become the owner or pledgee
of Certificates or Notes with the same rights as it would
have if it were not the Seller or an Affiliate thereof,
except as expressly provided herein or in any Basic
Document. Notes or Certificates so owned by the Seller or
such Affiliate shall have an equal and proportionate benefit
under the provisions of the Basic Documents, without
preference, priority, or distinction as among all of the
Notes or Certificates; provided, however, except in the
event that all outstanding Notes and Certificates are owned
by the Seller and/or any Affiliate thereof, that any Notes
or Certificates owned by the Seller or any Affiliate
thereof, during the time such Notes or Certificates are
owned by them, shall be without voting rights for any
purpose set forth in the Basic Documents and any such Notes
will not be entitled to the benefits of any financial
guaranty insurance policy. The Seller shall notify the
Owner Trustee and the Trustee promptly after it or any of
its Affiliates become the owner or pledgee of a Certificate
or a Note.
ARTICLE IX
The Master Servicer
SECTION 9.1. Representations of Master
Servicer
. The Master Servicer makes the following representations
on which each Series Support Provider shall be deemed to
have relied in executing and delivering the Series Support
and on which the Issuer is deemed to have relied in
acquiring the Receivables and on which the Noteholders are
deemed to have relied on in the purchasing of Notes and any
Additional Principal Amount in connection with the Series
Trust Estate. The representations speak as of the execution
and delivery of this Agreement and each Series Supplement,
each Series Closing Date and as of each Transfer Date and
shall survive each sale of the Series Trust Estate to the
Issuer and each pledge thereof to the Trustee pursuant to
the Indenture.
(i) Organization and Good Standing.
The Master Servicer has been duly organized
and is validly existing and in good standing
under the laws of its jurisdiction of
organization, with power, authority and legal
right to own its properties and to conduct
its business as such properties are currently
owned and such business is currently
conducted, and had at all relevant times, and
now has, power, authority and legal right to
enter into and perform its obligations under
this Agreement and the other Basic Documents
to which it is a party;
(ii) Due Qualification. The Master
Servicer 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 property or the conduct
of its business (including the servicing of
the Receivables as required by this
Agreement) requires or shall require such
qualification; except where the failure to
qualify or obtain licenses or approvals would
not have a material adverse effect on its
ability to perform its obligations as Master
Servicer under this Agreement and the other
Basic Documents to which it is a party;
(iii) Power and Authority. The
Master Servicer has the power and authority
to execute and deliver this Agreement and its
Basic Documents and to carry out its terms
and their terms, respectively, and the
execution, delivery and performance of this
Agreement and the Basic Documents to which
the Master Servicer is a party have been duly
authorized by the Master Servicer by all
necessary corporate action;
(iv) Binding Obligation. This Agreement
and the Basic Documents to which the Master
Servicer is a party shall constitute legal,
valid and binding obligations of the Master
Servicer enforceable in accordance with their
respective terms, except as enforceability
may be limited by bankruptcy, insolvency,
reorganization, or other similar laws
affecting the enforcement of creditors'
rights generally and by equitable limitations
on the availability of specific remedies,
regardless of whether such enforceability is
considered in a proceeding in equity or at
law;
(v) No Violation. The consummation of
the transactions contemplated by this
Agreement and the Basic Documents to which
the Master Servicer is a party, and the
fulfillment of the terms of this Agreement
and the Basic Documents to which the Master
Servicer is a party, shall 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 material default
under, the articles of incorporation or
bylaws of the Master Servicer, or any
indenture, agreement, mortgage, deed of trust
or other instrument to which the Master
Servicer is a party or by which it is bound,
or result in the creation or imposition of
any Lien upon any of its properties pursuant
to the terms of any such indenture,
agreement, mortgage, deed of trust or other
instrument, other than this Agreement, or
violate any law, order, rule or regulation
applicable to the Master Servicer of any
court or of any federal or state regulatory
body, administrative agency or other
governmental instrumentality having
jurisdiction over the Master Servicer or any
of its properties, or any way materially
adversely affect the interest of the
Noteholders or the Trust in any Receivable or
affect the Master Servicer's ability to
perform its obligations under this Agreement;
(vi) No Proceedings. There are no
proceedings or investigations pending or, to
the Master Servicer's knowledge, threatened
against the Master Servicer, before any
court, regulatory body, administrative agency
or other tribunal or governmental
instrumentality having jurisdiction over the
Master Servicer or its properties (A)
asserting the invalidity of this Agreement or
any of the Basic Documents, (B) seeking to
prevent the issuance of the Securities or the
consummation of any of the transactions
contemplated by this Agreement or any of the
Basic Documents, or c seeking any
determination or ruling that might materially
and adversely affect the performance by the
Master Servicer of its obligations under, or
the validity or enforceability of, this
Agreement or any of the Basic Documents or
(D) seeking to adversely affect the federal
income tax or other federal, state or local
tax attributes of the Securities;
(vii) Approvals. All approvals,
authorizations, consents, orders or other
actions of any person, corporation or other
organization, or of any court, governmental
agency or body or official, required in
connection with the execution and delivery by
the Master Servicer of this Agreement and the
consummation of the transactions contemplated
hereby have been or will be taken or obtained
on or prior to the Closing Date.
(viii) No Consents. The Master
Servicer is not required to obtain the
consent of any other party or any consent,
license, approval or authorization, or
registration or declaration with, any
governmental authority, bureau or agency in
connection with the execution, delivery,
performance, validity or enforceability of
this Agreement which has not already been
obtained.
(ix) Chief Executive Office. The chief
executive office of the Master Servicer is
located at 2700 Sanders Road, Prospect
Heights, Illinois 60070.
SECTION 9.2. Liability of Master Servicer;
Indemnities
(a) . (a) The Master Servicer (in its
capacity as such) shall be liable hereunder only to the
extent of the obligations in this Agreement specifically
undertaken by the Master Servicer and the representations
made by the Master Servicer.
(b) The Master Servicer shall defend,
indemnify and hold harmless the Trust, the Trustee, the
Owner Trustee and their respective officers, directors,
agents and employees, from and against any and all costs,
expenses, losses, damages, claims and liabilities, including
reasonable fees and expenses of counsel and expenses of
litigation arising out of or resulting from the use,
ownership or operation of, or lien on, any Financed Vehicle;
(c) The Master Servicer (when the
Master Servicer is Household or an Affiliate of Household)
shall indemnify, defend and hold harmless the Trust, the
Trustee, the Owner Trustee and their respective officers,
directors, agents and employees and from and against any
taxes that may at any time be asserted against any of such
parties with respect to the transactions contemplated in
this Agreement, including, without limitation, any sales,
gross receipts, tangible or intangible personal property,
privilege or license taxes (but not including any federal or
other income taxes, including franchise taxes asserted with
respect to, and as of the date of, the sale of the
Receivables and the Other Conveyed Property to the Trust or
the issuance and original sale of any Series of the Notes)
and costs and expenses in defending against the same, except
to the extent that such costs, expenses, losses, damages,
claims and liabilities arise out of the negligence or
willful misconduct of such parties;
The Master Servicer (when the Master Servicer is
not Household) shall indemnify, defend and hold harmless the
Trust, the Trustee, the Owner Trustee and their respective
officers, directors, agents and employees from and against
any taxes with respect to the sale of Receivables in
connection with servicing hereunder that may at any time be
asserted against any of such parties with respect to the
transactions contemplated in this Agreement, including,
without limitation, any sales, gross receipts, tangible or
intangible personal property, privilege or license taxes
(but not including any federal or other income taxes,
including franchise taxes asserted with respect to, and as
of the date of, the sale of the Series Trust Estate to the
Trust or the issuance and original sale of the Securities)
and costs and expenses in defending against the same; and
(d) The Master Servicer shall
indemnify, defend and hold harmless the Trust, the Trustee,
the Owner Trustee, each Series Support Provider and their
respective officers, directors, agents and employees from
and against any and all costs, expenses, losses, claims,
damages, and liabilities to the extent that such cost,
expense, loss, claim, damage, or liability arose out of, or
was imposed upon the Trust or the Trustee by reason of the
breach of this Agreement by the Master Servicer, the
negligence, misfeasance, or bad faith of the Master Servicer
in the performance of its duties under this Agreement or any
Series Supplement or by reason of reckless disregard of its
obligations and duties under this Agreement or any Series
Supplement, except to the extent that such costs, expenses,
losses, damages, claims, and liabilities arise out of the
negligence or willful misconduct of the Person seeking
indemnification.
(e) The Master Servicer shall
indemnify, defend and hold harmless the Trust, the Trustee,
the Owner Trustee and their respective officers, directors,
agents and employees from and against any loss, liability or
expense incurred by reason of the violation by Master
Servicer of federal or state securities laws in connection
with the registration or the sale of the Securities, except
to the extent that such costs, expenses, losses, damages,
claims, and liabilities arise out of the negligence or
willful misconduct of such parties.
(f) Indemnification under this Article
shall survive the termination of this Agreement and will
survive the early resignation or removal of any of the
parties hereto and shall include, without limitation,
reasonable fees and expenses of counsel and expenses of
litigation. If the Master Servicer has made any indemnity
payments pursuant to this Article and the recipient
thereafter collects any of such amounts from others, the
recipient shall promptly repay such amounts collected to the
Master Servicer, without interest. Notwithstanding any
other provision of this Agreement, the obligations of the
Master Servicer shall not terminate or be deemed released
upon the resignation or termination of Household as the
Master Servicer and shall survive any termination of this
Agreement.
SECTION 9.3. Merger or Consolidation of, or
Assumption of the Obligations of the Master Servicer
(a) . (a) Any Person (i) into which
the Master Servicer may be merged or consolidated, (ii)
resulting from any merger or consolidation to which the
Master Servicer shall be a party, (iii) which acquires by
conveyance, transfer, or lease substantially all of the
assets of the Master Servicer, or (iv) succeeding to the
business of the Master Servicer, in any of the foregoing
cases shall execute an agreement of assumption to perform
every obligation of the Master Servicer under this Agreement
and each Basic Document and Series Related Document and,
whether or not such assumption agreement is executed, shall
be the successor to the Master Servicer under this Agreement
and each Basic Document and Series Related Document without
the execution or filing of any paper or any further act on
the part of any of the parties to this Agreement and each
Series Supplement, anything in this Agreement and each
Series Supplement to the contrary notwithstanding.
Notwithstanding the foregoing, the Master Servicer shall not
merge or consolidate with any other Person or permit any
other Person to become a successor to the Master Servicer's
business, unless (x) the Master Servicer shall have
delivered to the Owner Trustee, the Rating Agencies and the
Trustee an Officer's Certificate and an Opinion of Counsel
each stating that such consolidation, merger or succession
and such agreement of assumption comply with this Section
9.3(a) and that all conditions precedent, if any, provided
for in this Agreement relating to such transaction have been
complied with, and (y) the Rating Agency Condition shall
have been satisfied with respect to such assignment or
succession.
SECTION 9.4. Limitation on Liability of
Master Servicer and Others
(a) . (a) Neither the Master
Servicer, the Trustee nor any of the directors or officers
or employees or agents of the Master Servicer or the Trustee
shall be under any liability to the Trust, except as
provided in this Agreement and each Basic Document or Series
Related Document, for any action taken or for refraining
from the taking of any action pursuant to this Agreement and
each Basic Document or Series Related Document; provided,
however, that this provision shall not protect the Master
Servicer, the Trustee or any such person against any
liability that would otherwise be imposed by reason of
willful misfeasance, bad faith or negligence (excluding
errors in judgment) in the performance of duties (including
negligence with respect to the Master Servicer's
indemnification obligations hereunder), by reason of
reckless disregard of obligations and duties under this
Agreement and each Basic Document or Series Related Document
or any violation of law by the Master Servicer, the Trustee
or such person, as the case may be; provided, further, that
this provision shall not affect any liability to indemnify
the Trustee and the Owner Trustee for costs, taxes,
expenses, claims, liabilities, losses or damages paid by the
Trustee and the Owner Trustee, in their individual
capacities. The Master Servicer, the Trustee and any
director, officer, employee or agent of the Master Servicer
may rely in good faith on the written advice of counsel or
on any document of any kind prima facie properly executed
and submitted by any Person respecting any matters arising
under this Agreement. The Trustee shall not be required 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 the
repayment of such funds or adequate written indemnity
against such risk or liability is not reasonably assured to
it in writing prior to the expenditure of risk of such funds
or incurrence of financial liability.
(b) Notwithstanding anything herein to
the contrary, the Trustee shall not be liable for any
obligation of the Master Servicer contained in this
Agreement and each Basic Document and Series Related
Document, and the Owner Trustee, the Seller and the
Noteholders shall look only to the Master Servicer to
perform such obligations.
(c) The parties expressly acknowledge
and consent to The Chase Manhattan Bank acting in the
potential dual capacity of successor Master Servicer and in
the capacity as Trustee. The Chase Manhattan Bank may, in
such dual or other capacity, discharge its separate
functions fully, without hindrance or regard to conflict of
interest principles, duty of loyalty principles or other
breach of fiduciary duties to the extent that any such
conflict or breach arises from the performance by The Chase
Manhattan Bank of express duties set forth in this Agreement
in any of such capacities, all of which defenses, claims or
assertions are hereby expressly waived by the other parties
hereto and the Noteholders except in the case of negligence
and willful misconduct by The Chase Manhattan Bank.
SECTION 9.5. Delegation of Duties
. In the ordinary course of business, the Master Servicer
at any time may delegate any of its duties hereunder to any
Person, including any of its Affiliates, who agrees to
conduct such duties in accordance with standards employed by
the Master Servicer in compliance with Section 4.1. Such
delegation shall not relieve the Master Servicer of its
liabilities and responsibilities with respect to such duties
and shall not constitute a resignation within the meaning of
Section 9.6. The Master Servicer shall provide each Rating
Agency and the Trustee with written notice prior to the
delegation of any of its duties to any Person other than any
of the Master Servicer's Affiliates or their respective
successors and assigns.
SECTION 9.6. Master Servicer Not to Resign
. Subject to the provisions of Section 9.3, the Master
Servicer shall not resign from the obligations and duties
hereby imposed on it except (i) upon determination that the
performance of its obligations or duties hereunder are no
longer permissible under applicable law or are in material
conflict by reason of applicable law with any other
activities carried on by it or its subsidiaries or
Affiliates, the other activities of the Master Servicer so
causing such a conflict being of a type and nature carried
on by the Master Servicer or its subsidiaries or Affiliates
at the date of this Agreement or (ii) upon satisfaction of
the following conditions: (a) the Master Servicer has
proposed a successor servicer to the Trustee in writing and
such proposed successor servicer is reasonably acceptable to
the Trustee; (b) the Rating Agency shall have delivered a
letter to the Trustee stating that the appointment of such
proposed successor servicer as Master Servicer hereunder
will satisfy the Rating Agency Condition; and c such
proposed successor servicer has agreed in writing to assume
the obligations of Master Servicer hereunder and under each
relevant Basic Document and Series Related Document and (d)
the Master Servicer has delivered to the Trustee an Opinion
of Counsel to the effect that all conditions precedent to
the resignation of the Master Servicer and the appointment
of and acceptance by the proposed successor servicer have
been satisfied; provided, however, that, in the case of
clause (i) above, no such resignation by the Master Servicer
shall become effective until the Trustee shall have assumed
the Master Servicer's responsibilities and obligations
hereunder or the Trustee shall have designated a successor
servicer in accordance with Section 10.3 which shall have
assumed such responsibilities and obligations. Any such
resignation shall not relieve the Master Servicer of
responsibility for any of the obligations specified in
Sections 10.1 and 10.3 as obligations that survive the
resignation or termination of the Master Servicer. Any such
determination permitting the resignation of the Master
Servicer pursuant to clause (i) above shall be evidenced by
an Opinion of Counsel to such effect delivered to the
Trustee.
SECTION 9.7. Sub-Servicing Agreements
Between Master Servicer and Sub-Servicers
. The Master Servicer may enter into agreements for any
subservicing and administration of Receivables with any
institution which is an Eligible Subservicer and is in
compliance with the laws of each state necessary to enable
it to perform the obligations of the Master Servicer
pursuant to this Agreement. For purposes of this Agreement
and each Basic Document and Series Related Document, the
Master Servicer shall be deemed to have received payments on
Receivables when any Sub-Servicer has received such
payments. Any such agreement shall be consistent with and
not violate the provisions of this Agreement. The Master
Servicer shall not be relieved of its obligations under this
Agreement and each Basic Document and Series Related
Document notwithstanding any agreement relating to
subservicing and the Master Servicer shall be obligated to
the same extent and under the same terms and conditions as
if it alone were servicing and administering the
Receivables. The Issuer shall have no liability to the
Master Servicer except for payment of the Base Servicing Fee
and any Supplemental Servicing Fee. The Issuer shall have
no obligation to indemnify the Master Servicer for costs or
expenses, except with respect to the preceding sentence.
The parties hereto acknowledge that with respect to
statements or certificates required to be delivered by the
Master Servicer in accordance with this Agreement and each
Series Supplement, including, but not limited to, Sections
4.9, 4.10 and 4.11 hereof, that a statement or certificate
delivered by the Sub-Servicer shall be sufficient to
discharge the Master Servicer's obligation to deliver such
certificate or statement.
SECTION 9.8. Successor Sub-Servicers
. The Master Servicer may terminate any Sub-Servicer and
either directly service the related Receivables itself or
enter into an agreement with a successor Sub-Servicer that
is an Eligible Sub-Servicer. None of the Owner Trustee or
the Trustee shall have no duty or obligation to monitor or
supervise the performance of any Sub-Servicer.
ARTICLE X
Default
SECTION 10.1. Master Servicer Termination
Event
. For purposes of this Agreement, each of the following
shall constitute a "Master Servicer Termination Event", but
shall only constitute a Master Servicer Termination Event
with respect to the Series and the related Series Trust
Estates with respect to which such event arose:
(a) Any failure by the Master Servicer
to deliver, or cause to be delivered, to the Trustee for
distribution pursuant to the terms of this Agreement any
proceeds or payment required to be so delivered under the
terms of this Agreement (including deposits of the
Repurchase Amount pursuant to Section 3.2 and Section 4.7)
that continues unremedied for a period of five Business Days
after written notice is received by the Master Servicer from
the Trustee or after discovery of such failure by a
responsible Officer of the Master Servicer (but in no event
later than five Business Days after the Master Servicer is
required to make such delivery or deposit);
(b) Failure on the part of the Master
Servicer duly to observe or perform any other covenants or
agreements of the Master Servicer set forth in this
Agreement and each Basic Document or Series Related
Document, which failure (i) materially and adversely affects
the rights of Noteholders of a Series (determined without
regard to the availability of funds under any Series
Support) and (ii) continues unremedied for a period of 60
days after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to
the Master Servicer by the Trustee;
(c) The entry of a decree or order for
relief by a court or regulatory authority having
jurisdiction in respect of the Master Servicer in an
involuntary case under the federal bankruptcy laws, as now
or hereafter in effect, or another present or future,
federal bankruptcy, insolvency or similar law, or appointing
a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Master
Servicer or of any substantial part of its property or
ordering the winding up or liquidation of the affairs of the
Master Servicer or the commencement of an involuntary case
under the federal bankruptcy laws, as now or hereinafter in
effect, or another present or future federal or state
bankruptcy, insolvency or similar law and such case is not
dismissed within 60 days; or
(d) The commencement by the Master
Servicer of a voluntary case under the federal bankruptcy
laws, as now or hereafter in effect, or any other present or
future, federal or state, bankruptcy, insolvency or similar
law, or the consent by the Master Servicer to the
appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator or
other similar official of the Master Servicer or of any
substantial part of its property or the making by the Master
Servicer of an assignment for the benefit of creditors or
the failure by the Master Servicer generally to pay its
debts as such debts become due or the taking of corporate
action by the Master Servicer in furtherance of any of the
foregoing; or
(e) Any representation, warranty or
certification of the Master Servicer made in this Agreement
or any Series Supplement or any certificate, report or other
writing delivered pursuant hereto or thereto shall prove to
be incorrect in any material respect as of the time when the
same shall have been made, and the incorrectness of such
representation, warranty or statement has a material adverse
effect on the interests of the Trust in the related Series
Trust Estate and, within 60 days after written notice
thereof shall have been given to the Master Servicer by the
Trustee the circumstances or condition in respect of which
such representation, warranty or statement was incorrect
shall not have been eliminated or otherwise cured; or
(f) Notwithstanding the foregoing, a
delay in or failure of performance under Section 10.1(a) for
a period of five Business Days or under Section 10.1(b) for
a period of 60 days, shall not constitute a Master Servicer
Termination Event if such delay or failure could not be
prevented by the exercise of reasonable diligence by the
Master Servicer and such delay or failure was caused by an
act of God, acts of declared or undeclared war, public
disorder, rebellion or sabotage, epidemics, landslides,
lightning, fire, hurricanes, earthquakes, floods or similar
causes. The preceding sentence shall not relieve the Master
Servicer from using its best efforts to perform its
obligations in a timely manner in accordance with the terms
of this Agreement, and the Master Servicer shall provide the
Trustee and the Seller with an Officers' Certificate giving
prompt notice of such failure or delay by it, together with
a description of its efforts to so perform its obligations.
SECTION 10.2. Consequences of a Master
Servicer Termination Event
. If a Master Servicer Termination Event shall occur and be
continuing, the Trustee (to the extent a Trust Officer of
the Trustee has actual knowledge thereof) at the direction
of the Trustee, by notice given in writing to the Master
Servicer may terminate all of the rights and obligations of
the Master Servicer under this Agreement and the other Basic
Documents as they relate to a Series and a Series Trust
Estate out of which such Servicer Termination Event arose.
On or after the receipt by the Master Servicer of such
written notice, all authority, power, obligations and
responsibilities of the Master Servicer under this
Agreement, whether with respect to the Notes or the Other
Conveyed Property or otherwise, automatically shall pass to,
be vested in, and become obligations and responsibilities,
of the Trustee (or such other successor Master Servicer
appointed by Trustee pursuant to Section 10.3); provided,
however, that the successor Master Servicer shall (i) have
no liability with respect to any obligation which was
required to be performed by the terminated Master Servicer
prior to the date that the successor Master Servicer becomes
the Master Servicer or any claim of a third party based on
any alleged action or inaction of the terminated Master
Servicer and (ii) no obligation to perform any repurchase or
advancing obligations, if any, of the terminated Master
Servicer.
The successor Master Servicer is authorized and
empowered by this Agreement to execute and deliver, on
behalf of the terminated Master Servicer, as attorney-in-
fact or otherwise, any and all documents and other
instruments and to do or accomplish all other acts or things
necessary or appropriate to effect the purposes of such
notice of termination, whether to complete the transfer and
endorsement of the Series Trust Estate and related documents
to show the Trust as lienholder or secured party on the
related Lien Certificates, or otherwise. The terminated
Master Servicer agrees to cooperate with the successor
Master Servicer in effecting the termination of the
responsibilities and rights of the terminated Master
Servicer under this Agreement as they relate to the Series
Trust Estate with respect to which such termination has been
effected , including, without limitation, the transfer to
the successor Master Servicer for administration by it of
all cash amounts that shall at the time be held by the
terminated Master Servicer for deposit, or have been
deposited by the terminated Master Servicer, in the Master
Collection Account or thereafter received with respect to
the Receivables in the subject Series Trust Estate and the
delivery to the successor Master Servicer of all Receivable
Files, Monthly Records and Collection Records and a computer
tape in readable form as of the most recent Business Day
containing all information necessary to enable the successor
Master Servicer to service such Series Trust Estate. If
requested by the Trustee, the successor Master Servicer
shall direct the Obligors to make all payments under the
Receivables directly to the successor Master Servicer (in
which event the successor Master Servicer shall process such
payments in accordance with Section 4.2(d)). The terminated
Master Servicer shall grant the Trustee and the successor
Master Servicer reasonable access to the terminated Master
Servicer's premises at the terminated Master Servicer's
expense.
SECTION 10.3. Appointment of Successor
(a) . (a) On and after the time the
Master Servicer receives a notice of termination pursuant to
Section 10.2 or upon the resignation of the Master Servicer
pursuant to Section 9.6, the Master Servicer shall continue
to perform all servicing functions under this Agreement
until the date specified in such termination notice or until
such resignation becomes effective or until a date mutually
agreed upon by the Master Servicer and the Trustee. The
Trustee shall as promptly as possible after such termination
or resignation appoint an Eligible Servicer as a successor
servicer (the "Successor Master Servicer"), and such
Successor Master Servicer shall accept its appointment by a
written assumption in a form acceptable to the Trustee. In
the event that a Successor Master Servicer has not been
appointed or has not accepted its appointment at the time
when the Master Servicer ceases to act as Master Servicer,
the Trustee without further action shall automatically be
appointed the Master Successor Servicer. The Trustee may
delegate any of its servicing obligations to an Affiliate or
agent in accordance with Section 9.6. Notwithstanding the
foregoing, the Trustee shall, if it is legally unable so to
act, petition a court of competent jurisdiction to appoint
any established institution qualifying as an Eligible
Servicer as the Successor Master Servicer hereunder. The
Trustee shall give prompt notice to each Rating Agency upon
the appointment of a Successor Master Servicer. The Trustee
or the Successor Master Servicer, as the case may be, shall
be the successor in all respects to the Master Servicer in
its capacity as servicer under this Agreement and the
transactions set forth or provided for in this Agreement,
and shall be subject to all the rights, responsibilities,
restrictions, duties, liabilities and termination provisions
relating thereto placed on the Master Servicer by the terms
and provisions of this Agreement, except as otherwise stated
herein. The Trustee or the Successor Master Servicer, as
the case may be, shall take such action, consistent with
this Agreement, as shall be necessary to effectuate any such
succession. The Successor Master Servicer shall be subject
to termination under Section 10.2 upon the occurrence of any
Master Servicer Termination Event applicable to it as Master
Servicer.
(b) Subject to Section 9.6, no
provision of this Agreement shall be construed as relieving
the Trustee of its obligation to succeed as successor Master
Servicer upon the termination of the Master Servicer
pursuant to Section 10.2 or the resignation of the Master
Servicer pursuant to Section 9.6.
(c) Any successor Master Servicer shall
be entitled to such compensation (whether payable out of the
Master Collection Account or otherwise) equal to the greater
of (a) the compensation the Master Servicer would have been
entitled to under this Agreement if the Master Servicer had
not resigned or been terminated hereunder and (b)
compensation calculated with a Servicing Fee Rate equal to
the then-current "market rate" fee for servicing assets
comparable to the Receivables, which rate shall be
determined by averaging three fee bids obtained by the
Trustee from third party servicers selected by the Trustee.
In addition, any successor Master Servicer shall be entitled
to reasonable transition expenses incurred in acting as
successor Master Servicer payable by the outgoing Master
Servicer, and to the extent such transition expenses have
not been paid by the outgoing Master Servicer, such
successor Master Servicer shall be entitled to reimbursement
for such reasonable expenses pursuant to the related Series
Supplement.
SECTION 10.4. Notification to Noteholders
and Certificateholders
. Upon any termination of, or appointment of a successor
to, the Master Servicer or the Trustee shall give prompt
written notice thereof to each Noteholder.
SECTION 10.5. Waiver of Past Defaults
. A majority of the Noteholders may, on behalf of all
Securityholders, waive any default by the Seller or the
Master Servicer in the performance of their obligations
hereunder and its consequences, except the failure to make
any distributions required to be made to Noteholders or to
make any required deposits of any amounts to be so
distributed. Upon any such waiver of a past default, such
default shall cease to exist, and any default arising
therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to
any subsequent or other default or impair any right
consequent thereon except to the extent expressly so waived.
SECTION 10.6. Successor to Master Servicer
(a) . (a) The Trustee, in its
capacity as successor to the Master Servicer, shall perform
such duties and only such duties as are specifically set
forth in this Agreement and each Basic Document and Series
Related Document with respect to the assumption of any
servicing duties and no implied covenants or obligations
shall be read into this Agreement against the Trustee.
(b) In the absence of bad faith or
negligence on its part, the 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 Trustee and conforming to the requirements
of this Agreement and each Series Supplement; but in the
case of any such certificates or opinions, which by any
provision hereof are specifically required to be furnished
to the Trustee , the Trustee shall be under a duty to
examine the same and to determine whether or not they
conform to the requirements of this Agreement and each
Series Supplement.
(c) The Trustee shall have no liability
for any actions taken or omitted by the terminated Master
Servicer.
ARTICLE XI
Termination
SECTION 11.1. Optional Purchase of All
Receivables
(a) . (a) To the extent and under the
circumstances provided in a Series Supplement, the Master
Servicer and the Seller each shall have the option to
purchase the related Series Trust Estate, other than the
Trust Accounts; provided, however, that the amount to be
paid for such purchase shall be sufficient to pay the full
amount of principal, premium, if any, and interest then due
and payable on the Notes of such Series and all other
amounts due to the Series Securityholders, the Trustee and
Owner Trustee under the related Series Supplement and Note
Purchase Agreement. To exercise such option, the Master
Servicer or the Seller, as the case may be, shall deposit
pursuant to Section 5.3 in the Master Collection Account an
amount equal to the aggregate Repurchase Amount for the
related Receivables, plus the appraised value of any other
property constituting such Series Trust Estate, such value
to be determined by an appraiser mutually agreed upon by the
Master Servicer and the Trust, and shall succeed to all
interests in and to the related Series Trust Estate.
(b) Upon any sale of the assets of the
Trust pursuant to Article IV of the Indenture , the Master
Servicer shall instruct the Trustee to deposit the proceeds
from such sale after all payments and reserves therefrom
(including the expenses of such sale) have been made (the
"Insolvency Proceeds") in the Master Collection Account.
(c) Notice of any termination of the
Trust shall be given by the Master Servicer to the Owner
Trustee, the Trustee and the Rating Agencies as soon as
practicable after the Master Servicer has received notice
thereof.
(d) Following the satisfaction and
discharge of the Indenture, the payment in full of the
principal of and interest on the Notes, the termination of
any Series Support (as provided therein) and the surrender
of any Series Support to the Series Support Provider, the
Certificateholders will succeed to the rights of the
Noteholders hereunder and the Owner Trustee will succeed to
the rights of, and assume the obligations of, the Trustee
pursuant to this Agreement.
ARTICLE XII
Administrative Duties of the Master Servicer
SECTION 12.1. Administrative Duties.
(a) Duties with Respect to the
Indenture. The Master Servicer shall perform all its duties
and the duties of the Issuer under the Indenture. In
addition, the Master Servicer shall consult with the Owner
Trustee as the Master Servicer deems appropriate regarding
the duties of the Issuer under the Indenture. The Master
Servicer 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 Indenture. The
Master Servicer shall prepare for execution by the Issuer or
shall cause the preparation by other appropriate Persons of
all such documents, reports, filings, instruments,
certificates and opinions as it shall be the duty of the
Issuer to prepare, file or deliver pursuant to the
Indenture. In furtherance of the foregoing, the Master
Servicer shall take all necessary action that is the duty of
the Issuer to take pursuant to the Indenture, including,
without limitation, pursuant to Sections 2.7, 3.5, 3.6, 3.7,
3.9, 3.10, 3.17, 5.1, 5.4, 7.3, 8.3, 9.2, 9.3, 11.1 and
11.15 of the Indenture.
(b) Duties with Respect to the Issuer.
(i) In addition to the duties of the
Master Servicer set forth in this Agreement
or any of the Basic Documents, the Master
Servicer shall perform such calculations and
shall prepare for execution by the Issuer or
the Owner Trustee or shall cause the
preparation by other appropriate Persons of
all such documents, reports, filings,
instruments, certificates and opinions as it
shall be the duty of the Issuer or the Owner
Trustee to prepare, file or deliver pursuant
to this Agreement or any of the Basic
Documents or under state and federal tax and
securities laws, and at the request of the
Owner Trustee shall take all appropriate
action that it is the duty of the Issuer to
take pursuant to this Agreement or any of the
Basic Documents, including, without
limitation, pursuant to Sections 2.6 and 2.11
of the Trust Agreement. In accordance with
the directions of the Issuer or the Owner
Trustee, the Master Servicer shall
administer, perform or supervise the
performance of such other activities in
connection with the Trust Estate (including
the Basic Documents) as are not covered by
any of the foregoing provisions and as are
expressly requested by the Issuer or the
Owner Trustee and are reasonably within the
capability of the Master Servicer.
(ii) Notwithstanding anything in this
Agreement or any of the Basic Documents to
the contrary, the Master Servicer shall be
responsible for promptly notifying the Owner
Trustee and the Trustee in the event that any
withholding tax is imposed on the Issuer's
payments (or allocations of income) to an
Owner (as defined in the Trust Agreement) as
contemplated by this Agreement. Any such
notice shall be in writing and specify the
amount of any withholding tax required to be
withheld by the Owner Trustee and the Trustee
pursuant to such provision.
(iii) Notwithstanding anything in
this Agreement or the Basic Documents to the
contrary, the Master Servicer shall be
responsible for performance of the duties of
the Issuer or the Seller set forth in Section
5.1(a), (b), c and (d) of the Trust Agreement
with respect to, among other things,
accounting and reports to Owners (as defined
in the Trust Agreement); provided, however,
that once prepared by the Master Servicer,
the Depositor shall retain responsibility
under Section 5.1(g) of the Trust Agreement
for the distribution of the Schedule K-1s
necessary to enable each Certificateholder to
prepare its federal and state income tax
returns.
(iv) The Master Servicer shall perform
the duties of the Depositor specified in
Section 10.2 of the Trust Agreement required
to be performed in connection with the
resignation or removal of the Owner Trustee,
and any other duties expressly required to be
performed by the Master Servicer under this
Agreement or any of the Basic Documents.
(v) The Master Servicer, on behalf of
the Seller, shall direct the Issuer to
request the tender of all or a portion of the
Notes of any Series in accordance with the
Indenture or any Series Supplement.
(vi) In carrying out the foregoing
duties or any of its other obligations under
this Agreement, the Master Servicer may enter
into transactions with 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 Issuer and shall
be, in the Master Servicer's opinion, no less
favorable to the Issuer in any material
respect.
(c) Tax Matters. The Master Servicer
shall prepare and file, on behalf of the Seller, all tax
returns, tax elections, financial statements and such annual
or other reports of the Issuer as are necessary for
preparation of tax reports as provided in Article V of the
Trust Agreement, including without limitation forms 1099 and
1066. All tax returns will be signed by the Seller.
(d) Non-Ministerial Matters. With
respect to matters that in the reasonable judgment of the
Master Servicer are non-ministerial, the Master Servicer
shall not take any action pursuant to this Article XII
unless within a reasonable time before the taking of such
action, the Master Servicer shall have notified the Owner
Trustee and the Trustee of the proposed action and the Owner
Trustee and the Trustee shall not have withheld consent or
provided an alternative direction. For the purpose of the
preceding sentence, "non-ministerial matters" shall include:
(A) 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 (other
than in connection with the collection of the
Receivables);
(B) the appointment of successor Note Registrars,
successor Paying Agents and successor Trustees
pursuant to the Indenture or the consent to the
assignment by the Note Registrar, Paying Agent or
Trustee of its obligations under the Indenture;
and
(C) the removal of the Trustee.
(e) Exceptions. Notwithstanding
anything to the contrary in this Agreement, except as
expressly provided herein or in the other Basic Documents,
the Master Servicer, in its capacity hereunder, shall not be
obligated to, and shall not, (1) make any payments to the
Noteholders or Certificateholders under the Basic Documents,
(2) sell any Trust Property pursuant to Section 5.5 of the
Indenture, (3) take any other action that the Issuer directs
the Master Servicer not to take on its behalf or (4) in
connection with its duties hereunder assume any
indemnification obligation of any other Person.
(f) Neither the Trustee nor any
successor Master Servicer shall be responsible for any
obligations or duties of the Master Servicer under Section
12.1.
SECTION 12.2. Records
. The Master Servicer shall maintain appropriate books of
account and records relating to services performed under
this Agreement, which books of account and records shall be
accessible for inspection by the Issuer and the Trustee at
any time during normal business hours.
SECTION 12.3. Additional Information to be
Furnished to the Issuer
. The Master Servicer shall furnish to the Issuer and the
Trustee from time to time such additional information
regarding any Series Trust Estate as the Issuer and the
Trustee shall reasonably request.
ARTICLE XIII
Miscellaneous Provisions
SECTION 13.1. Amendments
(a) . (a) This Agreement may be
amended by the parties hereto at any time when no Series of
Securities or commitment to purchase a Series of Securities
is outstanding without the requirement of any consents or
the satisfaction of any conditions set forth below.
(b) Except as otherwise provided with
respect to a Series in a Series Supplement, this Agreement
may be amended from time to time by the parties hereto, by a
written instrument signed by each of the parties hereto,
without the consent of any of the Securityholders, provided
that (i) an Opinion of Counsel for the Seller (which Opinion
of Counsel may, as to factual matters, rely upon officers'
certificates of the Seller or the Master Servicer) is
addressed and delivered to the Trustee, dated the date of
any such amendment, to the effect that the conditions
precedent to any such amendment have been satisfied and (ii)
the Seller shall have delivered to the Trustee and each
Rating Agency, 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 rights of the Noteholders.
(c) Except as otherwise provided with
respect to a Series in a Series Supplement, this Agreement
may also be amended from time to time by the Servicer, the
Seller and the Trustee, with the consent of the Noteholders
evidencing in each case not less than a majority of the
outstanding principal amount of the Notes of each affected
Series for which the Seller has not delivered an Officer's
Certificate stating that there is no adverse effect on the
rights of Noteholders of each Series, 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 any
distributions to be made to Securityholders or deposits of
amounts to be so distributed or the amount available under
any Series Support without the consent of each affected
Securityholder, (ii) change the definition of or the manner
of calculating the interest of any Securityholder without
the consent of each affected Securityholder, (iii) reduce
the aforesaid percentage required to consent to any such
amendment without the consent of each Securityholder or (iv)
adversely affect any rating of a Series by each Rating
Agency without the consent of the Noteholders evidencing not
less than a majority of the outstanding principal amount of
the outstanding Notes of such Series.
Promptly after the execution of any such amendment
or supplement, the Trustee shall furnish written
notification of the substance of such amendment or
supplement to each Securityholder.
It shall not be necessary for the consent of
Certificateholders or Noteholders pursuant to this Section
to approve the particular form of any amendment, but it
shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents
(and any other consents of Noteholders or Certificateholders
provided for in this Agreement) and of evidencing the
authorization of any action by Noteholders or
Certificateholders shall be subject to such reasonable
requirements as the Trustee or the Owner Trustee, as
applicable, may prescribe, including the establishment of
record dates.
The Owner Trustee and the Trustee may, but shall
not be obligated to, enter into any amendment which affects
the Issuer's, the Owner Trustee's or the Trustee's, as
applicable, own rights, duties or immunities under this
Agreement or otherwise.
Prior to the execution of any amendment to this
Agreement, the Trustee shall be entitled to receive or rely
upon an Opinion of Counsel stating that the execution of
such amendment is authorized or permitted by this Agreement
and that all conditions precedent to the execution and
delivery of such amendment have been satisfied.
SECTION 13.2. Protection of Title to Trust
(a) . (a) The Seller shall execute
and file such financing statements and cause to be executed
and filed such continuation statements, all in such manner
and in such places as may be required by law fully to
preserve, maintain and protect the interest of the Issuer
and the interests of the Trustee on behalf of the related
Series Securityholders in the related Series Trust Estate
and in the proceeds thereof.
(b) Neither the Seller nor the Master
Servicer shall change its name, identity or corporate
structure in any manner that would, could or might make any
financing statement or continuation statement filed in
accordance with paragraph (a) above seriously misleading
within the meaning of 9-402(7) of the UCC, unless it shall
have given the Owner Trustee and the Trustee at least thirty
days' prior written notice thereof and shall have promptly
filed appropriate amendments to all previously filed
financing statements or continuation statements.
(c) Each of the Seller and the Master
Servicer shall have an obligation to give the Owner Trustee
and the Trustee prompt notice of any relocation of its
principal executive office if, as a result of such
relocation, the applicable provisions of the UCC would
require the filing of any amendment of any previously filed
financing or continuation statement or of any new financing
statement and shall promptly file any such amendment. The
Master Servicer shall at all times maintain each office from
which it shall service Receivables, and its principal
executive office, within the United States of America.
(d) The Master Servicer shall maintain
accounts and records as to each Receivable accurately and in
sufficient detail to permit (i) the reader thereof to know
at any time the status of such Receivable, including
payments and recoveries made and payments owing (and the
nature of each) and (ii) reconciliation between payments or
recoveries on (or with respect to) each Receivable and the
amounts from time to time deposited in the Master Collection
Account in respect of such Receivable.
(e) The Master Servicer shall maintain
or cause to be maintained, a computer system so that, from
and after the time of sale under this Agreement and each
Transfer Agreement of the Receivables to the Issuer, such
master computer records (including any backup archives) that
refer to a Receivable shall indicate clearly the interest of
the Trust in such Receivable and that such Receivable is
owned by the Trust and to which Series Trust Estate such
Receivable has been pledged pursuant to the Indenture.
Indication of the Trust's interest in a Receivable shall be
deleted from or modified on such computer systems when, and
only when, the related Receivable shall have been paid in
full or repurchased by HAFC or the Seller.
(f) If at any time the Seller or HAFC
shall propose to sell, grant a security interest in or
otherwise transfer any interest in automotive receivables to
any prospective purchaser, lender or other transferee, the
Master Servicer shall give to such prospective purchaser,
lender or other transferee computer tapes, records or
printouts (including any restored from backup archives)
that, if they shall refer in any manner whatsoever to any
Receivable, shall indicate clearly that such Receivable has
been sold and is owned by the Trust unless such Receivable
has been paid in full or repurchased by HAFC or the Seller.
(g) With respect to any Series Trust
Estate, upon request, the Master Servicer shall furnish or
cause to be furnished to the related Series Support Provider
(only in the event that there is a Series Support Provider
with respect to such Series), the Owner Trustee or to the
Trustee, within five Business Days, a list of all
Receivables (by contract number) then held as part of the
related Series Trust Estate, together with a reconciliation
of such list to the related Schedule of Receivables and to
each of the Master Servicer's Certificates furnished before
such request indicating removal of Receivables from the
related Series Trust Estate. The Trustee shall hold any
such list and Schedule of Receivables for examination by
interested parties during normal business hours at the
Corporate Trust Office upon reasonable notice by such
Persons of their desire to conduct an examination.
(h) The Master Servicer shall deliver
to the Owner Trustee and the Trustee:
(1) simultaneously with the execution and
delivery of the Agreement and, if required pursuant to
Section 13.1, of each amendment, an Opinion of Counsel
stating that, in the opinion of such Counsel, in form
and substance reasonably satisfactory to the addressees
of such Opinion, either (A) all financing statements
and continuation statements have been executed and
filed that are necessary fully to preserve and protect
the interest of the Trust and the Trustee in the
Receivables then held as part of the related Series
Trust Estate, or (B) no such action shall be necessary
to preserve and protect such interest or c any action
which is necessary to preserve and protect such
interest during the following 12-month period; and
(2) within 90 days after the beginning of
each calendar year beginning in 1999, dated as of a
date during such 90-day period, stating that, in the
opinion of such counsel, either (A) all financing
statements and continuation statements have been
executed and filed that are necessary fully to preserve
and protect the interest of the Trust and the Trustee
in the Series Trust Estate or (B) no such action shall
be necessary to preserve and protect such interest.
Each Opinion of Counsel referred to in clause (1)
or (2) above shall specify any action necessary (as of the
date of such opinion) to be taken in the following year to
preserve and protect such interest.
SECTION 13.3. Notices
. All demands, notices and communications upon or to the
Seller, the Master Servicer, the Owner Trustee, the Trustee
or the Rating Agencies under this Agreement shall be in
writing, personally delivered, or mailed by certified mail,
or sent by confirmed telecopier transmission and shall be
deemed to have been duly given upon receipt (a) in the case
of the Seller to Household Auto Receivables Corporation,
1111 Town Center Drive, Las Vegas, Nevada 89134, with a copy
to Household International, Inc., 2700 Sanders Road,
Prospect Heights, Illinois, 60070, Attn: Treasurer (Telecopy
No. (847) 205-7538), (b) in the case of the Master Servicer
to Household Finance Corporation, 2700 Sanders Road,
Prospect Heights, Illinois 60070, Attention: Treasurer,
Telecopier # (847) 205-7538, c in the case of the Issuer or
the Owner Trustee, at the Corporate Trust Office of the
Owner Trustee, Telecopier # 302-651-8882, (d) in the case of
the Trustee at the Corporate Trust Office, Telecopier #
(212) 946-8191, (e) in the case of the Series Support
Provider to the address set forth in the related Series
Supplement, and (f) in the case of any Rating Agency, to the
address set forth in the related Series Supplement. Any
notice required or permitted to be mailed to a Noteholder or
Certificateholder shall be given by first class mail,
postage prepaid, at the address of such Holder as shown in
the Certificate Register or Note Register, as applicable.
Any notice so mailed within the time prescribed in the
Agreement shall be conclusively presumed to have been duly
given, whether or not the Certificateholder or Noteholder
shall receive such notice.
SECTION 13.4. Assignment
. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective
successors and permitted assigns. Notwithstanding anything
to the contrary contained herein, except as provided in
Sections 8.4 and 9.3 and as provided in the provisions of
this Agreement concerning the resignation of the Master
Servicer, this Agreement may not be assigned by the Seller
or the Master Servicer without the prior written consent of
the Owner Trustee and the Trustee. In the event that a
successor Issuer with respect to a Series is formed as
contemplated in the related Series Supplement, such Issuer
shall succeed to all of the rights and obligations of the
predecessor Issuer hereunder; and all references to the
Issuer hereunder shall thereafter be deemed to be references
to such successor Issuer.
SECTION 13.5. Limitations on Rights of
Others
. The provisions of this Agreement are solely for the
benefit of the parties hereto and for the benefit of the
Certificateholders (including the Seller) and the Trustee,
as third-party beneficiaries. Each Series Support Provider
and its successors and assigns shall be a third-party
beneficiary to the provisions of this Agreement and to each
Series Supplement with respect to each Series for which they
are providing Series Support, and shall be entitled to rely
upon and directly enforce such provisions of this Agreement
and to each Series Supplement with respect to each Series
for which they are providing Series Support, so long as no
default with respect to such Series Support Provider shall
have occurred and be continuing. Nothing in this Agreement
or in any Series Supplement, whether express or implied,
shall be construed to give to any other Person any legal or
equitable right, remedy or claim in the Owner Trust Estate
or under or in respect of this Agreement or any covenants,
conditions or provisions contained herein.
SECTION 13.6. Severability
. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other
jurisdiction.
SECTION 13.7. Separate Counterparts
. This Agreement and each Transfer 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 13.8. 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 13.9. Governing Law
. THIS AGREEMENT AND EACH TRANSFER 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.
SECTION 13.10. Assignment to Trustee
. The Seller hereby acknowledges and consents to any
mortgage, pledge, assignment and grant of a security
interest by the Issuer to the Trustee pursuant to the
Indenture, as supplemented by a Series Supplement for the
benefit of the related Series Securityholders of all right,
title and interest of the Issuer in, to and under the
applicable Series Trust Estate.
SECTION 13.11. Nonpetition Covenants
(a) . (a) Notwithstanding any prior
termination of this Agreement or any Series Supplement, the
Master Servicer and the Seller shall not, prior to the date
which is one year and one day after the termination of this
Agreement or any Series Supplement with respect to the
Issuer, acquiesce, petition or otherwise invoke or cause the
Issuer to invoke the process of any court or government
authority for the purpose of commencing or sustaining a case
against the Issuer under any federal or state bankruptcy,
insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or
other similar official of the Issuer or any substantial part
of its property, or ordering the winding up or liquidation
of the affairs of the Issuer.
(b) Notwithstanding any prior
termination of this Agreement or any Series Supplement, the
Master Servicer shall not, prior to the date that is one
year and one day after the termination of this Agreement or
any Series Supplement with respect to the Seller, acquiesce
to, petition or otherwise invoke or cause the Seller to
invoke the process of any court or government authority for
the purpose of commencing or sustaining a case against the
Seller under any federal or state bankruptcy, insolvency or
similar law, appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator, or other similar official
of the Seller or any substantial part of its property, or
ordering the winding up or liquidation of the affairs of the
Seller.
SECTION 13.12. Limitation of Liability of
Owner Trustee
(a) . (a) Notwithstanding anything
contained herein to the contrary, this Agreement and each
Series Supplement has been countersigned by Wilmington Trust
Company not in its individual capacity but solely in its
capacity as Owner Trustee of the Issuer and in no event
shall Wilmington Trust Company in its individual capacity
or, except as expressly provided in the Trust Agreement, as
Owner Trustee have any liability for the representations,
warranties, covenants, agreements or other obligations of
the Issuer hereunder or in any of the certificates, notices
or agreements delivered pursuant hereto, as to all of which
recourse shall be had solely to the assets of the Issuer.
For all purposes of this Agreement and each Series
Supplement, in the performance of its duties or obligations
hereunder or 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.
(b) In no event shall Wilmington Trust
Company, in any of its capacities hereunder, be deemed to
have assumed any duties of the Owner Trustee under the
Delaware Business Trust Statute, common law, or the Trust
Agreement.
SECTION 13.13. Independence of the Master
Servicer
. For all purposes of this Agreement, the Master Servicer
shall be an independent contractor and shall not be subject
to the supervision of the Issuer, the Trustee 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 or any Series
Supplement, the Master Servicer shall have no authority to
act for or represent the Issuer or the Owner Trustee in any
way and shall not otherwise be deemed an agent of the Issuer
or the Owner Trustee.
SECTION 13.14. No Joint Venture
. Nothing contained in this Agreement or any Series
Supplement (i) shall constitute the Master Servicer and
either of the Issuer or the Owner Trustee 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.
IN WITNESS WHEREOF, the parties hereto have caused
this Master Sale and Servicing Agreement to be duly executed
and delivered by their respective duly authorized officers
as of the day and the year first above written.
HOUSEHOLD AUTOMOBILE REVOLVING TRUST I
by Wilmington Trust Company, not in
its individual capacity but solely
as Owner Trustee on behalf of the
Trust,
by
Title:
HOUSEHOLD AUTO RECEIVABLES CORPORATION,
Seller,
by
Name:
Title:
HOUSEHOLD FINANCE CORPORATION,
as Master Servicer,
by
Name:
Title:
THE CHASE MANHATTAN BANK
not in its individual capacity but
solely as Trustee,
by
Name: Thomas J. Provenzano
Title: Vice President
[Signature Page for Master Sale and Servicing Agreement]
EXHIBIT A
FORM OF MASTER SERVICER'S CERTIFICATE
EXHIBIT B
FORM OF TRANSFER AGREEMENT
TRANSFER No. OF Receivables
pursuant to the Amended and Restated Master Sale and
Servicing Agreement dated as of November 1, 1998 (the "Sale
and Servicing Agreement"), among HOUSEHOLD AUTOMOBILE
REVOLVING TRUST I, a Delaware business trust (the "Issuer"),
HOUSEHOLD AUTO RECEIVABLES CORPORATION, a Nevada corporation
(the "Seller"), HOUSEHOLD FINANCE CORPORATION, a Delaware
corporation (the "Master Servicer"), and THE CHASE MANHATTAN
BANK, a New York banking corporation, in its capacity as
Trustee (the "Trustee ").
W I T N E S S E T H:
WHEREAS pursuant to the Master Sale and Servicing
Agreement, the Seller wishes to convey the Receivables to
the Issuer; and
WHEREAS, the Issuer is willing to accept such
conveyance subject to the terms and conditions hereof.
NOW, THEREFORE, the Issuer, the Seller, the Master
Servicer and the Trustee hereby agree as follows:
1. Defined Terms. Capitalized terms used
herein shall have the meanings ascribed to them in the Sale
and Servicing Agreement unless otherwise defined herein.
"Cutoff Date" shall mean, with respect to the
Receivables conveyed hereby, _______________, 1998.
"Transfer Date" shall mean. with respect to the
Receivables conveyed hereby, _____________, 1998.
2. Schedule of Receivables. Annexed hereto
is a supplement to Schedule A to the Master Sale and
Servicing Agreement listing the Receivables that constitute
the Receivables to be conveyed pursuant to this Agreement on
the Transfer Date. The Receivables conveyed pursuant to
this Agreement shall be a component of the Series __ Trust
Estate.
3. Conveyance of Receivables. The Seller
does hereby sell, transfer, assign, set over and otherwise
convey to the Issuer, without recourse (except as expressly
provided in the Master Sale and Servicing Agreement), all
right, title and interest of the Seller in and to:
(i) each and every Receivable listed on
Schedule A to the related Receivables Purchase
Agreement Supplement and all monies paid or payable
thereon or in respect thereof on or after the related
Cutoff Date (including amounts due on or before the
related Cutoff Date but received by the Seller on or
after such date);
(ii) the security interests in the related
Financed Vehicles granted by Obligors pursuant to such
Receivables and any other interest of the Seller in
such Financed Vehicles;
(iii) all rights of the Seller against Dealers
pursuant to Dealer Agreements, Dealer Assignments or
Unaffiliated Originator Receivables Purchase Agreements
related to such Receivables;
(iv) any proceeds and the right to receive
proceeds with respect to such Receivables repurchased
by either (i) a Dealer, pursuant to a Dealer Agreement,
or (ii) an Unaffiliated Originator, pursuant to an
Unaffiliated Originator Receivables Purchase Agreement
as a result of a breach of representation or warranty
in the related Dealer Agreement or Unaffiliated
Originator Receivables Purchase Agreement, as
applicable;
(v) all rights of Seller under any Service
Contracts on the related Financed Vehicles;
(vi) any proceeds and the right to receive
proceeds with respect to the related Receivables from
claims on any physical damage, credit life or
disability insurance policies, if any, covering
Financed Vehicles or Obligors, including rebates of
insurance premiums relating to the Receivables and any
proceeds from the liquidation of such Receivables;
(vii) all items contained in the Receivables
Files with respect to such Receivables and any and all
other documents that Seller or Master Servicer keeps on
file in accordance with its customary procedures
relating to the related Receivables, or the related
Financed Vehicles or Obligor;
(viii) property (including the right to receive
future Net Liquidation Proceeds) that secures each
related Receivable and that has been acquired by or on
behalf of HARC pursuant to liquidation of such
Receivable;
(ix) 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, including all proceeds
of the conversion, voluntary or involuntary, into cash
or other liquid property, all cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances,
chattel paper, checks, deposit accounts, insurance
proceeds, condemnation awards, rights to payment of any
and every kind and other forms of obligations and
receivables, instruments and other property which at
any time constitute all or part of or are included in
the proceeds of any of the foregoing.
4. Representations and Warranties of the
Seller. The Seller hereby represents and warrants to the
Issuer as of the date of this Agreement and as of the
Transfer Date that:
Organization and Good Standing. The Seller has
been duly organized and is 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
currently conducted, and had at all relevant times, and
now has, power, authority and legal right to acquire,
own and sell the Receivables and the Other Conveyed
Property transferred to the Trust.
Due Qualification. 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 where the failure to do
so would materially and adversely affect Seller's
ability to transfer the Receivables and the Other
Conveyed Property to the Trust pursuant to this
Agreement, or the validity or enforceability of the
Receivables and the Other Conveyed Property or to
perform Seller's obligations hereunder and under the
Seller's Basic Documents.
Power and Authority. The Seller has the power and
authority to execute and deliver this Agreement and its
Basic Documents and to carry out its terms and their
terms, respectively; the Seller has full power and
authority to sell and assign the Receivables and the
Other Conveyed Property to be sold and assigned to and
deposited with the Trust by it and has duly authorized
such sale and assignment to the Trust by all necessary
corporate action; and the execution, delivery and
performance of this Agreement and the Seller's Basic
Documents have been duly authorized by the Seller by
all necessary corporate action.
Valid Sale, Binding Obligations. This Agreement
effects a valid sale, transfer and assignment of the
Receivables and the Other Conveyed Property,
enforceable against the Seller and creditors of and
purchasers from the Seller; and this Agreement and the
Seller's Basic Documents, when duly executed and
delivered, shall constitute legal, valid and binding
obligations of the Seller enforceable in accordance
with their respective terms, except as enforceability
may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting the
enforcement of creditors' rights generally and by
equitable limitations on the availability of specific
remedies, regardless of whether such enforceability is
considered in a proceeding in equity or at law.
No Violation. The consummation of the
transactions contemplated by this Agreement and the
Basic Documents and the fulfillment of the terms of
this Agreement and the Basic Documents shall not
conflict with, result in any breach of any of the terms
and provisions of or constitute (with or without
notice, lapse of time or both) a default under the
certificate of incorporation or by-laws of the Seller,
or any indenture, agreement, mortgage, deed of trust or
other instrument to which the Seller is a party or by
which it is bound, or result in the creation or
imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, agreement,
mortgage, deed of trust or other instrument, other than
this Agreement, or violate any law, 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 any of its properties.
No Proceedings. There are no proceedings or
investigations pending or, to the Seller's knowledge,
threatened against the Seller, before any court,
regulatory body, administrative agency or other
tribunal or governmental instrumentality having
jurisdiction over the Seller or its properties (A)
asserting the invalidity of this Agreement or any of
the Basic Documents, (B) seeking to prevent the
issuance of the Securities or the consummation of any
of the transactions contemplated by this Agreement or
any of the Basic Documents, c seeking any determination
or ruling that might materially and adversely affect
the performance by the Seller of its obligations under,
or the validity or enforceability of, this Agreement or
any of the Basic Documents, or (D) seeking to adversely
affect the federal income tax or other federal, state
or local tax attributes of the Securities.
Approvals. All approvals, authorizations,
consents, order or other actions of any person,
corporation or other organization, or of any court,
governmental agency or body or official, required in
connection with the execution and delivery by the
Seller of this Agreement and the consummation of the
transactions contemplated hereby have been or will be
taken or obtained on or prior to the Closing Date.
No Consents. The Seller is not required to obtain
the consent of any other party or any consent, license,
approval or authorization, or registration or
declaration with, any governmental authority, bureau or
agency in connection with the execution, delivery,
performance, validity or enforceability of this
Agreement which has not already been obtained.
Chief Executive Office. The chief executive
office of the Seller is at 1111 Town Center Drive, Las
Vegas, Nevada 89134.
Principal Balance. The aggregate Principal
Balance of the Receivables listed on the supplement to
Schedule A annexed hereto and conveyed to the Issuer
pursuant to this Agreement as of the Cutoff Date is
$____________.
5. Conditions Precedent. The obligation of
the Issuer to acquire the Receivables hereunder is subject
to the satisfaction, on or prior to the Transfer Date, of
the following conditions precedent:
Representations and Warranties. Each of the
representations and warranties made by the Seller in
Section 4 of this Agreement and in Section 3.1 of the
Sale and Servicing Agreement shall be true and correct
as of the date of this Agreement and as of the Transfer
Date.
Sale and Servicing Agreement Conditions. Each of
the conditions set forth in Section 2.1(b) to the Sale
and Servicing Agreement shall have been satisfied.
Additional Information. The Seller shall have
delivered to the Issuer such information as was
reasonably requested by the Issuer to satisfy itself as
to (i) the accuracy of the representations and
warranties set forth in Section 4 of this Agreement and
in Section 6.1 of the Sale and Servicing Agreement and
(ii) the satisfaction of the conditions set forth in
this Section 5.
6. Ratification of Agreement. As
supplemented by this Agreement, the Sale and Servicing
Agreement is in all respects ratified and confirmed and the
Sale and Servicing Agreement as so supplemented by this
Agreement shall be read, taken and construed as one and the
same instrument.
7. Counterparts. This Agreement may be
executed in two or more counterparts (and by different
parties in separate counterparts), each of which shall be an
original but all of which together shall constitute one and
the same instrument.
8. 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.
1.
IN WITNESS WHEREOF, the Issuer, the Seller and the
Master Servicer have caused this Agreement to be duly
executed and delivered by their respective duly authorized
officers as of day and the year first above written.
HOUSEHOLD AUTOMOBILE REVOLVING TRUST I
by Wilmington Trust Company, not in
its individual capacity but solely
as Owner Trustee on behalf of the
Trust,
by
Name:
Title:
HOUSEHOLD AUTO RECEIVABLES CORPORATION,
Seller,
by
Name:
Title:
HOUSEHOLD FINANCE CORPORATION, Master
Servicer,
by
Name:
Title:
Acknowledged and Accepted:
THE CHASE MANHATTAN BANK,
not in its individual
capacity but solely as Trustee
by
Name:
Title:
EXHIBIT C
REQUEST FOR RELEASE AND RECEIPT OF DOCUMENTS
To: The Chase Manhattan Bank
Re: Amended and Restated Sale and Servicing Agreement
(the "Servicing Agreement, dated as of November 1,
1998 between Household Auto Receivables Corporation
(the "Seller"), Household Automobile Revolving Trust
I (the "Trust"), Household Finance Corporation
individually and in its capacity as Servicer (the
"Servicer"), and The Chase Manhattan Bank, as
Trustee (the "Trustee")
In connection with the administration of the
Receivables held by you as the Trustee, we request the
release, and acknowledged receipt, of the Receivable and
related Receivable File described below, for the reason
indicated.
Obligor's Name, Customer Account Number and Vehicle
Identification Number
1. Receivable Paid in Full. All amounts
received in connection with such payments
have been deposited as required pursuant to
Section 3.3(b) of the Master Servicing
Agreement
2. Receivable Purchased from Trust pursuant to
Section 3.2 or 4.7 of the Servicing
Agreement.
3. Receivable is being serviced or subject to
enforcement of rights and remedies pursuant
to Section 3.3(b) of the Servicing Agreement.
4. Other (explain)
If item 1 or 2 above is checked, and if all or part of the
Receivable or Receivable File was previously released to us,
please release to us any additional documents in your
possession to the above specified Receivable.
If Item 3 or 4 above is checked, upon our return of all of
the above documents to you as the Indenture Trustee, please
acknowledge your receipt by signing in the space indicated
below and returning this form.
[ ] HOUSEHOLD FINANCE CORPORATION
as Servicer
By:
Name:
Title:
Date:
DOCUMENTS RETURNED TO THE TRUSTEE
The Chase Manhattan Bank
By:
Name:
Title:
Date:
EXHIBIT D
TRUSTEE'S ACKNOWLEDGEMENT
The Chase Manhattan Bank (the "Trustee"), holds on
behalf of the [Securityholders] certain "Receivable Files,"
as described in the Sale and Servicing Agreement, dated as
of _____________ (the "Sale and Servicing Agreement"), among
[Household] Automobile Revolving Trust, [Household] Auto
Receivables Corp., as Seller, [Household] Auto Finance
Corporation, as Master Servicer, and the Trustee, hereby
acknowledges receipt of the Receivable File for each
Receivable listed in the Schedule of Receivables attached as
Schedule A to said Sale and Servicing Agreement except as
noted in the Exception List attached as Schedule I hereto.
IN WITNESS WHEREOF, The Chase Manhattan Bank has
caused this acknowledgement to be executed by its duly
authorized officer as of this ___________________.
THE CHASE MANHATTAN BANK, as Trustee
by
Name:
Title:
