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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) November 19, 1999
HFC Revolving Corporation
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(Exact name of registrant as specified in charter)
Delaware 333-84611 36-3955292
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
2700 Sanders Road, Prospect Heights, Illinois 60070
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (847) 564-5000
Item 1. Changes in Control of Registrant.
Not Applicable.
Item 2. Acquisition or Disposition of Assets.
Not Applicable.
Item 3. Bankruptcy or Receivership.
Not Applicable.
Item 4. Changes in Registrant's Certifying Accountant.
Not Applicable.
Item 5. Other Events.
On November 19, 1999, the Registrant sold Closed-End Home Equity Loan
Asset Backed Certificates, Series 1999-1, for $500,390,000, which
evidence beneficial ownership interests in Household Home Equity Loan
Trust 1999-1 (the "Trust"). The Trust property consists primarily of a
pool of closed-end, fixed-rate home equity loans (the "Home Equity
Loans"), including the right to receive payments due on the Home Equity
Loans on and after the applicable cut-off date as described in the
Pooling and Servicing Agreement, dated as of November 1, 1999.
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Item 6. Resignations of Registrant's Directors.
Not Applicable.
Item 7. Financial Statements and Exhibits
(a) Financial statements of businesses acquired.
Not applicable
(b) Pro forma financial information.
Not applicable.
(c) Exhibits.
The following is filed herewith:
Exhibit No. Description
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4.1 Pooling and Servicing Agreement among HFC Revolving
Corporation, as Depositor, Household Finance Corporation, as
Master Servicer, and Bank One, National Association, as
Trustee, dated as of November 1, 1999 creating a trust
entitled Household Home Equity Loan Trust 1999-1.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HFC REVOLVING CORPORATION
By: /s/ Steven H. Smith
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Steven H. Smith
Vice President and Assistant Treasurer
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EXHIBIT 4.1
HFC REVOLVING CORPORATION,
as Depositor,
and
HOUSEHOLD FINANCE CORPORATION,
as Master Servicer,
and
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
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POOLING AND SERVICING AGREEMENT
Dated as of November 1, 1999
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Closed-End Home Equity Loan Asset Backed Certificates,
Series 1999-1
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TABLE OF CONTENTS
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Article I
Definitions
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Section 1.01. Definitions................................................................................6
Section 1.02. Interest Calculations.....................................................................24
Section 1.03. Usage of Terms............................................................................24
Article II
Conveyance of Home Equity Loans; Original Issuance of Certificates; Tax Treatment
Section 2.01. Acknowledgment; Conveyance of Home Equity Loans; Custody of Mortgage Files................25
Section 2.02. Acceptance by Trustee; Repurchase of Home Equity Loans; Conveyance of Eligible Substitute
Home Equity Loans.........................................................................28
Section 2.03. Representations, Warranties and Covenants of the Master Servicer..........................30
Section 2.04. Representations and Warranties of the Depositor Regarding this Agreement and the Home
Equity Loans; Repurchases and Substitutions...............................................31
Section 2.05. Execution and Authentication of Certificates..............................................36
Section 2.06. Designation of Interests in the REMIC.....................................................36
Section 2.07. Designation of Start-up Day...............................................................36
Section 2.08. REMIC Certificate Maturity Date...........................................................36
Section 2.09. Miscellaneous REMIC Provisions............................................................36
Article III
Administration and Servicing of Home Equity Loans
Section 3.01. The Master Servicer.......................................................................38
Section 3.02. Collection of Certain Home Equity Loan Payments...........................................40
Section 3.03. Withdrawals from the Collection Account...................................................42
Section 3.04. Maintenance of Hazard Insurance; Property Protection Expenses.............................43
Section 3.05. Assumption and Modification Agreements....................................................44
Section 3.06. Realization Upon Defaulted Home Equity Loans..............................................44
Section 3.07. Optional Purchase of Defaulted Home Equity Loans..........................................45
Section 3.08. Trustee to Cooperate......................................................................46
Section 3.09. Servicing Compensation; Payment of Certain Expenses by Master Servicer....................46
Section 3.10. Annual Statement as to Compliance.........................................................47
Section 3.11. Annual Servicing Report...................................................................47
Section 3.12. Access to Certain Documentation and Information Regarding the Home Equity Loans...........47
Section 3.13. Maintenance of Certain Servicing Insurance Policies.......................................48
Section 3.14. Reports to the Securities and Exchange Commission.........................................48
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Section 3.15. Taxpayer Identification Number............................................................48
Section 3.16. Information Required by the Internal Revenue Service Generally and Reports of Foreclosures
and Abandonments of Mortgaged Property....................................................48
Section 3.17. Additional Covenants of HFC. HFC hereby agrees that:......................................49
Article IV
Servicing Certificate
Section 4.01. Servicing Certificate.....................................................................50
Article V
Distributions and Statements to Certificateholders; Rights of Certificateholders
Section 5.01. Distributions.............................................................................53
Section 5.02. Statements to Certificateholders..........................................................55
Article VI
The Certificates
Section 6.01. The Certificates..........................................................................58
Section 6.02. Registration of Transfer and Exchange of Certificates.....................................58
Section 6.03. Mutilated, Destroyed, Lost or Stolen Certificates.........................................64
Section 6.04. Persons Deemed Owners.....................................................................64
Section 6.05. Appointment of Paying Agent...............................................................64
Section 6.06. Actions of Certificateholders.............................................................65
Article VII
The Master Servicer and the Depositor
Section 7.01. Liability of the Master Servicer and the Depositor........................................66
Section 7.02. Merger or Consolidation of, or Assumption of the Obligations of, the Master Servicer or
the Depositor.............................................................................66
Section 7.03. Limitation on Liability of the Master Servicer, the Depositor and Others..................66
Section 7.04. Master Servicer Not to Resign.............................................................67
Section 7.05. Delegation of Duties......................................................................67
Article VIII
Events of Default
Section 8.01. Events of Default.........................................................................69
Section 8.02. Trustee to Act; Appointment of Successor..................................................70
Section 8.03. Notification to Certificateholders........................................................71
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Article IX
The Trustee
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Section 9.01. Duties of Trustee.........................................................................72
Section 9.02. Certain Matters Affecting the Trustee.....................................................73
Section 9.03. Trustee Not Liable for Certificates or Home Equity Loans..................................74
Section 9.04. Trustee May Own Certificates..............................................................75
Section 9.05. Master Servicer to Pay Trustee's Fees and Expenses........................................75
Section 9.06. Eligibility Requirements for Trustee......................................................76
Section 9.07. Resignation or Removal of Trustee.........................................................76
Section 9.08. Successor Trustee.........................................................................76
Section 9.09. Merger or Consolidation of Trustee........................................................77
Section 9.10. Appointment of Co-Trustee or Separate Trustee.............................................77
Section 9.11. Trustee May Enforce Claims Without Possession of Certificates.............................78
Section 9.12. Inspection of Mortgage Files..............................................................79
Section 9.13. Tax Returns...............................................................................79
Article X
Termination
Section 10.01. Termination..............................................................................80
Section 10.02. Additional Termination Requirements......................................................83
Section 10.03. Termination Upon Loss of REMIC Status....................................................83
Article XI
Miscellaneous Provisions
Section 11.01. Amendment................................................................................85
Section 11.02. Recordation of Agreement.................................................................86
Section 11.03. Limitation on Rights of Certificateholders...............................................86
Section 11.04. Governing Law............................................................................87
Section 11.05. Notices..................................................................................87
Section 11.06. Severability of Provisions...............................................................88
Section 11.07. Assignment...............................................................................88
Section 11.08. Certificates Nonassessable and Fully Paid................................................88
Section 11.09. Third-Party Beneficiaries................................................................88
Section 11.10. Counterparts.............................................................................88
Section 11.11. Effect of Headings and Table of Contents.................................................88
Section 11.12. Limitation on Voting of Preferred Stock..................................................88
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Exhibit A Form of Class A-1 Certificate.............................................................A-1
Exhibit B Form of Class A-2 Certificate.............................................................B-1
Exhibit C Form of Class A-3 Certificate.............................................................C-1
Exhibit D Form of Class A-4 Certificate.............................................................D-1
Exhibit E Form of Class M-1 Certificate.............................................................E-1
Exhibit F Form of Class M-2 Certificate.............................................................F-1
Exhibit G Form of Class R Certificate...............................................................G-1
Exhibit H Home Equity Loan Schedule.................................................................H-1
Exhibit I Form of Investment Letter.................................................................I-1
Exhibit J Form of Affidavit of Transfer of Residual Certificates....................................J-1
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This Pooling and Servicing Agreement, dated as of November 1, 1999,
among HFC REVOLVING CORPORATION, as Depositor, HOUSEHOLD FINANCE CORPORATION, as
Master Servicer, and BANK ONE, NATIONAL ASSOCIATION, as Trustee,
WITNESSETH THAT:
In consideration of the mutual agreements herein contained, the parties
hereto agree as follows:
Article I
Definitions
Section 1.01. Definitions. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the meanings specified in this Article.
Accrual Period: As to any Class and Distribution Date, the calendar
month preceding the month in which such Distribution Date occurs.
Additional Principal Distribution Amount: As to any Distribution Date,
any remaining amount that would otherwise be distributed to the Holders of the
Class R Certificates pursuant to Section 5.01(a).
Affiliate: As to any Person, any other Person controlling, controlled
by or under common control with such Person. For purposes of this definition,
"control" means the power to direct the management and policies of a Person,
directly or indirectly, whether through ownership of voting securities, by
contract or otherwise, and "controlling" and "controlled" shall have meanings
correlative to the foregoing.
Agreement: This Pooling and Servicing Agreement and all amendments
hereof and supplements hereto.
Applied Realized Loss Amount: As to any Class of Class M Certificates
and Distribution Date, the aggregate Realized Losses, if any, applied in
reduction of the Certificate Principal Balance of such Class on such
Distribution Date pursuant to Section 5.01(b).
Appraised Value: As to any Home Equity Loan, the appraised value of the
related Mortgaged Property based upon the appraisal made by or on behalf of the
applicable Seller at the time of origination of such Home Equity Loan; provided,
that if the Mortgage Loan was originated simultaneously with or not more than 12
months after a senior lien on the related Mortgaged Property, the lesser of the
Appraised Value at origination of the senior lien and the sales price, if any,
of the related Mortgaged Property at the time of origination of the senior lien.
Authorized Newspaper: A newspaper of general circulation in the Borough
of Manhattan, The City of New York, printed in the English language and
customarily published on each Business Day, whether or not published on
Saturdays, Sundays and holidays.
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Available Distribution Amount: As to any Distribution Date, the sum,
without duplication, of all amounts described in clauses (i) through (iv),
inclusive, of Section 3.02(b) received by the Master Servicer with respect to
the related Collection Period and deposited in the Collection Account.
BIF: The Bank Insurance Fund, as from time to time constituted, created
under the Financial Institutions Reform, Recovery and Enhancement Act of 1989
or, if at any time after the execution of this instrument the Bank Insurance
Fund is not existing and performing duties now assigned to it, the body
performing such duties on such date.
Book-Entry Certificate: Any Class A or Class M Certificate registered
in the name of the Depository or its nominee, ownership of which is reflected on
the books of the Depository or on the books of a person maintaining an account
with such Depository (directly or as an indirect participant in accordance with
the rules of such Depository).
Business Day: Any day other than (i) a Saturday or a Sunday or (ii) a
day on which banking institutions in the State of New York or Illinois are
required or authorized by law to be closed.
Certificate: A Class A Certificate, Class M Certificate or Class R
Certificate.
Certificate Owner: The Person who is the beneficial owner of a
Book-Entry Certificate.
Certificate Principal Balance: As to any Class (other than the Class R
Certificates) and any Determination Date, the Original Class Certificate Balance
thereof reduced by (i) all amounts previously distributed to the holders of such
Class and allocable to principal and (ii) in the case of each Class of Class M
Certificates, all Applied Realized Loss Amounts previously allocated to such
Class. The Class R Certificates have no Certificate Principal Balance.
Certificate Register and Certificate Registrar: The register maintained
and the registrar appointed pursuant to Section 6.02.
Certificateholder or Holder: The Person in whose name a Certificate is
registered in the Certificate Register, except that, solely for the purpose of
giving any consent, direction, waiver or request pursuant to this Agreement, (i)
any Certificate registered in the name of the Depositor (unless to the knowledge
of a Responsible Officer of the Trustee the Depositor is acting as trustee or
nominee for a Person who is not an Affiliate of the Depositor and who makes the
voting decision with respect to such Certificate) or the Master Servicer or any
Person known to a Responsible Officer of the Trustee to be an Affiliate of
either the Depositor or the Master Servicer and (ii) any Certificate for which
the Depositor (unless to the knowledge of a Responsible Officer of the Trustee
(A) the Depositor is acting as trustee or nominee for a Person who is not an
Affiliate of the Depositor and who makes the voting decision with respect to
such Certificate or (B) the Depositor is the owner of all the Certificates) or
the Master Servicer or any Person known to a Responsible Officer of the Trustee
to be an Affiliate (other than an Affiliate that has purchased any Certificate
on the Closing Date) of either the Depositor or the Master Servicer is the
Certificate Owner shall be deemed not to be outstanding and the Percentage
Interest evidenced thereby shall not be taken into account in determining
whether the requisite
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amount of Percentage Interests necessary to effect any such consent, direction,
waiver or request has been obtained.
Charge Off Amount: As to any Charged Off Home Equity Loan and
Collection Period, an amount equal to the amount of the Principal Balance that
the Master Servicer has charged off on its servicing records during such
Collection Period.
Charged Off Home Equity Loan: A defaulted Home Equity Loan that is not
a Liquidated Home Equity Loan and as to which (i) collection procedures are
ongoing and (ii) the Master Servicer has charged off all or a portion of the
related Principal Balance.
Class: Any of the Class A-1, Class A-2, Class A-3, Class A-4, Class
M-1, Class M-2 and Class R Certificates.
Class A-1 Certificate: Any Certificate designated as a Class A-1
Certificate on the face thereof, substantially in the form of Exhibit A hereto.
Class A-2 Certificate: Any Certificate designated as a Class A-2
Certificate on the face thereof, substantially in the form of Exhibit B hereto.
Class A-3 Certificate: Any Certificate designated as a Class A-3
Certificate on the face thereof, substantially in the form of Exhibit C hereto.
Class A-4 Certificate: Any Certificate designated as a Class A-4
Certificate on the face thereof, substantially in the form of Exhibit D hereto.
Class A-4 Lockout Distribution Amount: As to any Distribution Date, the
product of (i) the Class A-4 Lockout Percentage for such Distribution Date and
(ii) the Class A-4 Lockout Pro Rata Distribution Amount for such Distribution
Date.
Class A-4 Lockout Percentage: As to each Distribution Date, shall be as
follows:
Distribution Dates Lockout Percentage
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December 1999 - November 2002 0%
December 2002 - November 2004 45%
December 2004 - November 2005 80%
December 2005 - November 2006 100%
December 2006 and thereafter 300%
Notwithstanding the foregoing, if the aggregate Certificate Principal
Balance of the Class A Certificates, other than the Class A-4 Certificates, has
been reduced to zero, the Lockout Percentage shall be 100%.
Class A-4 Lockout Pro Rata Distribution Amount: As to any Distribution
Date, an amount equal to the product of (x) a fraction, the numerator of which
is the aggregate Certificate Principal Balance of the Class A-4 Certificates
immediately prior to such Distribution Date and the denominator of which is the
aggregate Certificate Principal Balance of the Class A
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Certificates immediately prior to such Distribution Date and (y) the Class A
Principal Distribution Amount for such Distribution Date.
Class A Certificateholder: A Holder of a Class A Certificate.
Class A Certificates: Any of the Class A-1, Class A-2, Class A-3 or
Class A-4 Certificates.
Class A Pass-Through Rate: With respect to each Class of Class A
Certificates, the per annum rate set forth below:
CLASS PASS-THROUGH RATE
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A-1 6.83%
A-2 6.95%
A-3 7.21%
A-4 7.21%
Class A Principal Distribution Amount: As to any Distribution Date (a)
prior to the Stepdown Date or with respect to which a Trigger Event is in
effect, the lesser of (i) 100% of the Principal Distribution Amount and (ii) the
aggregate Certificate Principal Balance of the Class A Certificates immediately
prior to such Distribution Date and (b) on or after the Stepdown Date and as
long as a Trigger Event is not in effect, the excess, if any, of (x) the
aggregate Certificate Principal Balance of the Class A Certificates immediately
prior to such Distribution Date, over (y) the lesser of (i) the product of (A)
57.00% and (B) the Pool Balance as of the last day of the related Collection
Period and (ii) the Pool Balance as of the last day of the related Collection
Period minus $2,633,666.
Class M-1 Certificate: Any Certificate designated as a Class M-1
Certificate on the face thereof, substantially in the form of Exhibit E hereto.
Class M-1 Pass-Through Rate: On any Distribution Date, a per annum rate
equal to the lesser of (a) 7.83% or (b) the weighted average Net Loan Rate of
the Home Equity Loans for such Distribution Date.
Class M-1 Principal Distribution Amount: As to any Distribution Date,
the excess, if any, of (a) the sum of (i) the aggregate Certificate Principal
Balance of the Class A Certificates (after taking into account the distribution
of the Class A Principal Distribution Amount on such Distribution Date) and (ii)
the aggregate Certificate Principal Balance of the Class M-1 Certificates
immediately prior to such Distribution Date, over (b) the lesser of (i) the
product of (A) 68.50% and (B) the Pool Balance as of the last day of the related
Collection Period and (ii) the Pool Balance as of the last day of the related
Collection Period minus $2,633,666.
Class M-2 Certificate: Any Certificate designated as a Class M-2
Certificate on the face thereof, substantially in the form of Exhibit F hereto.
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Class M-2 Pass-Through Rate: On any Distribution Date, a per annum rate
equal to the lesser of (a) 8.87% or (b) the weighted average Net Loan Rate of
the Home Equity Loans for such Distribution Date.
Class M-2 Principal Distribution Amount: As to any Distribution Date,
the excess, if any, of (a) the sum of (i) the aggregate Certificate Principal
Balance of the Class A Certificates (after taking into account the distribution
of the Class A Principal Distribution Amount on such Distribution Date), (ii)
the aggregate Certificate Principal Balance of the Class M-1 Certificates (after
taking into account the distribution of the related Class M-1 Principal
Distribution Amount on such Distribution Date), and (iii) the aggregate
Certificate Principal Balance of the Class M-2 Certificates immediately prior to
such Distribution Date, over (b) the lesser of (i) the product of (A) 81.00% and
(B) the Pool Balance as of the last day of the related Collection Period and
(ii) the Pool Balance as of the last day of the related Collection Period minus
$2,633,666.
Class M Certificateholder: A Holder of a Class M Certificate.
Class M Certificates: The Class M-1 and the Class M-2 Certificates.
Class M Pass-Through Rate: Either the Class M-1 Pass-Through Rate or
the Class M-2 Pass-Through Rate, as applicable.
Class R Certificate: Any Certificate designated as a Class R
Certificate on the face thereof, substantially in the form of Exhibit G hereto.
Closing Date: November 19, 1999.
Code: The Internal Revenue Code of 1986, as the same may be amended
from time to time (or any successor statute thereto).
Collection Account: The custodial account or accounts created and
maintained for the benefit of the Certificateholders pursuant to Section
3.02(b). The Collection Account shall be an Eligible Account.
Collection Period: As to any Distribution Date and Home Equity Loan,
the calendar month preceding the month in which such Distribution Date occurs.
Combined Loan-to-Value Ratio or CLTV: As to each Home Equity Loan, a
ratio, expressed as a percentage, the numerator of which is the sum of (a) the
original Principal Balance of the Home Equity Loan and (b) the aggregate unpaid
principal balance, at the time of origination of the Home Equity Loan, of all
other mortgage loans, if any, secured by senior liens on the related Mortgaged
Property, and the denominator of which is the Appraised Value of the Mortgaged
Property.
Corporate Trust Office: The principal office of the Trustee at which at
any particular time its corporate trust business shall be administered, which
office on the Closing Date is located at the address set forth in Section 11.05.
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Current Interest: As to each Class of Class A and Class M Certificates
and any Distribution Date, (i) the interest accrued at the applicable
Pass-Through Rate during the Accrual Period on the aggregate Certificate
Principal Balance of such Class of Certificates.
Cut-Off Date: As to each Home Equity Loan, the close of business on
October 31, 1999.
Cut-Off Date Pool Balance: The aggregate of the Cut-Off Date Principal
Balances of the Home Equity Loans.
Cut-Off Date Principal Balance: As to any Home Equity Loan, the unpaid
principal balance thereof as of the Cut-Off Date or, as to any Eligible
Substitute Home Equity Loan, as of the date of substitution of such Eligible
Substitute Home Equity Loan.
Defective Home Equity Loan: A Home Equity Loan subject to repurchase
pursuant to Section 2.02 or 2.04.
Definitive Certificates: As defined in Section 6.02(f).
Delinquent Home Equity Loan: Any Home Equity Loan that is 30 or more
days contractually delinquent.
Deposit Event: The lowering of the Master Servicer's short-term debt
rating below "P-1" by Moody's or "F-1" by Fitch.
Depositor: HFC Revolving Corporation, a Delaware corporation, and its
successors in interest.
Depository: The initial Depository shall be The Depository Trust
Company, the nominee of which is Cede & Co., as the registered Holder of Class A
and Class M Certificates. The Depository shall at all times be a "clearing
corporation" as defined in Section 8-102(3) of the UCC of the State of New York.
Depository Participant: A broker, dealer, bank or other financial
institution or other Person for whom from time to time the Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
Determination Date: As to any Distribution Date, the fifth Business Day
prior to such Distribution Date.
Distribution Date: The 20th day of each month (or if such 20th day is
not a Business Day, then the next succeeding Business Day), commencing December
20, 1999.
Electronic Ledger: The electronic master record of home equity loans
(including the Home Equity Loans) maintained by the Master Servicer.
Eligible Account: An account that is either (i) maintained with a
depository institution whose short-term debt obligations at the time of any
deposit therein are rated in the highest short-
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term debt rating category by the Rating Agencies, (ii) an account or accounts
maintained with a depository institution with a long-term unsecured debt rating
by each Rating Agency that is at least investment grade, provided that the
deposits in such account or accounts are fully insured by either the BIF or the
SAIF, (iii) a segregated trust account maintained on the corporate trust side
with the Trustee in its fiduciary capacity, or (iv) an account otherwise
acceptable to each Rating Agency, as evidenced by a letter to such effect from
each such Rating Agency to the Trustee, without reduction or withdrawal of the
then-current ratings of the Class A or Class M Certificates.
Eligible Substitute Home Equity Loan: A Home Equity Loan substituted by
the Depositor or the Master Servicer for a Defective Home Equity Loan pursuant
to Section 2.02 or 2.04, which on the date of such substitution must
(i) have a Principal Balance not substantially greater or less
than the Principal Balance of such Defective Home Equity Loan;
(ii) have a Loan Rate of not less than the Loan Rate of the
Defective Home Equity Loan and not more than 500 basis points in excess
thereof;
(iii) have a remaining term to maturity not more than six months
earlier or later than the remaining term to maturity of the Defective
Home Equity Loan;
(iv) comply with the representations and warranties set forth in
Section 2.04(b), to the extent such representations and warranties do
not pertain exclusively to the Home Equity Loans transferred on the
Closing Date;
(v) have a Combined Loan-to-Value Ratio that is not greater than
the Combined Loan-to-Value Ratio of the Defective Home Equity Loan as
of the date of origination of such Defective Home Equity Loan;
(vi) have a lien position at least equal to the lien position of
the Mortgage relating to the Defective Home Equity Loan; and
(vii) be the obligation of a Mortgagor whose credit profile is
substantially similar to that of the Mortgagor under the Defective Home
Equity Loan,
provided, however, that with respect to (i) through (vii) above, a home equity
loan may qualify as an Eligible Substitute Home Equity Loan if each of the
Rating Agencies consents to such substitution.
Events of Default: As defined in Section 8.01.
Extra Principal Distribution Amount: As to any Distribution Date, the
lesser of (x) the Monthly Excess Cashflow and (y) the Overcollateralization
Deficiency.
Fannie Mae: Fannie Mae, formerly known as The Federal National Mortgage
Association, or any successor thereto.
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FDIC: The Federal Deposit Insurance Corporation or any successor
thereto.
Final Scheduled Distribution Date: With respect to each Class of Class
A and Class M Certificates, as follows:
Class A-1 Certificates December 20, 2016
Class A-2 Certificates October 20, 2023
Class A-3 Certificates October 20, 2030
Class A-4 Certificates October 20, 2030
Class M-1 Certificates October 20, 2030
Class M-2 certificates October 20, 2030
Fitch: Fitch IBCA, Inc. or its successors in interest.
Foreclosure Profit: As to any Liquidated Home Equity Loan, the amount,
if any, by which (i) the aggregate of its Liquidation Proceeds less Liquidation
Expenses exceeds (ii) the Principal Balance thereof immediately prior to the
final recovery of its Liquidation Proceeds, together with the sum of (x) accrued
and unpaid interest thereon at the applicable Loan Rate from the date interest
was last paid through the date of receipt of the final Liquidation Proceeds and
(y) the related Charge Off Amounts.
Freddie Mac: Freddie Mac, formerly known as The Federal Home Loan
Mortgage Corporation, or any successor thereto.
HFC: Household Finance Corporation, a Delaware corporation, and its
successors.
Home Equity Loan: Such of the home equity loans (together with the
related Mortgage Notes and Mortgages) transferred and assigned to the Trustee
pursuant to Section 2.01 and pursuant to the Transfer Agreement as from time to
time are held as a part of the Trust, the home equity loans originally so held
being identified in the Home Equity Loan Schedule delivered on the Closing Date.
As applicable, the term Home Equity Loan shall be deemed to refer to the
Mortgaged Property that has been converted to ownership by the Master Servicer
prior to the final recovery of related Liquidation Proceeds.
Home Equity Loan Purchase Agreement: The home equity loan purchase
agreement dated as of November 1, 1999, between the Depositor and the Sellers
pursuant to which the Sellers convey to the Depositor all of their right, title
and interest in and to the unpaid Principal Balance of the Home Equity Loans,
including all interest and principal payments in respect thereof received on or
after the Cut-Off Date, and certain other rights with respect to the collateral
supporting the Home Equity Loans.
Home Equity Loan Schedule: As to any date, the schedule of Home Equity
Loans, including any Eligible Substitute Home Equity Loans, included in the
Trust on such date. The initial Home Equity Loan Schedule is the schedule
delivered by the Depositor to the Trustee on the Closing Date and attached
hereto as Exhibit H, which schedule sets forth as to each Home Equity Loan (i)
the Cut-Off Date Principal Balance, (ii) the Loan Rate, (iii) the lien position
of
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the related Mortgage and (iv) the CLTV. The Home Equity Loan Schedule will be
amended from time to time to reflect the removal of Home Equity Loans and the
addition of any Eligible Substitute Home Equity Loans to the Trust, and when so
amended shall include the information set forth above with respect to each
Eligible Substitute Home Equity Loan as of its related date of substitution.
Initial Home Equity Loan: Each Home Equity Loan transferred and
assigned to the Trust on the Closing Date.
Insurance Proceeds: Proceeds paid by any insurer pursuant to any
insurance policy covering a Home Equity Loan, or by the Master Servicer pursuant
to the last sentence of Section 3.04, net of any component thereof covering any
expenses incurred by or on behalf of the Master Servicer in connection with
obtaining such Insurance Proceeds and exclusive of any portion thereof that is
applied to the restoration or repair of the related Mortgaged Property, released
to the Mortgagor in accordance with the Master Servicer's normal servicing
procedures or required to be paid to any holder of a mortgage senior to such
Home Equity Loan.
Interest Carry Forward Amount: As to any Class of Class A or Class M
Certificates and any Distribution Date, the sum of (x) the amount, if any, by
which (i) the sum of the Current Interest and all prior unpaid Interest Carry
Forward Amounts for such Class as of the immediately preceding Distribution Date
exceeded (ii) the amount of the actual distribution with respect to interest
made to such Class on such Distribution Date plus (y) interest on such amount
calculated for the related Accrual Period at the related Pass-Through Rate in
effect with respect to such Class.
Interest Collections: As to any Distribution Date, the sum, without
duplication of:
(i) the portion allocable to interest of all scheduled
monthly payments on the Home Equity Loans received during the related
Collection Period, minus the Servicing Fee for the related Collection
Period;
(ii) all Net Liquidation Proceeds actually collected by the
Master Servicer during the related Collection Period (to the extent
such Net Liquidation Proceeds relate to interest);
(iii) the interest portion of the Purchase Price for any Home
Equity Loan repurchased from the Trust pursuant to the terms of this
Agreement during the related Collection Period; and
(iv) the interest portion of all Substitution Adjustment
Amounts with respect to the related Collection Period.
Lien: Any mortgage, deed of trust, pledge, conveyance, hypothecation,
assignment, participation, deposit arrangement, encumbrance, lien (statutory or
other), preference, priority right or interest or other security agreement or
preferential arrangement of any kind or nature whatsoever, including, without
limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing or the
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filing of any financing statement under the UCC (other than any such financing
statement filed for informational purposes only) or comparable law of any
jurisdiction to evidence any of the foregoing.
Liquidated Home Equity Loan: As to any Distribution Date, any Home
Equity Loan in respect of which the Master Servicer has determined as of the end
of the related Collection Period that all Liquidation Proceeds which it expects
to recover on such Home Equity Loan have been recovered (exclusive of any
possibility of a deficiency judgement).
Liquidation Expenses: Out-of-pocket expenses (exclusive of overhead)
that are incurred by the Master Servicer in connection with the liquidation of
any Home Equity Loan and not recovered under any insurance policy, such expenses
including, without limitation, reasonable legal fees and expenses, any
unreimbursed amount expended pursuant to Section 3.06 (including, without
limitation, amounts advanced to correct defaults on any mortgage loan that is
senior to such Home Equity Loan and amounts advanced to keep current or pay off
a mortgage loan that is senior to such Home Equity Loan) with respect to the
related Home Equity Loan and any related and unreimbursed expenditures for real
estate property taxes or for property restoration, preservation or insurance
against casualty loss or damage.
Liquidation Proceeds: Proceeds (including Insurance Proceeds) received
in connection with the liquidation of any Home Equity Loan, whether through
trustee's sale, foreclosure sale or otherwise.
Loan Rate: As to any Home Equity Loan and day, the per annum rate of
interest applicable under the related Mortgage Note to the calculation of
interest for such day on the Principal Balance.
Master Servicer: Household Finance Corporation, a Delaware corporation,
or its successor in interest, or any successor master servicer appointed as
herein provided.
Monthly Excess Cashflow: As to any Distribution Date, the excess, if
any, of (x) Interest Collections over (y) the Current Interest plus the Interest
Carry Forward Amount, if any, of all Classes of Class A and Class M Certificates
(after taking into account all distributions of interest on such Distribution
Date).
Moody's: Moody's Investors Service, Inc., or its successor in
interest.
Mortgage: The mortgage, deed of trust or other instrument creating a
first, second or third lien on an estate in fee simple interest in real property
securing a Home Equity Loan.
Mortgage File: The mortgage documents (including without limitation the
related Mortgage Note) listed in Section 2.01 pertaining to a particular Home
Equity Loan and any additional documents required to be added to the Mortgage
File pursuant to this Agreement, which documents may be physical documents or,
pursuant to the terms of Section 2.01, may be optical images or other
representations thereof.
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Mortgage Note: As to a Home Equity Loan, the mortgage note or other
evidence of indebtedness under which the related Mortgagor agrees to pay the
indebtedness evidenced thereby and secured by the related Mortgage.
Mortgaged Property: The underlying property securing a Home Equity
Loan.
Mortgagor: The obligor or obligors under a Mortgage.
Net Liquidation Proceeds: As to any Liquidated Home Equity Loan,
Liquidation Proceeds less Liquidation Expenses.
Net Loan Rate: As to any Home Equity Loan, the Loan Rate less the
Servicing Fee Rate.
Officer's Certificate: A certificate signed by the President, a Senior
Vice President, a Vice President, the Treasurer, Assistant Treasurer, Controller
or Assistant Controller of the Depositor or the Master Servicer, as the case may
be, and delivered to the Trustee.
Opinion of Counsel: A written opinion of counsel acceptable to the
Trustee, who may be internal counsel for the Master Servicer or the Depositor.
Original Class Certificate Balance: With respect to each Class of Class
A and Class M Certificates, the amount set forth below:
CLASS ORIGINAL CLASS CERTIFICATE BALANCE
------------ --------------------------------------------
A-1 $237,000,000
A-2 $ 62,000,000
A-3 $ 90,000,000
A-4 $ 42,920,000
M-1 $ 35,550,000
M-2 $ 32,920,000
Overcollateralization Amount: As to any Distribution Date, the excess,
if any, of (x) the Pool Balance as of the last day of the preceding Collection
Period over (y) the aggregate Certificate Principal Balance of all Classes of
Class A and Class M Certificates, calculated after taking into account all
distributions of principal on such Distribution Date (other than the Extra
Principal Distribution Amount), but prior to taking into account the application
of any Applied Realized Loss Amounts on such Distribution Date.
Overcollateralization Deficiency: As to any Distribution Date, the
excess, if any, of (x) the Targeted Overcollateralization Amount over (y) the
Overcollateralization Amount, calculated after taking into account all
distributions of principal on such Distribution Date (other than the Extra
Principal Distribution Amount), but prior to taking into account the application
of any Applied Realized Loss Amounts on such Distribution Date.
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Overcollateralization Release Amount: As to any Distribution Date, the
amount (but not in excess of the Principal Collections for such Distribution
Date) equal to the excess, if any, of (i) the Overcollateralization Amount
(assuming that 100% of the Principal Collections are applied on such
Distribution Date to the distribution of principal on the Class A and Class M
Certificates) over (ii) the Targeted Overcollateralization Amount.
Ownership Interest: As to any Certificate, any ownership or security
interest in such Certificate, including any interest in such Certificate as the
Holder thereof and any other interest therein, whether direct or indirect, legal
or beneficial, as owner or as pledgee.
Pass-Through Rate: Either the Class A Pass-Through Rate or the Class M
Pass-Through Rate, as the context requires.
Paying Agent: Any Person appointed as paying agent pursuant to Section
6.05.
Percentage Interest: For purposes of making distributions among
Certificates of the same Class of Class A or Class M Certificates, the
percentage obtained by dividing the principal denomination of such Certificate
by the aggregate of the principal denominations of all Certificates of such
Class. In the case of any Class R Certificate, the percentage interest set forth
on the face of such Class R Certificate.
Permitted Investments: One or more of the following (excluding any
callable investments purchased at a premium):
(i) direct obligations of, or obligations fully guaranteed as
to timely payment of principal and interest by, the United States or
any agency or instrumentality thereof, provided that such obligations
are backed by the full faith and credit of the United States;
(ii) repurchase agreements on obligations specified in clause
(i) maturing not more than three months from the date of acquisition
thereof, provided that the short-term unsecured debt obligations of the
party agreeing to repurchase such obligations are at the date of
acquisition rated by each Rating Agency in its highest short-term
rating category (which is "F-1" for Fitch and "P-1" for Moody's);
(iii) certificates of deposit, time deposits and bankers'
acceptances (which, if Moody's is a Rating Agency, shall each have an
original maturity of not more than 90 days and, in the case of bankers'
acceptances, shall in no event have an original maturity of more than
365 days) of any U.S. depository institution or trust company
incorporated under the laws of the United States or any state thereof
and subject to supervision and examination by federal and/or state
banking authorities, provided that the unsecured short-term debt
obligations of such depository institution or trust company at the date
of acquisition thereof have been rated by each of Moody's and Fitch in
its highest unsecured short-term debt rating category;
(iv) commercial paper (having original maturities of not more
than 270 days) of any corporation incorporated under the laws of the
United States or any state thereof
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which on the date of acquisition has been rated by Fitch and Moody's in
their highest short-term rating categories;
(v) short term investment funds sponsored by any trust company
or national banking association incorporated under the laws of the
United States or any state thereof which on the date of acquisition has
been rated by Fitch and Moody's in their respective highest rating
category for long-term unsecured debt, or any other short-term
investment fund the funds in which are invested in securities rated in
the highest rating category by Fitch and Moody's and which mature on or
prior to the next Distribution Date;
(vi) interests in any money market fund which at the date of
acquisition has a rating of "Aaa" by Moody's and "AAA" by Fitch or such
lower rating as will not result in the qualification, downgrading or
withdrawal of the then-current rating assigned to the Class A
Certificates by each Rating Agency; and
(vii) other obligations or securities that are acceptable to
each Rating Agency as a Permitted Investment hereunder and will not
result in a reduction in the then-current rating of the Class A or
Class M Certificates, as evidenced by a confirmation or letter to such
effect from such Rating Agency;
provided that no instrument described hereunder shall evidence either the right
to receive (a) only interest with respect to the obligations underlying such
instrument or (b) both principal and interest payments derived from obligations
underlying such instrument if such interest and principal payments provide a
yield to maturity at par greater than 120% of the yield to maturity at par of
the underlying obligations; and provided, further, that no instrument described
hereunder may be purchased at a price greater than par if such instrument may be
prepaid or called at a price less than its purchase price prior to its stated
maturity.
Permitted Transferee: Any Person other than (i) the United States, any
State or any political subdivision thereof or any agency or instrumentality of
any of the foregoing, (ii) a foreign government, international organization or
any agency or instrumentality of either of the foregoing, (iii) an organization
which is exempt from tax imposed by Chapter 1 of the Code (including the tax
imposed by Code section 511 on unrelated business taxable income) (except
certain farmers' cooperatives described in Code section 521) on any excess
inclusions (as defined in Code section 860E(c)(1)) with respect to any Class R
Certificate, (iv) rural electric and telephone cooperatives described in Code
section 1381(a)(2)(C), (v) a Person that is not a citizen or resident of the
United States, a corporation or partnership (including an entity treated as a
corporation or partnership for U.S. federal income tax purposes) created or
organized in or under the laws of the United States, any state thereof or the
District of Columbia, or an estate whose income from sources without the United
States is includible in gross income for United States federal income tax
purposes regardless of its connection with the conduct of a trade or business
within the United States, or a trust if a court within the United States is able
to exercise primary supervision over the administration of the trust and one or
more United States Persons have the authority to control all substantial
decisions of the trust, (vi) an "electing large partnership" within the meaning
of Code section 775 and (vii) any other Person so designated by the Trustee
based on an Opinion of Counsel to the effect that any transfer to such Person
may
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cause the Trust to fail to qualify as a REMIC at any time the Certificates are
outstanding. The terms "United States", "State" and "international organization"
shall have the meanings set forth in Code section 7701 or successor provisions.
A corporation will not be treated as an instrumentality of the United States or
of any State or political subdivision thereof if all of its activities are
subject to tax and, with the exception of the Freddie Mac, a majority of its
board of directors is not selected by such governmental unit.
Person: Any individual, corporation, partnership, joint venture,
association, limited liability company, joint-stock company, trust,
unincorporated organization, or government or any agency or political
subdivision thereof.
Pool Balance: As to any date, the aggregate of the outstanding
Principal Balances of all Home Equity Loans as of such date.
Pool Factor: As to any Distribution Date, the percentage, carried to
seven places, obtained by dividing the aggregate Certificate Principal Balance
of the Class A and Class M Certificates for such Distribution Date by the
aggregate Original Class Certificate Balance of the Class A and Class M
Certificates.
Preferred Stock: As defined in Section 11.12.
Principal Balance: As to any Home Equity Loan (other than a Liquidated
Home Equity Loan) and date, the related Cut-Off Date Principal Balance, minus
the sum of (x) all collections credited against the principal balance of such
Home Equity Loan in accordance with the terms of the related Mortgage Note and
(y) any related Charge Off Amounts credited against the principal balance of
such Home Equity Loan prior to such date. For purposes of this definition, a
Liquidated Home Equity Loan shall be deemed to have a Principal Balance equal to
the Principal Balance of the related Home Equity Loan immediately prior to the
final recovery of related Liquidation Proceeds and a Principal Balance of zero
thereafter.
Principal Collections: As to any Distribution Date, the sum, without
duplication, of:
(i) the principal portion of all scheduled monthly payments
on the Home Equity Loans received by the Master Servicer during the
related Collection Period;
(ii) the principal portion of the Purchase Price for any Home
Equity Loan repurchased from the Trust pursuant to the terms of this
Agreement during the related Collection Period;
(iii) the principal portion of all Substitution Adjustment
Amounts with respect to the related Collection Period;
(iv) all Net Liquidation Proceeds (excluding Foreclosure
Profits and Recovered Charge Off Amounts) actually received by the
Master Servicer during the related Collection Period (to the extent
such Net Liquidation Proceeds relate to principal); and
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(v) the principal portion of all other unscheduled collections
on the Home Equity Loans received by the Master Servicer during the
related Collection Period (including, without limitation, full and
partial prepayments of principal made by the Mortgagors), to the extent
not previously distributed.
Principal Distribution Amount: As to any Distribution Date, (i) the
sum, without duplication, of (x) the Principal Collections and (y) the Extra
Principal Distribution Amount, if any, minus (ii) for Distribution Dates
occurring on and after the Stepdown Date and for which a Trigger Event is not in
effect, the Overcollateralization Release Amount, if any.
Purchase Price: As to any Home Equity Loan purchased from the Trust on
any date pursuant to Section 2.02, 2.04 or 3.01 an amount equal to the sum of
(i) the Principal Balance thereof plus any related Charge Off Amount as of the
end of the related Collection Period preceding the date of repurchase, (ii)
accrued and unpaid interest to the end of such Collection Period computed on a
daily basis at the Net Loan Rate on the Principal Balance outstanding from time
to time and (iii) with respect to any Home Equity Loan the Master Servicer or
the related Seller, as the case may be, elects to repurchase or replace pursuant
to this Agreement, an amount sufficient so that after paying any taxes pursuant
to Section 860F(a)(l) or Section 860G(d)(l) of the Code with respect to such
purchase (including any taxes imposed on the Trust with respect to such
additional purchase price), the Trust will retain an amount equal to the sum of
clauses (i) and (ii).
Rating Agencies: Moody's and Fitch or their respective successors. If
such agency or a successor is no longer in existence, "Rating Agency" shall be
such statistical credit rating agency, or other comparable Person, designated by
the Depositor, notice of which designation shall be given to the Trustee.
References herein to the highest short term unsecured rating category of a
Rating Agency shall mean "P-1" or better in the case of Moody's and "F1+" in the
case of Fitch and in the case of any other Rating Agency shall mean such
equivalent ratings. References herein to the highest long-term rating category
of a Rating Agency shall mean "AAA" in the case of Fitch and "Aaa" in the case
of Moody's and in the case of any other Rating Agency, such equivalent rating.
Realized Losses: As to any (i) Charged Off Home Equity Loan and any
Collection Period (other than the Collection Period in which all or a portion of
such Charged Off Home Equity Loan becomes a Liquidated Home Equity Loan), the
related Charge Off Amount and (ii) Liquidated Home Equity Loan, the excess of
the related Principal Balance at the end of the Collection Period in which such
Liquidated Home Equity Loan became a Liquidated Home Equity Loan over the
portion of related Net Liquidation Proceeds that are allocable to principal in
accordance with the related Mortgage Note.
Record Date: The last day preceding the related Distribution Date;
provided, however, that following the date on which Definitive Certificates are
available pursuant to Section 6.02(f) the Record Date shall be the last day of
the month preceding the month in which the related Distribution Date occurs.
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Recovered Charge Off Amount: As to any Home Equity Loan that became a
Liquidated Home Equity Loan in a Collection Period, the amount, if any, by which
(i) its Net Liquidation Proceeds that are allocable to principal in accordance
with the related Mortgage Note exceeds (ii) its Principal Balance immediately
prior to foreclosure up to an amount of all related Charge Off Amounts, but in
no event less than zero.
Regular Certificates: The Class A and Class M Certificates.
Related Documents: As such term is defined in the Home Equity Loan
Purchase Agreement.
REMIC: A "real estate mortgage investment conduit" within the meaning
of Section 860D of the Code.
REMIC Certificate Maturity Date: The "latest possible maturity date" of
the Regular Certificates as that term is defined in Section 2.08 hereof.
REMIC Change of Law: Any proposed, temporary or final regulation,
revenue ruling, revenue procedure or other official announcement or
interpretation relating to the REMIC and the REMIC Provisions issued after the
Closing Date.
REMIC Provisions: Provisions of the Federal income tax law relating to
real estate mortgage investment conduits, which appear at Section 860A through
860G of Subchapter M of Chapter 1 of the Code, and related provisions, and
regulations promulgated thereunder, as the foregoing may be in effect from time
to time.
REO: A Mortgaged Property that is acquired by the Trust in a
foreclosure or by grant of deed in lieu of foreclosure.
Responsible Officer: When used with respect to the Trustee, any officer
in the Corporate Trustee Administration Department of the Trustee with direct
responsibility for the administration of this Agreement.
SAIF: The Savings Association Insurance Fund, as from time to time
constituted, created under the Financial Institutions Reform, Recovery and
Enhancement Act of 1989, or if at any time after the execution of this
instrument the Savings Association Insurance Fund is not existing and performing
duties now assigned to it, the body performing such duties on such date.
Sellers: Household Realty Corporation, Household Finance Corporation of
Alabama, Household Finance Corporation of California, Household Finance
Corporation II, Household Finance Corporation III, Household Finance Corporation
of West Virginia, Household Finance Realty Corporation of New York, Household
Financial Center Inc., Household Finance Realty Corporation of Nevada, Household
Finance Industrial Loan Company of Iowa, Household Finance Consumer Discount
Company and Household Industrial Finance Company.
Senior Enhancement Percentage: As to any Distribution Date, the
percentage obtained by dividing (x) the sum of (i) the aggregate Certificate
Principal Balance of the Class M-1 and
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Class M-2 Certificates and (ii) the Overcollateralization Amount, in each case
after taking into account the distribution of the Principal Distribution Amount
on such Distribution Date, by (y) the Pool Balance as of the last day of the
related Collection Period.
Senior Specified Enhancement Percentage: As to any Distribution Date
means 43.00%.
Servicer: As to each Home Equity Loan, the related Seller that sold
such Home Equity Loan to the Depositor pursuant to the Home Equity Loan Purchase
Agreement.
Servicing Certificate: A certificate completed by and executed on
behalf of the Master Servicer in accordance with Section 4.01.
Servicing Fee: The fee payable to the Master Servicer pursuant to
Section 3.09.
Servicing Fee Rate: A rate equal to 0.50% per annum.
Servicing Officer: Any officer of the Master Servicer or other
individual designated by an officer of the Master Servicer involved in, or
responsible for, the administration and servicing of the Home Equity Loans,
whose name and specimen signature appear on a list of servicing officers
furnished to the Trustee on the Closing Date by the Master Servicer, as such
list may be amended from time to time.
60 Day Delinquency Percentage: As to any Collection Period, (a) the
aggregate of the Principal Balances of all Home Equity Loans that are 60 or more
days contractually delinquent, in bankruptcy, in foreclosure and REO, over (b)
the Pool Balance as of the end of such Collection Period.
60 Day+ Rolling Average: As to any Distribution Date, the average of
the 60 Day Delinquency Percentage for each of the three (3) immediately
preceding Collection Periods.
Statistical Cut-Off Date: October 28, 1999.
Stepdown Date: The earlier to occur of:
(i) the later to occur of (x) the Distribution Date in May
2002 and (y) the first Distribution Date on which the Senior
Enhancement Percentage (after taking into account distributions of
principal on such Distribution Date) is greater than or equal to the
Senior Specified Enhancement Percentage, and
(ii) the Distribution Date on which the aggregate Certificate
Principal Balance of the Class A Certificates has been reduced to zero.
Stepped Up Enhancement Level: As to any Distribution Date, two (2)
times the amount of the 60 Day+ Rolling Average.
Substitution Adjustment Amount: As to any Defective Home Equity Loan
and the date on which a substitution thereof occurs pursuant to Sections 2.02 or
2.04, the sum of:
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(i) the excess, if any, of (a) the Principal Balance of such
Defective Home Equity Loan plus any related Charge Off Amount as of the
end of the related Collection Period preceding the date of substitution
(after the application of any principal payments received on such
Defective Home Equity Loan on or before the date of the substitution of
the applicable Eligible Substitute Home Equity Loan or Loans) over (b)
the aggregate Principal Balance of the applicable Eligible Substitute
Home Equity Loan or Loans, plus
(ii) accrued and unpaid interest to the end of such Collection
Period computed on a daily basis at the Net Loan Rate on the Principal
Balance of such Defective Home Equity Loan outstanding from time to
time.
Targeted Overcollateralization Amount: As to any Distribution Date, (x)
prior to the Stepdown date, 9.50% of the Cut-Off Date Pool Balance, and (y) on
and after the Stepdown Date and assuming a Trigger Event is not in effect, the
greater of (i) 19.00% of the Pool Balance as of the last day of the related
Collection Period and (ii) $2,633,666. If a Trigger Event is in effect on and
after the Stepdown Date, the Targeted Overcollateralization Amount shall be
equal to the Targeted Overcollateralization Amount for the immediately preceding
Distribution Date.
Transfer: Any direct or indirect transfer, sale, pledge, hypothecation
or other form of assignment of any Ownership Interest in a Certificate.
Transfer Agreement: The transfer agreement dated as of November 1,
1999, between the Trustee and each Seller pursuant to which the Sellers will
assign to the Trust all of their right, title and interest in and on the
Transferred Assets not otherwise transferred pursuant to the Home Equity Loan
Purchase Agreement.
Transfer Date: As to any Home Equity Loan transferred to or
retransferred from the Trust hereunder, the date on which such transfer or
retransfer is made under the terms hereof, which date shall be (i) in the case
of the Home Equity Loans originally listed on the Home Equity Loan Schedule, the
Closing Date, and (ii) in the case of any Eligible Substitute Home Equity Loan,
the date on which such Eligible Substitute Home Equity Loan is conveyed to the
Trust under the terms hereof.
Transferred Assets: All aspects, rights, title or interests of, in, to
or under the Home Equity Loans that are not otherwise conveyed hereunder
pursuant to Section 2.01, including, without limitation, all agreements,
instruments and other documents evidencing or governing the Mortgagor's
obligations under the Home Equity Loans or otherwise related thereto or
establishing or setting forth the terms and conditions thereof, and any
amendments or modifications thereto, and all property and collateral securing
the borrowers obligations thereunder.
Trigger Event: Any Distribution Date on which the 60 Day+ Rolling
Average equals or exceeds 50% of the Senior Enhancement Percentage; provided, a
Trigger Event shall not be in effect if the Senior Enhancement Percentage equals
or exceeds the Stepped Up Enhancement Level.
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Trust: The trust created by this Agreement and designated "Household
Home Equity Loan Trust 1999-1", the corpus of which consists of the Home Equity
Loans, such assets as shall from time to time be identified as deposited in the
Collection Account (exclusive of net earnings thereon), the Mortgage Notes and
other Mortgage File documents for the Home Equity Loans, any property that
secured a Home Equity Loan and that has become REO, the interest of the
Depositor in certain hazard insurance policies maintained by the Mortgagors or
the Master Servicer in respect of the Home Equity Loans, the Collection Account,
the proceeds of each of the foregoing and one share of Preferred Stock of the
Depositor.
Trustee: Bank One, National Association, a national banking
association, or any successor Trustee appointed in accordance with this
Agreement that has accepted such appointment in accordance with this Agreement.
UCC: The Uniform Commercial Code, as amended from time to time, as in
effect in any specified jurisdiction.
Widely-Held Certification: A certification delivered to the Trustee by
the underwriters of the Class A and Class M Certificates to the effect that one
or more Classes of Class A and/or Class M Certificates will be owned on such
date by 100 or more investors independent of the Sellers, the Trust, the
Depositor, and each other.
Section 1.02. Interest Calculations. All calculations of interest
hereunder that are made in respect of the Principal Balance of a Home Equity
Loan shall be made based on the number of days elapsed between the date that
interest was last paid on such Home Equity Loan and the date of receipt of the
related Mortgagor's most current payment. All calculations of interest on the
Class A and Class M Certificates shall be made on the basis of a 360-day year
consisting of twelve 30-day months. The calculation of the Servicing Fee shall
be made on the basis of a 360-day year consisting of twelve 30-day months.
Section 1.03. Usage of Terms. As to all terms in this Agreement the
singular includes the plural and the plural the singular; words importing any
gender include the other gender; references to "writing" include printing,
typing, lithography, optical imaging, 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; and the term "including"
means "including without limitation." The term "related Collection Period" as
used herein with respect to any Distribution Date shall mean the Collection
Period immediately preceding such Distribution Date and the term "preceding
Collection Period" as used herein with respect to any Distribution Date shall
mean the Collection Period preceding the related Collection Period for such
Distribution Date.
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Article II
Conveyance of Home Equity Loans; Original Issuance of Certificates;
Tax Treatment
Section 2.01. Acknowledgment; Conveyance of Home Equity Loans; Custody of
Mortgage Files.
(a) The Depositor, concurrently with the execution and delivery of this
Agreement, does hereby irrevocably transfer, assign, sell, set over and
otherwise convey to the Trustee for the benefit of the Certificateholders
without recourse (subject to Sections 2.02 and 2.04) (i) all of its right, title
and interest in and to the unpaid principal balance of each Home Equity Loan and
each Eligible Substitute Mortgage Loan, including all Interest Collections and
Principal Collections in respect of any such Home Equity Loan received after the
applicable Cut-Off Date pursuant to the Home Equity Loan Purchase Agreement;
(ii) property which secured such Home Equity Loan and which has been acquired by
foreclosure or deed in lieu of foreclosure; (iii) its interest in any insurance
policies in respect of the Home Equity Loans; (iv) all proceeds of any of the
foregoing; and (v) one share of the Depositor's Preferred Stock.
(b) The Depositor agrees to take, or to cause to be taken, such actions and
to execute such documents (including without limitation the filing of all
necessary continuation statements for the UCC-1 financing statement filed in the
State of Illinois (which shall have been filed as promptly as practicable, but
in no event later than 15 days following the Closing Date) describing the Home
Equity Loans and naming the Depositor as seller and the Trustee as buyer, and
any amendments or other filings to the UCC-1 financing statement required to
reflect a change in the UCC of the name or corporate structure of the Depositor,
or the filing of any additional UCC-1 financing statement due to any change in
the principal office of the Depositor) as are necessary to perfect and protect
the Certificateholders' interests in each Home Equity Loan and the proceeds
thereof (other than delivering to the Trustee possession of the Mortgage Files,
which possession will, subject to the terms hereof, be maintained by the
Servicers on behalf of the Master Servicer as custodian and bailee for the
Trustee). The parties hereto intend that the transactions set forth herein
constitute a sale and not a pledge by the Depositor to the Trust of all the
Depositor's right, title and interest in and to the Home Equity Loans and other
property as and to the extent described above. In the event the transactions set
forth herein are characterized as a pledge and not a sale, the Depositor hereby
grants to the Trustee a security interest in all of the Depositor's right, title
and interest in, to and under the Home Equity Loans and such other property, to
secure all of the Depositor's obligations hereunder, and this Agreement shall
constitute a security agreement under applicable law. With respect to the Home
Equity Loans sold by each Seller to the Depositor, the Master Servicer shall
cause such Seller to file as promptly as practicable, but in no event later than
15 days following the Closing Date, in the appropriate public filing office or
offices UCC-1 financing statements and continuation statements describing such
Home Equity Loans and naming such Seller as seller and the Depositor as buyer,
to file appropriate continuation statements thereto, to file amendments thereto
in the case of a name change or change in corporate structure and to file
appropriate additional UCC-1 financing statements, if any, if such Seller
changes its principal office.
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(c) In connection with such transfer and assignment by the Depositor, the
Master Servicer, acting through the Servicers hereby acknowledges that the
Servicers are holding, with respect to the Home Equity Loans transferred on the
Closing Date, and will hold, with respect to each Eligible Substitute Home
Equity Loan, on and from the applicable Transfer Date, as custodian and bailee
for the Trustee, the following documents or instruments with respect to each
such Home Equity Loan:
(i) the original Mortgage Note, endorsed in blank, with all intervening
endorsements showing a complete chain of title from the originator of such
Home Equity Loan to the Seller or a copy of such original Mortgage Note
with an accompanying lost note affidavit;
(ii) the original Mortgage, with evidence of recording thereon,
provided that if the original Mortgage has been delivered for recording to
the appropriate public recording office of the jurisdiction in which the
Mortgaged Property is located but has not yet been returned to the Seller
by such recording office, the Seller may hold a copy of such original
Mortgage; and
(iii) originals of any amendments to the Mortgage Note or Mortgage, any
modification or assumption agreements and any previous assignments of such
Home Equity Loan;
provided, however, that as to any Home Equity Loan, if, as evidenced by an
Opinion of Counsel delivered to and in form and substance satisfactory to the
Trustee, (x) an optical image or other representation of the related documents
specified in clauses (i) through (iii) above are enforceable in the relevant
jurisdictions to the same extent as the original of such document and (y) such
optical image or other representation does not impair the ability of an owner of
such Home Equity Loan to transfer its interest in such Home Equity Loan, such
optical image or other representation may be held by the Master Servicer, acting
through the Servicers, as custodian and bailee for the Trustee, in lieu of the
physical documents specified above.
(d) Except as hereinafter provided, the Master Servicer, acting through the
Servicers, shall be entitled to maintain possession of all of the foregoing
documents and instruments, shall not be required to deliver any of them to the
Trustee and shall not be required to record an assignment of Mortgage in favor
of the Trustee with respect to any Home Equity Loan. In the event, however, that
possession of any of such documents or instruments is required by any Person
(including the Trustee) acting as successor master servicer pursuant to Section
7.04 or 8.02 in order to carry out the duties of Master Servicer hereunder, then
such successor shall be entitled to request delivery, at the expense of the
Master Servicer, of such documents or instruments by the Master Servicer and to
retain such documents or instruments for servicing purposes; provided that the
Trustee or such servicers shall maintain such documents at such offices as may
be required by any regulatory body having jurisdiction over such Home Equity
Loans.
(e) The Master Servicer's right to maintain possession, directly or through
the Servicers, of the documents enumerated above shall continue so long as (i)
the long-term senior
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unsecured debt of HFC is assigned ratings of at least "A" by Fitch and "A3" by
Moody's, or such lower ratings as shall be acceptable to the Rating Agencies in
order to maintain their current ratings of the Class A and Class M Certificates,
and (ii) each of the Servicers remains an Affiliate of HFC. At such time as
either of the conditions specified in the preceding sentence is not satisfied,
as promptly as practicable, but in no event more than 90 days thereafter in the
case of clause (i) below and 60 days in the case of clause (ii) below, the
Master Servicer shall cause each Servicer, at such Servicer's expense or, at the
Master Servicer's discretion, the Master Servicer's expense, to (i) either (x)
record an assignment of Mortgage in favor of the Trustee (which may be a blanket
assignment if permitted by applicable law) with respect to each of the Home
Equity Loans being serviced by such Servicer in the appropriate real property or
other records or (y) deliver to the Trustee the assignment of such Mortgage in
favor of the Trustee in form for recordation, together with an Opinion of
Counsel addressed to the Trustee to the effect that recording is not required to
protect the Trustee's right, title and interest in and to the related Home
Equity Loan or to perfect a first priority security interest in favor of the
Trustee in the related Home Equity Loan, which Opinion of Counsel also shall be
reasonably acceptable to each of the Rating Agencies (as evidenced in writing),
and (ii) unless an Opinion of Counsel, reasonably acceptable to the Trustee and
the Rating Agencies (as evidenced in writing), is delivered to the Trustee to
the effect that delivery of the Mortgage Files is not necessary to protect the
Trustee's right, title and interest in and to the related Home Equity Loans or
to perfect a first priority security interest in favor of the Trustee in the
related Home Equity Loans, deliver the related Mortgage Files to the Trustee to
be held by the Trustee in trust, upon the terms herein set forth, for the use
and benefit of all present and future Certificateholders, and the Trustee shall
retain possession thereof except to the extent the Master Servicer or Servicers
require any Mortgage Files for normal servicing as contemplated by Section 3.08.
The Master Servicer shall cause the Servicers to appoint the Trustee their
attorney-in-fact to prepare, execute and record any assignments of Mortgages
required under this Section 2.01 in the event that the Servicers should fail to
do so on a timely basis.
(f) Within 90 days following delivery, if any, of the Mortgage Files to the
Trustee pursuant to the preceding subsection, the Trustee shall review each such
Mortgage File to ascertain that all required documents set forth in this Section
2.01 have been executed and received and that such documents relate to the Home
Equity Loans identified on the Home Equity Loan Schedule, and in so doing the
Trustee may rely on the purported due execution and genuineness of any signature
thereon. If within such 90-day period the Trustee finds any document
constituting a part of a Mortgage File not to have been executed or received or
to be unrelated to the Home Equity Loans identified in said Home Equity Loan
Schedule or, if in the course of its review, the Trustee determines that such
Mortgage File is otherwise defective in any material respect, the Trustee shall
promptly upon the conclusion of its review notify the Depositor and the Master
Servicer, and the Depositor and the Master Servicer shall have a period of 90
days after such notice within which to correct or cure any such defect;
provided, however, that if such defect shall not have been corrected or cured
within such 90-day period due to the failure of the related office of real
property or other records to return any document constituting a part of a
Mortgage File, the Depositor or the Master Servicer shall so notify the Trustee
and the period during which such defect may be corrected or cured shall be
extended for one additional 90-day period.
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(g) The Trustee shall have no responsibility for reviewing any Mortgage
File except as expressly provided in this Section 2.01. In reviewing any
Mortgage File pursuant to this Section 2.01, the Trustee shall have no
responsibility for determining whether any document is valid and binding,
whether the text of any assignment or endorsement is in proper or recordable
form (except, if applicable, to determine if the Trustee is the assignee or
endorsee), whether any document has been recorded in accordance with the
requirements of any applicable jurisdiction, or whether a blanket assignment is
permitted in any applicable jurisdiction, whether any Person executing any
document is authorized to do so or whether any signature thereon is genuine, but
shall only be required to determine whether a document has been executed, that
it appears to be what it purports to be and, where applicable, that it purports
to be recorded.
(h) The Master Servicer hereby confirms to the Trustee that on or prior to
the Closing Date and on or prior to the applicable Transfer Date with respect to
any Eligible Substitute Home Equity Loan, the portions of the Electronic Ledger
relating to such Home Equity Loans have been or will have been clearly and
unambiguously marked, and the appropriate entries have been or will have been
made in its general accounting records, to indicate that such Home Equity Loans
have been transferred to the Trustee and constitute part of the Trust in
accordance with the terms hereof.
Section 2.02. Acceptance by Trustee; Repurchase of Home Equity Loans;
Conveyance of Eligible Substitute Home Equity Loans.
(a) The Trustee hereby acknowledges receipt of all the right, title and
interest of the Depositor in and to the assets described Section 2.01(i) through
(v), and all of the right, title and interest of the Sellers in and to the
Transferred Assets pursuant to the Transfer Agreement, including but not limited
to the transfer and assignment of the Mortgage Notes and the Mortgages, and
declares that it holds and will hold such documents and interests and all
amounts received by it in trust, upon the terms herein set forth, for the use
and benefit of all present and future Certificateholders. If the time to cure
any defect of which the Trustee has notified the Depositor and the Master
Servicer following the Trustee's review of the Home Equity Loan Files pursuant
to Section 2.01 has expired or if any loss is suffered by the Trustee, on behalf
of the Certificateholders, in respect of any Home Equity Loan as a result of (i)
a defect in any document constituting a part of a Mortgage File or (ii) the
related Seller's retention of such Mortgage File or an assignment of Mortgage
not having been recorded, the Depositor shall, in the case of a defect in such
document, or the Master Servicer shall, in the case of a loss resulting from
such Seller's retention of a Mortgage File or assignment of Mortgage not having
been recorded, on the Business Day next preceding the Distribution Date in the
month following the end of the Collection Period in which the time to cure such
defect expired or such loss occurred, either (i) repurchase the related Home
Equity Loan (a "Defective Home Equity Loan") (including any property acquired in
respect thereof and any insurance policy or insurance proceeds with respect
thereto) from the Trust at a price equal to the Purchase Price which shall be
accomplished by deposit by the Depositor or the Master Servicer, as applicable,
in the Collection Account pursuant to Section 3.02 on such next preceding
Business Day, or (ii) so long as such Distribution Date occurs within two (2)
years following the Closing Date, remove such Defective Home Equity Loan from
the Trust and substitute in its place an Eligible Substitute Home Equity Loan or
Loans.
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(b) As to any Eligible Substitute Home Equity Loan or Loans, the Master
Servicer shall cause the related Seller to deliver to the Trustee with respect
to such Eligible Substitute Home Equity Loan or Loans an acknowledgment that the
related Seller is holding as custodian for the Trustee such documents and
agreements, if any, as are permitted to be held by the related Seller in
accordance with Section 2.01. An assignment of the Mortgage in favor of the
Trustee with respect to such Eligible Substitute Home Equity Loan or Loans shall
be required to be recorded in the appropriate real property or other records or
delivered to the Trustee with the Opinion of Counsel referred to in Section 2.01
under the same circumstances that all other assignments of Mortgage are required
to be recorded hereunder. For any Collection Period during which the Depositor
or the Master Servicer substitutes one or more Eligible Substitute Home Equity
Loans, the Master Servicer shall determine the Substitution Adjustment Amount.
The Depositor or the Master Servicer, as applicable, shall deposit the
Substitution Adjustment Amount in the Collection Account no later than the
Business Day next preceding the Distribution Date in the month following the end
of the Collection Period in which such substitution occurs. The Master Servicer
shall amend the Home Equity Loan Schedule to reflect the removal of the
Defective Home Equity Loan from the terms of this Agreement and the substitution
of the Eligible Substitute Home Equity Loan or Loans. Upon such substitution,
the Eligible Substitute Home Equity Loan or Loans shall be subject to the terms
of this Agreement in all respects, and the Depositor shall be deemed to have
made with respect to such Eligible Substitute Home Equity Loan or Loans, as of
the date of substitution, the covenants, representations and warranties set
forth in Section 2.04(b). The Trustee shall upon satisfaction of the conditions
in this subsection immediately effect the reconveyance of such Defective Home
Equity Loan so removed from the Trust to the Depositor or the Master Servicer,
as applicable. The procedures applied by the Depositor or the Master Servicer in
selecting each Eligible Substitute Home Equity Loan shall not be adverse to the
interests of the Certificateholders and shall be comparable to the selection
procedures applicable to the Home Equity Loans originally conveyed hereunder.
(c) Upon receipt by the Trustee of (i) in the case of a repurchase, written
notification signed by a Servicing Officer to the effect that the Purchase Price
for any such Defective Home Equity Loan has been so deposited in the Collection
Account or (ii) in the case of a substitution, (A) written notification signed
by a Servicing Officer to the effect that the Substitution Adjustment Amount, if
any, has been so deposited in the Collection Account and (B) an Officer's
Certificate reciting the transfer and assignment of the Eligible Substitute Home
Equity Loan(s) to the Trustee and, if required at such time, that the related
Mortgage File(s) for such Eligible Substitute Home Equity Loan(s) have been
delivered to the Trustee and the assignment(s) of Mortgage have been recorded,
the Trustee shall execute and deliver such instrument of transfer or assignment
presented to it by the Master Servicer, in each case without recourse, as shall
be necessary to vest in the Depositor or the Master Servicer, as applicable,
legal and beneficial ownership of such Defective Home Equity Loan (including any
property acquired in respect thereof or proceeds of any insurance policy with
respect thereto). It is understood and agreed that the obligation of the
Depositor or the Master Servicer to repurchase or substitute for (to the extent
permitted herein) any Defective Home Equity Loan shall constitute the sole
remedy respecting such defect available to Certificateholders or the Trustee
against the Depositor or the Master Servicer, and such obligation on the part of
the Master Servicer shall survive any resignation or termination of the Master
Servicer hereunder.
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(d) In connection with any Defective Home Equity Loan required to be
purchased or substituted for, the Master Servicer shall deliver to the Trustee
an Opinion of Counsel to the effect that such purchase or substitution will not
cause (i) any federal tax to be imposed on the Trust, including, without
limitation, any Federal tax imposed on "prohibited transactions" under Section
860F(a)(1) of the Code or on "contributions after the start-up day" under
Section 860G(d)(1) of the Code or (ii) the Trust to fail to qualify as a REMIC.
In the event that such opinion indicates that a purchase or substitution will
result in the imposition of a prohibited transaction tax, give rise to net
taxable income or be deemed a contribution to the REMIC after the "start-up day"
of the REMIC within the meaning of Section 860G(a)(9) of the Code, the Depositor
or the Master Servicer shall not be required to repurchase or substitute for any
such Defective Home Equity Loan unless and until the Master Servicer has
determined there is an actual or imminent default with respect thereto or that
such defect or breach adversely affects the enforceability of such Defective
Home Equity Loan.
Section 2.03. Representations, Warranties and Covenants of the Master
Servicer. The Master Servicer represents,
warrants and covenants that as of the Closing Date:
(i) The Master Servicer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and
has the corporate power to own its assets and to transact the business in
which it is currently engaged. The Master Servicer is duly qualified to do
business as a foreign corporation and is in good standing in each
jurisdiction in which the character of the business transacted by it or
properties owned or leased by it require 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 other) of the
Master Servicer;
(ii) The Master Servicer has the power and authority to make, execute,
deliver and perform its obligations under this Agreement and to perform its
obligations with respect to all of the transactions contemplated under this
Agreement, and has taken all necessary corporate action to authorize the
execution, delivery and performance of its obligations under this
Agreement. When executed and delivered, this Agreement will constitute the
legal, valid and binding obligation of the Master Servicer enforceable in
accordance with its terms, except as enforcement of such terms may be
limited by bankruptcy, insolvency or similar laws affecting the enforcement
of creditors' rights generally and by the availability of equitable
remedies (whether in a proceeding at law or in equity);
(iii) The Master Servicer is not required to obtain the consent of any
other Person or any consent, license, approval or authorization from, or
registration or declaration with, any governmental authority, bureau or
agency in connection with the execution, delivery, performance, validity or
enforceability of this Agreement, except for such consents, licenses,
approvals or authorizations, or registrations or declarations, as shall
have been obtained or filed, as the case may be;
(iv) The execution and delivery of this Agreement and the performance
of the transactions contemplated hereby by the Master Servicer will not
violate any provision of
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any existing law or regulation or any order or decree of any court
applicable to the Master Servicer or any provision of the Certificate of
Incorporation or Bylaws of the Master Servicer, or constitute a material
breach of any mortgage, indenture, contract or other agreement to which the
Master Servicer is a party or by which the Master Servicer may be bound;
and
(v) No litigation or administrative proceeding of or before any court,
tribunal or governmental body is currently pending, or to the knowledge of
the Master Servicer threatened, against the Master Servicer or any of its
properties or with respect to this Agreement or the Certificates which in
the opinion of the Master Servicer has a reasonable likelihood of resulting
in a material adverse effect on the transactions contemplated by this
Agreement.
The representations and warranties set forth in this Section 2.03 shall
survive the sale and assignment of the Home Equity Loans to the Trust. Upon
discovery of a breach of any representations and warranties which materially and
adversely affects the interests of the Certificateholders, the Person
discovering such breach shall give prompt written notice to the other parties.
Within 60 days (or such longer period as permitted by prior written consent of a
Responsible Officer of the Trustee) of its discovery or its receipt of notice of
such breach, the Master Servicer shall cure such breach in all material
respects.
Section 2.04. Representations and Warranties of the Depositor Regarding
this Agreement and the Home Equity Loans; Repurchases and Substitutions.
(a) The Depositor represents and warrants that as of the Closing Date:
(i) The Depositor is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and has the
corporate power to own its assets and to transact the business in which it
is currently engaged. The Depositor is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction in which
the character of the business transacted by it or properties owned or
leased by it require 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 other) of the Depositor;
(ii) The Depositor has the power and authority to make, execute,
deliver and perform its obligations under this Agreement and to perform its
obligations with respect to all of the transactions contemplated under this
Agreement, and has taken all necessary corporate action to authorize the
execution, delivery and performance of its obligations under this
Agreement. When executed and delivered, this Agreement will constitute the
legal, valid and binding obligation of the Depositor enforceable in
accordance with its terms, except as enforcement of such terms may be
limited by bankruptcy, insolvency or similar laws affecting the enforcement
of creditors' rights generally and by the availability of equitable
remedies (whether in a proceeding at law or in equity);
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(iii) The Depositor is not required to obtain the consent of any other
Person or any consent, license, approval or authorization from, or
registration or declaration with, any governmental authority, bureau or
agency in connection with the execution, delivery, performance, validity or
enforceability of this Agreement, except for such consents, licenses,
approvals or authorizations, or registrations or declarations, as shall
have been obtained or filed, as the case may be;
(iv) The execution and delivery of this Agreement and the performance
of the transactions contemplated hereby by the Depositor will not violate
any provision of any existing law or regulation or any order or decree of
any court applicable to the Depositor or any provision of the Certificate
of Incorporation or Bylaws of the Depositor, or constitute a material
breach of any mortgage, indenture, contract or other agreement to which the
Depositor is a party or by which the Depositor may be bound; and
(v) No litigation or administrative proceeding of or before any court,
tribunal or governmental body is currently pending, or to the knowledge of
the Depositor threatened, against the Depositor or any of its properties or
with respect to this Agreement or the Certificates which in the opinion of
the Depositor has a reasonable likelihood of resulting in a material
adverse effect on the transactions contemplated by this Agreement.
(b) The Depositor represents and warrants with respect to each Home Equity
Loan that as of the Closing Date (or to the extent expressly stated herein as of
such other time):
(i) This Agreement and the Transfer Agreement constitutes a valid
transfer and assignment to the Trustee of all right, title and interest of
the Depositor and the Sellers, respectively, in and to the Home Equity
Loans, all monies due or to become due with respect thereto, all proceeds
thereof, such funds as are from time to time deposited in the Collection
Account (excluding any investment earnings thereon) and all other property
specified in the definition of "Trust" as being part of the corpus of the
Trust conveyed to the Trust by the Depositor;
(ii) The information set forth in the Home Equity Loan Schedule with
respect to such Home Equity Loan is true and correct in all material
respects;
(iii) Immediately prior to the transfer and assignment by the related
Seller to the Depositor pursuant to the Home Equity Loan Purchase
Agreement, the Home Equity Loan has not been assigned or pledged, and the
related Seller has good and marketable title thereto, and the related
Seller is the sole owner and holder of such Home Equity Loan free and clear
of any and all liens, claims, encumbrances, participation interests,
equities, pledges, charges or security interests of any nature, and has
full right and authority, under all governmental and regulatory bodies
having jurisdiction over the ownership of such Home Equity Loan, to
transfer and assign the same pursuant to the Home Equity Loan Purchase
Agreement;
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(iv) Immediately prior to the transfer and assignment by the Depositor
to the Trustee pursuant to this Agreement, the Home Equity Loan has not
been assigned or pledged, and the Depositor has good and marketable title
thereto, and the Depositor is the sole owner and holder of such Home Equity
Loan free and clear of any and all liens, claims, encumbrances,
participation interests, equities, pledges, charges or security interests
of any nature, and has full right and authority, under all governmental and
regulatory bodies having jurisdiction over the ownership of such Home
Equity Loan, to transfer and assign the same pursuant to this Agreement;
(v) The related Mortgage is a valid and subsisting first or second
lien, as set forth on the Home Equity Loan Schedule with respect to such
Home Equity Loan, on the property therein described, and the related
Mortgaged Property is free and clear of all encumbrances and liens having
priority over the first or second lien, as applicable, of such Mortgage
except for liens for (a) real estate taxes and special assessments not yet
delinquent; (b) any first and if applicable, second mortgage loan secured
by such Mortgaged Property and specified on the Home Equity Loan Schedule;
(c) covenants, conditions and restrictions, rights of way, easements and
other matters of public record as of the date of recording that are
acceptable to mortgage lending institutions generally; and (d) other
matters to which like properties are commonly subject which do not
materially interfere with the benefits of the security intended to be
provided by such Mortgage;
(vi) To the best knowledge of the Depositor, there is no valid offset,
defense or counterclaim of any obligor under the Mortgage;
(vii) To the best knowledge of the Depositor, there is no delinquent
recording or other tax or fee or assessment lien against the related
Mortgaged Property;
(viii) To the best knowledge of the Depositor, there is no proceeding
pending or threatened for the total or partial condemnation of the related
Mortgaged Property, and such property is free of material damage and is in
good repair;
(ix) There are no mechanics' or similar liens or claims which have been
filed for work, labor or material affecting the related Mortgaged Property
which are, or may be, liens prior or equal to the lien of the related
Mortgage, except liens which are fully insured against by the title
insurance policy referred to in clause (xiii);
(x) As of the Statistical Cut-Off Date for the Initial Home Equity
Loans (or as of the applicable Transfer Date for any Eligible Substitute
Home Equity Loan), no scheduled monthly payment is more than 29 days
delinquent (measured on a contractual basis); and with respect to the
Initial Home Equity Loans, none of the Initial Home Equity Loans were 30-59
days delinquent (measured on a contractual basis) and none of the Home
Equity Loans were 60-89 days delinquent (measured on a contractual basis);
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(xi) The related Mortgage File contains each of the documents and
instruments specified to be included therein (including an appraisal (which
may be an appraisal prepared using a statistical data base));
(xii) The related Mortgage Note and the related Mortgage at the time
they were made complied in all material respects with applicable state and
federal laws, including, without limitation, usury, truth-in-lending, real
estate settlement procedures, consumer credit protection, equal credit
opportunity or disclosure laws applicable to the Home Equity Loan;
(xiii) A lender's title insurance policy or binder was issued on the
date of origination of each Home Equity Loan for home equity loans in
excess of $50,000, and each such policy is valid and remains in full force
and effect, and a title search or other assurance of title customary in the
relevant jurisdiction was obtained with respect to each Home Equity Loan as
to which no title insurance policy or binder was issued;
(xiv) The related Mortgaged Property is not a mobile home or a
manufactured housing unit that is not permanently attached to its
foundation;
(xv) As of the Statistical Cut-Off Date for the Initial Home Equity
Loans, no more than 0.60% of such Home Equity Loans (by Pool Balance as of
the Statistical Cut-Off Date) are secured by Mortgaged Properties located
in one United States postal zip code;
(xvi) As of the Statistical Cut-Off Date, the Combined Loan-to-Value
Ratio for each Initial Home Equity Loan was not in excess of 115%;
(xvii) No selection procedure reasonably believed by the Depositor to
be adverse to the interests of the Certificateholders was utilized in
selecting the Home Equity Loan;
(xviii) The Depositor has not transferred the Home Equity Loans to the
Trust with any intent to hinder, delay or defraud any of its creditors;
(xix) Each Mortgage Note and each Mortgage is in substantially the form
previously provided to the Trustee by the Depositor and each Home Equity
Loan is an enforceable obligation of the related Mortgagor;
(xx) The Depositor has not received a notice of default of any senior
mortgage loan with respect to the related Mortgaged Property that has not
been cured by a party other than the related Servicer;
(xxi) The Home Equity Loan does not have an original term to maturity
in excess of 360 months; and as of the Statistical Cut-Off Date for the
Initial Home Equity Loans, the weighted average remaining term to maturity
of the Home Equity Loans on a contractual basis is approximately 277.77
months.
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(xxii) The related Mortgaged Property consists of a single parcel of
real property with a one-to-four unit single family residence erected
thereon, or an individual condominium unit, planned unit development unit
or townhouse, generally approvable by Fannie Mae;
(xxiii) As of the Statistical Cut-Off Date, the minimum Principal
Balance of any Initial Home Equity Loan was $5,186.75 the maximum Principal
Balance was $237,060.29 and the weighted average Principal Balance was
$67,337.88;
(xxiv) As of the Statistical Cut-Off Date, approximately 85.78% (by
Pool Balance as of the Statistical Cut-Off Date) and 14.22% (by Pool
Balance as of the Statistical Cut-Off Date) of the Initial Home Equity
Loans are first and second liens, respectively; and
(xxv) The related Mortgage is a "qualified mortgage" under the REMIC
Provisions.
(c) It is understood and agreed that the representations and warranties set
forth in this Section 2.04 shall survive the transfer and assignment of the Home
Equity Loans to the Trustee. Upon discovery by the Depositor, the Master
Servicer or the Trustee of a breach of any foregoing representations and
warranties, without regard to any limitation set forth in such representation or
warranty concerning the knowledge of the Depositor as to the facts stated
therein, which materially and adversely affects the interests of the
Certificateholders in the related Home Equity Loan, the person discovering such
breach shall give prompt written notice to the other parties and each Rating
Agency. Within 60 days of its discovery or its receipt of notice of such breach,
or, with the prior written consent of a Responsible Officer of the Trustee, such
longer period not to exceed 90 days specified in such consent, the Depositor or,
as necessary, the Master Servicer shall cure such breach in all material
respects. With regard to any such breach of the representations and warranties
set forth in Section 2.04(b), unless, at the expiration of such 60 day or longer
period, such breach has been cured in all material respects or otherwise does
not exist or continue to exist, the Depositor or the Master Servicer shall, not
later than the Business Day next preceding the Distribution Date in the month
following the end of the Collection Period in which any such cure period
expired, either (i) repurchase such Defective Home Equity Loan (including any
property acquired in respect thereof and any insurance policy or insurance
proceeds with respect thereto) or (ii) remove such Home Equity Loan from the
Trust and substitute in its place an Eligible Substitute Home Equity Loan or
Loans, in the same manner and subject to the same conditions as set forth in
Section 2.02; provided, that if such breach causes the Defective Home Equity
Loan to fail to be a "qualified mortgage" or "qualified replacement mortgage"
within the meaning of Section 860G of the Code, such repurchase or substitution
shall occur no later than the last day of the cure period. Upon making any such
repurchase or substitution the Depositor or the Master Servicer, as applicable,
shall be entitled to receive an instrument of assignment or transfer from the
Trustee to the same extent as set forth in Section 2.02 with respect to the
repurchase or replacement of Home Equity Loans under that Section. It is
understood and agreed that the obligation of the Depositor or the Master
Servicer to purchase or substitute for any such Defective Home Equity Loan (or
property acquired in respect thereof) shall constitute the sole remedy against
the Depositor or the Master Servicer respecting
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such breach of the foregoing representations or warranties available to
Certificateholders or the Trustee against the Depositor or the Master Servicer,
and such obligation on the part of the Master Servicer shall survive any
resignation or termination of the Master Servicer hereunder.
Section 2.05. Execution and Authentication of Certificates. The Trustee on
behalf of the Trust shall cause to be executed, authenticated and delivered on
the Closing Date to or upon the order of the Depositor, in exchange for the Home
Equity Loans, concurrently with the assignment and conveyance to the Trustee of
the Home Equity Loans, each Class of Class A and Class M Certificates in
authorized denominations and the Class R Certificates, together evidencing the
ownership of the entire Trust.
Section 2.06. Designation of Interests in the REMIC. Each Class of Class A
and Class M Certificates is hereby designated as a "regular interest" in the
REMIC and the Class R Certificates are hereby designated as the single "residual
interest" in the REMIC.
Section 2.07. Designation of Start-up Day. The Closing Date is hereby
designated as the "start-up day" of the REMIC within the meaning of Section
860G(a)(9) of the Code.
Section 2.08. REMIC Certificate Maturity Date. Solely for purposes of
satisfying Section 1.860G-1(a)(4)(iii) of the Treasury Regulations, the "latest
possible maturity date" of each Class of Class A and Class M Certificates is the
Distribution Date in October 2030.
Section 2.09. Miscellaneous REMIC Provisions.
(a) The parties intend that the Trust formed hereunder shall constitute,
and that the affairs of the Trust shall be conducted so as to qualify it as a
"real estate mortgage investment conduit" as defined in and in accordance with
the REMIC Provisions. In furtherance of such intention, the Master Servicer
covenants and agrees that it shall, to the extent permitted by applicable law,
act as agent (and the Master Servicer is hereby appointed to act as agent) on
behalf of the Trust and that in such capacity it shall:
(i) prepare, or cause to be prepared, for the Trustee's signature and
file, or cause to be filed, all required federal and state tax returns for
the REMIC using a calendar year as the taxable year for the Trust when and
as required by the REMIC Provisions and other applicable federal income tax
laws;
(ii) prepare and forward, or cause to be prepared and forwarded, to
the Certificateholders all information reports as and when required to be
provided to them in accordance with the REMIC Provisions and other
applicable Federal income tax laws;
(iii) conduct the affairs of the Trust at all times that any
Certificates are outstanding so as to maintain the status thereof as a
REMIC under the REMIC Provisions;
(iv) notwithstanding any other provision of this Agreement (other than
as expressly provided in Article X) not knowingly or intentionally take any
action that
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would cause, or omit to take any action that would or might reasonably
prevent, the termination of the REMIC status of the Trust;
(v) so long as it holds the Class R Certificates, serve as Tax Matters
Person pursuant to Treasury Regulation Section 1.860F-4(d) for the Trust;
(vi) notwithstanding any other provisions of the Agreement (other than
Sections 2.02, 2.04 and 3.01(b) with respect to the purchase of Home Equity
Loans under certain circumstances) knowingly or intentionally take any
action that would cause or would create a material risk of causing, the
Trust to be subject to tax under Sections 860F(a)(l) or 860G(d)(l) of the
Code; and
(vii) pay (if permitted by applicable law) on the REMIC's behalf the
amount of any federal income tax, including prohibited transaction penalty
taxes or taxes on contributions to the REMIC after the startup day, imposed
on the Trust when and as the same shall be due and payable (but such
obligation shall not prevent the Master Servicer or any other appropriate
Person from contesting at its own expense any such tax in appropriate
proceedings and shall not prevent the Master Servicer from withholding
payment of such tax, if permitted by law, pending the outcome of such
proceedings); provided, that, if any such tax shall be paid by the Master
Servicer, it shall thereafter be reimbursed from amounts otherwise
distributable to the Holders of the Class R Certificates, on a pro rata
basis, and the Master Servicer is hereby authorized to retain from amounts
otherwise distributable to the Holders of the Class R Certificates on any
Distribution Date sufficient funds to reimburse the Master Servicer for the
payment of any such tax (to the extent that the Master Servicer has not
been previously reimbursed or indemnified therefor).
(b) If the Master Servicer is not permitted, by applicable law, to fulfill
any of its duties described in this Section, the Trustee shall carry out such
duties pursuant to the instructions of the Master Servicer. The Trustee
covenants and agrees that it shall make an election for the Trust to be treated
as a REMIC on Internal Revenue Service Form 1066 for its first taxable year, in
accordance with the REMIC Provisions.
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Article III
Administration and Servicing of Home Equity Loans
Section 3.01. The Master Servicer.
(a) The Master Servicer shall, or shall cause the Servicers to, service and
administer the Home Equity Loans in a manner consistent with the terms of this
Agreement and with general industry practice and shall have full power and
authority, acting alone or through the Servicers, to do any and all things in
connection with such servicing and administration which it may deem necessary or
desirable, it being understood, however, that the Master Servicer shall at all
times remain responsible to the Trustee and the Certificateholders for the
performance of its duties and obligations hereunder in accordance with the terms
hereof. Any amounts received by the related Servicer in respect of a Home Equity
Loan shall be deemed to have been received by the Master Servicer whether or not
actually received by it. Without limiting the generality of the foregoing, the
Master Servicer shall continue, and is hereby authorized and empowered by the
Trustee, to execute and deliver, on behalf of itself, the Certificateholders and
the Trustee or any of them, 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 Home Equity Loans and with respect
to the Mortgaged Properties. Upon the written request of the Master Servicer,
the Depositor and the Trustee shall furnish the Master Servicer with any powers
of attorney and other documents necessary or appropriate to enable the Master
Servicer to carry out its servicing and administrative duties hereunder. The
Master Servicer in such capacity may also consent to the placing of a proposed
lien senior to that of the Mortgage on the related Mortgaged Property, provided
that such proposed lien is not secured by a note providing for negative
amortization and:
(x) (i) the Mortgage relating to the Home Equity Loan was in a first
lien position as of the Cut-Off Date and was in a first lien position
immediately prior to the placement of the proposed senior lien, and (ii)
the ratio of (a) the sum of the Principal Balance of the Home Equity Loan
and the principal balance of the mortgage loan to be secured by the
proposed senior lien to (b) the Appraised Value of the Mortgaged Property
at the time the Home Equity Loan was originated is not greater than (1)
with respect to Home Equity Loans with an original CLTV of 85% or less,
85%, (2) with respect to Home Equity Loans with an original CLTV in excess
of 85% and not greater than 95%, 95% and (3) with respect to Home Equity
Loans with an original CLTV in excess of 95% and not greater than 115%,
115%.
(y) (i) the Mortgage relating to the Home Equity Loan was in a first or
second lien position at the time the related Home Equity Loan was conveyed
to the Trust and, immediately following the placement of such proposed
senior lien, such Mortgage will be in a second or, if such Mortgage was in
a second lien position at the time the related Home Equity Loan was
conveyed to the Trust, a third lien position and (ii) the principal balance
of the mortgage loan to be secured by the proposed senior lien and the rate
at which interest accrues thereon are no
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greater than those of the related Home Equity Loan as of the date it was
first conveyed to the Trust; or
(z) the Mortgage relating to the Home Equity Loan was in a second lien
position as of the Cut-Off Date and the proposed senior lien secures a
mortgage loan that refinances an existing first mortgage loan and the
outstanding principal amount of such mortgage loan immediately following
such refinancing and the rate at which interest accrues thereon are not
greater than that of such existing first mortgage loan at the date of such
refinancing;
(b) If (i) foreclosure proceedings are commenced with respect to any Home
Equity Loan with respect to which the Master Servicer has consented to the
placing of a subsequent senior lien pursuant to clause (x) in Section 3.01(a),
or (ii) any loss is suffered by the Trustee on behalf of the Certificateholders
in respect of any Home Equity Loan as a result of (x) a failure to file on or
within 15 days following the Closing Date the UCC-l financing statements
referred to in Section 2.01 or (y) a failure to publish on or prior to the
Closing Date such notices reflecting the sale of the Home Equity Loans as are
described in Section 3440.1(h) of the California Civil Code, then the Master
Servicer shall repurchase or substitute for any adversely affected Home Equity
Loan on the Business Day preceding the next Distribution Date following the end
of the Collection Period during which such foreclosure proceedings were
commenced or such losses were suffered. Such repurchase or substitution shall be
accomplished in the same manner and subject to the same conditions as set forth
in Section 2.02. Upon making any such repurchase or substitution the Master
Servicer shall be entitled to receive an instrument of assignment or transfer
from the Trustee to the same extent as set forth in Section 2.02.
(c) Upon the request of a Mortgagor or at the Master Servicer's own
initiative, the Master Servicer (or the related Servicer on behalf of the Master
Servicer) may waive, modify or vary any term of any Home Equity Loan or consent
to the postponement of strict compliance with any such term or in any manner
grant indulgence to any Mortgagor if:
(i) in the Master Servicer's (or such Servicer's) good faith
determination such waiver, modification, postponement or indulgence is not
materially adverse to the interests of the Certificateholders;
(ii) the Mortgagor is in default with respect to the Home Equity Loan,
or such default is, in the judgment of the Master Servicer (or such
Servicer), imminent; and
(iii) such waiver, modification, postponement or indulgence would not
cause the Trust to be disqualified as a REMIC or otherwise cause a tax to
be imposed on the Trust.
(d) Upon receipt of a certificate from the Sellers to the effect that in
order to reduce the likelihood of prepayment of the Home Equity Loans due to the
availability to Mortgagors of alternative home equity loan financing
opportunities, prudent business practice requires a modification to the terms of
the Mortgage Notes pursuant to the provision designated "Termination and Changes
in the Agreement" or "Changes in the Agreement", as the case may
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be, of the forms thereof, the Master Servicer will deliver to the Trustee and
each of the Rating Agencies, prior to the effectiveness of any such
modifications, an Opinion of Counsel to the effect that such modifications will
not (i) be materially adverse to the interests of the Certificateholders, or
(ii) affect the status of the Trust as a REMIC or otherwise cause a tax to be
imposed on the Trust. Following the delivery of such opinion the proposed
modifications may be made to the Mortgage Notes. In the event such opinion is
not delivered prior to the time such modifications would be effective, the
Master Servicer shall cause the Sellers to refrain from making any such
modifications.
(e) Notwithstanding anything to the contrary contained herein, any other
changes to the terms of a Home Equity Loan that may adversely affect the status
of the Trust Fund as a REMIC or otherwise cause a tax to be imposed on the
Trust, may be agreed to by the Master Servicer (or the related Servicer on
behalf of the Master Servicer) if (i) the Master Servicer (A) has determined
that such changes are necessary to avoid prepayment of the Home Equity Loan as a
result of refinancing provided by another lender and that such changes are
consistent with prudent business practice as evidenced by an Officer's
Certificate signed by a Servicing Officer to such effect and (B) repurchases
such Home Equity Loan on the Business Day next preceding the Distribution Date
following the end of the Collection Period during which such determination was
made and prior to the effectiveness of such changes, and (ii) the aggregate
Principal Balance of the Home Equity Loans so repurchased under this Section
3.01(e) and Section 3.07 does not exceed 4.99% of the Cut-Off Date Pool Balance.
In the event that such repurchase does not occur, no changes may be made to the
terms of such Home Equity Loan. Such repurchase shall be accomplished in the
same manner and subject to the same conditions set forth in Section 2.02 and the
payment by the Master Servicer of any tax imposed on the Trust in accordance
with Section 2.09(a)(vii), and shall be made by repurchase and not by the
substitution of loans. Upon making any such repurchase, the Master Servicer
shall be entitled to receive an instrument of assignment or transfer from the
Trustee to the same extent as set forth in Section 2.02.
(f) The relationship of the Master Servicer (and of any successor to the
Master Servicer as servicer under this Agreement) to the Trustee under this
Agreement is intended by the parties to be that of an independent contractor and
not that of a joint venturer, partner or agent.
(g) In the event that the rights, duties and obligations of the Master
Servicer are terminated hereunder, any successor to the Master Servicer in its
sole discretion may, to the extent permitted by applicable law, terminate the
existing subservicer arrangements with any Servicer or assume the terminated
Master Servicer's rights under such subservicing arrangements which termination
or assumption will not violate the terms of such arrangements.
Section 3.02. Collection of Certain Home Equity Loan Payments.
(a) The Master Servicer shall make reasonable efforts to collect all
payments called for under the terms and provisions of the Home Equity Loans, and
shall, to the extent such procedures shall be consistent with this Agreement,
follow such collection procedures as it follows with respect to home equity
loans in its servicing portfolio comparable to the Home
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Equity Loans. Consistent with, and without limiting the generality of, the
foregoing, the Master Servicer may in its discretion (i) waive any late payment
charge or any assumption fees or other fees that may be collected in the
ordinary course of servicing the Home Equity Loans, (ii) arrange with a
Mortgagor a schedule for the payment of delinquent amounts, so long as such
arrangement is consistent with the Master Servicer's policies with respect to
the home equity loans it owns or services, or (iii) and treat a Home Equity Loan
as current if the Mortgagor has made one scheduled payment to cure the
delinquency status of such Home Equity Loan.
(b) The Master Servicer shall establish and maintain with the Trustee a
separate trust account (the "Collection Account") titled "Bank One, National
Association, as Trustee, in trust for the registered holders of Closed-End Home
Equity Loan Asset Backed Certificates, Series 1999-1". In the event that a
successor Trustee is appointed as provided in Section 9.07, a new Collection
Account shall be promptly established at and maintained by such successor
Trustee, and the title of the new Collection Account shall be "[Successor
Trustee], as Trustee, in trust for the registered holders of Closed-End Home
Equity Loan Asset Backed Certificates, Series 1999-1", and any amounts in the
old Collection Account shall be transferred to the new Collection Account. The
Collection Account shall be an Eligible Account. No later than 12:00 noon
Chicago time one (1) Business Day prior to each Distribution Date (or, if a
Deposit Event has occurred, within two (2) Business Days following receipt
thereof), the Master Servicer shall deposit or cause to be deposited into the
Collection Account the following payments and collections received or made by it
with respect to the Home Equity Loans (without duplication):
(i) Interest Collections on the Home Equity Loans;
(ii) Principal Collections on the Home Equity Loans;
(iii) Insurance Proceeds (including, for this purpose, any amount
required to be paid by the Master Servicer pursuant to Section 3.04 and
excluding any portion thereof constituting Principal Collections); and
(iv) amounts required to be paid by the Depositor in connection with
the termination of the Trust pursuant to Section 10.01.
The foregoing requirements respecting deposits to the Collection Account are
exclusive, it being understood that, without limiting the generality of the
foregoing, fees (including annual fees) or late charge penalties payable by
Mortgagors, or amounts received by the Master Servicer or a Servicer for the
accounts of Mortgagors for application towards the payment of taxes, insurance
premiums, assessments and similar items for the account of the related Servicer,
if any, need not be deposited in the Collection Account.
(c) The Trustee shall hold amounts deposited in the Collection Account as
trustee for the Certificateholders. In addition, the Master Servicer shall
notify the Trustee in writing on each Determination Date of the amount of
payments and collections to be deposited in the Collection Account with respect
to the related Distribution Date.
(d) The Master Servicer may cause the institution maintaining the
Collection Account to invest any funds in the Collection Account in Permitted
Investments (including obligations of
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the Master Servicer or of any of its affiliates, if such obligations otherwise
qualify as Permitted Investments), which shall mature or otherwise be available
not later than the Business Day next preceding the Distribution Date or on the
Distribution Date next following the date of such investment as long as such
action does not result in a withdrawal or downgrading of the then current
ratings on the Class A and Class M Certificates by the Rating Agencies (except
that any investment in an obligation of the institution with which the
Collection Account is maintained may mature on or before 12:00 noon, Chicago
time, on such Distribution Date) and shall not be sold or disposed of prior to
its maturity. In the event the Trustee is at any time maintaining the Collection
Account, any request by the Master Servicer to invest funds on deposit in the
Collection Account shall be in writing, shall be delivered to the Trustee at or
before 10:30 A.M., Chicago time, if such investment is to be made on such day,
and shall certify that the requested investment is a Permitted Investment that
matures at or prior to the time required hereby. Any such investment shall be
registered in the name of the Trustee as trustee hereunder or in the name of its
nominee and to the extent such investments are certificated they shall be
maintained in the possession of the Trustee in the state of its Corporate Trust
Office. Except as provided above, all income and gain realized from any such
investment shall be for the benefit of the Master Servicer and shall be subject
to its withdrawal or order from time to time. The amount of any losses incurred
in respect of the principal amount of any such investments shall be deposited in
the Collection Account by the Master Servicer out of its own funds immediately
as realized.
(e) The Trustee is hereby authorized to execute purchases and sales of
Permitted Investments as directed by the Master Servicer through the facilities
of its own trading or capital markets operations on the condition that such
purchases and sales do not cause any tax to be imposed on the Trust under the
REMIC Provisions or result in the disqualification of the Trust Fund as a REMIC.
The Trustee shall send to the Master Servicer statements reflecting the monthly
activity for each such purchase and sale made for the preceding month. Although
the Master Servicer recognizes that it may obtain a broker confirmation or
written monthly statement containing comparable information at no additional
cost, the Master Servicer hereby agrees that confirmations of investments are
not required to be issued by the Trustee for each month in which a monthly
statement is rendered. No statement need be rendered pursuant to the provision
of this subsection if no activity occurred in the account for such month.
Section 3.03. Withdrawals from the Collection Account.
(a) The Trustee shall withdraw or cause to be withdrawn funds from the
Collection Account for the following purposes:
(i) On each Distribution Date, to make distributions and payments to
Certificateholders pursuant to Section 5.01;
(ii) From time to time, to make investments in Permitted Investments
and to pay to the Master Servicer all income and gain earned in respect of
Permitted Investments or on funds deposited in the Collection Account;
(iii) To reimburse the Master Servicer to the extent permitted by
Section 7.03;
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(iv) To withdraw any funds deposited in the Collection Account that
were not required to be deposited therein or were deposited therein in
error and to pay such funds to the appropriate Person;
(v) To pay to the party legally entitled by a final order of a court
of competent jurisdiction in an insolvency proceeding an amount equal to
any preference claim made with respect to amounts paid with respect to the
Home Equity Loans; provided that, if any such amount is later determined
not to be a preference by such court of competent jurisdiction and is
returned to the Master Servicer or any Servicer, such amount shall be
redeposited into the Collection Account by the Master Servicer; and
(vi) to clear and terminate the Collection Account upon the termination
of this Agreement and to pay any amounts remaining therein to the Class R
Certificateholders.
(b) If the Master Servicer deposits in the Collection Account any amount
not required to be deposited therein or credited thereto or any amount in
respect of payments by Mortgagors made by checks subsequently returned for
insufficient funds or other reason for non-payment, it may at any time withdraw
such amount from the Collection Account pursuant to Section 3.03(a)(iv), and any
such amounts shall not be included in Interest Collections and Principal
Collections, any provision herein to the contrary notwithstanding. Any
withdrawal or debit permitted by Section 3.03(a) may be accomplished by
delivering an Officer's Certificate to the Trustee which describes the purpose
of such withdrawal (including, without limitation, that any such amount was
deposited in the Collection Account in error or, in the case of returned checks,
that such amounts were properly debited, respectively). Upon receipt of any such
Officer's Certificate, the Trustee shall withdraw such amount for the account of
the Master Servicer. All funds deposited by the Master Servicer in the
Collection Account shall be held by the Trustee in trust for the
Certificateholders, until disbursed in accordance with Section 5.01 or withdrawn
or debited in accordance with this Section.
Section 3.04. Maintenance of Hazard Insurance; Property Protection
Expenses. The Master Servicer shall cause to be maintained for each Home Equity
Loan hazard insurance naming the Master Servicer or the related Servicer as loss
payee thereunder providing extended coverage in an amount which is at least
equal to the lesser of (i) the maximum insurable value of the Mortgaged Property
or (ii) the combined principal balance owing on such Home Equity Loan and any
mortgage loan senior to such Home Equity Loan from time to time. The Master
Servicer shall also maintain on property acquired upon foreclosure, or by grant
of deed in lieu of foreclosure, hazard insurance with extended coverage in an
amount which is at least equal to the lesser of (i) the maximum insurable value
of the Mortgaged Property or (ii) the combined unpaid principal balance owing on
such Home Equity Loan and any mortgage loans senior to such Home Equity Loans at
the time of such foreclosure or grant of deed in lieu of foreclosure plus
accrued interest thereon. Amounts collected by the Master Servicer under any
such policies shall be either deposited in the Collection Account to the extent
called for by Section 3.02. In cases in which any Mortgaged Property is located
in a federally designated flood area, the hazard insurance to be maintained for
the related Home Equity Loan shall include flood insurance. All such flood
insurance shall be in such amounts as are required under applicable guidelines
of Fannie Mae. The Master Servicer shall be under no obligation to require that
any Mortgagor
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maintain earthquake or other additional insurance and shall be under no
obligation itself to maintain any such additional insurance on property acquired
in respect of a Home Equity Loan, other than pursuant to such applicable laws
and regulations as shall at any time be in force and as shall require such
additional insurance. As to Mortgaged Properties acquired by the Master Servicer
as provided herein, the Master Servicer may satisfy its obligation set forth in
the first sentence of this Section 3.04 by self insuring Mortgaged Properties
for which the aggregate unpaid principal balance of the related Home Equity
Loans plus the outstanding balance of any mortgage loans senior to such Home
Equity Loans at the time title was acquired, plus accrued interest (the
"Combined Exposure"), was less than $500,000 (or such other amount as the Master
Servicer may in good faith determine from time to time) and by causing hazard
policies to be maintained with respect to Mortgaged Properties for which the
Combined Exposure equals or exceeds the self insurance threshold established
from time to time by the Master Servicer by maintaining a blanket policy
consistent with prudent industry standards insuring against hazard losses on the
Mortgaged Properties. Such policy may contain a deductible clause, in which case
the Master Servicer shall, in the event that there shall not have been
maintained on the related Mortgaged Property a policy complying with the first
sentence of this Section 3.04, and there shall have been a loss which would have
been covered by such policy, deposit in the Collection Account the amount not
otherwise payable under the blanket policy because of such deductible clause.
Section 3.05. Assumption and Modification Agreements. In any case in which
a Mortgaged Property has been or is about to be conveyed by the Mortgagor, the
Master Servicer shall exercise or refrain from exercising its right to
accelerate the maturity of such Home Equity Loan consistent with the
then-current practice of the Master Servicer and without regard to the inclusion
of such Home Equity Loan in the Trust and not in the Master Servicer's
portfolio. If it elects not to enforce its right to accelerate or if it is
prevented from doing so by applicable law, the Master Servicer (so long as such
action conforms with the Master Servicer's underwriting standards at the time
for new originations) is authorized to take or enter into an assumption and
modification agreement from or with the Person to whom such Mortgaged Property
has been or is about to be conveyed, pursuant to which such Person becomes
liable under the Mortgage Note and, to the extent permitted by applicable law,
the Mortgagor remains liable thereon. The Master Servicer shall notify the
Trustee that any assumption and modification agreement has been completed by
delivering to the Trustee an Officer's Certificate certifying that such
agreement is in compliance with this Section and by forwarding to the applicable
Servicer on behalf of the Depositor or the Trustee, as applicable, the original
copy of such assumption and modification agreement. Any such assumption and
modification agreement shall, for all purposes, be considered a part of the
related Mortgage File to the same extent as all other documents and instruments
constituting a part thereof. No change in the terms of the related Mortgage Note
may be made by the Master Servicer in connection with any such assumption to the
extent that such change would not be permitted to be made in respect of the
original Mortgage Note pursuant to Section 3.01 unless the conditions specified
in Section 3.01 are satisfied. Any fee collected by the Master Servicer for
entering into any such agreement will be retained by the Master Servicer as
additional servicing compensation.
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Section 3.06. Realization Upon Defaulted Home Equity Loans.
(a) The Master Servicer (or the Master Servicer together with the related
Seller as called for by the Home Equity Loan Purchase Agreement) shall foreclose
upon or otherwise comparably convert to ownership Mortgaged Properties securing
such of the Home Equity Loans as come into and continue in default when, in the
opinion of the Master Servicer based upon the practices and procedures referred
to in the following sentence, no satisfactory arrangements can be made for
collection of delinquent payments pursuant to Section 3.02; provided that if the
Master Servicer has actual knowledge or reasonably believes that any Mortgaged
Property is affected by hazardous or toxic wastes or substances and that the
acquisition of such Mortgaged Property would not be commercially reasonable,
then the Master Servicer will not cause the Trust to acquire title to such
Mortgaged Property in a foreclosure or similar proceeding. In connection with
such foreclosure or other conversion, the Master Servicer shall follow such
practices (including, in the case of any default on a related senior mortgage
loan, the advancing of funds to correct such default) and procedures as it shall
deem necessary or advisable and as shall be normal and usual in its general
mortgage servicing activities. The foregoing is subject to the proviso that the
Master Servicer shall not be required to expend its own funds in connection with
any foreclosure or towards the correction of any default on a related senior
mortgage loan or restoration of any property unless it shall determine that such
expenditure will increase Net Liquidation Proceeds. The Master Servicer will be
reimbursed out of Liquidation Proceeds for advances of its own funds to pay
Liquidation Expenses before any Net Liquidation Proceeds are deposited in the
Collection Account.
(b) In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall (i) so long as the long-term unsecured debt of the Master Servicer is
assigned ratings of at least "A" by Fitch and "A3" by Moody's, be issued in the
name of the related Servicer or (ii) if the rating requirements in clause (i)
are not satisfied, be issued to the Trustee, or to its nominee on behalf of
Certificateholders. In the event that the Trust acquires any Mortgaged Property
as aforesaid or otherwise in connection with a default or imminent default on a
Home Equity Loan, such Mortgaged Property shall be disposed of by or on behalf
of the Trust within three (3) years after its acquisition by the Trust unless
the Trustee shall have received an Opinion of Counsel to the effect that the
holding by the Trust of such Mortgaged Property subsequent to three years after
its acquisition will not result in the imposition of taxes on "prohibited
transactions" of the Trust as defined in Section 860F of the Code or cause the
Trust to fail to qualify as a REMIC at any time that any Certificates are
outstanding. If the Trustee has not otherwise disposed of any such Mortgaged
Property after its acquisition by the Trust, the Master Servicer may purchase
such Mortgaged Property prior to the third anniversary of the date on which it
was acquired at a price equal to its fair market value as established by an
appraisal conducted by an independent appraiser, such appraisal to be at the
expense of the Master Servicer.
Section 3.07. Optional Purchase of Defaulted Home Equity Loans. The Master
Servicer, in its sole discretion, shall have the right, but not the obligation,
to elect (by written notice sent to the Trustee) to purchase for its own account
from the Trust any Home Equity Loan which is 90 or more days contractually
delinquent. The Master Servicer shall not purchase defaulted Home Equity Loans
that, by aggregate Principal Balance, are in excess of 4.99% of the
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Cut-Off Date Pool Balance or, when combined with the aggregate Principal Balance
of any Home Equity Loans repurchased under Section 3.01(e), are in excess of
4.99% of the Cut-Off Date Pool Balance. The Purchase Price for any Home Equity
Loan purchased under this Section shall be paid by a deposit in the Collection
Account on the Business Day preceding the Distribution Date next following the
end of the Collection Period during which such defaulted Home Equity Loan became
90 or more days contractually delinquent. Such purchase shall be accomplished in
the same manner and subject to the same conditions as set forth in Section 2.02.
Upon making any such purchase the Master Servicer shall be entitled to receive
an instrument of assignment or transfer from the Trustee to the same extent as
set forth in Section 2.02.
Section 3.08. Trustee to Cooperate.
(a) Upon any payment in full of the Principal Balance of any Home Equity
Loan, the Master Servicer is authorized to execute, pursuant to the
authorization contained in Section 3.01, if the assignments of Mortgage have
been recorded as required hereunder, an instrument of satisfaction regarding the
related Mortgage, which instrument of satisfaction shall be recorded by the
Master Servicer if required by applicable law and be delivered to the Person
entitled thereto. It is understood and agreed that no expenses incurred in
connection with such instrument of satisfaction or transfer shall be reimbursed
from amounts deposited in the Collection Account. If the Trustee is holding the
Mortgage Files, from time to time and as appropriate for the servicing or
foreclosure of any Home Equity Loan, the Trustee shall, upon request of the
Master Servicer and delivery to the Trustee of a trust receipt signed by a
Servicing Officer, release the related Mortgage File to the Master Servicer, and
the Trustee shall execute such documents as shall be necessary to the
prosecution of any such proceedings or the taking of other servicing actions.
Such trust receipt shall obligate the Master Servicer to return the Mortgage
File to the Trustee when the need therefor by the Master Servicer no longer
exists unless the Home Equity Loan shall be liquidated, in which case, upon
receipt of an Officer's Certificate of the Master Servicer, the trust receipt
shall be released by the Trustee to the Master Servicer.
(b) In order to facilitate the foreclosure of the Mortgage securing any
Home Equity Loan that is in default following recordation of the assignments of
Mortgage in accordance with the provisions hereof, the Trustee shall, if the
Master Servicer so requests in writing and supplies the Trustee with appropriate
forms therefor, assign such Home Equity Loan for the purpose of collection to
the Master Servicer or to the related Servicer (any such assignment shall
unambiguously indicate that the assignment is for the purpose of collection
only), and, upon such assignment, such assignee for collection will thereupon
bring all required actions in its own name and otherwise enforce the terms of
the Home Equity Loan and deposit or credit the Net Liquidation Proceeds received
with respect thereto in the Collection Account. In the event that all delinquent
payments due under any such Home Equity Loan are paid by the Mortgagor and any
other defaults are cured then the assignee for collection shall promptly
reassign such Home Equity Loan to the Trustee and return it to the place where
the related Mortgage File was being maintained.
Section 3.09. Servicing Compensation; Payment of Certain Expenses by Master
Servicer. The Master Servicer shall be entitled to receive the Servicing Fee as
compensation for its services in connection with servicing the Home Equity
Loans. The Servicing Fee for each
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Collection Period shall be paid to the Master Servicer out of Interest
Collections prior to their deposit in the Collection Account and shall not be
the responsibility or liability of the Trust, the Trustee or the Class A or
Class M Certificateholders. Additional servicing compensation in the form of
late payment charges or other receipts not required to be deposited in the
Collection Account shall be retained by the Master Servicer. The Master Servicer
shall be required to pay all expenses incurred by it in connection with its
activities hereunder (including payment of Trustee fees and all other fees and
expenses not expressly stated hereunder to be for the account of the
Certificateholders) and shall not be entitled to reimbursement therefor except
as specifically provided herein.
Section 3.10. Annual Statement as to Compliance.
(a) The Master Servicer will deliver to the Trustee and a copy to each of
the Rating Agencies, on or before March 31 of each year, beginning March 31,
2001, an Officer's Certificate stating that (i) a review of the activities of
the Master Servicer during the preceding calendar year (or in the case of the
Officer's Certificate delivered in 2001, from the Closing Date) and of its
performance under this Agreement has been made under such officer's supervision
and (ii) to the best of such officer's knowledge, based on such review, the
Master Servicer has fulfilled all its material obligations under this Agreement
throughout such year (or in the case of the Officer's Certificate delivered in
2001, from the Closing Date), 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 shall deliver to the Trustee and a copy to each of
the Rating Agencies, promptly after having obtained knowledge thereof, but in no
event later than five Business Days thereafter, written notice by means of an
Officer's Certificate of any event which with the giving of notice or the lapse
of time or both, would become an Event of Default.
Section 3.11. Annual Servicing Report. On or before March 31 of each year,
beginning March 31, 2001, the Master Servicer at its expense shall cause a firm
of nationally recognized independent public accountants (who may also render
other services to the Master Servicer) to furnish a report to the Trustee and a
copy to each of the Rating Agencies to the effect that such firm has examined
certain documents and records relating to the servicing of home equity loans by
the Master Servicer during the most recent calendar year (or in the case of the
report delivered in 2001, from the Closing Date) then ended under pooling and
servicing agreements (including this Agreement) substantially similar to this
Agreement and that such examination, which has been conducted substantially in
compliance with the audit guide for audits of non-supervised mortgagees approved
by the Department of Housing and Urban Development for use by independent public
accountants (to the extent that the procedures in such audit guide are
applicable to the servicing obligations set forth in such agreements), has
disclosed no items of noncompliance with the provisions of this Agreement which,
in the opinion of such firm, are material, except for such items of
noncompliance as shall be set forth in such report.
Section 3.12. Access to Certain Documentation and Information Regarding the
Home Equity Loans.
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(a) The Master Servicer and the Servicers shall provide to the Trustee,
Class A or Class M Certificateholders that are federally insured savings and
loan associations, the Office of Thrift Supervision, the successor to the
Federal Home Loan Bank Board, the FDIC and the supervisory agents and examiners
of the Office of Thrift Supervision access to the documentation regarding the
Home Equity Loans required by applicable regulations of the Office of Thrift
Supervision and the FDIC (acting as operator of the SAIF or the BIF), such
access being afforded without charge but only upon reasonable request and during
normal business hours at the offices of the Master Servicer or the Servicers.
Nothing in this Section shall derogate from the obligation of the Master
Servicer to observe any applicable law prohibiting disclosure of information
regarding the Mortgagors, 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.
(b) The Master Servicer shall supply information in such form as the
Trustee shall reasonably request to the Trustee and the Paying Agent, on or
before the start of the third Business Day preceding the related Distribution
Date, as is required in the Trustee's reasonable judgment to enable the Paying
Agent or the Trustee, as the case may be, to make the required distributions and
to furnish the required reports to Certificateholders.
Section 3.13. Maintenance of Certain Servicing Insurance Policies. The
Master Servicer shall during the term of its service as master servicer maintain
in force (i) a policy or policies of insurance covering errors and omissions in
the performance of its obligations as master servicer hereunder and (ii) a
fidelity bond in respect of its officers, employees or agents. Each such policy
or policies and bond shall, together, comply with the requirements from time to
time of Fannie Mae for Persons performing servicing for mortgage loans purchased
by such association.
Section 3.14. Reports to the Securities and Exchange Commission. The Master
Servicer shall, on behalf of the Trust, cause to be filed with the Securities
and Exchange Commission any periodic reports required to be filed under the
provisions of the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Securities and Exchange Commission thereunder.
Section 3.15. Taxpayer Identification Number. The Master Servicer shall
prepare for the Trustee's signature and file, or the Trustee shall prepare and
file, with the Internal Revenue Service, on behalf of the Trust, an application
on IRS Form SS-4. The Trustee or the Master Servicer, as the case may be, upon
receipt from the Internal Revenue Service of the Notice of Taxpayer
Identification Number Assigned, shall promptly forward a copy of such notice to
the other party.
Section 3.16. Information Required by the Internal Revenue Service
Generally and Reports of Foreclosures and Abandonments of Mortgaged Property.
The Master Servicer shall prepare and deliver, or cause to be prepared and
delivered, to the Trustee all federal and state information reports when and as
required by all applicable state and federal income tax laws including, to the
extent applicable, returns reporting a cancellation of indebtedness as
prescribed by Section 6050P of the Code. In particular, with respect to the
requirement under Section 6050J of the Code to the effect that the Trustee shall
make reports of foreclosures and abandonments of
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any mortgaged property for each year beginning in 1999, the Master Servicer, in
order to facilitate this reporting process, shall provide to the Trustee in a
timely fashion each year as required by law reports relating to each instance
occurring during the previous calendar year in which the Master Servicer or any
Servicer (i) on behalf of the Trustee acquired an interest in any Mortgaged
Property through foreclosure or other comparable conversion in full or partial
satisfaction of a Home Equity Loan or (ii) knew or had reason to know that any
Mortgaged Property has been abandoned. The reports from the Master Servicer
shall be in form and substance sufficient to enable the Trustee to meet the
reporting requirements imposed by Section 6050J of the Code.
Section 3.17. Additional Covenants of HFC. HFC hereby agrees that:
(i) it will maintain its books and records to clearly note the
separate corporate existence of the Depositor, each Servicer and the Master
Servicer;
(ii) the Depositor, the Servicers and HFC will share certain overhead
expenses, although the amount the Depositor will be charged for such use
will be based on actual use to the extent practicable and, to the extent
such allocation is not practicable, on a basis reasonably related to use;
(iii) separate financial records will be maintained to reflect the
assets and liabilities of the Depositor, HFC and each Servicer, which
financial records are and will be subject to audit by independent public
accountants at the reasonable request of the Board of Directors of the
Depositor, HFC or such Servicer, as the case may be;
(iv) except as permitted hereunder, there will be no commingling of
the assets of the Depositor with the assets of HFC or any Servicer. All
demand deposit accounts and other bank accounts of the Depositor will be
maintained separately from those of HFC and the Servicers. Monetary
transactions between the Depositor and HFC or any Servicer are and will
continue to be properly reflected in their respective financial records;
(v) HFC at all times will recognize, and will take all steps within
its power to maintain, the corporate existence of the Depositor and
Servicers as being separate and apart from its own corporate existence and
will not refer to the Depositor or any Servicer as a department or division
of HFC; and
(vi) Except as otherwise expressly provided herein, the Depositor and
HFC will not guaranty or advance the proceeds for payment of any
obligations of the Trust.
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Article IV
Servicing Certificate
Section 4.01. Servicing Certificate. Not later than each Determination
Date, the Master Servicer shall deliver to the Trustee, the Paying Agent and
each Rating Agency a Servicing Certificate (in written form or the form of
computer readable media or such other form as may be agreed to by the Trustee
and the Master Servicer), together with an Officer's Certificate to the effect
that such Servicing Certificate is true and correct in all material respects,
stating the related Collection Period, Distribution Date, the series number of
the Certificates, the date of this Agreement, and:
(i) the Available Distribution Amount for such Distribution Date,
separately stating the amount of Interest Collections and Principal
Collections;
(ii) the amount of the distributions to Holders of each Class of
Class A and Class M Certificates for such Distribution Date, separately
stating the portions thereof allocable to interest and allocable to
principal;
(iii) the amount of any Interest Carry Forward Amount for each Class
paid on such Distribution Date and the amount of any Interest Carry Forward
Amount for each Class remaining after giving effect to the distributions on
such Distribution Date;
(iv) the amount of any Extra Principal Distribution Amount for such
Distribution Date;
(v) the Principal Distribution Amount for such Distribution Date,
separately stating the components thereof;
(vi) the number and aggregate Principal Balance of any Home Equity
Loan purchased or substituted by the Depositor or the Master Servicer with
respect to the related Collection Period pursuant to Section 2.02;
(vii) the number and aggregate Principal Balance of any Home Equity
Loan purchased or substituted by the Depositor or the Master Servicer with
respect to the related Collection Period pursuant to Section 2.04;
(viii) the number and aggregate Principal Balance of any Home Equity
Loan purchased or substituted by the Depositor or the Master Servicer with
respect to the related Collection Period pursuant to Section 3.01;
(ix) the number and aggregate Principal Balance of any Home Equity
Loan purchased or substituted by the Depositor or the Master Servicer with
respect to the related Collection Period pursuant to Section 3.07;
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(x) the number and aggregate Principal Balance of any Home Equity
Loan that the Master Servicer has consented to the placement of a senior
lien during the related Collection Period pursuant to Section 3.01(a);
(xi) the amount of any Substitution Adjustment Amounts for such
Distribution Date;
(xii) the Servicing Fee for such Collection Period and any accrued
amounts thereof that remain unpaid for previous Collection Periods;
(xiii) the Realized Losses for such Collection Period and the amount of
such losses, if any, constituting Applied Realized Loss Amounts;
(xiv) the amount, if any, to be distributed to the Class R
Certificateholders on such Distribution Date;
(xv) the Overcollateralization Amount, Overcollateralization
Deficiency, the Overcollateralization Release Amount, the Targeted
Overcollateralization Amount and the Monthly Excess Cashflow for such
Distribution Date;
(xvi) the number of Home Equity Loans outstanding at the beginning
and end of such Collection Period;
(xvii) the Pool Balance as of the end of such Collection Period;
(xviii) the Certificate Principal Balance of each Class of Certificates
and the Pool Factor after giving effect to the distribution on such
Distribution Date;
(xix) the number and aggregate Principal Balances of Home Equity
Loans (x) as to which the scheduled monthly payment is contractually
delinquent for 30-59 days, 60-89 days and 90 or more days, respectively and
(y) that have become REO, in each case as of the end of such Collection
Period;
(xx) the unpaid principal amount of all Home Equity Loans that
became Liquidated Home Equity Loans during such Collection Period;
(xxi) the book value (within the meaning of 12 C.F.R. ss. 571.13 or
comparable provision) of any real estate acquired through foreclosure or
grant of a deed in lieu of foreclosure;
(xxii) whether a Trigger Event has occurred or is continuing;
(xxiii) such other information as is required by the Code and
regulations thereunder to be made available to Holders of the Regular
Certificates; and
(xxiv) whether an Event of Default has occurred since the prior
Determination Date, specifying each such Event of Default if one has
occurred.
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The Trustee shall conclusively rely upon the information contained in a
Servicing Certificate for purposes of making distributions pursuant to Section
5.01, shall have no duty to inquire into such information and shall have no
liability in so relying. The format and content of the Servicing Certificate may
be modified by the mutual agreement of the Master Servicer and the Trustee. The
Master Servicer shall give notice of any such change to the Rating Agencies.
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Article V
Distributions and Statements to Certificateholders;
Rights of Certificateholders
Section 5.01. Distributions. (a) On each Distribution Date, the Trustee
shall withdraw an amount equal to the Available Distribution Amount from the
Collection Account and make distributions thereof as described below (to the
extent of the Available Distribution Amount) to Holders of the Certificates in
the following order of priority:
I. from the Available Distribution Amount in the following order of
priority:
(i) to the Class A Certificates, the Current Interest plus the
Interest Carry Forward Amount with respect to each Class of Class A
Certificates without any priority among such Class A Certificates;
provided, that if amount available is not sufficient to make a full
distribution of interest with respect to all Classes of the Class A
Certificates, the amount available will be distributed among the
outstanding Classes of Class A Certificates pro rata based on the aggregate
amount of interest due on each such Class, and the amount of the shortfall
will be carried forward with accrued interest;
(ii) to the Class M-1 Certificates, the Current Interest plus the
Interest Carry Forward Amount with respect to the Class M-1 Certificates;
and
(iii) to the Class M-2 Certificates, the Current Interest plus the
Interest Carry Forward Amount with respect to the Class M-2 Certificates.
II. On each Distribution Date (a) before the related Stepdown Date or (b)
with respect to which a Trigger Event is in effect, the Certificates will be
entitled to receive distributions of principal up to the Principal Distribution
Amount for such Distribution Date, to the extent of the remaining funds in the
Collection Account after the distributions of interest have been made pursuant
to paragraph (a)I.(i) through (iii) above, in the amounts set forth below and in
the following order of priority:
(i) to the Class A-4 Certificates, the Class A-4 Lockout
Distribution Amount, and then sequentially to each Class of the Class A
Certificates, in the order of their numerical class designation until the
Certificate Principal Balance of each such Class of Class A Certificates
has been reduced to zero; provided, that if on any Distribution Date the
Class A-3 Certificate Principal Balance is zero, to the Class A-4
Certificates, without regard to the Class A-4 Lockout Distribution Amount,
until the Certificate Principal Balance thereof has been reduced to zero;
(ii) after the aggregate Certificate Principal Balance of the Class
A Certificates has been reduced to zero, to the Class M-1 Certificates,
until the Class M-1 Certificate Principal Balance has been reduced to zero;
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(iii) after the aggregate Certificate Principal Balance of the Class
A Certificates and the Class M-1 Certificates has been reduced to zero, to
the Class M-2 Certificates, until the Class M-2 Certificate Principal
Balance has been reduced to zero; and
(iv) any remaining Available Distribution Amount to the Class R
Certificates; provided, however, that on any Distribution Date on which the
Additional Principal Distribution Amount is distributable pursuant to
Section 10.01(d), any remaining amount shall instead be distributed to the
Class M-1 and Class M-2 Certificates in reduction of the applicable Class
or Classes' Certificate Principal Balance.
III. On each Distribution Date (a) on or after the related Stepdown Date
and (b) as long as a Trigger Event is not in effect, the Certificates will be
entitled to receive distributions of principal up to the Principal Distribution
Amount for such Distribution Date, to the extent of the remaining funds in the
Collection Account after the distributions of interest have been made pursuant
to paragraph (a)I.(i) through (iii) above, in the amounts set forth below and in
the following order of priority:
(i) to the Class A Certificates, the Class A Principal
Distribution Amount shall be distributed as follows: first, to the Class
A-4 Certificates, the Class A-4 Lockout Distribution Amount, and then
sequentially to each Class of the Class A Certificates, in the order of
their numerical class designation until the Certificate Principal Balance
of each such Class of Class A Certificates has been reduced to zero;
provided, that if on any Distribution Date the Class A-3 Certificate
Principal Balance is zero, to the Class A-4 Certificates, without regard to
the Class A-4 Lockout Distribution Amount, until the Certificate Principal
Balance thereof has been reduced to zero;
(ii) to the Class M-1 Certificates, the Class M-1 Principal
Distribution Amount, until the Class M-1 Certificate Principal Balance has
been reduced to zero;
(iii) to the Class M-2 Certificates, the Class M-2 Principal
Distribution Amount, until the Class M-2 Certificate Principal Balance has
been reduced to zero; and
(iv) any remaining Available Distribution Amount to the Class R
Certificates; provided, however, that on any Distribution Date on which the
Additional Principal Distribution Amount is distributable pursuant to
Section 10.01(d), any remaining amount shall instead be distributed to the
Class M-1 and Class M-2 Certificates in reduction of the applicable Class
or Classes' Certificate Principal Balance.
(b) Applied Realized Loss Amounts. On each Distribution Date, if (I) the
aggregate Certificate Principal Balance of all Classes of Class A and Class M
Certificates (calculated after taking into account all distributions of
principal on such Distribution Date, including any Extra Principal Distribution
Amount) exceeds (II) the Pool Balance as of the last day of the preceding
Collection Period, then such excess will be allocated as follows:
(i) first, to the Class M-2 Certificates until the Class M-2
Certificate Principal Balance has been reduced to zero; and
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(ii) second, to the Class M-1 Certificates until the Class M-1
Certificate Principal Balance has been reduced to zero.
This allocation of Realized Losses to Certificateholders shall be effected
through the reduction of the applicable Class or Classes' Certificate Principal
Balance.
(c) Method of Distribution. The Trustee shall make distributions in
respect of a Distribution Date to each Certificateholder of record on the
related Record Date (other than as provided in Section 10.01 respecting the
final distribution) by check or money order mailed to such Certificateholder at
the address appearing in the Certificate Register, or upon written request by a
Certificateholder delivered to the Trustee at least five Business Days prior to
such Record Date, by wire transfer (but only if such Certificateholder is the
Depository or such Certificateholder owns of record one or more Class of
Certificates having principal denominations aggregating at least $5,000,000), or
by such other means of payment as such Certificateholder and the Trustee shall
agree. Distributions among Certificateholders shall be made in proportion to the
Percentage Interests evidenced by the Certificates held by such
Certificateholders.
(d) Distributions on Book-Entry Certificates. Each distribution with
respect to a Book-Entry Certificate shall be paid to the Depository, which shall
credit the amount of such distribution to the accounts of its Depository
Participants in accordance with its normal procedures. Each Depository
Participant shall be responsible for disbursing such distribution to the
Certificate Owners that it represents and to each indirect participating
brokerage firm (a "brokerage firm" or "indirect participating firm") for which
it acts as agent. Each brokerage firm shall be responsible for disbursing funds
to the Certificate Owners that it represents. All such credits and disbursements
with respect to a Book-Entry Certificate are to be made by the Depository and
the Depository Participants in accordance with the provisions of the Class A or
Class M Certificates. None of the Trustee, the Paying Agent, the Certificate
Registrar, the Depositor or the Master Servicer shall have any responsibility
therefor except as otherwise provided by applicable law.
Section 5.02. Statements to Certificateholders. (a) On each Determination
Date, the Master Servicer shall forward to the Trustee and the Paying Agent for
mailing to each Certificateholder, and concurrently with each distribution to
Certificateholders the Trustee shall mail to them a statement with respect to
their distribution setting forth:
(i) the amount of the distributions to Holders of each Class of
Class A and Class M Certificates for such Distribution Date, separately
stating the portions thereof allocable to interest and allocable to
principal;
(ii) the amount of any Interest Carry Forward Amount for each Class
paid on such Distribution Date and the amount of any Interest Carry Forward
Amount for each Class remaining after giving effect to the distributions on
such Distribution Date;
(iii) the amount of any Extra Principal Distribution Amount for such
Distribution Date;
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(iv) the Principal Distribution Amount for such Distribution Date,
separately stating the components thereof;
(v) the number and aggregate Principal Balance of any Home Equity
Loans purchased by the Depositor or the Master Servicer with respect to the
related Collection Period pursuant to Sections 2.02, 2.04, 3.01 and 3.07;
(vi) the amount of any Substitution Adjustment Amounts for such
Distribution Date;
(vii) the Servicing Fee for such Collection Period and any accrued
amounts thereof that remain unpaid for previous Collection Periods;
(viii) the Realized Losses for such Collection Period and the amount
of such losses, if any, constituting Applied Realized Loss Amounts;
(ix) the amount, if any, to be distributed to the Class R
Certificateholders on such Distribution Date;
(x) The Overcollateralization Amount, Overcollateralization
Deficiency, the Overcollateralization Release Amount, the Targeted
Overcollateralization Amount and the Monthly Excess Cashflow for such
Distribution Date;
(xi) The number of Home Equity Loans outstanding at the beginning
and end of such Collection Period;
(xii) The Pool Balance as of the end of such Collection Period;
(xiii) the Certificate Principal Balance of each Class of
Certificates and the Pool Factor after giving effect to the distribution on
such Distribution Date;
(xiv) the number and aggregate Principal Balances of Home Equity
Loans (x) as to which the scheduled monthly payment is contractually
delinquent for 30-59 days, 60-89 days and 90 or more days, respectively,
and (y) that have become REO, in each case as of the end of such Collection
Period;
(xv) The unpaid principal amount of all Home Equity Loans that
became Liquidated Home Equity Loans during such Collection Period;
(xvi) The book value (within the meaning of 12 C.F.R. ss. 571.13 or
comparable provision) of any real estate acquired through foreclosure or
grant of a deed in lieu of foreclosure;
(xvii) Whether a Trigger Event has occurred or is continuing;
(xviii) Such other information as is required by the Code and
regulations thereunder to be made available to Holders of the Regular
Certificates; and
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(xix) whether an Event of Default has occurred since the prior
Determination Date, specifying each such Event of Default if one has
occurred;
(b) In the case of information furnished pursuant to clauses (i) and (ii)
above, the amounts shall be expressed as a dollar amount per Class A Certificate
or Class M Certificate, as applicable, with a $1,000 denomination.
(c) The Master Servicer shall also give such statement to each Rating
Agency at the time it gives such statement to the Trustee and the Paying Agent.
(d) Within 60 days after the end of each calendar year, the Master
Servicer shall prepare or cause to be prepared and shall forward to the Trustee
the information set forth in clauses (i) and (ii) above aggregated for such
calendar year. Such obligation of the Master Servicer shall be deemed to have
been satisfied to the extent that substantially comparable information shall be
provided by the Master Servicer pursuant to any requirements of the Code.
(e) On each Distribution Date, the Master Servicer shall forward to the
Trustee for mailing to each Holder of a Class R Certificate a copy of the report
forwarded to the Holders of Class A Certificates and Class M Certificates on
such Distribution Date. The Master Servicer shall also forward to the Trustee
for mailing to Holders of Class R Certificates a statement setting forth the
amount of the distribution to Holders of Class R Certificates expressed as a
dollar amount per Class R Certificate with a 10% Percentage Interest, together
with such other information as the Master Servicer deems necessary or
appropriate.
(f) Within 90 days after the end of each calendar year, the Master
Servicer shall forward to the Trustee for mailing to each Person who at any time
during the calendar year was the Holder of a Class R Certificate a statement
containing the applicable distribution information provided pursuant to this
Section aggregated for such calendar year or applicable portion thereof during
which such Person was the Holder of a Class R Certificate together with any
other information relating to the Trust reasonably required in order to enable a
Class R Certificateholder to prepare its federal income tax return. Such
obligation of the Master Servicer shall be deemed to have been satisfied to the
extent that substantially comparable information shall be provided by the Master
Servicer to the Trustee pursuant to any requirements of the Code. The Master
Servicer shall further cause the Trust to comply with any requirements for the
quarterly preparation, execution and distribution to Holders of Class R
Certificates of Schedule Q to IRS Form 1066.
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Article VI
The Certificates
Section 6.01. The Certificates.
(a) The Class A, Class M and Class R Certificates shall be substantially
in the forms set forth in Exhibit A through Exhibit G, and shall, on original
issue, be executed by the Trustee on behalf of the Trust and authenticated and
delivered by the Trustee to or upon the order of the Depositor concurrently with
the sale and assignment to the Trustee of the Trust. The Class A and Class M
Certificates shall be initially evidenced by one or more certificates
representing the entire Original Class Certificate Balance, and shall be held in
minimum dollar denominations of $1,000 and multiples of $1,000 in excess thereof
(except that one Certificate of each Class of Regular Certificates may be in a
different denomination). The Class R Certificates shall be issuable in a minimum
denomination of a 10% Percentage Interest and integral multiples of 10% in
excess thereof (except that one of such Class R Certificates shall be issuable
in a denomination that is not an integral multiple of 10%).
(b) The Certificates shall be executed on behalf of the Trust by manual or
facsimile signature of any officer of the Trustee duly authorized to execute
such Certificates on behalf of the Trust. Certificates bearing the manual or
facsimile signatures of individuals who were, at the time when such signatures
were affixed, authorized to sign on behalf of the Trustee shall bind the
Trustee, notwithstanding that such individuals or any of them 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 such Certificate. No Certificate shall
be entitled to any benefit under this Agreement, or be valid for any purpose,
unless such Certificate shall have been manually authenticated by the Trustee
substantially in the form provided for herein, and such authentication upon any
Certificate shall be conclusive evidence, and the only evidence, that such
Certificate has been duly authenticated and delivered hereunder. All
Certificates shall be dated the date of their authentication. Subject to Section
6.02, the Class A and Class M Certificates shall be Book-Entry Certificates. The
Class R Certificates shall not be Book-Entry Certificates.
Section 6.02. Registration of Transfer and Exchange of Certificates.
(a) The Certificate Registrar shall cause to be kept at its corporate
trust office (which shall be the Corporate Trust Office if the Trustee is the
Certificate Registrar) a Certificate Register in which, subject to such
reasonable regulations as it may prescribe, the Certificate Registrar shall
provide for the registration of the Certificates and of transfers and exchanges
of the Certificates as herein provided. The Trustee shall initially serve as
Certificate Registrar for the purpose of registering the Certificates and
transfers and exchanges of Certificates as herein provided.
(b) Upon surrender for registration of transfer of any Certificate at any
office or agency of the Certificate Registrar maintained for such purpose
pursuant to the foregoing paragraph, and in the case of the Class M and Class R
Certificates, upon satisfaction of the conditions applicable to such
Certificates set forth below, the Trustee shall execute on behalf of
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the Trust and shall authenticate and deliver in the name of the designated
transferee or transferees, one or more new Certificates of a like Class and of
the same aggregate Percentage Interest.
(c) At the option of the Certificateholders, Certificates may be exchanged
for other Certificates of like Class in authorized denominations and the same
aggregate Percentage Interests, upon surrender of the Certificates to be
exchanged at any such office or agency. Whenever any Certificates are so
surrendered for exchange, the Trustee shall execute on behalf of the Trust and
shall authenticate and deliver the Certificates of such Class which the
Certificateholder making the exchange is entitled to receive. Every Certificate
presented or surrendered for registration of transfer or exchange shall (if so
required by the Trustee or the Certificate Registrar) be duly endorsed by, or be
accompanied by a written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by, the Holder thereof or
such Holder's attorney duly authorized in writing.
(d) Except as provided in Section 6.02(f), the Book-Entry Certificates
shall at all times remain registered in the name of the Depository or its
nominee and at all times: (i) transfers of the Book-Entry Certificates may not
be registered by the Trustee except to another Depository; (ii) the Depository
shall maintain book-entry records with respect to the Certificate Owners and
with respect to ownership and registration of transfers of such Certificates;
(iii) ownership and registration of transfers of the Book-Entry Certificates on
the books of the Depository shall be governed by applicable rules established by
the Depository; (iv) the Depository may collect its usual and customary fees,
charges and expenses from its Depository Participants; (v) the Trustee shall
deal with the Depository as representative of the Certificate Owners of the
Book-Entry Certificates for purposes of exercising the rights of Holders under
this Agreement, and requests and directions for and votes of such representative
shall not be deemed to be inconsistent if they are made with respect to
different Certificate Owners; and (vi) the Trustee may rely and shall be fully
protected in relying upon information furnished by the Depository with respect
to its Depository Participants and furnished by the Depository Participants with
respect to indirect participating firms and Persons shown on the books of such
indirect participating firms as direct or indirect Certificate Owners.
(e) All transfers by Certificate Owners of Book-Entry Certificates shall
be made in accordance with the procedures established by the Depository
Participant or brokerage firm representing such Certificate Owners. Each
Depository Participant shall only transfer ownership interests represented by
Book-Entry Certificates of Certificate Owners that it represents or of brokerage
firms for which it acts as agent in accordance with the Depository's normal
procedures. The parties hereto are hereby authorized to execute a letter of
representations with the Depository or take such other action as may be
necessary or desirable to register a Book-Entry Certificate to the Depository.
In the event of any conflict between the terms of any such Letter of
Representation and this Agreement the terms of this Agreement shall control.
(f) If (i) (x) the Depository or the Depositor advises the Trustee in
writing that the Depository is no longer willing or able to discharge properly
its responsibilities as Depository and (y) the Trustee or the Depositor is
unable to locate a qualified successor, (ii) the Depositor, at its sole option,
with the consent of the Trustee, elects to terminate the book-entry system
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through the Depository or (iii) after the occurrence of an Event of Default, the
Certificate Owners of each Class of Regular Certificates representing Percentage
Interests aggregating not less than 51% advises the Trustee and Depository
through the Financial Intermediaries and the Depository Participants in writing
that the continuation of a book-entry system through the Depository to the
exclusion of definitive, fully registered certificates (the "Definitive
Certificates") to Certificate Owners is no longer in the best interests of the
Certificate Owners, upon surrender to the Certificate Registrar of each Class of
Regular Certificates by the Depository, accompanied by registration instructions
from the Depository for registration, the Trustee shall, at the Master
Servicer's expense, execute on behalf of the Trust and authenticate the
Definitive Certificates. None of the Depositor, the Master Servicer 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 Certificates, all references herein to
obligations imposed upon or to be performed by the Depository shall be deemed to
be imposed upon and performed by the Trustee, to the extent applicable with
respect to such Definitive Certificates, and the Trustee, the Certificate
Registrar, the Master Servicer and the Depositor shall recognize the Holders of
the Definitive Certificates as Certificateholders hereunder.
(g) No service charge shall be made for any Transfer or exchange of
Certificates of any Class, but the Trustee 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.
(h) All Certificates surrendered for Transfer and exchange shall be
destroyed by the Certificate Registrar.
(i) Except in the case of the initial Transfer to Household Finance
Corporation, no Transfer of a Class R Certificate shall be made unless such
Transfer is exempt from the registration requirements of the Securities Act of
1933, as amended, and any applicable state securities laws or is made in
accordance with said Act and laws. Except in the case of the initial Transfer to
Household Finance Corporation, as a condition to any Transfer of Class R
Certificate, (i) the Trustee may require a written Opinion of Counsel acceptable
to and in form and substance satisfactory to the Trustee that such Transfer may
be made pursuant to an exemption, describing the applicable exemption and the
basis therefor, from said Act and laws or is being made pursuant to said Act and
laws, which Opinion of Counsel shall not be an expense of the Trustee, the
Master Servicer, the Trust and (ii) the Trustee may require the Transferee to
execute an investment letter acceptable to and in form and substance
satisfactory to the Trustee certifying to the Master Servicer, the Sellers and
the Trustee the facts surrounding such Transfer, which investment letter shall
not be an expense of the Trustee, the Master Servicer or the Trust Fund except
to the extent any of such parties is the transferor of such Certificate. The
Holder of a Class R Certificate desiring to effect such Transfer shall, and does
hereby agree to, indemnify the Trustee, the Master Servicer and the Trust
against any liability that may result if the Transfer is not so exempt or is not
made in accordance with such federal and state laws.
(j) Except in the case of the initial Transfer of a Class R Certificate to
Household Finance Corporation, no Transfer of a Class A Certificate, Class M
Certificate or Class R
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Certificate with respect to which a Widely-Held Certification was not delivered
(each, an "ERISA-Restricted Certificate") shall be made unless the Trustee shall
have received either (i) a representation from the transferee of such
Certificate, acceptable to and in form satisfactory to the Trustee and the
Depositor, to the effect that such transferee is not an employee benefit plan or
arrangement subject to Section 406 of ERISA or a plan subject to Section 4975 of
the Code, nor a person acting on behalf of any such plan or arrangement nor
using the assets of any such plan or arrangement to effect such transfer or (ii)
in the case of any such ERISA-Restricted Certificate presented for registration
in the name of an employee benefit plan subject to ERISA or a plan or
arrangement subject to Section 4975 of the Code (or comparable provisions of any
subsequent enactments), or a trustee of any such plan or any other person acting
on behalf of any such plan or arrangement or using such plan's or arrangement's
assets, an Opinion of Counsel in form satisfactory to the Trustee which Opinion
of Counsel shall not be an expense of either the Trustee or the Trust, addressed
to the Trustee, to the effect that the purchase or holding of such
ERISA-Restricted Certificate will not result in the assets of the Trust being
deemed to be "plan assets" and subject to the prohibited transaction provisions
of ERISA and the Code and will not subject the Trustee, the Master Servicer, the
Sellers or the Trust to any obligation in addition to those expressly undertaken
in this Agreement or to any liability. For purposes of clause (i) of the
preceding sentence, such representation shall be deemed to have been made to the
Trustee by the transferee's acceptance of an ERISA-Restricted Certificate (or
the acceptance by a Certificate Owner of the beneficial interest in any such
Class of ERISA-Restricted Certificates) unless the Trustee shall have received
from the transferee an alternative representation acceptable in form and
substance to the Depositor. The Trustee shall be under no liability to any
Person for any registration of Transfer of any ERISA-Restricted Certificate that
is in fact not permitted by this Section or for making any payments due on such
Certificate to the Holder thereof or taking any other action with respect to
such Holder under the provisions of this Agreement so long as the Transfer was
registered by the Trustee in accordance with the foregoing requirements.
(k) Each Person who has or who acquires any Ownership Interest in a Class
R Certificate shall be deemed by the acceptance or acquisition of such Ownership
Interest to have agreed to be bound by the following provisions and to have
irrevocably appointed the Trustee designee as its attorney-in-fact to negotiate
the terms of any mandatory sale under clause (vi) below and to execute all
instruments of Transfer and to do all other things necessary in connection with
any such sale, and the rights of each Person acquiring any Ownership Interest in
a Class R Certificate are expressly subject to the following provisions:
(i) Each Person holding or acquiring any Ownership Interest in a
Class R Certificate shall be a Permitted Transferee, shall not be holding
or acquiring such Ownership Interest on behalf of any Person that is not a
Permitted Transferee and shall promptly notify the Trustee of any change or
impending change in its status or the status of any beneficial owner as a
Permitted Transferee.
(ii) No Person shall acquire an Ownership Interest in a Class R
Certificate unless such Ownership Interest is a pro rata undivided
interest.
(iii) No Ownership Interest in a Class R Certificate may be
transferred without the express written consent of the Trustee. In
connection with any proposed Transfer of
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any Ownership Interest in a Class R Certificate, the Trustee shall as a
condition to such consent, require delivery to it, in form and substance
satisfactory to it, of each of the following:
(A) an affidavit from the proposed Transferee in the form
attached as Exhibit J (a "Transfer Affidavit") to the effect that (a)
such Transferee is a Permitted Transferee and that it is not
acquiring its Ownership Interest in the Class R Certificate that is
the subject of the proposed Transfer as a nominee, trustee or agent
for any Person who is not a Permitted Transferee; (b) the proposed
Transferee does not have the intention to impede the assessment or
collection of tax legally required to be paid with respect to any
Ownership Interest in a Class R Certificate and the Proposed
Transferee acknowledges that the Class R Certificate may generate tax
liabilities in excess of the cash flow associated with the Class R
Certificate and intends to pay such taxes associated with the Class R
Certificate when they become due, (c) it has no present knowledge or
expectation that it will become insolvent or subject to a bankruptcy
proceeding for so long as it holds any Ownership Interest in a Class
R Certificate, (d) it is not a Non-U.S. Person or is a Non-U.S.
Person and has furnished to the transferor and the Trustee (i) an
Internal Revenue Service Form 4224 or (ii) an opinion of a nationally
recognized tax counsel to the effect that such transfer of a Class R
Certificate will not be disregarded for federal income tax purposes
and (e) it will abide by the provisions of this Section 6.02(k); and
(B) a covenant of the proposed Transferee to the effect that
the proposed Transferee agrees to be bound by and to abide by the
Transfer restrictions applicable to the Class R Certificates
(iv) Notwithstanding the delivery of a Transfer Affidavit by a
proposed Transferee under clause (iii) above, if the Trustee has actual
knowledge that the proposed Transferee is not a Permitted Transferee, no
Transfer of any Ownership Interest in a Class R Certificate to such
proposed Transferee shall be effected.
(v) Any attempted or purported Transfer of any Ownership Interest
in a Class R Certificate in violation of the provisions of this Section
6.02 shall be absolutely null and void and shall vest no rights in the
purported Transferee. If any purported Transferee shall, in violation of
the provisions of this Section 6.02, become a Holder of a Class R
Certificate, then the prior Holder of such Certificate that is a Permitted
Transferee shall, upon discovery that the registration of Transfer of such
Class R Certificate was not in fact permitted by this Section 6.02, be
restored to all rights as Holder thereof retroactive to the date of
registration of Transfer of such Class R Certificate. The Trustee shall be
under no liability to any Person for any registration of Transfer of a
Class R Certificate that is in fact not permitted by this Section 6.02 or
for making any distributions due on such Certificate to the Holder thereof
or taking any other action with respect to such Holder under the provisions
of the Agreement so long as the Transfer was not registered upon the
express written consent of the Trustee. The Trustee shall be entitled to
recover from any Holder of a Class R Certificate that was in fact not a
Permitted Transferee at the time
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such distributions were made all distributions made on such Class R
Certificate. Any such distributions so recovered by the Trustee shall be
distributed and delivered by the Trustee to the prior Holder of such
Certificate that is a Permitted Transferee.
(vi) If any Person other than a Permitted Transferee acquires any
Ownership Interest in a Class R Certificate in violation of the
restrictions in this Section 6.02(k), then the Trustee shall have the
right, without notice to the Holder of such Class R Certificate or any
other Person having an Ownership Interest therein, to sell such Class R
Certificate to a purchaser selected by the Trustee on such terms as the
Trustee may choose. Such purchaser may be the Trustee itself or any
affiliate of the Trustee. The proceeds of such sale, net of commissions
(which may include commissions payable to the Trustee or its affiliates),
expenses and taxes due, if any, will be remitted by the Trustee to the
previous Holder of such Class R Certificate that is a Permitted Transferee,
except that in the event that the Trustee determines that the Holder of
such Class R Certificate may be liable for any amount due under this
Section 6.02(k) or any other provisions of this Agreement, the Trustee may
withhold a corresponding amount from such remittance as security for such
claim. The terms and conditions of any sale under this clause (vi) shall be
determined in the sole discretion of the Trustee, and it shall not be
liable to any Person having an Ownership Interest in a Class R Certificate
as a result of its exercise of such discretion.
(vii) Each Person holding or acquiring any Ownership Interest in a
Class R Certificate shall agree (A) to require a Transfer Affidavit from
any other Person to whom such person attempts to transfer any Ownership
Interest in a Class R Certificate and (B) not to transfer any Ownership
Interest in, or to cause the transfer of any Ownership Interest in, a Class
R Certificate if it has actual knowledge that such Person is not a
Permitted Transferee or will be holding any Ownership Interest in a Class R
Certificate on behalf of a Person that is not a Permitted Transferee.
(l) Upon notice to the Trustee that any Ownership Interest in a Class R
Certificate has been transferred, either directly or indirectly, to any Person
that is not a Permitted Transferee or an agent thereof (including a broker,
nominee or middleman) in contravention of the foregoing restrictions, or that is
a pass-through entity as defined in Section 860E(e)(6) of the Code an interest
of which is held of record by a Person that is not a Permitted Transferee, the
Trustee agrees to furnish to the Internal Revenue Service, the transferor of
such Class R Certificate or such agent or pass-through entity such information
necessary to the application of Section 860E(e) of the Code as may be required
by the Code, including but not limited to the present value of the total
anticipated excess inclusions with respect to such Class R Certificate (or
portion thereof) for periods after such transfer and the total excess inclusions
for any taxable year allocable to any holder of an interest in such pass-through
entity that is not a Permitted Transferee. The Trustee shall require the Master
Servicer to make all necessary computations under this paragraph; provided,
however, that the Trustee shall in no event be excused from furnishing such
information to the Internal Revenue Service.
(m) The foregoing provisions of Section 6.02(k)-(l) shall cease to apply
to Transfers occurring on or after the date on which there shall have been
delivered to the Trustee, in form and substance satisfactory to the Trustee, (i)
confirmation from each Rating Agency that the
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removal of the restrictions on Transfer set forth in Section 6.02(k)-(l) will
not cause such Rating Agency to downgrade its current rating of the Class A and
Class M Certificates and (ii) an Opinion of Counsel to the effect that such
removal will not cause the Trust to fail to qualify as a REMIC. The affidavit
referred to in clause (k)(iii)A above shall not be required in the case of the
initial Transfer to Household Finance Corporation.
Section 6.03. Mutilated, Destroyed, Lost or Stolen Certificates. If (i) any
mutilated Certificate is surrendered to the Certificate Registrar or the
Certificate Registrar receives evidence to its satisfaction of the destruction,
loss or theft of any Certificate, and (ii) there is delivered to the Trustee,
the Master Servicer and the Certificate Registrar such security or indemnity as
may be required by them to save each of them harmless, then, in the absence of
notice to the Trustee or the Certificate Registrar that such Certificate has
been acquired by a bona fide purchaser, the Trustee shall execute on behalf of
the Trust and shall authenticate and deliver, in exchange for or in lieu of any
such mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
Class, tenor and Percentage Interest. Upon the issuance of any new Certificate
under this Section, the 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 relation thereto and any other expenses (including the fees
and expenses of the Trustee and the Certificate Registrar) connected therewith.
Any duplicate Certificate issued pursuant to this Section shall constitute
complete and indefeasible evidence of ownership in the Trust, as if originally
issued, whether or not the lost, stolen or destroyed Certificate shall be found
at any time.
Section 6.04. Persons Deemed Owners. Prior to due presentation of a
Certificate for registration of transfer, the Master Servicer, the Depositor,
the Trustee, the Certificate Registrar and any agent of the Master Servicer, the
Depositor, the Trustee or the Certificate Registrar may treat the Person in
whose name any Certificate is registered as the owner of such Certificate for
the purpose of receiving distributions pursuant to Section 5.01 and for all
other purposes whatsoever, and none of the Master Servicer, the Depositor, the
Trustee, the Certificate Registrar or any agent of any of them shall be affected
by notice to the contrary.
Section 6.05. Appointment of Paying Agent.
(a) The Paying Agent shall make distributions to Certificateholders from
the Collection Account pursuant to Section 5.01 and shall report the amounts of
such distributions to the Trustee. The duties of the Paying Agent may include
the obligation (i) to withdraw funds from the Collection Account pursuant to
Section 3.03 for the purpose of making the distributions referred to above and
(ii) to distribute statements and provide information to Certificateholders as
required hereunder. The Paying Agent hereunder shall at all times be a
corporation duly incorporated and validly existing under the laws of the United
States of America or any state thereof, authorized under such laws to exercise
corporate trust powers and subject to supervision or examination by federal or
state authorities. The Paying Agent shall initially be the Trustee. The Trustee
may appoint a successor to act as Paying Agent, which appointment shall be
reasonably satisfactory to the Depositor.
(b) The Trustee shall cause the Paying Agent (if other than the Trustee)
to execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee
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that such Paying Agent shall hold all sums, if any, held by it for payment to
the Certificateholders in trust for the benefit of the Certificateholders
entitled thereto until such sums shall be paid to such Certificateholders and
shall agree that it shall comply with all requirements of the Code regarding the
withholding of payments in respect of federal income taxes due from Certificate
Owners and otherwise comply with the provisions of this Agreement applicable to
it.
Section 6.06. Actions of Certificateholders.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Agreement to be given or taken by
Certificateholders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Certificateholders in person or by
their 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, when required, to the Depositor or the Master
Servicer. Proof of execution of any such instrument or of a writing appointing
any such agent shall be sufficient for any purpose of this Agreement and
conclusive in favor of the Trustee, the Depositor and the Master Servicer, if
made in the manner provided in this Section.
(b) The fact and date of the execution by any Certificateholder of any
such instrument or writing may be proved in any reasonable manner which the
Trustee deems sufficient.
(c) Any request, demand, authorization, direction, notice, consent, waiver
or other act by a Certificateholder shall bind every Holder of every Certificate
issued upon the registration of transfer thereof or in exchange therefor or in
lieu thereof, in respect of anything done, or omitted to be done, by the
Trustee, the Depositor or the Master Servicer in reliance therein, whether or
not notation of such action is made upon such Certificate.
(d) The Trustee may require such additional proof of any matter referred
to in this Section 6.06 as it shall deem necessary.
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Article VII
The Master Servicer and the Depositor
Section 7.01. Liability of the Master Servicer and the Depositor. The
Master Servicer shall be liable in accordance herewith only to the extent of the
obligations specifically imposed upon and undertaken by the Master Servicer
herein. The Depositor shall be liable in accordance herewith only to the extent
of the obligations specifically imposed upon and undertaken by the Depositor
herein.
Section 7.02. Merger or Consolidation of, or Assumption of the Obligations
of, the Master Servicer or the Depositor. Any corporation into which the Master
Servicer or Depositor may be merged or consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Master
Servicer or the Depositor shall be a party, or any corporation succeeding to the
business of the Master Servicer or the Depositor, shall be the successor of the
Master Servicer or the Depositor, as the case may be, hereunder, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding.
Section 7.03. Limitation on Liability of the Master Servicer, the
Depositor and Others. None of the Master Servicer, the Depositor, or any
director, officer, employee or agent of the Master Servicer or the Depositor
shall be under any liability to the Trust or the Certificateholders for any
action taken or for refraining from the taking of any action by the Master
Servicer or the Depositor, as applicable, in good faith pursuant to this
Agreement, or for errors in judgment; PROVIDED, HOWEVER, that this provision
shall not protect the Master Servicer, the Depositor or any such person against
any liability which would otherwise be imposed by reason of willful misfeasance,
bad faith or gross negligence in the performance of duties or by reason of
reckless disregard of obligations and duties hereunder, and that this provision
shall not be construed to entitle the Master Servicer to indemnity in the event
that amounts advanced by the Master Servicer to retire any senior Lien exceed
Net Liquidation Proceeds realized with respect to the related Home Equity Loan.
The Master Servicer, the Depositor and any director, officer, employee or agent
of the Master Servicer or the Depositor may rely in good faith on any document
of any kind PRIMA FACIE properly executed and submitted by any Person respecting
any matters arising hereunder. The Master Servicer, the Depositor and any
director, officer, employee or agent of the Master Servicer or the Depositor
shall be indemnified by the Trust and held harmless against any loss, liability
or expense incurred in connection with any legal action relating to this
Agreement or the Certificates, other than any loss, liability or expense related
to any specific Home Equity Loan or Home Equity Loans (except as any such loss,
liability or expense shall be otherwise reimbursable pursuant to this Agreement)
and any loss, liability or expense incurred by reason of willful misfeasance,
bad faith or gross negligence in the performance of duties hereunder or by
reason of reckless disregard of obligations and duties hereunder. Neither the
Master Servicer nor the Depositor shall be under any obligation to appear in,
prosecute or defend any legal action which is not incidental to its respective
duties under this Agreement, and which in its opinion may involve it in any
expense or liability; PROVIDED, HOWEVER, that the Master Servicer or the
Depositor may, in its sole discretion, undertake any such action which it may
deem necessary or desirable in respect of this Agreement and the rights and
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duties of the parties hereto and the interests of the Certificateholders
hereunder. In such event, the reasonable legal expenses and costs of such action
and any liability resulting therefrom and any claims by the Master Servicer or
the Depositor hereunder for indemnification shall be expenses, costs and
liabilities of the Trust, and the Master Servicer or the Depositor, as the case
may be, shall be entitled to be reimbursed therefor and indemnified pursuant to
the terms hereof from amounts deposited in the Collection Account as provided by
Section 3.03. The Master Servicer's and the Depositor's right to indemnity or
reimbursement pursuant to this Section shall survive any resignation or
termination of the Master Servicer pursuant to Section 7.04 or 8.01 with respect
to any losses, expenses, costs or liabilities arising prior to such resignation
or termination (or arising from events that occurred prior to such resignation
or termination). The Master Servicer shall have no claim (whether by subrogation
or otherwise) or other action against any Certificateholder for any amounts paid
by the Master Servicer pursuant to any provision of this Agreement.
Section 7.04. Master Servicer Not to Resign. Subject to the provisions of
Section 7.02, 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) each Rating Agency shall have confirmed to the Trustee that
the appointment of such proposed successor servicer as Master Servicer hereunder
will not result in the reduction or withdrawal of the then-current rating of the
Class A or Class M Certificates; and (c) such proposed successor servicer has
agreed in writing to assume the obligations of Master Servicer hereunder and 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 8.02. Any such resignation shall not relieve the Master
Servicer of responsibility for any of the obligations specified in Sections 8.01
and 8.02 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 7.05. 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 comparable to those with which the Master Servicer
complies pursuant to Section 3.01. 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 7.04. The
Master Servicer shall provide each Rating Agency and the Trustee with written
notice prior to the delegation of any of
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its duties to any Person other than any of the Master Servicer's Affiliates or
their respective successors and assigns.
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Article VIII
Events of Default
Section 8.01. Events of Default. If any one of the following events
("Events of Default") shall occur and be continuing:
(i) Any failure by the Master Servicer to deposit in the
Collection Account any deposit required to be made under the terms of this
Agreement which continues unremedied for a period of five (5) Business
Days after the date upon which written notice of such failure shall have
been given to the Master Servicer by the Trustee, or to the Master
Servicer and the Trustee by Holders of Certificates evidencing not less
than 51% of the aggregate Percentage Interests of the Regular
Certificates; or
(ii) Any failure on the part of the Master Servicer duly to observe
or perform in any material respect any other covenants or agreements of
the Master Servicer set forth in the Certificates or in this Agreement,
which failure (A) materially and adversely affects the interests of
Certificateholders and (B) continues unremedied for a period of sixty (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, or to the Master Servicer and the Trustee by Holders of
Certificates evidencing not less than 51% of the aggregate Percentage
Interests of the Regular Certificates; or
(iii) The entry against the Master Servicer of a decree or order by
a court or agency or supervisory authority having jurisdiction in the
premises for the appointment of a trustee, conservator, receiver or
liquidator in any insolvency, conservatorship, receivership, readjustment
of debt, marshalling of assets and liabilities or similar proceedings, or
for the winding up or liquidation of its affairs, and the continuance of
any such decree or order unstayed and in effect for a period of 60
consecutive days; or
(iv) The consent by the Master Servicer to the appointment of a
trustee, conservator, receiver or liquidator in any insolvency,
conservatorship, receivership, readjustment of debt, marshalling of assets
and liabilities or similar proceedings of or relating to the Master
Servicer or of or relating to substantially all of its property; or the
Master Servicer shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for
the benefit of its creditors, or voluntarily suspend payment of its
obligations;
then, and in each and every case, so long as an Event of Default shall not have
been remedied by the Master Servicer, either the Trustee or the Holders of
Certificates evidencing not less than 51% of the aggregate Percentage Interests
of the Regular Certificates, by notice then given in writing to the Master
Servicer (and to the Trustee if given by the Regular Certificateholders) may
terminate all of the rights and obligations of the Master Servicer as servicer
under this Agreement; PROVIDED, HOWEVER, that the responsibilities and duties of
the initial Master Servicer with respect to the purchase of Home Equity Loans
pursuant to Sections 2.04(c) and 3.01 shall
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not terminate. Any such notice to the Master Servicer shall also be given to
each Rating Agency. On or after the receipt by the Master Servicer of such
written notice, all authority and power of, and all benefits accruing to, the
Master Servicer under this Agreement, whether with respect to the Certificates
or the Home Equity Loans or otherwise, shall pass to and be vested in the
Trustee or, if a successor Master Servicer has been appointed under Section
8.02, such successor Master Servicer pursuant to and under this Section 8.01;
and, without limitation, the Trustee is hereby authorized and empowered to
execute and deliver, on behalf of the 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 each
Home Equity Loan and related documents, or otherwise. The Master Servicer agrees
to cooperate with the Trustee in effecting the termination of the
responsibilities and rights of the Master Servicer hereunder, including, without
limitation, the transfer to the Trustee for the administration by it of all cash
amounts that shall at the time be held by the terminated Master Servicer and to
be deposited by it in the Collection Account, or that have been deposited by the
terminated Master Servicer in the Collection Account or thereafter received by
the terminated Master Servicer with respect to the Home Equity Loans.
Notwithstanding the foregoing, a delay in or failure of performance under
Section 8.01(i) for a period of five (5) Business Days or under Section 8.01(ii)
for a period of sixty (60) days, shall not constitute an Event of Default 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, the Depositor and the Regular Certificateholders 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. The
Master Servicer shall immediately notify the Trustee and each Rating Agency in
writing of any Events of Default.
Section 8.02. Trustee to Act; Appointment of Successor.
(a) On and after the time the Master Servicer receives a notice of
termination pursuant to Section 7.04 or 8.01, the Trustee 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 herein and shall be
subject to all the responsibilities, duties and liabilities relating thereto
placed on the Master Servicer by the terms and provisions hereof; provided,
however, that the responsibilities and duties of HFC as Master Servicer with
respect to the purchase of the Home Equity Loans pursuant to Sections 2.04(c)
and 3.01 shall not terminate. As compensation therefor, the Trustee shall be
entitled to such compensation as the Master Servicer would have been entitled to
hereunder if no such notice of termination had been given. Notwithstanding the
above, (i) if the Trustee is unwilling to act as successor Master Servicer, or
(ii) if the Trustee is legally unable so to act, the Trustee may (in the
situation described in clause (i)) or shall (in the situation described in
clause (ii)) appoint, or petition a court of competent jurisdiction to appoint,
any housing and home finance institution or other mortgage loan or home equity
loan servicer
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having all licenses and permits required in order to perform its
obligations hereunder and a net worth of not less than $50,000,000 as the
successor to the Master Servicer hereunder in the assumption of all or any part
of the responsibilities, duties or liabilities of the Master Servicer hereunder;
provided that the appointment of any such successor Master Servicer will not
result in the qualification, reduction or withdrawal of the then-current rating
assigned to the either the Class A or Class M Certificates by the Rating
Agencies, as evidenced by a writing to such effect delivered to the Trustee.
Pending appointment of a successor to the Master Servicer hereunder, unless the
Trustee is prohibited by law from so acting, the Trustee shall act in such
capacity as hereinabove provided. In connection with such appointment and
assumption, the successor shall be entitled to receive compensation out of
payments on Home Equity Loans in an amount equal to the compensation which the
Master Servicer would otherwise have received pursuant to Section 3.09 (or such
lesser compensation as the Trustee and such successor shall agree). The Trustee
and such successor shall take such action, consistent with this Agreement, as
shall be necessary to effectuate any such succession.
(b) Any successor, including the Trustee, to the Master Servicer as master
servicer shall during the term of its service as master servicer (i) continue to
service and administer the Home Equity Loans for the benefit of
Certificateholders and (ii) maintain in force a policy or policies of insurance
covering errors and omissions in the performance of its obligations as Master
Servicer hereunder and a fidelity bond in respect of its officers, employees and
agents to the same extent as the Master Servicer is so required pursuant to
Section 3.13. The appointment of a successor Master Servicer shall not affect
any liability of the predecessor Master Servicer which may have arisen under
this Agreement prior to its termination as Master Servicer (including, without
limitation, any deductible under an insurance policy pursuant to Section 3.04),
nor shall any successor Master Servicer be liable for any acts or omissions of
the predecessor Master Servicer or for any breach by such Master Servicer or the
Depositor of any of their representations or warranties contained herein or in
any related document or agreement.
Section 8.03. Notification to Certificateholders. Upon any termination or
appointment of a successor to the Master Servicer pursuant to this Article VIII,
the Trustee shall give prompt written notice thereof to the Certificateholders
at their respective addresses appearing in the Certificate Register and each
Rating Agency.
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Article IX
The Trustee
Section 9.01. Duties of Trustee. The Trustee, prior to the occurrence of
an Event of Default and after the curing of all Events of Default which may have
occurred, undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement. If an Event of Default of which a
Responsible Officer of the Trustee shall have actual knowledge has occurred
(which has not been cured), the Trustee shall exercise such rights and powers
vested in it by this Agreement, and use the same degree of care and skill in
their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of his own affairs.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement.
No provision of this Agreement shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act or
its own misconduct; provided, however, that:
(i) prior to the occurrence of an Event of Default of which a
Responsible Officer of the Trustee shall have actual knowledge, and after
the curing of all such Events of Default which may have occurred, the
duties and obligations of the Trustee shall be determined solely by the
express provisions of this Agreement, the Trustee shall not be liable
except for the performance of such duties and obligations as are
specifically set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the Trustee and, in
the absence of bad faith on the part of the Trustee, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon any certificates or opinions
furnished to the Trustee and conforming to the requirements of this
Agreement;
(ii) the Trustee shall not be personally liable for an error of
judgment made in good faith by a Responsible Officer of the Trustee,
unless it shall be proved that the Trustee was negligent in performing its
duties in accordance with the terms of this Agreement;
(iii) the Trustee shall not be personally liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in
accordance with the consent or in accordance with the direction of the
Holders of Regular Certificates evidencing not less than 51% of the
aggregate Percentage Interests of the Regular Certificates relating to the
time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred upon
the Trustee, under this Agreement; and
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(iv) the Trustee shall not be charged with knowledge of any failure
by the Master Servicer to comply with the obligations of the Master
Servicer referred to in clauses (i) and (ii) of Section 8.01 unless a
Responsible Officer of the Trustee obtains actual knowledge of such
failure or the Trustee receives written notice of such failure from the
Master Servicer or the Holders of Regular Certificates evidencing not less
than 51% of the aggregate Percentage Interests of the Regular
Certificates.
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 there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it, and
none of the provisions contained in this Agreement shall in any event require
the Trustee to perform, or be responsible for the manner of performance of, any
of the obligations of the Master Servicer under this Agreement, except during
such time, if any, as the Trustee shall be the successor to, and be vested with
the rights, duties, powers and privileges of, the Master Servicer in accordance
with the terms of this Agreement.
Section 9.02. Certain Matters Affecting the Trustee. Except as otherwise
provided in Section 9.01:
(i) the Trustee may request and rely upon, and shall be protected
in acting or refraining from acting upon, any resolution, Officer's
Certificate, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal,
bond or other paper or document reasonably believed by it to be genuine
and to have been signed or presented by the proper party or parties;
(ii) the Trustee may consult with counsel and any written advice or
opinion of counsel shall be full and complete authorization and protection
in respect of any action taken or suffered or omitted by it hereunder in
good faith and in accordance with such advice or Opinion of Counsel;
(iii) the 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 hereunder or in relation hereto, at the
request, order or direction of any of the Certificateholders, pursuant to
the provisions of this Agreement, unless such Certificateholders shall
have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which may be incurred therein or thereby;
nothing contained herein shall, however, relieve the Trustee of the
obligations, upon the occurrence of an Event of Default of which a
Responsible Officer of the Trustee has actual knowledge (which has not
been cured), to exercise such of the rights and powers vested in it by
this Agreement, and to use the same degree of care and skill in their
exercise as a prudent person would exercise or use under the circumstances
in the conduct of his own affairs;
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(iv) the Trustee shall not be personally liable for any action
taken, suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon it
by this Agreement;
(v) prior to the occurrence of an Event of Default of which a
Responsible Officer of the Trustee has actual knowledge and after the
curing of all Events of Default which may have occurred, 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
documents, unless requested in writing to do so by Holders of Regular
Certificates evidencing not less than 51% of the aggregate Percentage
Interests of the Regular Certificates; 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 Agreement,
the Trustee may require reasonable indemnity against such cost, expense or
liability as a condition to such proceeding. The reasonable expense of
every such examination shall be paid by the Master Servicer or, if paid by
the Trustee, shall be reimbursed by the Master Servicer upon demand.
Nothing in this clause (v) shall derogate from the obligation of the
Master Servicer to observe any applicable law prohibiting disclosure of
information regarding the Mortgagors; and
(vi) 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 (except that the Trustee shall not be responsible
for selecting the Master Servicer as custodian and bailee).
Section 9.03. Trustee Not Liable for Certificates or Home Equity Loans.
The recitals contained herein and in the Certificates (other than the
authentication of the Trustee on the Certificates) shall be taken as the
statements of the Master Servicer, and the Trustee assumes no responsibility for
the correctness of the same. The Trustee makes no representations as to the
validity or sufficiency of this Agreement or of the Certificates (other than the
signature and authentication of the Trustee on the Certificates) or of any Home
Equity Loan or related document. The Trustee shall not be accountable for the
use or application by the Master Servicer of any of the Certificates or of the
proceeds of such Certificates, or for the use or application of any funds paid
to the Depositor or the Master Servicer in respect of the Home Equity Loans or
deposited in or withdrawn from the Collection Account by the Master Servicer.
The Trustee shall at no time have any responsibility or liability for or with
respect to the legality, validity and enforceability of any Mortgage or any Home
Equity Loan, or the perfection and priority of any Mortgage or the maintenance
of any such perfection and priority, or for or with respect to the sufficiency
of the Trust or its ability to generate the payments to be distributed to
Certificateholders under this Agreement, including, without limitation: the
existence, condition and ownership of any Mortgaged Property; the existence and
enforceability of any hazard insurance thereon (other than if the Trustee shall
assume the duties of the Master Servicer pursuant to Section 8.02); the
existence and contents of any Home Equity Loan on any computer or other record
thereof (other than if the Trustee shall assume the duties of the Master
Servicer pursuant to Section 8.02); the validity of the assignment of any Home
Equity Loan to the Trust
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or of any intervening assignment; the completeness of any Home Equity Loan; the
performance or enforcement of any Home Equity Loan (other than if the Trustee
shall assume the duties of the Master Servicer pursuant to Section 8.02); the
compliance by the Depositor or the Master Servicer with any warranty or
representation made under this Agreement or in any related document or the
accuracy of any such warranty or representation prior to the Trustee's receipt
of notice or other discovery of any non-compliance therewith or any breach
thereof; any investment of monies by or at the direction of the Master Servicer
or any loss resulting therefrom, it being understood that the Trustee shall
remain responsible for any Trust property that it may hold in its individual
capacity; the acts or omissions of the Depositor, the Master Servicer (other
than if the Trustee shall assume the duties of the Master Servicer pursuant to
Section 8.02), any Servicer (other than if the Trustee shall assume the duties
of the Master Servicer pursuant to Section 8.02 and shall engage such Servicer
as its subservicer) or any Mortgagor; any action of the Master Servicer (other
than if the Trustee shall assume the duties of the Master Servicer pursuant to
Section 8.02), or any Servicer (other than if the Trustee shall assume the
duties of the Master Servicer pursuant to Section 8.02 and shall engage such
Servicer as its subservicer) taken in the name of the Trustee; or any action by
the Trustee taken at the instruction of the Master Servicer in accordance with
the terms of this Agreement (other than if the Trustee shall assume the duties
of the Master Servicer pursuant to Section 8.02); PROVIDED, HOWEVER, that the
foregoing shall not relieve the Trustee of its obligation to perform its duties
under this Agreement. The 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 (unless the Trustee shall have become the successor
Master Servicer) or to prepare or file any Securities and Exchange Commission
filing for the Trust or to record this Agreement.
Section 9.04. Trustee May Own Certificates. The Trustee in its individual
or any other capacity may become the owner or pledgee of Certificates with the
same rights as it would have if it were not Trustee.
Section 9.05. Master Servicer to Pay Trustee's Fees and Expenses. The
Master Servicer covenants and agrees to pay to the Trustee from time to time,
and the Trustee shall be entitled to, reasonable compensation (which shall not
be limited by any provision of law in regard to the compensation of a trustee of
an express trust) for all services rendered by it in the execution of the trusts
hereby created and in the exercise and performance of any of the powers and
duties hereunder of the Trustee, and the Master Servicer will pay or reimburse
the Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any of the
provisions of this Agreement (including the reasonable compensation and the
expenses and disbursements of its counsel and of all persons not regularly in
its employ) except any such expense, disbursement or advance as may arise from
its negligence or bad faith. In addition, the Master Servicer and the Depositor,
jointly and severally, covenant and agree to indemnify the Trustee from, and
hold it harmless against, any and all losses, liabilities, damages, claims or
expenses other than those resulting from the Trustee's willful malfeasance, bad
faith or gross negligence or by reason of the Trustee's reckless disregard of
its obligations and duties hereunder.
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Section 9.06. Eligibility Requirements for Trustee. The Trustee hereunder
shall at all times be a corporation duly incorporated and validly existing under
the laws of the United States of America or any state thereof, authorized under
such laws to exercise corporate trust powers, having a combined capital and
surplus of at least $50,000,000 and subject to supervision or examination by
federal or state authority. If such corporation publishes reports of condition
at least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purposes 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. The principal office of the Trustee (other than the initial
Trustee) shall be in a state with respect to which an Opinion of Counsel has
been delivered to such Trustee at the time such Trustee is appointed Trustee to
the effect that the Trust will not be a taxable entity under the laws of such
state. In case at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section, the Trustee shall resign immediately in the
manner and with the effect specified in Section 9.07.
Section 9.07. Resignation or Removal of Trustee. The Trustee may at any
time resign and be discharged from the trusts hereby created by giving written
notice thereof to the Depositor, the Master Servicer and each Rating Agency.
Upon receiving such notice of resignation, the Depositor shall promptly appoint
a successor Trustee by written instrument, in duplicate, one copy of which
instrument shall be delivered to the resigning Trustee and one copy to the
successor Trustee; PROVIDED, HOWEVER, that any such successor Trustee shall be
subject to the prior written approval of the Master Servicer. If no successor
Trustee shall have been so appointed and have accepted appointment within 30
days after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
If at any time the Trustee shall cease to be eligible in accordance with
the provisions of Section 9.06 and shall fail to resign after written request
therefor by the Depositor, or if at any time the Trustee shall be legally unable
to act, or shall be adjudged a bankrupt or insolvent, or a receiver of the
Trustee or of its property shall be appointed, or any public officer shall take
charge or control of the Trustee or of its property or affairs for the purpose
of rehabilitation, conservation or liquidation, then the Depositor may remove
the Trustee. If the Depositor removes the Trustee under the authority of the
immediately preceding sentence, the Depositor shall promptly appoint a successor
Trustee by written instrument, in duplicate, one copy of which instrument shall
be delivered to the Trustee so removed and one copy to the successor Trustee.
Any resignation or removal of the Trustee and appointment of a successor
Trustee pursuant to any of the provisions of this Section shall not become
effective until acceptance of appointment by the successor Trustee as provided
in Section 9.08.
Section 9.08. Successor Trustee. Any successor Trustee appointed as
provided in Section 9.07 shall execute, acknowledge and deliver to the Depositor
and to its predecessor Trustee an instrument accepting such appointment
hereunder, and thereupon the resignation or removal of the predecessor Trustee
shall become effective and such successor Trustee, without any further act, deed
or conveyance, shall become fully vested with all the rights, powers, duties
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and obligations of its predecessor hereunder, with like effect as if originally
named as Trustee. The Depositor, the Master Servicer and the predecessor 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 Trustee all such rights, powers, duties and obligations.
No successor Trustee shall accept appointment as provided in this Section
unless at the time of such acceptance (i) such successor Trustee shall be
eligible under the provisions of Section 9.06, (ii) the unsecured long-term debt
of such successor Trustee is rated at least "A3" by Moody's or (iii) the Rating
Agencies have confirmed that such successor Trustee will not result in a
withdrawal or a downgrading of the then current rating on the Class A or Class M
Certificates. The predecessor Trustee shall notify the Rating Agency of the
appointment of any successor Trustee.
Upon acceptance of appointment by a successor Trustee as provided in this
Section, the Master Servicer shall mail notice of the succession of such Trustee
hereunder to all Holders of Certificates at their addresses as shown in the
Certificate Register and to each Rating Agency. If the Master Servicer fails to
mail such notice within 30 days after acceptance of appointment by the successor
Trustee, the successor Trustee shall cause such notice to be mailed at the
expense of the Master Servicer.
Section 9.09. Merger or Consolidation of Trustee. Any corporation into
which the 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 Trustee shall be a party, or any corporation
succeeding to all or substantially all of the business of the Trustee, shall be
the successor of the Trustee hereunder, PROVIDED that such corporation shall be
eligible under the provisions of Section 9.06, without the execution or filing
of any paper or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding.
Section 9.10. 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 Trust or any Mortgaged Property may at the time be located, the Depositor
and the Trustee acting jointly shall have the power and shall execute and
deliver all instruments to appoint one or more Persons approved by the to act as
co-trustee or co-trustees, jointly with the Trustee, or separate trustee or
separate trustees, of all or any part of the Trust, and to vest in such Person
or Persons, in such capacity and for the benefit of the Certificateholders, 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 Trustee may consider necessary or desirable. Any such
co-trustee or separate trustee shall be subject to the written approval of the
Master Servicer. 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, or in
the case an Event of Default shall have occurred and be continuing, the Trustee
alone shall have the power to make such appointment. No co-trustee or separate
trustee hereunder shall be required to meet the terms of eligibility as a
successor Trustee under Section 9.06 and no notice to Certificateholders of the
appointment of any co-trustee or separate trustee shall be required under
Section 9.08.
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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 (whether as Trustee hereunder
or as successor to the Master Servicer hereunder), 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 held personally liable by reason
of any act or omission of any other trustee hereunder; and
(iii) the Master Servicer and the Trustee acting jointly may at any
time accept the resignation of or remove any separate trustee or
co-trustee, except that following the occurrence of an Event of Default
which has not been cured, the Trustee acting alone may accept the
resignation of or remove any separate trustee or co-trustee.
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 IX. 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 Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
Depositor and the Master Servicer.
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, 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 9.11. Trustee May Enforce Claims Without Possession of
Certificates. All rights of action and claims under this Agreement or the
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto. Any such proceeding instituted by the Trustee shall
be brought in its own name or in its capacity as Trustee. Any recovery of
judgment shall, after
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provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
benefit of the Certificateholders.
Section 9.12. Inspection of Mortgage Files. Following the time that the
Mortgage Files have been delivered to the Trustee upon reasonable prior notice
and during regular business hours, the Trustee shall permit representatives of
applicable state regulatory to inspect the Mortgage Files on the Trustee's
premises or shall provide such documents at such places required by state
regulations, including the offices of the Servicers. Any loss incurred by the
Trustee in fulfilling such obligations shall be paid by the Master Servicer.
Section 9.13. Tax Returns. The Trustee, upon request, will furnish the
Master Servicer with all such information as may be reasonably required in
connection with the preparation of all tax returns of the Trust, and shall, upon
request, execute such returns.
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Article X
Termination
Section 10.01. Termination.
(a) Subject to Section 10.02, the respective obligations and
responsibilities of the Master Servicer, the Depositor and the Trustee created
hereby (other than the obligation of the Trustee to make certain payments to
Certificateholders after the final Distribution Date, the obligations of the
Depositor and the Master Servicer under Section 9.05 and the obligation of the
Master Servicer to send certain notices as hereinafter set forth) shall
terminate upon the last action required to be taken by the Trustee pursuant to
this Article X on the earliest of (i) the repurchase by the Master Servicer of
all Home Equity Loans and all property acquired in respect of any Home Equity
Loan remaining in the Trust at a price (the "Termination Price") equal to the
greater of (A) the sum of (x) 100% of the Principal Balance of each Home Equity
Loan (other than any Home Equity Loan as to which title to the underlying
Mortgaged Property has been acquired and whose fair market value is included
pursuant to clause (y) below) as of the first day of the Collection Period
preceding the Distribution Date upon which the proceeds of any repurchase are to
be distributed and (y) the fair market value of such acquired property (as
determined by the Master Servicer as of the close of business on the third
Business Day next preceding the date upon which notice of any such termination
is furnished to Certificateholders pursuant to Section 10.01(e)) plus, in each
case, one month's interest at the applicable Net Loan Rate on the Principal
Balance of each Home Equity Loan (including any Home Equity Loan as to which
title to the underlying Mortgaged Property has been acquired), (B) the aggregate
fair market value (as determined by the Master Servicer as of the close of
business on such third preceding Business Day) of all of the assets of the
Trust, or (C) the sum of the Certificate Principal Balance of the Class A and
Class M Certificates, together with any unpaid Interest Carry Forward Amounts
allocable to such Classes, plus one month's interest on such Certificate
Principal Balance and any unpaid Interest Carry Forward Amounts at the related
Pass-Through Rates, or (ii) the final payment or other liquidation of the
Principal Balance of the last Home Equity Loan remaining in the Trust or the
disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Home Equity Loan or (iii) the disposition of the Home Equity
Loans and Mortgaged Property pursuant to the provisions of Section 10.03 or (iv)
the Distribution Date in October 2030; provided that in no event shall the Trust
created hereby continue beyond the expiration of 21 years from the death of the
last survivor of the descendants of Joseph P. Kennedy, the late Ambassador of
the United States to the Court of St. James, living on the date hereof. Upon
termination in accordance with clause (i), (ii) or (iv) of this Section 10.01,
the Trustee shall execute such documents and instruments of transfer, in each
case without recourse, representation or warranty, presented by the Depositor
and take such other actions as the Depositor may reasonably request to effect
the retransfer of the Home Equity Loans to the Depositor.
(b) The right of the Master Servicer to repurchase all Home Equity Loans
pursuant to clause (i) of Section 10.01(a) above is conditioned upon the
aggregate Certificate Principal Balance of the Regular Certificates being less
than fifteen (15%) percent of the initial aggregate Certificate Principal
Balance of the Regular Certificates and receipt by the Trustee of an Opinion
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of Counsel to the effect that such repurchase will give rise neither to any tax
on prohibited transactions under Section 860(F)(a)(l) of the Code nor to any tax
on contributions to the REMIC after the startup day under Section 860G(d) of the
Code. The Master Servicer may exercise such right on the first Distribution Date
and any Distribution Date thereafter with respect to which the conditions
specified in the preceding sentence are satisfied unless the Trustee has
accepted a qualifying bid for the Home Equity Loans pursuant to subsection (c)
below. If such right is exercised, the Master Servicer shall provide to the
Trustee the certification required by Section 3.08 and the Trustee shall,
promptly following payment of the repurchase price, execute proper instruments
acknowledging termination and discharge of this Agreement. The Master Servicer
may exercise such right on any Distribution Date after the first Distribution
Date on which the conditions specified in the first sentence of this subsection
are satisfied.
(c) If the Master Servicer does not repurchase all of the Home Equity Loans
pursuant to clause (i) of Section 10.01(a) above within three (3) months of the
first Distribution Date upon which such repurchase option may occur, then
promptly on the following Distribution Date the Trustee shall begin a process
for soliciting bids in connection with an auction of the Home Equity Loans. The
Trustee shall provide the Master Servicer written notice of such auction at
least ten (10) Business Days prior to the date bids must be received in such
auction (the "Auction Date"). The auction shall be conducted as follows:
(i) If at least two bids are received, the Trustee shall solicit and
resolicit new bids from all participating bidders until only one bid
remains or the remaining bidders decline to resubmit bids. The Trustee
shall accept the highest of such remaining bids if it is equal to or in
excess of the Termination Price. If less than two bids are received or the
highest bid after the resolicitation process is completed is not equal to
or in excess of the Termination Price, the Trustee shall not consummate
such sale. If a bid meeting the Termination Price is received, then the
Trustee may, and if so requested by the Master Servicer shall, consult with
a financial advisor, which may be an underwriter of the Certificates, to
determine if the fair market value of the Home Equity Loans and related
property has been offered.
(ii) If the first auction conducted by the Trustee does not produce
any bid at least equal to the Termination Price, then the Trustee shall,
beginning on the Distribution Date occurring approximately three months
after the Auction Date for the failed first auction, commence another
auction in accordance with the requirements of this subsection (c). If such
second auction does not produce any bid at least equal to the Termination
Price, then the Trustee shall, beginning on the Distribution Date occurring
approximately three months after the Auction Date for the failed second
auction, commence another auction in accordance with the requirements of
this subsection (c), and shall continue to conduct similar auctions
approximately every three months thereafter until the earliest of (i)
delivery by the Master Servicer of notice of exercise of its repurchase
option pursuant to clause (i) of Section 10.01(a) above, (ii) receipt by
the Trustee of a bid meeting the conditions specified in the preceding
paragraph, or (iii) the Distribution Date on which the Principal Balance of
all the Home Equity Loans is reduced to zero.
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<PAGE> 82
(iii) If the Trustee receives a bid meeting the conditions specified
in this subsection (c), then the Trustee's written acceptance of such bid
shall constitute a plan of complete liquidation within the meaning of
Section 860F of the Code, and the Trustee shall release to the winning
bidder, upon payment of the bid purchase price, the Mortgage Files
pertaining to the Home Equity Loans being purchased and take such other
actions as the winning bidder may reasonably request to effect the transfer
of the Home Equity Loans to the winning bidder.
(d) If the first auction conducted by the Trustee does not produce any bid
at least equal to the Termination Price, then on the following Distribution Date
and each Distribution Date thereafter the Class M-1 and Class M-2 Certificates
shall be entitled to receive the Additional Principal Distribution Amount,
allocated among such classes pro rata based upon the outstanding Certificate
Principal Balance of each such Class on each such Distribution Date.
(e) Notice of any termination, specifying the Distribution Date (which
shall be a date that would otherwise be a Distribution Date) upon which the
Certificateholders may surrender their Certificates to the Trustee for payment
of the final distribution and cancellation, shall be given promptly by the
Trustee (upon receipt of written directions from the Master Servicer, if the
Depositor is exercising its right to retransfer the Home Equity Loans) by letter
to Certificateholders mailed not earlier than the 15th day and not later than
the 25th day of the month next preceding the month of such final distribution
specifying (i) the Distribution Date upon which final distribution of the
Certificates will be made upon presentation and surrender of the Certificates at
the office or agency of the Trustee therein designated, (ii) the amount of any
such final distribution and (iii) that the Record Date otherwise applicable to
such Distribution Date is not applicable, distributions being made only upon
presentation and surrender of the Certificates at the office or agency of the
Trustee therein specified. In the event written directions are delivered by the
Master Servicer to the Trustee as described in the preceding sentence, the
Depositor shall deposit in the Collection Account on or before the Distribution
Date for such final distribution in immediately available funds an amount which,
when added to the funds on deposit in the Collection Account that are payable to
the related Certificateholders, will be equal to the purchase price for the
assets of the Trust computed as above provided.
(f) Upon presentation and surrender of the Certificates, the Trustee shall
cause to be distributed to the Certificateholders on the Distribution Date for
such final distribution, in proportion to their respective Percentage Interests,
an amount equal to (i) as to each Class of Class A or Class M Certificates, such
Class' appropriate share of the Principal Distribution Amount, any Interest
Carry Forward Amounts and one month's interest at the related Pass-Through Rate
on such Certificate Principal Balance and (ii) as to Class R Certificates the
amount which remains on deposit in the Certificate Account (other than the
amounts retained to meet claims) after application pursuant to clause (i) above.
The distribution on such final Distribution Date shall be in lieu of the
distribution otherwise required to be made on such Distribution Date in respect
of each Class of Certificates.
(g) In the event that all of the Certificateholders shall not surrender
their Certificates for final payment and cancellation on or before such final
Distribution Date, the Trustee shall on such date cause all funds in the
Collection Account not distributed in final distribution to
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Certificateholders to be withdrawn therefrom and credited to the remaining
Certificateholders by depositing such funds in a separate escrow account for the
benefit of such Certificateholders and the Depositor (if the Depositor has
exercised its right to retransfer the Home Equity Loans) or the Trustee (in any
other case) and the Trustee shall give a second written notice to the remaining
Certificateholders to surrender their Certificates for cancellation and receive
the final distribution with respect thereto. If within one year after the second
notice all the Certificates shall not have been surrendered for cancellation,
any funds deposited in such escrow account and remaining unclaimed shall be paid
by the Trustee to the Master Servicer and thereafter Certificateholders shall
look only to the Master Servicer with respect to any claims in respect of such
funds.
Section 10.02. Additional Termination Requirements. (a) In the event that
the Master Servicer exercises its repurchase option as provided in Section
10.01, the Trust shall be terminated in accordance with the following additional
requirements, unless the Trustee has received an Opinion of Counsel to the
effect that the failure of the Trust to comply with the requirements of this
Section will not (i) result in the imposition of taxes on "prohibited
transactions" of the Trust as defined in Section 860F of the Code or
contributions to the REMIC after the startup day as defined in Section 860G(d)
of the Code, or (ii) cause the Trust to fail to qualify as a REMIC at any time
that any Certificates are outstanding:
(i) Within 90 days prior to the final Distribution Date set forth
in the notice given by the Master Servicer under Section 10.01, the
Trustee, at the direction of the Master Servicer, shall adopt a plan of
complete liquidation of the Trust;
(ii) At or after the time of adoption of such a plan of complete
liquidation and at or prior to the Distribution Date for the final
distribution, the Trustee shall sell all of the assets of the Trust to the
Master Servicer, for cash; provided, however, that in the event that a
calendar quarter ends after the time of adoption of such a plan of complete
liquidation but prior to the such final Distribution Date, the Trustee
shall not sell any of the assets of the Trust prior to the close of that
calendar quarter; and
(iii) The Trustee shall make the distributions specified in Section
10.01(f) hereof on or before the final Distribution Date referred to in
clause (i) above.
(b) The Trustee hereby agrees to adopt such a plan of complete liquidation
upon the written request of the Master Servicer and to take such other action in
connection therewith as may be reasonably requested by the Master Servicer.
Section 10.03. Termination Upon Loss of REMIC Status.
(a) Following a final determination by the Internal Revenue Service, or by
a court of competent jurisdiction, in either case from which no appeal is taken
within the permitted time for such appeal, or if any appeal is taken, following
a final determination of such appeal from which no further appeal can be taken,
to the effect that the Trust does not qualify as a REMIC pursuant to Section
860D of the Code (the "Final Determination") and such failure to qualify cannot
reasonably be rectified, as soon as practical but in any event within 30
calendar days following such Final Determination, the Holders of a majority in
interest of the Class R Certificates then
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outstanding or the Master Servicer may direct the Trustee on behalf of the Trust
to adopt a plan of complete liquidation. Upon receipt of such direction from the
Holders of the Class R Certificates or the Master Servicer, the Trustee shall
notify all Certificateholders of such election to liquidate (the "Termination
Notice"). The Trustee shall sell all (but not fewer than all) the Home Equity
Loans, all Mortgaged Property and all other assets (other than cash) then
remaining in the Trust, and distribute the proceeds of the liquidation of the
Trust Fund, each in accordance with the plan of complete liquidation and in the
order specified in Section 10.01(f) hereof, such that, if so directed, the
liquidation of the Trust, the distribution of the proceeds of the liquidation
(and any other cash assets of the Trust) and the termination of this Agreement
occur no later than the close of the 30th day after the date of the Termination
Notice.
(b) Alternatively, following a Final Determination, the Holders
representing a majority in interest of the Class R Certificates then outstanding
may, at their option and upon delivery to the Holders of the Class A
Certificates and Class M Certificates of an opinion of counsel experienced in
Federal income tax matters selected by the Holders of the Class R Certificates,
which opinion shall be reasonably satisfactory in form and substance to the
Trustee, to the effect that the effect of the Final Determination is to increase
substantially the probability that the gross income of the Trust will be subject
to Federal taxation, purchase from the Trust Fund all (but not fewer than all)
the Home Equity Loans, all Mortgaged Property and all other assets (other than
cash) remaining in the Trust at a purchase price equal to the Termination Price.
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Article XI
Miscellaneous Provisions
Section 11.01. Amendment. This Agreement may be amended from time to time
by the Master Servicer, the Depositor and the Trustee, in each case without the
consent of any of the Certificateholders, (i) to cure any ambiguity, (ii) to
correct any defective provisions or to correct or supplement any provisions
herein that may be inconsistent with any other provisions herein, (iii) to add
to the duties of the Depositor or the Master Servicer, (iv) to modify, eliminate
or add to any of its provisions to such extent as shall be necessary to maintain
the qualification of the Trust as a REMIC and to comply with the requirements of
the Code and the REMIC provisions, (v) to add any other provisions with respect
to matters or questions arising under this Agreement, which shall not be
inconsistent with this Agreement, or (vi) to add or amend any provisions of this
Agreement as required by any Rating Agency or any other nationally recognized
statistical rating agency in order to maintain or improve any rating of the
Regular Certificates (it being understood that, after obtaining the ratings in
effect on the Closing Date, neither the Trustee, the Depositor nor the Master
Servicer is obligated to obtain, maintain or improve any such rating); provided,
however, that as evidenced by an Opinion of Counsel (a copy of which shall be
delivered to the Trustee) (at the expense of the requesting party), in each case
such action shall not materially and adversely affect the interests of any
Regular Certificateholder; and provided, further, that the amendment shall not
be deemed to adversely affect in any material respect the interests of the
Regular Certificateholders and no Opinion of Counsel to that effect shall be
required if the Person requesting the amendment receives a confirmation from
each Rating Agency stating that the amendment would not result in the
downgrading or withdrawal of the respective ratings then assigned to the Regular
Certificates.
This Agreement also may be amended from time to time by the Master
Servicer, the Depositor and the Trustee, in each case with the consent of the
Holders of each Class of Regular Certificates which is affected by such
amendment, evidencing Percentage Interests aggregating not less than 51% in
Percentage Interests of such Class or in the case of an amendment which affects
all classes, evidencing Percentage Interests aggregating not less than 51% of
all Classes, for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement or of modifying in
any manner the rights of the Certificateholders; provided, however, that no such
amendment shall (i) reduce in any manner the amount of, or delay the timing of,
collections of payments on Home Equity Loans, or (ii) reduce the aforesaid
percentage required to consent to any such amendment, or (iii) adversely affect
the status of the Trust as a REMIC or create a material risk of the Trust
incurring taxes imposed under Section 860F(a)(1) or 860G(d)(1) of the Code, or
(iv) result in a downgrading of the ratings of the Regular Certificates without,
in each case, the consent of the Holders of all Classes of Certificates then
outstanding or each Class of Certificates affected thereby.
Prior to the solicitation of consent of Certificateholders in connection
with any such amendment, the party seeking such amendment shall furnish the
Trustee with an Opinion of Counsel stating whether such amendment would
adversely affect the qualification of the Trust as a REMIC or create a material
risk of the Trust incurring taxes imposed under 860F(a)(1) or 860G(d)(1) of the
Code and notice of the conclusion expressed in such Opinion of Counsel shall
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be included with any such solicitation. An amendment made with the consent of
all Certificateholders and executed in accordance with this Section shall be
permitted or authorized by this Agreement notwithstanding that such Opinion of
Counsel may conclude that such amendment would adversely affect the
qualification of the Trust as a REMIC or create a material risk of the Trust
incurring taxes imposed under 860F(a)(1) or 860G(d)(l) of the Code.
Prior to the execution of any such amendment made with the consent of
Certificateholders, the Master Servicer shall furnish written notification of
the substance of such amendment to each Rating Agency. In addition, promptly
after the execution of any such amendment made with the consent of the
Certificateholders, the Trustee shall furnish written notification of the
substance of such amendment to each Certificateholder.
It shall not be necessary for the consent of Certificateholders under 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 of evidencing the authorization of the
execution thereof by Certificateholders shall be subject to such reasonable
requirements as the Trustee may prescribe.
Prior to the execution of any amendment to this Agreement, the 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 Agreement.
The Trustee may, but shall not be obligated to, enter into any such amendment
which affects the Trustee's own rights, duties or immunities under this
Agreement.
Section 11.02. Recordation of Agreement. This Agreement is subject to
recordation in all appropriate public offices for real property records in all
the counties or other comparable jurisdictions in which any or all of the
Mortgaged Properties are situated, and in any other appropriate public recording
office or elsewhere, such recordation to be effected by the Master Servicer and
at its expense on direction by the Trustee (which shall not have any duty to
determine whether such recordation should be made), but only upon direction of
the Trustee or the Master Servicer accompanied by an Opinion of Counsel to the
effect that such recordation materially and beneficially affects the interests
of Certificateholders.
For the purpose of facilitating the recordation of this Agreement as herein
provided and for other purposes, this Agreement may be executed simultaneously
in any number of counterparts, each of which counterparts shall be deemed to be
an original, and such counterparts shall constitute but one and the same
instrument.
Section 11.03. Limitation on Rights of Certificateholders. The death or
incapacity of any Certificateholder shall not operate to terminate this
Agreement or the Trust, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the Trust,
nor otherwise affect the rights, obligations and liabilities of the parties
hereto or any of them.
No Certificateholder shall have any right to vote (except as provided in
Section 11.01) or in any manner otherwise control the operation and management
of the Trust, or the obligations of
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the parties hereto, nor shall anything herein set forth, or contained in the
terms of the Certificates, be construed so as to constitute the
Certificateholders from time to time as partners or members of an association;
nor shall any Certificateholder be under any liability to any third person by
reason of any action taken by the parties to this Agreement pursuant to any
provision hereof.
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, unless such
Holder previously shall have given to the Trustee a written notice of default
and of the continuance thereof, as hereinbefore provided, and unless also the
Holders of Certificates evidencing not less than 51% of the aggregate Percentage
Interests of the Regular Certificates shall have made written request upon the
Trustee to institute such action, suit or proceeding in its own name as Trustee
hereunder and shall have offered to the Trustee such reasonable indemnity as it
may require against the costs, expenses and liabilities to be incurred therein
or thereby, and the Trustee, for 60 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; it being understood and intended, and being
expressly covenanted by each Certificateholder with every other
Certificateholder and the 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 herein provided and for the
equal, ratable and common benefit of all Certificateholders. For the protection
and enforcement of the provisions of this Section, each and every
Certificateholder and the Trustee shall be entitled to such relief as can be
given either at law or in equity.
Section 11.04. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS.
Section 11.05. Notices. All demands, notices (whether or not any notice is
referred to herein as a notice, a written notice or a notice in writing) and
communications hereunder shall be in writing and shall be deemed to have been
duly given if personally delivered at or mailed by certified mail, return
receipt requested, or telecopied to (a) in the case of the Depositor or the
Master Servicer, c/o Household Finance Corporation, 2700 Sanders Road, Prospect
Heights, Illinois 60070, Attention: Treasurer, (b) in the case of the Trustee,
at the Corporate Trust Office, 1 Bank One, Suite IL1-0126, Chicago, Illinois
60670-0126, Attn: Corporate Trust Administration, (c) in the case of Moody's,
ABS Monitoring Department, 99 Church Street, New York, New York 10007, and (d)
in the case of Fitch, One State Street Plaza, 33rd Floor, New York, New York
10004, Attention: RMBS Surveillance Department, or, as to each party, at such
other address as shall be designated by such party in a written notice to each
other party. Any notice required or permitted to be mailed 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.
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Section 11.06. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates
or the rights of the Holders thereof.
Section 11.07. Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 7.02 and 7.04, this Agreement
may not be assigned by the Depositor or the Master Servicer without the prior
written consent of Holders of Certificates of each Class, voting as a Class,
evidencing, as to each such Class, Percentage Interests aggregating not less
than 66-2/3%.
Section 11.08. Certificates Nonassessable and Fully Paid. The parties agree
that the Certificateholders shall not be personally liable for obligations of
the Trust, that the beneficial ownership interests represented by the
Certificates shall be nonassessable for any losses or expenses of the Trust or
for any reason whatsoever, and that the Certificates upon execution by the
Trustee on behalf of the Trust and the authentication and delivery thereof by
the Trustee pursuant to Sections 2.05 or 6.01 are and shall be deemed fully
paid.
Section 11.09. Third-Party Beneficiaries. This Agreement will inure to the
benefit of and be binding upon the parties hereto, the Certificateholders and
their respective successors and permitted assigns. Except as otherwise provided
in this Agreement, no other person will have any right or obligation hereunder.
Section 11.10. Counterparts. This instrument 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 11.11. 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 11.12. Limitation on Voting of Preferred Stock. The Trustee shall
hold all of the preferred stock ("Preferred Stock") of the Depositor in trust,
for the benefit of the Certificateholders, and shall vote such stock only
pursuant to the written instructions of Holders of Certificates evidencing not
less than 51% of the aggregate Percentage Interests of the Regular Certificates.
Concurrently with any retransfer of the Home Equity Loans to the Master Servicer
pursuant to Section 10.01, the Trustee shall transfer to the Depositor for
cancellation all shares of Preferred Stock held by the Trustee.
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IN WITNESS WHEREOF, the Depositor, the Master Servicer and the Trustee have
caused this Agreement to be duly executed by their respective officers all as of
the day and year first above written.
HFC REVOLVING CORPORATION,
as Depositor
By: /s/ Steven H. Smith
---------------------------------------------
Name: Steven H. Smith
Title: Vice President and Assistant Treasurer
HOUSEHOLD FINANCE CORPORATION,
as Master Servicer
By: /s/ J. W. Blenke
---------------------------------------------
Name: J. W. Blenke
Title: Vice President
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
By: /s/ Mark J. Frye
---------------------------------------------
Name: Mark J. Frye
Title: Assistant Vice President
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State of Illinois }
} ss.:
County of Cook }
On this 19th day of November, 1999 before me, a notary public in and
for the State of Illinois, personally appeared Steven A. Smith, known to me who,
being by me duly sworn, did depose and say that he resides at 934 N. Princeton
Ave., Arlington Heights, IL 60064; that he is the Vice President and Assistant
Treasurer of HFC Revolving Corporation, a Delaware corporation, one of the
parties that executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by order of the Board of Directors of said corporation;
and that he signed his name thereto by like order.
--------------------------------------
Notary Public
[Seal]
State of Illinois }
} ss.:
County of Cook }
On this 19th day of November, 1999 before me, a notary public in and
for the State of Illinois, personally appeared John W. Blenke, known to me who,
being by me duly sworn, did depose and say that he resides at 45 Lagoon Dr.,
Hawthorn Woods, IL; that he is the Vice President and Assistant Secretary of
Household Finance Corporation, a Delaware corporation, one of the parties
that executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by order of the Board of Directors of said corporation;
and that he signed his name thereto by like order.
--------------------------------------
Notary Public
[Seal]
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State of Illinois }
} ss.:
County of Cook }
On this 19th day of November, 1999 before me, a notary public in and
for the State of Illinois, personally appeared Mark Frye, known to me who, being
by me duly sworn, did depose and say that he resides at 15031 S. Ridgewood
Drive, Oak Forest, IL; that he is the Assistant Vice President of Bank One,
National Association of Chicago, a national banking association, one of the
parties that executed the foregoing instrument; and that he signed his name
thereto by order of the Board of Directors of said association.
-------------------------------------
Notary Public
[Seal]
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EXHIBIT A
FORM OF CLASS A-1 CERTIFICATE
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
A-1
<PAGE> 93
Certificate No. :
Cut-Off Date : October 31, 1999
First Distribution Date : December 20, 1999
Final Scheduled Distribution Date : December 20, 2016
Original Class Certificate
Balance of this Certificate
("Denomination") : $[__________]
Original Certificate
Balance of this Class : $[__________]
Pass-Through Rate : [__]%
CUSIP : [______]
Class : A-1
A-2
<PAGE> 94
HOUSEHOLD HOME EQUITY LOAN TRUST 1999-1
Closed-End Home Equity Loan Asset-Backed Certificates,
Series 1999-1
Class A-1
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to a Trust
consisting of closed-end fixed rate home equity loans (the "Home Equity
Loans")
HFC Revolving Corporation, as Depositor
Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Principal Balance of this Class
A-1 Certificate at any time may be less than the Original Class Certificate
Balance set forth on the face hereof, as described herein. This Class A-1
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Sellers, the Master Servicer, or the Trustee
referred to below or any of their respective affiliates. Neither this Class A-1
Certificate nor the Home Equity Loans are guaranteed or insured by any
governmental agency or instrumentality.
This certifies that CEDE & CO. is the registered owner of the
Percentage Interest evidenced by this Class A-1 Certificate (obtained by
dividing the principal denomination of this Class A-1 Certificate by the
aggregate of the principal denominations of all Certificates of this Class) in
certain monthly distributions with respect to a Trust consisting primarily of
the Home Equity Loans deposited by HFC Revolving Corporation (the "Depositor").
The Trust was created pursuant to a Pooling and Servicing Agreement dated as of
November 1, 1999 (the "Agreement") among the Depositor, Household Finance
Corporation, as Master Servicer (the "Master Servicer") and Bank One, National
Association, as Trustee (the "Trustee"). To the extent not defined herein, the
capitalized terms used herein have the meanings assigned in the Agreement. This
Class A-1 Certificate is issued under and is subject to the terms, provisions
and conditions of the Agreement, to which Agreement the Certificateholder of
this Class A-1 Certificate by virtue of the acceptance hereof assents and by
which such Certificateholder is bound.
Reference is hereby made to the further provisions of this Class A-1
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.
This Class A-1 Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.
A-3
<PAGE> 95
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: November 19, 1999
HOUSEHOLD HOME EQUITY LOAN TRUST 1999-1
By: BANK ONE, NATIONAL ASSOCIATION
not in its individual capacity, but
solely as Trustee
By _____________________________________
This is one of the Class A-1 Certificates
referenced in the above-mentioned Agreement
By ________________________________
Authorized Signatory of
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
A-4
<PAGE> 96
[REVERSE OF CLASS A-1 CERTIFICATE]
HOUSEHOLD HOME EQUITY LOAN TRUST 1999-1
Closed-End Home Equity Loan Asset-Backed Certificates,
Series 1999-1
This Certificate is one of a duly authorized issue of Certificates
designated as Household Home Equity Loan Trust 1999-1, Closed-End Home Equity
Loan Asset-Backed Certificates, Series 1999-1 (herein collectively called the
"Certificates"), and representing a beneficial ownership interest in the Trust
created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Collection Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on
the 20th day of each month or, if such 20th day is not a Business Day then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Certificateholders of Certificates of the Class to which this Certificate
belongs on such Distribution Date pursuant to the Agreement. The Record Date
applicable to each Distribution Date is the Business Day preceding such
Distribution Date; provided, however, that following the date on which
Definitive Certificates are available pursuant to Section 6.02(f) of the
Agreement, the Record Date shall be the last day of the month preceding the
month in which such Distribution Date occurs.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or, upon the request of a Certificateholder owning
Certificates having the requisite aggregate denominations or Percentage
Interests specified in the Agreement, by wire transfer or otherwise, as set
forth in the Agreement. The final distribution on each Certificate will be made
in like manner, but only upon presentment and surrender of such Certificate at
the office or agency of the Trustee specified in the notice to
Certificateholders of such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Master Servicer, the Depositor, and the Trustee, in each case with the
consent of the Certificateholders of the requisite percentage of the Percentage
Interests of each Class of Certificates affected by such amendment or all
classes
A-5
<PAGE> 97
in the case of amendments or modifications which affect all classes, as
specified in the Agreement. Any such consent by the holder of this Certificate
shall be conclusive and binding on such holder and upon all future holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange therefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Certificate Registrar upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Certificate
Registrar (which shall be the Corporate Trust Office if the Trustee is the
Certificate Registrar as provided in the Agreement). Every Certificate presented
or surrendered for registration of transfer or exchange shall (if so required by
the Trustee or the Certificate Registrar) be duly endorsed by, or accompanied by
a written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the Certificateholder hereof or such
Certificateholder's attorney duly authorized in writing. Upon satisfaction of
the foregoing, one or more new Certificates of the same Class in authorized
denominations and evidencing the same aggregate Percentage Interest in the Trust
will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Sellers, Master Servicer, Depositor, and the Trustee and any agent
of the Sellers, Master Servicer, Depositor or the Trustee may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and the Sellers, the Master Servicer, the Depositor, or the Trustee or
any such agent shall not be affected by any notice to the contrary.
On any Distribution Date following the date at which the aggregate
Certificate Principal Balance is less than 15% of the initial aggregate
Certificate Principal Balance of the Class A and Class M Certificates, the
Master Servicer will have the option to repurchase, in whole, from the Trust the
Home Equity Loans at a purchase price determined as provided in the Agreement.
In the event that no such optional termination occurs, the obligations and
responsibilities created by the Agreement will terminate upon the earliest of
(i) the disposition of the Home Equity Loans and Mortgaged Property pursuant to
the provisions of Section 10.03(a) of the Agreement; provided, however, if the
Master Servicer does not repurchase all of the Home Equity Loans pursuant to
Section 10.01(a)(i) of the Agreement within three months of the first
Distribution Date upon which such repurchase option may occur, then the Trustee
shall begin a process for soliciting bids in connection with an auction of the
Home Equity Loans pursuant to Section 10.01(c) and 10.01(d) of the Agreement;
(ii) the final payment or other liquidation of the
A-6
<PAGE> 98
Principal Balance of the last Home Equity Loan in the Trust and (iii) the
Distribution Date in October 2030. In no event, however, will the trust created
by the Agreement continue beyond the expiration of 21 years from the death of
the last survivor of the descendants living at the date of the Agreement of a
certain person named in the Agreement.
Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
A-7
<PAGE> 99
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address: ______________________________________________________
Dated: _____________
________________________________________
Signature by or on behalf of assignor
A-8
<PAGE> 100
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to_________________________________________________,
_______________________________________________________________________________,
_______________________________________________________________________________,
for the account of ____________________________________________________________,
account number _______________, or, if mailed by check, to _____________________
________________________________________________________________________________
Applicable statements should be mailed to ______________________________________
________________________________________________________________________________
________________________________________________________________________________
This information is provided by ______________________________________,
the assignee named above, or __________________________________________________,
as its agent.
A-9
<PAGE> 101
EXHIBIT B
FORM OF CLASS A-2 CERTIFICATE
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
B-1
<PAGE> 102
Certificate No. :
Cut-Off Date : October 31, 1999
First Distribution Date : December 20, 1999
Final Scheduled Distribution Date : October 20, 2023
Original Class Certificate
Balance of this Certificate
("Denomination") : $[__________]
Original Certificate
Balance of this Class : $[__________]
Pass-Through Rate : [___]%
CUSIP : [_____]
Class : A-2
B-2
<PAGE> 103
HOUSEHOLD HOME EQUITY LOAN TRUST 1999-1
Closed-End Home Equity Loan Asset-Backed Certificates,
Series 1999-1
Class A-2
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to a Trust
consisting of closed-end fixed rate home equity loans (the "Home Equity
Loans")
HFC Revolving Corporation, as Depositor
Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Principal Balance of this Class
A-2 Certificate at any time may be less than the Original Class Certificate
Balance set forth on the face hereof, as described herein. This Class A-2
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Sellers, the Master Servicer, or the Trustee
referred to below or any of their respective affiliates. Neither this Class A-2
Certificate nor the Home Equity Loans are guaranteed or insured by any
governmental agency or instrumentality.
This certifies that CEDE & CO. is the registered owner of the
Percentage Interest evidenced by this Class A-2 Certificate (obtained by
dividing the principal denomination of this Class A-2 Certificate by the
aggregate of the principal denominations of all Certificates of this Class) in
certain monthly distributions with respect to a Trust consisting primarily of
the Home Equity Loans deposited by HFC Revolving Corporation (the "Depositor").
The Trust was created pursuant to a Pooling and Servicing Agreement dated as of
November 1, 1999 (the "Agreement") among the Depositor, Household Finance
Corporation, as Master Servicer (the "Master Servicer") and Bank One, National
Association, as Trustee (the "Trustee"). To the extent not defined herein, the
capitalized terms used herein have the meanings assigned in the Agreement. This
Class A-2 Certificate is issued under and is subject to the terms, provisions
and conditions of the Agreement, to which Agreement the Certificateholder of
this Class A-2 Certificate by virtue of the acceptance hereof assents and by
which such Certificateholder is bound.
Reference is hereby made to the further provisions of this Class A-2
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.
This Class A-2 Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.
B-3
<PAGE> 104
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: November 19, 1999
HOUSEHOLD HOME EQUITY LOAN TRUST 1999-1
By: BANK ONE, NATIONAL ASSOCIATION
not in its individual capacity, but
solely as Trustee
By _____________________________________
This is one of the Class A-2 Certificates
referenced in the above-mentioned Agreement
By ________________________________
Authorized Signatory of
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
B-4
<PAGE> 105
[REVERSE OF CLASS A-2 CERTIFICATE]
HOUSEHOLD HOME EQUITY LOAN TRUST 1999-1
Closed-End Home Equity Loan Asset-Backed Certificates,
Series 1999-1
This Certificate is one of a duly authorized issue of Certificates
designated as Household Home Equity Loan Trust 1999-1, Closed-End Home Equity
Loan Asset-Backed Certificates, Series 1999-1 (herein collectively called the
"Certificates"), and representing a beneficial ownership interest in the Trust
created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Collection Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on
the 20th day of each month or, if such 20th day is not a Business Day then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Certificateholders of Certificates of the Class to which this Certificate
belongs on such Distribution Date pursuant to the Agreement. The Record Date
applicable to each Distribution Date is the Business Day preceding such
Distribution Date; provided, however, that following the date on which
Definitive Certificates are available pursuant to Section 6.02(f) of the
Agreement, the Record Date shall be the last day of the month preceding the
month in which such Distribution Date occurs.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or, upon the written request of a Certificateholder owning
Certificates having the requisite aggregate denominations specified in the
Agreement, by wire transfer or otherwise, as set forth in the Agreement. The
final distribution on each Certificate will be made in like manner, but only
upon presentment and surrender of such Certificate at the office or agency of
the Trustee specified in the notice to Certificateholders of such final
distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Master Servicer, the Depositor, and the Trustee, in each case with the
consent of the Certificateholders of the requisite percentage of the Percentage
Interests of each Class of Certificates affected by such amendment or all
classes
B-5
<PAGE> 106
in the case of amendments or modifications which affect all classes, as
specified in the Agreement. Any such consent by the holder shall be conclusive
and binding on such holder and upon all future holders of this Certificate and
of any Certificate issued upon the transfer hereof or in exchange therefor or in
lieu hereof whether or not notation of such consent is made upon this
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Holders of any of the
Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Certificate Registrar upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Certificate
Registrar (which shall be the Corporate Trust Office if the Trustee is the
Certificate Registrar as provided in the Agreement). Every Certificate presented
or surrendered for registration of transfer or exchange shall (if so required by
the Trustee or the Certificate Registrar) be duly endorsed by, or accompanied by
a written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the Certificateholder hereof or such
Certificateholder's attorney duly authorized in writing. Upon satisfaction of
the foregoing, one or more new Certificates of the same Class in authorized
denominations and evidencing the same aggregate Percentage Interest in the Trust
will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Sellers, Master Servicer, Depositor, and the Trustee and any agent
of the Sellers, Master Servicer, Depositor or the Trustee may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and the Sellers, the Master Servicer, the Depositor, or the Trustee or
any such agent shall not be affected by any notice to the contrary.
On any Distribution Date following the date at which the aggregate
Certificate Principal Balance is less than 15% of the initial aggregate
Certificate Principal Balance of the Class A and Class M Certificates, the
Master Servicer will have the option to repurchase, in whole, from the Trust the
Home Equity Loans at a purchase price determined as provided in the Agreement.
In the event that no such optional termination occurs, the obligations and
responsibilities created by the Agreement will terminate upon the earliest of
(i) the disposition of the Home Equity Loans and Mortgaged Property pursuant to
the provisions of Section 10.03(a) of the Agreement; provided, however, if the
Master Servicer does not repurchase all of the Home Equity Loans pursuant to
Section 10.01(a)(i) of the Agreement within three months of the first
Distribution Date upon which such repurchase option may occur, then the Trustee
shall begin a process for soliciting bids in connection with an auction of the
Home Equity Loans pursuant to Section 10.01(c) and 10.01(d) of the Agreement;
(ii) the final payment or other liquidation of the
B-6
<PAGE> 107
Principal Balance of the last Home Equity Loan in the Trust and (iii) the
Distribution Date in October 2030. In no event, however, will the trust created
by the Agreement continue beyond the expiration of 21 years from the death of
the last survivor of the descendants living at the date of the Agreement of a
certain person named in the Agreement.
Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
B-7
<PAGE> 108
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address: _____________________________________________________.
Dated: _____________
___________________________________________
Signature by or on behalf of assignor
B-8
<PAGE> 109
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to_________________________________________________,
_______________________________________________________________________________,
_______________________________________________________________________________,
for the account of ____________________________________________________________,
account number_______________, or, if mailed by check, to ______________________
________________________________________________________________________________
Applicable statements should be mailed to ______________________________________
________________________________________________________________________________
________________________________________________________________________________
This information is provided by ______________________________________,
the assignee named above, or __________________________________________________,
as its agent.
B-9
<PAGE> 110
EXHIBIT C
FORM OF CLASS A-3 CERTIFICATE
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
C-1
<PAGE> 111
Certificate No. :
Cut-Off Date : October 31, 1999
First Distribution Date : December 20, 1999
Final Scheduled Distribution Date : October 20, 2030
Original Class Certificate
Balance of this Certificate
("Denomination") : $[__________]
Original Certificate
Balance of this Class : $[__________]
Pass-Through Rate : [___]%
CUSIP : [_____]
Class : A-3
C-2
<PAGE> 112
HOUSEHOLD HOME EQUITY LOAN TRUST 1999-1
Closed-End Home Equity Loan Asset-Backed Certificates,
Series 1999-1
Class A-3
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to a Trust
consisting of closed-end fixed rate home equity loans (the "Home Equity
Loans")
HFC Revolving Corporation, as Depositor
Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Principal Balance of this Class
A-3 Certificate at any time may be less than the Original Class Certificate
Balance set forth on the face hereof, as described herein. This Class A-3
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Sellers, the Master Servicer, or the Trustee
referred to below or any of their respective affiliates. Neither this Class A-3
Certificate nor the Home Equity Loans are guaranteed or insured by any
governmental agency or instrumentality.
This certifies that CEDE & CO. is the registered owner of the
Percentage Interest evidenced by this Class A-3 Certificate (obtained by
dividing the principal denomination of this Class A-3 Certificate by the
aggregate of the principal denominations of all Certificates of this Class) in
certain monthly distributions with respect to a Trust consisting primarily of
the Home Equity Loans deposited by HFC Revolving Corporation (the "Depositor").
The Trust was created pursuant to a Pooling and Servicing Agreement dated as of
November 1, 1999 (the "Agreement") among the Depositor, Household Finance
Corporation, as Master Servicer (the "Master Servicer") and Bank One, National
Association, as Trustee (the "Trustee"). To the extent not defined herein, the
capitalized terms used herein have the meanings assigned in the Agreement. This
Class A-3 Certificate is issued under and is subject to the terms, provisions
and conditions of the Agreement, to which Agreement the Certificateholder of
this Class A-3 Certificate by virtue of the acceptance hereof assents and by
which such Certificateholder is bound.
Reference is hereby made to the further provisions of this Class A-3
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.
This Class A-3 Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.
C-3
<PAGE> 113
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: November 19, 1999
HOUSEHOLD HOME EQUITY LOAN TRUST 1999-1
By: BANK ONE, NATIONAL ASSOCIATION
not in its individual capacity, but
solely as Trustee
By _____________________________________
This is one of the Class A-3 Certificates
referenced in the above-mentioned Agreement
By ________________________________
Authorized Signatory of
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
C-4
<PAGE> 114
[REVERSE OF CLASS A-3 CERTIFICATE]
HOUSEHOLD HOME EQUITY LOAN TRUST 1999-1
Closed-End Home Equity Loan Asset-Backed Certificates,
Series 1999-1
This Certificate is one of a duly authorized issue of Certificates
designated as Household Home Equity Loan Trust 1999-1, Closed-End Home Equity
Loan Asset-Backed Certificates, Series 1999-1 (herein collectively called the
"Certificates"), and representing a beneficial ownership interest in the Trust
created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Collection Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on
the 20th day of each month or, if such 20th day is not a Business Day then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Certificateholders of Certificates of the Class to which this Certificate
belongs on such Distribution Date pursuant to the Agreement. The Record Date
applicable to each Distribution Date is the Business Day preceding such
Distribution Date; provided, however, that following the date on which
Definitive Certificates are available pursuant to Section 6.02(f) of the
Agreement, the Record Date shall be the last day of the month preceding the
month in which such Distribution Date occurs.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or, upon the written request of a Certificateholder owning
Certificates having the requisite aggregate denominations specified in the
Agreement, by wire transfer or otherwise, as set forth in the Agreement. The
final distribution on each Certificate will be made in like manner, but only
upon presentment and surrender of such Certificate at the office or agency of
the Trustee specified in the notice to Certificateholders of such final
distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Master Servicer, the Depositor, and the Trustee, in each case with the
consent of the Certificateholders of the requisite percentage of the Percentage
Interests of each Class of Certificates affected by such amendment or all
classes
C-5
<PAGE> 115
in the case of amendments or modifications which affect all classes, as
specified in the Agreement. Any such consent by the holder of this Certificate
shall be conclusive and binding on such holder and upon all future holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange therefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Certificate Registrar upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Certificate
Registrar (which shall be the Corporate Trust Office if the Trustee is the
Certificate Registrar as provided in the Agreement). Every Certificate presented
or surrendered for registration of transfer or exchange shall (if so required by
the Trustee or the Certificate Registrar) be duly endorsed by, or accompanied by
a written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the Certificateholder hereof or such
Certificateholder's attorney duly authorized in writing. Upon satisfaction of
the foregoing, one or more new Certificates of the same Class in authorized
denominations and evidencing the same aggregate Percentage Interest in the Trust
will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Sellers, Master Servicer, Depositor, and the Trustee and any agent
of the Sellers, Master Servicer, Depositor or the Trustee may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and the Sellers, the Master Servicer, the Depositor, or the Trustee or
any such agent shall not be affected by any notice to the contrary.
On any Distribution Date following the date at which the aggregate
Certificate Principal Balance is less than 15% of the initial aggregate
Certificate Principal Balance of the Class A and Class M Certificates, the
Master Servicer will have the option to repurchase, in whole, from the Trust the
Home Equity Loans at a purchase price determined as provided in the Agreement.
In the event that no such optional termination occurs, the obligations and
responsibilities created by the Agreement will terminate upon the earliest of
(i) the disposition of the Home Equity Loans and Mortgaged Property pursuant to
the provisions of Section 10.03(a) of the Agreement; provided, however, if the
Master Servicer does not repurchase all of the Home Equity Loans pursuant to
Section 10.01(a)(i) of the Agreement within three months of the first
Distribution Date upon which such repurchase option may occur, then the Trustee
shall begin a process for soliciting bids in connection with an auction of the
Home Equity Loans pursuant to Section 10.01(c) and 10.01(d) of the Agreement;
(ii) the final payment or other liquidation of the
C-6
<PAGE> 116
Principal Balance of the last Home Equity Loan in the Trust and (iii) the
Distribution Date in October 2030. In no event, however, will the trust created
by the Agreement continue beyond the expiration of 21 years from the death of
the last survivor of the descendants living at the date of the Agreement of a
certain person named in the Agreement.
Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
C-7
<PAGE> 117
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address: _____________________________________________________.
Dated: _____________
_____________________________________________
Signature by or on behalf of assignor
C-8
<PAGE> 118
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to_________________________________________________,
_______________________________________________________________________________,
_______________________________________________________________________________,
for the account of ____________________________________________________________,
account number _______________, or, if mailed by check, to _____________________
________________________________________________________________________________
Applicable statements should be mailed to ______________________________________
________________________________________________________________________________
________________________________________________________________________________
This information is provided by ______________________________________,
the assignee named above, or __________________________________________________,
as its agent.
C-9
<PAGE> 119
EXHIBIT D
FORM OF CLASS A-4 CERTIFICATE
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
D-1
<PAGE> 120
Certificate No. :
Cut-Off Date : October 31, 1999
First Distribution Date : December 20, 1999
Final Scheduled Distribution Date : October 20, 2030
Original Class Certificate
Balance of this Certificate
("Denomination") : $[_________]
Original Certificate
Balance of this Class : $[__________]
Pass-Through Rate : [___]%
CUSIP : [_____]
Class : A-4
D-2
<PAGE> 121
HOUSEHOLD HOME EQUITY LOAN TRUST 1999-1
Closed-End Home Equity Loan Asset-Backed Certificates,
Series 1999-1
Class A-4
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to a Trust
consisting of closed-end fixed rate home equity loans (the "Home Equity
Loans")
HFC Revolving Corporation, as Depositor
Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Principal Balance of this Class
A-4 Certificate at any time may be less than the Original Class Certificate
Balance set forth on the face hereof, as described herein. This Class A-4
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Sellers, the Master Servicer, or the Trustee
referred to below or any of their respective affiliates. Neither this Class A-4
Certificate nor the Home Equity Loans are guaranteed or insured by any
governmental agency or instrumentality.
This certifies that CEDE & CO. is the registered owner of the
Percentage Interest evidenced by this Class A-4 Certificate (obtained by
dividing the principal denomination of this Class A-4 Certificate by the
aggregate of the principal denominations of all Certificates of this Class) in
certain monthly distributions with respect to a Trust consisting primarily of
the Home Equity Loans deposited by HFC Revolving Corporation (the "Depositor").
The Trust was created pursuant to a Pooling and Servicing Agreement dated as of
November 1, 1999 (the "Agreement") among the Depositor, Household Finance
Corporation, as Master Servicer (the "Master Servicer") and Bank One, National
Association, as Trustee (the "Trustee"). To the extent not defined herein, the
capitalized terms used herein have the meanings assigned in the Agreement. This
Class A-4 Certificate is issued under and is subject to the terms, provisions
and conditions of the Agreement, to which Agreement the Certificateholder of
this Class A-4 Certificate by virtue of the acceptance hereof assents and by
which such Certificateholder is bound.
Reference is hereby made to the further provisions of this Class A-4
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.
This Class A-4 Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.
D-3
<PAGE> 122
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: November 19, 1999
HOUSEHOLD HOME EQUITY LOAN TRUST 1999-1
By: BANK ONE, NATIONAL ASSOCIATION
not in its individual capacity, but
solely as Trustee
By _____________________________________
This is one of the Class A-4 Certificates
referenced in the above-mentioned Agreement
By ________________________________
Authorized Signatory of
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
D-4
<PAGE> 123
[REVERSE OF CLASS A-4 CERTIFICATE]
HOUSEHOLD HOME EQUITY LOAN TRUST 1999-1
Closed-End Home Equity Loan Asset-Backed Certificates,
Series 1999-1
This Certificate is one of a duly authorized issue of Certificates
designated as Household Home Equity Loan Trust 1999-1, Closed-End Home Equity
Loan Asset-Backed Certificates, Series 1999-1 (herein collectively called the
"Certificates"), and representing a beneficial ownership interest in the Trust
created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Collection Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on
the 20th day of each month or, if such 20th day is not a Business Day then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Certificateholders of Certificates of the Class to which this Certificate
belongs on such Distribution Date pursuant to the Agreement. The Record Date
applicable to each Distribution Date is the Business Day preceding such
Distribution Date; provided, however, that following the date on which
Definitive Certificates are available pursuant to Section 6.02(f) of the
Agreement, the Record Date shall be the last day of the month preceding the
month in which such Distribution Date occurs.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or, upon the written request of a Certificateholder owning
Certificates having the requisite aggregate denominations specified in the
Agreement, by wire transfer or otherwise, as set forth in the Agreement. The
final distribution on each Certificate will be made in like manner, but only
upon presentment and surrender of such Certificate at the office or agency of
the Trustee specified in the notice to Certificateholders of such final
distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Master Servicer, the Depositor, and the Trustee, in each case with the
consent of the Certificateholders of the requisite percentage of the Percentage
Interests of each Class of Certificates affected by such amendment or all
classes
D-5
<PAGE> 124
in the case of amendments or modifications which affect all classes, as
specified in the Agreement. Any such consent by the holder of this Certificate
shall be conclusive and binding on such holder and upon all future holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange therefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Certificate Registrar upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Certificate
Registrar (which shall be the Corporate Trust Office if the Trustee is the
Certificate Registrar as provided in the Agreement). Every Certificate presented
or surrendered for registration of transfer or exchange shall (if so required by
the Trustee or the Certificate Registrar) be duly endorsed by, or accompanied by
a written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the Certificateholder hereof or such
Certificateholder's attorney duly authorized in writing. Upon satisfaction of
the foregoing, one or more new Certificates of the same Class in authorized
denominations and evidencing the same aggregate Percentage Interest in the Trust
will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Sellers, Master Servicer, Depositor, and the Trustee and any agent
of the Sellers, Master Servicer, Depositor or the Trustee may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and the Sellers, the Master Servicer, the Depositor, or the Trustee or
any such agent shall not be affected by any notice to the contrary.
On any Distribution Date following the date at which the aggregate
Certificate Principal Balance is less than 15% of the initial aggregate
Certificate Principal Balance of the Class A and Class M Certificates, the
Master Servicer will have the option to repurchase, in whole, from the Trust the
Home Equity Loans at a purchase price determined as provided in the Agreement.
In the event that no such optional termination occurs, the obligations and
responsibilities created by the Agreement will terminate upon the earliest of
(i) the disposition of the Home Equity Loans and Mortgaged Property pursuant to
the provisions of Section 10.03(a) of the Agreement; provided, however, if the
Master Servicer does not repurchase all of the Home Equity Loans pursuant to
Section 10.01(a)(i) of the Agreement within three months of the first
Distribution Date upon which such repurchase option may occur, then the Trustee
shall begin a process for soliciting bids in connection with an auction of the
Home Equity Loans pursuant to Section 10.01(c) and 10.01(d) of the Agreement;
(ii) the final payment or other liquidation of the
D-6
<PAGE> 125
Principal Balance of the last Home Equity Loan in the Trust and (iii) the
Distribution Date in October 2030. In no event, however, will the trust created
by the Agreement continue beyond the expiration of 21 years from the death of
the last survivor of the descendants living at the date of the Agreement of a
certain person named in the Agreement.
Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
D-7
<PAGE> 126
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address: _____________________________________________________.
Dated: _____________
_____________________________________________
Signature by or on behalf of assignor
D-8
<PAGE> 127
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to_________________________________________________,
_______________________________________________________________________________,
_______________________________________________________________________________,
for the account of ____________________________________________________________,
account number _______________, or, if mailed by check, to _____________________
________________________________________________________________________________
Applicable statements should be mailed to ______________________________________
________________________________________________________________________________
________________________________________________________________________________
This information is provided by ______________________________________,
the assignee named above, or __________________________________________________,
as its agent
D-9
<PAGE> 128
EXHIBIT E
FORM OF CLASS M-1 CERTIFICATE
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE DELIVERS TO THE TRUSTEE EITHER A REPRESENTATION LETTER TO THE EFFECT
THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR A PLAN SUBJECT TO SECTION
4975 OF THE CODE, OR AN OPINION OF COUNSEL IN ACCORDANCE WITH THE PROVISIONS OF
THE AGREEMENT REFERRED TO HEREIN. SUCH REPRESENTATION SHALL BE DEEMED TO HAVE
BEEN MADE TO THE TRUSTEE BY THE TRANSFEREE'S ACCEPTANCE OF THIS CERTIFICATE OR
BY THE ACCEPTANCE BY A BENEFICIAL OWNER OF THE BENEFICIAL INTEREST REPRESENTED
HEREBY UNLESS THE TRUSTEE SHALL HAVE RECEIVED FROM THE TRANSFEREE AN ALTERNATIVE
REPRESENTATION ACCEPTABLE IN FORM AND SUBSTANCE TO THE MASTER SERVICER AND THE
DEPOSITOR. NOTWITHSTANDING ANYTHING ELSE TO THE CONTRARY HEREIN, ANY PURPORTED
TRANSFER OF THIS CERTIFICATE TO OR ON BEHALF OF AN EMPLOYEE BENEFIT PLAN SUBJECT
TO ERISA OR TO THE CODE WITHOUT THE OPINION OF COUNSEL SATISFACTORY TO THE
TRUSTEE AS DESCRIBED ABOVE SHALL BE VOID AND OF NO EFFECT.
THIS CLASS M-1 CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A
CERTIFICATES.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
E-1
<PAGE> 129
Certificate No. :
Cut-Off Date : October 31, 1999
First Distribution Date : December 20, 1999
Final Scheduled Distribution Date : October 20, 2030
Original Class Certificate
Balance of this Certificate
("Denomination") : $[__________]
Original Certificate
Balance of this Class : $[__________]
Pass-Through Rate : [___]%, subject to the weighted
average Net Loan Rates described in
the Agreement
CUSIP : [_____]
Class : M-1
E-2
<PAGE> 130
HOUSEHOLD HOME EQUITY LOAN TRUST 1999-1
Closed-End Home Equity Loan Asset-Backed Certificates,
Series 1999-1
Class M-1
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to a Trust
consisting of closed-end fixed rate home equity loans (the "Home Equity
Loans")
HFC Revolving Corporation, as Depositor
Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Principal Balance of this Class
M-1 Certificate at any time may be less than the Original Class Certificate
Balance set forth on the face hereof, as described herein. This Class M-1
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Sellers, the Master Servicer, or the Trustee
referred to below or any of their respective affiliates. Neither this Class M-1
Certificate nor the Home Equity Loans are guaranteed or insured by any
governmental agency or instrumentality.
This certifies that CEDE & CO. is the registered owner of the
Percentage Interest evidenced by this Class M-1 Certificate (obtained by
dividing the principal denomination of this Class M-1 Certificate by the
aggregate of the principal denominations of all Certificates of this Class) in
certain monthly distributions with respect to a Trust consisting primarily of
the Home Equity Loans deposited by HFC Revolving Corporation (the "Depositor").
The Trust was created pursuant to a Pooling and Servicing Agreement dated as of
November 1, 1999 (the "Agreement") among the Depositor, Household Finance
Corporation, as Master Servicer (the "Master Servicer") and Bank One, National
Association, as Trustee (the "Trustee"). To the extent not defined herein, the
capitalized terms used herein have the meanings assigned in the Agreement. This
Class M-1 Certificate is issued under and is subject to the terms, provisions
and conditions of the Agreement, to which Agreement the Certificateholder of
this Class M-1 Certificate by virtue of the acceptance hereof assents and by
which such Certificateholder is bound.
Reference is hereby made to the further provisions of this Class M-1
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.
This Class M-1 Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.
E-3
<PAGE> 131
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: November 19, 1999
HOUSEHOLD HOME EQUITY LOAN TRUST 1999-1
By: BANK ONE, NATIONAL ASSOCIATION
not in its individual capacity, but
solely as Trustee
By _____________________________________
This is one of the Class M-1 Certificates
referenced in the above-mentioned Agreement
By ________________________________
Authorized Signatory of
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
E-4
<PAGE> 132
[REVERSE OF CLASS M-1 CERTIFICATE]
HOUSEHOLD HOME EQUITY LOAN TRUST 1999-1
Closed-End Home Equity Loan Asset-Backed Certificates,
Series 1999-1
This Certificate is one of a duly authorized issue of Certificates
designated as Household Home Equity Loan Trust 1999-1, Closed-End Home Equity
Loan Asset-Backed Certificates, Series 1999-1 (herein collectively called the
"Certificates"), and representing a beneficial ownership interest in the Trust
created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Collection Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on
the 20th day of each month or, if such 20th day is not a Business Day then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Certificateholders of Certificates of the Class to which this Certificate
belongs on such Distribution Date pursuant to the Agreement. The Record Date
applicable to each Distribution Date is the Business Day preceding such
Distribution Date; provided, however, that following the date on which
Definitive Certificates are available pursuant to Section 6.02(f) of the
Agreement, the Record Date shall be the last day of the month preceding the
month in which such Distribution Date occurs.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or, upon the written request of a Certificateholder owning
Certificates having the requisite aggregate denominations specified in the
Agreement, by wire transfer or otherwise, as set forth in the Agreement. The
final distribution on each Certificate will be made in like manner, but only
upon presentment and surrender of such Certificate at the office or agency of
the Trustee specified in the notice to Certificateholders of such final
distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Master Servicer, the Depositor, and the Trustee, in each case with the
consent of the Certificateholders of the requisite percentage of the Percentage
Interests of each Class of Certificates affected by such amendment or all
classes
E-5
<PAGE> 133
in the case of amendments or modifications which affect all classes, as
specified in the Agreement. Any such consent by the holder of this Certificate
shall be conclusive and binding on such holder and upon all future holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange therefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof,
in certain limited circumstances, without the consent of the Holders of any of
the Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Certificate Registrar upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Certificate
Registrar (which shall be the Corporate Trust Office if the Trustee is the
Certificate Registrar as provided in the Agreement). Every Certificate presented
or surrendered for registration of transfer or exchange shall (if so required by
the Trustee or the Certificate Registrar) be duly endorsed by, or accompanied by
a written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the Certificateholder hereof or such
Certificateholder's attorney duly authorized in writing. Upon satisfaction of
the foregoing, one or more new Certificates of the same Class in authorized
denominations and evidencing the same aggregate Percentage Interest in the Trust
will be issued to the designated transferee or transferees.
No Transfer of this Class M Certificate shall be made to an employee
benefit plan subject to the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or to Section 4975 of the Code (or comparable provisions of
any subsequent enactments), or a trustee of any such plan, unless the Trustee
shall have received an Opinion of Counsel satisfactory to the Trustee to the
effect that the purchase or holding of this Class M Certificate will not result
in the assets of the Trust being deemed to be "plan assets" and subject to the
prohibited transaction provisions of ERISA and the Code and will not subject the
Trustee, the Master Servicer, the Sellers or the Trust to any obligation in
addition to those undertaken in this Agreement, which Opinion of Counsel shall
not be an expense of the Trustee, the Master Servicer, the Sellers or the Trust
except to the extent any of such parties is the transferor of such Certificate.
Unless such Opinion of Counsel is delivered, each Transferee shall be deemed to
represent to the Trustee, the Sellers and the Master Servicer that such
Transferee is neither an employee benefit plan subject to Section 406 of ERISA
or and Section 4975 of the Code, nor a person acting on behalf of any such plan.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Sellers, Master Servicer, Depositor, and the Trustee and any agent
of the Sellers, Master Servicer, Depositor or the Trustee may treat the Person
in whose name this Certificate is
E-6
<PAGE> 134
registered as the owner hereof for all purposes, and the Sellers, the Master
Servicer, the Depositor, or the Trustee or any such agent shall not be affected
by any notice to the contrary.
On any Distribution Date following the date at which the aggregate
Certificate Principal Balance is less than 15% of the initial aggregate
Certificate Principal Balance of the Class A and Class M Certificates, the
Master Servicer will have the option to repurchase, in whole, from the Trust the
Home Equity Loans at a purchase price determined as provided in the Agreement.
In the event that no such optional termination occurs, the obligations and
responsibilities created by the Agreement will terminate upon the earliest of
(i) the disposition of the Home Equity Loans and Mortgaged Property pursuant to
the provisions of Section 10.03(a) of the Agreement; provided, however, if the
Master Servicer does not repurchase all of the Home Equity Loans pursuant to
Section 10.01(a)(i) of the Agreement within three months of the first
Distribution Date upon which such repurchase option may occur, then the Trustee
shall begin a process for soliciting bids in connection with an auction of the
Home Equity Loans pursuant to Section 10.01(c) and 10.01(d) of the Agreement;
(ii) the final payment or other liquidation of the Principal Balance of the last
Home Equity Loan in the Trust and (iii) the Distribution Date in October 2030.
In no event, however, will the trust created by the Agreement continue beyond
the expiration of 21 years from the death of the last survivor of the
descendants living at the date of the Agreement of a certain person named in the
Agreement.
Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
E-7
<PAGE> 135
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
_______________________________________________________________________________.
Dated: _____________
_____________________________________
Signature by or on behalf of assignor
E-8
<PAGE> 136
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to_________________________________________________,
_______________________________________________________________________________,
_______________________________________________________________________________,
________________________________________________________________________________
for the account of ____________________________________________________________,
account number _______________, or, if mailed by check, to _____________________
________________________________________________________________________________
Applicable statements should be mailed to ______________________________________
_______________________________________________________________________________,
_______________________________________________________________________________,
This information is provided by ______________________________________,
the assignee named above, or __________________________________________________,
as its agent.
E-9
<PAGE> 137
EXHIBIT F
FORM OF CLASS M-2 CERTIFICATE
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE DELIVERS TO THE TRUSTEE EITHER A REPRESENTATION LETTER TO THE EFFECT
THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR A PLAN SUBJECT TO SECTION
4975 OF THE CODE, OR AN OPINION OF COUNSEL IN ACCORDANCE WITH THE PROVISIONS OF
THE AGREEMENT REFERRED TO HEREIN. SUCH REPRESENTATION SHALL BE DEEMED TO HAVE
BEEN MADE TO THE TRUSTEE BY THE TRANSFEREE'S ACCEPTANCE OF THIS CERTIFICATE OR
BY THE ACCEPTANCE BY A BENEFICIAL OWNER OF THE BENEFICIAL INTEREST REPRESENTED
HEREBY UNLESS THE TRUSTEE SHALL HAVE RECEIVED FROM THE TRANSFEREE AN ALTERNATIVE
REPRESENTATION ACCEPTABLE IN FORM AND SUBSTANCE TO THE MASTER SERVICER AND THE
DEPOSITOR. NOTWITHSTANDING ANYTHING ELSE TO THE CONTRARY HEREIN, ANY PURPORTED
TRANSFER OF THIS CERTIFICATE TO OR ON BEHALF OF AN EMPLOYEE BENEFIT PLAN SUBJECT
TO ERISA OR TO THE CODE WITHOUT THE OPINION OF COUNSEL SATISFACTORY TO THE
TRUSTEE AS DESCRIBED ABOVE SHALL BE VOID AND OF NO EFFECT.
THIS CLASS M-2 CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A
CERTIFICATES AND THE CLASS M-1 CERTIFICATES.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
F-1
<PAGE> 138
Certificate No. :
Cut-Off Date : October 31, 1999
First Distribution Date : December 20, 1999
Final Scheduled Distribution Date : October 20, 2030
Original Class Certificate
Balance of this Certificate
("Denomination") : $[__________]
Original Certificate
Balance of this Class : $[__________]
Pass-Through Rate : [___]%, subject to the weighted
average Net Loan Rates described in
the Agreement
CUSIP : [_____]
Class : M-2
F-2
<PAGE> 139
HOUSEHOLD HOME EQUITY LOAN TRUST 1999-1
Closed-End Home Equity Loan Asset-Backed Certificates,
Series 1999-1
Class M-2
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to a Trust
consisting of closed-end fixed rate home equity loans (the "Home Equity
Loans")
HFC Revolving Corporation, as Depositor
Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Principal Balance of this Class
M-2 Certificate at any time may be less than the Original Class Certificate
Balance set forth on the face hereof, as described herein. This Class M-2
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Depositor, the Sellers, the Master Servicer, or the Trustee
referred to below or any of their respective affiliates. Neither this Class M-2
Certificate nor the Home Equity Loans are guaranteed or insured by any
governmental agency or instrumentality.
This certifies that CEDE & CO. is the registered owner of the
Percentage Interest evidenced by this Class M-2 Certificate (obtained by
dividing the principal denomination of this Class M-2 Certificate by the
aggregate of the principal denominations of all Certificates of this Class) in
certain monthly distributions with respect to a Trust consisting primarily of
the Home Equity Loans deposited by HFC Revolving Corporation (the "Depositor").
The Trust was created pursuant to a Pooling and Servicing Agreement dated as of
November 1, 1999 (the "Agreement") among the Depositor, Household Finance
Corporation, as Master Servicer (the "Master Servicer") and Bank One, National
Association, as Trustee (the "Trustee"). To the extent not defined herein, the
capitalized terms used herein have the meanings assigned in the Agreement. This
Class M-2 Certificate is issued under and is subject to the terms, provisions
and conditions of the Agreement, to which Agreement the Certificateholder of
this Class M-2 Certificate by virtue of the acceptance hereof assents and by
which such Certificateholder is bound.
Reference is hereby made to the further provisions of this Class M-2
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.
This Class M-2 Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.
F-3
<PAGE> 140
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: November 19, 1999
HOUSEHOLD HOME EQUITY LOAN TRUST 1999-1
By: BANK ONE, NATIONAL ASSOCIATION
not in its individual capacity, but
solely as Trustee
By _____________________________________
This is one of the Class M-2 Certificates
referenced in the above-mentioned Agreement
By ________________________________
Authorized Signatory of
BANK ONE, NATIONAL ASSOCIATION,
as Trustee
F-4
<PAGE> 141
[REVERSE OF CLASS M-2 CERTIFICATE]
HOUSEHOLD HOME EQUITY LOAN TRUST 1999-1
Closed-End Home Equity Loan Asset-Backed Certificates,
Series 1999-1
This Certificate is one of a duly authorized issue of Certificates
designated as Household Home Equity Loan Trust 1999-1, Closed-End Home Equity
Loan Asset-Backed Certificates, Series 1999-1 (herein collectively called the
"Certificates"), and representing a beneficial ownership interest in the Trust
created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Collection Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on
the 20th day of each month or, if such 20th day is not a Business Day then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Certificateholders of Certificates of the Class to which this Certificate
belongs on such Distribution Date pursuant to the Agreement. The Record Date
applicable to each Distribution Date is the Business Day preceding such
Distribution Date; provided, however, that following the date on which
Definitive Certificates are available pursuant to Section 6.02(f) of the
Agreement, the Record Date shall be the last day of the month preceding the
month in which such Distribution Date occurs.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or, upon the written request of a Certificateholder owning
Certificates having the requisite aggregate denominations specified in the
Agreement, by wire transfer or otherwise, as set forth in the Agreement. The
final distribution on each Certificate will be made in like manner, but only
upon presentment and surrender of such Certificate at the office or agency of
the Trustee specified in the notice to Certificateholders of such final
distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Master Servicer, the Depositor, and the Trustee, in each case with the
consent of the Certificateholders of the requisite percentage of the Percentage
Interests of each Class of Certificates affected by such amendment or all
classes
F-5
<PAGE> 142
in the case of amendments or modifications which affect all classes, as
specified in the Agreement. Any such consent by the holder of this Certificate
shall be conclusive and binding on such holder and upon all future holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange therefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Certificate Registrar upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Certificate
Registrar (which shall be the Corporate Trust Office if the Trustee is the
Certificate Registrar as provided in the Agreement). Every Certificate presented
or surrendered for registration of transfer or exchange shall (if so required by
the Trustee or the Certificate Registrar) be duly endorsed by, or accompanied by
a written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the Certificateholder hereof or such
Certificateholder's attorney duly authorized in writing. Upon satisfaction of
the foregoing, one or more new Certificates of the same Class in authorized
denominations and evidencing the same aggregate Percentage Interest in the Trust
will be issued to the designated transferee or transferees.
No Transfer of this Class M Certificate shall be made to an employee
benefit plan subject to the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or to Section 4975 of the Code (or comparable provisions of
any subsequent enactments), or a trustee of any such plan, unless the Trustee
shall have received an Opinion of Counsel satisfactory to the Trustee to the
effect that the purchase or holding of such this Class M Certificate will not
result in the assets of the Trust being deemed to be "plan assets" and subject
to the prohibited transaction provisions of ERISA and the Code and will not
subject the Trustee, the Master Servicer, the Sellers or the Trust to any
obligation in addition to those undertaken in this Agreement, which Opinion of
Counsel shall not be an expense of the Trustee, the Master Servicer, the Sellers
or the Trust except to the extent any of such parties is the transferor of such
Certificate. Unless such Opinion of Counsel is delivered, each Transferee shall
be deemed to represent to the Trustee, the Sellers and the Master Servicer that
such Transferee is neither an employee benefit plan subject to Section 406 of
ERISA or Section 4975 of the Code, nor a person acting on behalf of any such
plan.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Sellers, Master Servicer, Depositor, and the Trustee and any agent
of the Sellers, Master Servicer, Depositor or the Trustee may treat the Person
in whose name this Certificate is
F-6
<PAGE> 143
registered as the owner hereof for all purposes, and the Sellers, the Master
Servicer, the Depositor, or the Trustee or any such agent shall not be affected
by any notice to the contrary.
On any Distribution Date following the date at which the aggregate
Certificate Principal Balance is less than 15% of the initial aggregate
Certificate Principal Balance of the Class A and Class M Certificates, the
Master Servicer will have the option to repurchase, in whole, from the Trust the
Home Equity Loans at a purchase price determined as provided in the Agreement.
In the event that no such optional termination occurs, the obligations and
responsibilities created by the Agreement will terminate upon the earliest of
(i) the disposition of the Home Equity Loans and Mortgaged Property pursuant to
the provisions of Section 10.03(a) of the Agreement; provided, however, if the
Master Servicer does not repurchase all of the Home Equity Loans pursuant to
Section 10.01(a)(i) of the Agreement within three months of the first
Distribution Date upon which such repurchase option may occur, then the Trustee
shall begin a process for soliciting bids in connection with an auction of the
Home Equity Loans pursuant to Section 10.01(c) and 10.01(d) of the Agreement;
(ii) the final payment or other liquidation of the Principal Balance of the last
Home Equity Loan in the Trust and (iii) the Distribution Date in October 2030.
In no event, however, will the trust created by the Agreement continue beyond
the expiration of 21 years from the death of the last survivor of the
descendants living at the date of the Agreement of a certain person named in the
Agreement.
Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
F-7
<PAGE> 144
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
________________________________________________________________________________
Dated: _____________
_____________________________________________
Signature by or on behalf of assignor
F-8
<PAGE> 145
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to_________________________________________________,
_______________________________________________________________________________,
_______________________________________________________________________________,
for the account of ____________________________________________________________,
account number _______________, or, if mailed by check, to _____________________
________________________________________________________________________________
Applicable statements should be mailed to_______________________________________
________________________________________________________________________________
________________________________________________________________________________
This information is provided by ______________________________________,
the assignee named above, or __________________________________________________,
as its agent.
F-9
<PAGE> 146
EXHIBIT G
FORM OF CLASS R CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
THIS CERTIFICATE MAY NOT BE TRANSFERRED TO ANY PERSON EXCEPT IN CONNECTION WITH
THE ASSUMPTION BY THE TRANSFEREE OF CERTAIN DUTIES SPECIFIED IN THE AGREEMENT.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
THIS CLASS R CERTIFICATE HAS NO SPECIFIED PRINCIPAL BALANCE, DOES NOT BEAR
INTEREST AND WILL NOT RECEIVE ANY DISTRIBUTIONS EXCEPT AS PROVIDED HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
PROPOSED TRANSFEREE DELIVERS TO THE TRUSTEE A TRANSFER AFFIDAVIT IN ACCORDANCE
WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE DELIVERS TO THE TRUSTEE EITHER A REPRESENTATION LETTER TO THE EFFECT
THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR A PLAN SUBJECT TO SECTION
4975 OF THE CODE, OR AN OPINION OF COUNSEL IN ACCORDANCE WITH THE PROVISIONS OF
THE AGREEMENT REFERRED TO HEREIN. NOTWITHSTANDING ANYTHING ELSE TO THE CONTRARY
HEREIN, ANY PURPORTED TRANSFER OF THIS CERTIFICATE TO OR ON BEHALF OF AN
EMPLOYEE BENEFIT PLAN SUBJECT TO ERISA OR TO THE CODE WITHOUT THE OPINION OF
COUNSEL SATISFACTORY TO THE TRUSTEE AS DESCRIBED ABOVE SHALL BE VOID AND OF NO
EFFECT.
G-1
<PAGE> 147
Certificate No. :
Percentage Interest
evidenced by this
Certificate : 100%
HOUSEHOLD HOME EQUITY LOAN TRUST 1999-1
Closed-End Home Equity Loan Asset-Backed Certificates,
Series 1999-1
Class R
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to a Trust
consisting of closed-end fixed rate home equity loans (the "Home Equity
Loans")
HFC Revolving Corporation, as Depositor
This Certificate does not evidence an obligation of, or an interest in,
and is not guaranteed by the Depositor, the Sellers, the Master Servicer or the
Trustee referred to below or any of their respective affiliates. Neither this
Certificate nor the Home Equity Loans are guaranteed or insured by any
governmental agency or instrumentality.
This certifies that HOUSEHOLD FINANCE CORPORATION is the registered
owner of the Percentage Interest evidenced by this Certificate specified above
in the interest represented by all Certificates of the Class to which this
Certificate belongs in a Trust consisting primarily of the Home Equity Loans
deposited by HFC Revolving Corporation (the "Depositor"). The Trust was created
pursuant to a Pooling and Servicing Agreement dated as of November 1, 1999 (the
"Agreement") among the Depositor, Household Finance Corporation as Master
Servicer (the "Master Servicer"), and Bank One, National Association, as Trustee
(the "Trustee"). To the extent not defined herein, the capitalized terms used
herein have the meanings assigned in the Agreement. This Certificate is issued
under and is subject to the terms, provisions and conditions of the Agreement,
to which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Certificateholder is bound.
This Certificate does not have a specified principal balance or
pass-through rate and will be entitled to distributions only to the extent set
forth in the Agreement. In addition, any distribution of the proceeds of any
remaining assets of the Trust will be made only upon presentment and surrender
of this Certificate at the Corporate Trust Office or the office or agency
maintained by the Trustee in Chicago, Illinois.
No transfer of a Certificate of this Class shall be made unless such
transfer is made pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws or is exempt from the
registration requirements under said Act and such laws. In the event that a
transfer is to be made in reliance upon an exemption from the Securities Act and
such laws, in order to assure compliance with the Securities Act and such laws,
the Certificateholder desiring to effect such transfer and such
Certificateholder's prospective
G-2
<PAGE> 148
transferee shall each certify to the Trustee and the Depositor in writing the
facts surrounding the transfer. The Trustee may also require the delivery
(except in the case of a transfer pursuant to Rule 144A of the Securities Act)
to the Trustee of an Opinion of Counsel acceptable to and in form and substance
satisfactory to the Trustee that such transfer may be made pursuant to an
exemption from the Securities Act, which Opinion of Counsel shall not be
obtained at the expense of the Trustee, the Master Servicer or the Trust; and
the Trustee may require the Transferee to execute an investment letter
acceptable to and in form and substance satisfactory to the Trustee certifying
to the Master Servicer, the Sellers and the Trustee the facts surrounding such
Transfer which investment letter shall not be an expense of the Trustee, the
Master Servicer or the Trust. The Certificateholder hereof desiring to effect
such transfer shall, and does hereby agree to, indemnify the Trustee, the Master
Servicer and the Trust against any liability that may result if the transfer is
not so exempt or is not made in accordance with such federal and state laws.
Except in the case of the initial Transfer to Household Finance
Corporation, no Transfer of a Class R Certificate shall be made to an employee
benefit plan subject to the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or to Section 4975 of the Code (or comparable provisions of
any subsequent enactments), or a trustee of any such plan, unless the Trustee
shall have received an Opinion of Counsel satisfactory to the Trustee to the
effect that the purchase or holding of such Class R Certificate will not result
in the assets of the Trust being deemed to be "plan assets" and subject to the
prohibited transaction provisions of ERISA and the Code and will not subject the
Trustee, the Master Servicer, the Sellers or the Trust to any obligation in
addition to those undertaken in the Agreement, which Opinion of Counsel shall
not be an expense of the Trustee, the Master Servicer, the Sellers or the Trust
except to the extent any of such parties is the transferor of such Certificate.
Unless such Opinion of Counsel is delivered, each Transferee shall be deemed to
represent to the Trustee, the Sellers and the Master Servicer that such
Transferee is neither an employee benefit plan subject to Section 406 of ERISA
or Section 4975 of the Code, nor a person acting on behalf of any such plan.
Each Holder of this Certificate will be deemed to have agreed to be
bound by the restrictions of the Agreement, including but not limited to the
restrictions that (i) each person holding or acquiring any Ownership Interest in
this Certificate must be a Permitted Transferee, (ii) no Ownership Interest in
this Certificate may be transferred without delivery to the Trustee of (a) a
transfer affidavit of the proposed transferee and (b) a transfer certificate of
the transferor, each of such documents to be in the form described in the
Agreement, (iii) each person holding or acquiring any Ownership Interest in this
Certificate must agree to require a transfer affidavit and to deliver a transfer
certificate to the Trustee as required pursuant to the Agreement, (iv) each
person holding or acquiring an Ownership Interest in this Certificate must agree
not to transfer an Ownership Interest in this Certificate if it has actual
knowledge that the proposed transferee is not a Permitted Transferee and (v) any
attempted or purported transfer of any Ownership Interest in this Certificate in
violation of such restrictions will be absolutely null and void and will vest no
rights in the purported transferee. The Trustee will provide the Internal
Revenue Service and any pertinent persons with the information needed to compute
the tax imposed under the applicable tax laws on transfers of residual interests
to disqualified organizations, if any person other than a Permitted Transferee
acquires an Ownership Interest on a Class R Certificate in violation of the
restrictions mentioned above.
G-3
<PAGE> 149
Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized officer of the Trustee.
* * *
G-4
<PAGE> 150
IN WITNESS WHEREOF, the Trustee on behalf of the Trust has caused this
Certificate to be duly executed.
Dated: November 19, 1999
HOUSEHOLD HOME EQUITY LOAN TRUST 1999-1
By: BANK ONE, NATIONAL ASSOCIATION
not in its individual capacity, but
solely as Trustee
By ___________________________
This is one of the Class R Certificates
referenced in the above-mentioned Agreement
By ________________________________
Authorized Signatory of
Bank One, National Association, as Trustee
G-5
<PAGE> 151
[REVERSE OF CLASS R CERTIFICATE]
HOUSEHOLD HOME EQUITY LOAN TRUST 1999-1
Closed-End Home Equity Loan Asset-Backed Certificates,
Series 1999-1
This Certificate is one of a duly authorized issue of Certificates
designated as Household Home Equity Loan Trust 1999-1, Closed-End Home Equity
Loan Asset-Backed Certificates, Series 1999-1 (herein collectively called the
"Certificates"), and representing a beneficial ownership interest in the Trust
created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Collection Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on
the 20th day of each month or, if such 20th day is not a Business Day, then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to Certificateholders of Certificates of the Class to which this Certificate
belongs on such Distribution Date pursuant to the Agreement. The Record Date
applicable to each Distribution Date is the Business Day preceding such
Distribution Date; provided, however, that following the date on which
Definitive Certificates are available pursuant to Section 6.02(f) of the
Agreement, the Record Date shall be the last day of the month preceding the
month in which such Distribution Date occurs.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or, upon the request of a Certificateholder owning
Certificates having the requisite aggregate denominations or Percentage
Interests specified in the Agreement, by wire transfer or otherwise, as set
forth in the Agreement. The final distribution on each Certificate will be made
in like manner, but only upon presentment and surrender of such Certificate at
the office or agency of the Trustee specified in the notice to
Certificateholders of such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Master Servicer, the Depositor, and the Trustee, in each case with the
consent of the Certificateholders of the requisite percentage of the Percentage
Interests of each Class of Certificates affected by such amendment or all
classes
G-6
<PAGE> 152
in the case of amendments or modifications which affect all classes, as
specified in the Agreement. Any such consent by the holder of this Certificate
shall be conclusive and binding on such holder and upon all future holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange therefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Sellers, Master Servicer, Depositor, and the Trustee and any agent
of the Sellers, Master Servicer, Depositor or the Trustee may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and the Sellers, the Master Servicer, the Depositor, or the Trustee or
any such agent shall not be affected by any notice to the contrary.
On any Distribution Date following the date at which the aggregate
Certificate Principal Balance is less than 15% of the initial aggregate
Certificate Principal Balance of the Class A and Class M Certificates, the
Master Servicer will have the option to repurchase, in whole, from the Trust the
Home Equity Loans at a purchase price determined as provided in the Agreement.
In the event that no such optional termination occurs, the obligations and
responsibilities created by the Agreement will terminate upon the earliest of
(i) the disposition of the Home Equity Loans and Mortgaged Property pursuant to
the provisions of Section 10.03(a) of the Agreement; provided, however, if the
Master Servicer does not repurchase all of the Home Equity Loans pursuant to
Section 10.01(a)(i) of the Agreement within three months of the first
Distribution Date upon which such repurchase option may occur, then the Trustee
shall begin a process for soliciting bids in connection with an auction of the
Home Equity Loans pursuant to Section 10.01(c) and 10.01(d) of the Agreement;
(ii) the final payment or other liquidation of the Principal Balance of the last
Home Equity Loan in the Trust and (iii) the Distribution Date in October 2030.
In no event, however, will the trust created by the Agreement continue beyond
the expiration of 21 years from the death of the last survivor of the
descendants living at the date of the Agreement of a certain person named in the
Agreement.
Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
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ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
_______________________________________________________________________________.
Dated: _____________
_____________________________________________
Signature by or on behalf of assignor
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DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to_________________________________________________,
_______________________________________________________________________________,
_______________________________________________________________________________,
for the account of ____________________________________________________________,
account number _______________, or, if mailed by check, to _____________________
________________________________________________________________________________
Applicable statements should be mailed to_______________________________________
________________________________________________________________________________
________________________________________________________________________________
This information is provided by ______________________________________,
the assignee named above, or __________________________________________________,
as its agent.
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EXHIBIT H
MORTGAGE LOAN SCHEDULE
H-1
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EXHIBIT I
FORM OF INVESTMENT LETTER [NON-RULE 144A]
[DATE]
HFC Revolving Corporation
2700 Sanders Road
Prospect Heights, Illinois 60070
Bank One, National Association
1 Bank One Plaza
Global Corporate Trust Services
Suite IL1-0126
Chicago, Illinois 60670-0126
Re: HOUSEHOLD HOME EQUITY LOAN TRUST 1999-1
Closed-End Home Equity Loan Asset-Backed Certificates,
Series 1999-1, Class R
Ladies and Gentlemen:
In connection with our acquisition of the above-captioned
Certificates, we certify that (a) we understand that the Certificates are not
being registered under the Securities Act of 1933, as amended (the "Act"), or
any state securities laws and are being transferred to us in a transaction that
is exempt from the registration requirements of the Act and any such laws, (b)
we are an "accredited investor," as defined in Regulation D under the Act, and
have such knowledge and experience in financial and business matters that we are
capable of evaluating the merits and risks of investments in the Certificates,
(c) we have had the opportunity to ask questions of and receive answers from the
Depositor concerning the purchase of the Certificates and all matters relating
thereto or any additional information deemed necessary to our decision to
purchase the Certificates, (d) we are not an employee benefit plan that is
subject to the Employee Retirement Income Security Act of 1974, as amended, or a
plan that is subject to Section 4975 of the Internal Revenue Code of 1986, as
amended, nor are we acting on behalf of any such plan, (e) we are acquiring the
Certificates for investment for our own account and not with a view to any
distribution of such Certificates (but without prejudice to our right at all
times to sell or otherwise dispose of the Certificates in accordance with clause
(g) below), (f) we have not offered or sold any Certificates to, or solicited
offers to buy any Certificates from, any person, or otherwise approached or
negotiated with any person with respect thereto, or taken any other action which
would result in a violation of Section 5 of the Act, and (g) we will not sell,
transfer or otherwise dispose of any Certificates unless (1) such sale, transfer
or other disposition is made pursuant to an effective registration statement
under the Act or is exempt from such registration requirements, and if
requested, we will at our expense provide an opinion of counsel satisfactory to
the addressees of this Certificate that such sale, transfer or other disposition
may be made
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pursuant to an exemption from the Act, (2) the purchaser or transferee of such
Certificate has executed and delivered to you a certificate to substantially the
same effect as this certificate, and (3) the purchaser or transferee has
otherwise complied with any conditions for transfer set forth in the Pooling
and Servicing Agreement.
Very truly yours,
[NAME OF TRANSFEREE]
By: ___________________
Authorized Officer
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<PAGE> 158
FORM OF RULE 144A LETTER
[DATE]
HFC Revolving Corporation
2700 Sanders Road
Prospect Heights, Illinois 60070
Bank One, National Association
1 Bank One Plaza
Global Corporate Trust Services
Suite IL1-0126
Chicago, Illinois 60670-0126
Re: HOUSEHOLD HOME EQUITY LOAN TRUST 1999-1
Closed-End Home Equity Loan Asset-Backed Certificates,
Series 1999-1, Class R
Ladies and Gentlemen:
In connection with our acquisition of the above Certificates
we certify that (a) we understand that the Certificates are not being registered
under the Securities Act of 1933, as amended (the "Act"), or any state
securities laws and are being transferred to us in a transaction that is exempt
from the registration requirements of the Act and any such laws, (b) we have had
the opportunity to ask questions of and receive answers from the Depositor
concerning the purchase of the Certificates and all matters relating thereto or
any additional information deemed necessary to our decision to purchase the
Certificates, (c) we are not an employee benefit plan that is subject to the
Employee Retirement Income Security Act of 1974, as amended, or a plan that is
subject to Section 4975 of the Internal Revenue Code of 1986, as amended, nor
are we acting on behalf of any such plan, (d) we have not, nor has anyone acting
on our behalf offered, transferred, pledged, sold or otherwise disposed of the
Certificates, any interest in the Certificates or any other similar security to,
or solicited any offer to buy or accept a transfer, pledge or other disposition
of the Certificates, any interest in the Certificates or any other similar
security from, or otherwise approached or negotiated with respect to the
Certificates, any interest in the Certificates or any other similar security
with, any person in any manner, or made any general solicitation by means of
general advertising or in any other manner, or taken any other action, that
would constitute a distribution of the Certificates under the Securities Act or
that would render the disposition of the Certificates a violation of Section 5
of the Securities Act or require registration pursuant thereto, nor will act,
nor has authorized or will authorize any person to act, in such manner with
respect to the Certificates, (e) we are a "qualified institutional buyer" as
that term is defined in Rule 144A under the Securities Act and have completed
either of the forms of certification to that effect attached hereto as Annex 1
or Annex 2. We are aware that
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the sale to us is being made in reliance on Rule 144A. We are acquiring the
Certificates for our own account or for resale pursuant to Rule 144A and
further, understand that such Certificates may be resold, pledged or transferred
only (i) to a person reasonably believed to be a qualified institutional buyer
that purchases for its own account or for the account of a qualified
institutional buyer to whom notice is given that the resale, pledge or transfer
is being made in reliance on Rule 144A, or (ii) pursuant to another exemption
from registration under the Securities Act.
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<PAGE> 160
ANNEX 1 TO EXHIBIT I
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees Other Than Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to
the parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:
i. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
Buyer.
ii. In connection with purchases by the Buyer, the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A") because (i) the Buyer owned
and/or invested on a discretionary basis $ in securities (except for the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year (such amount being calculated in accordance with Rule 144A and (ii)
the Buyer satisfies the criteria in the category marked below.
___ Corporation, etc. The Buyer is a corporation (other than a
bank, savings and loan association or similar institution),
Massachusetts or similar business trust, partnership, or
charitable organization described in Section 501(c)(3) of the
Internal Revenue Code of 1986, as amended.
___ Bank. The Buyer (a) is a national bank or banking
institution organized under the laws of any State, territory
or the District of Columbia, the business of which is
substantially confined to banking and is supervised by the
State or territorial banking commission or similar official or
is a foreign bank or equivalent institution, and (b) has an
audited net worth of at least $25,000,000 as demonstrated in
its latest annual financial statements, a copy of which is
attached hereto.
___ Savings and Loan. The Buyer (a) is a savings and loan
association, building and loan association, cooperative bank,
homestead association or similar institution, which is
supervised and examined by a State or Federal authority having
supervision over any such institutions or is a foreign savings
and loan association or equivalent institution and (b) has an
audited net worth of at least $25,000,000 as demonstrated in
its latest annual financial statements, a copy of which is
attached hereto.
___ Broker-dealer. The Buyer is a dealer registered pursuant
to Section 15 of the Securities Exchange Act of 1934.
___ Insurance Company. The Buyer is an insurance company whose
primary and predominant business activity is the writing of
insurance or the reinsuring of
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<PAGE> 161
risks underwritten by insurance companies and which is subject
to supervision by the insurance commissioner or a similar
official or agency of a State, territory or the District of
Columbia.
___ State or Local Plan. The Buyer is a plan established and
maintained by a State, its political subdivisions, or any
agency or instrumentality of the State or its political
subdivisions, for the benefit of its employees.
___ ERISA Plan. The Buyer is an employee benefit plan within
the meaning of Title I of the Employee Retirement Income
Security Act of 1974.
___ Investment Advisor. The Buyer is an investment advisor
registered under the Investment Advisors Act of 1940.
___ Small Business Investment Company. Buyer is a small
business investment company licensed by the U.S. Small
Business Administration under Section 301(c) or (d) of the
Small Business Investment Act of 1958.
___ Business Development Company. Buyer is a business
development company as defined in Section 202(a)(22) of the
Investment Advisors Act of 1940.
iii. The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer, (ii) securities that
are part of an unsold allotment to or subscription by the Buyer, if the Buyer is
a dealer, (iii) securities issued or guaranteed by the U.S. or any
instrumentality thereof, (iv) bank deposit notes and certificates of deposit,
(v) loan participations, (vi) repurchase agreements, (vii) securities owned but
subject to a repurchase agreement and (viii) currency, interest rate and
commodity swaps.
iv. For purposes of determining the aggregate amount of
securities owned and/or invested on a discretionary basis by the Buyer, the
Buyer used the cost of such securities to the Buyer and did not include any of
the securities referred to in the preceding paragraph, except (i) where the
Buyer reports its securities holdings in its financial statements on the basis
of their market value, and (ii) no current information with respect to the cost
of those securities has been published. If clause (ii) in the preceding sentence
applies, the securities may be valued at market. Further, in determining such
aggregate amount, the Buyer may have included securities owned by subsidiaries
of the Buyer, but only if such subsidiaries are consolidated with the Buyer in
its financial statements prepared in accordance with generally accepted
accounting principles and if the investments of such subsidiaries are managed
under the Buyer's direction. However, such securities were not included if the
Buyer is a majority-owned, consolidated subsidiary of another enterprise and the
Buyer is not itself a reporting company under the Securities Exchange Act of
1934, as amended.
v. The Buyer acknowledges that it is familiar with Rule 144A
and understands that the seller to it and other parties related to the
Certificates are relying and will continue to rely on the statements made herein
because one or more sales to the Buyer may be in reliance on Rule 144A.
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<PAGE> 162
vi. Until the date of purchase of the Rule 144A Securities,
the Buyer will notify each of the parties to which this certification is made of
any changes in the information and conclusions herein. Until such notice is
given, the Buyer's purchase of the Certificates will constitute a reaffirmation
of this certification as of the date of such purchase. In addition, if the Buyer
is a bank or savings and loan is provided above, the Buyer agrees that it will
furnish to such parties updated annual financial statements promptly after they
become available.
Print Name of Buyer
By:
-------------------------------
Name:
Title:
Date:
-------------------------------
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<PAGE> 163
ANNEX 2 TO EXHIBIT I
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees That are Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to
the parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:
1. As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the Buyer or, if the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A") because Buyer is part of a
Family of Investment Companies (as defined below), is such an officer of the
Adviser.
2. In connection with purchases by Buyer, the Buyer is a
"qualified institutional buyer" as defined in SEC Rule 144A because (i) the
Buyer is an investment company registered under the Investment Company Act of
1940, as amended and (ii) as marked below, the Buyer alone, or the Buyer's
Family of Investment Companies, owned at least $100,000,000 in securities (other
than the excluded securities referred to below) as of the end of the Buyer's
most recent fiscal year. For purposes of determining the amount of securities
owned by the Buyer or the Buyer's Family of Investment Companies, the cost of
such securities was used, except (i) where the Buyer or the Buyer's Family of
Investment Companies reports its securities holdings in its financial statements
on the basis of their market value, and (ii) no current information with respect
to the cost of those securities has been published. If clause (ii) in the
preceding sentence applies, the securities may be valued at market.
___ The Buyer owned $_______ in securities (other than the
excluded securities referred to below) as of the end of the
Buyer's most recent fiscal year (such amount being calculated
in accordance with Rule 144A).
___ The Buyer is part of a Family of Investment Companies
which owned in the aggregate $_______ in securities (other
than the excluded securities referred to below) as of the end
of the Buyer's most recent fiscal year (such amount being
calculated in accordance with Rule 144A).
3. The term "Family of Investment Companies" as used herein
means two or more registered investment companies (or series thereof) that have
the same investment adviser or investment advisers that are affiliated (by
virtue of being majority owned subsidiaries of the same parent or because one
investment adviser is a majority owned subsidiary of the other).
4. The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer or are part of the
Buyer's Family of Investment Companies, (ii) securities issued or guaranteed by
the U.S. or any instrumentality thereof, (iii) bank deposit notes and
certificates of deposit, (iv) loan participations, (v) repurchase agreements,
(vi) securities
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<PAGE> 164
owned but subject to a repurchase agreement and (vii) currency, interest rate
and commodity swaps.
5. The Buyer is familiar with Rule 144A and understands that
the parties listed in the Rule 144A Transferee Certificate to which this
certification relates are relying and will continue to rely on the statements
made herein because one or more sales to the Buyer will be in reliance on Rule
144A. In addition, the Buyer will only purchase for the Buyer's own account.
6. Until the date of purchase of the Certificates, the
undersigned will notify the parties listed in the Rule 144A Transferee
Certificate to which this certification relates of any changes in the
information and conclusions herein. Until such notice is given, the Buyer's
purchase of the Certificates will constitute a reaffirmation of this
certification by the undersigned as of the date of such purchase.
--------------------------------
Print Name of Buyer or Adviser
By:
-----------------------------
Name:
Title:
IF AN ADVISER:
---------------------------------
Print Name of Buyer
Date:
---------------------
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<PAGE> 165
EXHIBIT J
AFFIDAVIT OF TRANSFER OF RESIDUAL CERTIFICATES
PURSUANT TO SECTION 6.02(d)
HOUSEHOLD HOME EQUITY LOAN TRUST 1999-1
Closed-End Home Equity Loan Asset-Backed Certificates,
Series 1999-1
STATE OF )
) ss.:
COUNTY OF )
The undersigned, being first duly sworn, deposes and says as follows:
1. The undersigned is an officer of _______________, the proposed
Transferee of an Ownership Interest in a Class R Certificate (the "Certificate")
issued pursuant to the Pooling Agreement, (the "Agreement"), relating to the
above-referenced Series, among HFC Revolving Corporation as Depositor (the
"Depositor"), Household Finance Corporation as Master Servicer (the "Master
Servicer"), and Bank One, a National Association, as Trustee (the "Trustee").
Capitalized terms used, but not defined herein or in Exhibit 1 hereto, shall
have the meanings ascribed to such terms in the Agreement. The Transferee has
authorized the undersigned to make this affidavit on behalf of the Transferee.
2. The Transferee is, as of the date hereof, and will be, as of the
date of the Transfer, a Permitted Transferee. The Transferee is acquiring its
Ownership Interest in the Certificate either (i) for its own account or (ii) as
nominee, trustee or agent for another Person and has attached hereto an
affidavit from such Person in substantially the same form as this affidavit. The
Transferee has no knowledge that any such affidavit is false.
3. The Transferee has been advised of, and understands that (i) a tax
will be imposed on Transfers of the Certificate to Persons that are not
Permitted Transferees; (ii) such tax will be imposed on the transferor, or, if
such Transfer is through an agent (which includes a broker, nominee or
middleman) for a Person that is not a Permitted Transferee, on the agent; and
(iii) the Person otherwise liable for the tax shall be relieved of liability for
the tax if the subsequent Transferee furnished to such Person an affidavit that
such subsequent Transferee is a Permitted Transferee and, at the time of
Transfer, such Person does not have actual knowledge that the affidavit is
false.
4. The Transferee has been advised of, and understands that a tax will
be imposed on a "pass-through entity" holding the Certificate if at any time
during the taxable year of the pass-through entity a Person that is not a
Permitted Transferee is the record Certificateholder of an interest in such
entity. The Transferee understands that such tax will not be imposed for any
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period with respect to which the record Certificateholder furnishes to the
pass-through entity an affidavit that such record Certificateholder is a
Permitted Transferee and the pass-through entity does not have actual knowledge
that such affidavit is false. (For this purpose, a "pass-through entity"
includes a regulated investment company, a real estate investment trust or
common trust fund, a partnership, trust or estate, and certain cooperatives and,
except as may be provided in Treasury Regulations, persons holding interests in
pass-through entities as a nominee for another Person.)
5. The Transferee has reviewed the provisions of Section 6.02(i) - (m)
of the Agreement (attached hereto as Exhibit 2 and incorporated herein by
reference) and understands the legal consequences of the acquisition of an
Ownership Interest in the Certificate including, without limitation, the
restrictions on subsequent Transfers and the provisions regarding voiding the
Transfer and mandatory sales. The Transferee expressly agrees to be bound by and
to abide by the provisions of Section 6.02(i) - (m) of the Agreement and the
restrictions noted on the face of the Certificate. The Transferee understands
and agrees that any breach of any of the representations included herein shall
render the Transfer to the Transferee contemplated hereby null and void.
6. The Transferee agrees to require a Transfer Affidavit from any
Person to whom the Transferee attempts to Transfer its Ownership Interest in the
Certificate, and in connection with any Transfer by a Person for whom the
Transferee is acting as nominee, trustee or agent, and the Transferee will not
Transfer its Ownership Interest or cause any Ownership Interest to be
Transferred to any Person that the Transferee knows is not a Permitted
Transferee. In connection with any such Transfer by the Transferee, the
Transferee agrees to deliver to the Trustee a certificate substantially in the
form set forth as Exhibit J to the Agreement (a "Transferor Certificate") to the
effect that such Transferee has no actual knowledge that the Person to which the
Transfer is to be made is not a Permitted Transferee.
7. The Transferee does not have the intention to impede the assessment
or collection of any tax legally required to be paid with respect to the
Certificate.
8. The Transferee's taxpayer identification number is ___________.
9. The Transferee is a U.S. Person as defined in Code Section
7701(a)(30).
10. The Transferee is aware that the Certificate may be a "noneconomic
residual interest" within the meaning of proposed Treasury regulations
promulgated pursuant to the Code and that the transferor of a noneconomic
residual interest will remain liable for any taxes due with respect to the
income on such residual interest, unless no significant purpose of the transfer
was to impede the assessment or collection of tax.
11. The Transferee is not an employee benefit plan that is subject to
ERISA or a plan that is subject to Section 4975 of the Code, nor are we acting
on behalf of such a plan.
* * *
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IN WITNESS WHEREOF, the Transferee has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
duly authorized officer and its corporate seal to be hereunto affixed, duly
attested, this ___ day of _____________, 19__.
[NAME OF TRANSFEREE]
By:____________________
Name:
Title:
[Corporate Seal]
ATTEST:
_________________________
[Assistant] Secretary
Personally appeared before me the above-named ___________________,
known or proved to me to be the same person who executed the foregoing
instrument and to be the _____________________ of the Transferee, and
acknowledged that he executed the same as his free act and deed and the free act
and deed of the Transferee.
Subscribed and sworn before me this _____ day of _________, 19__.
_________________________________
NOTARY PUBLIC
My Commission expires the _____ day
of ______________, 19__.
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EXHIBIT 1 to EXHIBIT J
Certain Definitions
Ownership Interest: As to any Certificate or security interest in such
Certificate, including any interest in such Certificate as the Certificateholder
thereof and any other interest therein, whether direct or indirect, legal or
beneficial, as owner or as pledgee.
Permitted Transferee: Any Person other than (i) the United States, any
State or any political subdivision thereof or any agency or instrumentality of
any of the foregoing, (ii) a foreign government, international organization or
any agency or instrumentality of either of the foregoing, (iii) an organization
which is exempt from tax imposed by Chapter 1 of the Code (including the tax
imposed by Code section 511 on unrelated business taxable income) (except
certain farmers' cooperatives described in Code section 521) on any excess
inclusions (as defined in Code section 860E(c)(1)) with respect to any Class R
Certificate, (iv) rural electric and telephone cooperatives described in Code
section 1381(a)(2)(C), (v) a Person that is not a citizen or resident of the
United States, a corporation or partnership (including an entity treated as a
corporation or partnership for U.S. federal income tax purposes) created or
organized in or under the laws of the United States, any state thereof or the
District of Columbia, or an estate whose income from sources without the United
States is includible in gross income for United States federal income tax
purposes regardless of its connection with the conduct of a trade or business
within the United States, or a trust if a court within the United States is able
to exercise primary supervision over the administration of the trust and one or
more United States Persons have the authority to control all substantial
decisions of the trust, (vi) an "electing large partnership" within the meaning
of Code section 775 and (vii) any other Person so designated by the Trustee
based on an Opinion of Counsel to the effect that any transfer to such Person
may cause the Trust to fail to qualify as a REMIC at any time the Certificates
are outstanding. The terms "United States", "State" and "international
organization" shall have the meanings set forth in Code section 7701 or
successor provisions. A corporation will not be treated as an instrumentality of
the United States or of any State or political subdivision thereof if all of its
activities are subject to tax and, with the exception of the Freddie Mac, a
majority of its board of directors is not selected by such governmental unit.
Person: Any individual, corporation, partnership, joint venture, bank,
joint stock company, trust, unincorporated organization or government or any
agency or political subdivision thereof.
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EXHIBIT 2 to EXHIBIT J
Section 6.02(i) - (m) of the Agreement
(i) Except in the case of the initial Transfer to Household Finance
Corporation, no Transfer of a Class R Certificate shall be made unless such
Transfer is exempt from the registration requirements of the Securities Act of
1933, as amended, and any applicable state securities laws or is made in
accordance with said Act and laws. Except in the case of the initial Transfer to
Household Finance Corporation, as a condition to any Transfer of Class R
Certificate, (i) the Trustee may require a written Opinion of Counsel acceptable
to and in form and substance satisfactory to the Trustee that such Transfer may
be made pursuant to an exemption, describing the applicable exemption and the
basis therefor, from said Act and laws or is being made pursuant to said Act and
laws, which Opinion of Counsel shall not be an expense of the Trustee, the
Master Servicer, the Trust and (ii) the Trustee may require the Transferee to
execute an investment letter acceptable to and in form and substance
satisfactory to the Trustee certifying to the Master Servicer, the Sellers and
the Trustee the facts surrounding such Transfer, which investment letter shall
not be an expense of the Trustee, the Master Servicer or the Trust Fund except
to the extent any of such parties is the transferor of such Certificate. The
Certificateholder of a Class R Certificate desiring to effect such Transfer
shall, and does hereby agree to, indemnify the Trustee, the Master Servicer and
the Trust against any liability that may result if the Transfer is not so exempt
or is not made in accordance with such federal and state laws.
(j) Except in the case of the initial Transfer to Household Finance
Corporation, no Transfer of a Class M Certificate or Class R Certificate shall
be made to an employee benefit plan subject to ERISA, and to Section 4975 of the
Code (or comparable provisions of any subsequent enactments), or a trustee of
any such plan, unless the Trustee shall have received an Opinion of Counsel
satisfactory to the Trustee to the effect that the purchase or holding of such
Class M or Class R Certificate will not result in the assets of the Trust being
deemed to be "plan assets" and subject to the prohibited transaction provisions
of ERISA and the Code and will not subject the Trustee, the Master Servicer, the
Sellers or the Trust to any obligation in addition to those undertaken in this
Agreement, which Opinion of Counsel shall not be an expense of the Trustee, the
Master Servicer, the Sellers or the Trust except to the extent any of such
parties is the transferor of such Certificate. Unless such Opinion of Counsel is
delivered, each Transferee shall be deemed to represent to the Trustee, the
Sellers and the Master Servicer that such Transferee is neither an employee
benefit plan subject to Section 406 of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), and Section 4975 of the Code, nor a person
acting on behalf of any such plan.
(k) Each Person who has or who acquires any Ownership Interest in a
Class R Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions and to
have irrevocably appointed the Trustee designee as its attorney-in-fact to
negotiate the terms of any mandatory sale under clause (vi) below and to execute
all instruments of Transfer and to do all other things necessary in
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connection with any such sale, and the rights of each Person acquiring any
Ownership Interest in a Class R Certificate are expressly subject to the
following provisions:
(i) Each Person holding or acquiring any Ownership Interest in
a Class R Certificate shall be a Permitted Transferee, shall not be
holding or acquiring such Ownership Interest on behalf of any Person
that is not a Permitted Transferee and shall promptly notify the
Trustee of any change or impending change in its status or the status
of any beneficial owner as a Permitted Transferee.
(ii) No Person shall acquire an Ownership Interest in a Class
R Certificate unless such Ownership Interest is a pro rata undivided
interest.
(iii) No Ownership Interest in a Class R Certificate may be
transferred without the express written consent of the Trustee. In
connection with any proposed Transfer of any Ownership Interest in a
Class R Certificate, the Trustee shall as a condition to such consent,
require delivery to it, in form and substance satisfactory to it, of
each of the following:
A. an affidavit from the proposed Transferee in the
form attached as Exhibit J (a "Transfer Affidavit") to the
effect that (a) such Transferee is a Permitted Transferee and
that it is not acquiring its Ownership Interest in the Class R
Certificate that is the subject of the proposed Transfer as a
nominee, trustee or agent for any Person who is not a
Permitted Transferee; (b) the proposed Transferee does not
have the intention to impede the assessment or collection of
tax legally required to be paid with respect to any Ownership
Interest in a Class R Certificate and the Proposed Transferee
acknowledges that the Class R Certificate may generate tax
liabilities in excess of the cash flow associated with the
Class R Certificate and intends to pay such taxes associated
with the Class R Certificate when they become due, (c) it has
no present knowledge or expectation that it will become
insolvent or subject to a bankruptcy proceeding for so long as
it holds any Ownership Interest in a Class R Certificate, (d)
it is not a Non-U.S. Person or is a Non-U.S. Person and has
furnished to the transferor and the Trustee (i) an Internal
Revenue Service Form 4224 or (ii) an opinion of a nationally
recognized tax counsel to the effect that such transfer of a
Class R Certificate will not be disregarded for federal income
tax purposes and (e) it will abide by the provisions of this
Section 6.02(k); and
B. a covenant of the proposed Transferee to the
effect that the proposed Transferee agrees to be bound by and
to abide by the Transfer restrictions applicable to the Class
R Certificates
(iv) Notwithstanding the delivery of a Transfer Affidavit by a
proposed Transferee under clause (iii) above, if the Trustee has actual
knowledge that the proposed Transferee is not a Permitted Transferee,
no Transfer of any Ownership Interest in a Class R Certificate to such
proposed Transferee shall be effected.
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(v) Any attempted or purported Transfer of any Ownership
Interest in a Class R Certificate in violation of the provisions of
this Section 6.02 shall be absolutely null and void and shall vest no
rights in the purported Transferee. If any purported Transferee shall,
in violation of the provisions of this Section 6.02, become a
Certificateholder of a Class R Certificate, then the prior
Certificateholder of such Certificate that is a Permitted Transferee
shall, upon discovery that the registration of Transfer of such Class R
Certificate was not in fact permitted by this Section 6.02, be restored
to all rights as Certificateholder thereof retroactive to the date of
registration of Transfer of such Class R Certificate. The Trustee shall
be under no liability to any Person for any registration of Transfer of
a Class R Certificate that is in fact not permitted by this Section
6.02 or for making any distributions due on such Certificate to the
Certificateholder thereof or taking any other action with respect to
such Certificateholder under the provisions of the Agreement so long as
the Transfer was not registered upon the express written consent of the
Trustee. The Trustee shall be entitled to recover from any
Certificateholder of a Class R Certificate that was in fact not a
Permitted Transferee at the time such distributions were made all
distributions made on such Class R Certificate. Any such distributions
so recovered by the Trustee shall be distributed and delivered by the
Trustee to the prior Certificateholder of such Certificate that is a
Permitted Transferee.
(vi) If any Person other than a Permitted Transferee acquires
any Ownership Interest in a Class R Certificate in violation of the
restrictions in this Section 6.02(k), then the Trustee shall have the
right, without notice to the Certificateholder of such Class R
Certificate or any other Person having an Ownership Interest therein,
to sell such Class R Certificate to a purchaser selected by the Trustee
on such terms as the Trustee may choose. Such purchaser may be the
Trustee itself or any affiliate of the Trustee. The proceeds of such
sale, net of commissions (which may include commissions payable to the
Trustee or its affiliates), expenses and taxes due, if any, will be
remitted by the Trustee to the previous Certificateholder of such Class
R Certificate that is a Permitted Transferee, except that in the event
that the Trustee determines that the Certificateholder of such Class R
Certificate may be liable for any amount due under this Section 6.02(k)
or any other provisions of this Agreement, the Trustee may withhold a
corresponding amount from such remittance as security for such claim.
The terms and conditions of any sale under this clause (vi) shall be
determined in the sole discretion of the Trustee, and it shall not be
liable to any Person having an Ownership Interest in a Class R
Certificate as a result of its exercise of such discretion.
(vii) Each Person holding or acquiring any Ownership Interest
in a Class R Certificate shall agree (A) to require a Transfer
Affidavit from any other Person to whom such person attempts to
transfer any Ownership Interest in a Class R Certificate and (B) not to
transfer any Ownership Interest in, or to cause the transfer of any
Ownership Interest in, a Class R Certificate if it has actual knowledge
that such Person is not a Permitted Transferee or will be holding any
Ownership Interest in a Class R Certificate on behalf of a Person that
is not a Permitted Transferee.
(l) Upon notice to the Trustee that any Ownership Interest in a Class R
Certificate has been transferred, either directly or indirectly, to any Person
that is not a Permitted Transferee or an agent thereof (including a broker,
nominee or middleman) in contravention of the
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foregoing restrictions, or that is a pass-through entity as defined in
Section 860E(e)(6) of the Code an interest of which is held of record by a
Person that is not a Permitted Transferee, the Trustee agrees to furnish to the
Internal Revenue Service, the transferor of such Class R Certificate or such
agent or pass-through entity such information necessary to the application of
Section 860E(e) of the Code as may be required by the Code, including but not
limited to the present value of the total anticipated excess inclusions with
respect to such Class R Certificate (or portion thereof) for periods after such
transfer and the total excess inclusions for any taxable year allocable to any
Certificateholder of an interest in such pass-through entity that is not a
Permitted Transferee. The Trustee shall require the Master Servicer to make all
necessary computations under this paragraph; provided, however, that the Trustee
shall in no event be excused from furnishing such information to the Internal
Revenue Service.
(m) The foregoing provisions of Section 6.02(k)-(l) shall cease to
apply to Transfers occurring on or after the date on which there shall have been
delivered to the Trustee, in form and substance satisfactory to the Trustee, (i)
written notification from each Rating Agency that the removal of the
restrictions on Transfer set forth in Section 6.02(k)-(l) will not cause such
Rating Agency to downgrade its rating of the Certificates and (ii) an Opinion of
Counsel to the effect that such removal will not cause the Trust to fail to
qualify as a REMIC. The affidavit referred to in clause (k)(iii) A. above shall
not be required in the case of the initial Transfer to Household Finance
Corporation.
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