Common use of Optional Substitution Clause in Contracts

Optional Substitution. (a) At any time the Servicer and HAFI shall each have the right, in their respective sole discretion, but not the obligation, to elect (by written notice sent to the Indenture Trustee and the Owner Trustee) to substitute in the place of any Receivable an Eligible Substitute Receivable or Receivables; provided that the aggregate Principal Balance of all Eligible Substitute Receivables substituted pursuant to this Section shall not exceed 2% of the Pool Balance as of the initial Cut-off Date; provided further that prior to any such substitution the Servicer shall give written notice to each Rating Agency of any such substitution. (b) For any Collection Period during which the Servicer or HAFI substitutes one or more Eligible Substitute Receivables, the Servicer shall determine the Substitution Adjustment Amount. The Servicer or HAFI, as applicable, shall deposit the Substitution Adjustment Amount in the Collection Account no later than the Business Day immediately preceding the Distribution Date in the month following the end of the Collection Period in which such substitution occurs. The Servicer shall amend the Schedule of Receivables to reflect the removal of any Receivable for which the Servicer or HAFI has made a substitution election pursuant to Section 5.02(a) from the terms of this Agreement and the substitution of the Eligible Substitute Receivable or Receivables. Upon such substitution, the Eligible Substitute Receivable or Receivables shall be subject to the terms of this Agreement in all respects, and the Seller shall be deemed to have represented that each such Eligible Substitute Receivable or Receivables, as of the date of substitution, satisfies the Eligibility Criteria, to the extent such criteria do not pertain exclusively to the Receivables transferred on the Closing Date. The Indenture Trustee and the Owner Trustee shall, upon receipt by each of the Indenture Trustee and the Owner Trustee of an officer’s certificate from an officer of the Servicer certifying that the conditions in this Section 5.02(b) have been satisfied, take any action requested by the Servicer or HAFI, as the case may be, to effect the reconveyance of such Receivable for which the Servicer or HAFI, as the case may be, has made a substitution election so removed from the Series Trust Estate to the Servicer or HAFI, as the case may be. The procedures applied by the Servicer or HAFI in selecting each Eligible Substitute Receivable shall not be adverse to the interests of the Noteholders and shall be comparable to the selection procedures applicable to the Receivables originally conveyed hereunder. (c) In the case of a substitution pursuant to this Section, upon receipt by the Indenture Trustee of (i) a Servicer’s Certificate to the effect that the Substitution Adjustment Amount, if any, has been so deposited in the Collection Account and (ii) an Officer’s Certificate reciting the transfer and assignment of the Eligible Substitute Receivable(s) to the Indenture Trustee, the Indenture Trustee shall execute and deliver such instrument of transfer or assignment presented to it by the Servicer, in each case without recourse, as shall be necessary to vest in the Servicer or HAFI, as applicable, legal and beneficial ownership of such Receivable for which the Servicer has made a substitution election (including any property acquired in respect thereof or proceeds of any insurance policy with respect thereto).

Optional Substitution. (a) At any time the Master Servicer and HAFI shall each have the right, in their respective sole discretion, but not the obligation, to elect (by written notice sent to the Indenture Trustee and the Owner Trustee) to substitute in the place of any Receivable an Eligible Substitute Receivable or Receivables; provided that the aggregate Principal Balance of all Eligible Substitute Receivables substituted pursuant to this Section shall not exceed 2% of the Pool Balance as of the initial Cut-off Date; provided further that prior to any such substitution the Master Servicer shall give written notice to each Rating Agency of any such substitution. (b) For any Collection Period during which the Master Servicer or HAFI substitutes one or more Eligible Substitute Receivables, the Master Servicer shall determine the Substitution Adjustment Amount. The Master Servicer or HAFI, as applicable, shall deposit the Substitution Adjustment Amount in the Collection Account no later than the Business Day immediately 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 Schedule of Receivables to reflect the removal of any Receivable for which the Master Servicer or HAFI has made a substitution election pursuant to Section 5.02(a) from the terms of this Agreement and the substitution of the Eligible Substitute Receivable or Receivables. Upon such substitution, the Eligible Substitute Receivable or Receivables shall be subject to the terms of this Agreement in all respects, and the Seller shall be deemed to have represented that each such Eligible Substitute Receivable or Receivables, as of the date of substitution, satisfies the Eligibility Criteria, to the extent such criteria do not pertain exclusively to the Receivables transferred on the Closing Date. The Indenture Trustee and the Owner Trustee shall, upon receipt by each of the Indenture Trustee and the Owner Trustee of an officer’s certificate from an officer of the Master Servicer certifying that the conditions in this Section 5.02(b) have been satisfied, take any action requested by the Master Servicer or HAFI, as the case may be, to effect the reconveyance of such Receivable for which the Master Servicer or HAFI, as the case may be, has made a substitution election so removed from the Series Trust Estate to the Master Servicer or HAFI, as the case may be. The procedures applied by the Master Servicer or HAFI in selecting each Eligible Substitute Receivable shall not be adverse to the interests of the Noteholders and shall be comparable to the selection procedures applicable to the Receivables originally conveyed hereunder. (c) In the case of a substitution pursuant to this Section, upon receipt by the Indenture Trustee of (i) a Master Servicer’s Certificate to the effect that the Substitution Adjustment Amount, if any, has been so deposited in the Collection Account and (ii) an Officer’s Certificate reciting the transfer and assignment of the Eligible Substitute Receivable(s) to the Indenture Trustee, the Indenture 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 Master Servicer or HAFI, as applicable, legal and beneficial ownership of such Receivable for which the Master Servicer has made a substitution election (including any property acquired in respect thereof or proceeds of any insurance policy with respect thereto).

Optional Substitution. (a) At any time the Master Servicer and HAFI HAFC shall each have the right, in their respective sole discretion, but not the obligation, to elect (by written notice sent to the Indenture Trustee and the Owner Trustee) to substitute in the place of any Receivable an Eligible Substitute Receivable or Receivables; provided that the aggregate Principal Balance of all Eligible Substitute Receivables substituted pursuant to this Section shall not exceed 2% of the Pool Balance as of the initial Cut-off Cutoff Date; provided further that prior to any such substitution the Master Servicer shall give written notice to each Rating Agency of any such substitution. (b) For any Collection Period during which the Master Servicer or HAFI HAFC substitutes one or more Eligible Substitute Receivables, the Master Servicer shall determine the Substitution Adjustment Amount. The Master Servicer or HAFIHAFC, as applicable, shall deposit the Substitution Adjustment Amount in the Collection Account no later than the Business Day immediately 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 Schedule of Receivables to reflect the removal of any Receivable for which the Master Servicer or HAFI HAFC has made a substitution election pursuant to Section 5.02(a) from the terms of this Agreement and the substitution of the Eligible Substitute Receivable or Receivables. Upon such substitution, the Eligible Substitute Receivable or Receivables shall be subject to the terms of this Agreement in all respects, and the Seller shall be deemed to have represented that each such Eligible Substitute Receivable or Receivables, as of the date of substitution, satisfies the Eligibility Criteria, to the extent such criteria do not pertain exclusively to the Receivables transferred on the Closing Date. The Indenture Trustee and the Owner Trustee shall, shall upon receipt by each satisfaction of the Indenture Trustee and the Owner Trustee of an officer’s certificate from an officer of the Servicer certifying that the conditions in this Section 5.02(b) have been satisfied, take any action requested by the Master Servicer or HAFIHAFC, as the case may be, to effect the reconveyance of such Receivable for which the Master Servicer or HAFIHAFC, as the case may be, has made a substitution election so removed from the Series Trust Estate to the Master Servicer or HAFIHAFC, as the case may be. The procedures applied by the Master Servicer or HAFI HAFC in selecting each Eligible Substitute Receivable shall not be adverse to the interests of the Noteholders and shall be comparable to the selection procedures applicable to the Receivables originally conveyed hereunder. (c) In the case of a substitution pursuant to this Section, upon receipt by the Indenture Trustee of (i) a Master Servicer’s Certificate to the effect that the Substitution Adjustment Amount, if any, has been so deposited in the Collection Account and (ii) an Officer’s Certificate reciting the transfer and assignment of the Eligible Substitute Receivable(s) to the Indenture Trustee, the Indenture 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 Master Servicer or HAFIHAFC, as applicable, legal and beneficial ownership of such Receivable for which the Master Servicer has made a substitution election (including any property acquired in respect thereof or proceeds of any insurance policy with respect thereto).

Optional Substitution. (a) At any time the Master Servicer and HAFI shall each have the right, in their respective sole discretion, but not the obligation, to elect (by written notice sent to the Indenture Trustee and the Owner Trustee) to substitute in the place of any Receivable an Eligible Substitute Receivable or Receivables; provided that the aggregate Principal Balance of all Eligible Substitute Receivables substituted pursuant to this Section shall not exceed 2% of the Pool Balance as of the initial Cut-off Date; provided further that prior to any such substitution the Master Servicer shall give written notice to each Rating Agency of any such substitution. (b) For any Collection Period during which the Master Servicer or HAFI substitutes one or more Eligible Substitute Receivables, the Master Servicer shall determine the Substitution Adjustment Amount. The Master Servicer or HAFI, as applicable, shall deposit the Substitution Adjustment Amount in the Collection Account no later than the Business Day immediately 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 Schedule of Receivables to reflect the removal of any Receivable for which the Master Servicer or HAFI has made a substitution election pursuant to Section 5.02(a) from the terms of this Agreement and the substitution of the Eligible Substitute Receivable or Receivables. Upon such substitution, the Eligible Substitute Receivable or Receivables shall be subject to the terms of this Agreement in all respects, and the Seller shall be deemed to have represented that each such Eligible Substitute Receivable or Receivables, as of the date of substitution, satisfies the Eligibility Criteria, to the extent such criteria do not pertain exclusively to the Receivables transferred on the Closing Date. The Indenture Trustee and the Owner Trustee shall, upon receipt by each of the Indenture Trustee and the Owner Trustee of an officer’s certificate from an officer of the Master Servicer certifying that the conditions in this Section 5.02(b) have been satisfied, take any action requested by the Master Servicer or HAFI, as the case may be, to effect the reconveyance of such Receivable for which the Master Servicer or HAFI, as the case may be, has made a substitution election so removed from the Series Trust Estate to the Master Servicer or HAFI, as the case may be. The procedures applied by the Master Servicer or HAFI in selecting each Eligible Substitute Receivable shall not be adverse to the interests of the Noteholders and shall be comparable to the selection procedures applicable to the Receivables originally conveyed hereunder. (c) In the case of a substitution pursuant to this Section, upon receipt by the Indenture Trustee of (i) a Master Servicer’s Certificate to the effect that the Substitution Adjustment Amount, if any, has been so deposited in the Collection Account and (ii) an Officer’s Certificate reciting the transfer and assignment of the Eligible Substitute Receivable(s) to the Indenture Trustee, the Indenture 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 Master Servicer or HAFI, as applicable, legal and beneficial ownership of such Receivable for which the Master Servicer has made a substitution election (including any property acquired in respect thereof or proceeds of any insurance policy with respect thereto).