Exhibit 4.4
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MASTER SALE AND SERVICING AGREEMENT
among
HOUSEHOLD AUTOMOBILE REVOLVING TRUST I, Issuer,
together with the Respective Additional Issuers Referred to
Herein,
HOUSEHOLD AUTO RECEIVABLES CORPORATION,
Seller,
HOUSEHOLD FINANCE CORPORATION,
Master Servicer
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
Trustee and Trust Collateral Agent
Dated as of March 1, 1998
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TABLE OF CONTENTS
Page
ARTICLE I
Definitions
SECTION 1.1. Definitions......................................................................1
SECTION 1.2. Other Interpretive Provisions...................................................19
SECTION 1.3. Usage of Terms..................................................................20
SECTION 1.4. Certain References..............................................................21
SECTION 1.5. No Recourse.....................................................................21
SECTION 1.6. Action by or Consent of Noteholders.............................................21
SECTION 1.7. Material Adverse Effect.........................................................21
ARTICLE II
Conveyance of Receivables
SECTION 2.1. Conveyance of Receivables.......................................................21
SECTION 2.2. Further Encumbrance of Series Trust Estate......................................24
ARTICLE III
The Receivables
SECTION 3.1. Representations and Warranties of Seller........................................25
SECTION 3.2. Repurchase upon Breach..........................................................26
SECTION 3.3. Custody of Receivables Files....................................................26
ARTICLE IV
Administration and Servicing of Receivables
SECTION 4.1. Duties of the Master Servicer...................................................27
SECTION 4.2. Collection of Receivable Payments; Modifications of Receivables.................28
SECTION 4.3. Realization Upon Receivables....................................................30
SECTION 4.4. Insurance.......................................................................31
SECTION 4.5. Maintenance of Security Interests in Vehicles...................................32
SECTION 4.6. Covenants, Representations, and Warranties of Master Servicer...................32
SECTION 4.7. Repurchase of Receivables Upon Breach of Covenant...............................33
SECTION 4.8. Total Servicing Fee; Payment of Certain Expenses by Master Servicer.............34
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SECTION 4.9. Master Servicer's Certificate...................................................34
SECTION 4.10. Annual Statement as to Compliance, Notice of Master Servicer Termination
Event...........................................................................35
SECTION 4.11. Annual Independent Accountants' Report..........................................35
SECTION 4.12. Access to Certain Documentation and Information Regarding Receivables...........36
SECTION 4.13. Fidelity Bond and Errors and Omissions Policy...................................36
SECTION 4.14. Year 2000 Compliance............................................................37
ARTICLE V
Trust Accounts; Distributions;
Statements to Certificateholders and Noteholders
SECTION 5.1. Establishment of Trust Accounts.................................................37
SECTION 5.2. Certain Reimbursements to the Master Servicer...................................39
SECTION 5.3. Application of Collections......................................................39
SECTION 5.4. Additional Deposits.............................................................39
SECTION 5.5. Distributions...................................................................40
ARTICLE VI
RESERVED
ARTICLE VII
RESERVED
ARTICLE VIII
The Seller
SECTION 8.1. Representations of Seller.......................................................40
SECTION 8.2. Corporate Existence.............................................................42
SECTION 8.3. Liability of Seller; Indemnities................................................43+
SECTION 8.4. Merger or Consolidation of, or Assumption of the Obligations of, Seller.........44
SECTION 8.5. Limitation on Liability of Seller and Others....................................44
SECTION 8.6. Seller May Own Certificates or Notes............................................45
ARTICLE IX
The Master Servicer
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SECTION 9.1. Representations of Master Servicer..............................................45
SECTION 9.2. Liability of Master Servicer; Indemnities.......................................47
SECTION 9.3. Merger or Consolidation of, or Assumption of the Obligations of the
Master Servicer or the Trust Collateral Agent...................................49
SECTION 9.4. Limitation on Liability of Master Servicer, Trust Collateral Agent and
Others..........................................................................49
SECTION 9.5. Delegation of Duties............................................................50
SECTION 9.6. Master Servicer Not to Resign...................................................51
SECTION 9.7. Sub-Servicing Agreements Between Master Servicer and Sub-Servicers..............51
SECTION 9.8. Successor Sub-Servicers.........................................................52
ARTICLE X
Default
SECTION 10.1. Master Servicer Termination Event...............................................52
SECTION 10.2. Consequences of a Master Servicer Termination Event.............................54
SECTION 10.3. Appointment of Successor........................................................54
SECTION 10.4. Notification to Noteholders and Certificateholders..............................55
SECTION 10.5. Waiver of Past Defaults.........................................................56
SECTION 10.6. Successor to Master Servicer....................................................56
ARTICLE XI
Termination
SECTION 11.1. Optional Purchase of All Receivables............................................56
ARTICLE XII
Administrative Duties of the Master Servicer
SECTION 12.1. Administrative Duties...........................................................57
SECTION 12.2. Records.........................................................................59
SECTION 12.3. Additional Information to be Furnished to the Issuer............................59
ARTICLE XIII
Miscellaneous Provisions
SECTION 13.1. Master Agreement Supplements....................................................60
SECTION 13.2. Protection of Title to Trust....................................................61
SECTION 13.3. Notices.........................................................................63
SECTION 13.4. Assignment......................................................................63
SECTION 13.5. Limitations on Rights of Others.................................................64
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SECTION 13.6. Severability....................................................................64
SECTION 13.7. Separate Counterparts...........................................................64
SECTION 13.8. Headings........................................................................64
SECTION 13.9. Governing Law...................................................................64
SECTION 13.10. Assignment to Trustee...........................................................64
SECTION 13.11. Nonpetition Covenants...........................................................64
SECTION 13.12. Limitation of Liability of Owner Trustee and the Trust Collateral Agent.........65
SECTION 13.13. Independence of the Master Servicer.............................................65
SECTION 13.14. No Joint Venture................................................................66
EXHIBITS
Exhibit A Form of Servicer's Certificate
Exhibit B Form of Transfer Agreement
Exhibit C Form of Request for Release and Receipt of Documents
Exhibit D Form of Trustee's Acknowledgement
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MASTER SALE AND SERVICING AGREEMENT dated as of March 1, 1998, among
HOUSEHOLD AUTOMOBILE REVOLVING TRUST I, a Delaware business trust (the
"Issuer"), together with the respective additional issuers referred to herein,
HOUSEHOLD AUTO RECEIVABLES CORPORATION, a Nevada corporation (the "Seller"),
HOUSEHOLD FINANCE CORPORATION, a Delaware corporation (the "Master Servicer")
and NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, a national banking
association, in its capacity as Trustee and Trust Collateral Agent.
WHEREAS the Issuer desires to purchase from time to time Receivables
arising in connection with motor vehicle retail installment sale contracts
acquired by Household Automotive Finance Corporation or any of its subsidiaries;
WHEREAS the Seller will purchase from time to time Receivables from
Household Automotive Finance Corporation and is willing to sell Receivables to
the Issuer;
WHEREAS the Master Servicer is willing to service all such receivables;
NOW, THEREFORE, in consideration of the promises and the mutual covenants
herein contained, the parties hereto agree as follows:
ARTICLE I
Definitions
Definitions. Whenever used in this Agreement, the following words and phrases
shall have the following meanings:
"Accountants' Report" means the report of a firm of nationally recognized
independent accountants described in Section 4.11.
"Accounting Date" means, with respect to a Distribution Date, the last day
of the Collection Period immediately preceding such Distribution Date.
"Actuarial Method" means the method of allocating a fixed level monthly
payment on an obligation between principal and interest, pursuant to which the
portion of such payment that is allocated to interest is equal to the product of
(a) 1/12, (b) the fixed annual rate of interest on such obligation and (c) the
outstanding principal balance of such obligation.
"Actuarial Receivable" means a Receivable under which the portion of the
payment allocated to interest and the portion allocable to principal is
determined in
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accordance with the Actuarial Method.
"Addition Notice" means, with respect to any transfer of Receivables to the
Trust pursuant to Section 2.1 of this Agreement, notice of the Seller's election
to transfer Receivables to the Trust, such notice to designate the related
Transfer Date, the related Series Trust Estate, if any, and the approximate
principal amount of Receivables to be transferred on such Transfer Date.
"Affiliate" means, with respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control" when used with respect to any
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Aggregate Principal Balance" means, with respect to any date of
determination, the sum of the Principal Balances for all Receivables (other than
(i) any Receivable that has become a Liquidated Receivable and (ii) any
Receivable that has become a Repurchased Receivable as of the date of
determination).
"Agreement" means this Master Sale and Servicing Agreement, as the same may
be amended and supplemented from time to time.
"Amount Financed" means, with respect to a Receivable, the aggregate amount
advanced under such Receivable toward the purchase price of the Financed Vehicle
and any related costs, including amounts advanced in respect of accessories,
insurance premiums, service and warranty contracts, other items customarily
financed as part of retail automobile installment sale contracts or promissory
notes, and related costs.
"Annual Percentage Rate" or "APR" of a Receivable means the annual
percentage rate of finance charges or service charges, as stated in the related
Contract.
"Base Servicing Fee" means, with respect to each Series Trust Estate and
with respect to any Collection Period, the fee payable to the Master Servicer
for services rendered during such Collection Period, which, unless otherwise
specified in the related Series Supplement, shall be equal to one-twelfth of the
Servicing Fee Rate multiplied by the daily average Pool Balance for such Series
Trust Estate determined with respect to the preceding Collection Period.
"Basic Documents" means this Agreement, the Certificate of Trust, the Trust
Agreement, the Indenture, the Purchase Agreement and other documents and
certificates delivered in connection therewith.
"Business Day" means a day other than a Saturday, a Sunday or other day on
which commercial banks located in the states of Illinois, Minnesota, California
or New York are authorized or obligated to be closed.
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"Certificate" has the meaning assigned to such term in the Trust Agreement
and, with respect to a Series, the meaning specified in the relevant Series
Supplement.
"Certificateholder" has the meaning assigned to such term in the Trust
Agreement.
"Class" means a class of Notes or Certificates, as the context requires.
"Closing Date" means March 31, 1998.
"Collected Funds" means, with respect to any Distribution Date, the amount
of funds in the Master Collection Account representing collections on
Receivables during the related Collection Period, including all Net Liquidation
Proceeds collected during the related Collection Period (but excluding any
Repurchase Amounts).
"Collection Period" means, for each Series, with respect to the first
Distribution Date in such Series, the period beginning on the opening of
business on the related Cutoff Date and ending on the close of business on the
last day of the calendar month preceding such Distribution Date. With respect to
each subsequent Distribution Date, the preceding calendar month. Any amount
stated "as of the close of business of the last day of a Collection Period"
shall give effect to all applications of collections on such day.
"Collection Records" means all manually prepared or computer generated
records relating to collection efforts or payment histories with respect to the
Receivables.
"Computer Tape" means the computer tapes or other electronic media
furnished by the Seller to the Issuer and its assigns describing certain
characteristics of the Receivables.
"Contract" means a motor vehicle retail installment sale contract.
"Corporate Trust Office" means (i) with respect to the Owner Trustee, the
principal corporate trust office of the Owner Trustee, which at the time of
execution of this agreement is Xxxxxx Square North, 0000 Xxxxx Xxxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxx 00000-0000, Attention: Corporate Trust Administration, and
(ii) with respect to the Trustee and the Trust Collateral Agent, if any, the
principal corporate trust office of Norwest Bank Minnesota, National
Association, which at the time of execution of this agreement is Xxxxx Xxxxxx
xxx Xxxxxxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000-0000, Attention: Corporate
Trust Services-Asset Backed Administration.
"Covenant Receivable" means, with respect to any Collection Period, a
Receivable which the Master Servicer is required to purchase pursuant to Section
4.7.
"Cram Down Loss" means, with respect to a Receivable, if a court of
8
appropriate jurisdiction in an insolvency proceeding shall have issued a Final
Order reducing the amount owed on a Receivable or otherwise modifying or
restructuring the scheduled payments to be made on a Receivable, an amount equal
to (i) the excess of the principal balance of such Receivable immediately prior
to such order over the principal balance of such Receivable as so reduced and/or
(ii) if such court shall have issued an order reducing the effective rate of
interest on such Receivable, the excess of the principal balance of such
Receivable immediately prior to such order over the net present value (using as
the discount rate the higher of the APR on such Receivable or the rate of
interest, if any, specified by the court in such order) of the scheduled
payments as so modified or restructured. A "Cram Down Loss" shall be deemed to
have occurred on the date of issuance of such order.
"Cutoff Date" means, with respect to a Receivable and the Transfer Date as
of which such Receivable is transferred to the Trust, (i) the Accounting Date
immediately preceding such Transfer Date or (ii) if such Receivable is
originated in the month of the related Transfer Date, the date of origination.
"Dealer" means a dealer who sold a Financed Vehicle and who originated and
assigned the respective Receivable, directly or indirectly, to HAFC or one of
its subsidiaries or an Unaffiliated Originator under a Dealer Agreement or
pursuant to a Dealer Assignment.
"Dealer Agreement" means any agreement between an Unaffiliated Originator
and a Dealer relating to the acquisition of Receivables from a Dealer by an
Unaffiliated Originator.
"Dealer Assignment" means, with respect to a Receivable, the executed
assignment executed by a Dealer conveying such Receivable to an Unaffiliated
Originator.
"Dealer Underwriting Guide" means either, (i) the underwriting guidelines
used by or on behalf of HAFC or one of its subsidiaries in the origination and
purchase of Receivables as amended from time to time or (ii) the underwriting
guidelines used in the origination of Receivables as reviewed by HAFC or one of
its subsidiaries prior to the purchase of Receivables by HAFC.
"Defaulted Receivable" means, unless otherwise provided in a Series
Supplement, with respect to any Distribution Date, a Receivable with respect to
which: (i) 90% or more of a Scheduled Payment is 60 or more days delinquent,
(ii) the Servicer has repossessed the related Financed Vehicle (and any
applicable redemption period has expired), (iii) such Receivable is delinquent
and the Master Servicer has determined in good faith that payments thereunder
are not likely to be resumed or (iv) the Obligor has been identified on the
records of the Master Servicer as being the subject of a current bankruptcy
proceeding.
"Delivery" means with respect to the Trust Account Property:
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(1) the perfection and priority of a security interest in which is governed
by the law of a jurisdiction which has adopted the 1978 Revision to Article
Eight of the UCC:
(a) with respect to bankers' acceptances, commercial paper, negotiable
certificates of deposit and other obligations that constitute "instruments"
within the meaning of Section 9-105(1)(i) of the UCC (other than
certificated securities) and are susceptible of physical delivery, transfer
thereof to the Trustee by physical delivery to the Trustee, endorsed to, or
registered in the name of, the Trustee or its nominee or endorsed in blank
and such additional or alternative procedures as may hereafter become
appropriate to effect the complete transfer of ownership of any such
Collateral to the Trustee free and clear of any adverse claims, consistent
with changes in applicable law or regulations or the interpretation
thereof;
(b) with respect to a "certificated security" (as defined in Section
8-102(1)(a) of the UCC), transfer thereof:
(i) by physical delivery of such certificated security to the
Trustee, provided that if the certificated security is in registered
form, it shall be endorsed to, or registered in the name of, the
Trustee or endorsed in blank;
(ii) by physical delivery of such certificated security to a
"financial intermediary" (as defined in Section 8-313(4) of the UCC)
of the Trustee specially endorsed to or issued in the name of the
Trustee;
(iii) by the sending by a financial intermediary, not a "clearing
corporation" (as defined in Section 8-102(3) of the UCC), of a
confirmation of the purchase and the making by such financial
intermediary of entries on its books and records identifying as
belonging to the Trustee of (A) a specific certificated security in
the financial intermediary's possession, (B) a quantity of securities
that constitute or are part of a fungible bulk of certificated
securities in the financial intermediary's possession, or (C) a
quantity of securities that constitute or are part of a fungible bulk
of securities shown on the account of the financial intermediary on
the books of another financial intermediary; or
(iv) by the making by a clearing corporation of appropriate
entries on its books reducing the appropriate securities account of
the transferor and increasing the appropriate securities account of
the Trustee or a Person designated by the Trustee by the amount of
such certificated security, provided that in each case: (A) the
clearing corporation identifies such certificated security for the
sole and exclusive account of the Trustee or the Person designated by
the Trustee, (B) such certificated security shall be subject to the
clearing corporation's exclusive control, (C) such certificated
security is in bearer form or endorsed in blank or registered in
10
the name of the clearing corporation or custodian bank or a nominee of
either of them, (D) custody of such certificated security shall be
maintained by such clearing corporation or a "custodian bank" (as
defined in Section 8-102(4) of the UCC) or the nominee of either
subject to the control of the clearing corporation and (E) such
certificated security is shown on the account of the transferor
thereof on the books of the clearing corporation prior to the making
of such entries; and such additional or alternative procedures as may
hereafter become appropriate to effect the complete transfer of
ownership of any such Collateral to the Trustee free and clear of any
adverse claims, consistent with changes in applicable law or
regulations or the interpretation thereof;
(c) with respect to any security issued by the U.S. Treasury, the
Federal Home Loan Mortgage Corporation or by the Federal National Mortgage
Association that is a book-entry security held through the Federal Reserve
System pursuant to Federal book entry regulations, the following
procedures, all in accordance with applicable law, including applicable
Federal regulations and Articles 8 and 9 of the UCC: book-entry
registration of such property to an appropriate book-entry account
maintained with a Federal Reserve Bank by a financial intermediary which is
also a "depositary" pursuant to applicable Federal regulations and issuance
by such financial intermediary of a deposit advice or other written
confirmation of such book-entry registration to the Trustee of the purchase
by the financial intermediary on behalf of the Trustee of such book-entry
security; the making by such financial intermediary of entries in its books
and records identifying such book-entry security held through the Federal
Reserve System pursuant to Federal book-entry regulations as belonging to
the Trustee and indicating that such financial intermediary holds such
book-entry security solely an agent for the Trustee; and such additional or
alternative procedures as may hereafter become appropriate to effect
complete transfer of ownership of any such Collateral to the Trustee free
of any adverse claims, consistent with changes in applicable law or
regulations or the interpretation thereof;
(d) with respect to any Trust Account Property that is an
"uncertificated security" (as defined in Section 8-102(1)(b) of the UCC)
and that is not governed by clause (c) above, transfer thereof:
(i) by registration of the transfer thereof to the Trustee, on
the books and records of the issuer thereof;
(ii) by the sending of a confirmation by a financial intermediary
of the purchase, and the making by such financial intermediary of
entries on its books and records identifying as belonging to the
Trustee (A) a quantity of securities which constitute or are part of a
fungible bulk of uncertificated securities registered in the name of
the financial intermediary or (B) a quantity of securities which
constitute or
11
are part of a fungible bulk of securities shown on the account of the
financial intermediary on the books of another financial intermediary;
or
(iii) by the making by a clearing corporation of appropriate
entries on its books reducing the appropriate account of the
transferor and increasing the account of the Trustee or a person
designated by the Trustee by the amount of such uncertificated
security, provided that in each case: (A) the clearing corporation
identifies such uncertificated security for the sole and exclusive use
of the Trustee or the Person designated by the Trustee, (B) such
uncertificated security is registered in the name of the clearing
corporation or a custodian bank or a nominee of either, and (C) such
uncertificated security is shown on the account of the transferor on
the books of the clearing corporation prior to the making of such
entries; and
(e) in each case of delivery contemplated herein, the Trustee shall
make appropriate notations on its records, and shall cause same to be made
of the records of its nominees, indicating that such securities are held in
trust pursuant to and as provided in this Agreement.
(2) the perfection and priority of a security interest in which is governed
by the law of a jurisdiction which has adopted the 1994 Revision to Article 8 of
the UCC:
(a) with respect to bankers' acceptances, commercial paper, negotiable
certificates of deposit and other obligations that constitute "instruments"
within the meaning of Section 9-105(1)(i) of the UCC (other than
certificated securities) and are susceptible of physical delivery, transfer
thereof to the Trustee by physical delivery to the Trustee, endorsed to, or
registered in the name of, the Trustee or its nominee or endorsed in blank
and such additional or alternative procedures as may hereafter become
appropriate to effect the complete transfer of ownership of any such
Collateral to the Trustee free and clear of any adverse claims, consistent
with changes in applicable law or regulations or the interpretation
thereof;
(b) with respect to a "certificated security" (as defined in Section
8-102(a)(4) of the UCC), transfer thereof:
(i) by physical delivery of such certificated security to the
Trustee, provided that if the certificated security is in registered
form, it shall be endorsed to, or registered in the name of, the
Trustee or endorsed in blank;
(ii) by physical delivery of such certificated security in
registered form to a "securities intermediary" (as defined in Section
8-102(a)(14) of the UCC) acting on behalf of the Trustee if the
certificated security has been specially endorsed to the Trustee by an
effective endorsement.
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(c) with respect to any security issued by the U.S. Treasury, the
Federal Home Loan Mortgage Corporation or by the Federal National Mortgage
Association that is a book-entry security held through the Federal Reserve
System pursuant to Federal book entry regulations, the following
procedures, all in accordance with applicable law, including applicable
federal regulations and Articles 8 and 9 of the UCC: book-entry
registration of such property to an appropriate book-entry account
maintained with a Federal Reserve Bank by a securities intermediary which
is also a "depositary" pursuant to applicable federal regulations and
issuance by such securities intermediary of a deposit advice or other
written confirmation of such book-entry registration to the Trustee of the
purchase by the securities intermediary on behalf of the Trustee of such
book-entry security; the making by such securities intermediary of entries
in its books and records identifying such book-entry security held through
the Federal Reserve System pursuant to Federal book-entry regulations as
belonging to the Trustee and indicating that such securities intermediary
holds such book-entry security solely as agent for the Trustee; and such
additional or alternative procedures as may hereafter become appropriate to
effect complete transfer of ownership of any such Collateral to the Trustee
free of any adverse claims, consistent with changes in applicable law or
regulations or the interpretation thereof;
(d) with respect to any Trust Account Property that is an
"uncertificated security" (as defined in Section 8-102(a)(18) of the UCC)
and that is not governed by clause (c) above, transfer thereof:
(i) (A) by registration to the Trustee as the registered owner
thereof, on the books and records of the issuer thereof.
(B) by another Person (not a securities intermediary) either
becomes the registered owner of the uncertificated security on behalf
of the Trustee, or having become the registered owner acknowledges
that it holds for the Trustee.
(ii) the issuer thereof has agreed that it will comply with
instructions originated by the Trustee without further consent of the
registered owner thereof.
(e) in each case of delivery contemplated herein, the Trustee shall
make appropriate notations on its records, and shall cause same to be made
of the records of its nominees, indicating that securities are held in
trust pursuant to and as provided in this Agreement.
(f) with respect to a "security entitlement" (as defined in Section
8-102(a)(17) of the UCC)
(i) if a securities intermediary (A) indicates by book entry that a
"financial asset" (as defined in Section 8-102(a)(9) of the UCC) has been
credited to be
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the Trustee's "securities account" (as defined in Section 8-501(a) of the UCC),
(B) receives a financial asset (as so defined) from the Trustee or acquires a
financial asset for the Trustee, and in either case, accepts it for credit to
the Trustee's securities account (as so defined), (C) becomes obligated under
other law, regulation or rule to credit a financial asset to the Trustee's
securities account, or (D) has agreed that it will comply with "entitlement
orders" (as defined in Section 8-102(a)(8) of the UCC) originated by the Trustee
without further consent by the "entitlement holder" (as defined in Section
8-102(a)(7) of the UCC), of a confirmation of the purchase and the making by
such securities intermediary of entries on its books and records identifying as
belonging to the Trustee or (I) specific certificated security in the securities
intermediary's possession, (II) a quantity of securities that constitute or are
part of a fungible bulk of certificated securities in the securities
intermediary's possession, or (III) a quantity of securities that constitute or
are part of a fungible bulk of securities shown on the account of the securities
intermediary on the books of another securities intermediary.
If there is a Trust Collateral Agent with respect to a Series, references
to the Trustee in the definition of Delivery shall be deemed to be to the Trust
Collateral Agent with respect to Trust Account Property which is Collateral only
with respect to such Series.
"Depositor" shall mean the Seller in its capacity as Depositor under the
Trust Agreement.
"Determination Date" means, unless otherwise provided in a Series
Supplement, the earlier of the fifth calendar day (or if such day is not a
Business Day, the next preceding Business Day) or the third Business Day
preceding each Distribution Date.
"Distribution Date" means, unless otherwise provided in a Series
Supplement, with respect to each Collection Period, the seventeenth day of the
following calendar month, or if such day is not a Business Day, the immediately
following Business Day.
"Electronic Ledger" means the electronic master record of the retail
installment sales contracts or installment loans serviced by the Master
Servicer.
"Eligibility Criteria" means with respect to a Series, the criteria set
forth in the related Schedule of Eligibility Criteria.
"Eligible Bank" means, except as otherwise provided in a Series Supplement,
any depository institution (which shall initially be the Trustee or the Trust
Collateral Agent, as the case may be, organized under the laws of the United
States of America or any one of the states thereof or the District of Columbia
(or any United States branch or agency of a foreign bank), which is subject to
supervision and examination by federal or state banking authorities and which at
all times (a) has a net worth in excess of $50,000,000 and (b) has either (i) a
rating of P-1 from Moody's and A-1 from Standard &
14
Poor's with respect to short-term deposit obligations, or such other lower
ratings acceptable to the Rating Agency, or (ii) if such institution has issued
long-term unsecured debt obligations, a rating acceptable to the Rating Agency
with respect to long-term unsecured debt obligations.
"Eligible Deposit Account" means, except as otherwise provided in a Series
Supplement, either (a) a segregated account with an Eligible Bank or (b) a
segregated trust account with the corporate trust department of a depository
institution with corporate trust powers organized under the laws of the United
States of America or any state thereof or the District of Columbia (or any
United States branch or agency of a foreign bank), provided that such
institution also must have a rating of Baa3 or higher from Moody's and a rating
of BBB- or higher from Standard & Poor's with respect to long-term deposit
obligations, or such other lower ratings acceptable to the Rating Agency.
"Eligible Investments" shall mean, except as otherwise provided in a Series
Supplement, negotiable instruments or securities represented by instruments in
bearer or registered form, or, in the case of deposits described below, deposit
accounts held in the name of the Trust Collateral Agent in trust for the benefit
of the Holders of the Securities of the relevant Series, subject to the
exclusive custody and control of the Trust Collateral Agent and for which the
Trust Collateral Agent has sole signature authority, which evidence:
(a) direct obligations of, or obligations fully guaranteed as to timely
payment by, the United States of America;
(b) demand deposits, time deposits or certificates of deposit (having
original maturities of no more than 365 days) of depositary institutions or
trust companies incorporated under the laws of the United States of America or
any state thereof (or domestic branches of foreign banks) and subject to
supervision and examination by federal or state banking or depositary
institution authorities; provided, that at the time of the Trust's investment or
contractual commitment to invest therein, the short-term debt rating of such
depository institution or trust company shall be satisfactory to the Rating
Agency;
(c) commercial paper (having original or remaining maturities of not more
than 30 days) having, at the time of the Trust's investment or contractual
commitment to invest therein, a rating satisfactory to the Rating Agency;
(d) investments in money market funds having, at the time of the Trust's
investment therein, a rating acceptable to the Rating Agency;
(e) demand deposits, time deposits and certificates of deposit which are
fully insured by the FDIC having, at the time of the Trust's investment therein,
a rating satisfactory to the Rating Agency;
15
(f) bankers' acceptances (having original maturities of no more than 365
days) issued by a depository institution or trust company referred to in (b)
above;
(g) (x) time deposits (having maturities not later than the succeeding
Distribution Date) other than as referred to in clause (e) above, with a Person
the commercial paper of which has a credit rating satisfactory to the Rating
Agency or (y) notes which are payable on demand issued by Household provided;
such notes will constitute Eligible Investments only if the commercial paper of
Household has, at the time of the Trust's investment in such notes, a rating
satisfactory to the Rating Agency; or
(h) any other investment of a type or rating that is acceptable to the
Rating Agency.
Any of the foregoing Eligible Investments may be purchased on or through
the Trustee or the Trust Collateral Agent, if any, or through any Affiliate of
either of them.
"Eligible Servicer" means Household Finance Corporation or any Person which
at the time of its appointment as Servicer, (i) is servicing a portfolio of
motor vehicle retail installment sales contracts and/or motor vehicle
installment loans, (ii) is legally qualified and has the capacity to service the
Receivables, (iii) has demonstrated the ability professionally and competently
to service a portfolio of motor vehicle retail installment sales contracts
and/or motor vehicle installment loans similar to the Receivables with
reasonable skill and care, (iv) is qualified and entitled to use, pursuant to a
license or other written agreement, and agrees to maintain the confidentiality
of, the software which the Master Servicer uses in connection with performing
its duties and responsibilities under this Agreement or otherwise has available
software which is adequate to perform its duties and responsibilities under this
Agreement and (v) has a net worth of at least $50,000,000.
"Eligible Sub-Servicer" means Household Automotive Finance Corporation or
any wholly owned subsidiary of Household or any Person which at the time of its
appointment as Sub-Servicer, (i) is servicing a portfolio of motor vehicle
retail installment sales contracts and/or motor vehicle installment loans, (ii)
is legally qualified and has the capacity to service the Receivables, (iii) has
demonstrated the ability professionally and competently to service a portfolio
of motor vehicle retail installment sales contracts and/or motor vehicle
installment loans similar to the Receivables with reasonable skill and care, and
(iv) is qualified and entitled to use, pursuant to a license or other written
agreement, and agrees to maintain the confidentiality of, the software which the
Master Servicer uses in connection with performing its duties and
responsibilities under this Agreement or otherwise has available software which
is adequate to perform its duties and responsibilities under this Agreement.
"Insolvency Event" means, with respect to a specified Person, (a) the
filing of a petition against such Person or the entry of a decree or order for
relief by a court having jurisdiction in the premises in respect of such Person
or any substantial part of its
16
property in an involuntary case under any applicable federal or state
bankruptcy, insolvency or other similar law now or hereafter in effect, or
appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator,
or similar official for such Person or for any substantial part of its property,
or ordering the winding-up or liquidation of such Person's affairs, and such
petition, decree or order shall remain unstayed and in effect for a period of 60
consecutive days; or (b) the commencement by such Person of a voluntary case
under any applicable federal or state bankruptcy, insolvency or other similar
law now or hereafter in effect, or the consent by such Person to the entry of an
order for relief in an involuntary case under any such law, or the consent by
such Person to the appointment of or taking possession by, a receiver,
liquidator, assignee, custodian, trustee, sequestrator, or similar official for
such Person or for any substantial part of its property, or the making by such
Person of any general assignment for the benefit of creditors, or the failure by
such Person generally to pay its debts as such debts become due, or the taking
of action by such Person in furtherance of any of the foregoing.
"Insurance Policy" means, with respect to a Receivable, any insurance
policy (including the insurance policies described in Section 4.4 hereof)
benefiting the holder of the Receivable providing loss or physical damage,
credit life, credit disability, theft, mechanical breakdown or similar coverage
with respect to the Financed Vehicle or the Obligor.
"Interest Period" for any Class or Series of Notes or Certificates, the
meaning set forth in the related Series Supplement.
"Interest Rate" for any Class or Series of Notes or Certificates, the
meaning set forth in the related Series Supplement.
"Investment Earnings" means, with respect to any Distribution Date and
Trust Account, the investment earnings (net of investment losses and expenses)
on amounts on deposit in such Trust Account on such Distribution Date.
"Issuer" means Household Automobile Revolving Trust I, together with each
other Trust designated as an Issuer hereunder pursuant to a Series Supplement,
in each case so long as such Trust has not been terminated in accordance with
the terms of the related Trust Agreements.
"Lien" means a security interest, lien, charge, pledge, equity, or
encumbrance of any kind, other than tax liens, mechanics' liens and any liens
that attach to the respective Receivable by operation of law as a result of any
act or omission by the related Obligor, provided that, any assignment permitted
by Section 2.1 hereof and the lien created by this Agreement or the Indenture
shall not be deemed to constitute a Lien.
"Lien Certificate" means, with respect to a Financed Vehicle, an original
certificate of title, certificate of lien or other notification issued by the
Registrar of Titles of the applicable state to a secured party which indicates
that the lien of the secured party on the Financed Vehicle is recorded on the
original certificate of title. In any jurisdiction
17
in which the original certificate of title is required to be given to the
Obligor, the term "Lien Certificate" shall mean only a certificate or
notification issued to a secured party.
"Liquidated Receivable" means, with respect to any Collection Period, a
Receivable as to which (i) such Receivable has been liquidated by the Master
Servicer through the sale of the Financed Vehicle, (ii) 60 days have elapsed
since the Master Servicer repossessed the Financed Vehicle, (iii) proceeds have
been received in respect of such Receivable which, in the Master Servicer's
reasonable judgment, constitute the final amounts recoverable in respect of such
Receivable or (iv) 90% or more of a Scheduled Payment shall have become 150 or
more days delinquent (or, in the case where the Obligor of such Receivable is
subject to an Insolvency Event, 90% or more of a Scheduled Payment shall have
become 210 or more days delinquent), except in the case of a repossessed
Financed Vehicle. Any Receivable that becomes a Repurchased Receivable on or
before the related Accounting Date shall not be a Liquidated Receivable.
"Master Collection Account" means the account designated as such,
established and maintained pursuant to Section 5.1.
"Master Servicer" means Household Finance Corporation, as the servicer of
the Receivables, and each successor Master Servicer pursuant to Section 10.3.
"Master Servicer Credit Facility" means the credit facility maintained by
the Master Servicer with a Master Servicer Credit Facility Issuer pursuant to
Section 4.2(d).
"Master Servicer Credit Facility Issuer" means a depository institution or
insurance company that qualifies pursuant to Section 4.2(d).
"Master Servicer Termination Event" means an event specified in Section
10.1.
"Master Servicer's Certificate" means an Officers' Certificate of the
Master Servicer delivered pursuant to Section 4.9, substantially in the form of
Exhibit A hereto.
"Monthly Records" means all records and data maintained by the Master
Servicer with respect to the Receivables, including the following with respect
to each Receivable: the account number; the originating Dealer; Obligor name;
Obligor address; Obligor home phone number; Obligor business phone number;
original Principal Balance; original term; Annual Percentage Rate; current
Principal Balance; current remaining term; origination date; first payment date;
final scheduled payment date; next payment due date; date of most recent
payment; new/used classification; collateral description; days currently
delinquent; number of contract extensions (months) to date; amount of Scheduled
Payment; current Insurance Policy expiration date; and past due late charges.
18
"Moody's" means Xxxxx'x Investors Service, Inc., or its successor.
"Net Liquidation Proceeds" means, with respect to a Liquidated Receivable,
all amounts realized with respect to such Receivable (other than amounts
withdrawn from any Series Support) net of (i) reasonable expenses, which
expenses shall not include any deficiency balances or post-disposition
recoveries collected, incurred by the Master Servicer in connection with the
collection of such Receivable and the repossession and disposition of the
Financed Vehicle and (ii) amounts that are required to be refunded to the
Obligor on such Receivable; provided, however, that the Liquidation Proceeds
with respect to any Receivable shall in no event be less than zero, provided,
further, that, so long as amounts cannot be traced to specific Receivables the
Master Servicer shall reasonably estimate, on or prior to each Accounting Date,
the amount of Net Liquidation Proceeds attributable to each Series Trust Estate.
"Noteholder" means the Person in whose name a Note is registered on the
Note Register.
"Noteholders' Distributable Amount" means, with respect to any Distribution
Date, the sum of the Noteholders' Principal Distributable Amount and the
Noteholders' Interest Distributable Amount.
"Noteholders' Interest Distributable Amount" has the meaning assigned to
such term in the related Series Supplement.
"Noteholders' Principal Distributable Amount" has the meaning assigned to
such term in the related Series Supplement.
"Notes" has the meaning assigned to such term in the Indenture.
"Obligor" on a Receivable means the purchaser or co-purchasers of the
Financed Vehicle and any other Person who owes payments under the Receivable.
"Officers' Certificate" means a certificate signed by the chairman of the
board, the president, any executive vice president or any vice president, any
treasurer, assistant treasurer, secretary or assistant secretary of the Seller
or the Master Servicer, as appropriate.
"Opinion of Counsel" means an opinion of counsel who may be counsel to the
Master Servicer or the Seller, acceptable to the Trustee.
""Other Conveyed Property" means all property conveyed by the Seller to the
Trust pursuant to Section 2.1(a)(ii) through (x) of this Agreement.
"Outstanding" has the meaning assigned to such term in the Indenture.
"Outstanding Amount" means, with respect to any Series, the aggregate
principal amount of all Notes of such Series which are Outstanding at the date
of
19
determination after giving effect to all distributions of principal on such date
of determination.
"Owner Trust Estate" has the meaning assigned to such term in the Trust
Agreement.
"Owner Trustee" means Wilmington Trust Company, not in its individual
capacity but solely as Owner Trustee under the Trust Agreement, its
successors-in-interest or any successor Owner Trustee under the Trust Agreement.
"Payment Record" means the record maintained by the Master Servicer for the
Trust as provided in Section 4.2(d) hereof.
"Person" means any individual, corporation, estate, partnership, joint
venture, association, joint stock company, trust (including any beneficiary
thereof), unincorporated organization or government or any agency or political
subdivision thereof.
"Physical Property" has the meaning assigned to such term in the definition
of "Delivery" above.
"Principal Balance" means, with respect to any Receivable, as of any date,
the Amount Financed minus (i) that portion of all amounts received on or prior
to such date and allocable to principal in accordance with the Actuarial Method,
or the Simple Interest Method, as appropriate, and (ii) any Cram Down Loss in
respect of such Receivable. The "Principal Balance" of a Repurchased Receivable
or Liquidated Receivable shall be deemed to be zero.
"Purchase Agreement" means the Master Receivables Purchase Agreement
between the Seller and HAFC, dated as of March 1, 1998, pursuant to which the
Seller acquired the Receivables, as such agreement may be amended or
supplemented from time to time.
"Purchase Agreement Supplement" means any Receivables Purchase Agreement
Supplement to the Purchase Agreement.
"Rating Agency" means, with respect to any outstanding Series or Class,
each Rating Agency specified in the Series Supplement. If with respect to a
Series the consent of the Rating Agency is required, and at the time the Notes
of the Series have not been rated by such Rating Agency, "Rating Agency" shall
mean the related Series Secured Parties for the purpose of the giving of such
consent
"Rating Agency Condition" means, with respect to any action with respect to
a Series, that each Rating Agency shall have received prior notice thereof and
that each Rating Agency shall have notified the Master Servicer in writing (who
shall then immediately notify the Seller, the Owner Trustee, the Trustee and the
Trust Collateral
20
Agent, if any, in writing) that such action will not result in a reduction or
withdrawal of the then current rating of any Class of Notes. If with respect to
a Series a Rating Agency Condition is required to be satisfied with respect to
an event or criteria, and at the time the Notes of the Series have not been
rated by such Rating Agency, "Rating Agency Condition" shall mean the consent or
approval of the related Series Secured Parties to such event or criteria.
"Realized Losses" means, with respect to any Receivable that becomes a
Liquidated Receivable, the excess of the Principal Balance of such Liquidated
Receivable over Net Liquidation Proceeds to the extent allocable to principal.
"Receivable" means any Contract listed on Schedule A to a
Transfer Agreement (which Schedule may be in an acceptable electronic format),
except Liquidated Receivables and Receivables released from the Owner Trust
Estate.
"Receivable Files" means the documents specified in Section 3.3.
"Record Date" with respect to each Distribution Date means the Business Day
immediately preceding such Distribution Date, unless otherwise specified in the
applicable Series Supplement.
"Registrar of Titles" means, with respect to any state, the governmental
agency or body responsible for the registration of, and the issuance of
certificates of title relating to, motor vehicles and liens thereon.
"Repurchase Amount" means, with respect to a Receivable, the Principal
Balance and all accrued and unpaid interest on the Receivable, after giving
effect to the receipt of any moneys collected (from whatever source) on such
Receivable, if any, as of the date of purchase, provided that, reductions in the
Principal Balance resulting from such Receivable becoming a Liquidated
Receivable shall be disregarded.
"Repurchased Receivable" means a Receivable purchased by the Master
Servicer pursuant to Section 4.7 or repurchased by the Seller pursuant to
Section 3.2 or the Seller or HAFC pursuant to Section 11.1(a).
"Schedule of Eligibility Criteria" means the Schedule of Eligibility
Criteria attached as Schedule 1 to a Series Supplement.
"Schedule of Receivables" means, with respect to each Series Trust Estate,
the schedule of all retail installment sales contracts and promissory notes
originally held as part of the Trust which is attached as Schedule A to the
Transfer Agreement relating to such Series Trust Estate.
"Scheduled Payment" means, with respect to any Collection Period for any
Receivable, the amount set forth in such Receivable as required to be paid by
the Obligor in such Collection Period. If after the Closing Date, the Obligor's
obligation under a
21
Receivable with respect to a Collection Period has been modified so as to differ
from the amount specified in such Receivable as a result of (i) the order of a
court in an insolvency proceeding involving the Obligor, (ii) pursuant to the
Soldiers' and Sailors' Civil Relief Act of 1940, as amended, or (iii)
modifications or extensions of the Receivable permitted by Sections 4.2(b) and
(c), the Scheduled Payment with respect to such Collection Period shall refer to
the Obligor's payment obligation with respect to such Collection Period as so
modified.
"Securities" means the Notes and the Certificates.
"Securityholders" means the Noteholders and the Certificateholders.
"Seller" means Household Auto Receivables Corporation, a Nevada
corporation, and its successors in interest to the extent permitted hereunder.
"Series" means, with respect to any Notes, Notes issued pursuant to the
same Series Supplement and with respect to any Certificates, Certificates issued
pursuant to the same Series Supplement, or the Notes and Certificates issued
pursuant to the same Series Supplement, as the context may require.
"Series Closing Date" means, with respect to any Series, the date
designated in the related Series Supplement as the closing date for such Series.
"Series Collection Account" means, with respect to any Series, the
collection account designated in the related Series Supplement.
"Series of Certificates" means the Certificates issued in connection with a
Series of Notes.
"Series Related Documents" with respect to a Series, has the meaning
specified therefor in the related Series Supplement.
"Series Secured Obligations" has the meaning specified therefor in the
related Series Supplement.
"Series Secured Parties" has the meaning specified therefor in the related
Series Supplement.
"Series Supplement" means, with respect to any Series, a Series Supplement
to the Indenture and the Trust Agreement, executed and delivered in connection
with the original issuance of the Notes and Certificates of such Series, and all
amendments thereof and supplements thereto.
"Series Support" means the rights and benefits provided to the
Trustee or the Noteholders of any Series or Class pursuant to any letter of
credit, surety bond, cash collateral account, spread account, guaranteed rate
agreement, maturity liquidity facility, interest rate swap agreement, tax
protection agreement or other similar arrangement. The
22
subordination of any Series or Class to another Series or Class shall be deemed
to be a Series Support. Notwithstanding that such Series Support may be held by
or in favor of the Trustee for the benefit of any Series or Class, only those
Series or Classes to which such Series Support relates shall have any rights
with respect thereto and all payments thereunder received by the Trustee shall
be distributed exclusively as prescribed in the Series Supplement relating to
such Series or Class.
"Series Support Provider" means the Person, if any, designated in the
related Series Supplement, as providing any Series Support, other than Household
or any of its Affiliates or the Noteholders of any Series or Class which is
subordinated to another Class or Series.
"Series Trust Accounts" has the meaning with respect to each Series
specified in the related Series Supplement.
"Series Termination Date" has the meaning with respect to each Series
specified in the related Series Supplement.
"Series Trust Estate" has the meaning with respect to each Series specified
in the related Series Supplement.
"Service Contract" means, with respect to a Financed Vehicle, the
agreement, if any, financed under the related Receivable that provides for the
repair of such Financed Vehicle.
"Servicing Fee Rate" means 3% per annum unless otherwise specified in a
Series Supplement with respect to the related Series Trust Estate.
"Simple Interest Method" means the method of allocating a fixed level
payment on an obligation between principal and interest, pursuant to which the
portion of such payment that is allocated to interest is equal to the product of
the fixed rate of interest on such obligation multiplied by the period of time
(expressed as a fraction of a year, based on the actual number of days in the
calendar month and 365 days in the calendar year) elapsed since the preceding
payment under the obligation was made.
"Simple Interest Receivable" means a Receivable under which the portion of
the payment allocable to interest and the portion allocable to principal is
determined in accordance with the Simple Interest Method.
"Standard & Poor's" means Standard & Poor's Ratings Services, or its
successor.
"Sub-Servicer" means any Eligible Sub-Servicer with whom the Master
Servicer has entered into an agreement relating to subservicing the Receivables.
Initially, the Sub-Servicer will be HAFC.
23
"Supplemental Servicing Fee" means, with respect to any Collection Period,
(i) all administrative fees, expenses and charges paid by or on behalf of
Obligors, including late fees, prepayment fees and liquidation fees collected on
the Receivables during such Collection Period, and (ii) the net realized
Investment Earnings of funds on deposit in the Master Collection Account.
"Support Default" shall mean a default relating to the Insolvency or
performance of a Series Support Provider.
"Transfer Agreement" means the agreement among the Issuer, the Seller and
the Master Servicer, substantially in the form of Exhibit B.
"Transfer Date" means, with respect to Receivables, any date on which
Receivables are to be transferred to a Trust pursuant to this Agreement and a
related Transfer Agreement.
"Trust" means the respective Issuers, individually.
"Trust Account Property" means the Trust Accounts and each Series Trust
Account, all amounts and investments held from time to time in any Trust Account
and each Series Trust Account (whether in the form of deposit accounts, Physical
Property, book-entry securities, uncertificated securities or otherwise), and
all proceeds of the foregoing.
"Trust Accounts" has the meaning assigned thereto in Section 5.1.
"Trust Agreement" means the Trust Agreement dated as of March 1, 1998,
between the Seller and the Owner Trustee, as the same may be amended and
supplemented from time to time.
"Trust Collateral Agent" means the Person, if any, acting as Trust
Collateral Agent hereunder as agent of the Noteholders of a Series and a related
Series Support Provider, its successors in interest and any successor Trust
Collateral Agent hereunder.
"Trust Officer" means, (i) in the case of the Trust Collateral Agent, the
chairman or vice-chairman of the board of directors, the chairman or
vice-chairman of the executive committee of the board of directors, the
president, any vice president, assistant vice-president or managing director,
the secretary, any assistant secretary or any other officer of the Trust
Collateral Agent customarily performing functions similar to those performed by
any of the above designated officers and also means, with respect to a
particular corporate trust matter, any other officer to whom such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject, and (ii) in the case of the Owner Trustee, any officer in
the corporate trust office of the Owner Trustee or any agent of the Owner
Trustee under a power of attorney with direct responsibility for the
administration of this Agreement or any of the Basic Documents or
24
Series Related Documents on behalf of the Owner Trustee.
"Trustee" means the Person acting as Trustee under the Indenture, its
successors in interest and any successor trustee under the Indenture.
"Trustee Fee" means the fees due to the Trustee and the Trust Collateral
Agent, if any, as may be set forth in that certain fee agreement dated as of the
date hereof between the Master Servicer and Norwest Bank Minnesota, National
Association.
"Unaffiliated Originator" means a third-party originator or owner of
Receivables not affiliated with the Seller or HAFC.
"Unaffiliated Originator Receivables Purchase Agreements" means,
collectively, the agreements pursuant to which HAFC acquired certain of the
Receivables, directly or indirectly, from Unaffiliated Originators, as any of
such agreements may be amended, supplemented or otherwise modified from time to
time in accordance with the terms thereof.
"UCC" means the Uniform Commercial Code as in effect in the relevant
jurisdiction on the date of the Agreement.
"Warranty Receivable" With respect to any Collection Period, a Receivable
which the Seller has become obligated to repurchase pursuant to Section 3.2.
Other Interpretive Provisions
(a) . (a) Capitalized terms used herein and not otherwise defined herein have
the meanings assigned to them in the Indenture, or, if not defined therein, in
the Trust Agreement. Cross referenced definitions may include a Series
designation.
(b) All terms defined in this Agreement shall have the defined meanings
when used in any instrument governed hereby and in any certificate or other
document made or delivered pursuant hereto unless otherwise defined therein.
(c) As used in this Agreement, in any instrument governed hereby and in any
certificate or other document made or delivered pursuant hereto or thereto,
accounting terms not defined in this Agreement or in any such instrument,
certificate or other document, and accounting terms partly defined in this
Agreement or in any such instrument, certificate or other document to the extent
not defined, shall have the respective meanings given to them under generally
accepted accounting principles as in effect on the date of this Agreement or any
such instrument, certificate or other document, as applicable. To the extent
that the definitions of accounting terms in this Agreement or in any such
instrument, certificate or other document are inconsistent with the meanings of
such terms under generally accepted accounting principles, the definitions
contained in this Agreement or in any such instrument, certificate or other
document shall control.
25
(d) Any agreement, instrument or statute defined or referred to herein or
in any instrument or certificate delivered in connection herewith means such
agreement, instrument or statute as from time to time amended, modified or
supplemented and includes (in the case of agreements or instruments) references
to all attachments thereto and instruments incorporated therein.
(e) Any term defined herein, which is otherwise defined in a Series
Supplement, shall have the meaning with respect to such Series specified
therefor in such Series Supplement, whether or not the definition in this
Agreement includes a phrase to the effect that such term may be otherwise
defined in a Series Supplement.
(f) In the event that with respect to a Series there is no Series Support
Provider, any references herein or in any other of the Basic Documents to the
consent of, or acceptability to, the Series Support Provider shall be deemed to
be deleted.
(g) In the event that no Trust Collateral Agent is appointed to act as
agent on behalf of a Series of Noteholders and a related Series Support
Provider, then all references hereunder to the Trust Collateral Agent shall
refer to the Trustee, as agent of the Series Secured Parties of each Series, or
if duplicative with respect to the Trustee, shall be deemed to be deleted.
(h) Any provision hereof that refers to the consent of, or acceptability
to, the Trustee or Trust Collateral Agent, as the case may be, unless otherwise
specified herein, or in the related Series Supplement, shall be deemed to mean
such consent of, or acceptability to, at the direction of, or with the consent
of, the related Series Secured Parties.
Usage of Terms. With respect to all terms used in this Agreement, the
singular includes the plural and the plural includes the singular; words
importing any gender include the other gender; references to "writing"
include printing, typing, lithography, and other means of reproducing words
in a visible form; references to agreements and other contractual instruments
include all subsequent amendments thereto or changes therein entered into in
accordance with their respective terms and not prohibited by this Agreement;
references to Persons include their permitted successors and assigns; the
terms "include" or "including" mean "include without limitation" or
"including without limitation;" the words "herein", "hereof" and "hereunder"
and other words of similar import refer to this Agreement as a whole and not
to any particular Article, Section or other subdivision, and Article,
Section, Schedule and Exhibit references, unless otherwise specified, refer
to Articles and Sections of Schedules and Exhibits to this Agreement.
Certain References. All references to the Principal Balance of a Receivable
as of any date of determination
26
shall refer to the close of business on such day, or as of the first day of an
Interest Period shall refer to the opening of business on such day. All
references to the last day of an Interest Period shall refer to the close of
business on such day.
No Recourse. Without limiting the obligations of the Master Servicer or
Seller hereunder, no recourse may be taken, directly or indirectly, under
this Agreement or any certificate or other writing delivered in connection
herewith or therewith, against any stockholder, officer or director, as such,
of the Master Servicer or Seller, or of any of their respective Affiliates,
predecessors or successors.
Action by or Consent of Noteholders. Whenever any provision of this Agreement
refers to action to be taken, or consented to, by Noteholders, such provision
shall be deemed to refer to the Noteholders of record as of the Record Date
immediately preceding the date on which such action is to be taken, or
consent given, by Noteholders. Solely for the purposes of any action to be
taken, or consented to, by Noteholders, any Note registered in the name of
HAFC or any Affiliate thereof shall be deemed not to be outstanding;
provided, however, that, solely for the purpose of determining whether the
Trustee is entitled to rely upon any such action or consent, only Notes which
the Trust Officer of the Trustee actually knows to be so owned shall be so
disregarded.
Material Adverse Effect. Whenever a determination is to be made under this
Agreement as to whether a given event, action, course of conduct or set of
facts or circumstances could or would have a material adverse effect on the
Noteholders (or any similar or analogous determination), such determination
shall be made without taking into account any Series Support.
ARTICLE II
Conveyance of Receivables
Conveyance of Receivables(a) (a) Subject to the conditions set forth in
paragraph (b) below, in consideration of the Issuer's delivery to or upon the
order of the Seller on a Transfer Date of the net proceeds from the sale of a
Series of Notes and any Additional Principal Amount thereunder and the other
amounts to be distributed from time to time to the Seller in accordance with
the terms of this Agreement and the related Series Supplement, the Seller
shall, from time to time, sell, transfer, assign, set over and otherwise
convey to the Issuer, without recourse (subject to the obligations set forth
herein), all right, title and interest of the Seller in and to:
27
(i) each and every Receivables listed on Schedule A to the
related Transfer Agreement and all monies paid or payable thereon or
in respect thereof after the related Transfer Date (including amounts
due on or before the Cutoff Date but received by HAFC, the Seller or
the Issuer on or after the Cutoff Date);
(ii) the security interests in the related Financed Vehicles
granted by Obligors pursuant to the related Receivables and any other
interest of the Seller in such Financed Vehicles;
(iii) all rights of the Seller against the Dealers pursuant to
Dealer Agreements; or Unaffiliated Originator Receivables Purchase
Agreements (as may be limited with respect to a Series in the
applicable Series Related Documents);
(iv) any proceeds and the right to receive proceeds with respect
to such Receivables repurchased by either (i) a Dealer, pursuant to a
Dealer Agreement, or (ii) an Unaffiliated Originator, pursuant to an
Unaffiliated Originator Receivables Purchase Agreement as a result of
a breach of representation or warranty in the related Dealer Agreement
or Unaffiliated Originator Receivables Purchase Agreement, as
applicable;
(v) all rights under any Service Contracts on the related
Financed Vehicles:
(vi) any proceeds and the right to receive proceeds with respect
to such Receivables from claims on any physical damage, credit life or
disability insurance policies covering the related Financed Vehicles
or Obligors, including rebates of insurance premiums relating to the
Receivables;
(vii) all items contained in the related Receivables Files with
respect to the Receivables; and any and all other documents that HAFC
keeps on file in accordance with its customary procedures relating to
the related Receivables, the Obligors or the Financed Vehicles;
(viii) all funds on deposit from time to time in the Trust
Accounts (including all investments and proceeds thereof);
(ix) property (including the right to receive future Net
Liquidation Proceeds) that secures a Receivable and that has been
acquired by or on behalf of the Trust pursuant to liquidation of such
Receivable;
(x) all of the Seller's right, title and interest in its rights
and benefits, but none of its obligations or burdens, under each of
the Purchase Agreements and Purchase Agreement Supplements, including
the delivery requirements, representations and warranties and the cure
and repurchase obligations of HAFC under each of the Purchase
Agreements and Purchase Agreement Supplements, on or after the related
Cutoff Date; and
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(xi) all present and future claims, demands, causes and chooses
in action in respect of any or all of the foregoing and all payments
on or under and all proceeds of every kind and nature whatsoever in
respect of any or all of the foregoing, including all proceeds of the
conversion, voluntary or involuntary, into cash or other liquid
property, all cash proceeds, accounts, accounts receivable, notes,
drafts, acceptances, chattel paper, checks, deposit accounts,
insurance proceeds, condemnation awards, rights to payment of any and
every kind and other forms of obligations and receivables, instruments
and other property which at any time constitute all or part of or are
included in the proceeds of any of the foregoing.
(b) The Seller shall transfer to the Issuer the Receivables and the
other property and rights related thereto described in paragraph (a) above
only upon the satisfaction of each of the following conditions on or prior to
the related Transfer Date:
(i) the Seller shall have provided the Trustee, the Trust
Collateral Agent, if any, and the Owner Trustee with an Addition
Notice not later than five days prior to such Transfer Date (which
Addition Notice will designate the Series Trust Estate which the
Receivables will be a part of, if any) and shall have provided any
information reasonably requested by any of the foregoing with respect
to the related Receivables;
(ii) the Seller shall have delivered to the Owner Trustee, the
Trustee and the Trust Collateral Agent, if any, a duly executed
Transfer Agreement which shall include supplements to Schedule A
(which may be in electronic format), listing the Receivables to be
transferred;
(iii) the Seller shall, to the extent required by Section 4.2,
have deposited in the Master Collection Account all collections
received after the related Cutoff Date in respect of the Receivables
to be transferred;
(iv) as of each Transfer Date, (A) the Seller shall not be
insolvent and shall not become insolvent as a result of the transfer
of Receivables on such Transfer Date, (B) the Seller shall not intend
to incur or believe that it shall incur debts that would be beyond its
ability to pay as such debts mature, (C) such transfer shall not have
been made with actual intent to hinder, delay or defraud any Person
and (D) the assets of the Seller shall not constitute unreasonably
small capital to carry out its business as conducted;
(v) each of the representations and warranties made by the Seller
pursuant to Section 3.1 with respect to the Receivables to be
transferred on such Transfer Date shall be true and correct as of the
related Transfer Date, and the Seller shall have performed all
obligations to be performed by it hereunder on or prior to such
Transfer Date;
(vi) the Seller shall, at its own expense, on or prior to the
Transfer Date indicate in its computer files that the Receivables
identified in
29
the Transfer Agreement have been sold to the Trust pursuant to this Agreement;
(vii) the Seller shall have taken any action necessary or, if
required by the Trustee, advisable to maintain the first priority
perfected ownership interest of the Trust in the Owner Trust Estate
and the first perfected security interest of the Trust Collateral
Agent in the Series Trust Estate;
(viii) no selection procedures adverse to the interests of the
related Series shall have been utilized in selecting the related
Receivables;
(ix) the addition of any such Receivables shall not result in a
material adverse tax consequence to the Trust or the Noteholders;
(x) if required by any of the related Series Related Documents,
the Seller shall simultaneously transfer to the Trustee or to the
Trust Collateral Agent, if any, any amounts required to be deposited
in the related Trust Accounts with respect to the Receivables
transferred on such Transfer Date; and
(xi) the Seller shall have delivered to the related Series
Secured Parties and the Trust Collateral Agent an Officers'
Certificate confirming the satisfaction of each condition precedent
specified in this paragraph (b).
The Seller covenants that in the event any of the foregoing conditions
precedent are not satisfied with respect to any Receivable on the date required
as specified above, the Seller will immediately repurchase such Receivable from
the Trust, at a price equal to the Repurchase Amount thereof, in the manner
specified in Section 4.7.
It is the intention of the Seller that the transfer and assignment
contemplated by this Agreement and each related Transfer Agreement shall
constitute a sale of the related Series Trust Estate from the Seller to the
Issuer and the beneficial interest in and title to the related Series Trust
Estate shall not be part of the Seller's estate in the event of the filing of a
bankruptcy petition by or against the Seller under any bankruptcy law. In the
event that, notwithstanding the intent of the Seller, the transfer and
assignment contemplated hereby and thereby is held not to be a sale, this
Agreement and the related Transfer Agreement shall constitute a grant of a
security interest in the property referred to in this Section 2.1 for the
benefit of the Noteholders and the related Series Secured Parties.
Further Encumbrance of Series Trust Estate(a) . (a) Immediately upon the
conveyance to the Trust by the Seller of any item of the related Series Trust
Estate pursuant to Section 2.1, all right, title and interest of the Seller
in and to such Series Trust Estate shall terminate, and all such right, title
and interest shall vest in the Issuer, in accordance with the Trust Agreement
and Sections 3802 and 3805 of the Business Trust Statute (as defined in the
Trust
30
Agreement).
(b) Immediately upon the vesting of the related Series Trust Estate in the
Trust, the Trust shall have the sole right to pledge or otherwise encumber, such
related Series Trust Estate. Pursuant to the Indenture and a Series Supplement,
the Trust will grant a security interest in the Series Trust Estate to secure
the repayment of a related Series of Notes. The related Series of Certificates
shall represent the beneficial ownership interest in the related Series Trust
Estate, and the related Series of Certificateholders shall be entitled to
receive distributions with respect thereto as set forth in the related Series
Supplement.
(c) The Trustee or the Trust Collateral Agent, as the case may be, shall
hold the related Series Trust Estate for the benefit of the related Series
Secured Parties. Following the payment in full of the related Series of Notes
and the release and discharge of the Indenture and the related Series
Supplement, all covenants of the Issuer under Article III of the Indenture and
the related Series Supplement shall, until payment in full of the Certificates,
remain as covenants of the Issuer for the benefit of the related Series of
Certificateholders, enforceable by the related Series of Certificateholders to
the same extent as such covenants were enforceable by the related Series of
Noteholders prior to the discharge of the Indenture. Any rights of the Trustee
under Article III of the Indenture and the related Series Supplement, following
the discharge of the Indenture and the related Series Supplement, shall vest in
related Series of Certificateholders.
(d) The Trustee or Trust Collateral Agent, as the case may be, shall, at
such time as there are no Securities of a Series outstanding and all sums due
to the Trustee, the Trust Collateral Agent, if any, or any agent or counsel
thereof pursuant to the Indenture as supplemented by the related Series
Supplement, have been paid, pursuant to Section 4.1 of the Indenture, and
subject to satisfaction of the conditions set forth therein, release the Lien
of the related Series Supplement and the Indenture with respect to the
related Series Trust Estate.
ARTICLE III
The Receivables
Representations and Warranties of Seller. The Seller represents and warrants
as to the related Receivables that the representations and warranties set
forth on the Schedule of Eligibility Criteria with respect to a Series are,
or will be, true and correct as of the respective dates specified in such
Schedule. The Issuer is deemed to have relied on such representations and
warranties in acquiring the related Receivables and the related Series
Secured Parties shall be deemed to rely on such representations and
warranties in purchasing the Notes including any Additional Principal
Amounts. Such representations and warranties shall survive the sale, transfer
and
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assignment of the related Series Trust Estate to the Issuer and any pledge
thereof to the Trustee or the Trust Collateral Agent, as the case may be,
pursuant to the Indenture and the related Series Supplement.
Repurchase upon Breach(a) . (a) The Seller, the Master Servicer, any Trust
Officer of the Trustee, Trust Collateral Agent, if any, or the Owner Trustee,
as the case may be, shall inform each of the other parties to this Agreement
promptly, in writing, upon the discovery of any breach of the Seller's
representations and warranties made pursuant to Section 3.1; provided,
however, that the failure to give any such notice shall not derogate from any
obligations of the Seller under this Section 3.2. As of the last day of the
second (or, if the Seller so elects, the first, or with respect to any
exceptions appearing on any exception report delivered by the Trustee or the
Trust Collateral Agent, if any, the first) month following the discovery by
the Seller or receipt by the Seller of notice of such breach (or such longer
period not in excess of 120 days, as may be agreed upon by the Trustee or the
Trust Collateral Agent, if any, and the Master Servicer), unless such breach
is cured by such date, the Seller shall have an obligation to repurchase or
cause HAFC to repurchase any Receivable in which the interests of the related
Series Secured Parties, if any, are materially and adversely affected by any
such breach. In consideration of and simultaneously with the repurchase of
the Receivables, the Seller shall remit, or cause HAFC to remit, to the
related Series Collection Account the Repurchase Amount in the manner
specified in Section 5.4 and the Issuer shall execute such assignments and
other documents reasonably requested by such person in order to effect such
repurchase. The sole remedy of the Issuer, the Owner Trustee, the Trust
Collateral Agent, if any, the Trustee and the related Series Secured Parties
with respect to a breach of representations and warranties pursuant to
Section 3.1 and the agreement contained in this Section shall be the
repurchase of the Receivables pursuant to this Section, subject to the
conditions contained herein or to enforce the obligation of HAFC to the
Seller to repurchase such Receivables pursuant to the Purchase Agreement.
None of the Owner Trustee, the Trust Collateral Agent, if any, or the Trustee
shall have a duty to conduct any affirmative investigation as to the
occurrence of any conditions requiring the repurchase of any Receivable
pursuant to this Section; provided, however, that the Trust Collateral Agent,
if any, or the Trustee shall notify the related Series Secured Parties, if
any, in writing promptly of any failure by the Seller or HAFC to repurchase
any Receivable as provided herein to the extent the Trust Collateral Agent,
if any, or the Trustee has actual knowledge of such failure.
(b) Pursuant to Section 2.1 of this Agreement and pursuant to the
related Transfer Agreement, the Seller conveyed to the Trust all of the
Seller's right, title and interest in its rights and benefits, but none of
its obligations or burdens, under the Purchase Agreement and the related
Purchase Agreement Supplement, including the Seller's rights under the
Purchase Agreement and the delivery requirements, representations and
warranties and the cure or repurchase obligations of HAFC thereunder. The
Seller hereby represents and warrants to the Trust that such assignment
32
is valid, enforceable and effective to permit the Trust to enforce such
obligations of HAFC under the Purchase Agreement.
Custody of Receivables Files. In connection with the sale, transfer and
assignment of the Receivables, if any, to the Trust pursuant to this
Agreement and pursuant to the related Transfer Agreement, the Master Servicer
shall act as custodian for the benefit of the Trustee and Trust Collateral
Agent, if any, of the following documents or instruments with respect to each
Receivable:
(i) The fully executed original of the Receivable (together with
any agreements modifying the Receivable, including, without
limitation, any extension agreements);
(ii) The original credit application, or a copy thereof, of each
Obligor, fully executed by each such Obligor on HAFC's or the
applicable Unaffiliated Originator's customary form, or on a form
approved by HAFC, for such application; and
(iii) The original certificate of title (when received) and
otherwise such documents, if any, that HAFC keeps on file in
accordance with its customary procedures indicating that the Financed
Vehicle is owned by the Obligor and subject to the interest of
(x) HAFC (or any predecessor corporation to HAFC, or any Affiliate of
HAFC or such predecessor corporation) as first lienholder or secured
party (including any Lien Certificate received by HAFC), or, (y) an
Unaffiliated Originator as first lienholder or secured party or, if
such original certificate of title has not yet been received, a copy
of the application therefor, showing either HAFC (or any predecessor
corporation to HAFC, or any Affiliate of HAFC or such predecessor
corporation), or an Unaffiliated Originator as secured party; and
(iv) Documents evidencing or relating to any Insurance Policy, to
the extent such documents are maintained by or on behalf of the Seller
or HAFC.
Notwithstanding the foregoing, the Master Servicer may appoint a Sub-Servicer as
subcustodian, which subcustodian may hold physical possession of some or all of
the Receivable Files. Neither the Trustee nor the Trust Collateral Agent, if
any, shall have any liability for the acts or omissions of any such custodian or
subcustodian.
ARTICLE IV
Administration and Servicing of Receivables
Duties of the Master Servicer
33
. The Master Servicer is hereby authorized to act as agent for the Trust (and
also on behalf of the Trust Collateral Agent, if any, the Trustee and the
Noteholders) and in such capacity shall manage, service, administer and make
collections on the Receivables, and perform the other actions required by the
Master Servicer under this Agreement. The Master Servicer agrees that its
servicing of the Receivables shall be carried out in accordance with customary
and usual procedures of institutions which service motor vehicles retail
installment sales contracts and, to the extent more exacting, the degree of
skill and attention that the Master Servicer exercises with respect to all
comparable motor vehicle receivables that it services for itself or others. In
performing such duties, so long as Household is the Master Servicer, it shall
comply with the standard and customary procedures for servicing all of its
comparable motor vehicle receivables. The Master Servicer's duties shall
include, without limitation, collection and posting of all payments, responding
to inquiries of Obligors on the Receivables, investigating delinquencies,
sending payment coupons to Obligors, reporting any required tax information to
Obligors, monitoring the collateral, accounting for collections and furnishing
monthly and annual statements to the Trust Collateral Agent, the Trustee and
each related Series Secured Parties, if any, with respect to distributions,
monitoring the status of Insurance Policies with respect to the Financed
Vehicles and performing the other duties specified herein. The Master Servicer
shall also administer and enforce all rights and responsibilities of the holder
of the Receivables provided for in the Dealer Agreements (and Household shall
make efforts to obtain possession of the Dealer Agreements, to the extent it is
necessary to do so), the Dealer Assignments, the Purchase Agreements, the
Unaffiliated Originator Receivables Purchase Agreements and the Insurance
Policies, to the extent that such Dealer Agreements, Dealer Assignments, the
Purchase Agreements, Unaffiliated Originator Receivables Purchase Agreements and
Insurance Policies relate to the Receivables, the Financed Vehicles or the
Obligors. To the extent consistent with the standards, policies and procedures
otherwise required hereby, the Master Servicer shall follow its customary
standards, policies, and procedures and shall have full power and authority,
acting alone, to do any and all things in connection with such managing,
servicing, administration and collection that it may deem necessary or
desirable. Without limiting the generality of the foregoing, the Master Servicer
is hereby authorized and empowered by the Trust to execute and deliver, on
behalf of the Trust, any and all instruments of satisfaction or cancellation, or
of partial or full release or discharge, and all other comparable instruments,
with respect to the Receivables and with respect to the Financed Vehicles;
provided, however, that notwithstanding the foregoing and subject to Section 4.3
hereof, the Master Servicer shall not, except pursuant to an order from a court
of competent jurisdiction, release an Obligor from payment of any unpaid amount
under any Receivable or waive the right to collect the unpaid balance of any
Receivable from the Obligor. The Master Servicer is hereby authorized to
commence, in it's own name or in the name of the Trust, a legal proceeding to
enforce a Receivable pursuant to Section 4.3 or to commence or participate in
any other legal proceeding (including, without limitation, a bankruptcy
proceeding) relating to or involving a Receivable, an Obligor or a Financed
Vehicle. If the Master Servicer commences or participates in such a legal
proceeding in its own name, the Trust shall thereupon be deemed to have
automatically assigned such Receivable to the Master Servicer solely for
purposes of commencing or
34
participating in any such proceeding as a party or claimant, and the Master
Servicer is authorized and empowered by the Trust to execute and deliver in the
Master Servicer's name any notices, demands, claims, complaints, responses,
affidavits or other documents or instruments in connection with any such
proceeding. The Trust Collateral Agent, if any, or the Trustee and the Owner
Trustee shall furnish the Master Servicer with any powers of attorney and other
documents which the Master Servicer may reasonably request and which the Master
Servicer deems necessary or appropriate and take any other steps which the
Master Servicer may deem reasonably necessary or appropriate to enable the
Master Servicer to carry out its servicing and administrative duties under this
Agreement.
Collection of Receivable Payments; Modifications of Receivables(a) . (a)
Consistent with the standards, policies and procedures required by this
Agreement, the Master Servicer shall make reasonable efforts to collect all
payments called for under the terms and provisions of the Receivables as and
when the same shall become due, and shall follow such collection procedures
as it follows with respect to all comparable automobile receivables that it
services for itself or others and otherwise act with respect to the
Receivables, the Dealer Agreements, the Dealer Assignments, the Purchase
Agreements, the Unaffiliated Originator Receivables Purchase Agreements, the
Insurance Policies and the Other Conveyed Property in such manner as will, in
the reasonable judgment of the Master Servicer, maximize the amount to be
received by the Trust with respect thereto. The Master Servicer is authorized
in its discretion to waive any prepayment charge, late payment charge or any
other similar fees that may be collected in the ordinary course of servicing
any Receivable.
(b) The Master Servicer may at any time agree to a modification or
amendment of a Receivable in order to (i) change the Obligor's regular due date
to a date within 30 days of when such due date occurs or (ii) re-amortize the
scheduled payments on the Receivable following a partial prepayment of
principal; provided, however, that no such change shall extend the maturity date
of any Receivable.
(c) The Master Servicer may grant payment extensions on, or other
modifications or amendments to, a Receivable (including those modifications
permitted by Section 4.2(b)) in accordance with its customary procedures if the
Master Servicer believes in good faith that such extension, modification or
amendment is necessary to avoid a default on such Receivable, will maximize the
amount to be received with respect to such Receivable, and is otherwise in the
best interests of the Trust; provided, however, that unless otherwise specified
in any Series Supplement:
(i) The aggregate period of all extensions on a Receivable shall
not exceed six months; provided, however, that not more than two
months can be in any consecutive twelve month period;
(ii) In no event may a Receivable be extended by the
35
Master Servicer beyond the Collection Period immediately preceding the
Final Scheduled Distribution Date of the Notes with respect to the
related Series; and
(iii) As of any Determination Date the number of Receivables
included in a Series Trust Estate the term of which have been extended
during the preceding 12-month period shall not exceed 8% of the number
of Receivables in such Series Trust Estate at the beginning of the
preceding 12-month period.
(d) Except as otherwise provided below, the Master Servicer shall
deposit collections on or with respect to Receivables into the Master
Collection Account as promptly as possible after the date of processing of
such collections, but in no event later than the second Business Day
following the date of processing. Subject to the express terms of any Series
Supplement, but notwithstanding anything else in this Agreement to the
contrary, for so long as (i) Household remains the Master Servicer and
maintains a commercial paper rating of not less than A-1 by Standard & Poor's
and P-1 by Moody's (or such other rating below A-1 or P-1, as the case may
be, which is satisfactory to the Rating Agency) and for five Business Days
following any reduction of any such rating or (ii) a Master Servicer Credit
Facility is maintained in effect by the Master Servicer acceptable in form
and substance to the Rating Agency (such acceptability to be evidenced in
writing by the Rating Agency to the effect that failure to make the
aforementioned deposit on the basis of the maintenance of the Master Servicer
Credit Facility will not adversely affect the then current rating of the
Notes), issued by a depository institution or insurance having a rating on
its (A) short-term obligations of at least P-1 by Moody's and A-1 by Standard
& Poor's and (B) long term obligations of at least A2 by Moody's and A by
Standard & Poor's or other ratings approved by the Rating Agency, the Master
Servicer shall not be required to make deposits of collections on or with
respect to Receivables as provided in the preceding sentence, but may make
one or more deposits of such collections with respect to a Collection Period
into the Master Collection Account in immediately available funds not later
than 1:00 P.M., Central time, on the Business Day immediately preceding the
related Distribution Date. In the event that a Master Servicer Credit
Facility is maintained, the Master Servicer shall within two Business Days of
the date of processing of collections on or with respect to Receivables
notify the Trustee and the Master Servicer Credit Facility Issuer in writing
of the amounts that would otherwise be deposited in the Collection Account
and the Master Servicer shall establish and maintain for the Trust a Payment
Record in which the payments on or with respect to the Receivables shall be
credited and the Master Servicer shall notify the Trustee and the Master
Servicer Credit Facility Issuer in writing as promptly as practicable (but in
any event prior to the Determination Date for the following Distribution
Date) of the amounts so credited on or with respect to the Receivables that
are to be included in Collected Funds for the related Distribution Date and
of the amounts so credited which will constitute a part of Collected Funds
for the second following Distribution Date. The Payment Record shall be made
available for inspection during normal business hours of the Master Servicer
upon request of the Trustee, or any Master Servicer Credit Facility Issuer.
The Master Servicer shall give written notice to the
36
Trustee and the Trust Collateral Agent, if any, if it is required to deposit
funds in accordance with the first sentence of this paragraph.
Realization Upon Receivables(a) . (a) Consistent with the standards, policies
and procedures required by this Agreement, the Master Servicer shall use its
best efforts to repossess (or otherwise comparably convert the ownership of)
and liquidate any Financed Vehicle securing a Receivable with respect to
which the Master Servicer has determined that payments thereunder are not
likely to be resumed, as soon as is practicable after default on such
Receivable but in no event later than the date on which all or any portion of
a Scheduled Payment has become 120 days delinquent (other than in the case of
Financed Vehicles where neither the Financed Vehicle nor the Obligor can be
physically located by the Master Servicer (using procedures consistent with
the standards, policies and procedures of the Master Servicer required by
this Agreement) and other than in the case of an Obligor who is subject to a
bankruptcy proceeding); provided, however, that the Master Servicer may elect
not to repossess a Financed Vehicle within such time period if in its good
faith judgment it determines that the proceeds ultimately recoverable with
respect to such Receivable would be increased by forbearance. The Master
Servicer is authorized to follow such customary practices and procedures as
it shall deem necessary or advisable, consistent with the standard of care
required by Section 4.1, which practices and procedures may include
reasonable efforts to realize upon any recourse to Dealers, the sale of the
related Financed Vehicle at public or private sale, the submission of claims
under an Insurance Policy and other actions, including, without limitation,
entering into settlements with Obligors, by the Master Servicer in order to
realize upon such a Receivable. The foregoing is subject to the provision
that, in any case in which the Financed Vehicle shall have suffered damage,
the Master Servicer shall not expend funds in connection with any repair or
towards the repossession of such Financed Vehicle unless it shall determine
in its discretion that such repair and/or repossession shall increase the
proceeds of liquidation of the related Receivable by an amount greater than
the amount of such expenses. The Master Servicer shall be entitled to recover
all reasonable expenses incurred by it in the course of repossessing and
liquidating a Financed Vehicle but only from the liquidation proceeds of the
vehicle or under the related Dealer Agreement. The Master Servicer shall
recover such reasonable expenses based on the information contained in the
Master Servicer's Certificate delivered on the related Determination Date.
The Master Servicer shall pay on behalf of the Trust any personal property
taxes assessed on repossessed Financed Vehicles. The Master Servicer shall be
entitled to reimbursement of any such tax from Net Liquidation Proceeds with
respect to such Receivable.
(b) If the Master Servicer elects to commence a legal proceeding to enforce
a Dealer Agreement, Dealer Assignment or Unaffiliated Originator Receivables
Purchase Agreement, the act of commencement shall be deemed to be an automatic
assignment from the Trust to the Master Servicer of the rights under such Dealer
Agreement and Dealer Assignment for purposes of collection only. If, however,
37
in any enforcement suit or legal proceeding it is held that the Master Servicer
may not enforce a Dealer Agreement, Dealer Assignment or Unaffiliated Originator
Receivables Purchase Agreement on the grounds that it is not a real party in
interest or a Person entitled to enforce the Dealer Agreement, Dealer Assignment
or Unaffiliated Receivables Purchase Agreement, the Owner Trustee and/or the
Trust Collateral Agent, at the Master Servicer's written direction and expense,
or the Seller, at the Seller's expense, shall take such steps as the Master
Servicer deems reasonably necessary to enforce the Dealer Agreement, Dealer
Assignment or Unaffiliated Originator Receivables Purchase Agreement, including
bringing suit in its name or the name of the Seller or of the Trust and the
Owner Trustee and/or the Trust Collateral Agent for the benefit of the
Securityholders. All amounts recovered shall be remitted directly by the Master
Servicer as provided in Section 4.2(d).
(c) The Master Servicer agrees that prior to delivering any repossessed
Finance Vehicle for sale to any dealer, it shall make such filings and effect
such notices as are necessary under Section 9-114(1) of the UCC to preserve
the Trust's ownership interest (or security interest, as the case may be) in
such repossessed Financed Vehicle.
Insurance(a).(a) The Master Servicer shall require, in accordance with its
customary servicing policies and procedures, that each Financed Vehicle be
insured by the related Obligor under an insurance policy covering physical
loss and damage to the related Financed Vehicle and shall monitor the status
of such physical loss and damage insurance coverage thereafter, in accordance
with its customary servicing procedures. Each Receivable requires the Obligor
to obtain such physical loss and damage insurance, naming HAFC and its
successors and assigns as loss payee, and with respect to liability coverage,
additional insureds, and permits the holder of such Receivable to obtain
physical loss and damage insurance at the expense of the Obligor if the
Obligor fails to maintain such insurance. If the Master Servicer shall
determine that an Obligor has failed to obtain or maintain a physical loss
and damage Insurance Policy covering the related Financed Vehicle which
satisfies the conditions set forth in the related Eligibility Criteria
(including, without limitation, during the repossession of such Financed
Vehicle) the Master Servicer shall be diligent in carrying out its customary
servicing procedures to enforce the rights of the holder of the Receivable
under the Receivable to require the Obligor to obtain such physical loss and
damage insurance in accordance with its customary servicing policies and
procedures.
(b) The Master Servicer may xxx to enforce or collect upon the Insurance
Policies, in its own name, if possible, or as agent of the Trust. If the Master
Servicer elects to commence a legal proceeding to enforce an Insurance Policy,
the act of commencement shall be deemed to be an automatic assignment of the
rights of the Trust under such Insurance Policy to the Master Servicer for
purposes of collection only. If, however, in any enforcement suit or legal
proceeding it is held that the Master Servicer may not enforce an Insurance
Policy on the grounds that it is not a real party in interest or
38
a holder entitled to enforce the Insurance Policy, the Owner Trustee and/or the
Trust Collateral Agent, at the Master Servicer's written direction and expense,
or the Seller, at the Seller's expense, shall take such steps as the Master
Servicer deems reasonably necessary to enforce such Insurance Policy, including
bringing suit in its name or the name of the Trust and the Owner Trustee and/or
the Trust Collateral Agent for the benefit of the Noteholders.
Maintenance of Security Interests in Vehicles. Consistent with the policies
and procedures required by this Agreement, the Master Servicer shall take
such steps on behalf of the Trust as are necessary to maintain perfection of
the security interest created by each Receivable in the related Financed
Vehicle on behalf of the Trust as the Series Secured Parties shall reasonably
request, including, but not limited to, obtaining the execution by the
Obligors and the recording, registering, filing, re-recording, re-filing, and
re-registering of all security agreements, financing statements and
continuation statements as are necessary to maintain the security interest
granted by the Obligors under the respective Receivables. The Owner Trustee,
on behalf of the Trust, hereby authorizes the Master Servicer, and the Master
Servicer agrees, to take any and all steps necessary to re-perfect such
security interest on behalf of the Trust as necessary because of the
relocation of a Financed Vehicle or for any other reason. In the event that
the assignment of a Receivable to the Trust is insufficient, without a
notation on the related Financed Vehicle's certificate of title, or without
fulfilling any additional administrative requirements under the laws of the
state in which the Financed Vehicle is located, to perfect a security
interest in the related Financed Vehicle in favor of the Trust, HAFC hereby
agrees that the designation of any of HAFC, a predecessor company to HAFC, or
any Affiliate of any of the foregoing as the secured party on the certificate
of title is in its capacity as agent of the Trust for such limited purpose.
Covenants, Representations, and Warranties of Master Servicer. By its
execution and delivery of this Agreement, the Master Servicer makes the
following representations, warranties and covenants on which the Trust
Collateral Agent, if any, or the Trustee relies in accepting the related
Receivables, on which the Trustee relies in authenticating each Series of
Notes, on which the Noteholders rely on in purchasing a Series of Notes and
any Additional Principal Amount thereon on which the Owner Trustee relies in
executing each Series of Certificates.
The Master Servicer covenants as follows:
(i) Liens in Force. The Financed Vehicle securing each
Receivable shall not be released in whole or in part from the security
interest granted by the Receivable, except upon payment in full of the
Receivable or as otherwise contemplated herein;
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(ii) No Impairment. The Master Servicer shall do nothing to
impair the rights of the Trust or the related Series of Noteholders in
the Receivables, the Dealer Agreements, the Dealer Assignments, the
Purchase Agreements, the Unaffiliated Originator Receivables Purchase
Agreements, the Insurance Policies or the Other Conveyed Property;
(iii) No Amendments. The Master Servicer shall not extend or
otherwise amend the terms of any Receivable, except in accordance with
Section 4.2;
(iv) Restrictions on Liens. The Master Servicer shall not (i)
create, incur or suffer to exist, or agree to create, incur or suffer
to exist, or consent to cause or permit in the future (upon the
happening of a contingency or otherwise) the creation, incurrence or
existence of any Lien or restriction on transferability of the
Receivables except for the Lien in favor of the Trust Collateral
Agent, if any, or Trustee for the benefit of the related Series
Secured Parties, and the restrictions on transferability imposed by
this Agreement or (ii) sign or file under the Uniform Commercial Code
of any jurisdiction any financing statement which names HAFC, the
Master Servicer or any Affiliate thereof as a debtor, or sign any
security agreement authorizing any secured party thereunder to file
such financing statement, with respect to the Receivables, except in
each case any such instrument solely securing the rights and
preserving the Lien of the Trust Collateral Agent, if any, or the
Trustee; and
(v) Servicing of Receivables. The Master Servicer shall service
the Receivables as required by the terms of this Agreement and in
material compliance with its standard and customary procedures for
servicing all its other comparable motor vehicle receivables and in
compliance with applicable law; and
(vi) The Master Servicer shall notify the Trustee of any
relocation of the Master Servicer's principal office set forth in
Section 13.3 hereof and all Receivables Files shall be maintained by
the Master Servicer in the United States.
Repurchase of Receivables Upon Breach of Covenant. Upon discovery by any of
the Master Servicer, the Seller, a Trust Officer of the Trust Collateral
Agent, if any, the Owner Trustee or of the Trustee of a breach of any of the
covenants set forth in Sections 4.5 or 4.6, the party discovering such breach
shall give prompt written notice to the others; provided, however, that the
failure to give any such notice shall not affect any obligation of the Master
Servicer under this Section 4.7. As of the second Accounting Date following
its discovery or receipt of notice of any breach of any covenant set forth in
Sections 4.5 or 4.6 which materially and adversely affects the interests of
the related Series Secured Parties in any Receivable (including any
Liquidated Receivable) (or, at the Master Servicer's election, the first
Accounting Date so following)
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or the related Financed Vehicle, the Master Servicer shall, unless such breach
shall have been cured in all material respects, repurchase from the Trust the
Receivable affected by such breach and, on the date specified in Section 5.4,
the Master Servicer shall pay the related Repurchase Amount and deposit such
Repurchase Amounts into the Master Collection Account in accordance with Section
5.3 hereof. The Trust Collateral Agent or the Trustee, as the case may be, shall
notify the related Series Secured Parties promptly, in writing, of any failure
by the Master Servicer to so repurchase any Receivable to the extent the Trust
Collateral Agent or the Trustee, as the case may be, has actual knowledge of
such failure. It is understood and agreed that the obligation of the Master
Servicer to repurchase any Receivable (including any Liquidated Receivable) with
respect to which such a breach has occurred and is continuing shall, if such
obligation is fulfilled, constitute the sole remedy against the Master Servicer
for such breach available to the related Series Secured Parties;
Total Servicing Fee; Payment of Certain Expenses by Master Servicer. As
compensation for its activities, the Master Servicer shall be entitled to
retain out of amounts otherwise to be deposited in the Master Collection
Account with respect to a Collection Period, the Base Servicing Fee and any
Supplemental Servicing Fee for each Series for such Collection Period. The
Master Servicer shall be required to pay all expenses incurred by it in
connection with its activities under this Agreement (including taxes imposed
on the Master Servicer, expenses incurred in connection with distributions
and reports made by the Master Servicer to Securityholders or the Series
Secured Parties and all fees and expenses of the Owner Trustee, the Trust
Collateral Agent, if any, or the Trustee), except taxes levied or assessed
against the Trust, and claims against the Trust in respect of
indemnification, which taxes and claims in respect of indemnification against
the Trust are expressly stated to be for the account of Household. The Master
Servicer shall be liable for the fees, charges and expenses of the Owner
Trustee, the Trust Collateral Agent, if any, the Trustee, any Sub-Servicer
and their respective agents.
Master Servicer's Certificate. No later than 10:00 a.m. Central time on each
Determination Date, the Master Servicer shall deliver, or cause to be
delivered, to the Trustee, the Owner Trustee, the Trust Collateral Agent, if
any, and each Series Secured Party, a Master Servicer's Certificate executed
by a responsible officer or agent of the Master Servicer containing among
other things, (i) all information necessary to enable the Trustee or Trust
Collateral Agent, if any, to make the allocations required by Section 5.5 and
the distributions with respect to such Distribution Date pursuant to each
Series Supplement and (ii) all information to be provided to each Series
Secured Parties. Upon request, the Master Servicer will also provide a
listing of all Warranty Receivables and Covenant Receivables repurchased as
of the related Determination Date, identifying the Receivables so purchased.
Such list will identify Receivables repurchased by the Master Servicer or by
the Seller on the related Determination Date and each Receivable which became
a Liquidated Receivable or
41
which was paid in full during the related Collection Period by account number.
In addition to the information set forth in the preceding sentence, the Master
Servicer's Certificate shall also contain the information required by any Series
Supplement.
Annual Statement as to Compliance, Notice of Master Servicer Termination
Event(a) . (a) The Master Servicer shall deliver or cause to be delivered to
the Trustee, the Owner Trustee, the Trust Collateral Agent, if any, and each
Series Secured Party on or before April 30 (or 120 days after the end of the
Master Servicer's fiscal year, if other than December 31) of each year,
beginning on April 30, 1999, an Officer's Certificate signed by any
responsible officer of the Master Servicer, or such Eligible Sub-Servicer who
is performing the servicing duties of the Master Servicer, dated as of
December 31 (or other applicable date) of the immediately preceding year,
stating that (i) a review of the activities of the Master Servicer, or such
Eligible Sub-Servicer who is performing the servicing duties of the Master
Servicer, during the preceding 12-month period and of its performance under
this Agreement has been made under such officer's supervision, and (ii) to
such officer's knowledge, based on such review, the Master Servicer, or such
Eligible Sub-Servicer who is performing the servicing duties of the Master
Servicer, has in all material respects fulfilled all its obligations under
this Agreement throughout such period, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to
such officer and the nature and status thereof.
(b) The Master Servicer, or such Eligible Sub-Servicer who is performing the
servicing duties of the Master Servicer, shall deliver to the Trustee, the Owner
Trustee, the Trust Collateral Agent, if any, each Series Secured Party and, in
the event that such notice is delivered by the Sub-Servicer, to the Master
Servicer, promptly after having obtained knowledge thereof, but in no event
later than two (2) Business Days thereafter, written notice in an Officer's
Certificate of any event which with the giving of notice or lapse of time, or
both, would become a Master Servicer Termination Event under Section 10.1(a).
The Seller or the Master Servicer shall deliver to the Trustee, the Owner
Trustee, the Trust Collateral Agent, if any, each Series Secured Party, the
Master Servicer or the Seller (as applicable) promptly after having obtained
knowledge thereof, but in no event later than two (2) Business Days thereafter,
written notice in an Officer's Certificate of any event which with the giving of
notice or lapse of time, or both, would become a Master Servicer Termination
Event under any other clause of Section 10.1.
Annual Independent Accountants' Report(a) . (a) The Master Servicer shall
cause a firm of nationally recognized independent certified public
accountants (the "Independent Accountants"), who may also render other
services to the Master Servicer or to the Seller, to deliver to the Trustee,
the Owner Trustee, the Trust Collateral Agent, any Series Secured Parties on
or before April 30 (or 120 days after the end of the Master Servicer's
42
fiscal year, if other than December 31) of each year, beginning on April 30,
1999, with respect to the twelve months ended the immediately preceding December
31 (or other applicable date), a report to the effect that they have examined
certain documents and records relating to the servicing of Receivables under
this Agreement and each Series Supplement, compared the information contained in
the Master Servicer's Certificates delivered pursuant to Section 4.9 during the
period covered by such report with such documents and records and that, on the
basis of such examination, such accountants are of the opinion that the
servicing has been conducted in compliance with the terms and conditions as set
forth in Articles IV and V of this Agreement and the applicable provisions of
each Series Supplement, except for such exceptions as they believe to be
immaterial and such other exceptions as shall be set forth in such statement.
Such report shall acknowledge that the Trustee, or the Trust Collateral Agent,
as the case may be, shall be a "non-participating party" with respect to such
report, or words to similar effect. Neither the Trustee nor the Trust Collateral
Agent, if any, shall have any duty to make any independent inquiry or
investigation as to, and shall have no obligation or liability in respect of,
the sufficiency of such procedures.
(b) On or before April 30 of each calendar year, beginning with April
30, 1999, the Master Servicer shall cause a firm of nationally recognized
independent public accountants (who may also render other services to the
Master Servicer or Seller) to furnish a report to the Trustee, the Master
Servicer and each Rating Agency and any Series Secured Parties to the effect
that they have compared the mathematical calculations of each amount set
forth in the Master Servicer's Certificates delivered pursuant to Section 4.9
during the period covered by such report with the Master Servicer's computer
reports which were the source of such amounts and that on the basis of such
comparison, such accountants are of the opinion that such amounts are in
agreement, except for such exceptions as they believe to be immaterial and
such other exceptions as shall be set forth in such statement. Such report
shall acknowledge that the Trustee, or the Trust Collateral Agent, as the
case may be, shall be a "non-participating party" with respect to such
report, or words to similar effect. Neither the Trustee nor the Trust
Collateral Agent, if any, shall have any duty to make any independent inquiry
or investigation as to, and shall have no obligation or liability in respect
of, the sufficiency of such procedures.
Access to Certain Documentation and Information Regarding Receivables. The
Master Servicer shall provide to representatives of the Trustee, the Owner
Trustee, the Trust Collateral Agent and the Series Secured Parties reasonable
access to the documentation regarding the Receivables. In each case, such
access shall be afforded without charge but only upon reasonable request and
during normal business hours. Nothing in this Section shall derogate from the
obligation of the Master Servicer to observe any applicable law prohibiting
disclosure of information regarding the Obligors, and the failure of the
Master Servicer to provide access as provided in this Section as a result of
such obligation shall not constitute a breach of this Section.
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Fidelity Bond and Errors and Omissions Policy. The Master Servicer or such
Eligible Sub-Servicer that is performing the servicing duties of the Master
Servicer, has obtained, and shall continue to maintain in full force and
effect, a Fidelity Bond and Errors and Omissions Policy of a type and in such
amount as is customary for servicers engaged in the business of servicing
automobile receivables.
Year 2000 Compliance. The Master Servicer covenants that its computer and
other systems used in servicing the Receivables will be modified to operate
in a manner such that on and after January 1, 2000 (i) the Master Servicer
can service the Receivables in accordance with the terms of this Agreement
and (ii) the Master Servicer can operate its business in the same manner as
it is operating on the date hereof.
ARTICLE V
Trust Accounts; Distributions;
Statements to Certificateholders and Noteholders
Establishment of Trust Accounts(a) . (a) (i) The Master Servicer, on behalf
of the Series Secured Parties with respect to each Series the holders of the
Series Trust Certificates of each Series and the holders of the Owner Trust
Certificates, shall establish and maintain in the name of the Trustee, a
trust account which is an Eligible Deposit Account (the "Master Collection
Account"), bearing a designation clearly indicating that the funds deposited
therein are held for the benefit of the Series Secured Parties with respect
to the Household Automotive Revolving Trusts the holders of the Series Trust
Certificates of each Series and the holders of the Owner Trust Certificates.
The Master Collection Account shall initially be established with the
Trustee. The Trustee shall possess all right, title and interest in all funds
on deposit from time to time in, and shall have sole dominion and control
with respect to, the Master Collection Account and in all proceeds thereof
for the benefit of the Series Secured Parties, the holders of the Series
Trust Certificates of each Series, the holders of the Owner Trust
Certificates, and, if a Trust Collateral Agent shall have been appointed with
respect to any Series, the Trust Collateral Agent. Except as expressly
provided in this Agreement, the Master Servicer agrees that it shall have no
right of setoff or banker's lien against, and no right to otherwise deduct
from, any funds held in the Master Collection Account for any amount owed to
it by the Trust Collateral Agent, the Trust, or any Series Secured Party.
(ii) With respect to each Series, the Master Servicer shall
establish and maintain the Series Trust Accounts required to be
established and
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maintained pursuant to the related Series Supplement.
(b) Funds on deposit in the Master Collection Account and any Series
Trust Accounts (collectively, the "Trust Accounts") shall be invested by the
Trust Collateral Agent, if any, or the Trustee, as the case may be, (or any
custodian with respect to funds on deposit in any such account) in Eligible
Investments selected in writing by the Master Servicer (pursuant to standing
instructions or otherwise) which absent any instruction shall be the
investments specified in clause (d) of the definition of Eligible Investments
set forth herein. Funds on deposit in any Trust Account shall be invested in
Eligible Investments that will mature so that such funds will be available at
the close of business on the Business Day immediately preceding the following
Distribution Date. Funds deposited in a Trust Account on the day immediately
preceding a Distribution Date and representing the proceeds of Eligible
Investments are not required to be invested overnight. All Eligible
Investments will be held to maturity.
(c) All investment earnings of monies deposited in the Trust Accounts shall
be deposited (or caused to be deposited) by the Trust Collateral Agent, if any,
or the Trustee, as the case may be, in the Master Collection Account or the
related Series Collection Account no later than the close of business on the
Business Day immediately preceding the related Distribution Date, and any loss
resulting from such investments shall be charged to the Master Collection
Account. The Master Servicer will not direct the Trust Collateral Agent, if any,
or the Trustee, as the case may be, to make any investment of any funds held in
any of the Trust Accounts unless the security interest granted and perfected in
such account will continue to be perfected in such investment, in either case
without any further action by any Person, and, in connection with any direction
to the Trust Collateral Agent, if any, or the Trustee, as the case may be, to
make any such investment, if necessary, the Master Servicer shall deliver to the
Trust Collateral Agent, if any, or the Trustee, as the case may be, an Opinion
of Counsel to such effect.
(d) The Trust Collateral Agent, if any, or the Trustee, as the case may
be, shall not in any way be held liable by reason of any insufficiency in any
of the Trust Accounts resulting from any loss on any Eligible Investment
included therein except for losses attributable to the Trust Collateral
Agent's or the Trustee's, as the case may be, negligence or bad faith or its
failure to make payments on such Eligible Investments issued by the Trust
Collateral Agent, or the Trustee, as the case may be, in its commercial
capacity as principal obligor and not as Trust Collateral Agent or Trustee,
as the case may be, in accordance with their terms.
(e) If (i) the Master Servicer shall have failed to give investment
directions for any funds on deposit in the Trust Accounts to the Trust
Collateral Agent, if any, or the Trustee, as the case may be, by 2:00 p.m.
Eastern Time (or such other time as may be agreed by the Issuer and Trust
Collateral Agent, if any, or the Trustee, as the case may be) on any Business
Day; or (ii) an Event of Default shall have occurred and be continuing with
respect to a Series of Notes, the Trust Collateral Agent, if any, or the
Trustee, as the case may be, shall, to the fullest extent practicable, invest
45
and reinvest funds in the Trust Accounts in one or more Eligible Investments in
accordance with paragraph (b) above, provided that, if following an Event of
Default amounts are to be distributed to Securityholders other than on a
Distribution Date, investments shall mature on the Business Day preceding any
such proposed date of distribution.
(f) The Trustee, or the Trust Collateral Agent, as the case may be, in its
respective capacities with respect to the various Series shall possess all
right, title and interest in all funds on deposit from time to time in the Trust
Accounts and in all proceeds thereof (excluding all Investment Earnings on the
Master Collection Account and the Series Collection Accounts) and all such
funds, investments, proceeds and income shall be part of the Owner Trust Estate.
Except as otherwise provided herein, the Trust Accounts shall be under the sole
dominion and control of the Trustee, or the Trust Collateral Agent, as the case
may be, for the benefit of the related Secured Parties. If, at any time, any of
the Trust Accounts ceases to be an Eligible Deposit Account, the Trustee, or the
Trust Collateral Agent, as the case may be, (or the Master Servicer on its
behalf) shall within five Business Days (or such longer period as to which each
Rating Agency may consent) establish a new Trust Account as an Eligible Deposit
Account and shall transfer any cash and/or any investments to such new Trust
Account. In connection with the foregoing, the Master Servicer agrees that, in
the event that any of the Trust Accounts are not accounts with the Trustee or
the Trust Collateral Agent, as the case may be, the Master Servicer shall notify
the Trustee or the Trust Collateral Agent, as the case may be, in writing
promptly upon any of such Trust Accounts ceasing to be an Eligible Deposit
Account. Pursuant to the authority granted to the Master Servicer under this
Agreement, the Master Servicer shall have the revocable power, granted by the
Trustee or the Trust Collateral Agent, as the case may be, to make withdrawals
and payments from the Master Collection Account and to instruct the Trustee or
the Trust Collateral Agent, as the case may be, to make withdrawals and payments
from the Master Collection Account for the purposes of carrying out the Master
Servicer's duties hereunder. The Master Servicer may net against any deposits
required to be made to the Master Collection Account on the Business Day before
any Determination Date amounts that the Seller, as Certificateholder or
otherwise, is entitled to receive as distributions directly or indirectly from
the Master Collection Account on such Determination Date.
Certain Reimbursements to the Master Servicer. The Master Servicer shall be
entitled to withhold from amounts otherwise required to be remitted to the
Master Collection Account with respect to a Collection Period an amount in
respect of funds deposited with respect to prior Collection Periods in the
Master Collection Account but later determined by the Master Servicer to have
resulted from mistaken deposits or postings or checks returned for
insufficient funds, provided, that, such withholding may be made only
following certification by the Master Servicer of such amounts and the
provision of such information to the Trustee or the Trust Collateral Agent,
as the case may be, as may be necessary in the opinion of the Trust
Collateral Agent, as the case may be, to verify the accuracy of such
certification.
46
Application of Collections. All collections for the Collection Period shall
be applied by the Master Servicer as follows:
With respect to each Simple Interest Receivable (other than a Repurchased
Receivable), payments by or on behalf of the Obligor, (other than Supplemental
Servicing Fees with respect to such Receivable, to the extent collected) shall
be applied to interest and principal in accordance with the Simple Interest
Method. With respect to each Actuarial Receivable, (other than a Repurchased
Receivable), payments by or on behalf of the Obligor, (other than Supplemental
Servicing Fees with respect to such Receivable, to the extent collected) shall
be applied to interest and principal in accordance with the Actuarial Method.
Additional Deposits. HAFC and the Seller, as applicable, shall deposit or
cause to be deposited in the Master Collection Account for distribution to
the appropriate Series Collection Account on the Business Day preceding the
Determination Date following the date on which such obligations are due the
aggregate Repurchase Amount with respect to Repurchased Receivables.
Distributions(a) . (a) On each Distribution Date, the Trustee, shall transfer
Collected Funds with respect to a Series Trust Estate in the respective
amounts set forth in the Master Servicer's Certificates with respect to each
Series from the Master Collection Account to the related Series Collection
Account for further application and distribution as set forth in the related
Series Supplement. On each Distribution Date, the Trustee shall also
distribute to the Certificate Paying Agent, amounts on deposit in the Master
Collection Account representing Collected Funds with respect to the Unpledged
Trust Estate for further application and distribution pursuant to Section
3.11 of the Trust Agreement.
(b) In the event that the Master Collection Account is maintained with an
institution other than the Trustee, the Master Servicer shall instruct and cause
such institution to make all deposits and distributions pursuant to Section
5.5(a) on the related Distribution Date.
ARTICLE VI
RESERVED
ARTICLE VII
47
RESERVED
ARTICLE VIII
The Seller
Representations of Seller. The Seller makes the following representations on
which each Series Support Provider shall be deemed to have relied in
providing the Series Support and on which the Issuer is deemed to have relied
in acquiring the Receivables and on which the Noteholders are deemed to have
relied on in the purchasing of Notes and any Additional Principal Amount in
connection with the Series Trust Estate. The representations speak as of the
execution and delivery of this Agreement and each Transfer Agreement and as
of each Transfer Date and each Series Closing Date and shall survive each
sale of the Receivables to the Issuer and each pledge thereof to the Trustee
or the Trust Collateral Agent, as the case may be, pursuant to the Indenture
and each Series Supplement.
(a) Schedule of Representations. The representations and warranties set
forth on the Schedule of Representations attached as Schedule B to the
related Transfer Agreement are true and correct.
(b) Organization and Good Standing. The Seller has been duly organized and
is validly existing as a corporation in good standing under the laws of the
State of Nevada, with power and authority to own its properties and to conduct
its business as such properties are currently owned and such business is
currently conducted, and had at all relevant times, and now has, power,
authority and legal right to acquire, own and sell each Series Trust Estate
transferred to the Trust.
(c) Due Qualification. The Seller is duly qualified to do business as a
foreign corporation in good standing and has obtained all necessary licenses and
approvals in all jurisdictions where the failure to do so would materially and
adversely affect Seller's ability to transfer the Receivables and the Other
Conveyed Property to the Trust pursuant to this Agreement, or the validity or
enforceability of the Series Trust Estate or to perform Seller's obligations
hereunder and under the Basic Documents to which the Seller is a party.
(d) Power and Authority. The Seller has the power and authority to
execute and deliver this Agreement and its Basic Documents and to carry out
its terms and their terms, respectively; the Seller has full power and
authority to sell and assign each Series Trust Estate to be sold and assigned
to and deposited with the Trust by it and has duly authorized such sale and
assignment to the Trust by all necessary corporate action; and the execution,
delivery and performance of this Agreement and the Basic Documents to which
the Seller is a party have been duly authorized by the Seller by all
48
necessary corporate action.
(e) Valid Sale, Binding Obligations. This Agreement and each related
Transfer Agreement effects a valid sale, transfer and assignment of the related
Series Trust Estate, enforceable against the Seller and creditors of and
purchasers from the Seller; and this Agreement and the Basic Documents to which
the Seller is a party, when duly executed and delivered, shall constitute legal,
valid and binding obligations of the Seller enforceable in accordance with their
respective terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting the enforcement of
creditors' rights generally and by equitable limitations on the availability of
specific remedies, regardless of whether such enforceability is considered in a
proceeding in equity or at law.
(f) No Violation. The consummation of the transactions contemplated by
this Agreement and the Basic Documents and the fulfillment of the terms of
this Agreement and the Basic Documents shall not conflict with, result in any
breach of any of the terms and provisions of or constitute (with or without
notice, lapse of time or both) a material default under the certificate of
incorporation or by-laws of the Seller, or any indenture, agreement,
mortgage, deed of trust or other instrument to which the Seller is a party or
by which it is bound, or result in the creation or imposition of any Lien
upon any of its properties pursuant to the terms of any such indenture,
agreement, mortgage, deed of trust or other instrument, other than this
Agreement, or violate any law, order, rule or regulation applicable to the
Seller of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Seller or any of its properties.
(g) No Proceedings. There are no proceedings or investigations pending
or, to the Seller's knowledge, threatened against the Seller, before any
court, regulatory body, administrative agency or other tribunal or
governmental instrumentality having jurisdiction over the Seller or its
properties (A) asserting the invalidity of this Agreement or any of the Basic
Documents, (B) seeking to prevent the issuance of any Securities or the
consummation of any of the transactions contemplated by this Agreement or any
of the Basic Documents, (C) seeking any determination or ruling that might
materially and adversely affect the performance by the Seller of its
obligations under, or the validity or enforceability of, this Agreement or
any of the Basic Documents, or (D) seeking to adversely affect the federal
income tax or other federal, state or local tax attributes of the Securities.
(h) Approvals. All approvals, authorizations, consents, orders or other
actions of any person, corporation or other organization, or of any court,
governmental agency or body or official, required in connection with the
execution and delivery by the Seller of this Agreement and the consummation of
the transactions contemplated hereby have been or will be taken or obtained on
or prior to the Closing Date and each Transfer Date.
49
(i) No Consents. The Seller is not required to obtain the consent of any
other party or any consent, license, approval or authorization, or registration
or declaration with, any governmental authority, bureau or agency in connection
with the execution, delivery, performance, validity or enforceability of this
Agreement which has not already been obtained.
(j) Chief Executive Office. The chief executive office of the Seller is at
0000 Xxxx Xxxxxx Xxxxx, Xxx Xxxxx, Xxxxxx 00000.
Corporate Existence(a) . (a) During the term of this Agreement, the Seller
will keep in full force and effect its existence, rights and franchises as a
corporation under the laws of the jurisdiction of its incorporation and will
obtain and preserve its qualification to do business in each jurisdiction in
which such qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, the Basic Documents and each other
instrument or agreement necessary or appropriate to the proper administration
of this Agreement and the transactions contemplated hereby.
(b) During the term of this Agreement, the Seller shall observe the
applicable legal requirements for the recognition of the Seller as a legal
entity separate and apart from its Affiliates, including as follows:
(i) the Seller shall not engage in any other business other
than as provided in Article THIRD of Seller's Articles of
Incorporation;
(ii) the Seller shall maintain corporate records and books of
account separate from those of its Affiliates;
(iii) except as otherwise provided in this Agreement, the Seller
shall not commingle its assets and funds with those of its Affiliates;
(iv) the Seller shall hold such appropriate meetings of its Board
of Directors as are necessary to authorize all the Seller's corporate
actions required by law to be authorized by the Board of Directors,
shall keep minutes of such meetings and of meetings of its
stockholder(s) and observe all other customary corporate formalities
(and any successor Seller not a corporation shall observe similar
procedures in accordance with its governing documents and applicable
law);
(v) the Seller shall at all times hold itself out to the public
under the Seller's own name as a legal entity separate and distinct
from its Affiliates;
(vi) the Seller shall not become involved in the day-to-day
management of any other Person;
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(vii) the Seller shall not guarantee any other Person's
obligations or advance funds to any other Person for the payment of
expenses or otherwise;
(viii) the Seller shall not act as an agent of any other Person
in any capacity;
(ix) the Seller shall not dissolve or liquidate, in whole or in
part; and
(x) all transactions and dealings between the Seller and its
Affiliates will be conducted on an arm's-length basis.
(c) During the term of this Agreement, the Seller will comply with the
limitations on its business and activities, as set forth in its Certificates
of Incorporation, and will not incur indebtedness other than pursuant to or
as expressly permitted by the Basic Documents or the Series Related Documents
with respect to each Series.
Liability of Seller; Indemnities. The Seller shall be liable in accordance
herewith only to the extent of the obligations specifically undertaken under
this Agreement by the Seller and the representations made by the Seller under
this Agreement.
(a) The Seller shall indemnify, defend and hold harmless the Issuer, the
Owner Trustee, the Trust, the Trustee and the Trust Collateral Agent, if any,
from and against any taxes that may at any time be asserted against any such
Person with respect to the transactions contemplated in this Agreement and
any of the Basic Documents (except any income taxes arising out of fees paid
to the Owner Trustee, the Trust Collateral Agent, the Trustee and each Series
Support Provider and except any taxes to which the Owner Trustee, the Trust
Collateral Agent or the Trustee may otherwise be subject to), including any
sales, gross receipts, general corporation, tangible personal property,
privilege or license taxes (but, in the case of the Issuer, not including any
taxes asserted with respect to, federal or other income taxes arising out of
distributions on the Certificates and the Notes) and costs and expenses in
defending against the same.
(b) The Seller shall indemnify, defend and hold harmless the Issuer, the
Owner Trustee, the Trustee and the Trust Collateral Agent, if any, against any
loss, liability or expense incurred by reason of (i) the Seller's willful
misfeasance, bad faith or negligence in the performance of its duties under this
Agreement, or by reason of reckless disregard of its obligations and duties
under this Agreement and (ii) the Seller's or the Issuer's violation of Federal
or state securities laws in connection with the offering and sale of the Notes.
(c) The Seller shall indemnify, defend and hold harmless the Owner
Trustee, Trustee and the Trust Collateral Agent, if any, and their respective
officers,
51
directors, employees and agents from and against any and all costs, expenses,
losses, claims, damages and liabilities arising out of, or incurred in
connection with, the acceptance or performance of the trusts and duties set
forth herein and in the Basic Documents, except to the extent that such cost,
expense, loss, claim, damage or liability shall be due to the willful
misfeasance, bad faith or negligence (except for errors in judgment) of the
Person seeking indemnification.
Indemnification under this Section shall survive the resignation or removal
of the Owner Trustee, the Trustee or the Trust Collateral Agent, if any, and the
termination of this Agreement or the Indenture or the Trust Agreement, as
applicable, and shall include reasonable fees and expenses of counsel and other
expenses of litigation. If the Seller shall have made any indemnity payments
pursuant to this Section and the Person to or on behalf of whom such payments
are made thereafter shall collect any of such amounts from others, such Person
shall promptly repay such amounts to the Seller, without interest.
Merger or Consolidation of, or Assumption of the Obligations of, Seller. Any
Person (a) into which the Seller may be merged or consolidated, (b) which may
result from any merger or consolidation to which the Seller shall be a party
or (c) which may succeed to the properties and assets of the Seller
substantially as a whole, which Person in any of the foregoing cases (x) has
a certificate of incorporation containing provisions relating to limitations
on business and other matters substantially identical to those contained in
the Seller's certificate of incorporation and (y) executes an agreement of
assumption to perform every obligation of the Seller under this Agreement,
the other Basic Documents and the applicable Series Related Documents shall
be the successor to the Seller hereunder without the execution or filing of
any document or any further act by any of the parties to this Agreement;
provided, however, that the Rating Agency Condition shall have been satisfied
with respect to such transaction.
Limitation on Liability of Seller and Others. (a) The Seller and any director
or officer or employee or agent of the Seller may rely in good faith on the
written advice of counsel or on any document of any kind, prima facie
properly executed and submitted by any Person respecting any matters arising
under any Basic Document. The Seller shall not be under any obligation to
appear in, prosecute or defend any legal action that shall not be incidental
to its obligations under this Agreement, and that in its opinion may involve
it in any expense or liability. Except as provided in Section 8.3 hereof,
neither the Seller nor any of the directors, officers, employees or agents of
the Seller acting in such capacities shall be under any liability to the
Trust, the Trust Collateral Agent, the Securityholders, any Series Support
Provider or any other Person for any action taken or for refraining from the
taking of any action in good faith in such capacities pursuant to this
Agreement; provided, however, that this provision shall not protect the
Seller or any such person against any liability which would
52
otherwise be imposed by reason of willful misfeasance, bad faith or negligence
in the performance of duties or by reason of reckless disregard of obligations
and duties hereunder.
(b) All obligations of the Seller under this Agreement (including, but not
limited to, repurchase and indemnification obligations) and under any of the
Basic Documents shall be limited in recourse to property, if any, which the
Seller may hold from time to time, not subject to any Lien.
Seller May Own Certificates or Notes. The Seller and any Affiliate thereof
may in its individual or any other capacity become the owner or pledgee of
Certificates or Notes with the same rights as it would have if it were not
the Seller or an Affiliate thereof, except as expressly provided herein or in
any Basic Document. Notes or Certificates so owned by the Seller or such
Affiliate shall have an equal and proportionate benefit under the provisions
of the Basic Documents, without preference, priority, or distinction as among
all of the Notes or Certificates; provided, however, that any Notes or
Certificates owned by the Seller or any Affiliate thereof, during the time
such Notes or Certificates are owned by them, shall be without voting rights
for any purpose set forth in the Basic Documents and any such Notes will not
be entitled to the benefits of any financial guaranty insurance policy. The
Seller shall notify the Owner Trustee, the Trustee, the Trust Collateral
Agent, if any, promptly after it or any of its Affiliates become the owner or
pledgee of a Certificate or a Note.
ARTICLE IX
The Master Servicer
Representations of Master Servicer. The Master Servicer makes the following
representations on which each Series Support Provider shall be deemed to have
relied in executing and delivering the Series Support and on which the Issuer
is deemed to have relied in acquiring the Receivables and on which the
Noteholders are deemed to have relied on in the purchasing of Notes and any
Additional Principal Amount in connection with the Series Trust Estate. The
representations speak as of the execution and delivery of this Agreement and
each Series Supplement, each Series Closing Date and as of each Transfer Date
and shall survive each sale of the Series Trust Estate to the Issuer and each
pledge thereof to the Trustee or the Trust Collateral Agent pursuant to the
Indenture.
(i) Organization and Good Standing. The Master Servicer has been
duly organized and is validly existing and in good standing under the
laws of its jurisdiction of organization, with power, authority and
legal right to own its properties and to conduct its business as such
properties are currently owned and such business is currently
conducted, and had at all relevant times, and now has, power,
authority and
53
legal right to enter into and perform its obligations under this
Agreement and the other Basic Documents to which it is a party;
(ii) Due Qualification. The Master Servicer is duly qualified to
do business as a foreign corporation in good standing and has obtained
all necessary licenses and approvals, in all jurisdictions in which
the ownership or lease of property or the conduct of its business
(including the servicing of the Receivables as required by this
Agreement) requires or shall require such qualification; except where
the failure to qualify or obtain licenses or approvals would not have
a material adverse effect on its ability to perform its obligations as
Master Servicer under this Agreement and the other Basic Documents to
which it is a party;
(iii) Power and Authority. The Master Servicer has the power and
authority to execute and deliver this Agreement and its Basic
Documents and to carry out its terms and their terms, respectively,
and the execution, delivery and performance of this Agreement and the
Basic Documents to which the Master Servicer is a party have been duly
authorized by the Master Servicer by all necessary corporate action;
(iv) Binding Obligation. This Agreement and the Basic Documents
to which the Master Servicer is a party shall constitute legal, valid
and binding obligations of the Master Servicer enforceable in
accordance with their respective terms, except as enforceability may
be limited by bankruptcy, insolvency, reorganization, or other similar
laws affecting the enforcement of creditors' rights generally and by
equitable limitations on the availability of specific remedies,
regardless of whether such enforceability is considered in a
proceeding in equity or at law;
(v) No Violation. The consummation of the transactions
contemplated by this Agreement and the Basic Documents to which the
Master Servicer is a party, and the fulfillment of the terms of this
Agreement and the Basic Documents to which the Master Servicer is a
party, shall not conflict with, result in any breach of any of the
terms and provisions of, or constitute (with or without notice or
lapse of time) a material default under, the articles of incorporation
or bylaws of the Master Servicer, or any indenture, agreement,
mortgage, deed of trust or other instrument to which the Master
Servicer is a party or by which it is bound, or result in the creation
or imposition of any Lien upon any of its properties pursuant to the
terms of any such indenture, agreement, mortgage, deed of trust or
other instrument, other than this Agreement, or violate any law,
order, rule or regulation applicable to the Master Servicer of any
court or of any federal or state regulatory body, administrative
agency or other governmental instrumentality having jurisdiction over
the Master Servicer or any of its properties, or any way materially
adversely affect the interest of the Noteholders or the Trust in any
Receivable or affect the Master Servicer's ability
54
to perform its obligations under this Agreement;
(vi) No Proceedings. There are no proceedings or investigations
pending or, to the Master Servicer's knowledge, threatened against the
Master Servicer, before any court, regulatory body, administrative
agency or other tribunal or governmental instrumentality having
jurisdiction over the Master Servicer or its properties (A) asserting
the invalidity of this Agreement or any of the Basic Documents,
(B) seeking to prevent the issuance of the Securities or the
consummation of any of the transactions contemplated by this Agreement
or any of the Basic Documents, or (C) seeking any determination or
ruling that might materially and adversely affect the performance by
the Master Servicer of its obligations under, or the validity or
enforceability of, this Agreement or any of the Basic Documents or
(D) seeking to adversely affect the federal income tax or other
federal, state or local tax attributes of the Securities;
(vii) Approvals. All approvals, authorizations, consents, orders
or other actions of any person, corporation or other organization, or
of any court, governmental agency or body or official, required in
connection with the execution and delivery by the Master Servicer of
this Agreement and the consummation of the transactions contemplated
hereby have been or will be taken or obtained on or prior to the
Closing Date.
(viii) No Consents. The Master Servicer is not required to obtain
the consent of any other party or any consent, license, approval or
authorization, or registration or declaration with, any governmental
authority, bureau or agency in connection with the execution,
delivery, performance, validity or enforceability of this Agreement
which has not already been obtained.
(ix) Chief Executive Office. The chief executive office of the
Master Servicer is located at 0000 Xxxxxxx Xxxx, Xxxxxxxx Xxxxxxx,
Xxxxxxxx 00000.
Liability of Master Servicer; Indemnities(a) . (a) The Master Servicer (in
its capacity as such) shall be liable hereunder only to the extent of the
obligations in this Agreement specifically undertaken by the Master Servicer
and the representations made by the Master Servicer.
(b) The Master Servicer shall defend, indemnify and hold harmless the
Trust, the Trustee, the Trust Collateral Agent, if any, the Owner Trustee and
their respective officers, directors, agents and employees, from and against any
and all costs, expenses, losses, damages, claims and liabilities, including
reasonable fees and expenses of counsel and expenses of litigation arising out
of or resulting from the use, ownership or operation of, or lien on, any
Financed Vehicle;
(c) The Master Servicer (when the Master Servicer is Household or an
55
Affiliate of Household) shall indemnify, defend and hold harmless the Trust, the
Trustee, the Trust Collateral Agent, if any, the Owner Trustee and their
respective officers, directors, agents and employees and from and against any
taxes that may at any time be asserted against any of such parties with respect
to the transactions contemplated in this Agreement, including, without
limitation, any sales, gross receipts, tangible or intangible personal property,
privilege or license taxes (but not including any federal or other income taxes,
including franchise taxes asserted with respect to, and as of the date of, the
sale of the Receivables and the Other Conveyed Property to the Trust or the
issuance and original sale of any Series of the Notes) and costs and expenses in
defending against the same, except to the extent that such costs, expenses,
losses, damages, claims and liabilities arise out of the negligence or willful
misconduct of such parties;
The Master Servicer (when the Master Servicer is not Household) shall
indemnify, defend and hold harmless the Trust, the Trustee, the Trust Collateral
Agent, if any, the Owner Trustee and their respective officers, directors,
agents and employees from and against any taxes with respect to the sale of
Receivables in connection with servicing hereunder that may at any time be
asserted against any of such parties with respect to the transactions
contemplated in this Agreement, including, without limitation, any sales, gross
receipts, tangible or intangible personal property, privilege or license taxes
(but not including any federal or other income taxes, including franchise taxes
asserted with respect to, and as of the date of, the sale of the Series Trust
Estate to the Trust or the issuance and original sale of the Securities) and
costs and expenses in defending against the same; and
(d) The Master Servicer shall indemnify, defend and hold harmless the
Trust, the Trustee, the Trust Collateral Agent, if any, the Owner Trustee,
each Series Support Provider and their respective officers, directors, agents
and employees from and against any and all costs, expenses, losses, claims,
damages, and liabilities to the extent that such cost, expense, loss, claim,
damage, or liability arose out of, or was imposed upon the Trust, the Trustee
or the Trust Collateral Agent, if any, by reason of the breach of this
Agreement by the Master Servicer, the negligence, misfeasance, or bad faith
of the Master Servicer in the performance of its duties under this Agreement
or any Series Supplement or by reason of reckless disregard of its
obligations and duties under this Agreement or any Series Supplement, except
to the extent that such costs, expenses, losses, damages, claims, and
liabilities arise out of the negligence or willful misconduct of the Person
seeking indemnification.
(e) The Master Servicer shall indemnify, defend and hold harmless the
Trust, the Trustee, the Trust Collateral Agent, if any, the Owner Trustee and
their respective officers, directors, agents and employees from and against any
loss, liability or expense incurred by reason of the violation by Master
Servicer of federal or state securities laws in connection with the registration
or the sale of the Securities, except to the extent that such costs, expenses,
losses, damages, claims, and liabilities arise out of the negligence or willful
misconduct of such parties.
56
(f) Indemnification under this Article shall survive the termination of
this Agreement and will survive the early resignation or removal of any of the
parties hereto and shall include, without limitation, reasonable fees and
expenses of counsel and expenses of litigation. If the Master Servicer has made
any indemnity payments pursuant to this Article and the recipient thereafter
collects any of such amounts from others, the recipient shall promptly repay
such amounts collected to the Master Servicer, without interest. Notwithstanding
any other provision of this Agreement, the obligations of the Master Servicer
shall not terminate or be deemed released upon the resignation or termination of
Household as the Master Servicer and shall survive any termination of this
Agreement.
Merger or Consolidation of, or Assumption of the Obligations of the Master
Servicer or the Trust Collateral Agent(a) . (a) Any Person (i) into which the
Master Servicer may be merged or consolidated, (ii) resulting from any merger
or consolidation to which the Master Servicer shall be a party, (iii) which
acquires by conveyance, transfer, or lease substantially all of the assets of
the Master Servicer, or (iv) succeeding to the business of the Master
Servicer, in any of the foregoing cases shall execute an agreement of
assumption to perform every obligation of the Master Servicer under this
Agreement and each Basic Document and Series Related Document and, whether or
not such assumption agreement is executed, shall be the successor to the
Master Servicer under this Agreement and each Basic Document and Series
Related Document without the execution or filing of any paper or any further
act on the part of any of the parties to this Agreement and each Series
Supplement, anything in this Agreement and each Series Supplement to the
contrary notwithstanding. Notwithstanding the foregoing, the Master Servicer
shall not merge or consolidate with any other Person or permit any other
Person to become a successor to the Master Servicer's business, unless (x)
the Master Servicer shall have delivered to the Owner Trustee, the Trust
Collateral Agent, if any, the Rating Agencies and the Trustee an Officer's
Certificate and an Opinion of Counsel each stating that such consolidation,
merger or succession and such agreement of assumption comply with this
Section 9.3(a) and that all conditions precedent, if any, provided for in
this Agreement relating to such transaction have been complied with, and (y)
the Rating Agency Condition shall have been satisfied with respect to such
assignment or succession.
(b) Any Person (i) into which the Trust Collateral Agent, if any, may be
merged or consolidated, (ii) resulting from any merger or consolidation to
which the Trust Collateral Agent shall be a party, (iii) which acquires by
conveyance, transfer or lease substantially all of the assets of the Trust
Collateral Agent, or (iv) succeeding to the business of the Trust Collateral
Agent, in any of the foregoing cases shall execute an agreement of assumption
to perform every obligation of the Trust Collateral Agent under this
Agreement and each Series Supplement and, whether or not such assumption
agreement is executed, shall be the successor to the Trust Collateral Agent
under this Agreement and each Series
57
Supplement without the execution or filing of any paper or any further act on
the part of any of the parties to this Agreement and each Series Supplement,
anything in this Agreement and each Series Supplement to the contrary
notwithstanding. In the event that the resulting entity does not meet the
eligibility requirements set forth in Section 6.11 of the Indenture, the Trust
Collateral Agent shall resign. Upon such resignation, the Seller shall appoint a
successor thereto, provided, that, if no successor shall have been so appointed
and have accepted within 30 days, the resigning Trust Collateral Agent may
petition a court of competent jurisdiction for the appointment of a successor
Trust Collateral Agent; provided, further, that in no event shall the
resignation of the Trust Collateral Agent be effective unless a successor
thereto shall have assumed the duties of Trust Collateral Agent hereunder .
Nothing contained herein shall be deemed to release the Trust Collateral Agent
from any obligation.
Limitation on Liability of Master Servicer, Trust Collateral Agent and
Others(a) . (a) Neither the Master Servicer, the Trust Collateral Agent, the
Trustee nor any of the directors or officers or employees or agents of the
Master Servicer, the Trustee or the Trust Collateral Agent shall be under any
liability to the Trust or the Series Secured Parties, except as provided in
this Agreement and each Basic Document or Series Related Document, for any
action taken or for refraining from the taking of any action pursuant to this
Agreement and each Basic Document or Series Related Document; provided,
however, that this provision shall not protect the Master Servicer, the
Trustee, the Trust Collateral Agent or any such person against any liability
that would otherwise be imposed by reason of willful misfeasance, bad faith
or negligence (excluding errors in judgment) in the performance of duties
(including negligence with respect to the Master Servicer's indemnification
obligations hereunder), by reason of reckless disregard of obligations and
duties under this Agreement and each Basic Document or Series Related
Document or any violation of law by the Master Servicer, the Trustee, the
Trust Collateral Agent or such person, as the case may be; provided, further,
that this provision shall not affect any liability to indemnify the Trust
Collateral Agent, the Trustee and the Owner Trustee for costs, taxes,
expenses, claims, liabilities, losses or damages paid by the Trust Collateral
Agent, the Trustee and the Owner Trustee, in their individual capacities. The
Master Servicer, the Trust Collateral Agent, the Trustee and any director,
officer, employee or agent of the Master Servicer or Trust Collateral Agent
may rely in good faith on the written advice of counsel or on any document of
any kind prima facie properly executed and submitted by any Person respecting
any matters arising under this Agreement. The Trust Collateral Agent shall
not be required to expend or risk its own funds or otherwise incur financial
liability in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if the repayment of such funds or
adequate written indemnity against such risk or liability is not reasonably
assured to it in writing prior to the expenditure of risk of such funds or
incurrence of financial liability.
(b) Notwithstanding anything herein to the contrary, the Trust Collateral
Agent and the Trustee shall not be liable for any obligation of the Master
Servicer contained in this Agreement and each Basic Document and Series Related
Document, and the Trust Collateral Agent and the Owner Trustee, the Seller, any
Series
58
Secured Party and the Noteholders shall look only to the Master Servicer
to perform such obligations.
(c) The parties expressly acknowledge and consent to Norwest Bank
Minnesota, National Association acting in the potential dual capacity of
successor Master Servicer and in the capacity as Trust Collateral Agent
and/or Trustee. Norwest Bank Minnesota, National Association may, in such
dual or other capacity, discharge its separate functions fully, without
hindrance or regard to conflict of interest principles, duty of loyalty
principles or other breach of fiduciary duties to the extent that any such
conflict or breach arises from the performance by Norwest Bank Minnesota,
National Association of express duties set forth in this Agreement in any of
such capacities, all of which defenses, claims or assertions are hereby
expressly waived by the other parties hereto and the Noteholders except in
the case of negligence and willful misconduct by Norwest Bank Minnesota,
National Association.
Delegation of Duties. In the ordinary course of business, the Master Servicer
at any time may delegate any of its duties hereunder to any Person, including
any of its Affiliates, who agrees to conduct such duties in accordance with
standards employed by the Master Servicer in compliance with Section 4.1.
Such delegation shall not relieve the Master Servicer of its liabilities and
responsibilities with respect to such duties and shall not constitute a
resignation within the meaning of Section 9.6. The Master Servicer shall
provide each Rating Agency, the Series Secured Parties, the Trustee and the
Trust Collateral Agent, if any, with written notice prior to the delegation
of any of its duties to any Person other than any of the Master Servicer's
Affiliates or their respective successors and assigns.
Master Servicer Not to Resign. Subject to the provisions of Section 9.3, the
Master Servicer shall not resign from the obligations and duties hereby
imposed on it except (i) upon determination that the performance of its
obligations or duties hereunder are no longer permissible under applicable
law or are in material conflict by reason of applicable law with any other
activities carried on by it or its subsidiaries or Affiliates, the other
activities of the Master Servicer so causing such a conflict being of a type
and nature carried on by the Master Servicer or its subsidiaries or
Affiliates at the date of this Agreement or (ii) upon satisfaction of the
following conditions: (a) the Master Servicer has proposed a successor
servicer to the Trustee in writing and such proposed successor servicer is
reasonably acceptable to the Trustee; (b) the Rating Agency shall have
delivered a letter to the Trustee stating that the appointment of such
proposed successor servicer as Master Servicer hereunder will satisfy the
Rating Agency Condition; and (c) such proposed successor servicer has agreed
in writing to assume the obligations of Master Servicer hereunder and under
each relevant Basic Document and Series Related Document and (d) the Master
Servicer has delivered to the Trustee an Opinion of Counsel to the effect
that all conditions precedent to the resignation of the Master Servicer and
the appointment of
59
and acceptance by the proposed successor servicer have been satisfied; provided,
however, that, in the case of clause (i) above, no such resignation by the
Master Servicer shall become effective until the Trustee shall have assumed the
Master Servicer's responsibilities and obligations hereunder or the Trustee
shall have designated a successor servicer in accordance with Section 10.3 which
shall have assumed such responsibilities and obligations. Any such resignation
shall not relieve the Master Servicer of responsibility for any of the
obligations specified in Sections 10.1 and 10.3 as obligations that survive the
resignation or termination of the Master Servicer. Any such determination
permitting the resignation of the Master Servicer pursuant to clause (i) above
shall be evidenced by an Opinion of Counsel to such effect delivered to the
Trustee and any Series Secured Parties.
Sub-Servicing Agreements Between Master Servicer and Sub-Servicers. The
Master Servicer may enter into agreements for any subservicing and
administration of Receivables with any institution which is an Eligible
Subservicer and is in compliance with the laws of each state necessary to
enable it to perform the obligations of the Master Servicer pursuant to this
Agreement. For purposes of this Agreement and each Basic Document and Series
Related Document, the Master Servicer shall be deemed to have received
payments on Receivables when any Sub-Servicer has received such payments. Any
such agreement shall be consistent with and not violate the provisions of
this Agreement. The Master Servicer shall not be relieved of its obligations
under this Agreement and each Basic Document and Series Related Document
notwithstanding any agreement relating to subservicing and the Master
Servicer shall be obligated to the same extent and under the same terms and
conditions as if it alone were servicing and administering the Receivables.
The Issuer shall have no liability to the Master Servicer except for payment
of the Base Servicing Fee and any Supplemental Services Fee. The Issuer shall
have no obligation to indemnify the Master Servicer for costs or expenses,
except with respect to the preceding sentence. The parties hereto acknowledge
that with respect to statements or certificates required to be delivered by
the Master Servicer in accordance with this Agreement and each Series
Supplement, including, but not limited to, Sections 4.9, 4.10 and 4.11
hereof, that a statement or certificate delivered by the Sub-Servicer shall
be sufficient to discharge the Master Servicer's obligation to deliver such
certificate or statement.
Successor Sub-Servicers. The Master Servicer may terminate any Sub-Servicer
and either directly service the related Receivables itself or enter into an
agreement with a successor Sub-Servicer that is an Eligible Sub-Servicer.
None of the Owner Trustee, the Trustee or the Trust Collateral Agent, if any,
shall have no duty or obligation to monitor or supervise the performance of
any Sub-Servicer.
ARTICLE X
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Default
Master Servicer Termination Event. For purposes of this Agreement, each of
the following shall constitute a "Master Servicer Termination Event", but
shall only constitute a Master Servicer Termination Event with respect to the
Series and the related Series Trust Estates with respect to which such event
arose:
(a) Any failure by the Master Servicer to deliver, or cause to be
delivered, to the Trust Collateral Agent or Trustee, as applicable for
distribution pursuant to the terms of this Agreement any proceeds or payment
required to be so delivered under the terms of this Agreement (including
deposits of the Repurchase Amount pursuant to Section 3.2 and Section 4.7) that
continues unremedied for a period of five Business Days after written notice is
received by the Master Servicer from the Trust Collateral Agent or Trustee, as
applicable, or after discovery of such failure by a responsible Officer of the
Master Servicer (but in no event later than five Business Days after the Master
Servicer is required to make such delivery or deposit);
(b) Failure on the part of the Master Servicer duly to observe or
perform any other covenants or agreements of the Master Servicer set forth in
this Agreement and each Basic Document or Series Related Document, which
failure (i) materially and adversely affects the rights of Noteholders of a
Series (determined without regard to the availability of funds under any
Series Support) and (ii) continues unremedied for a period of 60 days after
the date on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Master Servicer by the Trust
Collateral Agent or the Trustee;
(c) The entry of a decree or order for relief by a court or regulatory
authority having jurisdiction in respect of the Master Servicer in an
involuntary case under the federal bankruptcy laws, as now or hereafter in
effect, or another present or future, federal bankruptcy, insolvency or similar
law, or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Master Servicer or of any
substantial part of its property or ordering the winding up or liquidation of
the affairs of the Master Servicer or the commencement of an involuntary case
under the federal bankruptcy laws, as now or hereinafter in effect, or another
present or future federal or state bankruptcy, insolvency or similar law and
such case is not dismissed within 60 days; or
(d) The commencement by the Master Servicer of a voluntary case under
the federal bankruptcy laws, as now or hereafter in effect, or any other
present or future, federal or state, bankruptcy, insolvency or similar law,
or the consent by the Master Servicer to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Master Servicer or of any
substantial part of its property or the making by the Master Servicer of an
assignment for
61
the benefit of creditors or the failure by the Master Servicer generally to pay
its debts as such debts become due or the taking of corporate action by the
Master Servicer in furtherance of any of the foregoing; or
(e) Any representation, warranty or certification of the Master Servicer
made in this Agreement or any Series Supplement or any certificate, report or
other writing delivered pursuant hereto or thereto shall prove to be incorrect
in any material respect as of the time when the same shall have been made, and
the incorrectness of such representation, warranty or statement has a material
adverse effect on the interests of the Trust, or the Series Secured Parties in
the related Series Trust Estate and, within 60 days after written notice thereof
shall have been given to the Master Servicer by the Trust Collateral Agent or
the Trustee, as the case may be, the circumstances or condition in respect of
which such representation, warranty or statement was incorrect shall not have
been eliminated or otherwise cured; or
(f) Notwithstanding the foregoing, a delay in or failure of performance
under Section 10.1(a) for a period of five Business Days or under Section
10.1(b) for a period of 60 days, shall not constitute a Master Servicer
Termination Event if such delay or failure could not be prevented by the
exercise of reasonable diligence by the Master Servicer and such delay or
failure was caused by an act of God, acts of declared or undeclared war, public
disorder, rebellion or sabotage, epidemics, landslides, lightning, fire,
hurricanes, earthquakes, floods or similar causes. The preceding sentence shall
not relieve the Master Servicer from using its best efforts to perform its
obligations in a timely manner in accordance with the terms of this Agreement,
and the Master Servicer shall provide the Trust Collateral Agent, or the
Trustee, as the case may be, the Seller and any Series Secured Parties 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.
Consequences of a Master Servicer Termination Event. If a Master Servicer
Termination Event shall occur and be continuing, the Trust Collateral Agent
or the Trustee, as the case may be, (to the extent a Trust Officer of the
Trust Collateral Agent or the Trustee, as the case may be, has actual
knowledge thereof) at the direction of the Trustee, by notice given in
writing to the Master Servicer (and to the Trust Collateral Agent if given by
the Trustee) may terminate all of the rights and obligations of the Master
Servicer under this Agreement and the other Basic Documents as they relate to
a Series and a Series Trust Estate out of which such Servicer Termination
Event arose. On or after the receipt by the Master Servicer of such written
notice, all authority, power, obligations and responsibilities of the Master
Servicer under this Agreement, whether with respect to the Notes or the Other
Conveyed Property or otherwise, automatically shall pass to, be vested in,
and become obligations and responsibilities, of the Trustee (or such other
successor Master Servicer appointed by Trustee pursuant to Section 10.3);
provided, however, that the successor Master Servicer shall (i) have no
liability with respect to any obligation which was required to be
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performed by the terminated Master Servicer prior to the date that the successor
Master Servicer becomes the Master Servicer or any claim of a third party based
on any alleged action or inaction of the terminated Master Servicer and (ii) no
obligation to perform any repurchase or advancing obligations, if any, of the
terminated Master Servicer.
The successor Master Servicer is authorized and empowered by this Agreement
to execute and deliver, on behalf of the terminated Master Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments and
to do or accomplish all other acts or things necessary or appropriate to effect
the purposes of such notice of termination, whether to complete the transfer and
endorsement of the Series Trust Estate and related documents to show the Trust
as lienholder or secured party on the related Lien Certificates, or otherwise.
The terminated Master Servicer agrees to cooperate with the successor Master
Servicer in effecting the termination of the responsibilities and rights of the
terminated Master Servicer under this Agreement as they relate to the Series
Trust Estate with respect to which such termination has been effected ,
including, without limitation, the transfer to the successor Master Servicer for
administration by it of all cash amounts that shall at the time be held by the
terminated Master Servicer for deposit, or have been deposited by the terminated
Master Servicer, in the Master Collection Account or thereafter received with
respect to the Receivables in the subject Series Trust Estate and the delivery
to the successor Master Servicer of all Receivable Files, Monthly Records and
Collection Records and a computer tape in readable form as of the most recent
Business Day containing all information necessary to enable the successor Master
Servicer to service such Series Trust Estate. If requested by the Trustee, the
successor Master Servicer shall direct the Obligors to make all payments under
the Receivables directly to the successor Master Servicer (in which event the
successor Master Servicer shall process such payments in accordance with Section
4.2(d)). The terminated Master Servicer shall grant the Trust Collateral Agent,
the Trustee and the successor Master Servicer reasonable access to the
terminated Master Servicer's premises at the terminated Master Servicer's
expense.
Appointment of Successor(a). (a) On and after the time the Master Servicer
receives a notice of termination pursuant to Section 10.2 or upon the
resignation of the Master Servicer pursuant to Section 9.6, the Master
Servicer shall continue to perform all servicing functions under this
Agreement until the date specified in such termination notice or until such
resignation becomes effective or until a date mutually agreed upon by the
Master Servicer and the Trustee. The Trustee shall as promptly as possible
after such termination or resignation appoint an Eligible Servicer as a
successor servicer (the "Successor Master Servicer"), and such Successor
Master Servicer shall accept its appointment by a written assumption in a
form acceptable to the Trustee. In the event that a Successor Master Servicer
has not been appointed or has not accepted its appointment at the time when
the Master Servicer ceases to act as Master Servicer, the Trustee without
further action shall automatically be appointed the Master Successor
Servicer. The Trustee may delegate any of its servicing obligations to an
Affiliate or
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agent in accordance with Section 9.6. Notwithstanding the foregoing, the Trustee
shall, if it is legally unable so to act, petition a court of competent
jurisdiction to appoint any established institution qualifying as an Eligible
Servicer as the Successor Master Servicer hereunder. The Trustee shall give
prompt notice to each Rating Agency upon the appointment of a Successor Master
Servicer. The Trustee or the Successor Master Servicer, as the case may be,
shall be the successor in all respects to the Master Servicer in its capacity as
servicer under this Agreement and the transactions set forth or provided for in
this Agreement, and shall be subject to all the rights, responsibilities,
restrictions, duties, liabilities and termination provisions relating thereto
placed on the Master Servicer by the terms and provisions of this Agreement,
except as otherwise stated herein. The Trustee or the Successor Master Servicer,
as the case may be, shall take such action, consistent with this Agreement, as
shall be necessary to effectuate any such succession. The Successor Master
Servicer shall be subject to termination under Section 10.2 upon the occurrence
of any Master Servicer Termination Event applicable to it as Master Servicer.
(b) Subject to Section 9.6, no provision of this Agreement shall be
construed as relieving the Trustee of its obligation to succeed as successor
Master Servicer upon the termination of the Master Servicer pursuant to Section
10.2 or the resignation of the Master Servicer pursuant to Section 9.6.
(c) Any successor Master Servicer shall be entitled to such compensation
(whether payable out of the Master Collection Account or otherwise) equal to the
greater of (a) the compensation the Master Servicer would have been entitled to
under this Agreement if the Master Servicer had not resigned or been terminated
hereunder and (b) compensation calculated with a Servicing Fee Rate equal to the
then-current "market rate" fee for servicing assets comparable to the
Receivables, which rate shall be determined by averaging three fee bids obtained
by the Trustee from third party servicers selected by the Trustee. In addition,
any successor Master Servicer shall be entitled to reasonable transition
expenses incurred in acting as successor Master Servicer payable by the outgoing
Master Servicer, and to the extent such transition expenses have not been paid
by the outgoing Master Servicer, such successor Master Servicer shall be
entitled to reimbursement for such reasonable expenses pursuant to the related
Series Supplement.
Notification to Noteholders and Certificateholders. Upon any termination of,
or appointment of a successor to, the Master Servicer, the Trust Collateral
Agent or Trustee, as the case may be, shall give prompt written notice
thereof to each Noteholder.
Waiver of Past Defaults. A majority of the Noteholders may, on behalf of all
Securityholders, waive any default by the Seller or the Master Servicer in
the performance of their obligations hereunder and its consequences, except
the failure to make any distributions required to be made to
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Noteholders or to make any required deposits of any amounts to be so
distributed. Upon any such waiver of a past default, such default shall cease to
exist, and any default arising therefrom shall be deemed to have been remedied
for every purpose of this Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereon except to the
extent expressly so waived.
Successor to Master Servicer(a). (a) The Trustee, in its capacity as
successor to the Master Servicer, shall perform such duties and only such
duties as are specifically set forth in this Agreement and each Basic
Document and Series Related Document with respect to the assumption of any
servicing duties and no implied covenants or obligations shall be read into
this Agreement against the Trustee.
(b) In the absence of bad faith or negligence on its part, the Trustee may
conclusively rely as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Agreement and each Series
Supplement; but in the case of any such certificates or opinions, which by any
provision hereof are specifically required to be furnished to the Trustee , the
Trustee shall be under a duty to examine the same and to determine whether or
not they conform to the requirements of this Agreement and each Series
Supplement.
(c) The Trustee shall have no liability for any actions taken or omitted by
the terminated Master Servicer.
ARTICLE XI
Termination
Optional Purchase of All Receivables(a). (a) To the extent and under the
circumstances provided in a Series Supplement, the Master Servicer and the
Seller each shall have the option to purchase the related Series Trust
Estate, other than the Trust Accounts; provided, however, that the amount to
be paid for such purchase shall be sufficient to pay the full amount of
principal, premium, if any, and interest then due and payable on the Notes of
such Series and all other amounts due to the Series Secured Parties, the
Trustee, Trust Collateral Agent, if any, and Owner Trustee under the related
Series Supplement and Note Purchase Agreement. To exercise such option, the
Master Servicer or the Seller, as the case may be, shall deposit pursuant to
Section 5.3 in the Master Collection Account an amount equal to the aggregate
Repurchase Amount for the related Receivables, plus the appraised value of
any other property constituting such Series Trust Estate, such value to be
determined by an appraiser mutually agreed upon by the Master Servicer and
the Trust, and shall succeed to all interests in and to the related Series
Trust Estate.
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(b) Upon any sale of the assets of the Trust pursuant to Section 9.1 of the
Trust Agreement, the Master Servicer shall instruct the Trustee or Trust
Collateral Agent, as the case may be, to deposit the proceeds from such sale
after all payments and reserves therefrom (including the expenses of such sale)
have been made (the "Insolvency Proceeds") in the Master Collection Account.
(c) Notice of any termination of the Trust shall be given by the Master
Servicer to the Owner Trustee, the Trustee, the Trust Collateral Agent, each
Series Secured Party (and the Rating Agencies as soon as practicable after the
Master Servicer has received notice thereof.
(d) Following the satisfaction and discharge of the Indenture, the payment
in full of the principal of and interest on the Notes, the payment of all
amounts due to each Series Secured Party, the termination of any Series Support
(as provided therein) and the surrender of any Series Support to the Series
Support Provider, the Certificateholders will succeed to the rights of the
Noteholders hereunder and the Owner Trustee will succeed to the rights of, and
assume the obligations of, the Trustee or the Trust Collateral Agent, as the
case may be, pursuant to this Agreement.
ARTICLE XII
Administrative Duties of the Master Servicer
SECTION XII.1. Administrative Duties.
(a) Duties with Respect to the Indenture. The Master Servicer shall
perform all its duties and the duties of the Issuer under the Indenture. In
addition, the Master Servicer shall consult with the Owner Trustee as the
Master Servicer deems appropriate regarding the duties of the Issuer under
the Indenture. The Master Servicer shall monitor the performance of the
Issuer and shall advise the Owner Trustee when action is necessary to comply
with the Issuer's duties under the Indenture. The Master Servicer shall
prepare for execution by the Issuer or shall cause the preparation by other
appropriate Persons of all such documents, reports, filings, instruments,
certificates and opinions as it shall be the duty of the Issuer to prepare,
file or deliver pursuant to the Indenture. In furtherance of the foregoing,
the Master Servicer shall take all necessary action that is the duty of the
Issuer to take pursuant to the Indenture, including, without limitation,
pursuant to Sections 2.7, 3.5, 3.6, 3.7, 3.9, 3.10, 3.17, 5.1, 5.4, 7.3, 8.3,
9.2, 9.3, 11.1 and 11.15 of the Indenture.
(b) Duties with Respect to the Issuer.
(i) In addition to the duties of the Master Servicer set forth
in this Agreement or any of the Basic Documents, the Master Servicer
shall perform such calculations and shall prepare for execution by
the Issuer or the Owner Trustee or shall cause the preparation by
other appropriate Persons of all such documents, reports, filings,
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instruments, certificates and opinions as it shall be the duty of
the Issuer or the Owner Trustee to prepare, file or deliver pursuant
to this Agreement or any of the Basic Documents or under state and
federal tax and securities laws, and at the request of the Owner
Trustee shall take all appropriate action that it is the duty of the
Issuer to take pursuant to this Agreement or any of the Basic
Documents, including, without limitation, pursuant to Sections 2.6
and 2.11 of the Trust Agreement. In accordance with the directions
of the Issuer or the Owner Trustee, the Master Servicer shall
administer, perform or supervise the performance of such other
activities in connection with the Trust Estate (including the
Basic Documents) as are not covered by any of the foregoing provisions
and as are expressly requested by the Issuer or the Owner Trustee and
are reasonably within the capability of the Master Servicer.
(ii) Notwithstanding anything in this Agreement or any of the
Basic Documents to the contrary, the Master Servicer shall be
responsible for promptly notifying the Owner Trustee and the Trust
Collateral Agent in the event that any withholding tax is imposed on
the Issuer's payments (or allocations of income) to an Owner (as
defined in the Trust Agreement) as contemplated by this Agreement. Any
such notice shall be in writing and specify the amount of any
withholding tax required to be withheld by the Owner Trustee or the
Trust Collateral Agent pursuant to such provision.
(iii) Notwithstanding anything in this Agreement or the Basic
Documents to the contrary, the Master Servicer shall be responsible
for performance of the duties of the Issuer or the Seller set forth in
Section 5.1(a), (b), (c) and (d) of the Trust Agreement with respect
to, among other things, accounting and reports to Owners (as defined
in the Trust Agreement); provided, however, that once prepared by the
Master Servicer, the Depositor shall retain responsibility under
Section 5.1(g) of the Trust Agreement for the distribution of the
Schedule K-1s necessary to enable each Certificateholder to prepare
its federal and state income tax returns.
(iv) The Master Servicer shall perform the duties of the
Depositor specified in Section 10.2 of the Trust Agreement required to
be performed in connection with the resignation or removal of the
Owner Trustee, and any other duties expressly required to be performed
by the Master Servicer under this Agreement or any of the Basic
Documents.
(v) The Master Servicer, on behalf of the Seller, shall direct
the Issuer to request the tender of all or a portion of the Notes of
any Series in accordance with the Indenture or any Series Supplement.
(vi) In carrying out the foregoing duties or any of its other
obligations under this Agreement, the Master Servicer may enter into
transactions with or otherwise deal with any of its Affiliates;
provided, however, that the terms of any such transactions or dealings
shall be in accordance with any
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directions received from the Issuer and shall be, in the Master
Servicer's opinion, no less favorable to the Issuer in any material
respect.
(c) Tax Matters. The Master Servicer shall prepare and file, on behalf
of the Seller, all tax returns, tax elections, financial statements and such
annual or other reports of the Issuer as are necessary for preparation of tax
reports as provided in Article V of the Trust Agreement, including without
limitation forms 1099 and 1066. All tax returns will be signed by the Seller.
(d) Non-Ministerial Matters. With respect to matters that in the reasonable
judgment of the Master Servicer are non-ministerial, the Master Servicer shall
not take any action pursuant to this Article XII unless within a reasonable time
before the taking of such action, the Master Servicer shall have notified the
Owner Trustee and the Trustee of the proposed action and the Owner Trustee and
the Trustee shall not have withheld consent or provided an alternative
direction. For the purpose of the preceding sentence, "non-ministerial matters"
shall include:
(A) the initiation of any claim or lawsuit by the Issuer and the
compromise of any action, claim or lawsuit brought by or
against the Issuer (other than in connection with the
collection of the Receivables);
(B) the appointment of successor Note Registrars, successor Paying
Agents and successor Trustees pursuant to the Indenture or the
consent to the assignment by the Note Registrar, Paying Agent
or Trustee of its obligations under the Indenture; and
(C) the removal of the Trustee or the Trust Collateral Agent.
(e) Exceptions. Notwithstanding anything to the contrary in this
Agreement, except as expressly provided herein or in the other Basic
Documents, the Master Servicer, in its capacity hereunder, shall not be
obligated to, and shall not, (1) make any payments to the Noteholders or
Certificateholders under the Basic Documents, (2) sell any Trust Property
pursuant to Section 5.5 of the Indenture, (3) take any other action that the
Issuer directs the Master Servicer not to take on its behalf or (4) in
connection with its duties hereunder assume any indemnification obligation of
any other Person.
(f) None of the Trust Collateral Agent, if any, the Trustee, or any
successor Master Servicer shall be responsible for any obligations or duties of
the Master Servicer under Section 12.1.
Records. The Master Servicer shall maintain appropriate books of account and
records relating to services performed under this Agreement, which books of
account and records shall be accessible for inspection by the Issuer and the
Trust Collateral Agent, if any, or the
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Trustee at any time during normal business hours.
Additional Information to be Furnished to the Issuer. The Master Servicer
shall furnish to the Issuer, the Trustee, and the Trust Collateral Agent, if
any, from time to time such additional information regarding any Series Trust
Estate as the Issuer and the Trust Collateral Agent shall reasonably request.
ARTICLE XIII
Miscellaneous Provisions
Amendments(a). (a) This Agreement may be amended by the parties hereto at
any time when no Series of Securities or commitment to purchase a Series of
Securities is outstanding without the requirement of any consents or the
satisfaction of any conditions set forth below.
(b) Except as otherwise provided with respect to a Series in a Series
Supplement, this Agreement may be amended from time to time by the parties
hereto, by a written instrument signed by each of the parties hereto, without
the consent of any of the Securityholders, provided that (i) an Opinion of
Counsel for the Seller (which Opinion of Counsel may, as to factual matters,
rely upon officers' certificates of the Seller or the Master Servicer) is
addressed and delivered to the Trustee, dated the date of any such amendment,
to the effect that the conditions precedent to any such amendment have been
satisfied and (ii) the Seller shall have delivered to the Trustee and each
Rating Agency, an Officer's Certificate dated the date of any such Amendment,
stating that the Seller reasonably believes that such amendment will not have
a material adverse effect on the rights of the Noteholders.
(c) Except as otherwise provided with respect to a Series in a Series
Supplement, this Agreement may also be amended from time to time by the
Servicer, the Seller, the Trustee and the Trust Collateral Agent, if any, with
the consent of the Noteholders evidencing in each case not less than a majority
of the outstanding principal amount of the Notes of each affected Series for
which the Seller has not delivered an Officer's Certificate stating that there
is no adverse effect on the rights of Noteholders of each Series, for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Agreement or of modifying in any manner the rights of
the Securityholders; provided, however, that no such amendment shall (i) reduce
in any manner the amount of or delay the timing of any distributions to be made
to Securityholders or deposits of amounts to be so distributed or the amount
available under any Series Support without the consent of each affected
Securityholder, (ii) change the definition of or the manner of calculating the
interest of any Securityholder without the consent of each affected
Securityholder, (iii) reduce the
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aforesaid percentage required to consent to any such amendment without the
consent of each Securityholder or (iv) adversely affect any rating of a Series
by each Rating Agency without the consent of the Noteholders evidencing not less
than a majority of the outstanding principal amount of the outstanding Notes of
such Series.
Promptly after the execution of any such amendment or supplement, the
Trustee shall furnish written notification of the substance of such amendment or
supplement to each Securityholder.
It shall not be necessary for the consent of Certificateholders or
Noteholders pursuant to this Section to approve the particular form of any
amendment, but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents (and any other consents
of Noteholders or Certificateholders provided for in this Agreement) and of
evidencing the authorization of any action by Noteholders or Certificateholders
shall be subject to such reasonable requirements as the Trustee or the Owner
Trustee, as applicable, may prescribe, including the establishment of record
dates.
The Owner Trustee, the Trust Collateral Agent and the Trustee may, but
shall not be obligated to, enter into any amendment which affects the Issuer's,
the Owner Trustee's, the Trust Collateral Agent's or the Trustee's, as
applicable, own rights, duties or immunities under this Agreement or otherwise.
Prior to the execution of any amendment to this Agreement, the Trustee and
the Trust Collateral Agent, if any, shall be entitled to receive or rely upon an
Opinion of Counsel stating that the execution of such amendment is authorized or
permitted by this Agreement and that all conditions precedent to the execution
and delivery of such amendment have been satisfied.
Protection of Title to Trust(a). (a) The Seller shall execute and file such
financing statements and cause to be executed and filed such continuation
statements, all in such manner and in such places as may be required by law
fully to preserve, maintain and protect the interest of the Issuer and the
interests of the Trust Collateral Agent, if any, and the Trustee on behalf of
the related Series Secured Parties in the related Series Trust Estate and in
the proceeds thereof.
(b) Neither the Seller nor the Master Servicer shall change its name,
identity or corporate structure in any manner that would, could or might make
any financing statement or continuation statement filed in accordance with
paragraph (a) above seriously misleading within the meaning of ss. 9-402(7) of
the UCC, unless it shall have given the Owner Trustee, the Trust Collateral
Agent and the Trustee at least thirty days' prior written notice thereof and
shall have promptly filed appropriate amendments to all previously filed
financing statements or continuation statements.
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(c) Each of the Seller and the Master Servicer shall have an obligation to
give the Owner Trustee, the Trust Collateral Agent and the Trustee prompt notice
of any relocation of its principal executive office if, as a result of such
relocation, the applicable provisions of the UCC would require the filing of any
amendment of any previously filed financing or continuation statement or of any
new financing statement and shall promptly file any such amendment. The Master
Servicer shall at all times maintain each office from which it shall service
Receivables, and its principal executive office, within the United States of
America.
(d) The Master Servicer shall maintain accounts and records as to each
Receivable accurately and in sufficient detail to permit (i) the reader thereof
to know at any time the status of such Receivable, including payments and
recoveries made and payments owing (and the nature of each) and (ii)
reconciliation between payments or recoveries on (or with respect to) each
Receivable and the amounts from time to time deposited in the Master Collection
Account in respect of such Receivable.
(e) The Master Servicer shall maintain or cause to be maintained, a
computer system so that, from and after the time of sale under this Agreement
and each Transfer Agreement of the Receivables to the Issuer, such master
computer records (including any backup archives) that refer to a Receivable
shall indicate clearly the interest of the Trust in such Receivable and that
such Receivable is owned by the Trust and to which Series Trust Estate such
Receivable has been pledged pursuant to the Indenture. Indication of the Trust's
interest in a Receivable shall be deleted from or modified on such computer
systems when, and only when, the related Receivable shall have been paid in full
or repurchased by HAFC or the Seller.
(f) If at any time the Seller or HAFC shall propose to sell, grant a
security interest in or otherwise transfer any interest in automotive
receivables to any prospective purchaser, lender or other transferee, the
Master Servicer shall give to such prospective purchaser, lender or other
transferee computer tapes, records or printouts (including any restored from
backup archives) that, if they shall refer in any manner whatsoever to any
Receivable, shall indicate clearly that such Receivable has been sold and is
owned by the Trust unless such Receivable has been paid in full or
repurchased by HAFC or the Seller.
(g) With respect to any Series Trust Estate, upon request, the Master
Servicer shall furnish or cause to be furnished to the related Series Support
Provider (only in the event that there is a Series Support Provider with
respect to such Series), the Owner Trustee or to the Trustee, within five
Business Days, a list of all Receivables (by contract number) then held as
part of the related Series Trust Estate, together with a reconciliation of
such list to the related Schedule of Receivables and to each of the Master
Servicer's Certificates furnished before such request indicating removal of
Receivables from the related Series Trust Estate. The Trustee shall hold any
such list and Schedule of Receivables for examination by interested parties
during normal business hours at the Corporate Trust Office upon reasonable
notice by such Persons of
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their desire to conduct an examination.
(h) The Master Servicer shall deliver to the Owner Trustee, the Trust
Collateral Agent, if any, and the Trustee and each Series Secured party:
(1) simultaneously with the execution and delivery of the Agreement
and, if required pursuant to Section 13.1, of each amendment, an Opinion of
counsel stating that, in the opinion of such Counsel, in form and substance
reasonably satisfactory to the addressees of such Opinion, either (A) all
financing statements and continuation statements have been executed and
filed that are necessary fully to preserve and protect the interest of the
Trust, the Trustee and the Trust Collateral Agent, if any, in the
Receivables then held as part of the related Series Trust Estate, or (B) no
such action shall be necessary to preserve and protect such interest or (C)
any action which is necessary to preserve and protect such interest during
the following 12-month period; and
(2) within 90 days after the beginning of each calendar year beginning
in 1999, dated as of a date during such 90-day period, stating that, in the
opinion of such counsel, either (A) all financing statements and
continuation statements have been executed and filed that are necessary
fully to preserve and protect the interest of the Trust, the Trustee and
the Trust Collateral Agent, if any, in the Series Trust Estate or (B) no
such action shall be necessary to preserve and protect such interest.
Each Opinion of Counsel referred to in clause (1) or (2) above shall
specify any action necessary (as of the date of such opinion) to be taken in the
following year to preserve and protect such interest.
Notices. All demands, notices and communications upon or to the Seller, the
Master Servicer, the Owner Trustee, the Trustee, the Trust Collateral Agent,
if any, any Series Secured Party or the Rating Agencies under this Agreement
shall be in writing, personally delivered, or mailed by certified mail, or
sent by confirmed telecopier transmission and shall be deemed to have been
duly given upon receipt (a) in the case of the Seller to Household Auto
Receivables Corporation, 0000 Xxxx Xxxxxx Xxxxx, Xxx Xxxxx, Xxxxxx 00000,
with a copy to Household International, Inc., 0000 Xxxxxxx Xxxx, Xxxxxxxx
Xxxxxxx, Xxxxxxxx, 00000, Attn: Treasurer (Telecopy No. (000) 000-0000), (b)
in the case of the Master Servicer to Household Finance Corporation, 0000
Xxxxxxx Xxxx, Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000, Attention: Treasurer,
Telecopier # (000) 000-0000, (c) in the case of the Issuer or the Owner
Trustee, at the Corporate Trust Office of the Owner Trustee, Telecopier #
000-000-0000, (d) in the case of the Trustee or the Trust Collateral Agent,
at the Corporate Trust Office, Telecopier # (000) 000-0000, (e) in the case
of the Series Support Provider to the address set forth in the related Series
Supplement, and (f) in the case of any Rating Agency, to the address set
forth in the related Series Supplement. Any notice required or permitted to
be mailed to a Noteholder or
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Certificateholder shall be given by first class mail, postage prepaid, at the
address of such Holder as shown in the Certificate Register or Note Register, as
applicable. Any notice so mailed within the time prescribed in the Agreement
shall be conclusively presumed to have been duly given, whether or not the
Certificateholder or Noteholder shall receive such notice.
Assignment. This Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective successors and permitted assigns.
Notwithstanding anything to the contrary contained herein, except as provided
in Sections 8.4 and 9.3 and as provided in the provisions of this Agreement
concerning the resignation of the Master Servicer, this Agreement may not be
assigned by the Seller or the Master Servicer without the prior written
consent of the Owner Trustee, the Trust Collateral Agent, if any, and the
Trustee. In the event that a successor Issuer with respect to a Series is
formed as contemplated in the related Series Supplement, such Issuer shall
succeed to all of the rights and obligations of the predecessor Issuer
hereunder; and all references to the Issuer hereunder shall thereafter be
deemed to be references to such successor Issuer.
Limitations on Rights of Others. The provisions of this Agreement are solely
for the benefit of the parties hereto and for the benefit of the
Certificateholders (including the Seller), the Trustee and the Series Secured
Parties, as third-party beneficiaries. Each Series Support Provider and its
successors and assigns shall be a third-party beneficiary to the provisions
of this Agreement and to each Series Supplement with respect to each Series
for which they are providing Series Support, and shall be entitled to rely
upon and directly enforce such provisions of this Agreement and to each
Series Supplement with respect to each Series for which they are providing
Series Support, so long as no default with respect to such Series Support
Provider shall have occurred and be continuing. Nothing in this Agreement or
in any Series Supplement, whether express or implied, shall be construed to
give to any other Person any legal or equitable right, remedy or claim in the
Owner Trust Estate or under or in respect of this Agreement or any covenants,
conditions or provisions contained herein.
Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Separate Counterparts. This Agreement and each Transfer Agreement may be
executed by the parties hereto in
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separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute but
one and the same instrument.
Headings. The headings of the various Articles and Sections herein are for
convenience of reference only and shall not define or limit any of the terms
or provisions hereof.
Governing Law. THIS AGREEMENT AND EACH TRANSFER AGREEMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO
ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF
THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Assignment to Trustee. The Seller hereby acknowledges and consents to any
mortgage, pledge, assignment and grant of a security interest by the Issuer
to the Trustee or Trust Collateral, if any, pursuant to the Indenture, as
supplemented by a Series Supplement for the benefit of the related Series
Secured Parties of all right, title and interest of the Issuer in, to and
under the applicable Series Trust Estate.
Nonpetition Covenants(a). (a) Notwithstanding any prior termination of this
Agreement or any Series Supplement, the Master Servicer and the Seller shall
not, prior to the date which is one year and one day after the termination of
this Agreement or any Series Supplement with respect to the Issuer,
acquiesce, petition or otherwise invoke or cause the Issuer to invoke the
process of any court or government authority for the purpose of commencing or
sustaining a case against the Issuer under any federal or state bankruptcy,
insolvency or similar law or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Issuer or
any substantial part of its property, or ordering the winding up or
liquidation of the affairs of the Issuer.
(b) Notwithstanding any prior termination of this Agreement or any Series
Supplement, the Master Servicer shall not, prior to the date that is one year
and one day after the termination of this Agreement or any Series Supplement
with respect to the Seller, acquiesce to, petition or otherwise invoke or cause
the Seller to invoke the process of any court or government authority for the
purpose of commencing or sustaining a case against the Seller under any federal
or state bankruptcy, insolvency or similar law, appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator, or other similar
official of the Seller or any substantial part of its property, or ordering the
winding up or liquidation of the affairs of the Seller.
74
Limitation of Liability of Owner Trustee and the Trust Collateral Agent(a).
(a) Notwithstanding anything contained herein to the contrary, this Agreement
and each Series Supplement has been countersigned by Wilmington Trust Company
not in its individual capacity but solely in its capacity as Owner Trustee of
the Issuer and in no event shall Wilmington Trust Company in its individual
capacity or, except as expressly provided in the Trust Agreement, as Owner
Trustee have any liability for the representations, warranties, covenants,
agreements or other obligations of the Issuer hereunder or in any of the
certificates, notices or agreements delivered pursuant hereto, as to all of
which recourse shall be had solely to the assets of the Issuer. For all
purposes of this Agreement and each Series Supplement, in the performance of
its duties or obligations hereunder or in the performance of any duties or
obligations of the Issuer hereunder, the Owner Trustee shall be subject to,
and entitled to the benefits of, the terms and provisions of Articles VI, VII
and VIII of the Trust Agreement.
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been executed and delivered by Norwest Bank Minnesota, National
Association not in its individual capacity but solely as Trust Collateral Agent
and in no event shall Norwest Bank Minnesota, National Association, have any
liability for the representations, warranties, covenants, agreements or other
obligations of the Issuer hereunder or in any of the certificates, notices or
agreements delivered pursuant hereto, as to all of which recourse shall be had
solely to the assets of the Issuer.
(c) In no event shall Wilmington Trust Company, in any of its capacities
hereunder, be deemed to have assumed any duties of the Owner Trustee under the
Delaware Business Trust Statute, common law, or the Trust Agreement.
Independence of the Master Servicer. For all purposes of this Agreement, the
Master Servicer shall be an independent contractor and shall not be subject
to the supervision of the Issuer, the Trust Collateral Agent, the Trustee or
the Owner Trustee with respect to the manner in which it accomplishes the
performance of its obligations hereunder. Unless expressly authorized by this
Agreement or any Series Supplement, the Master Servicer shall have no
authority to act for or represent the Issuer or the Owner Trustee in any way
and shall not otherwise be deemed an agent of the Issuer or the Owner Trustee.
No Joint Venture. Nothing contained in this Agreement or any Series
Supplement (i) shall constitute the Master Servicer and either of the Issuer
or the Owner Trustee as members of any partnership, joint venture,
association, syndicate, unincorporated business or other separate entity,
(ii) shall be construed to impose any liability as such on any of them or
(iii) shall be deemed to confer on any of them any express, implied or
apparent authority to incur any obligation or liability on behalf of the
others.
75
IN WITNESS WHEREOF, the parties hereto have caused this Master Sale and
Servicing Agreement to be duly executed and delivered by their respective
duly authorized officers as of the day and the year first above written.
HOUSEHOLD AUTOMOBILE REVOLVING TRUST I
by Wilmington Trust Company, not in its
individual capacity but solely as Owner
Trustee on behalf of the Trust,
by
------------------------------------
Title:
HOUSEHOLD AUTO RECEIVABLES CORPORATION,
Seller,
by
------------------------------------
Name:
Title:
HOUSEHOLD FINANCE CORPORATION,
as Master Servicer,
by
------------------------------------
Name:
Title:
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
not in its individual capacity but
solely as Trustee, and to the extent
provided herein, as Trust Collateral
Agent
by
------------------------------------
Name:
Title:
[Signature Page for Sale and Servicing Agreement]
76
EXHIBIT A
FORM OF MASTER SERVICER'S CERTIFICATE
77
EXHIBIT B
FORM OF TRANSFER AGREEMENT
TRANSFER No. OF Receivables pursuant to the Master Sale and
Servicing Agreement dated as of March 1, 1998 (the "Sale and Servicing
Agreement"), among HOUSEHOLD AUTOMOBILE REVOLVING TRUST I, a Delaware
business trust (the "Issuer"), HOUSEHOLD AUTO RECEIVABLES CORPORATION, a
Nevada corporation (the "Seller"), HOUSEHOLD FINANCE CORPORATION, a Delaware
corporation (the "Master Servicer"), and NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, a New York banking Corporation (the "Trust Collateral Agent").
W I T N E S S E T H:
WHEREAS pursuant to the Master Sale and Servicing Agreement, the Seller
wishes to convey the Receivables to the Issuer; and
WHEREAS, the Issuer is willing to accept such conveyance subject to the
terms and conditions hereof.
NOW, THEREFORE, the Issuer, the Seller, the Master Servicer and the Trust
Collateral Agent hereby agree as follows:
1. Defined Terms. Capitalized terms used herein shall have the meanings
ascribed to them in the Sale and Servicing Agreement unless otherwise defined
herein.
"Cutoff Date" shall mean, with respect to the Receivables conveyed hereby,
_______________, 1998.
"Transfer Date" shall mean. with respect to the Receivables conveyed
hereby, _____________, 1998.
2. Schedule of Receivables. Annexed hereto is a supplement to Schedule A to
the Master Sale and Servicing Agreement listing the Receivables that constitute
the Receivables to be conveyed pursuant to this Agreement on the Transfer Date.
The Receivables conveyed pursuant to this Agreement shall be a component of the
Series __ Trust Estate.
3. Conveyance of Receivables. The Seller does hereby sell, transfer,
assign, set over and otherwise convey to the Issuer, without recourse (except as
expressly provided in the Master Sale and Servicing Agreement), all right, title
and interest of the Seller in and to:
(i) each and every Receivable listed on Schedule A
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to the related Receivables Purchase Agreement Supplement and
all monies paid or payable thereon or in respect thereof on
or after the related Cutoff Date (including amounts due on
or before the related Cutoff Date but received by the Seller
on or after such date);
(ii) the security interests in the related Financed Vehicles
granted by Obligors pursuant to such Receivables and any other
interest of the Seller in such Financed Vehicles;
(iii) all rights of the Seller against Dealers pursuant to Dealer
Agreements, Dealer Assignments or Unaffiliated Originator Receivables
Purchase Agreements related to such Receivables;
(iv) any proceeds and the right to receive proceeds with respect
to such Receivables repurchased by either (i) a Dealer, pursuant to a
Dealer Agreement, or (ii) an Unaffiliated Originator, pursuant to an
Unaffiliated Originator Receivables Purchase Agreement as a result of
a breach of representation or warranty in the related Dealer Agreement
or Unaffiliated Originator Receivables Purchase Agreement, as
applicable;
(v) all rights of Seller under any Service Contracts on the
related Financed Vehicles;
(vi) any proceeds and the right to receive proceeds with respect
to the related Receivables from claims on any physical damage, credit
life or disability insurance policies, if any, covering Financed
Vehicles or Obligors, including rebates of insurance premiums relating
to the Receivables and any proceeds from the liquidation of such
Receivables;
(vii) all items contained in the Receivables Files with respect
to such Receivables and any and all other documents that Seller or
Master Servicer keeps on file in accordance with its customary
procedures relating to the related Receivables, or the related
Financed Vehicles or Obligor;
(viii) property (including the right to receive future Net
Liquidation Proceeds) that secures each related Receivable and that
has been acquired by or on behalf of HARC pursuant to liquidation of
such Receivable;
(ix) all present and future claims, demands, causes and chooses
in action in respect of any or all of the foregoing and all payments
on or under and all proceeds of every kind and nature whatsoever in
respect of any or all of the foregoing, including all proceeds of the
conversion, voluntary or involuntary, into cash or other liquid
property, all cash proceeds, accounts, accounts receivable, notes,
drafts, acceptances, chattel paper, checks, deposit accounts,
insurance proceeds, condemnation awards, rights to payment of any and
every kind and other forms of obligations and receivables, instruments
and other
B-79
property which at any time constitute all or part of or are included
in the proceeds of any of the foregoing.
4. Representations and Warranties of the Seller. The Seller hereby
represents and warrants to the Issuer as of the date of this Agreement and as of
the Transfer Date that:
Organization and Good Standing. The Seller has been duly
organized and is validly existing as a corporation in good standing
under the laws of the State of Nevada, with power and authority to own
its properties and to conduct its business as such properties are
currently owned and such business is currently conducted, and had at
all relevant times, and now has, power, authority and legal right to
acquire, own and sell the Receivables and the Other Conveyed Property
transferred to the Trust.
Due Qualification. The Seller is duly qualified to do business as
a foreign corporation in good standing and has obtained all necessary
licenses and approvals in all jurisdictions where the failure to do so
would materially and adversely affect Seller's ability to transfer the
Receivables and the Other Conveyed Property to the Trust pursuant to
this Agreement, or the validity or enforceability of the Receivables
and the Other Conveyed Property or to perform Seller's obligations
hereunder and under the Seller's Basic Documents.
Power and Authority. The Seller has the power and authority to
execute and deliver this Agreement and its Basic Documents and to
carry out its terms and their terms, respectively; the Seller has full
power and authority to sell and assign the Receivables and the Other
Conveyed Property to be sold and assigned to and deposited with the
Trust by it and has duly authorized such sale and assignment to the
Trust by all necessary corporate action; and the execution, delivery
and performance of this Agreement and the Seller's Basic Documents
have been duly authorized by the Seller by all necessary corporate
action.
Valid Sale, Binding Obligations. This Agreement effects a valid
sale, transfer and assignment of the Receivables and the Other
Conveyed Property, enforceable against the Seller and creditors of and
purchasers from the Seller; and this Agreement and the Seller's Basic
Documents, when duly executed and delivered, shall constitute legal,
valid and binding obligations of the Seller enforceable in accordance
with their respective terms, except as enforceability may be limited
by bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors' rights generally and by
equitable limitations on the availability of specific remedies,
regardless of whether such enforceability is considered in a
proceeding in equity or at law.
No Violation. The consummation of the transactions contemplated
by this Agreement and the Basic Documents and the
B-80
fulfillment of the terms of this Agreement and the Basic Documents
shall not conflict with, result in any breach of any of the terms and
provisions of or constitute (with or without notice, lapse of time or
both) a default under the certificate of incorporation or by-laws of
the Seller, or any indenture, agreement, mortgage, deed of trust or
other instrument to which the Seller is a party or by which it is
bound, or result in the creation or imposition of any Lien upon any of
its properties pursuant to the terms of any such indenture, agreement,
mortgage, deed of trust or other instrument, other than this
Agreement, or violate any law, order, rule or regulation applicable to
the Seller of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Seller or any of its properties.
No Proceedings. There are no proceedings or investigations
pending or, to the Seller's knowledge, threatened against the Seller,
before any court, regulatory body, administrative agency or other
tribunal or governmental instrumentality having jurisdiction over the
Seller or its properties (A) asserting the invalidity of this
Agreement or any of the Basic Documents, (B) seeking to prevent the
issuance of the Securities or the consummation of any of the
transactions contemplated by this Agreement or any of the Basic
Documents, (C) seeking any determination or ruling that might
materially and adversely affect the performance by the Seller of its
obligations under, or the validity or enforceability of, this
Agreement or any of the Basic Documents, or (D) seeking to adversely
affect the federal income tax or other federal, state or local tax
attributes of the Securities.
Approvals. All approvals, authorizations, consents, order or
other actions of any person, corporation or other organization, or of
any court, governmental agency or body or official, required in
connection with the execution and delivery by the Seller of this
Agreement and the consummation of the transactions contemplated hereby
have been or will be taken or obtained on or prior to the Closing Date.
No Consents. The Seller is not required to obtain the consent of
any other party or any consent, license, approval or authorization, or
registration or declaration with, any governmental authority, bureau
or agency in connection with the execution, delivery, performance,
validity or enforceability of this Agreement which has not already
been obtained.
Chief Executive Office. The chief executive office of the Seller
is at 000 Xxxx Xxxxxx Xxxxx, Xxx Xxxxx, Xxxxxx 00000.
Principal Balance. The aggregate Principal Balance of the
Receivables listed on the supplement to Schedule A annexed hereto and
conveyed to the Issuer pursuant to this Agreement as of the Cutoff
Date is $____________.
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5. Conditions Precedent. The obligation of the Issuer to acquire the
Receivables hereunder is subject to the satisfaction, on or prior to the
Transfer Date, of the following conditions precedent:
Representations and Warranties. Each of the representations and
warranties made by the Seller in Section 4 of this Agreement and in
Section 3.1 of the Sale and Servicing Agreement shall be true and
correct as of the date of this Agreement and as of the Transfer Date.
Sale and Servicing Agreement Conditions. Each of the conditions
set forth in Section 2.1(b) to the Sale and Servicing Agreement shall
have been satisfied.
Additional Information. The Seller shall have delivered to the
Issuer such information as was reasonably requested by the Issuer to
satisfy itself as to (i) the accuracy of the representations and
warranties set forth in Section 4 of this Agreement and in Section 6.1
of the Sale and Servicing Agreement and (ii) the satisfaction of the
conditions set forth in this Section 5.
6. Ratification of Agreement. As supplemented by this Agreement, the Sale
and Servicing Agreement is in all respects ratified and confirmed and the Sale
and Servicing Agreement as so supplemented by this Agreement shall be read,
taken and construed as one and the same instrument.
7. Counterparts. This Agreement may be executed in two or more counterparts
(and by different parties in separate counterparts), each of which shall be an
original but all of which together shall constitute one and the same instrument.
8. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
9.
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IN WITNESS WHEREOF, the Issuer, the Seller and the Master Servicer have
caused this Agreement to be duly executed and delivered by their respective duly
authorized officers as of day and the year first above written.
HOUSEHOLD AUTOMOBILE REVOLVING TRUST I
by Wilmington Trust Company, not in its
individual capacity but solely as Owner
Trustee on behalf of the Trust,
by
------------------------------------
Title:
HOUSEHOLD AUTO RECEIVABLES CORPORATION, Seller,
by
------------------------------------
Title:
HOUSEHOLD FINANCE CORPORATION, Master Servicer,
by
------------------------------------
Title:
Acknowledged and Accepted:
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
not in its individual
capacity but solely as
Trust Collateral Agent
by
---------------------------
Title:
B-84
EXHIBIT C
REQUEST FOR RELEASE AND RECEIPT OF DOCUMENTS
To: Norwest Bank Minnesota, National Association
Re: Sale and Servicing Agreement (the "Servicing
Agreement, dated as of March 1, 1998 between
Household Auto Receivables Corporation (the
"Seller"), Household Automobile Revolving Trust I
(the "Trust"), Household Finance Corporation
individually and in its capacity as Servicer (the
"Servicer"), and Norwest Bank Minnesota, National
Association, as Trust Collateral Agent (the "Trust
Collateral Agent")
In connection with the administration of the Receivables held by you as the
Trust Collateral Agent, we request the release, and acknowledged receipt, of the
Receivable and related Receivable File described below, for the reason
indicated.
Obligor's Name, Customer Account Number and Vehicle Identification Number
1. Receivable Paid in Full. All amounts received in connection with
--------- such payments have been deposited as required pursuant to Section
3.3(b) of the Master Servicing Agreement
2. Receivable Purchased from Trust pursuant to Section 3.2 or 4.7 of
--------- the Servicing Agreement.
3. Receivable is being serviced or subject to enforcement of rights
--------- and remedies pursuant to Section 3.3(b) of the Servicing
Agreement.
4. Other (explain)
--------- ------------------------------------------------
If item 1 or 2 above is checked, and if all or part of the Receivable or
Receivable File was previously released to us, please release to us any
additional documents in your possession to the above specified Receivable.
C-85
If Item 3 or 4 above is checked, upon our return of all of the above documents
to you as the Indenture Trustee, please acknowledge your receipt by signing in
the space indicated below and returning this form.
[ ] HOUSEHOLD FINANCE CORPORATION
as Servicer
By:
---------------------------
Name:
-------------------------
Title:
------------------------
Date:
------------------------
DOCUMENTS RETURNED TO THE TRUST COLLATERAL AGENT
Norwest Bank Minnesota, National Association (Trust Collateral Agent)
By:
---------------------------
Name:
-------------------------
Title:
------------------------
Date:
------------------------
C-86
EXHIBIT D
TRUST COLLATERAL AGENT'S ACKNOWLEDGEMENT
Norwest Bank Minnesota, National Association (the "Trust
Collateral Agent"), holds on behalf of the [Securityholders] certain
"Receivable Files," as described in the Sale and Servicing Agreement, dated
as of _____________ (the "Sale and Servicing Agreement"), among [ ]
Automobile Revolving Trust, [ ] Auto Receivables Corp. II., as Seller,
[ ] Auto Finance Corporation, as Master Servicer, and the Trust
Collateral Agent, hereby acknowledges receipt of the Receivable File for each
Receivable listed in the Schedule of Receivables attached as Schedule A to
said Sale and Servicing Agreement except as noted in the Exception List
attached as Schedule I hereto.
IN WITNESS WHEREOF, Norwest Bank Minnesota, National
Association has caused this acknowledgement to be executed by its duly
authorized officer as of this ___________________.
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trust Collateral Agent
by
--------------------------------------
Name:
Title:
C-87
