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EXHIBIT 4.3
THIRD AMENDMENT TO THE AMENDED AND RESTATED
POOLING AND SERVICING AGREEMENT
This THIRD AMENDMENT TO THE AMENDED AND RESTATED POOLING AND
SERVICING AGREEMENT, dated as of August 21, 1998 (this "AMENDMENT"), is among
Household Affinity Funding Corporation, a Delaware corporation (as Seller,
"HAFC"), Household Finance Corporation, a Delaware corporation (the "SERVICER")
and The Bank of New York, a New York banking corporation (the "TRUSTEE"). This
Amendment amends the Amended and Restated Pooling and Servicing Agreement, dated
as of August 1, 1993, as amended by the Amendment to Amended and Restated
Pooling and Servicing Agreement, dated as of April 12, 1995, and the Second
Amendment to the Amended and Restated Pooling and Servicing Agreement, dated as
of October 20, 1997 (collectively, the "POOLING AND SERVICING AGREEMENT"), each
by and among HAFC, the Servicer and the Trustee.
RECITALS
1. Pursuant to Section 13.01(a) of the Pooling and Servicing
Agreement, HAFC has delivered to the Trustee an Officer's Certificate, dated the
date of this Amendment, stating that HAFC reasonably believes that this
Amendment will not have an Adverse Effect.
2. The parties to the Pooling and Servicing Agreement have
satisfied all conditions precedent contained in the Pooling and Servicing
Agreement to entering into this Amendment. All capitalized terms not otherwise
defined herein shall have the meanings assigned to such terms in the Pooling and
Servicing Agreement.
3. Now, therefore, in consideration of the mutual agreements
herein contained, and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, each party hereto agrees as follows:
AMENDMENTS
1. The definitions of "Finance Charge Receivables", "Portfolio
Yield", "Required Minimum Principal Balance", "Revolving Credit Agreement" and
"Seller's Participation Amount" in Section 1.01 are hereby amended and restated
in their entirety as follows:
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"Finance Charge Receivables" shall mean all amounts billed to
the Obligors on any Account in respect of (a) all finance charges, (b)
Cash Advance Fees, (c) annual membership fees with respect to the
Accounts and (d) any other fees with respect to the Accounts designated
by the Seller by notice to the Trustee at any time and from time to
time to be included as Finance Charge Receivables. Finance Charge
Receivables shall also include (a) the interest portion of
Participation Interests as shall be determined pursuant to the
applicable Participation Interest Supplement or Series Supplement, (b)
any amounts designated to be Finance Charge Receivables pursuant to
Section 4.05, (c) all Recoveries with respect to Finance Charge
Receivables previously charged off as uncollectible, (d) with resect to
any Due Period, a portion, determined pursuant to Section 2.08(d), of
the Interchange paid or payable to the Bank or any Additional Seller
with respect to such Due Period and (e) investment earnings on amounts
on deposit in the Special Funding Account.
"Portfolio Yield" shall mean with respect to the Trust as a
whole and, with respect to any Due Period, the annualized percentage
equivalent of a fraction (a) the numerator of which is the aggregate of
the sum of the Series Allocable Finance Charge and Administrative
Collections for all Series during such Due Period calculated on a cash
basis, after subtracting therefrom the Series Allocable Defaulted
Amounts for all Series with respect to such Due Period and (b) the
denominator of which is the total amount of Principal Receivables
conveyed to the Trust, plus the Special Funding Amount, in each case,
as of the last day of the immediately preceding Due Period; provided
that, with respect to any Due Period in which an Aggregate Addition
pursuant to Section 2.09 occurs or a removal of Accounts pursuant to
Section 2.10 occurs, the amount of Principal Receivables shall be the
average amount of Principal Receivables in the Trust on each Business
Day during such Due Period based upon the assumptions that (1) the
aggregate amount of Principal Receivables in the Trust at the end of
the day on the last day of the prior Due Period is the aggregate amount
of Principal Receivables in the Trust on each Business Day of the
period from and including the first day of such Due Period to but
excluding the related Addition Date or Removal Date and (2) the
aggregate amount of Principal Receivables in the Trust conveyed to the
Trust at the end of the day on the related Addition Date or Removal
Date is the aggregate amount of Principal Receivables in the Trust on
each Business Day of the period from and including the related Addition
Date or Removal Date to and including the last day of such Due Period.
"Required Minimum Principal Balance" shall mean, with respect
to any date, an amount equal to (a) the sum of the Series Adjusted
Invested Amount for each Series outstanding on such date; plus the sum
of the Series Required Seller Amounts for each such Series minus (b)
the Special Funding Amount.
"Revolving Credit Agreement" shall mean the revolving credit
agreement by and between the Seller and the Bank, dated as of April 30,
1993, as amended
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and as may be amended from time to time, and any substantially similar
agreement between any lender and the Seller or any Additional Seller.
"Seller's Participation Amount" shall mean on any date of
determination an amount equal to the difference between (a) the sum of
(i) the aggregate balance of Principal Receivables at the end of the
day immediately prior to such date of determination and (ii) the
Special Funding Amount at the end of the day immediately prior to such
date of determination and (b) the aggregate Invested Amounts for all
outstanding Series at the end of such day.
2. Section 1.01 is hereby further amended by adding the
following definitions to such section:
"Partial Amortization SFA Amounts" shall mean the amounts
specified by the Servicer or the Seller pursuant to Section 4.02 which
are to be applied to the partial amortization of each Series as
specified in the related Supplement.
"Special Funding Account" shall have the meaning set forth
in Section 4.02.
"Special Funding Amount" shall mean the amount on deposit in
the Special Funding Account (other than the portion constituting
Finance Charge and Administrative Receivables).
3. Section 2.01 is hereby amended by inserting "and the
Special Funding Account, and" immediately after "the Series Accounts" in the
second sentence thereof.
4. Section 2.05(b) is hereby amended by replacing the words
"Collection Account" in the second and third sentences of the first paragraph
and in the second sentence of the second paragraph thereof with "Special Funding
Account".
5. Section 3.01(b)(i) is hereby amended by inserting the words
", the Special Funding Account" immediately after "from the Collection Account".
6. Section 3.09(a) is hereby amended by deleting the words
"Collection Account" in the fourth and fifth sentences thereof and inserting in
each such place "Special Funding Account".
7. Section 4.01 is hereby amended by inserting the words "and
the Special Funding Account" after "the Collection Account" in the first
sentence thereof.
8. Section 4.02 is hereby amended by adding the words "and the
Special Funding Account" to the end of the section heading and by inserting the
following at the end of such section:
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"The Servicer, for the benefit of the Certificateholders, may
establish and maintain in the name of the Trustee, on behalf of the Trust, an
Eligible Deposit Account bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Certificateholders (the
"Special Funding Account"). The Trustee shall possess all right, title and
interest in all monies, instruments, securities, documents, certificates of
deposit and other property on deposit from time to time in the Special Funding
Account and in all proceeds, earnings, income, revenue, dividends and
distributions thereof for the benefit of the Certificateholders. The Special
Funding Account shall be under the sole dominion and control of the Trustee for
the benefit of the Certificateholders. Except as expressly provided in this
Agreement, the 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
Special Funding Account for any amount owed to it by the Trustee, the Trust, any
Certificateholder or any Series Enhancer. If, at any time, the Special Funding
Account ceases to be an Eligible Deposit Account, the Trustee (or the Servicer
on its behalf) shall within ten Business Days (or such longer period, not to
exceed 30 calendar days, as to which each Rating Agency may consent) establish a
new Special Funding Account meeting the conditions specified above, transfer any
monies, instruments, securities, documents, certificates of deposit and other
property to such new Special Funding Account and from the date such new Special
Funding Account is established, it shall be the "Special Funding Account."
Funds on deposit in the Special Funding Account shall at the
written direction of the Servicer be invested by the Trustee in Eligible
Investments selected by the Servicer. All such Eligible Investments shall be
held by the Trustee for the benefit of the Certificateholders. The Trustee shall
maintain for the benefit of the Certificateholders possession of the
instruments, securities, documents and certificates of deposit, if any,
evidencing such Eligible Investments. Funds on deposit in the Special Funding
Account on any Distribution Date will be invested in Eligible Investments that
will mature so that such funds will be available no later than the close of
business on the Transfer Date following such Due Period. No Eligible Investment
shall be disposed of prior to its maturity; provided, however, that the Trustee
may sell, liquidate or dispose of an Eligible Investment before its maturity, if
so directed by the Servicer and if the Rating Agency Condition shall have been
satisfied. Unless directed by the Servicer, funds deposited in the Special
Funding Account on a Transfer Date with respect to the immediately succeeding
Distribution Date are not required to be invested overnight. On each
Distribution Date, all interest and other investment earnings (net of losses and
investment expenses) on funds on deposit in the Special Funding Account shall be
treated as Collections of Finance Charge and Administrative Receivables with
respect to the last day of the related Due Period except as otherwise specified
in the related Supplement. Subject to the immediately following sentence, on
each Business Day on which funds are on deposit in the Special Funding Account
and on which no Series is in an accumulation period or amortization period, the
Servicer shall determine the amount (if any) by which the Seller's Participation
Amount exceeds the Series Required Seller Amount for all Series on such date and
may instruct the Trustee to withdraw any such excess from the Special Funding
Account and pay such amount to the Holders of the Seller's Certificates. If (i)
an accumulation period or amortization period has commenced and is continuing
with respect to one or more outstanding Series, any funds on deposit in the
Special Funding Account will be withdrawn by the Servicer from the Special
Funding Account and
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deposited into the Collection Account and shall be treated as Trust Excess
Principal Collections and shall be allocated and distributed in accordance with
Section 4.04 and the terms of each Supplement and (ii) the Servicer determines,
based upon the yield of Special Funding Account investments during the previous
Due Period, that by decreasing the amount on deposit in the Special Funding
Account any Series then outstanding which is issued pursuant to a Supplement
which permits partial amortization as provided in this Section 4.02 may be
prevented from experiencing an Amortization Event based upon insufficiency of
yield, the Servicer shall on the next succeeding Distribution Date instruct the
Trustee in writing to apply funds on deposit in the Special Funding Account as
"Partial Amortization SFA Amounts" to such Series (and if more than one such
Series, to each on a pro rata basis according to each such Invested Amount) in
an amount such that the Special Funding Account is reduced to an amount which,
based on the then current investment yield, would not cause a yield
insufficiency Amortization Event for any such Series then outstanding. In
addition, the Servicer shall instruct the Trustee in writing to apply funds on
deposit in the Special Funding Account to each such Series on such pro rata
basis as Partial Amortization SFA Amounts on any Distribution Date to the extent
the Seller so determines in written instructions provided to the Servicer on or
prior to the Determination Date preceding such Distribution Date."
9. Section 4.04 is hereby amended and restated in its
entirety as follows:
"Section 4.04. Unallocated Principal Collections and Trust Excess
Principal Collections. On each Determination Date, (a) the Servicer shall
allocate Trust Excess Principal Collections (as described below) to each Series
as set forth in the related Supplement and (b) the Servicer shall withdraw from
the Collection Account and pay to the Seller (i) an amount equal to the excess,
if any, of (x) the aggregate amount for all outstanding Series of Collections of
Principal Receivables which the related Supplements specify are to be treated as
"Trust Excess Principal Collections" for such Distribution Date over (y) the
aggregate amount for all outstanding Series which the related Supplements
specify are "Principal Shortfalls" for such Distribution Date and, without
duplication, and (ii) the aggregate amount for all outstanding Series of that
portion of Series Allocable Principal Collections which the related Supplements
specify are to be allocated and paid to the Seller with respect to such
Distribution Date; provided, however, that, in the case of clauses (i) and (ii),
such amounts shall be paid to the Seller only if the Seller's Participation
Amount as of such Determination Date (determined after giving effect to any
Principal Receivables transferred to the Trust on such date) exceeds zero. The
amount required to be held as a result of the proviso in the preceding sentence
shall, at the option of the Seller, be held in the Collection Account or
deposited in the Special Funding Account for allocation and distribution in
accordance with Section 4.02 and the terms of such Supplement. Any amount held
in the Collection Account will be deemed to be "Unallocated Principal
Collections."
Any Unallocated Principal Collections on deposit in the
Collection Account at the time the Seller's Participation Amount exceeds zero
shall be paid to the Seller, provided that at any time during which any Series
is in its accumulation period, amortization period or early amortization period,
any Unallocated Principal Collections on deposit in the Collection Account shall
be deemed to be "Miscellaneous Payments" and shall be allocated and distributed
in accordance with Section 4.03 and the terms of each Supplement.
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The Seller may, at its option, instruct the Trustee to deposit
Trust Excess Principal Collections which are otherwise payable to the holders of
the Seller's Certificates pursuant to the provisions set forth above into the
Special Funding Account."
10. The second paragraph of Section 10.02(b) is hereby
amended and restated in its entirety as follows:
Notwithstanding the foregoing, any provision of this Agreement which
requires the Servicer to make a deposit into the Collection Account or
the Special Funding Account not later than 1:00 P.M., New York City
time, on a Distribution Date shall be deemed to require a Successor
Servicer to make such deposit into the Collection Account or the
Special Funding Account, respectively, on the Transfer Date immediately
preceding such Distribution Date.
11. Section 12.02(b) is hereby amended by adding the words ",
the Special Funding Account" immediately after the words "the Collection Account
in each of the first and third sentences thereof.
MISCELLANEOUS
12. Effective Date. This Amendment shall be effective upon the
execution hereof by the parties hereto.
13. Counterparts. This Amendment may be executed in two or
more counterparts (and by different parties on separate counterparts), each of
which shall be an original, but all of which together shall constitute one and
the same instrument.
14. GOVERNING LAW. THIS AMENDMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO ITS
CONFLICTS OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
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IN WITNESS WHEREOF, HAFC, the Servicer and the Trustee have
caused this Amendment to be duly executed and delivered by their respective duly
authorized officers as of the day and year first written above.
HOUSEHOLD AFFINITY FUNDING
CORPORATION
By: /s/ Xxxxx Xxxxx
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Name: Xxxxx Xxxxx
Title: Vice President and Assistant
Treasurer
HOUSEHOLD FINANCE CORPORATION
By: /s/ X.X. Xxxx, Xx.
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Name: X.X. Xxxx, Xx.
Title: Vice President and Treasurer
THE BANK OF NEW YORK
By: /s/ Xxxxx X. Xxxxxxxx
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Name: Xxxxx X. Xxxxxxxx
Title: Vice President
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