EXHIBIT 4.3
EXECUTION COPY
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MASTER SALE AND SERVICING AGREEMENT
among
HOUSEHOLD AUTOMOTIVE TRUST 2001-2,
HOUSEHOLD AUTO RECEIVABLES CORPORATION,
Seller,
HOUSEHOLD FINANCE CORPORATION,
Master Servicer
and
U.S. BANK NATIONAL ASSOCIATION,
Indenture Trustee
Dated as of July 2, 2001
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TABLE OF CONTENTS
PAGE
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ARTICLE I
Definitions
SECTION 1.1. Definitions................................................................................ 1
SECTION 1.2. Other Interpretive Provisions.............................................................. 17
SECTION 1.3. Usage of Terms............................................................................. 18
SECTION 1.4. Certain References......................................................................... 18
SECTION 1.5. No Recourse................................................................................ 18
SECTION 1.6. Action by or Consent of Noteholders........................................................ 18
ARTICLE II
Conveyance of Receivables
SECTION 2.1. Conveyance of Receivables.................................................................. 19
SECTION 2.2. Further Encumbrance of Series Trust Estate................................................. 22
ARTICLE III
The Receivables
SECTION 3.1. Representations and Warranties of Seller................................................... 23
SECTION 3.2. Repurchase upon Breach..................................................................... 23
SECTION 3.3. Custody of Receivables Files............................................................... 24
ARTICLE IV
Administration and Servicing of Receivables
SECTION 4.1. Duties of the Master Servicer.............................................................. 25
SECTION 4.2. Collection of Receivable Payments; Modifications of Receivables............................ 26
SECTION 4.3. Realization Upon Receivables............................................................... 28
SECTION 4.4. Insurance.................................................................................. 29
SECTION 4.5. Maintenance of Security Interests in Vehicles.............................................. 30
SECTION 4.6. Covenants, Representations, and Warranties of Master Servicer.............................. 30
SECTION 4.7. Repurchase of Receivables Upon Breach of Covenant.......................................... 31
SECTION 4.8. Total Servicing Fee; Payment of Certain Expenses by Master Servicer........................ 32
SECTION 4.9. Master Servicer's Certificate.............................................................. 32
SECTION 4.10. Annual Statement as to Compliance, Notice of Master Servicer Termination Event............. 33
SECTION 4.11. Annual Independent Accountants' Report..................................................... 33
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SECTION 4.12. Access to Certain Documentation and Information Regarding Receivables...................... 34
SECTION 4.13. Fidelity Bond and Errors and Omissions Policy.............................................. 34
ARTICLE V
Trust Accounts; Distributions;
Statements to Certificateholders and Noteholders
SECTION 5.1. Establishment of Trust Accounts............................................................ 34
SECTION 5.2. Certain Reimbursements to the Master Servicer.............................................. 37
SECTION 5.3. Application of Collections................................................................. 37
SECTION 5.4. Additional Deposits........................................................................ 37
SECTION 5.5. Distributions.............................................................................. 38
ARTICLE VI
RESERVED
ARTICLE VII
RESERVED
ARTICLE VIII
The Seller
SECTION 8.1. Representations of Seller.................................................................. 38
SECTION 8.2. Corporate Existence........................................................................ 40
SECTION 8.3. Liability of Seller; Indemnities........................................................... 41
SECTION 8.4. Merger or Consolidation of, or Assumption of the Obligations of, Seller.................... 42
SECTION 8.5. Limitation on Liability of Seller and Others............................................... 42
SECTION 8.6. Seller May Own Certificates or Notes....................................................... 43
ARTICLE IX
The Master Servicer
SECTION 9.1. Representations of Master Servicer......................................................... 43
SECTION 9.2. Liability of Master Servicer; Indemnities.................................................. 45
SECTION 9.3. Merger or Consolidation of, or Assumption of the Obligations of the Master Servicer........ 47
SECTION 9.4. Limitation on Liability of Master Servicer and Others...................................... 47
SECTION 9.5. Delegation of Duties....................................................................... 48
SECTION 9.6. Master Servicer Not to Resign.............................................................. 49
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SECTION 9.7. Sub-Servicing Agreements Between Master Servicer and Sub-Servicers......................... 49
SECTION 9.8. Successor Sub-Servicers.................................................................... 50
ARTICLE X
Default
SECTION 10.1. Master Servicer Termination Event.......................................................... 50
SECTION 10.2. Consequences of a Master Servicer Termination Event........................................ 51
SECTION 10.3. Appointment of Successor................................................................... 53
SECTION 10.4. Notification to Noteholders and Certificateholders......................................... 54
SECTION 10.5. Waiver of Past Defaults.................................................................... 54
SECTION 10.6. Successor to Master Servicer............................................................... 54
ARTICLE XI
Termination
SECTION 11.1. Optional Purchase of All Receivables....................................................... 54
ARTICLE XII
Administrative Duties of the Master Servicer
SECTION 12.1. Administrative Duties...................................................................... 55
SECTION 12.2. Records.................................................................................... 58
SECTION 12.3. Additional Information to be Furnished to the Issuer....................................... 58
ARTICLE XIII
Miscellaneous Provisions
SECTION 13.1. Amendments................................................................................. 58
SECTION 13.2. Protection of Title to Trust............................................................... 59
SECTION 13.3. Notices.................................................................................... 61
SECTION 13.4. Assignment................................................................................. 62
SECTION 13.5. Limitations on Rights of Others............................................................ 62
SECTION 13.6. Severability............................................................................... 62
SECTION 13.7. Separate Counterparts...................................................................... 62
SECTION 13.8. Headings................................................................................... 62
SECTION 13.9. Governing Law.............................................................................. 63
SECTION 13.10. Assignment to Indenture Trustee............................................................ 63
SECTION 13.11. Nonpetition Covenants...................................................................... 63
SECTION 13.12. Limitation of Liability of Owner Trustee................................................... 63
SECTION 13.13. Independence of the Master Servicer........................................................ 64
SECTION 13.14. No Joint Venture........................................................................... 64
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EXHIBITS
Exhibit A - Form of Master Servicer's Certificate
Exhibit B - Form of Transfer Agreement
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MASTER SALE AND SERVICING AGREEMENT dated as of July 2, 2001,
among HOUSEHOLD AUTOMOTIVE TRUST 2001-2, 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 U.S. BANK NATIONAL ASSOCIATION, a national banking association,
in its capacity as Indenture Trustee.
WHEREAS the Issuer desires to purchase from time to time
Receivables arising in connection with motor vehicle retail installment sale
contracts acquired by Household Automotive Finance Corporation or any of its
predecessors or Affiliates, including, but not limited to, Household Bank,
f.s.b. ("Household Bank");
WHEREAS the Seller will purchase from time to time Receivables
from Household Automotive Finance Corporation or one or more of its Affiliates,
including, but not limited to, Household Bank, and is willing to sell
Receivables to the Issuer;
WHEREAS the Master Servicer is willing to service all such
receivables;
NOW, THEREFORE, in consideration of the promises and the
mutual covenants herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITIONS. Whenever used in this Agreement, the
following words and phrases shall have the following meanings:
"Accountants' Report" means the report of a firm of nationally
recognized independent accountants described in Section 4.11.
"Accounting Date" means, with respect to a Distribution Date,
the last day of the Collection Period immediately preceding such Distribution
Date.
"Actuarial Method" means the method of allocating a fixed
level monthly payment on an obligation between principal and interest, pursuant
to which the portion of such payment that is allocated to interest is equal to
the product of (a) 1/12, (b) the fixed annual rate of interest on such
obligation and (c) the outstanding principal balance of such obligation.
"Actuarial Receivable" means a Receivable under which the
portion of the payment allocated to interest and the portion allocable to
principal is determined in accordance with the Actuarial Method.
"Addition Notice" means, with respect to any transfer of
Receivables to the Trust pursuant to Section 2.1 of this Agreement, notice of
the Seller's election to
transfer Receivables to the Trust, such notice to designate the related
Transfer Date, the related Series Trust Estate, if any, and the approximate
principal amount of Receivables to be transferred on such Transfer Date.
"Affiliate" means, with respect to any specified Person, any
other Person controlling or controlled by or under common control with such
specified Person. For the purposes of this definition, "control" when used with
respect to any Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Aggregate Principal Balance" means, with respect to any date
of determination, the sum of the Principal Balances for all Receivables (other
than (i) any Receivable that has become a Liquidated Receivable and (ii) any
Receivable that has become a Repurchased Receivable as of the date of
determination).
"Agreement" means this
Master Sale and Servicing Agreement, as
the same may be amended and supplemented from time to time.
"Amount Financed" means, with respect to a Receivable, the
aggregate amount advanced under such Receivable toward the purchase price of the
Financed Vehicle and any related costs, including amounts advanced in respect of
accessories, insurance premiums, service and warranty contracts, other items
customarily financed as part of retail automobile installment sale contracts or
promissory notes, and related costs.
"Annual Percentage Rate" or "APR" of a Receivable means the
annual percentage rate of finance charges or service charges, as stated in the
related Contract.
"Basic Documents" means this Agreement, the Certificate of
Trust, the Trust Agreement, the Indenture, the Master Receivables Purchase
Agreements 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 and
New
York are authorized or obligated to be closed.
"Certificate" has the meaning assigned to such term in the
Trust Agreement and, with respect to a Series, the meaning specified in the
relevant Series Supplement.
"Certificateholder" has the meaning assigned to such term in
the Trust Agreement.
"Class" means a class of Notes or Certificates, as the context
requires.
"Collected Funds" means, with respect to any Collection
Period, the amount of funds in the Collection Account representing collections
(including all administrative fees, expenses and charges actually paid by or on
behalf of Obligors,
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including late fees, payment fees and liquidation fees but excluding taxes,
assessments, credit insurance charges or similar items) on the Receivables
during such Collection Period, including all Net Liquidation Proceeds
collected during such 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.
"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 Indenture Trustee, the corporate
trust office of U.S. Bank National Association, which at the time of execution
of this agreement is U.S. Bank National Association, 000 X. Xxxxxx Xxxxx, Xxxxx
0000, Xxxxxxx, Xxxxxxxx 00000, Attn: Corporate Trust.
"Covenant Receivable" means, with respect to any Collection
Period, a Receivable which the Master Servicer is required to purchase pursuant
to Section 4.7.
"Cram Down Loss" means, with respect to a Receivable, if a
court of appropriate jurisdiction in an insolvency proceeding shall have issued
a final order reducing the amount owed on a Receivable or otherwise modifying or
restructuring the scheduled payments to be made on a Receivable, an amount equal
to (i) the excess of the Principal Balance of such Receivable immediately prior
to such order over the Principal Balance of such Receivable as so reduced and/or
(ii) if such court shall have issued an order reducing the effective rate of
interest on such Receivable, the excess of the Principal Balance of such
Receivable immediately prior to such order over the net present value (using as
the discount rate the higher of the APR on such Receivable or the rate of
interest, if any, specified by the court in such order) of the scheduled
payments as so modified or restructured. A "Cram Down Loss" shall be deemed to
have occurred on the date of issuance of such order.
"Cutoff Date" means, with respect to a Receivable and (i) the
Transfer Date as of which such Receivable is transferred to the Trust, (a) the
Accounting Date immediately preceding such Transfer Date or (b) if such
Receivable is originated in the month of the related Transfer Date, the date of
origination or (ii) the date designated in the related Series Supplement as the
Cutoff Date for such Series.
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"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 Affiliates under a Dealer Agreement or pursuant to a Dealer
Assignment.
"Dealer Agreement" means any agreement between HAFC or one if
its Affiliates and a Dealer relating to the acquisition of Receivables from a
Dealer by HAFC or one of its Affiliates.
"Dealer Assignment" means, with respect to a Receivable, the
executed assignment executed by a Dealer conveying such Receivable to HAFC or
one of its Affiliates.
"Dealer Underwriting Guide" means either (i) the underwriting
guidelines used by or on behalf of HAFC or one of its Affiliates 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 Affiliates prior to the purchase of Receivables by HAFC or
such Affiliate.
"Delivery" means, with respect to Trust Account Property:
(1) (a) with respect to bankers' acceptances, commercial
paper, negotiable certificates of deposit and other obligations that constitute
"instruments" within the meaning of Article 9 of the UCC, transfer thereof:
(i) by physical delivery to the Indenture Trustee,
indorsed to, or registered in the name of, the Indenture
Trustee or its nominee or indorsed in blank;
(ii) by the Indenture Trustee continuously
maintaining possession of such instrument; and
(iii) by the Indenture Trustee continuously
indicating by book-entry that such instrument is credited to
the related Trust Account;
(b) with respect to a "certificated security" (as defined in
Article 8 of the UCC), transfer thereof:
(i) by (x) physical delivery of such certificated
security to the Indenture Trustee, provided that if the
certificated security is in registered form, it shall be
indorsed to, or registered in the name of, the Indenture
Trustee or indorsed in blank, and (y) the Indenture Trustee
continuously maintaining possession of such certificated
security; or
(ii) by another Person (not a securities
intermediary) (1) acquiring possession of such certificated
security on behalf of the Indenture Trustee, provided that if
the certificated security is in registered form, it shall be
indorsed to, or registered in the name of, the Indenture
Trustee or indorsed in blank, or (2) having acquired
possession of such
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certificated security, acknowledging that it holds such
certificated security for the Indenture Trustee, and, in
either such case, continuously maintaining possession of such
certificated security; and
by the Indenture Trustee continuously indicating by book-entry that
such certificated security is credited to the related Trust Account;
(c) with respect to any security issued by the U.S. Treasury,
the Federal Home Loan Mortgage Corporation or the Federal National
Mortgage Association that is a book-entry security held through the
Federal Reserve System pursuant to Federal book entry regulations,
transfer thereof pursuant to the following procedures, all in
accordance with applicable law, including applicable federal
regulations and Articles 8 and 9 of the UCC:
(i) by (x) book-entry registration of such property
to an appropriate book-entry account maintained with a Federal
Reserve Bank by a securities intermediary that 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 Indenture Trustee of the purchase by the securities
intermediary on behalf of the Indenture 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 Indenture Trustee and continuously indicating that such
securities intermediary holds such book-entry security solely
as agent for the Indenture Trustee or (y) continuous
book-entry registration of such property to a book-entry
account maintained by the Indenture Trustee with a Federal
Reserve Bank; and
(ii) by the Indenture Trustee continuously indicating
by book-entry that such property is credited to the related
Trust Account;
(d) with respect to any asset in the Trust Accounts that is an
"uncertificated security" (as defined in Article 8 of the UCC) and that
is not governed by clause (c) above or clause (e) below:
(i) transfer thereof:
(A) by registration to the Indenture Trustee as the
registered owner thereof, on the books and records of the
issuer thereof; or
(B) by another Person (not a securities intermediary)
(1) becoming the registered owner of the uncertificated
security on behalf of the Indenture Trustee, or (2) having
become the registered owner of the uncertificated security,
acknowledging that it holds such uncertificated security for
the Indenture Trustee; or
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(ii) the issuer of the uncertificated security has
agreed that it will comply with instructions originated by the
Indenture Trustee with respect to such uncertificated security
without further consent of the registered owner thereof; and
the Indenture Trustee continuously indicating by book-entry that such
uncertificated security is credited to the related Trust Account;
(e) in the case of a security in the custody of or maintained
on the books of a clearing corporation (as defined in Article 8 of the
UCC) or its nominee, transfer thereof by causing:
(i) the relevant clearing corporation to credit such
security to a securities account of the Indenture Trustee at
such clearing corporation; and
(ii) the Indenture Trustee to continuously indicate
by book-entry that such security is credited to the related
Trust Account; or
(f) with respect to a "security entitlement" (as defined in
Article 8 of the UCC) to be transferred to or for the benefit of the
Indenture Trustee and not governed by clauses (c) or (e) above,
transfer thereof by:
(i) a securities intermediary's (A) indicating by
book entry that the underlying "financial asset" (as defined
in Article 8 of the UCC) has been credited to the Indenture
Trustee's "securities account" (as defined in Article 8 of the
UCC), (B) receiving a financial asset from the Indenture
Trustee or acquiring the underlying financial asset for the
Indenture Trustee, and in either case, accepting it for credit
to the Indenture Trustee's securities account, or (C) becoming
obligated under other law, regulation or rule to credit the
underlying financial asset to the Indenture Trustee's
securities account,
(ii) the making by the securities intermediary of
entries on its books and records continuously identifying such
security entitlement as belonging to the Indenture Trustee;
and continuously indicating by book-entry that such securities
entitlement is credited to the Indenture Trustee's securities
account; and
(iii) the Indenture Trustee's continuously indicating
by book-entry that such security entitlement (or all rights
and property of the Indenture Trustee representing such
securities entitlement) is credited to the related Trust
Account; and/or
(2) In the case of any such asset, (i) compliance with such
additional or alternative procedures as are now or may hereafter become
appropriate to effect the complete transfer of ownership of, or control over,
any such Trust Account Property to the Indenture Trustee free and clear of any
adverse claims, consistent with changes in
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applicable law or regulations or the interpretation thereof, and (ii) the
Indenture Trustee's continuously indicating by book entry that such asset is
credited to the related Trust Account.
In each case of delivery contemplated herein, the Indenture
Trustee shall make appropriate notations on its records, and shall cause the
same to be made on the records of its nominees, indicating that securities are
held in trust pursuant to and as provided in this Agreement.
"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.
"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
Indenture Trustee) organized under the laws of the United States of America or
any one of the states thereof or the District of Columbia (or any United States
branch or agency of a foreign bank), which is subject to supervision and
examination by federal or state banking authorities and which at all times (a)
has a net worth in excess of $50,000,000 and (b) has either (i) a rating of P-1
from Moody's, A-1 from Standard & Poor's and F1+ from Fitch, Inc. 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, a rating of
BBB- or higher from Standard & Poor's and a rating of BBB- or higher from Fitch,
Inc. with respect to long-term deposit obligations, or such other lower ratings
acceptable to the Rating Agency.
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"Eligible Investments" shall mean, except as otherwise
provided in a Series Supplement, (i) negotiable instruments or securities
represented by instruments in bearer or registered form (or, in the case of
Eligible Investments described in clause (a) of this definition, book-entry
securities representing such obligations), or (ii) securities entitlements (as
defined in Article 8 of the UCC) arising from Delivery of any such negotiable
instruments or securities in accordance with the provisions of clause (1)(f) of
the definition of such term, or (iii) in the case of deposits described below,
deposit accounts held in the name of the Indenture Trustee in trust for the
benefit of the Holders of the Securities of the relevant Series, subject to the
exclusive custody and control of the Indenture Trustee and for which the
Indenture Trustee has sole signature authority, which evidence or arise out of,
as the case may be:
(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, and PROVIDED FURTHER that the "jurisdiction" of such depositary
institution or trust company, for purposes of Article 9 of the UCC, shall be a
state in which Revised Article 9 of the UCC (1999) has become effective and in
which security interests in deposit accounts are subject to Article 9, as in
effect therein;
(c) commercial paper (having original or remaining maturities
of not more than 30 days) having, at the time of the Trust's investment or
contractual commitment to invest therein, a rating satisfactory to the Rating
Agency;
(d) investments in money market funds having, at the time of
the Trust's investment therein, a rating acceptable to the Rating Agency;
(e) demand deposits, time deposits and certificates of deposit
which are fully insured by the FDIC having, at the time of the Trust's
investment therein, a rating satisfactory to the Rating Agency;
(f) bankers' acceptances (having original maturities of no
more than 365 days) issued by a depository institution or trust company referred
to in (b) above;
(g) (x) time deposits (having maturities not later than the
succeeding Distribution Date) other than as referred to in clause (e) above,
with a Person the commercial paper of which has a credit rating satisfactory to
the Rating Agency or (y) notes which are payable on demand issued by Household
Finance Corporation; PROVIDED such notes will constitute Eligible Investments
only if the commercial paper of
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Household Finance Corporation 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 by
or through the Indenture Trustee or through any of its Affiliates.
"Eligible Servicer" means Household Finance Corporation or any
Person which at the time of its appointment as Master 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 Finance Corporation 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.
"Financed Vehicle" means a new or used automobile, light-duty
truck or van securing an Obligor's indebtedness under the respective Receivable.
"HAFC" means Household Automotive Finance Corporation.
"Household Bank" means Household Bank, f.s.b., a federal
savings bank. For the avoidance of doubt, Household Bank is an Affiliate of
HAFC.
"Indenture" means the indenture dated as of July 2, 2001
between the Issuer and U.S. Bank National Association, as indenture trustee, as
supplemented by the Series 2001-2 Supplement.
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"Indenture Trustee" means the Person acting as trustee under
the Indenture, its successors in interest and any successor trustee under the
Indenture.
"Indenture Trustee Fee" means the fees due to the Indenture
Trustee as may be set forth in that certain fee agreement dated as of the date
hereof between the Master Servicer and U.S. Bank National Association.
"Insolvency Event" means, with respect to a specified Person,
(a) the filing of a petition against such Person or the entry of a decree or
order for relief by a court having jurisdiction in the premises in respect of
such Person or any substantial part of its property in an involuntary case under
any applicable federal or state bankruptcy, insolvency or other similar law now
or hereafter in effect, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator, or similar official for such Person or for any
substantial part of its property, or ordering the winding-up or liquidation of
such Person's affairs, and such petition, decree or order shall remain unstayed
and in effect for a period of 60 consecutive days; or (b) the commencement by
such Person of a voluntary case under any applicable federal or state
bankruptcy, insolvency or other similar law now or hereafter in effect, or the
consent by such Person to the entry of an order for relief in an involuntary
case under any such law, or the consent by such Person to the appointment of or
taking possession by, a receiver, liquidator, assignee, custodian, trustee,
sequestrator, or similar official for such Person or for any substantial part of
its property, or the making by such Person of any general assignment for the
benefit of creditors, or the failure by such Person generally to pay its debts
as such debts become due, or the taking of action by such Person in furtherance
of any of the foregoing.
"Insurance Policy" means, with respect to a Receivable, any
insurance policy (including the insurance policies described in Section 4.4
hereof) benefiting the holder of the Receivable providing loss or physical
damage, credit life, credit disability, theft, mechanical breakdown or similar
coverage with respect to the Financed Vehicle or the Obligor.
"Interest Period" for any Class or Series of Notes or
Certificates, the meaning set forth in the related Series Supplement.
"Issuer" means Household Automotive Trust 2001-2, 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
10
of the applicable state to a secured party which indicates that the lien of
the secured party on the Financed Vehicle is recorded on the original
certificate of title. In any jurisdiction in which the original certificate
of title is required to be given to the Obligor, the term "Lien Certificate"
shall mean only a certificate or notification issued to a secured party.
"Liquidated Receivable" means, with respect to any Collection
Period, upon the earliest of each of the following to occur, a Receivable as to
which (i) such Receivable has been liquidated by the Master Servicer through the
sale of the Financed Vehicle, (ii) 90 days have elapsed since the Master
Servicer repossessed the Financed Vehicle, (iii) proceeds have been received in
respect of such Receivable which, in the Master Servicer's reasonable judgment,
constitute the final amounts recoverable in respect of such Receivable or (iv)
10% or more of a Scheduled Payment shall have become 150 or more days delinquent
(or, for certain loans originated by an Affiliate of HAFC, 120 or more days
delinquent or, in the case where the Obligor of such Receivable is subject to an
Insolvency Event, 10% or more of a Scheduled Payment shall have become 210 or
more days delinquent). 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 Receivables Purchase Agreements" with respect to a
Series, has the meaning specified therefor in the related Series Supplement.
"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 Extension Rate" means, with respect to any Accounting
Date, the fraction, expressed as a percentage, the numerator of which is the
aggregate Principal Balance of Receivables whose payments were extended during
the Collection Period ended on such Accounting Date and the denominator of which
is the Aggregate Principal Balance as of the Accounting Date on which such
Collection Period began.
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"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, if any;
Obligor name; Obligor address; Obligor home phone number; Obligor business phone
number; original Principal Balance; original term; Annual Percentage Rate;
current Principal Balance; current remaining term; origination date; first
payment date; final scheduled payment date; next payment due date; date of most
recent payment; new/used classification; collateral description; days currently
delinquent; number of contract extensions (months) to date; amount of Scheduled
Payment; current Insurance Policy expiration date; and past due late charges.
"Moody's" means 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 or received 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 Net
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.
"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 Indenture
Trustee.
"Other Conveyed Property" means all property conveyed by the
Seller to the Trust pursuant to Section 2.1(a)(ii) through (xii) of this
Agreement.
"Outstanding" has the meaning assigned to such term in the
Indenture.
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"Outstanding Amount" means, with respect to any Series, the
aggregate principal amount of all Notes of such Series which are Outstanding at
the date of determination after giving effect to all distributions of principal
on such date of determination.
"Owner Trust Estate" has the meaning assigned to such term in
the Trust Agreement.
"Owner Trustee" means Wilmington Trust Company, not in its
individual capacity but solely as Owner Trustee under the Trust Agreement, its
successors-in-interest or any successor Owner Trustee under the Trust Agreement.
"Payment Record" means the record maintained by the Master
Servicer for the Trust as provided in Section 4.2(d) hereof.
"Person" means any individual, corporation, limited liability
company, 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.
"Rating Agency" means, with respect to any outstanding Series
or Class, each Rating Agency specified in the Series Supplement.
"Rating Agency Condition" means, with respect to any action
with respect to a Series, that each Rating Agency shall have received prior
notice thereof and that each Rating Agency shall have notified the Master
Servicer in writing (who shall then immediately notify the Seller, the Owner
Trustee and the Indenture Trustee in writing) that such action will not result
in a reduction or withdrawal of the then current rating of any Class of Notes.
"Receivable" means any Contract listed on Schedule II-A,
Schedule II-B or Schedule II-C to the Series Supplement or 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.
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"Receivables Purchase Agreement Supplement" means any
Receivables Purchase Agreement Supplement to any Master Receivables Purchase
Agreement.
"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 the Master Servicer pursuant to Section 11.1(a).
"Schedule of Eligibility Criteria" means the Schedule of
Eligibility Criteria attached as Schedule I to a Series Supplement.
"Schedules 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 are attached as
Schedule II-A, Schedule II-B and Schedule II-C to the Series Supplement or
Schedule A to the Transfer Agreements relating to such Series Trust Estate.
"Scheduled Payment" means, with respect to any Collection
Period for any Receivable, the amount set forth in such Receivable as required
to be paid by the Obligor in such Collection Period. If after the Series Closing
Date, the Obligor's obligation under a Receivable with respect to a Collection
Period has been modified so as to differ from the amount specified in such
Receivable as a result of (i) the order of a court in an insolvency proceeding
involving the Obligor, (ii) pursuant to the Soldiers' and Sailors' Civil Relief
Act of 1940, as amended, or (iii) modifications or extensions of the Receivable
permitted by Sections 4.2(b) and (c), the Scheduled Payment with respect to such
Collection Period shall refer to the Obligor's payment obligation with respect
to such Collection Period as so modified.
"Securities" means the Notes and the Certificates.
"Securityholders" means the Noteholders and the
Certificateholders.
"Seller" means
Household Auto Receivables Corporation, a
Nevada corporation, and its successors in interest to the extent permitted
hereunder.
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"Series" means, with respect to any Notes, Notes issued
pursuant to the same Series Supplement and with respect to any Certificates,
Certificates issued pursuant to the same Series Supplement, or the Notes and
Certificates issued pursuant to the same Series Supplement, as the context may
require.
"Series Closing Date" means, with respect to any Series, the
date designated in the related Series Supplement as the closing date for such
Series.
"Series Collection Account" means, with respect to any Series,
the collection account designated in the related Series Supplement.
"Series of Certificates" means the Certificates issued in
connection with a Series of Notes.
"Series Related Documents" with respect to a Series, has the
meaning specified therefor in the related Series Supplement.
"Series Supplement" means, with respect to any Series, a
Series Supplement to the Indenture and the Trust Agreement, executed and
delivered in connection with the original issuance of the Notes and Certificates
of such Series, and all amendments thereof and supplements thereto.
"Series Support" means the rights and benefits provided to the
Indenture Trustee or the Noteholders of any Series or Class pursuant to any
letter of credit, surety bond, cash collateral account, spread account,
guaranteed rate agreement, maturity liquidity facility, interest rate swap
agreement, tax protection agreement or other similar arrangement. The
subordination of any Series or Class to another Series or Class shall be deemed
to be a Series Support. Notwithstanding that such Series Support may be held by
or in favor of the Indenture 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
Indenture 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 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.
15
"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 Aggregate Principal
Balance for such Series Trust Estate determined as of the Accounting Date
immediately preceding such Collection Period. For the avoidance of doubt, the
Servicing Fee does not include any administrative fees, expenses or charges paid
by or on behalf of Obligors during any Collection Period.
"Servicing Fee Rate" means 2.25% 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, a division of the
McGraw Hill Companies, Inc., 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.
"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.
16
"Trust Accounts" has the meaning assigned thereto in Section
5.1.
"Trust Agreement" means the Trust Agreement, dated as of June
29, 2001, between the Seller and the Owner Trustee, as amended and restated as
of July 2, 2001 and as supplemented by the Series 2001-2 Supplement, and as the
same may be amended and further supplemented from time to time.
"Trust Officer" means, (i) in the case of the Indenture
Trustee, the chairman or vice-chairman of the board of directors, the chairman
or vice-chairman of the executive committee of the board of directors, the
president, any vice president, assistant vice-president or managing director,
the secretary, any assistant secretary or any other officer of the Indenture
Trustee customarily performing functions similar to those performed by any of
the above designated officers and also means, with respect to a particular
corporate trust matter and having direct responsibility for the Administration
of this Agreement, and (ii) in the case of the Owner Trustee, any officer in the
corporate trust office of the Owner Trustee or any agent of the Owner Trustee
under a power of attorney with direct responsibility for the administration of
this Agreement or any of the Basic Documents or Series Related Documents on
behalf of the Owner Trustee.
"UCC" means the Uniform Commercial Code as in effect in the
relevant jurisdiction on the date of the Agreement.
"Warranty Receivable" With respect to any Collection Period, a
Receivable which the Seller has become obligated to repurchase pursuant to
Section 3.2.
SECTION 1.2 OTHER INTERPRETIVE PROVISIONS. (a)
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.
17
(d) Any agreement, instrument or statute defined or
referred to herein or in any instrument or certificate delivered in connection
herewith means such agreement, instrument or statute as from time to time
amended, modified or supplemented and includes (in the case of agreements or
instruments) references to all attachments thereto and instruments incorporated
therein.
(e) Any term defined herein, which is otherwise
defined in a Series Supplement, shall have the meaning with respect to such
Series specified therefor in such Series Supplement, whether or not the
definition in this Agreement includes a phrase to the effect that such term may
be otherwise defined in a Series Supplement.
(f) In the event that with respect to a Series there
is no Series Support Provider, any references herein or in any other of the
Basic Documents to the consent of, or acceptability to, the Series Support
Provider shall be deemed to be deleted.
SECTION 1.3 USAGE OF TERMS. With respect to all terms used
in this Agreement, the singular includes the plural and the plural includes
the singular; words importing any gender include the other gender; references
to "writing" include printing, typing, lithography, and other means of
reproducing words in a visible form; references to agreements and other
contractual instruments include all subsequent amendments thereto or changes
therein entered into in accordance with their respective terms and not
prohibited by this Agreement; references to Persons include their permitted
successors and assigns; the terms "include" or "including" mean "include
without limitation" or "including without limitation;" the words "herein",
"hereof" and "hereunder" and other words of similar import refer to this
Agreement as a whole and not to any particular Article, Section or other
subdivision, and Article, Section, Schedule and Exhibit references, unless
otherwise specified, refer to Articles and Sections of Schedules and Exhibits
to this Agreement.
SECTION 1.4 CERTAIN REFERENCES. All references to the
Principal Balance of a Receivable as of any date of determination shall refer
to the close of business on such day, or as of the first day of an Interest
Period shall refer to the opening of business on such day. All references to
the last day of an Interest Period shall refer to the close of business on
such day.
SECTION 1.5 NO RECOURSE. Without limiting the obligations
of the Master Servicer or Seller hereunder, no recourse may be taken,
directly or indirectly, under this Agreement or any certificate or other
writing delivered in connection herewith or therewith, against any
stockholder, officer or director, as such, of the Master Servicer or Seller,
or of any of their respective Affiliates, predecessors or successors.
SECTION 1.6 ACTION BY OR CONSENT OF NOTEHOLDERS. Whenever
any provision of this Agreement refers to action to be taken, or consented
to, by Noteholders, such provision shall be deemed to refer to the
Noteholders of record as of the Record Date immediately preceding the date on
which such action is to be taken, or consent given, by Noteholders. Solely
for the purposes of any action to be taken, or consented to, by Noteholders,
any Note registered in the name of HAFC or any Affiliate thereof shall
18
be deemed not to be outstanding; PROVIDED, HOWEVER, that, solely for the
purpose of determining whether the Indenture Trustee is entitled to rely upon
any such action or consent, only Notes which the Trust Officer of the
Indenture Trustee actually knows to be so owned shall be so disregarded.
ARTICLE II
CONVEYANCE OF RECEIVABLES
SECTION 2.1 CONVEYANCE OF RECEIVABLES. (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 the Series Closing
Date or a Transfer Date of the net proceeds from the sale of a Series of
Notes thereunder and the other amounts to be distributed from time to time to
the Seller in accordance with the terms of this Agreement and the related
Series Supplement, the Seller shall, from time to time, sell, transfer,
assign, set over and otherwise convey to the Issuer, without recourse
(subject to the obligations set forth herein), all right, title and interest
of the Seller in and to:
(i) each and every Receivables listed on Schedule
II-A, Schedule II-B and Schedule II-C to the Series
Supplement and Schedule A to the related Transfer
Agreement, if any, and all monies paid or payable
thereon or in respect thereof after the Series
Closing Date or 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;
(iv) any proceeds and the right to receive
proceeds with respect to such Receivables repurchased
by a Dealer, pursuant to a Dealer Agreement as a
result of a breach of representation or warranty in
the related Dealer Agreement;
(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;
19
(vii) all items contained in the related
Receivables Files with respect to the Receivables;
and any and all other documents that HAFC or
Household Bank, as applicable, 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 Master
Receivables Purchase Agreements and the Receivables
Purchase Agreement Supplements, including the
delivery requirements, representations and warranties
and the cure and repurchase obligations of HAFC or
Household Bank, as applicable, under each of the
Master Receivables Purchase Agreements and the
related Receivables Purchase Agreement Supplements,
on or after the related Cutoff Date;
(xi) one share of Class SV Preferred Stock
of the Seller; and
(xii) 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 Series Closing Date or the related Transfer Date:
(i) if the transfer is not on the Series Closing
Date, the Seller shall have provided the Indenture
Trustee and the Owner Trustee with an Addition Notice
not later than five days prior to such
20
Transfer Date (which Addition Notice will designate
the Series Trust Estate which the Receivables will
be a part of, if any) and shall have provided any
information reasonably requested by any of the
foregoing with respect to the related Receivables;
(ii) the Seller shall have delivered to the Owner
Trustee and the Indenture Trustee a duly executed
Transfer Agreement or Series Supplement which shall
include a schedule (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 the Series Closing Date and 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 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 the
Series Closing Date or the related Transfer Date
shall be true and correct as of the Series Closing
Date or 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 Series Closing Date or the related
Transfer Date indicate in its computer files that the
Receivables identified in the Schedule to the Series
Supplement or to the related 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 Indenture 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 Indenture Trustee in the Series Trust Estate;
(viii) no selection procedures adverse to the
interests of the related Series shall have been
utilized in selecting the related Receivables;
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(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 Indenture Trustee any amounts
required to be deposited in the related Trust
Accounts with respect to the Receivables transferred
on such Series Closing Date or Transfer Date; and
(xi) the Seller shall have delivered to the
Indenture Trustee an Officers' Certificate confirming
the satisfaction of each condition precedent
specified in this paragraph (b).
The Seller covenants that in the event any of the foregoing
conditions precedent are not satisfied with respect to any Receivable on the
date required as specified above, the Seller will immediately repurchase such
Receivable from the Trust, at a price equal to the Repurchase Amount thereof.
It is the intention of the Seller that the transfer and
assignment contemplated by this Agreement and each related Transfer Agreement
shall constitute a sale of the related Series Trust Estate from the Seller to
the Issuer and the beneficial interest in and title to the related Series Trust
Estate shall not be part of the Seller's estate in the event of the filing of a
bankruptcy petition by or against the Seller under any bankruptcy law. In the
event that, notwithstanding the intent of the Seller, the transfer and
assignment contemplated hereby and thereby is held not to be a sale, this
Agreement and the related Transfer Agreement shall constitute a grant of a
security interest in the property referred to in this Section 2.1 for the
benefit of the Noteholders.
SECTION 2.2 FURTHER ENCUMBRANCE OF SERIES TRUST ESTATE.
(a) Immediately upon the conveyance to the Trust by the Seller of any item of
the related Series Trust Estate pursuant to Section 2.1, all right, title and
interest of the Seller in and to such Series Trust Estate shall terminate,
and all such right, title and interest shall vest in the Issuer, in
accordance with the Trust Agreement and Sections 3802 and 3805 of the
Business Trust Statute (as defined in the Trust Agreement).
(b) Immediately upon the vesting of the related
Series Trust Estate in the Trust, the Trust shall have the sole right to pledge
or otherwise encumber, such related Series Trust Estate. Pursuant to the
Indenture and a Series Supplement, the Trust will grant a security interest in
the Series Trust Estate to secure the repayment of a related Series of Notes.
The related Series of Certificates shall represent the beneficial ownership
interest in the related Series Trust Estate, and the related Series of
Certificateholders shall be entitled to receive distributions with respect
thereto as set forth in the related Series Supplement.
(c) The Indenture Trustee shall hold the related
Series Trust Estate for the benefit of the related Series Securityholders.
Following the payment in full of the related Series of Notes and the release and
discharge of the Indenture and the
22
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 Indenture 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 Indenture Trustee shall, at such time as
there are no Securities of a Series outstanding and all sums due to the
Indenture Trustee or any agent or counsel thereof pursuant to the Indenture as
supplemented by the related Series Supplement, have been paid, pursuant to
Section 4.1 of the Indenture, and subject to satisfaction of the conditions set
forth therein, release the Lien of the related Series Supplement and the
Indenture with respect to the related Series Trust Estate.
ARTICLE III
THE RECEIVABLES
SECTION 3.1 REPRESENTATIONS AND WARRANTIES OF SELLER. The
Seller represents and warrants as to the related Receivables that the
representations and warranties set forth on the Schedule of Eligibility
Criteria with respect to a Series are, or will be, true and correct as of the
respective dates specified in such Schedule. The Issuer is deemed to have
relied on such representations and warranties in acquiring the related
Receivables and the related Securityholders shall be deemed to rely on such
representations and warranties in purchasing the Notes. Such representations
and warranties shall survive the sale, transfer and assignment of the related
Series Trust Estate to the Issuer and any pledge thereof to the Indenture
Trustee pursuant to the Indenture and the related Series Supplement.
SECTION 3.2 REPURCHASE UPON BREACH. (a) The Seller, the
Master Servicer, any Trust Officer of the Indenture Trustee or the Owner
Trustee, as the case may be, shall inform each of the other parties to this
Agreement promptly, in writing, upon the discovery of any breach of the
Seller's representations and warranties made pursuant to Section 3.1;
PROVIDED, HOWEVER, that the failure to give any such notice shall not
derogate from any obligations of the Seller under this Section 3.2. As of the
last day of the second (or, if the Seller so elects, the first, or with
respect to any exceptions appearing on any exception report delivered by the
Indenture Trustee, the first) month following the discovery by the Seller or
receipt by the Seller of notice of such breach (or such longer period not in
excess of 120 days, as may be agreed upon by the Indenture Trustee and the
Master Servicer), unless such breach is cured by such date, the Seller shall
have an obligation to repurchase or cause HAFC or Household Bank, as
applicable, to repurchase any Receivable in which the interests of the
related Series Securityholders are materially and adversely affected by any
such breach. In consideration of and simultaneously with the repurchase of
the Receivables, the Seller shall remit, or cause HAFC or Household Bank, as
applicable, to remit, to the related Series Collection
23
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 Indenture Trustee and the related
Series Securityholders with respect to a breach of representations and
warranties pursuant to Section 3.1 and the agreement contained in this
Section shall be the repurchase of the Receivables pursuant to this Section,
subject to the conditions contained herein or to enforce the obligation of
HAFC or Household Bank, as applicable, to the Seller to repurchase such
Receivables pursuant to the Master Receivables Purchase Agreements. Neither
the Owner Trustee nor the Indenture Trustee shall have a duty to conduct any
affirmative investigation as to the occurrence of any conditions requiring
the repurchase of any Receivable pursuant to this Section.
(b) Pursuant to Section 2.1 of this Agreement and
pursuant to the related Transfer Agreement, the Seller conveyed to the Trust all
of the Seller's right, title and interest in its rights and benefits, but none
of its obligations or burdens, under the Master Receivables Purchase Agreements
and the related Receivables Purchase Agreement Supplements, including the
Seller's rights under the Master Receivables Purchase Agreements and the
delivery requirements, representations and warranties and the cure or repurchase
obligations of HAFC or Household Bank, as applicable, thereunder. The Seller
hereby represents and warrants to the Trust that such assignment is valid,
enforceable and effective to permit the Trust to enforce such obligations of
HAFC or Household Bank, as applicable, under the Master Receivables Purchase
Agreements.
SECTION 3.3 CUSTODY OF RECEIVABLES FILES. In connection
with the sale, transfer and assignment of the Receivables, if any, to the
Trust pursuant to this Agreement and pursuant to the related Transfer
Agreement, the Master Servicer shall act as custodian for the benefit of the
Indenture Trustee of the following documents or instruments with respect to
each Receivable:
(i) The fully executed original of the Receivable
(together with any agreements modifying the
Receivable, including, without limitation, any
extension agreements);
(ii) The original credit application, or a copy
thereof, of each Obligor, fully executed by each such
Obligor on HAFC's, an Affiliate of HAFC's or the
Dealer's customary form, or on a form approved by
HAFC or an Affiliate of HAFC, as applicable, for such
application; and
(iii) The original certificate of title (when
received) and otherwise such documents, if any, that
HAFC or an Affiliate of HAFC, as applicable, 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
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(including any Lien Certificate received by HAFC or
an Affiliate of HAFC, as applicable), or, (y) a
Dealer 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 a Dealer 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, HAFC or an
Affiliate of HAFC.
Notwithstanding the foregoing, the Master Servicer may appoint a Sub-Servicer as
subcustodian, which subcustodian may hold physical possession of some or all of
the Receivable Files. The Indenture Trustee shall have no liability for the acts
or omissions of any such custodian or subcustodian.
ARTICLE IV
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 4.1 DUTIES OF THE MASTER SERVICER. The Master
Servicer is hereby authorized to act as agent for the Trust (and also on
behalf of the Indenture 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 Finance Corporation 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 statements to Obligors, reporting any required
tax information to Obligors, accounting for collections and furnishing
monthly and annual statements to the Indenture Trustee with respect to
distributions, monitoring the status of Insurance Policies with respect to
the Financed Vehicles and performing the other duties specified herein. The
Master Servicer shall also administer and enforce all rights and
responsibilities of the holder of the Receivables provided for in the Dealer
Agreements (and Household Finance Corporation shall make efforts to obtain
possession of the Dealer Agreements, to the extent it is necessary to do so),
the Dealer Assignments and the Insurance Policies, to the extent that such
Dealer Agreements, Dealer Assignments 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
25
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. The Master Servicer is hereby authorized to commence,
in it's own name or in the name of the Trust, a legal proceeding to enforce a
Receivable pursuant to Section 4.3 or to commence or participate in any other
legal proceeding (including, without limitation, a bankruptcy proceeding)
relating to or involving a Receivable, an Obligor or a Financed Vehicle. If
the Master Servicer commences or participates in such a legal proceeding in
its own name, the Trust shall thereupon be deemed to have automatically
assigned such Receivable to the Master Servicer solely for purposes of
commencing or participating in any such proceeding as a party or claimant,
and the Master Servicer is authorized and empowered by the Trust to execute
and deliver in the Master Servicer's name any notices, demands, claims,
complaints, responses, affidavits or other documents or instruments in
connection with any such proceeding. The Indenture Trustee and the Owner
Trustee shall furnish the Master Servicer with any powers of attorney and
other documents which the Master Servicer may reasonably request and which
the Master Servicer deems necessary or appropriate and take any other steps
which the Master Servicer may deem reasonably necessary or appropriate to
enable the Master Servicer to carry out its servicing and administrative
duties under this Agreement.
SECTION 4.2 COLLECTION OF RECEIVABLE PAYMENTS;
MODIFICATIONS OF RECEIVABLES. (a) 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 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.
Consistent with the foregoing, the Master Servicer may, if it determines in
its reasonable judgement that such action would maximize the amount to be
received by the Trust, arrange for the sale by the Trust of Liquidated
Receivables with respect to which the related Financed Vehicle has been sold,
and the proceeds of such sale shall be included in Net Liquidation Proceeds.
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;
PROVIDED, HOWEVER, that no modification of a Receivable in connection with a due
date change pursuant to this clause (i) shall be considered an extension for
purposes of Section 4.2(c) below and therefore shall not be subject to the
restrictions on extensions, modifications or amendments specified in Section
4.2(c) below or (ii) re-amortize the Scheduled Payments on the
26
Receivable following a partial prepayment of principal; PROVIDED, HOWEVER,
that no re-amortization permitted by this clause (ii) 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 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 three months can be in
any consecutive twelve month period;
(ii) In no event may a Receivable be extended by
the Master Servicer beyond the Collection Period
immediately preceding the Final Scheduled
Distribution Date of the Notes with respect to the
related Series; and
(iii) The average Monthly Extension Rate for any
three consecutive calendar months shall not exceed
4%.
(d) Except as otherwise provided below, the Master
Servicer shall deposit collections on or with respect to Receivables into the
Master Collection Account or the related Series Trust Account, as applicable, 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
Finance Corporation remains the Master Servicer and maintains a commercial paper
rating of not less than A-1 by Standard & Poor's, P-1 by Moody's and F1+ by
Fitch, Inc. (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, A-1 by Standard & Poor's and F1+ by Fitch, Inc. and (B)
long term obligations of at least A2 by Moody's, A by Standard & Poor's and A by
Fitch, Inc. 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 or the related Series Trust Account, as applicable, in
immediately available funds not later than 1:00 P.M., Central
27
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 Indenture Trustee
and the Master Servicer Credit Facility Issuer in writing of the amounts that
would otherwise be deposited in the Collection Account. 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 Indenture 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 Indenture Trustee, or any Master Servicer Credit Facility
Issuer. The Master Servicer shall give written notice to the Indenture
Trustee if it is required to deposit funds in accordance with the first
sentence of this paragraph.
SECTION 4.3 REALIZATION UPON RECEIVABLES. (a) Consistent
with the standards, policies and procedures required by this Agreement, the
Master Servicer shall use its best efforts to repossess (or otherwise
comparably convert the ownership of) and liquidate any Financed Vehicle
securing a Receivable with respect to which the Master Servicer has
determined that payments thereunder are not likely to be resumed, as soon as
is practicable after default on such Receivable but in no event later than
the date on which 10% or more of a Scheduled Payment has become 150 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
28
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 or Dealer Assignment, the act
of commencement shall be deemed to be an automatic assignment from the Trust
to the Master Servicer of the rights under such Dealer Agreement and Dealer
Assignment for purposes of collection only. If, HOWEVER, in any enforcement
suit or legal proceeding it is held that the Master Servicer may not enforce
a Dealer Agreement or Dealer Assignment on the grounds that it is not a real
party in interest or a Person entitled to enforce the Dealer Agreement or
Dealer Assignment, the Owner Trustee, at the Master Servicer's written
direction and expense, or the Seller, at the Seller's expense, shall take
such steps as the Master Servicer deems reasonably necessary to enforce the
Dealer Agreement or Dealer Assignment, including bringing suit in its name or
the name of the Seller or of the Trust and the Owner Trustee for the benefit
of the Securityholders. All amounts recovered shall be remitted directly by
the Master Servicer as provided in Section 4.2(d).
(c) The Master Servicer agrees that prior to
delivering any repossessed Finance Vehicle for sale to any dealer, it shall
make such filings and effect such notices as are necessary under Section
9-324 of the UCC to preserve the Trust's ownership interest (or security
interest, as the case may be) in such repossessed Financed Vehicle.
SECTION 4.4 INSURANCE. (a) 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 or an Affiliate of HAFC, as applicable, 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
29
Servicer elects to commence a legal proceeding to enforce an Insurance
Policy, the act of commencement shall be deemed to be an automatic assignment
of the rights of the Trust under such Insurance Policy to the Master Servicer
for purposes of collection only. If, HOWEVER, in any enforcement suit or
legal proceeding it is held that the Master Servicer may not enforce an
Insurance Policy on the grounds that it is not a real party in interest or a
holder entitled to enforce the Insurance Policy, the Owner Trustee, at the
Master Servicer's written direction and expense, or the Seller, at the
Seller's expense, shall take such steps as the Master Servicer deems
reasonably necessary to enforce such Insurance Policy, including bringing
suit in its name or the name of the Trust and the Owner Trustee for the
benefit of the Noteholders.
SECTION 4.5 MAINTENANCE OF SECURITY INTERESTS IN VEHICLES.
Consistent with the policies and procedures required by this Agreement, the
Master Servicer shall take such steps on behalf of the Trust as are necessary
to maintain perfection of the security interest created by each Receivable in
the related Financed Vehicle on behalf of the Trust as the Indenture Trustee
shall reasonably request, including, but not limited to, obtaining the
execution by the Obligors and the recording, registering, filing,
re-recording, re-filing, and re-registering of all security agreements,
financing statements and continuation statements as are necessary to maintain
the security interest granted by the Obligors under the respective
Receivables. The Owner Trustee, on behalf of the Trust, hereby authorizes the
Master Servicer, and the Master Servicer agrees, to take any and all steps
necessary to re-perfect such security interest on behalf of the Trust as
necessary because of the relocation of a Financed Vehicle or for any other
reason. In the event that the assignment of a Receivable to the Trust is
insufficient, without a notation on the related Financed Vehicle's
certificate of title, or without fulfilling any additional administrative
requirements under the laws of the state in which the Financed Vehicle is
located, to perfect a security interest in the related Financed Vehicle in
favor of the Trust, HAFC hereby agrees that the designation of any
predecessor company to HAFC, or any Affiliate of any of the foregoing as the
secured party on the certificate of title is in its capacity as agent of the
Trust for such limited purpose.
SECTION 4.6 COVENANTS, REPRESENTATIONS, AND WARRANTIES OF
MASTER SERVICER. By its execution and delivery of this Agreement, the Master
Servicer makes the following representations, warranties and covenants on
which the Indenture Trustee relies in accepting the related Receivables, on
which the Indenture Trustee relies in authenticating each Series of Notes, on
which the Noteholders rely on in purchasing a Series of Notes and 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;
30
(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
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 Indenture Trustee for the
benefit of the related Series Securityholders, and
the restrictions on transferability imposed by this
Agreement or (ii) sign or file under the Uniform
Commercial Code of any jurisdiction any financing
statement which names HAFC or Household Bank, if
applicable, 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
Indenture Trustee;
(v) SERVICING OF RECEIVABLES. The Master
Servicer shall service the Receivables as required
by the terms of this Agreement and in material
compliance with its standard and customary procedures
for servicing all its other comparable motor vehicle
receivables and in compliance with applicable law;
and
(vi) RELOCATION OF OFFICE. The Master Servicer
shall notify the Indenture Trustee of any relocation
of the Master Servicer's principal office set forth
in Section 13.3 hereof and all Receivables Files
shall be maintained by the Master Servicer in the
United States.
SECTION 4.7. REPURCHASE OF RECEIVABLES UPON BREACH OF
COVENANT. Upon discovery by any of the Master Servicer, the Seller, a Trust
Officer of the Owner Trustee or of the Indenture 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
31
Series Securityholders in any Receivable (including any Liquidated
Receivable) (or, at the Master Servicer's election, the first Accounting Date
so following) or the related Financed Vehicle, the Master Servicer shall,
unless such breach shall have been cured in all material respects, repurchase
from the Trust the Receivable affected by such breach and, on the date
specified in Section 5.4, the Master Servicer shall pay the related
Repurchase Amount and deposit such Repurchase Amounts into the Master
Collection Account in accordance with Section 5.3 hereof. It is understood
and agreed that the obligation of the Master Servicer to repurchase any
Receivable (including any Liquidated Receivable) with respect to which such a
breach has occurred and is continuing shall, if such obligation is fulfilled,
constitute the sole remedy against the Master Servicer for such breach.
SECTION 4.8. TOTAL SERVICING FEE; PAYMENT OF CERTAIN EXPENSES
BY MASTER SERVICER. So long as: (i) the Master Servicer is not required in
accordance with Section 4.2(d) hereof to make deposits of collections with
respect to a Collection Period into the Collection Account until the Business
Day immediately preceding the related Distribution Date and (ii) the Master
Servicer's Certificate delivered with respect to such Distribution Date
indicates that Available Funds with respect to such Distribution Date are
sufficient to make the distributions required to be made on such Distribution
Date in respect of the Servicing Fee (and all other distributions required to
be made on such Distribution Date having a higher priority than the
distribution of the Servicing Fee), then 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 Servicing Fee for
each Series for such Collection Period. The Master Servicer shall be required
to pay all expenses incurred by it in connection with its activities under
this Agreement (including taxes imposed on the Master Servicer, expenses
incurred in connection with distributions and reports made by the Master
Servicer to Securityholders and all fees and expenses of the Owner Trustee or
the Indenture 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 Finance Corporation. The Master Servicer
shall be liable for the fees, charges and expenses of the Owner Trustee, the
Indenture Trustee, any Sub-Servicer and their respective agents.
SECTION 4.9. MASTER SERVICER'S CERTIFICATE. No later than
10:00 a.m. Central time on each Determination Date, the Master Servicer shall
deliver, or cause to be delivered via access to an affiliate's web-site
address or otherwise, to the Indenture Trustee and the Owner Trustee, a
Master Servicer's Certificate and, in the case of such delivery to the
Indenture Trustee only, executed by a responsible officer or agent of the
Master Servicer containing among other things, all information necessary to
enable the Indenture Trustee to make the allocations required by Section 5.5
and the distributions with respect to such Distribution Date pursuant to each
Series Supplement. Upon request, the Master Servicer will also provide a
listing of all Warranty Receivables and Covenant Receivables repurchased as
of the related Determination Date, identifying the Receivables so purchased.
Such list will identify Receivables repurchased by the Master Servicer or by
the Seller on the related Determination Date and each Receivable which became
a Liquidated Receivable or which was paid in full during the related
Collection
32
Period by account number. In addition to the information set forth in the
preceding sentence, the Master Servicer's Certificate shall also contain the
information required by any Series Supplement.
SECTION 4.10. ANNUAL STATEMENT AS TO COMPLIANCE, NOTICE OF
MASTER SERVICER TERMINATION EVENT. (a) The Master Servicer shall deliver
or cause to be delivered to the Indenture Trustee and the Owner Trustee on or
before April 30 (or 120 days after the end of the Master Servicer's fiscal
year, if other than December 31) of each year, beginning on April 30, 2002,
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
Indenture Trustee and the Owner Trustee and, in the event that such notice is
delivered by the Sub-Servicer, to the Master Servicer, promptly after having
obtained knowledge thereof, but in no event later than two (2) Business Days
thereafter, written notice in an Officer's Certificate of any event which with
the giving of notice or lapse of time, or both, would become a Master Servicer
Termination Event under Section 10.1(a). The Seller or the Master Servicer shall
deliver to the Indenture Trustee, the Owner Trustee, the Master Servicer or the
Seller (as applicable) promptly after having obtained knowledge thereof, but in
no event later than two (2) Business Days thereafter, written notice in an
Officer's Certificate of any event which with the giving of notice or lapse of
time, or both, would become a Master Servicer Termination Event under any other
clause of Section 10.1.
SECTION 4.11. ANNUAL INDEPENDENT ACCOUNTANTS' REPORT. (a)
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 Indenture Trustee and the Owner Trustee on or before April 30 (or 120
days after the end of the Master Servicer's fiscal year, if other than
December 31) of each year, beginning on April 30, 2002, 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
33
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 Indenture
Trustee shall be a "non-participating party" with respect to such report, or
words to similar effect. The Indenture Trustee shall have no duty to make any
independent inquiry or investigation as to, and shall have no obligation or
liability in respect of, the sufficiency of such procedures.
(b) On or before April 30 of each calendar year, beginning
with April 30, 2002, 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 Indenture
Trustee, the Master Servicer and each Rating Agency to the effect that they
have compared the mathematical calculations of each amount set forth in the
Master Servicer's Certificates delivered pursuant to Section 4.9 during the
period covered by such report with the Master Servicer's computer reports
which were the source of such amounts and that on the basis of such
comparison, such accountants are of the opinion that such amounts are in
agreement, except for such exceptions as they believe to be immaterial and
such other exceptions as shall be set forth in such statement. Such report
shall acknowledge that the Indenture Trustee shall be a "non-participating
party" with respect to such report, or words to similar effect. The Indenture
Trustee shall have no duty to make any independent inquiry or investigation
as to, and shall have no obligation or liability in respect of, the
sufficiency of such procedures.
SECTION 4.12. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION
REGARDING RECEIVABLES. The Master Servicer shall provide to representatives
of the Indenture Trustee and the Owner Trustee reasonable access to the
documentation regarding the Receivables. In each case, such access shall be
afforded without charge but only upon reasonable request and during normal
business hours. Nothing in this Section shall derogate from the obligation of
the Master Servicer to observe any applicable law prohibiting disclosure of
information regarding the Obligors, and the failure of the Master Servicer to
provide access as provided in this Section as a result of such obligation
shall not constitute a breach of this Section.
SECTION 4.13. FIDELITY BOND AND ERRORS AND OMISSIONS POLICY.
The Master Servicer or such Eligible Sub-Servicer that is performing the
servicing duties of the Master Servicer, has obtained, and shall continue to
maintain in full force and effect, a Fidelity Bond and Errors and Omissions
Policy of a type and in such amount as is customary for servicers engaged in
the business of servicing automobile receivables.
ARTICLE V
TRUST ACCOUNTS; DISTRIBUTIONS;
STATEMENTS TO CERTIFICATEHOLDERS AND NOTEHOLDERS
SECTION 5.1. ESTABLISHMENT OF TRUST ACCOUNTS. (a) (i) Except
as otherwise provided with respect to a Series in the related Series
Supplement, the Master
34
Servicer, on behalf of the Noteholders with respect to each Series, the
holders of the Series Trust Certificates of each Series and the holders of
the Owner Trust Certificates, shall establish and maintain in the name of the
Indenture Trustee, a trust account which is an Eligible Deposit Account (the
"Master Collection Account"), bearing a designation clearly indicating that
the funds deposited therein are held for the benefit of the Series
Noteholders with respect to the Household Automotive Trusts, holders of the
Series Trust Certificates of each Series and the holders of the Owner Trust
Certificates. The Master Collection Account shall initially be established
with the Indenture Trustee. The Indenture Trustee shall possess all right,
title and interest in all funds on deposit from time to time in, and shall
have sole dominion and control with respect to, the Master Collection Account
and in all proceeds thereof for the benefit of the Series Noteholders, the
holders of the Series Trust Certificates of each Series and the holders of
the Owner Trust Certificates. Except as expressly provided in this Agreement,
the Master Servicer agrees that it shall have no right of setoff or banker's
lien against, and no right to otherwise deduct from, any funds held in the
Master Collection Account for any amount owed to it by the Trust.
(ii) With respect to each Series, the Indenture Trustee shall
establish and maintain the Series Trust Accounts required to be established and
maintained pursuant to the related Series Supplement, and such Series Trust
Accounts shall be subject to the sole dominion and control of the Indenture
Trustee for the benefit of the Series Noteholders.
(iii) No Trust Account shall be maintained with an institution
other than the Indenture Trustee unless such institution agrees in writing to
the provisions of this Section 5.1 as if such institution were the Indenture
Trustee, except that the Indenture Trustee shall continue to be the "entitlement
holder" of the related Trust Account.
(iv) With respect to any Trust Account Property held from time
to time in any Trust Account, the Indenture Trustee agrees that (A) such Trust
Account Property shall at all times be credited in the Indenture Trustee's books
and records to the relevant Trust Account, (B) any Eligible Investment
constituting a deposit account shall be, except as otherwise provided herein,
subject to the exclusive custody and control of the Indenture Trustee, and, if
the Indenture Trustee is not the depositary bank with which such deposit account
is maintained, the Indenture Trustee shall be the depositary bank's customer
with respect thereto, and (C) any Eligible Investment other than a deposit
account shall be held, pending maturity or disposition by the Indenture Trustee,
in accordance with the relevant terms of the definition of "Delivery." The
Indenture Trustee acknowledges and agrees that each item of property (whether
investment property, financial asset, security, instrument, cash or any other
type of property) credited to a Trust Account shall be treated as a "financial
asset" within the meaning of Article 8 of the UCC.
(b) Funds on deposit in the Master Collection Account
and any Series Trust Accounts (collectively, the "Trust Accounts") shall be
invested by the Indenture Trustee (or any custodian with respect to funds on
deposit in any such account) in Eligible Investments selected in writing by the
Master Servicer (pursuant to standing instructions or otherwise) which absent
any instruction shall be the investments specified
35
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 Distribution
Date. Funds deposited in any Trust Account on the day immediately preceding a
Distribution Date and representing the proceeds of Eligible Investments are
required to be held overnight in an interest bearing Eligible Deposit Account
and the earnings on such overnight deposits shall be included in Available
Funds (as defined in the related Series Supplement) for the succeeding
Distribution Date. 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
Indenture Trustee in the Master Collection Account or the related Series
Collection Account no later than the close of business on the Business Day
immediately preceding the related Distribution Date, and any loss resulting from
such investments shall be charged to the Master Collection Account. The Master
Servicer will not direct the Indenture Trustee to make any investment of any
funds held in any of the Trust Accounts unless the security interest granted and
perfected in such account will continue to be perfected in such investment, in
either case without any further action by any Person, and, in connection with
any direction to the Indenture Trustee to make any such investment, if
necessary, the Master Servicer shall deliver to the Indenture Trustee an Opinion
of Counsel to such effect.
(d) The Indenture Trustee shall not in any way be held
liable by reason of any insufficiency in any of the Trust Accounts resulting
from any loss on any Eligible Investment included therein except for losses
attributable to the Indenture Trustee's negligence or bad faith or its
failure to make payments on such Eligible Investments issued by the Indenture
Trustee in its commercial capacity as principal obligor and not as Indenture
Trustee in accordance with their terms.
(e) If (i) the Master Servicer shall have failed to give
investment directions for any funds on deposit in the Trust Accounts to the
Indenture Trustee by 2:00 p.m. Eastern Time (or such other time as may be
agreed by the Issuer and the Indenture Trustee) on any Business Day; or (ii)
an Event of Default shall have occurred and be continuing with respect to a
Series of Notes, the Indenture Trustee shall, to the fullest extent
practicable, invest and reinvest funds in the Trust Accounts in one or more
Eligible Investments in accordance with paragraph (b) above; PROVIDED that,
if following an Event of Default amounts are to be distributed to
Securityholders other than on a Distribution Date, investments shall mature
on the Business Day preceding any such proposed date of distribution.
(f) The Indenture Trustee, in its respective capacities
with respect to the various Series shall possess all right, title and
interest in all funds on deposit from time to time in the Trust Accounts and
in all proceeds thereof 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
Indenture Trustee for the benefit of the related Noteholders. If, at any
time, any of the Trust Accounts ceases to be an Eligible Deposit Account, the
Indenture
36
Trustee (or the Master Servicer on its behalf) shall within five Business
Days (or such longer period as to which each Rating Agency may consent)
establish a new Trust Account as an Eligible Deposit Account and shall
transfer any cash and/or any investments to such new Trust Account. In
connection with the foregoing, the Master Servicer agrees that, in the event
that any of the Trust Accounts are not accounts with the Indenture Trustee,
the Master Servicer shall notify the Indenture Trustee in writing promptly
upon any of such Trust Accounts ceasing to be an Eligible Deposit Account.
Pursuant to the authority granted to the Master Servicer under this
Agreement, the Master Servicer shall have the revocable power, granted by the
Indenture Trustee to make withdrawals and payments from the Master Collection
Account and to instruct the Indenture Trustee to make withdrawals and
payments from the Master Collection Account for the purposes of carrying out
the Master Servicer's duties hereunder. The Master Servicer may net against
any deposits required to be made to the Master Collection Account on the
Business Day before any Determination Date amounts that the Seller, as
Certificateholder or otherwise, is entitled to receive as distributions
directly or indirectly from the Master Collection Account on such
Determination Date.
SECTION 5.2. CERTAIN REIMBURSEMENTS TO THE MASTER SERVICER.
The Master Servicer shall be entitled to withhold from amounts otherwise
required to be remitted to the Master Collection Account with respect to a
Collection Period an amount in respect of funds deposited with respect to
prior Collection Periods in the Master Collection Account but later
determined by the Master Servicer to have resulted from mistaken deposits or
postings or checks returned for insufficient funds; PROVIDED, THAT, such
withholding may be made only following certification by the Master Servicer
of such amounts and the provision of such information to the Indenture
Trustee, as may be necessary in the opinion of the Indenture Trustee to
verify the accuracy of such certification.
SECTION 5.3. APPLICATION OF COLLECTIONS. All collections for
the Collection Period shall be applied by the Master Servicer as follows:
With respect to each Simple Interest Receivable (other than a
Repurchased Receivable), payments by or on behalf of the Obligor (other than
amounts, if any, collected with respect to administrative fees, including late
fees, prepayment fees and liquidation fees collected on the Receivable) 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 amounts, if
any, collected with respect to administrative fees, including late fees,
prepayment fees and liquidation fees collected on the Receivable) shall be
applied to interest and principal in accordance with the Actuarial Method.
SECTION 5.4. ADDITIONAL DEPOSITS. HAFC, Household Bank 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.
37
SECTION 5.5. DISTRIBUTIONS. (a) If, with respect to a Series,
Collected Funds are deposited in the Master Collection Account, on each
Distribution Date, the Indenture Trustee shall transfer Collected Funds with
respect to such Series Trust Estate in the respective amounts set forth in
the Master Servicer's Certificates with respect to such 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.
(b) In the event that the Master Collection Account is
maintained with an institution other than the Indenture Trustee, the Master
Servicer shall instruct and cause such institution to make all deposits and
distributions pursuant to Section 5.5(a) on the related Distribution Date.
ARTICLE VI
RESERVED
ARTICLE VII
RESERVED
ARTICLE VIII
THE SELLER
SECTION 8.1. REPRESENTATIONS OF SELLER. The Seller makes the
following representations on which each Series Support Provider shall be
deemed to have relied in providing the Series Support and on which the Issuer
is deemed to have relied in acquiring the Receivables and on which the
Noteholders are deemed to have relied on in the purchasing of Notes. 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 Indenture Trustee pursuant to the Indenture and each
Series Supplement.
(a) SCHEDULE OF REPRESENTATIONS. The representations
and warranties set forth on the Schedule of Eligibility Criteria attached as
Schedule I to the Series Supplement 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.
38
(c) DUE QUALIFICATION. The Seller is duly qualified to
do business as a foreign corporation in good standing and has obtained all
necessary licenses and approvals in all jurisdictions where the failure to do
so would materially and adversely affect Seller's ability to transfer the
Receivables and the Other Conveyed Property to the Trust pursuant to this
Agreement, or the validity or enforceability of the Series Trust Estate or to
perform Seller's obligations hereunder and under the Basic Documents to which
the Seller is a party.
(d) POWER AND AUTHORITY. The Seller has the power and
authority to execute and deliver this Agreement and its Basic Documents and to
carry out its terms and their terms, respectively; the Seller has full power and
authority to sell and assign each Series Trust Estate to be sold and assigned to
and deposited with the Trust by it and has duly authorized such sale and
assignment to the Trust by all necessary corporate action; and the execution,
delivery and performance of this Agreement and the Basic Documents to which the
Seller is a party have been duly authorized by the Seller by all necessary
corporate action.
(e) VALID SALE, BINDING OBLIGATIONS. This Agreement and
each related Transfer Agreement effects a valid sale, transfer and assignment
of the related Series Trust Estate, enforceable against the Seller and
creditors of and purchasers from the Seller; and this Agreement and the Basic
Documents to which the Seller is a party, when duly executed and delivered,
shall constitute legal, valid and binding obligations of the Seller
enforceable in accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization or
other similar laws affecting the enforcement of creditors' rights generally
and by equitable limitations on the availability of specific remedies,
regardless of whether such enforceability is considered in a proceeding in
equity or at law.
(f) NO VIOLATION. The consummation of the transactions
contemplated by this Agreement and the Basic Documents and the fulfillment of
the terms of this Agreement and the Basic Documents shall not conflict with,
result in any breach of any of the terms and provisions of or constitute
(with or without notice, lapse of time or both) a material default under the
certificate of incorporation or by-laws of the Seller, or any indenture,
agreement, mortgage, deed of trust or other instrument to which the Seller is
a party or by which it is bound, or result in the creation or imposition of
any Lien upon any of its properties pursuant to the terms of any such
indenture, agreement, mortgage, deed of trust or other instrument, other than
this Agreement, or violate any law, order, rule or regulation applicable to
the Seller of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Seller or any of its properties.
(g) NO PROCEEDINGS. There are no proceedings or
investigations pending or, to the Seller's knowledge, threatened against the
Seller, before any court, regulatory body, administrative agency or other
tribunal or governmental instrumentality having jurisdiction over the Seller
or its properties (A) asserting the invalidity of this Agreement or any of
the Basic Documents, (B) seeking to prevent the issuance of any Securities or
the consummation of any of the transactions contemplated by this
39
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 each Series Closing Date and each Transfer
Date.
(i) NO CONSENTS. The Seller is not required to obtain
the consent of any other party or any consent, license, approval or
authorization, or registration or declaration with, any governmental
authority, bureau or agency in connection with the execution, delivery,
performance, validity or enforceability of this Agreement which has not
already been obtained.
(j) CHIEF EXECUTIVE OFFICE. The chief executive office
of the Seller is at 0000 Xxxx Xxxxxx Xxxxx, Xxx Xxxxx, Xxxxxx 00000.
SECTION 8.2. CORPORATE EXISTENCE. (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
40
its stockholder(s) and observe all other customary
corporate formalities (and any successor Seller not a
corporation shall observe similar procedures in accordance
with its governing documents and applicable law);
(v) the Seller shall at all times hold itself out
to the public under the Seller's own name as a legal
entity separate and distinct from its Affiliates;
(vi) the Seller shall not become involved in the
day-to-day management of any other Person;
(vii) the Seller shall not guarantee any other
Person's obligations or advance funds to any other
Person for the payment of expenses or otherwise;
(viii) the Seller shall not act as an agent of any
other Person in any capacity;
(ix) the Seller shall not dissolve or liquidate, in
whole or in part; and
(x) all transactions and dealings between the Seller
and its Affiliates will be conducted on an arm's-length
basis.
(c) During the term of this Agreement, the Seller will
comply with the limitations on its business and activities, as set forth in
its Certificate of Incorporation, and will not incur indebtedness other than
pursuant to or as expressly permitted by the Basic Documents or the Series
Related Documents with respect to each Series.
SECTION 8.3. LIABILITY OF SELLER; INDEMNITIES. The Seller
shall be liable in accordance herewith only to the extent of the obligations
specifically undertaken under this Agreement by the Seller and the
representations made by the Seller under this Agreement.
(a) The Seller shall indemnify, defend and hold harmless
the Issuer, the Owner Trustee, the Trust and the Indenture Trustee from and
against any taxes that may at any time be asserted against any such Person
with respect to the transactions contemplated in this Agreement and any of
the Basic Documents (except any income taxes arising out of fees paid to the
Owner Trustee, the Indenture Trustee and each Series Support Provider and
except any taxes to which the Owner Trustee or the Indenture 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.
41
(b) The Seller shall indemnify, defend and hold
harmless the Issuer, the Owner Trustee and the Indenture Trustee against any
loss, liability or expense incurred by reason of (i) the Seller's willful
misfeasance, bad faith or negligence in the performance of its duties under this
Agreement, or by reason of reckless disregard of its obligations and duties
under this Agreement and (ii) the Seller's or the Issuer's violation of Federal
or state securities laws in connection with the offering and sale of the Notes.
(c) The Seller shall indemnify, defend and hold harmless
the Owner Trustee and the Indenture Trustee and their respective officers,
directors, employees and agents from and against any and all costs, expenses,
losses, claims, damages and liabilities arising out of, or incurred in
connection with, the acceptance or performance of the trusts and duties set
forth herein and in the Basic Documents, except to the extent that such cost,
expense, loss, claim, damage or liability shall be due to the willful
misfeasance, bad faith or negligence (except for errors in judgment) of the
Person seeking indemnification.
Indemnification under this Section shall survive the
resignation or removal of the Owner Trustee or the Indenture Trustee and the
termination of this Agreement or the Indenture or the Trust Agreement, as
applicable, and shall include reasonable fees and expenses of counsel and
other expenses of litigation. If the Seller shall have made any indemnity
payments pursuant to this Section and the Person to or on behalf of whom such
payments are made thereafter shall collect any of such amounts from others,
such Person shall promptly repay such amounts to the Seller, without interest.
SECTION 8.4. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, SELLER. Any Person (a) into which the Seller may be merged or
consolidated, (b) which may result from any merger or consolidation to which
the Seller shall be a party or (c) which may succeed to the properties and
assets of the Seller substantially as a whole, which Person in any of the
foregoing cases (x) has a certificate of incorporation containing provisions
relating to limitations on business and other matters substantially identical
to those contained in the Seller's certificate of incorporation and (y)
executes an agreement of assumption to perform every obligation of the Seller
under this Agreement, the other Basic Documents and the applicable Series
Related Documents shall be the successor to the Seller hereunder without the
execution or filing of any document or any further act by any of the parties
to this Agreement; PROVIDED, HOWEVER, that the Rating Agency Condition shall
have been satisfied with respect to such transaction.
SECTION 8.5. LIMITATION ON LIABILITY OF SELLER AND OTHERS.
(a) The Seller and any director or officer or employee or agent of the Seller
may rely in good faith on the written advice of counsel or on any document of
any kind, prima facie properly executed and submitted by any Person
respecting any matters arising under any Basic Document. The Seller shall not
be under any obligation to appear in, prosecute or defend any legal action
that shall not be incidental to its obligations under this Agreement, and
that in its opinion may involve it in any expense or liability. Except as
provided in Section 8.3 hereof, neither the Seller nor any of the directors,
officers, employees or agents of the Seller acting in such capacities shall
be under any liability to
42
the Trust, the Securityholders, any Series Support Provider or any other
Person for any action taken or for refraining from the taking of any action
in good faith in such capacities pursuant to this Agreement; provided,
however, that this provision shall not protect the Seller or any such person
against any liability which would otherwise be imposed by reason of willful
misfeasance, bad faith or negligence in the performance of duties or by
reason of reckless disregard of obligations and duties hereunder.
(b) All obligations of the Seller under this Agreement
(including, but not limited to, repurchase and indemnification obligations)
and under any of the Basic Documents shall be limited in recourse to
property, if any, which the Seller may hold from time to time, not subject to
any Lien.
SECTION 8.6. SELLER MAY OWN CERTIFICATES OR NOTES. The Seller
and any Affiliate thereof may in its individual or any other capacity become
the owner or pledgee of Certificates or Notes with the same rights as it
would have if it were not the Seller or an Affiliate thereof, except as
expressly provided herein or in any Basic Document. Notes or Certificates so
owned by the Seller or such Affiliate shall have an equal and proportionate
benefit under the provisions of the Basic Documents, without preference,
priority, or distinction as among all of the Notes or Certificates; PROVIDED,
HOWEVER, except in the event that all outstanding Notes and Certificates are
owned by the Seller and/or any Affiliate thereof, that any Notes or
Certificates owned by the Seller or any Affiliate thereof, during the time
such Notes or Certificates are owned by them, shall be without voting rights
for any purpose set forth in the Basic Documents and any such Notes will not
be entitled to the benefits of any financial guaranty insurance policy. The
Seller shall notify the Owner Trustee and the Indenture Trustee promptly
after it or any of its Affiliates become the owner or pledgee of a
Certificate or a Note.
ARTICLE IX
THE MASTER SERVICER
SECTION 9.1. REPRESENTATIONS OF MASTER SERVICER. The Master
Servicer makes the following representations on which each Series Support
Provider shall be deemed to have relied in executing and delivering the
Series Support and on which the Issuer is deemed to have relied in acquiring
the Receivables and on which the Noteholders are deemed to have relied on in
the purchasing of Notes. 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 Indenture Trustee
pursuant to the Indenture.
(i) ORGANIZATION AND GOOD STANDING. The Master
Servicer has been duly organized and is validly existing
and in good standing under the laws of its jurisdiction
of organization, with power, authority and legal right
to own its properties and to conduct its business as
such properties are currently owned and such business is
currently conducted, and had at all relevant times,
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and now has, power, authority and legal right to enter
into and perform its obligations under this Agreement
and the other Basic Documents to which it is a party;
(ii) DUE QUALIFICATION. The Master Servicer is duly
qualified to do business as a foreign corporation in
good standing and has obtained all necessary licenses
and approvals, in all jurisdictions in which the
ownership or lease of property or the conduct of its
business (including the servicing of the Receivables as
required by this Agreement) requires or shall require
such qualification; except where the failure to qualify
or obtain licenses or approvals would not have a
material adverse effect on its ability to perform its
obligations as Master Servicer under this Agreement and
the other Basic Documents to which it is a party;
(iii) POWER AND AUTHORITY. The Master Servicer has
the power and authority to execute and deliver this
Agreement and its Basic Documents and to carry out its
terms and their terms, respectively, and the execution,
delivery and performance of this Agreement and the Basic
Documents to which the Master Servicer is a party have
been duly authorized by the Master Servicer by all
necessary corporate action;
(iv) BINDING OBLIGATION. This Agreement and the
Basic Documents to which the Master Servicer is a party
shall constitute legal, valid and binding obligations of
the Master Servicer enforceable in accordance with their
respective terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, or
other similar laws affecting the enforcement of
creditors' rights generally and by equitable limitations
on the availability of specific remedies, regardless of
whether such enforceability is considered in a
proceeding in equity or at law;
(v) NO VIOLATION. The consummation of the
transactions contemplated by this Agreement and the
Basic Documents to which the Master Servicer is a party,
and the fulfillment of the terms of this Agreement and
the Basic Documents to which the Master Servicer is a
party, shall not conflict with, result in any breach of
any of the terms and provisions of, or constitute (with
or without notice or lapse of time) a material default
under, the articles of incorporation or bylaws of the
Master Servicer, or any indenture, agreement, mortgage,
deed of trust or other instrument to which the Master
Servicer is a party or by which it is bound, or result
in the creation or imposition of any Lien upon any of
its properties pursuant to the terms of any such
indenture, agreement, mortgage, deed of trust or other
instrument, other than this Agreement, or violate any
law, order, rule or regulation applicable
44
to the Master Servicer of any court or of any federal or
state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over
the Master Servicer or any of its properties, or any way
materially adversely affect the interest of the
Noteholders or the Trust in any Receivable or affect the
Master Servicer's ability to perform its obligations
under this Agreement;
(vi) NO PROCEEDINGS. There are no proceedings or
investigations pending or, to the Master Servicer's
knowledge, threatened against the Master Servicer,
before any court, regulatory body, administrative agency
or other tribunal or governmental instrumentality having
jurisdiction over the Master Servicer or its properties
(A) asserting the invalidity of this Agreement or any of
the Basic Documents, (B) seeking to prevent the issuance
of the Securities or the consummation of any of the
transactions contemplated by this Agreement or any of
the Basic Documents, or (C) seeking any determination or
ruling that might materially and adversely affect the
performance by the Master Servicer of its obligations
under, or the validity or enforceability of, this
Agreement or any of the Basic Documents or (D) seeking
to adversely affect the federal income tax or other
federal, state or local tax attributes of the Securities;
(vii) APPROVALS. All approvals, authorizations,
consents, orders or other actions of any person,
corporation or other organization, or of any court,
governmental agency or body or official, required in
connection with the execution and delivery by the Master
Servicer of this Agreement and the consummation of the
transactions contemplated hereby have been or will be
taken or obtained on or prior to the Series 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.
SECTION 9.2. LIABILITY OF MASTER SERVICER; INDEMNITIES.
(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.
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(b) The Master Servicer shall defend, indemnify and hold
harmless the Trust, the Indenture Trustee, the Owner Trustee and their
respective officers, directors, agents and employees, from and against any
and all costs, expenses, losses, damages, claims and liabilities, including
reasonable fees and expenses of counsel and expenses of litigation arising
out of or resulting from the use, ownership or operation of, or lien on, any
Financed Vehicle;
(c) The Master Servicer (when the Master Servicer is
Household Finance Corporation or an Affiliate of Household Finance
Corporation) shall indemnify, defend and hold harmless the Trust, the
Indenture Trustee, the Owner Trustee and their respective officers,
directors, agents and employees and from and against any taxes that may at
any time be asserted against any of such parties with respect to the
transactions contemplated in this Agreement, including, without limitation,
any sales, gross receipts, tangible or intangible personal property,
privilege or license taxes (but not including any Federal or other income
taxes, including franchise taxes asserted with respect to, and as of the date
of, the sale of the Receivables and the Other Conveyed Property to the Trust
or the issuance and original sale of any Series of the Notes) and costs and
expenses in defending against the same, except to the extent that such costs,
expenses, losses, damages, claims and liabilities arise out of the negligence
or willful misconduct of such parties;
The Master Servicer (when the Master Servicer is not Household
Finance Corporation) shall indemnify, defend and hold harmless the Trust, the
Indenture Trustee, the Owner Trustee and their respective officers, directors,
agents and employees from and against any taxes with respect to the sale of
Receivables in connection with servicing hereunder that may at any time be
asserted against any of such parties with respect to the transactions
contemplated in this Agreement, including, without limitation, any sales, gross
receipts, tangible or intangible personal property, privilege or license taxes
(but not including any Federal or other income taxes, including franchise taxes
asserted with respect to, and as of the date of, the sale of the Series Trust
Estate to the Trust or the issuance and original sale of the Securities) and
costs and expenses in defending against the same; and
(d) The Master Servicer shall indemnify, defend and hold
harmless the Trust, the Indenture Trustee, the Owner Trustee, each Series
Support Provider and their respective officers, directors, agents and
employees from and against any and all costs, expenses, losses, claims,
damages, and liabilities to the extent that such cost, expense, loss, claim,
damage, or liability arose out of, or was imposed upon the Trust or the
Indenture Trustee by reason of the breach of this Agreement by the Master
Servicer, the negligence, misfeasance, or bad faith of the Master Servicer in
the performance of its duties under this Agreement or any Series Supplement
or by reason of reckless disregard of its obligations and duties under this
Agreement or any Series Supplement, except to the extent that such costs,
expenses, losses, damages, claims, and liabilities arise out of the
negligence or willful misconduct of the Person seeking indemnification.
46
(e) The Master Servicer (when the Master Servicer is
Household Finance Corporation or an Affiliate of Household Finance
Corporation) shall indemnify, defend and hold harmless the Trust, the
Indenture Trustee, the Owner Trustee and their respective officers,
directors, agents and employees from and against any loss, liability or
expense incurred by reason of the violation by Master Servicer of Federal or
state securities laws in connection with the registration or the sale of the
Securities, except to the extent that such costs, expenses, losses, damages,
claims, and liabilities arise out of the negligence or willful misconduct of
such parties.
(f) Indemnification under this Article shall survive the
termination of this Agreement and will survive the early resignation or
removal of any of the parties hereto and shall include, without limitation,
reasonable fees and expenses of counsel and expenses of litigation. If the
Master Servicer has made any indemnity payments pursuant to this Article and
the recipient thereafter collects any of such amounts from others, the
recipient shall promptly repay such amounts collected to the Master Servicer,
without interest. Notwithstanding any other provision of this Agreement, the
obligations of the Master Servicer shall not terminate or be deemed released
upon the resignation or termination of Household Finance Corporation as the
Master Servicer and shall survive any termination of this Agreement.
SECTION 9.3. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF THE MASTER SERVICER. (a) 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 initial Master
Servicer shall not merge or consolidate with any other Person or permit any
other Person to become a successor to the Master Servicer's business, unless
(x) the Master Servicer shall have delivered to the Owner Trustee, the Rating
Agencies and the Indenture Trustee an Officer's Certificate and an Opinion of
Counsel each stating that such consolidation, merger or succession and such
agreement of assumption comply with this Section 9.3(a) and that all
conditions precedent, if any, provided for in this Agreement relating to such
transaction have been complied with, and (y) the Rating Agency Condition
shall have been satisfied with respect to such assignment or succession.
SECTION 9.4. LIMITATION ON LIABILITY OF MASTER SERVICER AND
OTHERS. (a) Neither the Master Servicer, the Indenture Trustee nor any of the
directors or officers or employees or agents of the Master Servicer or the
Indenture Trustee shall be under any liability to the Trust, except as
provided in this Agreement and each Basic Document or
47
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 Indenture Trustee or any such person against
any liability that would otherwise be imposed by reason of willful
misfeasance, bad faith or negligence (excluding errors in judgment) in the
performance of duties (including negligence with respect to the Master
Servicer's indemnification obligations hereunder), by reason of reckless
disregard of obligations and duties under this Agreement and each Basic
Document or Series Related Document or any violation of law by the Master
Servicer, the Indenture Trustee or such person, as the case may be; PROVIDED,
FURTHER, that this provision shall not affect any liability to indemnify the
Indenture Trustee and the Owner Trustee for costs, taxes, expenses, claims,
liabilities, losses or damages paid by the Indenture Trustee and the Owner
Trustee, in their individual capacities. The Master Servicer, the Indenture
Trustee and any director, officer, employee or agent of the Master Servicer
may rely in good faith on the written advice of counsel or on any document of
any kind prima facie properly executed and submitted by any Person respecting
any matters arising under this Agreement. The Indenture Trustee shall not be
required to expend or risk its own funds or otherwise incur financial
liability in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if the repayment of such funds or
adequate written indemnity against such risk or liability is not reasonably
assured to it in writing prior to the expenditure of risk of such funds or
incurrence of financial liability.
(b) Notwithstanding anything herein to the contrary, the
Indenture Trustee shall not be liable for any obligation of the Master
Servicer contained in this Agreement and each Basic Document and Series
Related Document, and the Owner Trustee, the Seller and the Noteholders shall
look only to the Master Servicer to perform such obligations.
(c) The parties expressly acknowledge and consent to
U.S. Bank National Association acting in the potential dual capacity of
successor Master Servicer and in the capacity as Indenture Trustee. U.S. Bank
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
U.S. Bank 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 U.S. Bank National
Association.
SECTION 9.5. DELEGATION OF DUTIES. In the ordinary course of
business, the Master Servicer at any time may delegate any of its duties
hereunder to any Person, including any of its Affiliates, who agrees to
conduct such duties in accordance with standards employed by the Master
Servicer in compliance with Section 4.1. Such delegation shall not relieve
the Master Servicer of its liabilities and responsibilities with respect to
such duties and shall not constitute a resignation within the meaning of
Section 9.6. The Master Servicer shall provide each Rating Agency and the
Indenture
48
Trustee with written notice prior to the delegation of any of its duties to
any Person other than any of the Master Servicer's Affiliates or their
respective successors and assigns.
SECTION 9.6. MASTER SERVICER NOT TO RESIGN. Subject to the
provisions of Section 9.3, the Master Servicer shall not resign from the
obligations and duties hereby imposed on it except (i) upon determination
that the performance of its obligations or duties hereunder are no longer
permissible under applicable law or are in material conflict by reason of
applicable law with any other activities carried on by it or its subsidiaries
or Affiliates, the other activities of the Master Servicer so causing such a
conflict being of a type and nature carried on by the Master Servicer or its
subsidiaries or Affiliates at the date of this Agreement or (ii) upon
satisfaction of the following conditions: (a) the Master Servicer has
proposed a successor servicer to the Indenture Trustee in writing and such
proposed successor servicer is reasonably acceptable to the Indenture
Trustee; (b) the Rating Agency shall have delivered a letter to the Indenture
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 Indenture Trustee an Opinion of Counsel to the effect that
all conditions precedent to the resignation of the Master Servicer and the
appointment of and acceptance by the proposed successor servicer have been
satisfied; PROVIDED, HOWEVER, that, in the case of clause (i) above, no such
resignation by the Master Servicer shall become effective until the Indenture
Trustee shall have assumed the Master Servicer's responsibilities and
obligations hereunder or the Indenture 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 Indenture
Trustee.
SECTION 9.7. SUB-SERVICING AGREEMENTS BETWEEN MASTER SERVICER
AND SUB-SERVICERS. The Master Servicer may enter into agreements for any
subservicing and administration of Receivables with any institution which is
an Eligible Subservicer and is in compliance with the laws of each state
necessary to enable it to perform the obligations of the Master Servicer
pursuant to this Agreement. The Master Servicer initially appoints HAFC to
subservice the Receivables. 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 Servicing Fee and reimbursement of repossession and
49
liquidation expenses. The Issuer shall have no obligation to indemnify the
Master Servicer for costs or expenses, except with respect to the preceding
sentence. The parties hereto acknowledge that with respect to statements or
certificates required to be delivered by the Master Servicer in accordance
with this Agreement and each Series Supplement, including, but not limited
to, Sections 4.9, 4.10 and 4.11 hereof, that a statement or certificate
delivered by the Sub-Servicer shall be sufficient to discharge the Master
Servicer's obligation to deliver such certificate or statement.
SECTION 9.8. SUCCESSOR SUB-SERVICERS. The Master Servicer may
terminate any Sub-Servicer and either directly service the related
Receivables itself or enter into an agreement with a successor Sub-Servicer
that is an Eligible Sub-Servicer. None of the Owner Trustee or the Indenture
Trustee shall have no duty or obligation to monitor or supervise the
performance of any Sub-Servicer.
ARTICLE X
DEFAULT
SECTION 10.1. MASTER SERVICER TERMINATION EVENT. For purposes
of this Agreement, each of the following shall constitute a "Master Servicer
Termination Event", but shall only constitute a Master Servicer Termination
Event with respect to the Series and the related Series Trust Estates with
respect to which such event arose:
(a) Any failure by the Master Servicer to deliver, or
cause to be delivered, to the Indenture Trustee for distribution pursuant to the
terms of this Agreement any proceeds or payment required to be so delivered
under the terms of this Agreement (including deposits of the Repurchase Amount
pursuant to Section 3.2 and Section 4.7) that continues unremedied for a period
of five Business Days after written notice is received by the Master Servicer
from the Indenture Trustee or after discovery of such failure by a responsible
Officer of the Master Servicer (but in no event later than five Business Days
after the Master Servicer is required to make such delivery or deposit);
(b) Failure on the part of the Master Servicer duly to
observe or perform any other covenants or agreements of the Master Servicer
set forth in this Agreement and each Basic Document or Series Related
Document, which failure (i) materially and adversely affects the rights of
Noteholders of a Series (determined without regard to the availability of
funds under any Series Support) and (ii) continues unremedied for a period of
60 days after the date on which written notice of such failure, requiring the
same to be remedied, shall have been given to the Master Servicer by the
Indenture 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
50
the Master Servicer or of any substantial part of its property or ordering
the winding up or liquidation of the affairs of the Master Servicer or the
commencement of an involuntary case under the federal bankruptcy laws, as now
or hereinafter in effect, or another present or future federal or state
bankruptcy, insolvency or similar law and such case is not dismissed within
60 days; or
(d) The commencement by the Master Servicer of a
voluntary case under the federal bankruptcy laws, as now or hereafter in
effect, or any other present or future, federal or state, bankruptcy,
insolvency or similar law, or the consent by the Master Servicer to the
appointment of or taking possession by a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Master
Servicer or of any substantial part of its property or the making by the
Master Servicer of an assignment for the benefit of creditors or the failure
by the Master Servicer generally to pay its debts as such debts become due or
the taking of corporate action by the Master Servicer in furtherance of any
of the foregoing; or
(e) Any representation, warranty or certification of the
Master Servicer made in this Agreement or any Series Supplement or any
certificate, report or other writing delivered pursuant hereto or thereto
shall prove to be incorrect in any material respect as of the time when the
same shall have been made, and the incorrectness of such representation,
warranty or statement has a material adverse effect on the interests of the
Trust in the related Series Trust Estate and, within 60 days after written
notice thereof shall have been given to the Master Servicer by the Indenture
Trustee the circumstances or condition in respect of which such
representation, warranty or statement was incorrect shall not have been
eliminated or otherwise cured; or
(f) Notwithstanding the foregoing, a delay in or failure
of performance under Section 10.1(a) for a period of five Business Days or
under Section 10.1(b) for a period of 60 days, shall not constitute a Master
Servicer Termination Event if such delay or failure could not be prevented by
the exercise of reasonable diligence by the Master Servicer and such delay or
failure was caused by an act of God, acts of declared or undeclared war,
public disorder, rebellion or sabotage, epidemics, landslides, lightning,
fire, hurricanes, earthquakes, floods or similar causes. The preceding
sentence shall not relieve the Master Servicer from using its best efforts to
perform its obligations in a timely manner in accordance with the terms of
this Agreement, and the Master Servicer shall provide the Indenture Trustee
and the Seller with an Officers' Certificate giving prompt notice of such
failure or delay by it, together with a description of its efforts to so
perform its obligations.
SECTION 10.2. CONSEQUENCES OF A MASTER SERVICER TERMINATION
EVENT. If a Master Servicer Termination Event shall occur and be continuing,
the Indenture Trustee (to the extent a Trust Officer of the Indenture Trustee
has actual knowledge thereof), by notice given in writing to the Master
Servicer may terminate all of the rights and obligations of the Master
Servicer under this Agreement and the other Basic Documents as they relate to
a Series and a Series Trust Estate out of which such Master 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
51
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 Indenture Trustee (or such other
successor Master Servicer appointed by Indenture Trustee pursuant to Section
10.3); PROVIDED, HOWEVER, that the successor Master Servicer shall (i) have
no liability with respect to any obligation which was required to be
performed by the terminated Master Servicer prior to the date that the
successor Master Servicer becomes the Master Servicer or any claim of a third
party based on any alleged action or inaction of the terminated Master
Servicer, (ii) no obligation to perform any repurchase or advancing
obligations, if any, of the terminated Master Servicer, (iii) no obligation
to pay any of the fees and expenses of any other party involved in this
transaction not expressly assumed by the Master Servicer and (iv) no
liability or obligation with respect to any Master Servicer indemnification
obligations of any prior master servicer including the original master
servicer.
Notwithstanding anything contained in this Agreement to the
contrary, U.S. Bank National Association ("U.S. BANK"), as successor Master
Servicer, is authorized to accept and rely on all of the accounting, records
(including computer records) and work of the prior Master Servicer relating to
the Receivables (collectively, the "PREDECESSOR SERVICER WORK PRODUCT") without
any audit or other examination thereof, and U.S. Bank shall have no duty,
responsibility, obligation or liability for the acts and omissions of the prior
Master Servicer. If any error, inaccuracy, omission or incorrect or non-standard
practice or procedure (collectively, "ERRORS") exist in any Predecessor Servicer
Work Product and such Errors make it materially more difficult to service or
should cause or materially contribute to U.S. Bank making or continuing any
Errors (collectively, "CONTINUED ERRORS"), U.S. Bank shall have no duty,
responsibility, obligation or liability for such Continued Errors; PROVIDED,
HOWEVER, that U.S. Bank agrees to use its best efforts to prevent further
Continued Errors. In the event that U.S. Bank becomes aware of Errors or
Continued Errors, U.S. Bank shall, with the prior consent of the Noteholders
representing 66-2/3% of the outstanding Notes, use its best efforts to
reconstruct and reconcile such data as is commercially reasonable to correct
such Errors and Continued Errors and to prevent future Continued Errors.
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
52
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 Indenture 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 Indenture Trustee and the successor Master
Servicer reasonable access to the terminated Master Servicer's premises at the
terminated Master Servicer's expense.
SECTION 10.3. APPOINTMENT OF SUCCESSOR. (a) 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 Indenture Trustee. The Indenture 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 Indenture 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 Indenture Trustee without further action shall automatically be
appointed the Successor Master Servicer. The Indenture Trustee may delegate
any of its servicing obligations to an Affiliate or agent in accordance with
Section 9.5. Notwithstanding the foregoing, the Indenture 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 Indenture Trustee shall give prompt
notice to each Rating Agency upon the appointment of a Successor Master
Servicer. The Indenture 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
Indenture 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 Indenture 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
53
to the compensation the Master Servicer would have been entitled to under
this Agreement if the Master Servicer had not resigned or been terminated
hereunder. In addition, any Successor Master Servicer shall be entitled to
reasonable transition expenses incurred in acting as Successor Master
Servicer payable by the outgoing Master Servicer, and to the extent such
transition expenses have not been paid by the outgoing Master Servicer, such
Successor Master Servicer shall be entitled to reimbursement for such
reasonable expenses pursuant to the related Series Supplement.
SECTION 10.4. NOTIFICATION TO NOTEHOLDERS AND
CERTIFICATEHOLDERS. Upon any termination of, or appointment of a successor
to, the Master Servicer or the Indenture Trustee shall give prompt written
notice thereof to each Noteholder.
SECTION 10.5. WAIVER OF PAST DEFAULTS. A majority of the
Noteholders may, on behalf of all Securityholders, waive any default by the
Seller or the Master Servicer in the performance of their obligations
hereunder and its consequences, except the failure to make any distributions
required to be made to Noteholders or to make any required deposits of any
amounts to be so distributed. Upon any such waiver of a past default, such
default shall cease to exist, and any default arising therefrom shall be
deemed to have been remedied for every purpose of this Agreement. No such
waiver shall extend to any subsequent or other default or impair any right
consequent thereon except to the extent expressly so waived.
SECTION 10.6. SUCCESSOR TO MASTER SERVICER. (a) The
Indenture 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 Indenture Trustee.
(b) In the absence of bad faith or negligence on its
part, the Indenture 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 Indenture 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 Indenture Trustee, the Indenture
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 Indenture Trustee shall have no liability for
any actions taken or omitted by the terminated Master Servicer.
ARTICLE XI
TERMINATION
SECTION 11.1. OPTIONAL PURCHASE OF ALL RECEIVABLES. (a) To
the extent and under the circumstances provided in a Series Supplement, the
Master Servicer
54
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 and interest then due and payable on the Notes of such
Series and all other amounts due to the Series Securityholders, the Indenture
Trustee and Owner Trustee under the related Series Supplement. To exercise
such option, the Master Servicer or the Seller, as the case may be, shall
deposit pursuant to Section 5.3 in the Master Collection Account an amount
equal to the aggregate Repurchase Amount for the related Receivables, plus
the appraised value of any other property constituting such Series Trust
Estate, such value to be determined by an appraiser mutually agreed upon by
the Master Servicer and the Trust, and shall succeed to all interests in and
to the related Series Trust Estate.
(b) Upon any sale of the assets of the Trust pursuant
to Article IV of the Indenture, the Master Servicer shall instruct the
Indenture Trustee to deposit the proceeds from such sale after all payments and
reserves therefrom (including the expenses of such sale) have been made (the
"Insolvency Proceeds") in the Master Collection Account.
(c) Notice of any termination of the Trust shall be
given by the Master Servicer to the Owner Trustee, the Indenture Trustee and
the Rating Agencies as soon as practicable after the Master Servicer has
received notice thereof.
(d) Following the satisfaction and discharge of the
Indenture, the payment in full of the principal of and interest on the Notes,
the termination of any Series Support (as provided therein) and the surrender
of any Series Support to the Series Support Provider, the Certificateholders
will succeed to the rights of the Noteholders hereunder and the Owner Trustee
will succeed to the rights of, and assume the obligations of, the Indenture
Trustee pursuant to this Agreement.
ARTICLE XII
ADMINISTRATIVE DUTIES OF THE MASTER SERVICER
SECTION 12.1. ADMINISTRATIVE DUTIES.
(a) DUTIES WITH RESPECT TO THE INDENTURE. The Master
Servicer shall perform all its duties and the duties of the Issuer under the
Indenture. In addition, the Master Servicer shall consult with the Owner
Trustee as the Master Servicer deems appropriate regarding the duties of the
Issuer under the Indenture. The Master Servicer shall monitor the performance
of the Issuer and shall advise the Owner Trustee when action is necessary to
comply with the Issuer's duties under the Indenture. The Master Servicer
shall prepare for execution by the Issuer or shall cause the preparation by
other appropriate Persons of all such documents, reports, filings,
instruments, certificates and opinions as it shall be the duty of the Issuer
to prepare, file or deliver pursuant to the Indenture. In furtherance of the
foregoing, the Master Servicer shall take all necessary action that is the
duty of the Issuer to take pursuant to the Indenture, including, without
55
limitation, pursuant to Sections 2.7, 3.3, 3.4, 3.5, 3.6, 3.7, 3.9, 3.10, 3.17,
7.3, 11.1 and 11.15 of the Indenture.
(b) DUTIES WITH RESPECT TO THE ISSUER.
(i) In addition to the duties of the Master
Servicer set forth in this Agreement or any of the
Basic Documents, the Master Servicer shall perform
such calculations and shall prepare for execution by
the Issuer or the Owner Trustee or shall cause the
preparation by other appropriate Persons of all such
documents, reports, filings, instruments,
certificates and opinions as it shall be the duty of
the Issuer or the Owner Trustee to prepare, file or
deliver pursuant to this Agreement or any of the
Basic Documents or under state and Federal tax and
securities laws, and at the request of the Owner
Trustee shall take all appropriate action that it is
the duty of the Issuer to take pursuant to this
Agreement or any of the Basic Documents, including,
without limitation, pursuant to Sections 2.6 and 2.11
of the Trust Agreement. In accordance with the
directions of the Issuer or the Owner Trustee, the
Master Servicer shall administer, perform or
supervise the performance of such other activities in
connection with the Trust Property (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 Indenture Trustee
in the event that any withholding tax is imposed on
the Issuer's payments (or allocations of income) to a
Certificateholder (as defined in the Trust Agreement)
as contemplated by this Agreement. Any such notice
shall be in writing and specify the amount of any
withholding tax required to be withheld by the Owner
Trustee and the Indenture Trustee pursuant to such
provision.
(iii) Notwithstanding anything in this Agreement
or the Basic Documents to the contrary, the Master
Servicer shall be responsible for performance of the
duties of the Issuer or the Seller set forth in
Section 5.1(a), (b), (c) and (d) of the Trust
Agreement with respect to, among other things,
accounting and reports to Owners (as defined in the
Trust Agreement); PROVIDED, HOWEVER, that once
prepared by the Master Servicer, the Depositor shall
retain responsibility under Section 5.1(b) of the
Trust Agreement for the distribution of the Schedule
K-1s necessary to enable each
56
Certificateholder to prepare its Federal and state
income tax returns.
(iv) The Master Servicer shall perform the duties
of the Depositor specified in Section 10.2 of the
Trust Agreement required to be performed in
connection with the resignation or removal of the
Owner Trustee, and any other duties expressly
required to be performed by the Master Servicer under
this Agreement or any of the Basic Documents.
(v) The Master Servicer, on behalf of the Seller,
shall direct the Issuer to request the tender of all
or a portion of the Notes of any Series in accordance
with the Indenture or any Series Supplement.
(vi) In carrying out the foregoing duties or any
of its other obligations under this Agreement, the
Master Servicer may enter into transactions with or
otherwise deal with any of its Affiliates; PROVIDED,
HOWEVER, that the terms of any such transactions or
dealings shall be in accordance with any directions
received from the Issuer and shall be, in the Master
Servicer's opinion, no less favorable to the Issuer
in any material respect.
(c) TAX MATTERS. The Master Servicer shall prepare
and file, or cause to be prepared and filed, 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 Indenture Trustee of the proposed
action and the Owner Trustee and the Indenture 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 Note
Paying Agents and successor Indenture Trustees pursuant to the
Indenture or the consent to the assignment by the Note
Registrar, Note Paying Agent or Indenture Trustee of its
obligations under the Indenture; and
(C) the removal of the Indenture Trustee.
57
(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 4.03 of the Series 2001-2 Supplement, (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) The Indenture Trustee shall not be responsible
for any obligations or duties of the Master Servicer under Section 12.1.
SECTION 12.2. RECORDS. The Master Servicer shall maintain
appropriate books of account and records relating to services performed under
this Agreement, which books of account and records shall be accessible for
inspection by the Issuer and the Indenture Trustee at any time during normal
business hours.
SECTION 12.3. ADDITIONAL INFORMATION TO BE FURNISHED TO THE
ISSUER. The Master Servicer shall furnish to the Issuer and the Indenture
Trustee from time to time such additional information regarding any Series
Trust Estate as the Issuer and the Indenture Trustee shall reasonably request.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
SECTION 13.1. AMENDMENTS. (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 Indenture 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 Indenture
Trustee and each Rating Agency, an Officer's Certificate dated the date of any
such Amendment, stating that the Seller reasonably believes that such amendment
will not have a material adverse effect on the rights of the Noteholders.
(c) Except as otherwise provided with respect to a
Series in a Series Supplement, this Agreement may also be amended from time to
time by the Servicer, the Seller and the Indenture Trustee, with the consent of
the Noteholders evidencing in each case not less than a majority of the
outstanding principal amount of
58
the Notes of each affected Series for which the Seller has not delivered an
Officer's Certificate stating that there is no adverse effect on the rights of
Noteholders of each Series, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement
or of modifying in any manner the rights of the Securityholders; PROVIDED,
HOWEVER, that no such amendment shall (i) reduce in any manner the amount of
or delay the timing of any distributions to be made to Securityholders or
deposits of amounts to be so distributed or the amount available under any
Series Support without the consent of each affected Securityholder, (ii)
change the definition of or the manner of calculating the interest of any
Securityholder without the consent of each affected Securityholder, (iii)
reduce the aforesaid percentage required to consent to any such amendment
without the consent of each Securityholder or (iv) adversely affect any rating
of a Series by each Rating Agency without the consent of the Noteholders
evidencing not less than a majority of the outstanding principal amount of the
outstanding Notes of such Series.
Promptly after the execution of any such amendment or
supplement, the Indenture 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
Indenture Trustee or the Owner Trustee, as applicable, may prescribe, including
the establishment of record dates.
The Owner Trustee and the Indenture Trustee may, but shall not
be obligated to, enter into any amendment which affects the Issuer's, the Owner
Trustee's or the Indenture 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
Indenture Trustee shall be entitled to receive and rely upon an Opinion of
Counsel stating that the execution of such amendment is authorized or permitted
by this Agreement and that all conditions precedent to the execution and
delivery of such amendment have been satisfied.
SECTION 13.2. PROTECTION OF TITLE TO TRUST. (a) 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 Indenture Trustee on behalf of the related
Series Securityholders in the related Series Trust Estate and in the proceeds
thereof.
59
(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
Sections 9-503(a)(4) and 9-507 of the UCC, unless it shall have given the Owner
Trustee and the Indenture Trustee at least thirty days' prior written notice
thereof and shall have promptly filed appropriate amendments to all previously
filed financing statements or continuation statements.
(c) Each of the Seller and the Master Servicer shall
have an obligation to give the Owner Trustee and the Indenture Trustee prompt
notice of any change in its state of incorporation if, as a result of such
change, 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
Indenture Trustee, within five Business Days, a list
60
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 Indenture Trustee shall hold any
such list and Schedule of Receivables for examination by interested parties
during normal business hours at the Corporate Trust Office upon reasonable
notice by such Persons of their desire to conduct an examination.
(h) The Master Servicer shall deliver to the Owner
Trustee and the Indenture Trustee:
(1) simultaneously with the execution and delivery of the
Agreement and, if required pursuant to Section 13.1, of each amendment,
an Opinion of Counsel stating that, in the opinion of such Counsel, in
form and substance reasonably satisfactory to the addressees of such
Opinion, either (A) all financing statements and continuation
statements have been executed and filed that are necessary fully to
preserve and protect the interest of the Trust and the Indenture
Trustee in the Receivables then held as part of the related Series
Trust Estate, or (B) no such action shall be necessary to preserve and
protect such interest or (C) any action which is necessary to preserve
and protect such interest during the following 12-month period; and
(2) within 90 days after the beginning of each calendar year
beginning in 2001, dated as of a date during such 90-day period,
stating that, in the opinion of such counsel, either (A) all financing
statements and continuation statements have been executed and filed
that are necessary fully to preserve and protect the interest of the
Trust and the Indenture Trustee in the Series Trust Estate or (B) no
such action shall be necessary to preserve and protect such interest.
Each Opinion of Counsel referred to in clause (1) or (2) above
shall specify any action necessary (as of the date of such opinion) to be taken
in the following year to preserve and protect such interest.
SECTION 13.3. NOTICES. All demands, notices and
communications upon or to the Seller, the Master Servicer, the Owner Trustee,
the Indenture Trustee or the Rating Agencies under this Agreement shall be in
writing, personally delivered, or mailed by certified mail, or sent by
confirmed telecopier transmission and shall be deemed to have been duly given
upon receipt (a) in the case of the Seller to
Household Auto Receivables
Corporation, 0000 Xxxx Xxxxxx Xxxxx, Xxx Xxxxx, Xxxxxx 00000, with a copy to
Household International, Inc., 0000 Xxxxxxx Xxxx, Xxxxxxxx Xxxxxxx, Xxxxxxxx,
00000, Attn: Treasurer (Telecopier # (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 Indenture Trustee at the Corporate Trust Office, Telecopier # (312)
228-9401, (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
61
Agency, to the address set forth in the related Series Supplement. Any notice
required or permitted to be mailed to a Noteholder or Certificateholder shall
be given by first class mail, postage prepaid, at the address of such Holder
as shown in the Certificate Register or Note Register, as applicable. Any
notice so mailed within the time prescribed in the Agreement shall be
conclusively presumed to have been duly given, whether or not the
Certificateholder or Noteholder shall receive such notice.
SECTION 13.4. ASSIGNMENT. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Notwithstanding anything to the contrary
contained herein, except as PROVIDED in Sections 8.4 and 9.3 and as PROVIDED
in the provisions of this Agreement concerning the resignation of the Master
Servicer, this Agreement may not be assigned by the Seller or the Master
Servicer without the prior written consent of the Owner Trustee and the
Indenture Trustee. In the event that a successor Issuer with respect to a
Series is formed as contemplated in the related Series Supplement, such Issuer
shall succeed to all of the rights and obligations of the predecessor Issuer
hereunder; and all references to the Issuer hereunder shall thereafter be
deemed to be references to such successor Issuer.
SECTION 13.5. LIMITATIONS ON RIGHTS OF OTHERS. The
provisions of this Agreement are solely for the benefit of the parties hereto
and for the benefit of the Certificateholders (including the Seller), the
Owner Trustee and the Indenture Trustee, as third-party beneficiaries. Each
Series Support Provider and its successors and assigns shall be a third-party
beneficiary to the provisions of this Agreement and to each Series Supplement
with respect to each Series for which they are providing Series Support, and
shall be entitled to rely upon and directly enforce such provisions of this
Agreement and to each Series Supplement with respect to each Series for which
they are providing Series Support, so long as no default with respect to such
Series Support Provider shall have occurred and be continuing. Nothing in this
Agreement or in any Series Supplement, whether express or implied, shall be
construed to give to any other Person any legal or equitable right, remedy or
claim in the Owner Trust Estate or under or in respect of this Agreement or
any covenants, conditions or provisions contained herein.
SECTION 13.6. SEVERABILITY. Any provision of this Agreement
that is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
SECTION 13.7. SEPARATE COUNTERPARTS. This Agreement and
each Transfer Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one and the
same instrument.
SECTION 13.8. HEADINGS. The headings of the various
Articles and Sections herein are for convenience of reference only and shall
not define or limit any of the terms or provisions hereof.
62
SECTION 13.9. GOVERNING LAW. THIS AGREEMENT AND EACH
TRANSFER AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF
NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED
IN ACCORDANCE WITH SUCH LAWS.
SECTION 13.10. ASSIGNMENT TO INDENTURE TRUSTEE. The Seller
hereby acknowledges and consents to any mortgage, pledge, assignment and grant
of a security interest by the Issuer to the Indenture Trustee pursuant to the
Indenture, as supplemented by a Series Supplement for the benefit of the
related Series Securityholders of all right, title and interest of the Issuer
in, to and under the applicable Series Trust Estate.
SECTION 13.11. NONPETITION COVENANTS. (a) Notwithstanding
any prior termination of this Agreement or any Series Supplement, the Master
Servicer and the Seller shall not, prior to the date which is one year and one
day after the termination of this Agreement or any Series Supplement with
respect to the Issuer, acquiesce, petition or otherwise invoke or cause the
Issuer to invoke the process of any court or government authority for the
purpose of commencing or sustaining a case against the Issuer under any
federal or state bankruptcy, insolvency or similar law or appointing a
receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the Issuer or any substantial part of its property, or
ordering the winding up or liquidation of the affairs of the Issuer.
(b) Notwithstanding any prior termination of this
Agreement or any Series Supplement, the Master Servicer shall not, prior to the
date that is one year and one day after the termination of this Agreement or any
Series Supplement with respect to the Seller, acquiesce to, petition or
otherwise invoke or cause the Seller to invoke the process of any court or
government authority for the purpose of commencing or sustaining a case against
the Seller under any federal or state bankruptcy, insolvency or similar law,
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator,
or other similar official of the Seller or any substantial part of its property,
or ordering the winding up or liquidation of the affairs of the Seller.
SECTION 13.12. LIMITATION OF LIABILITY OF OWNER TRUSTEE.
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.
63
SECTION 13.13. INDEPENDENCE OF THE MASTER SERVICER. For all
purposes of this Agreement, the Master Servicer shall be an independent
contractor and shall not be subject to the supervision of the Issuer, the
Indenture Trustee or the Owner Trustee with respect to the manner in which it
accomplishes the performance of its obligations hereunder. Unless expressly
authorized by this Agreement or any Series Supplement, the Master Servicer
shall have no authority to act for or represent the Issuer or the Owner
Trustee in any way and shall not otherwise be deemed an agent of the Issuer or
the Owner Trustee.
SECTION 13.14. NO JOINT VENTURE. Nothing contained in this
Agreement or any Series Supplement (i) shall constitute the Master Servicer
and either of the Issuer or the Owner Trustee as members of any partnership,
joint venture, association, syndicate, unincorporated business or other
separate entity, (ii) shall be construed to impose any liability as such on
any of them or (iii) shall be deemed to confer on any of them any express,
implied or apparent authority to incur any obligation or liability on behalf
of the others.
64
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 AUTOMOTIVE TRUST 2001-2
by Wilmington Trust Company, not in
its individual capacity but solely
as Owner Trustee on behalf of the Trust,
by /s/ Xxxxxxxx X. Xxxxx
------------------------------------
Name: Xxxxxxxx X. Xxxxx
Title: Senior Financial Services
Officer
HOUSEHOLD AUTO RECEIVABLES CORPORATION,
Seller,
by /s/ Xxxxxx X. Xxxxx
------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Vice President and Assistant
Treasurer
HOUSEHOLD FINANCE CORPORATION,
as Master Servicer,
by /s/ X. X. Xxxx, Xx.
------------------------------------
Name: X. X. Xxxx Xx.
Title: Vice President and Treasurer
U.S. BANK NATIONAL ASSOCIATION,
not in its individual capacity but
solely as Indenture Trustee,
by /s/ Xxxxxxxx X. Child
------------------------------------
Name: Xxxxxxxx X. Child
Title: Vice President
[Signature Page for
Master Sale and Servicing Agreement]
65
EXHIBIT A
FORM OF MASTER SERVICER'S CERTIFICATE
EXHIBIT B
FORM OF TRANSFER AGREEMENT
TRANSFER No. of Receivables pursuant to the
Master
Sale and Servicing Agreement dated as of _________, 200_ (the "Sale and
Servicing Agreement"), among HOUSEHOLD AUTOMOTIVE TRUST 2001-2, 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 U.S. BANK NATIONAL ASSOCIATION, a
national banking association, in its capacity as Indenture Trustee (the
"Indenture Trustee").
W I T N E S S E T H:
WHEREAS pursuant to the
Master Sale and Servicing Agreement,
the Seller wishes to convey the Receivables to the Issuer; and
WHEREAS, the Issuer is willing to accept such conveyance
subject to the terms and conditions hereof.
NOW, THEREFORE, the Issuer, the Seller, the Master Servicer
and the Indenture Trustee hereby agree as follows:
1. DEFINED TERMS. Capitalized terms used herein shall have
the meanings ascribed to them in the Sale and Servicing Agreement unless
otherwise defined herein.
"Cutoff Date" shall mean, with respect to the Receivables
conveyed hereby, ___________, 200_.
"Transfer Date" shall mean, with respect to the Receivables
conveyed hereby, ___________, 200_.
2. SCHEDULE OF RECEIVABLES. Annexed hereto is a supplement to
Schedule II-A, Schedule II-B and Schedule II-C to the Series 2001-2 Supplement
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 2001-2 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:
(a) each and every Receivable listed on Schedule A to the
related Receivables Purchase Agreement Supplement and all monies paid
or payable
thereon or in respect thereof on or after the related Cutoff Date
(including amounts due on or before the related Cutoff Date but
received by the Seller on or after such date);
(b) 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;
(c) all rights of the Seller against Dealers pursuant to
Dealer Agreements or Dealer Assignments related to such Receivables;
(d) any proceeds and the right to receive proceeds with
respect to such Receivables repurchased by a Dealer, pursuant to a
Dealer Agreement, as a result of a breach of representation or warranty
in the related Dealer Agreement;
(e) all rights of Seller under any Service Contracts on the
related Financed Vehicles;
(f) 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;
(g) 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;
(h) 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;
(i) all present and future claims, demands, causes and
chooses in action in respect of any or all of the foregoing and all
payments on or under and all proceeds of every kind and nature
whatsoever in respect of any or all of the foregoing, including all
proceeds of the conversion, voluntary or involuntary, into cash or
other liquid property, all cash proceeds, accounts, accounts
receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, insurance proceeds, condemnation awards, rights to payment of
any and every kind and other forms of obligations and receivables,
instruments and other property which at any time constitute all or part
of or are included in the proceeds of any of the foregoing.
4. REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller
hereby represents and warrants to the Issuer as of the date of this Agreement
and as of the Transfer Date that:
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(a) 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.
(b) 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.
(c) 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.
(d) 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.
(e) NO VIOLATION. The consummation of the transactions
contemplated by this Agreement and the Basic Documents and the
fulfillment of the terms of this Agreement and the Basic Documents
shall not conflict with, result in any breach of any of the terms and
provisions of or constitute (with or without notice, lapse of time or
both) a default under the certificate of incorporation or by-laws of
the Seller, or any indenture, agreement, mortgage, deed of trust or
other instrument to which the Seller is a party or by which it is
bound, or result in the creation or imposition of any Lien upon any of
its properties pursuant to the terms of any such indenture, agreement,
mortgage, deed of trust or other instrument, other than this Agreement,
or violate any law, order, rule or regulation applicable to the Seller
of any court or of any federal or state regulatory body, administrative
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agency or other governmental instrumentality having jurisdiction over
the Seller or any of its properties.
(f) 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.
(g) 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 Transfer
Date.
(h) 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.
(i) CHIEF EXECUTIVE OFFICE. The chief executive office of the
Seller is at 0000 Xxxx Xxxxxx Xxxxx, Xxx Xxxxx, Xxxxxx 00000.
(j) PRINCIPAL BALANCE. The aggregate Principal Balance of the
Receivables listed on the supplement to Schedule A annexed hereto and
conveyed to the Issuer pursuant to this Agreement as of the Cutoff Date
is $_____________.
5. CONDITIONS PRECEDENT. The obligation of the Issuer to
acquire the Receivables hereunder is subject to the satisfaction, on or prior to
the Transfer Date, of the following conditions precedent:
(a) 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.
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(b) 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.
(c) 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.
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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 AUTOMOTIVE TRUST 2001-2
by Wilmington Trust Company, not in its
individual capacity but solely as Owner
Trustee on behalf of the Trust,
by
------------------------------------
Name:
Title:
HOUSEHOLD AUTO RECEIVABLES CORPORATION,
Seller,
by
------------------------------------
Name:
Title:
HOUSEHOLD FINANCE CORPORATION,
Master Servicer,
by
------------------------------------
Name:
Title:
Acknowledged and Accepted:
U.S. BANK NATIONAL ASSOCIATION,
not in its individual capacity
but solely as Indenture Trustee
by
--------------------------
Name:
Title:
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