Exhibit 4.3
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TRUST AGREEMENT
among
HOUSEHOLD FINANCE CORPORATION,
HFC REVOLVING CORPORATION
as Depositor,
and
[ ],
as Owner Trustee
Dated as of [ ]
HOUSEHOLD HOME EQUITY LOAN TRUST 200_-_
[ ] Home Equity Loan Asset-Backed Notes, Series 200_-_
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Table of Contents
Page
ARTICLE I
DEFINITIONS
Section 1.1 Capitalized Terms.............................................1
Section 1.2 Other Definitional Provisions.................................4
ARTICLE II
ORGANIZATION
Section 2.1 Name..........................................................5
Section 2.2 Office........................................................5
Section 2.3 Purposes and Powers...........................................5
Section 2.4 Appointment of Owner Trustee..................................6
Section 2.5 Initial Capital Contribution of Owner Trust Estate............6
Section 2.6 Declaration of Trust..........................................6
Section 2.7 Title to Trust Property.......................................6
Section 2.8 Situs of Trust................................................6
Section 2.9 Representations and Warranties of the Depositor...............7
Section 2.10 Federal Income Tax Allocations................................8
ARTICLE III
OWNERSHIP INTEREST AND TRANSFERS OF THE OWNERSHIP INTEREST
Section 3.1 Initial Ownership.............................................9
Section 3.2 The Ownership Interest........................................9
Section 3.3 [Reserved]....................................................9
Section 3.4 Registration of Transfer and Exchange of
Ownership Interest............................................9
Section 3.5 [Reserved]....................................................9
Section 3.6 Persons Deemed Transferors....................................9
Section 3.7 [Reserved]....................................................9
Section 3.8 Maintenance of Office or Agency...............................9
Section 3.9 Appointment of Paying Agent..................................10
Section 3.10 [Reserved]...................................................10
Section 3.11 [Reserved]...................................................10
Section 3.12 [Reserved]...................................................10
Section 3.13 Restrictions on Transfers of Ownership Interest..............10
ARTICLE IV
ACTIONS BY OWNER TRUSTEE
Section 4.1 Prior Notice to the Transferor [and the Insurer] with
Respect to Certain Matters...................................13
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Section 4.2 [Reserved]...................................................15
Section 4.3 Action by Transferor with Respect to Bankruptcy..............15
Section 4.4 Restrictions on Transferor's Power...........................15
ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
Section 5.1 Establishment of Trust Account...............................16
Section 5.2 Application Of Trust Funds...................................16
Section 5.3 Method of Payment............................................16
Section 5.4 [Reserved]...................................................16
Section 5.5 Accounting and Reports to the Transferor, the Internal
Revenue Service and Others...................................16
Section 5.6 Signature on Returns.........................................17
ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE
Section 6.1 General Authority............................................18
Section 6.2 General Duties...............................................18
Section 6.3 Action upon Instruction......................................18
Section 6.4 No Duties Except as Specified in this Agreement,
the Transaction Documents or in Instructions.................19
Section 6.5 No Action Except Under Specified Documents or Instructions...20
Section 6.6 Restrictions.................................................20
ARTICLE VII
CONCERNING THE OWNER TRUSTEE
Section 7.1 Acceptance of Trusts and Duties..............................21
Section 7.2 Furnishing of Documents......................................22
Section 7.3 Representations and Warranties...............................22
Section 7.4 Reliance; Advice of Counsel..................................23
Section 7.5 Not Acting in Individual Capacity............................23
Section 7.6 Owner Trustee Not Liable for the Ownership
Interest or the Home Equity Loans............................24
Section 7.7 Owner Trustee May Own the Ownership Interest and the Notes...24
Section 7.8 Licenses.....................................................24
ARTICLE VIII
COMPENSATION OF OWNER TRUSTEE
Section 8.1 Owner Trustee's Fees and Expenses............................25
Section 8.2 Indemnification..............................................25
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Section 8.3 Payments to the Owner Trustee.................................25
ARTICLE IX
TERMINATION OF TRUST AGREEMENT
Section 9.1 Termination of Trust Agreement................................26
ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
Section 10.1 Eligibility Requirements for Owner Trustee....................28
Section 10.2 Resignation or Removal of Owner Trustee.......................28
Section 10.3 Successor Owner Trustee.......................................29
Section 10.4 Merger or Consolidation of Owner Trustee......................29
Section 10.5 Appointment of Co-Owner Trustee or Separate Owner Trustee.....29
ARTICLE XI
MISCELLANEOUS
Section 11.1 Supplements and Amendments....................................32
Section 11.2 No Legal Title to Owner Trust Estate in Transferor............33
Section 11.3 Limitations on Rights of Others...............................33
Section 11.4 Notices.......................................................33
Section 11.5 Severability..................................................33
Section 11.6 Separate Counterparts.........................................34
Section 11.7 Successors and Assigns........................................34
Section 11.8 No Petition...................................................34
Section 11.9 [Reserved]....................................................34
Section 11.10 No Recourse...................................................34
Section 11.11 Headings......................................................34
Section 11.12 GOVERNING LAW.................................................34
Section 11.13 Inconsistencies with Sale and Servicing Agreement.............35
[Section 11.14 Third Party Beneficiary...................................... 35]
EXHIBIT A Certificate of Trust..........................................A-1
EXHIBIT B Form of Transfer Certificate..................................B-1
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TRUST AGREEMENT, dated as of [ ], among Household Finance Corporation
("HFC"), HFC Revolving Corporation, as depositor (the "Depositor") and [ ],
a Delaware banking corporation, as owner trustee (the "Owner Trustee").
ARTICLE I
DEFINITIONS
Section 1.1 Capitalized Terms. For all purposes of this Agreement, the
following terms shall have the meanings set forth below:
"Agreement" shall mean this Trust Agreement, as the same may be amended and
supplemented from time to time.
"Bankruptcy Action" shall have the meaning assigned to such term in Section
4.1.
"Benefit Plan" shall have the meaning assigned to such term in Section
3.13.
"Business Trust Statute" shall mean Chapter 38 of Title 12 of the Delaware
Code, 12 Del. Code ss. 3801 et seq., as the same may be amended from time to
time.
"Certificate" shall mean the Ownership Interest.
"Certificate of Trust" shall mean the Certificate of Trust in the form of
Exhibit A to be filed for the Trust pursuant to Section 3810(a) of the Business
Trust Statute.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Collection Account" shall have the meaning assigned to such term in the
Sale and Servicing Agreement.
"Corporate Trust Office" shall mean, (i) with respect to the Owner Trustee,
the principal corporate trust office of the Owner Trustee, which office at date
of execution of this Agreement, is located at [ ], Attention: Corporate
Trust Administration; or at such other address in the State of Delaware as the
Owner Trustee may designate by notice to the Transferor and the Trust, or the
principal corporate trust office of any successor Owner Trustee (the address
(which shall be in the State of Delaware) of which the successor owner trustee
will notify the Transferor and the Trust); or (ii) with respect to the Indenture
Trustee, the principal corporate trust office of the Indenture Trustee, which
office at date of execution of this Agreement, is located at [ ],
Attention: Indenture Trust Administration, or at such other address as the
Indenture Trustee may designate by notice to the Transferor and the Trust, or
the principal corporate trust office of any successor Indenture Trustee (the
address (which shall be in the State of [ ]) of which the successor indenture
trustee will notify the Transferor and the Trust.
"Depositor" shall mean HFC Revolving Corporation or its successors.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Expenses" shall have the meaning assigned to such term in Section 8.2.
"HFC" shall mean Household Finance Corporation or its successors.
"Indenture" shall mean the Indenture, dated as of [ ], by and
between the Trust and the Indenture Trustee.
"Indenture Trustee" shall mean [ ], as Indenture Trustee under
the Indenture.
"Initial Note Principal Amount" shall mean with respect to the Class A
Notes, $[ ].
["Insurance Agreement" shall mean the Insurance and Reimbursement Agreement
dated as of [ ] among the Indenture Trustee, the Depositor, the Master
Servicer and the Insurer, including any amendments and supplements thereto.]
"Master Servicer" shall mean HFC, or any successor servicer appointed
pursuant to the Sale and Servicing Agreement.
"Non-permitted Foreign Owner" shall have the meaning set forth in Exhibit B
hereto.
"Non-U.S. Person" shall mean any Person other than (i) a citizen or
resident of the United States, (ii) an entity treated for United States federal
income tax purposes as a corporation or partnership created or organized in or
under the laws of the United States or any state thereof, including the District
of Columbia, (iii) an estate that is subject to U.S. federal income tax
regardless of the source of its income, (iv) a trust if a court within the
United States is able to exercise primary supervision over the administration of
the trust and one or more United States trustees have authority to control all
substantial decisions of the trust, or (v) certain trusts in existence on August
20, 1996 and treated as United States persons on such date that elect to
continue to be so treated.
"Owner Trust Estate" shall mean the contribution of $1 referred to in
Section 2.5 and the Trust Estate.
"Owner Trustee" shall mean [ ], a Delaware banking corporation, not
in its individual capacity but solely as owner trustee under this Agreement, and
any successor owner trustee hereunder.
"Ownership Interest" shall have the meaning specified in Section 3.2.
"Prospective Transferor" shall mean any prospective purchaser or
prospective transferee of the Ownership Interest.
"Rating Agency Condition" shall mean, with respect to certain actions
requiring Rating Agency consent, that each Rating Agency shall have been given
10 days (or such shorter period
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as is acceptable to each Rating Agency) prior notice thereof and that each of
the Rating Agencies shall have notified the Depositor, the Owner Trustee[, the
Insurer] and the Trust in writing that such action will not result in a
reduction or withdrawal of the then current rating of the Notes[, without regard
to the Insurance Policy].
"Record Date" shall mean the last Business Day preceding the related
Payment Date; provided, however, that following the date on which Definitive
Notes are available pursuant to Section 2.2 of the Indenture, the Record Date
shall be the last day of the calendar month preceding the month in which the
related Payment Date occurs.
"Register" shall mean a register kept by the Registrar in which, subject to
such reasonable regulations as it may prescribe, the Registrar shall provide for
the registration of the Certificate and the registration of transfers of the
Certificate. The location of the Registrar shall be the same as that of the
Corporate Trust Office of the Indenture Trustee.
"Registrar" shall mean the [indenture trustee] as Registrar hereunder.
"Sale and Servicing Agreement" shall mean the Sale and Servicing Agreement
dated as of the date hereof, among the Trust, the Depositor, the Indenture
Trustee and the Master Servicer.
"Secretary of State" shall mean the Secretary of State of the State of
Delaware.
"Transaction Documents" shall mean each of the Indenture, the Sale and
Servicing Agreement[, the Insurance Agreement] and this Agreement.
"Transferor" shall mean the owner of the Ownership Interest.
"Transferor Interest" shall have the meaning specified in Section 3.2.
"Treasury Regulations" shall mean regulations, including proposed or
temporary regulations, promulgated under the Code. References herein to specific
provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.
"Trust" shall mean Household Home Equity Loan Trust 200_-_, the Delaware
business trust created pursuant to this Agreement.
"Trust Estate" shall mean the assets subject to the Sale and Servicing
Agreement, [each Home Equity Loan Purchase Agreement,] this Trust Agreement and
the Indenture, assigned to the Indenture Trustee, which assets consist of: (i)
each Home Equity Loan and its related Mortgage Note and other Mortgage File
documents for such Home Equity Loan, including such Home Equity Loan's Principal
Balance and all collections in respect thereof received after the Cut-Off Date;
(ii) property that secured a Home Equity Loan that has become REO; (iii) the
interest of the Depositor in certain hazard insurance policies maintained by the
Mortgagors or the
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Master Servicer in respect of the Home Equity Loans; (iv) amounts on deposit in
the Collection Account (exclusive of net earnings thereon); (v) the Depositor's
rights under the Purchase Agreement, (vi) one share of Preferred Stock of the
Depositor, (vii) any proceeds of any of the foregoing and (viii) all other
assets included or to be included in the Trust for the benefit of Noteholders
[and the Insurer]. [In addition, on or prior to the Closing Date, the Depositor
shall cause the Insurer to deliver the Insurance Policy to the Indenture Trustee
for the benefit of the Noteholders.]
"Underwriter" shall mean [ ].
Section 1.2 Other Definitional Provisions.
(a) Capitalized terms used herein and not otherwise defined herein
have the meanings assigned to them in the Sale and Servicing Agreement or, if
not defined therein, in the Indenture.
(b) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(c) As used in this Agreement 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 certificate or other document, and accounting
terms partly defined in this Agreement or in any such certificate or other
document to the extent not defined, shall have the respective meanings given to
them under generally accepted accounting principles. To the extent that the
definitions of accounting terms in this Agreement or in any such 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 certificate or other document shall control.
(d) The words "hereof," "herein," "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement; Section and Exhibit
references contained in this Agreement are references to Sections and Exhibits
in or to this Agreement unless otherwise specified; and the term "including"
shall mean "including without limitation."
(e) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such terms.
(f) 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; references to a
Person are also to its permitted successors and assigns.
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ARTICLE II
ORGANIZATION
Section 2.1 Name. The Trust created hereby shall be known as "Household
Home Equity Loan Trust 200_-_," in which name the Owner Trustee may conduct the
business of the Trust and make and execute contracts and other instruments on
behalf of the Trust and the Trust may xxx and be sued.
Section 2.2 Office. The office of the Trust shall be in care of the Owner
Trustee at the Corporate Trust Office or at such other address in the State of
Delaware as the Owner Trustee may designate by written notice to the Transferor.
Section 2.3 Purposes and Powers.
(a) The purpose of the Trust is to engage in the following
activities:
(i) to issue the Notes pursuant to the Indenture and the Ownership
Interest pursuant to this Agreement and to sell such Notes and Ownership
Interest;
(ii) with the proceeds of the sale of the Notes and the Ownership
Interest, to fund start-up and transactional expenses of the Trust and to
pay the balance to the Depositor, as its interests may appear pursuant to
the Sale and Servicing Agreement;
(iii) to assign, grant, transfer, pledge, mortgage and convey the
Trust Estate pursuant to the Indenture and to hold, manage and distribute
to the Transferor pursuant to the terms of the Sale and Servicing Agreement
any portion of the Trust Estate released from the lien of, and remitted to
the Trust pursuant to, the Indenture;
(iv) to enter into and perform its obligations under the Transaction
Documents to which it is to be a party;
(v) to engage in those activities, including entering into
agreements, that are necessary, suitable or convenient to accomplish the
foregoing or are incidental thereto or connected therewith; and
(vi) subject to compliance with the Transaction Documents, to engage
in such other activities as may be required in connection with conservation
of the Owner Trust Estate and the making of distributions to the
Noteholders and the Transferor.
The Trust is hereby authorized to engage in the foregoing activities. The Trust
shall not engage in any activity other than in connection with the foregoing or
other than as required or authorized by the terms of this Agreement or the
Transaction Documents.
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Section 2.4 Appointment of Owner Trustee. The Depositor hereby appoints the
Owner Trustee as trustee of the Trust effective as of the date hereof, to have
all the rights, powers and duties set forth herein.
Section 2.5 Initial Capital Contribution of Owner Trust Estate. The
Depositor hereby sells, assigns, transfers, conveys and sets over to the Trust,
as of the date hereof, the sum of $1. The Owner Trustee hereby acknowledges
receipt in trust from the Depositor, as of the date hereof, of the foregoing
contribution, which shall constitute the initial Owner Trust Estate and shall be
deposited in the Collection Account. The Depositor shall pay organizational
expenses of the Trust as they may arise or shall, upon the request of the Owner
Trustee, promptly reimburse the Owner Trustee for any such expenses paid by the
Owner Trustee.
Section 2.6 Declaration of Trust. The Owner Trustee hereby declares that it
will hold the Owner Trust Estate in trust upon and subject to the conditions set
forth herein for the use and benefit of the Transferor, subject to the
obligations of the Trust under the Transaction Documents. It is the intention of
the parties hereto that the Trust constitute a business trust under the Business
Trust Statute and that this Agreement constitute the governing instrument of
such business trust. It is the intention of the parties hereto that, solely for
income and franchise tax purposes, the Trust shall be treated as a security
arrangement, with the assets of the Trust being the Trust Estate and the
Transferor being the owner of the Ownership Interest. The parties agree that,
unless otherwise required by appropriate tax authorities, the Trust will file or
cause to be filed annual or other necessary returns, reports and other forms, if
any, consistent with the characterization of the Trust as provided in the
preceding sentence for such tax purposes. Effective as of the date hereof, the
Owner Trustee shall have all rights, powers and duties set forth herein and in
the Business Trust Statute with respect to accomplishing the purposes of the
Trust. The Owner Trustee shall file the Certificate of Trust with the Secretary
of State of the State of Delaware.
Section 2.7 Title to Trust Property.
(a) Subject to the Indenture, legal title to all the Owner Trust
Estate shall be vested at all times in the Trust as a separate legal entity
except where applicable law in any jurisdiction requires title to any part of
the Owner Trust Estate to be vested in a trustee or trustees, in which case
title shall be deemed to be vested in the Owner Trustee, a co-owner trustee
and/or a separate trustee, as the case may be.
(b) The Transferor shall not have legal title to any part of the Owner
Trust Estate. No transfer by operation of law or otherwise of any interest of
the Transferor shall operate to terminate this Agreement or the trusts hereunder
or entitle any transferee to an accounting or to the transfer to it of any part
of the Owner Trust Estate.
Section 2.8 Situs of Trust. The Trust will be located and administered in
the State of Delaware. All bank accounts maintained by the Owner Trustee on
behalf of the Trust shall be located in the State of Delaware or the State
of [ ]. The Trust shall not have any employees; provided, however, that
nothing herein shall restrict or prohibit the Owner Trustee
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from having employees within or without the State of Delaware. Payments will be
received by the Trust only in Delaware or [ ], and payments will be made
by the Trust only from Delaware or [ ]. The only office of the Trust will
be at the Corporate Trust Office in Delaware.
Section 2.9 Representations and Warranties of the Depositor.
The Depositor hereby represents and warrants to the Owner Trustee [and
the Insurer] that:
(a) The Depositor is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has the
corporate power to own its assets and to transact the business in which it is
currently engaged. The Depositor is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which the character
of the business transacted by it or properties owned or leased by it require
such qualification and in which the failure to so qualify would have a material
adverse effect on the business, properties, assets or condition (financial or
other) of the Depositor;
(b) The Depositor has the power and authority to make, execute,
deliver and perform its obligations under this Agreement and to perform its
obligations with respect to all of the transactions contemplated under this
Agreement, and has taken all necessary corporate action to authorize the
execution, delivery and performance of its obligations under this Agreement.
When executed and delivered, this Agreement will constitute the legal, valid and
binding obligation of the Depositor enforceable in accordance with its terms,
except as enforcement of such terms may be limited by bankruptcy, insolvency or
similar laws affecting the enforcement of creditors' rights generally and by the
availability of equitable remedies (whether in a proceeding at law or in
equity);
(c) The Depositor is not required to obtain the consent of any other
Person or any consent, license, approval or authorization from, or registration
or declaration with, any governmental authority, bureau or agency in connection
with the execution, delivery, performance, validity or enforceability of this
Agreement, except for such consents, licenses, approvals or authorizations, or
registrations or declarations, as shall have been obtained or filed, as the case
may be;
(d) The execution and delivery of this Agreement and the performance
of the transactions contemplated hereby by the Depositor will not violate any
provision of any existing law or regulation or any order or decree of any court
applicable to the Depositor or any provision of the Certificate of Incorporation
or Bylaws of the Depositor, or constitute a material breach of any mortgage,
indenture, contract or other agreement to which the Depositor is a party or by
which the Depositor may be bound; and
(e) No litigation or administrative proceeding of or before any court,
tribunal or governmental body is currently pending, or to the knowledge of the
Depositor threatened, against the Depositor or any of its properties or with
respect to this Agreement which in the opinion of
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the Depositor has a reasonable likelihood of resulting in a material adverse
effect on the transactions contemplated by this Agreement.
Section 2.10 Federal Income Tax Allocations. Net income of the Trust for
any month, as determined for Federal income tax purposes (and each item of
income, gain, loss and deduction entering into the computation thereof), shall
be allocated to the Transferor.
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ARTICLE III
OWNERSHIP INTEREST AND TRANSFERS OF THE OWNERSHIP INTEREST
Section 3.1 Initial Ownership. Upon the formation of the Trust by the
contribution by the Depositor pursuant to Section 2.5, the Transferor shall be
the sole beneficial owner of the Trust.
Section 3.2 The Ownership Interest. The Ownership Interest (as defined
below) shall be uncertificated and shall represent the entire beneficial
ownership interest in the Owner Trust Estate, subject to the debt
represented by the Notes (the "Ownership Interest" or "Transferor Interest").
The Ownership Interest may be assigned by the Transferor as provided in Section
3.13.
Upon the completion of a transfer in accordance with the terms and
conditions of this Article III, a transferee of the Ownership Interest shall
become the Transferor, and shall be entitled to the rights and subject to the
obligations of the Transferor hereunder, upon such transferee's acceptance of
the Ownership Interest duly registered in such transferee's name pursuant to
Section 3.4 below.
Section 3.3 [Reserved].
Section 3.4 Registration of Transfer and Exchange of Ownership Interest.
The Owner Trustee hereby appoints [ ] as Registrar under this Agreement.
The Registrar shall keep or cause to be kept, at the office or agency maintained
pursuant to Section 3.8, a Register in which, subject to such reasonable
regulations as it may prescribe, the Register shall provide for the registration
of the Ownership Interest and of transfer and exchange of the Ownership Interest
as herein provided. The Registrar, subject to Section 3.13 hereof, on behalf of
the Trust shall note on the Register the transfer of the Ownership Interest.
Section 3.5 [Reserved].
Section 3.6 Persons Deemed Transferors. Prior to due assignment of the
Ownership Interest for registration of transfer, the Depositor, the Owner
Trustee, the Indenture Trustee[, the Insurer] and the Registrar may treat the
Person in whose name the Ownership Interest shall be registered in the Register
as the owner thereof for the purpose of receiving distributions pursuant to
Section 5.2 hereof and for all other purposes whatsoever, and none of the
Depositor, the Owner Trustee, the Indenture Trustee[, the Insurer] or the
Registrar shall be bound by any notice to the contrary.
Section 3.7 [Reserved]
Section 3.8 Maintenance of Office or Agency. The Indenture Trustee shall
maintain an office or offices or agency or agencies (initially, the Corporate
Trust Office of the Indenture Trustee) where instructions for the transfer of
the Ownership Interest may be delivered for registration of transfer [or
exchange] pursuant to Section 3.4 and where notices and demands to or upon the
Registrar in respect of the Ownership Interest and the Transaction Documents may
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be served. The Indenture Trustee shall give prompt written notice to [the
Insurer,] the Owner Trustee and the Transferor of any change in the location of
the Register or any such office or agency.
Section 3.9 Appointment of Paying Agent. The Owner Trustee hereby appoints
the Indenture Trustee as Paying Agent under this Agreement. The Paying Agent
shall make distributions to the Transferor from the Collection Account pursuant
to Section 5.2 hereof and Section 5.01 of the Sale and Servicing Agreement and
shall report the amounts of such distributions to the Owner Trustee. The Paying
Agent shall have the revocable power to withdraw funds from the Collection
Account for the purpose of making the distributions referred to above. In the
event that the Indenture Trustee shall no longer be the Paying Agent hereunder,
the Owner Trustee shall appoint a successor to act as Paying Agent (which shall
at all times be a corporation duly incorporated and validly existing under the
laws of the United States of America or any state thereof, authorized under such
laws to exercise corporate trust powers and subject to supervision or
examination by federal or state authorities). The Owner Trustee shall cause such
successor Paying Agent or any additional Paying Agent appointed by the Owner
Trustee to execute and deliver to the Owner Trustee an instrument in which such
successor Paying Agent or additional Paying Agent shall agree with the Owner
Trustee that as Paying Agent, such successor Paying Agent or additional Paying
Agent will hold all sums, if any, held by it for payment to the Transferor in
trust for the benefit of the Transferor until such sums shall be paid to the
Transferor. The Paying Agent shall return all unclaimed funds to the Owner
Trustee, and upon removal of a Paying Agent, such Paying Agent shall also return
all funds in its possession to the Owner Trustee. Any reference in this
Agreement to the Paying Agent shall include any co-paying agent unless the
context requires otherwise.
Section 3.10 [Reserved].
Section 3.11 [Reserved].
Section 3.12 [Reserved].
Section 3.13 Restrictions on Transfers of Ownership Interest. To the
fullest extent permitted by applicable law, the Ownership Interest shall not be
sold, pledged, transferred or assigned, except as provided below.
(a) The Ownership Interest may not be acquired by or for the account
of (i) an employee benefit plan (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) that is subject to
the provisions of Title I of ERISA, (ii) a plan described in Section 4975(e)(1)
of the Code, or (iii) any entity, including an insurance company separate
account or general account, whose underlying assets include plan assets by
reason of a plan's investment in the entity (each, a "Benefit Plan"). Each
Prospective owner of the Ownership Interest, other than HFC or an affiliate of
HFC, shall represent and warrant, in writing, to the Owner Trustee and the
Registrar and any of their respective successors that:
(i) Such Person is (A) a "qualified institutional buyer" as defined in
Rule 144A under the Securities Act of 1933, as amended (the "Securities
Act"), and is
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aware that the seller of such Ownership Interest may be relying on the
exemption from the registration requirements of the Securities Act provided
by Rule 144A and is acquiring such Ownership Interest for its own account
or for the account of one or more qualified institutional buyers for whom
it is authorized to act, (B) an "accredited investor" as defined in Rule
501(a) under the Securities Act , or (C) a Person involved in the
organization or operation of the Trust or an affiliate of such Person
within the meaning of Rule 3a-7 of the 1940 Act, as amended (including, but
not limited to, HFC or the Transferor).
(ii) Such Person understands that such Ownership Interest has not been
and will not be registered under the Securities Act and may be offered,
sold, pledged or otherwise transferred only to a person whom the seller
reasonably believes is (A) a "qualified institutional buyer," (B) "an
accredited investor" or (C) a Person involved in the organization or
operation of the Trust or an affiliate of such Person, in each case in a
transaction meeting the requirements of Rule 144A under the Securities Act
or that is otherwise exempt from registration under the Securities Act and
in accordance with any applicable securities laws of any state of the
United States.
(iii) Such Person shall comply with the provisions of Section 3.13(b),
as applicable, relating to the ERISA restrictions with respect to the
acceptance or acquisition of such Ownership Interest .
(b) Each Prospective Transferor, other than the Transferor or an
affiliate of the Transferor, shall either:
(i) represent and warrant, in writing, to the Owner Trustee and the
Registrar and any of their respective successors, in accordance with
Exhibit B hereto, that the Prospective Transferor is not (A) an "employee
benefit plan" within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or (B) a "plan" within
the meaning of Section 4975(e)(1) of the Code (any such plan or employee
benefit plan, a "Plan") or (C) any entity, including an insurance company
separate account or general account, whose underlying assets include plan
assets by reason of a plan's investment in the entity and is not directly
or indirectly purchasing such Ownership Interest on behalf of, as
investment manager of, as named fiduciary of, as trustee of, or with assets
of a Plan; or
(ii) furnish to the Owner Trustee and the Registrar and any of their
respective successors an opinion of counsel acceptable to such persons that
(A) the proposed issuance or transfer of such Ownership Interest to such
Prospective Transferor will not cause any assets of the Trust to be deemed
assets of a Plan, and (B) the proposed holding or transfer of such
Ownership Interest will not cause the Owner Trustee or the Registrar or any
of their respective successors to be a fiduciary of a Plan within the
meaning of Section 3(21) of ERISA and will not give rise to a transaction
described in Section 406 of
11
ERISA or Section 4975(c)(1) of the Code for which a statutory or
administrative exemption is unavailable.
(c) [Reserved].
(d) The Prospective Transferor, other than the initial Transferor or
an affiliate of the initial Transferor, shall obtain an Opinion of Counsel to
the effect that, as a matter of federal income tax law, such Prospective
Transferor is permitted to accept the transfer of the Ownership Interest.
(e) The Ownership Interest may not be pledged or transferred without
delivery to the Registrar of an Opinion of Counsel to the effect that such
transfer would not jeopardize the tax treatment of the Trust, would not subject
the Trust to an entity-level tax, and would not jeopardize the status of the
Notes as debt for all purposes (including a withholding tax on the Home Equity
Loans).
(f) No pledge or transfer of the Ownership Interest shall be effective
unless such purchase or transfer is (i) to a single beneficial owner and (ii)
accompanied by an opinion of counsel satisfactory to the Owner Trustee, which
Opinion of Counsel shall not be an expense of the Trust, the Registrar or the
Master Servicer, to the effect such pledge or transfer will not cause the Trust
to be treated for federal income tax purposes as a taxable mortgage pool,
association or a publicly traded partnership taxable as a corporation.
(g) Transfer of the Ownership Interest shall be made only if
accompanied by an opinion of counsel satisfactory to the Owner Trustee, which
opinion of counsel shall not be an expense of the Trust, the Owner Trustee or
the Master Servicer, to the effect such transfer will not cause the Trust to be
treated for federal income tax purposes as an association, a taxable mortgage
pool or a publicly traded partnership taxable as a corporation.
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ARTICLE IV
ACTIONS BY OWNER TRUSTEE
Section 4.1 Prior Notice to the Transferor [and the Insurer] with Respect
to Certain Matters. With respect to the following matters, the Owner Trustee
shall not take action, and neither the Transferor [nor the Insurer] shall direct
the Owner Trustee to take any action, unless [(i) the Insurer has provided its
written consent and (ii)] at least 30 days before the taking of such action, the
Owner Trustee shall have notified the Transferor in writing of the proposed
action and neither the Transferor [nor the Insurer] shall have notified the
Owner Trustee in writing prior to the 30th day after such notice is given that
the Transferor has withheld consent or the Transferor [or the Insurer] has
provided alternative direction:
(a) the initiation of any claim or lawsuit by the Trust (except claims
or lawsuits brought in connection with the collection of the Home Equity Loans)
and the compromise of any action, claim or lawsuit brought by or against the
Trust (except with respect to the aforementioned claims or lawsuits for
collection of the Home Equity Loans);
(b) the election by the Trust to file an amendment to the Certificate
of Trust (unless such amendment is required to be filed under the Business Trust
Statute);
(c) the amendment or other change to this Agreement or any Transaction
Document in circumstances where the consent of any Noteholder [or the Insurer]
is required;
(d) the amendment or other change to this Agreement or any Transaction
Document in circumstances where the consent of any Noteholder [or the Insurer]
is not required and such amendment materially adversely affects the interest of
the Transferor;
(e) the appointment pursuant to the Indenture of a successor Note
Registrar, Paying Agent or Indenture Trustee, or the consent to the assignment
by the Note Registrar, Paying Agent or Indenture Trustee of its obligations
under the Indenture;
(f) the consent to the calling or waiver of any default of any
Transaction Document;
(g) the consent to the assignment by the Indenture Trustee of their
respective obligations under any Transaction Document;
(h) except as provided in Article IX hereof, dissolve, terminate or
liquidate the Trust in whole or in part;
(i) merge or consolidate the Trust with or into any other entity, or,
except as contemplated by the Sale and Servicing Agreement, convey or transfer
all or substantially all of the Trust's assets to any other entity;
13
(j) cause the Trust to incur, assume or guaranty any indebtedness
other than the Notes, as set forth in this Agreement;
(k) do any act that conflicts with any other Transaction Document;
(l) do any act which would make it impossible to carry on the ordinary
business of the Trust;
(m) confess a judgment against the Trust;
(n) possess Trust assets, or assign the Trust's right to property, for
other than a Trust purpose; or
(o) change the Trust's purpose and powers from those set forth in this
Agreement.
In addition, except as specifically contemplated by the Transaction
Documents, the Trust shall not commingle its assets with those of any other
entity. The Trust shall maintain its financial and accounting books and records
separate from those of any other entity. Except as expressly set forth herein,
the Trust shall pay its indebtedness, operating expenses from its own funds, and
the Trust shall not pay the indebtedness, operating expenses and liabilities of
any other Person. The Trust shall maintain appropriate minutes or other records
of all appropriate actions and shall maintain its office separate from the
offices of the Depositor or HFC, and any of their respective affiliates. This
Agreement and the Transaction Documents shall be the only agreements among the
parties hereto with respect to the creation, operation and termination of the
Trust. For accounting purposes, the Trust shall be treated as an entity separate
and distinct from the Transferor. The pricing and other material terms of all
transactions and agreements to which the Trust is a party shall be intrinsically
fair to all parties thereto.
The Owner Trustee shall not have the power, except upon the direction of
the Transferor [and with the consent of the Insurer (which consent shall not be
unreasonably withheld)], and to the extent otherwise consistent with the
Transaction Documents, to (i) remove or replace the Master Servicer or the
Indenture Trustee, (ii) institute proceedings to have the Trust declared or
adjudicated a bankrupt or insolvent, (iii) consent to the institution of
bankruptcy or insolvency proceedings against the Trust, (iv) file a petition or
consent to a petition seeking reorganization or relief on behalf of the Trust
under any applicable federal or state law relating to bankruptcy, (v) consent to
the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or
any similar official) of the Trust or a substantial portion of the property of
the Trust, (vi) make any assignment for the benefit of the Trust's creditors,
(vii) cause the Trust to admit in writing its inability to pay its debts
generally as they become due, or (viii) take any action, or cause the Trust to
take any action, in furtherance of any of the foregoing (any of the above, a
"Bankruptcy Action"). So long as the Indenture remains in effect, the Transferor
shall not have the power to take, and shall not take, any Bankruptcy Action with
respect to the Trust or direct the Owner Trustee to take any Bankruptcy Action
with respect to the Trust.
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Section 4.2 [Reserved].
Section 4.3 Action by Transferor with Respect to Bankruptcy. To the fullest
extent permitted by applicable law, the Owner Trustee shall not have the power
to commence a voluntary proceeding in bankruptcy relating to the Trust without
the prior consent and approval of [(i) the Insurer;] (ii) the Transferor; (iii)
the Owner Trustee; and (iv) the Indenture Trustee, and the delivery to the Owner
Trustee by the Transferor of a certificate certifying that such Transferor
reasonably believes that the Trust is insolvent. The terms of this Section 4.3
shall survive for one year and one day following the termination of this
Agreement.
Section 4.4 Restrictions on Transferor's Power. The Transferor shall not
direct the Owner Trustee to take or refrain from taking any action if such
action or inaction would be contrary to any obligation of the Trust or the Owner
Trustee under this Agreement or any of the Transaction Documents or would be
contrary to Section 2.3 hereof, nor shall the Owner Trustee be obligated to
follow any such direction, if given.
15
ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
Section 5.1 Establishment of Trust Account. The Owner Trustee shall cause
the Indenture Trustee to establish and maintain with the Indenture Trustee for
the benefit of the Owner Trustee one or more Eligible Accounts in accordance
with the Indenture.
Section 5.2 Application Of Trust Funds.
(a) On each Payment Date, the Paying Agent shall make the
distributions and payments set forth in Section 5.01 of the Sale and Servicing
Agreement from amounts on deposit in the Collection Account.
(b) On or before the third Business Day following each Payment Date,
the Paying Agent shall send to DTC the statement provided to the Paying Agent by
the Indenture Trustee pursuant to Section 5.03 of the Sale and Servicing
Agreement with respect to such Payment Date.
(c) In the event that any withholding tax is imposed on the Trust's
payment (or allocations of income) to the Transferor, such tax shall reduce the
amount otherwise distributable to the Transferor in accordance with this Section
5.2. The Paying Agent is hereby authorized and directed to retain from amounts
otherwise distributable to the Transferor sufficient funds for the payment of
any tax that is legally owed by the Trust (but such authorization shall not
prevent the Paying Agent from contesting any such tax in appropriate
proceedings, and withholding payment of such tax, if permitted by law, pending
the outcome of such proceedings). The amount of any withholding tax imposed with
respect to the Transferor shall be treated as cash distributed to the Transferor
at the time it is withheld by the Trust and remitted to the appropriate taxing
authority. If there is a possibility that withholding tax is payable with
respect to a distribution (such as a distribution to a non-U.S. Transferor), the
Paying Agent may in its sole discretion withhold such amounts in accordance with
this paragraph (c). In the event that the Transferor wishes to apply for a
refund of any such withholding tax, the Owner Trustee and the Paying Agent shall
reasonably cooperate with the Transferor in making such claim so long as the
Transferor agrees to reimburse the Owner Trustee and the Paying Agent for any
out-of-pocket expenses incurred.
Section 5.3 Method of Payment. Distributions required to be made to the
Transferor on any Payment Date shall be made to the Transferor of record on the
preceding Record Date in the manner set forth in Section 5.01 of the Sale and
Servicing Agreement.
Section 5.4 [Reserved].
Section 5.5 Accounting and Reports to the Transferor, the Internal Revenue
Service and Others. The Owner Trustee shall deliver to the Transferor such
information, reports or statements as may be required by the Code and applicable
Treasury Regulations and as may be
16
required to enable the Transferor to prepare its respective federal and state
income tax returns. Consistent with the Trust's characterization for tax
purposes as a security arrangement for the issuance of non-recourse debt, no
federal income tax return shall be filed on behalf of the Trust unless either
(a) the Trust or the Transferor shall receive an Opinion of Counsel based on a
change in applicable law occurring after the date hereof that the Code requires
such a filing or (b) the Internal Revenue Service shall determine that the Trust
is required to file such a return. In the event that the Trust is required to
file tax returns, the Owner Trustee shall elect under Section 1278 of the Code
to include in income currently any market discount that accrues with respect to
the Home Equity Loans. The Owner Trustee shall prepare or shall cause to be
prepared any tax returns required to be filed by the Trust and shall remit such
returns to the Transferor at least five days before such returns are due to be
filed. The Transferor, or any other such party required by law, shall promptly
sign such returns and deliver such returns after signature to the Owner Trustee
and such returns shall be filed by, or at the direction of, the Owner Trustee
with the appropriate tax authorities. In no event shall the Transferor be liable
for any liabilities, costs or expenses of the Trust arising out of the
application of any tax law, including federal, state, foreign or local income or
excise taxes or any other tax imposed on or measured by income (or any interest,
penalty or addition with respect thereto or arising from a failure to comply
therewith), except for any such liability, cost or expense attributable to the
Transferor's breach of its obligations under this Agreement.
Section 5.6 Signature on Returns.
The Owner Trustee shall sign on behalf of the Trust the tax returns of the
Trust, if any, unless applicable law requires a Transferor to sign such
documents, in which case such documents shall be signed by the Transferor.
17
ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE
Section 6.1 General Authority. The Owner Trustee is authorized and directed
to execute and deliver or cause to be executed and delivered the Notes, and the
Transaction Documents to which the Trust is to be a party and each certificate
or other document attached as an exhibit to or contemplated by the Transaction
Documents to which the Trust is to be a party and any amendment or other
agreement or instrument described in Article III, in each case, in such form as
the Owner Trustee shall approve, as evidenced conclusively by the Owner
Trustee's execution thereof, and, on behalf of the Trust, to direct the
Indenture Trustee to authenticate and deliver the Class A Notes in an aggregate
principal amount equal to $[ ]. In addition to the foregoing, the Owner
Trustee is authorized, but shall not be obligated, to take all actions required
of the Trust pursuant to the Transaction Documents.
Section 6.2 General Duties. It shall be the duty of the Owner Trustee to
discharge (or cause to be discharged) all of its responsibilities pursuant to
the terms of this Agreement and the Transaction Documents to which the Trust is
a party and to administer the Trust in the interest of the Transferor, subject
to the Transaction Documents and in accordance with the provisions of this
Agreement. Notwithstanding the foregoing, the Owner Trustee shall be deemed to
have discharged its duties and responsibilities hereunder and under the
Transaction Documents to the extent the Administrator has agreed in the
Administration Agreement to perform any act or to discharge any duty of the
Owner Trustee hereunder or under any Transaction Document, and the Owner Trustee
shall not be held liable for the default or failure of the Administrator to
carry out their respective obligations under the Administration Agreement.
Section 6.3 Action upon Instruction.
(a) Subject to Article IV herein and in accordance with the terms of
the Transaction Documents, the Transferor may by written instruction direct the
Owner Trustee in the management of the Trust but only to the extent consistent
with the limited purpose of the Trust. Such direction may be exercised at any
time by written instruction of the Transferor pursuant to Article IV.
(b) Notwithstanding the foregoing, the Owner Trustee shall not be
required to take any action hereunder or under any Transaction Document if the
Owner Trustee shall have reasonably determined, or shall have been advised by
counsel, that such action is likely to result in liability on the part of the
Owner Trustee or is contrary to the terms hereof or of any Transaction Document
or is otherwise contrary to law.
(c) Whenever the Owner Trustee is unable to decide between alternative
courses of action permitted or required by the terms of this Agreement or under
any Transaction Document, the Owner Trustee shall promptly give notice (in such
form as shall be appropriate under the circumstances) to the Transferor [and the
Insurer (so long as no Insurer Default exists)] requesting instruction from the
Transferor [and the Insurer (so long as no Insurer Default exists)]
18
as to the course of action to be adopted, and to the extent the Owner Trustee
acts in good faith in accordance with any written instruction of the Transferor
[or the Insurer] received, the Owner Trustee shall not be liable on account of
such action to any Person. If the Owner Trustee shall not have received
appropriate instruction within 10 days of such notice (or within such shorter
period of time as reasonably may be specified in such notice or may be necessary
under the circumstances) it may, but shall be under no duty to, take or refrain
from taking such action, not inconsistent with this Agreement or the Transaction
Documents, as it shall deem to be in the best interest of the Transferor, and
shall have no liability to any Person for such action or inaction.
(d) In the event that the Owner Trustee is unsure as to the
application of any provision of this Agreement or any Transaction Document or
any such provision is ambiguous as to its application, or is, or appears to be,
in conflict with any other applicable provision, or in the event that this
Agreement provides no direction to the Owner Trustee or is silent or is
incomplete as to the course of action that the Owner Trustee is required to take
with respect to a particular set of facts, the Owner Trustee may give notice (in
such form as shall be appropriate under the circumstances) to the Transferor
[and the Insurer] requesting instruction and, to the extent that the Owner
Trustee acts or refrains from acting in good faith in accordance with any such
instruction received from [the Insurer, or if there is an Insurer Default,] the
Transferor, the Owner Trustee shall not be liable, on account of such action or
inaction, to any Person. If the Owner Trustee shall not have received
appropriate instruction within 10 days of such notice (or within such shorter
period of time as reasonably may be specified in such notice or may be necessary
under the circumstances) it may, but shall be under no duty to, take or refrain
from taking such action, not inconsistent with this Agreement or the Transaction
Documents, as it shall deem to be in the best interest of the Transferor, and
shall have no liability to any Person for such action or inaction.
Section 6.4 No Duties Except as Specified in this Agreement, the
Transaction Documents or in Instructions. The Owner Trustee shall not have any
duty or obligation to manage, make any payment with respect to, register,
record, sell, dispose of, or otherwise deal with the Owner Trust Estate, or to
otherwise take or refrain from taking any action under, or in connection with,
any document contemplated hereby to which the Owner Trustee or the Trust is a
party, except as expressly provided by the terms of this Agreement, any
Transaction Document or in any document or written instruction received by the
Owner Trustee pursuant to Section 6.3; and no implied duties or obligations
shall be read into this Agreement or any Transaction Document against the Owner
Trustee. The Owner Trustee shall have no responsibility for filing any financing
or continuation statement in any public office at anytime or to otherwise
perfect or maintain the perfection of any security interest or lien granted to
it hereunder or to prepare or file any Securities and Exchange Commission filing
for the Trust or to record this Agreement or any Transaction Document. The Owner
Trustee nevertheless agrees that it will, at its own cost and expense, promptly
take all action as may be necessary to discharge any liens on any part of the
Owner Trust Estate that result from actions by, or claims against, the Owner
Trustee that are not related to the ownership or the administration of the Owner
Trust Estate.
19
Section 6.5 No Action Except Under Specified Documents or Instructions. The
Owner Trustee shall not manage, control, use, sell, dispose of or otherwise deal
with any part of the Owner Trust Estate except (i) in accordance with the powers
granted to and the authority conferred upon the Owner Trustee pursuant to this
Agreement, (ii) in accordance with the Transaction Documents and (iii) in
accordance with any document or instruction delivered to the Owner Trustee
pursuant to Section 6.3 above.
Section 6.6 Restrictions. The Owner Trustee shall not take any action (a)
that is inconsistent with the purposes of the Trust set forth in Section 2.3
hereof or (b) that, to the actual knowledge of the Owner Trustee, would result
in the Trust's becoming taxable as a corporation for Federal income tax
purposes. The Transferor shall not direct the Owner Trustee to take action that
would violate the provisions of this Section 6.6.
20
ARTICLE VII
CONCERNING THE OWNER TRUSTEE
Section 7.1 Acceptance of Trusts and Duties. The Owner Trustee accepts the
trusts hereby created and agrees to perform its duties hereunder with respect to
such trusts but only upon the terms of this Agreement and the Transaction
Documents. The Owner Trustee also agrees to disburse all moneys actually
received by it constituting part of the Owner Trust Estate upon the terms of the
Transaction Documents and this Agreement. The Owner Trustee shall not be
answerable or accountable hereunder or under any Transaction Document under any
circumstances, except (i) for its own willful misconduct, bad faith or
negligence or (ii) in the case of the inaccuracy of any representation or
warranty contained in Section 7.3 below expressly made by the Owner Trustee. In
particular, but not by way of limitation (and subject to the exceptions set
forth in the preceding sentence):
(a) the Owner Trustee shall not be liable for any error of judgment
made by a responsible officer of the Owner Trustee;
(b) no provision of this Agreement or any Transaction Document shall
require the Owner Trustee to expend or risk funds or otherwise incur any
financial liability in the performance of any of its rights or powers hereunder
or under any Transaction Document if the Owner Trustee shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured or provided to it;
(c) under no circumstances shall the Owner Trustee be liable for
indebtedness evidenced by or arising under any of the Transaction Documents,
including the principal of and interest on the Notes;
(d) the Owner Trustee shall not be responsible for or in respect of
the validity or sufficiency of this Agreement or for the due execution hereof by
the Depositor or for the form, character, genuineness, sufficiency, value or
validity of any of the Owner Trust Estate or for or in respect of the validity
or sufficiency of the Transaction Documents, other than the certificate of
authentication on the Ownership Interest, and the Owner Trustee shall in no
event assume or incur any liability, duty, or obligation to any Noteholder, to
the Transferor or other than as expressly provided for herein and in the
Transaction Documents;
(e) the Owner Trustee shall not be liable for the default or
misconduct of the Indenture Trustee or the Master Servicer under any of the
Transaction Documents or otherwise and the Owner Trustee shall have no
obligation or liability to perform the obligations of the Trust under this
Agreement or the Transaction Documents that are required to be performed by the
21
Indenture Trustee under the Indenture, the Master Servicer under the Sale and
Servicing Agreement, the Administrator or [ ] under the Administration Agreement
or the Registrar or any Paying Agent hereunder;
(f) the Owner Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Agreement, or to institute, conduct or
defend any litigation under this Agreement or otherwise or in relation to this
Agreement or any Transaction Document, at the request, order or direction of the
Transferor [or the Insurer], unless such Transferor [or Insurer] has offered to
the Owner Trustee security or indemnity satisfactory to it against the costs,
expenses and liabilities that may be incurred by the Owner Trustee therein or
thereby. The right of the Owner Trustee to perform any discretionary act
enumerated in this Agreement or in any Transaction Document shall not be
construed as a duty, and the Owner Trustee shall not be answerable for other
than its gross negligence or willful misconduct in the performance of any such
act; and
(g) The Owner Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in accordance with the instructions of [the
Insurer,] the Depositor or any Owner to the extent such action or direction is
permitted by the Transaction Documents.
Section 7.2 Furnishing of Documents. The Owner Trustee shall furnish (a) to
the Transferor promptly upon receipt of a written request therefor, duplicates
or copies of all reports, notices, requests, demands, certificates, financial
statements and any other instruments furnished to the Owner Trustee under the
Transaction Documents and (b) to Noteholders [and the Insurer] promptly upon
written request therefor, copies of the Sale and Servicing Agreement and this
Agreement.
Section 7.3 Representations and Warranties.
The Owner Trustee hereby represents and warrants to the Depositor, for the
benefit of the Transferor [and the Insurer], that:
(a) It is a banking corporation duly organized and validly existing in
good standing under the laws of the State of Delaware. It has all requisite
corporate power and authority to execute, deliver and perform its obligations
under this Agreement;
(b) It has taken all corporate action necessary to authorize the
execution and delivery by it of this Agreement, and this Agreement will be
executed and delivered by one of its officers who is duly authorized to execute
and deliver this Agreement on its behalf;
(c) Neither the execution nor the delivery by it of this Agreement nor
the consummation by it of the transactions contemplated hereby nor compliance by
it with any of the terms or provisions hereof will contravene any Federal or
Delaware law, governmental rule or regulation governing the banking or trust
powers of the Owner Trustee or any judgment or order binding on it, or
constitute any default under its charter documents or by-laws or any indenture,
mortgage, contract, agreement or instrument to which it is a party or by which
any of its properties may be bound;
22
(d) The execution, delivery, authentication and performance by the
Owner Trustee of this Agreement will not require the authorization, consent or
approval of, the giving of notice to, the filing or registration with, or the
taking of any other action with respect to, any governmental authority or
agency;
(e) This Agreement has been duly authorized, executed and delivered by
the Owner Trustee and constitutes a valid, legal and binding obligation of the
Owner Trustee, enforceable against it in accordance with the terms hereof,
subject to applicable bankruptcy, insolvency, reorganization, moratorium and
other laws affecting the enforcement of creditors' rights generally and to
general principles of equity, regardless of whether such enforcement is
considered in a proceeding in equity or at law;
(f) The Owner Trustee is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal, state,
municipal or governmental agency, which default might have consequences that
would materially and adversely affect the condition (financial or other) or
operations of the Owner Trustee or its properties or might have consequences
that would materially adversely affect its performance hereunder; and
(g) No litigation is pending or, to the best of the Owner Trustee's
knowledge, threatened against the Owner Trustee which would prohibit its
entering into this Agreement or performing its obligations under this Agreement.
Section 7.4 Reliance; Advice of Counsel.
(a) The Owner Trustee shall incur no liability to anyone in acting
upon any signature, instrument, notice, resolution, request, consent, order,
certificate, report, opinion, bond, or other document or paper believed by it to
be genuine and believed by it to be signed by the proper party or parties. The
Owner Trustee may accept a certified copy of a resolution of the board of
directors or other governing body of any corporate party as conclusive evidence
that such resolution has been duly adopted by such body and that the same is in
full force and effect. As to any fact or matter the method of the determination
of which is not specifically prescribed herein, the Owner Trustee may for all
purposes hereof rely on a certificate, signed by the president or any vice
president or by the treasurer or other authorized officer of the relevant party,
as to such fact or matter and such certificate shall constitute full protection
to the Owner Trustee for any action taken or omitted to be taken by it in good
faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder and in
the performance of its duties and obligations under this Agreement or the
Transaction Documents, the Owner Trustee (i) may act directly or through its
agents or attorneys pursuant to agreements entered into with any of them, and
the Owner Trustee shall not be liable for the conduct or misconduct of such
agents or attorneys if such agents or attorneys shall have been selected by the
Owner Trustee with reasonable care, and (ii) may consult with counsel,
accountants and other skilled persons to be selected with reasonable care and
employed by it. The Owner Trustee shall not be liable for anything done,
suffered or omitted in good faith by it in accordance with the opinion or advice
of any such counsel, accountants or other such persons and not contrary to this
Agreement or any Transaction Document.
Section 7.5 Not Acting in Individual Capacity. Except as provided in this
Article VII, in accepting the trusts hereby created, [Owner Trustee] acts solely
as Owner Trustee hereunder and not in its individual capacity and all Persons
having any claim against the Owner Trustee by
23
reason of the transactions contemplated by this Agreement or any Transaction
Document shall look only to the Owner Trust Estate for payment or satisfaction
thereof.
Section 7.6 Owner Trustee Not Liable for the Ownership Interest or the Home
Equity Loans. The recitals contained herein and in the Ownership Interest (other
than the signature of the Owner Trustee on the Certificate) shall be taken as
the statements of the Depositor, and the Owner Trustee assumes no responsibility
for the correctness thereof. The Owner Trustee makes no representations as to
the validity or sufficiency of this Agreement, of any Transaction Document or of
the Ownership Interest (other than the signature of the Owner Trustee on the
Certificate and as specified in Section 7.3 hereof) or the Notes, or of any Home
Equity Loans or related documents. The Owner Trustee shall at no time have any
responsibility or liability for or with respect to the legality, validity and
enforceability of any Home Equity Loan, or the perfection and priority of any
security interest created by any Home Equity Loan or the maintenance of any such
perfection and priority, or for or with respect to the sufficiency of the Owner
Trust Estate or its ability to generate the payments to be distributed to the
Transferor under this Agreement or to the Noteholders under the Indenture,
including, without limitation: the existence, condition and ownership of any
Mortgaged Property; the existence and enforceability of any insurance thereon;
the existence and contents of any Home Equity Loan on any computer or other
record thereof; the validity of the assignment of any Home Equity Loan to the
Trust or of any intervening assignment; the completeness of any Home Equity
Loan; the performance or enforcement of any Home Equity Loan; the compliance by
the Depositor or the Master Servicer with any warranty or representation made
under any Transaction Document or in any related document or the accuracy of any
such warranty or representation or any action of the Depositor, the Indenture
Trustee, the Administrator or the Master Servicer or any subservicer taken in
the name of the Owner Trustee.
Section 7.7 Owner Trustee May Own the Ownership Interest and the Notes. The
Owner Trustee in its individual or any other capacity may become the owner or
pledgee of the Ownership Interest or the Notes and may deal with the Depositor,
the Indenture Trustee, the Administrator and the Master Servicer in banking
transactions with the same rights as it would have if it were not Owner Trustee.
Section 7.8 Licenses. The Owner Trustee shall cause the Trust to use its
best efforts to obtain and maintain the effectiveness of any licenses required
in connection with this Agreement and the Transaction Documents and the
transactions contemplated hereby and thereby until such time as the Trust shall
terminate in accordance with the terms hereof.
24
ARTICLE VIII
COMPENSATION OF OWNER TRUSTEE
Section 8.1 Owner Trustee's Fees and Expenses. The Owner Trustee shall
receive as compensation for its services hereunder such fees as have been
separately agreed upon before the date hereof between [HFC] and the Owner
Trustee, and the Owner Trustee shall be entitled to be reimbursed by [HFC] for
its other reasonable expenses hereunder, including the reasonable compensation,
expenses and disbursements of such agents, representatives, experts and counsel
as the Owner Trustee may employ in connection with the exercise and performance
of its rights and its duties hereunder.
Section 8.2 Indemnification. [HFC] shall be liable as primary obligor for,
and shall indemnify the Owner Trustee and its successors, assigns, agents and
servants (collectively, the "Indemnified Parties") from and against, any and all
liabilities, obligations, losses, damages, taxes, claims, actions and suits, and
any and all reasonable costs, expenses and disbursements (including reasonable
legal fees and expenses) of any kind and nature whatsoever (collectively,
"Expenses") which may at any time be imposed on, incurred by, or asserted
against the Owner Trustee or any Indemnified Party in any way relating to or
arising out of this Agreement, the Transaction Documents, the Owner Trust
Estate, the administration of the Owner Trust Estate or the action or inaction
of the Owner Trustee hereunder, except only that [HFC] shall not be liable for
or required to indemnify an Indemnified Party from and against Expenses arising
or resulting from any of the matters described in the third sentence of Section
7.1 hereof. The indemnities contained in this Section 8.2 shall survive the
resignation or termination of the Owner Trustee or the termination of this
Agreement. In the event of any claim, action or proceeding for which indemnity
will be sought pursuant to this Section 8.2, the Owner Trustee's choice of legal
counsel shall be subject to the approval of HFC, which approval shall not be
unreasonably withheld.
Section 8.3 Payments to the Owner Trustee. Any amounts paid to the Owner
Trustee pursuant to this Article VIII shall be deemed not to be a part of the
Owner Trust Estate immediately after such payment.
25
ARTICLE IX
TERMINATION OF TRUST AGREEMENT
Section 9.1 Termination of Trust Agreement.
(a) This Agreement (other than Article VIII) and the Trust shall
terminate pursuant to the Business Trust Statute and be of no further force or
effect on the earlier of (i) payment in full of all amounts owing to the Insurer
unless the Insurer shall otherwise consent and (B) the earliest of (i) the final
payment or other liquidation of the last Home Equity Loan remaining in the
Trust; (ii) the optional purchase by the Master Servicer of the Home Equity
Loans as described below and (iii) the Payment Date in [_____]. Notwithstanding
the foregoing, in no event shall the trust created hereby continue beyond the
expiration of 21 years from the date of the last survivor of the descendants of
Xxxxxx X. Xxxxxxx, the late ambassador of the United States to the Court of St.
James's, living on the date hereof. The bankruptcy, liquidation, dissolution,
death or incapacity of the Transferor shall not (x) operate to terminate this
Agreement or the Trust, nor (y) entitle such Transferor's legal representatives
or heirs to claim an accounting or to take any action or proceeding in any court
for a partition or winding-up of all or any part of the Trust or Owner Trust
Estate nor (z) otherwise affect the rights, obligations and liabilities of the
parties hereto.
(b) The Ownership Interest shall be subject to an early redemption or
termination at the option of the Master Servicer in the manner and subject to
the provisions of Section 8.01 of the Sale and Servicing Agreement.
(c) Except as provided in Sections 9.1(a) and (b) above, none of the
Depositor, the Administrator, or the Transferor shall be entitled to revoke or
terminate the Trust.
(d) Notice of any termination of the Trust, specifying the Payment
Date upon which the Transferor shall surrender their Ownership Interest to the
Paying Agent for payment of the final distributions and cancellation, shall be
given by the Registrar to the Transferor[, the Insurer] and the Rating Agencies
mailed within five Business Days of receipt by the Registrar of notice of such
termination pursuant to (a) or (b) above, which notice given by the Owner
Trustee shall state (i) the Payment Date upon or with respect to which final
payment of the Registrar shall be made upon presentation and surrender of the
Ownership Interest at the office of the Paying Agent therein designated, (ii)
the amount of any such final payment and (iii) that the Record Date otherwise
applicable to such Payment Date is not applicable, payments being made only upon
submission of a claim for and acknowledgment of final distribution under the
Ownership Interest at the office of the Paying Agent therein specified. The
Registrar shall give such notice to the Owner Trustee and the Paying Agent at
the time such notice is given to the Transferor. Upon presentation of such
submission of a claim for and acknowledgment of final distribution under the
Ownership Interest, the Paying Agent shall cause to be distributed to the
Transferor amounts distributable on such Payment Date pursuant to Section 5.01
of the Sale and Servicing Agreement.
In the event that the Transferor shall not have submitted claim for
and acknowledgment of final distribution under the Ownership Interest for
cancellation within six months after the date specified in the above mentioned
written notice, the Registrar shall give a
26
second written notice to the Transferor with respect thereto. If within one year
after such second notice, the Registrar may take appropriate steps, or may
appoint an agent to take appropriate steps, to contact the Transferor concerning
the final distribution, and the cost thereof shall be paid out of the funds and
other assets that shall remain subject to this Agreement.
(e) Upon the winding up of the Trust and its termination, the Owner
Trustee shall cause the Certificate of Trust to be canceled by filing a
certificate of cancellation with the Secretary of State in accordance with the
Business Trust Statute.
27
ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
Section 10.1 Eligibility Requirements for Owner Trustee. The Owner Trustee
shall at all times be a corporation satisfying the provisions of the Business
Trust Statute; authorized to exercise corporate powers; having a combined
capital and surplus of at least $50,000,000 and subject to supervision or
examination by Federal or state authorities; and having (or having a parent
which has) a long-term rating of at least "A" (or its equivalent) by each of
Standard & Poor's and Fitch [and being acceptable to the Insurer]. If such
corporation shall publish reports of condition at least annually, pursuant to
law or to the requirements of the aforesaid supervising or examining authority,
then for the purpose of this Section, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. In case at any time the
Owner Trustee shall cease to be eligible in accordance with the provisions of
this Section 10.1, the Owner Trustee shall resign immediately in the manner and
with the effect specified in Section 10.2.
Section 10.2 Resignation or Removal of Owner Trustee. The Owner Trustee may
at any time resign and be discharged from the trusts hereby created by giving
written notice thereof to the Trust, the Indenture Trustee[, the Insurer] and
the Rating Agencies. Upon receiving such notice of resignation, the Indenture
Trustee shall promptly appoint a successor Owner Trustee [with the consent of
the Insurer, which consent shall not be unreasonably withheld,] by written
instrument, in duplicate, one copy of which instrument shall be delivered to the
resigning Owner Trustee and one copy to the successor Owner Trustee. If no
successor Owner Trustee shall have been so appointed and have accepted
appointment within 30 days after the giving of such notice of resignation, the
resigning Owner Trustee [or the Insurer] may petition any court of competent
jurisdiction for the appointment of a successor Owner Trustee.
If at any time the Owner Trustee shall cease to be eligible in accordance
with the provisions of Section 10.1 above and shall fail to resign after written
request therefor by the Indenture Trustee, or if at any time the Owner Trustee
shall be legally unable to act, or shall be adjudged bankrupt or insolvent, or a
receiver of the Owner Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Owner Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Indenture Trustee may[, and, at the direction of the
Insurer, shall,] remove the Owner Trustee. If the Indenture Trustee shall remove
the Owner Trustee under the authority of the immediately preceding sentence, the
Indenture Trustee shall promptly appoint a successor Owner Trustee [acceptable
to the Insurer] by written instrument in duplicate, one copy of which instrument
shall be delivered to the outgoing Owner Trustee so removed and one copy to the
successor Owner Trustee and payment of all fees owed to the outgoing Owner
Trustee.
Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this Section 10.2
shall not become effective until acceptance of appointment by the successor
Owner Trustee pursuant to Section 10.3[, written
28
approval by the Insurer] and payment of all fees and expenses owed to the
outgoing Owner Trustee. The Indenture Trustee shall provide notice of such
resignation or removal of the Owner Trustee to each of the Rating Agencies.
Section 10.3 Successor Owner Trustee. Any successor Owner Trustee appointed
pursuant to Section 10.2 shall execute, acknowledge and deliver to the Indenture
Trustee[, the Insurer] and to its predecessor Owner Trustee an instrument
accepting such appointment under this Agreement, and thereupon the resignation
or removal of the predecessor Owner Trustee shall become effective and such
successor Owner Trustee [(if acceptable to the Insurer)], without any further
act, deed or conveyance, shall become fully vested with all the rights, powers,
duties, and obligations of its predecessor under this Agreement, with like
effect as if originally named as Owner Trustee. The predecessor Owner Trustee
shall upon payment of its fees and expenses deliver to the successor Owner
Trustee all documents and statements and monies held by it under this Agreement;
and the Indenture Trustee and the predecessor Owner Trustee shall execute and
deliver such instruments and do such other things as may reasonably be required
for fully and certainly vesting and confirming in the successor Owner Trustee
all such rights, powers, duties, and obligations.
No successor Owner Trustee shall accept appointment as provided in this
Section 10.3 unless at the time of such acceptance such successor Owner Trustee
shall be eligible pursuant to Section 10.1 above.
Upon acceptance of appointment by a successor Owner Trustee pursuant to
this Section 10.3, the Indenture Trustee shall mail notice of the successor of
such Owner Trustee to the Transferor, the Noteholders[, the Insurer] and the
Rating Agencies. If the Indenture Trustee fails to mail such notice within 10
days after acceptance of appointment by the successor Owner Trustee, the
successor Owner Trustee shall cause such notice to be mailed at the expense of
the Indenture Trustee.
Section 10.4 Merger or Consolidation of Owner Trustee. Any corporation into
which the Owner Trustee may be merged or converted or with which either may be
consolidated or any corporation resulting from any merger, conversion or
consolidation to which the Owner Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Owner Trustee, shall be the successor of the Owner Trustee, as the case may be,
hereunder, provided such corporation shall be eligible pursuant to Section 10.1
above, without the execution or filing of any instrument or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding; provided further that the Owner Trustee, shall mail notice of
such merger or consolidation to the Depositor, HFC[, the Insurer] and the Rating
Agencies.
Section 10.5 Appointment of Co-Owner Trustee or Separate Owner Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Owner Trust Estate or any Mortgaged Property may at the time be located,
the Owner Trustee [(with the consent of the
29
Insurer, which consent shall not be unreasonably withheld)] shall have the power
and shall execute and deliver all instruments to appoint one or more Persons to
act as co-owner trustee, jointly with the Owner Trustee, or separate owner
trustee or separate owner trustees, of all or any part of the Owner Trust
Estate, and to vest in such Person, in such capacity, such title to the Trust,
or any part thereof, and, subject to the other provisions of this Section, such
powers, duties, obligations, rights and trusts as the Owner Trustee may consider
necessary or desirable. No co-owner trustee or separate trustee under this
Section 10.5 shall be required to meet the terms of eligibility as a successor
Owner Trustee pursuant to Section 10.1 above and no notice of the appointment of
any co-owner trustee or separate trustee shall be required pursuant to Section
10.3 above.
[The Owner Trustee hereby appoints the Indenture Trustee for the purpose of
establishing and maintaining the Collection Account and making the distributions
therefrom to the Persons entitled thereto pursuant to Section 5.01 of the Sale
and Servicing Agreement.]
Each separate trustee and co-owner trustee shall, to the extent permitted
by law, be appointed and act subject to the following provision and conditions:
(i) all rights, powers, duties and obligations conferred or imposed
upon the Owner Trustee shall be conferred upon and exercised or performed
by the Owner Trustee and such separate owner trustee or co-owner trustee
jointly (it being understood that such separate owner trustee or co-owner
trustee is not authorized to act separately without the Owner Trustee
joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed, the
Owner Trustee shall be incompetent or unqualified to perform such act or
acts, in which event such rights, powers, duties, and obligations
(including the holding of title to the Trust or any portion thereof in any
such jurisdiction) shall be exercised and performed singly by such separate
trustee or co-owner trustee but solely at the direction of the Owner
Trustee;
(ii) no owner trustee under this Agreement shall be personally liable
by reason of any act or omission of any other owner trustee under this
Agreement; and
(iii) the Owner Trustee may at any time accept the resignation of or
remove any separate trustee or co-owner trustee.
Any notice, request or other writing given to the Owner Trustee shall be
deemed to have been given to the separate trustees and co-owner trustees, as if
given to each of them. Every instrument appointing any separate owner trustee or
co-owner trustee, other than this Agreement, shall refer to this Agreement and
to the conditions of this Article X. Each separate trustee and co-owner trustee,
upon its acceptance of appointment, shall be vested with the estates specified
in its instrument of appointment, either jointly with the Owner Trustee or
separately, as may be provided therein, subject to all the provisions of this
Agreement, specifically including every provision of this Agreement relating to
the conduct of, affecting the liability of, or affording protection to, the
Owner Trustee. Each such instrument shall be filed with the Owner Trustee.
30
Any separate trustee or co-owner trustee may at any time appoint the Owner
Trustee as its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any owner trustee or co-owner
trustee shall die, become incapable of acting, resign or be removed, all of its
estates, properties, rights, remedies and trusts shall vest in and be exercised
by the Owner Trustee, to the extent permitted by law, without the appointment of
a new or successor trustee.
31
ARTICLE XI
MISCELLANEOUS
Section 11.1 Supplements and Amendments. This Agreement may be amended by
the Depositor, HFC and the Owner Trustee with prior written notice to the Rating
Agencies and the Indenture Trustee [and with the consent of the Insurer (which
consent shall not be unreasonably withheld)], but without the consent of any of
the Noteholders, the Transferor or the Indenture Trustee, to cure any ambiguity,
to correct or supplement any provisions in this Agreement or for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions in this Agreement or of modifying in any manner the rights of the
Noteholders or the Transferor; provided, however, that such action shall not, as
evidenced by an Opinion of Counsel, adversely affect in any material respect the
interests of any Noteholder, the Transferor [or the Insurer]. An amendment
described above shall be deemed not to adversely affect in any material respect
the interests of any Noteholder, the Transferor [or the Insurer] if the party
requesting the amendment satisfies the Rating Agency Condition with respect to
such amendment.
This Agreement may also be amended from time to time by the Depositor, HFC
and the Owner Trustee, with the prior written consent of the Rating Agencies[,
the Insurer] and the Indenture Trustee, the Noteholders evidencing more than 50%
of the Percentage Interests in the Notes and the Transferor, 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
Noteholders or the Transferor; provided, however, that no such amendment shall
(a) increase or reduce in any manner the amount of, or accelerate or delay the
timing of, collections of payments on the Home Equity Loans or distributions
that shall be required to be made for the benefit of the Noteholders or the
Transferor or (b) reduce the aforesaid Percentage Interests required to consent
to any such amendment, without the consent of the holders of all the outstanding
Notes. [; and provided further, that no such amendment will be effective unless
the Insurer consents to such action or such action will not, as evidenced by an
Opinion of Counsel, adversely affect in any material respect the interests of
any Noteholders or the Insurer]. The Depositor shall join in any such amendment
approved as provided in the preceding sentence so long as such amendment is not
adverse to the interests of the Depositor.
Promptly after the execution of any such amendment, the Owner Trustee shall
furnish written notification of the substance of such amendment to the Indenture
Trustee[, the Insurer] and each of the Rating Agencies.
It shall not be necessary for the consent of the Transferor, the
Noteholders or the Indenture Trustee pursuant to this Section 11.1 to approve
the particular form of any proposed 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 the Transferor provided for in this
Agreement or in any other Transaction Document) and of evidencing the
authorization of the execution thereof by the Transferor and the Noteholders
shall be subject to such reasonable requirements as the Owner Trustee may
prescribe.
32
Promptly after the execution of any amendment to the Certificate of Trust,
the Owner Trustee shall cause the filing of such amendment with the Secretary of
State.
Prior to the execution of any amendment to this Agreement or the
Certificate of Trust, the Owner 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
such execution and delivery have been satisfied. The Owner Trustee may, but
shall not be obligated to, enter into any such amendment which affects the Owner
Trustee's own rights, duties or immunities under this Agreement or otherwise.
Section 11.2 No Legal Title to Owner Trust Estate in Transferor. The
Transferor shall not have legal title to any part of the Owner Trust Estate. The
Transferor shall be entitled to receive distributions with respect to their
undivided ownership interest therein only in accordance with Articles V and IX
herein. No transfer, by operation of law or otherwise, of any right, title, or
interest of the Transferor to and in its Ownership Interest shall operate to
terminate this Agreement or the trusts hereunder or entitle any transferee to an
accounting or to the transfer to it of legal title to any part of the Owner
Trust Estate.
Section 11.3 Limitations on Rights of Others. The provisions of this
Agreement are solely for the benefit of the Owner Trustee, the Trust[, the
Insurer,] the Transferor and, to the extent expressly provided herein, the
Indenture Trustee[, the Insurer] and the Noteholders, and nothing in this
Agreement, 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 11.4 Notices.
(a) Unless otherwise expressly specified or permitted by the terms
hereof, all notices shall be in writing and shall be deemed given upon receipt
by the intended recipient or three Business Days after mailing if mailed by
certified mail, postage prepaid (except that notice to the Owner Trustee shall
be deemed given only upon actual receipt by the Owner Trustee), at the following
addresses: (i) if to the Owner Trustee, its Corporate Trust Office; (ii) if to
the Depositor or HFC, 0000 Xxxxxxx Xxxx, Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000,
Attention: Treasurer, [(iii) if to the Insurer, [ ];] (iv) if to the
Indenture Trustee, its Corporate Trust Office; (v) if to the Transferor,
[ ]; or, as to each such party, at such other address as shall be
designated by such party in a written notice to each other party.
(b) Any notice required or permitted to be given to the Transferor
shall be given by first-class mail, postage prepaid, at the address of such
Transferor as shown in the Register. Any notice so mailed within the time
prescribed in this Agreement shall be conclusively presumed to have been duly
given, whether or not the Transferor receives such notice.
Section 11.5 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
33
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 11.6 Separate Counterparts. This 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 11.7 Successors and Assigns. All covenants and agreements contained
herein shall be binding upon, and inure to the benefit of the Owner Trustee[,
the Insurer] and its successors and the Transferor and its successors and
permitted assigns, all as herein provided. Any request, notice, direction,
consent, waiver or other instrument or action by the Transferor shall bind the
successors and assigns of the Transferor.
Section 11.8 No Petition. The Owner Trustee, by entering into this
Agreement, the Transferor, by accepting the Ownership Interest, and the
Indenture Trustee and each Noteholder by accepting the benefits of this
Agreement, hereby covenant and agree that they will not at any time institute
against the Transferor or the Trust, or join in any institution against the
Transferor, or the Trust of, any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or other proceedings under any United
States Federal or state bankruptcy or law in connection with any obligations
relating to the Ownership Interest and the Notes, this Agreement or any of the
Transaction Documents.
Section 11.9 [Reserved].
Section 11.10 No Recourse. The Transferor by accepting the Ownership
Interest acknowledges that the Transferor's Ownership Interest represents a
beneficial interest in the Trust only and does not represent an interest in or
an obligation of the Master Servicer, the Owner Trustee or any Affiliate thereof
and no recourse may be had against such parties or their assets, except as may
be expressly set forth or contemplated in this Agreement, the Ownership Interest
or the Transaction Documents.
Section 11.11 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.
Section 11.12 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, 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.
34
Section 11.13 Inconsistencies with Sale and Servicing Agreement.
In the event certain provisions of this Agreement conflict with the
provisions of the Sale and Servicing Agreement, the parties hereto agree that
the provisions of the Sale and Servicing Agreement shall be controlling (other
than the provisions governing the internal affairs of the Trust, which shall be
governed by Delaware law).
Section 11.14 [Third Party Beneficiary.
The parties hereto acknowledge that the Insurer is an express third party
beneficiary hereof entitled to enforce the provisions hereof as if it were
actually a party hereto. Nothing in this Section 11.14 however shall be
construed to mitigate in any way, the fiduciary responsibilities of the Owner
Trustee to the beneficiaries of the Trust.]
35
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to
be duly executed by their respective officers hereunto duly authorized, as of
the day and year first above written.
[ ]
as Owner Trustee
By:
-----------------------------
Name:
Title:
HFC REVOLVING CORPORATION,
as Depositor
By:
-----------------------------
Name:
Title:
HOUSEHOLD FINANCE CORPORATION
By:
-----------------------------
Name:
Title:
EXHIBIT A
CERTIFICATE OF TRUST OF
HOUSEHOLD HOME EQUITY LOAN TRUST [ ]
THIS Certificate of Trust of HOUSEHOLD HOME EQUITY LOAN TRUST [ ] (the
"Trust"), is being duly executed and filed by [ ], a Delaware banking
corporation, as trustee, to form a business trust under the Delaware Business
Trust Act (12 Del. Code, ss. 3801 et seq.)(the "Act").
1. Name. The name of the business trust formed hereby is HOUSEHOLD HOME
EQUITY LOAN TRUST [ ].
2. Delaware Trustee. The name and business address of the trustee of the
Trust in the State of Delaware is [ ]. Attention: Corporate Trust
Administration Department.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of the Trust,
has executed this Certificate of Trust in accordance with Section 3811(a) of the
Act.
[ ], not in its individual
capacity but solely as Owner Trustee under a
Trust Agreement dated as of [ ].
By:
--------------------------------
Name:
Title:
A-1
EXHIBIT B
TRANSFER CERTIFICATE
[Owner Trustee]
---------------------------
---------------------------
---------------------------
Attention: [____________________]
Re: Trust Agreement, dated as of [ ], among Household Home Equity
Loan Trust 200_-_, [ ] and [ ], as Owner
Trustee; Household Home Equity Loan Trust 200_-_, [ ] Home
Equity Loan Asset-Backed Notes, Series 200_-_
Ladies and Gentlemen:
The undersigned (the "Transferee") has agreed to purchase from _______
(the "Transferor") the Ownership Interest:
A. Rule 144A "Qualified Institutional Buyers" should complete this
section
I. The Transferee is (check one):
__ (i) An insurance company, as defined in Section 2(13) of the
Securities Act of 1933, as amended (the "Securities Act"), (ii)
an investment company registered under the Investment Company Act
of 1940, as amended (the "Investment Company Act"), (iii) a
business development company as defined in Section 2(a)(48) of
the Securities Act, (iv) a Small Business Investment Company
licensed by the U.S. Small Business Administration under Section
301(c) or (d) of the Small Business Investment Act of 1958, (v) a
plan established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a state or its
political subdivisions, for the benefit of its employees, (vi) an
employee benefit plan within the meaning of Title I of the
Employee Retirement Income Security Act of 1974, as amended
("ERISA"), (vii) a business development company as defined in
Section 202(a)(22) of the Investment Advisors Act of 1940, (viii)
an organization described in Section 501(c)(3) of the Internal
Revenue Code, corporation (other than a bank as defined in
Section 3(a)(2) of the Securities Act or a savings and loan
association or
B-1
other institution referenced in Section 3(a)(2) of the Securities
Act or a foreign bank or savings and loan association or
equivalent institution), partnership, or Massachusetts or similar
business trust; or (ix) an investment advisor registered under
the Investment Advisors Act of 1940, which, for each of (i)
through (ix), owns and invests on a discretionary basis at least
$100 million in securities other than securities of issuers
affiliated with the Transferee, securities issued or guaranteed
by the United States or a person controlled or supervised by and
acting as an instrumentality of the government of the United
States pursuant to authority granted by the Congress of the
United States, bank deposit notes and certificates of deposit,
loan participations, repurchase agreements, securities owned but
subject to a repurchase agreement, and currency, interest rate
and commodity swaps (collectively, "Excluded Securities");
__ a dealer registered pursuant to Section 15 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") that in the
aggregate owns and invests on a discretionary basis at least $10
million of securities other than Excluded Securities and
securities constituting the whole or part of an unsold allotment
to, or subscription by, Transferee as a participant in a public
offering;
__ an investment company registered under the Investment Company Act
that is part of a family of investment companies (as defined in
Rule 144A of the Securities and Exchange Commission) which own in
the aggregate at least $100 million in securities other than
Excluded Securities and securities of issuers that are part of
such family of investment companies;
__ an entity, all of the equity owners of which are entities
described in this Paragraph A(I);
__ a bank as defined in Section 3(a)(2) of the Securities Act, any
savings and loan association or other institution as referenced
in Section 3(a)(5)(A) of the Securities Act, or any foreign bank
or savings and loan association or equivalent institution that in
the aggregate owns and invests on a discretionary basis at least
$100 million in securities other than Excluded Securities and has
an audited net worth of at least $25 million as demonstrated in
its latest annual financial statements, as of a date not more
than 16 months preceding the date of transfer of the Ownership
Interest to the Transferee in the case of a U.S. Bank or savings
and loan association, and not more than 18 months preceding such
date in the case of a foreign bank or savings association or
equivalent institution.
II. The Transferee is acquiring such Ownership Interest solely for its
own account, for the account of one or more others, all of which are "Qualified
Institutional Buyers"
B-2
within the meaning of Rule 144A, or in its capacity as a
dealer registered pursuant to Section 15 of the Exchange Act acting in a
riskless principal transaction on behalf of a "Qualified Institutional Buyer".
The Transferee is not acquiring such Ownership Interest with a view to or for
the resale, distribution, subdivision or fractionalization thereof which would
require registration of the Ownership Interest under the Securities Act.
B. "Accredited Investors" should complete this Section
I. The Transferee is (check one):
__ a bank within the meaning of Section 3(a)(2) of the Securities
Act;
__ a savings and loan association or other institution defined in
Section 3(a)(5) of the Securities Act;
__ a broker or dealer registered pursuant to the Exchange Act;
__ an insurance company within the meaning of Section 2(13) of the
Securities Act;
__ an investment company registered under the Investment Company
Act;
__ an employee benefit plan within the meaning of Title I of ERISA,
which has total assets in excess of $5,000,000;
__ another entity which is an "accredited investor" within the
meaning of paragraph ___ (fill in) of subsection (a) of Rule 501
of the Securities and Exchange Commission.
II. The Transferee is acquiring such Ownership Interest solely for its
own account, for investment, and not with a view to or for the resale,
distribution, subdivision or fractionalization thereof which would require
registration of the Ownership Interest under the Securities Act.
C. If the Transferee is unable to complete one of paragraph A(I) or
paragraph B(I) above, the Transferee must furnish an opinion in form and
substance satisfactory to the Trustee of counsel satisfactory to the Trustee to
the effect that such purchase will not violate any applicable federal or state
securities laws.
D. The Transferee represents that it is not (A) an "employee benefit
plan" within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or (B) a "plan" within the meaning
of Section 4975(e)(1) of the Code (any such plan or employee benefit plan, a
"Plan") or (C) any entity, including an insurance company separate account or
general account, whose underlying assets include plan assets by reason of a
B-3
plan's investment in the entity and is not directly or indirectly purchasing
such Trust Security on behalf of, as investment manager of, as named fiduciary
of, as trustee of, or with assets of a Plan.
(iii) the Transferee is an "accredited investor" as defined in Rule
501(a) of Regulation D pursuant to the Securities Act.
Very truly yours,
[NAME OF PURCHASER]
By:
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Title:
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Dated:
THE FOREGOING IS ACKNOWLEDGED THIS ____ DAY OF __________, 200_.
[NAME OF SELLER]
By:
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Title:
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B-4
