DRAFT OF MAY 28, 1999
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HOUSEHOLD FINANCE CORPORATION,
as the Master Servicer,
together with
HOUSEHOLD AUTOMOTIVE TRUST III,
as Issuer,
HOUSEHOLD AUTO RECEIVABLES CORPORATION,
as Seller,
THE CHASE MANHATTAN BANK,
as Indenture Trustee
and
WILMINGTON TRUST COMPANY,
as Owner Trustee
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SERIES 1999-1 SUPPLEMENT
Dated as of June 1, 1999
to the
INDENTURE
Dated as of June 1, 1999
MASTER SALE AND SERVICING AGREEMENT
Dated as of June 1, 1999
and to the
TRUST AGREEMENT
Dated as of June 1, 1999
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TABLE OF CONTENTS
PAGE
ARTICLE I CREATION OF THE SERIES 1999-1 NOTES. . . . . . . . . . . . . . . . . 1
SECTION 1.01. Designation. . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. Pledge of Series 1999-1 Trust Estate.. . . . . . . . . . . . 1
SECTION 1.03. Payments and Computations. . . . . . . . . . . . . . . . . . 3
SECTION 1.04. Denominations. . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE II DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2.01. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE III DISTRIBUTIONS AND STATEMENTS TO SERIES 1999-1 NOTEHOLDERS;
SERIES SPECIFIC COVENANTS . . . . . . . . . . . . . . . . . . .10
SECTION 3.01. Series 1999-1 Trust Accounts.. . . . . . . . . . . . . . . .10
SECTION 3.02. Reserve Account. . . . . . . . . . . . . . . . . . . . . . .11
SECTION 3.03. Distributions. . . . . . . . . . . . . . . . . . . . . . . .11
SECTION 3.04. Statements to Noteholders. . . . . . . . . . . . . . . . . .13
SECTION 3.05. Reporting Requirements.. . . . . . . . . . . . . . . . . . .14
SECTION 3.06. Compliance With Withholding Requirements.. . . . . . . . . .14
SECTION 3.07. Special Covenants and Acknowledgements.. . . . . . . . . . .14
SECTION 3.08. Tax Characterization.. . . . . . . . . . . . . . . . . . . .15
ARTICLE IV EVENTS OF DEFAULT; REMEDIES . . . . . . . . . . . . . . . . . . . .15
SECTION 4.01. Events of Default. . . . . . . . . . . . . . . . . . . . . .15
SECTION 4.02. Rights Upon Event of Default.. . . . . . . . . . . . . . . .16
SECTION 4.03. Remedies.. . . . . . . . . . . . . . . . . . . . . . . . . .17
SECTION 4.04. Priorities.. . . . . . . . . . . . . . . . . . . . . . . . .18
ARTICLE V PREPAYMENT AND REDEMPTION. . . . . . . . . . . . . . . . . . . . . .18
SECTION 5.01. Optional "Clean-Up" Redemption.. . . . . . . . . . . . . . .18
ARTICLE VI MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . .19
SECTION 6.01. Ratification of Basic Documents. . . . . . . . . . . . . . .19
SECTION 6.02. Counterparts.. . . . . . . . . . . . . . . . . . . . . . . .19
SECTION 6.03. GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . .19
SECTION 6.04. Amendments Without Consent of Noteholders. . . . . . . . . .19
SECTION 6.05. Amendments With Consent of the Series 1999-1 Noteholders.. .21
SECTION 6.06. Authority to Register Notes and File Reports.. . . . . . . .22
Schedule I Schedule of Eligibility Criteria
Schedule II Schedule of Receivables
Exhibit A Form of Master Servicer's Certificate
This Series 1999-1 Supplement, dated as of June 1, 1999, is by and
among Household Finance Corporation, a Delaware corporation, as master servicer
(the "MASTER SERVICER"), Household Automotive Trust III, a Delaware business
trust, as Issuer (the "ISSUER"), Household Auto Receivables Corporation, a
Nevada corporation, as Seller ("SELLER"), The Chase Manhattan Bank, a New York
banking corporation ("CHASE"), as trustee for the Noteholders (the "INDENTURE
TRUSTEE") and Wilmington Trust Company, a Delaware banking corporation, as owner
trustee (the "OWNER TRUSTEE") for the Certificateholders.
RECITALS
This Series 1999-1 Supplement, is executed and delivered by the
parties hereto pursuant to Section 9.3 of the Indenture dated as of June 1, 1999
(the "INDENTURE") among the Issuer, the Master Servicer and the Indenture
Trustee and pursuant to Section 3.2 of the Trust Agreement (the "TRUST
AGREEMENT") dated as of June 1, 1999 between the Seller and the Owner Trustee.
In the event that any term or provision contained herein shall conflict with or
be inconsistent with any term or provision contained in the Indenture or the
Trust Agreement, the terms and provisions of this Series 1999-1 Supplement shall
govern with respect to Series 1999-1.
Article I
CREATION OF THE SERIES 1999-1 NOTES
Section 1.01. DESIGNATION.
(a) There is hereby created a Series of Notes to be issued pursuant
to the Indenture and this Series 1999-1 Supplement to be known as "Household
Automotive Trust III, Series 1999-1 Notes" (as used herein, the "SERIES
1999-NOTES"). The Series 1999-1 Notes shall be issued in four classes (each, a
"CLASS"). The Class A-1 Notes in an aggregate initial principal amount of
$_________ (the "CLASS A-1 NOTES"), the Class A-2 Notes in an aggregate initial
principal amount of $__________ (the "CLASS A-2 NOTES"), the Class A-3 Notes in
an aggregate initial principal amount of $___________ (the "CLASS A-3 NOTES"),
the Class A-4 Notes in an aggregate initial principal amount of $__________ (the
"CLASS A-4 NOTES" and together with Class A-1 Notes, the Class A-2 Notes and the
Class A-3 Notes, the "CLASS A NOTES").
(b) There is hereby created a Series of Certificates to be issued
pursuant to the Trust Agreement and this Series 1999-1 Supplement to be known as
the "Household Automotive Trust III, Series 1999-1 Certificates."
Section 1.02. PLEDGE OF SERIES 1999-1 TRUST ESTATE.
The Issuer hereby Grants to the Indenture Trustee, for the benefit of
the Holders of the Notes all of the Issuer's right, title and interest (but none
of its obligations) in and to (a) each and every Receivable listed as a Series
1999-1 Receivable on the Schedule of Receivables attached hereto as Schedule II
and all monies paid or payable thereon or in respect thereof after the Cutoff
Date (including amounts due on or before the Cutoff Date but received by HAFC,
the
Seller, the Master Servicer or the Issuer after the Cutoff Date); (b) an
assignment of the security interests in the related Financed Vehicles granted by
Obligors pursuant to such Series 1999-1 Receivables and any other interest of
the Issuer in the related Financed Vehicles; (c) all rights of HAFC against
Dealers pursuant to Dealer Agreements or Dealer Assignments related to such
Series 1999-1 Receivables; (d) any proceeds and the right to receive proceeds
with respect to such Series 1999-1 Receivables repurchased by a Dealer, pursuant
to a Dealer Agreement as a result of a breach of representation or warranty in
the related Dealer Agreement; (e) all rights under any Service Contracts on the
related Financed Vehicles; (f) any proceeds and the right to receive proceeds
with respect to such Series 1999-1 Receivables from claims on any physical
damage, loss, credit life or disability insurance policies covering the related
Financed Vehicles or Obligors including rebates of insurance premiums relating
to such Series 1999-1 Receivables; (g) all funds on deposit from time to time in
the Series 1999-1 Trust Accounts (including all investments and proceeds thereof
from time to time allocable to the Series 1999-1 Reserve Account, but excluding
all investments and proceeds thereof allocable to the other Series 1999-1 Trust
Accounts or allocable to the Master Collection Account); (h) all rights of the
Seller in and to the Master Receivables Purchase Agreement and the Receivables
Purchase Agreement Supplements, including the delivery requirements,
representations and warranties and the cure and repurchase obligations of HAFC
under the Master Receivables Purchase Agreement and such Receivables Purchase
Agreement Supplements; (i) all property (including the right to receive future
Net Liquidation Proceeds) that secures such Series 1999-1 Receivables and that
has been acquired by or on behalf of the Issuer pursuant to liquidation of such
Series 1999-1 Receivables; (j) all items contained in the Receivable Files with
respect to such Series 1999-1 Receivables and any and all other documents that
the Master Servicer or HAFC keeps on file in accordance with its customary
procedures relating to such Series 1999-1 Receivables, or the related Financed
Vehicles or Obligors; (k) all rights of the Seller in and to the Master Sale and
Servicing Agreement and the Transfer Agreement or Transfer Agreements related to
Series 1999-1 (including all rights of the Seller under the Master Receivables
Purchase Agreement and the related Receivables Purchase Agreement Supplements,
assigned to the Issuer pursuant to the Master Sale and Servicing Agreement and
the related Transfer Agreement or Transfer Agreements); (l) one share of the
Class SV Preferred Stock of the Seller; and (m) all present and future claims,
demands, causes and chooses in action in respect of any or all of the foregoing
and all payments on or under and all proceeds of every kind and nature
whatsoever in respect of any or all of the foregoing, including all proceeds of
the conversion, voluntary or involuntary, into cash or other liquid property,
all cash proceeds, accounts, accounts receivable, notes, drafts, acceptances,
chattel paper, checks, deposit accounts, insurance proceeds, condemnation
awards, rights to payment of any and every kind and other forms of obligations
and receivables, instruments and other property which at any time constitute all
or part of or are included in the proceeds of any of the foregoing
(collectively, the "Series 1999-1 Trust Estate").
The foregoing Grant is made in trust to the Indenture Trustee for the
benefit of the Holders of the Notes. The Indenture Trustee hereby acknowledges
such Xxxxx, accepts the trusts under the Indenture and this Series 1999-1
Supplement in accordance with the provisions of the Indenture and this Series
1999-1 Supplement and agrees to perform its duties required in the Indenture and
in this Series 1999-1 Supplement in accordance with the provisions hereof and of
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the Indenture to the best of its ability to the end that the interests of such
parties, recognizing the priorities of their respective interests may be
adequately and effectively protected.
Section 1.03. PAYMENTS AND COMPUTATIONS.
All amounts to be paid or deposited by any Person hereunder shall be
paid or deposited in accordance with the terms hereof no later than 12:00 noon
(New York City time) on the day when due in immediately available funds.
Section 1.04. DENOMINATIONS.
The Notes of each Class will be issued in denominations of $100,000
and integral multiples of $1,000 in excess thereof, except for one Note of each
Class which may be issued in a denomination other than an integral multiple of
$1,000.
Article II
DEFINITIONS
Section 2.01. DEFINITIONS.
(a) Whenever used in this Series 1999-1 Supplement and when used in
the Series 1999-1 Related Documents with respect to the Series 1999-1 Notes or
the Series 1999-1 Certificates, the following words and phrases shall have the
following meanings, and the definitions of such terms 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. Unless otherwise defined
in this Series 1999-1 Supplement, terms defined in the Basic Documents are used
herein as therein defined. A term used herein preceded by the designation
"Series 1999-1" but not defined herein, shall have the meaning specified for
such term in the Basic Documents as such term relates to Series 1999-1.
"Aggregate Note Principal Balance" means, as of any date, the
aggregate outstanding principal amount of all the Notes on such date.
"Aggregate Optimal Note Principal Balance" means, with respect to any
Distribution Date, the excess, if any, of (x) the Pool Balance as of the close
of business on the last day of the prior Collection Period over (y) the Targeted
Overcollateralization Amount for such Distribution Date.
"Available Funds" means, with respect to any Collection Period, and
the related Distribution Date, the sum of (i) the Collected Funds for such
Collection Period, (ii) investment earnings realized on the Series 1999-1 Trust
Accounts during the related Collection Period, (iii) all Repurchase Amounts
deposited in the Collection Account during such Collection Period, (iv) any
proceeds of any liquidation, in whole or in part, of the assets of the Trust and
(v) the lesser of (a) the excess, if any, of the aggregate amount distributable
pursuant to Section 3.03(a)(i) - (iv) on such Distribution Date, over the
aggregate of the amounts specified in clauses (i), (ii) and (iii) hereof with
respect to such Collection Period and (b) the Reserve Account Balance.
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"Base Servicing Fee" means, with respect to any Collection Period, the
fee payable to the Master Servicer for services rendered during such Collection
Period, which shall be equal to one-twelfth of the Servicing Fee Rate multiplied
by the Aggregate Principal Balances of the Series 1999-1 Receivables, as of the
Accounting Date immediately preceding such Collection Period.
"Basic Documents" means the Master Sale and Servicing Agreement, the
Indenture, the Trust Agreement, the Master Receivables Purchase Agreement, and
other documents and certificates delivered therewith or pursuant thereto in
connection with Series 1999-1.
"Book Entry Notes" means any beneficial interest in the Notes,
ownership and transfers of which shall be made through book entries by a
Clearing Agency as described in Section 2.10 of the Indenture.
"Certificateholders" means the holders of Series 1999-1 Certificates.
"Certificateholders' Distributable Amount" means, with respect to any
Distribution Date, the amount payable pursuant to Section 3.03 (a)(vii) hereof.
"Class A Distributable Amount" means, with respect to any Distribution
Date and each class of Class A Notes, the sum of (i) the Class A Interest
Distributable Amount for such Distribution Date and (ii) the Class A Principal
Distributable Amount for such Distribution Date.
"Class A Interest Carryover Shortfall" means, with respect to any
Distribution Date and each Class of Class A Notes, the sum of: (i) excess of
(a) the related Class A Interest Distributable Amount for the preceding
Distribution Date, over (b) the amount actually paid as interest to the Class A
Noteholders on such preceding Distribution Date, PLUS (ii) interest on such
excess, to the extent permitted by law, at a rate per annum equal to the related
Note Rate with respect to the Class A Notes from such preceding Distribution
Date to but excluding the current Distribution Date.
"Class A Interest Distributable Amount" means, with respect to any
Distribution Date and each class of Class A Notes, an amount equal to the sum
of: (i) the aggregate amount of interest accrued on the Class A Notes at the
related Note Rate from and including the preceding Distribution Date (or, in the
case of the initial Distribution Date, from and including the Closing Date) to
but excluding the current Distribution Date PLUS (ii) the related Class A
Interest Carryover Shortfall for the current Distribution Date.
"Class A Monthly Principal Distributable Amount" means (i) with
respect to any Distribution Date, prior to the Distribution Date on which the
principal balance of the Class A-1 Notes is reduced to zero, 100% of the
Principal Distributable Amount, (ii) with respect to the Distribution Date on
which the principal balance of the Class A-1 Notes is reduced to zero, the sum
of (x) 100% of the Principal Distributable Amount with respect to that portion
of the Principal Distributable Amount required to reduce the principal balance
of the Class A-1 Notes to zero, plus (y) the excess of the amount described in
clause (iii) of this definition for such
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Distribution Date over the amount described in clause (ii)(x) (taking into
account payment of the principal balance of the Class A-1 Notes on such
Distribution Date), (iii) with respect to any Distribution Date after the
Distribution Date on which the Principal Balance of the Class A-1 Notes is
reduced to zero until the Distribution Date on which the Principal Balance of
the Class A Notes is reduced to zero, the excess of (x) the aggregate
outstanding principal balance of the Class A Notes over (y) (A) the outstanding
Pool Balance as of the end of the related Collection Period minus (B) the
Targeted Overcollateralization Amount for such Distribution Date.
"Class A Noteholders" means the Holders of the Class A Notes.
"Class A Principal Xxxxxxxxx Shortfall" means, with respect to any
Distribution Date after the Distribution Date on which the principal balance of
the Class A-1 Notes is reduced to zero, the excess of the Class A Principal
Distributable Amount for the preceding Distribution Date over the amount that
was actually distributed in respect of principal of the Class A Notes on such
preceding Distribution Date.
"Class A Principal Distributable Amount" means, with respect to any
Distribution Date, the sum of: (i) the Class A Monthly Principal Distributable
Amount for such Distribution Date and (ii) the Class A Principal Carryover
Shortfall for such Distribution Date; PROVIDED, HOWEVER, that (x) the sum of
clauses (i) and (ii) shall not exceed the outstanding principal amount of the
Class A Notes, and (y) on the Final Scheduled Distribution Date, the Class A
Principal Distributable Amount will include the amount, to the extent of the
remaining Available Funds, necessary (after giving effect to other amounts
having a higher payment priority on such Distribution Date) to reduce the
outstanding principal amount of the Class A Notes to zero.
"Class A-1 Noteholders" means the Holders of the Class A-1 Notes.
"Class A-1 Scheduled Maturity Date" means with respect to the Class
A-1 Notes, ____________.
"Class A-2 Noteholders" means the Holders of the Class A-2 Notes.
"Class A-2 Scheduled Maturity Date" means with respect to the Class
A-2 Notes, _____________.
"Class A-3 Noteholders" means the Holders of the Class A-3 Notes.
"Class A-3 Scheduled Maturity Date" means with respect to the Class
A-3 Notes, ____________.
"Class A-4 Noteholders" means the Holders of the Class A-4 Notes.
"Class A-4 Scheduled Maturity Date" means with respect to the Class
A-4 Notes, ____________.
"Collected Funds" means, with respect to any Collection Period, the
amount of funds in the Collection Account representing collections on the
Receivables during such
5
Collection Period, including all Net Liquidation Proceeds collected during such
Collection Period (but excluding any Purchase Amounts).
"Cutoff Date" means May 1, 1999.
"Definitive Notes" means the Notes that have been certificated and
fully registered in accordance with Section 2.12 of the Indenture.
"Distribution Date" means, with respect to each Collection Period, the
seventeenth day of the following calendar month, or if such day is not a
Business Day, the immediately following Business Day, commencing on July 19,
1999.
"Eligibility Criteria" means the criteria for eligibility for Eligible
Receivables set forth on Schedule I hereto.
"Eligible Receivable" or "Series 1999-1 Eligible Receivable" means a
Series 1999-1 Receivable that satisfies the Eligibility Criteria set forth in
Schedule I hereto.
"Event of Default" shall have the meaning assigned to such term in
Section 4.01.
"Final Scheduled Distribution Date" means ____________.
"HAFC " means Household Automotive Finance Corporation.
"HFC" means Household Finance Corporation.
"Indenture" means the indenture dated as of June 1, 1999 among the
Issuer, the Master Servicer and The Chase Manhattan Bank, as indenture trustee,
as supplemented by the Series 1999-1 Supplement.
"Initial Reserve Account Deposit" means [1]% of the Pool Balance as of
the Cutoff Date.
"Interest Period" means, with respect to any Distribution Date, the
period from and including the prior Distribution Date (or, in the case of the
first Distribution Date, from and including the Series 1999-1 Closing Date)
through (and including) the day preceding such Distribution Date.
"Master Servicer's Certificate" means, with respect to Series 1999-1,
a report in substantially the form of EXHIBIT A hereto (appropriately
completed), furnished by the Master Servicer to the Indenture Trustee and the
Owner Trustee pursuant to the Master Sale and Servicing Agreement.
"Maximum Reserve Account Deposit Amount" for any Distribution Date is
equal to that portion of Collected Funds representing interest collections on
the Receivables (including amounts representing Net Liquidation Proceeds for
such Collection Period) for the related Collection Period less the sum of: the
Base Servicing Fee paid to any Master Servicer other than
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HFC, the fees due to the Indenture Trustee and Owner Trustee, to the extent not
paid by the Master Servicer, plus, the Class A Interest Distributable Amounts
for such Distribution Date, plus the aggregate Principal Balances of all
Receivables which became Liquidated Receivables during the related Collection
Period, plus the aggregate amount of Cram Down Losses during such Collection
Period.
"Note Rate" means the per annum rate of interest due with respect to
each Class of Notes as set forth below for the respective Class of Note:
Class A-1 Notes: ____%
Class A-2 Notes: ____%
Class A-3 Notes: ____%
Class A-4 Notes: ____%
Interest on the Class A-1 and Class A-2 Notes will be calculated on
the basis of a 360-day year and the actual number of days elapsed in an
applicable Interest Period. Interest on the Class A-3 and Class A-4 Notes will
be calculated on the basis of a 360-day year consisting of twelve 30-day months.
The amount of interest payable on the Class A-3 and Class A-4 Notes for any
period shorter than a complete Interest Period will be computed on the basis of
the actual number of days elapsed in the 30-day months.
"Notes" means the Class A Notes.
"Original Pool Balance" means the aggregate of the Principal Balance
of the Receivables as of the Cutoff Date.
"Owner Trust Estate" has the meaning assigned to such term in the
Trust Agreement.
"Owner Trustee" means Wilmington Trust Company, not in its individual
capacity.
"Pledge" means the Grant by the Issuer hereunder to the Indenture
Trustee for the benefit of the Holders of Notes in accordance with Section 1.02
hereof in and to specified Pledged Property related thereto.
"Pledged Property" means, with respect to the Series 1999-1 Trust
Estate, each Series 1999-1 Receivable, together with all associated property and
rights with respect thereto described in the definition of Series 1999-1 Trust
Estate.
"Pool Balance" means, as of any date of determination, the aggregate
of the outstanding Principal Balances of the Receivables, unless otherwise
specified, as of the close of business on the preceding Business Day.
"Principal Amount Available" means, with respect to any Distribution
Date, the amount remaining in the Series 1999-1 Note Account on such
Distribution Date after the payment of the amounts required to be paid pursuant
to clause (i) through (iii) of Section 3.03(a)
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on such Distribution Date MINUS the Reserve Account Deposit Amount for such
Distribution Date.
"Principal Distributable Amount" means, with respect to any
Distribution Date, the lesser of (A) the Principal Amount Available for such
Distribution Date and (B) the excess, if any, of (i) the Aggregate Note
Principal Balance immediately prior to such Distribution Date over (ii) the
Aggregate Optimal Note Balance for such Distribution Date.
"Rating Agencies" means Standard & Poor's and Xxxxx'x. If such
organization or a successor does not maintain a rating on the Notes, "Rating
Agency" shall be a nationally recognized statistical rating organization or
other comparable Person designated by the Seller, notice of which designation
shall be given to the Indenture Trustee, the Owner Trustee and the Master
Servicer.
"Redemption Price" has the meaning specified in Section 5.01 hereof.
"Reserve Account" means the Series 1999-1 Reserve Account which shall
be an Eligible Deposit Account created pursuant to Section 3.01 hereof, which
initially shall be account no. ____________ for further credit, account no.
________, reference Household Automotive Trust III, Series 1999-1, at the
Indenture Trustee, ABA No. 000000000.
"Reserve Account Balance" means, with respect to a Distribution Date,
the amount on deposit in the Reserve Account as of the opening of business on
such Distribution Date.
"Reserve Account Deposit Amount" means, with respect to any
Distribution Date, the lesser of: (x) the Maximum Reserve Account Deposit
Amount for such Distribution Date and (y) the Reserve Account Shortfall Amount
for such Distribution Date.
"Reserve Account Shortfall Amount" means, with respect to any
Distribution Date, the excess of: (x) the Targeted Reserve Account Balance for
such Distribution Date over (y) the Reserve Account Balance for such
Distribution Date.
"Schedule of Receivables" means the schedule of all retail installment
sales contracts and promissory notes held as part of the Series 1999-1 Trust
Estate attached hereto as Schedule II.
"Series 1999-1 Certificates" means the Certificates (as defined in the
Trust Agreement).
"Series 1999-1 Closing Date" means June __, 1999.
"Series 1999-1 Collected Funds" means, with respect to a date of
determination, the amount of Collected Funds with respect to the Collection
Period immediately preceding such date of determination, including all Net
Liquidation Proceeds collected during the related Collection Period (but
excluding any Purchase Amounts).
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"Series 1999-1 Collection Account" means the Eligible Deposit Account
created pursuant to Section 3.01 hereof which initially shall be account
no.________, for further credit, account no. _________, reference Household
Automotive Trust III, Series 1999-1, at the Indenture Trustee, ABA No.
000000000.
"Series 1999-1 Eligible Investments" means, with respect to funds in
the Series 1999-1 Collection Account and Reserve Account, "Eligible Investments"
as defined in the Master Sale and Servicing Agreement, except that (i) all
references in such definition to "rating satisfactory to the Rating Agency" or
words of similar import shall mean ratings of not less than "A-1+" by Standard &
Poor's and "P-1" by Xxxxx'x (whichever is applicable)(except if such investment
is in commercial paper issued by HFC, the required rating shall mean not less
than "A-1"), and (ii) all such investments shall have maturities at the time of
the acquisition thereof occurring no later than the Business Day immediately
preceding the Distribution Date following such date of acquisition.
"Series 1999-1 Note Account" means the Eligible Deposit Account
created pursuant to Section 3.01 hereof, which initially shall be account no.
_________, for further credit, account no. _________, reference Household
Automotive Trust III, Series 1999-1 at the Indenture Trustee, ABA No. 000000000.
"Series 1999-1 Receivables" means each Receivable listed on the
Schedule of Receivables, which (a) has not been released from the Series 1999-1
Trust Estate as provided herein or in the Indenture and (b) is not a Liquidated
Receivable.
"Series 1999-1 Related Documents" means the Basic Documents, this
Series 1999-1 Supplement, each Receivables Purchase Agreement Supplement related
to the Series 1999-1 Trust Estate, each Transfer Agreement related to the Series
1999-1 Trust Estate, the Series 1999-1 Notes, the Series 1999-1 Certificates and
other documents and certificates delivered in connection therewith.
"Series 1999-1 Reserve Account" means the Reserve Account.
"Series 1999-1 Secured Obligations" means all amounts and obligations
which the Issuer may at any time owe to the Holders of the Series 1999-1 Notes.
"Series 1999-1 Securities" means the Series 1999-1 Notes and the
Series 1999-1 Certificates.
"Series 1999-1 Supplement" means this Series 1999-1 Supplement to the
Indenture and the Trust Agreement.
"Series 1999-1 Support" means, with respect to the Series 1999-1
Notes, the Series 1999-1 Certificates.
"Series 1999-1 Trust Accounts" means the Series 1999-1 Collection
Account, the Series 1999-1 Reserve Account, and the Series 1999-1 Note Account.
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"Series 1999-1 Trust Estate" means the property Granted to the
Indenture Trustee pursuant to Section 1.02.
"Servicing Fee Rate" means 3% per annum.
"Supplemental Servicing Fee" means, with respect to any Collection
Period, (i) all administrative fees, expenses and charges actually paid by or on
behalf of Obligors, including late fees, prepayment fees and liquidation fees
collected on the Series 1999-1 Receivables during such Collection Period, and
(ii) the net realized investment earnings of funds on deposit in the Series
1999-1 Collection Account or on deposit in the Master Collection Account and
allocable to the investment of Available Funds with respect to Series 1999-1.
"Targeted Credit Enhancement Amount" means, with respect to any
Distribution Date, [44.50]% of the Pool Balance as of the of last day of the
related Collection Period.
"Targeted Overcollateralization Amount" means, with respect to any
Distribution Date, the excess (but not less than zero), if any, of: (i) the
Targeted Credit Enhancement Amount over (ii) the Targeted Reserve Account
Balance.
"Targeted Reserve Account Balance" means, with respect to any
Distribution Date, the lesser of: (i) the greater of (a) [3.0]% of the
outstanding Pool Balance as of the end of the related Collection Period, and (b)
$_______ ([2.0]% of the Pool Balance as of the Cutoff Date) and (ii) the
Aggregate Note Principal Balance.
"Trust" means the Issuer.
"Trust Agreement" means the Trust Agreement dated as of June 1, 1999
between the Seller and the Owner Trustee, as supplemented by the Series 1999-1
Supplement.
Article III
DISTRIBUTIONS AND STATEMENTS TO
SERIES 1999-1 NOTEHOLDERS; SERIES SPECIFIC COVENANTS
Section 3.01. SERIES 1999-1 TRUST ACCOUNTS.
(a) The Indenture Trustee, for the benefit of the Holders of the
Series 1999-1 Securities, shall establish and maintain an account (the "SERIES
1999-1 COLLECTION ACCOUNT") as a segregated trust account in the Indenture
Trustee's corporate trust department, identified as the "Collection Account for
Household Automotive Trust III, in trust for the registered Holders of the
Series 1999-1 Securities." The Indenture Trustee shall make or permit
withdrawals from the Series 1999-1 Collection Account only as provided in this
Series 1999-1 Supplement. Notwithstanding anything in the Series 1999-1 Related
Documents to the contrary, at least one Business Day prior to each Distribution
Date the Master Servicer and the Issuer shall deposit Collected Funds (which
shall be immediately available) directly into the Series 1999-1 Collection
Account without any prior deposit into the Master Collection Account.
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(b) The Indenture Trustee for the benefit of the Holders of the
Series 1999-1 Notes shall establish and maintain an account (the "SERIES 1999-1
RESERVE ACCOUNT") as a segregated trust account in the Indenture Trustee's
corporate trust department, identified as the "Series 1999-1 Reserve Account for
Household Automotive Trust III, in trust for the registered Holders of the
Series 1999-1 Notes." The Indenture Trustee shall make or permit withdrawals
from the Reserve Account only as provided in this Series 1999-1 Supplement. On
the Series 1999-1 Closing Date, the Series 1999-1 Reserve Account will be funded
with the Initial Reserve Account Deposit.
(c) The Indenture Trustee, for the benefit of the Holders of Series
1999-1 Notes, shall establish and maintain an account (the "SERIES 1999-1 NOTE
ACCOUNT") as a segregated trust account in the Indenture Trustee's corporate
trust department, identified as the "Note Account for Household Automotive Trust
III, in trust for the registered Holders of the Series 1999-1 Notes." The
Indenture Trustee shall make or permit withdrawals from the Series 1999-1 Note
Account only as provided in this Series 1999-1 Supplement.
(d) On each Distribution Date, the Indenture Trustee shall transfer
Available Funds for such Distribution Date from the Series 1999-1 Collection
Account and from the Series 1999-1 Reserve Account, if applicable, to the Series
1999-1 Note Account.
(e) In the event that any Series 1999-1 Trust Account ceases to be
an Eligible Deposit Account, the Indenture Trustee, as applicable, within five
Business Days, shall establish a new Eligible Deposit Account. No withdrawals
may be made of funds in any Series 1999-1 Trust Account except as provided in
this Series 1999-1 Supplement. Except as specifically provided in this Series
1999-1 Supplement, funds in the Series 1999-1 Trust Accounts shall not be
commingled with any other moneys. All moneys deposited from time to time in
each of the Series 1999-1 Trust Accounts shall be invested and reinvested by the
Indenture Trustee in Series 1999-1 Eligible Investments selected in writing by
the Master Servicer (pursuant to standing instructions or otherwise) which,
absent any instruction shall be the investments specified in clause (d) of the
definition of Eligible Investment. The provisions of Section 5.1 of the Master
Sale and Servicing Agreement shall apply to the investment of funds in the
Series 1999-1 Trust Accounts to the same extent as they apply to the Master
Collection Account.
Section 3.02. RESERVE ACCOUNT.
On the earlier of (x) the maturity date of the Series 1999-1 Notes
(whether by acceleration or otherwise) or (y) the Final Scheduled Distribution
Date, the amount on deposit in the Reserve Account shall be withdrawn from the
Reserve Account and distributed in accordance with Section 4.04.
Section 3.03. DISTRIBUTIONS.
(a) On each Distribution Date, the Indenture Trustee shall (based
solely on the information contained in the Master Servicer's Certificate
delivered with respect to such Distribution Date) distribute the following
amounts from Available Funds with respect to such Distribution Date, and in the
following order of priority:
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(i) to the Master Servicer, any Supplemental Servicing Fees
for the related Collection Period and, if HFC is no longer acting as
Master Servicer, the Base Servicing Fee for the related Collection
Period;
(ii) to the Indenture Trustee and the Owner Trustee, any
accrued and unpaid trustees' fees (in each case, to the extent such
fees have not been previously paid by the Master Servicer);
(iii) to the Class A Noteholders, the Class A Interest
Distributable Amount;
(iv) (i) to the Class A-1 Noteholders, 100% of the Class A
Principal Distributable Amount until the outstanding principal amount
of the Class A-1 Notes has been reduced to zero; and (ii) on and after
the Distribution Date on which the outstanding principal amount of the
Class A-1 Notes has been reduced to zero, the Class A Principal
Distributable Amount will be allocated to payment of the Class A-2,
Class A-3 and Class A-4 Notes, in "sequential pay" fashion, beginning
with the Class A-2 Notes, in each case, until the respective
outstanding principal amount of the Class A-2, Class A-3 and Class A-4
Notes are paid in full;
(v) to the Reserve Account, the Reserve Account Deposit
Amount, if any, required to increase the amount therein to the
Targeted Reserve Account Balance;
(vi) if HFC is acting as the Master Servicer, the Base
Servicing Fee for the related Collection period; and
(vii) to the holders of the Series 1999-1 Certificates, any
remaining Available Funds.
(b) If on a Distribution Date, the Master Servicer's Certificate
delivered with respect to such Distribution Date indicates that the amount
specified in clauses (i) through (iv) of the definition of Available Funds with
respect to such Distribution Date is less than the sum of the amounts required
to be distributed pursuant to clauses (i) through (iv) of paragraph (a) above on
such Distribution Date, the Indenture Trustee shall withdraw from the Series
1999-1 Reserve Account an amount up to the amount of such deficiency and
distribute such amount as a component of Available Funds.
(c) Each Series 1999-1 Certificateholder by its acceptance of its
Certificate will be deemed to have consented to the provisions of paragraph (a)
above relating to the priority of distributions, and will be further deemed to
have acknowledged that no property rights in any amount or the proceeds of any
such amount shall vest in such Certificateholder until such amounts have been
distributed to such Certificateholder pursuant to such provisions; PROVIDED,
THAT the foregoing shall not restrict the right of any Certificateholder, upon
compliance with the provisions hereof, from seeking to compel the performance of
the provisions hereof by the parties hereto. Each Series 1999-1
Certificateholder, by acceptance of its Certificate, further
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specifically acknowledges that it has no right to or interest in any monies at
any time held in the Series 1999-1 Reserve Account, such monies being held in
trust for the benefit of the Series 1999-1 Noteholders.
(d) In the event that the Series 1999-1 Collection Account is
maintained with an institution other than the Indenture Trustee, the Master
Servicer shall instruct and cause such institution to transfer the amounts to be
withdrawn therefrom in accordance with Section 3.03(b) to the Indenture Trustee
for distribution pursuant to Section 3.03(a) one Business Day Prior to the
related Distribution Date.
(e) Unless Definitive Notes are issued pursuant to Section 2.12 of
the Indenture, with respect to Notes registered on the related Record Date in
the name of a nominee of the Clearing Agency, payment will be made by wire
transfer to an account designated by such nominee, without presentation or
surrender of the Series 1999-1 Notes or the making of any notation thereon.
(f) If not theretofore paid in full, all amounts outstanding with
respect to the Class A-1 Notes shall be due and payable on the Class A-1
Scheduled Maturity Date, if not theretofore paid in full, all amounts
outstanding with respect to the Class A-2 Notes shall be due and payable on the
Class A-2 Scheduled Maturity Date, if not theretofore paid in full, all amounts
outstanding with respect to the Class A-3 Notes shall be due and payable on the
Class A-3 Scheduled Maturity Date, and if not theretofore paid in full, all
amounts outstanding with respect to the Class A-4 Notes shall be due and payable
on the Class A-4 Scheduled Maturity Date.
Section 3.04. STATEMENTS TO NOTEHOLDERS.
On or prior to each Determination Date, the Master Servicer shall
provide to the Indenture Trustee (with a copy to the Rating Agencies) for the
Indenture Trustee to forward to each Noteholder of record, and to each
Certificateholder of record, a statement setting forth at least the following
information as to the Notes to the extent applicable:
(i) the amount of such distribution allocable to principal
of each Class of Notes;
(ii) the amount of such distribution allocable to interest
on or with respect to each Class of Notes;
(iii) the aggregate outstanding principal amount of each
Class of the Notes after giving effect to payments allocated to
principal reported under (i) above;
(iv) the Class A Interest Carryover Shortfall, the Class A
Principal Carryover Shortfall, if any, and the change in such amounts
from the preceding statement.
(v) the amount of the Base Servicing Fee paid to the Master
Servicer with respect to such Collection Period; and
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(vi) the Targeted Reserve Account Balance and the amount on
deposit in the Reserve Account at the end of such Distribution Date.
Each amount set forth pursuant to paragraph (i)through (iv) above shall be
expressed as a dollar amount per $1,000 of the initial principal balance of the
applicable Class of Notes.
Section 3.05. REPORTING REQUIREMENTS.
(a) The Master Servicer's Certificate shall be in the form attached
as EXHIBIT A hereto.
(b) By January 31 of each calendar year, commencing January 31,
2000, the Master Servicer on behalf of the Issuer shall prepare and distribute
to the Indenture Trustee a statement containing such information as is required
to be provided by an issuer of indebtedness under the Code and such other
customary information as is necessary to enable the Noteholders to prepare their
tax returns.
(c) If an Event of Default occurs and is continuing and if it is
either known by, or written notice of the existence thereof has been delivered
to, a Responsible Officer of the Indenture Trustee, the Indenture Trustee shall
mail to each Noteholder notice of the Default within 30 days after such
knowledge or notice occurs.
Section 3.06. COMPLIANCE WITH WITHHOLDING REQUIREMENTS.
Notwithstanding any other provisions of this Series 1999-1 Supplement
or the Indenture to the contrary, the Indenture Trustee, shall comply with all
Federal withholding requirements respecting payments (or advances thereof) to
the Noteholders as may be applicable to instruments constituting indebtedness
for Federal income tax purposes. Any amounts so withheld shall be treated as
having been paid to the applicable Noteholders for all purposes of the
Indenture. In no event shall the consent of any Noteholder be required for any
such withholding.
Section 3.07. SPECIAL COVENANTS AND ACKNOWLEDGEMENTS.
With respect to the Series 1999-1 Notes, the Issuer hereby represents
and warrants, as of the Series 1999-1 Closing Date:
(i) VALID PLEDGE. It is the intention of the Issuer that
each pledge herein contemplated constitutes the Grant of a perfected,
first priority security interest in all Pledged Property to the
Indenture Trustee for the benefit of the Series 1999-1 Noteholders.
(ii) GOVERNMENTAL AUTHORIZATION. Other than the filing of
the financing statements required hereunder, no authorization or
approval or other action by, and no notice to or filing with, any
governmental authority or regulatory body is required for the due
execution, delivery and performance by the Issuer of this Series
1999-1 Supplement, the Indenture, and each Series 1999-1 Related
Document to which it is a party.
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Section 3.08. TAX CHARACTERIZATION.
It is the intent of the parties hereto that, for all Federal, state,
local and foreign taxes, the Series 1999-1 Notes will be evidence of
indebtedness. To the extent permitted by law, the parties hereto, and each
owner of a beneficial interest in the Series 1999-1 Notes by acceptance of such
interest, agrees to treat the Series 1999-1 Notes for purposes of all Federal,
state, local and foreign taxes as indebtedness secured by the Series 1999-1
Trust Estate.
Article IV
EVENTS OF DEFAULT; REMEDIES
Section 4.01. EVENTS OF DEFAULT.
"Event of Default", wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):
(i) default in the payment of any interest on any Note when
the same becomes due and payable, and such default shall continue for
a period of five calendar days; or
(ii) [default in the payment of the principal of or any
installment of the principal of any Note when the same becomes due and
payable, and such default shall continue for a period of five calendar
days]; or
(iii) default in the observance or performance of any
covenant or agreement of the Issuer made in the Series 1999-1 Related
Documents (other than a covenant or agreement, a default in the
observance or performance of which is elsewhere in this Section
specifically dealt with), or any representation or warranty of the
Issuer made in the Series 1999-1 Related Documents or in any
certificate or other writing delivered pursuant thereto or in
connection therewith proving to have been incorrect in any material
respect as of the time when the same shall have been made and has a
material adverse effect on the Noteholders, and such default shall
continue or not be cured, or the circumstance or condition in respect
of which such misrepresentation or warranty was incorrect shall not
have been eliminated or otherwise cured, for a period of 60 days after
there shall have been given, by registered or certified mail, to the
Issuer by the Indenture Trustee or to the Issuer and the Indenture
Trustee by the Holders of at least 25% of the Outstanding Amount of
the Notes, a written notice specifying such default or incorrect
representation or warranty and requiring it to be remedied and stating
that such notice is a "Notice of Default" hereunder; or
(iv) the filing of a decree or order for relief by a court
having jurisdiction in the premises in respect of the Issuer or any
substantial part of the Trust Property in an involuntary case under
any applicable Federal or state
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bankruptcy, insolvency or other similar law now or hereafter in
effect, or appointing a receiver, liquidator, assignee, custodian,
trustee, sequestrator or similar official of the Issuer or for any
substantial part of the Trust Property, or ordering the winding-up or
liquidation of the Issuer's affairs, and such decree or order shall
remain unstayed and in effect for a period of 60 consecutive days; or
(v) the commencement by the Issuer of a voluntary case
under any applicable Federal or state bankruptcy, insolvency or other
similar law now or hereafter in effect, or the consent by the Issuer
to the entry of an order for relief in an involuntary case under any
such law, or the consent by the Issuer to the appointment or taking
possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of the Issuer or for any substantial
part of the Trust Property, or the making by the Issuer of any general
assignment for the benefit of creditors, or the failure by the Issuer
generally to pay its debts as such debts become due, or the taking of
action by the Issuer in furtherance of any of the foregoing.
Section 4.02. RIGHTS UPON EVENT OF DEFAULT.
(a) If an Event of Default shall have occurred and be continuing,
the Indenture Trustee in its discretion may, or if so requested in writing by
Holders holding Notes representing at least 66 2/3% of the Outstanding Amount of
the Notes shall, declare by written notice to the Issuer that the Notes have
become due and payable, whereupon they shall become, immediately due and payable
at 100% of the outstanding principal balance of the Notes, and accrued interest
thereon (together with interest accrued at the relevant Note Rate on such
overdue interest).
(b) At any time after such declaration of acceleration of maturity
has been made and before a judgment or decree for payment of the money due has
been obtained by the Indenture Trustee, the Holders of Notes representing a
majority of the Outstanding Amount of the Notes, by written notice to the Issuer
and the Indenture Trustee, may rescind and annul such declaration and its
consequences if:
(i) the Issuer has paid or deposited with the Indenture
Trustee a sum sufficient to pay:
(A) all payments of principal of and interest on all Notes
and all other amounts that would then be due hereunder or upon such
Notes if the Event of Default giving rise to such acceleration had not
occurred; and
(B) all sums paid or advanced by the Indenture Trustee
hereunder and the reasonable compensation, expenses, disbursements and
advances of the Indenture Trustee and its agents and counsel; and
(ii) all Events of Default, other than the nonpayment of the
principal of the Notes that has become due solely by such
acceleration, have been cured or waived as provided in Section 5.9 of
the Indenture.
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No such rescission shall affect any subsequent default or impair any right
consequent thereto.
Section 4.03. REMEDIES.
If an Event of Default shall have occurred and be continuing, the
Indenture Trustee, subject to Section 11.17 of the Indenture, may exercise any
of the remedies specified in Article V of the Indenture and, in addition, may do
one or more of the following.
(i) institute Proceedings in its own name and as trustee of
an express trust for the collection of all amounts then payable on the
Notes or under the Indenture with respect thereto, whether by
declaration or otherwise, enforce any judgment obtained, and collect
from the Issuer and any other obligor upon such Notes moneys adjudged
due;
(ii) institute Proceedings from time to time for the
complete or partial foreclosure of the Indenture with respect to the
Trust Property;
(iii) exercise any remedies of a secured party under the UCC
and take any other appropriate action to protect and enforce the
rights and remedies of the Indenture Trustee and the Holders of the
Notes; and
(iv) sell the Trust Property or any portion thereof or
rights or interest therein, at one or more public or private sales
called and conducted in any manner permitted by law; provided,
however, that the Indenture Trustee may not sell or otherwise
liquidate the Trust Property following an Event of Default unless:
(x) the proceeds of such sale or liquidation distributable
to the Noteholders are sufficient to discharge in full all
amounts then due and unpaid upon such Notes for principal and
interest, or
(y) the Indenture Trustee determines that the Trust
Property will not continue to provide sufficient funds for the
payment of principal of and interest on the Notes as they would
have become due if the Notes had not been declared due and
payable, and the Indenture Trustee obtains the consent of
Holders of 66-2/3% of the Outstanding Amount of the Notes, or
(z) the Indenture Trustee has not determined that the Trust
Property will not continue to provide sufficient funds for the
principal of and interest on the Notes and the proceeds of such
sale or liquidation distributable to the Noteholders are not
sufficient to discharge in full all amounts then due and unpaid
upon such Notes for principal and interest, and the Indenture
Trustee obtains the consent of Holders of 100% of the
Outstanding Amount of the Notes.
In determining such sufficiency or insufficiency with respect to
clause (y) and (z), the Indenture Trustee may, but need not, obtain and rely
upon an opinion of an Independent
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investment banking or accounting firm of national reputation as to the
feasibility of such proposed action and as to the sufficiency of the Trust
Property for such purpose.
Section 4.04. PRIORITIES.
(a) On and after the maturity date of the Series 1999-1 Notes (by
acceleration or otherwise) all Available Funds, all amounts on deposit in the
Reserve Account withdrawn in accordance with Section 3.02 and any proceeds of
the liquidation of all or any portion of the Series 1999-1 Trust Estate pursuant
to Section 4.03(iv), shall be applied by the Indenture Trustee on the related
Distribution Date in the following order of priority:
First: amounts due and owing and required to be distributed
to the Master Servicer, the Owner Trustee and the Indenture Trustee,
respectively, pursuant to priorities (i) and (ii) of Section 3.03
hereof and not previously distributed, in the order of such priorities
and without preference or priority of any kind within such priorities;
Second: to Class A Noteholders for amounts due and unpaid on
the Class A Notes for interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Class A Notes for interest;
Third: to the Class A Noteholders for amounts due and unpaid
on the Class A Notes for principal, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Class A Notes for principal;
Fourth: to the Servicer for any Servicing Fees and
Supplemental Servicing Fees then due;
Fifth: to the Series 1999-1 Certificateholders, any remaining
Available Funds.
(b) The Indenture Trustee may fix a record date and distribution
date for any payment to Series 1999-1 Noteholders pursuant to this Section 4.04.
At least 15 days before such record date, the Indenture Trustee shall mail to
the Noteholders a notice that states the record date, the Distribution Date and
the amount to be paid.
Article V
PREPAYMENT AND REDEMPTION
Section 5.01. OPTIONAL "CLEAN-UP" REDEMPTION.
On any Distribution Date occurring on or after the date upon which the
aggregate outstanding principal balance of the Class A-1 Notes, the Class A-2
Notes, the Class A-3 Notes and the Class A-4 Notes shall have been reduced to an
amount which is less than or equal to 10% of the aggregate outstanding principal
balance of such Classes of Notes as of the Series 1999-1 Closing Date, the
Master Servicer and the Seller on behalf of the Issuer, shall each have the
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option to redeem the outstanding Series 1999-1 Notes at a redemption price (the
"REDEMPTION PRICE") which is not less than the then Aggregate Note Principal
Balance, plus all accrued and unpaid interest thereon and all fees and other
amounts owing to the Indenture Trustee, the Owner Trustee and the Master
Servicer (if other than HFC) under the Series 1999-1 Related Documents. The
Master Servicer and the Seller, on behalf of the Issuer, shall give the Master
Servicer (if other than HFC), the Indenture Trustee, and the Owner Trustee at
least 10 days' irrevocable prior written notice of the date on which the Master
Servicer or the Seller, as applicable intends to exercise such option to
purchase. Not later than 12:00 P.M., New York City time, on such Distribution
Date, the Master Servicer or the Seller, as applicable, shall deposit such
amount in the Collection Account in immediately available funds for distribution
pursuant to Section 3.03 against the presentment of the Notes for cancellation.
Such purchase option is subject to payment in full of the Redemption Price.
Article VI
MISCELLANEOUS
Section 6.01. RATIFICATION OF BASIC DOCUMENTS.
Each of the Basic Documents, and to the extent appropriate, as
supplemented by this Series 1999-1 Supplement, is in all respects ratified and
confirmed and each of the Basic Documents, as so supplemented by this Series
1999-1 Supplement shall be read, taken and construed as one and the same
instrument.
Section 6.02. COUNTERPARTS.
This Series 1999-1 Supplement may be executed in one or more
counterparts, each of which so executed shall be deemed to be an original, but
all of which shall together constitute but one and the same instrument.
Section 6.03. GOVERNING LAW.
THIS SERIES 1999-1 SUPPLEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS.
Section 6.04. AMENDMENTS WITHOUT CONSENT OF NOTEHOLDERS.
(a) Without the consent of the Noteholders but with prior written
notice to the Rating Agencies, as evidenced to the Indenture Trustee and the
Issuer, when authorized by an Issuer Order, at any time and from time to time,
the parties hereto may enter into one or more amendments hereto, in form
satisfactory to the Indenture Trustee and the Owner Trustee, for any of the
following purposes:
(i) to correct or amplify the description of any property
at any time subject to the lien of the Indenture as supplemented by
this Series 1999-1
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Supplement, or better to assure, convey and confirm unto the Indenture
Trustee, if any, any property subject or required to be subjected to
the lien of the Indenture as supplemented by this Series 1999-1
Supplement, or to subject to the lien of the Indenture as supplemented
by this Series 1999-1 Supplement additional property;
(ii) to evidence the succession, in compliance with the
applicable provisions hereof, of another person to the Issuer, and the
assumption by any such successor of the covenants of the Issuer herein
and in the Notes contained;
(iii) to add to the covenants of the Issuer, for the benefit
of the Noteholders, or to surrender any right or power herein
conferred upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any
property to or with the Indenture Trustee, if any;
(v) to cure any ambiguity, to correct or supplement any
provision herein which may be inconsistent with any other provision
herein or to make any other provisions with respect to matters or
questions arising under the Indenture, the Trust Agreement or in this
Series 1999-1 Supplement; provided that such action shall not
adversely affect the interests of the Series 1999-1 Noteholders;
(vi) to evidence and provide for the acceptance of the
appointment hereunder and under the Indenture by a successor indenture
trustee with respect to the Notes and to add to or change any of the
provisions of the Indenture or of this Series 1999-1 Supplement as
shall be necessary to facilitate the administration of the trusts
hereunder by more than one indenture trustee, pursuant to the
requirements of Article VI of the Indenture; or
(vii) to modify, eliminate or add to the provisions of the
Indenture or of this Series 1999-1 Supplement to such extent as shall
be necessary to effect the qualification of the Indenture under the
TIA or under any similar federal statute hereafter enacted and to add
to the Indenture such other provisions as may be expressly required by
the TIA.
Each of the Indenture Trustee and the Owner Trustee is hereby
authorized to join in the execution of any amendment and to make any further
appropriate agreements and stipulations that may be therein contained.
(b) Except as otherwise provided herein, the Issuer and the
Indenture Trustee, when authorized by an Issuer Order, may, also without the
consent of any of the Series 1999-1 Noteholders but with prior written notice to
the Rating Agencies by the Issuer, as evidenced to the Indenture Trustee, enter
into an amendment hereto for the purpose of adding any provisions to, or
changing in any manner or eliminating any of the provisions of, the Indenture or
of this Series 1999-1 Supplement of modifying in any manner the rights of the
Series 1999-1 Noteholders under the Indenture or under this Series 1999-1
Supplement; provided, however,
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that such action shall not, as evidenced by an Opinion of Counsel, adversely
affect in any material respect the interests of any Series 1999-1 Noteholder.
Section 6.05. AMENDMENTS WITH CONSENT OF THE SERIES 1999-1
NOTEHOLDERS.
Except as otherwise provided herein, the Issuer and the Indenture
Trustee, when authorized by an Issuer Order provided by the Master Servicer,
also may, upon satisfaction of the Rating Agency Condition and with the consent
of the Holders of not less than a majority of the Outstanding Amount of each
Class of affected Series 1999-1 Notes, by Act of such Holders delivered to the
Issuer and the Indenture Trustee, enter into an amendment hereto for the purpose
of adding any provisions to, or changing in any manner or eliminating any of the
provisions of, this Series 1999-1 Supplement or of modifying in any manner the
rights of the Series 1999-1 Noteholders under the Indenture or under this Series
1999-1 Supplement; provided, however, that no such amendment shall, without the
consent of the Holder of each Outstanding Series 1999-1 Note affected thereby:
(i) change the date of payment of any installment of
principal of or interest on any Series 1999-1 Note, or reduce the
principal amount thereof, the interest rate thereon, change the
provision of the Indenture relating to the application of collections
on, or the proceeds of the sale of, all or any portion of any Series
1999-1 Trust Estate to payment of principal of or interest on the
Series 1999-1 Notes, or change any place of payment where, or the coin
or currency in which, any Series 1999-1 Note or the interest thereon
is payable;
(ii) impair the right to institute suit for the enforcement
of the provisions of the Indenture requiring the application of funds
available therefor, as provided in Article V of the Indenture, to the
payment of any such amount due on the Series 1999-1 Notes on or after
the respective due dates thereof;
(iii) reduce the percentage of the Outstanding Amount of the
Series 1999-1 Notes, the consent of the Holders of which is required
for this Series 1999-1 Supplement, or the consent of the Holders of
which is required for any waiver of compliance with certain provisions
of the Indenture or certain defaults hereunder and their consequences
provided for in the Indenture;
(iv) modify or alter the provisions of the proviso to the
definition of the term "Outstanding";
(v) reduce the percentage of the Outstanding Amount of the
Notes required to direct the Trustee to direct the Issuer to sell or
liquidate the Series 1999-1 Trust Estate pursuant to Section 5.4 of
the Indenture;
(vi) modify any provision of this Section except to increase
any percentage specified herein or to provide that certain additional
provisions of the Indenture or the Basic Documents cannot be modified
or waived without the consent of the Holder of each Outstanding Series
1999-1 Note affected thereby;
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(vii) modify any of the provisions of the Indenture in such
manner as to affect the calculation of the amount of any payment of
interest or principal due on any Series 1999-1 Note on any
Distribution Date (including the calculation of any of the individual
components of such calculation) or to affect the rights of the Holders
of Series 1999-1 Notes to the benefit of any provisions for the
mandatory redemption of the Series 1999-1 Notes contained herein; or
(viii) permit the creation of any lien ranking prior to or on
a parity with the lien of the Indenture with respect to any part of
the a Series 1999-1 Trust Estate or, except as otherwise permitted or
contemplated herein or the Series 1999-1 Related Documents, terminate
the lien of the Indenture on any property at any time subject hereto
or deprive the Holder of any Series 1999-1 Note of the security
provided by the lien of the Indenture.
It shall not be necessary for any Act of Noteholders under this
Section to approve the particular form of an amendment to this Series 1999-1
Supplement, but it shall be sufficient if such Act shall approve the substance
thereof.
Promptly after the execution by the Issuer and the Indenture Trustee
of an amendment to this Series 1999-1 Supplement, the Indenture Trustee shall
mail to the Series 1999-1 Noteholders a notice setting forth in general terms
the substance hereof. Any failure of the Indenture Trustee to mail such notice,
or any defect therein, shall not, however, in any way impair or affect the
validity of any amendment to the Series 1999-1 Supplement.
Prior to the execution of any amendment to this Supplement, the
Indenture Trustee shall be entitled to receive and rely upon an Opinion of
Counsel stating that the execution of such amendment is authorized or permitted
by this Supplement. The Indenture Trustee may, but shall not be obligated to,
enter into any such amendment which affects the Indenture Trustee's own rights,
duties or immunities under this Supplement.
By its acceptance of its interest in the Series 1999-1 Notes, each
owner of a beneficial interest in a Note shall be deemed to have agreed that
prior to the date which is one year and one day after the termination of the
Indenture, such Person shall not acquiesce, petition or otherwise invoke or
cause the Issuer or the Seller to invoke the process of any governmental
authority for the purpose of commencing or sustaining a case against the Seller
or Issuer under any Federal or state bankruptcy, insolvency or similar law or
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or
other similar official of or for the Issuer or the Seller or any substantial
part of its property or ordering the winding-up or liquidation of the affairs of
the Issuer or the Seller.
Section 6.06. AUTHORITY TO REGISTER NOTES AND FILE REPORTS.
The Issuer hereby authorizes the Seller to prepare and execute on
behalf of the Issuer, filings with the Securities and Exchange Commission and
any applicable state agencies of documents required to register or qualify the
Notes for public distribution and to file on a
22
periodic basis, such documents as may be required by rules and regulations
prescribed by such authorities.
23
IN WITNESS WHEREOF, the parties hereto have caused this Series 1999-1
Supplement to be fully executed by their respective officers as of the day and
year first above written.
HOUSEHOLD FINANCE CORPORATION,
as Master Servicer
By
-----------------------------------
Name:
Title:
HOUSEHOLD AUTOMOTIVE TRUST III,
as Issuer
By WILMINGTON TRUST COMPANY
Not in its individual capacity but solely
as Owner Trustee
By
-----------------------------------
Name:
Title:
HOUSEHOLD AUTO RECEIVABLES
CORPORATION
By
-----------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK,
as Indenture Trustee
By
-----------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY,
as Owner Trustee
By
-----------------------------------
Name:
Title:
Schedule I
Eligibility Criteria
"ELIGIBLE RECEIVABLE" means a Series 1999-1 Receivable with respect to which
each of the following is true as of the Cutoff Date:
(a) that (i) was originated directly by HAFC (or any predecessor or
Affiliate of HAFC) with the consumer or was originated by a Dealer for the
retail sale of a Financed Vehicle in the ordinary course of such Dealer's
business and (A) in the case of a Dealer originated receivable, such Dealer had
all necessary licenses and permits to originate receivables in the state where
such Dealer was located, and such receivable was purchased by HAFC (or any
predecessor or Affiliate of HAFC) from such Dealer under an existing Dealer
Agreement with HAFC (or any predecessor or Affiliate of HAFC), and (B) in the
case of a Dealer originated receivable or a receivable originated by HAFC (or
any predecessor or Affiliate of HAFC) such receivable was purchased (x) by HARC
pursuant to the terms of the Master Receivables Purchase Agreement or by a
master receivables purchase agreement between HARC and HAFC, dated as of
November 1, 1998, that is substantially the same as the Master Receivables
Purchase Agreement (the "Trust II Receivables Purchase Agreement"), (y) by the
Issuer pursuant to the Master Sale and Servicing Agreement; and each
Series 1999-1 Receivable was validly assigned (1) if Dealer originated, by such
Dealer to HAFC (or any predecessor or Affiliate of HAFC), (2) by HAFC to HARC
pursuant to the terms of the Master Receivables Purchase Agreement or the Trust
II Receivables Purchase Agreement, (3) by HARC to the Issuer pursuant to the
Master Sale and Servicing Agreement and (4) by the Issuer to the Trustee
pursuant to the Indenture, (ii) was fully and properly executed by the parties
thereto, (iii) contains customary and enforceable provisions such as to render
the rights and remedies of the holder thereof adequate for realization against
the collateral security, and (iv) is fully amortizing and provides for level
monthly payments (PROVIDED that the first and final payment of the Series 1999-1
Receivable may be minimally different from the level payment) which, if made
when due, shall fully amortize the Amount Financed over the original term;
(b) that if originated by a Dealer, was sold by the Dealer to HAFC
(or any predecessor or Affiliate of HAFC) without any fraud or material
misrepresentation on the part of such Dealer in either case or on the part of
the Obligor;
(c) with respect to which all requirements of applicable federal,
state and local laws, and regulations thereunder (including, without limitation,
usury laws, the Federal Truth-in-Lending Act, the Equal Credit Opportunity Act,
the Fair Credit Billing Act, the Fair Credit Reporting Act, the Fair Debt
Collection Practices Act, the Federal Trade Commission Act, the Xxxxxxxx-Xxxx
Warranty Act, the Federal Reserve Board's Regulations "B" and "Z", the Soldiers'
and Sailors' Civil Relief Act of 1940 and state adaptations of the National
Consumer Act and of the Uniform Consumer Credit Code and other consumer credit
laws and equal credit opportunity and disclosure laws) in respect of all of the
Series 1999-1 Receivables, each and every sale of Financed Vehicles and the sale
of any physical damage, loss, credit life and credit
SCH-I-1
accident and health insurance and any extended service contracts, have been
complied with in all material respects, and each Series 1999-1 Receivable and
the sale of the Financed Vehicle evidenced by each Series 1999-1 Receivable and
the sale of any physical damage, loss, credit life and credit accident and
health insurance and any extended service contracts complied at the time it was
originated or made and now complies in all material respects with all applicable
legal requirements;
(d) that was originated in the United States of America and, at the
time of origination materially conformed to all requirements of the Dealer
Underwriting Guides (or such similar guidelines of any predecessor or affiliate
of HAFC) applicable thereto;
(e) which represents the genuine, legal, valid and binding payment
obligation of the Obligor thereon, enforceable by the holder thereof in
accordance with its terms, except (A) as enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting the enforcement
of creditors' rights generally and by equitable limitations on the availability
of specific remedies, regardless of whether such enforceability is considered in
a proceeding in equity or at law and (B) as such Receivable may be modified by
the application of the Soldiers' and Sailors' Civil Relief Act of 1940, as
amended; and all parties thereto had full legal capacity to execute and deliver
such Receivable and all other documents related thereto and to grant the
security interest purported to be granted thereby;
(f) which is not due from the United States of America or any state
or from any agency, department, subdivision or instrumentality thereof;
(g) which (i) had an original maturity of at least 18 months but
not more than 72 months, (ii) had an original Amount Financed of at least $3,000
and not more than $27,000, (iii) had an Annual Percentage Rate of at least
10.50% and not more than 27%, (iv) was not more than 30 days past due, (v) no
funds have been advanced by the Issuer, the Master Servicer, HAFC, any
predecessor or Affiliate of HAFC, any Dealer, or anyone acting on behalf of any
of them in order to cause such Series 1999-1 Receivable to qualify under
SUBCLAUSE (iv) of this CLAUSE (g) and (vi) had no provision thereof waived,
altered or modified in any respect since its origination;
(h) with respect to which the information pertaining to such Series
1999-1 Receivable set forth in each Schedule of Receivables is true and correct
in all material respects;
(i) with respect to which HAFC will have caused the portions of
HAFC's and the Master Servicer's servicing records relating to such Series
1999-1 Receivable to be clearly and unambiguously marked to show that such
Series 1999-1 Receivable has been transferred by HAFC to HARC in accordance with
the terms of the Master Receivables Purchase Agreement and by HARC to the Issuer
pursuant to the Master Sale and Servicing Agreement or the Trust II Receivables
Purchase Agreement, and by the Issuer to the Indenture Trustee pursuant to the
Indenture;
(j) with respect to which the computer tape or listing to be made
available by HAFC to HARC, the Master Servicer or the Trustee is complete and
accurate and includes a
SCH-I-2
description of the same Series 1999-1 Receivables that are, or will be,
described in the related Schedule of Receivables;
(k) which constitutes chattel paper within the meaning of the UCC;
(l) of which there is only one original executed copy;
(m) with respect to which there exists a Receivable File and such
Receivable File contains, without limitation, (a) a fully executed original of
such Receivable, (b) a certificate of insurance, application form for insurance
signed by the Obligor, or a signed representation letter from the relevant
Obligor named pursuant to which the Obligor has agreed to obtain physical damage
insurance for the related Financed Vehicle, (c) the original Lien Certificate or
application therefor showing HAFC (or any predecessor or Affiliate of HAFC) as
first lienholder and by HAFC (or any predecessor or Affiliate of HAFC) to HARC
and by HARC to the Issuer and by the Issuer to the Trustee) and (d) an original
credit application signed by the Obligor; and (x) each of the documents relating
thereto which is required to be signed by the Obligor has been signed by the
Obligor in the appropriate spaces and (y) all blanks on any form relating
thereto by HAFC (or any predecessor or Affiliate of HAFC) to be completed have
been properly filled in and each form has otherwise been correctly prepared;
and, notwithstanding the above, with respect to which, a copy of the complete
Receivable File for such Series 1999-1 Receivable, which fulfills the
documentation requirements of the Dealer Underwriting Guides as in effect at the
time of purchase is in the possession of the Master Servicer or Sub-Servicer;
(n) which has not been satisfied, subordinated or rescinded, and
the Financed Vehicle securing such Series 1999-1 Receivable has not been
released from the lien of such Series 1999-1 Receivable in whole or in part;
(o) which was not originated in, and is not subject to the laws of,
any jurisdiction the laws of which would make unlawful, void or voidable the
sale, transfer and assignment of such Series 1999-1 Receivable and with respect
to which neither HAFC (nor any predecessor or affiliate of HAFC) nor the Issuer
has entered into any agreement with any account debtor that prohibits, restricts
or conditions the assignment of any portion of such Series 1999-1 Receivable;
(p) which has not been sold, transferred, assigned or pledged to
any Person other than to (i) HAFC (or any predecessor or Affiliate of HAFC) by a
Dealer, (ii) HARC by HAFC pursuant to the terms of the Master Receivables
Purchase Agreement, (iii) the Issuer by HARC pursuant to the terms of the Master
Sale and Servicing Agreement and (iv) the Trustee by the Issuer pursuant to the
terms of the Indenture. No Dealer has a participation in, or other right to
receive, proceeds of any Series 1999-1 Receivable and with respect to which
neither HAFC (nor any predecessor or Affiliate of HAFC), HARC nor the Issuer has
taken any action to convey any right to any Person that would result in such
Person having a right to payments received under the related Insurance Policy or
the related Dealer Agreement or Dealer Assignment or to payments due under such
Series 1999-1 Receivable;
SCH-I-3
(q) which creates or shall create a valid, binding and enforceable
first priority security interest in favor of HAFC in the Financed Vehicle;
(r) which is secured by an enforceable and perfected first priority
security interest in the Financed Vehicle in favor of HAFC as secured party,
which security interest is prior to all other Liens upon and security interests
in such Financed Vehicle which now exist or may hereafter arise or be created
(except, as to priority, for any Lien for taxes, labor or materials affecting a
Financed Vehicle); and, with respect to which there are no Liens or claims for
taxes, work, labor or materials affecting the related Financed Vehicle which are
or may be Liens prior or equal to the lien of such Receivable;
(s) as to which all filings (including, without limitation, UCC
filings) required to be made by any Person and actions required to be taken or
performed by any Person in any jurisdiction to give the Trustee a first priority
perfected lien on, or ownership interest in, the Series 1999-1 Receivables and
the proceeds thereof have been made, taken or performed;
(t) as to which HAFC (or any predecessor or Affiliate of HAFC),
HARC or the Issuer has not done anything to convey any right to any Person that
would result in such Person having a right to payments due under such Series
1999-1 Receivable or otherwise to impair the rights of the Trustee, the
Noteholders or the Certificateholders in such Series 1999-1 Receivable or the
proceeds thereof;
(u) which is not assumable by another Person in a manner which
would release the Obligor thereof from such Obligor's obligations with respect
to such Receivable;
(v) which is not subject to any right of rescission, setoff,
counterclaim or defense and no such right has been asserted or threatened with
respect thereto;
(w) as to which there has been no default, breach, violation or
event permitting acceleration under the terms of such Series 1999-1 Receivable
(other than payment delinquencies of not more than 30 days) and no condition
exists or event has occurred and is continuing that with notice, the lapse of
time or both would constitute a default, breach, violation or event permitting
acceleration under the terms of such Series 1999-1 Receivable, and there has
been no waiver of any of the foregoing, and with respect to which the related
Financed Vehicle had not been repossessed;
(x) at the time of the origination of which, the related Financed
Vehicle was covered by a comprehensive and collision insurance policy (i) in an
amount at least equal to the lesser of (a) its maximum insurable value and
(b) the principal amount due from the Obligor thereunder, (ii) naming HAFC and
its successors and assigns as loss payee and (iii) insuring against loss and
damage due to fire, theft, transportation, collision and other risks generally
covered by comprehensive and collision coverage and with respect to which the
Obligor is required to maintain physical loss and damage insurance, naming HAFC
and its successors and assigns as additional insured parties, and such
Receivable permits the holder thereof to obtain physical loss and damage
insurance at the expense of the Obligor if the Obligor fails to do so;
SCH-I-4
(y) with respect to which the following is true:
The Lien Certificate for the related Financed Vehicle shows, or if a
new or replacement Lien Certificate is being applied for with respect to such
Financed Vehicle the Lien Certificate will be received within 180 days of the
Series 1999-1 Closing Date and will show, HAFC (or any predecessor or Affiliate
of HAFC) named as the original secured party under such Series 1999-1 Receivable
and, accordingly, HAFC will be the holder of a first priority security interest
in such Financed Vehicle. With respect to each Series 1999-1 Receivable for
which the Lien Certificate has not yet been returned from the Registrar of
Titles, HAFC has received written evidence from the related Dealer or the
Obligor that such Lien Certificate showing HAFC as first lienholder has been
applied for. If the Series 1999-1 Receivable was originated in a state in which
a filing or recording is required of the secured party to perfect a security
interest in motor vehicles, such filings or recordings have been duly made to
show HAFC named as the original secured party under the related Series 1999-1
Receivable; and
(z) as to which no selection procedures adverse to the Noteholders
or the Certificateholder have been utilized in selecting such Series 1999-1
Receivable from all other similar Receivables originated by HAFC or any
predecessor or Affiliate of HAFC.
SCH-I-5
Schedule II
Schedule of Receivables on File in Electronic Form
at Xxxxx Xxxxxxxxxx
Exhibit A
Form of Master Servicer's Certificate
