EXHIBIT 1.1
HOUSEHOLD MORTGAGE LOAN TRUST 200_-_
HOUSEHOLD MORTGAGE FUNDING CORPORATION III
(Depositor)
HOUSEHOLD FINANCE CORPORATION
(Master Servicer)
[ ] Mortgage Loan Asset Backed Notes,
Series 200_-_
$[ ] Class A Notes
UNDERWRITING AGREEMENT
[Date]
[Representative Underwriter]
as Representative of the Underwriters
[address]
Attention: [ ]
[Representative Underwriter]
as Representative of the Underwriters
[address]
Attention: [ ]
Ladies and Gentlemen:
Household Mortgage Funding Corporation III (the "Depositor"), has entered
into a Trust Agreement dated as of [_______________] (the "Trust Agreement")
with [Owner Trustee] (the "Owner Trustee") and Household Finance Corporation
("HFC") creating the Household Mortgage Loan Trust 200_-_ (the "Trust"), a
statutory business trust established under the laws of the State of Delaware.
The Depositor proposes to direct the Owner Trustee pursuant to the Trust
Agreement to cause the Trust to issue Mortgage Loan Trust Series 200_-_, Class A
Notes (the "Class A Notes") and a single class of ownership interests (the
"Ownership Interests" and, together with the Class A Notes, the "Securities").
Simultaneously with the execution of the Trust Agreement, the Depositor will
enter into a Sale and Servicing Agreement dated as of [ ] (the "Sale and
Servicing Agreement") among the Depositor, the Trust, [Indenture Trustee], as
indenture trustee (the "Indenture Trustee") and HFC, as master servicer (the
"Master Servicer").
Only the Class A Notes are being purchased by the several underwriters
named in Schedule I hereto (collectively, the "Underwriters"), for whom [ ]
and [ ] together are acting as representatives (the "Representatives"),
except that the amount purchased by each Underwriter may change in accordance
with Section 13 of this Agreement.
The Class A Notes will be secured by the assets of the Trust consisting of,
among other things, a pool of [ ] mortgage loans conveyed to the Trust at
the Closing Time (as defined herein) and any eligible mortgage loan substituted
for a loan pursuant to the Sale and Servicing Agreement (each, an "Eligible
Substitute Mortgage Loan" and, together with the mortgage loans conveyed to the
Trust at the Closing Time, the "Mortgage Loans"), secured primarily by first and
second mortgages on residential properties that are primarily one- to
four-family properties and certain monies due thereunder. The Depositor will
acquire the Mortgage Loans pursuant to the Mortgage Loan Purchase Agreement, as
described below. The Depositor is a subsidiary of HFC.
The Depositor will acquire the Mortgage Loans, simultaneously with the
execution of the Sale and Servicing Agreement, pursuant to a mortgage loan
purchase agreement dated as of [ ] (the "Mortgage Loan Purchase Agreement"),
between the Depositor, as purchaser, and certain sellers, each of which is a
subsidiary of HFC (collectively, the "Sellers" and each individually, a
"Seller"). Pursuant to the Mortgage Loan Purchase Agreement, the Sellers will
sell to the
Depositor all of their right, title and interest in and to the unpaid principal
balance of the Mortgage Loans, including all interest and principal payments in
respect thereof received on or after the Cut-Off Date, and certain other rights
with respect to the collateral supporting the Mortgage Loans. Pursuant to the
Sale and Servicing Agreement, the Depositor will assign and grant to the Trust
all of its right, title and interest in and to the unpaid principal balance of
the Mortgage Loans. In addition, the Sellers have entered into an agreement
dated as of [ ] (the "Transfer Agreement"), between the Trustee and each
Seller, pursuant to which the Sellers will assign to the Trust all of their
right, title and interest in and to the collateral supporting the Mortgage
Loans, including the loan agreement and mortgage notes relating thereto
(collectively, the "Transferred Assets") not otherwise transferred pursuant to
the Mortgage Loan Purchase Agreement.
The Class A Notes will be issued pursuant to an indenture to be dated as of
[ ] (the "Indenture") between the Trust, as issuer and the Indenture
Trustee. The Ownership Interests will evidence fractional undivided interests in
the property held in the Trust and evidence the right to receive amounts in
respect of the Transferor Interest (as defined in the Trust Agreement). The
aggregate principal balance of the Class A Notes initially will be equal to
$ [ ], which represents approximately 100% of the outstanding principal
balances of the Mortgage Loans as of the close of business on [ ] (the
"Cut-Off Date").
The Class A Notes will have the benefit of a financial guaranty insurance
policy (the "Policy") issued by [Insurer], a stock insurance corporation
organized under the laws of the State of New York (the "Insurer") pursuant to an
Insurance and Reimbursement Agreement (the "Insurance Agreement") to be dated as
of [ ] among the Depositor, the Master Servicer, the Indenture Trustee,
[ ] and the Insurer. Forms of the Indenture, the Sale and Servicing
Agreement and the Trust Agreement have been filed as an exhibit to the
Registration Statement (hereinafter defined).
The Depositor has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (File No. 333-__________)
relating to the Class A Notes, and the offering thereof from time to time in
accordance with Rule 415 under the Securities Act of 1933, as amended (the "1933
Act"), and has filed, and proposes to file, such amendments thereto as may have
been required to the date hereof pursuant to the 1933 Act and the rules of the
Commission thereunder (the "1933 Act Regulations"). Such registration statement,
including all exhibits thereto, as amended at the time when it became effective
under the 1933 Act and at the Closing Time defined below, is referred to herein
as the "Registration Statement". The Depositor proposes to file with the
Commission pursuant to Rule 424(b) under the 1933 Act Regulations a supplement
(the "Prospectus Supplement") to the prospectus (as it may be amended in
connection with such Prospectus Supplement, the "Basic Prospectus"; the Basic
Prospectus, together with the Prospectus Supplement, the "Prospectus").
For purposes of this Agreement, all references to the Registration
Statement, the Prospectus or any amendment or supplement to any of the foregoing
shall be deemed to include the copy filed with the Commission pursuant to its
Electronic Data Gathering, Analysis and Retrieval system ("XXXXX").
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All references in this Agreement to financial statements and schedules and
other information which is "contained," "included" or "stated" in the
Registration Statement or the Prospectus (or other references of like import)
shall be deemed to mean and include all such financial statements and schedules
and other information which are incorporated by reference in the Registration
Statement or the Prospectus, as the case may be; and all references in this
Agreement to amendments or supplements to the Registration Statement or the
Prospectus shall be deemed to mean and include the filing of any document under
the Securities Exchange Act of 1934, as amended (the "1934 Act"), which is
incorporated by reference in the Registration Statement or the Prospectus, as
the case may be.
Capitalized terms used but not otherwise defined herein shall have the
meanings assigned thereto in the Sale and Servicing Agreement.
SECTION 1. REPRESENTATIONS AND WARRANTIES.
(a) The Depositor represents and warrants to, and agrees with, each
Underwriter as set forth in this Section 1(a):
(i) The Depositor meets the requirements for use of Form S-3 under
the 1933 Act. The Registration Statement has become effective under the
1933 Act and no stop order suspending the effectiveness of the Registration
Statement has been issued under the 1933 Act and no proceedings for that
purpose have been instituted or are pending or, to the knowledge of the
Depositor, are contemplated by the Commission, and any request on the part
of the Commission for additional information has been complied with. At the
time the Registration Statement became effective and at the Closing Time,
the Registration Statement and any amendments and supplements thereto,
including documents incorporated or deemed to be incorporated by reference
in the Registration Statement, complied and will comply in all material
respects with the requirements of the 1933 Act and the 1933 Act Regulations
and the 1934 Act and the rules and regulations of the Commission thereunder
(the "1934 Act Regulations"), and did not and will not contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading. Neither the Prospectus nor any amendments or supplements
thereto, at the time the Prospectus or any such amendment or supplement was
filed with the Commission and at the Closing Time, included or will include
an untrue statement of a material fact or omitted or will omit to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided, however, that the Depositor makes no representations or
warranties as to (i) any statements in, or omissions from, the Registration
Statement or the Prospectus made in reliance upon and in conformity with
information furnished to the Depositor in writing by the Underwriters
expressly for use in the Registration Statement or the Prospectus or (ii)
information in any "Computational Materials", "Collateral Term Sheets" or
"Structural Term Sheets" (each as hereinafter defined) provided by the
Underwriters except to the extent that the information set forth therein is
"Pool Information" or "Prospectus Information". As used herein, Pool
Information means information provided by the Depositor or HFC to the
Representatives in written form or on computer tape, floppy disk or other
electronic media with respect to the financial characteristics of the
Mortgage Loans. As used
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herein, "Prospectus Information" shall mean any information in the
Prospectus other than Underwriter Information (as defined in Section 9(b)).
(ii) The prospectus filed as part of the Registration Statement as
originally filed or as part of any amendment thereto, or filed pursuant to
Rule 424(b) under the 1933 Act, complied when so filed in all material
respects with the 1933 Act Regulations and the Prospectus delivered to the
Underwriters for use in connection with this offering was, in all material
respects, identical to the electronically transmitted copies thereof filed
with the Commission pursuant to XXXXX, except to the extent permitted by
Regulation S-T.
(iii) Since the respective dates as of which information is given in
the Prospectus, or the Prospectus as amended and supplemented at the
Closing Time, there has not been any material adverse change in the general
affairs, management, financial condition, or results of operations of any
of the Sellers or the Depositor or of their subsidiaries, otherwise than as
set forth or contemplated in the Prospectus or the Prospectus as amended
and supplemented at the Closing Time.
(iv) Each of the Sellers and the Depositor has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of its respective jurisdiction of incorporation, with the
full right, power and authority (corporate and other) to own, lease and
operate its properties and conduct its business as described in the
Prospectus and to enter into and perform its obligations under this
Agreement, the Sale and Servicing Agreement, the Transfer Agreement and the
Mortgage Loan Purchase Agreement, as applicable, and to cause the
Securities to be issued; each of the Sellers and the Depositor is duly
qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction which requires such qualification, except
where failure to be so qualified would not have a material adverse effect
on the business or consolidated financial condition of any such Seller or
the Depositor or the transactions contemplated by this Agreement; and each
Seller is duly authorized under the statutes that regulate the business of
making loans or of financing the sale of goods (commonly called "small loan
laws," "consumer finance laws," or "sales finance laws"), or is permitted
under the general interest statutes and related laws and court decisions,
to conduct in the various jurisdictions in which any of them do business
the businesses as currently conducted therein by any of them.
(v) There are no legal or governmental proceedings pending to
which any Seller or the Depositor is a party or of which any property of
any Seller or the Depositor is the subject, other than proceedings which
are not reasonably expected, individually or in the aggregate, to have a
material adverse effect on the financial position, shareholders' equity or
results of operations of such Seller or the Depositor, and to the best
knowledge of the Depositor, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others.
(vi) This Agreement has been duly authorized, executed and
delivered by the Depositor, and the Sale and Servicing Agreement, the Trust
Agreement, the Insurance Agreement and the Mortgage Loan Purchase
Agreement, when executed and delivered as
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contemplated hereby and thereby, will have been duly authorized, executed
and delivered by the Depositor, and the Mortgage Loan Purchase Agreement
and the Transfer Agreement when executed and delivered as contemplated
hereby and thereby, will have been duly authorized, executed and delivered
by each Seller. This Agreement constitutes, and the Sale and Servicing
Agreement, the Trust Agreement, the Insurance Agreement, the Transfer
Agreement and the Mortgage Loan Purchase Agreement when executed and
delivered as contemplated herein and therein will constitute, legal, valid
and binding instruments enforceable against the Depositor or the Sellers,
as applicable, in accordance with their respective terms, subject as to
enforceability (A) to applicable bankruptcy, reorganization, insolvency,
moratorium or other similar laws affecting creditors' rights generally, (B)
to general principles of equity (regardless of whether enforcement is
sought in a proceeding in equity or at law) and (C) with respect to rights
of indemnity under this Agreement and the Insurance Agreement, to
limitations of public policy under applicable securities laws.
(vii) The issuance and delivery of the Securities, the consummation
of any other of the transactions contemplated herein or in the Sale and
Servicing Agreement, the Trust Agreement, the Indenture, the Insurance
Agreement, the Transfer Agreement and the Mortgage Loan Purchase Agreement,
and the fulfillment of the terms of this Agreement, the Mortgage Loan
Purchase Agreement, the Transfer Agreement, the Sale and Servicing
Agreement, the Trust Agreement and the Insurance Agreement do not and will
not conflict with or violate any term or provision of the Certificate or
Articles of Incorporation or Bylaws of any of the Sellers or the Depositor,
as applicable, any statute, order or regulation applicable to any of the
Sellers or the Depositor, as applicable, of any court, regulatory body,
administrative agency or governmental body having jurisdiction over any of
the Sellers or the Depositor, as applicable, and do not and will not
conflict with, result in a breach or violation or the acceleration of, or
constitute a default under, or result in the creation or imposition of any
lien, charge or encumbrance upon any of the property or assets of any of
the Sellers or the Depositor, as applicable, pursuant to the terms of, any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which any of the Sellers or the Depositor is a party or by
which any of the Sellers or the Depositor may be bound or to which any of
the property or assets of any of the Sellers or the Depositor may be
subject, except for conflicts, violations, breaches, accelerations and
defaults which would not, individually or in the aggregate, be materially
adverse to any of the Sellers or the Depositor or materially adverse to the
transactions contemplated by this Agreement.
(viii) [ ] is an independent public accountant with respect
to the Sellers and the Depositor as required by the 1933 Act and 1933 Act
Regulations.
(ix) The Class A Notes are duly and validly authorized and, when
executed, authenticated and delivered in accordance with the Indenture and
the Sale and Servicing Agreement, and issued and delivered to and paid for
by the Underwriters, as contemplated hereby, will be entitled to the
benefits provided by the Indenture and the Sale and Servicing Agreement.
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(x) No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body of the
United States is required for the issuance or sale of the Class A Notes, or
the consummation by any of the Sellers or the Depositor of the other
transactions contemplated by this Agreement, the Sale and Servicing
Agreement, the Transfer Agreement, the Mortgage Loan Purchase Agreement,
the Trust Agreement, the Indenture and the Insurance Agreement, as
applicable, except for (A) the registration under the 1933 Act of the Class
A Notes, (B) such consents, approvals, authorizations, orders,
registrations, filings, qualifications, licenses or permits as have been
obtained or as may be required under the State securities or Blue Sky laws
in connection with the issuance of the Class A Notes and the subsequent
purchase and distribution of the Class A Notes by the Underwriters, or (C)
where the failure to obtain such consents, approvals, authorizations,
orders, registrations, filings, qualifications, licenses or permits would
not have a material adverse effect on the business or consolidated
financial condition of the Depositor or any of the Sellers or the
transactions contemplated by such agreements.
(xi) Each of the Sellers and the Depositor possesses all material
licenses, certificates, authorities or permits issued by the appropriate
state, federal or foreign regulatory agencies or bodies necessary to
conduct the business now conducted by it and as described in the
Prospectus, and none of the Sellers or the Depositor has received notice of
proceedings relating to the revocation or modification of any such license,
certificate, authority or permit which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would materially and
adversely affect the conduct of its business, operations or financial
condition or the transactions contemplated by this Agreement.
(xii) At the time of execution and delivery of the Mortgage Loan
Purchase Agreement and the Transfer Agreement each Seller (A) will have
good and marketable title to the unpaid principal balance of the Mortgage
Loans and the Transferred Assets being transferred by it to the Depositor
or Trustee, as the case may be, free and clear of any lien, mortgage,
pledge, charge, encumbrance, adverse claim or other security interest
(collectively "Liens"), (B) will not have assigned to any person any of its
right, title or interest in or to the unpaid principal balance of the
Mortgage Loans under the Mortgage Loan Purchase Agreement or the
Transferred Assets under the Transfer Agreement, and (C) will have the
power and authority to sell the unpaid principal balance of the Mortgage
Loans to the Depositor and transfer and assign the Transferred Assets to
the Trust; and upon the consummation of the sale, transfer and assignment
provided for pursuant to the terms of the Mortgage Loan Purchase Agreement,
the Depositor will have acquired beneficial ownership of all the related
Seller's right, title and interest in and to the unpaid principal balance
of the Mortgage Loans.
(xiii) At the time of execution and delivery of the Sale and
Servicing Agreement, the Depositor (A) will have good and marketable title
to the unpaid principal balance of the Mortgage Loans being transferred by
it to the Trust pursuant to the Sale and Servicing Agreement, free and
clear of Liens, (B) will not have assigned to any person any of its right,
title or interest in or to the unpaid principal balance of the Mortgage
Loans under the Mortgage Loan Purchase Agreement, the Trust Agreement,
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the Sale and Servicing Agreement or the Class A Notes and (C) will have the
power and authority to sell the unpaid principal balance of the Mortgage
Loans to the Trust and to sell the Class A Notes to the Underwriters; and
upon execution and delivery of the Sale and Servicing Agreement and the
Trust Agreement by the Trust, the Trust will have acquired beneficial
ownership of all of the Depositor's right, title and interest in and to the
unpaid principal balance of the Mortgage Loans; and upon delivery to the
Underwriters of the Class A Notes in return for the agreed upon
consideration the Underwriters will have good and marketable title to the
Class A Notes, in each case free of Liens, except to the extent disclosed
in the Prospectus.
(xiv) As of the Cut-Off Date, each of the Mortgage Loans will meet
the eligibility criteria described in the Prospectus and as of the related
Cut-Off Date for any Eligible Substitute Mortgage Loan, the Eligible
Substitute Mortgage Loan will meet the eligibility criteria applicable
thereto described in the Sale and Servicing Agreement.
(xv) None of the Sellers, the Depositor or the Trust will conduct
their operations while any of the Class A Notes are outstanding in a manner
that would require any Seller, the Depositor or the Trust to be registered
as an "investment company" under the Investment Company Act of 1940, as
amended (the "1940 Act"), as in effect on the date hereof.
(xvi) At the Closing Time, the Class A Notes, the Sale and Servicing
Agreement, the Indenture and the Trust Agreement will conform in all
material respects to the descriptions thereof contained in the Prospectus.
(xvii) At the Closing Time, each class of the Class A Notes shall
have been rated in the applicable rating category described in the
Prospectus.
(xviii) Any taxes, fees and other governmental charges in connection
with the execution, delivery and issuance of this Agreement, the Sale and
Servicing Agreement, the Trust Agreement, the Indenture, the Transfer
Agreement, the Mortgage Loan Purchase Agreement and the Securities have
been paid or will be paid at or prior to the Closing Time.
(xix) At the Closing Time, each of the representations and
warranties of the Depositor with respect to the Mortgage Loans set forth in
the Sale and Servicing Agreement will be true and correct in all material
aspects.
(b) HFC represents and warrants to, and agrees with, each Underwriter as
set forth in this Section 1(b):
(i) HFC is a corporation duly organized and validly existing and
in good standing under the laws of its jurisdiction of incorporation. HFC
has all requisite power and authority to own its properties and conduct its
business as presently conducted and is duly qualified as a foreign
corporation to transact business and is in good standing in each
jurisdiction which requires such qualification, except where the failure to
have such power and authority or to be so qualified would not have a
material adverse effect on the
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business or consolidated financial condition of HFC and its subsidiaries
taken as a whole or the transactions contemplated by this Agreement.
(ii) HFC is not in violation of its restated articles of
incorporation or in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other instrument
material to the business HFC and its subsidiaries, taken as a whole, to
which HFC is a party or by which it may be bound, or to which any of the
property or assets of HFC is subject.
(iii) The execution, delivery and performance by HFC of this
Agreement, the Sale and Servicing Agreement and the Trust Agreement and the
consummation of the transactions contemplated hereby and thereby have been
duly and validly authorized by all necessary action or proceedings and will
not conflict with or constitute a breach of, or default under, or result in
the creation or imposition of any lien, charge or encumbrance upon any
property or assets of HFC pursuant to, any contract, indenture, mortgage,
loan agreement, note, lease or other instrument to which HFC is a party or
by which it may be bound, or to which any of the property or assets of HFC
is subject, nor will such action result in any violation of the provisions
of the charter or by-laws of HFC or any applicable law, administrative
regulation or administrative or court decree, except where any such
conflict, breach, default, encumbrance or violation would not have a
material adverse effect on the business or consolidated financial condition
of HFC or the transactions contemplated by this Agreement.
(iv) This Agreement, the Sale and Servicing Agreement and the Trust
Agreement have been duly executed and delivered by HFC; and this Agreement
and the Sale and Servicing Agreement constitute legal, valid and binding
instruments enforceable against HFC in accordance with their respective
terms, subject as to enforceability (A) to applicable bankruptcy,
reorganization, insolvency, moratorium or other similar laws affecting
creditors' rights generally, (B) to general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity or
at law) and (C) with respect to rights of indemnity under this Agreement,
to limitations of public policy under applicable securities laws.
(v) Except as set forth in or contemplated in reports filed by HFC
with the Commission pursuant to the 1934 Act and the 1934 Act Regulations,
there has been no material adverse change in the business or consolidated
financial condition of HFC and its subsidiaries taken as a whole since the
respective dates as of which any information relating to HFC is given in
the Prospectus.
(vi) There are no legal or governmental proceedings pending, or to
the knowledge of HFC threatened, to which HFC is a party or of which any of
its property is the subject, other than proceedings which are not
reasonably expected, individually or in the aggregate, to have a material
adverse effect on the shareholder's equity or consolidated financial
position of HFC and its subsidiaries taken as a whole or which would have a
material adverse effect upon the transactions contemplated by this
Agreement.
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(vii) No consent, approval, authorization, order, registration,
filing, qualification, license or permit of or with any court or
governmental agency or body of the United States is required for the
consummation by HFC of the transactions contemplated by this Agreement, the
Sale and Servicing Agreement and the Trust Agreement, except for (A) the
registration under the 1933 Act of the Class A Notes, (B) such consents,
approvals, authorizations, orders, registrations, filings, qualifications,
licenses or permits as have been obtained or as may be required under state
securities or Blue Sky laws in connection with the issuance of the Class A
Notes and the subsequent purchase and distribution of the Class A Notes by
the Underwriters or (C) where the failure to obtain such consents,
approvals, authorizations, orders, registrations, filings, qualifications,
licenses or permits would not have a material adverse effect on the
business or consolidated financial condition of HFC and its subsidiaries
taken as a whole or the transactions contemplated by such agreements.
(viii) [ ] is an independent public accountant with respect
to HFC.
(c) Any certificates signed by an officer of the Depositor or HFC and
delivered to you or your counsel in connection with the offering of the Class A
Notes shall be deemed, and shall state that it is, a representation and warranty
as to the matters covered thereby to each person to whom the representations and
warranties in this Section 1 are made.
(d) Each Underwriter represents and warrants to, and agrees with, the
Depositor and HFC as of the date hereof and as of the Closing Time that it has
complied and will comply with all of its obligations arising hereunder and, with
respect to the Computational Materials and Structural Term Sheets provided by
it, such Computational Materials and Structural Term Sheets are accurate in all
material respects (taking into account the assumptions explicitly set forth in
the Computational Materials and Structural Term Sheets, except for any errors
therein attributable to errors or mistakes in the Pool Information or Prospectus
Information). Each Underwriter represents and warrants that the Computational
Materials and Structural Term Sheets provided by it to the Depositor constitute
a complete set of all Computational Materials and Structural Term Sheets
required to be filed with the Commission pursuant to the No-Action Letters.
SECTION 2. PURCHASE AND SALE. Subject to the terms and conditions and in
reliance upon the covenants, representations and warranties herein set forth,
the Depositor agrees to sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from the Depositor
the principal amount of Class A Notes at the purchase price set forth opposite
such Underwriter's name in Schedule I pursuant to the terms of this Agreement.
SECTION 3. DELIVERY AND PAYMENT. Payment of the purchase price for, and
delivery of, the Class A Notes to be purchased by the Underwriters shall be made
at the offices of Xxxxxx Xxxxxx Xxxxx Xxxxxxxx, 000 Xxxx Xxxxxx Xxxxxx, Xxxxxxx,
Xxxxxxxx 00000, or at such other place as shall be agreed upon by you, the
Depositor and HFC, at 10:00 A.M. New York City time on [ ], which date, time
or place may be postponed or changed by agreement between you, the Depositor and
HFC (such date and time of delivery and payment for the Class A Notes being
herein referred to as the "Closing Time"). Delivery of one or more global
certificates representing the Class A Notes shall be made to the accounts of the
several
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Underwriters against payment by them of the purchase price therefor, to or upon
the order of the Depositor by one or more wire transfers in immediately
available funds. The global certificates to be so delivered shall be registered
in the name of Cede & Co., as nominee for The Depository Trust Company ("DTC").
The interests of beneficial owners of the Class A Notes will be represented by
book entries on the records of DTC and participating members thereof. Definitive
Notes representing the Class A Notes will be available only under limited
circumstances as described in the Indenture.
SECTION 4. OFFERING BY THE UNDERWRITERS. It is understood that the
Underwriters propose to offer the Class A Notes for sale to the public as set
forth in the Prospectus.
SECTION 5. COVENANTS OF THE DEPOSITOR. The Depositor covenants with each of
the Underwriters as follows:
(a) The Depositor will notify the Underwriters immediately, and confirm
the notice in writing, (i) when any post-effective amendment to the Registration
Statement shall become effective, or any supplement to the Prospectus or any
amended Prospectus shall have been filed, (ii) of the receipt of any comments
from the Commission with respect to the Prospectus, (iii) of any request by the
Commission for any amendment to the Registration Statement or any amendment or
supplement to the Prospectus or for additional information, and (iv) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement, or of the suspension of the qualification of the Class A
Notes for offering or sale in any jurisdiction, or of the initiation or
threatening of any proceedings for any of such purposes. The Depositor will
promptly effect the filings necessary pursuant to Rule 424(b) and will take such
steps as it deems necessary to ascertain promptly whether the form of prospectus
transmitted for filing under Rule 424(b) was received for filing by the
Commission and, in the event that it was not, it will promptly file such
prospectus. The Depositor will make every reasonable effort to prevent the
issuance of any stop order and, if any stop order is issued, to obtain the
lifting thereof at the earliest possible moment.
(b) The Depositor will give the Underwriters notice of its intention to
file or prepare any amendment to the Registration Statement or any amendment,
supplement or revision to either the Basic Prospectus or to the Prospectus,
whether pursuant to the 1933 Act, the 1934 Act or otherwise (other than reports
to be filed pursuant to the 1934 Act), will furnish the Representatives with
copies of any such documents (other than Computational Materials and Structural
Term Sheets) a reasonable amount of time prior to such proposed filing or use,
as the case may be, and will not file or use any such document to which the
Representatives or counsel for the Underwriters shall object.
(c) The Depositor has furnished or will deliver to the Underwriters and
counsel for the Underwriters, without charge, conformed copies of the
Registration Statement as originally filed and of each amendment thereto
(including exhibits filed therewith or incorporated by reference therein and
documents incorporated or deemed to be incorporated by reference therein) and
conformed copies of all consents and certificates of experts. The copies of the
Registration Statement and each amendment thereto furnished to the Underwriters
will be identical, in all material respects, to the electronically transmitted
copies thereof filed with the Commission pursuant to XXXXX, except to the extent
permitted by Regulation S-T.
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(d) The Depositor will furnish to the Underwriters, without charge, during
the period when the Prospectus is required to be delivered under the 1933 Act or
the 1934 Act, such number of copies of the Prospectus (as amended or
supplemented) as the Underwriters may reasonably request. The Prospectus and any
amendments or supplements thereto furnished to the Underwriters will be
identical, in all material respects, to the electronically transmitted copies
thereof filed with the Commission pursuant to XXXXX, except to the extent
permitted by Regulation S-T.
(e) The Depositor will comply with the 1933 Act and the 1933 Act
Regulations, the 1934 Act and the 1934 Act Regulations so as to permit the
completion of the distribution of the Class A Notes as contemplated in this
Agreement and in the Prospectus. If at any time when a prospectus is required by
the 1933 Act to be delivered in connection with sales of the Class A Notes, any
event shall occur or condition shall exist as a result of which it is necessary,
in the opinion of counsel for the Underwriters or for the Depositor, to amend
the Registration Statement or amend or supplement the Prospectus in order that
the Prospectus will not include any untrue statements of a material fact or omit
to state a material fact necessary in order to make the statements therein not
misleading in the light of the circumstances existing at the time it is
delivered to a purchaser, or if it shall be necessary, in the opinion of such
counsel, at any such time to amend the Registration Statement or amend or
supplement the Prospectus in order to comply with the requirements of the 1933
Act or the 1933 Act Regulations, the Depositor will, at its expense, promptly
prepare and file with the Commission, subject to Section 5(b), such amendment or
supplement as may be necessary to correct such statement or omission or to make
the Registration Statement or the Prospectus comply with such requirements, and
the Depositor will furnish to the Underwriters such number of copies of such
amendment or supplement as the Underwriters may reasonably request.
(f) Upon the request of and in cooperation with the Underwriters, the
Depositor will use its best efforts to qualify the Class A Notes for offering
and sale under the applicable securities laws of such states and other
jurisdictions as the Representatives may designate and to maintain such
qualifications in effect for as long as may be required for the distribution of
the Class A Notes; provided, however, that the Depositor or the Trust shall not
be obligated to file any general consent to service of process or to qualify as
a foreign corporation or as a dealer in securities in any jurisdiction in which
it is not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject. Upon the
request of and in cooperation with the Underwriters, the Depositor will also
supply the Representatives with such information as is reasonably necessary for
the determination of the legality of the Class A Notes for investment under the
laws of such jurisdictions as the Underwriters may request.
(g) The Depositor, during the period when the Prospectus is required to be
delivered under the 1933 Act or the 1934 Act, will file all documents required
to be filed with the Commission pursuant to the 1934 Act within the time periods
required by the 1934 Act and the 1934 Act Regulations.
(h) The Depositor will, at the expense of the Underwriters, file the
Computational Materials and Structural Term Sheets provided to it by the
Representatives under Section 6 with the Commission pursuant to a Current Report
on Form 8-K not later than 5:00 p.m. on the day
11
the Prospectus is delivered to the Underwriters; provided, however, that as a
condition to the filing of the Computational Materials and Structural Term
Sheets by the Depositor, the Depositor must receive a letter from a firm of
independent certified public accountants reasonably acceptable to the Depositor,
which letter shall be satisfactory in form and substance to the Depositor, HFC
and their counsel, to the effect that such accountants have performed certain
specified procedures, all of which have been agreed to by the Depositor, as a
result of which they have determined the accuracy in all material respects of
the numerical and financial information included in the Computational Materials
and Structural Term Sheets provided by the Representatives to the Depositors for
filing with the Commission.
(i) The Depositor shall take all reasonable action necessary to enable
[ ] and [ ] (the "Rating Agencies") to provide their respective credit
ratings of the Class A Notes as described in the Prospectus.
(j) The Depositor will not, without your prior written consent, publicly
offer or sell in the United States any mortgage loan pass-through certificates,
mortgage loan pass-through notes or collateralized mortgage loan obligations or
other similar securities representing interests in or secured by primarily
non-conforming second mortgage-related assets originated or owned by the
Depositor or HFC for a period of thirty days following the commencement of the
offering of the Class A Notes to the public.
(k) The Depositor will cooperate with the Underwriters and use its best
efforts to permit the Class A Notes to be eligible for clearance and settlement
through the facilities of DTC.
(l) If, between the date hereof and the Closing Time, to the knowledge of
the Depositor there are any legal or governmental proceedings instituted or
threatened against HFC or the Depositor, other than proceedings which are not
reasonably expected, individually or in the aggregate, to have a material
adverse effect on the financial condition, shareholders' equity or results of
operations of HFC or the Depositor or the transactions contemplated by this
Agreement, the Depositor will give prompt written notice thereof to the
Underwriters.
(m) So long as the Class A Notes shall be outstanding, to deliver to the
Underwriters as soon as such statements are furnished to the Indenture Trustee:
(i) the annual statement as to compliance delivered to the Indenture Trustee
pursuant to Section 3.10 of the Sale and Servicing Agreement; (ii) the annual
statement of a firm of independent public accountants furnished to the Indenture
Trustee pursuant to Section 3.11 of the Sale and Servicing Agreement; and (iii)
the Monthly Statement furnished to the Noteholders pursuant to Section 5.03 of
the Sale and Servicing Agreement.
(n) To apply the net proceeds from the sale of the Class A Notes in the
manner set forth in the Prospectus.
SECTION 6. COMPUTATIONAL MATERIALS AND STRUCTURAL TERM SHEETS. It is
understood that the Underwriters may prepare and provide to prospective
investors certain Computational Materials and Structural Term Sheets in
connection with their offering of the Class A Notes, subject to the following
conditions:
12
(a) The Underwriters shall comply with all applicable laws and regulations
in connection with the use of Computational Materials, including the No-Action
letter of May 20, 1994 issued by the Commission to Xxxxxx, Xxxxxxx Acceptance
Corporation I, Xxxxxx, Peabody & Co. Incorporated and Xxxxxx Structured Asset
Corporation as made applicable to other issuers and underwriters by the
Commission in response to the request of the Public Securities Association dated
May 24, 1994 (collectively, the "Xxxxxx/PSA Letter"), as well as the PSA Letter
referred to below. The Underwriters shall comply with all applicable laws and
regulations in connection with the use of Collateral Term Sheets and Structural
Term Sheets, including the No-Action Letter of February 17, 1995 issued by the
Commission to the Public Securities Association (the "PSA Letter" and, together
with the Xxxxxx/PSA Letter, the "No-Action Letters").
(b) As used herein, "Computational Materials" shall have the meaning given
such term in the No-Action Letters, but shall include only those Computational
Materials that have been prepared and delivered to prospective investors by or
at the direction of the Underwriters. As used herein, "Structural Term Sheets"
shall have the meaning given such term in the PSA Letter, but shall include only
those Structural Term Sheets that have been prepared and delivered to
prospective investors by or at the direction of the Underwriters.
(c) The Representatives shall provide to the Depositor copies (in such
format as required by the Depositor) of all Computational Materials and
Structural Term Sheets that are required to be filed with the Commission
pursuant to the No-Action Letters. The Representatives may provide to the
Depositor copies of the foregoing in a consolidated or aggregated form,
including all information required to be filed. All Computational Materials and
Structural Term Sheets must be provided to the Depositor by the Representatives
not later than 10:00 a.m. on the first business day prior to the day on which
the filing of such materials is to be made with the Commission. The Underwriters
shall be responsible for all costs and expenses incurred by the Depositor in
filing the Computational Materials and Structural Term Sheets with the
Commission, including the fees of the independent auditor who provides the
letter required by Section 5(h).
(d) All Computational Materials and Structural Term Sheets provided to
prospective investors by the Underwriters that are required to be filed pursuant
to the No-Action Letters shall bear a legend on each page substantially in the
following form:
"Recipients must read the information contained in the attached statement.
Do not use or rely on this information if you have not received and
reviewed the statement. If you have not received the statement, call your
[Underwriter] account executive for another copy."
The statement referenced in the above paragraph shall be substantially in
the following form:
"The attached tables and other statistical analyses (the "Computational
Materials") are privileged and confidential and are intended for use by the
addressee only. These Computational Materials are furnished to you solely
by [Underwriter] ("[Underwriter]") and not by the issuer of the securities
or any of
13
its affiliates. The issuer of these securities has not prepared or taken
part in the preparation of these materials. Neither [Underwriter], the
issuer of the securities nor any of its affiliates makes any representation
as to the accuracy or completeness of the information herein. The
information herein is preliminary, and will be superseded by the applicable
Prospectus Supplement and by any other information subsequently filed with
the Securities and Exchange Commission. They may not be provided to any
third party other than the addressee's legal, tax, financial and/or
accounting advisors for the purposes of evaluating said material.
Numerous assumptions were used in preparing the Computational Materials
which may or may not be stated therein. As such, no assurance can be given
as to the accuracy, appropriateness or completeness of the Computational
Materials in any particular context; or as to whether the Computational
Materials and/or the assumptions upon which they are based reflect present
market conditions or future market performance. These Computational
Materials should not be construed as either projections or predictions or
as legal, tax, financial or accounting advice.
Any yields or weighted average lives shown in the Computational Materials
are based on prepayment assumptions and actual prepayment experience may
dramatically affect such yields or weighted average lives. In addition, it
is probable that prepayments on the underlying assets will occur at rates
slower or faster than the rates assumed in the attached Computational
Materials. Furthermore, unless otherwise provided, the Computational
Materials assume no losses on the underlying assets and no interest
shortfall. The specific characteristics of the securities may differ from
those shown in the Computational Materials due to differences between the
actual underlying assets and the hypothetical assets used in preparing the
Computational Materials. The principal amount and structure of any security
described in the Computational Materials are subject to change prior to
issuance.
Although a registration statement (including the prospectus) relating to
the securities discussed in this communication has been filed with the
Securities and Exchange Commission and is effective, the final prospectus
supplement relating to the securities discussed in this communication has
not been filed with the Securities and Exchange Commission. This
communication shall not constitute an offer to sell or the solicitation of
any offer to buy nor shall there be any sale of the securities discussed in
this communication in any state in which such offer, solicitations or sale
would be unlawful prior to registration or qualification under the
securities laws of any such state. Prospective purchasers are referred to
the final prospectus and prospectus supplement relating to the securities
discussed in this communication for definitive Computational Materials on
any matter discussed in this communication. The information contained in
these Computational Materials will be superseded by the description of the
mortgage loans and the other information contained in the final prospectus
supplement and prospectus relating to the securities discussed in this
communication. A final prospectus and prospectus supplement may be obtained
by contacting the [Underwriter] Trading Desk at (212) ___ - ____.
14
Please be advised that asset-backed securities may not be appropriate for
all investors. Potential investors must be willing to assume, among other
things, market price volatility, prepayments, yield curve and interest rate
risk. Investors should fully consider the risk of an investment in these
securities.
If you have received this communication in error, please notify the sending
party immediately by telephone and return the original to such party by
mail."
Notwithstanding the foregoing legends, this subsection (d) shall be satisfied if
all Computational Materials and Structural Term Sheets bear a legend in the form
of the legend included in the Computational Materials dated [ ] or in another
form or forms previously approved in writing by the Depositor.
(e) The Depositor shall not be obligated to file any Computational
Materials or Structural Term Sheets that have been determined to contain any
material errors or omissions; provided, however, that, at the request of the
Representatives, the Depositor shall file Computational Materials or Structural
Term Sheets containing material errors or omissions if clearly marked
"superseded by materials dated _______________" and accompanied by corrected
Computational Materials or Structural Term Sheets that are marked "these
materials supersede and correct the materials dated ______________."
SECTION 7. CONDITIONS TO THE UNDERWRITERS' OBLIGATIONS. The obligations of
the Underwriters to purchase the Class A Notes pursuant to this Agreement are
subject to the accuracy on and as of the Closing Time of the representations and
warranties on the part of the Depositor and HFC herein contained, to the
material accuracy of the statements of officers of the Depositor and HFC,
respectively, made pursuant hereto, to the performance by the Depositor and HFC
of all of their respective obligations hereunder and to the following conditions
at the Closing Time:
(a) At the Closing Time (i) no stop order suspending the effectiveness of
the Registration Statement shall have been issued under the 1933 Act or
proceedings therefor initiated or threatened by the Commission, and any request
on the part of the Commission for additional information shall have been
complied with to the reasonable satisfaction of counsel to the Underwriters and
(ii) the Prospectus shall have been filed with the Commission no later than the
time required by Rule 424(b) under the 0000 Xxx.
(b) All corporate proceedings and other legal matters relating to the
authorization, form and validity of this Agreement, the Sale and Servicing
Agreement, the Trust Agreement, the Indenture, the Transfer Agreement, the
Mortgage Loan Purchase Agreement, the Securities, the Registration Statement and
the Prospectus, and all other legal matters relating to this Agreement and the
transactions contemplated hereby shall be satisfactory in all respects to
counsel for the Underwriters.
(c) The Underwriters shall have received the favorable opinion, dated the
date of the Closing Time, of Xxxxxx Xxxxxx Xxxxx Xxxxxxxx, as special counsel to
the Depositor and HFC, in form and substance satisfactory to the Underwriters,
to the effect that:
15
(i) Neither the Depositor nor the Trust is an "investment company"
or under the control of an "investment company" as such terms are defined
in the Investment Company Act of 1940, as amended and the Trust is not
required to be registered under the Investment Company Act of 1940, as
amended.
(ii) The statements in the Basic Prospectus under the headings
"Employee Benefit Plan Considerations", "State Tax Considerations" and
"Material Federal Income Tax Consequences", and the statements in the
Prospectus Supplement under the headings "Summary-Tax Status", and
"-Employee Benefit Considerations", "Material Federal Income Tax
Consequences", and "Employee Benefit Plan Considerations", to the extent
that they constitute matters of federal law or legal conclusions with
respect thereto, have been reviewed by such counsel and are correct in all
material respects with respect to those consequences or aspects that are
discussed.
(iii) The Sale and Servicing Agreement and the Trust Agreement
conform in all material respects to the descriptions thereof contained in
the Prospectus Supplement and are not required to be qualified under the
Trust Indenture Act of 1939, as amended. The Indenture has been duly
qualified under the Trust Indenture Act of 1939, as amended.
(iv) The Class A Notes will, when issued, conform to the
description thereof contained in the Prospectus.
(v) With respect to the characterization of the Class A Notes and
the characterization of the Trust, (A) the Class A Notes will be
characterized as indebtedness for Federal income tax purposes, (B) the
Trust will not be classified as an "association" taxable as a corporation
for Federal income tax purposes, and (C) the Trust is not a "taxable
mortgage pool" for Federal income tax purposes.
Such opinion may express its reliance as to factual matters on the
representations and warranties made by the parties hereto, and on certificates
or other documents furnished by officers of such parties to the instruments and
documents referred to therein. No opinion need be expressed as to the effect of
the compliance or noncompliance of the Depositor, HFC or the Trustee with any
state or federal laws or regulations applicable to them because of their legal
or regulatory status or the nature of their respective businesses, or to the due
authorization, execution and delivery of this Agreement and the Securities. As
to such matters, such opinion may rely upon the opinion of Xxxx X. Xxxxxx, Esq.,
Vice President - Corporate Law and Assistant Secretary of Household
International, Inc., delivered pursuant to Section 7(d) of this Agreement, and
such counsel need make no independent investigation of the matters referred to
in such opinion.
(d) The Underwriters shall have received the favorable opinion, dated the
date of the Closing Time, of Xxxx X. Xxxxxx, Esq., Vice President - Corporate
Law and Assistant Secretary of Household International, Inc., the parent company
of HFC, in form and substance satisfactory to the Underwriters, to the effect
that:
16
(i) HFC has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware, with
corporate power to own its properties, to conduct its business as described
in the Prospectus and to enter into and perform its obligations under this
Agreement, the Sale and Servicing Agreement, the Trust Agreement and the
Insurance Agreement.
(ii) The Depositor has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware, with corporate power to own its properties, to conduct its
business as described in the Prospectus and to enter into and perform its
obligations under this Agreement, the Sale and Servicing Agreement, the
Trust Agreement, the Mortgage Loan Purchase Agreement and the Insurance
Agreement.
(iii) Each of the Sellers has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, with corporate power to own its properties,
to conduct its business as described in the Prospectus and to enter into
and perform its obligations under the Mortgage Loan Purchase Agreement and
the Transfer Agreement.
(iv) HFC has full corporate power and authority to serve in the
capacity of master servicer of the Mortgage Loans as contemplated in the
Sale and Servicing Agreement.
(v) Each of the Sellers, the Depositor and HFC is duly authorized
under relevant statutes, laws and court decisions, to conduct in the
various jurisdictions in which they do business the respective businesses
therein currently conducted by them, except where failure to be so
permitted or failure to be so authorized will not have a material adverse
effect on the business or financial condition of the Sellers, the Depositor
or HFC, and the Sellers are duly authorized under the statutes which
regulate the business of making loans or of financing the sale of goods
(commonly called "small loan laws," "consumer finance laws" or "sales
finance laws"), or are permitted under the general interest statutes and
related laws and court decisions, to conduct in the various jurisdictions
in which any of them do business the businesses as currently conducted
therein by any of them.
(vi) None of the Sellers, the Depositor or HFC is in violation of
its Certificate or Articles of Incorporation or Bylaws or, to the best of
such counsel's knowledge, in default in the performance or observance of
any obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other instrument known
to such counsel which is material to the business of the Sellers, the
Depositor or HFC and to which any of the Sellers, the Depositor or HFC is a
party or by which it or its properties may be bound.
(vii) This Agreement, the Sale and Servicing Agreement, the Trust
Agreement and the Insurance Agreement have been duly authorized, executed
and delivered by the Depositor and HFC, as applicable, and, assuming the
due authorization, execution and delivery of such agreements by the other
parties thereto, such agreements constitute the
17
valid and binding obligation of each of the Depositor and HFC, as
applicable, enforceable against each of the Depositor and HFC, as
applicable, in accordance with their respective terms, and the Mortgage
Loan Purchase Agreement and Transfer Agreement has been duly authorized,
executed and delivered by the Depositor and the Sellers, as the case may
be, and such agreements constitute the valid and binding obligation of each
of the Depositor and the Sellers, as applicable, enforceable against the
Depositor or the Sellers in accordance with its terms, except that in each
case as to enforceability (A) such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect relating to creditors' rights generally, (B) the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the
court before which any proceeding therefor may be brought and (C) the
enforceability as to rights to indemnification under this Agreement may be
subject to limitations of public policy under applicable securities laws.
(viii) The issuance and delivery of the Securities, the consummation
of any other of the transactions contemplated herein, in the Sale and
Servicing Agreement, the Trust Agreement, the Mortgage Loan Purchase
Agreement and the Insurance Agreement, and the fulfillment of the terms of
this Agreement, the Sale and Servicing Agreement, the Trust Agreement and
the Insurance Agreement do not and will not conflict with or violate any
term or provision of the Certificate or Articles of Incorporation or Bylaws
of the Depositor or, to the best of such counsel's knowledge, any statute,
order or regulation applicable to the Depositor of any court, regulatory
body, administrative agency or governmental body having jurisdiction over
the Depositor and do not and will not conflict with, result in a breach or
violation or the acceleration of, or constitute a default under, or result
in the creation or imposition of any lien, charge or encumbrance upon any
of the property or assets of the Depositor pursuant to the terms of, any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument known to such counsel to which the Depositor is a party or by
which the Depositor may be bound or to which any of the property or assets
of the Depositor may be subject except for conflicts, violations, breaches,
accelerations and defaults which would not, individually or in the
aggregate, be materially adverse to the Depositor or materially adverse to
the transactions contemplated by this Agreement.
(ix) The consummation of any of the transactions contemplated in
the Mortgage Loan Purchase Agreement and the Transfer Agreement, and the
fulfillment of the terms of the Mortgage Loan Purchase Agreement and the
Transfer Agreement, do not and will not conflict with or violate any terms
or provision of the Certificate or Articles of Incorporation or Bylaws of
any of the Sellers or, to the best of such counsel's knowledge, any
statute, order or regulation applicable to any of the Sellers and do not
and will not conflict with, result in a breach or violation or the
acceleration of, or constitute a default under or result in the creation or
imposition of any lien, charge or encumbrance upon any of the property or
assets of any of the Sellers pursuant to the terms of, any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument
known to such counsel to which any of the Sellers may be bound or to which
any of the property or assets of any of the Sellers may be subject except
for conflicts, violations, breaches, accelerations and defaults which would
not, individually or in the aggregate, be
18
materially adverse to the applicable Sellers or materially adverse to the
transactions contemplated by this Agreement.
(x) The consummation of any of the transactions contemplated
herein and in the Sale and Servicing Agreement, the Trust Agreement and the
Insurance Agreement, and the fulfillment of the terms of this Agreement,
the Sale and Servicing Agreement, the Trust Agreement and the Insurance
Agreement, do not and will not conflict with or violate any term or
provision of the Certificate or Articles of Incorporation or Bylaws of HFC
or, to the best of such counsel's knowledge, any statute, order or
regulation applicable to HFC, and do not and will not conflict with, result
in a breach or violation or the acceleration of, or constitute a default
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any of the property or assets of HFC pursuant to the terms
of, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument known to such counsel to which HFC is a party or by
which HFC may be bound or to which any of the property or assets of HFC may
be subject except for conflicts, violations, breaches, accelerations and
defaults which would not, individually or in the aggregate, be materially
adverse to HFC or materially adverse to the transactions contemplated by
this Agreement.
(xi) The Class A Notes are duly and validly authorized and, when
executed, authenticated and delivered in accordance with the Indenture and
the Sale and Servicing Agreement, and issued and delivered to and paid for
by the Underwriters, as contemplated hereby, will be entitled to the
benefits provided by the Indenture and the Sale and Servicing Agreement.
(xii) To the best of such counsel's knowledge, no consent, approval,
authorization, order, registration or qualification of or with any court or
governmental agency or body of the United States is required for the
issuance of the Class A Notes and the sale of the Class A Notes to the
Underwriters, or the consummation by the Sellers, the Depositor and HFC of
the other transactions contemplated by this Agreement, the Sale and
Servicing Agreement, the Transfer Agreement, the Mortgage Loan Purchase
Agreement and the Insurance Agreement, except the registration under the
1933 Act of the Class A Notes and such consents, approvals, authorizations,
registrations or qualifications as have been obtained or as may be required
under State securities or Blue Sky laws in connection with the issuance of
the Class A Notes and the subsequent purchase and distribution of the Class
A Notes by the Underwriters.
(xiii) The Registration Statement and any amendments thereto have
become effective under the 1933 Act; to the best of such counsel's
knowledge, no stop order suspending the effectiveness of the Registration
Statement has been issued and not withdrawn and no proceedings for that
purpose have been instituted or threatened and not terminated.
(xiv) The conditions to the use by the Depositor and the Trust of a
registration statement on Form S-3 under the 1933 Act, as set forth in the
General Instructions to Form S-3, have been satisfied with respect to the
Registration Statement and the Prospectus. To the best of such counsel's
knowledge, there are no material contracts,
19
indentures or other documents of a character required to be described or
referred to in the Registration Statement or the Prospectus or to be filed
as exhibits to the Registration Statement other than those described or
referred to therein or filed or incorporated by reference as exhibits
thereto. The statements in the Prospectus under the caption ["Legal Aspects
of Mortgage Loans and Related Matters",] to the extent that statements in
such section constitute matters of law or legal conclusions with respect
thereto, have been reviewed by attorneys under such counsel's supervision
and are complete and correct in all material respects.
(xv) There are no actions, proceedings or investigations pending
before or, to the best knowledge of such counsel, threatened by any court,
administrative agency or other tribunal to which any of the Sellers, HFC or
the Depositor is a party or of which any of their respective properties is
the subject (A) other than actions, proceedings or investigations which are
not reasonably expected to have a material adverse effect on the business
or financial condition of any of the Sellers, HFC or the Depositor, (B)
asserting the invalidity of the Sale and Servicing Agreement, the Trust
Agreement, the Indenture, the Transfer Agreement, the Mortgage Loan
Purchase Agreement, the Insurance Agreement or the Securities, (C) seeking
to prevent the issuance of the Securities or the consummation by any of the
Sellers, HFC or the Depositor of any of the transactions contemplated by
the Sale and Servicing Agreement, the Trust Agreement, the Indenture, the
Transfer Agreement and the Mortgage Loan Purchase Agreement, the Insurance
Agreement and this Agreement, as the case may be, or (D) which might
materially and adversely affect the performance by any of the Sellers, HFC
or the Depositor of their respective obligations under, or the validity or
enforceability of, the Sale and Servicing Agreement, the Trust Agreement,
the Mortgage Loan Purchase Agreement, this Agreement, the Insurance
Agreement or the Securities.
(xvi) The Registration Statement, the Prospectus and each amendment
or supplement thereto, as of their respective effective or issue dates
complied as to form in all material respects with the applicable
requirements of the 1933 Act and the 1993 Act Regulations.
(xvii) Such counsel has no reason to believe that (A) the
Registration Statement and the Prospectus, as of the date the Registration
Statement became effective, or the Registration Statement (excluding the
exhibits thereto) as of the date that the most recent post-effective
amendment thereto became effective, contained or contains any untrue
statement of a material fact or omitted or omits to state any material fact
required to be stated therein or necessary in order to make the statements
therein not misleading or (B) the Prospectus, as of its date and the date
of such opinion, contained or contains any untrue statement of a material
fact or omitted or omits to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading (it being understood that such counsel need
express no opinion as to information included in Computational Materials or
Structural Term Sheets and the financial statements or other financial and
statistical data contained or incorporated by reference in the Registration
Statement). Such opinion may express its reliance as to factual matters on
the representations and warranties made by the parties hereto, and on
certificates or other documents furnished by public officials or officers
of
20
such parties to the instruments and documents referred to therein. Such
opinion may be qualified, insofar as it concerns the enforceability of the
documents referred to therein, to the extent that such enforceability may
be limited by bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors' rights in general, or by general
principles of equity (regardless of whether such enforcement is considered
in a proceeding in equity or at law) and no opinion need be given as to the
enforceability of Section 9 or the legends set forth in Section 6 of this
Agreement.
(e) The Underwriters shall have received the favorable opinion of counsel
to the Indenture Trustee, dated the Closing Date, addressed to the Underwriters
and the Depositor and in form and scope satisfactory to counsel to the
Underwriters, to the effect that:
(i) The Indenture Trustee is a national banking association with
trust powers, duly organized and validly existing in good standing under
the laws of the United States, and has all requisite power and authority to
enter into the Sale and Servicing Agreement, the Indenture, the
Administration Agreement and the Insurance Agreement and perform its
obligations thereunder.
(ii) The Sale and Servicing Agreement, the Indenture, the
Administration Agreement and the Insurance Agreement have been duly
authorized, executed and delivered by the Indenture Trustee and, assuming
the due authorization, execution and delivery thereof by the other parties
thereto, constitute the legal, valid and binding obligations of the
Indenture Trustee, enforceable against the Indenture Trustee in accordance
with their respective terms, subject to bankruptcy laws and other similar
laws of general application affecting creditors' rights and subject to the
application of the rules of equity, including those respecting the
availability of specific performance.
(iii) No consent, approval, authorization or other action by, or
filing with, any court or governmental agency or authority having
jurisdiction over the banking or trust powers of the Indenture Trustee is
required in connection with its execution and delivery of the Sale and
Servicing Agreement, the Indenture, the Administration Agreement and the
Insurance Agreement, according to their respective terms.
(iv) The execution, delivery and performance of the Sale and
Servicing Agreement, the Indenture, the Administration Agreement and the
Insurance Agreement do not result in a violation of (a) any law or
regulation of the United States governing the banking or trust powers of
the Indenture Trustee or any order, writ, judgment or decree of any court,
arbitrator or governmental authority applicable to the Indenture Trustee or
any of its assets or (b) the articles of association or by-laws of the
Indenture Trustee.
(v) The Class A Notes have been authenticated and delivered by the
Indenture Trustee in accordance with the Indenture.
(vi) There are no actions, proceedings or investigations pending or
threatened against or affecting the Indenture Trustee before or by any
court, arbitrator, administrative agency or other governmental authority
which, if decided adversely to the Indenture Trustee, would materially and
adversely affect the ability of the Indenture
21
Trustee to carry out the transactions contemplated in the Sale and
Servicing Agreement, the Indenture, the Administration Agreement or the
Insurance Agreement.
(f) The Underwriters shall have received the favorable opinion or
opinions, dated the date of the Closing Time, of [Mayer, Brown, Xxxx & Maw], as
counsel for the Underwriters, with respect to the issuance of the Class A Notes
and the sale of the Class A Notes to the Underwriters, the Registration
Statement, this Agreement, the Prospectus and such other related matters as the
Underwriters may require.
(g) The Underwriters shall have received the favorable opinion, dated the
Closing Date of [ ], counsel to the Owner Trustee, with respect to the
issue and sale of the Class A Notes and the Ownership Interests, the status of
the Trust, the Trust Agreement, perfections of applicable security interests and
such other matters as the Underwriters may reasonably require.
(h) The Underwriters shall have received the favorable opinion, dated the
Closing Date, of [ ] counsel to the Insurer ("Insurer Counsel") in form
and scope satisfactory to counsel for the Underwriters, to the effect that:
(i) The Insurer is a stock insurance corporation, duly
incorporated and validly existing under the laws of the State of [ ]
and is licensed and has the power and authority to issue the Policy under
the laws of the State of [ ].
(ii) The Policy has been duly authorized, executed and delivered
and is the valid and binding obligation of the Insurer enforceable in
accordance with its terms, except that the enforcement of the Policy may be
limited by laws relating to bankruptcy, insolvency, reorganization,
moratorium, receivership and other similar laws affecting creditors' rights
generally and by general principles of equity (regardless of whether the
enforcement of such remedies is considered in a proceeding in equity or at
law).
(iii) The Insurer has the power and authority to perform its
obligations under the Insurance Agreement and the Indemnification Agreement
(as defined in the Insurance Agreement) and the Insurance Agreement and the
Indemnification Agreement have been duly executed and are the valid and
binding obligations of the Insurer, each enforceable in accordance with its
terms, except that the enforcement of the Insurance Agreement and the
Indemnification Agreement may be limited by laws relating to bankruptcy,
insolvency, reorganization, moratorium, receivership and other similar laws
affecting creditors' rights generally and by general principles of equity
and, in the case of the Indemnification Agreement, subject to principles of
public policy limiting the right to enforce the indemnification provisions
contained therein insofar as such provisions relate to indemnification for
liabilities arising under the securities laws.
(iv) No consent, approval, authorization, filing or order of any
state or federal court or governmental agency or body is required on the
part of the Insurer the lack of which would adversely affect the validity
and enforceability of the Policy.
(v) The execution, delivery and performance by the Insurer of its
obligations under the Policy do not contravene any provision of the charter
or by-laws of the Insurer.
22
The execution, delivery and performance by the Insurer of its obligations
under the Policy do not, to the extent that either of the following would
affect the validity or enforceability of the Policy, (a) contravene any law
or government regulation or order presently binding on the Insurer or (b)
contravene any provision of or constitute a default under any indenture,
contract or other instrument to which the Insurer is a party or by which it
is bound.
(vi) To the extent that the Policy constitutes a security within
the meaning of Section 2(l) of the 1933 Act, it is a security exempt from
the registration requirements of the 0000 Xxx.
(vii) The description of the Policy in the Prospectus Supplement
under the headings ["The Insurer" and "Description of the Notes--The
Policy"] is, to the extent that such description constitutes statements of
matters of law or legal conclusions with respect thereto, accurate in all
material respects; provided, however, that no opinion need be expressed as
to the accuracy of any financial statements or other financial or
statistical data contained in or omitted from the Prospectus Supplement,
including such statements or other information included under such caption
or in any appendix to the Prospectus Supplement.
(i) The Underwriters shall have received an opinion, dated the date of the
Closing Time, of Xxxxxx Xxxxxx Xxxxx Xxxxxxxx, as special counsel to the
Depositor and HFC, addressed to the Depositor, and satisfactory to the Insurer,
the Rating Agencies and the Underwriters relating to the transfer of the
principal balance of the Mortgage Loans by the Sellers to the Depositor and by
the Depositor to the Trust, and such counsel shall have consented to reliance by
the Insurer, the Rating Agencies and the Underwriters on such opinion as though
such opinion had been addressed to each such party.
(j) Each of the Depositor and HFC shall have furnished to the Underwriters
a certificate signed on behalf of the Depositor and HFC by an accounting or
financial officer thereof, dated the date of the Closing Time, as to (A) the
accuracy of the representations and warranties of the Depositor and HFC herein
at and as of the Closing Time, (B) there being no legal or governmental
proceedings pending, other than those, if any, referred to in the Prospectus or
the Prospectus as amended or supplemented or the 1934 Act filings of HFC, as the
case may be, to which any of the Depositor or HFC is a party or of which any
property of any of the Depositor or HFC is the subject, which, in the judgment
of any of the Depositor or HFC, as applicable, have a reasonable likelihood of
resulting in (i) a material adverse change in the financial condition,
shareholders' equity or results of operations of the Depositor or HFC or (ii) a
material adverse effect on the transactions contemplated by this Agreement; and
to the best knowledge of each of the Depositor or HFC, as applicable, no such
proceedings are threatened or contemplated by governmental authorities or
threatened by others, (C) the performance by the Depositor and HFC of all of
their respective obligations hereunder to be performed at or prior to the
Closing Time, and (D) such other matters as you may reasonably request.
(k) The Indenture Trustee shall have furnished to the Underwriters and the
Depositor a certificate of the Indenture Trustee, signed by one or more duly
authorized officers of the Indenture Trustee, dated the Closing Date, as to the
due authorization, execution and delivery of
23
the Sale and Servicing Agreement, the Indenture and the Insurance Agreement by
the Indenture Trustee and the acceptance by the Indenture Trustee of the trusts
created thereby and the due authentication and delivery of the Class A Notes by
the Indenture Trustee under the Indenture and such other matters as the
Underwriters shall reasonably request.
(l) The Policy shall have been issued by the Insurer and shall have been
duly authenticated by an authorized agent of the Insurer, if so required under
applicable state law or regulations.
(m) The Class A Notes shall have been rated [ ] by [ ] and [ ]
by [ ].
(n) Counsel and special counsel to HFC and the Depositor shall have
furnished to the Underwriters any opinions supplied to the Rating Agencies
relating to certain matters with respect to the Class A Notes.
(o) The Underwriters shall have received from [ ], or other
independent certified public accountants acceptable to the Underwriters, a
letter, dated as of the Closing Time in the form heretofore agreed to.
(p) Prior to the Closing Time, [Mayer, Brown, Xxxx & Maw], as counsel for
the Underwriters, shall have been furnished with such documents and opinions as
they may reasonably require for the purpose of enabling them to pass upon the
issuance of the Class A Notes and the sale of the Class A Notes to the
Underwriters as herein contemplated and related proceedings or in order to
evidence the accuracy and completeness of any of the representations and
warranties, or the fulfillment of any of the conditions, herein contained; and
all proceedings taken by the Depositor and HFC in connection with the issuance
of the Class A Notes and the sale of the Class A Notes to the Underwriters as
herein contemplated shall be satisfactory in form and substance to the
Underwriters and [Mayer, Brown, Xxxx & Maw].
(q) Since the respective dates as of which information is given in the
Prospectus, there shall not have been any change, or any development involving a
prospective change, in or affecting the general affairs, management, financial
condition, stockholders equity or results of operations of the Depositor, any of
the Sellers or HFC otherwise than as set forth or contemplated in the
Prospectus, the effect of which is in the reasonable judgment of the
Underwriters, after consultation with the Depositor and HFC, so material and
adverse as to make it impracticable or inadvisable to proceed with the public
offering or the delivery of the Class A Notes on the terms and in the manner
contemplated in the Prospectus.
If any condition specified in this Section 7 shall not have been fulfilled
when and as required to be fulfilled, this Agreement may be terminated by you by
notice to the Depositor at any time at or prior to the Closing Time, and such
termination shall be without liability of any party to any other party except
that in the event of any such termination, the provisions of Section 8, the
indemnity agreement set forth in Section 9, and the provisions of Sections 10
and 15 shall remain in effect.
SECTION 8. PAYMENT OF EXPENSES. The Depositor and HFC jointly and severally
agree to pay all expenses incident to the performance of their obligations under
this Agreement, including without limitation those related to (i) the filing of
the Registration Statement and all
24
amendments thereto, (ii) the preparation, issuance and delivery of the
Securities, (iii) the fees and disbursements of Xxxxxx Xxxxxx Xxxxx Xxxxxxxx, as
special counsel for the Depositor and HFC, and [ ], accountants of the
Depositor and HFC, (iv) any qualification of the Class A Notes under state
securities and Blue Sky laws and the determination of the eligibility of the
Class A Notes for investment in accordance with the provisions of subsection
5(f) including filing fees, and the fees and disbursements of [Mayer, Brown,
Xxxx & Maw], as counsel for the Underwriters (not to exceed $30,000), in
connection therewith and in connection with the preparation of any Blue Sky
Survey, (v) the printing and delivery to the Underwriters, in such quantities as
you may reasonably request, of copies of the Registration Statement and
Prospectus and all amendments and supplements thereto, and of any Blue Sky
Survey, (vi) the delivery to the Underwriters, in such quantities as you may
reasonably request, of copies of the Sale and Servicing Agreement, (vii) the
fees charged by nationally recognized statistical rating agencies for rating the
Class A Notes and (viii) the fees and expenses of the Indenture Trustee and the
Owner Trustee and each's respective counsel. It is understood that, except as
expressly provided in this Section 8, the Underwriters will pay all of their own
expenses, including (i) the fees of counsel to the Underwriters, (ii) any
expenses incurred in connection with the preparation and filing with the
Commission of Computational Materials and Structural Term Sheets and (iii)
expenses related to the overnight delivery to the Underwriters of copies of the
Prospectus.
If this Agreement is terminated by you in accordance with the provisions of
Section 7, the Depositor, the Sellers and HFC shall reimburse you for all
reasonable out-of-pocket expenses, including the fees and disbursements of
[Mayer, Brown, Xxxx & Maw], as counsel for the Underwriters.
SECTION 9. INDEMNIFICATION. (a) HFC and the Depositor jointly and severally
agree to indemnify and hold harmless the Underwriters and each person, if any,
who controls the Underwriters within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(or any amendment thereto), or the omission or alleged omission therefrom
of a material fact required to be stated therein or necessary to make the
statements therein not misleading or arising out of any untrue statement or
alleged untrue statement of a material fact contained in the Prospectus (or
any amendment or supplement thereto) or the omission or alleged omission
therefrom of a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, unless (A) such untrue statement or omission or alleged untrue
statement or omission was made in reliance upon and in conformity with
written information furnished to the Depositor or HFC, or information
electronically transmitted to the Depositor or HFC, by the Underwriters
expressly for use in the Registration Statement (or any amendment thereto)
or (B) such untrue statement or omission or alleged untrue statement or
omission relates to information in any Computational Materials or
Structural Term Sheets provided by the Underwriters (except to the extent
that such untrue statements or errors contained therein are Pool
Information or Prospectus Information);
25
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, if such settlement is effected with
the written consent of the Depositor; and
(iii) against any and all expense whatsoever (including the fees and
disbursements of counsel chosen by you) as reasonably incurred in
investigating, preparing to defend or defending against or appearing as a
third party witness with respect to any litigation, or investigation or
proceeding by any governmental agency or body, commenced or threatened, or
any claim whatsoever based upon any such untrue statement or omission, as
such expense is incurred and to the extent that any such expense is not
paid under (i) or (ii) above. This indemnity agreement will be in addition
to any liability which the Depositor may otherwise have.
(b) Each of the Underwriters severally agrees to indemnify and hold
harmless the Depositor, each of its directors, each of its officers who signed
the Registration Statement, and each person, if any, who controls the Depositor
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
(each, an "Indemnified Party") against any and all loss, liability, claim,
damage and expense, as incurred, described in the indemnity contained in
subsection (a) of this Section 9, but only with respect to (i) untrue statements
or alleged untrue statements of a material fact made in the Registration
Statement (or any amendment thereto) or the Prospectus (or any amendment or
supplement thereto) or the omission or alleged omission therefrom of material
facts required to be stated therein or necessary to make the statements therein
not misleading, in each case in reliance upon and in conformity with written
information furnished to the Depositor or HFC by such Underwriter expressly for
use in the Registration Statement (or any amendment thereto) or the Prospectus
(or any amendment or supplement thereto) or (ii) information in any
Computational Materials or Structural Term Sheets provided by such Underwriter
(except to the extent that such untrue statements or errors contained therein
are Pool Information or Prospectus Information). The parties hereto acknowledge
that the only information supplied to the Depositor or HFC by the Underwriters
expressly for use in the Registration Statement or the Prospectus is limited to
the information set forth in the [ ] paragraph on the cover page and the
[ ] under the caption ["Method of Distribution"] in the Prospectus
Supplement (the "Underwriter Information"). This indemnity agreement will be in
addition to any liability that the Underwriters may otherwise have.
(c) Each indemnified party shall give prompt notice to each indemnifying
party of any action commenced against it with respect to which indemnity may be
sought hereunder, but failure to so notify an indemnifying party shall not
relieve it from any liability which it may have hereunder unless it has been
materially prejudiced by such failure to notify or from any liability which it
may have otherwise than on account of this indemnity agreement. An indemnifying
party may participate at its own expense in the defense of such action. In no
event shall the indemnifying parties be liable for the fees and expenses of more
than one counsel for all indemnified parties in connection with any one action
or separate but similar or related actions in the same jurisdiction arising out
of the same general allegations or circumstances, unless (i) if the defendants
in any such action include one or more of the indemnified parties and the
26
indemnifying party, and one or more of the indemnified parties shall have
employed separate counsel after having reasonably concluded that there may be
legal defenses available to it or them that are different from or additional to
those available to the indemnifying party or to one or more of the other
indemnified parties or (ii) the indemnifying party shall not have employed
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of the commencement of
the action.
SECTION 10. CONTRIBUTION. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Section 9 is for any reason held to be unenforceable by the indemnified parties
although applicable in accordance with its terms, HFC and the Depositor on the
one hand, and the Underwriters, on the other, shall contribute to the aggregate
losses, liabilities, claims, damages and expenses of the nature contemplated by
said indemnity agreement incurred by the Depositor and one or more of the
Underwriters (i) in such proportion as shall be appropriate to reflect the
relative benefits to HFC and the Depositor on the one hand and the Underwriters
on the other hand from the offering of the Class A Notes pursuant to this
Agreement or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law or otherwise prohibited hereby, in such proportion
as is appropriate to reflect not only the relative benefits referred to in
clause (i) above but also the relative fault of HFC and the Depositor on the one
hand and the Underwriters or Underwriter, as applicable, on the other in
connection with the actions, statements or omissions that resulted in such
losses, claims, damages or liabilities, or actions in respect thereof, as well
as any other relevant equitable considerations; PROVIDED, HOWEVER, that no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 0000 Xxx) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
The relative benefits received by HFC and the Depositor on the one hand and
the Underwriters on the other hand in connection with the offering of the Class
A Notes pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the Class A Notes
pursuant to this Agreement (before deducting expenses) received by HFC and the
Depositor and the total underwriting discount received by the Underwriters, in
each case as set forth in the Prospectus, bear to the aggregate initial public
offering price of the Class A Notes as set forth in the Prospectus. The relative
fault of HFC and the Depositor on the one hand and the Underwriters on the other
hand shall be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by HFC or the
Depositor, on the one hand, or the Underwriters, on the other hand, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission.
HFC, the Depositor and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section 10 were to be determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take into
account the equitable considerations referred to in the first sentence of this
Section 10. The amount paid by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to in
the first sentence of this Section 10 shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating, preparing to defend or defending against any
27
action or claim that is the subject of this Section 10. Notwithstanding the
provisions of this Section 10, no Underwriter shall be required to contribute
any amount in excess of the amount by which the total price at which the Class A
Notes underwritten by such Underwriter and distributed to the public were
offered to the public exceeds the amount of any damages which such Underwriter
has otherwise been required to pay in respect of such losses, liabilities,
claims, damages and expenses. The Underwriters' obligations in this Section 10
to contribute are several in proportion to their respective underwriting
obligations and not joint. Each party entitled to contribution agrees that upon
the service of a summons or other initial legal process upon it in any action
instituted against it in respect to which contribution may be sought, it shall
promptly give written notice of such service to the party or parties from whom
contribution may be sought, but the omission so to notify such party or parties
of any such service shall not relieve the party from whom contribution may be
sought for any obligation it may have hereunder or otherwise (except as
specifically provided in section 9 hereof). For purposes of this Section 10,
each person, if any, who controls any Underwriter within the meaning of Section
15 of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to
contribution as such Underwriter, and each respective director of the Depositor,
each respective officer of the Depositor who signed the Registration Statement,
and each person, if any, who controls the Depositor within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same
rights to contribution as the Depositor.
SECTION 11. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY.
All representations, warranties and agreements contained in this Agreement or
contained in certificates of officers of the Depositor or HFC submitted pursuant
hereto shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of the Underwriters or controlling person
thereof, or by or on behalf of the Depositor or HFC and shall survive delivery
of any Class A Notes to the Underwriters.
SECTION 12. TERMINATION OF AGREEMENT. [Representative Underwriter] and
[Representative Underwriter], as Representatives, may terminate this Agreement
immediately upon notice to the Depositor and HFC, at any time at or prior to the
Closing Time (i) if there has been since the respective dates as of which
information is given in the Prospectus, any change, or any development involving
a prospective change, in or affecting the condition, financial or otherwise,
earnings, affairs or business of HFC or the Depositor, whether or not arising in
the ordinary course of business, which, in the reasonable judgment of the
Underwriters after consultation with HFC and the Depositor, materially impairs
the market for, or the investment quality of, the Class A Notes, (ii) if there
has been an outbreak or material escalation of hostilities involving the United
States of America, or the declaration by the United States of America of a
national emergency or war, if the effect of any such event in the Underwriters'
reasonable judgment makes it impracticable or inadvisable to proceed with the
public offering of the Class A Notes, (iii) if trading in securities generally
on the New York Stock Exchange has been suspended or materially limited (other
than normal trading restrictions resulting from the total number of trades on
the New York Stock Exchange), or minimum prices have been established by the
exchange or by order of the Commission or any other governmental authority, or
if a banking moratorium has been declared by either federal or New York State
authorities or (iv) if there has been any material disruption of securities
settlement, payment or clearance services in the United States. In the event of
any such termination, the provisions of Section 8, the indemnity agreement set
forth in Section 9, and the provisions of Sections 10 and 15 shall
28
remain in effect. If the Agreement is terminated by you in accordance with the
provisions of Section12(i), the Depositor and HFC shall reimburse you for all
reasonable out-of-pocket expenses, including the fees and disbursements of
[Mayer, Brown, Xxxx & Maw], as counsel for the Underwriters.
SECTION 13. DEFAULT BY ONE OR MORE OF THE UNDERWRITERS. If one or more of
the Underwriters participating in the public offering of the Class A Notes shall
fail at the Closing Time to purchase the Class A Notes which it is (or they are)
obligated to purchase hereunder (the "Defaulted Notes"), then such of the
non-defaulting Underwriters shall have the right, within 24 hours thereafter, to
make arrangements for one or more of the non-defaulting Underwriters, or any
other underwriters, to purchase all, but not less than all, of the Defaulted
Notes in such amounts as may be agreed upon and upon the terms herein set forth.
If, however, you have not completed such arrangements within such 24-hour
period, then:
(i) if the aggregate principal amount of Defaulted Notes does not
exceed 10% of the aggregate principal amount of the Class A Notes to be
purchased pursuant to this Agreement, the non-defaulting Underwriters named
in this Agreement shall be obligated to purchase the full amount thereof in
the proportions that their respective underwriting obligations hereunder
bear to the underwriting obligations of all such non-defaulting
Underwriters, or
(ii) if the aggregate principal amount of Defaulted Notes exceeds
10% of the aggregate principal amount of the Class A Notes to be purchased
pursuant to this Agreement, this Agreement shall terminate, without any
liability on the part of any non-defaulting Underwriters.
No action taken pursuant to this Section 13 shall relieve any defaulting
Underwriter from any liability with respect to any default of such Underwriter
under this Agreement.
In the event of a default by any Underwriters as set forth in this Section
13, either you or the Depositor shall have the right to postpone the Closing
Time for a period not exceeding five (5) Business Days in order that any
required changes in the Registration Statement or Prospectus or in any other
documents or arrangements may be effected.
SECTION 14. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Representatives at the addresses set
forth on the first page hereof, in the case of [Representative Underwriter]
(Fax: (212) ___-____), with a copy to [ ] (Fax: (212) ___-____) and in
the case of [Representative Underwriter] (Fax: (212) ___-____), with a copy
to [ ]. Notices to the Depositor shall be directed to Household Mortgage
Funding Corporation III, 0000 Xxxx Xxxxxx Xxxxx, Xxx Xxxxx, Xxxxxx 00000, to
the attention of [ ]. Notices to HFC shall be directed to Household
Finance Corporation, 0000 Xxxxxxx Xxxx, Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000, to
the attention of the Secretary, with a copy to the Treasurer (Fax: (847)
000-0000).
SECTION 15. PARTIES. This Agreement shall inure to the benefit of and be
binding upon the Underwriters, the Depositor and HFC, and their respective
successors. Nothing expressed or mentioned in this Agreement is intended nor
shall it be construed to give any person, firm or
29
corporation, other than the parties hereto and their respective successors and
the controlling persons and officers and directors referred to in Sections 9 and
10 and their heirs and legal representatives, any legal or equitable right,
remedy or claim under or with respect to this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the parties and their respective
successors and said controlling persons and officers and directors and their
heirs and legal representatives (to the extent of their rights as specified
herein) and except as provided above for the benefit of no other person, firm or
corporation. No purchaser of Class A Notes from the Underwriters shall be deemed
to be a successor by reason merely of such purchase.
SECTION 16. GOVERNING LAW AND TIME. This Agreement shall be governed by the
law of the State of New York and shall be construed in accordance with such law.
Specified times of day refer to New York City time.
SECTION 17. COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall constitute an original of any party whose signature appears
on it, and all of which shall together constitute a single instrument.
30
If the foregoing is in accordance with the Underwriters' understanding of
our agreement, please sign and return to us a counterpart hereof, whereupon this
instrument along with all counterparts will become a binding agreement among the
Underwriters, the Depositor and HFC in accordance with its terms.
Very truly yours,
HOUSEHOLD MORTGAGE FUNDING
CORPORATION III
By:
---------------------------
Name:
Title:
HOUSEHOLD FINANCE CORPORATION
By:
---------------------------
Name:
Title:
CONFIRMED AND ACCEPTED, as of the
date first above written:
[Representative Underwriter]
as Representative of the Underwriters
By:
--------------------------------
Name:
Title:
[Representative Underwriter]
as Representative of the Underwriters
By:
--------------------------------
Name:
Title:
31
Schedule I
CLASS A NOTES
PRINCIPAL AMOUNT PURCHASE PRICE
[Underwriter] $[ ] [ ]%
[Underwriter] $[ ] [ ]%
[Underwriter] $[ ] [ ]%
[Underwriter] $[ ] [ ]%
[Underwriter] $[ ] [ ]%
Total $[ ]
32
