Exhibit 4.2
EXECUTION COPY
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AMENDED AND RESTATED TRUST AGREEMENT
among
HSBC FINANCE CORPORATION
HSBC HOME EQUITY LOAN CORPORATION I
as Depositor
CHASE BANK USA, NATIONAL ASSOCIATION
as Owner Trustee
and
HSBC BANK USA, NATIONAL ASSOCIATION
as Administrator
Dated November 9, 2005
HSBC HOME EQUITY LOAN TRUST 2005-3
Closed-End Home Equity Loan Asset Backed Notes,
Series 2005-3
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Table of Contents
Page
ARTICLE I
DEFINITIONS
Section 1.1 Capitalized Terms..........................................1
Section 1.2 Other Definitional Provisions..............................4
ARTICLE II
ORGANIZATION
Section 2.1 Name.......................................................6
Section 2.2 Offices....................................................6
Section 2.3 Purposes and Powers........................................6
Section 2.4 Appointment of Owner Trustee...............................6
Section 2.5 [Reserved].................................................7
Section 2.6 [Reserved].................................................7
Section 2.7 Capital Contribution of Owner Trust Estate.................7
Section 2.8 Declaration of Trust.......................................7
Section 2.9 Title to Trust Property....................................7
Section 2.10 Situs of Trust.............................................7
Section 2.11 Representations and Warranties of the Depositor............8
Section 2.12 Federal Income Tax Allocations.............................9
ARTICLE III
OWNERSHIP INTEREST AND TRANSFERS OF THE OWNERSHIP INTEREST
Section 3.1 Initial Ownership..........................................10
Section 3.2 The Ownership Interest.....................................10
Section 3.3 [Reserved].................................................10
Section 3.4 Registration of Transfer and Exchange of
Ownership Interest.........................................10
Section 3.5 [Reserved].................................................10
Section 3.6 Persons Deemed Transferors.................................10
Section 3.7 [Reserved].................................................10
Section 3.8 Maintenance of Office or Agency............................10
Section 3.9 Appointment of Paying Agent................................11
Section 3.10 [Reserved].................................................11
Section 3.11 [Reserved].................................................11
Section 3.12 [Reserved].................................................11
Section 3.13 Restrictions on Transfers of Ownership Interest............11
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ARTICLE IV
ACTIONS BY OWNER TRUSTEE
Section 4.1 Prior Notice to the Transferor and the Indenture
Trustee with Respect to Certain Matters....................14
Section 4.2 Action by Transferor with Respect to Bankruptcy............15
Section 4.3 Action by Owner Trustee with Respect to Bankruptcy.........16
Section 4.4 Restrictions on Transferor's Power.........................16
ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
Section 5.1 Establishment of Trust Account.............................17
Section 5.2 Application of Trust Funds.................................17
Section 5.3 Method of Payment..........................................17
Section 5.4 [Reserved].................................................17
Section 5.5 Accounting and Reports to the Transferor, the
Internal Revenue Service and Others........................17
Section 5.6 Signature on Returns.......................................18
ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE
Section 6.1 General Authority..........................................19
Section 6.2 General Duties.............................................19
Section 6.3 Action upon Instruction....................................19
Section 6.4 No Duties Except as Specified in this Agreement,
the Transaction Documents or in Instructions...............20
Section 6.5 No Action Except Under Specified Documents or
Instructions...............................................20
Section 6.6 Restrictions...............................................21
ARTICLE VII
CONCERNING THE OWNER TRUSTEE
Section 7.1 Acceptance of Trusts and Duties............................22
Section 7.2 Furnishing of Documents....................................23
Section 7.3 Representations and Warranties.............................23
Section 7.4 Reliance; Advice of Counsel................................24
Section 7.5 Not Acting in Individual Capacity..........................25
Section 7.6 Owner Trustee Not Liable for the Ownership Interest
or the Home Equity Loans...................................25
Section 7.7 Owner Trustee May Own the Ownership Interest
and the Notes..............................................25
Section 7.8 Licenses...................................................25
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ARTICLE VIII
COMPENSATION OF OWNER TRUSTEE
Section 8.1 Fees and Expenses..........................................26
Section 8.2 Indemnification............................................26
Section 8.3 Payments to the Owner Trustee..............................26
Section 8.4 Non-recourse Obligations...................................26
ARTICLE IX
TERMINATION OF TRUST AGREEMENT
Section 9.1 Termination of Trust Agreement.............................27
ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
Section 10.1 Eligibility Requirements for Owner Trustee.................28
Section 10.2 Resignation or Removal of Owner Trustee....................28
Section 10.3 Successor Trustee..........................................29
Section 10.4 Merger or Consolidation of Owner Trustee...................29
Section 10.5 Appointment of Co-Owner Trustee or Separate Owner Trustee..29
ARTICLE XI
MISCELLANEOUS
Section 11.1 Supplements and Amendments.................................31
Section 11.2 No Legal Title to Owner Trust Estate in Transferor.........32
Section 11.3 Limitations on Rights of Others............................32
Section 11.4 Notices....................................................32
Section 11.5 Severability...............................................32
Section 11.6 Separate Counterparts......................................33
Section 11.7 Successors and Assigns.....................................33
Section 11.8 No Petition................................................33
Section 11.9 [Reserved].................................................33
Section 11.10 No Recourse................................................33
Section 11.11 Headings...................................................33
Section 11.12 GOVERNING LAW..............................................33
Section 11.13 Inconsistencies with Sale and Servicing Agreement..........33
Section 11.14 Third Party Beneficiary....................................34
Section 11.15 Master Servicer............................................34
Section 11.16 Rights Under Indenture.....................................34
EXHIBIT A Certificate of Trust......................................A-1
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EXHIBIT B Form of Transfer Certificate..............................B-1
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AMENDED AND RESTATED TRUST AGREEMENT, dated November 9, 2005, among
HSBC Finance Corporation ("HSBC Finance"), HSBC Home Equity Loan Corporation
I, as depositor (the "Depositor"), Chase Bank USA, National Association, a
national banking association, as owner trustee (in such capacity, the "Owner
Trustee"), and HSBC Bank USA, National Association, a national banking
association, as administrator (the "Administrator").
PRELIMINARY STATEMENT
WHEREAS, the Trust was formed pursuant to a Trust Agreement, dated as
of November 2, 2005, among the Depositor and the Owner Trustee;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Capitalized Terms. For all purposes of this
Agreement, the following terms shall have the meanings set forth below:
"Administrator" shall mean HSBC Bank USA, National Association, not
in its individual capacity but solely as administrator under this Agreement
and the other Transaction Documents to which it is a party, and any successor
administrator hereunder and thereunder.
"Agreement" shall mean this Amended and Restated Trust Agreement, as
the same may be amended and supplemented from time to time.
"Bankruptcy Action" shall have the meaning assigned to such term in
Section 4.1.
"Certificate of Trust" shall mean the Certificate of Trust in the
form of Exhibit A filed for the Trust pursuant to Section 3810(a) of the
Statutory Trust Statute.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Collection Account" shall have the meaning assigned to such term in
the Sale and Servicing Agreement.
"Corporate Trust Office" shall mean:
(i) with respect to the Owner Trustee, the principal corporate trust
office of the Owner Trustee, which office, at date of execution of this
Agreement is located at 000 Xxxxxxx Xxxxxxxxxx Xx., Xxxxxxxx 0 - 0xx Xxxxx,
Xxxxxx, Xxxxxxxx 00000. Attention: Worldwide Securities Services (facsimile
number (000) 000-0000); or at such other address in the State of Delaware as
the Owner Trustee may designate by notice to the Transferor, the Administrator
and the Trust, or the principal corporate trust office of any successor owner
trustee (the address of which the successor owner trustee will notify the
Administrator, the Transferor and the Trust);
(ii) with respect to the Indenture Trustee, the corporate trust
office of the Indenture Trustee, which office at date of execution of this
Agreement is located at 000 Xxxxx XxXxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxx
00000, Attention: Structured Finance, Reference: HSBC Home Equity Loan Trust
2005-3 (facsimile number (000) 000-0000), or at such other address as the
Indenture Trustee may designate by notice to the Owner Trustee, the
Administrator, the Transferor and the Trust, or the principal corporate trust
office of any successor Indenture Trustee (the address of which the successor
indenture trustee will notify the Owner Trustee, the Administrator, the
Transferor and the Trust); or
(iii) with respect to the Administrator, the corporate trust office
of the Administrator, which office at date of execution of this Agreement is
located at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Corporate
Trust, Reference: HSBC Home Equity Loan Trust 2005-3 (facsimile number (212)
525-1300), or at such other address as the Administrator may designate by
notice to the Transferor, the Indenture Trustee, the Owner Trustee and the
Trust, or the corporate trust office of any successor Administrator (the
address of which the successor co-trustee will notify the Indenture Trustee,
the Owner Trustee, the Transferor and the Trust).
"Depositor" shall mean HSBC Home Equity Loan Corporation I or its
successors.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Expenses" shall have the meaning assigned to such term in Section
8.2.
"HSBC Finance" shall mean HSBC Finance Corporation or its successors.
"HSBC" shall mean HSBC Bank USA, National Association or its
successors.
"Indenture" shall mean the Indenture, dated November 9, 2005, by and
among the Trust, the Indenture Trustee, the Owner Trustee and the
Administrator.
"Indenture Trustee" shall mean U.S. Bank National Association, as
Indenture Trustee under the Indenture, or any successor indenture trustee
appointed pursuant to the terms of the Indenture.
"Initial Note Principal Amount" shall mean with respect to the Class
A-1 Notes, $472,350,000, with respect to the Class A-2 Notes, $118,000,000,
with respect to the Class M-1 Notes, $102,450,000, and with respect to the
Class M-2 Notes, $82,950,000.
"Master Servicer" shall mean HSBC Finance, or any successor servicer
appointed pursuant to the Sale and Servicing Agreement.
"Owner Trust Estate" shall mean the contribution of $1,000 and one
share of the Depositor's Class SV-W Preferred Stock referred to in Section 2.7
and the Trust Estate.
"Owner Trustee" shall mean Chase Bank USA, National Association, a
national banking association, not in its individual capacity but solely as
owner trustee under this Agreement, and any successor owner trustee hereunder.
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"Ownership Interest" shall have the meaning specified in Section 3.2.
"Paying Agent" shall mean the Person appointed to serve as Paying
Agent pursuant to Section 3.9.
"Plan" shall have the meaning assigned to such term in Section 3.13.
"Prospective Transferor" shall mean any prospective purchaser or
prospective transferee of the Ownership Interest.
"Rating Agency Condition" shall mean, with respect to certain actions
requiring Rating Agency consent, that each Rating Agency shall have been given
10 days (or such shorter period as is acceptable to each Rating Agency) prior
notice thereof and that each of the Rating Agencies shall have notified the
Depositor, the Owner Trustee and the Indenture Trustee that such action will
not result in a reduction or withdrawal of such Rating Agency's then current
ratings of the Notes.
"Record Date" shall mean the last Business Day preceding the related
Payment Date; provided, however, that following the date on which Definitive
Notes are available pursuant to Section 2.2 of the Indenture, the Record Date
shall be the last day of the calendar month preceding the month in which the
related Payment Date occurs.
"Register" shall mean a register kept by the Registrar in which,
subject to such reasonable regulations as it may prescribe, the Registrar
shall provide for the registration of the Ownership Interest and the
registration of transfers of the Ownership Interest. The location of the
Registrar shall be the same as that of the Corporate Trust Office of the
Administrator.
"Registrar" shall mean the Administrator as Registrar hereunder.
"Sale and Servicing Agreement" shall mean the Sale and Servicing
Agreement, dated as of November 9, 2005, among the Trust, the Depositor, the
Indenture Trustee, the Master Servicer and the Administrator.
"Secretary of State" shall mean the Secretary of State of the State
of Delaware.
"Statutory Trust Statute" shall mean Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code ss. 3801 et seq., as the same may be amended from
time to time.
"Transaction Documents" shall have the meaning assigned to such term
in the Sale and Servicing Agreement.
"Transfer Agreement" shall mean the transfer agreement dated November
9, 2005 between the Trust and the Sellers pursuant to which the Sellers will
assign to the Trust all of their right, title and interest in and to the
Transferred Assets not otherwise transferred pursuant to the Home Equity Loan
Purchase Agreement.
"Transferor" shall mean the Depositor or any subsequent owner of the
Ownership Interest.
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"Transferred Assets" shall have the meaning specified in Section 2.1
of the Transfer Agreement.
"Treasury Regulations" shall mean regulations, including proposed or
temporary regulations, promulgated under the Code. References herein to
specific provisions of proposed or temporary regulations shall include
analogous provisions of final Treasury Regulations or other successor Treasury
Regulations.
"Trust" shall mean HSBC Home Equity Loan Trust 2005-3, the Delaware
statutory trust governed pursuant to this Agreement.
"Trust Agreement" shall mean the Trust Agreement, dated as of
November 2, 2005, among the Depositor and the Owner Trustee.
"Trust Estate" shall mean the assets transferred and assigned to the
Trust pursuant to the Sale and Servicing Agreement, the Transfer Agreement and
this Agreement and pledged to the Indenture Trustee pursuant to the Indenture,
consisting of: (i) each Home Equity Loan and each Eligible Substitute Home
Equity Loan and the related Mortgage Note and other Mortgage File documents
for each Home Equity Loan and each Eligible Substitute Home Equity Loan,
including such Home Equity Loan's, and each such Eligible Substitute Home
Equity Loan's, Principal Balance and all collections in respect thereof
received after the Cut-Off Date or Subsequent Cut-Off Date, as applicable;
(ii) property that secured each Home Equity Loan and each Eligible Substitute
Home Equity Loan that has become REO; (iii) the interest of the Depositor in
certain hazard insurance policies maintained by the Mortgagors or the Master
Servicer in respect of each Home Equity Loan and each Eligible Substitute Home
Equity Loan transferred by the Depositor; (iv) the Collection Account and all
amounts on deposit in the Collection Account (exclusive of net earnings
thereon); (v) one share of Preferred Stock of the Depositor; (vi) the Trust's
rights under the Sale and Servicing Agreement; (vii) any proceeds of any of
the foregoing and (viii) all other assets included or to be included in the
Trust for the benefit of Noteholders.
Section 1.2 Other Definitional Provisions.
(a) Capitalized terms used herein and not otherwise defined herein
have the meanings assigned to them in the Sale and Servicing Agreement or, if
not defined therein, in the Indenture.
(b) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms not
defined in this Agreement or in any such certificate or other document, and
accounting terms partly defined in this Agreement or in any such certificate
or other document to the extent not defined, shall have the respective
meanings given to them under generally accepted accounting principles. To the
extent that the definitions of accounting terms in this Agreement or in any
such certificate or other document are inconsistent with the meanings of such
terms under generally accepted accounting principles,
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the definitions contained in this Agreement or in any such certificate or
other document shall control.
(d) The words "hereof," "herein," "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole
and not to any particular provision of this Agreement; Section and Exhibit
references contained in this Agreement are references to Sections and Exhibits
in or to this Agreement unless otherwise specified; and the term "including"
shall mean "including without limitation."
(e) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such terms.
(f) Any agreement, instrument or statute defined or referred to
herein or in any instrument or certificate delivered in connection herewith
means such agreement, instrument or statute as from time to time amended,
modified or supplemented and includes (in the case of agreements or
instruments) references to all attachments thereto and instruments
incorporated therein; references to a Person are also to its permitted
successors and assigns.
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ARTICLE II
ORGANIZATION
Section 2.1 Name. The Trust created hereby shall be known as
"HSBC Home Equity Loan Trust 2005-3," in which name the Owner Trustee may
conduct the business of the Trust and make and execute contracts and other
instruments on behalf of the Trust and the Trust may xxx and be sued.
Section 2.2 Offices. The principal office of the Trust shall be
in care of the Owner Trustee at the Corporate Trust Office of the Owner
Trustee or at such other address in the State of Delaware as the Owner Trustee
may designate by written notice to the Transferor, the Indenture Trustee and
the Administrator.
Section 2.3 Purposes and Powers.
(a) The purpose of the Trust is to engage in the following
activities:
(i) to issue the Notes pursuant to the Indenture and the
Ownership Interest pursuant to this Agreement and to sell such
Notes and Ownership Interest;
(ii) with the proceeds of the sale of the Notes and the
Ownership Interest, to fund start-up and transactional expenses of
the Trust and to pay the balance to the Depositor, as its
interests may appear pursuant to the Sale and Servicing Agreement;
(iii) to assign, grant, transfer, pledge, mortgage and
convey the Trust Estate pursuant to the Indenture and to hold,
manage and distribute to the Transferor pursuant to the terms of
the Sale and Servicing Agreement any portion of the Trust Estate
released from the lien of, and remitted to the Trust pursuant to,
the Indenture;
(iv) to enter into and perform its obligations under the
Transaction Documents to which it is to be a party;
(v) to engage in those activities, including entering into
agreements, that are necessary, suitable or convenient to
accomplish the foregoing or are incidental thereto or connected
therewith; and
(vi) subject to compliance with the Transaction Documents,
to engage in such other activities as may be required in
connection with conservation of the Owner Trust Estate and the
making of distributions to the Noteholders and the Transferor.
The Trust is hereby authorized to engage in the foregoing activities. The
Trust shall not engage in any activity other than in connection with the
foregoing or other than as required or authorized by the terms of this
Agreement or the Transaction Documents.
Section 2.4 Appointment of Owner Trustee. Pursuant to the Trust
Agreement, effective as of the date thereof, the Depositor appointed the Owner
Trustee as trustee of the
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Trust. Pursuant to this Agreement, the Owner Trustee shall have all the
rights, powers and duties set forth herein.
Section 2.5 [Reserved]
Section 2.6 [Reserved]
Section 2.7 Capital Contribution of Owner Trust Estate. Pursuant to
the Trust Agreement, as of the date thereof, the Depositor conveyed to the
Trust the sum of $1,000. The Depositor hereby sells, assigns, transfers,
conveys and sets over to the Trust, as of the date hereof, one share of its
Class SV-W Preferred Stock. The Owner Trustee hereby acknowledges receipt in
trust from the Depositor, as of the date hereof, of the foregoing
contributions, which shall constitute the initial Owner Trust Estate and such
cash contribution shall be deposited in the Collection Account. The Depositor
shall pay organizational expenses of the Trust as they may arise or shall,
upon the request of the Owner Trustee, promptly reimburse the Owner Trustee
for any such expenses paid by the Owner Trustee.
Section 2.8 Declaration of Trust. The Owner Trustee hereby declares
that it will hold the Owner Trust Estate in trust upon and subject to the
conditions set forth herein for the use and benefit of the Transferor, subject
to the obligations of the Trust under the Transaction Documents. It is the
intention of the parties hereto that the Trust constitute a statutory trust
under the Statutory Trust Statute and that this Agreement constitute the
governing instrument of such statutory trust. It is the intention of the
parties hereto that, solely for income and franchise tax purposes, the Trust
shall be treated as a disregarded entity, with the assets of the Trust being
treated as owned by the Transferor as the owner of the Ownership Interest. The
parties agree that, unless otherwise required by appropriate tax authorities,
the Trust will file or cause to be filed annual or other necessary returns,
reports and other forms, if any, consistent with the characterization of the
Trust as provided in the preceding sentence for such tax purposes. Effective
as of the date hereof, the Owner Trustee shall have all rights, powers and
duties set forth herein and in the Statutory Trust Statute with respect to
accomplishing the purposes of the Trust. The Owner Trustee has filed the
Certificate of Trust with the Secretary of State.
Section 2.9 Title to Trust Property.
(a) Subject to the Indenture, legal title to (i) all of the Owner
Trust Estate (other than the Transferred Assets) shall be vested at all times
in the Trust as a separate legal entity except where applicable law in any
jurisdiction requires title to any part of the Owner Trust Estate to be vested
in a trustee or trustees, in which case title shall be deemed to be vested in
the Owner Trustee, a co-owner trustee and/or a separate trustee, as the case
may be, and (ii) all of the Transferred Assets shall be vested at all times in
the Owner Trustee.
(b) The Transferor shall not have legal title to any part of the
Owner Trust Estate. No transfer by operation of law or otherwise of any
interest of the Transferor shall operate to terminate this Agreement or the
trusts hereunder or entitle any transferee to an accounting or to the transfer
to it of any part of the Owner Trust Estate.
Section 2.10 Situs of Trust. The Trust will be located and
administered in the State of Delaware. All bank accounts maintained by the
Owner Trustee on behalf of the Trust shall be
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located in the State of Delaware, the State of Illinois or the State of New
York. The Trust shall not have any employees; provided, however, that nothing
herein shall restrict or prohibit the Owner Trustee from having employees
within or without the State of Delaware. Payments will be received by the
Trust only in Delaware, Illinois or New York, and payments will be made by the
Trust only from Delaware, Illinois or New York.
Section 2.11 Representations and Warranties of the Depositor.
The Depositor hereby represents and warrants to the Owner Trustee,
the Noteholders, the Indenture Trustee and the Administrator that:
(a) The Depositor is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has the
corporate power to own its assets and to transact the business in which it is
currently engaged. The Depositor is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which the
character of the business transacted by it or properties owned or leased by it
require such qualification and in which the failure to so qualify would have a
material adverse effect on the business, properties, assets or condition
(financial or other) of the Depositor;
(b) The Depositor has the power and authority to make, execute,
deliver and perform its obligations under this Agreement and to perform its
obligations with respect to all of the transactions contemplated under this
Agreement, and has taken all necessary corporate action to authorize the
execution, delivery and performance of its obligations under this Agreement.
When executed and delivered, this Agreement will constitute the legal, valid
and binding obligation of the Depositor enforceable in accordance with its
terms, except as enforcement of such terms may be limited by bankruptcy,
insolvency or similar laws affecting the enforcement of creditors' rights
generally and by the availability of equitable remedies (whether in a
proceeding at law or in equity);
(c) The Depositor is not required to obtain the consent of any other
Person or any consent, license, approval or authorization from, or
registration or declaration with, any governmental authority, bureau or agency
in connection with the execution, delivery, performance, validity or
enforceability of this Agreement, except for such consents, licenses,
approvals or authorizations, or registrations or declarations, as shall have
been obtained or filed, as the case may be;
(d) The execution and delivery of this Agreement and the performance
of the transactions contemplated hereby by the Depositor will not violate any
provision of any existing law or regulation or any order or decree of any
court applicable to the Depositor or any provision of the Certificate of
Incorporation or Bylaws of the Depositor, or constitute a material breach of
any mortgage, indenture, contract or other agreement to which the Depositor is
a party or by which the Depositor may be bound; and
(e) No litigation or administrative proceeding of or before any
court, tribunal or governmental body is currently pending, or to the knowledge
of the Depositor threatened, against the Depositor or any of its properties or
with respect to this Agreement which in the
8
opinion of the Depositor has a reasonable likelihood of resulting in a
material adverse effect on the transactions contemplated by this Agreement.
Section 2.12 Federal Income Tax Allocations. Net income of the Trust
for any month, as determined for Federal income tax purposes (and each item of
income, gain, loss and deduction entering into the computation thereof), shall
be allocated to the Transferor.
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ARTICLE III
OWNERSHIP INTEREST AND TRANSFERS OF THE OWNERSHIP INTEREST
Section 3.1 Initial Ownership. The Transferor is the sole beneficial
owner of the Trust. The initial Transferor shall furnish the Owner Trustee and
the Administrator with its contact information, wiring instructions and
Federal taxpayer identification number on or prior to the Closing Date. Such
information may be amended by the initial Transferor or any successor
Transferor in accordance with the provisions of Section 11.4.
Section 3.2 The Ownership Interest. The Ownership Interest (as
defined below) shall be uncertificated and shall represent the entire
undivided beneficial ownership interest in the Owner Trust Estate, subject to
the debt represented by the Notes (the "Ownership Interest"). The Ownership
Interest may be assigned by the Transferor as provided in Section 3.13.
Upon the completion of a transfer in accordance with the terms and
conditions of this Article III, a transferee of the Ownership Interest shall
become the Transferor, and shall be entitled to the rights and subject to the
obligations of the Transferor hereunder, upon such transferee's acceptance of
the Ownership Interest duly registered in such transferee's name pursuant to
Section 3.4 below.
Section 3.3 [Reserved].
Section 3.4 Registration of Transfer and Exchange of Ownership
Interest. The Trust hereby appoints the Administrator as Registrar under this
Agreement. The Registrar shall keep or cause to be kept, at the office or
agency maintained pursuant to Section 3.8, a Register in which, subject to
such reasonable regulations as it may prescribe, the Registrar shall provide
for the registration of the Ownership Interest and of transfer and exchange of
the Ownership Interest as herein provided. The Registrar, subject to Section
3.13 hereof, on behalf of the Trust shall note on the Register the transfer of
the Ownership Interest.
Section 3.5 [Reserved].
Section 3.6 Persons Deemed Transferors. Prior to due assignment of
the Ownership Interest for registration of transfer, the Depositor, the Owner
Trustee, the Indenture Trustee, the Administrator and the Registrar may treat
the Person in whose name the Ownership Interest shall be registered in the
Register as the owner thereof for the purpose of receiving distributions
pursuant to Section 5.2 hereof and for all other purposes whatsoever, and none
of the Depositor, the Owner Trustee, the Indenture Trustee, the Administrator
or the Registrar shall be bound by any notice to the contrary.
Section 3.7 [Reserved]
Section 3.8 Maintenance of Office or Agency. The Registrar shall
maintain an office or offices or agency or agencies (initially, the Corporate
Trust Office of the Administrator) where instructions for the transfer of the
Ownership Interest may be delivered for registration of transfer or exchange
pursuant to Section 3.4 and where notices and demands to or upon the Registrar
in respect of the Ownership Interest and the Transaction Documents may be
served.
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The Registrar shall give prompt written notice to the Indenture Trustee, the
Owner Trustee, the Transferor and, unless the Administrator is the Registrar,
the Administrator, of any change in the location of the Register or any such
office or agency.
Section 3.9 Appointment of Paying Agent. The Trust hereby appoints
the Administrator as Paying Agent under this Agreement. The Paying Agent shall
make distributions to the Transferor from the Collection Account pursuant to
Section 5.2 hereof and Section 5.01 of the Sale and Servicing Agreement. The
Paying Agent shall have the revocable power to withdraw funds from the
Collection Account for the purpose of making the distributions referred to
above. In the event that the Administrator shall no longer be the Paying Agent
hereunder, the Owner Trustee shall, pursuant to the direction of the
Depositor, appoint a successor to act as Paying Agent (which (x) shall at all
times be a corporation duly incorporated and validly existing under the laws
of the United States of America or any state thereof, authorized under such
laws to exercise corporate trust powers and subject to supervision or
examination by federal or state authorities and (y) shall not be entitled to
compensation from the Trust Estate). The Owner Trustee shall cause such
successor Paying Agent or any additional Paying Agent appointed by the Owner
Trustee to execute and deliver to the Trust an instrument in which such
successor Paying Agent or additional Paying Agent shall agree with the Trust
that as Paying Agent, such successor Paying Agent or additional Paying Agent
will hold all sums, if any, held by it for payment to the Transferor in trust
for the benefit of the Transferor until such sums shall be paid to the
Transferor. The Paying Agent shall return all unclaimed funds to the Owner
Trustee, and upon removal of a Paying Agent, such Paying Agent shall also
return all funds in its possession to the Owner Trustee. Any reference in this
Agreement to the Paying Agent shall include any co-paying agent unless the
context requires otherwise.
Section 3.10 [Reserved].
Section 3.11 [Reserved].
Section 3.12 [Reserved].
Section 3.13 Restrictions on Transfers of Ownership Interest. To the
fullest extent permitted by applicable law, the Ownership Interest shall not
be sold, pledged, transferred or assigned, except as provided below.
(a) Unless the Prospective Transferor furnishes an opinion of counsel
meeting the requirements specified in Section 3.13(c)(ii) hereof, the
Ownership Interest may not be acquired by or for the account of (i) an
employee benefit plan (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) that is subject to the
provisions of Title I of ERISA, (ii) a plan described in and subject to
Section 4975 of the Code, or (iii) any entity, including an insurance company
separate account or general account, whose underlying assets include plan
assets by reason of a plan's investment in the entity or otherwise under
ERISA.
(b) Each Prospective Transferor, other than (subject to Section
3.13(d) hereof) an affiliate of HSBC Finance, shall represent and warrant, in
writing, to the Owner Trustee and the Registrar and any of their respective
successors that:
11
(i) Such Person is (A) a "qualified institutional buyer" as
defined in Rule 144A under the Securities Act of 1933, as amended
(the "Securities Act"), and is aware that the seller of such
Ownership Interest may be relying on the exemption from the
registration requirements of the Securities Act provided by Rule
144A and is acquiring such Ownership Interest for its own account
or for the account of one or more qualified institutional buyers
for whom it is authorized to act, (B) an "accredited investor" as
defined in Rule 501(a) under the Securities Act , or (C) a Person
involved in the organization or operation of the Trust or an
affiliate of such Person within the meaning of Rule 3a-7 of the
1940 Act, as amended (including, but not limited to, HSBC Finance
or the Transferor).
(ii) Such Person understands that such Ownership Interest
has not been and will not be registered under the Securities Act
and may be offered, sold, pledged or otherwise transferred only to
a person whom the seller reasonably believes is (A) a "qualified
institutional buyer," (B) "an accredited investor" or (C) a Person
involved in the organization or operation of the Trust or an
affiliate of such Person, in each case in a transaction meeting
the requirements of Rule 144A under the Securities Act or that is
otherwise exempt from registration under the Securities Act and in
accordance with any applicable securities laws of any state of the
United States.
(iii) Such Person shall comply with the provisions of
Section 3.13(c), as applicable, relating to the ERISA restrictions
with respect to the acceptance or acquisition of such Ownership
Interest.
(c) Each Prospective Transferor, other than the initial Transferor or
an affiliate of the initial Transferor, shall either:
(i) represent and warrant, in writing, to the Owner Trustee
and the Registrar and any of their respective successors, in
accordance with Exhibit B hereto, that the Prospective Transferor
is not (A) an "employee benefit plan" within the meaning of
Section 3(3) of ERISA that is subject to Title I of ERISA, (B) a
plan within the meaning of and subject to Section 4975 of the Code
(any such plan or employee benefit plan, a "Plan") or (C) any
entity, including an insurance company separate account or general
account, whose underlying assets include plan assets by reason of
a plan's investment in the entity or otherwise under ERISA, and is
not directly or indirectly purchasing such Ownership Interest on
behalf of, as investment manager of, as named fiduciary of, as
trustee of, or with assets of a Plan; or
(ii) furnish to the Owner Trustee and the Registrar and any
of their respective successors an opinion of counsel acceptable to
such persons that (A) the proposed issuance or transfer of such
Ownership Interest to such Prospective Transferor will not cause
any assets of the Trust to be deemed assets of a Plan, and (B) the
proposed holding or transfer of such Ownership Interest will not
cause the Owner Trustee or the Registrar or any of their
respective successors to be a fiduciary of a Plan within the
meaning of Section 3(21) of ERISA and will not give rise to a
transaction described in Section 406 of ERISA or Section
4975(c)(1) of the Code for which a statutory, regulatory or
administrative exemption is unavailable.
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(d) Neither the Ownership Interest nor any beneficial ownership
interest therein may be transferred to HSBC Finance or any Seller, or to any
non-United States Person as defined in Section 7701(a)(30) of the Code, and
any purported transfer in violation of this Section 3.13(d) shall be null and
void ab initio.
(e) The Prospective Transferor, other than the initial Transferor or
an affiliate of the initial Transferor, shall deliver to the Registrar and the
Owner Trustee an opinion of counsel acceptable to such Persons to the effect
that, as a matter of federal income tax law, such Prospective Transferor is
permitted to accept the transfer of the Ownership Interest.
(f) The Ownership Interest may not be pledged or transferred without
delivery to the Registrar of an opinion of counsel acceptable to the Registrar
to the effect that such transfer would not jeopardize the tax treatment of the
Trust, would not subject the Trust to an entity-level tax, and would not
jeopardize the status of the Notes as debt for all purposes.
(g) No pledge or transfer of the Ownership Interest shall be
effective unless such purchase or transfer (i) results in the Ownership
Interest being owned by a single beneficial owner and (ii) is accompanied by
an opinion of counsel satisfactory to the Owner Trustee, which opinion of
counsel shall not be an expense of the Trust, the Owner Trustee, the Indenture
Trustee, the Registrar, the Administrator or the Master Servicer, to the
effect such pledge or transfer will not cause the Trust to be treated for
federal income tax purposes as a taxable mortgage pool, association or a
publicly traded partnership taxable as a corporation.
13
ARTICLE IV
ACTIONS BY OWNER TRUSTEE
Section 4.1 Prior Notice to the Transferor and the Indenture Trustee
with Respect to Certain Matters. With respect to the following matters, the
Owner Trustee shall not take action, and neither the Transferor nor the
Indenture Trustee shall direct the Owner Trustee to take any action, unless
(i) the Indenture Trustee has provided written consent to the Owner Trustee,
(ii) at least 30 days before the taking of such action, the Owner Trustee
shall have notified the Transferor and the Indenture Trustee in writing of the
proposed action and neither the Transferor nor the Indenture Trustee shall
have notified the Owner Trustee in writing prior to the 30th day after such
notice is given that the Transferor has withheld consent or the Transferor or
the Indenture Trustee has provided alternative direction, and (iii) in the
case of clauses (b), (c), (d), (g), (h), (i), (j), (k), (l) and (o), the
Rating Agencies have confirmed that the taking of the proposed action would
not result in a withdrawal or a reduction of the then-current ratings of the
Notes.
(a) the initiation of any claim or lawsuit by the Trust (except
claims or lawsuits brought in connection with the collection of the Home
Equity Loans) and the compromise of any action, claim or lawsuit brought by or
against the Trust (except with respect to the aforementioned claims or
lawsuits for collection of the Home Equity Loans);
(b) the election by the Trust to file an amendment to the Certificate
of Trust (unless such amendment is required to be filed under the Statutory
Trust Statute);
(c) the amendment or other change to this Agreement or any
Transaction Document in circumstances where the consent of any Noteholder is
required;
(d) the amendment or other change to this Agreement or any
Transaction Document in circumstances where the consent of any Noteholder is
not required and such amendment materially adversely affects the interest of
the Transferor;
(e) the appointment pursuant to the Indenture of a successor Note
Registrar, Paying Agent (as defined in the Indenture) or Indenture Trustee, or
the consent to the assignment by the Note Registrar, Paying Agent (as defined
in the Indenture) or Indenture Trustee of its obligations under the Indenture;
(f) the consent to the calling or waiver of any default of any
Transaction Document;
(g) the consent to the assignment by the Indenture Trustee of its
obligations under any Transaction Document;
(h) except as provided in Article IX hereof, dissolve, terminate or
liquidate the Trust in whole or in part;
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(i) merge or consolidate the Trust with or into any other entity, or,
except as contemplated by the Sale and Servicing Agreement or the Indenture,
convey or transfer all or substantially all of the Trust's assets to any other
entity;
(j) cause the Trust to incur, assume or guaranty any indebtedness
other than as permitted by the Transaction Documents, as set forth in this
Agreement;
(k) do any act that conflicts with any other Transaction Document;
(l) do any act which would make it impossible to carry on the
ordinary business of the Trust;
(m) confess a judgment against the Trust;
(n) possess Trust assets, or assign the Trust's right to property,
for other than a Trust purpose; or
(o) change the Trust's purpose and powers from those set forth in
this Agreement.
In addition, except as specifically contemplated by the Transaction
Documents, the Trust shall not commingle its assets with those of any other
entity. The Trust shall maintain its financial and accounting books and
records separate from those of any other entity. Except as expressly set forth
herein, the Trust shall pay its indebtedness, operating expenses and other
liabilities from its own funds, and the Trust shall not pay the indebtedness,
operating expenses and liabilities of any other Person. The Trust shall
maintain appropriate minutes or other records of all appropriate actions and
shall maintain its office separate from the offices of the Depositor or HSBC
Finance, and any of their respective affiliates. This Agreement and the
Transaction Documents shall be the only agreements among the parties hereto
with respect to the creation, operation and termination of the Trust. For
accounting purposes, the Trust shall be treated as an entity separate and
distinct from the Transferor. The pricing and other material terms of all
transactions and agreements to which the Trust is a party shall be
intrinsically fair to all parties thereto.
The Owner Trustee shall not have the power, except upon the written
direction of the Transferor or the Indenture Trustee, and to the extent
otherwise consistent with the Transaction Documents, to remove or replace the
Master Servicer, the Indenture Trustee or the Administrator.
Section 4.2 Action by Transferor with Respect to Bankruptcy. So long
as the Indenture remains in effect, the Transferor shall not have the power
to, and shall not, and shall not direct the Owner Trustee to (i) institute
proceedings to have the Trust declared or adjudicated a bankrupt or insolvent,
(ii) consent to the institution of bankruptcy or insolvency proceedings
against the Trust, (iii) file a petition or consent to a petition seeking
reorganization or relief on behalf of the Trust under any applicable federal
or state law relating to bankruptcy, (iv) consent to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or any similar
official) of the Trust or a substantial portion of the property of the Trust,
(v) make any assignment for the benefit of the Trust's creditors, (vi) cause
the Trust to admit in writing its
15
inability to pay its debts generally as they become due, or (vii) take any
action, or cause the Trust to take any action, in furtherance of any of the
foregoing (any of the above, a "Bankruptcy Action"). The terms of this Section
4.2 shall survive for one year and one day following the termination of this
Agreement.
Section 4.3 Action by Owner Trustee with Respect to Bankruptcy. To
the fullest extent permitted by applicable law, the Owner Trustee shall not
have the power to commence a voluntary proceeding in bankruptcy relating to
the Trust without the prior consent and approval of the Transferor, and the
delivery to the Owner Trustee by the Transferor of a certificate certifying
that such Transferor reasonably believes that the Trust is insolvent. The
terms of this Section 4.3 shall survive for one year and one day following the
termination of this Agreement.
Section 4.4 Restrictions on Transferor's Power. The Transferor shall
not direct the Owner Trustee to take or refrain from taking any action if such
action or inaction would be contrary to any obligation of the Trust or the
Owner Trustee under this Agreement or any of the Transaction Documents or
would be contrary to Section 2.3 hereof, nor shall the Owner Trustee be
obligated to follow any such direction, if given.
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ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
Section 5.1 Establishment of Trust Account. The Administrator shall
establish and maintain the Collection Account in accordance with the
Indenture.
Section 5.2 Application of Trust Funds.
(a) On each Payment Date, the Administrator shall make the
distributions and payments set forth in Section 5.01 of the Sale and Servicing
Agreement from amounts on deposit in the Collection Account.
(b) On or before the second Business Day prior to each Payment Date,
the Administrator shall send to DTC the Servicing Certificate prepared by the
Master Servicer pursuant to Section 3.18 of the Sale and Servicing Agreement
with respect to such Payment Date.
(c) In the event that the Master Servicer advises the Administrator
in writing that any withholding tax is imposed on the Trust's payment (or
allocations of income) to the Transferor, such tax shall reduce the amount
otherwise distributable to the Transferor in accordance with this Section 5.2.
The Administrator is hereby authorized and directed to retain from amounts
otherwise distributable to the Transferor sufficient funds as the Master
Servicer shall specify in writing to the Administrator for the payment of any
tax that is legally owed by the Trust. The amount of any withholding tax
imposed with respect to the Transferor shall be treated as cash distributed to
the Transferor at the time it is withheld by the Trust and remitted to the
appropriate taxing authority. If there is a possibility that withholding tax
is payable with respect to a distribution (such as a distribution to a
non-U.S. Transferor), the Administrator may in its sole discretion withhold
such amounts in accordance with this paragraph (c). In the event that the
Transferor wishes to apply for a refund of any such withholding tax, the Owner
Trustee and the Administrator shall reasonably cooperate with the Transferor
in making such claim so long as the Transferor agrees to reimburse the Owner
Trustee and the Administrator for any out-of-pocket expenses incurred.
Section 5.3 Method of Payment. Distributions required to be made to
the Transferor on any Payment Date shall be made to the Transferor of record
on the preceding Record Date in the manner set forth in Section 5.01 of the
Sale and Servicing Agreement.
Section 5.4 [Reserved].
Section 5.5 Accounting and Reports to the Transferor, the Internal
Revenue Service and Others. The Master Servicer shall deliver (or cause to be
delivered) to the Transferor such information, reports or statements as may be
required by the Code and applicable Treasury Regulations and as may be
required to enable the Transferor to prepare its respective federal and state
income tax returns. Consistent with the Trust's characterization as a
disregarded entity within the meaning of Treasury regulations Section
301.7701-2(a), no federal income tax return shall be filed on behalf of the
Trust unless either (a) the Trust or the Transferor shall receive an opinion
of counsel that, based on a change in applicable law occurring after the date
hereof, the
17
Code requires such a filing or (b) the Internal Revenue Service shall
determine that the Trust is required to file such a return. The Master
Servicer shall prepare or shall cause to be prepared any tax returns required
to be filed by the Trust and shall remit such returns to the Transferor at
least five days before such returns are due to be filed. Such returns shall be
filed by, or at the direction of, the Master Servicer with the appropriate tax
authorities.
Section 5.6 Signature on Returns.
The Master Servicer shall sign on behalf of the Trust the tax returns
of the Trust, if any, unless applicable law requires the Transferor to sign
such documents, in which case such documents shall be signed by the
Transferor.
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ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE
Section 6.1 General Authority. The Owner Trustee is authorized and
directed to execute and deliver or cause to be executed and delivered the
Notes, and the Transaction Documents to which the Trust is to be a party and
each certificate or other document attached as an exhibit to or contemplated
by the Transaction Documents to which the Trust is to be a party and any other
agreement or instrument described in Article III, in each case, in such form
as the Owner Trustee shall approve, as evidenced conclusively by the Owner
Trustee's execution thereof, and, on behalf of the Trust, to direct the
Administrator to authenticate and deliver each Class of Notes in its
respective Initial Note Principal Amount. In addition to the foregoing, the
Owner Trustee is authorized, but shall not be obligated, to take all actions
required of the Trust pursuant to the Transaction Documents.
Section 6.2 General Duties. It shall be the duty of the Owner Trustee
to discharge (or cause to be discharged) all of its responsibilities pursuant
to the terms of this Agreement and the Transaction Documents to which the
Trust is a party and to administer the Trust in the interest of the
Transferor, subject to the Transaction Documents and in accordance with the
provisions of this Agreement. Notwithstanding the foregoing, the Owner Trustee
shall be deemed to have discharged its duties and responsibilities hereunder
and under the Transaction Documents to the extent the Master Servicer has
agreed in the Sale and Servicing Agreement to perform any act or to discharge
any duty of the Owner Trustee hereunder or under any Transaction Document, and
the Owner Trustee shall not be held liable for the default or failure of the
Master Servicer to carry out its respective obligations under the Sale and
Servicing Agreement.
Section 6.3 Action upon Instruction.
(a) Subject to Article IV herein and in accordance with the terms of
the Transaction Documents, the Transferor may by written instruction direct
the Owner Trustee in the management of the Trust but only to the extent
consistent with the limited purpose of the Trust. Such direction may be
exercised at any time by written instruction of the Transferor pursuant to
Article IV.
(b) Notwithstanding the foregoing, the Owner Trustee shall not be
required to take any action hereunder or under any Transaction Document if the
Owner Trustee shall have reasonably determined, or shall have been advised by
counsel, that such action is likely to result in liability on the part of the
Owner Trustee or is contrary to the terms hereof or of any Transaction
Document or is otherwise contrary to law.
(c) Whenever the Owner Trustee is unable to decide between
alternative courses of action permitted or required by the terms of this
Agreement or under any Transaction Document, the Owner Trustee shall promptly
give notice (in such form as shall be appropriate under the circumstances) to
the Transferor requesting instruction from the Transferor as to the course of
action to be adopted, and to the extent the Owner Trustee acts in good faith
in accordance with any written instruction of the Transferor received, the
Owner Trustee shall not be liable on account of such action to any Person. If
the Owner Trustee shall not have received
19
appropriate instruction within 10 days of such notice (or within such shorter
period of time as reasonably may be specified in such notice or may be
necessary under the circumstances) it may, but shall be under no duty to, take
or refrain from taking such action, not inconsistent with this Agreement or
the Transaction Documents, as it shall deem to be in the best interest of the
Transferor, and shall have no liability to any Person for such action or
inaction.
(d) In the event that the Owner Trustee is unsure as to the
application of any provision of this Agreement or any Transaction Document or
any such provision is ambiguous as to its application, or is, or appears to
be, in conflict with any other applicable provision, or in the event that this
Agreement provides no direction to the Owner Trustee or is silent or is
incomplete as to the course of action that the Owner Trustee is required to
take with respect to a particular set of facts, the Owner Trustee may give
notice (in such form as shall be appropriate under the circumstances) to the
Transferor requesting instruction and, to the extent that the Owner Trustee
acts or refrains from acting in good faith in accordance with any such
instruction received from the Transferor, the Owner Trustee shall not be
liable, on account of such action or inaction, to any Person. If the Owner
Trustee shall not have received appropriate instruction within 10 days of such
notice (or within such shorter period of time as reasonably may be specified
in such notice or may be necessary under the circumstances) it may, but shall
be under no duty to, take or refrain from taking such action, not inconsistent
with this Agreement or the Transaction Documents, as it shall deem to be in
the best interest of the Transferor, and shall have no liability to any Person
for such action or inaction.
Section 6.4 No Duties Except as Specified in this Agreement, the
Transaction Documents or in Instructions. The Owner Trustee shall not have any
duty or obligation to manage, make any payment with respect to, register,
record, sell, dispose of, or otherwise deal with the Owner Trust Estate, or to
otherwise take or refrain from taking any action under, or in connection with,
any document contemplated hereby to which the Owner Trustee or the Trust is a
party, except as expressly provided by the terms of this Agreement, any
Transaction Document or in any document or written instruction received by the
Owner Trustee pursuant to Section 6.3; and no implied duties or obligations
shall be read into this Agreement or any Transaction Document against the
Owner Trustee. The Owner Trustee shall have no responsibility for filing any
financing or continuation statement in any public office at anytime or to
otherwise perfect or maintain the perfection of any security interest or lien
granted to it hereunder or to prepare or file any Securities and Exchange
Commission filing for the Trust or to record this Agreement or any Transaction
Document. The Owner Trustee nevertheless agrees that it will, at its own cost
and expense, promptly take all action as may be necessary to discharge any
liens on any part of the Owner Trust Estate that result from actions by, or
claims against, the Owner Trustee in its individual capacity that are not
related to the ownership or the administration of the Owner Trust Estate.
Section 6.5 No Action Except Under Specified Documents or
Instructions. The Owner Trustee shall not manage, control, use, sell, dispose
of or otherwise deal with any part of the Owner Trust Estate except (i) in
accordance with the powers granted to and the authority conferred upon the
Owner Trustee pursuant to this Agreement, (ii) in accordance with the
Transaction Documents and (iii) in accordance with any document or instruction
delivered to the Owner Trustee pursuant to Section 6.3 above. The Owner
Trustee shall not be required to take any action under this Agreement if the
Owner Trustee shall reasonably determine or shall have
20
been advised by counsel that such action is contrary to the terms of this
Agreement or is otherwise contrary to law.
Section 6.6 Restrictions. The Owner Trustee shall not take any action
(a) that is inconsistent with the purposes of the Trust set forth in Section
2.3 hereof or (b) that, to the actual knowledge of a responsible officer of
the Owner Trustee, would result in the Trust's becoming taxable as a
corporation for Federal income tax purposes. The Transferor shall not direct
the Owner Trustee to take action that would violate the provisions of this
Section 6.6.
21
ARTICLE VII
CONCERNING THE OWNER TRUSTEE
Section 7.1 Acceptance of Trusts and Duties. The Owner Trustee
accepts the trusts hereby created and agrees to perform its duties hereunder
with respect to such trusts but only upon the terms of this Agreement and the
Transaction Documents. The Owner Trustee also agrees to disburse all moneys
actually received by it constituting part of the Owner Trust Estate upon the
terms of the Transaction Documents and this Agreement. The Owner Trustee shall
not be answerable or accountable hereunder or under any Transaction Document
under any circumstances, except (i) for its own willful misconduct, bad faith
or gross negligence or (ii) in the case of the inaccuracy of any
representation or warranty contained in Section 7.3 below expressly made by
the Owner Trustee. In particular, but not by way of limitation (and subject to
the exceptions set forth in the preceding sentence):
(a) the Owner Trustee shall not be liable for any error of judgment
made by a responsible officer of the Owner Trustee;
(b) no provision of this Agreement or any Transaction Document shall
require the Owner Trustee to expend or risk funds or otherwise incur any
financial liability in the performance of any of its rights or powers
hereunder or under any Transaction Document if the Owner Trustee shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured or provided
to it;
(c) under no circumstances shall the Owner Trustee be liable for
indebtedness evidenced by or arising under any of the Transaction Documents,
including the principal of and interest on the Notes;
(d) the Owner Trustee shall not be responsible for or in respect of
the validity or sufficiency of this Agreement or for the due execution hereof
by the Depositor or for the form, character, genuineness, sufficiency, value
or validity of any of the Owner Trust Estate or for or in respect of the
validity or sufficiency of the Transaction Documents, and the Owner Trustee
shall in no event assume or incur any liability, duty, or obligation to any
Noteholder or the Transferor other than as expressly provided for herein and
in the Transaction Documents;
(e) the Owner Trustee shall not be liable for the default or
misconduct of the Indenture Trustee or the Master Servicer under any of the
Transaction Documents or otherwise and the Owner Trustee shall not have any
obligation or liability to perform the obligations of the Trust under this
Agreement or the Transaction Documents that are required to be performed by
the Indenture Trustee under the Indenture, the Master Servicer under the Sale
and Servicing Agreement, or the Registrar or the Administrator hereunder;
(f) the Owner Trustee shall not be under any obligation to exercise
any of the rights or powers vested in it by this Agreement, or to institute,
conduct or defend any litigation under this Agreement or otherwise or in
relation to this Agreement or any Transaction Document, at the request, order
or direction of the Transferor, unless the Transferor has offered to the Owner
Trustee security or indemnity satisfactory to it against the costs, expenses
and
22
liabilities that may be incurred by the Owner Trustee therein or thereby.
The right of the Owner Trustee to perform any discretionary act enumerated in
this Agreement or in any Transaction Document shall not be construed as a
duty, and the Owner Trustee shall not be answerable for other than its gross
negligence or willful misconduct in the performance of any such act; and
(g) the Owner Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in accordance with the instructions of the
Transferor or any other Person to the extent such action or direction is
permitted by the Transaction Documents.
With respect to the Noteholders, the Owner Trustee undertakes to
perform or observe only such of the covenants and obligations of the Owner
Trustee as are expressly set forth in this Agreement, and no implied covenants
or obligations with respect to the Noteholders shall be read into this
Agreement or the other Transaction Documents against the Owner Trustee. The
Owner Trustee shall not be deemed to owe any fiduciary duty to the
Noteholders, and shall not be liable to any such person for the failure of the
Trust to perform its obligations to such persons other than as a result of the
gross negligence or willful misconduct of the Owner Trustee in the performance
of its express obligations under this Agreement.
Section 7.2 Furnishing of Documents. The Owner Trustee shall furnish
(a) to the Transferor promptly upon receipt of a written request therefor,
duplicates or copies of all reports, notices, requests, demands, certificates,
financial statements and any other instruments furnished to the Owner Trustee
under the Transaction Documents and (b) to Noteholders promptly upon written
request therefor, copies of the Sale and Servicing Agreement and this
Agreement.
Section 7.3 Representations and Warranties.
The Owner Trustee hereby represents and warrants to the Administrator
and the Depositor, for the benefit of the Transferor, the Noteholders and the
Indenture Trustee, that:
(a) It is a national banking association duly organized and validly
existing under the laws of the United States of America. It has all requisite
corporate power and authority to execute, deliver and perform its obligations
under this Agreement;
(b) It has taken all corporate action necessary to authorize the
execution and delivery by it of this Agreement, and this Agreement will be
executed and delivered by one of its officers who is duly authorized to
execute and deliver this Agreement on its behalf;
(c) Neither the execution nor the delivery by it of this Agreement
nor the consummation by it of the transactions contemplated hereby nor
compliance by it with any of the terms or provisions hereof will contravene
any federal law, governmental rule or regulation governing the banking or
trust powers of the Owner Trustee or any judgment or order binding on it, or
constitute any default under its charter documents or by-laws or any
indenture, mortgage, contract, agreement or instrument to which it is a party
or by which any of its properties may be bound;
(d) The execution, delivery, authentication and performance by the
Owner Trustee of this Agreement will not require the authorization, consent or
approval of, the giving of
23
notice to, the filing or registration with, or the taking of any other action
with respect to, any governmental authority or agency;
(e) This Agreement has been duly authorized, executed and delivered
by the Owner Trustee and constitutes a valid, legal and binding obligation of
the Owner Trustee, enforceable against it in accordance with the terms hereof,
subject to applicable bankruptcy, insolvency, reorganization, moratorium and
other laws affecting the enforcement of creditors' rights generally and to
general principles of equity, regardless of whether such enforcement is
considered in a proceeding in equity or at law;
(f) The Owner Trustee is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal, state,
municipal or governmental agency, which default might have consequences that
would materially and adversely affect the condition (financial or other) or
operations of the Owner Trustee or its properties or might have consequences
that would materially adversely affect its performance hereunder; and
(g) No litigation is pending or, to the best of the Owner Trustee's
knowledge, threatened against the Owner Trustee which would prohibit its
entering into this Agreement or performing its obligations under this
Agreement.
Section 7.4 Reliance; Advice of Counsel.
(a) The Owner Trustee shall not incur any liability to anyone in
acting upon any signature, instrument, notice, resolution, request, consent,
order, certificate, report, opinion, bond, or other document or paper believed
by it to be genuine and believed by it to be signed by the proper party or
parties. The Owner Trustee may accept a certified copy of a resolution of the
board of directors or other governing body of any corporate party as
conclusive evidence that such resolution has been duly adopted by such body
and that the same is in full force and effect. As to any fact or matter the
method of the determination of which is not specifically prescribed herein,
the Owner Trustee may for all purposes hereof rely on a certificate, signed by
the president or any vice president or by the treasurer or other authorized
officer of the relevant party, as to such fact or matter and such certificate
shall constitute full protection to the Owner Trustee for any action taken or
omitted to be taken by it in good faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder and in
the performance of its duties and obligations under this Agreement or the
Transaction Documents, the Owner Trustee (i) may, at the expense of HSBC
Finance, act directly or through its agents or attorneys pursuant to
agreements entered into with any of them, and the Owner Trustee shall not be
liable for the conduct or misconduct of their respective agents or attorneys
if such agents or attorneys shall have been selected by the Owner Trustee with
reasonable care, and (ii) may, at the expense of HSBC Finance, consult with
counsel, accountants and other skilled persons to be selected with reasonable
care and employed by them. The Owner Trustee shall not be liable for anything
done, suffered or omitted in good faith by it in accordance with the opinion
or advice of any such counsel, accountants or other such persons and not
contrary to this Agreement or any Transaction Document.
24
Section 7.5 Not Acting in Individual Capacity. Except as provided in
this Article VII, in accepting the trusts hereby created, Chase Bank USA,
National Association acts solely as Owner Trustee hereunder and not in its
individual capacity, and all Persons having any claim against the Owner
Trustee by reason of the transactions contemplated by this Agreement or any
Transaction Document shall look only to the Owner Trust Estate for payment or
satisfaction thereof.
Section 7.6 Owner Trustee Not Liable for the Ownership Interest or
the Home Equity Loans. The recitals contained herein shall be taken as the
statements of the Depositor, and the Owner Trustee assumes no responsibility
for the correctness thereof. The Owner Trustee makes no representation as to
the validity or sufficiency of this Agreement, of any Transaction Document or
of the Ownership Interest (other than as specified in Section 7.3 hereof) or
the Notes, or of any Home Equity Loans or related documents. The Owner Trustee
shall not at any time have any responsibility or liability for or with respect
to the legality, validity and enforceability of any Home Equity Loan, or the
perfection and priority of any security interest created by any Home Equity
Loan or the maintenance of any such perfection and priority, or for or with
respect to the sufficiency of the Owner Trust Estate or its ability to
generate the payments to be distributed to the Transferor under this Agreement
or to the Noteholders under the Indenture, including, without limitation: the
existence, condition and ownership of any Mortgaged Property; the existence
and enforceability of any insurance thereon; the existence and contents of any
Home Equity Loan on any computer or other record thereof; the validity of the
assignment of any Home Equity Loan to the Trust or of any intervening
assignment; the completeness of any Home Equity Loan; the performance or
enforcement of any Home Equity Loan; the compliance by the Depositor or the
Master Servicer with any warranty or representation made under any Transaction
Document or in any related document or the accuracy of any such warranty or
representation or any action of the Depositor, the Indenture Trustee or the
Master Servicer or any subservicer taken in the name of the Owner Trustee.
Section 7.7 Owner Trustee May Own the Ownership Interest and the
Notes. Chase Bank USA, National Association in its individual or any other
capacity may become the owner or pledgee of the Ownership Interest or the
Notes and may deal with the Depositor, the Indenture Trustee, the
Administrator and the Master Servicer in banking transactions with the same
rights as they would have if it were not the Owner Trustee.
Section 7.8 Licenses. The Master Servicer shall cause the Trust to
use its best efforts to obtain and maintain the effectiveness of any licenses
required in connection with this Agreement and the Transaction Documents and
the transactions contemplated hereby and thereby until such time as the Trust
shall terminate in accordance with the terms hereof.
25
ARTICLE VIII
COMPENSATION OF OWNER TRUSTEE
Section 8.1 Fees and Expenses. The Owner Trustee shall receive as
compensation for its services hereunder such fees as have been separately
agreed upon before the date hereof between HSBC Finance and the Owner Trustee,
and the Owner Trustee shall be entitled to be reimbursed by HSBC Finance for
its other reasonable expenses hereunder, including the reasonable
compensation, expenses and disbursements of such agents, representatives,
experts and counsel as the Owner Trustee may employ in connection with the
exercise and performance of its rights and its duties hereunder.
Section 8.2 Indemnification. HSBC Finance shall be liable as primary
obligor for, and shall indemnify the Owner Trustee (in its individual and
trustee capacities) and its respective successors, assigns, agents and
servants (collectively, the "Indemnified Parties") from and against, any and
all liabilities, obligations, losses, damages, taxes, claims, actions and
suits, and any and all reasonable costs, expenses and disbursements (including
reasonable legal fees and expenses) of any kind and nature whatsoever
(collectively, "Expenses") which may at any time be imposed on, incurred by,
or asserted against any Indemnified Party in any way relating to or arising
out of this Agreement, the Transaction Documents, the Owner Trust Estate, the
administration of the Owner Trust Estate or the action or inaction of the
Owner Trustee hereunder, except only that HSBC Finance shall not be liable for
or required to indemnify an Indemnified Party from and against Expenses
arising or resulting from any of the matters described in the third sentence
of Section 7.1 hereof. The indemnities contained in this Section 8.2 shall
survive the resignation or removal of the Owner Trustee or the termination of
this Agreement. In the event of any claim, action or proceeding for which
indemnity will be sought pursuant to this Section 8.2, the choice of legal
counsel of the Owner Trustee shall be subject to the approval of HSBC Finance,
which approval shall not be unreasonably withheld.
Section 8.3 Payments to the Owner Trustee. The Owner Trustee shall be
entitled to receive payment from the Trust Estate for any amounts due to it
pursuant to this Article VIII to the extent set forth in the Transaction
Documents. Any amounts paid to the Owner Trustee pursuant to this Article VIII
shall be deemed not to be a part of the Owner Trust Estate immediately after
such payment.
Section 8.4 Non-recourse Obligations. Notwithstanding anything in
this Agreement or any Transaction Document, the Owner Trustee agrees in its
individual capacity and in its capacity as Owner Trustee for the Trust that
all obligations of the Trust to the Owner Trustee individually or as Owner
Trustee for the Trust shall be recourse to the Trust only and specifically
shall not be recourse to the assets of any Noteholder.
26
ARTICLE IX
TERMINATION OF TRUST AGREEMENT
Section 9.1 Termination of Trust Agreement.
(a) This Agreement (other than Article VIII) shall terminate and the
Trust shall dissolve and terminate pursuant to and in accordance with Section
3808(d) and (e) of the Statutory Trust Statute and be of no further force or
effect upon notice to the Indenture Trustee of the earliest of (i) the final
payment or other liquidation of the last Home Equity Loan remaining in the
Trust; (ii) the optional purchase by the Master Servicer of the Home Equity
Loans as described in Section 8.01 of the Sale and Servicing Agreement, (iii)
the sale of the Home Equity Loans as described in Section 10.2 of the
Indenture and the corresponding redemption of the Notes; and (iv) the Payment
Date in January 2035. The bankruptcy, liquidation, dissolution, death or
incapacity of the Transferor shall not (x) operate to terminate this Agreement
or the Trust, nor (y) entitle such Transferor's legal representatives or heirs
to claim an accounting or to take any action or proceeding in any court for a
partition or winding-up of all or any part of the Trust or Owner Trust Estate
nor (z) otherwise affect the rights, obligations and liabilities of the
parties hereto.
(b) The Ownership Interest shall be subject to an early redemption or
termination at the option of the Master Servicer in the manner and subject to
the provisions of Section 8.01 of the Sale and Servicing Agreement.
(c) Except as provided in Sections 9.1(a) and (b) above, neither the
Depositor nor the Transferor shall be entitled to revoke or terminate the
Trust.
(d) The Master Servicer shall be responsible for the liquidation of
the Trust. Upon the winding up of the Trust and its termination in accordance
with Section 3808 of the Statutory Trust Statute, the Owner Trustee shall at
the direction and expense of the Master Servicer cause the Certificate of
Trust to be canceled by filing a certificate of cancellation with the
Secretary of State in accordance with Section 3810 of the Statutory Trust
Statute.
27
ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
Section 10.1 Eligibility Requirements for Owner Trustee. (a) The
Owner Trustee shall at all times be a corporation or national banking
association authorized to exercise corporate powers; having a combined capital
and surplus of at least $50,000,000 and subject to supervision or examination
by Federal or state authorities; and having (or having a parent which has) a
long-term rating of at least "Baa3" (or its equivalent) by Xxxxx'x and "A" (or
its equivalent) by Standard & Poor's. If such corporation shall publish
reports of condition at least annually, pursuant to law or to the requirements
of the aforesaid supervising or examining authority, then for the purpose of
this Section, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. In case at any time the Owner Trustee shall
cease to be eligible in accordance with the provisions of this Section 10.1,
the Owner Trustee shall resign immediately in the manner and with the effect
specified in Section 10.2.
(b) The Owner Trustee shall at all times be an entity satisfying the
provisions of Section 3807(a) of the Delaware Statutory Trust Statute. If at
any time the Owner Trustee ceases to be eligible in accordance with the
provisions of this Section, the Owner Trustee will resign immediately in the
manner and with the effect specified in Section 10.2.
Section 10.2 Resignation or Removal of Owner Trustee. The Owner
Trustee may at any time resign and be discharged from the trusts hereby
created by giving written notice thereof to the Trust, the Indenture Trustee
and the Rating Agencies. Upon receiving such notice of resignation, the
Depositor shall promptly appoint a successor Owner Trustee by written
instrument, in duplicate, one copy of which instrument shall be delivered to
the resigning trustee and one copy to the successor trustee, with a copy to
the Indenture Trustee. If no successor Owner Trustee shall have been so
appointed and have accepted appointment within 30 days after the giving of
such notice of resignation, the resigning trustee may petition any court of
competent jurisdiction for the appointment of a successor Owner Trustee.
If at any time the Owner Trustee shall cease to be eligible in
accordance with the provisions of Section 10.1 above and shall fail to resign
after written request therefor by the Indenture Trustee, or if at any time the
Owner Trustee shall be legally unable to act, or shall be adjudged bankrupt or
insolvent, or a receiver of the Owner Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the Owner
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then the Indenture Trustee may, and, at the
written direction of the Majority Noteholder, shall, remove the Owner Trustee.
If the Indenture Trustee shall remove the Owner Trustee under the authority of
the immediately preceding sentence, the Indenture Trustee shall promptly
appoint a successor Owner Trustee by written instrument in duplicate, one copy
of which instrument shall be delivered to the outgoing trustee so removed and
one copy to the successor trustee and payment of all fees owed to the outgoing
trustee.
Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this Section 10.2
shall not become effective until
28
acceptance of appointment by the successor trustee pursuant to Section 10.3
and payment of all fees and expenses owed to the outgoing trustee. The
Indenture Trustee shall provide notice of such resignation or removal of the
Owner Trustee to each of the Rating Agencies and to the Administrator.
Section 10.3 Successor Trustee. Any successor Owner Trustee appointed
pursuant to Section 10.2 shall execute, acknowledge and deliver to the
Indenture Trustee and to its predecessor trustee an instrument accepting such
appointment under this Agreement, and thereupon the resignation or removal of
the predecessor trustee shall become effective and such successor trustee,
without any further act, deed or conveyance, shall become fully vested with
all the rights, powers, duties, and obligations of its predecessor under this
Agreement, with like effect as if originally named as Owner Trustee. The
predecessor Owner Trustee shall upon payment of its fees and expenses deliver
to the successor Owner Trustee all documents and statements and monies held by
it under this Agreement; and the Indenture Trustee and the predecessor Owner
Trustee shall execute and deliver such instruments and do such other things as
may reasonably be required for fully and certainly vesting and confirming in
the successor Owner Trustee all such rights, powers, duties, and obligations.
No successor Owner Trustee shall accept appointment as provided in
this Section 10.3 unless at the time of such acceptance such successor Owner
Trustee shall be eligible pursuant to Section 10.1 above.
Upon acceptance of appointment by a successor Owner Trustee pursuant
to this Section 10.3, the Indenture Trustee shall mail notice of the successor
of such Owner Trustee to the Administrator, the Transferor, the Noteholders
and the Rating Agencies. If the Indenture Trustee fails to mail such notice
within 10 days after acceptance of appointment by the successor Owner Trustee,
the successor Owner Trustee shall cause such notice to be mailed at the
expense of the Indenture Trustee.
Any successor Owner Trustee shall promptly file a certificate of
amendment identifying the name and principal plan of business of the Owner
Trustee in the State of Delaware.
Section 10.4 Merger or Consolidation of Owner Trustee. Any Person
into which the Owner Trustee may be merged or converted or with which either
may be consolidated or any Person resulting from any merger, conversion or
consolidation to which the Owner Trustee shall be a party, or any Person
succeeding to all or substantially all of the corporate trust business of the
Owner Trustee, shall be the successor of the Owner Trustee hereunder, provided
such Person shall be eligible pursuant to Section 10.1 above, without the
execution or filing of any instrument or any further act on the part of any of
the parties hereto, anything herein to the contrary notwithstanding; provided
further that the Owner Trustee shall mail notice of such merger or
consolidation to the Depositor, HSBC Finance and the Rating Agencies.
Section 10.5 Appointment of Co-Owner Trustee or Separate Owner
Trustee. Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Owner Trust Estate or any Mortgaged Property may at the time
be located, the Owner Trustee shall have the power and shall execute and
deliver all instruments to appoint one or more Persons to act as co-owner
29
trustee, jointly with the Owner Trustee, or separate owner trustee or separate
owner trustees, of all or any part of the Owner Trust Estate, and to vest in
such Person, in such capacity, such title to the Trust, or any part thereof,
and, subject to the other provisions of this Section, such powers, duties,
obligations, rights and trusts as the Owner Trustee may consider necessary or
desirable. No co-owner trustee or separate trustee under this Section 10.5
shall be required to meet the terms of eligibility as a successor Owner
Trustee pursuant to Section 10.1 above and no notice of the appointment of any
co-owner trustee or separate trustee shall be required pursuant to Section
10.3 above.
Each separate trustee and co-owner trustee shall, to the extent
permitted by law, be appointed and act subject to the following provision and
conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Owner Trustee shall be conferred upon and
exercised or performed by the Owner Trustee and such separate
owner trustee or co-owner trustee jointly (it being understood
that such separate owner trustee or co-owner trustee is not
authorized to act separately without the Owner Trustee joining in
such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be
performed, the Owner Trustee shall be incompetent or unqualified
to perform such act or acts, in which event such rights, powers,
duties, and obligations (including the holding of title to the
Trust or any portion thereof in any such jurisdiction) shall be
exercised and performed singly by such separate trustee or
co-owner trustee but solely at the direction of the Owner Trustee;
(ii) no owner trustee under this Agreement shall be
personally liable by reason of any act or omission of any other
owner trustee under this Agreement; and
(iii) the Owner Trustee may at any time accept the
resignation of or remove any separate trustee or co-owner trustee.
Any notice, request or other writing given to the Owner Trustee shall
be deemed to have been given to the separate trustees and co-owner trustees,
as if given to each of them. Every instrument appointing any separate owner
trustee or co-owner trustee, other than this Agreement, shall refer to this
Agreement and to the conditions of this Article X. Each separate trustee and
co-owner trustee, upon its acceptance of appointment, shall be vested with the
estates specified in its instrument of appointment, either jointly with the
Owner Trustee or separately, as may be provided therein, subject to all the
provisions of this Agreement, specifically including every provision of this
Agreement relating to the conduct of, affecting the liability of, or affording
protection to, the Owner Trustee. Each such instrument shall be filed with the
Owner Trustee.
Any separate trustee or co-owner trustee may at any time appoint the
Owner Trustee as its agent or attorney-in-fact with full power and authority,
to the extent not prohibited by law, to do any lawful act under or in respect
of this Agreement on its behalf and in its name. If any owner trustee or
co-owner trustee shall die, become incapable of acting, resign or be removed,
all of its estates, properties, rights, remedies and trusts shall vest in and
be exercised by the Owner Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
30
ARTICLE XI
MISCELLANEOUS
Section 11.1 Supplements and Amendments. This Agreement may be
amended by the Depositor, HSBC Finance, the Owner Trustee and the
Administrator with prior written notice to the Rating Agencies and the
Indenture Trustee, but without the consent of any of the Noteholders, the
Transferor or the Indenture Trustee, to cure any ambiguity, to correct or
supplement any provisions in this Agreement or for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions
in this Agreement or of modifying in any manner the rights of the Noteholders
or the Transferor; provided, however, that such action shall not, as evidenced
by an opinion of counsel delivered to and acceptable to the Indenture Trustee,
adversely affect in any material respect the interests of any Noteholder or
the Transferor. An amendment described above shall be deemed not to adversely
affect in any material respect the interests of any Noteholder or the
Transferor if the party requesting the amendment satisfies the Rating Agency
Condition with respect to such amendment. The Depositor and the Administrator
each shall join in any such amendment approved as provided in the preceding
sentence so long as such amendment is not adverse to the interests of the
Depositor or the Administrator, as the case may be.
This Agreement may also be amended from time to time by the
Depositor, HSBC Finance, the Owner Trustee and the Administrator with the
prior written consent of the Rating Agencies, the Indenture Trustee, the
Majority Noteholder and the Transferor, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions
of this Agreement or modifying in any manner the rights of the Noteholders or
the Transferor; provided, however, that no such amendment shall (a) increase
or reduce in any manner the amount of, or accelerate or delay the timing of,
collections of payments on the Home Equity Loans or distributions that shall
be required to be made for the benefit of the Noteholders or the Transferor or
(b) reduce the Percentage Interest required to consent to any such amendment,
without the consent of the holders of all the outstanding Notes; and provided
further, that no such amendment will be effective unless such action will not,
as evidenced by an opinion of counsel delivered to and acceptable to the
Indenture Trustee, adversely affect in any material respect the interests of
any Noteholders. The Depositor and the Administrator each shall join in any
such amendment approved as provided in the preceding sentence so long as such
amendment is not adverse to the interests of the Depositor or the
Administrator, as the case may be.
Promptly after the execution of any such amendment, the Master
Servicer shall furnish written notification of the substance of such amendment
to the Indenture Trustee and each of the Rating Agencies.
It shall not be necessary for the consent of the Transferor, the
Noteholders or the Indenture Trustee pursuant to this Section 11.1 to approve
the particular form of any proposed amendment, but it shall be sufficient if
such consent shall approve the substance thereof. The manner of obtaining such
consents (and any other consents of the Transferor provided for in this
Agreement or in any other Transaction Document) and of evidencing the
authorization of the execution thereof by the Transferor and the Noteholders
shall be subject to such reasonable requirements as the Owner Trustee may
prescribe.
31
Promptly after the execution of any amendment to the Certificate of
Trust, the Owner Trustee shall cause the filing of such amendment with the
Secretary of State.
Prior to the execution of any amendment to this Agreement or the
Certificate of Trust, each of the Owner Trustee and the Administrator shall be
entitled to receive and rely upon an opinion of counsel stating that the
execution of such amendment is authorized and permitted by this Agreement and
that all conditions precedent to such execution and delivery have been
satisfied. The Owner Trustee and the Administrator may, but shall not be
obligated to, enter into any such amendment which affects their respective
rights, duties or immunities under this Agreement or otherwise.
Section 11.2 No Legal Title to Owner Trust Estate in Transferor. The
Transferor shall not have legal title to any part of the Owner Trust Estate.
The Transferor shall be entitled to receive distributions with respect to its
undivided Ownership Interest therein only in accordance with Articles V and IX
herein. No transfer, by operation of law or otherwise, of any right, title, or
interest of the Transferor to and in its Ownership Interest shall operate to
terminate this Agreement or the trusts hereunder or entitle any transferee to
an accounting or to the transfer to it of legal title to any part of the Owner
Trust Estate.
Section 11.3 Limitations on Rights of Others. The provisions of this
Agreement are solely for the benefit of the Owner Trustee, the Administrator,
the Trust, the Transferor and, to the extent expressly provided herein, the
Indenture Trustee and the Noteholders, and nothing in this Agreement, whether
express or implied, shall be construed to give to any other Person any legal
or equitable right, remedy or claim in the Owner Trust Estate or under or in
respect of this Agreement or any covenants, conditions or provisions contained
herein.
Section 11.4 Notices.
(a) Unless otherwise expressly specified or permitted by the terms
hereof, all notices shall be in writing and shall be deemed given (1) upon
receipt by the intended recipient via facsimile if also mailed by first-class
mail, postage prepaid or (2) upon receipt by the intended recipient or three
Business Days after mailing if mailed by certified mail, postage prepaid
(except that notice to the Owner Trustee shall be deemed given only upon
actual receipt by the Owner Trustee), at the following addresses: (i) if to
the Owner Trustee, the Indenture Trustee or the Administrator, at its
respective Corporate Trust Office; (ii) if to the Depositor or HSBC Finance,
0000 Xxxxxxx Xxxx, Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000, Attention: Treasurer; or,
as to each such party, at such other address as shall be designated by such
party in a written notice to each other party.
(b) Any notice required or permitted to be given to the Transferor
shall be given by first-class mail, postage prepaid, at the address of such
Transferor as shown in the Register. Any notice so mailed within the time
prescribed in this Agreement shall be conclusively presumed to have been duly
given, whether or not the Transferor receives such notice.
Section 11.5 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such
32
prohibition or unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other
jurisdiction.
Section 11.6 Separate Counterparts. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed
and delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
Section 11.7 Successors and Assigns. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of the Owner
Trustee, the Administrator and the Transferor and its successors and permitted
assigns, all as herein provided. Any request, notice, direction, consent,
waiver or other instrument or action by the Transferor shall bind the
successors and assigns of the Transferor.
Section 11.8 No Petition. The Owner Trustee and the Administrator, by
entering into this Agreement, the Transferor, by accepting the Ownership
Interest, and the Indenture Trustee and each Noteholder by accepting the
benefits of this Agreement, hereby covenant and agree that they will not at
any time institute against the Depositor or the Trust, or join in any
institution against the Depositor, or the Trust of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any United States Federal or state bankruptcy or law in
connection with any obligations relating to the Ownership Interest and the
Notes, this Agreement or any of the Transaction Documents.
Section 11.9 [Reserved].
Section 11.10 No Recourse. The Transferor by accepting the Ownership
Interest acknowledges that the Transferor's Ownership Interest represents a
beneficial interest in the Trust only and does not represent an interest in or
an obligation of the Master Servicer, the Depositor, the Owner Trustee, the
Administrator or any Affiliate thereof and no recourse may be had against such
parties or their assets, except as may be expressly set forth or contemplated
in this Agreement or the other Transaction Documents.
Section 11.11 Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
Section 11.12 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 11.13 Inconsistencies with Sale and Servicing Agreement.
In the event certain provisions of this Agreement conflict with the
provisions of the Sale and Servicing Agreement, the parties hereto agree that
the provisions of the Sale and Servicing Agreement shall be controlling (other
than the provisions governing the internal affairs of the Trust, which shall
be governed by Delaware law).
33
Section 11.14 Third Party Beneficiary.
The parties hereto acknowledge that the Indenture Trustee is an
express third party beneficiary hereof entitled to enforce the provisions
hereof as if it were actually a party hereto. Nothing in this Section 11.14
however shall be construed to mitigate in any way, the fiduciary
responsibilities of the Owner Trustee to the beneficiaries of the Trust.
Section 11.15 Master Servicer.
The Master Servicer is authorized to prepare, or to cause to be
prepared, execute and deliver on behalf of the Trust all such documents,
reports, filings, instruments, certificates and opinions as it shall be the
duty of the Trust or the Owner Trustee to prepare, file or deliver pursuant to
the Transaction Documents. Upon written request, the Owner Trustee shall
execute and deliver to the Master Servicer a limited power of attorney
appointing the Master Servicer the Trust's agent and attorney-in-fact to
prepare, or to cause to be prepared, execute and deliver all such documents,
reports, filings, instruments, certificates and opinions.
Section 11.16 Rights Under Indenture.
HSBC Bank USA, National Association shall be afforded each of the
rights, protections, immunities and indemnities in acting as Administrator,
Registrar and Paying Agent hereunder as it is entitled to in its capacity as
Administrator, Note Registrar and Paying Agent under the Indenture.
34
IN WITNESS WHEREOF, the parties hereto have caused this Amended and
Restated Trust Agreement to be duly executed by their respective officers
hereunto duly authorized, as of the day and year first above written.
HSBC FINANCE CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President and Assistant Treasurer
HSBC HOME EQUITY LOAN CORPORATION I,
as Depositor
By: /s/ Xxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President and Assistant Treasurer
CHASE BANK USA, NATIONAL ASSOCIATION,
as Owner Trustee
By: /s/ Xxxx X. Xxxxxx
------------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President
HSBC BANK USA, NATIONAL ASSOCIATION
as Administrator
By: /s/ Xxxxx Xxx
-----------------------------------
Name: Xxxxx Xxx
Title: Vice President
EXHIBIT A
CERTIFICATE OF TRUST
OF
HSBC HOME EQUITY LOAN TRUST 2005-3
----------------------------------
THIS Certificate of Trust of HSBC Home Equity Loan Trust 2005-3 (the
"Trust"), is being duly executed and filed on behalf of the trust by the
undersigned, as trustee, to form a statutory trust under the Delaware
Statutory Trust Act (12 Del. C., ss. 3801 et seq.) (the "Act").
1. Name. The name of the statutory trust formed by this is HSBC Home
Equity Loan Trust 2005-3.
2. Owner Trustee. The name and business address of the trustee of the
Trust in the State of Delaware are Chase Bank USA, National Association, x/x
XXXxxxxx Xxxxx, 000 Xxxxxxx Xxxxxxxxxx Rd., Building 0 - 0xx Xxxxx, Xxxxxx,
Xxxxxxxx 00000. Attention: Worldwide Securities Services.
3. Effective Date. This Certificate of Trust shall be effective upon
filing.
IN WITNESS WHEREOF, the undersigned has duly executed this
Certificate of Trust in accordance with Section 3811(a) of the Act.
CHASE BANK, NATIONAL ASSOCIATION,
not in its individual capacity but
solely as Owner Trustee
By:_________________________________________
Name:
Title:
A-1
EXHIBIT B
TRANSFER CERTIFICATE
--------------------
Chase Bank USA, National Association, as Owner Trustee
x/x XXXxxxxx Xxxxx
000 Xxxxxxx Xxxxxxxxxx Rd.,
Building 4 - 3rd Floor,
Newark, Delaware 19713
Attention: Worldwide Securities Services
HSBC Bank USA, National Association, as Registrar
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Corporate Trust, Reference: HSBC Home Equity Loan Trust 2005-3
Re: Amended and Restated Trust Agreement, dated
November 9, 2005, among HSBC Finance Corporation,
HSBC Home Equity Loan Corporation I, as Depositor,
Chase Bank USA, National Association, as Owner
Trustee, and HSBC Bank USA, National Association,
as Administrator; HSBC Home Equity Loan Trust
2005-3, Closed-End Home Equity Loan Asset Backed
Notes, Series 2005-3
--------------------------------------------------
Ladies and Gentlemen:
The undersigned (the "Transferee") has agreed to purchase ____________
from (the "Transferor") the Ownership Interest:
A. Rule 144A "Qualified Institutional Buyers" should complete this
section
I. The Transferee is (check one):
____ (i) An insurance company, as defined in Section 2(13)
of the Securities Act of 1933, as amended (the
"Securities Act"), (ii) an investment company
registered under the Investment Company Act of
1940, as amended (the "Investment Company Act"),
(iii) a business development company as defined in
Section 2(a)(48) of the Securities Act, (iv) a
Small Business Investment Company licensed by the
U.S. Small Business Administration under Section
301(c) or (d) of the Small Business Investment Act
of 1958, (v) a plan established and maintained by a
state, its political subdivisions, or any agency or
instrumentality of a state or its political
subdivisions, for the benefit of its employees,
(vi) an employee benefit plan within the meaning of
Title I of the Employee Retirement
B-1
Income Security Act of 1974, as amended ("ERISA"),
(vii) a business development company as defined in
Section 202(a)(22) of the Investment Advisors Act of
1940, (viii) an organization described in Section
501(c)(3) of the Internal Revenue Code, corporation
(other than a bank as defined in Section 3(a)(2) of
the Securities Act or a savings and loan association
or other institution referenced in Section 3(a)(2) of
the Securities Act or a foreign bank or savings and
loan association or equivalent institution),
partnership, or Massachusetts or similar business
trust; or (ix) an investment advisor registered under
the Investment Advisors Act of 1940, which, for each
of (i) through (ix), owns and invests on a
discretionary basis at least $100 million in
securities other than securities of issuers affiliated
with the Transferee, securities issued or guaranteed
by the United States or a person controlled or
supervised by and acting as an instrumentality of the
government of the United States pursuant to authority
granted by the Congress of the United States, bank
deposit notes and certificates of deposit, loan
participations, repurchase agreements, securities
owned but subject to a repurchase agreement, and
currency, interest rate and commodity swaps
(collectively, "Excluded Securities");
____ a dealer registered pursuant to Section 15 of the
Securities Exchange Act of 1934, as amended (the
"Exchange Act") that in the aggregate owns and invests
on a discretionary basis at least $10 million of
securities other than Excluded Securities and
securities constituting the whole or part of an unsold
allotment to, or subscription by, Transferee as a
participant in a public offering;
____ an investment company registered under the Investment
Company Act that is part of a family of investment
companies (as defined in Rule 144A of the Securities
and Exchange Commission) which own in the aggregate at
least $100 million in securities other than Excluded
Securities and securities of issuers that are part of
such family of investment companies;
____ an entity, all of the equity owners of which are
entities described in this Paragraph A(I);
____ a bank as defined in Section 3(a)(2) of the Securities
Act, any savings and loan association or other
institution as referenced in Section 3(a)(5)(A) of the
Securities Act, or any foreign bank or savings and
loan association or equivalent institution that in the
aggregate owns and invests on a discretionary basis at
least $100 million in securities other than Excluded
Securities and has an audited net worth of at least
$25 million as demonstrated in its latest annual
financial statements, as of a date not more than 16
months preceding the date of transfer of the Ownership
Interest to the Transferee in the case of a U.S. bank
or savings and loan association, and not more than 18
months preceding such date in the case of a foreign
bank or savings association or equivalent institution.
B-2
II. The Transferee is acquiring such Ownership Interest solely for
its own account, for the account of one or more others, all of which are
"Qualified Institutional Buyers" within the meaning of Rule 144A, or in its
capacity as a dealer registered pursuant to Section 15 of the Exchange Act
acting in a riskless principal transaction on behalf of a "Qualified
Institutional Buyer". The Transferee is not acquiring such Ownership Interest
with a view to or for the resale, distribution, subdivision or
fractionalization thereof which would require registration of the Ownership
Interest under the Securities Act.
B. "Accredited Investors" should complete this Section
I. The Transferee is (check one):
____ a bank within the meaning of Section 3(a)(2) of the
Securities Act;
____ a savings and loan association or other institution
defined in Section 3(a)(5) of the Securities Act;
____ a broker or dealer registered pursuant to the Exchange
Act;
____ an insurance company within the meaning of Section
2(13) of the Securities Act;
____ an investment company registered under the Investment
Company Act;
____ an employee benefit plan within the meaning of Title I
of ERISA, which has total assets in excess of
$5,000,000;
____ another entity which is an "accredited investor"
within the meaning of paragraph ______ (fill in) of
subsection (a) of Rule 501 of the Securities and
Exchange Commission.
II. The Transferee is acquiring such Ownership Interest solely for
its own account, for investment, and not with a view to or for the resale,
distribution, subdivision or fractionalization thereof which would require
registration of the Ownership Interest under the Securities Act.
C. If the Transferee is unable to complete one of paragraph A(I) or
paragraph B(I) above, the Transferee must furnish an opinion in form and
substance satisfactory to the Trustee of counsel satisfactory to the Trustee
to the effect that such purchase will not violate any applicable federal or
state securities laws.
D. The Transferee is not (A) an "employee benefit plan" within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA") that is subject to Title I of ERISA, or (B) a
"plan" within the meaning of and subject to Section 4975 of the Code (any such
plan or employee benefit plan, a "Plan") or (C) any entity, including an
insurance company separate account or general account, whose underlying assets
include plan assets by reason of a plan's investment in the entity and is not
directly or indirectly purchasing
B-3
such Trust Security on behalf of, as investment manager of, as named fiduciary
of, as trustee of, or with assets of a Plan.
(iii) the Transferee is an "accredited investor" as defined in Rule
501(a) of Regulation D pursuant to the Securities Act.
Very truly yours,
[NAME OF TRANSFEREE]
By:______________________________________
Title:___________________________________
Dated:
THE FOREGOING IS ACKNOWLEDGED THIS ____ DAY OF __________, 200_.
[NAME OF TRANSFEROR]
By:_______________________________________
Title:____________________________________
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