EXHIBIT 4.2
EXECUTION VERSION
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AMENDED AND RESTATED TRUST AGREEMENT
among
HOUSEHOLD FINANCE CORPORATION
HFC REVOLVING CORPORATION
as Depositor
THE BANK OF NEW YORK
as Owner Trustee
U.S. BANK NATIONAL ASSOCIATION
as Co-Trustee
THE BANK OF NEW YORK (DELAWARE)
as Delaware Trustee
and
HSBC BANK USA, NATIONAL ASSOCIATION
as Administrator
Dated July 22, 2004
HOUSEHOLD HOME EQUITY LOAN TRUST 2004-1
Closed-End Home Equity Loan Asset Backed Notes, Series 2004-1
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Table of Contents
Page
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ARTICLE I
DEFINITIONS
Section 1.1 Capitalized Terms...........................................1
Section 1.2 Other Definitional Provisions...............................5
ARTICLE II
ORGANIZATION
Section 2.1 Name........................................................7
Section 2.2 Offices.....................................................7
Section 2.3 Purposes and Powers.........................................7
Section 2.4 Appointment of Owner Trustee................................8
Section 2.5 Appointment of Delaware Trustee.............................8
Section 2.6 Appointment of Co-Trustee...................................8
Section 2.7 Capital Contribution of Owner Trust Estate.................10
Section 2.8 Declaration of Trust.......................................10
Section 2.9 Title to Trust Property....................................11
Section 2.10 Situs of Trust.............................................11
Section 2.11 Representations and Warranties of the Depositor............11
Section 2.12 Federal Income Tax Allocations.............................12
ARTICLE III
OWNERSHIP INTEREST AND TRANSFERS OF THE OWNERSHIP INTEREST
Section 3.1 Initial Ownership..........................................13
Section 3.2 The Ownership Interest.....................................13
Section 3.3 [Reserved].................................................13
Section 3.4 Registration of Transfer and Exchange of Ownership
Interest...................................................13
Section 3.5 [Reserved].................................................13
Section 3.6 Persons Deemed Transferors.................................13
Section 3.7 [Reserved].................................................13
Section 3.8 Maintenance of Office or Agency............................13
Section 3.9 Appointment of Paying Agent................................14
Section 3.10 [Reserved].................................................14
Section 3.11 [Reserved].................................................14
Section 3.12 [Reserved].................................................14
Section 3.13 Restrictions on Transfers of Ownership Interest............14
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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............................17
Section 4.2 [Reserved].................................................19
Section 4.3 Action by Transferor with Respect to Bankruptcy............19
Section 4.4 Restrictions on Transferor's Power.........................19
ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
Section 5.1 Establishment of Trust Account.............................20
Section 5.2 Application of Trust Funds.................................20
Section 5.3 Method of Payment..........................................20
Section 5.4 [Reserved].................................................20
Section 5.5 Accounting and Reports to the Transferor, the Internal
Revenue Service and Others.................................20
Section 5.6 Signature on Returns.......................................21
ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE
Section 6.1 General Authority..........................................22
Section 6.2 General Duties.............................................22
Section 6.3 Action upon Instruction....................................22
Section 6.4 No Duties Except as Specified in this Agreement,
the Transaction Documents or in Instructions...............23
Section 6.5 No Action Except Under Specified Documents or
Instructions...............................................23
Section 6.6 Restrictions...............................................24
ARTICLE VII
CONCERNING THE OWNER TRUSTEE AND THE DELAWARE TRUSTEE
Section 7.1 Acceptance of Trusts and Duties............................25
Section 7.2 Furnishing of Documents....................................26
Section 7.3 Representations and Warranties.............................27
Section 7.4 Reliance; Advice of Counsel................................29
Section 7.5 Not Acting in Individual Capacity..........................29
Section 7.6 Owner Trustee and Delaware Trustee Not Liable for
the Ownership Interest or the Home Equity Loans............29
Section 7.7 Owner Trustee and Delaware Trustee May Own the
Ownership Interest and the Notes...........................30
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Section 7.8 Licenses...................................................30
ARTICLE VIII
COMPENSATION OF OWNER TRUSTEE AND DELAWARE TRUSTEE
Section 8.1 Fees and Expenses..........................................31
Section 8.2 Indemnification............................................31
Section 8.3 Payments to the Owner Trustee and Delaware Trustee.........31
Section 8.4 Non-recourse Obligations...................................31
ARTICLE IX
TERMINATION OF TRUST AGREEMENT
Section 9.1 Termination of Trust Agreement.............................32
ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES;
SUCCESSOR DELAWARE TRUSTEES
Section 10.1 Eligibility Requirements for Owner Trustee and
Delaware Trustee...........................................33
Section 10.2 Resignation or Removal of Owner Trustee or Delaware
Trustee....................................................33
Section 10.3 Successor Trustee..........................................34
Section 10.4 Merger or Consolidation of Owner Trustee or
Delaware Trustee...........................................34
Section 10.5 Appointment of Co-Owner Trustee or Separate
Owner Trustee..............................................35
ARTICLE XI
MISCELLANEOUS
Section 11.1 Supplements and Amendments.................................37
Section 11.2 No Legal Title to Owner Trust Estate in Transferor.........38
Section 11.3 Limitations on Rights of Others............................38
Section 11.4 Notices....................................................38
Section 11.5 Severability...............................................39
Section 11.6 Separate Counterparts......................................39
Section 11.7 Successors and Assigns.....................................39
Section 11.8 No Petition................................................39
Section 11.9 [Reserved].................................................39
Section 11.10 No Recourse................................................39
Section 11.11 Headings...................................................39
Section 11.12 GOVERNING LAW..............................................39
Section 11.13 Inconsistencies with Sale and Servicing Agreement..........40
Section 11.14 Third Party Beneficiary....................................40
Section 11.15 Master Servicer............................................40
Section 11.16 Rights Under Indenture.....................................40
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EXHIBIT A Certificate of Trust..........................................A-1
EXHIBIT B Form of Transfer Certificate..................................B-1
iv
AMENDED AND RESTATED TRUST AGREEMENT, dated July 22, 2004, among
Household Finance Corporation ("HFC"), HFC Revolving Corporation, as depositor
(the "Depositor"), The Bank of New York, a New York banking corporation, as
owner trustee (in such capacity, the "Owner Trustee"), U.S. Bank National
Association, a national banking association, as co-trustee and not in its
individual capacity (the "Co-Trustee"), The Bank of New York (Delaware), a
Delaware banking corporation, as Delaware trustee (in such capacity, the
"Delaware 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
July 16, 2004, among the Depositor, the Owner Trustee, and the Delaware
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, 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 to be 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 Delaware Trustee, the principal corporate trust
office of the Delaware Trustee, which office, at date of execution of this
Agreement is located at Xxxxx Xxxx Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxx 00000,
Attention: Corporate Trust Administration (facsimile number (000) 000-0000);
or at such other address in the State of Delaware as the Delaware Trustee may
designate by notice to the Transferor, the Owner Trustee, the Co-Trustee,
the Administrator and the Trust, or the principal corporate trust office of
any successor Delaware trustee (the address of which the successor Delaware
trustee will notify the Transferor, the Owner Trustee and the Trust);
(ii) with respect to the Owner Trustee, the principal corporate trust of
the Owner Trustee, which office, at date of execution of this Agreement is
located at 000 Xxxxxxx Xx., Xxxxx 0X, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Asset Backed Securities (facsimile number (000) 000-0000); or at such other
address in the State of New York as the Owner Trustee may designate by notice
to the Transferor, the Delaware Trustee, the Co-Trustee, 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
Delaware Trustee, the Administrator, the Transferor and the Trust);
(iii) 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: Household Home Equity Loan Trust
2004-1 (facsimile number (000) 000-0000), or at such other address as the
Indenture Trustee may designate by notice to the Owner Trustee, the Delaware
Trustee, the Co-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 Delaware Trustee, the Administrator, the Transferor and the
Trust);
(iv) with respect to the Co-Trustee, the corporate trust office of the
Co-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: Household Home Equity Loan Trust 2004-1
(facsimile number (000) 000-0000), or at such other address as the Co-Trustee
may designate by notice to the Transferor, the Owner Trustee, the
Administrator and the Trust, or the principal corporate trust office of any
successor Co-Trustee (the address of which the successor co-trustee will
notify the Owner Trustee, the Delaware Trustee, the Administrator, the
Transferor and the Trust); or
(v) 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: Household Home Equity Loan Trust 2004-1 (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, the
Co-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 Delaware Trustee, the Transferor and
the Trust).
"Co-Trustee" shall mean U.S. Bank National Association, a national
banking association, as co-trustee and not in its individual capacity under
this Agreement and any successor co-trustee hereunder.
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"Delaware Trustee" shall mean The Bank of New York (Delaware), a Delaware
banking corporation, not in its individual capacity but solely as Delaware
trustee under this Agreement and any successor Delaware trustee hereunder.
"Depositor" shall mean HFC Revolving Corporation or its successors.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Expenses" shall have the meaning assigned to such term in Section 8.2.
"HFC" shall mean Household Finance Corporation or its successors.
"HSBC" shall mean HSBC Bank USA, National Association or its successors.
"Indenture" shall mean the Indenture, dated July 22, 2004, by and among
the Trust, the Indenture Trustee, the Co-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
Notes, $702,644,000 and with respect to the Class M Notes, $175,045,000.
"Master Servicer" shall mean HFC, or any successor servicer appointed
pursuant to the Sale and Servicing Agreement.
"Non-permitted Foreign Owner" shall have the meaning set forth in Exhibit
B hereto.
"Non-U.S. Person" shall mean any Person other than (i) a citizen or
resident of the United States, (ii) an entity treated for United States
federal income tax purposes as a corporation or partnership created or
organized in or under the laws of the United States or any state thereof,
including the District of Columbia, (iii) an estate that is subject to U.S.
federal income tax regardless of the source of its income, (iv) a trust if a
court within the United States is able to exercise primary supervision over
the administration of the trust and one or more United States trustees have
authority to control all substantial decisions of the trust, or (v) certain
trusts in existence on August 20, 1996 and treated as United States persons on
such date that elect to continue to be so treated.
"Owner Trust Estate" shall mean the contribution of $1,000 and one share
of the Depositor's Class SV-S Preferred Stock referred to in Section 2.7 and
the Trust Estate.
"Owner Trustee" shall mean The Bank of New York, a New York banking
corporation, not in its individual capacity but solely as owner trustee under
this Agreement, and any successor owner trustee hereunder.
"Ownership Interest" shall have the meaning specified in Section 3.2.
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"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 Trust 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 July 22, 2004, 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 Section 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 July 22,
2004 between the Trust, Household Pooling Corporation and the Originating
Sellers pursuant to which the Originating Sellers will assign to the Trust all
of their right, title and interest in and to the Transferred Assets (including
but not limited to any right, title and interest in and to the Transferred
Assets of any of the Originating Sellers relating to the Home Equity Loans
sold by Household Pooling Corporation pursuant to the Home Equity Loan
Purchase Agreement) 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 Household Home Equity Loan Trust 2004-1, the Delaware
statutory trust governed pursuant to this Agreement.
"Trust Agreement" shall mean the Trust Agreement, dated as of July 16,
2004, among the Depositor, the Owner Trustee and the Delaware 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 its 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 "Household
Home Equity Loan Trust 2004-1," 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 Delaware Trustee at the Corporate Trust Office of the Delaware Trustee
or at such other address in the State of Delaware as the Delaware Trustee may
designate by written notice to the Transferor, the Owner Trustee, the
Indenture Trustee and the Administrator. The New York office of the Trust will
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 New York as the Owner Trustee
may designate by written notice to the Transferor, the Delaware Trustee, 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.
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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 Trust. Pursuant to this Agreement, the Owner Trustee
shall have all the rights, powers and duties set forth herein.
Section 2.5 Appointment of Delaware Trustee. The Delaware Trustee is
hereby appointed to serve as the trustee of the Trust in the State of Delaware
for the sole and limited purpose of satisfying the requirement of Section 3807
of the Statutory Trust Statute that the Trust have at least one trustee with a
principal place of business in Delaware. It is understood and agreed by the
parties hereto that the Delaware Trustee has none of the duties or liabilities
of the Owner Trustee. The duties of the Delaware Trustee are limited to (a)
accepting legal process served on the Trust in the State of Delaware and (b)
executing and filing any certificates with the Secretary of State that the
Delaware Trustee is required to execute and file pursuant to Section 3811 of
the Statutory Trust Statute. The Delaware Trustee shall provide prompt notice
to the Owner Trustee of its performance of any such acts. The parties to this
Agreement understand and agree that the Delaware Trustee is not entitled to
exercise any powers, nor has the Delaware Trustee any of the duties and
liabilities, of the Owner Trustee. The Delaware Trustee is not liable for the
acts or omissions of the Owner Trustee, the Transferor or the Trust. To the
extent that, at law or in equity, the Delaware Trustee has duties (including
fiduciary duties) and liabilities relating thereto to the Trust, it is hereby
understood and agreed by the other parties that such duties and liabilities
are replaced by the duties and liabilities of the Delaware Trustee expressly
set forth in this Agreement. The Delaware Trustee owes no fiduciary or other
duties to the Trust or the Transferor except as expressly provided for in this
Agreement.
Section 2.6 Appointment of Co-Trustee.
(a) The Co-Trustee is hereby appointed to serve as trustee solely in
respect of the Transferred Assets. The Co-Trustee shall not undertake nor have
any of the duties of the Owner Trustee or the Delaware Trustee and shall have
no obligations under this Agreement other than as expressly stated in this
Section 2.6 and in Section 2.9(a)(ii).
(b) The compensation of the Co-Trustee will be separately agreed to
between the Master Servicer and the Co-Trustee. The Co-Trustee shall have no
claim against the Owner Trustee, the Delaware Trustee, the Depositor or any of
the Owner Trust Estate or the Trust Estate for the payment of any of its fees
and expenses. The Master Servicer shall indemnify and hold harmless the
Co-Trustee for any loss suffered as a result of acting as Co-Trustee
hereunder.
(c) The Co-Trustee shall, at all times, be a national banking
association organized and doing business under the laws of a state or the
United States of America, authorized under such laws to exercise corporate
trust powers having aggregate capital surplus and undivided profits of at
least $50,000,000, and subject to supervision or examination by a federal or
state authority, and otherwise acceptable to the Master Servicer. If at any
time the Co-Trustee ceases to be eligible in accordance with this subsection,
the Co-Trustee shall resign immediately in the manner and with the effect
specified in Section 2.6(d). The national banking association serving as
Co-Trustee may have normal banking and trust relationships with the Transferor
and its affiliates.
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(d) The Co-Trustee may at any time resign and be discharged from the
trusts hereby created (1) by giving written notice of resignation to the
Master Servicer and the Owner Trustee, not less than 60 days before the date
specified in the notice when the resignation is to take effect, and (2) upon
acceptance of appointment by a successor co-trustee in accordance with this
Subsection and meeting the qualifications in Section 2.6(c). If no successor
co-trustee shall have been so appointed and have accepted appointment within
60 days after the notice or resignation, the resigning Co-Trustee may petition
any court of competent jurisdiction for the appointment of a successor
co-trustee.
If at any time (i) the Co-Trustee ceases to be eligible in
accordance with Section 2.6(c) and fails to resign after written request by
the Master Servicer or the Owner Trustee, or (ii) the Co-Trustee becomes
incapable of acting, or is adjudged as bankrupt or insolvent, or a receiver of
the Co-Trustee or of its property is appointed, or any public officer takes
charge of the Co-Trustee or of its property or affairs for the purpose of
rehabilitation, conservation, or liquidation, then the Master Servicer or the
Owner Trustee may remove the Co-Trustee and appoint a successor co-trustee by
written instrument, with copies delivered to the Co-Trustee, the Master
Servicer, the Owner Trustee and the successor co-trustee. Any successor
co-trustee shall be paid pursuant to an agreement with Master Servicer and the
Owner Trust Estate and the Trust Estate shall not be used to satisfy any
obligation to pay the compensation of the successor co-trustee. Any
resignation or removal of the Co-Trustee and appointment of a successor
co-trustee pursuant to this Subsection shall become effective only upon
acceptance of appointment by the successor co-trustee as provided in this
Subsection.
(e) Any successor co-trustee appointed as provided in Section 2.6(c)
shall execute, acknowledge, and deliver to the Master Servicer, the Owner
Trustee, and to its predecessor co-trustee an instrument accepting its
appointment and thereupon the resignation or removal of the predecessor
co-trustee shall become effective and the successor co-trustee, without
anything further, shall become fully vested with all the rights and
obligations of its predecessor hereunder, with the like effect as if
originally named as co-trustee. The Co-Trustee shall deliver the Transferred
Assets to the successor co-trustee upon the appointment of the successor
co-trustee.
(f) The Co-Trustee represents and warrants as to itself that it is
duly authorized under applicable law, its charter, and its by-laws to execute
and deliver this Agreement, and to perform its obligations under this
Agreement, and that all corporate action necessary or required therefor has
been duly and effectively taken or obtained and all federal and state
governmental consents and approvals required with respect thereto have been
obtained.
(g) All parties to this Agreement agree that in any suit for the
enforcement of any right under this Agreement, or in any suit against the
Co-Trustee for any action taken, suffered, or omitted by it as Co-Trustee, any
court may in its discretion require the filing by any party litigant in the
suit of an undertaking to pay the costs of the suit, and that the court may in
its discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in the suit, having due regard to the merits and
good faith of the claims or defenses made by the party litigant.
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(h) The Co-Trustee may rely on any document believed by it to be
genuine and to have been signed or presented by the proper person.
(i) Before the Co-Trustee acts or refrains from acting, it may
require an Officer's Certificate or an opinion of counsel. The Co-Trustee
shall not be liable for any action it takes or omits to take in good faith in
reliance on an Officer's Certificate or opinion of counsel unless other
evidence is specifically required.
(j) The Co-Trustee shall undertake to perform such duties and only
such duties as are specifically set forth in this Agreement. The Co-Trustee
shall have all of the rights and benefits of and limitations on liability
afforded to the Indenture Trustee under Article VI of the Indenture to the
same extent as though the Co-Trustee had been named in the various provisions
of Article VI of the Indenture. Without limiting the generality of the
foregoing, the Co-Trustee and any director, officer, employee or agent of the
Co-Trustee shall be indemnified by the Master Servicer and held harmless by
the Master Servicer against any loss, liability or expense (including
reasonable attorney's fees and expenses) arising out of, relating to or in
connection with (i) this Agreement, the Indenture, the Notes or in connection
with their respective duties hereunder or thereunder or any legal action
relating thereto, other than any loss, liability or expense incurred by reason
of willful misconduct, negligence or bad faith in the performance of its
duties hereunder or thereunder, or incurred by reason of any action of the
Co-Trustee at the direction of the Noteholders, and (ii) any audit,
controversy or judicial proceeding relating to a governmental taxing
authority.
Section 2.7 Capital Contribution of Owner Trust Estate. Pursuant to the
Trust Agreement, as of July 16, 2004, 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-S
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
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Trust. Together with the Delaware Trustee, 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, Co-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 Co-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 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 Delaware
Trustee or the Owner Trustee from having employees within or without the State
of Delaware. Payments will be received by the Trust only in Delaware or New
York, and payments will be made by the Trust only from Delaware or New York.
Section 2.11 Representations and Warranties of the Depositor.
The Depositor hereby represents and warrants to the Owner Trustee, the
Delaware 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);
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(c) The Depositor is not required to obtain the consent of any other
Person or any consent, license, approval or authorization from, or
registration or declaration with, any governmental authority, bureau or agency
in connection with the execution, delivery, performance, validity or
enforceability of this Agreement, except for such consents, licenses,
approvals or authorizations, or registrations or declarations, as shall have
been obtained or filed, as the case may be;
(d) The execution and delivery of this Agreement and the performance
of the transactions contemplated hereby by the Depositor will not violate any
provision of any existing law or regulation or any order or decree of any
court applicable to the Depositor or any provision of the Certificate of
Incorporation or Bylaws of the Depositor, or constitute a material breach of
any mortgage, indenture, contract or other agreement to which the Depositor is
a party or by which the Depositor may be bound; and
(e) No litigation or administrative proceeding of or before any
court, tribunal or governmental body is currently pending, or to the knowledge
of the Depositor threatened, against the Depositor or any of its properties or
with respect to this Agreement which in the opinion of 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 Owner Trustee 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 Delaware 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
Delaware 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 Delaware 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 Owner Trustee 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 Owner Trustee an instrument in which
such successor Paying Agent or additional Paying Agent shall agree with the
Owner Trustee that as Paying Agent, such successor Paying Agent or additional
Paying Agent will hold all sums, if any, held by it for payment to the
Transferor in trust for the benefit of the Transferor until such sums shall be
paid to the Transferor. The Paying Agent shall return all unclaimed funds to
the Owner Trustee, and upon removal of a Paying Agent, such Paying Agent shall
also return all funds in its possession to the Owner Trustee. Any reference in
this Agreement to the Paying Agent shall include any co-paying agent unless
the context requires otherwise.
Section 3.10 [Reserved].
Section 3.11 [Reserved].
Section 3.12 [Reserved].
Section 3.13 Restrictions on Transfers of Ownership Interest. To the
fullest extent permitted by applicable law, the Ownership Interest shall not
be sold, pledged, transferred or assigned, except as provided below.
(a) 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(e)(1) of the Code, or (iii) any entity, including an insurance
company separate account or general account, whose underlying assets include
plan assets by reason of a plan's investment in the entity or otherwise under
ERISA.
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(b) Each Prospective Transferor, other than (subject to Section
3.13(d) hereof) an affiliate of HFC, shall represent and warrant, in writing,
to the Owner Trustee and the Registrar and any of their respective successors
that:
(i) Such Person is (A) a "qualified institutional buyer" as defined
in Rule 144A under the Securities Act of 1933, as amended (the
"Securities Act"), and is aware that the seller of such Ownership
Interest may be relying on the exemption from the registration
requirements of the Securities Act provided by Rule 144A and is acquiring
such Ownership Interest for its own account or for the account of one or
more qualified institutional buyers for whom it is authorized to act, (B)
an "accredited investor" as defined in Rule 501(a) under the Securities
Act , or (C) a Person involved in the organization or operation of the
Trust or an affiliate of such Person within the meaning of Rule 3a-7 of
the 1940 Act, as amended (including, but not limited to, HFC or the
Transferor).
(ii) Such Person understands that such Ownership Interest has not
been and will not be registered under the Securities Act and may be
offered, sold, pledged or otherwise transferred only to a person whom the
seller reasonably believes is (A) a "qualified institutional buyer," (B)
"an accredited investor" or (C) a Person involved in the organization or
operation of the Trust or an affiliate of such Person, in each case in a
transaction meeting the requirements of Rule 144A under the Securities
Act or that is otherwise exempt from registration under the Securities
Act and in accordance with any applicable securities laws of any state of
the United States.
(iii) Such Person shall comply with the provisions of Section
3.13(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(e)(1) of the Code (any such plan or employee benefit plan, a
"Plan") or (C) any entity, including an insurance company separate
account or general account, whose underlying assets include plan assets
by reason of a plan's investment in the entity 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 Xxxxxxxxx
00
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.
(d) Neither the Ownership Interest nor any beneficial ownership
interest therein may be transferred to HFC 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 Delaware
Trustee, the Co-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.
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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. 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;
17
(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 HFC,
and any of their respective affiliates. This Agreement and the Transaction
Documents shall be the only agreements among the parties hereto with respect
to the creation, operation and termination of the Trust. For accounting
purposes, the Trust shall be treated as an entity separate and distinct from
the Transferor. The pricing and other material terms of all transactions and
agreements to which the Trust is a party shall be intrinsically fair to all
parties thereto.
The Owner Trustee shall not have the power, except upon the written
direction of the Transferor or the Indenture Trustee, and to the extent
otherwise consistent with the Transaction Documents, to (i) remove or replace
the Master Servicer, the Indenture Trustee or the Administrator, (ii)
institute proceedings to have the Trust declared or adjudicated a bankrupt or
insolvent, (iii) consent to the institution of bankruptcy or insolvency
proceedings against the Trust, (iv) file a petition or consent to a petition
seeking reorganization or relief on behalf of the Trust under any applicable
federal or state law relating to bankruptcy, (v) consent to the appointment of
a receiver, liquidator, assignee, trustee, sequestrator (or any similar
official) of the Trust or a substantial portion of the property of the Trust,
(vi) make any assignment for the benefit of the Trust's creditors, (vii) cause
the Trust to admit in writing its inability to pay its debts generally as they
become due, or (viii) take any action, or cause the Trust to take any action,
in furtherance of any of the foregoing (any of the above, a "Bankruptcy
Action"). So long as the Indenture remains in effect, the Transferor shall not
have the power to take, and shall not take, any Bankruptcy Action with respect
to the Trust or direct the Owner Trustee to take any Bankruptcy Action with
respect to the Trust.
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Section 4.2 [Reserved].
Section 4.3 Action by Transferor with Respect to Bankruptcy. To the
fullest extent permitted by applicable law, the Owner Trustee shall not have
the power to commence a voluntary proceeding in bankruptcy relating to the
Trust without the prior consent and approval of (i) the Transferor; (ii) the
Owner Trustee; and (iii) the Indenture Trustee, and the delivery to the Owner
Trustee by the Transferor of a certificate certifying that such Transferor
reasonably believes that the Trust is insolvent. The terms of this Section 4.3
shall survive for one year and one day following the termination of this
Agreement.
Section 4.4 Restrictions on Transferor's Power. The Transferor shall not
direct the Owner Trustee to take or refrain from taking any action if such
action or inaction would be contrary to any obligation of the Trust or the
Owner Trustee under this Agreement or any of the Transaction Documents or
would be contrary to Section 2.3 hereof, nor shall the Owner Trustee be
obligated to follow any such direction, if given.
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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 with the Administrator 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 third Business Day following 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 Owner Trustee 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
20
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. In no event shall the Transferor be liable for any liabilities,
costs or expenses of the Trust arising out of the application of any tax law,
including federal, state, foreign or local income or excise taxes or any other
tax imposed on or measured by income (or any interest, penalty or addition
with respect thereto or arising from a failure to comply therewith), except
for any such liability, cost or expense attributable to the Transferor's
breach of its obligations under this Agreement.
Section 5.6 Signature on Returns.
The Owner Trustee shall sign on behalf of the Trust the tax returns of
the Trust, if any, unless applicable law requires 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
22
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
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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 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.
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ARTICLE VII
CONCERNING THE OWNER TRUSTEE AND THE DELAWARE TRUSTEE
Section 7.1 Acceptance of Trusts and Duties. Each of the Owner Trustee
and the Delaware 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. Each of the Owner
Trustee and the Delaware 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. Neither the Owner Trustee nor
the Delaware Trustee shall 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 or the Delaware Trustee, as the case may
be. In particular, but not by way of limitation (and subject to the exceptions
set forth in the preceding sentence):
(a) neither the Owner Trustee nor the Delaware Trustee shall be
liable for any error of judgment made by a responsible officer of the Owner
Trustee or the Delaware Trustee, as applicable;
(b) no provision of this Agreement or any Transaction Document shall
require the Owner Trustee or the Delaware 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 or the Delaware Trustee, as the case may be, 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 or the Delaware
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) neither the Owner Trustee nor the Delaware Trustee shall 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 and the Delaware 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) neither the Owner Trustee nor the Delaware Trustee shall be
liable for the default or misconduct of the Indenture Trustee or the Master
Servicer under any of the Transaction Documents or otherwise and neither the
Owner Trustee nor the Delaware Trustee shall 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;
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(f) neither the Owner Trustee nor the Delaware Trustee shall 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 or the Delaware Trustee, as the
case may be, security or indemnity satisfactory to it against the costs,
expenses and liabilities that may be incurred by the Owner Trustee or the
Delaware Trustee, as the case may be, therein or thereby. The right of the
Owner Trustee or the Delaware Trustee, as the case may be, 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 and the Delaware
Trustee answerable for other than their gross negligence or willful misconduct
in the performance of any such act;
(g) notwithstanding anything contained herein to the contrary, the
Delaware Trustee will not be required to take any action in any jurisdiction
other than in the State of Delaware if the taking of such action (i) requires
the registration with, licensing by or the taking of any other similar action
in respect of, any state or other governmental authority or agency of any
jurisdiction other than the State of Delaware by or with respect to the
Delaware Trustee (other than any registration, licensing or taking of any
other similar action that at the time of such action is in effect or has been
taken); (ii) results in any fee, tax or other governmental charge under the
laws of any jurisdiction or any political subdivisions thereof in existence on
the date hereof other than the State of Delaware becoming payable by the
Delaware Trustee; or (iii) subjects the Delaware Trustee to personal
jurisdiction in any jurisdiction other than the State of Delaware for causes
of action arising from acts unrelated to the consummation of the transactions
by the Delaware Trustee contemplated hereby. The Delaware Trustee will be
entitled to obtain advice of counsel (which advice will be an expense of the
Transferor) to determine whether any action required to be taken pursuant to
the Agreement results in the consequences described in clauses (i), (ii) and
(iii) of the preceding sentence. If said counsel advises the Delaware Trustee
that such action will result in such consequences, the Transferor will appoint
an additional trustee pursuant to Section 10.5 hereof to proceed with such
action; and
(h) neither the Owner Trustee nor the Delaware Trustee shall be
liable with respect to any action taken or omitted to be taken by it in
accordance with the instructions of the Depositor or any Owner 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,
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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.
(a) 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:
(i) It is a New York banking corporation duly organized and validly
existing in good standing under the laws of New York. It has all
requisite corporate power and authority to execute, deliver and perform
its obligations under this Agreement;
(ii) 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;
(iii) 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;
(iv) The execution, delivery, authentication and performance by the
Owner Trustee of this Agreement will not require the authorization,
consent or approval of, the giving of notice to, the filing or
registration with, or the taking of any other action with respect to, any
governmental authority or agency;
(v) 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;
(vi) 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
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(vii) 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.
(b) The Delaware Trustee hereby represents and warrants to the
Administrator and the Depositor, for the benefit of the Transferor, the
Noteholders and the Indenture Trustee, that:
(i) It is a Delaware banking corporation duly organized and validly
existing in good standing under the laws of the State of Delaware. It has
all requisite corporate power and authority to execute, deliver and
perform its obligations under this Agreement;
(ii) 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;
(iii) 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 Delaware 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;
(iv) The execution, delivery, authentication and performance by the
Delaware Trustee of this Agreement will not require the authorization,
consent or approval of, the giving of notice to, the filing or
registration with, or the taking of any other action with respect to, any
governmental authority or agency;
(v) This Agreement has been duly authorized, executed and delivered
by the Delaware Trustee and constitutes a valid, legal and binding
obligation of the Delaware 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;
(vi) The Delaware 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 Delaware Trustee or
its properties or might have consequences that would materially adversely
affect its performance hereunder; and
(vii) No litigation is pending or, to the best of the Delaware
Trustee's knowledge, threatened against the Delaware Trustee which would
prohibit its entering into this Agreement or performing its obligations
under this Agreement.
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Section 7.4 Reliance; Advice of Counsel.
(a) Neither the Owner Trustee nor the Delaware Trustee shall 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. Each of the Owner Trustee and the
Delaware 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, each of the
Owner Trustee and the Delaware 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 each of the Owner
Trustee and the Delaware 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 their duties and obligations under this Agreement or the
Transaction Documents, the Owner Trustee and the Delaware Trustee (i) may, at
the expense of HFC, act directly or through their agents or attorneys pursuant
to agreements entered into with any of them, and neither the Owner Trustee nor
the Delaware Trustee shall 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 or the Delaware Trustee, as the case may be,
with reasonable care, and (ii) may, at the expense of HFC, consult with
counsel, accountants and other skilled persons to be selected with reasonable
care and employed by them. Neither the Owner Trustee nor the Delaware Trustee
shall be liable for anything done, suffered or omitted in good faith by it in
accordance with the opinion or advice of any such counsel, accountants or
other such persons and not contrary to this Agreement or any Transaction
Document.
Section 7.5 Not Acting in Individual Capacity. Except as provided in this
Article VII, in accepting the trusts hereby created, The Bank of New York acts
solely as Owner Trustee hereunder, and The Bank of New York (Delaware) acts
solely as Delaware Trustee hereunder, and not in their individual capacities,
and all Persons having any claim against the Owner Trustee or the Delaware
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, Delaware Trustee and Co-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 none of the Owner
Trustee, the Delaware Trustee or the Co-Trustee assumes any responsibility for
the correctness thereof. None of the Owner Trustee, the Delaware Trustee or
the Co-Trustee makes any representations 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. None of the Owner Trustee, the Delaware
Trustee or the Co-Trustee shall 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
29
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, the
Delaware Trustee or the Co-Trustee.
Section 7.7 Owner Trustee, Delaware Trustee and Co-Trustee May Own the
Ownership Interest and the Notes. The Bank of New York, The Bank of New York
(Delaware) and U.S. Bank National Association in their individual or any other
capacities 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 they were not the Owner Trustee, Delaware Trustee
and Co-Trustee, respectively.
Section 7.8 Licenses. The Owner Trustee shall cause the Trust to use its
best efforts to obtain and maintain the effectiveness of any licenses required
in connection with this Agreement and the Transaction Documents and the
transactions contemplated hereby and thereby until such time as the Trust
shall terminate in accordance with the terms hereof.
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ARTICLE VIII
COMPENSATION OF OWNER TRUSTEE AND DELAWARE TRUSTEE
Section 8.1 Fees and Expenses. Each of the Owner Trustee and the Delaware
Trustee shall receive as compensation for its services hereunder such fees as
have been separately agreed upon before the date hereof between HFC and each
of the Owner Trustee and the Delaware Trustee, and the Owner Trustee and the
Delaware Trustee shall be entitled to be reimbursed by HFC for their other
reasonable expenses hereunder, including the reasonable compensation, expenses
and disbursements of such agents, representatives, experts and counsel as the
Owner Trustee and the Delaware Trustee may employ in connection with the
exercise and performance of their rights and its duties hereunder.
Section 8.2 Indemnification. HFC shall be liable as primary obligor for,
and shall indemnify the Owner Trustee and the Delaware Trustee (in their
individual and trustee capacities) and their 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 the Owner Trustee, the Delaware Trustee
or any Indemnified Party in any way relating to or arising out of this
Agreement, the Transaction Documents, the Owner Trust Estate, the
administration of the Owner Trust Estate or the action or inaction of the
Owner Trustee or the Delaware Trustee hereunder, except only that HFC shall
not be liable for or required to indemnify an Indemnified Party from and
against Expenses arising or resulting from any of the matters described in the
third sentence of Section 7.1 hereof. The indemnities contained in this
Section 8.2 shall survive the resignation or termination of the Owner Trustee
or the Delaware 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 or Delaware
Trustee, as applicable, shall be subject to the approval of HFC, which
approval shall not be unreasonably withheld.
Section 8.3 Payments to the Owner Trustee and Delaware Trustee. Any
amounts paid to the Owner Trustee or the Delaware 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, (i) 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 and (ii) the Delaware
Trustee agrees in its individual capacity and in its capacity as Delaware
Trustee for the Trust that all obligations of the Trust to the Delaware
Trustee individually or as Delaware Trustee for the Trust shall be recourse to
the Trust only and specifically shall not be recourse to the assets of any
Noteholder.
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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 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 [June 2034]. 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) Upon the winding up of the Trust and its termination, the
Delaware Trustee and the Owner Trustee shall cause the Certificate of Trust to
be canceled by filing a certificate of cancellation with the Secretary of
State in accordance with the Statutory Trust Statute.
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ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES;
SUCCESSOR DELAWARE TRUSTEES
Section 10.1 Eligibility Requirements for Owner Trustee and Delaware
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
Moody's 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 Delaware 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 Delaware Trustee ceases to be eligible in accordance with the
provisions of this Section, the Delaware 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 or Delaware Trustee.
The Owner Trustee or the Delaware 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 or Delaware Trustee, as applicable, 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 or Delaware 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 or
Delaware Trustee, as applicable.
If at any time the Owner Trustee or Delaware 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 or Delaware 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, or of the Delaware Trustee or its property, shall
be appointed, or any public officer shall take charge or control of the Owner
Trustee or of its property or affairs, or of the Delaware 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 or Delaware Trustee,
as applicable. If the Indenture Trustee shall remove the Owner Trustee or
Delaware Trustee under the authority of the immediately preceding sentence,
the Indenture Trustee shall promptly appoint a successor Owner
33
Trustee or Delaware Trustee, as applicable, 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 or Delaware Trustee and
appointment of a successor Owner Trustee or Delaware Trustee, as applicable,
pursuant to any of the provisions of this Section 10.2 shall not become
effective until 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 or Delaware Trustee to each of the Rating
Agencies and to the Administrator.
Section 10.3 Successor Trustee. Any successor Owner Trustee or Delaware
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 or Delaware Trustee, as the case may be. The predecessor Owner
Trustee or Delaware Trustee shall upon payment of its fees and expenses
deliver to the successor Owner Trustee or Delaware Trustee, as the case may
be, all documents and statements and monies held by it under this Agreement;
and the Indenture Trustee and the predecessor Owner Trustee or Delaware
Trustee, as the case may be, 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 or Delaware Trustee, as
the case may be, all such rights, powers, duties, and obligations.
No successor Owner Trustee or Delaware Trustee shall accept appointment
as provided in this Section 10.3 unless at the time of such acceptance such
successor Owner Trustee or Delaware Trustee, as the case may be, shall be
eligible pursuant to Section 10.1 above.
Upon acceptance of appointment by a successor Owner Trustee or Delaware
Trustee, as the case may be, pursuant to this Section 10.3, the Indenture
Trustee shall mail notice of the successor of such Owner Trustee or Delaware
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 or Delaware
Trustee, as the case may be, the successor Owner Trustee or Delaware Trustee
shall cause such notice to be mailed at the expense of the Indenture Trustee.
Any successor Delaware Trustee shall promptly file a certificate of
amendment identifying the name and principal plan of business of the Delaware
Trustee in the State of Delaware.
Section 10.4 Merger or Consolidation of Owner Trustee or Delaware
Trustee. Any Person into which the Owner Trustee or Delaware 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 or Delaware Trustee shall be a party, or any Person succeeding to all
or substantially all of the corporate trust business of the Owner Trustee or
34
Delaware Trustee, shall be the successor of the Owner Trustee or Delaware
Trustee, as the case may be, 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 or Delaware Trustee, as the case may be, shall mail notice of
such merger or consolidation to the Depositor, the Co-Trustee, HFC 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 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
35
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.
36
ARTICLE XI
MISCELLANEOUS
Section 11.1 Supplements and Amendments. This Agreement may be amended by
the Depositor, HFC, the Owner Trustee, the Delaware Trustee, the Co-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,
HFC, the Owner Trustee, the Delaware Trustee, the Co-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 Owner Trustee
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
37
execution thereof by the Transferor and the Noteholders shall be subject to
such reasonable requirements as the Owner Trustee may prescribe.
Promptly after the execution of any amendment to the Certificate of
Trust, the Delaware 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, the Delaware 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 or permitted by
this Agreement and that all conditions precedent to such execution and
delivery have been satisfied. The Owner Trustee, the Delaware 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 Delaware
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 Delaware Trustee, the Co-Trustee, the Indenture Trustee
or the Administrator, at its respective Corporate Trust Office; (ii) if to the
Depositor or HFC, 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
38
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 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 Delaware Trustee, the Co-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, the Delaware Trustee, the
Co-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
Delaware Trustee, the Co-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.
39
Section 11.13 Inconsistencies with Sale and Servicing Agreement.
In the event certain provisions of this Agreement conflict with the
provisions of the Sale and Servicing Agreement, the parties hereto agree that
the provisions of the Sale and Servicing Agreement shall be controlling (other
than the provisions governing the internal affairs of the Trust, which shall
be governed by Delaware law).
Section 11.14 Third Party Beneficiary.
The parties hereto acknowledge that the 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, the Delaware Trustee 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. In addition, the
Master Servicer is authorized to cause the Trust to obtain and maintain the
effectiveness of any licenses as provided in Section 7.8.
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.
40
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.
HOUSEHOLD FINANCE CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Assistant Treasurer
HFC REVOLVING CORPORATION,
as Depositor
By: /s/ Xxxxx X. Xxxxxx
----------------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President and Assistant Treasurer
THE BANK OF NEW YORK,
as Owner Trustee
By: /s/ Xxxx Bourtman
----------------------------------------------
Name: Xxxx Bourtman
Title: Assistant Treasurer
THE BANK OF NEW YORK (DELAWARE),
as Delaware Trustee
By: /s/ Xxxxxxx X. Xxxxx
----------------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Senior Vice President
U.S. BANK NATIONAL ASSOCIATION
as Co-Trustee
By: /s/ Xxxxxxxx X. Child
----------------------------------------------
Name: Xxxxxxxx X. Child
Title: Vice President
HSBC BANK USA, NATIONAL ASSOCIATION
as Administrator
By: /s/ Xxxxxxx Xx
---------------------------------------------
Name: Xxxxxxx Xx
Title: Vice President
41
EXHIBIT A
CERTIFICATE OF TRUST OF
HOUSEHOLD HOME EQUITY LOAN TRUST 2004-1
---------------------------------------
THIS Certificate of Trust of HOUSEHOLD HOME EQUITY LOAN TRUST 2004-1 (the
"Trust"), is being duly executed and filed by the undersigned, as trustees, to
form a statutory trust under the Delaware Statutory Trust Act (12 Del. Code,
Section 3801 et seq.)(the "Act").
1. Name. The name of the statutory trust formed hereby is HOUSEHOLD HOME
EQUITY LOAN TRUST 2004-1.
2. Delaware Trustee. The name and business address of the trustee of the
Trust in the State of Delaware is The Bank of New York (Delaware), Xxxxx Xxxx
Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxx 00000. Attention: Corporate Trust
Administration Department.
IN WITNESS WHEREOF, the undersigned, being all of the trustees of the
Trust, have executed this Certificate of Trust in accordance with Section
3811(a) of the Act.
THE BANK OF NEW YORK, not in its
individual capacity but solely as
Owner Trustee
By:
-----------------------------------------
Name:
Title:
THE BANK OF NEW YORK (DELAWARE),
not in its individual capacity but solely
as Delaware Trustee
By:
-----------------------------------------
Name:
Title:
A-1
EXHIBIT B
TRANSFER CERTIFICATE
--------------------
The Bank of New York, as Owner Trustee
000 Xxxxxxx Xx., 0X
Xxx Xxxx, Xxx Xxxx 00000
Attention: Corporate Trust Administration
HSBC Bank USA, National Association, as Registrar
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Corporate Trust, Reference: Household Home Equity Loan Trust 2004-1
Re: Amended and Restated Trust Agreement, July 22, 2004, Household
Finance Corporation, HFC Revolving Corporation, as Depositor,
The Bank of New York (Delaware), as Delaware Trustee, The Bank
of New York, as Owner Trustee, U.S. Bank National Association,
as Co-Trustee, and HSBC Bank USA, National Association, as
Administrator; Household Home Equity Loan Trust 2004-1,
Closed-End Home Equity Loan Asset Backed Notes, Series 2004-1
--------------------------------------------------------------
Ladies and Gentlemen:
The undersigned (the "Transferee") has agreed to purchase from
______________________ (the "Transferor") the Ownership Interest:
A. Rule 144A "Qualified Institutional Buyers" should complete this
section
I. The Transferee is (check one):
___ (i) An insurance company, as defined in Section 2(13) of the
Securities Act of 1933, as amended (the "Securities Act"), (ii)
an investment company registered under the Investment Company
Act of 1940, as amended (the "Investment Company Act"), (iii) a
business development company as defined in Section 2(a)(48) of
the Securities Act, (iv) a Small Business Investment Company
licensed by the U.S. Small Business Administration under
Section 301(c) or (d) of the Small Business Investment Act of
1958, (v) a plan established and maintained by a state, its
political subdivisions, or any agency or instrumentality of a
state or its political subdivisions, for the benefit of its
employees, (vi) an employee benefit plan within the meaning of
Title I of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), (vii) a business
B-1
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(e)(1) of the Code
(any such plan or employee benefit plan, a "Plan") or (C) any entity,
including an insurance company separate account or general account, whose
underlying assets include plan assets by reason of a plan's investment in the
entity and is not directly or indirectly
B-3
purchasing such Trust Security on behalf of, as investment manager of, as
named fiduciary of, as trustee of, or with assets of a Plan.
(iii) the Transferee is an "accredited investor" as defined in
Rule 501(a) of Regulation D pursuant to the Securities Act.
Very truly yours,
[NAME OF TRANSFEREE]
By:
-----------------------------------
Title:
--------------------------------
Dated:
THE FOREGOING IS ACKNOWLEDGED THIS ____ DAY OF __________, 200_.
[NAME OF TRANSFEROR]
By:
-------------------------------------------------
Title:
----------------------------------------------
B-4
