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EXHIBIT 4.4
FORM OF SERIES 1998-1 SUPPLEMENT
HOUSEHOLD AFFINITY FUNDING CORPORATION
Seller,
HOUSEHOLD FINANCE CORPORATION
Servicer,
and
THE BANK OF NEW YORK,
Trustee
on behalf of the Certificateholders
SERIES 1998-1 SUPPLEMENT
Dated as of July 1, 1998
to the
AMENDED AND RESTATED
POOLING AND SERVICING AGREEMENT
Dated as of August 1, 1993
HOUSEHOLD AFFINITY CREDIT CARD MASTER TRUST I
Series 1998-1
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TABLE OF CONTENTS
PAGE
SECTION 1. Designation....................................................................................1
SECTION 2. Definitions....................................................................................2
SECTION 3. Servicing Compensation........................................................................19
SECTION 4. Article IV of Agreement.......................................................................19
Section 4.07. Allocations..........................................................................20
Section 4.08. Determination of Monthly Interest....................................................20
Section 4.09. Determination of Monthly Principal...................................................22
Section 4.10. Coverage of Required Amounts.........................................................24
Section 4.11. Application of Available Funds on Deposit in the Collection Account, the
Principal Funding Account and the Collection Subaccount..............................24
Section 4.12. Investor Charge-Offs.................................................................27
Section 4.13. Excess Finance Charge and Administrative Collections.................................29
Section 4.14. Establishment of Series 1998-1 Cash Collateral Account...............................30
Section 4.15. Subordinated Principal Collections...................................................32
Section 4.16. Reallocated Investor Finance Charge and Administrative Collections...................33
Section 4.17. Series 1998-1 Excess Principal Collections...........................................34
Section 4.18. Exchange of Investor Certificates for Seller Interest................................35
Section 4.19. Principal Funding Account............................................................35
Section 4.20. Reserve Account......................................................................36
SECTION 5. Distributions.................................................................................38
SECTION 6. Statements to Certificateholders..............................................................39
SECTION 7. Additional Amortization Events................................................................40
SECTION 8. Optional Repurchase...........................................................................42
SECTION 9. Sale of Certificateholders' Interest pursuant to Section 2....................................42
SECTION 10. Distributions pursuant to Sections 8 or 9 of this Series Supplement and Section 2.06,
10.01 or 12.02(c) of the Agreement............................................................42
SECTION 11. Distribution of Proceeds of Sale, Disposition or Liquidation of the Receivables
pursuant to Section 9.02 of the Agreement.....................................................43
SECTION 12. Section 9.02 of the Agreement; Rights of the Collateral Interest Holder.......................45
SECTION 13. Clearing Agency...............................................................................45
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TABLE OF CONTENTS
(CONTINUED)
Page
SECTION 14. Delivery of the Class A Certificates and the Class B Certificates.............................45
SECTION 15. Ratification of Agreement.....................................................................45
SECTION 16. Counterparts..................................................................................45
SECTION 17. Governing Law.................................................................................46
SECTION 18. Forms of Certificates and Monthly Servicer's Certificate......................................46
SECTION 19. Definition of Tax Opinion for Purposes of Series 1998-1.......................................46
SECTION 20. ERISA Restrictions............................................................................46
EXHIBITS
Exhibit A-1 Form of 1998-1 Class A Certificate
Exhibit A-2 Form of 1998-1 Class B Certificate
Exhibit B Form of 1998-1 Monthly Servicer's Certificate
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Series 1998-1 SUPPLEMENT, dated as of July 1, 1998 (the "Series
Supplement") by and among Household Affinity Funding Corporation, a Delaware
corporation, as seller (the "Seller"), Household Finance Corporation, a Delaware
corporation, as servicer (the "Servicer"), and The Bank of New York, a New York
banking corporation (together with its successor in trust thereunder as provided
in the Pooling and Servicing Agreement referred to below, the "Trustee"), as
trustee under the Amended and Restated Pooling and Servicing Agreement, by and
among the Seller, the Servicer and the Trustee dated as of August 1, 1993 (as
amended to the date hereof, the "Agreement").
RECITALS
Section 6.03 of the Agreement provides, among other things, that the
Seller and the Trustee may at any time and from time to time enter into a
supplement to the Agreement for the purpose of authorizing the issuance by the
Trustee to the Seller for execution and redelivery to the Trustee for
authentication one or more Series of Investor Certificates. The Seller has
tendered the notice of issuance required by subsection 6.03(b)(i) of the
Agreement and hereby enters into this Series Supplement with the Servicer and
the Trustee as required by such Section 6.03 to provide for the issuance,
authentication and delivery of the Class A and Class B Certificates, Series
1998-1 and to specify the Principal Terms thereof. In the event that any term or
provision contained herein shall conflict with or be inconsistent with any term
or provision contained in the Agreement, the terms and provisions of this Series
Supplement shall govern.
SECTION 1. Designation.
(a) There is hereby created a Series of Investor Certificates to be
issued pursuant to the Agreement and this Series Supplement designated as
"Household Affinity Credit Card Master Trust I, Series 1998-1". The Series
1998-1 Certificates shall be issued in two certificated Classes, the first of
which shall be known as the "Floating Rate Class A Credit Card Participation
Certificates, Series 1998-1", and the second of which shall be known as the
"Floating Rate Class B Credit Card Participation Certificates, Series 1998-1".
In addition, there is hereby created a third Class of uncertificated interests
in the Trust which, except as expressly provided herein, shall be deemed to be
"Investor Certificates" for all purposes under the Agreement and this Series
Supplement and which shall be known as the "Collateral Interest, Series 1998-1".
The Collateral Interest Holder shall be deemed to be the Series Enhancer for all
purposes under the Agreement and this Series Supplement.
(b) The Series 1998-1 Certificates shall be included in Group Three
and shall be deemed to be "Investor Certificates" for all purposes under the
Agreement and this Series Supplement. Notwithstanding any provision in the
Agreement or in this Series Supplement, the first Distribution Date with respect
to Series 1998-1 shall be the [____________], 1998 Distribution Date.
(c) Except as expressly provided herein, the provisions of Article
VI and Article XII of the Agreement relating to the registration,
authentication, delivery, presentation,
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cancellation and surrender of Registered Certificates shall not be applicable
to the Collateral Interest, and in no event shall clause (c) of the definition
of "Tax Opinion" set forth in Section 19 hereof be operative with respect to
the Collateral Interest.
SECTION 2. Definitions.
(a) Whenever used in this Series Supplement and when used in the
Agreement with respect to the Series 1998-1 Certificates, the following words
and phrases shall have the following meanings, and the definitions of such terms
are applicable to the singular as well as the plural forms of such terms and to
the masculine as well as to the feminine and neuter genders of such terms.
"Additional Interest" shall mean, at any time of determination, the
sum of Class A Additional Interest, Class B Additional Interest and Collateral
Additional Interest.
"Adjusted Invested Amount" shall mean, with respect to any date of
determination, an amount equal to the Invested Amount, less the Principal
Funding Account Balance on such date of determination.
"Agreement" shall mean, for purposes of this Supplement, the Amended
and Restated Pooling and Servicing Agreement, dated as of August 1, 1993, as
amended and as may be further amended from time to time, by and among the
Seller, the Servicer and the Trustee (without regard to this Supplement or
supplements for other Series).
"Allocable Servicing Fee" shall have the meaning specified in
Section 3.
"Available Collateral Amount" shall mean, with respect to any date
of determination, the lesser of (a) the sum of the amount on deposit in the Cash
Collateral Account and the Collateral Invested Amount and (b) the Required
Collateral Amount.
"Available Investor Principal Collections" shall mean, with respect
to any Distribution Date, the sum of (a) an amount equal to (i) the Floating
Allocation Percentage with respect to the Revolving Period, or the Principal
Allocation Percentage with respect to the Controlled Accumulation Period, any
Early Accumulation Period or any Early Amortization Period, of Series Allocable
Principal Collections deposited into the Collection Account for the related Due
Period (or any partial Due Period which occurs as the first Due Period during
any Early Accumulation Period or any Early Amortization Period), minus (ii) the
amount of Subordinated Principal Collections allocable to the Class B Invested
Amount and the Collateral Invested Amount with respect to such Distribution Date
which is required to fund any deficiency pursuant to subsection 4.15(a) for such
Distribution Date, plus (b) Series Allocable Miscellaneous Payments on deposit
in the Collection Account for such Distribution Date, plus (c) Series 1998-1
Excess Principal Collections on deposit in the Collection Account for such
Distribution Date, plus (d) Subordinated Series Reallocated Principal
Collections on deposit in the Collection Account for such Distribution Date,
plus (e) the amount, if any, of Reallocated Investor Finance Charge
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and Administrative Collections to be distributed pursuant to Section
4.11(a)(ii) on such Distribution Date and plus (f) the amount, if any, of
Excess Finance Charge and Administrative Collections to be distributed pursuant
to Sections 4.13(b), (d) or (e) on such Distribution Date.
"Available Reserve Account Amount" shall mean, with respect to any
Distribution Date, the lesser of (a) the amount on deposit in the Reserve
Account on such date (after taking into account any interest and earnings
retained in the Reserve Account pursuant to subsection 4.20(b) on such date and
(b) the Required Reserve Account Amount.
"Base Rate" shall mean the weighted average of the Class A
Certificate Rate, the Class B Certificate Rate and the Collateral Rate (weighted
based on the Class A Adjusted Invested Amount, the Class B Adjusted Invested
Amount and the Collateral Invested Amount as of the last day of the preceding
Due Period) plus 2.00% per annum.
"Cash Collateral Account" shall have the meaning set forth in
Section 4.14.
"Class A Additional Interest" shall have the meaning specified in
subsection 4.08(a).
"Class A Adjusted Invested Amount" shall mean, with respect to any
date of determination, an amount equal to the Class A Invested Amount less the
Principal Funding Account Balance (but not in excess of the Class A Invested
Amount) on such date.
"Class A Certificate Rate" shall mean, from and including
[___________], 1998 to and excluding [___________], 1998, and for any Interest
Period thereafter, a per annum rate equal to LIBOR (as defined herein) plus
[____]%.
"Class A Certificateholder" shall mean the Person in whose name a
Class A Certificate is registered in the Certificate Register.
"Class A Certificateholders' Interest" shall mean the portion of the
Certificateholders' Interest evidenced by the Class A Certificates.
"Class A Certificates" shall mean any one of the Certificates
executed by the Seller and authenticated by or on behalf of the Trustee,
substantially in the form of Exhibit A-1.
"Class A Initial Invested Amount" shall mean the aggregate initial
principal amount of the Class A Certificates, which is $[____________].
"Class A Interest Shortfall" shall have the meaning specified in
subsection 4.08(a).
"Class A Invested Amount" shall mean, when used with respect to any
date, an amount equal to (a) the Class A Initial Invested Amount, minus (b) the
amount of principal payments made to Class A Certificateholders prior to such
date, minus (c) the excess, if any, of the aggregate amount of Class A Investor
Charge-Offs over Class A Investor Charge-Offs reimbursed pursuant to subsection
4.12(a) prior to such date and minus (d) the amount of any reduction in the
Class A Invested Amount pursuant to Section 4.18 prior to such date.
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"Class A Invested Percentage" shall mean, with respect to any
Distribution Date, the percentage equivalent (which percentage shall never
exceed 100%) of a fraction, the numerator of which is the Class A Adjusted
Invested Amount as of the last day of the second preceding Due Period and the
denominator of which is the Adjusted Invested Amount as of such last day.
"Class A Investor Charge-Offs" shall have the meaning specified in
subsection 4.12(a).
"Class A Investor Default Amount" shall mean, with respect to each
Distribution Date, an amount equal to the product of the Investor Defaulted
Amount for the immediately preceding Due Period and the Class A Invested
Percentage for such Distribution Date.
"Class A Monthly Interest" shall mean the monthly interest
distributable in respect of the Class A Certificates as calculated in accordance
with subsection 4.08(a).
"Class A Monthly Principal" shall mean the monthly principal
distributable in respect of the Class A Certificates as calculated in accordance
with subsection 4.09(a).
"Class A Pool Factor" shall mean, with respect to any Record Date, a
number carried out to eight decimals representing the ratio of the Class A
Invested Amount as of such Record Date (determined after taking into account any
increases or decreases in the Class A Invested Amount which will occur on the
following Distribution Date) to the Class A Initial Invested Amount.
"Class A Principal Funding Account Percentage" shall mean with
respect to any Distribution Date, the percentage equivalent of a fraction, the
numerator of which is the sum of all deposits of Class A Monthly Principal
deposited into the Principal Funding Account pursuant to subsection 4.11(d)(i)
and the denominator of which is the Principal Funding Account Balance as of such
date.
"Class A Required Amount" shall have the meaning specified in
subsection 4.10(a).
"Class B Additional Interest" shall have the meaning specified in
subsection 4.08(b).
"Class B Adjusted Invested Amount" shall mean an amount equal to the
Class B Invested Amount less the positive difference, if any, between the
Principal Funding Account Balance and the Class A Invested Amount on such date.
"Class B Certificate Rate" shall mean from and including
[___________], 1998 to and excluding [__________], 1998, and for any Interest
Period thereafter, a per annum rate equal to LIBOR (as defined herein) plus
[______]%.
"Class B Certificateholder" shall mean the Person in whose name a
Class B Certificate is registered in the Certificate Register.
"Class B Certificateholders' Interest" shall mean the portion of the
Certificateholders' Interest evidenced by the Class B Certificates.
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"Class B Certificates" shall mean any one of the Certificates
executed by the Seller and authenticated by or on behalf of the Trustee,
substantially in the form of Exhibit A-2.
"Class B Initial Invested Amount" shall mean the aggregate initial
principal amount of the Class B Certificates, which is $[____________].
"Class B Interest Shortfall" shall have the meaning specified in
subsection 4.08(b).
"Class B Invested Amount" shall mean, when used with respect to any
date, an amount equal to (a) the Class B Initial Invested Amount, minus (b) the
amount of principal payments made to Class B Certificateholders prior to such
date, minus (c) the aggregate amount of Class B Investor Charge-Offs for all
prior Distribution Dates, minus (d) the amount of Subordinated Principal
Collections allocated on all prior Distribution Dates pursuant to Section 4.15
(excluding any Subordinated Principal Collections allocable to the Collateral
Invested Amount), minus (e) an amount equal to the amount by which the Class B
Invested Amount has been reduced on all prior Distribution Dates pursuant to
subsection 4.12(a), plus (f) the sum of (A) the aggregate amount of any Series
Allocable Miscellaneous Payments allocated on all prior Distribution Dates
pursuant to subsection 4.12(b) and (B) the amount of Excess Finance Charge and
Administrative Collections allocated and available on all prior Distribution
Dates pursuant to subsection 4.13(e) and any withdrawals from the Cash
Collateral Account applied in accordance with such subsection on such dates, for
the purpose of reimbursing amounts deducted pursuant to the foregoing clauses
(c), (d) and (e), and minus (g) the amount of any reduction in the Class B
Invested Amount pursuant to Section 4.18 prior to such date.
"Class B Invested Percentage" shall mean, with respect to any
Distribution Date, the percentage equivalent (which percentage shall never
exceed 100%) of a fraction, the numerator of which is the Class B Adjusted
Invested Amount as of the last day of the second preceding Due Period and the
denominator of which is the Adjusted Invested Amount as of such last day.
"Class B Investor Charge-Offs" shall have the meaning specified in
subsection 4.12(b).
"Class B Investor Default Amount" shall mean, with respect to each
Distribution Date, an amount equal to the product of the Investor Defaulted
Amount for the immediately preceding Due Period and the Class B Invested
Percentage for such Distribution Date.
"Class B Monthly Interest" shall mean the monthly interest
distributable in respect of the Class B Certificates as calculated in accordance
with subsection 4.08(b).
"Class B Monthly Principal" shall mean the monthly principal
distributable in respect of the Class B Certificates as calculated in accordance
with subsection 4.09(b).
"Class B Pool Factor" shall mean, with respect to any Record Date, a
number carried out to eight decimals representing the ratio of the Class B
Invested Amount as of such Record Date (determined after taking into account any
increases or decreases in the Class B Invested Amount which will occur on the
following Distribution Date) to the Class B Initial Invested Amount.
"Class B Principal Commencement Date" shall mean the first date on
which principal is actually distributed to Class B Certificateholders.
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"Class B Principal Funding Account Percentage" shall mean with
respect to any Distribution Date, the percentage equivalent of a fraction, the
numerator of which is the sum of all deposits of Class B Monthly Principal
deposited into the Principal Funding Account pursuant to subsection 4.11(d)(ii)
and the denominator of which is the Principal Funding Account Balance as of such
date.
"Class B Required Amount" shall have the meaning specified in
subsection 4.10(b).
"Collateral Additional Interest" shall have the meaning specified in
subsection 4.08(c).
"Collateral Agreement" shall mean the agreement among the Seller,
the Servicer, the Trustee and the Collateral Interest Holder, dated as of July
[__], 1998, as amended from time to time.
"Collateral Amount" shall mean, for any date of determination, the
sum of (a) the Collateral Invested Amount and (b) the aggregate amount of funds
on deposit in the Cash Collateral Account, in each case on such date.
"Collateral Cash Surplus" shall mean, as of any date of
determination, the lesser of (a) the Collateral Surplus and (b) the amount on
deposit in the Cash Collateral Account.
"Collateral Charge-Offs" shall have the meaning specified in Section
4.12(c).
"Collateral Default Amount" shall mean, with respect to any
Distribution Date, the product of the Investor Defaulted Amount for the related
Due Period and the Collateral Invested Percentage.
"Collateral Initial Invested Amount" shall mean $[____________].
"Collateral Interest" shall mean a fractional undivided interest in
the Trust which shall consist of the right to receive, to the extent necessary
to make the required payments to the Collateral Interest Holder under this
Series Supplement, the portion of Collections allocable thereto under the
Agreement and this Series Supplement, funds on deposit in the Collection Account
allocable thereto pursuant to the Agreement and this Series Supplement and,
subject to the rights of the Investor Certificateholders with respect thereto,
funds on deposit in the Cash Collateral Account.
"Collateral Interest Holder" shall mean the entity so designated in
the Collateral Agreement.
"Collateral Interest Shortfall" shall have the meaning specified in
Section 4.08(c).
"Collateral Invested Amount" shall mean, when used with respect to
any date, an amount equal to (a) the Collateral Initial Invested Amount, minus
(b) the aggregate amount of deposits made to the Cash Collateral Account
pursuant to Sections 4.11(c) or 4.11(d)(iii) and (vi) prior to such date, minus
(c) the aggregate amount of Collateral Charge-Offs for all prior Distribution
Dates pursuant to Section 4.12(c), minus (d) the aggregate amount of
Subordinated Principal Collections allocated on all prior Distribution Dates
pursuant to Section 4.15 allocable to the Collateral Invested Amount minus (e)
an amount equal to the amount by which the Collateral Invested Amount has been
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reduced on all prior Distribution Dates pursuant to Sections 4.12(a) and (b),
plus (f) the sum of (A) the Series Allocable Miscellaneous Payments allocated
and available on all prior Distribution Dates pursuant to Section 4.12(c) and
(B) the amount of Excess Finance Charge and Administrative Collections
allocated and available on all prior Distribution Dates pursuant to Section
4.13(i), for the purpose of reimbursing amounts deducted pursuant to the
foregoing clauses (c), (d) and (e), and minus (g) the amount of any reduction
resulting from a cancellation of any portion of the Collateral Interest
pursuant to Section 4.18; provided, however, that the Collateral Invested
Amount may not be reduced below zero.
"Collateral Invested Percentage" shall mean, with respect to any
Distribution Date, the percentage equivalent (which percentage shall never
exceed 100%) of a fraction, the numerator of which is the Collateral Invested
Amount as of the last day of the second preceding Due Period and the denominator
of which is the Adjusted Invested Amount as of such last day.
"Collateral Monthly Interest" shall mean the monthly interest
distributable in respect of the Collateral Invested Amount as calculated in
accordance with subsection 4.08(c).
"Collateral Monthly Principal" shall mean the monthly principal
distributable in respect of the Collateral Invested Amount as calculated in
accordance with subsection 4.09(c).
"Collateral Rate" shall mean, for any Interest Period, a per annum
rate equal to LIBOR for such Interest Period plus 1%.
"Collateral Surplus" shall mean, with respect to any Distribution
Date, the excess, if any, of (a) the amount on deposit in the Cash Collateral
Account plus the Collateral Invested Amount over (b) the Required Collateral
Amount; provided, however that at any time the Class B Invested Amount is
greater than zero and as long as an Early Amortization Period is not in effect,
at the option of the Seller (as evidenced by written instructions to the
Servicer and the Trustee), the Collateral Surplus shall be such higher amount as
the Seller shall specify, from time to time, in such instructions.
"Collection Subaccount" shall mean the Collection Account subaccount
designated for the deposit of funds pursuant to subsections 4.19(b), 4.20(b) and
4.20(d).
"Controlled Accumulation Amount" shall mean, for any Distribution
Date with respect to any Due Period during the Controlled Accumulation Period,
$[____________]; provided, however, that, if the commencement of the Controlled
Accumulation Period is modified pursuant to Section 4.11(f), (a) the Controlled
Accumulation Amount shall mean the amount specified in accordance with such
Section on the date on which the Controlled Accumulation Period has most
recently been modified and (b) the sum of the Controlled Accumulation Amounts
for all Due Periods during the modified Controlled Accumulation Period shall not
be less than the sum of the Class A Invested Amount plus the Class B Invested
Amount.
"Controlled Accumulation Period" shall mean, unless an Amortization
Event shall have occurred prior thereto, the period commencing at the close of
business on the last Business Day of [____________], or such later date as is
determined in accordance with subsection 4.11(f) and ending on the first to
occur of (a) the commencement of the Early Amortization Period or Early
Accumulation
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Period, (b) the payment in full of the Invested Amount and (c) the
Series 1998-1 Termination Date; provided however, that the commencement of the
Controlled Accumulation Period may be delayed to no later than the close of
business on the last Business Day of [____________].
"Controlled Accumulation Period Amount" shall mean, for each Due
Period, the product of (a) Expected Monthly Principal for such Due Period and
(b) a fraction, the numerator of which is equal to the Invested Amount as of the
last day of the Revolving Period, and the denominator of which is equal to the
sum of the Invested Amount as of the last day of the Revolving Period plus the
invested amounts as of the last day of the revolving periods of all outstanding
Series that have controlled accumulation periods or controlled amortization
periods, the length of which may be altered in accordance with the terms of the
related Supplements and are not scheduled to be in their respective revolving
periods as of such Due Period.
"Controlled Accumulation Period Length" has the meaning specified in
subsection 4.11(f)
"Controlled Deposit Amount" shall mean, for any Distribution Date
with respect to the Controlled Accumulation Period, an amount equal to the sum
of the Controlled Accumulation Amount for such Distribution Date and any Deficit
Controlled Accumulation Amount for the immediately preceding Distribution Date.
"Covered Amount" shall mean, for any Distribution Date with respect
to the Controlled Accumulation Period and any Early Accumulation Period, an
amount equal to the sum of (i) the product of (x) a fraction, the numerator of
which is the actual number of days in the related Interest Period and the
denominator of which is 360, (y) the Class A Certificate Rate in effect during
such Interest Period, and (z) the Class A Principal Funding Account Percentage
of funds available in the Principal Funding Account, if any, as of the preceding
Distribution Date and (ii) the product of (x) a fraction, the numerator of which
is the actual number of days in the related Interest Period and the denominator
of which is 360, (y) the Class B Certificate Rate in effect during such Interest
Period, and (z) the Class B Principal Funding Account Percentage of funds
available in the Principal Funding Account, if any, as of the preceding
Distribution Date.
"Cumulative Excess Interest Amount" shall mean, with respect to any
Distribution Date, an amount equal to the sum of (a) the Excess Interest Amount
with respect to such Distribution Date and (b) the aggregate Excess Interest
Amounts with respect to prior Distribution Dates which have not been distributed
to the Class B Certificateholders pursuant to subsection 4.13(c) or Section
4.14; provided, however, that with respect to the first Distribution Date, the
Cumulative Excess Interest Amount shall be equal to zero.
"Deficit Controlled Accumulation Amount" shall mean (a) on the first
Distribution Date with respect to the Controlled Accumulation Period, the
excess, if any, of the Controlled Accumulation Amount for such Distribution Date
over the amount deposited in the Principal Funding Account on such Distribution
Date and (b) on each subsequent Distribution Date with respect to the Controlled
Accumulation Period, the excess, if any, of the Controlled Deposit Amount for
such subsequent Distribution Date over the amount deposited in the Principal
Funding Account on such subsequent Distribution Date.
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"Distribution Date" shall mean, with respect to Series 1998-1, the
fifteenth day of each calendar month, or if such fifteenth day is not a Business
Day, the next succeeding Business Day, provided that the first Distribution Date
shall be [____________], 1998.
"Early Accumulation Period" shall mean, the period commencing at the
close of business on the Business Day immediately preceding the day on which an
Amortization Event is deemed to have occurred pursuant to clauses (a), (b), (d),
(e), (f) or (i) of Section 7 of this Supplement and continuing to the earlier of
(a) the commencement of the Early Amortization Period and (b) the Series 1998-1
Expected Final Payment Date.
"Early Amortization Period" shall mean, if an Amortization Event has
occurred pursuant to subsection 9.01(a) of the Agreement or clauses (c), (g) or
(h) of Section 7 of this Supplement, the period commencing on the close of
business on the earlier of (x) if on the day on which such Amortization Event is
deemed to have occurred, the Servicer pursuant to subsection 4.03(a) of the
Agreement need not make daily deposits into or withdrawals from the Collection
Account, the close of business on the Business Day immediately preceding the
first day of the Due Period in which such Amortization Event is deemed to have
occurred, and (y) otherwise, at the close of business on the Business Day
immediately preceding the day on which such Amortization Event is deemed to have
occurred and ending, in either case, on the earlier to occur of (a) the Series
1998-1 Termination Date, (b) the termination of the Trust pursuant to Section
12.01 of the Agreement and (c) the date the Invested Amount is reduced to zero.
"Eligible Investments" shall mean with respect to funds allocable to
Series 1998-1 in the Collection Account and the Reserve Account, "Eligible
Investments" as defined in the Agreement, except that all references in such
definition to "rating satisfactory to the Rating Agency" shall mean ratings of
not less than A-1+ (or A-1 in the case of Reserve Account investments prior to
the commencement of an Early Accumulation Period or a Controlled Accumulation
Period) and P-1 (whichever is applicable).
"Eligible Institution" shall mean with respect to the Cash
Collateral Account, the Principal Funding Account, the Reserve Account and funds
allocable to Series 1998-1 in the Collection Account, any "Eligible Institution"
as defined in the Agreement, except that all references in such definition to
"rating satisfactory to the Rating Agency" shall mean long term ratings of not
less than AAA or Aaa (whichever is applicable) or short-term unsecured debt
ratings of at least A-1+ and P-1 (whichever is applicable), except that no such
rating shall be required of an institution which maintains such Account or such
funds as a fully segregated trust account or subaccount with the corporate trust
department of such institution as long as such institution maintains the credit
rating of the Rating Agency in one of its generic credit rating categories which
signifies investment grade.
"Excess Finance Charge and Administrative Collections" shall mean,
with respect to any Distribution Date, the sum of the amounts, if any, specified
pursuant to subsections 4.11(a)(iv), 4.11(b)(ii) and an amount equal to the
product of (x) Reallocated Investor Finance Charge and Administrative
Collections with respect to such Distribution Date and (y) the Collateral
Invested Percentage with respect to such Distribution Date.
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"Excess Interest Amount" shall mean, with respect to any
Distribution Date, an amount equal to one-twelfth of the product of (a) the
outstanding principal balance of the Class B Certificates as of the preceding
Distribution Date (computed by subtracting from the Class B Initial Invested
Amount the aggregate amount of distributions of Class B Monthly Principal made
to the Class B Certificateholders on or before such preceding Distribution Date)
minus the Class B Invested Amount as of such preceding Distribution Date (after
giving effect to any increase or decrease in the Class B Invested Amount on such
preceding Distribution Date) and (b) the Class B Certificate Rate; provided,
however, that with respect to the first Distribution Date, the Excess Interest
Amount shall be equal to zero.
"Excess Principal Funding Investment Proceeds" shall mean, with
respect to each Distribution Date relating to the Controlled Accumulation Period
or any Early Accumulation Period, the amount, if any, by which the Principal
Funding Investment Proceeds for such Distribution Date exceed the Covered Amount
determined on such Distribution Date.
"Expected Monthly Principal" shall be equal to the excess of (a) the
product of (i) the lowest monthly principal payment rate (determined by dividing
Collections of Principal Receivables during a related Due Period by the amount
of Principal Receivables in the Trust as of the last day of the preceding Due
Period, adjusted for additions and removals occurring after such last day),
expressed as a decimal, for the 3 Due Periods preceding the date of such
calculation (or such lower principal payment rate as the Servicer may select)
and (ii) the sum of (X) the Initial Invested Amounts (as defined in their
respective related Supplements) of all outstanding Series which are not Variable
Funding Series and (Y) the Invested Amounts (as defined in their respective
related Supplements) of all outstanding Variable Funding Series, over (b) the
sum of, without duplication, (i) the allocations of Collections of Principal
Receivables required for all Series which have controlled accumulation periods
or controlled amortization periods, the length of which may not be altered in
accordance with the terms of their related Supplements, and which are either
amortizing or accumulating principal at such time and (ii) all Collections of
Principal Receivables accounted for in clause (a) above which are then being
allocated to any other Series then in an Early Amortization Period or an Early
Accumulation Period (as such terms are defined in the related Supplement).
"Floating Allocation Percentage" shall mean, with respect to any Due
Period, the percentage equivalent of a fraction, the numerator of which is the
Adjusted Invested Amount as of the last day of the immediately preceding Due
Period and the denominator of which is the product of (a) the total amount of
Principal Receivables in the Trust plus the amount on deposit in the Special
Funding Account (other than the portion constituting Finance Charge and
Administrative Receivables), as of the last day of such immediately preceding
Due Period and (b) the Series 1998-1 Allocation Percentage with respect to the
Due Period in respect of which the Floating Allocation Percentage is being
determined; provided, however, that, with respect to the first Due Period, the
Floating Allocation Percentage shall mean the percentage equivalent of a
fraction, the numerator of which is the Initial Invested Amount and the
denominator of which is the product of (x) the total amount of Principal
Receivables in the Trust on the Series Cut-Off Date and (y) the Series 1998-1
Allocation Percentage with respect to the Series Cut-Off Date; provided further
that, with respect to any Due Period in which an Aggregate Addition occurs or a
removal of Accounts pursuant to Section 2.10 of the Agreement occurs, the amount
referred to in clause (a) shall be the average of the amount of Principal
Receivables
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in the Trust on the date on which such Aggregate Addition or removal of
Accounts occurs (after giving effect thereto) and the last day of the
immediately preceding Due Period.
"Group Three" shall mean Series 1998-1 and each other Series
specified in the related Supplement to be included in Group Three.
"Group Three Investor Additional Amounts" shall mean, with respect
to any Distribution Date, the sum of (a) Series 1998-1 Additional Amounts for
such Distribution Date and (b) for all other Series included in Group Three, the
sum of (i) the aggregate net amount by which the Invested Amounts of such Series
have been reduced as a result of investor charge-offs, subordination of
principal collections and funding the investor default amounts in respect of any
Class or Series Enhancement interests of such Series as of such Distribution
Date and (ii) if the applicable Supplements so provide, the aggregate unpaid
amount of interest at the applicable certificate rates that has accrued on the
amounts described in the preceding clause (i) for such Distribution Date.
"Group Three Investor Default Amount" shall mean, with respect to
any Distribution Date, the sum of (a) the Investor Defaulted Amount for such
Distribution Date and (b) the aggregate amount of the investor default amounts
for all other Series included in Group Three for such Distribution Date.
"Group Three Investor Finance Charge and Administrative Collections"
shall mean, with respect to any Distribution Date, the sum of (a) Investor
Finance Charge and Administrative Collections for such Distribution Date and (b)
the aggregate amount of the investor finance charge and administrative
collections for all other Series included in Group Three for such Distribution
Date.
"Group Three Investor Monthly Fees" shall mean with respect to any
Distribution Date, the sum of (a) Series 1998-1 Monthly Fees for such
Distribution Date and (b) the aggregate amount of the servicing fees, investor
fees, fees payable to any Series Enhancer and any other similar fees, which are
payable out of reallocated investor finance charge collections pursuant to the
related Supplements, for all other Series included in Group Three for such
Distribution Date.
"Group Three Investor Monthly Interest" shall mean, with respect to
any Distribution Date, the sum of (a) Series 1998-1 Monthly Interest for such
Distribution Date and (b) the aggregate amount of monthly interest, including
overdue monthly interest and interest on such overdue monthly interest, if
applicable, for all other Series included in Group Three for such Distribution
Date.
"Initial Invested Amount" shall mean the sum of the Class A Initial
Invested Amount, the Class B Initial Invested Amount and the Collateral Initial
Invested Amount.
"Interest Period" shall mean, with respect to any Distribution Date,
the period from and including the Distribution Date immediately preceding such
Distribution Date (or, in the case of the first Distribution Date, from and
including the Issuance Date) to but excluding such Distribution Date.
"Invested Amount" shall mean, when used with respect to any date, an
amount equal to the sum of (a) the Class A Invested Amount as of such date, (b)
the Class B Invested Amount as of such date and (c) the Collateral Invested
Amount as of such date.
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"Investor Charge-Offs" shall mean, when used with respect to any Due
Period, the Class A Investor Charge-Offs for such Due Period, the Class B
Investor Charge-Offs for such Due Period and the Collateral Charge-Offs for such
Due Period.
"Investor Defaulted Amount" shall mean, with respect to any Due
Period, an amount equal to the product of (a) the Series 1998-1 Allocation
Percentage with respect to such Due Period, (b) the Floating Allocation
Percentage with respect to such Due Period and (c) the Defaulted Amount with
respect to such Due Period.
"Investor Finance Charge and Administrative Collections" shall mean,
with respect to any Distribution Date, an amount equal to the product of (a) the
Floating Allocation Percentage for the related Due Period and (b) Series 1998-1
Allocable Finance Charge and Administrative Collections deposited in the
Collection Account for the related Due Period.
"Issuance Date" shall mean July [__], 1998.
"LIBOR" shall mean for the Interest Period from [____________], 1998
to and excluding [____________], 1998 and for any subsequent Interest Period,
the per annum rate for deposits in United States dollars for a period of one
month which appears on Telerate Page 3750 as of 11:00 a.m., London time, on the
related LIBOR Determination Date. If such rate does not appear on Telerate Page
3750 on such day, the rate will be determined on the basis of the rates at which
deposits in United States dollars are offered by the Reference Banks at
approximately 11:00 a.m., London time, on such day to prime banks in the London
interbank market for a period of one month commencing on that day. The Servicer
will request the principal London office of each of the Reference Banks to
provide a quotation of its rate. If at least two such quotations are provided,
the rate for that day will be the arithmetic mean of the quotations. If fewer
than two quotations are provided as requested, the rate for that day will be the
arithmetic mean of the rates quoted by two or more major banks in New York City,
selected by the Servicer, in its sole discretion at approximately 11:00 a.m.,
New York City time, on that day for loans in United States dollars to leading
European banks for a period of one month.
"LIBOR Determination Date" shall mean the second London business day
prior to the commencement of an Interest Period.
"Optional Repurchase Amount" shall mean, with respect to any
Distribution Date, after giving effect to any deposits and distributions
otherwise to be made on such Distribution Date, the sum of (i) the sum of the
Class A Invested Amount and the Class B Invested Amount on such Distribution
Date, plus (ii) accrued and unpaid interest on the unpaid principal balance of
the Class A Certificates and Class B Certificates through the day preceding such
Distribution Date, plus (iii) the amount of Additional Interest, if any, for
such Distribution Date and any Additional Interest previously due but not
distributed to Class A Certificateholders and Class B Certificateholders, as
applicable, on a prior Distribution Date.
"PFA Eligible Investments" shall mean negotiable instruments or
securities represented by instruments in bearer or registered form, or, in the
case of deposits described below, deposit accounts held in the name of the
Trustee in trust for the benefit of the Certificateholders, subject to the
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exclusive custody and control of the Trustee and for which the Trustee has sole
signature authority, which evidence:
(a) direct obligations of, or obligations fully guaranteed as to
timely payment by, the United States of America;
(b) demand deposits, time deposits or certificates of deposit
(having original maturities of no more than 365 days) of depository
institutions or trust companies incorporated under the laws of the United
States of America or any state thereof (or domestic branches of foreign
banks) and subject to supervision and examination by federal or state
banking or depository institution authorities; provided that at the time
of the Trust's investment or contractual commitment to invest therein,
the short-term debt rating of such depository institution or trust
company shall be in the highest rating category of the Rating Agency;
(c) commercial paper (having original or remaining maturities of no
more than 31 days) having, at the time of the Trust's investment or
contractual commitment to invest therein, a rating in the highest rating
category of the Rating Agency;
(d) demand deposits, time deposits and certificates of deposit which
are fully insured by the FDIC having, at the time of the Trust's
investment therein, a rating in the highest rating category of the Rating
Agency;
(e) bankers' acceptances (having original maturities of no more than
365 days) issued by any depository institution or trust company referred
to in (b) above;
(f) time deposits (having maturities not later than the succeeding
Distribution Date) other than as referred to in clause (e) above, with a
Person the commercial paper of which has a credit rating in the highest
rating category of the Rating Agency or notes which are payable on demand
issued by Household Finance Corporation, provided such notes will
constitute PFA Eligible Investments only if the commercial paper of
Household Finance Corporation has, at the time of the Trust's investment
in such notes, a rating in the highest rating category of the Rating
Agency; or
(g) any other investment of a type or rating that satisfies the
Rating Agency Condition and the definition of "eligible assets" as
defined under Rule 3a-7(b)(1) of the Rules and Regulations promulgated
under the Investment Company Act of 1940.
"Principal Allocation Percentage" shall mean, with respect to any
Due Period, the percentage equivalent (which percentage shall never exceed 100%)
of a fraction, the numerator of which is the Series Adjusted Invested Amount as
of the last day of the Revolving Period and the denominator of which is the
product of (a) the total amount of Principal Receivables in the Trust as of the
last day of the immediately preceding Due Period plus the amount on deposit in
the Special Funding Account (other than the portion constituting Finance Charge
and Administrative Receivables)
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on such last day and (b) the Series 1998-1 Allocation Percentage with respect
to the Due Period in respect of which the Principal Allocation Percentage is
being determined; provided, however, that with respect to any Due Period in
which an Aggregate Addition occurs or a removal of Accounts pursuant to Section
2.10 of the Agreement occurs, the amount referred to in clause (a) shall
be the average of the amount of Principal Receivables in the Trust on the date
on which such Aggregate Addition or removal of Accounts occurs (after giving
effect thereto) and the last day of the immediately preceding Due Period. If,
with respect to any Due Period, the Principal Funding Account Balance is equal
to the sum of the Class A Initial Invested Amount and the Class B Initial
Invested Amount, the Principal Allocation Percentage shall be zero. For
purposes of this definition, Series Adjusted Invested Amount shall be computed
during the Controlled Accumulation Period or any Early Accumulation Period or
any Early Amortization Period by subtracting from such amount the difference
between (a) the Initial Collateral Invested Amount and (b) the sum of the
Collateral Invested Amount determined as of the close of business on the last
day of the Revolving Period plus an amount equal to the aggregate unreimbursed
Collateral Charge-Offs as of such last day.
"Principal Funding Account" shall have the meaning specified in
subsection 4.19(a).
"Principal Funding Account Balance" shall mean, with respect to any
date of determination during the Controlled Accumulation Period or any Early
Accumulation Period, the principal amount, if any, on deposit in the Principal
Funding Account on such date of determination.
"Principal Funding Investment Proceeds" shall mean, with respect to
each Distribution Date, the investment earnings on funds in the Principal
Funding Account (net of investment expenses and losses) for the period from and
including the immediately preceding Distribution Date to but excluding such
Distribution Date.
"Principal Funding Investment Shortfall" shall mean, with respect to
each Distribution Date during the Controlled Accumulation Period or any Early
Accumulation Period, the amount, if any, by which the Principal Funding
Investment Proceeds are less than the Covered Amount.
"Rating Agency" shall mean Xxxxx'x and Standard & Poor's.
"Reallocated Investor Finance Charge and Administrative Collections"
shall mean the sum of (a) that portion of Group Three Investor Finance Charge
and Administrative Collections allocated to Series 1998-1 pursuant to Section
4.16, (b) any Collections of Finance Charge and Administrative Receivables
allocable to any Series expressly subordinated to Series 1998-1 which are
available for application pursuant to Sections 4.11 and 4.13 and (c) any
Collections of Principal Receivables allocable to any such Series to the extent
the Supplement for such Series provides for such Collections to be deemed
Collections of Finance Charge and Administrative Receivables available for
application pursuant to such Sections.
"Reassignment Amount" shall mean, with respect to any Distribution
Date, after giving effect to any deposits and distributions otherwise to be made
on such Distribution Date, the sum of (i) the Adjusted Invested Amount on such
Distribution Date, plus (ii) accrued and unpaid interest on the unpaid principal
balance of the Class A Certificates and Class B Certificates through the day
preceding such Distribution Date, plus (iii) the amount of Additional Interest,
if any, for such Distribution Date
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and any Additional Interest previously due but not distributed to Investor
Certificateholders on a prior Distribution Date, plus (iv) accrued and unpaid
interest on the unpaid balance of the Collateral Invested Amount.
"Reference Banks" shall mean four major banks in the London
interbank market selected by the Servicer.
"Required Collateral Amount" shall mean $[____________] initially
and as of any Distribution Date thereafter an amount equal to the greater of (x)
[__]% of the sum of the Class A Adjusted Invested Amount, the Class B Adjusted
Invested Amount and the Required Collateral Amount in each case as of such
Distribution Date after taking into account distributions made on such date and
(y) $[____________]; provided that (i) if there are any withdrawals from the
Cash Collateral Account pursuant to subsection 4.14(b), any reductions in the
Collateral Invested Amount pursuant to clauses (c), (d), or (e) of the
definition of such amount, or an Amortization Event has occurred, the Required
Collateral Amount for any Distribution Date shall equal the amount of such
requirement immediately preceding such withdrawal, reduction or Amortization
Event, (ii) in no event shall the Required Collateral Amount exceed the
aggregate outstanding principal amount of the Class A Certificates and the Class
B Certificates on any such date, (iii) the Required Collateral Amount may be
reduced at any time to a lesser amount if (X) the Rating Agency Condition is
satisfied and (Y) an Officer's Certificate of the Seller has been delivered to
the effect that in the reasonable belief of the Seller, such reduction will not
result in the occurrence of an Amortization Event, (iv) the Seller, in its sole
discretion may increase the Required Collateral Amount at any time to a greater
amount and (v) if the Principal Funding Account Balance is equal to the sum of
the Class A Initial Invested Amount and the Class B Initial Invested Amount, the
Required Collateral Amount shall be zero.
"Required Reserve Account Amount" shall mean an amount equal to the
product of (a) [___]% of the sum of the Class A Invested Amount and the Class B
Invested Amount as of the preceding Distribution Date (after giving effect to
all changes therein on such date) and (b) the number of Distribution Dates
remaining from and excluding the Distribution Date on which such calculation is
being determined to and including the Series 1998-1 Expected Final Payment Date
divided by 12; provided that the Seller, in its sole discretion may increase the
Required Reserve Account Amount at any time to a greater amount.
"Reserve Account" shall have the meaning specified in Section
4.20(a).
"Reserve Account Event" shall have the meaning specified in Section
4.20(e).
"Reserve Account Surplus" shall mean, as of any date of
determination, the amount, if any, by which the amount on deposit in the Reserve
Account exceeds the Required Reserve Account Amount.
"Reserve Draw Amount" shall have the meaning specified in Section
4.20(c).
"Revolving Period" shall mean the period beginning on the close of
business on the Series Cut-Off Date and ending on the earlier of (x) the day on
which the Controlled Accumulation Period commences, (y) if on the day on which
an Amortization Event is deemed to have occurred, the
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Servicer pursuant to subsection 4.03(a) of the Agreement need not make daily
deposits into or withdrawals from the Collection Account, the close of business
on the Business Day immediately preceding the first day of the Due Period in
which an Amortization Event is deemed to have occurred pursuant to Section 9.01
of the Agreement or Section 7 hereof, and (z) otherwise, at the close of
business on the Business Day immediately preceding the day on which an
Amortization Event is deemed to have occurred pursuant to Section 9.01 of the
Agreement or Section 7 hereof.
"Seller's Percentage" shall mean 100% minus (a) the Floating
Allocation Percentage, when used at any time with respect to Finance Charge and
Administrative Receivables and Defaulted Receivables, (b) the Floating
Allocation Percentage, when used with respect to Principal Receivables during
the Revolving Period and (c) the Principal Allocation Percentage, when used with
respect to Principal Receivables during the Controlled Accumulation Period, any
Early Accumulation Period or any Early Amortization Period.
"Series Adjusted Invested Amount" shall mean, with respect to any
Due Period:
(a) during the Revolving Period, the Invested Amount as of the
last day of the immediately preceding Due Period;
(b) during the Controlled Accumulation Period, the amount
specified in clause (a) above as of the close of business on the
last day of the Revolving Period less Investor Charge-Offs over any
reimbursed Investor Charge-Offs thereafter; provided, however, that
on any date, at the option of the Seller (the exercise of such
option to be evidenced by written instructions from the Seller to
the Servicer and the Trustee), such amount may be reduced below the
amount specified for the previous Due Period to an amount not less
than the greater of (i) the Adjusted Invested Amount as of the last
day of the immediately preceding Due Period (less any amounts
deposited into the Principal Funding Account since the last day of
the immediately preceding Due Period) and (ii) an amount that, if
used as the numerator of the Principal Allocation Percentage for the
remainder of the Controlled Accumulation Period would assure that
Available Investor Principal Collections for this series plus the
product of the aggregate amount of the Trust Excess Principal
Collections for all Series during each Due Period times a fraction
the numerator of which is the Invested Amount of such Series and the
denominator of which is the aggregate Invested Amount of all Series
not scheduled to be in their Revolving Period during such Due Period
would equal at least 125% of the applicable Controlled Accumulation
Amount for such Due Period for so long as the Invested Amount is
greater than zero, assuming for this purpose that (A) the payment
rate with respect to Collections of Principal Receivables remains
constant at the level of the immediately preceding Due Period, (B)
the total amount of Principal Receivables and the outstanding
principal amount of any Participation Interests theretofore conveyed
to and in the Trust remains constant at the level existing on the
date of such reduction, (C) no Amortization Event with respect to
any Series will subsequently occur and (D) no additional Series
(other than any Series being issued on the date of such reduction)
will be subsequently issued; provided, however, that any such
reduction of the Invested Amount pursuant to clause (ii) above shall
be subject to the
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receipt by the Trustee of an Officer's Certificate of the Seller to
the effect that the Seller does not expect that, after giving effect
to such reduction of the Invested Amount, the Available Investor
Principal Collections for this series and the aggregate amount of
the Trust Excess Principal Collections for all Series reallocated to
this series for any Monthly Period would be less than the Controlled
Accumulation Amount; and
(c) during any Early Amortization Period or Early Accumulation
Period, the Invested Amount as of the last day of the Revolving
Period less Investor Charge-Offs over any reimbursed Investor
Charge-Offs thereafter or, if less, the amount last determined
pursuant to clause (b) above during the Controlled Accumulation
Period.
"Series Adjusted Portfolio Yield" shall mean with respect to Series
1998-1 and, with respect to any Due Period, the annualized percentage equivalent
of a fraction (a) the numerator of which is the amount of Reallocated Investor
Finance Charge and Administrative Collections during the immediately preceding
Due Period calculated on a cash basis, after subtracting therefrom the Investor
Defaulted Amount with respect to such Due Period, and (b) the denominator of
which is the Adjusted Invested Amount as of the last day of the immediately
preceding Due Period.
"Series Cut-Off Date" shall mean the close of business on
[____________], 1998.
"Series 1998-1" or "Series 1998-1 Certificates" shall mean the
Series of Investor Certificates, the terms of which are specified in this Series
Supplement.
"Series 1998-1 Additional Amounts" shall mean, with respect to any
Distribution Date, the sum of the amounts determined pursuant to clauses (b),
(c)(ii), (e) and (i) of Section 4.13 for such Distribution Date.
"Series 1998-1 Allocable Finance Charge and Administrative
Collections" shall mean the Series Allocable Finance Charge and Administrative
Collections with respect to Series 1998-1.
"Series 1998-1 Allocation Percentage" shall mean the Series
Allocation Percentage with respect to Series 1998-1.
"Series 1998-1 Certificateholders" shall mean the Holders of Series
1998-1 Certificates.
"Series 1998-1 Certificateholders' Interest" shall mean the Class A
Certificateholders' Interest, the Class B Certificateholders' Interest and the
Collateral Interest.
"Series 1998-1 Excess Principal Collections" shall mean that portion
of "Trust Excess Principal Collections" for all Series (as defined in the
respective Supplements) allocated to Series 1998-1 pursuant to Section 4.17.
"Series 1998-1 Expected Final Payment Date" shall mean the March
2002 Distribution Date.
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"Series 1998-1 Monthly Fees" shall mean, with respect to any
Distribution Date, the amount determined pursuant to Section 4.11(a)(iii).
"Series 1998-1 Monthly Interest" shall mean the amounts determined
pursuant to Sections 4.08(a), (b) and (c).
"Series 1998-1 Principal Shortfall" shall have the meaning specified
in Section 4.17.
"Series 1998-1 Termination Date" shall mean the earlier of the
August 2004 Distribution Date and the date the Trust is terminated pursuant to
Section 12.01 of the Agreement.
"Series Required Seller Amount" shall mean an amount equal to 7% of
the Series Adjusted Invested Amount as of the date of determination provided,
however, that the Series Required Seller Amount may be adjusted by the Seller
upon (a) the satisfaction of the Rating Agency Condition and (b) the delivery to
the Trustee by the Seller of a Tax Opinion.
"Servicing Fee" shall have the meaning specified in Section 3.
"Servicing Fee Rate" shall mean 2%.
"Subordinated Principal Collections" shall mean, with respect to
each Distribution Date, the product of (a) the Floating Allocation Percentage,
with respect to the Revolving Period, or the Principal Allocation Percentage,
with respect to the Controlled Accumulation Period and any Early Accumulation
Period or Early Amortization Period, of Series Allocable Principal Collections
deposited in the Collection Account for the related Due Period (or any partial
Due Period which occurs as the first Due Period during any Early Accumulation
Period or Early Amortization Period) and (b) the sum of the Class B Invested
Percentage and the Collateral Invested Percentage for such Distribution Date.
"Subordinated Series" shall mean any Series which, pursuant to the
terms of the related Supplement, is subordinated in any manner to the Series
1998-1 Certificates.
"Subordinated Series Reallocated Principal Collections" shall mean,
with respect to any Distribution Date, that portion of Collections of Principal
Receivables allocable to a Subordinated Series which, pursuant to the terms of
the related Supplement, are to be reallocated to Series 1998-1 and treated as a
portion of Available Investor Principal Collections for such Distribution Date
and are not deemed to be Collections of Finance Charge and Administrative
Receivables pursuant to clause (c) of the definition of Reallocated Investor
Finance Charge and Administrative Collections.
"Tax Opinion" shall have the meaning specified in Section 19.
"Telerate Page 3750" shall mean the display page so designated on
the Dow Xxxxx Telerate Service (or such other page as may replace that page on
that service for the purpose of displaying comparable rates or prices).
"Termination Proceeds" shall mean any Termination Proceeds arising
out of a sale of Receivables (or interests therein) pursuant to subsection
12.02(c) of the Agreement with respect to Series 1998-1.
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"Trust Excess Principal Collections" shall mean, with respect to
Series 1998-1, the amounts so specified in subsection 4.11(c) or 4.11(d)(iii) or
(vi) and, with respect to all other Series, shall mean the amount specified in
the related Supplement.
"Variable Funding Series" shall mean any Series, the invested amount
of which may be increased or decreased subject to the satisfaction of certain
conditions specified in the Supplement related to such Series.
(a) All capitalized terms used herein and not otherwise defined
herein have the meanings ascribed to them in the Agreement.
(b) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Series Supplement shall refer to this Series
Supplement as a whole and not to any particular provision of this Series
Supplement; references herein to any Article, Section or Exhibit are references
to Articles, Sections and Exhibits in or to this Series Supplement unless
otherwise specified; and the term "including" means "including without
limitation".
SECTION 3. Servicing Compensation.
The monthly servicing fee (the "Servicing Fee") shall be payable to
the Servicer, in arrears, on each Distribution Date in respect of any Due Period
(or portion thereof) occurring prior to the earlier of the first Distribution
Date following the Series 1998-1 Termination Date and the first Distribution
Date on which the Invested Amount is zero, in an amount equal to one-twelfth of
the product of (a) the Servicing Fee Rate, (b) the amount of Principal
Receivables as of the last day of the Due Period second preceding such
Distribution Date (or, if an Aggregate Addition occurs or a removal of Accounts
pursuant to Section 2.10 of the Agreement occurs in the Due Period preceding
such Distribution Date, the weighted average amount of Principal Receivables in
the Trust on the date on which such Aggregate Addition or removal of Accounts
occurs (after giving effect thereto) and the last day of such second preceding
Due Period) and (c) the Series 1998-1 Allocation Percentage for the Due Period
preceding such Distribution Date; provided, however, with respect to the first
Distribution Date, the Servicing Fee shall be an amount equal to the product of
(a) the Servicing Fee Rate, (b) the amount of Principal Receivables in the Trust
as of the Series Cut-Off Date, (c) the Series 1998-1 Allocation Percentage for
the Due Period preceding such Distribution Date and (d) a fraction the numerator
of which is 30 and the denominator of which is 360. The portion of the Servicing
Fee payable from Reallocated Investor Finance Charge and Administrative
Collections with respect to any Distribution Date (the "Allocable Servicing
Fee") shall be equal to one-twelfth of the product of (a) the Servicing Fee Rate
(such rate to be reduced with respect to any Distribution Date by the amount by
which the product of 12 and Interchange received during the preceding Due Period
as a percentage of the total amount of Principal Receivables at the end of such
Due Period is less than 1.25%) and (b) the Adjusted Invested Amount as of the
last day of the Due Period second preceding such Distribution Date; provided,
however, with respect to the first Distribution Date, the Allocable Servicing
Fee shall be equal to the product of (a) the Servicing Fee Rate (such rate to be
reduced with respect to any Distribution Date by the amount by which the product
of 12 and Interchange received during the preceding Due Period as a percentage
of the total amount of Principal Receivables is less than 1.25%), (b) the
Initial Invested Amount and (c) a fraction the numerator of which is 30 and the
denominator of
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which is 360. The remainder of the Servicing Fee shall be paid directly by the
Seller and in no event shall the Trust, the Trustee or the Series 1998-1
Certificateholders be liable for the share of the Servicing Fee to be paid
directly by the Seller. The Allocable Servicing Fee shall be payable to the
Servicer solely to the extent amounts are available for distribution pursuant to
subsection 4.11(a)(iii) and subsection 4.13(g), as the case may be.
SECTION 4. Article IV of Agreement.
Sections 4.01 through 4.06 of the Agreement shall be read in their
entirety as provided in the Agreement. Article IV of the Agreement (except for
Sections 4.01 through 4.06 thereof) shall, with respect to the Series 1998-1
Certificates, be read in its entirety as follows:
ARTICLE IV
RIGHTS OF CERTIFICATEHOLDERS AND
ALLOCATION AND APPLICATION OF COLLECTIONS
Section 4.07. Allocations. Allocations. Collections of Finance
Charge and Administrative Receivables and Principal Receivables, Defaulted
Receivables and Miscellaneous Payments allocated to Series 1998-1 pursuant to
Article IV of the Agreement (and, as described herein, Collections of Finance
Charge and Administrative Receivables reallocated from other Series in Group
Three) shall be allocated and distributed or reallocated as set forth in this
Article.
(b) Payments to the Seller. The Servicer shall on Deposit Dates
withdraw from the Collection Account and pay to the Seller the following
amounts:
(i) an amount equal to the Seller's Percentage for the related
Due Period of Series 1998-1 Allocable Finance Charge and
Administrative Collections to the extent such amount is deposited
in the Collection Account; and
(ii) an amount equal to the Seller's Percentage for the
related Due Period of Series Allocable Principal Collections
deposited in the Collection Account, if the Seller's Participation
Amount (determined after giving effect to any Principal Receivables
transferred to the Trust on such Deposit Date) exceeds zero.
The withdrawals to be made from the Collection Account pursuant to
this Section 4.07(b) do not apply to deposits into the Collection Account that
do not represent Collections, including payment of the purchase price for the
Certificateholders' Interest pursuant to Section 2.06 or 10.01 of the Agreement,
payment of the purchase price for the Series 1998-1 Certificateholders' Interest
pursuant to Section 8 of this Series Supplement and proceeds from the sale,
disposition or liquidation of Receivables pursuant to Section 9.02 or 12.02 of
the Agreement.
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Section 4.08. Determination of Monthly Interest. The amount of
monthly interest ("Class A Monthly Interest") distributable from the Collection
Account with respect to the Class A Certificates on any Distribution Date shall
be an amount equal to the product of the Class A Certificate Rate in effect with
respect to the applicable Interest Period, the outstanding principal balance of
the Class A Certificates as of the close of business on the preceding
Distribution Date (after giving effect to all distributions on such date) and a
fraction the numerator of which is the actual number of days in the Interest
Period ending immediately prior to such Distribution Date and the denominator of
which is 360; provided that with respect to the first Distribution Date after
the Due Period in which the Series 1998-1 Issuance Date occurs, Class A Monthly
Interest shall be an amount equal to $[____________].
On the Determination Date preceding each Distribution Date, the
Servicer shall determine an amount (the "Class A Interest Shortfall") equal to
(x) the aggregate Class A Monthly Interest for the Interest Period applicable to
such Distribution Date minus (y) the amount which will be on deposit in the
Collection Account and allocable to the Class A Certificates on such
Distribution Date. If the Class A Interest Shortfall with respect to any
Distribution Date is greater than zero, on each subsequent Distribution Date
until such Class A Interest Shortfall is fully paid, an additional amount
("Class A Additional Interest") shall be payable as provided herein with respect
to the Class A Certificates on each Distribution Date following such
Distribution Date, to and including the Distribution Date on which the Class A
Interest Shortfall is paid to the Class A Certificateholders, equal to the
product of (i) the Class A Certificate Rate in effect with respect to the
applicable period, (ii) such Class A Interest Shortfall (or the portion thereof
which has not been paid to Class A Certificateholders) and (iii) a fraction the
numerator of which is the actual number of days in the Interest Period ending
immediately prior to such Distribution Date and the denominator of which is 360.
Notwithstanding anything to the contrary herein, Class A Additional Interest
shall be payable or distributed to Class A Certificateholders only to the extent
permitted by applicable law.
(b) The amount of monthly interest ("Class B Monthly Interest")
distributable from the Collection Account with respect to the Class B
Certificates on any Distribution Date shall be an amount equal to the product of
(i) the Class B Certificate Rate in effect with respect to the applicable
Interest Period, (ii) the Class B Invested Amount as of the close of business on
the preceding Distribution Date (after giving effect to all distributions on
such date) and (iii) a fraction the numerator of which is the actual number of
days in the Interest Period ending immediately prior to such Distribution Date
and the denominator of which is 360; provided, that with respect to the first
Distribution Date after the Due Period in which the Series 1998-1 Issuance Date
occurs, Class B Monthly Interest shall be an amount equal to $[____________].
On the Determination Date preceding each Distribution Date, the
Servicer shall determine an amount (the "Class B Interest Shortfall") equal to
(x) the aggregate Class B Monthly Interest for the Interest Period applicable to
such Distribution Date minus (y) the amount which will be on deposit in the
Collection Account and allocable to the Class B Certificates on such
Distribution Date. If the Class B Interest Shortfall with respect to any
Distribution Date is greater than zero, on each subsequent Distribution Date
until such Class B Interest Shortfall is fully paid, an additional amount
("Class B Additional Interest") shall be payable as provided herein with respect
to the Class B Certificates on each Distribution Date following such
Distribution Date to and including the
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Distribution Date on which such Class B Interest Shortfall is paid to Class B
Certificateholders equal to the product of (i) the Class B Certificate Rate in
effect with respect to the applicable Interest Period, (ii) such Class B
Interest Shortfall (or the portion thereof which has not been paid to Class B
Certificateholders) and (iii) a fraction the numerator of which is the actual
number of days in the Interest Period ending immediately prior to such
Distribution Date and the denominator of which is 360. Notwithstanding anything
to the contrary herein, Class B Additional Interest shall be payable or
distributed to Class B Certificateholders only to the extent permitted by
applicable law.
(c) The amount of monthly interest ("Collateral Monthly Interest")
distributable from the Collection Account with respect to the Collateral
Invested Amount on any Distribution Date shall be an amount equal to the product
of (i) the Collateral Rate in effect with respect to the applicable Interest
Period, (ii) the Collateral Invested Amount as of the close of business on the
preceding Distribution Date (after giving effect to any increase or decrease in
the Collateral Invested Amount on such preceding Distribution Date), provided
that in the case of the first Distribution Date such Collateral Invested Amount
shall be determined as of the close of business on the Issuance Date and (iii) a
fraction the numerator of which is the actual number of days in the Interest
Period ending immediately prior to such Distribution Date and the denominator of
which is 360.
On the Determination Date preceding each Distribution Date, the
Servicer shall determine an amount (the "Collateral Interest Shortfall") equal
to (x) the aggregate Collateral Monthly Interest for the Interest Period
applicable to such Distribution Date minus (y) the amount which will be on
deposit in the Collection Account and allocable to the Collateral Invested
Amount on such Distribution Date. If the Collateral Interest Shortfall with
respect to any Distribution Date is greater than zero, on each subsequent
Distribution Date until such Collateral Interest Shortfall is fully paid, an
additional amount ("Collateral Additional Interest") shall be payable as
provided herein with respect to the Collateral Invested Amount on each
Distribution Date following such Distribution Date, to and including the
Distribution Date on which such Collateral Interest Shortfall is paid to the
Collateral Interest Holder, equal to the product of (i) the Collateral Rate in
effect with respect to the applicable Interest Period, (ii) such Collateral
Interest Shortfall (or the portion thereof which has not been paid to the
Collateral Interest Holder) and (iii) a fraction the numerator of which is the
actual number of days in the Interest Period ending immediately prior to such
Distribution Date and the denominator of which is 360. Notwithstanding anything
to the contrary herein, Collateral Additional Interest shall be payable or
distributed to the Collateral Interest Holder only to the extent permitted by
applicable law.
Section 4.09. Determination of Monthly Principal. The amount of
monthly principal ("Class A Monthly Principal") distributable from the
Collection Account with respect to the Class A Certificates on each Distribution
Date beginning with the earlier to occur of the first Distribution Date with
respect to any Early Accumulation Period or Early Amortization Period or the
Controlled Accumulation Period, shall be equal to the Available Investor
Principal Collections on deposit in the Collection Account with respect to such
Distribution Date; provided, however, that for each Distribution Date with
respect to the Controlled Accumulation Period, Class A Monthly Principal shall
not exceed the Controlled Deposit Amount; and provided further that with respect
to any Distribution Date Class A Monthly Principal shall not exceed the Class A
Adjusted Invested Amount.
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(b) The amount of monthly principal ("Class B Monthly Principal")
distributable from the Collection Account with respect to the Class B
Certificates on each Distribution Date (i) during the Controlled Accumulation
Period, beginning with the Distribution Date on which the Class A Invested
Amount is paid in full, (ii) during the Early Accumulation Period, beginning
with the Distribution Date on which funds on deposit in the Principal Funding
Account (after any deposits to be made on such date) equal the Class A Invested
Amount, and (iii) during the Early Amortization Period beginning with the
Distribution Date on which the Class A Invested Amount will be paid in full
shall be an amount equal to the Available Investor Principal Collections on
deposit in the Collection Account with respect to such Distribution Date (minus
the portion of such Available Investor Principal Collections applied to Class A
Monthly Principal on such Distribution Date); provided, however, that for each
Distribution Date with respect to the Controlled Accumulation Period, Class B
Monthly Principal shall not exceed the Controlled Deposit Amount less the Class
A Monthly Principal for such Distribution Date; and provided further that with
respect to any Distribution Date, Class B Monthly Principal shall not exceed the
lesser of the applicable Class B Adjusted Invested Amount and the outstanding
principal amount of the Class B Certificates.
(c) The amount, if any, of monthly principal ("Collateral Monthly
Principal") distributable from the Collection Account with respect to the
Collateral Invested Amount on each Distribution Date:
(i) [reserved]
(ii) on any Distribution Date prior to the Distribution Date
on which the Class A Invested Amount and the Class B Invested
Amount are paid in full, shall be an amount equal to the lesser of
(A) Available Investor Principal Collections not applied to Class A
or Class B Monthly Principal on such Distribution Date and (B) the
difference between (x) the Collateral Surplus on such Distribution
Date and (y) the Collateral Cash Surplus, if any, computed without
reference to distributions under this subsection;
(iii) beginning with the Distribution Date on which the Class
A Invested Amount and Class B Invested Amount are paid in full,
shall be an amount equal to the Available Investor Principal
Collections with respect to such Distribution Date (minus the
portion of such Available Investor Principal Collections applied to
Class A and Class B Monthly Principal on such Distribution Date);
and
(iv) beginning on any Distribution Date, in addition to the
amount, if any, set forth in items (i) through (iii) above, at the
option of the Seller (as evidenced by written instructions to the
Servicer and Trustee), and after receipt by the Servicer and the
Trustee of a written determination by the Rating Agency that such
action will not result in a reduction or withdrawal of the then
current ratings of the Class A Certificates and the Class B
Certificates, shall be an amount
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established by the Seller and consistent with any restrictions set
forth in the determination of the Rating Agency;
provided, however, with respect to any Distribution Date, Collateral Monthly
Principal shall not exceed the Collateral Invested Amount and, with respect to
any Distribution Date with respect to the Revolving Period, the Controlled
Accumulation Period and any Early Accumulation Period, Collateral Monthly
Principal shall be zero except to the extent otherwise specified in, or
pursuant to, clauses (ii), (iii) and (iv) above.
Section 4.10. Coverage of Required Amounts. With respect to each
Distribution Date, the Servicer shall determine the amount (the "Class A
Required Amount"), if any, by which (a) the sum of Class A Monthly Interest for
such Distribution Date, any Class A Monthly Interest previously due but not paid
to the Class A Certificateholders, Class A Additional Interest, if any, for such
Distribution Date, the Class A Investor Default Amount, if any, and if Household
Finance Corporation is not the Servicer, the Allocable Servicing Fee for the
preceding Due Period exceeds the product of Reallocated Investor Finance Charge
and Administrative Collections for such Distribution Date plus any other funds
available to the Trust to cover the amounts referred to in clauses (i) through
(v) above and the Class A Invested Percentage for such Distribution Date. In the
event that the Class A Required Amount for such Distribution Date is greater
than zero, the Servicer shall give written notice to the Trustee of such
positive Class A Required Amount on the date of computation (but no later than
11:00 a.m. two days prior to the Distribution Date).
With respect to each Distribution Date, the Servicer shall determine
the amount (the "Class B Required Amount"), if any, by which (a) the sum of (i)
Class B Monthly Interest for such Distribution Date, (ii) any Class B Monthly
Interest previously due but not paid to the Class B Certificateholders, (iii)
Class B Additional Interest, if any, for such Distribution Date, (iv) the Class
B Investor Default Amount, if any, and (v) the Cumulative Excess Interest Amount
for such Distribution Date exceeds (b) the amounts available therefor pursuant
to subsections 4.11(b)(i) and 4.13(c) and (d) plus any other funds available to
the Trust to cover the amounts referred to in clauses (i) through (v) above. In
the event that the Class B Required Amount for such Distribution Date is greater
than zero, the Servicer shall give written notice to the Trustee of such
positive Class B Required Amount on the date of computation (but no later than
11:00 a.m. two days prior to the Distribution Date).
Section 4.11. Application of Available Funds on Deposit in the
Collection Account, the Principal Funding Account and the Collection Subaccount.
With respect to Series 1998-1, on each Distribution Date the Servicer shall
provide written directions to the Trustee to apply Series Allocable Finance
Charge and Administrative Collections (other than the portion thereof
reallocated to other Series in Group Three), Collections of Finance Charge and
Administrative Receivables reallocated to Series 1998-1 from other Series and
Available Investor Principal Collections on deposit in the Collection Account,
the Collection Subaccount and the Principal Funding Account with respect to such
Distribution Date in the following manner:
(a) An amount equal to the sum of (A) the product of (x) Reallocated
Investor Finance Charge and Administrative Collections with respect to such
Distribution Date plus any
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other funds available to the Trust for application pursuant to this clause and
(y) the Class A Invested Percentage and (B) the Class A Principal Funding
Account Percentage of funds available in the Collection Subaccount will be
distributed in the following priority:
(i) an amount equal to Class A Monthly Interest for such
Distribution Date, plus the amount of any Class A Monthly Interest
previously due but not distributed to the Class A Certificateholders
on a prior Distribution Date, plus the amount of any Class A
Additional Interest for such Distribution Date shall be held on
deposit by the Servicer or the Trustee in the Collection Account for
distribution to the Class A Certificateholders;
(ii) an amount equal to the Class A Investor Default Amount
for such Distribution Date shall be treated as a portion of
Available Investor Principal Collections for such Distribution
Date;
(iii) an amount equal to the Allocable Servicing Fee for such
date (to the extent such amount has not been netted from deposits
made in the related Due Period) plus any previously unpaid
Allocable Servicing Fee (but only with respect to the then current
Servicer) shall be paid to the Servicer; and
(iv) the balance, if any, shall constitute Excess Finance
Charge and Administrative Collections and shall be allocated and
distributed as set forth in Section 4.13.
(b) An amount equal to the sum of (A) the product of (x) Reallocated
Investor Finance Charge and Administrative Collections with respect to such
Distribution Date plus any other funds available to the Trust for application
pursuant to this clause and (y) the Class B Invested Percentage and (B) the
Class B Principal Funding Account Percentage of funds available in the
Collection Subaccount will be distributed in the following priority:
(i) an amount equal to Class B Monthly Interest for such
Distribution Date, plus the amount of any Class B Monthly Interest
previously due but not distributed to the Class B
Certificateholders on a prior Distribution Date, plus the amount of
any Class B Additional Interest for such Distribution Date, shall
be set aside by the Servicer or the Trustee for distribution to the
Class B Certificateholders; and
(ii) the balance, if any, shall constitute Excess Finance
Charge and Administrative Collections and shall be allocated and
distributed as set forth in Section 4.13.
(c) On each Distribution Date with respect to the Revolving Period,
an amount equal to Available Investor Principal Collections deposited in the
Collection Account for the
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related Due Period shall be withdrawn therefrom and deposited in the Cash
Collateral Account to the extent of Collateral Monthly Principal with respect to
such Distribution Date and, to the extent not required for such purpose, shall
be treated as Trust Excess Principal Collections and applied in accordance with
Section 4.04 of the Agreement.
(d) On each Distribution Date with respect to the Controlled
Accumulation Period or any Early Accumulation Period or Early Amortization
Period, an amount equal to Available Investor Principal Collections deposited in
the Collection Account for the related Due Period will be distributed in the
following priority:
(i) an amount equal to the Class A Monthly Principal for such
Distribution Date shall be (A) during the Controlled Accumulation
Period and any Early Accumulation Period, deposited into the
Principal Funding Account and (B) during any Early Amortization
Period, held on deposit by the Servicer or the Trustee in the
Collection Account for distribution to Class A Certificateholders;
(ii) an amount equal to the Class B Monthly Principal for such
Distribution Date shall be (A) during the Controlled Accumulation
Period and any Early Accumulation Period, deposited into the
Principal Funding Account and (B) during any Early Amortization
Period, held on deposit by the Servicer or the Trustee in the
Collection Account for distribution to Class B Certificateholders;
(iii) for each Distribution Date with respect to the
Controlled Accumulation Period prior to the Distribution Date on
which the Class A Invested Amount and the Class B Invested Amount
are each paid in full, unless an Amortization Event has occurred,
after giving effect to the distributions referred to in clauses (i)
and (ii) above, an amount equal to the balance, if any, of such
Available Investor Principal Collections then on deposit in the
Collection Account shall be deposited in the Cash Collateral
Account in an amount equal to Collateral Monthly Principal with
respect to such Distribution Date, and any amount not required for
such purpose shall be treated as Trust Excess Principal Collections
and applied in accordance with Section 4.04 of the Agreement;
(iv) [reserved]
(v) [reserved]
(vi) for each Distribution Date beginning with the
Distribution Date on which the Class A Invested Amount and the
Class B Invested Amount are paid in full an amount equal to the
balance, if any, of such Available Investor Principal Collections
shall, to the extent of Collateral Monthly Principal, be deposited
in the Cash Collateral Account, and any remaining Collections shall
be treated as Trust
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Excess Principal Collections and applied in accordance with Section
4.04 of the Agreement.
(e) On the earliest to occur of (i) the first Distribution Date with
respect to any Early Amortization Period and (ii) the Series 1998-1 Expected
Final Payment Date, and on each Distribution Date thereafter, the Trustee,
acting in accordance with instructions from the Servicer, shall pay in
accordance with Section 5.01 the amount on deposit in the Principal Funding
Account on such Date in the following priority:
(i) for any Distribution Date following the commencement of
the Early Amortization Period and on the Series 1998-1 Expected
Final Payment Date, an amount equal to the lesser of such amount on
deposit in the Principal Funding Account and the Class A Invested
Amount shall be paid to the Class A Certificateholders; and
(ii) for each Distribution Date following commencement of the
Early Amortization Period and on the Series 1998-1 Expected Final
Payment Date, after giving effect to the distributions referred to
in clause (i) above, an amount equal to the lesser of such amount
on deposit in the Principal Funding Account and the Class B
Invested Amount shall be paid to the Class B Certificateholders.
(f) The Controlled Accumulation Period is scheduled to commence at
the close of business on the last Business Day of ___________; provided,
however, that, if the Controlled Accumulation Period Length (determined as
described below) is less than __ Due Periods, the date on which the Controlled
Accumulation Period actually commences may be delayed to the first Business Day
of the Due Period that is the number of whole Due Periods prior to the Series
1998-1 Expected Final Payment Date at least equal to the Controlled Accumulation
Period Length and, as a result, the number of Due Periods in the Controlled
Accumulation Period will at least equal the Controlled Accumulation Period
Length. On the Determination Date immediately preceding the ___________
Distribution Date, and each Determination Date thereafter until the Controlled
Accumulation Period, any Early Accumulation Period or any Early Amortization
Period begins, the Servicer will determine a "Controlled Accumulation Period
Length" which will equal at least the number of Due Periods such that the
Controlled Accumulation Period Amount for the Due Period immediately preceding
the Series 1998-1 Expected Final Payment Date, when aggregated with the
Controlled Accumulation Period Amounts for each preceding Due Period, shall
equal or exceed the sum of the Class A Initial Invested Amount and the Class B
Initial Invested Amount; provided, however, that the Controlled Accumulation
Period Length will not be determined to be less than one Due Period. If the
Servicer elects to modify the commencement of the Controlled Accumulation Period
pursuant to this subsection (f) , the Servicer shall specify in the Monthly
Servicer's Certificate (i) the Controlled Accumulation Period Length, (ii) the
commencement date of the Controlled Accumulation Period and (iii) the Controlled
Accumulation Amount with respect to each Monthly Period.
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Section 4.12. Investor Charge-Offs. If on any Distribution Date the
Class A Required Amount for such Distribution Date will exceed the sum of (x)
the amount of Subordinated Principal Collections, (y) the amount of Excess
Finance Charge and Administrative Collections with respect to such Distribution
Date and (z) any amount to be withdrawn from the Cash Collateral Account
pursuant to subsection 4.14(b) with respect to such Distribution Date, the Class
B Invested Amount and the Collateral Invested Amount and the invested amount of
any other Series or Class that is expressly subordinated to the Series 1998-1
Certificateholders shall be reduced by the amount of such excess, but not more
than the Class A Investor Default Amount for such Distribution Date. The Class B
Invested Amount shall only be reduced after any Collateral Invested Amount (and
any such other subordinated invested amount) has been reduced to zero. In the
event that such reduction would cause the sum of the Class B Invested Amount and
the Collateral Invested Amount (and any such other subordinated invested amount)
to be a negative number, such Class B Invested Amount and Collateral Invested
Amount (and any such other subordinated invested amount) shall be reduced to
zero, and the Class A Invested Amount will be reduced by the amount by which the
Class B Invested Amount and Collateral Invested Amount (and any such other
subordinated invested amount) would have been reduced below zero, but not more
than the Class A Investor Default Amount for such Distribution Date (a "Class A
Investor Charge-Off"). Class A Investor Charge-Offs shall thereafter be
reimbursed and the Class A Invested Amount increased (but not by an amount in
excess of the aggregate Class A Investor Charge-Offs) on any Distribution Date
by the sum of (i) Series Allocable Miscellaneous Payments with respect to such
Distribution Date and (ii) the amount of Excess Finance Charge and
Administrative Collections allocated and available for that purpose pursuant to
Section 4.13(b) and any withdrawals from the Cash Collateral Account applied in
accordance with such Section.
(b) If on any Distribution Date, the Class B Required Amount, if
any, for such Distribution Date will exceed the amount to be withdrawn from the
Cash Collateral Account pursuant to subsection 4.14(b) which is remaining after
application pursuant to subsection 4.12(a) and the sum of the Collateral
Invested Amount and any Subordinated Principal Collections allocable to the
Collateral Invested Amount as described in clause (a) above which are not
required to be reallocated for the benefit of the Class A Certificates on such
Distribution Date, then the Class B Invested Amount and the Collateral Invested
Amount and the invested amount of any other Series or Class that is expressly
subordinated to the Series 1998-1 Certificateholders shall be reduced by the
aggregate amount of such excess, but not more than the Class B Investor Default
Amount for such Distribution Date (a "Class B Investor Charge-Off"). The Class B
Invested Amount shall only be reduced after the Collateral Invested Amount (and
any such other subordinated invested amount) has been reduced to zero. Class B
Investor Charge-Offs shall thereafter be reimbursed and the Class B Invested
Amount increased (but not by an amount in excess of the aggregate Class B
Investor Charge-Offs) on any Distribution Date by the sum of (i) Series
Allocable Miscellaneous Payments with respect to such Distribution Date to the
extent that such amount is not required to reimburse Class A Investor
Charge-Offs pursuant to subsection 4.12(a) and (ii) the amount of Excess Finance
Charge and Administrative Collections allocated for that purpose pursuant to
subsection 4.13(e) and any withdrawals from the Cash Collateral Account applied
in accordance with such subsection.
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(c) If on any Distribution Date the Collateral Default Amount for
such Distribution Date will exceed the amount of Excess Finance Charge and
Administrative Collections with respect to the immediately preceding Due Period
which are allocated and available pursuant to Section 4.13(h), then the
Collateral Invested Amount (and any such other subordinated invested amount)
shall be reduced by the amount of such excess, (a "Collateral Charge-Off").
Collateral Charge-Offs shall thereafter be reimbursed and the Collateral
Invested Amount increased (but not by an amount in excess of the aggregate
Collateral Charge-Offs) on any Distribution Date by the sum of (i) Series
Allocable Miscellaneous Payments with respect to such Distribution Date not
required to be applied pursuant to subsections 4.12(a) or (b) above and (ii) the
amount of Excess Finance Charge and Administrative Collections allocated for
that purpose pursuant to subsection 4.13(i).
(c-1) The Collateral Invested Amount shall only be reduced, in the
case of subsections 4.12(a), (b) and (c), after any other Series Enhancement
expressly subordinated to the Collateral Invested Amount or the invested amount
of any other Series or Class expressly subordinated to the Collateral Invested
Amount has been reduced to zero.
(d) Notwithstanding any other provision of this Series Supplement,
the Invested Amount of any Class, including the Collateral Invested Amount,
shall never be reduced below zero.
Section 4.13. Excess Finance Charge and Administrative Collections.
On each Distribution Date the Servicer shall by written instructions cause the
Trustee to apply the Excess Finance Charge and Administrative Collections with
respect to such Distribution Date in the following priority:
(a) an amount equal to the Class A Required Amount, if any, with
respect to such Distribution Date shall be distributed to fund any
deficiency pursuant to subsections 4.11(a)(i) and (ii) and, during any
period in which Household Finance Corporation or an Affiliate thereof is
no longer the Servicer, 4.11(a)(iii); provided that in the event the
Class A Required Amount for such Distribution Date exceeds the amount of
such Excess Finance Charge and Administrative Collections, such Excess
Finance Charge and Administrative Collections shall be applied to pay
amounts due with respect to such Distribution Date pursuant to
subsections 4.11(a)(i), (ii) and, during any period in which Household
Finance Corporation or an Affiliate is no longer the Servicer, (iii) in
that order;
(b) an amount equal to the aggregate amount of Class A Investor
Charge-Offs which have not been previously reimbursed as provided in
subsection 4.12(a) (after giving effect to the allocation on such
Distribution Date of any amount for that purpose pursuant to subsection
4.12(a)(i)) shall be treated as a portion of Available Investor Principal
Collections with respect to such Distribution Date;
(c) an amount equal to the sum of (i) any Class B Monthly Interest
due but not available from the Class B Invested Percentage of Reallocated
Investor Finance Charge
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and Administrative Collections on such Distribution Date or not
distributed to the Class B Certificateholders on a prior Distribution
Date, (ii) the Cumulative Excess Interest Amount for such Distribution
Date and (iii) the amount of any Class B Additional Interest previously
due but not distributed to the Class B Certificateholders on such
Distribution Date or a prior Distribution Date, shall be deposited with
the Paying Agent for distribution to such Class B Certificateholders;
(d) an amount equal to the Class B Investor Default Amount for such
Distribution Date shall be treated as a portion of Available Investor
Principal Collections with respect to such Distribution Date;
(e) an amount equal to the aggregate amount by which the Class B
Invested Amount has been reduced pursuant to clauses (c), (d) and (e) of
the definition of "Class B Invested Amount" (but not including such
reductions which have been previously reimbursed) shall be treated as a
portion of Available Investor Principal Collections with respect to such
Distribution Date;
(f) an amount equal to Collateral Monthly Interest for such
Distribution Date, plus the amount of any Collateral Monthly Interest
previously due but not distributed to the Collateral Interest Holder on a
prior Distribution Date, plus the amount of any Collateral Additional
Interest for such Distribution Date shall be applied in accordance with
the Collateral Agreement;
(g) an amount equal to the unpaid Allocable Servicing Fee (to the
extent not paid pursuant to clause (a) above) for the preceding Due
Periods shall be paid to the Servicer;
(h) an amount equal to the Collateral Default Amount for such
Distribution Date shall be treated as a portion of Available Investor
Principal Collections with respect to such Distribution Date;
(i) for each Distribution Date with respect to the Revolving Period
and the Controlled Accumulation Period, an amount equal to the aggregate
amount by which the Collateral Invested Amount has been reduced pursuant
to clauses (c), (d) and (e) of the definition of "Collateral Invested
Amount" (but not including such reductions which have been previously
reimbursed) shall be treated as a portion of Available Investor Principal
Collections with respect to such Distribution Date;
(j) an amount equal to the excess of the Required Collateral Amount
over the Available Collateral Amount (without giving effect to any
deposit made on such date hereunder) shall be deposited in the Cash
Collateral Account;
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(k) on each Distribution Date prior to the date on which the Reserve
Account terminates as described in Section 4.20(g), an amount up to the
Required Reserve Account Amount less the Available Reserve Account Amount
shall be deposited into the Reserve Account; and
(l) the balance, if any, after giving effect to the payments made
pursuant to subparagraphs (a) through (k) above shall be applied in
accordance with the Collateral Agreement.
Section 4.14. Establishment of Series 1998-1 Cash Collateral
Account. The Servicer, for the benefit of the Series 1998-1 Certificateholders
shall establish and maintain or cause to be established and maintained in the
name of the Trustee, on behalf of the Trust, a Cash Collateral Account with
respect to Series 1998-1 (the "Cash Collateral Account") which shall be an
Eligible Deposit Account, bearing a designation clearly indicating that the
funds deposited therein are held for the benefit of the Series 1998-1
Certificateholders. The Trustee shall possess all right, title and interest in
all funds on deposit from time to time in the Cash Collateral Account and in all
proceeds thereof. The Cash Collateral Account shall be under the sole dominion
and control of the Trustee for the benefit of the Series 1998-1
Certificateholders, as provided herein, and the Collateral Interest Holder. The
interest of any Collateral Interest Holder in the Cash Collateral Account shall
be subject to the interest of the Series 1998-1 Certificateholders as provided
herein and in the Collateral Agreement. If, at any time, the Cash Collateral
Account ceases to be an Eligible Deposit Account, the Trustee (or the Servicer
on its behalf) shall within 20 Business Days establish a new Cash Collateral
Account with respect to Series 1998-1 which shall be an Eligible Deposit
Account, and shall transfer any cash and/or any investments to such new Cash
Collateral Account and from the date such new Cash Collateral Account is
established, it shall be the Cash Collateral Account for Series 1998-1. The
Trustee at the written direction of the Servicer (or the Servicer on the
Trustee's behalf) shall make withdrawals from such Account from time to time for
the purposes set forth in this Section. Withdrawals shall be made in the
priority set forth below and the Available Collateral Amount will be reduced by
the amount of each related withdrawal as provided in the definition thereof set
forth in Section 2 hereof. No Collateral Interest Holder shall be entitled to
reimbursement for any withdrawals, interest or fees with respect to any Cash
Collateral Account except as specifically provided herein and in the Collateral
Agreement.
Funds on deposit in any Cash Collateral Account shall be invested at
the written direction of the Servicer (or the Collateral Interest Holder, as
provided in the Collateral Agreement) by the Trustee in Eligible Investments;
provided, however, that references in the definition of "Eligible Investments"
to "rating satisfactory to the Rating Agency" shall be modified to require
ratings of not less than A-1+ and P-1 (whichever is applicable) from the
applicable Rating Agency. All such investments shall be held by the Trustee for
the benefit of the Series 1998-1 Certificateholders and the Collateral Interest
Holder, as their interests may appear, provided that on each Distribution Date,
the Trustee shall (upon the written instruction of the Servicer and in
accordance with the information set forth in the Monthly Servicer's Certificate
pursuant to subsection 3.04(b) of the Agreement) apply all interest and other
investment earnings (net of losses and investment expenses) and the Collateral
Cash
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Surplus, if any, in accordance with the Collateral Agreement. Funds on deposit
in the Cash Collateral Account shall be invested in accordance with the
Collateral Agreement and in investments having maturities such that such funds
will be available not later than 10:00 A.M. New York City time on the succeeding
Distribution Date. No cash collateral investment shall be disposed of prior to
its maturity. On each Distribution Date, all interest and earnings (net of
losses and investment expenses) accrued since the preceding Distribution Date on
funds on deposit in the Cash Collateral Account shall be paid by the Trustee
upon written instruction of the Servicer and applied in accordance with the
Collateral Agreement. For purposes of determining the availability of funds or
the balances in the Cash Collateral Account for any reason under this Agreement,
all investment earnings on such funds shall be deemed not to be available or on
deposit. The Seller shall report such earnings as its income for tax purposes
and the Servicer shall prepare, or cause to be prepared, all tax returns and any
other information, returns or reports, if any, that need to be filed on behalf
of the Seller with respect to earnings on the Cash Collateral Account.
(b) On each Determination Date, the Servicer shall determine the
amount by which the amounts specified in clauses (a) through (e) of Section 4.13
with respect to the following Distribution Date exceed the amount of Excess
Finance Charge and Administrative Collections with respect to such Distribution
Date. In the event that for any Distribution Date, such amount is greater than
zero, the Servicer shall give written notice to the Trustee and the Collateral
Interest Holder of such amount on the date of computation. Not more than two
Business Days prior to such Distribution Date, the Trustee (or the Servicer on
its behalf) shall give the Collateral Interest Holder notice of such amount and
not later than 10:00 a.m. on the Distribution Date, withdraw such amount from
the Cash Collateral Account (but not in excess of the Available Collateral
Amount) for application in accordance with (and subject to the priorities set
forth in) Section 4.13.
(c) In the event that the Collateral Cash Surplus on any
Distribution Date, after giving effect to all deposits and withdrawals from the
Cash Collateral Account pursuant to Section 4.14 and Section 4.13 on such
Distribution Date, is greater than zero, the Servicer shall cause the Trustee to
withdraw from the Cash Collateral Account and pay in accordance with the
Collateral Agreement, an amount equal to the lesser of, the amount then on
deposit in the Cash Collateral Account and the Collateral Cash Surplus.
Section 4.15. Subordinated Principal Collections. On each
Distribution Date, the Servicer shall by written instructions cause the Trustee
to apply Subordinated Principal Collections (applying all such Collections with
respect to the Collateral Invested Amount prior to applying any such Collections
with respect to the Class B Invested Amount and applying no such Collections
with respect to the Class B Invested Amount pursuant to clause (b) below) with
respect to such Distribution Date to make the following distributions in the
following priority:
(a) an amount equal to the excess, if any, of (i) the Class A
Required Amount, if any, with respect to such Distribution Date over (ii)
the sum of the amount of Excess Finance Charge and Administrative
Collections with respect to such Distribution Date and any amount to be
withdrawn from the Cash Collateral Account pursuant to subsection 4.14(b)
shall be distributed to fund any deficiency pursuant to subsections
4.11(a)(i), (ii)
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and, during any period in which Household Finance Corporation or any
Affiliate is not the Servicer, 4.11(a)(iii) in that order;
(b) an amount equal to the excess, if any, of (i) the Class B
Required Amount, if any, with respect to such Distribution Date over (ii)
the amount of Excess Finance Charge and Administrative Collections with
respect to such Distribution Date and any amount to be withdrawn from the
Cash Collateral Account pursuant to subsection 4.14(b) remaining, in each
case, after the application of such monies pursuant to clause (a) above
shall be distributed to fund any deficiency pursuant to subsections
4.11(b)(i), 4.13(c) and 4.13(d) in that order; and
(c) the balance, if any, shall be treated as a portion of Available
Investor Principal Collections with respect to such Distribution Date to
be applied in accordance with subsections 4.11(c) or (d), as applicable.
Section 4.16. Reallocated Investor Finance Charge and Administrative
Collections. (a) That portion of Group Three Investor Finance Charge and
Administrative Collections for any Distribution Date equal to the amount of
Reallocated Investor Finance Charge and Administrative Collections for such
Distribution Date will be allocated to Series 1998-1 and will be distributed as
set forth in this Series Supplement.
(b) Reallocated Investor Finance Charge and Administrative
Collections, with respect to any Distribution Date shall equal the sum of (i)
the aggregate amount of Series 1998-1 Monthly Interest, Investor Defaulted
Amount, Series 1998-1 Monthly Fees and Series 1998-1 Additional Amounts for such
Distribution Date and (ii) that portion of excess Group Three Investor Finance
Charge and Administrative Collections to be included in Reallocated Investor
Finance Charge and Administrative Collections pursuant to subsection (c) hereof;
provided, however, that if the amount of Group Three Investor Finance Charge and
Administrative Collections for such Distribution Date is less than the sum of
(w) Group Three Investor Monthly Interest, (x) Group Three Investor Default
Amount, (y) Group Three Investor Monthly Fees and (z) Group Three Investor
Additional Amounts, then Reallocated Investor Finance Charge and Administrative
Collections shall equal the sum of the following amounts for such Distribution
Date:
(A) The product of (I) Group Three Investor Finance Charge and
Administrative Collections (up to the amount of Group Three Investor
Monthly Interest) and (II) a fraction, the numerator of which is Series
1998-1 Monthly Interest and the denominator of which is Group Three
Investor Monthly Interest;
(B) the product of (I) Group Three Investor Finance Charge and
Administrative Collections less the amount of Group Three Investor Monthly
Interest (up to the Group Three Investor Default Amount) and (II) a
fraction, the numerator of which is the Investor Defaulted Amount and the
denominator of which is the Group Three Investor Default Amount;
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(C) the product of (I) Group Three Investor Finance Charge and
Administrative Collections less the amount of Group Three Investor Monthly
Interest and the Group Three Investor Default Amount (up to Group Three
Investor Monthly Fees) and (II) a fraction, the numerator of which is
Series 1998-1 Monthly Fees and the denominator of which is Group Three
Investor Monthly Fees; and
(D) the product of (I) Group Three Investor Finance Charge and
Administrative Collections less the sum of (i) Group Three Investor
Monthly Interest, (ii) the Group Three Investor Default Amount and (iii)
Group Three Investor Monthly Fees and (II) a fraction, the numerator of
which is Series 1998-1 Additional Amounts and the denominator of which is
Group Three Investor Additional Amounts.
(c) If the amount of Group Three Investor Finance Charge and
Administrative Collections for such Distribution Date exceeds the sum of (i)
Group Three Investor Monthly Interest, (ii) Group Three Investor Default Amount,
(iii) Group Three Investor Monthly Fees and (iv) Group Three Investor Additional
Amounts, then Reallocated Investor Finance Charge and Administrative Collections
for such Distribution Date shall include an amount equal to the product of (x)
the amount of such excess and (y) a fraction, the numerator of which is the
Invested Amount as of the last day of the second preceding Due Period and the
denominator of which is the sum of such Invested Amount and the aggregate
invested amounts for all other Series included in Group Three as of such last
day.
Section 4.17. Series 1998-1 Excess Principal Collections. (a) That
portion of Trust Excess Principal Collections for all Series for any
Distribution Date equal to the amount of Series 1998-1 Excess Principal
Collections for such Distribution Date will be allocated to Series 1998-1 and
will be distributed as set forth in this Series Supplement.
(b) Series 1998-1 Excess Principal Collections, for any Distribution
Date with respect to the Controlled Accumulation Period or any Early
Accumulation Period or Early Amortization Period, shall mean an amount equal to
the Series 1998-1 Principal Shortfall for such Distribution Date; provided,
however, that if the aggregate amount of Trust Excess Principal Collections for
all Series for such Distribution Date is less than the aggregate amount of
Principal Shortfalls for all Series for such Distribution Date, then Series
1998-1 Excess Principal Collections for such Distribution Date shall equal the
product of (x) Trust Excess Principal Collections for all Series all for such
Distribution Date and (y) a fraction, the numerator of which is the Series
1998-1 Principal Shortfall for such Distribution Date and the denominator of
which is the aggregate amount of Principal Shortfalls for all Series for such
Distribution Date. The Series 1998-1 Principal Shortfall for any Distribution
Date shall equal the excess of (i) (x) for any Distribution Date prior to the
date on which the Class A and Class B Certificates are paid in full with respect
to the Controlled Accumulation Period, the Controlled Deposit Amount plus the
amount calculated pursuant to subsection 4.09(c)(ii)(B) and after such date, the
Collateral Invested Amount, (y) for any Distribution Date with respect to any
Early Accumulation Period, the Adjusted Invested Amount or (z) for any
Distribution Date with respect to any Early Amortization Period, the Invested
Amount, over (ii) Available Investor Principal Collections,
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excluding from the amount described in this clause (ii) any portion thereof
attributable to Series 1998-1 Excess Principal Collections.
(c) The Seller may direct (by written instructions to the Servicer
and the Trustee) that Collections of Principal Receivables allocable to the
Invested Amount of any Series or Class, which either the Agreement or the
Supplement for any Series provides are payable to the Seller, shall be
reallocated to any other Series or Class. Such Collections shall be treated as
Collections of Principal Receivables allocable to the Series or Class to which
they are reallocated for all purposes of the Agreement and the applicable
Supplement.
Collections of Principal Receivables subject to reallocation
pursuant to this subsection may include, without limitation, Collections of
Principal Receivables allocable to the uncertificated Series Enhancement
invested amount of any other Series which either the Agreement or the Supplement
for any Series provides are payable to the Seller.
The Trustee, at the direction of the Servicer, shall apply such
Collections of Principal Receivables in accordance with such instructions.
Section 4.18. Exchange of Investor Certificates for Seller Interest.
If the Seller purchases Series 1998-1 Certificates from Series 1998-1
Certificateholders and becomes a Series 1998-1 Certificateholder, the Seller
may, on any Distribution Date (after giving effect to all required allocations
and payments on such Distribution Date), cancel such purchased Series 1998-1
Certificates by delivering a written request to the Trustee to do so, provided,
however, that the Seller may only cancel Class A and Class B Certificates it has
purchased during the Revolving Period and if the Rating Agency Condition has
been satisfied. The Seller may in connection with such cancellation purchase a
portion of the Collateral Interest from the Collateral Interest Holder and may
(but shall not be required to) cancel such portion of the Collateral Interest,
provided that the reduction in the Collateral Invested Amount resulting from
such cancellation may not result in the Collateral Invested Amount being less
than the Required Collateral Amount. As a result of any cancellation of Series
1998-1 Certificates pursuant to this Section, (a) the Invested Amount shall be
reduced by (i) the aggregate principal amount of such purchased Series 1998-1
Certificates and (ii) the reduction in the Collateral Interest and (b) the
Seller's Interest shall be increased in an amount equal to such reduction in the
Invested Amount.
Section 4.19. Principal Funding Account.
(a) The Trustee shall establish and maintain with an Eligible
Institution, in the name of the Trustee, on behalf of the Trust, for the benefit
of the Investor Certificateholders, a segregated trust account with the
corporate trust department of such Eligible Institution (the "Principal Funding
Account"), bearing a designation clearly indicating that the funds deposited
therein are held for the benefit of the Investor Certificateholders. The Trustee
shall possess all right, title and interest in all funds on deposit from time to
time in the Principal Funding Account and in all proceeds thereof. The Principal
Funding Account shall be under the sole dominion and control of the Trustee for
the benefit of the Investor Certificateholders. If at any time the
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institution holding the Principal Funding Account ceases to be an Eligible
Institution, the Seller shall notify the Trustee, and the Trustee upon being
notified (or the Servicer on its behalf) shall, within 10 Business Days,
establish a new Principal Funding Account meeting the conditions specified
above with an Eligible Institution, and shall transfer any cash or any
investments to such new Principal Funding Account. The Trustee, at the
direction of the Servicer, shall (i) make withdrawals from the Principal
Funding Account from time to time, in the amounts and for the purposes set
forth in this Supplement, and (ii) on each Distribution Date (from and after
the commencement of the Controlled Accumulation Period or the Early
Accumulation Period) prior to termination of the Principal Funding Account make
a deposit into the Principal Funding Account in the amount specified in, and
otherwise in accordance with, subsection 4.11(d). Amounts deposited into the
Principal Funding Account shall not be considered principal payments made to
Certificateholders.
(b) Funds on deposit in the Principal Funding Account shall be
invested at the direction of the Servicer by the Trustee in PFA Eligible
Investments. Funds on deposit in the Principal Funding Account on any
Distribution Date, after giving effect to any withdrawals from the Principal
Funding Account on such Distribution Date, shall be invested in such investments
that will automatically mature so that such funds will be available for
withdrawal on or prior to the following Distribution Date. The Trustee shall
maintain for the benefit of the Investor Certificateholders possession of the
negotiable instruments or securities, if any, evidencing such investments. No
PFA Eligible Investment shall be disposed of prior to its maturity.
On the Distribution Date occurring in the month following the
commencement of the Controlled Accumulation Period or the Early Accumulation
Period and on each Distribution Date thereafter with respect to the Controlled
Accumulation Period or the Early Accumulation Period, the Trustee, acting at the
Servicer's direction given on or before such Distribution Date, shall transfer
from the Principal Funding Account to the Collection Subaccount the Principal
Funding Investment Proceeds in an amount not to exceed the Covered Amount, for
application in accordance with subsections 4.11(a) and 4.11(b).
Any Excess Principal Funding Investment Proceeds shall be paid to
the Seller on each Distribution Date. An amount equal to any Principal Funding
Investment Shortfall will be deposited in the Collection Subaccount on each
Distribution Date from the Reserve Account to the extent funds are available
pursuant to subsection 4.20(d). Principal Funding Investment Proceeds (including
reinvested interest) shall not be considered part of the amounts on deposit in
the Principal Funding Account for purposes of this Supplement.
Section 4.20. Reserve Account.
(a) The Trustee shall establish and maintain with an Eligible
Institution, in the name of the Trust, on behalf of the Trust, for the benefit
of the Investor Certificateholders, a segregated trust account with the
corporate trust department of such Eligible Institution (the "Reserve Account"),
bearing a designation clearly indicating that the funds deposited therein are
held for the benefit of the Investor Certificateholders. The Trustee shall
possess all right, title and interest in all funds on deposit from time to time
in the Reserve Account and in all proceeds
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thereof. The Reserve Account shall be under the sole dominion and control of
the Trustee for the benefit of the Investor Certificateholders. If at any time
the institution holding the Reserve Account ceases to be an Eligible
Institution, the Seller shall notify the Trustee, and the Trustee upon being
notified (or the Servicer on its behalf) shall, within 10 Business Days,
establish a new Reserve Account meeting the conditions specified above with an
Eligible Institution, and shall transfer any cash or any investments to such
new Reserve Account.
(b) Funds on deposit in the Reserve Account shall be invested at the
direction of the Servicer by the Trustee in Eligible Investments. Funds on
deposit in the Reserve Account on any Distribution Date, after giving effect to
any withdrawals from the Reserve Account on such Distribution Date, shall be
invested in such investments that will mature so that such funds will be
available for withdrawal on or prior to the following Distribution Date. The
Trustee shall maintain for the benefit of the Investor Certificateholders
possession of the negotiable instruments or securities, if any, evidencing such
Eligible Investments. No Eligible Investment shall be disposed of prior to its
maturity. On each Distribution Date, all interest and earnings (net of losses
and investment expenses) accrued since the preceding Distribution Date on funds
on deposit in the Reserve Account shall be retained in the Reserve Account to
the extent that the Available Reserve Account Amount is less than the Required
Reserve Account Amount, and the balance of such interest and earnings, if any,
shall be distributed to the Seller on such Distribution Date. For purposes of
determining the availability of funds or the balance in the Reserve Account for
any reason under this Supplement, except as otherwise provided in the preceding
sentence, investment earnings on such funds shall be deemed not to be available
or on deposit.
(c) On or before each Distribution Date with respect to the
Controlled Accumulation Period or any Early Accumulation Period prior to the
payment in full of the Class B Invested Amount and prior to the first
Distribution Date with respect to any Early Amortization Period, the Servicer
shall calculate the "Reserve Draw Amount" which shall be equal to the Principal
Funding Investment Shortfall with respect to each Distribution Date with respect
to the Controlled Accumulation Period or any Early Accumulation Period or the
first Distribution Date with respect to any Early Amortization Period.
(d) In the event that for any Distribution Date the Reserve Draw
Amount is greater than zero, the Reserve Draw Amount, up to the Available
Reserve Account Amount, shall be withdrawn from the Reserve Account on such
Distribution Date by the Trustee (acting in accordance with the instructions of
the Servicer) and deposited into the Collection Subaccount for application in
accordance with subsections 4.11(a) and 4.11(b) on such Distribution Date.
(e) If on any LIBOR Determination Date during the Controlled
Accumulation Period or any Early Accumulation Period, (i) the amount required to
pay the Covered Amount, for the period from the next Distribution Date to the
second succeeding Distribution Date exceeds (ii) the sum of (A) for the period
from the next Distribution Date to the second succeeding Distribution Date, the
projected Principal Funding Investment Proceeds plus the projected reinvestment
income on the funds on deposit in the Reserve Account and (B) the remaining
balance in the Reserve Account after giving effect to withdrawals to be made for
the next
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Distribution Date (a "Reserve Account Event"), then the Controlled Accumulation
Period or any Early Accumulation Period will terminate and the Early
Amortization Period will commence.
(f) In the event that the Reserve Account Surplus on any
Distribution Date, after giving effect to all deposits to and withdrawals from
the Reserve Account with respect to such Distribution Date, is greater than
zero, the Trustee, acting in accordance with the instructions of the Servicer,
shall withdraw from the Reserve Account, and pay to the Seller, an amount equal
to such Reserve Account Surplus.
(g) Upon the earlier to occur of (i) the termination of the Trust
pursuant to Article XII of the Agreement, (ii) the first Distribution Date
following the commencement of any Early Amortization Period and (iii) the Series
1998-1 Expected Final Payment Date (after taking into account all distributions
to be made on such date), the Trustee, acting in accordance with the
instructions of the Servicer, after the prior payment of all amounts owing to
the Series 1998-1 Certificateholders that are payable from the Reserve Account
as provided herein, shall withdraw from the Reserve Account and pay to the
Seller, all amounts, if any, on deposit in the Reserve Account and the Reserve
Account shall be deemed to have terminated for purposes of this Supplement.
SECTION 5. Distributions.
(a) On each Distribution Date, the Paying Agent shall distribute to
each Class A Certificateholder of record on the Record Date for such
Distribution Date (other than as provided in Section 12.02 of the Agreement
respecting a final distribution) such Certificateholder's pro rata share (based
on the aggregate fractional undivided interests represented by Class A
Certificates held by such Certificateholder) of the amounts on deposit in the
Collection Account pursuant to subsection 4.11(a).
(b) On each Distribution Date with respect to any Early Amortization
Period, the Paying Agent shall distribute to each Class A Certificateholder of
record on the Record Date for such Distribution Date (other than as provided in
Section 12.02 of the Agreement respecting a final distribution) such
Certificateholder's pro rata share (based on the aggregate fractional undivided
interests represented by Class A Certificates held by such Certificateholder) of
the amounts on deposit in the Collection Account with respect to principal of
the Class A Certificates pursuant to subsection 4.11(d)(i).
(c) On each Distribution Date, the Paying Agent shall distribute to
each Class B Certificateholder of record on the Record Date for such
Distribution Date (other than as provided in Section 12.02 of the Agreement
respecting a final distribution) such Certificateholder's pro rata share (based
on the aggregate fractional undivided interests represented by Class B
Certificates held by such Certificateholder) of the amounts on deposit in the
Collection Account pursuant to subsections 4.11(b) and 4.13(c).
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(d) On each Distribution Date with respect to any Early Amortization
Period, beginning on the Distribution Date on which the Class A Invested Amount
is paid in full, the Paying Agent shall distribute to each Class B
Certificateholder of record on the Record Date for such Distribution Date (other
than as provided in Section 12.02 of the Agreement respecting a final
distribution) such Certificateholder's pro rata share (based on the aggregate
fractional undivided interests represented by Class B Certificates held by such
Certificateholder) of the amounts on deposit in the Collection Account with
respect to principal of the Class B Certificates pursuant to subsection
4.11(d)(ii).
(e) On the Series 1998-1 Expected Final Payment Date, the Paying
Agent shall distribute to each Class A Certificateholder of record on the
related Record Date (other than as provided in Section 12.02 of the Agreement
respecting a final distribution) such Class A Certificateholder's pro rata share
of the amounts on deposit in the Principal Funding Account or otherwise held by
the Paying Agent that are allocated and available on such date to pay principal
of the Class A Certificates pursuant to subsection 4.11(e)(i) up to a maximum
amount on any such date equal to the Class A Invested Amount on such date.
(f) On the Series 1998-1 Expected Final Payment Date and after
giving effect to the distribution referred to in subsection 5(e) above, the
Paying Agent shall distribute to each Class B Certificateholder of record on the
related Record Date (other than as provided in Section 12.02 of the Agreement
respecting a final distribution) such Class B Certificateholder's pro rata share
of the amounts on deposit in the Principal Funding Account or otherwise held by
the Paying Agent that are allocated and available on such date to pay principal
of the Class B Certificates pursuant to subsection 4.11(e)(ii) up to a maximum
amount on any such date equal to the Class B Invested Amount on such date.
(g) Except as provided in Section 12.02 of the Agreement with
respect to a final distribution, distributions to Investor Certificateholders
hereunder shall be made by check mailed to each Certificateholder at such
Certificateholder's address appearing in the Certificate Register without
presentation or surrender of any Investor Certificate or the making of any
notation thereon; provided, however, that with respect to Investor Certificates
registered in the name of a Clearing Agency, such distributions shall be made to
such Clearing Agency in immediately available funds.
SECTION 6. Statements to Certificateholders.
(a) On each Distribution Date, the Paying Agent, on behalf of the
Trustee, shall forward to each Class A Certificateholder and the Rating Agency a
statement substantially in the form of Exhibit B prepared by the Servicer
setting forth certain information relating to the Trust and the Class A
Certificates.
(b) On each Distribution Date, the Paying Agent, on behalf of the
Trustee, shall forward to each Class B Certificateholder and the Rating Agency a
statement substantially in
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the form of Exhibit B prepared by the Servicer setting forth certain information
relating to the Trust and the Class B Certificates.
(c) On or before January 31 of each calendar year, beginning January
31, 1998, the Paying Agent, on behalf of the Trustee, shall furnish or cause to
be furnished to each Person who at any time during the preceding calendar year
was an Investor Certificateholder, a statement prepared by the Servicer
containing the information which is required to be contained in the statement to
Class A Certificateholders or Class B Certificateholders, as set forth in
subsection (a) or (b) above, as the case may be, aggregated for such preceding
calendar year or the applicable portion thereof (the initial statement shall
cover the period beginning on the Issuance Date and ending on [_____________],
1998) during which such Person was an Investor Certificateholder, together with
other information as is required to be provided by an issuer of indebtedness
under the Internal Revenue Code and such other customary information as is
necessary to enable the Investor Certificateholders to prepare their tax
returns. Such obligation of the Servicer shall be deemed to have been satisfied
to the extent that substantially comparable information shall be provided by the
Paying Agent pursuant to any requirements of the Internal Revenue Code as from
time to time in effect.
(d) The form of 1998-1 Monthly Servicer's Certificate set forth at
Exhibit B hereto may be modified as the Servicer may determine to be necessary
or desirable; provided, however, that no such modification shall serve to
exclude information required by this Section 6. The Servicer shall, upon making
such determination, deliver to the Trustee and the Rating Agency an Officer's
Certificate to which shall be annexed the form of Exhibit B, as so changed. Upon
the delivery of such Officer's Certificate to the Trustee, Exhibit B, as so
changed, shall for all purposes of this Agreement constitute Exhibit B. The
Trustee may conclusively rely upon such Officer's Certificate as to such change
conforming to the requirements of this Agreement.
SECTION 7. Additional Amortization Events. If any one of the following shall
occur:
(a) failure on the part of the Seller (i) to make any payment or
deposit required by the terms of the Agreement or this Series Supplement
on or before the date occurring five Business Days after the date such
payment or deposit is required to be made herein or therein, or (ii) duly
to observe or perform any other covenants or agreements of the Seller set
forth in the Agreement or this Series Supplement, which failure has a
material adverse affect on the Series 1998-1 Certificateholders and which
continues unremedied for a period of 60 days after the date on which
written notice of such failure, requiring the same to be remedied, shall
have been given to the Seller by the Trustee, or to the Seller and the
Trustee by a Series 1998-1 Certificateholder;
(b) any representation or warranty made by the Seller in the
Agreement or the Series Supplement or any information to identify the
Accounts required to be delivered by the Seller pursuant to Section 2.01
or 2.09 of the Agreement (i) shall prove to have been incorrect in any
material respect when made or when delivered, which continues to be
incorrect in any material respect for a period of 60 days after the date
on which written
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notice of such failure, requiring the same to be remedied, shall have
been given to the Seller by the Trustee, or to the Seller and the Trustee
by a Series 1998-1 Certificateholder, and (ii) as a result of such
incorrectness the interests of the Series 1998-1 Certificateholders are
materially and adversely affected; provided, however, that neither an
Early Accumulation Event or an Early Amortization Event shall be deemed
to have occurred under this subsection 7(b) if the Seller has repurchased
the related Receivables or all such Receivables, if applicable, during
such period in accordance with the provisions of the Agreement;
(c) the Trust becomes subject to regulation by the Securities and
Exchange Commission as an "investment company" within the meaning of the
Investment Company Act of 1940, as amended;
(d) a failure by the Seller to convey Receivables in Additional
Accounts to the Trust or make deposits in the Special Funding Account
within five Business Days after the day on which it is required to convey
such Receivables pursuant to subsection 2.09(a) of the Agreement;
provided that such requirement to convey Receivables or make deposits
shall be determined solely for purposes of this clause (d), by including
the amount then on deposit in the Special Funding Account in determining
the amount of Principal Receivables in the Trust as if such amounts were
Principal Receivables;
(e) a Servicer Default shall occur which has a material adverse
effect on the Series 1998-1 Certificateholders (determined without regard
to the availability of moneys in the Cash Collateral Account);
(f) the average Series Adjusted Portfolio Yield (averaged over any
three consecutive Due Periods) is reduced to a rate below the average
Base Rate for such period;
(g) failure to distribute an amount equal to the full Class A
Invested Amount and the Class B Invested Amount, and all interest accrued
thereon, on or before the Series 1998-1 Expected Final Payment Date;
(h) the occurrence of the Reserve Account Event described in Section
4.20(e); or
(i) the Seller is unable for any reason to transfer Receivables to
the Trust in accordance with the Agreement.
then, in the case of any event described in subparagraph (a), (b) or (e) above
after the applicable grace period, if any, set forth in such subparagraphs,
either the Trustee or the Series 1998-1 Certificateholders evidencing more than
50% of the aggregate unpaid principal amount of the Series 1998-1 Certificates
by notice then given in writing to the Seller and the Servicer (and to the
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Trustee if given by the Series 1998-1 Certificateholders) may declare that
an Amortization Event has occurred as of the date of such notice, and, in the
case of any event described in subparagraphs (c), (d), (f), (g), (h) or (i)
above subject to applicable law, an Amortization Event shall occur without any
notice or other action on the part of the Trustee or the Investor
Certificateholders (except as otherwise provided in any such subparagraph),
immediately upon the occurrence of such event.
SECTION 8. Optional Repurchase.
On the Distribution Date occurring on or after the date on which the
Invested Amount is reduced to $[____________] or less, the Seller shall have the
option to purchase the Class A Certificateholders' Interest and Class B
Certificateholders' Interest, at a purchase price equal to the Optional
Repurchase Amount. Such purchased portion of the Certificateholders' Interest
shall thereafter be deemed to be part of the Seller's Interest. The Seller shall
give the Servicer, the Rating Agency and the Trustee at least 30 days prior
written notice of the date on which the Seller intends to exercise such option
to purchase. Not later than 10:00 A.M., New York City time, on such Distribution
Date the Seller shall deposit the Optional Repurchase Amount into the Collection
Account in immediately available funds. Such purchase option is subject to
payment in full of the Optional Repurchase Amount. The Optional Repurchase
Amount shall be distributed as set forth in Section 10 hereof.
SECTION 9. Sale of Certificateholders' Interest pursuant to Section 2.06 or
10.01 of the Agreement.
(a) The amount to be paid by the Seller with respect to Series 1998-1 in
connection with a repurchase of the Certificateholders' Interest pursuant to
Section 2.06 of the Agreement shall equal the Reassignment Amount for the first
Distribution Date following the Due Period in which the reassignment obligation
arises under the Agreement.
(b) The amount to be paid by the Seller with respect to Series 1998-1 in
connection with a repurchase of the Certificateholders' Interest pursuant to
Section 10.01 of the Agreement shall equal the sum of (x) the Reassignment
Amount for the Distribution Date of such repurchase and (y) the sum of (A) the
excess, if any, of (I) a price equivalent to the average of bids quoted on the
Record Date preceding the date of repurchase or, if not a Business Day, on the
next succeeding Business Day by at least two recognized dealers selected by the
Trustee (which may be selected from the list attached as Schedule 1), for the
purchase by such dealers of a security which is similar to the Class A
Certificates with a remaining maturity approximately equal to the remaining
maturity of the Class A Certificates and rated by each Rating Agency in the
rating category originally assigned to the Class A Certificates over (II) the
portion of the Reassignment Amount attributable to the Class A Certificates and
(B) the excess, if any, of (I) a price equivalent to the average of bids quoted
on such Record Date, or if not a Business Day, on the next succeeding Business
Day by at least two recognized dealers selected by the Trustee (which may be
selected from the list attached as Schedule 1), for the purchase by such
dealers of a security which is similar to the Class B Certificates with a
remaining maturity approximately equal to the remaining maturity of the Class B
Certificates and rated by each Rating Agency in the
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rating category originally assigned to the Class B Certificates over (II) the
portion of the Reassignment Amount attributable to the Class B Certificates.
SECTION 10. Distributions pursuant to Sections 8 or 9 of this Series Supplement
and Section 2.06, 10.01 or 12.02(c) of the Agreement.
(a) With respect to the Optional Repurchase Amount deposited into
the Collection Account pursuant to Section 8, the Reassignment Amount deposited
into the Collection Account pursuant to Section 9 or any Termination Proceeds
deposited into the Collection Account pursuant to Section 12.02(c) of the
Agreement, the Trustee shall, not later than 1:00 P.M., New York City time, on
the date of deposit, make deposits of the following amounts (in the priority set
forth below and, in each case, after giving effect to any deposits and
distributions otherwise to be made on such date) in immediately available funds
as follows: (i) the Class A Invested Amount (or, with respect to Termination
Proceeds, the Class A Adjusted Invested Amount) on such date and the amount of
accrued and unpaid interest on the unpaid balance of the Class A Certificates,
plus the amount of Class A Additional Interest previously due but not paid on
any prior Distribution Date, will be deposited into the Collection Account for
distribution to Class A Certificateholders, (ii) the Class B Invested Amount
(or, with respect to Termination Proceeds, the Class B Adjusted Invested Amount)
on such date and the amount of accrued and unpaid interest on the unpaid balance
of the Class B Certificates, plus the amount of Class B Additional Interest, if
any, for such Distribution Date and any Class B Interest, if any, for such
Distribution Date and any Class B Additional Interest previously due but not
paid on a prior Distribution Date, will be deposited into the Collection Account
for distribution to Class B Certificateholders and (iii) the Collateral Invested
Amount on such date and the amount of accrued and unpaid interest on the
Collateral Invested Amount (including any unpaid Collateral Additional Interest)
will be applied in accordance with the Collateral Agreement. Notwithstanding
anything to the contrary contained in this Series Supplement or the Agreement,
the amount of any excess determined pursuant to subsection 9(b)(y)(A) hereof
shall be distributed to the Class A Certificateholders and the amount of any
excess determined pursuant to subsection 9(b)(y)(B) hereof shall be distributed
to the Class B Certificateholders. The remainder of any Termination Proceeds
shall be applied in accordance with the Collateral Agreement.
(b) Notwithstanding anything to the contrary in this Series
Supplement or the Agreement, the entire amount deposited in the Collection
Account pursuant to Section 8 or subsections 9(a) or (b) and 10(a) hereof and
all other amounts on deposit therein for distribution to the Series 1998-1
Certificateholders shall be distributed in full to the Series 1998-1
Certificateholders on such date and shall be deemed to be a final distribution
pursuant to Section 12.02 of the Agreement.
SECTION 11. Distribution of Proceeds of Sale, Disposition or Liquidation of the
Receivables pursuant to Section 9.02 of the Agreement.
(a) Not later than 1:00 p.m., New York City time, on the
Distribution Date following the date on which the Insolvency Proceeds are
deposited into the Collection Account
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pursuant to Section 9.02(b) of the Agreement, the Trustee shall (in the
following priority and, in each case, after giving effect to any deposits and
distributions otherwise to be made on such Distribution Date) (i) deduct an
amount equal to the Class A Adjusted Invested Amount on such Distribution Date
from the portion of the Insolvency Proceeds allocated to Series Allocable
Principal Collections and deposit such amount in the Collection Account for
distribution to Class A Certificateholders, provided that the amount of such
deposit shall not exceed the product of (x) the portion of the Insolvency
Proceeds allocated to Series Allocable Principal Collections and (y) the
Principal Allocation Percentage with respect to the related Due Period, (ii)
deduct an amount equal to the Class B Adjusted Invested Amount on such
Distribution Date from the portion of the Insolvency Proceeds allocated to
Series Allocable Principal Collections and deposit such amount in the Collection
Account for distribution to Class B Certificateholders, provided that the amount
of such deposit shall not exceed (x) the product of the portion of the
Insolvency Proceeds allocated to Series Allocable Principal Collections and the
Principal Allocation Percentage with respect to such Due Period, minus (y) the
amount deposited into the Collection Account pursuant to clause (a)(i) of this
sentence and (iii), after applying amounts pursuant to clauses (i) and (ii),
deduct an amount equal to the Collateral Invested Amount on such Distribution
Date from such Proceeds and apply such amount in accordance with the Collateral
Agreement. The remainder of the portion of the Insolvency Proceeds allocated to
Series Allocable Principal Collections shall be allocated to the Sellers'
Interest and shall be released to the Seller on such Distribution Date.
(b) Not later than 1:00 P.M., New York City time, on such
Distribution Date, the Trustee shall (in the following priority and, in each
case, after giving effect to any deposits and distributions otherwise to be made
on such Distribution Date) (i) deduct an amount equal to the sum of (w) Class A
Monthly Interest for such Distribution Date, (x) any Class A Monthly Interest
previously due but not paid on a prior Distribution Date and (y) the amount of
Class A Additional Interest, if any, for such Distribution Date and any Class A
Additional Interest previously due but not paid on a prior Distribution Date,
from the portion of the Insolvency Proceeds allocated to Series 1998-1 Allocable
Finance Charge and Administrative Collections and deposit such amount in the
Collection Account for distribution to Class A Certificateholders, provided that
the amount of such deposit shall not exceed the product of (x) the portion of
the Insolvency Proceeds allocated to Series 1998-1 Allocable Finance Charge and
Administrative Collections, (y) the Floating Allocation Percentage with respect
to such Due Period and (z) a fraction, the numerator of which is the Class A
Invested Amount with respect to such Distribution Date and the denominator of
which is the Adjusted Invested Amount with respect to such Distribution Date and
(ii) deduct an amount equal to the sum of (v) Class B Monthly Interest for such
Distribution Date, (w) any Class B Monthly Interest previously due but not paid
on a prior Distribution Date, (x) the Cumulative Excess Interest Amount with
respect to such Distribution Date and (y) the amount of Class B Additional
Interest, if any, for such Distribution Date and any Class B Additional Interest
previously due but not paid on a prior Distribution Date from the portion of the
Insolvency Proceeds allocated to Series 1998-1 Allocable Finance Charge and
Administrative Collections and deposit such amount into the Collection Account
for distribution to Class B Certificateholders, provided that the amount of such
deposit shall not exceed the product of (x) the portion of the Insolvency
Proceeds allocated to Series 1998-1 Allocable Finance Charge and Administrative
Collections, (y) the Floating Allocation Percentage with respect to
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such Due Period and (z) a fraction, the numerator of which is the Class B
Invested Amount with respect to such Distribution Date and the denominator of
which is the Adjusted Invested Amount with respect to such Distribution Date.
The remainder of the Insolvency Proceeds allocated to Allocable Finance Charge
and Administrative Collections shall be released to the Collateral Interest
Holder for application by the Collateral Interest Holder in accordance with the
provisions of the Collateral Agreement.
(c) Notwithstanding anything to the contrary in this Series
Supplement or the Agreement, the entire amount deposited in the Collection
Account pursuant to this Section 11 and all other amounts on deposit therein for
distribution for the Series 1998-1 Certificateholders shall be distributed in
full to the Series 1998-1 Certificateholders on the Distribution Date on which
funds are deposited pursuant to this Section (or, if not so deposited on a
Distribution Date, on the immediately following Distribution Date) and shall be
deemed to be a final distribution pursuant to Section 12.02 of the Agreement.
SECTION 12. Section 9.02 of the Agreement; Rights of the Collateral Interest
Holder.
(a) If the Trustee shall have received instructions within 90 days
from the date notice pursuant to clause (i) of subsection 9.02(a) of the
Agreement is first published, from the Collateral Interest Holder to the effect
that the Collateral Interest Holder objects to the liquidation of the
Receivables, the Trustee shall not proceed with such liquidation.
(b) All payments to the Collateral Interest Holder required by this
Series Supplement shall be made no later than 1:00 p.m. on the date such payment
is required to be made.
SECTION 13. Clearing Agency.
The Clearing Agency with respect to the Class A Certificates and
Class B Certificates shall initially be The Depository Trust Company.
SECTION 14. Delivery of the Class A Certificates and the Class B Certificates.
The Trustee shall deliver the Class A and Class B Certificates to
the Seller when authenticated in accordance with Section 6.02 of the Agreement.
The Trustee shall register the Collateral Interest in the Certificate Register
in the manner set forth in the Collateral Agreement.
SECTION 15. Ratification of Agreement.
As supplemented by this Supplement, the Agreement is in all respects
ratified and confirmed and the Agreement, as so supplemented by this Supplement
shall be read, taken and construed as one and the same instrument.
SECTION 16. Counterparts.
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This Supplement may be executed in two or more counterparts, each of
which when so executed shall be deemed to be an original, but all of which shall
together constitute but one and the same instrument.
SECTION 17. Governing Law.
THIS SUPPLEMENT SHALL BE CONSTRUED AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS.
SECTION 18. Forms of Certificates and Monthly Servicer's Certificate.
The Class A Certificates, Class B Certificates and Monthly
Servicer's Certificate with respect to Series 1998-1 shall be in substantially
the respective forms attached as exhibits hereto. The Servicer may add to the
Monthly Servicer's Certificate such additional information with respect to the
Collateral Agreement as the Servicer shall determine to be appropriate (or as
required under the Collateral Agreement).
SECTION 19. Definition of Tax Opinion for Purposes of Series 1998-1
For purposes of this Series Supplement, the definition of Tax
Opinion contained in Section 1.01 of the Agreement shall be as follows:
"Tax Opinion" shall mean, with respect to any action, an Opinion of
Counsel to the effect that, for Federal income tax purposes: (a) such
action will not adversely affect the tax characterization as debt of the
Investor Certificates of any outstanding Series or Class that were
characterized as debt at the time of their issuance, (b) following such
action the Trust will not be treated as an association (or publicly
traded partnership) taxable as a corporation and (c) unless otherwise
provided in a Supplement, in the case of Section 6.03(b)(vi) of the
Agreement, the Investor Certificates of the Series established pursuant
to such Supplement will properly be characterized as debt.
SECTION 20. ERISA Restrictions.
Registration of transfers of any Class B Certificate containing the
legend set forth on the Class B Certificate attached hereto as Exhibit A-2 shall
be effected only if such transfer is made to a Person that certifies to the
Transfer Agent in writing that it is not an employee benefit plan, trust or
account, including an individual retirement account, that is subject to ERISA or
that is described in Section 4975(e)(1) of the Code or an entity whose
underlying assets include plan assets by reason of a plan's investment in such
entity (each a "Benefit Plan"). By accepting and holding a Class B Certificate,
a Class B Certificateholder shall be
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deemed to have represented and warranted that it is not a Benefit Plan and is
not purchasing a Class B Certificate on behalf of a Benefit Plan. By acquiring
any interest in a Book-Entry Certificate representing a Class B Certificate, a
Certificate Owner shall be deemed to have represented and warranted that it is
not a Benefit Plan and is not purchasing a Class B Certificate on behalf of a
Benefit Plan.
IN WITNESS WHEREOF, the Seller, the Servicer and the Trustee have caused
this Series Supplement to be fully executed by their respective officers as of
the day and year first above written.
HOUSEHOLD AFFINITY
FUNDING CORPORATION
Seller
By
------------------------------------------
Name:
Title:
HOUSEHOLD FINANCE CORPORATION,
Servicer
By
------------------------------------------
Name:
Title:
THE BANK OF NEW YORK
Trustee
By
------------------------------------------
Name:
Title:
47
51
EXHIBIT A-1
FORM OF CLASS A CERTIFICATE
REGISTERED $___________*
No. R-A__ CUSIP No. __________
UNLESS THIS CLASS A CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS
MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.
HOUSEHOLD AFFINITY CREDIT CARD MASTER TRUST I
SERIES 1998-1
FLOATING RATE CLASS A CREDIT CARD PARTICIPATION CERTIFICATE
SERIES 1998-1 EXPECTED FINAL PAYMENT DATE:
The March 2002 Distribution Date
Each $1,000 minimum denomination represents a 1/_______
undivided interest in the Series 1998-1
Class A Invested Amount in the
HOUSEHOLD AFFINITY CREDIT CARD MASTER TRUST I
Evidencing an undivided interest in a trust, the corpus of which
consists primarily of receivables generated from time to time in the ordinary
course of business in a portfolio of revolving credit card accounts provided by
HOUSEHOLD AFFINITY FUNDING CORPORATION
(Not an interest in or obligation of
Household Affinity Funding Corporation
or any affiliate thereof)
______________
* Denominations of $1,000 and integral multiples of $1,000 in excess thereof.
52
This certifies that CEDE & CO. (the "Class A Certificateholder") is the
registered owner of a fractional undivided interest in certain assets of a
trust (the "Trust") created pursuant to an Amended and Restated Pooling and
Servicing Agreement, dated as of August 1, 1993, as amended as of April 12,
1995 and as may be further amended from time to time (the "Agreement"), as
supplemented by the Series 1998-1 Supplement dated as of July 1, 1998 (the
"Series Supplement"), by and among Household Affinity Funding Corporation, as
Seller (the "Seller"), Household Finance Corporation, as Servicer, and The Bank
of New York, as trustee (the "Trustee"). The corpus of the Trust includes (i) a
portfolio of all receivables (the "Receivables") existing in the revolving
credit card accounts identified under the Agreement from time to time (the
"Accounts"), (ii) all Receivables generated under the Accounts from time to
time thereafter, (iii) funds collected or to be collected from cardholders in
respect of the Receivables, (iv) all funds which are from time to time on
deposit in certain accounts held in the name of the Trustee and for the benefit
of the Certificateholders, and (v) all other assets and interests constituting
the Trust, including certain monies constituting Interchange and Recoveries
allocated to the Trust pursuant to the Agreement and the Series Supplement.
Although a summary of certain provisions of the Agreement and the Series
Supplement is set forth below and in the Summary of Terms and Conditions
attached hereto and made a part hereof, this Class A Certificate does not
purport to summarize the Agreement and the Series Supplement and reference is
made to the Agreement and the Series Supplement for information with respect to
the interests, rights, benefits, obligations, proceeds and duties evidenced
hereby and the rights, duties and obligations of the Trustee. A copy of the
Agreement and the Series Supplement (without schedules) may be requested from
the Trustee by writing to the Trustee at 000 Xxxxxxx Xxxxxx, Xxxxx 00X, Xxx
Xxxx, Xxx Xxxx 00000, Attention: Corporate Trust Trustee Administration. To
the extent not defined herein, the capitalized terms used herein have the
meanings ascribed to them in the Agreement or the Series Supplement, as
applicable.
This Class A Certificate is issued under and is subject to the
terms, provisions and conditions of the Agreement and the Series Supplement, to
which Agreement and Series Supplement, as may be amended from time to time, the
Class A Certificateholder by virtue of the acceptance hereof assents and is
bound.
Unless otherwise specified in the applicable Supplement, it is the
intent of the Seller and the Investor Certificateholders that, with respect to
all Taxes, the Investor Certificates will evidence debt secured by the
Receivables. The Seller and the Class A Certificateholder, by the acceptance of
this Class A Certificate, agree to treat this Class A Certificate for the
purpose of all Taxes as debt.
Interest will accrue on the unpaid principal amount of this Class A
Certificate from and including its date of issuance to and excluding
[____________], 1998 and with respect to each Due Period thereafter, at the rate
of [___]% above LIBOR.
In general, payments of principal with respect to the Class A
Certificates are limited to the unpaid Class A Invested Amount, which may be
less than the unpaid principal balance of the Class A Certificates pursuant to
the terms of the Agreement and the Series Supplement. The Series 1998-1 Expected
Final Payment Date is the [__________] Distribution Date, but principal with
respect to the Class A Certificates may be paid earlier or later under certain
limited circumstances described in the Agreement and the Series Supplement. If
for one or more months during the Controlled Accumulation
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53
Period there are not sufficient Collections of Principal Receivables to deposit
the Controlled Deposit Amount into the Principal Funding Account, then to the
extent that excess Collections of Principal Receivables are not available on
subsequent Distribution Dates with respect to the Controlled Accumulation Period
to make up for such shortfalls, the final payment of principal of the Class A
Certificates will occur later than the Series 1998-1 Expected Final Payment
Date. If the principal of the Class A Certificates and the Class B Certificates
have not been paid in full prior to the [____________] Distribution Date, the
Trustee will sell or cause to be sold on such Termination Date Principal
Receivables (or interests therein) (and the related Finance Charge and
Administrative Receivables) in an amount equal to 100% of the Invested Amount as
of such Termination Date, subject to certain limitations, and shall immediately
deposit the Termination Proceeds allocable to the Series 1998-1
Certificateholders' Interest in the Collection Account. The Termination Proceeds
shall be allocated and distributed to the Class A Certificateholders, the Class
B Certificateholders and the Collateral Interest Holder in accordance with the
Series Supplement.
Unless the certificate of authentication hereon has been executed by
or on behalf of the Trustee, by manual or facsimile signature, this Class A
Certificate shall not be entitled to any benefit under the Agreement or the
Series Supplement, or be valid for any purpose.
IN WITNESS WHEREOF, the Seller has caused this Class A Certificate
to be duly executed.
HOUSEHOLD AFFINITY
FUNDING CORPORATION
By
------------------------------------------
Name:
Title:
By
------------------------------------------
Name:
Title:
Dated: ________ __, 1998
54
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class A Certificates
described in the within-mentioned Amended and Restated
Pooling and Servicing Agreement and Series Supplement.
THE BANK OF NEW YORK, as Trustee
By:_______________________________
Authorized Signatory
55
HOUSEHOLD AFFINITY CREDIT CARD MASTER TRUST I
SERIES 1998-1
FLOATING RATE CLASS A CREDIT CARD PARTICIPATION CERTIFICATE
Summary of Terms and Conditions
The Receivables consist of Principal Receivables which arise generally
from the purchase of merchandise and services and amounts advanced to
cardholders as cash advances, Finance Charge Receivables which arise from all
Finance Charges, Cash Advance Fees and annual membership fees with respect to
the Accounts and Administrative Receivables which consist of administrative
fees, late charges on amounts charged for merchandise and services and premiums
paid with respect to credit life insurance and other types of insurance and all
other fees billed to the Obligors on the Accounts. Collections of Finance
Charge Receivables include a portion, determined pursuant to the Agreement, of
the Interchange paid or payable to Household Bank (SB), N.A. (the "Bank")
through VISA USA, Inc. and MasterCard International Incorporated. All
Recoveries with respect to Receivables previously charged off as uncollectible
will be treated as Collections of Finance Charge and Administrative
Receivables. This Class A Certificate is one of a series of Class A
Certificates titled Household Affinity Credit Card Master Trust I, Series
1998-1 Floating Rate Class A Credit Card Participation Certificates (the
"Class A Certificates"), each of which represents a fractional undivided
Interest in certain assets of the Trust. The Trust's assets are allocated in
part to the Investor Certificateholders of all outstanding Series (the
"Certificateholders' Interest") with the remainder allocated to the Seller.
The aggregate interest represented by the Class A Certificates at any time in
the Principal Receivables in the Trust and any amounts on deposit in the
Principal Funding Account with respect to the Class A Certificates shall not
exceed an amount equal to the Class A Invested Amount at such time. The Class
A Initial Invested Amount is $[___________]. The Class A Invested Amount on
any date will be an amount equal to (a) $[___________] minus (b) the aggregate
amount of principal payments paid to Class A Certificateholders prior to such
date, minus (c) the excess, if any, of the aggregate amount of Class A Investor
Charge-Offs over Class A Investor Charge-Offs reimbursed pursuant to Section
4.12(a) of the Series Supplement prior to such date and minus (d) the amount of
any reduction in the Class A Invested Amount pursuant to Section 4.18 of the
Series Supplement prior to such date. In addition to the Class A Certificates,
$[___________] aggregate principal amount of Class B Certificates entitled
Household Affinity Credit Card Master Trust I, Series 1998-1 Floating Rate
Class B Credit Card Participation Certificates (the "Class B Certificates")
will be issued. Also, the HAFC Seller Certificate has been issued to the
Seller pursuant to the Agreement which will represent the Seller's Interest in
the Trust. Subject to the terms and conditions of the Agreement, the Seller
may from time to time direct the Trustee, on behalf of the Trust, to issue one
or more new Series of Investor Certificates, which will represent fractional
undivided interests in certain of the Trust Assets.
Interest will accrue on the Class A Certificates at the Class A
Certificate Rate and, except as otherwise provided in the Series Supplement, be
distributed monthly to Class A Certificateholders, commencing [____________],
1998, and on the 15th day of each month thereafter, or if such day is
not a business day, on the next succeeding business day (each, a "Distribution
Date") in an amount equal to the product of (i) the unpaid principal amount of
the Class A Certificates, (ii) the Class A
56
Certificate Rate and a fraction, the numerator of which is the actual number of
days in the Interest Period and the denominator of which is 360. Interest for
any Distribution Date will accrue from and including the preceding Distribution
Date except in the case of the first Distribution Date on which will be payable
accrued interest from and including the Issuance Date to and excluding
[____________], 1998.
On each Distribution Date, the Paying Agent shall distribute to each
Class A Certificateholder of record on the last day of the preceding calendar
month (each a "Record Date") such Class A Certificateholder's pro rata share
(based on the aggregate fractional undivided interest represented by the Class
A Certificates held by such Investor Certificateholder) of such amounts as are
payable to the Class A Certificateholders pursuant to the Agreement and Series
Supplement. The amount to be distributed on each Distribution Date to the
Holder of this Class A Certificate will be equal to the product of the
aggregate fractional undivided interest represented by this Class A Certificate
and the aggregate of all payments to be made to Class A Certificateholders on
such payment date. Distributions with respect to this Class A Certificate will
be made by the Paying Agent by check mailed to the address of the Class A
Certificateholder of record appearing in the Certificate Register without the
presentation or surrender of this Class A Certificate or the making of any
notation thereon (except for the final distribution in respect of this Class A
Certificate) except that with respect to Class A Certificates registered in the
name of Cede & Co., the nominee for The Depository Trust Company, distributions
will be made in the form of immediately available funds. Final payment of this
Class A Certificate will be made only upon presentation and surrender of this
Class A Certificate at the office or agency specified in the notice of final
distribution delivered by the Trustee to the Class A Certificateholders in
accordance with the Agreement.
On the Distribution Date occurring on or after the date on which the
Invested Amount is reduced to $[____________] or less, the Seller will have the
option to purchase the Class A Certificateholders' Interest and Class B
Certificateholders' Interest in the Trust. The purchase price (determined
after giving effect to any payment of principal and interest on such
Distribution Date) for the Class A Certificates and the Class B Certificates
will be equal to the sum of the Class A Adjusted Invested Amount and the Class
B Adjusted Invested Amount, plus accrued and unpaid interest on the unpaid
principal balance of the Class A Certificates and Class B Certificates through
the day immediately prior to the date of such purchase, plus the amount of
Additional Interest, if any, for such Distribution Date and any Additional
Interest previously due but not distributed to the Class A Certificateholders
and the Class B Certificateholders, as applicable, on a prior Distribution
Date.
This Class A Certificate does not represent an obligation of, or an
interest in, the Seller, the Servicer or any affiliate of any of them and is
not insured or guaranteed by the Federal Deposit Insurance Corporation or any
other governmental agency or instrumentality. This Class A Certificate is
limited in right of payment to certain Collections representing the Receivables
(and certain other amounts) all as more specifically set forth hereinabove and
in the Agreement and the Series Supplement.
The Agreement and the Series Supplement may be amended by the Seller, the
Servicer and the Trustee, without Certificateholder consent. No such
Amendment, however, may adversely affect in any material respect the interests
of the Investor Certificateholders. The Trustee may, but shall not be
2
57
obligated to, enter into any such amendment which affects the Trustee's rights,
duties or immunities under the Agreement or otherwise.
The Agreement and the Series Supplement may be amended by the Seller, the
Servicer and the Trustee with the consent of the Holders of Investor
Certificates evidencing not less than 66-2/3% of the aggregate unpaid principal
amount of the Investor Certificates of all adversely affected Series for which
the Seller has not delivered an Officer's Certificate stating that there is no
Adverse Affect, for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of the Agreement or any Supplement
or of modifying in any manner the rights of Investor Certificateholders;
provided, however, that no such amendment shall (a) reduce in any manner the
amount of, or delay the timing of, distributions to Investor Certificateholders
without the consent of each Class A Certificateholder; (b)(i) change the
definition of or the manner of calculating the interest of any Investor
Certificateholder without the consent of each affected Investor
Certificateholder or (ii) reduce the aforesaid percentage required to consent
to any such amendment, in either case without the consent of each Investor
Certificateholder; or (c) adversely affect the rating of the Class A
Certificates or the Class B Certificates by the Rating Agency without the
consent of the Class A Certificateholders or Class B Certificateholders
evidencing not less than 66-2/3% of the aggregate unpaid principal amount of
the Class A Certificates or the Class B Certificates, respectively. Any such
amendment and any such consent by the holder of the Class A Certificate shall
be conclusive and binding on such Class A Certificateholder and upon all future
holders of this Class A Certificate and of any Class A Certificate issued in
exchange hereof or in lieu hereof whether or not notation thereof is made upon
this Class A Certificate. The Seller or the Trustee shall establish a record
date for determining the Investor Certificateholders who may give such consent.
The Class A Certificates are issuable only in minimum denominations of
$l,000 and integral multiples of $l,000 in excess thereof. The transfer of
this Class A Certificate shall be registered in the Certificate Register upon
surrender of this Class A Certificate for registration of transfer at any
office or agency maintained by the Transfer Agent and Registrar accompanied by
a written instrument of transfer, in a form satisfactory to the Trustee or the
Transfer Agent and Registrar, duly executed by the Class A Certificateholder or
such Class A Certificateholder's attorney, and duly authorized in writing with
such signature guaranteed, and thereupon one or more new Class A Certificates
of authorized denominations and for the same aggregate Fractional Undivided
Interest will be issued to the designated transferee or transferees.
As provided in the Agreement and subject to certain limitations therein
set forth, Class A Certificates are exchangeable for new Class A Certificates
evidencing like aggregate fractional undivided interests as requested by the
Class A Certificateholder surrendering such Class A Certificates. No service
charge may be imposed for any such exchange but the Servicer or Transfer Agent
and Registrar may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith.
The Seller, the Servicer, the Trustee, the Paying Agent and the Transfer
Agent and Registrar and any agent of any of them, may treat the person in whose
name this Class A Certificate is registered as the owner hereof for all
purposes, and neither the Servicer nor the Seller, the Trustee, the Paying
Agent, the Transfer Agent and Registrar, nor any agent of any of them, shall be
affected by notice to the contrary except in certain circumstances described
in the Agreement.
3
58
THIS CLASS A CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE LAWS OF THE STATE OF NEW YORK.
4
59
ASSIGNMENT
Social Security or other identifying number of assignee
________________________________________________________________________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
________________________________________________________________________________
________________________________________________________________________________
(name and address of assignee )
the within certificate and all rights thereunder, and hereby irrevocably
constitutes and appoints _______________________ attorney, to transfer said
certificate on the books kept for registration thereof, with full power of
substitution in the premises.
Dated:________________
(1) A Non U.S. Person as defined in Note: The signature(s) to this
the Internal Revenue Code of 1986, as Assignment must correspond with the
amended must certify to the Trustee name(s) as written on the face of the
in writing as to its Non U.S. Person within certificate in every particular
status and such further information without alteration or enlargement or
as may be alteration or required any change whatsoever
under the Code or reasonably
requested by the Trustee
60
EXHIBIT A-2
FORM OF CLASS B CERTIFICATE
REGISTERED $___________*
No. R-B__ CUSIP No. __________
THIS CLASS B CERTIFICATE MAY NOT BE ACQUIRED BY OR FOR THE ACCOUNT
OF A BENEFIT PLAN (AS DEFINED BELOW).
UNLESS THIS CLASS B CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS
MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.
HOUSEHOLD AFFINITY CREDIT CARD MASTER TRUST I
SERIES 1998-1
FLOATING RATE CLASS B CREDIT CARD PARTICIPATION CERTIFICATE
SERIES 1998-1 EXPECTED FINAL PAYMENT DATE:
The March 2002 Distribution Date
Each $1,000 minimum denomination represents a 1/______
undivided interest in the Series 1998-1
Class B Invested Amount in the
HOUSEHOLD AFFINITY CREDIT CARD MASTER TRUST I
Evidencing an undivided interest in a trust, the corpus of which consists
primarily of receivables generated from time to time in the ordinary course of
business in a portfolio of revolving credit card accounts provided by
_________________
* Denominations of $1,000 and integral multiples of $1,000 in excess thereof.
61
HOUSEHOLD AFFINITY FUNDING CORPORATION
(Not an interest in or obligation of
Household Affinity Funding Corporation
or any affiliate thereof)
This certifies that CEDE & CO. (the "Class B Certificateholder"), is the
registered owner of a fractional undivided interest in certain assets of a
trust (the "Trust") created pursuant to an Amended and Restated Pooling and
Servicing Agreement, dated as of August 1, 1993, as amended as of April 12,
1995 and as may be further amended from time to time (the "Agreement"), as
supplemented by the Series 1998-1 Supplement, dated as of July 1, 1998 (the
"Series Supplement"), by and among Household Affinity Funding Corporation, as
Seller (the "Seller"), Household Finance Corporation, as Servicer, and The Bank
of New York, as trustee (the "Trustee"). The corpus of the Trust includes (i)
a portfolio of all receivables (the "Receivables") existing in the revolving
credit card accounts identified under the Agreement from time to time (the
"Accounts"), (ii) all receivables generated under the Accounts from time to
time thereafter, (iii) funds collected or to be collected from cardholders in
respect of the Receivables, (iv) all funds which are from time to time on
deposit in certain accounts held in the name of the Trustee for the benefit of
Certificateholders, and (v) all other assets and interests constituting the
Trust, including certain monies constituting Interchange and Recoveries
allocated to the Trust pursuant to the Agreement and the Series Supplement.
Although a summary of certain provisions of the Agreement and the Series
Supplement is set forth below and in the Summary of Terms and Conditions
attached hereto and made a part hereof, this Class B Certificate does not
purport to summarize the Agreement and the Series Supplement and reference is
made to the Agreement and the Series Supplement for information with respect to
the interests, rights, benefits, obligations, proceeds and duties evidenced
hereby and the rights, duties and obligations of the Trustee. A copy of the
Agreement and the Series Supplement (without schedules) may be requested from
the Trustee by writing to the Trustee at 000 Xxxxxxx Xxxxxx, Xxxxx 00X, Xxx
Xxxx, Xxx Xxxx 00000, Attention: Corporate Trust Trustee Administration. To
the extent not defined herein, the capitalized terms used herein have the
meanings ascribed to them in the Agreement or the Series Supplement as
applicable.
This Class B Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement and the Series Supplement, to which
Agreement and Series Supplement, as may be amended from time to time, the Class
B Certificateholder by virtue of the acceptance hereof assents and is bound.
Unless otherwise specified in the applicable Supplement, it is the intent
of the Seller and the Investor Certificateholders that, with respect to all
Taxes, the Investor Certificates will evidence debt secured by the Receivables.
The Seller and the Class B Certificateholder, by the acceptance of this Class
B Certificate, agree to treat this Class B Certificate for purposes of all
Taxes as debt.
Interest will accrue on the unpaid principal amount of this Class B
Certificate from and including its date of issuance to and excluding
[____________], 1998 and with respect to each Due Period thereafter, at the
rate of [_____]% above LIBOR.
2
62
In general, payments of principal with respect to the Class B Certificates
are limited to the unpaid Class B Invested Amount, which may be less than the
unpaid principal balance of the Class B Certificates pursuant to the terms of
the Agreement and the Series Supplement. The Series 1998-1 Expected Final
Payment Date is the [___________] Distribution Date, but principal with respect
to the Class B Certificates may be paid earlier or later under certain limited
circumstances described in the Agreement and the Series Supplement.
Principal payments with respect to the Class B Certificates will not
commence until the Class A Invested Amount is paid in full. In addition, the
final payment of principal of the Class B Certificates will occur later than
the [___________] Distribution Date if Collections of Receivables allocable to
pay principal of the Class B Certificates and the Collateral Invested Amount are
insufficient to pay the Class B Invested Amount on or prior to such Distribution
Date. If the principal of the Class A Certificates and the Class B Certificates
has not been paid in full prior to the [___________] Distribution Date, the
Trustee will sell or cause to be sold on such Termination Date Principal
Receivables (or interests therein) (and the related Finance Charge and
Administrative Receivables) in an amount equal to 100% of the Invested Amount as
of such Termination Date, subject to certain limitations, and shall immediately
deposit the Termination Proceeds allocable to the Series 1998-1
Certificateholders' Interest in the Collection Account. The Termination Proceeds
shall be allocated and distributed to the Class A Certificateholders, the Class
B Certificateholders and the Collateral Interest Holder in accordance with the
Series Supplement.
Unless the certificate of authentication hereon has been executed by or on
behalf of the Trustee, by manual or facsimile signature, this Class B
Certificate shall not be entitled to any benefit under the Agreement or the
Series Supplement, or be valid for any purpose.
IN WITNESS WHEREOF, the Seller has caused this Class B Certificate to be
duly executed.
HOUSEHOLD AFFINITY
FUNDING CORPORATION
By _______________________________________
Name:
Title:
By _______________________________________
Name:
Title:
Dated: ________ __, 1998
3
63
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class B Certificates
described in the within-mentioned Amended and Restated
Pooling and Servicing Agreement and Series Supplement.
THE BANK OF NEW YORK, as Trustee
By: _______________________________
Authorized Signatory
64
HOUSEHOLD AFFINITY CREDIT CARD MASTER TRUST I
SERIES 1998-1
FLOATING RATE CLASS B CREDIT CARD PARTICIPATION CERTIFICATE
Summary of Terms and Conditions
The Receivables consist of Principal Receivables which arise generally
from the purchase of merchandise and services and amounts advanced to
cardholders as cash advances, Finance Charge Receivables which arise from all
Finance Charges, Cash Advance Fees and annual membership fees with respect to
the Accounts and Administrative Receivables which consist of administrative
fees, late charges on amounts charged for merchandise and services and premiums
paid with respect to credit life insurance and other types of insurance and all
other fees billed to the Obligors on the Accounts. Collections of Finance
Charge Receivables include a portion, determined pursuant to the Agreement, of
the Interchange paid or payable to Household Bank (SB), N.A. (the "Bank")
through VISA USA, Inc. and MasterCard International, Incorporated. All
Recoveries with respect to Receivables previously charged-off as uncollectible
will be treated as Collections of Finance Charge and Administrative
Receivables. This Class B Certificate is one of a series of Class B
Certificates titled Household Affinity Credit Card Master Trust I, Series
1998-1 Floating Rate Class B Credit Card Participation Certificates (the "Class
B Certificates"), each of which represents a fractional undivided interest in
certain assets of the Trust. The Trust's assets are allocated in part to the
Investor Certificateholders (the "Certificateholders' Interest") with the
remainder allocated to the Seller. The aggregate interest represented by the
Class B Certificates at any time in the Principal Receivables in the Trust and
amounts on deposit in the Principal Funding Account with respect to the Class B
Certificates shall not exceed an amount equal to the Class B Invested Amount at
such time. The Class B Initial Invested Amount is $[___________]. The Class B
Invested Amount on any date will be an amount equal to (a) $[___________] minus
(b) the amount of principal payments made to Class B Certificateholders prior
to such date minus (c) the aggregate amount of Class B Investor Charge-Offs for
all prior Distribution Dates, minus (d) the amount of Subordinated Principal
Collections allocated on all prior Distribution Dates calculated pursuant to
Section 4.15 of the Series Supplement (excluding any Subordinated Principal
Collections allocable to the Collateral Invested Amount), minus (e) an amount
equal to the amount by which the Class B Invested Amount has been reduced on
all prior Distribution Dates pursuant to subsection 4.12(a) of the Series
Supplement, plus (f) the sum of (A) the aggregate amount of any Series
Allocable Miscellaneous Payments allocated on all prior Distribution Dates
pursuant to subsection 4.12(b) of the Series Supplement and (B) the amount of
Excess Finance Charge and Administrative Collections allocated and available on
all prior Distribution Dates pursuant to subsection 4.13(e) of the Series
Supplement and any withdrawals from the Cash Collateral Account applied in
accordance with such subsection for the purpose of reimbursing amounts deducted
pursuant to the foregoing clauses (c), (d) and (e) of the Series Supplement and
minus (g) the amount of any reduction in the Class B Invested Amount pursuant
to Section 4.18 of the Series Supplement prior to such date. In addition to
the Class B Certificates, $[___________] aggregate principal amount of Class A
Certificates entitled Household Affinity Credit Card Master Trust I, Series
1998-1 Floating Rate Class A Credit Card Participation Certificates (the "Class
A Certificates") will be issued. Also,
65
the HAFC Seller Certificate has been issued to the Seller pursuant to the
Agreement which will represent the Seller's interest in the Trust.
Subject to the terms and conditions of the Agreement, the Seller may from
time to time direct the Trustee, on behalf of the Trust, to issue one or more
new Series of Investor Certificates, which will represent fractional undivided
interests in certain of the Trust Assets.
Interest will accrue on the Class B Certificates at the Class B
Certificate Rate and, except as otherwise provided in the Series Supplement, be
distributed monthly to Class B Certificateholders, commencing [____________],
1998, and on the 15th day of each month thereafter, or if such day is not a
business day, on the next succeeding business day (each, a "Distribution Date")
in an amount equal to the product of (i) the unpaid principal amount of the
Class B Certificates, (ii) the Class B Certificate Rate and a fraction, the
numerator of which is the actual number of days in the Interest Period and the
denominator of which is 360. Interest for any Distribution Date will accrue
from and including the preceding Distribution Date except in the case of the
first Distribution Date on which will be payable accrued interest from and
including the Issuance Date to and excluding [____________], 1998.
On each Distribution Date, the Paying Agent shall distribute to each Class
B Certificateholder of record on the last day of the preceding calendar month
(each a "Record Date") such Class B Certificateholder's pro rata share (based
on the aggregate fractional undivided interest represented by the Class B
Certificates held by such Investor Certificateholder) of such amounts as are
payable to the Class B Certificateholders pursuant to the Agreement and the
Series Supplement. The amount to be distributed on each payment date to the
Holder of this Class B Certificate will be equal to the product of the
aggregate fractional undivided interest represented by this Class B Certificate
and the aggregate of all payments to be made to Class B Certificateholders on
such Distribution Date. Distributions with respect to this Class B Certificate
will be made by the Paying Agent by check mailed to the address of the Class B
Certificateholder of record appearing in the Certificate Register without the
presentation or surrender of this Class B Certificate or the making of any
notation thereon (except for the final distribution in respect of this Class B
Certificate) except that with respect to Class B Certificates registered in the
name of Cede & Co., the nominee for The Depository Trust Company, distributions
will be made in the form of immediately available funds. Final payment of this
Class B Certificate will be made only upon presentation and surrender of this
Class B Certificate at the office or agency specified in the notice of final
distribution delivered by the Trustee to the Class B Certificateholders in
accordance with the Agreement.
On the Distribution Date occurring on or after the date on which the
Invested Amount is reduced to $[___________] or less, the Seller will have the
option to purchase the Class A Certificateholders' Interest and the Class B
Certificateholders' Interest in the Trust. The purchase price (determined after
giving effect to any payment of principal and interest on such Distribution
Date) the Class A Certificates and the Class B Certificates will be equal to the
Class A Adjusted Invested Amount and the Class B Adjusted Invested Amount, plus
accrued and unpaid interest on the unpaid principal balance of the Class A
Certificates and Class B Certificates through the day immediately prior to the
date of such purchase, plus the amount of Additional Interest, if any, for such
Distribution Date and any Additional Interest previously due but not distributed
to the Class A Certificateholders and the Class B Certificateholders, as
applicable, on a prior Distribution Date.
66
This Class B Certificate does not represent an obligation of, or an
interest in, the Seller, the Servicer or any affiliate of any of them and is
not insured or guaranteed by the Federal Deposit Insurance Corporation or any
other governmental agency or instrumentality. This Class B Certificate is
limited in right of payment to certain Collections representing the Receivables
(and certain other amounts) all as more specifically set forth hereinabove and
in the Agreement.
The Agreement and the Series Supplement may be amended by the Seller, the
Servicer and the Trustee, without Certificateholder consent. No such amendment,
however, may, in the reasonable belief of the Seller, adversely effect in any
material respect the interests of the Investor Certificateholders. The Trustee
may, but shall not be obligated to, enter into any such amendment which affects
the Trustee's rights, duties or immunities under the Agreement or otherwise.
The Agreement and the Series Supplement may be amended by the Seller, the
Servicer and the Trustee with the consent of the Holders of Investor
Certificates evidencing not less than 66-2/3% of the aggregate unpaid principal
amount of the Investor Certificates of all adversely affected Series for which
the Seller has not delivered an Officer's Certificate stating that there is no
Adverse Affect, for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of the Agreement or any Supplement
or of modifying in any manner the rights of Investor Certificateholders;
provided, however, that no such amendment shall (a) reduce in any manner the
amount of, or delay the timing of, distributions without the consent of each
affected Certificateholder; (b) (i) change the definition of or the manner of
calculating the interest of any Investor Certificateholder without the consent
of each affected Investor Certificateholder or (ii) reduce the aforesaid
percentage required to consent to any such amendment, in either case without
the consent of each Investor Certificateholder; or (c) adversely affect the
rating of the Class A Certificates or the Class B Certificates by the Rating
Agency without the consent of the Class A Certificateholders or Class B
Certificateholders evidencing not less than 66-2/3% of the aggregate unpaid
principal amount of the Class A Certificates or the Class B Certificates,
respectively. Any such amendment and any such consent by the holder of this
Class B Certificate shall be conclusive and binding on such Class B
Certificateholder and upon all future holders of this Class B Certificate and
of any Class B Certificate issued in exchange hereof or in lieu hereof whether
or not notation thereof is made upon this Class B Certificate. The Seller or
the Trustee shall establish a record date for determining the Investor
Certificateholders who may give such consent.
The Class B Certificates are issuable only in minimum denominations of
$1,000 and integral multiples of $l,000 ln excess thereof. The transfer of
this Class B Certificate shall be registered in the Certificate Register upon
surrender of this Class B Certificate for registration of transfer at any
office or agency maintained by the Transfer Agent and Registrar accompanied by
a written instrument of transfer, in a form satisfactory to the Trustee or the
Transfer Agent and Registrar, duly executed by the Class B Certificateholder or
such Class B Certificateholder's attorney, and duly authorized in writing with
such signature guaranteed, and thereupon one or more new Class B Certificates
of authorized denominations and for the same aggregate fractional undivided
interest will be issued to the designated transferee or transferees.
The Class B Certificates may not be acquired by or for the account of any
employee benefit plan, trust or account, including an individual retirement
account, that is subject to the Employee Retirement Income Security Act of
1974, as amended, or that is described in Section 4975(e)(1) of the
67
Internal Revenue Code of 1986, as amended, or an entity whose underlying assets
include plan assets by reason of a plan's investment in such entity (each a
"Benefit Plan"). By accepting and holding this Class B Certificate, the holder
hereof shall be deemed to have represented and warranted that it is not a
Benefit Plan. By acquiring any interest in this Class B Certificate, the
applicable Certificateholder or holders shall be deemed to have represented and
warranted that it is or they are not Benefit Plans.
As provided in the Agreement and subject to the limitations therein set
forth, Class B Certificates are exchangeable for new Class B Certificates
evidencing like aggregate fractional undivided interests as requested by the
Class B Certificateholder surrendering such Class B Certificates. No service
charge may be imposed for any such exchange but the Servicer or Transfer Agent
and Registrar may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith.
The Seller, the Servicer, the Trustee, the Paying Agent and the Transfer
Agent and Registrar and any agent of any of them, may treat the person in whose
name this Class B Certificate is registered as the owner hereof for all
purposes, and neither the Servicer nor the Seller, the Trustee, the Paying
Agent, the Transfer Agent and Registrar, nor any agent of any of them, shall be
affected by notice to the contrary except in certain circumstances described in
the Agreement.
THIS CLASS B CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE LAWS OF THE STATE OF NEW YORK.
68
ASSIGNMENT
Social Security or other identifying number of assignee
___________________________________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
___________________________________________
__________________________________________________________
(name and address of assignee )
the within certificate and all rights thereunder, and hereby irrevocably
constitutes and appoints _______________________ attorney, to transfer said
certificate on the books kept for registration thereof, with full power of
substitution in the premises.
Dated:________________
(1) A Non U.S. Person as defined in
the Internal Revenue Code of 1986, as
amended must certify to the Trustee
in writing as to its Non U.S. Person
status and such further information
as may be alteration or required
under the Code or reasonably
requested by the Trustee
Note: The signature(s) to this
Assignment must correspond with the
name(s) as written on the face of the
within certificate in every particular
without alteration or enlargement or
any change whatsoever
69
EXHIBIT B
FORM OF MONTHLY SERVICER'S CERTIFICATE
(To be delivered pursuant to subsection 3.04(b)
of the Amended and Restated Pooling and Servicing
Agreement not later than the second Business
Day preceding each Distribution Date)
HOUSEHOLD FINANCE CORPORATION
HOUSEHOLD AFFINITY FUNDING CORPORATION
HOUSEHOLD AFFINITY CREDIT CARD MASTER TRUST I
Class A and Class B Certificates, Series 1998-1
--------------------------------------------
The undersigned, a duly authorized representative of Household Finance
Corporation, as Servicer (the "Servicer"), pursuant to the Amended and Restated
Pooling and Servicing Agreement, dated as of August 1, 1993 (the "Pooling and
Servicing Agreement"), by and among Household Affinity Funding Corporation, as
Seller, the Servicer, and The Bank of New York, as Trustee, does hereby certify
with respect to the information set forth below as follows:
1. Capitalized terms used in this Certificate shall have the respective
meanings set forth in the Pooling and Servicing Agreement.
2. Household Finance Corporation is, as of the date hereof, the Servicer under
the Pooling and Servicing Agreement.
3. The undersigned is a Servicing Officer.
4. This Certificate relates to the Distribution Date occurring on
_________________.
5. Trust Information.
(a) The aggregate amount of Collections processed for the Due Period
preceding such Distribution Date was equal to.....................$_______
(b) The aggregate amount of such Collections with respect to Principal
Receivables for the Due Period preceding such Distribution Date was
equal to..........................................................$_______
70
(c) The aggregate amount of such Collections with respect to Finance Charge and
Administrative Receivables for the Due Period preceding such Distribution
Date was equal to............................................................. $_______
(d) The Defaulted Amount for the preceding Due Period is.......................... $_______
(e) The Portfolio Yield for such Distribution Date................................ ________%
(f) The total amount of Principal Receivables as of the last day of the
immediately preceding Due Period is........................................... $_______
(g) The total amount of Principal Receivables in the Trust at the beginning of
the preceding Due Period is equal to.......................................... $_______
(h) The average amount of Principal Receivables in the Trust during the
preceding Due Period (the sum of the amounts in clause (e) and the amount
in clause (g) divided by 2) is equal to....................................... $_______
(i) The total amount of Finance Charge Receivables in the Trust as of the last
day of the immediately preceding Due Period is................................ $_______
(j) The aggregate outstanding balance of the Accounts which were delinquent by
5-29 days as of the close of business on the last day of the calendar month
preceding such Distribution Date was equal to................................. $_______
(k) The aggregate outstanding balance of the Accounts which were delinquent by
30-59 days as of the close of business on the last day of the calendar
month preceding such Distribution Date was equal to........................... $_______
(l) The aggregate outstanding balance of the Accounts which were delinquent by
60 days or more as of the close of business on the last day of the calendar
month preceding such Distribution Date was equal to........................... $_______
(m) The aggregate amount of Trust Excess Principal Collections for such
Distribution Date is.......................................................... $_______
(n) The aggregate amount of Principal Shortfalls for such Distribution Date is.... $_______
6. Group Three Information
(a) The Average Rate for Group Three (the weighted average Certificate Rate
reduced to take into account any payments made pursuant to interest rate
agreements) is equal to....................................................... ________%
(b) Group Three Total Investor Collections is equal to............................ $_______
(c) Group Three Investor Principal Collections is equal to........................ $_______
71
(d) Group Three Investor Finance Charge and Administrative Collections equal
to........................................................................... $_______
(e) Group Three Investor Additional Amounts is equal to.......................... $_______
(f) Group Three Investor Default Amount is equal to.............................. $_______
(g) Group Three Investor Monthly Fees is equal to................................ $_______
(h) Group Three Investor Monthly Interest is equal to............................ $_______
7. Series 1998-1 Information
(a) The Series Adjusted Portfolio Yield for the Due Period preceding such
Distribution Date was equal to............................................... ________%
(b) The Series 1998-1 Allocation Percentage with respect to the Due Period
preceding such Distribution Date was equal to................................ ________%
(c) The Floating Allocation Percentage for the Due Period preceding such
Distribution Date was equal to............................................... ________%
(d) The aggregate amount of Reallocated Finance Charge and Administrative
Collections for the Due Period preceding such Distribution Date was equal
to........................................................................... $_______
(e) The Floating Allocation Percentage of Series Allocable Finance Charge and
Administrative Collections for the Due Period preceding such Distribution
Date is equal to............................................................. ________%
(f) Class A Invested Amount...................................................... $_______
(g) The Class A Invested Percentage with respect to the Due Period preceding
such Distribution Date was equal to.......................................... ________%
(h) The Class A Invested Percentage of the amount set forth in Item 7(d) above
was equal to................................................................. ________%
(i) The amount of Class A Monthly Interest for such Distribution Date is equal
to........................................................................... $_______
(j) The amount of any Class A Monthly Interest previously due but not
distributed on a prior Distribution Date is equal to......................... $_______
(k) The amount of Class A Additional Interest for such Distribution Date is
equal to..................................................................... $_______
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(l) The amount of any Class A Additional Interest previously due but not
distributed on a prior Distribution Date is equal to......................... $_______
(m) The Class A Investor Default Amount for such Distribution Date is equal
to........................................................................... $_______
(n) The Allocable Servicing Fee for such Distribution Date is equal to........... $_______
(o) The Class A Required Amount, if any, with respect to such Distribution Date
is equal to.................................................................. $_______
(p) Class B Invested Amount...................................................... $_______
(q) The Class B Invested Percentage for the Due Period preceding such
Distribution Date was equal to............................................... ________%
(r) The Class B Invested Percentage of the amount set forth in Item 7(d) above
is equal to.................................................................. ________%
(s) The amount of Class B Monthly Interest for such Distribution Date is equal
to........................................................................... $_______
(t) The amount of any Class B Monthly Interest previously due but not
distributed on a prior Distribution Date is equal to......................... $_______
(u) The amount of Class B Additional Interest for such Distribution Date is
equal to..................................................................... $_______
(v) The amount of any Class B Additional Interest previously due but not
distributed on a prior Distribution Date is equal to......................... $_______
(w) Class B Investor Default Amount for such Distribution Date is equal to....... $_______
(x) The amount of Reallocated Finance Charge and Administrative Collections to
be distributed to the Collateral Interest Holder with respect to such
Distribution Date is equal to................................................ $_______
(y) The Series 1998-1 Principal Shortfall for such Distribution Date is equal
to........................................................................... $_______
(z) The Series 1998-1 Excess Principal Collections is equal to................... $_______
(aa) The amount of Excess Finance Charge and Administrative Collections with
respect to such Distribution Date is equal to................................ $_______
73
(bb) The amount of Excess Finance Charge and Administrative Collections referred
to in Item 7(aa) will be available to be distributed on such Distribution
Date to fund or reimburse the following items:..............
(i) to fund the Class A Required Amount, if any, with respect to
such Distribution
Date...................................................................... $_______
(ii) to reimburse Class A Investor Charge-Offs....................... $_______
(iii) to pay current or overdue Class B Monthly Interest, Class B
Additional Interest or the Cumulative Excess Interest Amount............... $_______
(iv) to fund the Class b Investor Default Amount with respect to such
Distribution Date......................................................... $_______
(v) to reimburse certain previous reductions in the Class B Invested
Amount..................................................................... $_______
(vi) to pay any portion of the Allocable Servicing Fee not paid
pursuant to clause (I) above............................................... $_______
(vii) to fund the Collateral Default Amount with respect to such
Distribution Date.......................................................... $_______
(viii) to make any required deposit in the Cash Collateral Account... $_______
(cc) The amount of Subordinated Principal Collections with respect to such
Distribution Date is equal to............................................... $_______
(dd) The amount, if any, of Miscellaneous Payments with respect to such
Distribution Date is equal to............................................... $_______
(ee) The Principal Allocation Percentage is equal................................ $_______
(ff) The total amount to be distributed to Class A Certificateholders on such
Distribution Date in payment of principal is equal to....................... $_______
(gg) The total amount to be distributed to Class B Certificateholders on such
Distribution Date in payment of principal is equal to....................... $_______
(hh) The amount of Class A Investor Charge-Offs for such Distribution Date is
equal to................................................................... $_______
(ii) The total amount of reimbursements of Class A Investor Charge-Offs for such
Distribution Date is equal to............................................... $_______
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(jj) The amount of Class B Investor Charge-Offs and other reductions in the
Class B Invested Amount for such Distribution Date is equal to.................... $_______
(kk) The total amount of reimbursements of Class B Investor Charge-Offs for such
Distribution Date is equal to..................................................... $_______
(ll) The Class A Invested Amount at the close of business on such Distribution
Date (after giving effect to all payments and adjustments on such
Distribution Date) will be equal to............................................... $_______
(mm) The Class B Invested Amount at the close of business on such Distribution
Date (after giving effect to all payments and adjustments on such
Distribution Date) will be equal to............................................... $_______
(nn) The Available Collateral Amount as of the close of business on the
preceding Distribution Date (after giving effect to any withdrawal from the
Collateral Account) was equal to.................................................. $_______
(oo) The Required Collateral Amount as of the close of business on such
Distribution Date, after giving effect to any withdrawal from the
Collateral Account and payments to the Collateral Interest Holder on such
Distribution Date, will be equal to............................................... $_______
(pp) The ratio of the Required Collateral Amount to the Class B Invested Amount
as of the close of business on such Distribution Date, after giving effect
to any withdrawal from the Collateral Account and payments to the
Collateral Interest Holder on such Distribution Date, will be equal
to................................................................................ ________%
(qq) The Cumulative Excess Interest Amount as of the close of business on such
Distribution Date, after giving effect to any payments of interest to Class
B Certificateholders on such Distribution Date, will be equal
to................................................................................ $_______
8. Total amount to be on deposit in the Collection Account (after giving
effect to allocations required to be made pursuant to the terms of all
other Series now outstanding) prior to making the required distributions on
such Distribution Date is equal to................................................ $_______
9. The total amount to be distributed from the Collection Account to the
Seller on such Distribution Date (after taking into consideration the
amounts which have been netted with respect to all Series against deposits
to the Collection Account) is equal to............................................ $_______
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10. Total amount to be distributed from the Collection Account to the Servicer
in respect of the unpaid Allocable Servicing Fee for the preceding Due
Period on such Distribution Date (after taking into consideration the
amounts which have been netted with respect to this Series against deposits
to the Collection Account) is equal to....................................... $_______
11. The Class A Adjusted Invested Amount......................................... $_______
12. The Class B Adjusted Invested Amount......................................... $_______
13. The Controlled Accumulation Amount........................................... $_______
14. The Controlled Deposit Amount................................................ $_______
15. The Deficit Controlled Accumulation Amount................................... $_______
16. The Principal Funding Account Balance........................................ $_______
17. The Principal Funding Investment Shortfall................................... $_______
18. The Required Reserve Account Amount.......................................... $_______
19. The Reserve Account Balance.................................................. $_______
20. As of the date hereof, to the best knowledge of the undersigned, (a) the
Servicer has performed in all material respects all its obligations under
the Pooling and Servicing Agreement through the Due Period preceding such
Distribution Date or, if there has been a default in the performance of any
such obligation, set forth in detail the (i) nature of such default, (ii)
the action taken by the Seller and Servicer, if any, to remedy such default
and (iii) the current status of each such default; if applicable, insert
"None".
21. As of the date hereof, to the best knowledge of the undersigned, no
Amortization Event has been deemed to have occurred on or prior to such
Distribution Date.
22. As of the date hereof, to the best knowledge of the undersigned, no Lien
has been placed on any of the Receivables other than pursuant to the
Pooling and Servicing Agreement (or, if there is a Lien, such Lien consists
of _______________).
23. The amount specified to be deposited into and withdrawn from the Collection
Account, as well as the amounts specified to be paid to the Seller, the
Servicer, the Interest Holder and the Certificateholders are all in
accordance with the requirements of the Pooling and Servicing Agreement.
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IN WITNESS WHEREOF, the undersigned has duly executed and delivered this
Certificate this ____ day of ______________, 199_.
HOUSEHOLD FINANCE CORPORATION
as Servicer,
By:_______________________________________
Name:
Title:
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