NY_220368.6
EXECUTION COPY
HOUSEHOLD FINANCE CORPORATION,
as the Master Servicer,
together with
HOUSEHOLD AUTOMOBILE REVOLVING TRUST I,
as Issuer,
HOUSEHOLD AUTO RECEIVABLES CORPORATION,
as Seller,
and
THE CHASE MANHATTAN BANK,
as Indenture Trustee
and
WILMINGTON TRUST COMPANY,
as Owner Trustee
SERIES 1998-1 SUPPLEMENT
Dated as of November 1, 1998
to the
INDENTURE
Dated as of November 1, 1998
and to the
TRUST AGREEMENT
Dated as of March 1, 1998
TABLE OF CONTENTS
Page
ARTICLE I CREATION OF THE SERIES 1998-1 NOTES 1
SECTION 1.01. DESIGNATION. 1
SECTION 1.02. PLEDGE OF SERIES 1998-1 TRUST ESTATE. 2
SECTION 1.03. PAYMENTS AND COMPUTATIONS. 3
SECTION 1.04. DENOMINATIONS. 3
ARTICLE II DEFINITIONS 3
SECTION 2.01. DEFINITIONS. 3
ARTICLE III DISTRIBUTIONS AND STATEMENTS TO SERIES 1998-1
NOTEHOLDERS; SERIES SPECIFIC COVENANTS 15
SECTION 3.01. SERIES 1998-1 TRUST ACCOUNTS. 15
SECTION 3.02. RESERVE ACCOUNT. 16
SECTION 3.03. DISTRIBUTIONS. 16
SECTION 3.04. STATEMENTS TO NOTEHOLDERS. 19
SECTION 3.05. REPORTING REQUIREMENTS. 19
SECTION 3.06. COMPLIANCE WITH WITHHOLDING REQUIREMENTS. 20
SECTION 3.07. SPECIAL COVENANTS AND ACKNOWLEDGEMENTS. 20
SECTION 3.08. TAX CHARACTERIZATION. 20
SECTION 3.09. DETERMINATION OF LIBOR. 20
SECTION 3.10. INTEREST RATE CAP. 21
ARTICLE IV EVENTS OF DEFAULT; REMEDIES 21
SECTION 4.01. EVENTS OF DEFAULT. 21
SECTION 4.02. RIGHTS UPON EVENT OF DEFAULT. 22
SECTION 4.03. REMEDIES. 23
SECTION 4.04. PRIORITIES. 24
ARTICLE V PREPAYMENT AND REDEMPTION 25
SECTION 5.01. OPTIONAL "CLEAN-UP" REDEMPTION. 25
ARTICLE VI MISCELLANEOUS 26
SECTION 6.01. RATIFICATION OF BASIC DOCUMENTS. 26
SECTION 6.02. COUNTERPARTS. 26
SECTION 6.03. GOVERNING LAW. 26
SECTION 6.04. AMENDMENTS WITHOUT CONSENT OF NOTEHOLDERS. 26
SECTION 6.05. AMENDMENTS WITH CONSENT OF THE SERIES 1998-
1 NOTEHOLDERS. 27
SECTION 6.06. AUTHORITY TO REGISTER NOTES AND FILE
REPORTS. 29
Schedule I Schedule of Eligibility Criteria
Schedule II Schedule of Receivables
Exhibit A Form of Master Servicer's Certificate
Exhibit B Form of Interest Rate Cap
This Series 1998-1 Supplement, dated as of November 1,
1998, is by and among Household Finance Corporation, a Delaware
corporation, as master servicer (the "Master Servicer"),
Household Automobile Revolving Trust I, a Delaware business
trust, as Issuer (the "Issuer"), Household Auto Receivables
Corporation, a Nevada corporation, as Seller ("Seller"), The
Chase Manhattan Bank, a New York banking corporation ("Chase"),
as trustee for the Noteholders (the "Indenture Trustee") and
Wilmington Trust Company, a Delaware banking corporation, as
owner trustee (the "Owner Trustee") for the Certificateholders.
RECITALS
This Series 1998-1 Supplement, is executed and
delivered by the parties hereto pursuant to Section 9.3 of the
Indenture dated as of November 1, 1998 (the "Indenture") among
the Issuer, the Master Servicer and the Indenture Trustee and
pursuant to Section 3.2 of the Trust Agreement (the "Trust
Agreement") dated as of March 1, 1998 between the Seller and the
Owner Trustee. In the event that any term or provision contained
herein shall conflict with or be inconsistent with any term or
provision contained in the Indenture or the Trust Agreement, the
terms and provisions of this Series 1998-1 Supplement shall
govern with respect to Series 1998-1.
ARTICLE I
CREATION OF THE SERIES 1998-1 NOTES
SECTION 1.01. Designation.
(a) There is hereby created a Series of Notes to
be issued pursuant to the Indenture and this Series 1998-1
Supplement to be known as "Household Automobile Revolving Trust
I, Series 1998-1 Notes." The Series 1998-1 Notes shall be issued
in eight classes (each, a "Class"). The Class A-1 Notes in an
aggregate initial principal amount of $139,370,000 (the "Class X-
0 Notes"), the Class A-2 Notes in an aggregate initial principal
amount of $54,000,000 (the "Class A-2 Notes"), the Class A-3
Notes in an aggregate initial principal amount of $143,000,000
(the "Class A-3 Notes"), the Class A-4 Notes in an aggregate
initial principal amount of $80,832,000 (the "Class A-4 Notes"),
the Class A-5 Notes in an aggregate initial principal amount of
$100,000,000 (the "Class A-5 Notes", and together with Class A-1
Notes, the Class A-2 Notes, the Class A-3 Notes and the Class A-4
Notes, the "Class A Notes"), the Class B-1 Notes in an aggregate
initial principal amount of $99,303,000 (the "Class B-1 Notes"),
the Class B-2 Notes in an aggregate initial principal amount of
$94,338,000 (the "Class B-2 Notes", and together with the Class B-
1 Notes, the "Class B Notes") and the Class C Notes in an
aggregate initial principal amount of $60,823,000 (the "Class C
Notes").
(b) There is hereby created a Series of Series
Trust Certificates to be issued pursuant to the Trust Agreement
and this Series 1998-1 Supplement to be known as the "Household
Automobile Revolving Trust I, Series 1998-1 Certificates."
SECTION 1.02. Pledge of Series 1998-1 Trust
Estate.
The Issuer hereby Grants to the Indenture Trustee, for
the benefit of the Holders of the Notes all of the Issuer's
right, title and interest (but none of its obligations) in and to
(a) each and every Receivable listed as a Series 1998-1
Receivable on the Schedule of Receivables attached hereto as
Schedule I and all monies paid or payable thereon or in respect
thereof after the Cutoff Date (including amounts due on or before
the Cutoff Date but received by HAFC, the Seller, the Master
Servicer or the Issuer after the Cutoff Date); (b) an assignment
of the security interests in the related Financed Vehicles
granted by Obligors pursuant to such Series 1998-1 Receivables
and any other interest of the Issuer in the related Financed
Vehicles; c all rights of HAFC against Dealers pursuant to Dealer
Agreements or Dealer Assignments related to such Series 1998-1
Receivables; (d) any proceeds and the right to receive proceeds
with respect to such Series 1998-1 Receivables repurchased by a
Dealer, pursuant to a Dealer Agreement as a result of a breach of
representation or warranty in the related Dealer Agreement; (e)
all rights under any Service Contracts on the related Financed
Vehicles; (f) any proceeds and the right to receive proceeds with
respect to such Series 1998-1 Receivables from claims on any
physical damage, credit life or disability insurance policies
covering the related Financed Vehicles or Obligors including
rebates of insurance premiums relating to such Series 1998-1
Receivables; (g) all funds on deposit from time to time in the
Series 1998-1 Trust Accounts (including all investments and
proceeds thereof from time to time allocable to the Series 1998-1
Reserve Account, but excluding all investments and proceeds
thereof allocable to the other Series 1998-1 Trust Accounts or
allocable to the Master Collection Account); (h) all rights of
the Seller in and to the Purchase Agreement and the Purchase
Agreement Supplement or Purchase Agreement Supplements related to
Series 1998-1, including the delivery requirements,
representations and warranties and the cure and repurchase
obligations of HAFC under the Purchase Agreement and such
Purchase Agreement Supplement, or Purchase Agreement Supplements;
(i) all property (including the right to receive future Net
Liquidation Proceeds) that secures such Series 1998-1 Receivables
and that has been acquired by or on behalf of the Issuer pursuant
to liquidation of such Series 1998-1 Receivables; (j) all items
contained in the Receivable Files with respect such Series 1998-1
Receivables and any and all other documents that the Master
Servicer or HAFC keeps on file in accordance with its customary
procedures relating to such Series 1998-1 Receivables, or the
related Financed Vehicles or Obligors; (k) the Master Sale and
Servicing Agreement and the Transfer Agreement or Transfer
Agreements related to Series 1998-1 (including all rights of the
Seller under the Purchase Agreement and the related Purchase
Agreement Supplement or Purchase Agreement Supplements, assigned
to the Issuer pursuant to the Master Sale and Servicing Agreement
and the related Transfer Agreement or Transfer Agreements); (l)
one share of the Preferred Stock of the Seller; (m) all rights of
the Issuer in and to the Interest Rate Cap, including all
proceeds and the right to receive proceeds with respect thereto;
and (n) all present and future claims, demands, causes and
chooses in action in respect of any or all of the foregoing and
all payments on or under and all proceeds of every kind and
nature whatsoever in respect of any or all of the foregoing,
including all proceeds of the conversion, voluntary or
involuntary, into cash or other liquid property, all cash
proceeds, accounts, accounts receivable, notes, drafts,
acceptances, chattel paper, checks, deposit accounts, insurance
proceeds, condemnation awards, rights to payment of any and every
kind and other forms of obligations and receivables, instruments
and other property which at any time constitute all or part of or
are included in the proceeds of any of the foregoing
(collectively, the "Series 1998-1 Trust Estate").
The foregoing Grant is made in trust to the Indenture
Trustee for the benefit of the Holders of the Notes. The
Indenture Trustee hereby acknowledges such Grant, accepts the
trusts under the Indenture and this Series 1998-1 Supplement in
accordance with the provisions of the Indenture and this Series
1998-1 Supplement and agrees to perform its duties required in
the Indenture and in this Series 1998-1 Supplement in accordance
with the provisions hereof and of the Indenture to the best of
its ability to the end that the interests of such parties,
recognizing the priorities of their respective interests may be
adequately and effectively protected.
SECTION 1.03. Payments and Computations.
All amounts to be paid or deposited by any Person
hereunder shall be paid or deposited in accordance with the terms
hereof no later than 12:00 noon (New York City time) on the day
when due in immediately available funds.
SECTION 1.04. Denominations.
The Notes of each Class will be issued in denominations
of $100,000 and integral multiples of $1,000 in excess thereof,
except for one Note of each Class which may be issued in a
denomination other than an integral multiple of $1,000.
ARTICLE II
DEFINITIONS
SECTION 2.01. Definitions.
(a) Whenever used in this Series 1998-1
Supplement and when used in the Series 1998-1 Related Documents
with respect to the Series 1998-1 Notes or 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. Unless otherwise defined in this Series
1998-1 Supplement, terms defined in the Basic Documents are used
herein as therein defined. A term used herein preceded by the
designation "Series 1998-1" but not defined herein, shall have
the meaning specified for such term in the Basic Documents as
such term relates to Series 1998-1.
"Aggregate Note Principal Balance" means, as of any
date, the aggregate outstanding principal amount of all the Notes
on such date.
"Aggregate Optimal Note Principal Balance" means, with
respect to any Distribution Date, the excess, if any, of (x) the
Pool Balance as of the close of business on the last day of the
prior Collection Period over (y) the Targeted
Overcollateralization Amount for such Distribution Date.
"Available Funds" means, with respect to any Collection
Period, and the related Distribution Date, the sum of (i) the
Collected Funds for such Collection Period, (ii) investment
earnings realized on the Collection Account during the related
Collection Period, (iii) all Repurchase Amounts deposited in the
Collection Account during such Collection Period, (iv) any
proceeds of any liquidation, in whole or in part, of the assets
of the Trust and (v) the lesser of (a) the excess, if any, of the
aggregate amount distributable pursuant to Section 3.03(a)(i) -
(x) on such Distribution Date, over the aggregate of the amounts
specified in clauses (i), (ii) and (iii) hereof with respect to
such Collection Period and (b) the Reserve Account Balance.
"Base Servicing Fee" means, with respect to any
Collection Period, the fee payable to the Master Servicer for
services rendered during such Collection Period, which shall be
equal to one-twelfth of the Servicing Fee Rate multiplied by the
Aggregate Principal Balances of the Series 1998-1 Receivables, as
of the Accounting Date immediately preceding such Collection
Period.
"Basic Documents" means the Master Sale and Servicing
Agreement, the Indenture, the Trust Agreement, the Purchase
Agreement, and other documents and certificates delivered
therewith or pursuant thereto in connection with Series 1998-1.
"Book Entry Notes" means any beneficial interest in the
Notes, ownership and transfers of which shall be made through
book entries by a Clearing Agency as described in Section 2.10 of
the Indenture.
"Certificateholders" means the holders of Series 1998-1
Certificates.
"Certificateholders' Distributable Amount" means, with
respect to any Distribution Date, the amount payable pursuant to
Section 3.03 (a)(xiii) hereof.
"Class A Distributable Amount" means, with respect to
any Distribution Date and each class of Class A Notes, the sum of
(i) the Class A Interest Distributable Amount for such
Distribution Date and (ii) the Class A Principal Distributable
Amount for such Distribution Date.
"Class A Interest Carryover Shortfall" means, with
respect to any Distribution Date and each Class of Class A Notes,
the sum of: (i) excess of (a) the related Class A Interest
Distributable Amount for the preceding Distribution Date, over
(b) the amount actually paid as interest to the Class A
Noteholders on such preceding Distribution Date, plus (ii)
interest on such excess, to the extent permitted by law, at a
rate per annum equal to the related Note Rate with respect to the
Class A Notes from such preceding Distribution Date to but
excluding the current Distribution Date.
"Class A Interest Distributable Amount" means, with
respect to any Distribution Date and each class of Class A Notes,
an amount equal to the sum of: (i) the aggregate amount of
interest accrued on the Class A Notes at the related Note Rate
from and including the preceding Distribution Date (or, in the
case of the initial Distribution Date, from and including the
Closing Date) to but excluding the current Distribution Date plus
(ii) the related Class A Interest Carryover Shortfall for the
current Distribution Date.
"Class A Monthly Principal Distributable Amount" means
(i) with respect to any Distribution Date, prior to the
Distribution Date on which the principal balance of the Class A-1
Notes is reduced to zero, 100% of the Principal Distributable
Amount, (ii) with respect to the Distribution Date on which the
principal balance of the Class A-1 Notes is reduced to zero, the
sum of (x) the Class A-5 Monthly Principal Distributable Amount,
plus (y) 100% of the Principal Distributable Amount with respect
to that portion of the Principal Distributable Amount required to
reduce the principal balance of the Class A-1 Notes to zero, plus
(z) the excess of the amount described in clause (iii) of this
definition for such Distribution Date over the sum of the amounts
described in clauses (ii)(x) (taking into account payment of the
principal balance of the Class
A-1 Notes on such Distribution Date) and (ii)(y) for such
Distribution Date, (iii) with respect to any Distribution Date
after the Distribution Date on which the Principal Balance of the
Class A-1 Notes is reduced to zero until the Distribution Date on
which the Principal Balance of the Class A Notes is reduced to
zero, the greater of (1) the Class A-5 Monthly Principal
Distributable Amount and (2) the excess of (x) the aggregate
outstanding principal balance of the Class A Notes over (y) (A)
the product of 69.25% and the Pool Balance as of the end of the
related Collection Period minus (B) the Targeted
Overcollateralization Amount for such Distribution Date.
"Class A Noteholders" means the Holders of the Class A
Notes.
"Class A Principal Carryover Shortfall" means, with
respect to any Distribution Date after the Distribution Date on
which the principal balance of the Class A-1 Notes is reduced to
zero, the excess of the Class A Principal Distributable Amount
for the preceding Distribution Date over the amount that was
actually distributed in respect of principal of the Class A Notes
on such preceding Distribution Date.
"Class A Principal Distributable Amount" means, with
respect to any Distribution Date, the sum of: (i) the Class A
Monthly Principal Distributable Amount for such Distribution Date
and (ii) the Class A Principal Carryover Shortfall for such
Distribution Date; provided, however, that (x) the sum of clauses
(i) and (ii) shall not exceed the outstanding principal amount of
the Class A Notes, and (y) on the Class A-2 Scheduled Maturity
Date, the Class A Principal Distributable Amount will include the
amount, to the extent of the remaining Available Funds, necessary
(after giving effect to other amounts having a higher or pari
passu payment priority on such Distribution Date) to reduce the
outstanding principal amount of the Class A-2 Notes to zero, on
the Class A-3 Scheduled Maturity Date, the Class A Principal
Distributable Amount will include the amount, to the extent of
the remaining Available Funds, necessary (after giving effect to
other amounts having a higher or pari passu payment priority on
such Distribution Date) to reduce the outstanding principal
amount of the Class A-3 Notes to zero, on the Final Scheduled
Distribution Date, the Class A Principal Distributable Amount
will include the amount, to the extent of the remaining Available
Funds, necessary (after giving effect to other amounts having a
higher payment priority on such Distribution Date) to reduce the
outstanding principal amount of the Class A Notes to zero.
"Class A-1 Noteholders" means the Holders of the Class
A-1 Notes.
"Class A-1 Scheduled Maturity Date" means with respect
to the Class A-1 Notes, December 17, 1999.
"Class A-2 Noteholders" means the Holders of the Class
A-2 Notes.
"Class A-2 Scheduled Maturity Date" means with respect
to the Class A-2 Notes, November 19, 2001.
"Class A-3 Noteholders" means the Holders of the Class
A-3 Notes.
"Class A-3 Scheduled Maturity Date" means with respect
to the Class A-3 Notes, July 17, 2003.
"Class A-4 Noteholders" means the Holders of the Class
A-4 Notes.
"Class A-5 Monthly Principal Distributable Amount"
means, with respect to any Distribution Date, the product of (i)
a fraction, the numerator of which is the original principal
balance of the Class A-5 Notes and the denominator of which is
the Original Pool Balance, and (ii) the excess of the outstanding
Pool Balance as of the close of business on the last day of the
second preceding Collection Period over the outstanding Pool
Balance as of the close of business on the last day of the
related Collection Period.
"Class A-5 Noteholders" means the Holders of the Class
A-5 Notes.
"Class A-5 Principal Carryover Shortfall" means, with
respect to any Distribution Date, the excess of the Class A-5
Principal Distributable Amount for the preceding Distribution
Date over the amount that was actually distributed in respect of
principal of the Class A-5 Notes on such preceding Distribution
Date.
"Class A-5 Principal Distributable Amount" means, with
respect to any Distribution Date, the sum of: (i) the Class A-5
Monthly Principal Distributable Amount for such Distribution Date
and (ii) the Class A-5 Principal Carryover Shortfall for such
Distribution Date; provided however, that the sum of clauses (i)
and (ii) shall not exceed the outstanding principal amount of the
Class A-5 Notes, and on the Final Scheduled Distribution Date,
the Class A-5 Principal Distributable Amount will include the
amount, to the extent of the remaining Available Funds, necessary
(after giving effect to other amounts having a higher payment
priority on such Distribution Date) to reduce the outstanding
principal amount of the Class A-5 Notes to zero.
"Class B-1 Distributable Amount" means, with respect to
any Distribution Date, the sum of (i) the Class B-1 Interest
Distributable Amount for such Distribution Date and (ii) the
Class B-1 Principal Distributable Amount for such Distribution
Date.
"Class B-1 Interest Carryover Shortfall" means, with
respect to any Distribution Date, the sum of: (i) the excess of
(a) the Class B-1 Interest Distributable Amount for the preceding
Distribution Date, over (b) the amount actually paid as interest
to the Class B-1 Noteholders on such preceding Distribution Date,
plus (ii) interest on such excess, to the extent permitted by
law, at a rate per annum equal to the Note Rate with respect to
the Class B-1 Notes from such preceding Distribution Date to but
excluding the current Distribution Date.
"Class B-1 Interest Distributable Amount" means, with
respect to any Distribution Date, an amount equal to the sum of:
(i) the aggregate amount of interest accrued on the Class B-1
Notes at the Note Rate with respect to the Class B-1 Notes from
and including the preceding Distribution Date (or, in the case of
the initial Distribution Date, from and including the Closing
Date) to but excluding the current Distribution Date plus (ii)
the Class B-1 Interest Carryover Shortfall for the current
Distribution Date.
"Class B-1 Monthly Principal Distributable Amount"
means, with respect to each Distribution Date on and after the
Distribution Date on which the principal balance of the Class A-1
Notes is reduced to zero, until the Distribution Date on which
the outstanding principal amount of the Class B-1 Notes has been
reduced to zero, an amount equal to the excess of: (i) the sum
of (x) the outstanding principal balance of the Class A Notes on
such Distribution Date (after giving effect to distribution of
the Class A Principal Distributable Amount for such Distribution
Date) plus (y) the outstanding principal balance of the Class B-1
Notes prior to such Distribution Date over (ii) (A) the product
of 81.25% and the outstanding Pool Balance as of the end of the
related Collection Period minus (B) the Targeted
Overcollateralization Amount.
"Class B-1 Noteholders" means the Holders of the Class
B-1 Notes."
"Class B-1 Principal Carryover Shortfall" means, with
respect to any Distribution Date, the excess of the Class B-1
Principal Distributable Amount for the preceding Distribution
Date over the amount that was actually distributed in respect of
principal of the Class B-1 Notes on such Preceding Distribution
Date.
"Class B-1 Principal Distributable Amount" means, with
respect to any Distribution Date, the sum of: (i) the Class B-1
Monthly Principal Distributable Amount for such Distribution Date
and (ii) the Class B-1 Principal Carryover Shortfall for such
Distribution Date; provided, however, that the sum of clauses (i)
and (ii) shall not exceed the outstanding principal amount of the
Class B-1 Notes, and on the Final Scheduled Distribution Date,
the Class B-1 Principal Distributable Amount will include the
amount, to the extent of the remaining Available Funds, necessary
(after giving effect to other amounts having a higher payment
priority on such Distribution Date) to reduce the outstanding
principal amount of the Class B-1 Notes to zero.
"Class B-2 Distributable Amount" means, with respect to
any Distribution Date, the sum of (i) the Class B-2 Interest
Distributable Amount for such Distribution Date and (ii) the
Class B-2 Principal Distributable Amount for such Distribution
Date.
"Class B-2 Interest Carryover Shortfall" means, with
respect to any Distribution Date, the sum of: (i) the excess of
(a) the Class B-2 Interest Distributable Amount for the preceding
Distribution Date, over (b) the amount actually paid as interest
to the Class B-2 Noteholders on such preceding Distribution Date,
plus (ii) interest on such excess, to the extent permitted by
law, at a rate per annum equal to the Note Rate with respect to
the Class B-2 Notes from such preceding Distribution Date to but
excluding the current Distribution Date.
"Class B-2 Interest Distributable Amount" means, with
respect to any Distribution Date, an amount equal to the sum of:
(i) the aggregate amount of interest accrued on the Class B-2
Notes at the Note Rate with respect to the Class B-2 Notes from
and including the preceding Distribution Date (or, in the case of
the initial Distribution Date, from and including the Closing
Date) to but excluding the current Distribution Date plus (ii)
the Class B-2 Interest Carryover Shortfall for the current
Distribution Date.
"Class B-2 Monthly Principal Distributable Amount"
means, with respect to each Distribution Date on and after the
Distribution Date on which the principal balance of the Class A-1
Notes is reduced to zero, until the Distribution Date on which
the outstanding principal amount of the Class B-2 Notes has been
reduced to zero, an amount equal to the excess of: (i) the sum
of (x) the outstanding principal balance of the Class A Notes on
such Distribution Date (after giving effect to distribution of
the Class A Principal Distributable Amount for such Distribution
Date) plus (y) the outstanding principal balance of the Class B-1
Notes (after giving effect to distribution of the Class B-1
Principal Distributable Amount for such Distribution Date) and
(z) the outstanding principal balance of the Class B-2 Notes over
(ii) (A) the product of 92.65% and the outstanding Pool Balance
as of the end of the related Collection Period minus (B) the
Targeted Overcollateralization Amount.
"Class B-2 Noteholders" means the Holders of the Class
B-2 Notes.
"Class B-2 Principal Carryover Shortfall" means, with
respect to any Distribution Date, the excess of the Class B-2
Principal Distributable Amount for the preceding Distribution
Date over the amount that was actually distributed in respect of
principal of the Class B-2 Notes on such Preceding Distribution
Date.
"Class B-2 Principal Distributable Amount" means, with
respect to any Distribution Date, the sum of: (i) the Class B-2
Monthly Principal Distributable Amount for such Distribution Date
and (ii) the Class B-2 Principal Carryover Shortfall for such
Distribution Date; provided, however, that the sum of clauses (i)
and (ii) shall not exceed the outstanding principal amount of the
Class B-2 Notes, and on the Final Scheduled Distribution Date,
the Class B-2 Principal Distributable Amount will include the
amount, to the extent of the remaining Available Funds, necessary
(after giving effect to other amounts having a higher payment
priority on such Distribution Date) to reduce the outstanding
principal amount of the Class B-2 Notes to zero.
"Class C Distributable Amount" means, with respect to
any Distribution Date, the sum of (i) the Class C Interest
Distributable Amount and (ii) the Class C Principal Distributable
Amount.
"Class C Interest Carryover Shortfall" means, with
respect to any Distribution Date the sum of: (i) excess of (a)
the Class C Interest Distributable Amount for the preceding
Distribution Date, over (b) the amount actually paid as interest
to the Class C Noteholders on such preceding Distribution Date,
plus (ii) interest on such excess, to the extent permitted by
law, at a rate per annum equal to the Note Rate with respect to
the Class C Notes from such preceding Distribution Date to but
excluding the current Distribution Date.
"Class C Interest Distributable Amount" means, with
respect to any Distribution Date an amount equal to the sum of:
(i) the aggregate amount of interest accrued on the Class C Notes
at the Note Rate with respect to the Class C Notes from and
including the preceding Distribution Date (or, in the case of the
initial Distribution Date, from and including the Closing Date)
to but excluding the current Distribution Date plus (ii) the
Class C Interest Carryover Shortfall for the current Distribution
Date.
"Class C Monthly Principal Distributable Amount" means,
with respect to each Distribution Date on and after the
Distribution Date on which the outstanding principal amount of
the Class A-1 Notes is reduced to zero, until the Distribution
Date on which the outstanding principal amount of the Class C
Notes has been reduced to zero, an amount equal to the excess, if
any of: (i) the sum of (x) the outstanding principal balance of
the Class A Notes on such Distribution Date (after giving effect
to distribution of the Class A Principal Distributable Amount for
such Distribution Date), plus (y) the outstanding principal
balance of the Class B Notes on such Distribution Date (after
giving effect to distribution of the Class B-1 Principal
Distributable Amount and the Class B-2 Principal Distributable
Amount for such Distribution Date), plus (z) the outstanding
principal balance of the Class C Notes immediately prior to such
Distribution Date and (ii) (A) the product of 100% and the
outstanding Pool Balance as of the end of the related Collection
Period minus (B) the Targeted Overcollateralization Amount for
such Distribution Date.
"Class C Noteholders" means the Holders of the Class C
Notes.
"Class C Principal Carryover Shortfall" means, with
respect to any Distribution Date, the excess of the Class C
Principal Distributable Amount for the preceding Distribution
Date over the amount that was actually distributed in respect of
principal of the Class C Notes on such Preceding Distribution
Date.
"Class C Principal Distributable Amount" means, with
respect to any Distribution Date, the sum of: (i) the Class C
Monthly Principal Distributable Amount for such Distribution Date
and (ii) the Class C Principal Carryover Shortfall for such
Distribution Date; provided, however, that the sum of clauses (i)
and (ii) shall not exceed the outstanding principal amount of the
Class C Notes, and on the Final Scheduled Distribution Date, the
Class C Principal Distributable Amount will include the amount,
to the extent of the remaining Available Funds, necessary (after
giving effect to other amounts having a higher payment priority
on such Distribution Date) to reduce the outstanding principal
amount of the Class C Notes to zero.
"Collected Funds" means, with respect to any Collection
Period, the amount of funds in the Collection Account
representing collections on the Receivables during such
Collection Period, including all Net Liquidation Proceeds
collected during such Collection Period (but excluding any
Purchase Amounts) and funds deposited into the Collection Account
representing payments pursuant to the Interest Rate Cap.
"Cutoff Date" means October 31, 1998.
"Definitive Notes" means the Notes that have been
certificated and fully registered in accordance with Section 2.12
of the Indenture.
"Distribution Date" means, with respect to each
Collection Period, the seventeenth day of the following calendar
month, or if such day is not a Business Day, the immediately
following Business Day, commencing on December 17, 1998.
"Eligibility Criteria" means the criteria for
eligibility for Eligible Receivables set forth on Schedule I
hereto.
"Eligible Receivable" or "Series 1998-1 Eligible
Receivable" means a Series 1998-1 Receivable that satisfies the
Eligibility Criteria set forth in Schedule I hereto.
"Event of Default" shall have the meaning assigned to
such term in Section 4.01.
"Final Scheduled Distribution Date" means May 17, 2005.
"HAFC " means Household Automotive Finance Corporation.
"HFC" means Household Finance Corporation.
"Indenture" means the indenture dated as of November 1,
1998 among the Issuer, the Master Servicer and The Chase
Manhattan Bank, as indenture trustee, as supplemented by the
Series 1998-1 Supplement.
"Initial Reserve Account Deposit" means 1% of the Pool
Balance as of the Cutoff Date.
"Interest Period" means, with respect to any
Distribution Date, the period from and including the prior
Distribution Date (or, in the case of the first Distribution
Date, from and including the Series 1998-1 Closing Date) through
(and including) the day preceding such Distribution Date.
"Interest Rate Cap" means the agreement dated as of
December 3, 1998 between the Issuer and the Interest Rate Cap
Provider, substantially in the form set forth in Exhibit B
hereto, and any replacement Interest Rate Cap entered into by the
Issuer pursuant to Section 3.10.
"Interest Rate Cap Provider" means initially
Westdeutsche Landesbank Girozentrale, New York Branch, and any
successor thereto or replacement therefor under the Interest Rate
Cap.
"LIBOR" means, for any Interest Period, the rate for
United States dollar deposits for one month which appears on the
Telerate Screen Page 3750 as of 11:00 A.M., London time, on the
related LIBOR Determination Date, or if such rate does not appear
on such page, the Reference Bank Rate.
"LIBOR Business Day" means any day other than (i) a
Saturday or a Sunday or (ii) a day on which banking institutions
in the States of New York or Illinois or in the City of London,
England are required or authorized by law to be closed.
"LIBOR Determination Date" for each Interest Period
will be the second LIBOR Business Day prior to the first day of
such Interest Period.
"Master Servicer's Certificate" means, with respect to
Series 1998-1, a report in substantially the form of Exhibit A
hereto (appropriately completed), furnished by the Master
Servicer to the Indenture Trustee and the Owner Trustee pursuant
to the Master Sale and Servicing Agreement.
"Maximum Reserve Account Deposit Amount" for any
Distribution Date is equal to that portion of Collected Funds
representing interest collections on the Receivables (including
amounts representing Net Liquidation Proceeds for such Collection
Period) for the related Collection Period less the sum of: the
Base Servicing Fee paid to any Master Servicer other than HFC,
the fees due to the Interest Rate Cap Provider, the Indenture
Trustee and Owner Trustee, to the extent not paid by the
Servicer, plus, the aggregate of the Class A, Class B-1, Class B-
2 and Class C Interest Distributable Amounts for such
Distribution Date, plus the aggregate Principal Balances of all
Receivables which became Liquidated Receivables during the
related Collection Period, plus the aggregate amount of Cram Down
Losses during such Collection Period.
"Noteholders' Distributable Amount" means, with respect
to any Distribution Date, the sum of the Class A Distributable
Amount, the Class B-1 Distributable Amount, the Class B-2
Distributable Amount and the Class C Distributable Amount.
"Noteholders' Interest Distributable Amount" means with
respect to any Distribution Date, the sum of the Class A Interest
Distributable Amount, the Class B-1 Interest Distributable
Amount, the Class B-2 Interest Distributable Amount, and the
Class C Interest Distributable Amount.
"Note Rate" means the per annum rate of interest due
with respect to each Class of Notes as set forth below for the
respective Class of Note:
Class A-1 Notes: 5.330%
Class A-2 Notes: 5.514%
Class A-3 Notes: LIBOR plus 0.45%
Class A-4 Notes: LIBOR plus 0.50%
Class A-5 Notes: 5.650%
Class B-1 Notes: 6.300%
Class B-2 Notes: 6.400%
Class C Notes: 6.500%
Interest (including interest calculated with respect to
Interest Carryover Shortfalls) on the Class A-1, Class A-2, Class
A-3 and Class A-4 Notes will be calculated on the basis of a 360-
day year and the actual number of days elapsed in an applicable
Interest Period. Interest (including interest calculated with
respect to Interest Carryover Shortfalls) on the Class A-5, Class
B-1, Class B-2 and Class C Notes will be calculated on the basis
of a 360-day year consisting of twelve 30-day months.
"Notes" means the Class A Notes, the Class B-1 Notes,
the Class B-2 and the Class C Notes, collectively.
"Notional Amount" means with respect to any date of
determination, the sum of the aggregate principal amount of the
Class A-3 Notes plus the aggregate outstanding principal amount
of the Class A-4 Notes on such date.
"Original Pool Balance" means the aggregate of the
Principal Balance of the Receivables as of the Cutoff Date.
"Owner Trust Estate" has the meaning assigned to such
term in the Trust Agreement.
"Owner Trustee" means Wilmington Trust Company, not in
its individual capacity.
"Pledge" means the Grant by the Issuer hereunder to the
Indenture Trustee for the benefit of the Holders of Notes in
accordance with Section 1.02 hereof in and to specified Pledged
Property related thereto.
"Pledged Property" means, with respect to the Series
1998-1 Trust Estate, each Series 1998-1 Receivable, together with
all associated property and rights with respect thereto described
in the definition of Series 1998-1 Trust Estate.
"Pool Balance" means, as of any date of determination,
the aggregate of the outstanding Principal Balances of the
Receivables, unless otherwise specified, as of the close of
business on the preceding Business Day.
"Principal Amount Available" means, with respect to any
Distribution Date, the amount remaining in the Note Account on
such Distribution Date after the payment of the amounts required
to be paid pursuant to clause (i) through (vi) of Section 3.03(a)
on such Distribution Date minus the Reserve Account Deposit
Amount for such Distribution Date.
"Principal Distributable Amount" means, with respect to
any Distribution Date, the lesser of (A) the Principal Amount
Available for such Distribution Date and (B) the greater of (x)
the excess, if any, of (i) the Aggregate Note Principal Balance
immediately prior to such Distribution Date over (ii) the
Aggregate Optimal Note Balance for such Distribution Date and (y)
the Class A-5 Principal Distributable Amount.
"Rating Agencies" means Standard & Poor's and Xxxxx'x.
If such organization or a successor does not maintain a rating on
the Notes, "Rating Agency" shall be a nationally recognized
statistical rating organization or other comparable Person
designated by the Seller, notice of which designation shall be
given to the Indenture Trustee, the Owner Trustee and the Master
Servicer.
"Redemption Price" has the meaning specified in Section
5.01 hereof.
"Reference Bank Rate" will be determined on the basis
of the rates at which deposits in U.S. Dollars are offered by the
reference banks (which shall be three major banks that are
engaged in transactions in the London interbank market, selected
by the Indenture Trustee after consultation with the Master
Servicer) as of 11:00 A.M., London time, such LIBOR Determination
Date to prime banks in the London interbank market for a period
of one month in amounts approximately equal to the Notional
Amount as of the immediately succeeding Distribution Date. The
Indenture Trustee 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 as requested, the
rate will be the arithmetic mean of the quotation. If on such
date fewer than two quotations are provided as requested, the
rate will be the arithmetic mean of the rates quoted by one or
more major banks in New York City, selected by the Indenture
Trustee after consultation with the Master Servicer, as of 11:00
A.M., New York City time, on such date for loans in U.S. Dollars
to leading European banks for a period of one month in amounts
approximately equal to the Notional Amount as of the immediately
succeeding Distribution Date. If no such quotations can be
obtained, the rate will be LIBOR for the prior Distribution Date.
"Reserve Account" means the Series 1998-1 Reserve
Account which shall be an Eligible Deposit Account created
pursuant to Section 3.01 hereof, which initially shall be account
no. 9102758076 for further credit, account no. C70647C, reference
Household Automobile Revolving Trust I, Series 1998-1, at the
Indenture Trustee, ABA No. 000000000.
"Reserve Account Balance" means, with respect to a
Distribution Date, the amount on deposit in the Reserve Account
as of the opening of business on such Distribution Date.
"Reserve Account Deposit Amount" means, with respect to
any Distribution Date, the lesser of: (x) the Maximum Reserve
Account Deposit Amount for such Distribution Date and (y) the
Reserve Account Shortfall Amount for such Distribution Date.
"Reserve Account Shortfall Amount" means, with respect
to any Distribution Date, the excess of: (x) the Targeted
Reserve Account Balance for such Distribution Date over (y) the
Reserve Account Balance for such Distribution Date.
"Schedule of Receivables" means the schedule of all
retail installment sales contracts and promissory notes held as
part of the Series 1998-1 Trust Estate attached hereto as
Schedule II.
"Series 1998-1 Certificate" means the Series Trust
Certificate (as defined in the Trust Agreement) designated as the
"Series 1998-1 Certificate".
"Series 1998-1 Closing Date" means December 3, 1998.
"Series 1998-1 Collected Funds" means, with respect to
a date of determination, the amount of Collected Funds with
respect to the Collection Period immediately preceding such date
of determination, including all Net Liquidation Proceeds
collected during the related Collection Period (but excluding any
Purchase Amounts) and any funds deposited therein by the Interest
Rate Cap Provider pursuant to the Interest Rate Cap.
"Series 1998-1 Collection Account" means the Eligible
Deposit Account created pursuant to Section 3.01 hereof which
initially shall be account no. 9102758076, for further credit,
account no. C70647A, reference Household Automobile Revolving
Trust I, Series 1998-1, at the Indenture Trustee, ABA No.
000000000.
"Series 1998-1 Eligible Investments" means, with
respect to funds in the Series 1998-1 Collection Account and
Reserve Account, "Eligible Investments" as defined in the Master
Sale and Servicing Agreement, except that (i) all references in
such definition to "rating satisfactory to the Rating Agency" or
words of similar import shall mean ratings of not less than "A-
1+" by Standard & Poor's and "P-1" by Xxxxx'x (whichever is
applicable)(except if such investment is in commercial paper
issued by HFC, the required rating shall mean not less than "X-
0"), and (ii) all such investments shall have maturities at the
time of the acquisition thereof occurring no later than the
Business Day immediately preceding the Distribution Date
following such date of acquisition.
"Series 1998-1 Note Account" means the Eligible Deposit
Account created pursuant to Section 3.01 hereof, which initially
shall be account no. 9102758076, for further credit, account no.
C70647B, reference Household Automobile Revolving Trust I, Series
1998-1 at the Indenture Trustee, ABA No. 000000000.
"Series 1998-1 Receivables" means each Receivable
listed on the Schedule of Receivables, which (a) has not been
released from the Series 1998-1 Trust Estate as provided herein
or in the Indenture and (b) is not a Liquidated Receivable.
"Series 1998-1 Related Documents" means the Basic
Documents, this Series 1998-1 Supplement, each Purchase Agreement
Supplement related to the Series 1998-1 Trust Estate, each
Transfer Agreement related to the Series 1998-1 Trust Estate, the
Series 1998-1 Notes, the Series 1998-1 Certificates, the Interest
Rate Cap and other documents and certificates delivered in
connection therewith.
"Series 1998-1 Reserve Account" means the Reserve
Account.
"Series 1998-1 Secured Obligations" means all amounts
and obligations which the Issuer may at any time owe to the
Holders of the Series 1998-1 Notes.
"Series 1998-1 Securities" means the Series 1998-1
Notes and the Series 1998-1 Certificates.
"Series 1998-1 Supplement" means this Series 1998-1
Supplement to the Indenture and the Trust Agreement.
"Series 1998-1 Support" means, with respect to the
Series 1998-1 Notes, the Series 1998-1 Certificates.
"Series 1998-1 Trust Accounts" means the Series 1998-1
Collection Account, the Series 1998-1 Reserve Account, and the
Series 1998-1 Note Account.
"Series 1998-1 Trust Estate" means the property Granted
to the Indenture Trustee pursuant to Section 1.02.
"Servicing Fee Rate" means 3% per annum.
"Supplemental Servicing Fee" means, with respect to any
Collection Period, (i) all administrative fees, expenses and
charges actually paid by or on behalf of Obligors, including late
fees, prepayment fees and liquidation fees collected on the
Series 1998-1 Receivables during such Collection Period, and (ii)
the net realized investment earnings of funds on deposit in the
Series 1998-1 Collection Account or on deposit in the Master
Collection Account and allocable to the investment of Available
Funds with respect to Series 1998-1.
"Targeted Credit Enhancement Amount" means, with
respect to any Distribution Date, 13.75% of the Pool Balance as
of the of last day of the related Collection Period.
"Targeted Overcollateralization Amount" means, with
respect to any Distribution Date, the excess (but not less than
zero), if any, of: (i) the Targeted Credit Enhancement Amount
over (ii) the Targeted Reserve Account Balance.
"Targeted Reserve Account Balance" means, with respect
to any Distribution Date, the lesser of: (i) the greater of (a)
3.0% of the outstanding Pool Balance as of the end of the related
Collection Period, and (b) 2.0% of the Original Pool Balance, and
(ii) the Aggregate Note Principal Balance.
"Telerate Screen Page 3750" means the display
designated as page 3750 on the Telerate Service (or such other
page as may replace page 3750 on that service for the purpose of
displaying London interbank offered rates of major banks), or if
such service is no longer offered, such other service for
displaying LIBOR or comparable rates as may be selected by the
Indenture Trustee after consultation with the Master Servicer).
"Trust" means the Issuer.
"Trust Agreement" means the Trust Agreement dated as of
March 1, 1998 between the Seller and the Owner Trustee, as
supplemented by the Series 1998-1 Supplement.
ARTICLE III
DISTRIBUTIONS AND STATEMENTS TO
SERIES 1998-1 NOTEHOLDERS; SERIES SPECIFIC COVENANTS
SECTION 3.01. Series 1998-1 Trust Accounts.
(a) The Indenture Trustee, for the benefit of the
Holders of the Series 1998-1 Securities, shall establish and
maintain an account (the "Series 1998-1 Collection Account") as a
segregated trust account in the Indenture Trustee's corporate
trust department, identified as the "Collection Account for
Household Automobile Revolving Trust I, in trust for the
registered Holders of the Series 1998-1 Securities." The
Indenture Trustee shall make or permit withdrawals from the
Series 1998-1 Collection Account only as provided in this Series
1998-1 Supplement. Notwithstanding anything in the Series 1998-1
Related Documents to the contrary, at least one Business Day
prior to each Distribution Date the Master Servicer and the
Issuer shall deposit Collected Funds (which shall be immediately
available) directly into the Series 1998-1 Collection Account
without any prior deposit into the Master Collection Account.
(b) The Indenture Trustee for the benefit of the
Holders of the Series 1998-1 Notes shall establish and maintain
an account (the "Series 1998-1 Reserve Account") as a segregated
trust account in the Indenture Trustee's corporate trust
department, identified as the "Series 1998-1 Reserve Account for
Household Automobile Revolving Trust I, in trust for the
registered Holders of the Series 1998-1 Notes." The Indenture
Trustee shall make or permit withdrawals from the Reserve Account
only as provided in this Series 1998-1 Supplement. On the Series
1998-1 Closing Date, the Series 1998-1 Reserve Account will be
funded with the Initial Reserve Account Deposit.
(c) The Indenture Trustee, for the benefit of the
Holders of Series 1998-1 Notes, shall establish and maintain an
account (the "Series 1998-1 Note Account") as a segregated trust
account in the Indenture Trustee's corporate trust department,
identified as the "Note Account for Household Automobile
Revolving Trust I, in trust for the registered Holders of the
Series 1998-1 Notes." The Indenture Trustee shall make or permit
withdrawals from the Series 1998-1 Note Account only as provided
in this Series 1998-1 Supplement.
(d) On each Distribution Date, the Indenture
Trustee shall transfer Available Funds for such Distribution Date
from the Series 1998-1 Collection Account and from the Series
1998-1 Reserve Account, if applicable, to the Series 1998-1 Note
Account.
(e) In the event that any Series 1998-1 Trust
Account ceases to be an Eligible Deposit Account, the Indenture
Trustee, as applicable, within five Business Days, shall
establish a new Eligible Deposit Account. No withdrawals may be
made of funds in any Series 1998-1 Trust Account except as
provided in this Series 1998-1 Supplement. Except as
specifically provided in this Series 1998-1 Supplement, funds in
the Series 1998-1 Trust Accounts shall not be commingled with any
other moneys. All moneys deposited from time to time in each of
the Series 1998-1 Trust Accounts shall be invested and reinvested
by the Indenture Trustee in Series 1998-1 Eligible Investments
selected in writing by the Master Servicer (pursuant to standing
instructions or otherwise) which, absent any instruction shall be
the investments specified in clause (d) of the definition of
Eligible Investment. The provisions of Section 5.1 of the Master
Sale and Servicing Agreement shall apply to the investment of
funds in the Series 1998-1 Trust Accounts to the same extent as
they apply to the Master Collection Account.
SECTION 3.02. Reserve Account.
On the earlier of (x) the maturity date of the Series
1998-1 Notes (whether by acceleration or otherwise) or (y) the
Final Scheduled Distribution Date, the amount on deposit in the
Reserve Account shall be withdrawn from the Reserve Account and
distributed in accordance with Section 4.04.
SECTION 3.03. Distributions.
(a) On each Distribution Date, the Indenture
Trustee shall (based solely on the information contained in the
Master Servicer's Certificate delivered with respect to such
Distribution Date) distribute the following amounts from
Available Funds with respect to such Distribution Date, and in
the following order of priority:
(i) to the Master Servicer, any Supplemental
Servicing Fees for the related Collection Period and,
if HFC is no longer acting as Master Servicer, the Base
Servicing Fee for the related Collection Period;
(ii) to the Interest Rate Cap Provider, the
fee for maintaining the Interest Rate Cap and to the
Indenture Trustee and the Owner Trustee, any accrued
and unpaid trustees' fees (in each case, to the extent
such fees have not been previously paid by the Master
Servicer);
(iii) to the Class A Noteholders, the Class A
Interest Distributable Amount;
(iv) to the Class B-1 Noteholders, the Class
B-1 Interest Distributable Amount;
(v) to the Class B-2 Noteholders, the Class
B-2 Interest Distributable Amount;
(vi) to the Class C Noteholders, the Class C
Interest Distributable Amount;
(vii) (i) to the Class A-5 Noteholders, the
Class A-5 Principal Distributable Amount and to the
Class A-1 Noteholders, 100% of the Class A Principal
Distributable Amount remaining after distribution of
the Class A-5 Principal Distributable Amount, until the
outstanding principal amount of the Class A-1 Notes has
been reduced to zero; and (ii) on and after the
Distribution Date on which the outstanding principal
amount of the Class A-1 Notes has been reduced to zero,
the Class A Principal Distributable Amount will be
allocated to payment of the Class A-5 Principal
Distributable Amount to the Class A-5 Noteholders and
the remaining portion of the Class A Principal
Distributable Amount will be allocated to payment of
the Class A-2, Class A-3 and Class A-4 Notes, in
"sequential pay" fashion, beginning with the Class A-2
Notes, in each case until the respective outstanding
principal amount of the Class A-2, Class A-3 and Class
A-4 Notes are paid in full;
(viii) to the Class B-1 Noteholders, the Class
B-1 Principal Distributable Amount;
(ix) to the Class B-2 Noteholders, the Class
B-2 Principal Distributable Amount;
(x) to the Class C Noteholders, the Class C
Principal Distributable Amount;
(xi) to the Reserve Account, the Reserve
Account Deposit Amount, if any, required to increase
the amount therein to the Targeted Reserve Account
Balance;
(xii) if HFC is acting as the Master Servicer,
the Base Servicing Fee for the related Collection
period; and
(xiii) to the holders of the Series 1998-1
Certificates, any remaining Available Funds.
In the event that on any Distribution Date after the
Distribution Date on which the principal balance of the Class A-1
Notes is reduced to zero, Available Funds, available to be
distributed in accordance with clause (vii) of Section 3.03(a),
are less than the Class A Monthly Principal Distributable Amount
for such Distribution Date, such Available Funds shall be
allocated pro rata (based on the ratio between the respective
amounts of the Class A-5 Principal Distributable Amount for such
Distribution Date and the amount specified in clause (iii)(2) of
the definition of Class A Monthly Principal Distributable Amount
for such Distribution Date).
(b) If on a Distribution Date, the Master
Servicer's Certificate delivered with respect to such
Distribution Date indicates that the amount specified in clauses
(i) through (iv) of the definition of Available Funds with
respect to such Distribution Date is less than the sum of the
amounts required to be distributed pursuant to clauses (i)
through (x) of paragraph (a) above on such Distribution Date, the
Indenture Trustee shall withdraw from the Series 1998-1 Reserve
Account an amount up to the amount of such deficiency and
distribute such amount as a component of Available Funds.
(c) Each Series 1998-1 Certificateholder by its
acceptance of its Certificate will be deemed to have consented to
the provisions of paragraph (a) above relating to the priority of
distributions, and will be further deemed to have acknowledged
that no property rights in any amount or the proceeds of any such
amount shall vest in such Certificateholder until such amounts
have been distributed to such Certificateholder pursuant to such
provisions; provided, that the foregoing shall not restrict the
right of any Certificateholder, upon compliance with the
provisions hereof, from seeking to compel the performance of the
provisions hereof by the parties hereto. Each Series 1998-1
Certificateholder, by acceptance of its Certificate, further
specifically acknowledges that it has no right to or interest in
any monies at any time held in the Series 1998-1 Reserve Account,
such monies being held in trust for the benefit of the Series
1998-1 Noteholders.
(d) In the event that the Series 1998-1
Collection Account is maintained with an institution other than
the Indenture Trustee, the Master Servicer shall instruct and
cause such institution to transfer the amounts to be withdrawn
therefrom in accordance with Section 3.03(a) or 3.03(b) to the
Indenture Trustee for distribution pursuant to Section 3.03(a) or
Section 3.03(b), as the case may be, one Business Day Prior to
the related Distribution Date.
(e) Unless Definitive Notes are issued pursuant
to Section 2.12 of the Indenture, with respect to Notes
registered on the related Record Date in the name of a nominee of
the Clearing Agency, payment will be made by wire transfer to an
account designated by such nominee, without presentation or
surrender of the Series 1998-1 Notes or the making of any
notation thereon.
(f) If not theretofore paid in full, all amounts
outstanding with respect to the Class A-1 Notes shall be due and
payable on the Class A-1 Scheduled Maturity Date, if not
theretofore paid in full, all amounts outstanding with respect to
the Class A-2 Notes shall be due and payable on the Class A-2
Scheduled Maturity Date, if not theretofore paid in full, all
amounts outstanding with respect to the Class A-3 Notes shall be
due and payable on the Class A-3 Scheduled Maturity Date, and if
not theretofore paid in full, all amounts outstanding with
respect to the Class A-4 Notes, the Class A-5 Notes, the Class B-
1 Notes, the Class B-2 Notes and the Class C Notes shall be due
and payable on the Final Scheduled Distribution Date.
SECTION 3.04. Statements to Noteholders.
On or prior to each Determination Date, the Master
Servicer shall provide to the Indenture Trustee (with a copy to
the Rating Agencies) for the Indenture Trustee to forward to each
Noteholder of record, and to each Certificateholder of record, a
statement setting forth at least the following information as to
the Notes to the extent applicable:
(i) the amount of such distribution
allocable to principal of each Class of Notes;
(ii) the amount of such distribution
allocable to interest on or with respect to each Class
of Notes;
(iii) the aggregate outstanding principal
amount of each Class of the Notes after giving effect
to payments allocated to principal reported under (i)
above;
(iv) the Class A Interest Carryover
Shortfall, the Class B-1 Interest Carryover Shortfall,
the Class B-2 Interest Carryover Shortfall, the Class C
Interest Carryover Shortfall, the Class A Principal
Carryover Shortfall, the Class A-5 Principal Carryover
Shortfall, the Class B-1 Principal Carryover Shortfall,
the Class B-2 Principal Carryover Shortfall, the Class
C Principal Carryover Shortfall, if any, and the change
in such amounts from the preceding statement.
(v) the amount of the Base Servicing Fee
paid to the Master Servicer with respect to such
Collection Period;
(vi) the Notional Amount of the Interest Rate
Cap, the amount of the distribution attributable to a
payment under the Interest Rate Cap and the current
LIBOR; and
(vii) the Targeted Reserve Account Balance and
the amount on deposit in the Reserve Account at the end
of such Distribution Date.
Each amount set forth pursuant to paragraph (i)through (iv) above
shall be expressed as a dollar amount per $1,000 of the initial
principal balance of the applicable Class of Notes.
SECTION 3.05. Reporting Requirements.
(a) The Master Servicer's Certificate shall be in
the form attached as Exhibit A hereto.
(b) By January 31 of each calendar year,
commencing January 31, 1999, the Master Servicer on behalf of the
Issuer shall prepare and distribute to the Indenture Trustee a
statement containing such information as is required to be
provided by an issuer of indebtedness under the Code and such
other customary information as is necessary to enable the
Noteholders to prepare their tax returns.
(c) If an Event of Default occurs and is
continuing and if it is either known by, or written notice of the
existence thereof has been delivered to, a Responsible Officer of
the Indenture Trustee, the Indenture Trustee shall mail to each
Noteholder notice of the Default within 30 days after such
knowledge or notice occurs.
SECTION 3.06. Compliance With Withholding
Requirements.
Notwithstanding any other provisions of this Series
1998-1 Supplement or the Indenture to the contrary, the Indenture
Trustee, shall comply with all Federal withholding requirements
respecting payments (or advances thereof) to the Noteholders as
may be applicable to instruments constituting indebtedness for
Federal income tax purposes. Any amounts so withheld shall be
treated as having been paid to the applicable Noteholders for all
purposes of the Indenture. In no event shall the consent of any
Noteholder be required for any such withholding.
SECTION 3.07. Special Covenants and
Acknowledgements.
With respect to the Series 1998-1 Notes, the Issuer
hereby represents and warrants, as of the Series 1998-1 Closing
Date:
(i) Valid Pledge. It is the intention of
the Issuer that each pledge herein contemplated
constitutes the Grant of a perfected, first priority
security interest in all Pledged Property to the
Indenture Trustee for the benefit of the Series 1998-1
Noteholders.
(ii) Governmental Authorization. Other than
the filing of the financing statements required
hereunder, no authorization or approval or other action
by, and no notice to or filing with, any governmental
authority or regulatory body is required for the due
execution, delivery and performance by the Issuer of
this Series 1998-1 Supplement, the Indenture, and each
Series 1998-1 Related Document to which it is a party.
SECTION 3.08. Tax Characterization.
It is the intent of the parties hereto that, for all
Federal, state, local and foreign taxes, the Series 1998-1 Notes
will be evidence of indebtedness. To the extent permitted by
law, the parties hereto, and each owner of a beneficial interest
in the Series 1998-1 Notes by acceptance of such interest, agrees
to treat the Series 1998-1 Notes for purposes of all Federal,
state, local and foreign taxes as indebtedness secured by the
Series 1998-1 Trust Estate.
SECTION 3.09. Determination of LIBOR.
The Indenture Trustee will determine LIBOR for purposes
of calculating the Interest Rate for Class A-3, and the Class A-4
Notes for each Interest Period.
SECTION 3.10. Interest Rate Cap.
(a) The Issuer shall enter into the Interest Rate
Cap with the Interest Rate Cap Provider on the Closing Date.
Notwithstanding any other provision of the Basic Documents and
the Series 1998-1 Related Documents, none of the execution,
delivery and performance by the Issuer of the Interest Rate Cap
shall conflict with the Basic Documents nor the Series 1998-1
Related Documents.
(b) In the event that the short-term debt rating
of the Interest Rate Cap Provider is withdrawn or reduced below A-
1+ by Standard & Poor's or the long-term debt rating is withdrawn
or reduced below Aa3 by Moody's (either, a "Downgrade"), the then
Interest Rate Cap Provider shall at the expense of the Interest
Rate Cap Provider and within thirty days of the Downgrade either
(i) obtain a substitute cap provider that (A) is reasonably
acceptable to the Issuer, (B) has a counterparty or long-term
unsecured debt or long-term certificate of deposit rating of at
least Aa3 (or its equivalent) by Moody's and a short-term debt
rating of A-1+ by Standard & Poor's, and c assumes the
outstanding Interest Rate Cap or replaces the outstanding
Interest Rate Cap with a cap on identical terms except that the
substitute cap provider shall be "Party A", or (ii) establish any
other arrangement reasonably satisfactory to the Trust and the
Rating Agencies, such that the then ratings of the respective
classes of Notes will not be withdrawn or reduced.
(c) On each Determination Date, the Master
Servicer will notify the Interest Rate Cap Provider of the
Notional Amount as of the next succeeding Distribution Date and
will set forth such Notional Amount in the Master Servicer's
Certificate.
ARTICLE IV
EVENTS OF DEFAULT; REMEDIES
SECTION 4.01. Events of Default.
"Event of Default", wherever used herein, means any one
of the following events (whatever the reason for such Event of
Default and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree
or order of any court or any order, rule or regulation of any
administrative or governmental body):
(i) default in the payment of any interest
on any Note when the same becomes due and payable, and
such default shall continue for a period of five
calendar days; or
(ii) default in the payment of the principal
of or any installment of the principal of any Note when
the same becomes due and payable, and such default
shall continue for a period of five calendar days; or
(iii) default in the observance or performance
of any covenant or agreement of the Issuer made in the
Series 1998-1 Related Documents (other than a covenant
or agreement, a default in the observance or
performance of which is elsewhere in this Section
specifically dealt with), or any representation or
warranty of the Issuer made in the Series 1998-1
Related Documents or in any certificate or other
writing delivered pursuant thereto or in connection
therewith proving to have been incorrect in any
material respect as of the time when the same shall
have been made and has a material adverse effect on the
Noteholders, and such default shall continue or not be
cured, or the circumstance or condition in respect of
which such misrepresentation or warranty was incorrect
shall not have been eliminated or otherwise cured, for
a period of 60 days after there shall have been given,
by registered or certified mail, to the Issuer by the
Indenture Trustee or to the Issuer and the Indenture
Trustee by the Holders of at least 25% of the
Outstanding Amount of the Notes, a written notice
specifying such default or incorrect representation or
warranty and requiring it to be remedied and stating
that such notice is a "Notice of Default" hereunder; or
(iv) the filing of a decree or order for
relief by a court having jurisdiction in the premises
in respect of the Issuer or any substantial part of the
Trust Assets in an involuntary case under any
applicable Federal or state bankruptcy, insolvency or
other similar law now or hereafter in effect, or
appointing a receiver, liquidator, assignee, custodian,
trustee, sequestrator or similar official of the Issuer
or for any substantial part of the Trust Property, or
ordering the winding-up or liquidation of the Issuer's
affairs, and such decree or order shall remain unstayed
and in effect for a period of 60 consecutive days; or
(v) the commencement by the Issuer of a
voluntary case under any applicable Federal or state
bankruptcy, insolvency or other similar law now or
hereafter in effect, or the consent by the Issuer to
the entry of an order for relief in an involuntary case
under any such law, or the consent by the Issuer to the
appointment or taking possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator
or similar official of the Issuer or for any
substantial part of the Trust Assets, or the making by
the Issuer of any general assignment for the benefit of
creditors, or the failure by the Issuer generally to
pay its debts as such debts become due, or the taking
of action by the Issuer in furtherance of any of the
foregoing.
SECTION 4.02. Rights Upon Event of Default.
(a) If an Event of Default shall have occurred
and be continuing, the Indenture Trustee in its discretion may,
or if so requested in writing by Holders holding Notes
representing at least 66 2/3% of the Outstanding Amount of the
Notes shall, declare by written notice to the Issuer that the
Notes have become due and payable, whereupon they shall become,
immediately due and payable at 100% of the outstanding principal
balance of the Notes, and accrued interest thereon (together with
interest accrued at the relevant Note Rate on such overdue
interest).
(b) At any time after such declaration of
acceleration of maturity has been made and before a judgment or
decree for payment of the money due has been obtained by the
Indenture Trustee, the Holders of Notes representing a majority
of the Outstanding Amount of the Notes, by written notice to the
Issuer and the Indenture Trustee, may rescind and annul such
declaration and its consequences if:
(i) the Issuer has paid or deposited with
the Indenture Trustee a sum sufficient to pay
(A) all payments of principal of and
interest on all Notes and all other amounts that would
then be due hereunder or upon such Notes if the Event
of Default giving rise to such acceleration had not
occurred; and
(B) all sums paid or advanced by the
Indenture Trustee hereunder and the reasonable
compensation, expenses, disbursements and advances of
the Indenture Trustee and its agents and counsel; and
(ii) all Events of Default, other than the
nonpayment of the principal of the Notes that has
become due solely by such acceleration, have been cured
or waived as provided in Section 5.9 of the Indenture.
No such rescission shall affect any subsequent default or impair
any right consequent thereto.
SECTION 4.03. Remedies.
If an Event of Default shall have occurred and be
continuing, the Indenture Trustee, subject to Section 11.17 of
the Indenture, may exercise any of the remedies specified in
Article V of the Indenture and, in addition, may do one or more
of the following.
(i) institute Proceedings in its own name
and as trustee of an express trust for the collection
of all amounts then payable on the Notes or under the
Indenture with respect thereto, whether by declaration
or otherwise, enforce any judgment obtained, and
collect from the Issuer and any other obligor upon such
Notes moneys adjudged due;
(ii) institute Proceedings from time to time
for the complete or partial foreclosure of the
Indenture with respect to the Trust Assets;
(iii) exercise any remedies of a secured party
under the UCC and take any other appropriate action to
protect and enforce the rights and remedies of the
Indenture Trustee and the Holders of the Notes; and
(iv) sell the Trust Assets or any portion
thereof or rights or interest therein, at one or more
public or private sales called and conducted in any
manner permitted by law; provided, however, that the
Indenture Trustee may not sell or otherwise liquidate
the Trust Assets following an Event of Default unless
(x) the proceeds of such sale or liquidation
distributable to the Noteholders are sufficient to
discharge in full all amounts then due and unpaid
upon such Notes for principal and interest, or
(y) the Indenture Trustee determines that
the Trust Assets will not continue to provide
sufficient funds for the payment of principal of
and interest on the Notes as they would have
become due if the Notes had not been declared due
and payable, and the Indenture Trustee obtains the
consent of Holders of 66-2/3% of the Outstanding
Amount of the Notes, or
(z) the Indenture Trustee has not determined
that the Trust Assets will not continue to provide
sufficient funds for the principal of and interest
on the Notes and the proceeds of such sale or
liquidation distributable to the Noteholders are
not sufficient to discharge in full all amounts
then due and unpaid upon such Notes for principal
and interest, and the Indenture Trustee obtains
the consent of Holders of 100% of the Outstanding
Amount of the Notes.
In determining such sufficiency or insufficiency with
respect to clause (y) and (z), the Indenture Trustee may, but
need not, obtain and rely upon an opinion of an Independent
investment banking or accounting firm of national reputation as
to the feasibility of such proposed action and as to the
sufficiency of the Trust Assets for such purpose.
SECTION 4.04. Priorities.
(a) On and after the maturity date of the Series
1998-1 Notes (by acceleration or otherwise) all Available Funds,
all amounts on deposit in the Reserve Account withdrawn in
accordance with Section 3.02 and any proceeds of the liquidation
of all or any portion of the Series 1998-1 Trust Estate pursuant
to Section 4.03(iv), shall be applied by the Indenture Trustee on
the related Distribution Date in the following order of priority:
FIRST: amounts due and owing and required to be
distributed to the Master Servicer, the Rate Cap
Provider, the Owner Trustee and the Indenture Trustee,
respectively, pursuant to priorities (i) and (ii) of
Section 3.03 hereof and not previously distributed, in
the order of such priorities and without preference or
priority of any kind within such priorities;
SECOND: to Class A Noteholders for amounts
due and unpaid on the Class A Notes for interest,
ratably, without preference or priority of any kind,
according to the amounts due and payable on the Class A
Notes for interest;
THIRD: to the Class A Noteholders for amounts
due and unpaid on the Class A Notes for principal,
ratably, without preference or priority of any kind,
according to the amounts due and payable on the Class A
Notes for principal.
FOURTH: to the Class B-1 Noteholders for
amounts due and unpaid on the Class B-1 Notes for
interest, ratably, without preference or priority of
any kind, according to the amounts due and payable on
the Class B-1 Notes for interest.
FIFTH: to the Class B-1 Noteholders for amounts
due and unpaid on the Class B-1 Notes for principal,
ratably, without preference or priority of any kind,
according to the amounts due and payable on the Class B-
1 Notes for principal.
SIXTH: to the Class B-2 Noteholders for amounts
due and unpaid on the Class B-2 Notes for interest,
ratably, without preference or priority of any kind,
according to the amounts due and payable on the Class B-
2 Notes for interest.
SEVENTH: to the Class B-2 Noteholders for
amounts due and unpaid on the Class B-2 Notes for
principal, ratably, without preference or priority of
any kind, according to the amounts due and payable on
the Class B-2 Notes for principal.
EIGHTH: to the Class C Noteholders for
amounts due and unpaid on the Class C Notes for
interest, ratably, without preference or priority of
any kind, according to the amounts due and payable on
the Class C Notes for interest.
NINTH: to the Class C Noteholders for amounts
due and unpaid on the Class C Notes for principal,
ratably, without preference or priority of any kind,
according to the amounts due and payable on the Class C
Notes for principal.
TENTH: to the Series 1998-1 Certificateholders,
any remaining Available Funds.
(b) The Indenture Trustee may fix a record date
and distribution date for any payment to Series 1998-1
Noteholders pursuant to this Section 4.04. At least 15 days
before such record date, the Indenture Trustee shall mail to the
Noteholders a notice that states the record date, the
Distribution Date and the amount to be paid.
ARTICLE V
PREPAYMENT AND REDEMPTION
SECTION 5.01. Optional "Clean-Up" Redemption.
On any Distribution Date occurring on or after the date
upon which the aggregate outstanding principal balance of the
Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the
Class A-4 Notes, the Class A-5 Notes and the Class B-1 Notes
shall have been reduced to an amount which is less than or equal
to 10% of the aggregate outstanding principal balance of such
Classes of Notes as of the Series 1998-1 Closing Date, the Master
Servicer and the Seller on behalf of the Issuer, shall each have
the option to redeem the outstanding Series 1998-1 Notes at a
redemption price (the "Redemption Price") which is not less than
the then Aggregate Note Principal Balance, plus all accrued and
unpaid interest thereon and all fees and other amounts owing to
the Indenture Trustee, the Interest Rate Cap Provider, the Owner
Trustee and the Master Servicer (if other than HFC) under the
Series 1998-1 Related Documents. The Master Servicer and the
Seller, on behalf of the Issuer, shall give the Master Servicer
(if other than HFC), the Indenture Trustee, and the Owner Trustee
at least 10 days' irrevocable prior written notice of the date on
which the Master Servicer or the Seller, as applicable intends to
exercise such option to purchase. Not later than 12:00 P.M., New
York City time, on such Distribution Date, the Master Servicer or
the Seller, as applicable, shall deposit such amount in the
Collection Account in immediately available funds for
distribution pursuant to Section 3.03 against the presentment of
the Notes for cancellation. Such purchase option is subject to
payment in full of the Redemption Price.
ARTICLE VI
MISCELLANEOUS
SECTION 6.01. Ratification of Basic Documents.
Each of the Basic Documents, and to the extent
appropriate, as supplemented by this Series 1998-1 Supplement, is
in all respects ratified and confirmed and each of the Basic
Documents, as so supplemented by this Series 1998-1 Supplement
shall be read, taken and construed as one and the same
instrument.
SECTION 6.02. Counterparts.
This Series 1998-1 Supplement may be executed in one or
more counterparts, each of which so executed shall be deemed to
be an original, but all of which shall together constitute but
one and the same instrument.
SECTION 6.03. GOVERNING LAW.
THIS SERIES 1998-1 SUPPLEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 6.04. Amendments Without Consent of
Noteholders.
(a) Without the consent of the Noteholders but
with prior written notice to the Rating Agencies, as evidenced to
the Indenture Trustee and the Issuer, when authorized by an
Issuer Order, at any time and from time to time, the parties
hereto may enter into one or more amendments hereto, in form
satisfactory to the Indenture Trustee and the Owner Trustee, for
any of the following purposes:
(i) to correct or amplify the description of
any property at any time subject to the lien of the
Indenture as supplemented by this Series 1998-1
Supplement, or better to assure, convey and confirm
unto the Indenture Trustee, if any, any property
subject or required to be subjected to the lien of the
Indenture as supplemented by this Series 1998-1
Supplement, or to subject to the lien of the Indenture
as supplemented by this Series 1998-1 Supplement
additional property;
(ii) to evidence the succession, in
compliance with the applicable provisions hereof, of
another person to the Issuer, and the assumption by any
such successor of the covenants of the Issuer herein
and in the Notes contained;
(iii) to add to the covenants of the Issuer,
for the benefit of the Noteholders, or to surrender any
right or power herein conferred upon the Issuer;
(iv) to convey, transfer, assign, mortgage or
pledge any property to or with the Indenture Trustee,
if any;
(v) to cure any ambiguity, to correct or
supplement any provision herein which may be
inconsistent with any other provision herein or to make
any other provisions with respect to matters or
questions arising under the Indenture, the Trust
Agreement or in this Series 1998-1 Supplement; provided
that such action shall not adversely affect the
interests of the Series 1998-1 Noteholders;
(vi) to evidence and provide for the
acceptance of the appointment hereunder and under the
Indenture by a successor indenture trustee with respect
to the Notes and to add to or change any of the
provisions of the Indenture or of this Series 1998-1
Supplement as shall be necessary to facilitate the
administration of the trusts hereunder by more than one
indenture trustee, pursuant to the requirements of
Article VI of the Indenture; or
(vii) to modify, eliminate or add to the
provisions of the Indenture or of this Series 1998-1
Supplement to such extent as shall be necessary to
effect the qualification of the Indenture under the TIA
or under any similar federal statute hereafter enacted
and to add to the Indenture such other provisions as
may be expressly required by the TIA.
Each of the Indenture Trustee and the Owner Trustee is
hereby authorized to join in the execution of any amendment and
to make any further appropriate agreements and stipulations that
may be therein contained.
(b) Except as otherwise provided herein, the
Issuer and the Indenture Trustee, when authorized by an Issuer
Order, may, also without the consent of any of the Series 1998-1
Noteholders but with prior written notice to the Rating Agencies
by the Issuer, as evidenced to the Indenture Trustee, enter into
an amendment hereto for the purpose of adding any provisions to,
or changing in any manner or eliminating any of the provisions
of, the Indenture or of this Series 1998-1 Supplement of
modifying in any manner the rights of the Series 1998-1
Noteholders under the Indenture or under this Series 1998-1
Supplement; provided, however, that such action shall not, as
evidenced by an Opinion of Counsel, adversely affect in any
material respect the interests of any Series 1998-1 Noteholder.
SECTION 6.05. Amendments With Consent of the
Series 1998-1 Noteholders.
Except as otherwise provided herein, the Issuer and the
Indenture Trustee, when authorized by an Issuer Order provided by
the Master Servicer, also may, upon satisfaction of the Rating
Agency Condition and with the consent of the Holders of not less
than a majority of the Outstanding Amount of each Class of
affected Series 1998-1 Notes, by Act of such Holders delivered to
the Issuer and the Indenture Trustee, enter into an amendment
hereto for the purpose of adding any provisions to, or changing
in any manner or eliminating any of the provisions of, this
Series 1998-1 Supplement or of modifying in any manner the rights
of the Series 1998-1 Noteholders under the Indenture or under
this Series 1998-1 Supplement; provided, however, that no such
amendment shall, without the consent of the Holder of each
Outstanding Series 1998-1 Note affected thereby:
(i) change the date of payment of any
installment of principal of or interest on any Series
1998-1 Note, or reduce the principal amount thereof,
the interest rate thereon, change the provision of the
Indenture relating to the application of collections
on, or the proceeds of the sale of, all or any portion
of any Series 1998-1 Trust Estate to payment of
principal of or interest on the Series 1998-1 Notes, or
change any place of payment where, or the coin or
currency in which, any Series 1998-1 Note or the
interest thereon is payable;
(ii) impair the right to institute suit for
the enforcement of the provisions of the Indenture
requiring the application of funds available therefor,
as provided in Article V of the Indenture, to the
payment of any such amount due on the Series 1998-1
Notes on or after the respective due dates thereof;
(iii) reduce the percentage of the Outstanding
Amount of the Series 1998-1 Notes, the consent of the
Holders of which is required for this Series 1998-1
Supplement, or the consent of the Holders of which is
required for any waiver of compliance with certain
provisions of the Indenture or certain defaults
hereunder and their consequences provided for in the
Indenture;
(iv) modify or alter the provisions of the
proviso to the definition of the term "Outstanding";
(v) reduce the percentage of the Outstanding
Amount of the Notes required to direct the Trustee to
direct the Issuer to sell or liquidate the Series 1998-
1 Trust Estate pursuant to Section 5.4 of the
Indenture;
(vi) modify any provision of this Section
except to increase any percentage specified herein or
to provide that certain additional provisions of the
Indenture or the Basic Documents cannot be modified or
waived without the consent of the Holder of each
Outstanding Series 1998-1 Note affected thereby;
(vii) modify any of the provisions of the
Indenture in such manner as to affect the calculation
of the amount of any payment of interest or principal
due on any Series 1998-1 Note on any Distribution Date
(including the calculation of any of the individual
components of such calculation) or to affect the rights
of the Holders of Series 1998-1 Notes to the benefit of
any provisions for the mandatory redemption of the
Series 1998-1 Notes contained herein; or
(viii) permit the creation of any lien ranking
prior to or on a parity with the lien of the Indenture
with respect to any part of the a Series 1998-1 Trust
Estate or, except as otherwise permitted or
contemplated herein or the Series 1998-1 Related
Documents, terminate the lien of the Indenture on any
property at any time subject hereto or deprive the
Holder of any Series 1998-1 Note of the security
provided by the lien of the Indenture.
It shall not be necessary for any Act of Noteholders
under this Section to approve the particular form of an amendment
to this Series 1998-1 Supplement, but it shall be sufficient if
such Act shall approve the substance thereof.
Promptly after the execution by the Issuer and the
Indenture Trustee of an amendment to this Series 1998-1
Supplement, the Indenture Trustee shall mail to the Series 1998-1
Noteholders a notice setting forth in general terms the substance
hereof. Any failure of the Indenture Trustee to mail such
notice, or any defect therein, shall not, however, in any way
impair or affect the validity of any amendment to the Series 1998-
1 Supplement.
Prior to the execution of any amendment to this
Supplement, the Indenture Trustee shall be entitled to receive
and rely upon an Opinion of Counsel stating that the execution of
such amendment is authorized or permitted by this Supplement.
The Indenture Trustee may, but shall not be obligated to, enter
into any such amendment which affects the Indenture Trustee's own
rights, duties or immunities under this Supplement.
By its acceptance of its interest in the Series 1998-1
Notes, each owner of a beneficial interest in a Note shall be
deemed to have agreed that prior to the date which is one year
and one day after the termination of the Indenture, such Person
shall not acquiesce, petition or otherwise invoke or cause the
Issuer or the Seller to invoke the process of any governmental
authority for the purpose of commencing or sustaining a case
against the Seller or Issuer under any Federal or state
bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other
similar official of or for the Issuer or the Seller or any
substantial part of its property or ordering the winding-up or
liquidation of the affairs of the Issuer or the Seller.
SECTION 6.06. Authority to Register Notes and
File Reports.
The Issuer hereby authorizes the Seller to prepare and
execute on behalf of the Issuer, filings with the Securities and
Exchange Commission and any applicable state agencies of
documents required to register or qualify the Notes for public
distribution and to file on a periodic basis, such documents as
may be required by rules and regulations prescribed by such
authorities.
(a)
IN WITNESS WHEREOF, the parties hereto have caused this
Series 1998-1 Supplement to be fully executed by their respective
officers as of the day and year first above written.
HOUSEHOLD FINANCE CORPORATION,
as Master Servicer
By
Name:
Title:
HOUSEHOLD AUTOMOBILE REVOLVING
TRUST I,
as Issuer
By WILMINGTON TRUST COMPANY
Not in its individual capacity but
solely as Owner Trustee
By
Name:
Title:
HOUSEHOLD AUTO RECEIVABLES
CORPORATION,
By
Name:
Title:
THE CHASE MANHATTAN BANK,
as Indenture Trustee
By
Name:
Title:
WILMINGTON TRUST COMPANY,
as Owner Trustee
By
Name:
Title:
Schedule I
Eligibility Criteria
"Eligible Receivable" means a Series 1998-A Receivable with
respect to which each of the following is true as of the Cutoff
Date:
(a) that (i) was originated directly by HAFC (or any
predecessor or Affiliate of HAFC) with the consumer or was
originated by a Dealer for the retail sale of a Financed Vehicle
in the ordinary course of such Dealer's business and (A) in the
case of a Dealer originated receivable, such Dealer had all
necessary licenses and permits to originate receivables in the
state where such Dealer was located, and such receivable was
purchased by HAFC (or any predecessor or Affiliate of HAFC) from
such Dealer under an existing Dealer Agreement with HAFC (or any
predecessor or Affiliate of HAFC), and (B) in the case of a
Dealer originated receivable or a receivable originated by HAFC
(or any predecessor or Affiliate of HAFC) such receivable was
purchased (x) by HARC pursuant to the terms of the Master
Receivables Purchase Agreement, (y) by the Issuer pursuant to the
Master Sale and Servicing Agreement; and each Series 1998-1
Receivable was validly assigned (1) if Dealer originated, by such
Dealer to HAFC (or any predecessor or Affiliate of HAFC), (2) by
HAFC to HARC pursuant to the terms of the Master Receivables
Purchase Agreement, (3) by HARC to the Issuer pursuant to the
Master Sale and Servicing Agreement and (4) by the Issuer to the
Trustee pursuant to the Indenture, (ii) was fully and properly
executed by the parties thereto, (iii) contains customary and
enforceable provisions such as to render the rights and remedies
of the holder thereof adequate for realization against the
collateral security, and (iv) is fully amortizing and provides
for level monthly payments (provided that the payment in the
first Collection Period and the final Collection Period of the
term of the Series 1998-1 Receivable may be minimally different
from the level payment) which, if made when due, shall fully
amortize the Amount Financed over the original term;
(b) that if originated by a Dealer, was sold by the
Dealer to HAFC (or any predecessor or Affiliate of HAFC) without
any fraud or material misrepresentation on the part of such
Dealer in either case or on the part of the Obligor;
(c) with respect to which all requirements of
applicable federal, state and local laws, and regulations
thereunder (including, without limitation, usury laws, the
Federal Truth-in-Lending Act, the Equal Credit Opportunity Act,
the Fair Credit Billing Act, the Fair Credit Reporting Act, the
Fair Debt Collection Practices Act, the Federal Trade Commission
Act, the Xxxxxxxx-Xxxx Warranty Act, the Federal Reserve Board's
Regulations "B" and "Z", the Soldiers' and Sailors' Civil Relief
Act of 1940 and state adaptations of the National Consumer Act
and of the Uniform Consumer Credit Code and other consumer credit
laws and equal credit opportunity and disclosure laws) in respect
of all of the Series 1998-1 Receivables, each and every sale of
Financed Vehicles and the sale of any physical damage, credit
life and credit accident and health insurance and any extended
service contracts, have been complied with in all material
respects, and each Series 1998-1 Receivable and the sale of the
Financed Vehicle evidenced by each Series 1998-1 Receivable and
the sale of any physical damage, credit life and credit accident
and health insurance and any extended service contracts complied
at the time it was originated or made and now complies in all
material respects with all applicable legal requirements;
(d) that was originated in the United States of
America and, at the time of origination materially conformed to
all requirements of the Dealer Underwriting Guides and HAFC's
Funding Department Guidelines (or such similar guidelines of any
predecessor or affiliate of HAFC) applicable thereto;
(e) which represents the genuine, legal, valid and
binding payment obligation of the Obligor thereon, enforceable by
the holder thereof in accordance with its terms, except (A) as
enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting the enforcement of
creditors' rights generally and by equitable limitations on the
availability of specific remedies, regardless of whether such
enforceability is considered in a proceeding in equity or at law
and (B) as such Receivable may be modified by the application of
the Soldiers' and Sailors' Civil Relief Act of 1940, as amended;
and all parties thereto had full legal capacity to execute and
deliver such Receivable and all other documents related thereto
and to grant the security interest purported to be granted
thereby;
(f) which is not due from the United States of America
or any State or from any agency, department, subdivision or
instrumentality thereof;
(g) which, as of the relevant Pledge Date, (i) had an
original maturity of at least 18 months but not more than 72
months, (ii) had an original Amount Financed of at least $3,000
and not more than $27,000, (iii) had an Annual Percentage Rate of
at least 10.50% and not more than 27%, (iv) was not more than 30
days past due, (v) no funds have been advanced by the Issuer, the
Master Servicer, HAFC, any predecessor or Affiliate of HAFC, any
Dealer, or anyone acting on behalf of any of them in order to
cause such Series 1998-1 Receivable to qualify under subclause
(iv) of this clause (g) and (vi) had no provision thereof waived,
altered or modified in any respect since its origination;
(h) with respect to which the information pertaining
to such Series 1998-1 Receivable set forth in each Schedule of
Receivables is true and correct in all material respects;
(i) with respect to which, by the related Pledge Date
and on each relevant date thereafter, HAFC will have caused the
portions of HAFC's and the Master Servicer's servicing records
relating to such Series 1998-1 Receivable to be clearly and
unambiguously marked to show that such Series 1998-1 Receivable
has been transferred by HAFC to HARC in accordance with the terms
of the Master Receivables Purchase Agreement and by HARC to the
Issuer pursuant to the Master Sale and Servicing Agreement and by
the Issuer to the Trustee pursuant to the Indenture;
(j) with respect to which the computer tape or listing
to be made available by HAFC to HARC, the Master Servicer or the
Trustee from time to time was, or will be, complete and accurate
as of the related Pledge Date and includes a description of the
same Series 1998-1 Receivables that are, or will be, described in
the related Schedule of Receivables;
(k) which constitutes chattel paper within the meaning
of the UCC;
(l) of which there is only one original executed copy;
(m) with respect to which there exists a Receivable
File and such Receivable File contains, without limitation, (a) a
fully executed original of such Receivable, (b) a certificate of
insurance, application form for insurance signed by the Obligor,
or a signed representation letter from the relevant Obligor named
pursuant to which the Obligor has agreed to obtain physical
damage insurance for the related Financed Vehicle, c the original
Lien Certificate or application therefor showing HAFC (or any
predecessor or Affiliate of HAFC) or, pursuant to (bb) below, an
Unaffiliated Originator as first lienholder (as such Lien was
assigned by the Unaffiliated Originator to HAFC (if applicable)
and by HAFC (or any predecessor or Affiliate of HAFC) to HARC and
by HARC to the Issuer and by the Issuer to the Trustee) and (d)
an original credit application signed by the Obligor; and (x)
each of the documents relating thereto which is required to be
signed by the Obligor has been signed by the Obligor in the
appropriate spaces and (y) all blanks on any form relating
thereto by HAFC (or any predecessor or Affiliate of HAFC) to be
completed have been properly filled in and each form has
otherwise been correctly prepared; and, notwithstanding the
above, with respect to which, a copy of the complete Receivable
File for such Series 1998-1 Receivable, which fulfills the
documentation requirements of the Dealer Underwriting Guides as
in effect at the time of purchase is in the possession of the
Master Servicer or Sub-Servicer;
(n) which has not been satisfied, subordinated or
rescinded, and the Financed Vehicle securing such Series 1998-1
Receivable has not been released from the lien of such Series
1998-1 Receivable in whole or in part;
(o) which was not originated in, and is not subject to
the laws of, any jurisdiction the laws of which would make
unlawful, void or voidable the sale, transfer and assignment of
such Series 1998-1 Receivable and with respect to which neither
HAFC (nor any predecessor or affiliate of HAFC) nor the Issuer
has entered into any agreement with any account debtor that
prohibits, restricts or conditions the assignment of any portion
of such Series 1998-1 Receivable;
(p) which has not been sold, transferred, assigned or
pledged to any Person other than to (i) HAFC (or any predecessor
or Affiliate of HAFC) by a Dealer or Unaffiliated Originator,
(ii) HARC by HAFC pursuant to the terms of the Master Receivables
Purchase Agreement, (iii) the Issuer by HARC pursuant to the
terms of the Master Sale and Servicing Agreement and (iv) the
Trustee by the Issuer pursuant to the terms of the Indenture. No
Dealer or Unaffiliated Originator has a participation in, or
other right to receive, proceeds of any Series 1998-1 Receivable
and with respect to which neither HAFC (nor any predecessor or
Affiliate of HAFC), HARC nor the Issuer has taken any action to
convey any right to any Person that would result in such Person
having a right to payments received under the related Insurance
Policy or the related Dealer Agreement or Dealer Assignment or
Unaffiliated Originator Receivables Purchase Agreement or to
payments due under such Series 1998-1 Receivable;
(q) which creates or shall create a valid, binding and
enforceable first priority security interest in favor of HAFC in
the Financed Vehicle;
(r) which is secured by an enforceable and perfected
first priority security interest in the Financed Vehicle in favor
of HAFC as secured party, which security interest is prior to all
other Liens upon and security interests in such Financed Vehicle
which now exist or may hereafter arise or be created (except, as
to priority, for any Lien for taxes, labor or materials affecting
a Financed Vehicle); and, with respect to which there are no
Liens or claims for taxes, work, labor or materials affecting the
related Financed Vehicle which are or may be Liens prior or equal
to the lien of such Receivable;
(s) as to which all filings (including, without
limitation, UCC filings) required to be made by any Person and
actions required to be taken or performed by any Person in any
jurisdiction to give the Trustee a first priority perfected lien
on, or ownership interest in, the Series 1998-1 Receivables and
the proceeds thereof have been made, taken or performed;
(t) as to which HAFC (or any predecessor or Affiliate
of HAFC), HARC or the Issuer has not done anything to convey any
right to any Person that would result in such Person having a
right to payments due under such Series 1998-1 Receivable or
otherwise to impair the rights of the Trustee, the Noteholders or
the Certificateholders in such Series 1998-1 Receivable or the
proceeds thereof;
(u) which is not assumable by another Person in a
manner which would release the Obligor thereof from such
Obligor's obligations with respect to such Receivable;
(v) which is not subject to any right of rescission,
setoff, counterclaim or defense and no such right has been
asserted or threatened with respect thereto;
(w) as to which there has been no default, breach,
violation or event permitting acceleration under the terms of
such Series 1998-1 Receivable (other than payment delinquencies
of not more than 30 days) and no condition exists or event has
occurred and is continuing that with notice, the lapse of time or
both would constitute a default, breach, violation or event
permitting acceleration under the terms of such Series 1998-1
Receivable, and there has been no waiver of any of the foregoing,
and with respect to which the related Financed Vehicle had not
been repossessed;
(x) at the time of the origination of which, the
related Financed Vehicle was covered by a comprehensive and
collision insurance policy (i) in an amount at least equal to the
lesser of (a) its maximum insurable value and (b) the principal
amount due from the Obligor thereunder, (ii) naming HAFC and its
successors and assigns as loss payee and (iii) insuring against
loss and damage due to fire, theft, transportation, collision and
other risks generally covered by comprehensive and collision
coverage and with respect to which the Obligor is required to
maintain physical loss and damage insurance, naming HAFC and its
successors and assigns as additional insured parties, and such
Receivable permits the holder thereof to obtain physical loss and
damage insurance at the expense of the Obligor if the Obligor
fails to do so;
(y) with respect to which the following is true:
The Lien Certificate for the related Financed Vehicle
shows, or if a new or replacement Lien Certificate is being
applied for with respect to such Financed Vehicle the Lien
Certificate will be received within 180 days of the Series 1998-1
Closing Date and will show, HAFC (or any predecessor or Affiliate
of HAFC) named as the original secured party under such Series
1998-1 Receivable and, accordingly, HAFC will be the holder of a
first priority security interest in such Financed Vehicle. With
respect to each Series 1998-1 Receivable for which the Lien
Certificate has not yet been returned from the Registrar of
Titles, HAFC has received written evidence from the related
Dealer, Unaffiliated Originator or the Obligor that such Lien
Certificate showing HAFC as first lienholder has been applied
for. If the Series 1998-1 Receivable was originated in a state
in which a filing or recording is required of the secured party
to perfect a security interest in motor vehicles, such filings or
recordings have been duly made to show HAFC named as the original
secured party under the related Series 1998-1 Receivable;
(z) as to which no selection procedures adverse to the
Noteholders or the Certificateholder have been utilized in
selecting such Series 1998-1 Receivable from all other similar
Receivables originated by HAFC or any predecessor or Affiliate of
HAFC;
(aa) that, as of the last day of the immediately
preceding Collection Period, is not a Defaulted Receivable; and
(bb) that, if acquired from an Unaffiliated Originator,
will not result in more than 5% of the aggregate principal
balance of the Series 1998-1 Receivables having been originated
by Unaffiliated Originators.
Schedule II
Schedule of Receivables on File in Electronic Form
at Xxxxx Xxxxxxxxxx
Exhibit A
Form of Master Servicer's Certificate
Exhibit B
Form of Interest Rate Cap
(See Swap Documentation at Tab 9)
