Exhibit 99.2
EXECUTION COPY
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AMENDED AND RESTATED TRUST AGREEMENT
among
HOUSEHOLD FINANCE CORPORATION
HFC REVOLVING CORPORATION
as Depositor
THE BANK OF NEW YORK
as Owner Trustee
BANK ONE, NATIONAL ASSOCIATION
as Co-Trustee
and
THE BANK OF NEW YORK (DELAWARE)
as Delaware Trustee
Dated November 14, 2002
HOUSEHOLD HOME EQUITY LOAN TRUST 2002-4
Closed-End Home Equity Loan Asset Backed Notes, Series 2002-4
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Table of Contents
Page
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ARTICLE I
DEFINITIONS
Section 1.1 Capitalized Terms......................................................................1
Section 1.2 Other Definitional Provisions..........................................................5
ARTICLE II
ORGANIZATION
Section 2.1 Name...................................................................................6
Section 2.2 Offices................................................................................6
Section 2.3 Purposes and Powers....................................................................6
Section 2.4 Appointment of Owner Trustee...........................................................7
Section 2.4A Appointment of Delaware Trustee........................................................7
Section 2.4B Appointment of Co-Trustee..............................................................7
Section 2.5 Capital Contribution of Owner Trust Estate.............................................9
Section 2.6 Declaration of Trust...................................................................9
Section 2.7 Title to Trust Property................................................................9
Section 2.8 Situs of Trust........................................................................10
Section 2.9 Representations and Warranties of the Depositor.......................................10
Section 2.10 Federal Income Tax Allocations........................................................11
ARTICLE III
OWNERSHIP INTEREST AND TRANSFERS OF THE OWNERSHIP INTEREST
Section 3.1 Initial Ownership.....................................................................12
Section 3.2 The Ownership Interest................................................................12
Section 3.3 [Reserved]............................................................................12
Section 3.4 Registration of Transfer and Exchange of Ownership Interest...........................12
Section 3.5 [Reserved]............................................................................12
Section 3.6 Persons Deemed Transferors............................................................12
Section 3.7 [Reserved]............................................................................12
Section 3.8 Maintenance of Office or Agency.......................................................12
Section 3.9 Appointment of Paying Agent...........................................................13
Section 3.10 [Reserved]............................................................................13
Section 3.11 [Reserved]............................................................................13
Section 3.12 [Reserved]............................................................................13
Section 3.13 Restrictions on Transfers of Ownership Interest.......................................13
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ARTICLE IV
ACTIONS BY OWNER TRUSTEE
Section 4.1 Prior Notice to the Transferor, the Indenture Trustee and the Insurer with
Respect to Certain Matters............................................................16
Section 4.2 [Reserved]............................................................................18
Section 4.3 Action by Transferor with Respect to Bankruptcy.......................................18
Section 4.4 Restrictions on Transferor's Power....................................................18
Section 4.5 Insurer's Rights Regarding Actions, Proceedings or Investigations.....................18
ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
Section 5.1 Establishment of Trust Account........................................................20
Section 5.2 Application of Trust Funds............................................................20
Section 5.3 Method of Payment.....................................................................20
Section 5.4 [Reserved]............................................................................20
Section 5.5 Accounting and Reports to the Transferor, the Internal Revenue Service and
Others................................................................................20
Section 5.6 Signature on Returns..................................................................21
ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE
Section 6.1 General Authority.....................................................................22
Section 6.2 General Duties........................................................................22
Section 6.3 Action upon Instruction...............................................................22
Section 6.4 No Duties Except as Specified in this Agreement, the Transaction Documents or
in Instructions.......................................................................23
Section 6.5 No Action Except Under Specified Documents or Instructions............................23
Section 6.6 Restrictions..........................................................................24
ARTICLE VII
CONCERNING THE OWNER TRUSTEE AND THE DELAWARE TRUSTEE
Section 7.1 Acceptance of Trusts and Duties.......................................................25
Section 7.2 Furnishing of Documents...............................................................27
Section 7.3 Representations and Warranties........................................................27
Section 7.4 Reliance; Advice of Counsel...........................................................29
Section 7.5 Not Acting in Individual Capacity.....................................................29
Section 7.6 Owner Trustee Nor Delaware Trustee Liable for the Ownership Interest or the
Home Equity Loans.....................................................................29
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Section 7.7 Owner Trustee and Delaware Trustee May Own the Ownership Interest and the Notes.......30
Section 7.8 Licenses..............................................................................30
ARTICLE VIII
COMPENSATION OF OWNER TRUSTEE AND DELAWARE TRUSTEE
Section 8.1 Fees and Expenses.....................................................................31
Section 8.2 Indemnification.......................................................................31
Section 8.3 Payments to the Owner Trustee and Delaware Trustee....................................31
Section 8.4 Non-recourse Obligations..............................................................31
ARTICLE IX
TERMINATION OF TRUST AGREEMENT
Section 9.1 Termination of Trust Agreement........................................................32
ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES;
SUCCESSOR DELAWARE TRUSTEES
Section 10.1 Eligibility Requirements for Owner Trustee and Delaware Trustee.......................34
Section 10.2 Resignation or Removal of Owner Trustee or Delaware Trustee...........................34
Section 10.3 Successor Trustee.....................................................................35
Section 10.4 Merger or Consolidation of Owner Trustee or Delaware Trustee..........................36
Section 10.5 Appointment of Co-Owner Trustee or Separate Owner Trustee.............................36
ARTICLE XI
MISCELLANEOUS
Section 11.1 Supplements and Amendments............................................................38
Section 11.2 No Legal Title to Owner Trust Estate in Transferor....................................39
Section 11.3 Limitations on Rights of Others.......................................................39
Section 11.4 Notices...............................................................................39
Section 11.5 Severability..........................................................................40
Section 11.6 Separate Counterparts.................................................................40
Section 11.7 Successors and Assigns................................................................40
Section 11.8 No Petition...........................................................................40
Section 11.9 [Reserved]............................................................................40
Section 11.10 No Recourse...........................................................................40
Section 11.11 Headings..............................................................................40
Section 11.12 GOVERNING LAW.........................................................................40
Section 11.13 Inconsistencies with Sale and Servicing Agreement.....................................41
Section 11.14 Third Party Beneficiary...............................................................41
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Section 11.15 Master Servicer.......................................................................41
Section 11.16 Consent of Insurer....................................................................41
EXHIBIT A Certificate of Trust.................................................................A-1
EXHIBIT B Form of Transfer Certificate.........................................................B-1
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AMENDED AND RESTATED TRUST AGREEMENT, dated November 14, 2002, among
Household Finance Corporation ("HFC"), HFC Revolving Corporation, as depositor
(the "Depositor"), The Bank of New York, a New York banking corporation, as
owner trustee (in such capacity, the "Owner Trustee"), Bank One, National
Association, a national banking association, as co-trustee and not in its
individual capacity (the "Co-Trustee") and The Bank of New York (Delaware), a
Delaware banking corporation, as Delaware trustee (in such capacity, the
"Delaware Trustee").
PRELIMINARY STATEMENT
WHEREAS, the Trust was formed pursuant to a Trust Agreement, dated as of
October 17, 2002, among the Depositor, the Owner Trustee, and the Delaware
Trustee;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Capitalized Terms. For all purposes of this Agreement, the
following terms shall have the meanings set forth below:
"Agreement" shall mean this Amended and Restated Trust Agreement, as the
same may be amended and supplemented from time to time.
"Bankruptcy Action" shall have the meaning assigned to such term in
Section 4.1.
"Benefit Plan" shall have the meaning assigned to such term in Section
3.13.
"Certificate of Trust" shall mean the Certificate of Trust in the form of
Exhibit A to be filed for the Trust pursuant to Section 3810(a) of the
Statutory Trust Statute.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Collection Account" shall have the meaning assigned to such term in the
Sale and Servicing Agreement.
"Corporate Trust Office" shall mean, (i) with respect to the Delaware
Trustee, the principal corporate trust office of the Delaware Trustee, which
office, at date of execution of this Agreement, is located at Xxxxx Xxxx
Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxx 00000, Attention: Corporate Trust
Administration; or at such other address in the State of Delaware as the
Delaware Trustee may designate by notice to the Transferor, the Insurer, the
Owner Trustee and the Trust, or the principal corporate trust office of any
successor Delaware trustee (the address of which the successor Delaware
trustee will notify the Transferor, the Insurer, the Owner Trustee and the
Trust); or (ii) with respect to the Owner Trustee, the principal corporate
trust of the Owner Trustee, which office, at date of execution of this
Agreement, is located at 000 Xxxxxxx Xx., Xxxxx 0X, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Asset Backed Securities; or at such
other address in the State of New York as the Owner Trustee may designate by
notice to the Transferor, the Insurer, the Delaware Trustee, the Co-Trustee
and the Trust, or the principal corporate trust office of any successor owner
trustee (the address of which the successor owner trustee will notify the
Delaware Trustee, the Insurer, the Transferor and the Trust); or (iii) with
respect to the Indenture Trustee, the principal corporate trust office of the
Indenture Trustee, which office at date of execution of this Agreement, is
located at Xxx Xxxx Xxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000, Attention: Indenture
Trust Administration, or at such other address as the Indenture Trustee may
designate by notice to the Owner Trustee, the Delaware Trustee, the
Transferor, the Insurer and the Trust, or the principal corporate trust office
of any successor Indenture Trustee (the address of which the successor
indenture trustee will notify the Owner Trustee, the Delaware Trustee, the
Transferor, the Insurer and the Trust); or (iv) with respect to the
Co-Trustee, the principal corporate trust office of the Co-Trustee, which
office at date of execution of this Agreement, is located at Xxx Xxxx Xxx
Xxxxx, Xxxxxxx, Xxxxxxxx 00000, Attention: Trust Administration, or at such
other address as the Co-Trustee may designate by notice to the Transferor, the
Insurer, the Owner Trustee and the Trust, or the principal corporate trust
office of any successor Co-Trustee (the address of which the successor
co-trustee will notify the Owner Trustee, the Delaware Trustee, the
Transferor, the Insurer and the Trust).
"Co-Trustee" shall mean Bank One, National Association, a national
banking association, as co-trustee and not in its individual capacity under
this Agreement and any successor co-trustee hereunder.
"Delaware Trustee" shall mean The Bank of New York (Delaware), a Delaware
banking corporation, not in its individual capacity but solely as Delaware
trustee under this Agreement and any successor Delaware trustee hereunder.
"Depositor" shall mean HFC Revolving Corporation or its successors.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Expenses" shall have the meaning assigned to such term in Section 8.2.
"HFC" shall mean Household Finance Corporation or its successors.
"Indenture" shall mean the Indenture, dated November 14, 2002, by and
between the Trust and the Indenture Trustee.
"Indenture Trustee" shall mean Bank One, National Association, as
Indenture Trustee under the Indenture.
"Initial Note Principal Amount" shall mean with respect to the Notes
$846,640,000.
"Insurance Agreement" shall mean the Insurance and Indemnity Agreement
dated as of November 14, 2002 among the Indenture Trustee, the Depositor, the
Master Servicer, the Trust and the Insurer, including any amendments and
supplements thereto.
"Insurer" means Ambac Assurance Corporation or its successors.
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"Master Servicer" shall mean HFC, or any successor servicer appointed
pursuant to the Sale and Servicing Agreement.
"Non-permitted Foreign Owner" shall have the meaning set forth in Exhibit
B hereto.
"Non-U.S. Person" shall mean any Person other than (i) a citizen or
resident of the United States, (ii) an entity treated for United States
federal income tax purposes as a corporation or partnership created or
organized in or under the laws of the United States or any state thereof,
including the District of Columbia, (iii) an estate that is subject to U.S.
federal income tax regardless of the source of its income, (iv) a trust if a
court within the United States is able to exercise primary supervision over
the administration of the trust and one or more United States trustees have
authority to control all substantial decisions of the trust, or (v) certain
trusts in existence on August 20, 1996 and treated as United States persons on
such date that elect to continue to be so treated.
"Owner Trust Estate" shall mean the contribution of $1,000 and one share
of the Depositor's Class SV-P Preferred Stock referred to in Section 2.5 and
the Trust Estate.
"Owner Trustee" shall mean The Bank of New York, a New York banking
corporation, not in its individual capacity but solely as owner trustee under
this Agreement, and any successor owner trustee hereunder.
"Ownership Interest" shall have the meaning specified in Section 3.2.
"Prospective Transferor" shall mean any prospective purchaser or
prospective transferee of the Ownership Interest.
"Rating Agency Condition" shall mean, with respect to certain actions
requiring Rating Agency consent, that each Rating Agency shall have been given
10 days (or such shorter period as is acceptable to each Rating Agency) prior
notice thereof and that each of the Rating Agencies shall have notified the
Depositor, the Owner Trustee, the Insurer and the Trust that such action will
not result in a reduction or withdrawal of the then current rating of the
Notes, without regard to the Note Guaranty Insurance Policy.
"Record Date" shall mean the last Business Day preceding the related
Payment Date; provided, however, that following the date on which Definitive
Notes are available pursuant to Section 2.2 of the Indenture, the Record Date
shall be the last day of the calendar month preceding the month in which the
related Payment Date occurs.
"Register" shall mean a register kept by the Registrar in which, subject
to such reasonable regulations as it may prescribe, the Registrar shall
provide for the registration of the Ownership Interest and the registration of
transfers of the Ownership Interest. The location of the Registrar shall be
the same as that of the Corporate Trust Office of the Indenture Trustee.
"Registrar" shall mean the Indenture Trustee as Registrar hereunder.
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"Sale and Servicing Agreement" shall mean the Sale and Servicing
Agreement, dated as of the date hereof, among the Trust, the Depositor, the
Indenture Trustee and the Master Servicer.
"Secretary of State" shall mean the Secretary of State of the State of
Delaware.
"Statutory Trust Statute" shall mean Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code Section 3801 et seq., as the same may be amended
from time to time.
"Transaction Documents" shall mean each of the Indenture, the Sale and
Servicing Agreement, the Transfer Agreement, the Trust Agreement, the
Insurance Agreement and this Agreement.
"Transfer Agreement" shall mean the transfer agreement dated November 14,
2002 between the Trust and each Seller pursuant to which the Sellers will
assign to the Trust all of their right, title and interest in and on the
Transferred Assets not otherwise transferred pursuant to the Home Equity Loan
Purchase Agreement.
"Transferor" shall mean the owner of the Ownership Interest.
"Transferred Assets" shall have the meaning specified in Section 2.1 of
the Transfer Agreement.
"Treasury Regulations" shall mean regulations, including proposed or
temporary regulations, promulgated under the Code. References herein to
specific provisions of proposed or temporary regulations shall include
analogous provisions of final Treasury Regulations or other successor Treasury
Regulations.
"Trust" shall mean Household Home Equity Loan Trust 2002-4, the Delaware
statutory trust governed pursuant to this Agreement.
"Trust Agreement" shall mean the Trust Agreement, dated as of November
14, 2002, among the Depositor, the Owner Trustee and the Delaware Trustee.
"Trust Estate" shall mean the assets transferred and assigned to the
Trust pursuant to the Sale and Servicing Agreement, the Home Equity Loan
Purchase Agreement, the Transfer Agreement, and this Agreement and pledged to
the Indenture Trustee pursuant to the Indenture, consisting of: (i) each Home
Equity Loan and each Eligible Substitute Home Equity Loan and its related
Mortgage Note and other Mortgage File documents for each Home Equity Loan and
each Eligible Substitute Home Equity Loan, including such Home Equity Loan's,
and each such Eligible Substitute Home Equity Loan's, Principal Balance and
all collections in respect thereof received after the Cut-Off Date or
Subsequent Cut-Off Date, as applicable; (ii) property that secured each Home
Equity Loan and each Eligible Substitute Home Equity Loan that has become REO;
(iii) the interest in certain hazard insurance policies maintained by the
Mortgagors or the Master Servicer in respect of each Home Equity Loan and each
Eligible Substitute Home Equity Loan transferred by the Depositor; (iv) the
Collection Account and all amounts on deposit in the Collection Account
(exclusive of net earnings thereon); (v) one share of Preferred Stock of the
Depositor; (vi) the Trust's rights under the Sale and Servicing Agreement;
(vii) any proceeds
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of any of the foregoing and (viii) all other assets included or to be included
in the Trust for the benefit of Noteholders and the Insurer. In addition, on
or prior to the Closing Date, the Depositor shall cause the Insurer to deliver
the Note Guaranty Insurance Policy to the Indenture Trustee for the benefit of
the Noteholders.
Section 1.2 Other Definitional Provisions.
(a) Capitalized terms used herein and not otherwise defined herein
have the meanings assigned to them in the Sale and Servicing Agreement or, if
not defined therein, in the Indenture.
(b) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms not
defined in this Agreement or in any such certificate or other document, and
accounting terms partly defined in this Agreement or in any such certificate
or other document to the extent not defined, shall have the respective
meanings given to them under generally accepted accounting principles. To the
extent that the definitions of accounting terms in this Agreement or in any
such certificate or other document are inconsistent with the meanings of such
terms under generally accepted accounting principles, the definitions
contained in this Agreement or in any such certificate or other document shall
control.
(d) The words "hereof," "herein," "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole
and not to any particular provision of this Agreement; Section and Exhibit
references contained in this Agreement are references to Sections and Exhibits
in or to this Agreement unless otherwise specified; and the term "including"
shall mean "including without limitation."
(e) The definitions contained in this Agreement are applicable to
the singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such terms.
(f) Any agreement, instrument or statute defined or referred to
herein or in any instrument or certificate delivered in connection herewith
means such agreement, instrument or statute as from time to time amended,
modified or supplemented and includes (in the case of agreements or
instruments) references to all attachments thereto and instruments
incorporated therein; references to a Person are also to its permitted
successors and assigns.
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ARTICLE II
ORGANIZATION
Section 2.1 Name. The Trust created hereby shall be known as "Household
Home Equity Loan Trust 2002-4," in which name the Owner Trustee may conduct
the business of the Trust and make and execute contracts and other instruments
on behalf of the Trust and the Trust may xxx and be sued.
Section 2.2 Offices. The principal office of the Trust shall be in care
of the Delaware Trustee at the Corporate Trust Office of the Delaware Trustee
or at such other address in the State of Delaware as the Delaware Trustee may
designate by written notice to the Transferor, the Insurer, the Owner Trustee
and the Indenture Trustee. The New York office of the Trust will be in care of
the Owner Trustee at the Corporate Trust Office of the Owner Trustee or at
such other address in the State of New York as the Owner Trustee may designate
by written notice to the Transferor, the Insurer, the Delaware Trustee and the
Indenture Trustee.
Section 2.3 Purposes and Powers.
(a) The purpose of the Trust is to engage in the following
activities:
(i) to issue the Notes pursuant to the Indenture and the Ownership
Interest pursuant to this Agreement and to sell such Notes and Ownership
Interest;
(ii) with the proceeds of the sale of the Notes and the Ownership
Interest, to fund start-up and transactional expenses of the Trust and to
pay the balance to the Depositor, as its interests may appear pursuant to
the Sale and Servicing Agreement;
(iii) to assign, grant, transfer, pledge, mortgage and convey the
Trust Estate pursuant to the Indenture and to hold, manage and distribute
to the Transferor pursuant to the terms of the Sale and Servicing
Agreement any portion of the Trust Estate released from the lien of, and
remitted to the Trust pursuant to, the Indenture;
(iv) to enter into and perform its obligations under the Transaction
Documents to which it is to be a party;
(v) to engage in those activities, including entering into
agreements, that are necessary, suitable or convenient to accomplish the
foregoing or are incidental thereto or connected therewith; and
(vi) subject to compliance with the Transaction Documents, to engage
in such other activities as may be required in connection with
conservation of the Owner Trust Estate and the making of distributions to
the Noteholders and the Transferor.
The Trust is hereby authorized to engage in the foregoing activities. The
Trust shall not engage in any activity other than in connection with the
foregoing or other than as required or authorized by the terms of this
Agreement or the Transaction Documents.
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Section 2.4 Appointment of Owner Trustee. Pursuant to the Trust
Agreement, effective as of the date thereof, the Depositor appointed the Owner
Trustee as trustee of the Trust. Pursuant to this Agreement, the Owner Trustee
shall have all the rights, powers and duties set forth herein.
Section 2.4A Appointment of Delaware Trustee. The Delaware Trustee is
hereby appointed to serve as the trustee of the Trust in the State of Delaware
for the sole and limited purpose of satisfying the requirement of Section 3807
of the Statutory Trust Statute that the Trust have at least one trustee with a
principal place of business in Delaware. It is understood and agreed by the
parties hereto that the Delaware Trustee has none of the duties or liabilities
of the Owner Trustee. The duties of the Delaware Trustee are limited to (a)
accepting legal process served on the Trust in the State of Delaware and (b)
executing and filing any certificates with the Secretary of State that the
Delaware Trustee is required to execute and file pursuant to Section 3811 of
the Statutory Trust Statute. The Delaware Trustee shall provide prompt notice
to the Owner Trustee of its performance of any such acts. The parties to this
Agreement understand and agree that the Delaware Trustee is not entitled to
exercise any powers, nor has the Delaware Trustee any of the duties and
liabilities, of the Owner Trustee. The Delaware Trustee is not liable for the
acts or omissions of the Owner Trustee, the Transferor or the Trust. To the
extent that, at law or in equity, the Delaware Trustee has duties (including
fiduciary duties) and liabilities relating thereto to the Trust, it is hereby
understood and agreed by the other parties that such duties and liabilities
are replaced by the duties and liabilities of the Delaware Trustee expressly
set forth in this Agreement. The Delaware Trustee owes no fiduciary or other
duties to the Trust or the Transferor except as expressly provided for in this
Agreement.
Section 2.4B Appointment of Co-Trustee.
(a) The Co-Trustee is hereby appointed to serve as trustee solely in
respect of the Transferred Assets. The Co-Trustee shall not undertake nor have
any of the duties of the Owner Trustee or the Delaware Trustee and shall have
no obligations under this Amended and Restated Trust Agreement other than as
expressly stated in this Section 2.4B and in Section 2.7(a)(ii).
(b) The compensation of the Co-Trustee will be separately agreed to
between the Master Servicer and the Co-Trustee. The Co-Trustee shall have no
claim against the Owner Trustee, the Delaware Trustee, the Depositor or any of
the Owner Trust Estate or the Trust Estate for the payment of any of its fees
and expenses. The Master Servicer shall indemnify and hold harmless the
Co-Trustee for any loss suffered as a result of acting as Co-Trustee
hereunder.
(c) The Co-Trustee shall, at all times, be a national banking
association organized and doing business under the laws of a state or the
United States of America, authorized under such laws to exercise corporate
trust powers having aggregate capital surplus and undivided profits of at
least $50,000,000, and subject to supervision or examination by a federal or
state authority, and otherwise acceptable to the Master Servicer. If at any
time the Co-Trustee ceases to be eligible in accordance with this subsection,
the Co-Trustee shall resign immediately in the manner and with the effect
specified in Section 2.4B(d). The national banking association serving as
Co-Trustee may have normal banking and trust relationships with the Transferor
and its affiliates.
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(d) The Co-Trustee may at any time resign and be discharged from the
trusts hereby created (1) by giving written notice of resignation to the
Master Servicer, the Insurer and the Owner Trustee, not less than 60 days
before the date specified in the notice when the resignation is to take
effect, and (2) upon acceptance of appointment by a successor co-trustee in
accordance with this Subsection and meeting the qualifications in Section
2.4B(c). If no successor co-trustee shall have been so appointed and have
accepted appointment within 60 days after the notice or resignation, the
resigning Co-Trustee may petition any court of competent jurisdiction for the
appointment of a successor co-trustee.
If at any time (i) the Co-Trustee ceases to be eligible in
accordance with Section 2.4B(c) and fails to resign after written request by
the Master Servicer or the Owner Trustee, or (ii) the Co-Trustee becomes
incapable of acting, or is adjudged as bankrupt or insolvent, or a receiver of
the Co-Trustee or of its property is appointed, or any public officer takes
charge of the Co-Trustee or of its property or affairs for the purpose of
rehabilitation, conservation, or liquidation, then the Master Servicer or the
Owner Trustee may remove the Co-Trustee and appoint a successor co-trustee by
written instrument, with copies delivered to the Co-Trustee, the Master
Servicer, the Insurer, the Owner Trustee and the successor co-trustee. Any
successor co-trustee shall be paid pursuant to an agreement with Master
Servicer and the Owner Trust Estate and the Trust Estate shall not be used to
satisfy any obligation to pay the compensation of the successor co-trustee.
Any resignation or removal of the Co-Trustee and appointment of a successor
co-trustee pursuant to this Subsection shall become effective only upon
acceptance of appointment by the successor co-trustee as provided in this
Subsection.
(e) Any successor co-trustee appointed as provided in Section
2.4B(c) shall execute, acknowledge, and deliver to the Master Servicer, the
Insurer, the Owner Trustee, and to its predecessor co-trustee an instrument
accepting its appointment and thereupon the resignation or removal of the
predecessor co-trustee shall become effective and the successor co-trustee,
without anything further, shall become fully vested with all the rights and
obligations of its predecessor hereunder, with the like effect as if
originally named as co-trustee. The Co-Trustee shall deliver the Transferred
Assets to the successor co-trustee upon the appointment of the successor
co-trustee.
(f) The Co-Trustee represents and warrants as to itself that it is
duly authorized under applicable law, its charter, and its by-laws to execute
and deliver this Amended and Restated Trust Agreement, and to perform its
obligations under this Amended and Restated Trust Agreement, and that all
corporate action necessary or required therefor has been duly and effectively
taken or obtained and all federal and state governmental consents and
approvals required with respect thereto have been obtained.
(g) All parties to this Amended and Restated Trust Agreement agree
that in any suit for the enforcement of any right under this Trust Agreement,
or in any suit against the Co-Trustee for any action taken, suffered, or
omitted by it as Co-Trustee, any court may in its discretion require the
filing by any party litigant in the suit of an undertaking to pay the costs of
the suit, and that the court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in the suit,
having due regard to the merits and good faith of the claims or defenses made
by the party litigant.
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(h) The Co-Trustee may rely on any document believed by it to be
genuine and to have been signed or presented by the proper person.
(i) Before the Co-Trustee acts or refrains from acting, it may
require an Officer's Certificate or an Opinion of Counsel. The Co-Trustee
shall not be liable for any action it takes or omits to take in good faith in
reliance on an Officer's Certificate or Opinion of Counsel unless other
evidence is specifically required.
Section 2.5 Capital Contribution of Owner Trust Estate. Pursuant to the
Trust Agreement, as of October 17, 2002, the Depositor conveyed to the Trust
the sum of $1,000. The Depositor hereby sells, assigns, transfers, conveys and
sets over to the Trust, as of the date hereof, one share of its Class SV-P
Preferred Stock. The Owner Trustee hereby acknowledges receipt in trust from
the Depositor, as of the date hereof, of the foregoing contributions, which
shall constitute the initial Owner Trust Estate and such cash contribution
shall be deposited in the Collection Account. The Depositor shall pay
organizational expenses of the Trust as they may arise or shall, upon the
request of the Owner Trustee, promptly reimburse the Owner Trustee for any
such expenses paid by the Owner Trustee.
Section 2.6 Declaration of Trust. The Owner Trustee hereby declares that
it will hold the Owner Trust Estate in trust upon and subject to the
conditions set forth herein for the use and benefit of the Transferor, subject
to the obligations of the Trust under the Transaction Documents. It is the
intention of the parties hereto that the Trust constitute a statutory trust
under the Statutory Trust Statute and that this Agreement constitute the
governing instrument of such statutory trust. It is the intention of the
parties hereto that, solely for income and franchise tax purposes, the Trust
shall be treated as a disregarded entity, with the assets of the Trust being
treated as owned by the Transferor as the owner of the Ownership Interest. The
parties agree that, unless otherwise required by appropriate tax authorities,
the Trust will file or cause to be filed annual or other necessary returns,
reports and other forms, if any, consistent with the characterization of the
Trust as provided in the preceding sentence for such tax purposes. Effective
as of the date hereof, the Owner Trustee shall have all rights, powers and
duties set forth herein and in the Statutory Trust Statute with respect to
accomplishing the purposes of the Trust. Together with the Delaware Trustee,
the Owner Trustee has filed the Certificate of Trust with the Secretary of
State.
Section 2.7 Title to Trust Property.
(a) Subject to the Indenture, legal title to (i) all the Owner Trust
Estate (other than the Transferred Assets) shall be vested at all times in the
Trust as a separate legal entity except where applicable law in any
jurisdiction requires title to any part of the Owner Trust Estate to be vested
in a trustee or trustees, in which case title shall be deemed to be vested in
the Owner Trustee, Co-Trustee, a co-owner trustee and/or a separate trustee,
as the case may be, and (ii) all the Transferred Assets shall be vested at all
times in the Co-Trustee.
(b) The Transferor shall not have legal title to any part of the
Owner Trust Estate. No transfer by operation of law or otherwise of any
interest of the Transferor shall operate to terminate this Agreement or the
trusts hereunder or entitle any transferee to an accounting or to the transfer
to it of any part of the Owner Trust Estate.
9
Section 2.8 Situs of Trust. The Trust will be located and administered in
the State of Delaware. All bank accounts maintained by the Owner Trustee on
behalf of the Trust shall be located in the State of Delaware, the State of
Illinois or the State of New York. The Trust shall not have any employees;
provided, however, that nothing herein shall restrict or prohibit the Delaware
Trustee or the Owner Trustee from having employees within or without the State
of Delaware. Payments will be received by the Trust only in Delaware or New
York, and payments will be made by the Trust only from Delaware or New York.
Section 2.9 Representations and Warranties of the Depositor.
The Depositor hereby represents and warrants to the Owner Trustee, the
Delaware Trustee, the Noteholders, the Indenture Trustee and the Insurer that:
(a) The Depositor is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has the
corporate power to own its assets and to transact the business in which it is
currently engaged. The Depositor is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which the
character of the business transacted by it or properties owned or leased by it
require such qualification and in which the failure to so qualify would have a
material adverse effect on the business, properties, assets or condition
(financial or other) of the Depositor;
(b) The Depositor has the power and authority to make, execute,
deliver and perform its obligations under this Agreement and to perform its
obligations with respect to all of the transactions contemplated under this
Agreement, and has taken all necessary corporate action to authorize the
execution, delivery and performance of its obligations under this Agreement.
When executed and delivered, this Agreement will constitute the legal, valid
and binding obligation of the Depositor enforceable in accordance with its
terms, except as enforcement of such terms may be limited by bankruptcy,
insolvency or similar laws affecting the enforcement of creditors' rights
generally and by the availability of equitable remedies (whether in a
proceeding at law or in equity);
(c) The Depositor is not required to obtain the consent of any other
Person or any consent, license, approval or authorization from, or
registration or declaration with, any governmental authority, bureau or agency
in connection with the execution, delivery, performance, validity or
enforceability of this Agreement, except for such consents, licenses,
approvals or authorizations, or registrations or declarations, as shall have
been obtained or filed, as the case may be;
(d) The execution and delivery of this Agreement and the performance
of the transactions contemplated hereby by the Depositor will not violate any
provision of any existing law or regulation or any order or decree of any
court applicable to the Depositor or any provision of the Certificate of
Incorporation or Bylaws of the Depositor, or constitute a material breach of
any mortgage, indenture, contract or other agreement to which the Depositor is
a party or by which the Depositor may be bound; and
(e) No litigation or administrative proceeding of or before any
court, tribunal or governmental body is currently pending, or to the knowledge
of the Depositor threatened,
10
against the Depositor or any of its properties or with respect to this
Agreement which in the opinion of the Depositor has a reasonable likelihood of
resulting in a material adverse effect on the transactions contemplated by
this Agreement.
Section 2.10 Federal Income Tax Allocations. Net income of the Trust for
any month, as determined for Federal income tax purposes (and each item of
income, gain, loss and deduction entering into the computation thereof), shall
be allocated to the Transferor.
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ARTICLE III
OWNERSHIP INTEREST AND TRANSFERS OF THE OWNERSHIP INTEREST
Section 3.1 Initial Ownership. The Transferor is the sole beneficial
owner of the Trust.
Section 3.2 The Ownership Interest. The Ownership Interest (as defined
below) shall be uncertificated and shall represent the entire undivided
beneficial ownership interest in the Owner Trust Estate, subject to the debt
represented by the Notes (the "Ownership Interest"). The Ownership Interest
may be assigned by the Transferor as provided in Section 3.13.
Upon the completion of a transfer in accordance with the terms and
conditions of this Article III, a transferee of the Ownership Interest shall
become the Transferor, and shall be entitled to the rights and subject to the
obligations of the Transferor hereunder, upon such transferee's acceptance of
the Ownership Interest duly registered in such transferee's name pursuant to
Section 3.4 below.
Section 3.3 [Reserved].
Section 3.4 Registration of Transfer and Exchange of Ownership Interest.
The Owner Trustee hereby appoints Bank One, National Association as Registrar
under this Agreement. The Registrar shall keep or cause to be kept, at the
office or agency maintained pursuant to Section 3.8, a Register in which,
subject to such reasonable regulations as it may prescribe, the Register shall
provide for the registration of the Ownership Interest and of transfer and
exchange of the Ownership Interest as herein provided. The Registrar, subject
to Section 3.13 hereof, on behalf of the Trust shall note on the Register the
transfer of the Ownership Interest.
Section 3.5 [Reserved].
Section 3.6 Persons Deemed Transferors. Prior to due assignment of the
Ownership Interest for registration of transfer, the Depositor, the Owner
Trustee, the Delaware Trustee, the Indenture Trustee, the Insurer and the
Registrar may treat the Person in whose name the Ownership Interest shall be
registered in the Register as the owner thereof for the purpose of receiving
distributions pursuant to Section 5.2 hereof and for all other purposes
whatsoever, and none of the Depositor, the Owner Trustee, the Delaware
Trustee, the Indenture Trustee, the Insurer or the Registrar shall be bound by
any notice to the contrary.
Section 3.7 [Reserved]
Section 3.8 Maintenance of Office or Agency. The Indenture Trustee shall
maintain an office or offices or agency or agencies (initially, the Corporate
Trust Office of the Indenture Trustee) where instructions for the transfer of
the Ownership Interest may be delivered for registration of transfer or
exchange pursuant to Section 3.4 and where notices and demands to or upon the
Registrar in respect of the Ownership Interest and the Transaction Documents
may be served. The Indenture Trustee shall give prompt written notice to the
Insurer, the Owner Trustee, the Delaware Trustee and the Transferor of any
change in the location of the Register or any such office or agency.
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Section 3.9 Appointment of Paying Agent. The Owner Trustee hereby
appoints the Indenture Trustee as Paying Agent under this Agreement. The
Paying Agent shall make distributions to the Transferor from the Collection
Account pursuant to Section 5.2 hereof and Section 5.01 of the Sale and
Servicing Agreement and shall report the amounts of such distributions to the
Owner Trustee and the Insurer. The Paying Agent shall have the revocable power
to withdraw funds from the Collection Account for the purpose of making the
distributions referred to above. In the event that the Indenture Trustee shall
no longer be the Paying Agent hereunder, the Owner Trustee shall, pursuant to
the direction of the Depositor, appoint a successor to act as Paying Agent
(which (x) shall at all times be a corporation duly incorporated and validly
existing under the laws of the United States of America or any state thereof,
authorized under such laws to exercise corporate trust powers and subject to
supervision or examination by federal or state authorities and (y) shall not
be entitled to compensation from the Trust Estate). The Owner Trustee shall
cause such successor Paying Agent or any additional Paying Agent appointed by
the Owner Trustee to execute and deliver to the Owner Trustee an instrument in
which such successor Paying Agent or additional Paying Agent shall agree with
the Owner Trustee that as Paying Agent, such successor Paying Agent or
additional Paying Agent will hold all sums, if any, held by it for payment to
the Transferor in trust for the benefit of the Transferor until such sums
shall be paid to the Transferor. The Paying Agent shall return all unclaimed
funds to the Owner Trustee, and upon removal of a Paying Agent, such Paying
Agent shall also return all funds in its possession to the Owner Trustee. Any
reference in this Agreement to the Paying Agent shall include any co-paying
agent unless the context requires otherwise.
Section 3.10 [Reserved].
Section 3.11 [Reserved].
Section 3.12 [Reserved].
Section 3.13 Restrictions on Transfers of Ownership Interest. To the
fullest extent permitted by applicable law, the Ownership Interest shall not
be sold, pledged, transferred or assigned, except as provided below.
(a) Unless the Prospective Transferor furnishes an opinion of
counsel meeting the requirements specified in Section 3.13(c)(ii) hereof, the
Ownership Interest may not be acquired by or for the account of (i) an
employee benefit plan (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) that is subject to the
provisions of Title I of ERISA, (ii) a plan described in and subject to
Section 4975(e)(1) of the Code, or (iii) any entity, including an insurance
company separate account or general account, whose underlying assets include
plan assets by reason of a plan's investment in the entity.
(b) Each prospective owner of the Ownership Interest, other than HFC
or an affiliate of HFC, shall represent and warrant, in writing, to the Owner
Trustee and the Registrar and any of their respective successors that:
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(i) Such Person is (A) a "qualified institutional buyer" as defined
in Rule 144A under the Securities Act of 1933, as amended (the
"Securities Act"), and is aware that the seller of such Ownership
Interest may be relying on the exemption from the registration
requirements of the Securities Act provided by Rule 144A and is acquiring
such Ownership Interest for its own account or for the account of one or
more qualified institutional buyers for whom it is authorized to act, (B)
an "accredited investor" as defined in Rule 501(a) under the Securities
Act , or (C) a Person involved in the organization or operation of the
Trust or an affiliate of such Person within the meaning of Rule 3a-7 of
the 1940 Act, as amended (including, but not limited to, HFC or the
Transferor).
(ii) Such Person understands that such Ownership Interest has not
been and will not be registered under the Securities Act and may be
offered, sold, pledged or otherwise transferred only to a person whom the
seller reasonably believes is (A) a "qualified institutional buyer," (B)
"an accredited investor" or (C) a Person involved in the organization or
operation of the Trust or an affiliate of such Person, in each case in a
transaction meeting the requirements of Rule 144A under the Securities
Act or that is otherwise exempt from registration under the Securities
Act and in accordance with any applicable securities laws of any state of
the United States.
(iii) Such Person shall comply with the provisions of Section
3.13(c), as applicable, relating to the ERISA restrictions with respect
to the acceptance or acquisition of such Ownership Interest .
(c) Each Prospective Transferor, other than the initial Transferor
or an affiliate of the initial Transferor, shall either:
(i) represent and warrant, in writing, to the Owner Trustee and the
Registrar and any of their respective successors, in accordance with
Exhibit B hereto, that the Prospective Transferor is not (A) an "employee
benefit plan" within the meaning of Section 3(3) of ERISA that is subject
to Title I of ERISA, (B) a plan within the meaning of and subject to
Section 4975(e)(1) of the Code (any such plan or employee benefit plan, a
"Plan") or (C) any entity, including an insurance company separate
account or general account, whose underlying assets include plan assets
by reason of a plan's investment in the entity, and is not directly or
indirectly purchasing such Ownership Interest on behalf of, as investment
manager of, as named fiduciary of, as trustee of, or with assets of a
Plan; or
(ii) furnish to the Owner Trustee and the Registrar and any of their
respective successors an opinion of counsel acceptable to such persons
that (A) the proposed issuance or transfer of such Ownership Interest to
such Prospective Transferor will not cause any assets of the Trust to be
deemed assets of a Plan, and (B) the proposed holding or transfer of such
Ownership Interest will not cause the Owner Trustee or the Registrar or
any of their respective successors to be a fiduciary of a Plan within the
meaning of Section 3(21) of ERISA and will not give rise to a transaction
described in Section 406 of ERISA or Section 4975(c)(1) of the Code for
which a statutory, regulatory or administrative exemption is unavailable.
14
(d) Neither the Ownership Interest nor any beneficial ownership
interest therein may be transferred to HFC or any Seller, or to any non-United
States Person as defined in Section 7701(a)(30) of the Code, and any purported
transfer in violation of this Section 3.13(d) shall be null and void ab
initio.
(e) The Prospective Transferor, other than the initial Transferor or
an affiliate of the initial Transferor, shall obtain an Opinion of Counsel to
the effect that, as a matter of federal income tax law, such Prospective
Transferor is permitted to accept the transfer of the Ownership Interest.
(f) The Ownership Interest may not be pledged or transferred without
delivery to the Registrar and the Insurer of an Opinion of Counsel to the
effect that such transfer would not jeopardize the tax treatment of the Trust,
would not subject the Trust to an entity-level tax, and would not jeopardize
the status of the Notes as debt for all purposes.
(g) No pledge or transfer of the Ownership Interest shall be
effective unless such purchase or transfer is (i) to a single beneficial owner
and (ii) accompanied by an opinion of counsel satisfactory to the Owner
Trustee and the Insurer, which Opinion of Counsel shall not be an expense of
the Trust, the Owner Trustee, the Delaware Trustee, the Co-Trustee, the
Registrar, the Insurer or the Master Servicer, to the effect such pledge or
transfer will not cause the Trust to be treated for federal income tax
purposes as a taxable mortgage pool, association or a publicly traded
partnership taxable as a corporation.
15
ARTICLE IV
ACTIONS BY OWNER TRUSTEE
Section 4.1 Prior Notice to the Transferor, the Indenture Trustee and the
Insurer with Respect to Certain Matters. With respect to the following
matters, the Owner Trustee shall not take action, and neither the Transferor,
the Indenture Trustee nor the Insurer shall direct the Owner Trustee to take
any action, unless (i) so long as no Insurer Default has occurred and is
continuing, the Insurer has provided its written consent, or at any time when
an Insurer Default has occurred and is continuing, the Indenture Trustee has
provided written consent to the Owner Trustee (ii) at least 30 days before the
taking of such action, the Owner Trustee shall have notified the Transferor,
the Indenture Trustee and the Insurer in writing of the proposed action and
neither the Transferor, the Indenture Trustee nor, so long as no Insurer
Default has occurred and is continuing, the Insurer shall have notified the
Owner Trustee in writing prior to the 30th day after such notice is given that
the Transferor has withheld consent or the Transferor, the Indenture Trustee
or the Insurer has provided alternative direction, and (iii) in the case of
clauses (b), (c), (d), (g), (h), (i), (j), (k), (l) and (o), the Rating
Agencies have confirmed that the taking of the proposed action would not
result in a withdrawal or a reduction of the then-current ratings of the Notes
(without regard to the existence of the Note Guaranty Insurance Policy).
(a) the initiation of any claim or lawsuit by the Trust (except
claims or lawsuits brought in connection with the collection of the Home
Equity Loans) and the compromise of any action, claim or lawsuit brought by or
against the Trust (except with respect to the aforementioned claims or
lawsuits for collection of the Home Equity Loans);
(b) the election by the Trust to file an amendment to the
Certificate of Trust (unless such amendment is required to be filed under the
Statutory Trust Statute);
(c) the amendment or other change to this Agreement or any
Transaction Document in circumstances where the consent of any Noteholder or
the Insurer is required;
(d) the amendment or other change to this Agreement or any
Transaction Document in circumstances where the consent of any Noteholder or
the Insurer is not required and such amendment materially adversely affects
the interest of the Transferor;
(e) the appointment pursuant to the Indenture of a successor Note
Registrar, Paying Agent or Indenture Trustee, or the consent to the assignment
by the Note Registrar, Paying Agent or Indenture Trustee of its obligations
under the Indenture;
(f) the consent to the calling or waiver of any default of any
Transaction Document;
(g) the consent to the assignment by the Indenture Trustee of its
obligations under any Transaction Document;
(h) except as provided in Article IX hereof, dissolve, terminate or
liquidate the Trust in whole or in part;
16
(i) merge or consolidate the Trust with or into any other entity,
or, except as contemplated by the Sale and Servicing Agreement or the
Indenture, convey or transfer all or substantially all of the Trust's assets
to any other entity;
(j) cause the Trust to incur, assume or guaranty any indebtedness
other than as permitted by the Transaction Documents, as set forth in this
Agreement;
(k) do any act that conflicts with any other Transaction Document;
(l) do any act which would make it impossible to carry on the
ordinary business of the Trust;
(m) confess a judgment against the Trust;
(n) possess Trust assets, or assign the Trust's right to property,
for other than a Trust purpose; or
(o) change the Trust's purpose and powers from those set forth in
this Agreement.
In addition, except as specifically contemplated by the Transaction
Documents, the Trust shall not commingle its assets with those of any other
entity. The Trust shall maintain its financial and accounting books and
records separate from those of any other entity. Except as expressly set forth
herein, the Trust shall pay its indebtedness, operating expenses and other
liabilities from its own funds, and the Trust shall not pay the indebtedness,
operating expenses and liabilities of any other Person. The Trust shall
maintain appropriate minutes or other records of all appropriate actions and
shall maintain its office separate from the offices of the Depositor or HFC,
and any of their respective affiliates. This Agreement and the Transaction
Documents shall be the only agreements among the parties hereto with respect
to the creation, operation and termination of the Trust. For accounting
purposes, the Trust shall be treated as an entity separate and distinct from
the Transferor. The pricing and other material terms of all transactions and
agreements to which the Trust is a party shall be intrinsically fair to all
parties thereto.
The Owner Trustee shall not have the power, except upon the written
direction of the Transferor, the Indenture Trustee and with the consent of the
Insurer (which consent shall not be unreasonably withheld), and to the extent
otherwise consistent with the Transaction Documents, to (i) remove or replace
the Master Servicer or the Indenture Trustee, (ii) institute proceedings to
have the Trust declared or adjudicated a bankrupt or insolvent, (iii) consent
to the institution of bankruptcy or insolvency proceedings against the Trust,
(iv) file a petition or consent to a petition seeking reorganization or relief
on behalf of the Trust under any applicable federal or state law relating to
bankruptcy, (v) consent to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator (or any similar official) of the Trust or a
substantial portion of the property of the Trust, (vi) make any assignment for
the benefit of the Trust's creditors, (vii) cause the Trust to admit in
writing its inability to pay its debts generally as they become due, or (viii)
take any action, or cause the Trust to take any action, in furtherance of any
of the foregoing (any of the above, a "Bankruptcy Action"). So long as the
Indenture remains in effect, the Transferor shall not have the power to take,
and shall not take, any Bankruptcy Action with
17
respect to the Trust or direct the Owner Trustee to take any Bankruptcy Action
with respect to the Trust.
Section 4.2 [Reserved].
Section 4.3 Action by Transferor with Respect to Bankruptcy. To the
fullest extent permitted by applicable law, the Owner Trustee shall not have
the power to commence a voluntary proceeding in bankruptcy relating to the
Trust without the prior consent and approval of (i) the Insurer; (ii) the
Transferor; (iii) the Owner Trustee; and (iv) the Indenture Trustee, and the
delivery to the Owner Trustee by the Transferor of a certificate certifying
that such Transferor reasonably believes that the Trust is insolvent. The
terms of this Section 4.3 shall survive for one year and one day following the
termination of this Agreement.
Section 4.4 Restrictions on Transferor's Power. The Transferor shall not
direct the Owner Trustee to take or refrain from taking any action if such
action or inaction would be contrary to any obligation of the Trust or the
Owner Trustee under this Agreement or any of the Transaction Documents or
would be contrary to Section 2.3 hereof, nor shall the Owner Trustee be
obligated to follow any such direction, if given.
Section 4.5 Insurer's Rights Regarding Actions, Proceedings or
Investigations. Until the Notes have been paid in full, all amounts owed to
the Insurer have been paid in full, the Insurance Agreement has terminated and
the Note Guaranty Insurance Policy has been returned to the Insurer for
cancellation, unless an Insurer Default has occurred and is continuing, the
following provisions shall apply:
(a) notwithstanding anything contained herein or in the other
Transaction Documents to the contrary, the Insurer shall have the right to
participate in, or to direct the enforcement or defense of, any action,
proceeding or investigation that could adversely affect the Trust to the
extent relating to the rights or obligations of the Insurer hereunder or under
the Note Guaranty Insurance Policy or the Transaction Documents, including
(without limitation) any insolvency or bankruptcy proceeding in respect of the
Trust or any affiliate thereof. All costs and expenses of the Insurer in
connection with such action, proceeding or investigation, including (without
limitation) any judgment or settlement entered into affecting the Insurer or
the Insurer's interests, shall be included in Reimbursement Amounts;
(b) in connection with any action, proceeding or investigation that
could adversely affect the Trust, the Trust Estate or the rights or
obligations of the Insurer hereunder or under the Note Guaranty Insurance
Policy or the Transaction Documents, including (without limitation) any
insolvency or bankruptcy proceeding in respect of the Trust, the Delaware
Trustee, the Owner Trustee and the Co-Trustee hereby agree to cooperate with
the Noteholders, the Insurer and the Transferor.
(c) any judgment or settlement entered against or affecting the
Trust, or the Trust Estate, on behalf of the Noteholders or the Ownership
Interest, in connection with any action, proceeding or investigation shall be
paid by the Indenture Trustee from the Trust Estate pursuant to Section 5.01
of the Sale and Servicing Agreement;
18
(d) the Owner Trustee, the Delaware Trustee and the Co-Trustee
hereby agree to provide to the Insurer prompt written notice of any action,
proceeding or investigation of which the Owner Trustee, the Delaware Trustee
and the Co-Trustee have actual knowledge and that names the Trust, the
Delaware Trustee, the Owner Trustee or the Co-Trustee as a party or that could
adversely affect the Trust, the Trust Estate or the rights or obligations of
the Insurer hereunder or under the Note Guaranty Insurance Policy or the
Transaction Documents including (without limitation) any insolvency or
bankruptcy proceeding in respect of the Trust; and
(e) each Transferor, by its acceptance of the Ownership Interest,
the Delaware Trustee, the Owner Trustee and the Co-Trustee agree that the
Insurer shall have such rights as set forth in this Section, which are in
addition to any rights of the Insurer pursuant to the other provisions of the
Transaction Documents, that the rights set forth in this Section may be
exercised by the Insurer, in its sole discretion, without the need for the
consent or approval of any Noteholder, the Transferor, the Indenture Trustee,
the Delaware Trustee, the Owner Trustee or the Co-Trustee, notwithstanding any
other provision contained herein or in any of the other Transaction Documents,
and that nothing contained in this Section shall be deemed to be an obligation
of the Insurer to exercise any of the rights provided for herein.
19
ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
Section 5.1 Establishment of Trust Account. The Owner Trustee shall cause
the Indenture Trustee to establish and maintain with the Indenture Trustee for
the benefit of the Trust one or more Eligible Accounts in accordance with the
Indenture.
Section 5.2 Application of Trust Funds.
(a) On each Payment Date, the Paying Agent shall make the
distributions and payments set forth in Section 5.01 of the Sale and Servicing
Agreement from amounts on deposit in the Collection Account.
(b) On or before the third Business Day following each Payment Date,
the Paying Agent shall send to DTC the statement provided to the Paying Agent
by the Indenture Trustee pursuant to Section 5.03 of the Sale and Servicing
Agreement with respect to such Payment Date.
(c) In the event that any withholding tax is imposed on the Trust's
payment (or allocations of income) to the Transferor, such tax shall reduce
the amount otherwise distributable to the Transferor in accordance with this
Section 5.2. The Paying Agent is hereby authorized and directed to retain from
amounts otherwise distributable to the Transferor sufficient funds for the
payment of any tax that is legally owed by the Trust (but such authorization
shall not prevent the Paying Agent from contesting any such tax in appropriate
proceedings, and withholding payment of such tax, if permitted by law, pending
the outcome of such proceedings). The amount of any withholding tax imposed
with respect to the Transferor shall be treated as cash distributed to the
Transferor at the time it is withheld by the Trust and remitted to the
appropriate taxing authority. If there is a possibility that withholding tax
is payable with respect to a distribution (such as a distribution to a
non-U.S. Transferor), the Paying Agent may in its sole discretion withhold
such amounts in accordance with this paragraph (c). In the event that the
Transferor wishes to apply for a refund of any such withholding tax, the Owner
Trustee and the Paying Agent shall reasonably cooperate with the Transferor in
making such claim so long as the Transferor agrees to reimburse the Owner
Trustee and the Paying Agent for any out-of-pocket expenses incurred.
Section 5.3 Method of Payment. Distributions required to be made to the
Transferor on any Payment Date shall be made to the Transferor of record on
the preceding Record Date in the manner set forth in Section 5.01 of the Sale
and Servicing Agreement.
Section 5.4 [Reserved].
Section 5.5 Accounting and Reports to the Transferor, the Internal
Revenue Service and Others. The Owner Trustee shall deliver (or cause to be
delivered) to the Transferor such information, reports or statements as may be
required by the Code and applicable Treasury Regulations and as may be
required to enable the Transferor to prepare its respective federal and state
income tax returns. Consistent with the Trust's characterization as a
disregarded entity within the meaning of Treasury regulations Section
301.7701-2(a), no federal income tax return
20
shall be filed on behalf of the Trust unless either (a) the Trust or the
Transferor shall receive an Opinion of Counsel that, based on a change in
applicable law occurring after the date hereof, the Code requires such a
filing or (b) the Internal Revenue Service shall determine that the Trust is
required to file such a return. The Master Servicer shall prepare or shall
cause to be prepared any tax returns required to be filed by the Trust and
shall remit such returns to the Transferor at least five days before such
returns are due to be filed. Such returns shall be filed by, or at the
direction of, the Master Servicer with the appropriate tax authorities. In no
event shall the Transferor be liable for any liabilities, costs or expenses of
the Trust arising out of the application of any tax law, including federal,
state, foreign or local income or excise taxes or any other tax imposed on or
measured by income (or any interest, penalty or addition with respect thereto
or arising from a failure to comply therewith), except for any such liability,
cost or expense attributable to the Transferor's breach of its obligations
under this Agreement.
Section 5.6 Signature on Returns.
The Owner Trustee shall sign on behalf of the Trust the tax returns of
the Trust, if any, unless applicable law requires the Transferor to sign such
documents, in which case such documents shall be signed by the Transferor.
21
ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE
Section 6.1 General Authority. The Owner Trustee is authorized and
directed to execute and deliver or cause to be executed and delivered the
Notes, and the Transaction Documents to which the Trust is to be a party and
each certificate or other document attached as an exhibit to or contemplated
by the Transaction Documents to which the Trust is to be a party and any other
agreement or instrument described in Article III, in each case, in such form
as the Owner Trustee shall approve, as evidenced conclusively by the Owner
Trustee's execution thereof, and, on behalf of the Trust, to direct the
Indenture Trustee to authenticate and deliver the Notes in the Initial Note
Principal Amount. In addition to the foregoing, the Owner Trustee is
authorized, but shall not be obligated, to take all actions required of the
Trust pursuant to the Transaction Documents.
Section 6.2 General Duties. It shall be the duty of the Owner Trustee to
discharge (or cause to be discharged) all of its responsibilities pursuant to
the terms of this Agreement and the Transaction Documents to which the Trust
is a party and to administer the Trust in the interest of the Transferor,
subject to the Transaction Documents and in accordance with the provisions of
this Agreement. Notwithstanding the foregoing, the Owner Trustee shall be
deemed to have discharged its duties and responsibilities hereunder and under
the Transaction Documents to the extent the Master Servicer has agreed in the
Sale and Servicing Agreement to perform any act or to discharge any duty of
the Owner Trustee hereunder or under any Transaction Document, and the Owner
Trustee shall not be held liable for the default or failure of the Master
Servicer to carry out its respective obligations under the Sale and Servicing
Agreement.
Section 6.3 Action upon Instruction.
(a) Subject to Article IV herein and in accordance with the terms of
the Transaction Documents, the Insurer or the Transferor with the prior
written consent of the Insurer may by written instruction direct the Owner
Trustee in the management of the Trust but only to the extent consistent with
the limited purpose of the Trust. Such direction may be exercised at any time
by written instruction of the Insurer or the Transferor with the prior written
consent of the Insurer (which consent shall not be unreasonably withheld)
pursuant to Article IV.
(b) Notwithstanding the foregoing, the Owner Trustee shall not be
required to take any action hereunder or under any Transaction Document if the
Owner Trustee shall have reasonably determined, or shall have been advised by
counsel, that such action is likely to result in liability on the part of the
Owner Trustee or is contrary to the terms hereof or of any Transaction
Document or is otherwise contrary to law.
(c) Whenever the Owner Trustee is unable to decide between
alternative courses of action permitted or required by the terms of this
Agreement or under any Transaction Document, the Owner Trustee shall promptly
give notice (in such form as shall be appropriate under the circumstances) to
the Transferor and the Insurer requesting instruction from the Transferor and
the Insurer as to the course of action to be adopted, and to the extent the
Owner Trustee acts in good faith in accordance with any written instruction of
the Transferor with the
22
consent of the Insurer (which consent shall not be unreasonably withheld) or
the Insurer received, the Owner Trustee shall not be liable on account of such
action to any Person. If the Owner Trustee shall not have received appropriate
instruction within 10 days of such notice (or within such shorter period of
time as reasonably may be specified in such notice or may be necessary under
the circumstances) it may, but shall be under no duty to, take or refrain from
taking such action, not inconsistent with this Agreement or the Transaction
Documents, as it shall deem to be in the best interest of the Transferor, and
shall have no liability to any Person for such action or inaction.
(d) In the event that the Owner Trustee is unsure as to the
application of any provision of this Agreement or any Transaction Document or
any such provision is ambiguous as to its application, or is, or appears to
be, in conflict with any other applicable provision, or in the event that this
Agreement provides no direction to the Owner Trustee or is silent or is
incomplete as to the course of action that the Owner Trustee is required to
take with respect to a particular set of facts, the Owner Trustee may give
notice (in such form as shall be appropriate under the circumstances) to the
Transferor and the Insurer requesting instruction and, to the extent that the
Owner Trustee acts or refrains from acting in good faith in accordance with
any such instruction received from the Insurer, or if an Insurer Default has
occurred and is continuing, the Transferor with the consent of the Insurer
(which consent shall not be unreasonably withheld), the Owner Trustee shall
not be liable, on account of such action or inaction, to any Person. If the
Owner Trustee shall not have received appropriate instruction within 10 days
of such notice (or within such shorter period of time as reasonably may be
specified in such notice or may be necessary under the circumstances) it may,
but shall be under no duty to, take or refrain from taking such action, not
inconsistent with this Agreement or the Transaction Documents, as it shall
deem to be in the best interest of the Transferor, and shall have no liability
to any Person for such action or inaction.
Section 6.4 No Duties Except as Specified in this Agreement, the
Transaction Documents or in Instructions. The Owner Trustee shall not have any
duty or obligation to manage, make any payment with respect to, register,
record, sell, dispose of, or otherwise deal with the Owner Trust Estate, or to
otherwise take or refrain from taking any action under, or in connection with,
any document contemplated hereby to which the Owner Trustee or the Trust is a
party, except as expressly provided by the terms of this Agreement, any
Transaction Document or in any document or written instruction received by the
Owner Trustee pursuant to Section 6.3; and no implied duties or obligations
shall be read into this Agreement or any Transaction Document against the
Owner Trustee. The Owner Trustee shall have no responsibility for filing any
financing or continuation statement in any public office at anytime or to
otherwise perfect or maintain the perfection of any security interest or lien
granted to it hereunder or to prepare or file any Securities and Exchange
Commission filing for the Trust or to record this Agreement or any Transaction
Document. The Owner Trustee nevertheless agrees that it will, at its own cost
and expense, promptly take all action as may be necessary to discharge any
liens on any part of the Owner Trust Estate that result from actions by, or
claims against, the Owner Trustee in its individual capacity that are not
related to the ownership or the administration of the Owner Trust Estate.
Section 6.5 No Action Except Under Specified Documents or Instructions.
The Owner Trustee shall not manage, control, use, sell, dispose of or
otherwise deal with any part of
23
the Owner Trust Estate except (i) in accordance with the powers granted to and
the authority conferred upon the Owner Trustee pursuant to this Agreement,
(ii) in accordance with the Transaction Documents and (iii) in accordance with
any document or instruction delivered to the Owner Trustee pursuant to Section
6.3 above. The Owner Trustee shall not be required to take any action under
this Agreement if the Owner Trustee shall reasonably determine or shall have
been advised by counsel that such action is contrary to the terms of this
Agreement or is otherwise contrary to law.
Section 6.6 Restrictions. The Owner Trustee shall not take any action (a)
that is inconsistent with the purposes of the Trust set forth in Section 2.3
hereof or (b) that, to the actual knowledge of the Owner Trustee, would result
in the Trust's becoming taxable as a corporation for Federal income tax
purposes. The Transferor shall not direct the Owner Trustee to take action
that would violate the provisions of this Section 6.6.
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ARTICLE VII
CONCERNING THE OWNER TRUSTEE AND THE DELAWARE TRUSTEE
Section 7.1 Acceptance of Trusts and Duties. Each of the Owner Trustee
and the Delaware Trustee accepts the trusts hereby created and agrees to
perform its duties hereunder with respect to such trusts but only upon the
terms of this Agreement and the Transaction Documents. Each of the Owner
Trustee and the Delaware Trustee also agrees to disburse all moneys actually
received by it constituting part of the Owner Trust Estate upon the terms of
the Transaction Documents and this Agreement. Neither the Owner Trustee nor
the Delaware Trustee shall be answerable or accountable hereunder or under any
Transaction Document under any circumstances, except (i) for its own willful
misconduct, bad faith or gross negligence or (ii) in the case of the
inaccuracy of any representation or warranty contained in Section 7.3 below
expressly made by the Owner Trustee or the Delaware Trustee, as the case may
be. In particular, but not by way of limitation (and subject to the exceptions
set forth in the preceding sentence):
(a) neither the Owner Trustee nor the Delaware Trustee shall be
liable for any error of judgment made by a responsible officer of the Owner
Trustee or the Delaware Trustee, as applicable;
(b) no provision of this Agreement or any Transaction Document shall
require the Owner Trustee or the Delaware Trustee to expend or risk funds or
otherwise incur any financial liability in the performance of any of its
rights or powers hereunder or under any Transaction Document if the Owner
Trustee or the Delaware Trustee, as the case may be, shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity
against such risk or liability is not reasonably assured or provided to it;
(c) under no circumstances shall the Owner Trustee or the Delaware
Trustee be liable for indebtedness evidenced by or arising under any of the
Transaction Documents, including the principal of and interest on the Notes;
(d) neither the Owner Trustee nor the Delaware Trustee shall be
responsible for or in respect of the validity or sufficiency of this Agreement
or for the due execution hereof by the Depositor or for the form, character,
genuineness, sufficiency, value or validity of any of the Owner Trust Estate
or for or in respect of the validity or sufficiency of the Transaction
Documents, other than the genuineness of the signature and countersignature of
the Owner Trustee on the certificate of authentication on the Ownership
Interest, and the Owner Trustee and the Delaware Trustee shall in no event
assume or incur any liability, duty, or obligation to any Noteholder or the
Transferor other than as expressly provided for herein and in the Transaction
Documents;
(e) neither the Owner Trustee nor the Delaware Trustee shall be
liable for the default or misconduct of the Indenture Trustee or the Master
Servicer under any of the Transaction Documents or otherwise and neither the
Owner Trustee nor the Delaware Trustee shall have any obligation or liability
to perform the obligations of the Trust under this Agreement or the
Transaction Documents that are required to be performed by the Indenture
Trustee under
25
the Indenture, the Master Servicer under the Sale and Servicing Agreement, or
the Registrar or any Paying Agent hereunder;
(f) neither the Owner Trustee nor the Delaware Trustee shall be
under any obligation to exercise any of the rights or powers vested in it by
this Agreement, or to institute, conduct or defend any litigation under this
Agreement or otherwise or in relation to this Agreement or any Transaction
Document, at the request, order or direction of the Transferor or the Insurer
(so long as no Insurer Default has occurred and is continuing), unless such
Transferor or Insurer has offered to the Owner Trustee or the Delaware
Trustee, as the case may be, security or indemnity satisfactory to it against
the costs, expenses and liabilities that may be incurred by the Owner Trustee
or the Delaware Trustee, as the case may be, therein or thereby. The right of
the Owner Trustee or the Delaware Trustee, as the case may be, to perform any
discretionary act enumerated in this Agreement or in any Transaction Document
shall not be construed as a duty, and the Owner Trustee and the Delaware
Trustee answerable for other than their gross negligence or willful misconduct
in the performance of any such act;
(g) notwithstanding anything contained herein to the contrary, the
Delaware Trustee will not be required to take any action in any jurisdiction
other than in the State of Delaware if the taking of such action (i) requires
the registration with, licensing by or the taking of any other similar action
in respect of, any state or other governmental authority or agency of any
jurisdiction other than the State of Delaware by or with respect to the
Delaware Trustee (other than any registration, licensing or taking of any
other similar action that at the time of such action is in effect or has been
taken); (ii) results in any fee, tax or other governmental charge under the
laws of any jurisdiction or any political subdivisions thereof in existence on
the date hereof other than the State of Delaware becoming payable by the
Delaware Trustee; or (iii) subjects the Delaware Trustee to personal
jurisdiction in any jurisdiction other than the State of Delaware for causes
of action arising from acts unrelated to the consummation of the transactions
by the Delaware Trustee contemplated hereby. The Delaware Trustee will be
entitled to obtain advice of counsel (which advice will be an expense of the
Transferor) to determine whether any action required to be taken pursuant to
the Agreement results in the consequences described in clauses (i), (ii) and
(iii) of the preceding sentence. If said counsel advises the Delaware Trustee
that such action will result in such consequences, the Transferor will appoint
an additional trustee pursuant to Section 10.5 hereof to proceed with such
action; and
(h) neither the Owner Trustee nor the Delaware Trustee shall be
liable with respect to any action taken or omitted to be taken by it in
accordance with the instructions of the Insurer (so long as no Insurer Default
has occurred and is continuing), the Depositor or any Owner to the extent such
action or direction is permitted by the Transaction Documents.
With respect to the Noteholders and the Insurer, the Owner Trustee
undertakes to perform or observe only such of the covenants and obligations of
the Owner Trustee as are expressly set forth in this Agreement, and no implied
covenants or obligations with respect to the Noteholders or the Insurer shall
be read into this Agreement or the other Transaction Documents against the
Owner Trustee. The Owner Trustee shall not be deemed to owe any fiduciary duty
to the Noteholders or the Insurer, and shall not be liable to any such person
for the failure of the Trust to perform its obligations to such persons other
than as a result of the gross negligence or willful
26
misconduct of the Owner Trustee in the performance of its express obligations
under this Agreement.
Section 7.2 Furnishing of Documents. The Owner Trustee shall furnish (a)
to the Transferor promptly upon receipt of a written request therefor,
duplicates or copies of all reports, notices, requests, demands, certificates,
financial statements and any other instruments furnished to the Owner Trustee
under the Transaction Documents and (b) to Noteholders and the Insurer
promptly upon written request therefor, copies of the Sale and Servicing
Agreement and this Agreement.
Section 7.3 Representations and Warranties.
(a) The Owner Trustee hereby represents and warrants to the
Depositor, for the benefit of the Transferor, the Insurer, the Noteholders and
the Indenture Trustee that:
(i) It is a New York banking corporation duly organized and validly
existing in good standing under the laws of New York. It has all
requisite corporate power and authority to execute, deliver and perform
its obligations under this Agreement;
(ii) It has taken all corporate action necessary to authorize the
execution and delivery by it of this Agreement, and this Agreement will
be executed and delivered by one of its officers who is duly authorized
to execute and deliver this Agreement on its behalf;
(iii) Neither the execution nor the delivery by it of this Agreement
nor the consummation by it of the transactions contemplated hereby nor
compliance by it with any of the terms or provisions hereof will
contravene any federal law, governmental rule or regulation governing the
banking or trust powers of the Owner Trustee or any judgment or order
binding on it, or constitute any default under its charter documents or
by-laws or any indenture, mortgage, contract, agreement or instrument to
which it is a party or by which any of its properties may be bound;
(iv) The execution, delivery, authentication and performance by the
Owner Trustee of this Agreement will not require the authorization,
consent or approval of, the giving of notice to, the filing or
registration with, or the taking of any other action with respect to, any
governmental authority or agency;
(v) This Agreement has been duly authorized, executed and delivered
by the Owner Trustee and constitutes a valid, legal and binding
obligation of the Owner Trustee, enforceable against it in accordance
with the terms hereof, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and other laws affecting the enforcement of
creditors' rights generally and to general principles of equity,
regardless of whether such enforcement is considered in a proceeding in
equity or at law;
(vi) The Owner Trustee is not in default with respect to any order
or decree of any court or any order, regulation or demand of any federal,
state, municipal or governmental agency, which default might have
consequences that would materially and adversely affect the condition
(financial or other) or operations of the Owner Trustee or
27
its properties or might have consequences that would materially adversely
affect its performance hereunder; and
(vii) No litigation is pending or, to the best of the Owner
Trustee's knowledge, threatened against the Owner Trustee which would
prohibit its entering into this Agreement or performing its obligations
under this Agreement.
(b) The Delaware Trustee hereby represents and warrants to the
Depositor, for the benefit of the Transferor, the Insurer, the Noteholders and
the Indenture Trustee that:
(i) It is a Delaware banking corporation duly organized and validly
existing in good standing under the laws of the State of Delaware. It has
all requisite corporate power and authority to execute, deliver and
perform its obligations under this Agreement;
(ii) It has taken all corporate action necessary to authorize the
execution and delivery by it of this Agreement, and this Agreement will
be executed and delivered by one of its officers who is duly authorized
to execute and deliver this Agreement on its behalf;
(iii) Neither the execution nor the delivery by it of this Agreement
nor the consummation by it of the transactions contemplated hereby nor
compliance by it with any of the terms or provisions hereof will
contravene any federal law, governmental rule or regulation governing the
banking or trust powers of the Delaware Trustee or any judgment or order
binding on it, or constitute any default under its charter documents or
by-laws or any indenture, mortgage, contract, agreement or instrument to
which it is a party or by which any of its properties may be bound;
(iv) The execution, delivery, authentication and performance by the
Delaware Trustee of this Agreement will not require the authorization,
consent or approval of, the giving of notice to, the filing or
registration with, or the taking of any other action with respect to, any
governmental authority or agency;
(v) This Agreement has been duly authorized, executed and delivered
by the Delaware Trustee and constitutes a valid, legal and binding
obligation of the Delaware Trustee, enforceable against it in accordance
with the terms hereof, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and other laws affecting the enforcement of
creditors' rights generally and to general principles of equity,
regardless of whether such enforcement is considered in a proceeding in
equity or at law;
(vi) The Delaware Trustee is not in default with respect to any
order or decree of any court or any order, regulation or demand of any
federal, state, municipal or governmental agency, which default might
have consequences that would materially and adversely affect the
condition (financial or other) or operations of the Delaware Trustee or
its properties or might have consequences that would materially adversely
affect its performance hereunder; and
28
(vii) No litigation is pending or, to the best of the Delaware
Trustee's knowledge, threatened against the Delaware Trustee which would
prohibit its entering into this Agreement or performing its obligations
under this Agreement.
Section 7.4 Reliance; Advice of Counsel.
(a) Neither the Owner Trustee nor the Delaware Trustee shall incur
any liability to anyone in acting upon any signature, instrument, notice,
resolution, request, consent, order, certificate, report, opinion, bond, or
other document or paper believed by it to be genuine and believed by it to be
signed by the proper party or parties. Each of the Owner Trustee and the
Delaware Trustee may accept a certified copy of a resolution of the board of
directors or other governing body of any corporate party as conclusive
evidence that such resolution has been duly adopted by such body and that the
same is in full force and effect. As to any fact or matter the method of the
determination of which is not specifically prescribed herein, each of the
Owner Trustee and the Delaware Trustee may for all purposes hereof rely on a
certificate, signed by the president or any vice president or by the treasurer
or other authorized officer of the relevant party, as to such fact or matter
and such certificate shall constitute full protection to each of the Owner
Trustee and the Delaware Trustee for any action taken or omitted to be taken
by it in good faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder and in
the performance of their duties and obligations under this Agreement or the
Transaction Documents, the Owner Trustee and the Delaware Trustee (i) may, at
the expense of HFC, act directly or through their agents or attorneys pursuant
to agreements entered into with any of them, and neither the Owner Trustee nor
the Delaware Trustee shall be liable for the conduct or misconduct of their
respective agents or attorneys if such agents or attorneys shall have been
selected by the Owner Trustee or the Delaware Trustee, as the case may be,
with reasonable care, and (ii) may, at the expense of HFC, consult with
counsel, accountants and other skilled persons to be selected with reasonable
care and employed by them. Neither the Owner Trustee nor the Delaware Trustee
shall be liable for anything done, suffered or omitted in good faith by it in
accordance with the opinion or advice of any such counsel, accountants or
other such persons and not contrary to this Agreement or any Transaction
Document.
Section 7.5 Not Acting in Individual Capacity. Except as provided in this
Article VII, in accepting the trusts hereby created, The Bank of New York acts
solely as Owner Trustee hereunder, and The Bank of New York (Delaware) acts
solely as Delaware Trustee hereunder, and not in their individual capacities,
and all Persons having any claim against the Owner Trustee or the Delaware
Trustee by reason of the transactions contemplated by this Agreement or any
Transaction Document shall look only to the Owner Trust Estate for payment or
satisfaction thereof.
Section 7.6 Owner Trustee Nor Delaware Trustee Liable for the Ownership
Interest or the Home Equity Loans. The recitals contained herein and in the
Ownership Interest shall be taken as the statements of the Depositor, and
neither the Owner Trustee nor the Delaware Trustee assumes any responsibility
for the correctness thereof. Neither the Owner Trustee nor the Delaware
Trustee makes any representations as to the validity or sufficiency of this
Agreement, of any Transaction Document or of the Ownership Interest (other
than as specified in Section 7.3
29
hereof) or the Notes, or of any Home Equity Loans or related documents.
Neither the Owner Trustee nor the Delaware Trustee shall at any time have any
responsibility or liability for or with respect to the legality, validity and
enforceability of any Home Equity Loan, or the perfection and priority of any
security interest created by any Home Equity Loan or the maintenance of any
such perfection and priority, or for or with respect to the sufficiency of the
Owner Trust Estate or its ability to generate the payments to be distributed
to the Transferor under this Agreement or to the Noteholders under the
Indenture, including, without limitation: the existence, condition and
ownership of any Mortgaged Property; the existence and enforceability of any
insurance thereon; the existence and contents of any Home Equity Loan on any
computer or other record thereof; the validity of the assignment of any Home
Equity Loan to the Trust or of any intervening assignment; the completeness of
any Home Equity Loan; the performance or enforcement of any Home Equity Loan;
the compliance by the Depositor or the Master Servicer with any warranty or
representation made under any Transaction Document or in any related document
or the accuracy of any such warranty or representation or any action of the
Depositor, the Indenture Trustee or the Master Servicer or any subservicer
taken in the name of the Owner Trustee or the Delaware Trustee.
Section 7.7 Owner Trustee and Delaware Trustee May Own the Ownership
Interest and the Notes. The Bank of New York and The Bank of New York
(Delaware) in their individual or any other capacities may become the owner or
pledgee of the Ownership Interest or the Notes and may deal with the
Depositor, the Indenture Trustee and the Master Servicer in banking
transactions with the same rights as they would have if they were not the
Owner Trustee and Delaware Trustee, respectively.
Section 7.8 Licenses. The Owner Trustee shall cause the Trust to use its
best efforts to obtain and maintain the effectiveness of any licenses required
in connection with this Agreement and the Transaction Documents and the
transactions contemplated hereby and thereby until such time as the Trust
shall terminate in accordance with the terms hereof.
30
ARTICLE VIII
COMPENSATION OF OWNER TRUSTEE AND DELAWARE TRUSTEE
Section 8.1 Fees and Expenses. Each of the Owner Trustee and the Delaware
Trustee shall receive as compensation for its services hereunder such fees as
have been separately agreed upon before the date hereof between HFC and each
of the Owner Trustee and the Delaware Trustee, and the Owner Trustee and the
Delaware Trustee shall be entitled to be reimbursed by HFC for their other
reasonable expenses hereunder, including the reasonable compensation, expenses
and disbursements of such agents, representatives, experts and counsel as the
Owner Trustee and the Delaware Trustee may employ in connection with the
exercise and performance of their rights and its duties hereunder.
Section 8.2 Indemnification. HFC shall be liable as primary obligor for,
and shall indemnify the Owner Trustee and the Delaware Trustee (in their
individual and trustee capacities) and their respective successors, assigns,
agents and servants (collectively, the "Indemnified Parties") from and
against, any and all liabilities, obligations, losses, damages, taxes, claims,
actions and suits, and any and all reasonable costs, expenses and
disbursements (including reasonable legal fees and expenses) of any kind and
nature whatsoever (collectively, "Expenses") which may at any time be imposed
on, incurred by, or asserted against the Owner Trustee, the Delaware Trustee
or any Indemnified Party in any way relating to or arising out of this
Agreement, the Transaction Documents, the Owner Trust Estate, the
administration of the Owner Trust Estate or the action or inaction of the
Owner Trustee or the Delaware Trustee hereunder, except only that HFC shall
not be liable for or required to indemnify an Indemnified Party from and
against Expenses arising or resulting from any of the matters described in the
third sentence of Section 7.1 hereof. The indemnities contained in this
Section 8.2 shall survive the resignation or termination of the Owner Trustee
or the Delaware Trustee or the termination of this Agreement. In the event of
any claim, action or proceeding for which indemnity will be sought pursuant to
this Section 8.2, the choice of legal counsel of the Owner Trustee or Delaware
Trustee, as applicable, shall be subject to the approval of HFC, which
approval shall not be unreasonably withheld.
Section 8.3 Payments to the Owner Trustee and Delaware Trustee. Any
amounts paid to the Owner Trustee or the Delaware Trustee pursuant to this
Article VIII shall be deemed not to be a part of the Owner Trust Estate
immediately after such payment.
Section 8.4 Non-recourse Obligations. Notwithstanding anything in this
Agreement or any Transaction Document, (i) the Owner Trustee agrees in its
individual capacity and in its capacity as Owner Trustee for the Trust that
all obligations of the Trust to the Owner Trustee individually or as Owner
Trustee for the Trust shall be recourse to the Trust only and specifically
shall not be recourse to the assets of any Noteholder and (ii) the Delaware
Trustee agrees in its individual capacity and in its capacity as Delaware
Trustee for the Trust that all obligations of the Trust to the Delaware
Trustee individually or as Delaware Trustee for the Trust shall be recourse to
the Trust only and specifically shall not be recourse to the assets of any
Noteholder.
31
ARTICLE IX
TERMINATION OF TRUST AGREEMENT
Section 9.1 Termination of Trust Agreement.
(a) This Agreement (other than Article VIII) shall terminate and the
Trust shall dissolve and terminate pursuant to the Statutory Trust Statute and
be of no further force or effect upon notice to the Indenture Trustee of the
later of (A) payment in full of all amounts owing to the Insurer unless the
Insurer shall otherwise consent (regardless of whether an Insurer Default
exists and is continuing) and (B) the earliest of (i) the final payment or
other liquidation of the last Home Equity Loan remaining in the Trust; (ii)
the optional purchase by the Master Servicer of the Home Equity Loans as
described in Section 8.01 of the Sale and Servicing Agreement, (iii) the sale
of the Home Equity Loans as described in Section 10.2 of the Indenture and the
corresponding redemption of the Notes; and (iv) the Payment Date in October
2032. The bankruptcy, liquidation, dissolution, death or incapacity of the
Transferor shall not (x) operate to terminate this Agreement or the Trust, nor
(y) entitle such Transferor's legal representatives or heirs to claim an
accounting or to take any action or proceeding in any court for a partition or
winding-up of all or any part of the Trust or Owner Trust Estate nor (z)
otherwise affect the rights, obligations and liabilities of the parties
hereto.
(b) The Ownership Interest shall be subject to an early redemption
or termination at the option of the Master Servicer in the manner and subject
to the provisions of Section 8.01 of the Sale and Servicing Agreement.
(c) Except as provided in Sections 9.1(a) and (b) above, neither the
Depositor nor the Transferor shall be entitled to revoke or terminate the
Trust.
(d) If any Ownership Interest is in certificated form, notice of any
termination of the Trust, specifying the Payment Date upon which the
Transferor shall surrender their Ownership Interest to the Paying Agent for
payment of the final distributions and cancellation, shall be given by the
Registrar to the Transferor, the Insurer and the Rating Agencies mailed within
five Business Days of receipt by the Registrar of notice of such termination
pursuant to (a) or (b) above, which notice given by the Owner Trustee shall
state (i) the Payment Date upon or with respect to which final payment of the
Registrar shall be made upon presentation and surrender of the Ownership
Interest at the office of the Paying Agent therein designated, (ii) the amount
of any such final payment and (iii) that the Record Date otherwise applicable
to such Payment Date is not applicable, payments being made only upon
submission of a claim for and acknowledgment of final distribution under the
Ownership Interest at the office of the Paying Agent therein specified. The
Registrar shall give such notice to the Owner Trustee and the Paying Agent at
the time such notice is given to the Transferor. Upon presentation of such
submission of a claim for and acknowledgment of final distribution under the
Ownership Interest, the Paying Agent shall cause to be distributed to the
Transferor amounts distributable on such Payment Date pursuant to Section 5.01
of the Sale and Servicing Agreement.
In the event that the Transferor shall not have submitted claim for
and acknowledgment of final distribution under the Ownership Interest for
cancellation within six
32
months after the date specified in the above mentioned written notice, the
Registrar shall give a second written notice to the Transferor with respect
thereto. Within one year after such second notice, the Registrar may take
appropriate steps, or may appoint an agent to take appropriate steps, to
contact the Transferor concerning the final distribution, and the cost thereof
shall be paid out of the funds and other assets that shall remain subject to
this Agreement.
(e) Upon the winding up of the Trust and its termination, the
Delaware Trustee and the Owner Trustee shall cause the Certificate of Trust to
be canceled by filing a certificate of cancellation with the Secretary of
State in accordance with the Statutory Trust Statute.
33
ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES;
SUCCESSOR DELAWARE TRUSTEES
Section 10.1 Eligibility Requirements for Owner Trustee and Delaware
Trustee. (a) The Owner Trustee shall at all times be a corporation or national
banking association authorized to exercise corporate powers; having a combined
capital and surplus of at least $50,000,000 and subject to supervision or
examination by Federal or state authorities; and having (or having a parent
which has) a long-term rating of at least "Baa3" (or its equivalent) by
Moody's and "A" (or its equivalent) by Standard & Poor's and being acceptable
to the Insurer. If such corporation shall publish reports of condition at
least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purpose of this Section, the
combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published. In case at any time the Owner Trustee shall cease to
be eligible in accordance with the provisions of this Section 10.1, the Owner
Trustee shall resign immediately in the manner and with the effect specified
in Section 10.2.
(b) The Delaware Trustee shall at all times be an entity satisfying
the provisions of Section 3807(a) of the Delaware Statutory Trust Statute. If
at any time the Delaware Trustee ceases to be eligible in accordance with the
provisions of this Section, the Delaware Trustee will resign immediately in
the manner and with the effect specified in Section 10.02.
Section 10.2 Resignation or Removal of Owner Trustee or Delaware Trustee.
The Owner Trustee or the Delaware Trustee may at any time resign and be
discharged from the trusts hereby created by giving written notice thereof to
the Trust, the Indenture Trustee, the Insurer and the Rating Agencies. Upon
receiving such notice of resignation, the Indenture Trustee shall promptly
appoint a successor Owner Trustee or Delaware Trustee, as applicable, with the
consent of the Insurer, which consent shall not be unreasonably withheld, by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the resigning trustee and one copy to the successor trustee. If
no successor Owner Trustee or Delaware shall have been so appointed and have
accepted appointment within 30 days after the giving of such notice of
resignation, the resigning trustee or the Insurer may petition any court of
competent jurisdiction for the appointment of a successor Owner Trustee or
Delaware Trustee, as applicable.
If at any time the Owner Trustee or Delaware Trustee shall cease to be
eligible in accordance with the provisions of Section 10.1 above and shall
fail to resign after written request therefor by the Indenture Trustee, or if
at any time the Owner Trustee or Delaware Trustee shall be legally unable to
act, or shall be adjudged bankrupt or insolvent, or a receiver of the Owner
Trustee or of its property, or of the Delaware Trustee or its property, shall
be appointed, or any public officer shall take charge or control of the Owner
Trustee or of its property or affairs, or of the Delaware Trustee or of its
property or affairs, for the purpose of rehabilitation, conservation or
liquidation, then the Indenture Trustee may, and, at the direction of the
Insurer (so long as no Insurer Default has occurred and is continuing), shall,
remove the Owner Trustee or Delaware Trustee, as applicable. If the Indenture
Trustee shall remove the Owner Trustee or Delaware
34
Trustee under the authority of the immediately preceding sentence, the
Indenture Trustee shall promptly appoint a successor Owner Trustee or Delaware
Trustee, as applicable, acceptable to the Insurer by written instrument in
duplicate, one copy of which instrument shall be delivered to the outgoing
trustee so removed and one copy to the successor trustee (and a copy to the
Insurer) and payment of all fees owed to the outgoing trustee.
Any resignation or removal of the Owner Trustee or Delaware Trustee and
appointment of a successor Owner Trustee or Delaware Trustee, as applicable,
pursuant to any of the provisions of this Section 10.2 shall not become
effective until acceptance of appointment by the successor trustee pursuant to
Section 10.3, payment of all fees and expenses owed to the outgoing trustee
and written approval by the Insurer. The Indenture Trustee shall provide
notice of such resignation or removal of the Owner Trustee or Delaware Trustee
to each of the Rating Agencies.
Section 10.3 Successor Trustee. Any successor Owner Trustee or Delaware
Trustee appointed pursuant to Section 10.2 shall execute, acknowledge and
deliver to the Indenture Trustee, the Insurer and to its predecessor trustee
an instrument accepting such appointment under this Agreement, and thereupon
the resignation or removal of the predecessor trustee shall become effective
and such successor trustee (if acceptable to the Insurer), without any further
act, deed or conveyance, shall become fully vested with all the rights,
powers, duties, and obligations of its predecessor under this Agreement, with
like effect as if originally named as Owner Trustee or Delaware Trustee, as
the case may be. The predecessor Owner Trustee or Delaware Trustee shall upon
payment of its fees and expenses deliver to the successor Owner Trustee or
Delaware Trustee, as the case may be, all documents and statements and monies
held by it under this Agreement; and the Indenture Trustee and the predecessor
Owner Trustee or Delaware Trustee, as the case may be, shall execute and
deliver such instruments and do such other things as may reasonably be
required for fully and certainly vesting and confirming in the successor Owner
Trustee or Delaware Trustee, as the case may be, all such rights, powers,
duties, and obligations.
No successor Owner Trustee or Delaware Trustee shall accept appointment
as provided in this Section 10.3 unless at the time of such acceptance such
successor Owner Trustee or Delaware Trustee, as the case may be, shall be
eligible pursuant to Section 10.1 above.
Upon acceptance of appointment by a successor Owner Trustee or Delaware
Trustee, as the case may be, pursuant to this Section 10.3, the Indenture
Trustee shall mail notice of the successor of such Owner Trustee or Delaware
Trustee to the Transferor, the Noteholders, the Insurer and the Rating
Agencies. If the Indenture Trustee fails to mail such notice within 10 days
after acceptance of appointment by the successor Owner Trustee or Delaware
Trustee, as the case may be, the successor Owner Trustee or Delaware Trustee
shall cause such notice to be mailed at the expense of the Indenture Trustee.
Any successor Delaware Trustee shall promptly file a certificate of
amendment identifying the name and principal plan of business of the Delaware
Trustee in the State of Delaware.
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Section 10.4 Merger or Consolidation of Owner Trustee or Delaware
Trustee. Any corporation into which the Owner Trustee or Delaware Trustee may
be merged or converted or with which either may be consolidated or any
corporation resulting from any merger, conversion or consolidation to which
the Owner Trustee or Delaware Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Owner Trustee or Delaware Trustee, shall be the successor of the Owner Trustee
or Delaware Trustee, as the case may be, hereunder, provided such corporation
shall be eligible pursuant to Section 10.1 above, without the execution or
filing of any instrument or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding; provided further that
the Owner Trustee or Delaware Trustee, as the case may be, shall mail notice
of such merger or consolidation to the Depositor, the Co-Trustee, HFC, the
Insurer and the Rating Agencies.
Section 10.5 Appointment of Co-Owner Trustee or Separate Owner Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any
part of the Owner Trust Estate or any Mortgaged Property may at the time be
located, the Owner Trustee (with the consent of the Insurer, which consent
shall not be unreasonably withheld) shall have the power and shall execute and
deliver all instruments to appoint one or more Persons to act as co-owner
trustee, jointly with the Owner Trustee, or separate owner trustee or separate
owner trustees, of all or any part of the Owner Trust Estate, and to vest in
such Person, in such capacity, such title to the Trust, or any part thereof,
and, subject to the other provisions of this Section, such powers, duties,
obligations, rights and trusts as the Owner Trustee may consider necessary or
desirable. No co-owner trustee or separate trustee under this Section 10.5
shall be required to meet the terms of eligibility as a successor Owner
Trustee pursuant to Section 10.1 above and no notice of the appointment of any
co-owner trustee or separate trustee shall be required pursuant to Section
10.3 above.
The Owner Trustee hereby appoints the Indenture Trustee for the purpose
of establishing and maintaining the Collection Account and making the
distributions therefrom to the Persons entitled thereto pursuant to Section
5.01 of the Sale and Servicing Agreement.
Each separate trustee and co-owner trustee shall, to the extent permitted
by law, be appointed and act subject to the following provision and
conditions:
(i) all rights, powers, duties and obligations conferred or imposed
upon the Owner Trustee shall be conferred upon and exercised or performed
by the Owner Trustee and such separate owner trustee or co-owner trustee
jointly (it being understood that such separate owner trustee or co-owner
trustee is not authorized to act separately without the Owner Trustee
joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed, the
Owner Trustee shall be incompetent or unqualified to perform such act or
acts, in which event such rights, powers, duties, and obligations
(including the holding of title to the Trust or any portion thereof in
any such jurisdiction) shall be exercised and performed singly by such
separate trustee or co-owner trustee but solely at the direction of the
Owner Trustee;
(ii) no owner trustee under this Agreement shall be personally
liable by reason of any act or omission of any other owner trustee under
this Agreement; and
36
(iii) the Owner Trustee may at any time accept the resignation of or
remove any separate trustee or co-owner trustee.
Any notice, request or other writing given to the Owner Trustee shall be
deemed to have been given to the separate trustees and co-owner trustees, as
if given to each of them. Every instrument appointing any separate owner
trustee or co-owner trustee, other than this Agreement, shall refer to this
Agreement and to the conditions of this Article X. Each separate trustee and
co-owner trustee, upon its acceptance of appointment, shall be vested with the
estates specified in its instrument of appointment, either jointly with the
Owner Trustee or separately, as may be provided therein, subject to all the
provisions of this Agreement, specifically including every provision of this
Agreement relating to the conduct of, affecting the liability of, or affording
protection to, the Owner Trustee. Each such instrument shall be filed with the
Owner Trustee.
Any separate trustee or co-owner trustee may at any time appoint the
Owner Trustee as its agent or attorney-in-fact with full power and authority,
to the extent not prohibited by law, to do any lawful act under or in respect
of this Agreement on its behalf and in its name. If any owner trustee or
co-owner trustee shall die, become incapable of acting, resign or be removed,
all of its estates, properties, rights, remedies and trusts shall vest in and
be exercised by the Owner Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
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ARTICLE XI
MISCELLANEOUS
Section 11.1 Supplements and Amendments. This Agreement may be amended by
the Depositor, HFC, the Owner Trustee, the Delaware Trustee and the Co-Trustee
with prior written notice to the Rating Agencies and the Indenture Trustee and
with the consent of the Insurer (which consent shall not be unreasonably
withheld), but without the consent of any of the Noteholders, the Transferor
or the Indenture Trustee, to cure any ambiguity, to correct or supplement any
provisions in this Agreement or for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions in this Agreement
or of modifying in any manner the rights of the Noteholders or the Transferor;
provided, however, that such action shall not, as evidenced by an Opinion of
Counsel, adversely affect in any material respect the interests of any
Noteholder, the Transferor or the Insurer. An amendment described above shall
be deemed not to adversely affect in any material respect the interests of any
Noteholder, the Transferor or the Insurer if the party requesting the
amendment satisfies the Rating Agency Condition with respect to such
amendment.
This Agreement may also be amended from time to time by the Depositor,
HFC, the Owner Trustee, the Delaware Trustee and the Co-Trustee with the prior
written consent of the Rating Agencies, the Indenture Trustee, the Majority
Noteholder, the Transferor and the Insurer, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions
of this Agreement or modifying in any manner the rights of the Noteholders or
the Transferor; provided, however, that no such amendment shall (a) increase
or reduce in any manner the amount of, or accelerate or delay the timing of,
collections of payments on the Home Equity Loans or distributions that shall
be required to be made for the benefit of the Noteholders or the Transferor or
(b) reduce the aforesaid Percentage Interests required to consent to any such
amendment, without the consent of the holders of all the outstanding Notes;
and provided further, that no such amendment will be effective unless the
Insurer consents to such action or such action will not, as evidenced by an
Opinion of Counsel, adversely affect in any material respect the interests of
any Noteholders or the Insurer. The Depositor shall join in any such amendment
approved as provided in the preceding sentence so long as such amendment is
not adverse to the interests of the Depositor.
Anything to the contrary herein notwithstanding, no amendment to this
Agreement may be made that affects the rights and liabilities of the Delaware
Trustee without the written consent of the Delaware Trustee.
Promptly after the execution of any such amendment, the Owner Trustee
shall furnish written notification of the substance of such amendment to the
Indenture Trustee, the Insurer and each of the Rating Agencies.
It shall not be necessary for the consent of the Transferor, the
Noteholders or the Indenture Trustee pursuant to this Section 11.1 to approve
the particular form of any proposed amendment, but it shall be sufficient if
such consent shall approve the substance thereof. The manner of obtaining such
consents (and any other consents of the Transferor provided for in this
Agreement or in any other Transaction Document) and of evidencing the
authorization of the
38
execution thereof by the Transferor and the Noteholders shall be subject to
such reasonable requirements as the Owner Trustee may prescribe.
Promptly after the execution of any amendment to the Certificate of
Trust, the Delaware Trustee shall cause the filing of such amendment with the
Secretary of State.
Prior to the execution of any amendment to this Agreement or the
Certificate of Trust, each of the Owner Trustee and the Delaware 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 Agreement and
that all conditions precedent to such execution and delivery have been
satisfied. The Owner Trustee and the Delaware Trustee may, but shall not be
obligated to, enter into any such amendment which affects the Owner Trustee's
own rights, duties or immunities under this Agreement or otherwise.
Section 11.2 No Legal Title to Owner Trust Estate in Transferor. The
Transferor shall not have legal title to any part of the Owner Trust Estate.
The Transferor shall be entitled to receive distributions with respect to
their undivided ownership interest therein only in accordance with Articles V
and IX herein. No transfer, by operation of law or otherwise, of any right,
title, or interest of the Transferor to and in its Ownership Interest shall
operate to terminate this Agreement or the trusts hereunder or entitle any
transferee to an accounting or to the transfer to it of legal title to any
part of the Owner Trust Estate.
Section 11.3 Limitations on Rights of Others. The provisions of this
Agreement are solely for the benefit of the Owner Trustee, the Delaware
Trustee, the Trust, the Insurer, the Transferor and, to the extent expressly
provided herein, the Indenture Trustee, the Insurer and the Noteholders, and
nothing in this Agreement, whether express or implied, shall be construed to
give to any other Person any legal or equitable right, remedy or claim in the
Owner Trust Estate or under or in respect of this Agreement or any covenants,
conditions or provisions contained herein.
Section 11.4 Notices.
(a) Unless otherwise expressly specified or permitted by the terms
hereof, all notices shall be in writing and shall be deemed given upon receipt
by the intended recipient or three Business Days after mailing if mailed by
certified mail, postage prepaid (except that notice to the Owner Trustee shall
be deemed given only upon actual receipt by the Owner Trustee), at the
following addresses: (i) if to the Owner Trustee, its Corporate Trust Office;
(ii) if to the Delaware Trustee, at Xxxxx Xxxx Xxxxxx, Xxxxx 000, Xxxxxx,
Xxxxxxxx 00000; (iii) if to the Co-Trustee, at Xxx Xxxx Xxx Xxxxx, Xxxxxxx,
Xxxxxxxx 00000; (iv) if to the Depositor or HFC, 0000 Xxxxxxx Xxxx, Xxxxxxxx
Xxxxxxx, Xxxxxxxx 00000, Attention: Treasurer, (v) if to the Insurer, Ambac
Assurance Corporation, Xxx Xxxxx Xxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Consumer Asset-Backed Securities Group, Facsimile: (000) 000-0000,
Confirmation: (000) 000-0000, (vi) if to the Indenture Trustee, its Corporate
Trust Office; or, as to each such party, at such other address as shall be
designated by such party in a written notice to each other party.
(b) Any notice required or permitted to be given to the Transferor
shall be given by first-class mail, postage prepaid, at the address of such
Transferor as shown in the
39
Register. Any notice so mailed within the time prescribed in this Agreement
shall be conclusively presumed to have been duly given, whether or not the
Transferor receives such notice.
Section 11.5 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
Section 11.6 Separate Counterparts. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
Section 11.7 Successors and Assigns. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of the Owner
Trustee, the Delaware Trustee, the Co-Trustee, the Insurer and its successors
and the Transferor and its successors and permitted assigns, all as herein
provided. Any request, notice, direction, consent, waiver or other instrument
or action by the Transferor shall bind the successors and assigns of the
Transferor.
Section 11.8 No Petition. The Owner Trustee, the Delaware Trustee and the
Co-Trustee, by entering into this Agreement, the Transferor, by accepting the
Ownership Interest, and the Indenture Trustee and each Noteholder by accepting
the benefits of this Agreement, hereby covenant and agree that they will not
at any time institute against the Depositor or the Trust, or join in any
institution against the Depositor, or the Trust of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any United States Federal or state bankruptcy or law in
connection with any obligations relating to the Ownership Interest and the
Notes, this Agreement or any of the Transaction Documents.
Section 11.9 [Reserved].
Section 11.10 No Recourse. The Transferor by accepting the Ownership
Interest acknowledges that the Transferor's Ownership Interest represents a
beneficial interest in the Trust only and does not represent an interest in or
an obligation of the Master Servicer, the Depositor, the Owner Trustee, the
Delaware Trustee, the Co-Trustee or any Affiliate thereof and no recourse may
be had against such parties or their assets, except as may be expressly set
forth or contemplated in this Agreement, the Ownership Interest or the
Transaction Documents.
Section 11.11 Headings. The headings of the various Articles and Sections
herein are for convenience of reference only and shall not define or limit any
of the terms or provisions hereof.
Section 11.12 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
40
Section 11.13 Inconsistencies with Sale and Servicing Agreement.
In the event certain provisions of this Agreement conflict with the
provisions of the Sale and Servicing Agreement, the parties hereto agree that
the provisions of the Sale and Servicing Agreement shall be controlling (other
than the provisions governing the internal affairs of the Trust, which shall
be governed by Delaware law).
Section 11.14 Third Party Beneficiary.
The parties hereto acknowledge that the Insurer and the Indenture Trustee
are express third party beneficiaries hereof entitled to enforce the
provisions hereof as if they were actually parties hereto. Nothing in this
Section 11.14 however shall be construed to mitigate in any way, the fiduciary
responsibilities of the Owner Trustee to the beneficiaries of the Trust.
Section 11.15 Master Servicer.
The Master Servicer is authorized to prepare, or to cause to be prepared,
execute and deliver on behalf of the Trust all such documents, reports,
filings, instruments, certificates and opinions as it shall be the duty of the
Trust, the Delaware Trustee or the Owner Trustee to prepare, file or deliver
pursuant to the Transaction Documents. Upon written request, the Owner Trustee
shall execute and deliver to the Master Servicer a limited power of attorney
appointing the Master Servicer the Trust's agent and attorney-in-fact to
prepare, or to cause to be prepared, execute and deliver all such documents,
reports, filings, instruments, certificates and opinions. In addition, the
Master Servicer is authorized to cause the Trust to obtain and maintain the
effectiveness of any licenses as provided in Section 7.8.
Section 11.16 Consent of Insurer.
Unless otherwise specified, whenever in this Agreement the taking of any
action, giving of any instruction or direction, exercise of any right or
remedy or effectiveness of any amendment is conditioned upon the approval of,
acceptance by or consent of the Insurer (whether written or otherwise), such
approval, acceptance or consent requirement shall be waived so long as an
Insurer Default exists and is continuing.
41
IN WITNESS WHEREOF, the parties hereto have caused this Amended and
Restated Trust Agreement to be duly executed by their respective officers
hereunto duly authorized, as of the day and year first above written.
HOUSEHOLD FINANCE CORPORATION
By: /s/X.X. Xxxx, Xx.
----------------------------------
Name: X.X. Xxxx, Xx.
Title: Vice President and Treasurer
HFC REVOLVING CORPORATION,
as Depositor
By: /s/X.X. Xxxxx
----------------------------------
Name: X.X. Xxxxx
Title: Vice President and Assistant Treasurer
THE BANK OF NEW YORK (DELAWARE),
as Delaware Trustee
By: /s/Xxxxxxx X. Xxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxx
Title: SVP
BANK ONE, NATIONAL ASSOCIATION,
as Co-Trustee
By:/s/ Xxxxxx Xxxxxxx
----------------------------------
Name: Xxxxxx Xxxxxxx
Title: Vice President
THE BANK OF NEW YORK,
as Owner Trustee
By: /s/ Xxxxx Xxx
---------------------------------
Name: Xxxxx Xxx
Title: Assistant Treasurer
EXHIBIT A
CERTIFICATE OF TRUST OF
HOUSEHOLD HOME EQUITY LOAN TRUST 2002-4
THIS Certificate of Trust of HOUSEHOLD HOME EQUITY LOAN TRUST 2002-4 (the
"Trust"), is being duly executed and filed by the undersigned, as trustees, to
form a statutory trust under the Delaware Statutory Trust Act (12 Del. Code,
Section 3801 et seq.)(the "Act").
1. Name. The name of the statutory trust formed hereby is HOUSEHOLD HOME
EQUITY LOAN TRUST 2002-4.
2. Delaware Trustee. The name and business address of the trustee of the
Trust in the State of Delaware is The Bank of New York (Delaware), Xxxxx Xxxx
Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxx 00000. Attention: Corporate Trust
Administration Department.
IN WITNESS WHEREOF, the undersigned, being all of the trustees of the
Trust, have executed this Certificate of Trust in accordance with Section
3811(a) of the Act.
THE BANK OF NEW YORK, not in its
individual capacity but solely as Owner
Trustee
By: -----------------------------------------
Name:
Title:
THE BANK OF NEW YORK
(DELAWARE), not in its individual capacity
but solely as Delaware
By:-----------------------------------------
Name:
Title:
A-1
EXHIBIT B
TRANSFER CERTIFICATE
The Bank of New York
0 Xxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Corporate Trust Administration
Re: Amended and Restated Trust Agreement, November 14,
2002, Household Finance Corporation, HFC Revolving
Corporation, as Depositor, The Bank of New York
(Delaware), as Delaware Trustee, The Bank of New
York, as Owner Trustee, and Bank One, National
Association, as Co-Trustee; Household Home Equity
Loan Trust 2002-4, Closed-End Home Equity Loan
Asset Backed Notes, Series 2002-4
Ladies and Gentlemen:
The undersigned (the "Transferee") has agreed to purchase from (the
"Transferor") the Ownership Interest:
A. Rule 144A "Qualified Institutional Buyers" should complete this
section
I. The Transferee is (check one):
(i) An insurance company, as defined in Section 2(13) of
the Securities Act of 1933, as amended (the "Securities
Act"), (ii) an investment company registered under the
Investment Company Act of 1940, as amended (the "Investment
Company Act"), (iii) a business development company as
defined in Section 2(a)(48) of the Securities Act, (iv) a
Small Business Investment Company licensed by the U.S.
Small Business Administration under Section 301(c) or (d)
of the Small Business Investment Act of 1958, (v) a plan
established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a state
or its political subdivisions, for the benefit of its
employees, (vi) an employee benefit plan within the meaning
of Title I of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), (vii) a business development
company as defined in Section 202(a)(22) of the Investment
Advisors Act of 1940, (viii) an organization described in
Section 501(c)(3) of the Internal Revenue Code, corporation
(other than a bank as defined in Section 3(a)(2) of the
Securities Act or a savings and loan association or
B-1
other institution referenced in Section 3(a)(2) of the
Securities Act or a foreign bank or savings and loan
association or equivalent institution), partnership, or
Massachusetts or similar business trust; or (ix) an
investment advisor registered under the Investment Advisors
Act of 1940, which, for each of (i) through (ix), owns and
invests on a discretionary basis at least $100 million in
securities other than securities of issuers affiliated with
the Transferee, securities issued or guaranteed by the
United States or a person controlled or supervised by and
acting as an instrumentality of the government of the
United States pursuant to authority granted by the Congress
of the United States, bank deposit notes and certificates
of deposit, loan participations, repurchase agreements,
securities owned but subject to a repurchase agreement, and
currency, interest rate and commodity swaps (collectively,
"Excluded Securities");
____ a dealer registered pursuant to Section 15 of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act") that in the aggregate owns and invests on a
discretionary basis at least $10 million of securities
other than Excluded Securities and securities constituting
the whole or part of an unsold allotment to, or
subscription by, Transferee as a participant in a public
offering;
___ an investment company registered under the Investment
Company Act that is part of a family of investment
companies (as defined in Rule 144A of the Securities and
Exchange Commission) which own in the aggregate at least
$100 million in securities other than Excluded Securities
and securities of issuers that are part of such family of
investment companies;
___ an entity, all of the equity owners of which are entities
described in this Paragraph A(I);
___ a bank as defined in Section 3(a)(2) of the Securities Act,
any savings and loan association or other institution as
referenced in Section 3(a)(5)(A) of the Securities Act, or
any foreign bank or savings and loan association or
equivalent institution that in the aggregate owns and
invests on a discretionary basis at least $100 million in
securities other than Excluded Securities and has an
audited net worth of at least $25 million as demonstrated
in its latest annual financial statements, as of a date not
more than 16 months preceding the date of transfer of the
Ownership Interest to the Transferee in the case of a U.S.
bank or savings and loan association, and not more than 18
months preceding such date in the case of a foreign bank or
savings association or equivalent institution.
II. The Transferee is acquiring such Ownership Interest solely for
its own account, for the account of one or more others, all of which are
"Qualified Institutional Buyers" within the meaning of Rule 144A, or in its
capacity as a dealer registered pursuant to Section 15 of the Exchange Act
acting in a riskless principal transaction on behalf of a "Qualified
Institutional Buyer". The Transferee is not acquiring such Ownership Interest
with a view to or
B-2
for the resale, distribution, subdivision or fractionalization thereof which
would require registration of the Ownership Interest under the Securities Act.
B. "Accredited Investors" should complete this Section
I. The Transferee is (check one):
___ a bank within the meaning of Section 3(a)(2) of the
Securities Act;
___ a savings and loan association or other institution
defined in Section 3(a)(5) of the Securities Act;
___ a broker or dealer registered pursuant to the Exchange
Act;
___ an insurance company within the meaning of Section
2(13) of the Securities Act;
___ an investment company registered under the Investment
Company Act;
___ an employee benefit plan within the meaning of Title I
of ERISA, which has total assets in excess of
$5,000,000;
___ another entity which is an "accredited investor" within
the meaning of paragraph (fill in) of subsection (a) of
Rule 501 of the Securities and Exchange Commission.
II. The Transferee is acquiring such Ownership Interest solely for
its own account, for investment, and not with a view to or for the resale,
distribution, subdivision or fractionalization thereof which would require
registration of the Ownership Interest under the Securities Act.
C. If the Transferee is unable to complete one of paragraph A(I) or
paragraph B(I) above, the Transferee must furnish an opinion in form and
substance satisfactory to the Trustee of counsel satisfactory to the Trustee
to the effect that such purchase will not violate any applicable federal or
state securities laws.
D. The Transferee is not (A) an "employee benefit plan" within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA") that is subject to Title I of ERISA, or (B) a
"plan" within the meaning of and subject to Section 4975(e)(1) of the Code
(any such plan or employee benefit plan, a "Plan") or (C) any entity,
including an insurance company separate account or general account, whose
underlying assets include plan assets by reason of a plan's investment in the
entity and is not directly or indirectly purchasing such Trust Security on
behalf of, as investment manager of, as named fiduciary of, as trustee of, or
with assets of a Plan.
(iii) the Transferee is an "accredited investor" as defined in
Rule 501(a) of Regulation D pursuant to the Securities Act.
B-3
Very truly yours,
[NAME OF TRANSFEREE]
By: -------------------------------
Title: ----------------------------
Dated:
THE FOREGOING IS ACKNOWLEDGED THIS ____ DAY OF __________, 200_.
[NAME OF TRANSFEROR]
By: -----------------------------------
Title:---------------------------------
B-4
