EXHIBIT 4.4
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MASTER SALE AND SERVICING AGREEMENT
among
HOUSEHOLD AUTOMOTIVE TRUST ___,
HOUSEHOLD AUTO RECEIVABLES CORPORATION,
Seller,
HOUSEHOLD FINANCE CORPORATION,
Master Servicer
and
[Name of Trustee],
Trustee
Dated as of __________
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TABLE OF CONTENTS
PAGE
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ARTICLE I
Definitions
SECTION 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2. Other Interpretive Provisions . . . . . . . . . . . . . . . . . .19
SECTION 1.3. Usage of Terms. . . . . . . . . . . . . . . . . . . . . . . . . .20
SECTION 1.4. Certain References. . . . . . . . . . . . . . . . . . . . . . . .20
SECTION 1.5. No Recourse . . . . . . . . . . . . . . . . . . . . . . . . . . .20
SECTION 1.6. Action by or Consent of Noteholders . . . . . . . . . . . . . . .20
ARTICLE II
Conveyance of Receivables
SECTION 2.1. Conveyance of Receivables . . . . . . . . . . . . . . . . . . . .21
SECTION 2.2. Further Encumbrance of Series Trust Estate. . . . . . . . . . . .24
ARTICLE III
The Receivables
SECTION 3.1. Representations and Warranties of Seller. . . . . . . . . . . . .25
SECTION 3.2. Repurchase upon Breach. . . . . . . . . . . . . . . . . . . . . .25
SECTION 3.3. Custody of Receivables Files. . . . . . . . . . . . . . . . . . .26
ARTICLE IV
Administration and Servicing of Receivables
SECTION 4.1. Duties of the Master Servicer . . . . . . . . . . . . . . . . . .27
SECTION 4.2. Collection of Receivable Payments; Modifications of
Receivables. . . . . . . . . . . . . . . . . . . . . . . . . .28
SECTION 4.3. Realization Upon Receivables. . . . . . . . . . . . . . . . . . .30
SECTION 4.4. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
SECTION 4.5. Maintenance of Security Interests in Vehicles . . . . . . . . . .32
SECTION 4.6. Covenants, Representations, and Warranties of Master Servicer . .32
SECTION 4.7. Repurchase of Receivables Upon Breach of Covenant . . . . . . . .33
SECTION 4.8. Total Servicing Fee; Payment of Certain Expenses by
Master Servicer. . . . . . . . . . . . . . . . . . . . . . . .34
SECTION 4.9. Master Servicer's Certificate . . . . . . . . . . . . . . . . . .34
SECTION 4.10. Annual Statement as to Compliance, Notice of Master
Servicer Termination Event . . . . . . . . . . . . . . . . . .34
i
SECTION 4.11. Annual Independent Accountants' Report . . . . . . . . . . . . .35
SECTION 4.12. Access to Certain Documentation and Information
Regarding Receivables. . . . . . . . . . . . . . . . . . . . .36
SECTION 4.13. Fidelity Bond and Errors and Omissions Policy. . . . . . . . . .36
SECTION 4.14. Year 2000 Compliance . . . . . . . . . . . . . . . . . . . . . .36
ARTICLE V
Trust Accounts; Distributions;
Statements to Certificateholders and Noteholders
SECTION 5.1. Establishment of Trust Accounts . . . . . . . . . . . . . . . . .36
SECTION 5.2. Certain Reimbursements to the Master Servicer . . . . . . . . . .38
SECTION 5.3. Application of Collections. . . . . . . . . . . . . . . . . . . .39
SECTION 5.4. Additional Deposits . . . . . . . . . . . . . . . . . . . . . . .39
SECTION 5.5. Distributions . . . . . . . . . . . . . . . . . . . . . . . . . .39
ARTICLE VI
RESERVED
ARTICLE VII
RESERVED
ARTICLE VIII
The Seller
SECTION 8.1. Representations of Seller . . . . . . . . . . . . . . . . . . . .40
SECTION 8.2. Corporate Existence . . . . . . . . . . . . . . . . . . . . . . .42
SECTION 8.3. Liability of Seller; Indemnities. . . . . . . . . . . . . . . . .43
SECTION 8.4. Merger or Consolidation of, or Assumption of the
Obligations of, Seller . . . . . . . . . . . . . . . . . . . .44
SECTION 8.5. Limitation on Liability of Seller and Others. . . . . . . . . . .44
SECTION 8.6. Seller May Own Certificates or Notes. . . . . . . . . . . . . . .44
ARTICLE IX
The Master Servicer
SECTION 9.1. Representations of Master Servicer. . . . . . . . . . . . . . . .45
SECTION 9.2. Liability of Master Servicer; Indemnities . . . . . . . . . . . .47
ii
SECTION 9.3. Merger or Consolidation of, or Assumption of the
Obligations of the Master Servicer . . . . . . . . . . . . . .49
SECTION 9.4. Limitation on Liability of Master Servicer and Others . . . . . .49
SECTION 9.5. Delegation of Duties. . . . . . . . . . . . . . . . . . . . . . .50
SECTION 9.6. Master Servicer Not to Resign . . . . . . . . . . . . . . . . . .50
SECTION 9.7. Sub-Servicing Agreements Between Master Servicer
and Sub-Servicers. . . . . . . . . . . . . . . . . . . . . . .51
SECTION 9.8. Successor Sub-Servicers . . . . . . . . . . . . . . . . . . . . .51
ARTICLE X
Default
SECTION 10.1. Master Servicer Termination Event. . . . . . . . . . . . . . . .52
SECTION 10.2. Consequences of a Master Servicer Termination Event. . . . . . .53
SECTION 10.3. Appointment of Successor . . . . . . . . . . . . . . . . . . . .54
SECTION 10.4. Notification to Noteholders and Certificateholders . . . . . . .55
SECTION 10.5. Waiver of Past Defaults. . . . . . . . . . . . . . . . . . . . .55
SECTION 10.6. Successor to Master Servicer . . . . . . . . . . . . . . . . . .56
ARTICLE XI
Termination
SECTION 11.1. Optional Purchase of All Receivables . . . . . . . . . . . . . .56
ARTICLE XII
Administrative Duties of the Master Servicer
SECTION 12.1. Administrative Duties. . . . . . . . . . . . . . . . . . . . . .57
SECTION 12.2. Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . .59
SECTION 12.3. Additional Information to be Furnished to the Issuer . . . . . .60
ARTICLE XIII
Miscellaneous Provisions
SECTION 13.1. Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . .60
SECTION 13.2. Protection of Title to Trust . . . . . . . . . . . . . . . . . .61
SECTION 13.3. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . .63
SECTION 13.4. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . .63
SECTION 13.5. Limitations on Rights of Others. . . . . . . . . . . . . . . . .64
SECTION 13.6. Severability . . . . . . . . . . . . . . . . . . . . . . . . . .64
SECTION 13.7. Separate Counterparts. . . . . . . . . . . . . . . . . . . . . .64
SECTION 13.8. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . .64
iii
SECTION 13.9. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . .64
SECTION 13.10. Assignment to Trustee . . . . . . . . . . . . . . . . . . . . .64
SECTION 13.11. Nonpetition Covenants . . . . . . . . . . . . . . . . . . . . .65
SECTION 13.12. Limitation of Liability of Owner Trustee. . . . . . . . . . . .65
SECTION 13.13. Independence of the Master Servicer . . . . . . . . . . . . . .65
SECTION 13.14. No Joint Venture. . . . . . . . . . . . . . . . . . . . . . . .65
EXHIBITS
Exhibit A - Form of Master Servicer's Certificate
Exhibit B - Form of Transfer Agreement
Exhibit C - Form of Request for Release and Receipt of Documents
Exhibit D - Form of Trustee's Acknowledgement
iv
MASTER SALE AND SERVICING AGREEMENT dated as of ________, among
HOUSEHOLD AUTOMOTIVE TRUST ___, a Delaware business trust (the "Issuer"),
HOUSEHOLD AUTO RECEIVABLES CORPORATION, a Nevada corporation (the "Seller"),
HOUSEHOLD FINANCE CORPORATION, a Delaware corporation (the "Master Servicer")
and [Name of Trustee], a [New York] banking corporation, in its capacity as
Trustee.
WHEREAS the Issuer desires to purchase from time to time Receivables
arising in connection with motor vehicle retail installment sale contracts
acquired by Household Automotive Finance Corporation or any of its subsidiaries;
WHEREAS the Seller will purchase from time to time Receivables from
Household Automotive Finance Corporation and is willing to sell Receivables to
the Issuer;
WHEREAS the Master Servicer is willing to service all such
receivables;
NOW, THEREFORE, in consideration of the promises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
.1. DEFINITIONS. Whenever used in this Agreement, the following
words and phrases shall have the following meanings:
"Accountants' Report" means the report of a firm of nationally
recognized independent accountants described in Section 4.11.
"Accounting Date" means, with respect to a Distribution Date, the last
day of the Collection Period immediately preceding such Distribution Date.
"Actuarial Method" means the method of allocating a fixed level
monthly payment on an obligation between principal and interest, pursuant to
which the portion of such payment that is allocated to interest is equal to the
product of (a) 1/12, (b) the fixed annual rate of interest on such obligation
and (c) the outstanding principal balance of such obligation.
"Actuarial Receivable" means a Receivable under which the portion of
the payment allocated to interest and the portion allocable to principal is
determined in accordance with the Actuarial Method.
"Addition Notice" means, with respect to any transfer of Receivables
to the Trust pursuant to Section 2.1 of this Agreement, notice of the Seller's
election to
transfer Receivables to the Trust, such notice to designate the related
Transfer Date, the related Series Trust Estate, if any, and the approximate
principal amount of Receivables to be transferred on such Transfer Date.
"Affiliate" means, with respect to any specified Person, any other
Person controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with respect
to any Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Aggregate Principal Balance" means, with respect to any date of
determination, the sum of the Principal Balances for all Receivables (other than
(i) any Receivable that has become a Liquidated Receivable and (ii) any
Receivable that has become a Repurchased Receivable as of the date of
determination).
"Agreement" means this Master Sale and Servicing Agreement, as the
same may be amended and supplemented from time to time.
"Amount Financed" means, with respect to a Receivable, the aggregate
amount advanced under such Receivable toward the purchase price of the Financed
Vehicle and any related costs, including amounts advanced in respect of
accessories, insurance premiums, service and warranty contracts, other items
customarily financed as part of retail automobile installment sale contracts or
promissory notes, and related costs.
"Annual Percentage Rate" or "APR" of a Receivable means the annual
percentage rate of finance charges or service charges, as stated in the related
Contract.
"Base Servicing Fee" means, with respect to each Series Trust
Estate and with respect to any Collection Period, the fee payable to the
Master Servicer for services rendered during such Collection Period, which,
unless otherwise specified in the related Series Supplement, shall be equal
to one-twelfth of the Servicing Fee Rate multiplied by the Pool Balance for
such Series Trust Estate determined as of the first day of such Collection
Period.
"Basic Documents" means this Agreement, the Certificate of Trust, the
Trust Agreement, the Indenture, the Master Receivables Purchase Agreements and
other documents and certificates delivered in connection therewith.
"Business Day" means a day other than a Saturday, a Sunday or other
day on which commercial banks located in the states of Illinois, California or
New York are authorized or obligated to be closed.
"Certificate" has the meaning assigned to such term in the Trust
Agreement and, with respect to a Series, the meaning specified in the relevant
Series Supplement.
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"Certificateholder" has the meaning assigned to such term in the Trust
Agreement.
"Class" means a class of Notes or Certificates, as the context
requires.
"Collected Funds" means, with respect to any Distribution Date, the
amount of funds in the Master Collection Account representing collections on
Receivables during the related Collection Period, including all Net Liquidation
Proceeds collected during the related Collection Period (but excluding any
Repurchase Amounts).
"Collection Period" means, for each Series, with respect to the first
Distribution Date in such Series, the period beginning on the opening of
business on the related Cutoff Date and ending on the close of business on the
last day of the calendar month preceding such Distribution Date. With respect
to each subsequent Distribution Date, the preceding calendar month. Any amount
stated "as of the close of business of the last day of a Collection Period"
shall give effect to all applications of collections on such day.
"Collection Records" means all manually prepared or computer generated
records relating to collection efforts or payment histories with respect to the
Receivables.
"Computer Tape" means the computer tapes or other electronic media
furnished by the Seller to the Issuer and its assigns describing certain
characteristics of the Receivables.
"Contract" means a motor vehicle retail installment sale contract.
"Corporate Trust Office" means (i) with respect to the Owner Trustee,
the principal corporate trust office of the Owner Trustee, which at the time of
execution of this agreement is [address], Attention: ______________________,
and (ii) with respect to the Trustee, the principal corporate trust office of
[Name of Trustee], which at the time of execution of this agreement is
[address], Attention: ______________________.
"Covenant Receivable" means, with respect to any Collection Period, a
Receivable which the Master Servicer is required to purchase pursuant to
Section 4.7.
"Cram Down Loss" means, with respect to a Receivable, if a court of
appropriate jurisdiction in an insolvency proceeding shall have issued a final
order reducing the amount owed on a Receivable or otherwise modifying or
restructuring the scheduled payments to be made on a Receivable, an amount equal
to (i) the excess of the Principal Balance of such Receivable immediately prior
to such order over the Principal Balance of such Receivable as so reduced and/or
(ii) if such court shall have issued an order reducing the effective rate of
interest on such Receivable, the excess of the Principal Balance of such
Receivable immediately prior to such order over the net present value (using as
the discount rate the higher of the APR on such Receivable or the rate of
interest, if any, specified by the court in such order) of the scheduled
payments as so
3
modified or restructured. A "Cram Down Loss" shall be deemed to have
occurred on the date of issuance of such order.
"Cutoff Date" means, with respect to a Receivable and (i) the Transfer
Date as of which such Receivable is transferred to the Trust, (a) the Accounting
Date immediately preceding such Transfer Date or (b) if such Receivable is
originated in the month of the related Transfer Date, the date of origination or
(ii) the date designated in the related Series Supplement as the Cutoff Date for
such Series.
"Dealer" means a dealer who sold a Financed Vehicle and who originated
and assigned the respective Receivable, directly or indirectly, to HAFC or one
of its subsidiaries under a Dealer Agreement or pursuant to a Dealer Assignment.
"Dealer Agreement" means any agreement between HAFC and a Dealer
relating to the acquisition of Receivables from a Dealer by HAFC.
"Dealer Assignment" means, with respect to a Receivable, the executed
assignment executed by a Dealer conveying such Receivable to HAFC.
"Dealer Underwriting Guide" means either, (i) the underwriting
guidelines used by or on behalf of HAFC or one of its subsidiaries in the
origination and purchase of Receivables as amended from time to time or (ii) the
underwriting guidelines used in the origination of Receivables as reviewed by
HAFC or one of its subsidiaries prior to the purchase of Receivables by HAFC.
"Delivery" means with respect to the Trust Account Property:
(1) the perfection and priority of a security interest in which is
governed by the law of a jurisdiction which has adopted the 1978 Revision to
Article Eight of the UCC:
(a) with respect to bankers' acceptances, commercial paper,
negotiable certificates of deposit and other obligations that constitute
"instruments" within the meaning of Section 9-105(1)(i) of the UCC (other
than certificated securities) and are susceptible of physical delivery,
transfer thereof to the Trustee by physical delivery to the Trustee,
endorsed to, or registered in the name of, the Trustee or its nominee or
endorsed in blank and such additional or alternative procedures as may
hereafter become appropriate to effect the complete transfer of ownership
of any such Collateral to the Trustee free and clear of any adverse claims,
consistent with changes in applicable law or regulations or the
interpretation thereof;
(b) with respect to a "certificated security" (as defined in
Section 8-102(1)(a) of the UCC), transfer thereof:
(i) by physical delivery of such certificated security to
the Trustee, provided that if the certificated security is in
registered form, it
4
shall be endorsed to, or registered in the name of, the Trustee or
endorsed in blank;
(ii) by physical delivery of such certificated security to a
"financial intermediary" (as defined in Section 8-313(4) of the UCC)
of the Trustee specially endorsed to or issued in the name of the
Trustee;
(iii) by the sending by a financial intermediary, not a
"clearing corporation" (as defined in Section 8-102(3) of the UCC), of
a confirmation of the purchase and the making by such financial
intermediary of entries on its books and records identifying as
belonging to the Trustee of (A) a specific certificated security in
the financial intermediary's possession, (B) a quantity of securities
that constitute or are part of a fungible bulk of certificated
securities in the financial intermediary's possession, or (C) a
quantity of securities that constitute or are part of a fungible bulk
of securities shown on the account of the financial intermediary on
the books of another financial intermediary; or
(iv) by the making by a clearing corporation of appropriate
entries on its books reducing the appropriate securities account of
the transferor and increasing the appropriate securities account of
the Trustee or a Person designated by the Trustee by the amount of
such certificated security, provided that in each case: (A) the
clearing corporation identifies such certificated security for the
sole and exclusive account of the Trustee or the Person designated by
the Trustee, (B) such certificated security shall be subject to the
clearing corporation's exclusive control, (C) such certificated
security is in bearer form or endorsed in blank or registered in the
name of the clearing corporation or custodian bank or a nominee of
either of them, (D) custody of such certificated security shall be
maintained by such clearing corporation or a "custodian bank" (as
defined in Section 8-102(4) of the UCC) or the nominee of either
subject to the control of the clearing corporation and (E) such
certificated security is shown on the account of the transferor
thereof on the books of the clearing corporation prior to the making
of such entries; and such additional or alternative procedures as may
hereafter become appropriate to effect the complete transfer of
ownership of any such Collateral to the Trustee free and clear of any
adverse claims, consistent with changes in applicable law or
regulations or the interpretation thereof;
(c) with respect to any security issued by the U.S. Treasury, the
Federal Home Loan Mortgage Corporation or by the Federal National Mortgage
Association that is a book-entry security held through the Federal Reserve
System pursuant to Federal book entry regulations, the following
procedures, all in accordance with applicable law, including applicable
Federal regulations and Articles 8 and 9 of the UCC: book-entry
registration of such property to an
5
appropriate book-entry account maintained with a Federal Reserve Bank by
a financial intermediary which is also a "depositary" pursuant to
applicable Federal regulations and issuance by such financial
intermediary of a deposit advice or other written confirmation of such
book-entry registration to the Trustee of the purchase by the financial
intermediary on behalf of the Trustee of such book-entry security; the
making by such financial intermediary of entries in its books and
records identifying such book-entry security held through the Federal
Reserve System pursuant to Federal book-entry regulations as belonging
to the Trustee and indicating that such financial intermediary holds
such book-entry security solely an agent for the Trustee; and such
additional or alternative procedures as may hereafter become appropriate
to effect complete transfer of ownership of any such Collateral to the
Trustee free of any adverse claims, consistent with changes in
applicable law or regulations or the interpretation thereof;
(d) with respect to any Trust Account Property that is an
"uncertificated security" (as defined in Section 8-102(1)(b) of the UCC)
and that is not governed by clause (c) above, transfer thereof:
(i) by registration of the transfer thereof to the Trustee,
on the books and records of the issuer thereof;
(ii) by the sending of a confirmation by a financial
intermediary of the purchase, and the making by such financial
intermediary of entries on its books and records identifying as
belonging to the Trustee (A) a quantity of securities which constitute
or are part of a fungible bulk of uncertificated securities registered
in the name of the financial intermediary or (B) a quantity of
securities which constitute or are part of a fungible bulk of
securities shown on the account of the financial intermediary on the
books of another financial intermediary; or
(iii) by the making by a clearing corporation of appropriate
entries on its books reducing the appropriate account of the
transferor and increasing the account of the Trustee or a person
designated by the Trustee by the amount of such uncertificated
security, provided that in each case: (A) the clearing corporation
identifies such uncertificated security for the sole and exclusive use
of the Trustee or the Person designated by the Trustee, (B) such
uncertificated security is registered in the name of the clearing
corporation or a custodian bank or a nominee of either, and (C) such
uncertificated security is shown on the account of the transferor on
the books of the clearing corporation prior to the making of such
entries; and
(e) in each case of delivery contemplated herein, the Trustee shall
make appropriate notations on its records, and shall cause same to be made
of the
6
records of its nominees, indicating that such securities are held in
trust pursuant to and as provided in this Agreement.
(2) the perfection and priority of a security interest in which is
governed by the law of a jurisdiction which has adopted the 1994 Revision to
Article 8 of the UCC:
(a) with respect to bankers' acceptances, commercial paper,
negotiable certificates of deposit and other obligations that constitute
"instruments" within the meaning of Section 9-105(1)(i) of the UCC (other
than certificated securities) and are susceptible of physical delivery,
transfer thereof to the Trustee by physical delivery to the Trustee,
endorsed to, or registered in the name of, the Trustee or its nominee or
endorsed in blank and such additional or alternative procedures as may
hereafter become appropriate to effect the complete transfer of ownership
of any such Collateral to the Trustee free and clear of any adverse claims,
consistent with changes in applicable law or regulations or the
interpretation thereof;
(b) with respect to a "certificated security" (as defined in
Section 8-102(a)(4) of the UCC), transfer thereof:
(i) by physical delivery of such certificated security to
the Trustee, provided that if the certificated security is in
registered form, it shall be endorsed to, or registered in the name
of, the Trustee or endorsed in blank;
(ii) by physical delivery of such certificated security in
registered form to a "securities intermediary" (as defined in
Section 8-102(a)(14) of the UCC) acting on behalf of the
Trustee if the certificated security has been specially
endorsed to the Trustee by an effective endorsement.
(c) with respect to any security issued by the U.S. Treasury, the
Federal Home Loan Mortgage Corporation or by the Federal National Mortgage
Association that is a book-entry security held through the Federal Reserve
System pursuant to Federal book entry regulations, the following
procedures, all in accordance with applicable law, including applicable
federal regulations and Articles 8 and 9 of the UCC: book-entry
registration of such property to an appropriate book-entry account
maintained with a Federal Reserve Bank by a securities intermediary which
is also a "depositary" pursuant to applicable federal regulations and
issuance by such securities intermediary of a deposit advice or other
written confirmation of such book-entry registration to the Trustee of the
purchase by the securities intermediary on behalf of the Trustee of such
book-entry security; the making by such securities intermediary of entries
in its books and records identifying such book-entry security held through
the Federal Reserve System pursuant to Federal book-entry regulations as
belonging to the Trustee and indicating that such securities intermediary
holds such book-entry security solely as agent for the Trustee; and such
additional or alternative procedures as may
7
hereafter become appropriate to effect complete transfer of ownership of
any such Collateral to the Trustee free of any adverse claims,
consistent with changes in applicable law or regulations or the
interpretation thereof;
(d) with respect to any Trust Account Property that is an
"uncertificated security" (as defined in Section 8-102(a)(18) of the UCC)
and that is not governed by clause (c) above, transfer thereof:
(i) (A) by registration to the Trustee as the registered
owner thereof, on the books and records of the issuer thereof.
(B) by another Person (not a securities intermediary)
either becomes the registered owner of the uncertificated security on
behalf of the Trustee, or having become the registered owner
acknowledges that it holds for the Trustee.
(ii) the issuer thereof has agreed that it will comply with
instructions originated by the Trustee without further consent of the
registered owner thereof.
(e) in each case of delivery contemplated herein, the Trustee shall
make appropriate notations on its records, and shall cause same to be made
of the records of its nominees, indicating that securities are held in
trust pursuant to and as provided in this Agreement.
(f) with respect to a "security entitlement" (as defined in Section
8-102(a)(17) of the UCC)
(i) if a securities intermediary (A) indicates by book entry
that a "financial asset" (as defined in Section 8-102(a)(9) of the UCC) has been
credited to be the Trustee's "securities account" (as defined in Section
8-501(a) of the UCC), (B) receives a financial asset (as so defined) from the
Trustee or acquires a financial asset for the Trustee, and in either case,
accepts it for credit to the Trustee's securities account (as so defined), (C)
becomes obligated under other law, regulation or rule to credit a financial
asset to the Trustee's securities account, or (D) has agreed that it will comply
with "entitlement orders" (as defined in Section 8-102(a)(8) of the UCC)
originated by the Trustee without further consent by the "entitlement holder"
(as defined in Section 8-102(a)(7) of the UCC), of a confirmation of the
purchase and the making by such securities intermediary of entries on its books
and records identifying as belonging to the Trustee or (I) specific certificated
security in the securities intermediary's possession, (II) a quantity of
securities that constitute or are part of a fungible bulk of certificated
securities in the securities intermediary's possession, or (III) a quantity of
securities that constitute or are part of a fungible bulk of securities shown on
the account of the securities intermediary on the books of another securities
intermediary.
8
"Depositor" shall mean the Seller in its capacity as Depositor under
the Trust Agreement.
"Determination Date" means, unless otherwise provided in a Series
Supplement, the earlier of the fifth calendar day (or if such day is not a
Business Day, the next preceding Business Day) or the third Business Day
preceding each Distribution Date.
"Distribution Date" means, unless otherwise provided in a Series
Supplement, with respect to each Collection Period, the seventeenth day of the
following calendar month, or if such day is not a Business Day, the immediately
following Business Day.
"Electronic Ledger" means the electronic master record of the retail
installment sales contracts or installment loans serviced by the Master
Servicer.
"Eligibility Criteria" means with respect to a Series, the criteria
set forth in the related Schedule of Eligibility Criteria.
"Eligible Bank" means, except as otherwise provided in a Series
Supplement, any depository institution (which shall initially be the Trustee)
organized under the laws of the United States of America or any one of the
states thereof or the District of Columbia (or any United States branch or
agency of a foreign bank), which is subject to supervision and examination by
federal or state banking authorities and which at all times (a) has a net worth
in excess of $50,000,000 and (b) has either (i) a rating of P-1 from Moody's and
A-1 from Standard & Poor's with respect to short-term deposit obligations, or
such other lower ratings acceptable to the Rating Agency, or (ii) if such
institution has issued long-term unsecured debt obligations, a rating acceptable
to the Rating Agency with respect to long-term unsecured debt obligations.
"Eligible Deposit Account" means, except as otherwise provided in a
Series Supplement, either (a) a segregated account with an Eligible Bank or (b)
a segregated trust account with the corporate trust department of a depository
institution with corporate trust powers organized under the laws of the United
States of America or any state thereof or the District of Columbia (or any
United States branch or agency of a foreign bank), provided that such
institution also must have a rating of Baa3 or higher from Moody's and a rating
of BBB- or higher from Standard & Poor's with respect to long-term deposit
obligations, or such other lower ratings acceptable to the Rating Agency.
"Eligible Investments" shall mean, except as otherwise provided in a
Series Supplement, negotiable instruments or securities represented by
instruments in bearer or registered form, or, in the case of deposits described
below, deposit accounts held in the name of the Trustee in trust for the benefit
of the Holders of the Securities of the relevant Series, subject to the
exclusive custody and control of the Trustee and for which the Trustee has sole
signature authority, which evidence:
9
(a) direct obligations of, or obligations fully guaranteed as to
timely payment by, the United States of America;
(b) demand deposits, time deposits or certificates of deposit
(having original maturities of no more than 365 days) of depositary institutions
or trust companies incorporated under the laws of the United States of America
or any state thereof (or domestic branches of foreign banks) and subject to
supervision and examination by federal or state banking or depositary
institution authorities; PROVIDED, that at the time of the Trust's investment or
contractual commitment to invest therein, the short-term debt rating of such
depository institution or trust company shall be satisfactory to the Rating
Agency;
(c) commercial paper (having original or remaining maturities of
not more than 30 days) having, at the time of the Trust's investment or
contractual commitment to invest therein, a rating satisfactory to the Rating
Agency;
(d) investments in money market funds having, at the time of the
Trust's investment therein, a rating acceptable to the Rating Agency;
(e) demand deposits, time deposits and certificates of deposit
which are fully insured by the FDIC having, at the time of the Trust's
investment therein, a rating satisfactory to the Rating Agency;
(f) bankers' acceptances (having original maturities of no more
than 365 days) issued by a depository institution or trust company referred to
in (b) above;
(g) (x) time deposits (having maturities not later than the
succeeding Distribution Date) other than as referred to in clause (e) above,
with a Person the commercial paper of which has a credit rating satisfactory to
the Rating Agency or (y) notes which are payable on demand issued by Household;
PROVIDED such notes will constitute Eligible Investments only if the commercial
paper of Household has, at the time of the Trust's investment in such notes, a
rating satisfactory to the Rating Agency; or
(h) any other investment of a type or rating that is acceptable to
the Rating Agency.
Any of the foregoing Eligible Investments may be purchased on or
through the Trustee or through any of its Affiliates.
"Eligible Servicer" means Household Finance Corporation or any Person
which at the time of its appointment as Master Servicer, (i) is servicing a
portfolio of motor vehicle retail installment sales contracts and/or motor
vehicle installment loans, (ii) is legally qualified and has the capacity to
service the Receivables, (iii) has demonstrated the ability professionally and
competently to service a portfolio of motor vehicle retail installment sales
contracts and/or motor vehicle installment loans similar to the Receivables with
reasonable skill and care, (iv) is qualified and entitled to use, pursuant
10
to a license or other written agreement, and agrees to maintain the
confidentiality of, the software which the Master Servicer uses in connection
with performing its duties and responsibilities under this Agreement or
otherwise has available software which is adequate to perform its duties and
responsibilities under this Agreement and (v) has a net worth of at least
$50,000,000.
"Eligible Sub-Servicer" means Household Automotive Finance Corporation
or any wholly owned subsidiary of Household or any Person which at the time of
its appointment as Sub-Servicer, (i) is servicing a portfolio of motor vehicle
retail installment sales contracts and/or motor vehicle installment loans, (ii)
is legally qualified and has the capacity to service the Receivables, (iii) has
demonstrated the ability professionally and competently to service a portfolio
of motor vehicle retail installment sales contracts and/or motor vehicle
installment loans similar to the Receivables with reasonable skill and care, and
(iv) is qualified and entitled to use, pursuant to a license or other written
agreement, and agrees to maintain the confidentiality of, the software which the
Master Servicer uses in connection with performing its duties and
responsibilities under this Agreement or otherwise has available software which
is adequate to perform its duties and responsibilities under this Agreement.
"Financed Vehicle" means a new or used automobile, light-duty truck or
van securing an Obligor's indebtedness under the respective Receivable.
"HAFC" means Household Automotive Finance Corporation.
"Insolvency Event" means, with respect to a specified Person, (a) the
filing of a petition against such Person or the entry of a decree or order for
relief by a court having jurisdiction in the premises in respect of such Person
or any substantial part of its property in an involuntary case under any
applicable federal or state bankruptcy, insolvency or other similar law now or
hereafter in effect, or appointing a receiver, liquidator, assignee, custodian,
trustee, sequestrator, or similar official for such Person or for any
substantial part of its property, or ordering the winding-up or liquidation of
such Person's affairs, and such petition, decree or order shall remain unstayed
and in effect for a period of 60 consecutive days; or (b) the commencement by
such Person of a voluntary case under any applicable federal or state
bankruptcy, insolvency or other similar law now or hereafter in effect, or the
consent by such Person to the entry of an order for relief in an involuntary
case under any such law, or the consent by such Person to the appointment of or
taking possession by, a receiver, liquidator, assignee, custodian, trustee,
sequestrator, or similar official for such Person or for any substantial part of
its property, or the making by such Person of any general assignment for the
benefit of creditors, or the failure by such Person generally to pay its debts
as such debts become due, or the taking of action by such Person in furtherance
of any of the foregoing.
"Insurance Policy" means, with respect to a Receivable, any insurance
policy (including the insurance policies described in Section 4.4 hereof)
benefiting the holder of the Receivable providing loss or physical damage,
credit life, credit disability,
11
theft, mechanical breakdown or similar coverage with respect to the Financed
Vehicle or the Obligor.
"Interest Period" for any Class or Series of Notes or Certificates,
the meaning set forth in the related Series Supplement.
"Investment Earnings" means, with respect to any Distribution Date and
Trust Account, the investment earnings (net of investment losses and expenses)
on amounts on deposit in such Trust Account on such Distribution Date.
"Issuer" means Household Automotive Trust ___, together with each
other Trust designated as an Issuer hereunder pursuant to a Series Supplement,
in each case so long as such Trust has not been terminated in accordance with
the terms of the related Trust Agreements.
"Lien" means a security interest, lien, charge, pledge, equity, or
encumbrance of any kind, other than tax liens, mechanics' liens and any liens
that attach to the respective Receivable by operation of law as a result of any
act or omission by the related Obligor, provided that, any assignment permitted
by Section 2.1 hereof and the lien created by this Agreement or the Indenture
shall not be deemed to constitute a Lien.
"Lien Certificate" means, with respect to a Financed Vehicle, an
original certificate of title, certificate of lien or other notification issued
by the Registrar of Titles of the applicable state to a secured party which
indicates that the lien of the secured party on the Financed Vehicle is recorded
on the original certificate of title. In any jurisdiction in which the original
certificate of title is required to be given to the Obligor, the term "Lien
Certificate" shall mean only a certificate or notification issued to a secured
party.
"Liquidated Receivable" means, with respect to any Collection Period,
a Receivable as to which (i) such Receivable has been liquidated by the Master
Servicer through the sale of the Financed Vehicle, (ii) 90 days have elapsed
since the Master Servicer repossessed the Financed Vehicle, (iii) proceeds have
been received in respect of such Receivable which, in the Master Servicer's
reasonable judgment, constitute the final amounts recoverable in respect of such
Receivable or (iv) 10% or more of a Scheduled Payment shall have become 150 or
more days delinquent (or, in the case where the Obligor of such Receivable is
subject to an Insolvency Event, 10% or more of a Scheduled Payment shall have
become 210 or more days delinquent). Any Receivable that becomes a Repurchased
Receivable on or before the related Accounting Date shall not be a Liquidated
Receivable.
"Master Collection Account" means the account designated as such,
established and maintained pursuant to Section 5.1.
"Master Receivables Purchase Agreements" means (i) the Master
Receivables Purchase Agreement between the Seller and HAFC, dated as
____________, pursuant to which the Seller acquired the Series _____
Receivables, as such agreement
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may be amended or supplemented from time to time and (ii) the Master
Receivables Purchase Agreement between the Seller and HAFC, dated as of
________, pursuant to which the Seller acquired the Series _____ Receivables,
as such agreement may be amended or supplemented from time to time .
"Master Servicer" means Household Finance Corporation, as the servicer
of the Receivables, and each successor Master Servicer pursuant to Section 10.3.
"Master Servicer Credit Facility" means the credit facility maintained
by the Master Servicer with a Master Servicer Credit Facility Issuer pursuant to
Section 4.2(d).
"Master Servicer Credit Facility Issuer" means a depository
institution or insurance company that qualifies pursuant to Section 4.2(d).
"Master Servicer Termination Event" means an event specified in
Section 10.1.
"Master Servicer's Certificate" means an Officers' Certificate of the
Master Servicer delivered pursuant to Section 4.9, substantially in the form of
Exhibit A hereto.
"Monthly Records" means all records and data maintained by the Master
Servicer with respect to the Receivables, including the following with respect
to each Receivable: the account number; the originating Dealer; Obligor name;
Obligor address; Obligor home phone number; Obligor business phone number;
original Principal Balance; original term; Annual Percentage Rate; current
Principal Balance; current remaining term; origination date; first payment date;
final scheduled payment date; next payment due date; date of most recent
payment; new/used classification; collateral description; days currently
delinquent; number of contract extensions (months) to date; amount of Scheduled
Payment; current Insurance Policy expiration date; and past due late charges.
"Moody's" means Xxxxx'x Investors Service, Inc., or its successor.
"Net Liquidation Proceeds" means, with respect to a Liquidated
Receivable, all amounts realized with respect to such Receivable (other than
amounts withdrawn or received from any Series Support) net of (i) reasonable
expenses, which expenses shall not include any deficiency balances or
post-disposition recoveries collected, incurred by the Master Servicer in
connection with the collection of such Receivable and the repossession and
disposition of the Financed Vehicle and (ii) amounts that are required to be
refunded to the Obligor on such Receivable; PROVIDED, HOWEVER, that the
Liquidation Proceeds with respect to any Receivable shall in no event be less
than zero; PROVIDED, FURTHER, THAT, so long as amounts cannot be traced to
specific Receivables the Master Servicer shall reasonably estimate, on or
prior to each Accounting Date, the amount of Net Liquidation Proceeds
attributable to each Series Trust Estate.
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"Noteholder" means the Person in whose name a Note is registered on
the Note Register.
"Notes" has the meaning assigned to such term in the Indenture.
"Obligor" on a Receivable means the purchaser or co-purchasers of the
Financed Vehicle and any other Person who owes payments under the Receivable.
"Officers' Certificate" means a certificate signed by the chairman of
the board, the president, any executive vice president or any vice president,
any treasurer, assistant treasurer, secretary or assistant secretary of the
Seller or the Master Servicer, as appropriate.
"Opinion of Counsel" means an opinion of counsel who may be counsel to
the Master Servicer or the Seller, acceptable to the Trustee.
"Other Conveyed Property" means all property conveyed by the Seller to
the Trust pursuant to Section 2.1(a)(ii) through (xii) of this Agreement.
"Outstanding" has the meaning assigned to such term in the Indenture.
"Outstanding Amount" means, with respect to any Series, the aggregate
principal amount of all Notes of such Series which are Outstanding at the date
of determination after giving effect to all distributions of principal on such
date of determination.
"Owner Trust Estate" has the meaning assigned to such term in the
Trust Agreement.
"Owner Trustee" means ________________, not in its individual
capacity but solely as Owner Trustee under the Trust Agreement, its
successors-in-interest or any successor Owner Trustee under the Trust
Agreement.
"Payment Record" means the record maintained by the Master Servicer
for the Trust as provided in Section 4.2(d) hereof.
"Person" means any individual, corporation, estate, partnership, joint
venture, association, joint stock company, trust (including any beneficiary
thereof), unincorporated organization or government or any agency or political
subdivision thereof.
"Physical Property" has the meaning assigned to such term in the
definition of "Delivery" above.
"Principal Balance" means, with respect to any Receivable, as of any
date, the Amount Financed minus (i) that portion of all amounts received on or
prior to such date and allocable to principal in accordance with the Actuarial
Method, or the Simple
14
Interest Method, as appropriate, and (ii) any Cram Down Loss in respect of
such Receivable. The "Principal Balance" of a Repurchased Receivable or
Liquidated Receivable shall be deemed to be zero.
"Rating Agency" means, with respect to any outstanding Series or
Class, each Rating Agency specified in the Series Supplement.
"Rating Agency Condition" means, with respect to any action with
respect to a Series, that each Rating Agency shall have received prior notice
thereof and that each Rating Agency shall have notified the Master Servicer in
writing (who shall then immediately notify the Seller, the Owner Trustee and the
Trustee in writing) that such action will not result in a reduction or
withdrawal of the then current rating of any Class of Notes.
"Realized Losses" means, with respect to any Receivable that becomes a
Liquidated Receivable, the excess of the Principal Balance of such Liquidated
Receivable over Net Liquidation Proceeds to the extent allocable to principal.
"Receivable" means any Contract listed on Schedule II to the Series
Supplement or Schedule A to a Transfer Agreement (which Schedule may be in an
acceptable electronic format), except Liquidated Receivables and Receivables
released from the Owner Trust Estate.
"Receivable Files" means the documents specified in Section 3.3.
"Receivables Purchase Agreement Supplement" means any Receivables
Purchase Agreement Supplement to either Master Receivables Purchase Agreement.
"Record Date" with respect to each Distribution Date means the
Business Day immediately preceding such Distribution Date, unless otherwise
specified in the applicable Series Supplement.
"Registrar of Titles" means, with respect to any state, the
governmental agency or body responsible for the registration of, and the
issuance of certificates of title relating to, motor vehicles and liens thereon.
"Repurchase Amount" means, with respect to a Receivable, the Principal
Balance and all accrued and unpaid interest on the Receivable, after giving
effect to the receipt of any moneys collected (from whatever source) on such
Receivable, if any, as of the date of purchase, provided that, reductions in the
Principal Balance resulting from such Receivable becoming a Liquidated
Receivable shall be disregarded.
"Repurchased Receivable" means a Receivable purchased by the Master
Servicer pursuant to Section 4.7 or repurchased by the Seller pursuant to
Section 3.2 or the Seller or HAFC pursuant to Section 11.1(a).
15
"Schedule of Eligibility Criteria" means the Schedule of Eligibility
Criteria attached as Schedule I to a Series Supplement.
"Schedule of Receivables" means, with respect to each Series Trust
Estate, the schedule of all retail installment sales contracts and promissory
notes originally held as part of the Trust which is attached as Schedule II to
the Series Supplement or Schedule A to the Transfer Agreements relating to such
Series Trust Estate.
"Scheduled Payment" means, with respect to any Collection Period for
any Receivable, the amount set forth in such Receivable as required to be paid
by the Obligor in such Collection Period. If after the Series Closing Date, the
Obligor's obligation under a Receivable with respect to a Collection Period has
been modified so as to differ from the amount specified in such Receivable as a
result of (i) the order of a court in an insolvency proceeding involving the
Obligor, (ii) pursuant to the Soldiers' and Sailors' Civil Relief Act of 1940,
as amended, or (iii) modifications or extensions of the Receivable permitted by
Sections 4.2(b) and (c), the Scheduled Payment with respect to such Collection
Period shall refer to the Obligor's payment obligation with respect to such
Collection Period as so modified.
"Securities" means the Notes and the Certificates.
"Securityholders" means the Noteholders and the Certificateholders.
"Seller" means Household Auto Receivables Corporation, a Nevada
corporation, and its successors in interest to the extent permitted hereunder.
"Series" means, with respect to any Notes, Notes issued pursuant to
the same Series Supplement and with respect to any Certificates, Certificates
issued pursuant to the same Series Supplement, or the Notes and Certificates
issued pursuant to the same Series Supplement, as the context may require.
"Series Closing Date" means, with respect to any Series, the date
designated in the related Series Supplement as the closing date for such Series.
"Series Collection Account" means, with respect to any Series, the
collection account designated in the related Series Supplement.
"Series of Certificates" means the Certificates issued in connection
with a Series of Notes.
"Series Related Documents" with respect to a Series, has the meaning
specified therefor in the related Series Supplement.
"Series Supplement" means, with respect to any Series, a Series
Supplement to the Indenture and the Trust Agreement, executed and delivered in
16
connection with the original issuance of the Notes and Certificates of such
Series, and all amendments thereof and supplements thereto.
"Series Support" means the rights and benefits provided to the Trustee
or the Noteholders of any Series or Class pursuant to any letter of credit,
surety bond, cash collateral account, spread account, guaranteed rate agreement,
maturity liquidity facility, interest rate swap agreement, tax protection
agreement or other similar arrangement. The subordination of any Series or
Class to another Series or Class shall be deemed to be a Series Support.
Notwithstanding that such Series Support may be held by or in favor of the
Trustee for the benefit of any Series or Class, only those Series or Classes to
which such Series Support relates shall have any rights with respect thereto and
all payments thereunder received by the Trustee shall be distributed exclusively
as prescribed in the Series Supplement relating to such Series or Class.
"Series Support Provider" means the Person, if any, designated in the
related Series Supplement, as providing any Series Support, other than Household
or any of its Affiliates or the Noteholders of any Series or Class which is
subordinated to another Class or Series.
"Series Trust Accounts" has the meaning with respect to each Series
specified in the related Series Supplement.
"Series Termination Date" has the meaning with respect to each Series
specified in the related Series Supplement.
"Series Trust Estate" has the meaning with respect to each Series
specified in the related Series Supplement.
"Service Contract" means, with respect to a Financed Vehicle, the
agreement, if any, financed under the related Receivable that provides for the
repair of such Financed Vehicle.
"Servicing Fee Rate" means [3]% per annum unless otherwise specified
in a Series Supplement with respect to the related Series Trust Estate.
"Simple Interest Method" means the method of allocating a fixed level
payment on an obligation between principal and interest, pursuant to which the
portion of such payment that is allocated to interest is equal to the product of
the fixed rate of interest on such obligation multiplied by the period of time
(expressed as a fraction of a year, based on the actual number of days in the
calendar month and 365 days in the calendar year) elapsed since the preceding
payment under the obligation was made.
"Simple Interest Receivable" means a Receivable under which the
portion of the payment allocable to interest and the portion allocable to
principal is determined in accordance with the Simple Interest Method.
17
"Standard & Poor's" means Standard & Poor's, a division of the McGraw
Hill Companies, Inc., or its successor.
"Sub-Servicer" means any Eligible Sub-Servicer with whom the Master
Servicer has entered into an agreement relating to subservicing the
Receivables. Initially, the Sub-Servicer will be HAFC.
"Supplemental Servicing Fee" means, with respect to any Collection
Period, (i) all administrative fees, expenses and charges paid by or on behalf
of Obligors, including late fees, prepayment fees and liquidation fees collected
on the Receivables during such Collection Period, and (ii) the net realized
Investment Earnings of funds on deposit in the Master Collection Account and
Series Collection Account.
"Support Default" shall mean a default relating to the Insolvency or
performance of a Series Support Provider.
"Transfer Agreement" means the agreement among the Issuer, the Seller
and the Master Servicer, substantially in the form of Exhibit B.
"Transfer Date" means, with respect to Receivables, any date on which
Receivables are to be transferred to a Trust pursuant to this Agreement and a
related Transfer Agreement.
"Trust" means the respective Issuers, individually.
"Trust Account Property" means the Trust Accounts and each Series
Trust Account, all amounts and investments held from time to time in any Trust
Account and each Series Trust Account (whether in the form of deposit accounts,
Physical Property, book-entry securities, uncertificated securities or
otherwise), and all proceeds of the foregoing.
"Trust Accounts" has the meaning assigned thereto in Section 5.1.
"Trust Agreement" means the Trust Agreement, dated as of _________,
between the Seller and the Owner Trustee, as supplemented by the Series _____
Supplement, and as the same may be amended and further supplemented from time to
time.
"Trust Officer" means, (i) in the case of the Trustee, the chairman or
vice-chairman of the board of directors, the chairman or vice-chairman of the
executive committee of the board of directors, the president, any vice
president, assistant vice-president or managing director, the secretary, any
assistant secretary or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also means, with respect to a particular corporate trust matter and having
direct responsibility for the Administration of this Agreement, and (ii) in the
case of the Owner Trustee, any officer in the corporate trust office of the
Owner
18
Trustee or any agent of the Owner Trustee under a power of attorney with
direct responsibility for the administration of this Agreement or any of the
Basic Documents or Series Related Documents on behalf of the Owner Trustee.
"Trustee" means the Person acting as Trustee under the Indenture, its
successors in interest and any successor trustee under the Indenture.
"Trustee Fee" means the fees due to the Trustee as may be set forth in
that certain fee agreement dated as of the date hereof between the Master
Servicer and [Name of Trustee].
"UCC" means the Uniform Commercial Code as in effect in the relevant
jurisdiction on the date of the Agreement.
"Warranty Receivable" With respect to any Collection Period, a
Receivable which the Seller has become obligated to repurchase pursuant to
Section 3.2.
.2. OTHER INTERPRETIVE PROVISIONS. (a) Capitalized terms used
herein and not otherwise defined herein have the meanings assigned to them in
the Indenture, or, if not defined therein, in the Trust Agreement. Cross
referenced definitions may include a Series designation.
(b) All terms defined in this Agreement shall have the
defined meanings when used in any instrument governed hereby and in any
certificate or other document made or delivered pursuant hereto unless otherwise
defined therein.
(c) As used in this Agreement, in any instrument governed
hereby 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
instrument, certificate or other document, and accounting terms partly defined
in this Agreement or in any such instrument, certificate or other document to
the extent not defined, shall have the respective meanings given to them under
generally accepted accounting principles as in effect on the date of this
Agreement or any such instrument, certificate or other document, as applicable.
To the extent that the definitions of accounting terms in this Agreement or in
any such instrument, 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 instrument, certificate
or other document shall control.
(d) 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.
19
(e) Any term defined herein, which is otherwise defined in a
Series Supplement, shall have the meaning with respect to such Series specified
therefor in such Series Supplement, whether or not the definition in this
Agreement includes a phrase to the effect that such term may be otherwise
defined in a Series Supplement.
(f) In the event that with respect to a Series there is no
Series Support Provider, any references herein or in any other of the Basic
Documents to the consent of, or acceptability to, the Series Support Provider
shall be deemed to be deleted.
.3. USAGE OF TERMS. With respect to all terms used in this
Agreement, the singular includes the plural and the plural includes the
singular; words importing any gender include the other gender; references to
"writing" include printing, typing, lithography, and other means of reproducing
words in a visible form; references to agreements and other contractual
instruments include all subsequent amendments thereto or changes therein entered
into in accordance with their respective terms and not prohibited by this
Agreement; references to Persons include their permitted successors and assigns;
the terms "include" or "including" mean "include without limitation" or
"including without limitation;" the words "herein", "hereof" and "hereunder" and
other words of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision, and Article, Section, Schedule
and Exhibit references, unless otherwise specified, refer to Articles and
Sections of Schedules and Exhibits to this Agreement.
.4. CERTAIN REFERENCES. All references to the Principal Balance of
a Receivable as of any date of determination shall refer to the close of
business on such day, or as of the first day of an Interest Period shall refer
to the opening of business on such day. All references to the last day of an
Interest Period shall refer to the close of business on such day.
.5. NO RECOURSE. Without limiting the obligations of the Master
Servicer or Seller hereunder, no recourse may be taken, directly or indirectly,
under this Agreement or any certificate or other writing delivered in connection
herewith or therewith, against any stockholder, officer or director, as such, of
the Master Servicer or Seller, or of any of their respective Affiliates,
predecessors or successors.
.6. ACTION BY OR CONSENT OF NOTEHOLDERS. Whenever any provision of
this Agreement refers to action to be taken, or consented to, by Noteholders,
such provision shall be deemed to refer to the Noteholders of record as of the
Record Date immediately preceding the date on which such action is to be taken,
or consent given, by Noteholders. Solely for the purposes of any action to be
taken, or consented to, by Noteholders, any Note registered in the name of HAFC
or any Affiliate thereof shall be deemed not to be outstanding; PROVIDED,
HOWEVER, that, solely for the purpose of determining whether the Trustee is
entitled to rely upon any such action or consent, only Notes which the Trust
Officer of the Trustee actually knows to be so owned shall be so disregarded.
20
ARTICLE II
CONVEYANCE OF RECEIVABLES
.1. CONVEYANCE OF RECEIVABLES. (a) Subject to the conditions set
forth in paragraph (b) below, in consideration of the Issuer's delivery to or
upon the order of the Seller on the Series Closing Date or a Transfer Date of
the net proceeds from the sale of a Series of Notes thereunder and the other
amounts to be distributed from time to time to the Seller in accordance with the
terms of this Agreement and the related Series Supplement, the Seller shall,
from time to time, sell, transfer, assign, set over and otherwise convey to the
Issuer, without recourse (subject to the obligations set forth herein), all
right, title and interest of the Seller in and to:
(i) each and every Receivables listed on Schedule II to
the Series Supplement and Schedule A to the related Transfer
Agreement, if any, and all monies paid or payable thereon or in
respect thereof after the Series Closing Date or the related
Transfer Date (including amounts due on or before the Cutoff
Date but received by HAFC, the Seller or the Issuer on or after
the Cutoff Date);
(ii) the security interests in the related Financed
Vehicles granted by Obligors pursuant to the related
Receivables and any other interest of the Seller in such
Financed Vehicles;
(iii) all rights of the Seller against the Dealers
pursuant to Dealer Agreements;
(iv) any proceeds and the right to receive proceeds with
respect to such Receivables repurchased by a Dealer, pursuant
to a Dealer Agreement as a result of a breach of representation
or warranty in the related Dealer Agreement;
(v) all rights under any Service Contracts on the
related Financed Vehicles:
(vi) any proceeds and the right to receive proceeds with
respect to such Receivables from claims on any physical damage,
credit life or disability insurance policies covering the
related Financed Vehicles or Obligors, including rebates of
insurance premiums relating to the Receivables;
(vii) all items contained in the related Receivables Files
with respect to the Receivables; and any and all other
documents that HAFC keeps on file in accordance with its
customary procedures
21
relating to the related Receivables, the Obligors or the
Financed Vehicles;
(viii) all funds on deposit from time to time in the Trust
Accounts (including all investments and proceeds thereof);
(ix) property (including the right to receive future Net
Liquidation Proceeds) that secures a Receivable and that has
been acquired by or on behalf of the Trust pursuant to
liquidation of such Receivable;
(x) all of the Seller's right, title and interest in its
rights and benefits, but none of its obligations or burdens,
under each of the Master Receivables Purchase Agreements and
the Receivables Purchase Agreement Supplements, including the
delivery requirements, representations and warranties and the
cure and repurchase obligations of HAFC under each of the
Master Receivables Purchase Agreements and the Receivables
Purchase Agreement Supplements, on or after the related Cutoff
Date;
(xi) one share of Class SV Preferred Stock of the Seller;
and
(xii) all present and future claims, demands, causes and
choses in action in respect of any or all of the foregoing and
all payments on or under and all proceeds of every kind and
nature whatsoever in respect of any or all of the foregoing,
including all proceeds of the conversion, voluntary or
involuntary, into cash or other liquid property, all cash
proceeds, accounts, accounts receivable, notes, drafts,
acceptances, chattel paper, checks, deposit accounts, insurance
proceeds, condemnation awards, rights to payment of any and
every kind and other forms of obligations and receivables,
instruments and other property which at any time constitute all
or part of or are included in the proceeds of any of the
foregoing.
(b) The Seller shall transfer to the Issuer the Receivables
and the other property and rights related thereto described in paragraph (a)
above only upon the satisfaction of each of the following conditions on or prior
to the Series Closing Date or the related Transfer Date:
(i) if the transfer is not on the Closing Date, the
Seller shall have provided the Trustee and the Owner Trustee
with an Addition Notice not later than five days prior to such
Transfer Date (which Addition Notice will designate the Series
Trust Estate which the Receivables will be a part of, if any)
and shall have provided any
22
information reasonably requested by any of the foregoing with
respect to the related Receivables;
(ii) the Seller shall have delivered to the Owner Trustee
and the Trustee a duly executed Transfer Agreement or Series
Supplement which shall include a schedule (which may be in
electronic format), listing the Receivables to be transferred;
(iii) the Seller shall, to the extent required by Section
4.2, have deposited in the Master Collection Account all
collections received after the related Cutoff Date in respect
of the Receivables to be transferred;
(iv) as of the Series Closing Date and each Transfer
Date, (A) the Seller shall not be insolvent and shall not
become insolvent as a result of the transfer of Receivables on
such date, (B) the Seller shall not intend to incur or believe
that it shall incur debts that would be beyond its ability to
pay as such debts mature, (C) such transfer shall not have been
made with actual intent to hinder, delay or defraud any Person
and (D) the assets of the Seller shall not constitute
unreasonably small capital to carry out its business as
conducted;
(v) each of the representations and warranties made by
the Seller pursuant to Section 3.1 with respect to the
Receivables to be transferred on the Series Closing Date or the
related Transfer Date shall be true and correct as of the
Series Closing Date or the related Transfer Date, and the
Seller shall have performed all obligations to be performed by
it hereunder on or prior to such Transfer Date;
(vi) the Seller shall, at its own expense, on or prior to
the Series Closing Date or the related Transfer Date indicate
in its computer files that the Receivables identified in the
Schedule to the Series Supplement or to the related Transfer
Agreement have been sold to the Trust pursuant to this
Agreement;
(vii) the Seller shall have taken any action necessary or,
if required by the Trustee, advisable to maintain the first
priority perfected ownership interest of the Trust in the Owner
Trust Estate and the first perfected security interest of the
Trustee in the Series Trust Estate;
(viii) no selection procedures adverse to the interests of
the related Series shall have been utilized in selecting the
related Receivables;
23
(ix) the addition of any such Receivables shall not
result in a material adverse tax consequence to the Trust or
the Noteholders;
(x) if required by any of the related Series Related
Documents, the Seller shall simultaneously transfer to the
Trustee any amounts required to be deposited in the related
Trust Accounts with respect to the Receivables transferred on
such Series Closing Date or Transfer Date; and
(xi) the Seller shall have delivered to the Trustee an
Officers' Certificate confirming the satisfaction of each
condition precedent specified in this paragraph (b).
The Seller covenants that in the event any of the foregoing conditions
precedent are not satisfied with respect to any Receivable on the date required
as specified above, the Seller will immediately repurchase such Receivable from
the Trust, at a price equal to the Repurchase Amount thereof, in the manner
specified in Section 3.2.
It is the intention of the Seller that the transfer and assignment
contemplated by this Agreement and each related Transfer Agreement shall
constitute a sale of the related Series Trust Estate from the Seller to the
Issuer and the beneficial interest in and title to the related Series Trust
Estate shall not be part of the Seller's estate in the event of the filing of a
bankruptcy petition by or against the Seller under any bankruptcy law. In the
event that, notwithstanding the intent of the Seller, the transfer and
assignment contemplated hereby and thereby is held not to be a sale, this
Agreement and the related Transfer Agreement shall constitute a grant of a
security interest in the property referred to in this Section 2.1 for the
benefit of the Noteholders.
.2. FURTHER ENCUMBRANCE OF SERIES TRUST ESTATE. (a) Immediately
upon the conveyance to the Trust by the Seller of any item of the related Series
Trust Estate pursuant to Section 2.1, all right, title and interest of the
Seller in and to such Series Trust Estate shall terminate, and all such right,
title and interest shall vest in the Issuer, in accordance with the Trust
Agreement and Sections 3802 and 3805 of the Business Trust Statute (as defined
in the Trust Agreement).
(b) Immediately upon the vesting of the related Series Trust
Estate in the Trust, the Trust shall have the sole right to pledge or otherwise
encumber, such related Series Trust Estate. Pursuant to the Indenture and a
Series Supplement, the Trust will grant a security interest in the Series Trust
Estate to secure the repayment of a related Series of Notes. The related Series
of Certificates shall represent the beneficial ownership interest in the related
Series Trust Estate, and the related Series of Certificateholders shall be
entitled to receive distributions with respect thereto as set forth in the
related Series Supplement.
(c) The Trustee shall hold the related Series Trust Estate
for the benefit of the related Series Securityholders. Following the payment in
full of the related
24
Series of Notes and the release and discharge of the Indenture and the
related Series Supplement, all covenants of the Issuer under Article III of
the Indenture and the related Series Supplement shall, until payment in full
of the Certificates, remain as covenants of the Issuer for the benefit of the
related Series of Certificateholders, enforceable by the related Series of
Certificateholders to the same extent as such covenants were enforceable by
the related Series of Noteholders prior to the discharge of the Indenture.
Any rights of the Trustee under Article III of the Indenture and the related
Series Supplement, following the discharge of the Indenture and the related
Series Supplement, shall vest in related Series of Certificateholders.
(d) The Trustee shall, at such time as there are no
Securities of a Series outstanding and all sums due to the Trustee or any agent
or counsel thereof pursuant to the Indenture as supplemented by the related
Series Supplement, have been paid, pursuant to Section 4.1 of the Indenture, and
subject to satisfaction of the conditions set forth therein, release the Lien of
the related Series Supplement and the Indenture with respect to the related
Series Trust Estate.
ARTICLE III
THE RECEIVABLES
.1. REPRESENTATIONS AND WARRANTIES OF SELLER. The Seller
represents and warrants as to the related Receivables that the representations
and warranties set forth on the Schedule of Eligibility Criteria with respect to
a Series are, or will be, true and correct as of the respective dates specified
in such Schedule. The Issuer is deemed to have relied on such representations
and warranties in acquiring the related Receivables and the related
Securityholders shall be deemed to rely on such representations and warranties
in purchasing the Notes. Such representations and warranties shall survive the
sale, transfer and assignment of the related Series Trust Estate to the Issuer
and any pledge thereof to the Trustee pursuant to the Indenture and the related
Series Supplement.
.2. REPURCHASE UPON BREACH. (a) The Seller, the Master Servicer,
any Trust Officer of the Trustee or the Owner Trustee, as the case may be, shall
inform each of the other parties to this Agreement promptly, in writing, upon
the discovery of any breach of the Seller's representations and warranties made
pursuant to Section 3.1; PROVIDED, HOWEVER, that the failure to give any such
notice shall not derogate from any obligations of the Seller under this Section
3.2. As of the last day of the second (or, if the Seller so elects, the first,
or with respect to any exceptions appearing on any exception report delivered by
the Trustee, the first) month following the discovery by the Seller or receipt
by the Seller of notice of such breach (or such longer period not in excess of
120 days, as may be agreed upon by the Trustee and the Master Servicer), unless
such breach is cured by such date, the Seller shall have an obligation to
repurchase or cause HAFC to repurchase any Receivable in which the interests of
the related Series Securityholders are materially and adversely affected by any
such breach. In consideration of and simultaneously with the repurchase of the
Receivables, the Seller shall remit, or cause
25
HAFC to remit, to the related Series Collection Account, the Repurchase
Amount in the manner specified in Section 5.4 and the Issuer shall execute
such assignments and other documents reasonably requested by such person in
order to effect such repurchase. The sole remedy of the Issuer, the Owner
Trustee, the Trustee and the related Series Securityholders with respect to a
breach of representations and warranties pursuant to Section 3.1 and the
agreement contained in this Section shall be the repurchase of the
Receivables pursuant to this Section, subject to the conditions contained
herein or to enforce the obligation of HAFC to the Seller to repurchase such
Receivables pursuant to the Master Receivables Purchase Agreements. Neither
the Owner Trustee nor the Trustee shall have a duty to conduct any
affirmative investigation as to the occurrence of any conditions requiring
the repurchase of any Receivable pursuant to this Section.
(b) Pursuant to Section 2.1 of this Agreement and pursuant to
the related Transfer Agreement, the Seller conveyed to the Trust all of the
Seller's right, title and interest in its rights and benefits, but none of its
obligations or burdens, under the Master Receivables Purchase Agreements and the
related Receivables Purchase Agreement Supplements, including the Seller's
rights under the Master Receivables Purchase Agreements and the delivery
requirements, representations and warranties and the cure or repurchase
obligations of HAFC thereunder. The Seller hereby represents and warrants to
the Trust that such assignment is valid, enforceable and effective to permit the
Trust to enforce such obligations of HAFC under the Master Receivables Purchase
Agreements.
.3. CUSTODY OF RECEIVABLES FILES. In connection with the sale,
transfer and assignment of the Receivables, if any, to the Trust pursuant to
this Agreement and pursuant to the related Transfer Agreement, the Master
Servicer shall act as custodian for the benefit of the Trustee of the following
documents or instruments with respect to each Receivable:
(i) The fully executed original of the Receivable
(together with any agreements modifying the Receivable,
including, without limitation, any extension agreements);
(ii) The original credit application, or a copy thereof,
of each Obligor, fully executed by each such Obligor on HAFC's
or the Dealer's customary form, or on a form approved by HAFC,
for such application; and
(iii) The original certificate of title (when received)
and otherwise such documents, if any, that HAFC keeps on file
in accordance with its customary procedures indicating that the
Financed Vehicle is owned by the Obligor and subject to the
interest of (x) HAFC (or any predecessor corporation to HAFC,
or any Affiliate of HAFC or such predecessor corporation) as
first lienholder or secured party (including any Lien
Certificate received
26
by HAFC), or, (y) a Dealer as first lienholder or secured
party or, if such original certificate of title has not yet
been received, a copy of the application therefor, showing
either HAFC (or any predecessor corporation to HAFC, or any
Affiliate of HAFC or such predecessor corporation), or a
Dealer as secured party; and
(iv) Documents evidencing or relating to any Insurance
Policy, to the extent such documents are maintained by or on
behalf of the Seller or HAFC.
Notwithstanding the foregoing, the Master Servicer may appoint a Sub-Servicer as
subcustodian, which subcustodian may hold physical possession of some or all of
the Receivable Files. The Trustee shall have no liability for the acts or
omissions of any such custodian or subcustodian.
ARTICLE IV
ADMINISTRATION AND SERVICING OF RECEIVABLES
.1. DUTIES OF THE MASTER SERVICER. The Master Servicer is hereby
authorized to act as agent for the Trust (and also on behalf of the Trustee and
the Noteholders) and in such capacity shall manage, service, administer and make
collections on the Receivables, and perform the other actions required by the
Master Servicer under this Agreement. The Master Servicer agrees that its
servicing of the Receivables shall be carried out in accordance with customary
and usual procedures of institutions which service motor vehicles retail
installment sales contracts and, to the extent more exacting, the degree of
skill and attention that the Master Servicer exercises with respect to all
comparable motor vehicle receivables that it services for itself or others. In
performing such duties, so long as Household is the Master Servicer, it shall
comply with the standard and customary procedures for servicing all of its
comparable motor vehicle receivables. The Master Servicer's duties shall
include, without limitation, collection and posting of all payments, responding
to inquiries of Obligors on the Receivables, investigating delinquencies,
sending payment statements to Obligors, reporting any required tax information
to Obligors, accounting for collections and furnishing monthly and annual
statements to the Trustee with respect to distributions, monitoring the status
of Insurance Policies with respect to the Financed Vehicles and performing the
other duties specified herein. The Master Servicer shall also administer and
enforce all rights and responsibilities of the holder of the Receivables
provided for in the Dealer Agreements (and Household shall make efforts to
obtain possession of the Dealer Agreements, to the extent it is necessary to do
so), the Dealer Assignments and the Insurance Policies, to the extent that such
Dealer Agreements, Dealer Assignments and Insurance Policies relate to the
Receivables, the Financed Vehicles or the Obligors. To the extent consistent
with the standards, policies and procedures otherwise required hereby, the
Master Servier shall follow its customary standards, policies, and procedures
and shall have full power and authority, acting alone, to do any and all things
in connection with such managing,
27
servicing, administration and collection that it may deem necessary or
desirable. Without limiting the generality of the foregoing, the Master
Servicer is hereby authorized and empowered by the Trust to execute and
deliver, on behalf of the Trust, any and all instruments of satisfaction or
cancellation, or of partial or full release or discharge, and all other
comparable instruments, with respect to the Receivables and with respect to
the Financed Vehicles; PROVIDED, HOWEVER, that notwithstanding the foregoing
and subject to Section 4.3 hereof, the Master Servicer shall not, except
pursuant to an order from a court of competent jurisdiction, release an
Obligor from payment of any unpaid amount under any Receivable or waive the
right to collect the unpaid balance of any Receivable from the Obligor. The
Master Servicer is hereby authorized to commence, in its own name or in the
name of the Trust, a legal proceeding to enforce a Receivable pursuant to
Section 4.3 or to commence or participate in any other legal proceeding
(including, without limitation, a bankruptcy proceeding) relating to or
involving a Receivable, an Obligor or a Financed Vehicle. If the Master
Servicer commences or participates in such a legal proceeding in its own
name, the Trust shall thereupon be deemed to have automatically assigned such
Receivable to the Master Servicer solely for purposes of commencing or
participating in any such proceeding as a party or claimant, and the Master
Servicer is authorized and empowered by the Trust to execute and deliver in
the Master Servicer's name any notices, demands, claims, complaints,
responses, affidavits or other documents or instruments in connection with
any such proceeding. The Trustee and the Owner Trustee shall furnish the
Master Servicer with any powers of attorney and other documents which the
Master Servicer may reasonably request and which the Master Servicer deems
necessary or appropriate and take any other steps which the Master Servicer
may deem reasonably necessary or appropriate to enable the Master Servicer to
carry out its servicing and administrative duties under this Agreement.
.2. COLLECTION OF RECEIVABLE PAYMENTS; MODIFICATIONS OF
RECEIVABLES. (a) Consistent with the standards, policies and procedures
required by this Agreement, the Master Servicer shall make reasonable efforts to
collect all payments called for under the terms and provisions of the
Receivables as and when the same shall become due, and shall follow such
collection procedures as it follows with respect to all comparable automobile
receivables that it services for itself or others and otherwise act with respect
to the Receivables, the Dealer Agreements, the Dealer Assignments, the Insurance
Policies and the Other Conveyed Property in such manner as will, in the
reasonable judgment of the Master Servicer, maximize the amount to be received
by the Trust with respect thereto. The Master Servicer is authorized in its
discretion to waive any prepayment charge, late payment charge or any other
similar fees that may be collected in the ordinary course of servicing any
Receivable.
(b) The Master Servicer may at any time agree to a
modification or amendment of a Receivable in order to (i) change the Obligor's
regular due date to a date within 30 days of when such due date occurs or (ii)
re-amortize the scheduled payments on the Receivable following a partial
prepayment of principal; PROVIDED, HOWEVER, that no such change shall extend the
maturity date of any Receivable.
28
(c) The Master Servicer may grant payment extensions on, or
other modifications or amendments to, a Receivable (including those
modifications permitted by Section 4.2(b)) in accordance with its customary
procedures if the Master Servicer believes in good faith that such extension,
modification or amendment is necessary to avoid a default on such Receivable,
will maximize the amount to be received with respect to such Receivable, and is
otherwise in the best interests of the Trust; PROVIDED, HOWEVER, that unless
otherwise specified in any Series Supplement:
(i) The aggregate period of all extensions on a
Receivable shall not exceed six months; PROVIDED, HOWEVER, that
not more than two months can be in any consecutive twelve month
period;
(ii) In no event may a Receivable be extended by the
Master Servicer beyond the Collection Period immediately
preceding the Final Scheduled Distribution Date of the Notes
with respect to the related Series; and
(iii) As of any Determination Date the number of
Receivables included in a Series Trust Estate the term of which
have been extended during the preceding 12-month period shall
not exceed [8]% of the number of Receivables in such Series
Trust Estate at the beginning of the preceding 12-month period.
(d) Except as otherwise provided below, the Master Servicer
shall deposit collections on or with respect to Receivables into the Master
Collection Account as promptly as possible after the date of processing of such
collections, but in no event later than the second Business Day following the
date of processing. Subject to the express terms of any Series Supplement, but
notwithstanding anything else in this Agreement to the contrary, for so long as
(i) Household remains the Master Servicer and maintains a commercial paper
rating of not less than A-1 by Standard & Poor's and P-1 by Moody's (or such
other rating below A-1 or P-1, as the case may be, which is satisfactory to the
Rating Agency) and for five Business Days following any reduction of any such
rating or (ii) a Master Servicer Credit Facility is maintained in effect by the
Master Servicer acceptable in form and substance to the Rating Agency (such
acceptability to be evidenced in writing by the Rating Agency to the effect that
failure to make the aforementioned deposit on the basis of the maintenance of
the Master Servicer Credit Facility will not adversely affect the then current
rating of the Notes), issued by a depository institution or insurance having a
rating on its (A) short-term obligations of at least P-1 by Moody's and A-1 by
Standard & Poor's and (B) long term obligations of at least A2 by Moody's and A
by Standard & Poor's or other ratings approved by the Rating Agency, the Master
Servicer shall not be required to make deposits of collections on or with
respect to Receivables as provided in the preceding sentence, but may make one
or more deposits of such collections with respect to a Collection Period into
the Master Collection Account in immediately available funds not later than 1:00
P.M., Central time, on the Business Day immediately preceding the related
Distribution Date. In the event
29
that a Master Servicer Credit Facility is maintained, the Master Servicer
shall within two Business Days of the date of processing of collections on or
with respect to Receivables notify the Trustee and the Master Servicer Credit
Facility Issuer in writing of the amounts that would otherwise be deposited
in the Collection Account. The Master Servicer shall establish and maintain
for the Trust a Payment Record in which the payments on or with respect to
the Receivables shall be credited and the Master Servicer shall notify the
Trustee and the Master Servicer Credit Facility Issuer in writing as promptly
as practicable (but in any event prior to the Determination Date for the
following Distribution Date) of the amounts so credited on or with respect to
the Receivables that are to be included in Collected Funds for the related
Distribution Date and of the amounts so credited which will constitute a part
of Collected Funds for the second following Distribution Date. The Payment
Record shall be made available for inspection during normal business hours of
the Master Servicer upon request of the Trustee, or any Master Servicer
Credit Facility Issuer. The Master Servicer shall give written notice to the
Trustee if it is required to deposit funds in accordance with the first
sentence of this paragraph.
.3. REALIZATION UPON RECEIVABLES. (a) Consistent with the
standards, policies and procedures required by this Agreement, the Master
Servicer shall use its best efforts to repossess (or otherwise comparably
convert the ownership of) and liquidate any Financed Vehicle securing a
Receivable with respect to which the Master Servicer has determined that
payments thereunder are not likely to be resumed, as soon as is practicable
after default on such Receivable but in no event later than the date on which
10% or more of a Scheduled Payment has become 150 days delinquent (other than in
the case of Financed Vehicles where neither the Financed Vehicle nor the Obligor
can be physically located by the Master Servicer (using procedures consistent
with the standards, policies and procedures of the Master Servicer required by
this Agreement) and other than in the case of an Obligor who is subject to a
bankruptcy proceeding); PROVIDED, HOWEVER, that the Master Servicer may elect
not to repossess a Financed Vehicle within such time period if in its good faith
judgment it determines that the proceeds ultimately recoverable with respect to
such Receivable would be increased by forbearance. The Master Servicer is
authorized to follow such customary practices and procedures as it shall deem
necessary or advisable, consistent with the standard of care required by Section
4.1, which practices and procedures may include reasonable efforts to realize
upon any recourse to Dealers, the sale of the related Financed Vehicle at public
or private sale, the submission of claims under an Insurance Policy and other
actions, including, without limitation, entering into settlements with Obligors,
by the Master Servicer in order to realize upon such a Receivable. The
foregoing is subject to the provision that, in any case in which the Financed
Vehicle shall have suffered damage, the Master Servicer shall not expend funds
in connection with any repair or towards the repossession of such Financed
Vehicle unless it shall determine in its discretion that such repair and/or
repossession shall increase the proceeds of liquidation of the related
Receivable by an amount greater than the amount of such expenses. The Master
Servicer shall be entitled to recover all reasonable expenses incurred by it in
the course of repossessing and liquidating a Financed Vehicle but only from the
liquidation proceeds of the vehicle or
30
under the related Dealer Agreement. The Master Servicer shall recover such
reasonable expenses based on the information contained in the Master
Servicer's Certificate delivered on the related Determination Date. The
Master Servicer shall pay on behalf of the Trust any personal property taxes
assessed on repossessed Financed Vehicles. The Master Servicer shall be
entitled to reimbursement of any such tax from Net Liquidation Proceeds with
respect to such Receivable.
(b) If the Master Servicer elects to commence a legal
proceeding to enforce a Dealer Agreement or Dealer Assignment, the act of
commencement shall be deemed to be an automatic assignment from the Trust to the
Master Servicer of the rights under such Dealer Agreement and Dealer Assignment
for purposes of collection only. If, HOWEVER, in any enforcement suit or legal
proceeding it is held that the Master Servicer may not enforce a Dealer
Agreement or Dealer Assignment on the grounds that it is not a real party in
interest or a Person entitled to enforce the Dealer Agreement or Dealer
Assignment, the Owner Trustee, at the Master Servicer's written direction and
expense, or the Seller, at the Seller's expense, shall take such steps as the
Master Servicer deems reasonably necessary to enforce the Dealer Agreement or
Dealer Assignment, including bringing suit in its name or the name of the Seller
or of the Trust and the Owner Trustee for the benefit of the Securityholders.
All amounts recovered shall be remitted directly by the Master Servicer as
provided in Section 4.2(d).
(c) The Master Servicer agrees that prior to delivering any
repossessed Finance Vehicle for sale to any dealer, it shall make such filings
and effect such notices as are necessary under Section 9-114(1) of the UCC to
preserve the Trust's ownership interest (or security interest, as the case may
be) in such repossessed Financed Vehicle.
.4. INSURANCE. (a) The Master Servicer shall require, in
accordance with its customary servicing policies and procedures, that each
Financed Vehicle be insured by the related Obligor under an insurance policy
covering physical loss and damage to the related Financed Vehicle and shall
monitor the status of such physical loss and damage insurance coverage
thereafter, in accordance with its customary servicing procedures. Each
Receivable requires the Obligor to obtain such physical loss and damage
insurance, naming HAFC and its successors and assigns as loss payee, and with
respect to liability coverage, additional insureds, and permits the holder of
such Receivable to obtain physical loss and damage insurance at the expense of
the Obligor if the Obligor fails to maintain such insurance. If the Master
Servicer shall determine that an Obligor has failed to obtain or maintain a
physical loss and damage Insurance Policy covering the related Financed Vehicle
which satisfies the conditions set forth in the related Eligibility Criteria
(including, without limitation, during the repossession of such Financed
Vehicle) the Master Servicer shall be diligent in carrying out its customary
servicing procedures to enforce the rights of the holder of the Receivable under
the Receivable to require the Obligor to obtain such physical loss and damage
insurance in accordance with its customary servicing policies and procedures.
31
(b) The Master Servicer may xxx to enforce or collect upon
the Insurance Policies, in its own name, if possible, or as agent of the Trust.
If the Master Servicer elects to commence a legal proceeding to enforce an
Insurance Policy, the act of commencement shall be deemed to be an automatic
assignment of the rights of the Trust under such Insurance Policy to the Master
Servicer for purposes of collection only. If, HOWEVER, in any enforcement suit
or legal proceeding it is held that the Master Servicer may not enforce an
Insurance Policy on the grounds that it is not a real party in interest or a
holder entitled to enforce the Insurance Policy, the Owner Trustee, at the
Master Servicer's written direction and expense, or the Seller, at the Seller's
expense, shall take such steps as the Master Servicer deems reasonably necessary
to enforce such Insurance Policy, including bringing suit in its name or the
name of the Trust and the Owner Trustee for the benefit of the Noteholders.
.5. MAINTENANCE OF SECURITY INTERESTS IN VEHICLES. Consistent with
the policies and procedures required by this Agreement, the Master Servicer
shall take such steps on behalf of the Trust as are necessary to maintain
perfection of the security interest created by each Receivable in the related
Financed Vehicle on behalf of the Trust as the Trustee shall reasonably request,
including, but not limited to, obtaining the execution by the Obligors and the
recording, registering, filing, re-recording, re-filing, and re-registering of
all security agreements, financing statements and continuation statements as are
necessary to maintain the security interest granted by the Obligors under the
respective Receivables. The Owner Trustee, on behalf of the Trust, hereby
authorizes the Master Servicer, and the Master Servicer agrees, to take any and
all steps necessary to re-perfect such security interest on behalf of the Trust
as necessary because of the relocation of a Financed Vehicle or for any other
reason. In the event that the assignment of a Receivable to the Trust is
insufficient, without a notation on the related Financed Vehicle's certificate
of title, or without fulfilling any additional administrative requirements under
the laws of the state in which the Financed Vehicle is located, to perfect a
security interest in the related Financed Vehicle in favor of the Trust, HAFC
hereby agrees that the designation of any predecessor company to HAFC, or any
Affiliate of any of the foregoing as the secured party on the certificate of
title is in its capacity as agent of the Trust for such limited purpose.
.6. COVENANTS, REPRESENTATIONS, AND WARRANTIES OF MASTER SERVICER.
By its execution and delivery of this Agreement, the Master Servicer makes the
following representations, warranties and covenants on which the Trustee relies
in accepting the related Receivables, on which the Trustee relies in
authenticating each Series of Notes, on which the Noteholders rely on in
purchasing a Series of Notes and on which the Owner Trustee relies in executing
each Series of Certificates.
The Master Servicer covenants as follows:
(i) LIENS IN FORCE. The Financed Vehicle securing each
Receivable shall not be released in whole or in part from the
32
security interest granted by the Receivable, except upon
payment in full of the Receivable or as otherwise contemplated
herein;
(ii) NO IMPAIRMENT. The Master Servicer shall do nothing
to impair the rights of the Trust or the related Series of
Noteholders in the Receivables, the Dealer Agreements, the
Dealer Assignments, the Insurance Policies or the Other
Conveyed Property;
(iii) NO AMENDMENTS. The Master Servicer shall not extend
or otherwise amend the terms of any Receivable, except in
accordance with Section 4.2;
(iv) RESTRICTIONS ON LIENS. The Master Servicer shall
not (i) create, incur or suffer to exist, or agree to create,
incur or suffer to exist, or consent to cause or permit in the
future (upon the happening of a contingency or otherwise) the
creation, incurrence or existence of any Lien or restriction on
transferability of the Receivables except for the Lien in favor
of the Trustee for the benefit of the related Series
Securityholders, and the restrictions on transferability
imposed by this Agreement or (ii) sign or file under the
Uniform Commercial Code of any jurisdiction any financing
statement which names HAFC, the Master Servicer or any
Affiliate thereof as a debtor, or sign any security agreement
authorizing any secured party thereunder to file such financing
statement, with respect to the Receivables, except in each case
any such instrument solely securing the rights and preserving
the Lien of the Trustee;
(v) SERVICING OF RECEIVABLES. The Master Servicer shall
service the Receivables as required by the terms of this
Agreement and in material compliance with its standard and
customary procedures for servicing all its other comparable
motor vehicle receivables and in compliance with applicable
law; and
(vi) RELOCATION OF OFFICE. The Master Servicer shall
notify the Trustee of any relocation of the Master Servicer's
principal office set forth in Section 13.3 hereof and all
Receivables Files shall be maintained by the Master Servicer in
the United States.
.7. REPURCHASE OF RECEIVABLES UPON BREACH OF COVENANT. Upon
discovery by any of the Master Servicer, the Seller, a Trust Officer of the
Owner Trustee or of the Trustee of a breach of any of the covenants set forth in
Sections 4.5 or 4.6, the party discovering such breach shall give prompt written
notice to the others; PROVIDED, HOWEVER, that the failure to give any such
notice shall not affect any obligation of the Master Servicer under this Section
4.7. As of the second Accounting Date following its discovery or receipt of
notice of any breach of any covenant set forth in Sections 4.5 or
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4.6 which materially and adversely affects the interests of the related
Series Securityholders in any Receivable (including any Liquidated
Receivable) (or, at the Master Servicer's election, the first Accounting Date
so following) or the related Financed Vehicle, the Master Servicer shall,
unless such breach shall have been cured in all material respects, repurchase
from the Trust the Receivable affected by such breach and, on the date
specified in Section 5.4, the Master Servicer shall pay the related
Repurchase Amount and deposit such Repurchase Amounts into the Master
Collection Account in accordance with Section 5.3 hereof. It is understood
and agreed that the obligation of the Master Servicer to repurchase any
Receivable (including any Liquidated Receivable) with respect to which such a
breach has occurred and is continuing shall, if such obligation is fulfilled,
constitute the sole remedy against the Master Servicer for such breach;
.8. TOTAL SERVICING FEE; PAYMENT OF CERTAIN EXPENSES BY MASTER
SERVICER. As compensation for its activities, the Master Servicer shall be
entitled to retain out of amounts otherwise to be deposited in the Master
Collection Account with respect to a Collection Period, the Base Servicing
Fee and any Supplemental Servicing Fee for each Series for such Collection
Period. The Master Servicer shall be required to pay all expenses incurred by
it in connection with its activities under this Agreement (including taxes
imposed on the Master Servicer, expenses incurred in connection with
distributions and reports made by the Master Servicer to Securityholders and
all fees and expenses of the Owner Trustee or the Trustee), except taxes
levied or assessed against the Trust, and claims against the Trust in respect
of indemnification, which taxes and claims in respect of indemnification
against the Trust are expressly stated to be for the account of Household.
The Master Servicer shall be liable for the fees, charges and expenses of the
Owner Trustee, the Trustee, any Sub-Servicer and their respective agents.
.9. MASTER SERVICER'S CERTIFICATE. No later than 10:00 a.m.
Central time on each Determination Date, the Master Servicer shall deliver, or
cause to be delivered, to the Trustee and the Owner Trustee, a Master Servicer's
Certificate executed by a responsible officer or agent of the Master Servicer
containing among other things, all information necessary to enable the Trustee
to make the allocations required by Section 5.5 and the distributions with
respect to such Distribution Date pursuant to each Series Supplement. Upon
request, the Master Servicer will also provide a listing of all Warranty
Receivables and Covenant Receivables repurchased as of the related Determination
Date, identifying the Receivables so purchased. Such list will identify
Receivables repurchased by the Master Servicer or by the Seller on the related
Determination Date and each Receivable which became a Liquidated Receivable or
which was paid in full during the related Collection Period by account number.
In addition to the information set forth in the preceding sentence, the Master
Servicer's Certificate shall also contain the information required by any Series
Supplement.
.10. ANNUAL STATEMENT AS TO COMPLIANCE, NOTICE OF MASTER SERVICER
TERMINATION EVENT. (a) The Master Servicer shall deliver or cause to be
delivered to the Trustee and the Owner Trustee on or before April 30 (or 120
days after the end of the Master Servicer's fiscal year, if other than December
31) of each year, beginning on April
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30, ____, an Officer's Certificate signed by any responsible officer of the
Master Servicer, or such Eligible Sub-Servicer who is performing the
servicing duties of the Master Servicer, dated as of December 31 (or other
applicable date) of the immediately preceding year, stating that (i) a review
of the activities of the Master Servicer, or such Eligible Sub-Servicer who
is performing the servicing duties of the Master Servicer, during the
preceding 12-month period and of its performance under this Agreement has
been made under such officer's supervision, and (ii) to such officer's
knowledge, based on such review, the Master Servicer, or such Eligible
Sub-Servicer who is performing the servicing duties of the Master Servicer,
has in all material respects fulfilled all its obligations under this
Agreement throughout such period, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to
such officer and the nature and status thereof.
(b) The Master Servicer, or such Eligible Sub-Servicer who is
performing the servicing duties of the Master Servicer, shall deliver to the
Trustee and the Owner Trustee and, in the event that such notice is delivered by
the Sub-Servicer, to the Master Servicer, promptly after having obtained
knowledge thereof, but in no event later than two (2) Business Days thereafter,
written notice in an Officer's Certificate of any event which with the giving of
notice or lapse of time, or both, would become a Master Servicer Termination
Event under Section 10.1(a). The Seller or the Master Servicer shall deliver to
the Trustee, the Owner Trustee, the Master Servicer or the Seller (as
applicable) promptly after having obtained knowledge thereof, but in no event
later than two (2) Business Days thereafter, written notice in an Officer's
Certificate of any event which with the giving of notice or lapse of time, or
both, would become a Master Servicer Termination Event under any other clause of
Section 10.1.
.11. ANNUAL INDEPENDENT ACCOUNTANTS' REPORT. (a) The Master
Servicer shall cause a firm of nationally recognized independent certified
public accountants (the "Independent Accountants"), who may also render other
services to the Master Servicer or to the Seller, to deliver to the Trustee
and the Owner Trustee on or before April 30 (or 120 days after the end of the
Master Servicer's fiscal year, if other than December 31) of each year,
beginning on April 30, ____, with respect to the twelve months ended the
immediately preceding December 31 (or other applicable date), a report to the
effect that they have examined certain documents and records relating to the
servicing of Receivables under this Agreement and each Series Supplement,
compared the information contained in the Master Servicer's Certificates
delivered pursuant to Section 4.9 during the period covered by such report
with such documents and records and that, on the basis of such examination,
such accountants are of the opinion that the servicing has been conducted in
compliance with the terms and conditions as set forth in Articles IV and V of
this Agreement and the applicable provisions of each Series Supplement,
except for such exceptions as they believe to be immaterial and such other
exceptions as shall be set forth in such statement. Such report shall
acknowledge that the Trustee shall be a "non-participating party" with
respect to such report, or words to similar effect. The Trustee shall have no
duty to make any independent inquiry or investigation as to, and shall have
no obligation or liability in respect of, the sufficiency of such procedures.
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(b) On or before April 30 of each calendar year, beginning
with April 30, ____, the Master Servicer shall cause a firm of nationally
recognized independent public accountants (who may also render other services
to the Master Servicer or Seller) to furnish a report to the Trustee, the
Master Servicer and each Rating Agency to the effect that they have compared
the mathematical calculations of each amount set forth in the Master
Servicer's Certificates delivered pursuant to Section 4.9 during the period
covered by such report with the Master Servicer's computer reports which were
the source of such amounts and that on the basis of such comparison, such
accountants are of the opinion that such amounts are in agreement, except for
such exceptions as they believe to be immaterial and such other exceptions as
shall be set forth in such statement. Such report shall acknowledge that the
Trustee shall be a "non-participating party" with respect to such report, or
words to similar effect. The Trustee shall have no duty to make any
independent inquiry or investigation as to, and shall have no obligation or
liability in respect of, the sufficiency of such procedures.
.12. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING
RECEIVABLES. The Master Servicer shall provide to representatives of the
Trustee and the Owner Trustee reasonable access to the documentation regarding
the Receivables. In each case, such access shall be afforded without charge but
only upon reasonable request and during normal business hours. Nothing in this
Section shall derogate from the obligation of the Master Servicer to observe any
applicable law prohibiting disclosure of information regarding the Obligors, and
the failure of the Master Servicer to provide access as provided in this Section
as a result of such obligation shall not constitute a breach of this Section.
.13. FIDELITY BOND AND ERRORS AND OMISSIONS POLICY. The Master
Servicer or such Eligible Sub-Servicer that is performing the servicing duties
of the Master Servicer, has obtained, and shall continue to maintain in full
force and effect, a Fidelity Bond and Errors and Omissions Policy of a type and
in such amount as is customary for servicers engaged in the business of
servicing automobile receivables.
.14. YEAR 2000 COMPLIANCE. The Master Servicer covenants that its
computer and other systems used in servicing the Receivables have or will be
modified to operate in a manner such that on and after January 1, 2000 (i) the
Master Servicer can service the Receivables in accordance with the terms of this
Agreement and (ii) the Master Servicer can operate its business in the same
manner as it is operating on the date hereof.
ARTICLE V
TRUST ACCOUNTS; DISTRIBUTIONS;
STATEMENTS TO CERTIFICATEHOLDERS AND NOTEHOLDERS
.1. ESTABLISHMENT OF TRUST ACCOUNTS. (a) (i) Except as otherwise
provided with respect to a Series in the related Series Supplement, the Master
Servicer,
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on behalf of the Noteholders with respect to each Series, the holders of the
Series Trust Certificates of each Series and the holders of the Owner Trust
Certificates, shall establish and maintain in the name of the Trustee, a
trust account which is an Eligible Deposit Account (the "Master Collection
Account"), bearing a designation clearly indicating that the funds deposited
therein are held for the benefit of the Series Noteholders with respect to
the Household Automotive Trusts, holders of the Series Trust Certificates of
each Series and the holders of the Owner Trust Certificates. The Master
Collection Account shall initially be established with the Trustee. The
Trustee shall possess all right, title and interest in all funds on deposit
from time to time in, and shall have sole dominion and control with respect
to, the Master Collection Account and in all proceeds thereof for the benefit
of the Series Noteholders, the holders of the Series Trust Certificates of
each Series and the holders of the Owner Trust Certificates. Except as
expressly provided in this Agreement, the Master Servicer agrees that it
shall have no right of setoff or banker's lien against, and no right to
otherwise deduct from, any funds held in the Master Collection Account for
any amount owed to it by the Trust.
(ii) With respect to each Series, the Trustee shall establish and
maintain the Series Trust Accounts required to be established and maintained
pursuant to the related Series Supplement.
(b) Funds on deposit in the Master Collection Account and any
Series Trust Accounts (collectively, the "Trust Accounts") shall be invested by
the Trustee (or any custodian with respect to funds on deposit in any such
account) in Eligible Investments selected in writing by the Master Servicer
(pursuant to standing instructions or otherwise) which absent any instruction
shall be the investments specified in clause (d) of the definition of Eligible
Investments set forth herein. Funds on deposit in any Trust Account shall be
invested in Eligible Investments that will mature so that such funds will be
available at the close of business on the Business Day immediately preceding the
Distribution Date. Funds deposited in a Trust Account on the day immediately
preceding a Distribution Date and representing the proceeds of Eligible
Investments are not required to be invested overnight. All Eligible Investments
will be held to maturity.
(c) All investment earnings of monies deposited in the Trust
Accounts shall be deposited (or caused to be deposited) by the Trustee in the
Master Collection Account or the related Series Collection Account no later than
the close of business on the Business Day immediately preceding the related
Distribution Date, and any loss resulting from such investments shall be charged
to the Master Collection Account. The Master Servicer will not direct the
Trustee to make any investment of any funds held in any of the Trust Accounts
unless the security interest granted and perfected in such account will continue
to be perfected in such investment, in either case without any further action by
any Person, and, in connection with any direction to the Trustee to make any
such investment, if necessary, the Master Servicer shall deliver to the Trustee
an Opinion of Counsel to such effect.
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(d) The Trustee shall not in any way be held liable by reason
of any insufficiency in any of the Trust Accounts resulting from any loss on any
Eligible Investment included therein except for losses attributable to the
Trustee's negligence or bad faith or its failure to make payments on such
Eligible Investments issued by the Trustee in its commercial capacity as
principal obligor and not as Trustee in accordance with their terms.
(e) If (i) the Master Servicer shall have failed to give
investment directions for any funds on deposit in the Trust Accounts to the
Trustee by 2:00 p.m. Eastern Time (or such other time as may be agreed by the
Issuer and the Trustee) on any Business Day; or (ii) an Event of Default shall
have occurred and be continuing with respect to a Series of Notes, the Trustee
shall, to the fullest extent practicable, invest and reinvest funds in the Trust
Accounts in one or more Eligible Investments in accordance with paragraph (b)
above; PROVIDED that, if following an Event of Default amounts are to be
distributed to Securityholders other than on a Distribution Date, investments
shall mature on the Business Day preceding any such proposed date of
distribution.
(f) The Trustee, in its respective capacities with respect to
the various Series shall possess all right, title and interest in all funds on
deposit from time to time in the Trust Accounts and in all proceeds thereof
(excluding all Investment Earnings on the Master Collection Account and the
Series Collection Accounts) and all such funds, investments, proceeds and income
shall be part of the Owner Trust Estate. Except as otherwise provided herein,
the Trust Accounts shall be under the sole dominion and control of the Trustee
for the benefit of the related Noteholders. If, at any time, any of the Trust
Accounts ceases to be an Eligible Deposit Account, the Trustee (or the Master
Servicer on its behalf) shall within five Business Days (or such longer period
as to which each Rating Agency may consent) establish a new Trust Account as an
Eligible Deposit Account and shall transfer any cash and/or any investments to
such new Trust Account. In connection with the foregoing, the Master Servicer
agrees that, in the event that any of the Trust Accounts are not accounts with
the Trustee, the Master Servicer shall notify the Trustee in writing promptly
upon any of such Trust Accounts ceasing to be an Eligible Deposit Account.
Pursuant to the authority granted to the Master Servicer under this Agreement,
the Master Servicer shall have the revocable power, granted by the Trustee to
make withdrawals and payments from the Master Collection Account and to instruct
the Trustee to make withdrawals and payments from the Master Collection Account
for the purposes of carrying out the Master Servicer's duties hereunder. The
Master Servicer may net against any deposits required to be made to the Master
Collection Account on the Business Day before any Determination Date amounts
that the Seller, as Certificateholder or otherwise, is entitled to receive as
distributions directly or indirectly from the Master Collection Account on such
Determination Date.
.2. CERTAIN REIMBURSEMENTS TO THE MASTER SERVICER. The Master
Servicer shall be entitled to withhold from amounts otherwise required to be
remitted to the Master Collection Account with respect to a Collection Period
an amount in respect of funds deposited with respect to prior Collection
Periods in the Master Collection
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Account but later determined by the Master Servicer to have resulted from
mistaken deposits or postings or checks returned for insufficient funds;
PROVIDED, THAT, such withholding may be made only following certification by
the Master Servicer of such amounts and the provision of such information to
the Trustee, as may be necessary in the opinion of the Trustee to verify the
accuracy of such certification.
.3. APPLICATION OF COLLECTIONS. All collections for the
Collection Period shall be applied by the Master Servicer as follows:
With respect to each Simple Interest Receivable (other than a
Repurchased Receivable), payments by or on behalf of the Obligor, (other than
Supplemental Servicing Fees with respect to such Receivable, to the extent
collected) shall be applied to interest and principal in accordance with the
Simple Interest Method. With respect to each Actuarial Receivable, (other
than a Repurchased Receivable), payments by or on behalf of the Obligor,
(other than Supplemental Servicing Fees with respect to such Receivable, to
the extent collected) shall be applied to interest and principal in
accordance with the Actuarial Method.
.4. ADDITIONAL DEPOSITS. HAFC and the Seller, as applicable, shall
deposit or cause to be deposited in the Master Collection Account for
distribution to the appropriate Series Collection Account on the Business Day
preceding the Determination Date following the date on which such obligations
are due the aggregate Repurchase Amount with respect to Repurchased Receivables.
.5. DISTRIBUTIONS. (a) If, with respect to a Series, Collected
Funds are deposited in the Master Collection Account, on each Distribution Date,
the Trustee shall transfer Collected Funds with respect to such Series Trust
Estate in the respective amounts set forth in the Master Servicer's Certificates
with respect to such Series from the Master Collection Account to the related
Series Collection Account for further application and distribution as set forth
in the related Series Supplement.
(b) In the event that the Master Collection Account is
maintained with an institution other than the Trustee, the Master Servicer shall
instruct and cause such institution to make all deposits and distributions
pursuant to Section 5.5(a) on the related Distribution Date.
ARTICLE VI
RESERVED
ARTICLE VII
RESERVED
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ARTICLE VIII
THE SELLER
.1. REPRESENTATIONS OF SELLER. The Seller makes the following
representations on which each Series Support Provider shall be deemed to have
relied in providing the Series Support and on which the Issuer is deemed to have
relied in acquiring the Receivables and on which the Noteholders are deemed to
have relied on in the purchasing of Notes. The representations speak as of the
execution and delivery of this Agreement and each Transfer Agreement and as of
each Transfer Date and each Series Closing Date and shall survive each sale of
the Receivables to the Issuer and each pledge thereof to the Trustee pursuant to
the Indenture and each Series Supplement.
(a) SCHEDULE OF REPRESENTATIONS. The representations and
warranties set forth on the Schedule of Eligibility Criteria attached as
Schedule I to the Series Supplement are true and correct.
(b) ORGANIZATION AND GOOD STANDING. The Seller has been duly
organized and is validly existing as a corporation in good standing under the
laws of the State of Nevada, with power and authority to own its properties and
to conduct its business as such properties are currently owned and such business
is currently conducted, and had at all relevant times, and now has, power,
authority and legal right to acquire, own and sell each Series Trust Estate
transferred to the Trust.
(c) DUE QUALIFICATION. The Seller is duly qualified to do
business as a foreign corporation in good standing and has obtained all
necessary licenses and approvals in all jurisdictions where the failure to do so
would materially and adversely affect Seller's ability to transfer the
Receivables and the Other Conveyed Property to the Trust pursuant to this
Agreement, or the validity or enforceability of the Series Trust Estate or to
perform Seller's obligations hereunder and under the Basic Documents to which
the Seller is a party.
(d) POWER AND AUTHORITY. The Seller has the power and
authority to execute and deliver this Agreement and its Basic Documents and to
carry out its terms and their terms, respectively; the Seller has full power and
authority to sell and assign each Series Trust Estate to be sold and assigned to
and deposited with the Trust by it and has duly authorized such sale and
assignment to the Trust by all necessary corporate action; and the execution,
delivery and performance of this Agreement and the Basic Documents to which the
Seller is a party have been duly authorized by the Seller by all necessary
corporate action.
(e) VALID SALE, BINDING OBLIGATIONS. This Agreement and each
related Transfer Agreement effects a valid sale, transfer and assignment of the
related Series Trust Estate, enforceable against the Seller and creditors of and
purchasers from the Seller; and this Agreement and the Basic Documents to which
the Seller is a party, when duly executed and delivered, shall constitute legal,
valid and binding obligations of
40
the Seller enforceable in accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization or
other similar laws affecting the enforcement of creditors' rights generally
and by equitable limitations on the availability of specific remedies,
regardless of whether such enforceability is considered in a proceeding in
equity or at law.
(f) NO VIOLATION. The consummation of the transactions
contemplated by this Agreement and the Basic Documents and the fulfillment of
the terms of this Agreement and the Basic Documents shall not conflict with,
result in any breach of any of the terms and provisions of or constitute (with
or without notice, lapse of time or both) a material default under the
certificate of incorporation or by-laws of the Seller, or any indenture,
agreement, mortgage, deed of trust or other instrument to which the Seller is a
party or by which it is bound, or result in the creation or imposition of any
Lien upon any of its properties pursuant to the terms of any such indenture,
agreement, mortgage, deed of trust or other instrument, other than this
Agreement, or violate any law, order, rule or regulation applicable to the
Seller of any court or of any federal or state regulatory body, administrative
agency or other governmental instrumentality having jurisdiction over the Seller
or any of its properties.
(g) NO PROCEEDINGS. There are no proceedings or
investigations pending or, to the Seller's knowledge, threatened against the
Seller, before any court, regulatory body, administrative agency or other
tribunal or governmental instrumentality having jurisdiction over the Seller or
its properties (A) asserting the invalidity of this Agreement or any of the
Basic Documents, (B) seeking to prevent the issuance of any Securities or the
consummation of any of the transactions contemplated by this Agreement or any of
the Basic Documents, (C) seeking any determination or ruling that might
materially and adversely affect the performance by the Seller of its obligations
under, or the validity or enforceability of, this Agreement or any of the Basic
Documents, or (D) seeking to adversely affect the federal income tax or other
federal, state or local tax attributes of the Securities.
(h) APPROVALS. All approvals, authorizations, consents,
orders or other actions of any person, corporation or other organization, or of
any court, governmental agency or body or official, required in connection with
the execution and delivery by the Seller of this Agreement and the consummation
of the transactions contemplated hereby have been or will be taken or obtained
on or prior to each Series Closing Date and each Transfer Date.
(i) NO CONSENTS. The Seller is not required to obtain the
consent of any other party or any consent, license, approval or authorization,
or registration or declaration with, any governmental authority, bureau or
agency in connection with the execution, delivery, performance, validity or
enforceability of this Agreement which has not already been obtained.
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(j) CHIEF EXECUTIVE OFFICE. The chief executive office of
the Seller is at 0000 Xxxx Xxxxxx Xxxxx, Xxx Xxxxx, Xxxxxx 00000.
.2. CORPORATE EXISTENCE. (a) During the term of this Agreement,
the Seller will keep in full force and effect its existence, rights and
franchises as a corporation under the laws of the jurisdiction of its
incorporation and will obtain and preserve its qualification to do business in
each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of this Agreement, the Basic Documents
and each other instrument or agreement necessary or appropriate to the proper
administration of this Agreement and the transactions contemplated hereby.
(b) During the term of this Agreement, the Seller shall
observe the applicable legal requirements for the recognition of the Seller as a
legal entity separate and apart from its Affiliates, including as follows:
(i) the Seller shall not engage in any other business
other than as provided in Article THIRD of Seller's Articles of
Incorporation;
(ii) the Seller shall maintain corporate records and
books of account separate from those of its Affiliates;
(iii) except as otherwise provided in this Agreement, the
Seller shall not commingle its assets and funds with those of
its Affiliates;
(iv) the Seller shall hold such appropriate meetings of
its Board of Directors as are necessary to authorize all the
Seller's corporate actions required by law to be authorized by
the Board of Directors, shall keep minutes of such meetings and
of meetings of its stockholder(s) and observe all other
customary corporate formalities (and any successor Seller not a
corporation shall observe similar procedures in accordance with
its governing documents and applicable law);
(v) the Seller shall at all times hold itself out to the
public under the Seller's own name as a legal entity separate
and distinct from its Affiliates;
(vi) the Seller shall not become involved in the
day-to-day management of any other Person;
(vii) the Seller shall not guarantee any other Person's
obligations or advance funds to any other Person for the
payment of expenses or otherwise;
42
(viii) the Seller shall not act as an agent of any other
Person in any capacity;
(ix) the Seller shall not dissolve or liquidate, in whole
or in part; and
(x) all transactions and dealings between the Seller and
its Affiliates will be conducted on an arm's-length basis.
(c) During the term of this Agreement, the Seller will comply
with the limitations on its business and activities, as set forth in its
Certificates of Incorporation, and will not incur indebtedness other than
pursuant to or as expressly permitted by the Basic Documents or the Series
Related Documents with respect to each Series.
.3. LIABILITY OF SELLER; INDEMNITIES. The Seller shall be liable
in accordance herewith only to the extent of the obligations specifically
undertaken under this Agreement by the Seller and the representations made by
the Seller under this Agreement.
(a) The Seller shall indemnify, defend and hold harmless
the Issuer, the Owner Trustee, the Trust and the Trustee from and against any
taxes that may at any time be asserted against any such Person with respect
to the transactions contemplated in this Agreement and any of the Basic
Documents (except any income taxes arising out of fees paid to the Owner
Trustee, the Trustee and each Series Support Provider and except any taxes to
which the Owner Trustee or the Trustee may otherwise be subject to),
including any sales, gross receipts, general corporation, tangible personal
property, privilege or license taxes (but, in the case of the Issuer, not
including any taxes asserted with respect to, federal or other income taxes
arising out of distributions on the Certificates and the Notes) and costs and
expenses in defending against the same.
(b) The Seller shall indemnify, defend and hold harmless
the Issuer, the Owner Trustee and the Trustee against any loss, liability or
expense incurred by reason of (i) the Seller's willful misfeasance, bad faith
or negligence in the performance of its duties under this Agreement, or by
reason of reckless disregard of its obligations and duties under this
Agreement and (ii) the Seller's or the Issuer's violation of Federal or state
securities laws in connection with the offering and sale of the Notes.
(c) The Seller shall indemnify, defend and hold harmless
the Owner Trustee and the Trustee and their respective officers, directors,
employees and agents from and against any and all costs, expenses, losses,
claims, damages and liabilities arising out of, or incurred in connection
with, the acceptance or performance of the trusts and duties set forth herein
and in the Basic Documents, except to the extent that such cost, expense,
loss, claim, damage or liability shall be due to the willful misfeasance, bad
faith or negligence (except for errors in judgment) of the Person seeking
indemnification.
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Indemnification under this Section shall survive the resignation or
removal of the Owner Trustee or the Trustee and the termination of this
Agreement or the Indenture or the Trust Agreement, as applicable, and shall
include reasonable fees and expenses of counsel and other expenses of
litigation. If the Seller shall have made any indemnity payments pursuant to
this Section and the Person to or on behalf of whom such payments are made
thereafter shall collect any of such amounts from others, such Person shall
promptly repay such amounts to the Seller, without interest.
.4. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE OBLIGATIONS
OF, SELLER. Any Person (a) into which the Seller may be merged or consolidated,
(b) which may result from any merger or consolidation to which the Seller shall
be a party or (c) which may succeed to the properties and assets of the Seller
substantially as a whole, which Person in any of the foregoing cases (x) has a
certificate of incorporation containing provisions relating to limitations on
business and other matters substantially identical to those contained in the
Seller's certificate of incorporation and (y) executes an agreement of
assumption to perform every obligation of the Seller under this Agreement, the
other Basic Documents and the applicable Series Related Documents shall be the
successor to the Seller hereunder without the execution or filing of any
document or any further act by any of the parties to this Agreement; PROVIDED,
HOWEVER, that the Rating Agency Condition shall have been satisfied with respect
to such transaction.
.5. LIMITATION ON LIABILITY OF SELLER AND OTHERS. (a) The Seller
and any director or officer or employee or agent of the Seller may rely in good
faith on the written advice of counsel or on any document of any kind, prima
facie properly executed and submitted by any Person respecting any matters
arising under any Basic Document. The Seller shall not be under any obligation
to appear in, prosecute or defend any legal action that shall not be incidental
to its obligations under this Agreement, and that in its opinion may involve it
in any expense or liability. Except as provided in Section 8.3 hereof, neither
the Seller nor any of the directors, officers, employees or agents of the Seller
acting in such capacities shall be under any liability to the Trust, the
Securityholders, any Series Support Provider or any other Person for any action
taken or for refraining from the taking of any action in good faith in such
capacities pursuant to this Agreement; provided, however, that this provision
shall not protect the Seller or any such person against any liability which
would otherwise be imposed by reason of willful misfeasance, bad faith or
negligence in the performance of duties or by reason of reckless disregard of
obligations and duties hereunder.
(b) All obligations of the Seller under this Agreement (including,
but not limited to, repurchase and indemnification obligations) and under any of
the Basic Documents shall be limited in recourse to property, if any, which the
Seller may hold from time to time, not subject to any Lien.
.6. SELLER MAY OWN CERTIFICATES OR NOTES. The Seller and any
Affiliate thereof may in its individual or any other capacity become the owner
or pledgee of Certificates or Notes with the same rights as it would have if it
were not the Seller or an
44
Affiliate thereof, except as expressly provided herein or in any Basic
Document. Notes or Certificates so owned by the Seller or such Affiliate
shall have an equal and proportionate benefit under the provisions of the
Basic Documents, without preference, priority, or distinction as among all of
the Notes or Certificates; PROVIDED, HOWEVER, except in the event that all
outstanding Notes and Certificates are owned by the Seller and/or any
Affiliate thereof, that any Notes or Certificates owned by the Seller or any
Affiliate thereof, during the time such Notes or Certificates are owned by
them, shall be without voting rights for any purpose set forth in the Basic
Documents and any such Notes will not be entitled to the benefits of any
financial guaranty insurance policy. The Seller shall notify the Owner
Trustee and the Trustee promptly after it or any of its Affiliates become the
owner or pledgee of a Certificate or a Note.
ARTICLE IX
THE MASTER SERVICER
.1. REPRESENTATIONS OF MASTER SERVICER. The Master Servicer makes
the following representations on which each Series Support Provider shall be
deemed to have relied in executing and delivering the Series Support and on
which the Issuer is deemed to have relied in acquiring the Receivables and on
which the Noteholders are deemed to have relied on in the purchasing of Notes.
The representations speak as of the execution and delivery of this Agreement and
each Series Supplement, each Series Closing Date and as of each Transfer Date
and shall survive each sale of the Series Trust Estate to the Issuer and each
pledge thereof to the Trustee pursuant to the Indenture.
(i) ORGANIZATION AND GOOD STANDING. The Master Servicer
has been duly organized and is validly existing and in good
standing under the laws of its jurisdiction of organization,
with power, authority and legal right to own its properties and
to conduct its business as such properties are currently owned
and such business is currently conducted, and had at all
relevant times, and now has, power, authority and legal right
to enter into and perform its obligations under this Agreement
and the other Basic Documents to which it is a party;
(ii) DUE QUALIFICATION. The Master Servicer is duly
qualified to do business as a foreign corporation in good
standing and has obtained all necessary licenses and approvals,
in all jurisdictions in which the ownership or lease of
property or the conduct of its business (including the
servicing of the Receivables as required by this Agreement)
requires or shall require such qualification; except where the
failure to qualify or obtain licenses or approvals would not
have a material adverse effect on its ability to perform its
obligations as Master Servicer under this Agreement and the
other Basic Documents to which it is a party;
45
(iii) POWER AND AUTHORITY. The Master Servicer has the
power and authority to execute and deliver this Agreement and
its Basic Documents and to carry out its terms and their terms,
respectively, and the execution, delivery and performance of
this Agreement and the Basic Documents to which the Master
Servicer is a party have been duly authorized by the Master
Servicer by all necessary corporate action;
(iv) BINDING OBLIGATION. This Agreement and the Basic
Documents to which the Master Servicer is a party shall
constitute legal, valid and binding obligations of the Master
Servicer enforceable in accordance with their respective terms,
except as enforceability may be limited by bankruptcy,
insolvency, reorganization, or other similar laws affecting the
enforcement of creditors' rights generally and by equitable
limitations on the availability of specific remedies,
regardless of whether such enforceability is considered in a
proceeding in equity or at law;
(v) NO VIOLATION. The consummation of the transactions
contemplated by this Agreement and the Basic Documents to which
the Master Servicer is a party, and the fulfillment of the
terms of this Agreement and the Basic Documents to which the
Master Servicer is a party, shall not conflict with, result in
any breach of any of the terms and provisions of, or constitute
(with or without notice or lapse of time) a material default
under, the articles of incorporation or bylaws of the Master
Servicer, or any indenture, agreement, mortgage, deed of trust
or other instrument to which the Master Servicer is a party or
by which it is bound, or result in the creation or imposition
of any Lien upon any of its properties pursuant to the terms of
any such indenture, agreement, mortgage, deed of trust or other
instrument, other than this Agreement, or violate any law,
order, rule or regulation applicable to the Master Servicer of
any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality
having jurisdiction over the Master Servicer or any of its
properties, or any way materially adversely affect the interest
of the Noteholders or the Trust in any Receivable or affect the
Master Servicer's ability to perform its obligations under this
Agreement;
(vi) NO PROCEEDINGS. There are no proceedings or
investigations pending or, to the Master Servicer's knowledge,
threatened against the Master Servicer, before any court,
regulatory body, administrative agency or other tribunal or
governmental instrumentality having jurisdiction over the
Master Servicer or its
46
properties (A) asserting the invalidity of this Agreement or
any of the Basic Documents, (B) seeking to prevent the
issuance of the Securities or the consummation of any of the
transactions contemplated by this Agreement or any of the
Basic Documents, or (C) seeking any determination or ruling
that might materially and adversely affect the performance by
the Master Servicer of its obligations under, or the validity
or enforceability of, this Agreement or any of the Basic
Documents or (D) seeking to adversely affect the federal
income tax or other federal, state or local tax attributes of
the Securities;
(vii) APPROVALS. All approvals, authorizations, consents,
orders or other actions of any person, corporation or other
organization, or of any court, governmental agency or body or
official, required in connection with the execution and
delivery by the Master Servicer of this Agreement and the
consummation of the transactions contemplated hereby have been
or will be taken or obtained on or prior to the Series Closing
Date.
(viii) NO CONSENTS. The Master Servicer is not required to
obtain the consent of any other party or any consent, license,
approval or authorization, or registration or declaration with,
any governmental authority, bureau or agency in connection with
the execution, delivery, performance, validity or
enforceability of this Agreement which has not already been
obtained.
(ix) CHIEF EXECUTIVE OFFICE. The chief executive office
of the Master Servicer is located at 0000 Xxxxxxx Xxxx,
Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000.
.2. LIABILITY OF MASTER SERVICER; INDEMNITIES. (a) The Master
Servicer (in its capacity as such) shall be liable hereunder only to the extent
of the obligations in this Agreement specifically undertaken by the Master
Servicer and the representations made by the Master Servicer.
(b) The Master Servicer shall defend, indemnify and hold
harmless the Trust, the Trustee, the Owner Trustee and their respective
officers, directors, agents and employees, from and against any and all costs,
expenses, losses, damages, claims and liabilities, including reasonable fees and
expenses of counsel and expenses of litigation arising out of or resulting from
the use, ownership or operation of, or lien on, any Financed Vehicle;
(c) The Master Servicer (when the Master Servicer is
Household or an Affiliate of Household) shall indemnify, defend and hold
harmless the Trust, the Trustee, the Owner Trustee and their respective
officers, directors, agents and employees and from and against any taxes that
may at any time be asserted against any of such
47
parties with respect to the transactions contemplated in this Agreement,
including, without limitation, any sales, gross receipts, tangible or
intangible personal property, privilege or license taxes (but not including
any Federal or other income taxes, including franchise taxes asserted with
respect to, and as of the date of, the sale of the Receivables and the Other
Conveyed Property to the Trust or the issuance and original sale of any
Series of the Notes) and costs and expenses in defending against the same,
except to the extent that such costs, expenses, losses, damages, claims and
liabilities arise out of the negligence or willful misconduct of such parties;
The Master Servicer (when the Master Servicer is not Household) shall
indemnify, defend and hold harmless the Trust, the Trustee, the Owner Trustee
and their respective officers, directors, agents and employees from and against
any taxes with respect to the sale of Receivables in connection with servicing
hereunder that may at any time be asserted against any of such parties with
respect to the transactions contemplated in this Agreement, including, without
limitation, any sales, gross receipts, tangible or intangible personal property,
privilege or license taxes (but not including any Federal or other income taxes,
including franchise taxes asserted with respect to, and as of the date of, the
sale of the Series Trust Estate to the Trust or the issuance and original sale
of the Securities) and costs and expenses in defending against the same; and
(d) The Master Servicer shall indemnify, defend and hold
harmless the Trust, the Trustee, the Owner Trustee, each Series Support Provider
and their respective officers, directors, agents and employees from and against
any and all costs, expenses, losses, claims, damages, and liabilities to the
extent that such cost, expense, loss, claim, damage, or liability arose out of,
or was imposed upon the Trust or the Trustee by reason of the breach of this
Agreement by the Master Servicer, the negligence, misfeasance, or bad faith of
the Master Servicer in the performance of its duties under this Agreement or any
Series Supplement or by reason of reckless disregard of its obligations and
duties under this Agreement or any Series Supplement, except to the extent that
such costs, expenses, losses, damages, claims, and liabilities arise out of the
negligence or willful misconduct of the Person seeking indemnification.
(e) The Master Servicer shall indemnify, defend and hold
harmless the Trust, the Trustee, the Owner Trustee and their respective
officers, directors, agents and employees from and against any loss, liability
or expense incurred by reason of the violation by Master Servicer of Federal or
state securities laws in connection with the registration or the sale of the
Securities, except to the extent that such costs, expenses, losses, damages,
claims, and liabilities arise out of the negligence or willful misconduct of
such parties.
(f) Indemnification under this Article shall survive the
termination of this Agreement and will survive the early resignation or removal
of any of the parties hereto and shall include, without limitation, reasonable
fees and expenses of counsel and expenses of litigation. If the Master Servicer
has made any indemnity payments pursuant to this Article and the recipient
thereafter collects any of such
48
amounts from others, the recipient shall promptly repay such amounts
collected to the Master Servicer, without interest. Notwithstanding any other
provision of this Agreement, the obligations of the Master Servicer shall not
terminate or be deemed released upon the resignation or termination of
Household as the Master Servicer and shall survive any termination of this
Agreement.
.3. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE OBLIGATIONS OF
THE MASTER SERVICER. (a) Any Person (i) into which the Master Servicer may be
merged or consolidated, (ii) resulting from any merger or consolidation to which
the Master Servicer shall be a party, (iii) which acquires by conveyance,
transfer, or lease substantially all of the assets of the Master Servicer, or
(iv) succeeding to the business of the Master Servicer, in any of the foregoing
cases shall execute an agreement of assumption to perform every obligation of
the Master Servicer under this Agreement and each Basic Document and Series
Related Document and, whether or not such assumption agreement is executed,
shall be the successor to the Master Servicer under this Agreement and each
Basic Document and Series Related Document without the execution or filing of
any paper or any further act on the part of any of the parties to this Agreement
and each Series Supplement, anything in this Agreement and each Series
Supplement to the contrary notwithstanding. Notwithstanding the foregoing, the
Master Servicer shall not merge or consolidate with any other Person or permit
any other Person to become a successor to the Master Servicer's business, unless
(x) the Master Servicer shall have delivered to the Owner Trustee, the Rating
Agencies and the Trustee an Officer's Certificate and an Opinion of Counsel each
stating that such consolidation, merger or succession and such agreement of
assumption comply with this Section 9.3(a) and that all conditions precedent, if
any, provided for in this Agreement relating to such transaction have been
complied with, and (y) the Rating Agency Condition shall have been satisfied
with respect to such assignment or succession.
.4. LIMITATION ON LIABILITY OF MASTER SERVICER AND OTHERS.
(a) Neither the Master Servicer, the Trustee nor any of the directors or
officers or employees or agents of the Master Servicer or the Trustee shall be
under any liability to the Trust, except as provided in this Agreement and each
Basic Document or Series Related Document, for any action taken or for
refraining from the taking of any action pursuant to this Agreement and each
Basic Document or Series Related Document; PROVIDED, HOWEVER, that this
provision shall not protect the Master Servicer, the Trustee or any such person
against any liability that would otherwise be imposed by reason of willful
misfeasance, bad faith or negligence (excluding errors in judgment) in the
performance of duties (including negligence with respect to the Master
Servicer's indemnification obligations hereunder), by reason of reckless
disregard of obligations and duties under this Agreement and each Basic Document
or Series Related Document or any violation of law by the Master Servicer, the
Trustee or such person, as the case may be; PROVIDED, FURTHER, that this
provision shall not affect any liability to indemnify the Trustee and the Owner
Trustee for costs, taxes, expenses, claims, liabilities, losses or damages paid
by the Trustee and the Owner Trustee, in their individual capacities. The
Master Servicer, the Trustee and any director, officer, employee or agent of the
Master Servicer may rely in
49
good faith on the written advice of counsel or on any document of any kind
prima facie properly executed and submitted by any Person respecting any
matters arising under this Agreement. The Trustee shall not be required to
expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if the repayment of such funds or adequate written
indemnity against such risk or liability is not reasonably assured to it in
writing prior to the expenditure of risk of such funds or incurrence of
financial liability.
(b) Notwithstanding anything herein to the contrary, the
Trustee shall not be liable for any obligation of the Master Servicer contained
in this Agreement and each Basic Document and Series Related Document, and the
Owner Trustee, the Seller and the Noteholders shall look only to the Master
Servicer to perform such obligations.
(c) The parties expressly acknowledge and consent to [Name of
Trustee] acting in the potential dual capacity of successor Master Servicer and
in the capacity as Trustee [Name of Trustee] may, in such dual or other
capacity, discharge its separate functions fully, without hindrance or regard to
conflict of interest principles, duty of loyalty principles or other breach of
fiduciary duties to the extent that any such conflict or breach arises from the
performance by [Name of Trustee] of express duties set forth in this Agreement
in any of such capacities, all of which defenses, claims or assertions are
hereby expressly waived by the other parties hereto and the Noteholders except
in the case of negligence and willful misconduct by [Name of Trustee].
.5. DELEGATION OF DUTIES. In the ordinary course of business, the
Master Servicer at any time may delegate any of its duties hereunder to any
Person, including any of its Affiliates, who agrees to conduct such duties in
accordance with standards employed by the Master Servicer in compliance with
Section 4.1. Such delegation shall not relieve the Master Servicer of its
liabilities and responsibilities with respect to such duties and shall not
constitute a resignation within the meaning of Section 9.6. The Master Servicer
shall provide each Rating Agency and the Trustee with written notice prior to
the delegation of any of its duties to any Person other than any of the Master
Servicer's Affiliates or their respective successors and assigns.
.6. MASTER SERVICER NOT TO RESIGN. Subject to the provisions of
Section 9.3, the Master Servicer shall not resign from the obligations and
duties hereby imposed on it except (i) upon determination that the performance
of its obligations or duties hereunder are no longer permissible under
applicable law or are in material conflict by reason of applicable law with any
other activities carried on by it or its subsidiaries or Affiliates, the other
activities of the Master Servicer so causing such a conflict being of a type and
nature carried on by the Master Servicer or its subsidiaries or Affiliates at
the date of this Agreement or (ii) upon satisfaction of the following
conditions: (a) the Master Servicer has proposed a successor servicer to the
Trustee in writing and such proposed successor servicer is reasonably acceptable
to the Trustee; (b) the Rating Agency shall have delivered a letter to the
Trustee stating that the appointment of such
50
proposed successor servicer as Master Servicer hereunder will satisfy the
Rating Agency Condition; and (c) such proposed successor servicer has agreed
in writing to assume the obligations of Master Servicer hereunder and under
each relevant Basic Document and Series Related Document and (d) the Master
Servicer has delivered to the Trustee an Opinion of Counsel to the effect
that all conditions precedent to the resignation of the Master Servicer and
the appointment of and acceptance by the proposed successor servicer have
been satisfied; PROVIDED, HOWEVER, that, in the case of clause (i) above, no
such resignation by the Master Servicer shall become effective until the
Trustee shall have assumed the Master Servicer's responsibilities and
obligations hereunder or the Trustee shall have designated a successor
servicer in accordance with Section 10.3 which shall have assumed such
responsibilities and obligations. Any such resignation shall not relieve the
Master Servicer of responsibility for any of the obligations specified in
Sections 10.1 and 10.3 as obligations that survive the resignation or
termination of the Master Servicer. Any such determination permitting the
resignation of the Master Servicer pursuant to clause (i) above shall be
evidenced by an Opinion of Counsel to such effect delivered to the Trustee.
.7. SUB-SERVICING AGREEMENTS BETWEEN MASTER SERVICER AND
SUB-SERVICERS. The Master Servicer may enter into agreements for any
subservicing and administration of Receivables with any institution which is
an Eligible Subservicer and is in compliance with the laws of each state
necessary to enable it to perform the obligations of the Master Servicer
pursuant to this Agreement. The Master Servicer initially appoints HAFC to
subservice the Receivables. For purposes of this Agreement and each Basic
Document and Series Related Document, the Master Servicer shall be deemed to
have received payments on Receivables when any Sub-Servicer has received such
payments. Any such agreement shall be consistent with and not violate the
provisions of this Agreement. The Master Servicer shall not be relieved of
its obligations under this Agreement and each Basic Document and Series
Related Document notwithstanding any agreement relating to subservicing and
the Master Servicer shall be obligated to the same extent and under the same
terms and conditions as if it alone were servicing and administering the
Receivables. The Issuer shall have no liability to the Master Servicer
except for payment of the Base Servicing Fee and any Supplemental Servicing
Fee and reimbursement of repossession and liquidation expenses. The Issuer
shall have no obligation to indemnify the Master Servicer for costs or
expenses, except with respect to the preceding sentence. The parties hereto
acknowledge that with respect to statements or certificates required to be
delivered by the Master Servicer in accordance with this Agreement and each
Series Supplement, including, but not limited to, Sections 4.9, 4.10 and 4.11
hereof, that a statement or certificate delivered by the Sub-Servicer shall
be sufficient to discharge the Master Servicer's obligation to deliver such
certificate or statement.
.8. SUCCESSOR SUB-SERVICERS. The Master Servicer may terminate
any Sub-Servicer and either directly service the related Receivables itself
or enter into an agreement with a successor Sub-Servicer that is an Eligible
Sub-Servicer. None of the
51
Owner Trustee or the Trustee shall have no duty or obligation to monitor or
supervise the performance of any Sub-Servicer.
ARTICLE X
DEFAULT
.1. MASTER SERVICER TERMINATION EVENT. For purposes of this
Agreement, each of the following shall constitute a "Master Servicer Termination
Event", but shall only constitute a Master Servicer Termination Event with
respect to the Series and the related Series Trust Estates with respect to which
such event arose:
(a) Any failure by the Master Servicer to deliver, or cause
to be delivered, to the Trustee for distribution pursuant to the terms of this
Agreement any proceeds or payment required to be so delivered under the terms of
this Agreement (including deposits of the Repurchase Amount pursuant to Section
3.2 and Section 4.7) that continues unremedied for a period of five Business
Days after written notice is received by the Master Servicer from the Trustee or
after discovery of such failure by a responsible Officer of the Master Servicer
(but in no event later than five Business Days after the Master Servicer is
required to make such delivery or deposit);
(b) Failure on the part of the Master Servicer duly to
observe or perform any other covenants or agreements of the Master Servicer set
forth in this Agreement and each Basic Document or Series Related Document,
which failure (i) materially and adversely affects the rights of Noteholders of
a Series (determined without regard to the availability of funds under any
Series Support) and (ii) continues unremedied for a period of 60 days after the
date on which written notice of such failure, requiring the same to be remedied,
shall have been given to the Master Servicer by the Trustee;
(c) The entry of a decree or order for relief by a court or
regulatory authority having jurisdiction in respect of the Master Servicer in an
involuntary case under the federal bankruptcy laws, as now or hereafter in
effect, or another present or future, federal bankruptcy, insolvency or similar
law, or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Master Servicer or of any
substantial part of its property or ordering the winding up or liquidation of
the affairs of the Master Servicer or the commencement of an involuntary case
under the federal bankruptcy laws, as now or hereinafter in effect, or another
present or future federal or state bankruptcy, insolvency or similar law and
such case is not dismissed within 60 days; or
(d) The commencement by the Master Servicer of a voluntary
case under the Federal bankruptcy laws, as now or hereafter in effect, or any
other present or future, Federal or state, bankruptcy, insolvency or similar
law, or the consent by the Master Servicer to the appointment of or taking
possession by a receiver, liquidator,
52
assignee, trustee, custodian, sequestrator or other similar official of the
Master Servicer or of any substantial part of its property or the making by
the Master Servicer of an assignment for the benefit of creditors or the
failure by the Master Servicer generally to pay its debts as such debts
become due or the taking of corporate action by the Master Servicer in
furtherance of any of the foregoing; or
(e) Any representation, warranty or certification of the
Master Servicer made in this Agreement or any Series Supplement or any
certificate, report or other writing delivered pursuant hereto or thereto shall
prove to be incorrect in any material respect as of the time when the same shall
have been made, and the incorrectness of such representation, warranty or
statement has a material adverse effect on the interests of the Trust in the
related Series Trust Estate and, within 60 days after written notice thereof
shall have been given to the Master Servicer by the Trustee the circumstances or
condition in respect of which such representation, warranty or statement was
incorrect shall not have been eliminated or otherwise cured; or
(f) Notwithstanding the foregoing, a delay in or failure of
performance under Section 10.1(a) for a period of five Business Days or under
Section 10.1(b) for a period of 60 days, shall not constitute a Master Servicer
Termination Event if such delay or failure could not be prevented by the
exercise of reasonable diligence by the Master Servicer and such delay or
failure was caused by an act of God, acts of declared or undeclared war, public
disorder, rebellion or sabotage, epidemics, landslides, lightning, fire,
hurricanes, earthquakes, floods or similar causes. The preceding sentence shall
not relieve the Master Servicer from using its best efforts to perform its
obligations in a timely manner in accordance with the terms of this Agreement,
and the Master Servicer shall provide the Trustee and the Seller with an
Officers' Certificate giving prompt notice of such failure or delay by it,
together with a description of its efforts to so perform its obligations.
.2. CONSEQUENCES OF A MASTER SERVICER TERMINATION EVENT. If a
Master Servicer Termination Event shall occur and be continuing, the Trustee
(to the extent a Trust Officer of the Trustee has actual knowledge thereof),
by notice given in writing to the Master Servicer may terminate all of the
rights and obligations of the Master Servicer under this Agreement and the
other Basic Documents as they relate to a Series and a Series Trust Estate
out of which such Servicer Termination Event arose. On or after the receipt
by the Master Servicer of such written notice, all authority, power,
obligations and responsibilities of the Master Servicer under this Agreement,
whether with respect to the Notes or the Other Conveyed Property or
otherwise, automatically shall pass to, be vested in, and become obligations
and responsibilities, of the Trustee (or such other successor Master Servicer
appointed by Trustee pursuant to Section 10.3); PROVIDED, HOWEVER, that the
successor Master Servicer shall (i) have no liability with respect to any
obligation which was required to be performed by the terminated Master
Servicer prior to the date that the successor Master Servicer becomes the
Master Servicer or any claim of a third party based on any alleged action or
inaction of the terminated Master Servicer and (ii) no
53
obligation to perform any repurchase or advancing obligations, if any, of the
terminated Master Servicer.
The successor Master Servicer is authorized and empowered by this
Agreement to execute and deliver, on behalf of the terminated Master
Servicer, as attorney-in-fact or otherwise, any and all documents and other
instruments and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement of the Series Trust Estate and related
documents to show the Trust as lienholder or secured party on the related
Lien Certificates, or otherwise. The terminated Master Servicer agrees to
cooperate with the successor Master Servicer in effecting the termination of
the responsibilities and rights of the terminated Master Servicer under this
Agreement as they relate to the Series Trust Estate with respect to which
such termination has been effected , including, without limitation, the
transfer to the successor Master Servicer for administration by it of all
cash amounts that shall at the time be held by the terminated Master Servicer
for deposit, or have been deposited by the terminated Master Servicer, in the
Master Collection Account or thereafter received with respect to the
Receivables in the subject Series Trust Estate and the delivery to the
successor Master Servicer of all Receivable Files, Monthly Records and
Collection Records and a computer tape in readable form as of the most recent
Business Day containing all information necessary to enable the successor
Master Servicer to service such Series Trust Estate. If requested by the
Trustee, the successor Master Servicer shall direct the Obligors to make all
payments under the Receivables directly to the successor Master Servicer (in
which event the successor Master Servicer shall process such payments in
accordance with Section 4.2(d)). The terminated Master Servicer shall grant
the Trustee and the successor Master Servicer reasonable access to the
terminated Master Servicer's premises at the terminated Master Servicer's
expense.
.3. APPOINTMENT OF SUCCESSOR. (a) On and after the time the
Master Servicer receives a notice of termination pursuant to Section 10.2 or
upon the resignation of the Master Servicer pursuant to Section 9.6, the Master
Servicer shall continue to perform all servicing functions under this Agreement
until the date specified in such termination notice or until such resignation
becomes effective or until a date mutually agreed upon by the Master Servicer
and the Trustee. The Trustee shall as promptly as possible after such
termination or resignation appoint an Eligible Servicer as a successor servicer
(the "Successor Master Servicer"), and such Successor Master Servicer shall
accept its appointment by a written assumption in a form acceptable to the
Trustee. In the event that a Successor Master Servicer has not been appointed
or has not accepted its appointment at the time when the Master Servicer ceases
to act as Master Servicer, the Trustee without further action shall
automatically be appointed the Successor Master Servicer. The Trustee may
delegate any of its servicing obligations to an Affiliate or agent in accordance
with Section 9.6. Notwithstanding the foregoing, the Trustee shall, if it is
legally unable so to act, petition a court of competent jurisdiction to appoint
any established institution qualifying as an Eligible Servicer as the Successor
Master Servicer hereunder. The Trustee shall give prompt notice to each Rating
Agency upon the
54
appointment of a Successor Master Servicer. The Trustee or the Successor
Master Servicer, as the case may be, shall be the successor in all respects
to the Master Servicer in its capacity as servicer under this Agreement and
the transactions set forth or provided for in this Agreement, and shall be
subject to all the rights, responsibilities, restrictions, duties,
liabilities and termination provisions relating thereto placed on the Master
Servicer by the terms and provisions of this Agreement, except as otherwise
stated herein. The Trustee or the Successor Master Servicer, as the case may
be, shall take such action, consistent with this Agreement, as shall be
necessary to effectuate any such succession. The Successor Master Servicer
shall be subject to termination under Section 10.2 upon the occurrence of any
Master Servicer Termination Event applicable to it as Master Servicer.
(b) Subject to Section 9.6, no provision of this Agreement
shall be construed as relieving the Trustee of its obligation to succeed as
Successor Master Servicer upon the termination of the Master Servicer pursuant
to Section 10.2 or the resignation of the Master Servicer pursuant to
Section 9.6.
(c) Any Successor Master Servicer shall be entitled to such
compensation (whether payable out of the Master Collection Account or otherwise)
equal to the greater of (a) the compensation the Master Servicer would have been
entitled to under this Agreement if the Master Servicer had not resigned or been
terminated hereunder and (b) compensation calculated with a Servicing Fee Rate
equal to the then-current "market rate" fee for servicing assets comparable to
the Receivables, which rate shall be determined by averaging three fee bids
obtained by the Trustee from third party servicers selected by the Trustee. In
addition, any Successor Master Servicer shall be entitled to reasonable
transition expenses incurred in acting as Successor Master Servicer payable by
the outgoing Master Servicer, and to the extent such transition expenses have
not been paid by the outgoing Master Servicer, such Successor Master Servicer
shall be entitled to reimbursement for such reasonable expenses pursuant to the
related Series Supplement.
.4. NOTIFICATION TO NOTEHOLDERS AND CERTIFICATEHOLDERS. Upon any
termination of, or appointment of a successor to, the Master Servicer or the
Trustee shall give prompt written notice thereof to each Noteholder.
.5. WAIVER OF PAST DEFAULTS. A majority of the Noteholders may, on
behalf of all Securityholders, waive any default by the Seller or the Master
Servicer in the performance of their obligations hereunder and its consequences,
except the failure to make any distributions required to be made to Noteholders
or to make any required deposits of any amounts to be so distributed. Upon any
such waiver of a past default, such default shall cease to exist, and any
default arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereon except to the extent
expressly so waived.
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.6. SUCCESSOR TO MASTER SERVICER. (a) The Trustee, in its
capacity as successor to the Master Servicer, shall perform such duties and only
such duties as are specifically set forth in this Agreement and each Basic
Document and Series Related Document with respect to the assumption of any
servicing duties and no implied covenants or obligations shall be read into this
Agreement against the Trustee.
(b) In the absence of bad faith or negligence on its part,
the Trustee may conclusively rely as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or opinions
furnished to the Trustee and conforming to the requirements of this Agreement
and each Series Supplement; but in the case of any such certificates or
opinions, which by any provision hereof are specifically required to be
furnished to the Trustee, the Trustee shall be under a duty to examine the same
and to determine whether or not they conform to the requirements of this
Agreement and each Series Supplement.
(c) The Trustee shall have no liability for any actions taken
or omitted by the terminated Master Servicer.
ARTICLE XI
TERMINATION
.1. OPTIONAL PURCHASE OF ALL RECEIVABLES. (a) To the extent and
under the circumstances provided in a Series Supplement, the Master Servicer and
the Seller each shall have the option to purchase the related Series Trust
Estate, other than the Trust Accounts; PROVIDED, HOWEVER, that the amount to be
paid for such purchase shall be sufficient to pay the full amount of principal
and interest then due and payable on the Notes of such Series and all other
amounts due to the Series Securityholders, the Trustee and Owner Trustee under
the related Series Supplement. To exercise such option, the Master Servicer or
the Seller, as the case may be, shall deposit pursuant to Section 5.3 in the
Master Collection Account an amount equal to the aggregate Repurchase Amount for
the related Receivables, plus the appraised value of any other property
constituting such Series Trust Estate, such value to be determined by an
appraiser mutually agreed upon by the Master Servicer and the Trust, and shall
succeed to all interests in and to the related Series Trust Estate.
(b) Upon any sale of the assets of the Trust pursuant to
Article IV of the Indenture , the Master Servicer shall instruct the Trustee
to deposit the proceeds from such sale after all payments and reserves
therefrom (including the expenses of such sale) have been made (the
"Insolvency Proceeds") in the Master Collection Account.
(c) Notice of any termination of the Trust shall be given
by the Master Servicer to the Owner Trustee, the Trustee and the Rating
Agencies as soon as practicable after the Master Servicer has received notice
thereof.
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(d) Following the satisfaction and discharge of the
Indenture, the payment in full of the principal of and interest on the Notes,
the termination of any Series Support (as provided therein) and the surrender
of any Series Support to the Series Support Provider, the Certificateholders
will succeed to the rights of the Noteholders hereunder and the Owner Trustee
will succeed to the rights of, and assume the obligations of, the Trustee
pursuant to this Agreement.
ARTICLE XII
ADMINISTRATIVE DUTIES OF THE MASTER SERVICER
.1. ADMINISTRATIVE DUTIES.
(a) DUTIES WITH RESPECT TO THE INDENTURE. The Master
Servicer shall perform all its duties and the duties of the Issuer under the
Indenture. In addition, the Master Servicer shall consult with the Owner
Trustee as the Master Servicer deems appropriate regarding the duties of the
Issuer under the Indenture. The Master Servicer shall monitor the
performance of the Issuer and shall advise the Owner Trustee when action is
necessary to comply with the Issuer's duties under the Indenture. The Master
Servicer shall prepare for execution by the Issuer or shall cause the
preparation by other appropriate Persons of all such documents, reports,
filings, instruments, certificates and opinions as it shall be the duty of
the Issuer to prepare, file or deliver pursuant to the Indenture. In
furtherance of the foregoing, the Master Servicer shall take all necessary
action that is the duty of the Issuer to take pursuant to the Indenture,
including, without limitation, pursuant to Sections 2.7, 3.4, 3.5, 3.6, 3.7,
3.9, 3.10, 3.17, 5.1, 5.4, 7.3, 8.3, 9.2, 9.3, 11.1 and 11.15 of the
Indenture.
(b) DUTIES WITH RESPECT TO THE ISSUER.
(i) In addition to the duties of the Master Servicer set
forth in this Agreement or any of the Basic Documents, the
Master Servicer shall perform such calculations and shall
prepare for execution by the Issuer or the Owner Trustee or
shall cause the preparation by other appropriate Persons of all
such documents, reports, filings, instruments, certificates and
opinions as it shall be the duty of the Issuer or the Owner
Trustee to prepare, file or deliver pursuant to this Agreement
or any of the Basic Documents or under state and Federal tax
and securities laws, and at the request of the Owner Trustee
shall take all appropriate action that it is the duty of the
Issuer to take pursuant to this Agreement or any of the Basic
Documents, including, without limitation, pursuant to Sections
2.6 and 2.11 of the Trust Agreement. In accordance with the
directions of the Issuer or the Owner Trustee, the Master
Servicer shall administer, perform or supervise the performance
of such other activities in connection with the Trust Property
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(including the Basic Documents) as are not covered by any of
the foregoing provisions and as are expressly requested by the
Issuer or the Owner Trustee and are reasonably within the
capability of the Master Servicer.
(ii) Notwithstanding anything in this Agreement or any of
the Basic Documents to the contrary, the Master Servicer shall
be responsible for promptly notifying the Owner Trustee and the
Trustee in the event that any withholding tax is imposed on the
Issuer's payments (or allocations of income) to a
Certificateholder (as defined in the Trust Agreement) as
contemplated by this Agreement. Any such notice shall be in
writing and specify the amount of any withholding tax required
to be withheld by the Owner Trustee and the Trustee pursuant to
such provision.
(iii) Notwithstanding anything in this Agreement or the
Basic Documents to the contrary, the Master Servicer shall be
responsible for performance of the duties of the Issuer or
the Seller set forth in Section 5.1(a), (b), (c) and (d) of
the Trust Agreement with respect to, among other things,
accounting and reports to Owners (as defined in the Trust
Agreement); PROVIDED, HOWEVER, that once prepared by the
Master Servicer, the Depositor shall retain responsibility
under Section 5.1(b) of the Trust Agreement for the
distribution of the Schedule K-1s necessary to enable each
Certificateholder to prepare its Federal and state income tax
returns.
(iv) The Master Servicer shall perform the duties of the
Depositor specified in Section 10.2 of the Trust Agreement
required to be performed in connection with the resignation or
removal of the Owner Trustee, and any other duties expressly
required to be performed by the Master Servicer under this
Agreement or any of the Basic Documents.
(v) The Master Servicer, on behalf of the Seller, shall
direct the Issuer to request the tender of all or a portion of
the Notes of any Series in accordance with the Indenture or any
Series Supplement.
(vi) In carrying out the foregoing duties or any of its
other obligations under this Agreement, the Master Servicer may
enter into transactions with or otherwise deal with any of its
Affiliates; PROVIDED, HOWEVER, that the terms of any such
transactions or dealings shall be in accordance with any
directions received from
58
the Issuer and shall be, in the Master Servicer's opinion, no
less favorable to the Issuer in any material respect.
(c) TAX MATTERS. The Master Servicer shall prepare and
file, or cause to be prepared and filed, on behalf of the Seller, all tax
returns, tax elections, financial statements and such annual or other reports
of the Issuer as are necessary for preparation of tax reports as provided in
Article V of the Trust Agreement, including without limitation forms 1099 and
1066. All tax returns will be signed by the Seller.
(d) NON-MINISTERIAL MATTERS. With respect to matters that
in the reasonable judgment of the Master Servicer are non-ministerial, the
Master Servicer shall not take any action pursuant to this Article XII unless
within a reasonable time before the taking of such action, the Master
Servicer shall have notified the Owner Trustee and the Trustee of the
proposed action and the Owner Trustee and the Trustee shall not have withheld
consent or provided an alternative direction. For the purpose of the
preceding sentence, "non-ministerial matters" shall include:
(A) the initiation of any claim or lawsuit by the Issuer and the
compromise of any action, claim or lawsuit brought by or against the
Issuer (other than in connection with the collection of the
Receivables);
(B) the appointment of successor Note Registrars, successor Note Paying
Agents and successor Trustees pursuant to the Indenture or the
consent to the assignment by the Note Registrar, Note Paying Agent
or Trustee of its obligations under the Indenture; and
(C) the removal of the Trustee.
(e) EXCEPTIONS. Notwithstanding anything to the contrary in
this Agreement, except as expressly provided herein or in the other Basic
Documents, the Master Servicer, in its capacity hereunder, shall not be
obligated to, and shall not, (1) make any payments to the Noteholders or
Certificateholders under the Basic Documents, (2) sell any Trust Property
pursuant to Section 4.03 of the Series _____ Supplement, (3) take any other
action that the Issuer directs the Master Servicer not to take on its behalf
or (4) in connection with its duties hereunder assume any indemnification
obligation of any other Person.
(f) The Trustee shall not be responsible for any obligations
or duties of the Master Servicer under Section 12.1.
.2. RECORDS. The Master Servicer shall maintain appropriate
books of account and records relating to services performed under this
Agreement, which books of account and records shall be accessible for
inspection by the Issuer and the Trustee at any time during normal business
hours.
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.3. ADDITIONAL INFORMATION TO BE FURNISHED TO THE ISSUER. The
Master Servicer shall furnish to the Issuer and the Trustee from time to time
such additional information regarding any Series Trust Estate as the Issuer
and the Trustee shall reasonably request.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
.1. AMENDMENTS. (a) This Agreement may be amended by the
parties hereto at any time when no Series of Securities or commitment to
purchase a Series of Securities is outstanding without the requirement of any
consents or the satisfaction of any conditions set forth below.
(b) Except as otherwise provided with respect to a Series
in a Series Supplement, this Agreement may be amended from time to time by
the parties hereto, by a written instrument signed by each of the parties
hereto, without the consent of any of the Securityholders, provided that
(i) an Opinion of Counsel for the Seller (which Opinion of Counsel may, as to
factual matters, rely upon officers' certificates of the Seller or the Master
Servicer) is addressed and delivered to the Trustee, dated the date of any
such amendment, to the effect that the conditions precedent to any such
amendment have been satisfied and (ii) the Seller shall have delivered to the
Trustee and each Rating Agency, an Officer's Certificate dated the date of
any such Amendment, stating that the Seller reasonably believes that such
amendment will not have a material adverse effect on the rights of the
Noteholders.
(c) Except as otherwise provided with respect to a Series
in a Series Supplement, this Agreement may also be amended from time to time
by the Servicer, the Seller and the Trustee, with the consent of the
Noteholders evidencing in each case not less than a majority of the
outstanding principal amount of the Notes of each affected Series for which
the Seller has not delivered an Officer's Certificate stating that there is
no adverse effect on the rights of Noteholders of each Series, for the
purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Agreement or of modifying in any manner the
rights of the Securityholders; PROVIDED, HOWEVER, that no such amendment
shall (i) reduce in any manner the amount of or delay the timing of any
distributions to be made to Securityholders or deposits of amounts to be so
distributed or the amount available under any Series Support without the
consent of each affected Securityholder, (ii) change the definition of or the
manner of calculating the interest of any Securityholder without the consent
of each affected Securityholder, (iii) reduce the aforesaid percentage
required to consent to any such amendment without the consent of each
Securityholder or (iv) adversely affect any rating of a Series by each Rating
Agency without the consent of the Noteholders evidencing not less than a
majority of the outstanding principal amount of the outstanding Notes of such
Series.
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Promptly after the execution of any such amendment or supplement,
the Trustee shall furnish written notification of the substance of such
amendment or supplement to each Securityholder.
It shall not be necessary for the consent of Certificateholders or
Noteholders pursuant to this Section to approve the particular form of any
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 Noteholders or Certificateholders provided for in this Agreement)
and of evidencing the authorization of any action by Noteholders or
Certificateholders shall be subject to such reasonable requirements as the
Trustee or the Owner Trustee, as applicable, may prescribe, including the
establishment of record dates.
The Owner Trustee and the Trustee may, but shall not be obligated
to, enter into any amendment which affects the Issuer's, the Owner Trustee's
or the Trustee's, as applicable, own rights, duties or immunities under this
Agreement or otherwise.
Prior to the execution of any amendment to this Agreement, the
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 the execution and
delivery of such amendment have been satisfied.
.2. PROTECTION OF TITLE TO TRUST. (a) The Seller shall execute
and file such financing statements and cause to be executed and filed such
continuation statements, all in such manner and in such places as may be
required by law fully to preserve, maintain and protect the interest of the
Issuer and the interests of the Trustee on behalf of the related Series
Securityholders in the related Series Trust Estate and in the proceeds
thereof.
(b) Neither the Seller nor the Master Servicer shall change
its name, identity or corporate structure in any manner that would, could or
might make any financing statement or continuation statement filed in
accordance with paragraph (a) above seriously misleading within the meaning
of Section 9-402(7) of the UCC, unless it shall have given the Owner Trustee
and the Trustee at least thirty days' prior written notice thereof and shall
have promptly filed appropriate amendments to all previously filed financing
statements or continuation statements.
(c) Each of the Seller and the Master Servicer shall have
an obligation to give the Owner Trustee and the Trustee prompt notice of any
relocation of its principal executive office if, as a result of such
relocation, the applicable provisions of the UCC would require the filing of
any amendment of any previously filed financing or continuation statement or
of any new financing statement and shall promptly file any such amendment.
The Master Servicer shall at all times maintain each office from which it
shall service Receivables, and its principal executive office, within the
United States of America.
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(d) The Master Servicer shall maintain accounts and records
as to each Receivable accurately and in sufficient detail to permit (i) the
reader thereof to know at any time the status of such Receivable, including
payments and recoveries made and payments owing (and the nature of each) and
(ii) reconciliation between payments or recoveries on (or with respect to)
each Receivable and the amounts from time to time deposited in the Master
Collection Account in respect of such Receivable.
(e) The Master Servicer shall maintain or cause to be
maintained, a computer system so that, from and after the time of sale under
this Agreement and each Transfer Agreement of the Receivables to the Issuer,
such master computer records (including any backup archives) that refer to a
Receivable shall indicate clearly the interest of the Trust in such
Receivable and that such Receivable is owned by the Trust and to which Series
Trust Estate such Receivable has been pledged pursuant to the Indenture.
Indication of the Trust's interest in a Receivable shall be deleted from or
modified on such computer systems when, and only when, the related Receivable
shall have been paid in full or repurchased by HAFC or the Seller.
(f) If at any time the Seller or HAFC shall propose to
sell, grant a security interest in or otherwise transfer any interest in
automotive receivables to any prospective purchaser, lender or other
transferee, the Master Servicer shall give to such prospective purchaser,
lender or other transferee computer tapes, records or printouts (including
any restored from backup archives) that, if they shall refer in any manner
whatsoever to any Receivable, shall indicate clearly that such Receivable has
been sold and is owned by the Trust unless such Receivable has been paid in
full or repurchased by HAFC or the Seller.
(g) With respect to any Series Trust Estate, upon request,
the Master Servicer shall furnish or cause to be furnished to the related
Series Support Provider (only in the event that there is a Series Support
Provider with respect to such Series), the Owner Trustee or to the Trustee,
within five Business Days, a list of all Receivables (by contract number)
then held as part of the related Series Trust Estate, together with a
reconciliation of such list to the related Schedule of Receivables and to
each of the Master Servicer's Certificates furnished before such request
indicating removal of Receivables from the related Series Trust Estate. The
Trustee shall hold any such list and Schedule of Receivables for examination
by interested parties during normal business hours at the Corporate Trust
Office upon reasonable notice by such Persons of their desire to conduct an
examination.
(h) The Master Servicer shall deliver to the Owner Trustee
and the Trustee:
(1) simultaneously with the execution and delivery of the Agreement
and, if required pursuant to Section 13.1, of each amendment, an Opinion of
Counsel stating that, in the opinion of such Counsel, in form and substance
reasonably satisfactory to the addressees of such Opinion, either (A) all
financing
62
statements and continuation statements have been executed and
filed that are necessary fully to preserve and protect the interest of the
Trust and the Trustee in the Receivables then held as part of the related
Series Trust Estate, or (B) no such action shall be necessary to preserve
and protect such interest or (C) any action which is necessary to preserve
and protect such interest during the following 12-month period; and
(2) within 90 days after the beginning of each calendar year
beginning in ____, dated as of a date during such 90-day period, stating
that, in the opinion of such counsel, either (A) all financing statements
and continuation statements have been executed and filed that are necessary
fully to preserve and protect the interest of the Trust and the Trustee in
the Series Trust Estate or (B) no such action shall be necessary to
preserve and protect such interest.
Each Opinion of Counsel referred to in clause (1) or (2) above shall
specify any action necessary (as of the date of such opinion) to be taken in the
following year to preserve and protect such interest.
.3. NOTICES. All demands, notices and communications upon or to
the Seller, the Master Servicer, the Owner Trustee, the Trustee or the Rating
Agencies under this Agreement shall be in writing, personally delivered, or
mailed by certified mail, or sent by confirmed telecopier transmission and shall
be deemed to have been duly given upon receipt (a) in the case of the Seller to
Household Auto Receivables Corporation, 0000 Xxxx Xxxxxx Xxxxx, Xxx Xxxxx,
Xxxxxx 00000, with a copy to Household International, Inc., 0000 Xxxxxxx Xxxx,
Xxxxxxxx Xxxxxxx, Xxxxxxxx, 00000, Attn: Treasurer (Telecopier # (847)
205-7538), (b) in the case of the Master Servicer to Household Finance
Corporation, 0000 Xxxxxxx Xxxx, Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000, Attention:
Treasurer, Telecopier # (000) 000-0000, (c) in the case of the Issuer or the
Owner Trustee, at the Corporate Trust Office of the Owner Trustee, Telecopier #
_______________, (d) in the case of the Trustee at the Corporate Trust Office,
Telecopier # _____________, (e) in the case of the Series Support Provider to
the address set forth in the related Series Supplement, and (f) in the case of
any Rating Agency, to the address set forth in the related Series Supplement.
Any notice required or permitted to be mailed to a Noteholder or
Certificateholder shall be given by first class mail, postage prepaid, at the
address of such Holder as shown in the Certificate Register or Note Register, as
applicable. Any notice so mailed within the time prescribed in the Agreement
shall be conclusively presumed to have been duly given, whether or not the
Certificateholder or Noteholder shall receive such notice.
.4. ASSIGNMENT. This Agreement shall inure to the benefit of and
be binding upon the parties hereto and their respective successors and permitted
assigns. Notwithstanding anything to the contrary contained herein, except as
PROVIDED in Sections 8.4 and 9.3 and as PROVIDED in the provisions of this
Agreement concerning the resignation of the Master Servicer, this Agreement may
not be assigned by the Seller or the Master Servicer without the prior written
consent of the Owner Trustee and the
63
Trustee. In the event that a successor Issuer with respect to a Series is
formed as contemplated in the related Series Supplement, such Issuer shall
succeed to all of the rights and obligations of the predecessor Issuer
hereunder; and all references to the Issuer hereunder shall thereafter be
deemed to be references to such successor Issuer.
.5. LIMITATIONS ON RIGHTS OF OTHERS. The provisions of this
Agreement are solely for the benefit of the parties hereto and for the benefit
of the Certificateholders (including the Seller), the Owner Trustee and the
Trustee, as third-party beneficiaries. Each Series Support Provider and its
successors and assigns shall be a third-party beneficiary to the provisions of
this Agreement and to each Series Supplement with respect to each Series for
which they are providing Series Support, and shall be entitled to rely upon and
directly enforce such provisions of this Agreement and to each Series Supplement
with respect to each Series for which they are providing Series Support, so long
as no default with respect to such Series Support Provider shall have occurred
and be continuing. Nothing in this Agreement or in any Series Supplement,
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.
.6. 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.
.7. SEPARATE COUNTERPARTS. This Agreement and each Transfer
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.
.8. 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.
.9. GOVERNING LAW. THIS AGREEMENT AND EACH TRANSFER AGREEMENT
SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, 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.
.10. ASSIGNMENT TO TRUSTEE. The Seller hereby acknowledges and
consents to any mortgage, pledge, assignment and grant of a security interest by
the Issuer to the Trustee pursuant to the Indenture, as supplemented by a Series
Supplement for the benefit of the related Series Securityholders of all right,
title and interest of the Issuer in, to and under the applicable Series Trust
Estate.
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.11. NONPETITION COVENANTS. (a) Notwithstanding any prior
termination of this Agreement or any Series Supplement, the Master Servicer and
the Seller shall not, prior to the date which is one year and one day after the
termination of this Agreement or any Series Supplement with respect to the
Issuer, acquiesce, petition or otherwise invoke or cause the Issuer to invoke
the process of any court or government authority for the purpose of commencing
or sustaining a case against the Issuer under any federal or state bankruptcy,
insolvency or similar law or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Issuer or any
substantial part of its property, or ordering the winding up or liquidation of
the affairs of the Issuer.
(b) Notwithstanding any prior termination of this Agreement
or any Series Supplement, the Master Servicer shall not, prior to the date that
is one year and one day after the termination of this Agreement or any Series
Supplement with respect to the Seller, acquiesce to, petition or otherwise
invoke or cause the Seller to invoke the process of any court or government
authority for the purpose of commencing or sustaining a case against the Seller
under any federal or state bankruptcy, insolvency or similar law, appointing a
receiver, liquidator, assignee, trustee, custodian, sequestrator, or other
similar official of the Seller or any substantial part of its property, or
ordering the winding up or liquidation of the affairs of the Seller.
.12. LIMITATION OF LIABILITY OF OWNER TRUSTEE. Notwithstanding
anything contained herein to the contrary, this Agreement and each Series
Supplement has been countersigned by [Name of Trustee] not in its individual
capacity but solely in its capacity as Owner Trustee of the Issuer and in no
event shall [Name of Trustee] in its individual capacity or, except as expressly
provided in the Trust Agreement, as Owner Trustee have any liability for the
representations, warranties, covenants, agreements or other obligations of the
Issuer hereunder or in any of the certificates, notices or agreements delivered
pursuant hereto, as to all of which recourse shall be had solely to the assets
of the Issuer. For all purposes of this Agreement and each Series Supplement, in
the performance of its duties or obligations hereunder or in the performance of
any duties or obligations of the Issuer hereunder, the Owner Trustee shall be
subject to, and entitled to the benefits of, the terms and provisions of
Articles VI, VII and VIII of the Trust Agreement.
.13. INDEPENDENCE OF THE MASTER SERVICER. For all purposes of this
Agreement, the Master Servicer shall be an independent contractor and shall not
be subject to the supervision of the Issuer, the Trustee or the Owner Trustee
with respect to the manner in which it accomplishes the performance of its
obligations hereunder. Unless expressly authorized by this Agreement or any
Series Supplement, the Master Servicer shall have no authority to act for or
represent the Issuer or the Owner Trustee in any way and shall not otherwise be
deemed an agent of the Issuer or the Owner Trustee.
.14. NO JOINT VENTURE. Nothing contained in this Agreement or any
Series Supplement (i) shall constitute the Master Servicer and either of the
Issuer or the Owner Trustee as members of any partnership, joint venture,
association, syndicate,
65
unincorporated business or other separate entity, (ii) shall be construed to
impose any liability as such on any of them or (iii) shall be deemed to
confer on any of them any express, implied or apparent authority to incur any
obligation or liability on behalf of the others.
66
IN WITNESS WHEREOF, the parties hereto have caused this Master Sale
and Servicing Agreement to be duly executed and delivered by their respective
duly authorized officers as of the day and the year first above written.
HOUSEHOLD AUTOMOTIVE TRUST ___
by ______________________ , not in its
individual capacity but solely as Owner
Trustee on behalf of the Trust,
by_____________________________________
Title:
HOUSEHOLD AUTO RECEIVABLES CORPORATION,
Seller,
by_____________________________________
Name:
Title:
HOUSEHOLD FINANCE CORPORATION,
as Master Servicer,
by_____________________________________
Name:
Title:
[Name of Trustee]
not in its individual capacity but solely as
Trustee,
by_____________________________________
Name:
Title:
[Signature Page for Master Sale and Servicing Agreement]
67
EXHIBIT A
FORM OF MASTER SERVICER'S CERTIFICATE
EXHIBIT B
FORM OF TRANSFER AGREEMENT
TRANSFER No. of Receivables pursuant to the Master Sale and
Servicing Agreement dated as of __________, ____ (the "Sale and Servicing
Agreement"), among HOUSEHOLD AUTOMOTIVE TRUST ___, a Delaware business trust
(the "Issuer"), HOUSEHOLD AUTO RECEIVABLES CORPORATION, a Nevada corporation
(the "Seller"), HOUSEHOLD FINANCE CORPORATION, a Delaware corporation (the
"Master Servicer"), and ________________________, a [New York] banking
corporation, in its capacity as Trustee (the "Trustee ").
W I T N E S S E T H:
WHEREAS pursuant to the Master Sale and Servicing Agreement, the
Seller wishes to convey the Receivables to the Issuer; and
WHEREAS, the Issuer is willing to accept such conveyance subject to
the terms and conditions hereof.
NOW, THEREFORE, the Issuer, the Seller, the Master Servicer and the
Trustee hereby agree as follows:
1. DEFINED TERMS. Capitalized terms used herein shall have the
meanings ascribed to them in the Sale and Servicing Agreement unless otherwise
defined herein.
"Cutoff Date" shall mean, with respect to the Receivables conveyed
hereby, _______________, ____.
"Transfer Date" shall mean. with respect to the Receivables conveyed
hereby, _____________, ____.
2. SCHEDULE OF RECEIVABLES. Annexed hereto is a supplement to
Schedule II to the Series _____ Supplement listing the Receivables that
constitute the Receivables to be conveyed pursuant to this Agreement on the
Transfer Date. The Receivables conveyed pursuant to this Agreement shall be a
component of the Series _____ Trust Estate.
3. CONVEYANCE OF RECEIVABLES. The Seller does hereby sell,
transfer, assign, set over and otherwise convey to the Issuer, without recourse
(except as expressly PROVIDED in the Master Sale and Servicing Agreement), all
right, title and interest of the Seller in and to:
(A) each and every Receivable listed on Schedule A to the
related Receivables Purchase Agreement Supplement and all monies paid or
payable
thereon or in respect thereof on or after the related Cutoff Date
(including amounts due on or before the related Cutoff Date but received by
the Seller on or after such date);
(B) the security interests in the related Financed Vehicles
granted by Obligors pursuant to such Receivables and any other interest of
the Seller in such Financed Vehicles;
(C) all rights of the Seller against Dealers pursuant to Dealer
Agreements or Dealer Assignments related to such Receivables;
(D) any proceeds and the right to receive proceeds with respect
to such Receivables repurchased by a Dealer, pursuant to a Dealer
Agreement, as a result of a breach of representation or warranty in the
related Dealer Agreement;
(E) all rights of Seller under any Service Contracts on the
related Financed Vehicles;
(F) any proceeds and the right to receive proceeds with respect
to the related Receivables from claims on any physical damage, credit life
or disability insurance policies, if any, covering Financed Vehicles or
Obligors, including rebates of insurance premiums relating to the
Receivables and any proceeds from the liquidation of such Receivables;
(G) all items contained in the Receivables Files with respect to
such Receivables and any and all other documents that Seller or Master
Servicer keeps on file in accordance with its customary procedures relating
to the related Receivables, or the related Financed Vehicles or Obligor;
(H) property (including the right to receive future Net
Liquidation Proceeds) that secures each related Receivable and that has
been acquired by or on behalf of HARC pursuant to liquidation of such
Receivable;
(I) all present and future claims, demands, causes and chooses
in action in respect of any or all of the foregoing and all payments on or
under and all proceeds of every kind and nature whatsoever in respect of
any or all of the foregoing, including all proceeds of the conversion,
voluntary or involuntary, into cash or other liquid property, all cash
proceeds, accounts, accounts receivable, notes, drafts, acceptances,
chattel paper, checks, deposit accounts, insurance proceeds, condemnation
awards, rights to payment of any and every kind and other forms of
obligations and receivables, instruments and other property which at any
time constitute all or part of or are included in the proceeds of any of
the foregoing.
B-2
4. REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller
hereby represents and warrants to the Issuer as of the date of this Agreement
and as of the Transfer Date that:
(a) ORGANIZATION AND GOOD STANDING. The Seller has been duly
organized and is validly existing as a corporation in good standing under
the laws of the State of Nevada, with power and authority to own its
properties and to conduct its business as such properties are currently
owned and such business is currently conducted, and had at all relevant
times, and now has, power, authority and legal right to acquire, own and
sell the Receivables and the Other Conveyed Property transferred to the
Trust.
(b) DUE QUALIFICATION. The Seller is duly qualified to do business
as a foreign corporation in good standing and has obtained all necessary
licenses and approvals in all jurisdictions where the failure to do so
would materially and adversely affect Seller's ability to transfer the
Receivables and the Other Conveyed Property to the Trust pursuant to this
Agreement, or the validity or enforceability of the Receivables and the
Other Conveyed Property or to perform Seller's obligations hereunder and
under the Seller's Basic Documents.
(c) POWER AND AUTHORITY. The Seller has the power and authority to
execute and deliver this Agreement and its Basic Documents and to carry out
its terms and their terms, respectively; the Seller has full power and
authority to sell and assign the Receivables and the Other Conveyed
Property to be sold and assigned to and deposited with the Trust by it and
has duly authorized such sale and assignment to the Trust by all necessary
corporate action; and the execution, delivery and performance of this
Agreement and the Seller's Basic Documents have been duly authorized by the
Seller by all necessary corporate action.
(d) VALID SALE, BINDING OBLIGATIONS. This Agreement effects a
valid sale, transfer and assignment of the Receivables and the Other
Conveyed Property, enforceable against the Seller and creditors of and
purchasers from the Seller; and this Agreement and the Seller's Basic
Documents, when duly executed and delivered, shall constitute legal, valid
and binding obligations of the Seller enforceable in accordance with their
respective terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting the enforcement
of creditors' rights generally and by equitable limitations on the
availability of specific remedies, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
(e) NO VIOLATION. The consummation of the transactions
contemplated by this Agreement and the Basic Documents and the fulfillment
of the terms of this Agreement and the Basic Documents shall not conflict
with, result in any breach of any of the terms and provisions of or
constitute (with or without notice, lapse of time or both) a default under
the certificate of incorporation or by-laws of
B-3
the Seller, or any indenture, agreement, mortgage, deed of trust or
other instrument to which the Seller is a party or by which it is bound,
or result in the creation or imposition of any Lien upon any of its
properties pursuant to the terms of any such indenture, agreement,
mortgage, deed of trust or other instrument, other than this Agreement,
or violate any law, order, rule or regulation applicable to the Seller
of any court or of any federal or state regulatory body, administrative
agency or other governmental instrumentality having jurisdiction over
the Seller or any of its properties.
(f) NO PROCEEDINGS. There are no proceedings or investigations
pending or, to the Seller's knowledge, threatened against the Seller,
before any court, regulatory body, administrative agency or other tribunal
or governmental instrumentality having jurisdiction over the Seller or its
properties (A) asserting the invalidity of this Agreement or any of the
Basic Documents, (B) seeking to prevent the issuance of the Securities or
the consummation of any of the transactions contemplated by this Agreement
or any of the Basic Documents, (C) seeking any determination or ruling that
might materially and adversely affect the performance by the Seller of its
obligations under, or the validity or enforceability of, this Agreement or
any of the Basic Documents, or (D) seeking to adversely affect the federal
income tax or other federal, state or local tax attributes of the
Securities.
(g) APPROVALS. All approvals, authorizations, consents, order or
other actions of any person, corporation or other organization, or of any
court, governmental agency or body or official, required in connection with
the execution and delivery by the Seller of this Agreement and the
consummation of the transactions contemplated hereby have been or will be
taken or obtained on or prior to the Transfer Date.
(h) NO CONSENTS. The Seller is not required to obtain the consent
of any other party or any consent, license, approval or authorization, or
registration or declaration with, any governmental authority, bureau or
agency in connection with the execution, delivery, performance, validity or
enforceability of this Agreement which has not already been obtained.
(i) CHIEF EXECUTIVE OFFICE. The chief executive office of the
Seller is at 0000 Xxxx Xxxxxx Xxxxx, Xxx Xxxxx, Xxxxxx 00000.
(j) PRINCIPAL BALANCE. The aggregate Principal Balance of the
Receivables listed on the supplement to Schedule A annexed hereto and
conveyed to the Issuer pursuant to this Agreement as of the Cutoff Date is
$____________.
5. CONDITIONS PRECEDENT. The obligation of the Issuer to acquire
the Receivables hereunder is subject to the satisfaction, on or prior to the
Transfer Date, of the following conditions precedent:
B-4
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations
and warranties made by the Seller in Section 4 of this Agreement and in
Section 3.1 of the Sale and Servicing Agreement shall be true and correct
as of the date of this Agreement and as of the Transfer Date.
(b) SALE AND SERVICING AGREEMENT CONDITIONS. Each of the
conditions set forth in Section 2.1(b) to the Sale and Servicing Agreement
shall have been satisfied.
(c) ADDITIONAL INFORMATION. The Seller shall have delivered to the
Issuer such information as was reasonably requested by the Issuer to
satisfy itself as to (i) the accuracy of the representations and warranties
set forth in Section 4 of this Agreement and in Section 6.1 of the Sale and
Servicing Agreement and (ii) the satisfaction of the conditions set forth
in this Section 5.
6. RATIFICATION OF AGREEMENT. As supplemented by this Agreement,
the Sale and Servicing Agreement is in all respects ratified and confirmed and
the Sale and Servicing Agreement as so supplemented by this Agreement shall be
read, taken and construed as one and the same instrument.
7. COUNTERPARTS. This Agreement may be executed in two or more
counterparts (and by different parties in separate counterparts), each of which
shall be an original but all of which together shall constitute one and the same
instrument.
8. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, 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.
B-5
IN WITNESS WHEREOF, the Issuer, the Seller and the Master Servicer
have caused this Agreement to be duly executed and delivered by their respective
duly authorized officers as of day and the year first above written.
HOUSEHOLD AUTOMOTIVE TRUST ___
by __________________________, not in its
individual capacity but solely as Owner
Trustee on behalf of the Trust,
by_____________________________________
Name:
Title:
HOUSEHOLD AUTO RECEIVABLES CORPORATION, Seller,
by_____________________________________
Name:
Title:
HOUSEHOLD FINANCE CORPORATION, Master Servicer,
by_____________________________________
Name:
Title:
Acknowledged and Accepted:
[Name of Trustee],
not in its individual
capacity but solely as Trustee
by___________________________
Name:
Title:
EXHIBIT C
REQUEST FOR RELEASE AND RECEIPT OF DOCUMENTS
To: ____________________ (name of Trustee)
Re: Sale and Servicing Agreement (the "Servicing Agreement, dated
as of __________, ____ between Household Auto Receivables
Corporation (the "SELLER"), Household Automotive Trust ___ (the
"TRUST"), Household Finance Corporation individually and in its
capacity as Master Servicer (the "SERVICER"), and
_______________, as Trustee (the "TRUSTEE")
In connection with the administration of the Receivables held by you
as the Trustee, we request the release, and acknowledged receipt, of the
Receivable and related Receivable File described below, for the reason
indicated.
OBLIGOR'S NAME, CUSTOMER ACCOUNT NUMBER AND VEHICLE IDENTIFICATION NUMBER
__________1. Receivable Paid in Full. All amounts received in connection
with such payments have been deposited as required pursuant to
SECTION 3.3(b) of the Master Servicing Agreement
__________2. Receivable Purchased from Trust pursuant to SECTION 3.2 or 4.7
of the Servicing Agreement.
__________3. Receivable is being serviced or subject to enforcement of
rights and remedies pursuant to Section 3.3(b) of the Servicing
Agreement.
__________4. Other (explain)_______________________________________________
If item 1 or 2 above is checked, and if all or part of the Receivable or
Receivable File was previously released to us, please release to us any
additional documents in your possession to the above specified Receivable.
If Item 3 or 4 above is checked, upon our return of all of the above documents
to you as the Indenture Trustee, please acknowledge your receipt by signing in
the space indicated below and returning this form.
[ ] HOUSEHOLD FINANCE CORPORATION
as Servicer
By:__________________________
Name:________________________
Title:_______________________
Date:________________________
DOCUMENTS RETURNED TO THE TRUSTEE
[Name of Trustee]
By:__________________________
Name:________________________
Title:_______________________
Date:________________________
C-2
EXHIBIT D
TRUSTEE'S ACKNOWLEDGEMENT
_______________________ (the "Trustee"), holds on behalf of the
Securityholders certain "Receivable Files," as described in the Sale and
Servicing Agreement, dated as of _____________ (the "Sale and Servicing
Agreement"), among Household Automotive Trust ___, Household Auto Receivables
Corporation, as Seller, Household Finance Corporation, as Master Servicer, and
the Trustee, hereby acknowledges receipt of the Receivable File for each
Receivable listed in the Schedule of Receivables attached as Schedule A to said
Sale and Servicing Agreement except as noted in the Exception List attached as
Schedule I hereto.
IN WITNESS WHEREOF, [Name of Trustee] has caused this acknowledgement
to be executed by its duly authorized officer as of this ___________________.
[Name of Trustee], as Trustee
by__________________________________________
Name:
Title:
