Exhibit 4.2
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HOUSEHOLD AFFINITY FUNDING CORPORATION
Seller,
HOUSEHOLD FINANCE CORPORATION
Servicer,
and
THE BANK OF NEW YORK,
Trustee
on behalf of the Certificateholders
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SERIES 1997-1 SUPPLEMENT
Dated as of March 1, 1997
to the
AMENDED AND RESTATED
POOLING AND SERVICING AGREEMENT
Dated as of August 1, 1993
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HOUSEHOLD AFFINITY CREDIT CARD MASTER TRUST I
Series 1997-1
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TABLE OF CONTENTS
PAGE
SECTION 1. Designation..................................................... 1
SECTION 2. Definitions..................................................... 2
SECTION 3. Servicing Compensation.......................................... 20
SECTION 4. Article IV of Agreement......................................... 21
Section 4.07. Allocations.............................................. 21
Section 4.08. Determination of Monthly Interest........................ 21
Section 4.09. Determination of Monthly Principal....................... 23
Section 4.10. Coverage of Required Amounts............................. 25
Section 4.11. Application of Available Funds on
Deposit in the Collection Account and
the Principal Funding Account............................ 25
Section 4.12. Investor Charge-Offs..................................... 28
Section 4.13. Excess Finance Charge and Administrative
Collections.............................................. 30
Section 4.14. Establishment of Series 1997-1 Cash
Collateral Account....................................... 32
Section 4.15. Subordinated Principal Collections....................... 33
Section 4.16. Reallocated Investor Finance Charge and
Administrative Collections............................... 34
Section 4.17. Series 1997-1 Excess Principal
Collections.............................................. 35
Section 4.18 Exchange of Investor Certificates for
Seller Interest.......................................... 36
SECTION 4.19 Principal Funding Account................................ 37
SECTION 4.20 Reserve Account.......................................... 38
SECTION 5. Distributions................................................... 39
SECTION 6. Statements to Certificateholders................................ 41
SECTION 7. Additional Amortization Events.................................. 42
SECTION 8. Optional Repurchase............................................. 43
SECTION 9. Sale of Certificateholders' Interest pursuant
to Section 2.06 or 10.01 of the Agreement....................... 43
SECTION 10. Distributions pursuant to Sections 8 or 9 of
this Series Supplement and Section 2.06,
10.01 or 12.02(c) of the Agreement.............................. 44
i
SECTION 11. Distribution of Proceeds of Sale, Disposition or Liquidation of
the Receivables pursuant to Section 9.02 of the Agreement...... 45
SECTION 12. Section 9.02 of the Agreement; Rights of the Collateral
Interest Holder................................................ 46
SECTION 13. Clearing Agency................................................ 47
SECTION 14. Delivery of the Class A Certificates and the Class B
Certificates................................................... 47
SECTION 15. Ratification of Agreement...................................... 47
SECTION 16. Counterparts.................................................... 47
SECTION 17. Governing Law.................................................. 47
SECTION 18. Forms of Certificates and Monthly Servicer's Certificate....... 47
SECTION 19. Definition of Tax Opinion and of Required Minimum Principal
Balance for Purposes of Series 1997-1.......................... 48
SECTION 20. ERISA Restrictions............................................. 48
EXHIBITS
Exhibit A-1 Form of 1997-1 Class A Certificate
Exhibit A-2 Form of 1997-1 Class B Certificate
Exhibit B Form of 1997-1 Monthly Servicer's Certificate
ii
Series 1997-1 SUPPLEMENT, dated as of March 1, 1997 (the "Series
Supplement") by and among Household Affinity Funding Corporation, a Delaware
corporation, as seller (the "Seller"), Household Finance Corporation, a Delaware
corporation, as servicer (the "Servicer"), and The Bank of New York, a New York
banking corporation (together with its successor in trust thereunder as provided
in the Pooling and Servicing Agreement referred to below, the "Trustee"), as
trustee under the Amended and Restated Pooling and Servicing Agreement, by and
among the Seller, the Servicer and the Trustee dated as of August 1, 1993 (as
amended to the date hereof, the "Agreement").
RECITALS
Section 6.03 of the Agreement provides, among other things, that the
Seller and the Trustee may at any time and from time to time enter into a
supplement to the Agreement for the purpose of authorizing the issuance by the
Trustee to the Seller for execution and redelivery to the Trustee for
authentication one or more Series of Investor Certificates. The Seller has
tendered the notice of issuance required by subsection 6.03(b)(i) of the
Agreement and hereby enters into this Series Supplement with the Servicer and
the Trustee as required by such Section 6.03 to provide for the issuance,
authentication and delivery of the Class A and Class B Certificates, Series
1997-1 and to specify the Principal Terms thereof. In the event that any term
or provision contained herein shall conflict with or be inconsistent with any
term or provision contained in the Agreement, the terms and provisions of this
Series Supplement shall govern.
SECTION 1. Designation.
(a) There is hereby created a Series of Investor Certificates to be
issued pursuant to the Agreement and this Series Supplement designated as
"Household Affinity Credit Card Master Trust I, Series 1997-1". The Series
1997-1 Certificates shall be issued in two certificated Classes, the first of
which shall be known as the "Floating Rate Class A Credit Card Participation
Certificates, Series 1997-1", and the second of which shall be known as the
"Floating Rate Class B Credit Card Participation Certificates, Series 1997-1".
In addition, there is hereby created a third Class of uncertificated interests
in the Trust which, except as expressly provided herein, shall be deemed to be
"Investor Certificates" for all purposes under the Agreement and this Series
Supplement and which shall be known as the "Collateral Interest, Series 1997-1".
The Collateral Interest Holder shall be deemed to be the Series Enhancer for all
purposes under the Agreement and this Series Supplement.
(b) The Series 1997-1 Certificates shall be included in Group Two and
shall be deemed to be "Investor Certificates" for all
purposes under the Agreement and this Series Supplement. Notwithstanding any
provision in the Agreement or in this Series Supplement, the first Distribution
Date with respect to Series 1997-1 shall be the April 1997 Distribution Date.
(c) Except as expressly provided herein, the provisions of Article VI
and Article XII of the Agreement relating to the registration, authentication,
delivery, presentation, cancellation and surrender of Registered Certificates
shall not be applicable to the Collateral Interest, and in no event shall clause
(c) of the definition of "Tax Opinion" set forth in Section 19 hereof be
operative with respect to the Collateral Interest.
SECTION 2. Definitions.
(a) Whenever used in this Series Supplement and when used in the
Agreement with respect to the Series 1997-1 Certificates, the following words
and phrases shall have the following meanings, and the definitions of such terms
are applicable to the singular as well as the plural forms of such terms and to
the masculine as well as to the feminine and neuter genders of such terms.
"Additional Interest" shall mean, at any time of determination, the
sum of Class A Additional Interest, Class B Additional Interest and Collateral
Additional Interest.
"Adjusted Invested Amount" shall mean, with respect to any date of
determination, an amount equal to the Invested Amount, less the Principal
Funding Account Balance on such date of determination.
"Agreement" shall mean, for purposes of this Supplement, the Amended
and Restated Pooling and Servicing Agreement, dated as of August 1, 1993, as
amended and as may be further amended from time to time, by and among the
Seller, the Servicer and the Trustee (without regard to this Supplement or
supplements for other Series).
"Allocable Servicing Fee" shall have the meaning specified in Section
3.
"Available Collateral Amount" shall mean, with respect to any date of
determination, the lesser of (a) the sum of the amount on deposit in the Cash
Collateral Account and the Collateral Invested Amount and (b) the Required
Collateral Amount.
"Available Investor Principal Collections" shall mean, with respect to
any Distribution Date, the sum of (a) an amount equal to (i) the Floating
Allocation Percentage with respect to the Revolving Period, or the Principal
Allocation Percentage with respect to the Controlled Accumulation Period, any
Early Accumulation Period or any Early Amortization Period, of Series
2
Allocable Principal Collections deposited into the Collection Account for the
related Due Period (or any partial Due Period which occurs as the first Due
Period during any Early Accumulation Period or any Early Amortization Period),
minus (ii) the amount of Subordinated Principal Collections allocable to the
Class B Invested Amount and the Collateral Invested Amount with respect to such
Distribution Date which is required to fund any deficiency pursuant to
subsection 4.15(a) for such Distribution Date, plus (b) Series Allocable
Miscellaneous Payments on deposit in the Collection Account for such
Distribution Date, plus (c) Series 1997-1 Excess Principal Collections on
deposit in the Collection Account for such Distribution Date, plus (d)
Subordinated Series Reallocated Principal Collections on deposit in the
Collection Account for such Distribution Date, plus (e) the amount, if any, of
Reallocated Investor Finance Charge and Administrative Collections to be
distributed pursuant to Section 4.11(a)(ii) on such Distribution Date and plus
(f) the amount, if any, of Excess Finance Charge and Administrative Collections
to be distributed pursuant to Sections 4.13(b), (d) or (e) on such Distribution
Date.
"Available Reserve Account Amount" shall mean, with respect to any
Distribution Date, the lesser of (a) the amount on deposit in the Reserve
Account on such date (after taking into account any interest and earnings
retained in the Reserve Account pursuant to subsection 4.20(b) on such date and
(b) the Required Reserve Account Amount.
"Base Rate" shall mean the weighted average of the Class A Certificate
Rate, the Class B Certificate Rate and the lesser of the Collateral Rate and 11%
(weighted based on the Class A Adjusted Invested Amount, the Class B Adjusted
Invested Amount and the Collateral Invested Amount as of the last day of the
preceding Due Period) plus 2.00% per annum.
"Cash Collateral Account" shall have the meaning set forth in Section
4.14.
"Class A Additional Interest" shall have the meaning specified in
subsection 4.08(a).
"Class A Adjusted Invested Amount" shall mean, with respect to any
date of determination, an amount equal to the Class A Invested Amount less the
Principal Funding Account Balance (but not in excess of the Class A Invested
Amount) on such date.
"Class A Certificate Rate" shall mean, from March [__], 1997 to and
excluding April 15, 1997, [_____]% per annum and for any Interest Period
thereafter, a per annum rate equal to LIBOR (as defined herein) plus [____]%.
"Class A Certificateholder" shall mean the Person in whose name a
Class A Certificate is registered in the Certificate Register.
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"Class A Certificateholders' Interest" shall mean the portion of the
Certificateholders' Interest evidenced by the Class A Certificates.
"Class A Certificates" shall mean any one of the Certificates executed
by the Seller and authenticated by or on behalf of the Trustee, substantially in
the form of Exhibit A-1.
"Class A Initial Invested Amount" shall mean the aggregate initial
principal amount of the Class A Certificates, which is $870,000,000.
"Class A Interest Shortfall" shall have the meaning specified in
subsection 4.08(a).
"Class A Invested Amount" shall mean, when used with respect to any
date, an amount equal to (a) the Class A Initial Invested Amount, minus (b) the
amount of principal payments made to Class A Certificateholders prior to such
date, minus (c) the excess, if any, of the aggregate amount of Class A Investor
Charge-Offs over Class A Investor Charge-Offs reimbursed pursuant to subsection
4.12(a) prior to such date and minus (d) the amount of any reduction in the
Class A Invested Amount pursuant to Section 4.18 prior to such date.
"Class A Invested Percentage" shall mean, with respect to any
Distribution Date, the percentage equivalent (which percentage shall never
exceed 100%) of a fraction, the numerator of which is the Class A Adjusted
Invested Amount as of the last day of the second preceding Due Period and the
denominator of which is the Adjusted Invested Amount as of such last day.
"Class A Investor Charge-Offs" shall have the meaning specified in
subsection 4.12(a).
"Class A Investor Default Amount" shall mean, with respect to each
Distribution Date, an amount equal to the product of the Investor Defaulted
Amount for the immediately preceding Due Period and the Class A Invested
Percentage for such Distribution Date.
"Class A Monthly Interest" shall mean the monthly interest
distributable in respect of the Class A Certificates as calculated in accordance
with subsection 4.08(a).
"Class A Monthly Principal" shall mean the monthly principal
distributable in respect of the Class A Certificates as calculated in accordance
with subsection 4.09(a).
"Class A Pool Factor" shall mean, with respect to any Record Date, a
number carried out to eight decimals representing the ratio of the Class A
Invested Amount as of such Record Date (determined after taking into account any
increases or decreases in
4
the Class A Invested Amount which will occur on the following Distribution Date)
to the Class A Initial Invested Amount.
"Class A Principal Funding Account Percentage" shall mean with respect
to any Distribution Date, the percentage equivalent of a fraction, the numerator
of which is the sum of all deposits of Class A Monthly Principal deposited into
the Principal Funding Account pursuant to subsection 4.11(d)(i) and the
denominator of which is the Principal Funding Account Balance as of such date.
"Class A Required Amount" shall have the meaning specified in
subsection 4.10(a).
"Class B Additional Interest" shall have the meaning specified in
subsection 4.08(b).
"Class B Adjusted Invested Amount" shall mean an amount equal to the
Class B Invested Amount less the positive difference, if any, between the
Principal Funding Account Balance and the Class A Invested Amount on such date.
"Class B Certificate Rate" shall mean from March [__], 1997 to and
excluding April 15, 1997, [ ]% per annum and for any Interest Period
thereafter, a per annum rate equal to LIBOR (as defined herein) plus [ ]%.
"Class B Certificateholder" shall mean the Person in whose name a
Class B Certificate is registered in the Certificate Register.
"Class B Certificateholders' Interest" shall mean the portion of the
Certificateholders' Interest evidenced by the Class B Certificates.
"Class B Certificates" shall mean any one of the Certificates executed
by the Seller and authenticated by or on behalf of the Trustee, substantially in
the form of Exhibit A-2.
"Class B Initial Invested Amount" shall mean the aggregate initial
principal amount of the Class B Certificates, which is $47,500,000.
"Class B Interest Shortfall" shall have the meaning specified in
subsection 4.08(b).
"Class B Invested Amount" shall mean, when used with respect to any
date, an amount equal to (a) the Class B Initial Invested Amount, minus (b) the
amount of principal payments made to Class B Certificateholders prior to such
date, minus (c) the aggregate amount of Class B Investor Charge-Offs for all
prior Distribution Dates, minus (d) the amount of Subordinated Principal
Collections allocated on all prior Distribution Dates pursuant to Section 4.15
(excluding any Subordinated Principal Collections allocable to the Collateral
Invested Amount), minus (e) an amount
5
equal to the amount by which the Class B Invested Amount has been reduced on all
prior Distribution Dates pursuant to subsection 4.12(a), plus (f) the sum of (A)
the aggregate amount of any Series Allocable Miscellaneous Payments allocated on
all prior Distribution Dates pursuant to subsection 4.12(b) and (B) the amount
of Excess Finance Charge and Administrative Collections allocated and available
on all prior Distribution Dates pursuant to subsection 4.13(e) and any
withdrawals from the Cash Collateral Account applied in accordance with such
subsection on such dates, for the purpose of reimbursing amounts deducted
pursuant to the foregoing clauses (c), (d) and (e), and minus (g) the amount of
any reduction in the Class B Invested Amount pursuant to Section 4.18 prior to
such date.
"Class B Invested Percentage" shall mean, with respect to any
Distribution Date, the percentage equivalent (which percentage shall never
exceed 100%) of a fraction, the numerator of which is the Class B Adjusted
Invested Amount as of the last day of the second preceding Due Period and the
denominator of which is the Adjusted Invested Amount as of such last day.
"Class B Investor Charge-Offs" shall have the meaning specified in
subsection 4.12(b).
"Class B Investor Default Amount" shall mean, with respect to each
Distribution Date, an amount equal to the product of the Investor Defaulted
Amount for the immediately preceding Due Period and the Class B Invested
Percentage for such Distribution Date.
"Class B Monthly Interest" shall mean the monthly interest
distributable in respect of the Class B Certificates as calculated in accordance
with subsection 4.08(b).
"Class B Monthly Principal" shall mean the monthly principal
distributable in respect of the Class B Certificates as calculated in accordance
with subsection 4.09(b).
"Class B Pool Factor" shall mean, with respect to any Record Date, a
number carried out to eight decimals representing the ratio of the Class B
Invested Amount as of such Record Date (determined after taking into account any
increases or decreases in the Class B Invested Amount which will occur on the
following Distribution Date) to the Class B Initial Invested Amount.
"Class B Principal Commencement Date" shall mean the first date on
which principal is actually distributed to Class B Certificateholders.
"Class B Principal Funding Account Percentage" shall mean with respect
to any Distribution Date, the percentage equivalent of a fraction, the numerator
of which is the sum of all deposits of Class B Monthly Principal deposited into
the Principal Funding
6
Account pursuant to subsection 4.11(d)(ii) and the denominator of which is the
Principal Funding Account Balance as of such date.
"Class B Required Amount" shall have the meaning specified in
subsection 4.10(b).
"Collateral Additional Interest" shall have the meaning specified in
subsection 4.08(c).
"Collateral Agreement" shall mean the agreement among the Seller, the
Servicer, the Trustee and the Collateral Interest Holder, dated as of March
[__], 1997, as amended from time to time.
"Collateral Amount" shall mean, for any date of determination, the sum
of (a) the Collateral Invested Amount and (b) the aggregate amount of funds on
deposit in the Cash Collateral Account, in each case on such date.
"Collateral Cash Surplus" shall mean, as of any date of determination,
the lesser of (a) the Collateral Surplus and (b) the amount on deposit in the
Cash Collateral Account.
"Collateral Charge-Offs" shall have the meaning specified in Section
4.12(c).
"Collateral Default Amount" shall mean, with respect to any
Distribution Date, the product of the Investor Defaulted Amount for the related
Due Period and the Collateral Invested Percentage.
"Collateral Initial Invested Amount" shall mean $82,500,000.
"Collateral Interest" shall mean a fractional undivided interest in
the Trust which shall consist of the right to receive, to the extent necessary
to make the required payments to the Collateral Interest Holder under this
Series Supplement, the portion of Collections allocable thereto under the
Agreement and this Series Supplement, funds on deposit in the Collection Account
allocable thereto pursuant to the Agreement and this Series Supplement and,
subject to the rights of the Investor Certificateholders with respect thereto,
funds on deposit in the Cash Collateral Account.
"Collateral Interest Holder" shall mean the entity so designated in
the Collateral Agreement.
"Collateral Interest Shortfall" shall have the meaning specified in
Section 4.08(c).
"Collateral Invested Amount" shall mean, when used with respect to any
date, an amount equal to (a) the Collateral Initial Invested Amount, minus (b)
the aggregate amount of deposits made to the Cash Collateral Account pursuant to
Sections 4.11(c) or 4.11(d)(iii) and (vi) prior to such date, minus (c) the
aggregate
7
amount of Collateral Charge-Offs for all prior Distribution Dates pursuant to
Section 4.12(c), minus (d) the aggregate amount of Subordinated Principal
Collections allocated on all prior Distribution Dates pursuant to Section 4.15
allocable to the Collateral Invested Amount minus (e) an amount equal to the
amount by which the Collateral Invested Amount has been reduced on all prior
Distribution Dates pursuant to Sections 4.12(a) and (b), plus (f) the sum of (A)
the Series Allocable Miscellaneous Payments allocated and available on all prior
Distribution Dates pursuant to Section 4.12(c) and (B) the amount of Excess
Finance Charge and Administrative Collections allocated and available on all
prior Distribution Dates pursuant to Section 4.13(i), for the purpose of
reimbursing amounts deducted pursuant to the foregoing clauses (c), (d) and (e),
and minus (g) the amount of any reduction resulting from a cancellation of any
portion of the Collateral Interest pursuant to Section 4.18; provided, however,
that the Collateral Invested Amount may not be reduced below zero.
"Collateral Invested Percentage" shall mean, with respect to any
Distribution Date, the percentage equivalent (which percentage shall never
exceed 100%) of a fraction, the numerator of which is the Collateral Invested
Amount as of the last day of the second preceding Due Period and the denominator
of which is the Adjusted Invested Amount as of such last day.
"Collateral Monthly Interest" shall mean the monthly interest
distributable in respect of the Collateral Invested Amount as calculated in
accordance with subsection 4.08(c).
"Collateral Monthly Principal" shall mean the monthly principal
distributable in respect of the Collateral Invested Amount as calculated in
accordance with subsection 4.09(c).
"Collateral Rate" shall mean, for any Interest Period, a per annum
rate equal to LIBOR for such Interest Period plus 1%.
"Collateral Surplus" shall mean, with respect to any Distribution
Date, the excess, if any, of (a) the amount on deposit in the Cash Collateral
Account plus the Collateral Invested Amount over (b) the greater of (x) the
Required Collateral Amount or (y) at any time the Class B Invested Amount is
greater than zero and as long as an Early Amortization Period is not in effect,
at the option of the Seller (as evidenced by written instructions to the
Servicer and the Trustee), such higher amount as the Seller shall specify, from
time to time, in such instructions.
"Collection Subaccount" shall mean the Collection Account subaccount
designated for the deposit of funds pursuant to subsections 4.19(b), 4.20(b) and
4.20(d).
"Controlled Accumulation Amount" shall mean, for any Distribution Date
with respect to the Controlled Accumulation Period, $[__________]; provided,
however, that, if the commencement of the Controlled Accumulation Period is
modified pursuant to
8
Section 4.11(f), (a) the Controlled Accumulation Amount shall mean the amount
specified in accordance with such Section on the date on which the Controlled
Accumulation Period has most recently been modified, (b) the Controlled
Accumulation Amount for each Due Period shall be no greater than the Controlled
Accumulation Period Amount for such Due Period and (c) the sum of the Controlled
Accumulation Amounts for all Due Periods during the modified Controlled
Accumulation Period shall not be less than the the sum of the Class A Initial
Invested Amount plus the Class B Initial Invested Amount.
"Controlled Accumulation Period" shall mean, unless an Amortization
Event shall have occurred prior thereto, the period commencing at the close of
business on the last Business Day of September 2001, or such later date as is
determined in accordance with subsection 4.11(f) and ending on the first to
occur of (a) the commencement of the Early Amortization Period, (b) the payment
in full of the Invested Amount and (c) the Series 1997-1 Termination Date.
"Controlled Accumulation Period Amount" shall mean, for each Due
Period, the product of (a) Expected Monthly Principal for such Due Period and
(b) a fraction, the numerator of which is equal to the Invested Amount as of the
last day of the Revolving Period, and the denominator of which is equal to the
sum of the Invested Amount as of the the last day of the Revolving Period plus
the Invested Amounts (as defined in the related Supplements) of all other Series
which have a variable Controlled Accumulation Period Length (as defined in the
related Supplements) and are not scheduled to be in their Revolving Period as of
such Due Period.
"Controlled Accumulation Period Length" has the meaning specified in
subsection 4.11(f)
"Controlled Deposit Amount" shall mean, for any Distribution Date with
respect to the Controlled Accumulation Period, an amount equal to the sum of the
Controlled Accumulation Amount for such Distribution Date and any Deficit
Controlled Accumulation Amount for the immediately preceding Distribution Date.
"Covered Amount" shall mean, for any Distribution Date with respect to
the Controlled Accumulation Period and any Early Accumulation Period, an amount
equal to the sum of (i) the product of (x) a fraction, the numerator of which is
the actual number of days in the related Interest Period and the denominator of
which is 360, (y) the Class A Certificate Rate in effect during such Interest
Period, and (z) the Class A Principal Funding Account Percentage of funds
available in the Principal Funding Account, if any, as of the preceding
Distribution Date and (ii) the product of (x) a fraction, the numerator of which
is the actual number of days in the related Interest Period and the denominator
of which is 360, (y) the Class B Certificate Rate in effect during such Interest
Period, and (z) the Class B Principal Funding Account Percentage of
9
funds available in the Principal Funding Account, if any, as of the preceding
Distribution Date.
"Cumulative Excess Interest Amount" shall mean, with respect to any
Distribution Date, an amount equal to the sum of (a) the Excess Interest Amount
with respect to such Distribution Date and (b) the aggregate Excess Interest
Amounts with respect to prior Distribution Dates which have not been distributed
to the Class B Certificateholders pursuant to subsection 4.13(c) or Section
4.14; provided, however, that with respect to the first Distribution Date, the
Cumulative Excess Interest Amount shall be equal to zero.
"Deficit Controlled Accumulation Amount" shall mean (a) on the first
Distribution Date with respect to the Controlled Accumulation Period, the
excess, if any, of the Controlled Accumulation Amount for such Distribution Date
over the amount deposited in the Principal Funding Account on such Distribution
Date and (b) on each subsequent Distribution Date with respect to the Controlled
Accumulation Period, the excess, if any, of the Controlled Deposit Amount for
such subsequent Distribution Date over the amount deposited in the Principal
Funding Account on such subsequent Distribution Date.
"Distribution Date" shall mean, with respect to Series 1997-1, the
fifteenth day of each calendar month, or if such fifteenth day is not a Business
Day, the next succeeding Business Day, provided that the first Distribution Date
shall be April 15, 1997.
"Early Accumulation Period" shall mean, the period commencing at the
close of business on the Business Day immediately preceding the day on which an
Amortization Event is deemed to have occurred pursuant to clauses (a), (b), (d),
(e), (f) or (i) of Section 7 of this Supplement and continuing to the earlier of
(a) the commencement of the Early Amortization Period and (b) the Series 1997-1
Expected Final Payment Date.
"Early Amortization Period" shall mean the period commencing on the
earlier of (a) if an Amortization Event has occurred pursuant to subsection
9.01(a) of the Agreement or clauses (c), (g) or (h) of Section 7 of this
Supplement, the close of business on the last Business Day of the Revolving
Period determined pursuant to clause (y) or (z), as applicable, of the
definition of Revolving Period in this Section 2, and (b) the termination of the
Early Accumulation Period pursuant to subsection 4.20(e) of this Supplement, and
ending, in either case, on the earlier to occur of (a) the Series 1997-1
Termination Date, (b) the termination of the Trust pursuant to Section 12.01 of
the Agreement and (c) the date the Invested Amount is reduced to zero.
"Eligible Investments" shall mean with respect to funds allocable to
Series 1997-1 in the Collection Account, the Principal Funding Account and the
Reserve Account, "Eligible Investments" as defined in the Agreement, except that
all references in such
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definition to "rating satisfactory to the Rating Agency" shall mean ratings of
not less than A-1+ (or A-1 in the case of Reserve Account investments prior to
the commencement of an Early Accumulation Period or a Controlled Accumulation
Period) and P-1 (whichever is applicable).
"Eligible Institution" shall mean with respect to the Cash Collateral
Account and funds allocable to Series 1997-1 in the Collection Account, any
"Eligible Institution" as defined in the Agreement, except that all references
in such definition to "rating satisfactory to the Rating Agency" shall mean long
term ratings of not less than AAA or Aaa (whichever is applicable) or short-term
unsecured debt ratings of at least A-1+ and P-1 (whichever is applicable),
except that no such rating shall be required of an institution which maintains
such Account or such funds as a fully segregated trust account or subaccount
with the corporate trust department of such institution as long as such
institution maintains the credit rating of the Rating Agency in one of its
generic credit rating categories which signifies investment grade.
"Excess Finance Charge and Administrative Collections" shall mean,
with respect to any Distribution Date, the sum of the amounts, if any, specified
pursuant to subsections 4.11(a)(iv), 4.11(b)(ii) and an amount equal to the
product of (x) Reallocated Investor Finance Charge and Administrative
Collections with respect to such Distribution Date and (y) the Collateral
Invested Percentage with respect to such Distribution Date.
"Excess Interest Amount" shall mean, with respect to any Distribution
Date, an amount equal to one-twelfth of the product of (a) the outstanding
principal balance of the Class B Certificates as of the preceding Distribution
Date (computed by subtracting from the Class B Initial Invested Amount the
aggregate amount of distributions of Class B Monthly Principal made to the Class
B Certificateholders on or before such preceding Distribution Date) minus the
Class B Invested Amount as of such preceding Distribution Date (after giving
effect to any increase or decrease in the Class B Invested Amount on such
preceding Distribution Date) and (b) the Class B Certificate Rate; provided,
however, that with respect to the first Distribution Date, the Excess Interest
Amount shall be equal to zero.
"Excess Principal Funding Investment Proceeds" shall mean, with
respect to each Distribution Date relating to the Controlled Accumulation Period
or any Early Accumulation Period, the amount, if any, by which the Principal
Funding Investment Proceeds for such Distribution Date exceed the Covered Amount
determined on such Distribution Date.
"Expected Monthly Principal" shall be equal to the excess of (a) the
product of (i) the lowest of the monthly principal payment rates (determined by
dividing Collections of Principal Receivables during a calendar month by the
amount of Principal Receivables in the Trust as of the last day of the preceding
month,
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adjusted for additions and removals occurring after such last day), expressed as
a decimal, for the 3 calendar months preceding the date of such calculation (or
such lower principal payment rate as the Servicer may select) and (ii) the sum
of the Initial Invested Amounts (as defined in their respective related
Supplements) of all outstanding Series, over (b) the sum of, without
duplication, (i) all Series which have a fixed Accumulation Period Length (as
defind in the respective related Supplements) and which are either amortizing or
accumulating principal and (ii) all Collections of Principal Receivables
accounted for in clause (a) above which are projected by the Servicer to be
allocable to any other Series then in an Early Amortization Period or an Early
Accumulation Peroid (as such terms are defined in the related Supplement).
"Floating Allocation Percentage" shall mean, with respect to any Due
Period, the percentage equivalent of a fraction, the numerator of which is the
Adjusted Invested Amount as of the last day of the immediately preceding Due
Period and the denominator of which is the product of (a) the total amount of
Principal Receivables in the Trust as of the last day of such immediately
preceding Due Period and (b) the Series 1997-1 Allocation Percentage with
respect to the Due Period in respect of which the Floating Allocation Percentage
is being determined; provided, however, that, with respect to the first Due
Period, the Floating Allocation Percentage shall mean the percentage equivalent
of a fraction, the numerator of which is the Initial Invested Amount and the
denominator of which is the product of (x) the total amount of Principal
Receivables in the Trust on the Series Cut-Off Date and (y) the Series 1997-1
Allocation Percentage with respect to the Series Cut-Off Date; provided further
that, with respect to any Due Period in which an Aggregate Addition occurs or a
removal of Accounts pursuant to Section 2.10 of the Agreement occurs, the amount
referred to in clause (a) shall be the average of the amount of Principal
Receivables in the Trust on the date on which such Aggregate Addition or removal
of Accounts occurs (after giving effect thereto) and the last day of the
immediately preceding Due Period.
"Group Two" shall mean Series 1997-1 and each other Series specified
in the related Supplement to be included in Group Two.
"Group Two Investor Additional Amounts" shall mean, with respect to
any Distribution Date, the sum of (a) Series 1997-1 Additional Amounts for such
Distribution Date and (b) for all other Series included in Group Two, the sum of
(i) the aggregate net amount by which the Invested Amounts of such Series have
been reduced as a result of investor charge-offs, subordination of principal
collections and funding the investor default amounts in respect of any Class or
Series Enhancement interests of such Series as of such Distribution Date and
(ii) if the applicable Supplements so provide, the aggregate unpaid amount of
interest at the applicable certificate rates that has accrued on the amounts
described in the preceding clause (i) for such Distribution Date.
12
"Group Two Investor Default Amount" shall mean, with respect to any
Distribution Date, the sum of (a) the Investor Defaulted Amount for such
Distribution Date and (b) the aggregate amount of the investor default amounts
for all other Series included in Group Two for such Distribution Date.
"Group Two Investor Finance Charge and Administrative Collections"
shall mean, with respect to any Distribution Date, the sum of (a) Investor
Finance Charge and Administrative Collections for such Distribution Date and (b)
the aggregate amount of the investor finance charge and administrative
collections for all other Series included in Group Two for such Distribution
Date.
"Group Two Investor Monthly Fees" shall mean with respect to any
Distribution Date, the sum of (a) Series 1997-1 Monthly Fees for such
Distribution Date and (b) the aggregate amount of the servicing fees, investor
fees, fees payable to any Series Enhancer and any other similar fees, which are
payable out of reallocated investor finance charge collections pursuant to the
related Supplements, for all other Series included in Group Two for such
Distribution Date.
"Group Two Investor Monthly Interest" shall mean, with respect to any
Distribution Date, the sum of (a) Series 1997-1 Monthly Interest for such
Distribution Date and (b) the aggregate amount of monthly interest, including
overdue monthly interest and interest on such overdue monthly interest, if
applicable, for all other Series included in Group Two for such Distribution
Date.
"Initial Invested Amount" shall mean the sum of the Class A Initial
Invested Amount, the Class B Initial Invested Amount and the Collateral Initial
Invested Amount.
"Interest Period" shall mean, with respect to any Distribution Date,
the period from and including the Distribution Date immediately preceding such
Distribution Date (or, in the case of the first Distribution Date, from and
including the Issuance Date) to but excluding such Distribution Date.
"Invested Amount" shall mean, when used with respect to any date, an
amount equal to the sum of (a) the Class A Invested Amount as of such date, (b)
the Class B Invested Amount as of such date and (c) the Collateral Invested
Amount as of such date.
"Investor Charge-Offs" shall mean, when used with respect to any Due
Period, the Class A Investor Charge-Offs for such Due Period, the Class B
Investor Charge-Offs for such Due Period and the Collateral Charge-Offs for such
Due Period.
"Investor Defaulted Amount" shall mean, with respect to any Due
Period, an amount equal to the product of (a) the Series 1997-1 Allocation
Percentage with respect to such Due Period, (b) the Floating Allocation
Percentage with respect to such Due Period and (c) the Defaulted Amount with
respect to such Due Period.
13
"Investor Finance Charge and Administrative Collections" shall mean,
with respect to any Distribution Date, an amount equal to the product of (a) the
Floating Allocation Percentage for the related Due Period and (b) Series 1997-1
Allocable Finance Charge and Administrative Collections deposited in the
Collection Account for the related Due Period.
"Issuance Date" shall mean March [__], 1997.
"LIBOR" shall mean for the Interest Period from March [__], 1997 to
and excluding April 15, 1997 and for any subsequent Interest Period, the per
annum rate for deposits in United States dollars for a period of one month which
appears on Telerate Page 3750 as of 11:00 a.m., London time, on the related
LIBOR Determination Date. If such rate does not appear on Telerate Page 3750 on
such day, the rate will be determined on the basis of the rates at which
deposits in United States dollars are offered by the Reference Banks at
approximately 11:00 a.m., London time, on such day to prime banks in the London
interbank market for a period of one month commencing on that day. The Servicer
will request the principal London office of each of the Reference Banks to
provide a quotation of its rate. If at least two such quotations are provided,
the rate for that day will be the arithmetic mean of the quotations. If fewer
than two quotations are provided as requested, the rate for that day will be the
arithmetic mean of the rates quoted by two or more major banks in New York City,
selected by the Servicer, in its sole discretion at approximately 11:00 a.m.,
New York City time, on that day for loans in United States dollars to leading
European banks for a period of one month.
"LIBOR Determination Date" shall mean the second London business day
prior to the commencement of an Interest Period.
"Optional Repurchase Amount" shall mean, with respect to any
Distribution Date, after giving effect to any deposits and distributions
otherwise to be made on such Distribution Date, the sum of (i) the sum of the
Class A Invested Amount and the Class B Invested Amount on such Distribution
Date, plus (ii) accrued and unpaid interest on the unpaid principal balance of
the Class A Certificates and Class B Certificates through the day preceding such
Distribution Date, plus (iii) the amount of Additional Interest, if any, for
such Distribution Date and any Additional Interest previously due but not
distributed to Class A Certificateholders and Class B Certificateholders, as
applicable, on a prior Distribution Date.
"PFA Eligible Invesetments" shall mean negotiable instruments or
securities represented by instruments in bearer or registered form, or, in the
case of deposits described below, deposit accounts held in the name of the
Trustee in trust for the benefit of the Certificateholders, subject to the
exclusive custody and control of the Trustee and for which the Trustee has sole
signature authority, which evidence:
14
(a) direct obligations of, or obligations fully guaranteed as to
timely payment by, the United States of America;
(b) demand deposits, time deposits or certificates of deposit (having
original maturities of no more than 365 days) of depository institutions or
trust companies incorporated under the laws of the United States of America
or any state thereof (or domestic branches of foreign banks) and subject to
supervision and examination by federal or state banking or depository
institution authorities; provided that at the time of the Trust's
investment or contractual commitment to invest therein, the short-term debt
rating of such depository institution or trust company shall be
satisfactory to the Rating Agency;
(c) commercial paper (having original or remaining maturities of no
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) 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;
(e) bankers' acceptances (having original maturities of no more than
365 days) issued by any depository institution or trust company referred to
in (b) above;
(f) time deposits (having maturities not later than the succeeding
Distribution Date) other than as referred to in clause (e) above, with a
Person the commercial paper of which has a credit rating satisfactory to
the Rating Agency or notes which are payable on demand issued by Household
Finance Corporation, provided such notes will constitute Eligible
Investments only if the commercial paper of Household Finance Corporation
has, at the time of the Trust's investment in such notes, a rating
satisfactory to the Rating Agency; or
(g) any other investment of a type or rating that satisfies the Rating
Agency Condition and the definition of "eligible assets" as defined under
Rule 3a-7(b)(1) of the Rules and Regulations promulgated under the
Investment Company Act of 1940.
"Principal Allocation Percentage" shall mean, with respect to any Due
Period, the percentage equivalent (which percentage shall never exceed 100%) of
a fraction, the numerator of which is the Series Adjusted Invested Amount as of
the last day of the Revolving Period and the denominator of which is the product
of (a) the total amount of Principal Receivables in the Trust as of the last day
of the immediately preceding Due Period and (b) the Series 1997-1 Allocation
Percentage with respect to the Due Period
15
in respect of which the Principal Allocation Percentage is being determined;
provided, however, that with respect to any Due Period in which an Aggregate
Addition occurs or a removal of Accounts pursuant to Section 2.10 of the
Agreement occurs, the amount referred to in clause (a) shall be the average of
the amount of Principal Receivables in the Trust on the date on which such
Aggregate Addition or removal of Accounts occurs (after giving effect thereto)
and the last day of the immediately preceding Due Period. If, with respect to
any Due Period, the Principal Funding Account Balance is equal to the sum of the
Class A Initial Invested Amount and the Class B Initial Invested Amount, the
Principal Allocation Percentage shall be zero. For purposes of this definition,
Series Adjusted Invested Amount shall be computed during the Controlled
Accumulation Period or any Early Accumulation Period or any Early Amortization
Period by subtracting from such amount the difference between (a) the Initial
Collateral Invested Amount and (b) the sum of the Collateral Invested Amount
determined as of the close of business on the last day of the Revolving Period
plus an amount equal to the aggregate unreimbursed Collateral Charge-Offs as of
such last day.
"Principal Funding Account" shall have the meaning specified in
subsection 4.19(a).
"Principal Funding Account Balance" shall mean, with respect to any
date of determination during the Controlled Accumulation Period or any Early
Accumulation Period, the principal amount, if any, on deposit in the Principal
Funding Account on such date of determination.
"Principal Funding Investment Proceeds" shall mean, with respect to
each Distribution Date, the investment earnings on funds in the Principal
Funding Account (net of investment expenses and losses) for the period from and
including the immediately preceding Distribution Date to but excluding such
Distribution Date.
"Principal Funding Investment Shortfall" shall mean, with respect to
each Distribution Date during the Controlled Accumulation Period or any Early
Accumulation Period, the amount, if any, by which the Principal Funding
Investment Proceeds are less than the Covered Amount.
"Rating Agency" shall mean ▇▇▇▇▇'▇ and Standard & Poor's.
"Reallocated Investor Finance Charge and Administrative Collections"
shall mean that portion of Group Two Investor Finance Charge and Administrative
Collections allocated to Series 1997-1 pursuant to Section 4.16 plus any
Collections of Finance Charge and Administrative Receivables allocable to any
Series expressly subordinated to Series 1997-1 which are available for
application pursuant to Sections 4.11 and 4.13.
"Reassignment Amount" shall mean, with respect to any Distribution
Date, after giving effect to any deposits and
16
distributions otherwise to be made on such Distribution Date, the sum of (i) the
Adjusted Invested Amount on such Distribution Date, plus (ii) accrued and unpaid
interest on the unpaid principal balance of the Class A Certificates and Class B
Certificates through the day preceding such Distribution Date, plus (iii) the
amount of Additional Interest, if any, for such Distribution Date and any
Additional Interest previously due but not distributed to Investor Certificate-
holders on a prior Distribution Date, plus (iv) accrued and unpaid interest on
the unpaid balance of the Collateral Invested Amount.
"Reference Banks" shall mean four major banks in the London interbank
market selected by the Servicer.
"Required Collateral Amount" shall mean $82,500,000 initially and as
of any Distribution Date thereafter an amount equal to the greatest of (x)(i)
[_______]% of the Class A Adjusted Invested Amount minus (ii) the Class B
Adjusted Invested Amount, (y) [__]% of the unpaid principal amount of the Class
B Certificates and (z) [__]% of the Adjusted Invested Amount, in each case after
taking into account distributions to be made on such Distribution Date; provided
that (i) if there are any withdrawals from the Cash Collateral Account pursuant
to subsection 4.14(b), any reductions in the Collateral Invested Amount pursuant
to clauses (c), (d), or (e) of the definition of such amount, or an Amortization
Event has occurred, the Required Collateral Amount for any Distribution Date
shall equal the amount of such requirement immediately preceding such
withdrawal, reduction or Amortization Event, (ii) in no event shall the Required
Collateral Amount exceed the aggregate outstanding principal amount of the Class
A Certificates and the Class B Certificates on any such date, (iii) the Required
Collateral Amount may be reduced at any time to a lesser amount if (X) the
Rating Agency Condition is satisfied and (Y) an Officer's Certificate of the
Seller has been delivered to the effect that in the reasonable belief of the
Seller, such reduction will not result in the occurrence of an Amortization
Event, (iv) the Seller, in its sole discretion may increase the Required
Collateral Amount at any time to a greater amount and (v) if the Principal
Funding Account Balance is equal to the sum of the Class A Initial Invested
Amount and the Class B Initial Invested Amount, the Required Collateral Amount
shall be zero.
"Required Reserve Account Amount" shall mean an amount equal to the
product of (a) 0.30% of the sum of the Class A Invested Amount and the Class B
Invested Amount as of the preceding Distribution Date (after giving effect to
all changes therein on such date) and (b) the number of Distribution Dates
remaining from and excluding the Distribution Date on which such calculation is
being determined to and including the Series 1997-1 Expected Final Payment Date
divided by 12; provided that the Seller, in its sole discretion may increase the
Required Reserve Account Amount at any time to a greater amount.
17
"Reserve Account" shall have the meaning specified in Section 4.20(a).
"Reserve Account Surplus" shall mean, as of any date of determination,
the amount, if any, by which the amount on deposit in the Reserve Account
exceeds the Required Reserve Account Amount.
"Reserve Draw Amount" shall have the meaning specified in Section
4.20(c).
"Revolving Period" shall mean the period beginning on the close of
business on the Series Cut-Off Date and ending on the earlier of (x) the day on
which the Controlled Accumulation Period commences, (y) if on the day on which
an Amortization Event is deemed to have occurred, the Servicer pursuant to
subsection 4.03(a) of the Agreement need not make daily deposits into or
withdrawals from the Collection Account, the close of business on the Business
Day immediately preceding the first day of the Due Period in which an
Amortization Event is deemed to have occurred pursuant to Section 9.01 of the
Agreement or Section 7 hereof, and (z) otherwise, at the close of business on
the Business Day immediately preceding the day on which an Amortization Event is
deemed to have occurred pursuant to Section 9.01 of the Agreement or Section 7
hereof.
"Seller's Percentage" shall mean 100% minus (a) the Floating
Allocation Percentage, when used at any time with respect to Finance Charge and
Administrative Receivables and Defaulted Receivables, (b) the Floating
Allocation Percentage, when used with respect to Principal Receivables during
the Revolving Period and (c) the Principal Allocation Percentage, when used with
respect to Principal Receivables during the Controlled Accumulation Period and
any Early Accumulation Period or Early Amortization Period.
"Series Adjusted Portfolio Yield" shall mean with respect to Series
1997-1 and, with respect to any Due Period, the annualized percentage equivalent
of a fraction (a) the numerator of which is the amount of Reallocated Investor
Finance Charge and Administrative Collections during the immediately preceding
Due Period calculated on a cash basis, after subtracting therefrom the Investor
Defaulted Amount with respect to such Due Period, and (b) the denominator of
which is the Invested Amount as of the last day of the immediately preceding Due
Period.
"Series Cut-Off Date" shall mean the close of business on February 28,
1997.
"Series 1997-1" or "Series 1997-1 Certificates" shall mean the Series
of Investor Certificates, the terms of which are specified in this Series
Supplement.
"Series 1997-1 Additional Amounts" shall mean, with respect to any
Distribution Date, the sum of the amounts determined
18
pursuant to Sections 4.13(b), (c)(ii), (e) and (i) for such Distribution Date.
"Series 1997-1 Allocable Finance Charge and Administrative
Collections" shall mean the Series Allocable Finance Charge and Administrative
Collections with respect to Series 1997-1.
"Series 1997-1 Allocation Percentage" shall mean the Series Allocation
Percentage with respect to Series 1997-1.
"Series 1997-1 Certificateholders" shall mean the Holders of Series
1997-1 Certificates.
"Series 1997-1 Certificateholders' Interest" shall mean the Class A
Certificateholders' Interest, the Class B Certificateholders' Interest and the
Collateral Interest.
"Series 1997-1 Excess Principal Collections" shall mean that portion
of "Trust Excess Principal Collections" for all Series (as defined in the
respective Supplements) allocated to Series 1997-1 pursuant to Section 4.17.
"Series 1997-1 Expected Final Payment Date" shall mean the April 2002
Distribution Date.
"Series 1997-1 Monthly Fees" shall mean, with respect to any
Distribution Date, the amount determined pursuant to Section 4.11(a)(iii).
"Series 1997-1 Monthly Interest" shall mean the amounts determined
pursuant to Sections 4.08(a), (b) and (c); provided, however, that for purposes
of Section 4.16 the amount determined pursuant to subsection 4.08(c) shall be
determined based on the lesser of the Collateral Rate and 11% per annum.
"Series 1997-1 Principal Shortfall" shall have the meaning specified
in Section 4.17.
"Series 1997-1 Termination Date" shall mean the earlier of the
[_____________] Distribution Date and the date the Trust is terminated pursuant
to Section 12.01 of the Agreement.
"Series Required Seller Amount" shall mean an amount equal to 7% of
the Initial Invested Amount.
"Servicing Fee" shall have the meaning specified in Section 3.
"Servicing Fee Rate" shall mean 2%.
"Subordinated Principal Collections" shall mean, with respect to each
Distribution Date, the product of (a) the Floating Allocation Percentage, with
respect to the Revolving Period, or the
19
Principal Allocation Percentage, with respect to the Controlled Accumulation
Period and any Early Accumulation Period or Early Amortization Period, of Series
Allocable Principal Collections deposited in the Collection Account for the
related Due Period (or any partial Due Period which occurs as the first Due
Period during any Early Accumulation Period or Early Amortization Period) and
(b) the sum of the Class B Invested Percentage and the Collateral Invested
Percentage for such Distribution Date.
"Subordinated Series" shall mean any Series which, pursuant to the
terms of the related Supplement, is subordinated in any manner to the Series
1997-1 Certificates.
"Subordinated Series Reallocated Principal Collections" shall mean,
with respect to any Distribution Date, that portion of Collections of Principal
Receivables allocable to a Subordinated Series which, pursuant to the terms of
the related Supplement, are to be reallocated to Series 1997-1 and treated as a
portion of Available Investor Principal Collections for such Distribution Date.
"Tax Opinion" shall have the meaning specified in Section 19.
"Telerate Page 3750" shall mean the display page so designated on the
Dow ▇▇▇▇▇ Telerate Service (or such other page as may replace that page on that
service for the purpose of displaying comparable rates or prices).
"Termination Proceeds" shall mean any Termination Proceeds arising out
of a sale of Receivables (or interests therein) pursuant to subsection 12.02(c)
of the Agreement with respect to Series 1997-1.
"Trust Excess Principal Collections" shall mean, with respect to
Series 1997-1, the amounts so specified in subsection 4.11(c) or 4.11(d)(iii) or
(vi) and, with respect to all other Series, shall mean the amount specified in
the related Supplement.
(b) All capitalized terms used herein and not otherwise defined
herein have the meanings ascribed to them in the Agreement.
(c) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Series Supplement shall refer to this Series Supplement
as a whole and not to any particular provision of this Series Supplement;
references herein to any Article, Section or Exhibit are references to Articles,
Sections and Exhibits in or to this Series Supplement unless otherwise
specified; and the term "including" means "including without limitation".
20
SECTION 3. Servicing Compensation.
----------------------
The monthly servicing fee (the "Servicing Fee") shall be payable to
the Servicer, in arrears, on each Distribution Date in respect of any Due Period
(or portion thereof) occurring prior to the earlier of the first Distribution
Date following the Series 1997-1 Termination Date and the first Distribution
Date on which the Invested Amount is zero, in an amount equal to one-twelfth of
the product of (a) the Servicing Fee Rate, (b) the amount of Principal
Receivables as of the last day of the Due Period second preceding such
Distribution Date (or, if an Aggregate Addition occurs or a removal of Accounts
pursuant to Section 2.10 of the Agreement occurs in the Due Period preceding
such Distribution Date, the weighted average amount of Principal Receivables in
the Trust on the date on which such Aggregate Addition or removal of Accounts
occurs (after giving effect thereto) and the last day of such second preceding
Due Period) and (c) the Series 1997-1 Allocation Percentage for the Due Period
preceding such Distribution Date; provided, however, with respect to the first
Distribution Date, the Servicing Fee shall be an amount equal to the product of
(a) the Servicing Fee Rate, (b) the amount of Principal Receivables in the Trust
as of [March] 1, 1997, (c) the Series 1997-1 Allocation Percentage for the Due
Period preceding such Distribution Date and (d) a fraction the numerator of
which is 30 and the denominator of which is 360. The portion of the Servicing
Fee payable from Reallocated Investor Finance Charge and Administrative
Collections with respect to any Distribution Date (the "Allocable Servicing
Fee") shall be equal to one-twelfth of the product of (a) the Servicing Fee Rate
(such rate to be reduced with respect to any Distribution Date by the amount by
which the product of 12 and Interchange received during the preceding Due Period
as a percentage of the total amount of Principal Receivables at the end of such
Due Period is less than 1.25%) and (b) the Adjusted Invested Amount as of the
last day of the Due Period second preceding such Distribution Date; provided,
however, with respect to the first Distribution Date, the Allocable Servicing
Fee shall be equal to the product of (a) the Servicing Fee Rate (such rate to be
reduced with respect to any Distribution Date by the amount by which the product
of 12 and Interchange received during the preceding Due Period as a percentage
of the total amount of Principal Receivables is less than 1.25%), (b) the
Initial Invested Amount and (c) a fraction the numerator of which is 30 and the
denominator of which is 360. The remainder of the Servicing Fee shall be paid
directly by the Seller and in no event shall the Trust, the Trustee or the
Series 1997-1 Certificateholders be liable for the share of the Servicing Fee to
be paid directly by the Seller. The Allocable Servicing Fee shall be payable to
the Servicer solely to the extent amounts are available for distribution
pursuant to subsection 4.11(a)(iii) and subsection 4.13(g), as the case may be.
21
SECTION 4. Article IV of Agreement.
-----------------------
Sections 4.01 through 4.06 of the Agreement shall be read in their
entirety as provided in the Agreement. Article IV of the Agreement (except for
Sections 4.01 through 4.06 thereof) shall, with respect to the Series 1997-1
Certificates, be read in its entirety as follows:
ARTICLE IV
RIGHTS OF CERTIFICATEHOLDERS AND
ALLOCATION AND APPLICATION OF COLLECTIONS
Section 4.07. Allocations. (a) Allocations. Collections of Finance
Charge and Administrative Receivables and Principal Receivables, Defaulted
Receivables and Miscellaneous Payments allocated to Series 1997-1 pursuant to
Article IV of the Agreement (and, as described herein, Collections of Finance
Charge and Administrative Receivables reallocated from other Series in Group
Two) shall be allocated and distributed or reallocated as set forth in this
Article.
(b) Payments to the Seller. The Servicer shall on Deposit Dates
withdraw from the Collection Account and pay to the Seller the following
amounts:
(i) an amount equal to the Seller's Percentage for the related
Due Period of Series 1997-1 Allocable Finance Charge and
Administrative Collections to the extent such amount is deposited in
the Collection Account; and
(ii) an amount equal to the Seller's Percentage for the related
Due Period of Series Allocable Principal Collections deposited in the
Collection Account, if the Seller's Participation Amount (determined
after giving effect to any Principal Receivables transferred to the
Trust on such Deposit Date) exceeds zero.
The withdrawals to be made from the Collection Account pursuant to
this Section 4.07(b) do not apply to deposits into the Collection Account that
do not represent Collections, including payment of the purchase price for the
Certificateholders' Interest pursuant to Section 2.06 or 10.01 of the Agreement,
payment of the purchase price for the Series 1997-1 Certificateholders' Interest
pursuant to Section 8 of this Series Supplement and proceeds from the sale,
disposition or liquidation of Receivables pursuant to Section 9.02 or 12.02 of
the Agreement.
Section 4.08. Determination of Monthly Interest. (a) The amount of
monthly interest ("Class A Monthly Interest") distributable from the Collection
Account with respect to the Class A Certificates on any Distribution Date shall
be an amount equal to the product of (i) the Class A Certificate Rate in effect
with respect to the applicable
22
Interest Period, (ii) the outstanding principal balance of the Class A
Certificates as of the close of business on the preceding Distribution Date
(after giving effect to all distributions on such date) and (iii) a fraction the
numerator of which is the actual number of days in the Interest Period ending
immediately prior to such Distribution Date and the denominator of which is 360;
provided that with respect to the first Distribution Date after the Due Period
in which the Series ▇▇▇▇-▇ ▇▇▇▇▇▇▇▇ Date occurs, Class A Monthly Interest shall
be an amount equal to $[____________].
On the Determination Date preceding each Distribution Date, the
Servicer shall determine an amount (the "Class A Interest Shortfall") equal to
(x) the aggregate Class A Monthly Interest for the Interest Period applicable to
such Distribution Date minus (y) the amount which will be on deposit in the
Collection Account and allocable to the Class A Certificates on such
Distribution Date. If the Class A Interest Shortfall with respect to any
Distribution Date is greater than zero, on each subsequent Distribution Date
until such Class A Interest Shortfall is fully paid, an additional amount
("Class A Additional Interest") shall be payable as provided herein with respect
to the Class A Certificates on each Distribution Date following such
Distribution Date, to and including the Distribution Date on which the Class A
Interest Shortfall is paid to the Class A Certificateholders, equal to the
product of (i) the Class A Certificate Rate in effect with respect to the
applicable period, (ii) such Class A Interest Shortfall (or the portion thereof
which has not been paid to Class A Certificateholders) and (iii) a fraction the
numerator of which is the actual number of days in the Interest Period ending
immediately prior to such Distribution Date and the denominator of which is 360.
Notwithstanding anything to the contrary herein, Class A Additional Interest
shall be payable or distributed to Class A Certificateholders only to the extent
permitted by applicable law.
(b) The amount of monthly interest ("Class B Monthly Interest")
distributable from the Collection Account with respect to the Class B
Certificates on any Distribution Date shall be an amount equal to the product of
(i) the Class B Certificate Rate in effect with respect to the applicable
Interest Period, (ii) the Class B Invested Amount as of the close of business on
the preceding Distribution Date (after giving effect to all distributions on
such date) and (iii) a fraction the numerator of which is the actual number of
days in the Interest Period ending immediately prior to such Distribution Date
and the denominator of which is 360; provided, that with respect to the first
Distribution Date after the Due Period in which the Series ▇▇▇▇-▇ ▇▇▇▇▇▇▇▇ Date
occurs, Class B Monthly Interest shall be an amount equal to $[___________].
On the Determination Date preceding each Distribution Date, the
Servicer shall determine an amount (the "Class B Interest Shortfall") equal to
(x) the aggregate Class B Monthly Interest for the Interest Period applicable to
such Distribution Date minus (y) the amount which will be on deposit in the
Collection Account and allocable to the Class B Certificates on such
Distribution Date. If the Class B Interest Shortfall with respect to any
Distribution Date is greater than zero, on each subsequent Distribution Date
until such Class B Interest Shortfall is fully paid, an additional amount
("Class B Additional
23
Interest") shall be payable as provided herein with respect to the Class B
Certificates on each Distribution Date following such Distribution Date to and
including the Distribution Date on which such Class B Interest Shortfall is paid
to Class B Certificateholders equal to the product of (i) the Class B
Certificate Rate in effect with respect to the applicable Interest Period, (ii)
such Class B Interest Shortfall (or the portion thereof which has not been paid
to Class B Certificateholders) and (iii) a fraction the numerator of which is
the actual number of days in the Interest Period ending immediately prior to
such Distribution Date and the denominator of which is 360. Notwithstanding
anything to the contrary herein, Class B Additional Interest shall be payable or
distributed to Class B Certificateholders only to the extent permitted by
applicable law.
(c) The amount of monthly interest ("Collateral Monthly Interest")
distributable from the Collection Account with respect to the Collateral
Invested Amount on any Distribution Date shall be an amount equal to the product
of (i) the Collateral Rate in effect with respect to the applicable Interest
Period, (ii) the Collateral Invested Amount as of the close of business on the
preceding Distribution Date (after giving effect to any increase or decrease in
the Collateral Invested Amount on such preceding Distribution Date), provided
that in the case of the first Distribution Date such Collateral Invested Amount
shall be determined as of the close of business on the Issuance Date and (iii) a
fraction the numerator of which is the actual number of days in the Interest
Period ending immediately prior to such Distribution Date and the denominator of
which is 360.
On the Determination Date preceding each Distribution Date, the
Servicer shall determine an amount (the "Collateral Interest Shortfall") equal
to (x) the aggregate Collateral Monthly Interest for the Interest Period
applicable to such Distribution Date minus (y) the amount which will be on
deposit in the Collection Account and allocable to the Collateral Invested
Amount on such Distribution Date. If the Collateral Interest Shortfall with
respect to any Distribution Date is greater than zero, on each subsequent
Distribution Date until such Collateral Interest Shortfall is fully paid, an
additional amount ("Collateral Additional Interest") shall be payable as
provided herein with respect to the Collateral Invested Amount on each
Distribution Date following such Distribution Date, to and including the
Distribution Date on which such Collateral Interest Shortfall is paid to the
Collateral Interest Holder, equal to the product of (i) the Collateral Rate in
effect with respect to the applicable Interest Period, (ii) such Collateral
Interest Shortfall (or the portion thereof which has not been paid to the
Collateral Interest Holder) and (iii) a fraction the numerator of which is the
actual number of days in the Interest Period ending immediately prior to such
Distribution Date and the denominator of which is 360. Notwithstanding anything
to the contrary herein, Collateral Additional Interest shall be payable or
distributed to the Collateral Interest Holder only to the extent permitted by
applicable law.
Section 4.09. Determination of Monthly Principal. (a) The amount of
monthly principal ("Class A Monthly Principal") distributable from the
Collection Account with respect to the Class A Certificates on each Distribution
Date beginning with the earlier to occur of the first
24
Distribution Date with respect to any Early Accumulation Period or Early
Amortization Period or the Controlled Accumulation Period, shall be equal to the
Available Investor Principal Collections on deposit in the Collection Account
with respect to such Distribution Date; provided, however, that for each
Distribution Date with respect to the Controlled Accumulation Period, Class A
Monthly Principal shall not exceed the Controlled Deposit Amount; and provided
further that with respect to any Distribution Date Class A Monthly Principal
shall not exceed the Class A Adjusted Invested Amount.
(b) The amount of monthly principal ("Class B Monthly Principal")
distributable from the Collection Account with respect to the Class B
Certificates on each Distribution Date (i) during the Controlled Accumulation
Period, beginning with the Distribution Date on which the Class A Invested
Amount is paid in full, (ii) during the Early Accumulation Period, beginning
with the Distribution Date on which funds on deposit in the Principal Funding
Account (after any deposits to be made on such date) equal the Class A Invested
Amount, and (iii) during the Early Amortization Period beginning with the
Distribution Date on which the Class A Invested Amount will be paid in full
shall be an amount equal to the Available Investor Principal Collections on
deposit in the Collection Account with respect to such Distribution Date (minus
the portion of such Available Investor Principal Collections applied to Class A
Monthly Principal on such Distribution Date); provided, however, that for each
Distribution Date with respect to the Controlled Accumulation Period, Class B
Monthly Principal shall not exceed the Controlled Deposit Amount less the Class
A Monthly Principal for such Distribution Date; and provided further that with
respect to any Distribution Date, Class B Monthly Principal shall not exceed the
lesser of the applicable Class B Adjusted Invested Amount and the outstanding
principal amount of the Class B Certificates.
(c) The amount, if any, of monthly principal ("Collateral Monthly
Principal") distributable from the Collection Account with respect to the
Collateral Invested Amount on each Distribution Date:
(i) [reserved]
(ii) on any Distribution Date prior to the Distribution Date on
which the Class A Invested Amount and the Class B Invested Amount are paid
in full, shall be an amount equal to the lesser of (A) Available Investor
Principal Collections not applied to Class A or Class B Monthly Principal
on such Distribution Date and (B) the difference between (x) the Collateral
Surplus on such Distribution Date and (y) the Collateral Cash Surplus, if
any, computed without reference to distributions under this subsection;
(iii) beginning with the Distribution Date on which the Class A
Invested Amount and Class B Invested Amount are paid in full, shall be an
amount equal to the Available Investor Principal Collections with respect
to such Distribution Date (minus the portion of such Available Investor
Principal Collections applied to Class A and Class B Monthly Principal on
such Distribution Date); and
25
(iv) beginning on any Distribution Date, in addition to the
amount, if any, set forth in items (i) through (iii) above, at the option
of the Seller (as evidenced by written instructions to the Servicer and
Trustee), and after receipt by the Servicer and the Trustee of a written
determination by the Rating Agency that such action will not result in a
reduction or withdrawal of the then current ratings of the Class A
Certificates and the Class B Certificates, shall be an amount established
by the Seller and consistent with any restrictions set forth in the
determination of the Rating Agency;
provided, however, with respect to any Distribution Date, Collateral Monthly
Principal shall not exceed the Collateral Invested Amount and, with respect to
any Distribution Date with respect to the Revolving Period, the Controlled
Accumulation Period and any Early Accumulation Period, Collateral Monthly
Principal shall be zero except to the extent otherwise specified in, or pursuant
to, clauses (ii), (iii) and (iv) above.
Section 4.10. Coverage of Required Amounts. (a) With respect to
each Distribution Date, the Servicer shall determine the amount (the "Class A
Required Amount"), if any, by which (a) the sum of (i) Class A Monthly Interest
for such Distribution Date, (ii) any Class A Monthly Interest previously due but
not paid to the Class A Certificateholders, (iii) Class A Additional Interest,
if any, for such Distribution Date, (iv) the Class A Investor Default Amount, if
any, and (v) if Household Finance Corporation is not the Servicer, the Allocable
Servicing Fee for the preceding Due Period exceeds (b) the product of (i)
Reallocated Investor Finance Charge and Administrative Collections for such
Distribution Date plus any other funds available to the Trust to cover the
amounts referred to in clauses (i) through (v) above and (ii) the Class A
Invested Percentage for such Distribution Date. In the event that the Class A
Required Amount for such Distribution Date is greater than zero, the Servicer
shall give written notice to the Trustee of such positive Class A Required
Amount on the date of computation (but no later than 11:00 a.m. two days prior
to the Distribution Date).
(b) With respect to each Distribution Date, the Servicer shall
determine the amount (the "Class B Required Amount"), if any, by which (a) the
sum of (i) Class B Monthly Interest for such Distribution Date, (ii) any Class B
Monthly Interest previously due but not paid to the Class B Certificateholders,
(iii) Class B Additional Interest, if any, for such Distribution Date, (iv) the
Class B Investor Default Amount, if any, and (v) the Cumulative Excess Interest
Amount for such Distribution Date exceeds (b) the amounts available therefor
pursuant to subsections 4.11(b)(i) and 4.13(c) and (d) plus any other funds
available to the Trust to cover the amounts referred to in clauses (i) through
(v) above. In the event that the Class B Required Amount for such Distribution
Date is greater than zero, the Servicer shall give written notice to the Trustee
of such positive Class B Required Amount on the date of computation (but no
later than 11:00 a.m. two days prior to the Distribution Date).
Section 4.11. Application of Available Funds on Deposit in the
Collection Account and the Principal Funding Account. With respect to Series
1997-1, on each Distribution Date the Servicer shall provide
26
written directions to the Trustee to apply Series Allocable Finance Charge and
Administrative Collections (other than the portion thereof reallocated to other
Series in Group Two), Collections of Finance Charge and Administrative
Receivables reallocated to Series 1997-1 from other Series and Available
Investor Principal Collections on deposit in the Collection Account, the
Collection Subaccount and the Principal Funding Account with respect to such
Distribution Date in the following manner:
(a) An amount equal to the sum of (A) the product of (x) Reallocated
Investor Finance Charge and Administrative Collections with respect to such
Distribution Date plus any other funds available to the Trust for
application pursuant to this clause and (y) the Class A Invested Percentage
and (B) the Class A Principal Funding Account Percentage of funds available
in the Collection Subaccount will be distributed in the following priority:
(i) an amount equal to Class A Monthly Interest for such
Distribution Date, plus the amount of any Class A Monthly Interest
previously due but not distributed to the Class A Certificateholders
on a prior Distribution Date, plus the amount of any Class A
Additional Interest for such Distribution Date shall be held on
deposit by the Servicer or the Trustee in the Collection Account for
distribution to the Class A Certificateholders;
(ii) an amount equal to the Class A Investor Default Amount for
such Distribution Date shall be treated as a portion of Available
Investor Principal Collections for such Distribution Date;
(iii) an amount equal to the Allocable Servicing Fee for such
date (to the extent such amount has not been netted from deposits made
in the related Due Period) plus any previously unpaid Allocable
Servicing Fee (but only with respect to the then current Servicer)
shall be paid to the Servicer; and
(iv) the balance, if any, shall constitute Excess Finance Charge
and Administrative Collections and shall be allocated and distributed
as set forth in Section 4.13.
(b) An amount equal to the sum of (A) the product of (x) Reallocated
Investor Finance Charge and Administrative Collections with respect to such
Distribution Date plus any other funds available to the Trust for
application pursuant to this clause and (y) the Class B Invested Percentage
and (B) the Class B Principal Funding Account Percentage of funds available
in the Collection Subaccount will be distributed in the following priority:
(i) an amount equal to Class B Monthly Interest for such
Distribution Date, plus the amount of any Class B Monthly Interest
previously due but not distributed to the Class B Certificateholders
on a prior Distribution Date, plus the amount of any Class B
Additional Interest for such Distribution Date, shall be set aside by
the Servicer or the Trustee for distribution to the Class B
Certificateholders; and
27
(ii) the balance, if any, shall constitute Excess Finance Charge
and Administrative Collections and shall be allocated and distributed
as set forth in Section 4.13.
(c) On each Distribution Date with respect to the Revolving Period,
(i) an amount equal to Available Investor Principal Collections deposited in the
Collection Account for the related Due Period shall be withdrawn therefrom and
deposited in the Cash Collateral Account to the extent of Collateral Monthly
Principal with respect to such Distribution Date and, to the extent not required
for such purpose, shall be treated as Trust Excess Principal Collections and
applied in accordance with Section 4.04 of the Agreement.
(d) On each Distribution Date with respect to the Controlled
Accumulation Period or any Early Accumulation Period or Early Amortization
Period, an amount equal to Available Investor Principal Collections deposited in
the Collection Account for the related Due Period will be distributed in the
following priority:
(i) an amount equal to the Class A Monthly Principal for such
Distribution Date shall be (A) during the Controlled Accumulation
Period and any Early Accumulation Period, deposited into the Principal
Funding Account and (B) during any Early Amortization Period, held on
deposit by the Servicer or the Trustee in the Collection Account for
distribution to Class A Certificateholders;
(ii) an amount equal to the Class B Monthly Principal for such
Distribution Date shall be (A) during the Controlled Accumulation
Period and any Early Accumulation Period, deposited into the Principal
Funding Account and (B) during any Early Amortization Period, held on
deposit by the Servicer or the Trustee in the Collection Account for
distribution to Class B Certificateholders;
(iii) for each Distribution Date with respect to the Controlled
Accumulation Period prior to the Distribution Date on which the Class
A Invested Amount and the Class B Invested Amount are each paid in
full, unless an Amortization Event has occurred, after giving effect
to the distributions referred to in clauses (i) and (ii) above, an
amount equal to the balance, if any, of such Available Investor
Principal Collections then on deposit in the Collection Account shall
be deposited in the Cash Collateral Account in an amount equal to
Collateral Monthly Principal with respect to such Distribution Date,
and any amount not required for such purpose shall be treated as Trust
Excess Principal Collections and applied in accordance with Section
4.04 of the Agreement;
(iv) [reserved]
(v) [reserved]
(vi) for each Distribution Date beginning with the
Distribution Date on which the Class A Invested Amount and the Class B
Invested Amount are paid in full an amount equal to
28
the balance, if any, of such Available Investor Principal Collections
shall, to the extent of Collateral Monthly Principal, be deposited in
the Cash Collateral Account, and any remaining Collections shall be
treated as Trust Excess Principal Collections and applied in
accordance with Section 4.04 of the Agreement.
(e) On the earliest to occur of (i) the first Distribution Date with
respect to any Early Amortization Period and (ii) the Series 1997-1 Expected
Final Payment Date, and on each Distribution Date thereafter, the Trustee,
acting in accordance with instructions from the Servicer, shall pay in
accordance with Section 5.01 the amount on deposit in the Principal Funding
Account on such Date in the following priority:
(i) for any Distribution Date following the commencement of the Early
Amortization Period and on the Series 1997-1 Expected Final Payment Date,
an amount equal to the lesser of such amount on deposit in the Principal
Funding Account and the Class A Invested Amount shall be paid to the Class
A Certificateholders; and
(ii) for each Distribution Date following commencement of the Early
Amortization Period and on the Series 1997-1 Expected Final Payment Date,
after giving effect to the distributions referred to in clause (i) above,
an amount equal to the lesser of such amount on deposit in the Principal
Funding Account and the Class B Invested Amount shall be paid to the Class
B Certificateholders.
(f) The Controlled Accumulation Period is scheduled to commence at the
close of business on [______ __, ____]; provided, however, that, if the
Controlled Accumulation Period Length (determined as described below) is less
than [ ] months, the date on which the Controlled Accumulation Period actually
commences may be delayed to the first Business Day of the month that is the
number of whole months prior to the Series 1997-1 Expected Final Payment Date at
least equal to the Controlled Accumulation Period Length and, as a result, the
number of Due Periods in the Controlled Accumulation Period will at least equal
the Controlled Accumulation Period Length. On the Determination Date immediately
preceding the [_____ ____] Distribution Date, and each Determination Date
thereafter until the Controlled Accumulation Period begins, the Servicer will
determine a "Controlled Accumulation Period Length" which will equal at least
the number of months such that the Controlled Accumulation Period Amount for the
Due Periods ending on the Series 1997-1 Expected Final Payment Date, when
aggregated with the Controlled Accumulation Period Amounts for each preceding
Due Period, shall equal or exceed the sum of the Class A Initial Invested Amount
and the Class B Initial Invested Amount; provided, however, that the Controlled
Accumulation Period Length will not be determined to be less than one month. Any
notice by the Servicer electing to modify the commencement of the Controlled
Accumulation Period pursuant to this subsection (f) shall specify (i) the
Controlled Accumulation Period Length, (ii) the commencement date of the
Controlled Accumulation Period and (iii) the Controlled Accumulation Amount with
respect to each Monthly Period.
29
Section 4.12. Investor Charge-Offs. (a) If on any Distribution Date
the Class A Required Amount for such Distribution Date will exceed the sum of
(x) the amount of Subordinated Principal Collections, (y) the amount of Excess
Finance Charge and Administrative Collections with respect to such Distribution
Date and (z) any amount to be withdrawn from the Cash Collateral Account
pursuant to subsection 4.14(b) with respect to such Distribution Date, the Class
B Invested Amount and the Collateral Invested Amount and the invested amount of
any other Series or Class that is expressly subordinated to the Series 1997-1
Certificateholders shall be reduced by the amount of such excess, but not more
than the Class A Investor Default Amount for such Distribution Date. The Class B
Invested Amount shall only be reduced after any Collateral Invested Amount (and
any such other subordinated invested amount) has been reduced to zero. In the
event that such reduction would cause the sum of the Class B Invested Amount and
the Collateral Invested Amount (and any such other subordinated invested amount)
to be a negative number, such Class B Invested Amount and Collateral Invested
Amount (and any such other subordinated invested amount) shall be reduced to
zero, and the Class A Invested Amount will be reduced by the amount by which the
Class B Invested Amount and Collateral Invested Amount (and any such other
subordinated invested amount) would have been reduced below zero, but not more
than the Class A Investor Default Amount for such Distribution Date (a "Class A
Investor Charge-Off"). Class A Investor Charge-Offs shall thereafter be
reimbursed and the Class A Invested Amount increased (but not by an amount in
excess of the aggregate Class A Investor Charge-Offs) on any Distribution Date
by the sum of (i) Series Allocable Miscellaneous Payments with respect to such
Distribution Date and (ii) the amount of Excess Finance Charge and
Administrative Collections allocated and available for that purpose pursuant to
Section 4.13(b) and any withdrawals from the Cash Collateral Account applied in
accordance with such Section.
(b) If on any Distribution Date, the Class B Required Amount, if any,
for such Distribution Date will exceed the amount to be withdrawn from the Cash
Collateral Account pursuant to subsection 4.14(b) which is remaining after
application pursuant to subsection 4.12(a) and the sum of the Collateral
Invested Amount and any Subordinated Principal Collections allocable to the
Collateral Invested Amount as described in clause (a) above which are not
required to be reallocated for the benefit of the Class A Certificates on such
Distribution Date, then the Class B Invested Amount and the Collateral Invested
Amount and the invested amount of any other Series or Class that is expressly
subordinated to the Series 1997-1 Certificateholders shall be reduced by the
aggregate amount of such excess, but not more than the Class B Investor Default
Amount for such Distribution Date (a "Class B Investor Charge-Off"). The Class B
Invested Amount shall only be reduced after the Collateral Invested Amount (and
any such other subordinated invested amount) has been reduced to zero. Class B
Investor Charge-Offs shall thereafter be reimbursed and the Class B Invested
Amount increased (but not by an amount in excess of the aggregate Class B
Investor Charge-Offs) on any Distribution Date by the sum of (i) Series
Allocable Miscellaneous Payments with respect to such Distribution Date to the
extent that such amount is not required to reimburse Class A Investor Charge-
Offs pursuant to subsection 4.12(a) and (ii) the amount of Excess Finance Charge
and Administrative
30
Collections allocated for that purpose pursuant to subsection 4.13(e) and any
withdrawals from the Cash Collateral Account applied in accordance with such
subsection.
(c) If on any Distribution Date the Collateral Default Amount for
such Distribution Date will exceed the amount of Excess Finance Charge and
Administrative Collections with respect to the immediately preceding Due Period
which are allocated and available pursuant to Section 4.13(h), then the
Collateral Invested Amount (and any such other subordinated invested amount)
shall be reduced by the amount of such excess, (a "Collateral Charge-Off").
Collateral Charge-Offs shall thereafter be reimbursed and the Collateral
Invested Amount increased (but not by an amount in excess of the aggregate
Collateral Charge-Offs) on any Distribution Date by the sum of (i) Series
Allocable Miscellaneous Payments with respect to such Distribution Date not
required to be applied pursuant to subsections 4.12(a) or (b) above and (ii) the
amount of Excess Finance Charge and Administrative Collections allocated for
that purpose pursuant to subsection 4.13(i).
(c-1) The Collateral Invested Amount shall only be reduced, in the
case of subsections 4.12(a), (b) and (c), after any other Series Enhancement
expressly subordinated to the Collateral Invested Amount or the invested amount
of any other Series or Class expressly subordinated to the Collateral Invested
Amount has been reduced to zero.
(d) Notwithstanding any other provision of this Series Supplement,
the Invested Amount of any Class, including the Collateral Invested Amount,
shall never be reduced below zero.
Section 4.13. Excess Finance Charge and Administrative Collections.
On each Distribution Date the Servicer shall by written instructions cause the
Trustee to apply the Excess Finance Charge and Administrative Collections with
respect to such Distribution Date in the following priority:
(a) an amount equal to the Class A Required Amount, if any, with
respect to such Distribution Date shall be distributed to fund any
deficiency pursuant to subsections 4.11(a)(i) and (ii) and, during any
period in which Household Finance Corporation or an Affiliate thereof
is no longer the Servicer, 4.11(a)(iii); provided that in the event
the Class A Required Amount for such Distribution Date exceeds the
amount of such Excess Finance Charge and Administrative Collections,
such Excess Finance Charge and Administrative Collections shall be
applied to pay amounts due with respect to such Distribution Date
pursuant to subsections 4.11(a)(i), (ii) and, during any period in
which Household Finance Corporation or an Affiliate is no longer the
Servicer, (iii) in that order;
(b) an amount equal to the aggregate amount of Class A Investor
Charge-Offs which have not been previously reimbursed as provided in
subsection 4.12(a) (after giving effect to the allocation on such
Distribution Date of any amount for that purpose pursuant to
subsection 4.12(a)(i)) shall be treated as
31
a portion of Available Investor Principal Collections with respect to
such Distribution Date;
(c) an amount equal to the sum of (i) any Class B Monthly
Interest due but not available from the Class B Invested Percentage of
Reallocated Investor Finance Charge and Administrative Collections on
such Distribution Date or not distributed to the Class B
Certificateholders on a prior Distribution Date, (ii) the Cumulative
Excess Interest Amount for such Distribution Date and (iii) the amount
of any Class B Additional Interest previously due but not distributed
to the Class B Certificateholders on such Distribution Date or a prior
Distribution Date, shall be deposited with the Paying Agent for
distribution to such Class B Certificateholders;
(d) an amount equal to the Class B Investor Default Amount for
such Distribution Date shall be treated as a portion of Available
Investor Principal Collections with respect to such Distribution Date;
(e) an amount equal to the aggregate amount by which the Class B
Invested Amount has been reduced pursuant to clauses (c), (d) and (e)
of the definition of "Class B Invested Amount" (but not including such
reductions which have been previously reimbursed) shall be treated as
a portion of Available Investor Principal Collections with respect to
such Distribution Date;
(f) an amount equal to Collateral Monthly Interest for such
Distribution Date, plus the amount of any Collateral Monthly Interest
previously due but not distributed to the Collateral Interest Holder
on a prior Distribution Date, plus the amount of any Collateral
Additional Interest for such Distribution Date shall be applied in
accordance with the Collateral Agreement;
(g) an amount equal to the unpaid Allocable Servicing Fee (to the
extent not paid pursuant to clause (a) above) for the preceding Due
Periods shall be paid to the Servicer;
(h) an amount equal to the Collateral Default Amount for such
Distribution Date shall be treated as a portion of Available Investor
Principal Collections with respect to such Distribution Date;
(i) for each Distribution Date with respect to the Revolving
Period and the Controlled Accumulation Period, an amount equal to the
aggregate amount by which the Collateral Invested Amount has been
reduced pursuant to clauses (c), (d) and (e) of the definition of
"Collateral Invested Amount" (but not including such reductions which
have been previously reimbursed) shall be treated as a portion of
Available Investor Principal Collections with respect to such
Distribution Date;
32
(j) an amount equal to the excess of the Required Collateral
Amount over the Available Collateral Amount (without giving effect to
any deposit made on such date hereunder) shall be deposited in the
Cash Collateral Account;
(k) on each Distribution Date prior to the date on which the
Reserve Account terminates as described in Section 4.20(g), an amount
up to the Required Reserve Account Amount less the Available Reserve
Account Amount shall be deposited into the Reserve Account; and
(l) the balance, if any, after giving effect to the payments made
pursuant to subparagraphs (a) through (k) above shall be applied in
accordance with the Collateral Agreement.
Section 4.14. Establishment of Series 1997-1 Cash Collateral Account.
(a) The Servicer, for the benefit of the Series 1997-1 Certificateholders shall
establish and maintain or cause to be established and maintained in the name of
the Trustee, on behalf of the Trust, a Cash Collateral Account with respect to
Series 1997-1 (the "Cash Collateral Account") which shall be an Eligible Deposit
Account, bearing a designation clearly indicating that the funds deposited
therein are held for the benefit of the Series 1997-1 Certificateholders. The
Trustee shall possess all right, title and interest in all funds on deposit from
time to time in the Cash Collateral Account and in all proceeds thereof. The
Cash Collateral Account shall be under the sole dominion and control of the
Trustee for the benefit of the Series 1997-1 Certificateholders, as provided
herein, and the Collateral Interest Holder. The interest of any Collateral
Interest Holder in the Cash Collateral Account shall be subject to the interest
of the Series 1997-1 Certificateholders as provided herein and in the Collateral
Agreement. If, at any time, the Cash Collateral Account ceases to be an Eligible
Deposit Account, the Trustee (or the Servicer on its behalf) shall within 20
Business Days establish a new Cash Collateral Account with respect to Series
1997-1 which shall be an Eligible Deposit Account, and shall transfer any cash
and/or any investments to such new Cash Collateral Account and from the date
such new Cash Collateral Account is established, it shall be the Cash Collateral
Account for Series 1997-1. The Trustee at the written direction of the Servicer
(or the Servicer on the Trustee's behalf) shall make withdrawals from such
Account from time to time for the purposes set forth in this Section.
Withdrawals shall be made in the priority set forth below and the Available
Collateral Amount will be reduced by the amount of each related withdrawal as
provided in the definition thereof set forth in Section 2 hereof. No Collateral
Interest Holder shall be entitled to reimbursement for any withdrawals, interest
or fees with respect to any Cash Collateral Account except as specifically
provided herein and in the Collateral Agreement.
Funds on deposit in any Cash Collateral Account shall be invested at
the written direction of the Servicer (or the Collateral Interest Holder, as
provided in the Collateral Agreement) by the Trustee in Eligible Investments;
provided, however, that references in the definition of "Eligible Investments"
to "rating satisfactory to the Rating Agency" shall be modified to require
ratings of not less than A-1+ and P-1 (whichever is applicable) from the
applicable Rating Agency.
33
All such investments shall be held by the Trustee for the benefit of the Series
1997-1 Certificateholders and the Collateral Interest Holder, as their interests
may appear, provided that on each Distribution Date, the Trustee shall (upon the
written instruction of the Servicer and in accordance with the information set
forth in the Monthly Servicer's Certificate pursuant to subsection 3.04(b) of
the Agreement) apply all interest and other investment earnings (net of losses
and investment expenses) and the Collateral Cash Surplus, if any, in accordance
with the Collateral Agreement. Funds on deposit in the Cash Collateral Account
shall be invested in accordance with the Collateral Agreement and in investments
having maturities such that such funds will be available not later than 10:00
A.M. New York City time on the succeeding Distribution Date. No cash collateral
investment shall be disposed of prior to its maturity. On each Distribution
Date, all interest and earnings (net of losses and investment expenses) accrued
since the preceding Distribution Date on funds on deposit in the Cash Collateral
Account shall be paid by the Trustee upon written instruction of the Servicer
and applied in accordance with the Collateral Agreement. For purposes of
determining the availability of funds or the balances in the Cash Collateral
Account for any reason under this Agreement, all investment earnings on such
funds shall be deemed not to be available or on deposit. The Seller shall report
such earnings as its income for tax purposes and the Servicer shall prepare, or
cause to be prepared, all tax returns and any other information, returns or
reports, if any, that need to be filed on behalf of the Seller with respect to
earnings on the Cash Collateral Account.
(b) On each Determination Date, the Servicer shall determine the
amount by which the amounts specified in clauses (a) through (e) of Section 4.13
with respect to the following Distribution Date exceed the amount of Excess
Finance Charge and Administrative Collections with respect to such Distribution
Date. In the event that for any Distribution Date, such amount is greater than
zero, the Servicer shall give written notice to the Trustee and the Collateral
Interest Holder of such amount on the date of computation. Not more than two
Business Days prior to such Distribution Date, the Trustee (or the Servicer on
its behalf) shall give the Collateral Interest Holder notice of such amount and
not later than 10:00 a.m. on the Distribution Date, withdraw such amount from
the Cash Collateral Account (but not in excess of the Available Collateral
Amount) for application in accordance with (and subject to the priorities set
forth in) Section 4.13.
(c) In the event that the Collateral Cash Surplus on any Distribution
Date, after giving effect to all deposits and withdrawals from the Cash
Collateral Account pursuant to Section 4.14 and Section 4.13 on such
Distribution Date, is greater than zero, the Servicer shall cause the Trustee to
withdraw from the Cash Collateral Account and pay in accordance with the
Collateral Agreement, an amount equal to the lesser of, the amount then on
deposit in the Cash Collateral Account and the Collateral Cash Surplus.
Section 4.15. Subordinated Principal Collections. On each Distribution
Date, the Servicer shall by written instructions cause the Trustee to apply
Subordinated Principal Collections (applying all such Collections with respect
to the Collateral Invested Amount prior to applying any such Collections with
respect to the Class B Invested
34
Amount and applying no such Collections with respect to the Class B Invested
Amount pursuant to clause (b) below) with respect to such Distribution Date to
make the following distributions in the following priority:
(a) an amount equal to the excess, if any, of (i) the Class A
Required Amount, if any, with respect to such Distribution Date over
(ii) the sum of the amount of Excess Finance Charge and Administrative
Collections with respect to such Distribution Date and any amount to
be withdrawn from the Cash Collateral Account pursuant to subsection
4.14(b) shall be distributed to fund any deficiency pursuant to
subsections 4.11(a)(i), (ii) and, during any period in which Household
Finance Corporation or any Affiliate is not the Servicer, 4.11(a)(iii)
in that order;
(b) an amount equal to the excess, if any, of (i) the Class B
Required Amount, if any, with respect to such Distribution Date over
(ii) the amount of Excess Finance Charge and Administrative
Collections with respect to such Distribution Date and any amount to
be withdrawn from the Cash Collateral Account pursuant to subsection
4.14(b) remaining, in each case, after the application of such monies
pursuant to clause (a) above shall be distributed to fund any
deficiency pursuant to subsections 4.11(b)(i), 4.13(c) and 4.13(d) in
that order; and
(c) the balance, if any, shall be treated as a portion of
Available Investor Principal Collections with respect to such
Distribution Date to be applied in accordance with subsections 4.11(c)
or (d), as applicable.
Section 4.16. Reallocated Investor Finance Charge and Administrative
Collections. (a) That portion of Group Two Investor Finance Charge and
Administrative Collections for any Distribution Date equal to the amount of
Reallocated Investor Finance Charge and Administrative Collections for such
Distribution Date will be allocated to Series 1997-1 and will be distributed as
set forth in this Series Supplement.
(b) Reallocated Investor Finance Charge and Administrative Collections,
with respect to any Distribution Date shall equal the sum of (i) the aggregate
amount of Series 1997-1 Monthly Interest, Investor Defaulted Amount, Series
1997-1 Monthly Fees and Series 1997-1 Additional Amounts for such Distribution
Date and (ii) that portion of excess Group Two Investor Finance Charge and
Administrative Collections to be included in Reallocated Investor Finance Charge
and Administrative Collections pursuant to subsection (c) hereof; provided,
however, that if the amount of Group Two Investor Finance Charge and
Administrative Collections for such Distribution Date is less than the sum of
(w) Group Two Investor Monthly Interest, (x) Group Two Investor Default Amount,
(y) Group Two Investor Monthly Fees and (z) Group Two Investor Additional
Amounts, then Reallocated Investor Finance Charge and Administrative Collections
shall equal the sum of the following amounts for such Distribution Date:
35
(A) The product of (I) Group Two Investor Finance Charge and
Administrative Collections (up to the amount of Group Two Investor Monthly
Interest) and (II) a fraction, the numerator of which is Series 1997-1
Monthly Interest and the denominator of which is Group Two Investor Monthly
Interest;
(B) the product of (I) Group Two Investor Finance Charge and
Administrative Collections less the amount of Group Two Investor Monthly
Interest (up to the Group Two Investor Default Amount) and (II) a fraction,
the numerator of which is the Investor Defaulted Amount and the denominator
of which is the Group Two Investor Default Amount;
(C) the product of (I) Group Two Investor Finance Charge and
Administrative Collections less the amount of Group Two Investor Monthly
Interest and the Group Two Investor Default Amount (up to Group Two
Investor Monthly Fees) and (II) a fraction, the numerator of which is
Series 1997-1 Monthly Fees and the denominator of which is Group Two
Investor Monthly Fees; and
(D) the product of (I) Group Two Investor Finance Charge and
Administrative Collections less the sum of (i) Group Two Investor Monthly
Interest, (ii) the Group Two Investor Default Amount and (iii) Group Two
Investor Monthly Fees and (II) a fraction, the numerator of which is Series
1997-1 Additional Amounts and the denominator of which is Group Two
Investor Additional Amounts.
(c) If the amount of Group Two Investor Finance Charge and
Administrative Collections for such Distribution Date exceeds the sum of (i)
Group Two Investor Monthly Interest, (ii) Group Two Investor Default Amount,
(iii) Group Two Investor Monthly Fees and (iv) Group Two Investor Additional
Amounts, then Reallocated Investor Finance Charge and Administrative Collections
for such Distribution Date shall include an amount equal to the product of (x)
the amount of such excess and (y) a fraction, the numerator of which is the
Invested Amount as of the last day of the second preceding Due Period and the
denominator of which is the sum of such Invested Amount and the aggregate
invested amounts for all other Series included in Group Two as of such last day.
Section 4.17. Series 1997-1 Excess Principal Collections. (a) That
portion of Trust Excess Principal Collections for all Series for any
Distribution Date equal to the amount of Series 1997-1 Excess Principal
Collections for such Distribution Date will be allocated to Series 1997-1 and
will be distributed as set forth in this Series Supplement.
(b) Series 1997-1 Excess Principal Collections, for any Distribution
Date with respect to the Controlled Accumulation Period or any Early
Accumulation Period or Early Amortization Period, shall mean an amount equal to
the Series 1997-1 Principal Shortfall for such Distribution Date; provided,
however, that if the aggregate amount of Trust Excess Principal Collections for
all Series for such Distribution Date is less than the aggregate amount of
Principal Shortfalls for all Series for such Distribution Date, then Series
1997-1 Excess Principal Collections for such Distribution Date shall equal the
product of (x) Trust Excess Principal Collections for all Series all for such
36
Distribution Date and (y) a fraction, the numerator of which is the Series 1997-
1 Principal Shortfall for such Distribution Date and the denominator of which is
the aggregate amount of Principal Shortfalls for all Series for such
Distribution Date. The Series 1997-1 Principal Shortfall for any Distribution
Date shall equal the excess of (i) (x) for any Distribution Date prior to the
date on which the Class A and Class B Certificates are paid in full with respect
to the Controlled Accumulation Period, the Controlled Deposit Amount plus the
amount calculated pursuant to subsection 4.09(c)(ii)(B) and after such date, the
Collateral Invested Amount, (y) for any Distribution Date with respect to any
Early Accumulation Period, the Adjusted Invested Amount or (z) for any
Distribution Date with respect to any Early Amortization Period, the Invested
Amount, over (ii) Available Investor Principal Collections, excluding from the
amount described in this clause (ii) any portion thereof attributable to Series
1997-1 Excess Principal Collections.
(c) The Seller may direct (by written instructions to the Servicer and
the Trustee) that Collections of Principal Receivables allocable to the Invested
Amount of any Series or Class, which either the Agreement or the Supplement for
any Series provides are payable to the Seller, shall be reallocated to any other
Series or Class. Such Collections shall be treated as Collections of Principal
Receivables allocable to the Series or Class to which they are reallocated for
all purposes of the Agreement and the applicable Supplement.
Collections of Principal Receivables subject to reallocation pursuant
to this subsection may include, without limitation, Collections of Principal
Receivables allocable to the uncertificated Series Enhancement invested amount
of any other Series which either the Agreement or the Supplement for any Series
provides are payable to the Seller.
The Trustee, at the direction of the Servicer, shall apply such
Collections of Principal Receivables in accordance with such instructions.
Section 4.18 Exchange of Investor Certificates for Seller Interest. If
the Seller purchases Series 1997-1 Certificates from Series 1997-1
Certificateholders and becomes a Series 1997-1 Certificateholder, the Seller
may, on any Distribution Date (after giving effect to all required allocations
and payments on such Distribution Date), cancel such purchased Series 1997-1
Certificates by delivering a written request to the Trustee to do so, provided,
however, that the Seller may only cancel Class A and Class B Certificates it has
purchased during the Revolving Period and if the Rating Agency Condition has
been satisfied. The Seller may in connection with such cancellation purchase a
portion of the Collateral Interest from the Collateral Interest Holder and may
(but shall not be required to) cancel such portion of the Collateral Interest,
provided that the reduction in the Collateral Invested Amount resulting from
such cancellation may not result in the Collateral Invested Amount being less
than the Required Collateral Amount. As a result of any cancellation of Series
1997-1 Certificates pursuant to this Section, (a) the Invested Amount shall be
reduced by (i) the aggregate principal amount of such purchased Series 1997-1
Certificates and (ii) the reduction in the Collateral Interest
37
and (b) the Seller's Interest shall be increased in an amount equal to such
reduction in the Invested Amount.
Section 4.19 Principal Funding Account.
(a) The Trustee shall establish and maintain with an Eligible
Institution, in the name of the Trustee, on behalf of the Trust, for the benefit
of the Investor Certificateholders, a segregated trust account with the
corporate trust department of such Eligible Institution (the "Principal Funding
Account"), bearing a designation clearly indicating that the funds deposited
therein are held for the benefit of the Investor Certificateholders. The
Trustee shall possess all right, title and interest in all funds on deposit from
time to time in the Principal Funding Account and in all proceeds thereof. The
Principal Funding Account shall be under the sole dominion and control of the
Trustee for the benefit of the Investor Certificateholders. If at any time the
institution holding the Principal Funding Account ceases to be an Eligible
Institution, the Seller shall notify the Trustee, and the Trustee upon being
notified (or the Servicer on its behalf) shall, within 10 Business Days,
establish a new Principal Funding Account meeting the conditions specified above
with an Eligible Institution, and shall transfer any cash or any investments to
such new Principal Funding Account. The Trustee, at the direction of the
Servicer, shall (i) make withdrawals from the Principal Funding Account from
time to time, in the amounts and for the purposes set forth in this Supplement,
and (ii) on each Distribution Date (from and after the commencement of the
Controlled Accumulation Period or the Early Accumulation Period) prior to
termination of the Principal Funding Account make a deposit into the Principal
Funding Account in the amount specified in, and otherwise in accordance with,
subsection 4.11(d). Amounts deposited into the Principal Funding Account shall
not be considered principal payments made to Certificateholders.
(b) Funds on deposit in the Principal Funding Account shall be
invested at the direction of the Servicer by the Trustee in PFA Eligible
Investments. Funds on deposit in the Principal Funding Account on any
Distribution Date, after giving effect to any withdrawals from the Principal
Funding Account on such Distribution Date, shall be invested in such investments
that will automatically mature so that such funds will be available for
withdrawal on or prior to the following Distribution Date. The Trustee shall
maintain for the benefit of the Investor Certificateholders possession of the
negotiable instruments or securities, if any, evidencing such investments. No
PFA Eligible Investment shall be disposed of prior to its maturity.
On the Distribution Date occurring in the month following the
commencement of the Controlled Accumulation Period or the Early Accumulation
Period and on each Distribution Date thereafter with respect to the Controlled
Accumulation Period or the Early Accumulation Period, the Trustee, acting at the
Servicer's direction given on or before such Distribution Date, shall transfer
from the Principal Funding Account to the Collection Subaccount the Principal
Funding Investment Proceeds on deposit in the Principal Funding Account in an
amount not to exceed the Covered Amount, for application in accordance with
subsections 4.11(a) and 4.11(b).
38
Any Excess Principal Funding Investment Proceeds shall be paid to the
Seller on each Distribution Date. An amount equal to any Principal Funding
Investment Shortfall will be deposited in the Collection Subaccount on each
Distribution Date from the Reserve Account to the extent funds are available
pursuant to subsection 4.20(d). Principal Funding Investment Proceeds
(including reinvested interest) shall not be considered part of the amounts on
deposit in the Principal Funding Account for purposes of this Supplement.
Section 4.20 Reserve Account.
(a) The Trustee shall establish and maintain with an Eligible
Institution, in the name of the Trust, on behalf of the Trust, for the benefit
of the Investor Certificateholders, a segregated trust account with the
corporate trust department of such Eligible Institution (the "Reserve Account"),
bearing a designation clearly indicating that the funds deposited therein are
held for the benefit of the Investor Certificateholders. The Trustee shall
possess all right, title and interest in all funds on deposit from time to time
in the Reserve Account and in all proceeds thereof. The Reserve Account shall
be under the sole dominion and control of the Trustee for the benefit of the
Investor Certificateholders. If at any time the institution holding the Reserve
Account ceases to be an Eligible Institution, the Seller shall notify the
Trustee, and the Trustee upon being notified (or the Servicer on its behalf)
shall, within 10 Business Days, establish a new Reserve Account meeting the
conditions specified above with an Eligible Institution, and shall transfer any
cash or any investments to such new Reserve Account.
(b) Funds on deposit in the Reserve Account shall be invested at the
direction of the Servicer by the Trustee in Eligible Investments. Funds on
deposit in the Reserve Account on any Distribution Date, after giving effect to
any withdrawals from the Reserve Account on such Distribution Date, shall be
invested in such investments that will mature so that such funds will be
available for withdrawal on or prior to the following Distribution Date. The
Trustee shall maintain for the benefit of the Investor Certificateholders
possession of the negotiable instruments or securities, if any, evidencing such
Eligible Investments. No Eligible Investment shall be disposed of prior to its
maturity. On each Distribution Date, all interest and earnings (net of losses
and investment expenses) accrued since the preceding Distribution Date on funds
on deposit in the Reserve Account shall be retained in the Reserve Account to
the extent that the Available Reserve Account Amount is less than the Required
Reserve Account Amount, and the balance, if any, shall be deposited into the
Collection Subaccount for application in accordance with subsections 4.11(a) and
4.11(b) on such Distribution Date. For purposes of determining the availability
of funds or the balance in the Reserve Account for any reason under this
Supplement, except as otherwise provided in the preceding sentence, investment
earnings on such funds shall be deemed not to be available or on deposit.
(c) On or before each Distribution Date with respect to the
Controlled Accumulation Period or any Early Accumulation Period prior to the
payment in full of the Class B Invested Amount and prior to the
39
first Distribution Date with respect to any Early Amortization Period, the
Servicer shall calculate the "Reserve Draw Amount" which shall be equal to the
Principal Funding Investment Shortfall with respect to each Distribution Date
with respect to the Controlled Accumulation Period or any Early Accumulation
Period or the first Distribution Date with respect to any Early Amortization
Period.
(d) In the event that for any Distribution Date the Reserve Draw
Amount is greater than zero, the Reserve Draw Amount, up to the Available
Reserve Account Amount, shall be withdrawn from the Reserve Account on such
Distribution Date by the Trustee (acting in accordance with the instructions of
the Servicer), deposited into the Collection Subaccount for application in
accordance with subsections 4.11(a) and 4.11(b) on such Distribution Date.
(e) If on any Determination Date during the Controlled Accumulation
Period or any Early Accumulation Period, (i) the amount required to pay
interest, for the period from the next Distribution Date to the second
succeeding Distribution Date, to the Class A Certificateholders and the Class B
Certificateholders at the Class A Certificate Rate and the Class B Certificate
Rate, respectively, based on LIBOR, as determined on such Determination Date,
exceeds (ii) the sum of (A) for the period from the next Distribution Date to
the second succeeding Distribution Date, the projected Principal Funding
Investment Proceeds plus the projected reinvestment income on the funds on
deposit in the Reserve Account and (B) the remaining balance in the Reserve
Account after giving effect to withdrawals to be made for the next Distribution
Date, then the Early Accumulation Period will terminate and the Early
Amortization Period will commence.
(f) In the event that the Reserve Account Surplus on any Distribution
Date, after giving effect to all deposits to and withdrawals from the Reserve
Account with respect to such Distribution Date, is greater than zero, the
Trustee, acting in accordance with the instructions of the Servicer, shall
withdraw from the Reserve Account, and pay to the Seller, an amount equal to
such Reserve Account Surplus.
(g) Upon the earlier to occur of (i) the termination of the Trust
pursuant to Article XII of the Agreement, (ii) the first Distribution Date
following the commencement of any Early Amortization Period and (iii) the Series
1997-1 Expected Final Payment Date (after taking into account all distributions
to be made on such date), the Trustee, acting in accordance with the
instructions of the Servicer, after the prior payment of all amounts owing to
the Series 1997-1 Certificateholders that are payable from the Reserve Account
as provided herein, shall withdraw from the Reserve Account and pay to the
Seller, all amounts, if any, on deposit in the Reserve Account and the Reserve
Account shall be deemed to have terminated for purposes of this Supplement.
SECTION 5. Distributions.
(a) On each Distribution Date, the Paying Agent shall distribute to
each Class A Certificateholder of record on the Record Date for such
Distribution Date (other than as provided in Section 12.02
40
of the Agreement respecting a final distribution) such Certificateholder's pro
rata share (based on the aggregate fractional undivided interests represented by
Class A Certificates held by such Certificateholder) of the amounts on deposit
in the Collection Account pursuant to subsection 4.11(a).
(b) On each Distribution Date with respect to any Early Amortization
Period, the Paying Agent shall distribute to each Class A Certificateholder of
record on the Record Date for such Distribution Date (other than as provided in
Section 12.02 of the Agreement respecting a final distribution) such
Certificateholder's pro rata share (based on the aggregate fractional undivided
interests represented by Class A Certificates held by such Certificateholder) of
the amounts on deposit in the Collection Account with respect to principal of
the Class A Certificates pursuant to subsection 4.11(d)(i).
(c) On each Distribution Date, the Paying Agent shall distribute to
each Class B Certificateholder of record on the Record Date for such
Distribution Date (other than as provided in Section 12.02 of the Agreement
respecting a final distribution) such Certificateholder's pro rata share (based
on the aggregate fractional undivided interests represented by Class B
Certificates held by such Certificateholder) of the amounts on deposit in the
Collection Account pursuant to subsections 4.11(b) and 4.13(c).
(d) On each Distribution Date with respect to any Early Amortization
Period, beginning on the Distribution Date on which the Class A Invested Amount
is paid in full, the Paying Agent shall distribute to each Class B
Certificateholder of record on the Record Date for such Distribution Date (other
than as provided in Section 12.02 of the Agreement respecting a final
distribution) such Certificateholder's pro rata share (based on the aggregate
fractional undivided interests represented by Class B Certificates held by such
Certificateholder) of the amounts on deposit in the Collection Account with
respect to principal of the Class B Certificates pursuant to subsection
4.11(d)(ii).
(e) On the Series 1997-1 Expected Final Payment Date, the Paying
Agent shall distribute to each Class A Certificateholder of record on the
related Record Date (other than as provided in Section 12.02 of the Agreement
respecting a final distribution) such Class A Certificateholder's pro rata share
of the amounts on deposit in the Principal Funding Account or otherwise held by
the Paying Agent that are allocated and available on such date to pay principal
of the Class A Certificates pursuant to subsection 4.11(e)(i) up to a maximum
amount on any such date equal to the Class A Invested Amount on such date.
(f) On the Series 1997-1 Expected Final Payment Date and after giving
effect to the distribution referred to in subsection 5(e) above, the Paying
Agent shall distribute to each Class B Certificateholder of record on the
related Record Date (other than as provided in Section 12.02 of the Agreement
respecting a final distribution) such Class B Certificateholder's pro rata share
of the amounts on deposit in the Principal Funding Account or otherwise held by
the Paying Agent that are allocated and available on such date to pay principal
of the Class B Certificates pursuant to subsection 4.11(e)(ii)
41
up to a maximum amount on any such date equal to the Class B Invested Amount on
such date.
(g) Except as provided in Section 12.02 of the Agreement with respect
to a final distribution, distributions to Investor Certificateholders hereunder
shall be made by check mailed to each Certificateholder at such
Certificateholder's address appearing in the Certificate Register without
presentation or surrender of any Investor Certificate or the making of any
notation thereon; provided, however, that with respect to Investor Certificates
registered in the name of a Clearing Agency, such distributions shall be made to
such Clearing Agency in immediately available funds.
SECTION 6. Statements to Certificateholders.
(a) On each Distribution Date, the Paying Agent, on behalf of the
Trustee, shall forward to each Class A Certificateholder and the Rating Agency a
statement substantially in the form of Exhibit B prepared by the Servicer
setting forth certain information relating to the Trust and the Class A
Certificates.
(b) On each Distribution Date, the Paying Agent, on behalf of the
Trustee, shall forward to each Class B Certificateholder and the Rating Agency a
statement substantially in the form of Exhibit B prepared by the Servicer
setting forth certain information relating to the Trust and the Class B
Certificates.
(c) On or before January 31 of each calendar year, beginning January
31, 1998, the Paying Agent, on behalf of the Trustee, shall furnish or cause to
be furnished to each Person who at any time during the preceding calendar year
was an Investor Certificateholder, a statement prepared by the Servicer
containing the information which is required to be contained in the statement to
Class A Certificateholders or Class B Certificateholders, as set forth in
subsection (a) or (b) above, as the case may be, aggregated for such preceding
calendar year or the applicable portion thereof (the initial statement shall
cover the period beginning on the Issuance Date and ending on December 31, 1997)
during which such Person was an Investor Certificateholder, together with other
information as is required to be provided by an issuer of indebtedness under the
Internal Revenue Code and such other customary information as is necessary to
enable the Investor Certificateholders to prepare their tax returns. Such
obligation of the Servicer shall be deemed to have been satisfied to the extent
that substantially comparable information shall be provided by the Paying Agent
pursuant to any requirements of the Internal Revenue Code as from time to time
in effect.
(d) The form of 1997-1 Monthly Servicer's Certificate set forth at
Exhibit B hereto may be modified as the Servicer may determine to be necessary
or desirable; provided, however, that no such modification shall serve to
exclude information required by this Section 6. The Servicer shall, upon making
such determination, deliver to the Trustee and the Rating Agency an Officer's
Certificate to which shall be annexed the form of Exhibit B, as so changed.
Upon the delivery of such Officer's Certificate to the Trustee, Exhibit B, as so
changed, shall
42
for all purposes of this Agreement constitute Exhibit B. The Trustee may
conclusively rely upon such Officer's Certificate as to such change conforming
to the requirements of this Agreement.
SECTION 7. Additional Amortization Events. If any one of the following shall
occur:
(a) failure on the part of the Seller (i) to make any payment or
deposit required by the terms of the Agreement or this Series Supplement on
or before the date occurring five Business Days after the date such payment
or deposit is required to be made herein or therein, or (ii) duly to
observe or perform any other covenants or agreements of the Seller set
forth in the Agreement or this Series Supplement, which failure has a
material adverse affect on the Series 1997-1 Certificateholders and which
continues unremedied for a period of 60 days after the date on which
written notice of such failure, requiring the same to be remedied, shall
have been given to the Seller by the Trustee, or to the Seller and the
Trustee by a Series 1997-1 Certificateholder;
(b) any representation or warranty made by the Seller in the Agreement
or the Series Supplement or any information to identify the Accounts
required to be delivered by the Seller pursuant to Section 2.01 or 2.09 of
the Agreement (i) shall prove to have been incorrect in any material
respect when made or when delivered, which continues to be incorrect in any
material respect for a period of 60 days after the date on which written
notice of such failure, requiring the same to be remedied, shall have been
given to the Seller by the Trustee, or to the Seller and the Trustee by a
Series 1997-1 Certificateholder, and (ii) as a result of such incorrectness
the interests of the Series 1997-1 Certificateholders are materially and
adversely affected; provided, however, that neither an Early Accumulation
Event or an Early Amortization Event shall be deemed to have occurred under
this subsection 7(b) if the Seller has repurchased the related Receivables
or all such Receivables, if applicable, during such period in accordance
with the provisions of the Agreement;
(c) the Trust becomes subject to regulation by the Securities and
Exchange Commission as an "investment company" within the meaning of the
Investment Company Act of 1940, as amended;
(d) a failure by the Seller to convey Receivables in Additional
Accounts to the Trust within five Business Days after the day on which it
is required to convey such Receivables pursuant to subsection 2.09(a) of
the Agreement;
(e) a Servicer Default shall occur which has a material adverse effect
on the Series 1997-1 Certificateholders (determined without regard to the
availability of moneys in the Cash Collateral Account);
(f) the average Series Adjusted Portfolio Yield for any three
consecutive Due Periods is reduced to a rate below the average Base Rate
for such period;
43
(g) failure to distribute an amount equal to the full Invested Amount
of the Class A Certificates, or the Class B Certificates, as the case may
be, and all interest accrued thereon, on or before the Series 1997-1
Expected Final Payment Date;
(h) the occurrence of the Reserve Account event described in Section
4.20(e); or
(i) the Seller is unable for any reason to transfer Receivables to the
Trust in accordance with the Agreement.
then, in the case of any event described in subparagraph (a), (b) or (e) above
after the applicable grace period, if any, set forth in such subparagraphs,
either the Trustee or the Series 1997-1 Certificateholders evidencing more than
50% of the aggregate unpaid principal amount of the Series 1997-1 Certificates
by notice then given in writing to the Seller and the Servicer (and to the
Trustee if given by the Series 1997-1 Certificateholders) may declare that an
Amortization Event has occurred as of the date of such notice, and, in the case
of any event described in subparagraphs (c), (d), (f), (g), (h) or (i) above
subject to applicable law, an Amortization Event shall occur without any notice
or other action on the part of the Trustee or the Investor Certificateholders
(except as otherwise provided in any such subparagraph), immediately upon the
occurrence of such event.
SECTION 8. Optional Repurchase.
On the Distribution Date occurring on or after the date on which the
Invested Amount is reduced to $50,000,000 or less, the Seller shall have the
option to purchase the Class A Certificateholders' Interest and Class B
Certificateholders' Interest, at a purchase price equal to the Optional
Repurchase Amount. Such purchased portion of the Certificateholders' Interest
shall thereafter be deemed to be part of the Seller's Interest. The Seller
shall give the Servicer, the Rating Agency and the Trustee at least 30 days
prior written notice of the date on which the Seller intends to exercise such
option to purchase. Not later than 10:00 A.M., New York City time, on such
Distribution Date the Seller shall deposit the Optional Repurchase Amount into
the Collection Account in immediately available funds. Such purchase option is
subject to payment in full of the Optional Repurchase Amount. The Optional
Repurchase Amount shall be distributed as set forth in Section 10 hereof.
SECTION 9. Sale of Certificateholders' Interest pursuant to Section 2.06 or
10.01 of the Agreement.
(a) The amount to be paid by the Seller with respect to Series 1997-1
in connection with a repurchase of the Certificateholders' Interest pursuant to
Section 2.06 of the Agreement shall equal the Reassignment Amount for the first
Distribution Date following the Due Period in which the reassignment obligation
arises under the Agreement.
(b) The amount to be paid by the Seller with respect to Series 1997-1
in connection with a repurchase of the Certificateholders'
44
Interest pursuant to Section 10.01 of the Agreement shall equal the sum of (x)
the Reassignment Amount for the Distribution Date of such repurchase and (y) the
sum of (A) the excess, if any, of (I) a price equivalent to the average of bids
quoted on the Record Date preceding the date of repurchase or, if not a Business
Day, on the next succeeding Business Day by at least two recognized dealers
selected by the Trustee (which may be selected from the list attached as
Schedule 1), for the purchase by such dealers of a security which is similar to
the Class A Certificates with a remaining maturity approximately equal to the
remaining maturity of the Class A Certificates and rated by each Rating Agency
in the rating category originally assigned to the Class A Certificates over (II)
the portion of the Reassignment Amount attributable to the Class A Certificates
and (B) the excess, if any, of (I) a price equivalent to the average of bids
quoted on such Record Date, or if not a Business Day, on the next succeeding
Business Day by at least two recognized dealers selected by the Trustee (which
may be selected from the list attached as Schedule 1), for the purchase by such
dealers of a security which is similar to the Class B Certificates with a
remaining maturity approximately equal to the remaining maturity of the Class B
Certificates and rated by each Rating Agency in the rating category originally
assigned to the Class B Certificates over (II) the portion of the Reassignment
Amount attributable to the Class B Certificates.
SECTION 10. Distributions pursuant to Sections 8 or 9 of this Series Supplement
-------------------------------------------------------------------
and Section 2.06, 10.01 or 12.02(c) of the Agreement.
----------------------------------------------------
(a) With respect to the Optional Repurchase Amount deposited into the
Collection Account pursuant to Section 8, the Reassignment Amount deposited into
the Collection Account pursuant to Section 9 or any Termination Proceeds
deposited into the Collection Account pursuant to Section 12.02(c) of the
Agreement, the Trustee shall, not later than 1:00 P.M., New York City time, on
the date of deposit, make deposits of the following amounts (in the priority set
forth below and, in each case, after giving effect to any deposits and
distributions otherwise to be made on such date) in immediately available funds
as follows: (i) the Class A Invested Amount on such date and the amount of
accrued and unpaid interest on the unpaid balance of the Class A Certificates,
plus the amount of Class A Additional Interest previously due but not paid on
any prior Distribution Date, will be deposited into the Collection Account for
distribution to Class A Certificateholders, (ii) the Class B Invested Amount on
such date and the amount of accrued and unpaid interest on the unpaid balance of
the Class B Certificates, plus the amount of Class B Additional Interest, if
any, for such Distribution Date and any Class B Interest, if any, for such
Distribution Date and any Class B Additional Interest previously due but not
paid on a prior Distribution Date, will be deposited into the Collection Account
for distribution to Class B Certificateholders and (iii) the Collateral Invested
Amount on such date and the amount of accrued and unpaid interest on the
Collateral Invested Amount (including any unpaid Collateral Additional Interest)
will be applied in accordance with the Collateral Agreement. Notwithstanding
anything to the contrary contained in this Series Supplement or the Agreement,
the amount of any excess determined pursuant to subsection 9(b)(y)(A) hereof
shall be
45
distributed to the Class A Certificateholders and the amount of any excess
determined pursuant to subsection 9(b)(y)(B) hereof shall be distributed to the
Class B Certificateholders. The remainder of any Termination Proceeds shall be
applied in accordance with the Collateral Agreement.
(b) Notwithstanding anything to the contrary in this Series
Supplement or the Agreement, the entire amount deposited in the Collection
Account pursuant to Section 8 or subsections 9(a) or (b) and 10(a) hereof and
all other amounts on deposit therein for distribution to the Series 1997-1
Certificateholders shall be distributed in full to the Series 1997-1
Certificateholders on such date and shall be deemed to be a final distribution
pursuant to Section 12.02 of the Agreement.
SECTION 11. Distribution of Proceeds of Sale, Disposition or Liquidation of the
-------------------------------------------------------------------
Receivables pursuant to Section 9.02 of the Agreement.
-----------------------------------------------------
(a) Not later than 1:00 p.m., New York City time, on the Distribution
Date following the date on which the Insolvency Proceeds are deposited into the
Collection Account pursuant to Section 9.02(b) of the Agreement, the Trustee
shall (in the following priority and, in each case, after giving effect to any
deposits and distributions otherwise to be made on such Distribution Date) (i)
deduct an amount equal to the Class A Adjusted Invested Amount on such
Distribution Date from the portion of the Insolvency Proceeds allocated to
Series Allocable Principal Collections and deposit such amount in the Collection
Account for distribution to Class A Certificateholders, provided that the amount
of such deposit shall not exceed the product of (x) the portion of the
Insolvency Proceeds allocated to Series Allocable Principal Collections and (y)
the Principal Allocation Percentage with respect to the related Due Period, (ii)
deduct an amount equal to the Class B Adjusted Invested Amount on such
Distribution Date from the portion of the Insolvency Proceeds allocated to
Series Allocable Principal Collections and deposit such amount in the Collection
Account for distribution to Class B Certificateholders, provided that the amount
of such deposit shall not exceed (x) the product of the portion of the
Insolvency Proceeds allocated to Series Allocable Principal Collections and the
Principal Allocation Percentage with respect to such Due Period, minus (y) the
amount deposited into the Collection Account pursuant to clause (a)(i) of this
sentence and (iii), after applying amounts pursuant to clauses (i) and (ii),
deduct an amount equal to the Collateral Invested Amount on such Distribution
Date from such Proceeds and apply such amount in accordance with the Collateral
Agreement. The remainder of the portion of the Insolvency Proceeds allocated to
Series Allocable Principal Collections shall be allocated to the Sellers'
Interest and shall be released to the Seller on such Distribution Date.
(b) Not later than 1:00 P.M., New York City time, on such
Distribution Date, the Trustee shall (in the following priority and, in each
case, after giving effect to any deposits and distributions otherwise to be made
on such Distribution Date) (i) deduct an amount equal to the sum of (w) Class A
Monthly Interest for such Distribution Date, (x) any Class A Monthly Interest
previously due but not paid on a prior Distribution Date and (y) the amount of
Class A Additional
46
Interest, if any, for such Distribution Date and any Class A Additional Interest
previously due but not paid on a prior Distribution Date, from the portion of
the Insolvency Proceeds allocated to Series 1997-1 Allocable Finance Charge and
Administrative Collections and deposit such amount in the Collection Account for
distribution to Class A Certificateholders, provided that the amount of such
deposit shall not exceed the product of (x) the portion of the Insolvency
Proceeds allocated to Series 1997-1 Allocable Finance Charge and Administrative
Collections, (y) the Floating Allocation Percentage with respect to such Due
Period and (z) a fraction, the numerator of which is the Class A Invested Amount
with respect to such Distribution Date and the denominator of which is the
Adjusted Invested Amount with respect to such Distribution Date and (ii) deduct
an amount equal to the sum of (v) Class B Monthly Interest for such Distribution
Date, (w) any Class B Monthly Interest previously due but not paid on a prior
Distribution Date, (x) the Cumulative Excess Interest Amount with respect to
such Distribution Date and (y) the amount of Class B Additional Interest, if
any, for such Distribution Date and any Class B Additional Interest previously
due but not paid on a prior Distribution Date from the portion of the Insolvency
Proceeds allocated to Series 1997-1 Allocable Finance Charge and Administrative
Collections and deposit such amount into the Collection Account for distribution
to Class B Certificateholders, provided that the amount of such deposit shall
not exceed the product of (x) the portion of the Insolvency Proceeds allocated
to Series 1997-1 Allocable Finance Charge and Administrative Collections, (y)
the Floating Allocation Percentage with respect to such Due Period and (z) a
fraction, the numerator of which is the Class B Invested Amount with respect to
such Distribution Date and the denominator of which is the Adjusted Invested
Amount with respect to such Distribution Date. The remainder of the Insolvency
Proceeds allocated to Allocable Finance Charge and Administrative Collections
shall be released to the Collateral Interest Holder for application by the
Collateral Interest Holder in accordance with the provisions of the Collateral
Agreement.
(c) Notwithstanding anything to the contrary in this Series
Supplement or the Agreement, the entire amount deposited in the Collection
Account pursuant to this Section 11 and all other amounts on deposit therein for
distribution for the Series 1997-1 Certificateholders shall be distributed in
full to the Series 1997-1 Certificateholders on the Distribution Date on which
funds are deposited pursuant to this Section (or, if not so deposited on a
Distribution Date, on the immediately following Distribution Date) and shall be
deemed to be a final distribution pursuant to Section 12.02 of the Agreement.
SECTION 12. Section 9.02 of the Agreement; Rights of the Collateral Interest
----------------------------------------------------------------
Holder.
------
(a) If the Trustee shall have received instructions within 90 days
from the date notice pursuant to clause (i) of subsection 9.02(a) of the
Agreement is first published, from the Collateral Interest Holder to the effect
that the Collateral Interest Holder objects to the liquidation of the
Receivables, the Trustee shall not proceed with such liquidation.
47
(b) All payments to the Collateral Interest Holder required by this
Series Supplement shall be made no later than 1:00 p.m. on the date such payment
is required to be made.
SECTION 13. Clearing Agency.
The Clearing Agency with respect to the Class A Certificates and Class
B Certificates shall initially be The Depository Trust Company.
SECTION 14. Delivery of the Class A Certificates and the Class B Certificates.
The Trustee shall deliver the Class A and Class B Certificates to the
Seller when authenticated in accordance with Section 6.02 of the Agreement. The
Trustee shall register the Collateral Interest in the Certificate Register in
the manner set forth in the Collateral Agreement.
SECTION 15. Ratification of Agreement.
As supplemented by this Supplement, the Agreement is in all respects
ratified and confirmed and the Agreement, as so supplemented by this Supplement
shall be read, taken and construed as one and the same instrument.
SECTION 16. Counterparts.
This Supplement may be executed in two or more counterparts, each of
which when so executed shall be deemed to be an original, but all of which shall
together constitute but one and the same instrument.
SECTION 17. Governing Law.
THIS SUPPLEMENT SHALL BE CONSTRUED AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS.
SECTION 18. Forms of Certificates and Monthly Servicer's
Certificate.
The Class A Certificates, Class B Certificates and Monthly Servicer's
Certificate with respect to Series 1997-1 shall be in substantially the
respective forms attached as exhibits hereto. The Servicer may add to the
Monthly Servicer's Certificate such additional information with respect to the
Collateral Agreement as the Servicer shall determine to be appropriate (or as
required under the Collateral Agreement).
48
SECTION 19. Definition of Tax Opinion and of Required Minimum Principal
Balance for Purposes of Series 1997-1
(a) For purposes of this Series Supplement, the definition of Tax
Opinion contained in Section 1.01 of the Agreement shall be as follows:
"Tax Opinion" shall mean, with respect to any action, an Opinion of
Counsel to the effect that, for Federal income tax purposes: (a) such
action will not adversely affect the tax characterization as debt of the
Investor Certificates of any outstanding Series or Class that were
characterized as debt at the time of their issuance, (b) following such
action the Trust will not be treated as an association (or publicly traded
partnership) taxable as a corporation and (c) unless otherwise provided in
a Supplement, in the case of Section 6.03(b)(vi) of the Agreement, the
Investor Certificates of the Series established pursuant to such Supplement
will properly be characterized as debt.
(b) For purposes of this Series Supplement, at such time as the
Invested Amounts of all Series issued by the Trust prior to Series 1997-1 have
been reduced to zero, the definition of Required Minimum Principal Balance
contained in Section 1.01 of the Agreement shall be as follows:
"Required Minimum Principal Balance" shall mean, with respect to any
date, an amount equal to the sum of the adjusted invested amounts (or, if
there is no adjusted invested amount with respect to any particular Series,
then the invested amount for such Series) for all outstanding Series on
such date; plus the sum of the Series Required Seller Amounts for each
Series.
SECTION 20. ERISA Restrictions.
Registration of transfers of any Class B Certificate containing the
legend set forth on the Class B Certificate attached hereto as Exhibit A-2 shall
be effected only if such transfer is made to a Person that certifies to the
Transfer Agent in writing that it is not an employee benefit plan, trust or
account, including an individual retirement account, that is subject to ERISA or
that is described in Section 4975(e)(1) of the Code or an entity whose
underlying assets include plan assets by reason of a plan's investment in such
entity (each a "Benefit Plan"). By accepting and holding a Class B Certificate,
a Class B Certificateholder shall be deemed to have represented and warranted
that it is not a Benefit Plan and is not purchasing a Class B Certificate on
behalf of a Benefit Plan. By acquiring any interest in a Book-Entry Certificate
representing a Class B Certificate, a Certificate Owner shall be deemed to have
represented and warranted that it is not a Benefit Plan and is not purchasing a
Class B Certificate on behalf of a Benefit Plan.
49
IN WITNESS WHEREOF, the Seller, the Servicer and the Trustee have
caused this Series Supplement to be fully executed by their respective officers
as of the day and year first above written.
HOUSEHOLD AFFINITY
FUNDING CORPORATION
Seller
By_________________________
Name:
Title:
HOUSEHOLD FINANCE CORPORATION,
Servicer
By_________________________
Name:
Title:
THE BANK OF NEW YORK
Trustee
By_________________________
Name:
Title:
EXHIBIT A-1
-----------
FORM OF CLASS A CERTIFICATE
---------------------------
REGISTERED $___________*
No. R-A CUSIP No.
--- ----------
UNLESS THIS CLASS A CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS
MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.
HOUSEHOLD AFFINITY CREDIT CARD MASTER TRUST I
SERIES 1997-1
FLOATING RATE CLASS A CREDIT CARD PARTICIPATION CERTIFICATE
SERIES 1997-1 EXPECTED FINAL PAYMENT DATE:
The _________ Distribution Date
Each $1,000 minimum denomination represents a 1/_______
undivided interest in the Series 1997-1
Class A Invested Amount in the
HOUSEHOLD AFFINITY CREDIT CARD MASTER TRUST I
Evidencing an undivided interest in a trust, the corpus of which consists
primarily of receivables generated from time to time in the ordinary course of
business in a portfolio of revolving credit card accounts provided by
HOUSEHOLD AFFINITY FUNDING CORPORATION
(Not an interest in or obligation of
Household Affinity Funding Corporation
or any affiliate thereof)
______________
*Denominations of $1,000 and integral multiples of $1,000 in excess thereof.
This certifies that CEDE & CO. (the "Class A Certificateholder") is the
registered owner of a fractional undivided interest in certain assets of a trust
(the "Trust") created pursuant to an Amended and Restated Pooling and Servicing
Agreement, dated as of August 1, 1993, as amended and as may be further amended
from time to time (the "Agreement"), as supplemented by the Series 1997-1
Supplement dated as of March 1, 1997 (the "Series Supplement"), by and among
Household Affinity Funding Corporation, as Seller (the "Seller"), Household
Finance Corporation, as Servicer, and The Bank of New York, as trustee (the
"Trustee"). The corpus of the Trust includes (i) a portfolio of all receivables
(the "Receivables") existing in the revolving credit card accounts identified
under the Agreement from time to time (the "Accounts"), (ii) all Receivables
generated under the Accounts from time to time thereafter, (iii) funds collected
or to be collected from cardholders in respect of the Receivables, (iv) all
funds which are from time to time on deposit in certain accounts held in the
name of the Trustee and for the benefit of the Certificateholders, and (v) all
other assets and interests constituting the Trust, including certain monies
constituting Interchange and Recoveries allocated to the Trust pursuant to the
Agreement and the Series Supplement. Although a summary of certain provisions of
the Agreement and the Series Supplement is set forth below and in the Summary of
Terms and Conditions attached hereto and made a part hereof, this Class A
Certificate does not purport to summarize the Agreement and the Series
Supplement and reference is made to the Agreement and the Series Supplement for
information with respect to the interests, rights, benefits, obligations,
proceeds and duties evidenced hereby and the rights, duties and obligations of
the Trustee. A copy of the Agreement and the Series Supplement (without
schedules) may be requested from the Trustee by writing to the Trustee at ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Trust
Trustee Administration. To the extent not defined herein, the capitalized terms
used herein have the meanings ascribed to them in the Agreement or the Series
Supplement, as applicable.
This Class A Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement and the Series Supplement, to which
Agreement and Series Supplement, as may be amended from time to time, the Class
A Certificateholder by virtue of the acceptance hereof assents and is bound.
Unless otherwise specified in the applicable Supplement, it is the intent
of the Seller and the Investor Certificateholders that, with respect to all
Taxes, the Investor Certificates will evidence debt secured by the Receivables.
The Seller and the Class A Certificateholder, by the acceptance of this Class A
Certificate, agree to treat this Class A Certificate for the purpose of all
Taxes as debt.
Interest will accrue on the unpaid principal amount of this Class A
Certificate from its date of issuance to and excluding _____ __, 1997 at the
rate of _____% per annum and with respect to each Due Period thereafter, at the
rate of ____% above LIBOR.
In general, payments of principal with respect to the Class A Certificates
are limited to the unpaid Class A Invested Amount, which may be less than the
unpaid principal balance of the Class A Certificates pursuant to the terms of
the Agreement and the Series Supplement. The Series 1997-1 Expected Final
Payment Date is the
A-1-2
_________ Distribution Date, but principal with respect to the Class A
Certificates may be paid earlier or later under certain limited circumstances
described in the Agreement and the Series Supplement. If for one or more months
during the Controlled Accumulation Period there are not sufficient funds to pay
the Controlled Deposit Amount, then to the extent that excess funds are not
available on subsequent Distribution Dates with respect to the Controlled
Accumulation Period to make up for such shortfalls, the final payment of
principal of the Class A Certificates will occur later than the Scheduled Final
Payment Date. If the principal of the Class A Certificates and the Class B
Certificates have not been paid in full prior to the ________ Distribution Date,
the Trustee will sell or cause to be sold on such Termination Date Principal
Receivables (or interests therein) (and the related Finance Charge and
Administrative Receivables) in an amount equal to 100% of the Invested Amount as
of such Termination Date, subject to certain limitations, and shall immediately
deposit the Termination Proceeds allocable to the Series 1997-1
Certificateholders' Interest in the Collection Account. The Termination Proceeds
shall be allocated and distributed to the Class A Certificateholders, the Class
B Certificateholders and the Collateral Interest Holder in accordance with the
Series Supplement.
Unless the certificate of authentication hereon has been executed by or on
behalf of the Trustee, by manual or facsimile signature, this Class A
Certificate shall not be entitled to any benefit under the Agreement or the
Series Supplement, or be valid for any purpose.
A-1-3
IN WITNESS WHEREOF, the Seller has caused this Class A Certificate to be
duly executed.
HOUSEHOLD AFFINITY FUNDING CORPORATION
By:
-----------------------------------
Name:
Title:
By:
-----------------------------------
Name:
Title:
Dated: _______ __, 1997
A-1-4
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class A Certificates
described in the within-mentioned Amended and Restated
Pooling and Servicing Agreement and Series Supplement.
THE BANK OF NEW YORK, as Trustee
By:_____________________________
Authorized Signatory
HOUSEHOLD AFFINITY CREDIT CARD MASTER TRUST I
SERIES 1997-1
FLOATING RATE CLASS A CREDIT CARD PARTICIPATION CERTIFICATE
Summary of Terms and Conditions
The Receivables consist of Principal Receivables which arise generally from
the purchase of merchandise and services and amounts advanced to cardholders as
cash advances, Finance Charge Receivables which arise from all Finance Charges,
Cash Advance Fees and annual membership fees with respect to the Accounts and
Administrative Receivables which consist of administrative fees, late charges on
amounts charged for merchandise and services and premiums paid with respect to
credit life insurance and other types of insurance and all other fees billed to
the Obligors on the Accounts. Collections of Finance Charge Receivables include
a portion, determined pursuant to the Agreement, of the Interchange paid or
payable to Household Bank (SB), N.A. (the "Bank") through VISA USA, Inc. and
MasterCard International Incorporated. All Recoveries with respect to
Receivables previously charged off as uncollectible will be treated as
Collections of Finance Charge and Administrative Receivables. This Class A
Certificate is one of a series of Class A Certificates titled Household Affinity
Credit Card Master Trust I, Series 1997-1 Floating Rate Class A Credit Card
Participation Certificates (the "Class A Certificates"), each of which
represents a fractional undivided Interest in certain assets of the Trust. The
Trust's assets are allocated in part to the Investor Certificateholders of all
outstanding Series (the "Certificateholders' Interest") with the remainder
allocated to the Seller. The aggregate interest represented by the Class A
Certificates at any time in the Principal Receivables in the Trust shall not
exceed an amount equal to the Class A Invested Amount at such time. The Class A
Initial Invested Amount is $___________. The Class A Invested Amount on any date
will be an amount equal to (a) $___________ minus (b) the aggregate amount of
principal payments paid to Class A Certificateholders prior to such date, minus
(c) the excess, if any, of the aggregate amount of Class A Investor Charge-Offs
over Class A Investor Charge-Offs reimbursed pursuant to Section 4.12(a) of the
Series Supplement prior to such date and minus (d) the amount of any reduction
in the Class A Invested Amount pursuant to Section 4.18 of the Series Supplement
prior to such date. In addition to the Class A Certificates, $__________
aggregate principal amount of Class B Certificates entitled Household Affinity
Credit Card Master Trust I, Series 1997-1 Floating Rate Class B Credit Card
Participation Certificates (the "Class B Certificates") will be issued. Also, a
Seller Certificate has been issued to the Seller pursuant to the Agreement which
will represent the Seller's Interest in the Trust. Subject to the terms and
conditions of the Agreement, the Seller may from time to time direct the
Trustee, on behalf of the Trust, to issue one or more new Series of Investor
Certificates, which will represent fractional undivided interests in certain of
the Trust Assets.
Interest will accrue on the Class A Certificates at the Class A Certificate
Rate and, except as otherwise provided in the Series Supplement, be distributed
monthly to Class A Certificateholders, commencing _____ __, 1997, and on the
15th day of each month thereafter, or if such day is not a business day, on the
next succeeding business
day (each, a "Distribution Date") in an amount equal to the product of (i) the
unpaid principal amount of the Class A Certificates, (ii) the Class A
Certificate Rate and a fraction, the numerator of which is the actual number of
days in the Interest Period and the denominator is 360. Interest for any
Distribution Date will accrue from and including the preceding Distribution Date
except in the case of the first Distribution Date on which will be payable
accrued interest from and including the Issuance Date to and excluding _________
__, 1997.
On each Distribution Date, the Paying Agent shall distribute to each Class
A Certificateholder of record on the last day of the preceding calendar month
(each a "Record Date") such Class A Certificateholder's pro rata share (based on
the aggregate fractional undivided interest represented by the Class A
Certificates held by such Investor Certificateholder) of such amounts as are
payable to the Class A Certificateholders pursuant to the Agreement and Series
Supplement. The amount to be distributed on each Distribution Date to the Holder
of this Class A Certificate will be equal to the product of the aggregate
fractional undivided interest represented by this Class A Certificate and the
aggregate of all payments to be made to Class A Certificateholders on such
payment date. Distributions with respect to this Class A Certificate will be
made by the Paying Agent by check mailed to the address of the Class A
Certificateholder of record appearing in the Certificate Register without the
presentation or surrender of this Class A Certificate or the making of any
notation thereon (except for the final distribution in respect of this Class A
Certificate) except that with respect to Class A Certificates registered in the
name of Cede & Co., the nominee for The Depository Trust Company, distributions
will be made in the form of immediately available funds. Final payment of this
Class A Certificate will be made only upon presentation and surrender of this
Class A Certificate at the office or agency specified in the notice of final
distribution delivered by the Trustee to the Class A Certificateholders in
accordance with the Agreement.
On the Distribution Date occurring on or after the date on which the
Invested Amount is reduced to $__________ or less, the Seller will have the
option to purchase the Class A Certificateholders' Interest and Class B
Certificateholders' Interest in the Trust. The purchase price (determined after
giving effect to any payment of principal and interest on such Distribution
Date) for the Class A Certificates and the Class B Certificates will be equal to
the sum of the Class A Invested Amount and the Class B Invested Amount, plus
accrued and unpaid interest on the unpaid principal balance of the Class A
Certificates and Class B Certificates through the day immediately prior to the
date of such purchase, plus the amount of Additional Interest, if any, for such
Distribution Date and any Additional Interest previously due but not distributed
to the Class A Certificateholders and the Class B Certificateholders, as
applicable, on a prior Distribution Date.
This Class A Certificate does not represent an obligation of, or an
interest in, the Seller, the Servicer or any affiliate of any of them and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or any other
governmental agency or instrumentality. This Class A Certificate is limited in
right of payment to certain Collections representing the Receivables (and
certain other amounts)
2
all as more specifically set forth hereinabove and in the Agreement and the
Series Supplement.
The Agreement and the Series Supplement may be amended by the Seller, the
Servicer and the Trustee, without Certificateholder consent. No such Amendment,
however, may adversely affect in any material respect the interests of the
Investor Certificateholders. The Trustee may, but shall not be obligated to,
enter into any such amendment which affects the Trustee's rights, duties or
immunities under the Agreement or otherwise.
The Agreement and the Series Supplement may be amended by the Seller, the
Servicer and the Trustee with the consent of the Holders of Investor
Certificates evidencing not less than 66-2/3% of the aggregate unpaid principal
amount of the Investor Certificates of all adversely affected Series for which
the Seller has not delivered an Officer's Certificate stating that there is no
Adverse Affect, for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of the Agreement or any Supplement
or of modifying in any manner the rights of Investor Certificateholders;
provided, however, that no such amendment shall (a) reduce in any manner the
amount of, or delay the timing of, distributions to Investor Certificateholders
without the consent of each Class A Certificateholder; (b)(i) change the
definition of or the manner of calculating the interest of any Investor
Certificateholder without the consent of each affected Investor
Certificateholder or (ii) reduce the aforesaid percentage required to consent to
any such amendment, in either case without the consent of each Investor
Certificateholder; or (c) adversely affect the rating of the Class A
Certificates or the Class B Certificates by the Rating Agency without the
consent of the Class A Certificateholders or Class B Certificateholders
evidencing not less than 66-2/3% of the aggregate unpaid principal amount of the
Class A Certificates or the Class B Certificates, respectively. Any such
amendment and any such consent by the holder of the Class A Certificate shall be
conclusive and binding on such Class A Certificateholder and upon all future
holders of this Class A Certificate and of any Class A Certificate issued in
exchange hereof or in lieu hereof whether or not notation thereof is made upon
this Class A Certificate. The Seller or the Trustee shall establish a record
date for determining the Investor Certificateholders who may give such consent.
The Class A Certificates are issuable only in minimum denominations of
$l,000 and integral multiples of $l,000 in excess thereof. The transfer of this
Class A Certificate shall be registered in the Certificate Register upon
surrender of this Class A Certificate for registration of transfer at any office
or agency maintained by the Transfer Agent and Registrar accompanied by a
written instrument of transfer, in a form satisfactory to the Trustee or the
Transfer Agent and Registrar, duly executed by the Class A Certificateholder or
such Class A Certificateholder's attorney, and duly authorized in writing with
such signature guaranteed, and thereupon one or more new Class A Certificates of
authorized denominations and for the same aggregate Fractional Undivided
Interest will be issued to the designated transferee or transferees.
As provided in the Agreement and subject to certain limitations therein set
forth, Class A Certificates are exchangeable for new Class
3
A Certificates evidencing like aggregate fractional undivided interests as
requested by the Class A Certificateholder surrendering such Class A
Certificates. No service charge may be imposed for any such exchange but the
Servicer or Transfer Agent and Registrar may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
therewith.
The Seller, the Servicer, the Trustee, the Paying Agent and the Transfer
Agent and Registrar and any agent of any of them, may treat the person in whose
name this Class A Certificate is registered as the owner hereof for all
purposes, and neither the Servicer nor the Seller, the Trustee, the Paying
Agent, the Transfer Agent and Registrar, nor any agent of any of them, shall be
affected by notice to the contrary except in certain circumstances described in
the Agreement.
THIS CLASS A CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE LAWS OF THE STATE OF NEW YORK.
4
ASSIGNMENT
Social Security or other identifying number of assignee
____________________________________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
---------------------------------------------------------
-------------------------------------------------------------
(name and address of assignee )
the within certificate and all rights thereunder, and hereby irrevocably
constitutes and appoints _______________________ attorney, to transfer said
certificate on the books kept for registration thereof, with full power of
substitution in the premises.
Dated:________________
(1) A Non U.S. Person as Note: The signature(s)to
defined in the Internal this Assignment must
Revenue Code of 1986, as correspond with the
amended must certify to the name(s) as written on
Trustee in writing as to the face of the within
its Non U.S. Person status certificate in every
and such further particular without
information as may be alteration or
required under the Code or enlargement or any
reasonably requested by the change whatsoever
Trustee
EXHIBIT A-2
-----------
FORM OF CLASS B CERTIFICATE
---------------------------
REGISTERED $__________*
No. R-B__ CUSIP NO. _________
THIS CLASS B CERTIFICATE MAY NOT BE ACQUIRED BY OR FOR THE ACCOUNT
OF A BENEFIT PLAN (AS DEFINED BELOW).
UNLESS THIS CLASS B CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS
MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.
HOUSEHOLD AFFINITY CREDIT CARD MASTER TRUST I
SERIES 1997-1
FLOATING RATE CLASS B CREDIT CARD PARTICIPATION CERTIFICATE
SERIES 1997-1 EXPECTED FINAL PAYMENT DATE:
The ___________ Distribution Date
Each $1,000 minimum denomination represents a 1/______
undivided interest in the Series 1997-1
Class B Invested Amount in the
HOUSEHOLD AFFINITY CREDIT CARD MASTER TRUST I
Evidencing an undivided interest in a trust, the corpus of which consists
primarily of receivables generated from time to time in the ordinary course of
business in a portfolio of revolving credit card accounts provided by
HOUSEHOLD AFFINITY FUNDING CORPORATION
(Not an interest in or obligation of
Household Affinity Funding Corporation
or any affiliate thereof)
__________
*Denominations of $1,000 and integral multiples of $1,000 in excess thereof.
This certifies that CEDE & CO. (the "Class B Certificateholder"), is the
registered owner of a fractional undivided interest in certain assets of a trust
(the "Trust") created pursuant to an Amended and Restated Pooling and Servicing
Agreement, dated as of August 1, 1993, as amended and as may be further amended
from time to time (the "Agreement"), as supplemented by the Series 1997-1
Supplement, dated as of March 1, 1997 (the "Series Supplement"), by and among
Household Affinity Funding Corporation, as Seller (the "Seller"), Household
Finance Corporation, as Servicer, and The Bank of New York, as trustee (the
"Trustee"). The corpus of the Trust includes (i) a portfolio of all receivables
(the "Receivables") existing in the revolving credit card accounts identified
under the Agreement from time to time (the "Accounts"), (ii) all receivables
generated under the Accounts from time to time thereafter, (iii) funds collected
or to be collected from cardholders in respect of the Receivables, (iv) all
funds which are from time to time on deposit in certain accounts held in the
name of the Trustee for the benefit of Certificateholders, and (v) all other
assets and interests constituting the Trust, including certain monies
constituting Interchange and Recoveries allocated to the Trust pursuant to the
Agreement and the Series Supplement. Although a summary of certain provisions of
the Agreement and the Series Supplement is set forth below and in the Summary of
Terms and Conditions attached hereto and made a part hereof, this Class B
Certificate does not purport to summarize the Agreement and the Series
Supplement and reference is made to the Agreement and the Series Supplement for
information with respect to the interests, rights, benefits, obligations,
proceeds and duties evidenced hereby and the rights, duties and obligations of
the Trustee. A copy of the Agreement and the Series Supplement (without
schedules) may be requested from the Trustee by writing to the Trustee at ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Trust
Trustee Administration. To the extent not defined herein, the capitalized terms
used herein have the meanings ascribed to them in the Agreement or the Series
Supplement as applicable.
This Class B Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement and the Series Supplement, to which
Agreement and Series Supplement, as may be amended from time to time, the Class
B Certificateholder by virtue of the acceptance hereof assents and is bound.
Unless otherwise specified in the applicable Supplement, it is the intent
of the Seller and the Investor Certificateholders that, with respect to all
Taxes, the Investor Certificates will evidence debt secured by the Receivables.
The Seller and the Class B Certificateholder, by the acceptance of this Class B
Certificate, agree to treat this Class B Certificate for purposes of all Taxes
as debt.
Interest will accrue on the unpaid principal amount of this Class B
Certificate from its date of issuance to and excluding _____, __, 1997 at the
rate of ___% per annum and with respect to each Due Period thereafter, at the
rate of ___% above LIBOR.
In general, payments of principal with respect to the Class B Certificates
are limited to the unpaid Class B Invested Amount, which may be less than the
unpaid principal balance of the Class B Certificates pursuant to the terms of
the Agreement and the Series Supplement. The Series 1997-1 Expected Final
Payment Date is the
A-2-2
_____________ Distribution Date, but principal with respect to the Class B
Certificates may be paid earlier or later under certain limited circumstances
described in the Agreement and the Series Supplement.
Principal payments with respect to the Class B Certificates will not
commence until the Class A Invested Amount is paid in full. In addition, the
final payment of principal of the Class B Certificates will occur later than the
___________ Distribution Date if Collections of Receivables allocable to pay
principal of the Class B Certificates and the Collateral Invested Amount are
insufficient to pay the Class B Invested Amount on or prior to such Distribution
Date. If the principal of the Class A Certificates and the Class B Certificates
has not been paid in full prior to the __________ Distribution Date, the Trustee
will sell or cause to be sold on such Termination Date Principal Receivables (or
interests therein) (and the related Finance Charge and Administrative
Receivables) in an amount equal to 100% of the Invested Amount as of such
Termination Date, subject to certain limitations, and shall immediately deposit
the Termination Proceeds allocable to the Series 1997-1 Certificateholders'
Interest in the Collection Account. The Termination Proceeds shall be allocated
and distributed to the Class A Certificateholders, the Class B
Certificateholders and the Collateral Interest Holder in accordance with the
Series Supplement.
Unless the certificate of authentication hereon has been executed by or on
behalf of the Trustee, by manual or facsimile signature, this Class B
Certificate shall not be entitled to any benefit under the Agreement or the
Series Supplement, or be valid for any purpose.
A-2-3
IN WITNESS WHEREOF, the Seller has caused this Class B Certificate to be
duly executed.
HOUSEHOLD AFFINITY FUNDING CORPORATION
By:___________________________________
Name:
Title:
By:___________________________________
Name:
Title:
Dated: ____________, 1997
A-2-4
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class B Certificates
described in the within-mentioned Amended and Restated
Pooling and Servicing Agreement and Series Supplement.
THE BANK OF NEW YORK, as Trustee
By:_____________________________
Authorized Signatory
HOUSEHOLD AFFINITY CREDIT CARD MASTER TRUST I
SERIES 1997-1
FLOATING RATE CLASS B CREDIT CARD PARTICIPATION CERTIFICATE
Summary of Terms and Conditions
The Receivables consist of Principal Receivables which arise generally from
the purchase of merchandise and services and amounts advanced to cardholders as
cash advances, Finance Charge Receivables which arise from all Finance Charges,
Cash Advance Fees and annual membership fees with respect to the Accounts and
Administrative Receivables which consist of administrative fees, late charges on
amounts charged for merchandise and services and premiums paid with respect to
credit life insurance and other types of insurance and all other fees billed to
the Obligors on the Accounts. Collections of Finance Charge Receivables include
a portion, determined pursuant to the Agreement, of the Interchange paid or
payable to Household Bank (SB), N.A. (the "Bank") through VISA USA, Inc. and
MasterCard International, Incorporated. All Recoveries with respect to
Receivables previously charged-off as uncollectible will be treated as
Collections of Finance Charge and Administrative Receivables. This Class B
Certificate is one of a series of Class B Certificates titled Household Affinity
Credit Card Master Trust I, Series 1997-1 Floating Rate Class B Credit Card
Participation Certificates (the "Class B Certificates"), each of which
represents a fractional undivided interest in certain assets of the Trust. The
Trust's assets are allocated in part to the Investor Certificateholders (the
"Certificateholders' Interest") with the remainder allocated to the Seller. The
aggregate interest represented by the Class B Certificates at any time in the
Principal Receivables in the Trust shall not exceed an amount equal to the Class
B Invested Amount at such time. The Class B Initial Invested Amount is
$__________. The Class B Invested Amount on any date will be an amount equal to
(a) $__________ minus (b) the amount of principal payments made to Class B
Certificateholders prior to such date minus (c) the aggregate amount of Class B
Investor Charge-Offs for all prior Distribution Dates, minus (d) the amount of
Subordinated Principal Collections allocated on all prior Distribution Dates
calculated pursuant to Section 4.15 of the Series Supplement (excluding any
Subordinated Principal Collections allocable to the Collateral Invested Amount),
minus (e) an amount equal to the amount by which the Class B Invested Amount has
been reduced on all prior Distribution Dates pursuant to subsection 4.12(a) of
the Series Supplement, plus (f) the sum of (A) the aggregate amount of any
Series Allocable Miscellaneous Payments allocated on all prior Distribution
Dates pursuant to subsection 4.12(b) of the Series Supplement and (B) the amount
of Excess Finance Charge and Administrative Collections allocated and available
on all prior Distribution Dates pursuant to subsection 4.13(e) of the Series
Supplement and any withdrawals from the Cash Collateral Account applied in
accordance with such subsection for the purpose of reimbursing amounts deducted
pursuant to the foregoing clauses (c), (d) and (e) of the Series Supplement and
minus (g) the amount of any reduction in the Class B Invested Amount pursuant to
Section 4.18 of the Series Supplement prior to such date. In addition to the
Class B Certificates, $___________ aggregate principal amount of Class A
Certificates entitled Household Affinity Credit Card Master
Trust I, Series 1997-1 Floating Rate Class A Credit Card Participation
Certificates (the "Class A Certificates") will be issued. Also, a Seller
Certificate has been issued to the Seller pursuant to the Agreement which will
represent the Seller's interest in the Trust.
Subject to the terms and conditions of the Agreement, the Seller may from
time to time direct the Trustee, on behalf of the Trust, to issue one or more
new Series of Investor Certificates, which will represent fractional undivided
interests in certain of the Trust Assets.
Interest will accrue on the Class B Certificates at the Class B Certificate
Rate and, except as otherwise provided in the Series Supplement, be distributed
monthly to Class B Certificateholders, commencing ______ __, 1997, and on the
15th day of each month thereafter, or if such day is not a business day, on the
next succeeding business day (each, a "Distribution Date") in an amount equal to
one-twelfth of the product of the Class B Certificate Rate and the Class B
Invested Amount. Interest for any Distribution Date will accrue from and
including the preceding Distribution Date except in the case of the first
Distribution Date on which will be payable accrued interest from and including
the Issuance Date to and excluding _________ __, 1997.
On each Distribution Date, the Paying Agent shall distribute to each Class
B Certificateholder of record on the last day of the preceding calendar month
(each a "Record Date") such Class B Certificateholder's pro rata share (based on
the aggregate fractional undivided interest represented by the Class B
Certificates held by such Investor Certificateholder) of such amounts as are
payable to the Class B Certificateholders pursuant to the Agreement and the
Series Supplement. The amount to be distributed on each payment date to the
Holder of this Class B Certificate will be equal to the product of the aggregate
fractional undivided interest represented by this Class B Certificate and the
aggregate of all payments to be made to Class B Certificateholders on such
Distribution Date. Distributions with respect to this Class B Certificate will
be made by the Paying Agent by check mailed to the address of the Class B
Certificateholder of record appearing in the Certificate Register without the
presentation or surrender of this Class B Certificate or the making of any
notation thereon (except for the final distribution in respect of this Class B
Certificate) except that with respect to Class B Certificates registered in the
name of Cede & Co., the nominee for The Depository Trust Company, distributions
will be made in the form of immediately available funds. Final payment of this
Class B Certificate will be made only upon presentation and surrender of this
Class B Certificate at the office or agency specified in the notice of final
distribution delivered by the Trustee to the Class B Certificateholders in
accordance with the Agreement.
On the Distribution Date occurring on or after the date on which the
Invested Amount is reduced to $__________ or less, the Seller will have the
option to purchase the Class A Certificateholders' Interest and the Class B
Certificateholders' Interest in the Trust. The purchase price (determined after
giving effect to any payment of principal and interest on such Distribution
Date) the Class A Certificates and the Class B Certificates will be equal to the
Class A Invested Amount and the Class B Invested Amount, plus accrued and unpaid
interest on the unpaid principal balance of the Class A Certificates and Class B
2
Certificates through the day immediately prior to the date of such purchase,
plus the amount of Additional Interest, if any, for such Distribution Date and
any Additional Interest previously due but not distributed to the Class A
Certificateholders and the Class B Certificateholders, as applicable, on a prior
Distribution Date.
This Class B Certificate does not represent an obligation of, or an
interest in, the Seller, the Servicer or any affiliate of any of them and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or any other
governmental agency or instrumentality. This Class B Certificate is limited in
right of payment to certain Collections representing the Receivables (and
certain other amounts) all as more specifically set forth hereinabove and in the
Agreement.
The Agreement and the Series Supplement may be amended by the Seller, the
Servicer and the Trustee, without Certificateholder consent. No such amendment,
however, may, in the reasonable belief of the Seller, adversely effect in any
material respect the interests of the Investor Certificateholders. The Trustee
may, but shall not be obligated to, enter into any such amendment which affects
the Trustee's rights, duties or immunities under the Agreement or otherwise.
The Agreement and the Series Supplement may be amended by the Seller, the
Servicer and the Trustee with the consent of the Holders of Investor
Certificates evidencing not less than 66-2/3% of the aggregate unpaid principal
amount of the Investor Certificates of all adversely affected Series for which
the Seller has not delivered an Officer's Certificate stating that there is no
Adverse Affect, for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of the Agreement or any Supplement
or of modifying in any manner the rights of Investor Certificateholders;
provided, however, that no such amendment shall (a) reduce in any manner the
amount of, or delay the timing of, distributions without the consent of each
affected Certificateholder; (b) (i) change the definition of or the manner of
calculating the interest of any Investor Certificateholder without the consent
of each affected Investor Certificateholder or (ii) reduce the aforesaid
percentage required to consent to any such amendment, in either case without the
consent of each Investor Certificateholder; or (c) adversely affect the rating
of the Class A Certificates or the Class B Certificates by the Rating Agency
without the consent of the Class A Certificateholders or Class B
Certificateholders evidencing not less than 66-2/3% of the aggregate unpaid
principal amount of the Class A Certificates or the Class B Certificates,
respectively. Any such amendment and any such consent by the holder of this
Class B Certificate shall be conclusive and binding on such Class B
Certificateholder and upon all future holders of this Class B Certificate and of
any Class B Certificate issued in exchange hereof or in lieu hereof whether or
not notation thereof is made upon this Class B Certificate. The Seller or the
Trustee shall establish a record date for determining the Investor
Certificateholders who may give such consent.
The Class B Certificates are issuable only in minimum denominations of
$1,000 and integral multiples of $l,000 ln excess thereof. The transfer of this
Class B Certificate shall be registered in the Certificate Register upon
surrender of this Class B Certificate for registration of transfer at any office
or agency maintained by the Transfer Agent and Registrar accompanied by a
written instrument of
3
transfer, in a form satisfactory to the Trustee or the Transfer Agent and
Registrar, duly executed by the Class B Certificateholder or such Class B
Certificateholder's attorney, and duly authorized in writing with such signature
guaranteed, and thereupon one or more new Class B Certificates of authorized
denominations and for the same aggregate fractional undivided interest will be
issued to the designated transferee or transferees.
The Class B Certificates may not be acquired by or for the account of any
employee benefit plan, trust or account, including an individual retirement
account, that is subject to the Employee Retirement Income Security Act of 1974,
as amended, or that is described in Section 4975(e)(1) of the Internal Revenue
Code of 1986, as amended, or an entity whose underlying assets include plan
assets by reason of a plan's investment in such entity (each a "Benefit Plan").
By accepting and holding this Class B Certificate, the holder hereof shall be
deemed to have represented and warranted that it is not a Benefit Plan. By
acquiring any interest in this Class B Certificate, the applicable
Certificateholder or holders shall be deemed to have represented and warranted
that it is or they are not Benefit Plans.
As provided in the Agreement and subject to the limitations therein set
forth, Class B Certificates are exchangeable for new Class B Certificates
evidencing like aggregate fractional undivided interests as requested by the
Class B Certificateholder surrendering such Class B Certificates. No service
charge may be imposed for any such exchange but the Servicer or Transfer Agent
and Registrar may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith.
The Seller, the Servicer, the Trustee, the Paying Agent and the Transfer
Agent and Registrar and any agent of any of them, may treat the person in whose
name this Class B Certificate is registered as the owner hereof for all
purposes, and neither the Servicer nor the Seller, the Trustee, the Paying
Agent, the Transfer Agent and Registrar, nor any agent of any of them, shall be
affected by notice to the contrary except in certain circumstances described in
the Agreement.
THIS CLASS B CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE LAWS OF THE STATE OF NEW YORK.
4
ASSIGNMENT
Social Security or other identifying number of assignee
____________________________________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto _______________________________________________________
____________________________________________________________
(name and address of assignee )
the within certificate and all rights thereunder, and hereby irrevocably
constitutes and appoints _______________________ attorney, to transfer said
certificate on the books kept for registration thereof, with full power of
substitution in the premises.
Dated:________________
(1) A Non U.S. Person as Note: The signature(s)to
defined in the Internal this Assignment must
Revenue Code of 1986, as correspond with the
amended must certify to the name(s) as written on
Trustee in writing as to the face of the within
its Non U.S. Person status certificate in every
and such further particular without
information as may be alteration or
required under the Code or enlargement or any
reasonably requested by the change whatsoever
Trustee
5
EXHIBIT B
---------
FORM OF MONTHLY SERVICER'S CERTIFICATE
(To be delivered pursuant to subsection 3.04(b)
of the Amended and Restated Pooling and Servicing
Agreement not later than the second Business
Day preceding each Distribution Date)
HOUSEHOLD FINANCE CORPORATION
HOUSEHOLD AFFINITY FUNDING CORPORATION
HOUSEHOLD AFFINITY CREDIT CARD MASTER TRUST I
Class A and Class B Certificates, Series 1997-1
___________________________________
The undersigned, a duly authorized representative of Household Finance
Corporation, as Servicer (the "Servicer"), pursuant to the Amended and Restated
Pooling and Servicing Agreement, dated as of August 1, 1993 (the "Pooling and
Servicing Agreement"), by and among Household Affinity Funding Corporation, as
Seller, the Servicer, and The Bank of New York, as Trustee, does hereby certify
with respect to the information set forth below as follows:
1. Capitalized terms used in this Certificate shall have the
respective meanings set forth in the Pooling and Servicing
Agreement.
2. Household Finance Corporation is, as of the date hereof, the
Servicer under the Pooling and Servicing Agreement.
3. The undersigned is a Servicing Officer.
4. This Certificate relates to the Distribution Date occurring
on _________________.
5. Trust Information.
(a) The aggregate amount of Collections processed for the Due
Period preceding such Distribution Date was equal to......... $_______
(b) The aggregate amount of such Collections with respect to
Principal Receivables for the Due Period preceding such
Distribution Date was equal to............................... $_______
(c) The aggregate amount of such Collections with respect to
Finance Charge and Administrative Receivables for the Due
Period preceding such Distribution Date was equal to......... $_______
(d) The Defaulted Amount for the preceding Due Period is......... $_______
(e) The total amount of Principal Receivables as of the last day
of the immediately preceding Due Period is................... $_______
(f) The Portfolio Yield for such Distribution Date............... ______%
(g) The total amount of Principal Receivables in the Trust at the
beginning of the preceding Due Period is equal to............ $_______
(h) The average amount of Principal Receivables in the Trust
during the preceding Due Period (the sum of the amounts in
clause (e) and the amount in clause (g) divided by 2) is
equal to..................................................... $_______
(i) The total amount of Finance Charge Receivables in the Trust
as of the last day of the immediately preceding Due Period is $_______
(j) The aggregate outstanding balance of the Accounts which were
delinquent by 36 days to 65 days as of the close of business
on the last day of the calendar month preceding such
Distribution Date was equal to............................... $_______
(k) The aggregate outstanding balance of the Accounts which were
delinquent by 66 days or more as of the close of business on
the last day of the calendar month preceding such
Distribution Date was equal to............................... $_______
(l) The aggregate amount of Trust Excess Principal Collections
for such Distribution Date is................................ $_______
(m) The aggregate amount of Principal Shortfalls for such
Distribution Date is......................................... $_______
6. Group Two Information
---------------------
(a) The Average Rate for Group Two (the weighted average
Certificate Rate reduced to take into account any payments
made pursuant to interest rate agreements) is equal to....... ______%
(b) Group Two Total Investor Collections is equal to............. $_______
(c) Group Two Investor Principal Collections is equal to......... $_______
(d) Group Two Investor Finance Charge and Administrative
Collections equal to......................................... $_______
(e) Group Two Investor Additional Amounts is equal to............ $_______
2
(f) Group Two Investor Default Amount is equal to................ $_______
(g) Group Two Investor Monthly Fees is equal to.................. $_______
(h) Group Two Investor Monthly Interest is equal to.............. $_______
7. Series 1997-1 Information
-------------------------
(a) The Series Adjusted Portfolio Yield for the Due Period
preceding such Distribution Date was equal to................ ______%
(b) The Series 1997-1 Allocation Percentage with respect to the
Due Period preceding such Distribution Date was equal to..... ______%
(c) The Floating Allocation Percentage for the Due Period
preceding such Distribution Date was equal to................ ______%
(d) The aggregate amount of Reallocated Finance Charge and
Administrative Collections for the Due Period preceding such
Distribution Date was equal to............................... $_______
(e) The Floating Allocation Percentage of Series Allocable
Finance Charge and Administrative Collections for the Due
Period preceding such Distribution Date is equal to.......... ______%
(f) Class A Invested Amount ..................................... $_______
(g) The Class A Invested Percentage with respect to the Due
Period preceding such Distribution Date was equal to......... ______%
(h) The Class A Invested Percentage of the amount set forth in
Item 7(d) above was equal to................................. ______%
(i) The amount of Class A Monthly Interest for such Distribution
Date is equal to............................................. $_______
(j) The amount of any Class A Monthly Interest previously due but
not distributed on a prior Distribution Date is equal to..... $_______
(k) The amount of Class A Additional Interest for such
Distribution Date is equal to................................ $_______
(l) The amount of any Class A Additional Interest previously due
but not distributed on a prior Distribution Date is equal to. $_______
(m) The Class A Investor Default Amount for such Distribution
Date is equal to............................................. $_______
(n) The Allocable Servicing Fee for such Distribution Date is
equal to..................................................... $_______
3
(o) The Class A Required Amount, if any, with respect to such
Distribution Date is equal to................................ $_______
(p) Class B Invested Amount...................................... $_______
(q) The Class B Invested Percentage for the Due Period preceding
such Distribution Date was equal to.......................... ______%
(r) The Class B Invested Percentage of the amount set forth in
Item 7(d) above is equal to.................................. ______%
(s) The amount of Class B Monthly Interest for such Distribution
Date is equal to............................................. $_______
(t) The amount of any Class B Monthly Interest previously due but
not distributed on a prior Distribution Date is equal to..... $_______
(u) The amount of Class B Additional Interest for such
Distribution Date is equal to................................ $_______
(v) The amount of any Class B Additional Interest previously
due but not distributed on a prior Distribution Date is
equal to..................................................... $_______
(w) Class B Investor Default Amount for such Distribution Date
is equal to.................................................. $_______
(x) The amount of Reallocated Finance Charge and Administrative
Collections to be distributed to the Collateral Interest
Holder with respect to such Distribution Date is equal to.... $_______
(y) The Series 1997-1 Principal Shortfall for such Distribution
Date is equal to............................................. $_______
(z) The Series 1997-1 Excess Principal Collections is equal to... $_______
(aa) The amount of Excess Finance Charge and Administrative
Collections with respect to such Distribution Date is
equal to..................................................... $_______
(bb) The amount of Excess Finance Charge and Administrative
Collections referred to in Item 7(aa) will be available to
be distributed on such Distribution Date to fund or reimburse
the following items:
(i) to fund the Class A Required Amount, if
any, with respect to such Distribution Date.................. $_______
(ii) to reimburse Class A Investor Charge-
Offs......................................................... $_______
4
(iii) to pay current or overdue Class B Monthly
Interest, Class B Additional Interest or the Cumulative
Excess Interest Amount....................................... $_______
(iv) to fund the Class B Investor Default Amount with
respect to such Distribution Date............................ $_______
(v) to reimburse certain previous reductions in the
Class B Invested Amount...................................... $_______
(vi) to pay any portion of the Allocable Servicing
Fee not paid pursuant to clause (i) above.................... $_______
(vii) to make any required deposit in the Collateral
Account...................................................... $_______
(cc) The amount of Subordinated Principal Collections with
respect to such Distribution Date is equal to................ $_______
(dd) The amount, if any, of Miscellaneous Payments with respect
to such Distribution Date is equal to........................ $_______
(ee) The Principal Allocation Percentage is equal to.............. ______%
(ff) The total amount to be distributed to Class A Certificate-
holders on such Distribution Date in payment of principal
is equal to.................................................. $_______
(gg) The total amount to be distributed to Class B Certificate-
holders on such Distribution Date in payment of principal
is equal to.................................................. $_______
(hh) The amount of Class A Investor Charge-Offs for such
Distribution Date is equal to................................ $_______
(ii) The total amount of reimbursements of Class A Investor
Charge-Offs for such Distribution Date is equal to........... $_______
(jj) The amount of Class B Investor Charge-Offs and other
reductions in the Class B Invested Amount for such
Distribution Date is equal to................................ $_______
(kk) The total amount of reimbursements of Class B Investor
Charge-Offs for such Distribution Date is equal to........... $_______
(ll) The Class A Invested Amount at the close of business on
such Distribution Date (after giving effect to all payments
and adjustments on such Distribution Date) will be equal to.. $_______
(mm) The Class B Invested Amount at the close of business on such
Distribution Date (after giving
5
effect to all payments and adjustments on such Distribution
Date) will be equal to....................................... $_______
(nn) The Available Collateral Amount as of the close of business
on the preceding Distribution Date (after giving effect to
any withdrawal from the Collateral Account) was equal to..... $_______
(oo) The Required Collateral Amount as of the close of business
on such Distribution Date, after giving effect to any
withdrawal from the Collateral Account and payments to
the Collateral Interest Holder on such Distribution Date,
will be equal to............................................. $_______
(pp) The ratio of the Required Collateral Amount to the Class B
Invested Amount as of the close of business on such
Distribution Date, after giving effect to any withdrawal
from the Collateral Account and payments to the Collateral
Interest Holder on such Distribution Date, will be equal to.. ______%
(qq) The Cumulative Excess Interest Amount as of the close of
business on such Distribution Date, after giving effect to
any payments of interest to Class B Certificateholders on
such Distribution Date, will be equal to..................... $_______
8. Total amount to be on deposit in the Collection Account
(after giving effect to allocations required to be made
pursuant to the terms of all other Series now outstanding)
prior to making the required distributions on such
Distribution Date is equal to................................ $_______
9. The total amount to be distributed from the Collection
Account to the Seller on such Distribution Date (after
taking into consideration the amounts which have been
netted with respect to all Series against deposits to
the Collection Account) is equal to.......................... $_______
10. Total amount to be distributed from the Collection Account
to the Servicer in respect of the unpaid Allocable
Servicing Fee for the preceding Due Period on such
Distribution Date (after taking into consideration the
amounts which have been netted with respect to this Series
against deposits to the Collection Account) is equal to...... $_______
11. The Class A Adjusted Invested Amount......................... $_______
12. The Class B Adjusted Invested Amount......................... $_______
13. The Controlled Accumulation Amount........................... $_______
14. The Controlled Deposit Amount................................ $_______
6
15. The Deficit Controlled Accumulation Amount................... $_______
16. The Principal Funding Account Balance........................ $_______
17. The Principal Funding Investment Shortfall................... $_______
18. The Required Reserve Account Amount.......................... $_______
19. The Reserve Account Balance.................................. $_______
20. As of the date hereof, to the best knowledge of the
undersigned, (a) the Servicer has performed in all material
respects all its obligations under the Pooling and Servicing
Agreement through the Due Period preceding such Distribution
Date or, if there has been a default in the performance of any
such obligation, set forth in detail the (i) nature of such
default, (ii) the action taken by the Seller and Servicer, if
any, to remedy such default and (iii) the current status of
each such default; if applicable, insert "None".
21. As of the date hereof, to the best knowledge of the
undersigned, no Amortization Event has been deemed to have
occurred on or prior to such Distribution Date.
22. As of the date hereof, to the best knowledge of the
undersigned, no Lien has been placed on any of the
Receivables other than pursuant to the Pooling and Servicing
Agreement (or, if there is a Lien, such Lien consists of
_______________).
23. The amount specified to be deposited into and withdrawn from
the Collection Account, as well as the amounts specified to
be paid to the Seller, the Servicer, the Interest Holder and
the Certificateholders are all in accordance with the
requirements of the Pooling and Servicing Agreement.
7
IN WITNESS WHEREOF, the undersigned has duly executed and delivered this
Certificate this ____ day of ______________, 199_.
HOUSEHOLD FINANCE CORPORATION
as Servicer,
By:
--------------------------
Name:
Title:
8