EXHIBIT 4.1
-------------------------------------------------------------------------------
HOUSEHOLD AFFINITY FUNDING CORPORATION,
Seller,
HOUSEHOLD FINANCE CORPORATION,
Servicer,
and
THE BANK OF NEW YORK,
Trustee
HOUSEHOLD AFFINITY CREDIT CARD MASTER TRUST I
AMENDED AND RESTATED
POOLING AND SERVICING AGREEMENT
Dated as of August 1, 1993
amending and restating in full the
Pooling and Servicing Agreement
Dated as of April 30, 1993
-------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
Section 1.01. Definitions..................................... 1
Section 1.02. Other Definitional Provisions................... 22
ARTICLE II
CONVEYANCE OF RECEIVABLES
Section 2.01. Conveyance of Receivables....................... 23
Section 2.02. Acceptance by Trustee........................... 25
Section 2.03. Representations and Warranties of the Seller
Relating to the Seller........................ 25
Section 2.04. Representations and Warranties of the Seller
Relating to the Agreement and Any Supplement
and the Receivables........................... 27
Section 2.05. Reassignment of Ineligible Receivables.......... 29
Section 2.06. Reassignment of Certificateholders' Interest
in Trust Portfolio............................ 30
Section 2.07. Covenants of the Seller......................... 31
Section 2.08. Covenants of The Seller with respect to the
Bank Purchase Agreement....................... 33
Section 2.09. Addition of Accounts............................ 34
Section 2.10. Removal of Accounts and Participation
Interests..................................... 38
Section 2.11. Account Allocations............................. 39
ARTICLE III
ADMINISTRATION AND SERVICING
OF RECEIVABLES
Section 3.01. Acceptance of Appointment and Other Matters
Relating to the Servicer...................... 40
Section 3.02. Servicing Compensation.......................... 42
Section 3.03. Representations, Warranties and Covenants of
the Servicer.................................. 42
Section 3.04. Reports and Records for the Trustee............. 45
Section 3.05. Annual Certificate of Servicer.................. 45
Section 3.06. Annual Servicing Report of Independent Public
Accountants; Copies of Reports Available...... 45
Section 3.07. Tax Treatment................................... 46
Section 3.08. Notices to Household Finance Corporation........ 46
Section 3.09. Adjustments..................................... 46
Section 3.10. Interchange; Recoveries......................... 47
-i-
ARTICLE IV
RIGHTS OF CERTIFICATEHOLDERS AND
ALLOCATION AND APPLICATION OF COLLECTIONS
Section 4.01. Rights of Certificateholders.................... 48
Section 4.02. Establishment of Collection Account............. 48
Section 4.03. Collections and Allocations..................... 50
Section 4.04. Unallocated Principal Collections............... 51
Section 4.05. Discount or Premium Receivables................. 51
Section 4.06. Allocation of Trust Assets to Series or
Groups........................................ 52
ARTICLE V
DISTRIBUTIONS AND REPORTS TO
CERTIFICATEHOLDERS
ARTICLE VI
THE CERTIFICATES
Section 6.01. The Certificates................................ 53
Section 6.02. Authentication of Certificates.................. 54
Section 6.03. New Issuances................................... 54
Section 6.04. Registration of Transfer and Exchange of
Certificates.................................. 55
Section 6.05. Mutilated, Destroyed, Lost or Stolen
Certificates.................................. 57
Section 6.06. Persons Deemed Owners........................... 57
Section 6.07. Appointment of Paying Agent..................... 58
Section 6.08. Access to List of Registered
Certificateholders' Names and Addresses....... 59
Section 6.09. Authenticating Agent............................ 59
Section 6.10. Book-Entry Certificates......................... 60
Section 6.11. Notices to Clearing Agency...................... 61
Section 6.12. Definitive Certificates......................... 62
Section 6.13. Uncertificated Classes.......................... 61
ARTICLE VII
OTHER MATTERS RELATING TO THE SELLER
Section 7.01. Liability of the Seller......................... 62
Section 7.02. Merger or Consolidation of, or Assumption of
the Obligations of, the Seller................ 62
Section 7.03. Limitations on Liability of the Seller.......... 63
Section 7.04. Seller Indemnification of the Trust and
the Trustee..................................... 63
ARTICLE VIII
OTHER MATTERS RELATING TO THE SERVICER
Section 8.01. Liability of the Servicer....................... 64
-ii-
Section 8.02. Merger or Consolidation of, or Assumption of
the Obligations of, the Servicer............. 64
Section 8.03. Limitation on Liability of the Servicer and
Others....................................... 65
Section 8.04. Servicer Indemnification of the Trust and the
Trustee...................................... 65
Section 8.05. Resignation of the Servicer.................... 65
Section 8.06. Access to Certain Documentation and
Information Regarding the Receivables........ 66
Section 8.07. Delegation of Duties........................... 66
Section 8.08. Examination of Records......................... 66
ARTICLE IX
AMORTIZATION EVENTS
Section 9.01. Amortization Events............................ 67
Section 9.02. Additional Rights upon the Occurrence of
Certain Events............................... 68
ARTICLE X
SERVICER DEFAULTS
Section 10.01. Servicer Defaults............................. 69
Section 10.02. Trustee To Act; Appointment of Successor...... 71
Section 10.03. Notification to Certificateholders............ 73
ARTICLE XI
THE TRUSTEE
Section 11.01. Duties of Trustee............................. 73
Section 11.02. Certain Matters Affecting the Trustee......... 75
Section 11.03. Trustee Not Liable for Recitals in
Certificates................................ 77
Section 11.04. Trustee May Own Certificates.................. 77
Section 11.05. The Servicer To Pay Trustee's Fees and
Expenses.................................... 77
Section 11.06. Eligibility Requirements for Trustee.......... 78
Section 11.07. Resignation or Removal of Trustee............. 78
Section 11.08. Successor Trustee............................. 79
Section 11.09. Merger or Consolidation of Trustee............ 79
Section 11.10. Appointment of Co-Trustee or Separate
Trustee..................................... 80
Section 11.11. Tax Returns................................... 81
Section 11.12. Trustee May Enforce Claims Without
Possession of Certificates.................. 81
Section 11.13. Suits for Enforcement......................... 81
Section 11.14. Rights of Certificateholders To Direct
Trustee..................................... 82
Section 11.15. Representations and Warranties of Trustee..... 82
Section 11.16. Maintenance of Office or Agency............... 83
-iii-
ARTICLE XII
TERMINATION
Section 12.01. Termination of Trust........................... 83
Section 12.02. Final Distribution............................. 83
Section 12.03. Seller's Termination Rights.................... 85
ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.01. Amendment; Waiver of Past Defaults............. 85
Section 13.02. Protection of Right, Title and Interest to
Trust........................................ 87
Section 13.03. Limitation on Rights of Certificateholders..... 88
Section 13.04. Governing Law.................................. 89
Section 13.05. Notices; Payments.............................. 89
Section 13.06. Severability of Provisions..................... 90
Section 13.07. Certificates Nonassessable and Fully Paid...... 91
Section 13.08. Further Assurances............................. 91
Section 13.09. Nonpetition Covenant........................... 91
Section 13.10. No Waiver; Cumulative Remedies................. 91
Section 13.11. Counterparts................................... 91
Section 13.12. Third-Party Beneficiaries...................... 92
Section 13.13. Actions by Certificateholders.................. 92
Section 13.14 Limitation on Voting of Preferred Stock........ 92
Section 13.15. Merger and Integration......................... 92
Section 13.16. Headings....................................... 92
Section 13.17. Construction of Agreement...................... 92
EXHIBITS
Exhibit A Form of HAFC Seller Certificate
Exhibit B Form of Assignment of Receivables in
Additional Accounts
Exhibit C Form of Reassignment of Receivables in Removed
Accounts
Exhibit D Form of Annual Servicer's Certificate
Exhibit E-1 Form of Opinion of Counsel with respect to
Amendments
Exhibit E-2 Form of Opinion of Counsel with respect to
Accounts
Exhibit E-3 Form of Annual Opinion of Counsel
SCHEDULES
Schedule 1 List of Accounts [Deemed Incorporated]
-iv-
AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT dated as of
August 1, 1993, among HOUSEHOLD AFFINITY FUNDING CORPORATION, a Delaware
corporation, as Seller; HOUSEHOLD FINANCE CORPORATION, a Delaware corporation,
as Servicer; and THE BANK OF NEW YORK, a New York banking corporation, as
Trustee. This Agreement amends and restates in full the Pooling and Servicing
Agreement, dated as of April 30, 1993, among the parties listed in the preceding
sentence.
In consideration of the mutual agreements herein contained, each party
agrees as follows for the benefit of the other parties, the Certificateholders
and any Series Enhancer (as defined below) to the extent provided herein and in
any Supplement:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. Whenever used in this Agreement, 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.
"Account" shall mean (a) each Initial Account, (b) each Additional
Account, (c) each Related Account, (d) any account originated as a replacement
of an Account in connection with the upgrade of such Account to premium status
(provided that such replacement account can be traced or identified by reference
to, or by way of, the applicable computer file or microfiche list previously
filed pursuant hereto), (e) each Transferred Account, (f) each surviving account
resulting from the combination, in accordance with the Credit Card Guidelines,
of two or more of the Accounts but shall exclude (g) any Account all the
Receivables in which are either: (i) after the Removal Date, removed by the
Seller pursuant to Section 2.10, (ii) reassigned to the Seller pursuant to
Section 2.05 or (iii) assigned and transferred to the Servicer pursuant to
Section 3.03.
"Act" shall mean the Securities Act of 1933, as amended.
"Addition Date" shall mean (a) with respect to Aggregate Addition
Accounts, the date from and after which such Aggregate Addition Accounts are to
be included as Accounts pursuant to Section 2.09(a) or (b), (b) with respect to
Participation Interests, the date from and after which such Participation
Interests are to be included as assets of the Trust pursuant to Section 2.09(a)
or (b), and (c) with respect to New
Accounts, the first Distribution Date following the calendar month in which such
New Accounts are originated.
"Additional Account" shall mean each New Account and each Aggregate
Addition Account.
"Additional Cut-Off Date" shall mean (a) with respect to Aggregate
Addition Accounts or Participation Interests, the date specified as such in the
notice delivered with respect thereto pursuant to Section 2.09(c) and (b) with
respect to New Accounts, the later of the dates on which such New Accounts are
originated or designated pursuant to Section 2.09(d).
"Additional Seller" shall have the meaning specified in Section
2.09(g).
"Administrative Receivables" shall mean all amounts billed to the
Obligors on any Account in respect of administrative fees, late charges on
amounts charged for merchandise and services, credit insurance premiums and all
fees billed to the Obligors on the Accounts not otherwise allocated.
"Adverse Effect" shall mean, with respect to any action, that such
action will (a) result in the occurrence of an Amortization Event or (b)
materially adversely affect the amount or timing of distributions to be made to
the Investor Certificateholders of any Series or Class pursuant to this
Agreement and the related Supplement.
"Affiliate" shall mean, with respect to any specified Person, any
other Person controlling or controlled by or under common control with such
specified Person. For the purposes of this definition, "control" shall mean the
power to direct the management and policies of a Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Aggregate Addition" shall mean the designation of additional Eligible
Accounts, other than New Accounts, to be included as Accounts or of
Participation Interests to be included as Trust Assets pursuant to Section
2.09(a) or (b).
"Aggregate Addition Account" shall mean each revolving credit card
account established pursuant to a Credit Card Agreement, which account is
designated pursuant to Section 2.09(a) or (b) to be included as an Account and
is identified in the computer file or microfiche list delivered to the Trustee
by the Seller pursuant to Sections 2.01 and 2.09(h).
"Agreement" shall mean this Amended and Restated Pooling and Servicing
Agreement and all amendments hereof and
-2-
supplements hereto, including, with respect to any Series or Class, the related
Supplement.
"Amortization Event" shall have the meaning specified in Section 9.01
and, with respect to any Series, shall also mean any Amortization Event
specified in the related Supplement.
"Applicants" shall have the meaning specified in Section 6.08.
"Appointment Date" shall have the meaning specified in Section
9.02(a).
"Assignment" shall have the meaning specified in Section 2.09(h).
"Authorized Newspaper" shall mean any newspaper or newspapers of
general circulation in the Borough of Manhattan, The City of New York, printed
in the English language (and, with respect to any Series or Class, any other
newspaper provided for in the applicable Supplement) and customarily published
on each business day at such place, whether or not published on Saturdays,
Sundays or holidays.
"Average Rate" shall mean, with respect to any Group, the percentage
equivalent of a decimal equal to the sum of the amounts for each outstanding
Series (or each Class within any Series consisting of more than one Class)
within such Group obtained by multiplying (a) the Certificate Rate (reduced to
take into account the payments made pursuant to any interest rate agreements)
for such Series or Class, by (b) a fraction, the numerator of which is the
aggregate unpaid principal amount of the Investor Certificates of such Series or
Class and the denominator of which is the aggregate unpaid principal amount of
all Investor Certificates within such Group.
"Bank" shall mean Household Bank, f.s.b., a federal savings bank and
its successors or assigns under the Bank Purchase Agreement and/or any
transferee of the Accounts from such bank or any other originator of Accounts
which enters into a receivables purchase agreement with the Seller.
"Bank Purchase Agreement" shall mean the receivables purchase
agreement by and between the Bank and the Seller and dated as of April 30, 1993
and, in the event of a transfer of Accounts referred to in the definition of
"Bank" above, shall include a receivables purchase agreement between the
transferee of the Accounts and the Seller, substantially in the form of such
receivables purchase agreement dated as of April 30, 1993.
"Bearer Certificates" shall have the meaning specified in Section
6.01.
-3-
"Book-Entry Certificates" shall mean beneficial interests in the
Investor Certificates, ownership and transfers of which shall be made through
book entries by a Clearing Agency as described in Section 6.10.
"Business Day" shall mean any day other than (a) a Saturday or Sunday
or (b) any other day on which national banking associations or state banking
institutions in New York, New York, Prospect Heights, Illinois, Wood Dale,
Illinois, Newport Beach, California, Salinas, California, or the State of Nevada
or any other State in which the principal executive offices of the Bank or any
Additional Seller are located, are authorized or obligated by law, executive
order or governmental decree to be closed or (c) for purposes of any particular
Series, any other day specified in the applicable Series Supplement.
"Cash Advance Fees" shall mean cash advance transaction fees and cash
advance late fees, if any, as specified in the Credit Card Agreement applicable
to each Account.
"Certificate" shall mean any one of the Investor Certificates or the
Seller Certificates.
"Certificate Owner" shall mean, with respect to a Book-Entry
Certificate, the Person who is the owner of such Book-Entry Certificate, as
reflected on the books of the Clearing Agency, or on the books of a Person
maintaining an account with such Clearing Agency (directly as a Clearing Agency
Participant or as an indirect participant, in accordance with the rules of such
Clearing Agency).
"Certificate Rate" shall mean, with respect to any Series or Class,
the certificate rate specified therefor in the related Supplement.
"Certificate Register" shall mean the register maintained pursuant to
Section 6.04, providing for the registration of the Registered Certificates and
transfers and exchanges thereof.
"Certificateholder" or "Holder" shall mean an Investor
Certificateholder or a Person in whose name the Seller Certificates are
registered.
"Certificateholders' Interest" shall have the meaning specified in
Section 4.01. For purposes of determining whether Holders of Investor
Certificates evidencing a specified percentage of the Certificateholders'
Interest have approved, consented or otherwise agreed to any action hereunder,
such determination shall be made based on the percentage of the Invested Amount
represented by such Investor Certificates.
-4-
"Class" shall mean, with respect to any Series, any one of the classes
of Investor Certificates of that Series.
"Clearing Agency" shall mean an organization registered as a "clearing
agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as
amended, and serving as clearing agency for a Series or Class of Book-Entry
Certificates.
"Clearing Agency Participant" shall mean a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" shall mean, with respect to any Series, the closing
date specified in the related Supplement.
"Collection Account" shall have the meaning specified in Section 4.02.
"Collections" shall mean all payments by or on behalf of Obligors
(including Insurance Proceeds) received in respect of the Receivables, in the
form of cash, checks, wire transfers, electronic transfers, ATM transfers or any
other form of payment in accordance with a Credit Card Agreement in effect from
time to time. As specified in any Participation Interest Supplement or Series
Supplement, Collections shall include amounts received with respect to
Participation Interests. All Recoveries with respect to Receivables previously
charged-off as uncollectible will be treated as Collections of Finance Charge
and Administrative Receivables. Collections of Finance Charge Receivables with
respect to any Due Period shall include a portion, determined pursuant to
subsection 2.08(d), of the Interchange paid or payable to the Bank through
VISA/1/ and MasterCard/*/ with respect to such Due Period.
"Corporate Trust Office" shall have the meaning specified in Section
11.16.
"Coupon" shall have the meaning specified in Section 6.01.
"Credit Card Agreement" shall mean, with respect to a revolving credit
card account, the agreements between the Bank or any Additional Seller, as the
case may be, and the Obligor governing the terms and conditions of such account,
as such agreements may be amended, modified or otherwise changed from
----------
/1/ "MasterCard" and "VISA" are registered trademarks of MasterCard
International Incorporated and of VISA U.S.A., Inc., respectively.
-5-
time to time and as distributed (including any amendments and revisions thereto)
to holders of such account.
"Credit Card Guidelines" shall mean the policies and procedures of the
Bank or any Additional Seller, as the case may be, as such policies and
procedures may be amended from time to time, (a) relating to the operation of
its credit card business, which generally are applicable to its entire portfolio
of revolving credit card accounts and are consistent with prudent practice,
including the policies and procedures for determining the creditworthiness of
credit card customers and the extension of credit to credit card customers, and
(b) relating to the maintenance of credit card accounts and collection of credit
card receivables.
"Date of Processing" shall mean, with respect to any transaction, the
date on which such transaction is first recorded on the Servicer's computer file
of revolving credit card accounts (without regard to the effective date of such
recordation).
"Defaulted Amount" shall mean, with respect to any Due Period, an
amount (which shall not be less than zero) equal to (a) the amount of Principal
Receivables which became Defaulted Receivables in such Due Period, minus (b) the
sum of (i) the amount of any Defaulted Receivables of which the Seller or the
Servicer became obligated to accept reassignment or assignment in accordance
with the terms of this Agreement during such Due Period and (ii) the excess, if
any, for the immediately preceding Due Period of the sum computed pursuant to
this clause (b) for such Due Period over the amount of Principal Receivables
which became Defaulted Receivables in such Due Period; provided, however, that,
if an Insolvency Event occurs with respect to the Seller, the amount of such
Defaulted Receivables which are subject to reassignment to the Seller in
accordance with the terms of this Agreement shall not be added to the sum so
subtracted and, if any of the events described in Section 10.01(d) occur with
respect to the Servicer, the amount of such Defaulted Receivables which are
subject to reassignment or assignment to the Servicer in accordance with the
terms of this Agreement shall not be added to the sum so subtracted.
"Defaulted Receivables" shall mean, with respect to any Due Period,
all Principal Receivables which are charged off as uncollectible in such Due
Period. A Principal Receivable shall become a Defaulted Receivable on the day
on which such Principal Receivable is recorded as charged-off on the Servicer's
computer file of revolving credit card accounts in accordance with the Credit
Card Guidelines.
"Definitive Certificates" shall have the meaning specified in Section
6.10.
-6-
"Deposit Date" shall mean each day on which the Servicer deposits
Collections in the Collection Account.
"Depository Agreement" shall mean, with respect to any Series or Class
of Book-Entry Certificates, the agreement among the Seller, the Trustee and the
Clearing Agency substantially in the form attached to the applicable Supplement.
"Determination Date" shall mean the earlier of the third Business Day
and the fifth calendar day (or if the fifth calendar day is not a Business Day,
then the preceding Business Day) preceding the fifteenth day of each calendar
month.
"Distribution Date" shall mean, with respect to any Series, the date
specified in the applicable Supplement.
"Document Delivery Date" shall have the meaning specified in Section
2.09(h).
"Due Period" shall mean, with respect to each Distribution Date, the
period beginning at the close of business on the last Business Day of the second
month preceding such Distribution Date and ending at the close of business on
the last Business Day of the month immediately preceding such Distribution Date.
"Duff & ▇▇▇▇▇▇" shall mean Duff & ▇▇▇▇▇▇ Credit Rating Co. or its
successor.
"Early Amortization Period" shall mean, with respect to any Series,
the period beginning (x) on the first day of the Due Period in which an
Amortization Event is deemed to have occurred pursuant to Section 9.01 or the
applicable Supplement or (y) if the Servicer is required to make daily deposits
into the Collection Account pursuant to this Agreement, the day on which the
Amortization Event is deemed to have occurred pursuant to Section 9.01 or the
applicable Supplement and in each case ending upon the earlier to occur of (i)
the payment in full to the Investor Certificateholders of such Series of the
Invested Amount with respect to such Series and (ii) the earlier of the date the
Trust terminates pursuant to Section 12.01 or the Termination Date with respect
to such Series.
"Eligible Account" shall mean a revolving credit card account owned by
the Bank, in the case of the Initial Accounts, or the Bank or any Additional
Seller, in the case of Additional Accounts which, as of the Initial Cut-Off Date
with respect to an Initial Account or as of the Additional Cut-Off Date with
respect to an Additional Account meets the requirements of either clauses (i) or
(ii) below: (i) (a) is in existence and maintained by the Bank; (b) is payable
in United States dollars; (c) has a cardholder who has provided, as his most
recent billing address,
-7-
an address located in the United States or its territories or possessions; (d)
has a cardholder who has not been identified by the Bank in its computer files
as being involved in a voluntary or involuntary bankruptcy proceeding; (e) has
not been identified as an account with respect to which the related card has
been lost or stolen; (f) has not been sold or pledged to any other party except
for any transferee referred to in the definition of the Bank; (g) does not have
receivables which have been sold or pledged by the Bank to any other party; and
(h) with respect to the Initial Accounts, is an account in existence and
maintained by the Bank as of the Initial Cut-Off Date, or (ii) with respect to
Additional Accounts, the addition of such Accounts shall have satisfied the
Rating Agency Condition.
"Eligible Deposit Account" shall mean either (a) a segregated account
with an Eligible Institution or (b) a segregated trust account with the
corporate trust department of a depository institution organized under the laws
of the United States or any one of the states thereof, including the District of
Columbia (or any domestic branch of a foreign bank), and acting as a trustee for
funds deposited in such account, so long as any of the unsecured, unguaranteed
senior debt securities of such depository institution shall have a credit rating
from each Rating Agency in one of its credit rating categories which signifies
investment grade.
"Eligible Institution" shall mean the Trustee or any other depository
institution organized under the laws of the United States or any one of the
states thereof, including the District of Columbia (or any domestic branch of a
foreign bank), which other depository at all times (a) is a member of the FDIC
and (b) has (i) a long-term unsecured debt rating acceptable to the Rating
Agency or (ii) a certificate of deposit rating acceptable to the Rating Agency.
Notwithstanding the previous sentence any institution the appointment of which
satisfies the Rating Agency Condition shall be considered an Eligible
Institution. If so qualified, the Servicer may be considered an Eligible
Institution for the purposes of this definition.
"Eligible Investments" shall mean negotiable instruments or securities
represented by instruments in bearer or registered form, or, in the case of
deposits described below, deposit accounts held in the name of the Trustee in
trust for the benefit of the Certificateholders, subject to the exclusive
custody and control of the Trustee and for which the Trustee has sole signature
authority, which evidence:
(a) direct obligations of, or obligations fully guaranteed as to
timely payment by, the United States of America;
-8-
(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) investments in money market funds having, at the time of the
Trust's investment therein, a rating satisfactory to the Rating Agency;
(e) demand deposits, time deposits and certificates of deposit which
are fully insured by the FDIC having, at the time of the Trust's investment
therein, a rating satisfactory to the Rating Agency;
(f) bankers' acceptances (having original maturities of no more than
365 days) issued by any depository institution or trust company referred to
in (b) above;
(g) 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
(h) any other investment of a type or rating that satisfies the Rating
Agency Condition.
"Eligible Receivable" shall mean each Receivable:
(a) which has arisen in an Eligible Account;
(b) which was created in compliance in all material respects with all
Requirements of Law applicable to the Bank (or the institution which owned
such Receivable at the time of its creation) and pursuant to a Credit Card
Agreement
-9-
which complies in all material respects with all Requirements of Law
applicable to the Bank;
(c) with respect to which all material consents, licenses, approvals
or authorizations of, or registrations or declarations with, any
Governmental Authority required to be obtained, effected or given in
connection with the creation of such Receivable or the execution, delivery
and performance by the Bank or any Additional Seller, as the case may be,
of the Credit Card Agreement pursuant to which such Receivable was created,
have been duly obtained, effected or given and are in full force and
effect;
(d) as to which at the time of the transfer of such Receivable to the
Trust, the Seller or the Trust will have good and marketable title thereto
free and clear of all Liens arising prior to the transfer or arising at any
time;
(e) which has been the subject of either a valid transfer and
assignment from the Seller to the Trust of all the Seller's right, title
and interest therein (including any proceeds thereof), or the grant of a
first priority perfected security interest therein (and in the proceeds
thereof), effective until the termination of the Trust;
(f) which will at all times be the legal, valid and binding payment
obligation of the Obligor thereon enforceable against such Obligor in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws, now or hereafter in effect, affecting the enforcement of
creditors' rights in general and except as such enforceability may be
limited by general principles of equity (whether considered in a suit at
law or in equity);
(g) which, at the time of transfer to the Trust, has not been waived
or modified except as permitted in accordance with the Credit Card
Guidelines and which waiver or modification is reflected in the Servicer's
computer file of revolving credit card accounts;
(h) which, at the time of transfer to the Trust, is not subject to any
right of rescission, setoff, counterclaim or any other defense (including
defenses arising out of violations of usury laws) of the Obligor, other
than defenses arising out of applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement
of creditors' rights in general;
-10-
(i) as to which, at the time of transfer to the Trust, the Seller and
the Bank have satisfied all their obligations required to be satisfied by
such time;
(j) as to which, at the time of transfer to the Trust, neither the
Seller nor the Bank has taken any action which would impair, or omitted to
take any action the omission of which would impair, the rights of the Trust
or the Certificateholders therein; and
(k) which constitutes either an "account" or a "general intangible"
under and as defined in Article 9 of the UCC as then in effect in the State
of California or any other state where the filing of a financing statement
is required to perfect the Trust's interest in the Receivables and the
proceeds thereof.
"Eligible Servicer" shall mean the Trustee or an entity which, at the
time of its appointment as Servicer, (a) is servicing a portfolio of revolving
credit card accounts, (b) is legally qualified and has the capacity to service
the Accounts, (c) in the sole determination of the Trustee, which determination
shall be conclusive and binding, has demonstrated the ability to service
professionally and competently a portfolio of similar accounts in accordance
with high standards of skill and care, (d) is qualified to use the software that
is then being used to service the Accounts or obtains the right to use or has
its own software which is adequate to perform its duties under this Agreement
and (e) has a net worth of at least $50,000,000 as of the end of its most recent
fiscal quarter.
"Enhancement Agreement" shall mean any agreement, instrument or
document governing the terms of any Series Enhancement or pursuant to which any
Series Enhancement is issued or outstanding.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"FDIC" shall mean the Federal Deposit Insurance Corporation or any
successor.
"Finance Charge and Administrative Receivables" shall mean the Finance
Charge Receivables together with the Administrative Receivables.
"Finance Charge Receivables" shall mean all amounts billed to the
Obligors on any Account in respect of
(a) all finance charges, (b) Cash Advance Fees, (c) annual membership fees with
respect to the Accounts and (d) any other fees with respect to the Accounts
designated by the Seller by notice to the Trustee at any time and from time to
time to be
-11-
included as Finance Charge Receivables. Finance Charge Receivables shall also
include (a) the interest portion of Participation Interests as shall be
determined pursuant to the applicable Participation Interest Supplement or
Series Supplement, (b) any amounts designated to be Finance Charge Receivables
pursuant to Section 4.05, (c) all Recoveries with respect to Finance Charge
Receivables previously charged off as uncollectible, and (d) with respect to any
Due Period, a portion, determined pursuant to Section 2.08(d), of the
Interchange paid or payable to the Bank or any Additional Seller with respect to
such Due Period.
"FIRREA" shall mean the Financial Institutions Reform, Recovery and
Enforcement Act of 1989, as amended.
"Fitch" shall mean Fitch Investors Service, Inc. or its successors.
"Governmental Authority" shall mean the United States of America, any
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Group" shall mean, with respect to any Series, the group of Series,
if any, in which the related Supplement specifies such Series is to be included.
"HAFC Seller Certificate" shall mean the certificate executed by the
Household Affinity Funding Corporation and authenticated by or on behalf of the
Trustee, substantially in the form of Exhibit A.
"Household Finance Corporation" shall mean Household Finance
Corporation, a corporation incorporated under the laws of the State of Delaware.
"Household International, Inc." shall mean Household International,
Inc., a corporation incorporated under the laws of the State of Delaware.
"Ineligible Receivables" shall have the meaning specified in Section
2.05(a).
"Initial Account" shall mean each "MasterCard" and "VISA" account
established pursuant to a Credit Card Agreement between the Bank and any Person,
which account is identified in the computer file or microfiche list delivered to
the Trustee by the Seller pursuant to Section 2.01 on the Closing Date of the
initial Series issued hereunder.
"Initial Cut-Off Date" shall mean April 1, 1993.
-12-
"Insolvency Event" shall have the meaning specified in Section
9.01(a).
"Insolvency Proceeds" shall have the meaning specified in Section
9.02(b).
"Insurance Proceeds" shall mean any amounts received pursuant to any
credit life insurance policies, credit disability or unemployment insurance
policies covering any Obligor with respect to Receivables under such Obligor's
Account.
"Intended Characterization" shall have the meaning specified in
Section 3.07.
"Interchange" shall mean interchange fees payable to the Bank or any
Additional Seller, in its capacity as credit card issuer, through VISA,
MasterCard or any other similar entity or organization with respect to any type
of revolving credit card accounts included as Accounts (except as otherwise
provided in the initial Assignment with respect to any such type of Accounts),
in connection with cardholder charges for goods and services.
"Internal Revenue Code" shall mean the Internal Revenue Code of 1986,
as amended.
"Invested Amount" shall mean, with respect to any Series and for any
date, an amount equal to the invested amount specified in the related
Supplement.
"Investment Company Act" shall mean the Investment Company Act of
1940, as amended.
"Investor Certificateholder" shall mean the Person in whose name a
Registered Certificate is registered in the Certificate Register or the bearer
of any Bearer Certificate or Coupon.
"Investor Certificates" shall mean any certificated or uncertificated
interest in the Trust designated as, or deemed to be, an "Investor Certificate"
in the related Supplement.
"Lien" shall mean any mortgage, deed of trust, pledge, hypothecation,
assignment, deposit arrangement, equity interest, encumbrance, lien (statutory
or other), preference, participation interest, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever,
including, without limitation, any conditional sale or other title retention
agreement, any financing lease having substantially the same economic effect as
any of the foregoing and the filing of any financing statement under the UCC or
comparable law of any jurisdiction to evidence any of the foregoing; provided,
however,
-13-
that any assignment permitted by Sections 6.03(b) or 7.02 and the Lien created
by this Agreement shall not be deemed to constitute a Lien.
"MasterCard" shall mean MasterCard International Incorporated.
"Miscellaneous Payments" shall mean, with respect to any Due Period,
Unallocated Principal Collections on such Distribution Date available to be
treated as Miscellaneous Payments pursuant to Section 4.04.
"Moody's" shall mean ▇▇▇▇▇'▇ Investors Service, Inc., or its
successor.
"New Account" shall mean each revolving credit card account
established pursuant to a Credit Card Agreement, which account is designated
pursuant to Section 2.09(d) to be included as an Account and is identified in
the computer file or microfiche list delivered to the Trustee by the Seller
pursuant to Sections 2.01 and 2.09(h).
"Obligor" shall mean, with respect to any Account, the Person or
Persons obligated to make payments with respect to such Account, including any
guarantor thereof, but excluding any merchant.
"Officer's Certificate" shall mean, unless otherwise specified in this
Agreement, a certificate delivered to the Trustee signed by the President, any
Vice President or the Treasurer of a Seller or the Servicer, as the case may be,
or by the President, any Vice President or the financial controller (or an
officer holding an office with equivalent or more senior responsibilities) of a
Successor Servicer.
"Opinion of Counsel" shall mean a written opinion of counsel, who may
be counsel for, or an employee of, the Person providing the opinion and who
shall be reasonably acceptable to the Trustee.
"Participation Interest Supplement" shall mean a Supplement entered
into pursuant to Section 2.09(a) in connection with the conveyance of
Participation Interests to the Trust.
"Participation Interests" shall have the meaning specified in Section
2.09(a).
"Paying Agent" shall mean any paying agent appointed pursuant to
Section 6.07.
-14-
"Periodic Rate Finance Charges" shall have the meaning specified in
the Credit Card Agreement applicable to each Account for finance charges (due to
periodic rate) or any similar term.
"Person" shall mean any legal person, including any individual,
corporation, partnership, joint venture, association, joint-stock company,
trust, unincorporated organization, governmental entity or other entity of
similar nature.
"Portfolio Yield" shall mean with respect to the Trust as a whole and,
with respect to any Due Period, the annualized percentage equivalent of a
fraction (a) the numerator of which is the aggregate of the sum of the Series
Allocable Finance Charge and Administrative Collections for all Series during
the immediately preceding Due Period calculated on a cash basis, after
subtracting therefrom the Series Allocable Defaulted Amounts for all Series with
respect to such Due Period and (b) the denominator of which is the total amount
of Principal Receivables as of the last day of the immediately preceding Due
Period.
"Preferred Stock" shall mean the preferred shares of the Seller,
designated as such, with a par value of $1.00 per share and a liquidation value
of $1.00 per share.
"Principal Receivables" shall mean amounts (other than such amounts,
including the amounts of any principal receivable discounts determined in
accordance with Section 4.05, which represent Finance Charge and Administrative
Receivables) billed to the Obligor on any Account in respect of (a) purchases of
goods or services, and (b) cash advances. Principal Receivables shall also
include (a) the principal portion of Participation Interests as shall be
determined pursuant to the applicable Participation Interest Supplement or
Series Supplement and (b) any amounts designated to be Principal Receivables
pursuant to Section 4.05. Any Principal Receivables which the Seller is unable
to transfer as provided in Section 2.11 shall not be included in calculating the
amount of Principal Receivables.
"Principal Shortfalls" shall have the meaning specified in Section
4.04.
"Principal Terms" shall mean, with respect to any Series, (i) the name
or designation; (ii) the initial principal amount (or method for calculating
such amount) (iii) the Certificate Rate (or method for the determination
thereof); (iv) the payment date or dates and the date or dates from which
interest shall accrue; (v) the method for allocating collections to Investor
Certificateholders; (vi) the designation of any Series Accounts and the terms
governing the operation of any such Series Accounts; (vii) the Servicing Fee;
(viii) the issuer and terms of any form of Series Enhancements with respect
thereto;
-15-
(ix) the terms on which the Investor Certificates of such Series may be
exchanged for Investor Certificates of another Series, repurchased by the Seller
or remarketed to other investors; (x) the Termination Date; (xi) the number of
Classes of Investor Certificates of such Series and, if more than one Class, the
rights and priorities of each such Class; (xii) the extent to which the Investor
Certificates of such Series will be issuable in temporary or permanent global
form (and, in such case, the depositary for such global certificate or
certificates, the terms and conditions, if any, upon which such global
certificate may be exchanged, in whole or in part, for Definitive Certificates,
and the manner in which any interest payable on a temporary or global
certificate will be paid); (xiii) whether the Investor Certificates of such
Series may be issued in bearer form and any limitations imposed thereon; (xiv)
the priority of such Series with respect to any other Series; (xv) whether such
Series will be part of a Group; (xvi) the Distribution Date and (xvii) any other
terms of such Series.
"Rating Agency" shall mean, with respect to any outstanding Series or
Class, each rating agency, as specified in the applicable Supplement, selected
by the Seller to rate the Investor Certificates of such Series or Class.
"Rating Agency Condition" shall mean, with respect to any action, that
each Rating Agency shall have notified the Seller, the Servicer and the Trustee
in writing that such action will not result in a reduction or withdrawal of the
then existing rating of any outstanding Series or Class with respect to which it
is a Rating Agency.
"Reassignment" shall have the meaning specified in Section 2.10.
"Receivables" shall mean all amounts shown on the Servicer's records
as amounts payable by Obligors on any Account, from time to time, including
without limitation, amounts payable for Principal Receivables and Finance Charge
and Administrative Receivables. Receivables which become Defaulted Receivables
will cease to be included as Receivables as of the day on which they become
Defaulted Receivables.
"Record Date" shall mean, with respect to any Distribution Date, the
last day of the calendar month immediately preceding such Distribution Date
unless otherwise specified for a Series in the applicable Supplement.
"Recoveries" shall mean all amounts received (net of out-of-pocket
costs of collection) including Insurance Proceeds, with respect to Defaulted
Receivables, provided that for so long as such amounts cannot be traced to
specific receivables,
-16-
including the Receivables, Recoveries shall mean such amounts allocated to the
Receivables as provided in subsection 3.10(b).
"Registered Certificateholder" shall mean the Holder of a Registered
Certificate.
"Registered Certificates" shall have the meaning specified in Section
6.01.
"Related Account" shall mean an Account with respect to which a new
credit account number has been issued by the Servicer or the applicable Seller
under circumstances resulting from a lost or stolen credit card and not
requiring standard application and credit evaluation procedures under the Credit
Card Guidelines.
"Removal Date" shall have the meaning specified in Section 2.10.
"Removed Accounts" shall have the meaning specified in Section 2.10.
"Required Minimum Principal Balance" shall mean, with respect to any
date, an amount equal to the sum of the initial Invested Amounts for all
outstanding Series on such date; plus the sum of the Series Required Seller
Amounts for each such Series.
"Requirements of Law" shall mean any law, treaty, rule or regulation,
or determination of an arbitrator or Governmental Authority, whether Federal,
state or local (including, without limitation, usury laws, the Federal Truth in
Lending Act and Regulation B and Regulation Z of the Board of Governors of the
Federal Reserve System), and, when used with respect to any Person, the
certificate of incorporation and by-laws or other organizational or governing
documents of such Person.
"Responsible Officer" shall mean, when used with respect to the
Trustee, any officer within the Corporate Trust Administration Department (or
any successor group) of the Trustee including any vice president, assistant vice
president, trust officer or any other officer of the Trustee customarily
performing functions similar to those performed by the persons who at the time
shall be such officers or to whom any corporate trust matter is referred at the
Corporate Trust Office because of such officer's knowledge of and familiarity
with the particular subject.
"Revolving Credit Agreement" shall mean the revolving credit agreement
by and between the Seller and the Bank, dated as of April 30, 1993 and any
substantially similar agreement between any lender and the Seller or any
Additional Seller.
-17-
"Seller" shall mean Household Affinity Funding Corporation, a wholly
owned special purpose operating subsidiary of the Bank and incorporated in the
State of Delaware, or its successor under this Agreement and any Additional
Seller.
"Seller Certificates" shall mean, collectively, the HAFC Seller
Certificate and any outstanding Supplemental Certificates.
"Seller's Interest" shall have the meaning specified in Section 4.01.
"Seller's Participation Amount" shall mean at any time of
determination an amount equal to the total amount of Principal Receivables in
the Trust at such time minus the aggregate Invested Amounts for all outstanding
Series at such time.
"Series" shall mean any series of Investor Certificates established
pursuant to a Supplement.
"Series Account" shall mean any deposit, trust, escrow or similar
account maintained for the benefit of the Investor Certificateholders of any
Series or Class, as specified in any Supplement.
"Series Adjusted Invested Amount" shall mean, with respect to any
Series and for any Due Period, the initial Invested Amount of such Series after
subtracting therefrom the excess, if any, of the cumulative amount (calculated
in accordance with the terms of the related Supplement) of investor charge-offs
allocable to the Invested Amount for such Series as of the last day of the
immediately preceding Due Period over the aggregate reimbursement of such
investor charge-offs as of such last day.
"Series Allocable Defaulted Amount" shall mean, with respect to any
Series and for any Due Period, the product of the Series Allocation Percentage
and the Defaulted Amount with respect to such Due Period.
"Series Allocable Finance Charge and Administrative Collections" shall
mean, with respect to any Series and for any Due Period, the product of the
Series Allocation Percentage and the amount of Collections of Finance Charge and
Administrative Receivables deposited in the Collection Account for such Due
Period.
"Series Allocable Miscellaneous Payments" shall mean, with respect to
any Series and for any Due Period, the product of the Series Allocation
Percentage and the amount of Miscellaneous Payments for such Due Period.
-18-
"Series Allocation Percentage" shall mean, with respect to any Series
and for any Due Period, the percentage equivalent of a fraction, the numerator
of which is the Series Adjusted Invested Amount plus, for purposes of allocating
Principal Collections to a Series, the Series Required Seller Amount as of the
last day of the immediately preceding Due Period and the denominator of which is
the Trust Adjusted Invested Amount plus, for purposes of allocating Principal
Collections to a Series, the sum of all Series Required Seller Amounts as of
such last day.
"Series Allocable Principal Collections" shall mean, with respect to
any Series and for any Due Period, the product of the Series Allocation
Percentage and the amount of Collections of Principal Receivables deposited in
the Collection Account for such Due Period.
"Series Enhancement" shall mean the rights and benefits provided to
the Trust or the Investor Certificateholders of any Series or Class pursuant to
any letter of credit, surety bond, cash collateral account, spread account,
guaranteed rate agreement, maturity liquidity facility, tax protection
agreement, interest rate swap agreement, interest rate cap agreement or other
similar arrangement. The subordination of any Series or Class to another Series
or Class shall be deemed to be a Series Enhancement.
"Series Enhancer" shall mean the Person or Persons providing any
Series Enhancement, other than the Investor Certificateholders of any Series or
Class which is subordinated to another Series or Class.
"Series Issuance Date" shall mean, with respect to any Series, the
date on which the Investor Certificates of such Series are to be originally
issued in accordance with Section 6.03 and the related Supplement.
"Series Required Seller Amount" shall have the meaning, with respect
to any Series, as specified in the related Supplement.
"Service Transfer" shall have the meaning specified in Section 10.01.
"Servicer" shall mean Household Finance Corporation, in its capacity
as Servicer pursuant to this Agreement, and, after any Service Transfer, the
Successor Servicer.
"Servicer Default" shall have the meaning specified in Section 10.01.
"Servicing Fee" shall mean, with respect to any Series, the servicing
fee specified in the related Supplement.
-19-
"Servicing Officer" shall mean any officer of the Servicer or an
attorney-in-fact of the Servicer who in either case is involved in, or
responsible for, the administration and servicing of the Receivables and whose
name appears on a list of servicing officers furnished to the Trustee by the
Servicer, as such list may from time to time be amended.
"Small Balances" shall have the meaning established in accordance with
the Credit Card Guidelines.
"Standard & Poor's" shall mean Standard & Poor's Corporation or its
successor.
"Successor Servicer" shall have the meaning specified in Section
10.02(a).
"Supplement" shall mean, with respect to any Series, a Supplement to
this Agreement, executed and delivered in connection with the original issuance
of the Investor Certificates of such Series pursuant to Section 6.03, and all
amendments thereof and supplements thereto.
"Supplemental Certificate" shall have the meaning specified in Section
6.03.
"Tax" or "Taxes" shall mean all taxes, charges, fees, levies or other
assessments including, without limitation, income, gross receipts, profits,
withholding, excise, property, sales, use, occupation and franchise taxes
(including, in each such case, any interest, penalties or additions attributable
to or imposed on or with respect to any such taxes, charges, fees or other
assessments) imposed by the United States, any state or political subdivision
thereof, any foreign government or any other jurisdiction or taxing authority.
"Tax Opinion" shall mean, with respect to any action, an Opinion of
Counsel to the effect that, for Federal, California and Illinois (so long as any
substantial servicing activities are conducted in such states) and any other
State where substantial servicing activities in respect of credit card accounts
are conducted by any Additional Seller (or the Bank, if there is a substantial
change from present servicing activities), state income and franchise 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), the Investor Certificates of the Series
established pursuant to such Supplement will properly be characterized as debt.
-20-
"Termination Date" shall mean, with respect to any Series, the
termination date specified in the related Supplement.
"Termination Notice" shall have the meaning specified in Section
10.01.
"Termination Proceeds" shall have the meaning specified in Section
12.02(c).
"Transfer Agent and Registrar" shall have the meaning specified in
Section 6.04.
"Transfer Date" shall mean the Business Day immediately preceding each
Distribution Date.
"Transfer Restriction Event" shall have the meaning specified in
Section 2.11.
"Transferred Account" shall mean each account into which an Account
shall be transferred provided that (i) such transfer was made in accordance with
the Credit Card Guidelines and (ii) such account can be traced or identified as
an account into which an Account has been transferred.
"Trust" shall mean the Household Affinity Credit Card Master Trust I
created by this Agreement.
"Trust Adjusted Invested Amount" shall mean, with respect to any Due
Period, the aggregate Series Adjusted Invested Amounts for all outstanding
Series for such Due Period.
"Trust Assets" shall have the meaning specified in Section 2.01.
"Trust Excess Principal Collections" shall have the meaning specified
in the applicable Supplement.
"Trustee" shall mean The Bank of New York, a banking corporation
organized and existing under the laws of the State of New York, in its capacity
as trustee on behalf of the Trust, or its successor in interest, or any
successor trustee appointed as herein provided.
"UCC" shall mean the Uniform Commercial Code, as amended from time to
time, as in effect in any specified jurisdiction.
"Unallocated Principal Colletions" shall have the meaning specified
in Section 4.04.
"VISA" shall mean VISA U.S.A., Inc.
-21-
Section 1.02. Other Definitional Provisions.
(a) with respect to any Series, all terms used herein and not otherwise
defined herein shall have meanings ascribed to them in the related Supplement.
(b) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms not
defined in this Agreement or in any such certificate or other document, and
accounting terms partly defined in this Agreement or in any such certificate or
other document to the extent not defined, shall have the respective meanings
given to them under generally accepted accounting principles or regulatory
accounting principles, as applicable. To the extent that the definitions of
accounting terms in this Agreement or in any such certificate or other document
are inconsistent with the meanings of such terms under generally accepted
accounting principles or regulatory accounting principles in the United States,
the definitions contained in this Agreement or in any such certificate or other
document shall control.
(d) The agreements, representations and warranties of Household
Affinity Funding Corporation and Household Finance Corporation in this Agreement
in each of their respective capacities as Seller and Servicer shall be deemed to
be the agreements, representations and warranties of Household Affinity Funding
Corporation and Household Finance Corporation solely in each such capacity for
so long as Household Affinity Funding Corporation and Household Finance
Corporation act in each such capacity under this Agreement.
(e) Any reference to each Rating Agency shall only apply to any
specific rating agency if such rating agency is then rating any outstanding
Series.
(f) Unless otherwise specified, references to any amount as on
deposit or outstanding on any particular date shall mean such amount at the
close of business on such day.
(g) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement; references to any Section,
Schedule or Exhibit are references to Sections, Schedules and Exhibits in or to
this Agreement unless otherwise specified; and the term "including" means
"including without limitation".
-22-
ARTICLE II
CONVEYANCE OF RECEIVABLES
Section 2.01. Conveyance of Receivables. By execution of this
Agreement, the Seller does hereby sell, transfer, assign, set over and otherwise
convey to the Trustee, on behalf of the Trust, for the benefit of the
Certificateholders, all its right, title and interest in, to and under, without
recourse except as provided herein, the Receivables existing at the close of
business on the Initial Cut-Off Date, in the case of Receivables arising in the
Initial Accounts, and on each Additional Cut-Off Date, in the case of
Receivables arising in the Additional Accounts, and in each case thereafter
created from time to time until the termination of the Trust, all Interchange
and Recoveries allocable to the Trust as provided herein, all monies due or to
become due and all amounts received with respect thereto and all proceeds
(including "proceeds" as defined in the UCC of the State of California) thereof.
Such property, together with all monies on deposit in the Collection Account,
the Series Accounts, the Preferred Stock of the Seller issued in the name of The
Bank of New York, as Trustee of the Trust, any Series Enhancement and the right
to receive certain Interchange and Recoveries attributed to cardholder charges
for merchandise and services in the Accounts shall constitute the assets of the
Trust (the "Trust Assets"). The foregoing does not constitute and is not
intended to result in the creation or assumption by the Trust, the Trustee, any
Investor Certificateholder or any Series Enhancer of any obligation of the
Servicer, the Bank, the Seller, any Additional Seller or any other Person in
connection with the Accounts or the Receivables or under any agreement or
instrument relating thereto, including any obligation to Obligors, merchant
banks, merchants clearance systems, VISA, MasterCard or insurers. The foregoing
sale, transfer, assignment, set-over and conveyance to the Trust shall be made
to the Trustee, on behalf of the Trust, and each reference in this Agreement to
such sale, transfer, assignment, set-over and conveyance shall be construed
accordingly.
The Seller agrees to record and file, at its own expense, financing
statements (and continuation statements when applicable) with respect to the
Receivables now existing and hereafter created meeting the requirements of
applicable state law in such manner and in such jurisdictions as are necessary
to perfect, and maintain the perfection of, the sale and assignment of the
Receivables to the Trust, and to deliver a file stamped copy of each such
financing statement or other evidence of such filing to the Trustee as soon as
practicable after the first Closing Date, in the case of Receivables arising in
the Initial Accounts, and (if any additional filing is so necessary) as soon as
practicable after the applicable Addition Date, in the case of Receivables
arising in Additional Accounts. The Trustee shall be
-23-
under no obligation whatsoever to file such financing or continuation statements
or to make any other filing under the UCC in connection with such sale and
assignment.
The Seller further agrees, at its own expense, (a) on or prior to (x)
the first Closing Date, in the case of the Initial Accounts, (y) the applicable
Addition Date, in the case of Additional Accounts, and (z) the applicable
Removal Date, in the case of Removed Accounts, to indicate in the appropriate
computer files that Receivables created (or reassigned, in the case of Removed
Accounts) in connection with the Accounts have been conveyed to the Trust
pursuant to this Agreement for the benefit of the Certificateholders (or
conveyed to the Seller or its designee in accordance with Section 2.10, in the
case of Removed Accounts) by including (or deleting in the case of Removed
Accounts) in such computer files the code identifying each such Account and (b)
on or prior to (w) the first Closing Date, in the case of the Initial Accounts,
(x) the date that is five Business Days after the applicable Addition Date, in
the case of Aggregate Additions, (y) the date that is 90 days after the
applicable Addition Date, in the case of New Accounts, and (z) the date that is
five business days after the applicable Removal Date, in the case of Removed
Accounts, to deliver to the Trustee a computer file or microfiche list
containing a true and complete list of all such Accounts specifying for each
such Account, as of the Initial Cut-Off Date, in the case of the Initial
Accounts, the applicable Additional Cut-Off Date, in the case of Additional
Accounts, and the applicable Removal Date, in the case of Removed Accounts, its
account number and, other than in the case of New Accounts, the aggregate amount
outstanding in such Account and the aggregate amount of Principal Receivables
outstanding in such Account. Such file or list, as supplemented, from time to
time, to reflect Additional Accounts and Removed Accounts, shall be marked as
Schedule 1 to this Agreement and is hereby incorporated into and made a part of
this Agreement. The Seller further agrees not to alter the code referenced in
this paragraph with respect to any Account during the term of this Agreement
unless and until such Account becomes a Removed Account.
It is the intention of the parties hereto that the arrangements with
respect to the Receivables shall constitute a purchase and sale of such
Receivables and not a loan. In the event, however, that a court of competent
jurisdiction were to hold that the transactions evidenced hereby constitute a
loan and not a purchase and sale, it is the intention of the parties hereto that
this Agreement shall constitute a security agreement under applicable law, and
that the Seller shall be deemed to have granted to the Trust a first priority
perfected security interest in all of the Seller's right, title and interest in,
to and under the Receivables, and the other Trust Assets.
-24-
Section 2.02. Acceptance by Trustee. (a) The Trustee hereby
acknowledges its acceptance on behalf of the Trust of all right, title and
interest to the property, now existing and hereafter created, conveyed to the
Trust pursuant to Section 2.01 and declares that it shall maintain such right,
title and interest, upon the trust herein set forth, for the benefit of all
Certificateholders. The Trustee further acknowledges that, prior to or
simultaneously with the execution and delivery of this Agreement, the Seller
delivered to the Trustee the computer file or microfiche list relating to the
Initial Accounts described in the penultimate paragraph of Section 2.01.
(b) The Trustee hereby agrees not to disclose to any Person any of
the account numbers or other information contained in the computer files or
microfiche lists marked as Schedule 1 delivered to the Trustee, from time to
time, except (i) to a Successor Servicer or as required by a Requirement of Law
applicable to the Trustee, (ii) in connection with the performance of the
Trustee's duties hereunder or (iii) in enforcing the rights of
Certificateholders. The Trustee agrees to take such measures as shall be
reasonably requested by the Seller to protect and maintain the security and
confidentiality of such information and, in connection therewith, shall allow
the Seller to inspect the Trustee's security and confidentiality arrangements
from time to time during business hours. The Trustee shall provide the Seller
with notice five Business Days prior to disclosure of any information of the
type described in this subsection 2.02(b).
(c) The Trustee shall have no power to create, assume or incur
indebtedness or other liabilities in the name of the Trust other than as
contemplated in this Agreement.
Section 2.03. Representations and Warranties of the Seller Relating
to the Seller. The Seller hereby represents and warrants to the Trust (and
agrees that the Trustee may rely on each such representation and warranty in
accepting the Receivables in trust and in authenticating the Certificates) as of
each Closing Date that:
(a) Organization and Good Standing. The Seller is a Delaware
corporation validly existing under the laws of the jurisdiction of its
organization or incorporation and has, in all material respects, full power
and authority to own its properties and conduct its business as presently
owned or conducted, and to execute, deliver and perform its obligations
under this Agreement and each Supplement and to execute and deliver to the
Trustee the Certificates.
(b) Due Qualification. The Seller is duly qualified to do business
and is in good standing as a foreign corporation and has obtained all
necessary licenses and
-25-
approvals, in each jurisdiction in which failure to so qualify or to obtain
such licenses and approvals would (i) render any Credit Card Agreement
relating to an Account or any Receivable unenforceable by the Seller or the
Trust and (ii) have a material adverse effect on the Investor
Certificateholders.
(c) Due Authorization. The execution and delivery of this Agreement
and each Supplement by the Seller and the execution and delivery to the
Trustee of the Certificates and the consummation by the Seller of the
transactions provided for in this Agreement and each Supplement, have been
duly authorized by the Seller by all necessary corporate action on the part
of the Seller.
(d) No Conflict. The execution and delivery by the Seller of this
Agreement, each Supplement, and the Certificates, the performance of the
transactions contemplated by this Agreement and each Supplement and the
fulfillment of the terms hereof and thereof applicable to the Seller, will
not conflict with or violate any Requirements of Law applicable to the
Seller or conflict with, result in any breach of any of the material terms
and provisions of, or constitute (with or without notice or lapse of time
or both) a material default under, any indenture, contract, agreement,
mortgage, deed of trust or other instrument to which the Seller is a party
or by which it or its properties are bound.
(e) No Proceedings. There are no proceedings or investigations,
pending or, to the best knowledge of the Seller, threatened against the
Seller before any Governmental Authority (i) asserting the invalidity of
this Agreement, any Supplement or the Certificates, (ii) seeking to prevent
the issuance of any of the Certificates or the consummation of any of the
transactions contemplated by this Agreement, any Supplement or the
Certificates, (iii) seeking any determination or ruling that, in the
reasonable judgment of the Seller, would materially and adversely affect
the performance by the Seller of its obligations under this Agreement or
any Supplement, (iv) seeking any determination or ruling that would
materially and adversely affect the validity or enforceability of this
Agreement, any Supplement or the Certificates or (v) seeking to affect
adversely the income or franchise tax attributes of the Trust under the
United States Federal or any State income or franchise tax systems.
(f) All Consents. All authorizations, consents, orders or approvals
of or registrations or declarations with any Governmental Authority
required to be obtained, effected or given by the Seller in connection with
the execution and
-26-
delivery by the Seller of this Agreement, each Supplement and the
Certificates and the performance of the transactions contemplated by this
Agreement and each Supplement by the Seller have been duly obtained,
effected or given and are in full force and effect.
Section 2.04. Representations and Warranties of the Seller Relating
to the Agreement and Any Supplement and the Receivables. (a) Representations
and Warranties. The Seller hereby represents and warrants to the Trust as of
each Closing Date and, with respect to Additional Accounts, as of the related
Addition Date that:
(i) this Agreement, each Supplement and, in the case of Additional
Accounts, the related Assignment, each constitutes a legal, valid and
binding obligation of the Seller enforceable against the Seller in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally from time to time in
effect or general principles of equity;
(ii) as of the first Closing Date and, as of the related Addition Date
with respect to Additional Accounts, Schedule 1 to this Agreement, as
supplemented to such date, is an accurate and complete listing in all
material respects of all the Accounts as of the Initial Cut-Off Date or
such Additional Cut-Off Date, as the case may be, and the information
contained therein with respect to the identity of such Accounts and the
Receivables existing thereunder is true and correct in all material
respects as of the Initial Cut-Off Date or such Additional Cut-Off Date, as
the case may be;
(iii) each Receivable has been conveyed to the Trust free and clear of
any Lien;
(iv) all authorizations, consents, orders or approvals of or
registrations or declarations with any Governmental Authority required to
be obtained, effected or given by the Seller in connection with the
conveyance of each Receivable to the Trust have been duly obtained,
effected or given and are in full force and effect;
(v) either this Agreement or, in the case of Additional Accounts, the
related Assignment constitutes a valid sale, transfer and assignment to the
Trust of all right, title and interest of the Seller in the Receivables and
the proceeds thereof and the Interchange payable pursuant to this Agreement
and the Recoveries payable pursuant to this Agreement and Recoveries
identified as
-27-
relating to specific Defaulted Receivables, or, if this Agreement or, in
the case of Additional Accounts, the related Assignment does not constitute
a sale of such property, it constitutes a grant of a first priority
perfected "security interest" (as defined in the UCC) in such property to
the Trust, which, in the case of existing Receivables and the proceeds
thereof and said Interchange, is enforceable upon execution and delivery of
this Agreement, or, with respect to then existing Receivables in Additional
Accounts, as of the applicable Addition Date, and which will be enforceable
with respect to such Receivables hereafter and thereafter created and the
proceeds thereof upon such creation. Upon the filing of the financing
statements and, in the case of Receivables hereafter created and the
proceeds thereof, upon the creation thereof, the Trust shall have a first
priority perfected security or ownership interest in such property and
proceeds;
(vi) on the Initial Cut-Off Date, each Initial Account is an Eligible
Account and, on the applicable Additional Cut-Off Date, each related
Additional Account is an Eligible Account;
(vii) on the Initial Cut-Off Date, each Receivable then existing is an
Eligible Receivable and, on the applicable Additional Cut-Off Date, each
Receivable contained in the related Additional Accounts is an Eligible
Receivable;
(viii) as of the date of the creation of any new Receivable, such
Receivable is an Eligible Receivable; and
(ix) no selection procedures believed by the Seller to be materially
adverse to the interests of the Investor Certificateholders have been used
in selecting the Initial Accounts or the Additional Accounts from among any
pool of Accounts of a similar type.
(b) Notice of Breach. The representations and warranties set forth
in Section 2.03, this Section 2.04 and Section 2.09(f) shall survive the
transfers and assignments of the Receivables to the Trust and the issuance of
the Certificates. Upon discovery by the Seller, the Servicer or the Trustee of
a breach of any of the representations and warranties set forth in Section 2.03,
this Section 2.04 or Section 2.09(f), the party discovering such breach shall
give notice to the other parties and to each Series Enhancer within three
Business Days following such discovery, provided that the failure to give notice
within three Business Days does not preclude subsequent notice.
Section 2.05. Reassignment of Ineligible Receivables. (a)
Reassignment of Receivables. In the event (i) any
-28-
representation or warranty contained in Section 2.04(a)(ii), (iii), (iv), (vi),
(vii) or (viii) is not true and correct in any material respect as of the date
specified therein with respect to any Receivable or the related Account and such
breach has a material adverse effect on the Certificateholders' Interest in any
Receivable (which determination shall be made without regard to whether funds
are then available pursuant to any Series Enhancement) unless cured within 60
days (or such longer period, not in excess of 120 days, as may be agreed to by
the Trustee and the Servicer) after the earlier to occur of the discovery
thereof by the Seller or receipt by the Seller of written notice thereof given
by the Trustee or the Servicer, or (ii) it is so provided in Section 2.07(a) or
2.09(d) (iii) with respect to any Receivables, then the Seller shall accept
reassignment of the Certificateholders' Interest in all Receivables in the
related Account ("Ineligible Receivables") on the terms and conditions set forth
in paragraph (b) below.
(b) Price of Reassignment. The Seller shall accept reassignment of
any Ineligible Receivables by directing the Servicer to deduct the portion of
such Ineligible Receivables reassigned to the Seller which are Principal
Receivables from the aggregate amount of Principal Receivables used to calculate
the Seller's Participation Amount and the Seller's Interest applicable to any
Series. In the event that, following the exclusion of such Principal
Receivables from the calculation of the Seller's Participation Amount, the
Seller's Participation Amount would be a negative number, not later than 1:00
P.M., New York City time, on the first Distribution Date following the Due
Period in which such reassignment obligation arises, the Seller shall make a
deposit into the Collection Account in immediately available funds in an amount
equal to the amount by which the Seller's Participation Amount would be below
zero (up to the amount of such Principal Receivables). Any amount deposited
into the Collection Account in connection with the reassignment of an Ineligible
Receivable attributable to the principal portion of such Ineligible Receivable
shall be considered Collections of Principal Receivables and shall be applied in
accordance with Article IV and the terms of each Supplement.
Upon reassignment of Ineligible Receivables, the Trustee, on behalf of
the Trust, shall automatically and without further action be deemed to sell,
transfer, assign, set over and otherwise convey to the Seller or its designee,
without recourse, representation or warranty, all the right, title and interest
of the Trust in and to such Ineligible Receivables, all monies due or to become
due and all proceeds thereof and such reassigned Ineligible Receivables shall be
treated by the Trust as collected in full as of the date on which they were
transferred. The obligation of the Seller to accept reassignment of any
Ineligible Receivables, and to make the deposits, if any, required to be made to
the Collection Account as provided in this Section, shall
-29-
constitute the sole remedy respecting the event giving rise to such obligation
available to Certificateholders (or the Trustee on behalf of the
Certificateholders) or any Series Enhancer. Notwithstanding any other
provision of this subsection 2.05(b), a reassignment of an Ineligible Receivable
in excess of the amount that would cause the Seller's Participation Amount to be
a negative number shall not occur if the Seller fails to make any deposit
required by this subsection 2.05(b) with respect to such Ineligible Receivable.
The Trustee shall execute such documents and instruments of transfer or
assignment and take such other actions as shall reasonably be requested by the
Seller to effect the conveyance of such Ineligible Receivables pursuant to this
subsection 2.05(b), but only upon receipt of an Officer's Certificate that
states that all conditions set forth in this Section 2.05 have been satisfied.
Section 2.06. Reassignment of Certificateholders' Interest in Trust
Portfolio. In the event any representation or warranty set forth in Section
2.03(a) or (c) or Section 2.04(a)(i) or (v) is not true and correct in any
material respect and such breach has a material adverse effect on the
Certificateholders' Interest in the Receivables or the availability of the
proceeds thereof to the Trust (which determination shall be made without regard
to whether funds are then available pursuant to any Series Enhancement), then
either the Trustee or the Holders of Investor Certificates evidencing not less
than 50% of the aggregate unpaid principal amount of all outstanding Investor
Certificates, by notice then given to the Seller and the Servicer (and to the
Trustee if given by the Investor Certificateholders), may direct the Seller to
accept a reassignment of the Certificateholders' Interest in the Receivables if
such breach and any material adverse effect caused by such breach is not cured
within 60 days of such notice (or within such longer period, not in excess of
120 days, as may be specified in such notice), and upon those conditions the
Seller shall be obligated to accept such reassignment on the terms set forth
below.
The Seller shall deposit in the Collection Account in immediately
available funds not later than 1:00 P.M., New York City time, on the first
Distribution Date following the Due Period in which such reassignment obligation
arises, in payment for such reassignment, an amount equal to the sum of the
amounts specified therefor with respect to each outstanding Series in the
related Supplement. Notwithstanding anything to the contrary in this Agreement,
such amounts shall be distributed to the Investor Certificateholders on such
Distribution Date in accordance with the terms of each Supplement. If the
Trustee or the Investor Certificateholders give notice directing the Seller to
accept a reassignment of the Certificateholders' Interest in the Receivables as
provided above, the obligation of the Seller to accept such reassignment
pursuant to this Section and to make the
-30-
deposit required to be made to the Collection Account as provided in this
paragraph shall constitute the sole remedy respecting an event of the type
specified in the first sentence of this Section available to the
Certificateholders (or the Trustee on behalf of the Certificateholders) or any
Series Enhancer.
Section 2.07. Covenants of the Seller. The Seller hereby covenants
that:
(a) Receivables Not To Be Evidenced by Promissory Notes. Except in
connection with its enforcement or collection of an Account, the Seller
will take no action to cause any Receivable to be evidenced by any
instrument (as defined in the UCC) and if any Receivable is so evidenced it
shall be deemed to be an Ineligible Receivable in accordance with Section
2.05(a) and shall be reassigned to the Seller in accordance with Section
2.05(b).
(b) Security Interests. Except for the conveyances hereunder, the
Seller will not sell, pledge, assign or transfer to any other Person, or
grant, create, incur, assume or suffer to exist any Lien on, any Receivable
or Participation Interest, whether now existing or hereafter created, or
any interest therein, and the Seller shall defend the right, title and
interest of the Trust in, to and under the Receivables, whether now
existing or hereafter created, against all claims of third parties claiming
through or under the Seller.
(c) Seller's Interest. Except for (i) the conveyances hereunder, in
connection with any transaction permitted by Section 7.02 and as provided
in Section 6.03 or (ii) conveyances with respect to which the Rating Agency
Condition shall have been satisfied, the Seller agrees not to transfer or
sell the HAFC Seller Certificate or any Supplemental Certificate and any
such attempted transfer or sale shall be void.
(d) Delivery of Collections or Recoveries. In the event that the
Seller receives Collections or Recoveries, the Seller agrees to pay the
Servicer all such Collections and Recoveries as soon as practicable after
receipt thereof.
(e) Notice of Liens. The Seller shall notify the Trustee and each
Series Enhancer promptly after becoming aware of any Lien on any Receivable
other than the conveyances hereunder.
(f) Amendment of the Certificate of Incorporation. The Seller will
not amend in any material respect its certificate of incorporation without
providing the Rating Agency with notice no later than the fifth Business
Day
-31-
prior to such amendment (unless the right to such notice is waived by the
Rating Agency) and satisfying the Rating Agency Condition.
(g) Other Indebtedness. The Seller shall not incur any additional
debt, unless (i) such debt is incurred pursuant to the Revolving Credit
Agreement or (ii) the Rating Agency is provided with notice no later than
the fifth Business Day prior to the incurrence of such additional debt
(unless the right to such notice is waived by the Rating Agency) and either
(1) the Rating Agency Condition is satisfied or (2) (x) such debt (A) is
non-recourse against any assets of the Seller other than the assets pledged
to secure such additional debt, (B) does not constitute a claim against the
Seller in the event such assets are insufficient to pay additional debt,
(C) is fully subordinated to the Investor Certificates, (D) would not
result in an Adverse Effect, and (E) is with an Affiliate of the Seller and
(y) no Rating Agency has notified the Seller that incurring such additional
debt will result in a withdrawal or downgrade of any existing Series.
(h) Certain Matters Relating to Dividends. After the expiration of
the 180th day after the commencement of any material litigation to which
the Seller is a party and which has a reasonable chance of adversely
affecting the Receivables or the Seller's or the Certificateholders'
Interests therein, the Seller shall not pay any dividends or other
distributions to the Bank, other than interest in the ordinary course of
business, unless after giving effect to the payment of such dividends or
such other distributions, the Seller's capital shall not be less than the
amount claimed in such litigation.
Section 2.08. Covenants of The Seller with Respect to the Bank
Purchase Agreement. The Seller, in its capacity as purchaser of the Receivables
from the Bank, pursuant to the Bank Purchase Agreement hereby covenants that the
Seller will at all times enforce the covenants and agreements of the Bank in the
Bank Purchase Agreement, including, without limitation, covenants to the effect
set forth below only to the extent to which they are enforceable against the
Bank pursuant to the Bank Purchase Agreement:
(a) Periodic Rate Finance Charges. (i) Except (x) as otherwise
required by any Requirements of Law or (y) as is deemed by the Bank to be
necessary in order for it to maintain its credit card business or a program
operated by such credit card business on a competitive basis based on a
good faith assessment by it of the nature of the competition with respect
to the credit card business or such program and only if the change giving
rise to such reduction with
-32-
respect to a specific program is made applicable to substantially all of
the credit card accounts subject to such program, it shall not at any time
take any action which would have the effect of reducing the Portfolio Yield
to a level that could be reasonably expected to cause any Series to
experience any Amortization Event based on the insufficiency of the
Portfolio Yield or any similar test and (ii) except as otherwise required
by any Requirements of Law, it shall not take any action which would have
the effect of reducing the Portfolio Yield to be less than the highest
Average Rate for any Group.
(b) Credit Card Agreements and Guidelines. Subject to compliance with
all Requirements of Law and paragraph (a) above, the Bank may change the
terms and provisions of the Credit Card Agreements or the Credit Card
Guidelines in any respect (including the calculation of the amount or the
timing of charge-offs and the Periodic Rate Finance Charges to be assessed
thereon) only if the change made with respect to a specific program (for
purposes of this Trust, securitizations shall be deemed not to be a
program) is made applicable to substantially all of the Accounts subject to
such program. Notwithstanding the above, unless required by Requirements
of Law or as permitted by Section 2.08(a), the Bank will take no action
with respect to the Credit Card Agreements or the Credit Card Guidelines,
which, at the time of such action, the Bank reasonably believes will have a
material adverse effect on the Investor Certificateholders.
(c) MasterCard and VISA. The Bank shall, to the extent applicable to
Accounts owned or serviced by it, use its best efforts to remain, either
directly or indirectly, a member in good standing of the MasterCard system,
the VISA system and any other similar entity's or organization's system
relating to any other type of revolving credit card accounts included as
Accounts.
(d) Interchange. Not later than 1:00 P.M., New York City time, on
each Distribution Date, the Bank shall deposit into the Collection Account
in immediately available funds the amount of Interchange to be so included
as Collections of Finance Charge Receivables with respect to the preceding
Due Period.
The Seller further covenants that the Seller will not enter into any
amendments to the Bank Purchase Agreement unless the Rating Agency Condition has
been satisfied. In the event that any Additional Seller is the owner of any
Accounts, such Additional Seller agrees to perform the covenants and agreements
of the Bank set forth in clauses (a) through (d) of this Section 2.08 with
respect to such Accounts.
-33-
Section 2.09. Addition of Accounts.
(a) Required Aggregate Additions. (i) If, as of the close of
business on the last Business Day of any calendar month, the total amount
of Principal Receivables is less than the Required Minimum Principal
Balance on such date, the Seller shall on or prior to the close of business
on the tenth Business Day of the next succeeding calendar month (the
"Required Designation Date"), designate additional Eligible Accounts to be
included as Accounts as of the Required Designation Date or any earlier
date in a sufficient amount such that, after giving effect to such
addition, the total amount of Principal Receivables as of the close of
business on the Addition Date is at least equal to the Required Minimum
Principal Balance on such date.
(ii) In lieu of, or in addition to, designating Additional Accounts
pursuant to clause (i) above, the Seller may, subject to the conditions
specified in paragraph (c) below, convey to the Trust participations
(including, without limitation, 100% participations) representing undivided
interests in a pool of assets primarily consisting of revolving credit card
receivables, consumer loan receivables (secured and unsecured), charge card
receivables, and any interests in any of the foregoing, including
securities representing or backed by such receivables, and other self-
liquidating financial assets including, without limitation, any "Eligible
Assets" as such term is defined in Rule 3a-7 under the Investment Company
Act of 1940, as amended (or any successor to such Rule) and collections
thereon ("Participation Interests"). The addition of Participation
Interests in the Trust pursuant to this paragraph (a) or paragraph (b)
below shall be effected by a Participation Interest Supplement, dated the
applicable Addition Date and entered into pursuant to Section 13.01(a).
(iii) Any Additional Accounts or Participation Interests designated to
be included as Accounts pursuant to clauses (i) or (ii) above may only be
so included if (x) Standard & Poor's shall have notified the Seller, the
Servicer and the Trustee in writing that such addition will not result in a
reduction or withdrawal of the then existing rating of any outstanding
Series or Class with respect to which Standard and Poor's is a Rating
Agency and (y) the applicable conditions specified in paragraph (c) below
have been satisfied.
(b) Permitted Aggregate Additions. The Seller may from time to time,
at its sole discretion, subject to the conditions specified in paragraph (c)
below, voluntarily designate additional Eligible Accounts to be included as
Accounts
-34-
or Participation Interests to be included as Trust Assets, in either case as of
the applicable Additional Cut-Off Date.
(c) Conditions to Aggregate Additions. On the Addition Date with
respect to any Aggregate Addition Accounts or Participation Interests, the Trust
shall purchase the Receivables in such Additional Accounts (and such Additional
Accounts shall be deemed to be Accounts for purposes of this Agreement) or shall
purchase such Participation Interests as of the close of business on the
applicable Additional Cut-off Date, subject to the satisfaction of the following
conditions:
(i) on or before the eighth Business Day immediately preceding the
Addition Date, the Seller shall have given the Trustee, the Servicer and
each Rating Agency notice (unless such notice requirement is otherwise
waived) that the Aggregate Addition Accounts or Participation Interests
will be included and specifying the applicable Addition Date and Additional
Cut-Off Date;
(ii) the Aggregate Addition Accounts shall all be Eligible Accounts;
(iii) the Seller shall have delivered to the Trustee copies of UCC-1
financing statements covering such Aggregate Addition Accounts, if
necessary to perfect the Trust's interest in the Receivables arising
therein;
(iv) to the extent required by Section 4.03, the Seller shall have
deposited in the Collection Account all Collections with respect to such
Aggregate Addition Accounts since the Additional Cut-Off Date;
(v) as of each of the Additional Cut-Off Date and the Addition Date,
no Insolvency Event with respect to the Bank or the Seller shall have
occurred nor shall the transfer of the Receivables arising in the Aggregate
Addition Accounts or of the Participation Interests to the Trust have been
made in contemplation of the occurrence thereof;
(vi) solely with respect to Aggregate Additions designated pursuant to
Section 2.09(b), the Rating Agency Condition shall have been satisfied;
(vii) the Seller shall have delivered to the Trustee an Officer's
Certificate, dated the Addition Date, confirming, to the extent applicable,
the items set forth in clauses (ii) through (vi) above;
(viii) the addition of the Receivables arising in the Aggregate
Addition Accounts or of the Participation Interests to the Trust will not
result in an Adverse Effect
-35-
and, in the case of Aggregate Additions, the Seller shall have delivered to
the Trustee an Officer's Certificate, dated the Addition Date, stating that
the Seller reasonably believes that the addition of the Receivables arising
in the Additional Accounts or of the Participation Interests to the Trust
will not have an Adverse Effect; and
(ix) the Seller shall have delivered to the Trustee and each Rating
Agency an Opinion of Counsel, dated the Addition Date, in accordance with
Section 13.02(d)(ii).
(d) New Accounts.
(i) The Seller may from time to time, at its sole discretion, subject
to and in compliance with the limitations specified in clause (ii) below
and the conditions specified in paragraph (e) below, voluntarily designate
newly originated Eligible Accounts to be included as New Accounts. For
purposes of this paragraph, Eligible Accounts shall be deemed to include
only types of revolving credit card accounts which are included as Initial
Accounts or which have previously been included in any Aggregate Addition
if the Assignment related to such Aggregate Addition expressly provides
that such type of revolving credit card account is permitted to be
designated as a New Account.
(ii) Unless each Rating Agency otherwise consents, the number of New
Accounts designated with respect to any of the three consecutive Due
Periods commencing in January, April, July and October of each calendar
year shall not exceed 15% of the number of Accounts as of the first day of
the calendar year during which such Due Periods commence (or the Initial
Cut-Off Date, in the case of 1993) and the number of New Accounts
designated during any such calendar year shall not exceed 20% of the number
of Accounts as of the first day of such calendar year (or the Initial Cut-
Off Date, in the case of 1993).
(iii) The failure of the Seller to deliver semiannually an Opinion of
Counsel substantially in the form of Exhibit E-2 (or, if the Bank has a
long-term rating below "A" by Moody's or "A-1" by Standard & Poor's such
Opinion of Counsel shall be delivered quarterly and if the long-term rating
of the Bank is not in one of the generic categories of each Rating Agency
which signifies investment grade such Opinion of Counsel shall be delivered
monthly) with respect to the New Accounts included as Accounts shall result
in all Receivables arising in the New Accounts to which such failure
relates to be deemed to be Ineligible Receivables in accordance with
Section 2.05(a) and all such Receivables shall be reassigned to the Seller
in accordance with Section
-36-
2.05(b). The opinion delivery requirement set forth in the immediately
preceding parenthetical may be modified provided that the Rating Agency
Condition is satisfied.
(e) Conditions to Addition of New Accounts. On the Addition Date with
respect to any New Accounts, the Trust shall purchase the Receivables in such
New Accounts (and such New Accounts shall be deemed to be Accounts for purposes
of this Agreement) as of the close of business on the applicable Additional Cut-
Off Date, subject to the satisfaction of the following conditions:
(i) the New Accounts shall all be Eligible Accounts;
(ii) the Seller shall have delivered to the Trustee copies of UCC-1
financing statements covering such New Accounts, if necessary to perfect
the Trust's interest in the Receivables arising therein;
(iii) to the extent required by Section 4.03, the Seller shall have
deposited in the Collection Account all Collections with respect to such
New Accounts since the Additional Cut-Off Date;
(iv) as of each of the Additional Cut-Off Date and the Addition Date,
no Insolvency Event with respect to the Bank or the Seller shall have
occurred nor shall the transfer of the Receivables arising in the New
Accounts to the Trust have been made in contemplation of the occurrence
thereof; and
(v) the addition of the Receivables arising in the New Accounts to
the Trust will not result in the occurrence of an Amortization Event.
(f) Representations and Warranties. The Seller hereby represents and
warrants to the Trust as of the related Addition Date as to the matters set
forth in paragraph (c) (v) and (viii) above and that, in the case of Additional
Accounts, the list delivered pursuant to paragraph (h) below is, as of the
applicable Additional Cut-Off Date, true and complete in all material respects.
(g) Additional Sellers. The Seller may designate Affiliates of the
Seller to be included as Sellers ("Additional Sellers") under this Agreement in
a supplement to this Agreement (which supplement shall be subject to Section
13.01 to the extent that it amends any of the terms of this Agreement) and each
Additional Seller shall be issued a Supplemental Certificate pursuant to Section
6.03(b) reflecting such Additional Seller's interest in the Seller's Interest;
provided, however, that prior
-37-
to any such designation and issuance the conditions set forth in Section 6.03(b)
shall have been satisfied with respect thereto.
(h) Delivery of Documents. In the case of the designation of
Additional Accounts, the Seller shall deliver to the Trustee (i) the computer
file or microfiche list required to be delivered pursuant to Section 2.01 with
respect to such Additional Accounts on the date such file or list is required to
be delivered pursuant to Section 2.01 (the "Document Delivery Date") and (ii) a
duly executed, written Assignment (including an acceptance by the Trustee for
the benefit of the Certificateholders), substantially in the form of Exhibit B
(the "Assignment"), on the Document Delivery Date. In addition, in the case of
the designation of New Accounts, the Seller shall deliver to the Trustee on the
Document Delivery Date an Officer's Certificate confirming, to the extent
applicable, the items set forth in clauses (i) through (v) of Section 2.09(e)
above.
Section 2.10. Removal of Accounts and Participation Interests. On
any day of any Due Period the Seller shall have the right to require the
reassignment to it or its designee of all the Trust's right, title and interest
in, to and under the Receivables then existing and thereafter created, all
monies due or to become due and all amounts received with respect thereto and
all proceeds thereof in or with respect to the Accounts (the "Removed Accounts")
or Participation Interests (unless otherwise set forth in the applicable
Participation Interest Supplement or Series Supplement) designated by the Seller
upon satisfaction of the following conditions:
(i) on or before the eighth Business Day immediately preceding the
Removal Date, the Seller shall have given the Trustee, the Servicer, each Rating
Agency and each Series Enhancer notice (unless such notice requirement is
otherwise waived) of such removal and specifying the date for removal of the
Removed Accounts and Participation Interests (the "Removal Date");
(ii) on or prior to the date that is five Business Days after the
Removal Date, the Seller shall have amended Schedule 1 by delivering to the
Trustee a computer file or microfiche list containing a true and complete list
of the Removed Accounts specifying for each such Account, as of the date notice
of the Removal Date is given, its account number, the aggregate amount
outstanding in such Account and the aggregate amount of Principal Receivables
outstanding in such Account;
(iii) the Seller shall have represented and warranted as of the
Removal Date that the list of Removed Accounts delivered pursuant to paragraph
(ii) above, as of the Removal Date, is true and complete in all material
respects;
-38-
(iv) the Rating Agency Condition shall have been satisfied with
respect to the removal of the Removed Accounts and Participation Interests;
(v) the Seller shall have delivered to the Trustee an Officer's
Certificate, dated the Removal Date, to the effect that the Seller reasonably
believes that (a) such removal will not have an Adverse Effect, (b) such removal
will not result in the occurrence of an Amortization Event, and (c) no selection
procedures believed by the Seller to be materially adverse to the interests of
the Investor Certificateholders have been used in removing Removed Accounts from
among any pool of Accounts of a similar type.
Upon satisfaction of the above conditions, the Trustee shall execute
and deliver to the Seller a written reassignment in substantially the form of
Exhibit C (the "Reassignment") and shall, without further action, be deemed to
sell, transfer, assign, set over and otherwise convey to the Seller or its
designee, effective as of the Removal Date, without recourse, representation or
warranty, all the right, title and interest of the Trust in and to the
Receivables arising in the Removed Accounts and Participation Interests, all
monies due and to become due and all amounts received with respect thereto and
all proceeds thereof. The Trustee may conclusively rely on the Officer's
Certificate delivered pursuant to this Section 2.10 and shall have no duty to
make inquiries with regard to the matters set forth therein and shall incur no
liability in so relying.
Section 2.11. Account Allocations. In the event that the Seller is
unable for any reason to transfer Receivables to the Trust in accordance with
the provisions of this Agreement, including by reason of the application of the
provisions of Section 9.02 or any order of any Governmental Authority (a
"Transfer Restriction Event"), then, in any such event, (a) the Seller and the
Servicer agree (except as prohibited by any such order) to allocate and pay to
the Trust, after the date of such inability, all Collections, including
Collections of Receivables transferred to the Trust prior to the occurrence of
such event, and all amounts which would have constituted Collections but for the
Seller's inability to transfer Receivables (up to an aggregate amount equal to
the amount of Receivables transferred to the Trust by the Seller in the Trust on
such date), (b) the Seller and the Servicer agree that such amounts will be
applied as Collections in accordance with Article IV and the terms of each
Supplement and (c) for so long as the allocation and application of all
Collections and all amounts that would have constituted Collections are made in
accordance with clauses (a) and (b) above, Principal Receivables and all amounts
which would have constituted Principal Receivables but for the Seller's
inability to transfer Receivables to the Trust which are written off as
uncollectible in accordance with this Agreement shall
-39-
continue to be allocated in accordance with Article IV and the terms of each
Supplement. For the purpose of the immediately preceding sentence, the Seller
and the Servicer shall treat the first received Collections with respect to the
Accounts as allocable to the Trust until the Trust shall have been allocated and
paid Collections in an amount equal to the aggregate amount of Principal
Receivables in the Trust as of the date of the occurrence of such event. If the
Seller and the Servicer are unable pursuant to any Requirements of Law to
allocate Collections as described above, the Seller and the Servicer agree that,
after the occurrence of such event, payments on each Account with respect to the
principal balance of such Account shall be allocated first to the oldest
principal balance of such Account and shall have such payments applied as
Collections in accordance with Article IV and the terms of each Supplement. The
parties hereto agree that Finance Charge and Administrative Receivables,
whenever created, accrued in respect of Principal Receivables which have been
conveyed to the Trust shall continue to be a part of the Trust notwithstanding
any cessation of the transfer of additional Principal Receivables to the Trust
and Collections with respect thereto shall continue to be allocated and paid in
accordance with Article IV and the terms of each Supplement.
ARTICLE III
ADMINISTRATION AND SERVICING
OF RECEIVABLES
Section 3.01. Acceptance of Appointment and Other Matters Relating to
the Servicer. (a) Household Finance Corporation agrees to act as the Servicer
under this Agreement and the Certificateholders by their acceptance of
Certificates consent to Household Finance Corporation acting as Servicer.
(b) As agent for the Seller and the Trust, the Servicer shall service
and administer the Receivables, shall collect and deposit into the Collection
Account payments due under the Receivables and shall charge-off as uncollectible
Receivables, all in accordance with its customary and usual servicing procedures
for servicing credit card receivables comparable to the Receivables and in
accordance with the Credit Card Guidelines. As agent for the Seller and the
Trust, the Servicer shall have full power and authority, acting alone or through
any party properly designated by it hereunder, to do any and all things in
connection with such servicing and administration which it may deem necessary or
desirable. Without limiting the generality of the foregoing and subject to
Section 10.01, the Servicer or its designee is hereby authorized and empowered
unless such power is revoked by the Trustee on account of the occurrence of a
Servicer Default pursuant to Section
-40-
10.01, (i) to instruct the Trustee to make withdrawals and payments from the
Collection Account and any Series Account, as set forth in this Agreement or any
Supplement, (ii) to take any action required or permitted under any Series
Enhancement, as set forth in this Agreement or any Supplement, (iii) to execute
and deliver, on behalf of the Trust for the benefit of the Certificateholders,
any and all instruments of satisfaction or cancellation, or of partial or full
release or discharge, and all other comparable instruments, with respect to the
Receivables and, after the delinquency of any Receivable and to the extent
permitted under and in compliance with applicable Requirements of Law, to
commence enforcement proceedings with respect to such Receivables and (iv) to
make any filings, reports, notices, applications and registrations with, and to
seek any consents or authorizations from, the Securities and Exchange Commission
and any state securities authority on behalf of the Trust as may be necessary or
advisable to comply with any Federal or state securities or reporting
requirements or other laws or regulations. The Trustee shall furnish the
Servicer with any documents necessary or appropriate to enable the Servicer to
carry out its servicing and administrative duties hereunder.
(c) The Servicer shall not, and no Successor Servicer shall, be
obligated to use separate servicing procedures, offices, employees or accounts
for servicing the Receivables from the procedures, offices, employees and
accounts used by the Servicer or such Successor Servicer, as the case may be, in
connection with servicing other credit card receivables.
(d) The Servicer shall comply with and perform its servicing
obligations with respect to the Accounts and Receivables in accordance with the
Credit Card Agreements relating to the Accounts and the Credit Card Guidelines
and all applicable rules and regulations of VISA, MasterCard and any other
similar entity or organization relating to any other type of revolving credit
card accounts included as Accounts, except insofar as any failure to so comply
or perform would not materially and adversely affect the Trust or the Investor
Certificateholders.
(e) The Servicer shall pay out of its own funds, without
reimbursement, all expenses incurred in connection with the Trust and the
servicing activities hereunder including expenses related to enforcement of the
Receivables, fees and disbursements of the Trustee (including the reasonable
fees and expenses of its counsel) and independent accountants and all other fees
and expenses, including the costs of filing UCC continuation statements and the
costs and expenses relating to obtaining and maintaining the listing of any
Investor Certificates on any stock exchange, that are not expressly stated in
this Agreement to be payable by the Trust or the Seller (other than Federal,
state, local and foreign income and franchise taxes, if any, or any interest or
penalties with respect thereto, assessed on the Trust).
-41-
Section 3.02. Servicing Compensation. As full compensation for its
servicing activities hereunder and as reimbursement for any expense incurred by
it in connection therewith, the Servicer shall be entitled to receive the
Servicing Fee specified in any Supplement.
Section 3.03. Representations, Warranties and Covenants of the
Servicer. Household Finance Corporation, as initial Servicer, hereby makes, and
any Successor Servicer by its appointment hereunder shall make, with respect to
itself, on each Closing Date (and on the date of any such appointment), the
following representations, warranties and covenants on which the Trustee shall
be deemed to have relied in accepting the Receivables in trust and in
authenticating the Certificates:
(a) Organization and Good Standing. The Servicer is a national
banking association or corporation validly existing under the applicable law of
the jurisdiction of its organization or incorporation and has, in all material
respects, full power and authority to own its properties and conduct its credit
card servicing business as presently owned or conducted, and to execute, deliver
and perform its obligations under this Agreement and each Supplement.
(b) Due Qualification. The Servicer is duly qualified to do business
and is in good standing as a foreign corporation (or is exempt from such
requirements) and has obtained all necessary licenses and approvals in each
jurisdiction in which the servicing of the Receivables as required by this
Agreement requires such qualification except where the failure to so qualify or
obtain licenses or approvals would not have a material adverse effect on its
ability to perform its obligations as Servicer under this Agreement.
(c) Due Authorization. The execution, delivery, and performance of
this Agreement and each Supplement, and the other agreements and instruments
executed or to be executed by the Servicer as contemplated hereby, have been
duly authorized by the Servicer by all necessary action on the part of the
Servicer.
(d) Binding Obligation. This Agreement and each Supplement
constitutes a legal, valid and binding obligation of the Servicer, enforceable
in accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally from time to time in effect or by
general principles of equity.
(e) No Conflict. The execution and delivery of this Agreement and
each Supplement by the Servicer, and the performance of the transactions
contemplated by this Agreement and each Supplement and the fulfillment of the
terms hereof and thereof applicable to the Servicer, will not conflict with,
violate or result in any breach of any of the material terms and
-42-
provisions of, or constitute (with or without notice or lapse of time or both) a
material default under, any indenture, contract, agreement, mortgage, deed of
trust or other instrument to which the Servicer is a party or by which it or its
properties are bound.
(f) No Violation. The execution and delivery of this Agreement and
each Supplement by the Servicer, the performance of the transactions
contemplated by this Agreement and each Supplement and the fulfillment of the
terms hereof and thereof applicable to the Servicer will not conflict with or
violate any Requirements of Law applicable to the Servicer.
(g) No Proceedings. There are no proceedings or investigations
pending or, to the best knowledge of the Servicer, threatened against the
Servicer before any Governmental Authority seeking to prevent the consummation
of any of the transactions contemplated by this Agreement or any Supplement or
seeking any determination or ruling that, in the reasonable judgment of the
Servicer, would materially and adversely affect the performance by the Servicer
of its obligations under this Agreement or any Supplement.
(h) Compliance with Requirements of Law. The Servicer shall duly
satisfy all obligations on its part to be fulfilled under or in connection with
each Receivable and the related Account, will maintain in effect all
qualifications required under Requirements of Law in order to service properly
each Receivable and the related Account and will comply in all material respects
with all other Requirements of Law in connection with servicing each Receivable
and the related Account the failure to comply with which would have a material
adverse effect on the Investor Certificateholders.
(i) No Rescission or Cancellation. The Servicer shall not permit any
rescission or cancellation of any Receivable except in accordance with the
Credit Card Guidelines or as ordered by a court of competent jurisdiction or
other Governmental Authority.
(j) Protection of Certificateholders' Rights. The Servicer shall take
no action which, nor omit to take any action the omission of which, would impair
the rights of Certificateholders in any Receivable or the related Account, nor
shall it reschedule, revise or defer payments due on any Receivable except in
accordance with the Credit Card Guidelines.
(k) Receivables Not To Be Evidenced by Promissory Notes. Except in
connection with its enforcement or collection of an Account, the Servicer will
take no action to cause any Receivable to be evidenced by any instrument (as
defined in the UCC) and if any Receivable is so evidenced it shall be reassigned
or assigned to the Servicer as provided in this Section.
-43-
(l) All Consents. All authorizations, consents, orders or approvals
of or registrations or declarations with any Governmental Authority required to
be obtained, effected or given by the Servicer in connection with the execution
and delivery of this Agreement and each Supplement by the Servicer and the
performance of the transactions contemplated by this Agreement and each
Supplement by the Servicer, have been duly obtained, effected or given and are
in full force and effect.
In the event (x) any of the representations, warranties or covenants
of the Servicer contained in subsection 3.03 (h), (i) or (j) with respect to any
Receivable or the related Account is breached, and such breach has a material
adverse effect on the Certificateholders' Interest in such Receivable (which
determination shall be made without regard to whether funds are then available
to any Investor Certificateholders pursuant to any Series Enhancement) and is
not cured within 60 days (or such longer period, not in excess of 150 days, as
may be agreed to by the Trustee and the Seller) of the earlier to occur of the
discovery of such event by the Servicer, or receipt by the Servicer of notice of
such event given by the Trustee or the Seller, or (y) as provided in subsection
3.03(k) with respect to any Receivable, all Receivables in the Account or
Accounts to which such event relates shall be assigned and transferred to the
Servicer on the terms and conditions set forth below.
The Servicer shall effect such assignment by making a deposit into the
Collection Account in immediately available funds on the Transfer Date following
the Due Period in which such assignment obligation arises in an amount equal to
the amount of such Receivables.
Upon each such reassignment or assignment to the Servicer, the
Trustee, on behalf of the Trust, shall automatically and without further action
be deemed to sell, transfer, assign, set over and otherwise convey to the
Servicer, without recourse, representation or warranty, all right, title and
interest of the Trust in and to such Receivables, all monies due or to become
due and all amounts received with respect thereto and all proceeds thereof. The
Trustee shall execute such documents and instruments of transfer or assignment
and take such other actions as shall be reasonably requested by the Servicer to
effect the conveyance of any such Receivables pursuant to this Section but only
upon receipt of an Officer's Certificate of the Servicer that states that all
conditions set forth in this section have been satisfied. The obligation of the
Servicer to accept reassignment or assignment of such Receivables, and to make
the deposits, if any, required to be made to the Collection Account as provided
in the preceding paragraph, shall constitute the sole remedy respecting the
event giving rise to such obligation available to Certificateholders (or the
Trustee on behalf of Certificateholders) or any Series Enhancer, except as
provided in Section 8.04.
-44-
Section 3.04. Reports and Records for the Trustee. (a) Daily
Records. On each Business Day, the Servicer shall make or cause to be made
available at the office of the Servicer for inspection by the Trustee upon
request a record setting forth (i) the Collections in respect of Principal
Receivables and in respect of Finance Charge and Administrative Receivables
processed by the Servicer on the second preceding Business Day in respect of
each Account and (ii) the amount of Receivables as of the close of business on
the second preceding Business Day in each Account. The Servicer shall, at all
times, maintain its computer files with respect to the Accounts in such a manner
so that the Accounts may be specifically identified and shall make available to
the Trustee at the office of the Servicer on any Business Day any computer
programs necessary to make such identification. The Trustee shall enter into
such confidentiality agreements as the Servicer shall deem necessary to protect
its interests.
(b) Monthly Servicer's Certificate. Not later than the second
Business Day preceding each Distribution Date, the Servicer shall, with respect
to each outstanding Series, deliver to the Trustee and each Rating Agency a
certificate of a Servicing Officer in substantially the form set forth in the
related Supplement.
Section 3.05. Annual Certificate of Servicer. The Servicer shall
deliver to the Trustee and each Rating Agency on or before March 31 of each
calendar year, beginning with March 31, 1994, an Officer's Certificate
substantially in the form of Exhibit D.
Section 3.06. Annual Servicing Report of Independent Public
Accountants; Copies of Reports Available. (a) On or before March 31 of each
calendar year, beginning with March 31, 1994, the Servicer shall cause a firm of
nationally recognized independent public accountants (who may also render other
services to the Servicer or the Seller) to furnish a report (addressed to the
Trustee) to the Trustee, the Servicer and each Rating Agency to the effect that
they have examined certain documents and records relating to the servicing of
Accounts under this Agreement and each Supplement, compared the information
contained in the Servicer's certificates delivered pursuant to Section 3.04(b)
during the period covered by such report with such documents and records and
that, on the basis of such examination, such accountants are of the opinion that
the servicing has been conducted in compliance with the terms and conditions as
set forth in Articles III and Article IV and Section 8.08 of this Agreement and
the applicable provisions of each Supplement, except for such exceptions as they
believe to be immaterial and such other exceptions as shall be set forth in such
statement.
(b) On or before March 31 of each calendar year, beginning with March
31, 1994, the Servicer shall cause a firm of
-45-
nationally recognized independent public accountants (who may also render other
services to the Servicer or Seller) to furnish a report to the Trustee, the
Servicer and each Rating Agency to the effect that they have compared the
mathematical calculations of each amount set forth in the Servicer's
certificates delivered pursuant to Section 3.04(b) during the period covered by
such report with the Servicer's computer reports which were the source of such
amounts and that on the basis of such comparison, such accountants are of the
opinion that such amounts are in agreement, except for such exceptions as they
believe to be immaterial and such other exceptions as shall be set forth in such
statement.
(c) A copy of each certificate and report provided pursuant to
Section 3.04(b), 3.05 or 3.06 may be obtained by any Investor Certificateholder
or Certificate Owner by a request in writing to the Trustee addressed to the
Corporate Trust Office.
Section 3.07. Tax Treatment. Unless otherwise provided in a
Supplement, it is the intention of the Seller and the Investor
Certificateholders that, with respect to all Taxes, the Investor Certificates
will be treated as indebtedness of the Seller to the Investor Certificateholders
secured by the Receivables (the "Intended Characterization"). The Seller, by
entering into this Agreement, and each Investor Certificateholder, by the
acceptance of its Investor Certificate, agree to report such transactions for
the purposes of all Taxes in a manner consistent with the Intended
Characterization.
Section 3.08. Notices to Household Finance Corporation. In the event
that Household Finance Corporation is no longer acting as Servicer, any
Successor Servicer shall deliver or make available to Household Finance
Corporation each certificate and report required to be provided thereafter
pursuant to Section 3.04(b), 3.05 and 3.06.
Section 3.09. Adjustments. (a) If the Servicer adjusts downward the
amount of any Receivable because of a rebate, refund, unauthorized charge or
billing error to a cardholder, because such Receivable was created in respect of
merchandise which was refused or returned by a cardholder, or because the
Servicer charges off as uncollectible Small Balances, or if the Servicer
otherwise adjusts downward the amount of any Receivable without receiving
Collections therefor or charging off such amount as uncollectible, then, in any
such case, the amount of Principal Receivables used to calculate the Seller's
Participation Amount and the Seller's Interest will be reduced by the amount of
the adjustment. Similarly, the amount of Principal Receivables used to
calculate the Seller's Participation Amount and the Seller's Interest will be
reduced by the amount of any Receivable which was discovered as having been
created through a fraudulent or counterfeit charge or with respect to which the
covenant contained in Section 2.07(b) was breached. Any adjustment required
pursuant to either of the two preceding
-46-
sentences shall be made on or prior to the end of the Due Period in which such
adjustment obligation arises. In the event that, following the exclusion of
such Principal Receivables from the calculation of the Seller's Participation
Amount, the Seller's Participation Amount would be a negative number, not later
than 1:00 P.M., New York City time, on the Distribution Date following the Due
Period in which such adjustment obligation arises, the Seller shall make a
deposit into the Collection Account in immediately available funds in an amount
equal to the amount by which the Seller's Participation Amount would be below
zero (up to the amount of such Principal Receivables). Any amount deposited
into the Collection Account in connection with the adjustment of a Receivable
shall be considered Collections of Principal Receivables and shall be applied in
accordance with Article IV and the terms of each Supplement.
(b) If (i) the Servicer makes a deposit into the Collection Account
in respect of a Collection of a Receivable and such Collection was received by
the Servicer in the form of a check which is not honored for any reason or (ii)
the Servicer makes a mistake with respect to the amount of any Collection and
deposits an amount that is less than or more than the actual amount of such
Collection, the Servicer shall appropriately adjust the amount subsequently
deposited into the Collection Account to reflect such dishonored check or
mistake. Any Receivable in respect of which a dishonored check is received
shall be deemed not to have been paid. Notwithstanding the first two sentences
of this paragraph, adjustments made pursuant to this paragraph shall not require
any change in any report previously delivered pursuant to Section 3.04(a).
Section 3.10. Interchange; Recoveries. (a) If at any time the
Servicer cannot identify the amount of Interchange to be included as Collections
of Finance Charge Receivables with respect to the preceding Due Period, then the
Servicer shall reasonably estimate on or prior to each Determination Date the
amount of Interchange which shall be attributable to Accounts. In such event,
the Servicer shall notify the Bank of such amount prior to 1:00 p.m., New York
City time, on the applicable Distribution Date.
(b) If at any time the Servicer cannot identify the Recoveries which
relate to specific Defaulted Receivables, then the Servicer shall reasonably
estimate, on or prior to each Determination Date, the amount of Recoveries to be
attributed to Accounts.
-47-
ARTICLE IV
RIGHTS OF CERTIFICATEHOLDERS AND
ALLOCATION AND APPLICATION OF COLLECTIONS
Section 4.01. Rights of Certificateholders. The Investor
Certificates shall represent fractional undivided interests in the Trust, which,
with respect to each Series, shall consist of the right to receive, to the
extent necessary to make the required payments with respect to the Investor
Certificates of such Series at the times and in the amounts specified in the
related Supplement, the portion of Collections allocable to Investor
Certificateholders of such Series pursuant to this Agreement and such
Supplement, funds on deposit in the Collection Account allocable to
Certificateholders of such Series pursuant to this Agreement and such
Supplement, funds on deposit in any related Series Account and funds available
pursuant to any related Series Enhancement (collectively, with respect to all
Series, the "Certificateholders' Interest"), it being understood that the
Investor Certificates of any Series or Class shall not represent any interest in
any Series Account or Series Enhancement for the benefit of any other Series or
Class. The Seller's Certificates shall represent the ownership interest in the
remainder of the Trust Assets not allocated pursuant to this Agreement or any
Supplement to the Certificateholders' Interest, including the right to receive
Collections with respect to the Receivables and other amounts at the times and
in the amounts specified in any Supplement to be paid to the Seller on behalf of
all holders of the Seller's Certificates (the "Seller's Interest"); provided,
however, that the Seller's Certificates shall not represent any interest in the
Collection Account, any Series Account or any Series Enhancement, except as
specifically provided in this Agreement or any Supplement.
Section 4.02. Establishment of Collection Account. The Servicer, for
the benefit of the Certificateholders, shall establish and maintain in the name
of the Trustee, on behalf of the Trust, an Eligible Deposit Account bearing a
designation clearly indicating that the funds deposited therein are held for the
benefit of the Certificateholders (the "Collection Account"). The Trustee shall
possess all right, title and interest in all funds on deposit from time to time
in the Collection Account and in all proceeds thereof for the benefit of the
Certificateholders.
The Collection Account shall be under the sole dominion and control of the
Trustee for the benefit of the Certificateholders. Except as expressly provided
in this Agreement, the Servicer agrees that it shall have no right of setoff or
banker's lien against, and no right to otherwise deduct from, any funds held in
the Collection Account for any amount owed to it by the Trustee, the Trust, any
Certificateholder or any Series Enhancer. If, at any time, the Collection
Account ceases to be an Eligible Deposit Account, the Trustee (or the Servicer
on its behalf) shall within 10 Business Days (or such longer period, not to
exceed 30
-48-
calendar days, as to which each Rating Agency may consent) establish a new
Collection Account meeting the conditions specified above, transfer any cash
and/or any investments to such new Collection Account and from the date such new
Collection Account is established, it shall be the "Collection Account".
Pursuant to the authority granted to the Servicer in subsection 3.01(b), the
Servicer shall have the power, revocable by the Trustee, to make withdrawals and
payments from the Collection Account and to instruct the Trustee to make
withdrawals and payments from the Collection Account for the purposes of
carrying out the Servicer's or the Trustee's duties hereunder. The Servicer
shall reduce deposits into the Collection Account payable by the Seller on any
Deposit Date to the extent the Seller is entitled to receive funds from the
Collection Account on such Deposit Date, but only to the extent such reduction
would not reduce the Seller's Participation Amount to an amount less than zero.
Funds on deposit in the Collection Account (other than investment
earnings and amounts deposited pursuant to Sections 2.06, 9.02, 10.01 or 12.02)
shall at the direction of the Servicer be invested by the Trustee in Eligible
Investments selected by the Servicer. All such Eligible Investments shall be
held by the Trustee for the benefit of the Certificateholders. Investments of
funds representing Collections collected during any Due Period shall be invested
in Eligible Investments that will mature so that such funds will be available at
the close of business on each monthly Transfer Date following such Due Period in
amounts sufficient to the extent of such funds to make the required
distributions on the following Distribution Date. Until all Series of
Certificates have been paid in full, the Trustee shall not liquidate such
Eligible Investments prior to their scheduled maturity, unless the Rating Agency
Condition shall have been satisfied. Funds deposited in the Collection Account
on a Transfer Date with respect to the next following Distribution Date are not
required to be invested overnight. On each Distribution Date, all interest and
other investment earnings (net of losses and investment expenses) on funds on
deposit in the Collection Account shall be paid to the Seller, except as
otherwise specified in any Supplement. The Trustee shall bear no responsibility
or liability for any losses resulting from investment or reinvestment of any
funds in accordance with this Section 4.02.
Section 4.03. Collections and Allocations.
(a) The Servicer will apply or will instruct the Trustee to apply all funds on
deposit in the Collection Account as described in this Article IV and in each
Supplement. Except as otherwise provided below, the Servicer shall deposit
Collections into the Collection Account as promptly as possible after the Date
of Processing of such Collections, but in no event later than the second
Business Day following the Date of Processing. Subject to the express terms of
any Supplement, but notwithstanding anything else in this Agreement to the
contrary, for so long as Household
-49-
Finance Corporation remains the Servicer and maintains a commercial paper rating
of not less than A-1 by Standard and Poor's and P-1 by Moody's (or such other
rating below A-1 or P-1, as the case may be, which is satisfactory to each
Rating Agency), and for five Business Days following any reduction of any such
rating, the Servicer need not make the daily deposits of Collections into the
Collection Account as provided in the preceding sentence, but may make a single
deposit in the Collection Account in immediately available funds not later than
1:00 P.M., New York City time, on each Distribution Date. Subject to the first
proviso in Section 4.04, but notwithstanding anything else in this Agreement to
the contrary, with respect to any Due Period, whether the Servicer is required
to make deposits of Collections pursuant to the first or the second preceding
sentence, (i) the Servicer will only be required to deposit Collections into the
Collection Account up to the aggregate amount of Collections required to be
deposited into any Series Account or, without duplication, distributed on or
prior to the related Distribution Date to Investor Certificateholders or to any
Series Enhancer pursuant to the terms of any Supplement or Enhancement Agreement
and (ii) if at any time prior to such Distribution Date the amount of
Collections deposited in the Collection Account exceeds the amount required to
be deposited pursuant to clause (i) above, the Servicer will be permitted to
withdraw the excess from the Collection Account. The Servicer may pay amounts
due to the Seller on the following Deposit Date directly to the Seller and shall
not be required to deposit such amounts in the Collection Account. Subject to
the second preceding sentence, the Servicer may retain its Servicing Fee with
respect to a Series and shall not be required to deposit it in the Collection
Account.
(b) Collections of Finance Charge and Administrative Receivables and
Principal Receivables and Defaulted Receivables and Miscellaneous Payments will
be allocated to each Series on the basis of the Series Allocable Finance Charge
and Administrative Collections of such Series, Series Allocable Principal
Collections, Series Allocable Defaulted Amount and Series Allocable
Miscellaneous Payments and amounts so allocated to any Series will not, except
as specified in the related Supplement, be available to the Investor
Certificateholders of any other Series. Allocations thereof between the
Certificateholders' Interest and the Seller's Interest, among the Series and
among the Classes in any Series, shall be set forth in the related Supplement or
Supplements. On each Determination Date, after the amounts of all allocations
have been determined (i) with respect to all outstanding Series and (ii) as
provided for in any applicable Supplement, the Servicer may, with the consent of
the Seller, allocate any excess Collections which would otherwise be payable to
the Seller at its discretion to one or more of the outstanding Series subject to
the following conditions:
-50-
(i) on or before the fifth Business Day immediately preceding such
allocation, the Servicer shall have given the Trustee and each Rating
Agency notice of such allocation;
(ii) the Rating Agency Condition shall have been satisfied with
respect to such allocation; and
(iii) the Servicer shall have delivered to the Trustee an Officer's
Certificate, dated the date of such allocation, to the effect that the
Servicer reasonably believes that such allocation will not have an Adverse
Effect.
Section 4.04. Unallocated Principal Collections. On each
Determination Date, (a) the Servicer shall allocate Trust Excess Principal
Collections (as described below) to each Series as set forth in the related
Supplement and (b) the Servicer shall withdraw from the Collection Account and
pay to the Seller (i) an amount equal to the excess, if any, of (x) the
aggregate amount for all outstanding Series of Collections of Principal
Receivables which the related Supplements specify are to be treated as "Trust
Excess Principal Collections" for such Distribution Date over (y) the aggregate
amount for all outstanding Series which the related Supplements specify are
"Principal Shortfalls" for such Distribution Date and, without duplication, and
(ii) the aggregate amount for all outstanding Series of that portion of Series
Allocable Principal Collections which the related Supplements specify are to be
allocated and paid to the Seller with respect to such Distribution Date;
provided, however, that, in the case of clauses (i) and (ii), such amounts shall
be paid to the Seller only if the Seller's Participation Amount as of such
Determination Date (determined after giving effect to any Principal Receivables
transferred to the Trust on such date) exceeds zero. The amount required to be
held in the Collection Account as a result of the proviso in the preceding
sentence ("Unallocated Principal Collections") shall be paid to the Seller at
the time the Seller's Participation Amount exceeds zero; provided, however, that
any Unallocated Principal Collections on deposit in the Collection Account at
any time during which any Series is in its accumulation period, amortization
period or Early Amortization Period shall be deemed to be "Miscellaneous
Payments" and shall be allocated and distributed in accordance with Section 4.03
and the terms of each Supplement.
Section 4.05. Discount or Premium Receivables. The Seller may
designate a fixed percentage of the amount of Receivables arising in the
Accounts on and after the date of such designation (a) that would otherwise be
treated as Principal Receivables to be treated as Finance Charge Receivables or
(b) that would otherwise be treated as Finance Charge Receivables to be treated
as Principal Receivables. The Seller must provide 30 days' prior written notice
to the Servicer, the Trustee and each Rating Agency of any such designation, and
such designation will become effective on the date specified therein only if
(i) the
-51-
Seller shall have delivered to the Trustee an Officer's Certificate, dated the
date of such designation, to the effect that the Seller reasonably believes such
designation will not have an Adverse Effect and (ii) the Rating Agency Condition
is satisfied.
Section 4.06. Allocation of Trust Assets to Series or Groups. To the
extent so provided in the Supplement for any Series or in an amendment to the
Pooling and Servicing Agreement executed pursuant to 13.01(a), Receivables
conveyed to the Trust pursuant to Section 2.01 and Receivables or Participation
Interests conveyed to the Trust pursuant to Section 2.09 or any Participation
Interest Supplement, and all Collections received with respect to such
Receivables or Participation Interests, may be allocated in whole or in part to
one or more Series or Groups as may be provided in such Supplement or amendment,
provided, however, that any such allocation shall be effective only upon
satisfaction of the following conditions:
(i) on or before the fifth Business Day immediately preceding such
allocation, the Servicer shall have given the Trustee and each Rating
Agency written notice of such allocation;
(ii) the Rating Agency Condition shall have been satisfied with
respect to such allocation; and
(iii) the Servicer shall have delivered to the Trustee an Officer's
Certificate, dated the date of such allocation, to the effect that the
Servicer reasonably believes that such allocation will not have an Adverse
Effect.
Any such Supplement or amendment may provide that (i) such allocation
to one or more particular Series or Groups may terminate upon the occurrence of
certain events specified therein and (ii) that upon the occurrence of any such
event, such assets and any Collections with respect thereto, shall be
reallocated to other Series or Groups or to all Series, all as shall be provided
in such Supplement or amendment.
ARTICLE V
DISTRIBUTIONS AND REPORTS TO
CERTIFICATEHOLDERS
Distributions shall be made to, and reports shall be provided to,
Certificateholders as set forth in the applicable Supplement. The identity of
the Certificateholders with respect to distributions and reports shall be
determined according to the immediately preceding Record Date.
-52-
ARTICLE VI
THE CERTIFICATES
Section 6.01. The Certificates. The Investor Certificates of any
Series or Class shall be issued in fully registered form ((including, without
limitation, any uncertificated Series or Class which is registered in the
Certificate Register) the "Registered Certificates") unless the applicable
Supplement provides, in accordance with then applicable laws, that such
Certificates be issued in bearer form ("Bearer Certificates") with attached
interest coupons and a special coupon (collectively the "Coupons"). Such
Registered Certificates or Bearer Certificates, as the case may be, shall be
substantially in the form of the exhibits with respect thereto attached to the
applicable Supplement. The HAFC Seller Certificate will be issued in registered
form, substantially in the form of Exhibit A, and shall upon issue, be executed
and delivered by the Seller to the Trustee for authentication and redelivery as
provided in Section 6.02. If specified in any Supplement, the Investor
Certificates of any Series or Class shall be issued upon initial issuance as a
single certificate evidencing the aggregate original principal amount of such
Series or Class as described in Section 6.10. The HAFC Seller Certificate shall
be a single certificate and shall initially represent the entire Seller's
Interest. Each Certificate shall be executed by manual or facsimile signature
on behalf of the Seller by its President or any Vice President or by any
attorney-in-fact duly authorized to execute such Certificate on behalf of any
such officer. Certificates bearing the manual or facsimile signature of an
individual who was, at the time when such signature was affixed, authorized to
sign on behalf of the Seller shall not be rendered invalid, notwithstanding that
such individual ceased to be so authorized prior to the authentication and
delivery of such Certificates or does not hold such office at the date of such
Certificates. No Certificates shall be entitled to any benefit under this
Agreement, or be valid for any purpose, unless there appears on such Certificate
a certificate of authentication substantially in the form provided for herein
executed by or on behalf of the Trustee by the manual signature of a duly
authorized signatory, and such certificate upon any Certificate shall be
conclusive evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder. Bearer Certificates shall be dated the
Series Issuance Date. All Registered Certificates and Seller's Certificates
shall be dated the date of their authentication.
Section 6.02. Authentication of Certificates. The Trustee shall
authenticate and deliver the Investor Certificates of each Series and Class that
are issued upon original issuance to or upon the order of the Seller against
payment to the Seller of the purchase price therefor. The Trustee shall
authenticate and deliver the HAFC Seller Certificate to the Seller
-53-
simultaneously with its delivery of the Investor Certificates of the first
Series to be issued hereunder.
Section 6.03. New Issuances. (a) 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. The Investor Certificates of all outstanding Series
shall be equally and ratably entitled as provided herein to the benefits of this
Agreement without preference, priority or distinction, all in accordance with
the terms and provisions of this Agreement and the applicable Supplement except,
with respect to any Series or Class, as provided in the related Supplement.
(b) Upon satisfaction of the conditions set forth in clauses (i)
through (vii) below on or before the Series Issuance Date relating to any new
Series, the parties hereto will execute and deliver a Supplement which will
specify the Principal Terms of such new Series. The Trustee shall execute the
Supplement and the Seller shall execute the Investor Certificates of such Series
and deliver such Investor Certificates to the Trustee for authentication. In
connection with the issuance of a new Series of Investor Certificates or at any
other time, the Seller may surrender the Seller Certificate to the Trustee in
exchange for a newly issued Seller Certificate and a second certificate (a
"Supplemental Certificate"), the terms of which shall be defined in a supplement
to this Agreement (which supplement shall be subject to Section 13.01 to the
extent that it amends any of the terms of this Agreement); to be delivered to or
upon the order of the Seller (or the holder of a Supplemental Certificate, in
the case of the transfer and exchange thereof):
(i) on or before the eighth Business Day immediately preceding the
Series Issuance Date or Seller Certificate transfer and exchange, as the
case may be, the Seller shall have given the Trustee, the Servicer and each
Rating Agency notice (unless such notice requirement is otherwise waived)
of such issuance and the Series Issuance Date or such Seller Certificate
transfer and exchange, as the case may be;
(ii) the Seller shall have delivered to the Trustee the related
Supplement, in form satisfactory to the Trustee, executed by each party
hereto other than the Trustee;
(iii) the Seller shall have delivered to the Trustee any related
Enhancement Agreement executed by each of the parties thereto, other than
the Trustee;
(iv) the Rating Agency Condition shall have been satisfied with
respect to such issuance or such Seller Certificate transfer and exchange,
as the case may be;
(v) such issuance or transfer and exchange, as the case may be, will
not result in any Adverse Effect and the Seller shall have delivered to the
Trustee an Officer's
-54-
Certificate, dated the Series Issuance Date or the date of such transfer
and exchange, as the case may be, to the effect that the Seller reasonably
believes that such issuance or such transfer and exchange, as the case may
be, will not have an Adverse Effect;
(vi) the Seller shall have delivered to the Trustee and each Rating
Agency a Tax Opinion, dated the Series Issuance Date or the date of such
transfer and exchange, as the case may be, with respect to such issuance or
transfer and exchange, respectively; and
(vii) the balances of the Principal Receivables in the Trust as of the
end of the next preceding Due Period shall not be less than the Required
Minimum Principal Balance as of the Series Issuance Date or the date of
such transfer and exchange, as the case may be, and after giving effect to
such issuance or such transfer and exchange, respectively.
Section 6.04. Registration of Transfer and Exchange of Certificates.
(a) The Trustee shall cause to be kept at the office or agency to be maintained
in accordance with the provisions of Section 11.16 a register (the "Certificate
Register") in which, subject to such reasonable regulations as it may prescribe,
a transfer agent and registrar (which may be the Trustee) (the "Transfer Agent
and Registrar") shall provide for the registration of the Registered
Certificates and of transfers and exchanges of the Registered Certificates as
herein provided. The Transfer Agent and Registrar shall initially be The Bank
of New York.
The Trustee may revoke such appointment and remove The Bank of New
York as Transfer Agent and Registrar if the Trustee determines in its sole
discretion that The Bank of New York failed to perform its obligations under
this Agreement in any material respect. The Bank of New York shall be permitted
to resign as Transfer Agent and Registrar upon 30 days' notice to the Seller,
the Trustee and the Servicer; provided, however, that such resignation shall not
be effective and The Bank of New York shall continue to perform its duties as
Transfer Agent and Registrar until the Trustee has appointed a successor
Transfer Agent and Registrar reasonably acceptable to the Seller.
Upon surrender for registration of transfer of any Registered
Certificate at any office or agency of the Transfer Agent and Registrar
maintained for such purpose, one or more new Registered Certificates (of the
same Series and Class) in authorized denominations of like aggregate fractional
undivided interests in the Certificateholders' Interest shall be executed,
authenticated and delivered, in the name of the designated transferee or
transferees.
At the option of a Registered Certificateholder, Registered
Certificates (of the same Series and Class) may be
-55-
exchanged for other Registered Certificates of authorized denominations of like
aggregate fractional undivided interests in the Certificateholders' Interest,
upon surrender of the Registered Certificates to be exchanged at any such office
or agency; Registered Certificates, including Registered Certificates received
in exchange for Bearer Certificates, may not be exchanged for Bearer
Certificates. At the option of the Holder of a Bearer Certificate, subject to
applicable laws and regulations, Bearer Certificates may be exchanged for other
Bearer Certificates or Registered Certificates (of the same Series and Class) of
authorized denominations of like aggregate fractional undivided interests in the
Certificateholders' Interest, upon surrender of the Bearer Certificates to be
exchanged at an office or agency of the Transfer Agent and Registrar located
outside the United States. Each Bearer Certificate surrendered pursuant to this
Section shall have attached thereto all unmatured Coupons; provided that any
Bearer Certificate, so surrendered after the close of business on the Record
Date preceding the relevant payment date or distribution date after the expected
final payment date need not have attached the Coupon relating to such payment
date or distribution date (in each case, as specified in the applicable
Supplement).
The preceding provisions of this Section notwithstanding, the Trustee
or the Transfer Agent and Registrar, as the case may be, shall not be required
to register the transfer of or exchange any Certificate for a period of 15 days
preceding the due date for any payment with respect to the Certificate.
Whenever any Investor Certificates are so surrendered for exchange,
the Seller shall execute, the Trustee shall authenticate and the Transfer Agent
and Registrar shall deliver (in the case of Bearer Certificates, outside the
United States) the Investor Certificates which the Investor Certificateholder
making the exchange is entitled to receive. Every Investor Certificate
presented or surrendered for registration of transfer or exchange shall be
accompanied by a written instrument of transfer in a form satisfactory to the
Trustee or the Transfer Agent and Registrar duly executed by the Investor
Certificateholder or the attorney-in-fact thereof duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Investor Certificates, but the Transfer Agent and Registrar may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any such transfer or exchange.
All Investor Certificates (together with any Coupons) surrendered for
registration of transfer and exchange or for payment shall be canceled and
disposed of in a manner satisfactory to the Trustee.
-56-
The Seller shall execute and deliver to the Trustee Bearer
Certificates and Registered Certificates in such amounts and at such times as
are necessary to enable the Trustee to fulfill its responsibilities under this
Agreement, each Supplement and the Certificates.
(b) The Transfer Agent and Registrar will maintain at its expense in
the Borough of Manhattan, The City of New York, an office or agency where
Investor Certificates may be surrendered for registration of transfer or
exchange.
Section 6.05. Mutilated, Destroyed, Lost or Stolen Certificates. If
(a) any mutilated Certificate (together, in the case of Bearer Certificates,
with all unmatured Coupons (if any) appertaining thereto) is surrendered to the
Transfer Agent and Registrar, or the Transfer Agent and Registrar receives
evidence to its satisfaction of the destruction, loss or theft of any
Certificate and (b) there is delivered to the Transfer Agent and Registrar and
the Trustee such security or indemnity as may be required by them to save each
of them harmless, then, in the absence of notice to the Trustee that such
Certificate has been acquired by a bona fide purchaser, the Seller shall
execute, the Trustee shall authenticate and the Transfer Agent and Registrar
shall deliver (in the case of Bearer Certificates, outside the United States),
in exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like tenor and aggregate fractional undivided
interest. In connection with the issuance of any new Certificate under this
Section, the Trustee or the Transfer Agent and Registrar may require the payment
by the Certificateholder of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee and Transfer Agent and
Registrar) connected therewith. Any duplicate Certificate issued pursuant to
this Section shall constitute complete and indefeasible evidence of ownership in
the Trust, as if originally issued, whether or not the lost, stolen or destroyed
Certificate shall be found at any time.
Section 6.06. Persons Deemed Owners. The Trustee, the Paying Agent,
the Transfer Agent and Registrar and any agent of any of them may (a) prior to
due presentation of a Registered Certificate for registration of transfer, treat
the Person in whose name any Registered Certificate is registered as the owner
of such Registered Certificate for the purpose of receiving distributions
pursuant to the terms of the applicable Supplement and for all other purposes
whatsoever, and (b) treat the bearer of a Bearer Certificate or Coupon as the
owner of such Bearer Certificate or Coupon for the purpose of receiving
distributions pursuant to the terms of the applicable Supplement and for all
other purposes whatsoever; and, in any such case, neither the Trustee, the
Paying Agent, the Transfer Agent and Registrar nor any agent of any of them
shall be affected by any notice to the contrary. Notwithstanding the foregoing,
in determining whether
-57-
the Holders of the requisite Investor Certificates have given any request,
demand, authorization, direction, notice, consent or waiver hereunder,
Certificates owned by any of the Seller, the Servicer, any other holder of a
Seller's Certificate or any Affiliate thereof, shall be disregarded and deemed
not to be outstanding, except that, in determining whether the Trustee shall be
protected in relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only Certificates which the Trustee knows to be so
owned shall be so disregarded. Certificates so owned which have been pledged in
good faith shall not be disregarded and may be regarded as outstanding if the
pledgee establishes to the satisfaction of the Trustee the pledgee's right so to
act with respect to such Certificates and that the pledgee is not the Seller,
the Servicer, any other holder of a Seller's Certificate or any Affiliate
thereof. None of the Seller, the Servicer, the Trustee, the Registrar or the
Paying Agent will have any responsibility or liability for any of the records
relating to or on account of beneficial ownership in Book-Entry Certificates or
for maintaining, supervising or reviewing records relating thereto.
Section 6.07. Appointment of Paying Agent. The Paying Agent shall
make distributions to Investor Certificateholders from the Collection Account or
applicable Series Account pursuant to the provisions of the applicable
Supplement and shall report the amounts of such distributions to the Trustee.
Any Paying Agent shall have the revocable power to withdraw funds from the
Collection Account or applicable Series Account for the purpose of making the
distributions referred to above. The Trustee may revoke such power and remove
the Paying Agent if the Trustee determines in its sole discretion that the
Paying Agent shall have failed to perform its obligations under this Agreement
or any Supplement in any material respect. The Paying Agent shall initially be
The Bank of New York. In the event that The Bank of New York shall no longer be
the Paying Agent, the Trustee shall appoint a successor to act as Paying Agent.
The Trustee shall act as Paying Agent until a successor is appointed. The
Trustee shall cause each successor or additional Paying Agent to execute and
deliver to the Trustee an instrument in which such successor or additional
Paying Agent shall agree with the Trustee that it will hold all sums, if any,
held by it for payment to the Investor Certificateholders in trust for the
benefit of the Investor Certificateholders entitled thereto until such sums
shall be paid to such Investor Certificateholders. The Paying Agent shall
return all unclaimed funds to the Trustee and upon removal shall also return all
funds in its possession to the Trustee. The provisions of Sections 11.01,
11.02, 11.03 and 11.05 shall apply to the Trustee also in its role as Paying
Agent, for so long as the Trustee shall act as Paying Agent.
Section 6.08. Access to List of Registered Certificateholders' Names
and Addresses. The Trustee will furnish or cause to be furnished by the
Transfer Agent and
-58-
Registrar to the Servicer or the Paying Agent, within five Business Days after
receipt by the Trustee of a request therefor, a list in such form as the
Servicer or the Paying Agent may reasonably require, of the names and addresses
of the Registered Certificateholders. If any Holder or group of Holders of
Investor Certificates of any Series or all outstanding Series, as the case may
be, evidencing not less than 10% of the aggregate unpaid principal amount of
such Series or all outstanding Series, as applicable (the "Applicants"), apply
to the Trustee, and such application states that the Applicants desire to
communicate with other Investor Certificateholders with respect to their rights
under this Agreement or any Supplement or under the Investor Certificates and is
accompanied by a copy of the communication which such Applicants propose to
transmit, then the Trustee, after having been adequately indemnified by such
Applicants for its costs and expenses, shall afford or shall cause the Transfer
Agent and Registrar to afford such Applicants access during normal business
hours to the most recent list of Registered Certificateholders of such Series or
all outstanding Series, as applicable, held by the Trustee, within five Business
Days after the receipt of such application. Such list shall be as of a date no
more than 45 days prior to the date of receipt of such Applicants' request.
With respect to any Series of Registered Certificates, every
Registered Certificateholder, by receiving and holding a Registered Certificate,
agrees with the Trustee that neither the Trustee, the Transfer Agent and
Registrar, nor any of their respective agents, shall be held accountable by
reason of the disclosure of any such information as to the names and addresses
of the Registered Certificateholders hereunder, regardless of the sources from
which such information was derived.
Section 6.09. Authenticating Agent. (a) The Trustee may appoint one
or more authenticating agents with respect to the Certificates which shall be
authorized to act on behalf of the Trustee in authenticating the Certificates in
connection with the issuance, delivery, registration of transfer, exchange or
repayment of the Certificates. Whenever reference is made in this Agreement to
the authentication of Certificates by the Trustee or the Trustee's certificate
of authentication, such reference shall be deemed to include authentication on
behalf of the Trustee by an authenticating agent and certificate of
authentication executed on behalf of the Trustee by an authenticating agent.
Each authenticating agent must be acceptable to the Seller and the Servicer.
(b) Any institution succeeding to the corporate agency business of an
authenticating agent shall continue to be an authenticating agent without the
execution or filing of any power or any further act on the part of the Trustee
or such authenticating agent. An authenticating agent may at any time resign by
giving notice of resignation to the Trustee and to the Seller. The Trustee may
at any time terminate the agency of an
-59-
authenticating agent by giving notice of termination to such authenticating
agent and to the Seller. Upon receiving such a notice of resignation or upon
such a termination, or in case at any time an authenticating agent shall cease
to be acceptable to the Trustee or the Seller, the Trustee promptly may appoint
a successor authenticating agent. Any successor authenticating agent upon
acceptance of its appointment hereunder shall become vested with all the rights,
powers and duties of its predecessor hereunder, with like effect as if
originally named as an authenticating agent. No successor authenticating agent
shall be appointed unless acceptable to the Trustee and the Seller. The Seller
agrees to pay to each authenticating agent from time to time reasonable
compensation for its services under this Section. The provisions of Sections
11.01, 11.02 and 11.03 shall be applicable to any authenticating agent.
(c) Pursuant to an appointment made under this Section, the
Certificates may have endorsed thereon, in lieu of the Trustee's certificate of
authentication, an alternate certificate of authentication in substantially the
following form:
This is one of the Certificates described in the Pooling and Servicing
Agreement.
____________________________
____________________________
as Authenticating Agent
for the Trustee,
By _________________________
Authorized Officer
Section 6.10. Book-Entry Certificates. Unless otherwise specified in
the related Supplement for any Series or Class, the Investor Certificates, upon
original issuance, shall be issued in the form of one or more master Investor
Certificates representing the Book-Entry Certificates, to be delivered to the
Clearing Agency, by, or on behalf of, the Seller. The Investor Certificates
shall initially be registered on the Certificate Register in the name of the
Clearing Agency or its nominee, and no Certificate Owner will receive a
definitive certificate representing such Certificate Owner's interest in the
Investor Certificates, except as provided in Section 6.12. Unless and until
definitive, fully registered Investor Certificates ("Definitive Certificates")
have been issued to the applicable Certificate Owners pursuant to Section 6.12
or as otherwise specified in any such Supplement:
(a) the provisions of this Section shall be in full force and
effect;
-60-
(b) the Seller, the Servicer and the Trustee may deal with the
Clearing Agency and the Clearing Agency Participants for all purposes
(including the making of distributions) as the authorized representatives
of the respective Certificate Owners;
(c) to the extent that the provisions of this Section conflict
with any other provisions of this Agreement, the provisions of this Section
shall control; and
(d) the rights of the respective Certificate Owners shall be
exercised only through the Clearing Agency and the Clearing Agency
Participants and shall be limited to those established by law and
agreements between such Certificate Owners and the Clearing Agency and/or
the Clearing Agency Participants. Pursuant to the Depository Agreement,
unless and until Definitive Certificates are issued pursuant to Section
6.12, the Clearing Agency will make book-entry transfers among the Clearing
Agency Participants and receive and transmit distributions of principal and
interest on the related Investor Certificates to such Clearing Agency
Participants.
For purposes of any provision of this Agreement requiring or
permitting actions with the consent of, or at the direction of, Investor
Certificateholders evidencing a specified percentage of the aggregate unpaid
principal amount of Investor Certificates, such direction or consent may be
given by Certificate Owners (acting through the Clearing Agency and the Clearing
Agency Participants) owning Investor Certificates evidencing the requisite
percentage of principal amount of Investor Certificates.
Section 6.11. Notices to Clearing Agency. Whenever any notice or
other communication is required to be given to Investor Certificateholders of
any Series or Class with respect to which Book-Entry Certificates have been
issued, unless and until Definitive Certificates shall have been issued to the
related Certificate Owners, the Trustee shall give all such notices and
communications to the applicable Clearing Agency.
Section 6.12. Definitive Certificates. If Book-Entry Certificates
have been issued with respect to any Series or Class and (a) the Seller advises
the Trustee that the Clearing Agency is no longer willing or able to discharge
properly its responsibilities under the Depository Agreement with respect to
such Series or Class and the Trustee or the Seller is unable to locate a
qualified successor, (b) the Seller, at its option, advises the Trustee that it
elects to terminate the book-entry system with respect to such Series or Class
through the Clearing Agency or (c) after the occurrence of a Servicer Default,
Certificate Owners of such Series or Class evidencing not less
-61-
than 50% of the aggregate unpaid principal amount of such Series or Class advise
the Trustee and the Clearing Agency through the Clearing Agency Participants
that the continuation of a book-entry system with respect to the Investor
Certificates of such Series or Class through the Clearing Agency is no longer in
the best interests of the Certificate Owners with respect to such Certificates,
then the Trustee shall notify all Certificate Owners of such Certificates,
through the Clearing Agency, of the occurrence of any such event and of the
availability of Definitive Certificates to Certificate Owners requesting the
same. Upon surrender to the Trustee of any such Certificates by the Clearing
Agency, accompanied by registration instructions from the Clearing Agency for
registration, the Trustee shall authenticate and deliver such Definitive
Certificates. Neither the Seller nor the Trustee shall be liable for any delay
in delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of such
Definitive Certificates all references herein to obligations imposed upon or to
be performed by the Clearing Agency shall be deemed to be imposed upon and
performed by the Trustee, to the extent applicable with respect to such
Definitive Certificates and the Trustee shall recognize the Holders of such
Definitive Certificates as Investor Certificateholders hereunder.
Section 6.13. Uncertificated Classes. Notwithstanding anything to
the contrary contained in this Article VI or in Article XII, unless otherwise
specified in any Supplement any provisions contained in this Article VI and in
Article XII relating to the registration form, execution, authentication,
delivery, presentation, cancellation and surrender of Certificates shall not be
applicable to any uncertificated Certificates.
ARTICLE VII
OTHER MATTERS RELATING TO THE SELLER
Section 7.01. Liability of the Seller. The Seller shall be liable
for all obligations, covenants, representations and warranties of the Seller
arising under or related to this Agreement or any Supplement. Except as
provided in the preceding sentence, the Seller shall be liable only to the
extent of the obligations specifically undertaken by it in its capacity as
Seller.
Section 7.02. Merger or Consolidation of, or Assumption of the
Obligations of, the Seller. (a) The Seller shall not dissolve, liquidate,
consolidate with or merge into any other corporation or convey, transfer or sell
its properties and assets substantially as an entirety to any Person unless:
-62-
(i) (x) the corporation formed by such consolidation or into which the
Seller is merged or the Person which acquires by conveyance, transfer or
sale the properties and assets of the Seller substantially as an entirety
shall be, if the Seller is not the surviving entity, organized and existing
under the laws of the United States of America or any State or the District
of Columbia, and shall be a savings and loan association, a national
banking association, a bank or other entity which is not subject to Title
11 of the United States Code or is a special purpose corporation whose
powers and activities are limited to the performance of the Seller's
obligations under this Agreement and any Supplement and, if the Seller is
not the surviving entity, shall expressly assume, by an agreement
supplemental hereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, the performance of every covenant and
obligation of the Seller hereunder; and (y) the Seller or the surviving
entity, as the case may be, has delivered to the Trustee (with a copy to
the Rating Agency) an Officer's Certificate and an Opinion of Counsel each
stating that such consolidation, merger, conveyance, transfer or sale and
such supplemental agreement comply with this Section, that such
supplemental agreement is a valid and binding obligation of such surviving
entity enforceable against such surviving entity in accordance with its
terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally from time to time in effect or
general principles of equity, and that all conditions precedent herein
provided for relating to such transaction have been complied with; and
(ii) the Rating Agency Condition shall have been satisfied with
respect to such consolidation, merger, conveyance or transfer.
(b) Except as permitted by Section 2.07(c), the obligations, rights
or any part thereof of the Seller hereunder shall not be assignable nor shall
any Person succeed to such obligations or rights of the Seller hereunder except
(i) for conveyances, mergers, consolidations, assumptions, sales or transfers in
accordance with the provisions of the foregoing paragraph and (ii) conveyances,
mergers, consolidations, assumptions, sales or transfers to other entities (1)
which the Seller and the Servicer determine will not result in an Adverse
Effect, (2) which meet the requirements of clause (ii) of the preceding
paragraph and (3) for which such purchaser, transferee, pledgee or entity shall
expressly assume, in an agreement supplemental hereto, executed and delivered to
the Trustee in writing in form satisfactory to the Trustee, the performance of
every covenant and obligation of the Seller thereby conveyed.
Section 7.03. Limitations on Liability of the Seller. Subject to
Section 7.01, neither the Seller nor any of the
-63-
directors, officers, employees or agents of the Seller acting in such capacities
shall be under any liability to the Trust, the Trustee, the Certificateholders,
any Series Enhancer or any other Person for any action taken or for refraining
from the taking of any action in good faith in such capacities pursuant to this
Agreement; provided, however, that this provision shall not protect the Seller
or any such person against any liability which would otherwise be imposed by
reason of willful misfeasance, bad faith or gross negligence in the performance
of duties or by reason of reckless disregard of obligations and duties
hereunder. The Seller and any director, officer, employee or agent of the
Seller may rely in good faith on any document of any kind prima facie properly
executed and submitted by any Person (other than the Seller) respecting any
matters arising hereunder.
Section 7.04. Seller Indemnification of the Trust and the Trustee.
The Seller shall indemnify and hold harmless the Trust and the Trustee from and
against any loss, liability, expense, damage or injury suffered or sustained by
reason of (a) any acts or omissions of the Seller with respect to the Trust
pursuant to this Agreement or (b) the administration by the Trustee of the Trust
(in the case of clause (a) or (b), other than such as may arise from the
negligence or wilful misconduct of the Trustee), including any judgment, award,
settlement, reasonable attorneys' fees and other costs or expenses incurred in
connection with the defense of any action, proceeding or claim. Indemnification
pursuant to this Section shall not be payable from the Trust Assets.
ARTICLE VIII
OTHER MATTERS RELATING TO THE SERVICER
Section 8.01. Liability of the Servicer. The Servicer shall be
liable under this Article only to the extent of the obligations specifically
undertaken by the Servicer in its capacity as Servicer.
Section 8.02. Merger or Consolidation of, or Assumption of the
Obligations of, the Servicer. The Servicer shall not consolidate with or merge
into any other corporation or convey, transfer or sell its properties and assets
substantially as an entirety to any Person, unless:
(a) (i) the corporation formed by such consolidation or into which
the Servicer is merged or the Person which acquires by conveyance, transfer
or sale the properties and assets of the Servicer substantially as an
entirety shall be, if the Servicer is not the surviving entity, a
corporation organized and existing under the laws of the United States of
America or any State or the District of Columbia, and, if the Servicer is
not the surviving entity, such corporation shall expressly assume, by an
agreement
-64-
supplemental hereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, the performance of every covenant and
obligation of the Servicer hereunder;
(ii) the Servicer has delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel each stating that such consolidation,
merger, conveyance, transfer or sale comply with this Section and that all
conditions precedent herein provided for relating to such transaction have
been complied with;
(b) the Rating Agency Condition shall have been satisfied with
respect to such assignment and succession; and
(c) the corporation formed by such consolidation or into which
the Servicer is merged or the Person which acquires by conveyance or
transfer the properties and assets of the Servicer substantially as an
entirety shall be an Eligible Servicer.
Section 8.03. Limitation on Liability of the Servicer and Others.
Except as provided in Section 8.04 and Section 11.05, neither the Servicer nor
any of the directors, officers, employees or agents of the Servicer in its
capacity as Servicer shall be under any liability to the Trust, the Trustee, the
Certificateholders, any Series Enhancer or any other person for any action taken
or for refraining from the taking of any action in good faith in its capacity as
Servicer pursuant to this Agreement; provided, however, that this provision
shall not protect the Servicer or any such Person against any liability which
would otherwise be imposed by reason of willful misfeasance, bad faith or gross
negligence in the performance of duties or by reason of reckless disregard of
obligations and duties hereunder. The Servicer and any director, officer,
employee or agent of the Servicer may rely in good faith on any document of any
kind prima facie properly executed and submitted by any Person (other than the
Servicer) respecting any matters arising hereunder. The Servicer shall not be
under any obligation to appear in, prosecute or defend any legal action which is
not incidental to its duties as Servicer in accordance with this Agreement and
which in its reasonable judgment may involve it in any expense or liability.
The Servicer may, in its sole discretion, undertake any such legal action which
it may deem necessary or desirable for the benefit of the Certificateholders
with respect to this Agreement and the rights and duties of the parties hereto
and the interests of the Certificateholders hereunder.
Section 8.04. Servicer Indemnification of the Trust and the Trustee.
The Servicer shall indemnify and hold harmless the Trust and the Trustee from
and against any loss, liability, expense, damage or injury suffered or sustained
by reason of (a) any acts or omissions of the Servicer with respect to the Trust
-65-
pursuant to this Agreement or (b) the administration by the Trustee of the Trust
(in the case of clause (a) or (b), other than such as may arise from the
negligence or wilful misconduct of the Trustee), including any judgment, award,
settlement, reasonable attorneys' fees and other costs or expenses incurred in
connection with the defense of any action, proceeding or claim. Indemnification
pursuant to this Section shall not be payable from the Trust Assets.
Section 8.05. Resignation of the Servicer. The Servicer shall not
resign from the obligations and duties hereby imposed on it except (a) upon
determination that (i) the performance of its duties hereunder is no longer
permissible under applicable law and (ii) there is no reasonable action which
the Servicer could take to make the performance of its duties hereunder
permissible under applicable law or (b) upon the assumption, by an agreement
supplemental hereto, executed and delivered to the Trustee, in form satisfactory
to the Trustee, of the obligations and duties of the Servicer hereunder by any
of its Affiliates that is a direct or indirect wholly owned subsidiary of
Household International, Inc. or by any other entity the appointment of which
shall have satisfied the Rating Agency Condition and, in either case, qualifies
as an Eligible Servicer. Any determination permitting the resignation of the
Servicer shall be evidenced as to clause (a) above by an Opinion of Counsel to
such effect delivered to the Trustee. No resignation shall become effective
until the Trustee or a Successor Servicer shall have assumed the
responsibilities and obligations of the Servicer in accordance with Section
10.02 hereof. If within 120 days of the date of the determination that the
Servicer may no longer act as Servicer under clause (a) above the Trustee is
unable to appoint a Successor Servicer, the Trustee shall serve as Successor
Servicer. Notwithstanding the foregoing, the Trustee shall, if it is legally
unable so to act, petition a court of competent jurisdiction to appoint any
established institution qualifying as an Eligible Servicer as the Successor
Servicer hereunder. The Trustee shall give prompt notice to each Rating Agency
and each Series Enhancer upon the appointment of a Successor Servicer.
Section 8.06. Access to Certain Documentation and Information
Regarding the Receivables. The Servicer shall provide to the Trustee access to
the documentation regarding the Accounts and the Receivables in such cases where
the Trustee is required in connection with the enforcement of the rights of
Certificateholders or by applicable statutes or regulations to review such
documentation, such access being afforded without charge but only (a) upon
reasonable request, (b) during normal business hours, (c) subject to the
Servicer's normal security and confidentiality procedures and (d) at reasonably
accessible offices in the continental United States designated by the Servicer.
Nothing in this Section shall derogate from the obligation of the Seller, the
Trustee and the Servicer to observe any applicable law prohibiting disclosure of
information
-66-
regarding the Obligors and the failure of the Servicer to provide access as
provided in this Section as a result of such obligation shall not constitute a
breach of this Section.
Section 8.07. Delegation of Duties. In the ordinary course of
business, the Servicer may at any time delegate its duties hereunder with
respect to the Accounts and the Receivables to any Person that agrees to conduct
such duties in accordance with the Credit Card Guidelines and this Agreement.
Such delegation shall not relieve the Servicer of its liability and
responsibility with respect to such duties, and shall not constitute a
resignation within the meaning of Section 8.05.
Section 8.08. Examination of Records. The Seller and the Servicer
shall indicate generally in their computer files or other records that the
Receivables arising in the Accounts have been conveyed to the Trustee, on behalf
of the Trust, pursuant to this Agreement for the benefit of the
Certificateholders. The Seller and the Servicer shall, prior to the sale or
transfer to a third party of any receivable held in its custody, examine its
computer records and other records to determine that such receivable is not a
Receivable.
ARTICLE IX
AMORTIZATION EVENTS
Section 9.01. Amortization Events. If any one of the following
events shall occur:
(a) the Seller, the Bank or any Additional Seller shall consent to the
appointment of a conservator, receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings of or relating to the Seller, the Bank or any Additional Seller or
of or relating to all or substantially all of each such entity's respective
property, or a decree or order of a court or agency or supervisory authority
having jurisdiction in the premises for the appointment of a conservator,
receiver or liquidator in any insolvency, readjustment of debt, marshalling of
assets and liabilities or similar proceedings, or for the winding-up or
liquidation of each such entity's respective affairs, shall have been entered
against the Seller, the Bank or any Additional Seller; or the Seller, the Bank
or any Additional Seller shall admit in writing its respective inability to pay
its debts generally as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for the
benefit of its respective creditors or voluntarily suspend payment of its
respective obligations (any such act or occurrence being an "Insolvency Event");
or
(b) with respect to any Series, any Amortization Event set forth in
the related Supplement;
-67-
then, subject to applicable law, in the case of any event described in
paragraph (a), an Amortization Event shall occur with respect to all outstanding
Series without any notice or other action on the part of the Trustee or the
Certificateholders immediately upon the occurrence of such event and in the case
of any event described in paragraph (b), such Amortization Event shall be an
Amortization Event only for such Series and the applicable Supplement shall set
forth provisions which shall govern each such Amortization Event set forth
therein.
The Trustee, upon learning of any Amortization Event, shall promptly
notify each Rating Agency.
Section 9.02. Additional Rights upon the Occurrence of Certain
Events. (a) If an Insolvency Event occurs with respect to the Seller, the
Seller shall on the day any such Insolvency Event (the "Appointment Date"),
immediately cease to transfer Principal Receivables to the Trust and shall
promptly give notice to the Trustee thereof. Notwithstanding any cessation of
the transfer to the Trust of additional Principal Receivables, Principal
Receivables transferred to the Trust prior to the occurrence of such Insolvency
Event and Collections in respect of such Principal Receivables and Finance
Charge and Administrative Receivables whenever created, accrued in respect of
such Principal Receivables, shall continue to be a part of the Trust. Within 15
days of the Appointment Date, the Trustee shall (i) publish a notice in an
Authorized Newspaper that an Insolvency Event has occurred and that the Trustee
intends to sell, dispose of or otherwise liquidate the Receivables on
commercially reasonable terms and in a commercially reasonable manner and (ii)
give notice to Certificateholders describing the provisions of this Section and
requesting instructions from such Holders. Unless (x) the Trustee shall have
received instructions within 90 days from the date notice pursuant to clause (i)
above is first published from Holders of Investor Certificates evidencing more
than 50% of the aggregate unpaid principal amount of each Series to the effect
that such Investor Certificateholders disapprove of the liquidation of the
Receivables or (y) the Trustee shall have received instructions in accordance
with any Supplement that the Trustee shall not proceed with such liquidation,
the Trustee shall promptly sell, dispose of or otherwise liquidate the
Receivables in a commercially reasonable manner and on commercially reasonable
terms, which shall include the solicitation of competitive bids. The Trustee may
obtain a prior determination from any such conservator, receiver or liquidator
that the terms and manner of any proposed sale, disposition or liquidation are
commercially reasonable. The provisions of Sections 9.01 and 9.02 shall not be
deemed to be mutually exclusive.
(b) The proceeds from the sale, disposition or liquidation of the
Receivables pursuant to paragraph (a) ("Insolvency Proceeds") shall be
immediately deposited in the Collection Account. The Trustee shall determine
conclusively the
-68-
amount of the Insolvency Proceeds which are deemed to be Finance Charge and
Administrative Receivables and Principal Receivables. Proceeds shall be
allocated to Finance Charge and Administrative Receivables and Principal
Receivables in the same proportion as the amount of Finance Charge and
Administrative Receivables and Principal Receivables bear to one another on the
prior Determination Date. The Insolvency Proceeds shall be allocated and
distributed to Investor Certificateholders in accordance with the terms of each
Supplement and the Trust shall terminate immediately thereafter.
ARTICLE X
SERVICER DEFAULTS
Section 10.01. Servicer Defaults. If any one of the following events
(a "Servicer Default") shall occur and be continuing:
(a) any failure by the Servicer to make any payment, transfer or
deposit or to give instructions or to give notice to the Trustee to make such
payment, transfer or deposit on or before the date occurring five Business Days
after the date such payment, transfer or deposit or such instruction or notice
is required to be made or given, as the case may be, under the terms of this
Agreement or any Supplement;
(b) failure on the part of the Servicer duly to observe or perform in
any material respect any other covenants or agreements of the Servicer set forth
in this Agreement or any Supplement which has an Adverse Effect and which
continues unremedied for a period of 60 days after the date on which notice of
such failure, requiring the same to be remedied, shall have been given to the
Servicer by the Trustee, or to the Servicer and the Trustee by Holders of
Investor Certificates evidencing not less than 10% of the aggregate unpaid
principal amount of all Investor Certificates (or, with respect to any such
failure that does not relate to all Series, 10% of the aggregate unpaid
principal amount of all Series to which such failure relates); or the Servicer
shall assign or delegate its duties under this Agreement, except as permitted by
Sections 8.02 and 8.07;
(c) any representation, warranty or certification made by the Servicer
in this Agreement or any Supplement or in any certificate delivered pursuant to
this Agreement or any Supplement shall prove to have been incorrect when made,
which has an Adverse Effect on the rights of the Investor Certificateholders of
any Series (which determination shall be made without regard to whether funds
are then available pursuant to any Series Enhancement) and which material
adverse effect continues for a period of 60 days after the date on which notice
thereof, requiring the same to be remedied, shall have been given to the
Servicer by the Trustee, or to the Servicer and the
-69-
Trustee by the Holders of Investor Certificates evidencing not less than 10% of
the aggregate unpaid principal amount of all Investor Certificates (or, with
respect to any such representation, warranty or certification that does not
relate to all Series, 10% of the aggregate unpaid principal amount of all Series
to which such representation, warranty or certification relates); or
(d) the Servicer shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt, marshalling of
assets and liabilities or similar proceedings of or relating to the Servicer or
of or relating to all or substantially all its property, or a decree or order of
a court or agency or supervisory authority having jurisdiction in the premises
for the appointment of a conservator or receiver or liquidator in any
insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings, or the winding-up or liquidation of its affairs, shall have
been entered against the Servicer and such decree or order shall have remained
in force undischarged or unstayed for a period of 60 days; or the Servicer shall
admit in writing its inability to pay its debts generally as they become due,
file a petition to take advantage of any applicable insolvency or reorganization
statute, make any assignment for the benefit of its creditors or voluntarily
suspend payment of its obligations;
then, in the event of any Servicer Default, so long as the Servicer Default
shall not have been remedied, either the Trustee, or the Holders of Investor
Certificates evidencing more than 50% of the aggregate unpaid principal amount
of all Investor Certificates, by notice then given to the Servicer (and to the
Trustee and any Series Enhancer if given by the Investor Certificateholders) (a
"Termination Notice"), may terminate all but not less than all the rights and
obligations of the Servicer as Servicer under this Agreement and in and to the
Receivables and the proceeds thereof; provided, however, if within 60 days of
receipt of a Termination Notice the Trustee does not receive any bids from
Eligible Servicers in accordance with Section 10.02(c) to act as a Successor
Servicer and receives an Officer's Certificate of the Seller to the effect that
the Servicer cannot in good faith cure the Servicer Default which gave rise to
the Termination Notice, the Trustee shall grant a right of first refusal to the
Seller which would permit the Seller at its option to purchase the
Certificateholders' Interest on the Distribution Date in the next calendar
month.
The purchase price for the Certificateholders' Interest shall be equal
to the sum of the amounts specified therefor with respect to each outstanding
Series in the related Supplement. The Seller shall notify the Trustee prior to
the Record Date for the Distribution Date of the purchase if it is exercising
such right of first refusal. If the Seller exercises such right of first
refusal, the Seller shall deposit the purchase price into the Collection Account
not later than 1:00 P.M., New York City
-70-
time, on such Distribution Date in immediately available funds. The purchase
price shall be allocated and distributed to Investor Certificateholders in
accordance with the terms of each Supplement.
After receipt by the Servicer of a Termination Notice, and on the date
that a Successor Servicer is appointed by the Trustee pursuant to Section 10.02,
all authority and power of the Servicer under this Agreement shall pass to and
be vested in the Successor Servicer (a "Service Transfer"); and, without
limitation, the Trustee is hereby authorized and empowered (upon the failure of
the Servicer to cooperate) to execute and deliver, on behalf of the Servicer, as
attorney-in-fact or otherwise, all documents and other instruments upon the
failure of the Servicer to execute or deliver such documents or instruments, and
to do and accomplish all other acts or things necessary or appropriate to effect
the purposes of such Service Transfer. The Servicer agrees to cooperate with
the Trustee and such Successor Servicer in effecting the termination of the
responsibilities and rights of the Servicer to conduct servicing hereunder,
including the transfer to such Successor Servicer of all authority of the
Servicer to service the Receivables provided for under this Agreement, including
all authority over all Collections which shall on the date of transfer be held
by the Servicer for deposit, or which have been deposited by the Servicer, in
the Collection Account, or which shall thereafter be received with respect to
the Receivables, and in assisting the Successor Servicer. The Servicer shall
within 20 Business Days transfer its electronic records relating to the
Receivables to the Successor Servicer in such electronic form as the Successor
Servicer may reasonably request and shall promptly transfer to the Successor
Servicer all other records, correspondence and documents necessary for the
continued servicing of the Receivables in the manner and at such times as the
Successor Servicer shall reasonably request. To the extent that compliance with
this Section shall require the Servicer to disclose to the Successor Servicer
information of any kind which the Servicer deems to be confidential, the
Successor Servicer shall be required to enter into such customary licensing and
confidentiality agreements as the Servicer shall deem necessary to protect its
interest.
Notwithstanding the foregoing, a delay in or failure of performance
referred to in paragraph (a) above for a period of 10 Business Days after the
applicable grace period or under paragraph (b) or (c) above for a period of 60
Business Days after the applicable grace period, shall not constitute a Servicer
Default if such delay or failure could not be prevented by the exercise of
reasonable diligence by the Servicer and such delay or failure was caused by an
act of God or the public enemy, acts of declared or undeclared war, public
disorder, rebellion or sabotage, epidemics, landslides, lightning, fire,
hurricanes, earthquakes, floods or similar causes. The preceding sentence shall
not relieve the Servicer from using its best efforts to perform its obligations
in a timely manner in accordance with the
-71-
terms of this Agreement and the Servicer shall provide the Trustee, the Seller
and any Series Enhancer with an Officer's Certificate giving prompt notice of
such failure or delay by it, together with a description of its efforts so to
perform its obligations.
Section 10.02. Trustee To Act; Appointment of Successor. (a) On and
after the receipt by the Servicer of a Termination Notice pursuant to Section
10.01, the Servicer shall continue to perform all servicing functions under this
Agreement until the date specified in the Termination Notice or otherwise
specified by the Trustee or until a date mutually agreed upon by the Servicer
and Trustee. The Trustee shall as promptly as possible after the giving of a
Termination Notice appoint an Eligible Servicer as a successor servicer (the
"Successor Servicer"), and such Successor Servicer shall accept its appointment
by a written assumption in a form acceptable to the Trustee. In the event that
a Successor Servicer has not been appointed or has not accepted its appointment
at the time when the Servicer ceases to act as Servicer, the Trustee without
further action shall automatically be appointed the Successor Servicer. The
Trustee may delegate any of its servicing obligations to an Affiliate or agent
in accordance with Sections 3.01(b) and 8.07. Notwithstanding the foregoing,
the Trustee shall, if it is legally unable so to act, petition a court of
competent jurisdiction to appoint any established institution qualifying as an
Eligible Servicer as the Successor Servicer hereunder. The Trustee shall give
prompt notice to each Rating Agency and each Series Enhancer upon the
appointment of a Successor Servicer.
(b) Upon its appointment, the Successor Servicer shall be the
successor in all respects to the Servicer with respect to servicing functions
under this Agreement and shall be subject to all the responsibilities, duties
and liabilities relating thereto placed on the Servicer by the terms and
provisions hereof, and all references in this Agreement to the Servicer shall be
deemed to refer to the Successor Servicer.
Notwithstanding the foregoing, any provision of this Agreement which
requires the Servicer to make a deposit into the Collection Account not later
than 1:00 P.M., New York City time, on a Distribution Date shall be deemed to
require a Successor Servicer to make such deposit into the Collection Account on
the Transfer Date immediately preceding such Distribution Date.
(c) In connection with any Termination Notice, the Trustee will
review any bids which it obtains from Eligible Servicers and shall be permitted
to appoint any Eligible Servicer submitting such a bid as a Successor Servicer
for servicing compensation not in excess of the aggregate Servicing Fees for all
Series plus the sum of the amounts with respect to each Series and with respect
to each Distribution Date equal to any Collections of Finance Charge and
Administrative Receivables
-72-
allocable to Investor Certificateholders of such Series which are payable to the
Seller after payment of all amounts owing to the Investor Certificateholders of
such Series with respect to such Distribution Date or required to be deposited
in the applicable Series Accounts with respect to such Distribution Date and any
amounts required to be paid to any Series Enhancer for such Series with respect
to such Distribution Date pursuant to the terms of any Enhancement Agreement;
provided, however, that the Seller shall be responsible for payment of the
Seller's portion of such aggregate Servicing Fees and all other amounts in
excess of such aggregate Servicing Fees. Each holder of any of the Seller's
Certificates agrees that, if Household Finance Corporation (or any Successor
Servicer) is terminated as Servicer hereunder, the portion of the Collections in
respect of Finance Charge and Administrative Receivables that the Seller is
entitled to receive pursuant to this Agreement or any Supplement shall be
reduced by an amount sufficient to pay the Seller's share of the compensation of
the Successor Servicer.
(d) All authority and power granted to the Successor Servicer under
this Agreement shall automatically cease and terminate upon termination of the
Trust pursuant to Section 12.01, and shall pass to and be vested in the Seller
and, without limitation, the Seller is hereby authorized and empowered to
execute and deliver, on behalf of the Successor Servicer, as attorney-in-fact or
otherwise, all documents and other instruments, and to do and accomplish all
other acts or things necessary or appropriate to effect the purposes of such
transfer of servicing rights. The Successor Servicer agrees to cooperate with
the Seller in effecting the termination of the responsibilities and rights of
the Successor Servicer to conduct servicing of the Receivables. The Successor
Servicer shall transfer its electronic records relating to the Receivables to
Household Finance Corporation or its designee in such electronic form as it may
reasonably request and shall transfer all other records, correspondence and
documents to it in the manner and at such times as it shall reasonably request.
To the extent that compliance with this Section shall require the Successor
Servicer to disclose to Household Finance Corporation information of any kind
which the Successor Servicer deems to be confidential, Household Finance
Corporation shall be required to enter into such customary licensing and
confidentiality agreements as the Successor Servicer shall deem necessary to
protect its interests.
Section 10.03. Notification to Certificateholders. Within two
Business Days after the Servicer becomes aware of any Servicer Default, the
Servicer shall give notice thereof to the Trustee, each Rating Agency and each
Series Enhancer and the Trustee shall give notice to the Investor
Certificateholders. Upon any termination or appointment of a Successor Servicer
pursuant to this Article, the Trustee shall give prompt notice thereof to the
Investor Certificateholders.
-73-
ARTICLE XI
THE TRUSTEE
Section 11.01. Duties of Trustee. (a) The Trustee, prior to the
occurrence of a Servicer Default of which it has actual knowledge and after the
curing of all Servicer Defaults which may have occurred, undertakes to perform
such duties and only such duties as are specifically set forth in this Agreement
and no implied covenants by the Trustee shall be read into this Agreement. If a
Servicer Default to the actual knowledge of the Trustee has occurred (which has
not been cured or waived) the Trustee shall exercise such of the rights and
powers vested in it by this Agreement and use the same degree of care and skill
in their exercise, as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs.
(b) In the absence of bad faith or recklessness on its part, the
Trustee may conclusively rely, as to the truth of the statements and correctness
of the opinions expressed therein, upon all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee pursuant to this Agreement. The Trustee, upon receipt of all
resolutions, certificates, statements, opinions, reports, documents, orders or
other instruments furnished to the Trustee which are specifically required to be
furnished pursuant to any provision of this Agreement, shall examine them to
determine whether they substantially conform to the requirements of this
Agreement. The Trustee shall give prompt notice to the Investor
Certificateholders of any material lack of conformity of any such instrument to
the applicable requirements of this Agreement discovered by the Trustee which
would entitle a specified percentage of Investor Certificateholders to take any
action pursuant to this Agreement.
(c) Subject to paragraph (a) no provision of this Agreement shall be
construed to relieve the Trustee from liability for its own negligent action,
its own negligent failure to act or its own willful misconduct; provided,
however, that:
(i) the Trustee shall not be liable for an error of judgment made in
good faith by a Responsible Officer or Responsible Officers of the Trustee,
unless it shall be proved that the Trustee was negligent in ascertaining
the pertinent facts;
(ii) the Trustee shall not be liable with respect to any action taken,
suffered or omitted to be taken by it in good faith in accordance with the
direction of the Holders of Investor Certificates evidencing more than 50%
of the aggregate unpaid principal amount of all Investor Certificates (or,
with respect to any such action that does not relate to all Series, 50% of
the aggregate unpaid principal amount of the Investor Certificates of all
Series
-74-
to which such action relates) relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this
Agreement; and
(iii) the Trustee shall not be charged with knowledge of any failure by
the Servicer to comply with the obligations of the Servicer referred to in
clauses (a) or (b) of Section 10.01 unless a Responsible Officer of the
Trustee obtains actual knowledge of such failure or the Trustee receives
notice of such failure from the Servicer or any Holders of Investor
Certificates evidencing not less than 10% of the aggregate unpaid principal
amount of all Investor Certificates (or, with respect to any such failure
that does not relate to all Series, 10% of the aggregate unpaid principal
amount of the Investors Certificates of all Series to which such failure
relates).
(d) The Trustee shall not be required to expend or risk its own funds
or otherwise incur financial liability in the performance of any of its duties
hereunder or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it, and
none of the provisions contained in this Agreement shall in any event require
the Trustee to perform, or be responsible for the manner of performance of, any
obligations of the Servicer under this Agreement except during such time, if
any, as the Trustee shall be the successor to, and be vested with the rights,
duties, powers and privileges of, the Servicer in accordance with the terms of
this Agreement.
(e) Except for actions expressly authorized by this Agreement, the
Trustee shall take no actions reasonably likely to impair the interests of the
Trust in any Receivable now existing or hereafter created or to impair the value
of any Receivable now existing or hereafter created.
(f) Except as expressly provided in this Agreement, the Trustee shall
have no power to vary the corpus of the Trust including by (i) accepting any
substitute obligation for a Receivable initially assigned to the Trust under
Section 2.01 or 2.09, (ii) adding any other investment, obligation or security
to the Trust or (iii) withdrawing from the Trust any Receivables.
(g) In the event that the Paying Agent or the Transfer Agent and
Registrar shall fail to perform any obligation, duty or agreement in the manner
or on the day required to be performed by the Paying Agent or the Transfer Agent
and Registrar, as the case may be, under this Agreement, the Trustee shall be
obligated promptly upon its knowledge thereof to perform such obligation, duty
or agreement in the manner so required.
-75-
Section 11.02. Certain Matters Affecting the Trustee. Except as
otherwise provided in Section 11.01:
(a) the Trustee may rely on and shall be protected in acting on, or
in refraining from acting in accord with, any resolution, certificate,
statement, instrument, Officer's Certificate, opinion, report, notice, request,
consent, order, appraisal, approval, bond or other paper or document believed by
it to be genuine and to have been signed or presented to it pursuant to this
Agreement by the proper party or parties;
(b) the Trustee may consult with counsel and any Opinion of Counsel
shall be full and complete authorization and protection in respect of any action
taken or suffered or omitted by it hereunder in good faith and in accordance
with such Opinion of Counsel;
(c) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement, or to institute, conduct or
defend any litigation hereunder or in relation hereto, at the request, order or
direction of any of the Certificateholders, pursuant to the provisions of this
Agreement, unless such Certificateholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
which may be incurred therein or thereby; provided, however, that nothing
contained herein shall relieve the Trustee of the obligations, upon the
occurrence of a Servicer Default (which has not been cured or waived) to
exercise such of the rights and powers vested in it by this Agreement, and to
use the same degree of care and skill in their exercise as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs;
(d) the Trustee shall not be personally liable for any action taken,
suffered or omitted by it in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this Agreement;
(e) the Trustee shall not be bound to make any investigation into the
facts of matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, appraisal, approval, bond or
other paper or document believed by it to be genuine, unless requested in
writing so to do by Holders of Investor Certificates evidencing more than 25% of
the aggregate unpaid principal amount of all Investor Certificates (or, with
respect to any such matters that do not relate to all Series, 25% of the
aggregate unpaid principal amount of the Investor Certificates of all Series to
which such matters relate); provided, however, that if the payment within a
reasonable time to the Trustee of the costs, expenses, or liabilities likely to
be incurred by it in the making of such investigation is, in the opinion of the
Trustee, not reasonably assured to the Trustee by the security afforded to it by
the terms of this Agreement, the Trustee may require
-76-
reasonable indemnity against such cost, expense, or liability as a condition to
so proceeding.
(f) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys or a custodian, and the Trustee shall not be responsible for any
misconduct or negligence on the part of any such agent, attorney or custodian
appointed with due care by it hereunder; and
(g) except as may be required by Section 11.01(a), the Trustee shall
not be required to make any initial or periodic examination of any documents or
records related to the Receivables or the Accounts for the purpose of
establishing the presence or absence of defects, the compliance by the Seller
with its representations and warranties or for any other purpose;
(h) whether or not therein expressly so provided, every provision of
this Agreement relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section 11.02;
(i) the Trustee shall have no liability with respect to the acts or
omissions of the Servicer (except and to the extent the Servicer is the
Trustee), including, acts or omissions in connection with the servicing,
management or administration of Receivables; calculations made by the Servicer
whether or not reported to the Trustee; and deposits into or withdrawals from
any Accounts or funds established pursuant to the terms of this Agreement; and
(j) in the event that the Trustee is also acting as Paying Agent or
Transfer Agent and Registrar hereunder, the rights and protections afforded to
the Trustee pursuant to this Article XI shall also be afforded to such Paying
Agent, Transfer Agent and Registrar.
Section 11.03. Trustee Not Liable for Recitals in Certificates. The
Trustee assumes no responsibility for the correctness of the recitals contained
herein and in the Certificates (other than the certificate of authentication on
the Certificates). Except as set forth in Section 11.15, the Trustee makes no
representations as to the validity or sufficiency of this Agreement or any
Supplement or of the Certificates (other than the certificate of authentication
on the Certificates) or of any Receivable or related document or as to the
perfection or priority of any security interest therein or as to the efficacy of
the Trust. The Trustee shall not be accountable for the use or application by
the Seller of any of the Certificates or of the proceeds of such Certificates,
or for the use or application of any funds paid to the Seller in respect of the
Receivables or deposited in or withdrawn from the Collection Account, any Series
Accounts or any other accounts hereafter established to
-77-
effectuate the transactions contemplated by this Agreement and in accordance
with the terms of this Agreement.
Section 11.04. Trustee May Own Certificates. Subject to any
restrictions that may otherwise be imposed by Section 406 of ERISA or Section
4975(e) of the Internal Revenue Code, the Trustee in its individual or any other
capacity may become the owner or pledgee of Investor Certificates with the same
rights as it would have if it were not the Trustee.
Section 11.05. The Servicer To Pay Trustee's Fees and Expenses. The
Servicer covenants and agrees to pay to the Trustee from time to time, and the
Trustee shall be entitled to receive, reasonable compensation (which shall not
be limited by any provision of law in regard to the compensation of a trustee of
an express trust) for all services rendered by it in the execution of the trust
hereby created and in the exercise and performance of any of the powers and
duties hereunder of the Trustee, and the Servicer will pay or reimburse the
Trustee upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with any of the provisions of this
Agreement or any Enhancement Agreement (including the reasonable fees and
expenses of its agents, any co-trustee and counsel) except any such expense,
disbursement or advance as may arise from its negligence or bad faith and except
as provided in the following sentence. If the Trustee is appointed Successor
Servicer pursuant to Section 10.02, the provision of this Section shall not
apply to expenses, disbursements and advances made or incurred by the Trustee in
its capacity as Successor Servicer, which shall be paid out of the Servicing
Fee. The Servicer's covenant to pay the expenses, disbursements and advances
provided for in this Section shall survive the termination of this Agreement.
Section 11.06. Eligibility Requirements for Trustee. The Trustee
hereunder shall at all times be a corporation organized and doing business under
the laws of the United States or any State thereof authorized under such laws to
exercise corporate trust powers, have a net worth of at least $50,000,000, be
subject to supervision or examination by Federal or State authority and maintain
any credit or deposit rating required by any Rating Agency (which shall be Baa3,
in the case of ▇▇▇▇▇'▇ unless otherwise notified, and BBB- in the case of
Standard & Poor's unless otherwise notified) or any higher credit or deposit
rating required in connection with the issuance of a particular Series. If such
corporation publishes reports of condition at least annually, pursuant to law or
to the requirements of the aforesaid supervising or examining authority, then,
for the purpose of this Section, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. In case at any time the
Trustee shall cease to be eligible in accordance with the provisions of this
Section, the
-78-
Trustee shall resign immediately in the manner and with the effect specified in
Section 11.07.
Section 11.07. Resignation or Removal of Trustee.
(a) The Trustee may at any time resign and be discharged from the trust hereby
created by giving written notice thereof to the Seller and the Servicer. Upon
receiving such notice of resignation, the Seller shall promptly appoint a
successor trustee by written instrument, in duplicate, one copy of which
instrument shall be delivered to the resigning Trustee and one copy to the
successor trustee. If no successor trustee shall have been so appointed and
have accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee.
(b) If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 11.06 and shall fail to resign after
request therefor by the Servicer, or if at any time the Trustee shall be legally
unable to act, or shall be adjudged a bankrupt or insolvent, or if a receiver of
the Trustee or of its property shall be appointed, or any public officer shall
take charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation, then the Servicer may
remove the Trustee and promptly appoint a successor trustee by written
instrument, in duplicate, one copy of which instrument shall be delivered to the
Trustee so removed and one copy to the successor trustee.
(c) Any resignation or removal of the Trustee and appointment of
successor trustee pursuant to any of the provisions of this Section shall not
become effective until acceptance of appointment by the successor trustee as
provided in Section 11.08.
Section 11.08. Successor Trustee. (a) Any successor trustee
appointed as provided in Section 11.07 shall execute, acknowledge and deliver to
the Seller, to the Servicer and to its predecessor Trustee an instrument
accepting such appointment hereunder, and thereupon the resignation or removal
of the predecessor Trustee shall become effective and such successor trustee,
without any further act, deed or conveyance, shall become fully vested with all
the rights, powers, duties and obligations of its predecessor hereunder, with
like effect as if originally named as Trustee herein. The predecessor Trustee
shall deliver, at the expense of the Servicer, to the successor trustee all
documents or copies thereof and statements held by it hereunder; and the Seller
and the predecessor Trustee shall execute and deliver such instruments and do
such other things as may reasonably be required for fully and certainly vesting
and confirming in the successor trustee all such rights, powers, duties and
obligations.
-79-
(b) No successor trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor trustee shall be
eligible under the provisions of Section 11.06.
(c) Notwithstanding any other provisions herein, the appointment of a
Successor Trustee shall not be effective unless the Rating Agency Condition
shall have been satisfied.
(d) Upon acceptance of appointment by a successor trustee as provided
in this Section, such successor trustee shall
provide notice of such succession hereunder to all Certificate-
holders and the Servicer shall provide such notice to each Rating Agency and
each Series Enhancer.
Section 11.09. Merger or Consolidation of Trustee. Any Person into
which the Trustee may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any Person succeeding to
the corporate trust business of the Trustee, shall be the successor of the
Trustee hereunder, provided such corporation shall be eligible under the
provisions of Section 11.06, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding.
Section 11.10. Appointment of Co-Trustee or Separate Trustee. (a)
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust may at the time be located, the Trustee shall have the power and
may execute and deliver all instruments to appoint one or more persons to act as
a co-trustee or co-trustees, or separate trustee or separate trustees, of all or
any part of the Trust, and to vest in such Person or Persons, in such capacity
and for the benefit of the Certificateholders, such title to the Trust, or any
part thereof, and, subject to the other provisions of this Section, such powers,
duties, obligations, rights and trusts as the Trustee may consider necessary or
desirable. No co-trustee or separate trustee hereunder shall be required to
meet the terms of eligibility as a successor trustee under Section 11.06 and no
notice to Certificateholders of the appointment of any co-trustee or separate
trustee shall be required under Section 11.08.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred or imposed
upon the Trustee shall be conferred or imposed upon and exercised or
performed by the Trustee and such separate trustee or co-trustee jointly
(it being understood that such separate trustee or co-trustee is not
-80-
authorized to act separately without the Trustee joining in such act)
except to the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed (whether as Trustee hereunder or
as Successor Servicer) the Trustee shall be incompetent or unqualified to
perform such act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Trust or any portion
thereof in any such jurisdiction) shall be exercised and performed singly
by such separate trustee or co-trustee, but solely at the direction of the
Trustee;
(ii) no trustee hereunder shall be personally liable by reason of any
act or omission of any other trustee hereunder; and
(iii) the Trustee may at any time accept the resignation of or remove
any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Trustee shall
be deemed to have been given to each of the then separate trustees and co-
trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or property
specified in its instrument of appointment, either jointly with the Trustee or
separately, as may be provided therein, subject to all the provisions of this
Agreement, specifically including every provision of this Agreement relating to
the conduct of, affecting the liability of, or affording protection to, the
Trustee. Every such instrument shall be filed with the Trustee and a copy
thereof given to the Servicer.
(d) Any separate trustee or co-trustee may at any time constitute the
Trustee, its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
Section 11.11. Tax Returns. In the event the Trust shall be required
to file tax returns, the Servicer shall prepare or shall cause to be prepared
such tax returns and shall provide such tax returns to the Trustee for signature
at least five days before such tax returns are due to be filed. The Servicer,
in accordance with the terms of each Supplement, shall also prepare or shall
cause to be prepared all tax information required by law to be distributed to
Investor Certificateholders and shall deliver such information to the Trustee at
least five days prior to the date it is required by law to be distributed to
Investor
-81-
Certificateholders. The Trustee, upon request, will furnish the Servicer with
all such information known to the Trustee as may be reasonably required in
connection with the preparation of all tax returns of the Trust, and shall, upon
request, execute such returns.
Section 11.12. Trustee May Enforce Claims Without Possession of
Certificates. All rights of action and claims under this Agreement or the
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the Trustee
shall be brought in its own name as trustee. Any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Certificateholders in respect of which such judgment has
been obtained.
Section 11.13. Suits for Enforcement. (a) If a Servicer Default
shall occur and be continuing, the Trustee, in its discretion may, subject to
the provisions of Sections 11.01 and 11.14, proceed to protect and enforce its
rights and the rights of the Certificateholders under this Agreement by suit,
action or proceeding in equity or at law or otherwise, whether for the specific
performance of any covenant or agreement contained in this Agreement or in aid
of the execution of any power granted in this Agreement or for the enforcement
of any other legal, equitable or other remedy as the Trustee, being advised by
counsel, shall deem most effectual to protect and enforce any of the rights of
the Trustee or the Certificateholders.
(b) Nothing herein contained shall be deemed to authorize the Trustee
to authorize or consent to or accept or adopt on behalf of any Certificateholder
any plan of reorganization, arrangement, adjustment or composition affecting the
Investor Certificates or the rights of any Holder thereof, or to authorize the
Trustee to vote in respect of the claim of any Certificateholder in any such
proceeding.
Section 11.14. Rights of Certificateholders To Direct Trustee.
Except as otherwise provided in the applicable Supplement, holders of Investor
Certificates evidencing more than 50% of the aggregate unpaid principal amount
of all Investor Certificates (or, with respect to any remedy, trust or power
that does not relate to all Series, 50% of the aggregate unpaid principal amount
of the Investor Certificates of all Series to which such remedy, trust or power
relates) shall have the right to direct the time, method, and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee; provided, however, that, subject to
Section 11.01, the Trustee shall have the right to decline to follow any such
direction if the Trustee after
-82-
being advised by counsel determines that the action so directed may not lawfully
be taken, or if the Trustee in good faith shall, by a Responsible Officer or
Responsible Officers of the Trustee, determine that the proceedings so directed
would be illegal or involve it in personal liability or be unduly prejudicial to
the rights of Investor Certificateholders not parties to such direction; and
provided further that nothing in this Agreement shall impair the right of the
Trustee to take any action deemed proper by the Trustee and which is not
inconsistent with such direction of the Investor Certificateholders.
Section 11.15. Representations and Warranties of Trustee. The
Trustee represents and warrants that:
(i) the Trustee is a trust company organized, existing and in good
standing under the laws of the State of New York;
(ii) the Trustee has full power, authority and right to execute,
deliver and perform this Agreement and each Supplement, and has taken all
necessary action to authorize the execution, delivery and performance by it
of this Agreement and each Supplement; and
(iii) this Agreement and each Supplement has been duly executed and
delivered by the Trustee.
Section 11.16. Maintenance of Office or Agency. The Trustee will
maintain at its expense an office or agency (the "Corporate Trust Office") where
notices and demands to or upon the Trustee in respect of the Certificates and
this Agreement may be served in the Borough of Manhattan, The City of New York.
The Trustee initially appoints ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇ as such office and will give prompt notice to the Servicer and to Investor
Certificateholders of any change in the location of the Certificate Register or
any such office or agency.
ARTICLE XII
TERMINATION
Section 12.01. Termination of Trust. The Trust and the respective
obligations and responsibilities of the Seller, the Servicer and the Trustee
created hereby (other than the obligation of the Trustee to make payments to
Investor Certificateholders as hereinafter set forth) shall terminate, except
with respect to the duties described in Sections 8.04 and 12.02(b), upon the
earlier of (i) April 30, 2014, (ii) at the option of the Seller, the day
following the Distribution Date on which the Invested Amount for each Series is
zero and (iii) the time provided in Section 9.02(b).
-83-
Section 12.02. Final Distribution. (a) The Servicer shall give the
Trustee at least 30 days prior notice of the Distribution Date on which the
Investor Certificateholders of any Series or Class may surrender their Investor
Certificates for payment of the final distribution on and cancellation of such
Investor Certificates (or, in the event of a final distribution resulting from
the application of Section 2.06, 9.02 or 10.01, notice of such Distribution Date
promptly after Servicer has determined that a final distribution will occur, if
such determination is made less than 30 days prior to such Distribution Date).
Such notice shall be accompanied by an Officer's Certificate setting forth the
information specified in Section 3.05 covering the period during the then-
current calendar year through the date of such notice. Not later than the fifth
day of the month in which the final distribution in respect of such Series or
Class is payable to Investor Certificateholders, the Trustee shall provide
notice to Investor Certificateholders of such Series or Class specifying (i) the
date upon which final payment of such Series or Class will be made upon
presentation and surrender of Investor Certificates of such Series or Class at
the office or offices therein designated, (ii) the amount of any such final
payment and (iii) that the Record Date otherwise applicable to such payment date
is not applicable, payments being made only upon presentation and surrender of
such Investor Certificates at the office or offices therein specified (which, in
the case of Bearer Certificates, shall be outside the United States). The
Trustee shall give such notice to the Transfer Agent and Registrar and the
Paying Agent at the time such notice is given to Investor Certificateholders.
(b) Notwithstanding a final distribution to the Investor
Certificateholders of any Series or Class (or the termination of the Trust),
except as otherwise provided in this paragraph, all funds then on deposit in the
Collection Account and any Series Account allocated to such Investor
Certificateholders shall continue to be held in trust for the benefit of such
Investor Certificateholders and the Paying Agent or the Trustee shall pay such
funds to such Investor Certificateholders upon surrender of their Investor
Certificates, if certificated (and any excess shall be paid in accordance with
the terms of any Enhancement Agreement). In the event that all such Investor
Certificateholders shall not surrender their Investor Certificates for
cancellation within six months after the date specified in the notice from the
Trustee described in paragraph (a), the Trustee shall give a second notice to
the remaining such Investor Certificateholders to surrender their Investor
Certificates for cancellation and receive the final distribution with respect
thereto (which surrender and payment, in the case of Bearer Certificates, shall
be outside the United States). If within one year after the second notice all
such Investor Certificates shall not have been surrendered for cancellation, the
Trustee may take appropriate steps, or may appoint an agent to take appropriate
steps, to contact the remaining such Investor Certificateholders concerning
surrender
-84-
of their Investor Certificates, and the cost thereof shall be paid out of the
funds in the Collection Account or any Series Account held for the benefit of
such Investor Certificateholders. The Trustee and the Paying Agent shall pay to
the Seller any monies held by them for the payment of principal or interest that
remains unclaimed for two years. After payment to the Seller, Investor
Certificateholders entitled to the money must look to the Seller for payment as
general creditors unless an applicable abandoned property law designates another
Person.
(c) In the event that the Invested Amount with respect to any Series
is greater than zero on its Termination Date (after giving effect to deposits
and distributions otherwise to be made on such Termination Date) the Trustee
will sell or cause to be sold on such Termination Date an amount of Principal
Receivables (or interests therein) equal to 100% of the Invested Amount with
respect to such Series on such Termination Date plus related Finance Charge and
Administrative Receivables (after giving effect to such deposits and
distributions; provided, however, that in no event shall such amount exceed the
Series Allocation Percentage of Receivables with respect to such Series on such
Termination Date). The proceeds (the "Termination Proceeds") from such sale
shall be immediately deposited into the Collection Account for such Series. The
Termination Proceeds shall be allocated and distributed to Investor
Certificateholders of such Series in accordance with the terms of the applicable
Supplement.
Section 12.03. Seller's Termination Rights. Upon the termination of
the Trust pursuant to Section 12.01 and the surrender of the Seller's
Certificates, the Trustee shall sell, assign and convey to the Seller or its
designee, without recourse, representation or warranty, all right, title and
interest of the Trust in the Receivables, whether then existing or thereafter
created, all monies due or to become due and all amounts received with respect
thereto (including all moneys then held in the Collection Account or any Series
Account) and all proceeds thereof, except for amounts held by the Trustee
pursuant to Section 12.02(b). The Trustee shall execute and deliver such
instruments of transfer and assignment, in each case without recourse, as shall
be reasonably requested by the Seller to vest in the Seller or its designee all
right, title and interest which the Trust had in the Receivables.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.01. Amendment; Waiver of Past Defaults. (a) This
Agreement or any Supplement may be amended from time to time (including in
connection with the issuance of a Supplemental Certificate, conveyance of a
Participation Interest, allocation of assets pursuant to Section 4.06, or to
change the definition of Due Period, Determination Date or Distribution Date) by
the
-85-
Servicer, the Seller and the Trustee, by a written instrument signed by each of
them, without the consent of any of the Certificateholders, provided that an
Opinion of Counsel for the Seller is addressed and delivered to the Trustee,
dated the date of any such amendment, to the effect that the conditions
precedent to any such amendment have been satisfied and the Seller shall have
delivered to the Trustee an Officer's Certificate, dated the date of any such
Amendment, stating that the Seller reasonably believes that such amendment will
not have an Adverse Effect. The designation of Additional Sellers pursuant to
Section 2.09(g) shall be subject to this Section 13.01 only to the extent that
the supplement to this Agreement providing for such designation amends any of
the terms of this Agreement.
(b) This Agreement or any Supplement may also be amended from time to
time (including in connection with the issuance of a Supplemental Certificate)
by the Servicer, the Seller 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 affected Series for which
the Seller has not delivered an Officer's Certificate stating that there is no
Adverse Effect, for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement or any Supplement
or of modifying in any manner the rights of the Certificateholders; provided,
however, that no such amendment shall (i) reduce in any manner the amount of or
delay the timing of any distributions to (changes in Amortization Events which
decrease the likelihood of the occurrence thereof shall not be considered delays
in the timing of distributions for purposes of this clause) be made to Investor
Certificateholders or deposits of amounts to be so distributed or the amount
available under any Series Enhancement without the consent of each affected
Certificateholder, (ii) change the definition of or the manner of calculating
the interest of any Investor Certificateholder without the consent of each
affected Investor Certificateholder, (iii) reduce the aforesaid percentage
required to consent to any such amendment without the consent of each Investor
Certificateholder or (iv) adversely affect the rating of any Series or Class by
each Rating Agency without the consent of the Holders of Investor Certificates
of such Series or Class evidencing not less than 66-2/3% of the aggregate unpaid
principal amount of the Investor Certificates of such Series or Class.
(c) Promptly after the execution of any such amendment or consent
(other than an amendment pursuant to paragraph (a)), the Trustee shall furnish
notification of the substance of such amendment to each Investor
Certificateholder, and the Servicer shall furnish notification of the substance
of such amendment to each Rating Agency and each Series Enhancer.
-86-
(d) It shall not be necessary for the consent of Investor
Certificateholders under this Section to approve the particular form of any
proposed amendment, but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Investor Certificateholders shall be
subject to such reasonable requirements as the Trustee may prescribe.
(e) Notwithstanding anything in this Section to the contrary, no
amendment may be made to this Agreement or any Supplement which would adversely
affect in any material respect the interests of any Series Enhancer without the
consent of such Series Enhancer.
(f) Any Supplement executed in accordance with the provisions of
Section 6.03 shall not be considered an amendment to this Agreement for the
purposes of this Section.
(g) The Holders of Investor Certificates evidencing more than 66-2/3%
of the aggregate unpaid principal amount of the Investor Certificates of each
Series, or, with respect to any Series with two or more Classes, of each Class
(or, with respect to any default that does not relate to all Series, 66-2/3% of
the aggregate unpaid principal amount of the Investor Certificates of each
Series to which such default relates or, with respect to any such Series with
two or more classes, of each Class) may, on behalf of all Certificateholders,
waive any default by the Seller or the Servicer in the performance of their
obligations hereunder and its consequences, except the failure to make any
distributions required to be made to Investor Certificateholders or to make any
required deposits of any amounts to be so distributed. Upon any such waiver of
a past default, such default shall cease to exist, and any default arising
therefrom shall be deemed to have been remedied for every purpose of this
Agreement. No such waiver shall extend to any subsequent or other default or
impair any right consequent thereon except to the extent expressly so waived.
(h) The Trustee may, but shall not be obligated to, enter into any
such amendment which affects the Trustee's rights, duties or immunities under
this Agreement or otherwise. In connection with the execution of any amendment
hereunder, the Trustee shall be entitled to receive the Opinion described in
Section 13.02(d).
Section 13.02. Protection of Right, Title and Interest to Trust. (a)
The Servicer shall cause this Agreement, all amendments and supplements hereto
and/or all financing statements and continuation statements and any other
necessary documents covering the Certificateholders' and the Trustee's right,
title and interest to the Trust to be promptly recorded, registered and filed,
and at all times to be kept recorded, registered and filed, all in such manner
and in such places as may be required
-87-
by law fully to preserve and protect the right, title and interest of the
Certificateholders and the Trustee hereunder to all property comprising the
Trust. The Servicer shall deliver to the Trustee file-stamped copies of, or
filing receipts for, any document recorded, registered or filed as provided
above, as soon as available following such recording, registration or filing.
The Seller shall cooperate fully with the Servicer in connection with the
obligations set forth above and will execute any and all documents reasonably
required to fulfill the intent of this paragraph.
(b) Within 30 days after the Seller makes any change in its name,
identity or corporate structure which would make any financing statement or
continuation statement filed in accordance with paragraph (a) seriously
misleading within the meaning of Section 9-402(7) (or any comparable provision)
of the UCC, the Seller shall give the Trustee notice of any such change and
shall file such financing statements or amendments as may be necessary to
continue the perfection of the Trust's security interest in the Receivables and
the proceeds thereof.
(c) The Seller and the Servicer shall give the Trustee prompt notice
of any relocation of any office from which it services Receivables or keeps
records concerning the Receivables or of its principal executive office and
whether, as a result of such relocation, the applicable provisions of the UCC
would require the filing of any amendment of any previously filed financing or
continuation statement or of any new financing statement and shall file such
financing statements or amendments as may be necessary to perfect or to continue
the perfection of the Trust's security interest in the Receivables and the
proceeds thereof. The Seller and the Servicer shall at all times maintain each
office from which it services Receivables and its principal executive offices
within the United States.
(d) The Servicer shall deliver to the Trustee (i) upon the execution
and delivery of each amendment of this Agreement or any Supplement, an Opinion
of Counsel to the effect specified in Exhibit E-1; (ii) on each date specified
in Section 2.09(c)(ix) with respect to Aggregate Additions to be designated as
Accounts, an Opinion of Counsel substantially in the form of Exhibit E-2, (iii)
semiannually, with respect to any New Accounts included as Accounts, an Opinion
of Counsel substantially in the form of Exhibit E-2, (iv) on each Addition Date
on which any Participation Interests are to be included in the Trust pursuant to
Section 2.09(a) or (b), an Opinion of Counsel covering the same substantive
legal issues addressed by Exhibits E-1 and E-2 but conformed to the extent
appropriate to relate to Participation Interests; and (v) on or before March 31
of each year, beginning with March 31, 1994, an Opinion of Counsel substantially
in the form of Exhibit E-3.
Section 13.03. Limitation on Rights of Certificateholders. (a) The
death or incapacity of any
-88-
Certificateholder shall not operate to terminate this Agreement or the Trust,
nor shall such death or incapacity entitle such Certificateholders' legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the Trust,
nor otherwise affect the rights, obligations and liabilities of the parties
hereto or any of them.
(b) No Investor Certificateholder shall have any right to vote
(except as expressly provided in this Agreement) or in any manner otherwise
control the operation and management of the Trust, or the obligations of the
parties hereto, nor shall anything herein set forth, or contained in the terms
of the Certificates, be construed so as to constitute the Investor
Certificateholders from time to time as partners or members of an association,
nor shall any Investor Certificateholder be under any liability to any third
person by reason of any action taken by the parties to this Agreement pursuant
to any provision hereof.
(c) No Investor Certificateholder shall have any right by virtue of
any provisions of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Agreement, unless such
Investor Certificateholder previously shall have made, and unless the Holders of
Investor Certificates evidencing more than 50% of the aggregate unpaid principal
amount of all Investor Certificates (or, with respect to any such action, suit
or proceeding that does not relate to all Series, 50% of the aggregate unpaid
principal amount of the Investor Certificates of all Series to which such
action, suit or proceeding relates) shall have made, a request to the Trustee to
institute such action, suit or proceeding in its own name as Trustee hereunder
and shall have offered to the Trustee such reasonable indemnity as it may
require against the costs, expenses and liabilities to be incurred therein or
thereby, and the Trustee, for 60 days after such request and offer of indemnity,
shall have neglected or refused to institute any such action, suit or
proceeding; it being understood and intended, and being expressly covenanted by
each Investor Certificateholder with every other Investor Certificateholder and
the Trustee, that no one or more Investor Certificateholders shall have any
right in any manner whatever by virtue or by availing itself or themselves of
any provisions of this Agreement to affect, disturb or prejudice the rights of
the holders of any other of the Investor Certificates, or to obtain or seek to
obtain priority over or preference to any other such Investor Certificateholder,
or to enforce any right under this Agreement, except in the manner herein
provided and for the equal, ratable and common benefit of all Investor
Certificateholders except as otherwise expressly provided in this Agreement.
For the protection and enforcement of the provisions of this Section, each and
every Investor Certificateholder and the Trustee shall be entitled to such
relief as can be given either at law or in equity.
-89-
Section 13.04. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 13.05. Notices; Payments. (a) All demands, notices,
instructions, directions and communications (collectively, "Notices") under this
Agreement shall be in writing and shall be deemed to have been duly given if
personally delivered at, mailed by registered mail, return receipt requested, or
sent by facsimile transmission (i) in the case of the Seller, to Household
Affinity Funding Corporation at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: General Counsel (facsimile no. (▇▇▇) ▇▇▇-▇▇▇▇) (ii) in the case of
the Bank, to Household Bank f.s.b. at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: General Counsel (facsimile no. (▇▇▇) ▇▇▇-▇▇▇▇), (iii) in the
case of the Servicer, to Household Finance Corporation, at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Vice President, Asset
Securitization (facsimile no. (▇▇▇) ▇▇▇-▇▇▇▇), with copies to Household Credit
Services, Inc. at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
General Counsel (facsimile no. (▇▇▇) ▇▇▇-▇▇▇▇) and to Household International,
Inc. at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: General
Counsel's Office, Securities and Funding Unit (facsimile no. (▇▇▇) ▇▇▇-▇▇▇▇),
(iv) in the case of the Trustee, the Paying Agent or Transfer Agent and
Registrar, to The Bank of New York at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, (v) in the case of ▇▇▇▇▇'▇, to ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, Attention: ABS Monitoring Department 4th Floor (facsimile no. 212-
553-4600), (vi) in the case of Standard & Poor's, to ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, Attention: Asset Backed Group, 15th Floor (facsimile no. 212-412-
0323), (vii) in the case of Duff & ▇▇▇▇▇▇, to ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Structured Finance Department (facsimile no. (312)
263-2650), (viii) in the case of Fitch, to ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇, Attention: Structured Finance Department (facsimile no. (▇▇▇) ▇▇▇-▇▇▇▇),
and (ix) to any other Person as specified in any Supplement; or, as to each
party, at such other address or facsimile number as shall be designated by such
party in a written notice to each other party.
(b) Any Notice required or permitted to be given to a Holder of
Registered Certificates shall be given by first-class mail, postage prepaid, at
the address of such Holder as shown in the Certificate Register. No Notice
shall be required to be mailed to a Holder of Bearer Certificates or Coupons but
shall be given as provided below. Any Notice so mailed within the time
prescribed in this Agreement shall be conclusively presumed to have been duly
given, whether or not the Investor Certificateholder receives such Notice. In
addition, (a) if and so long as any Series or Class is listed on the Luxembourg
Stock Exchange and such Exchange shall so require, any Notice to
-90-
Investor Certificateholders shall be published in an Authorized Newspaper of
general circulation in Luxembourg within the time period prescribed in this
Agreement and (b) in the case of any Series or Class with respect to which any
Bearer Certificates are outstanding, any Notice required or permitted to be
given to Investor Certificateholders of such Series or Class shall be published
in an Authorized Newspaper within the time period prescribed in this Agreement.
Section 13.06. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall for any
reason whatsoever be held invalid, then such provisions shall be deemed
severable from the remaining provisions of this Agreement and shall in no way
affect the validity or enforceability of the remaining provisions or of the
Certificates or the rights of the Certificateholders.
Section 13.07. Certificates Nonassessable and Fully Paid. It is the
intention of the parties to this Agreement that the Certificateholders shall not
be personally liable for obligations of the Trust, that the interests in the
Trust represented by the Certificates shall be nonassessable for any losses or
expenses of the Trust or for any reason whatsoever and that the Certificates
upon authentication and delivery thereof by the Trustee pursuant to Section 6.02
are and shall be deemed fully paid.
Section 13.08. Further Assurances. The Seller and the Servicer agree
to do and perform, from time to time, any and all acts and to execute any and
all further instruments required or reasonably requested by the Trustee more
fully to effect the purposes of this Agreement, including the execution of any
financing statements or continuation statements relating to the Receivables for
filing under the provisions of the UCC of any applicable jurisdiction.
Section 13.09. Nonpetition Covenant. Notwithstanding any prior
termination of this Agreement, the Investor Certificateholders, the Servicer,
the Trustee, the Seller, the Paying Agent, the Authenticating Agent, the
Transfer Agent, the Registrar, the Series Enhancers and each holder of a
Supplemental Certificate shall not, prior to the date which is one year and one
day after the termination of this Agreement with respect to the Trust or the
Seller, acquiesce, petition or otherwise invoke or cause the Trust or the Seller
to invoke the process of any Governmental Authority for the purpose of
commencing or sustaining a case against the Trust or the Seller under any
Federal or state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Trust or the Seller or any substantial part of its property or ordering
the winding-up or liquidation of the affairs of the Trust or the Seller.
-91-
Section 13.10. No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of the Trustee or the
Certificateholders, any right, remedy, power or privilege under this Agreement
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege under this Agreement preclude any other or
further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges provided under this
Agreement are cumulative and not exhaustive of any rights, remedies, powers and
privileges provided by law.
Section 13.11. Counterparts. This Agreement may be executed in two
or more counterparts (and by different parties on separate counterparts), each
of which shall be an original, but all of which together shall constitute one
and the same instrument.
Section 13.12. Third-Party Beneficiaries. This Agreement will inure
to the benefit of and be binding upon the parties hereto, the
Certificateholders, any Series Enhancer and their respective successors and
permitted assigns. Except as otherwise expressly provided in this Agreement, no
other Person will have any right or obligation hereunder.
Section 13.13. Actions by Certificateholders. (a) Wherever in this
Agreement a provision is made that an action may be taken or a Notice given by
Certificateholders, such action or Notice may be taken or given by any
Certificateholder, unless such provision requires a specific percentage of
Certificateholders.
(b) Any Notice, request, authorization, direction, consent, waiver or
other act by the Holder of a Certificate shall bind such Holder and every
subsequent Holder of such Certificate and of any Certificate issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done or omitted to be done by the Trustee or the Servicer in
reliance thereon, whether or not notation of such action is made upon such
Certificate.
Section 13.14 Limitation on Voting of Preferred Stock. The Trustee
shall hold the Preferred Stock of the Seller in trust, for the benefit of the
Certificateholders and shall vote such stock only pursuant to the written
instructions of Certificateholders holding more than 50% of the Aggregate
Invested Amount of all Series of Certificates then outstanding. The Preferred
Stock shall be non-transferable except pursuant to the written instructions of
Certificateholders holding 100% of the Aggregate Invested Amount of all Series
of Certificates then outstanding and the Rating Agency Condition has been
satisfied.
Section 13.15. Merger and Integration. Except as specifically stated
otherwise herein, this Agreement sets forth
-92-
the entire understanding of the parties relating to the subject matter hereof,
and all prior understandings, written or oral, are superseded by this Agreement.
This Agreement may not be modified, amended, waived or supplemented except as
provided herein.
Section 13.16. Headings. The headings herein are for purposes of
reference only and shall not otherwise affect the meaning or interpretation of
any provision hereof.
Section 13.17. Construction of Agreement. The Seller hereby grants
to the Trustee a security interest in all of the Seller's right, title and
interest in, to and under the Receivables now existing and hereafter created,
all monies due or to become due and all amounts received with respect thereto
and all "proceeds" thereof and any other Trust Assets, to secure all the
Seller's and Servicer's obligations hereunder, including the Seller's obligation
to sell or transfer Receivables hereafter created to the Trust. This Agreement
shall constitute a security agreement under applicable law.
-93-
IN WITNESS WHEREOF, the Seller, the Servicer and the Trustee have
caused this Agreement to be duly executed by their respective officers as of the
day and year first above written.
HOUSEHOLD AFFINITY FUNDING
CORPORATION, Seller,
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------
Title:
HOUSEHOLD FINANCE CORPORATION,
Servicer,
By /s/ ▇.▇ ▇▇▇▇, ▇▇.
-----------------------------
Title:
THE BANK OF NEW YORK, Trustee,
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------
Title:
-94-
EXHIBIT A
FORM OF HAFC SELLER CERTIFICATE
THIS HAFC SELLER CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. NEITHER THIS HAFC SELLER CERTIFICATE NOR
ANY PORTION HEREOF MAY BE OFFERED OR SOLD EXCEPT IN COMPLIANCE WITH THE
REGISTRATION PROVISIONS OF SUCH ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM
SUCH REGISTRATION PROVISIONS.
THIS HAFC SELLER CERTIFICATE IS NOT PERMITTED TO BE TRANSFERRED,
ASSIGNED, EXCHANGED OR OTHERWISE PLEDGED OR CONVEYED EXCEPT IN COMPLIANCE WITH
THE TERMS OF THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
No. R- One Unit
HOUSEHOLD AFFINITY CREDIT CARD MASTER TRUST I
HAFC SELLER CERTIFICATE
THIS CERTIFICATE REPRESENTS AN INTEREST
IN CERTAIN ASSETS OF THE
HOUSEHOLD AFFINITY CREDIT CARD MASTER TRUST I
Evidencing an 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 by Household Bank, f.s.b. (the
"Bank").
(Not an interest in or obligation of the Bank, the Seller
or any affiliate thereof)
This certifies that HOUSEHOLD AFFINITY FUNDING CORPORATION (the
"Seller"), is the registered owner of a fractional interest in the assets of a
trust (the "Trust") not allocated to the Certificateholders' Interest or the
interest of any holder of a Supplemental Certificate pursuant to the Pooling and
Servicing Agreement dated as of April 30, 1993 (as amended and supplemented, the
"Agreement"), by and among the Seller, Household Finance Corporation, as
Servicer, and The Bank of New York, as trustee (the "Trustee"). The corpus of
the Trust consists of (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 the Collection Account and in the Series Accounts,
(v) the benefits of any Series Enhancements issued and to be issued by Series
Enhancers with respect to one or more Series of Investor Certificates and (vi)
all
other assets and interests constituting the Trust. Although a summary of
certain provisions of the Agreement is set forth below, this Certificate does
not purport to summarize the Agreement and reference is made to the Agreement
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 may be requested from the Trustee by
writing to the Trustee at the Corporate Trust Office. To the extent not defined
herein, the capitalized terms used herein have the meanings ascribed to them in
the Agreement.
This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement, as amended and
supplemented from time to time, the Seller by virtue of the acceptance hereof
assents and is bound.
The Receivables consist of Principal Receivables which arise generally
from the purchase of merchandise and services and amounts advanced to
cardholders as cash advances and Finance Charge and Administrative Receivables
which arise generally from Periodic Rate Finance Charges, Cash Advance Fees,
Late Payment Fees and annual membership fees with respect to the Accounts.
This Certificate is the HAFC Seller Certificate, which represents part
of the Seller's interest in certain assets of the Trust, which includes the
right to receive a portion of the Collections and other amounts at the times and
in the amounts specified in the Agreement. The aggregate interest represented
by the HAFC Seller Certificate at any time in the Receivables in the Trust shall
not exceed the Seller's Interest at such time. In addition to the HAFC Seller
Certificate, (i) Investor Certificates will be issued to investors pursuant to
the Agreement, which will represent the Certificateholders' Interest, and (ii)
Supplemental Certificates may be issued pursuant to the Agreement, which will
represent that portion of the Seller's Interest not allocated to the Seller.
This HAFC Seller Certificate shall not represent any interest in the Collection
Account, the Series Accounts or any Series Enhancements, except as expressly
provided in the Agreement.
The Seller has entered into the Agreement, and this Certificate is
issued, with the intention that, for Federal, state and local income and
franchise tax purposes only, the Investor Certificates will qualify as
indebtedness of the Seller secured by the Receivables. The Seller, by entering
into the Agreement and by the acceptance of this Certificate, agrees to treat
the Investor Certificates for Federal, state and local income and franchise tax
purposes as indebtedness of the Seller.
Subject to certain conditions and exceptions specified in the
Agreement, the obligations created by the Agreement and the Trust created
thereby shall terminate upon the earlier of (i) April 30, 2014, (ii) at the
option of the Seller, the day following the Distribution Date on which the
Invested Amount for each Series is
2
zero and (iii) the time provided in Section 9.02(b) of the Agreement.
Unless the certificate of authentication hereon has been executed by
or on behalf of the Trustee, by manual or facsimile signature, this Certificate
shall not be entitled to any benefit under the Agreement or be valid for any
purpose.
IN WITNESS WHEREOF, the Seller has caused this Certificate to be duly
executed.
HOUSEHOLD AFFINITY FUNDING
CORPORATION
By:___________________________________
Name:
Title:
Dated: May 5, 1993
3
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is the HAFC Seller Certificate described in the within-mentioned
Agreement.
THE BANK OF NEW YORK, as Trustee,
By:_______________________________
Authorized Officer
4
EXHIBIT B
FORM OF ASSIGNMENT OF RECEIVABLES IN ADDITIONAL ACCOUNTS
(As required by Section 2.09(c) of
the Pooling and Servicing Agreement)
ASSIGNMENT No. _____ OF RECEIVABLES IN ADDITIONAL ACCOUNTS dated as of
__________/*/, by and among HOUSEHOLD AFFINITY FUNDING CORPORATION (the
"Seller"), HOUSEHOLD FINANCE CORPORATION, as Servicer (the "Servicer"), and THE
BANK OF NEW YORK, as Trustee (the "Trustee"), pursuant to the Pooling and
Servicing Agreement, dated as of April 30, 1993 (the "Agreement"), by and among
the Seller, the Servicer and the Trustee.
W I T N E S S E T H:
-------------------
WHEREAS, the Seller, the Servicer and the Trustee are parties to the
Agreement;
WHEREAS, pursuant to the Agreement, the Seller wishes to designate
Additional Accounts to be included as Accounts and to convey the Receivables of
such Additional Accounts, whether now existing or hereafter created, to the
Household Affinity Credit Card Master Trust I (the "Trust") as part of the
corpus of the Trust; and
WHEREAS, the Trustee is willing to accept such designation and
conveyance subject to the terms and conditions hereof;
NOW, THEREFORE, the Seller, the Servicer and the Trustee hereby agree
as follows:
1. Defined Terms. All capitalized terms used herein shall have the
meanings ascribed to them in the Agreement unless otherwise defined herein.
"Addition Date" shall mean, with respect to the Additional Accounts
designated hereby, __________.
"Additional Cut-Off Date" shall mean, with respect to the Additional
Accounts designated hereby, __________.
2. Designation of Additional Accounts. The Seller hereby delivers
herewith a computer file or microfiche list containing a true and complete
schedule identifying all such Additional Accounts specifying for each such
Account, as of the
----------------------
/*/To be dated as of the applicable Addition Date.
Additional Cut-Off Date, its account number, the aggregate amount outstanding in
such Account and the aggregate amount of Principal Receivables outstanding in
such Account, which computer file or microfiche list shall supplement Schedule 1
to the Agreement.
3. Conveyance of Receivables.
(a) The Seller does hereby sell, transfer, assign, set over and
otherwise convey to the Trustee, on behalf of the Trust, for the benefit of the
Certificateholders, all its right, title and interest in, to and under the
Receivables of such Additional Accounts existing at the close of business on the
Additional Cut-Off Date and thereafter created from time to time until the
termination of the Trust, all Recoveries and Interchange with respect thereto
allocable to the Trust pursuant to the Agreement, all monies due or to become
due and all amounts received with respect thereto and all proceeds (including
"proceeds" as defined in the UCC as in effect in the state of California)
thereof. The foregoing does not constitute and is not intended to result in the
creation or assumption by the Trust, the Trustee, any Investor Certificateholder
or any Series Enhancer of any obligation of the Servicer, the Seller or any
other Person in connection with the Accounts, the Receivables or under any
agreement or instrument relating thereto, including any obligation to Obligors,
merchant banks, merchants clearance systems, VISA, MasterCard or insurers.
(b) In connection with such sale, the Seller agrees to record and
file, at its own expense, financing statements (and continuation statements when
applicable) with respect to the Receivables now existing and hereafter created
meeting the requirements of applicable state law in such manner and in such
jurisdictions as are necessary to perfect, and maintain perfection of, the sale
and assignment of the Receivables to the Trust, and to deliver a file-stamped
copy of each such financing statement or other evidence of such filing to the
Trustee on or prior to the Addition Date. The Trustee shall be under no
obligation whatsoever to file such financing or continuation statements or to
make any other filing under the UCC in connection with such sale and assignment.
(c) In connection with such sale, the Seller further agrees, at its
own expense, on or prior to the date of this Assignment, to indicate in the
appropriate computer files that Receivables created in connection with the
Additional Accounts designated hereby have been conveyed to the Trust pursuant
to the Agreement and this Assignment for the benefit of the Certificateholders.
4. Acceptance by Trustee. Subject to the satisfaction of the
conditions set forth in Section 6 of this Assignment, the Trustee hereby
acknowledges its acceptance on behalf of the Trust of all right, title and
interest to the property, now existing and hereafter created, conveyed to the
Trust pursuant to Section 3(a) of this Assignment, and declares that it shall
maintain such right,
2
title and interest, upon the trust set forth in the Agreement for the benefit of
all Certificateholders. The Trustee further acknowledges that, prior to or
simultaneously with the execution and delivery of this Assignment, the Seller
delivered to the Trustee the computer file or microfiche list described in
Section 2 of this Assignment.
5. Representations and Warranties of the Sellers. The Seller hereby
represents and warrants to the Trustee, on behalf of the Trust, as of the
Addition Date that:
(a) Legal, Valid and Binding Obligation. This Assignment constitutes
a legal, valid and binding obligation of such Seller enforceable against such
Seller in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally from time to time in
effect or general principles of equity;
(b) Eligibility of Accounts. Each Additional Account designated
hereby is an Eligible Account;
(c) Insolvency. As of the Additional Cut-Off Date and the Addition
Date, no Insolvency Event with respect to the Seller has occurred and the
transfer of the Receivables arising in the Additional Accounts to the Trust has
not been made in contemplation of the occurrence thereof;
(d) Adverse Effect. The addition of the Receivables arising in the
Additional Accounts will not result in the occurrence of an Amortization Event;
(e) Security Interest. This Assignment constitutes a valid sale,
transfer and assignment to the Trust of all right, title and interest of such
Seller in the Receivables now existing or hereafter created, all Recoveries and
Interchange with respect thereto allocable to the Trust pursuant to the
Agreement, all monies due or to become due and all amounts received with respect
thereto and the "proceeds" (including "proceeds" as defined in the UCC as in
effect in the state of California) thereof, relating thereto or, if this
Assignment does not constitute a sale of such property, it constitutes a grant
of a first priority perfected "security interest" (as defined in the UCC as in
effect in the state of California) in such property to the Trust, which, in the
case of existing Receivables and the proceeds thereof, is enforceable upon
execution and delivery of this Assignment, and which will be enforceable with
respect to such Receivables hereafter created and the proceeds thereof upon such
creation. Upon the filing of the financing statements described in Section 3 of
this Assignment and, in the case of the Receivables hereafter created and the
proceeds thereof, upon the creation thereof, the Trust shall have a first
priority perfected security or ownership interest in such property;
3
(f) No Conflict. The execution and delivery by the Seller of this
Assignment, the performance of the transactions contemplated by this Assignment
and the fulfillment of the terms hereof applicable to the Seller, will not
conflict with or violate any Requirements of Law applicable to the Seller or
conflict with, result in any breach of any of the material terms and provisions
of, or constitute (with or without notice or lapse of time or both) a material
default under, any indenture, contract, agreement, mortgage, deed of trust or
other instrument to which the Seller is a party or by which it or its properties
are bound;
(g) No Proceedings. There are no proceedings or investigations,
pending or, to the best knowledge of the Seller, threatened against the Seller
before any Governmental Authority (i) asserting the invalidity of this
Assignment, (ii) seeking to prevent the consummation of any of the transactions
contemplated by this Assignment, (iii) seeking any determination or ruling that,
in the reasonable judgment of the Seller, would materially and adversely affect
the performance by such Seller of its obligations under this Assignment or (iv)
seeking any determination or ruling that would materially and adversely affect
the validity or enforceability of this Assignment; and
(h) All Consents. All authorizations, consents, orders or approvals
of or registrations or declarations with any Governmental Authority required to
be obtained, effected or given by the Seller in connection with the execution
and delivery of this Assignment by such Seller and the performance of the
transactions contemplated by this Assignment by such Seller have been duly
obtained, effected or given and are in full force and effect.
6. Conditions Precedent. The acceptance of the Trustee set forth in
Section 4 of this Assignment is subject to the satisfaction, on or prior to the
Addition Date, of the following conditions precedent:
(a) Representations and Warranties. Each of the representations and
warranties made by the Seller in Section 5 of this Assignment shall be true and
correct as of the date of this Assignment and as of the Addition Date.
(b) Agreement. Each of the conditions set forth in Section 2.09(c)
of the Agreement applicable to the designation of the Additional Accounts to be
designated hereby shall have been satisfied and each of the covenants set forth
in Section 2.09(h) of the Agreement applicable to the designation of Additional
Accounts to be designated hereby shall have been fulfilled.
7. Ratification of Agreement. The Agreement is in all respects
ratified and confirmed and the Agreement as supplemented by this Assignment
shall be read, taken and construed as one and the same instrument.
4
8. Counterparts. This Assignment may be executed in two or more
counterparts, and by different parties on separate counterparts, each of which
shall be an original, but all of which shall constitute one and the same
instrument.
9. GOVERNING LAW. THIS ASSIGNMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
5
IN WITNESS WHEREOF, the Seller, the Servicer and the Trustee have
caused this Assignment to be duly executed by their respective officers as of
the day and year first above written.
HOUSEHOLD FINANCE CORPORATION,
Servicer
By: _______________________________
Name:
Title:
HOUSEHOLD AFFINITY FUNDING
CORPORATION, Seller
By: _______________________________
Name:
Title:
THE BANK OF NEW YORK, Trustee
By: _______________________________
Name:
Title:
6
EXHIBIT C
FORM OF REASSIGNMENT OF RECEIVABLES IN REMOVED ACCOUNTS
(As required by Section 2.10 of
the Pooling and Servicing Agreement)
REASSIGNMENT No. __________ OF RECEIVABLES dated as of
____________/1/, by and among HOUSEHOLD AFFINITY FUNDING CORPORATION (the
"Seller"), HOUSEHOLD FINANCE CORPORATION, as Servicer (the "Servicer"), and THE
BANK OF NEW YORK, as Trustee (the "Trustee"), pursuant to the Pooling and
Servicing Agreement, dated as of April 30, 1993 (the "Agreement"), by and among
the Seller, the Servicer and the Trustee.
W I T N E S S E T H:
-------------------
WHEREAS the Seller, the Servicer and the Trustee are parties to the
Agreement;
WHEREAS pursuant to the Agreement, the Seller wishes to remove all
Receivables from certain designated Accounts of the Seller (the "Removed
Accounts") and to cause the Trustee to reconvey the Receivables of such Removed
Accounts, whether now existing or hereafter created, from the Trust to the
Seller; and
WHEREAS the Trustee is willing to accept such designation and to
reconvey the Receivables in the Removed Accounts subject to the terms and
conditions hereof;
NOW, THEREFORE, the Seller, the Servicer and the Trustee hereby agree
as follows:
1. Defined Terms. All terms defined in the Agreement and used
herein shall have such defined meanings when used herein, unless otherwise
defined herein.
"Removal Date" shall mean, with respect to the Removed Accounts
designated hereby, _______________.
2. Designation of Removed Accounts. The Seller shall deliver
herewith to the Trustee a computer file or microfiche list containing a true and
complete schedule identifying all Accounts the Receivables of which are being
removed from the Trust, specifying for each such Account, as of the Removal
Notice Date, its account number, the aggregate amount outstanding in such
Account and the aggregate amount of Principal Receivables in such Account, which
computer file or microfiche list shall supplement Schedule 1 to the Agreement.
-------------------------
/1/ To be dated as of the Removal Date.
3. Conveyance of Receivables. (a) The Trustee does hereby transfer,
assign, set over and otherwise convey to the Seller, without recourse, on and
after the Removal Date, all right, title and interest of the Trust in, to and
under the Receivables existing at the close of business on the Removal Date and
thereafter created from time to time in the Removed Accounts designated hereby,
all monies due or to become due and all amounts received with respect thereto
and all proceeds thereof [but excluding all Recoveries relating thereto].
(b) In connection with such transfer, the Trustee agrees to execute
and deliver to the Seller on or prior to the date this Reassignment is
delivered, such termination statements with respect to the Receivables now
existing at the close of business on the Removal Date and thereafter created
from time to time in the Removed Accounts reassigned hereby (which may be a
single termination statement with respect to all such Receivables) evidencing
the release by the Trust of its interest in the Receivables in the Removed
Accounts, and meeting the requirements of applicable state law, in such manner
and such jurisdictions as are necessary to terminate such interest. The Seller
shall record and file such termination statements.
4. Acceptance by Trustee. The Trustee hereby acknowledges that,
prior to or simultaneously with the execution and delivery of this Reassignment,
the Seller delivered to the Trustee the computer file or microfiche list
described in Section 2 of this Reassignment.
5. Representations and Warranties of the Sellers. The Seller hereby
represents and warrants to the Trustee, on behalf of the Trust, as of the
Removal Date:
(a) Legal, Valid and Binding Obligation. This Reassignment
constitutes a legal, valid and binding obligation of the Seller enforceable
against the Seller, in accordance with its terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting creditors' rights generally from time to time in
effect.
(b) Adverse Effect. The removal of the Removed Accounts will not
result in the occurrence of an Amortization Event.
6. Conditions Precedent. The removal of the Removed Accounts is
subject to the satisfaction on or prior to the Removal Date, of the following
conditions precedent:
Officer's Certificate. The Seller shall have delivered to the Trustee
an Officer's Certificate certifying that (i) as of the Removal Date, all
requirements set forth in Section 2.10 of the Agreement for designating Removed
Accounts and reconveying the Receivables of such Removed Accounts, whether
existing at the close of business on the Removal Date or thereafter created from
time to
2
time have been satisfied, and (ii) each of the representations and warranties
made by the Seller in Section 5 hereof is true and correct as of the Removal
Date. The Trustee may conclusively rely on such Officer's Certificate, shall
have no duty to make inquiries with regard to the matters set forth therein and
shall incur no liability in so relying.
7. Ratification of Agreement. The Agreement is in all respects
ratified and confirmed and the Agreement as supplemented by this Reassignment
shall be read, taken and construed as one and the same instrument.
8. Counterparts. This Reassignment may be executed in two or more
counterparts, and by different parties on separate counterparts, each of which
shall be an original, but all of which shall constitute one and the same
instrument.
9. GOVERNING LAW. THIS REASSIGNMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
3
IN WITNESS WHEREOF, the Seller, the Servicer and the Trustee have
caused this Reassignment to be duly executed by their respective officers as of
the day and year first above written.
HOUSEHOLD FINANCE CORPORATION,
Servicer
by: __________________________________
Title:
HOUSEHOLD AFFINITY FUNDING
CORPORATION, Seller
by: __________________________________
Title:
THE BANK OF NEW YORK, Trustee
by: __________________________________
Title:
4
EXHIBIT D
FORM OF ANNUAL SERVICER'S CERTIFICATE
(To be delivered on or before March 31 of
each calendar year beginning with March 31, 1994,
pursuant to section 3.05 of the Pooling and
Servicing Agreement referred to below)
HOUSEHOLD FINANCE CORPORATION
----------------------------------------
HOUSEHOLD AFFINITY CREDIT CARD MASTER TRUST I
----------------------------------------
The undersigned, a duly authorized representative of Household Finance
Corporation, as Servicer (the "Servicer"), pursuant to the Pooling and Servicing
Agreement, dated as of April 30, 1993 (as amended and supplemented, the
"Agreement"), by and among the Servicer, Household Affinity Funding Corporation
(the "Seller") and The Bank of New York, as Trustee (the "Trustee"), does hereby
certify that:
1. The Servicer is, as of the date hereof, the Servicer under
the Agreement. Capitalized terms used in this Certificate have their
respective meanings as set forth in the Agreement.
2. The undersigned is a servicing Officer who is duly authorized
pursuant to the Agreement to execute and deliver this Certificate to the
Trustee.
3. A review of the activities of the Servicer during the
calendar year ended December 31, 199_, and of its performance under the
Agreement was conducted under my supervision.
4. Based on such review, the Servicer has, to the best of my
knowledge, performed in all material respects its obligations under the
Agreement throughout such year and no default in the performance of such
obligations has occurred or is continuing except as set forth in paragraph
5 below.
5. The following is a description of each default in the
performance of the Servicer's obligations under the provisions of the
Agreement known to me to have been made by the Servicer during the year
ended December 31, 199_, which sets forth in detail (i) the nature of each
such default, (ii) the action taken by the Servicer, if any, to remedy each
such
default and (iii) the current status of each such default: [If applicable,
insert "None."]
IN WITNESS WHEREOF, the undersigned has duly executed this Certificate
this ___ day of ______________.
HOUSEHOLD FINANCE CORPORATION,
as Servicer
By: ___________________________________
Name:
Title:
2
EXHIBIT E-1
PROVISIONS TO BE INCLUDED IN
OPINION OF COUNSEL
WITH RESPECT TO AMENDMENTS
TO THE POOLING AND SERVICING AGREEMENT
TO BE DELIVERED PURSUANT TO
SUBSECTION 13.02(d)(i)
--------------------------------------
(i) The amendment to the Pooling and Servicing Agreement, attached
hereto as Schedule 1 (the "Amendment"), has been duly authorized, executed and
delivered by the Seller constitutes the legal, valid and binding agreement of
the Seller, and enforceable in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights generally
from time to time in effect.
(ii) The Amendment has been entered into in accordance with the terms
and provisions of Section 13.01 of the Pooling and Servicing Agreement.
(iii) The Amendment will not adversely affect in any material respect
the interests of the Investor Certificateholders of any Series of Certificates.
[Include clause (iii) only in the case of amendments effected pursuant to
subsection 13.01(a) of the Pooling and Servicing Agreement.]
E-1-1
EXHIBIT E-2
PROVISIONS TO BE INCLUDED IN
OPINION OF COUNSEL
TO BE DELIVERED PURSUANT TO
SUBSECTIONS 2.09(c) (ix) and (d)(iii) and 13.02(d)(ii) and (iii)
----------------------------------------------------------------
The opinions set forth below may be subject to all the qualifications,
assumptions, limitations and exceptions taken or made in the opinions of counsel
to the Seller delivered on the Closing Date. Unless otherwise indicated, all
capitalized terms used herein shall have the meanings ascribed to them in the
Pooling and Servicing Agreement and in the Assignment.
1. The Trustee has a valid perfected first priority security interest
with respect to the Bank's right, title and interest in and to the
Receivables arising in [the Additional Accounts] [New Accounts
designated since [date]].
E-2-1
EXHIBIT E-3
PROVISIONS TO BE INCLUDED IN
ANNUAL OPINION OF COUNSEL
DELIVERED PURSUANT TO
SUBSECTION 13.02(d)(v)
--------------------------------------
The opinions set forth below may be subject to all the qualifications,
assumptions, limitations and exceptions taken or made in the opinions of counsel
to the Seller delivered on the Closing Date. Unless otherwise indicated, all
capitalized terms used herein shall have the meanings ascribed to them in the
Pooling and Servicing Agreement and in the Assignment.
1. The Trustee has a valid perfected first priority security interest
with respect to the Bank's right, title and interest in and to the
Receivables transferred to the Trust.
E-3-1
SCHEDULE 1
List of Accounts
----------------
[Original list delivered to Trustee]
Amendment to Amended and Restated
Pooling and Servicing Agreement
This AMENDMENT TO AMENDED AND RESTATED POOLING AND SERVICING AGREEMENT
dated as of April 12, 1995 (this "Amendment") is among Household Affinity
Funding Corporation, a Delaware corporation, as Seller, Household Finance
Corporation, a Delaware corporation, as Servicer and THE BANK OF NEW YORK, a New
York banking corporation, as Trustee. This Amendment amends the Amended and
Restated Pooling and Servicing Agreement dated as of August 1, 1993 (the
"Pooling and Servicing Agreement") among the parties listed in the preceding
sentence.
RECITALS
The parties hereto are parties to the Pooling and Servicing Agreement. All
capitalized terms not otherwise defined herein shall have the meanings assigned
such terms in the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement permits pursuant to Section 13.01(a)
thereof amendments without the consent of any Certificateholders to the extent
that such amendment does not have an Adverse Effect.
The parties hereto desire to amend the definition of Business Day to
correct an error and render such definition consistent with prospectuses
delivered to such Certificateholders.
The Seller believes that the amendment to such definition meets the
expectations of Certificateholders and, therefore, will not have an Adverse
Effect.
The parties hereto also desire to permit the return of Defaulted
Receivables to the Seller in order to facilitate servicing and increase
Recoveries.
The Seller believes that this amendment will benefit Certificateholders and
will not have an Adverse Effect.
Now, therefore, in consideration of the mutual agreements herein contained,
each party hereto agrees as follows for the benefit of the other parties, the
Certificateholders and any Series Enhancer to the extent provided herein and in
any supplement.
AMENDMENT
SECTION 1: Amendment
Section 1.01 of the Pooling and Servicing Agreement is hereby amended by
deleting the definition of "Business Day" and inserting in lieu thereof the
following:
"Business Day" shall mean any day other than (a) a Saturday or Sunday
or (b) any other day on which national banking associations or state
banking institutions in New York, New York, Prospect Heights, Illinois,
Wood Dale, Illinois, Newport Beach, California, Salinas, California, or the
State of Nevada or any other State in which the principal executive offices
of the Bank or any Additional Seller are located, are authorized or
obligated by law, executive order or governmental decree to be closed or
(c) for purposes of any particular Series, any other day specified in the
applicable Series Supplement; provided that with respect to any date
designated for determination of a rate based upon the London interbank
market, "Business Day" shall mean any day other than any day on which
banking institutions in London, England are authorized or obligated by law,
executive order or government decree to be closed.
Section 2.10 of the Pooling and Servicing Agreement is hereby amended by
adding new paragraph (vi) after the current text of Section 2.10.
(vi) Servicer and/or Seller may at any time on behalf of the Trust
sell all Receivables in an Account if all such Receivables are Defaulted
Receivables and the Bank has terminated its credit line to the obligor
thereof to any third party free and clear of any claim or interest in the
Trust to such Receivables provided that the price the Servicer or Seller
shall receive from such third party shall be deemed a Recovery and shall be
applied as provided herein. The Trust's rights to any Recoveries shall be
limited to the receipt of the purchase price. Upon such sale, the Trust
shall automatically and without further action or consideration be deemed
to transfer, set over and otherwise convey to the Servicer or Seller with
respect to such Account, without recourse, representation or warranty, all
right, title and interest of the Trust in and to the Receivables in such
Account, including all monies due or to become due with respect thereto,
all proceeds thereof and any Insurance Proceeds relating thereto.
SECTION 2: Miscellaneous
-------------
(a) Counterparts. This Amendment may be executed in two or more
counterparts, and by different parties on separate counterparts, each of which
shall be an original, but all of which shall constitute one and the same
instrument.
(b) Governing Law. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
IN WITNESS WHEREOF, the Seller, the Servicer and the Trustee have caused
this Amendment to be duly executed by their respective officers as of the day
and year first written above.
HOUSEHOLD FINANCE CORPORATION
--------------------------------------
Name:
Title:
HOUSEHOLD AFFINITY FUNDING CORPORATION
--------------------------------------
Name:
Title:
THE BANK OF NEW YORK
--------------------------------------
Name:
Title: