1
MASTER SALE AND SERVICING AGREEMENT
among
HOUSEHOLD AUTOMOTIVE TRUST V,
HOUSEHOLD AUTO RECEIVABLES CORPORATION,
Seller,
HOUSEHOLD FINANCE CORPORATION,
Master Servicer
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
Indenture Trustee
Dated as of June 1, 2000
2
TABLE OF CONTENTS
Page
ARTICLE I
Definitions
SECTION 1.1. Definitions 1
SECTION 1.2. Other Interpretive Provisions 19
SECTION 1.3. Usage of Terms 20
SECTION 1.4. Certain References 20
SECTION 1.5. No Recourse 20
SECTION 1.6. Action by or Consent of Noteholders 20
ARTICLE II
Conveyance of Receivables
SECTION 2.1. Conveyance of Receivables 21
SECTION 2.2. Further Encumbrance of Series Trust
Estate 24
ARTICLE III
The Receivables
SECTION 3.1. Representations and Warranties of Seller 25
SECTION 3.2. Repurchase upon Breach 25
SECTION 3.3. Custody of Receivables Files 26
ARTICLE IV
Administration and Servicing of Receivables
SECTION 4.1. Duties of the Master Servicer 27
SECTION 4.2. Collection of Receivable Payments;
Modifications of Receivables 28
SECTION 4.3. Realization Upon Receivables 30
SECTION 4.4. Insurance 31
SECTION 4.5. Maintenance of Security Interests in
Vehicles 32
SECTION 4.6. Covenants, Representations, and
Warranties of Master Servicer 32
SECTION 4.7. Repurchase of Receivables Upon Breach of
Covenant 33
SECTION 4.8. Total Servicing Fee; Payment of Certain
Expenses by Master Servicer 34
SECTION 4.9. Master Servicer's Certificate 34
SECTION 4.10. Annual Statement as to Compliance,
Notice of Master Servicer Termination
Event 34
SECTION 4.11. Annual Independent Accountants' Report 35
SECTION 4.12. Access to Certain Documentation and
Information Regarding Receivables 36
SECTION 4.13. Fidelity Bond and Errors and Omissions
Policy 36
ARTICLE V
Trust Accounts; Distributions;
Statements to Certificateholders and Noteholders
SECTION 5.1. Establishment of Trust Accounts 36
SECTION 5.2. Certain Reimbursements to the Master
Servicer 38
SECTION 5.3. Application of Collections 38
SECTION 5.4. Additional Deposits 38
SECTION 5.5. Distributions 39
ARTICLE VI
RESERVED
3
ARTICLE VII
RESERVED
ARTICLE VIII
The Seller
SECTION 8.1. Representations of Seller 39
SECTION 8.2. Corporate Existence 41
SECTION 8.3. Liability of Seller; Indemnities 42
SECTION 8.4. Merger or Consolidation of, or Assumption
of the Obligations of, Seller 43
SECTION 8.5. Limitation on Liability of Seller and
Others 43
SECTION 8.6. Seller May Own Certificates or Notes 44
ARTICLE IX
The Master Servicer
SECTION 9.1. Representations of Master Servicer 44
SECTION 9.2. Liability of Master Servicer; Indemnities 47
SECTION 9.3. Merger or Consolidation of, or Assumption
of the Obligations of the Master Servicer 48
SECTION 9.4. Limitation on Liability of Master
Servicer and Others 49
SECTION 9.5. Delegation of Duties 49
SECTION 9.6. Master Servicer Not to Resign 50
SECTION 9.7. Sub-Servicing Agreements Between Master
Servicer and Sub-Servicers 50
SECTION 9.8. Successor Sub-Servicers 51
ARTICLE X
Default
SECTION 10.1. Master Servicer Termination Event 51
SECTION 10.2. Consequences of a Master Servicer
Termination Event 52
SECTION 10.3. Appointment of Successor 54
SECTION 10.4. Notification to Noteholders and
Certificateholders 55
SECTION 10.5. Waiver of Past Defaults 55
SECTION 10.6. Successor to Master Servicer 55
ARTICLE XI
Termination
SECTION 11.1. Optional Purchase of All Receivables 56
ARTICLE XII
Administrative Duties of the Master Servicer
SECTION 12.1. Administrative Duties. 56
SECTION 12.2. Records 59
SECTION 12.3. Additional Information to be Furnished
to the Issuer 59
ARTICLE XIII
Miscellaneous Provisions
SECTION 13.1. Amendments 59
SECTION 13.2. Protection of Title to Trust 61
SECTION 13.3. Notices 62
SECTION 13.4. Assignment 63
SECTION 13.5. Limitations on Rights of Others 63
SECTION 13.6. Severability 63
SECTION 13.7. Separate Counterparts 63
SECTION 13.8. Headings 64
SECTION 13.9. Governing Law 64
SECTION 13.10. Assignment to Indenture Trustee 64
SECTION 13.11. Nonpetition Covenants 64
SECTION 13.12. Limitation of Liability of Owner
Trustee 64
SECTION 13.13. Independence of the Master Servicer 65
SECTION 13.14. No Joint Venture 65
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EXHIBITS
Exhibit A - Form of Master Servicer's Certificate
Exhibit B - Form of Transfer Agreement
Exhibit C - Form of Request for Release and Receipt of
Documents
Exhibit D - Form of Indenture Trustee's Acknowledgement
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MASTER SALE AND SERVICING AGREEMENT dated as of
June 1, 2000, among HOUSEHOLD AUTOMOTIVE TRUST V, a Delaware
business trust (the "Issuer"), HOUSEHOLD AUTO RECEIVABLES
CORPORATION, a Nevada corporation (the "Seller"), HOUSEHOLD
FINANCE CORPORATION, a Delaware corporation (the "Master
Servicer") and NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
a national banking association, in its capacity as Indenture
Trustee.
WHEREAS the Issuer desires to purchase from time
to time Receivables arising in connection with motor vehicle
retail installment sale contracts acquired by Household
Automotive Finance Corporation or any of its subsidiaries;
WHEREAS the Seller will purchase from time to time
Receivables from Household Automotive Finance Corporation
and is willing to sell Receivables to the Issuer;
WHEREAS the Master Servicer is willing to service
all such receivables;
NOW, THEREFORE, in consideration of the promises
and the mutual covenants herein contained, the parties
hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.1. Definitions
. Whenever used in this Agreement, the following words and
phrases shall have the following meanings:
"Accountants' Report" means the report of a firm
of nationally recognized independent accountants described
in Section 4.11.
"Accounting Date" means, with respect to a
Distribution Date, the last day of the Collection Period
immediately preceding such Distribution Date.
"Actuarial Method" means the method of allocating
a fixed level monthly payment on an obligation between
principal and interest, pursuant to which the portion of
such payment that is allocated to interest is equal to the
product of (a) 1/12, (b) the fixed annual rate of interest
on such obligation and (c) the outstanding principal balance
of such obligation.
"Actuarial Receivable" means a Receivable under
which the portion of the payment allocated to interest and
the portion allocable to principal is determined in
accordance with the Actuarial Method.
"Addition Notice" means, with respect to any
transfer of Receivables to the Trust pursuant to Section 2.1
of this Agreement, notice of the Seller's election to
transfer Receivables to the Trust, such notice to designate
the related Transfer Date, the related Series Trust Estate,
if any, and the approximate principal amount of Receivables
to be transferred on such Transfer Date.
"Affiliate" means, with respect to any specified
Person, any other Person controlling or controlled by or
under common control with such specified Person. For the
purposes of this definition, "control" when used with
respect to any Person means the power to direct the
management and policies of such Person, directly or
indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to
the foregoing.
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"Aggregate Principal Balance" means, with respect
to any date of determination, the sum of the Principal
Balances for all Receivables (other than (i) any Receivable
that has become a Liquidated Receivable and (ii) any
Receivable that has become a Repurchased Receivable as of
the date of determination).
"Agreement" means this Master Sale and Servicing
Agreement, as the same may be amended and supplemented from
time to time.
"Amount Financed" means, with respect to a
Receivable, the aggregate amount advanced under such
Receivable toward the purchase price of the Financed Vehicle
and any related costs, including amounts advanced in respect
of accessories, insurance premiums, service and warranty
contracts, other items customarily financed as part of
retail automobile installment sale contracts or promissory
notes, and related costs.
"Annual Percentage Rate" or "APR" of a Receivable
means the annual percentage rate of finance charges or
service charges, as stated in the related Contract.
"Base Servicing Fee" means, with respect to each
Series Trust Estate and with respect to any Collection
Period, the fee payable to the Master Servicer for services
rendered during such Collection Period, which, unless
otherwise specified in the related Series Supplement, shall
be equal to one-twelfth of the Servicing Fee Rate multiplied
by the Pool Balance for such Series Trust Estate determined
as of the first day of such Collection Period.
"Basic Documents" means this Agreement, the
Certificate of Trust, the Trust Agreement, the Indenture,
the Master Receivables Purchase Agreements and other
documents and certificates delivered in connection
therewith.
"Business Day" means a day other than a Saturday,
a Sunday or other day on which commercial banks located in
the states of Illinois and Minnesota are authorized or
obligated to be closed.
"Certificate" has the meaning assigned to such
term in the Trust Agreement and, with respect to a Series,
the meaning specified in the relevant Series Supplement.
"Certificateholder" has the meaning assigned to
such term in the Trust Agreement.
"Class" means a class of Notes or Certificates, as
the context requires.
"Collected Funds" means, with respect to any
Distribution Date, the amount of funds in the Master
Collection Account representing collections on Receivables
during the related Collection Period, including all Net
Liquidation Proceeds collected during the related Collection
Period (but excluding any Repurchase Amounts).
"Collection Period" means, for each Series, with
respect to the first Distribution Date in such Series, the
period beginning on the opening of business on the related
Cutoff Date and ending on the close of business on the last
day of the calendar month preceding such Distribution Date.
With respect to each subsequent Distribution Date, the
preceding calendar month. Any amount stated "as of the
close of business of the last day of a Collection Period"
shall give effect to all applications of collections on such
day.
"Collection Records" means all manually prepared
or computer generated records relating to collection efforts
or payment histories with respect to the Receivables.
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"Computer Tape" means the computer tapes or other
electronic media furnished by the Seller to the Issuer and
its assigns describing certain characteristics of the
Receivables.
"Contract" means a motor vehicle retail
installment sale contract.
"Corporate Trust Office" means (i) with respect to
the Owner Trustee, the principal corporate trust office of
the Owner Trustee, which at the time of execution of this
agreement is ▇▇▇▇▇▇ Square North, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: Corporate Trust
Administration, and (ii) with respect to the Indenture
Trustee, the principal corporate trust office of Norwest
Bank Minnesota, National Association, which at the time of
execution of this agreement is Norwest Bank Minnesota,
National Association, MAC ▇▇▇▇▇-▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attn: Corporate
Trust Services/Asset-Backed Administration.
"Covenant Receivable" means, with respect to any
Collection Period, a Receivable which the Master Servicer is
required to purchase pursuant to Section 4.7.
"Cram Down Loss" means, with respect to a
Receivable, if a court of appropriate jurisdiction in an
insolvency proceeding shall have issued a final order
reducing the amount owed on a Receivable or otherwise
modifying or restructuring the scheduled payments to be made
on a Receivable, an amount equal to (i) the excess of the
Principal Balance of such Receivable immediately prior to
such order over the Principal Balance of such Receivable as
so reduced and/or (ii) if such court shall have issued an
order reducing the effective rate of interest on such
Receivable, the excess of the Principal Balance of such
Receivable immediately prior to such order over the net
present value (using as the discount rate the higher of the
APR on such Receivable or the rate of interest, if any,
specified by the court in such order) of the scheduled
payments as so modified or restructured. A "Cram Down Loss"
shall be deemed to have occurred on the date of issuance of
such order.
"Cutoff Date" means, with respect to a Receivable
and (i) the Transfer Date as of which such Receivable is
transferred to the Trust, (a) the Accounting Date
immediately preceding such Transfer Date or (b) if such
Receivable is originated in the month of the related
Transfer Date, the date of origination or (ii) the date
designated in the related Series Supplement as the Cutoff
Date for such Series.
"Dealer" means a dealer who sold a Financed
Vehicle and who originated and assigned the respective
Receivable, directly or indirectly, to HAFC or one of its
subsidiaries under a Dealer Agreement or pursuant to a
Dealer Assignment.
"Dealer Agreement" means any agreement between
HAFC and a Dealer relating to the acquisition of Receivables
from a Dealer by HAFC.
"Dealer Assignment" means, with respect to a
Receivable, the executed assignment executed by a Dealer
conveying such Receivable to HAFC.
"Dealer Underwriting Guide" means either, (i) the
underwriting guidelines used by or on behalf of HAFC or one
of its subsidiaries in the origination and purchase of
Receivables as amended from time to time or (ii) the
underwriting guidelines used in the origination of
Receivables as reviewed by HAFC or one of its subsidiaries
prior to the purchase of Receivables by HAFC.
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"Delivery" means with respect to the Trust Account
Property:
(1) the perfection and priority of a security interest
in which is governed by the law of a jurisdiction which has
adopted the 1978 Revision to Article Eight of the UCC:
(a) with respect to bankers' acceptances,
commercial paper, negotiable certificates of deposit
and other obligations that constitute "instruments"
within the meaning of Section 9-105(1)(i) of the UCC
(other than certificated securities) and are
susceptible of physical delivery, transfer thereof to
the Indenture Trustee by physical delivery to the
Indenture Trustee, endorsed to, or registered in the
name of, the Indenture Trustee or its nominee or
endorsed in blank and such additional or alternative
procedures as may hereafter become appropriate to
effect the complete transfer of ownership of any such
Collateral to the Indenture Trustee free and clear of
any adverse claims, consistent with changes in
applicable law or regulations or the interpretation
thereof;
(b) with respect to a "certificated security" (as
defined in Section 8-102(1)(a) of the UCC), transfer
thereof:
(i) by physical delivery of such
certificated security to the Indenture Trustee,
provided that if the certificated security is in
registered form, it shall be endorsed to, or
registered in the name of, the Indenture Trustee
or endorsed in blank;
(ii) by physical delivery of such
certificated security to a "financial
intermediary" (as defined in Section 8-313(4) of
the UCC) of the Indenture Trustee specially
endorsed to or issued in the name of the Indenture
Trustee;
(iii) by the sending by a financial
intermediary, not a "clearing corporation" (as
defined in Section 8-102(3) of the UCC), of a
confirmation of the purchase and the making by
such financial intermediary of entries on its
books and records identifying as belonging to the
Indenture Trustee of (A) a specific certificated
security in the financial intermediary's
possession, (B) a quantity of securities that
constitute or are part of a fungible bulk of
certificated securities in the financial
intermediary's possession, or (C) a quantity of
securities that constitute or are part of a
fungible bulk of securities shown on the account
of the financial intermediary on the books of
another financial intermediary; or
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(iv) by the making by a clearing corporation
of appropriate entries on its books reducing the
appropriate securities account of the transferor
and increasing the appropriate securities account
of the Indenture Trustee or a Person designated by
the Indenture Trustee by the amount of such
certificated security, provided that in each case:
(A) the clearing corporation identifies such
certificated security for the sole and exclusive
account of the Indenture Trustee or the Person
designated by the Indenture Trustee, (B) such
certificated security shall be subject to the
clearing corporation's exclusive control, (C) such
certificated security is in bearer form or
endorsed in blank or registered in the name of the
clearing corporation or custodian bank or a
nominee of either of them, (D) custody of such
certificated security shall be maintained by such
clearing corporation or a "custodian bank" (as
defined in Section 8-102(4) of the UCC) or the
nominee of either subject to the control of the
clearing corporation and (E) such certificated
security is shown on the account of the transferor
thereof on the books of the clearing corporation
prior to the making of such entries; and such
additional or alternative procedures as may
hereafter become appropriate to effect the
complete transfer of ownership of any such
Collateral to the Indenture Trustee free and clear
of any adverse claims, consistent with changes in
applicable law or regulations or the
interpretation thereof;
(c) with respect to any security issued by the
U.S. Treasury, the Federal Home Loan Mortgage
Corporation or by the Federal National Mortgage
Association that is a book-entry security held through
the Federal Reserve System pursuant to Federal book
entry regulations, the following procedures, all in
accordance with applicable law, including applicable
Federal regulations and Articles 8 and 9 of the UCC:
book-entry registration of such property to an
appropriate book-entry account maintained with a
Federal Reserve Bank by a financial intermediary which
is also a "depositary" pursuant to applicable Federal
regulations and issuance by such financial intermediary
of a deposit advice or other written confirmation of
such book-entry registration to the Indenture Trustee
of the purchase by the financial intermediary on behalf
of the Indenture Trustee of such book-entry security;
the making by such financial intermediary of entries in
its books and records identifying such book-entry
security held through the Federal Reserve System
pursuant to Federal book-entry regulations as belonging
to the Indenture Trustee and indicating that such
financial intermediary holds such book-entry security
solely an agent for the Indenture Trustee; and such
additional or alternative procedures as may hereafter
become appropriate to effect complete transfer of
ownership of any such Collateral to the Indenture
Trustee free of any adverse claims, consistent with
changes in applicable law or regulations or the
interpretation thereof;
(d) with respect to any Trust Account Property
that is an "uncertificated security" (as defined in
Section 8-102(1)(b) of the UCC) and that is not
governed by clause (c) above, transfer thereof:
(i) by registration of the transfer thereof
to the Indenture Trustee, on the books and records
of the issuer thereof;
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(ii) by the sending of a confirmation by a
financial intermediary of the purchase, and the
making by such financial intermediary of entries
on its books and records identifying as belonging
to the Indenture Trustee (A) a quantity of
securities which constitute or are part of a
fungible bulk of uncertificated securities
registered in the name of the financial
intermediary or (B) a quantity of securities which
constitute or are part of a fungible bulk of
securities shown on the account of the financial
intermediary on the books of another financial
intermediary; or
(iii) by the making by a clearing
corporation of appropriate entries on its books
reducing the appropriate account of the transferor
and increasing the account of the Indenture
Trustee or a person designated by the Indenture
Trustee by the amount of such uncertificated
security, provided that in each case: (A) the
clearing corporation identifies such
uncertificated security for the sole and exclusive
use of the Indenture Trustee or the Person
designated by the Indenture Trustee, (B) such
uncertificated security is registered in the name
of the clearing corporation or a custodian bank or
a nominee of either, and (C) such uncertificated
security is shown on the account of the transferor
on the books of the clearing corporation prior to
the making of such entries; and
(e) in each case of delivery contemplated herein,
the Indenture Trustee shall make appropriate notations
on its records, and shall cause same to be made of the
records of its nominees, indicating that such
securities are held in trust pursuant to and as
provided in this Agreement.
(2) the perfection and priority of a security interest
in which is governed by the law of a jurisdiction which has
adopted the 1994 Revision to Article 8 of the UCC:
(a) with respect to bankers' acceptances,
commercial paper, negotiable certificates of deposit
and other obligations that constitute "instruments"
within the meaning of Section 9-105(1)(i) of the UCC
(other than certificated securities) and are
susceptible of physical delivery, transfer thereof to
the Indenture Trustee by physical delivery to the
Indenture Trustee, endorsed to, or registered in the
name of, the Indenture Trustee or its nominee or
endorsed in blank and such additional or alternative
procedures as may hereafter become appropriate to
effect the complete transfer of ownership of any such
Collateral to the Indenture Trustee free and clear of
any adverse claims, consistent with changes in
applicable law or regulations or the interpretation
thereof;
(b) with respect to a "certificated security" (as
defined in Section 8-102(a)(4) of the UCC), transfer
thereof:
(i) by physical delivery of such
certificated security to the Indenture Trustee,
provided that if the certificated security is in
registered form, it shall be endorsed to, or
registered in the name of, the Indenture Trustee
or endorsed in blank;
(ii) by physical delivery of such
certificated security in registered form to a
"securities intermediary" (as defined in Section
8-102(a)(14) of the UCC) acting on behalf of the
Indenture Trustee if the certificated security has
been specially endorsed to the Indenture Trustee
by an effective endorsement.
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(c) with respect to any security issued by the
U.S. Treasury, the Federal Home Loan Mortgage
Corporation or by the Federal National Mortgage
Association that is a book-entry security held through
the Federal Reserve System pursuant to Federal book
entry regulations, the following procedures, all in
accordance with applicable law, including applicable
federal regulations and Articles 8 and 9 of the UCC:
book-entry registration of such property to an
appropriate book-entry account maintained with a
Federal Reserve Bank by a securities intermediary which
is also a "depositary" pursuant to applicable federal
regulations and issuance by such securities
intermediary of a deposit advice or other written
confirmation of such book-entry registration to the
Indenture Trustee of the purchase by the securities
intermediary on behalf of the Indenture Trustee of such
book-entry security; the making by such securities
intermediary of entries in its books and records
identifying such book-entry security held through the
Federal Reserve System pursuant to Federal book-entry
regulations as belonging to the Indenture Trustee and
indicating that such securities intermediary holds such
book-entry security solely as agent for the Indenture
Trustee; and such additional or alternative procedures
as may hereafter become appropriate to effect complete
transfer of ownership of any such Collateral to the
Indenture Trustee free of any adverse claims,
consistent with changes in applicable law or
regulations or the interpretation thereof;
(d) with respect to any Trust Account Property
that is an "uncertificated security" (as defined in
Section 8-102(a)(18) of the UCC) and that is not
governed by clause (c) above, transfer thereof:
(i) (A) by registration to the Indenture
Trustee as the registered owner thereof, on the
books and records of the issuer thereof.
(B) by another Person (not a securities
intermediary) either becomes the registered owner
of the uncertificated security on behalf of the
Indenture Trustee, or having become the registered
owner acknowledges that it holds for the Indenture
Trustee.
(ii) the issuer thereof has agreed that it
will comply with instructions originated by the
Indenture Trustee without further consent of the
registered owner thereof.
(e) in each case of delivery contemplated herein,
the Indenture Trustee shall make appropriate notations
on its records, and shall cause same to be made of the
records of its nominees, indicating that securities are
held in trust pursuant to and as provided in this
Agreement.
(f) with respect to a "security entitlement" (as
defined in Section 8-102(a)(17) of the UCC)
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(i) if a securities intermediary (A)
indicates by book entry that a "financial asset" (as defined
in Section 8-102(a)(9) of the UCC) has been credited to be
the Indenture Trustee's "securities account" (as defined in
Section 8-501(a) of the UCC), (B) receives a financial asset
(as so defined) from the Indenture Trustee or acquires a
financial asset for the Indenture Trustee, and in either
case, accepts it for credit to the Indenture Trustee's
securities account (as so defined), (C) becomes obligated
under other law, regulation or rule to credit a financial
asset to the Indenture Trustee's securities account, or (D)
has agreed that it will comply with "entitlement orders" (as
defined in Section 8-102(a)(8) of the UCC) originated by the
Indenture Trustee without further consent by the
"entitlement holder" (as defined in Section 8-102(a)(7) of
the UCC), of a confirmation of the purchase and the making
by such securities intermediary of entries on its books and
records identifying as belonging to the Indenture Trustee or
(I) specific certificated security in the securities
intermediary's possession, (II) a quantity of securities
that constitute or are part of a fungible bulk of
certificated securities in the securities intermediary's
possession, or (III) a quantity of securities that
constitute or are part of a fungible bulk of securities
shown on the account of the securities intermediary on the
books of another securities intermediary.
"Depositor" shall mean the Seller in its capacity
as Depositor under the Trust Agreement.
"Determination Date" means, unless otherwise
provided in a Series Supplement, the earlier of the fifth
calendar day (or if such day is not a Business Day, the next
preceding Business Day) or the third Business Day (x)
preceding each Distribution Date and (y) the Class A-1
Special Distribution Date.
"Distribution Date" means, unless otherwise
provided in a Series Supplement, with respect to each
Collection Period, the seventeenth day of the following
calendar month, or if such day is not a Business Day, the
immediately following Business Day.
"Electronic Ledger" means the electronic master
record of the retail installment sales contracts or
installment loans serviced by the Master Servicer.
"Eligibility Criteria" means with respect to a
Series, the criteria set forth in the related Schedule of
Eligibility Criteria.
"Eligible Bank" means, except as otherwise
provided in a Series Supplement, any depository institution
(which shall initially be the Indenture Trustee) organized
under the laws of the United States of America or any one of
the states thereof or the District of Columbia (or any
United States branch or agency of a foreign bank), which is
subject to supervision and examination by federal or state
banking authorities and which at all times (a) has a net
worth in excess of $50,000,000 and (b) has either (i) a
rating of P-1 from Moody's and A-1 from Standard & Poor's
with respect to short-term deposit obligations, or such
other lower ratings acceptable to the Rating Agency, or (ii)
if such institution has issued long-term unsecured debt
obligations, a rating acceptable to the Rating Agency with
respect to long-term unsecured debt obligations.
"Eligible Deposit Account" means, except as
otherwise provided in a Series Supplement, either (a) a
segregated account with an Eligible Bank or (b) a segregated
trust account with the corporate trust department of a
depository institution with corporate trust powers organized
under the laws of the United States of America or any state
thereof or the District of Columbia (or any United States
branch or agency of a foreign bank), provided that such
institution also must have a rating of Baa3 or higher from
Moody's and a rating of BBB- or higher from Standard &
Poor's with respect to long-term deposit obligations, or
such other lower ratings acceptable to the Rating Agency.
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"Eligible Investments" shall mean, except as
otherwise provided in a Series Supplement, negotiable
instruments or securities represented by instruments in
bearer or registered form, or, in the case of deposits
described below, deposit accounts held in the name of the
Indenture Trustee in trust for the benefit of the Holders of
the Securities of the relevant Series, subject to the
exclusive custody and control of the Indenture Trustee and
for which the Indenture 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;
(b) demand deposits, time deposits or
certificates of deposit (having original maturities of no
more than 365 days) of depositary institutions or trust
companies incorporated under the laws of the United States
of America or any state thereof (or domestic branches of
foreign banks) and subject to supervision and examination by
federal or state banking or depositary institution
authorities; provided, that at the time of the Trust's
investment or contractual commitment to invest therein, the
short-term debt rating of such depository institution or
trust company shall be satisfactory to the Rating Agency;
(c) commercial paper (having original or
remaining maturities of not more than 30 days) having, at
the time of the Trust's investment or contractual commitment
to invest therein, a rating satisfactory to the Rating
Agency;
(d) investments in money market funds having, at
the time of the Trust's investment therein, a rating
acceptable to the Rating Agency;
(e) demand deposits, time deposits and
certificates of deposit which are fully insured by the FDIC
having, at the time of the Trust's investment therein, a
rating satisfactory to the Rating Agency;
(f) bankers' acceptances (having original
maturities of no more than 365 days) issued by a depository
institution or trust company referred to in (b) above;
(g) (x) time deposits (having maturities not
later than the succeeding Distribution Date) other than as
referred to in clause (e) above, with a Person the
commercial paper of which has a credit rating satisfactory
to the Rating Agency or (y) notes which are payable on
demand issued by Household; provided such notes will
constitute Eligible Investments only if the commercial paper
of Household has, at the time of the Trust's investment in
such notes, a rating satisfactory to the Rating Agency; or
(h) any other investment of a type or rating that
is acceptable to the Rating Agency.
Any of the foregoing Eligible Investments may be
purchased on or through the Indenture Trustee or through any
of its Affiliates.
"Eligible Servicer" means Household Finance
Corporation or any Person which at the time of its
appointment as Master Servicer, (i) is servicing a portfolio
of motor vehicle retail installment sales contracts and/or
motor vehicle installment loans, (ii) is legally qualified
and has the capacity to service the Receivables, (iii) has
demonstrated the ability professionally and competently to
service a portfolio of motor vehicle retail installment
sales contracts and/or motor vehicle installment loans
similar to the Receivables with reasonable skill and care,
(iv) is qualified and entitled to use, pursuant to a license
or other written agreement, and agrees to maintain the
confidentiality of, the software which the Master Servicer
uses in connection with performing its duties and
responsibilities under this Agreement or otherwise has
available software which is adequate to perform its duties
and responsibilities under this Agreement and (v) has a net
worth of at least $50,000,000.
14
"Eligible Sub-Servicer" means Household Automotive
Finance Corporation or any wholly owned subsidiary of
Household or any Person which at the time of its appointment
as Sub-Servicer, (i) is servicing a portfolio of motor
vehicle retail installment sales contracts and/or motor
vehicle installment loans, (ii) is legally qualified and has
the capacity to service the Receivables, (iii) has
demonstrated the ability professionally and competently to
service a portfolio of motor vehicle retail installment
sales contracts and/or motor vehicle installment loans
similar to the Receivables with reasonable skill and care,
and (iv) is qualified and entitled to use, pursuant to a
license or other written agreement, and agrees to maintain
the confidentiality of, the software which the Master
Servicer uses in connection with performing its duties and
responsibilities under this Agreement or otherwise has
available software which is adequate to perform its duties
and responsibilities under this Agreement.
"Financed Vehicle" means a new or used automobile,
light-duty truck or van securing an Obligor's indebtedness
under the respective Receivable.
"HAFC" means Household Automotive Finance
Corporation.
"Indenture" means the indenture dated as of June
1, 2000 between the Issuer and Norwest Bank Minnesota,
National Association, as indenture trustee, as supplemented
by the Series 2000-2 Supplement.
"Indenture Trustee" means the Person acting as
trustee under the Indenture, its successors in interest and
any successor trustee under the Indenture.
"Indenture Trustee Fee" means the fees due to the
Indenture Trustee as may be set forth in that certain fee
agreement dated as of the date hereof between the Master
Servicer and Norwest Bank Minnesota, National Association.
"Insolvency Event" means, with respect to a
specified Person, (a) the filing of a petition against such
Person or the entry of a decree or order for relief by a
court having jurisdiction in the premises in respect of such
Person or any substantial part of its property in an
involuntary case under any applicable federal or state
bankruptcy, insolvency or other similar law now or hereafter
in effect, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator, or similar official for
such Person or for any substantial part of its property, or
ordering the winding-up or liquidation of such Person's
affairs, and such petition, decree or order shall remain
unstayed and in effect for a period of 60 consecutive days;
or (b) the commencement by such Person of a voluntary case
under any applicable federal or state bankruptcy, insolvency
or other similar law now or hereafter in effect, or the
consent by such Person to the entry of an order for relief
in an involuntary case under any such law, or the consent by
such Person to the appointment of or taking possession by, a
receiver, liquidator, assignee, custodian, trustee,
sequestrator, or similar official for such Person or for any
substantial part of its property, or the making by such
Person of any general assignment for the benefit of
creditors, or the failure by such Person generally to pay
its debts as such debts become due, or the taking of action
by such Person in furtherance of any of the foregoing.
"Insurance Policy" means, with respect to a
Receivable, any insurance policy (including the insurance
policies described in Section 4.4 hereof) benefiting the
holder of the Receivable providing loss or physical damage,
credit life, credit disability, theft, mechanical breakdown
or similar coverage with respect to the Financed Vehicle or
the Obligor.
"Interest Period" for any Class or Series of Notes
or Certificates, the meaning set forth in the related Series
Supplement.
15
"Investment Earnings" means, with respect to any
Distribution Date and Trust Account, the investment earnings
(net of investment losses and expenses) on amounts on
deposit in such Trust Account on such Distribution Date.
"Issuer" means Household Automotive Trust V,
together with each other Trust designated as an Issuer
hereunder pursuant to a Series Supplement, in each case so
long as such Trust has not been terminated in accordance
with the terms of the related Trust Agreements.
"Lien" means a security interest, lien, charge,
pledge, equity, or encumbrance of any kind, other than tax
liens, mechanics' liens and any liens that attach to the
respective Receivable by operation of law as a result of any
act or omission by the related Obligor, provided that, any
assignment permitted by Section 2.1 hereof and the lien
created by this Agreement or the Indenture shall not be
deemed to constitute a Lien.
"Lien Certificate" means, with respect to a
Financed Vehicle, an original certificate of title,
certificate of lien or other notification issued by the
Registrar of Titles of the applicable state to a secured
party which indicates that the lien of the secured party on
the Financed Vehicle is recorded on the original certificate
of title. In any jurisdiction in which the original
certificate of title is required to be given to the Obligor,
the term "Lien Certificate" shall mean only a certificate or
notification issued to a secured party.
"Liquidated Receivable" means, with respect to any
Collection Period, upon the earliest of each of the
following to occur, a Receivable as to which (i) such
Receivable has been liquidated by the Master Servicer
through the sale of the Financed Vehicle, (ii) 90 days have
elapsed since the Master Servicer repossessed the Financed
Vehicle, (iii) proceeds have been received in respect of
such Receivable which, in the Master Servicer's reasonable
judgment, constitute the final amounts recoverable in
respect of such Receivable or (iv) 10% or more of a
Scheduled Payment shall have become 150 or more days
delinquent (or, in the case where the Obligor of such
Receivable is subject to an Insolvency Event, 10% or more of
a Scheduled Payment shall have become 210 or more days
delinquent). Any Receivable that becomes a Repurchased
Receivable on or before the related Accounting Date shall
not be a Liquidated Receivable.
"Master Collection Account" means the account
designated as such, established and maintained pursuant to
Section 5.1.
"Master Receivables Purchase Agreements" means (i)
the Master Receivables Purchase Agreement between the Seller
and HAFC, dated as of December 1, 1998, as such agreement
was amended and supplemented by the Master Succession and
Assumption Agreement and further amended and supplemented by
the Master Succession, Assumption and Amendment Agreement
and (ii) the Master Receivables Purchase Agreement between
the Seller and HAFC, dated as of June 1, 2000, as such
agreement may be amended or supplemented from time to time.
"Master Servicer" means Household Finance
Corporation, as the servicer of the Receivables, and each
successor Master Servicer pursuant to Section 10.3.
"Master Servicer Credit Facility" means the credit
facility maintained by the Master Servicer with a Master
Servicer Credit Facility Issuer pursuant to Section 4.2(d).
"Master Servicer Credit Facility Issuer" means a
depository institution or insurance company that qualifies
pursuant to Section 4.2(d).
16
"Master Servicer Termination Event" means an event
specified in Section 10.1.
"Master Servicer's Certificate" means an Officers'
Certificate of the Master Servicer delivered pursuant to
Section 4.9, substantially in the form of Exhibit A hereto.
"Master Succession and Assumption Agreement" means
the Master Succession and Assumption Agreement dated as of
September 1, 1999 among the Master Servicer, Household
Automotive Funding Trust 1999-A, the Seller, Credit Suisse
First Boston, New York Branch, as agent and purchaser,
Alpine Securitization Corp., Gramercy Capital Corporation,
The Chase Manhattan Bank, as indenture trustee, and the
Owner Trustee.
"Master Succession, Assumption and Amendment
Agreement" means the Master Succession, Assumption and
Amendment Agreement dated as of March 1, 2000 among the
Master Servicer, Household Automotive Funding Trust 2000-A,
the Seller, Credit Suisse First Boston, New York Branch, as
agent and purchaser, Gramercy Capital Corporation, The Chase
Manhattan Bank, as the retiring indenture trustee, Norwest
Bank Minnesota, National Association, as the successor
indenture trustee, and the Owner Trustee.
"Monthly Records" means all records and data
maintained by the Master Servicer with respect to the
Receivables, including the following with respect to each
Receivable: the account number; the originating Dealer;
Obligor name; Obligor address; Obligor home phone number;
Obligor business phone number; original Principal Balance;
original term; Annual Percentage Rate; current Principal
Balance; current remaining term; origination date; first
payment date; final scheduled payment date; next payment due
date; date of most recent payment; new/used classification;
collateral description; days currently delinquent; number of
contract extensions (months) to date; amount of Scheduled
Payment; current Insurance Policy expiration date; and past
due late charges.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc.,
or its successor.
"Net Liquidation Proceeds" means, with respect to
a Liquidated Receivable, all amounts realized with respect
to such Receivable (other than amounts withdrawn or received
from any Series Support) net of (i) reasonable expenses,
which expenses shall not include any deficiency balances or
post-disposition recoveries collected, incurred by the
Master Servicer in connection with the collection of such
Receivable and the repossession and disposition of the
Financed Vehicle and (ii) amounts that are required to be
refunded to the Obligor on such Receivable; provided,
however, that the Net Liquidation Proceeds with respect to
any Receivable shall in no event be less than zero;
provided, further, that, so long as amounts cannot be traced
to specific Receivables the Master Servicer shall reasonably
estimate, on or prior to each Accounting Date, the amount of
Net Liquidation Proceeds attributable to each Series Trust
Estate.
"Noteholder" means the Person in whose name a Note
is registered on the Note Register.
"Notes" has the meaning assigned to such term in
the Indenture.
"Obligor" on a Receivable means the purchaser or
co-purchasers of the Financed Vehicle and any other Person
who owes payments under the Receivable.
"Officers' Certificate" means a certificate signed
by the chairman of the board, the president, any executive
vice president or any vice president, any treasurer,
assistant treasurer, secretary or assistant secretary of the
Seller or the Master Servicer, as appropriate.
17
"Opinion of Counsel" means an opinion of counsel
who may be counsel to the Master Servicer or the Seller,
acceptable to the Indenture Trustee.
"Other Conveyed Property" means all property
conveyed by the Seller to the Trust pursuant to Section
2.1(a)(ii) through (xii) of this Agreement.
"Outstanding" has the meaning assigned to such
term in the Indenture.
"Outstanding Amount" means, with respect to any
Series, the aggregate principal amount of all Notes of such
Series which are Outstanding at the date of determination
after giving effect to all distributions of principal on
such date of determination.
"Owner Trust Estate" has the meaning assigned to
such term in the Trust Agreement.
"Owner Trustee" means Wilmington Trust Company,
not in its individual capacity but solely as Owner Trustee
under the Trust Agreement, its successors-in-interest or any
successor Owner Trustee under the Trust Agreement.
"Payment Record" means the record maintained by
the Master Servicer for the Trust as provided in Section
4.2(d) hereof.
"Person" means any individual, corporation,
estate, partnership, joint venture, association, joint stock
company, trust (including any beneficiary thereof),
unincorporated organization or government or any agency or
political subdivision thereof.
"Physical Property" has the meaning assigned to
such term in the definition of "Delivery" above.
"Principal Balance" means, with respect to any
Receivable, as of any date, the Amount Financed minus (i)
that portion of all amounts received on or prior to such
date and allocable to principal in accordance with the
Actuarial Method, or the Simple Interest Method, as
appropriate, and (ii) any Cram Down Loss in respect of such
Receivable. The "Principal Balance" of a Repurchased
Receivable or Liquidated Receivable shall be deemed to be
zero.
"Rating Agency" means, with respect to any
outstanding Series or Class, each Rating Agency specified in
the Series Supplement.
"Rating Agency Condition" means, with respect to
any action with respect to a Series, that each Rating Agency
shall have received prior notice thereof and that each
Rating Agency shall have notified the Master Servicer in
writing (who shall then immediately notify the Seller, the
Owner Trustee and the Indenture Trustee in writing) that
such action will not result in a reduction or withdrawal of
the then current rating of any Class of Notes.
"Realized Losses" means, with respect to any
Receivable that becomes a Liquidated Receivable, the excess
of the Principal Balance of such Liquidated Receivable over
Net Liquidation Proceeds to the extent allocable to
principal.
"Receivable" means any Contract listed on Schedule
II-A or Schedule II-B to the Series Supplement or Schedule A
to a Transfer Agreement (which Schedule may be in an
acceptable electronic format), except Liquidated Receivables
and Receivables released from the Owner Trust Estate.
"Receivable Files" means the documents specified
in Section 3.3.
"Receivables Purchase Agreement Supplement" means
any Receivables Purchase Agreement Supplement to either
Master Receivables Purchase Agreement.
18
"Record Date" with respect to each Distribution
Date means the Business Day immediately preceding such
Distribution Date, unless otherwise specified in the
applicable Series Supplement.
"Registrar of Titles" means, with respect to any
state, the governmental agency or body responsible for the
registration of, and the issuance of certificates of title
relating to, motor vehicles and liens thereon.
"Repurchase Amount" means, with respect to a
Receivable, the Principal Balance and all accrued and unpaid
interest on the Receivable, after giving effect to the
receipt of any moneys collected (from whatever source) on
such Receivable, if any, as of the date of purchase,
provided that, reductions in the Principal Balance resulting
from such Receivable becoming a Liquidated Receivable shall
be disregarded.
"Repurchased Receivable" means a Receivable
purchased by the Master Servicer pursuant to Section 4.7 or
repurchased by the Seller pursuant to Section 3.2 or the
Seller or HAFC pursuant to Section 11.1(a).
"Schedule of Eligibility Criteria" means the
Schedule of Eligibility Criteria attached as Schedule I to a
Series Supplement.
"Schedules of Receivables" means, with respect to
each Series Trust Estate, the schedule of all retail
installment sales contracts and promissory notes originally
held as part of the Trust which are attached as Schedule II-
A and Schedule II-B to the Series Supplement or Schedule A
to the Transfer Agreements relating to such Series Trust
Estate.
"Scheduled Payment" means, with respect to any
Collection Period for any Receivable, the amount set forth
in such Receivable as required to be paid by the Obligor in
such Collection Period. If after the Series Closing Date,
the Obligor's obligation under a Receivable with respect to
a Collection Period has been modified so as to differ from
the amount specified in such Receivable as a result of (i)
the order of a court in an insolvency proceeding involving
the Obligor, (ii) pursuant to the Soldiers' and Sailors'
Civil Relief Act of 1940, as amended, or (iii) modifications
or extensions of the Receivable permitted by Sections 4.2(b)
and (c), the Scheduled Payment with respect to such
Collection Period shall refer to the Obligor's payment
obligation with respect to such Collection Period as so
modified.
"Securities" means the Notes and the Certificates.
"Securityholders" means the Noteholders and the
Certificateholders.
"Seller" means Household Auto Receivables
Corporation, a Nevada corporation, and its successors in
interest to the extent permitted hereunder.
"Series" means, with respect to any Notes, Notes
issued pursuant to the same Series Supplement and with
respect to any Certificates, Certificates issued pursuant to
the same Series Supplement, or the Notes and Certificates
issued pursuant to the same Series Supplement, as the
context may require.
"Series Closing Date" means, with respect to any
Series, the date designated in the related Series Supplement
as the closing date for such Series.
"Series Collection Account" means, with respect to
any Series, the collection account designated in the related
Series Supplement.
19
"Series of Certificates" means the Certificates
issued in connection with a Series of Notes.
"Series Related Documents" with respect to a
Series, has the meaning specified therefor in the related
Series Supplement.
"Series Supplement" means, with respect to any
Series, a Series Supplement to the Indenture and the Trust
Agreement, executed and delivered in connection with the
original issuance of the Notes and Certificates of such
Series, and all amendments thereof and supplements thereto.
"Series Support" means the rights and benefits
provided to the Indenture Trustee or the Noteholders of any
Series or Class pursuant to any letter of credit, surety
bond, cash collateral account, spread account, guaranteed
rate agreement, maturity liquidity facility, interest rate
swap agreement, tax protection agreement or other similar
arrangement. The subordination of any Series or Class to
another Series or Class shall be deemed to be a Series
Support. Notwithstanding that such Series Support may be
held by or in favor of the Indenture Trustee for the benefit
of any Series or Class, only those Series or Classes to
which such Series Support relates shall have any rights with
respect thereto and all payments thereunder received by the
Indenture Trustee shall be distributed exclusively as
prescribed in the Series Supplement relating to such Series
or Class.
"Series Support Provider" means the Person, if
any, designated in the related Series Supplement, as
providing any Series Support, other than Household or any of
its Affiliates or the Noteholders of any Series or Class
which is subordinated to another Class or Series.
"Series Trust Accounts" has the meaning with
respect to each Series specified in the related Series
Supplement.
"Series Termination Date" has the meaning with
respect to each Series specified in the related Series
Supplement.
"Series Trust Estate" has the meaning with respect
to each Series specified in the related Series Supplement.
"Service Contract" means, with respect to a
Financed Vehicle, the agreement, if any, financed under the
related Receivable that provides for the repair of such
Financed Vehicle.
"Servicing Fee Rate" means 3% per annum unless
otherwise specified in a Series Supplement with respect to
the related Series Trust Estate.
"Simple Interest Method" means the method of
allocating a fixed level payment on an obligation between
principal and interest, pursuant to which the portion of
such payment that is allocated to interest is equal to the
product of the fixed rate of interest on such obligation
multiplied by the period of time (expressed as a fraction of
a year, based on the actual number of days in the calendar
month and 365 days in the calendar year) elapsed since the
preceding payment under the obligation was made.
"Simple Interest Receivable" means a Receivable
under which the portion of the payment allocable to interest
and the portion allocable to principal is determined in
accordance with the Simple Interest Method.
"Standard & Poor's" means Standard & Poor's, a
division of the McGraw Hill Companies, Inc., or its
successor.
20
"Sub-Servicer" means any Eligible Sub-Servicer
with whom the Master Servicer has entered into an agreement
relating to subservicing the Receivables. Initially, the
Sub-Servicer will be HAFC.
"Supplemental Servicing Fee" means, with respect
to any Collection Period, all administrative fees, expenses
and charges paid by or on behalf of Obligors, including late
fees, prepayment fees and liquidation fees collected on the
Receivables during such Collection Period.
"Support Default" shall mean a default relating to
the Insolvency or performance of a Series Support Provider.
"Transfer Agreement" means the agreement among the
Issuer, the Seller and the Master Servicer, substantially in
the form of Exhibit B.
"Transfer Date" means, with respect to
Receivables, any date on which Receivables are to be
transferred to a Trust pursuant to this Agreement and a
related Transfer Agreement.
"Trust" means the respective Issuers,
individually.
"Trust Account Property" means the Trust Accounts
and each Series Trust Account, all amounts and investments
held from time to time in any Trust Account and each Series
Trust Account (whether in the form of deposit accounts,
Physical Property, book-entry securities, uncertificated
securities or otherwise), and all proceeds of the foregoing.
"Trust Accounts" has the meaning assigned thereto
in Section 5.1.
"Trust Agreement" means the Trust Agreement, dated
as of June 1, 2000, between the Seller and the Owner
Trustee, as amended and restated as of June 1, 2000 and as
supplemented by the Series 2000-2 Supplement, and as the
same may be amended and further supplemented from time to
time.
"Trust Officer" means, (i) in the case of the
Indenture Trustee, the chairman or vice-chairman of the
board of directors, the chairman or vice-chairman of the
executive committee of the board of directors, the
president, any vice president, assistant vice-president or
managing director, the secretary, any assistant secretary or
any other officer of the Indenture Trustee customarily
performing functions similar to those performed by any of
the above designated officers and also means, with respect
to a particular corporate trust matter and having direct
responsibility for the Administration of this Agreement, and
(ii) in the case of the Owner Trustee, any officer in the
corporate trust office of the Owner Trustee or any agent of
the Owner Trustee under a power of attorney with direct
responsibility for the administration of this Agreement or
any of the Basic Documents or Series Related Documents on
behalf of the Owner Trustee.
"UCC" means the Uniform Commercial Code as in
effect in the relevant jurisdiction on the date of the
Agreement.
"Warranty Receivable" With respect to any
Collection Period, a Receivable which the Seller has become
obligated to repurchase pursuant to Section 3.2.
21
SECTION 1.2. Other Interpretive Provisions
(a) . (a) Capitalized terms used herein and not
otherwise defined herein have the meanings assigned to them
in the Indenture, or, if not defined therein, in the Trust
Agreement. Cross referenced definitions may include a
Series designation.
(b) All terms defined in this Agreement shall have the
defined meanings when used in any instrument governed hereby
and in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(c) As used in this Agreement, in any instrument
governed hereby and in any certificate or other document
made or delivered pursuant hereto or thereto, accounting
terms not defined in this Agreement or in any such
instrument, certificate or other document, and accounting
terms partly defined in this Agreement or in any such
instrument, certificate or other document to the extent not
defined, shall have the respective meanings given to them
under generally accepted accounting principles as in effect
on the date of this Agreement or any such instrument,
certificate or other document, as applicable. To the extent
that the definitions of accounting terms in this Agreement
or in any such instrument, certificate or other document are
inconsistent with the meanings of such terms under generally
accepted accounting principles, the definitions contained in
this Agreement or in any such instrument, certificate or
other document shall control.
(d) Any agreement, instrument or statute defined or
referred to herein or in any instrument or certificate
delivered in connection herewith means such agreement,
instrument or statute as from time to time amended, modified
or supplemented and includes (in the case of agreements or
instruments) references to all attachments thereto and
instruments incorporated therein.
(e) Any term defined herein, which is otherwise
defined in a Series Supplement, shall have the meaning with
respect to such Series specified therefor in such Series
Supplement, whether or not the definition in this Agreement
includes a phrase to the effect that such term may be
otherwise defined in a Series Supplement.
(f) In the event that with respect to a Series there
is no Series Support Provider, any references herein or in
any other of the Basic Documents to the consent of, or
acceptability to, the Series Support Provider shall be
deemed to be deleted.
SECTION 1.3. Usage of Terms
. With respect to all terms used in this Agreement, the
singular includes the plural and the plural includes the
singular; words importing any gender include the other
gender; references to "writing" include printing, typing,
lithography, and other means of reproducing words in a
visible form; references to agreements and other contractual
instruments include all subsequent amendments thereto or
changes therein entered into in accordance with their
respective terms and not prohibited by this Agreement;
references to Persons include their permitted successors and
assigns; the terms "include" or "including" mean "include
without limitation" or "including without limitation;" the
words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to
any particular Article, Section or other subdivision, and
Article, Section, Schedule and Exhibit references, unless
otherwise specified, refer to Articles and Sections of
Schedules and Exhibits to this Agreement.
SECTION 1.4. Certain References
. All references to the Principal Balance of a Receivable
as of any date of determination shall refer to the close of
business on such day, or as of the first day of an Interest
Period shall refer to the opening of business on such day.
All references to the last day of an Interest Period shall
refer to the close of business on such day.
22
SECTION 1.5. No Recourse
. Without limiting the obligations of the Master Servicer
or Seller hereunder, no recourse may be taken, directly or
indirectly, under this Agreement or any certificate or other
writing delivered in connection herewith or therewith,
against any stockholder, officer or director, as such, of
the Master Servicer or Seller, or of any of their respective
Affiliates, predecessors or successors.
SECTION 1.6. Action by or Consent of Noteholders
. Whenever any provision of this Agreement refers to action
to be taken, or consented to, by Noteholders, such provision
shall be deemed to refer to the Noteholders of record as of
the Record Date immediately preceding the date on which such
action is to be taken, or consent given, by Noteholders.
Solely for the purposes of any action to be taken, or
consented to, by Noteholders, any Note registered in the
name of HAFC or any Affiliate thereof shall be deemed not to
be outstanding; provided, however, that, solely for the
purpose of determining whether the Indenture Trustee is
entitled to rely upon any such action or consent, only Notes
which the Trust Officer of the Indenture Trustee actually
knows to be so owned shall be so disregarded.
23
ARTICLE II
Conveyance of Receivables
SECTION 2.1. Conveyance of Receivables
(a) . (a) Subject to the conditions set forth in
paragraph (b) below, in consideration of the Issuer's
delivery to or upon the order of the Seller on the Series
Closing Date or a Transfer Date of the net proceeds from the
sale of a Series of Notes thereunder and the other amounts
to be distributed from time to time to the Seller in
accordance with the terms of this Agreement and the related
Series Supplement, the Seller shall, from time to time,
sell, transfer, assign, set over and otherwise convey to the
Issuer, without recourse (subject to the obligations set
forth herein), all right, title and interest of the Seller
in and to:
(i) each and every Receivables listed on Schedule II-A
and Schedule II-B to the Series Supplement and Schedule A to
the related Transfer Agreement, if any, and all monies paid
or payable thereon or in respect thereof after the Series
Closing Date or the related Transfer Date (including amounts
due on or before the Cutoff Date but received by HAFC, the
Seller or the Issuer on or after the Cutoff Date);
(ii) the security interests in the related Financed
Vehicles granted by Obligors pursuant to the related
Receivables and any other interest of the Seller in such
Financed Vehicles;
(iii) all rights of the Seller against the Dealers
pursuant to Dealer Agreements;
(iv) any proceeds and the right to receive proceeds
with respect to such Receivables repurchased by a Dealer,
pursuant to a Dealer Agreement as a result of a breach of
representation or warranty in the related Dealer Agreement;
(v) all rights under any Service Contracts on the
related Financed Vehicles:
(vi) any proceeds and the right to receive proceeds
with respect to such Receivables from claims on any physical
damage, credit life or disability insurance policies
covering the related Financed Vehicles or Obligors,
including rebates of insurance premiums relating to the
Receivables;
(vii) all items contained in the related Receivables
Files with respect to the Receivables; and any and all other
documents that HAFC keeps on file in accordance with its
customary procedures relating to the related Receivables,
the Obligors or the Financed Vehicles;
(viii) all funds on deposit from time to time in the
Trust Accounts (including all investments and proceeds
thereof);
(ix) property (including the right to receive future
Net Liquidation Proceeds) that secures a Receivable and that
has been acquired by or on behalf of the Trust pursuant to
liquidation of such Receivable;
(x) all of the Seller's right, title and interest in
its rights and benefits, but none of its obligations or
burdens, under each of the Master Receivables Purchase
Agreements and the Receivables Purchase Agreement
Supplements, including the delivery requirements,
representations and warranties and the cure and repurchase
obligations of HAFC under each of the Master Receivables
Purchase Agreements and the Receivables Purchase Agreement
Supplements, on or after the related Cutoff Date;
(xi) one share of Class SV Preferred Stock of the
Seller; and
(xii) all present and future claims, demands, causes and
chooses in action in respect of any or all of the foregoing
and all payments on or under and all proceeds of every kind
and nature whatsoever in respect of any or all of the
foregoing, including all proceeds of the conversion,
voluntary or involuntary, into cash or other liquid
property, all cash proceeds, accounts, accounts receivable,
notes, drafts, acceptances, chattel paper, checks, deposit
accounts, insurance proceeds, condemnation awards, rights to
payment of any and every kind and other forms of obligations
and receivables, instruments and other property which at any
time constitute all or part of or are included in the
proceeds of any of the foregoing.
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(b) The Seller shall transfer to the Issuer the
Receivables and the other property and rights related
thereto described in paragraph (a) above only upon the
satisfaction of each of the following conditions on or prior
to the Series Closing Date or the related Transfer Date:
(i) if the transfer is not on the Closing Date, the
Seller shall have provided the Indenture Trustee and the
Owner Trustee with an Addition Notice not later than five
days prior to such Transfer Date (which Addition Notice will
designate the Series Trust Estate which the Receivables will
be a part of, if any) and shall have provided any
information reasonably requested by any of the foregoing
with respect to the related Receivables;
(ii) the Seller shall have delivered to the Owner
Trustee and the Indenture Trustee a duly executed Transfer
Agreement or Series Supplement which shall include a
schedule (which may be in electronic format), listing the
Receivables to be transferred;
(iii) the Seller shall, to the extent required by
Section 4.2, have deposited in the Master Collection Account
all collections received after the related Cutoff Date in
respect of the Receivables to be transferred;
(iv) as of the Series Closing Date and each Transfer
Date, (A) the Seller shall not be insolvent and shall not
become insolvent as a result of the transfer of Receivables
on such date, (B) the Seller shall not intend to incur or
believe that it shall incur debts that would be beyond its
ability to pay as such debts mature, (C) such transfer shall
not have been made with actual intent to hinder, delay or
defraud any Person and (D) the assets of the Seller shall
not constitute unreasonably small capital to carry out its
business as conducted;
(v) each of the representations and warranties made by
the Seller pursuant to Section 3.1 with respect to the
Receivables to be transferred on the Series Closing Date or
the related Transfer Date shall be true and correct as of
the Series Closing Date or the related Transfer Date, and
the Seller shall have performed all obligations to be
performed by it hereunder on or prior to such Transfer Date;
(vi) the Seller shall, at its own expense, on or prior
to the Series Closing Date or the related Transfer Date
indicate in its computer files that the Receivables
identified in the Schedule to the Series Supplement or to
the related Transfer Agreement have been sold to the Trust
pursuant to this Agreement;
(vii) the Seller shall have taken any action necessary
or, if required by the Indenture Trustee, advisable to
maintain the first priority perfected ownership interest of
the Trust in the Owner Trust Estate and the first perfected
security interest of the Indenture Trustee in the Series
Trust Estate;
(viii) no selection procedures adverse to the interests
of the related Series shall have been utilized in selecting
the related Receivables;
(ix) the addition of any such Receivables shall not
result in a material adverse tax consequence to the Trust or
the Noteholders;
(x) if required by any of the related Series Related
Documents, the Seller shall simultaneously transfer to the
Indenture Trustee any amounts required to be deposited in
the related Trust Accounts with respect to the Receivables
transferred on such Series Closing Date or Transfer Date;
and
(xi) the Seller shall have delivered to the Indenture
Trustee an Officers' Certificate confirming the satisfaction
of each condition precedent specified in this paragraph (b).
The Seller covenants that in the event any of the
foregoing conditions precedent are not satisfied with
respect to any Receivable on the date required as specified
above, the Seller will immediately repurchase such
Receivable from the Trust, at a price equal to the
Repurchase Amount thereof, in the manner specified in
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Section 3.2.
It is the intention of the Seller that the
transfer and assignment contemplated by this Agreement and
each related Transfer Agreement shall constitute a sale of
the related Series Trust Estate from the Seller to the
Issuer and the beneficial interest in and title to the
related Series Trust Estate shall not be part of the
Seller's estate in the event of the filing of a bankruptcy
petition by or against the Seller under any bankruptcy law.
In the event that, notwithstanding the intent of the Seller,
the transfer and assignment contemplated hereby and thereby
is held not to be a sale, this Agreement and the related
Transfer Agreement shall constitute a grant of a security
interest in the property referred to in this Section 2.1 for
the benefit of the Noteholders.
SECTION 2.2. Further Encumbrance of Series Trust
Estate
(a) . (a) Immediately upon the conveyance to the
Trust by the Seller of any item of the related Series Trust
Estate pursuant to Section 2.1, all right, title and
interest of the Seller in and to such Series Trust Estate
shall terminate, and all such right, title and interest
shall vest in the Issuer, in accordance with the Trust
Agreement and Sections 3802 and 3805 of the Business Trust
Statute (as defined in the Trust Agreement).
(b) Immediately upon the vesting of the related Series
Trust Estate in the Trust, the Trust shall have the sole
right to pledge or otherwise encumber, such related Series
Trust Estate. Pursuant to the Indenture and a Series
Supplement, the Trust will grant a security interest in the
Series Trust Estate to secure the repayment of a related
Series of Notes. The related Series of Certificates shall
represent the beneficial ownership interest in the related
Series Trust Estate, and the related Series of
Certificateholders shall be entitled to receive
distributions with respect thereto as set forth in the
related Series Supplement.
(c) The Indenture Trustee shall hold the related
Series Trust Estate for the benefit of the related Series
Securityholders. Following the payment in full of the
related Series of Notes and the release and discharge of the
Indenture and the related Series Supplement, all covenants
of the Issuer under Article III of the Indenture and the
related Series Supplement shall, until payment in full of
the Certificates, remain as covenants of the Issuer for the
benefit of the related Series of Certificateholders,
enforceable by the related Series of Certificateholders to
the same extent as such covenants were enforceable by the
related Series of Noteholders prior to the discharge of the
Indenture. Any rights of the Indenture Trustee under
Article III of the Indenture and the related Series
Supplement, following the discharge of the Indenture and the
related Series Supplement, shall vest in related Series of
Certificateholders.
(d) The Indenture Trustee shall, at such time as there
are no Securities of a Series outstanding and all sums due
to the Indenture Trustee or any agent or counsel thereof
pursuant to the Indenture as supplemented by the related
Series Supplement, have been paid, pursuant to Section 4.1
of the Indenture, and subject to satisfaction of the
conditions set forth therein, release the Lien of the
related Series Supplement and the Indenture with respect to
the related Series Trust Estate.
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ARTICLE III
The Receivables
SECTION 3.1. Representations and Warranties of Seller
. The Seller represents and warrants as to the related
Receivables that the representations and warranties set
forth on the Schedule of Eligibility Criteria with respect
to a Series are, or will be, true and correct as of the
respective dates specified in such Schedule. The Issuer is
deemed to have relied on such representations and warranties
in acquiring the related Receivables and the related
Securityholders shall be deemed to rely on such
representations and warranties in purchasing the Notes.
Such representations and warranties shall survive the sale,
transfer and assignment of the related Series Trust Estate
to the Issuer and any pledge thereof to the Indenture
Trustee pursuant to the Indenture and the related Series
Supplement.
SECTION 3.2. Repurchase upon Breach
(a) . (a) The Seller, the Master Servicer, any Trust
Officer of the Indenture Trustee or the Owner Trustee, as
the case may be, shall inform each of the other parties to
this Agreement promptly, in writing, upon the discovery of
any breach of the Seller's representations and warranties
made pursuant to Section 3.1; provided, however, that the
failure to give any such notice shall not derogate from any
obligations of the Seller under this Section 3.2. As of the
last day of the second (or, if the Seller so elects, the
first, or with respect to any exceptions appearing on any
exception report delivered by the Indenture Trustee, the
first) month following the discovery by the Seller or
receipt by the Seller of notice of such breach (or such
longer period not in excess of 120 days, as may be agreed
upon by the Indenture Trustee and the Master Servicer),
unless such breach is cured by such date, the Seller shall
have an obligation to repurchase or cause HAFC to repurchase
any Receivable in which the interests of the related Series
Securityholders are materially and adversely affected by any
such breach. In consideration of and simultaneously with
the repurchase of the Receivables, the Seller shall remit,
or cause HAFC to remit, to the related Series Collection
Account, the Repurchase Amount in the manner specified in
Section 5.4 and the Issuer shall execute such assignments
and other documents reasonably requested by such person in
order to effect such repurchase. The sole remedy of the
Issuer, the Owner Trustee, the Indenture Trustee and the
related Series Securityholders with respect to a breach of
representations and warranties pursuant to Section 3.1 and
the agreement contained in this Section shall be the
repurchase of the Receivables pursuant to this Section,
subject to the conditions contained herein or to enforce the
obligation of HAFC to the Seller to repurchase such
Receivables pursuant to the Master Receivables Purchase
Agreements. Neither the Owner Trustee nor the Indenture
Trustee shall have a duty to conduct any affirmative
investigation as to the occurrence of any conditions
requiring the repurchase of any Receivable pursuant to this
Section.
(b) Pursuant to Section 2.1 of this Agreement and
pursuant to the related Transfer Agreement, the Seller
conveyed to the Trust all of the Seller's right, title and
interest in its rights and benefits, but none of its
obligations or burdens, under the Master Receivables
Purchase Agreements and the related Receivables Purchase
Agreement Supplements, including the Seller's rights under
the Master Receivables Purchase Agreements and the delivery
requirements, representations and warranties and the cure or
repurchase obligations of HAFC thereunder. The Seller
hereby represents and warrants to the Trust that such
assignment is valid, enforceable and effective to permit the
Trust to enforce such obligations of HAFC under the Master
Receivables Purchase Agreements.
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SECTION 3.3. Custody of Receivables Files
. In connection with the sale, transfer and assignment of
the Receivables, if any, to the Trust pursuant to this
Agreement and pursuant to the related Transfer Agreement,
the Master Servicer shall act as custodian for the benefit
of the Indenture Trustee of the following documents or
instruments with respect to each Receivable:
(i) The fully executed original of the Receivable
(together with any agreements modifying the Receivable,
including, without limitation, any extension agreements);
(ii) The original credit application, or a copy
thereof, of each Obligor, fully executed by each such
Obligor on HAFC's or the Dealer's customary form, or on a
form approved by HAFC, for such application; and
(iii) The original certificate of title (when received)
and otherwise such documents, if any, that HAFC keeps on
file in accordance with its customary procedures indicating
that the Financed Vehicle is owned by the Obligor and
subject to the interest of (x) HAFC (or any predecessor
corporation to HAFC, or any Affiliate of HAFC or such
predecessor corporation) as first lienholder or secured
party (including any Lien Certificate received by HAFC), or,
(y) a Dealer as first lienholder or secured party or, if
such original certificate of title has not yet been
received, a copy of the application therefor, showing either
HAFC (or any predecessor corporation to HAFC, or any
Affiliate of HAFC or such predecessor corporation), or a
Dealer as secured party; and
(iv) Documents evidencing or relating to any Insurance
Policy, to the extent such documents are maintained by or on
behalf of the Seller or HAFC.
Notwithstanding the foregoing, the Master Servicer may
appoint a Sub-Servicer as subcustodian, which subcustodian
may hold physical possession of some or all of the
Receivable Files. The Indenture Trustee shall have no
liability for the acts or omissions of any such custodian or
subcustodian.
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ARTICLE IV
Administration and Servicing of Receivables
SECTION 4.1. Duties of the Master Servicer
. The Master Servicer is hereby authorized to act as agent
for the Trust (and also on behalf of the Indenture Trustee
and the Noteholders) and in such capacity shall manage,
service, administer and make collections on the Receivables,
and perform the other actions required by the Master
Servicer under this Agreement. The Master Servicer agrees
that its servicing of the Receivables shall be carried out
in accordance with customary and usual procedures of
institutions which service motor vehicles retail installment
sales contracts and, to the extent more exacting, the degree
of skill and attention that the Master Servicer exercises
with respect to all comparable motor vehicle receivables
that it services for itself or others. In performing such
duties, so long as Household is the Master Servicer, it
shall comply with the standard and customary procedures for
servicing all of its comparable motor vehicle receivables.
The Master Servicer's duties shall include, without
limitation, collection and posting of all payments,
responding to inquiries of Obligors on the Receivables,
investigating delinquencies, sending payment statements to
Obligors, reporting any required tax information to
Obligors, accounting for collections and furnishing monthly
and annual statements to the Indenture Trustee with respect
to distributions, monitoring the status of Insurance
Policies with respect to the Financed Vehicles and
performing the other duties specified herein. The Master
Servicer shall also administer and enforce all rights and
responsibilities of the holder of the Receivables provided
for in the Dealer Agreements (and Household shall make
efforts to obtain possession of the Dealer Agreements, to
the extent it is necessary to do so), the Dealer Assignments
and the Insurance Policies, to the extent that such Dealer
Agreements, Dealer Assignments and Insurance Policies relate
to the Receivables, the Financed Vehicles or the Obligors.
To the extent consistent with the standards, policies and
procedures otherwise required hereby, the Master Servicer
shall follow its customary standards, policies, and
procedures and shall have full power and authority, acting
alone, to do any and all things in connection with such
managing, servicing, administration and collection that it
may deem necessary or desirable. Without limiting the
generality of the foregoing, the Master Servicer is hereby
authorized and empowered by the Trust to execute and
deliver, on behalf of the Trust, any and all instruments of
satisfaction or cancellation, or of partial or full release
or discharge, and all other comparable instruments, with
respect to the Receivables and with respect to the Financed
Vehicles; provided, however, that notwithstanding the
foregoing and subject to Section 4.3 hereof, the Master
Servicer shall not, except pursuant to an order from a court
of competent jurisdiction, release an Obligor from payment
of any unpaid amount under any Receivable or waive the right
to collect the unpaid balance of any Receivable from the
Obligor. The Master Servicer is hereby authorized to
commence, in it's own name or in the name of the Trust, a
legal proceeding to enforce a Receivable pursuant to Section
4.3 or to commence or participate in any other legal
proceeding (including, without limitation, a bankruptcy
proceeding) relating to or involving a Receivable, an
Obligor or a Financed Vehicle. If the Master Servicer
commences or participates in such a legal proceeding in its
own name, the Trust shall thereupon be deemed to have
automatically assigned such Receivable to the Master
Servicer solely for purposes of commencing or participating
in any such proceeding as a party or claimant, and the
Master Servicer is authorized and empowered by the Trust to
execute and deliver in the Master Servicer's name any
notices, demands, claims, complaints, responses, affidavits
or other documents or instruments in connection with any
such proceeding. The Indenture Trustee and the Owner
Trustee shall furnish the Master Servicer with any powers of
attorney and other documents which the Master Servicer may
reasonably request and which the Master Servicer deems
necessary or appropriate and take any other steps which the
Master Servicer may deem reasonably necessary or appropriate
to enable the Master Servicer to carry out its servicing and
administrative duties under this Agreement.
29
SECTION 4.2. Collection of Receivable Payments;
Modifications of Receivables
(a) . (a) Consistent with the standards, policies
and procedures required by this Agreement, the Master
Servicer shall make reasonable efforts to collect all
payments called for under the terms and provisions of the
Receivables as and when the same shall become due, and shall
follow such collection procedures as it follows with respect
to all comparable automobile receivables that it services
for itself or others and otherwise act with respect to the
Receivables, the Dealer Agreements, the Dealer Assignments,
the Insurance Policies and the Other Conveyed Property in
such manner as will, in the reasonable judgment of the
Master Servicer, maximize the amount to be received by the
Trust with respect thereto. The Master Servicer is
authorized in its discretion to waive any prepayment charge,
late payment charge or any other similar fees that may be
collected in the ordinary course of servicing any
Receivable.
(b) The Master Servicer may at any time agree to a
modification or amendment of a Receivable in order to (i)
change the Obligor's regular due date to a date within 30
days of when such due date occurs or (ii) re-amortize the
scheduled payments on the Receivable following a partial
prepayment of principal; provided, however, that no such
change shall extend the maturity date of any Receivable.
(c) The Master Servicer may grant payment extensions
on, or other modifications or amendments to, a Receivable
(including those modifications permitted by Section 4.2(b))
in accordance with its customary procedures if the Master
Servicer believes in good faith that such extension,
modification or amendment is necessary to avoid a default on
such Receivable, will maximize the amount to be received
with respect to such Receivable, and is otherwise in the
best interests of the Trust; provided, however, that unless
otherwise specified in any Series Supplement:
(i) The aggregate period of all extensions on a
Receivable shall not exceed six months; provided, however,
that not more than two months can be in any consecutive
twelve month period;
(ii) In no event may a Receivable be extended by the
Master Servicer beyond the Collection Period immediately
preceding the Final Scheduled Distribution Date of the Notes
with respect to the related Series; and
(iii) As of any Determination Date the number of
Receivables included in a Series Trust Estate the term of
which have been extended during the preceding 12-month
period shall not exceed 8% of the number of Receivables in
such Series Trust Estate at the beginning of the preceding
12-month period.
(d) Except as otherwise provided below, the Master
Servicer shall deposit collections on or with respect to
Receivables into the Master Collection Account as promptly
as possible after the date of processing of such
collections, but in no event later than the second Business
Day following the date of processing. Subject to the
express terms of any Series Supplement, but notwithstanding
anything else in this Agreement to the contrary, for so long
as (i) Household remains the Master Servicer and maintains a
commercial paper rating of not less than A-1 by Standard &
Poor's and P-1 by Moody's (or such other rating below A-1 or
P-1, as the case may be, which is satisfactory to the Rating
Agency) and for five Business Days following any reduction
of any such rating or (ii) a Master Servicer Credit Facility
is maintained in effect by the Master Servicer acceptable in
form and substance to the Rating Agency (such acceptability
to be evidenced in writing by the Rating Agency to the
effect that failure to make the aforementioned deposit on
the basis of the maintenance of the Master Servicer Credit
Facility will not adversely affect the then current rating
of the Notes), issued by a depository institution or
insurance having a rating on its (A) short-term obligations
of at least P-1 by Moody's and A-1 by Standard & Poor's and
30
(B) long term obligations of at least A2 by Moody's and A by
Standard & Poor's or other ratings approved by the Rating
Agency, the Master Servicer shall not be required to make
deposits of collections on or with respect to Receivables as
provided in the preceding sentence, but may make one or more
deposits of such collections with respect to a Collection
Period into the Master Collection Account in immediately
available funds not later than 1:00 P.M., Central time, on
the Business Day immediately preceding the related
Distribution Date. In the event that a Master Servicer
Credit Facility is maintained, the Master Servicer shall
within two Business Days of the date of processing of
collections on or with respect to Receivables notify the
Indenture Trustee and the Master Servicer Credit Facility
Issuer in writing of the amounts that would otherwise be
deposited in the Collection Account. The Master Servicer
shall establish and maintain for the Trust a Payment Record
in which the payments on or with respect to the Receivables
shall be credited and the Master Servicer shall notify the
Indenture Trustee and the Master Servicer Credit Facility
Issuer in writing as promptly as practicable (but in any
event prior to the Determination Date for the following
Distribution Date) of the amounts so credited on or with
respect to the Receivables that are to be included in
Collected Funds for the related Distribution Date and of the
amounts so credited which will constitute a part of
Collected Funds for the second following Distribution Date.
The Payment Record shall be made available for inspection
during normal business hours of the Master Servicer upon
request of the Indenture Trustee, or any Master Servicer
Credit Facility Issuer. The Master Servicer shall give
written notice to the Indenture Trustee if it is required to
deposit funds in accordance with the first sentence of this
paragraph.
SECTION 4.3. Realization Upon Receivables
(a) . (a) Consistent with the standards, policies
and procedures required by this Agreement, the Master
Servicer shall use its best efforts to repossess (or
otherwise comparably convert the ownership of) and liquidate
any Financed Vehicle securing a Receivable with respect to
which the Master Servicer has determined that payments
thereunder are not likely to be resumed, as soon as is
practicable after default on such Receivable but in no event
later than the date on which 10% or more of a Scheduled
Payment has become 150 days delinquent (other than in the
case of Financed Vehicles where neither the Financed Vehicle
nor the Obligor can be physically located by the Master
Servicer (using procedures consistent with the standards,
policies and procedures of the Master Servicer required by
this Agreement) and other than in the case of an Obligor who
is subject to a bankruptcy proceeding); provided, however,
that the Master Servicer may elect not to repossess a
Financed Vehicle within such time period if in its good
faith judgment it determines that the proceeds ultimately
recoverable with respect to such Receivable would be
increased by forbearance. The Master Servicer is authorized
to follow such customary practices and procedures as it
shall deem necessary or advisable, consistent with the
standard of care required by Section 4.1, which practices
and procedures may include reasonable efforts to realize
upon any recourse to Dealers, the sale of the related
Financed Vehicle at public or private sale, the submission
of claims under an Insurance Policy and other actions,
including, without limitation, entering into settlements
with Obligors, by the Master Servicer in order to realize
upon such a Receivable. The foregoing is subject to the
provision that, in any case in which the Financed Vehicle
shall have suffered damage, the Master Servicer shall not
expend funds in connection with any repair or towards the
repossession of such Financed Vehicle unless it shall
31
determine in its discretion that such repair and/or
repossession shall increase the proceeds of liquidation of
the related Receivable by an amount greater than the amount
of such expenses. The Master Servicer shall be entitled to
recover all reasonable expenses incurred by it in the course
of repossessing and liquidating a Financed Vehicle but only
from the liquidation proceeds of the vehicle or under the
related Dealer Agreement. The Master Servicer shall recover
such reasonable expenses based on the information contained
in the Master Servicer's Certificate delivered on the
related Determination Date. The Master Servicer shall pay
on behalf of the Trust any personal property taxes assessed
on repossessed Financed Vehicles. The Master Servicer shall
be entitled to reimbursement of any such tax from Net
Liquidation Proceeds with respect to such Receivable.
(b) If the Master Servicer elects to commence a legal
proceeding to enforce a Dealer Agreement or Dealer
Assignment, the act of commencement shall be deemed to be an
automatic assignment from the Trust to the Master Servicer
of the rights under such Dealer Agreement and Dealer
Assignment for purposes of collection only. If, however, in
any enforcement suit or legal proceeding it is held that the
Master Servicer may not enforce a Dealer Agreement or Dealer
Assignment on the grounds that it is not a real party in
interest or a Person entitled to enforce the Dealer
Agreement or Dealer Assignment, the Owner Trustee, at the
Master Servicer's written direction and expense, or the
Seller, at the Seller's expense, shall take such steps as
the Master Servicer deems reasonably necessary to enforce
the Dealer Agreement or Dealer Assignment, including
bringing suit in its name or the name of the Seller or of
the Trust and the Owner Trustee for the benefit of the
Securityholders. All amounts recovered shall be remitted
directly by the Master Servicer as provided in Section
4.2(d).
(c) The Master Servicer agrees that prior to
delivering any repossessed Finance Vehicle for sale to any
dealer, it shall make such filings and effect such notices
as are necessary under Section 9-114(1) of the UCC to
preserve the Trust's ownership interest (or security
interest, as the case may be) in such repossessed Financed
Vehicle.
SECTION 4.4. Insurance
(a) . (a) The Master Servicer shall require, in
accordance with its customary servicing policies and
procedures, that each Financed Vehicle be insured by the
related Obligor under an insurance policy covering physical
loss and damage to the related Financed Vehicle and shall
monitor the status of such physical loss and damage
insurance coverage thereafter, in accordance with its
customary servicing procedures. Each Receivable requires
the Obligor to obtain such physical loss and damage
insurance, naming HAFC and its successors and assigns as
loss payee, and with respect to liability coverage,
additional insureds, and permits the holder of such
Receivable to obtain physical loss and damage insurance at
the expense of the Obligor if the Obligor fails to maintain
such insurance. If the Master Servicer shall determine that
an Obligor has failed to obtain or maintain a physical loss
and damage Insurance Policy covering the related Financed
Vehicle which satisfies the conditions set forth in the
related Eligibility Criteria (including, without limitation,
during the repossession of such Financed Vehicle) the Master
Servicer shall be diligent in carrying out its customary
servicing procedures to enforce the rights of the holder of
the Receivable under the Receivable to require the Obligor
to obtain such physical loss and damage insurance in
accordance with its customary servicing policies and
procedures.
32
(b) The Master Servicer may ▇▇▇ to enforce or collect
upon the Insurance Policies, in its own name, if possible,
or as agent of the Trust. If the Master Servicer elects to
commence a legal proceeding to enforce an Insurance Policy,
the act of commencement shall be deemed to be an automatic
assignment of the rights of the Trust under such Insurance
Policy to the Master Servicer for purposes of collection
only. If, however, in any enforcement suit or legal
proceeding it is held that the Master Servicer may not
enforce an Insurance Policy on the grounds that it is not a
real party in interest or a holder entitled to enforce the
Insurance Policy, the Owner Trustee, at the Master
Servicer's written direction and expense, or the Seller, at
the Seller's expense, shall take such steps as the Master
Servicer deems reasonably necessary to enforce such
Insurance Policy, including bringing suit in its name or the
name of the Trust and the Owner Trustee for the benefit of
the Noteholders.
SECTION 4.5. Maintenance of Security Interests in
Vehicles
. Consistent with the policies and procedures required by
this Agreement, the Master Servicer shall take such steps on
behalf of the Trust as are necessary to maintain perfection
of the security interest created by each Receivable in the
related Financed Vehicle on behalf of the Trust as the
Indenture Trustee shall reasonably request, including, but
not limited to, obtaining the execution by the Obligors and
the recording, registering, filing, re-recording, re-filing,
and re-registering of all security agreements, financing
statements and continuation statements as are necessary to
maintain the security interest granted by the Obligors under
the respective Receivables. The Owner Trustee, on behalf of
the Trust, hereby authorizes the Master Servicer, and the
Master Servicer agrees, to take any and all steps necessary
to re-perfect such security interest on behalf of the Trust
as necessary because of the relocation of a Financed Vehicle
or for any other reason. In the event that the assignment
of a Receivable to the Trust is insufficient, without a
notation on the related Financed Vehicle's certificate of
title, or without fulfilling any additional administrative
requirements under the laws of the state in which the
Financed Vehicle is located, to perfect a security interest
in the related Financed Vehicle in favor of the Trust, HAFC
hereby agrees that the designation of any predecessor
company to HAFC, or any Affiliate of any of the foregoing as
the secured party on the certificate of title is in its
capacity as agent of the Trust for such limited purpose.
SECTION 4.6. Covenants, Representations, and
Warranties of Master Servicer
. By its execution and delivery of this Agreement, the
Master Servicer makes the following representations,
warranties and covenants on which the Indenture Trustee
relies in accepting the related Receivables, on which the
Indenture Trustee relies in authenticating each Series of
Notes, on which the Noteholders rely on in purchasing a
Series of Notes and on which the Owner Trustee relies in
executing each Series of Certificates.
The Master Servicer covenants as follows:
(i) Liens in Force. The Financed Vehicle securing
each Receivable shall not be released in whole or in part
from the security interest granted by the Receivable, except
upon payment in full of the Receivable or as otherwise
contemplated herein;
(ii) No Impairment. The Master Servicer shall do
nothing to impair the rights of the Trust or the related
Series of Noteholders in the Receivables, the Dealer
Agreements, the Dealer Assignments, the Insurance Policies
or the Other Conveyed Property;
(iii) No Amendments. The Master Servicer shall not
extend or otherwise amend the terms of any Receivable,
except in accordance with Section 4.2;
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(iv) Restrictions on Liens. The Master Servicer shall
not (i) create, incur or suffer to exist, or agree to
create, incur or suffer to exist, or consent to cause or
permit in the future (upon the happening of a contingency or
otherwise) the creation, incurrence or existence of any Lien
or restriction on transferability of the Receivables except
for the Lien in favor of the Indenture Trustee for the
benefit of the related Series Securityholders, and the
restrictions on transferability imposed by this Agreement or
(ii) sign or file under the Uniform Commercial Code of any
jurisdiction any financing statement which names HAFC, the
Master Servicer or any Affiliate thereof as a debtor, or
sign any security agreement authorizing any secured party
thereunder to file such financing statement, with respect to
the Receivables, except in each case any such instrument
solely securing the rights and preserving the Lien of the
Indenture Trustee;
(v) Servicing of Receivables. The Master Servicer
shall service the Receivables as required by the terms of
this Agreement and in material compliance with its standard
and customary procedures for servicing all its other
comparable motor vehicle receivables and in compliance with
applicable law; and
(vi) Relocation of Office. The Master Servicer shall
notify the Indenture Trustee of any relocation of the Master
Servicer's principal office set forth in Section 13.3 hereof
and all Receivables Files shall be maintained by the Master
Servicer in the United States.
SECTION 4.7. Repurchase of Receivables Upon Breach of
Covenant
. Upon discovery by any of the Master Servicer, the Seller,
a Trust Officer of the Owner Trustee or of the Indenture
Trustee of a breach of any of the covenants set forth in
Sections 4.5 or 4.6, the party discovering such breach shall
give prompt written notice to the others; provided, however,
that the failure to give any such notice shall not affect
any obligation of the Master Servicer under this Section
4.7. As of the second Accounting Date following its
discovery or receipt of notice of any breach of any covenant
set forth in Sections 4.5 or 4.6 which materially and
adversely affects the interests of the related Series
Securityholders in any Receivable (including any Liquidated
Receivable) (or, at the Master Servicer's election, the
first Accounting Date so following) or the related Financed
Vehicle, the Master Servicer shall, unless such breach shall
have been cured in all material respects, repurchase from
the Trust the Receivable affected by such breach and, on the
date specified in Section 5.4, the Master Servicer shall pay
the related Repurchase Amount and deposit such Repurchase
Amounts into the Master Collection Account in accordance
with Section 5.3 hereof. It is understood and agreed that
the obligation of the Master Servicer to repurchase any
Receivable (including any Liquidated Receivable) with
respect to which such a breach has occurred and is
continuing shall, if such obligation is fulfilled,
constitute the sole remedy against the Master Servicer for
such breach;
SECTION 4.8. Total Servicing Fee; Payment of Certain
Expenses by Master Servicer
. As compensation for its activities, the Master Servicer
shall be entitled to retain out of amounts otherwise to be
deposited in the Master Collection Account with respect to a
Collection Period, the Base Servicing Fee and any
Supplemental Servicing Fee for each Series for such
Collection Period. The Master Servicer shall be required to
pay all expenses incurred by it in connection with its
activities under this Agreement (including taxes imposed on
the Master Servicer, expenses incurred in connection with
distributions and reports made by the Master Servicer to
Securityholders and all fees and expenses of the Owner
Trustee or the Indenture Trustee), except taxes levied or
assessed against the Trust, and claims against the Trust in
respect of indemnification, which taxes and claims in
respect of indemnification against the Trust are expressly
stated to be for the account of Household. The Master
Servicer shall be liable for the fees, charges and expenses
of the Owner Trustee, the Indenture Trustee, any Sub-
Servicer and their respective agents.
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SECTION 4.9. Master Servicer's Certificate
. No later than 10:00 a.m. Central time on each
Determination Date, the Master Servicer shall deliver, or
cause to be delivered, to the Indenture Trustee and the
Owner Trustee, a Master Servicer's Certificate executed by a
responsible officer or agent of the Master Servicer
containing among other things, all information necessary to
enable the Indenture Trustee to make the allocations
required by Section 5.5 and the distributions with respect
to such Distribution Date pursuant to each Series
Supplement. Upon request, the Master Servicer will also
provide a listing of all Warranty Receivables and Covenant
Receivables repurchased as of the related Determination
Date, identifying the Receivables so purchased. Such list
will identify Receivables repurchased by the Master Servicer
or by the Seller on the related Determination Date and each
Receivable which became a Liquidated Receivable or which was
paid in full during the related Collection Period by account
number. In addition to the information set forth in the
preceding sentence, the Master Servicer's Certificate shall
also contain the information required by any Series
Supplement.
SECTION 4.10. Annual Statement as to Compliance,
Notice of Master Servicer Termination Event
(a) . (a) The Master Servicer shall deliver or cause
to be delivered to the Indenture Trustee and the Owner
Trustee on or before April 30 (or 120 days after the end of
the Master Servicer's fiscal year, if other than December
31) of each year, beginning on April 30, 2001, an Officer's
Certificate signed by any responsible officer of the Master
Servicer, or such Eligible Sub-Servicer who is performing
the servicing duties of the Master Servicer, dated as of
December 31 (or other applicable date) of the immediately
preceding year, stating that (i) a review of the activities
of the Master Servicer, or such Eligible Sub-Servicer who is
performing the servicing duties of the Master Servicer,
during the preceding 12-month period and of its performance
under this Agreement has been made under such officer's
supervision, and (ii) to such officer's knowledge, based on
such review, the Master Servicer, or such Eligible Sub-
Servicer who is performing the servicing duties of the
Master Servicer, has in all material respects fulfilled all
its obligations under this Agreement throughout such period,
or, if there has been a default in the fulfillment of any
such obligation, specifying each such default known to such
officer and the nature and status thereof.
(b) The Master Servicer, or such Eligible Sub-Servicer
who is performing the servicing duties of the Master
Servicer, shall deliver to the Indenture Trustee and the
Owner Trustee and, in the event that such notice is
delivered by the Sub-Servicer, to the Master Servicer,
promptly after having obtained knowledge thereof, but in no
event later than two (2) Business Days thereafter, written
notice in an Officer's Certificate of any event which with
the giving of notice or lapse of time, or both, would become
a Master Servicer Termination Event under Section 10.1(a).
The Seller or the Master Servicer shall deliver to the
Indenture Trustee, the Owner Trustee, the Master Servicer or
the Seller (as applicable) promptly after having obtained
knowledge thereof, but in no event later than two (2)
Business Days thereafter, written notice in an Officer's
Certificate of any event which with the giving of notice or
lapse of time, or both, would become a Master Servicer
Termination Event under any other clause of Section 10.1.
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SECTION 4.11. Annual Independent Accountants' Report
(a) . (a) The Master Servicer shall cause a firm of
nationally recognized independent certified public
accountants (the "Independent Accountants"), who may also
render other services to the Master Servicer or to the
Seller, to deliver to the Indenture Trustee and the Owner
Trustee on or before April 30 (or 120 days after the end of
the Master Servicer's fiscal year, if other than December
31) of each year, beginning on April 30, 2001, with respect
to the twelve months ended the immediately preceding
December 31 (or other applicable date), a report to the
effect that they have examined certain documents and records
relating to the servicing of Receivables under this
Agreement and each Series Supplement, compared the
information contained in the Master Servicer's Certificates
delivered pursuant to Section 4.9 during the period covered
by such report with such documents and records and that, on
the basis of such examination, such accountants are of the
opinion that the servicing has been conducted in compliance
with the terms and conditions as set forth in Articles IV
and V of this Agreement and the applicable provisions of
each Series Supplement, except for such exceptions as they
believe to be immaterial and such other exceptions as shall
be set forth in such statement. Such report shall
acknowledge that the Indenture Trustee shall be a "non-
participating party" with respect to such report, or words
to similar effect. The Indenture Trustee shall have no duty
to make any independent inquiry or investigation as to, and
shall have no obligation or liability in respect of, the
sufficiency of such procedures.
(b) On or before April 30 of each calendar year,
beginning with April 30, 2001, the Master Servicer shall
cause a firm of nationally recognized independent public
accountants (who may also render other services to the
Master Servicer or Seller) to furnish a report to the
Indenture Trustee, the Master Servicer and each Rating
Agency to the effect that they have compared the
mathematical calculations of each amount set forth in the
Master Servicer's Certificates delivered pursuant to Section
4.9 during the period covered by such report with the Master
Servicer's computer reports which were the source of such
amounts and that on the basis of such comparison, such
accountants are of the opinion that such amounts are in
agreement, except for such exceptions as they believe to be
immaterial and such other exceptions as shall be set forth
in such statement. Such report shall acknowledge that the
Indenture Trustee shall be a "non-participating party" with
respect to such report, or words to similar effect. The
Indenture Trustee shall have no duty to make any independent
inquiry or investigation as to, and shall have no obligation
or liability in respect of, the sufficiency of such
procedures.
SECTION 4.12. Access to Certain Documentation and
Information Regarding Receivables
. The Master Servicer shall provide to representatives of
the Indenture Trustee and the Owner Trustee reasonable
access to the documentation regarding the Receivables. In
each case, such access shall be afforded without charge but
only upon reasonable request and during normal business
hours. Nothing in this Section shall derogate from the
obligation of the Master Servicer to observe any applicable
law prohibiting disclosure of information regarding the
Obligors, and the failure of the Master Servicer to provide
access as provided in this Section as a result of such
obligation shall not constitute a breach of this Section.
SECTION 4.13. Fidelity Bond and Errors and Omissions
Policy
. The Master Servicer or such Eligible Sub-Servicer that is
performing the servicing duties of the Master Servicer, has
obtained, and shall continue to maintain in full force and
effect, a Fidelity Bond and Errors and Omissions Policy of a
type and in such amount as is customary for servicers
engaged in the business of servicing automobile receivables.
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ARTICLE V
Trust Accounts; Distributions;
Statements to Certificateholders and Noteholders
SECTION 5.1. Establishment of Trust Accounts
(a) . (a) (i) Except as otherwise provided with
respect to a Series in the related Series Supplement, the
Master Servicer, on behalf of the Noteholders with respect
to each Series, the holders of the Series Trust Certificates
of each Series and the holders of the Owner Trust
Certificates, shall establish and maintain in the name of
the Indenture Trustee, a trust account which is an Eligible
Deposit Account (the "Master Collection Account"), bearing a
designation clearly indicating that the funds deposited
therein are held for the benefit of the Series Noteholders
with respect to the Household Automotive Trusts, holders of
the Series Trust Certificates of each Series and the holders
of the Owner Trust Certificates. The Master Collection
Account shall initially be established with the Indenture
Trustee. The Indenture Trustee shall possess all right,
title and interest in all funds on deposit from time to time
in, and shall have sole dominion and control with respect
to, the Master Collection Account and in all proceeds
thereof for the benefit of the Series Noteholders, the
holders of the Series Trust Certificates of each Series and
the holders of the Owner Trust Certificates. Except as
expressly provided in this Agreement, the Master Servicer
agrees that it shall have no right of setoff or banker's
lien against, and no right to otherwise deduct from, any
funds held in the Master Collection Account for any amount
owed to it by the Trust.
(ii) With respect to each Series, the Indenture
Trustee shall establish and maintain the Series Trust
Accounts required to be established and maintained pursuant
to the related Series Supplement.
(b) Funds on deposit in the Master Collection Account
and any Series Trust Accounts (collectively, the "Trust
Accounts") shall be invested by the Indenture Trustee (or
any custodian with respect to funds on deposit in any such
account) in Eligible Investments selected in writing by the
Master Servicer (pursuant to standing instructions or
otherwise) which absent any instruction shall be the
investments specified in clause (d) of the definition of
Eligible Investments set forth herein. Funds on deposit in
any Trust Account shall be invested in Eligible Investments
that will mature so that such funds will be available at the
close of business on the Business Day immediately preceding
the Distribution Date. Funds deposited in a Trust Account
on the day immediately preceding a Distribution Date and
representing the proceeds of Eligible Investments are not
required to be invested overnight. All Eligible Investments
will be held to maturity.
(c) All investment earnings of monies deposited in the
Trust Accounts shall be deposited (or caused to be
deposited) by the Indenture Trustee in the Master Collection
Account or the related Series Collection Account no later
than the close of business on the Business Day immediately
preceding the related Distribution Date, and any loss
resulting from such investments shall be charged to the
Master Collection Account. The Master Servicer will not
direct the Indenture Trustee to make any investment of any
funds held in any of the Trust Accounts unless the security
interest granted and perfected in such account will continue
to be perfected in such investment, in either case without
any further action by any Person, and, in connection with
any direction to the Indenture Trustee to make any such
investment, if necessary, the Master Servicer shall deliver
to the Indenture Trustee an Opinion of Counsel to such
effect.
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(d) The Indenture Trustee shall not in any way be held
liable by reason of any insufficiency in any of the Trust
Accounts resulting from any loss on any Eligible Investment
included therein except for losses attributable to the
Indenture Trustee's negligence or bad faith or its failure
to make payments on such Eligible Investments issued by the
Indenture Trustee in its commercial capacity as principal
obligor and not as Indenture Trustee in accordance with
their terms.
(e) If (i) the Master Servicer shall have failed to
give investment directions for any funds on deposit in the
Trust Accounts to the Indenture Trustee by 2:00 p.m. Eastern
Time (or such other time as may be agreed by the Issuer and
the Indenture Trustee) on any Business Day; or (ii) an Event
of Default shall have occurred and be continuing with
respect to a Series of Notes, the Indenture Trustee shall,
to the fullest extent practicable, invest and reinvest funds
in the Trust Accounts in one or more Eligible Investments in
accordance with paragraph (b) above; provided that, if
following an Event of Default amounts are to be distributed
to Securityholders other than on a Distribution Date,
investments shall mature on the Business Day preceding any
such proposed date of distribution.
(f) The Indenture Trustee, in its respective
capacities with respect to the various Series shall possess
all right, title and interest in all funds on deposit from
time to time in the Trust Accounts and in all proceeds
thereof (excluding all Investment Earnings on the Master
Collection Account and the Series Collection Accounts) and
all such funds, investments, proceeds and income shall be
part of the Owner Trust Estate. Except as otherwise
provided herein, the Trust Accounts shall be under the sole
dominion and control of the Indenture Trustee for the
benefit of the related Noteholders. If, at any time, any of
the Trust Accounts ceases to be an Eligible Deposit Account,
the Indenture Trustee (or the Master Servicer on its behalf)
shall within five Business Days (or such longer period as to
which each Rating Agency may consent) establish a new Trust
Account as an Eligible Deposit Account and shall transfer
any cash and/or any investments to such new Trust Account.
In connection with the foregoing, the Master Servicer agrees
that, in the event that any of the Trust Accounts are not
accounts with the Indenture Trustee, the Master Servicer
shall notify the Indenture Trustee in writing promptly upon
any of such Trust Accounts ceasing to be an Eligible Deposit
Account. Pursuant to the authority granted to the Master
Servicer under this Agreement, the Master Servicer shall
have the revocable power, granted by the Indenture Trustee
to make withdrawals and payments from the Master Collection
Account and to instruct the Indenture Trustee to make
withdrawals and payments from the Master Collection Account
for the purposes of carrying out the Master Servicer's
duties hereunder. The Master Servicer may net against any
deposits required to be made to the Master Collection
Account on the Business Day before any Determination Date
amounts that the Seller, as Certificateholder or otherwise,
is entitled to receive as distributions directly or
indirectly from the Master Collection Account on such
Determination Date.
SECTION 5.2. Certain Reimbursements to the Master
Servicer
. The Master Servicer shall be entitled to withhold from
amounts otherwise required to be remitted to the Master
Collection Account with respect to a Collection Period an
amount in respect of funds deposited with respect to prior
Collection Periods in the Master Collection Account but
later determined by the Master Servicer to have resulted
from mistaken deposits or postings or checks returned for
insufficient funds; provided, that, such withholding may be
made only following certification by the Master Servicer of
such amounts and the provision of such information to the
Indenture Trustee, as may be necessary in the opinion of the
Indenture Trustee to verify the accuracy of such
certification.
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SECTION 5.3. Application of Collections
. All collections for the Collection Period shall be
applied by the Master Servicer as follows:
With respect to each Simple Interest Receivable
(other than a Repurchased Receivable), payments by or on
behalf of the Obligor, (other than Supplemental Servicing
Fees with respect to such Receivable, to the extent
collected) shall be applied to interest and principal in
accordance with the Simple Interest Method. With respect to
each Actuarial Receivable, (other than a Repurchased
Receivable), payments by or on behalf of the Obligor, (other
than Supplemental Servicing Fees with respect to such
Receivable, to the extent collected) shall be applied to
interest and principal in accordance with the Actuarial
Method.
SECTION 5.4. Additional Deposits
. HAFC and the Seller, as applicable, shall deposit or
cause to be deposited in the Master Collection Account for
distribution to the appropriate Series Collection Account on
the Business Day preceding the Determination Date following
the date on which such obligations are due the aggregate
Repurchase Amount with respect to Repurchased Receivables.
SECTION 5.5. Distributions
(a) . (a) If, with respect to a Series, Collected
Funds are deposited in the Master Collection Account, on
each Distribution Date, the Indenture Trustee shall transfer
Collected Funds with respect to such Series Trust Estate in
the respective amounts set forth in the Master Servicer's
Certificates with respect to such Series from the Master
Collection Account to the related Series Collection Account
for further application and distribution as set forth in the
related Series Supplement.
(b) In the event that the Master Collection Account is
maintained with an institution other than the Indenture
Trustee, the Master Servicer shall instruct and cause such
institution to make all deposits and distributions pursuant
to Section 5.5(a) on the related Distribution Date.
ARTICLE VI
RESERVED
ARTICLE VII
RESERVED
39
ARTICLE VIII
The Seller
SECTION 8.1. Representations of Seller
. The Seller makes the following representations on which
each Series Support Provider shall be deemed to have relied
in providing the Series Support and on which the Issuer is
deemed to have relied in acquiring the Receivables and on
which the Noteholders are deemed to have relied on in the
purchasing of Notes. The representations speak as of the
execution and delivery of this Agreement and each Transfer
Agreement and as of each Transfer Date and each Series
Closing Date and shall survive each sale of the Receivables
to the Issuer and each pledge thereof to the Indenture
Trustee pursuant to the Indenture and each Series
Supplement.
(a) Schedule of Representations. The representations
and warranties set forth on the Schedule of Eligibility
Criteria attached as Schedule I to the Series Supplement are
true and correct.
(b) Organization and Good Standing. The Seller has
been duly organized and is validly existing as a corporation
in good standing under the laws of the State of Nevada, with
power and authority to own its properties and to conduct its
business as such properties are currently owned and such
business is currently conducted, and had at all relevant
times, and now has, power, authority and legal right to
acquire, own and sell each Series Trust Estate transferred
to the Trust.
(c) Due Qualification. The Seller is duly qualified
to do business as a foreign corporation in good standing and
has obtained all necessary licenses and approvals in all
jurisdictions where the failure to do so would materially
and adversely affect Seller's ability to transfer the
Receivables and the Other Conveyed Property to the Trust
pursuant to this Agreement, or the validity or
enforceability of the Series Trust Estate or to perform
Seller's obligations hereunder and under the Basic Documents
to which the Seller is a party.
(d) Power and Authority. The Seller has the power and
authority to execute and deliver this Agreement and its
Basic Documents and to carry out its terms and their terms,
respectively; the Seller has full power and authority to
sell and assign each Series Trust Estate to be sold and
assigned to and deposited with the Trust by it and has duly
authorized such sale and assignment to the Trust by all
necessary corporate action; and the execution, delivery and
performance of this Agreement and the Basic Documents to
which the Seller is a party have been duly authorized by the
Seller by all necessary corporate action.
(e) Valid Sale, Binding Obligations. This Agreement
and each related Transfer Agreement effects a valid sale,
transfer and assignment of the related Series Trust Estate,
enforceable against the Seller and creditors of and
purchasers from the Seller; and this Agreement and the Basic
Documents to which the Seller is a party, when duly executed
and delivered, shall constitute legal, valid and binding
obligations of the Seller enforceable in accordance with
their respective terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditors' rights
generally and by equitable limitations on the availability
of specific remedies, regardless of whether such
enforceability is considered in a proceeding in equity or at
law.
40
(f) No Violation. The consummation of the
transactions contemplated by this Agreement and the Basic
Documents and the fulfillment of the terms of this Agreement
and the Basic Documents shall not conflict with, result in
any breach of any of the terms and provisions of or
constitute (with or without notice, lapse of time or both) a
material default under the certificate of incorporation or
by-laws of the Seller, or any indenture, agreement,
mortgage, deed of trust or other instrument to which the
Seller is a party or by which it is bound, or result in the
creation or imposition of any Lien upon any of its
properties pursuant to the terms of any such indenture,
agreement, mortgage, deed of trust or other instrument,
other than this Agreement, or violate any law, order, rule
or regulation applicable to the Seller of any court or of
any federal or state regulatory body, administrative agency
or other governmental instrumentality having jurisdiction
over the Seller or any of its properties.
(g) No Proceedings. There are no proceedings or
investigations pending or, to the Seller's knowledge,
threatened against the Seller, before any court, regulatory
body, administrative agency or other tribunal or
governmental instrumentality having jurisdiction over the
Seller or its properties (A) asserting the invalidity of
this Agreement or any of the Basic Documents, (B) seeking to
prevent the issuance of any Securities or the consummation
of any of the transactions contemplated by this Agreement or
any of the Basic Documents, (C) seeking any determination or
ruling that might materially and adversely affect the
performance by the Seller of its obligations under, or the
validity or enforceability of, this Agreement or any of the
Basic Documents, or (D) seeking to adversely affect the
federal income tax or other federal, state or local tax
attributes of the Securities.
(h) Approvals. All approvals, authorizations,
consents, orders or other actions of any person, corporation
or other organization, or of any court, governmental agency
or body or official, required in connection with the
execution and delivery by the Seller of this Agreement and
the consummation of the transactions contemplated hereby
have been or will be taken or obtained on or prior to each
Series Closing Date and each Transfer Date.
(i) No Consents. The Seller is not required to obtain
the consent of any other party or any consent, license,
approval or authorization, or registration or declaration
with, any governmental authority, bureau or agency in
connection with the execution, delivery, performance,
validity or enforceability of this Agreement which has not
already been obtained.
(j) Chief Executive Office. The chief executive
office of the Seller is at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇.
SECTION 8.2. Corporate Existence
(a) . (a) During the term of this Agreement, the
Seller will keep in full force and effect its existence,
rights and franchises as a corporation under the laws of the
jurisdiction of its incorporation and will obtain and
preserve its qualification to do business in each
jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of this
Agreement, the Basic Documents and each other instrument or
agreement necessary or appropriate to the proper
administration of this Agreement and the transactions
contemplated hereby.
(b) During the term of this Agreement, the Seller
shall observe the applicable legal requirements for the
recognition of the Seller as a legal entity separate and
apart from its Affiliates, including as follows:
(i) the Seller shall not engage in any other business
other than as provided in Article THIRD of Seller's Articles
of Incorporation;
41
(ii) the Seller shall maintain corporate records and
books of account separate from those of its Affiliates;
(iii) except as otherwise provided in this Agreement,
the Seller shall not commingle its assets and funds with
those of its Affiliates;
(iv) the Seller shall hold such appropriate meetings of
its Board of Directors as are necessary to authorize all the
Seller's corporate actions required by law to be authorized
by the Board of Directors, shall keep minutes of such
meetings and of meetings of its stockholder(s) and observe
all other customary corporate formalities (and any successor
Seller not a corporation shall observe similar procedures in
accordance with its governing documents and applicable law);
(v) the Seller shall at all times hold itself out to
the public under the Seller's own name as a legal entity
separate and distinct from its Affiliates;
(vi) the Seller shall not become involved in the day-to-
day management of any other Person;
(vii) the Seller shall not guarantee any other Person's
obligations or advance funds to any other Person for the
payment of expenses or otherwise;
(viii) the Seller shall not act as an agent of any other
Person in any capacity;
(ix) the Seller shall not dissolve or liquidate, in
whole or in part; and
(x) all transactions and dealings between the Seller
and its Affiliates will be conducted on an arm's-length
basis.
(c) During the term of this Agreement, the Seller will
comply with the limitations on its business and activities,
as set forth in its Certificate of Incorporation, and will
not incur indebtedness other than pursuant to or as
expressly permitted by the Basic Documents or the Series
Related Documents with respect to each Series.
SECTION 8.3. Liability of Seller; Indemnities
. The Seller shall be liable in accordance herewith only to
the extent of the obligations specifically undertaken under
this Agreement by the Seller and the representations made by
the Seller under this Agreement.
(a) The Seller shall indemnify, defend and hold
harmless the Issuer, the Owner Trustee, the Trust and the
Indenture Trustee from and against any taxes that may at any
time be asserted against any such Person with respect to the
transactions contemplated in this Agreement and any of the
Basic Documents (except any income taxes arising out of fees
paid to the Owner Trustee, the Indenture Trustee and each
Series Support Provider and except any taxes to which the
Owner Trustee or the Indenture Trustee may otherwise be
subject to), including any sales, gross receipts, general
corporation, tangible personal property, privilege or
license taxes (but, in the case of the Issuer, not including
any taxes asserted with respect to, federal or other income
taxes arising out of distributions on the Certificates and
the Notes) and costs and expenses in defending against the
same.
(b) The Seller shall indemnify, defend and hold
harmless the Issuer, the Owner Trustee and the Indenture
Trustee against any loss, liability or expense incurred by
reason of (i) the Seller's willful misfeasance, bad faith or
negligence in the performance of its duties under this
Agreement, or by reason of reckless disregard of its
obligations and duties under this Agreement and (ii) the
Seller's or the Issuer's violation of Federal or state
securities laws in connection with the offering and sale of
the Notes.
42
(c) The Seller shall indemnify, defend and hold
harmless the Owner Trustee and the Indenture Trustee and
their respective officers, directors, employees and agents
from and against any and all costs, expenses, losses,
claims, damages and liabilities arising out of, or incurred
in connection with, the acceptance or performance of the
trusts and duties set forth herein and in the Basic
Documents, except to the extent that such cost, expense,
loss, claim, damage or liability shall be due to the willful
misfeasance, bad faith or negligence (except for errors in
judgment) of the Person seeking indemnification.
Indemnification under this Section shall survive
the resignation or removal of the Owner Trustee or the
Indenture Trustee and the termination of this Agreement or
the Indenture or the Trust Agreement, as applicable, and
shall include reasonable fees and expenses of counsel and
other expenses of litigation. If the Seller shall have made
any indemnity payments pursuant to this Section and the
Person to or on behalf of whom such payments are made
thereafter shall collect any of such amounts from others,
such Person shall promptly repay such amounts to the Seller,
without interest.
SECTION 8.4. Merger or Consolidation of, or
Assumption of the Obligations of, Seller
. Any Person (a) into which the Seller may be merged or
consolidated, (b) which may result from any merger or
consolidation to which the Seller shall be a party or (c)
which may succeed to the properties and assets of the Seller
substantially as a whole, which Person in any of the
foregoing cases (x) has a certificate of incorporation
containing provisions relating to limitations on business
and other matters substantially identical to those contained
in the Seller's certificate of incorporation and (y)
executes an agreement of assumption to perform every
obligation of the Seller under this Agreement, the other
Basic Documents and the applicable Series Related Documents
shall be the successor to the Seller hereunder without the
execution or filing of any document or any further act by
any of the parties to this Agreement; provided, however,
that the Rating Agency Condition shall have been satisfied
with respect to such transaction.
SECTION 8.5. Limitation on Liability of Seller and
Others
. (a) The Seller and any director or officer or employee
or agent of the Seller may rely in good faith on the written
advice of counsel or on any document of any kind, prima
facie properly executed and submitted by any Person
respecting any matters arising under any Basic Document.
The Seller shall not be under any obligation to appear in,
prosecute or defend any legal action that shall not be
incidental to its obligations under this Agreement, and that
in its opinion may involve it in any expense or liability.
Except as provided in Section 8.3 hereof, neither the Seller
nor any of the directors, officers, employees or agents of
the Seller acting in such capacities shall be under any
liability to the Trust, the Securityholders, any Series
Support Provider or any other Person for any action taken or
for refraining from the taking of any action in good faith
in such capacities pursuant to this Agreement; provided,
however, that this provision shall not protect the Seller or
any such person against any liability which would otherwise
be imposed by reason of willful misfeasance, bad faith or
negligence in the performance of duties or by reason of
reckless disregard of obligations and duties hereunder.
(b) All obligations of the Seller under this
Agreement (including, but not limited to, repurchase and
indemnification obligations) and under any of the Basic
Documents shall be limited in recourse to property, if any,
which the Seller may hold from time to time, not subject to
any Lien.
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SECTION 8.6. Seller May Own Certificates or Notes
. The Seller and any Affiliate thereof may in its
individual or any other capacity become the owner or pledgee
of Certificates or Notes with the same rights as it would
have if it were not the Seller or an Affiliate thereof,
except as expressly provided herein or in any Basic
Document. Notes or Certificates so owned by the Seller or
such Affiliate shall have an equal and proportionate benefit
under the provisions of the Basic Documents, without
preference, priority, or distinction as among all of the
Notes or Certificates; provided, however, except in the
event that all outstanding Notes and Certificates are owned
by the Seller and/or any Affiliate thereof, that any Notes
or Certificates owned by the Seller or any Affiliate
thereof, during the time such Notes or Certificates are
owned by them, shall be without voting rights for any
purpose set forth in the Basic Documents and any such Notes
will not be entitled to the benefits of any financial
guaranty insurance policy. The Seller shall notify the
Owner Trustee and the Indenture Trustee promptly after it or
any of its Affiliates become the owner or pledgee of a
Certificate or a Note.
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ARTICLE IX
The Master Servicer
SECTION 9.1. Representations of Master Servicer
. The Master Servicer makes the following representations
on which each Series Support Provider shall be deemed to
have relied in executing and delivering the Series Support
and on which the Issuer is deemed to have relied in
acquiring the Receivables and on which the Noteholders are
deemed to have relied on in the purchasing of Notes. The
representations speak as of the execution and delivery of
this Agreement and each Series Supplement, each Series
Closing Date and as of each Transfer Date and shall survive
each sale of the Series Trust Estate to the Issuer and each
pledge thereof to the Indenture Trustee pursuant to the
Indenture.
(i) Organization and Good Standing. The Master
Servicer has been duly organized and is validly existing and
in good standing under the laws of its jurisdiction of
organization, with power, authority and legal right to own
its properties and to conduct its business as such
properties are currently owned and such business is
currently conducted, and had at all relevant times, and now
has, power, authority and legal right to enter into and
perform its obligations under this Agreement and the other
Basic Documents to which it is a party;
(ii) Due Qualification. The Master Servicer is duly
qualified to do business as a foreign corporation in good
standing and has obtained all necessary licenses and
approvals, in all jurisdictions in which the ownership or
lease of property or the conduct of its business (including
the servicing of the Receivables as required by this
Agreement) requires or shall require such qualification;
except where the failure to qualify or obtain licenses or
approvals would not have a material adverse effect on its
ability to perform its obligations as Master Servicer under
this Agreement and the other Basic Documents to which it is
a party;
(iii) Power and Authority. The Master Servicer has the
power and authority to execute and deliver this Agreement
and its Basic Documents and to carry out its terms and their
terms, respectively, and the execution, delivery and
performance of this Agreement and the Basic Documents to
which the Master Servicer is a party have been duly
authorized by the Master Servicer by all necessary corporate
action;
(iv) Binding Obligation. This Agreement and the Basic
Documents to which the Master Servicer is a party shall
constitute legal, valid and binding obligations of the
Master Servicer enforceable in accordance with their
respective terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, or other similar
laws affecting the enforcement of creditors' rights
generally and by equitable limitations on the availability
of specific remedies, regardless of whether such
enforceability is considered in a proceeding in equity or at
law;
45
(v) No Violation. The consummation of the
transactions contemplated by this Agreement and the Basic
Documents to which the Master Servicer is a party, and the
fulfillment of the terms of this Agreement and the Basic
Documents to which the Master Servicer is a party, shall not
conflict with, result in any breach of any of the terms and
provisions of, or constitute (with or without notice or
lapse of time) a material default under, the articles of
incorporation or bylaws of the Master Servicer, or any
indenture, agreement, mortgage, deed of trust or other
instrument to which the Master Servicer is a party or by
which it is bound, or result in the creation or imposition
of any Lien upon any of its properties pursuant to the terms
of any such indenture, agreement, mortgage, deed of trust or
other instrument, other than this Agreement, or violate any
law, order, rule or regulation applicable to the Master
Servicer of any court or of any federal or state regulatory
body, administrative agency or other governmental
instrumentality having jurisdiction over the Master Servicer
or any of its properties, or any way materially adversely
affect the interest of the Noteholders or the Trust in any
Receivable or affect the Master Servicer's ability to
perform its obligations under this Agreement;
(vi) No Proceedings. There are no proceedings or
investigations pending or, to the Master Servicer's
knowledge, threatened against the Master Servicer, before
any court, regulatory body, administrative agency or other
tribunal or governmental instrumentality having jurisdiction
over the Master Servicer or its properties (A) asserting the
invalidity of this Agreement or any of the Basic Documents,
(B) seeking to prevent the issuance of the Securities or the
consummation of any of the transactions contemplated by this
Agreement or any of the Basic Documents, or (C) seeking any
determination or ruling that might materially and adversely
affect the performance by the Master Servicer of its
obligations under, or the validity or enforceability of,
this Agreement or any of the Basic Documents or (D) seeking
to adversely affect the federal income tax or other federal,
state or local tax attributes of the Securities;
(vii) Approvals. All approvals, authorizations,
consents, orders or other actions of any person, corporation
or other organization, or of any court, governmental agency
or body or official, required in connection with the
execution and delivery by the Master Servicer of this
Agreement and the consummation of the transactions
contemplated hereby have been or will be taken or obtained
on or prior to the Series Closing Date.
(viii) No Consents. The Master Servicer is not required
to obtain the consent of any other party or any consent,
license, approval or authorization, or registration or
declaration with, any governmental authority, bureau or
agency in connection with the execution, delivery,
performance, validity or enforceability of this Agreement
which has not already been obtained.
(ix) Chief Executive Office. The chief executive
office of the Master Servicer is located at ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
SECTION 9.2. Liability of Master Servicer;
Indemnities
(a) . (a) The Master Servicer (in its capacity as
such) shall be liable hereunder only to the extent of the
obligations in this Agreement specifically undertaken by the
Master Servicer and the representations made by the Master
Servicer.
(b) The Master Servicer shall defend, indemnify and
hold harmless the Trust, the Indenture Trustee, the Owner
Trustee and their respective officers, directors, agents and
employees, from and against any and all costs, expenses,
losses, damages, claims and liabilities, including
reasonable fees and expenses of counsel and expenses of
litigation arising out of or resulting from the use,
ownership or operation of, or lien on, any Financed Vehicle;
46
(c) The Master Servicer (when the Master Servicer is
Household or an Affiliate of Household) shall indemnify,
defend and hold harmless the Trust, the Indenture Trustee,
the Owner Trustee and their respective officers, directors,
agents and employees and from and against any taxes that may
at any time be asserted against any of such parties with
respect to the transactions contemplated in this Agreement,
including, without limitation, any sales, gross receipts,
tangible or intangible personal property, privilege or
license taxes (but not including any Federal or other income
taxes, including franchise taxes asserted with respect to,
and as of the date of, the sale of the Receivables and the
Other Conveyed Property to the Trust or the issuance and
original sale of any Series of the Notes) and costs and
expenses in defending against the same, except to the extent
that such costs, expenses, losses, damages, claims and
liabilities arise out of the negligence or willful
misconduct of such parties;
The Master Servicer (when the Master Servicer is
not Household) shall indemnify, defend and hold harmless the
Trust, the Indenture Trustee, the Owner Trustee and their
respective officers, directors, agents and employees from
and against any taxes with respect to the sale of
Receivables in connection with servicing hereunder that may
at any time be asserted against any of such parties with
respect to the transactions contemplated in this Agreement,
including, without limitation, any sales, gross receipts,
tangible or intangible personal property, privilege or
license taxes (but not including any Federal or other income
taxes, including franchise taxes asserted with respect to,
and as of the date of, the sale of the Series Trust Estate
to the Trust or the issuance and original sale of the
Securities) and costs and expenses in defending against the
same; and
(d) The Master Servicer shall indemnify, defend and
hold harmless the Trust, the Indenture Trustee, the Owner
Trustee, each Series Support Provider and their respective
officers, directors, agents and employees from and against
any and all costs, expenses, losses, claims, damages, and
liabilities to the extent that such cost, expense, loss,
claim, damage, or liability arose out of, or was imposed
upon the Trust or the Indenture Trustee by reason of the
breach of this Agreement by the Master Servicer, the
negligence, misfeasance, or bad faith of the Master Servicer
in the performance of its duties under this Agreement or any
Series Supplement or by reason of reckless disregard of its
obligations and duties under this Agreement or any Series
Supplement, except to the extent that such costs, expenses,
losses, damages, claims, and liabilities arise out of the
negligence or willful misconduct of the Person seeking
indemnification.
(e) The Master Servicer (when the Master Servicer is
Household or an Affiliate of Household) shall indemnify,
defend and hold harmless the Trust, the Indenture Trustee,
the Owner Trustee and their respective officers, directors,
agents and employees from and against any loss, liability or
expense incurred by reason of the violation by Master
Servicer of Federal or state securities laws in connection
with the registration or the sale of the Securities, except
to the extent that such costs, expenses, losses, damages,
claims, and liabilities arise out of the negligence or
willful misconduct of such parties.
(f) Indemnification under this Article shall survive
the termination of this Agreement and will survive the early
resignation or removal of any of the parties hereto and
shall include, without limitation, reasonable fees and
expenses of counsel and expenses of litigation. If the
Master Servicer has made any indemnity payments pursuant to
this Article and the recipient thereafter collects any of
such amounts from others, the recipient shall promptly repay
such amounts collected to the Master Servicer, without
interest. Notwithstanding any other provision of this
Agreement, the obligations of the Master Servicer shall not
terminate or be deemed released upon the resignation or
termination of Household as the Master Servicer and shall
survive any termination of this Agreement.
47
SECTION 9.3. Merger or Consolidation of, or
Assumption of the Obligations of the Master Servicer
(a) . (a) Any Person (i) into which the Master
Servicer may be merged or consolidated, (ii) resulting from
any merger or consolidation to which the Master Servicer
shall be a party, (iii) which acquires by conveyance,
transfer, or lease substantially all of the assets of the
Master Servicer, or (iv) succeeding to the business of the
Master Servicer, in any of the foregoing cases shall execute
an agreement of assumption to perform every obligation of
the Master Servicer under this Agreement and each Basic
Document and Series Related Document and, whether or not
such assumption agreement is executed, shall be the
successor to the Master Servicer under this Agreement and
each Basic Document and Series Related Document without the
execution or filing of any paper or any further act on the
part of any of the parties to this Agreement and each Series
Supplement, anything in this Agreement and each Series
Supplement to the contrary notwithstanding. Notwithstanding
the foregoing, the initial Master Servicer shall not merge
or consolidate with any other Person or permit any other
Person to become a successor to the Master Servicer's
business, unless (x) the Master Servicer shall have
delivered to the Owner Trustee, the Rating Agencies and the
Indenture Trustee an Officer's Certificate and an Opinion of
Counsel each stating that such consolidation, merger or
succession and such agreement of assumption comply with this
Section 9.3(a) and that all conditions precedent, if any,
provided for in this Agreement relating to such transaction
have been complied with, and (y) the Rating Agency Condition
shall have been satisfied with respect to such assignment or
succession.
SECTION 9.4. Limitation on Liability of Master
Servicer and Others
(a) . (a) Neither the Master Servicer, the Indenture
Trustee nor any of the directors or officers or employees or
agents of the Master Servicer or the Indenture Trustee shall
be under any liability to the Trust, except as provided in
this Agreement and each Basic Document or Series Related
Document, for any action taken or for refraining from the
taking of any action pursuant to this Agreement and each
Basic Document or Series Related Document; provided,
however, that this provision shall not protect the Master
Servicer, the Indenture Trustee or any such person against
any liability that would otherwise be imposed by reason of
willful misfeasance, bad faith or negligence (excluding
errors in judgment) in the performance of duties (including
negligence with respect to the Master Servicer's
indemnification obligations hereunder), by reason of
reckless disregard of obligations and duties under this
Agreement and each Basic Document or Series Related Document
or any violation of law by the Master Servicer, the
Indenture Trustee or such person, as the case may be;
provided, further, that this provision shall not affect any
liability to indemnify the Indenture Trustee and the Owner
Trustee for costs, taxes, expenses, claims, liabilities,
losses or damages paid by the Indenture Trustee and the
Owner Trustee, in their individual capacities. The Master
Servicer, the Indenture Trustee and any director, officer,
employee or agent of the Master Servicer may rely in good
faith on the written advice of counsel or on any document of
any kind prima facie properly executed and submitted by any
Person respecting any matters arising under this Agreement.
The Indenture Trustee shall not be required to expend or
risk its own funds or otherwise incur financial liability in
the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if the repayment of
such funds or adequate written indemnity against such risk
or liability is not reasonably assured to it in writing
prior to the expenditure of risk of such funds or incurrence
of financial liability.
48
(b) Notwithstanding anything herein to the contrary,
the Indenture Trustee shall not be liable for any obligation
of the Master Servicer contained in this Agreement and each
Basic Document and Series Related Document, and the Owner
Trustee, the Seller and the Noteholders shall look only to
the Master Servicer to perform such obligations.
(c) The parties expressly acknowledge and consent to
Norwest Bank Minnesota, National Association acting in the
potential dual capacity of successor Master Servicer and in
the capacity as Indenture Trustee. Norwest Bank Minnesota,
National Association may, in such dual or other capacity,
discharge its separate functions fully, without hindrance or
regard to conflict of interest principles, duty of loyalty
principles or other breach of fiduciary duties to the extent
that any such conflict or breach arises from the performance
by Norwest Bank Minnesota, National Association of express
duties set forth in this Agreement in any of such
capacities, all of which defenses, claims or assertions are
hereby expressly waived by the other parties hereto and the
Noteholders except in the case of negligence and willful
misconduct by Norwest Bank Minnesota, National Association.
SECTION 9.5. Delegation of Duties
. In the ordinary course of business, the Master Servicer
at any time may delegate any of its duties hereunder to any
Person, including any of its Affiliates, who agrees to
conduct such duties in accordance with standards employed by
the Master Servicer in compliance with Section 4.1. Such
delegation shall not relieve the Master Servicer of its
liabilities and responsibilities with respect to such duties
and shall not constitute a resignation within the meaning of
Section 9.6. The Master Servicer shall provide each Rating
Agency and the Indenture Trustee with written notice prior
to the delegation of any of its duties to any Person other
than any of the Master Servicer's Affiliates or their
respective successors and assigns.
SECTION 9.6. Master Servicer Not to Resign
. Subject to the provisions of Section 9.3, the Master
Servicer shall not resign from the obligations and duties
hereby imposed on it except (i) upon determination that the
performance of its obligations or duties hereunder are no
longer permissible under applicable law or are in material
conflict by reason of applicable law with any other
activities carried on by it or its subsidiaries or
Affiliates, the other activities of the Master Servicer so
causing such a conflict being of a type and nature carried
on by the Master Servicer or its subsidiaries or Affiliates
at the date of this Agreement or (ii) upon satisfaction of
the following conditions: (a) the Master Servicer has
proposed a successor servicer to the Indenture Trustee in
writing and such proposed successor servicer is reasonably
acceptable to the Indenture Trustee; (b) the Rating Agency
shall have delivered a letter to the Indenture Trustee
stating that the appointment of such proposed successor
servicer as Master Servicer hereunder will satisfy the
Rating Agency Condition; and (c) such proposed successor
servicer has agreed in writing to assume the obligations of
Master Servicer hereunder and under each relevant Basic
Document and Series Related Document and (d) the Master
Servicer has delivered to the Indenture Trustee an Opinion
of Counsel to the effect that all conditions precedent to
the resignation of the Master Servicer and the appointment
of and acceptance by the proposed successor servicer have
been satisfied; provided, however, that, in the case of
clause (i) above, no such resignation by the Master Servicer
shall become effective until the Indenture Trustee shall
have assumed the Master Servicer's responsibilities and
obligations hereunder or the Indenture Trustee shall have
designated a successor servicer in accordance with Section
10.3 which shall have assumed such responsibilities and
obligations. Any such resignation shall not relieve the
Master Servicer of responsibility for any of the obligations
specified in Sections 10.1 and 10.3 as obligations that
survive the resignation or termination of the Master
Servicer. Any such determination permitting the resignation
of the Master Servicer pursuant to clause (i) above shall be
evidenced by an Opinion of Counsel to such effect delivered
to the Indenture Trustee.
49
SECTION 9.7. Sub-Servicing Agreements Between Master
Servicer and Sub-Servicers
. The Master Servicer may enter into agreements for any
subservicing and administration of Receivables with any
institution which is an Eligible Subservicer and is in
compliance with the laws of each state necessary to enable
it to perform the obligations of the Master Servicer
pursuant to this Agreement. The Master Servicer initially
appoints HAFC to subservice the Receivables. For purposes
of this Agreement and each Basic Document and Series Related
Document, the Master Servicer shall be deemed to have
received payments on Receivables when any Sub-Servicer has
received such payments. Any such agreement shall be
consistent with and not violate the provisions of this
Agreement. The Master Servicer shall not be relieved of its
obligations under this Agreement and each Basic Document and
Series Related Document notwithstanding any agreement
relating to subservicing and the Master Servicer shall be
obligated to the same extent and under the same terms and
conditions as if it alone were servicing and administering
the Receivables. The Issuer shall have no liability to the
Master Servicer except for payment of the Base Servicing Fee
and any Supplemental Servicing Fee and reimbursement of
repossession and liquidation expenses. The Issuer shall
have no obligation to indemnify the Master Servicer for
costs or expenses, except with respect to the preceding
sentence. The parties hereto acknowledge that with respect
to statements or certificates required to be delivered by
the Master Servicer in accordance with this Agreement and
each Series Supplement, including, but not limited to,
Sections 4.9, 4.10 and 4.11 hereof, that a statement or
certificate delivered by the Sub-Servicer shall be
sufficient to discharge the Master Servicer's obligation to
deliver such certificate or statement.
SECTION 9.8. Successor Sub-Servicers
. The Master Servicer may terminate any Sub-Servicer and
either directly service the related Receivables itself or
enter into an agreement with a successor Sub-Servicer that
is an Eligible Sub-Servicer. None of the Owner Trustee or
the Indenture Trustee shall have no duty or obligation to
monitor or supervise the performance of any Sub-Servicer.
ARTICLE X
Default
SECTION 10.1. Master Servicer Termination Event
. For purposes of this Agreement, each of the following
shall constitute a "Master Servicer Termination Event", but
shall only constitute a Master Servicer Termination Event
with respect to the Series and the related Series Trust
Estates with respect to which such event arose:
(a) Any failure by the Master Servicer to deliver, or
cause to be delivered, to the Indenture Trustee for
distribution pursuant to the terms of this Agreement any
proceeds or payment required to be so delivered under the
terms of this Agreement (including deposits of the
Repurchase Amount pursuant to Section 3.2 and Section 4.7)
that continues unremedied for a period of five Business Days
after written notice is received by the Master Servicer from
the Indenture Trustee or after discovery of such failure by
a responsible Officer of the Master Servicer (but in no
event later than five Business Days after the Master
Servicer is required to make such delivery or deposit);
50
(b) Failure on the part of the Master Servicer duly to
observe or perform any other covenants or agreements of the
Master Servicer set forth in this Agreement and each Basic
Document or Series Related Document, which failure (i)
materially and adversely affects the rights of Noteholders
of a Series (determined without regard to the availability
of funds under any Series Support) and (ii) continues
unremedied for a period of 60 days after the date on which
written notice of such failure, requiring the same to be
remedied, shall have been given to the Master Servicer by
the Indenture Trustee;
(c) The entry of a decree or order for relief by a
court or regulatory authority having jurisdiction in respect
of the Master Servicer in an involuntary case under the
federal bankruptcy laws, as now or hereafter in effect, or
another present or future, federal bankruptcy, insolvency or
similar law, or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official
of the Master Servicer or of any substantial part of its
property or ordering the winding up or liquidation of the
affairs of the Master Servicer or the commencement of an
involuntary case under the federal bankruptcy laws, as now
or hereinafter in effect, or another present or future
federal or state bankruptcy, insolvency or similar law and
such case is not dismissed within 60 days; or
(d) The commencement by the Master Servicer of a
voluntary case under the Federal bankruptcy laws, as now or
hereafter in effect, or any other present or future, Federal
or state, bankruptcy, insolvency or similar law, or the
consent by the Master Servicer to the appointment of or
taking possession by a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official
of the Master Servicer or of any substantial part of its
property or the making by the Master Servicer of an
assignment for the benefit of creditors or the failure by
the Master Servicer generally to pay its debts as such debts
become due or the taking of corporate action by the Master
Servicer in furtherance of any of the foregoing; or
(e) Any representation, warranty or certification of
the Master Servicer made in this Agreement or any Series
Supplement or any certificate, report or other writing
delivered pursuant hereto or thereto shall prove to be
incorrect in any material respect as of the time when the
same shall have been made, and the incorrectness of such
representation, warranty or statement has a material adverse
effect on the interests of the Trust in the related Series
Trust Estate and, within 60 days after written notice
thereof shall have been given to the Master Servicer by the
Indenture Trustee the circumstances or condition in respect
of which such representation, warranty or statement was
incorrect shall not have been eliminated or otherwise cured;
or
(f) Notwithstanding the foregoing, a delay in or
failure of performance under Section 10.1(a) for a period of
five Business Days or under Section 10.1(b) for a period of
60 days, shall not constitute a Master Servicer Termination
Event if such delay or failure could not be prevented by the
exercise of reasonable diligence by the Master Servicer and
such delay or failure was caused by an act of God, acts of
declared or undeclared war, public disorder, rebellion or
sabotage, epidemics, landslides, lightning, fire,
hurricanes, earthquakes, floods or similar causes. The
preceding sentence shall not relieve the Master Servicer
from using its best efforts to perform its obligations in a
timely manner in accordance with the terms of this
Agreement, and the Master Servicer shall provide the
Indenture Trustee and the Seller with an Officers'
Certificate giving prompt notice of such failure or delay by
it, together with a description of its efforts to so perform
its obligations.
SECTION 10.2. Consequences of a Master Servicer
Termination Event
51
. If a Master Servicer Termination Event shall occur and be
continuing, the Indenture Trustee (to the extent a Trust
Officer of the Indenture Trustee has actual knowledge
thereof), by notice given in writing to the Master Servicer
may terminate all of the rights and obligations of the
Master Servicer under this Agreement and the other Basic
Documents as they relate to a Series and a Series Trust
Estate out of which such Servicer Termination Event arose.
On or after the receipt by the Master Servicer of such
written notice, all authority, power, obligations and
responsibilities of the Master Servicer under this
Agreement, whether with respect to the Notes or the Other
Conveyed Property or otherwise, automatically shall pass to,
be vested in, and become obligations and responsibilities,
of the Indenture Trustee (or such other successor Master
Servicer appointed by Indenture Trustee pursuant to Section
10.3); provided, however, that the successor Master Servicer
shall (i) have no liability with respect to any obligation
which was required to be performed by the terminated Master
Servicer prior to the date that the successor Master
Servicer becomes the Master Servicer or any claim of a third
party based on any alleged action or inaction of the
terminated Master Servicer, (ii) no obligation to perform
any repurchase or advancing obligations, if any, of the
terminated Master Servicer, (iii) no obligation to pay any
of the fees and expenses of any other party involved in this
transaction not expressly assumed by the Master Servicer and
(iv) no liability or obligation with respect to any Master
Servicer indemnification obligations of any prior master
servicer including the original master servicer.
Notwithstanding anything contained in this
Agreement to the contrary, Norwest Bank Minnesota, National
Association ("Norwest"), as successor Master Servicer, is
authorized to accept and rely on all of the accounting,
records (including computer records) and work of the prior
Master Servicer relating to the Receivables (collectively,
the "Predecessor Servicer Work Product") without any audit
or other examination thereof, and Norwest shall have no
duty, responsibility, obligation or liability for the acts
and omissions of the prior Master Servicer. If any error,
inaccuracy, omission or incorrect or non-standard practice
or procedure (collectively, "Errors") exist in any
Predecessor Servicer Work Product and such Errors make it
materially more difficult to service or should cause or
materially contribute to Norwest making or continuing any
Errors (collectively, "Continued Errors"), Norwest shall
have no duty, responsibility, obligation or liability for
such Continued Errors; provided, however, that Norwest
agrees to use its best efforts to prevent further Continued
Errors. In the event that Norwest becomes aware of Errors
or Continued Errors, Norwest shall, with the prior consent
of the Noteholders representing 66-2/3% of the outstanding
Notes, use its best efforts to reconstruct and reconcile
such data as is commercially reasonable to correct such
Errors and Continued Errors and to prevent future Continued
Errors.
The successor Master Servicer is authorized and
empowered by this Agreement to execute and deliver, on
behalf of the terminated Master Servicer, as attorney-in-
fact or otherwise, any and all documents and other
instruments and to do or accomplish all other acts or things
necessary or appropriate to effect the purposes of such
notice of termination, whether to complete the transfer and
endorsement of the Series Trust Estate and related documents
to show the Trust as lienholder or secured party on the
related Lien Certificates, or otherwise. The terminated
Master Servicer agrees to cooperate with the successor
Master Servicer in effecting the termination of the
responsibilities and rights of the terminated Master
Servicer under this Agreement as they relate to the Series
Trust Estate with respect to which such termination has been
52
effected , including, without limitation, the transfer to
the successor Master Servicer for administration by it of
all cash amounts that shall at the time be held by the
terminated Master Servicer for deposit, or have been
deposited by the terminated Master Servicer, in the Master
Collection Account or thereafter received with respect to
the Receivables in the subject Series Trust Estate and the
delivery to the successor Master Servicer of all Receivable
Files, Monthly Records and Collection Records and a computer
tape in readable form as of the most recent Business Day
containing all information necessary to enable the successor
Master Servicer to service such Series Trust Estate. If
requested by the Indenture Trustee, the successor Master
Servicer shall direct the Obligors to make all payments
under the Receivables directly to the successor Master
Servicer (in which event the successor Master Servicer shall
process such payments in accordance with Section 4.2(d)).
The terminated Master Servicer shall grant the Indenture
Trustee and the successor Master Servicer reasonable access
to the terminated Master Servicer's premises at the
terminated Master Servicer's expense.
SECTION 10.3. Appointment of Successor
(a) . (a) On and after the time the Master Servicer
receives a notice of termination pursuant to Section 10.2 or
upon the resignation of the Master Servicer pursuant to
Section 9.6, the Master Servicer shall continue to perform
all servicing functions under this Agreement until the date
specified in such termination notice or until such
resignation becomes effective or until a date mutually
agreed upon by the Master Servicer and the Indenture
Trustee. The Indenture Trustee shall as promptly as
possible after such termination or resignation appoint an
Eligible Servicer as a successor servicer (the "Successor
Master Servicer"), and such Successor Master Servicer shall
accept its appointment by a written assumption in a form
acceptable to the Indenture Trustee. In the event that a
Successor Master Servicer has not been appointed or has not
accepted its appointment at the time when the Master
Servicer ceases to act as Master Servicer, the Indenture
Trustee without further action shall automatically be
appointed the Successor Master Servicer. The Indenture
Trustee may delegate any of its servicing obligations to an
Affiliate or agent in accordance with Section 9.5.
Notwithstanding the foregoing, the Indenture Trustee shall,
if it is legally unable so to act, petition a court of
competent jurisdiction to appoint any established
institution qualifying as an Eligible Servicer as the
Successor Master Servicer hereunder. The Indenture Trustee
shall give prompt notice to each Rating Agency upon the
appointment of a Successor Master Servicer. The Indenture
Trustee or the Successor Master Servicer, as the case may
be, shall be the successor in all respects to the Master
Servicer in its capacity as servicer under this Agreement
and the transactions set forth or provided for in this
Agreement, and shall be subject to all the rights,
responsibilities, restrictions, duties, liabilities and
termination provisions relating thereto placed on the Master
Servicer by the terms and provisions of this Agreement,
except as otherwise stated herein. The Indenture Trustee or
the Successor Master Servicer, as the case may be, shall
take such action, consistent with this Agreement, as shall
be necessary to effectuate any such succession. The
Successor Master Servicer shall be subject to termination
under Section 10.2 upon the occurrence of any Master
Servicer Termination Event applicable to it as Master
Servicer.
(b) Subject to Section 9.6, no provision of this
Agreement shall be construed as relieving the Indenture
Trustee of its obligation to succeed as Successor Master
Servicer upon the termination of the Master Servicer
pursuant to Section 10.2 or the resignation of the Master
Servicer pursuant to Section 9.6.
53
(c) Any Successor Master Servicer shall be entitled to
such compensation (whether payable out of the Master
Collection Account or otherwise) equal to the greater of (a)
the compensation the Master Servicer would have been
entitled to under this Agreement if the Master Servicer had
not resigned or been terminated hereunder and (b)
compensation calculated with a Servicing Fee Rate equal to
the then-current "market rate" fee for servicing assets
comparable to the Receivables, which rate shall be
determined by averaging three fee bids obtained by the
Indenture Trustee from third party servicers selected by the
Indenture Trustee. In addition, any Successor Master
Servicer shall be entitled to reasonable transition expenses
incurred in acting as Successor Master Servicer payable by
the outgoing Master Servicer, and to the extent such
transition expenses have not been paid by the outgoing
Master Servicer, such Successor Master Servicer shall be
entitled to reimbursement for such reasonable expenses
pursuant to the related Series Supplement.
SECTION 10.4. Notification to Noteholders and
Certificateholders
. Upon any termination of, or appointment of a successor
to, the Master Servicer or the Indenture Trustee shall give
prompt written notice thereof to each Noteholder.
SECTION 10.5. Waiver of Past Defaults
. A majority of the Noteholders may, on behalf of all
Securityholders, waive any default by the Seller or the
Master Servicer in the performance of their obligations
hereunder and its consequences, except the failure to make
any distributions required to be made to Noteholders or to
make any required deposits of any amounts to be so
distributed. Upon any such waiver of a past default, such
default shall cease to exist, and any default arising
therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to
any subsequent or other default or impair any right
consequent thereon except to the extent expressly so waived.
SECTION 10.6. Successor to Master Servicer
(a) . (a) The Indenture Trustee, in its capacity as
successor to the Master Servicer, shall perform such duties
and only such duties as are specifically set forth in this
Agreement and each Basic Document and Series Related
Document with respect to the assumption of any servicing
duties and no implied covenants or obligations shall be read
into this Agreement against the Indenture Trustee.
(b) In the absence of bad faith or negligence on its
part, the Indenture Trustee may conclusively rely as to the
truth of the statements and the correctness of the opinions
expressed therein, upon certificates or opinions furnished
to the Indenture Trustee and conforming to the requirements
of this Agreement and each Series Supplement; but in the
case of any such certificates or opinions, which by any
provision hereof are specifically required to be furnished
to the Indenture Trustee, the Indenture Trustee shall be
under a duty to examine the same and to determine whether or
not they conform to the requirements of this Agreement and
each Series Supplement.
(c) The Indenture Trustee shall have no liability for
any actions taken or omitted by the terminated Master
Servicer.
54
ARTICLE XI
Termination
SECTION 11.1. Optional Purchase of All Receivables
(a) . (a) To the extent and under the circumstances
provided in a Series Supplement, the Master Servicer and the
Seller each shall have the option to purchase the related
Series Trust Estate, other than the Trust Accounts;
provided, however, that the amount to be paid for such
purchase shall be sufficient to pay the full amount of
principal and interest then due and payable on the Notes of
such Series and all other amounts due to the Series
Securityholders, the Indenture Trustee and Owner Trustee
under the related Series Supplement. To exercise such
option, the Master Servicer or the Seller, as the case may
be, shall deposit pursuant to Section 5.3 in the Master
Collection Account an amount equal to the aggregate
Repurchase Amount for the related Receivables, plus the
appraised value of any other property constituting such
Series Trust Estate, such value to be determined by an
appraiser mutually agreed upon by the Master Servicer and
the Trust, and shall succeed to all interests in and to the
related Series Trust Estate.
(b) Upon any sale of the assets of the Trust pursuant
to Article IV of the Indenture , the Master Servicer shall
instruct the Indenture Trustee to deposit the proceeds from
such sale after all payments and reserves therefrom
(including the expenses of such sale) have been made (the
"Insolvency Proceeds") in the Master Collection Account.
(c) Notice of any termination of the Trust shall be
given by the Master Servicer to the Owner Trustee, the
Indenture Trustee and the Rating Agencies as soon as
practicable after the Master Servicer has received notice
thereof.
(d) Following the satisfaction and discharge of the
Indenture, the payment in full of the principal of and
interest on the Notes, the termination of any Series Support
(as provided therein) and the surrender of any Series
Support to the Series Support Provider, the
Certificateholders will succeed to the rights of the
Noteholders hereunder and the Owner Trustee will succeed to
the rights of, and assume the obligations of, the Indenture
Trustee pursuant to this Agreement.
ARTICLE XII
Administrative Duties of the Master Servicer
SECTION 12.1. Administrative Duties.
(a) Duties with Respect to the Indenture. The Master
Servicer shall perform all its duties and the duties of the
Issuer under the Indenture. In addition, the Master
Servicer shall consult with the Owner Trustee as the Master
Servicer deems appropriate regarding the duties of the
Issuer under the Indenture. The Master Servicer shall
monitor the performance of the Issuer and shall advise the
Owner Trustee when action is necessary to comply with the
Issuer's duties under the Indenture. The Master Servicer
shall prepare for execution by the Issuer or shall cause the
preparation by other appropriate Persons of all such
documents, reports, filings, instruments, certificates and
opinions as it shall be the duty of the Issuer to prepare,
file or deliver pursuant to the Indenture. In furtherance
of the foregoing, the Master Servicer shall take all
necessary action that is the duty of the Issuer to take
pursuant to the Indenture, including, without limitation,
pursuant to Sections 2.7, 3.4, 3.5, 3.6, 3.7, 3.9, 3.10,
3.17, 5.1, 5.4, 7.3, 8.3, 9.2, 9.3, 11.1 and 11.15 of the
Indenture.
55
(b) Duties with Respect to the Issuer.
(i) In addition to the duties of the Master Servicer
set forth in this Agreement or any of the Basic Documents,
the Master Servicer shall perform such calculations and
shall prepare for execution by the Issuer or the Owner
Trustee or shall cause the preparation by other appropriate
Persons of all such documents, reports, filings,
instruments, certificates and opinions as it shall be the
duty of the Issuer or the Owner Trustee to prepare, file or
deliver pursuant to this Agreement or any of the Basic
Documents or under state and Federal tax and securities
laws, and at the request of the Owner Trustee shall take all
appropriate action that it is the duty of the Issuer to take
pursuant to this Agreement or any of the Basic Documents,
including, without limitation, pursuant to Sections 2.6 and
2.11 of the Trust Agreement. In accordance with the
directions of the Issuer or the Owner Trustee, the Master
Servicer shall administer, perform or supervise the
performance of such other activities in connection with the
Trust Property (including the Basic Documents) as are not
covered by any of the foregoing provisions and as are
expressly requested by the Issuer or the Owner Trustee and
are reasonably within the capability of the Master Servicer.
(ii) Notwithstanding anything in this Agreement or any
of the Basic Documents to the contrary, the Master Servicer
shall be responsible for promptly notifying the Owner
Trustee and the Indenture Trustee in the event that any
withholding tax is imposed on the Issuer's payments (or
allocations of income) to a Certificateholder (as defined in
the Trust Agreement) as contemplated by this Agreement. Any
such notice shall be in writing and specify the amount of
any withholding tax required to be withheld by the Owner
Trustee and the Indenture Trustee pursuant to such
provision.
(iii) Notwithstanding anything in this Agreement or the
Basic Documents to the contrary, the Master Servicer shall
be responsible for performance of the duties of the Issuer
or the Seller set forth in Section 5.1(a), (b), (c) and (d)
of the Trust Agreement with respect to, among other things,
accounting and reports to Owners (as defined in the Trust
Agreement); provided, however, that once prepared by the
Master Servicer, the Depositor shall retain responsibility
under Section 5.1(b) of the Trust Agreement for the
distribution of the Schedule K-1s necessary to enable each
Certificateholder to prepare its Federal and state income
tax returns.
(iv) The Master Servicer shall perform the duties of
the Depositor specified in Section 10.2 of the Trust
Agreement required to be performed in connection with the
resignation or removal of the Owner Trustee, and any other
duties expressly required to be performed by the Master
Servicer under this Agreement or any of the Basic Documents.
(v) The Master Servicer, on behalf of the Seller,
shall direct the Issuer to request the tender of all or a
portion of the Notes of any Series in accordance with the
Indenture or any Series Supplement.
(vi) In carrying out the foregoing duties or any of its
other obligations under this Agreement, the Master Servicer
may enter into transactions with or otherwise deal with any
of its Affiliates; provided, however, that the terms of any
such transactions or dealings shall be in accordance with
any directions received from the Issuer and shall be, in the
Master Servicer's opinion, no less favorable to the Issuer
in any material respect.
(c) Tax Matters. The Master Servicer shall prepare and
file, or cause to be prepared and filed, on behalf of the
Seller, all tax returns, tax elections, financial statements
and such annual or other reports of the Issuer as are
necessary for preparation of tax reports as provided in
Article V of the Trust Agreement, including without
limitation forms 1099 and 1066. All tax returns will be
signed by the Seller.
56
(d) Non-Ministerial Matters. With respect to matters
that in the reasonable judgment of the Master Servicer are
non-ministerial, the Master Servicer shall not take any
action pursuant to this Article XII unless within a
reasonable time before the taking of such action, the Master
Servicer shall have notified the Owner Trustee and the
Indenture Trustee of the proposed action and the Owner
Trustee and the Indenture Trustee shall not have withheld
consent or provided an alternative direction. For the
purpose of the preceding sentence, "non-ministerial matters"
shall include:
(A) the initiation of any claim or lawsuit by the Issuer
and the compromise of any action, claim or lawsuit brought
by or against the Issuer (other than in connection with the
collection of the Receivables);
(B) the appointment of successor Note Registrars, successor
Note Paying Agents and successor Indenture Trustees pursuant
to the Indenture or the consent to the assignment by the
Note Registrar, Note Paying Agent or Indenture Trustee of
its obligations under the Indenture; and
(C) the removal of the Indenture Trustee.
(e) Exceptions. Notwithstanding anything to the
contrary in this Agreement, except as expressly provided
herein or in the other Basic Documents, the Master Servicer,
in its capacity hereunder, shall not be obligated to, and
shall not, (1) make any payments to the Noteholders or
Certificateholders under the Basic Documents, (2) sell any
Trust Property pursuant to Section 4.03 of the Series 2000-2
Supplement, (3) take any other action that the Issuer
directs the Master Servicer not to take on its behalf or (4)
in connection with its duties hereunder assume any
indemnification obligation of any other Person.
(f) The Indenture Trustee shall not be responsible for
any obligations or duties of the Master Servicer under
Section 12.1.
SECTION 12.2. Records
. The Master Servicer shall maintain appropriate books of
account and records relating to services performed under
this Agreement, which books of account and records shall be
accessible for inspection by the Issuer and the Indenture
Trustee at any time during normal business hours.
SECTION 12.3. Additional Information to be Furnished
to the Issuer
. The Master Servicer shall furnish to the Issuer and the
Indenture Trustee from time to time such additional
information regarding any Series Trust Estate as the Issuer
and the Indenture Trustee shall reasonably request.
57
ARTICLE XIII
Miscellaneous Provisions
SECTION 13.1. Amendments
(a) . (a) This Agreement may be amended by the
parties hereto at any time when no Series of Securities or
commitment to purchase a Series of Securities is outstanding
without the requirement of any consents or the satisfaction
of any conditions set forth below.
(b) Except as otherwise provided with respect to a
Series in a Series Supplement, this Agreement may be amended
from time to time by the parties hereto, by a written
instrument signed by each of the parties hereto, without the
consent of any of the Securityholders, provided that (i) an
Opinion of Counsel for the Seller (which Opinion of Counsel
may, as to factual matters, rely upon officers' certificates
of the Seller or the Master Servicer) is addressed and
delivered to the Indenture Trustee, dated the date of any
such amendment, to the effect that the conditions precedent
to any such amendment have been satisfied and (ii) the
Seller shall have delivered to the Indenture Trustee and
each Rating Agency, an Officer's Certificate dated the date
of any such Amendment, stating that the Seller reasonably
believes that such amendment will not have a material
adverse effect on the rights of the Noteholders.
(c) Except as otherwise provided with respect to a
Series in a Series Supplement, this Agreement may also be
amended from time to time by the Servicer, the Seller and
the Indenture Trustee, with the consent of the Noteholders
evidencing in each case not less than a majority of the
outstanding principal amount of the Notes of each affected
Series for which the Seller has not delivered an Officer's
Certificate stating that there is no adverse effect on the
rights of Noteholders of each Series, for the purpose of
adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Securityholders;
provided, however, that no such amendment shall (i) reduce
in any manner the amount of or delay the timing of any
distributions to be made to Securityholders or deposits of
amounts to be so distributed or the amount available under
any Series Support without the consent of each affected
Securityholder, (ii) change the definition of or the manner
of calculating the interest of any Securityholder without
the consent of each affected Securityholder, (iii) reduce
the aforesaid percentage required to consent to any such
amendment without the consent of each Securityholder or (iv)
adversely affect any rating of a Series by each Rating
Agency without the consent of the Noteholders evidencing not
less than a majority of the outstanding principal amount of
the outstanding Notes of such Series.
Promptly after the execution of any such amendment
or supplement, the Indenture Trustee shall furnish written
notification of the substance of such amendment or
supplement to each Securityholder.
It shall not be necessary for the consent of
Certificateholders or Noteholders pursuant to this Section
to approve the particular form of any amendment, but it
shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents
(and any other consents of Noteholders or Certificateholders
provided for in this Agreement) and of evidencing the
authorization of any action by Noteholders or
Certificateholders shall be subject to such reasonable
requirements as the Indenture Trustee or the Owner Trustee,
as applicable, may prescribe, including the establishment of
record dates.
The Owner Trustee and the Indenture Trustee may,
but shall not be obligated to, enter into any amendment
which affects the Issuer's, the Owner Trustee's or the
Indenture Trustee's, as applicable, own rights, duties or
immunities under this Agreement or otherwise.
58
Prior to the execution of any amendment to this
Agreement, the Indenture Trustee shall be entitled to
receive and rely upon an Opinion of Counsel stating that the
execution of such amendment is authorized or permitted by
this Agreement and that all conditions precedent to the
execution and delivery of such amendment have been
satisfied.
SECTION 13.2. Protection of Title to Trust
(a) . (a) The Seller shall execute and file such
financing statements and cause to be executed and filed such
continuation statements, all in such manner and in such
places as may be required by law fully to preserve, maintain
and protect the interest of the Issuer and the interests of
the Indenture Trustee on behalf of the related Series
Securityholders in the related Series Trust Estate and in
the proceeds thereof.
(b) Neither the Seller nor the Master Servicer shall
change its name, identity or corporate structure in any
manner that would, could or might make any financing
statement or continuation statement filed in accordance with
paragraph (a) above seriously misleading within the meaning
of 9-402(7) of the UCC, unless it shall have given the
Owner Trustee and the Indenture Trustee at least thirty
days' prior written notice thereof and shall have promptly
filed appropriate amendments to all previously filed
financing statements or continuation statements.
(c) Each of the Seller and the Master Servicer shall
have an obligation to give the Owner Trustee and the
Indenture Trustee prompt notice of any relocation of its
principal executive office if, as a result of such
relocation, the applicable provisions of the UCC would
require the filing of any amendment of any previously filed
financing or continuation statement or of any new financing
statement and shall promptly file any such amendment. The
Master Servicer shall at all times maintain each office from
which it shall service Receivables, and its principal
executive office, within the United States of America.
(d) The Master Servicer shall maintain accounts and
records as to each Receivable accurately and in sufficient
detail to permit (i) the reader thereof to know at any time
the status of such Receivable, including payments and
recoveries made and payments owing (and the nature of each)
and (ii) reconciliation between payments or recoveries on
(or with respect to) each Receivable and the amounts from
time to time deposited in the Master Collection Account in
respect of such Receivable.
(e) The Master Servicer shall maintain or cause to be
maintained, a computer system so that, from and after the
time of sale under this Agreement and each Transfer
Agreement of the Receivables to the Issuer, such master
computer records (including any backup archives) that refer
to a Receivable shall indicate clearly the interest of the
Trust in such Receivable and that such Receivable is owned
by the Trust and to which Series Trust Estate such
Receivable has been pledged pursuant to the Indenture.
Indication of the Trust's interest in a Receivable shall be
deleted from or modified on such computer systems when, and
only when, the related Receivable shall have been paid in
full or repurchased by HAFC or the Seller.
(f) If at any time the Seller or HAFC shall propose to
sell, grant a security interest in or otherwise transfer any
interest in automotive receivables to any prospective
purchaser, lender or other transferee, the Master Servicer
shall give to such prospective purchaser, lender or other
transferee computer tapes, records or printouts (including
any restored from backup archives) that, if they shall refer
in any manner whatsoever to any Receivable, shall indicate
clearly that such Receivable has been sold and is owned by
the Trust unless such Receivable has been paid in full or
repurchased by HAFC or the Seller.
59
(g) With respect to any Series Trust Estate, upon
request, the Master Servicer shall furnish or cause to be
furnished to the related Series Support Provider (only in
the event that there is a Series Support Provider with
respect to such Series), the Owner Trustee or to the
Indenture Trustee, within five Business Days, a list of all
Receivables (by contract number) then held as part of the
related Series Trust Estate, together with a reconciliation
of such list to the related Schedule of Receivables and to
each of the Master Servicer's Certificates furnished before
such request indicating removal of Receivables from the
related Series Trust Estate. The Indenture Trustee shall
hold any such list and Schedule of Receivables for
examination by interested parties during normal business
hours at the Corporate Trust Office upon reasonable notice
by such Persons of their desire to conduct an examination.
(h) The Master Servicer shall deliver to the Owner
Trustee and the Indenture Trustee:
(1) simultaneously with the execution and delivery of
the Agreement and, if required pursuant to Section 13.1, of
each amendment, an Opinion of Counsel stating that, in the
opinion of such Counsel, in form and substance reasonably
satisfactory to the addressees of such Opinion, either (A)
all financing statements and continuation statements have
been executed and filed that are necessary fully to preserve
and protect the interest of the Trust and the Indenture
Trustee in the Receivables then held as part of the related
Series Trust Estate, or (B) no such action shall be
necessary to preserve and protect such interest or (C) any
action which is necessary to preserve and protect such
interest during the following 12-month period; and
(2) within 90 days after the beginning of each
calendar year beginning in 2001, dated as of a date during
such 90-day period, stating that, in the opinion of such
counsel, either (A) all financing statements and
continuation statements have been executed and filed that
are necessary fully to preserve and protect the interest of
the Trust and the Indenture Trustee in the Series Trust
Estate or (B) no such action shall be necessary to preserve
and protect such interest.
Each Opinion of Counsel referred to in clause (1)
or (2) above shall specify any action necessary (as of the
date of such opinion) to be taken in the following year to
preserve and protect such interest.
SECTION 13.3. Notices
. All demands, notices and communications upon or to the
Seller, the Master Servicer, the Owner Trustee, the
Indenture Trustee or the Rating Agencies under this
Agreement shall be in writing, personally delivered, or
mailed by certified mail, or sent by confirmed telecopier
transmission and shall be deemed to have been duly given
upon receipt (a) in the case of the Seller to Household Auto
Receivables Corporation, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇, with a copy to Household International, Inc.,
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇, Attn:
Treasurer (Telecopier # (▇▇▇) ▇▇▇-▇▇▇▇), (b) in the case of
the Master Servicer to Household Finance Corporation, ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
Treasurer, Telecopier # (▇▇▇) ▇▇▇-▇▇▇▇, (c) in the case of
the Issuer or the Owner Trustee, at the Corporate Trust
Office of the Owner Trustee, Telecopier # (▇▇▇) ▇▇▇-▇▇▇▇,
(d) in the case of the Indenture Trustee at the Corporate
Trust Office, Telecopier # (▇▇▇) ▇▇▇-▇▇▇▇, (e) in the case
of the Series Support Provider to the address set forth in
the related Series Supplement, and (f) in the case of any
Rating Agency, to the address set forth in the related
Series Supplement. Any notice required or permitted to be
mailed to a Noteholder or Certificateholder shall be given
by first class mail, postage prepaid, at the address of such
Holder as shown in the Certificate Register or Note
Register, as applicable. Any notice so mailed within the
time prescribed in the Agreement shall be conclusively
presumed to have been duly given, whether or not the
Certificateholder or Noteholder shall receive such notice.
60
SECTION 13.4. Assignment
. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective
successors and permitted assigns. Notwithstanding anything
to the contrary contained herein, except as provided in
Sections 8.4 and 9.3 and as provided in the provisions of
this Agreement concerning the resignation of the Master
Servicer, this Agreement may not be assigned by the Seller
or the Master Servicer without the prior written consent of
the Owner Trustee and the Indenture Trustee. In the event
that a successor Issuer with respect to a Series is formed
as contemplated in the related Series Supplement, such
Issuer shall succeed to all of the rights and obligations of
the predecessor Issuer hereunder; and all references to the
Issuer hereunder shall thereafter be deemed to be references
to such successor Issuer.
SECTION 13.5. Limitations on Rights of Others
. The provisions of this Agreement are solely for the
benefit of the parties hereto and for the benefit of the
Certificateholders (including the Seller), the Owner Trustee
and the Indenture Trustee, as third-party beneficiaries.
Each Series Support Provider and its successors and assigns
shall be a third-party beneficiary to the provisions of this
Agreement and to each Series Supplement with respect to each
Series for which they are providing Series Support, and
shall be entitled to rely upon and directly enforce such
provisions of this Agreement and to each Series Supplement
with respect to each Series for which they are providing
Series Support, so long as no default with respect to such
Series Support Provider shall have occurred and be
continuing. Nothing in this Agreement or in any Series
Supplement, whether express or implied, shall be construed
to give to any other Person any legal or equitable right,
remedy or claim in the Owner Trust Estate or under or in
respect of this Agreement or any covenants, conditions or
provisions contained herein.
SECTION 13.6. Severability
. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other
jurisdiction.
SECTION 13.7. Separate Counterparts
. This Agreement and each Transfer Agreement may be
executed by the parties hereto in separate counterparts,
each of which when so executed and delivered shall be an
original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 13.8. Headings
. The headings of the various Articles and Sections herein
are for convenience of reference only and shall not define
or limit any of the terms or provisions hereof.
SECTION 13.9. Governing Law
. THIS AGREEMENT AND EACH TRANSFER AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS,
AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
61
SECTION 13.10. Assignment to Indenture Trustee
. The Seller hereby acknowledges and consents to any
mortgage, pledge, assignment and grant of a security
interest by the Issuer to the Indenture Trustee pursuant to
the Indenture, as supplemented by a Series Supplement for
the benefit of the related Series Securityholders of all
right, title and interest of the Issuer in, to and under the
applicable Series Trust Estate.
SECTION 13.11. Nonpetition Covenants
(a) . (a) Notwithstanding any prior termination of
this Agreement or any Series Supplement, the Master Servicer
and the Seller shall not, prior to the date which is one
year and one day after the termination of this Agreement or
any Series Supplement with respect to the Issuer, acquiesce,
petition or otherwise invoke or cause the Issuer to invoke
the process of any court or government authority for the
purpose of commencing or sustaining a case against the
Issuer under any federal or state bankruptcy, insolvency or
similar law or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official
of the Issuer or any substantial part of its property, or
ordering the winding up or liquidation of the affairs of the
Issuer.
(b) Notwithstanding any prior termination of this
Agreement or any Series Supplement, the Master Servicer
shall not, prior to the date that is one year and one day
after the termination of this Agreement or any Series
Supplement with respect to the Seller, acquiesce to,
petition or otherwise invoke or cause the Seller to invoke
the process of any court or government authority for the
purpose of commencing or sustaining a case against the
Seller under any federal or state bankruptcy, insolvency or
similar law, appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator, or other similar official
of the Seller or any substantial part of its property, or
ordering the winding up or liquidation of the affairs of the
Seller.
SECTION 13.12. Limitation of Liability of Owner Trustee
. Notwithstanding anything contained herein to the
contrary, this Agreement and each Series Supplement has been
countersigned by Wilmington Trust Company not in its
individual capacity but solely in its capacity as Owner
Trustee of the Issuer and in no event shall Wilmington Trust
Company in its individual capacity or, except as expressly
provided in the Trust Agreement, as Owner Trustee have any
liability for the representations, warranties, covenants,
agreements or other obligations of the Issuer hereunder or
in any of the certificates, notices or agreements delivered
pursuant hereto, as to all of which recourse shall be had
solely to the assets of the Issuer. For all purposes of this
Agreement and each Series Supplement, in the performance of
its duties or obligations hereunder or in the performance of
any duties or obligations of the Issuer hereunder, the Owner
Trustee shall be subject to, and entitled to the benefits
of, the terms and provisions of Articles VI, VII and VIII of
the Trust Agreement.
SECTION 13.13. Independence of the Master Servicer
. For all purposes of this Agreement, the Master Servicer
shall be an independent contractor and shall not be subject
to the supervision of the Issuer, the Indenture Trustee or
the Owner Trustee with respect to the manner in which it
accomplishes the performance of its obligations hereunder.
Unless expressly authorized by this Agreement or any Series
Supplement, the Master Servicer shall have no authority to
act for or represent the Issuer or the Owner Trustee in any
way and shall not otherwise be deemed an agent of the Issuer
or the Owner Trustee.
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SECTION 13.14. No Joint Venture
. Nothing contained in this Agreement or any Series
Supplement (i) shall constitute the Master Servicer and
either of the Issuer or the Owner Trustee as members of any
partnership, joint venture, association, syndicate,
unincorporated business or other separate entity, (ii) shall
be construed to impose any liability as such on any of them
or (iii) shall be deemed to confer on any of them any
express, implied or apparent authority to incur any
obligation or liability on behalf of the others.
IN WITNESS WHEREOF, the parties hereto have caused
this Master Sale and Servicing Agreement to be duly executed
and delivered by their respective duly authorized officers
as of the day and the year first above written.
HOUSEHOLD AUTOMOTIVE TRUST V
by Wilmington Trust Company, not in
its individual capacity but solely
as Owner Trustee on behalf of the
Trust,
by
Name:
Title:
HOUSEHOLD AUTO RECEIVABLES CORPORATION,
Seller,
by
Name:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title:
Vice President
HOUSEHOLD FINANCE CORPORATION,
as Master Servicer,
by
Name: ▇.
▇. ▇▇▇▇ ▇▇.
Title:
Vice President
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION
not in its individual capacity but
solely as Indenture Trustee,
by
Name:
Title:
[Signature Page for Master Sale and Servicing Agreement]
63
EXHIBIT A
FORM OF MASTER SERVICER'S CERTIFICATE
EXHIBIT B
FORM OF TRANSFER AGREEMENT
TRANSFER No. of Receivables
pursuant to the Master Sale and Servicing Agreement dated as
of June 1, 2000 (the "Sale and Servicing Agreement"), among
HOUSEHOLD AUTOMOTIVE TRUST V, a Delaware business trust (the
"Issuer"), HOUSEHOLD AUTO RECEIVABLES CORPORATION, a Nevada
corporation (the "Seller"), HOUSEHOLD FINANCE CORPORATION, a
Delaware corporation (the "Master Servicer"), and NORWEST
BANK MINNESOTA, NATIONAL ASSOCIATION, a New York banking
corporation, in its capacity as Indenture Trustee (the
"Indenture Trustee ").
W I T N E S S E T H:
WHEREAS pursuant to the Master Sale and Servicing
Agreement, the Seller wishes to convey the Receivables to
the Issuer; and
WHEREAS, the Issuer is willing to accept such
conveyance subject to the terms and conditions hereof.
NOW, THEREFORE, the Issuer, the Seller, the Master
Servicer and the Indenture Trustee hereby agree as follows:
1. Defined Terms. Capitalized terms used herein
shall have the meanings ascribed to them in the Sale and
Servicing Agreement unless otherwise defined herein.
"Cutoff Date" shall mean, with respect to the
Receivables conveyed hereby, ___________, 200_.
"Transfer Date" shall mean. with respect to the
Receivables conveyed hereby, ___________, 200_.
2. Schedule of Receivables. Annexed hereto is a
supplement to Schedule II-A and Schedule II-B to the Series
2000-2 Supplement listing the Receivables that constitute
the Receivables to be conveyed pursuant to this Agreement on
the Transfer Date. The Receivables conveyed pursuant to
this Agreement shall be a component of the Series 2000-2
Trust Estate.
3. Conveyance of Receivables. The Seller does hereby
sell, transfer, assign, set over and otherwise convey to the
Issuer, without recourse (except as expressly provided in
the Master Sale and Servicing Agreement), all right, title
and interest of the Seller in and to:
(a) each and every Receivable listed on Schedule A to the
related Receivables Purchase Agreement Supplement and all
monies paid or payable thereon or in respect thereof on or
after the related Cutoff Date (including amounts due on or
before the related Cutoff Date but received by the Seller on
or after such date);
(b) the security interests in the related Financed Vehicles
granted by Obligors pursuant to such Receivables and any
other interest of the Seller in such Financed Vehicles;
(c) all rights of the Seller against Dealers pursuant to
Dealer Agreements or Dealer Assignments related to such
Receivables;
(d) any proceeds and the right to receive proceeds with
respect to such Receivables repurchased by a Dealer,
pursuant to a Dealer Agreement, as a result of a breach of
representation or warranty in the related Dealer Agreement;
(e) all rights of Seller under any Service Contracts on the
related Financed Vehicles;
64
(f) any proceeds and the right to receive proceeds with
respect to the related Receivables from claims on any
physical damage, credit life or disability insurance
policies, if any, covering Financed Vehicles or Obligors,
including rebates of insurance premiums relating to the
Receivables and any proceeds from the liquidation of such
Receivables;
(g) all items contained in the Receivables Files with
respect to such Receivables and any and all other documents
that Seller or Master Servicer keeps on file in accordance
with its customary procedures relating to the related
Receivables, or the related Financed Vehicles or Obligor;
(h) property (including the right to receive future Net
Liquidation Proceeds) that secures each related Receivable
and that has been acquired by or on behalf of HARC pursuant
to liquidation of such Receivable;
(i) all present and future claims, demands, causes and
chooses in action in respect of any or all of the foregoing
and all payments on or under and all proceeds of every kind
and nature whatsoever in respect of any or all of the
foregoing, including all proceeds of the conversion,
voluntary or involuntary, into cash or other liquid
property, all cash proceeds, accounts, accounts receivable,
notes, drafts, acceptances, chattel paper, checks, deposit
accounts, insurance proceeds, condemnation awards, rights to
payment of any and every kind and other forms of obligations
and receivables, instruments and other property which at any
time constitute all or part of or are included in the
proceeds of any of the foregoing.
4. Representations and Warranties of the Seller. The
Seller hereby represents and warrants to the Issuer as of
the date of this Agreement and as of the Transfer Date that:
(a) Organization and Good Standing. The Seller
has been duly organized and is validly existing as a
corporation in good standing under the laws of the
State of Nevada, with power and authority to own its
properties and to conduct its business as such
properties are currently owned and such business is
currently conducted, and had at all relevant times, and
now has, power, authority and legal right to acquire,
own and sell the Receivables and the Other Conveyed
Property transferred to the Trust.
(b) Due Qualification. The Seller is duly
qualified to do business as a foreign corporation in
good standing and has obtained all necessary licenses
and approvals in all jurisdictions where the failure to
do so would materially and adversely affect Seller's
ability to transfer the Receivables and the Other
Conveyed Property to the Trust pursuant to this
Agreement, or the validity or enforceability of the
Receivables and the Other Conveyed Property or to
perform Seller's obligations hereunder and under the
Seller's Basic Documents.
(c) Power and Authority. The Seller has the
power and authority to execute and deliver this
Agreement and its Basic Documents and to carry out its
terms and their terms, respectively; the Seller has
full power and authority to sell and assign the
Receivables and the Other Conveyed Property to be sold
and assigned to and deposited with the Trust by it and
has duly authorized such sale and assignment to the
Trust by all necessary corporate action; and the
execution, delivery and performance of this Agreement
and the Seller's Basic Documents have been duly
authorized by the Seller by all necessary corporate
action.
65
(d) Valid Sale, Binding Obligations. This
Agreement effects a valid sale, transfer and assignment
of the Receivables and the Other Conveyed Property,
enforceable against the Seller and creditors of and
purchasers from the Seller; and this Agreement and the
Seller's Basic Documents, when duly executed and
delivered, shall constitute legal, valid and binding
obligations of the Seller enforceable in accordance
with their respective terms, except as enforceability
may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting the
enforcement of creditors' rights generally and by
equitable limitations on the availability of specific
remedies, regardless of whether such enforceability is
considered in a proceeding in equity or at law.
(e) No Violation. The consummation of the
transactions contemplated by this Agreement and the
Basic Documents and the fulfillment of the terms of
this Agreement and the Basic Documents shall not
conflict with, result in any breach of any of the terms
and provisions of or constitute (with or without
notice, lapse of time or both) a default under the
certificate of incorporation or by-laws of the Seller,
or any indenture, agreement, mortgage, deed of trust or
other instrument to which the Seller is a party or by
which it is bound, or result in the creation or
imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, agreement,
mortgage, deed of trust or other instrument, other than
this Agreement, or violate any law, order, rule or
regulation applicable to the Seller of any court or of
any federal or state regulatory body, administrative
agency or other governmental instrumentality having
jurisdiction over the Seller or any of its properties.
(f) No Proceedings. There are no proceedings or
investigations pending or, to the Seller's knowledge,
threatened against the Seller, before any court,
regulatory body, administrative agency or other
tribunal or governmental instrumentality having
jurisdiction over the Seller or its properties (A)
asserting the invalidity of this Agreement or any of
the Basic Documents, (B) seeking to prevent the
issuance of the Securities or the consummation of any
of the transactions contemplated by this Agreement or
any of the Basic Documents, (C) seeking any
determination or ruling that might materially and
adversely affect the performance by the Seller of its
obligations under, or the validity or enforceability
of, this Agreement or any of the Basic Documents, or
(D) seeking to adversely affect the federal income tax
or other federal, state or local tax attributes of the
Securities.
(g) Approvals. All approvals, authorizations,
consents, order or other actions of any person,
corporation or other organization, or of any court,
governmental agency or body or official, required in
connection with the execution and delivery by the
Seller of this Agreement and the consummation of the
transactions contemplated hereby have been or will be
taken or obtained on or prior to the Transfer Date.
(h) No Consents. The Seller is not required to
obtain the consent of any other party or any consent,
license, approval or authorization, or registration or
declaration with, any governmental authority, bureau or
agency in connection with the execution, delivery,
performance, validity or enforceability of this
Agreement which has not already been obtained.
(i) Chief Executive Office. The chief executive
office of the Seller is at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇.
66
(j) Principal Balance. The aggregate Principal
Balance of the Receivables listed on the supplement to
Schedule A annexed hereto and conveyed to the Issuer
pursuant to this Agreement as of the Cutoff Date is
$_____________.
5. Conditions Precedent. The obligation of the
Issuer to acquire the Receivables hereunder is subject to
the satisfaction, on or prior to the Transfer Date, of the
following conditions precedent:
(a) Representations and Warranties. Each of the
representations and warranties made by the Seller in
Section 4 of this Agreement and in Section 3.1 of the
Sale and Servicing Agreement shall be true and correct
as of the date of this Agreement and as of the Transfer
Date.
(b) Sale and Servicing Agreement Conditions.
Each of the conditions set forth in Section 2.1(b) to
the Sale and Servicing Agreement shall have been
satisfied.
(c) Additional Information. The Seller shall
have delivered to the Issuer such information as was
reasonably requested by the Issuer to satisfy itself as
to (i) the accuracy of the representations and
warranties set forth in Section 4 of this Agreement and
in Section 6.1 of the Sale and Servicing Agreement and
(ii) the satisfaction of the conditions set forth in
this Section 5.
6. Ratification of Agreement. As supplemented by
this Agreement, the Sale and Servicing Agreement is in all
respects ratified and confirmed and the Sale and Servicing
Agreement as so supplemented by this Agreement shall be
read, taken and construed as one and the same instrument.
7. Counterparts. This Agreement may be executed in
two or more counterparts (and by different parties in
separate counterparts), each of which shall be an original
but all of which together shall constitute one and the same
instrument.
8. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
1.
67
IN WITNESS WHEREOF, the Issuer, the Seller and the
Master Servicer have caused this Agreement to be duly
executed and delivered by their respective duly authorized
officers as of day and the year first above written.
HOUSEHOLD AUTOMOTIVE TRUST V
by Wilmington Trust Company, not in
its individual capacity but solely
as Owner Trustee on behalf of the
Trust,
by /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Senior Financial Services Officer
HOUSEHOLD AUTO RECEIVABLES CORPORATION,
Seller,
by /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President and Assistant Treasurer
HOUSEHOLD FINANCE CORPORATION, Master
Servicer,
by /s/ ▇.▇. ▇▇▇▇ ▇▇.
Name: ▇.▇. ▇▇▇▇ ▇▇.
Title: Vice President and Treasurer
Acknowledged and Accepted:
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
not in its individual
capacity but solely as Indenture Trustee
by /s/ ▇▇▇ ▇▇▇▇▇
Name: ▇▇▇ ▇▇▇▇▇
Title: Corporate Trust Officer
68
EXHIBIT C
REQUEST FOR RELEASE AND RECEIPT OF DOCUMENTS
To: Norwest Bank Minnesota, National Association
Re: Sale and Servicing Agreement (the "Servicing
Agreement"), dated as of June 1, 2000 between
Household Auto Receivables Corporation (the
"Seller"), Household Automotive Trust V (the
"Trust"), Household Finance Corporation
individually and in its capacity as Master
Servicer (the "Master Servicer"), and Norwest
Bank Minnesota, National Association, as
Indenture Trustee (the "Indenture Trustee")
In connection with the administration of the
Receivables held by you as the Indenture Trustee, we request
the release, and acknowledged receipt, of the Receivable and
related Receivable File described below, for the reason
indicated.
Obligor's Name, Customer Account Number and Vehicle
Identification Number
1. Receivable Paid in Full. All
amounts received in connection with such
payments have been deposited as required
pursuant to Section 3.3(b) of the Servicing
Agreement
2. Receivable Purchased from Trust
pursuant to Section 3.2 or 4.7 of the
Servicing Agreement.
3. Receivable is being serviced or
subject to enforcement of rights and remedies
pursuant to Section 3.3(b) of the Servicing
Agreement.
4. Other (explain)
If item 1 or 2 above is checked, and if all or part of the
Receivable or Receivable File was previously released to us,
please release to us any additional documents in your
possession to the above specified Receivable.
If Item 3 or 4 above is checked, upon our return of all of
the above documents to you as the Indenture Trustee, please
acknowledge your receipt by signing in the space indicated
below and returning this form.
HOUSEHOLD FINANCE CORPORATION
as Master Servicer
By:
Name:
Title:
Date:
DOCUMENTS RETURNED TO THE TRUSTEE
Norwest Bank Minnesota, National Association
By:
Name:
Title:
Date:
69
EXHIBIT D
TRUSTEE'S ACKNOWLEDGEMENT
Norwest Bank Minnesota, National Association (the
"Indenture Trustee"), holds on behalf of the Securityholders
certain "Receivable Files," as described in the Sale and
Servicing Agreement, dated as of June 1, 2000 (the "Sale and
Servicing Agreement"), among Household Automotive Trust V,
Household Auto Receivables Corporation, as Seller, Household
Finance Corporation, as Master Servicer, and the Indenture
Trustee, hereby acknowledges receipt of the Receivable File
for each Receivable listed in the Schedules of Receivables
attached as Schedule II-A and Schedule II-B to the Series
Supplement related to the said Sale and Servicing Agreement
except as noted in the Exception List attached as Schedule I
hereto.
IN WITNESS WHEREOF, Norwest Bank Minnesota,
National Association has caused this acknowledgement to be
executed by its duly authorized officer as of this
_______________.
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Indenture Trustee
by
Name:
Title: