EXECUTION COPY
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AMENDED AND RESTATED TRUST AGREEMENT
among
HOUSEHOLD FINANCE CORPORATION,
HOUSEHOLD MORTGAGE FUNDING CORPORATION III
as Depositor,
and
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Owner Trustee
Dated as of July 3, 2002
HOUSEHOLD MORTGAGE LOAN TRUST 2002-HC1
Closed-End Mortgage Loan Asset Backed Notes, Series 2002-HC1
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TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS..................................................................................1
Section 1.1 Capitalized Terms......................................................................1
Section 1.2 Other Definitional Provisions..........................................................4
ARTICLE II ORGANIZATION.................................................................................5
Section 2.1 Name...................................................................................5
Section 2.2 Office.................................................................................5
Section 2.3 Purposes and Powers....................................................................5
Section 2.4 Appointment of Owner Trustee...........................................................6
Section 2.5 Capital Contribution of Owner Trust Estate.............................................6
Section 2.6 Declaration of Trust...................................................................6
Section 2.7 Title to Trust Property................................................................6
Section 2.8 Situs of Trust.........................................................................6
Section 2.9 Representations and Warranties of the Depositor........................................7
ARTICLE III OWNERSHIP INTEREST AND TRANSFERS OF THE OWNERSHIP INTEREST...................................8
Section 3.1 Initial Ownership......................................................................8
Section 3.2 The Ownership Interest.................................................................8
Section 3.3 [Reserved].............................................................................8
Section 3.4 Registration of Transfer and Exchange of Ownership Interest............................8
Section 3.5 [Reserved].............................................................................8
Section 3.6 Persons Deemed Transferors.............................................................8
Section 3.7 [Reserved].............................................................................8
Section 3.8 Maintenance of Office or Agency........................................................8
Section 3.9 Appointment of Paying Agent............................................................8
Section 3.10 [Reserved].............................................................................9
Section 3.11 [Reserved].............................................................................9
Section 3.12 [Reserved].............................................................................9
Section 3.13 Restrictions on Transfers of Ownership Interest........................................9
ARTICLE IV ACTIONS BY OWNER TRUSTEE....................................................................11
Section 4.1 Prior Notice to the Transferor with Respect to Certain Matters........................11
Section 4.2 [Reserved]............................................................................13
Section 4.3 Action by Transferor with Respect to Bankruptcy.......................................13
Section 4.4 Restrictions on Transferor's Power....................................................13
ARTICLE V APPLICATION OF TRUST FUNDS; CERTAIN DUTIES..................................................13
Section 5.1 Establishment of Trust Account........................................................13
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Section 5.2 Application Of Trust Funds............................................................13
Section 5.3 Method of Payment.....................................................................14
Section 5.4 [Reserved]............................................................................14
Section 5.5 Accounting and Reports to the Transferor, the Internal Revenue Service and
Others................................................................................14
Section 5.6 Signature on Returns..................................................................15
ARTICLE VI AUTHORITY AND DUTIES OF OWNER TRUSTEE.......................................................15
Section 6.1 General Authority.....................................................................15
Section 6.2 General Duties........................................................................15
Section 6.3 Action upon Instruction...............................................................15
Section 6.4 No Duties Except as Specified in this Agreement, the Transaction Documents or
in Instructions.......................................................................16
Section 6.5 No Action Except Under Specified Documents or Instructions............................16
Section 6.6 Restrictions..........................................................................17
ARTICLE VII CONCERNING THE OWNER TRUSTEE................................................................17
Section 7.1 Acceptance of Trusts and Duties.......................................................17
Section 7.2 Furnishing of Documents...............................................................18
Section 7.3 Representations and Warranties........................................................18
Section 7.4 Reliance; Advice of Counsel...........................................................19
Section 7.5 Not Acting in Individual Capacity.....................................................20
Section 7.6 Owner Trustee Not Liable for the Ownership Interest or the Mortgage Loans.............20
Section 7.7 Owner Trustee May Own the Ownership Interest and the Notes............................20
Section 7.8 Licenses..............................................................................20
Section 7.9 Doing Business in Other Jurisdictions.................................................21
ARTICLE VIII COMPENSATION OF OWNER TRUSTEE...............................................................21
Section 8.1 Owner Trustee's Fees and Expenses.....................................................21
Section 8.2 Indemnification.......................................................................21
Section 8.3 Payments to the Owner Trustee.........................................................21
Section 8.4 Non-recourse Obligations..............................................................22
ARTICLE IX TERMINATION OF AGREEMENT....................................................................22
Section 9.1 Termination of Agreement..............................................................22
ARTICLE X SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES......................................23
Section 10.1 Eligibility Requirements for Owner Trustee............................................23
Section 10.2 Resignation or Removal of Owner Trustee...............................................23
Section 10.3 Successor Owner Trustee...............................................................24
Section 10.4 Merger or Consolidation of Owner Trustee..............................................24
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Section 10.5 Appointment of Co-Owner Trustee or Separate Owner Trustee.............................25
ARTICLE XI MISCELLANEOUS...............................................................................26
Section 11.1 Supplements and Amendments............................................................26
Section 11.2 No Legal Title to Owner Trust Estate in Transferor....................................27
Section 11.3 Limitations on Rights of Others.......................................................27
Section 11.4 Notices...............................................................................27
Section 11.5 Severability..........................................................................28
Section 11.6 Separate Counterparts.................................................................28
Section 11.7 Successors and Assigns................................................................28
Section 11.8 No Petition...........................................................................28
Section 11.9 [Reserved]............................................................................28
Section 11.10 No Recourse...........................................................................28
Section 11.11 Headings..............................................................................28
Section 11.12 GOVERNING LAW.........................................................................28
Section 11.13 Inconsistencies with Sale and Servicing Agreement.....................................29
Section 11.14 Third Party Beneficiary...............................................................29
Section 11.15 Master Servicer.......................................................................29
Section 11.16 Rights Under Indenture................................................................29
EXHIBIT A Certificate of Trust.......................................................................A-1
EXHIBIT B Form of Transfer Certificate...............................................................B-1
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THIS AMENDED AND RESTATED
TRUST AGREEMENT, dated as of July 3, 2002 among
Household Finance Corporation ("HFC"), Household Mortgage Funding Corporation
III, as depositor (the "DEPOSITOR") and U.S. Bank Trust National Association, a
national banking association, as owner trustee (the "OWNER TRUSTEE") amends and
restates in its entirety that certain
Trust Agreement, dated as of June 25,
2002, between the Depositor and the Owner Trustee.
PRELIMINARY STATEMENT
WHEREAS, the Trust was formed pursuant to a
Trust Agreement, dated as of
June 25, 2002, among the Depositor and the Owner Trustee;
NOW, THEREFORE, in consideration of the mutual agreements herein contained,
the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. CAPITALIZED TERMS. For all purposes of this Agreement,
the following terms shall have the meanings set forth below:
"AGREEMENT" shall mean this Amended and Restated
Trust Agreement, as the
same may be amended and supplemented from time to time.
"BANKRUPTCY ACTION" shall have the meaning assigned to such term in Section
4.1.
"BENEFIT PLAN" shall have the meaning assigned to such term in Section
3.13.
"BUSINESS TRUST STATUTE" shall mean Chapter 38 of Title 12 of the
Delaware
Code, 12 Del. Code Section 3801 et seq., as the same may be amended from time to
time.
"CERTIFICATE OF TRUST" shall mean the Certificate of Trust in the form of
Exhibit A to be filed for the Trust pursuant to Section 3810(a) of the Business
Trust Statute.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COLLECTION ACCOUNT" shall have the meaning assigned to such term in the
Sale and Servicing Agreement.
"CORPORATE TRUST OFFICE" shall mean, (i) with respect to the Owner Trustee,
the principal corporate trust office of the Owner Trustee, which office at date
of execution of this Agreement, is located at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Trust Administration; or at
such other address in the State of
Delaware as the Owner Trustee may designate
by notice to the Transferor and the Trust, or the principal corporate trust
office of any successor Owner Trustee (the address (which shall be in the State
of
Delaware) of which the successor owner trustee will notify the Transferor and
the Trust); or (ii) with respect to the Indenture Trustee, the principal
corporate trust office of the Indenture Trustee, which office
at date of execution of this Agreement, is located at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Institutional Trust
Services/Household Finance 2002-HC1, or at such other address as the Indenture
Trustee may designate by notice to the Transferor and the Trust, or the
principal corporate trust office of any successor Indenture Trustee (the address
(which shall be in the State of New York) of which the successor indenture
trustee will notify the Transferor and the Trust.
"DEPOSITOR" shall mean Household Mortgage Funding Corporation III or its
successors.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended.
"EXPENSES" shall have the meaning assigned to such term in Section 8.2.
"HFC" shall mean Household Finance Corporation or its successors.
"INDENTURE" shall mean the Indenture, dated as of July 3, 2002, by and
between the Trust and the Indenture Trustee.
"INDENTURE TRUSTEE" shall mean JPMorgan Chase Bank, a New York banking
corporation, as Indenture Trustee under the Indenture.
"INITIAL NOTE PRINCIPAL AMOUNT" shall mean with respect to the Class A
Notes and Class M Notes, an aggregate of $1,051,007,000.
"MASTER SERVICER" shall mean HFC, or any successor servicer appointed
pursuant to the Sale and Servicing Agreement.
"NON-PERMITTED FOREIGN OWNER" shall have the meaning set forth in Exhibit B
hereto.
"NON-U.S. PERSON" shall mean any Person other than (i) a citizen or
resident of the United States, (ii) an entity treated for United States federal
income tax purposes as a corporation or partnership created or organized in or
under the laws of the United States or any state thereof, including the District
of Columbia, (iii) an estate that is subject to U.S. federal income tax
regardless of the source of its income, (iv) a trust if a court within the
United States is able to exercise primary supervision over the administration of
the trust and one or more United States trustees have authority to control all
substantial decisions of the trust, or (v) certain trusts in existence on August
20, 1996 and treated as United States persons on such date that elect to
continue to be so treated.
"OWNER TRUST ESTATE" shall mean the contribution of $1,000 and one share of
the Depositor's Class SV Preferred Stock referred to in Section 2.5 and the
Trust Estate.
"OWNER TRUSTEE" shall mean U.S. Bank Trust National Association, a national
banking association, not in its individual capacity but solely as owner trustee
under this Agreement, and any successor owner trustee hereunder.
"OWNERSHIP INTEREST" shall have the meaning specified in Section 3.2.
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"PROSPECTIVE TRANSFEROR" shall mean any prospective purchaser or
prospective transferee of the Ownership Interest.
"RATING AGENCY CONDITION" shall mean, with respect to certain actions
requiring Rating Agency consent, that each Rating Agency shall have been given
10 days (or such shorter period as is acceptable to each Rating Agency) prior
notice thereof and that each of the Rating Agencies shall have notified the
Depositor, the Owner Trustee and the Trust in writing that such action will not
result in a reduction or withdrawal of the then current rating of the Notes.
"RECORD DATE" shall mean the last Business Day preceding the related
Payment Date; provided, however, that following the date on which Definitive
Notes are available pursuant to Section 2.2 of the Indenture, the Record Date
shall be the last day of the calendar month preceding the month in which the
related Payment Date occurs.
"REGISTER" shall mean a register kept by the Registrar in which, subject to
such reasonable regulations as it may prescribe, the Registrar shall provide for
the registration of the Ownership Interest and the registration of transfers of
the Ownership Interest. The location of the Registrar shall be the same as that
of the Corporate Trust Office of the Indenture Trustee.
"REGISTRAR" shall mean the Indenture Trustee as Registrar hereunder.
"SALE AND SERVICING AGREEMENT" shall mean the Sale and Servicing Agreement
dated as of the date hereof, among the Trust, the Depositor, the Indenture
Trustee and the Master Servicer.
"SECRETARY OF STATE" shall mean the Secretary of State of the State of
Delaware.
"TRANSFER AGREEMENT" shall mean the Transfer Agreement dated as the date
hereof, among the Trust and the sellers named therein.
"TRANSACTION DOCUMENTS" shall mean each of the Indenture, the Sale and
Servicing Agreement, the Transfer Agreement and this Agreement.
"TRANSFEROR" shall mean the owner of the Ownership Interest.
"TREASURY REGULATIONS" shall mean regulations, including proposed or
temporary regulations, promulgated under the Code. References herein to specific
provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.
"TRUST" shall mean Household Mortgage Loan Trust 2002-HC1, the
Delaware
business trust governed pursuant to this Agreement.
"TRUST ESTATE" shall mean the assets transferred and assigned to the Trust
pursuant to the Sale and Servicing Agreement, the Mortgage Loan Purchase
Agreement, the Transfer Agreement, this Agreement and pledged to the Indenture
Trustee pursuant to the Indenture consisting of: (i) each Mortgage Loan and each
Eligible Substitute Mortgage Loan and its related Mortgage Note and other
Mortgage File documents for each Mortgage Loan and each Eligible
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Substitute Mortgage Loan, including such Mortgage Loan's and each such Eligible
Substitute Mortgage Loan's Principal Balance and all collections in respect
thereof received after the Cut-Off Date or Subsequent Cut-Off Date, as
applicable; (ii) property that secured a Mortgage Loan and each Eligible
Substitute Mortgage Loan that has become REO; (iii) the interest in certain
hazard insurance policies maintained by the Mortgagors or the Master Servicer in
respect of the Mortgage Loans and each Eligible Substitute Mortgage Loan
transferred by the Depositor; (iv) the Collection Account and all amounts on
deposit in the Collection Account (exclusive of net earnings thereon); (v) one
share of Preferred Stock of the Depositor, (vi) the Trust's rights under the
Sale and Servicing Agreement; (vii) any proceeds of any of the foregoing and
(viii) all other assets included or to be included in the Trust for the benefit
of Noteholders.
Section 1.2. OTHER DEFINITIONAL PROVISIONS.
(a) Capitalized terms used herein and not otherwise defined
herein have the meanings assigned to them in the Sale and Servicing Agreement
or, if not defined therein, in the Indenture.
(b) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms not
defined in this Agreement or in any such certificate or other document, and
accounting terms partly defined in this Agreement or in any such certificate or
other document to the extent not defined, shall have the respective meanings
given to them under generally accepted accounting principles. To the extent that
the definitions of accounting terms in this Agreement or in any such certificate
or other document are inconsistent with the meanings of such terms under
generally accepted accounting principles, the definitions contained in this
Agreement or in any such certificate or other document shall control.
(d) The words "hereof," "herein," "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement; Section and Exhibit
references contained in this Agreement are references to Sections and Exhibits
in or to this Agreement unless otherwise specified; and the term "including"
shall mean "including without limitation."
(e) The definitions contained in this Agreement are applicable
to the singular as well as the plural forms of such terms and to the masculine
as well as to the feminine and neuter genders of such terms.
(f) Any agreement, instrument or statute defined or referred to
herein or in any instrument or certificate delivered in connection herewith
means such agreement, instrument or statute as from time to time amended,
modified or supplemented and includes (in the case of agreements or instruments)
references to all attachments thereto and instruments incorporated therein;
references to a Person are also to its permitted successors and assigns.
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ARTICLE II
ORGANIZATION
Section 2.1. NAME. The Trust created hereby shall be known as "Household
Mortgage Loan Trust 2002-HC1," in which name the Owner Trustee may conduct the
business of the Trust and make and execute contracts and other instruments on
behalf of the Trust and the Trust may ▇▇▇ and be sued.
Section 2.2. OFFICE. The office of the Trust shall be in care of the
Owner Trustee at the Corporate Trust Office or at such other address in the
State of
Delaware as the Owner Trustee may designate by written notice to the
Transferor and the Indenture Trustee.
Section 2.3. PURPOSES AND POWERS.
(a) The purpose of the Trust is to engage in the following
activities:
(i) to issue the Notes pursuant to the Indenture and the
Ownership Interest pursuant to this Agreement and to sell such Notes
and Ownership Interest;
(ii) with the proceeds of the sale of the Notes and the
Ownership Interest, to fund start-up and transactional expenses of
the Trust and to pay the balance to the Depositor, as its interests
may appear pursuant to the Sale and Servicing Agreement;
(iii) to assign, grant, transfer, pledge, mortgage and
convey the Trust Estate pursuant to the Indenture and to hold,
manage and distribute to the Transferor pursuant to the terms of the
Sale and Servicing Agreement any portion of the Trust Estate
released from the lien of, and remitted to the Trust pursuant to,
the Indenture;
(iv) to enter into and perform its obligations under the
Transaction Documents to which it is to be a party;
(v) to engage in those activities, including entering
into agreements, that are necessary, suitable or convenient to
accomplish the foregoing or are incidental thereto or connected
therewith; and
(vi) subject to compliance with the Transaction Documents,
to engage in such other activities as may be required in connection
with conservation of the Owner Trust Estate and the making of
distributions to the Noteholders and the Transferor.
The Trust is hereby authorized to engage in the foregoing activities. The Trust
shall not engage in any activity other than in connection with the foregoing or
other than as required or authorized by the terms of this Agreement or the
Transaction Documents.
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Section 2.4. APPOINTMENT OF OWNER TRUSTEE. Pursuant to the
Trust
Agreement, effective as of June 25, 2002, the Depositor appointed the Owner
Trustee as trustee of the Trust. Pursuant to this Agreement, the Owner Trustee
shall have all the rights, powers and duties set forth herein.
Section 2.5. CAPITAL CONTRIBUTION OF OWNER TRUST ESTATE. Pursuant to
the
Trust Agreement, as of June 25, 2002, the Depositor conveyed to the Trust
the sum of $1,000. Depositor hereby sells, assigns, transfers, conveys and sets
over to the Trust, as of the date hereof, one share of its Class SV Preferred
Stock. The Owner Trustee hereby acknowledges receipt in trust from the
Depositor, as of the date hereof, of the foregoing contributions, which shall
constitute the initial Owner Trust Estate and such cash contribution shall be
deposited in the Collection Account. The Depositor shall pay organizational
expenses of the Trust as they may arise or shall, upon the request of the Owner
Trustee, promptly reimburse the Owner Trustee for any such expenses paid by the
Owner Trustee.
Section 2.6. DECLARATION OF TRUST. The Owner Trustee hereby declares
that it will hold the Owner Trust Estate in trust upon and subject to the
conditions set forth herein for the use and benefit of the Transferor, subject
to the obligations of the Trust under the Transaction Documents. It is the
intention of the parties hereto that the Trust constitute a business trust under
the Business Trust Statute and that this Agreement constitute the governing
instrument of such business trust. It is the intention of the parties hereto
that, solely for income and franchise tax purposes, the Trust shall be treated
as a disregarded entity, with the assets of the Trust being treated as owned by
the Transferor as the owner of the Ownership Interest. The parties agree that,
unless otherwise required by appropriate tax authorities, the Trust will file or
cause to be filed annual or other necessary returns, reports and other forms, if
any, consistent with the characterization of the Trust as provided in the
preceding sentence for such tax purposes. Effective as of the date hereof, the
Owner Trustee shall have all rights, powers and duties set forth herein and in
the Business Trust Statute with respect to accomplishing the purposes of the
Trust. The Owner Trustee has filed the Certificate of Trust with the Secretary
of State of the State of
Delaware.
Section 2.7. TITLE TO TRUST PROPERTY.
(a) Subject to the Indenture, legal title to all the Owner Trust
Estate shall be vested at all times in the Trust as a separate legal entity
except where applicable law in any jurisdiction requires title to any part of
the Owner Trust Estate to be vested in a trustee or trustees, in which case
title shall be deemed to be vested in the Owner Trustee, a co-owner trustee
and/or a separate trustee, as the case may be.
(b) The Transferor shall not have legal title to any part of the
Owner Trust Estate. No transfer by operation of law or otherwise of any interest
of the Transferor shall operate to terminate this Agreement or the trusts
hereunder or entitle any transferee to an accounting or to the transfer to it of
any part of the Owner Trust Estate.
Section 2.8. SITUS OF TRUST. The Trust will be located and administered
in the State of
Delaware. All bank accounts maintained by the Owner Trustee on
behalf of the Trust shall be located in the State of
Delaware or the State of
New York. The Trust shall not have any
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employees; provided, however, that nothing herein shall restrict or prohibit the
Owner Trustee from having employees within or without the State of
Delaware.
Payments will be received by the Trust only in Delaware or New York, and
payments will be made by the Trust only from Delaware or New York.
Section 2.9. REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR.
The Depositor hereby represents and warrants to the Owner Trustee, the
Noteholders and the Indenture Trustee that:
(a) The Depositor is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
the corporate power to own its assets and to transact the business in which it
is currently engaged. The Depositor is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction in which the
character of the business transacted by it or properties owned or leased by it
require such qualification and in which the failure to so qualify would have a
material adverse effect on the business, properties, assets or condition
(financial or other) of the Depositor;
(b) The Depositor has the power and authority to make, execute,
deliver and perform its obligations under this Agreement and to perform its
obligations with respect to all of the transactions contemplated under this
Agreement, and has taken all necessary corporate action to authorize the
execution, delivery and performance of its obligations under this Agreement.
When executed and delivered, this Agreement will constitute the legal, valid and
binding obligation of the Depositor enforceable in accordance with its terms,
except as enforcement of such terms may be limited by bankruptcy, insolvency or
similar laws affecting the enforcement of creditors' rights generally and by the
availability of equitable remedies (whether in a proceeding at law or in
equity);
(c) The Depositor is not required to obtain the consent of any
other Person or any consent, license, approval or authorization from, or
registration or declaration with, any governmental authority, bureau or agency
in connection with the execution, delivery, performance, validity or
enforceability of this Agreement, except for such consents, licenses, approvals
or authorizations, or registrations or declarations, as shall have been obtained
or filed, as the case may be;
(d) The execution and delivery of this Agreement and the
performance of the transactions contemplated hereby by the Depositor will not
violate any provision of any existing law or regulation or any order or decree
of any court applicable to the Depositor or any provision of the Certificate of
Incorporation or Bylaws of the Depositor, or constitute a material breach of any
mortgage, indenture, contract or other agreement to which the Depositor is a
party or by which the Depositor may be bound; and
(e) No litigation or administrative proceeding of or before any
court, tribunal or governmental body is currently pending, or to the knowledge
of the Depositor threatened, against the Depositor or any of its properties or
with respect to this Agreement which in the opinion of the Depositor has a
reasonable likelihood of resulting in a material adverse effect on the
transactions contemplated by this Agreement.
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ARTICLE III
OWNERSHIP INTEREST AND TRANSFERS OF THE OWNERSHIP INTEREST
Section 3.1. INITIAL OWNERSHIP. The Transferor is the sole owner of the
Trust.
Section 3.2. THE OWNERSHIP INTEREST. The Ownership Interest (as defined
below) shall be uncertificated and shall represent the entire undivided
beneficial ownership interest in the Owner Trust Estate, subject to the debt
represented by the Notes (the "OWNERSHIP INTEREST". The Ownership Interest may
be assigned by the Transferor as provided in Section 3.13.
Upon completion of a transfer in accordance with the terms and conditions
of this Article III, a transferee of the Ownership Interest shall become the
Transferor, and shall be entitled to the rights and subject to the obligations
of the Transferor hereunder, upon such transferee's acceptance of the Ownership
Interest duly registered in such transferee's name pursuant to Section 3.4
below.
Section 3.3. [Reserved].
Section 3.4. REGISTRATION OF TRANSFER AND EXCHANGE OF OWNERSHIP INTEREST.
The Owner Trustee hereby appoints JPMorgan Chase Bank as Registrar under this
Agreement. The Registrar shall keep or cause to be kept, at the office or agency
maintained pursuant to Section 3.8, a Register in which, subject to such
reasonable regulations as it may prescribe, the Register shall provide for the
registration of the Ownership Interest and of transfer and exchange of the
Ownership Interest as herein provided. The Registrar, subject to Section 3.13
hereof, on behalf of the Trust shall note on the Register the transfer of the
Ownership Interest.
Section 3.5. [Reserved].
Section 3.6. PERSONS DEEMED TRANSFERORS. Prior to due assignment of
the Ownership Interest for registration of transfer, the Depositor, the Owner
Trustee, the Indenture Trustee and the Registrar may treat the Person in whose
name the Ownership Interest shall be registered in the Register as the owner
thereof for the purpose of receiving distributions pursuant to Section 5.2
hereof and for all other purposes whatsoever, and none of the Depositor, the
Owner Trustee, the Indenture Trustee or the Registrar shall be bound by any
notice to the contrary.
Section 3.7. [Reserved].
Section 3.8. MAINTENANCE OF OFFICE OR AGENCY. The Indenture Trustee shall
maintain an office or offices or agency or agencies (initially, the Corporate
Trust Office of the Indenture Trustee) where instructions for the transfer of
the Ownership Interest may be delivered for registration of transfer or exchange
pursuant to Section 3.4 and where notices and demands to or upon the Registrar
in respect of the Ownership Interest and the Transaction Documents may be
served. The Indenture Trustee shall give prompt written notice to the Owner
Trustee and the Transferor of any change in the location of the Register or any
such office or agency.
Section 3.9. APPOINTMENT OF PAYING AGENT. The Owner Trustee hereby
appoints the Indenture Trustee as Paying Agent under this Agreement. The Paying
Agent shall make
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distributions to the Transferor from the Collection Account pursuant to Section
5.2 hereof and Section 5.01 of the Sale and Servicing Agreement and shall report
the amounts of such distributions to the Owner Trustee. The Paying Agent shall
have the revocable power to withdraw funds from the Collection Account for the
purpose of making the distributions referred to above. In the event that the
Indenture Trustee shall no longer be the Paying Agent hereunder, the Owner
Trustee shall, pursuant to the direction of the Depositor, appoint a successor
to act as Paying Agent (which shall at all times be a corporation duly
incorporated and validly existing under the laws of the United States of America
or any state thereof, authorized under such laws to exercise corporate trust
powers and subject to supervision or examination by federal or state
authorities). The Owner Trustee shall cause such successor Paying Agent or any
additional Paying Agent appointed by the Owner Trustee to execute and deliver to
the Owner Trustee an instrument in which such successor Paying Agent or
additional Paying Agent shall agree with the Owner Trustee that as Paying Agent,
such successor Paying Agent or additional Paying Agent will hold all sums, if
any, held by it for payment to the Transferor in trust for the benefit of the
Transferor until such sums shall be paid to the Transferor. The Paying Agent
shall return all unclaimed funds to the Owner Trustee, and upon removal of a
Paying Agent, such Paying Agent shall also return all funds in its possession to
the Owner Trustee. Any reference in this Agreement to the Paying Agent shall
include any co-paying agent unless the context requires otherwise.
Section 3.10. [Reserved].
Section 3.11. [Reserved].
Section 3.12. [Reserved].
Section 3.13. RESTRICTIONS ON TRANSFERS OF OWNERSHIP INTEREST. To the
fullest extent permitted by applicable law, the Ownership Interest shall not be
sold, pledged, transferred or assigned, except as provided below.
(a) The Ownership Interest may not be acquired by or for the
account of (i) an employee benefit plan (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")) that is
subject to the provisions of Title I of ERISA, (ii) a plan described in Section
4975(e)(1) of the Code, or (iii) any entity, including an insurance company
separate account or general account, whose underlying assets include plan assets
by reason of a plan's investment in the entity (each, a "BENEFIT PLAN"). Each
prospective owner of the Ownership Interest, other than HFC or an affiliate of
HFC, shall represent and warrant, in writing, to the Owner Trustee and the
Registrar and any of their respective successors that:
(i) Such Person is (A) a "qualified institutional buyer"
as defined in Rule 144A under the Securities Act of 1933, as amended
(the "SECURITIES ACT"), and is aware that the seller of such
Ownership Interest may be relying on the exemption from the
registration requirements of the Securities Act provided by Rule
144A and is acquiring such Ownership Interest for its own account or
for the account of one or more qualified institutional buyers for
whom it is authorized to act, (B) an "accredited investor" as
defined in Rule 501(a) under the Securities Act , or (C) a Person
involved in the organization or operation of the Trust or an
9
affiliate of such Person within the meaning of Rule 3a-7 of the 1940
Act, as amended (including, but not limited to, HFC or the
Transferor).
(ii) Such Person understands that such Ownership Interest
has not been and will not be registered under the Securities Act and
may be offered, sold, pledged or otherwise transferred only to a
person whom the seller reasonably believes is (A) a "qualified
institutional buyer," (B) "an accredited investor" or (C) a Person
involved in the organization or operation of the Trust or an
affiliate of such Person, in each case in a transaction meeting the
requirements of Rule 144A under the Securities Act or that is
otherwise exempt from registration under the Securities Act and in
accordance with any applicable securities laws of any state of the
United States.
(iii) Such Person shall comply with the provisions of
SECTION 3.13(b), as applicable, relating to the ERISA restrictions
with respect to the acceptance or acquisition of such Ownership
Interest .
(b) Each Prospective Transferor, other than the Transferor or an
affiliate of the Transferor, shall either:
(i) represent and warrant, in writing, to the Owner
Trustee and the Registrar and any of their respective successors, in
accordance with Exhibit B hereto, that the Prospective Transferor is
not (A) an "employee benefit plan" within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or (b) a "plan" within the meaning of Section
4975(e)(1) of the Code (any such plan or employee benefit plan, a
"PLAN") or (C) any entity, including an insurance company separate
account or general account, whose underlying assets include plan
assets by reason of a plan's investment in the entity and is not
directly or indirectly purchasing such Ownership Interest on behalf
of, as investment manager of, as named fiduciary of, as trustee of,
or with assets of a Plan; or
(ii) furnish to the Owner Trustee and the Registrar and
any of their respective successors an opinion of counsel acceptable
to such persons that (A) the proposed issuance or transfer of such
Ownership Interest to such Prospective Transferor will not cause any
assets of the Trust to be deemed assets of a Plan, and (B) the
proposed holding or transfer of such Ownership Interest will not
cause the Owner Trustee or the Registrar or any of their respective
successors to be a fiduciary of a Plan within the meaning of Section
3(21) of ERISA and will not give rise to a transaction described in
Section 406 of ERISA or Section 4975(c)(1) of the Code for which a
statutory or administrative exemption is unavailable.
(c) Neither the Ownership Interest nor any beneficial ownership
interest therein may be transferred to HFC or any Seller, or to any non-United
States Person as defined in Code Sections 7701(a)(30), and any purported
transfer in violation of this Section 3.13(c) shall be null and void ab initio.
10
(d) The Prospective Transferor, other than the initial
Transferor or an affiliate of the initial Transferor, shall obtain an Opinion of
Counsel (which shall be addressed to the Owner Trustee and the Registrar) to the
effect that, as a matter of federal income tax law, such Prospective Transferor
is permitted to accept the transfer of the Ownership Interest.
(e) The Ownership Interest may not be pledged or transferred
without delivery to the Registrar of an Opinion of Counsel to the effect that
such transfer would not jeopardize the tax treatment of the Trust, would not
subject the Trust to an entity-level tax, and would not jeopardize the status of
the Notes as debt for all purposes.
(f) No pledge or transfer of the Ownership Interest shall be
effective unless such purchase or transfer is (i) to a single beneficial owner
and (ii) accompanied by an opinion of counsel satisfactory to the Owner Trustee,
which Opinion of Counsel shall not be an expense of the Trust, the Owner
Trustee, the Registrar or the Master Servicer, to the effect such pledge or
transfer will not cause the Trust to be treated for federal income tax purposes
as a taxable mortgage pool, association or a publicly traded partnership taxable
as a corporation.
ARTICLE IV
ACTIONS BY OWNER TRUSTEE
Section 4.1. PRIOR NOTICE TO THE TRANSFEROR WITH RESPECT TO CERTAIN
MATTERS. With respect to the following matters, the Owner Trustee shall not take
action, and neither the Transferor nor the Indenture Trustee shall direct the
Owner Trustee to take any action, unless (i) at least 30 days before the taking
of such action, the Owner Trustee shall have notified the Transferor and the
Indenture Trustee in writing of the proposed action and neither the Transferor
nor the Indenture Trustee shall have notified the Owner Trustee in writing prior
to the 30th day after such notice is given that the Transferor has withheld
consent or the Transferor has provided alternative direction, and (ii) in the
case of clauses (b), (c), (d), (g), (i), (j), and (o), the Rating Agencies have
confirmed in writing that the taking of the proposed action would not result in
a withdrawal or reduction of the then-current ratings of the Notes:
(a) the initiation of any claim or lawsuit by the Trust (except
claims or lawsuits brought in connection with the collection of the Mortgage
Loans) and the compromise of any action, claim or lawsuit brought by or against
the Trust (except with respect to the aforementioned claims or lawsuits for
collection of the Mortgage Loans);
(b) the election by the Trust to file an amendment to the
Certificate of Trust (unless such amendment is required to be filed under the
Business Trust Statute);
(c) the amendment or other change to this Agreement or any
Transaction Document in circumstances where the consent of any Noteholder is
required;
(d) the amendment or other change to this Agreement or any
Transaction Document in circumstances where the consent of any Noteholder is not
required and such amendment materially adversely affects the interest of the
Transferor;
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(e) the appointment pursuant to the Indenture of a successor
Note Registrar, Paying Agent or Indenture Trustee, or the consent to the
assignment by the Note Registrar, Paying Agent or Indenture Trustee of its
obligations under the Indenture;
(f) the consent to the calling or waiver of any default of any
Transaction Document;
(g) the consent to the assignment by the Indenture Trustee of
its obligations under any Transaction Document;
(h) except as provided in Article IX hereof, dissolve, terminate
or liquidate the Trust in whole or in part;
(i) merge or consolidate the Trust with or into any other
entity, or, except as contemplated by the Sale and Servicing Agreement or the
Indenture, convey or transfer all or substantially all of the Trust's assets to
any other entity;
(j) cause the Trust to incur, assume or guaranty any
indebtedness other than as permitted by the Transaction Documents;
(k) do any act that conflicts with any other Transaction
Document;
(l) do any act which would make it impossible to carry on the
ordinary business of the Trust;
(m) confess a judgment against the Trust;
(n) possess Trust assets, or assign the Trust's right to
property, for other than a Trust purpose; or
(o) change the Trust's purpose and powers from those set forth
in this Agreement.
In addition, except as specifically contemplated by the Transaction
Documents, the Trust shall not commingle its assets with those of any other
entity. The Trust shall maintain its financial and accounting books and records
separate from those of any other entity. Except as expressly set forth herein,
the Trust shall pay its indebtedness, operating expenses and liabilities from
its own funds, and the Trust shall not pay the indebtedness, operating expenses
and liabilities of any other Person. The Trust shall maintain appropriate
minutes or other records of all appropriate actions and shall maintain its
office separate from the offices of the Depositor or HFC, and any of their
respective affiliates. This Agreement and the Transaction Documents shall be the
only agreements among the parties hereto with respect to the creation, operation
and termination of the Trust. The pricing and other material terms of all
transactions and agreements to which the Trust is a party shall be intrinsically
fair to all parties thereto.
The Owner Trustee shall not have the power, except upon the written
direction of the Transferor and to the extent otherwise consistent with the
Transaction Documents, to (i) remove or replace the Master Servicer or the
Indenture Trustee, (ii) institute proceedings to have the
12
Trust declared or adjudicated a bankrupt or insolvent, (iii) consent to the
institution of bankruptcy or insolvency proceedings against the Trust, (iv) file
a petition or consent to a petition seeking reorganization or relief on behalf
of the Trust under any applicable federal or state law relating to bankruptcy,
(v) consent to the appointment of a receiver, liquidator, assignee, trustee,
sequestrator (or any similar official) of the Trust or a substantial portion of
the property of the Trust, (vi) make any assignment for the benefit of the
Trust's creditors, (vii) cause the Trust to admit in writing its inability to
pay its debts generally as they become due, or (viii) take any action, or cause
the Trust to take any action, in furtherance of any of the foregoing (any of the
above, a "BANKRUPTCY ACTION"). So long as the Indenture remains in effect, the
Transferor shall not have the power to take, and shall not take, any Bankruptcy
Action with respect to the Trust or direct the Owner Trustee to take any
Bankruptcy Action with respect to the Trust.
Section 4.2. [Reserved].
Section 4.3. ACTION BY TRANSFEROR WITH RESPECT TO BANKRUPTCY. To the
fullest extent permitted by applicable law, the Owner Trustee shall not have the
power to commence a voluntary proceeding in bankruptcy relating to the Trust
without the prior consent and approval of (i) the Transferor, and (ii) the
Indenture Trustee, and the delivery to the Owner Trustee by the Transferor of a
certificate certifying that such Transferor reasonably believes that the Trust
is insolvent. The terms of this Section 4.3 shall survive for one year and one
day following the termination of this Agreement.
Section 4.4. RESTRICTIONS ON TRANSFEROR'S POWER. The Transferor shall
not direct the Owner Trustee to take or refrain from taking any action if such
action or inaction would be contrary to any obligation of the Trust or the Owner
Trustee under this Agreement or any of the Transaction Documents or would be
contrary to Section 2.3 hereof, nor shall the Owner Trustee be obligated to
follow any such direction, if given.
ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
Section 5.1. ESTABLISHMENT OF TRUST ACCOUNT. The Owner Trustee shall
cause the Indenture Trustee to establish and maintain with the Indenture Trustee
for the benefit of the Trust one or more Eligible Accounts in accordance with
the Indenture.
Section 5.2. APPLICATION OF TRUST FUNDS.
(a) On each Payment Date, the Paying Agent shall make the
distributions and payments set forth in Section 5.01 of the Sale and Servicing
Agreement from amounts on deposit in the Collection Account.
(b) On or before the third Business Day following each Payment
Date, the Paying Agent shall send to DTC the statement provided to the Paying
Agent by the Indenture Trustee pursuant to Section 5.03 of the Sale and
Servicing Agreement with respect to such Payment Date.
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(c) In the event that any withholding tax is imposed on the
Trust's payment (or allocations of income) to the Transferor, such tax shall
reduce the amount otherwise distributable to the Transferor in accordance with
this Section 5.2. The Paying Agent is hereby authorized and directed in
accordance with the instructions of the Master Servicer to retain from amounts
otherwise distributable to the Transferor sufficient funds for the payment of
any tax that is legally owed by the Trust (but such authorization shall not
prevent the Paying Agent from contesting any such tax in appropriate
proceedings, and withholding payment of such tax, if permitted by law, pending
the outcome of such proceedings). The amount of any withholding tax imposed with
respect to the Transferor shall be treated as cash distributed to the Transferor
at the time it is withheld by the Trust and remitted to the appropriate taxing
authority. If there is a possibility that withholding tax is payable with
respect to a distribution (such as a distribution to a non-U.S. Transferor), the
Paying Agent in accordance with the instructions of the Master Servicer shall
withhold such amounts in accordance with this paragraph (c). In the event that
the Transferor wishes to apply for a refund of any such withholding tax, the
Owner Trustee and the Paying Agent shall reasonably cooperate with the
Transferor in making such claim so long as the Transferor agrees to reimburse
the Owner Trustee and the Paying Agent for any out-of-pocket expenses incurred.
Section 5.3. METHOD OF PAYMENT. Distributions required to be made to
the Transferor on any Payment Date shall be made to the Transferor of record on
the preceding Record Date in the manner set forth in Section 5.01 of the Sale
and Servicing Agreement.
Section 5.4. [Reserved].
Section 5.5. ACCOUNTING AND REPORTS TO THE TRANSFEROR, THE INTERNAL
REVENUE SERVICE AND OTHERS. The Master Servicer shall deliver (or cause to be
delivered) to the Transferor such information, reports or statements as may be
required by the Code and applicable Treasury Regulations and as may be required
to enable the Transferor to prepare its respective federal and state income tax
returns. Consistent with the Trust's characterization as a disregarded entity
within the meaning of Treasury regulations Section 301.7701-2(a), no federal
income tax return shall be filed on behalf of the Trust unless either (a) the
Trust or the Transferor shall receive an Opinion of Counsel that based on a
change in applicable law occurring after the date hereof the Code requires such
a filing or (b) the Internal Revenue Service shall determine that the Trust is
required to file such a return. The Master Servicer shall prepare or shall cause
to be prepared any tax returns required to be filed by the Trust and shall remit
such returns to the Transferor at least five days before such returns are due to
be filed. Such returns shall be filed by, or at the direction of, the Master
Servicer with the appropriate tax authorities. In no event shall the Transferor
be liable for any liabilities, costs or expenses of the Trust arising out of the
application of any tax law, including federal, state, foreign or local income or
excise taxes or any other tax imposed on or measured by income (or any interest,
penalty or addition with respect thereto or arising from a failure to comply
therewith), except for any such liability, cost or expense attributable to the
Transferor's breach of its obligations under this Agreement.
14
Section 5.6. SIGNATURE ON RETURNS.
The Owner Trustee shall sign on behalf of the Trust the tax returns of the
Trust, if any, unless applicable law requires the Transferor to sign such
documents, in which case such documents shall be signed by the Transferor.
ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE
Section 6.1. GENERAL AUTHORITY. The Owner Trustee is authorized and
directed to execute and deliver the Notes, and the Transaction Documents to
which the Trust is to be a party and each certificate or other document attached
as an exhibit to or contemplated by the Transaction Documents to which the Trust
is to be a party and any other agreement or instrument described in Article III,
in each case, in such form as the Transferor shall approve, as evidenced
conclusively by the Owner Trustee's execution thereof, and, on behalf of the
Trust, to direct the Indenture Trustee to authenticate and deliver the Class A
Notes and Class M Notes in an aggregate principal amount equal to the Initial
Note Principal Amount. In addition to the foregoing, the Owner Trustee is
authorized, but shall not be obligated, to take all actions required of the
Trust pursuant to the Transaction Documents.
Section 6.2. GENERAL DUTIES. It shall be the duty of the Owner Trustee to
discharge (or cause to be discharged) all of its responsibilities pursuant to
the terms of this Agreement and to administer the Trust in the interest of the
Transferor, subject to the Transaction Documents and in accordance with the
provisions of this Agreement. Notwithstanding the foregoing, the Owner Trustee
shall be deemed to have discharged its duties and responsibilities hereunder and
under the Transaction Documents to the extent the Master Servicer has agreed in
the Sale and Servicing Agreement to perform any act or to discharge any duty of
the Owner Trustee hereunder or under any Transaction Document, and the Owner
Trustee shall not be held liable for the default or failure of the Master
Servicer to carry out its obligations under the Sale and Servicing Agreement.
Section 6.3. ACTION UPON INSTRUCTION.
(a) Subject to Article IV herein and in accordance with the
terms of the Transaction Documents, the Transferor may by written instruction
direct the Owner Trustee in the management of the Trust but only to the extent
consistent with the limited purpose of the Trust. Such direction may be
exercised at any time by written instruction of the Transferor.
(b) Notwithstanding the foregoing, the Owner Trustee shall not
be required to take any action hereunder or under any Transaction Document if
the Owner Trustee shall have reasonably determined, or shall have been advised
by counsel, that such action is likely to result in liability on the part of the
Owner Trustee or is contrary to the terms hereof or of any Transaction Document
or is otherwise contrary to law.
(c) Whenever the Owner Trustee is unable to decide between
alternative courses of action permitted or required by the terms of this
Agreement or under any Transaction Document, the Owner Trustee shall promptly
give notice (in such form as shall be appropriate
15
under the circumstances) to the Transferor requesting instruction from the
Transferor as to the course of action to be adopted, and to the extent the Owner
Trustee acts in good faith in accordance with any written instruction of the
Transferor received, the Owner Trustee shall not be liable on account of such
action to any Person. If the Owner Trustee shall not have received appropriate
instruction within 10 days of such notice (or within such shorter period of time
as reasonably may be specified in such notice or may be necessary under the
circumstances) it may, but shall be under no duty to, take or refrain from
taking such action, not inconsistent with this Agreement or the Transaction
Documents, as it shall deem to be in the best interest of the Transferor, and
shall have no liability to any Person for such action or inaction.
(d) In the event that the Owner Trustee is unsure as to the
application of any provision of this Agreement or any Transaction Document or
any such provision is ambiguous as to its application, or is, or appears to be,
in conflict with any other applicable provision, or in the event that this
Agreement provides no direction to the Owner Trustee or is silent or is
incomplete as to the course of action that the Owner Trustee is required to take
with respect to a particular set of facts, the Owner Trustee may give notice (in
such form as shall be appropriate under the circumstances) to the Transferor
requesting instruction and, to the extent that the Owner Trustee acts or
refrains from acting in good faith in accordance with any such instruction
received from the Transferor, the Owner Trustee shall not be liable, on account
of such action or inaction, to any Person. If the Owner Trustee shall not have
received appropriate instruction within 10 days of such notice (or within such
shorter period of time as reasonably may be specified in such notice or may be
necessary under the circumstances) it may, but shall be under no duty to, take
or refrain from taking such action, not inconsistent with this Agreement or the
Transaction Documents, as it shall deem to be in the best interest of the
Transferor, and shall have no liability to any Person for such action or
inaction.
Section 6.4. NO DUTIES EXCEPT AS SPECIFIED IN THIS AGREEMENT, THE
TRANSACTION DOCUMENTS OR IN INSTRUCTIONS. The Owner Trustee shall not have any
duty or obligation to manage, make any payment with respect to, register,
record, sell, dispose of, or otherwise deal with the Owner Trust Estate, or to
otherwise take or refrain from taking any action under, or in connection with,
any document contemplated hereby to which the Owner Trustee or the Trust is a
party, except as expressly provided by the terms of this Agreement, or in any
document or written instruction received by the Owner Trustee pursuant to
Section 6.3; and no implied duties or obligations shall be read into this
Agreement or any Transaction Document against the Owner Trustee. The Owner
Trustee shall have no responsibility for filing any financing or continuation
statement in any public office at anytime or to otherwise perfect or maintain
the perfection of any security interest or lien granted to it hereunder or to
prepare or file any Securities and Exchange Commission filing for the Trust or
to record this Agreement or any Transaction Document. The Owner Trustee
nevertheless agrees that it will, at its own cost and expense, promptly take all
action as may be necessary to discharge any liens on any part of the Owner Trust
Estate that result from actions by, or claims against, the Owner Trustee in its
individual capacity that are not related to the ownership or the administration
of the Owner Trust Estate.
Section 6.5. NO ACTION EXCEPT UNDER SPECIFIED DOCUMENTS OR INSTRUCTIONS.
The Owner Trustee shall not manage, control, use, sell, dispose of or otherwise
deal with any part of the Owner Trust Estate except (i) in accordance with the
powers granted to and the authority conferred upon the Owner Trustee pursuant to
this Agreement, (ii) in accordance with the
16
Transaction Documents and (iii) in accordance with any document or instruction
delivered to the Owner Trustee pursuant to Section 6.3 above. The Owner Trustee
shall not be required to take any action under this Agreement if the Owner
Trustee shall reasonably determine or shall have been advised by counsel that
such action is contrary to the terms of this Agreement or is otherwise contrary
to law..
Section 6.6. RESTRICTIONS. The Owner Trustee shall not take any action
(a) that is inconsistent with the purposes of the Trust set forth in Section 2.3
hereof or (b) that, to the actual knowledge of the Owner Trustee, would result
in the Trust's becoming taxable as a corporation for Federal income tax
purposes. The Transferor shall not direct the Owner Trustee to take action that
would violate the provisions of this Section 6.6.
ARTICLE VII
CONCERNING THE OWNER TRUSTEE
Section 7.1. ACCEPTANCE OF TRUSTS AND DUTIES. The Owner Trustee accepts
the trusts hereby created and agrees to perform its duties hereunder with
respect to such trusts but only upon the terms of this Agreement. The Owner
Trustee also agrees to disburse all moneys actually received by it constituting
part of the Owner Trust Estate upon the terms of the Transaction Documents and
this Agreement. The Owner Trustee shall not be answerable or accountable
hereunder or under any Transaction Document under any circumstances, except (i)
for its own willful misconduct, bad faith or negligence or (ii) in the case of
the inaccuracy of any representation or warranty contained in Section 7.3 below
expressly made by the Owner Trustee. In particular, but not by way of limitation
(and subject to the exceptions set forth in the preceding sentence):
(a) the Owner Trustee shall not be liable for any error of
judgment made by a responsible officer of the Owner Trustee;
(b) the Owner Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in accordance with the instructions of
the Transferor or the Master Servicer.
(c) no provision of this Agreement or any Transaction Document
shall require the Owner Trustee to expend or risk funds or otherwise incur any
financial liability in the performance of any of its rights or powers hereunder
or under any Transaction Document if the Owner Trustee shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured or provided to it;
(d) under no circumstances shall the Owner Trustee be liable for
indebtedness evidenced by or arising under any of the Transaction Documents,
including the principal of and interest on the Notes;
(e) the Owner Trustee shall not be responsible for or in respect
of the validity or sufficiency of this Agreement or for the due execution hereof
by the Depositor or for the form, character, genuineness, sufficiency, value or
validity of any of the Owner Trust Estate or for or in respect of the validity
or sufficiency of the Transaction Documents, and the Owner Trustee
17
shall in no event assume or incur any liability, duty, or obligation to any
Noteholder, or the Transferor other than as expressly provided for herein and in
the Transaction Documents;
(f) the Owner Trustee shall not be liable for the default or
misconduct of the Indenture Trustee or the Master Servicer under any of the
Transaction Documents or otherwise and the Owner Trustee shall have no
obligation or liability to perform the obligations of the Trust under this
Agreement or the Transaction Documents that are required to be performed by the
Indenture Trustee under the Indenture, the Master Servicer under the Sale and
Servicing Agreement or the Registrar or any Paying Agent hereunder;
(g) the Owner Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Agreement, or to institute,
conduct or defend any litigation under this Agreement or otherwise or in
relation to this Agreement or any Transaction Document, at the request, order or
direction of the Transferor, unless such Transferor has offered to the Owner
Trustee security or indemnity satisfactory to it against the costs, expenses and
liabilities that may be incurred by the Owner Trustee therein or thereby. The
right of the Owner Trustee to perform any discretionary act enumerated in this
Agreement or in any Transaction Document shall not be construed as a duty, and
the Owner Trustee shall not be answerable for other than its gross negligence or
willful misconduct in the performance of any such act; and
(h) With respect to the Noteholders, the Owner Trustee
undertakes to perform or observe only such of the covenants and obligations of
the Owner Trustee as are expressly set forth in this Agreement, and no implied
covenants or obligations with respect to the Noteholders shall be read into this
Agreement or the other Transaction Documents against the Owner Trustee. The
Owner Trustee shall not be deemed to owe any fiduciary duty to the Noteholders,
and shall not be liable to any such person for the failure of the Trust to
perform its obligations to such persons other than as a result of the gross
negligence or willful misconduct of the Owner Trustee in the performance of its
express obligations under this Agreement.
Section 7.2. FURNISHING OF DOCUMENTS. The Owner Trustee shall furnish to
the Transferor promptly upon receipt of a written request therefor, duplicates
or copies of all reports, notices, requests, demands, certificates, financial
statements and any other instruments furnished to the Owner Trustee under the
Transaction Documents.
Section 7.3. REPRESENTATIONS AND WARRANTIES.
The Owner Trustee hereby represents and warrants to the Depositor, for the
benefit of the Transferor, the Noteholders and the Indenture Trustee, that:
(a) It is a national banking association duly formed and validly
existing under the laws of the United States of America. It has all requisite
corporate power and authority to execute, deliver and perform its obligations
under this Agreement;
(b) It has taken all corporate action necessary to authorize the
execution and delivery by it of this Agreement, and this Agreement will be
executed and delivered by one of its officers who is duly authorized to execute
and deliver this Agreement on its behalf. The execution, delivery and
performance by the Owner Trustee of this Agreement will not require the
authorization, consent or approval of, the giving of notice to, the filing or
registration with, or the
18
taking of any other action with respect to, any governmental authority or agency
of the State of Delaware or the United States of America governing its trust
powers;
(c) Neither the execution nor the delivery by it of this
Agreement nor the consummation by it of the transactions contemplated hereby nor
compliance by it with any of the terms or provisions hereof will contravene any
Federal, governmental rule or regulation governing the banking or trust powers
of the Owner Trustee or any judgment or order binding on it, or constitute any
default under its charter documents or by-laws or any indenture, mortgage,
contract, agreement or instrument to which it is a party or by which any of its
properties may be bound;
(d) This Agreement has been duly authorized, executed and
delivered by the Owner Trustee and constitutes a valid, legal and binding
obligation of the Owner Trustee, enforceable against it in accordance with the
terms hereof, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and other laws affecting the enforcement of creditors' rights
generally and to general principles of equity, regardless of whether such
enforcement is considered in a proceeding in equity or at law;
(e) The Owner Trustee is not in default with respect to any
order or decree of any court or any order, regulation or demand of any federal,
state, municipal or governmental agency, which default might have consequences
that would materially and adversely affect the condition (financial or other) or
operations of the Owner Trustee or its properties or might have consequences
that would materially adversely affect its performance hereunder; and
(f) No litigation is pending or, to the best of the Owner
Trustee's knowledge, threatened against the Owner Trustee which would prohibit
its entering into this Agreement or performing its obligations under this
Agreement.
Section 7.4. RELIANCE; ADVICE OF COUNSEL.
(a) The Owner Trustee shall incur no liability to anyone in
acting upon any signature, instrument, notice, resolution, request, consent,
order, certificate, report, opinion, bond, or other document or paper believed
by it to be genuine and believed by it to be signed by the proper party or
parties. The Owner Trustee may accept a certified copy of a resolution of the
board of directors or other governing body of any corporate party as conclusive
evidence that such resolution has been duly adopted by such body and that the
same is in full force and effect. As to any fact or matter the method of the
determination of which is not specifically prescribed herein, the Owner Trustee
may for all purposes hereof rely on a certificate, signed by the president or
any vice president or by the treasurer or any assistant treasurer or other
authorized officer of the relevant party, as to such fact or matter and such
certificate shall constitute full protection to the Owner Trustee for any action
taken or omitted to be taken by it in good faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder
and in the performance of its duties and obligations under this Agreement or the
Transaction Documents, the Owner Trustee (i) may, at the expense of HFC, act
directly or through its agents or attorneys pursuant to agreements entered into
with any of them, and the Owner Trustee shall not be liable
19
for the conduct or misconduct of such agents or attorneys if such agents or
attorneys shall have been selected by the Owner Trustee with reasonable care,
and (ii) may consult with counsel, accountants and other skilled persons to be
selected with reasonable care. The Owner Trustee shall not be liable for
anything done, suffered or omitted in good faith by it in accordance with the
opinion or advice of any such counsel, accountants or other such persons and not
contrary to this Agreement or any Transaction Document.
Section 7.5. NOT ACTING IN INDIVIDUAL CAPACITY. Except as provided in
this Article VII, in accepting the trusts hereby created, U.S. Bank Trust
National Association acts solely as Owner Trustee hereunder and not in its
individual capacity and all Persons having any claim against the Owner Trustee
by reason of the transactions contemplated by this Agreement or any Transaction
Document shall look only to the Owner Trust Estate for payment or satisfaction
thereof.
Section 7.6. OWNER TRUSTEE NOT LIABLE FOR THE OWNERSHIP INTEREST OR THE
MORTGAGE LOANS. The recitals contained herein and in the Ownership Interest
shall be taken as the statements of the Depositor, and the Owner Trustee assumes
no responsibility for the correctness thereof. The Owner Trustee makes no
representations as to the validity or sufficiency of this Agreement, of any
Transaction Document or of the Ownership Interest (other than as specified in
Section 7.3 hereof) or the Notes, or of any Mortgage Loans or related documents.
The Owner Trustee shall at no time have any responsibility or liability for or
with respect to the legality, validity and enforceability of any Mortgage Loan,
or the perfection and priority of any security interest created by any Mortgage
Loan or the maintenance of any such perfection and priority, or for or with
respect to the sufficiency of the Owner Trust Estate or its ability to generate
the payments to be distributed to the Transferor under this Agreement or to the
Noteholders under the Indenture, including, without limitation: the existence,
condition and ownership of any Mortgaged Property; the existence and
enforceability of any insurance thereon; the existence and contents of any
Mortgage Loan on any computer or other record thereof; the validity of the
assignment of any Mortgage Loan to the Trust or of any intervening assignment;
the completeness of any Mortgage Loan; the performance or enforcement of any
Mortgage Loan; the compliance by the Depositor or the Master Servicer with any
warranty or representation made under any Transaction Document or in any related
document or the accuracy of any such warranty or representation or any action of
the Depositor, the Indenture Trustee, or the Master Servicer or any subservicer
taken in the name of the Owner Trustee.
Section 7.7. OWNER TRUSTEE MAY OWN THE OWNERSHIP INTEREST AND THE NOTES.
The Owner Trustee in its individual or any other capacity may become the owner
or pledgee of the Ownership Interest or the Notes and may deal with the
Depositor, the Indenture Trustee, and the Master Servicer in banking
transactions with the same rights as it would have if it were not Owner Trustee.
Section 7.8. LICENSES. The Owner Trustee shall cause the Trust to use its
best efforts to obtain and maintain the effectiveness of any licenses required
in connection with this Agreement and the Transaction Documents and the
transactions contemplated hereby and thereby until such time as the Trust shall
terminate in accordance with the terms hereof.
20
Section 7.9. DOING BUSINESS IN OTHER JURISDICTIONS. Notwithstanding
anything contained herein to the contrary, the Owner Trustee (in its individual
and trust capacities) shall not be required to take any action in any
jurisdiction other than in the State of Delaware if the taking of such action
will, even after the appointment of a co-trustee or separate trustee in
accordance with Section 10.4 hereof, (i) require the consent or approval or
authorization or order of or the giving of notice to, or the registration with
or the taking of any other action in respect of, any state or other governmental
authority or agency of any jurisdiction other than the State of Delaware; (ii)
result in any fee, tax or other governmental charge under the laws of the State
of Delaware becoming payable by the Owner Trustee (in its individual capacity);
or (iii) subject the Owner Trustee (in its individual capacity) to personal
jurisdiction in any jurisdiction other than the State of Delaware for causes of
action arising from acts unrelated to the consummation of the transactions by
the Owner Trustee (in its individual and trust capacities) contemplated hereby.
ARTICLE VIII
COMPENSATION OF OWNER TRUSTEE
Section 8.1. OWNER TRUSTEE'S FEES AND EXPENSES. HFC is a party to this
Agreement solely for purposes of this Article VIII. The Owner Trustee shall
receive as compensation for its services hereunder such fees as have been
separately agreed upon before the date hereof between HFC and the Owner Trustee,
and the Owner Trustee shall be entitled to be reimbursed by HFC for its other
reasonable expenses hereunder, including the reasonable compensation, expenses
and disbursements of such agents, representatives, experts and counsel as the
Owner Trustee may employ in connection with the exercise and performance of its
rights and its duties hereunder or under the Transaction Documents.
Section 8.2. INDEMNIFICATION. HFC shall be liable as primary obligor for,
and shall indemnify the Owner Trustee (in its individual and trust capacities)
and its officers, directors, successors, assigns, agents and servants
(collectively, the "Indemnified Parties") from and against, any and all
liabilities, obligations, losses, damages, taxes, claims, actions and suits, and
any and all reasonable costs, expenses and disbursements (including reasonable
legal fees and expenses) of any kind and nature whatsoever (collectively,
"EXPENSES") which may at any time be imposed on, incurred by, or asserted
against the Owner Trustee (in its individual and trust capacities) or any
Indemnified Party in any way relating to or arising out of this Agreement, the
Transaction Documents, the Owner Trust Estate, the administration of the Owner
Trust Estate or the action or inaction of the Owner Trustee hereunder, except
only that HFC shall not be liable for or required to indemnify an Indemnified
Party from and against Expenses arising or resulting from any of the matters
described in the third sentence of Section 7.1 hereof. The indemnities contained
in this Section 8.2 and the rights under Section 8.1 shall survive the
resignation or termination of the Owner Trustee or the termination of this
Agreement. In the event of any claim, action or proceeding for which indemnity
will be sought pursuant to this Section 8.2, the Owner Trustee's choice of legal
counsel shall be subject to the approval of HFC, which approval shall not be
unreasonably withheld.
Section 8.3. PAYMENTS TO THE OWNER TRUSTEE. Any amounts paid to the Owner
Trustee pursuant to this Article VIII shall be deemed not to be a part of the
Owner Trust Estate immediately after such payment.
21
Section 8.4. NON-RECOURSE OBLIGATIONS. Notwithstanding anything in
this Agreement or any Transaction Document, (i) the Owner Trustee agrees in its
individual capacity and in its capacity as Owner Trustee for the Trust that all
obligations of the Trust to the Owner Trustee individually or as Owner Trustee
for the Trust shall be recourse to the Trust only and specifically shall not be
recourse to the assets of the Transferor.
ARTICLE IX
TERMINATION OF AGREEMENT
Section 9.1. TERMINATION OF AGREEMENT.
(a) This Agreement (other than Article VIII) shall terminate and
the Trust shall dissolve and terminate pursuant to the Business Trust Statute
and be of no further force or effect on the earliest of (i) the final payment or
other liquidation of the last Mortgage Loan remaining in the Trust; (ii) the
optional purchase by the Master Servicer of the Mortgage Loans as described in
Section 8.01 of the Sale and Servicing Agreement, and (iii) the sale of the
Mortgage Loans as described in Section 10.2 of the Indenture and the
corresponding redemption of the Notes; and (iv) the Payment Date in May 2032.
The bankruptcy, liquidation, dissolution, death or incapacity of the Transferor
shall not (x) operate to terminate this Agreement or the Trust, nor (y) entitle
such Transferor's legal representatives or heirs to claim an accounting or to
take any action or proceeding in any court for a partition or winding-up of all
or any part of the Trust or Owner Trust Estate nor (z) otherwise affect the
rights, obligations and liabilities of the parties hereto.
(b) The Ownership Interest shall be subject to an early
redemption or termination at the option of the Master Servicer in the manner and
subject to the provisions of Section 8.01 of the Sale and Servicing Agreement.
(c) Except as provided in Sections 9.1(a) and (b) above, neither
the Depositor, or the Transferor shall be entitled to revoke or terminate the
Trust.
(d) If any Ownership Interest is in certificated form notice of
any termination of the Trust, specifying the Payment Date upon which the
Transferor shall surrender its Ownership Interest to the Paying Agent for
payment of the final distributions and cancellation, shall be given by the
Registrar to the Transferor and the Rating Agencies mailed within five Business
Days of receipt by the Registrar of notice of such termination pursuant to (a)
or (b) above, which notice given by the Registar shall state (i) the Payment
Date upon or with respect to which final payment of the Registrar shall be made
upon presentation and surrender of the Ownership Interest at the office of the
Paying Agent therein designated, (ii) the amount of any such final payment and
(iii) that the Record Date otherwise applicable to such Payment Date is not
applicable, payments being made only upon submission of a claim for and
acknowledgment of final distribution under the Ownership Interest at the office
of the Paying Agent therein specified. The Registrar shall give such notice to
the Owner Trustee and the Paying Agent at the time such notice is given to the
Transferor. Upon presentation of such submission of a claim for and
acknowledgment of final distribution under the Ownership Interest, the Paying
Agent shall
22
cause to be distributed to the Transferor amounts distributable on such Payment
Date pursuant to Section 5.01 of the Sale and Servicing Agreement.
In the event that the Transferor shall not have submitted claim for and
acknowledgment of final distribution under the Ownership Interest for
cancellation within six months after the date specified in the above mentioned
written notice, the Registrar shall give a second written notice to the
Transferor with respect thereto. Within one year after such second notice, the
Registrar may take appropriate steps, or may appoint an agent to take
appropriate steps, to contact the Transferor concerning the final distribution,
and the cost thereof shall be paid out of the funds and other assets that shall
remain subject to this Agreement.
(e) Upon the winding up of the Trust and its termination, the
Owner Trustee shall cause the Certificate of Trust to be canceled by filing a
certificate of cancellation with the Secretary of State in accordance with the
Business Trust Statute.
ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
Section 10.1. ELIGIBILITY REQUIREMENTS FOR OWNER TRUSTEE. The Owner
Trustee shall at all times be a corporation or national banking association
satisfying the provisions of Section 3807(a) of the Business Trust Statute;
authorized to exercise corporate powers; having a combined capital and surplus
of at least $50,000,000 and subject to supervision or examination by Federal or
state authorities; and having (or having a parent which has) a long-term rating
of at least "Baa3" (or its equivalent) by ▇▇▇▇▇'▇ and "A" (or its equivalent) by
Standard & Poor's. If such corporation shall publish reports of condition at
least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purpose of this Section, the
combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. In case at any time the Owner Trustee shall cease to be eligible
in accordance with the provisions of this Section 10.1, the Owner Trustee shall
resign immediately in the manner and with the effect specified in Section 10.2.
Section 10.2. RESIGNATION OR REMOVAL OF OWNER TRUSTEE. The Owner
Trustee may at any time resign and be discharged from the trusts hereby created
by giving written notice thereof to the Trust, the Indenture Trustee, the
Transferor and the Rating Agencies. Upon receiving such notice of resignation,
the Transferor shall promptly appoint a successor Owner Trustee by written
instrument, in duplicate, one copy of which instrument shall be delivered to the
resigning Owner Trustee and one copy to the successor Owner Trustee. If no
successor Owner Trustee shall have been so appointed and have accepted
appointment within 30 days after the giving of such notice of resignation, the
resigning Owner Trustee may petition any court of competent jurisdiction for the
appointment of a successor Owner Trustee.
If at any time the Owner Trustee shall cease to be eligible in accordance
with the provisions of Section 10.1 above and shall fail to resign after written
request therefor by the Transferor, or if at any time the Owner Trustee shall be
legally unable to act, or shall be adjudged bankrupt or insolvent, or a receiver
of the Owner Trustee or of its property shall be
23
appointed, or any public officer shall take charge or control of the Owner
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then the Transferor may remove the Owner Trustee.
If the Transferor shall remove the Owner Trustee under the authority of the
immediately preceding sentence, the Transferor shall promptly appoint a
successor Owner Trustee by written instrument in duplicate, one copy of which
instrument shall be delivered to the outgoing Owner Trustee so removed and one
copy to the successor Owner Trustee and payment of all fees owed to the outgoing
Owner Trustee.
Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this Section 10.2
shall not become effective until acceptance of appointment by the successor
Owner Trustee pursuant to Section 10.3 and payment of all fees and expenses owed
to the outgoing Owner Trustee. The Indenture Trustee shall provide notice of
such resignation or removal of the Owner Trustee to each of the Rating Agencies.
Section 10.3. SUCCESSOR OWNER TRUSTEE. Any successor Owner Trustee
appointed pursuant to Section 10.2 shall execute, acknowledge and deliver to the
Indenture Trustee and to its predecessor Owner Trustee an instrument accepting
such appointment under this Agreement, and thereupon the resignation or removal
of the predecessor Owner Trustee shall become effective and such successor Owner
Trustee, without any further act, deed or conveyance, shall become fully vested
with all the rights, powers, duties, and obligations of its predecessor under
this Agreement, with like effect as if originally named as Owner Trustee. The
predecessor Owner Trustee shall upon payment of its fees and expenses deliver to
the successor Owner Trustee all documents and statements and monies held by it
under this Agreement; the predecessor Owner Trustee shall execute and deliver
such instruments and do such other things as may reasonably be required for
fully and certainly vesting and confirming in the successor Owner Trustee all
such rights, powers, duties, and obligations.
No successor Owner Trustee shall accept appointment as provided in this
Section 10.3 unless at the time of such acceptance such successor Owner Trustee
shall be eligible pursuant to Section 10.1 above.
Upon acceptance of appointment by a successor Owner Trustee pursuant to
this Section 10.3, the Indenture Trustee shall mail notice of the successor of
such Owner Trustee to the Transferor, the Noteholders and the Rating Agencies.
If the Indenture Trustee fails to mail such notice within 10 days after
acceptance of appointment by the successor Owner Trustee, the successor Owner
Trustee shall cause such notice to be mailed at the expense of the Indenture
Trustee.
Any successor Owner Trustee shall promptly file a certificate of amendment
identifying the name and principal place of business of the Owner Trustee in the
State of Delaware.
Section 10.4. MERGER OR CONSOLIDATION OF OWNER TRUSTEE. Any corporation
into which the Owner Trustee may be merged or converted or with which it may be
consolidated or any corporation resulting from any merger, conversion or
consolidation to which the Owner Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Owner Trustee, shall be the successor of the Owner Trustee, as the case may be,
24
hereunder, provided such corporation shall be eligible pursuant to Section 10.1
above, without the execution or filing of any instrument or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding; provided further that the Owner Trustee, shall mail notice of
such merger or consolidation to the Depositor, HFC and the Rating Agencies.
Section 10.5. APPOINTMENT OF CO-OWNER TRUSTEE OR SEPARATE OWNER TRUSTEE.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Owner Trust Estate or any Mortgaged Property may at the time be located,
the Owner Trustee shall have the power and shall execute and deliver all
instruments to appoint one or more Persons to act as co-owner trustee, jointly
with the Owner Trustee, or separate owner trustee or separate owner trustees, of
all or any part of the Owner Trust Estate, and to vest in such Person, in such
capacity, such title to the Trust, or any part thereof, and, subject to the
other provisions of this Section, such powers, duties, obligations, rights and
trusts as the Owner Trustee may consider necessary or desirable. No co-owner
trustee or separate trustee under this Section 10.5 shall be required to meet
the terms of eligibility as a successor Owner Trustee pursuant to Section 10.1
above and no notice of the appointment of any co-owner trustee or separate
trustee shall be required pursuant to Section 10.3 above.
The Owner Trustee hereby appoints the Indenture Trustee for the purpose of
establishing and maintaining the Collection Account and making the distributions
therefrom to the Persons entitled thereto pursuant to Section 5.01 of the Sale
and Servicing Agreement.
Each separate trustee and co-owner trustee shall, to the extent permitted
by law, be appointed and act subject to the following provision and conditions:
(i) all rights, powers, duties and obligations conferred
or imposed upon the Owner Trustee shall be conferred upon and
exercised or performed by the Owner Trustee and such separate owner
trustee or co-owner trustee jointly (it being understood that such
separate owner trustee or co-owner trustee is not authorized to act
separately without the Owner Trustee joining in such act), except to
the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed, the Owner Trustee shall
be incompetent or unqualified to perform such act or acts, in which
event such rights, powers, duties, and obligations (including the
holding of title to the Trust or any portion thereof in any such
jurisdiction) shall be exercised and performed singly by such
separate trustee or co-owner trustee but solely at the direction of
the Owner Trustee;
(ii) no owner trustee under this Agreement shall be
personally liable by reason of any act or omission of any other
owner trustee under this Agreement; and
(iii) the Owner Trustee may at any time accept the
resignation of or remove any separate trustee or co-owner trustee.
25
Any notice, request or other writing given to the Owner Trustee shall be
deemed to have been given to the separate trustees and co-owner trustees, as if
given to each of them. Every instrument appointing any separate owner trustee or
co-owner trustee, other than this Agreement, shall refer to this Agreement and
to the conditions of this Article X. Each separate trustee and co-owner trustee,
upon its acceptance of appointment, shall be vested with the estates specified
in its instrument of appointment, either jointly with the Owner Trustee or
separately, as may be provided therein, subject to all the provisions of this
Agreement, specifically including every provision of this Agreement relating to
the conduct of, affecting the liability of, or affording protection to, the
Owner Trustee. Each such instrument shall be filed with the Owner Trustee.
Any separate trustee or co-owner trustee may at any time appoint the Owner
Trustee as its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any owner trustee or co-owner
trustee shall die, become incapable of acting, resign or be removed, all of its
estates, properties, rights, remedies and trusts shall vest in and be exercised
by the Owner Trustee, to the extent permitted by law, without the appointment of
a new or successor trustee.
ARTICLE XI
MISCELLANEOUS
Section 11.1. SUPPLEMENTS AND AMENDMENTS. This Agreement may be amended
by the Depositor, HFC and the Owner Trustee with prior written notice to the
Rating Agencies and the Indenture Trustee, but without the consent of any of the
Noteholders, the Transferor or the Indenture Trustee, to cure any ambiguity, to
correct or supplement any provisions in this Agreement or for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions in this Agreement or of modifying in any manner the rights of the
Noteholders or the Transferor; PROVIDED, HOWEVER, that such action shall not, as
evidenced by an Opinion of Counsel or satisfaction of the Rating Agency
Condition, adversely affect in any material respect the interests of the
Indenture Trustee, any Noteholder or the Transferor.
This Agreement may also be amended from time to time by the Depositor, HFC
and the Owner Trustee, with the prior written consent of the Rating Agencies and
the Indenture Trustee, the Majority Noteholder and the Transferor, 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 Noteholders or the Transferor; PROVIDED, HOWEVER, that no such amendment
shall (a) increase or reduce in any manner the amount of, or accelerate or delay
the timing of, collections of payments on the Mortgage Loans or distributions
that shall be required to be made for the benefit of the Noteholders or the
Transferor or (b) reduce the aforesaid Percentage Interests required to consent
to any such amendment, without the consent of the holders of all the outstanding
Notes. The Depositor shall join in any such amendment approved as provided in
the preceding sentence so long as such amendment is not adverse to the interests
of the Depositor.
Promptly after the execution of any such amendment, the Owner Trustee shall
furnish written notification of the substance of such amendment to the Indenture
Trustee and each of the Rating Agencies.
26
It shall not be necessary for the consent of the Transferor, the
Noteholders or the Indenture Trustee pursuant to this Section 11.1 to approve
the particular form of any proposed amendment, but it shall be sufficient if
such consent shall approve the substance thereof. The manner of obtaining such
consents (and any other consents of the Transferor provided for in this
Agreement or in any other Transaction Document) and of evidencing the
authorization of the execution thereof by the Transferor and the Noteholders
shall be subject to such reasonable requirements as the Owner Trustee may
prescribe.
Promptly after the execution of any amendment to the Certificate of Trust,
the Owner Trustee shall cause the filing of such amendment with the Secretary of
State.
Prior to the execution of any amendment to this Agreement or the
Certificate of Trust, the Owner Trustee shall be entitled to receive and rely
upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement and that all conditions precedent to
such execution and delivery have been satisfied. The Owner Trustee may, but
shall not be obligated to, enter into any such amendment which affects the Owner
Trustee's own rights, duties or immunities under this Agreement or otherwise.
Section 11.2. NO LEGAL TITLE TO OWNER TRUST ESTATE IN TRANSFEROR. The
Transferor shall not have legal title to any part of the Owner Trust Estate. The
Transferor shall be entitled to receive distributions with respect to their
undivided ownership interest therein only in accordance with Articles V and IX
herein. No transfer, by operation of law or otherwise, of any right, title, or
interest of the Transferor to and in its Ownership Interest shall operate to
terminate this Agreement or the trusts hereunder or entitle any transferee to an
accounting or to the transfer to it of legal title to any part of the Owner
Trust Estate.
Section 11.3. LIMITATIONS ON RIGHTS OF OTHERS. The provisions of this
Agreement are solely for the benefit of the Owner Trustee, the Trust, the
Transferor and, to the extent expressly provided herein, the Indenture Trustee
and the Noteholders, and nothing in this Agreement, whether express or implied,
shall be construed to give to any other Person any legal or equitable right,
remedy or claim in the Owner Trust Estate or under or in respect of this
Agreement or any covenants, conditions or provisions contained herein.
Section 11.4. NOTICES.
(a) Unless otherwise expressly specified or permitted by the
terms hereof, all notices shall be in writing and shall be deemed given upon
receipt by the intended recipient or three Business Days after mailing if mailed
by certified mail, postage prepaid (except that notice to the Owner Trustee
shall be deemed given only upon actual receipt by the Owner Trustee), at the
following addresses: (i) if to the Owner Trustee, its Corporate Trust Office
with a copy to: U.S. Bank National Association, ▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇; (ii) if to HFC, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Treasurer, (iii) if to the Depositor, ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Treasurer, (iv) if to the
Indenture Trustee, its Corporate Trust Office; or, as to each such party, at
such other address as shall be designated by such party in a written notice to
each other party.
27
(b) Any notice required or permitted to be given to the
Transferor shall be given by first-class mail, postage prepaid, at the address
of such Transferor as shown in the Register. Any notice so mailed within the
time prescribed in this Agreement shall be conclusively presumed to have been
duly given, whether or not the Transferor receives such notice.
Section 11.5. SEVERABILITY. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Section 11.6. SEPARATE COUNTERPARTS. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
Section 11.7. SUCCESSORS AND ASSIGNS. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of the Owner
Trustee and its successors and the Transferor and its successors and permitted
assigns, all as herein provided. Any request, notice, direction, consent, waiver
or other instrument or action by the Transferor shall bind the successors and
assigns of the Transferor.
Section 11.8. NO PETITION. The Owner Trustee, by entering into this
Agreement, the Transferor, by accepting the Ownership Interest, and the
Indenture Trustee and each Noteholder by accepting the benefits of this
Agreement, hereby covenant and agree that they will not at any time institute
against the Transferor or the Trust, or join in any institution against the
Transferor, or the Trust of, any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or other proceedings under any United
States Federal or state bankruptcy or law in connection with any obligations
relating to the Ownership Interest and the Notes, this Agreement or any of the
Transaction Documents.
Section 11.9. [Reserved].
Section 11.10. NO RECOURSE. The Transferor by accepting the Ownership
Interest acknowledges that the Transferor's Ownership Interest represents a
beneficial interest in the Trust only and does not represent an interest in or
an obligation of the Master Servicer, the Owner Trustee or any Affiliate thereof
and no recourse may be had against such parties or their assets, except as may
be expressly set forth or contemplated in this Agreement, the Ownership Interest
or the Transaction Documents.
Section 11.11. HEADINGS. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
Section 11.12. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS,
28
RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE
WITH SUCH LAWS.
Section 11.13. INCONSISTENCIES WITH SALE AND SERVICING AGREEMENT. In the
event certain provisions of this Agreement conflict with the provisions of the
Sale and Servicing Agreement, the parties hereto agree that the provisions of
the Sale and Servicing Agreement shall be controlling (other than the provisions
governing the internal affairs of the Trust; which shall be governed by Delaware
law).
Section 11.14. THIRD PARTY BENEFICIARY. The parties hereto acknowledge
that the Indenture Trustee is an express third party beneficiary hereof entitled
to enforce the provisions hereof as if it was actually a party hereto. Nothing
in this Section 11.14 however shall be construed to mitigate in any way, the
fiduciary responsibilities of the Owner Trustee to the holder of the Ownership
Interest.
Section 11.15. MASTER SERVICER. The Master Servicer is authorized to
prepare, or to cause to be prepared, execute and deliver on behalf of the Trust
as agent for the Trust all such documents, reports, filings, instruments,
certificates and opinions as it shall be the duty of the Trust, or the Owner
Trustee to prepare, file or deliver pursuant to the Transaction Documents. Upon
written request, the Owner Trustee shall execute and deliver to the Master
Servicer a limited power of attorney appointing the Master Servicer the Trust's
agent and attorney-in-fact to prepare, or to cause to be prepared, execute and
deliver all such documents, reports, filings, instruments, certificates and
opinions.
Section 11.16. RIGHTS UNDER INDENTURE. JPMorgan Chase Bank shall be
afforded each of the rights, protections, immunities and indemnities in acting
as Registrar and Paying Agent hereunder, as it is entitled to in its capacity as
Indenture Trustee under Article VI of the Indenture.
29
IN WITNESS WHEREOF, the parties hereto have caused this Amended and
Restated
Trust Agreement to be duly executed by their respective officers
hereunto duly authorized, as of the day and year first above written.
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Owner Trustee
By: /s/ ▇▇▇▇▇▇▇▇ ▇. Child
-------------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. Child
Title: Vice President
HOUSEHOLD MORTGAGE FUNDING CORPORATION III, as
Depositor
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President and Assistant Treasurer
HOUSEHOLD FINANCE CORPORATION
By: /s/ ▇.▇. ▇▇▇▇, ▇▇.
-------------------------------------------
Name: ▇.▇. ▇▇▇▇, ▇▇.
Title: Vice President and Treasurer
EXHIBIT A
CERTIFICATE OF TRUST OF
HOUSEHOLD MORTGAGE LOAN TRUST 2002-HC1
THIS Certificate of Trust of Household Mortgage Loan Trust 2002-HC1 (the
"Trust"), is being duly executed and filed on behalf of the Trust by the
undersigned, as trustee, to form a business trust under the Delaware Business
Trust Act (12 Del. Code, Section 3801 et seq.)(the "Act").
1. NAME. The name of the business trust formed by this Certificate of
Trust is Household Mortgage Loan Trust 2002-HC1.
2. DELAWARE TRUSTEE. The name and business address of the trustee of
the Trust in the State of Delaware is U.S. Bank Trust National Association, ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
3. EFFECTIVE DATE. This Certificate of Trust shall be effective upon
filing.
IN WITNESS WHEREOF, the undersigned has duly executed this Certificate of
Trust in accordance with Section 3811(a) of the Act.
U.S. Bank Trust National Association, not in its
individual capacity but solely as Owner Trustee.
By:
-----------------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. Child
Title: Vice President
A-1
EXHIBIT B
TRANSFER CERTIFICATE
U.S. Bank Trust National Association
_____________________________
_____________________________
Attention: [____________________]
Re: Amended and Restated
Trust Agreement, dated as of July 3, 2002,
among Household Finance Corporation and U.S. Bank Trust National
Associaion, as Owner Trustee; Household Mortgage Loan Trust
2002-HC1, Closed-End Mortgage Loan Asset Backed Notes, Series
2002-HC1
Ladies and Gentlemen:
The undersigned (the "Transferee") has agreed to purchase from
_______________________________________ (the "Transferor") the Ownership
Interest:
A. Rule 144A "Qualified Institutional Buyers" should complete this
section
I. The Transferee is (check one):
/ / (i) An insurance company, as defined in Section 2(13)
of the Securities Act of 1933, as amended (the
"Securities Act"), (ii) an investment company
registered under the Investment Company Act of 1940,
as amended (the "Investment Company Act"), (iii) a
business development company as defined in Section
2(a)(48) of the Securities Act, (iv) a Small Business
Investment Company licensed by the U.S. Small
Business Administration under Section 301(c) or (d)
of the Small Business Investment Act of 1958, (v) a
plan established and maintained by a state, its
political subdivisions, or any agency or
instrumentality of a state or its political
subdivisions, for the benefit of its employees, (vi)
an employee benefit plan within the meaning of Title
I of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), (vii) a business
development company as defined in Section 202(a)(22)
of the Investment Advisors Act of 1940, (viii) an
organization described in Section 501(c)(3) of the
Internal Revenue Code, corporation (other than a bank
as defined in Section 3(a)(2) of the Securities Act
or a savings and loan association or other
institution referenced in Section 3(a)(2) of the
Securities Act or a foreign bank or savings and loan
association or equivalent institution), partnership,
or Massachusetts or similar business trust; or (ix)
an investment advisor registered under the Investment
Advisors Act of 1940,
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which, for each of (i) through (ix), owns and invests
on a discretionary basis at least $100 million in
securities other than securities of issuers
affiliated with the Transferee, securities issued or
guaranteed by the United States or a person
controlled or supervised by and acting as an
instrumentality of the government of the United
States pursuant to authority granted by the Congress
of the United States, bank deposit notes and
certificates of deposit, loan participations,
repurchase agreements, securities owned but subject
to a repurchase agreement, and currency, interest
rate and commodity swaps (collectively, "Excluded
Securities");
/ / a dealer registered pursuant to Section 15 of the
Securities Exchange Act of 1934, as amended (the
"Exchange Act") that in the aggregate owns and
invests on a discretionary basis at least $10 million
of securities other than Excluded Securities and
securities constituting the whole or part of an
unsold allotment to, or subscription by, Transferee
as a participant in a public offering;
/ / an investment company registered under the Investment
Company Act that is part of a family of investment
companies (as defined in Rule 144A of the Securities
and Exchange Commission) which own in the aggregate
at least $100 million in securities other than
Excluded Securities and securities of issuers that
are part of such family of investment companies;
/ / an entity, all of the equity owners of which are
entities described in this Paragraph A(I);
/ / a bank as defined in Section 3(a)(2) of the
Securities Act, any savings and loan association or
other institution as referenced in Section 3(a)(5)(A)
of the Securities Act, or any foreign bank or savings
and loan association or equivalent institution that
in the aggregate owns and invests on a discretionary
basis at least $100 million in securities other than
Excluded Securities and has an audited net worth of
at least $25 million as demonstrated in its latest
annual financial statements, as of a date not more
than 16 months preceding the date of transfer of the
Ownership Interest to the Transferee in the case of a
U.S. Bank or savings and loan association, and not
more than 18 months preceding such date in the case
of a foreign bank or savings association or
equivalent institution.
II. The Transferee is acquiring such Ownership Interest solely
for its own account, for the account of one or more others, all of which are
"Qualified Institutional Buyers" within the meaning of Rule 144A, or in its
capacity as a dealer registered pursuant to Section 15
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of the Exchange Act acting in a riskless principal transaction on behalf of a
"Qualified Institutional Buyer". The Transferee is not acquiring such Ownership
Interest with a view to or for the resale, distribution, subdivision or
fractionalization thereof which would require registration of the Ownership
Interest under the Securities Act.
B. "Accredited Investors" should complete this Section
I. The Transferee is (check one):
/ / a bank within the meaning of Section 3(a)(2) of the
Securities Act;
/ / a savings and loan association or other institution
defined in Section 3(a)(5) of the Securities Act;
/ / a broker or dealer registered pursuant to the
Exchange Act;
/ / an insurance company within the meaning of Section
2(13) of the Securities Act;
/ / an investment company registered under the Investment
Company Act;
/ / an employee benefit plan within the meaning of Title
I of ERISA, which has total assets in excess of
$5,000,000;
/ / another entity which is an "accredited investor"
within the meaning of paragraph (fill in) of
subsection (a) of Rule 501 of the Securities and
Exchange Commission.
II. The Transferee is acquiring such Ownership Interest solely
for its own account, for investment, and not with a view to or for the resale,
distribution, subdivision or fractionalization thereof which would require
registration of the Ownership Interest under the Securities Act.
C. If the Transferee is unable to complete one of paragraph A(I) or
paragraph B(I) above, the Transferee must furnish an opinion in form and
substance satisfactory to the Trustee of counsel satisfactory to the Trustee to
the effect that such purchase will not violate any applicable federal or state
securities laws.
D. The Transferee represents that it is not (A) an "employee benefit
plan" within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or (B) a "plan" within the meaning
of Section 4975(e)(1) of the Code (any such plan or employee benefit plan, a
"Plan") or (C) any entity, including an insurance company separate account or
general account, whose underlying assets include plan assets by reason of a
plan's investment in the entity and is not directly or indirectly purchasing
such Trust Security on behalf of, as investment manager of, as named fiduciary
of, as trustee of, or with assets of a Plan or (D) a non-United States Person as
defined in Section 7701(a)(30) of the Code.
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Very truly yours,
[NAME OF PURCHASER]
By:
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Title:
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Dated:
THE FOREGOING IS ACKNOWLEDGED THIS ____ DAY OF __________, 200_.
[NAME OF SELLER]
By:
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Title:
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