EXHIBIT 4.6
POOLING AND SERVICING AGREEMENT
RELATING TO
HOUSEHOLD AUTOMOTIVE TRUST ______
among
HOUSEHOLD AUTO RECEIVABLES CORPORATION.
as Seller,
HOUSEHOLD FINANCE CORPORATION
as Master Servicer
and
[Name of Trustee]
as Trustee
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Dated as of ________
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TABLE OF CONTENTS
Page
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Article I DEFINITIONS...............................................................................................1
Section 1.1 Definitions.......................................................................................1
Section 1.2 Usage of Terms...................................................................................22
Section 1.3 Calculations.....................................................................................22
Section 1.4 Section References...............................................................................22
Section 1.5 Action by or Consent of Certificateholders.......................................................22
Section 1.6 No Recourse......................................................................................22
Section 1.7 Material Adverse Effect..........................................................................23
Article II CREATION OF TRUST.......................................................................................23
Section 2.1 Creation of Trust................................................................................23
Article III CONVEYANCE OF RECEIVABLES; ACCEPTANCE BY TRUSTEE; ORIGINAL ISSUANCE OF CERTIFICATES....................23
Section 3.1 Conveyance of Receivables........................................................................23
Section 3.2 Custody of Receivable Files......................................................................25
Section 3.3 Conditions to Issuance by Trust..................................................................26
Section 3.4 Representations of Seller With Respect to the Receivables........................................27
Section 3.5 Repurchase of Receivables Upon Breach of Warranty................................................27
Section 3.6 [Reserved].......................................................................................28
Article IV ADMINISTRATION AND SERVICING OF RECEIVABLES.............................................................28
Section 4.1 Duties of the Master Servicer....................................................................28
Section 4.2 Collection of Receivable Payments; Modifications of Receivables..................................29
Section 4.3 Realization Upon Receivables.....................................................................31
Section 4.4 Insurance........................................................................................32
Section 4.5 Maintenance of Security Interests in Vehicles....................................................33
Section 4.6 Covenants, Representations, and Warranties of Master Servicer....................................33
Section 4.7 Repurchase of Receivables Upon Breach of Covenant................................................34
Section 4.8 Total Servicing Fee; Payment of Certain Expenses by Master Servicer..............................34
Section 4.9 Master Servicer's Certificate....................................................................35
Section 4.10 Annual Statement as to Compliance, Notice of Master Servicer Termination Event...................35
Section 4.11 Annual Independent Accountants' Report...........................................................36
Section 4.12 Access to Certain Documentation and Information Regarding Receivables............................37
Section 4.13 Fidelity Bond and Errors and Omissions Policy....................................................37
Section 4.14 Year 2000 Compliance.............................................................................37
Article V DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS..........................................................38
Section 5.1 Establishment of Trust Accounts..................................................................38
Section 5.2 Certain Reimbursements to the Master Servicer....................................................39
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Section 5.3 Application of Collections.......................................................................39
Section 5.4 Additional Deposits..............................................................................40
Section 5.5 Distributions....................................................................................40
Section 5.6 Net Deposits.....................................................................................41
Section 5.7 Statements to Certificateholders.................................................................41
Article VI REPRESENTATIONS OF the SELLER...........................................................................42
Section 6.1 Representations of Seller........................................................................43
Section 6.2 Corporate Existence..............................................................................44
Article VII THE CERTIFICATES.......................................................................................46
Section 7.1 The Certificates.................................................................................46
Section 7.2 Authentication of Certificates...................................................................46
Section 7.3 Registration of Transfer and Exchange of Certificates............................................46
Section 7.4 Mutilated, Destroyed, Lost or Stolen Certificates................................................49
Section 7.5 Persons Deemed Owners............................................................................49
Section 7.6 Access to List of Certificateholders' Names and Addresses........................................50
Section 7.7 Maintenance of Office or Agency..................................................................50
Section 7.8 Affiliated Group May Own Certificates............................................................50
Article VIII THE SELLER............................................................................................50
Section 8.1 Liability of Seller; Indemnities.................................................................50
Section 8.2 Merger or Consolidation of, or Assumption of the Obligations of, Seller..........................51
Section 8.3 Limitation on Liability of Seller and Others.....................................................52
Section 8.4 Seller May Own Certificates......................................................................52
Section 8.5 Restrictions on Liens............................................................................52
Article IX THE MASTER SERVICER.....................................................................................53
Section 9.1 Representations of Master Servicer...............................................................53
Section 9.2 Liability of Master Servicer; Indemnities........................................................55
Section 9.3 Merger or Consolidation of, or Assumption of the Obligations of the Master Servicer..............56
Section 9.4 Limitation on Liability of Master Servicer and Others............................................57
Section 9.5 Delegation of Duties.............................................................................57
Section 9.6 Master Servicer Not to Resign....................................................................58
Section 9.7 Sub-Servicing Agreements Between Master Servicer and Sub-Servicers...............................58
Section 9.8 Successor Sub-Servicers..........................................................................59
Article X MASTER SERVICER TERMINATION EVENTS.......................................................................60
Section 10.1 Master Servicer Termination Event................................................................60
Section 10.2 Consequences of a Master Servicer Termination Event..............................................61
Section 10.3 Appointment of Successor.........................................................................62
Section 10.4 Notification to Certificateholders...............................................................63
Section 10.5 Waiver of Past Defaults..........................................................................63
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Article XI THE TRUSTEE.............................................................................................63
Section 11.1 Duties of Trustee................................................................................63
Section 11.2 Trustee's Assignment of Warranty Receivables.....................................................65
Section 11.3 Certain Matters Affecting the Trustee............................................................65
Section 11.4 Trustee Not Liable for Certificates or Receivables...............................................67
Section 11.5 Trustee May Own Certificates.....................................................................68
Section 11.6 Trustee's Fees and Expenses; Indemnification.....................................................68
Section 11.7 Eligibility Requirements for Trustee.............................................................68
Section 11.8 Resignation or Removal of Trustee................................................................68
Section 11.9 Successor Trustee................................................................................69
Section 11.10 Merger or Consolidation of Trustee...............................................................70
Section 11.11 Appointment of Co-Trustee or Separate Trustee....................................................70
Section 11.12 Representations and Warranties of Trustee........................................................71
Section 11.13 Tax Returns......................................................................................72
Section 11.14 Trustee May Enforce Claims Without Possession of Certificates....................................72
Section 11.15 Suit for Enforcement.............................................................................73
Section 11.16 Rights to Direct Trustee.........................................................................73
Article XII TERMINATION............................................................................................73
Section 12.1 Termination of the Trust.........................................................................73
Section 12.2 Optional Purchase of All Receivables.............................................................74
Article XIII MISCELLANEOUS PROVISIONS..............................................................................75
Section 13.1 Amendment........................................................................................75
Section 13.2 Protection of Title to Trust.....................................................................76
Section 13.3 Limitation on Rights of Certificateholders.......................................................78
Section 13.4 Governing Law....................................................................................78
Section 13.5 Severability of Provisions.......................................................................79
Section 13.6 Assignment.......................................................................................79
Section 13.7 Certificates Nonassessable and Fully Paid........................................................79
Section 13.8 Third-Party Beneficiaries........................................................................79
Section 13.9 Counterparts.....................................................................................79
Section 13.10 Notices..........................................................................................79
Section 13.11 Successors and Assigns...........................................................................80
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SCHEDULES
Schedule A - Schedule of Receivables
Schedule B - Representations and Warranties of the Seller
EXHIBITS
Exhibit A - Form of Class A Certificate
Exhibit B - Form of Class B Certificate
Exhibit C - Form of Servicer's Certificate
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THIS POOLING AND SERVICING AGREEMENT (this "AGREEMENT"), dated
as of _____________, is made with respect to the formation of the Household
Automotive Trust ___ (the "TRUST"), among Household Finance Corporation, a
Delaware corporation ("HFC"), in its capacity as Master Servicer (the "MASTER
SERVICER"), Household Auto Receivables Corporation, a Nevada corporation
("HARC"), as the Initial Class B Certificateholder and as the Seller (the
"SELLER") and [Name of Trustee], a [New York] banking corporation, as Trustee
(in such capacity, tHE "TRUSTEE") and as Backup Servicer (in such capacity, the
"BACKUP SERVICER").
WHEREAS, the Seller wishes to establish a trust and provide
for the allocation and sale of the beneficial interests therein and the
maintenance and distribution of the trust estate;
WHEREAS, the Master Servicer has agreed to service the
Receivables, which constitute the principal assets of the trust estate;
WHEREAS, all things necessary to make the Certificates, when
executed and authenticated by the Trustee, valid instruments, and to make this
Agreement a valid agreement, in accordance with their and its terms, have been
done; and
WHEREAS, [Name of Trustee] is willing to serve in the capacity
of Trustee and Backup Servicer hereunder.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein contained, the Seller, the Master Servicer, the Trustee
and the Backup Servicer hereby agree as follows:
Article I
DEFINITIONS
.1 DEFINITIONS. Whenever capitalized and used in this
Agreement, the following words and phrases, unless the context otherwise
requires, shall have the following meanings:
ACCOUNTANTS' REPORT: The report of a firm of nationally
recognized independent accountants described in Section 4.11.
ACCOUNTING DATE: With respect to a Distribution Date, the last
day of the Collection Period immediately preceding such Distribution Date.
ACTUARIAL METHOD: The method of allocating a fixed level
monthly payment on an obligation between principal and interest, pursuant to
which the portion of such payment that is allocated to interest is equal to the
product of (a) 1/12, (b) the fixed annual rate of interest on such obligation
and (c) the outstanding principal balance of such obligation.
ACTUARIAL RECEIVABLE: A Receivable under which the portion of
the payment allocated to interest and the portion allocable to principal is
determined in accordance with the Actuarial Method.
AFFILIATE: With respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or
indirect common control with such specified Person. For the purposes of this
definition, "control" when used with respect to any Person, means the power
to direct the management and voting securities, by contract or otherwise; and
the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
AGGREGATE PRINCIPAL BALANCE: With respect to any date of
determination, the sum of the Principal Balances for all Receivables (other
than (i) any Receivable that has become a Liquidated Receivable and (ii) any
Receivable that has become a Repurchased Receivable as of the date of
determination).
AGREEMENT: Shall have the meaning set forth in the first
paragraph of this Agreement.
AMOUNT AVAILABLE: With respect to any Distribution Date, shall
equal the Available Funds for the immediately preceding Determination Date.
AMOUNT FINANCED: With respect to a Receivable, the aggregate
amount advanced under such Receivable toward the purchase price of the
Financed Vehicle and related costs, including amounts advanced in respect of
accessories, insurance premiums, service and warranty contracts, other items
customarily financed as part of retail automobile installment sale contracts
or promissory notes, and related costs.
ANNUAL PERCENTAGE RATE OR APR: With respect to a Receivable
means the annual percentage rate of finance charges or service charges, as
stated in the related Contract.
ANNUAL TRUSTEE'S FEE: Shall have the meaning set forth in
Section 11.6.
AVAILABLE FUNDS: With respect to any Determination Date, the
sum of (i) the Collected Funds for such Determination Date, (ii) all Purchase
Amounts deposited in the Collection Account on the related Deposit Date and
(iii) all income from investments of funds in the Collection Account during
the prior Collection Period.
BASIC DOCUMENTS: This Agreement and the Master Receivables
Purchase Agreement and any other documents or certificates delivered in
connection therewith. The Basic Documents to be executed by any party are
referred to herein as "such party's Basic Documents," "its Basic Documents"
or by a similar expression.
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BACKUP SERVICER: [Name of Trustee], or its successor in interest
pursuant to Section 10.2, or such Person as shall have been appointed as Backup
Servicer or successor servicer pursuant to Section 10.3.
BASIC SERVICING FEE: With respect to any Collection Period,
the fee payable to the Master Servicer for services rendered during such
Collection Period, which shall be equal to one-twelfth of the Basic Servicing
Fee Rate multiplied by the Aggregate Principal Balance as of the first day of
the Collection Period.
BASIC SERVICING FEE RATE: ___% per annum, payable monthly at
one-twelfth of the annual rate.
BOOK-ENTRY CERTIFICATE: Any Certificate registered in the name
of the Depository or its nominee, ownership of which is reflected on the
books of the Depository or on the books of a person maintaining an account
with such Depository (directly or as an indirect participant in accordance
with the rules of such Depository).
BUSINESS DAY: Any day other than a Saturday, a Sunday or other
day on which commercial banks located in the states of Illinois, California
or New York are authorized or obligated to be closed.
CERTIFICATE: Any one of the Class A Certificates or Class B
Certificates executed by the Trustee on behalf of the Trust in substantially
the form set forth in Exhibit A or B, respectively.
CERTIFICATE MAJORITY: Holders of Class A Certificates and
Class B Certificates representing a majority of the sum of the Class A
Certificate Balance and the Class B Certificate Balance, or if there are no
Class A Certificates outstanding, holders of Class B Certificates
representing a majority of the Class B Certificate Balance, provided, that
for so long as the Class B Certificate is held by any Affiliate of HFC or by
HFC, it shall be disregarded for purposes of this definition.
CERTIFICATEHOLDER OR HOLDER: The Person in whose name a
Certificate is registered in the Certificate Register.
CERTIFICATE REGISTER AND CERTIFICATE REGISTRAR: The register
maintained and the registrar appointed pursuant to Section 7.3.
CLASS: A class of Certificates.
CLASS A CERTIFICATE: Any one of the Certificates executed by
the Trust and authenticated by the Trustee in substantially the form set forth
in Exhibit A hereto.
CLASS A CERTIFICATE BALANCE: Initially, the Class A Percentage
of the Cut-off Date Principal Balance and, thereafter, the initial Class A
Certificate Balance reduced by all amounts distributed to the Class A
Certificateholders and allocable to principal.
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CLASS A CERTIFICATE FACTOR: As of any Distribution Date, a
seven-digit decimal figure equal to the Class A Certificate Balance as of the
close of business on such Distribution Date divided by the initial Class A
Certificate Balance as of the Cut-off Date.
CLASS A DISTRIBUTABLE AMOUNT: On any Distribution Date, the sum
of the Class A Principal Distributable Amount and the Class A Interest
Distributable Amount.
CLASS A INTEREST CARRYOVER SHORTFALL: As of the close of
business on any Distribution Date, the excess of the Class A Interest
Distributable Amount for such Distribution Date plus any outstanding Class A
Interest Carryover Shortfall from the preceding Distribution Date plus
interest on such outstanding Class A Interest Carryover Shortfall, to the
extent permitted by law, at the Class A Pass-Through Rate from such preceding
Distribution Date through the current Distribution Date, over the amount of
interest that the holders of the Class A Certificates actually received on
such current Distribution Date.
CLASS A INTEREST DISTRIBUTABLE AMOUNT: With respect to any
Distribution Date, the sum of (i) for the initial Distribution Date ______ (__)
days of interest and for any Distribution Date thereafter, thirty (30) days of
interest, in any case calculated on the basis of a 360-day year consisting of
twelve 30-day months, at the Class A Pass-Through Rate on the Class A
Certificate Balance as of the close of business on the last day of the preceding
Collection Period and (ii) any outstanding Class A Interest Carryover Shortfall
with respect to the immediately preceding Distribution Date.
CLASS A PASS-THROUGH RATE: ___% per annum, calculated on the
basis of a 360-day year consisting of twelve 30-day months.
CLASS A PERCENTAGE: __%.
CLASS A PRINCIPAL CARRYOVER SHORTFALL: As of the close of
business on any Distribution Date, the excess of the Class A Principal
Distributable Amount plus any outstanding Class A Principal Carryover Shortfall
from the preceding Distribution Date over the amount of principal that the
holders of the Class A Certificates actually received on such current
Distribution Date.
CLASS A PRINCIPAL DISTRIBUTABLE AMOUNT: With respect to any
Distribution Date, other than the Final Scheduled Distribution Date, without
duplication, the sum of (x) the Class A Percentage of the sum of (i) the
principal portion of all Collected Funds received during or with respect to the
immediately preceding Collection Period (other than Liquidated Receivables and
Repurchased Receivables) including the principal portion of all prepayments,
(ii) the Principal Balance of all Receivables that became Liquidated Receivables
during the related Collection Period (other than Repurchased Receivables), (iii)
the principal portion of the Purchase Amount of all Receivables that became
Repurchased Receivables as of the immediately preceding Accounting Date, and
(iv) the aggregate amount of Cram Down Losses that shall have occurred during
the
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related Collection Period, and (y) Class A Principal Carryover Shortfall. On
the Final Scheduled Distribution Date the Class A Principal Distributable
Amount shall be the Outstanding Class A Certificate Balance.
CLASS B CERTIFICATE: Any one of the Certificates executed by
the Trust and authenticated by the Trustee in substantially the form set
forth in Exhibit B hereto.
CLASS B CERTIFICATE BALANCE: Initially, the Class B Percentage
of the Cut-off Date Principal Balance and, thereafter, the initial Class B
Certificate Balance, reduced by (x) all amounts distributed (pursuant to the
provision set forth in Section 5.5(b) hereof) to Class B Certificateholders and
allocable to principal and (y) on any Distribution Date on which (i) the sum of
the Class A Certificate Balance and the Class B Certificate Balance as of such
Distribution Date and after taking into account all distributions to be made on
such Distribution Date exceeds (ii) the Pool Balance with respect to the
immediately preceding Collection Period, the amount of such excess.
CLASS B CERTIFICATE FACTOR: As of any Distribution Date, a
seven-digit decimal figure equal to the Class B Certificate Balance as of the
close of business on such Distribution Date divided by the initial Class B
Certificate Balance as of the Cut-Off Date.
CLASS B CERTIFICATE INTEREST AMOUNT: With respect to any
Distribution Date, the sum of (i) for the initial Distribution Date ______
(__) days of interest and for any Distribution Date thereafter, thirty (30)
days of interest, in any case calculated on the basis of a 360-day year
consisting of twelve 30-day months, at the pass-through rate appropriate to
the Class B Certificate Balance as of the close of business on the last day
of the preceding Collection Period and (ii) any outstanding Class B
CERTIFICATE Interest Carryover Shortfall with respect to the immediately
preceding Distribution Date.
CLASS B CERTIFICATE INTEREST CARRYOVER SHORTFALL: As of the
close of business on any Distribution Date, the excess of the Class B
CERTIFICATE Interest Amount for such Distribution Date plus any outstanding
Class B CERTIFICATE Interest Carryover Shortfall from the preceding Distribution
Date, over the amount of interest that the holders of the Class B Certificates
actually received on such current Distribution Date.
CLASS B EXCESS INTEREST AMOUNT: With respect to any
Distribution Date, an amount equal to the portion of Available Funds, if any,
remaining after the distribution of amounts required to be distributed on such
Distribution Date pursuant to clauses (i) through (vii) of Section 5.5(a).
CLASS B PERCENTAGE: __%.
CLASS B PRINCIPAL CARRYOVER SHORTFALL: As of the close of
business on any Distribution Date, the excess of the Class B Principal
Distributable Amount plus any outstanding Class B Principal Carryover Shortfall
from the preceding Distribution Date
5
over the amount of principal that the holders of the Class B Certificates
actually received on such current Distribution Date.
CLASS B PRINCIPAL DISTRIBUTABLE AMOUNT: With respect to any
Distribution Date, without duplication, the Class B Percentage of the sum of:
(i) the principal portion of all Collected Funds received during or with
respect to the immediately preceding Collection Period (other than Liquidated
Receivables and Repurchased Receivables) including the principal portion of
all prepayments, (ii) the Principal Balance of all Receivables that became
Liquidated Receivables during the related Collection Period (other than
Repurchased Receivables), (iii) the principal portion of the Purchase Amount
of all Receivables that became Repurchased Receivables as of the immediately
preceding Accounting Date, and (iv) the aggregate amount of Cram Down Losses
that shall have occurred during the related Collection Period.
CLOSING DATE: ____________.
COLLATERAL INSURANCE: Shall have the meaning set forth in
Section 4.4(a).
COLLECTED FUNDS: With respect to any Determination Date, the
amount of funds in the Collection Account representing collections on the
Receivables during or with respect to the related Collection Period, including
all Liquidation Proceeds collected during the related Collection Period (but
excluding any Purchase Amounts).
COLLECTION ACCOUNT: The account designated as the Collection
Account in, and which is established and maintained pursuant to, Section 5.1.
COLLECTION PERIOD: With respect to the first Distribution
Date, the period beginning on the close of business on the Cutoff Date and
ending on the close of business on the last day of the calendar month preceding
such Distribution Date. With respect to each subsequent Distribution Date, the
preceding calendar month. Any amount stated "as of the close of business of the
last day of a Collection Period" shall give effect to the following calculations
as determined as of the end of the day on such last day: (i) all applications of
collections, and (ii) all distributions.
COLLECTION RECORDS: All manually prepared or computer generated
records relating to collection efforts or payment histories with respect to the
Receivables.
COMPENSATING INTEREST: Shall have the meaning set forth in
Section 4.8(b) hereof.
COMPUTER TAPE OR LISTING: The computer tape or listing
generated on behalf of the Seller which provides information relating to the
Receivables and which was used by the Seller in selecting the Receivables
conveyed to the Trust hereunder.
CORPORATE TRUST OFFICE: The principal office of the Trustee at
which at any particular time its corporate trust business shall be administered,
which office at the
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Closing Date is located at [address], Attention: ____________. The telecopy
number for the Corporate Trust Office on the Closing Date is ___________.
CRAM DOWN LOSS: With respect to a Receivable, if a court of
appropriate jurisdiction in an insolvency proceeding shall have issued an order
reducing the amount owed on a Receivable or otherwise modifying or restructuring
the scheduled payments to be made on a Receivable, an amount equal to (i) the
excess of the Principal Balance of such Receivable immediately prior to such
order over the Principal Balance of such Receivable as so reduced and/or (ii) if
such court shall have issued an order reducing the effective rate of interest on
such Receivable, the excess of the Principal Balance of such Receivable
immediately prior to such order over the net present value (using as the
discount rate the higher of the APR on such Receivable or the rate of interest,
if any, specified by the court in such order) of the scheduled payments as so
modified or restructured. A "Cram Down Loss" shall be deemed to have occurred on
the date of issuance of such order.
CUMULATIVE NET LOSSES: The difference between (A) the sum of
(i) the aggregate Principal Balances (plus accrued and unpaid interest, at the
applicable APR) of all Receivables that became Liquidated Receivables through
the Accounting Date of the latest Collection Period, plus (ii) the Principal
Balance of all Receivables that became Repurchased Receivables through the
Accounting Date of the latest Collection Period and that were delinquent with
respect to [5]% or more of a Scheduled Payment more than 30 days through the
Accounting Date of the latest Collection Period, plus (iii) the aggregate of all
Cram Down Losses that occurred through the Accounting Date of the latest
Collection Period, and (B) the Liquidation Proceeds received by the Seller
through the Accounting Date of the latest Collection Period.
CUT-OFF DATE: ____________.
CUT-OFF DATE PRINCIPAL BALANCE: $_______________.
DEALER: A dealer who sold a Financed Vehicle and who
originated and assigned the respective Receivable, directly or indirectly, to
HAFC or one of its subsidiaries under a Dealer Agreement or pursuant to a Dealer
Assignment.
DEALER AGREEMENT: Any agreement between HAFC and a Dealer
relating to the acquisition of Receivables from a Dealer by HAFC.
DEALER ASSIGNMENT: With respect to a Receivable, the executed
assignment executed by a Dealer conveying such Receivable to HAFC.
DEALER UNDERWRITING GUIDE: Either, (i) the underwriting
guidelines used by or on behalf of HAFC or one of its subsidiaries in the
origination and purchase of Receivables as amended from time to time or (ii) the
underwriting guidelines used in the origination of Receivables as reviewed by
HAFC or one of its subsidiaries prior to the purchase of Receivables by HAFC.
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DEFAULT RATIO: With respect to any Determination Date, the
fraction, expressed as a percentage, the numerator of which is equal to 12 times
the sum of the Principal Balances (as of the related Accounting Date) of all
Receivables that became Defaulted Receivables during the related monthly period
or that became Repurchased Receivables as of the related Accounting Date and
that were delinquent with respect to 5% or more of a Scheduled Payment more than
30 days as of such Accounting Date, and the denominator of which is equal to the
Aggregate Principal Balance as of the second preceding Accounting Date.
DEFAULTED RECEIVABLE: Any Receivable with respect to which (i)
5% or more of a Scheduled Payment has become more than 90 days delinquent, (ii)
the Master Servicer has repossessed the Financed Vehicle (and any applicable
redemption period has expired), or (iii) the Master Servicer has determined in
good faith that the payments under the Receivable are not likely to be resumed.
DELINQUENCY RATIO: With respect to any Determination Date, the
fraction, expressed as a percentage, the numerator of which is equal to the sum
of the Principal Balances (as of the related Accounting Date) of all Receivables
that were delinquent with respect to 5% or more of a Scheduled Payment more than
30 days as of the related Accounting Date or that became a Repurchased
Receivable as of the related Accounting Date and that were delinquent with
respect to 5% or more of a Scheduled Payment more than 30 days as of such
Accounting Date and the denominator of which is equal to the Aggregate Principal
Balance as of the second preceding Accounting Date.
DELIVERY: With respect to the Trust Account Property:
(1) the perfection and priority of a security interest in which is
governed by the law of a jurisdiction which has adopted the 1978 Revision to
Article Eight of the UCC:
(a) with respect to bankers' acceptances, commercial paper,
negotiable certificates of deposit and other obligations that
constitute "instruments" within the meaning of Section 9-105(1)(i) of
the UCC (other than certificated securities) and are susceptible of
physical delivery, transfer thereof to the Trustee by physical delivery
to the Trustee, endorsed to, or registered in the name of, the Trustee
or its nominee or endorsed in blank and such additional or alternative
procedures as may hereafter become appropriate to effect the complete
transfer of ownership of any such Collateral to the Trustee free and
clear of any adverse claims, consistent with changes in applicable law
or regulations or the interpretation thereof;
(b) with respect to a "certificated security" (as defined in
Section 8-102(1)(a) of the UCC), transfer thereof:
(i) by physical delivery of such certificated
security to the Trustee, provided that if the certificated
security is in registered form, it
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shall be endorsed to, or registered in the name of, the
Trustee or endorsed in blank;
(ii) by physical delivery of such certificated
security to a "financial intermediary" (as defined in Section
8-313(4) of the UCC) of the Trustee specially endorsed to or
issued in the name of the Trustee;
(iii) by the sending by a financial intermediary, not
a "clearing corporation" (as defined in Section 8-102(3) of
the UCC), of a confirmation of the purchase and the making by
such financial intermediary of entries on its books and
records identifying as belonging to the Trustee of (A) a
specific certificated security in the financial intermediary's
possession, (B) a quantity of securities that constitute or
are part of a fungible bulk of certificated securities in the
financial intermediary's possession, or (C) a quantity of
securities that constitute or are part of a fungible bulk of
securities shown on the account of the financial intermediary
on the books of another financial intermediary; or
(iv) by the making by a clearing corporation of
appropriate entries on its books reducing the appropriate
securities account of the transferor and increasing the
appropriate securities account of the Trustee or a Person
designated by the Trustee by the amount of such certificated
security, provided that in each case: (A) the clearing
corporation identifies such certificated security for the sole
and exclusive account of the Trustee or the Person designated
by the Trustee, (B) such certificated security shall be
subject to the clearing corporation's exclusive control, (C)
such certificated security is in bearer form or endorsed in
blank or registered in the name of the clearing corporation or
custodian bank or a nominee of either of them, (D) custody of
such certificated security shall be maintained by such
clearing corporation or a "custodian bank" (as defined in
Section 8-102(4) of the UCC) or the nominee of either subject
to the control of the clearing corporation and (E) such
certificated security is shown on the account of the
transferor thereof on the books of the clearing corporation
prior to the making of such entries; and such additional or
alternative procedures as may hereafter become appropriate to
effect the complete transfer of ownership of any such
Collateral to the Trustee free and clear of any adverse
claims, consistent with changes in applicable law or
regulations or the interpretation thereof;
(c) with respect to any security issued by the U.S. Treasury,
the Federal Home Loan Mortgage Corporation or by the Federal National
Mortgage Association that is a book-entry security held through the
Federal Reserve System pursuant to Federal book entry regulations, the
following procedures, all in accordance with applicable law, including
applicable Federal regulations and Articles 8 and 9 of the UCC:
book-entry registration of such property to an
9
appropriate book-entry account maintained with a Federal Reserve
Bank by a financial intermediary which is also a "depositary"
pursuant to applicable Federal regulations and issuance by such
financial intermediary of a deposit advice or other written
confirmation of such book-entry registration to the Trustee of the
purchase by the financial intermediary on behalf of the Trustee of
such book-entry security; the making by such financial intermediary
of entries in its books and records identifying such book-entry
security held through the Federal Reserve System pursuant to Federal
book-entry regulations as belonging to the Trustee and indicating
that such financial intermediary holds such book-entry security
solely an agent for the Trustee; and such additional or alternative
procedures as may hereafter become appropriate to effect complete
transfer of ownership of any such Collateral to the Trustee free of
any adverse claims, consistent with changes in applicable law or
regulations or the interpretation thereof;
(d) with respect to any Trust Account Property that is an
"uncertificated security" (as defined in Section 8-102(1)(b) of the
UCC) and that is not governed by clause (c) above, transfer thereof:
(i) by registration of the transfer thereof to the
Trustee, on the books and records of the issuer thereof;
(ii) by the sending of a confirmation by a financial
intermediary of the purchase, and the making by such financial
intermediary of entries on its books and records identifying
as belonging to the Trustee (A) a quantity of securities which
constitute or are part of a fungible bulk of uncertificated
securities registered in the name of the financial
intermediary or (B) a quantity of securities which constitute
or are part of a fungible bulk of securities shown on the
account of the financial intermediary on the books of another
financial intermediary; or
(iii) by the making by a clearing corporation of
appropriate entries on its books reducing the appropriate
account of the transferor and increasing the account of the
Trustee or a person designated by the Trustee by the amount of
such uncertificated security, provided that in each case: (A)
the clearing corporation identifies such uncertificated
security for the sole and exclusive use of the Trustee or the
Person designated by the Trustee, (B) such uncertificated
security is registered in the name of the clearing corporation
or a custodian bank or a nominee of either, and (C) such
uncertificated security is shown on the account of the
transferor on the books of the clearing corporation prior to
the making of such entries; and
(e) in each case of delivery contemplated herein, the Trustee
shall make appropriate notations on its records, and shall cause same
to be made of the
10
records of its nominees, indicating that such securities are held in
trust pursuant to and as provided in this Agreement.
(2) the perfection and priority of a security interest in which is
governed by the law of a jurisdiction which has adopted the 1994 Revision to
Article 8 of the UCC:
(a) with respect to bankers' acceptances, commercial paper,
negotiable certificates of deposit and other obligations that
constitute "instruments" within the meaning of Section 9-105(1)(i) of
the UCC (other than certificated securities) and are susceptible of
physical delivery, transfer thereof to the Trustee by physical delivery
to the Trustee, endorsed to, or registered in the name of, the Trustee
or its nominee or endorsed in blank and such additional or alternative
procedures as may hereafter become appropriate to effect the complete
transfer of ownership of any such Collateral to the Trustee free and
clear of any adverse claims, consistent with changes in applicable law
or regulations or the interpretation thereof;
(b) with respect to a "certificated security" (as defined in
Section 8-102(a)(4) of the UCC), transfer thereof:
(i) by physical delivery of such certificated
security to the Trustee, provided that if the certificated
security is in registered form, it shall be endorsed to, or
registered in the name of, the Trustee or endorsed in blank;
(ii) by physical delivery of such certificated
security in registered form to a "securities
intermediary" (as defined in Section 8-102(a)(14) of
the UCC) acting on behalf of the Trustee if the
certificated security has been specially endorsed to
the Trustee by an effective endorsement.
(c) with respect to any security issued by the U.S. Treasury,
the Federal Home Loan Mortgage Corporation or by the Federal National
Mortgage Association that is a book-entry security held through the
Federal Reserve System pursuant to Federal book entry regulations, the
following procedures, all in accordance with applicable law, including
applicable federal regulations and Articles 8 and 9 of the UCC:
book-entry registration of such property to an appropriate book-entry
account maintained with a Federal Reserve Bank by a securities
intermediary which is also a "depositary" pursuant to applicable
federal regulations and issuance by such securities intermediary of a
deposit advice or other written confirmation of such book-entry
registration to the Trustee of the purchase by the securities
intermediary on behalf of the Trustee of such book-entry security; the
making by such securities intermediary of entries in its books and
records identifying such book-entry security held through the Federal
Reserve System pursuant to Federal book-entry regulations as belonging
to the Trustee and indicating that such securities intermediary holds
such book-entry security solely as agent for the Trustee; and such
additional or alternative procedures as may
11
hereafter become appropriate to effect complete transfer of ownership
of any such Collateral to the Trustee free of any adverse claims,
consistent with changes in applicable law or regulations or the
interpretation thereof;
(d) with respect to any Trust Account Property that is an
"uncertificated security" (as defined in Section 8-102(a)(18) of the
UCC) and that is not governed by clause (c) above, transfer thereof:
(i) (A) by registration to the Trustee as the
registered owner thereof, on the books and records of the
issuer thereof.
(B) by another Person (not a securities
intermediary) either becomes the registered owner of the
uncertificated security on behalf of the Trustee, or having
become the registered owner acknowledges that it holds for the
Trustee.
(ii) the issuer thereof has agreed that it will
comply with instructions originated by the Trustee without
further consent of the registered owner thereof.
(e) in each case of delivery contemplated herein, the Trustee
shall make appropriate notations on its records, and shall cause same
to be made of the records of its nominees, indicating that securities
are held in trust pursuant to and as provided in this Agreement.
(f) with respect to a "security entitlement" (as defined in
Section 8-102(a)(17) of the UCC)
(i) if a securities intermediary (A) indicates by book entry that
a "financial asset" (as defined in Section 8-102(a)(9) of the UCC) has been
credited to be the Trustee's "securities account" (as defined in Section
8-501(a) of the UCC), (B) receives a financial asset (as so defined) from the
Trustee or acquires a financial asset for the Trustee, and in either case,
accepts it for credit to the Trustee's securities account (as so defined), (C)
becomes obligated under other law, regulation or rule to credit a financial
asset to the Trustee's securities account, or (D) has agreed that it will comply
with "entitlement orders" (as defined in Section 8-102(a)(8) of the UCC)
originated by the Trustee without further consent by the "entitlement holder"
(as defined in Section 8-102(a)(7) of the UCC), of a confirmation of the
purchase and the making by such securities intermediary of entries on its books
and records identifying as belonging to the Trustee or (I) specific certificated
security in the securities intermediary's possession, (II) a quantity of
securities that constitute or are part of a fungible bulk of certificated
securities in the securities intermediary's possession, or (III) a quantity of
securities that constitute or are part of a fungible bulk of securities shown on
the account of the securities intermediary on the books of another securities
intermediary.
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DEPOSIT DATE: With respect to any Collection Period, the Business
Day immediately preceding the related Determination Date.
DEPOSITORY: The Depository Trust Company, ▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ and any successor Depository hereafter named.
DEPOSITORY PARTICIPANT: A broker, dealer, bank or other
financial institution or other Person for whom from time to time a Depository
effects book-entry transfers and pledges of securities deposited from time to
time.
DETERMINATION DATE: The earlier of the fifth calendar day (or
if such day is not a Business Day, the next preceding Business Day) or the third
Business Day preceding each Distribution Date.
DISTRIBUTION AMOUNT: With respect to a Distribution Date, shall
equal the Available Funds for such Distribution Date.
DISTRIBUTION DATE: With respect to each Collection Period, the
seventeenth day of the following calendar month, or if such day is not a
Business Day, the immediately following Business Day.
ELECTRONIC LEDGER: The electronic master record of the retail
installment sales contracts or installment loans of the Master Servicer.
ELIGIBILITY CRITERIA: The criteria set forth in the Schedule B.
ELIGIBLE BANK: Any depository institution (which shall
initially be the Trustee) organized under the laws of the United States of
America or any one of the states thereof or the District of Columbia (or any
United States branch or agency of a foreign bank), which is subject to
supervision and examination by federal or state banking authorities and which at
all times (a) has a net worth in excess of $50,000,000 and (b) has either (i) a
rating of P-1 from Moody's and A-1 from Standard & Poor's with respect to
short-term deposit obligations, or such other lower ratings acceptable to the
Rating Agency, or (ii) if such institution has issued long-term unsecured debt
obligations, a rating acceptable to the Rating Agency with respect to long-term
unsecured debt obligations.
ELIGIBLE DEPOSIT ACCOUNT: Either (a) a segregated account with
an Eligible Bank or (b) a segregated trust account with the corporate trust
department of a depository institution with corporate trust powers organized
under the laws of the United States of America or any state thereof or the
District of Columbia (or any United States branch or agency of a foreign bank),
provided that such institution also must have a rating of Baa3 or higher from
Moody's and a rating of BBB- or higher from Standard & Poor's with respect to
long-term deposit obligations, or such other lower ratings acceptable to the
Rating Agency.
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ELIGIBLE INVESTMENTS: Negotiable instruments or securities
represented by instruments in bearer or registered form, or, in the case of
deposits described below, deposit accounts held in the name of the Trustee in
trust for the benefit of the Holders of the Certificates, subject to the
exclusive custody and control of the Trustee and for which the Trustee has sole
signature authority, which evidence:
(a) direct obligations of, or obligations fully guaranteed as to
timely payment by, the United States of America;
(b) demand deposits, time deposits or certificates of deposit
(having original maturities of no more than 365 days) of depositary institutions
or trust companies incorporated under the laws of the United States of America
or any state thereof (or domestic branches of foreign banks) and subject to
supervision and examination by federal or state banking or depositary
institution authorities; PROVIDED, that at the time of the Trust's investment or
contractual commitment to invest therein, the short-term debt rating of such
depository institution or trust company shall be satisfactory to the Rating
Agency;
(c) commercial paper (having original or remaining maturities
of not more than 30 days) having, at the time of the Trust's investment or
contractual commitment to invest therein, a rating satisfactory to the Rating
Agency;
(d) investments in money market funds having, at the time of
the Trust's investment therein, a rating acceptable to the Rating Agency;
(e) demand deposits, time deposits and certificates of deposit
which are fully insured by the FDIC having, at the time of the Trust's
investment therein, a rating satisfactory to the Rating Agency;
(f) bankers' acceptances (having original maturities of no
more than 365 days) issued by a depository institution or trust company referred
to in (b) above;
(g) (x) time deposits (having maturities not later than the
succeeding Distribution Date) other than as referred to in clause (e) above,
with a Person the commercial paper of which has a credit rating satisfactory to
the Rating Agency or (y) notes which are payable on demand issued by Household;
PROVIDED such notes will constitute Eligible Investments only if the commercial
paper of Household has, at the time of the Trust's investment in such notes, a
rating satisfactory to the Rating Agency; or
(h) any other investment of a type or rating that is acceptable
to the Rating Agency.
Any of the foregoing Eligible Investments may be purchased on
or through the Trustee or through any of its Affiliates.
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ELIGIBLE SERVICER: Household Finance Corporation or any Person
which at the time of its appointment as Master Servicer, (i) is servicing a
portfolio of motor vehicle retail installment sales contracts and/or motor
vehicle installment loans, (ii) is legally qualified and has the capacity to
service the Receivables, (iii) has demonstrated the ability professionally and
competently to service a portfolio of motor vehicle retail installment sales
contracts and/or motor vehicle installment loans similar to the Receivables with
reasonable skill and care, (iv) is qualified and entitled to use, pursuant to a
license or other written agreement, and agrees to maintain the confidentiality
of, the software which the Master Servicer uses in connection with performing
its duties and responsibilities under this Agreement or otherwise has available
software which is adequate to perform its duties and responsibilities under this
Agreement and (v) has a net worth of at least $50,000,000.
ELIGIBLE SUB-SERVICER: Household Automotive Finance
Corporation or any wholly owned subsidiary of Household or any Person which at
the time of its appointment as Sub-Servicer, (i) is servicing a portfolio of
motor vehicle retail installment sales contracts and/or motor vehicle
installment loans, (ii) is legally qualified and has the capacity to service the
Receivables, (iii) has demonstrated the ability professionally and competently
to service a portfolio of motor vehicle retail installment sales contracts
and/or motor vehicle installment loans similar to the Receivables with
reasonable skill and care, and (iv) is qualified and entitled to use, pursuant
to a license or other written agreement, and agrees to maintain the
confidentiality of, the software which the Master Servicer uses in connection
with performing its duties and responsibilities under this Agreement or
otherwise has available software which is adequate to perform its duties and
responsibilities under this Agreement.
FINAL SCHEDULED DISTRIBUTION DATE: ___________.
FINANCED VEHICLE: A new or used automobile or light-duty truck or
van securing an Obligor's indebtedness under the respective Receivable.
FRACTIONAL UNDIVIDED INTEREST: The fractional undivided interest
in the Trust that is evidenced by a Certificate.
HAFC: Household Automotive Finance Corporation.
INDEPENDENT ACCOUNTANTS: Shall have the meaning set forth in
Section 4.11(a).
INSOLVENCY EVENT: With respect to a specified Person, (a) the
filing of a petition against such Person or the entry of a decree or order for
relief by a court having jurisdiction in the premises in respect of such Person
or any substantial part of its property in an involuntary case under any
applicable federal or state bankruptcy, insolvency or other similar law now or
hereafter in effect, or appointing a receiver, liquidator, assignee, custodian,
trustee, sequestrator, or similar official for such Person or for any
substantial part of its property, or ordering the winding-up or liquidation of
such
15
Person's affairs, and such petition, decree or order shall remain unstayed
and in effect for a period of 60 consecutive days; or (b) the commencement by
such Person of a voluntary case under any applicable federal or state
bankruptcy, insolvency or other similar law now or hereafter in effect, or the
consent by such Person to the entry of an order for relief in an involuntary
case under any such law, or the consent by such Person to the appointment of or
taking possession by, a receiver, liquidator, assignee, custodian, trustee,
sequestrator, or similar official for such Person or for any substantial part of
its property, or the making by such Person of any general assignment for the
benefit of creditors, or the failure by such Person generally to pay its debts
as such debts become due, or the taking of action by such Person in furtherance
of any of the foregoing.
INSURANCE POLICY: With respect to a Receivable, any insurance
policy benefiting the holder of the Receivable providing loss or physical
damage, credit life, credit disability, theft, mechanical breakdown or similar
coverage with respect to the Financed Vehicle or the Obligor.
INVESTMENT EARNINGS: With respect to any Distribution Date and
Trust Account, the investment earnings (net of investment losses and expenses)
on amounts on deposit in such Trust Account on such Distribution Date.
LIEN: A security interest, lien, charge, pledge, equity, or
encumbrance of any kind, other than tax liens, mechanics' liens and any liens
that attach to the respective Receivable by operation of law as a result of any
act or omission by the related Obligor, provided that, any assignment permitted
hereby and the lien created by this Agreement shall not be deemed to constitute
a Lien.
LIEN CERTIFICATE: With respect to a Financed Vehicle, an
original certificate of title, certificate of lien or other notification issued
by the Registrar of Titles of the applicable state to a secured party which
indicates that the lien of the secured party on the Financed Vehicle is recorded
on the original certificate of title. In any jurisdiction in which the original
certificate of title is required to be given to the Obligor, the term "Lien
Certificate" shall mean only a certificate or notification issued to a secured
party.
LIQUIDATED RECEIVABLE: With respect to any Collection Period,
a Receivable as to which (i) such Receivable has been liquidated by the Master
Servicer through the sale of the Financed Vehicle, (ii) 90 days have elapsed
since the Master Servicer repossessed the Financed Vehicle, (iii) proceeds have
been received in respect of such Receivable which, in the Master Servicer's
reasonable judgment, constitute the final amounts recoverable in respect of such
Receivable or (iv) 10% or more of a Scheduled Payment shall have become 150 or
more days delinquent (or, in the case where the Obligor of such Receivable is
subject to an Insolvency Event, 10% or more of a Scheduled Payment shall have
become 210 or more days delinquent). Any Receivable that becomes a Repurchased
Receivable on or before the related Accounting Date shall not be a Liquidated
Receivable.
16
LIQUIDATION PROCEEDS: With respect to a Liquidated Receivable,
all amounts realized with respect to such Receivable net of (i) reasonable
expenses incurred by the Master Servicer in connection with the collection of
such Receivable and the repossession and disposition of the Financed Vehicle and
(ii) amounts that are required to be refunded to the Obligor on such Receivable;
provided, however, that the Liquidation Proceeds with respect to any Receivable
shall in no event be less than zero.
MASTER SERVICER: Household Finance Corporation, as the servicer
of the Receivables, and each successor Master Servicer pursuant to Section 10.3.
MASTER SERVICER CREDIT FACILITY: The credit facility
maintained by the Master Servicer with a Master Servicer Credit Facility Issuer
pursuant to Section 4.2(d).
MASTER SERVICER CREDIT FACILITY ISSUER: A depository institution
or insurance company that qualifies pursuant to Section 4.2(d).
MASTER SERVICER TERMINATION EVENT: An event specified in Section
10.1.
MASTER SERVICER'S CERTIFICATE: With respect to each
Determination Date, a certificate, completed by and executed on behalf of the
Master Servicer, in accordance with Section 4.9, substantially in the form
attached hereto as Exhibit C.
MONTHLY RECORDS: All records and data maintained by the Master
Servicer with respect to the Receivables, including the following with respect
to each Receivable: the account number; the originating Dealer; Obligor name;
Obligor address; Obligor home phone number; Obligor business phone number;
original Principal Balance; original term; Annual Percentage Rate; current
Principal Balance; current remaining term; origination date; first payment date;
final scheduled payment date; next payment due date; date of most recent
payment; new/used classification; collateral description; days currently
delinquent; number of contract extensions (months) to date; amount of Scheduled
Payment; current Insurance Policy expiration date; and past due late charges.
MOODY'S: ▇▇▇▇▇'▇ Investors Service, Inc., or any successor
thereto.
NET LIQUIDATION PROCEEDS: With respect to a Liquidated
Receivable, all amounts realized with respect to such Receivable net of (i)
reasonable expenses, which expenses shall not include any deficiency balances or
post-disposition recoveries collected, incurred by the Master Servicer in
connection with the collection of such Receivable and the repossession and
disposition of the Financed Vehicle and (ii) amounts that are required to be
refunded to the Obligor on such Receivable; PROVIDED, HOWEVER, that the
Liquidation Proceeds with respect to any Receivable shall in no event be less
than zero; PROVIDED, FURTHER, THAT, so long as amounts cannot be traced to
specific Receivables the Master Servicer shall reasonably estimate, on or prior
to each Accounting Date, the amount of Net Liquidation Proceeds attributable to
each Series Trust Estate.
17
OBLIGOR: The purchaser or the co-purchasers of the Financed
Vehicle and any other Person or Persons who are primarily or secondarily
obligated to make payments under a Receivable.
OFFICERS' CERTIFICATE: A certificate signed by the chairman of
the board, the president, any executive vice president or any vice president,
any treasurer, assistant treasurer, secretary or assistant secretary of the
Seller or the Master Servicer, as appropriate.
OPINION OF COUNSEL: An opinion of counsel who may be counsel to
the Master Servicer or the Seller, acceptable to the Trustee.
OTHER CONVEYED PROPERTY: All property conveyed by the Seller to
the Trust pursuant to this Agreement other than the Receivables.
PAYMENT RECORD: The record maintained by the Master Servicer for
the Trust as provided in Section 4.2(d).
PERSON: Any legal person, including any individual,
corporation, partnership, joint venture, estate, association, joint stock
company, trust (including any beneficiary thereof), unincorporated organization
or government or any agency or political subdivision thereof, or any other
entity.
POOL BALANCE: As of the close of business on the last day of a
Collection Period, the aggregate Principal Balance of the Receivables (excluding
Repurchased Receivables and Liquidated Receivables).
POOL FACTOR: With respect to any Distribution Date, a seven
digit decimal figure equal to, as applicable, the Class A Certificate Balance as
of such Distribution Date (after giving effect to distributions on such date)
divided by the Class A Certificate Balance as of the Closing Date, or, the Class
B Certificate Balance as of such Distribution Date (after giving effect to
distributions on such date) divided by the Class B Certificate Balance as of the
Closing Date.
PREPAYMENT: Any payment in full made by an Obligor of the
principal of a Receivable which is received by the Master Servicer in advance of
the scheduled maturity date for such Receivable.
PRINCIPAL BALANCE: With respect to any Receivable, as of any
date, the Amount Financed minus (i) that portion of all amounts received on or
prior to such date and allocable to principal in accordance with the Actuarial
Method, or the Simple Interest Method, as appropriate, and (ii) any Cram Down
Loss in respect of such Receivable. The "Principal Balance" of a Repurchased
Receivable or Liquidated Receivable shall be deemed to be zero.
18
PURCHASE AMOUNT: With respect to a Receivable, the Principal
Balance and all accrued and unpaid interest on the Receivable as of the date of
purchase.
RATING AGENCIES: Standard & Poor's and Moody's. If such
organization or a successor does not maintain a rating on the Notes, "Rating
Agency" shall be a nationally recognized statistical rating organization or
other comparable Person designated by the Seller, notice of which designation
shall be given to the Indenture Trustee, the Owner Trustee and the Master
Servicer.
RATING AGENCY CONDITION: With respect to any action with
respect to a Series, that each Rating Agency shall have received prior notice
thereof and that each Rating Agency shall have notified the Master Servicer in
writing (who shall then immediately notify the Seller and the Trustee in
writing) that such action will not result in a reduction or withdrawal of the
then current rating of any Class of Certificates.
REALIZED LOSSES: With respect to any Receivable that becomes a
Liquidated Receivable, the excess of the Principal Balance of such Liquidated
Receivable over Net Liquidation Proceeds to the extent allocable to principal.
RECEIVABLE: A retail installment sale contract or promissory
note (and related security agreement) for a new or used automobile or light
truck, vans or mini-vans (and all accessories thereto) that is included in the
Schedule of Receivables, and all rights and obligations under such a contract,
but not including (i) any Liquidated Receivable (other than for purposes of
calculating, as applicable, the Class A Principal Distributable Amount and the
Class B Principal Distributable Amount hereunder), or (ii) any Repurchased
Receivable on or after the Accounting Date immediately preceding the Deposit
Date on which payment of the Purchase Amount is made in connection therewith
pursuant to Section 5.4.
RECEIVABLES PURCHASE AGREEMENT: Shall mean the Receivables
Purchase Agreement between the Seller and HAFC, dated as of _________, pursuant
to which the Seller acquired the Receivables, as such agreement may be amended
or supplemented from time to time.
RECEIVABLE FILE: The documents, electronic entries, instruments
and writings listed in Section 3.2 pertaining to a particular Receivable.
RECORD DATE: With respect to each Distribution Date, the Business
Day immediately preceding such Distribution Date.
REGISTRAR OF TITLES: With respect to any state, the
governmental agency or body responsible for the registration of, and the
issuance of certificates of title relating to, motor vehicles and liens thereon.
REPURCHASE AMOUNT: With respect to a Receivable, the Principal
Balance and all accrued and unpaid interest on the Receivable, after giving
effect to the receipt of
19
any moneys collected (from whatever source) on such Receivable, if any, as of
the date of purchase, provided that, reductions in the Principal Balance
resulting from such Receivable becoming a Liquidated Receivable shall be
disregarded.
REPURCHASE EVENTS: The occurrence of a breach of any of the
Seller's or the Master Servicer's representations and warranties in this
Agreement which requires the repurchase of a Receivable by the Seller or the
Master Servicer pursuant hereto.
REPURCHASED RECEIVABLE: A Receivable purchased by the Master
Servicer pursuant to Section 4.7 or repurchased by the Seller pursuant to
Section 3.5 or the Seller or HAFC pursuant to Section 12.2(a).
REQUIRED DEPOSIT RATING: A rating on short-term unsecured debt
obligations of "[P-1]" by Moody's and at least "[A-1+]" by Standard & Poor's
(or such other rating as may be acceptable to the Rating Agencies) so as to
not affect the rating on the Certificates.
RESPONSIBLE OFFICER: When used with respect to the Trustee,
any officer of the Trustee assigned by the Trustee to administer its
corporate trust affairs relating to the Trust. When used with respect to any
other Person that is not an individual, the President, any Vice-President or
Assistant Vice-President or the Controller of such Person, or any other
officer or employee having similar functions.
SCHEDULE OF RECEIVABLES: The Schedule of Receivables attached
as Schedule A.
SCHEDULE OF REPRESENTATIONS: The criteria set forth in
Schedule B.
SCHEDULED PAYMENT: With respect to any Collection Period for
any Receivable, the amount set forth in such Receivable as required to be
paid by the Obligor in such Collection Period. If after the Closing Date, the
Obligor's obligation under a Receivable with respect to a Collection Period
has been modified so as to differ from the amount specified in such
Receivable as a result of (i) the order of a court in an insolvency
proceeding involving the Obligor, (ii) pursuant to the Soldiers' and Sailors'
Civil Relief Act of 1940 or (iii) modifications or extensions of the
Receivable permitted by Section 4.2(b), the Scheduled Payment with respect to
such Collection Period shall refer to the Obligor's payment obligation with
respect to such Collection Period as so modified.
SELLER: Household Auto Receivables Corporation, a Nevada
corporation, and its successors in interest to the extent permitted hereunder.
SERVICE CONTRACT: With respect to a Financed Vehicle, the
agreement, if any, financed under the related Receivable that provides for the
repair of such Financed Vehicle.
20
SIMPLE INTEREST METHOD: The method of allocating a fixed level
payment on an obligation between principal and interest, pursuant to which
the portion of such payment that is allocated to interest is equal to the
product of the fixed rate of interest on such obligation multiplied by the
period of time (expressed as a fraction of a year, based on the actual number
of days in the calendar month and 365 days in the calendar year) elapsed
since the preceding payment under the obligation was made.
SIMPLE INTEREST RECEIVABLE: A Receivable under which the
portion of the payment allocable to interest and the portion allocable to
principal is determined in accordance with the Simple Interest Method.
STANDARD & POOR'S: Standard & Poor's Ratings Service, or any
successor thereto.
SUB-SERVICER: Any Eligible Sub-Servicer with whom the Master
Servicer has entered into an agreement relating to subservicing the Receivables.
Initially, the Sub-Servicer will be HAFC.
SUPPLEMENTAL SERVICING Fee: With respect to any Collection
Period, (i) all administrative fees, expenses and charges paid by or on behalf
of Obligors, including late fees, prepayment fees and liquidation fees collected
on the Receivables during such Collection Period, and (ii) the net realized
Investment Earnings of funds on deposit in the Collection Account .
TOTAL SERVICING FEE: The sum of the Basic Servicing Fee and the
Supplemental Servicing Fee.
TRUST: Shall have the meaning set forth in Section 2.1.
TRUST ACCOUNT PROPERTY: means the Trust Accounts and all
amounts and investments held from time to time in any Trust Account (whether in
the form of deposit accounts, Physical Property, book-entry securities,
uncertificated securities or otherwise), and all proceeds of the foregoing.
TRUST ACCOUNTS: has the meaning assigned thereto in Section 5.1.
TRUST OFFICER: The chairman or vice-chairman of the board of
directors, the chairman or vice-chairman of the executive committee of the
board of directors, the president, any vice president, assistant
vice-president or managing director, the secretary, any assistant secretary
or any other officer of the Trustee customarily performing functions similar
to those performed by any of the above designated officers and also means,
with respect to a particular corporate trust matter and having direct
responsibility for the Administration of this Agreement.
TRUSTEE: The Person acting as Trustee under this Agreement, its
successors in interest and any successor Trustee under this Agreement.
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TRUSTEE FEE: The fees due to the Trustee as may be set forth in
that certain fee agreement dated as of the date hereof between the Master
Servicer and [Name of Trustee].
UCC: The Uniform Commercial Code as in effect in the relevant
jurisdiction.
WARRANTY RECEIVABLE: With respect to any Collection Period, a
Receivable which the Seller has become obligated to repurchase pursuant to
Section 3.5.
.2 USAGE OF TERMS. With respect to all terms used in this
Agreement, the singular includes the plural and the plural the singular;
words importing any gender include the other genders; references to "writing"
include printing, typing, lithography, and other means of reproducing words
in a visible form; references to agreements and other contractual instruments
include all subsequent amendments thereto or changes therein entered into in
accordance with their respective terms and not prohibited by this Agreement;
references to Persons include their permitted successors and assigns; and the
terms "include" or "including" mean "include without limitation" or
"including without limitation."
.3 CALCULATIONS. All calculations of the amount of interest
accrued on the Certificates and all calculations of the amount of the Basic
Servicing Fee shall be made on the basis of a 360-day year consisting of
twelve 30-day months. All references to the Principal Balance of a Receivable
as of a Accounting Date shall refer to the close of business on such day.
.4 SECTION REFERENCES. All references to Articles, Sections,
paragraphs, subsections, exhibits and schedules shall be to such portions of
this Agreement unless otherwise specified.
.5 ACTION BY OR CONSENT OF CERTIFICATEHOLDERS. Whenever any
provision of this Agreement refers to action to be taken, or consented to, by
Certificateholders, such provision shall be deemed to refer to
Certificateholders of record as of the Accounting Date immediately preceding
the date on which such action is to be taken, or consent given, by
Certificateholders. Solely for the purposes of any action to be taken, or
consented to, by Certificateholders, any Certificate registered in the name
of HFC or any Affiliate thereof shall be deemed not to be outstanding and the
Fractional Undivided Interest evidenced thereby shall not be taken into
account in determining whether the requisite Fractional Undivided Interest
necessary to effect any such action or consent has been obtained; PROVIDED,
HOWEVER, that, solely for the purpose of determining whether the Trustee is
entitled to rely upon any such action or consent, only Certificates which the
Trustee knows to be so owned shall be so disregarded.
.6 NO RECOURSE. No recourse may be taken, directly or
indirectly, under this Agreement or any certificate or other writing
delivered in connection herewith or therewith, against any stockholder,
officer, or director, as such, of the Seller, the Master
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Servicer or the Trustee or of any predecessor or successor of the Seller, the
Master Servicer or the Trustee.
.7 MATERIAL ADVERSE EFFECT. Whenever a determination is to be
made under this Agreement as to whether a given event, action, course of
conduct or set of facts or circumstances could or would have a material
adverse effect on the Trust or the Certificateholders (or any similar or
analogous determination), such determination shall be made without taking
into account the insurance provided by the Policy.
ARTICLE II
CREATION OF TRUST
.1 CREATION OF TRUST. The Seller does hereby create and
establish, pursuant to the laws of the State of New York and this Agreement a
trust (the "Trust"), which for convenience shall be known as "Household
Automotive Trust _____."
ARTICLE III
CONVEYANCE OF RECEIVABLES; ACCEPTANCE BY TRUSTEE;
ORIGINAL ISSUANCE OF CERTIFICATES
.1 CONVEYANCE OF RECEIVABLES. (a) Subject to the terms and
conditions of this Agreement, the Seller, pursuant to the mutually
agreed upon terms contained herein, hereby sells, transfers,
assigns, and otherwise conveys to the Trust, without recourse (but
without limitation of its obligations in this Agreement), all of
the right, title and interest of the Seller in and to:
(ii) each and every Receivables listed on Schedule A
and all monies paid or payable thereon or in respect thereof after
the Closing Date (including amounts due on or before the Cutoff
Date but received by HAFC, the Seller or the Trust on or after
the Cutoff Date);
(iii) the security interests in the related Financed
Vehicles granted by Obligors pursuant to the related Receivables
and any other interest of the Seller in such Financed Vehicles;
(iv) all rights of the Seller against the Dealers
pursuant to Dealer Agreements;
(v) any proceeds and the right to receive proceeds
with respect to such Receivables repurchased by a Dealer, pursuant
to a Dealer Agreement as a result of a breach of representation or
warranty in the related Dealer Agreement;
(vi) all rights under any Service Contracts on the
related Financed Vehicles:
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(vii) any proceeds and the right to receive proceeds
with respect to such Receivables from claims on any physical damage,
credit life or disability insurance policies covering the related
Financed Vehicles or Obligors, including rebates of insurance
premiums relating to the Receivables;
(viii) all items contained in the related Receivables
Files with respect to the Receivables; and any and all other
documents that HAFC keeps on file in accordance with its customary
procedures relating to the related Receivables, the Obligors or the
Financed Vehicles;
(ix) all funds on deposit from time to time in the
Trust Accounts (including all investments and proceeds thereof);
(x) property (including the right to receive future
Net Liquidation Proceeds) that secures a Receivable and that has
been acquired by or on behalf of the Trust pursuant to liquidation
of such Receivable;
(xi) all of the Seller's right, title and interest in
its rights and benefits, but none of its obligations or burdens,
under the Receivables Purchase Agreement including the delivery
requirements, representations and warranties and the cure and
repurchase obligations of HAFC under the Receivables Purchase
Agreement, on or after the Cutoff Date;
(xii) one share of Class SV Preferred Stock of the
Seller; and
(xiii) all present and future claims, demands,
causes and chooses in action in respect of any or all of the
foregoing and all payments on or under and all proceeds of
every kind and nature whatsoever in respect of any or all of the
foregoing, including all proceeds of the conversion, voluntary
or involuntary, into cash or other liquid property, all cash
proceeds, accounts, accounts receivable, notes, drafts,
acceptances, chattel paper, checks, deposit accounts,
insurance proceeds, condemnation awards, rights to payment of
any and every kind and other forms of obligations and
receivables, instruments and other property which at any time
constitute all or part of or are included in the proceeds of
any of the foregoing.
(b) The Seller shall transfer to the Trust the Receivables and
the other property and rights related thereto described in paragraph (a)
above only upon the satisfaction of each of the following conditions on or
prior to the Closing Date:
(i) the Seller shall, to the extent required by
Section 4.2, have deposited in the Collection Account all
collections received after the Cutoff Date in respect of the
Receivables to be transferred;
(ii) as of the Closing Date, (A) the Seller shall not be
insolvent and shall not become insolvent as a result of the
transfer of Receivables on such
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date, (B) the Seller shall not intend to incur or believe that
it shall incur debts that would be beyond its ability to pay as
such debts mature, (C) such transfer shall not have been made
with actual intent to hinder, delay or defraud any Person and
(D) the assets of the Seller shall not constitute unreasonably
small capital to carry out its business as conducted;
(iii) each of the representations and warranties made by
the Seller pursuant Section 3.4 with respect to the Receivables
to be transferred on the Closing Date shall be true and correct
as of the Closing Date, and the Seller shall have performed all
obligations to be performed by it hereunder on or prior to such
Closing Date;
(iv) the Seller shall, at its own expense, on or prior
to the Closing Date indicate in its computer files that the
Receivables identified in the Schedule A have been sold to the
Trust pursuant to this Agreement;
(v) the Seller shall have taken any action necessary
or, if required by the Trustee, advisable to maintain the first
priority perfected security interest of the Trustee in the Trust
Estate;
(vi) no selection procedures adverse to the interests
of the Certficateholders shall have been utilized in selecting
the Receivables; and
(vii) the Seller shall have delivered to the Trustee an
Officers' Certificate confirming the satisfaction of each
condition precedent specified in this paragraph (b).
The Seller covenants that in the event any of the foregoing
conditions precedent are not satisfied with respect to any Receivable on the
date required as specified above, the Seller will immediately repurchase such
Receivable from the Trust, at a price equal to the Repurchase Amount thereof,
in the manner specified in Section 3.5.
It is the intention of the Seller that the transfer and
assignment contemplated by this Agreement shall constitute a sale of the
related Trust Estate from the Seller to the Trust and the beneficial interest
in and title to the related Trust Estate shall not be part of the Seller's
estate in the event of the filing of a bankruptcy petition by or against the
Seller under any bankruptcy law. In the event that, notwithstanding the
intent of the Seller, the transfer and assignment contemplated hereby and
thereby is held not to be a sale, this Agreement shall constitute a grant of
a security interest in the property referred to in this Section 3.1 for the
benefit of the Certificateholders.
.2 CUSTODY OF RECEIVABLE FILES. In connection with the
sale, transfer and assignment of the Receivables, if any, to the Trust
pursuant to this Agreement, the Master Servicer shall act as custodian for
the benefit of the Trustee of the following documents or instruments with
respect to each Receivable:
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(i) The fully executed original of the Receivable (together
with any agreements modifying the Receivable, including, without
limitation, any extension agreements);
(ii) The original credit application, or a copy thereof, of
each Obligor, fully executed by each such Obligor on HAFC's or the
Dealer's customary form, or on a form approved by HAFC, for such
application; and
(iii) The original certificate of title (when received)
and otherwise such documents, if any, that HAFC keeps on file in
accordance with its customary procedures indicating that the
Financed Vehicle is owned by the Obligor and subject to the
interest of (x) HAFC (or any predecessor corporation to HAFC,
or any Affiliate of HAFC or such predecessor corporation) as
first lienholder or secured party (including any Lien
Certificate received by HAFC), or, (y) a Dealer as first
lienholder or secured party or, if such original certificate
of title has not yet been received, a copy of the application
therefor, showing either HAFC (or any predecessor corporation
to HAFC, or any Affiliate of HAFC or such predecessor
corporation), or a Dealer as secured party; and
(iv) Documents evidencing or relating to any Insurance
Policy, to the extent such documents are maintained by or on
behalf of the Seller or HAFC.
(b) Notwithstanding the foregoing, the Master Servicer may
appoint a Sub-Servicer as subcustodian, which subcustodian may hold physical
possession of some or all of the Receivable Files. The Trustee shall have no
liability for the acts or omissions of any such custodian or subcustodian.
.3 CONDITIONS TO ISSUANCE BY TRUST. As conditions to the
Trustee's execution and delivery of the Certificates on the Closing Date, the
Trustee shall have received the following on or before the Closing Date:
(a) The Schedule of Receivables certified by the
President, Controller or Treasurer of the Seller;
(b) The Receivable File relating to each Receivable;
(c) Copies of resolutions of the Board of Directors of the
Seller approving the execution, delivery and performance of this Agreement,
the Basic Documents and the transactions contemplated hereby and thereby,
certified by a Secretary or an Assistant Secretary of the Seller;
(d) Copies of resolutions of the Board of Directors of HFC
approving the execution, delivery and performance of this Agreement, the
Basic Documents and the transactions contemplated hereby and thereby,
certified by a Secretary or an Assistant Secretary of HFC;
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(e) Evidence that all filings (including, without limitation,
UCC filings) required to be made by any Person and actions required to be
taken or performed by any Person in any jurisdiction to give the Trustee a
first priority perfected lien on, or ownership interest in, the Receivables
and the Other Conveyed Property have been made, taken or performed.
.4 REPRESENTATIONS OF SELLER WITH RESPECT TO THE RECEIVABLES.
The Seller represents and warrants as to the related Receivables that the
representations and warranties set forth on the Schedule B are, or will be,
true and correct as of the respective dates specified in such Schedule. The
Trust is deemed to have relied on such representations and warranties in
acquiring the related Receivables and the related Certificateholders shall be
deemed to rely on such representations and warranties in purchasing the
Certificates. Such representations and warranties shall survive the sale,
transfer and assignment of the Trust Estate to the Trust and any pledge
thereof to the Trustee pursuant to this Agreement.
.5 REPURCHASE OF RECEIVABLES UPON BREACH OF WARRANTY. (a) The
Seller, the Master Servicer or any Trust Officer of the Trustee, as the case
may be, shall inform each of the other parties to this Agreement promptly, in
writing, upon the discovery of any breach of the Seller's representations and
warranties made pursuant to Section 3.4; PROVIDED, HOWEVER, that the failure
to give any such notice shall not derogate from any obligations of the Seller
under this Section 3.5. As of the last day of the second (or, if the Seller
so elects, the first, or with respect to any exceptions appearing on any
exception report delivered by the Trustee, the first) month following the
discovery by the Seller or receipt by the Seller of notice of such breach (or
such longer period not in excess of 120 days, as may be agreed upon by the
Trustee and the Master Servicer), unless such breach is cured by such date,
the Seller shall have an obligation to repurchase or cause HAFC to repurchase
any Receivable in which the interests of the Certificateholders are
materially and adversely affected by any such breach. In consideration of and
simultaneously with the repurchase of the Receivables, the Seller shall
remit, or cause HAFC to remit, to the related Collection Account, the
Repurchase Amount in the manner specified in Section 5.4 and the Trustee
shall execute such assignments and other documents reasonably requested by
such person in order to effect such repurchase. The sole remedy of the Trust,
the Trustee and the Certificateholders with respect to a breach of
representations and warranties pursuant to Section 3.4 and the agreement
contained in this Section shall be the repurchase of the Receivables pursuant
to this Section, subject to the conditions contained herein or to enforce the
obligation of HAFC to the Seller to repurchase such Receivables pursuant to
the Receivables Purchase Agreement. The Trustee shall not have a duty to
conduct any affirmative investigation as to the occurrence of any conditions
requiring the repurchase of any Receivable pursuant to this Section.
Pursuant to Section 3.1 of this Agreement, the Seller conveyed
to the Trust all of the Seller's right, title and interest in its rights and
benefits, but none of its obligations or burdens, under the Receivables
Purchase Agreement including the Seller's rights under the Receivables
Purchase Agreement and the delivery requirements,
27
representations and warranties and the cure or repurchase obligations of HAFC
thereunder. The Seller hereby represents and warrants to the Trust that such
assignment is valid, enforceable and effective to permit the Trust to enforce
such obligations of HAFC under the Receivables Purchase Agreement.
.6 [RESERVED].
ARTICLE IV
ADMINISTRATION AND SERVICING OF RECEIVABLES
.1 DUTIES OF THE MASTER SERVICER. The Master Servicer is
hereby authorized to act as agent for the Trust (and also on behalf of the
Trustee and the Certificateholders) and in such capacity shall manage,
service, administer and make collections on the Receivables, and perform the
other actions required by the Master Servicer under this Agreement. The
Master Servicer agrees that its servicing of the Receivables shall be carried
out in accordance with customary and usual procedures of institutions which
service motor vehicles retail installment sales contracts and, to the extent
more exacting, the degree of skill and attention that the Master Servicer
exercises with respect to all comparable motor vehicle receivables that it
services for itself or others. In performing such duties, so long as
Household is the Master Servicer, it shall comply with the standard and
customary procedures for servicing all of its comparable motor vehicle
receivables. The Master Servicer's duties shall include, without limitation,
collection and posting of all payments, responding to inquiries of Obligors
on the Receivables, investigating delinquencies, sending payment statements
to Obligors, reporting any required tax information to Obligors, accounting
for collections and furnishing monthly and annual statements to the Trustee
with respect to distributions, monitoring the status of Insurance Policies
with respect to the Financed Vehicles and performing the other duties
specified herein. The Master Servicer shall also administer and enforce all
rights and responsibilities of the holder of the Receivables provided for in
the Dealer Agreements (and Household shall make efforts to obtain possession
of the Dealer Agreements, to the extent it is necessary to do so), the Dealer
Assignments and the Insurance Policies, to the extent that such Dealer
Agreements, Dealer Assignments and Insurance Policies relate to the
Receivables, the Financed Vehicles or the Obligors. To the extent consistent
with the standards, policies and procedures otherwise required hereby, the
Master Servicer shall follow its customary standards, policies, and
procedures and shall have full power and authority, acting alone, to do any
and all things in connection with such managing, servicing, administration
and collection that it may deem necessary or desirable. Without limiting the
generality of the foregoing, the Master Servicer is hereby authorized and
empowered by the Trust to execute and deliver, on behalf of the Trust, any
and all instruments of satisfaction or cancellation, or of partial or full
release or discharge, and all other comparable instruments, with respect to
the Receivables and with respect to the Financed Vehicles; PROVIDED, HOWEVER,
that notwithstanding the foregoing and subject to Section 4.3 hereof, the
Master Servicer shall not, except pursuant to an order from a court of
competent jurisdiction, release an Obligor from payment of any unpaid amount
under
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any Receivable or waive the right to collect the unpaid balance of any
Receivable from the Obligor. The Master Servicer is hereby authorized to
commence, in its own name or in the name of the Trust, a legal proceeding to
enforce a Receivable pursuant to Section 4.3 or to commence or participate in
any other legal proceeding (including, without limitation, a bankruptcy
proceeding) relating to or involving a Receivable, an Obligor or a Financed
Vehicle. If the Master Servicer commences or participates in such a legal
proceeding in its own name, the Trust shall thereupon be deemed to have
automatically assigned such Receivable to the Master Servicer solely for
purposes of commencing or participating in any such proceeding as a party or
claimant, and the Master Servicer is authorized and empowered by the Trust to
execute and deliver in the Master Servicer's name any notices, demands,
claims, complaints, responses, affidavits or other documents or instruments
in connection with any such proceeding. The Trustee shall furnish the Master
Servicer with any powers of attorney and other documents which the Master
Servicer may reasonably request and which the Master Servicer deems necessary
or appropriate and take any other steps which the Master Servicer may deem
reasonably necessary or appropriate to enable the Master Servicer to carry
out its servicing and administrative duties under this Agreement.
.2 COLLECTION OF RECEIVABLE PAYMENTS; MODIFICATIONS OF
RECEIVABLES. (a) Consistent with the standards, policies and procedures
required by this Agreement, the Master Servicer shall make reasonable efforts
to collect all payments called for under the terms and provisions of the
Receivables as and when the same shall become due, and shall follow such
collection procedures as it follows with respect to all comparable automobile
receivables that it services for itself or others and otherwise act with
respect to the Receivables, the Dealer Agreements, the Dealer Assignments,
the Insurance Policies and the Other Conveyed Property in such manner as
will, in the reasonable judgment of the Master Servicer, maximize the amount
to be received by the Trust with respect thereto. The Master Servicer is
authorized in its discretion to waive any prepayment charge, late payment
charge or any other similar fees that may be collected in the ordinary course
of servicing any Receivable.
(b) The Master Servicer may at any time agree to a
modification or amendment of a Receivable in order to (i) change the
Obligor's regular due date to a date within 30 days of when such due date
occurs or (ii) re-amortize the scheduled payments on the Receivable following
a partial prepayment of principal; PROVIDED, HOWEVER, that no such change
shall extend the maturity date of any Receivable.
(c) The Master Servicer may grant payment extensions on, or
other modifications or amendments to, a Receivable (including those
modifications permitted by Section 4.2(b)) in accordance with its customary
procedures if the Master Servicer believes in good faith that such extension,
modification or amendment is necessary to avoid a default on such Receivable,
will maximize the amount to be received with respect to such Receivable, and
is otherwise in the best interests of the Trust; PROVIDED, HOWEVER:
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(i) The aggregate period of all extensions on a
Receivable shall not exceed six months; PROVIDED, HOWEVER,
that not more than two months can be in any consecutive
twelve month period;
(ii) In no event may a Receivable be extended by
the Master Servicer beyond the Collection Period immediately
preceding the Final Scheduled Distribution Date of the
Certificates; and
(iii) As of any Determination Date the number of
Receivables included in the Trust Estate the term of which have
been extended during the preceding 12-month period shall not
exceed 8% of the number of Receivables in the Trust Estate at
the beginning of the preceding 12-month period.
(d) Except as otherwise provided below, the Master Servicer
shall deposit collections on or with respect to Receivables into the
Collection Account as promptly as possible after the date of processing of
such collections, but in no event later than the second Business Day
following the date of processing. For so long as (i) Household remains the
Master Servicer and maintains a commercial paper rating of not less than [A-1]
by Standard & Poor's and [P-1] by Moody's (or such other rating below [A-1]
or [P-1], as the case may be, which is satisfactory to the Rating Agency) and
for five Business Days following any reduction of any such rating or (ii) a
Master Servicer Credit Facility is maintained in effect by the Master
Servicer acceptable in form and substance to the Rating Agency (such
acceptability to be evidenced in writing by the Rating Agency to the effect
that failure to make the aforementioned deposit on the basis of the
maintenance of the Master Servicer Credit Facility will not adversely affect
the then current rating of the Certificates), issued by a depository
institution or insurance having a rating on its (A) short-term obligations of
at least [P-1] by Moody's and [A-1] by Standard & Poor's and (B) long term
obligations of at least [A2]by Moody's and [A] by Standard & Poor's or other
ratings approved by the Rating Agency, the Master Servicer shall not be
required to make deposits of collections on or with respect to Receivables as
provided in the preceding sentence, but may make one or more deposits of such
collections with respect to a Collection Period into the Collection Account
in immediately available funds not later than 1:00 P.M., Central time, on the
Business Day immediately preceding the related Distribution Date. In the
event that a Master Servicer Credit Facility is maintained, the Master
Servicer shall within two Business Days of the date of processing of
collections on or with respect to Receivables notify the Trustee and the
Master Servicer Credit Facility Issuer in writing of the amounts that would
otherwise be deposited in the Collection Account. The Master Servicer shall
establish and maintain for the Trust a Payment Record in which the payments
on or with respect to the Receivables shall be credited and the Master
Servicer shall notify the Trustee and the Master Servicer Credit Facility
Issuer in writing as promptly as practicable (but in any event prior to the
Determination Date for the following Distribution Date) of the amounts so
credited on or with respect to the Receivables that are to be included in
Collected Funds for the related Distribution Date and of the amounts so
credited which will constitute a part of Collected Funds for the second
following Distribution Date. The
30
Payment Record shall be made available for inspection during normal business
hours of the Master Servicer upon request of the Trustee, or any Master
Servicer Credit Facility Issuer. The Master Servicer shall give written
notice to the Trustee if it is required to deposit funds in accordance with
the first sentence of this paragraph.
.3 REALIZATION UPON RECEIVABLES. (a) Consistent with the
standards, policies and procedures required by this Agreement, the Master
Servicer shall use its best efforts to repossess (or otherwise comparably
convert the ownership of) and liquidate any Financed Vehicle securing a
Receivable with respect to which the Master Servicer has determined that
payments thereunder are not likely to be resumed, as soon as is practicable
after default on such Receivable but in no event later than the date on which
10% or more of a Scheduled Payment has become 150 days delinquent (other than
in the case of Financed Vehicles where neither the Financed Vehicle nor the
Obligor can be physically located by the Master Servicer (using procedures
consistent with the standards, policies and procedures of the Master Servicer
required by this Agreement) and other than in the case of an Obligor who is
subject to a bankruptcy proceeding); PROVIDED, HOWEVER, that the Master
Servicer may elect not to repossess a Financed Vehicle within such time
period if in its good faith judgment it determines that the proceeds
ultimately recoverable with respect to such Receivable would be increased by
forbearance. The Master Servicer is authorized to follow such customary
practices and procedures as it shall deem necessary or advisable, consistent
with the standard of care required by Section 4.1, which practices and
procedures may include reasonable efforts to realize upon any recourse to
Dealers, the sale of the related Financed Vehicle at public or private sale,
the submission of claims under an Insurance Policy and other actions,
including, without limitation, entering into settlements with Obligors, by
the Master Servicer in order to realize upon such a Receivable. The foregoing
is subject to the provision that, in any case in which the Financed Vehicle
shall have suffered damage, the Master Servicer shall not expend funds in
connection with any repair or towards the repossession of such Financed
Vehicle unless it shall determine in its discretion that such repair and/or
repossession shall increase the proceeds of liquidation of the related
Receivable by an amount greater than the amount of such expenses. The Master
Servicer shall be entitled to recover all reasonable expenses incurred by it
in the course of repossessing and liquidating a Financed Vehicle but only
from the liquidation proceeds of the vehicle or under the related Dealer
Agreement. The Master Servicer shall recover such reasonable expenses based
on the information contained in the Master Servicer's Certificate delivered
on the related Determination Date. The Master Servicer shall pay on behalf of
the Trust any personal property taxes assessed on repossessed Financed
Vehicles. The Master Servicer shall be entitled to reimbursement of any such
tax from Net Liquidation Proceeds with respect to such Receivable.
(b) If the Master Servicer elects to commence a legal
proceeding to enforce a Dealer Agreement or Dealer Assignment, the act of
commencement shall be deemed to be an automatic assignment from the Trust to
the Master Servicer of the rights under such Dealer Agreement and Dealer
Assignment for purposes of collection only. If, HOWEVER, in any enforcement
suit or legal proceeding it is held that the Master Servicer
31
may not enforce a Dealer Agreement or Dealer Assignment on the grounds that
it is not a real party in interest or a Person entitled to enforce the Dealer
Agreement or Dealer Assignment, the Trustee, at the Master Servicer's written
direction and expense, or the Seller, at the Seller's expense, shall take
such steps as the Master Servicer deems reasonably necessary to enforce the
Dealer Agreement or Dealer Assignment, including bringing suit in its name or
the name of the Seller or of the Trust and the Trustee for the benefit of the
Certificateholders. All amounts recovered shall be remitted directly by the
Master Servicer as provided in Section 4.2(d).
(c) The Master Servicer agrees that prior to delivering any
repossessed Finance Vehicle for sale to any dealer, it shall make such
filings and effect such notices as are necessary under Section 9-114(1) of
the UCC to preserve the Trust's ownership interest (or security interest, as
the case may be) in such repossessed Financed Vehicle.
.4 INSURANCE. (a) The Master Servicer shall require, in
accordance with its customary servicing policies and procedures, that each
Financed Vehicle be insured by the related Obligor under an insurance policy
covering physical loss and damage to the related Financed Vehicle and shall
monitor the status of such physical loss and damage insurance coverage
thereafter, in accordance with its customary servicing procedures. Each
Receivable requires the Obligor to obtain such physical loss and damage
insurance, naming HAFC and its successors and assigns as loss payee, and with
respect to liability coverage, additional insureds, and permits the holder of
such Receivable to obtain physical loss and damage insurance at the expense
of the Obligor if the Obligor fails to maintain such insurance. If the Master
Servicer shall determine that an Obligor has failed to obtain or maintain a
physical loss and damage Insurance Policy covering the related Financed
Vehicle which satisfies the conditions set forth in the related Eligibility
Criteria (including, without limitation, during the repossession of such
Financed Vehicle) the Master Servicer shall be diligent in carrying out its
customary servicing procedures to enforce the rights of the holder of the
Receivable under the Receivable to require the Obligor to obtain such
physical loss and damage insurance in accordance with its customary servicing
policies and procedures.
(b) The Master Servicer may ▇▇▇ to enforce or collect upon the
Insurance Policies, in its own name, if possible, or as agent of the Trust.
If the Master Servicer elects to commence a legal proceeding to enforce an
Insurance Policy, the act of commencement shall be deemed to be an automatic
assignment of the rights of the Trust under such Insurance Policy to the
Master Servicer for purposes of collection only. If, HOWEVER, in any
enforcement suit or legal proceeding it is held that the Master Servicer may
not enforce an Insurance Policy on the grounds that it is not a real party in
interest or a holder entitled to enforce the Insurance Policy, the Trustee,
at the Master Servicer's written direction and expense, or the Seller, at the
Seller's expense, shall take such steps as the Master Servicer deems
reasonably necessary to enforce such Insurance Policy, including bringing
suit in its name or the name of the Trust and the Trustee for the benefit of
the Certificateholders.
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.5 MAINTENANCE OF SECURITY INTERESTS IN VEHICLES. Consistent
with the policies and procedures required by this Agreement, the Master
Servicer shall take such steps on behalf of the Trust as are necessary to
maintain perfection of the security interest created by each Receivable in
the related Financed Vehicle on behalf of the Trust as the Trustee shall
reasonably request, including, but not limited to, obtaining the execution by
the Obligors and the recording, registering, filing, re-recording, re-filing,
and re-registering of all security agreements, financing statements and
continuation statements as are necessary to maintain the security interest
granted by the Obligors under the respective Receivables. The Trustee, on
behalf of the Trust, hereby authorizes the Master Servicer, and the Master
Servicer agrees, to take any and all steps necessary to re-perfect such
security interest on behalf of the Trust as necessary because of the
relocation of a Financed Vehicle or for any other reason. In the event that
the assignment of a Receivable to the Trust is insufficient, without a
notation on the related Financed Vehicle's certificate of title, or without
fulfilling any additional administrative requirements under the laws of the
state in which the Financed Vehicle is located, to perfect a security
interest in the related Financed Vehicle in favor of the Trust, HAFC hereby
agrees that the designation of any predecessor company to HAFC, or any
Affiliate of any of the foregoing as the secured party on the certificate of
title is in its capacity as agent of the Trust for such limited purpose.
.6 COVENANTS, REPRESENTATIONS, AND WARRANTIES OF MASTER
SERVICER. By its execution and delivery of this Agreement, the Master
Servicer makes the following representations, warranties and covenants on
which the Trustee relies in accepting the Receivables and issuing the
Certificates and on which the Trustee relies in authenticating the
Certificates.
The Master Servicer covenants as follows:
(i) LIENS IN FORCE. The Financed Vehicle securing
each Receivable shall not be released in whole or in part from the
security interest granted by the Receivable, except upon payment in
full of the Receivable or as otherwise contemplated herein;
(ii) NO IMPAIRMENT. The Master Servicer shall do
nothing to impair the rights of the Trust or the Certificateholders
in the Receivables, the Dealer Agreements, the Dealer Assignments,
the Insurance Policies or the Other Conveyed Property;
(iii) NO AMENDMENTS. The Master Servicer shall not
extend or otherwise amend the terms of any Receivable, except in
accordance with Section 4.2;
(iv) RESTRICTIONS ON LIENS. The Master Servicer
shall not (i) create, incur or suffer to exist, or agree to
create, incur or suffer to exist, or consent to cause or permit in
the future (upon the happening of a contingency or otherwise) the
creation, incurrence or existence of any Lien or restriction on
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transferability of the Receivables except for the Lien in favor of
the Trustee for the benefit of the Certificateholders, and the
restrictions on transferability imposed by this Agreement or (ii)
sign or file under the Uniform Commercial Code of any jurisdiction
any financing statement which names HAFC, the Master Servicer or
any Affiliate thereof as a debtor, or sign any security agreement
authorizing any secured party thereunder to file such financing
statement, with respect to the Receivables, except in each case
any such instrument solely securing the rights and preserving the
Lien of the Trustee;
(v) SERVICING OF RECEIVABLES. The Master Servicer
shall service the Receivables as required by the terms of this
Agreement and in material compliance with its standard and
customary procedures for servicing all its other comparable motor
vehicle receivables and in compliance with applicable law; and
(vi) RELOCATION OF OFFICE. The Master Servicer shall
notify the Trustee of any relocation of the Master Servicer's
principal office set forth in Section 13.10 hereof and all
Receivables Files shall be maintained by the Master Servicer in
the United States.
.7 REPURCHASE OF RECEIVABLES UPON BREACH OF COVENANT. Upon
discovery by any of the Master Servicer, the Seller or the Trustee of a
breach of any of the covenants set forth in Sections 4.5 or 4.6, the party
discovering such breach shall give prompt written notice to the others;
PROVIDED, HOWEVER, that the failure to give any such notice shall not affect
any obligation of the Master Servicer under this Section 4.7. As of the
second Accounting Date following its discovery or receipt of notice of any
breach of any covenant set forth in Sections 4.5 or 4.6 which materially and
adversely affects the interests of the Certificateholders in any Receivable
(including any Liquidated Receivable) (or, at the Master Servicer's election,
the first Accounting Date so following) or the related Financed Vehicle, the
Master Servicer shall, unless such breach shall have been cured in all
material respects, repurchase from the Trust the Receivable affected by such
breach and, on the date specified in Section 5.4, the Master Servicer shall
pay the related Repurchase Amount and deposit such Repurchase Amounts into
the Collection Account in accordance with Section 5.3 hereof. It is
understood and agreed that the obligation of the Master Servicer to
repurchase any Receivable (including any Liquidated Receivable) with respect
to which such a breach has occurred and is continuing shall, if such
obligation is fulfilled, constitute the sole remedy against the Master
Servicer for such breach.
.8 TOTAL SERVICING FEE; PAYMENT OF CERTAIN EXPENSES BY MASTER
SERVICER. As compensation for its activities, the Master Servicer shall be
entitled to retain out of amounts otherwise to be deposited in the Collection
Account with respect to a Collection Period, the Basic Servicing Fee and any
Supplemental Servicing Fee for such Collection Period. The Master Servicer
shall be required to pay all expenses incurred by it in connection with its
activities under this Agreement (including taxes imposed on the Master
Servicer, expenses incurred in connection with distributions and reports made
by
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the Master Servicer to Certificateholders and all fees and expenses of the
Trustee), except taxes levied or assessed against the Trust, and claims
against the Trust in respect of indemnification, which taxes and claims in
respect of indemnification against the Trust are expressly stated to be for
the account of Household. The Master Servicer shall be liable for the fees,
charges and expenses of the Trustee, any Sub-Servicer and their respective
agents.
(b) On or prior to each Determination Date, the Master
Servicer shall deposit in the Collection Account with respect to any
Prepayment received on a Receivable during the related Collection Period, out
of its own funds without any right of reimbursement therefor, an amount equal
to the difference between (x) 30 days' interest at an interest rate equal to
the weighted average of the Class A Pass-Through Rate and the Class B
Pass-Through Rate on the Principal Balance of such Receivable as of the first
day of the related Collection Period and (y) the interest actually paid by
the Obligor with respect to the Receivable during such Collection Period (any
such amount paid by the Master Servicer, "Compensating Interest"). The Master
Servicer shall in no event be required to pay Compensating Interest with
respect to any Collection Period in an amount in excess of the aggregate
Servicing Fee received by the Master Servicer with respect to all Receivables
for the related Collection Period.
.9 MASTER SERVICER'S CERTIFICATE. No later than 10:00 a.m.
Central time on each Determination Date, the Master Servicer shall deliver,
or cause to be delivered, to the Trustee, a Master Servicer's Certificate
executed by a responsible officer or agent of the Master Servicer containing
among other things, all information necessary to enable the Trustee to make
the allocations required by Section 5.5 and the distributions with respect to
such Distribution Date. Upon request, the Master Servicer will also provide a
listing of all Warranty Receivables and Covenant Receivables repurchased as
of the related Determination Date, identifying the Receivables so purchased.
Such list will identify Receivables repurchased by the Master Servicer or by
the Seller on the related Determination Date and each Receivable which became
a Liquidated Receivable or which was paid in full during the related
Collection Period by account number.
.10 ANNUAL STATEMENT AS TO COMPLIANCE, NOTICE OF MASTER
SERVICER TERMINATION EVENT. (a) The Master Servicer shall deliver or cause to
be delivered to the Trustee on or before April 30 (or 120 days after the end
of the Master Servicer's fiscal year, if other than December 31) of each
year, beginning on April 30, ____, an Officer's Certificate signed by any
responsible officer of the Master Servicer, or such Eligible Sub-Servicer who
is performing the servicing duties of the Master Servicer, dated as of
December 31 (or other applicable date) of the immediately preceding year,
stating that (i) a review of the activities of the Master Servicer, or such
Eligible Sub-Servicer who is performing the servicing duties of the Master
Servicer, during the preceding 12-month period and of its performance under
this Agreement has been made under such officer's supervision, and (ii) to
such officer's knowledge, based on such review, the Master Servicer, or such
Eligible Sub-Servicer who is performing the servicing duties of the Master
Servicer, has in all material respects fulfilled all its obligations under
this
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Agreement throughout such period, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to
such officer and the nature and status thereof.
(b) The Master Servicer, or such Eligible Sub-Servicer who is
performing the servicing duties of the Master Servicer, shall deliver to the
Trustee and, in the event that such notice is delivered by the Sub-Servicer,
to the Master Servicer, promptly after having obtained knowledge thereof, but
in no event later than two (2) Business Days thereafter, written notice in an
Officer's Certificate of any event which with the giving of notice or lapse
of time, or both, would become a Master Servicer Termination Event under
Section 10.1(a). The Seller or the Master Servicer shall deliver to the
Trustee, the Master Servicer or the Seller (as applicable) promptly after
having obtained knowledge thereof, but in no event later than two (2)
Business Days thereafter, written notice in an Officer's Certificate of any
event which with the giving of notice or lapse of time, or both, would become
a Master Servicer Termination Event under any other clause of Section 10.1.
.11 ANNUAL INDEPENDENT ACCOUNTANTS' REPORT. (a) The Master
Servicer shall cause a firm of nationally recognized independent certified
public accountants (the "Independent Accountants"), who may also render other
services to the Master Servicer or to the Seller, to deliver to the Trustee
on or before April 30 (or 120 days after the end of the Master Servicer's
fiscal year, if other than December 31) of each year, beginning on April 30,
____, with respect to the twelve months ended the immediately preceding
December 31 (or other applicable date), a report to the effect that they have
examined certain documents and records relating to the servicing of
Receivables under this Agreement, compared the information contained in the
Master Servicer's Certificates delivered pursuant to Section 4.9 during the
period covered by such report with such documents and records and that, on
the basis of such examination, such accountants are of the opinion that the
servicing has been conducted in compliance with the terms and conditions as
set forth in Articles IV and V of this Agreement, except for such exceptions
as they believe to be immaterial and such other exceptions as shall be set
forth in such statement. Such report shall acknowledge that the Trustee shall
be a "non-participating party" with respect to such report, or words to
similar effect. The Trustee shall have no duty to make any independent
inquiry or investigation as to, and shall have no obligation or liability in
respect of, the sufficiency of such procedures.
(b) On or before April 30 of each calendar year, beginning
with April 30, ____, the Master Servicer shall cause a firm of nationally
recognized independent public accountants (who may also render other services
to the Master Servicer or Seller) to furnish a report to the Trustee, the
Master Servicer and each Rating Agency to the effect that they have compared
the mathematical calculations of each amount set forth in the Master
Servicer's Certificates delivered pursuant to Section 4.9 during the period
covered by such report with the Master Servicer's computer reports which were
the source of such amounts and that on the basis of such comparison, such
accountants are of the opinion that such amounts are in agreement, except for
such exceptions as they believe to
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be immaterial and such other exceptions as shall be set forth in such
statement. Such report shall acknowledge that the Trustee shall be a
"non-participating party" with respect to such report, or words to similar
effect. The Trustee shall have no duty to make any independent inquiry or
investigation as to, and shall have no obligation or liability in respect of,
the sufficiency of such procedures.
.12 ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING
RECEIVABLES. The Master Servicer shall provide to representatives of the
Trustee reasonable access to the documentation regarding the Receivables. In
each case, such access shall be afforded without charge but only upon
reasonable request and during normal business hours. Nothing in this Section
shall derogate from the obligation of the Master Servicer to observe any
applicable law prohibiting disclosure of information regarding the Obligors,
and the failure of the Master Servicer to provide access as provided in this
Section as a result of such obligation shall not constitute a breach of this
Section.
.13 FIDELITY BOND AND ERRORS AND OMISSIONS POLICY. The Master
Servicer or such Eligible Sub-Servicer that is performing the servicing
duties of the Master Servicer, has obtained, and shall continue to maintain
in full force and effect, a Fidelity Bond and Errors and Omissions Policy of
a type and in such amount as is customary for servicers engaged in the
business of servicing automobile receivables.
.14 YEAR 2000 COMPLIANCE. The Master Servicer covenants that
its computer and other systems used in servicing the Receivables have or will
be modified to operate in a manner such that on and after January 1, 2000 (i)
the Master Servicer can service the Receivables in accordance with the terms
of this Agreement and (ii) the Master Servicer can operate its business in
the same manner as it is operating on the date hereof.
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ARTICLE V
DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS
.1 ESTABLISHMENT OF TRUST ACCOUNTS. (a) The Master Servicer,
on behalf of the Certificateholders shall establish and maintain in the name
of the Trustee, a trust account which is an Eligible Deposit Account (the
"COLLECTION ACCOUNT"), bearing a designation clearly indicating that the
funds deposited therein are held for the benefit of the Certificateholders
with respect to Household Automotive Trust ___ and holders of the
Certificates. The Collection Account shall initially be established with the
Trustee. The Trustee shall possess all right, title and interest in all funds
on deposit from time to time in, and shall have sole dominion and control
with respect to, the Collection Account and in all proceeds thereof for the
benefit of the Certificateholders. Except as expressly provided in this
Agreement, the Master Servicer agrees that it shall have no right of setoff
or banker's lien against, and no right to otherwise deduct from, any funds
held in the Collection Account for any amount owed to it by the Trust.
(b) Funds on deposit in the Collection Account and any Trust
Accounts (collectively, the "Trust Accounts") shall be invested by the
Trustee (or any custodian with respect to funds on deposit in any such
account) in Eligible Investments selected in writing by the Master Servicer
(pursuant to standing instructions or otherwise) which absent any instruction
shall be the investments specified in clause (d) of the definition of
Eligible Investments set forth herein. Funds on deposit in any Trust Account
shall be invested in Eligible Investments that will mature so that such funds
will be available at the close of business on the Business Day immediately
preceding the Distribution Date. Funds deposited in a Trust Account on the
day immediately preceding a Distribution Date and representing the proceeds
of Eligible Investments are not required to be invested overnight. All
Eligible Investments will be held to maturity.
(c) All investment earnings of monies deposited in the Trust
Accounts shall be deposited (or caused to be deposited) by the Trustee in the
Collection Account or the related Collection Account no later than the close
of business on the Business Day immediately preceding the related
Distribution Date, and any loss resulting from such investments shall be
charged to the Collection Account. The Master Servicer will not direct the
Trustee to make any investment of any funds held in any of the Trust Accounts
unless the security interest granted and perfected in such account will
continue to be perfected in such investment, in either case without any
further action by any Person, and, in connection with any direction to the
Trustee to make any such investment, if necessary, the Master Servicer shall
deliver to the Trustee an Opinion of Counsel to such effect.
(d) The Trustee shall not in any way be held liable by reason
of any insufficiency in any of the Trust Accounts resulting from any loss on
any Eligible Investment included therein except for losses attributable to
the Trustee's negligence or bad faith or its failure to make payments on such
Eligible Investments issued by the Trustee in its commercial capacity as
principal obligor and not as Trustee in accordance with their terms.
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(e) If (i) the Master Servicer shall have failed to give
investment directions for any funds on deposit in the Trust Accounts to the
Trustee by 2:00 p.m. Eastern Time (or such other time as may be agreed by the
Trustee) on any Business Day; or (ii) an Event of Default shall have occurred
and be continuing with respect to the Certificates, the Trustee shall, to the
fullest extent practicable, invest and reinvest funds in the Trust Accounts
in one or more Eligible Investments in accordance with paragraph (b) above;
PROVIDED that, if following an Event of Default amounts are to be distributed
to Certificateholders other than on a Distribution Date, investments shall
mature on the Business Day preceding any such proposed date of distribution.
The Trustee shall possess all right, title and interest in all funds on deposit
from time to time in the Trust Accounts and in all proceeds thereof (excluding
all Investment Earnings on the Collection Account) and all such funds,
investments, proceeds and income shall be part of the Trust Estate. Except as
otherwise provided herein, the Trust Accounts shall be under the sole dominion
and control of the Trustee for the benefit of the related Certificateholders.
If, at any time, any of the Trust Accounts ceases to be an Eligible Deposit
Account, the Trustee (or the Master Servicer on its behalf) shall within five
Business Days (or such longer period as to which each Rating Agency may consent)
establish a new Trust Account as an Eligible Deposit Account and shall transfer
any cash and/or any investments to such new Trust Account. In connection with
the foregoing, the Master Servicer agrees that, in the event that any of the
Trust Accounts are not accounts with the Trustee, the Master Servicer shall
notify the Trustee in writing promptly upon any of such Trust Accounts ceasing
to be an Eligible Deposit Account. Pursuant to the authority granted to the
Master Servicer under this Agreement, the Master Servicer shall have the
revocable power, granted by the Trustee to make withdrawals and payments from
the Collection Account and to instruct the Trustee to make withdrawals and
payments from the Collection Account for the purposes of carrying out the Master
Servicer's duties hereunder. The Master Servicer may net against any deposits
required to be made to the Collection Account on the Business Day before any
Determination Date amounts that the Seller, as Certificateholder or otherwise,
is entitled to receive as distributions directly or indirectly from the
Collection Account on such Determination Date.
.2 CERTAIN REIMBURSEMENTS TO THE MASTER SERVICER. The Master
Servicer shall be entitled to withhold from amounts otherwise required to be
remitted to the Collection Account with respect to a Collection Period an
amount in respect of funds deposited with respect to prior Collection Periods
in the Collection Account but later determined by the Master Servicer to have
resulted from mistaken deposits or postings or checks returned for
insufficient funds; PROVIDED, THAT, such withholding may be made only
following certification by the Master Servicer of such amounts and the
provision of such information to the Trustee, as may be necessary in the
opinion of the Trustee to verify the accuracy of such certification.
.3 APPLICATION OF COLLECTIONS. All collections for the
Collection Period shall be applied by the Master Servicer as follows:
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(a) With respect to each Simple Interest Receivable (other
than a Repurchased Receivable), payments by or on behalf of the Obligor,
(other than Supplemental Servicing Fees with respect to such Receivable, to
the extent collected) shall be applied to interest and principal in
accordance with the Simple Interest Method. With respect to each Actuarial
Receivable, (other than a Repurchased Receivable), payments by or on behalf
of the Obligor, (other than Supplemental Servicing Fees with respect to such
Receivable, to the extent collected) shall be applied to interest and
principal in accordance with the Actuarial Method.
.4 ADDITIONAL DEPOSITS. HAFC and the Seller, as applicable,
shall deposit or cause to be deposited in the Collection Account for
distribution on the Business Day preceding the Determination Date following
the date on which such obligations are due the aggregate Repurchase Amount
with respect to Repurchased Receivables.
.5 DISTRIBUTIONS. (a) From the Collection Account, on each
Distribution Date, the Trustee shall (based solely on the information
contained in the Master Servicer's Certificate delivered with respect to the
related Determination Date) distribute the following amounts to the holders
of record on the Record Date and in the following order of priority:
(i) first, from the Distribution Amount, to the
Master Servicer, the Basic Servicing Fee for the related Collection
Period, any Supplemental Servicing Fees for the related Collection
Period, and any amounts specified in Section 5.2, to the extent the
Master Servicer has not reimbursed itself in respect of such
amounts pursuant to Section 5.6;
(ii) second, from the Distribution Amount, to the
Trustee or Backup Servicer, any accrued and unpaid fees (in each
case, to the extent such Person has not previously received such
amount from the Master Servicer or HFC);
(iii) third, from the Amount Available to the Class A
Certificateholders, the Class A Interest Distributable Amount for
such Distribution Date;
(iv) fourth, from the Amount Available to the Class
A Certificateholders, the Class A Principal Distributable Amount
for such Distribution Date;
(v) fifth, from Available Funds, to the Class B
Certificateholders, the Class B Certificate Interest Distributable
Amount for such Distribution Date;
(vi) sixth, from Available Funds, to the Class B
Certificateholders, the Class B Principal Distributable Amount for
such Distribution Date; and
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(vii) seventh, from Available Funds, to the Class B
Certificateholders, the Class B Excess Interest Amount for such
Distribution Date.
(b) Subject to Section 12.1 respecting the final payment upon
retirement of each Certificate, and provided that the Trustee has received
the applicable Master Servicer's Certificate, on each Distribution Date the
Trustee shall distribute to each Certificateholder of record on the preceding
Accounting Date either (i) by wire transfer, in immediately available funds
to the account of such holder at a bank or other entity having appropriate
facilities therefor, if such Certificateholder holds Certificates
representing at least $5 million in Class A Certificate Balance or Class B
Certificate Balance as of the Cut-off Date, and if such Certificateholder
shall have provided to the Trustee appropriate instructions not later than 15
days prior to such Distribution Date, or (ii) by check mailed to such
Certificateholder at the address of such Holder appearing in the Certificate
Register, such Holder's Fractional Undivided Interest of either the Class A
Distributable Amount or the Class B Distributable Amount, as applicable, to
the extent funds therefore are distributed under Section 5.5(a).
.6 NET DEPOSITS. The Master Servicer may make the remittances
to be made by it pursuant to Section 5.2 net of amounts (which amounts may be
netted prior to any such remittance for a Collection Period) to be
distributed to it pursuant to Sections 4.8 and 5.2 and (subject to payment by
the Master Servicer of amounts otherwise payable pursuant to Sections 4.8,
5.2, 5.5(a)(i) and 5.5(a)(ii), for so long as no Master Servicer Termination
Event has occurred and is continuing; PROVIDED, HOWEVER, that the Master
Servicer shall account for all of such amounts in the related Master
Servicer's Certificate as if such amounts were deposited and distributed
separately; and, PROVIDED, FURTHER, that if an error is made by the Master
Servicer in calculating the amount to be deposited or retained by it, with
the result that an amount less than required is deposited in the Collection
Account, the Master Servicer shall make a payment of the deficiency to the
Collection Account, immediately upon becoming aware, or receiving notice from
the Trustee, of such error.
.7 STATEMENTS TO CERTIFICATEHOLDERS. (a) On each Distribution
Date, the Trustee shall include with each distribution to each
Certificateholder, a statement (which statement shall also be provided to
each Rating Agency) based on information in the Master Servicer's Certificate
delivered on the related Determination Date pursuant to Section 4.9, setting
forth for the Collection Period relating to such Distribution Date the
following information:
(i) in the case of the Class A and Class B
Certificateholders, the amount of such distribution allocable to
principal;
(ii) in the case of the Class A and Class B
Certificateholders, the amount of such distribution allocable to
interest;
41
(iii) the Class A Certificate Balance and the Class B
Certificate Balance, as applicable, (after giving effect to
distributions made on such Distribution Date);
(iv) the amount of fees paid by the Trust with
respect to such Collection Period;
(v) the amount of the Class A Interest Carryover
Shortfall, Class A Principal Carryover Shortfall, Class B Interest
Carryover Shortfall and Class B Principal Carryover Shortfall, if
any, on such Distribution Date and the change in such amounts from
those of the prior Distribution Date;
(vi) the Class A Certificate Factor and the Class B
Certificate Factor as of such Distribution Date;
(vii) the Delinquency Ratio, Average Delinquency
Ratio, Default Ratio, average Default Ratio, Net Loss Ratio and
average Net Loss Ratio for such Determination Date;
(viii) the Pool Factor (after giving effect to
distributions made on such Distribution Date); and
(ix) Cumulative Net Losses.
Each amount set forth pursuant to subclauses (i) (such amounts broken down by
Class of Certificate), (ii) (such amounts broken down by Class of Certificate),
(iv) and (vi) above shall be expressed as a dollar amount per $1,000 of original
principal balance of a Certificate of the related Class.
(b) Within the prescribed period of time for tax reporting
purposes after the end of each calendar year during the term of this
Agreement, the Trustee shall mail, to each Person who at any time during such
calendar year shall have been a Holder of a Certificate, a statement
containing the sum of the amounts set forth in clauses (i), (ii), and (v)
(separately indicating amounts in respect of the Class A Certificates and the
Class B Certificates in the case of (i) and (ii)) and such other information,
requested in writing by the Master Servicer, if any, as the Master Servicer
determines is necessary to permit the Certificateholder to ascertain its
share of the gross income and deductions of the Trust (exclusive of the
Supplemental Servicing Fee), for such calendar year or, in the event such
Person shall have been a Holder of a Certificate during a portion of such
calendar year, for the applicable portion of such year, for the purposes of
such Certificateholder's preparation of federal income tax returns.
ARTICLE VI
REPRESENTATIONS OF the SELLER
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.1 REPRESENTATIONS OF SELLER. The Seller makes the following
representations on which the Trust is deemed to have relied in acquiring the
Receivables and on which the Certificateholders are deemed to have relied on
in the purchasing of Certificates. The representations speak as of the
execution and delivery of this Agreement and the Closing Date and shall
survive each sale of the Receivables to the Trust and each pledge thereof to
the Trustee pursuant to this Agreement.
(a) SCHEDULE OF REPRESENTATIONS. The representations and
warranties set forth on Schedule B are true and correct.
(b) ORGANIZATION AND GOOD STANDING. The Seller has been duly
organized and is validly existing as a corporation in good standing under the
laws of the State of Nevada, with power and authority to own its properties and
to conduct its business as such properties are currently owned and such business
is currently conducted, and had at all relevant times, and now has, power,
authority and legal right to acquire, own and sell the Trust Estate transferred
to the Trust.
(c) DUE QUALIFICATION. The Seller is duly qualified to do
business as a foreign corporation in good standing and has obtained all
necessary licenses and approvals in all jurisdictions where the failure to do
so would materially and adversely affect Seller's ability to transfer the
Receivables and the Other Conveyed Property to the Trust pursuant to this
Agreement, or the validity or enforceability of the Trust Estate or to
perform Seller's obligations hereunder and under the Basic Documents to which
the Seller is a party.
(d) POWER AND AUTHORITY. The Seller has the power and
authority to execute and deliver this Agreement and its Basic Documents and
to carry out its terms and their terms, respectively; the Seller has full
power and authority to sell and assign each Trust Estate to be sold and
assigned to and deposited with the Trust by it and has duly authorized such
sale and assignment to the Trust by all necessary corporate action; and the
execution, delivery and performance of this Agreement and the Basic Documents
to which the Seller is a party have been duly authorized by the Seller by all
necessary corporate action.
(e) VALID SALE, BINDING OBLIGATIONS. This Agreement effects a
valid sale, transfer and assignment of the related Trust Estate, enforceable
against the Seller and creditors of and purchasers from the Seller; and this
Agreement and the Basic Documents to which the Seller is a party, when duly
executed and delivered, shall constitute legal, valid and binding obligations
of the Seller enforceable in accordance with their respective terms, except
as enforceability may be limited by bankruptcy, insolvency, reorganization or
other similar laws affecting the enforcement of creditors' rights generally
and by equitable limitations on the availability of specific remedies,
regardless of whether such enforceability is considered in a proceeding in
equity or at law.
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(f) NO VIOLATION. The consummation of the transactions
contemplated by this Agreement and the Basic Documents and the fulfillment of
the terms of this Agreement and the Basic Documents shall not conflict with,
result in any breach of any of the terms and provisions of or constitute
(with or without notice, lapse of time or both) a material default under the
certificate of incorporation or by-laws of the Seller, or any indenture,
agreement, mortgage, deed of trust or other instrument to which the Seller is
a party or by which it is bound, or result in the creation or imposition of
any Lien upon any of its properties pursuant to the terms of any such
indenture, agreement, mortgage, deed of trust or other instrument, other than
this Agreement, or violate any law, order, rule or regulation applicable to
the Seller of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Seller or any of its properties.
(g) NO PROCEEDINGS. There are no proceedings or investigations
pending or, to the Seller's knowledge, threatened against the Seller, before
any court, regulatory body, administrative agency or other tribunal or
governmental instrumentality having jurisdiction over the Seller or its
properties (A) asserting the invalidity of this Agreement or any of the Basic
Documents, (B) seeking to prevent the issuance of any Securities or the
consummation of any of the transactions contemplated by this Agreement or any
of the Basic Documents, (C) seeking any determination or ruling that might
materially and adversely affect the performance by the Seller of its
obligations under, or the validity or enforceability of, this Agreement or
any of the Basic Documents, or (D) seeking to adversely affect the federal
income tax or other federal, state or local tax attributes of the Securities.
(h) APPROVALS. All approvals, authorizations, consents, orders
or other actions of any person, corporation or other organization, or of any
court, governmental agency or body or official, required in connection with
the execution and delivery by the Seller of this Agreement and the
consummation of the transactions contemplated hereby have been or will be
taken or obtained on or prior to the Closing.
(i) NO CONSENTS. The Seller is not required to obtain the
consent of any other party or any consent, license, approval or
authorization, or registration or declaration with, any governmental
authority, bureau or agency in connection with the execution, delivery,
performance, validity or enforceability of this Agreement which has not
already been obtained.
(j) CHIEF EXECUTIVE OFFICE. The chief executive office of the
Seller is at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇.
.2 CORPORATE EXISTENCE. (a) During the term of this Agreement,
the Seller will keep in full force and effect its existence, rights and
franchises as a corporation under the laws of the jurisdiction of its
incorporation and will obtain and preserve its qualification to do business
in each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of this Agreement, the Basic
44
Documents and each other instrument or agreement necessary or appropriate to
the proper administration of this Agreement and the transactions contemplated
hereby.
(b) During the term of this Agreement, the Seller shall
observe the applicable legal requirements for the recognition of the Seller
as a legal entity separate and apart from its Affiliates, including as
follows:
(i) the Seller shall not engage in any other
business other than as provided in Article THIRD of Seller's
Articles of Incorporation;
(ii) the Seller shall maintain corporate records and
books of account separate from those of its Affiliates;
(iii) except as otherwise provided in this Agreement,
the Seller shall not commingle its assets and funds with those of
its Affiliates;
(iv) the Seller shall hold such appropriate meetings
of its Board of Directors as are necessary to authorize all the
Seller's corporate actions required by law to be authorized by the
Board of Directors, shall keep minutes of such meetings and of
meetings of its stockholder(s) and observe all other customary
corporate formalities (and any successor Seller not a corporation
shall observe similar procedures in accordance with its governing
documents and applicable law);
(v) the Seller shall at all times hold itself out
to the public under the Seller's own name as a legal entity
separate and distinct from its Affiliates;
(vi) the Seller shall not become involved in the
day-to-day management of any other Person;
(vii) the Seller shall not guarantee any other
Person's obligations or advance funds to any other Person for the
payment of expenses or otherwise;
(viii) the Seller shall not act as an agent of any
other Person in any capacity;
(ix) the Seller shall not dissolve or liquidate, in
whole or in part; and
(x) all transactions and dealings between the
Seller and its Affiliates will be conducted on an arm's-length
basis.
(c) During the term of this Agreement, the Seller will comply
with the limitations on its business and activities, as set forth in its
Certificates of Incorporation, and will not incur indebtedness other than
pursuant to or as expressly permitted by the Basic Documents.
45
ARTICLE VII
THE CERTIFICATES
.1 THE CERTIFICATES. The Class A Certificates and the Class B
Certificates shall be issued in denominations of $1,000 initial principal
amount and integral multiples thereof, except that one Class A Certificate
and one Class B Certificate shall be issued in a denomination that includes
any residual amount. The Certificates shall be executed on behalf of the
Trustee by manual or facsimile signature of any Responsible Officer of the
Trustee having such authority under the Trustee's seal imprinted or otherwise
affixed thereon and attested on behalf of the Trustee by the manual or
facsimile signature of any other Responsible Officer of the Trustee.
Certificates bearing the manual or facsimile signatures of individuals who
were, at the time when such signatures were affixed, authorized to sign on
behalf of the Trustee shall be valid and binding obligations of the Trust,
notwithstanding that such individuals or any of them have ceased to be so
authorized prior to the execution and delivery of such Certificates. All
Certificates shall be dated the date of their execution.
.2 AUTHENTICATION OF CERTIFICATES. The Trustee shall cause the
Certificates to be executed on behalf of the Trust, authenticated, and
delivered to or upon the order of the Seller (or in the case of the Class B
Certificates, the Seller hereby authorizes the Trustee to execute such
Certificates on behalf of the Trust), signed by its chairman of the board,
its vice chairman, its chief financial officer, its president, any vice
president, its treasurer, or any assistant treasurer, its secretary or any
assistant secretary, without further corporate action by the Seller, in
exchange for the Receivables and the other Trust Property, simultaneously
with the sale, assignment and transfer to the Trustee of the Receivables, and
the delivery to the Trustee of the Receivable Files and the other Trust
Property. Such Certificates shall be duly executed by the Trustee, in
authorized denominations equaling in the aggregate the Cut-off Date Principal
Balance and evidencing the entire ownership of the Trust. No Certificate
shall entitle its holder to any benefit under the Agreement, or shall be
valid for any purpose, unless there shall appear on such Certificate a
certificate of authentication substantially in the form set forth in Exhibit
A or Exhibit B hereto executed by the Trustee by manual signature of an
authorized signatory; such authentication shall constitute conclusive
evidence that such Certificate shall have been duly authenticated and
delivered hereunder. All Certificates shall be dated the date of their
authentication and shall be numbered in the manner determined by the Trustee.
.3 REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES. (a)
The Certificate Registrar shall keep or cause to be kept, at the office or
agency maintained pursuant to Section 7.7, a Certificate Register in which,
subject to such reasonable regulations as it may prescribe, the Trustee shall
provide for the registration of Certificates and of transfers and exchanges
of Certificates as herein provided. The Trustee shall be the initial
Certificate Registrar. In the event that, subsequent to the Cut-off Date, the
Trustee notifies the Master Servicer that it is unable to act as Certificate
46
Registrar, the Master Servicer shall appoint another bank or trust company,
agreeing to act in accordance with the provisions of this Agreement
applicable to it, and otherwise acceptable to the Trustee, to act as
successor Certificate Registrar under this Agreement.
(b) At the option of a Certificateholder, Certificates may be
exchanged for other Certificates of the same Class, in authorized
denominations of a like aggregate original denomination, upon surrender of
such Certificates to be exchanged at such office. Whenever any Certificates
are so surrendered for exchange, the Trustee shall execute and deliver the
Certificates which the Certificateholder making the exchange is entitled to
receive. Every Certificate presented or surrendered for transfer or exchange
shall be duly endorsed by, or shall be accompanied by a written instrument of
transfer in form satisfactory to the Trustee and the Certificate Registrar
duly executed by the holder thereof or his or her attorney duly authorized in
writing.
(c) Except as provided in paragraph (d) below the Book-Entry
Certificates shall at all times remain registered in the name of the
Depository or its nominee and at all times: (i) registration of the Class A
Certificates may not be transferred by the Trustee except to another
Depository; (ii) the Depository shall maintain book-entry records with
respect to the Certificateholders and with respect to ownership and transfers
of such Class A Certificates; (iii) ownership and transfers of registration
of the Class A Certificates on the books of the Depository shall be governed
by applicable rules established by the Depository; (iv) the Depository may
collect its usual and customary fees, charges and expenses from its
Depository Participants; (v) the Trustee shall deal with the Depository,
Depository Participants and indirect participating firms as representatives
of the Certificateholders of the Class A Certificates for purposes of
exercising the rights of Holders under this Agreement, and requests and
directions for and votes of such representatives shall not be deemed to be
inconsistent if they are made with respect to different Certificateholders;
and (vi) the Trustee may rely and shall be fully protected in relying upon
information furnished by the Depository with respect to its Depository
Participants and furnished by the Depository Participants with respect to
indirect participating firms and persons shown on the books of such indirect
participating firms as direct or indirect Certificateholders.
All transfers by Certificateholders of Book-Entry Certificates
shall be made in accordance with the procedures established by the Depository
Participant or brokerage firm representing such Certificateholder. Each
Depository Participant shall only transfer Book-Entry Certificates of
Certificateholders it represents or of brokerage firms for which it acts as
agent in accordance with the Depository's normal procedures.
(d) If (x) (i) the Company or the Depository advises the
Trustee in writing that the Depository is no longer willing or able properly
to discharge its responsibilities as Depository and (ii) the Trustee or
Company is unable to locate a qualified successor or (y) the Company at its
sole option advises the Trustee in writing that it elects to terminate the
book-entry system through the Depository, the Trustee shall notify all
Certificateholders, through the Depository, of the occurrence of any such
event
47
and of the availability of definitive, fully registered Class A Certificates
(the "Definitive Certificates") to Certificateholders requesting the same.
Upon surrender to the Trustee of the Class A Certificates by the Depository,
accompanied by registration instructions from the Depository for
registration, the Trustee shall issue the Definitive Certificates. Neither
the Company nor the Trustee shall be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be protected in relying
on, such instructions. Upon the issuance of Definitive Certificates all
references herein to obligations imposed upon or to be performed by the
Depository shall be deemed to be imposed upon and performed by the Trustee,
to the extent applicable with respect to such Definitive Certificates and the
Trustee shall recognize the Holders of the Definitive Certificates as
Certificateholders hereunder.
(e) On or prior to the Closing Date, there shall be delivered
to the Depository one Class A Certificate, in registered form registered in
the name of the Depository's nominee, Cede & Co., the total face amount of
which represents 100% of the Original Class A Principal Balance. Each such
Class A Certificate registered in the name of the Depositary's nominee shall
bear the following legend:
"Unless this Certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC")
to the Trustee or its agent for registration of transfer, exchange or payment,
and any certificate issued is registered in the name of Cede & Co. or in such
other name as requested by an authorized representative of DTC (and any payment
is made to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein."
(f) No service charge shall be made for any registration of
transfer or exchange of Certificates, but the Trustee may require payment of
a sum sufficient to cover any tax or governmental charge that may be imposed
in connection with any transfer or exchange of Certificates.
(g) Notice of any transfer of one or more Certificates to HFC
or any Affiliate thereof other than the Seller shall be given to each Rating
Agency.
(h) The Class B Certificates shall initially be retained by
the Seller. No sale, assignment, pledge, encumbrance or transfer of any
interest in any Class B Certificate shall be made or permitted without prior
notice to the Rating Agencies until the Class A Certificate Balance is
reduced to zero, all payments in respect of interest on the Class A
Certificates have been made in full and the Final Termination Date with
respect to the Series ______ Certificates shall have occurred. The Class B
Certificates shall be subject to the same restrictions on transfer that the
Class A Certificates are subject to in Section 7.3 hereof. For purposes of
the restrictions on transfer of Class B Certificates, the Seller shall be
treated as the initial purchaser. No transfer of a Class B
48
Certificate or any interest therein shall be made unless prior to such
transfer the Holder of such Class B Certificates delivers to the Seller and
the Trustee either a ruling of the Internal Revenue Service or an Opinion of
Counsel, which shall be independent outside counsel, satisfactory to the
Trustee and the Rating Agencies in either case, to the effect that the
proposed transfer (x) will not result in the arrangement contemplated by this
Agreement being treated as an association taxable as a corporation under
either (I) the Code, as from time to time in force or (II) the tax laws of
the State of Illinois and (y) will not have any adverse effect on the Federal
income taxation of the Trust or the Certificateholders.
The Certificate Registrar shall not register the transfer of
any Class B Certificate unless it shall have received a representation letter
that (a) the transferee will not acquire the Class B Certificate with the assets
of any "employee benefit plan" as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or a "plan" as
defined in Section 4975(e)(l) of the Internal Revenue Code of 1986, as amended
(the "Code"), or (b) in the case of a transfer to an insurance company general
account, either (a) above or pursuant to Section I of Prohibited Transaction
Class Exemption 95-60 ("PTCE 95-60"), the acquisition and holding of the
certificate and, pursuant to Section III of PTCE 95-60, the servicing,
management and operation of the trust are, with respect to such transferee,
exempt from the "prohibited transaction" provisions of ERISA and the Code.
.4 MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES. If (a)
any mutilated Certificate is surrendered to the Certificate Registrar, or the
Certificate Registrar receives evidence to its satisfaction of the
destruction, loss or theft of any Certificate, and (b) there is delivered to
the Certificate Registrar and the Trustee such security or indemnity as may
be required by them to save each of them harmless, then, in the absence of
notice to the Certificate Registrar or the Trustee that such Certificate has
been acquired by a bona fide purchaser, the Trustee on behalf of the Trust
shall execute and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of like tenor and
Fractional Undivided Interest. In connection with the issuance of any new
Certificate under this Section 7.4, the Trustee may require the payment of a
sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other expenses (including the fees and
expenses of the Trustee and the Certificate Registrar) connected therewith.
Any duplicate Certificate issued pursuant to this Section 7.4 shall
constitute complete and indefeasible evidence of ownership in the Trust, as
if originally issued, whether or not the lost, stolen or destroyed
Certificate shall be found at any time.
.5 PERSONS DEEMED OWNERS. Prior to due presentation of a
Certificate for registration of transfer, the Trustee, the Certificate
Registrar and any agent of the Trustee or the Certificate Registrar may treat
the person in whose name any Certificate is registered as the owner of such
Certificate for the purpose of receiving distributions pursuant to Section
5.5 and for all other purposes whatsoever, and neither the Trustee, the
49
Certificate Registrar nor any agent of the Trustee or the Certificate
Registrar shall be affected by any notice to the contrary.
.6 ACCESS TO LIST OF CERTIFICATEHOLDERS' NAMES AND ADDRESSES.
The Trustee shall furnish or cause to be furnished to the Master Servicer,
within 10 days after receipt by the Trustee of a written request therefor
from such party, a list, in such form as such party may reasonably require,
of the names and addresses of the Certificateholders as of the most recent
Accounting Date for payment of distributions to Certificateholders. If three
or more Certificateholders, or one or more Certificateholders evidencing not
less than 25% of the Class A Certificate Balance and the Class B Certificate
Balance (disregarding any Class B Certificate held by HFC or any Affiliate
thereof) (hereinafter referred to as "Applicants"), apply in writing to the
Trustee, and such application states that the Applicants desire to
communicate with other Certificateholders of such Class with respect to their
rights under this Agreement or under the Certificates and is accompanied by a
copy of the communication that such Applicants propose to transmit, then the
Trustee shall, within five Business Days after the receipt of such
application, afford such Applicants access, during normal business hours, to
the current list of Certificateholders. Every Certificateholder, by receiving
and holding a Certificate, agrees with the Master Servicer and the Trustee
that neither the Master Servicer nor the Trustee shall be held accountable by
reason of the disclosure of any such information as to the names and
addresses of the Certificateholders under this Agreement, regardless of the
source from which such information was derived.
.7 MAINTENANCE OF OFFICE OR AGENCY. The Trustee shall maintain
in [Place of Office], an office or offices or agency or agencies where
Certificates may be surrendered for registration of transfer or exchange and
an office in [Place of Office] where notices and demands to or upon the
Trustee in respect of the Certificates and this Agreement may be served. The
Trustee initially designates the Corporate Trust Office as specified in this
Agreement as its office for such purposes. The Trustee shall give prompt
written notice to the Master Servicer and to Certificateholders of any change
in the location of the Certificate Register or any such office or agency.
.8 AFFILIATED GROUP MAY OWN CERTIFICATES. To the extent that
the Seller or any Affiliate of the Seller becomes the owner or pledgee of any
Certificate pursuant to Section 7.3(g) hereof, during the time such
Certificate is owned by it, such Certificate shall be without voting rights
for any purpose set forth in this Agreement or any Related Document. The
Seller shall notify the Trustee promptly after it or any of its Affiliates
become the owner or pledgee of a Certificate.
ARTICLE VIII
THE SELLER
.1 LIABILITY OF SELLER; INDEMNITIES. The Seller shall be liable
in accordance herewith only to the extent of the obligations specifically
undertaken under
50
this Agreement by the Seller and the representations made by the Seller under
this Agreement.
(a) The Seller shall indemnify, defend and hold harmless the
Trust and the Trustee from and against any taxes that may at any time be
asserted against any such Person with respect to the transactions
contemplated in this Agreement and any of the Basic Documents (except any
taxes to which the Trustee may otherwise be subject to), including any sales,
gross receipts, general corporation, tangible personal property, privilege or
license taxes (but, in the case of the Trust, not including any taxes
asserted with respect to, federal or other income taxes arising out of
distributions on the Certificates) and costs and expenses in defending
against the same.
(b) The Seller shall indemnify, defend and hold harmless the
Trust and the Trustee against any loss, liability or expense incurred by
reason of (i) the Seller's willful misfeasance, bad faith or negligence in
the performance of its duties under this Agreement, or by reason of reckless
disregard of its obligations and duties under this Agreement and (ii) the
Seller's or the Trustee's violation of Federal or state securities laws in
connection with the offering and sale of the Certificates.
(c) The Seller shall indemnify, defend and hold harmless the
Trustee and their respective officers, directors, employees and agents from
and against any and all costs, expenses, losses, claims, damages and
liabilities arising out of, or incurred in connection with, the acceptance or
performance of the trusts and duties set forth herein and in the Basic
Documents, except to the extent that such cost, expense, loss, claim, damage
or liability shall be due to the willful misfeasance, bad faith or negligence
(except for errors in judgment) of the Person seeking indemnification.
Indemnification under this Section shall survive the
resignation or removal of the Trustee and the termination of this Agreement and
shall include reasonable fees and expenses of counsel and other expenses of
litigation. If the Seller shall have made any indemnity payments pursuant to
this Section and the Person to or on behalf of whom such payments are made
thereafter shall collect any of such amounts from others, such Person shall
promptly repay such amounts to the Seller, without interest.
.2 MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, SELLER. Any Person (a) into which the Seller may be merged or
consolidated, (b) which may result from any merger or consolidation to which
the Seller shall be a party or (c) which may succeed to the properties and
assets of the Seller substantially as a whole, which Person in any of the
foregoing cases (x) has a certificate of incorporation containing provisions
relating to limitations on business and other matters substantially identical
to those contained in the Seller's certificate of incorporation and (y)
executes an agreement of assumption to perform every obligation of the Seller
under this Agreement, the other Basic Documents shall be the successor to the
Seller hereunder without the execution or filing of any document or any
further act by any of the parties to this
51
Agreement; PROVIDED, HOWEVER, that the Rating Agency Condition shall have been
satisfied with respect to such transaction.
.3 LIMITATION ON LIABILITY OF SELLER AND OTHERS. (a) The
Seller and any director or officer or employee or agent of the Seller may
rely in good faith on the written advice of counsel or on any document of any
kind, prima facie properly executed and submitted by any Person respecting
any matters arising under any Basic Document. The Seller shall not be under
any obligation to appear in, prosecute or defend any legal action that shall
not be incidental to its obligations under this Agreement, and that in its
opinion may involve it in any expense or liability. Except as provided in
Section 8.1 hereof, neither the Seller nor any of the directors, officers,
employees or agents of the Seller acting in such capacities shall be under
any liability to the Trust, the Certificateholders or any other Person for
any action taken or for refraining from the taking of any action in good
faith in such capacities pursuant to this Agreement; provided, however, that
this provision shall not protect the Seller or any such person against any
liability which would otherwise be imposed by reason of willful misfeasance,
bad faith or negligence in the performance of duties or by reason of reckless
disregard of obligations and duties hereunder.
(b) All obligations of the Seller under this Agreement
(including, but not limited to, repurchase and indemnification obligations) and
under any of the Basic Documents shall be limited in recourse to property, if
any, which the Seller may hold from time to time, not subject to any Lien.
.4 SELLER MAY OWN CERTIFICATES. The Seller and any Affiliate
thereof may in its individual or any other capacity become the owner or
pledgee of Certificates with the same rights as it would have if it were not
the Seller or an Affiliate thereof, except as expressly provided herein or in
any Basic Document. Certificates so owned by the Seller or such Affiliate
shall have an equal and proportionate benefit under the provisions of the
Basic Documents, without preference, priority, or distinction as among all of
the Certificates; PROVIDED, HOWEVER, except in the event that all outstanding
Certificates are owned by the Seller and/or any Affiliate thereof, that any
Certificates owned by the Seller or any Affiliate thereof, during the time
such Certificates are owned by them, shall be without voting rights for any
purpose set forth in the Basic Documents and any such Certificates will not
be entitled to the benefits of any financial guaranty insurance policy. The
Seller shall notify the Trustee promptly after it or any of its Affiliates
become the owner or pledgee of a Certificate.
.5 RESTRICTIONS ON LIENS. The Seller shall not (i) create,
incur or suffer to exist, or agree to create, incur or suffer to exist, or
consent to cause or permit in the future (upon the happening of a contingency
or otherwise) the creation, incurrence or existence of any Lien or
restriction on transferability of the Receivables except for the restrictions
on transferability imposed by this Agreement or (ii) sign or file under the
Uniform Commercial Code of any jurisdiction any financing statement which
names HFC or the Seller as a debtor, or sign any security agreement
authorizing any secured party
52
thereunder to file such financing statement, with respect to the Receivables,
except in each case any such instrument solely securing the rights and
preserving the Lien of the Trustee for the benefit of the Certificateholders.
ARTICLE IX
THE MASTER SERVICER
.1 REPRESENTATIONS OF MASTER SERVICER. The Master Servicer
makes the following representations on which the Trust is deemed to have
relied in acquiring the Receivables and on which the Certificateholders are
deemed to have relied on in the purchasing of Certificates. The
representations speak as of the execution and delivery of this Agreement and
the Closing Date and shall survive each sale of the Trust Estate to the Trust
and each pledge thereof to the Trustee pursuant to this Agreement.
(i) ORGANIZATION AND GOOD STANDING. The Master Servicer
has been duly organized and is validly existing and in good standing
under the laws of its jurisdiction of organization, with power,
authority and legal right to own its properties and to conduct its
business as such properties are currently owned and such business is
currently conducted, and had at all relevant times, and now has,
power, authority and legal right to enter into and perform its
obligations under this Agreement and the other Basic Documents to
which it is a party;
(ii) DUE QUALIFICATION. The Master Servicer is duly
qualified to do business as a foreign corporation in good standing and
has obtained all necessary licenses and approvals, in all
jurisdictions in which the ownership or lease of property or the
conduct of its business (including the servicing of the Receivables as
required by this Agreement) requires or shall require such
qualification; except where the failure to qualify or obtain licenses
or approvals would not have a material adverse effect on its ability
to perform its obligations as Master Servicer under this Agreement and
the other Basic Documents to which it is a party;
(iii) POWER AND AUTHORITY. The Master Servicer has the
power and authority to execute and deliver this Agreement and its
Basic Documents and to carry out its terms and their terms,
respectively, and the execution, delivery and performance of this
Agreement and the Basic Documents to which the Master Servicer is a
party have been duly authorized by the Master Servicer by all
necessary corporate action;
(iv) BINDING OBLIGATION. This Agreement and the Basic
Documents to which the Master Servicer is a party shall constitute
legal, valid and binding obligations of the Master Servicer
enforceable in accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency,
reorganization, or other similar laws affecting the enforcement of
creditors' rights generally and by equitable limitations on the
availability of
53
specific remedies, regardless of whether such enforceability is
considered in a proceeding in equity or at law;
(v) NO VIOLATION. The consummation of the transactions
contemplated by this Agreement and the Basic Documents to which the
Master Servicer is a party, and the fulfillment of the terms of this
Agreement and the Basic Documents to which the Master Servicer is a
party, shall not conflict with, result in any breach of any of the
terms and provisions of, or constitute (with or without notice or
lapse of time) a material default under, the articles of incorporation
or bylaws of the Master Servicer, or any indenture, agreement,
mortgage, deed of trust or other instrument to which the Master
Servicer is a party or by which it is bound, or result in the creation
or imposition of any Lien upon any of its properties pursuant to the
terms of any such indenture, agreement, mortgage, deed of trust or
other instrument, other than this Agreement, or violate any law,
order, rule or regulation applicable to the Master Servicer of any
court or of any federal or state regulatory body, administrative
agency or other governmental instrumentality having jurisdiction over
the Master Servicer or any of its properties, or any way materially
adversely affect the interest of the Certificateholders or the Trust
in any Receivable or affect the Master Servicer's ability to perform
its obligations under this Agreement;
(vi) NO PROCEEDINGS. There are no proceedings or
investigations pending or, to the Master Servicer's knowledge,
threatened against the Master Servicer, before any court, regulatory
body, administrative agency or other tribunal or governmental
instrumentality having jurisdiction over the Master Servicer or its
properties (A) asserting the invalidity of this Agreement or any of
the Basic Documents, (B) seeking to prevent the issuance of the
Securities or the consummation of any of the transactions contemplated
by this Agreement or any of the Basic Documents, or (C) seeking any
determination or ruling that might materially and adversely affect the
performance by the Master Servicer of its obligations under, or the
validity or enforceability of, this Agreement or any of the Basic
Documents or (D) seeking to adversely affect the federal income tax or
other federal, state or local tax attributes of the Certificates;
(vii) APPROVALS. All approvals, authorizations, consents,
orders or other actions of any person, corporation or other
organization, or of any court, governmental agency or body or
official, required in connection with the execution and delivery by
the Master Servicer of this Agreement and the consummation of the
transactions contemplated hereby have been or will be taken or
obtained on or prior to the Closing Date.
(viii) NO CONSENTS. The Master Servicer is not required to
obtain the consent of any other party or any consent, license,
approval or authorization, or registration or declaration with, any
governmental authority,
54
bureau or agency in connection with the execution, delivery,
performance, validity or enforceability of this Agreement which
has not already been obtained.
(ix) CHIEF EXECUTIVE OFFICE. The chief executive office
of the Master Servicer is located at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
.2 LIABILITY OF MASTER SERVICER; INDEMNITIES. (a) The Master
Servicer (in its capacity as such) shall be liable hereunder only to the
extent of the obligations in this Agreement specifically undertaken by the
Master Servicer and the representations made by the Master Servicer.
(b) The Master Servicer shall defend, indemnify and hold
harmless the Trust, the Trustee and their respective officers, directors,
agents and employees, from and against any and all costs, expenses, losses,
damages, claims and liabilities, including reasonable fees and expenses of
counsel and expenses of litigation arising out of or resulting from the use,
ownership or operation of, or lien on, any Financed Vehicle;
(c) The Master Servicer (when the Master Servicer is Household
or an Affiliate of Household) shall indemnify, defend and hold harmless the
Trust, the Trustee and their respective officers, directors, agents and
employees and from and against any taxes that may at any time be asserted
against any of such parties with respect to the transactions contemplated in
this Agreement, including, without limitation, any sales, gross receipts,
tangible or intangible personal property, privilege or license taxes (but not
including any Federal or other income taxes, including franchise taxes
asserted with respect to, and as of the date of, the sale of the Receivables
and the Other Conveyed Property to the Trust or the issuance and original
sale of any Series of the Certificates) and costs and expenses in defending
against the same, except to the extent that such costs, expenses, losses,
damages, claims and liabilities arise out of the negligence or willful
misconduct of such parties;
The Master Servicer (when the Master Servicer is not
Household) shall indemnify, defend and hold harmless the Trust, the Trustee and
their respective officers, directors, agents and employees from and against any
taxes with respect to the sale of Receivables in connection with servicing
hereunder that may at any time be asserted against any of such parties with
respect to the transactions contemplated in this Agreement, including, without
limitation, any sales, gross receipts, tangible or intangible personal property,
privilege or license taxes (but not including any Federal or other income taxes,
including franchise taxes asserted with respect to, and as of the date of, the
sale of the Trust Estate to the Trust or the issuance and original sale of the
Certificates) and costs and expenses in defending against the same; and
(d) The Master Servicer shall indemnify, defend and hold
harmless the Trust, the Trustee, and their respective officers, directors,
agents and employees from and against any and all costs, expenses, losses,
claims, damages, and liabilities to the extent that such cost, expense, loss,
claim, damage, or liability arose out of, or was imposed
55
upon the Trust or the Trustee by reason of the breach of this Agreement by
the Master Servicer, the negligence, misfeasance, or bad faith of the Master
Servicer in the performance of its duties under this Agreement or by reason
of reckless disregard of its obligations and duties under this Agreement,
except to the extent that such costs, expenses, losses, damages, claims, and
liabilities arise out of the negligence or willful misconduct of the Person
seeking indemnification.
(e) The Master Servicer shall indemnify, defend and hold
harmless the Trust, the Trustee and their respective officers, directors,
agents and employees from and against any loss, liability or expense incurred
by reason of the violation by Master Servicer of Federal or state securities
laws in connection with the registration or the sale of the Securities,
except to the extent that such costs, expenses, losses, damages, claims, and
liabilities arise out of the negligence or willful misconduct of such parties.
(f) Indemnification under this Article shall survive the
termination of this Agreement and will survive the early resignation or
removal of any of the parties hereto and shall include, without limitation,
reasonable fees and expenses of counsel and expenses of litigation. If the
Master Servicer has made any indemnity payments pursuant to this Article and
the recipient thereafter collects any of such amounts from others, the
recipient shall promptly repay such amounts collected to the Master Servicer,
without interest. Notwithstanding any other provision of this Agreement, the
obligations of the Master Servicer shall not terminate or be deemed released
upon the resignation or termination of Household as the Master Servicer and
shall survive any termination of this Agreement.
.3 MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF THE MASTER SERVICER. (a) Any Person (i) into which the Master
Servicer may be merged or consolidated, (ii) resulting from any merger or
consolidation to which the Master Servicer shall be a party, (iii) which
acquires by conveyance, transfer, or lease substantially all of the assets of
the Master Servicer, or (iv) succeeding to the business of the Master
Servicer, in any of the foregoing cases shall execute an agreement of
assumption to perform every obligation of the Master Servicer under this
Agreement and each Basic Document and, whether or not such assumption
agreement is executed, shall be the successor to the Master Servicer under
this Agreement and each Basic Document without the execution or filing of any
paper or any further act on the part of any of the parties to this Agreement,
anything in this Agreement to the contrary notwithstanding. Notwithstanding
the foregoing, the Master Servicer shall not merge or consolidate with any
other Person or permit any other Person to become a successor to the Master
Servicer's business, unless (x) the Master Servicer shall have delivered to
the the Rating Agencies and the Trustee an Officer's Certificate and an
Opinion of Counsel each stating that such consolidation, merger or succession
and such agreement of assumption comply with this Section 9.3(a) and that all
conditions precedent, if any, provided for in this Agreement relating to such
transaction have been complied with, and (y) the Rating Agency Condition
shall have been satisfied with respect to such assignment or succession.
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.4 LIMITATION ON LIABILITY OF MASTER SERVICER AND OTHERS. (a)
Neither the Master Servicer, the Trustee nor any of the directors or officers
or employees or agents of the Master Servicer or the Trustee shall be under
any liability to the Trust, except as provided in this Agreement and each
Basic Document, for any action taken or for refraining from the taking of any
action pursuant to this Agreement and each Basic Document; PROVIDED, HOWEVER,
that this provision shall not protect the Master Servicer, the Trustee or any
such person against any liability that would otherwise be imposed by reason
of willful misfeasance, bad faith or negligence (excluding errors in
judgment) in the performance of duties (including negligence with respect to
the Master Servicer's indemnification obligations hereunder), by reason of
reckless disregard of obligations and duties under this Agreement and each
Basic Document or any violation of law by the Master Servicer, the Trustee or
such person, as the case may be; PROVIDED, FURTHER, that this provision shall
not affect any liability to indemnify the Trustee for costs, taxes, expenses,
claims, liabilities, losses or damages paid by the Trustee. The Master
Servicer, the Trustee and any director, officer, employee or agent of the
Master Servicer may rely in good faith on the written advice of counsel or on
any document of any kind prima facie properly executed and submitted by any
Person respecting any matters arising under this Agreement. The Trustee shall
not be required to expend or risk its own funds or otherwise incur financial
liability in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if the repayment of such funds or
adequate written indemnity against such risk or liability is not reasonably
assured to it in writing prior to the expenditure of risk of such funds or
incurrence of financial liability.
(b) Notwithstanding anything herein to the contrary, the
Trustee shall not be liable for any obligation of the Master Servicer
contained in this Agreement and each Basic Document, and the Seller and the
Certificateholders shall look only to the Master Servicer to perform such
obligations.
(c) The parties expressly acknowledge and consent to
[Name of Trustee] acting in the potential dual capacity of successor Master
Servicer and in the capacity as Trustee. [Name of Trustee] may, in such dual
or other capacity, discharge its separate functions fully, without hindrance
or regard to conflict of interest principles, duty of loyalty principles or
other breach of fiduciary duties to the extent that any such conflict or
breach arises from the performance by [Name of Trustee] of express duties set
forth in this Agreement in any of such capacities, all of which defenses,
claims or assertions are hereby expressly waived by the other parties hereto
and the Certificateholders except in the case of negligence and willful
misconduct by [Name of Trustee].
.5 DELEGATION OF DUTIES. In the ordinary course of business,
the Master Servicer at any time may delegate any of its duties hereunder to
any Person, including any of its Affiliates, who agrees to conduct such
duties in accordance with standards employed by the Master Servicer in
compliance with Section 4.1. Such delegation shall not relieve the Master
Servicer of its liabilities and responsibilities with respect to such duties
and shall not constitute a resignation within the meaning of Section 9.6. The
Master Servicer shall provide each Rating Agency and the Trustee with written
notice
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prior to the delegation of any of its duties to any Person other than any of
the Master Servicer's Affiliates or their respective successors and assigns.
.6 MASTER SERVICER NOT TO RESIGN. Subject to the provisions of
Section 9.3, the Master Servicer shall not resign from the obligations and
duties hereby imposed on it except (i) upon determination that the
performance of its obligations or duties hereunder are no longer permissible
under applicable law or are in material conflict by reason of applicable law
with any other activities carried on by it or its subsidiaries or Affiliates,
the other activities of the Master Servicer so causing such a conflict being
of a type and nature carried on by the Master Servicer or its subsidiaries or
Affiliates at the date of this Agreement or (ii) upon satisfaction of the
following conditions: (a) the Master Servicer has proposed a successor
servicer to the Trustee in writing and such proposed successor servicer is
reasonably acceptable to the Trustee; (b) the Rating Agency shall have
delivered a letter to the Trustee stating that the appointment of such
proposed successor servicer as Master Servicer hereunder will satisfy the
Rating Agency Condition; and (c) such proposed successor servicer has agreed
in writing to assume the obligations of Master Servicer hereunder and under
each relevant Basic Document and (d) the Master Servicer has delivered to the
Trustee an Opinion of Counsel to the effect that all conditions precedent to
the resignation of the Master Servicer and the appointment of and acceptance
by the proposed successor servicer have been satisfied; PROVIDED, HOWEVER,
that, in the case of clause (i) above, no such resignation by the Master
Servicer shall become effective until the Trustee shall have assumed the
Master Servicer's responsibilities and obligations hereunder or the Trustee
shall have designated a successor servicer in accordance with Section 10.3
which shall have assumed such responsibilities and obligations. Any such
resignation shall not relieve the Master Servicer of responsibility for any
of the obligations specified in Sections 10.1 and 10.3 as obligations that
survive the resignation or termination of the Master Servicer. Any such
determination permitting the resignation of the Master Servicer pursuant to
clause (i) above shall be evidenced by an Opinion of Counsel to such effect
delivered to the Trustee.
.7 SUB-SERVICING AGREEMENTS BETWEEN MASTER SERVICER AND
SUB-SERVICERS. The Master Servicer may enter into agreements for any
subservicing and administration of Receivables with any institution which is
an Eligible Subservicer and is in compliance with the laws of each state
necessary to enable it to perform the obligations of the Master Servicer
pursuant to this Agreement. The Master Servicer initially appoints HAFC to
subservice the Receivables. For purposes of this Agreement and each Basic
Document, the Master Servicer shall be deemed to have received payments on
Receivables when any Sub-Servicer has received such payments. Any such
agreement shall be consistent with and not violate the provisions of this
Agreement. The Master Servicer shall not be relieved of its obligations under
this Agreement and each Basic Document notwithstanding any agreement relating
to subservicing and the Master Servicer shall be obligated to the same extent
and under the same terms and conditions as if it alone were servicing and
administering the Receivables. The Trust shall have no liability to the
Master Servicer except for payment of the Basic Servicing Fee and any
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Supplemental Servicing Fee and reimbursement of repossession and liquidation
expenses. The Trust shall have no obligation to indemnify the Master Servicer
for costs or expenses, except with respect to the preceding sentence. The
parties hereto acknowledge that with respect to statements or certificates
required to be delivered by the Master Servicer in accordance with this
Agreement, including, but not limited to, Sections 4.9, 4.10 and 4.11 hereof,
that a statement or certificate delivered by the Sub-Servicer shall be
sufficient to discharge the Master Servicer's obligation to deliver such
certificate or statement.
.8 SUCCESSOR SUB-SERVICERS. The Master Servicer may terminate any
Sub-Servicer and either directly service the related Receivables itself or
enter into an agreement with a successor Sub-Servicer that is an Eligible
Sub-Servicer. The Trustee shall have no duty or obligation to monitor or
supervise the performance of any Sub-Servicer.
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ARTICLE X
MASTER SERVICER TERMINATION EVENTS
.1 MASTER SERVICER TERMINATION EVENT. For purposes of this
Agreement, each of the following shall constitute a "Master Servicer
Termination Event":
(a) Any failure by the Master Servicer to deliver, or cause to be
delivered, to the Trustee for distribution pursuant to the terms of this
Agreement any proceeds or payment required to be so delivered under the terms
of this Agreement (including deposits of the Repurchase Amount pursuant to
Section 3.5 and Section 4.7) that continues unremedied for a period of five
Business Days after written notice is received by the Master Servicer from
the Trustee or after discovery of such failure by a responsible Officer of
the Master Servicer (but in no event later than five Business Days after the
Master Servicer is required to make such delivery or deposit);
(b) Failure on the part of the Master Servicer duly to observe or
perform any other covenants or agreements of the Master Servicer set forth in
this Agreement and each Basic Document, which failure (i) materially and
adversely affects the rights of Certificateholders and (ii) continues
unremedied for a period of 60 days after the date on which written notice of
such failure, requiring the same to be remedied, shall have been given to the
Master Servicer by the Trustee;
(c) The entry of a decree or order for relief by a court or
regulatory authority having jurisdiction in respect of the Master Servicer in
an involuntary case under the federal bankruptcy laws, as now or hereafter in
effect, or another present or future, federal bankruptcy, insolvency or
similar law, or appointing a receiver, liquidator, assignee, trustee,
custodian, sequestrator or other similar official of the Master Servicer or
of any substantial part of its property or ordering the winding up or
liquidation of the affairs of the Master Servicer or the commencement of an
involuntary case under the federal bankruptcy laws, as now or hereinafter in
effect, or another present or future federal or state bankruptcy, insolvency
or similar law and such case is not dismissed within 60 days; or
(d) The commencement by the Master Servicer of a voluntary case
under the Federal bankruptcy laws, as now or hereafter in effect, or any
other present or future, Federal or state, bankruptcy, insolvency or similar
law, or the consent by the Master Servicer to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Master Servicer or of any
substantial part of its property or the making by the Master Servicer of an
assignment for the benefit of creditors or the failure by the Master Servicer
generally to pay its debts as such debts become due or the taking of
corporate action by the Master Servicer in furtherance of any of the
foregoing; or
(e) Any representation, warranty or certification of the Master
Servicer made in this Agreement or any certificate, report or other writing
delivered pursuant
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hereto or thereto shall prove to be incorrect in any material respect as of
the time when the same shall have been made, and the incorrectness of such
representation, warranty or statement has a material adverse effect on the
interests of the Trust in the Trust Estate and, within 60 days after written
notice thereof shall have been given to the Master Servicer by the Trustee
the circumstances or condition in respect of which such representation,
warranty or statement was incorrect shall not have been eliminated or
otherwise cured; or
(f) Notwithstanding the foregoing, a delay in or failure of
performance under Section 10.1(a) for a period of five Business Days or under
Section 10.1(b) for a period of 60 days, shall not constitute a Master
Servicer Termination Event if such delay or failure could not be prevented by
the exercise of reasonable diligence by the Master Servicer and such delay or
failure was caused by an act of God, acts of declared or undeclared war,
public disorder, rebellion or sabotage, epidemics, landslides, lightning,
fire, hurricanes, earthquakes, floods or similar causes. The preceding
sentence shall not relieve the Master Servicer from using its best efforts to
perform its obligations in a timely manner in accordance with the terms of
this Agreement, and the Master Servicer shall provide the Trustee and the
Seller with an Officers' Certificate giving prompt notice of such failure or
delay by it, together with a description of its efforts to so perform its
obligations.
.2 CONSEQUENCES OF A MASTER SERVICER TERMINATION EVENT. If a
Master Servicer Termination Event shall occur and be continuing, the Trustee
(to the extent a Trust Officer of the Trustee has actual knowledge thereof),
by notice given in writing to the Master Servicer may terminate all of the
rights and obligations of the Master Servicer under this Agreement and the
other Basic Documents as they relate to the Trust Estate out of which such
Master Servicer Termination Event arose. On or after the receipt by the
Master Servicer of such written notice, all authority, power, obligations and
responsibilities of the Master Servicer under this Agreement, whether with
respect to the Certificates or the Other Conveyed Property or otherwise,
automatically shall pass to, be vested in, and become obligations and
responsibilities, of the Trustee (or such other successor Master Servicer
appointed by Trustee pursuant to Section 10.3); PROVIDED, HOWEVER, that the
successor Master Servicer shall (i) have no liability with respect to any
obligation which was required to be performed by the terminated Master
Servicer prior to the date that the successor Master Servicer becomes the
Master Servicer or any claim of a third party based on any alleged action or
inaction of the terminated Master Servicer and (ii) no obligation to perform
any repurchase or advancing obligations, if any, of the terminated Master
Servicer.
The successor Master Servicer is authorized and empowered by this Agreement
to execute and deliver, on behalf of the terminated Master Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments
and to do or accomplish all other acts or things necessary or appropriate to
effect the purposes of such notice of termination, whether to complete the
transfer and endorsement of the Trust Estate and related documents to show
the Trust as lienholder or secured party on the related Lien
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Certificates, or otherwise. The terminated Master Servicer agrees to
cooperate with the successor Master Servicer in effecting the termination of
the responsibilities and rights of the terminated Master Servicer under this
Agreement as they relate to the Trust Estate with respect to which such
termination has been effected , including, without limitation, the transfer
to the successor Master Servicer for administration by it of all cash amounts
that shall at the time be held by the terminated Master Servicer for deposit,
or have been deposited by the terminated Master Servicer, in the Collection
Account or thereafter received with respect to the Receivables in the subject
Trust Estate and the delivery to the successor Master Servicer of all
Receivable Files, Monthly Records and Collection Records and a computer tape
in readable form as of the most recent Business Day containing all
information necessary to enable the successor Master Servicer to service the
Trust Estate. If requested by the Trustee, the successor Master Servicer
shall direct the Obligors to make all payments under the Receivables directly
to the successor Master Servicer (in which event the successor Master
Servicer shall process such payments in accordance with Section 4.2(d)). The
terminated Master Servicer shall grant the Trustee and the successor Master
Servicer reasonable access to the terminated Master Servicer's premises at
the terminated Master Servicer's expense.
.3 APPOINTMENT OF SUCCESSOR. (a) On and after the time the Master
Servicer receives a notice of termination pursuant to Section 10.2 or upon
the resignation of the Master Servicer pursuant to Section 9.6, the Master
Servicer shall continue to perform all servicing functions under this
Agreement until the date specified in such termination notice or until such
resignation becomes effective or until a date mutually agreed upon by the
Master Servicer and the Trustee. The Trustee shall as promptly as possible
after such termination or resignation appoint an Eligible Servicer as a
successor servicer (the "Successor Master Servicer"), and such Successor
Master Servicer shall accept its appointment by a written assumption in a
form acceptable to the Trustee. In the event that a Successor Master Servicer
has not been appointed or has not accepted its appointment at the time when
the Master Servicer ceases to act as Master Servicer, the Trustee without
further action shall automatically be appointed the Successor Master
Servicer. The Trustee may delegate any of its servicing obligations to an
Affiliate or agent in accordance with Section 9.6. Notwithstanding the
foregoing, the Trustee shall, if it is legally unable so to act, petition a
court of competent jurisdiction to appoint any established institution
qualifying as an Eligible Servicer as the Successor Master Servicer
hereunder. The Trustee shall give prompt notice to each Rating Agency upon
the appointment of a Successor Master Servicer. The Trustee or the Successor
Master Servicer, as the case may be, shall be the successor in all respects
to the Master Servicer in its capacity as servicer under this Agreement and
the transactions set forth or provided for in this Agreement, and shall be
subject to all the rights, responsibilities, restrictions, duties, liabilities
and termination provisions relating thereto placed on the Master Servicer by
the terms and provisions of this Agreement, except as otherwise stated
herein. The Trustee or the Successor Master Servicer, as the case may be,
shall take such action, consistent with this Agreement, as shall be necessary
to effectuate any such succession. The Successor Master Servicer shall be
subject to termination under Section 10.2 upon
62
the occurrence of any Master Servicer Termination Event applicable to it as
Master Servicer.
(b) Subject to Section 9.6, no provision of this Agreement shall
be construed as relieving the Trustee of its obligation to succeed as
Successor Master Servicer upon the termination of the Master Servicer
pursuant to Section 10.2 or the resignation of the Master Servicer pursuant
to Section 9.6.
(c) Any Successor Master Servicer shall be entitled to such
compensation (whether payable out of the Collection Account or otherwise)
equal to the greater of (a) the compensation the Master Servicer would have
been entitled to under this Agreement if the Master Servicer had not resigned
or been terminated hereunder and (b) compensation calculated with a Servicing
Fee Rate equal to the then-current "market rate" fee for servicing assets
comparable to the Receivables, which rate shall be determined by averaging
three fee bids obtained by the Trustee from third party servicers selected by
the Trustee. In addition, any Successor Master Servicer shall be entitled to
reasonable transition expenses incurred in acting as Successor Master
Servicer payable by the outgoing Master Servicer.
.4 NOTIFICATION TO CERTIFICATEHOLDERS. Upon any termination of,
or appointment of a successor to, the Master Servicer pursuant to this
Article X, the Trust shall give prompt written notice thereof to each Rating
Agency to the Certificateholders at their respective addresses appearing in
the Certificate Register.
.5 WAIVER OF PAST DEFAULTS. A Certificate Majority may, on behalf
of all Holders of Certificates, waive any default by the Seller or the Master
Servicer in the performance of its obligations hereunder and its consequences.
Upon any such waiver of a past default, such default shall cease to exist,
and any default arising therefrom shall be deemed to have been remedied for
every purpose of this Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereon except to
the extent expressly so waived.
ARTICLE XI
THE TRUSTEE
.1 DUTIES OF TRUSTEE. (a) Subject to paragraph (c) of this
Section 11.1, the Trustee, both prior to and after the occurrence of a Master
Servicer Termination Event, undertakes to perform as Trustee such duties and
only such duties as are specifically set forth in this Agreement.
(b) The Trustee, upon receipt of any resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments
furnished to the Trustee that are specifically required to be furnished
pursuant to any provisions of this Agreement, shall examine them to determine
whether they conform on their face to the requirements of this Agreement.
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(c) No provision of this Agreement shall be construed to relieve
the Trustee from liability for its own negligent action, its own negligent
failure to act (other than errors in judgment) or its own bad faith or
willful misfeasance; PROVIDED, HOWEVER, that:
(i) the duties and obligations of the Trustee shall be
determined solely by the express provisions of this Agreement, the
Trustee shall not be liable except for the performance of such
duties and obligations as are specifically set forth in this
Agreement, no implied covenants or obligations shall be read into
this Agreement against the Trustee and, in the absence of bad faith
on the part of the Trustee, the Trustee may conclusively rely, as
to the truth of the statements and the correctness of the opinions
expressed therein, upon any certificates or opinions furnished to
the Trustee and conforming to the requirements of this Agreement;
(ii) the Trustee shall not be liable for an error of judgment
made in good faith by a Responsible Officer of the Trustee, unless
it shall be proven that the Trustee was negligent in performing its
duties in accordance with the terms of this Agreement;
(iii) the Trustee shall not be liable for any action taken,
suffered or omitted to be taken by it in good faith and reasonably
believed by it to be authorized or within the discretion or rights
or powers conferred upon it by this Agreement; and
(iv) the Trustee shall not be liable for any action it takes
or omits to take in good faith at the direction of a Certificate
Majority.
(d) Notwithstanding any other provision of this Agreement, the
Trustee shall not be required to expend or risk its own funds or otherwise
incur financial liability in the performance of any of its duties under this
Agreement, or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it, and
none of the provisions contained in this Agreement shall in any event require
the Trustee to perform, or be responsible for the manner of performance of,
any of the obligations of the Master Servicer under this Agreement except
during such time, if any, as the Backup Servicer shall be the successor to,
and be vested with the rights, duties, powers and privileges of, the Master
Servicer in accordance with the terms of this Agreement.
(e) The Trustee shall not be charged with knowledge of any failure
by the Master Servicer to comply with the obligations of the Master Servicer
referred to in this Agreement, or of any failure by the Seller to comply with
the obligations of the Seller referred to in this Agreement, unless a Trustee
officer obtains actual knowledge of such failure (it being understood that
knowledge of the Master Servicer is not attributable to the Trustee) or the
Trustee receives written notice of such failure from the Master Servicer or
the Seller, as the case may be, or the Holders of Certificates evidencing not
64
less than 25% of the sum of the Class A Certificate Balance and the Class B
Certificate Balance, or, if there are no Class A Certificates then
outstanding, by Holders of Class B Certificates evidencing not less than 25%
of the Class B Certificate Balance;
(f) Except for actions expressly authorized by this Agreement, the
Trustee shall take no action reasonably likely to impair the security
interests created or existing under any Receivable or Financed Vehicle or to
impair the value of any Receivable or Financed Vehicle; and
(g) Without limiting the generality of this Section 11.1, the
Trustee, in its capacity as Trustee, shall have no duty (i) to see to any
recording, filing or depositing of this Agreement or any agreement referred
to herein or any financing statement evidencing a security interest in the
Financed Vehicles, or to see to the maintenance of any such recording or
filing or depositing or to any recording, refiling or redepositing of any
thereof, (ii) to see to any insurance of the Financed Vehicles or Obligors or
to effect or maintain any such insurance, (iii) to see to the payment or
discharge of any tax, assessment or other governmental charge or any Lien or
encumbrance of any kind owing with respect to, assessed or levied against any
part of the Trust, (iv) to confirm or verify the contents of any reports or
certificates delivered to the Trustee pursuant to this Agreement believed by
the Trustee to be genuine and to have been signed or presented by the proper
party or parties, or (v) to inspect the Financed Vehicles at any time or
ascertain or inquire as to the performance or observance of any of the
Seller's or the Master Servicer's representations, warranties or covenants or
the Master Servicer's duties and obligations as Master Servicer.
.2 TRUSTEE'S ASSIGNMENT OF WARRANTY RECEIVABLES. With respect to
all Administrative Receivables and all Warranty Receivables purchased by the
Master Servicer or the Seller, the Trustee shall take any and all actions
reasonably requested by the Seller or the Master Servicer, at the expense of
the Person whose obligation was to repurchase the Administrative Receivable
or the Warranty Receivable, to assign, without recourse, representation or
warranty, to the Seller or the Master Servicer, as applicable, including,
without limitation, all the items conveyed to the Trustee pursuant to
Section 3.1(a) with respect to such Repurchased Receivable, all monies due
thereon, the security interests in the related Financed Vehicles, proceeds
from any Insurance Policies, proceeds from recourse against Dealers on such
Receivables and the interests of the Trust in certain rebates of premiums and
other amounts relating to the Insurance Policies and any documents relating
thereto, such assignment being an assignment outright and not for security;
and the Seller or the Master Servicer, as applicable, shall thereupon own
such Receivable, and all such security and documents, free of any further
obligation to the Trustee or the Certificateholders with respect thereto.
.3 CERTAIN MATTERS AFFECTING THE TRUSTEE. Except as otherwise
provided in Section 11.1(c):
65
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officer's Certificate,
certificate of auditors or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, appraisal, bond or other
paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) the Trustee may consult with counsel and any Opinion of
Counsel shall be full and complete authorization and protection in respect of
any action taken or suffered or omitted by it under this Agreement in good
faith and in accordance with such Opinion of Counsel;
(c) the Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Agreement, or to institute, conduct
or defend any litigation under this Agreement or in relation to this Agreement,
at the request, order or direction of any of the Certificateholders, pursuant
to the provisions of this Agreement, unless such Certificateholders shall
have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities that may be incurred therein or thereby;
PROVIDED, HOWEVER, that the Trustee shall, upon the occurrence of a Master
Servicer Termination Event (that has not been cured), exercise the rights and
powers vested in it by this Agreement with reasonable care and skill;
(d) the Trustee shall not be bound to make any investigation into
the facts of matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond
or other paper or document, unless requested in writing to do so by Holders
of Certificates evidencing not less than 25% of the sum of the Class A
Certificate Balance and the Class B Certificate Balance, or, if there are no
Class A Certificates then outstanding, by Holders of Class B Certificates
evidencing not less than 25% of the Class B Certificate Balance; PROVIDED,
HOWEVER, that if the payment within a reasonable time to the Trustee of the
costs, expenses or liabilities likely to be incurred by it in the making of
such investigation is, in the opinion of the Trustee, not reasonably assured
to the Trustee by the security afforded to it by the terms of this Agreement,
the Trustee may require reasonable indemnity against such cost, expense or
liability as a condition to so proceeding; the reasonable expense of every
such examination shall be paid by the Person making such request or, if paid
by the Trustee, shall be reimbursed by the Person making such request upon
demand;
(e) The Trustee may execute any of the trusts or powers under this
Agreement or perform any duties under this Agreement ether directly or by or
through agents or attorneys or custodians. The Trustee shall not be
responsible for any misconduct or negligence on the part of any agent or
attorney appointed with due care by the Trustee. The Trustee shall not be
responsible for any misconduct or negligence attributable to the acts or
omissions of the Master Servicer;
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(f) The Trustee may rely, as to factual matters relating to the
Seller or the Master Servicer, on an Officer's Certificate of a Responsible
Officer of the Seller or Master Servicer, respectively; and
(g) The Trustee shall not be required to take any action or
refrain from taking any action under this Agreement, or any Related Document
referred to herein, nor shall any provision of this Agreement, or any such
Related Document be deemed to impose a duty on the Trustee to take action, if
the Trustee shall have been advised by counsel that such action is contrary
to the terms of this Agreement, or any Related Document or is contrary to law.
.4 TRUSTEE NOT LIABLE FOR CERTIFICATES OR RECEIVABLES. The
Trustee makes no representations as to the validity or sufficiency of this
Agreement or of the Certificates (other than the execution of the
Certificates) or of any Receivable or Related Document, except to the extent
otherwise expressly provided herein. The Trustee shall at no time (except
during such time, if any, as it is acting as successor Master Servicer) have
any responsibility or liability for or with respect to the legality, validity
and enforceability of any security interest in any Financed Vehicle or any
Receivable, or the perfection and priority of such a security interest or the
maintenance of any such perfection and priority, or for or with respect to
the efficiency of the Trust or its ability to generate the payments to be
distributed to Certificateholders under this Agreement, including, without
limitation, the existence, condition, location and ownership of any Financed
Vehicle; the existence and enforceability of any insurance thereon; the
existence of any Receivable or any computer or other record thereof (it being
understood that the Trustee has not reviewed and does not intend to review
such matters, the sole responsibility for such review being vested in the
Seller and the Master Servicer as applicable); the completeness of any
Receivable; the receipt by the Master Servicer of any Receivable; the
performance or enforcement of any Receivable; the compliance by the Seller
and the Master Servicer with any covenant or the breach by the Seller and the
Master Servicer of any warranty or representation made under this Agreement
or in any Related Document and the accuracy of any such warranty or
representation prior to the Trustee's receipt of notice or other discovery of
any noncompliance therewith or any breach thereof, any investment of monies
by or at the direction of the Master Servicer or any loss resulting therefrom
(it being understood, however, that the Trustee shall remain responsible for
any Trust Property that it may hold directly); the acts or omissions of the
Seller, the Master Servicer or any Obligor; any action of the Master Servicer
taken in the name of the Trustee; the accuracy, content or completeness of
any offering documents used in connection with the sale of the Certificates
or any action by the Trustee taken at the instruction of the Master Servicer,
the Seller or the Certificateholders holding the requisite percentage of
Certificates; PROVIDED, HOWEVER, that the foregoing shall not relieve the
Trustee of its obligation to perform its duties under this Agreement, whether
as Trustee or as Backup Servicer. The Trustee shall not be accountable for
the use or application by the Seller of any of the Certificates or of the
proceeds of such Certificates, or for the use or application of any funds
paid to the Master Servicer in respect of the Receivables prior to the time
such funds are deposited in the Collection Account.
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.5 TRUSTEE MAY OWN CERTIFICATES. The Trustee in its individual or
any other capacity may become the owner or pledgee of Certificates with the
same rights as it would have if it were not Trustee and may deal with the
Seller and the Master Servicer in banking transactions with the same rights
as it would have if it were not Trustee.
.6 TRUSTEE'S FEES AND EXPENSES; INDEMNIFICATION. The Master
Servicer in a separate agreement (the "Fee Letter") has covenanted and agreed
to pay to the Trustee, and the Trustee shall be entitled to, certain annual
fees (the "Annual Trustee's Fee") (which shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust) for all services, including services as Backup Servicer, rendered by
it in the execution of the trusts created by this Agreement and in the
exercise and performance of any of the powers and duties under this Agreement
of the Trustee. To the extent not covered by Article IX, the Seller and the
Master Servicer shall indemnify, defend, and hold harmless the Trustee and
the Backup Servicer from and against all costs, expenses, losses, claims,
damages and liabilities arising out of or incurred in connection with the
acceptance of the performance of the trusts and duties contained in this
Agreement, except to the extent that such cost, expense, loss, claim, damage
or liability is due to the bad faith or gross negligence (except for errors
in judgment) of the Trustee or the Backup Servicer, respectively. In
addition, the Master Servicer in Section 9.2 has agreed to indemnify the
Trustee with respect to certain matters, and the Certificateholders in their
individual capacity under Section 11.3(c) or (d) may agree to indemnify the
Trustee under certain circumstances. The provisions of this Section 11.6
shall (i) not be in limitation of the Fee Letter entered into in connection
with this Agreement between the Master Servicer and the Trustee (ii) shall
not terminate or be deemed released upon the resignation or termination of
HFC as the Master Servicer and (iii) shall survive any termination of this
Agreement.
.7 ELIGIBILITY REQUIREMENTS FOR TRUSTEE. The Trustee under this
Agreement shall at all times be a corporation duly organized and validly
existing under the laws of its jurisdiction of incorporation authorized under
such laws to exercise corporate trust powers, having a combined capital and
surplus of at least $50,000,000 and subject to supervision or examination by
federal or state authority, satisfactory to HFC and (if ▇▇▇▇▇'▇ then has a
rating outstanding on the Certificates) with a long-term debt rating from
▇▇▇▇▇'▇ of ["Baa3"] or higher or otherwise acceptable to ▇▇▇▇▇'▇. If such
corporation publishes reports of condition at least annually, pursuant to law
or to the requirements of the aforesaid supervising or examining authority,
then for the purpose of this Section 11.7, the combined capital and surplus
of such corporation shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. In case at any
time the Trustee shall cease to be eligible in accordance with the provisions
of this Section 11.7, the Trustee shall resign immediately in the manner and
with the effect specified in Section 11.8.
.8 RESIGNATION OR REMOVAL OF TRUSTEE. (a) Subject to the
provisions of subsection (c) of this Section 11.8, the Trustee may at any
time resign and be discharged from the trusts created by this Agreement by
giving written notice thereof to the Master
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Servicer. Upon receiving such notice of resignation, the Master Servicer
shall promptly appoint a successor Trustee by written instrument, in
duplicate, one copy of which instrument shall be delivered to the resigning
Trustee and one copy to the successor Trustee. If no successor Trustee shall
have been so appointed and have accepted appointment within 30 days after the
giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor Trustee.
(b) If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section 11.8 and shall fail to resign
after written request therefor by the Master Servicer, or if at any time the
Trustee shall be legally unable to act, or shall be adjudged a bankrupt or
insolvent or a receiver of the Trustee or of its property shall be appointed
or any public officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Master Servicer shall remove the Trustee. If the
Trustee is removed under the authority of the immediately preceding sentence,
the Master Servicer shall promptly appoint a successor Trustee by written
instrument, in duplicate, one copy of which instrument shall be delivered to
the Trustee so removed and one copy to the successor trustee. The Master
Servicer shall also pay all fees due and owing to the outgoing Trustee.
(c) Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section 11.8
shall not become effective until acceptance of appointment by the successor
Trustee as provided in Section 11.9.
(d) If the Trustee and the Backup Servicer shall be the same
Person and the rights and obligations of the Backup Servicer shall have been
terminated pursuant to Section 10.2, then a Certificate Majority shall have
the option, by 60 days' prior notice in writing to the Seller, the Master
Servicer and the Trustee, to remove the Trustee, and such Certificateholders
shall not have any liability to the Trustee, HFC, the Seller, the Master
Servicer or any Certificateholder in connection with such removal.
.9 SUCCESSOR TRUSTEE. Any successor Trustee appointed as provided
in Section 11.8 shall execute, acknowledge and deliver to the Master Servicer
and to its predecessor Trustee an instrument accepting such appointment under
this Agreement, and thereupon the resignation or removal of the predecessor
Trustee shall become effective and such successor trustee, without any
further act, deed or conveyance (except as provided below), 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
Trustee; but, on request of the Master Servicer or the successor trustee,
such predecessor Trustee shall, upon payment of its charges then unpaid,
execute and deliver an instrument transferring to such successor trustee all
of the rights, powers and trusts of the Trustee so ceasing to act, and shall
duly assign, transfer and deliver to such successor trustee all property and
money held by such trustee so ceasing to act hereunder. Upon request of any
such successor trustee, the Seller, on behalf of the Trust, shall execute any
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and all instruments for more fully and certainly vesting in and confirming to
such successor trustee all such rights, powers and trusts. The predecessor
Trustee shall deliver to the successor Trustee all documents and statements
held by it under this Agreement or any Related Document; and the predecessor
Trustee and the other parties to the Basic Documents shall amend any Related
Document to make the successor Trustee the successor to the predecessor
Trustee thereunder; and the Master Servicer and the predecessor Trustee shall
execute and deliver such instruments and do such other things as may
reasonably be required for fully and certainly vesting and confirming in the
successor Trustee all such rights, powers, duties and obligations. No
successor Trustee shall accept appointment as provided in this Section 11.9
unless at the time of such acceptance such successor Trustee shall be
eligible under the provisions of Section 11.7. Upon acceptance of appointment
by a successor Trustee as provided in this Section 11.9, the Seller shall
mail notice by first-class mail of the successor of such Trustee and the
address of the successor Trustee's corporate trust office under this Agreement
to each Rating Agency and all Holders of Certificates at their addresses as
shown in the Certificate Register. If the Seller fails to mail such notice
within 10 days after acceptance of appointment by the successor Trustee, the
successor Trustee shall cause such notice to be mailed at the expense of the
Seller.
.10 MERGER OR CONSOLIDATION OF TRUSTEE. Any corporation into
which the Trustee may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Trustee
shall be a party, or any corporation succeeding to the business of the
Trustee, shall be the successor of the Trustee under this Agreement, provided
such corporation shall be eligible under the provisions of Section 11.7,
without the execution or filing of any instrument or any further act on the
part of any of the parties to this Agreement, anything in this Agreement to
the contrary notwithstanding. The Trustee or its successor hereunder shall
provide the Master Servicer with prompt notice of any such transaction.
.11 APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE. (a)
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any
part of the Trust Property or any Financed Vehicle may at the time be
located, the Trustee, with the consent of the Master Servicer shall have the
power and may execute and deliver all instruments to appoint one or more
Persons approved by the Trustee to act as co-trustee or co-trustees, jointly
with the Trustee, or separate trustee or separate trustees, of all or any
part of the Trust Property, and to vest in such Person or Persons, in such
capacity and for the benefit of the Certificateholders, such title to the
Trust Property, or any part thereof, and, subject to the other provisions of
this Section 11.11, such powers, duties, obligations, rights and trusts as
the Master Servicer, the Trustee may consider necessary or desirable. If the
Master Servicer shall not have consented to such appointment within 15 days
after the receipt by it of a request to do so, or if a Master Servicer
Termination Event shall have occurred and be continuing, the consent of the
Master Servicer shall not be required. No co-Trustee or separate Trustee
under this Agreement shall be required to meet the terms of eligibility as a
successor trustee under Section 11.7 and no notice to Certificateholders of
the
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appointment of any co-trustee or separate trustee shall be required under
Section 11.9. Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions
and conditions:
(i) All rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or
cotrustee jointly (it being understood that such separate trustee
or cotrustee is not authorized to act separately without the
Trustee joining in such act), except to the extent that under any
law of any jurisdiction in which any particular act or acts are to
be performed by the Trustee, the Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such
rights, powers, duties and obligations (including the holding of
title to the Trust Property or any portion thereof in any such
jurisdiction) shall be exercised and performed singly by such
separate trustee or co-trustee, but solely at the direction of the
Trustee;
(ii) No trustee under this Agreement shall be personally liable
by reason of any act or omission of any other trustee under this
Agreement; and
(iii) The Master Servicer and the Trustee acting jointly may at
any time accept the resignation of or remove any separate trustee or
co-trustee.
(b) Any notice, request or other writing given to the Trustee
shall be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement
and the conditions of this Article XI. Each separate trustee and co-trustee,
upon its acceptance of the trusts conferred, shall be vested with the estates
or property specified in its instrument of appointment, either jointly with
the Trustee or separately, as may be provided therein, subject to all the
provisions of this Agreement, specifically including every provision of this
Agreement relating to the conduct of, affecting the liability of, or affording
protection to, the Trustee. Every such instrument shall be filed with the
Trustee and a copy thereof given to the Master Servicer.
(c) Any separate trustee or co-trustee may at any time constitute
the Trustee, its agent or attorney-in-fact, with full power and authority, to
the extent not prohibited by law, to do any lawful act under or in respect of
this Agreement on its behalf and in its name. If any separate trustee or
co-trustee shall die, become incapable of acting, resign or be removed, all
of its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
.12 REPRESENTATIONS AND WARRANTIES OF TRUSTEE. Each of the
Trustee and Backup Servicer represents and warrants as of the date of this
Agreement that:
(a) it is either (i) a banking corporation duly organized, validly
existing and in good standing under the laws of the state of its incorporation
or (ii) a national
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banking association duly organized, validly existing and in good standing
under the laws of the United States of America;
(b) it has full power, authority and legal right to execute,
deliver and perform this Agreement, and has taken all necessary action to
authorize the execution, delivery and performance by it of this Agreement;
(c) the execution, delivery and performance by it of this
Agreement (a) do not violate any provision of any law or regulation governing
the banking and trust powers of it or any order, writ, judgment, or decree of
any court, arbitrator, or governmental authority applicable to it or any of
its assets, (b) do not violate any provision of its corporate charter or
by-laws, or (c) to the best of its knowledge do not violate any provision of,
or constitute, with or without notice or lapse of time, a default under, or
result in the creation or imposition of any lien on any of the Trust Property
pursuant to the provisions of any mortgage, indenture, contract, agreement or
other undertaking other than this Agreement to which it is a party;
(d) the execution, delivery and performance by it of this
Agreement do not require the authorization, consent or approval of, the
giving of notice to, the filing or registration with, or the taking of any
other action in respect of, any governmental authority or agency regulating
its banking and corporate trust activities; and
(e) this Agreement has been duly executed and delivered by it and
constitutes the legal, valid and binding agreement of it, enforceable in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally and by equitable limitations on
the availability of specific remedies, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
.13 TAX RETURNS. In the event the Trust shall be required to file
tax returns, 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 Trustee for signature at least five Business Days before such
returns are due to be filed. The Trustee, upon request, shall furnish the
Master Servicer with all such information known to the Trustee as may be
reasonably required in connection with the preparation of all tax returns of
the Trust, and shall execute such returns and cause such returns to be filed
on or prior to the date on which such returns are due; provided, that such
returns have been provided to the Trustee by the Master Servicer as described
in the previous sentence.
.14 TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF CERTIFICATES.
All rights of action and claims under this Agreement or the Certificates may
be prosecuted and enforced by the Trustee without the possession of any of
the Certificates or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall be brought
in its own name as trustee. Any recovery of judgment shall, after provision
for the payment of the reasonable compensation, expenses,
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disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Certificateholders in respect of which such judgment
has been obtained.
.15 SUIT FOR ENFORCEMENT. If a Master Servicer Termination Event
shall occur and be continuing, the Trustee, in its discretion may (but shall
have no duty or obligation so to proceed), subject to the provisions of
Section 11.1, proceed to protect and enforce its rights and the rights of the
Certificateholders under this Agreement by a suit, action or proceeding in
equity or at law or otherwise, whether for the specific performance of any
covenant or agreement contained in this Agreement or in aid of the execution
of any power granted in this Agreement or for the enforcement of any other
legal, equitable or other remedy as the Trustee, being advised by counsel,
shall deem most effectual to protect and enforce any of the rights of the
Trustee or the Certificateholders.
.16 RIGHTS TO DIRECT TRUSTEE. Subject to Section 11.3(c), a
Certificate Majority shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee,
or exercising any trust or power conferred on the Trustee; PROVIDED, HOWEVER,
that subject to Section 11.1, the Trustee shall have the right to decline to
follow any such direction if the Trustee being advised by counsel determines
that the action so directed may not lawfully be taken, or if the Trustee in
good faith shall, by a Responsible Officer, determine that the proceedings so
directed would be in violation of this Agreement or any of the Basic Documents
or would subject it to personal liability against which it has not been
provided reasonable indemnity or be unduly prejudicial to the rights of
Certificateholders not parties to such direction; and provided further that
nothing in this Agreement shall impair the right of the Trustee to take any
action deemed proper by the Trustee and which is not inconsistent with such
direction by the Certificateholders.
ARTICLE XII
TERMINATION
.1 TERMINATION OF THE TRUST. (a) The respective obligations and
responsibilities of the Seller, the Master Servicer and the Trustee created
by this Agreement and the Trust created by this Agreement shall terminate
upon the latest of (i) the maturity or other liquidation of the last
Receivable (including the purchase as of any Accounting Date by the Seller or
the Master Servicer at its option of the corpus of the Trust as described in
Section 12.2) and the subsequent distribution to Certificateholders pursuant
to Section 5.5 of the amount required to be deposited pursuant to Section
12.2 or (ii) the payment to Certificateholders of all amounts required to be
paid to them pursuant to this Agreement. In either case, there shall be
delivered to the Trustee an Opinion of Counsel that all applicable preference
periods under federal, state and local bankruptcy insolvency and similar laws
have expired with respect to the payments pursuant to clause (ii); PROVIDED,
HOWEVER, that in no event shall the trust created by this Agreement continue
beyond the expiration of 21 years from the death of the last survivor of the
descendants
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living on the date of this Agreement of ▇▇▇▇ ▇▇▇▇▇▇▇ of the Commonwealth of
Massachusetts; and provided, further, that the rights to indemnification
under Sections 9.2 and 11.6 shall survive the termination of the Trust. The
Master Servicer shall promptly notify the Trustee and the Rating Agencies of
any prospective termination pursuant to this Section 12.1.
(b) Notice of any final distribution, specifying the Distribution
Date upon which the Certificateholders may surrender their Certificates to
the Trustee for payment of the final distribution and retirement of the
Certificates, shall be given promptly by the Trustee by letter to
Certificateholders mailed not earlier than the 1st day and not later than the
10th day of the month of such final distribution specifying (i) the
Distribution Date upon which final payment of the Certificates shall be made
upon presentation and surrender of Certificates at the office of the Trustee
therein specified, (ii) the amount of any such final payment, and (iii) that
the Accounting Date otherwise applicable to such Distribution Date is not
applicable, payments being made only upon presentation and surrender of the
Certificates at the office of the Trustee therein specified. The Trustee
shall give such notice to the Certificate Registrar at the time such notice
is given to Certificateholders. In the event such notice is given, the Master
Servicer or the Trustee, as the case may be, shall make deposits into the
Collection Account in accordance with Section 5.4, or, in the case of an
optional purchase of Receivables pursuant to Section 12.2, shall deposit the
amount specified in Section 12.2. Upon presentation and surrender of the
Certificates, the Trustee shall cause to be distributed to Certificateholders
amounts distributable on such Distribution Date pursuant to Section 5.5.
(c) In the event that all of the Certificateholders shall not
surrender their Certificates for retirement within six months after the date
specified in the above-mentioned written notice, the Trustee shall have a
second written notice to the remaining Certificateholders to surrender their
Certificates for retirement and receive the final distribution with respect
thereto. If within one year after the second notice all the Certificates
shall not have been surrendered for retirement, the Trustee may take
appropriate steps, or may appoint an agent to take appropriate steps, to
contact the remaining Certificateholders concerning surrender of their
Certificates, and the cost thereof shall be paid out of the funds and other
assets that remain subject to this Agreement.
.2 OPTIONAL PURCHASE OF ALL RECEIVABLES. On each Determination
Date as of which the Class A Certificate Balance is less than 10% of the
Cut-Off Date Class A Certificate Balance, the Master Servicer and the Seller
each shall have the option to purchase the corpus of the Trust. To exercise
such option, the Master Servicer or the Seller, as the case may be, shall pay
the aggregate Purchase Amounts for the Receivables, plus the appraised value
of any other property (including the right to receive any future recoveries)
held as part of the Trust, such appraisal to be conducted by an appraiser
mutually agreed upon by the Master Servicer or the Seller, as the case may
be, and the Trustee and shall succeed to all interests in and to the Trust
Property. The Master
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Servicer or Seller shall promptly notify the Rating Agencies of any proposed
exercise of such option. The fees and expenses related to such appraisal
shall be paid by the party exercising the option to purchase.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
.1 AMENDMENT. (a) This Agreement may be amended by the Seller,
the Master Servicer and the Trustee but without the consent of any of the
Certificateholders, (i) to cure any ambiguity, or (ii) to correct or
supplement any provisions in this Agreement; PROVIDED, HOWEVER, that such
action shall not, as evidenced by an Opinion of Counsel, adversely affect in
any material respect the interests of the Certificateholders.
(b) This Agreement may also be amended from time to time by the
Seller, the Master Servicer and the Trustee with the consent of a Certificate
Majority (which consent of any Holder of a Certificate given pursuant to this
Section 13.1(b) or pursuant to any other provision of this Agreement shall be
conclusive and binding on such Holder and on all future Holders of such
Certificate and of any Certificate issued upon the transfer thereof or in
exchange thereof or in lieu thereof whether or not notation of such consent
is made upon the Certificate) 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 Holders of
Certificates; 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 Receivables or distributions that shall be
required to be made on any Certificate or the Class A Pass-Through Rate or
the Class B Pass-Through Rate or (b) reduce the aforesaid percentage required
to consent to any such amendment or any waiver hereunder, without the consent
of the Holders of all Certificates then outstanding.
(c) Prior to the execution of any such amendment or consent, the
Trustee shall furnish written notification of the substance of such amendment
or consent to each Rating Agency.
(d) Promptly after the execution of any such amendment or consent,
the Trustee shall furnish written notification of the substance of such
amendment or consent to each Certificateholder.
(e) It shall not be necessary for the consent of Certificateholders
pursuant to Section 13.1(b) to approve the particular form of any proposed
amendment or consent, but it shall be sufficient if such consent shall approve
the substance thereof. The manner of obtaining such consents (and any other
consents of Certificateholders provided for in this Agreement) and of
evidencing the authorization of the execution thereof by Certificateholders
shall be subject to such reasonable requirements as the Trustee may
prescribe, including the establishment of record dates.
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(f) Prior to the execution of any amendment to this Agreement, the
Trustee shall be entitled to receive and rely upon an Opinion of Counsel
stating that the execution of such amendment is authorized or permitted by
this Agreement, in addition to the Opinion of Counsel referred to in
Section 13.2(i). The Trustee may, but shall not be obligated to, enter into
any such amendment which affects the Trustee's own rights, duties or
immunities under this Agreement or otherwise.
.2 PROTECTION OF TITLE TO TRUST. (a) The Seller or the Master
Servicer or both shall execute and file such financing statements and cause
to be executed and filed such continuation and other statements, all in such
manner and in such places as may be required by law fully to preserve,
maintain and protect the interest of the Trust and the Trustee under this
Agreement in the Trust Property and in the proceeds thereof. The Seller or
the Master Servicer or both shall deliver (or cause to be delivered) to the
Trustee file-stamped copies of, or filing receipts for, any document filed as
provided above, as soon as available following such filing.
(b) Neither the Seller nor the Master Servicer shall change its
name, identity or corporate structure in any manner that would, could or
might make any financing statement or continuation statement filed by the
Seller in accordance with paragraph (a) above seriously misleading within the
meaning of Section 9-402(7) of the UCC, unless it shall have given the
Trustee at least 60 days prior written notice thereof, and shall promptly
file appropriate amendments to all previously filed financing statements and
continuation statements.
(c) Each of the Seller and the Master Servicer shall give the
Trustee at least 60 days prior written notice of any relocation of its
principal executive office if, as a result of such relocation, the applicable
provisions of the UCC would require the filing of any amendment of any
previously filed financing or continuation statement or of any new financing
statement. The Master Servicer shall at all times maintain each office from
which it services Receivables and its principal executive office within the
United States of America.
(d) The Master Servicer shall maintain accounts and records as to
each Receivable accurately and in sufficient detail to permit (i) the reader
thereof to know at any time the status of such Receivable, including payments
and recoveries made and payments owing (and the nature of each) and (ii)
reconciliation between payments or recoveries on (or with respect to) each
Receivable and the amounts from time to time deposited in the Collection
Account in respect of such Receivable.
(e) The Master Servicer shall maintain its computer systems so
that, from and after the time of sale under this Agreement of the Receivables
to the Trustee, the Master Servicer's master computer records (including any
backup archives) that refer to any Receivable indicate clearly (with
reference to the particular grantor trust) that the Receivable is owned by
the Trust. Indication of the Trust's ownership of a Receivable shall be
deleted from or modified on the Master Servicer's computer systems when, and
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only when, the Receivable has been paid in full or repurchased by the Seller
or the Master Servicer.
(f) If at any time the Seller or the Master Servicer
proposes to sell, grant a security interest in, or otherwise transfer any
interest in automotive receivables to any prospective purchaser, lender or
other transferee, the Master Servicer shall give to such prospective
purchaser, lender or other transferee computer tapes, records or printouts
(including any restored from backup archives) that, if they refer in any
manner whatsoever to any Receivable, indicate clearly that such Receivable
has been sold and is owned by the Trust unless such Receivable has been paid
in full or repurchased by the Seller or the Master Servicer.
(g) The Master Servicer shall permit the Trustee, the
Backup Servicer, the Seller and their respective agents, at any time to
inspect, audit and make copies of and abstracts from the Master Servicer's
records regarding any Receivables or any other portion of the Trust Property.
(h) The Master Servicer shall furnish to the Trustee, the
Backup Master Servicer and the Seller at any time upon request a list of all
Receivables then held as part of the Trust, together with a reconciliation of
such list to the Schedule of Receivables and to each of the Master Servicer's
Certificates furnished before such request indicating removal of Receivables
from the Trust. The Trustee shall hold any such list and Schedule of
Receivables for examination by interested parties during normal business
hours at the Corporate Trust Office upon reasonable notice by such Persons of
their desire to conduct an examination.
(i) The Seller and the Master Servicer shall deliver to the
Trustee simultaneously with the execution and delivery of this Agreement and
of each amendment thereto and upon the occurrence of the events giving rise
to an obligation to give notice pursuant to Section 13.2(b) or (c), an
Opinion of Counsel (a) stating that, in the opinion of such Counsel, all
financing statements and continuation statements have been executed and filed
that are necessary fully to preserve and protect the interest of the Trustee
in the Receivables and the other Trust Property, and reciting the details of
such filing or referring to prior Opinions of Counsel in which such details
are given, (b) stating that, in the opinion of such counsel, no such action
is necessary to preserve and protect such interest, or (c) stating in the
opinion of such counsel, any action which is necessary to preserve and
protect such interest during the following 12-month period.
(j) The Master Servicer shall deliver to the Trustee,
within 90 days after __________, an Opinion of Counsel, either (a) stating
that, in the opinion of such counsel, all financing statements and
continuation statements have been executed and filed that are necessary fully
to preserve and protect the interest of the Trustee in the Receivables, and
reciting the details of such filings or referring to prior Opinions of
Counsel in which such details are given, or (b) stating that, in the opinion
of such counsel, no action shall be necessary to preserve and protect such
interest.
77
.3 LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS. (a) The
death or incapacity of any Certificateholder shall not operate to terminate
this Agreement or the Trust, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the
Trust, nor otherwise affect the rights, obligations and liabilities of the
parties to this Agreement or any of them.
(b) No Certificateholder shall have any right to vote
(except as provided in this Section 13.3 or Sections 10.5 or 13.1) or in any
manner otherwise control the operation and management of the Trust, or the
obligations of the parties to this Agreement, nor shall anything set forth in
this Agreement, or contained in the terms of the Certificates, be construed
so as to constitute the Certificateholders from time to time as partners or
members of an association; nor shall any Certificateholder be under any
liability to any third person by reason of any action taken by the parties to
this Agreement pursuant to any provision of this Agreement or any Related
Document.
(c) No Certificateholder shall have any right by virtue or
by availing itself of any provisions of this Agreement to institute any suit,
action, or proceeding in equity or at law upon or under or with respect to
this Agreement, unless such Holder previously shall have given to the Trustee
a written notice of default and of the continuance thereof, as provided in
this Agreement and unless also the Holders of Certificates evidencing not
less than 25% of the sum of the Class A Certificate Balance and the Class B
Certificate Balance, or, if there are no Class A Certificates then
outstanding, by Holders of Class B Certificates evidencing not less than 25%
of the Class B Certificate Balance shall have made written request upon the
Trustee to institute such action, suit or proceeding in its own name as
Trustee under this Agreement and shall have offered to the Trustee such
reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby, and the Trustee, for 30 days
after its receipt of such notice, request, and offer of indemnity, shall have
neglected or refused to institute any such action, suit, or proceeding and
during such 30-day period, no request or waiver inconsistent with such
written request has been given to the Trustee pursuant to and in compliance
with this Section 13.3 or Section 10.5; it being understood and intended, and
being expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more Holders of
Certificates shall have any right in any manner whatever by virtue or by
availing itself or themselves of any provisions of this Agreement to affect,
disturb, or prejudice the rights of the Holders of any other of the
Certificates, or to obtain or seek to obtain priority over or preference to
any other such Holder, or to enforce any right under this Agreement, except
in the manner provided in this Agreement and for the equal, ratable, and
common benefit of all Certificateholders. For the protection and enforcement
of the provisions of this Section 13.3, each and every Certificateholder and
the Trustee shall be entitled to such relief as can be given either at law or
in equity.
.4 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
78
NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF AND
THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES UNDER THIS AGREEMENT
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
.5 SEVERABILITY OF PROVISIONS. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement or of the
Certificates or the rights of the Holders thereof.
.6 ASSIGNMENT. Notwithstanding anything to the contrary
contained in this Agreement, except as provided in Section 8.2 or Section 9.3
and as provided in the provisions of the Agreement concerning the resignation
of the Master Servicer and the Backup Servicer, this Agreement may not be
assigned by the Seller or the Master Servicer without the prior written
consent of the Trustee and a Certificate Majority.
.7 CERTIFICATES NONASSESSABLE AND FULLY PAID.
Certificateholders shall not be personally liable for obligations of the
Trust, the Fractional Undivided Interests represented by the Certificates
shall be nonassessable for any losses or expenses of the Trust or for any
reason whatsoever, and Certificates upon authentication thereof by the
Trustee pursuant to Section 7.2 are and shall be deemed fully paid.
.8 THIRD-PARTY BENEFICIARIES. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Except as otherwise provided in this
Article XIII, no other Person shall have any right or obligation hereunder.
.9 COUNTERPARTS. This Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts
shall be deemed to be an original, and all of which counterparts shall
constitute but one and the same instrument.
.10 NOTICES. All demands, notices and communications upon
or to the Seller, the Master Servicer, the Trustee or the Rating Agencies
under this Agreement shall be in writing, personally delivered, or mailed by
certified mail, or sent by confirmed telecopier transmission and shall be
deemed to have been duly given upon receipt (a) in the case of the Seller to
Household Auto Receivables Corporation, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇, with a copy to Household International, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇, Attn: Treasurer (Telecopier # (847)
205-7538), (b) in the case of the Master Servicer to Household Finance
Corporation, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
Treasurer, Telecopier # (▇▇▇) ▇▇▇-▇▇▇▇, (c) in the case of the Trustee at the
Corporate Trust Office, Telecopier # ______________, and (e) in the case of
any Rating Agency, [Names and Addresses of Ratings Agencies]. Any notice
required or permitted to be mailed to a Certificateholder shall be given by
first class mail, postage prepaid, at the address of such Holder as shown
79
in the Certificate Register. Any notice so mailed within the time prescribed
in the Agreement shall be conclusively presumed to have been duly given,
whether or not the Certificateholder shall receive such notice.
.11 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon the parties hereof and their respective successors and assigns, and
shall inure to the benefit of and be enforceable by the parties hereof and
their respective successors and assigns permitted hereunder. All covenants
and agreements contained herein shall be binding upon, and inure to the
benefit of, the Trustee and the Certificateholders and their respective
permitted successors and assigns, if any. Any request, notice, direction,
consent, waiver or other instrument or action by any Certificateholder shall
bind its successors and assigns.
80
IN WITNESS WHEREOF, the Seller, the Master Servicer and the
Trustee have caused this Pooling and Servicing Agreement to be duly executed
by their respective officers, effective as of the day and year first above
written.
HOUSEHOLD AUTO RECEIVABLES
CORPORATION,
as Seller,
by
---------------------------------------
Name:
Title:
HOUSEHOLD FINANCE CORPORATION,
as Master Servicer,
by
---------------------------------------
Name:
Title:
[Name of Trustee]
not in its individual capacity but as Trustee
and Backup Servicer,
by
---------------------------------------
Name:
Title:
[Signature Page for Pooling and Servicing Agreement]
81
SCHEDULE A
SCHEDULE OF RECEIVABLES
SCHEDULE B
REPRESENTATIONS AND WARRANTIES OF THE SELLER
CHARACTERISTICS OF RECEIVABLES.
The Seller represents and warrants as to the related Receivables that the
representations and warranties set forth hereunder are, or will be, true and
correct as of the Cutoff Date. The Trust is deemed to have relied on such
representations and warranties in acquiring the related Receivables and the
related Certificateholders shall be deemed to rely on such representations
and warranties in purchasing the Certificates. Such representations and
warranties shall survive the sale, transfer and assignment of the related
Trust Estate to the Trust and any pledge thereof to the Trustee pursuant to
the Pooling and Servicing Agreement and the related Supplement.
"ELIGIBLE RECEIVABLE" means a Series _____ Receivable with respect to which
each of the following is true as of the Cutoff Date:
(a) that (i) was originated directly by HAFC (or any predecessor or
Affiliate of HAFC) with the consumer or was originated by a Dealer for the
retail sale of a Financed Vehicle in the ordinary course of such Dealer's
business and (A) in the case of a Dealer originated receivable, such Dealer
had all necessary licenses and permits to originate receivables in the
state where such Dealer was located, and such receivable was purchased by
HAFC (or any predecessor or Affiliate of HAFC) from such Dealer under an
existing Dealer Agreement with HAFC (or any predecessor or Affiliate of
HAFC), and (B) in the case of a Dealer originated receivable or a
receivable originated by HAFC (or any predecessor or Affiliate of HAFC)
such receivable was purchased (x) by HARC pursuant to the terms of the
Master Receivables Purchase Agreement or by a master receivables purchase
agreement between HARC and HAFC, dated as of ______________, that is
substantially the same as the Master Receivables Purchase Agreement (the
"Trust __ Receivables Purchase Agreement"), (y) by the Trust pursuant to
the Pooling and Servicing Agreement; and each Series _____ Receivable was
validly assigned (1) if Dealer originated, by such Dealer to HAFC (or any
predecessor or Affiliate of HAFC), (2) by HAFC to HARC pursuant to the
terms of the Master Receivables Purchase Agreement or the Trust __
Receivables Purchase Agreement and (3) by HARC to the Trust pursuant to the
Pooling and Servicing Agreement, (ii) was fully and properly executed by
the parties thereto, (iii) contains customary and enforceable provisions
such as to render the rights and remedies of the holder thereof adequate
for realization against the collateral security, and (iv) is fully
amortizing and provides for level monthly payments (provided that the first
and final payment of the Series _____ Receivable may be minimally different
from the level payment) which, if made when due, shall fully amortize the
Amount Financed over the original term;
B-1
(b) that if originated by a Dealer, was sold by the Dealer to HAFC (or any
predecessor or Affiliate of HAFC) without any fraud or material
misrepresentation on the part of such Dealer in either case or on the part
of the Obligor;
(c) with respect to which all requirements of applicable federal, state and
local laws, and regulations thereunder (including, without limitation,
usury laws, the Federal Truth-in-Lending Act, the Equal Credit Opportunity
Act, the Fair Credit Billing Act, the Fair Credit Reporting Act, the Fair
Debt Collection Practices Act, the Federal Trade Commission Act, the
▇▇▇▇▇▇▇▇-▇▇▇▇ Warranty Act, the Federal Reserve Board's Regulations "B" and
"Z", the Soldiers' and Sailors' Civil Relief Act of 1940 and state
adaptations of the National Consumer Act and of the Uniform Consumer Credit
Code and other consumer credit laws and equal credit opportunity and
disclosure laws) in respect of all of the Series _____ Receivables, each
and every sale of Financed Vehicles and the sale of any physical damage,
loss, credit life and credit accident and health insurance and any extended
service contracts, have been complied with in all material respects, and
each Series _____ Receivable and the sale of the Financed Vehicle evidenced
by each Series _____ Receivable and the sale of any physical damage, loss,
credit life and credit accident and health insurance and any extended
service contracts complied at the time it was originated or made and now
complies in all material respects with all applicable legal requirements;
(d) that was originated in the United States of America and, at the time of
origination materially conformed to all requirements of the Dealer
Underwriting Guides (or such similar guidelines of any predecessor or
affiliate of HAFC) applicable thereto;
(e) which represents the genuine, legal, valid and binding payment
obligation of the Obligor thereon, enforceable by the holder thereof in
accordance with its terms, except (A) as enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting the
enforcement of creditors' rights generally and by equitable limitations on
the availability of specific remedies, regardless of whether such
enforceability is considered in a proceeding in equity or at law and (B) as
such Receivable may be modified by the application of the Soldiers' and
Sailors' Civil Relief Act of 1940, as amended; and all parties thereto had
full legal capacity to execute and deliver such Receivable and all other
documents related thereto and to grant the security interest purported to
be granted thereby;
(f) which is not due from the United States of America or any state or from
any agency, department, subdivision or instrumentality thereof;
(g) which (i) had an original maturity of at least __ months but not more
than __ months, (ii) had an original Amount Financed of at least $____ and
not more than $____, (iii) had an Annual Percentage Rate of at least ___%
and not more than __%, (iv) was not more than __ days past due, (v) no
funds have been advanced by the Trusts, the Master Servicer, HAFC, any
predecessor or Affiliate of HAFC, any Dealer, or anyone acting on behalf of
any of them in order to cause such Series _____ Receivable to qualify under
subclause (iv) of this clause (g) and (vi) had no provision thereof waived,
altered or modified in any respect since its origination;
B-2
(h) with respect to which the information pertaining to such Series _____
Receivable set forth in each Schedule of Receivables is true and correct in
all material respects;
(i) with respect to which HAFC will have caused the portions of HAFC's and
the Master Servicer's servicing records relating to such Series _____
Receivable to be clearly and unambiguously marked to show that such Series
_____ Receivable has been transferred by HAFC to HARC in accordance with
the terms of the Master Receivables Purchase Agreement and by HARC to the
Trust pursuant to the Pooling and Servicing Agreement or the Trust __
Receivables Purchase Agreement;
(j) with respect to which the computer tape or listing to be made available
by HAFC to HARC, the Master Servicer or the Trustee is complete and
accurate and includes a description of the same Series _____ Receivables
that are, or will be, described in the related Schedule of Receivables;
(k) which constitutes chattel paper within the meaning of the UCC;
(l) of which there is only one original executed copy;
(m) with respect to which there exists a Receivable File and such
Receivable File contains, without limitation, (a) a fully executed original
of such Receivable, (b) a certificate of insurance, application form for
insurance signed by the Obligor, or a signed representation letter from the
relevant Obligor named pursuant to which the Obligor has agreed to obtain
physical damage insurance for the related Financed Vehicle, (c) the
original Lien Certificate or application therefor showing HAFC (or any
predecessor or Affiliate of HAFC) as first lienholder and by HAFC (or any
predecessor or Affiliate of HAFC) to HARC and by HARC to the Trust) and (d)
an original credit application signed by the Obligor; and (x) each of the
documents relating thereto which is required to be signed by the Obligor
has been signed by the Obligor in the appropriate spaces and (y) all blanks
on any form relating thereto by HAFC (or any predecessor or Affiliate of
HAFC) to be completed have been properly filled in and each form has
otherwise been correctly prepared; and, notwithstanding the above, with
respect to which, a copy of the complete Receivable File for such Series
_____ Receivable, which fulfills the documentation requirements of the
Dealer Underwriting Guides as in effect at the time of purchase is in the
possession of the Master Servicer or Sub-Servicer;
(n) which has not been satisfied, subordinated or rescinded, and the
Financed Vehicle securing such Series _____ Receivable has not been
released from the lien of such Series _____ Receivable in whole or in part;
(o) which was not originated in, and is not subject to the laws of, any
jurisdiction the laws of which would make unlawful, void or voidable the
sale, transfer and assignment of such Series _____ Receivable and with
respect to which neither HAFC (nor any predecessor or affiliate of HAFC)
nor the Trust has entered into any agreement with any account debtor that
prohibits, restricts or conditions the assignment of any portion of such
Series _____ Receivable;
B-3
(p) which has not been sold, transferred, assigned or pledged to any Person
other than to (i) HAFC (or any predecessor or Affiliate of HAFC) by a
Dealer, (ii) HARC by HAFC pursuant to the terms of the Master Receivables
Purchase Agreement or the Trust __ Receivables Purchase Agreement and (iii)
the Trust by HARC pursuant to the terms of the Pooling and Servicing
Agreement. No Dealer has a participation in, or other right to receive,
proceeds of any Series _____ Receivable and with respect to which neither
HAFC (nor any predecessor or Affiliate of HAFC), HARC nor the Trustee has
taken any action to convey any right to any Person that would result in
such Person having a right to payments received under the related Insurance
Policy or the related Dealer Agreement or Dealer Assignment or to payments
due under such Series _____ Receivable;
(q) which creates or shall create a valid, binding and enforceable first
priority security interest in favor of HAFC in the Financed Vehicle;
(r) which is secured by an enforceable and perfected first priority
security interest in the Financed Vehicle in favor of HAFC as secured
party, which security interest is prior to all other Liens upon and
security interests in such Financed Vehicle which now exist or may
hereafter arise or be created (except, as to priority, for any Lien for
taxes, labor or materials affecting a Financed Vehicle); and, with respect
to which there are no Liens or claims for taxes, work, labor or materials
affecting the related Financed Vehicle which are or may be Liens prior or
equal to the lien of such Receivable;
(s) as to which all filings (including, without limitation, UCC filings)
required to be made by any Person and actions required to be taken or
performed by any Person in any jurisdiction to give the Trustee a first
priority perfected lien on, or ownership interest in, the Series _____
Receivables and the proceeds thereof have been made, taken or performed;
(t) as to which HAFC (or any predecessor or Affiliate of HAFC), HARC or the
Trust has not done anything to convey any right to any Person that would
result in such Person having a right to payments due under such Series
_____ Receivable or otherwise to impair the rights of the Trustee, the
Certificateholders in such Series _____ Receivable or the proceeds thereof;
(u) which is not assumable by another Person in a manner which would
release the Obligor thereof from such Obligor's obligations with respect to
such Receivable;
(v) which is not subject to any right of rescission, setoff, counterclaim
or defense and no such right has been asserted or threatened with respect
thereto;
(w) as to which there has been no default, breach, violation or event
permitting acceleration under the terms of such Series _____ Receivable
(other than payment delinquencies of not more than 30 days) and no
condition exists or event has occurred and is continuing that with notice,
the lapse of time or both would constitute a default, breach, violation or
event permitting acceleration under the terms of such Series _____
Receivable, and there has been no waiver of any of the foregoing, and with
respect to which the related Financed Vehicle had not been repossessed;
B-4
(x) at the time of the origination of which, the related Financed Vehicle
was covered by a comprehensive and collision insurance policy (i) in an
amount at least equal to the lesser of (a) its maximum insurable value and
(b) the principal amount due from the Obligor thereunder, (ii) naming HAFC
(or any predecessor or Affiliate of HAFC) and its successors and assigns as
loss payee and (iii) insuring against loss and damage due to fire, theft,
transportation, collision and other risks generally covered by
comprehensive and collision coverage and with respect to which the Obligor
is required to maintain physical loss and damage insurance, naming HAFC (or
any predecessor or Affiliate of HAFC) and its successors and assigns as
additional insured parties, and such Receivable permits the holder thereof
to obtain physical loss and damage insurance at the expense of the Obligor
if the Obligor fails to do so;
(y) with respect to which the following is true:
The Lien Certificate for the related Financed Vehicle shows, or if a new or
replacement Lien Certificate is being applied for with respect to such
Financed Vehicle the Lien Certificate will be received within 180 days of
the Series _____ Closing Date and will show, HAFC (or any predecessor or
Affiliate of HAFC) named as the original secured party under such Series
_____ Receivable and, accordingly, HAFC will be the holder of a first
priority security interest in such Financed Vehicle. With respect to each
Series _____ Receivable for which the Lien Certificate has not yet been
returned from the Registrar of Titles, HAFC has received written evidence
from the related Dealer or the Obligor that such Lien Certificate showing
HAFC as first lienholder has been applied for. If the Series _____
Receivable was originated in a state in which a filing or recording is
required of the secured party to perfect a security interest in motor
vehicles, such filings or recordings have been duly made to show HAFC named
as the original secured party under the related Series _____ Receivable;
and
(z) as to which no selection procedures adverse to the Certificateholders
or the Certificateholder have been utilized in selecting such Series _____
Receivable from all other similar Receivables purchased by HAFC or any
predecessor or Affiliate of HAFC.
B-5
EXHIBIT A
FORM OF CLASS A CERTIFICATE
SEE ATTACHED PAGES FOR CERTAIN DEFINITIONS
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION
("DTC") TO THE TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.
OR IN SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
A-1
HOUSEHOLD AUTOMOTIVE TRUST
-----
% ASSET BACKED CERTIFICATE, CLASS A
----
NUMBER
A-1 $
-------
THIS CERTIFIES THAT CEDE & CO. is the registered owner of
__________ cent nonassessable, fully-paid, fractional undivided interest in
the Household Automotive Trust _____ (the "Trust") formed by Household Auto
Receivables Corporation., a Nevada corporation (the "Seller"). The Trust was
created pursuant to a Pooling and Servicing Agreement dated as of ________
(the "Agreement"), among the Seller, Household Finance Corporation, as master
servicer (the "Master Servicer"), and [Name of Trustee], as trustee (the
"Trustee"), a summary of certain of the pertinent provisions of which is set
forth below. Unless the certificate of authentication hereon shall have been
executed by an authorized signatory of the Trustee, by manual signature, this
Class A Certificate shall not entitle the holder hereof to any benefit under
the Agreement or be valid for any purpose. All capitalized terms not
otherwise defined herein have the meanings assigned to them in the Agreement.
IN WITNESS WHEREOF, the Trustee on behalf of the Trust and
not in its individual capacity has caused this Class A Certificate to be duly
executed.
HOUSEHOLD AUTOMOTIVE
TRUST ___
By: [NAME OF TRUSTEE], as
Trustee
By:
---------------------------------
DATED:
-------------
This is one of the Class A Certificates referred to in
the within-mentioned Agreement.
[Name of Trustee], as Trustee
By:
---------------------------------
Authorized Signatory
A-2
This Certificate evidences a fractional undivided interest
in the Trust, as defined above, the property of which includes a pool of
retail installment sale contracts secured by new and used automobiles and
light trucks and sold to the Trust by the Seller. This Certificate does not
represent an interest in or obligation of the Seller, in its individual
capacity or as the Master Servicer or any of their respective affiliates
thereof, except to the extent described below.
To the extent not otherwise defined herein, the capitalized
terms used herein have the meanings assigned to them in the Agreement. This
Certificate is one of the duly authorized Certificates designated as "___%
Asset Backed Certificates, Class A" (herein called the "Class A
Certificates"). Also issued under the Agreement are Certificates designated
as "Asset Backed Certificates, Class B" (the "Class B Certificates"). The
Class B Certificates and the Class A Certificates are hereinafter
collectively called the "Certificates." The Class A Certificates represent
initially, or in the aggregate, __% of the principal balance of all
Certificates. This Class A Certificate is issued under and is subject to the
terms, provisions, and conditions of the Agreement, to which Agreement the
holder of this Class A Certificate by virtue of the acceptance hereof assents
and by which such holder is bound. The property of the Trust includes (as
more fully described in the Agreement) a pool of retail installment sale
contracts for new and used automobiles and light duty trucks (the
"Receivables"), certain monies due thereunder on or after _________, security
interests in the vehicles financed thereby, certain bank accounts and the
proceeds thereof, property securing the Receivables and held by the Trustee,
proceeds from claims on physical damage, credit life and disability insurance
policies covering vehicles financed thereby and the obligors thereunder, all
Collateral Insurance relating to the Receivables and the financed vehicles,
certain rights against Dealers and in contracts with Dealers, all right,
title and interest of the Seller in and to this Agreement and any and all
proceeds of the foregoing.
Under the Agreement, there will be distributed on the 17th
day of each month or, if such 17th day is not a Business Day, the next
Business Day (the "Distribution Date"), commencing on _________, to the
person in whose name this Class A Certificate is registered at the close of
business on the last day of the prior calendar month (the "Accounting Date"),
to the extent available from the Amount Available, such Class A
Certificateholder's fractional undivided interest in the sum of the Class A
Interest Distributable Amount for such Distribution Date, any outstanding
Class A Interest Carryover Shortfall for such Distribution Date, the Class A
Principal Distributable Amount for such Distribution Date and any Class A
Principal Carryover Shortfall for such Distribution Date.
Except as otherwise provided in the Agreement,
distributions on this Class A Certificate will be made by the Trustee by wire
transfer (as provided in the Agreement), check or money order mailed to the
Class A Certificateholder of record in the Certificate Register without the
presentation or surrender of this Class A Certificate or the making of any
notation hereon. Except as otherwise provided in the Agreement and
notwithstanding the above, the final distribution on this Class A Certificate
will be made
A-3
after due notice by the Trustee of the pendency of such distribution and only
upon presentation and surrender of this Class A Certificate at the office or
agency maintained for that purpose by the Trustee in [Place of Office]. The
Accounting Date otherwise applicable to such distribution shall not be
applicable.
The Certificates do not represent an obligation of, or an
interest in, the Seller, the Master Servicer, the Trustee or any affiliate of
any of them. The Certificates are limited in right of payment to certain
collections and recoveries respecting the Receivables, all as more
specifically set forth in the Agreement. A copy of the Agreement may be
examined during normal business hours at the principal office of the Seller,
and at such other places, if any, designated by the Seller, by any
Certificateholder upon request.
As provided in the Agreement, no Certificateholder shall
have any right by virtue or by availing itself of any provisions of the
Agreement to institute any suit, action, or proceeding in equity or at law
upon or under or with respect to the Agreement, unless such Holder previously
shall have given to the Trustee a written notice of default and of the
continuance thereof, as provided in the Agreement and unless also the Holders
of Certificates evidencing not less than 25% of the sum of the Class A
Certificate Balance and the Class B Certificate Balance, or, if there are no
Class A Certificates then outstanding, by Holders of Class B Certificates
evidencing not less than 25% of the Class B Certificate Balance shall have
made written request upon the Trustee to institute such action, suit or
proceeding in its own name as Trustee under the Agreement.
The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Seller and the rights of the Certificateholders under the
Agreement at any time by the Seller and the Trustee with the consent the
Holders of Certificates, voting together as a Class, evidencing not less than
a Certificate Majority. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and on all future Holders of
this Certificate and of any Certificate issued upon the registration of
transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain
limitations set forth therein, the transfer of this Certificate is
registrable in the Certificate Registrar upon surrender of this Certificate
for registration of transfer at the offices or agencies maintained by the
Trustee in its capacity as Certificate Registrar, or by any successor
Certificate Registrar, in the City of [Place of Office], accompanied by a
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the holder hereof or such holder's
attorney duly authorized in writing, and thereupon one or more new
Certificates of authorized denominations evidencing the same aggregate
interest in the Trust will be issued to the designated transferee.
A-4
The Class A Certificates and the Class B Certificates are
issuable only as registered Certificates without coupons in denominations of
$1,000 and integral multiples of $1,000 in excess thereof; however, one
Certificate of each such Class may be issued in a denomination representing
or including any remaining portion of the original Class A Certificate
Balance or the original Class B Certificate Balance, as the case may be. As
provided in the Agreement and subject to certain limitations therein set
forth, Certificates are exchangeable for new Certificates of authorized
denominations evidencing the same aggregate denomination, as requested by the
holder surrendering the same. No service charge will be made for any such
registration of transfer or exchange, but the Trustee may require payment of
a sum sufficient to cover any tax or governmental charges payable in
connection therewith.
The Trustee, the Certificate Registrar, and any agent of
the Trustee or the Certificate Registrar may treat the person in whose name
this Class A Certificate is registered as the owner hereof for all purposes,
and neither the Trustee, the Certificate Registrar, nor any such agent shall
be affected by any notice to the contrary.
The obligations and responsibilities created by the
Agreement and the Trust created thereby shall terminate upon the payment to
Certificateholders of all amounts required to be paid to them pursuant to the
Agreement and the disposition of all property held as part of the Trust. The
Master Servicer of the Receivables may at its option purchase the corpus of
the Trust at a price specified in the Agreement, and such purchase of the
Receivables and other property of the Trust will effect early retirement of
the Certificates; however, such right of purchase is exercisable only as of
the last day of any Collection Period as of which the Class A Certificate
Balance is 10% or less of the Cut-Off Date Class A Certificate Balance.
The recitals contained herein (other than the certificate
of authentication herein) shall be taken as the statements of the Seller or
the Master Servicer, as the case may be, and the Trustee assumes no
responsibility for the correctness thereof. The Trustee makes no
representations as to the validity or sufficiency of this Certificate (other
than the certificate of authentication herein), or of any Receivable or
related document.
A-5
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
------------------------------------
(Please print or typewrite name and address, including postal zip code, of
assignee)
------------------------------------
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
________________________ Attorney to transfer said Certificate on the books of
the Certificate Registrar, with full power of substitution in the premises.
Dated:
-----------------------------
Signature Guaranteed:
*
-----------------------------
* NOTICE: The signature to this assignment must correspond with the name as
it appears upon the face of the within Certificate in every particular,
without alteration, enlargement or any change whatever. Such signature must
be guaranteed by a member firm of the New York Stock Exchange or a commercial
bank or trust company.
A-6
EXHIBIT B
FORM OF CLASS B CERTIFICATE
SEE ATTACHED PAGES FOR CERTAIN DEFINITIONS
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF CERTAIN
PAYMENTS TO THE CLASS A CERTIFICATES AS DESCRIBED IN THE AGREEMENT REFERRED
TO HEREIN. IN ADDITION, ALL DISTRIBUTIONS HEREON ARE SUBJECT TO THE PRIOR
CLAIMS OF CERTAIN PARTIES TO RECEIVE AMOUNTS ON DEPOSIT IN THE SPREAD ACCOUNT.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES
LAWS OF ANY STATE IN RELIANCE UPON EXEMPTIONS PROVIDED BY THE SECURITIES ACT
AND SUCH STATE SECURITIES LAWS. NO RESALE OR OTHER TRANSFER OF THIS
CERTIFICATE MAY BE MADE UNLESS SUCH RESALE OR TRANSFER (A) IS MADE IN
ACCORDANCE WITH SECTION 7.3 OF THE POOLING AND SERVICING AGREEMENT AND (B) IS
MADE (i) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT, (ii) IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, (iii) TO THE SELLER OR
(iv) TO A PERSON WHO THE TRANSFEROR REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT
THAT IS AWARE THAT THE RESALE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A AND (C) UPON THE SATISFACTION OF CERTAIN OTHER REQUIREMENTS
SPECIFIED IN THE AGREEMENT. NEITHER THE SELLER, THE MASTER SERVICER, THE
TRUST NOR THE TRUSTEE IS OBLIGATED TO REGISTER THE CERTIFICATES UNDER THE
SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS.
NO RESALE OR OTHER TRANSFER OF THIS CERTIFICATE MAY BE MADE
UNLESS THE CERTIFICATE REGISTRAR SHALL HAVE RECEIVED A REPRESENTATION LETTER IN
SUBSTANTIALLY THE FORM REQUIRED BY THE AGREEMENT REFERRED TO BELOW FROM THE
TRANSFEREE OF THIS CERTIFICATE OR SUCH OTHER REPRESENTATIONS (OR AN OPINION OF
COUNSEL) AS MAY BE APPROVED BY THE SELLER, TO THE EFFECT THAT SUCH A TRANSFER
MAY BE MADE PURSUANT TO AN EXEMPTION FROM THE SECURITIES ACT, INCLUDING RULE
144A THEREUNDER, AND APPLICABLE STATE SECURITIES LAWS AND (A) SUCH TRANSFEREE
WILL NOT ACQUIRE THIS CERTIFICATE WITH THE ASSETS OF ANY "EMPLOYEE BENEFIT PLAN"
AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA") OR SECTION
4975(e)(1) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), (B)
IN THE CASE OF A TRANSFER TO AN INSURANCE COMPANY GENERAL ACCOUNT, EITHER (A)
ABOVE OR, PURSUANT TO SECTION I OF PROHIBITED TRANSACTION CLASS EXEMPTION
95-60 ("PTCE 9560"), THE ACQUISITION AND HOLDING OF THE CERTIFICATE AND,
PURSUANT TO SECTION III OF PTCE 95-60, THE SERVICING, MANAGEMENT AND
OPERATION OF THE TRUST ARE, WITH RESPECT TO SUCH TRANSFEREE, EXEMPT FROM THE
"PROHIBITED TRANSACTION" PROVISIONS OF ERISA AND THE CODE.
B-2
HOUSEHOLD AUTOMOTIVE TRUST ______
ASSET BACKED CERTIFICATE, CLASS B
NUMBER
RB $____________
THIS CERTIFIES THAT Household Auto Receivables Corporation
is the registered owner of a $_______ dollars nonassessable, fully-paid,
fractional undivided interest in the Household Automotive Trust _____ (the
"Trust") formed Household Auto Receivables Corporation, a Nevada corporation
(the "Seller"). The Trust was created pursuant to a Pooling and Servicing
Agreement dated as of ________ (the "Agreement"), among the Seller, Household
Finance Corporation, as master servicer (the "Master Servicer") , and
[Name of Trustee], as Trustee (the "Trustee"), a summary of certain of the
pertinent provisions of which is set forth below.
Reference is made to the further provisions of this Class B
Certificate set forth in the attached pages 3 through 7, which further
provisions shall for all purposes have the same effect as if set forth at
this place. Unless the certificate of authentication hereon shall have been
executed by an authorized signatory of the Trustee, by manual signature, this
Class B Certificate shall not entitle the holder hereof to any benefit under
the Agreement or be valid for any purpose. All capitalized terms not
otherwise defined herein have the meanings assigned to them in the Agreement.
IN WITNESS WHEREOF, the Trustee on behalf of the Trust and
not in its individual capacity has caused this Class B Certificate to be duly
executed.
HOUSEHOLD AUTOMOTIVE
TRUST______
By: [Name of Trustee], as Trustee
By:_______________________________
________
DATED: _________
This is one of the Class B Certificates referred to in
the within-mentioned Agreement.
[Name of Trustee], as Trustee
By:______________________________
B-3
Authorized Signatory
B-4
This Certificate evidences a fractional undivided interest
in the Trust, as defined below, the property of which includes a pool of
retail installment sale contracts secured by new and used automobiles and
light duty trucks and sold to the Trust by the Seller. This Certificate does
not represent an interest in or obligation of the Seller, in its individual
capacity or of the Master Servicer or any of their respective affiliates
thereof, except to the extent described below.
To the extent not otherwise defined herein, the capitalized
terms used herein have the meanings assigned to them in the Agreement. This
Certificate is one of the duly authorized Certificates designated as "Asset
Backed Certificates, Class B" (herein called the "Class B Certificates").
Also issued under the Agreement are Certificates designated as "___% Asset
Backed Certificates, Class A" (the "Class A Certificates"). The Class B
Certificates and the Class A Certificates are hereinafter collectively called
the "Certificates." This Class B Certificate is issued under and is subject
to the terms, provisions, and conditions of the Agreement, to which Agreement
the holder of this Class B Certificate by virtue of the acceptance hereof
assents and by which such holder is bound. The property of the Trust includes
(as more fully described in the Agreement) a pool of retail installment sale
contracts for new and used automobiles and light duty trucks (the
"Receivables"), certain monies due thereunder on or _________, security
interests in the vehicles financed thereby, certain bank accounts and the
proceeds thereof, property securing the Receivables and held by the Trustee,
proceeds from claims on physical damage, credit life and disability insurance
policies covering vehicles financed thereby and the obligors thereunder, all
Collateral Insurance relating to the Receivables and the financed vehicles,
certain rights against Dealers and in contracts with Dealers, all right,
title and interest of the Seller in and to this Agreement and any and all
proceeds of the foregoing. The rights of the holders of the Class B
Certificates to receive certain payments are subordinated to the rights of
the holders of the Class A Certificates, as set forth in the Agreement.
Under the Agreement, on the 17th day of each month or, if
such 17th day is not a Business Day, the next Business Day (the "Distribution
Date"), commencing on ____________, the Class B Distributable Amount (as
defined in the Agreement) will be applied as follows:
(A) Holder of the Class B Certificate.
Except as otherwise provided in the Agreement,
distributions on this Class B Certificate will be made by the Trustee by wire
transfer (as provided in the Agreement), check or money order mailed to the
Class B Certificateholder of record in the Certificate Register without the
presentation or surrender of this Class B Certificate or the making of any
notation hereon. Except as otherwise provided in the Agreement and
notwithstanding the above, the final distribution on this Class B Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Class B
Certificate at the office or agency maintained for that purpose by the
Trustee in [Place of Office].
B-5
The Certificates do not represent an obligation of, or an
interest in, the Seller, the Master Servicer, the Trustee or any affiliate of
any of them. The Certificates are limited in right of payment to certain
collections and recoveries respecting the Receivables, all as more
specifically set forth in the Agreement. A copy of the Agreement may be
examined during normal business hours at the principal office of the Seller,
and at such other places, if any, designated by the Seller, by any
Certificateholder upon request.
The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Seller and the rights of the Certificateholders under the
Agreement at any time by the Seller and the Trustee with the consent of the
Holders of Certificates, voting together as a Class, evidencing not less than
a Certificate Majority. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and on all future Holders of
this Certificate and of any Certificate issued upon the registration of
transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the Certificates. Notwithstanding the
foregoing, however, no consent of any Class A Certificateholder or Class B
Certificateholder shall be required in connection with any amendment in order
for the Seller to sell, assign, transfer or otherwise dispose of the excess
interest.
As provided in the Agreement and subject to certain
limitations set forth therein, the transfer of this Certificate is
registrable in the Certificate Registrar upon surrender of this Certificate
for registration of transfer at the offices or agencies maintained by the
Trustee in its capacity as Certificate Registrar, or by any successor
Certificate Registrar, in [Place of Office], accompanied by a written
instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the holder hereof or such holder's
attorney duly authorized in writing, and thereupon one or more new
Certificates of authorized denominations evidencing the same aggregate
interest in the Trust will be issued to the designated transferee.
The Class A Certificates and Class B Certificates are
issuable only as registered Certificates without coupons in denominations of
$1,000,000 and integral multiples of $1,000 in excess thereof; however, one
Certificate of each such Class may be issued in a denomination representing
or including any remaining portion of the original Class A Certificate
Balance or the original Class B Certificate Balance, as the case may be. As
provided in the Agreement and subject to certain limitations therein set
forth, Certificates are exchangeable for new Certificates of authorized
denominations evidencing the same aggregate denomination, as requested by the
holder surrendering the same. No service charge will be made for any such
registration of transfer or exchange, but the Trustee may require payment of
a sum sufficient to cover any tax or governmental charges payable in
connection therewith.
B-6
The Trustee, the Certificate Registrar, and any agent of
the Trustee or the Certificate Registrar may treat the person in whose name
this Class B Certificate is registered as the owner hereof for all purposes,
and neither the Trustee, the Certificate Registrar, nor any such agent shall
be affected by any notice to the contrary.
The obligations and responsibilities created by the
Agreement and the Trust created thereby shall terminate upon the payment to
Certificateholders of all amounts required to be paid to them pursuant to the
Agreement and the disposition of all property held as part of the Trust. The
Master Servicer may at its option purchase the corpus of the Trust at a price
specified in the Agreement, and such purchase of the Receivables and other
property of the Trust will effect early retirement of the Certificates;
however, such right of purchase is exercisable only as of the last day of any
Collection Period as of which the Class A Certificate Balance is less than
[10]% of the Cut-Off Date Class A Certificate Balance.
The recitals contained herein (other than the certificate
of authentication herein) shall be taken as the statements of the Seller or
the Servicer, as the case may be, and the Trustee assumes no responsibility
for the correctness thereof. The Trustee makes no representations as to the
validity or sufficiency of this Certificate (other than the certificate of
authentication herein), or of any Receivable or related document.
B-7
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
____________________________________
(Please print or typewrite name and address, including postal zip code, of
assignee)
____________________________________
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
________________________ Attorney to transfer said Certificate on the books of
the Certificate Registrar, with full power of substitution in the premises.
Dated:
_____________________________
Signature Guaranteed:
_____________________________*
* NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Certificate in every particular, without
alteration, enlargement or any change whatever. Such signature must be
guaranteed by a member firm of the New York Stock Exchange or a commercial bank
or trust company.
B-8
EXHIBIT C
FORM OF MASTER SERVICER'S CERTIFICATE