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HOUSEHOLD FINANCE CORPORATION,
as the Master Servicer,
together with
HOUSEHOLD AUTOMOBILE REVOLVING TRUST I,
as Issuer,
HOUSEHOLD AUTO RECEIVABLES CORPORATION,
as Seller,
and
THE CHASE MANHATTAN BANK,
as Indenture Trustee and Trust Collateral Agent
and
WILMINGTON TRUST COMPANY,
as Owner Trustee
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SERIES 1998-1 SUPPLEMENT
Dated as of November 1, 1998
to the
INDENTURE
Dated as of November 1, 1998
and to the
TRUST AGREEMENT
Dated as of March 1, 1998
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TABLE OF CONTENTS
PAGE
ARTICLE I CREATION OF THE SERIES 1998-1 NOTES. . . . . . . . . . . . . . . . . 1
SECTION 1.01. DESIGNATION. . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. PLEDGE OF SERIES 1998-1 TRUST ESTATE.. . . . . . . . . . . 2
SECTION 1.03. PAYMENTS AND COMPUTATIONS. . . . . . . . . . . . . . . . . 3
SECTION 1.04. DENOMINATIONS. . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE II DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2.01. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE III DISTRIBUTIONS AND STATEMENTS TO SERIES 1998-1
NOTEHOLDERS; SERIES SPECIFIC COVENANTS . . . . . . . . . . . . . . .15
SECTION 3.01. SERIES 1998-1 TRUST ACCOUNTS.. . . . . . . . . . . . . . .15
SECTION 3.02. RESERVE ACCOUNT. . . . . . . . . . . . . . . . . . . . . .16
SECTION 3.03. DISTRIBUTIONS. . . . . . . . . . . . . . . . . . . . . . .16
SECTION 3.04. STATEMENTS TO NOTEHOLDERS. . . . . . . . . . . . . . . . .18
SECTION 3.05. REPORTING REQUIREMENTS.. . . . . . . . . . . . . . . . . .20
SECTION 3.06. COMPLIANCE WITH WITHHOLDING REQUIREMENTS.. . . . . . . . .20
SECTION 3.07. SPECIAL COVENANTS AND ACKNOWLEDGEMENTS.. . . . . . . . . .20
SECTION 3.08. TAX CHARACTERIZATION.. . . . . . . . . . . . . . . . . . .20
SECTION 3.09. DETERMINATION OF LIBOR.. . . . . . . . . . . . . . . . . .20
ARTICLE IV EVENTS OF DEFAULT; REMEDIES . . . . . . . . . . . . . . . . . .20
SECTION 4.01. EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . .20
SECTION 4.02. RIGHTS UPON EVENT OF DEFAULT.. . . . . . . . . . . . . . .21
SECTION 4.03. REMEDIES.. . . . . . . . . . . . . . . . . . . . . . . . .22
SECTION 4.04. PRIORITIES.. . . . . . . . . . . . . . . . . . . . . . . .23
ARTICLE V PREPAYMENT AND REDEMPTION. . . . . . . . . . . . . . . . . . . . . .24
SECTION 5.01. OPTIONAL "CLEAN-UP" REDEMPTION.. . . . . . . . . . . . . .24
ARTICLE VI MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . .25
SECTION 6.01. RATIFICATION OF BASIC DOCUMENTS. . . . . . . . . . . . . .25
SECTION 6.02. COUNTERPARTS.. . . . . . . . . . . . . . . . . . . . . . .25
SECTION 6.03. GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . .25
SECTION 6.04. AMENDMENTS WITHOUT CONSENT OF NOTEHOLDERS. . . . . . . . .26
SECTION 6.05. AMENDMENTS WITH CONSENT OF THE SERIES 1998-1
NOTEHOLDERS.. . . . . . . . . . . . . . . . . . . . . . . . . .27
SECTION 6.06. NON-PETITION CLAUSES.. . . . . . . . . . . . . . . . . . .28
Schedule I Schedule of Eligibility Criteria
Exhibit A-1 Form of Series 1998-1 Class A-1 Note
Exhibit A-2 Form of Series 1998-1 Class A-2 Note
Exhibit A-3 Form of Series 1998-1 Class A-3 Note
Exhibit A-4 Form of Series 1998-1 Class A-4 Note
Exhibit A-5 Form of Series 1998-1 Class A-5 Note
Exhibit B-1 Form of Series 1998-1 Class B-1 Note
Exhibit B-2 Form of Series 1998-1 Class B-2 Note
Exhibit C Form of Series 1989-1 Class C Note
Exhibit D Form of Series 1998-1 Certificate
Exhibit E Form of Master Servicer's Certificate
2
This Series 1998-1 Supplement, dated as of November 1, 1998, is by
and among Household Finance Corporation, a Delaware corporation, as master
servicer (the "MASTER SERVICER"), Household Automobile Revolving Trust I, a
Delaware business trust, as Issuer (the "ISSUER"), Household Auto Receivables
Corporation, a Nevada corporation, as Seller ("SELLER"), The Chase Manhattan
Bank, a New York banking corporation ("CHASE"), as trustee for the Noteholders
(the "INDENTURE TRUSTEE") and as Trust Collateral Agent, and Wilmington Trust
Company, a Delaware banking corporation, as owner trustee (the "OWNER TRUSTEE")
for the Certificateholders.
RECITALS
This Series 1998-1 Supplement, is executed and delivered by the
parties hereto pursuant to Section 9.3 of the Indenture dated as of November 1,
1998 (the "INDENTURE") among the Issuer, the Master Servicer, the Indenture
Trustee and the Trust Collateral Agent and pursuant to Section 3.2 of the Trust
Agreement (the "TRUST AGREEMENT") dated as of March 1, 1998 between the Seller
and the Owner Trustee. In the event that any term or provision contained
herein shall conflict with or be inconsistent with any term or provision
contained in the Indenture or the Trust Agreement, the terms and provisions of
this Series 1998-1 Supplement shall govern with respect to Series 1998-1.
ARTICLE I
CREATION OF THE SERIES 1998-1 NOTES
SECTION 1.01. DESIGNATION.
(a) There is hereby created a Series of Notes to be issued
pursuant to the Indenture and this Series 1998-1 Supplement to be known as
"Household Automobile Revolving Trust I, Series 1998-1 Notes." The Series
1998-1 Notes shall be issued in eight classes (each, a "CLASS"). The Class A-1
Notes in an aggregate initial principal amount of $________ (the "CLASS A-1
NOTES"), the Class A-2 Notes in an aggregate initial principal amount of
$________ (the "CLASS A-2 NOTES"), the Class A-3 Notes in an aggregate initial
principal amount of $________ (the "CLASS A-3 NOTES"), the Class A-4 Notes in
an aggregate initial principal amount of $________ (the "CLASS A-4 NOTES"), the
Class A-5 Notes in an aggregate initial principal amount of $________ (the
"CLASS A-5 NOTES", and together with Class A-1 Notes, the Class A-2 Notes, the
Class A-3 Notes and the Class A-4 Notes, the "CLASS A NOTES"), the Class B-1
Notes in an aggregate initial principal amount of $________ (the "CLASS B-1
NOTES"), the Class B-2 Notes in an aggregate initial principal amount of
$________ (the "CLASS B-2 NOTES", and together with the Class B-1 Notes, the
"CLASS B NOTES") and the Class C Notes in an aggregate initial principal amount
of $________ (the "CLASS C NOTES").
(b) There is hereby created a Series of Series Trust
Certificates to be issued pursuant to the Trust Agreement and this Series
1998-1 Supplement to be known as the "Household Automobile Revolving Trust I,
Series 1998-1 Certificates."
SECTION 1.02. PLEDGE OF SERIES 1998-1 TRUST ESTATE.
The Issuer hereby Grants to the Indenture Trustee, for the benefit of
the Holders of the Notes all of the Issuer's right, title and interest (but
none of its obligations) in and to (a) each and every Receivable listed as a
Series 1998-1 Receivable on the Schedule of Receivables attached hereto as
Schedule I and all monies paid or payable thereon or in respect thereof after
the Cutoff Date (including amounts due on or before the Cutoff Date but
received by HAFC, the Seller, the Master Servicer or the Issuer after the
Cutoff Date); (b) an assignment of the security interests in the related
Financed Vehicles granted by Obligors pursuant to such Series 1998-1
Receivables and any other interest of the Issuer in the related Financed
Vehicles; (c) all rights of HAFC against Dealers pursuant to Dealer Agreements
or Dealer Assignments related to such Series 1998-1 Receivables; (d) any
proceeds and the right to receive proceeds with respect to such Series 1998-1
Receivables repurchased by a Dealer, pursuant to a Dealer Agreement as a result
of a breach of representation or warranty in the related Dealer Agreement; [(e)
all rights under any Service Contracts on the related Financed Vehicles;] (f)
any proceeds and the right to receive proceeds with respect to such Series
1998-1 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 such Series 1998-1
Receivables; (g) all funds on deposit from time to time in the Series 1998-1
Trust Accounts (including all investments and proceeds thereof from time to
time allocable to the Series 1998-1 Reserve Account, but excluding all
investments and proceeds thereof allocable to the other Series 1998-1 Trust
Accounts or allocable to the Master Collection Account); (h) all rights of the
Seller in and to the Purchase Agreement and the Purchase Agreement Supplement
or Purchase Agreement Supplements related to Series 1998-1, including the
delivery requirements, representations and warranties and the cure and
repurchase obligations of HAFC under the Purchase Agreement and such Purchase
Agreement Supplement, or Purchase Agreement Supplements, (i) all property
(including the right to receive future Net Liquidation Proceeds) that secures
such Series 1998-1 Receivables and that has been acquired by or on behalf of
the Issuer pursuant to liquidation of such Series 1998-1 Receivables; (j) all
items contained in the Receivable Files with respect such Series 1998-1
Receivables and any and all other documents that the Master Servicer or HAFC
keeps on file in accordance with its customary procedures relating to such
Series 1998-1 Receivables, or the related Financed Vehicles or Obligors, (k)
the Master Sale and Servicing Agreement and the Transfer Agreement or Transfer
Agreements related to Series 1998-1 (including all rights of the Seller under
the Purchase Agreement and the related Purchase Agreement Supplement or
Purchase Agreement Supplements, assigned to the Issuer pursuant to the Master
Sale and Servicing Agreement and the related Transfer Agreement or Transfer
Agreements); (l) one share of the Preferred Stock of the Seller and (m) 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 (collectively, the "Series 1998-1 Trust Estate").
2
The foregoing Grant is made in trust to the Indenture Trustee for the
benefit of the Holders of the Notes. The Indenture Trustee hereby acknowledges
such Grant, accepts the trusts under the Indenture and this Series 1998-1
Supplement in accordance with the provisions of the Indenture and this Series
1998-1 Supplement and agrees to perform its duties required in the Indenture
and in this Series 1998-1 Supplement in accordance with the provisions hereof
and of the Indenture to the best of its ability to the end that the interests
of such parties, recognizing the priorities of their respective interests may
be adequately and effectively protected.
SECTION 1.03. PAYMENTS AND COMPUTATIONS.
All amounts to be paid or deposited by any Person hereunder shall be
paid or deposited in accordance with the terms hereof no later than 12:00 noon
(New York City time) on the day when due in immediately available funds, or by
prior-day ACH debit.
SECTION 1.04. DENOMINATIONS.
The Notes of each Class will be issued in denominations of $100,000
and integral multiples of $1,000 in excess thereof, except for one Note of each
Class which may be issued in a denomination other than an integral multiple of
$1,000.
ARTICLE II
DEFINITIONS
SECTION 2.01. DEFINITIONS.
(a) Whenever used in this Series 1998-1 Supplement and when
used in the Series 1998-1 Related Documents with respect to the Series 1998-1
Notes or the Series 1998-1 Certificates, the following words and phrases shall
have the following meanings, and the definitions of such terms are applicable
to the singular as well as the plural forms of such terms and to the masculine
as well as to the feminine and neuter genders of such terms. Unless otherwise
defined in this Series 1998-1 Supplement, terms defined in the Basic Documents
are used herein as therein defined. A term used herein preceded by the
designation "Series 1998-1" but not defined herein, shall have the meaning
specified for such term in the Basic Documents as such term relates to Series
1998-1.
"Aggregate Note Principal Balance" means, as of any date, the
aggregate outstanding principal amount of all the Notes on such date.
"Aggregate Optimal Note Principal Balance" means, with respect to any
Distribution Date, the excess, if any, of (x) the Pool Balance as of the last
day of the prior Collection Period over (y) the Targeted Overcollateralization
Amount for such Distribution Date.
"Available Funds" means, with respect to any Collection Period, and
the related Distribution Date, the sum of (i) the Collected Funds for such
Collection Period, (ii) investment earnings realized during the related
Collection Period, (iii) all Repurchase Amounts deposited in
3
the Collection Account during such Collection Period, (iv) any Insolvency
Proceeds or proceeds of any liquidation, in whole or in part, of the assets
of the Trust and (v) the lesser of (a) the excess, if any, of the aggregate
amount distributable pursuant to Section 3.03(a)(i) - (x) on such
Distribution Date, over the aggregate of the amounts specified in clauses
(i), (ii) and (iii) with respect to such Collection Period and (b) the
Reserve Account Balance.
"Base Servicing Fee" means, 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 Servicing Fee
Rate multiplied by the Aggregate Principal Balances of the Series 1998-1
Receivables, as of the Accounting Date immediately preceding such Collection
Period.
"Basic Documents" means the Master Sale and Servicing Agreement, the
Indenture, the Trust Agreement, the Purchase Agreement, and other documents and
certificates delivered therewith or pursuant thereto in connection with Series
1998-1.
"Book Entry Notes" means any beneficial interest in the Notes,
ownership and transfers of which shall be made through book entries by a
Clearing Agency as described in Section 2.10 of the Indenture.
"Certificateholders" means the holders of Series 1998-1 Certificates.
"Certificateholders' Distributable Amount" means, with respect to any
Distribution Date, the amount payable pursuant to Section 3.03 (a)(xiii)
hereof.
"Class A Distributable Amount" means, with respect to any
Distribution Date and each class of Class A Notes, the sum of (i) the Class A
Interest Distributable Amount for such Distribution Date and (ii) the Class A
Principal Distributable Amount for such Distribution Date.
"Class A Interest Carryover Shortfall" means, with respect to any
Distribution Date and each Class of Class A Notes, the sum of: (i) excess of
(a) the related Class A Interest Distributable Amount for the preceding
Distribution Date, over (b) the amount actually paid as interest to the Class A
Noteholders on such preceding Distribution Date, PLUS (ii) interest on such
excess, to the extent permitted by law, at a rate per annum equal to the
related Class A Note Rate from such preceding Distribution Date to but
excluding the current Distribution Date.
"Class A Interest Distributable Amount" means, with respect to any
Distribution Date and each class of Class A Notes, an amount equal to the sum
of: (i) the aggregate amount of interest accrued on the Class A Notes at the
related Class A Note Rate from and including the preceding Distribution Date
(or, in the case of the initial Distribution Date, from and including the
Closing Date) to but excluding the current Distribution Date PLUS (ii) the
related Class A Interest Carryover Shortfall for the current Distribution Date.
"Class A Monthly Principal Distributable Amount" means (i) with
respect to any Distribution Date, prior to the Distribution Date on which the
principal balance of the Class A-1 Notes is reduced to zero, 100% of the
Principal Distributable Amount, (ii) with respect to the
4
Distribution Date on which the principal balance of the Class A-1 Notes is
reduced to zero, the sum of (x) the Class A-5 Monthly Principal Distributable
Amount, plus (y) 100% of the Principal Distributable Amount with respect to
that portion of the Principal Distributable Amount required to reduce the
principal balance of the Class A-1 Notes to zero, plus (z) the excess of the
amount described in clause (iii) of this definition for such Distribution
Date over the sum of the amounts described in clauses (ii)(x) (taking into
account payment of the principal balance of the Class A-1 Notes on such
Distribution Date) and (ii)(y) for such Distribution Date, (iii) with respect
to any Distribution Date on and after the Distribution Date on which the
Principal Balance of the Class A-1 Notes is reduced to zero until the
Distribution Date on which the Principal Balance of the Class A Notes is
reduced to zero, the greater of (1) the Class A-5 Monthly Principal
Distributable Amount and (2) the excess of (x) aggregate outstanding
principal balance of the Class A Notes over (y) (A) the product of 69.25% and
the Pool Balance as of the end of the related Collection Period minus (B) the
Targeted Overcollateralization Amount for such Distribution Date.
"Class A Noteholders" means the Holders of the Class A Notes.
"Class A Principal Carryover Shortfall" means, with respect to any
Distribution Date after the Distribution Date on which the principal balance of
the Class A-1 Notes is reduced to zero, the excess of the Class A Monthly
Principal Distributable Amount for the preceding Distribution Date over the
amount that was actually distributed in respect of principal of the Class A
Notes on such preceding Distribution Date.
"Class A Principal Distributable Amount" means, with respect to any
Distribution Date, the sum of: (i) the Class A Monthly Principal Distributable
Amount for such Distribution Date and (ii) the Class A Principal Carryover
Shortfall for such Distribution Date; PROVIDED, HOWEVER, that (x) the sum of
clauses (i) and (ii) shall not exceed the outstanding principal amount of the
Class A Notes, and (y) on the Final Scheduled Distribution Date, the Class A
Principal Distributable Amount will include the amount, to the extent of the
remaining Available Funds, necessary (after giving effect to other amounts
having a higher payment priority on such Distribution Date) to reduce the
outstanding principal amount of the Class A Notes to zero.
"Class A-1 Noteholders" means the Holders of the Class A-1 Notes.
"Class A-1 Scheduled Maturity Date" means with respect to the Class
A-1 Notes, _______________.
"Class A-2 Noteholders" means the Holders of the Class A-2 Notes.
"Class A-3 Noteholders" means the Holders of the Class A-3 Notes.
"Class A-4 Noteholders" means the Holders of the Class A-4 Notes.
"Class A-5 Monthly Principal Distributable Amount" means, with
respect to any Distribution Date, the product of (i) a fraction, the numerator
of which is the original principal balance of the Class A-5 Notes and the
denominator of which is the Original Pool Balance, and
5
(ii) the excess of the outstanding Pool Balance as of the close of business
on the last day of the second preceding Collection Period over the
outstanding Pool Balance as of the close of business on the last day of the
related Collection Period.
"Class A-5 Noteholders" means the Holders of the Class A-5 Notes.
"Class A-5 Principal Carryover Shortfall" means, with respect to any
Distribution Date, the excess of the Class A-5 Principal Distributable Amount
for the preceding Distribution Date over the amount that was actually
distributed in respect of principal of the Class A-5 Notes on such preceding
Distribution Date.
"Class A-5 Principal Distributable Amount" means, with respect to any
Distribution Date, the sum of: (i) the Class A-5 Monthly Principal
Distributable Amount for such Distribution Date and (ii) the Class A-5
Principal Carryover Shortfall for such Distribution Date; PROVIDED HOWEVER,
that the sum of clauses (i) and (ii) shall not exceed the outstanding principal
amount of the Class A-5 Notes, and on the Final Scheduled Distribution Date,
the Class A-5 Principal Distributable Amount will include the amount, to the
extent of the remaining Available Funds, necessary (after giving effect to
other amounts having a higher payment priority on such Distribution Date) to
reduce the outstanding principal amount of the Class A-5 Notes to zero.
"Class B-1 Distributable Amount" means, with respect to any
Distribution Date, the sum of (i) the Class B-1 Interest Distributable Amount
for such Distribution Date and (ii) the Class B-1 Principal Distributable
Amount for such Distribution Date.
"Class B-1 Interest Carryover Shortfall" means, with respect to any
Distribution Date, the sum of: (i) the excess of (a) the Class B-1 Interest
Distributable Amount for the preceding Distribution Date, over (b) the amount
actually paid as interest to the Class B-1 Noteholders on such preceding
Distribution Date, PLUS (ii) interest on such excess, to the extent permitted
by law, at a rate per annum equal to the Class B-1 Note Rate from such
preceding Distribution Date to but excluding the current Distribution Date.
"Class B-1 Interest Distributable Amount" means, with respect to any
Distribution Date, an amount equal to the sum of: (i) the aggregate amount of
interest accrued on the Class B-1 Notes at the Class B-1 Note Rate from and
including the preceding Distribution Date (or, in the case of the initial
Distribution Date, from and including the Closing Date) to but excluding the
current Distribution Date PLUS (ii) the Class B-1 Interest Carryover Shortfall
for the current Distribution Date.
"Class B-1 Monthly Principal Distributable Amount" means, with
respect to each Distribution Date on and after the Distribution Date on which
the principal balance of the Class A-1 Notes is reduced to zero, until the
Distribution Date on which the outstanding principal amount of the Class B-1
Notes has been reduced to zero, an amount equal to the excess of: (i) the sum
of (x) the outstanding principal balance of the Class A Notes on such
Distribution Date (after giving effect to distribution of the Class A Principal
Distributable Amount for such Distribution Date) plus (y) the outstanding
principal balance of the Class B-1 Notes prior to such
6
Distribution Date over (ii) (A) the product of 81.25% and the outstanding
Pool Balance as of the end of the related Collection Period minus (B) the
Targeted Overcollateralization Amount.
"Class B-1 Noteholders" means the Holders of the Class B-1 Notes."
"Class B-1 Principal Carryover Shortfall" means, with respect to any
Distribution Date, the excess of the Class B-1 Principal Distributable Amount
for the preceding Distribution Date over the amount that was actually
distributed in respect of principal of the Class B-1 Notes on such Preceding
Distribution Date.
"Class B-1 Principal Distributable Amount" means, with respect to any
Distribution Date, the sum of: (i) the Class B-1 Monthly Principal
Distributable Amount for such Distribution Date and (ii) the Class B-1
Principal Carryover Shortfall for such Distribution Date; PROVIDED, HOWEVER,
that the sum of clauses (i) and (ii) shall not exceed the outstanding principal
amount of the Class B-1 Notes, and on the Final Scheduled Distribution Date,
the Class B-1 Principal Distributable Amount will include the amount, to the
extent of the remaining Available Funds, necessary (after giving effect to
other amounts having a higher payment priority on such Distribution Date) to
reduce the outstanding principal amount of the Class B-1 Notes to zero.
"Class B-2 Distributable Amount" means, with respect to any
Distribution Date, the sum of (i) the Class B-2 Interest Distributable Amount
for such Distribution Date and (ii) the Class B-2 Principal Distributable
Amount for such Distribution Date.
"Class B-2 Interest Carryover Shortfall" means, with respect to any
Distribution Date, the sum of: (i) the excess of (a) the Class B-2 Interest
Distributable Amount for the preceding Distribution Date, over (b) the amount
actually paid as interest to the Class B-2 Noteholders on such preceding
Distribution Date, PLUS (ii) interest on such excess, to the extent permitted
by law, at a rate per annum equal to the Class B-2 Note Rate from such
preceding Distribution Date to but excluding the current Distribution Date.
"Class B-2 Interest Distributable Amount" means, with respect to any
Distribution Date, an amount equal to the sum of: (i) the aggregate amount of
interest accrued on the Class B-2 Notes at the Class B-2 Note Rate from and
including the preceding Distribution Date (or, in the case of the initial
Distribution Date, from and including the Closing Date) to but excluding the
current Distribution Date PLUS (ii) the Class B-2 Interest Carryover Shortfall
for the current Distribution Date.
"Class B-2 Monthly Principal Distributable Amount" means, with
respect to each Distribution Date on and after the Distribution Date on which
the principal balance of the Class A-1 Notes is reduced to zero, until the
Distribution Date on which the outstanding principal amount of the Class B-2
Notes has been reduced to zero, an amount equal to the excess of: (i) the sum
of (x) the outstanding principal balance of the Class A Notes on such
Distribution Date (after giving effect to distribution of the Class A Principal
Distributable Amount for such Distribution Date) plus (y) the outstanding
principal balance of the Class B-1 Notes (after giving effect to distribution
of the Class B-1 Principal Distributable Amount for such Distribution Date) and
(z) the outstanding principal balance of the Class B-2 Notes (after giving
effect to
7
distribution of the Class B-2 Principal Distributable Amount for such
Distribution Date) over (ii) (A) the product of 92.65% and the outstanding
Pool Balance as of the end of the related Collection Period minus (B) the
Targeted Overcollateralization Amount.
"Class B-2 Noteholders" means the Holders of the Class B-2 Notes.
"Class B-2 Principal Carryover Shortfall" means, with respect to any
Distribution Date, the excess of the Class B-2 Principal Distributable Amount
for the preceding Distribution Date over the amount that was actually
distributed in respect of principal of the Class B-2 Notes on such Preceding
Distribution Date.
"Class B-2 Principal Distributable Amount" means, with respect to any
Distribution Date, the sum of: (i) the Class B-2 Monthly Principal
Distributable Amount for such Distribution Date and (ii) the Class B-2
Principal Carryover Shortfall for such Distribution Date; PROVIDED, HOWEVER,
that the sum of clauses (i) and (ii) shall not exceed the outstanding principal
amount of the Class B-2 Notes, and on the Final Scheduled Distribution Date,
the Class B-2 Principal Distributable Amount will include the amount, to the
extent of the remaining Available Funds, necessary (after giving effect to
other amounts having a higher payment priority on such Distribution Date) to
reduce the outstanding principal amount of the Class B-2 Notes to zero.
"Class C Distributable Amount" means, with respect to any
Distribution Date, the sum of (i) the Class C Interest Distributable Amount and
(ii) the Class C Principal Distributable Amount.
"Class C Interest Carryover Shortfall" means, with respect to any
Distribution Date the sum of: (i) excess of (a) the Class C Interest
Distributable Amount for the preceding Distribution Date, over (b) the amount
actually paid as interest to the Class C Noteholders on such preceding
Distribution Date, PLUS (ii) interest on such excess, to the extent permitted
by law, at a rate per annum equal to the Class C Note Rate from such preceding
Distribution Date to but excluding the current Distribution Date.
"Class C Interest Distributable Amount" means, with respect to any
Distribution Date an amount equal to the sum of: (i) the aggregate amount of
interest accrued on the Class C Notes at the related Class C Note Rate from and
including the preceding Distribution Date (or, in the case of the initial
Distribution Date, from and including the Closing Date) to but excluding the
current Distribution Date PLUS (ii) the Class C Interest Carryover Shortfall
for the current Distribution Date.
"Class C Monthly Principal Distributable Amount" means, with respect
to each Distribution Date on and after the Distribution Date on which the
outstanding principal amount of the Class A-1 Notes is reduced to zero, until
the Distribution Date on which the outstanding principal amount of the Class C
Notes has been reduced to zero, an amount equal to the excess, if any of: (i)
the sum of (x) the outstanding principal balance of the Class A Notes on such
Distribution Date (after giving effect to distribution of the Class A Principal
Distribution Amount for such Distribution Date), plus (y) the outstanding
principal balance of the Class B Notes on such Distribution Date (after giving
effect to distribution of the Class ▇-▇ ▇▇▇▇▇▇▇▇▇
▇
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and the Class B-2 Principal Distributable Amount for
such Distribution Date), plus (z) the outstanding principal balance of the
Class C Notes immediately prior to such Distribution Date and (ii) (A) the
product of 100% and the outstanding Pool Balance as of the end of the related
Collection Period minus (B) the Targeted Overcollateralization Amount for
such Distribution Date.
"Class C Noteholders" means the Holders of the Class C Notes.
"Class C Principal Carryover Shortfall" means, with respect to any
Distribution Date, the excess of the Class C Principal Distributable Amount
for the preceding Distribution Date over the amount that was actually
distributed in respect of principal of the Class C Notes on such Preceding
Distribution Date.
"Class C Principal Distributable Amount" means, with respect to any
Distribution Date, the sum of: (i) the Class C Monthly Principal
Distributable Amount for such Distribution Date and (ii) the Class C
Principal Carryover Shortfall for such Distribution Date; PROVIDED, HOWEVER,
that the sum of clauses (i) and (ii) shall not exceed the outstanding
principal amount of the Class C Notes, and on the Final Scheduled
Distribution Date, the Class C Principal Distributable Amount will include
the amount, to the extent of the remaining Available Funds, necessary (after
giving effect to other amounts having a higher payment priority on such
Distribution Date) to reduce the outstanding principal amount of the Class C
Notes to zero.
"Cutoff Date" means October 31, 1998.
"Definitive Notes" means the Notes that have been certificated and
fully registered in accordance with Section 2.12 of the Indenture.
"Distribution Date" means, 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, commencing on _____
__, 1998.
"Eligibility Criteria" means the criteria for eligibility for
Eligible Receivables set forth on Schedule I hereto.
"Eligible Receivable" or "Series 1998-1 Eligible Receivable" means
a Series 1998-1 Receivable that satisfies the Eligibility Criteria set forth
in Schedule I hereto.
"Event of Default" shall have the meaning assigned to such term in
Section 4.01.
"Final Scheduled Distribution Date" means ____________.
"HAFC " means Household Automotive Finance Corporation.
"HFC " means Household Finance Corporation.
9
"Indenture" means the indenture dated as of November 1, 1998 among
the Issuer, the Master Servicer and The Chase Manhattan Bank, as indenture
trustee, as supplemented by the Series 1998-1 Supplement.
"Initial Reserve Account Deposit" means 1% of the Pool Balance as
of the Cutoff Date.
"Interest Period" means, with respect to any Distribution Date, the
period from and including the prior Distribution Date (or, in the case of the
first Distribution Date, from and including the Series 1998-1 Closing Date)
through (and including) the day preceding such Distribution Date.
"Interest Rate Cap" means the agreement to be entered into on the
Closing Date between the Issuer and the Interest Rate Cap Provider.
"Interest Rate Cap Provider" means Westdeutsche Landesbank
Girozentrale, New York Branch.
"LIBOR" means the London interbank offered rate for one-month
United States dollar deposit. LIBOR will equal the rate for United States
dollar deposits for one month which appears on the Telerate Screen Page 3750
as of 11:00 A.M., London time, on the related LIBOR Determination Date.
"LIBOR Business Day" means any day other than (i) a Saturday or a
Sunday or (ii) a day on which banking institutions in the States of New York
or Illinois or in the City of London, England are required or authorized by
law to be closed.
"LIBOR Determination Date" for each Interest Period will be the
second LIBOR Business Day prior to the first day of such Interest Period.
"Master Servicer's Certificate" means, with respect to Series
1998-1, a report in substantially the form of EXHIBIT E hereto (appropriately
completed), furnished by the Master Servicer to the Indenture Trustee and the
Owner Trustee pursuant to the Master Sale and Servicing Agreement.
"Maximum Reserve Account Deposit Amount" for any Distribution Date
is equal to that portion of Collected Funds representing interest collections
on the Receivables (including amounts representing Net Liquidation Proceeds
for such Collection Period) for the related Collection Period less the sum
of: the Base Servicing Fee paid to any third party Master Servicer, the fees
due to the Interest Rate Cap Provider, the Indenture Trustee, Trust
Collateral Agent and Owner Trustee, to the extent not paid by the Servicer,
plus, the aggregate of the Class A, Class B-1, Class B-2 and Class C Interest
Distributable Amounts for such Distribution Date, plus the aggregate
Principal Balances of all Receivables which became Liquidated Receivables
during the related Collection Period, plus the aggregate amount of Cram Down
Losses during such Collection Period.
10
"Note Account" means the Note Account.
"Noteholders' Distributable Amount" means, with respect to any
Distribution Date, the sum of the Class A Distributable Amount, the Class B-1
Distributable Amount, the Class B-2 Distributable Amount and the Class C
Distributable Amount.
"Noteholders' Interest Distributable Amount" means with respect to
any Distribution Date, the sum of the Class A Interest Distributable Amount,
the Class B-1 Interest Distributable Amount, the Class B-2 Interest
Distributable Amount, and the Class C Interest Distributable Amount.
"Note Rate" means the per annum rate of interest due with respect
to each Class of Notes as set forth below for the respective Class of Note:
Class A-1 Notes: ___%
Class A-2 Notes: ___%
Class A-3 Notes: LIBOR plus ___%
Class A-4 Notes: LIBOR plus ___%
Class A-5 Notes: ___%
Class B-1 Notes: ___%
Class B-2 Notes: ___%
Class C Notes: ___%
Interest (including interest calculated with respect to Interest
Carryover Shortfalls) on the Class A-1, Class A-2, Class A-3 and Class A-4
Notes will be calculated on the basis of a 360-day year and the actual number
of days elapsed in an applicable Interest Period. Interest (including
interest calculated with respect to Interest Carryover Shortfalls) on the
Class A-5, Class B-1, Class B-2 and Class C Notes will be calculated on the
basis of a 360-day year consisting of twelve 30-day months.
"Notes" means the Class A Notes, the Class B-1 Notes, the Class B-2
and the Class C Notes, collectively.
"Original Pool Balance" means the aggregate of the Principal
Balance of the Receivables as of the Cutoff Date.
"Owner Trust Estate" has the meaning assigned to such term in the
Trust Agreement.
"Owner Trustee" means Wilmington Trust Company, not in its
individual capacity.
"Pledge" means the Grant by the Issuer hereunder to the Indenture
Trustee for the benefit of the Holders of Notes in accordance with Section
1.02 hereof in and to specified Pledged Property related thereto.
11
"Pledged Property" means, with respect to the Series 1998-1 Trust
Estate, each Series 1998-1 Receivable, together with all associated property
and rights with respect thereto described in the definition of Series 1998-1
Trust Estate.
"Pool Balance" means, as of any date of determination, the
aggregate of the outstanding Principal Balances of the Receivables, unless
otherwise specified, as of the close of business on such Business Day.
"Principal Amount Available" means, with respect to any
Distribution Date, the amount remaining in the Note Account on such
Distribution Date after the payment of the amounts required to be paid
pursuant to clause (i) through (vi) of Section 3.03(a) on such Distribution
Date MINUS the Reserve Account Deposit Amount for such Distribution Date.
"Principal Distributable Amount" means, with respect to any
Distribution Date, the lesser of (A) the Principal Amount Available for such
Distribution Date and (B) the greater of (x) the excess, if any, of (i) the
Aggregate Note Principal Balance immediately prior to such Distribution Date
over (ii) the Aggregate Optimal Note Balance for such Distribution Date and
(y) the Class A-5 Principal Distributable Amount.
"Rating Agencies" means Standard & Poor's and ▇▇▇▇▇'▇. 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 Seller, notice of which designation
shall be given to the Indenture Trustee, the Owner Trustee and the Master
Servicer.
"Redemption Price" has the meaning specified in Section 5.01 hereof.
"Reference Bank Rate" will be determined on the basis of the rates
at which deposits in U.S. Dollars are offered by the reference banks (which
shall be three major banks that are engaged in transactions in the London
interbank market, selected by the Indenture Trustee after consultation with
the Servicer) as of 11:00 A.M., London time, on the day that is two LIBOR
Business Days prior to the immediately preceding Distribution Date to prime
banks in the London interbank market for a period of one month in amounts
approximately equal to the principal balance of the Class A-3 and Class A-4
Notes then outstanding. The Indenture Trustee will request the principal
London office of each of the reference banks to provide a quotation of its
rate. If at least two such quotations are provided as requested, the rate
will be the arithmetic mean of the rates quoted by one or more major banks in
New York City, selected by the Indenture Trustee after consultation with the
Servicer, as of 11:00 A.M., New York City time, on such date for loans in
U.S. Dollars to leading European banks for a period of one month in amounts
approximately equal to the principal balance of the Class A-3 and Class A-4
Notes then outstanding. If no such quotations can be obtained, the rate will
be LIBOR for the prior Distribution Date.
"Reserve Account" means the Series 1998-1 Reserve Account which
shall be an Eligible Deposit Account created pursuant to Section 3.01 hereof,
which initially shall be
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account no. ________, reference Household Automobile Revolving Trust I,
Series 1998-1, at the Indenture Trustee, ABA No. _________.
"Reserve Account Balance" means, with respect to a Distribution
Date, the amount on deposit in the Reserve Account as of the opening of
business on such Distribution Date.
"Reserve Account Deposit Amount" means, with respect to any
Distribution Date, the lesser of: (x) the Maximum Reserve Account Deposit
Amount for such Distribution Date and (y) the Reserve Account Shortfall
Amount for such Distribution Date.
"Reserve Account Shortfall Amount" means, with respect to any
Distribution Date, the excess of: (x) the Targeted Reserve Account Balance
for such Distribution Date over (y) the Reserve Account Balance for such
Distribution Date less amounts, if any, included in the definition of
Available Funds for such Distribution Date.
"Schedule of Receivables" means the schedule of all retail
installment sales contracts and promissory notes held as part of the Series
1998-1 Trust Estate.
"Series 1998-1 Certificate" means the Series Trust Certificate (as
defined in the Trust Agreement) designated as the "Series 1998-1 Certificate".
"Series 1998-1 Closing Date" means _______________, 1998.
"Series 1998-1 Collected Funds" means, with respect to a date of
determination, the amount of Collected Funds with respect to the Collection
Period immediately preceding such date of determination, including all Net
Liquidation Proceeds collected during the related Collection Period (but
excluding any Purchase Amounts) and any funds deposited therein by the
Interest Rate Cap Provider pursuant to the Interest Rate Cap.
"Series 1998-1 Collection Account" means the Eligible Deposit
Account created pursuant to Section 3.01 hereof which initially shall be
account no. __________, reference Household Automobile Revolving Trust I,
Series 1998-1, at the Indenture Trustee, ABA No. _______________.
"Series 1998-1 Eligible Investments" means, with respect to funds
in the Series 1998-1 Collection Account and Reserve Account, "Eligible
Investments" as defined in the Master Sale and Servicing Agreement, except
that (i) all references in such definition to "rating satisfactory to the
Rating Agency" or words of similar import shall mean ratings of not less than
"A-1" by Standard & Poor's and "P-1" by ▇▇▇▇▇'▇ (whichever is applicable),
and (ii) all such investments shall have maturities at the time of the
acquisition thereof occurring no later than the Business Day immediately
preceding the Distribution Date following such date of acquisition.
"Series 1998-1 Note Account" means the Eligible Deposit Account
created pursuant to Section 3.01 hereof, which initially shall be account no.
___, reference Household
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Automobile Revolving Trust I, Series 1998-1 at the Indenture Trustee, ATSA
No. ______________.
"Series 1998-1 Receivables" means each Receivable listed on the
Schedule of Receivables, which (a) has not been released from the Series
1998-1 Trust Estate as provided herein or in the Indenture and (b) is not a
Liquidated Receivable.
"Series 1998-1 Related Documents" means the Basic Documents, this
Series 1998-1 Supplement, each Purchase Agreement Supplement related to the
Series 1998-1 Trust Estate, each Transfer Agreement related to the Series
1998-1 Trust Estate, the Series 1998-1 Notes, the Series 1998-1 Certificates
and other documents and certificates delivered in connection therewith.
"Series 1998-1 Reserve Account" means the Reserve Account.
"Series 1998-1 Secured Obligations" means all amounts and
obligations which the Issuer may at any time owe to the Agent and the
Purchasers (including the principal of, and interest on, the Series 1998-1
Notes) and all other amounts owing at any time to the Agent and each
Purchaser under this Series 1998-1 Supplement or any other Series 1998-1
Related Documents.
"Series 1998-1 Securities" means the Series 1998-1 Notes and the
Series 1998-1 Certificates.
"Series 1998-1 Supplement" means this Series 1998-1 Supplement to
the Indenture and the Trust Agreement.
"Series 1998-1 Support" means, with respect to the Series 1998-1
Notes, the Series 1998-1 Certificates.
"Series 1998-1 Support Provider " means none.
"Series 1998-1 Trust Accounts" means the Series 1998-1 Collection
Account, the Series 1998-1 Reserve Account, and the Series 1998-1 Note
Account.
"Series 1998-1 Trust Estate" shall have the meaning set forth in
Section 1.02 hereof.
"Servicing Fee Rate" means 3% per annum.
"Supplemental Servicing Fee" means, with respect to any Collection
Period, (i) all administrative fees, expenses and charges actually paid by or
on behalf of Obligors, including late fees, prepayment fees and liquidation
fees collected on the Series 1998-1 Receivables during such Collection
Period, and (ii) the net realized investment earnings of funds on deposit in
the Series 1998-1 Collection Account or on deposit in the Master Collection
Account and allocable to the investment of Available Funds with respect to
Series 1998-1.
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"Targeted Credit Enhancement Amount" means, with respect to any
Distribution Date, 13.75% of the Pool Balance as of the of last day of the
related Collection Period.
"Targeted Overcollateralization Amount" means, with respect to any
Distribution Date, the excess (but not less than zero), if any, of: (i) the
Targeted Credit Enhancement Amount over (ii) the Targeted Reserve Account
Balance.
"Targeted Reserve Account Balance" means, with respect to any
Distribution Date, the lesser of: (i) the greater of (a) 3.0% of the
outstanding Pool Balance as of the end of the related Collection Period, and
(b) 2.0% of the Original Pool Balance, and (ii) the Aggregate Note Principal
Balance.
"Telerate Screen Page 3750" means the display designated as page
3750 on the Telerate Service (or such other page as may replace page 3750 on
that service for the purpose of displaying London interbank offered rates of
major banks). If such rate does not appear on such page (or such other page
as may replace that page on that service, or if such service is no longer
offered, such other service for displaying LIBOR or comparable rates as may
be selected by the Indenture Trustee after consultation with the Servicer),
the rate will be the Reference Bank Rate.
"Trust" means the Issuer.
"Trust Agreement" means the Trust Agreement dated as of March 1,
1998 between the Seller and the Owner Trustee, as supplemented by the Series
1998-1 Supplement.
ARTICLE III
DISTRIBUTIONS AND STATEMENTS TO
SERIES 1998-1 NOTEHOLDERS; SERIES SPECIFIC COVENANTS
SECTION 3.01. SERIES 1998-1 TRUST ACCOUNTS.
(a) The Trust Collateral Agent, for the benefit of the
Holders of the Series 1998-1 Securities, shall establish and maintain an
account (the "SERIES 1998-1 COLLECTION ACCOUNT") as a segregated trust
account in the Trust Collateral Agent's corporate trust department,
identified as the "Collection Account for Household Automobile Revolving
Trust I, in trust for the registered Holders of the Series 1998-1
Securities." The Trust Collateral Agent shall make or permit withdrawals
from the Series 1998-1 Collection Account only as provided in this Series
1998-1 Supplement.
(b) On each Distribution Date, the Indenture Trustee pursuant
to Section 5.5(a) of the Master Sale and Servicing Agreement shall transfer
amounts with respect to Series 1998-1 and such Distribution Date from the
Master Collection Account to the Series 1998-1 Collection Account.
(c) The Indenture Trustee for the benefit of the Holders of
the Series 1998-1 Notes shall establish and maintain an account (the "SERIES
1998-1 RESERVE ACCOUNT") as a
15
segregated trust account in the Indenture Trustee's corporate trust
department, identified as the "Series 1998-1 Reserve Account for Household
Automobile Revolving Trust I, in trust for the registered Holders of the
Series 1998-1 Notes." The Indenture Trustee shall make or permit withdrawals
from the Reserve Account only as provided in this Series 1998-1 Supplement.
On the Series 1998-1 Closing Date, the Series 1998-1 Reserve Account will be
funded with the Initial Reserve Account Deposit.
(d) The Indenture Trustee, for the benefit of the Holders of
Series 1998-1 Notes, shall establish and maintain an account (the "SERIES
1998-1 NOTE ACCOUNT") as a segregated trust account in the Indenture
Trustee's corporate trust department, identified as the "Note Account for
Household Automobile Revolving Trust I, in trust for the registered Holders
of the Series 1998-1 Notes." The Indenture Trustee shall make or permit
withdrawals from the Series 1998-1 Note Account only as provided in this
Series 1998-1 Supplement.
(e) On each Distribution Date, the Indenture Trustee shall
transfer Available Funds for such Distribution Date from the Series 1998-1
Collection Account and from the Series 1998-1 Reserve Account, if applicable,
to the Series 1998-1 Note Account.
(f) In the event that any Series 1998-1 Trust Account ceases
to be an Eligible Deposit Account, the Trust Collateral Agent or the
Indenture Trustee, as applicable, within five Business Days, shall establish
a new Eligible Deposit Account. No withdrawals may be made of funds in any
Series 1998-1 Trust Account except as provided in this Series 1998-1
Supplement. Except as specifically provided in this Series 1998-1 Supplement,
funds in the Series 1998-1 Trust Accounts shall not be commingled with any
other moneys. All moneys deposited from time to time in each of the Series
1998-1 Trust Accounts shall be invested and reinvested by the Owner Trustee
or the Indenture Trustee, as applicable, in Series 1998-1 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 Investment.
The provisions of Section 5.1 of the Master Sale and Servicing Agreement
shall apply to investment of funds in the Series 1998-1 Trust Accounts to the
same extent as they apply to the Master Collection Account.
SECTION 3.02. RESERVE ACCOUNT.
On the earlier of (x) the maturity date of the Series 1998-1 Notes
(whether by acceleration or otherwise) or (y) the Final Scheduled
Distribution Date, the amount on deposit in the Reserve Account shall be
withdrawn from the Reserve Account and distributed in accordance with Section
4.04.
SECTION 3.03. DISTRIBUTIONS.
(a) On each Distribution Date, the Indenture Trustee shall
(based solely on the information contained in the Master Servicer's
Certificate delivered with respect to such Distribution Date) distribute the
following amounts from Available Funds with respect to such Distribution
Date, and in the following order of priority:
16
(i) to the Master Servicer, any Supplemental Servicing
Fees for the related Collection Period and, if HFC is no longer
acting as Master Servicer, the Base Servicing Fee for the related
Collection Period;
(ii) to the Interest Rate Cap Provider, the fee for
maintaining the Interest Rate Cap and to the Indenture Trustee and
the Owner Trustee, any accrued and unpaid trustees' fees (in each
case, to the extent such fees have not been previously paid by the
Master Servicer);
(iii) to the Class A Noteholders, the Class A Interest
Distributable Amount;
(iv) to the Class B-1 Noteholders, the Class B-1 Interest
Distributable Amount;
(v) to the Class B-2 Noteholders, the Class B-2 Interest
Distributable Amount;
(vi) to the Class C Noteholders, the Class C Interest
Distributable Amount;
(vii) (i) to the Class A-5 Noteholders, the Class A-5
Principal Distributable Amount and to the Class A-1 Noteholders, 100%
of the Class A Principal Distributable Amount remaining after
distribution of the Class A-5 Principal Distributable Amount, until
the outstanding principal amount of the Class A-1 Notes has been
reduced to zero; and (ii) on and after the Distribution Date on which
the outstanding principal amount of the Class A-1 Notes has been
reduced to zero, the Class A-5 Principal Distributable Amount to the
Class A-2, Class A-3 and Class A-4 Notes, such amount to be
distributed in "sequential pay" fashion, beginning with the Class A-2
Notes, in each case until the respective outstanding principal amount
of the Class A-2, Class A-3 and Class A-4 Notes are paid in full;
(viii) to the Class B-1 Noteholders, the Class B-1 Principal
Distributable Amount;
(ix) to the Class B-2 Noteholders, the Class B-2 Principal
Distributable Amount;
(x) to the Class C Noteholders, the Class C Principal
Distributable Amount;
(xi) to the Reserve Account, the Reserve Account Deposit
Amount, if any, required to increase the amount therein to the
Targeted Reserve Account Balance;
17
(xii) if HFC is acting as the Master Servicer, the Base
Servicing Fee for the related Collection period; and
(xiii) to the holders of the Series 1998-1 Certificates, any
remaining Available Funds.
In the event that on any Distribution Date after the Distribution
Date on which the principal balance of the Class A-1 Notes is reduced to
zero, Available Funds, available to be distributed in accordance with clause
(vii) of Payment Priorities, are less than the Class A Monthly Principal
Distributable Amount for such Distribution Date, such Available Funds shall
be allocated pro rata (based on the ratio between the respective amounts of
the Class A-5 Principal Distributable Amount for such Distribution Date and
the amount specified in clause (iii)(2) of the definition of Class A Monthly
Principal Distributable Amount for such Distribution Date).
(b) If on a Distribution Date, the Master Servicer's
Certificate delivered with respect to such Distribution Date indicates that
the amount specified in clauses (i) through (iv) of the definition of
Available Funds with respect to such Distribution Date is less than the sum
of the amounts required to be distributed pursuant to clauses (i) through (x)
of subsection (a) on such Distribution Date, the Indenture Trustee shall
withdraw from the Series 1998-1 Reserve Account an amount up to the amount of
such deficiency and distribute such amount as a component of Available Funds.
(c) Each Series 1998-1 Certificateholder by its acceptance of
its Certificate will be deemed to have consented to the provisions of
paragraph (a) above relating to the priority of distributions, and will be
further deemed to have acknowledged that no property rights in any amount of
or the proceeds of any such amount shall vest in such Certificateholder until
such amounts have been distributed to such Certificateholder pursuant to such
provisions; PROVIDED, THAT the foregoing shall not restrict the right of any
Certificateholder, upon compliance with the provisions hereof, from seeking
to compel the performance of the provisions hereof by the parties hereto.
Each Series 1998-1 Certificateholder, by acceptance of its Certificate,
further specifically acknowledges that it has no right to or interest in any
monies at any time held in the Series 1998-1 Reserve Account, such monies
being held in trust for the benefit of the Series 1998-1 Noteholders.
(d) In the event that the Series 1998-1 Collection Account is
maintained with an institution other than the Indenture Trustee, the Master
Servicer shall instruct and cause such institution to transfer the amounts to
be withdrawn therefrom in accordance with Section 3.03(a) or 3.03(b) to the
Indenture Trustee for distribution pursuant to Section 3.03(a) or Section
3.03(b), as the case may be, on the related Distribution Date.
(e) Unless Definitive Notes are issued pursuant to Section
2.12 of the Indenture, with respect to Notes registered on the related Record
Date in name of a nominee of the Clearing Agency, payment will be made by
wire transfer to an account designated by such nominee, without presentation
or surrender of the Series 1998-1 Notes or the making of any
18
notation thereon, except that the final distribution with respect to the
Series 1998-1 Notes shall be made against tender thereof.
(f) If not theretofore paid in full, all amounts outstanding
with respect to the Class A-1 Notes shall be due and payable on the Class A-1
Scheduled Maturity Date, and if not theretofore paid in full, all amounts
outstanding with respect to the Class A-2 Notes, the Class A-3 Notes, the
Class A-4 Notes, the Class A-5 Notes, the Class B-1 Notes, the Class B-2
Notes and the Class C Notes shall be due and payable on the Final Scheduled
Distribution Date.
SECTION 3.04. STATEMENTS TO NOTEHOLDERS.
On or prior to each Determination Date, the Master Servicer shall
provide to the Trust Collateral Agent (with a copy to the Rating Agencies)
for the Trust Collateral Agent to forward to each Noteholder of record, and
to each Certificateholder of record, a statement setting forth at least the
following information as to the Notes to the extent applicable:
(i) the amount of such distribution allocable to principal
of each Class of Notes;
(ii) the amount of such distribution allocable to interest
on or with respect to each Class of Notes;
(iii) the aggregate outstanding principal amount of each
Class of the Notes after giving effect to payments allocated to
principal reported under (i) above;
(iv) the Class A Interest Carryover Shortfall, the
Class B-1 Interest Carryover Shortfall, the Class B-2 Interest
Carryover Shortfall, the Class C Interest Carryover Shortfall,
the Class A Principal Carryover Shortfall, the Class A-5
Principal Carryover Shortfall, the Class B-1 Principal Carryover
Shortfall, the Class B-2 Principal Carryover Shortfall, the
Class C Principal Carryover Shortfall, if any, and the change in
such amounts from the preceding statement.
(v) the amount of the Base Servicing Fee paid to the
Master Servicer with respect to such Collection Period;
(vi) the notional amount of the Interest Rate Cap, the
amount of the distribution attributable to a payment under the
Interest Rate Cap and the current LIBOR; and
(vii) the Targeted Reserve Account Balance and the amount on
deposit in the Reserve Account at the end of such Distribution Date.
Each amount set forth pursuant to paragraph (i)through (v) above shall be
expressed as a dollar amount per $1,000 of the initial principal balance of
the applicable Class of Notes.
19
SECTION 3.05. REPORTING REQUIREMENTS.
(a) The Master Servicer's Certificate shall be in the form
attached hereto as EXHIBIT E hereto.
(b) By January 31 of each calendar year, commencing January 31,
1999, the Master Servicer on behalf of the Issuer shall prepare and distribute
to the Indenture Trustee a statement containing such information as is required
to be provided by an issuer of indebtedness under the Code and such other
customary information as is necessary to enable the Noteholders to prepare
their tax returns.
(c) If an Event of Default occurs and is continuing and if it
is either known by, or written notice of the existence thereof has been
delivered to, a Responsible Officer of the Indenture Trustee, the Indenture
Trustee shall mail to each Noteholder notice of the Default within [30] days
after such knowledge or notice occurs. Except in the case of a Default in
payment of principal of or interest on any Note, the Indenture Trustee may
withhold the notice if and so long as a committee of its Responsible Officers
in good faith determines that withholding the notice is in the interests of
Noteholders.
SECTION 3.06. COMPLIANCE WITH WITHHOLDING REQUIREMENTS.
Notwithstanding any other provisions of this Series 1998-1 Supplement
or the Indenture to the contrary, the Indenture Trustee, shall comply with all
federal withholding requirements respecting payments (or advances thereof) to
the Noteholders as may be applicable to instruments constituting indebtedness
for federal income tax purposes. Any amounts so withheld shall be treated as
having been paid to the applicable Noteholders for all purposes of the
Indenture. In no event shall the consent of any Noteholder be required for any
such withholding.
SECTION 3.07. SPECIAL COVENANTS AND ACKNOWLEDGEMENTS.
With respect to the Series 1998-1 Notes, the Issuer hereby represents
and warrants, as of the Series 1998-1 Closing Date:
(i) VALID PLEDGE. It is the intention of the Issuer that
each pledge herein contemplated constitutes the Grant of a perfected,
first priority security interest in all Pledged Property to the
Indenture Trustee for the benefit of the Series 1998-1 Noteholders.
(ii) GOVERNMENTAL AUTHORIZATION. Other than the filing of
the financing statements required hereunder, no authorization or
approval or other action by, and no notice to or filing with, any
governmental authority or regulatory body is required for the due
execution, delivery and performance by the Issuer of this Series
1998-1 Supplement, the Indenture, and each Series 1998-1 Related
Document to which it is a party.
20
SECTION 3.08. TAX CHARACTERIZATION.
It is the intent of the parties hereto that, for all Federal, state,
local and foreign taxes, the Series 1998-1 Notes will be evidence of
indebtedness. To the extent permitted by law, the parties hereto, and each
owner of a beneficial interest in the Series 1998-1 Notes by acceptance of such
interest, agrees to treat the Series 1998-1 Notes for purposes of all Federal,
state, local and foreign taxes as indebtedness secured by the Series 1998-1
Trust Estate.
SECTION 3.09. DETERMINATION OF LIBOR.
The Indenture Trustee will determine LIBOR for purposes of
calculating the Interest Rate for Class A-3, and the Class A-4 Notes for each
Interest Period.
ARTICLE IV
EVENTS OF DEFAULT; REMEDIES
SECTION 4.01. EVENTS OF DEFAULT.
"Event of Default", wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(i) default in the payment of any interest on any Note
when the same becomes due and payable, and such default shall
continue for a period of five calendar days; or
(ii) default in the payment of the principal of or any
installment of the principal of any Note when the same becomes due
and payable, and such default shall continue for a period of five
calendar days; or
(iii) default in the observance or performance of any
covenant or agreement of the Issuer made in the Series 1998-1 Related
Documents (other than a covenant or agreement, a default in the
observance or performance of which is elsewhere in this Section
specifically dealt with), or any representation or warranty of the
Issuer made in the Series 1998-1 Related Documents or in any
certificate or other writing delivered pursuant thereto or in
connection therewith proving to have been incorrect in any material
respect as of the time when the same shall have been made and has a
material adverse effect on the Noteholders, and such default shall
continue or not be cured, or the circumstance or condition in respect
of which such misrepresentation or warranty was incorrect shall not
have been eliminated or otherwise cured, for a period of 60 days
after there shall have been given, by registered or certified mail,
to the Issuer by the Indenture Trustee or to the Issuer and the
Indenture Trustee by the Holders of at least 25% of the Outstanding
Amount of the Notes, a written notice specifying such default
21
or incorrect representation or warranty and requiring it to be
remedied and stating that such notice is a "Notice of Default"
hereunder; or
(iv) the filing of a decree or order for relief by a court
having jurisdiction in the premises in respect of the Issuer or any
substantial part of the Trust Assets 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 of the
Issuer or for any substantial part of the Trust Property, or ordering
the winding-up or liquidation of the Issuer's affairs, and such
decree or order shall remain unstayed and in effect for a period of
60 consecutive days; or
(v) the commencement by the Issuer 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 the Issuer
to the entry of an order for relief in an involuntary case under any
such law, or the consent by the Issuer to the appointment or taking
possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of the Issuer or for any substantial
part of the Trust Assets, or the making by the Issuer of any general
assignment for the benefit of creditors, or the failure by the Issuer
generally to pay its debts as such debts become due, or the taking of
action by the Issuer in furtherance of any of the foregoing.
SECTION 4.02. RIGHTS UPON EVENT OF DEFAULT.
(a) If an Event of Default shall have occurred and be
continuing, the Indenture Trustee in its discretion may, or if so requested in
writing by Holders holding Notes representing at least 66 2/3% of the
Outstanding Amount of the Notes, declare by written notice to the Issuer that
the Notes have become due and payable, whereupon they shall become, immediately
due and payable at 100% of the outstanding principal balance of the Notes, and
accrued interest thereon (together with interest accrued at the relevant Note
Rate on such overdue interest).
(b) At any time after such declaration of acceleration of
maturity has been made and before a judgment or decree for payment of the money
due has been obtained by the Indenture Trustee, the Holders of Notes
representing a majority of the Outstanding Amount of the Notes, by written
notice to the Issuer and the Indenture Trustee, may rescind and annul such
declaration and its consequences if:
(i) the Issuer has paid or deposited with the Indenture
Trustee a sum sufficient to pay
(A) all payments of principal of and interest on all Notes
and all other amounts that would then be due hereunder or upon such
Notes if the Event of Default giving rise to such acceleration had
not occurred; and
22
(B) all sums paid or advanced by the Indenture Trustee
hereunder and the reasonable compensation, expenses, disbursements
and advances of the Indenture Trustee and its agents and counsel; and
(ii) all Events of Default, other than the nonpayment of
the principal of the Notes that has become due solely by such
acceleration, have been cured or waived as provided in Section 5.9 of
the Indenture.
No such rescission shall affect any subsequent default or impair any right
consequent thereto.
SECTION 4.03. REMEDIES.
If an Event of Default shall have occurred and be continuing, the
Indenture Trustee, subject to Section 11.17 of the Indenture, may exercise any
of the remedies specified in Article V of the Indenture and, in addition, may
do one or more of the following.
(i) institute Proceedings in its own name and as trustee
of an express trust for the collection of all amounts then payable on
the Notes or under the Indenture with respect thereto, whether by
declaration or otherwise, enforce any judgment obtained, and collect
from the Issuer and any other obligor upon such Notes moneys adjudged
due;
(ii) institute Proceedings from time to time for the
complete or partial foreclosure of the Indenture with respect to the
Trust Assets;
(iii) exercise any remedies of a secured party under the UCC
and take any other appropriate action to protect and enforce the
rights and remedies of the Indenture Trustee and the Holders of the
Notes; and
(iv) direct the Trust Collateral Agent to sell the Trust
Assets or any portion thereof or rights or interest therein, at one
or more public or private sales called and conducted in any manner
permitted by law; provided, however, that the Indenture Trustee may
not sell or otherwise liquidate the Trust Assets following an Event
of Default unless
(x) the Holders of 100% of the Outstanding Amount of the
Notes consent thereto,
(y) the proceeds of such sale or liquidation distributable
to the Noteholders are sufficient to discharge in full all
amounts then due and unpaid upon such Notes for principal and
interest, or
(z) the Indenture Trustee determines that the Trust Assets
will not continue to provide sufficient funds for the payment of
principal of and interest on the Notes as they would have become
due if the Notes had
23
not been declared due and payable, and the Indenture Trustee
obtains the consent of Holders of 66-2/3% of the Outstanding
Amount of the Notes.
In determining such sufficiency or insufficiency with respect to
clause (y) and (z), the Indenture Trustee may, but need not, obtain and rely
upon an opinion of an Independent investment banking or accounting firm of
national reputation as to the feasibility of such proposed action and as to the
sufficiency of the Trust Assets for such purpose.
SECTION 4.04. PRIORITIES.
(a) On and after the maturity date of the Series 1998-1 Notes
(by acceleration or otherwise) all Available Funds, all amounts on deposit in
the Reserve Account withdrawn in accordance with Section 3.02 and any proceeds
of the liquidation of all or any portion of the Series 1998-1 Trust Estate
pursuant to Section 4.03(iv), shall be applied by the Indenture Trustee on the
related Distribution Date in the following order of priority:
FIRST: amounts due and owing and required to be distributed
to the Master Servicer, the Owner Trustee and the Indenture Trustee,
respectively, pursuant to priorities (i) and (ii) of Section 3.03
hereof and not previously distributed, in the order of such
priorities and without preference or priority of any kind within such
priorities;
SECOND: to Class A Noteholders for amounts due and unpaid
on the Class A Notes for interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Class A Notes for interest;
THIRD: to the Class A Noteholders for amounts due and
unpaid on the Class A Notes for principal, ratably, without
preference or priority of any kind, according to the amounts due and
payable on the Class A Notes for principal.
FOURTH: to the Class B-1 Noteholders for amounts due and
unpaid on the Class B-1 Notes for interest, ratably, without
preference or priority of any kind, according to the amounts due and
payable on the Class B-1 Notes for interest.
FIFTH: to the Class B-1 Noteholders for amounts due and
unpaid on the Class B-1 Notes for principal, ratably, without
preference or priority of any kind, according to the amounts due and
payable on the Class B-1 Notes for principal.
SIXTH: to the Class B-2 Noteholders for amounts due and
unpaid on the Class B-2 Notes for interest, ratably, without
preference or priority of any kind, according to the amounts due and
payable on the Class B-2 Notes for interest.
24
SEVENTH: to the Class B-2 Noteholders for amounts due and
unpaid on the Class B-2 Notes for principal, ratably, without
preference or priority of any kind, according to the amounts due and
payable on the Class B-2 Notes for principal.
EIGHTH: to the Class C Noteholders for amounts due and
unpaid on the Class C Notes for interest, ratably, without preference
or priority of any kind, according to the amounts due and payable on
the Class C Notes for interest.
NINTH: to the Class C Noteholders for amounts due and
unpaid on the Class C Notes for principal, ratably, without
preference or priority of any kind, according to the amounts due and
payable on the Class C Notes for principal.
TENTH: to the Series 1998-1 Certificateholders, any
remaining Available Funds.
(b) The Indenture Trustee may fix a record date and
Distribution Date for any payment to Series 1998-1 Noteholders pursuant to this
Section 4.04. At least 15 days before such record date, the Indenture Trustee
shall mail to the Noteholders a notice that states the record date, the
Distribution Date and the amount to be paid.
ARTICLE V
PREPAYMENT AND REDEMPTION
SECTION 5.01. OPTIONAL "CLEAN-UP" REDEMPTION.
On any Distribution Date occurring on or after the date upon which
the Series ▇▇▇▇-▇ ▇▇▇▇▇▇▇▇▇ Note Principal Balance shall have been reduced to
an amount which is less than or equal to 10% of the Aggregate Note Principal
Balance of the Series 1998-1 Notes as of the Series 1998-1 Closing Date, the
Master Servicer and the Seller on behalf of the Issuer, shall each have the
option to redeem the outstanding Series 1998-1 Notes at a redemption price (the
"REDEMPTION PRICE") which is not less than the then Aggregate Note Principal
Balance, plus all accrued and unpaid interest thereon and all fees and other
amounts owing to the Indenture Trustee, the Owner Trustee, the Trust Collateral
Agent and the Master Servicer (if other than HFC) under the Series 1998-1
Related Documents. The Master Servicer and the Seller, on behalf of the
Issuer, shall give the Master Servicer (if other than HFC), the Indenture
Trustee, and the Owner Trustee at least 10 days' irrevocable prior written
notice of the date on which the Master Servicer or the Seller, as applicable
intends to exercise such option to purchase. Not later than 12:00 P.M., New
York City time, on such Distribution Date, the Master Servicer or the Seller,
as applicable, shall deposit such amount in the Collection Account in
immediately available funds for distribution pursuant to Section 3.03 against
the presentment of the Notes for cancellation. Such purchase option is subject
to payment in full of the Redemption Price.
25
ARTICLE VI
MISCELLANEOUS
SECTION 6.01. RATIFICATION OF BASIC DOCUMENTS.
Each of the Basic Documents, and to the extent appropriate, as
supplemented by this Series 1998-1 Supplement, is in all respects ratified and
confirmed and each of the Basic Documents, as so supplemented by this Series
1998-1 Supplement shall be read, taken and construed as one and the same
instrument.
SECTION 6.02. COUNTERPARTS.
This Series 1998-1 Supplement may be executed in one or more
counterparts, each of which so executed shall be deemed to be an original, but
all of which shall together constitute but one and the same instrument.
SECTION 6.03. GOVERNING LAW.
THIS SERIES 1998-1 SUPPLEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS.
SECTION 6.04. AMENDMENTS WITHOUT CONSENT OF NOTEHOLDERS.
(a) Without the consent of the Noteholders but with prior
written notice to the Rating Agencies, as evidenced to the Indenture Trustee
and the Issuer, when authorized by an Issuer Order, at any time and from time
to time, the parties hereto may enter into one or more amendments hereto, in
form satisfactory to the Indenture Trustee and the Owner Trustee, for any of
the following purposes:
(i) to correct or amplify the description of any property
at any time subject to the lien of the Indenture as supplemented by
this Series 1998-1 Supplement, or better to assure, convey and
confirm unto the Indenture Trustee, if any, any property subject or
required to be subjected to the lien of the Indenture as supplemented
by this Series 1998-1 Supplement, or to subject to the lien of the
Indenture as supplemented by this Series 1998-1 Supplement additional
property;
(ii) to evidence the succession, in compliance with the
applicable provisions hereof, of another person to the Issuer, and
the assumption by any such successor of the covenants of the Issuer
herein and in the Notes contained;
(iii) to add to the covenants of the Issuer, for the benefit
of the Noteholders, or to surrender any right or power herein
conferred upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any
property to or with the Indenture Trustee, if any;
26
(v) to cure any ambiguity, to correct or supplement any
provision herein which may be inconsistent with any other provision
herein or to make any other provisions with respect to matters or
questions arising under the Indenture, the Trust Agreement or in this
Series 1998-1 Supplement; provided that such action shall not
adversely affect the interests of the Series 1998-1 Noteholders;
(vi) to evidence and provide for the acceptance of the
appointment hereunder and under the Indenture by a successor
indenture trustee with respect to the Notes and to add to or change
any of the provisions of the Indenture or of this Series 1998-1
Supplement as shall be necessary to facilitate the administration of
the trusts hereunder by more than one indenture trustee, pursuant to
the requirements of Article VI of the Indenture; or
(vii) to modify, eliminate or add to the provisions of the
Indenture or of this Series 1998-1 Supplement to such extent as shall
be necessary to effect the qualification of the Indenture under the
TIA or under any similar federal statute hereafter enacted and to add
to the Indenture such other provisions as may be expressly required
by the TIA.
Each of the Indenture Trustee and the Owner Trustee is hereby
authorized to join in the execution of any amendment and to make any further
appropriate agreements and stipulations that may be therein contained.
(b) Except as otherwise provided herein, the Issuer and the
Indenture Trustee, when authorized by an Issuer Order, may, also without the
consent of any of the Series 1998-1 Noteholders but with prior notice to the
Rating Agencies by the Issuer, as evidenced to the Indenture Trustee, enter
into an amendment hereto for the purpose of adding any provisions to, or
changing in any manner or eliminating any of the provisions of, the Indenture
or of this Series 1998-1 Supplement of modifying in any manner the rights of
the Series 1998-1 Noteholders under the Indenture or under this Series 1998-1
Supplement; provided, however, that such action shall not, as evidenced by an
Opinion of Counsel, adversely affect in any material respect the interests of
any Series 1998-1 Noteholder.
SECTION 6.05. AMENDMENTS WITH CONSENT OF THE SERIES 1998-1
NOTEHOLDERS.
Except as otherwise provided herein, the Issuer and the Indenture
Trustee, when authorized by an Issuer Order provided by the Master Servicer,
also may, upon satisfaction of the Rating Agency Condition and with the consent
of the Holders of not less than a majority of the Outstanding Amount of each
Class of affected Series 1998-1 Notes, by Act of such Holders delivered to the
Issuer and the Indenture Trustee, enter into an amendment hereto for the
purpose of adding any provisions to, or changing in any manner or eliminating
any of the provisions of, this Series 1998-1 Supplement or of modifying in any
manner the rights of the Series 1998-1 Noteholders under the Indenture or under
this Series 1998-1 Supplement; provided, however, that no such amendment shall,
without the consent of the Holder of each Outstanding Series 1998-1 Note
affected thereby:
27
(i) change the date of payment of any installment of
principal of or interest on any Series 1998-1 Note, or reduce the
principal amount thereof, the interest rate thereon, change the
provision of the Indenture relating to the application of collections
on, or the proceeds of the sale of, all or any portion of any Series
1998-1 Trust Estate to payment of principal of or interest on the
Series 1998-1 Notes, or change any place of payment where, or the
coin or currency in which, any Series 1998-1 Note or the interest
thereon is payable;
(ii) impair the right to institute suit for the enforcement
of the provisions of the Indenture requiring the application of funds
available therefor, as provided in Article V of the Indenture, to the
payment of any such amount due on the Series 1998-1 Notes on or after
the respective due dates thereof;
(iii) reduce the percentage of the Outstanding Amount of the
Series 1998-1 Notes, the consent of the Holders of which is required
for this Series 1998-1 Supplement, or the consent of the Holders of
which is required for any waiver of compliance with certain
provisions of the Indenture or certain defaults hereunder and their
consequences provided for in the Indenture;
(iv) modify or alter the provisions of the proviso to the
definition of the term "Outstanding";
(v) reduce the percentage of the Outstanding Amount of the
Notes required to direct the Trustee to direct the Issuer to sell or
liquidate the Series 1998-1 Trust Estate pursuant to Section 5.4 of
the Indenture;
(vi) modify any provision of this Section except to
increase any percentage specified herein or to provide that certain
additional provisions of the Indenture or the Basic Documents cannot
be modified or waived without the consent of the Holder of each
Outstanding Series 1998-1 Note affected thereby;
(vii) modify any of the provisions of the Indenture in such
manner as to affect the calculation of the amount of any payment of
interest or principal due on any Series 1998-1 Note on any
Distribution Date (including the calculation of any of the individual
components of such calculation) or to affect the rights of the
Holders of Series 1998-1 Notes to the benefit of any provisions for
the mandatory redemption of the Series 1998-1 Notes contained herein;
or
(viii) permit the creation of any lien ranking prior to or on
a parity with the lien of the Indenture with respect to any part of
the a Series 1998-1 Trust Estate or, except as otherwise permitted or
contemplated herein or the Series 1998-1 Related Documents, terminate
the lien of the Indenture on any property at any time subject hereto
or deprive the Holder of any Series 1998-1 Note of the security
provided by the lien of the Indenture.
28
Except as otherwise provided herein, the Indenture Trustee may
determine whether or not any Series 1998-1 Notes would be adversely affected by
any amendment upon receipt of an Opinion of Counsel to that effect and any such
determination shall be conclusive upon the Holders of all Series 1998-1 Notes,
whether theretofore or thereafter authenticated and delivered hereunder. The
Indenture Trustee shall not be liable for any such determination made in good
faith.
It shall not be necessary for any Act of Noteholders under this
Section to approve the particular form of this Series 1998-1 Supplement, but
it shall be sufficient if such Act shall approve the substance thereof.
Promptly after the execution by the Issuer and the Indenture Trustee
of this Series 1998-1 Supplement, the Indenture Trustee shall mail to the
Series 1998-1 Noteholders a notice setting forth in general terms the substance
hereof. Any failure of the Indenture Trustee to mail such notice, or any
defect therein, shall not, however, in any way impair or affect the validity of
the Series 1998-1 Supplement.
SECTION 6.06. NON-PETITION CLAUSES.
By its acceptance of its interest in the Series 1998-1 Notes, each
owner of a beneficial interest in a Note shall be deemed to have agreed that
prior to the date which is one year and one day after the termination of the
Indenture, such Person shall not acquiesce, petition or otherwise invoke or
cause the Issuer or the Seller to invoke the process of any governmental
authority for the purpose of commencing or sustaining a case against the Seller
or Issuer under any Federal or state bankruptcy, insolvency or similar law or
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator
or other similar official of or for the Issuer or the Seller or any substantial
part of its property or ordering the winding-up or liquidation of the affairs
of the Issuer or the Seller.
(a)
29
IN WITNESS WHEREOF, the parties hereto have caused this Series 1998-1
Supplement to be fully executed by their respective officers as of the day and
year first above written.
HOUSEHOLD FINANCE CORPORATION,
as Master Servicer
By
-------------------------------------
Name:
Title:
HOUSEHOLD AUTOMOBILE REVOLVING
TRUST I,
as Issuer
By WILMINGTON TRUST COMPANY
Not in its individual capacity but solely
as Owner Trustee
By
-------------------------------------
Name:
Title:
HOUSEHOLD AUTO RECEIVABLES
CORPORATION,
By
-------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK,
as Indenture Trustee
By
-------------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY,
as Owner Trustee
By
-------------------------------------
Name:
Title:
2
INDEX OF TERMS
PAGE
Aggregate Note Principal Balance . . . . . . . . . . . . . . . . . . . . . . . 3
Aggregate Optimal Note Principal Balance . . . . . . . . . . . . . . . . . . . 3
Available Funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Base Servicing Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Basic Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Book Entry Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Certificateholders' Distributable Amount . . . . . . . . . . . . . . . . . . . 4
Chase. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Class. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Class A Distributable Amount . . . . . . . . . . . . . . . . . . . . . . . . . 4
Class A Interest Carryover Shortfall . . . . . . . . . . . . . . . . . . . . . 4
Class A Interest Distributable Amount. . . . . . . . . . . . . . . . . . . . . 4
Class A Monthly Principal Distributable Amount . . . . . . . . . . . . . . . . 4
Class A Noteholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Class A Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Class A Principal Carryover Shortfall. . . . . . . . . . . . . . . . . . . . . 5
Class A Principal Distributable Amount . . . . . . . . . . . . . . . . . . . . 5
Class A-1 Noteholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Class A-1 Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Class A-1 Scheduled Maturity Date. . . . . . . . . . . . . . . . . . . . . . . 5
Class A-2 Noteholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Class A-2 Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Class A-3 Noteholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Class A-3 Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Class A-4 Noteholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Class A-4 Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Class A-5 Monthly Principal Distributable Amount . . . . . . . . . . . . . . . 5
Class A-5 Noteholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Class A-5 Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Class A-5 Principal Carryover Shortfall. . . . . . . . . . . . . . . . . . . . 6
Class A-5 Principal Distributable Amount . . . . . . . . . . . . . . . . . . . 6
Class B Distributable Amount . . . . . . . . . . . . . . . . . . . . . . . . . 6
Class B Interest Distributable Amount. . . . . . . . . . . . . . . . . . . . . 7
Class B Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Class B-1 Interest Carryover Shortfall . . . . . . . . . . . . . . . . . . . . 6
Class B-1 Interest Distributable Amount. . . . . . . . . . . . . . . . . . . . 6
Class B-1 Monthly Principal Distributable Amount . . . . . . . . . . . . . . . 6
Class B-1 Noteholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Class B-1 Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Class B-1 Principal Carryover Shortfall. . . . . . . . . . . . . . . . . . . . 6
Class B-1 Principal Distributable Amount . . . . . . . . . . . . . . . . . . . 7
Class B-2 Distributable Amount . . . . . . . . . . . . . . . . . . . . . . . . 7
Class B-2 Interest Carryover Shortfall . . . . . . . . . . . . . . . . . . . . 7
Class B-2 Monthly Principal Distributable Amount . . . . . . . . . . . . . . . 7
Class B-2 Noteholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Class B-2 Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Class B-2 Principal Carryover Shortfall. . . . . . . . . . . . . . . . . . . . 7
Class B-2 Principal Distributable Amount . . . . . . . . . . . . . . . . . . . 8
Class C Distributable Amount . . . . . . . . . . . . . . . . . . . . . . . . . 8
Class C Interest Carryover Shortfall . . . . . . . . . . . . . . . . . . . . . 8
Class C Interest Distributable Amount. . . . . . . . . . . . . . . . . . . . . 8
Class C Monthly Principal Distributable Amount . . . . . . . . . . . . . . . . 8
Class C Noteholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Class C Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Class C Principal Carryover Shortfall. . . . . . . . . . . . . . . . . . . . . 9
Class C Principal Distributable Amount . . . . . . . . . . . . . . . . . . . . 9
Cutoff Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Definitive Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Distribution Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Eligibility Criteria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Eligible Receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Final Scheduled Distribution Date. . . . . . . . . . . . . . . . . . . . . . . 9
HAFC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
HFC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Indenture. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1, 9
Indenture Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Initial Reserve Account Deposit. . . . . . . . . . . . . . . . . . . . . . . . 9
Interest Period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Interest Rate Cap. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Interest Rate Cap Provider . . . . . . . . . . . . . . . . . . . . . . . . . .10
Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
LIBOR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
LIBOR Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
LIBOR Determination Date . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Master Servicer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Master Servicer's Certificate. . . . . . . . . . . . . . . . . . . . . . . . .10
Maximum Reserve Account Deposit Amount . . . . . . . . . . . . . . . . . . . .10
Note Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Note Rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
Noteholders' Interest Distributable Amount . . . . . . . . . . . . . . . . . .10
Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
Original Pool Balance. . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
Owner Trust Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
Owner Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Pledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
Pledged Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
Pool Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
Principal Amount Available . . . . . . . . . . . . . . . . . . . . . . . . . .11
Principal Distributable Amount . . . . . . . . . . . . . . . . . . . . . . . .12
Rating Agencies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12, 24
Reference Bank Rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
Reserve Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
Reserve Account Balance. . . . . . . . . . . . . . . . . . . . . . . . . . . .12
Reserve Account Deposit Amount . . . . . . . . . . . . . . . . . . . . . . . .12
Reserve Account Shortfall Amount . . . . . . . . . . . . . . . . . . . . . . .12
Schedule of Receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Series 1998-1 Certificate. . . . . . . . . . . . . . . . . . . . . . . . . . .13
Series 1998-1 Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . .13
Series 1998-1 Collected Funds. . . . . . . . . . . . . . . . . . . . . . . . .13
2
Series 1998-1 Collection Account . . . . . . . . . . . . . . . . . . . . .13, 15
Series 1998-1 Eligible Investments . . . . . . . . . . . . . . . . . . . . . .13
Series 1998-1 Eligible Receivable. . . . . . . . . . . . . . . . . . . . . . . 9
Series 1998-1 Note Account . . . . . . . . . . . . . . . . . . . . . . . .13, 15
Series 1998-1 Receivables. . . . . . . . . . . . . . . . . . . . . . . . . . .13
Series 1998-1 Related Documents. . . . . . . . . . . . . . . . . . . . . . . .13
Series 1998-1 Reserve Account. . . . . . . . . . . . . . . . . . . . . . .13, 15
Series 1998-1 Secured Obligations. . . . . . . . . . . . . . . . . . . . . . .13
Series 1998-1 Securities . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Series 1998-1 Supplement . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Series 1998-1 Support. . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Series 1998-1 Support Provider . . . . . . . . . . . . . . . . . . . . . . . .14
Series 1998-1 Trust Accounts . . . . . . . . . . . . . . . . . . . . . . . . .14
Series 1998-1 Trust Estate . . . . . . . . . . . . . . . . . . . . . . . . 2, 14
Servicing Fee Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Supplemental Servicing Fee . . . . . . . . . . . . . . . . . . . . . . . . . .14
Targeted Credit Enhancement Amount . . . . . . . . . . . . . . . . . . . . . .14
Targeted Overcollateralization Amount. . . . . . . . . . . . . . . . . . . . .14
Targeted Reserve Account Balance . . . . . . . . . . . . . . . . . . . . . . .14
Telerate Screen Page 3750. . . . . . . . . . . . . . . . . . . . . . . . . . .14
Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
Trust Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 15
3
