Exhibit 4.1
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WILMINGTON TRUST COMPANY, AS OWNER TRUSTEE OF THE
HOUSEHOLD CREDIT CARD MASTER NOTE TRUST I
Issuer
and
▇▇▇▇▇ FARGO BANK MINNESOTA, NATIONAL ASSOCIATION
Indenture Trustee and Securities Intermediary
SERIES ▇▇▇▇-▇ ▇▇▇▇▇▇▇▇▇ SUPPLEMENT
Dated as of October 28, 2002
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TABLE OF CONTENTS Page
ARTICLE I CREATION OF THE SERIES 2002-1 NOTES....................................................... 1
Section 1.01. Designation........................................................................ 1
ARTICLE II DEFINITIONS............................................................................... 2
Section 2.01. Definitions........................................................................ 2
ARTICLE III SERVICING FEE AND INTERCHANGE............................................................. 13
Section 3.01. Servicing Compensation; Interchange................................................ 13
ARTICLE IV RIGHTS OF SERIES 2002-1 NOTEHOLDERS AND ALLOCATION AND
APPLICATION OF COLLECTIONS............................................................... 14
Section 4.01. Collections and Allocations........................................................ 14
Section 4.02. Determination of Monthly Interest.................................................. 15
Section 4.03. Determination of Monthly Principal................................................. 16
Section 4.04. Application of Available Funds on Deposit in the Collection Account................ 16
Section 4.05 Investor Charge-offs............................................................... 19
Section 4.06. Subordinated Principal Collections................................................. 19
Section 4.07. Excess Finance Charge and Administrative Collections............................... 19
Section 4.08. Shared Principal Collections....................................................... 20
Section 4.09. [Reserved]......................................................................... 20
Section 4.10. Principal Funding Account.......................................................... 20
Section 4.11. Reserve Account.................................................................... 21
Section 4.12. Determination of LIBOR............................................................. 23
Section 4.13. Investment Instructions............................................................ 24
Section 4.14. Exchange of Notes for Transferor Amount............................................ 24
ARTICLE V DELIVERY OF SERIES 2002-1 NOTES; DISTRIBUTIONS; REPORTS TO
SERIES 2002-1 NOTEHOLDERS................................................................ 25
Section 5.01. Delivery and Payment for the Series 2002-1 Notes................................... 25
Section 5.02. Distributions...................................................................... 25
Section 5.03. Reports and Statements to Series 2002-1 Noteholders................................ 26
ARTICLE VI SERIES 2002-1 AMORTIZATION EVENTS......................................................... 27
Section 6.01. Series 2002-1 Amortization Events................................................. 27
ARTICLE VII REDEMPTION OF SERIES 2002-1 NOTES; SERIES FINAL MATURITY;
FINAL DISTRIBUTIONS...................................................................... 29
Section 7.01. Optional Redemption of Series 2002-1 Notes......................................... 29
Section 7.02. Series Final Maturity.............................................................. 29
ARTICLE VIII MISCELLANEOUS PROVISIONS.................................................................. 31
Section 8.01. Ratification of Indenture......................................................... 31
Section 8.02. Counterparts...................................................................... 31
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TABLE OF CONTENTS Page
Section 8.03. Governing Law.................................................................. 31
Section 8.04. Transfer of the O/C Amount..................................................... 31
EXHIBITS
EXHIBIT A-1 FORM OF CLASS A NOTE
EXHIBIT A-2 FORM OF CLASS B NOTE
EXHIBIT B FORM OF MONTHLY PAYMENT INSTRUCTIONS AND NOTIFICATION TO THE
INDENTURE TRUSTEE
EXHIBIT C FORM OF MONTHLY STATEMENT
EXHIBIT D FORM OF MONTHLY SERVICER'S CERTIFICATE
SERIES ▇▇▇▇-▇ ▇▇▇▇▇▇▇▇▇ SUPPLEMENT, dated as of October 28, 2002 (the
"Indenture Supplement"), between WILMINGTON TRUST COMPANY, not in its individual
capacity, but solely as Owner Trustee of the HOUSEHOLD CREDIT CARD MASTER NOTE
TRUST I, a common law trust existing under the laws of the State of Delaware
(herein, the "Issuer" or the "Trust"), and ▇▇▇▇▇ FARGO BANK MINNESOTA, NATIONAL
ASSOCIATION, a national banking association, not in its individual capacity, but
solely as the Indenture Trustee (herein, together with its successors in the
trusts created under the Master Indenture referred to below, the "Indenture
Trustee") and the Securities Intermediary under the Amended and Restated Master
Indenture, dated as of November 16, 2000 (the "Indenture") between the Issuer
and the Indenture Trustee (the Indenture, together with this Indenture
Supplement, the "Agreement").
The Transferor may direct the Owner Trustee, on behalf of the Issuer, to
issue one or more Series of Notes in accordance with Section 2.12 of the
Indenture. The Transferor has tendered the notice of issuance required by
subsection 2.12(b)(i) of the Indenture and has directed the Owner Trustee, on
behalf of the Issuer, to enter into this Indenture Supplement with the Indenture
Trustee as required by Section 2.12 to provide for the issuance, authentication
and delivery of the Class A Notes, Series 2002-1 and the issuance,
authentication and delivery of the Class B Notes, Series 2002-1 and to specify
the Principal Terms thereof. The Principal Terms of this Series are set forth in
this Indenture Supplement to the Indenture.
ARTICLE I
CREATION OF THE SERIES 2002-1 NOTES
Section 1.01. Designation
(a) There is hereby created a Series of Notes to be issued
pursuant to the Indenture and this Indenture Supplement to be known as
"Household Credit Card Master Note Trust I, Series 2002-1" or the "Series 2002-1
Notes." The Series 2002-1 Notes shall be issued in two Classes, the first of
which shall be known as the "Class A Series 2002-1 Floating Rate Asset Backed
Notes" and the second of which shall be known as the "Class B Series 2002-1
Floating Rate Asset Backed Notes". The Series 2002-1 Notes shall be due and
payable on the Series 2002-1 Final Maturity Date.
(b) Series 2002-1 shall be a Pool One Series and shall be in
Principal Sharing Group One and Excess Finance Charge Sharing Group One, and
shall not be in a Reallocation Group, Shared Enhancement Group or be allocated
Shared Transferor Principal Collections. Series 2002-1 shall not be subordinated
to any other Series. Notwithstanding any provision in the Indenture or in this
Indenture Supplement to the contrary, the first Distribution Date with respect
to Series 2002-1 shall be the November 2002 Distribution Date, and the first Due
Period shall begin on and include October 1, 2002 and end on and include October
31, 2002.
(c) 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, the terms and provisions of this Indenture Supplement shall be
controlling. All capitalized terms not otherwise defined herein are defined in
the Indenture, the Transfer and Servicing Agreement or the Trust Agreement. Each
capitalized term defined herein shall relate only to the Series 2002-1 Notes but
not any other Series of Notes issued by the Issuer.
[END OF ARTICLE I]
ARTICLE II
DEFINITIONS
Section 2.01. Definitions.
(a) Whenever used in this Indenture Supplement, 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 the masculine as well as the feminine and neuter genders of such terms.
"Accumulation Period Factor" shall mean, with respect to any Due
Period, a fraction, (a) the numerator of which is equal to the sum of (i) the
initial invested amounts of all outstanding Series in Principal Sharing Group
One which are not Variable Funding Series, (ii) the Invested Amount of all
outstanding Variable Funding Series in Principal Sharing Group One which are in
the Revolving Period and (iii) the Invested Amount as of the end of the
Revolving Period for all Outstanding Variable Funding Series in Principal
Sharing Group One which are not in the Revolving Period and (b) the denominator
of which is equal to the sum of (i) the Initial Invested Amount, (ii) the
initial invested amounts of all outstanding Principal Sharing Group One Series
(other than Series 2002-1) that have controlled accumulation periods or
controlled amortization periods (the length of which may be altered in
accordance with the terms of the related Indenture Supplements) and are not
expected to be in their respective revolving periods as of such Due Period and
(iii) the Invested Amount as of the end of the Revolving Period for all
Outstanding Variable Funding Series in Principal Sharing Group One which are not
expected to be in their revolving periods as of such Due Period; provided,
however, that this definition may be changed at any time if an Officer's
Certificate is delivered indicating that such action will not result in an
Adverse Effect.
"Accumulation Period Length" shall have the meaning assigned such
term in subsection 4.04(e).
"Additional Interest" shall mean, with respect to any
Distribution Date, the Class A Additional Interest and the Class B Additional
Interest for such Distribution Date.
"Adjusted Invested Amount" shall mean, with respect to any date
of determination, an amount equal to the Invested Amount minus the Principal
Funding Account Balance on such date.
"Adjusted Pool One Principal Balance" shall mean an amount equal
to the greater of (a) the sum of (i) the total amount of Principal Receivables
in Pool One as of the close of business on the last day of the immediately
preceding Due Period (or with respect to the first Due Period, the total amount
of Principal Receivables in Pool One as of the Series 2002-1 Cut-off Date) and
(ii) the principal amount on deposit in the Special Funding Account with respect
to Pool One as of the close of business on such last day (or with respect to the
first Due Period, the Series 2002-1 Cut-off Date) and (b) the sum of the
numerators used to calculate the investor percentages for allocations with
respect to Principal Receivables, Finance Charge and Administrative Receivables
or Defaulted Amounts, as applicable, for all Pool One Series outstanding as of
the date as to which such determination is being made; provided, however, that
with respect to any Due Period in which an Addition Date for an Aggregate
Addition or a Removal Date occurs, the amount in clause (a)(i) above shall be
the sum of the amounts for each day in such Due Period computed as follows and
divided by the number of days in such Due Period: (1) the aggregate amount of
Principal Receivables in Pool One as of the close of business on the last day of
the prior Due Period, for each day in the period from and including the first
day of such Due Period to but
2
excluding the related Additional Cut-Off Date or Removal Date and (2) the
aggregate amount of Principal Receivables in Pool One as of the close of
business on the related Additional Cut-off Date or Removal Date after adjusting
for the aggregate amount of Principal Receivables added to or removed from Pool
One on the related Additional Cut-off Date or Removal Date, as the case may be,
for each day in the period from and including the related Additional Cut-off
Date or Removal Date to and including the last day of such Due Period.
"Administration Fee" shall mean the fee payable to the
Administrator pursuant to the Administration Agreement, to the extent not paid
by the Transferor.
"Available Investor Finance Charge and Administrative
Collections" shall mean, with respect to any Due Period, an amount equal to the
sum of (a) the Investor Finance Charge and Administrative Collections, (b)
Principal Funding Investment Proceeds, if any, with respect to the related
Distribution Date, and (c) amounts, if any, to be withdrawn from the Reserve
Account which will be deposited into the Collection Account on the related
Distribution Date to be treated as Available Investor Finance Charge and
Administrative Collections pursuant to subsections 4.11(b), (d) and (f).
"Available Investor Principal Collections" shall mean, with
respect to any Due Period, an amount equal to the sum of (a) (i) an amount equal
to the Investor Percentage of all Collections of Principal Receivables received
during such Due Period minus (ii) the amount of Subordinated Principal
Collections with respect to such Due Period, (b) any Shared Principal
Collections with respect to other Principal Sharing Group One Series (including
any amounts on deposit in the Special Funding Account with respect to Pool One
that are allocated to Series 2002-1 pursuant to the Agreement for application as
Shared Principal Collections), (c) any Refunding Proceeds and (d) any other
amounts which pursuant to Section 4.04 hereof are to be treated as Available
Investor Principal Collections with respect to the related Distribution Date.
"Available Reserve Account Amount" shall mean, with respect to
any Distribution Date, the lesser of (a) the amount on deposit in the Reserve
Account on such date (after taking into account any interest and earnings
retained in the Reserve Account pursuant to subsection 4.11(b) on such date, but
before giving effect to any (i) deposit made or to be made pursuant to
subsection 4.04(a)(ix) to the Reserve Account on such date, or (ii) any
withdrawal made or to be made pursuant to subsection 4.11(d), (e) and (f) from
the Reserve Account with respect to such date) and (b) the Required Reserve
Account Amount.
"Base Rate" shall mean, with respect to any Due Period, the sum
of (a) the product of the weighted average of the Class A Note Interest Rate and
the Class B Note Interest Rate, in each case for the related Interest Period
(weighted based on the Class A Note Principal Balance and the Class B Note
Principal Balance as of the last day of the prior Due Period) multiplied by a
fraction, the numerator of which is the Note Principal Balance and the
denominator of which is the sum of the Note Principal Balance and the O/C Amount
as of the last day of the prior Due Period and (b) a fraction, the numerator of
which is the product of (i) twelve and (ii) the Monthly Servicing Fee and the
denominator of which is the sum of the Note Principal Balance and the O/C Amount
as of the last day of the prior Due Period.
"Class A Additional Interest" shall have the meaning specified in
subsection 4.02(a).
"Class A Interest Shortfall" shall have the meaning specified in
subsection 4.02(a).
"Class A Monthly Interest" shall have the meaning specified in
subsection 4.02(a).
"Class A Note Initial Principal Balance" shall mean $507,111,000.
3
"Class A Note Interest Rate" shall mean a per annum rate of 0.13%
in excess of LIBOR as determined (i) on October 24, 2002, for the period from
and including the Closing Date through and excluding November 15, 2002 and (ii)
on the related LIBOR Determination Date with respect to each Interest Period
thereafter.
"Class A Note Principal Balance" shall mean, with respect to any
date, an amount equal to (a) the Class A Note Initial Principal Balance minus
(b) the aggregate amount of any principal payments made to the Class A
Noteholders prior to such date.
"Class A Noteholder" shall mean the Person in whose name a Class
A Note is registered in the Note Register.
"Class A Notes" shall mean any one of the Notes executed by the
Issuer and authenticated by or on behalf of the Indenture Trustee, substantially
in the form of Exhibit A-1.
"Class B Additional Interest" shall have the meaning specified in
subsection 4.02(b).
"Class B Interest Shortfall" shall have the meaning specified in
subsection 4.02(b).
"Class B Monthly Interest" shall have the meaning specified in
subsection 4.02(b).
"Class B Note Initial Principal Balance" shall mean $52,889,000.
"Class B Note Interest Rate" shall mean a per annum rate of 0.65%
in excess of LIBOR as determined (i) on October 24, 2002, for the period from
and including the Closing Date through and excluding November 15, 2002 and (ii)
on the related LIBOR Determination Date with respect to each Interest Period
thereafter.
"Class B Note Principal Balance" shall mean, with respect to any
date, the Class B Note Initial Principal Balance, minus the aggregate amount of
any principal payments made to the Class B Noteholders prior to such date.
"Class B Noteholder" shall mean the Person in whose name a Class
B Note is registered in the Note Register.
"Class B Notes" shall mean any one of the Notes executed by the
Issuer and authenticated by or on behalf of the Indenture Trustee, substantially
in the form of Exhibit A-2.
"Closing Date" shall mean October 28, 2002.
"Controlled Accumulation Amount" shall mean for any Distribution
Date with respect to the Controlled Accumulation Period, $40,000,000; provided,
however, that if the Accumulation Period Length is determined to be less than 14
Due Periods pursuant to subsection 4.04(e), the Controlled Accumulation Amount
for each Distribution Date with respect to the Controlled Accumulation Period
will be equal to (a) the product of (i) the sum of the Class A Note Initial
Principal Balance and the Class B Note Initial Principal Balance and (ii) the
Accumulation Period Factor for the related Due Period divided by (b) the
Required Accumulation Factor Number.
"Controlled Accumulation Period" shall mean, unless an
Amortization Event shall have occurred prior thereto, the period commencing at
the close of business on July 31, 2004, or such later date as is determined in
accordance with subsection 4.04(e), and ending on the first to occur of (a) the
4
commencement of the Early Amortization Period, (b) the payment in full of the
Note Principal Balance and (c) the Expected Principal Payment Date.
"Controlled Deposit Amount" shall mean, with respect to any
Distribution Date with respect to the Controlled Accumulation Period, an amount
equal to the sum of (a) the Controlled Accumulation Amount for such Distribution
Date and (b) any existing Deficit Controlled Accumulation Amount.
"Covered Amount" shall mean an amount, determined as of each
Distribution Date with respect to any Interest Period during the Controlled
Accumulation Period, equal to the sum of (a) the product of (i) a fraction, the
numerator of which is the actual number of days in such Interest Period and the
denominator of which is 360, times (ii) the Class A Note Interest Rate in effect
with respect to such Interest Period, times (iii) the aggregate amount on
deposit in the Principal Funding Account up to the Class A Note Principal
Balance as of the Record Date preceding such Distribution Date and (b) the
product of (i) a fraction, the numerator of which is the actual number of days
in such Interest Period and the denominator of which is 360, times (ii) the
Class B Note Interest Rate in effect with respect to such Interest Period, times
(iii) the lesser of (A) the aggregate amount on deposit in the Principal Funding
Account in excess of the Class A Note Principal Balance and (B) the Class B Note
Principal Balance, in each case as of the Record Date preceding such
Distribution Date.
"Deficit Controlled Accumulation Amount" shall mean (a) on the
first Distribution Date during the Controlled Accumulation Period, the excess,
if any, of the Controlled Accumulation Amount for such Distribution Date over
the amount deposited in the Principal Funding Account on such Distribution Date
and (b) on each subsequent Distribution Date with respect to the Controlled
Accumulation Period, the excess, if any, of the Controlled Deposit Amount for
such subsequent Distribution Date over the amount deposited into the Principal
Funding Account on such subsequent Distribution Date.
"Distribution Date" shall mean November 15, 2002 and the
fifteenth day of each calendar month thereafter, or if such fifteenth day is not
a Business Day, the next succeeding Business Day.
"Early Amortization Period" shall mean the period commencing on
the first day of the Due Period on which an Amortization Event with respect to
Series 2002-1 is deemed to have occurred or, if the Servicer is required to make
daily deposits into the Collection Account, on the day such Amortization Event
is deemed to have occurred, and ending upon the earlier to occur of (a) the
payment in full of the Note Principal Balance to the Series 2002-1 Noteholders
and (b) the Series 2002-1 Final Maturity Date.
"Eligible Investments" shall mean, with respect to funds
allocable to Series 2002-1 in the Collection Account, the Principal Funding
Account and the Reserve Account, "Eligible Investments" as defined in the
Indenture, except that (a) all references in such definition to "rating
satisfactory to the Rating Agency" shall mean ratings of not less than "A-1+",
"P-1" and "F1+" (whichever is applicable), unless otherwise specified by the
Rating Agency, and (b) all such investments shall have maturities at the time of
the acquisition thereof occurring no later than the Distribution Date following
such date of acquisition.
"Excess Finance Charge Sharing Group One" shall mean Series
2002-1 and each other Series specified in the related indenture supplement to be
included in Excess Finance Charge Sharing Group One.
5
"Excess O/C Amount" shall mean, with respect to any
Distribution Date, the excess of the O/C Amount before giving effect to
distributions on such Distribution Date over the Required O/C Amount as of such
Distribution Date.
"Excess Spread" shall mean with respect to any Due Period, the
annualized percentage equivalent of a fraction, (a) the numerator of which is
equal to (i) Available Investor Finance Charge and Administrative Collections
with respect to such Due Period, plus (ii) any Excess Finance Charge and
Administrative Collections that are allocated to Series 2002-1 with respect to
such Due Period, minus (iii) the amounts distributable pursuant to subsection
4.04(a)(i) through (viii) with respect to the related Distribution Date, and (b)
the denominator of which is the sum of the Note Principal Balance and the O/C
Amount as of the last day of the immediately preceding Due Period.
"Expected Principal Payment Date" shall mean the October 2005
Distribution Date.
"Finance Charge Shortfall" shall have the meaning specified in
Section 4.07.
"Fixed Investor Percentage" shall mean, with respect to any Due
Period, the percentage equivalent (which percentage shall never exceed 100%) of
a fraction, (a) the numerator of which is the Adjusted Invested Amount as of the
close of business on the last day of the Revolving Period and (b) the
denominator of which is the Adjusted Pool One Principal Balance.
"Floating Investor Percentage" shall mean, with respect to any
Due Period, the percentage equivalent (which percentage shall never exceed 100%)
of a fraction, (a) the numerator of which is the Adjusted Invested Amount as of
the close of business on the last day of the preceding Due Period (or with
respect to the first Due Period, the Initial Invested Amount) and (b) the
denominator of which is the Adjusted Pool One Principal Balance.
"Initial O/C Amount" shall mean $62,222,223.
"Initial Invested Amount" shall mean $622,222,223.
"Initial Principal Amount" shall mean $560,000,000.
"Interest Period" shall mean, with respect to any Distribution
Date, the period from and including the Distribution Date immediately preceding
such Distribution Date (or, in the case of the first Distribution Date, from the
Closing Date) to but excluding such Distribution Date.
"Interim Note Principal Amount" shall mean, as of any
Distribution Date (with respect to clauses (a), (b) and (c), before giving
effect to distributions on such Distribution Date), (a) the Class A Note
Principal Balance, plus (b) the Class B Note Principal Balance, minus (c) the
Principal Funding Account Balance, if any, as of such Distribution Date, minus
(d) the Controlled Deposit Amount distributed pursuant to Section 4.04(c)(i) for
such Distribution Date.
"Invested Amount" shall mean, as of any date of determination,
an amount equal to the Initial Principal Amount of the Series 2002-1 Notes and
the Initial O/C Amount minus (a) the amount of principal previously paid to the
Series 2002-1 Noteholders with respect to the Class A Notes and the Class B
Notes (including the principal amount of any Notes purchased by the Transferor)
and any reduction in the O/C Amount pursuant to Section 4.04(b) or (c), and (b)
the amount of unreimbursed Investor Charge-offs and unreimbursed Subordinated
Principal Collections.
"Investor Charge-off" shall have the meaning specified in
Section 4.05.
6
"Investor Defaulted Amount" shall mean, with respect to any
Distribution Date, an amount equal to the product of (a) the Defaulted Amount
for the related Due Period and (b) the Investor Percentage for such Due Period.
"Investor Finance Charge and Administrative Collections" shall
mean, with respect to any Distribution Date, an amount equal to the product of
(a) Investor Percentage for the related Due Period and (b) Collections of
Finance Charge and Administrative Receivables deposited in the Collection
Account for the related Due Period.
"Investor Percentage" shall mean, for any Due Period, (a) with
respect to (i) Finance Charge and Administrative Receivables during any period
other than the Early Amortization Period, (ii) Principal Receivables during the
Revolving Period and (iii) Defaulted Amounts at any time, the Floating Investor
Percentage and (b) with respect to (i) Principal Receivables during any period
other than the Revolving Period and (ii) Finance Charge and Administrative
Receivables during the Early Amortization Period, the Fixed Investor Percentage.
"LIBOR" shall mean, for any Interest Period, the London
interbank offered rate for one-month United States dollar deposits determined by
the Indenture Trustee for each Interest Period in accordance with the provisions
of Section 4.12.
"LIBOR Determination Date" shall mean (a) October 24, 2002 for
the period from and including the Closing Date through and including November
14, 2002 and (b) the second London Business Day prior to the commencement of the
second and each subsequent Interest Period.
"London Business Day" shall mean any Business Day on which
dealings in deposits in United States dollars are transacted in the London
interbank market.
"Monthly Administration Fee" shall mean the product of (i)
one-twelfth of the Administration Fee and (ii) the Floating Investor Percentage.
"Monthly Interest" shall mean, with respect to any Distribution
Date, the sum of the Class A Monthly Interest and the Class B Monthly Interest
for such Distribution Date.
"Monthly Principal" shall mean the monthly principal
distributable in respect of the Notes and the O/C Amount as calculated in
accordance with Section 4.03.
"Monthly Servicing Fee" shall mean, for any Distribution Date,
an amount equal to one-twelfth of the product of:
(a) the Servicing Fee Rate;
(b) the Floating Investor Percentage for the related Due
Period; and
(c) the total amount of Principal Receivables as of the close
of business on the last day of the immediately preceding Due Period, excluding
the principal portion of Participation Interests;
provided, however, that with respect to any Due Period in which an Addition Date
for an Aggregate Addition or a Removal Date occurs, the amount in clause (c)
above shall be the sum of the amounts for each day in that Due Period computed
as follows and divided by the number of days in that Due Period:
7
(i) the aggregate amount of Principal Receivables, excluding
the principal portion of participation interests, as of
the close of business on the last day of the prior Due
Period, for each day in the period from and including the
first day of that Due Period to but excluding the related
Additional Cut-off Date or Removal Date; and
(ii) the aggregate amount of Principal Receivables, excluding
the principal portion of participation interests, as of
the close of business on the related Additional Cut-off
Date or Removal Date after adjusting for the aggregate
amount of Principal Receivables, excluding the principal
portion of Participation Interests, added to or removed
on the related Additional Cut-off Date or Removal Date,
as the case may be, for each day in the period from and
including the related Additional Cut-off Date or Removal
Date to and including the last day of that Due Period;
provided further, that with respect to the first Distribution Date, the Monthly
Servicing Fee will equal $1,037,037.
"Monthly Subordination Amount" shall mean with respect to any
Due Period an amount equal to the sum of:
(a) the lower of (i) the excess of the amounts distributable
pursuant to subsection 4.04(a)(i) over the Available Investor Finance Charge and
Administrative Collections and Excess Finance Charge and Administrative
Collections allocated with respect thereto pursuant to subsection 4.04(a)(i),
and (ii) (1) the product of (I) 18.50% and (II) the Initial Invested Amount
minus (2) any principal payments to the O/C Holder and (3) the amount of
unreimbursed Investor Charge-offs (after giving effect to Investor Charge-offs
for the related Due Period) and unreimbursed Subordinated Principal Collections
(as of the previous Distribution Date); and
(b) the lower of (i) the excess of the amounts distributable
pursuant to subsections 4.04(a)(ii) and 4.04(a)(iii), over the Available
Investor Finance Charge and Administrative Collections and Excess Finance Charge
and Administrative Collections allocated with respect thereto pursuant to
subsections 4.04(a)(ii) and 4.04(a)(iii), and (ii)(1) the product of (I) 10% and
(II) the Initial Invested Amount minus (2) any principal payments to the O/C
Holder and (3) the amount of unreimbursed Investor Charge-offs (after giving
effect to Investor Charge-offs for the related Due Period) and unreimbursed
Subordinated Principal Collections (including amounts allocated pursuant to
clause (a) above with respect to the related Distribution Date).
"Note Principal Balance" shall mean, at any time of
determination, the sum of the Class A Note Principal Balance and the Class B
Note Principal Balance.
"O/C Amount" shall mean, with respect to any date, an amount
equal to (a) the Invested Amount minus (b) the Note Principal Balance.
"O/C Holder" shall mean initially Household Receivables
Funding, Inc. III, a Delaware corporation, as initial holder of the Transferor
Certificate.
"Pool One" shall mean the pool of Receivables listed on
Schedule 1 of the Transfer and Servicing Agreement.
"Pool One Series" shall mean Series 2002-1 and each other
Series which is designated as a Pool One Series in the related Indenture
Supplement.
8
"Principal Funding Account" shall have the meaning set forth in
subsection 4.10(a).
"Principal Funding Account Balance" shall mean, with respect to
any date of determination, the principal amount, if any, on deposit in the
Principal Funding Account on such date of determination.
"Principal Funding Investment Proceeds" shall mean, with
respect to each Distribution Date, the investment earnings on funds in the
Principal Funding Account (net of investment expenses and losses) for the period
from and including the immediately preceding Distribution Date to but excluding
such Distribution Date.
"Principal Sharing Group One" shall mean Series 2002-1 and each
other Series specified in the related Indenture Supplement to be included in
Principal Sharing Group One.
"Rating Agency" shall mean each of Standard & Poor's, ▇▇▇▇▇'▇
and Fitch.
"Reassignment Amount" shall mean, with respect to any
Distribution Date, after giving effect to any deposits and distributions
otherwise to be made on such Distribution Date, the sum of (a) the Note
Principal Balance and the O/C Amount on such Distribution Date, plus (b) Monthly
Interest for such Distribution Date and any Monthly Interest previously due but
not distributed to the Series 2002-1 Noteholders, plus (c) the amount of
Additional Interest, if any, for such Distribution Date and any Additional
Interest previously due but not distributed to the Series 2002-1 Noteholders on
a prior Distribution Date.
"Reference Banks" shall mean four major banks in the London
interbank market selected by the Servicer.
"Refunding Proceeds" shall mean with respect to any
Distribution Date, any proceeds of the issuance of a new Series of Notes
remitted by the Transferor, with the prior written consent of the Indenture
Trustee at least one Business Day prior to such Distribution Date, for deposit
into the Collection Account and application as Available Investor Principal
Collections.
"Required Accumulation Factor Number" shall be equal to a
fraction, rounded upwards to the nearest whole number, the numerator of which is
one and the denominator of which is equal to the lowest monthly principal
payment rate (calculated based upon Collections of Principal Receivables for any
Due Period, over the amount of Principal Receivables on the first day of such
Due Period) on the Accounts for the 12 months preceding the date of such
calculation; provided, however, that this definition may be changed at any time
if the Rating Agency Condition is satisfied.
"Required O/C Amount" shall mean, as of the Closing Date, the
Initial O/C Amount and, as of any Distribution Date thereafter, an amount equal
to 11.11% of the Interim Note Principal Amount for such Distribution Date but
not less than 3% of the Initial Invested Amount; provided that (a) if an
Amortization Event has occurred, the Required O/C Amount for any Distribution
Date shall equal the amount of such requirement immediately preceding such
Amortization Event, (b) in no event shall the Required O/C Amount exceed the sum
of the Class A Note Principal Balance and the Class B Note Principal Balance on
any such date, (c) the Required O/C Amount may be reduced at any time to a
lesser amount if (i) the Rating Agency Condition is satisfied and (ii) an
Officer's Certificate of the Transferor has been delivered to the effect that in
the reasonable belief of the Transferor, such reduction will not result in an
Adverse Effect, and (d) the Transferor, in its sole discretion, may increase the
Required O/C Amount at any time.
9
"Required Reserve Account Amount" shall mean, with respect to
any Distribution Date on or after the Reserve Account Funding Date, an amount
equal to (a) 0.5% of the Class A Note Principal Balance or (b) any other amount
designated by the Transferor; provided, however, that if such designation is of
a lesser amount, the Transferor shall (i) provide the Servicer and the Indenture
Trustee with evidence that the Rating Agency Condition shall have been satisfied
and (ii) deliver to the Indenture Trustee an Officer's Certificate indicating
that such designation will not result in an Adverse Effect.
"Required Transferor Amount" shall have the meaning specified
in the Indenture.
"Required Transferor Percentage" shall mean with respect to
Pool One, (a) initially 7.0% or (b) any other percentage designated by the
Transferor; provided, however, that if such designation is of a lesser amount,
the Transferor shall (i) provide the Servicer and the Indenture Trustee with
evidence that the Rating Agency Condition shall have been satisfied and (ii)
deliver to the Indenture Trustee a certificate of an authorized officer to the
effect that, based on the facts known to such officer at such time, in the
reasonable belief of the Transferor, such designation will not have an Adverse
Effect.
"Reserve Account" shall have the meaning specified in
subsection 4.11(a).
"Reserve Account Funding Date" shall mean (a) the third
Distribution Date prior to the scheduled commencement of the Controlled
Accumulation Period if the average Excess Spread for any three consecutive
months is 4% or greater, (b) the fourth Distribution Date prior to the scheduled
commencement of the Controlled Accumulation Period if the average Excess Spread
for any three consecutive months is 3% or greater, but less than 4%, (c) the
sixth Distribution Date prior to the scheduled commencement of the Controlled
Accumulation Period if the average Excess Spread for any three consecutive
months is 2% or greater, but less than 3% and (d) the twelfth Distribution Date
prior to the scheduled commencement of the Controlled Accumulation Period if the
average Excess Spread for any three consecutive months is less than 2%. For
purposes of this definition, Excess Spread shall be determined for each month
beginning 15 months prior to the scheduled commencement of the Controlled
Accumulation Period.
"Reserve Account Surplus" shall mean, as of any Distribution
Date following the Reserve Account Funding Date, the amount, if any, by which
the amount on deposit in the Reserve Account exceeds the Required Reserve
Account Amount.
"Reserve Draw Amount" shall mean, with respect to each
Distribution Date relating to the Controlled Accumulation Period or the first
Distribution Date relating to the Early Amortization Period, the amount, if any,
by which the Principal Funding Investment Proceeds for such Distribution Date
are less than the Covered Amount determined as of such Distribution Date.
"Revolving Period" shall mean the period beginning on the
Closing Date and ending on the earlier of the close of business on the day
immediately preceding the day the Controlled Accumulation Period or the Early
Amortization Period commences.
"Series 2002-1" shall mean the Series of Notes for which the
terms are specified in this Indenture Supplement.
"Series 2002-1 Accounts" shall mean the Reserve Account and the
Principal Funding Account.
"Series 2002-1 Amortization Event" shall have the meaning
specified in Section 6.01.
10
"Series 2002-1 Cut-off Date" shall mean the close of business on
September 30, 2002.
"Series 2002-1 Final Maturity Date" shall mean the earliest to
occur of (a) the July 2008 Distribution Date, (b) the Distribution Date on which
the Notes are paid in full, (c) the termination of the Trust pursuant to Section
11.01 of the Indenture and (d) at the option of the Transferor, the day on which
the right of all Series of Notes to receive payments from the Trust has
terminated.
"Series 2002-1 Note" shall mean a Class A Note or a Class B Note.
"Series 2002-1 Noteholder" shall mean a Class A Noteholder or a
Class B Noteholder.
"Series 2002-1 Principal Shortfall" shall have the meaning
specified in Section 4.08.
"Series Adjusted Invested Amount" shall mean, with respect to any
Due Period:
(a) during the Revolving Period, the Invested Amount as of the
last day of the immediately preceding Due Period;
(b) during the Controlled Accumulation Period, the amount
specified in clause (a) above as of the close of business on the last day of the
Revolving Period less unreimbursed Investor Charge-offs thereafter; provided,
however, that on any date, at the option of the Transferor (the exercise of such
option to be evidenced by written instructions from the Transferor to the
Servicer and the Indenture Trustee) and upon ten days written notice to the
Rating Agency, such amount may be reduced below the amount specified for the
previous Due Period to an amount not less than the greater of (i) the Adjusted
Invested Amount as of the last day of the immediately preceding Due Period (less
any amounts deposited into the Principal Funding Account since the last day of
the immediately preceding Due Period) and (ii) an amount that, if used as the
numerator of the Fixed Investor Percentage for the remainder of the Controlled
Accumulation Period, would assure that Available Investor Principal Collections
for this Series plus the product of the aggregate amount of the Shared Principal
Collections during each Due Period multiplied by a fraction the numerator of
which is the Invested Amount of this Series and the denominator of which is the
aggregate invested amount of all Series not scheduled to be in their revolving
period during such Due Period would equal at least 125% of the applicable
Controlled Accumulation Amount for such Due Period for so long as the Invested
Amount is greater than zero, assuming for this purpose that (A) the payment rate
with respect to Collections of Principal Receivables remains constant at the
level of the immediately preceding Due Period, (B) the total amount of Principal
Receivables theretofore conveyed to and in the Trust (and the Special Funding
Amount) remains constant at the level existing on the date of such reduction,
(C) no amortization event with respect to any Series will subsequently occur and
(D) no additional Series (other than any Series being issued on the date of such
reduction) will be subsequently issued; and
(c) during any Early Amortization Period, the Invested Amount as
of the last day of the Revolving Period less unreimbursed Investor Charge-offs
thereafter or, if less, the amount last determined pursuant to clause (b) above
during the Controlled Accumulation Period.
"Series Portfolio Yield" shall mean, with respect to any Due
Period, the annualized percentage equivalent of a fraction, (a) the numerator of
which is equal to the sum of (i) Available Investor Finance Charge and
Administrative Collections with respect to such Due Period, plus (ii) any Excess
Finance Charge and Administrative Collections that are allocated to Series
2002-1 with respect to such Due Period, such sum to be calculated after
subtracting the Investor Defaulted Amount for such Due Period, and (b) the
denominator of which is the sum of the Note Principal Balance and the O/C Amount
as of the last day of the immediately preceding Due Period.
11
"Servicing Fee Rate" shall mean 2% per annum or such lesser
percentage as may be specified by the Servicer in an Officer's Certificate filed
with the Indenture Trustee; provided, however, that (a) such Officer's
Certificate shall state that, in the reasonable belief of the Servicer, such
change in percentage will not result in an Adverse Effect and (b) the Servicer
shall have provided written notice of such change to the Rating Agency at least
ten days prior to the date such change is to take effect.
"Subordinated Principal Collections" shall mean with respect to
any Due Period, Available Investor Principal Collections applied in accordance
with Section 4.06.
"Telerate Page 3750" shall mean the display page currently so
designated on the Moneyline Telerate Services Report (or such other page as may
replace that page in that service for the purpose of displaying comparable rates
or prices).
"Variable Funding Series" shall mean any Series, the invested
amount of which may be increased or decreased subject to the satisfaction of
certain conditions specified in the Indenture Supplement related to such Series.
Each capitalized term defined herein shall relate to the Series
2002-1 Notes and no other Series of Notes issued by the Trust, unless the
context otherwise requires. All capitalized terms used herein and not otherwise
defined herein have the meanings ascribed to them in the Indenture or the
Transfer and Servicing Agreement. 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 Transfer and Servicing Agreement, the
terms and provisions of this Indenture Supplement shall govern.
The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Indenture Supplement shall refer to this Indenture
Supplement as a whole and not to any particular provision of this Indenture
Supplement; references to any Article, subsection, Section or Exhibit are
references to Articles, subsections, Sections and Exhibits in or to this
Indenture Supplement unless otherwise specified; and the term "including" means
"including without limitation."
[END OF ARTICLE II]
12
ARTICLE III
SERVICING FEE AND INTERCHANGE
Section 3.01. Servicing Compensation; Interchange.
(a) Servicing Fee. The share of the Servicing Fee allocable to
the Series 2002-1 Noteholders with respect to any Distribution Date shall equal
the Monthly Servicing Fee. The portion of the Servicing Fee that is not
allocable to the Series 2002-1 Noteholders shall be paid by the holders of the
Transferor Certificates or the noteholders of other Series (as provided in the
related Indenture Supplements), and in no event shall the Trust, the Owner
Trustee, the Indenture Trustee or the Series 2002-1 Noteholders be liable for
the share of the Servicing Fee to be paid by the holders of the Transferor
Certificates or the noteholders of any other Series.
(b) Interchange. Not later than 1:00 p.m., New York City time,
on each Transfer Date, the Servicer shall notify the Transferor, the Owner
Trustee and the Indenture Trustee of the amount of Interchange to be included as
Collections of Finance Charge and Administrative Receivables. On each
Distribution Date, the Transferor shall cause to be deposited into the
Collection Account, in immediately available funds, the amount of Interchange to
be so included as Collections of Finance Charge and Administrative Receivables
allocable to Series 2002-1 with respect to the preceding Due Period and such
Interchange shall be treated as a portion of Collections of Finance Charge and
Administrative Receivables allocable to Series 2002-1 for all purposes of this
Indenture Supplement, the Indenture and the Transfer and Servicing Agreement.
Notwithstanding the above, if the Transferor shall have delivered to the
Indenture Trustee an Officer's Certificate stating that the Transferor
reasonably believes that such action will not have an Adverse Effect, the
Transferor may, in lieu of causing the deposit of Interchange into the
Collection Account as set forth above, designate Discount Option Receivables
pursuant to Section 2.12 of the Transfer and Servicing Agreement in an amount
approximately equal to the then current Interchange with respect to the
Accounts.
[END OF ARTICLE III]
13
ARTICLE IV
RIGHTS OF SERIES 2002-1 NOTEHOLDERS
AND ALLOCATION AND APPLICATION OF COLLECTIONS
Section 4.01. Collections and Allocations.
(a) Allocations. Collections of Finance Charge and
Administrative Receivables and Principal Receivables and Defaulted Receivables
allocated to Series 2002-1 pursuant to Article VIII of the Indenture shall be
allocated and distributed as set forth in this Article.
(b) Payments to the Transferor. The Servicer shall on Deposit
Dates direct the Indenture Trustee to withdraw from the Collection Account and
pay to the Transferor the following amounts:
(i) an amount equal to the Transferor Percentage for the
related Due Period of Collections of Finance Charge and Administrative
Receivables to the extent that such amount is then on deposit in the
Collection Account; and
(ii) (A) if the Transferor Amount (determined after giving
effect to any Principal Receivables transferred to the Trust on
such Deposit Date) exceeds zero, an amount equal to the
Transferor Percentage for the related Due Period of Collections
of Principal Receivables that are then on deposit in the
Collection Account, and
(B) if the Transferor Amount (determined after giving
effect to any Principal Receivables transferred to the Trust on
such Deposit Date) does not exceed zero, the amount set forth in
clause (A) shall be deposited into the Special Funding Account.
The withdrawals to be made from the Collection Account pursuant
to this subsection 4.01(b) do not apply to deposits into the Collection Account
that do not represent Collections, including payment of the purchase price for
the Receivables or the Notes pursuant to Section 2.06 or 7.01 of the Transfer
and Servicing Agreement or Section 11.04 of the Indenture.
(c) Allocations to the Series 2002-1 Noteholders and to the O/C
Holder. The Servicer shall, prior to the close of business on any Deposit Date,
allocate to the Series 2002-1 Noteholders and to the O/C Holder the following
amounts as set forth below:
(i) Allocations of Investor Finance Charge and
Administrative Collections. The Servicer shall allocate to the Series
2002-1 Noteholders and to the O/C Holder and retain in the Collection
Account for application as provided herein an amount equal to the product
of (A) the Investor Percentage and (B) the aggregate amount of Collections
of Finance Charge and Administrative Receivables deposited in the
Collection Account on such Deposit Date.
(ii) Allocations of Principal Collections. The Servicer
shall allocate to the Series 2002-1 Noteholders and to the O/C Holder
the following amounts as set forth below:
(A) Allocations During the Revolving Period. During the
Revolving Period an amount equal to the product of (I) the
Investor Percentage and (II) the aggregate amount of Collections
of Principal Receivables deposited in the Collection Account on
14
such Deposit Date, shall be allocated to the Series 2002-1
Noteholders and retained in the Collection Account until applied
as provided herein.
(B) Allocations During the Controlled Accumulation Period.
During the Controlled Accumulation Period an amount equal to the
product of (I) the Investor Percentage and (II) the aggregate
amount of Collections of Principal Receivables deposited in the
Collection Account on such Deposit Date shall be allocated to the
Series 2002-1 Noteholders and deposited in the Principal Funding
Account until applied as provided herein; provided, however, that
if such Collections with respect to such Due Period exceed the
Controlled Deposit Amount for the related Distribution Date then
such excess shall be first, retained in the Collection Account
for application to reduce the O/C Amount to the Required O/C
Amount, second, if any other Principal Sharing Series in
Principal Sharing Group One is outstanding and in its
amortization period or accumulation period, retained in the
Collection Account for application, to the extent necessary, as
Shared Principal Collections to other Series in Principal Sharing
Group One on the related Distribution Date, and third paid to the
holders of the Transferor Certificates only if the Transferor
Amount on such Deposit Date is greater than the Required
Transferor Amount (after giving effect to all Principal
Receivables transferred to the Trust on such day) and otherwise
shall be deposited in the Special Funding Account for Pool One.
(C) Allocations During the Early Amortization Period.
During the Early Amortization Period, an amount equal to the
product of (I) the Investor Percentage and (II) the aggregate
amount of Collections of Principal Receivables deposited in the
Collection Account on such Deposit Date, shall be allocated to
the Series 2002-1 Noteholders and retained in the Collection
Account until applied as provided herein; provided, however, that
after the date on which an amount of such Collections equal to
the Note Principal Balance has been deposited into the Collection
Account and allocated to the Series 2002-1 Noteholders, the
excess over such amount shall be first, retained in the
Collection Account for application to reduce the O/C Amount to
the Required O/C Amount, second, if any other Principal Sharing
Series in Principal Sharing Group One is outstanding and in its
amortization period or accumulation period, retained in the
Collection Account for application, to the extent necessary, as
Shared Principal Collections on the related Distribution Date,
and third paid to the holders of the Transferor Certificates only
if the Transferor Amount on such date is greater than the
Required Transferor Amount (after giving effect to all Principal
Receivables transferred to the Trust on such day) and otherwise
shall be deposited in the Special Funding Account for Pool One.
Section 4.02. Determination of Monthly Interest.
(a) The amount of monthly interest ("Class A Monthly Interest")
distributable from the Collection Account with respect to the Class A Notes on
any Distribution Date shall be an amount equal to the product of (i) (A) a
fraction, the numerator of which is the actual number of days in the related
Interest Period and the denominator of which is 360, times (B) the Class A Note
Interest Rate in effect with respect to the related Interest Period and (ii) the
Class A Note Principal Balance as of the close of business on the last day of
the preceding Due Period.
On the Determination Date preceding each Distribution Date, the
Servicer shall determine the excess, if any (the "Class A Interest Shortfall"),
of (x) the Class A Monthly Interest for such Distribution Date and any unpaid
Class A Monthly Interest for a prior Distribution Date over (y) the
15
aggregate amount of funds allocated and available to pay such Class A Monthly
Interest on such Distribution Date. If the Class A Interest Shortfall with
respect to any Distribution Date is greater than zero, on each subsequent
Distribution Date until such Class A Interest Shortfall is fully paid, an
additional amount ("Class A Additional Interest") equal to the product of (i) a
fraction, the numerator of which is the actual number of days in the related
Interest Period and the denominator of which is 360, (ii) the Class A Note
Interest Rate in effect with respect to the related Interest Period and (iii)
such Class A Interest Shortfall (or the portion thereof which has not been paid
to the Class A Noteholders) shall be payable as provided herein with respect to
the Class A Notes. Notwithstanding anything to the contrary herein, Class A
Additional Interest shall be payable or distributed to the Class A Noteholders
only to the extent permitted by applicable law.
(b) The amount of monthly interest ("Class B Monthly Interest")
distributable from the Collection Account with respect to the Class B Notes on
any Distribution Date shall be an amount equal to the product of (i) (A) a
fraction, the numerator of which is the actual number of days in the related
Interest Period and the denominator of which is 360, times (B) the Class B Note
Interest Rate in effect with respect to the related Interest Period and (ii) the
Class B Note Principal Balance as of the close of business on the last day of
the preceding Due Period.
On the Determination Date preceding each Distribution Date, the
Servicer shall determine the excess, if any (the "Class B Interest Shortfall"),
of (x) the Class B Monthly Interest for such Distribution Date and any unpaid
Class B Monthly Interest for a prior Distribution Date over (y) the aggregate
amount of funds allocated and available to pay such Class B Monthly Interest on
such Distribution Date. If the Class B Interest Shortfall with respect to any
Distribution Date is greater than zero, on each subsequent Distribution Date
until such Class B Interest Shortfall is fully paid, an additional amount
("Class B Additional Interest") equal to the product of (i) a fraction, the
numerator of which is the actual number of days in the related Interest Period
and the denominator of which is 360, (ii) the Class B Note Interest Rate in
effect with respect to the related Interest Period and (iii) such Class B
Interest Shortfall (or the portion thereof which has not been paid to the Class
B Noteholders) shall be payable as provided herein with respect to the Class B
Notes. Notwithstanding anything to the contrary herein, Class B Additional
Interest shall be payable or distributed to the Class B Noteholders only to the
extent permitted by applicable law.
Section 4.03. Determination of Monthly Principal.
The amount of monthly principal distributable from the Collection
Account with respect to the Notes and the O/C Amount on each Distribution Date
(the "Monthly Principal"), beginning with the Distribution Date in the month
following the month in which the Controlled Accumulation Period or, if earlier,
the Early Amortization Period, begins, shall be equal to the least of (a) the
Available Investor Principal Collections on deposit in the Collection Account
with respect to such Distribution Date, (b) for each Distribution Date with
respect to the Controlled Accumulation Period, the Controlled Deposit Amount and
the Excess O/C Amount for such Distribution Date and (c) the Adjusted Invested
Amount (after taking into account any adjustments to be made on such
Distribution Date pursuant to Sections 4.05 and 4.06).
Section 4.04. Application of Available Funds on Deposit in the
Collection Account. The Servicer shall apply, or shall cause the Indenture
Trustee to apply by written instruction to the Indenture Trustee, on each
Distribution Date, Available Investor Finance Charge and Administrative
Collections and Excess Finance Charge and Administrative Collections allocable
to Series 2002-1 in accordance with Section 4.07 and Available Investor
Principal Collections on deposit in the Collection Account with respect to such
Distribution Date to make the following distributions:
16
(a) On each Distribution Date, an amount equal to the Available
Investor Finance Charge and Administrative Collections and Excess Finance Charge
and Administrative Collections allocable to Series 2002-1 in accordance with
Section 4.07 with respect to such Distribution Date will be distributed or
deposited in the following priority:
(i) an amount equal to Class A Monthly Interest for such
Distribution Date, plus the amount of any Class A Monthly Interest
previously due but not distributed to Class A Noteholders on a prior
Distribution Date, plus the amount of any Class A Additional Interest
for such Distribution Date, plus the amount of any Class A Additional
Interest previously due but not distributed to Class A Noteholders on a
prior Distribution Date, shall be distributed to the Paying Agent for
payment to Class A Noteholders on such Distribution Date;
(ii) an amount equal to Class B Monthly Interest for such
Distribution Date, plus the amount of any Class B Monthly Interest
previously due but not distributed to Class B Noteholders on a prior
Distribution Date, plus the amount of any Class B Additional Interest
for such Distribution Date, plus the amount of any Class B Additional
Interest previously due but not distributed to Class B Noteholders on a
prior Distribution Date, shall be distributed to the Paying Agent for
payment to Class B Noteholders on the applicable Distribution Date;
(iii) (A) if HFC or an Affiliate of HFC is no longer the
Servicer, an amount equal to the Monthly Servicing Fee for such
Distribution Date, plus the amount of any Monthly Servicing Fee
previously due but not distributed to such Servicer on a prior
Distribution Date, shall be distributed to such Servicer and (B) if HFC
or an Affiliate of HFC is no longer the Administrator, an amount equal
to the Monthly Administration Fee for such Distribution Date, plus the
amount of any Monthly Administration Fee previously due but not
distributed to such Administrator on a prior Distribution Date, shall
be distributed to such Administrator;
(iv) an amount equal to the Investor Defaulted Amount for such
Distribution Date shall be treated as a portion of Available Investor
Principal Collections for such Distribution Date;
(v) an amount equal to the sum of the aggregate amount of
Investor Charge-offs and the amount of Subordinated Principal
Collections which have not been previously reimbursed shall be treated
as a portion of Available Investor Principal Collections for such
Distribution Date;
(vi) upon the occurrence of an Event of Default with respect to
Series 2002-1 and acceleration of the maturity of the Series 2002-1
Notes pursuant to Section 5.03 of the Indenture, the balance, if any,
up to the outstanding Note Principal Balance shall be treated as a
portion of Available Investor Principal Collections for such
Distribution Date for distribution to the Series 2002-1 Noteholders;
(vii) if HFC or an Affiliate of HFC is the Servicer, an amount
equal to the Monthly Servicing Fee for such Distribution Date that has
not been paid to the Servicer and any Monthly Servicing Fee due but not
paid to the Servicer on a prior Distribution Date shall be paid to the
Servicer (unless such amount has been netted against deposits to the
Collection Account in accordance with Section 8.04 of the Indenture);
(viii) if HFC or an Affiliate of HFC is the Administrator, an
amount equal to the Monthly Administration Fee for such Distribution
Date and any Monthly Administration Fee due but not paid to the
Administrator on a prior Distribution Date shall be paid to the
17
Administrator (unless such amount has been netted against deposits to the
Collection Account in accordance with Section 8.04 of the Indenture);
(ix) on each Distribution Date from and after the Reserve Account
Funding Date, but prior to the date on which the Reserve Account terminates
as described in Section 4.11(f), an amount equal to the excess, if any, of
the Required Reserve Account Amount over the Available Reserve Account
Amount shall be deposited into the Reserve Account; and
(x) the balance, if any, will constitute a portion of Excess
Finance Charge and Administrative Collections for such Distribution Date
and will be available for allocation to other Series in Excess Finance
Charge Sharing Group One or to the Transferor, as set forth in Section
8.08C of the Indenture.
(b) On each Distribution Date with respect to the Revolving Period,
an amount equal to the Available Investor Principal Collections deposited in the
Collection Account for the related Due Period shall be distributed in the
following order of priority:
(i) an amount equal to the excess, if any, of the O/C Amount
over the Required O/C Amount shall be paid to the Transferor, for reduction
of the O/C Amount, to the extent that the Transferor Amount exceeds zero;
and
(ii) the balance of such Available Investor Principal
Collections shall be treated as Shared Principal Collections with respect
to Principal Sharing Group One and applied in accordance with Section 8.05
of the Indenture.
(c) On each Distribution Date with respect to the Controlled
Accumulation Period or the Early Amortization Period, an amount equal to the
Available Investor Principal Collections deposited in the Collection Account for
the related Due Period shall be distributed or deposited in the following order
of priority:
(i) during the Controlled Accumulation Period and prior to the
payment in full of the Class A Notes, the Class B Notes and the O/C Amount
an amount equal to the Monthly Principal for such Distribution Date shall
be first, deposited into the Principal Funding Account in an amount not to
exceed the Controlled Deposit Amount and second, an amount not to exceed
the Excess O/C Amount shall be distributed to the O/C Holder for reduction
of the O/C Amount;
(ii) during the Early Amortization Period, an amount equal to
the Monthly Principal for such Distribution Date shall be distributed to
the Paying Agent for payment to the Class A Noteholders on such
Distribution Date and on each subsequent Distribution Date until the Class
A Note Principal Balance has been paid in full;
(iii) after giving effect to the distribution referred to in
clause (ii) above, during the Early Amortization Period, an amount equal to
the Monthly Principal remaining, if any, shall be distributed to the Paying
Agent for payment to the Class B Noteholders on such Distribution Date and
on each subsequent Distribution Date until the Class B Note Principal
Balance has been paid in full;
(iv) after the Class B Note Principal Balance has been reduced
to zero, during the Early Amortization Period, an amount equal to the
Monthly Principal remaining, if any, shall be distributed to the O/C
Holder, for reduction of the O/C Amount, on such Distribution Date and on
each subsequent Distribution Date until the O/C Amount has been paid in
full; and
18
(v) the balance of such Available Investor Principal
Collections shall be treated as Shared Principal Collections with respect
to Principal Sharing Group One and applied in accordance with Section 8.05
of the Indenture.
(d) On the earlier to occur of (i) the first Distribution Date
with respect to the Early Amortization Period and (ii) the Expected Principal
Payment Date, the Indenture Trustee, acting in accordance with instructions from
the Servicer, shall withdraw from the Principal Funding Account and distribute
to the Paying Agent for payment first, to the Class A Noteholders up to the
Class A Note Principal Balance, and second, to the Class B Noteholders up to the
Class B Note Principal Balance, the amounts deposited into the Principal Funding
Account pursuant to subsection 4.04(c)(i).
(e) The Controlled Accumulation Period is scheduled to commence
at the close of business on July 31, 2004; provided, however, that, if the
Accumulation Period Length (determined as described below) is less than 14 Due
Periods, the date on which the Controlled Accumulation Period actually commences
will be delayed to the first Business Day of the Due Period that is the number
of whole Due Periods prior to the Expected Principal Payment Date at least equal
to the Accumulation Period Length and, as a result, the number of Due Periods in
the Controlled Accumulation Period will at least equal the Accumulation Period
Length. On the Determination Date immediately preceding the July 2004
Distribution Date, and each Determination Date thereafter until the Controlled
Accumulation Period begins, the Servicer will determine the "Accumulation Period
Length" which will equal the number of whole Due Periods such that the sum of
the Accumulation Period Factors for each Due Period during such period will be
equal to or greater than the Required Accumulation Factor Number; provided,
however, that the Accumulation Period Length will not be determined to be less
than one Due Period; provided further, however, that the determination of the
Accumulation Period Length may be changed at any time if an Officer's
Certificate is delivered by the Transferor indicating that, in the reasonable
belief of an Authorized Officer of the Transferor, such action will not result
in an Adverse Effect.
Section 4.05 Investor Charge-offs. On each Determination Date, the
Servicer shall calculate the Investor Defaulted Amount, if any, for the related
Distribution Date. If, on any Distribution Date, the Investor Defaulted Amount
for the related Due Period exceeds the amount available therefor pursuant to
Section 4.04(a)(iv) with respect to such Due Period, the Invested Amount will be
reduced by the amount of such excess, but not by more than the Investor
Defaulted Amount for such Distribution Date (such reduction, an "Investor
Charge-off").
Section 4.06. Subordinated Principal Collections. On each Distribution
Date, the Servicer shall apply, or shall cause the Indenture Trustee to withdraw
from the Collection Account and apply, Subordinated Principal Collections with
respect to such Distribution Date, in an amount equal to the lesser of the (a)
Investor Percentage of all Collections of Principal Receivables received during
the preceding Due Period and (b) the Monthly Subordination Amount for the
preceding Due Period in accordance with the priority set forth in clauses (i)
through (iii) of Section 4.04(a). On each Distribution Date, the Invested Amount
shall be reduced by the amount of Subordinated Principal Collections for such
Distribution Date.
Section 4.07. Excess Finance Charge and Administrative Collections.
Subject to Section 8.08C of the Indenture, Excess Finance Charge and
Administrative Collections with respect to the Excess Finance Charge Sharing
Series in Excess Finance Charge Sharing Group One for any Distribution Date will
be allocated to Series 2002-1 in an amount equal to the product of (a) the
aggregate amount of Excess Finance Charge and Administrative Collections with
respect to all the Excess Finance Charge Sharing Series in Excess Finance Charge
Sharing Group One for such Distribution Date and (b) a fraction, the numerator
of which is the Finance Charge Shortfall for Series 2002-1 for such Distribution
Date and the denominator of which is the aggregate amount of Finance Charge
Shortfalls for all the Excess Finance
19
Charge Sharing Series in Excess Finance Charge Sharing Group One for such
Distribution Date. The "Finance Charge Shortfall" for Series 2002-1 for any
Distribution Date will be equal to the excess, if any, of (a) the full amount
required to be paid, without duplication, pursuant to subsections 4.04(a)(i)
through (ix) on such Distribution Date over (b) the Available Investor Finance
Charge and Administrative Collections with respect to such Distribution Date.
Section 4.08. Shared Principal Collections.
Subject to Section 8.05 of the Indenture, Shared Principal
Collections with respect to the Series in Principal Sharing Group One for any
Distribution Date will be allocated to Series 2002-1 in an amount equal to the
product of (a) the aggregate amount of Shared Principal Collections with respect
to all Principal Sharing Series in Principal Sharing Group One for such
Distribution Date and (b) a fraction, the numerator of which is the Series
2002-1 Principal Shortfall for such Distribution Date and the denominator of
which is the aggregate amount of Principal Shortfalls for all the Series which
are Principal Sharing Series in Principal Sharing Group One for such
Distribution Date. The "Series 2002-1 Principal Shortfall" will be equal to (a)
for any Distribution Date with respect to the Revolving Period, zero, (b) for
any Distribution Date with respect to the Controlled Accumulation Period, the
excess, if any, of the Controlled Deposit Amount and the Excess O/C Amount with
respect to such Distribution Date over the amount of Available Investor
Principal Collections for such Distribution Date (excluding any portion thereof
attributable to Shared Principal Collections), and (c) for any Distribution Date
with respect to the Early Amortization Period, the excess, if any, of the
Adjusted Invested Amount over the amount of Available Investor Principal
Collections for such Distribution Date (excluding any portion thereof
attributable to Shared Principal Collections).
Section 4.09. [Reserved].
Section 4.10. Principal Funding Account.
(a) The Indenture Trustee shall establish and maintain with
an Eligible Institution, which may be the Indenture Trustee, in the name of the
Indenture Trustee, for the benefit of the Series 2002-1 Noteholders, a
segregated trust account with the corporate trust department of such Eligible
Institution (the "Principal Funding Account"), bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Series 2002-1 Noteholders. The Indenture Trustee shall possess all right, title
and interest in all funds on deposit from time to time in the Principal Funding
Account and in all proceeds thereof. The Principal Funding Account shall be
under the sole dominion and control of the Indenture Trustee for the benefit of
the Series 2002-1 Noteholders. If at any time the institution holding the
Principal Funding Account ceases to be an Eligible Institution, the Transferor
shall notify the Indenture Trustee, and the Indenture Trustee upon being
notified (or the Servicer on its behalf) shall, within 10 Business Days, (or
such longer period as to which the Rating Agency has consented) establish a new
Principal Funding Account meeting the conditions specified above with an
Eligible Institution, and shall transfer any cash or any investments to such new
Principal Funding Account. The Indenture Trustee, at the direction of the
Servicer, shall (i) make withdrawals from the Principal Funding Account from
time to time, in the amounts and for the purposes set forth in this Indenture
Supplement, and (ii) on each Distribution Date (from and after the commencement
of the Controlled Accumulation Period) prior to the termination of the Principal
Funding Account, make deposits into the Principal Funding Account in the amounts
specified in, and otherwise in accordance with, subsection 4.04(c)(i).
(b) Funds on deposit in the Principal Funding Account shall
be invested at the direction of the Servicer by the Indenture Trustee in
Eligible Investments. Funds on deposit in the Principal Funding Account on any
Distribution Date, after giving effect to any withdrawals from the Principal
Funding Account on such Distribution Date, shall be invested in such investments
that will
20
mature so that such funds will be available for withdrawal on or prior
to the following Distribution Date. The Indenture Trustee shall:
(i) hold each Eligible Investment that constitutes
investment property through a Securities Intermediary, which
Securities Intermediary shall agree with the Indenture Trustee that
(A) such investment property at all times shall be credited to a
securities account of the Indenture Trustee, (B) all property credited
to such securities account shall be treated as a financial asset, (C)
such Securities Intermediary shall treat the Indenture Trustee as
entitled to exercise the rights that comprise each financial asset
credited to such securities account, (D) such Securities Intermediary
shall comply with entitlement orders originated by the Indenture
Trustee without the further consent of any other person or entity, (E)
such Securities Intermediary shall not agree with any person or entity
other than the Indenture Trustee to comply with entitlement orders
originated by any person or entity other than the Indenture Trustee,
(F) such securities account and all property credited thereto shall
not be subject to any lien, security interest, right of set-off, or
encumbrance in favor of such Securities Intermediary or anyone
claiming through such Securities Intermediary (other than the
Indenture Trustee), and (G) such agreement between such Securities
Intermediary and the Indenture Trustee shall be governed by the laws
of the State of New York; and
(ii) maintain possession of each other Eligible Investment
not described in clause (i) above;
provided, that no Eligible Investment shall be disposed of prior to its maturity
date. Terms used in clause (i) above that are defined in the New York UCC and
not otherwise defined herein shall have the meaning set forth in the New York
UCC.
On each Distribution Date with respect to the Controlled
Accumulation Period and on the first Distribution Date with respect to the Early
Amortization Period, the Indenture Trustee, acting at the Servicer's direction
given on or before such Distribution Date, shall transfer from the Principal
Funding Account to the Collection Account the Principal Funding Investment
Proceeds on deposit in the Principal Funding Account for application as
Available Investor Finance Charge and Administrative Collections for such
Distribution Date.
Principal Funding Investment Proceeds (including reinvested
interest) shall not be considered part of the amounts on deposit in the
Principal Funding Account for purposes of this Indenture Supplement.
Section 4.11. Reserve Account.
(a) The Indenture Trustee shall establish and maintain with an
Eligible Institution, which may be the Indenture Trustee in the name of the
Indenture Trustee, for the benefit of the Series 2002-1 Noteholders, a
segregated trust account with the corporate trust department of such Eligible
Institution (the "Reserve Account"), bearing a designation clearly indicating
that the funds deposited therein are held for the benefit of the Series 2002-1
Noteholders. The Indenture Trustee shall possess all right, title and interest
in all funds on deposit from time to time in the Reserve Account and in all
proceeds thereof. The Reserve Account shall be under the sole dominion and
control of the Indenture Trustee for the benefit of the Series 2002-1
Noteholders. If at any time the institution holding the Reserve Account ceases
to be an Eligible Institution, the Transferor shall notify the Indenture
Trustee, and the Indenture Trustee upon being notified (or the Servicer on its
behalf) shall, within 10 Business Days (or such longer period as to which the
Rating Agency has consented), establish a new Reserve Account meeting the
conditions specified above with an Eligible Institution, and shall transfer any
cash or any
21
investments to such new Reserve Account. The Indenture Trustee, at the direction
of the Servicer, shall (i) make withdrawals from the Reserve Account from time
to time in an amount up to the Available Reserve Account Amount at such time,
for the purposes set forth in this Indenture Supplement, and (ii) on each
Distribution Date (from and after the Reserve Account Funding Date) prior to
termination of the Reserve Account, make a deposit into the Reserve Account in
the amount specified in, and otherwise in accordance with, subsection
4.04(a)(ix).
(b) Funds on deposit in the Reserve Account shall be invested
at the direction of the Servicer by the Indenture Trustee in Eligible
Investments. Funds on deposit in the Reserve Account on any Distribution Date,
after giving effect to any withdrawals from the Reserve Account on such
Distribution Date, shall be invested in such investments that will mature so
that such funds will be available for withdrawal on or prior to the following
Distribution Date. The Indenture Trustee shall:
(i) hold each Eligible Investment that constitutes
investment property through a Securities Intermediary, which
Securities Intermediary shall agree with the Indenture Trustee that
(A) such investment property at all times shall be credited to a
securities account of the Indenture Trustee, (B) all property credited
to such securities account shall be treated as a financial asset, (C)
such Securities Intermediary shall treat the Indenture Trustee as
entitled to exercise the rights that comprise each financial asset
credited to such securities account, (D) such Securities Intermediary
shall comply with entitlement orders originated by the Indenture
Trustee without the further consent of any other person or entity, (E)
such Securities Intermediary shall not agree with any person or entity
other than the Indenture Trustee to comply with entitlement orders
originated by any person or entity other than the Indenture Trustee,
(F) such securities account and all property credited thereto shall
not be subject to any lien, security interest, right of set-off, or
encumbrance in favor of such Securities Intermediary or anyone
claiming through such Securities Intermediary (other than the
Indenture Trustee), and (G) such agreement between such Securities
Intermediary and the Indenture Trustee shall be governed by the laws
of the State of New York; and
(ii) maintain possession of each other Eligible Investment
not described in clause (i) above;
provided that no Eligible Investment shall be disposed of prior to its maturity
date. Terms used in clause (i) above that are defined in the New York UCC and
not otherwise defined herein shall have the meaning set forth in the New York
UCC.
On each Distribution Date, all interest and earnings (net of
losses and investment expenses) accrued since the preceding Distribution Date on
funds on deposit in the Reserve Account shall be retained in the Reserve Account
to the extent that the Available Reserve Account Amount is less than the
Required Reserve Account Amount, and the balance, if any, shall be deposited
into the Collection Account and included in Available Investor Finance Charge
and Administrative Collections for such Distribution Date. For purposes of
determining the availability of funds or the balance in the Reserve Account for
any reason under this Indenture Supplement, except as otherwise provided in the
preceding sentence, investment earnings on such funds shall be deemed not to be
available or on deposit.
(c) On or before each Distribution Date with respect to the
Controlled Accumulation Period and on or before the first Distribution Date with
respect to the Early Amortization Period, the Servicer shall calculate the
Reserve Draw Amount; provided, however, that such amount will be reduced to the
extent that funds otherwise would be available for deposit in the Reserve
Account under Section 4.04(a)(ix) with respect to such Distribution Date.
22
(d) In the event that for any Distribution Date the Reserve Draw
Amount is greater than zero, the Reserve Draw Amount, up to the Available
Reserve Account Amount, shall be withdrawn from the Reserve Account on such
Distribution Date by the Indenture Trustee (acting in accordance with the
instructions of the Servicer) and deposited into the Collection Account for
application as Available Investor Finance Charge and Administrative Collections
for such Distribution Date.
(e) In the event that the Reserve Account Surplus on any
Distribution Date, after giving effect to all deposits to and withdrawals from
the Reserve Account with respect to such Distribution Date, is greater than
zero, the Indenture Trustee, acting in accordance with the instructions of the
Servicer, shall withdraw from the Reserve Account and pay to the Owner Trustee
for distribution in accordance with the Trust Agreement an amount equal to such
Reserve Account Surplus.
(f) Upon the earliest to occur of (i) the termination of the
Trust pursuant to Article VIII of the Trust Agreement, (ii) if the Controlled
Accumulation Period has not commenced, the first Distribution Date relating to
the Early Amortization Period and (iii) if the Controlled Accumulation Period
has commenced, the earlier of the first Distribution Date with respect to the
Early Amortization Period and the Expected Principal Payment Date, the Indenture
Trustee, acting in accordance with the instructions of the Servicer, after the
prior payment of all amounts owing to the Series 2002-1 Noteholders that are
payable from the Reserve Account as provided herein, shall withdraw from the
Reserve Account and pay first, to the O/C Holder for reduction of the O/C Amount
until reduced to zero and second, to the Transferor, all amounts, if any, on
deposit in the Reserve Account and the Reserve Account shall be deemed to have
terminated for purposes of this Indenture Supplement; provided, however, that
following the occurrence of an Event of Default with respect to Series 2002-1
and acceleration of the maturity of the Series 2002-1 Notes pursuant to Section
5.03 of the Indenture, the Servicer shall withdraw from the Reserve Account all
amounts on deposit therein and the Indenture Trustee or the Servicer shall
deposit such amounts in the Collection Account for distribution to the Series
2002-1 Noteholders in accordance with Section 5.02 to fund any shortfalls in
amounts owed to such Series 2002-1 Noteholders.
Section 4.12. Determination of LIBOR.
(a) On each LIBOR Determination Date, the Indenture Trustee shall
determine LIBOR on the basis of the rate for deposits in United States dollars
for a one-month period which appears on Telerate Page 3750 as of 11:00 a.m.,
London time, on such date. If such rate does not appear on Telerate Page 3750,
the rate for that LIBOR Determination Date shall be determined on the basis of
the rates at which deposits in United States dollars are offered by the
Reference Banks at approximately 11:00 a.m., London time, on that day to prime
banks in the London interbank market for a one-month period. The Indenture
Trustee shall 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, the rate for that LIBOR Determination Date shall be the arithmetic
mean of the quotations. If fewer than two quotations are provided as requested,
the rate for that LIBOR Determination Date will be the arithmetic mean of the
rates quoted by major banks in New York City, selected by the Servicer, at
approximately 11:00 a.m., New York City time, on that day for loans in United
States dollars to leading European banks for a one-month period.
(b) The Class A Note Interest Rate and the Class B Note Interest
Rate applicable to the then current and the immediately preceding Interest
Periods may be obtained by telephoning the Indenture Trustee at its Corporate
Trust Office or such other address and telephone number as shall be designated
by the Indenture Trustee for such purpose by prior written notice by the
Indenture Trustee to each Series 2002-1 Noteholder from time to time.
23
(c) On each LIBOR Determination Date, the Indenture Trustee shall
send to the Servicer and the Administrator by facsimile transmission,
notification of LIBOR for the following Interest Period.
Section 4.13. Investment Instructions. Any investment instructions required
to be given to the Indenture Trustee pursuant to the terms hereof must be given
to the Indenture Trustee no later than 12:00 p.m. (New York City time) on the
date such investment is to be made. In the event the Indenture Trustee receives
such investment instruction later than such time, the Indenture Trustee may, but
shall have no obligation to, make such investment. In the event the Indenture
Trustee is unable to make an investment required in an investment instruction
received by the Indenture Trustee after 12:00 p.m. (New York City time) on such
day, such investment shall be made by the Indenture Trustee on the next
succeeding Business Day. In no event shall the Indenture Trustee be liable for
any investment not made pursuant to investment instructions received after 12:00
p.m. (New York City time) on the day such investment is requested to be made.
Section 4.14. Exchange of Notes for Transferor Amount. If the Transferor
purchases Series 2002-1 Notes from Series 2002-1 Noteholders, the Transferor
may, on any Distribution Date (after giving effect to all required allocations
and payments on such Distribution Date), cancel such purchased Series 2002-1
Notes by delivering a written request to the Indenture Trustee to do so;
provided, however, that the Transferor may only cancel Class A Notes and Class B
Notes it has purchased if the Rating Agency Condition has been satisfied and a
credit enhancement deficiency will not result. The Transferor may in connection
with such cancellation reduce a portion of the O/C Amount and may (but shall not
be required to) cancel such portion of the O/C Amount, provided that the
reduction in the O/C Amount resulting from such cancellation may not result in
the O/C Amount being less than the Required O/C Amount. As a result of any
cancellation of Series 2002-1 Notes pursuant to this Section, (a) the Invested
Amount shall be reduced by (i) the aggregate principal amount of such purchased
Series 2002-1 Notes and (ii) the reduction in the O/C Amount and (b) the
Transferor Amount shall be increased in an amount equal to such reduction in the
Invested Amount.
[END OF ARTICLE IV]
24
ARTICLE V
DELIVERY OF SERIES 2002-1 NOTES;
DISTRIBUTIONS; REPORTS TO SERIES 2002-1 NOTEHOLDERS
Section 5.01. Delivery and Payment for the Series 2002-1 Notes.
With respect to the Series 2002-1 Notes which are in certificated
form, the Issuer shall execute and the Indenture Trustee shall authenticate the
Series 2002-1 Notes in accordance with Section 2.03 of the Indenture. The
Indenture Trustee shall deliver those Series 2002-1 Notes to or upon the order
of the Trust when so authenticated.
Section 5.02. Distributions.
(a) On each Distribution Date, the Paying Agent shall distribute to
each Class A Noteholder of record on the related Record Date (other than as
provided in Section 11.02 of the Indenture) such Class A Noteholder's pro rata
share of the amounts held by the Paying Agent that are allocated and available
on such Distribution Date to pay interest on the Class A Notes pursuant to this
Indenture Supplement.
(b) On each Distribution Date, the Paying Agent shall distribute to
each Class A Noteholder of record on the related Record Date such Class A
Noteholder's pro rata share of the amounts held by the Paying Agent that are
allocated and available on such Distribution Date to pay principal of the Class
A Notes pursuant to this Indenture Supplement.
(c) On each Distribution Date, the Paying Agent shall distribute to
each Class B Noteholder of record on the related Record Date (other than as
provided in Section 11.02 of the Indenture) such Class B Noteholder's pro rata
share of the amounts held by the Paying Agent that are allocated and available
on such Distribution Date to pay interest on the Class B Notes pursuant to this
Indenture Supplement.
(d) On each Distribution Date, the Paying Agent shall distribute to
each Class B Noteholder of record on the related Record Date such Class B
Noteholder's pro rata share of the amounts held by the Paying Agent that are
allocated and available on such Distribution Date to pay principal of the Class
B Notes pursuant to this Indenture Supplement.
(e) On each Distribution Date, the Paying Agent shall distribute to
the O/C Holder, in immediately available funds, the amounts held by the Paying
Agent that are allocated and available on such Distribution Date to reduce the
O/C Amount pursuant to this Indenture Supplement.
(f) The distributions to be made pursuant to this Section 5.02 are
subject to the provisions of Sections 2.06, 6.01 and 7.01 of the Transfer and
Servicing Agreement, Section 11.02 of the Indenture and Section 7.01 of this
Indenture Supplement.
(g) Except as provided in Section 11.02 of the Indenture with respect
to a final distribution, distributions to Series 2002-1 Noteholders hereunder
shall be made by (i) check mailed to each Series 2002-1 Noteholder (at such
Noteholder's address as it appears in the Note Register), except that with
respect to any Series 2002-1 Notes registered in the name of the nominee of a
Clearing Agency,
25
such distribution shall be made in immediately available funds and (ii) without
presentation or surrender of any Series 2002-1 Note or the making of any
notation thereon.
Section 5.03. Reports and Statements to Series 2002-1 Noteholders.
(a) On each Distribution Date, the Paying Agent, on behalf of
the Indenture Trustee, shall, provided the Servicer has delivered a statement
substantially in the form of Exhibit C, forward to each Series 2002-1 Noteholder
such statement substantially in the form of Exhibit C prepared by the Servicer.
(b) Not later than the second Business Day preceding each
Distribution Date, the Servicer shall deliver to the Owner Trustee, the
Indenture Trustee, the Paying Agent and each Rating Agency (i) a statement
substantially in the form of Exhibit C prepared by the Servicer and (ii) a
certificate of an Authorized Officer substantially in the form of Exhibit D;
provided that the Servicer may amend the form of Exhibit C and Exhibit D, from
time to time.
(c) A copy of each statement or certificate provided pursuant
to paragraph (a) or (b) may be obtained by any Series 2002-1 Noteholder by a
request in writing to the Servicer.
(d) On or before January 31 of each calendar year, beginning
with calendar year 2003, the Paying Agent, on behalf of the Indenture Trustee,
shall furnish or cause to be furnished to each Person who at any time during the
preceding calendar year was a Series 2002-1 Noteholder, a statement prepared by
the Servicer containing the information which is required to be contained in the
statement to Series 2002-1 Noteholders, as set forth in paragraph (a) above,
aggregated for such calendar year together with other information as is required
to be provided by an issuer of indebtedness under the Code. Such obligation of
the Paying Agent shall be deemed to have been satisfied to the extent that
substantially comparable information shall be provided by the Paying Agent
pursuant to any requirements of the Code as from time to time in effect.
(e) On or before March 31 of each calendar year, beginning
with March 31, 2003, the Paying Agent, on behalf of the Indenture Trustee, shall
forward to each Series 2002-1 Noteholder copies of each certificate and report
furnished to the Indenture Trustee pursuant to Section 3.05 or 3.06 of the
Transfer and Servicing Agreement.
[END OF ARTICLE V]
26
ARTICLE VI
SERIES 2002-1 AMORTIZATION EVENTS
Section 6.01. Series 2002-1 Amortization Events. If any one of
the following events shall occur with respect to Series 2002-1:
(a) failure on the part of the Transferor (i) to make any
payment or deposit required by the terms of the Transfer and Servicing
Agreement, the Indenture or this Indenture Supplement on or before the date
occurring five Business Days after the date such payment or deposit is required
to be made therein or herein or (ii) duly to observe or perform in any material
respect any other covenants or agreements of the Transferor set forth in the
Transfer and Servicing Agreement, the Indenture or this Indenture Supplement,
which failure has an Adverse Effect on the Series 2002-1 Noteholders and which
continues unremedied and continues to materially and adversely affect the
interests of the Series 2002-1 Noteholders for a period of 60 days after the
date on which written notice of such failure, requiring the same to be remedied,
shall have been given to the Transferor by the Indenture Trustee, or to the
Transferor and the Indenture Trustee by any Holder of the Series 2002-1 Notes;
(b) any representation or warranty made by the Transferor in
the Transfer and Servicing Agreement, or any information contained in a computer
file or microfiche list required to be delivered by the Transferor pursuant to
Section 2.01 or subsection 2.09(h) of the Transfer and Servicing Agreement shall
prove to have been incorrect in any material respect when made or when
delivered, which continues to be incorrect in any material respect for a period
of 60 days after the date on which written notice of such failure, requiring the
same to be remedied, shall have been given to the Transferor by the Indenture
Trustee, or to the Transferor and the Indenture Trustee by any Holder of the
Series 2002-1 Notes and as a result of which an Adverse Effect occurs with
respect to the Series 2002-1 Noteholders and such Adverse Effect continues for
the designated period; provided, however, that a Series 2002-1 Amortization
Event pursuant to this subsection 6.01(b) shall not be deemed to have occurred
hereunder if the Transferor has accepted reassignment of the related Receivable,
or all of such Receivables, if applicable, during such period in accordance with
the provisions of the Transfer and Servicing Agreement;
(c) a failure by the Transferor to convey Receivables in
Additional Accounts or Participation Interests to the Trust within five Business
Days after the day on which it is required to convey such Receivables or
Participation Interests pursuant to subsection 2.09(a) of the Transfer and
Servicing Agreement;
(d) any Servicer Default shall occur which has an Adverse
Effect on the Series 2002-1 Noteholders;
(e) the average Series Portfolio Yield for any three
consecutive Due Periods is reduced to a rate which is less than the average of
the Base Rates for such period;
(f) the Class A Note Principal Balance or the Class B Note
Principal Balance shall not be paid in full on the Expected Principal Payment
Date; or
(g) without limiting the foregoing, the occurrence of an
Event of Default with respect to Series 2002-1 and an acceleration of the
maturity of the Series 2002-1 Notes pursuant to Section 5.03 of the Indenture;
27
then, in the case of any event described in subparagraph (a), (b) or (d) after
the applicable grace period, if any, set forth in such subparagraphs, either the
Indenture Trustee or the Holders of Series 2002-1 Notes evidencing more than 50%
of the aggregate Outstanding Amount of Series 2002-1 Notes by notice then given
in writing to the Transferor and the Servicer (and to the Indenture Trustee if
given by the Series 2002-1 Noteholders) may declare that an amortization event
(a "Series 2002-1 Amortization Event") has occurred as of the date of such
notice, and, in the case of any event described in subparagraph (c), (e), (f) or
(g), a Series 2002-1 Amortization Event shall occur without any notice or other
action on the part of the Indenture Trustee or the Series 2002-1 Noteholders
immediately upon the occurrence of such event.
[END OF ARTICLE VI]
28
ARTICLE VII
REDEMPTION OF SERIES 2002-1 NOTES; SERIES FINAL MATURITY; FINAL DISTRIBUTIONS
Section 7.01. Optional Redemption of Series 2002-1 Notes.
(a) On any day occurring on or after the date on which the
Note Principal Balance is reduced to 10% or less of the sum of the Class A Note
Initial Principal Balance and the Class B Note Initial Principal Balance, the
Transferor shall have the option to redeem the Series 2002-1 Notes and the O/C
Amount, at a purchase price equal to (i) if such day is a Distribution Date, the
Reassignment Amount for such Distribution Date or (ii) if such day is not a
Distribution Date, the Reassignment Amount for the Distribution Date following
such day.
(b) The Transferor shall give the Servicer and the Indenture
Trustee at least 30 days prior written notice of the date on which the
Transferor intends to exercise such optional redemption. Not later than 1:00
p.m., New York City time, on such day the Transferor shall deposit into the
Principal Funding Account in immediately available funds the excess of the
Reassignment Amount (less the O/C Amount) over the amount, if any, on deposit in
the Principal Funding Account. The remaining Reassignment Amount shall be
distributed to the O/C Holder for reduction of the O/C Amount. Such redemption
option is subject to payment in full of the Reassignment Amount. Following such
deposit into the Principal Funding Account and such distribution to the O/C
Holder in accordance with the foregoing, the Invested Amount for Series 2002-1
shall be reduced to zero and the Series 2002-1 Noteholders shall have no further
interest in or claim against the Trust. The Reassignment Amount shall be
distributed as set forth in subsection 7.02(a).
Section 7.02. Series Final Maturity.
(a) The amount to be paid by the Transferor with respect to
Series 2002-1 in connection with (i) a reassignment of Receivables to the
Transferor pursuant to Section 2.06 of the Transfer and Servicing Agreement or
(ii) an Optional Redemption of the Notes pursuant to Section 7.01, shall be the
Reassignment Amount for the first Distribution Date following the Due Period in
which the reassignment obligation arises under the Transfer and Servicing
Agreement. With respect to the Reassignment Amount deposited into the Collection
Account pursuant to Section 7.01 herein or Section 2.06 of the Transfer and
Servicing Agreement or the proceeds from any Foreclosure Remedy pursuant to
Section 5.05 of the Indenture, the Indenture Trustee shall, in accordance with
the written direction of the Servicer, not later than 1:00 p.m. New York City
time, on the related Distribution Date, make deposits or distributions of the
following amounts (in the priority set forth below and, in each case after
giving effect to any deposits and distributions otherwise to be made on such
date) in immediately available funds:
(i) (x) the Class A Note Principal Balance on such
Distribution Date will be distributed to the Paying Agent for payment
to the Class A Noteholders and (y) an amount equal to the sum of (A)
Class A Monthly Interest for such Distribution Date, (B) any Class A
Monthly Interest previously due but not distributed to the Class A
Noteholders on a prior Distribution Date and (C) the amount of Class A
Additional Interest, if any, for such Distribution Date and any Class A
Additional Interest previously due but not distributed to the Class A
Noteholders on any prior Distribution Date, will be distributed to the
Paying Agent for payment to the Class A Noteholders;
29
(ii) (x) the Class B Note Principal Balance on such
Distribution Date will be distributed to the Paying Agent for payment
to the Class B Noteholders and (y) an amount equal to the sum of (A)
Class B Monthly Interest for such Distribution Date, (B) any Class B
Monthly Interest previously due but not distributed to the Class B
Noteholders on a prior Distribution Date and (C) the amount of Class B
Additional Interest, if any, for such Distribution Date and any Class B
Additional Interest previously due but not distributed to the Class B
Noteholders on any prior Distribution Date, will be distributed to the
Paying Agent for payment to the Class B Noteholders; and
(iii) the O/C Amount on such Distribution Date will be
distributed to the Paying Agent for payment to the O/C Holder.
(b) Notwithstanding anything to the contrary in this
Indenture Supplement, the Indenture or the Transfer and Servicing Agreement, all
amounts distributed to the Paying Agent pursuant to subsection 7.02(a) for
payment to the Series 2002-1 Noteholders shall be deemed distributed in full to
the Series 2002-1 Noteholders on the date on which such funds are distributed to
the Paying Agent pursuant to this Section and shall be deemed to be a final
distribution pursuant to Section 11.02 of the Indenture.
[END OF ARTICLE VII]
30
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.01. Ratification of Indenture. As supplemented by this
Indenture Supplement, the Indenture is in all respects ratified and confirmed
and the Indenture as so supplemented by this Indenture Supplement shall be read,
taken and construed as one and the same instrument.
Section 8.02. Counterparts. This Indenture Supplement may be executed
in two or more counterparts, and by different parties on separate counterparts,
each of which shall be an original, but all of which shall constitute one and
the same instrument.
Section 8.03. Governing Law. THIS INDENTURE SUPPLEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.
Section 8.04. Transfer of the O/C Amount. Notwithstanding anything to
the contrary in this Indenture Supplement, no interest in the O/C Amount may be
directly or indirectly sold, assigned, pledged, hypothecated, exchanged,
participated or otherwise transferred (other than in connection with the
transfer upon initial issuance to the Indenture Trustee as security for the
Series 2002-1 Notes) except to a Person who is a "United States person" for
United States federal income tax purposes and only upon the prior delivery of a
Tax Opinion to the Indenture Trustee, and any such transfer in violation of
these requirements shall be null and void ab initio.
Section 8.05. Certain Commercial Law Representations and Warranties.
The Issuer hereby makes the following representations and warranties. Such
representations and warranties shall survive until the termination of this
Indenture Supplement. Such representations and warranties speak of the date that
a security interest in the Receivables is granted to the Indenture Trustee but
shall not be waived by any of the parties to this Indenture Supplement unless
each Rating Agency shall have notified the Transferor, the Administrator, the
Owner Trustee and the Indenture Trustee in writing that such waiver will not
result in a reduction or withdrawal of the rating of any outstanding Series or
Class to which it is a Rating Agency.
(a) The Agreement creates a valid and continuing security interest (as
defined in the applicable UCC) in favor of the Indenture Trustee in the
Receivables described in Section 2.01 of the Agreement or in Section 3(a) of any
Assignment, which security interest is prior to all other liens, and is
enforceable as such against creditors of and purchasers from the Issuer.
(b) The Receivables constitute "accounts" within the meaning of the
applicable UCC.
(c) At the time of its grant of any security interest in the
Receivables pursuant to the Agreement or an Assignment, the Issuer owned and had
good and marketable title to the Receivables free and clear of any lien, claim
or encumbrance of any Person.
(d) The Issuer has caused or will have caused, within ten (10) days of
the initial execution of the Agreement and each Assignment, the filing of all
appropriate financing statements in the proper filing
31
office in the appropriate jurisdictions under applicable law in order to perfect
the security interest in the Receivables granted to the Indenture Trustee
pursuant to the Agreement or such Assignment.
(e) Other than the security interest granted to the Indenture Trustee
pursuant to the Agreement or an Assignment, the Issuer has not pledged,
assigned, sold, granted a security interest in, or otherwise conveyed the
Receivables. The Issuer has not authorized the filing of and is not aware of any
financing statements against the Issuer that include a description of the
Receivables other than any financing statement relating to the security interest
granted to the Indenture Trustee pursuant to the Agreement or an Assignment or
that has been terminated. The Issuer is not aware of any judgment or tax lien
filings against the Issuer.
[END OF ARTICLE VIII]
[SIGNATURE PAGE FOLLOWS]
32
IN WITNESS WHEREOF, the undersigned have caused this Indenture
Supplement to be duly executed and delivered by their respective duly authorized
officers on the day and year first above written.
WILMINGTON TRUST COMPANY, not in
its individual capacity, but
solely as Owner Trustee on
behalf of the HOUSEHOLD CREDIT
CARD MASTER
NOTE TRUST I
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Senior Financial
Services Officer
▇▇▇▇▇ FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION, not in its
individual capacity, but solely
as Indenture Trustee and
Securities Intermediary
By: /s/ ▇▇▇ ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇ ▇▇▇▇▇▇
Title: Assistant Vice President
[2002-1 Indenture Supplement]
33
EXHIBIT A-1
-----------
REGISTERED $__________
No. R-___ CUSIP NO. __________
Unless this Class A Note is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to Household
Credit Card Master Note Trust I or its agent for registration of transfer,
exchange or payment, and any note issued is registered in the name of CEDE & CO.
or in such other name as is requested by an authorized representative of DTC
(and any payment is made to CEDE & CO. or to such other entity as is requested
by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof, CEDE & CO., has an interest herein.
HOUSEHOLD CREDIT CARD MASTER NOTE TRUST I, SERIES 2002-1
FORM OF CLASS A SERIES 2002-1 FLOATING RATE ASSET BACKED NOTE
Wilmington Trust Company, acting not in its individual capacity, but solely
as owner trustee of Household Credit Card Master Note Trust I (herein referred
to as the "Issuer" or the "Trust"), a Delaware common law trust governed by an
Amended and Restated Trust Agreement, dated as of November 16, 2000, for value
received, hereby promises to pay to CEDE & CO., or registered assigns, subject
to the following provisions, the principal sum of $507,111,000, on the Series
2002-1 Final Maturity Date, except as otherwise provided below or in the
Indenture. The Issuer will pay interest on the unpaid principal amount of this
Note at the Class A Note Interest Rate on each Distribution Date until the
principal amount of this Note is paid in full. Interest on this Note will accrue
for each Distribution Date from and including the most recent Distribution Date
on which interest has been paid to but excluding such Distribution Date or, for
the initial Distribution Date, from and including the Closing Date to but
excluding such Distribution Date. Interest will be computed on the basis of a
360-day year and the actual number of days elapsed. Principal of this Note shall
be paid in the manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts.
Reference is made to the further provisions of this Note set forth on the
reverse hereof, which shall have the same effect as though fully set forth on
the face of this Note.
Unless the certificate of authentication hereon has been executed by or on
behalf of the Indenture Trustee, by manual signature, this Note shall not be
entitled to any benefit under the Indenture or the Indenture Supplement referred
to on the reverse hereof, or be valid for any purpose.
A-1-1
IN WITNESS WHEREOF, the Issuer has caused this Class A Note to be duly
executed.
WILMINGTON TRUST COMPANY, not in its
individual capacity, but solely as
Owner Trustee on behalf of the
HOUSEHOLD CREDIT CARD MASTER
NOTE TRUST I
By:
------------------------------
Name:
Title:
Dated: October 28, 2002
A-1-2
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class A Notes described in the within-mentioned Indenture.
▇▇▇▇▇ FARGO BANK MINNESOTA, NATIONAL
ASSOCIATION,
as Indenture Trustee
By:
--------------------------------
Authorized Signatory
A-1-3
HOUSEHOLD CREDIT CARD MASTER NOTE TRUST I, SERIES 2002-1
CLASS A SERIES 2002-1 FLOATING RATE ASSET BACKED NOTE
Summary of Terms and Conditions
This Class A Note is one of a duly authorized issue of Notes of the Issuer,
designated as Household Credit Card Master Note Trust I, Series 2002-1 (the
"Notes"), issued under an Amended and Restated Master Indenture, dated as of
November 16, 2000 (the "Master Indenture"), between the Issuer and ▇▇▇▇▇ Fargo
Bank Minnesota, National Association, as indenture trustee (the "Indenture
Trustee"), as supplemented by the Indenture Supplement, dated as of October 28,
2002 (the "Indenture Supplement"), and representing the right to receive certain
payments from the Issuer. The term "Indenture," unless the context otherwise
requires, refers to the Master Indenture as supplemented by the Indenture
Supplement. The Notes are subject to all of the terms of the Indenture. All
terms used in this Note that are defined in the Indenture shall have the
meanings assigned to them in or pursuant to the Indenture. In the event of any
conflict or inconsistency between the Indenture and this Note, the Indenture
shall control.
The Noteholder, by its acceptance of this Note, agrees that it will look
solely to the property of the Trust allocated to the payment of this Note for
payment hereunder and that the Indenture Trustee is not liable to the
Noteholders for any amount payable under the Note or the Indenture or, except as
expressly provided in the Indenture, subject to any liability under the
Indenture.
This Note does not purport to summarize the Indenture and reference is made
to the Indenture for the interests, rights and limitations of rights, benefits,
obligations and duties evidenced thereby, and the rights, duties and immunities
of the Indenture Trustee.
The Class A Note Initial Principal Balance is $507,111,000.
The Class A Note Principal Balance will be determined from time to time by the
Indenture Trustee in accordance with the Indenture.
Payments of principal of the Notes shall be payable in
accordance with the provisions of the Indenture.
Subject to the terms and conditions of the Indenture, the Transferor may,
from time to time, direct the Owner Trustee, on behalf of the Trust, to issue
one or more new Series of Notes.
On each Distribution Date, the Paying Agent shall distribute to each Class
A Noteholder of record on the related Record Date (except for the final
distribution in respect of this Class A Note) such Class A Noteholder's pro rata
share of the amounts held by the Paying Agent that are allocated and available
on such Distribution Date to pay interest and principal on the Class A Notes
pursuant to the Indenture Supplement. Except as provided in the Indenture with
respect to a final distribution, distributions to Series 2002-1 Noteholders
shall be made by (i) check mailed to each Series 2002-1 Noteholder (at such
Noteholder's address as it appears in the Note Register), except that with
respect to any Series 2002-1 Notes registered in the name of the nominee of a
Clearing Agency, such distribution shall be made in immediately available funds
and (ii) without presentation or surrender of any Series 2002-1 Note or the
making of any notation thereon. Final payment of this Class A Note will be made
only upon presentation and surrender of this Class A Note at the office or
agency specified in the notice of final distribution delivered by the Indenture
Trustee to the Series 2002-1 Noteholders in accordance with the Indenture.
A-1-4
On any day occurring on or after the date on which the outstanding
principal balance of the Series 2002-1 Notes is reduced to 10% or less of the
initial outstanding principal balance of the Series 2002-1 Notes, the Issuer
shall have the option to redeem the Series 2002-1 Notes, at a purchase price
equal to (i) if such day is a Distribution Date, the Reassignment Amount for
such Distribution Date or (ii) if such day is not a Distribution Date, the
Reassignment Amount for the Distribution Date following such day.
This Class A Note does not represent an obligation of, or an interest in,
the Transferor, Household Finance Corporation, Household Bank (SB), N.A. or any
Affiliate of any of them and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other governmental agency or instrumentality.
Each Noteholder, by accepting a Note, hereby covenants and agrees that it
will not at any time institute against the Issuer or the Transferor, or join in
instituting against the Issuer or the Transferor, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any United States federal or state bankruptcy or similar law.
Except as otherwise provided in the Indenture Supplement, the Class A Notes
are issuable only in minimum denominations of $1,000 and integral multiples of
$1,000. The transfer of this Class A Note shall be registered in the Note
Register upon surrender of this Class A Note for registration of transfer at any
office or agency maintained by the Transfer Agent and Registrar accompanied by a
written instrument of transfer, in a form satisfactory to the Indenture Trustee
or the Transfer Agent and Registrar, duly executed by the Class A Noteholder or
such Class A Noteholder's attorney, and duly authorized in writing with such
signature guaranteed, and thereupon one or more new Class A Notes in any
authorized denominations of like aggregate principal amount will be issued to
the designated transferee or transferees.
As provided in the Indenture and subject to certain limitations therein set
forth, Class A Notes are exchangeable for new Class A Notes in any authorized
denominations and of like aggregate principal amount, upon surrender of such
Notes to be exchanged at the office or agency of the Transfer Agent and
Registrar. No service charge may be imposed for any such exchange but the Issuer
or Transfer Agent and Registrar may require payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in connection
therewith.
The Issuer, the Transferor, the Indenture Trustee and any agent of the
Issuer, Transferor or the Indenture Trustee shall treat the person in whose name
this Class A Note is registered as the owner hereof for all purposes, and
neither the Issuer, the Transferor, the Indenture Trustee nor any agent of the
Issuer, Transferor or the Indenture Trustee shall be affected by notice to the
contrary.
THIS CLASS A NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
A-1-5
ASSIGNMENT
Social Security or other identifying number of assignee___________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto _____________________________________
(name and address of assignee)
the within note and all rights thereunder, and hereby irrevocably constitutes
and appoints ____________________, attorney, to transfer said note on the books
kept for registration thereof, with full power of substitution in the premises.
Dated: ____________ ______________________1/
Signature Guaranteed:
____________________
____________________
1/ NOTE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within note in every
particular, without alteration, enlargement or any change whatsoever.
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
-----------
REGISTERED $_________
No. R-__ CUSIP NO. __________
Unless this Class B Note is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to Household
Credit Card Master Note Trust I or its agent for registration of transfer,
exchange or payment, and any note issued is registered in the name CEDE & CO. or
in such other name as is requested by an authorized representative of DTC (and
any payment is made to CEDE & CO. or to such other entity as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered
owner hereof, CEDE & CO., has an interest herein.
HOUSEHOLD CREDIT CARD MASTER NOTE TRUST I, SERIES 2002-1
FORM OF CLASS B SERIES 2002-1 FLOATING RATE ASSET BACKED NOTE
Wilmington Trust Company, acting not in its individual capacity, but solely
as owner trustee of Household Credit Card Master Note Trust I (herein referred
to as the "Issuer" or the "Trust"), a Delaware common law trust governed by an
Amended and Restated Trust Agreement, dated as of November 16, 2000, for value
received, hereby promises to pay to CEDE & CO., or registered assigns, subject
to the following provisions, the principal sum of $52,889,000, on the Series
2002-1 Final Maturity Date, except as otherwise provided below or in the
Indenture. The Issuer will pay interest on the unpaid principal amount of this
Note at the Class B Note Interest Rate on each Distribution Date until the
principal amount of this Note is paid in full. Interest on this Note will accrue
for each Distribution Date from and including the most recent Distribution Date
on which interest has been paid to but excluding such Distribution Date or, for
the initial Distribution Date, from and including the Closing Date to but
excluding such Distribution Date. Interest will be computed on the basis of a
360-day year and the actual number of days elapsed. Principal of this Note shall
be paid in the manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts.
Reference is made to the further provisions of this Note set forth on the
reverse hereof, which shall have the same effect as though fully set forth on
the face of this Note.
Unless the certificate of authentication hereon has been executed by or on
behalf of the Indenture Trustee, by manual signature, this Note shall not be
entitled to any benefit under the Indenture or the Indenture Supplement referred
to on the reverse hereof, or be valid for any purpose.
A-2-1
IN WITNESS WHEREOF, the Issuer has caused this Class B Note to be duly
executed.
WILMINGTON TRUST COMPANY,
not in its individual capacity, but
solely as Owner Trustee on behalf of
the HOUSEHOLD CREDIT CARD MASTER
NOTE TRUST I
By:
------------------------------
Name:
Title:
Dated: October 28, 2002
A-2-2
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Class B Notes described in the within-mentioned
Indenture.
▇▇▇▇▇ FARGO BANK MINNESOTA, NATIONAL
ASSOCIATION,
as Indenture Trustee
By: ____________________________
Authorized Signatory
A-2-3
HOUSEHOLD CREDIT CARD MASTER NOTE TRUST I, SERIES 2002-1
CLASS B SERIES 2002-1 FLOATING RATE ASSET BACKED NOTE
Summary of Terms and Conditions
This Class B Note is one of a duly authorized issue of Notes of the
Issuer, designated as Household Credit Card Master Note Trust I, Series 2002-1
(the "Notes"), issued under an Amended and Restated Master Indenture, dated as
of November 16, 2000 (the "Master Indenture"), between the Issuer and ▇▇▇▇▇
Fargo Bank Minnesota, National Association, as indenture trustee (the "Indenture
Trustee"), as supplemented by the Indenture Supplement, dated as of October 28,
2002 (the "Indenture Supplement"), and representing the right to receive certain
payments from the Issuer. The term "Indenture," unless the context otherwise
requires, refers to the Master Indenture as supplemented by the Indenture
Supplement. The Notes are subject to all of the terms of the Indenture. All
terms used in this Note that are defined in the Indenture shall have the
meanings assigned to them in or pursuant to the Indenture. In the event of any
conflict or inconsistency between the Indenture and this Note, the Indenture
shall control.
The Noteholder, by its acceptance of this Note, agrees that it will
look solely to the property of the Trust allocated to the payment of this Note
for payment hereunder and that the Indenture Trustee is not liable to the
Noteholders for any amount payable under the Note or the Indenture or, except as
expressly provided in the Indenture, subject to any liability under the
Indenture.
This Note does not purport to summarize the Indenture and reference is
made to the Indenture for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced thereby, and the rights, duties and
immunities of the Indenture Trustee.
The Class B Note Initial Principal Balance is $52,889,000. The Class B
Note Principal Balance will be determined from time to time by the Indenture
Trustee in accordance with the Indenture.
Payments of principal of the Notes shall be payable in accordance with
the provisions of the Indenture.
Subject to the terms and conditions of the Indenture, the Transferor
may, from time to time, direct the Owner Trustee, on behalf of the Trust, to
issue one or more new Series of Notes.
On each Distribution Date, the Paying Agent shall distribute to each
Class B Noteholder of record on the related Record Date (except for the final
distribution in respect of this Class B Note) such Class B Noteholder's pro rata
share of the amounts held by the Paying Agent that are allocated and available
on such Distribution Date to pay interest and principal on the Class B Notes
pursuant to the Indenture Supplement. Except as provided in the Indenture with
respect to a final distribution, distributions to Series 2002-1 Noteholders
shall be made by (i) check mailed to each Series 2002-1 Noteholder (at such
Noteholder's address as it appears in the Note Register), except that with
respect to any Series 2002-1 Notes registered in the name of the nominee of a
Clearing Agency, such distribution shall be made in immediately available funds
and (ii) without presentation or surrender of any Series 2002-1 Note or the
making of any notation thereon. Final payment of this Class B Note will be made
only upon presentation and surrender of this Class B Note at the office or
agency specified in the notice of final distribution delivered by the Indenture
Trustee to the Series 2002-1 Noteholders in accordance with the Indenture.
A-2-4
On any day occurring on or after the date on which the outstanding
principal balance of the Series 2002-1 Notes is reduced to 10% or less of the
initial outstanding principal balance of the Series 2002-1 Notes, the Issuer
shall have the option to redeem the Series 2002-1 Notes, at a purchase price
equal to (i) if such day is a Distribution Date, the Reassignment Amount for
such Distribution Date or (ii) if such day is not a Distribution Date, the
Reassignment Amount for the Distribution Date following such day.
This Class B Note does not represent an obligation of, or an
interest in, the Transferor, Household Finance Corporation, Household Bank (SB),
N.A. or any Affiliate of any of them and is not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other governmental agency or
instrumentality.
Each Noteholder, by accepting a Note, hereby covenants and
agrees that it will not at any time institute against the Issuer or the
Transferor, or join in instituting against the Issuer or the Transferor, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings under any United States federal or state bankruptcy or
similar law.
Except as otherwise provided in the Indenture Supplement, the Class B
Notes are issuable only in minimum denominations of $1,000 and integral
multiples of $1,000. The transfer of this Class B Note shall be registered in
the Note Register upon surrender of this Class B Note for registration of
transfer at any office or agency maintained by the Transfer Agent and Registrar
accompanied by a written instrument of transfer, in a form satisfactory to the
Indenture Trustee or the Transfer Agent and Registrar, duly executed by the
Class B Noteholder or such Class B Noteholder's attorney, and duly authorized in
writing with such signature guaranteed, and thereupon one or more new Class B
Notes in any authorized denominations of like aggregate principal amount will be
issued to the designated transferee or transferees.
As provided in the Indenture and subject to certain limitations
therein set forth, Class B Notes are exchangeable for new Class B Notes in any
authorized denominations and of like aggregate principal amount, upon surrender
of such Notes to be exchanged at the office or agency of the Transfer Agent and
Registrar. No service charge may be imposed for any such exchange but the Issuer
or Transfer Agent and Registrar may require payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in connection
therewith.
The Issuer, the Transferor, the Indenture Trustee and any agent of the
Issuer, Transferor or the Indenture Trustee shall treat the person in whose name
this Class B Note is registered as the owner hereof for all purposes, and
neither the Issuer, the Transferor, the Indenture Trustee nor any agent of the
Issuer, Transferor or the Indenture Trustee shall be affected by notice to the
contrary.
THIS CLASS B NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND
THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
A-2-5
ASSIGNMENT
Social Security or other identifying number of assignee _______________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto _____________________________________
(name and address of assignee)
the within note and all rights thereunder, and hereby irrevocably constitutes
and appoints ____________________, attorney, to transfer said note on the books
kept for registration thereof, with full power of substitution in the premises.
Dated: ____________ ______________________/1/
Signature Guaranteed:
______________________
___________________________
/1/ NOTE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within note in every
particular, without alteration, enlargement or any change whatsoever.
A-2-6
EXHIBIT B
FORM OF MONTHLY PAYMENT INSTRUCTIONS AND
NOTIFICATION TO THE INDENTURE TRUSTEE
------------------------------
HOUSEHOLD CREDIT CARD MASTER NOTE TRUST I
SERIES 2002-1
------------------------------
The undersigned, a duly authorized representative of Household Finance
Corporation ("HFC"), as Servicer pursuant to the Amended and Restated Transfer
and Servicing Agreement, dated as of November 16, 2000 (as amended and
supplemented from time to time, the "Transfer and Servicing Agreement"), among
HFC, Household Receivables Funding, Inc. III ("HRFI"), as Transferor and
Household Credit Card Master Note Trust I (the "Trust"), as amended by Amendment
No. 1 thereto, dated as of March 23, 2001, does hereby certify as follows:
1. Capitalized terms used in this Certificate have their respective
meanings set forth in the Transfer and Servicing Agreement or the Amended and
Restated Master Indenture, dated as of November 16, 2000 (as amended or
supplemented from time to time, the "Master Indenture"), between the Trust and
▇▇▇▇▇ Fargo Bank Minnesota, National Association, as indenture trustee (the
"Indenture Trustee") as supplemented by the Series ▇▇▇▇-▇ ▇▇▇▇▇▇▇▇▇ Supplement,
dated as of October 28, 2002, between the Trust and the Indenture Trustee (as
amended and supplemented from time to time, the "Indenture Supplement"), as
applicable.
2. HFC is the Servicer.
3. The undersigned is an Authorized Officer of the Servicer.
I. INSTRUCTION TO MAKE A WITHDRAWAL
Pursuant to subsection 4.04(a) of the Indenture Supplement,
the Servicer does hereby instruct the Indenture Trustee (i) to make withdrawals
from the Collection Account on ___________, ____, which date is a Distribution
Date under the Indenture Supplement, in the aggregate amounts (equal to the
Available Investor Finance Charge and Administrative Collections and Excess
Finance Charge and Administrative Collections allocable to Series 2002-1) as set
forth below in respect of the following amounts and (ii) to apply the proceeds
of such withdrawals in accordance with subsection 4.04(a) of the Indenture
Supplement:
A) Pursuant to subsection 4.04(a)(i):
(1) Class A Monthly Interest for the related
Interest Period................................................. $_______
B-1
(2) Class A Monthly Interest previously due but not paid .... $_______
(3) Class A Additional Interest and any Class A
Additional Interest previously due but not paid .................. $_______
B) Pursuant to subsection 4.04(a)(ii):
(1) Class B Monthly Interest for the related
Interest Period .................................................. $_______
(2) Class B Monthly Interest previously due but not paid .... $_______
(3) Class B Additional Interest and any Class B Additional
Interest previously due but not paid ............................. $_______
C) Pursuant to subsection 4.04(a)(iii):
If HFC or an Affiliate of HFC is no longer the Servicer,
(1) The Monthly Servicing Fee for such Distribution Date .... $_______
(2) Accrued and unpaid Monthly Servicing Fees ............... $_______
If HFC or an Affiliate of HFC is no longer the Administrator,
(1) The Monthly Servicing Fee for such Distribution Date .... $_______
(2) Accrued and unpaid Monthly Servicing Fees ............... $_______
D) Pursuant to subsection 4.04(a)(iv):
(1) Investor Default Amount for such Distribution Date
to be treated as Available Investor Principal Collections ........ $_______
B-2
E) Pursuant to subsection 4.04(a)(v):
(1) Aggregate amount of Investor Charge-offs and
Subordinated Principal Collections not previously reimbursed
to be treated as Available Investor Principal Collections ........ $_______
F) Pursuant to subsection 4.04(a)(vi
(1) Upon an Event of Default and acceleration of the
Series 2002-1 Notes the amount of any balance treated as
Available Investor Principal Collections ......................... $_______
G) Pursuant to subsection 4.04(a)(vii):
If HFC or an Affiliate of HFC is the Servicer,
(1) The Monthly Servicing Fee for such Distribution Date .... $_______
(2) Accrued and unpaid Monthly Servicing Fees ............... $_______
H) Pursuant to subsection 4.04(a)(viii):
If HFC or an Affiliate of HFC is the Administrator,
(1) The Monthly Servicing Fee for such Distribution Date .... $_______
(2) Accrued and unpaid Monthly Servicing Fees ............... $_______
I) Pursuant to subsection 4.04(a)(ix):
(1) An amount equal to the amounts to be deposited in
the Reserve Account to be deposited in the Reserve Account ....... $_______
J) Pursuant to subsection 4.04(a)(x):
(1) Excess Finance Charge and Administrative
Collections ...................................................... $_______
Pursuant to subsections 4.04(b) and (c) of the Indenture Supplement, the
Servicer hereby instructs the Indenture Trustee (i) to make withdrawals from the
Collection Account on ____________, which date is a Distribution Date under the
Indenture Supplement,
B-3
in the aggregate amounts (equal to the Available Investor Principal Collections)
as set forth below in respect of the following amounts and (ii) to apply the
proceeds of such withdrawals in accordance with subsections 4.04(b) and (c) of
the Indenture Supplement:
A) Pursuant to subsection 4.04(b):
(1) Amount equal to the excess of the O/C Amount
over the Required O/C Amount..................................... $_______
(2) Amount equal to Available Investor Principal
Collections to be treated as Shared Principal Collections........ $_______
B) Pursuant to subsection 4.04(c)(i):
During Controlled Accumulation Period, Monthly Principal for such
Distribution Date deposited:
(1) into the Principal Funding Account...................... $_______
(2) Amount distributed to the O/C Holder for
reduction of the O/C Amount...................................... $_______
C) Pursuant to subsection 4.04(c)(ii):
(1) During Early Amortization Period, Monthly
Principal for such Distribution Date to Class A Notes
until Class A Notes paid in full................................. $_______
D) Pursuant to subsection 4.04(c)(iii):
(1) After giving effect to clause (C) above, during
Early Amortization Period, if any remaining Monthly Principal,
to Class B Notes until Class B Notes paid in full................ $_______
E) Pursuant to subsection 4.04(c)(iv):
(1) After giving effect to clauses (C) and (D) above,
during Early Amortization Period, if any remaining Monthly
Principal, to O/C Holder until O/C Amount paid in full .......... $_______
F) Pursuant to subsection 4.04(c)(v):
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(1) Amount, if any, remaining after giving effect to
clauses (B) or (E) above, to be treated as Shared Principal
Collections ...................................................... $_______
Pursuant to Section 4.06 of the Indenture Supplement, the Servicer does
hereby instruct the Indenture Trustee to apply on __________, which is a
Distribution Date under the Indenture Supplement, any Subordinated Principal
Collections for such Distribution Date in amount equal to the lesser of
(i) Investor Percentage of all Collections of Principal Receivables received
during the preceding Due Period and (ii) the Monthly Subordination Amount for
the preceding Due Period in accordance with the priority set forth in clauses
(i) through (iii) of Section 4.04(a) of the Indenture Supplement.
II. INSTRUCTION TO MAKE CERTAIN PAYMENTS
Pursuant to Section 5.02 of the Indenture Supplement, the Servicer does
hereby instruct the Indenture Trustee or the Paying Agent, as the case may be,
to pay in accordance with Section 5.02 of the Indenture Supplement from the
Collection Account or the Principal Funding Account, as applicable, on
__________, which date is a Distribution Date under the Indenture Supplement,
the following amounts as set forth below:
A) Pursuant to subsection 5.02(a):
Interest to be distributed to Class A Noteholders ........... $_______
B) Pursuant to subsection 5.02(b):
Principal to be distributed to Class A Noteholders .......... $_______
C) Pursuant to subsection 5.02(c):
Interest to be distributed to Class B Noteholders ........... $_______
D) Pursuant to subsection 5.02(d):
Principal to be distributed to Class B Noteholders .......... $_______
E) Pursuant to subsection 5.02(e):
Interest to be distributed to O/C Holder (including
amounts, if any, from the Spread Account) ........................ $_______
B-5
IN WITNESS WHEREOF, the undersigned has duly executed this Certificate
this ____ day of ________, _____.
HOUSEHOLD FINANCE CORPORATION
By: _______________________________
Name:
Title:
B-6
EXHIBIT C
FORM OF
MONTHLY SERVICING STATEMENT
(Delivered pursuant to subsection 5.03(a)
of the Indenture Supplement
HOUSEHOLD FINANCE CORPORATION
HOUSEHOLD RECEIVABLES FUNDING, INC. III
HOUSEHOLD CREDIT CARD MASTER NOTE TRUST I
Class A Notes and Class B Notes, Series 2002-1
This Certificate relates to the Distribution Date occurring on ______ __,
200_
1. Pool One Information.
(a) The aggregate amount of Collections processed for the Due
Period preceding such Distribution Date was equal to ......... $______
(b) The aggregate amount of such Collections with respect to
Principal Receivables for the Due Period preceding such
Distribution Date was equal to ............................... $______
(i) The total payment rate,
[((b) + (c)(ii) + (c)(iii))/(f)], is ................... $______
(c) The aggregate amount of such Collections with respect to
Finance Charge and Administrative Receivables for the Due
Period preceding such Distribution Date was equal to ......... $______
(i) The gross cash yield,
[((ii)+(iii)+(iv)+(v)) * 12/(f)], is .................... $______
(ii) The amount of such aggregate with respect to Finance
Charge was equal to ..................................... $______
(iii) The amount of such aggregate with respect to fees
was equal to ........................................... $______
(iv) The amount of such aggregate with respect to Interchange
was equal to ............................................ $______
(v) The amount of such aggregate with respect to other
recoveries was equal to ................................. $______
(vi) The amount of such aggregate with respect to principal
recoveries was equal to was equal to .................... $______
(d) The Gross Defaulted Amount for the preceding Due Period is ... $______
(i) The annualized default rate, (d)*12/(f), is .............
(ii) The annualized net default rate,
[(d)-(c)(vi)]*12/(f), is ....... ........................
C-1
(e) The Portfolio Yield for such Distribution Date
[c(i) - d(ii)] ...............................................
(f) The total amount of Principal Receivables in Pool One at the
beginning of the preceding Due Period or, if there were
Additions or Removals during the Due Period, the average
balance for such Due Period is equal to ......................
(g) The total amount of Principal Receivables in Pool One as of
the last day of the preceding Due Period is ..................
(h) The total amount of Principal Receivables in Pool One at the
beginning of the preceding Due Period ........................
(i) The total amount of Finance Charge and Administrative
Receivables in Pool One as of the last day of the
preceding Due Period is ......................................
(j) The aggregate outstanding gross balance of the Accounts which
were one payment (1-29 days) delinquent as of the close of
business on the last day of the calendar month preceding
such Distribution Date was equal to ..........................
(k) The aggregate outstanding gross balance of the Accounts which
were two payments (30-59 days) delinquent as of the close of
business on the last day of the calendar month preceding
such Distribution Date was equal to ..........................
(l) The aggregate outstanding gross balance of the Accounts which
were three or more payments (60+ days) delinquent as of the
close of business on the last day of the calendar month
preceding such Distribution Date was equal to ................
2. Series 2002-1 Information
(a) The average rate (the weighted average Class A Note Interest
Rate and Class B Note Interest Rate reduced to take into
account any payments made pursuant to interest rate
agreements, if any) is equal to ..............................
(b) Total investor Collections is equal to .......................
(c) Investor Principal Collections is equal to ...................
(d) The Floating Investor Percentage for the Due Period
preceding such Distribution Date was equal to ................
(e) Investor Finance Charge and Administrative Collections is
equal to .....................................................
(f) Investor Defaulted Amount is equal to ........................
(g) The Monthly Servicing Fee is equal to ........................
C-2
(h) The Monthly Administration Fee is equal to ...................
(i) The Series Portfolio Yield for the Due Period preceding
such Distribution Date was equal to ..........................
3. Determination of Monthly Interest
(a) The number of days in the Interest Period is equal to ........
(b) Class A Note Principal Balance - Average for Interest
Period .......................................................
(c) The Class A Note Interest Rate for the Interest Period with
respect to such Distribution Date is equal to ................
(d) Class A Monthly Interest is equal to .........................
(e) Class B Note Principal Balance - Average for Interest
Period . .....................................................
(f) The Class B Note Interest Rate for the Interest Period with
respect to such Distribution Date is equal to ................
(g) Class B Monthly Interest is equal to .........................
4. Application of Available Funds
(a) Available Investor Finance Charge and Administrative Collections
(i) The amount of Class A Monthly Interest for such
Distribution Date is equal to ...........................
The amount of any Class A Monthly Interest previously
due but not distributed on a prior Distribution Date
is equal to .............................................
The amount of Class A Additional Interest for such
Distribution Date is equal to ...........................
The amount of any Class A Additional Interest
previously due but not distributed on a prior
Distribution Date is equal to ...........................
(ii) The amount of Class B Monthly Interest for such
Distribution Date is equal to ...........................
The amount of any Class B Monthly Interest previously
due but not distributed on a prior Distribution Date
is equal to .............................................
The amount of Class B Additional Interest for such
Distribution Date
C-3
is equal to .............................................
The amount of any Class B Additional Interest
previously due but not distributed on a prior
Distribution Date is equal to ...........................
(iii)
(A) If HFC or an Affiliate of HFC is no longer the Servicer,
the Monthly Servicing Fee ...............................
(B) If HFC or an Affiliate of HFC is no longer the
Administrator, the Monthly Administration Fee
is equal to .............................................
(iv) The Investor Defaulted Amount for such Distribution
Date is equal to ........................................
(v) The aggregate amount of Investor Charges and the amount
of Subordinated Principal Collections which have not
been previously reimbursed is equal to ...................
(vi) After an Event of Default and the acceleration of the
Maturity of the Notes, the amount treated as Available
Investor Principal Collections ..........................
(vii) If HFC or an Affiliate of HFC is the Servicer, the
Monthly Servicing Fee for such Distribution Date .......
If HFC or an Affiliate of HFC is the Servicer, the
Monthly Servicing Fee due but not paid for a prior
Distribution Date ......................................
(viii) If HFC or an Affiliate of HFC is the Administrator,
the Monthly Administration Fee for such
Distribution Date is equal ............................
If HFC or an Affiliate of HFC is the Servicer, the
Monthly Servicing Fee due but not paid for a prior
Distribution Date .......................................
(ix) The amount deposited into the Reserve Account ...........
(x) The balance, if any, to be distributed to the
Transferor ..............................................
5. Other Information
(a) The Fixed Investor Percentage is equal to ...............
(b) The Series 2002-1 Principal Shortfall is equal to .......
(c) The Pool One Share Principal Collections are equal to ...
(d) The total amount to be distributed to Class A
Noteholders on such Distribution Date in payment
of principal is equal to ................................
(e) The total amount to be distributed to Class B Noteholders on
C-4
such Distribution Date in payment of principal
is equal to .............................................
(f) the total amount to be distributed to the O/C Holder
for reduction of the O/C Amount .........................
(g) The Subordinated Principal Collections with respect to
such Distribution Date is equal to ......................
(h) The amount applied at 4.04(a)(v) to reimburse previous
Subordinated Principal Collections. .....................
(i) The amount of Investor Charge-Offs for such
Distribution Date is equal to ...........................
(j) The total amount of reimbursements of Investor
Charge-Offs for such Distribution Date is equal to ......
(k) The Invested Amount at the close of business on such
Distribution Date (after giving effect to all payments
and adjustments on such Distribution Date) will be
equal to ................................................
(l) The Class A Note Principal Balance at the close of
business on such Distribution Date (after giving effect
to all payments and adjustments on such Distribution
Date) will be equal to ..................................
(m) The Class B Note Principal Balance at the close of
business on such Distribution Date (after giving effect
to all payments and adjustments on such Distribution
Date) will be equal to ..................................
(n) The O/C Amount at the close of business on such
Distribution Date (after giving effect to all payments
and all adjustments on such Distribution Date) will
be equal to .............................................
(o) Total amount to be on deposit in the Collection Account
(after giving effect to allocations required to be made
pursuant to the terms of all other Series now
outstanding and to the payment of the Servicer's fee
and funding of investor default amounts) prior to
making distributions on such Distribution Dates is
equal to ................................................
(p) The total amount to be distributed from the Collection
Account to the Transferor on such Distribution Date
(after taking into consideration the amounts which have
been netted with respect to all Series against deposits
to the Collection Account) is equal to ..................
(q) Total amount to be distributed from the Collection
Account to the Servicer in respect of the unpaid
Monthly Servicing Fee for the preceding Due Period on
such Distribution Date (after taking into consideration
the amounts which have been netted with respect to this
Series against deposits to the Collection Account) is
equal to ................................................
C-5
EXHIBIT D
HOUSEHOLD FINANCE CORPORATION
HOUSEHOLD RECEIVABLES FUNDING INC. III
HOUSEHOLD CREDIT CARD MASTER NOTE TRUST I
Class A Notes and Class B Notes
The undersigned, a duly authorized representative of Household Finance
Corporation, as Servicer (the "Servicer"), pursuant to the Amended and Restated
Transfer and Servicing Agreement, dated as of November 16, 2000 (the "Transfer
and Servicing Agreement"), by and among Household Receivables Funding, Inc. III,
as Transferor, the Servicer, and Wilmington Trust Company, as Owner Trustee, as
amended by Amendment No. 1 thereto, dated as of March 23, 2001, does hereby
certify with respect to the information set forth below as follows:
Capitalized terms used in this Certificate shall have the respective
meanings set forth in the Transfer and Servicing Agreement.
Household Finance Corporation is, as of the date hereof, the Servicer under
the Transfer and Servicing Agreement.
The undersigned is a Servicing Officer.
This Certificate relates to the Distribution Date occurring on ________ __,
200_.
As of the date hereof, to the best knowledge of the undersigned, no
Amortization Event has been deemed to have occurred on or prior to such
Distribution Date.
As of the date hereof, to the best knowledge of the undersigned, the
Servicer has performed in all material respects all its obligations under the
Transfer and Servicing Agreement through the Due Period preceding such
Distribution Date or, if there has been a default in the performance of any such
obligation, set forth in detail the (i) nature of such default, (ii) the action
taken by the Transferor and Servicer, if any, to remedy such default and (iii)
the current status of each such default; if applicable, insert "None".
As of the date hereof, to the best knowledge of the undersigned, no Lien
has been placed on any of the Receivables other than pursuant to the Indenture
(or, if there is a Lien, such Lien consists of:
____________________________________________).
The amounts specified to be deposited into and withdrawn from the
Collection Account, as well as the amounts specified to be paid to the
Transferor, the Servicer and the Noteholders are all in accordance with the
requirements of the Transfer and Servicing Agreement, Master Indenture and
Indenture Supplement.
IN WITNESS WHEREOF, the undersigned has duly executed and delivered this
Certificate this ___ day of _____, 200_.
HOUSEHOLD FINANCE CORPORATION,
as Servicer
-----------------------------
Servicing Officer
D-1
