EXHIBIT 4.4
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MASTER SALE AND SERVICING AGREEMENT
among
HOUSEHOLD AUTOMOTIVE TRUST ______,
as Issuer
HOUSEHOLD AUTO RECEIVABLES CORPORATION,
as Seller,
HOUSEHOLD FINANCE CORPORATION,
Master Servicer
and
[NAME OF INDENTURE TRUSTEE],
as Indenture Trustee
Dated as of _________________
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TABLE OF CONTENTS
Page
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ARTICLE I
Definitions
SECTION 1.1. Definitions...............................................................................1
SECTION 1.2. Other Interpretive Provisions............................................................17
SECTION 1.3. Usage of Terms...........................................................................18
SECTION 1.4. Certain References.......................................................................18
SECTION 1.5. No Recourse..............................................................................18
SECTION 1.6. Action by or Consent of Noteholders......................................................18
ARTICLE II
Conveyance of Receivables
SECTION 2.1. Conveyance of Receivables................................................................19
SECTION 2.2. Further Encumbrance of Owner Trust Estate................................................23
ARTICLE III
The Receivables
SECTION 3.1. Representations and Warranties of Seller.................................................24
SECTION 3.2. Repurchase upon Breach...................................................................24
SECTION 3.3. Custody of Receivables Files.............................................................25
ARTICLE IV
Administration and Servicing of Receivables
SECTION 4.1. Duties of the Master Servicer............................................................26
SECTION 4.2. Collection of Receivable Payments; Modifications of Receivables..........................27
SECTION 4.3. Realization Upon Receivables.............................................................29
SECTION 4.4. Insurance................................................................................30
SECTION 4.5. Maintenance of Security Interests in Vehicles............................................31
SECTION 4.6. Covenants, Representations, and Warranties of Master Servicer............................31
SECTION 4.7. Repurchase of Receivables Upon Breach of Covenant........................................32
SECTION 4.8. Total Servicing Fee; Payment of Certain Expenses by Master Servicer......................33
SECTION 4.9. Master Servicer's Certificate............................................................33
SECTION 4.10. Annual Statement as to Compliance, Notice of Master Servicer Termination Event...........34
SECTION 4.11. Annual Independent Accountants' Report...................................................34
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SECTION 4.12. Access to Certain Documentation and Information Regarding Receivables....................35
SECTION 4.13. Fidelity Bond and Errors and Omissions Policy............................................35
ARTICLE V
Trust Accounts; Distributions;
Statements to Certificateholders and Noteholders
SECTION 5.1. Establishment of Trust Accounts..........................................................35
SECTION 5.2. Certain Reimbursements to the Master Servicer............................................38
SECTION 5.3. Application of Collections...............................................................38
SECTION 5.4. Additional Deposits......................................................................38
SECTION 5.5. Distributions............................................................................38
ARTICLE VI
RESERVED
ARTICLE VII
RESERVED
ARTICLE VIII
The Seller
SECTION 8.1. Representations of Seller................................................................39
SECTION 8.2. Corporate Existence......................................................................41
SECTION 8.3. Liability of Seller; Indemnities.........................................................42
SECTION 8.4. Merger or Consolidation of, or Assumption of the Obligations of, Seller..................43
SECTION 8.5. Limitation on Liability of Seller and Others.............................................43
SECTION 8.6. Seller May Own Certificates or Notes.....................................................44
ARTICLE IX
The Master Servicer
SECTION 9.1. Representations of Master Servicer.......................................................44
SECTION 9.2. Liability of Master Servicer; Indemnities................................................46
SECTION 9.3. Merger or Consolidation of, or Assumption of the Obligations of the Master Servicer......48
SECTION 9.4. Limitation on Liability of Master Servicer and Others....................................48
SECTION 9.5. Delegation of Duties.....................................................................49
SECTION 9.6. Master Servicer Not to Resign............................................................49
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SECTION 9.7. Sub-Servicing Agreements Between Master Servicer and Subservicers........................50
SECTION 9.8. Successor Subservicers...................................................................50
ARTICLE X
Default
SECTION 10.1. Master Servicer Termination Event........................................................51
SECTION 10.2. Consequences of a Master Servicer Termination Event......................................52
SECTION 10.3. Appointment of Successor.................................................................54
SECTION 10.4. Notification to Noteholders and Certificateholders.......................................55
SECTION 10.5. Waiver of Past Defaults..................................................................55
SECTION 10.6. Successor to Master Servicer.............................................................55
ARTICLE XI
Termination
SECTION 11.1. Optional Purchase of All Receivables.....................................................56
ARTICLE XII
Administrative Duties of the Master Servicer
SECTION 12.1. Administrative Duties....................................................................56
SECTION 12.2. Records..................................................................................59
SECTION 12.3. Additional Information to be Furnished to the Issuer.....................................59
ARTICLE XIII
Miscellaneous Provisions
SECTION 13.1. Amendments...............................................................................59
SECTION 13.2. Protection of Title to Series Trust Estate...............................................60
SECTION 13.3. Notices..................................................................................62
SECTION 13.4. Assignment...............................................................................62
SECTION 13.5. Limitations on Rights of Others..........................................................63
SECTION 13.6. Severability.............................................................................63
SECTION 13.7. Separate Counterparts....................................................................63
SECTION 13.8. Headings.................................................................................63
SECTION 13.9. Governing Law............................................................................63
SECTION 13.10. Assignment to Indenture Trustee..........................................................63
SECTION 13.11. Nonpetition Covenants....................................................................64
SECTION 13.12. Limitation of Liability of Owner Trustee.................................................64
SECTION 13.13. Independence of the Master Servicer......................................................65
SECTION 13.14. No Joint Venture.........................................................................65
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EXHIBITS
Exhibit A. - Form of Master Servicer's Certificate
Exhibit B. - Form of Transfer Agreement
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MASTER SALE AND SERVICING AGREEMENT dated as of _________________,
among HOUSEHOLD AUTOMOTIVE TRUST ______, a Delaware business trust (the
"Issuer"),
HOUSEHOLD AUTO RECEIVABLES CORPORATION, a Nevada corporation (the
"Seller"), HOUSEHOLD FINANCE CORPORATION, a Delaware corporation (the "Master
Servicer") and [NAME OF INDENTURE TRUSTEE], a [_________________________], in
its capacity as Indenture Trustee.
WHEREAS the Issuer desires to purchase from time to time Receivables
arising in connection with motor vehicle retail installment sale contracts and
loan and security agreements originated or acquired by Household Automotive
Finance Corporation ("HAFC") or any of its predecessors or Affiliates,
including, but not limited to, Household Automotive Credit Corporation ("HACC");
WHEREAS the Seller will purchase from time to time Receivables from
HAFC or one or more of its Affiliates, including, but not limited to, HACC, and
is willing to sell Receivables to the Issuer;
WHEREAS the Master Servicer is willing to service all such
Receivables;
NOW, THEREFORE, in consideration of the promises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
SECTION 1.1. DEFINITIONS. Whenever used in this Agreement, the
following words and phrases shall have the following meanings:
"Accountants' Report" means the report of a firm of nationally
recognized independent accountants described in Section 4.11.
"Accounting Date" means, with respect to a Distribution Date, the last
day of the Collection Period immediately preceding such Distribution Date.
"Actuarial Method" means the method of allocating a fixed level
monthly payment on an obligation between principal and interest, pursuant to
which the portion of such payment that is allocated to interest is equal to the
product of (a) 1/12, (b) the fixed annual rate of interest on such obligation
and (c) the outstanding principal balance of such obligation.
"Actuarial Receivable" means a Receivable under which the portion of
the payment allocated to interest and the portion allocable to principal is
determined in accordance with the Actuarial Method.
"Addition Notice" means, with respect to any transfer of Receivables
to the Trust pursuant to Section 2.1 of this Agreement, notice of the Seller's
election to transfer Receivables to the Trust, such notice to designate the
related Transfer Date and the approximate principal amount of Receivables to be
transferred on such Transfer Date.
"Additional Principal Amount" has the meaning, if any assigned to such
term in the Series Supplement.
"Administrative Agent" means the Person, if any, specified in the Note
Purchase Agreement.
"Affiliate" means, with respect to any specified Person, any other
Person controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with respect to
any Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Aggregate Principal Balance" means, with respect to any date of
determination, the sum of the Principal Balances for all Receivables (other than
(i) any Receivable that has become a Liquidated Receivable and (ii) any
Receivable that has become a Repurchased Receivable as of the date of
determination).
"Agreement" means this
Master Sale and Servicing Agreement, as the
same may be amended and supplemented from time to time.
"Amount Financed" means, with respect to a Receivable, the aggregate
amount advanced under such Receivable toward the purchase price of the Financed
Vehicle and any related costs, including amounts advanced in respect of
accessories, insurance premiums, service and warranty contracts, other items
customarily financed as part of retail motor vehicle installment sales contracts
or loan and security agreements, and related costs.
"Annual Percentage Rate" or "APR" of a Receivable means the annual
percentage rate of finance charges or service charges, as stated in the related
Contract.
"Basic Documents" has the meaning assigned to such term in the Series
Supplement.
"Business Day" " has the meaning assigned to such term in the Series
Supplement.
"Certificate" has the meaning assigned to such term in the Trust
Agreement and the Series Supplement.
"Certificateholder" means the holders of the Certificates.
"Class" means a class of Notes or Certificates, as the context
requires.
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"Closing Date" has the meaning assigned to such term in the Series
Supplement.
"Collected Funds" means, with respect to any Collection Period, the
amount of funds in the Collection Account representing collections (including,
where applicable, all payment cancellation fees and all administrative fees,
expenses and charges actually paid by or on behalf of Obligors, including late
fees, payment fees and liquidation fees but excluding taxes, assessments, credit
insurance payments or similar items) received by the Master Servicer on or with
respect to the Receivables during such Collection Period, including all Net
Liquidation Proceeds collected during such Collection Period (but excluding any
Repurchase Amounts).
"Collection Account" means the collection account designated in the
Series Supplement.
"Collection Period" means, (i) with respect to the first Distribution
Date, the period beginning on the opening of business on the day after the
related Cutoff Date and ending on the close of business on the last day of the
calendar month preceding such Distribution Date and (ii) with respect to each
subsequent Distribution Date, the preceding calendar month. Any amount stated
"as of the close of business of the last day of a Collection Period" shall give
effect to all applications of collections on such day.
"Collection Records" means all manually prepared or computer generated
records relating to collection efforts or payment histories with respect to the
Receivables.
"Contract" means a motor vehicle retail installment sales contract.
"Controlling Party" has the meaning assigned to such term in the
Series Supplement.
"Corporate Trust Office" has the meaning assigned to such term in the
Series Supplement.
"Cram Down Loss" means, with respect to a Receivable, if a court of
appropriate jurisdiction in an insolvency proceeding shall have issued a final
order reducing the amount owed on a Receivable or otherwise modifying or
restructuring the scheduled payments to be made on a Receivable, an amount equal
to the excess of the Principal Balance of such Receivable immediately prior to
such order over the Principal Balance of such Receivable as so reduced. A "Cram
Down Loss" shall be deemed to have occurred on the date of issuance of such
order.
"Cutoff Date" means, except as otherwise provided in the Series
Supplement, with respect to a Receivable, the date designated in the related
Transfer Agreement as the Cutoff Date for such Receivable transferred to the
Trust on the related Transfer Date.
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"Dealer" means a dealer who sold a Financed Vehicle and who originated
and assigned the respective Receivable, directly or indirectly, to HAFC or HACC,
or one of their Affiliates, under a Dealer Agreement or pursuant to a Dealer
Assignment.
"Dealer Agreement" means any agreement between HAFC or HACC, or one of
their Affiliates, and a Dealer relating to the acquisition of Receivables from a
Dealer by HAFC or one of its Affiliates.
"Dealer Assignment" means, with respect to a Receivable, the executed
assignment executed by a Dealer conveying such Receivable to HAFC or one of its
Affiliates.
"Delivery" means, with respect to Trust Account Property:
(1) (a) with respect to bankers' acceptances, commercial paper,
negotiable certificates of deposit and other obligations that constitute
"instruments" within the meaning of Article 9 of the UCC, transfer thereof:
(i) by physical delivery to the Indenture Trustee, indorsed
to, or registered in the name of, the Indenture Trustee or its nominee
or indorsed in blank;
(ii) by the Indenture Trustee continuously maintaining
possession of such instrument; and
(iii) by the Indenture Trustee continuously indicating by
book-entry that such instrument is credited to the related Trust
Account;
(b) with respect to a "certificated security" (as defined in
Article 8 of the UCC), transfer thereof:
(i) by (x) physical delivery of such certificated security to
the Indenture Trustee, provided that if the certificated security is
in registered form, it shall be indorsed to, or registered in the name
of, the Indenture Trustee or indorsed in blank, and (y) the Indenture
Trustee continuously maintaining possession of such certificated
security; or
(ii) by another Person (not a securities intermediary) (1)
acquiring possession of such certificated security on behalf of the
Indenture Trustee, provided that if the certificated security is in
registered form, it shall be indorsed to, or registered in the name
of, the Indenture Trustee or indorsed in blank, or (2) having acquired
possession of such certificated security, acknowledging that it holds
such certificated security for the Indenture Trustee, and, in either
such case, continuously maintaining possession of such certificated
security; and
by the Indenture Trustee continuously indicating by book-entry that such
certificated security is credited to the related Trust Account;
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(c) with respect to any security issued by the U.S. Treasury, the
Federal Home Loan Mortgage Corporation or the Federal National Mortgage
Association that is a book-entry security held through the Federal Reserve
System pursuant to Federal book entry regulations, transfer thereof
pursuant to the following procedures, all in accordance with applicable
law, including applicable federal regulations and Articles 8 and 9 of the
UCC:
(i) by (x) book-entry registration of such property to an
appropriate book-entry account maintained with a Federal Reserve Bank
by a securities intermediary that is also a "depositary" pursuant to
applicable federal regulations and issuance by such securities
intermediary of a deposit advice or other written confirmation of such
book-entry registration to the Indenture Trustee of the purchase by
the securities intermediary on behalf of the Indenture Trustee of such
book-entry security; the making by such securities intermediary of
entries in its books and records identifying such book-entry security
held through the Federal Reserve System pursuant to Federal book-entry
regulations as belonging to the Indenture Trustee and continuously
indicating that such securities intermediary holds such book-entry
security solely as agent for the Indenture Trustee or such additional
or alternative procedures as are appropriate under applicable law to
effect a complete transfer of ownership of such property to the
Indenture Trustee or its nominee or custodian; or (y) continuous
book-entry registration of such property to a book-entry account
maintained by the Indenture Trustee with a Federal Reserve Bank; and
(ii) by the Indenture Trustee continuously indicating by
book-entry that such property is credited to the related Trust
Account;
(d) with respect to any asset in the Trust Accounts that is an
"uncertificated security" (as defined in Article 8 of the UCC) and that is
not governed by clause (c) above or clause (e) below:
(i) transfer thereof:
(A) by registration to the Indenture Trustee as the registered
owner thereof, on the books and records of the issuer thereof; or
(B) by another Person (not a securities intermediary) (1)
becoming the registered owner of the uncertificated security on behalf
of the Indenture Trustee, or (2) having become the registered owner of
the uncertificated security, acknowledging that it holds such
uncertificated security for the Indenture Trustee; or
(ii) the issuer of the uncertificated security has agreed that
it will comply with instructions originated by the Indenture Trustee
with
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respect to such uncertificated security without further consent of the
registered owner thereof; and
the Indenture Trustee continuously indicating by book-entry that such
uncertificated security is credited to the related Trust Account;
(e) in the case of a security in the custody of or maintained on the
books of a clearing corporation (as defined in Article 8 of the UCC) or its
nominee, transfer thereof by causing:
(i) the relevant clearing corporation to credit such security
to a securities account of the Indenture Trustee at such clearing
corporation; and
(ii) the Indenture Trustee to continuously indicate by
book-entry that such security is credited to the related Trust
Account; or
(f) with respect to a "security entitlement" (as defined in Article 8
of the UCC) to be transferred to or for the benefit of the Indenture
Trustee and not governed by clauses (c) or (e) above, transfer thereof by:
(i) a securities intermediary's (A) indicating by book entry
that the underlying "financial asset" (as defined in Article 8 of the
UCC) has been credited to the Indenture Trustee's "securities account"
(as defined in Article 8 of the UCC), (B) receiving a financial asset
from the Indenture Trustee or acquiring the underlying financial asset
for the Indenture Trustee, and in either case, accepting it for credit
to the Indenture Trustee's securities account, or (C) becoming
obligated under other law, regulation or rule to credit the underlying
financial asset to the Indenture Trustee's securities account,
(ii) the making by the securities intermediary of entries on
its books and records continuously identifying such security
entitlement as belonging to the Indenture Trustee; and continuously
indicating by book-entry that such securities entitlement is credited
to the Indenture Trustee's securities account; and
(iii) the Indenture Trustee's continuously indicating by
book-entry that such security entitlement (or all rights and property
of the Indenture Trustee representing such securities entitlement) is
credited to the related Trust Account; and/or
(2) In the case of any such asset, (i) compliance with such
additional or alternative procedures as are now or may hereafter become
appropriate to effect the complete transfer of ownership of, or control over,
any such Trust Account Property to the Indenture Trustee free and clear of any
adverse claims, consistent with changes in applicable law or regulations or the
interpretation thereof, and (ii) the Indenture Trustee's
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continuously indicating by book entry that such asset is credited to the related
Trust Account.
In each case of delivery contemplated herein, the Indenture Trustee
shall make appropriate notations on its records, and shall cause the same to be
made on the records of its nominees, indicating that securities are held in
trust pursuant to and as provided in this Agreement.
"Depositor" means the Seller in its capacity as Depositor under the
Trust Agreement.
"Determination Date" means, unless otherwise provided in a Series
Supplement, the earlier of the fifth calendar day (or if such day is not a
Business Day, the next preceding Business Day) or the third Business Day
preceding each Distribution Date.
"Distribution Date" has the meaning assigned to such term in the
Series Supplement.
"Eligibility Criteria" means the criteria set forth in the Schedule of
Eligibility Criteria.
"Eligible Bank" means, except as otherwise provided in the Series
Supplement, any depository institution (which shall initially be the Indenture
Trustee), organized under the laws of the United States of America or any one of
the states thereof or the District of Columbia (or any United States branch or
agency of a foreign bank), which is subject to supervision and examination by
federal or state banking authorities and which at all times (a) has a net worth
in excess of $50,000,000 and (b) (i) has a rating of P-1 from Moody's, A-1 from
Standard & Poor's and F1 from Fitch, in each case only if such Person is a
Rating Agency, with respect to short-term deposit obligations, or such other
lower ratings acceptable to the Rating Agency[ and the Insurer (for so long as
it is the Controlling Party)], or (ii) if such institution has issued long-term
unsecured debt obligations, a rating acceptable to the Rating Agency [and the
Insurer (for so long as it is the Controlling Party) ]with respect to long-term
unsecured debt obligations.
"Eligible Deposit Account" means, except as otherwise provided in the
Series Supplement, either (a) a segregated account with an Eligible Bank or (b)
a segregated trust account with the corporate trust department of a depository
institution with corporate trust powers organized under the laws of the United
States of America or any state thereof or the District of Columbia (or any
United States branch or agency of a foreign bank), provided that such
institution also must have a rating of Baa3 or higher from Moody's, a rating of
BBB- or higher from Standard & Poor's and a rating of BBB- or higher from Fitch,
in each case only if such Person is a Rating Agency, with respect to long-term
deposit obligations, or such other lower ratings acceptable to the Rating
Agency[ and the Insurer (for so long as it is the Controlling Party)].
"Eligible Investments" shall mean, except as otherwise provided in a
Series Supplement, (i) negotiable instruments or securities represented by
instruments in
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bearer or registered form (or, in the case of Eligible Investments described in
clause (a) of this definition, book-entry securities representing such
obligations), or (ii) securities entitlements (as defined in Article 8 of the
UCC) arising from Delivery of any such negotiable instruments or securities in
accordance with the provisions of clause (1)(f) of the definition of such term,
or (iii) in the case of deposits described below, deposit accounts held in the
name of the Indenture Trustee in trust for the benefit of the Holders of the
Securities, subject to the exclusive custody and control of the Indenture
Trustee and for which the Indenture Trustee has sole signature authority, which
evidence or arise out of, as the case may be:
(a) direct obligations of, or obligations fully guaranteed as to
timely payment by, the United States of America;
(b) demand deposits, time deposits or certificates of deposit (having
original maturities of no more than 365 days) of depositary institutions or
trust companies incorporated under the laws of the United States of America or
any state thereof (or domestic branches of foreign banks) and subject to
supervision and examination by federal or state banking or depositary
institution authorities; PROVIDED, that at the time of the Trust's investment or
contractual commitment to invest therein, the short-term debt rating of such
depository institution or trust company shall be satisfactory to the Rating
Agency, and PROVIDED FURTHER that the "jurisdiction" of such depositary
institution or trust company, for purposes of Article 9 of the UCC, shall be a
state in which Revised Article 9 of the UCC has become effective and in which
security interests in deposit accounts are subject to Article 9, as in effect
therein;
(c) commercial paper (having original or remaining maturities of not
more than 30 days) having, at the time of the Trust's investment or contractual
commitment to invest therein, a rating satisfactory to the Rating Agency;
(d) investments in money market funds having, at the time of
the Trust's investment therein, a rating satisfactory to the Rating Agency;
(e) demand deposits, time deposits and certificates of deposit which
are fully insured by the FDIC having, at the time of the Trust's investment
therein, a rating satisfactory to the Rating Agency;
(f) bankers' acceptances (having original maturities of no more than
365 days) issued by a depository institution or trust company referred to in (b)
above;
(g) (x) time deposits (having maturities not later than the
succeeding Distribution Date) other than as referred to in clause (e) above,
with a Person the commercial paper of which has a credit rating satisfactory to
the Rating Agency or (y) notes which are payable on demand issued by Household
Finance Corporation; PROVIDED such notes will constitute Eligible Investments
only if Household Finance Corporation has, at the time of the Trust's investment
in such notes, a commercial paper rating of not less than A-1 by Standard &
Poor's, P-1 by Moody's and F1 by Fitch (or such other rating
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as shall be satisfactory to such Rating Agency[ and the Insurer (for so long as
it is the Controlling Party]); or
(h) any other investment of a type or rating that is acceptable to
the Rating Agency[ and the Insurer (for so long as it is the Controlling
Party)].
Any of the foregoing Eligible Investments may be purchased by or
through the Indenture Trustee or through any of its Affiliates.
"Eligible Servicer" means Household Finance Corporation or any other
Person [reasonably acceptable to the Insurer (for so long as it is the
Controlling Party)] which at the time of its appointment as Master Servicer, (i)
is servicing a portfolio of motor vehicle retail installment sales contracts
and/or motor vehicle installment loans, (ii) is legally qualified and has the
capacity to service the Receivables, (iii) has demonstrated the ability
professionally and competently to service a portfolio of motor vehicle retail
installment sales contracts and/or motor vehicle installment loans similar to
the Receivables with reasonable skill and care, (iv) is qualified and entitled
to use, pursuant to a license or other written agreement, and agrees to maintain
the confidentiality of, the software which the Master Servicer uses in
connection with performing its duties and responsibilities under this Agreement
or otherwise has available software which is adequate to perform its duties and
responsibilities under this Agreement and (v) has a net worth of at least
$50,000,000.
"Eligible Subservicer" means Household Automotive Finance Corporation
or any wholly owned subsidiary of Household Finance Corporation or any other
Person [reasonably acceptable to the Insurer (for so long as it is the
Controlling Party)] which at the time of its appointment as Subservicer, (i) is
servicing a portfolio of motor vehicle retail installment sales contracts and/or
motor vehicle installment loans, (ii) is legally qualified and has the capacity
to service the Receivables, (iii) has demonstrated the ability professionally
and competently to service a portfolio of motor vehicle retail installment sales
contracts and/or motor vehicle installment loans similar to the Receivables with
reasonable skill and care, and (iv) is qualified and entitled to use, pursuant
to a license or other written agreement, and agrees to maintain the
confidentiality of, the software which the Master Servicer uses in connection
with performing its duties and responsibilities under this Agreement or
otherwise has available software which is adequate to perform its duties and
responsibilities under this Agreement.
"Financed Vehicle" means a new or used automobile, light-duty truck or
van securing an Obligor's indebtedness under the respective Receivable.
"Fitch" means Fitch Inc., or its successor.
"Grant" has the meaning assigned to such term in the Indenture.
"HACC" means Household Automotive Credit Corporation, a Delaware
corporation. For the avoidance of doubt, HACC is an Affiliate of HAFC.
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"HACC Purchase Agreement" means the Master Receivables Purchase
Agreement between the Seller and HACC, dated as of _______________, as such
agreement may be further amended or supplemented from time to time.
"HAFC" means Household Automotive Finance Corporation, a Delaware
corporation.
"HAFC Purchase Agreement" means the Master Receivables Purchase
Agreement between the Seller and HAFC, dated as of _______________, as such
agreement may be further amended or supplemented from time to time.
"Indenture" has the meaning assigned to such term in the Series
Supplement.
"Indenture Trustee" means the Person acting as Indenture Trustee under
the Indenture, its successors in interest and any successor Indenture Trustee
under the Indenture.
"Indenture Trustee Fee" means the fees and reasonable out-of-pocket
expenses due to the Indenture Trustee as may be set forth in that certain fee
agreement executed in connection with this Agreement between the Master Servicer
and the Indenture Trustee.
"Insolvency Event" means, with respect to a specified Person, (a) the
filing of a petition against such Person or the entry of a decree or order for
relief by a court having jurisdiction in respect of such Person or any
substantial part of its property in an involuntary case under any applicable
federal or state bankruptcy, insolvency or other similar law now or hereafter in
effect, or appointing a receiver, liquidator, assignee, custodian, trustee,
sequestrator, or similar official for such Person or for any substantial part of
its property, or ordering the winding-up or liquidation of such Person's
affairs, and such petition, decree or order shall remain unstayed and in effect
for a period of 60 consecutive days; or (b) the commencement by such Person of a
voluntary case under any applicable federal or state bankruptcy, insolvency or
other similar law now or hereafter in effect, or the consent by such Person to
the entry of an order for relief in an involuntary case under any such law, or
the consent by such Person to the appointment of or taking possession by, a
receiver, liquidator, assignee, custodian, trustee, sequestrator, or similar
official for such Person or for any substantial part of its property, or the
making by such Person of any general assignment for the benefit of creditors, or
the failure by such Person generally to pay its debts as such debts become due,
or the taking of action by such Person in furtherance of any of the foregoing.
["Insurance Agreement" has the meaning assigned to such term in the
Series Supplement.]
["Insurer" has the meaning assigned to such term in the Series
Supplement.]
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"Insurance Policy" means, with respect to a Receivable, any insurance
policy (including the insurance policies described in Section 4.4 hereof)
benefiting the holder of the Receivable providing loss or physical damage,
credit life, credit disability, theft, mechanical breakdown or similar coverage
with respect to the Financed Vehicle or the Obligor.
"Interest Period" has the meaning assigned to such term in the Series
Supplement.
"Issuer" means Household Automotive Trust ______, a Delaware business
trust formed under the laws of the State of Delaware.
"Lien" means a security interest, lien, charge, pledge, equity, or
encumbrance of any kind, other than tax liens, mechanics' liens and any liens
that attach to the respective Receivable by operation of law as a result of any
act or omission by the related Obligor, provided that the lien created by this
Agreement or the Indenture shall not be deemed to constitute a Lien.
"Lien Certificate" means, with respect to a Financed Vehicle, an
original certificate of title, certificate of lien or other notification issued
by the Registrar of Titles of the applicable state to a secured party which
indicates that the lien of the secured party on the Financed Vehicle is recorded
on the original certificate of title. In any jurisdiction in which the original
certificate of title is required to be given to the Obligor, the term "Lien
Certificate" shall mean only a certificate or notification issued to a secured
party.
"Liquidated Receivable" means, with respect to any Collection Period,
upon the earliest of any of the following to occur, a Receivable as to which (i)
such Receivable has been liquidated by the Master Servicer through the sale of
the Financed Vehicle, (ii) 90 days have elapsed since the Master Servicer
repossessed the Financed Vehicle, (iii) proceeds have been received in respect
of such Receivable which, in the Master Servicer's reasonable judgment,
constitute the final amounts recoverable in respect of such Receivable or (iv)
10% or more of a Scheduled Payment shall have become 150 or more days delinquent
(or, in the case where the Obligor of such Receivable is subject to an
Insolvency Event, 10% or more of a Scheduled Payment shall have become 210 or
more days delinquent); provided, however, that the number of days specified in
either clause (ii) or (iv) may, at the election of the Master Servicer, be such
shorter number of days as may from time to time be consistent with the Master
Servicer's then-current collection policy. Any Receivable that becomes a
Repurchased Receivable on or before the related Accounting Date shall not be a
Liquidated Receivable.
"Managing Agent" means, with respect to any Purchaser Group, the
Person specified as the Managing Agent for such Purchaser Group from time to
time pursuant to the Note Purchase Agreement (including, without limitation,
Schedule I thereto) or any Joinder Agreement thereto or any Assignment and
Acceptance Agreement thereto.
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"Majority Purchaser" has the meaning assigned to such term in the Note
Purchase Agreement.
"Master Receivables Purchase Agreements" has the meaning assigned to
such term in the Series Supplement.
"Master Servicer" means Household Finance Corporation, as the servicer
of the Receivables, and each successor Master Servicer pursuant to Section 10.3.
"Master Servicer Credit Facility" means the credit facility maintained
by the Master Servicer with a Master Servicer Credit Facility Issuer pursuant to
Section 4.2(e).
"Master Servicer Credit Facility Issuer" means a depository
institution or insurance company that qualifies pursuant to Section 4.2(e).
"Master Servicer Termination Event" means an event specified in
Section 10.1.
"Master Servicer's Certificate" has the meaning assigned to such term
in the Series Supplement.
"Monthly Extension Rate" means, with respect to any Accounting Date,
the fraction, expressed as a percentage, the numerator of which is the aggregate
Principal Balance of Receivables whose payments were extended during the
Collection Period ended on such Accounting Date and the denominator of which is
the Aggregate Principal Balance as of the Accounting Date on which such
Collection Period began.
"Monthly Records" means all records and data maintained by the Master
Servicer with respect to the Receivables, including the following with respect
to each Receivable: the account number; the originating Dealer, if any; Obligor
name; Obligor address; Obligor home phone number; Obligor business phone number;
original Principal Balance; original term; Annual Percentage Rate; current
Principal Balance; current remaining term; origination date; first payment date;
final scheduled payment date; next payment due date; date of most recent
payment; new/used classification; collateral description; days currently
delinquent; number of contract extensions (months) to date; amount of Scheduled
Payment; current Insurance Policy expiration date; and past due late charges.
"Moody's" means Xxxxx'x Investors Service, Inc., or its successor.
"Net Liquidation Proceeds" means, with respect to a Liquidated
Receivable, all amounts realized with respect to such Receivable (other than
amounts withdrawn or received from any Series Support) net of (i) reasonable
expenses incurred by the Master Servicer in connection with the collection of
such Receivable and the repossession and disposition of the Financed Vehicle and
(ii) amounts that are required to be refunded to the Obligor on such Receivable;
PROVIDED, HOWEVER, that the Net Liquidation Proceeds with respect to any
Receivable shall in no event be less than zero;
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PROVIDED, FURTHER, THAT, so long as amounts are not traced to specific
Receivables the Master Servicer shall reasonably estimate, on or prior to each
Accounting Date, the amount of Net Liquidation Proceeds attributable to the
Series Trust Estate.
"Noteholder" means the Person in whose name a Note is registered on
the Note Register.
["Note Policy" has the meaning assigned to such term in the Series
Supplement.]
"Note Purchase Agreement" has the meaning, if any, assigned to such
term in the Series Supplement.
"Notes" has the meaning assigned to such term in the Indenture.
"Obligor" on a Receivable means the purchaser or co-purchasers of the
Financed Vehicle and any other Person who owes payments under the Receivable.
"Officers' Certificate" means a certificate signed by the chairman of
the board, the president, any executive vice president or any vice president,
any treasurer, assistant treasurer, secretary or assistant secretary of the
Seller or the Master Servicer, as appropriate.
"Opinion of Counsel" means an opinion of counsel who may be counsel to
the Master Servicer or the Seller, acceptable to the Indenture Trustee[ and the
Insurer (for so long as it is the Controlling Party)].
"Other Conveyed Property" means all property conveyed by the Seller to
the Trust pursuant to Section 2.1(a)(ii) through (xii) of this Agreement.
"Outstanding" has the meaning assigned to such term in the Indenture.
"Outstanding Amount" has the meaning assigned to such term in the
Indenture.
"Owner Trust Estate" has the meaning assigned to such term in the
Trust Agreement.
"Owner Trustee" means the Person acting as Owner Trustee under the
Trust Agreement, its successors-in-interest or any successor Owner Trustee under
the Trust Agreement.
"Payment Record" means the record maintained by the Master Servicer
for the Trust as provided in Section 4.2(f) hereof.
"Person" means any individual, corporation, limited liability company,
estate, partnership, joint venture, association, joint stock company, trust
(including any
13
beneficiary thereof), unincorporated organization or government or any agency or
political subdivision thereof.
"Principal Balance" means, with respect to any Receivable, as of any
date, the Amount Financed minus (i) that portion of all amounts received on or
prior to such date and allocable to principal in accordance with the Actuarial
Method, or the Simple Interest Method, as appropriate, and (ii) any Cram Down
Loss in respect of such Receivable. The "Principal Balance" of a Repurchased
Receivable or Liquidated Receivable shall be deemed to be zero.
"Rating Agency" has the meaning assigned to such term in the Series
Supplement.
"Receivables" has the meaning assigned to such term in the Series
Supplement.
"Receivable Files" means the documents specified in Section 3.3.
"Receivables Purchase Agreement Supplement" means any Receivables
Purchase Agreement Supplement to any Master Receivables Purchase Agreement.
"Record Date" with respect to each Distribution Date means the
Business Day immediately preceding such Distribution Date, unless otherwise
specified in the Series Supplement.
"Registrar of Titles" means, with respect to any state, the
governmental agency or body responsible for the registration of, and the
issuance of certificates of title relating to, motor vehicles and liens thereon.
"Related Documents" has the meaning assigned to such term in the
Series Supplement.
"Repurchase Amount" means, with respect to a Receivable, the Principal
Balance and all accrued and unpaid interest on the Receivable, after giving
effect to the receipt of any moneys collected (from whatever source) on such
Receivable, if any, as of the date of repurchase, provided that, reductions in
the Principal Balance resulting from such Receivable becoming a Liquidated
Receivable shall be disregarded.
"Repurchased Receivable" means a Receivable purchased by the Master
Servicer pursuant to Section 4.7 or repurchased by the Seller pursuant to
Section 3.2 or the Master Servicer pursuant to Section 11.1(a).
"Schedule of Eligibility Criteria" means the Eligibility Criteria
attached as Schedule I to the Series Supplement.
"Schedule of Receivables" has the meaning assigned to such term in the
Series Supplement.
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"Scheduled Payment" means, with respect to any Collection Period for
any Receivable, the amount set forth in such Receivable as required to be paid
by the Obligor in such Collection Period. If after the Closing Date, the
Obligor's obligation under a Receivable with respect to a Collection Period has
been modified so as to differ from the amount specified in such Receivable as a
result of (i) the order of a court in an insolvency proceeding involving the
Obligor, (ii) pursuant to the Soldiers' and Sailors' Civil Relief Act of 1940,
as amended, or (iii) modifications or extensions of the Receivable permitted by
Sections 4.2(b) and (c), the Scheduled Payment with respect to such Collection
Period shall refer to the Obligor's payment obligation with respect to such
Collection Period as so modified.
"Secured Parties" has the meaning assigned to such term in the Series
Supplement.
"Securities" means the Notes and the Certificates.
"Securityholders" means the Noteholders and the Certificateholders.
"Seller" means
Household Auto Receivables Corporation, a Nevada
corporation, and its successors in interest to the extent permitted hereunder.
"Series" means the Notes and Certificates issued pursuant to the
Series Supplement.
"Series Supplement" means the Series Supplement, dated as of the
Closing Date, to this Agreement, the Indenture and the Trust Agreement, among
the Master Servicer, the Issuer, the Seller, the Indenture Trustee and the Owner
Trustee, as such agreement may be amended or supplemented from time to time.
"Series Support" means any such rights and benefits as specified in
the Series Supplement provided to the Indenture Trustee or the Noteholders of
any Class pursuant to any letter of credit, surety bond, cash collateral
account, spread account, reserve account, guaranteed rate agreement, maturity
liquidity facility, interest rate swap agreement, tax protection agreement or
other similar arrangement. The subordination of any Class to another Class shall
be deemed to be Series Support. Notwithstanding that such Series Support may be
held by or in favor of the Indenture Trustee for the benefit of any Class, only
those Classes to which such Series Support relates shall have any rights with
respect thereto and all payments thereunder received by the Indenture Trustee
shall be distributed exclusively as prescribed in the Series.
"Series Trust Estate" has the meaning assigned to such term in the
Series Supplement.
"Service Contract" means, with respect to a Financed Vehicle, the
agreement, if any, financed under the related Receivable that provides for the
repair of such Financed Vehicle.
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"Servicing Fee" has the meaning assigned to such term in the Series
Supplement..
"Servicing Fee Rate" means the rate per annum specified in the Series
Supplement.
"Simple Interest Method" means the method of allocating a fixed level
monthly payment on an obligation between principal and interest, pursuant to
which the portion of such payment that is allocated to interest is equal to the
product of (a) the fixed rate of interest on such obligation, (b) the period of
time (expressed as a fraction of a year, based on the actual number of days in
the calendar month and 365 or 360 days (as applicable in the underlying
document) in the calendar year) elapsed since the preceding payment under the
obligation was made and (c) the outstanding principal balance of such
obligation.
"Simple Interest Receivable" means a Receivable under which the
portion of the payment allocable to interest and the portion allocable to
principal is determined in accordance with the Simple Interest Method.
"Standard & Poor's" means Standard & Poor's Ratings Services, a
division of the McGraw Hill Companies, Inc., or its successor.
"Subservicer" means, initially, Household Automotive Finance
Corporation, or any Eligible Subservicer with whom the Master Servicer has
entered into an agreement relating to subservicing the Receivables.
"Support Default" means a default relating to an Insolvency Event with
respect to, or the performance of, a Support Provider.
"Support Provider" means the Person, if any, designated in the Series
Supplement, as providing any Series Support, other than Household Finance
Corporation or any of its Affiliates or the Noteholders of any Class which is
subordinated to any other Class.
"Transfer Agreement" means the agreement among the Issuer, the Seller,
the Master Servicer and the Indenture Trustee, substantially in the form of
Exhibit B.
"Transfer Date" means, with respect to Receivables, any date on which
Receivables are to be transferred to the Trust pursuant to this Agreement and a
related Transfer Agreement.
"Trust" means the Issuer.
"Trust Account Property" means the Trust Accounts, all amounts and
investments held from time to time in any Trust Account (whether in the form of
deposit accounts, book-entry securities, uncertificated securities or
otherwise), and all proceeds of the foregoing.
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"Trust Accounts" has the meaning assigned to such term in the Series
Supplement.
"Trust Agreement" has the meaning assigned to such term in the Series
Supplement.
"Trust Officer" means, (i) in the case of the Indenture Trustee, any
officer within the Corporate Trust Office of the Indenture Trustee, including
any President, Vice President, Assistant Vice President, Assistant Treasurer,
Assistant Secretary, Financial Services Officer or any other officer of the
Indenture Trustee, customarily performing functions similar to those performed
by any of the above designated officers and having direct responsibility for the
administration of the Indenture, and (ii) in the case of the Owner Trustee, any
officer in the corporate trust office of the Owner Trustee or any agent of the
Owner Trustee under a power of attorney with direct responsibility for the
administration of this Agreement or any of the Basic Documents or Related
Documents on behalf of the Owner Trustee.
"UCC" means the Uniform Commercial Code as in effect in the relevant
jurisdiction on the date of this Agreement.
SECTION 1.2. OTHER INTERPRETIVE PROVISIONS. Capitalized terms
used herein and not otherwise defined herein have the meanings assigned to them
in the Indenture, the Series Supplement or the Trust Agreement.
(b) All terms defined in this Agreement shall have the defined
meanings when used in any instrument governed hereby and in any certificate or
other document made or delivered pursuant hereto unless otherwise defined
therein.
(c) As used in this Agreement, in any instrument governed
hereby and in any certificate or other document made or delivered pursuant
hereto or thereto, accounting terms not defined in this Agreement or in any such
instrument, certificate or other document, and accounting terms partly defined
in this Agreement or in any such instrument, certificate or other document to
the extent not defined, shall have the respective meanings given to them under
generally accepted accounting principles as in effect on the date of this
Agreement or any such instrument, certificate or other document, as applicable.
To the extent that the definitions of accounting terms in this Agreement or in
any such instrument, certificate or other document are inconsistent with the
meanings of such terms under generally accepted accounting principles, the
definitions contained in this Agreement or in any such instrument, certificate
or other document shall control.
(d) Any agreement, instrument or statute defined or referred
to herein or in any instrument or certificate delivered in connection herewith
means such agreement, instrument or statute as from time to time amended,
modified or supplemented and includes (in the case of agreements or instruments)
references to all attachments thereto and instruments incorporated therein.
17
(e) Any term defined herein, which is otherwise defined in the
Series Supplement, shall have the meaning specified therefor in the Series
Supplement, whether or not the definition in this Agreement includes a phrase to
the effect that such term may be otherwise defined in the Series Supplement.
(f) In the event that with respect to the Series there is no
Support Provider, any references herein or in any other of the Basic Documents
to the consent of, or acceptability to, the Support Provider shall be deemed to
be deleted.
(g) In the event that with respect to the Series, the
Indenture and Series Supplement do not provide for the purchase by the
Noteholders of Additional Principal Amounts, any references herein or in any
other Basic Document to Additional Principal Amounts shall be deemed to be
deleted.
(h) In the event that with respect to the Series, the
Indenture and Series Supplement do not provide for an Administrative Agent or
any Managing Agent, any references herein or in any other Basic Document to an
Administrative Agent shall be deemed to be deleted.
SECTION 1.3. USAGE OF TERMS. With respect to all terms used in
this Agreement, the singular includes the plural and the plural includes the
singular; words importing any gender include the other gender; references to
"writing" include printing, typing, lithography, and other means of reproducing
words in a visible form; references to agreements and other contractual
instruments include all subsequent amendments thereto or changes therein entered
into in accordance with their respective terms and not prohibited by this
Agreement; references to Persons include their permitted successors and assigns;
the terms "include" or "including" mean "include without limitation" or
"including without limitation;" the words "herein", "hereof" and "hereunder" and
other words of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision, and Article, Section, Schedule
and Exhibit references, unless otherwise specified, refer to Articles and
Sections of Schedules and Exhibits to this Agreement.
SECTION 1.4. CERTAIN REFERENCES. All references to the Principal
Balance of a Receivable as of any date of determination shall refer to the close
of business on such day, or as of the first day of an Interest Period shall
refer to the opening of business on such day. All references to the last day of
an Interest Period shall refer to the close of business on such day.
SECTION 1.5. NO RECOURSE. Without limiting the obligations of the
Master Servicer or Seller hereunder, no recourse may be taken, directly or
indirectly, under this Agreement or any certificate or other writing delivered
in connection herewith or therewith, against any stockholder, officer or
director, as such, of the Master Servicer or Seller, or of any of their
respective Affiliates, predecessors or successors.
SECTION 1.6. ACTION BY OR CONSENT OF NOTEHOLDERS. Whenever any
provision of this Agreement refers to action to be taken, or consented to, by
Noteholders,
18
such provision shall be deemed to refer to the Noteholders of record as of the
Record Date immediately preceding the date on which such action is to be taken,
or consent given, by Noteholders. Solely for the purposes of any action to be
taken, or consented to, by Noteholders, any Note registered in the name of HAFC
or any Affiliate thereof shall be deemed not to be outstanding; PROVIDED,
HOWEVER, that, solely for the purpose of determining whether the Indenture
Trustee is entitled to rely upon any such action or consent, only Notes which
the Trust Officer of the Indenture Trustee actually knows to be so owned shall
be so disregarded.
ARTICLE II
CONVEYANCE OF RECEIVABLES
SECTION 2.1. CONVEYANCE OF RECEIVABLES. Subject to the conditions
set forth in paragraph (b) below, in consideration of the Issuer's delivery to
or upon the order of the Seller on a Transfer Date (which may include the
Closing Date) of the net proceeds of the issuance of the Notes or from any
Additional Principal Amount thereunder and the other amounts to be distributed
from time to time to the Seller in accordance with the terms of this Agreement
and the Series Supplement, the Seller shall, from time to time, sell, transfer,
assign, set over and otherwise convey to the Issuer, without recourse (subject
to the obligations set forth herein), all right, title and interest of the
Seller in and to:
(i) each and every Receivable listed on the Schedules of
Receivables and all monies paid or payable thereon or in respect
thereof after the related Cutoff Date (including amounts due on
or before such Cutoff Date but received by HAFC or any Affiliate
of HAFC that is a seller under a Master Receivables Purchase
Agreement or the Seller after such Cutoff Date);
(ii) the security interests in the related Financed
Vehicles granted by Obligors pursuant to the related Receivables
and any other interest of the Seller in such Financed Vehicles;
(iii) all rights of the Seller against the Dealers pursuant
to Dealer Agreements or Dealer Assignments related to such
Receivables;
(iv) any proceeds and the right to receive proceeds with
respect to such Receivables repurchased by a Dealer pursuant to a
Dealer Agreement;
(v) all rights under any Service Contracts on the related
Financed Vehicles;
(vi) any proceeds and the right to receive proceeds with
respect to such Receivables from claims on any physical damage,
19
credit life or disability insurance policies covering the related
Financed Vehicles or Obligors, including rebates of insurance
premiums relating to the Receivables;
(vii) all items contained in the related Receivables Files
with respect to the Receivables; and any and all other documents
that HAFC or any Affiliate of HAFC that is a seller under a
Master Receivables Purchase Agreement, the Seller or the Master
Servicer, as applicable, keeps on file in accordance with its
customary procedures relating to the related Receivables, the
Obligors or the Financed Vehicles;
(viii) all funds on deposit from time to time in the Trust
Accounts (including all investments and proceeds thereof);
(ix) all property (including the right to receive future
Net Liquidation Proceeds) that secures a Receivable and that has
been acquired by or on behalf of the Seller pursuant to
liquidation of such Receivable;
(x) all of the Seller's right, title and interest in its
rights and benefits, but none of its obligations or burdens,
under each of the Master Receivables Purchase Agreements and the
Receivables Purchase Agreement Supplements, including the
delivery requirements, representations and warranties and the
cure and repurchase obligations of HAFC or any Affiliate of HAFC
that is a seller under a Master Receivables Purchase Agreement or
Household Finance Corporation, as applicable, under each of the
Master Receivables Purchase Agreements and the related
Receivables Purchase Agreement Supplements, after the related
Cutoff Date;
(xi) on the Closing Date, one share of Class SV Preferred
Stock of the Seller together with the exclusive right to vote
such share; and
(xii) all present and future claims, demands, causes and
choses in action in respect of any or all of the foregoing and
all payments on or under and all proceeds of every kind and
nature whatsoever in respect of any or all of the foregoing,
including all proceeds of the conversion, voluntary or
involuntary, into cash or other liquid property, all cash
proceeds, accounts, accounts receivable, notes, drafts,
acceptances, chattel paper, checks, investment property, deposit
accounts, insurance proceeds, condemnation awards, rights to
payment of any and every kind and other forms of obligations and
receivables, instruments and other
20
property which at any time constitute all or part of or are
included in the proceeds of any of the foregoing.
(b) The Seller shall transfer to the Issuer the Receivables
and the other property and rights related thereto described in paragraph (a)
above only upon the satisfaction of each of the following conditions on or prior
to related Transfer Date:
(i) if the Transfer Date is not also the Closing Date,
the Seller shall have provided the Indenture Trustee and the
Owner Trustee [and the Insurer] with an Addition Notice not later
than five days prior to such Transfer Date and shall have
provided any information reasonably requested by any of the
foregoing with respect to the related Receivables;
(ii) the Seller shall have delivered to the Owner Trustee
a duly executed Transfer Agreement [and to the Insurer a copy of
such Transfer Agreement ]which shall include supplements to
Schedule A (which may be in electronic format), listing the
Receivables to be transferred to the Issuer;
(iii) the Master Servicer, on behalf of the Issuer, shall
have delivered to the Indenture Trustee and the Insurer a
supplemental schedule to the Series Supplement (which may be in
electronic format), listing the Receivables to be pledged to the
Indenture Trustee under the Indenture;
(iv) the Seller shall, to the extent required by Section
4.2, have deposited in the Collection Account all collections
received after the related Cutoff Date in respect of the
Receivables to be transferred;
(v) as of each Transfer Date, (A) the Seller shall not be
insolvent and shall not become insolvent as a result of the
transfer of Receivables on such Transfer Date, (B) the Seller
shall not intend to incur or believe that it shall incur debts
that would be beyond its ability to pay as such debts mature, (C)
such transfer shall not have been made with actual intent to
hinder, delay or defraud any Person and (D) the assets of the
Seller shall not constitute unreasonably small capital to carry
out its business as conducted;
(vi) each of the representations and warranties made by
the Seller pursuant to Section 3.1 with respect to the
Receivables to be transferred on such Transfer Date shall be true
and correct as of such Transfer Date, and the Seller shall have
performed all obligations to be performed by it hereunder on or
prior to such Transfer Date;
21
(vii) the Seller shall, at its own expense, on or prior to
the Transfer Date indicate in its computer files that the
Receivables identified in the Transfer Agreement have been sold
to the Trust pursuant to this Agreement;
(viii) the Seller shall have taken any action necessary or,
if required by the Indenture Trustee[ or the Insurer (for so long
as it is the Controlling Party)], advisable to maintain the first
priority perfected ownership interest of the Trust in the Owner
Trust Estate and the first perfected security interest of the
Indenture Trustee in the Owner Trust Estate;
(ix) the Issuer shall have taken any action necessary or,
if required by the Indenture Trustee[ or the Insurer (for so long
as it is the Controlling Party)], advisable to obtain and
maintain the first priority perfected security interest of the
Indenture Trustee, for the benefit of the Noteholders[ and the
Insurer], in the Series Trust Estate and the first priority
perfected security interest of the Indenture Trustee in the Owner
Trust Estate;
(x) no selection procedures adverse to the interests of
the Noteholders or any Support Provider shall have been utilized
in selecting the related Receivables;
(xi) the addition of any such Receivables shall not result
in a material adverse tax consequence to the Trust or the
Noteholders;
(xii) if required by any of the Related Documents, the
Issuer shall simultaneously transfer to the Indenture Trustee any
amounts required to be deposited in the related Trust Accounts
with respect to the Receivables transferred on such Transfer
Date; and
(xiii) the Seller shall have delivered to the Indenture
Trustee [and the Insurer] an Officers' Certificate confirming the
satisfaction of each condition precedent specified in this
paragraph (b).
The Seller covenants that in the event any of the foregoing conditions
precedent are not satisfied with respect to any Receivable on the date required
as specified above, the Seller will immediately repurchase such Receivable from
the Trust, at a price equal to the Repurchase Amount thereof, in the manner
specified in Section 5.4.
It is the intention of the Seller that the transfer and assignment
contemplated by this Agreement and each related Transfer Agreement shall
constitute a sale of the related Receivables and the related Other Conveyed
Property from the Seller to the Issuer and the beneficial interest in and title
to such property shall not be part of the Seller's estate in the event of the
filing of a bankruptcy petition by or against the Seller under any bankruptcy
law. In the event that, notwithstanding the intent of the Seller, the
22
transfer and assignment contemplated hereby and thereby is held not to be a
sale, this Agreement and the related Transfer Agreement shall constitute a Grant
of a security interest in the property referred to in this Section 2.1 to the
Issuer.
SECTION 2.2. FURTHER ENCUMBRANCE OF OWNER TRUST ESTATE.
Immediately upon the conveyance to the Trust by the Seller of Receivables and
the related Other Conveyed Property pursuant to Section 2.1, all right, title
and interest of the Seller in and to such Receivables and such Other Conveyed
Property shall terminate, and all such right, title and interest shall vest in
the Issuer, in accordance with the Trust Agreement and Sections 3802 and 3805 of
the Business Trust Statute (as defined in the Trust Agreement).
(b) Immediately upon the vesting of any Receivables and the
related Other Conveyed Property, the Trust shall have the sole right to pledge
or otherwise encumber such property subject to the terms of the Basic Documents.
Pursuant to the Indenture and the Series Supplement, the Trust will grant a
security interest in the Series Trust Estate to secure the repayment of the
Notes and amounts owing to the Insurer under the Insurance Agreement and the
Basic Documents. The Certificates shall represent the beneficial ownership
interest in the Receivables and the Other Conveyed Property, and the
Certificateholders shall be entitled to receive distributions with respect
thereto as set forth in the Series Supplement.
(c) The Indenture Trustee shall hold the Series Trust Estate
for the benefit of the Secured Parties. Following the payment in full of the
Notes and all amounts owing to the Insurer under the Insurance Agreement and the
Basic Documents and the release and discharge of the Indenture and the Series
Supplement, all covenants of the Issuer under Article III of the Indenture and
the Series Supplement shall, until payment in full of the Certificates, remain
as covenants of the Issuer for the benefit of the Certificateholders,
enforceable by the Certificateholders to the same extent as such covenants were
enforceable by the Secured Parties prior to the discharge of the Indenture. Any
rights of the Indenture Trustee under Article III of the Indenture and the
Series Supplement, following the discharge of the Indenture and the Series
Supplement, shall vest in the Certificateholders.
(d) The Indenture Trustee shall, at such time as there are no
Securities outstanding [and all amounts owing to the Insurer under the Insurance
Agreement and the Basic Documents ]and all sums due to the Indenture Trustee or
any agent or counsel thereof pursuant to the Indenture as supplemented by the
Series Supplement, have been paid, pursuant to Section 4.1 of the Indenture, and
subject to satisfaction of the conditions set forth therein, release the Lien of
the Series Supplement and the Indenture with respect to the Series Trust Estate.
ARTICLE III
THE RECEIVABLES
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SECTION 3.1. REPRESENTATIONS AND WARRANTIES OF SELLER. The Seller
represents and warrants as to the related Receivables that the representations
and warranties set forth on the Schedule of Eligibility Criteria are, or will
be, true and correct as of the respective dates specified in such Schedule. The
Issuer is deemed to have relied on such representations and warranties in
acquiring the related Receivables[, the Insurer is deemed to have relied on such
representations and warranties in issuing the Note Policy] and the related
Securityholders shall be deemed to rely on such representations and warranties
in purchasing the Notes and Certificates or any Additional Principal Amounts
thereunder. Such representations and warranties shall survive the sale, transfer
and assignment of the Owner Trust Estate to the Issuer and any pledge of the
Series Trust Estate to the Indenture Trustee pursuant to the Indenture and the
Series Supplement.
SECTION 3.2. REPURCHASE UPON BREACH. The Seller, the Master
Servicer, [the Insurer, ]any Trust Officer of the Indenture Trustee, or the
Owner Trustee, as the case may be, shall inform each of the other parties to
this Agreement promptly, in writing, upon the discovery of any breach of the
Seller's representations and warranties made pursuant to Section 3.1; PROVIDED,
HOWEVER, that the failure to give any such notice shall not derogate from any
obligations of the Seller under this Section 3.2. As of the last day of the
second (or, if the Seller so elects, the first, or with respect to any
exceptions appearing on any exception report delivered by the Indenture Trustee,
the first) month following the discovery by the Seller or receipt by the Seller
of notice of such breach (or such longer period not in excess of 120 days, as
may be agreed upon by the Indenture Trustee[, the Insurer (for so long as it is
the Controlling Party)] and the Master Servicer), unless such breach is cured by
such date, the Seller shall have an obligation to repurchase or cause HAFC or an
Affiliate of HAFC that is the seller under a Master Receivables Purchase
Agreement or Household Finance Corporation, as applicable, to repurchase any
Receivable in which the interests of the Securityholders and/or the Insurer are
materially and adversely affected by any such breach. In consideration of and
simultaneously with the repurchase of the Receivables, the Seller shall remit,
or cause HAFC or an Affiliate of HAFC that is the seller under a Master
Receivables Purchase Agreement to remit to the Collection Account the Repurchase
Amount in the manner specified in Section 5.4 and the Issuer shall execute such
assignments and other documents reasonably requested by such person in order to
effect such repurchase. The sole remedy of the Issuer, the Owner Trustee, the
Indenture Trustee[, the Insurer] and the related holders with respect to a
breach of representations and warranties pursuant to Section 3.1 and the
agreement contained in this Section shall be the repurchase of the Receivables
pursuant to this Section, subject to the conditions contained herein or to
enforce the obligation of HAFC or an Affiliate of HAFC that is the seller under
a Master Receivables Purchase Agreement to the Seller to repurchase such
Receivables pursuant to the related Master Receivables Purchase Agreement.
Neither the Owner Trustee nor the Indenture Trustee shall have a duty to conduct
any affirmative investigation as to the occurrence of any conditions requiring
the repurchase of any Receivable pursuant to this Section.
(b) Pursuant to Section 2.1 of this Agreement and pursuant to
the related Transfer Agreement, the Seller conveyed to the Trust all of the
Seller's right, title and interest in its rights and benefits, but none of its
obligations or burdens, under the Master Receivables Purchase Agreements and the
related Master Receivables Purchase
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Agreement Supplements, including the Seller's rights under the Master
Receivables Purchase Agreements and the delivery requirements, representations
and warranties and the cure or repurchase obligations of HAFC or an Affiliate of
HAFC that is the seller under a Master Receivables Purchase Agreement
thereunder. The Seller hereby represents and warrants to the Trust that such
assignment is valid, enforceable and effective to permit the Trust to enforce
such obligations of HAFC or an Affiliate of HAFC that is the seller under a
Master Receivables Purchase Agreement.
SECTION 3.3. CUSTODY OF RECEIVABLES FILES. In connection with the
sale, transfer and assignment of the Receivables to the Trust pursuant to this
Agreement and pursuant to the related Transfer Agreement, the Master Servicer
shall act as custodian for the benefit of the Indenture Trustee of the following
documents or instruments with respect to each Receivable:
(i) The fully executed original of the Receivable
(together with any agreements modifying the Receivable,
including, without limitation, any extension agreements);
(ii) The original credit application, or a copy thereof,
of each Obligor, fully executed by each such Obligor on the
customary form used by HAFC, an Affiliate of HAFC, or the related
Dealer, as applicable, or on a form approved by HAFC or an
Affiliate of HAFC, as applicable, for such application;
(iii) The original certificate of title (when received) and
otherwise such documents, if any, that HAFC or any Affiliate of
HAFC that is the seller under a Master Receivables Purchase
Agreement, as applicable, keeps on file in accordance with its
customary procedures indicating that the Financed Vehicle is
owned by the Obligor and subject to the interest of HAFC or any
Affiliate of HAFC that is the seller under a Master Receivables
Purchase Agreement as first lienholder or secured party
(including any Lien Certificate received by HAFC or any Affiliate
of HAFC that is the seller under a Master Receivables Purchase
Agreement, as applicable), or, if such original certificate of
title has not yet been received, a copy of the application
therefor, showing any of HAFC, HACC or a Dealer as secured party
(in the case of a Dealer, the application shall be to obtain
title in the name of HAFC or HACC); and
(iv) Documents evidencing or relating to any Insurance
Policy, to the extent such documents are maintained by or on
behalf of the Seller, HAFC or any Affiliate of HAFC that is the
seller under a Master Receivables Purchase Agreement.
Notwithstanding the foregoing, the Master Servicer may appoint a subcustodian,
which subcustodian may hold physical possession of some or all of the Receivable
Files. The
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Indenture Trustee shall have no liability for the acts or omissions of any such
custodian or subcustodian.
ARTICLE IV
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 4.1. DUTIES OF THE MASTER SERVICER. The Master Servicer is
hereby authorized to act as agent for the Trust (and also on behalf of the
Indenture Trustee and the Noteholders [and the Insurer]) and in such capacity
shall manage, service, administer and make collections on the Receivables, and
perform the other actions required by the Master Servicer under this Agreement,
the Indenture and the Series Supplement. The Master Servicer agrees that its
servicing of the Receivables shall be carried out in accordance with customary
and usual procedures of institutions which service motor vehicle retail
installment sales contracts and, to the extent more exacting, the degree of
skill and attention that the Master Servicer exercises with respect to all
comparable motor vehicle receivables that it services for itself or others. In
performing such duties, so long as Household Finance Corporation is the Master
Servicer, it shall comply with the standard and customary procedures for
servicing all of its comparable motor vehicle receivables. The Master Servicer's
duties shall include, without limitation, collection and posting of all
payments, responding to inquiries of Obligors on the Receivables, investigating
delinquencies, sending monthly billing statements to Obligors, reporting any
required tax information to Obligors, monitoring the collateral, accounting for
collections and furnishing monthly and annual statements to the Indenture
Trustee and the Noteholders [and the Insurer] with respect to distributions,
monitoring the status of Insurance Policies with respect to the Financed
Vehicles and performing the other duties specified herein. The Master Servicer
shall also administer and enforce all rights and responsibilities of the holder
of the Receivables provided for in the Dealer Agreements (and Household Finance
Corporation shall make commercially reasonable efforts to obtain possession of
the Dealer Agreements, to the extent it is necessary to do so), the Dealer
Assignments and the Insurance Policies, to the extent that such Dealer
Agreements, Dealer Assignments and Insurance Policies relate to the Receivables,
the Financed Vehicles or the Obligors. To the extent consistent with the
standards, policies and procedures otherwise required hereby, the Master
Servicer shall follow its customary standards, policies, and procedures and
shall have full power and authority, acting alone, to do any and all things in
connection with such managing, servicing, administration and collection that it
may deem necessary or desirable. In performing such duties, the Master Servicer
or any Subservicer may delegate their duties in accordance with Section 9.5
hereof. Without limiting the generality of the foregoing, the Master Servicer is
hereby authorized and empowered by the Trust to execute and deliver, on behalf
of the Trust, any and all instruments of satisfaction or cancellation, or of
partial or full release or discharge, and all other comparable instruments, with
respect to the Receivables and with respect to the Financed Vehicles. The Master
Servicer is hereby authorized to commence, in it's own name or in the name of
the Trust, a legal proceeding to enforce a Receivable pursuant to Section 4.3 or
to commence or participate in any other legal proceeding (including, without
limitation, a bankruptcy proceeding) relating to or
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involving a Receivable, an Obligor or a Financed Vehicle. If the Master Servicer
commences or participates in such a legal proceeding in its own name, the Trust
shall thereupon be deemed to have automatically assigned such Receivable to the
Master Servicer solely for purposes of commencing or participating in any such
proceeding as a party or claimant, and the Master Servicer is authorized and
empowered by the Trust to execute and deliver in the Master Servicer's name any
notices, demands, claims, complaints, responses, affidavits or other documents
or instruments in connection with any such proceeding. The Indenture Trustee and
the Owner Trustee shall furnish the Master Servicer with any powers of attorney
and other documents which the Master Servicer may reasonably request and which
the Master Servicer deems necessary or appropriate and take any other steps
which the Master Servicer may deem reasonably necessary or appropriate to enable
the Master Servicer to carry out its servicing and administrative duties under
this Agreement.
SECTION 4.2. COLLECTION OF RECEIVABLE PAYMENTS; MODIFICATIONS OF
RECEIVABLES. Consistent with the standards, policies and procedures required by
this Agreement, the Master Servicer shall make reasonable efforts to collect all
payments called for under the terms and provisions of the Receivables as and
when the same shall become due, and shall follow such collection procedures as
it follows with respect to all comparable motor vehicle receivables that it
services for itself or others and otherwise act with respect to the Receivables,
the Dealer Agreements, the Dealer Assignments, the Master Receivables Purchase
Agreements, the Insurance Policies and the Other Conveyed Property in such
manner as will, in the reasonable judgment of the Master Servicer, maximize the
amount to be received by the Trust with respect thereto. Consistent with the
foregoing, the Master Servicer may, if it determines in its reasonable judgement
that such action would maximize the amount to be received by the Trust, arrange
for the sale by the Trust of Liquidated Receivables with respect to which the
related Financed Vehicle has been sold, and the net proceeds of such sale shall
be included in Net Liquidation Proceeds. The Master Servicer is authorized in
its discretion to waive any prepayment charge, late payment charge or any other
similar fees that may be collected in the ordinary course of servicing any
Receivable.
(b) The Master Servicer may at any time agree to a
modification or amendment of a Receivable in order to (i) change the Obligor's
regular due date to a date within 30 days of when such due date occurs;
PROVIDED, HOWEVER, that no modification of a Receivable in connection with a due
date change pursuant to this clause (i) shall be considered an extension for
purposes of Section 4.2(c) below and therefore shall not be subject to the
restrictions on extensions, modifications or amendments specified in Section
4.2(c) below or (ii) re-amortize the Scheduled Payments on the Receivable
following a partial prepayment of principal; PROVIDED, HOWEVER, that no
re-amortization permitted by this clause (ii) shall extend the maturity date of
any Receivable.
(c) The Master Servicer may grant payment extensions on, or
other modifications or amendments to, a Receivable in accordance with its
customary procedures if the Master Servicer believes in good faith that such
extension, modification or amendment is necessary to avoid a default on such
Receivable, will maximize the
27
amount to be received with respect to such Receivable, and is otherwise in the
best interests of the Trust; PROVIDED, HOWEVER, that unless otherwise specified
in the Series Supplement:
(i) The aggregate period of all extensions on a
Receivable shall not exceed six months; PROVIDED, HOWEVER, that
not more than three months can be in any consecutive twelve month
period;
(ii) In no event may a Receivable be extended by the
Master Servicer beyond the Collection Period immediately
preceding the Final Scheduled Distribution Date of the Notes;
(iii) The average Monthly Extension Rate for any three
consecutive calendar months shall not exceed 4%; and
(iv) Not more than 5% of the Pool Balance may be subject
to a modified interest rate at any time (exclusive of Cram Down
Losses).
(d) Except as otherwise provided below in Section 4.2(e)
hereof, the Master Servicer shall deposit collections in immediately available
funds on or with respect to Receivables into the Collection Account as promptly
as possible after the date of processing of such collections, but in no event
later than the second Business Day following the date of processing.
(e) Subject to the express terms of the Series Supplement, but
notwithstanding anything else in this Agreement to the contrary, for so long as
(i) Household Finance Corporation remains the Master Servicer and maintains a
commercial paper rating of not less than A-1 by Standard & Poor's, P-1 by
Moody's and F1 by Fitch (or such other rating as shall be satisfactory to such
Rating Agency[ and the Insurer (for so long as it is the Controlling Party))],
in each case only if such Person is a Rating Agency, and for five Business Days
following any reduction of any such rating or (ii) a Master Servicer Credit
Facility is maintained in effect by the Master Servicer in form and substance
acceptable to the Rating Agency (such acceptability to be evidenced in writing
by the Rating Agency to the effect that failure to make the aforementioned
deposit on the basis of the maintenance of the Master Servicer Credit Facility
will not adversely affect the then current rating of the Notes) [and the Insurer
(for so long as it is the Controlling Party) ]issued by a depository institution
or insurance company having a rating on its (A) short-term obligations of at
least P-1 by Moody's, A-1 by Standard & Poor's and F1 by Fitch (or such other
rating as shall be satisfactory to such Rating Agency[ and the Insurer (for so
long as it is the Controlling Party))], in each case only if such Person is a
Rating Agency, and (B) long term obligations of at least A2 by Moody's, A by
Standard & Poor's, and A by Fitch, in each case only if such Person is a Rating
Agency, the Master Servicer shall not be required to make deposits of
collections on or with respect to Receivables as provided in Section 4.2(d), but
may make one or more deposits of Collected Funds (excluding any portion of such
funds which the Master Servicer may retain in accordance with Section 4.8 or pay
directly to the Seller in its capacity as
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Certificateholder in accordance with Section 5.1(f)) with respect to the Series
Trust Estate with respect to a Collection Period into the Collection Account in
immediately available funds not later than 1:00 P.M., Central time, on the
Business Day immediately preceding the related Distribution Date. The Master
Servicer shall give written notice to the Indenture Trustee and the Insurer if
it is required to deposit funds in accordance with Section 4.2(d).
(f) In the event that a Master Servicer Credit Facility is
maintained, the Master Servicer shall within two Business Days of the date of
processing of collections on or with respect to Receivables notify the Indenture
Trustee and the Master Servicer Credit Facility Issuer in writing of the amounts
that would otherwise be deposited in the Collection Account and the Master
Servicer shall establish and maintain for the Trust a Payment Record in which
the payments on or with respect to the Receivables shall be credited and the
Master Servicer shall notify the Indenture Trustee, the Insurer and the Master
Servicer Credit Facility Issuer in writing as promptly as practicable (but in
any event prior to the Determination Date for the following Distribution Date)
of the amounts so credited on or with respect to the Receivables that are to be
included in Collected Funds (as determined for this purpose after giving effect
to the exclusions described above) for the related Distribution Date and of the
amounts so credited which will constitute a part of Collected Funds (as
determined for this purpose after giving effect to the exclusions described
above) for the second following Distribution Date. The Payment Record shall be
made available for inspection during normal business hours of the Master
Servicer upon request of the Indenture Trustee[, the Insurer (for so long as it
is the Controlling Party)] or any Master Servicer Credit Facility Issuer.
SECTION 4.3. REALIZATION UPON RECEIVABLES. Consistent with the
standards, policies and procedures required by this Agreement, the Master
Servicer shall use its best efforts to repossess (or otherwise comparably
convert the ownership of) and liquidate any Financed Vehicle securing a
Receivable with respect to which the Master Servicer has determined that
payments thereunder are not likely to be resumed, as soon as is practicable
after default on such Receivable but in no event later than the date on which
10% or more of a Scheduled Payment has become 150 days delinquent (other than in
the case of Financed Vehicles where neither the Financed Vehicle nor the Obligor
can be physically located by the Master Servicer (using procedures consistent
with the standards, policies and procedures of the Master Servicer required by
this Agreement) and other than in the case of an Obligor who is subject to a
bankruptcy proceeding); PROVIDED, HOWEVER, that the Master Servicer may elect
not to repossess a Financed Vehicle within such time period if in its good faith
judgment it determines that the proceeds ultimately recoverable with respect to
such Receivable would be increased by forbearance. The Master Servicer is
authorized to follow such customary practices and procedures as it shall deem
necessary or advisable, consistent with the standard of care required by Section
4.1, which practices and procedures may include reasonable efforts to realize
upon any recourse to Dealers, the sale of the related Financed Vehicle at public
or private sale, the submission of claims under an Insurance Policy and other
actions, including, without limitation, entering into settlements with Obligors,
by the Master Servicer in order to realize upon such a Receivable. The foregoing
is subject to the provision that, in
29
any case in which the Financed Vehicle shall have suffered damage, the Master
Servicer shall not expend funds in connection with any repair or towards the
repossession of such Financed Vehicle unless it shall determine in its
discretion that such repair and/or repossession shall increase the proceeds of
liquidation of the related Receivable by an amount greater than the amount of
such expenses. The Master Servicer shall be entitled to recover all reasonable
expenses incurred by it in the course of repossessing and liquidating a Financed
Vehicle but only from the liquidation proceeds of the vehicle or under the
related Dealer Agreement. The Master Servicer shall pay on behalf of the Trust
any personal property taxes assessed on repossessed Financed Vehicles. The
Master Servicer shall be entitled to reimbursement of any such tax from Net
Liquidation Proceeds with respect to such Receivable.
(b) If the Master Servicer elects to commence a legal
proceeding to enforce a Dealer Agreement or Dealer Assignment, the act of
commencement shall be deemed to be an automatic assignment from the Trust to the
Master Servicer of the rights under such Dealer Agreement and Dealer Assignment
for purposes of collection only. If, HOWEVER, in any enforcement suit or legal
proceeding it is held that the Master Servicer may not enforce a Dealer
Agreement or Dealer Assignment on the grounds that it is not a real party in
interest or a Person entitled to enforce the Dealer Agreement or Dealer
Assignment, the Indenture Trustee, at the Master Servicer's written direction
and expense, or the Seller, at the Seller's expense, shall take such steps as
the Master Servicer deems reasonably necessary to enforce the Dealer Agreement
or Dealer Assignment, including bringing suit in its name or the name of the
Seller, the Trust or the Owner Trustee. All amounts recovered shall be remitted
directly by the Master Servicer as provided in Section 4.2(d) or 4.2(e), as
applicable.
SECTION 4.4. INSURANCE. The Master Servicer shall require, in
accordance with its customary servicing policies and procedures, that each
Financed Vehicle be insured by the related Obligor under an insurance policy
covering physical loss and damage to the related Financed Vehicle and shall
monitor the status of such physical loss and damage insurance coverage
thereafter, in accordance with its customary servicing procedures. Each
Receivable requires the Obligor to obtain such physical loss and damage
insurance, naming HAFC or any Affiliate of HAFC that is the seller under a
Master Receivables Purchase Agreement, as applicable, and its successors and
assigns as loss payee, and with respect to liability coverage, additional
insureds, and permits the holder of such Receivable to obtain physical loss and
damage insurance at the expense of the Obligor if the Obligor fails to maintain
such insurance. If the Master Servicer shall determine that an Obligor has
failed to obtain or maintain a physical loss and damage Insurance Policy
covering the related Financed Vehicle which satisfies the conditions set forth
in the related Eligibility Criteria (including, without limitation, during the
repossession of such Financed Vehicle) the Master Servicer shall be diligent in
carrying out its customary servicing procedures to enforce the rights of the
holder of the Receivable under the Receivable to require the Obligor to obtain
such physical loss and damage insurance in accordance with its customary
servicing policies and procedures.
(b) The Master Servicer may xxx to enforce or collect upon the
Insurance Policies, in its own name, if possible, or as agent of the Trust. If
the Master
30
Servicer elects to commence a legal proceeding to enforce an Insurance Policy,
the act of commencement shall be deemed to be an automatic assignment of the
rights of the Trust under such Insurance Policy to the Master Servicer for
purposes of collection only. If, HOWEVER, in any enforcement suit or legal
proceeding it is held that the Master Servicer may not enforce an Insurance
Policy on the grounds that it is not a real party in interest or a holder
entitled to enforce the Insurance Policy, the Indenture Trustee, at the Master
Servicer's written direction and expense, or the Seller, at the Seller's
expense, shall take such steps as the Master Servicer deems reasonably necessary
to enforce such Insurance Policy, including bringing suit in its name or the
name of the Trust or the Owner Trustee.
SECTION 4.5. MAINTENANCE OF SECURITY INTERESTS IN VEHICLES.
Consistent with the policies and procedures required by this Agreement, the
Master Servicer shall take such steps on behalf of the Trust as are necessary to
maintain perfection of the security interest created by each Receivable in the
related Financed Vehicle on behalf of the Trust or as the Indenture Trustee[ or
the Insurer (for so long as it is the Controlling Party)] shall reasonably
request, including, but not limited to, obtaining the execution by the Obligors
and the recording, registering, filing, re-recording, re-filing, and
re-registering of all security agreements, financing statements and continuation
statements as are necessary to maintain the security interest granted by the
Obligors under the respective Receivables. The Owner Trustee, on behalf of the
Trust, hereby authorizes the Master Servicer, and the Master Servicer agrees, to
take any and all steps necessary to re-perfect such security interest on behalf
of the Trust as necessary because of the relocation of a Financed Vehicle or for
any other reason. In the event that the assignment of a Receivable to the Trust
is insufficient, without a notation on the related Financed Vehicle's
certificate of title, or without fulfilling any additional administrative
requirements under the laws of the state in which the Financed Vehicle is
located, to perfect a security interest in the related Financed Vehicle in favor
of the Trust, the Seller hereby agrees to cause HAFC or any Affiliate of HAFC
that is the seller under a Master Receivables Purchase Agreement, as applicable,
to treat the designation of HAFC or any Affiliate of HAFC that is the seller
under a Master Receivables Purchase Agreement, as applicable, as the secured
party on the certificate of title as a designation in its capacity as agent of
the Trust for such limited purpose.
SECTION 4.6. COVENANTS, REPRESENTATIONS, AND WARRANTIES OF MASTER
SERVICER. By its execution and delivery of this Agreement, the Master Servicer
makes the following representations, warranties and covenants on which the
Issuer relies in accepting the Receivables, on which the Indenture Trustee
relies in authenticating the Notes, on which the Noteholders rely in purchasing
the Notes and any Additional Principal Amount thereunder, on which the Owner
Trustee relies in executing the Certificates[ and on which the Insurer relies in
issuing the Note Policy].
The Master Servicer covenants as follows:
(i) LIENS IN FORCE. The Financed Vehicle securing each
Receivable shall not be released in whole or in part from the
security interest granted by the Receivable, except upon payment
in full of the Receivable or as otherwise contemplated herein;
31
(ii) NO IMPAIRMENT. The Master Servicer shall do nothing
to impair the rights of the Trust[, the Insurer] or the
Noteholders in the Receivables, the Dealer Agreements, the Dealer
Assignments, the Master Receivables Purchase Agreements, the
Insurance Policies or the Other Conveyed Property;
(iii) NO AMENDMENTS. The Master Servicer shall not extend
or otherwise amend the terms of any Receivable, except in
accordance with Section 4.2;
(iv) RESTRICTIONS ON LIENS. The Master Servicer shall not
(i) create, incur or suffer to exist, or agree to create, incur
or suffer to exist, or consent to cause or permit in the future
(upon the happening of a contingency or otherwise) the creation,
incurrence or existence of any Lien or restriction on
transferability of the Receivables except for the Lien in favor
of the Indenture Trustee for the benefit of the Secured Parties,
and the restrictions on transferability imposed by this Agreement
or (ii) sign or file under the Uniform Commercial Code of any
jurisdiction any financing statement which names HAFC, the Master
Servicer or any Affiliate thereof as a debtor, or sign any
security agreement authorizing any secured party thereunder to
file such financing statement, with respect to the Receivables,
except in each case any such instrument solely securing the
rights and preserving the Lien in favor of the Indenture Trustee
for the benefit of the Secured Parties;
(v) SERVICING OF RECEIVABLES. The Master Servicer shall
service the Receivables as required by the terms of this
Agreement and in material compliance with its standard and
customary procedures for servicing all its other comparable motor
vehicle receivables and in compliance with applicable law; and
(vi) RELOCATION OF PRINCIPAL OFFICE. The Master Servicer
shall notify the Indenture Trustee [and the Insurer ]in writing
of any relocation of the Master Servicer's principal office set
forth in Section 13.3 hereof and all Receivables Files shall be
maintained by the Master Servicer in the United States.
SECTION 4.7. REPURCHASE OF RECEIVABLES UPON BREACH OF COVENANT.
Upon discovery by any of the Master Servicer, the Seller[, the Insurer], a Trust
Officer of the Owner Trustee or a Trust Officer of the Indenture Trustee of a
breach of any of the covenants set forth in Sections 4.5 or 4.6, the party
discovering such breach shall give prompt written notice to the others;
PROVIDED, HOWEVER, that the failure to give any such notice shall not affect any
obligation of the Master Servicer under this Section 4.7. As of the second
Accounting Date following its discovery or receipt of notice of any breach of
any covenant set forth in Sections 4.5 or 4.6 which materially and adversely
affects the interests of the Securityholders [or the Insurer ]in any Receivable
(including any
32
Liquidated Receivable) or the related Financed Vehicle (or, if such second
Accounting Date is more than 45 days after discovery or receipt by the Master
Servicer of notice of such breach, then the first Accounting Date so following),
the Master Servicer shall, unless such breach shall have been cured in all
material respects, repurchase from the Trust the Receivable affected by such
breach and, on the date specified in Section 5.4, the Master Servicer shall pay
the related Repurchase Amount and deposit such Repurchase Amounts into the
Collection Account. It is understood and agreed that the obligation of the
Master Servicer to repurchase any Receivable (including any Liquidated
Receivable) with respect to which such a breach has occurred and is continuing
shall, if such obligation is fulfilled, constitute the sole remedy against the
Master Servicer for such breach.
SECTION 4.8. TOTAL SERVICING FEE; PAYMENT OF CERTAIN EXPENSES BY
MASTER SERVICER. So as long as: (i) Household Finance Corporation is the Master
Servicer, (ii) the Master Servicer is permitted to make deposits of collections
in accordance with Section 4.2(e) hereof and (iii) the Master Servicer's
Certificate delivered with respect to such Distribution Date indicates that
Available Funds with respect to such Distribution Date are sufficient to make
the distributions required to be made on such Distribution Date in respect of
the Servicing Fee payable to Household Finance Corporation as Master Servicer
(and all other distributions required to be made on such Distribution Date
having a higher priority than the distribution of the Servicing Fee payable to
Household Finance Corporation as Master Servicer), the Master Servicer shall be
entitled to retain out of amounts otherwise to be deposited in the Collection
Account with respect to a Collection Period, the Servicing Fee payable to
Household Finance Corporation as Master Servicer for such Collection Period. The
Master Servicer shall be required to pay all expenses incurred by it in
connection with its activities under this Agreement (including taxes imposed on
the Master Servicer, expenses incurred in connection with distributions and
reports made by the Master Servicer to Securityholders, all fees and expenses of
the Owner Trustee or the Indenture Trustee), except taxes levied or assessed
against the Trust, and claims against the Trust in respect of indemnification,
which taxes and claims in respect of indemnification against the Trust are
expressly stated to be for the account of Household Finance Corporation. The
Master Servicer shall be liable for the fees, charges and expenses of the Owner
Trustee, the Indenture Trustee, any Subservicer and their respective agents.
SECTION 4.9. MASTER SERVICER'S CERTIFICATE. No later than
10:00 a.m. Central time on each Determination Date, the Master Servicer shall
deliver, and cause to be delivered via access to its or its Affiliate's web-site
address, to [the Insurer, ]the Indenture Trustee and the Owner Trustee, a Master
Servicer's Certificate executed by a responsible officer or agent of the Master
Servicer containing among other things, all information necessary to enable the
Indenture Trustee to give any notice required by Section 3.03(c) of the Series
Supplement and make the distributions with respect to the related Distribution
Date pursuant to the Series Supplement. In addition to the information set forth
in the preceding sentence, the Master Servicer's Certificate shall also contain
the information required by the Series Supplement.
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SECTION 4.10. ANNUAL STATEMENT AS TO COMPLIANCE, NOTICE OF MASTER
SERVICER TERMINATION EVENT. The Master Servicer shall deliver or cause to be
delivered to [the Insurer, ]the Indenture Trustee and the Owner Trustee on or
before April 30 (or 120 days after the end of the Master Servicer's fiscal year,
if other than December 31) of each year, beginning on April 30 in the calendar
year succeeding the Closing Date, an Officer's Certificate signed by any
responsible officer of the Master Servicer, or such Eligible Subservicer who is
performing the servicing duties of the Master Servicer, dated as of December 31
(or other applicable date) of the immediately preceding year, stating that (i) a
review of the activities of the Master Servicer, or such Eligible Subservicer
who is performing the servicing duties of the Master Servicer, during the
preceding 12-month period (or such shorter period since the Closing Date) and of
its performance under this Agreement has been made under such officer's
supervision, and (ii) to such officer's knowledge, based on such review, the
Master Servicer, or such Eligible Subservicer who is performing the servicing
duties of the Master Servicer, has in all material respects fulfilled all its
obligations under this Agreement throughout such period, or, if there has been a
default in the fulfillment of any such obligation, specifying each such default
known to such officer and the nature and status thereof.
(b) The Master Servicer, or such Eligible Subservicer who is
performing the servicing duties of the Master Servicer, shall deliver to [the
Insurer, ]the Indenture Trustee and the Owner Trustee, and, in the event that
such notice is delivered by the Subservicer, to the Master Servicer, promptly
after having obtained knowledge thereof, but in no event later than two (2)
Business Days thereafter, written notice in an Officer's Certificate of any
event which with the giving of notice or lapse of time, or both, would become a
Master Servicer Termination Event under Section 10.1(a). The Seller or the
Master Servicer shall deliver to [the Insurer, ]the Indenture Trustee, the Owner
Trustee, the Master Servicer or the Seller (as applicable) promptly after having
obtained knowledge thereof, but in no event later than two (2) Business Days
thereafter, written notice in an Officer's Certificate of any event which with
the giving of notice or lapse of time, or both, would become a Master Servicer
Termination Event under any other clause of Section 10.1.
SECTION 4.11. ANNUAL INDEPENDENT ACCOUNTANTS' REPORT. The Master
Servicer shall cause a firm of nationally recognized independent certified
public accountants (the "Independent Accountants"), who may also render other
services to the Master Servicer or to the Seller, to deliver to [the Insurer,]
the Indenture Trustee and the Owner Trustee on or before April 30 (or 120 days
after the end of the Master Servicer's fiscal year, if other than December 31)
of each year, beginning on April 30 in the calendar year succeeding the Closing
Date with respect to the twelve months (or shorter applicable period) ended the
immediately preceding December 31 (or other applicable date), a report to the
effect that they have examined certain documents and records relating to the
servicing of Receivables under this Agreement and the Series Supplement,
compared the information contained in the Master Servicer's Certificates
delivered pursuant to Section 4.9 during the period covered by such report with
such documents and records and that, on the basis of such examination, such
accountants are of the opinion that the servicing has been conducted in
compliance with the terms and conditions as set forth in Articles IV and V of
this Agreement and the applicable
34
provisions of the Series Supplement, except for such exceptions as they believe
to be immaterial and such other exceptions as shall be set forth in such
statement. Such report shall acknowledge that the Indenture Trustee shall be a
"non-participating party" with respect to such report, or words to similar
effect. The Indenture Trustee shall have no duty to make any independent inquiry
or investigation as to, and shall have no obligation or liability in respect of,
the sufficiency of such procedures.
(b) On or before April 30 of each calendar year, beginning
with April 30 in the calendar year succeeding the Closing Date, the Master
Servicer shall cause a firm of nationally recognized independent public
accountants (who may also render other services to the Master Servicer or the
Seller) to furnish a report to the Indenture Trustee[, the Insurer] and the
Master Servicer to the effect that they have compared the mathematical
calculations of each amount set forth in the Master Servicer's Certificates
delivered pursuant to Section 4.9 during the period covered by such report with
the Master Servicer's computer reports which were the source of such amounts and
that on the basis of such comparison, such accountants are of the opinion that
such amounts are in agreement, except for such exceptions as they believe to be
immaterial and such other exceptions as shall be set forth in such statement.
Such report shall acknowledge that the Indenture Trustee shall be a
"non-participating party" with respect to such report, or words to similar
effect. The Indenture Trustee shall have no duty to make any independent inquiry
or investigation as to, and shall have no obligation or liability in respect of,
the sufficiency of such procedures.
SECTION 4.12. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION
REGARDING RECEIVABLES. The Master Servicer shall provide to representatives of
[the Insurer (for so long as it is the Controlling Party), ]the Indenture
Trustee and the Owner Trustee reasonable access to the documentation regarding
the Receivables. In each case, such access shall be afforded without charge but
only upon reasonable request and during normal business hours. Nothing in this
Section shall derogate from the obligation of the Master Servicer to observe any
applicable law prohibiting disclosure of information regarding the Obligors, and
the failure of the Master Servicer to provide access as provided in this Section
as a result of such obligation shall not constitute a breach of this Section.
SECTION 4.13. FIDELITY BOND AND ERRORS AND OMISSIONS POLICY. The
Master Servicer or such Eligible Subservicer that is performing the servicing
duties of the Master Servicer, has obtained, and shall continue to maintain in
full force and effect, a Fidelity Bond and Errors and Omissions Policy of a type
and in such amount as is customary for servicers engaged in the business of
servicing motor vehicle receivables.
ARTICLE V
TRUST ACCOUNTS; DISTRIBUTIONS;
STATEMENTS TO CERTIFICATEHOLDERS AND NOTEHOLDERS
SECTION 5.1. ESTABLISHMENT OF TRUST ACCOUNTS. (i) The Indenture
Trustee shall establish and maintain the Trust Accounts required to be
established and
35
maintained pursuant to the Series Supplement, and such Trust Accounts shall be
subject to the sole dominion and control of the Indenture Trustee for the
benefit of the Noteholders[and the Insurer].
(ii) No Trust Account shall be maintained with an
institution other than the Indenture Trustee unless such
institution agrees in writing to the provisions of this Section
5.1 as if such institution were the Indenture Trustee, except
that the Indenture Trustee shall continue to be the "entitlement
holder" of the related Trust Account.
(iii) With respect to any Trust Account Property held from
time to time in any Trust Account, the Indenture Trustee agrees
that (A) such Trust Account Property shall at all times be
credited in the Indenture Trustee's books and records to the
relevant Trust Account, (B) any Eligible Investment constituting
a deposit account shall be, except as otherwise provided herein,
subject to the exclusive custody and control of the Indenture
Trustee, and, if the Indenture Trustee is not the depositary bank
with which such deposit account is maintained, the Indenture
Trustee shall be the depositary bank's customer with respect
thereto, and (C) any Eligible Investment other than a deposit
account shall be held, pending maturity or disposition by the
Indenture Trustee, in accordance with the relevant terms of the
definition of "Delivery." The Indenture Trustee acknowledges and
agrees that each item of property (whether investment property,
financial asset, security, instrument, cash or any other type of
property) credited to a Trust Account shall be treated as a
"financial asset" within the meaning of Article 8 of the UCC.
(b) Except as otherwise provided in the Series Supplement,
funds on deposit in the Trust Accounts shall be invested by the Indenture
Trustee (or any custodian with respect to funds on deposit in any such account)
in Eligible Investments selected in writing by the Master Servicer (pursuant to
standing instructions or otherwise) which absent any instruction shall be the
investments specified in clause (d) of the definition of Eligible Investments
set forth herein. Unless otherwise agreed in writing by the Rating Agencies and
the Insurer, funds on deposit in any Trust Account shall be invested in Eligible
Investments that will mature so that such funds will be available at the close
of business on the Business Day immediately preceding the following Distribution
Date. Funds deposited in a Trust Account on the day immediately preceding a
Distribution Date and representing the proceeds of Eligible Investments are
required to be held overnight in an Eligible Deposit Account and a portion of
the earnings on such overnight deposits in accordance with the agreed upon
Indenture Trustee Fee shall be included in Available Funds (as defined in the
Series Supplement) for the succeeding Distribution Date. All Eligible
Investments will be held to maturity.
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(c) All investment earnings of monies deposited in the Trust
Accounts shall be deposited (or caused to be deposited) by the Indenture Trustee
in the Collection Account no later than the close of business on the Business
Day immediately preceding the related Distribution Date, and any loss resulting
from such investments shall be charged to the Collection Account. The Master
Servicer will not direct the Indenture Trustee to make any investment of any
funds held in any of the Trust Accounts unless the security interest granted and
perfected in such account will continue to be perfected in such investment, in
either case without any further action by any Person, and, in connection with
any direction to the Indenture Trustee, to make any such investment, if
necessary, the Master Servicer shall deliver to the Indenture Trustee an Opinion
of Counsel to such effect.
(d) The Indenture Trustee shall not in any way be held liable
by reason of any insufficiency in any of the Trust Accounts resulting from any
loss on any Eligible Investment included therein except for losses attributable
to the Indenture Trustee's negligence or bad faith or its failure to make
payments on such Eligible Investments issued by the Indenture Trustee in its
commercial capacity as principal obligor and not as Indenture Trustee in
accordance with their terms.
(e) If (i) the Master Servicer shall have failed to give
investment directions for any funds on deposit in the Trust Accounts to the
Indenture Trustee by 2:00 p.m. Eastern Time (or such other time as may be agreed
by the Issuer and the Indenture Trustee) on any Business Day; or (ii) an Event
of Default shall have occurred and be continuing, the Indenture Trustee shall,
to the fullest extent practicable, invest and reinvest funds in the Trust
Accounts in one or more Eligible Investments in accordance with paragraph (b)
above; PROVIDED that, if following an Event of Default amounts are to be
distributed to Securityholders other than on a Distribution Date, investments
shall mature on the Business Day preceding any such proposed date of
distribution.
(f) The Indenture Trustee shall possess all right, title and
interest in all funds on deposit from time to time in the Trust Accounts and in
all proceeds thereof and all such funds, investments, proceeds and income shall
be part of the Series Trust Estate. Except as otherwise provided herein, the
Trust Accounts shall be under the sole dominion and control of the Indenture
Trustee for the benefit of the Secured Parties. If, at any time, any Trust
Account ceases to be an Eligible Deposit Account, the Indenture Trustee (or the
Master Servicer on its behalf) shall within five Business Days (or such longer
period as to which each Rating Agency [and the Insurer (for so long as it is the
Controlling Party) ]may consent) establish a new Trust Account as an Eligible
Deposit Account and shall transfer any cash and/or any investments to such new
Trust Account. In connection with the foregoing, the Master Servicer agrees
that, in the event that any of the Trust Accounts are not accounts with the
Indenture Trustee, the Master Servicer shall notify the Indenture Trustee [and
the Insurer ]in writing promptly upon any of such Trust Accounts ceasing to be
an Eligible Deposit Account. The Master Servicer may net against any deposits
required to be made to the Collection Account on the Business Day before any
Determination Date amounts that the Seller, as Certificateholder or otherwise,
is entitled to receive as distributions from the Collection Account on the
related Distribution Date.
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SECTION 5.2. CERTAIN REIMBURSEMENTS TO THE MASTER SERVICER. The
Master Servicer shall be entitled to withhold from amounts otherwise required to
be remitted to the Collection Account with respect to a Collection Period an
amount in respect of funds deposited with respect to prior Collection Periods in
the Collection Account but later determined by the Master Servicer to have
resulted from mistaken deposits or postings or checks returned for insufficient
funds; PROVIDED, THAT, such withholding may be made only following certification
by the Master Servicer of such amounts and the provision of such information to
the Indenture Trustee as may be necessary in the opinion of the Indenture
Trustee to verify the accuracy of such certification.
SECTION 5.3. APPLICATION OF COLLECTIONS. All collections for the
Collection Period shall be applied by the Master Servicer as follows: with
respect to each Simple Interest Receivable (other than a Repurchased
Receivable), payments by or on behalf of the Obligor (other than amounts, if
any, collected with respect to administrative fees, including late fees,
prepayment fees and liquidation fees collected on the Receivable) shall be
applied to interest and principal in accordance with the Simple Interest Method.
With respect to each Actuarial Receivable, (other than a Repurchased
Receivable), payments by or on behalf of the Obligor (other than amounts, if
any, collected with respect to administrative fees, including late fees,
prepayment fees and liquidation fees collected on the Receivable) shall be
applied to interest and principal in accordance with the Actuarial Method.
SECTION 5.4. ADDITIONAL DEPOSITS HAFC, any Affiliate of HAFC that
is the seller under a Master Receivables Purchase Agreement, Household Finance
Corporation and the Seller, as applicable, shall deposit or cause to be
deposited in the Collection Account on the Business Day preceding the
Distribution Date following the date on which such obligations are due the
aggregate Repurchase Amount with respect to Repurchased Receivables.
(b) The Master Servicer agrees for the benefit of the
Indenture Trustee that any amounts payable by the Master Servicer to the Seller
under the Master Receivables Purchase Agreement to which the Master Servicer is
a party which are to be paid by the Seller to the Indenture Trustee for the
benefit of the Secured Parties shall be paid by the Master Servicer, on behalf
of the Seller, directly to the Indenture Trustee.
SECTION 5.5. DISTRIBUTIONS. HAFC, any Affiliate of HAFC that is
the seller under a Master Receivables Purchase Agreement, Household Finance
Corporation and the Seller, as applicable, shall deposit or cause to be
deposited in the Collection Account on the Business Day preceding the
Distribution Date following the date on which such obligations are due the
aggregate Repurchase Amount with respect to Repurchased Receivables.
(b) The Master Servicer agrees for the benefit of the
Indenture Trustee that any amounts payable by the Master Servicer to the Seller
under the Master Receivables Purchase Agreement to which the Master Servicer is
a party which are to be
38
paid by the Seller to the Indenture Trustee for the benefit of the Secured
Parties shall be paid by the Master Servicer, on behalf of the Seller, directly
to the Indenture Trustee.
ARTICLE VI
RESERVED
ARTICLE VII
RESERVED
ARTICLE VIII
THE SELLER
SECTION 8.1. REPRESENTATIONS OF SELLER. The Seller makes the
following representations on which the Issuer is deemed to have relied in
acquiring the Receivables and on which the Noteholders are deemed to have relied
in the purchasing of Notes and any Additional Principal Amount and on which each
Support Provider shall be deemed to have relied in providing the Series Support.
Except as otherwise specifically provided, the representations speak as of the
Closing Date and as of each Transfer Date and shall survive each sale of the
Receivables to the Issuer and each pledge thereof to the Indenture Trustee
pursuant to the Indenture and the Series Supplement.
(a) REPRESENTATIONS IN TRANSFER AGREEMENT. The representations
and warranties set forth in the Eligibility Criteria attached as Schedule I to
the Series Supplement are true and correct with respect to the Receivables
included in the Series Trust Estate.
(b) ORGANIZATION AND GOOD STANDING. The Seller has been duly
organized and is validly existing as a corporation in good standing under the
laws of the State of Nevada, with power and authority to own its properties and
to conduct its business as such properties are currently owned and such business
is currently conducted, and had at all relevant times, and now has, power,
authority and legal right to acquire, own and sell the Owner Trust Estate
transferred to the Trust.
(c) DUE QUALIFICATION. The Seller is duly qualified to do
business as a foreign corporation in good standing and has obtained all
necessary licenses and approvals in all jurisdictions where the failure to do so
would materially and adversely affect Seller's ability to transfer the
Receivables and the Other Conveyed Property to the Trust pursuant to this
Agreement, or the validity or enforceability of the Receivables and the Other
Conveyed Property or to perform Seller's obligations hereunder and under the
Related Documents to which the Seller is a party.
(d) POWER AND AUTHORITY. The Seller has the power and
authority to execute and deliver this Agreement and the Related Documents to
which it is a party
39
and to carry out its terms and their terms, respectively; the Seller has full
power and authority to sell and assign the Owner Trust Estate to be sold and
assigned to and deposited with the Trust by it and has duly authorized such sale
and assignment to the Trust by all necessary corporate action; and the
execution, delivery and performance of this Agreement and the Related Documents
to which the Seller is a party have been duly authorized by the Seller by all
necessary corporate action.
(e) VALID SALE, BINDING OBLIGATIONS. This Agreement and each
related Transfer Agreement effects a valid sale, transfer and assignment of the
Owner Trust Estate, enforceable against the Seller and creditors of and
purchasers from the Seller; and this Agreement and the Related Documents to
which the Seller is a party, when duly executed and delivered, shall constitute
legal, valid and binding obligations of the Seller enforceable in accordance
with their respective terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally and by equitable limitations on the
availability of specific remedies, regardless of whether such enforceability is
considered in a proceeding in equity or at law.
(f) NO VIOLATION. The consummation of the transactions
contemplated by this Agreement and the Related Documents and the fulfillment of
the terms of this Agreement and the Related Documents shall not (A) conflict
with, result in any breach of any of the terms and provisions of, or constitute
(with or without notice, lapse of time or both) a default under, the articles of
incorporation or by-laws of the Seller, or any indenture, agreement, mortgage,
deed of trust or other instrument to which the Seller is a party or by which it
is bound, (B) result in the creation or imposition of any Lien upon any of its
properties pursuant to the terms of any such indenture, agreement, mortgage,
deed of trust or other instrument, other than this Agreement, or (C) violate any
law, order, rule or regulation applicable to the Seller of any court or of any
federal or state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Seller or any of its properties,
except in the case of (A), (B) or (C) where any such default, Lien or violation
shall not materially and adversely affect the interest of the Noteholders[, the
Insurer] or the Trust in the Series Trust Estate.
(g) NO PROCEEDINGS. There are no proceedings or investigations
pending or, to the Seller's knowledge, threatened against the Seller, before any
court, regulatory body, administrative agency or other tribunal or governmental
instrumentality having jurisdiction over the Seller or its properties (A)
asserting the invalidity of this Agreement or any of the Related Documents, (B)
seeking to prevent the issuance of any Securities or the consummation of any of
the transactions contemplated by this Agreement or any of the Related Documents,
(C) seeking any determination or ruling that might materially and adversely
affect the performance by the Seller of its obligations under, or the validity
or enforceability of, this Agreement or any of the Related Documents, or (D)
seeking to adversely affect the federal income tax or other federal, state or
local tax attributes of the Securities.
(h) APPROVALS. All approvals, authorizations, consents, orders
or other actions of any person, corporation or other organization, or of any
court,
40
governmental agency or body or official, required in connection with the
execution and delivery by the Seller of this Agreement and the other Related
Documents to which it is a party, and the consummation of the transactions
contemplated hereby and thereby have been or will be taken or obtained on or
prior to the Closing Date and each Transfer Date.
(i) NO CONSENTS. The Seller is not required to obtain the
consent of any other party or any consent, license, approval or authorization,
or registration or declaration with, any governmental authority, bureau or
agency in connection with the execution, delivery, performance, validity or
enforceability of this Agreement which has not already been obtained.
(j) CHIEF EXECUTIVE OFFICE. The chief executive office of the
Seller is at 0000 Xxxx Xxxxxx Xxxxx, Xxx Xxxxx, Xxxxxx 00000.
SECTION 8.2. CORPORATE EXISTENCE. (a) During the term of this
Agreement, the Seller will keep in full force and effect its existence, rights
and franchises as a corporation under the laws of the jurisdiction of its
incorporation and will obtain and preserve its qualification to do business in
each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of this Agreement, the Related Documents
and each other instrument or agreement necessary or appropriate to the proper
administration of this Agreement and the transactions contemplated hereby.
(b) During the term of this Agreement, the Seller shall
observe the applicable legal requirements for the recognition of the Seller as a
legal entity separate and apart from its Affiliates, including as follows:
(i) the Seller shall not engage in any other business
other than as provided in Article THIRD of Seller's Articles of
Incorporation;
(ii) the Seller shall maintain corporate records and books
of account separate from those of its Affiliates;
(iii) except as otherwise provided in this Agreement, the
Seller shall not commingle its assets and funds with those of its
Affiliates;
(iv) the Seller shall hold such appropriate meetings of
its Board of Directors as are necessary to authorize all the
Seller's corporate actions required by law to be authorized by
the Board of Directors, shall keep minutes of such meetings and
of meetings of its stockholder(s), or shall obtain written
consents in lieu of formal meetings of its Board of Directors or
stockholders, and observe all other customary corporate
formalities (and any successor Seller that is not a corporation
shall observe similar procedures in accordance with its governing
documents and applicable law);
41
(v) the Seller shall at all times hold itself out to the
public under the Seller's own name as a legal entity separate and
distinct from its Affiliates;
(vi) the Seller shall not become involved in the
day-to-day management of any other Person;
(vii) the Seller shall not guarantee any other Person's
obligations or advance funds to any other Person for the payment
of expenses or otherwise;
(viii) the Seller shall not act as an agent of any other
Person in any capacity;
(ix) the Seller shall not dissolve or liquidate, in whole
or in part; and
(x) all transactions and dealings between the Seller and
its Affiliates will be conducted on an arm's-length basis.
(c) During the term of this Agreement, the Seller will comply
with the limitations on its business and activities, as set forth in its
Articles of Incorporation, and will not incur indebtedness other than pursuant
to or as expressly permitted by the Related Documents.
(d) During the term of this Agreement, the Seller will ensure
that its corporate records indicate that the Indenture Trustee has the exclusive
right to vote the Class SV Preferred Stock.
SECTION 8.3. LIABILITY OF SELLER; INDEMNITIES. The Seller shall be
liable in accordance herewith only to the extent of the obligations specifically
undertaken under this Agreement by the Seller and the representations made by
the Seller under this Agreement.
(a) The Seller shall indemnify, defend and hold harmless the
Issuer, [the Insurer, ]the Owner Trustee and the Indenture Trustee from and
against any taxes that may at any time be asserted against any such Person with
respect to the transactions contemplated in this Agreement and any of the Basic
Documents (except any income taxes arising out of fees paid to the Owner Trustee
or the Indenture Trustee and except any taxes to which the Owner Trustee or the
Indenture Trustee may otherwise be subject to), including any sales, gross
receipts, general corporation, tangible personal property, privilege or license
taxes (but, in the case of the Issuer, not including any taxes asserted with
respect to, federal or other income taxes arising out of distributions on the
Certificates and the Notes) and costs and expenses in defending against the
same.
(b) The Seller shall indemnify, defend and hold harmless the
Issuer, the Owner Trustee and the Indenture Trustee against any loss, liability
or expense incurred by reason of (i) the Seller's willful misfeasance, bad faith
or negligence in the
42
performance of its duties under this Agreement, or by reason of reckless
disregard of its obligations and duties under this Agreement and (ii) the
Seller's or the Issuer's violation of Federal or state securities laws in
connection with the offering and sale of the Notes.
(c) The Seller shall indemnify, defend and hold harmless the
Owner Trustee and the Indenture Trustee and their respective officers,
directors, employees and agents from and against any and all costs, expenses,
losses, claims, damages and liabilities arising out of, or incurred in
connection with, the acceptance or performance of the trusts and duties set
forth herein and in the Basic Documents, except to the extent that such cost,
expense, loss, claim, damage or liability shall be due to the willful
misfeasance, bad faith or negligence (except for errors in judgment) of the
Person seeking indemnification.
Indemnification under this Section shall survive the resignation or
removal of the Owner Trustee or the Indenture Trustee and the termination of
this Agreement or the Indenture or the Trust Agreement, as applicable, and shall
include reasonable fees and expenses of counsel and other expenses of
litigation. If the Seller shall have made any indemnity payments pursuant to
this Section and the Person to or on behalf of whom such payments are made
thereafter shall collect any of such amounts from others, such Person shall
promptly repay such amounts to the Seller, without interest.
SECTION 8.4. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, SELLER. Any Person (a) into which the Seller may be merged or
consolidated, (b) which may result from any merger or consolidation to which the
Seller shall be a party or (c) which may succeed to the properties and assets of
the Seller substantially as a whole, which Person in any of the foregoing cases
(x) has articles of incorporation containing provisions relating to limitations
on business and other matters substantially identical to those contained in the
Seller's articles of incorporation and (y) executes an agreement of assumption
to perform every obligation of the Seller under this Agreement and the other
Related Documents shall be the successor to the Seller hereunder without the
execution or filing of any document or any further act by any of the parties to
this Agreement; PROVIDED, HOWEVER, that [the Insurer (for so long as it is the
Controlling Party) shall have consented to such action and ]written confirmation
shall be received by the Indenture Trustee [and the Insurer ]from each Rating
Agency rating the Notes that the then current rating of the Notes will not be
withdrawn, downgraded or suspended as a result of any action described in this
Section 8.4.
SECTION 8.5. LIMITATION ON LIABILITY OF SELLER AND OTHERS. The
Seller and any director or officer or employee or agent of the Seller may rely
in good faith on the written advice of counsel or on any document of any kind,
prima facie properly executed and submitted by any Person respecting any matters
arising under any Basic Document. The Seller shall not be under any obligation
to appear in, prosecute or defend any legal action that shall not be incidental
to its obligations under this Agreement, and that in its opinion may involve it
in any expense or liability. Except as provided in Section 8.3 hereof, neither
the Seller nor any of the directors, officers, employees or agents of the Seller
acting in such capacities shall be under any liability to the Trust, the
Securityholders, any Support Provider or any other Person for any action taken
or for
43
refraining from the taking of any action in good faith in such capacities
pursuant to this Agreement; provided, however, that this provision shall not
protect the Seller or any such person against any liability which would
otherwise be imposed by reason of willful misfeasance, bad faith or negligence
in the performance of duties or by reason of reckless disregard of obligations
and duties hereunder.
(b) All obligations of the Seller under this Agreement
(including, but not limited to, repurchase and indemnification obligations) and
under any of the Related Documents shall be limited in recourse to property, if
any, which the Seller may hold from time to time, not subject to any Lien.
SECTION 8.6. SELLER MAY OWN CERTIFICATES OR NOTES. The Seller and
any Affiliate thereof may in its individual or any other capacity become the
owner or pledgee of Certificates or Notes with the same rights as it would have
if it were not the Seller or an Affiliate thereof, except as expressly provided
herein or in any Basic Document. Notes or Certificates so owned by the Seller or
such Affiliate shall have an equal and proportionate benefit under the
provisions of the Basic Documents, without preference, priority, or distinction
as among all of the Notes or Certificates; PROVIDED, HOWEVER, [(i)] except in
the event that all outstanding Notes and Certificates are owned by the Seller
and/or any Affiliate thereof, that any Notes or Certificates owned by the Seller
or any Affiliate thereof, during the time such Notes or Certificates are owned
by them, shall be without voting rights for any purpose set forth in the Basic
Documents[ and (ii) any such Notes or Certificates owned by the Seller or any
Affiliate thereof, during the time such Notes or Certificates are owned by them,
will not be entitled to the benefits of the Note Policy]. The Seller shall
notify the Owner Trustee[, the Insurer] and the Indenture Trustee promptly after
it or any of its Affiliates become the owner or pledgee of a Certificate or a
Note.
ARTICLE IX
THE MASTER SERVICER
SECTION 9.1. REPRESENTATIONS OF MASTER SERVICER. The Master
Servicer makes the following representations on which the Issuer is deemed to
have relied in acquiring the Owner Trust Estate, on which the Noteholders are
deemed to have relied in the purchasing of Notes and any Additional Principal
Amount, and on which Support Provider shall be deemed to have relied in
providing the Series Support. The representations speak as of the execution and
delivery of this Agreement, the Closing Date and as of each Transfer Date and
shall survive the sale of the Owner Trust Estate to the Issuer and the pledge of
the Series Trust Estate to the Indenture Trustee pursuant to the Indenture.
(i) ORGANIZATION AND GOOD STANDING. The Master Servicer
has been duly organized and is validly existing and in good
standing under the laws of its jurisdiction of organization, with
power, authority and legal right to own its properties and to
conduct its business as such properties are currently owned and
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such business is currently conducted, and had at all relevant
times, and now has, power, authority and legal right to enter
into and perform its obligations under this Agreement and the
other Related Documents to which it is a party.
(ii) DUE QUALIFICATION. The Master Servicer is duly
qualified to do business as a foreign corporation in good
standing and has obtained all necessary licenses and approvals,
in all jurisdictions in which the ownership or lease of property
or the conduct of its business (including the servicing of the
Receivables as required by this Agreement) requires or shall
require such qualification; except where the failure to qualify
or obtain licenses or approvals would not have a material adverse
effect on its ability to perform its obligations as Master
Servicer under this Agreement and the other Related Documents to
which it is a party.
(iii) POWER AND AUTHORITY. The Master Servicer has the
power and authority to execute and deliver this Agreement and the
Basic Documents to which it is a party and to carry out its terms
and their terms, respectively, and the execution, delivery and
performance of this Agreement and the Related Documents to which
the Master Servicer is a party have been duly authorized by the
Master Servicer by all necessary corporate action.
(iv) BINDING OBLIGATION. This Agreement and the Basic
Documents to which the Master Servicer is a party shall
constitute legal, valid and binding obligations of the Master
Servicer enforceable in accordance with their respective terms,
except as enforceability may be limited by bankruptcy,
insolvency, reorganization, or other similar laws affecting the
enforcement of creditors' rights generally and by equitable
limitations on the availability of specific remedies, regardless
of whether such enforceability is considered in a proceeding in
equity or at law.
(v) NO VIOLATION. The consummation of the transactions
contemplated by this Agreement and the Related Documents to which
the Master Servicer is a party, and the fulfillment of the terms
of this Agreement and the Related Documents to which the Master
Servicer is a party, shall not (A) conflict with, result in any
breach of any of the terms and provisions of, or constitute (with
or without notice or lapse of time) a default under, the articles
of incorporation or bylaws of the Master Servicer, or any
indenture, agreement, mortgage, deed of trust or other instrument
to which the Master Servicer is a party or by which it is bound,
(B) result in the creation or imposition of any Lien upon any of
its properties pursuant to the terms of any such indenture,
agreement, mortgage, deed of trust or other instrument, or (C)
violate any law, order, rule
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or regulation applicable to the Master Servicer of any court or
of any federal or state regulatory body, administrative agency or
other governmental instrumentality having jurisdiction over the
Master Servicer or any of its properties, except in the case of
(A), (B) or (C) where any such default, Lien or violation shall
not materially and adversely affect the interest of the
Noteholders[, the Insurer] or the Trust in the Series Trust
Estate or affect the Master Servicer's ability to perform its
obligations under this Agreement.
(vi) NO PROCEEDINGS. There are no proceedings or
investigations pending or, to the Master Servicer's knowledge,
threatened against the Master Servicer, before any court,
regulatory body, administrative agency or other tribunal or
governmental instrumentality having jurisdiction over the Master
Servicer or its properties (A) asserting the invalidity of this
Agreement or any of the Related Documents, (B) seeking to prevent
the issuance of the Securities or the consummation of any of the
transactions contemplated by this Agreement or any of the Related
Documents, or (C) seeking any determination or ruling that might
materially and adversely affect the performance by the Master
Servicer of its obligations under, or the validity or
enforceability of, this Agreement or any of the Related Documents
or (D) seeking to adversely affect the federal income tax or
other federal, state or local tax attributes of the Securities.
(vii) APPROVALS. All approvals, authorizations, consents,
orders or other actions of any person, corporation or other
organization, or of any court, governmental agency or body or
official, required in connection with the execution and delivery
by the Master Servicer of this Agreement and the consummation of
the transactions contemplated hereby have been or will be taken
or obtained on or prior to the Closing Date.
(viii) NO CONSENTS. The Master Servicer is not required to
obtain the consent of any other party or any consent, license,
approval or authorization, or registration or declaration with,
any governmental authority, bureau or agency in connection with
the execution, delivery, performance, validity or enforceability
of this Agreement which has not already been obtained.
(ix) CHIEF EXECUTIVE OFFICE. The chief executive office of
the Master Servicer is located at 0000 Xxxxxxx Xxxx, Xxxxxxxx
Xxxxxxx, Xxxxxxxx 00000.
SECTION 9.2. LIABILITY OF MASTER SERVICER; INDEMNITIES. The
Master Servicer (in its capacity as such) shall be liable hereunder only to the
extent of the
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obligations in this Agreement specifically undertaken by the Master Servicer and
the representations made by the Master Servicer.
(b) The Master Servicer shall defend, indemnify and hold
harmless the Trust, the Indenture Trustee, the Owner Trustee, each Support
Provider and their respective officers, directors, agents and employees, from
and against any and all costs, expenses, losses, damages, claims and
liabilities, including reasonable fees and expenses of counsel and expenses of
litigation arising out of or resulting from the use, ownership or operation of,
or lien on, any Financed Vehicle.
(c) The Master Servicer (when the Master Servicer is Household
Finance Corporation or an Affiliate of Household Finance Corporation) shall
indemnify, defend and hold harmless the Trust, the Indenture Trustee, the Owner
Trustee, each Support Provider and their respective officers, directors, agents
and employees and from and against any taxes that may at any time be asserted
against any of such parties with respect to the transactions contemplated in
this Agreement, including, without limitation, any sales, gross receipts,
tangible or intangible personal property, privilege or license taxes (but not
including any federal or other income taxes) and costs and expenses in defending
against the same, except to the extent that such costs, expenses, losses,
damages, claims and liabilities arise out of the negligence or willful
misconduct of such parties.
(d) The Master Servicer (when the Master Servicer is not
Household Finance Corporation) shall indemnify, defend and hold harmless the
Trust, the Indenture Trustee, the Owner Trustee, each Support Provider and their
respective officers, directors, agents and employees from and against any taxes
with respect to the sale of Receivables in connection with servicing hereunder
that may at any time be asserted against any of such parties with respect to the
transactions contemplated in this Agreement, including, without limitation, any
sales, gross receipts, tangible or intangible personal property, privilege or
license taxes (but not including any federal or other income taxes) and costs
and expenses in defending against the same, except to the extent that such
costs, expenses, losses, damages, claims and liabilities arise out of the
negligence or willful misconduct of such parties.
(e) The Master Servicer shall indemnify, defend and hold
harmless the Trust, the Indenture Trustee, the Owner Trustee, each Support
Provider and their respective officers, directors, agents and employees from and
against any and all costs, expenses, losses, claims, damages, and liabilities to
the extent that such cost, expense, loss, claim, damage, or liability arose out
of, or was imposed upon the Trust, the Owner Trustee or the Indenture Trustee,
and the Insurer (to the extent provided in the Insurance Agreement), by reason
of the breach of this Agreement by the Master Servicer, the negligence,
misfeasance, or bad faith of the Master Servicer in the performance of its
duties under this Agreement or the Series Supplement or by reason of reckless
disregard of its obligations and duties under this Agreement or the Series
Supplement, except to the extent that such costs, expenses, losses, damages,
claims, and liabilities arise out of the negligence or willful misconduct of the
Person seeking indemnification.
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(f) The Master Servicer (when the Master Servicer is Household
Finance Corporation or an Affiliate of Household Finance Corporation) shall
indemnify, defend and hold harmless the Trust, the Indenture Trustee, the Owner
Trustee[, the Insurer (to the extent provided in the Insurance Agreement)] and
their respective officers, directors, agents and employees from and against any
loss, liability or expense incurred by reason of the violation by Master
Servicer of federal or state securities laws in connection with the registration
or the sale of the Securities, except to the extent that such costs, expenses,
losses, damages, claims, and liabilities arise out of the negligence or willful
misconduct of such parties.
(g) Indemnification under this Article shall survive the
termination of this Agreement and will survive the early resignation or removal
of any of the parties hereto and shall include, without limitation, reasonable
fees and expenses of counsel and expenses of litigation. If the Master Servicer
has made any indemnity payments pursuant to this Article and the recipient
thereafter collects any of such amounts from others, the recipient shall
promptly repay such amounts collected to the Master Servicer, without interest.
Notwithstanding any other provision of this Agreement, the obligations of the
Master Servicer shall not terminate or be deemed released upon the resignation
or termination of Household Finance Corporation as the Master Servicer and shall
survive any termination of this Agreement.
SECTION 9.3. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF THE MASTER SERVICER. Any Person (i) into which the Master
Servicer may be merged or consolidated, (ii) resulting from any merger or
consolidation to which the Master Servicer shall be a party, (iii) which
acquires by conveyance, transfer, or lease substantially all of the assets of
the Master Servicer, or (iv) succeeding to the business of the Master Servicer,
in any of the foregoing cases shall execute an agreement of assumption to
perform every obligation of the Master Servicer under this Agreement and each
Related Document and, whether or not such assumption agreement is executed,
shall be the successor to the Master Servicer under this Agreement and each
Related Document without the execution or filing of any paper or any further act
on the part of any of the parties to this Agreement or the Series Supplement,
anything in this Agreement or the Series Supplement to the contrary
notwithstanding. Notwithstanding the foregoing, the Master Servicer shall not
merge or consolidate with any other Person or permit any other Person to become
a successor to the Master Servicer's business, unless the Master Servicer shall
have delivered to the Owner Trustee[, the Insurer] and the Indenture Trustee an
Officer's Certificate and an Opinion of Counsel each stating that such
consolidation, merger or succession and such agreement of assumption comply with
this Section 9.3 and that all conditions precedent, if any, provided for in this
Agreement relating to such transaction have been complied with.
SECTION 9.4. LIMITATION ON LIABILITY OF MASTER SERVICER AND
OTHERS. Neither the Master Servicer, the Indenture Trustee nor any of the
directors or officers or employees or agents of any such Persons shall be under
any liability to the Trust, except as provided in this Agreement and each
Related Document, for any action taken or for refraining from the taking of any
action pursuant to this Agreement or a Related Document; PROVIDED, HOWEVER, that
this provision shall not protect the Master
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Servicer, the Indenture Trustee or any such Persons against any liability that
would otherwise be imposed by reason of willful misfeasance, bad faith or
negligence (excluding errors in judgment) in the performance of duties
(including negligence with respect to the Master Servicer's indemnification
obligations hereunder), by reason of reckless disregard of obligations and
duties under this Agreement and each Related Document or any violation of law by
the Master Servicer, the Indenture Trustee or such person, as the case may be;
PROVIDED, FURTHER, that this provision shall not affect any liability to
indemnify the Indenture Trustee or the Owner Trustee for costs, taxes, expenses,
claims, liabilities, losses or damages paid by the Indenture Trustee or the
Owner Trustee, in their individual capacities. The Master Servicer, the
Indenture Trustee and any director, officer, employee or agent of such Persons
may rely in good faith on the written advice of counsel or on any document of
any kind prima facie properly executed and submitted by any Person pertaining to
any matters arising under this Agreement. The Indenture Trustee shall not be
required to expend or risk its own funds or otherwise incur financial liability
in the performance of any of its duties hereunder, or in the exercise of any of
its rights or powers, if the repayment of such funds or adequate written
indemnity against such risk or liability is not reasonably assured to it in
writing prior to the expenditure of risk of such funds or incurrence of
financial liability.
(b) Unless serving as Successor Master Servicer pursuant to
Sections 10.2 and 10.3 hereof, and notwithstanding any other provision to the
contrary herein, the Indenture Trustee shall not be liable for any obligation of
the Master Servicer contained in this Agreement or any Related Document, and the
Owner Trustee, the Seller and the Noteholders shall look only to the Master
Servicer to perform such obligations.
(c) The parties expressly acknowledge and consent to the
initial Indenture Trustee acting in the potential dual capacity of successor
Master Servicer and in the capacity as Indenture Trustee. Such Indenture Trustee
may, in such dual or other capacity, discharge its separate functions fully,
without hindrance or regard to conflict of interest principles, duty of loyalty
principles or other breach of fiduciary duties to the extent that any such
conflict or breach arises from the performance by such Indenture Trustee of
express duties set forth in this Agreement in any of such capacities, all of
which defenses, claims or assertions are hereby expressly waived by the other
parties hereto and the Noteholders except in the case of negligence or willful
misconduct by such Indenture Trustee.
SECTION 9.5. DELEGATION OF DUTIES. Subject to Section 9.7, in the
ordinary course of business, the Master Servicer and the Subservicer, provided
it is HAFC, at any time may delegate any of their duties hereunder to any
Person, including any of their Affiliates, who agrees to conduct such duties in
accordance with standards employed by the Master Servicer or such Subservicer in
compliance with Section 4.1. Such delegation shall not relieve the Master
Servicer of its liabilities and responsibilities with respect to such duties and
shall not constitute a resignation within the meaning of Section 9.6.
SECTION 9.6. MASTER SERVICER NOT TO RESIGN. Subject to the
provisions of Section 9.3, the Master Servicer shall not resign from the
obligations and duties hereby
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imposed on it except (i) upon determination that the performance of its
obligations or duties hereunder are no longer permissible under applicable law
or are in material conflict by reason of applicable law with any other
activities carried on by it or its subsidiaries or Affiliates or (ii) upon
satisfaction of the following conditions: (a) the Master Servicer has proposed a
successor servicer to the Indenture Trustee [and the Insurer (for so long as it
is the Controlling Party)] in writing and such proposed successor servicer is
reasonably acceptable to the Indenture Trustee[, the Insurer (for so long as it
is the Controlling Party) ]and the Administrative Agent, where one exists, or
otherwise, the Managing Agents; (b) such proposed successor servicer has agreed
in writing to assume the obligations of Master Servicer hereunder and under each
Basic Document to which it is a party and (c) the Master Servicer has delivered
to the Indenture Trustee [and the Insurer ]an Opinion of Counsel to the effect
that all conditions precedent to the resignation of the Master Servicer and the
appointment of and acceptance by the proposed successor servicer have been
satisfied; PROVIDED, HOWEVER, that, in the case of clause (i) above, no such
resignation by the Master Servicer shall become effective until the Indenture
Trustee shall have assumed the Master Servicer's responsibilities and
obligations hereunder or the Indenture Trustee shall have designated a successor
servicer [reasonably acceptable to the Insurer (for as long as it is the
Controlling Party) ]in accordance with Section 10.3 which shall have assumed
such responsibilities and obligations. Any such resignation shall not relieve
the Master Servicer of responsibility for any of its obligations hereunder
arising prior to the effective date of such resignation. Any such determination
permitting the resignation of the Master Servicer pursuant to clause (i) above
shall be evidenced by an Opinion of Counsel to such effect delivered to the
Indenture Trustee[ and the Insurer].
SECTION 9.7. SUB-SERVICING AGREEMENTS BETWEEN MASTER SERVICER AND
SUBSERVICERS. The Master Servicer initially appoints HAFC to subservice the
Receivables. From time to time after the Closing Date, the Master Servicer may
enter into a subservicing agreement with any Person other than HAFC which is an
Eligible Subservicer and is in compliance with the laws of each state necessary
to enable it to perform the obligations of the Master Servicer pursuant to this
Agreement. Any such subservicing agreement shall be consistent with and not
violate the provisions of this Agreement. The Master Servicer shall not be
relieved of its obligations under this Agreement and each Basic Document to
which it is a party notwithstanding any agreement relating to subservicing and
the Master Servicer shall be obligated to the same extent and under the same
terms and conditions as if it alone were servicing and administering the
Receivables. For purposes of this Agreement and each Related Document, the
Master Servicer shall be deemed to have received payments on Receivables when
any Subservicer has received such payments. The parties hereto acknowledge that
with respect to statements or certificates required to be delivered by the
Master Servicer in accordance with this Agreement and the Series Supplement,
including, but not limited to, Sections 4.9, 4.10 and 4.11 hereof, that a
statement or certificate delivered by a subservicer shall be sufficient to
discharge the Master Servicer's obligation to deliver such certificate or
statement.
SECTION 9.8. SUCCESSOR SUBSERVICERS. The Master Servicer may
terminate any Subservicer and either directly service the related Receivables
itself or
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enter into an agreement with a successor Subservicer that is an Eligible
Subservicer. Neither the Owner Trustee nor the Indenture Trustee shall have a
duty or obligation to monitor or supervise the performance of any Subservicer.
ARTICLE X
DEFAULT
SECTION 10.1. MASTER SERVICER TERMINATION EVENT. For purposes of
this Agreement, each of the following shall constitute a "Master Servicer
Termination Event":
(a) Any failure by the Master Servicer to deliver, or cause to
be delivered, to the Indenture Trustee for distribution pursuant to the terms of
this Agreement or any Basic Document, any proceeds or payment required to be so
delivered by the Master Servicer under the terms of this Agreement or any Basic
Document (including deposits of the Repurchase Amount pursuant to Section 4.7)
that continues unremedied for a period of three Business Days after written
notice is received by the Master Servicer from the Indenture Trustee [or the
Insurer ]or after discovery of such failure by a responsible officer of the
Master Servicer (but in no event later than three Business Days after the Master
Servicer is required to make such delivery or deposit);
(b) Failure on the part of the Master Servicer duly to observe
or perform any other covenants or agreements of the Master Servicer set forth in
this Agreement or the Basic Documents, which failure (i) materially and
adversely affects the rights of Noteholders (determined without regard to the
availability of funds under any Series Support) [or the Insurer ]and (ii)
continues unremedied for a period of 60 days after the date on which written
notice of such failure, requiring the same to be remedied, shall have been given
to the Master Servicer by the Indenture Trustee [or the Insurer ]or after
discovery thereof by the Master Servicer;
(c) The entry of a decree or order for relief by a court or
regulatory authority having jurisdiction in respect of the Master Servicer in an
involuntary case under the federal bankruptcy laws, as now or hereafter in
effect, or another present or future, federal bankruptcy, insolvency or similar
law, or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Master Servicer or of any
substantial part of its property or ordering the winding up or liquidation of
the affairs of the Master Servicer or the commencement of an involuntary case
under the federal bankruptcy laws, as now or hereinafter in effect, or another
present or future federal or state bankruptcy, insolvency or similar law and
such case is not dismissed within 60 days; or
(d) The commencement by the Master Servicer of a voluntary
case under the federal bankruptcy laws, as now or hereafter in effect, or any
other present or future, federal or state, bankruptcy, insolvency or similar
law, or the consent by the Master Servicer to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator
or other similar official of the Master Servicer
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or of any substantial part of its property or the making by the Master Servicer
of an assignment for the benefit of creditors or the failure by the Master
Servicer generally to pay its debts as such debts become due or the taking of
corporate action by the Master Servicer in furtherance of any of the foregoing;
or
(e) Any representation, warranty or certification of the
Master Servicer made in this Agreement or any Basic Document or any certificate,
report or other writing delivered pursuant hereto or thereto shall prove to be
incorrect in any material respect as of the time when the same shall have been
made, and the incorrectness of such representation, warranty or statement has a
material adverse effect on the interests of the Indenture Trustee in the Series
Trust Estate [or the Insurer ]and, within 60 days after written notice thereof
shall have been given to the Master Servicer by the Indenture Trustee [or the
Insurer ]or after discovery thereof by the Master Servicer, the circumstances or
condition in respect of which such representation, warranty or statement was
incorrect shall not have been eliminated or otherwise cured; or
(f) An Event of Default (as defined in the Insurance
Agreement) shall have occurred; or
(g) A demand for payment shall be made by the Indenture
Trustee under the Note Policy.
Notwithstanding the foregoing, a delay in or failure of performance
under Section 10.1(a) for a period of three Business Days or under Section
10.1(b) or Section 10.1(f) for a period of 60 days, shall not constitute a
Master Servicer Termination Event if such delay or failure could not be
prevented by the exercise of reasonable diligence by the Master Servicer and
such delay or failure was caused by an act of God, acts of declared or
undeclared war, terrorism, public disorder, rebellion or sabotage, epidemics,
landslides, lightning, fire, hurricanes, earthquakes, floods or similar causes.
The preceding sentence shall not relieve the Master Servicer from using its best
efforts to perform its obligations in a timely manner in accordance with the
terms of this Agreement, and the Master Servicer shall provide the Indenture
Trustee[, the Insurer] and the Seller with an Officers' Certificate giving
prompt notice of such failure or delay by it, together with a description of its
efforts to so perform its obligations.
SECTION 10.2. CONSEQUENCES OF A MASTER SERVICER TERMINATION EVENT.
If a Master Servicer Termination Event shall occur and be continuing, the
Indenture Trustee (to the extent a Trust Officer of the Indenture Trustee has
actual knowledge or has received written notice thereof), by notice given in
writing to the Master Servicer may[, with the consent of the Insurer (for so
long as it is the Controlling Party),] and shall, at the written direction of
the Controlling Party, terminate all of the rights and obligations of the Master
Servicer under this Agreement and the other Basic Documents to which it is a
party. On or after the receipt by the Master Servicer of such written notice,
all authority, power, obligations and responsibilities of the Master Servicer
under this Agreement, whether with respect to the Notes, the Receivables or the
Other Conveyed Property or otherwise, automatically shall pass to, be vested in,
and become obligations and responsibilities, of the Indenture Trustee (or such
other successor Master
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Servicer appointed by the Controlling Party pursuant to Section 10.3); PROVIDED,
HOWEVER, that the successor Master Servicer shall have (i) no liability with
respect to any obligation which was required to be performed by the terminated
Master Servicer prior to the date that the successor Master Servicer becomes the
Master Servicer or any claim of a third party based on any alleged action or
inaction of the terminated Master Servicer, (ii) no obligation to perform any
repurchase or advancing obligations, if any, of the terminated Master Servicer,
(iii) no obligation to pay any of the fees and expenses of any other party
involved in this transaction not expressly assumed by the Master Servicer and
(iv) no liability or obligation with respect to any Master Servicer
indemnification obligations of any prior master servicer including the original
master servicer.
Notwithstanding anything contained in this Agreement to the contrary,
the Indenture Trustee as successor Master Servicer and any Successor Master
Servicer, are authorized to accept and rely on all of the accounting, records
(including computer records) and work of the prior Master Servicer relating to
the Receivables (collectively, the "Predecessor Servicer Work Product") without
any audit or other examination thereof, and the Indenture Trustee or Successor
Master Servicer shall have no duty, responsibility, obligation or liability for
the acts and omissions of the prior Master Servicer. If any error, inaccuracy,
omission or incorrect or non-standard practice or procedure (collectively,
"Errors") exist in any Predecessor Servicer Work Product and such Errors make it
materially more difficult to service or should cause or materially contribute to
the Indenture Trustee or Successor Master Servicer making or continuing any
Errors (collectively, "Continued Errors"), the Indenture Trustee or Successor
Master Servicer, as the case may be, shall have no duty, responsibility,
obligation or liability for such Continued Errors; PROVIDED, HOWEVER, that the
Indenture Trustee or Successor Master Servicer agrees to use its best efforts to
prevent further Continued Errors. In the event that the Indenture Trustee or
Successor Master Servicer becomes aware of Errors or Continued Errors, such
Indenture Trustee or Successor Master Servicer shall, with the prior consent of
(i) for so long as it is the Controlling Party, the Insurer, or (ii) for so long
as the Insurer is not the Controlling Party, Noteholders representing 66-2/3% of
the outstanding Notes, use its best efforts to reconstruct and reconcile such
data as is commercially reasonable to correct such Errors and Continued Errors
and to prevent future Continued Errors.
The successor Master Servicer is authorized and empowered by this
Agreement to execute and deliver, on behalf of the terminated Master Servicer,
as attorney-in-fact or otherwise, any and all documents and other instruments
and to do or accomplish all other acts or things necessary or appropriate to
effect the purposes of such notice of termination, whether to complete the
transfer and endorsement of the Owner Trust Estate and related documents to show
the Trust as lienholder or secured party on the related Lien Certificates, or
otherwise. The terminated Master Servicer agrees to cooperate with the successor
Master Servicer in effecting the termination of the responsibilities and rights
of the terminated Master Servicer under this Agreement, including, without
limitation, the transfer to the successor Master Servicer for administration by
it of all cash amounts that shall at the time be held by the terminated Master
Servicer for deposit, or have been deposited by the terminated Master Servicer,
in a Trust Account and the delivery to the successor Master Servicer of all
Receivable Files,
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Monthly Records and Collection Records and a computer tape in readable form as
of the most recent Business Day containing all information necessary to enable
the successor Master Servicer to service the Owner Trust Estate. If requested by
the Controlling Party, the successor Master Servicer shall direct the Obligors
to make all payments under the Receivables directly to the successor Master
Servicer (in which event the successor Master Servicer shall process such
payments in accordance with Section 4.2(d) or 4.2(e), as applicable). The
terminated Master Servicer shall grant the Indenture Trustee[, the Insurer (for
so long as it is the Controlling Party)] and the successor Master Servicer
reasonable access to the terminated Master Servicer's premises at the terminated
Master Servicer's expense.
SECTION 10.3. APPOINTMENT OF SUCCESSOR. On and after the time
the Master Servicer receives a notice of termination pursuant to Section 10.2 or
upon the resignation of the Master Servicer pursuant to Section 9.6, the Master
Servicer shall continue to perform all servicing functions under this Agreement
until the date specified in such termination notice or until such resignation
becomes effective or until a date mutually agreed upon by the Master Servicer,
the Indenture Trustee and the Insurer (for as long as it is the Controlling
Party). The Indenture Trustee shall as promptly as possible after such
termination or resignation appoint an Eligible Servicer as a successor servicer
(the "Successor Master Servicer") reasonably acceptable to the Insurer (for so
long as it is the Controlling Party), and such Successor Master Servicer shall
accept its appointment by a written assumption in a form reasonably acceptable
to the Indenture Trustee and the Insurer (for so long as it is the Controlling
Party). In the event that a Successor Master Servicer has not been appointed or
has not accepted its appointment at the time when the Master Servicer ceases to
act as Master Servicer, the Indenture Trustee without further action shall
automatically be appointed the Successor Master Servicer. The Indenture Trustee
may, with the consent of the Insurer (for so long as it is the Controlling
Party), delegate any of its servicing obligations to an Affiliate or agent in
accordance with Section 9.5. Notwithstanding the foregoing, the Indenture
Trustee shall, if it is legally unable so to act, petition a court of competent
jurisdiction to appoint any established institution qualifying as an Eligible
Servicer as the Successor Master Servicer hereunder. The Indenture Trustee or
the Successor Master Servicer, as the case may be, shall be the successor in all
respects to the Master Servicer in its capacity as servicer under this Agreement
and the transactions set forth or provided for in this Agreement, and shall be
subject to all the rights, responsibilities, restrictions, duties, liabilities
and termination provisions relating thereto placed on the Master Servicer by the
terms and provisions of this Agreement, except as otherwise stated herein. The
Indenture Trustee or the Successor Master Servicer, as the case may be, shall
take such action, consistent with this Agreement, as shall be necessary to
effectuate any such succession. The Successor Master Servicer shall be subject
to termination under Section 10.2 upon the occurrence of any Master Servicer
Termination Event applicable to it as Master Servicer.
(b) Subject to Section 9.6, no provision of this Agreement
shall be construed as relieving the Indenture Trustee of its obligation to
succeed as successor Master Servicer upon the termination of the Master Servicer
pursuant to Section 10.2 or the resignation of the Master Servicer pursuant to
Section 9.6.
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(c) Any Successor Master Servicer shall be entitled to such
compensation (whether payable out of the Collection Account or otherwise) equal
to the compensation the Master Servicer would have been entitled to under this
Agreement if the Master Servicer had not resigned or been terminated hereunder[
or such other amount as may be agreed to by the Successor Master Servicer and
the Insurer (for so long as it is the Controlling Party)]. In addition, any
Successor Master Servicer shall be entitled to reasonable transition expenses
incurred in acting as Successor Master Servicer payable by the outgoing Master
Servicer, and to the extent such transition expenses have not been paid by the
outgoing Master Servicer, such Successor Master Servicer shall be entitled to
reimbursement for such reasonable expenses pursuant to the Series Supplement.
SECTION 10.4. NOTIFICATION TO NOTEHOLDERS AND CERTIFICATEHOLDERS.
Upon any termination of, or appointment of a successor to, the Master Servicer,
the Indenture Trustee shall give prompt written notice thereof to each
Noteholder.
SECTION 10.5. WAIVER OF PAST DEFAULTS. The Controlling Party or,
with the consent of the Controlling Party, a majority of the Noteholders may, on
behalf of all Securityholders, waive any default by the Seller or the Master
Servicer in the performance of their obligations hereunder and its consequences,
except the failure to make any distributions required to be made to Noteholders
or to make any required deposits of any amounts to be so distributed. Upon any
such waiver of a past default, such default shall cease to exist, and any
default arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereon except to the extent
expressly so waived.
SECTION 10.6. SUCCESSOR TO MASTER SERVICER. The Indenture
Trustee, in its capacity as successor to the Master Servicer, shall perform such
duties and only such duties as are specifically set forth in this Agreement and
each Related Document with respect to the assumption of any servicing duties and
no implied covenants or obligations shall be read into this Agreement against
the Indenture Trustee.
(b) In the absence of bad faith or negligence on its part, the
Indenture Trustee may conclusively rely as to the truth of the statements and
the correctness of the opinions expressed therein, upon certificates or opinions
furnished to the Indenture Trustee and conforming to the requirements of this
Agreement and the Series Supplement; but in the case of any such certificates or
opinions, which by any provision hereof are specifically required to be
furnished to the Indenture Trustee, the Indenture Trustee shall be under a duty
to examine the same and to determine whether or not they conform to the
requirements of this Agreement and the Series Supplement.
(c) The Indenture Trustee shall have no liability for any
actions taken or omitted by the terminated Master Servicer.
ARTICLE XI
TERMINATION
55
SECTION 11.1. OPTIONAL PURCHASE OF ALL RECEIVABLES. To the
extent and under the circumstances provided in the Series Supplement, the Master
Servicer shall have the option to effect a "clean-up" redemption or purchase of
the Series Trust Estate.
(b) Upon any sale of the assets included in the Series Trust
Estate permitted by the Series Supplement, the Master Servicer shall instruct
the Indenture Trustee to deposit the proceeds from such sale after all payments
and reserves therefrom (including the expenses of such sale) have been made in
the Collection Account.
(c) Notice of any termination of the Trust shall be given by
the Master Servicer to the Owner Trustee, the Indenture Trustee[, the Insurer]
and the Rating Agencies as soon as practicable after the Master Servicer has
received notice thereof.
(d) Following the satisfaction and discharge of the Indenture,
the payment in full of the principal of and interest on the Notes, the
satisfaction of all payment obligations under the Basic Documents[ and the
Insurance Agreement] and termination of any Series Support (as provided
therein), the Certificateholders will succeed to the rights of the Noteholders
hereunder and the Owner Trustee will succeed to the rights of, and assume the
obligations of, the Indenture Trustee pursuant to this Agreement.
ARTICLE XII
ADMINISTRATIVE DUTIES OF THE MASTER SERVICER
SECTION 12.1. ADMINISTRATIVE DUTIES.
(a) DUTIES WITH RESPECT TO THE INDENTURE. The Master Servicer
shall perform all its duties and the duties of the Issuer under the Indenture.
In addition, the Master Servicer shall consult with the Owner Trustee as the
Master Servicer deems appropriate regarding the duties of the Issuer under the
Indenture. The Master Servicer shall monitor the performance of the Issuer and
shall advise the Owner Trustee when action is necessary to comply with the
Issuer's duties under the Indenture. The Master Servicer shall prepare for
execution by the Issuer or shall cause the preparation by other appropriate
Persons of all such documents, reports, filings, instruments, certificates and
opinions as it shall be the duty of the Issuer to prepare, file or deliver
pursuant to the Indenture. In furtherance of the foregoing, the Master Servicer
shall take all necessary action that is the duty of the Issuer to take pursuant
to the Indenture, including, without limitation, pursuant to Sections 2.7, 3.3,
3.4, 3.5, 3.6, 3.7, 3.9, 3.10, 3.17, 7.3, 8.3, 9.2, 9.3, 11.1 and 11.15 of the
Indenture.
(b) DUTIES WITH RESPECT TO THE ISSUER.
(i) In addition to the duties of the Master Servicer set
forth in this Agreement or any of the Related Documents, the
Master Servicer shall perform such calculations and shall prepare
for execution by the Issuer or the Owner Trustee or shall cause
the
56
preparation by other appropriate Persons of all such documents,
reports, filings, instruments, certificates and opinions as it
shall be the duty of the Issuer or the Owner Trustee to prepare,
file or deliver pursuant to this Agreement or any of the Related
Documents or under state and federal tax and securities laws, and
at the request of the Owner Trustee shall take all appropriate
action that it is the duty of the Issuer to take pursuant to this
Agreement or any of the Basic Documents, including, without
limitation, pursuant to Sections 2.6 and 2.11 of the Trust
Agreement. In accordance with the directions of the Issuer or the
Owner Trustee, the Master Servicer shall administer, perform or
supervise the performance of such other activities in connection
with the Owner Trust Estate (including the Basic Documents) as
are not covered by any of the foregoing provisions and as are
expressly requested by the Issuer or the Owner Trustee and are
reasonably within the capability of the Master Servicer.
(ii) Notwithstanding anything in this Agreement or any of
the Basic Documents to the contrary, the Master Servicer shall be
responsible for promptly notifying the Owner Trustee and the
Indenture Trustee in the event that any withholding tax is
imposed on the Issuer's payments (or allocations of income) to a
Certificateholder as contemplated by this Agreement. Any such
notice shall be in writing and specify the amount of any
withholding tax required to be withheld by the Owner Trustee or
the Indenture Trustee pursuant to such provision.
(iii) Notwithstanding anything in this Agreement or the
Basic Documents to the contrary, the Master Servicer shall be
responsible for performance of the duties of the Issuer and the
Seller set forth in Section 5.1(a), (b), (c) and (d) of the Trust
Agreement with respect to, among other things, accounting and
reports to Owners (as defined in the Trust Agreement); PROVIDED,
HOWEVER, that once prepared by the Master Servicer, the Depositor
shall retain responsibility under Section 5.1(b) of the Trust
Agreement for the distribution of the Schedule K-1s necessary to
enable each Certificateholder to prepare its federal and state
income tax returns.
(iv) The Master Servicer shall perform the duties of the
Depositor specified in Section 10.2 of the Trust Agreement
required to be performed in connection with the resignation or
removal of the Owner Trustee, and any other duties expressly
required to be performed by the Master Servicer under this
Agreement or any of the Related Documents.
57
(v) The Master Servicer, on behalf of the Seller, shall
direct the Issuer to request the tender of all or a portion of
the Notes in accordance with the Indenture or the Series
Supplement.
(vi) In carrying out the foregoing duties or any of its
other obligations under this Agreement, the Master Servicer may
enter into transactions with or otherwise deal with any of its
Affiliates; PROVIDED, HOWEVER, that the terms of any such
transactions or dealings shall be in accordance with any
directions received from the Issuer and shall be, in the Master
Servicer's opinion, no less favorable to the Issuer in any
material respect.
(c) TAX MATTERS. The Master Servicer shall prepare and file,
or cause to be prepared and filed, on behalf of the Seller, all tax returns, tax
elections, financial statements and such annual or other reports of the Issuer
as are necessary for preparation of tax reports as provided in Article V of the
Trust Agreement, including without limitation forms 1099 and 1066. All tax
returns will be signed by the Seller.
(d) NON-MINISTERIAL MATTERS. With respect to matters that in
the reasonable judgment of the Master Servicer are non-ministerial, the Master
Servicer shall not take any action pursuant to this Article XII unless within a
reasonable time before the taking of such action, the Master Servicer shall have
notified the Owner Trustee[, the Insurer (for so long as it is the Controlling
Party)] or the Indenture Trustee of the proposed action and the Owner Trustee[,
the Insurer (for so long as it is the Controlling Party)] or the Indenture
Trustee shall not have withheld consent or provided an alternative direction.
For the purpose of the preceding sentence, "non-ministerial matters" shall
include:
(A) the initiation of any claim or lawsuit by the Issuer and the
compromise of any action, claim or lawsuit brought by or against the
Issuer (other than in connection with the collection of the
Receivables);
(B) the appointment of successor Note Registrars, successor Note Paying
Agents and successor Indenture Trustees pursuant to the Indenture or
the consent to the assignment by the Note Registrar, Note Paying Agent
or Indenture Trustee of its obligations under the Indenture; and
(C) the removal of the Indenture Trustee.
(e) EXCEPTIONS. Notwithstanding anything to the contrary in
this Agreement, except as expressly provided herein or in the other Basic
Documents, the Master Servicer, in its capacity hereunder, shall not be
obligated to, and shall not, (1) make any payments to the Noteholders or
Certificateholders under the Basic Documents, (2) sell any portion of the Series
Trust Estate pursuant to the Basic Documents, (3) take any other action that the
Issuer directs the Master Servicer not to take on its behalf or (4) in
connection with its duties hereunder assume any indemnification obligation of
any other Person.
58
(f) Neither the Indenture Trustee nor any successor Master
Servicer shall be responsible for any obligations or duties of a predecessor
Master Servicer under Section 12.1.
SECTION 12.2. RECORDS. The Master Servicer shall maintain
appropriate books of account and records relating to services performed under
this Agreement, which books of account and records shall be accessible for
inspection by the Issuer and the Indenture Trustee at any time during normal
business hours.
SECTION 12.3. ADDITIONAL INFORMATION TO BE FURNISHED TO THE ISSUER.
The Master Servicer shall furnish to the Issuer and the Indenture Trustee[ and
the Insurer (for so long as it is the Controlling Party)] from time to time such
additional information regarding the Owner Trust Estate as the Issuer and the
Indenture Trustee [ and the Insurer (for so long as it is the Controlling
Party)]shall reasonably request.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
SECTION 13.1. AMENDMENTS. This Agreement may be amended by the
parties hereto at any time when no Securities are outstanding [and all amounts
payable to the Insurer pursuant to the Insurance Agreement have been paid in
full ]without the requirement of any consents or the satisfaction of any
conditions set forth below.
(b) Except as otherwise provided in the Series Supplement,
this Agreement may be amended from time to time by the parties hereto, by a
written instrument signed by each of the parties hereto,[ with the prior written
consent of the Insurer (for so long as it is the Controlling Party)] but without
the consent of any of the Securityholders, provided that (i) an Opinion of
Counsel for the Seller (which Opinion of Counsel may, as to factual matters,
rely upon Officers' Certificates of the Seller or the Master Servicer) is
addressed and delivered to the Indenture Trustee[ and the Insurer], dated the
date of any such amendment, to the effect that the conditions precedent to any
such amendment, including those of Section 13.2(h) hereof, have been satisfied
and (ii) the Seller shall have delivered to the Indenture Trustee[ and the
Insurer], an Officer's Certificate dated the date of any such amendment, stating
that the Seller reasonably believes that such amendment will not have a material
adverse effect on the rights of the Noteholders[ or the Insurer; PROVIDED,
HOWEVER, that no such amendment shall materially and adversely affect the
Insurer without the prior written consent of the Insurer].
(c) Except as otherwise provided in the Series Supplement,
subject to Section 13.2(h) hereof, this Agreement may also be amended from time
to time by the Master Servicer, the Seller and the Indenture Trustee, with the
prior written consent of [the Insurer and ]the Administrative Agent, where one
exists, or otherwise the Managing Agents, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or of modifying in any manner the rights of the Securityholders;
PROVIDED, HOWEVER, that no such amendment shall (i) reduce in any manner the
amount of or delay the timing of any distributions to be made to
59
Securityholders or deposits of amounts to be so distributed or the amount
available under any Series Support without the consent of each affected
Securityholder, (ii) change the definition of or the manner of calculating the
interest of any Securityholder without the consent of each affected
Securityholder, or (iii) reduce the aforesaid percentage of Noteholders required
to consent to any such amendment.
Promptly after the execution of any such amendment or supplement, the
Indenture Trustee shall furnish written notification of the substance of such
amendment or supplement to each Securityholder.
It shall not be necessary for the consent of Certificateholders or
Noteholders pursuant to this Section to approve the particular form of any
amendment, but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents (and any other consents
of Noteholders or Certificateholders provided for in this Agreement) and of
evidencing the authorization of any action by Noteholders or Certificateholders
shall be subject to such reasonable requirements as the Indenture Trustee or the
Owner Trustee, as applicable, may prescribe, including the establishment of
record dates.
The Owner Trustee and the Indenture Trustee may, but shall not be
obligated to, enter into any amendment which affects the Issuer's, the Owner
Trustee's or the Indenture Trustee's, as applicable, own rights, duties or
immunities under this Agreement or otherwise.
Prior to the execution of any amendment to this Agreement, the
Indenture Trustee shall be entitled to receive and rely upon an Opinion of
Counsel stating that the execution of such amendment is authorized or permitted
by this Agreement and that all conditions precedent to the execution and
delivery of such amendment have been satisfied.
SECTION 13.2. PROTECTION OF TITLE TO SERIES TRUST ESTATE. The
Seller shall execute and file such financing statements and cause to be executed
and filed such continuation statements, all in such manner and in such places as
may be required by law fully to preserve, maintain and protect the interest of
the Issuer in the Owner Trust Estate and the Indenture Trustee in the Series
Trust Estate.
(b) Neither the Seller nor the Master Servicer shall change
its name, identity or corporate structure in any manner that would, could or
might make any financing statement or continuation statement filed in accordance
with paragraph (a) above seriously misleading within the meaning of Sections
9-503(a), 9-506 and 9-507 of the UCC, unless it shall have given [the Insurer,
]the Owner Trustee and the Indenture Trustee at least thirty days' prior written
notice thereof and shall have promptly filed appropriate amendments to all
previously filed financing statements or continuation statements.
(c) Each of the Seller and the Master Servicer shall have an
obligation to give [the Insurer ,] the Owner Trustee and the Indenture Trustee
prompt
60
notice of any change in its state of incorporation if, as a result of such
change, the applicable provisions of the UCC would require the filing of any
amendment of any previously filed financing or continuation statement or of any
new financing statement and shall promptly file any such amendment. The Master
Servicer shall at all times maintain each office from which it shall service
Receivables within the United States of America.
(d) The Master Servicer shall maintain accounts and records as
to each Receivable accurately and in sufficient detail to permit (i) the reader
thereof to know at any time the status of such Receivable, including payments
and recoveries made and payments owing (and the nature of each) and (ii)
reconciliation between payments or recoveries on (or with respect to) each
Receivable and the amounts from time to time deposited in the Collection Account
in respect of such Receivable.
(e) The Master Servicer shall maintain or cause to be
maintained, a computer system so that, from and after the time of sale under
this Agreement and each Transfer Agreement of the Receivables to the Issuer,
such master computer records (including any backup archives) that refer to a
Receivable shall indicate clearly the interest of the Trust in such Receivable
and that such Receivable is owned by the Trust and has been pledged pursuant to
the Indenture. Indication of the Trust's and the Indenture Trustee's interest in
a Receivable shall be deleted from or modified on such computer systems when,
and only when, the related Receivable shall have been paid in full, repurchased
by HAFC, any Affiliate of HAFC that is the seller under a Master Receivables
Purchase Agreement, Household Finance Corporation or the Seller or otherwise
disposed of by the Issuer in accordance with the terms of this Agreement.
(f) If at any time the Seller, HAFC or any Affiliate of HAFC
that is a seller under a Master Receivables Purchase Agreement shall propose to
sell, grant a security interest in or otherwise transfer any interest in motor
vehicle receivables to any prospective purchaser, lender or other transferee,
the Master Servicer shall give to such prospective purchaser, lender or other
transferee computer tapes, records or printouts (including any restored from
backup archives) that, if they shall refer in any manner whatsoever to any
Receivable, shall indicate clearly that such Receivable has been sold and is
owned by the Trust unless such Receivable has been paid in full, has been
repurchased by HAFC, any Affiliate of HAFC that is the seller under a Master
Receivables Purchase Agreement, Household Finance Corporation or the Seller, or
otherwise has been disposed of by the Issuer in accordance with the terms of
this Agreement.
(g) Upon request, the Master Servicer shall furnish or cause
to be furnished to [the Insurer, ] the Owner Trustee or the Indenture Trustee,
within five Business Days, a list of all Receivables (by contract number) then
held as part of the Series Trust Estate, together with a reconciliation of such
list to the related Schedule of Receivables and to any Master Servicer's
Certificates furnished before such request indicating removal of Receivables
from the Series Trust Estate. The Indenture Trustee shall hold any such list and
Schedule of Receivables for examination by interested parties
61
during normal business hours at the Corporate Trust Office upon reasonable
notice by such Persons of their desire to conduct an examination.
(h) The Master Servicer shall deliver to the [the Insurer,
]Owner Trustee and the Indenture Trustee:
(1) simultaneously with the execution and delivery of the Agreement
and, if required pursuant to Section 13.1, of each amendment, an Opinion of
Counsel stating that, in the opinion of such Counsel, in form and substance
reasonably satisfactory to the addressees of such Opinion, either (A) all
financing statements and continuation statements have been executed and
filed that are necessary fully to preserve and protect the interest of the
Trust and the Indenture Trustee in the Receivables then held as part of the
Series Trust Estate, or (B) no such action shall be necessary to preserve
and protect such interest or (C) any action which is necessary to preserve
and protect such interest during the following 12-month period; and
(2) within 90 days after the beginning of each calendar year beginning
with the first calendar year following the Closing Date, dated as of a date
during such 90-day period, an Opinion of Counsel stating that, in the
opinion of such counsel, either (A) all financing statements and
continuation statements have been executed and filed that are necessary
fully to preserve and protect the interest of the Trust and the Indenture
Trustee in the Series Trust Estate or (B) no such action shall be necessary
to preserve and protect such interest.
Each Opinion of Counsel referred to in clause (1) or (2) above shall
specify any action necessary (as of the date of such opinion) to be taken in the
following year to preserve and protect such interest.
SECTION 13.3. NOTICES. All demands, notices and communications upon
or to the Seller, [the Insurer, ]the Master Servicer, the Owner Trustee, the
Indenture Trustee or any other Person entitled to receive a notice, shall be in
writing, personally delivered, or mailed by certified mail, sent by confirmed
telecopier transmission, or, with the consent of the receiving party, by
electronic mail, and shall be deemed to have been duly given upon receipt at the
address specified in the Series Supplement. Any notice required or permitted to
be mailed to a Noteholder or Certificateholder shall be given by first class
mail, postage prepaid, at the address of such Holder as shown in the Certificate
Register or Note Register, as applicable. Any notice so mailed within the time
prescribed in the Agreement shall be conclusively presumed to have been duly
given, whether or not the Certificateholder or Noteholder shall receive such
notice.
SECTION 13.4. ASSIGNMENT. This Agreement shall inure to the benefit
of and be binding upon the parties hereto[, the Insurer] and their respective
successors and permitted assigns. Notwithstanding anything to the contrary
contained herein, except as PROVIDED in Sections 8.4 and 9.3 and as PROVIDED in
the provisions of this Agreement concerning the resignation of the Master
Servicer, this Agreement may not be assigned by the Seller or the Master
Servicer without the prior written consent of [the Insurer, ]the
62
Owner Trustee, the Indenture Trustee and the Administrative Agent, where one
exists, or otherwise the Managing Agents. In the event that a successor Issuer
is formed as permitted by the Series Supplement, such Issuer shall succeed to
all of the rights and obligations of the predecessor Issuer hereunder; and all
references to the Issuer hereunder shall thereafter be deemed to be references
to such successor Issuer.
SECTION 13.5. LIMITATIONS ON RIGHTS OF OTHERS. The provisions of
this Agreement are solely for the benefit of the parties hereto and for the
benefit of the Certificateholders (including the Seller), the Indenture Trustee,
the Owner Trustee, any Support Provider and the Secured Parties, as third-party
beneficiaries. Each Support Provider shall be entitled to rely upon and directly
enforce such provisions of this Agreement, the Series Supplement and the
Indenture so long as no default with respect to such Support Provider shall have
occurred and be continuing; provided that nothing herein shall affect or limit
the Support Provider's rights as subrogee to the Noteholders. Nothing in this
Agreement or in the Series Supplement, whether express or implied, shall be
construed to give to any other Person any legal or equitable right, remedy or
claim in the Owner Trust Estate or under or in respect of this Agreement or any
covenants, conditions or provisions contained herein.
SECTION 13.6. SEVERABILITY. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 13.7. SEPARATE COUNTERPARTS. This Agreement and each
Transfer Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute but one and the same
instrument.
SECTION 13.8. HEADINGS. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
SECTION 13.9. GOVERNING LAW. THIS AGREEMENT AND EACH TRANSFER
AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW
YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAWS PROVISIONS WHICH WOULD REQUIRE
THE APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION, AND THE OBLIGATIONS,
RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE
WITH SUCH LAWS.
SECTION 13.10. ASSIGNMENT TO INDENTURE TRUSTEE. The Seller hereby
acknowledges and consents to any mortgage, pledge, assignment and grant of a
security interest by the Issuer to the Indenture Trustee pursuant to the
Indenture, as supplemented by the Series Supplement for the benefit of the
Secured Parties of all right, title and interest of the Issuer in, to and under
the Series Trust Estate.
63
SECTION 13.11. NONPETITION COVENANTS. Notwithstanding any prior
termination of this Agreement or the Series Supplement, none of the Master
Servicer, the Seller, the Administrative Agent, any Managing Agent or any
Secured Party shall, prior to the date which is one year and one day after the
termination of this Agreement and the payment in full of all obligations of the
Issuer under the Basic Documents, acquiesce, petition or otherwise invoke or
cause the Issuer to invoke the process of any court or government authority for
the purpose of commencing or sustaining a case against the Issuer under any
federal or state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Issuer or any substantial part of its property, or ordering the winding
up or liquidation of the affairs of the Issuer.
(b) Notwithstanding any prior termination of this Agreement or
the Series Supplement, none of the Master Servicer, any Managing Agent, the
Administrative Agent or any Secured Party shall, prior to the date that is one
year and one day after the termination of this Agreement, acquiesce to, petition
or otherwise invoke or cause the Seller to invoke the process of any court or
government authority for the purpose of commencing or sustaining a case against
the Seller under any federal or state bankruptcy, insolvency or similar law,
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator,
or other similar official of the Seller or any substantial part of its property,
or ordering the winding up or liquidation of the affairs of the Seller.
SECTION 13.12. LIMITATION OF LIABILITY OF OWNER TRUSTEE
Notwithstanding anything contained herein to the contrary, this Agreement and
the Series Supplement have been countersigned by the Owner Trustee not in its
individual capacity but solely in its capacity as Owner Trustee of the Issuer
and in no event shall the Owner Trustee in its individual capacity or, except as
expressly provided in the Trust Agreement, as Owner Trustee have any liability
for the representations, warranties, covenants, agreements or other obligations
of the Issuer hereunder or in any of the certificates, notices or agreements
delivered pursuant hereto, as to all of which recourse shall be had solely to
the assets of the Issuer. For all purposes of this Agreement and the Series
Supplement, in the performance of its duties or obligations hereunder or in the
performance of any duties or obligations of the Issuer hereunder, the Owner
Trustee shall be subject to, and entitled to the benefits of, the terms and
provisions of Articles VI, VII and VIII of the Trust Agreement.
(b) Notwithstanding anything contained herein to the contrary,
this Agreement has been executed and delivered by the Person acting as the
Indenture Trustee not in its individual capacity but solely as Indenture Trustee
and in no event shall such Person have any liability for the representations,
warranties, covenants, agreements or other obligations of the Issuer hereunder
or in any of the certificates, notices or agreements delivered pursuant hereto,
as to all of which recourse shall be had solely to the assets of the Issuer.
SECTION 13.13. LIMITATION OF LIABILITY OF ISSUER. The Issuer shall
have no liability to the Master Servicer except for payment of the Servicing Fee
and reimbursement of repossession and liquidation expenses. The Issuer shall
have no
64
obligation to indemnify the Master Servicer for costs or expenses, except with
respect to the preceding sentence.
SECTION 13.14. INDEPENDENCE OF THE MASTER SERVICER. For all purposes
of this Agreement, the Master Servicer shall be an independent contractor and
shall not be subject to the supervision of the Issuer or the Owner Trustee with
respect to the manner in which it accomplishes the performance of its
obligations hereunder. Unless expressly authorized by this Agreement or the
Series Supplement, the Master Servicer shall have no authority to act for or
represent the Issuer or the Owner Trustee in any way and shall not otherwise be
deemed an agent of the Issuer or the Owner Trustee.
SECTION 13.15. NO JOINT VENTURE. Nothing contained in this Agreement
or the Series Supplement (i) shall constitute the Master Servicer and either of
the Issuer or the Owner Trustee as members of any partnership, joint venture,
association, syndicate, unincorporated business or other separate entity, (ii)
shall be construed to impose any liability as such on any of them or (iii) shall
be deemed to confer on any of them any express, implied or apparent authority to
incur any obligation or liability on behalf of the others.
SECTION 13.16. [THIRD PARTY BENEFICIARY. The parties hereto agree
that the Insurer is a third-party beneficiary hereof.]
65
IN WITNESS WHEREOF, THE PARTIES HERETO HAVE CAUSED THIS
MASTER SALE
AND SERVICING AGREEMENT TO BE DULY EXECUTED AND DELIVERED BY THEIR RESPECTIVE
DULY AUTHORIZED OFFICERS AS OF THE DAY AND THE YEAR FIRST ABOVE WRITTEN.
HOUSEHOLD AUTOMOTIVE TRUST ______
by [Name of Owner Trustee], not in its individual
capacity but solely as Owner Trustee on behalf of
the Trust,
by
---------------------------------------------------
Name:
Title:
HOUSEHOLD AUTO RECEIVABLES CORPORATION,
Seller,
by
---------------------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Vice President
HOUSEHOLD FINANCE CORPORATION,
as Master Servicer,
by
---------------------------------------------------
Name: X. X. Xxxx Xx.
Title: Vice President
[NAME OF INDENTURE TRUSTEE],
not in its individual capacity but solely as Indenture
Trustee,
by
---------------------------------------------------
Name:
Title:
[Signature Page for
Master Sale and Servicing Agreement]
66
EXHIBIT A
FORM OF MASTER SERVICER'S CERTIFICATE
EXHIBIT B
FORM OF TRANSFER AGREEMENT
TRANSFER No. of Receivables pursuant to the
Master Sale and Servicing
Agreement dated as of __________________ (the "Sale and Servicing Agreement"),
among HOUSEHOLD AUTOMOTIVE TRUST ______, a Delaware business trust (the
"Issuer"),
HOUSEHOLD AUTO RECEIVABLES CORPORATION, a Nevada corporation (the
"Seller"), HOUSEHOLD FINANCE CORPORATION, a Delaware corporation (the "Master
Servicer"), and [NAME OF INDENTURE TRUSTEE], a [_________________________], in
its capacity as Indenture Trustee (the "Indenture Trustee").
W I T N E S S E T H:
WHEREAS pursuant to the Sale and Servicing Agreement, the Seller
wishes to convey the Receivables to the Issuer; and
WHEREAS, the Issuer is willing to accept such conveyance subject to
the terms and conditions hereof.
NOW, THEREFORE, the Issuer, the Seller, the Master Servicer and the
Indenture Trustee hereby agree as follows:
1. DEFINED TERMS. Capitalized terms used herein shall have the
meanings ascribed to them in the Sale and Servicing Agreement unless otherwise
defined herein.
"Cutoff Date" shall mean, with respect to the Receivables conveyed
hereby, the close of business on ______________.
"Transfer Date" shall mean, with respect to the Receivables conveyed
hereby,____________.
2. LIST OF RECEIVABLES. Annexed hereto is Schedule A listing the
Receivables that constitute the Receivables to be conveyed pursuant to the Sale
and Servicing Agreement and this Agreement on the Transfer Date.
3. CONVEYANCE OF RECEIVABLES. The Seller does hereby sell, transfer,
assign, set over and otherwise convey to the Issuer, without recourse (except as
expressly PROVIDED in the Sale and Servicing Agreement), all right, title and
interest of the Seller in and to:
(a) each and every Receivable listed on Schedule A and all monies
paid or payable thereon or in respect thereof after the related Cutoff Date
(including amounts due on or before the related Cutoff Date but received by
HAFC (or any
predecessor or Affiliate of HAFC, as applicable) or the Seller on or after
such date);
(b) the security interests in the related Financed Vehicles granted
by Obligors pursuant to such Receivables and any other interest of the
Seller in such Financed Vehicles;
(c) all rights of the Seller against Dealers pursuant to Dealer
Agreements or Dealer Assignments related to such Receivables;
(d) any proceeds and the right to receive proceeds with respect to
such Receivables repurchased by a Dealer pursuant to a Dealer Agreement;
(e) all rights of the Seller under any Service Contracts on the
related Financed Vehicles;
(f) any proceeds and the right to receive proceeds with respect to
such Receivables from claims on any physical damage, credit life or
disability insurance policies covering the related Financed Vehicles or
Obligors, including rebates of insurance premiums relating to such
Receivables;
(g) all items contained in the Receivables Files with respect to such
Receivables and any and all other documents that HAFC, any Affiliate of
HAFC that is a seller under a Master Receivables Purchase Agreement, the
Seller or the Master Servicer, as applicable, keeps on file in accordance
with its customary procedures relating to the related Receivables, the
related Financed Vehicles or Obligors;all funds on deposit from time to
time in the Trust Accounts (including all investments and proceeds
thereof);
(h) all property (including the right to receive future Net
Liquidation Proceeds) that secures each related Receivable and that has
been acquired by or on behalf of the Seller or the Trust pursuant to
liquidation of such Receivable;
(i) all of Seller's right, title and interest in its rights and
benefits, but none of its obligations or burdens, under each of the Master
Receivables Purchase Agreements and the Receivables Purchase Agreement
Supplements, including the delivery requirements, representations and
warranties and the cure and repurchase obligations of HAFC, any Affiliate
of HAFC that is the seller under a Master Receivables Purchase Agreement or
Household Finance Corporation, as applicable, under each of the Master
Receivables Purchase Agreements and related Receivables Purchase Agreement
Supplements, on or after the related Cutoff Date;
(j) on the initial Transfer Date only, one share of Class SV
Preferred Stock of the Seller together with the exclusive right to vote
such share; and
(k) all present and future claims, demands, causes and chooses in
action in respect of any or all of the foregoing and all payments on or
under and
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all proceeds of every kind and nature whatsoever in respect of any or all
of the foregoing, including all proceeds of the conversion, voluntary or
involuntary, into cash or other liquid property, all cash proceeds,
accounts, accounts receivable, notes, drafts, acceptances, chattel paper,
checks, deposit accounts, insurance proceeds, condemnation awards, rights
to payment of any and every kind and other forms of obligations and
receivables, instruments and other property which at any time constitute
all or part of or are included in the proceeds of any of the foregoing.
4. REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller hereby
represents and warrants to the Issuer as of the Transfer Date that:
(a) Each of its representations set forth in Sections 3.1 and 8.1 of
the Sale and Servicing Agreement are true and correct as if made on the
Transfer Date, except if specified to be true as of an earlier date, in
which case, such representations and warranties are true as of such earlier
date.
(b) The aggregate of the Principal Balances of the Receivables listed
on Schedule A annexed hereto and conveyed to the Issuer pursuant to this
Agreement as of the Cutoff Date is $_______________.
5. CONDITIONS PRECEDENT. The obligation of the Issuer to acquire the
Receivables hereunder is subject to the satisfaction, on or prior to the
Transfer Date, of the following conditions precedent:
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties made by the Seller in Section 4 of this Agreement shall be true
and correct as of the Transfer Date.
(b) SALE AND SERVICING AGREEMENT CONDITIONS. Each of the conditions
set forth in Section 2.1(b) to the Sale and Servicing Agreement shall have
been satisfied.
(c) ADDITIONAL INFORMATION. The Seller shall have delivered to the
Issuer such information as was reasonably requested by the Issuer to
satisfy itself as to the accuracy of the representations and warranties set
forth in Section 4 of this Agreement.
6. RATIFICATION OF AGREEMENT. As supplemented by this Agreement, the
Sale and Servicing Agreement is in all respects ratified and confirmed and the
Sale and Servicing Agreement as so supplemented by this Agreement shall be read,
taken and construed as one and the same instrument.
7. COUNTERPARTS. This Agreement may be executed in two or more
counterparts (and by different parties in separate counterparts), each of which
shall be an original but all of which together shall constitute one and the same
instrument.
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8. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF
NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
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IN WITNESS WHEREOF, the Issuer, the Seller and the Master Servicer
have caused this Agreement to be duly executed and delivered by their respective
duly authorized officers as of day and the year first above written.
HOUSEHOLD AUTOMOTIVE TRUST ______
by [Name of Owner Trustee], not in its individual
capacity but solely as Owner Trustee on behalf of
the Trust,
by
----------------------------------------------
Name:
Title:
HOUSEHOLD AUTO RECEIVABLES CORPORATION,
Seller,
by
----------------------------------------------
Name:
Title:
HOUSEHOLD FINANCE CORPORATION, Master Servicer,
by
----------------------------------------------
Name:
Title:
Acknowledged and Accepted:
[NAME OF INDENTURE TRUSTEE],
not in its individual
capacity but solely as Indenture Trustee
by
------------------------------------
Name:
Title:
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