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EXHIBIT 4.1
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HOUSEHOLD CONSUMER LOAN CORPORATION,
as Seller and
Holder of the
Designated Certificate
and
CHASE MANHATTAN BANK DELAWARE,
as Owner Trustee
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FORM OF TRUST AGREEMENT
Dated as of March 1, 1997
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Consumer Loan Asset Backed Certificates,
Series 1997-1
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Table of Contents
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Section Page
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ARTICLE I
Definitions
1.01. Definitions..................................................................... 1
1.02. Other Definitional Provisions................................................... 1
ARTICLE II
Organization
2.01. Name............................................................................ 3
2.02. Office.......................................................................... 3
2.03. Purposes and Powers............................................................. 3
2.04. Appointment of Owner Trustee.................................................... 4
2.05. Initial Capital Contribution of Owner Trust
Estate.......................................................................... 4
2.06. Declaration of Trust............................................................ 4
2.07. Liability of the Holder of the Designated
Certificate..................................................................... 5
2.08. Title to Trust Property......................................................... 5
2.09. Location of Corporate Trust Office.............................................. 5
2.10. Representations and Warranties and Covenants
of HCLC......................................................................... 5
ARTICLE III
Conveyance of the Series 1997-1 Participation Interest;
Certificates
3.01. Conveyance of the Series 1997-1 Participation
Interest........................................................................ 8
3.02. Initial Ownership............................................................... 8
3.03. The Certificates................................................................ 8
3.04. Authentication of Certificates.................................................. 9
3.05. Registration of and Limitations on Transfer
and Exchange of Certificates.................................................... 9
3.06. Mutilated, Destroyed, Lost or Stolen Certif-
icates.......................................................................... 12
3.07. Persons Deemed Certificateholders............................................... 12
3.08. Access to List of Certificateholders' Names
and Addresses................................................................... 12
3.09. Maintenance of Office or Agency................................................. 13
3.10. Certificate Paying Agent........................................................ 13
3.11. Ownership by HCLC............................................................... 14
3.12. RESERVED........................................................................ 14
3.13. Optional Repurchase of the Series 1997-1
Participation Interest.......................................................... 14
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Section Page
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ARTICLE IV
Actions by Owner Trustee
4.01. Prior Notice to Certificateholders with
Respect to Certain Matters...................................................... 16
4.02. Action by Certificateholders with Respect to
Certain Matters................................................................. 17
4.03. Action by Certificateholders with Respect to
Bankruptcy...................................................................... 17
4.04. Restrictions on Certificateholders' Power....................................... 17
4.05. Majority Control................................................................ 17
ARTICLE V
Application of Trust Funds
5.01. Distributions................................................................... 18
5.02. Method of Payment............................................................... 18
5.03. Signature on Returns............................................................ 19
5.04. Statements to Certificateholders................................................ 19
5.05. Tax Reporting; Tax Elections.................................................... 19
5.06. Capital Accounts................................................................ 19
ARTICLE VI
Authority and Duties of Owner Trustee
6.01. General Authority............................................................... 22
6.02. General Duties.................................................................. 22
6.03. Action upon Instruction......................................................... 22
6.04. No Duties Except as Specified in this Trust
Agreement or in Instructions.................................................... 23
6.05. No Action Except Under Specified Documents or
Instructions.................................................................... 24
6.06. Restrictions.................................................................... 24
ARTICLE VII
Concerning the Owner Trustee
7.01. Acceptance of Trusts and Duties................................................. 25
7.02. Furnishing of Documents......................................................... 26
7.03. Representations and Warranties.................................................. 26
7.04. Reliance; Advice of Counsel..................................................... 27
7.05. Not Acting in Individual Capacity............................................... 27
7.06. Owner Trustee Not Liable for Certificates....................................... 27
7.07. Owner Trustee May Own Certificates and Notes.................................... 28
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Section Page
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ARTICLE VIII
Compensation of Owner Trustee
8.01. Owner Trustee's Fees and Expenses............................................... 29
8.02. Indemnification................................................................. 29
ARTICLE IX
Termination of Trust Agreement
9.01. Termination of Trust Agreement.................................................. 31
9.02. Dissolution upon Bankruptcy of the Holder of
the Designated Certificate...................................................... 32
ARTICLE X
Successor Owner Trustees and Additional Owner Trustees
10.01. Eligibility Requirements for Owner Trustee...................................... 34
10.02. Resignation or Removal of Owner Trustee......................................... 34
10.03. Successor Owner Trustee......................................................... 35
10.04. Merger or Consolidation of Owner Trustee........................................ 35
10.05. Appointment of Co-Trustee or Separate
Trustee......................................................................... 36
ARTICLE XI
Miscellaneous
11.01. Amendments...................................................................... 38
11.02. No Legal Title to Owner Trust Estate in
Certificateholders.............................................................. 39
11.03. Limitations on Rights of Others................................................. 39
11.04. Notices......................................................................... 39
11.05. Severability.................................................................... 40
11.06. Separate Counterparts........................................................... 40
11.07. Successors and Assigns.......................................................... 40
11.08. Covenants of the Seller......................................................... 40
11.09. No Petition..................................................................... 40
11.10. No Recourse..................................................................... 41
11.11. Headings........................................................................ 41
11.12. Governing Law................................................................... 41
11.13. Integration..................................................................... 41
Signatures ........................................................................................ 40
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EXHIBITS
Exhibit A - Form of Certificate.................................................................... A-1
Exhibit B - RESERVED............................................................................... B-1
Exhibit C - Certificate of Trust of Household
Consumer Loan Trust 1997-1..................................................... C-1
Exhibit D - Form of 144A Investment Letter......................................................... D-1
Exhibit E - Definitions............................................................................ E-1
Exhibit F - Form of Certificate of Non-Foreign Status.............................................. F-1
Exhibit G - Form of Investment Letter
for Accredited Investors............................................................... G-1
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This Trust Agreement, dated as of March 1, 1997 (as amended from time
to time, this "Trust Agreement"), between HOUSEHOLD CONSUMER LOAN CORPORATION, a
Nevada corporation, as Seller and as Holder of the Designated Certificate
("HCLC", the "Seller", and the "Designated Certificateholder" as the context
requires) and CHASE MANHATTAN BANK DELAWARE, a Delaware banking corporation, as
Owner Trustee (the "Owner Trustee"),
WITNESSETH THAT:
In consideration of the mutual agreements herein contained, HCLC and
the Owner Trustee agree as follows:
ARTICLE I
Definitions
Section 1.01. Definitions. For all purposes of this Trust Agreement,
except as otherwise expressly provided herein or unless the context otherwise
requires, capitalized terms not otherwise defined herein shall have the meanings
assigned to such terms in the Definitions attached hereto as Exhibit E, which is
incorporated by reference herein. All other capitalized terms used herein shall
have the meanings specified herein.
SECTION 1.02. Other Definitional Provisions.
(a) All terms defined in this Trust Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(b) As used in this Trust Agreement and in any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms not
defined in this Trust Agreement or in any such certificate or other document,
and accounting terms partly defined in this Trust Agreement or in any such
certificate or other document to the extent not defined, shall have the
respective meanings given to them under generally accepted accounting
principles. To the extent that the definitions of accounting terms in this Trust
Agreement or in any such certificate or other document are inconsistent with the
meanings of such terms under generally accepted accounting principles, the
definitions contained in this Trust Agreement or in any such certificate or
other document shall control.
(c) The words "hereof," "herein," "hereunder" and words of similar
import when used in this Trust Agreement shall refer to this Trust Agreement as
a whole and not to any particular provision of this Trust Agreement; Section and
Exhibit references contained in this Trust Agreement are references to Sections
and Exhibits in or to this Trust Agreement unless otherwise speci-
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fied; and the term "including" shall mean "including without limitation".
(d) The definitions contained in this Trust Agreement are applicable to
the singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such terms.
(e) Any agreement, instrument or statute defined or referred to herein
or in any instrument or certificate delivered in connection herewith means such
agreement, instrument or statute as from time to time amended, modified or
supplemented and includes (in the case of agreements or instruments) references
to all attachments thereto and instruments incorporated therein; references to a
Person are also to its permitted successors and assigns.
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ARTICLE II
Organization
Section 2.01. Name. The trust created hereby (the "Issuer") shall be
known as "Household Consumer Loan Trust 1997- 1," in which name the Owner
Trustee may conduct the business of the Issuer, make and execute contracts and
other instruments on behalf of the Issuer and sue and be sued.
Section 2.02. Office. An office of the Issuer shall be in care of the
Owner Trustee at the Corporate Trust Office or at such other address in Delaware
as the Owner Trustee may designate by written notice to the Certificateholders
and the Seller.
Section 2.03. Purposes and Powers. The purpose of the Issuer is to
engage in the following activities:
(i) to issue the Notes pursuant to the Indenture and the
Certificates pursuant to this Trust Agreement and to sell the Notes and
the Certificates;
(ii) to purchase the Series 1997-1 Participation Interest and
to pay or cause to be paid its organizational, start-up and
transactional expenses;
(iii) to assign, grant, transfer, pledge, mortgage and convey
the Indenture Trust Estate pursuant to the Indenture and to hold,
manage and distribute to the Certificateholders pursuant to Section
5.01 any portion of the Indenture Trust Estate released from the Lien
of, and remitted to the Issuer pursuant to the Indenture;
(iv) to enter into and perform its obligations under the
Basic Documents to which it is to be a party;
(v) to engage in those activities, including entering into
agreements, that are necessary, suitable or convenient to accomplish
the foregoing or are incidental thereto or connected therewith,
including, without limitation, to accept additional contributions of
equity that are not subject to the Lien of the Indenture; and
(vi) subject to compliance with the Basic Documents, to
engage in such other activities as may be required in connection with
conservation of the Owner Trust Estate and the making of distributions
to the Certificateholders and the Noteholders.
The Issuer is hereby authorized to engage in the foregoing activities. The
Issuer shall not engage in any activity other than in connection with the
foregoing or other than as required or autho-
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rized by the terms of this Trust Agreement or the Basic Documents.
Section 2.04. Appointment of Owner Trustee. The Seller hereby appoints
the Owner Trustee as trustee of the Issuer effective as of the date hereof, to
have all the rights, powers and duties set forth herein.
Section 2.05. Initial Capital Contribution of Owner Trust Estate. The
Seller hereby sells, assigns, transfers, conveys and sets over to the Issuer, as
of the date hereof, the sum of $1. The Owner Trustee hereby acknowledges on
behalf of the Issuer, receipt in trust from the Seller, as of the date hereof,
of the foregoing contribution, which shall constitute the initial corpus of the
Issuer and shall be deposited in the Payment Account. The Owner Trustee also
acknowledges on behalf of the Issuer receipt of the other property transferred
and assigned to the Issuer pursuant to Section 3.01, which shall constitute the
Owner Trust Estate. The Seller shall pay or cause to be paid organizational
expenses of the Issuer as they may arise or shall, upon the request of the Owner
Trustee, promptly reimburse the Owner Trustee for any such expenses paid by the
Owner Trustee. The Seller shall execute and deliver any necessary state or
federal securities law filings on behalf of the Issuer.
Section 2.06. Declaration of Trust. The Owner Trustee hereby declares
that it will hold the Owner Trust Estate on behalf of the Issuer in trust upon
and subject to the conditions set forth herein for the use and benefit of the
Certificate- holders, subject to the obligations of the Issuer under the Basic
Documents. It is the intention of the parties hereto that the Issuer constitute
a business trust under the Business Trust Statute and that this Trust Agreement
constitute the governing instrument of such business trust. It is the intention
of the parties hereto that, for income and franchise tax purposes, the Issuer
shall be treated as a partnership, with the assets of the partnership being the
Owner Trust Estate, the partners of the partnership being the
Certificateholders, and the Notes being debt of the partnership. Except as
otherwise provided in this Trust Agreement, the rights of the Certificateholders
(other than the Holder of the Designated Certificate) will be those of limited
partners and the rights of the Holder of the Designated Certificate, subject to
Section 6.03 hereof, will be those of a general partner in a partnership formed
under the Delaware Revised Uniform Limited Partnership Act. The parties agree
that, unless otherwise required by appropriate tax authorities, the Issuer will
file or cause to be filed annual or other necessary returns, reports and other
forms consistent with the characterization of the Issuer as a partnership for
such tax purposes. Effective as of the date hereof, the Owner Trustee shall have
all rights, powers and duties set forth herein and in the Business Trust Statute
with respect to accomplishing the purposes of the Issuer. The Owner Trustee has
filed with the
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Secretary of State of the State of Delaware a Certificate of Trust of the
Issuer.
Section 2.07. Liability of the Holder of the Designated Certificate.
(a) The Holder of the Designated Certificate shall be liable directly to and
will indemnify any injured party for all losses, claims, damages, liabilities
and expenses of the Issuer (including Expenses, to the extent not paid out of
the Owner Trust Estate) to the extent that the Holder of the Designated
Certificate would be liable if the Issuer were a partnership under the Delaware
Revised Uniform Limited Partnership Act in which the Holder of the Designated
Certificate were a general partner; provided, however, that the Holder of the
Designated Certificate shall not be liable for payments required to be made on
the Notes or the Certificates, or for any losses incurred by a Certificateholder
in the capacity of an investor in the Certificates or a Noteholder in the
capacity of an investor in the Notes. In addition, any third party creditors of
the Issuer (other than in connection with the obligations described in the
preceding sentence for which the Holder of the Designated Certificate shall not
be liable) shall be deemed third party beneficiaries of this paragraph. The
obligations of the Holder of the Designated Certificate under this paragraph
shall be evidenced by the Designated Certificate.
(b) Subject to subsection (a) above, the Certificateholders shall be
entitled to the same limitation of personal liability extended to stockholders
of private corporations for profit organized under the General Corporation Law
of the State of Delaware.
Section 2.08. Title to Trust Property. Legal title to the Owner Trust
Estate shall be vested at all times in the Issuer as a separate legal entity
except where applicable law in any jurisdiction requires title to any part of
the Owner Trust Estate to be vested in a trustee or trustees, in which case
title shall be deemed to be vested in the Owner Trustee, a co-trustee and/or a
separate trustee, as the case may be.
Section 2.09. Location of Corporate Trust Office. All bank accounts
maintained by the Owner Trustee on behalf of the Issuer shall be located in the
State of Delaware or the State of New York. The Issuer shall not have any
employees; provided, however, that nothing herein shall restrict or prohibit the
Owner Trustee from having employees within or without the State of Delaware or
taking actions outside the State of Delaware in order to comply with Section
2.03. Payments will be received by the Issuer only in Delaware or New York, and
payments will be made by the Issuer only from Delaware or New York. The Owner
Trustee shall maintain its Corporate Trust Office in the State of Delaware.
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Section 2.10. Representations and Warranties and Covenants of HCLC. (a)
The Seller hereby represents and warrants to the Owner Trustee that:
(i) The Seller is duly organized and 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
presently conducted.
(ii) 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 in which the ownership or
lease of its property or the conduct of its business shall require such
qualifications and in which the failure to so qualify would have a
material adverse effect on the business, properties, assets or
condition (financial or other) of the Seller.
(iii) The Seller has the power and authority to execute and
deliver this Trust Agreement and to carry out its terms; the Seller has
full power and authority to sell and assign the property to be sold and
assigned to and deposited with the Issuer and the Seller has duly
authorized such sale and assignment and deposit to the Issuer by all
necessary corporate action; and the execution, delivery and performance
of this Trust Agreement have been duly authorized by the Seller by all
necessary corporate action.
(iv) The consummation of the transactions contemplated by
this Trust Agreement and the fulfillment of the terms hereof do not
conflict with, result in any breach of any of the terms and provisions
of, or constitute (with or without notice or lapse of time) a default
under, the articles of incorporation or bylaws of the Seller, or any
indenture, agreement or other instrument to which the Seller is a party
or by which it is bound; nor result in the creation or imposition of
any Lien upon any of its properties pursuant to the terms of any such
indenture, agreement or other instrument (other than pursuant to the
Basic Documents); nor violate any law or, to the best of the Seller's
knowledge, any 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 its properties.
(v) To the Seller's best knowledge, there are no
proceedings or investigations pending or threatened before any court,
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Seller or its properties:
(A) asserting the invalidity of this Trust Agreement, (B) seeking to
prevent the consum-
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mation of any of the transactions contemplated by this Trust Agreement
or (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 Trust Agreement.
(vi) Immediately prior to the conveyance by the Seller to
the Issuer of the Series 1997-1 Participation Interest as contemplated
by Section 3.01 hereof, the Seller owned the Series 1997-1
Participation Interest free and clear of any Lien.
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ARTICLE III
Conveyance of the Series 1997-1 Participation Interest;
Certificates
Section 3.01. Conveyance of the Series 1997-1 Participation Interest.
The Seller, concurrently with the execution and delivery hereof, does hereby
transfer, convey, sell and assign to the Issuer, on behalf of the Holders of the
Notes and the Certificates, without recourse, all its right, title and interest
in and to the Series 1997-1 Participation Interest free and clear of any Liens,
and all monies and the collections and proceeds due thereon and any part thereof
which consists of general intangibles (as defined in the UCC) (the "Owner Trust
Estate"). Simultaneous therewith and in consideration thereof, the Seller shall
receive from the Issuer the Securities, including the Designated Certificate,
and the obligation of the Issuer to pay an amount equal to a deferred stream of
payments represented by the Holdback Amount in accordance with Section 3.05 of
the Indenture.
The parties hereto intend that the transaction set forth herein be a
sale by the Seller to the Issuer of all of its right, title and interest in and
to the Series 1997-1 Participation Interest and the other property described
above. In the event that the transaction set forth herein is not deemed to be a
sale, the Seller hereby grants to the Issuer a security interest in all of its
right, title and interest in, to and under the Owner Trust Estate, all
distributions thereon and all proceeds thereof; and this Trust Agreement shall
constitute a security agreement under applicable law.
Section 3.02. Initial Ownership. Upon the formation of the Issuer by
the contribution by the Seller pursuant to Section 2.05 and until the conveyance
of the Series 1997-1 Participation Interest pursuant to Section 3.01 and the
issuance of the Certificates, the Seller shall be the sole beneficiary of the
Issuer.
Section 3.03. The Certificates. The Certificates shall be issued in
minimum denominations of $1,000,000 and in integral multiples of $100,000 in
excess thereof; except for one Certificate that may not be in an integral
multiple of $100,000; provided, however, that the Designated Certificate issued
pursuant to Section 3.11 may be issued in the amount of $__________. The
Certificates may not be subdivided for resale into units that had a Security
Balance of less than $1,000,000 upon the Closing Date. The Certificates shall be
executed on behalf of the Issuer by manual or facsimile signature of an
authorized officer of the Owner Trustee and authenticated in the manner provided
in Section 3.04. Certificates bearing the manual or facsimile signatures of
individuals who were, at the time when such signatures shall have been affixed,
authorized to sign on
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behalf of the Issuer, shall be validly issued and entitled to the benefit of
this Trust Agreement, notwithstanding that such individuals or any of them shall
have ceased to be so authorized prior to the authentication and delivery of such
Certificates or did not hold such offices at the date of authentication and
delivery of such Certificates. A Person shall become a Certificateholder and
shall be entitled to the rights and subject to the obligations of a
Certificateholder hereunder upon such Person's acceptance of a Certificate duly
registered in such Person's name, pursuant to Section 3.05. Each Person who
shall become a Certificateholder shall establish its non-foreign status by
submitting to the Certificate Paying Agent an IRS Form W-9 and the Certificate
of Non-Foreign Status set forth in Exhibit F hereto.
A transferee of a Certificate shall become a Certificate-holder and
shall be entitled to the rights and subject to the obligations of a
Certificateholder hereunder upon such transferee's acceptance of a Certificate
duly registered in such transferee's name pursuant to and upon satisfaction of
the conditions set forth in Section 3.05.
Section 3.04. Authentication of Certificates. Concurrently with the
acquisition of the Series 1997-1 Participation Interest by the Issuer, the Owner
Trustee shall cause the Certificates in an aggregate principal amount equal to
the Initial Principal Balance of the Certificates to be executed on behalf of
the Issuer, authenticated and delivered to or upon the written order of the
Seller, signed by its chairman of the board, its president, any vice president,
secretary, treasurer or any assistant treasurer, without further corporate
action by the Seller, in authorized denominations. No Certificate shall entitle
its holder to any benefit under this Trust Agreement or be valid for any purpose
unless there shall appear on such Certificate a certificate of authentication
substantially in the form set forth in Exhibit A, executed by the Owner Trustee
or The Bank of New York, as the Issuer's authenticating agent, by manual
signature; such authentication shall constitute conclusive evidence that such
Certificate shall have been duly authenticated and delivered hereunder. All
Certificates shall be dated the date of their authentication.
Section 3.05. Registration of and Limitations on Transfer and Exchange
of Certificates. The Certificate Registrar shall keep or cause to be kept, at
the office or agency maintained pursuant to Section 3.09, a Certificate Register
in which, subject to such reasonable regulations as it may prescribe, the Issuer
shall provide for the registration of Certificates and of transfers and
exchanges of Certificates as herein provided. The Bank of New York shall be the
initial Certificate Registrar.
Subject to satisfaction of the conditions set forth below and to the
provisions of Section 3.11 with respect to the Desig-
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nated Certificate, upon surrender for registration of transfer of any
Certificate at the office or agency maintained pursuant to Section 3.09, the
Issuer shall execute, authenticate and deliver (or shall cause The Bank of New
York as its authenticating agent to authenticate and deliver) in the name of the
designated transferee or transferees, one or more new Certificates in authorized
denominations of a like aggregate amount dated the date of authentication by the
Owner Trustee or any authenticating agent. At the option of a Holder,
Certificates may be exchanged for other Certificates of authorized denominations
of a like aggregate amount upon surrender of the Certificates to be exchanged at
the office or agency maintained pursuant to Section 3.09.
Every Certificate presented or surrendered for registration of transfer
or exchange shall be accompanied by a written instrument of transfer in form
satisfactory to the Certificate Registrar duly executed by the Holder or such
Holder's attorney duly authorized in writing. Each Certificate surrendered for
registration of transfer or exchange shall be cancelled and subsequently
disposed of by the Certificate Registrar in accordance with its customary
practice.
No service charge shall be made for any registration of transfer or
exchange of Certificates, but the Owner Trustee or the Certificate Registrar may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer or exchange of Certificates.
No transfer of a Certificate shall be made unless such transfer is
exempt from the registration requirements of the Securities Act and any
applicable state securities laws or is made in accordance with said Act and
laws. In the event of any such transfer, the Certificate Registrar or the Seller
shall require the transferee to execute (i) (a) an investment letter (in
substantially the form attached hereto as Exhibit D) in form and substance
reasonably satisfactory to the Certificate Registrar and the Seller certifying
to the Issuer, the Owner Trustee, the Certificate Registrar and the Seller that
such transferee is a "qualified institutional buyer" under Rule 144A under the
Securities Act, or (b) an investment letter (in substantially the form attached
hereto as Exhibit G), acceptable to and in form and substance reasonably
satisfactory to the Certificate Registrar, which investment letters shall not be
an expense of the Issuer, the Owner Trustee, the Certificate Registrar, the
Servicer or the Seller and (ii) the Certificate of Non-Foreign Status (in
substantially the form attached hereto as Exhibit F) acceptable to and in form
and substance reasonably satisfactory to the Certificate Registrar, which
certificate shall not be an expense of the Issuer, the Owner Trustee, the
Certificate Registrar, the Servicer, the Administrator or the Seller. The Holder
of a Certificate desiring to effect such transfer shall, and does hereby agree
to, indemnify the Issuer, the Owner Trustee, the
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Certificate Registrar, the Servicer and the Seller against any liability that
may result if the transfer is not so exempt or is not made in accordance with
such federal and state laws.
No transfer of a Certificate shall be made unless the Certificate
Registrar shall have received either (i) a representation letter from the
proposed transferee of such Certificate to the effect that such proposed
transferee is not an employee benefit plan subject to the fiduciary
responsibility provisions of ERISA, or Section 4975 of the Code, or a Person
acting on behalf of any such plan or using the assets of any such plan, or if
the proposed transferee is an insurance company, a representation that the
proposed transferee is an insurance company which is purchasing such
certificates with funds contained in an "insurance company general account" (as
such term is defined in section v(e) of prohibited transaction class exemption
95-60 ("ptce 95-60")) and that the purchase and holding of such certificates are
covered under ptce 95-60, which representation letter shall not be an expense of
the Issuer, Owner Trustee, the Certificate Registrar, the Servicer or the Seller
or (ii) in the case of any such certificate presented for registration in the
name of an employee benefit plan subject to the fiduciary responsibility
provisions of ERISA, or Section 4975 of the Code (or comparable provisions of
any subsequent enactments), or a trustee of any such plan, or any other Person
who is using the assets of any such plan to effect such acquisition, an Opinion
of Counsel, in form and substance reasonably satisfactory to, and addressed and
delivered to, the Issuer, the Certificate Registrar and the Seller, to the
effect that the purchase or holding of such Certificate will not result in the
assets of the Owner Trust Estate being deemed to be "plan assets" and subject to
the fiduciary responsibility provisions of ERISA or the prohibited transaction
provisions of the Code, will not constitute or result in a prohibited
transaction within the meaning of Section 406 or Section 407 of ERISA or Section
4975 of the Code, and will not subject the Issuer, the Owner Trustee, the
Certificate Registrar, the Servicer or the Seller to any obligation or liability
(including obligations or liabilities under ERISA or Section 4975 of the Code)
in addition to those explicitly undertaken in this Trust Agreement which Opinion
of Counsel shall not be an expense of the Issuer, the Owner Trustee, the
Certificate Registrar, the Servicer or Seller.
The Certificates shall not be listed for trading on an established
securities market, nor be readily tradeable on a secondary market, nor be
transferrable through the substantial equivalent of a secondary market, nor
shall the Issuer be permitted to have more than 100 partners, for income tax
purposes, all within the meaning of Code Section 7704, and its attendant
regulations, as applicable. If requested, in the discretion of the Seller,
transfer of a Certificate shall be made only if accompanied by an Opinion of
Counsel satisfactory to the Owner Trustee, which Opinion of Counsel shall not be
an expense
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of the Issuer, the Owner Trustee, the Servicer or the Seller, to the effect such
transfer will not cause the Issuer to be a publicly traded partnership taxable
as a corporation and will not cause the termination of the Issuer under the
federal income tax rules applicable to partnerships.
Each Certificateholder agrees to provide information to the
Administrator when so requested concerning the beneficial ownership of its
Certificates as necessary for the Issuer to assure its compliance with the
requirements for avoiding taxation at the entity level as a publicly traded
partnership or otherwise. Each Certificateholder agrees to restrict the transfer
of record ownership and beneficial ownership of its Certificates as requested by
the Administrator based upon applicable governmental regulation, rulings or
notices and any judicial decisions as may exist from time to time, as necessary
or advisable for avoiding the Issuer's treatment as a publicly-traded
partnership taxable as a corporation, or its termination for federal income tax
purposes under Code Section 708.
Section 3.06. Mutilated, Destroyed, Lost or Stolen Certificates. If (a)
any mutilated Certificate shall be surrendered to the Certificate Registrar, or
if the Certificate Registrar shall receive evidence to its satisfaction of the
destruction, loss or theft of any Certificate and (b) there shall be delivered
to the Issuer, the Certificate Registrar and the Owner Trustee such security or
indemnity as may be required by them to save each of them harmless, then in the
absence of notice that such Certificate has been acquired by a bona fide
purchaser, the Owner Trustee on behalf of the Issuer shall execute and the Owner
Trustee or The Bank of New York, as the Issuer's authenticating agent, shall
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of like tenor and
denomination. In connection with the issuance of any new Certificate under this
Section 3.06, the Owner Trustee or the Certificate Registrar may require the
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection therewith. Any duplicate Certificate issued
pursuant to this Section 3.06 shall constitute conclusive evidence of ownership
in the Issuer, as if originally issued, whether or not the lost, stolen or
destroyed Certificate shall be found at any time.
Section 3.07. Persons Deemed Certificateholders. Prior to due
presentation of a Certificate for registration of transfer, the Owner Trustee,
the Certificate Registrar or any Certificate Paying Agent may treat the Person
in whose name any Certificate is registered in the Certificate Register as the
owner of such Certificate for the purpose of receiving distributions pursuant to
Section 5.02 and for all other purposes whatsoever, and none of the Issuer, the
Owner Trustee, the Certificate Registrar or any Paying Agent shall be bound by
any notice to the contrary.
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Section 3.08. Access to List of Certificateholders' Names and
Addresses. The Certificate Registrar shall furnish or cause to be furnished to
the Seller or the Owner Trustee, within 15 days after receipt by the Certificate
Registrar of a written request therefor from the Seller or the Owner Trustee, a
list, in such form as the Seller or the Owner Trustee, as the case may be, may
reasonably require, of the names and addresses of the Certificateholders as of
the most recent Record Date. If three or more Certificateholders or one or more
Holders of Certificates representing not less than 25% of the Security Balance
of the Certificates apply in writing to the Certificate Registrar, and such
application states that the applicants desire to communicate with other
Certificateholders with respect to their rights under the Basic Documents or
under the Certificates and such application is accompanied by a copy of the
communication that such applicants propose to transmit, then the Certificate
Registrar shall, within five Business Days after the receipt of such
application, afford such applicants access during normal business hours to the
current list of Certificateholders. Each Holder, by receiving and holding a
Certificate, shall be deemed to have agreed not to hold any of the Issuer, the
Seller, the Holder of the Designated Certificate, the holder of the Holdback
Amount, the Certificate Registrar or the Owner Trustee accountable by reason of
the disclosure of its name and address, regardless of the source from which such
information was derived.
Section 3.09. Maintenance of Office or Agency. The Certificate
Registrar, on behalf of the Issuer, shall maintain in the city of New York, an
office or offices or agency or agencies where Certificates may be surrendered
for registration of transfer or exchange and where notices and demands to or
upon the Owner Trustee in respect of the Certificates and the Basic Documents
may be served. The Issuer initially designates the Corporate Trust Office of the
Indenture Trustee as its office for such purposes. The Certificate Registrar
shall give prompt written notice to the Seller, the Owner Trustee, the Holder of
the Designated Certificate and the Certificateholders of any change in the
location of the Certificate Register or any such office or agency. The
Certificate Registrar shall immediately furnish to the Owner Trustee any notices
or demands to the Owner Trustee received by the Certificate Registrar at the
office maintained by it pursuant to this Section.
Section 3.10. Certificate Paying Agent. The Certificate Paying Agent
shall make distributions to Certificateholders from the Payment Account pursuant
to Section 3.05 of the Indenture. The Issuer may revoke such power and remove
the Certificate Paying Agent if the Administrator determines in its sole discre-
tion that the Certificate Paying Agent shall have failed to perform its
obligations under this Trust Agreement or as set forth in Section 3.03 of the
Indenture in any material respect; provided that at the time of such removal,
the Paying Agent shall also be removed by the Issuer under the Indenture. The
Bank of
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New York shall be permitted to resign as Certificate Paying Agent upon 30 days
written notice to the Owner Trustee; provided that The Bank of New York is also
resigning as Paying Agent under the Indenture at such time. In the event that
The Bank of New York shall no longer be the Certificate Paying Agent and Paying
Agent under the Indenture, the Administrator shall appoint a successor to act as
Certificate Paying Agent (which shall be a bank or trust company) and which
shall also be the successor Paying Agent under the Indenture. The Administrator
shall cause such successor Certificate Paying Agent or any additional
Certificate Paying Agent appointed by the Administrator to execute and deliver
to the Owner Trustee an instrument to the effect set forth in Section 3.03 of
the Indenture as it relates to the Certificate Paying Agent. The Certificate
Paying Agent shall return all unclaimed funds to the Issuer and upon removal of
a Certificate Paying Agent such Certificate Paying Agent shall also return all
funds in its possession to the Issuer. The provisions of Sections 7.01, 7.03,
7.04 and 8.01 shall apply to the Certificate Paying Agent to the extent
applicable. Any reference in this Agreement to the Certificate Paying Agent
shall include any co-paying agent unless the context requires otherwise.
Section 3.11. Ownership by HCLC. (a) HCLC shall receive on the Closing
Date, in partial consideration for the transfer of the Series 1997-1
Participation Interest, a Certificate representing at least 1% of the Initial
Principal Balance of the Certificates (the "Designated Certificate") and the
right to the entire payment stream represented by the Holdback Amount. The Owner
Trustee shall cause the Designated Certificate and any Successor Designated
Certificate created pursuant to Section 9.02 to contain a legend stating "THIS
CERTIFICATE IS NOT TRANSFERABLE EXCEPT UPON SATISFACTION OF THE CONDITIONS IN
SECTION 3.11(b) OF THE TRUST AGREEMENT." For purposes of the Business Trust
Statute, the Designated Certificate and any Successor Designated Certificate
shall be deemed to be a separate class of Certificates from all other
Certificates issued by the Issuer; provided that the rights and obligations
evidenced by all Certificates, regardless of class, shall, except as provided in
this Section, be identical.
(b) The Designated Certificate and Holdback Amount shall, for income
and franchise tax purposes, be treated as the general partnership interest of
the Issuer. The Designated Certificate shall at all times represent an
investment in the Issuer of not less than 1.00% of the capital represented by
all Certificates. The Designated Certificate and Holdback Amount shall not be
separately transferable. HCLC may transfer the Designated Certificate to an
Affiliate of HCLC if, (a) the applicable provisions of Section 3.05 are
satisfied and (b) the Certificate Registrar receives an Opinion of Counsel to
the effect that the transfer of the Designated Certificate shall not cause the
Issuer to be subject to an entity level tax. Otherwise, HCLC may transfer the
Designated Certificate if, (a) the conditions in
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clauses (a) and (b) in the preceding sentence are satisfied, (b) a majority in
interest by Security Balance of the Certificates (exclusive of the Designated
Certificate) approves such transfer, which will not be unreasonably withheld,
and (c) the Rating Agencies shall consent to such transfer.
Section 3.12. RESERVED
Section 3.13. Optional Repurchase of the Series 1997-1 Participation
Interest. (a) The Seller may, with 10 days prior written notice to the Owner
Trustee, Servicer and the Indenture Trustee, purchase the entire Series 1997-1
Participation Interest, on any Payment Date in which the Aggregate Security
Balance is equal to or less than ten percent of the initial Aggregate Security
Balance. The Seller shall deposit into the Payment Account on the Business Day
prior to the Payment Date on which such purchase is to occur, an amount equal to
the principal balance of the Series 1997-1 Participation Interest and the amount
of interest and Certificate Yield to be distributed to the Security holders
pursuant to Section 3.05(a) of the Indenture as of such Payment Date.
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ARTICLE IV
Actions by Owner Trustee
Section 4.01. Prior Notice to Certificateholders with Respect to
Certain Matters. With respect to the following matters, the Owner Trustee shall
not take action unless at least 30 days before the taking of such action, the
Owner Trustee shall have notified the Certificateholders in writing of the
proposed action and the Certificateholders shall not have notified the Owner
Trustee in writing prior to the 30th day after such notice is given that such
Certificateholders have withheld consent or provided alternative direction:
(a) the initiation of any claim or lawsuit by the Issuer (except claims
or lawsuits brought in connection with the collection of the Series 1997-1
Participation Interest) and the compromise of any action, claim or lawsuit
brought by or against the Issuer (except with respect to the aforementioned
claims or lawsuits for collection of the Series 1997-1 Participation Interest);
(b) the election by the Issuer to file an amendment to the Certificate
of Trust (unless such amendment is required to be filed under the Business Trust
Statute);
(c) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is required;
(d) (i) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is not required and such
amendment materially adversely affects the interest of the Certificateholders or
(ii) the amendment of the Pooling and Servicing Agreement under circumstances
where the consent of the holder of Series Participation Interests is required;
(e) the amendment, change or modification of the Administration
Agreement, except to cure any ambiguity or to amend or supplement any provision
in a manner or add any provision that would not materially adversely affect the
interests of the Certificateholders; or
(f) the appointment pursuant to the Indenture of a successor Note
Registrar, Paying Agent or Indenture Trustee or pursuant to this Trust Agreement
of a successor Certificate Registrar, Certificate Paying Agent or Administrator
or the consent to the assignment by the Note Registrar, Paying Agent, Indenture
Trustee, Certificate Registrar, Certificate Paying Agent or Administrator of its
obligations under the Indenture or this Trust Agreement, as applicable.
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Section 4.02. Action by Certificateholders with Respect to Certain
Matters. The Owner Trustee shall not have the power, except upon the direction
of the Certificateholders, to (a) remove the Administrator under the
Administration Agreement pursuant to Section 8 thereof, (b) appoint a successor
Administrator pursuant to Section 8 of the Administration Agreement, (c) remove
the Servicer under the Pooling and Servicing Agreement pursuant to Article X
thereof or (d) except as expressly provided in the Basic Documents, sell the
Series 1997-1 Participation Interest after the termination of the Indenture. The
Owner Trustee shall take the actions referred to in the preceding sentence only
upon written instructions signed by the Certificateholders.
Section 4.03. Action by Certificateholders with Respect to Bankruptcy.
The Owner Trustee shall not have the power to commence a voluntary proceeding in
bankruptcy relating to the Issuer without the unanimous prior approval of all
Certificateholders and the delivery to the Owner Trustee by each such
Certificate-holder of a certificate certifying that such Certificateholder
reasonably believes that the Issuer is insolvent.
Section 4.04. Restrictions on Certificateholders' Power. The
Certificateholders shall not direct the Owner Trustee to take or to refrain from
taking any action if such action or inaction would be contrary to any obligation
of the Issuer or the Owner Trustee under this Trust Agreement or any of the
Basic Documents or would be contrary to Section 2.03, nor shall the Owner
Trustee be obligated to follow any such direction, if given.
Section 4.05. Majority Control. Except as expressly pro- vided herein,
any action that may be taken by the Certificate- holders under this Trust
Agreement may be taken by the Holders of Certificates evidencing not less than a
majority of the outstanding Security Balance of the Certificates. Except as
expressly provided herein, any written notice of the Certificateholders
delivered pursuant to this Trust Agreement shall be effective if signed by
Holders of Certificates evidencing not less than a majority of the outstanding
Security Balance of the Certificates at the time of the delivery of such notice.
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ARTICLE V
Application of Trust Funds
Section 5.01. Distributions. (a) On each Payment Date, the Certificate
Paying Agent shall distribute out of the Payment Account to the extent of funds
on deposit therein and available therefor, distributions on the Certificates and
in payment of the Holdback Amount as provided in Section 3.05 of the Indenture.
(b) In the event that any withholding tax is imposed on the
distributions (or allocations of income) to a Certificateholder, such tax shall
reduce the amount otherwise distributable to the Certificateholder in accordance
with Section 3.05 of the Indenture. The Certificate Paying Agent is hereby
authorized and directed to retain or cause to be retained from amounts otherwise
distributable to the Certificateholders sufficient funds for the payment of any
tax that is legally owed by the Issuer (but such authorization shall not prevent
the Issuer or the effected Certificateholder with the consent of the Designated
Certificateholder), from contesting any such tax in appropriate proceedings, and
withholding payment of such tax, if permitted by law, pending the outcome of
such proceedings). The amount of any withholding tax imposed with respect to a
Certificateholder shall be treated as cash distributed to such Certificateholder
at the time it is withheld by the Certificate Paying Agent and remitted to the
appropriate taxing authority. If there is a possibility that withholding tax is
payable with respect to a distribution (such as a distribution to a non-U.S.
Certificateholder), the Certificate Paying Agent may in its sole discretion
withhold such amounts in accordance with this paragraph (b).
(c) All calculations of the Certificate Yield on the Certificates shall
be made on the basis of the actual number of days in an Interest Period and a
year assumed to consist of 360 days.
Section 5.02. Method of Payment. Subject to Section 9.01(c),
distributions required to be made to Certificateholders on any Payment Date as
provided in Section 3.05 of the Indenture shall be made to each
Certificateholder of record on the preceding Record Date either by, in the
case of any Certificateholder owning Certificates, other than the Designated
Certificate, having denominations aggregating at least $1,000,000, wire
transfer, in immediately available funds, to the account of such Holder at a
bank or other entity having appropriate facilities therefor, if such
Certificateholder shall have provided to the Certificate Registrar appropriate
written instructions at least five Business Days prior to such Payment Date or,
if not, by check mailed to such Certificateholder at the address of such Holder
appearing in the Certificate Register. All distributions in respect of the
initial Designated Certificate and the Holdback Amount shall be made to HCLC,
the initial Holder of the Designated Certificate or
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its permitted transferee, as the case may be, by wire transfer, in immediately
available funds, to the account of such entity at a bank or other entity having
appropriate facilities therefor, as specified in written instructions to the
Certificate Paying Agent on the fifth Business Day prior to the first Payment
Date.
Section 5.03. Signature on Returns. The Holder of the Designated
Certificate shall sign on behalf of the Issuer the tax returns of the Issuer.
Section 5.04. Statements to Certificateholders. No later than the
second Business Day prior to each Payment Date, the Owner Trustee on behalf of
the Issuer shall cause to be delivered to the Certificate Paying Agent and the
Indenture Trustee the Monthly Security Report for such Payment Date prepared by
the Administrator substantially in the form set forth on Exhibit B to the
Indenture. On each Payment Date, the Certificate Paying Agent shall send to each
Certificateholder the statement or statements provided to the Owner Trustee, the
Certificate Paying Agent and the Indenture Trustee by the Servicer pursuant to
Article V of the Pooling and Servicing Agreement with respect to such Payment
Date.
Section 5.05. Tax Reporting; Tax Elections. The Holder of the
Designated Certificate shall cause the Issuer to file federal and state income
tax returns and information statements as a partnership for each of its taxable
years. Within 90 days after the end of each calendar year, the Holder of the
Designated Certificate shall cause the Issuer to provide to each
Certificateholder an Internal Revenue Service form "K-1" or any successor
schedule and supplemental information, if required by law, to enable each
Certificateholder to file its federal and state income tax returns. The Holder
of the Designated Certificate may from time to time make and revoke such tax
elections with respect to the Issuer as it deems necessary or desirable in its
sole discretion to carry out the business of the Issuer or the purposes of this
Trust Agreement if permitted by applicable law. Notwithstanding the foregoing,
an election under Section 754 of the Code shall not be made without the written
consent of the Holder of the Designated Certificate, which consent shall be
given in the sole discretion of the Holder of the Designated Certificate. The
Holder of the Designated Certificate shall serve as tax matters partner for the
Issuer.
Section 5.06. Capital Accounts. Separate capital accounts shall be
maintained for each Certificateholder in accordance with tax accounting
principles. Each such account shall initially equal the amount paid to the
Issuer by the Certificateholder for its Certificate and shall be (i) increased
by the distributive share of profits and capital gains of such
Certificateholder, and (ii) decreased by the amount of any cash and the fair
market value of any non-cash assets distributed to such Certificate-
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holder by the Issuer pursuant to this Agreement, and by such Certificateholder's
distributive share of losses.
The fiscal year of the Issuer shall end on the 31st day of December in
each year, unless otherwise required by the Code. For each fiscal year of the
Issuer, net profits shall be allocated among the Certificateholders (including
the holder of the Designated Certificate to which the payments in respect of the
Holdback Amount will be made to the extent possible) in such manner as to cause
their ending capital accounts (prior to any reduction for distributions for such
year and to the extent possible) to reflect their respective rights to current
and future distributions with respect to income and the return of their
investment. Such allocation shall be made to the Certificateholders in the order
of their right to such distributions and proportionately among
Certificateholders having equal priority. For each fiscal year of the Issuer,
net losses shall be allocated among the Certificateholders in such manner as to
reflect the order and amount in which they would respectively bear the economic
burden of such losses, and then in accordance with their relative Percentage
Interests.
The partnership tax returns of the Issuer shall be prepared in such a
manner as to fairly reflect the respective interest in the Issuer of each
Certificateholder in accordance with the principles of the regulations under
Code Section 704(b). Items of income and gain shall be allocated in proportion
to the overall allocation of income to each Certificateholder, and items of
loss, expense and deduction shall be allocated in proportion to the overall
allocation of loss to each Certificateholder. Any unexpected adjustments,
allocations or distributions shall be offset by allocations of items of income
and gain as quickly as possible in accordance with the qualified income offset
provisions of the Code Section 704(b) regulations.
If during any fiscal year of the Issuer there is a change in any
Certificateholder's interest as a result of the issuance, transfer or redemption
of any Certificates, profits and losses shall be allocated among the
Certificateholders so as to reflect their varying interest in the Issuer during
the period. The allocation shall be made using the "interim closing of the
books" method or any other method permissible under Code Section 706 selected by
the Administrator. The Administrator shall determine when any transferee of a
Certificate shall be deemed admitted to the "partnership" for federal income tax
purposes. Any transferee shall succeed to that portion of the assignor's capital
account attributable to the interest so transferred.
The maintenance of capital accounts by the Issuer is solely for the
preparation of its income tax returns, and is not intended to confer rights upon
any third parties. No Certificateholder shall have, by reason of its capital
account, any right to demand or receive any property or cash from the Issuer
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or any obligation to contribute such items to the Issuer. No creditor of the
Issuer shall be deemed a third party beneficiary of any obligation of any
Certificateholder by reason of its capital account to contribute capital or make
loans or advances to the Issuer.
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ARTICLE VI
Authority and Duties of Owner Trustee
Section 6.01. General Authority. The Owner Trustee is authorized and
directed to execute and deliver the Basic Documents to which the Issuer is to
be a party and each certificate or other document attached as an exhibit to or
contemplated by the Basic Documents to which the Issuer is to be a party and any
amendment or other agreement or instrument described herein, in each case, in
such form as the Administrator shall approve, as evidenced conclusively by the
Owner Trustee's execution thereof. In addition to the foregoing, the Owner
Trustee is authorized, but shall not be obligated, to take all actions required
of the Issuer pursuant to the Basic Documents. The Owner Trustee is further
authorized from time to time to take such action as the Administrator directs
with respect to the Basic Documents.
Section 6.02. General Duties. It shall be the duty of the Owner Trustee
to discharge (or cause to be discharged) all of its responsibilities pursuant to
the terms of this Trust Agreement and the Basic Documents to which the Issuer is
a party and to administer the Issuer in the interest of the Certificateholders,
subject to the Basic Documents and in accordance with the provisions of this
Trust Agreement. Notwithstanding the foregoing, the Owner Trustee shall be
deemed to have discharged its duties and responsibilities hereunder and under
the Basic Documents to the extent the Administrator has agreed in the
Administration Agreement to perform such acts or to discharge such duties of the
Owner Trustee or the Issuer hereunder or under any Basic Document, and the Owner
Trustee shall not be held liable for the default or failure of the Administrator
to carry out its obligations under the Administration Agreement. The Designated
Certificateholder may delegate its duties hereunder, provided, however, that
such delegation of duties shall not relieve the Designated Certificateholder of
its obligations hereunder.
Section 6.03. Action upon Instruction. (a) Unless the Owner Trustee has
actual knowledge that an Insolvency Event or breach of representation or
violation of any material obligation under the Basic Documents has occurred in
respect of the Designated Certificateholder or of any Affiliate thereof, the
Designated Certificateholder may by written instruction direct the Owner Trustee
in the management of the Issuer. In the event the Owner Trustee has actual
knowledge that an Insolvency Event or breach of representation or violation of
any material obligation under the Basic Documents has occurred in respect of the
Designated Certificateholder or any Affiliate thereof, the Certificateholders
may by written instruction direct the Owner Trustee in the management of the
Issuer. Such direction may be exercised at any time by written instruction of
the Designated Certificateholder or the Certificateholders as the case may be
pursuant to Article IV.
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(b) The Owner Trustee shall not be required to take any action
hereunder or under any Basic Document if the Owner Trustee shall have reasonably
determined, or shall have been advised by counsel, that such action is likely to
result in liability on the part of the Owner Trustee or is contrary to the terms
hereof or of any Basic Document or is otherwise contrary to law.
(c) Whenever the Owner Trustee is unable to decide between alternative
courses of action permitted or required by the terms of this Trust Agreement or
under any Basic Document, the Owner Trustee shall promptly give notice (in such
form as shall be appropriate under the circumstances) to the Certificateholders
requesting instruction as to the course of action to be adopted, and to the
extent the Owner Trustee acts in good faith in accordance with any written
instruction of the Certificateholders received, the Owner Trustee shall not be
liable on account of such action to any Person. If the Owner Trustee shall not
have received appropriate instruction within 10 days of such notice (or within
such shorter period of time as reasonably may be specified in such notice or may
be necessary under the circumstances) it may, but shall be under no duty to,
take or refrain from taking such action not inconsistent with this Trust
Agreement or the Basic Documents, as it shall deem to be in the best interests
of the Certificateholders, and shall have no liability to any Person for such
action or inaction.
(d) In the event that the Owner Trustee is unsure as to the application
of any provision of this Trust Agreement or any Basic Document or any such
provision is ambiguous as to its application, or is, or appears to be, in
conflict with any other applicable provision, or in the event that this Trust
Agreement permits any determination by the Owner Trustee or is silent or is
incomplete as to the course of action that the Owner Trustee is required to take
with respect to a particular set of facts, the Owner Trustee may give notice (in
such form as shall be appropriate under the circumstances) to the
Certificateholders requesting instruction and, to the extent that the Owner
Trustee acts or refrains from acting in good faith in accordance with any such
instruction received, the Owner Trustee shall not be liable, on account of such
action or inaction, to any Person. If the Owner Trustee shall not have received
appropriate instruction within 10 days of such notice (or within such shorter
period of time as reasonably may be specified in such notice or may be necessary
under the circumstances) it may, but shall be under no duty to, take or refrain
from taking such action not inconsistent with this Trust Agreement or the Basic
Documents, as it shall deem to be in the best interests of the
Certificateholders, and shall have no liability to any Person for such action or
inaction.
Section 6.04. No Duties Except as Specified in this Trust Agreement or
in Instructions. The Owner Trustee shall not have any duty or obligation to
manage, make any payment with respect
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to, register, record, sell, dispose of, or otherwise deal with the Owner Trust
Estate, or to otherwise take or refrain from taking any action under, or in
connection with, any document contemplated hereby to which the Owner Trustee is
a party, except as expressly provided by the terms of this Trust Agreement or in
any document or written instruction received by the Owner Trustee pursuant to
Section 6.03; and no implied duties or obligations shall be read into this Trust
Agreement or any Basic Document against the Owner Trustee. The Owner Trustee
shall have no responsibility for filing any financing or continuation statement
in any public office at any time or to otherwise perfect or maintain the
perfection of any security interest or lien granted to it hereunder or to
prepare or file any Securities and Exchange Commission filing for the Trust or
to record this Trust Agreement or any Basic Document. The Owner Trustee
nevertheless agrees that it will, at its own cost and expense, promptly take all
action as may be necessary to discharge any liens on any part of the Owner Trust
Estate that result from actions by, or claims against, the Owner Trustee that
are not related to the ownership or the administration of the Owner Trust
Estate.
Section 6.05. No Action Except Under Specified Documents or
Instructions. The Owner Trustee shall not manage, control, use, sell, dispose of
or otherwise deal with any part of the Owner Trust Estate except (1) in
accordance with the powers granted to and the authority conferred upon the Owner
Trustee pursuant to this Trust Agreement, (2) in accordance with the Basic
Documents and (3) in accordance with any document or instruction delivered to
the Owner Trustee pursuant to Section 6.03.
Section 6.06. Restrictions. The Owner Trustee shall not take any action
(i) that is inconsistent with the purposes of the Issuer set forth in Section
2.03 or (ii) that, to the actual knowledge of the Owner Trustee, would result in
the Issuer becoming taxable as a corporation for federal income tax purposes.
The Certificateholders shall not direct the Owner Trustee to take action that
would violate the provisions of this Section 6.06.
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ARTICLE VII
Concerning the Owner Trustee
Section 7.01. Acceptance of Trusts and Duties. The Owner Trustee
accepts the trust hereby created and agrees to perform its duties hereunder with
respect to such trusts but only upon the terms of this Trust Agreement. The
Owner Trustee and the Certificate Paying Agent also agree to disburse all moneys
actually received by it constituting part of the Owner Trust Estate upon the
terms of the Basic Documents and this Trust Agreement. The Owner Trustee shall
not be answerable or accountable hereunder or under any Basic Document under
any circumstances, except (i) for its own willful misconduct, negligence or
bad faith or (ii) in the case of the inaccuracy of any representation or
warranty contained in Section 7.03 expressly made by the Owner Trustee. In
particular, but not by way of limitation (and subject to the exceptions set
forth in the preceding sentence):
(a) The Owner Trustee shall not be liable for any error of judgment
made by a responsible officer of the Owner Trustee;
(b) The Owner Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in accordance with the instructions of the
Administrator, Holder of the Designated Certificate or the Certificateholders;
(c) No provision of this Trust Agreement or any Basic Document shall
require the Owner Trustee to expend or risk funds or otherwise incur any
financial liability in the performance of any of its rights, duties or powers
hereunder or under any Basic Document if the Owner Trustee shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured or provided to it;
(d) Under no circumstances shall the Owner Trustee be liable for
indebtedness evidenced by or arising under any of the Basic Documents, including
the principal of and interest on the Notes;
(e) The Owner Trustee shall not be responsible for or in respect of the
validity or sufficiency of this Trust Agreement or for the due execution hereof
by the Seller or the Holder of the Designated Certificate or for the form,
character, genuineness, sufficiency, value or validity of any of the Owner Trust
Estate, or for or in respect of the validity or sufficiency of the Basic
Documents, other than the certificate of authentication on the Certificates, if
executed by the Owner Trustee and the Owner Trustee shall in no event assume or
incur any liability, duty, or obligation to any Noteholder or to any
Certificateholder, other
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than as expressly provided for herein or expressly agreed to in the Basic
Documents;
(f) The Owner Trustee shall not be liable for the default or misconduct
of the Administrator, the Certificate Paying Agent, the Certificate Registrar,
the Holder of the Designated Certificate, the Seller, Indenture Trustee or the
Servicer under any of the Basic Documents or otherwise and the Owner Trustee
shall have no obligation or liability to perform the obligations of the Issuer
under this Trust Agreement or the Basic Documents that are required to be
performed by the Administrator under the Administration Agreement, the Indenture
Trustee, the Certificate Paying Agent, the Certificate Registrar under this
Trust Agreement or the Indenture or the Seller under the Receivables Purchase
Agreement; and
(g) The Owner Trustee shall be under no obligation to exercise any of
the rights or powers vested in it or duties imposed by this Trust Agreement, or
to institute, conduct or defend any litigation under this Trust Agreement or
otherwise or in relation to this Trust Agreement or any Basic Document, at the
request, order or direction of any of the Certificateholders, unless such
Certificateholders have offered to the Owner Trustee security or indemnity
satisfactory to it against the costs, expenses and liabilities that may be
incurred by the Owner Trustee therein or thereby. The right of the Owner Trustee
to perform any discretionary act enumerated in this Trust Agreement or in any
Basic Document shall not be construed as a duty, and the Owner Trustee shall not
be answerable for other than its negligence or willful misconduct in the
performance of any such act.
Section 7.02. Furnishing of Documents. The Issuer shall furnish to the
Certificateholders promptly upon receipt of a written reasonable request
therefor, duplicates or copies of all reports, notices, requests, demands,
certificates, financial statements and any other instruments furnished to the
Issuer under the Basic Documents.
Section 7.03. Representations and Warranties. The Owner Trustee hereby
represents and warrants to the Seller, for the benefit of the
Certificateholders, that:
(a) It is a banking corporation duly organized and validly existing in
good standing under the laws of the State of Delaware. It has all requisite
corporate power and authority to execute, deliver and perform its obligations
under this Trust Agreement.
(b) It has taken all corporate action necessary to authorize the
execution and delivery by it of this Trust Agreement, and this Trust Agreement
will be executed and delivered by one of its officers who is duly authorized to
execute and deliver this Trust Agreement on its behalf.
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(c) Neither the execution nor the delivery by it of this Trust
Agreement, nor the consummation by it of the transactions contemplated hereby
nor compliance by it with any of the terms or provisions hereof will contravene
any federal or Delaware law, governmental rule or regulation governing the
banking or trust powers of the Owner Trustee or any judgment or order binding on
it, or constitute any default under its charter documents or bylaws or any
indenture, mortgage, contract, agreement or instrument to which it is a party or
by which any of its properties may be bound.
Section 7.04. Reliance; Advice of Counsel. (a) The Owner Trustee shall
incur no liability to anyone in acting upon any signature, instrument, notice,
resolution, request, consent, order, certificate, report, opinion, bond, or
other document or paper believed by it to be genuine and believed by it to be
signed by the proper party or parties. The Owner Trustee may accept a certified
copy of a resolution of the board of directors or other governing body of any
corporate party as conclusive evidence that such resolution has been duly
adopted by such body and that the same is in full force and effect. As to any
fact or matter the method of determination of which is not specifically
prescribed herein, the Owner Trustee may for all purposes hereof rely on a
certificate, signed by the president or any vice president or by the treasurer
or any assistant treasurer or other authorized officers of the relevant party,
as to such fact or matter and such certificate shall constitute full protection
to the Owner Trustee for any action taken or omitted to be taken by it in good
faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder and in
the performance of its duties and obligations under this Trust Agreement or the
Basic Documents, the Owner Trustee (1) may act directly or through its agents,
attorneys or administrators pursuant to agreements entered into with any of
them, and the Owner Trustee shall not be liable for the conduct or misconduct of
such agents or attorneys if such agents or attorneys shall have been selected by
the Owner Trustee with reasonable care, and (2) may consult with counsel,
accountants and other skilled persons to be selected with reasonable care and
employed by it. The Owner Trustee shall not be liable for anything done,
suffered or omitted in good faith by it in accordance with the written opinion
or advice of any such counsel, accountants or other such Persons and not
contrary to this Trust Agreement or any Basic Document.
Section 7.05. Not Acting in Individual Capacity. Except as provided in
this Article VII, in accepting the trusts hereby created Chase Manhattan Bank
Delaware acts solely as Owner Trustee hereunder and not in its individual
capacity, and all Persons having any claim against the Owner Trustee by reason
of the transactions contemplated by this Trust Agreement or any Basic
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Document shall look only to the Owner Trust Estate for payment or satisfaction
thereof.
Section 7.06. Owner Trustee Not Liable for Certificates. The recitals
contained herein and in the Certificates (other than the signatures of the Owner
Trustee on the Certificates) shall be taken as the statements of the Seller, and
the Owner Trustee assumes no responsibility for the correctness thereof. The
Owner Trustee makes no representations as to the validity or sufficiency of this
Trust Agreement, of any Basic Document or of the Certificates (other than the
signatures of the Owner Trustee on the Certificates) or the Notes. The Owner
Trustee shall at no time have any responsibility or liability for or with
respect to the sufficiency of the Owner Trust Estate or its ability to generate
the payments to be distributed to Certificateholders under this Trust Agreement
or the Noteholders under the Indenture, including, the compliance by the Seller
with any warranty or representation made under any Basic Document or in any
related document or the accuracy of any such warranty or representation, or any
action of the Administrator, the Certificate Paying Agent, the Certificate
Registrar or the Indenture Trustee taken in the name of the Owner Trustee.
Section 7.07. Owner Trustee May Own Certificates and Notes. The Owner
Trustee in its individual or any other capacity may become the owner or pledgee
of Certificates or Notes and may deal with the Seller, the Certificate Paying
Agent, the Certificate Registrar, the Administrator and the Indenture Trustee in
banking transactions with the same rights as it would have if it were not Owner
Trustee.
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ARTICLE VIII
Compensation of Owner Trustee
Section 8.01. Owner Trustee's Fees and Expenses. The Owner Trustee
shall receive as compensation for its services hereunder such fees as have been
separately agreed upon before the date hereof, and the Owner Trustee shall be
reimbursed by HCLC, the initial Holder of the Designated Certificate for its
reasonable expenses hereunder and under the Basic Documents, including the
reasonable compensation, expenses and disbursements of such agents,
representatives, experts and outside counsel as the Owner Trustee may reasonably
employ in connection with the exercise and performance of its rights and its
duties hereunder and under the Basic Documents.
Section 8.02. Indemnification. The Holder of the Designated
Certificate shall be liable as primary obligor for, and shall indemnify the
Owner Trustee and its successors, assigns, agents and servants (collectively,
the "Indemnified Parties") from and against, any and all liabilities,
obligations, losses, damages, taxes, claims, actions and suits, and any and all
reasonable costs, expenses and disbursements (including reasonable legal fees
and expenses) of any kind and nature whatsoever (collectively, "Expenses") which
may at any time be imposed on, incurred by, or asserted against the Owner
Trustee or any Indemnified Party in any way relating to or arising out of this
Trust Agreement, the Basic Documents, the Owner Trust Estate, the administration
of the Owner Trust Estate or the action or inaction of the Owner Trustee
hereunder; provided that:
(i) the Holder of the Designated Certificate shall not be
liable for or required to indemnify an Indemnified Party from and
against Expenses arising or resulting from the Owner Trustee's willful
misconduct, negligence or bad faith or as a result of any inaccuracy of
a representation or warranty contained in Section 7.03 expressly made
by the Owner Trustee;
(ii) with respect to any such claim, the Indemnified Party
shall have given the Holder of the Designated Certificate written
notice thereof promptly after the Indemnified Party shall have actual
knowledge thereof;
(iii) while maintaining control over its own defense, the
Holder of the Designated Certificate shall consult with the Indemnified
Party in preparing such defense; and
(iv) notwithstanding anything in this Agreement to the
contrary, the Holder of the Designated Certificate shall not be liable
for settlement of any claim by an Indemnified Party entered into
without the prior consent of the Holder
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of the Designated Certificate which consent shall not be unreasonably
withheld.
The indemnities contained in this Section shall survive the resignation
or termination of the Owner Trustee or the termination of this Trust Agreement.
In the event of any claim, action or proceeding for which indemnity will be
sought pursuant to this Section, the Owner Trustee's choice of legal counsel, if
other than the legal counsel retained by the Owner Trustee in connection with
the execution and delivery of this Trust Agreement, shall be subject to the
approval of the Holder of the Designated Certificate, which approval shall not
be unreasonably withheld. In addition, upon written notice to the Owner Trustee
and with the consent of the Owner Trustee which consent shall not be
unreasonably withheld, the Holder of the Designated Certificate has the right to
assume the defense of any claim, action or proceeding against the Owner Trustee.
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ARTICLE IX
Termination of Trust Agreement
Section 9.01. Termination of Trust Agreement. (a) This Trust Agreement
(other than Article VIII) and the Issuer shall terminate and be of no further
force or effect upon the earliest of (i) upon the final distribution of all
moneys or other property or proceeds of the Owner Trust Estate in accordance
with the terms of the Indenture and this Trust Agreement, (ii) the Payment Date
in __________ 20___ or (iii) at the time provided for in Section 9.02. The
bankruptcy, liquidation, dissolution, death or incapacity of any
Certificateholder, other than the Holder of the Designated Certificate, shall
not (x) operate to terminate this Trust Agreement or the Issuer or (y) entitle
such Certificate-holder's legal representatives or heirs to claim an accounting
or to take any action or proceeding in any court for a partition or winding up
of all or any part of the Issuer or the Owner Trust Estate or (z) otherwise
affect the rights, obligations and liabilities of the parties hereto.
(b) Except as provided in Section 9.01(a), none of the Seller, the
Holder of the Designated Certificate or any other Certificateholder shall be
entitled to revoke or terminate the Trust.
(c) Notice of any termination of the Issuer, specifying the Payment
Date upon which Certificateholders shall surrender their Certificates to the
Certificate Paying Agent for payment of the final distribution and cancellation,
shall be given by the Certificate Paying Agent by letter to Certificateholders
mailed within five Business Days of receipt of notice of such termination from
the Administrator, stating (i) the Payment Date upon or with respect to which
final payment of the Certificates shall be made upon presentation and surrender
of the Certificates at the office of the Certificate Paying Agent therein
designated, (ii) the amount of any such final payment and (iii) that the Record
Date otherwise applicable to such Payment Date is not applicable, payments being
made only upon presentation and surrender of the Certificates at the office of
the Certificate Payment Agent therein specified. The Certificate Paying Agent
shall give such notice to the Owner Trustee and the Certificate Registrar at the
time such notice is given to Certificateholders. Upon presentation and surrender
of the Certificates, the Certificate Paying Agent shall cause to be distributed
to Certificate-holders amounts distributable on such Payment Date pursuant to
Section 5.01.
In the event that all of the Certificateholders shall not surrender
their Certificates for cancellation within six months after the date specified
in the above mentioned written notice, the Certificate Paying Agent shall give a
second written notice to the remaining Certificateholders to surrender their
Certifi-
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cates for cancellation and receive the final distribution with respect thereto.
Subject to applicable laws with respect to escheat of funds, if within two years
following the Payment Date on which final payment of the Certificates was to
have been made all the Certificates shall not have been surrendered for
cancellation, the Certificate Paying Agent may take appropriate steps, or may
appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates, and the cost
thereof shall be paid out of the funds and other assets that shall remain
subject to this Trust Agreement. Any funds remaining in the Payment Account
after exhaustion of such remedies shall be distributed by the Certificate Paying
Agent to the Holder of the Designated Certificate.
(d) Upon the winding up of the Issuer and its termination, the Owner
Trustee shall cause the Certificate of Trust to be cancelled by filing a
certificate of cancellation with the Secretary of State in accordance with the
provisions of Section 3810(c) of the Business Trust Statute.
Section 9.02. Dissolution upon Bankruptcy of the Holder of the
Designated Certificate. In the event that an Insolvency Event shall occur with
respect to the Holder of the Designated Certificate, this Agreement shall be
terminated in accordance with Section 9.01, 90 days after the date of such
Insolvency Event, unless, before the end of such 90-day period, the Owner
Trustee shall have received written instructions from Holders of Certificates
(other than the Holder of the Designated Certificate) representing more than 50%
of the Security Balance of the Certificates (not including the Security Balance
of the Designated Certificate or any other Certificates held by HCLC or any
Affiliate thereof), to the effect that such Holders disapprove of the
termination of the Issuer and have elected or appointed any one of such Holders
or a transferee of Certificates meeting the requisite conditions set forth in an
Opinion of Counsel delivered to the Owner Trustee as a new Designated
Certificateholder (the "Successor Designated Certificateholder") for the
continuation of the tax treatment of the Issuer. Such Successor Designated
Certificate shall represent at least 1% of the Initial Principal Balance of the
Certificates. The appointment of a Successor Designated Certificateholder will
not deprive HCLC or its transferee of its economic interest in the Designated
Certificate or Holdback Amount, its Certificates or otherwise in the Owner Trust
Estate. Promptly after the occurrence of any Insolvency Event with respect to
any Holder of the Designated Certificate (A) the Holder of such Designated
Certificate or Successor Designated Certificate shall give the Indenture Trustee
and the Owner Trustee written notice of such Insolvency Event, (B) the Owner
Trustee shall, upon the receipt of such written notice from the Holder of such
Designated Certificate, give prompt written notice to the Certificateholders of
the occurrence of such event and (C) the Indenture Trustee shall give prompt
written notice of such event to the Noteholders; provided, however, that any
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failure to give a notice required by this sentence shall not prevent or delay,
in any manner, a termination of the Issuer pursuant to the first sentence of
this Section 9.02. Upon a termination pursuant to this Section, the Owner
Trustee shall direct the Indenture Trustee promptly to sell the assets of the
Issuer (other than the Payment Account) in a commercially reasonable manner and
on commercially reasonable terms. The proceeds of such a sale of the assets of
the Issuer shall be deposited to the Payment Account for distribution in
accordance with Section 5.03(a) of the Indenture.
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ARTICLE X
Successor Owner Trustees and Additional Owner Trustees
Section 10.01. Eligibility Requirements for Owner Trustee. The Owner
Trustee shall at all times be a corporation satisfying the provisions of Section
3807(a) of the Business Trust Statute; authorized to exercise corporate trust
powers; having a combined capital and surplus of at least $50,000,000 and
subject to supervision or examination by federal or state authorities; and
having (or having a parent that has) a rating of at least Baa3 by Moody's (or a
rating otherwise acceptable to Moody's). If such corporation shall publish
reports of condition at least annually pursuant to law or to the requirements of
the aforesaid supervising or examining authority, then for the purpose of this
Section, the combined capital and surplus of such corporation shall be deemed to
be its combined capital and surplus as set forth in its most recent report of
condition so published. In case at any time the Owner Trustee shall cease to be
eligible in accordance with the provisions of this Section 10.01, the Owner
Trustee shall resign immediately in the manner and with the effect specified in
Section 10.02.
Section 10.02. Resignation or Removal of Owner Trustee. The Owner
Trustee may at any time resign and be discharged from the trusts hereby created
by giving written notice thereof to the Administrator and the Designated
Certificateholder. Upon receiving such notice of resignation, the Designated
Certificateholder shall promptly appoint a successor Owner Trustee, by written
instrument, in duplicate, one copy of which instrument shall be delivered to the
resigning Owner Trustee and one copy to the successor Owner Trustee. If no
successor Owner Trustee shall have been so appointed and have accepted
appointment within 30 days after the giving of such notice of resignation, the
resigning Owner Trustee may petition any court of competent jurisdiction for the
appointment of a successor Owner Trustee.
If at any time the Owner Trustee shall cease to be eligible in
accordance with the provisions of Section 10.01 and shall fail to resign after
written request therefor by the Designated Certificateholder or if at any time
the Owner Trustee shall be legally unable to act, or shall be adjudged bankrupt
or insolvent, or a receiver of the Owner Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the Owner
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then the Designated Certificateholder may remove
the Owner Trustee. If the Designated Certificateholder shall remove the Owner
Trustee under the authority of the immediately preceding sentence, the
Designated Certificateholder shall promptly appoint a successor Owner Trustee by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the outgoing
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Owner Trustee so removed and one copy to the successor Owner Trustee, and shall
pay all fees owed to the outgoing Owner Trustee.
Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this Section shall
not become effective until acceptance of appointment by the successor Owner
Trustee pursuant to Section 10.03 and payment of all fees and expenses owed to
the outgoing Owner Trustee. The Administrator shall provide notice of such
resignation or removal of the Owner Trustee to each of the Rating Agencies.
Section 10.03. Successor Owner Trustee. Any successor Owner Trustee
appointed pursuant to Section 10.02 shall execute, acknowledge and deliver to
the Designated Certificateholder and to its predecessor Owner Trustee an
instrument accepting such appointment under this Trust Agreement, and thereupon
the resignation or removal of the predecessor Owner Trustee shall become
effective, and such successor Owner Trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor under this Trust Agreement, with like effect as
if originally named as Owner Trustee. The predecessor Owner Trustee shall upon
payment of its fees and expenses deliver to the successor Owner Trustee all
documents and statements and monies held by it under this Trust Agreement; and
the Designated Certificateholder and the predecessor Owner Trustee shall execute
and deliver such instruments and do such other things as may reasonably be
required for fully and certainly vesting and confirming in the successor Owner
Trustee all such rights, powers, duties and obligations.
No successor Owner Trustee shall accept appointment as provided in this
Section 10.03 unless at the time of such acceptance such successor Owner Trustee
shall be eligible pursuant to Section 10.01.
Upon acceptance of appointment by a successor Owner Trustee pursuant to
this Section 10.03, the Administrator shall mail notice thereof to all
Certificateholders, the Indenture Trustee, the Noteholders and the Rating
Agencies. If the Administrator shall fail to mail such notice within 10 days
after acceptance of such appointment by the successor Owner Trustee, the
successor Owner Trustee shall cause such notice to be mailed at the expense of
the Administrator.
Section 10.04. Merger or Consolidation of Owner Trustee. Any Person
into which the Owner Trustee may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Owner Trustee shall be a party, or any Person
succeeding to all or substantially all of the corporate trust business of the
Owner
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Trustee, shall be the successor of the Owner Trustee hereunder, without the
execution or filing of any instrument or any further act on the part of any of
the parties hereto, anything herein to the contrary notwithstanding; provided
that such Person shall be eligible pursuant to Section 10.01 and, provided,
further, that the Owner Trustee shall mail notice of such merger or
consolidation to the Rating Agencies.
Section 10.05. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Owner Trust Estate may at the time be located, the Designated
Certificateholder and the Owner Trustee acting jointly shall have the power and
shall execute and deliver all instruments to appoint one or more Persons
approved by the Designated Certificateholder and Owner Trustee to act as
co-trustee, jointly with the Owner Trustee, or as separate trustee or separate
trustees, of all or any part of the Owner Trust Estate, and to vest in such
Person, in such capacity, such title to the Owner Trust Estate or any part
thereof and, subject to the other provisions of this Section, such powers,
duties, obligations, rights and trusts as the Designated Certificateholder and
the Owner Trustee may consider necessary or desirable. If the Designated
Certificateholder shall not have joined in such appointment within 15 days after
the receipt by it of a request so to do, the Owner Trustee alone shall have the
power to make such appointment. No co-trustee or separate trustee under this
Trust Agreement shall be required to meet the terms of eligibility as a
successor Owner Trustee pursuant to Section 10.01 and no notice of the
appointment of any co-trustee or separate trustee shall be required pursuant to
Section 10.03.
Each separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(a) All rights, powers, duties and obligations conferred or imposed
upon the Owner Trustee shall be conferred upon and exercised or performed by the
Owner Trustee and such separate trustee or co-trustee jointly (it being
understood that such separate trustee or co-trustee is not authorized to act
separately without the Owner Trustee joining in such act), except to the extent
that under any law of any jurisdiction in which any particular act or acts are
to be performed, the Owner Trustee shall be incompetent or unqualified to
perform such act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Owner Trust Estate or any
portion thereof in any such jurisdiction) shall be exercised and performed
singly by such separate trustee or co-trustee, but solely at the direction of
the Owner Trustee;
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(b) No trustee under this Trust Agreement shall be personally liable by
reason of any act or omission of any other trustee under this Trust Agreement;
and
(c) The Designated Certificateholder and the Owner Trustee acting
jointly may at any time accept the resignation of or remove any separate trustee
or co-trustee.
Any notice, request or other writing given to the Owner Trustee shall
be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Trust
Agreement and the conditions of this Article. Each separate trustee and
co-trustee, upon its acceptance of the trusts conferred, shall be vested with
the estates or property specified in its instrument of appointment, either
jointly with the Owner Trustee or separately, as may be provided therein,
subject to all the provisions of this Trust Agreement, specifically including
every provision of this Trust Agreement relating to the conduct of, affecting
the liability of, or affording protection to, the Owner Trustee. Each such
instrument shall be filed with the Owner Trustee and a copy thereof given to the
Administrator.
Any separate trustee or co-trustee may at any time appoint the Owner
Trustee as its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Trust Agreement on its behalf and in its name. If any separate trustee or
co-trustee shall die, become incapable of acting, resign or be removed, all of
its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Owner Trustee, to the extent permitted by law, without the
appointment of a new or successor co-trustee or separate trustee.
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ARTICLE XI
Miscellaneous
Section 11.01. Amendments. (a) This Trust Agreement may be amended from
time to time by the parties hereto, by a written instrument signed by each of
them, without the consent of any of the Securityholders; provided that an
Opinion of Counsel for the Seller (which Opinion of Counsel may, as to factual
matters, rely upon Officer's Certificates of the Seller) is addressed and
delivered to the Owner Trustee, dated the date of any such amendment, to the
effect that the conditions precedent to any such amendment have been satisfied
and the Seller shall have delivered to the Owner Trustee 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 Securityholders.
(b) This Agreement may also be amended from time to time with the
consent of the Holders of the Securities evidencing not less than 66-2/3% of the
aggregate unpaid principal amount of the Security Balance of all affected
Securityholders for which the Seller has not delivered an Officer's Certificate
stating that there is no material adverse effect, 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, payments received that are required to be
distributed on any Certificate without the consent of the related
Certificateholder, or (ii) reduce the aforesaid percentage of Certificates the
Holders of which are required to consent to any such amendment, without the
consent of the Holders of all such Certificates then outstanding or cause any
material adverse tax consequences to any Certificateholders or Noteholders.
(c) If the purpose of the amendment is to (i) prevent the imposition of
any federal or state taxes at any time that any Security is outstanding (i.e.,
technical in nature), or (ii) eliminate the provisions for termination of this
Trust Agreement and replacement of the Holder of the Designated Certificate upon
an Insolvency Event with respect to the Holder, and eliminate Section 2.07(a) so
that Section 2.07(b) applies as well to the Holder of the Designated
Certificate, or (iii) to permit the election or qualification of the Issuer as a
"FASIT" or other similar form of entity for federal income tax purposes pursuant
to legislation which may be enacted subsequent to the date of this Agreement it
shall not be necessary to obtain the consent of any Holder, but the Owner
Trustee shall be furnished with an Opinion of Counsel that in the case of (i)
above such amendment is necessary or helpful to prevent the imposition of such
taxes, or in the case of (ii) or (iii) above such amendment will not cause the
Issuer to be subject to an entity level tax and the
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Seller shall deliver an Officer's Certificate to the Owner Trustee stating that
the Seller reasonably believes that such amendment will not have a material
adverse effect on Securityholders.
(d) Promptly after the execution of any such amendment or consent
(other than an amendment pursuant to paragraph (a)), the Owner Trustee shall
furnish notification of the substance of such amendment to each
Certificateholder, and to each Rating Agency.
(e) It shall not be necessary for the consent of Certificateholders
under this Section to approve the particular form of any proposed amendment, but
it shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Certificateholders shall be subject to such reasonable
requirements as the Owner Trustee may prescribe.
Promptly after the execution of any amendment to the Certificate of
Trust, the Owner Trustee shall cause the filing of such amendment with the
Secretary of State of the State of Delaware.
Section 11.02. No Legal Title to Owner Trust Estate in
Certificateholders. The Certificateholders shall not have legal title to any
part of the Owner Trust Estate. The Certificate-holders shall be entitled to
receive distributions with respect to their undivided beneficial interest
therein only in accordance with Articles V and IX. No transfer, by operation of
law or otherwise, of any right, title or interest of the Certificate-holders to
and in their ownership interest in the Owner Trust Estate shall operate to
terminate this Trust Agreement or the trusts hereunder or entitle any transferee
to an accounting or to the transfer to it of legal title to any part of the
Owner Trust Estate.
Section 11.03. Limitations on Rights of Others. Except for Section
2.07, the provisions of this Trust Agreement are solely for the benefit of the
Owner Trustee, the Seller, the Holder of the Designated Certificate, the
Certificateholders, the Administrator and, to the extent expressly provided
herein, the Indenture Trustee and the Noteholders, and nothing in this Trust
Agreement (other than Section 2.07), 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 Trust Agreement
or any covenants, conditions or provisions contained herein.
Section 11.04. Notices. (a) Unless otherwise expressly specified or
permitted by the terms hereof, all notices shall be in writing and shall be
deemed given upon receipt by the intended recipient or three Business Days after
mailing if mailed by certified mail, postage prepaid (except that notice to the
Owner Trustee shall be deemed given only upon actual receipt by the
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Owner Trustee), if to the Owner Trustee, addressed to the Corporate Trust
Office; if to the Seller, addressed to Household Consumer Loan Corporation, 1111
Town Center Drive, Las Vegas, Nevada 89134, Attn: Compliance Officer, with a
copy to Household Finance Corporation, 2700 Sanders Road, Prospect Heights,
Illinois 60070, Attn: Treasurer; or, as to each party, at such other address as
shall be designated by such party in a written notice to each other party.
(b) Any notice required or permitted to be given to a Certificateholder
shall be given by first-class mail, postage prepaid, at the address of such
Holder as shown in the Certificate Register. Any notice so mailed within the
time prescribed in this Trust Agreement shall be conclusively presumed to have
been duly given, whether or not the Certificateholder receives such notice.
(c) A copy of any notice delivered to the Owner Trustee or the Issuer
shall also be delivered to the Seller, the Administrator and The Chase Manhattan
Bank, 450 West 33rd Street, 15th Floor, New York, New York 10001, Attn: Global
Trust Services.
Section 11.05. Severability. Any provision of this Trust Agreement that
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 11.06. Separate Counterparts. This Trust Agreement may be
executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute but one and the same instrument.
Section 11.07. Successors and Assigns. All representations, warranties,
covenants and agreements contained herein shall be binding upon, and inure to
the benefit of, each of the Seller, the Owner Trustee and its successors and
each Certificateholder and its successors and permitted assigns. Any request,
notice, direction, consent, waiver or other instrument or action by a
Certificateholder shall bind the successors and assigns of such
Certificateholder.
Section 11.08. Covenants of the Seller. Neither the Seller nor the
Holder of the Designated Certificate will at any time institute against the
Issuer any bankruptcy proceedings under any United States federal or state
bankruptcy or similar law in connection with any obligations relating to the
Certificates, the Notes, this Trust Agreement or any of the Basic Documents.
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Section 11.09. No Petition. The Owner Trustee, by entering into this
Trust Agreement, and each Certificateholder, by accepting a Certificate, hereby
covenant and agree that they will not at any time institute against the Seller
or the Issuer, or join in any institution against the Seller or the Issuer of
any bankruptcy proceedings under any United States federal or state bankruptcy
or similar law in connection with any obligations to the Certificates, the
Notes, this Trust Agreement or any of the Basic Documents.
Section 11.10. No Recourse. Each Certificateholder by accepting a
Certificate acknowledges that such Certificate- holder's Certificates represent
beneficial interests in the Issuer only and do not represent interests in or
obligations of the Seller, the Holder of the Designated Certificate, the
Administrator, the Owner Trustee, the Indenture Trustee or any Affiliate thereof
and no recourse may be had against such parties or their assets, except as may
be expressly set forth or contemplated in this Trust Agreement, the Certificates
or the Basic Documents.
Section 11.11. Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
Section 11.12. Governing Law. THIS TRUST AGREEMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 11.13. Integration. This Trust Agreement constitutes the entire
agreement among the parties hereto pertaining to the subject matter hereof and
supersedes all prior agreements and understanding pertaining thereto.
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IN WITNESS WHEREOF, the Seller and the Owner Trustee have caused their
names to be signed hereto by their respective officers thereunto duly
authorized, all as of the day and year first above written.
HOUSEHOLD CONSUMER LOAN CORPORATION,
as Seller and Holder of the
Designated Certificate
By:
--------------------------------
Name:
Title:
CHASE MANHATTAN BANK DELAWARE, not in
its individual capacity but solely
as Owner Trustee
By:
--------------------------------
Name: John J. Cashin
Title: Senior Trust Officer
Acknowledged and Agreed:
THE BANK OF NEW YORK, as Certificate
Registrar and Certificate
Paying Agent
By:
-------------------------
Name:
Title:
48
EXHIBIT A
[FORM OF CERTIFICATE]
[Face]
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT AND LAWS OR
IS SOLD OR TRANSFERRED IN TRANSACTIONS WHICH ARE EXEMPT FROM REGISTRATION UNDER
SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN ACCORDANCE WITH
THE PROVISIONS OF SECTION 3.05 OF THE TRUST AGREEMENT REFERRED TO HEREIN.
NO TRANSFER OF THIS CERTIFICATE SHALL BE MADE UNLESS THE CERTIFICATE REGISTRAR
SHALL HAVE RECEIVED (I) A REPRESENTATION LETTER FROM THE TRANSFEREE OF THIS
CERTIFICATE TO THE EFFECT THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN
SUBJECT TO THE FIDUCIARY RESPONSIBILITY PROVISIONS OF THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), OR A PERSON ACTING ON
BEHALF OF ANY SUCH PLAN OR USING THE ASSETS OF ANY SUCH PLAN, (II) IF THIS
CERTIFICATE IS PRESENTED FOR REGISTRATION IN THE NAME OF A PLAN SUBJECT TO THE
FIDUCIARY RESPONSIBILITY PROVISIONS OF ERISA, OR SECTION 4975 OF THE CODE (OR
COMPARABLE PROVISIONS OF ANY SUBSEQUENT ENACTMENTS), OR A TRUSTEE OF ANY SUCH
PLAN, OR ANY OTHER PERSON WHO IS USING THE ASSETS OF ANY SUCH PLAN TO EFFECT
SUCH ACQUISITION, AN OPINION OF COUNSEL TO THE EFFECT THAT THE PURCHASE OR
HOLDING OF THIS CERTIFICATE WILL NOT RESULT IN THE ASSETS OF THE OWNER TRUST
ESTATE BEING DEEMED TO BE "PLAN ASSETS" AND SUBJECT TO THE FIDUCIARY
RESPONSIBILITY PROVISIONS OF ERISA OR THE PROHIBITED TRANSACTION PROVISIONS OF
THE CODE, WILL NOT CONSTITUTE OR RESULT IN A PROHIBITED TRANSACTION WITHIN THE
MEANING OF SECTION 406 OR SECTION 407 OF ERISA OR SECTION 4975 OF THE CODE, AND
WILL NOT SUBJECT THE OWNER TRUSTEE OR THE SELLER TO ANY OBLIGATION OR LIABILITY,
(III) OR IF THE PURCHASER IS AN INSURANCE COMPANY, A REPRESENTATION THAT THE
PURCHASER IS AN INSURANCE COMPANY WHICH IS PURCHASING SUCH CERTIFICATES WITH
FUNDS CONTAINED IN AN "INSURANCE COMPANY GENERAL ACCOUNT" (AS SUCH TERM IS
DEFINED IN SECTION V(e) OF PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 ("PTCE
95-60")) AND THAT THE PURCHASE AND HOLDING OF SUCH CERTIFICATES ARE COVERED
UNDER PTCE 95-60, OR (IV) IN THE CASE OF ANY SUCH PROPOSED TRANSFEREE WHICH IS A
PLAN, AN OPINION OF COUNSEL SATISFACTORY TO THE OWNER TRUSTEE AND THE SELLER TO
THE EFFECT SET FORTH IN THE AGREEMENT.
NO TRANSFER OF THIS CERTIFICATE SHALL BE MADE UNLESS THE CERTIFICATE REGISTRAR
SHALL HAVE RECEIVED A CERTIFICATE OF NON-FOREIGN STATUS CERTIFYING AS TO THE
TRANSFEREE'S STATUS AS U.S. PERSONS OR CORPORATION OR PARTNERSHIP UNDER U.S.
LAW.
THIS CERTIFICATE DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF THE SELLER,
THE SERVICER, THE INDENTURE TRUSTEE, OR THE OWNER TRUSTEE OR ANY OF THEIR
RESPECTIVE AFFILIATES, EXCEPT AS EXPRESSLY PROVIDED IN THE TRUST AGREEMENT OR
THE BASIC DOCUMENTS.
A-1
49
Certificate No.
----
Original principal amount ("Denomination")
of this Certificate: $
--------------
Aggregate Denominations of all Certificates:
$
--------------
Certificate Rate: Floating
Closing Date: March , 1997
---
First Payment Date
April 15, 1997
CUSIP NO.
---------
HOUSEHOLD CONSUMER LOAN TRUST 1997-1
Evidencing a fractional undivided interest in the Owner Trust Estate,
the property of which consists primarily of the Series 1997-1 Participation
Interest in Receivables, sold by
HOUSEHOLD CONSUMER LOAN CORPORATION, AS SELLER
This certifies that [name of Holder] is the registered owner of the
Percentage Interest represented hereby in the Household Consumer Loan Trust
1997-1 (the "Issuer").
The Issuer was created pursuant to a Trust Agreement dated as of March
1, 1997 (as amended and supplemented from time to time, the "Trust Agreement")
among the Seller, as seller and as holder of the Designated Certificate, and
Chase Manhattan Bank Delaware, as owner trustee (the "Owner Trustee"), a summary
of certain of the pertinent provisions of which is set forth hereinafter. This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Trust Agreement, to which Trust Agreement the Holder of this
Certificate by virtue of the acceptance hereof assents and by which such Holder
is bound.
This Certificate is one of a duly authorized issue of Consumer Loan
Asset Backed Certificates, Series 1997-1 (the "Certificates") issued under the
Trust Agreement to which reference is hereby made for a statement of the
respective rights thereunder of the Seller, Designated Certificateholder, the
Owner Trustee and the Holders of the Certificates and the terms upon which the
Certificates are executed and delivered. All terms used in this Certificate
which are defined in the Trust Agreement shall have the meanings assigned to
them in the Trust Agreement. The Owner Trust Estate consists of the Series
1997-1 Participation Interest and all monies and the collections and
A-2
50
proceeds due thereon and any part thereof which consists of general intangibles
(as defined in the UCC). The rights of the Holders of the Certificates are
subordinated to the rights of the Holders of the Notes, as set forth in the
Indenture.
There will be distributed on the fifteenth day of each month or, if
such fifteenth day is not a Business Day, the next Business Day (each, a
"Payment Date"), commencing in April 1997, to the Person in whose name this
Certificate is registered at the close of business on the last Business Day of
the month preceding the month of such Payment Date (the "Record Date"), such
Certificateholder's Percentage Interest (obtained by dividing the Denomination
of this Certificate by the aggregate Denominations of all Certificates) in the
amount to be distributed to Certificateholders on such Payment Date.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Payment Account that
have been released from the Lien of the Indenture for payment hereunder and that
neither the Owner Trustee in its individual capacity nor the Seller is
personally liable to the Certificateholders for any amount payable under this
Certificate or the Trust Agreement or, except as expressly provided in the Trust
Agreement, subject to any liability under the Trust Agreement.
The Holder of this Certificate acknowledges and agrees that its rights
to receive distributions in respect of this Certificate are subordinated to the
rights of the Noteholders as described in the Indenture, dated as of March 1,
1997, between the Issuer and The Bank of New York, as Indenture Trustee (the
"Indenture").
It is the intent of the Seller and the Certificateholders that, for
purposes of federal income, state and local income and single business tax and
any other income taxes, the Issuer will be treated as a partnership. The Seller
and the other Certificateholders, by acceptance of a Certificate, agree to
treat, and to take no action inconsistent with the treatment of, the
Certificates for such tax purposes as an equity interest in a partnership.
Each Certificateholder, by its acceptance of a Certificate, covenants
and agrees that such Certificateholder will not at any time institute against
the Seller, or join in any institution against the Seller or the Issuer of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings under any United States federal or state bankruptcy or
similar law in connection with any obligations relating to the Certificates, the
Notes, the Trust Agreement or any of the Basic Documents.
A-3
51
Distributions on this Certificate will be made as provided in the Trust
Agreement by the Certificate Paying Agent to each Certificateholder of record on
the preceding Record Date either by, in the case of any Certificateholder owning
Certificates having denominations aggregating at least $1,000,000, wire
transfer, in immediately available funds, to the account of such Holder at a
bank or other entity having appropriate facilities therefor, if such
Certificateholder shall have provided to the Certificate Registrar appropriate
written instructions at least five Business Days prior to such Payment Date or,
if not, by check mailed to such Certificateholder at the address of such Holder
appearing in the Certificate Register. Except as otherwise provided in the Trust
Agreement and notwithstanding the above, the final distribution on this
Certificate will be made after due notice by the Certificate Paying Agent of the
pendency of such distribution and only upon presentation and surrender of this
Certificate at the office or agency maintained by the Certificate Registrar for
that purpose by the Issuer in the Borough of Manhattan, The City of New York.
Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Owner Trustee, or an authenticating
agent by manual signature, this Certificate shall not entitle the Holder hereof
to any benefit under the Trust Agreement or be valid for any purpose.
THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
A-4
52
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Issuer and not
in its individual capacity, has caused this Certificate to be duly executed.
HOUSEHOLD CONSUMER LOAN TRUST
1997-1
By: Chase Manhattan Bank
Delaware, not in its
individual capacity but
solely as Owner Trustee
Dated: March ___, 1997
------------------------------
Name: John J. Cashin
Title: Senior Trust Officer
Certificate of Authentication
This is one of the Certificates referred to in the within mentioned Trust
Agreement.
Chase Manhattan Bank Delaware,
not in its individual capacity
but solely as Owner Trustee
By:
---------------------------------
Name:
Title:
or
The Bank of New York,
as Authenticating Agent of the Issuer
By:
---------------------------------
Name:
Title:
53
[REVERSE OF CERTIFICATE]
The Certificates do not represent an obligation of, or an interest in,
the Seller, the Servicer, the Indenture Trustee, the Owner Trustee or any
Affiliates of any of them and no recourse may be had against such parties or
their assets, except as expressly set forth or contemplated herein or in the
Trust Agreement or the Basic Documents. In addition, this Certificate is not
guaranteed by any governmental agency or instrumentality and is limited in right
of payment to certain collections and recoveries with respect to the Series
1997-1 Participation Interest (and certain other amounts), all as more
specifically set forth herein. A copy of the Trust Agreement may be examined by
any Certificateholder upon written request during normal business hours at the
principal office of the Seller and at such other places, if any, designated by
the Seller.
The Trust Agreement permits the amendment thereof as specified below;
provided that any amendment be accompanied by an Opinion of Counsel for the
Seller (which Opinion of Counsel may, as to factual matters, rely upon Officer's
Certificates of the Seller) addressed and delivered to the Owner Trustee, to the
effect that the conditions precedent in the Trust Agreement to any such
amendment have been satisfied and the Seller shall have delivered to the Owner
Trustee an Officer's Certificate, stating that the Seller reasonably believes
that such amendment will not have a material adverse effect on the
Securityholders. If the purpose of the amendment is to (i) prevent the
imposition of any federal or state taxes at any time that any Security is
outstanding (i.e., technical in nature), or (ii) eliminate or modify certain
provisions relating to the Designated Certificate or to permit the election or
qualification of the Issuer as a "FASIT" or other similar form of entity for
federal income tax purposes pursuant to legislation which may be enacted
subsequent to the date of this Agreement it shall not be necessary to obtain the
consent of any Holder, but the Owner Trustee shall be furnished with an Opinion
of Counsel that in the case of (i) above such amendment is necessary or helpful
to prevent the imposition of such taxes, or in the case of (ii) above such
amendment will not cause the Issuer to be subject to an entity level tax. If the
purpose of the amendment is to add or eliminate or change any provision of the
Trust Agreement, other than as specified in the preceding two sentences, the
amendment shall require the consent of the Holders of the Certificates
evidencing not less than 66-2/3% of the aggregate unpaid Security Balance of all
affected Certificateholders; provided, however, that no such amendment shall (i)
reduce in any manner the amount of, or delay the timing of, payments received
that are required to be distributed on any Certificate without the consent of
the related Certificateholder, or (ii) reduce the aforesaid percentage of
Certificates the Holders of which are required to consent to any such amendment,
without the consent of the Holders
A-6
54
of all such Certificates then outstanding or cause any material adverse tax
consequences to any Certificateholders or Noteholders.
As provided in the Trust Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registerable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies of the Certificate Registrar maintained by
the Issuer in the Borough of Manhattan, The City of New York, accompanied by a
written instrument of transfer in form satisfactory to the Certificate Registrar
duly executed by the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Certificates of authorized denominations
evidencing the same aggregate interest in the Issuer will be issued to the
designated transferee. The initial Certificate Registrar appointed under the
Trust Agreement is The Bank of New York.
Except as provided in the Trust Agreement, the Certificates are
issuable only in minimum denominations of $1,000,000 and in integral multiples
of $100,000 in excess thereof, except for one Certificate issued in a
denomination of $________________ which will be held by the Seller and one other
Certificate that may not be in an integral multiple of $100,000. As provided in
the Trust Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates of authorized denominations
evidencing the same aggregate denomination, as requested by the Holder
surrendering the same. No service charge will be made for any such registration
of transfer or exchange, but the Owner Trustee or the Certificate Registrar may
require payment of a sum sufficient to cover any tax or governmental charge
payable in connection therewith.
The Owner Trustee, the Certificate Paying Agent, the Certificate
Registrar and any agent of the Owner Trustee, the Certificate Paying Agent, or
the Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Owner Trustee,
the Certificate Paying Agent, the Certificate Registrar or any such agent shall
be affected by any notice to the contrary.
The obligations and responsibilities created by the Trust Agreement and
the Issuer created thereby shall terminate (i) upon the final distribution of
all moneys or other property or proceeds of the Owner Trust Estate in accordance
with the terms of the Indenture and the Trust Agreement, (ii) the Payment Date
in ___________ 20___, or (iii) upon the bankruptcy or insolvency of the Holder
of the Designated Certificate and the satisfaction of other conditions specified
in Section 9.01 of the Trust Agreement.
A-7
55
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and
transfers unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------------------------------------------------
(Please print or type name and address, including postal zip
code, of assignee)
- --------------------------------------------------------------------------------
the within Certificate, and all rights thereunder, hereby
irrevocably constituting and appointing
- --------------------------------------------------------------------------------
to transfer said Certificate on the books of the Certificate Registrar, with
full power of substitution in the premises.
Dated:
*/
- ---------------------------------------------
Signature Guaranteed:
*/
------------------------------
- -----------------
*/ NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Certificate in every particular, without
alteration, enlargement or any change whatever. Such signature must be
guaranteed by a member firm of the New York Stock Exchange or a commercial bank
or trust company.
A-8
56
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for the information of the
Certificate Paying Agent:
Distribution shall be made by wire transfer in immediately
available funds to
--------------------------------------------------------------
- --------------------------------------------------------------------------------
for the account of
--------------------------------------------------------------
account number , or, if mailed by check,
-----------------------------------------
to
------------------------------------------------------------------------------
Applicable statements should be mailed to
------------------------------
- --------------------------------------------------------------------------------
------------------------------
Signature of assignee or agent
(for authorization of wire
transfer only)
A-9
57
EXHIBIT B
[RESERVED]
B-1
58
EXHIBIT C
CERTIFICATE OF TRUST OF
HOUSEHOLD CONSUMER LOAN TRUST 1997-1
This Certificate of Trust of HOUSEHOLD CONSUMER LOAN TRUST
1997-1 (the "Trust"), dated as of March ___, 1997, is being duly executed and
filed by Chase Manhattan Bank Delaware, a Delaware banking corporation, as
trustee, to form a business trust under the Delaware Business Trust Act (12 Del.
Code, ss. 3801 et seq.).
1. Name. The name of the business trust formed hereby
is HOUSEHOLD CONSUMER LOAN TRUST 1997-1.
2. Delaware Trustee. The name and business address of
the trustee of the Trust in the State of Delaware is Chase
Manhattan Bank Delaware, 1201 Market Street, Wilmington, Delaware
19801, Attention: Corporate Trustee Administration.
3. Effective Date. This Certificate of Trust shall be
effective on March ___, 1997.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of
the Trust, has executed this Certificate of Trust as of the date first above
written.
Chase Manhattan Bank Delaware,
as Owner Trustee
By:
---------------------------------
Name:
Title:
C-1
59
EXHIBIT D
[FORM OF RULE 144A INVESTMENT REPRESENTATION]
Description of Rule 144A Securities, including numbers:
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
The undersigned seller, as registered holder (the "Seller"),
intends to transfer the Rule 144A Securities described above to the undersigned
buyer (the "Buyer").
1. In connection with such transfer and in accordance with the
agreements pursuant to which the Rule 144A Securities were issued, the Seller
hereby certifies the following facts: Neither the Seller nor anyone acting on
its behalf has offered, transferred, pledged, sold or otherwise disposed of the
Rule 144A Securities, any interest in the Rule 144A Securities or any other
similar security to, or solicited any offer to buy or accept a transfer, pledge
or other disposition of the Rule 144A Securities, any interest in the Rule 144A
Securities or any other similar security from, or otherwise approached or
negotiated with respect to the Rule 144A Securities, any interest in the Rule
144A Securities or any other similar security with, any person in any manner, or
made any general solicitation by means of general advertising or in any other
manner, or taken any other action, that would constitute a distribution of the
Rule 144A Securities under the Securities Act of 1933, as amended (the "1933
Act"), or that would render the disposition of the Rule 144A Securities a
violation of Section 5 of the 1933 Act or require registration pursuant thereto,
and that the Seller has not offered the Rule 144A Securities to any person other
than the Buyer or another "qualified institutional buyer" as defined in Rule
144A under the 1933 Act.
2. The Buyer warrants and represents to, and covenants with,
the Owner Trustee, and the Seller (as defined in the Trust Agreement (the
"Agreement"), dated as of March 1, 1997 among Household Consumer Loan
Corporation, as Seller, and as Holder of the Designated Certificate and Chase
Manhattan Bank Delaware, as Owner Trustee pursuant to Section 3.05 of the
Agreement and The Bank of New York as Indenture Trustee, as follows:
a. The Buyer understands that the Rule 144A
Securities have not been registered under the 1933 Act or the
securities laws of any state.
b. The Buyer considers itself a substantial,
sophisticated institutional investor having such knowledge
and experience in financial and business matters that it is
D-1
60
capable of evaluating the merits and risks of investment in
the Rule 144A Securities.
c. The Buyer has been furnished with all information
regarding the Rule 144A Securities that it has requested from the
Seller, the Indenture Trustee, the Owner Trustee or the Servicer.
d. Neither the Buyer nor anyone acting on its behalf
has offered, transferred, pledged, sold or otherwise disposed of the
Rule 144A Securities, any interest in the Rule 144A Securities or any
other similar security to, or solicited any offer to buy or accept a
transfer, pledge or other disposition of the Rule 144A Securities, any
interest in the Rule 144A Securities or any other similar security
from, or otherwise approached or negotiated with respect to the Rule
144A Securities, any interest in the Rule 144A Securities or any other
similar security with, any person in any manner, or made any general
solicitation by means of general advertising or in any other manner, or
taken any other action, that would constitute a distribution of the
Rule 144A Securities under the 1933 Act or that would render the
disposition of the Rule 144A Securities a violation of Section 5 of the
1933 Act or require registration pursuant thereto, nor will it act, nor
has it authorized or will it authorize any person to act, in such
manner with respect to the Rule 144A Securities.
e. The Buyer is a "qualified institutional buyer" as
that term is defined in Rule 144A under the 1933 Act and has completed
either of the forms of certification to that effect attached hereto as
Annex 1 or Annex 2. The Buyer is aware that the sale to it is being
made in reliance on Rule 144A. The Buyer is acquiring the Rule 144A
Securities for its own account or the accounts of other qualified
institutional buyers, understands that such Rule 144A Securities may be
resold, pledged or transferred only (i) to a person reasonably believed
to be a qualified institutional buyer that purchases for its own
account or for the account of a qualified institutional buyer to whom
notice is given that the resale, pledge or transfer is being made in
reliance on Rule 144A, or (ii) pursuant to another exemption from
registration under the 1933 Act.
[3. The Buyer warrants and represents to, and covenants
with, the Seller, the Indenture Trustee, Owner Trustee, Servicer and the Seller
that either (1) the Buyer is (A) not an employee benefit plan (within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")), or a plan (within the meaning of Section 4975(e)(1) of
the Internal Revenue Code of 1986 ("Code")), which (in either case) is subject
to ERISA or Section 4975 of the Code (both a "Plan"), and (B) is not directly
or indirectly purchasing the Rule 144A Securities on behalf of, as investment
manager of, as named fiduciary of, as trustee of, or with "plan assets" of a
D-2
61
Plan, or (2) the Buyer understands that registration of transfer of any Rule
144A Securities to any Plan, or to any Person acting on behalf of any Plan, will
not be made unless such Plan delivers an opinion of its counsel, addressed and
satisfactory to the Certificate Registrar and the Seller, to the effect that the
purchase and holding of the Rule 144A Securities by, on behalf of or with "plan
assets" of any Plan would not constitute or result in a prohibited transaction
under Section 406 of ERISA or Section 4975 of the Code, and would not subject
the Seller, the Servicer, the Indenture Trustee or the Issuer to any obligation
or liability (including liabilities under ERISA or Section 4975 of the Code) in
addition to those undertaken in the Agreement or any other liability.]
4. This document may be executed in one or more counterparts
and by the different parties hereto on separate counterparts, each of which,
when so executed, shall be deemed to be an original; such counterparts,
together, shall constitute one and the same document.
IN WITNESS WHEREOF, each of the parties has executed this
document as of the date set forth below.
- ------------------------------------ ------------------------------------
Print Name of Seller Print Name of Seller
By: By:
---------------------------------- ---------------------------------
Name: Name:
Title: Title:
Taxpayer Identification: Taxpayer Identification:
No. No.
--------------------------------- ---------------------------------
Date: Date:
------------------------------- -------------------------------
D-3
62
Annex 1 to Exhibit D
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Buyers Other Than Registered Investment Companies]
The undersigned hereby certifies as follows in connection with the Rule
144A Investment Representation to which this Certification is attached:
1. As indicated below, the undersigned is the President,
Chief Financial Officer, Senior Vice President or other executive
officer of the Buyer.
2. In connection with purchases by the Buyer, the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933 ("Rule 144A") because (i) the Buyer owned and/or invested
on a discretionary basis $______________________1 in securities (except for the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year (such amount being calculated in accordance with Rule 144A) and (ii)
the Buyer satisfies the criteria in the category marked below.
___ Corporation, etc. The Buyer is a corporation (other than a
bank, savings and loan association or similar institution),
Massachusetts or similar business trust, partnership, or
charitable organization described in Section 501(c)(3) of the
Internal Revenue Code.
___ Bank. The Buyer (a) is a national bank or banking institution
organized under the laws of any State, territory or the
District of Columbia, the business of which is substantially
confined to banking and is supervised by the State or
territorial banking commission or similar official or is a
foreign bank or equivalent institution, and (b) has an audited
net worth of at least $25,000,000 as demonstrated in its
latest annual financial statements, a copy of which is
attached hereto.
- --------
1 Buyer must own and/or invest on a discretionary basis at least $100,000,000 in
securities unless Buyer is a dealer, and, in that case, Buyer must own and/or
invest on a discretionary basis at least $10,000,000 in securities.
D-4
63
___ Savings and Loan. The Buyer (a) is a savings and loan
association, building and loan association, cooperative bank,
homestead association or similar institution, which is
supervised and examined by a State or Federal authority having
supervision over any such institutions or is a foreign savings
and loan association or equivalent institution and (b) has an
audited net worth of at least $25,000,000 as demonstrated in
its latest annual financial statements.
___ Broker-Dealer. The Buyer is a dealer registered pursuant to
Section 15 of the Securities Exchange Act of 1934.
___ Insurance Company. The Buyer is an insurance company whose
primary and predominant business activity is the writing of
insurance or the reinsuring of risks underwritten by insurance
companies and which is subject to supervision by the insurance
commissioner or a similar official or agency of a State or
territory or the District of Columbia.
___ State or Local Plan. The Buyer is a plan established and
maintained by a State, its political subdivisions, or any
agency or instrumentality of the State or its political
subdivisions, for the benefit of its employees.
___ ERISA Plan. The Buyer is an employee benefit plan within the
meaning of Title I of the Employee Retirement Income Security
Act of 1974.
___ Investment Adviser. The Buyer is an investment adviser
registered under the Investment Advisers Act of 1940.
___ SBIC. The Buyer is a Small Business Investment Company
licensed by the U.S. Small Business Administration under
Section 301(c) or (d) of the Small Business Investment Act of
1958.
___ Business Development Company. The Buyer is a business
development company as defined in Section 202(a)(22) of the
Investment Advisers Act of 1940.
___ Trust Fund. The Buyer is a trust fund whose trustee is a bank
or trust company and whose participants are exclusively (a)
plans established and maintained by a State, its political
subdivisions, or any agency or instrumentality of the State or
its political subdivisions, for the benefit of its employees,
or (b) employee benefit plans within the meaning of Title I of
the Employee Retirement Income Security Act of 1974, but is
not a trust fund that includes as participants individual
retirement accounts or H.R. 10 plans.
D-5
64
3. The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer, (ii) securities that
are part of an unsold allotment to or subscription by the Buyer, if the Buyer is
a dealer, (iii) bank deposit notes and certificates of deposit, (iv) loan
participations, (v) repurchase agreements, (vi) securities owned but subject to
a repurchase agreement and (vii) currency, interest rate and commodity swaps.
4. For purposes of determining the aggregate amount of securities
owned and/or invested on a discretionary basis by the Buyer, the Buyer used the
cost of such securities to the Buyer and did not include any of the securities
referred to in the preceding paragraph. Further, in determining such aggregate
amount, the Buyer may have included securities owned by subsidiaries of the
Buyer, but only if such subsidiaries are consolidated with the Buyer in its
financial statements prepared in accordance with generally accepted accounting
principles and if the investments of such subsidiaries are managed under the
Buyer's direction. However, such securities were not included if the Buyer is a
majority-owned, consolidated subsidiary of another enterprise and the Buyer is
not itself a reporting company under the Securities Exchange Act of 1934.
5. The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the Certificates
are relying and will continue to rely on the statements made herein because one
or more sales to the Buyer may be in reliance on Rule 144A.
___ ___ Will the Buyer be purchasing the Rule 144A
Yes No Securities only for the Buyer's own account?
6. If the answer to the foregoing question is "no", the Buyer
agrees that, in connection with any purchase of securities sold to the Buyer for
the account of a third party (including any separate account) in reliance on
Rule 144A, the Buyer will only purchase for the account of a third party that at
the time is a "qualified institutional buyer" within the meaning of Rule 144A.
In addition, the Buyer agrees that the Buyer will not purchase securities for a
third party unless the Buyer has obtained a current representation letter from
such third party or taken other appropriate steps contemplated by Rule 144A to
conclude that such third party independently meets the definition of "qualified
institutional buyer" set forth in Rule 144A.
7. The Buyer will notify each of the parties to which this
certification is made of any changes in the information and conclusions herein.
Until such notice is given, the Buyer's
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purchase of Rule 144A Securities will constitute a reaffirmation of this
certification as of the date of such purchase.
-----------------------------------
Print Name of Buyer
By:
--------------------------------
Name:
Title:
Date:
------------------------------
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Annex 2 to Exhibit D
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Buyers That Are Registered Investment Companies]
The undersigned hereby certifies as follows in connection with
the Rule 144A Investment Representation to which this Certification is attached:
1. As indicated below, the undersigned is the President,
Chief Financial Officer or Senior Vice President of the Buyer or, if the Buyer
is a "qualified institutional buyer" as that term is defined in Rule 144A under
the Securities Act of 1933 ("Rule 144A") because Buyer is part of a Family of
Investment Companies (as defined below), is such an officer of the Adviser.
2. In connection with purchases by Buyer, the Buyer is a
"qualified institutional buyer" as defined in SEC Rule 144A because (i) the
Buyer is an investment company registered under the Investment Company Act of
1940, and (ii) as marked below, the Buyer alone, or the Buyer's Family of
Investment Companies, owned at least $100,000,000 in securities (other than the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year. For purposes of determining the amount of securities owned by the
Buyer or the Buyer's Family of Investment Companies, the cost of such securities
was used.
____ The Buyer owned $___________________ in securities
(other than the excluded securities referred to below)
as of the end of the Buyer's most recent fiscal year
(such amount being calculated in accordance with
Rule 144A).
____ The Buyer is part of a Family of Investment Companies
which owned in the aggregate $______________ in
securities (other than the excluded securities referred
to below) as of the end of the Buyer's most recent
fiscal year (such amount being calculated in accordance
with Rule 144A).
3. The term "Family of Investment Companies" as used herein
means two or more registered investment companies (or series thereof) that have
the same investment adviser or investment advisers that are affiliated (by
virtue of being majority owned subsidiaries of the same parent or because one
investment adviser is a majority owned subsidiary of the other).
4. The term "securities" as used herein does not include
(i) securities of issuers that are affiliated with the
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Buyer or are part of the Buyer's Family of Investment Companies, (ii) bank
deposit notes and certificates of deposit, (iii) loan participations, (iv)
repurchase agreements, (v) securities owned but subject to a repurchase
agreement and (vi) currency, interest rate and commodity swaps.
5. The Buyer is familiar with Rule 144A and understands that
each of the parties to which this certification is made are relying and will
continue to rely on the statements made herein because one or more sales to the
Buyer will be in reliance on Rule 144A. In addition, the Buyer will only
purchase for the Buyer's own account.
6. The undersigned will notify each of the parties to which
this certification is made of any changes in the information and conclusions
herein. Until such notice, the Buyer's purchase of Rule 144A Securities will
constitute a reaffirmation of this certification by the undersigned as of the
date of such purchase.
------------------------------------
Print Name of Buyer
By:
--------------------------------
Name:
--------------------------
Title:
-------------------------
IF AN ADVISER:
------------------------------------
Print Name of Buyer
Date:
-------------------------------
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EXHIBIT E
DEFINITIONS
[See Appendix A attached to the Indenture]
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EXHIBIT F
CERTIFICATE OF NON-FOREIGN STATUS
This Certificate of Non-Foreign Status ("certificate") is delivered
pursuant to Section 3.03 of the Trust Agreement, dated as of March 1, 1997 (the
"Trust Agreement"), among the Household Consumer Loan Corporation, as seller and
the entity who is the general partner for tax purposes (the "Designated Holder")
and Chase Manhattan Bank Delaware, as Owner Trustee, in connection with the
acquisition of, transfer to or possession by the undersigned, whether as
beneficial owner (the "Beneficial Owner"), or nominee on behalf of the
Beneficial Owner of the Household Consumer Loan Asset Backed Certificates,
Series 1997-1 (the "Certificate"). Capitalized terms used but not defined in
this certificate have the respective meanings given them in the Trust Agreement.
Each holder must complete Part I, Part II (if the holder is a nominee), and in
all cases sign and otherwise complete Part III. In addition, each holder shall
submit with the Certificate an IRS Form W-9 relating to such holder.
To confirm to the Issuer that the provisions of Section 1446 of the Internal
Revenue Code (relating to withholding tax on foreign partners) do not apply in
respect of the Certificate held by the undersigned, the undersigned hereby
certifies:
Part I - Complete Either A or B
A. Individual as Beneficial Owner
1. I am (The Beneficial Owner is) not a non-
resident alien for purposes of U.S. income
taxation;
2. My (The Beneficial Owner's) name and home
address are:
------------------------------------------
------------------------------------------
------------------------------------------;
and
3. My (The Beneficial Owner's) U.S. taxpayer
identification number (Social Security
Number) is .
B. Corporate, Partnership or Other Entity as
Beneficial Owner
1. (Name of the
-------------------------
Beneficial Owner) is not a foreign
corporation, foreign partnership, foreign
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70
trust or foreign estate (as those terms are
defined in the Code and Treasury
Regulations);
2. The Beneficial Owner's office address and
place of incorporation (if applicable) is
; and
--------------------------------------
3. The Beneficial Owner's U.S. employer
identification number is .
-------------------
Part II - Nominees
If the undersigned is the nominee for the Beneficial Owner, the
undersigned certifies that this certificate has been made in reliance upon
information contained in:
_______ an IRS Form W-9
_______ a form such as this or substantially similar
provided to the undersigned by an appropriate person and (i) the undersigned
agrees to notify the Issuer at least thirty (30) days prior to the date that the
form relied upon becomes obsolete, and (ii) in connection with change in
Beneficial Owners, the undersigned agrees to submit a new Certificate of
Non-Foreign Status to the Issuer promptly after such change.
Part III - Declaration
The undersigned, as the Beneficial Owner or a nominee thereof, agrees
to notify the Issuer within sixty (60) days of the date that the Beneficial
Owner becomes a foreign person. The undersigned understands that this
certificate may be disclosed to the Internal Revenue Service by the Issuer and
any false statement contained therein could be punishable by fines, imprisonment
or both.
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71
Under penalties of perjury, I declare that I have examined this
certificate and to the best of my knowledge and belief it is true, correct and
complete and will further declare that I will inform the Issuer of any change in
the information provided above, and, if applicable, I further declare that I
have the authority* to sign this document.
- ----------------------------------
Name
- ----------------------------------
Title (if applicable)
- ----------------------------------
Signature and Date
*NOTE: If signed pursuant to a power of attorney, the power of attorney must
accompany this certificate.
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EXHIBIT G
FORM OF INVESTMENT LETTER [NON-RULE 144A]
[DATE]
[Certificate Registrar]
Re: Household Consumer Loan Trust 1997-1
Consumer Loan Asset Backed Certificates,
Series 1997-1 (the "Certificates")
Ladies and Gentlemen:
In connection with our acquisition of the above-captioned Certificates,
we certify that (a) we understand that the Certificates are not being registered
under the Securities Act of 1933, as amended (the "Act"), or any state
securities laws and are being transferred to us in a transaction that is exempt
from the registration requirements of the Act and any such laws, (b) we are an
"accredited investor," as defined in Regulation D under the Act, and have such
knowledge and experience in financial and business matters that we are capable
of evaluating the merits and risks of investments in the Certificates, (c) we
have had the opportunity to review the Trust Agreement, Indenture and Pooling
and Servicing Agreement and we have had the opportunity to ask questions of and
receive answers from the Seller concerning the purchase of the Certificates and
all matters relating thereto or any additional information deemed necessary to
our decision to purchase the Certificates, (d) we are not an employee benefit
plan that is subject to the Employee Retirement Income Security Act of 1974, as
amended, or a plan that is subject to Section 4975 of the Internal Revenue Code
of 1986, as amended, nor are we acting on behalf of or using the assets of any
such plan, [or if the Purchaser is an insurance company, a representation that
the Purchaser is an insurance company which is purchasing such certificates with
funds contained in an "insurance company general account" (as such term is
defined in section v(e) of prohibited transaction class exemption 95-60 ("ptce
95-60")) and that the purchase and holding of such certificates are covered
under ptce 95-60,] or (iv) in the case of any such proposed transferee which is
a plan, an opinion of counsel satisfactory to the Owner Trustee and the Seller
to the effect set forth in the agreement (e) we are acquiring the Certificates
for investment for our own account and not with a view to any distribution of
such Certificates (but without prejudice to our right at all times to sell or
otherwise dispose of the Certificates in accordance with clause (g) below), (f)
we have not offered or sold any Certificates to, or solicited offers to buy any
Certificates from, any person, or otherwise approached or
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negotiated with any person with respect thereto, or taken any other action which
would result in a violation of Section 5 of the Act, (g) we will not sell,
transfer or otherwise dispose of any Certificates unless (1) such sale, transfer
or other disposition is made pursuant to an effective registration statement
under the Act or is exempt from such registration requirements, and if such
transfer is made pursuant to an exemption other than Rule 144A, we will, if
requested, at our expense provide an opinion of counsel satisfactory to the
addressees of this certificate that such sale, transfer or other disposition may
be made pursuant to an exemption from the Act, (2) the purchaser or transferee
of such Certificate has executed and delivered to you a certificate to
substantially the same effect as this certificate, and (3) the purchaser or
transferee has otherwise complied with any conditions for transfer set forth in
the Trust Agreement, and (h), either (i) we are a "C Corporation" under the
Internal Revenue Code of 1986, as amended, or (ii) we have provided such
disclosure concerning our status for federal income tax purposes and the status
and economic interest of our beneficial owners, as the Issuer or its
representatives have reasonably requested to determine that our acquisition of
the Certificates will not subject the Issuer to an entity level tax.
Very truly yours,
[TRANSFEREE]
By:
-------------------------------
Authorized Officer
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