EXHIBIT 10.1
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HOUSEHOLD BANK (SB), N.A.
and
HOUSEHOLD RECEIVABLES ACQUISITION COMPANY
AMENDED AND RESTATED
RECEIVABLES PURCHASE AGREEMENT
Dated as of June 12, 2002
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TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS....................................................................................1
Section 1.01.Definitions........................................................................1
Section 1.02.Other Definitional Provisions......................................................5
ARTICLE II PURCHASE AND CONVEYANCE OF RECEIVABLES........................................................5
Section 2.01.Purchase...........................................................................5
Section 2.02.Addition of Additional Accounts....................................................7
ARTICLE III CONSIDERATION AND PAYMENT....................................................................7
Section 3.01.Purchase Price.....................................................................7
Section 3.02.Adjustments to Purchase Price......................................................8
Section 3.03.Use of Name, Logo and Marks........................................................8
ARTICLE IV REPRESENTATIONS AND WARRANTIES................................................................9
Section 4.01.Representations and Warranties of the Bank Relating to the Bank....................9
Section 4.02.Representations and Warranties of the Bank Relating to the Agreement and the
Receivables..................................................................11
Section 4.03.Representations and Warranties of HRAC............................................12
ARTICLE V COVENANTS.....................................................................................13
Section 5.01.Covenants of the Bank.............................................................13
ARTICLE VI REPURCHASE OBLIGATION........................................................................14
Section 6.01.Repurchase Obligation Termination.................................................14
ARTICLE VII CONDITIONS PRECEDENT........................................................................15
Section 7.01.Conditions to HRAC's Obligations..................................................15
Section 7.02.Conditions Precedent to the Bank's Obligations....................................15
ARTICLE VIII TERM AND PURCHASE TERMINATION..............................................................16
Section 8.01.Term..............................................................................16
Section 8.02.Purchase Termination..............................................................16
ARTICLE IX MISCELLANEOUS PROVISIONS.....................................................................16
Section 9.01.Amendment.........................................................................16
Section 9.02.Governing Law.....................................................................17
Section 9.03.Notices...........................................................................17
Section 9.04.Severability of Provisions........................................................17
Section 9.05.Assignment........................................................................17
Section 9.06.Acknowledgement and Agreement of the Bank.........................................18
Section 9.07.Further Assurances................................................................18
Section 0.00.Xx Waiver; Cumulative Remedies....................................................18
Section 9.09.Counterparts......................................................................19
Section 9.10.Binding; Third-Party Beneficiaries................................................19
Section 9.11.Merger and Integration............................................................19
Section 9.12.Headings..........................................................................19
Section 9.13.Schedules and Exhibits............................................................19
Section 9.14.Nonpetition Covenant..............................................................19
Schedule I LIST OF ACCOUNTS.....................................................................I-1
Schedule II EXCLUDED ACCOUNT SCHEDULE...........................................................II-1
Schedule III ENTITIES TO WHICH RECEIVABLES MAY BE SOLD..........................................III-1
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AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT, dated as of June 12,
2002, by and between HOUSEHOLD RECEIVABLES ACQUISITION COMPANY, a Delaware
corporation ("HRAC"), and HOUSEHOLD BANK (SB), N.A., a national banking
association (the "BANK"), which amends and restates the Receivables Purchase
Agreement, dated as of June 12, 2001, by and between HRAC and the Bank.
W I T N E S S E T H:
WHEREAS, HRAC desires to purchase on each Business Day all Receivables
(hereinafter defined) arising under all revolving credit accounts arising under
the private label program (other than Excluded Accounts) owned by the Bank;
WHEREAS, the Bank desires to sell and assign on each Business Day all
Receivables arising under the private label program (other than Excluded
Accounts) to HRAC upon the terms and conditions hereinafter set forth;
WHEREAS, it is contemplated that certain of the Receivables purchased
hereunder have been, or will be, transferred by HRAC to HRSI Funding, Inc. II
then to the Trust (hereinafter defined) in connection with the issuance of
certain securities;
WHEREAS, the Bank and HRAC desire to amend this Agreement.
NOW, THEREFORE, it is hereby agreed by and between HRAC and the Bank as
follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. All capitalized terms used herein or in any
certificate or document, made or delivered pursuant hereto, and not defined
herein or therein, shall have the meaning ascribed thereto in the Transfer and
Servicing Agreement; in addition, the following words and phrases shall have the
following meanings:
"Account" shall mean (a) each Initial Account, (b) each Additional Account
(but only from and after the Addition Date with respect thereto), (c) each
Related Account, (d) each account into which an Account shall be transferred (a
"TRANSFERRED ACCOUNT"), provided that (i) such transfer was made in accordance
with the Credit Guidelines and (ii) such account can be traced or identified as
an account into which an Account has been transferred, and (e) each Newer
Account, but shall exclude (f) Excluded Accounts.
"Account Owner" shall mean the Bank.
"Account Schedule" shall mean a computer file or microfiche list containing
a true and complete list of all Accounts or Excluded Accounts, as applicable,
each identified by account number.
"Addition Date" shall mean with respect to Additional Accounts designated
prior to the Transition Date (or related Participation Interests), the date from
and after which such Additional Accounts were included as Accounts pursuant to
Section 2.02.
"Addition Notice Date" shall have the meaning specified in Section 2.02 of
this Agreement.
"Additional Account" shall mean each Account designated prior to the
Transition Date pursuant to Section 2.02 and that is identified in the computer
file or microfiche list delivered to HRAC by the Bank pursuant to Section 2.01.
"Additional Cut-Off Date" shall mean with respect to Additional Accounts,
the date specified as such in the notice delivered with respect thereto pursuant
to Section 2.02.
"Agreement" shall mean this Amended and Restated Receivables Purchase
Agreement and all amendments hereof and supplements hereto.
"Bank" shall mean Household Bank (SB), N.A., a nationally chartered bank,
and its successors and permitted assigns.
"Business Day" shall mean any day other than (a) a Saturday or Sunday or
(b) any other day on which national banking associations or state banking
institutions in New York City, New York, Delaware, Nevada, Illinois or any other
State in which the principal executive offices of the Bank, the Servicer, the
Owner Trustee or the Indenture Trustee, as the case may be, are located, are
authorized or obligated by law, executive order or governmental decree to be
closed.
"Closing Date" shall mean June 12, 2001.
"Company" shall mean HRSI Funding, Inc. II, a Delaware corporation, and its
permitted successors and assigns.
"Conveyance" shall have the meaning specified in subsection 2.01(a).
"Credit Adjustment" shall have the meaning specified in Section 3.02.
"Debtor Relief Laws" shall mean (a) the Bankruptcy Code of the United
States of America and (b) all other applicable liquidation, conservatorship,
bankruptcy, moratorium, rearrangement, receivership, insolvency, reorganization,
suspension of payments, readjustment of debt, marshalling of assets or similar
debtor relief laws of the United States, any state or any foreign country from
time to time in effect affecting the rights of creditors generally.
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"Excluded Account" shall mean any revolving credit account as to which the
Bank and HRAC have elected to exclude the related Receivables from sale under
this Agreement in accordance with subsection 2.01(f) hereof.
"FDIC" shall mean the Federal Deposit Insurance Corporation or any
successor.
"Finance Charge and Administrative Receivables" shall mean all Receivables
in the Accounts which would be treated as "Finance Charge and Administrative
Receivables" in accordance with the definition for such term in the Transfer and
Servicing Agreement.
"HRAC" shall mean Household Receivables Acquisition Company, a Delaware
corporation, and its successors and permitted assigns.
"Indenture" shall mean the Master Indenture between the Trust and U.S. Bank
National Association, as Indenture Trustee, dated as of June 12, 2001 as
supplemented by Indenture Supplements applicable to any Series that may be
issued from time to time.
"Indenture Supplement" shall mean the indenture supplement pursuant to
which a Series is issued.
"Indenture Trustee" shall mean U.S. Bank National Association in its
capacity as indenture trustee, or any successor indenture trustee.
"Initial Account" shall mean each Account included in the computer file
delivered pursuant to Section 2.01(c)(ii)(A) of this Agreement to HRAC or its
designee in respect of the Closing Date.
"Insolvency Event" shall have the meaning specified in Section 8.02.
"New Principal Receivables" shall have the meaning set forth in Section
3.01.
"Newer Account" shall mean each revolving credit account (a) which has been
established under the private label program of the Bank, (b) which is owned by
the Bank on or after the Transition Date, (c) which was not designated as an
Account under this Agreement prior to the Transition Date, and (d) which is not
an Excluded Account.
"Obligor" shall mean, with respect to each Account, each person that would
be treated as an "Obligor" in accordance with the definition for such term in
the Transfer and Servicing Agreement.
"Owner Trustee" shall mean Wilmington Trust Company, a Delaware banking
corporation the institution executing the Household Private Label Credit Card
Master Note Trust I Trust Agreement, dated as of June 12, 2001 with the Company,
as
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and acting in the capacity of Owner Trustee thereunder, or its successor in
interest, or any successor trustee appointed as provided thereunder.
"Principal Receivables" shall mean all Receivables other than Finance
Charge and Administrative Receivables. In calculating the aggregate amount of
Principal Receivables on any day, the amount of Principal Receivables shall be
reduced by the aggregate amount of credit balances in the Accounts and
Additional Accounts on such day.
"Purchase Price" shall have the meaning set forth in Section 3.01.
"Purchased Assets" shall have the meaning set forth in Section 2.01.
"Receivables" shall mean all amounts shown on the Bank's records as amounts
payable by Obligors on any Account from time to time, including amounts payable
for Principal Receivables and Finance Charge and Administrative Receivables.
"Securitized Accounts" shall mean the Accounts related to Securitized
Receivables.
"Securitization Date" shall mean with respect to the Receivables arising
under a Newer Account, the date when such Receivables are transferred to the
Company or the Trust.
"Securitized Receivables" shall mean Receivables which are owned by the
Company or the Trust.
"Servicer" shall mean Household Finance Corporation, in its capacity as
Servicer pursuant to the Transfer and Servicing Agreement and, after any Service
Transfer, the Successor Servicer.
"Transfer and Servicing Agreement" shall mean the Transfer and Servicing
Agreement, dated as of June 12, 2001 among Household Finance Corporation, as
Servicer, the Company, as Transferor, and the Owner Trustee on behalf of the
Trust, and all amendments and supplements thereto.
"Transferor RPA" shall mean the Receivables Purchase Agreement, dated June
12, 2001, between HRAC and the Company.
"Transition Date" shall mean July 1, 2002.
"Trust" shall mean the Household Private Label Credit Card Master Note
Trust I, acting by and through Wilmington Trust Company, not in its individual
capacity but solely as owner trustee.
"Trust Collateral" shall have the meaning set forth in Section 2.01.
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Section 1.02. Other Definitional Provisions.
All terms defined in this Agreement shall have the defined meanings when
used in any certificate, or other document, made or delivered pursuant hereto
unless otherwise defined therein.
The words "HEREOF," "HEREIN" and "HEREUNDER" and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement; and Section, Subsection, Schedule
and Exhibit references contained in this Agreement are references to Sections,
Subsections, Schedules and Exhibits in or to this Agreement unless otherwise
specified.
All capitalized terms used herein and not otherwise defined herein have the
meanings ascribed to them in the Indenture or the Transfer and Servicing
Agreement.
ARTICLE II
PURCHASE AND CONVEYANCE OF RECEIVABLES
Section 2.01. Purchase.
(a) By execution of this Agreement, the Bank does hereby sell, transfer,
assign, set over and otherwise convey to HRAC (collectively, the "CONVEYANCE"),
without recourse except as provided herein, all its right, title and interest
in, to and under the Receivables existing at the close of business on (i) the
Closing Date, in the case of Receivables arising in the Initial Accounts, (ii)
each Additional Cut-Off Date, in the case of Receivables arising in the
Additional Accounts and the related Participation Interests conveyed pursuant to
a Participation Interest Supplement, and (iii) commencing on the Transition
Date, the day the Bank acquires rights in the related Newer Account, in the case
of Receivables arising in the Newer Accounts, and in each case thereafter
created from time to time until the termination of this Agreement pursuant to
Article VIII hereof, all Recoveries with respect to such Accounts and all such
Participation Interests, all monies due or to become due and all amounts
received or receivable with respect thereto, and all proceeds (including,
without limitation, "proceeds" as defined in the UCC) thereof (the "PURCHASED
ASSETS").
(b) In connection with such Conveyance, the Bank agrees (i) to record and
file, at its own expense, any financing statements (and continuation statements
with respect to such financing statements when applicable) with respect to the
Receivables and Participation Interests conveyed pursuant to a Participation
Interest Supplement, meeting the requirements of applicable state law in such
manner and in such jurisdictions as are necessary to perfect, and maintain
perfection of, the Conveyance of such Receivables and all such Participation
Interests from the Bank to HRAC, (ii) that such financing statements shall name
the Bank, as seller, and HRAC, as purchaser, of the Receivables and all such
Participation Interests and (iii) to deliver a file-stamped copy of such
financing statements or other evidence of such filings (excluding such
continuation
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statements, which shall be delivered as filed) to HRAC as soon as
is practicable after filing.
(c) In connection with each such Conveyance, the Bank further agrees that
it will, at its own expense, on or prior to (A) the Closing Date, in the case of
Initial Accounts, (B) the applicable Addition Date, in the case of Additional
Accounts, and (C) the applicable Securitization Date, in the case of the related
Newer Accounts, indicate in its computer files that, Receivables created in
connection with such Accounts have been conveyed to HRAC in accordance with this
Agreement and, as applicable, have been conveyed by HRAC to the Company in
accordance with the Transferor RPA and, as applicable, have been conveyed by the
Company to the Trust pursuant to the Transfer and Servicing Agreement and, as
applicable, have been pledged by the Trust to the Indenture Trustee pursuant to
the Indenture for the benefit of the Noteholders by including in such computer
files the code that identifies each such Account. On or prior to each
Securitization Date, HRAC will prepare a computer file or microfiche list
containing a true and complete list of Securitized Accounts specifying, as of
the Closing Date, in the case of the Initial Accounts, the applicable Additional
Cut-Off Date, in the case of Additional Accounts, and the applicable
Securitization Date, in the case of the related Newer Accounts, (1) its account
number, (2) the aggregate amount outstanding in such Account and (3) the
aggregate amount of Principal Receivables in such Account. Each such computer
file or microfiche list, as supplemented from time to time to reflect Additional
Accounts or Securitized Accounts, as appropriate, shall be an Account Schedule
marked as SCHEDULE I to this Agreement, shall be delivered to the Bank, or its
designee, and is hereby incorporated into and made a part of this Agreement. The
Bank further agrees not to alter the code referenced in the first sentence of
this paragraph with respect to any such Account during the term of this
Agreement.
(d) The parties hereto intend that the conveyance of the Bank's right,
title and interest in and to the Purchased Assets shall constitute an absolute
sale, conveying good title free and clear of any liens, claims, encumbrances or
rights of others from the Bank to HRAC and that the Purchased Assets shall not
be part of the Bank's estate in the event of the insolvency of the Bank or a
conservatorship, receivership or similar event with respect to the Bank. It is
the intention of the parties hereto that the arrangements with respect to the
Purchased Assets shall constitute a purchase and sale of such Purchased Assets
and not a loan or a borrowing secured by such Purchased Assets. In the event,
however, that it were to be determined that the transactions evidenced hereby
constitute a loan and not a purchase and sale, it is the intention of the
parties hereto that this Agreement shall constitute a security agreement under
applicable law, and that the Bank shall be deemed to have granted and does
hereby grant to HRAC a first priority perfected security interest in all of the
Bank's right, title and interest, whether now owned or hereafter acquired, in,
to and under the Receivables and other Purchased Assets to secure the
obligations of the Bank hereunder.
(e) To the extent that the Bank retains any interest in the Purchased
Assets, the Bank hereby grants to the Indenture Trustee for the benefit of the
Noteholders a security interest in all of the Bank's right, title, and interest,
whether now owned or hereafter acquired, in, to, and under the Securitized
Receivables and other related
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Purchased Assets that are pledged to the Indenture Trustee pursuant to the
Indenture (collectively, the "TRUST COLLATERAL"), to secure the performance of
all of the obligations of the Bank under this Agreement and any other agreement
or document related to the Transfer and Servicing Agreement or the Indenture.
With respect to the Trust Collateral, the Indenture Trustee shall have all of
the rights that it has under the Transfer and Servicing Agreement and the
Indenture and all of the rights of a secured creditor under the UCC.
(f) The Bank and HRAC may designate revolving credit accounts which would
otherwise be Accounts as Excluded Accounts and the Receivables related to such
Excluded Accounts shall be excluded from sale hereunder. This designation shall
be evidenced by the Bank in an Account Schedule, and such Account Schedule, as
amended and supplemented from time to time, shall be incorporated into and
marked as Schedule II to this Agreement.
Section 2.02. Addition of Additional Accounts. Prior to the Transition
Date, if, from time to time, the Company becomes obligated to designate
Additional Accounts (as such term is defined in the Transfer and Servicing
Agreement) pursuant to subsection 2.09(a) of the Transfer and Servicing
Agreement, then HRAC may, at its option, give the Bank written notice thereof on
or before the fifth Business Day (the "ADDITION NOTICE DATE") prior to the
Addition Date therefor, and upon receipt of such notice the Bank shall on or
before such Addition Date, designate sufficient Eligible Accounts to be included
as Additional Accounts so that after the inclusion thereof HRAC will be in
compliance with the requirements of said subsection 2.09(a). Prior to the
Transition Date, additionally, subject to subsections 2.09(b) and (c) of the
Transfer and Servicing Agreement, from time to time Eligible Accounts may be
designated to be included as Additional Accounts upon the mutual agreement of
the Company, HRAC and the Bank. In either event, the Bank shall have sole
responsibility for selecting the Additional Accounts. On the Addition Date with
respect to any designation of Additional Accounts, HRAC has purchased the Bank's
right, title and interest in, to and under the Receivables in such Additional
Accounts (and such Additional Accounts shall be deemed to be Accounts for
purposes of this Agreement) and the related Purchased Assets.
ARTICLE III
CONSIDERATION AND PAYMENT
Section 3.01. Purchase Price.
(a) The "PURCHASE PRICE" for the Receivables in the Initial Accounts and
the related Purchased Assets conveyed to HRAC by the Bank under this Agreement
shall be payable on the Closing Date and shall be an amount equal to 100% of the
aggregate balance of Principal Receivables in those Accounts as of the Closing
Date, plus the present value of anticipated excess spread, computed by taking
into account factors such as historical losses, servicing fees, delinquencies
and paydown rates, yield and such other factors as the Bank and HRAC mutually
agree (and discounted to take into account
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any uncertainty as to future performance matching historical performances), will
result in a Purchase Price determined to be the fair market value of such
Purchased Assets. This computation of initial purchase price shall assume no
reinvestment in new Receivables. The Purchase Price for the Receivables and the
related Purchased Assets (including Receivables and the related Purchased Assets
in Additional Accounts) to be conveyed to HRAC under this Agreement which come
into existence after the Closing Date, shall be payable no later than the
Distribution Date following the Due Period in which such Receivables and
Purchased Assets are conveyed by the Bank to HRAC in an amount equal to 100% of
the aggregate balance of the Principal Receivables so conveyed (the "NEW
PRINCIPAL RECEIVABLES"), plus the present value of anticipated excess spread,
computed by taking into account factors such as historical losses, servicing
fees, delinquencies, paydown rates and yield and such other factors as the Bank
and HRAC may mutually agree so as to result in a Purchase Price determined to be
the fair market value of such Purchased Assets. The Bank and HRAC confirm that a
Purchase Price equal to the fair market value of all Purchased Assets sold to
HRAC through the date hereof has been paid by HRAC to the Bank. The Purchase
Price shall be paid in cash (including netting against other payments) or in
other immediately available funds by HRAC.
(b) Notwithstanding any other provision of this Agreement, the Bank shall
not be obligated to continue to sell Purchased Assets to HRAC to the extent that
the Bank is not paid the Purchase Price therefor as provided herein.
Section 3.02. Adjustments to Purchase Price. The Purchase Price shall be
adjusted on each purchase price payment date (a "CREDIT ADJUSTMENT") with
respect to any Receivable previously conveyed to HRAC by the Bank which has
since been reversed because of a rebate, refund, unauthorized charge or billing
error to a cardholder because such Receivable was created in respect of
merchandise which was refused or returned by a cardholder. The amount of such
adjustment shall equal (x) the reduction in the principal balance of such
Receivable resulting from the occurrence of such event multiplied by (y) the
quotient (expressed as a percentage) of (i) the Purchase Price for Principal
Receivables payable on such date computed in accordance with Section 3.01(a)
divided by (ii) the Principal Receivables paid for on such date pursuant to such
Section. In the event that an adjustment pursuant to this Section 3.02 causes
the Purchase Price to be a negative number, the Bank agrees that, not later than
1:00 P.M. New York City time on such date, the Bank shall pay to HRAC an amount
equal to the amount by which the Purchase Price minus the Credit Adjustment
would be reduced below zero.
Section 3.03. Use of Name, Logo and Marks. The Bank does hereby grant to
HRAC and the Servicer a non-exclusive license to use the name "Household Bank
(SB), National Association" and all related identifying trade or service marks,
signs, symbols, logos, designs, servicing software, customer lists and other
intangibles in connection with the servicing of the Receivables purchased
hereunder. The license granted shall be co-extensive with the term of the
Agreement.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01. Representations and Warranties of the Bank Relating to the
Bank. The Bank hereby represents and warrants to, and agrees with, HRAC as of
the Closing Date, on each Addition Date and on each day on or after the
Transition Date, that:
(a) the Bank is a national bank duly organized and validly existing in good
standing under the laws of the United States and has, in all material respects,
full power and authority to own its properties and conduct its business as such
properties are presently owned and such business is presently conducted, and to
execute, deliver and perform its obligations under this Agreement;
(b) the Bank is duly qualified to do business and is in good standing as a
foreign corporation (or is exempt from such requirements) and has obtained all
necessary licenses and approvals, in each jurisdiction in which failure to so
qualify or to obtain such licenses and approvals would (i) render any Credit
Agreement relating to an Account or any Receivable unenforceable by the Bank,
HRAC, the Company or the Owner Trustee on behalf of the Trust and (ii) have a
material adverse effect on the Noteholders;
(c) the execution, delivery and performance of this Agreement and any other
document or instrument delivered pursuant hereto, and the consummation of the
transactions provided for in this Agreement and any other document or instrument
delivered hereto have been duly authorized by the Bank by all necessary
corporate action on the part of the Bank;
(d) the execution and delivery of this Agreement and any other document or
instrument delivered hereto by the Bank, the performance of the transactions
contemplated by this Agreement, and the fulfillment of the terms of this
Agreement applicable to the Bank will not conflict with, violate or result in
any breach of any of the material terms and provisions of, or constitute (with
or without notice or lapse of time or both) a material default under, any
indenture, contract, agreement, mortgage, deed of trust, or other instrument to
which the Bank is a party or by which it or any of its properties are bound;
(e) the execution, delivery and performance of this Agreement by the Bank
and the fulfillment of the terms contemplated herein and therein applicable to
the Bank will not conflict with or violate any Requirements of Law applicable to
the Bank;
(f) there are no proceedings or investigations pending or, to the best
knowledge of the Bank, threatened against the Bank, before any Governmental
Authority (i) asserting the invalidity of this Agreement, (ii) seeking to
prevent the consummation of any of the transactions contemplated by this
Agreement, (iii) seeking any determination or ruling that, in the reasonable
judgment of the Bank, would materially and adversely
9
affect the performance by the Bank of its obligations under this Agreement, or
(iv) seeking any determination or ruling that would materially and adversely
affect the validity or enforceability of this Agreement;
(g) all authorizations, consents, orders or approvals of or registrations
or declarations with any Governmental Authority required to be obtained,
effected or given by the Bank in connection with the execution and delivery by
the Bank of this Agreement and any other document or instrument delivered hereto
and the performance of the transactions contemplated by this Agreement by the
Bank have been duly obtained, effected or given and are in full force and
effect;
(h) the Bank does not own directly or indirectly any ownership interest in
HRAC, the Company or the Trust;
(i) the consolidated financial statements of the Bank do not include the
assets or liabilities of HRAC, the Company or the Trust;
(j) the Bank has conducted and will conduct its business solely in its own
name through its duly authorized officers or agents so as not to mislead others
as to the identify of the entity with which those others are concerned;
(k) the Bank has maintained and will maintain its corporate records and
books of account separate, and apart from those of the Trust;
(l) the assets of the Bank (including its funds) have not been and will not
be commingled with those of the Trust;
(m) the board of directors of the Bank has held and will hold all
appropriate meetings or will properly execute written consents with respect to
all actions requiring such consents;
(n) the Bank has been and will be adequately capitalized as defined in 12
U.S.C.ss.1831 o(b)(1)(B) in light of its contemplated business obligations;
(o) the Bank has not and will not guaranty debts of the Trust;
(p) the Bank has not and will not acquire obligations or securities of, or
make loans or advances to, the Trust;
(q) the Bank has received fair consideration in exchange for its interests
in the related Receivables;
(r) the Bank will treat the transfer to HRAC of the related Receivables as
a sale for tax and accounting purposes; and
(s) there are no agreements or understandings between the Bank and the
Trust relating to the related Receivables, except as set forth in the
Transaction Documents.
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The representations and warranties set forth in this Section 4.01 shall
survive the transfer and assignment of the Receivables to HRAC. Upon discovery
by the Bank or HRAC of a breach of any of the foregoing representations and
warranties, the party discovering such breach shall give written notice to the
other party, the Company, the Owner Trustee and the Indenture Trustee within
three Business Days following such discovery.
Section 4.02. Representations and Warranties of the Bank Relating to the
Agreement and the Receivables.
(a) Representations and Warranties. The Bank hereby represents and warrants
to HRAC as of the date of this Agreement, as of the Closing Date, as of each
Addition Date, and on each Securitization Date, that:
(i) this Agreement constitutes a legal, valid and binding obligation
of the Bank enforceable against the Bank in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally from time to time in effect or general
principles of equity;
(ii) as of the date of transfer each Receivable has been and will be
conveyed to HRAC free and clear of any Lien;
(iii) all authorizations, consents, orders or approvals of or
registrations or declarations with any Governmental Authority required to
be obtained, effected or given by the Bank in connection with the
conveyance of Securitized Receivables to HRAC have been duly obtained,
effected or given and are in full force and effect;
(iv) this Agreement constitutes a valid sale, transfer and assignment
to HRAC of all right, title and interest of the Bank in the Securitized
Receivables and the proceeds thereof and the related Recoveries payable
pursuant to this Agreement; and
(v) Each Purchased Asset related to a Securitized Receivable has been
conveyed to HRAC in compliance, in all material respects, with all
Requirements of Law applicable to the Bank.
(b) Notice of Breach. The representations and warranties set forth in this
Section 4.02 shall survive the transfer and assignment of the Receivables to
HRAC. Upon discovery by either the Bank or HRAC of a breach of any of the
representations and warranties set forth in this Section 4.02, the party
discovering such breach shall give written notice to the other party, and in the
case of a Securitized Receivable, to the Company, the Owner Trustee and the
Indenture Trustee promptly following such discovery; provided that the failure
to give notice promptly does not preclude subsequent notice. The Bank agrees to
cooperate with HRAC in attempting to cure any such breach.
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Section 4.03. Representations and Warranties of HRAC. As of the Closing
Date, on each Addition Date and on each Business Day on or after the Transition
Date, HRAC hereby represents and warrants to, and agrees with, the Bank that:
(a) Organization and Good Standing. HRAC is a corporation duly organized
and validly existing under the laws of the State of Delaware and has, in all
material respects, full power and authority to own its properties and conduct
its business as such properties are presently owned and such business is
presently conducted and to execute, deliver and perform its obligations under
this Agreement.
(b) Due Authorization. The execution and delivery of this Agreement and the
consummation of the transactions provided for in this Agreement have been duly
authorized by HRAC by all necessary corporate action on the part of HRAC.
(c) No Conflict. The execution and delivery of this Agreement and any other
document or instrument delivered hereto by HRAC, the performance of the
transactions contemplated by this Agreement, and the fulfillment of the terms of
this Agreement applicable to HRAC, will not conflict with, result in any breach
of any of the material terms and provisions of, or constitute (with or without
notice or lapse of time or both) a material default under, any indenture,
contract, agreement, mortgage, deed of trust or other instrument to which HRAC
is a party or by which it or any of its properties are bound.
(d) No Violation. The execution, delivery and performance of this Agreement
by HRAC and the fulfillment of the terms contemplated herein and therein
applicable to HRAC will not conflict with or violate any Requirements of Law
applicable to HRAC.
(e) No Proceedings. There are no proceedings or investigations pending or,
to the best knowledge of HRAC, threatened against HRAC, before any Governmental
Authority (i) asserting the invalidity of this Agreement, (ii) seeking to
prevent the consummation of any of the transactions contemplated by this
Agreement, (iii) seeking any determination or ruling that, in the reasonable
judgment of HRAC, would materially and adversely affect the performance by HRAC
of its obligations under this Agreement or (iv) seeking any determination or
ruling that would materially and adversely affect the validity or enforceability
of this Agreement.
(f) All Consents. All authorizations, consents, orders or approvals of or
registrations or declarations with any Governmental Authority required to be
obtained, effected or given by HRAC in connection with the execution and
delivery by HRAC of this Agreement and any other document or instrument
delivered hereto and the performance of the transactions contemplated by this
Agreement have been duly obtained, effected or given and are in full force and
effect.
The representations and warranties set forth in this Section 4.03 shall
survive the Conveyance of the Receivables to HRAC. Upon discovery by HRAC or the
Bank of a breach of any of the foregoing representations and warranties, the
party
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discovering such breach shall give prompt written notice to the other
party, the Owner Trustee and the Indenture Trustee.
ARTICLE V
COVENANTS
Section 5.01. Covenants of the Bank. The Bank hereby covenants and agrees
with HRAC as follows:
(a) Receivables Not To Be Evidenced by Promissory Notes. Except in
connection with its enforcement or collection of an Account, the Bank will take
no action to cause any Receivable to be evidenced by any instrument (as defined
in the UCC).
(b) Security Interests. Except for the conveyances hereunder, the Bank will
not sell, pledge, assign or transfer to any other Person, or take any other
action inconsistent with HRAC's ownership of the Receivables or grant, create,
incur, assume or suffer to exist any Lien (arising through or under the Bank)
on, any Receivable, whether now existing or hereafter created, or any interest
therein, and the Bank shall not claim any ownership interest in the Receivables
and shall defend the right, title and interest of HRAC in, to and under the
Receivables, whether now existing or hereafter created, against all claims of
third parties claiming through or under the Bank.
(c) Account Allocations. In the event that the Bank is unable for any
reason to transfer Receivables to HRAC in accordance with the provisions of this
Agreement (including, without limitation, by reason of the application of the
provisions of Section 8.02 or any order of any Governmental Authority), then, in
any such event, the Bank agrees (except as prohibited by any such order) to
allocate and pay to HRAC, after the date of such inability, all Collections that
HRAC will be required to allocate and pay to the Company pursuant to Section
5.01 of the Receivables Purchase Agreement between HRAC and the Company.
(d) Delivery of Collections or Recoveries. In the event that the Bank
receives Collections or Recoveries, the Bank agrees to pay to HRAC (or to the
Servicer if HRAC so directs) all such Collections and Recoveries as soon as
practicable after receipt thereof.
(e) Notice of Liens. The Bank shall notify HRAC promptly after becoming
aware of any Lien on any Receivable other than the conveyances hereunder, under
the Transfer and Servicing Agreement and under the Indenture.
(f) Documentation of Transfer. The Bank shall undertake to file the
documents which would be necessary to perfect and maintain the transfer of the
Purchased Assets to HRAC.
(g) Periodic Rate Finance Charges. Except (A) as otherwise required by any
Requirements of Law or (B) as is deemed by the Bank to be necessary in order for
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it to maintain its credit business or a program operated by such credit business
on a competitive basis based on a good faith assessment by it of the nature of
the competition with respect to the credit business or such program, it shall
not at any time take any action which would have the effect of reducing the
Series Portfolio Yield to a level that could be reasonably expected to result in
an Adverse Effect with respect to any Series based on the insufficiency of the
Series Portfolio Yield or any similar test.
(h) Credit Agreements and Guidelines. Subject to compliance with all
Requirements of Law and paragraph (f) above, the Bank or the Servicer may change
the terms and provisions of the applicable Credit Agreements or the applicable
Credit Guidelines of the Bank or the Servicer in any respect (including the
calculation of the amount or the timing of charge-offs and the Periodic Rate
Finance Charges to be assessed thereon). Notwithstanding the above, unless
required by Requirements of Law or as permitted by paragraph (f) above, the Bank
or the Servicer will not take any action unless (i) at the time of such action,
the Bank or the Servicer, reasonably believes that such action will not cause an
Adverse Effect, and (ii) such change is made applicable to the comparable
segment of the revolving credit accounts owned by the Bank or serviced by the
Servicer which have characteristics the same as, or substantially similar to,
the Accounts that are the subject of such change, except as otherwise restricted
by an endorsement, sponsorship, or other agreement between the Bank and an
unrelated third party or by the terms of the Credit Agreements.
(i) Approval and Official Records. The Bank shall cause this Agreement to
be duly approved by the Bank's Board of Directors, and the Bank shall maintain
this Agreement as a part of the official records of the Bank for the term of
this Agreement.
(j) Trust Documents Control. The Bank acknowledges that some, but not all
Receivables are to be sold by HRAC to the entities listed on Schedule III
pursuant to the related Transaction Documents and are to be serviced by the
applicable Servicer. The Bank agrees to cooperate fully with such Servicer and
to permit such Servicer to take any and all actions necessary in connection with
such Receivables.
ARTICLE VI
REPURCHASE OBLIGATION
Section 6.01. Repurchase Obligation Termination. On the Transition Date,
all prior obligations of the Bank to accept reassignment of HRAC's interests in
Receivables as a result of breaches of representations or warranties hereunder
shall terminate, without regard to whether such breaches occur prior to or on or
after the Transition Date.
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ARTICLE VII
CONDITIONS PRECEDENT
Section 7.01. Conditions to HRAC's Obligations. The obligations of HRAC to
purchase any Purchased Assets on any Business Day shall be subject to the
satisfaction of the following conditions:
(a) All representations and warranties of the Bank contained in this
Agreement shall be true and correct with the same effect as though such
representations and warranties had been made on such date;
(b) All information concerning such Purchased Assets provided to HRAC, or
its designee, shall be true and correct as of such date in all material
respects;
(c) The Bank shall have substantially performed all other obligations
required to be performed by the provisions of this Agreement;
(d) The Bank shall have recorded and filed, at its expense, any financing
statement with respect to the Receivables now existing and hereafter created for
the transfer of accounts and general intangibles (each as defined in Section
9-102 of the UCC) meeting the requirements of applicable state law in such
manner and in such jurisdictions as would be necessary to perfect the sale of
and security interest in the Receivables from the Bank to HRAC, and shall
deliver a file-stamped copy of such financing statements or other evidence of
such filings to HRAC, or its designee;
(e) To the extent required of the Company by Section 2.09(e) of the
Transfer and Servicing Agreement, the Bank shall have deposited in the
Collection Account all Collections with respect to such related Purchased Assets
since the applicable cut-off date; and
(f) All corporate and legal proceedings and all instruments in connection
with the transactions contemplated by this Agreement shall be satisfactory in
form and substance to HRAC, and HRAC shall have received from the Bank copies of
all documents (including, without limitation, records of corporate proceedings)
relevant to the transactions herein contemplated as HRAC may reasonably have
requested.
Section 7.02. Conditions Precedent to the Bank's Obligations. The
obligations of the Bank to sell Purchased Assets on any Business Day shall be
subject to the satisfaction of the following conditions:
(a) All representations and warranties of HRAC contained in this Agreement
shall be true and correct with the same effect as though such representations
and warranties had been made on such date;
(b) Payment or provision for payment of the Purchase Price in accordance
with the provision of Section 3.01 hereof shall have been made; and
15
(c) All corporate and legal proceedings and all instruments in connection
with the transactions contemplated by this Agreement shall be satisfactory in
form and substance to the Bank, and the Bank shall have received from HRAC
copies of all documents (including, without limitation, records of corporate
proceedings) relevant to the transactions herein contemplated as the Bank may
reasonably have requested.
ARTICLE VIII
TERM AND PURCHASE TERMINATION
Section 8.01. Term. Notwithstanding the date of this Agreement, this
Agreement shall commence and be effective on May 7, 2001 and shall continue
until mutually agreed otherwise by the parties.
Section 8.02. Purchase Termination.
(a) Consistent with 12 U.S.C. ss. 1821(e)(12), HRAC may not employ as
grounds for termination of this Agreement that the liabilities of the Bank
exceed its assets; that it has been determined to be insolvent; that any grounds
for the appointment of a receiver or conservator as set forth in 12 U.S.C. ss.
1821(c)(5) exist; or that the FDIC has been appointed receiver, conservator or
liquidator of the Bank.
(b) In the event that the FDIC is appointed receiver, conservator or
liquidator of the Bank and HRAC has grounds to terminate this Agreement other
than those contemplated by 12 U.S.C. ss. 1821(e)(12), the FDIC may request that
HRAC not immediately terminate the Agreement, and, upon such request, HRAC shall
continue to fulfill its obligations as set forth in this Agreement for a period
of ninety (90) days or for such other period as may be mutually agreed by HRAC
and the FDIC (the "Continuation Period"). As compensation for any Receivables
purchased from the Bank during the Continuation Period, HRAC shall pay an amount
equal to the market rate for such Receivables, as mutually agreed by the FDIC
and HRAC.
(c) Nothing in the foregoing paragraphs (a) and (b) shall be deemed to
waive or otherwise impair the FDIC's statutory rights under 12
U.S.C.ss.1821(e)(1).
ARTICLE IX
MISCELLANEOUS PROVISIONS
Section 9.01. Amendment. This Agreement and the rights and obligations of
the parties hereunder and thereunder may not be changed orally, but only by an
instrument in writing signed by HRAC and the Bank in accordance with this
Section 9.01. This Agreement may be amended from time to time by HRAC and the
Bank (i) to cure any ambiguity, (ii) to correct or supplement any provisions
herein which may be inconsistent with any other provisions herein, (iii) to add
any other provisions with respect to matters or questions arising under this
Agreement which shall not be
16
inconsistent with the provisions of this Agreement, (iv) to change or modify the
Purchase Price and (v) to change, modify, delete or add any other obligation of
the Bank or HRAC; provided, however that no amendment pursuant to clause (v) of
this Section 9.01 shall be effective with respect to Securitized Receivables
unless the Bank and HRAC have been notified in writing that the Rating Agency
Condition has been satisfied; provided, further, the Bank and HRAC shall have
delivered to the Company, the Owner Trustee and the Indenture Trustee an
Officer's Certificate, dated the date of any such action, stating that each of
the Bank and HRAC, respectively, reasonably believes that such action will not
have an Adverse Effect, unless the Company, the Owner Trustee and the Indenture
Trustee shall consent thereto. A copy of any amendment to this Agreement with
respect to Securitized Receivables shall be sent to the Rating Agency.
Section 9.02. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 9.03. Notices. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if personally
delivered at or mailed by registered mail, return receipt requested, to (a) in
the case of the Bank, 0000 Xxxx Xxxxxx Xxxxx, Xxx Xxxxx, Xxxxxx 00000,
Attention: General Counsel, (b) in the case of HRAC, 0000 Xxxxxxx Xxxx, Xxxxxxxx
Xxxxxxx, XX 00000, Attention: General Counsel, (c) in the case of the Owner
Trustee, Xxxxxx Square North, 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, XX
00000-0000, (d) in the case of the Indenture Trustee, 000 Xxxx Xxxxxx Xxxxx,
Xxxxxxx, Xxxxxxxx, 00000, Attention: Corporate Trust Department, (e) in the case
of the Servicer, Household Finance Corporation, 0000 Xxxxxxx Xxxx, Xxxxxxxx
Xxxxxxx, Xxxxxxxx 00000, Attention: X.X. Xxxxx, Assistant Treasurer, (f) in the
case of Fitch, Fitch, Inc., Xxx Xxxxx Xxxxxx Xxxxx, Xxx Xxxx, XX 00000,
Attention: ABS Surveillance, (g) in the case of Moody's, Xxxxx'x Investors
Service Inc., 00 Xxxxxx Xxxxxx, Xxx Xxxx, XX 00000, Attention: ABS Monitoring
Group, or (h) in the case of Standard & Poor's, Standard & Poor's Ratings Group,
00 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000, Attention: Credit Card ABS; or, as to each
party, at such other address as shall be designated by such party in a written
notice to each other party.
Section 9.04. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall for any
reason whatsoever be held invalid, then such covenants, agreements, provisions,
or terms shall be deemed severable from the remaining covenants, agreements,
provisions, and terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement.
Section 9.05. Assignment. Notwithstanding anything to the contrary
contained herein, other than HRAC's assignment of its rights, title, and
interests in, to, and under this Agreement to the Company and the Company's
assignment of its rights, title and interest in, to and under this Agreement to
the Trust and the Trust's assignment of its rights, title and interests in, to
and under this Agreement to the Indenture Trustee
17
for the benefit of the beneficiaries of the Trust, including the Noteholders as
contemplated by the Transfer and Servicing Agreement, the Indenture and Section
9.06 hereof, this Agreement may not be assigned by the parties hereto unless the
Bank shall assign its rights, title and interests in, to and under this
Agreement to (a) any successor by merger assuming this Agreement (b) to any
affiliate owned directly or indirectly by Household International, Inc. which
assumes the obligations of this Agreement or (c) to any entity provided that the
Rating Agency has advised HRAC and the Bank that the Rating Agency Condition has
been satisfied.
Section 9.06. Acknowledgement and Agreement of the Bank. By execution
below, the Bank expressly acknowledges and agrees that all of HRAC's right,
title, and interest in, to, and under this Agreement as it relates to
Securitized Receivables, including, without limitation, all of HRAC's right,
title, and interest in and to the Securitized Receivables purchased pursuant to
this Agreement, shall be assigned by HRAC to the Company, and shall be assigned
by the Company to the Owner Trustee, and shall be assigned by the Owner Trustee
to the Indenture Trustee for the benefit of the beneficiaries of the Trust,
including the Noteholders, and the Bank consents to such assignments. The Bank
further agrees that notwithstanding any claim, counterclaim, right of setoff or
defense which it may have against HRAC, due to a breach by HRAC of this
Agreement or for any other reason, and notwithstanding the bankruptcy of HRAC or
any other event whatsoever, the Bank's sole remedy shall be a claim against HRAC
for money damages, and then only to the extent of funds received by HRAC
pursuant to the Receivables Purchase Agreement between HRAC and the Company, and
in no event shall the Bank assert any claim on or any interest in the
Securitized Receivables or any proceeds thereof or take any action which would
reduce or delay receipt by the Company or the Owner Trustee of collections with
respect to the Securitized Receivables. Additionally, the Bank agrees for the
benefit of the Noteholders that any amounts payable by the Bank to HRAC
hereunder with respect to the Securitized Receivables which are to be paid by
HRAC to the Company then paid by the Company to the Owner Trustee and pledged to
the Indenture Trustee for the benefit of the Noteholders shall be paid by the
Bank, on behalf of HRAC, directly to the Company.
Section 9.07. Further Assurances. HRAC and the Bank agree to do and
perform, from time to time, any and all acts and to execute any and all further
instruments required or reasonably requested by the other party, more fully to
effect the purposes of this Agreement, including, without limitation, the
execution of any financing statements or continuation statements or equivalent
documents relating to the Receivables for filing under the provisions of the UCC
or other law of any applicable jurisdiction.
Section 9.08. No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of HRAC or the Bank, any right, remedy, power
or privilege hereunder, shall operate as a waiver thereof; nor shall any single
or partial exercise of any right, remedy, power or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other right,
remedy, power or privilege. Subject to Section 9.06, the rights, remedies,
powers and privileges herein provided are cumulative and not exhaustive of any
rights, remedies, powers and privileges provided by law.
18
Section 9.09. Counterparts. This Agreement may be executed in two or more
counterparts (and by different parties on separate counterparts), each of which
shall be an original, but all of which together shall constitute one and the
same instrument.
Section 9.10. Binding; Third-Party Beneficiaries. This Agreement will inure
to the benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. The Company, the Owner Trustee and the
Indenture Trustee shall be considered third-party beneficiaries of this
Agreement.
Section 9.11. Merger and Integration. Except as specifically stated
otherwise herein, this Agreement set forth the entire understanding of the
parties relating to the subject matter hereof, and all prior understandings,
written or oral, are superseded by this Agreement. This Agreement may not be
modified, amended, waived or supplemented except as provided herein.
Section 9.12. Headings. The headings are for purposes of reference only and
shall not otherwise affect the meaning or interpretation of any provision
hereof.
Section 9.13. Schedules and Exhibits. The schedules and exhibits attached
hereto and referred to herein shall constitute a part of this Agreement and are
incorporated into this Agreement for all purposes.
Section 9.14. Nonpetition Covenant. Notwithstanding any prior termination
of this Agreement, the Bank shall not, prior to the date which is one year and
one day after the termination of this Agreement, acquiesce, petition or
otherwise invoke or cause HRAC to invoke the process of any Governmental
Authority for the purpose of commencing or sustaining a case against HRAC under
any Federal or state bankruptcy, insolvency or similar law or appointing a
receiver, conservator, liquidator, assignee, trustee, custodian, sequestrator or
other similar official of HRAC or any substantial part of its property or
ordering the winding-up or liquidation or the affairs of HRAC.
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IN WITNESS WHEREOF, HRAC and the Bank have caused this Agreement to be duly
executed by their respective officers as of the day and year first above
written.
HOUSEHOLD BANK (SB), N.A.
By: /s/ X.X. Xxxx
----------------------------------
Name: X.X. Xxxx
Title: Vice President
HOUSEHOLD RECEIVABLES ACQUISITION COMPANY
By: /s/ X.X. Xxxx
----------------------------------
Name: X.X. Xxxx
Title: Vice President
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