1
Exhibit 1
HOUSEHOLD CONSUMER LOAN TRUST 1997-2
HOUSEHOLD CONSUMER LOAN ASSET BACKED NOTES,
Series 1997-2, Class A-1, Class A-2 and Class A-3
HOUSEHOLD FINANCE CORPORATION
(Servicer)
HOUSEHOLD CONSUMER LOAN CORPORATION
(Seller)
FORM OF UNDERWRITING AGREEMENT
------------------------------
November ___, 1997
X.X. XXXXXX SECURITIES INC.
as Representative of the several Underwriters
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Ladies and Gentlemen:
Household Consumer Loan Corporation, a Nevada corporation (the "Seller")
and a wholly-owned, special purpose subsidiary of Household Finance Corporation
("HFC"), has entered into a Trust Agreement dated as of November 1, 1997 (the
"Trust Agreement") with Chase Manhattan Bank Delaware (the "Owner Trustee"),
creating Household Consumer Loan Trust 1997-2 (the "Issuer"), a statutory
business trust established under the laws of the State of Delaware. The Seller
proposes to direct the Owner Trustee under the Trust Agreement to cause the
Issuer to issue Household Consumer Loan Asset Backed Notes, Series 1997-2,
Class A-1 Notes, Class A-2 Notes, Class A-3 Notes and Class B Notes
(collectively, the "Notes") and Household Consumer Loan Asset Backed
Certificates, Series 1997-2 (the "Certificates" and, together with the Notes,
the "Securities"). The Class A-1, Class A-2 and Class A-3 Notes are
collectively referred to herein as the "Class A Notes". Only the Class A Notes
are being purchased by the underwriters named in Schedule A hereto (the
"Underwriters") for whom X.X. Xxxxxx Securities Inc. is acting as
representative (the "Representative"). The Seller and HFC understand that the
Underwriters propose to make
2
a public offering of the Class A Notes as soon as the Underwriters deem
advisable after the date hereof.
The Notes will be issued pursuant to an Indenture dated as of November 1,
1997 (the "Indenture") between the Issuer and The Bank of New York (the
"Indenture Trustee") and will represent indebtedness of the Issuer. The
Certificates will be issued pursuant to the Trust Agreement. The Notes will be
secured by (i) a participation interest (the "Series 1997-2 Participation
Interest") in (a) receivables held in Household Consumer Loan Deposit Trust I
(the "Deposit Trust") arising under certain fixed and variable rate revolving
unsecured consumer credit lines (the "Credit Lines") and (b) the preferred
stock of the Seller held by the Deposit Trustee (as defined herein), (ii)
amounts on deposit in certain accounts of the Issuer held for the benefit of
the holders of the Securities and (iii) an assignment of the Issuer's rights
under the Series 1997-2 Supplement (as defined below) (collectively, the "Trust
Assets"). The Deposit Trust was formed pursuant to a Pooling and Servicing
Agreement dated as of September 1, 1995 (the "Base Pooling and Servicing
Agreement") among the Seller, HFC, as Servicer (the "Servicer"), and Texas
Commerce Bank National Association as successor trustee to The Chase Manhattan
Bank, N.A., as Deposit Trustee (the "Deposit Trustee"). The Series 1997-2
Participation Interest was issued pursuant to the Supplement for Series 1997-2
dated as of November 1, 1997 among the Seller, the Servicer and the Deposit
Trustee (the "Supplement" and, together with the Base Pooling and Servicing
Agreement, the "Pooling and Servicing Agreement"). The Pooling and Servicing
Agreement, together with the Trust Agreement, the Certificate of Trust, the
Indenture, the Receivables Purchase Agreement, the Administration Agreement and
this Agreement, constitute the "Basic Documents" herein. Capitalized terms
used but not defined herein shall have the meanings assigned to such terms in
the Indenture.
The Notes are more fully described in the Registration Statement (as
defined below) which the Seller has furnished to the Underwriters.
SECTION 1. Representations and Warranties of the Seller and the Credit
Line Owners. Each of the Credit Line Owners (as defined in the Pooling and
Servicing Agreement) and the Seller, each as to itself, represents and warrants
to, and agrees with the Underwriters that:
(a) A registration statement on Form S-3 (Nos. 000-00000-00 and
333-36405-02) in respect of the Notes and a registration statement on Form S-1
(No. 333-36405) in respect of the Series 1997-2 Participation Interest,
including a prospectus and such amendments thereto as may have been required on
the date hereof, relating to the Notes and the Series 1997-2 Participation
Interest,
-2-
3
have been filed with the Securities and Exchange Commission (the "Commission").
The conditions to the use of a registration statement on Form S-3 and Form S-1
under the Securities Act of 1933, as amended (the "Act"), as set forth in the
General Instructions to Form S-3 and Form S-1, as applicable, have been, or
will prior to the effective date of the Registration Statement (defined herein)
be, satisfied in all material respects with respect to the Seller and the
Registration Statement. The Commission has not issued any order preventing or
suspending the use of the Preliminary Prospectus. There are no contracts or
documents of the Seller which are required to be filed as exhibits to the
Registration Statement pursuant to the Act or the Rules and Regulations
(defined herein) which have not been so filed or incorporated by reference
therein on or prior to the Effective Date of the Registration Statement,
assuming compliance by each Underwriter with Section 2(a) hereof.
(b) The Seller will next file with the Commission either, (i) prior to the
effectiveness of the Registration Statement, a further amendment thereto
(including the form of final prospectus) or (ii) after effectiveness of the
Registration Statement, a final prospectus in accordance with Rules 430A and
424(b)(1) or (4) of the Rules and Regulations. In the case of clause (ii), the
Seller has included in such Registration Statement, as amended at the Effective
Date (defined herein), all information (other than Rule 430A Information
(defined herein)) required by the Act and the rules and regulations thereunder
(the "Rules and Regulations") to be included in the Registration Statement with
respect to the Series 1997-2 Participation Interest and the Notes and the
offering of the Notes. As filed, such amendment and form of final prospectus,
or such final prospectus, shall include all Rule 430A Information and, except
to the extent the Underwriters shall agree in writing to a modification, shall
be in all substantive respects in the form furnished to the Underwriters prior
to the Execution Time (defined herein) or, to the extent not completed at the
Execution Time, shall contain only such specific additional information and
other changes (beyond that contained in the Preliminary Prospectus which has
previously been furnished to the Underwriters) as the Seller has advised the
Underwriters, prior to the Execution Time, will be included or made therein.
The terms which follow, when used in this Agreement, shall have the
meanings indicated. The term "Effective Date" shall mean each date that the
Registration Statement and any post-effective amendment or amendments thereto
became or become effective under the Act. "Execution Time" shall mean the date
and time that this Agreement is executed and delivered by the parties hereto.
"Preliminary Prospectus" shall mean any preliminary prospectus included in the
Registration Statement, or amendments thereof, which, as completed, is proposed
to be used in connection with the
-3-
4
sale of the Class A Notes and any prospectus subsequently filed with the
Commission by the Seller with the consent of the Underwriters pursuant to Rule
424(a) of the Rules and Regulations. "Prospectus" shall mean the prospectus
relating to the Notes that is first filed with the Commission pursuant to Rule
424(b) and any prospectus subsequently filed pursuant to Rule 424 or, if no
filing pursuant to Rule 424(b) is required, shall mean the form of final
prospectus included in the Registration Statement at the Effective Date.
Reference made herein to the Preliminary Prospectus or the Prospectus shall be
deemed to refer to and include any documents incorporated by reference therein
pursuant to Item 12 of Form S-3 under the Act, as of the date of the
Preliminary Prospectus or the Prospectus, as the case may be, and any reference
to any amendment or supplement to the Preliminary Prospectus or the Prospectus
shall be deemed to refer to and include any document filed under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), after the date of the
Preliminary Prospectus or the Prospectus and incorporated by reference in the
Preliminary Prospectus or the Prospectus; and any reference to any amendment to
the Registration Statement shall be deemed to include any report of the Seller
filed with the Commission pursuant to Section 13(a) or 15(d) of the Exchange
Act after the Effective Time that is incorporated by reference in the
Registration Statement. "Registration Statement" shall mean both registration
statements referred to in Section 1(a) hereof and any registration statements
required to be filed under the Act or the Rules and Regulations, including
incorporated documents, exhibits and financial statements, in the form in which
it has or shall become effective and, in the event of any post-effective
amendment thereto which becomes effective prior to the Closing Date (defined
herein), shall also mean such Registration Statement as so amended and
including the Rule 430A Information deemed to be included therein at the
Effective Date as provided by Rule 430A. "Rule 424" and "Rule 430A" refer to
such rules and regulations under the Act. "Rule 430A Information" means
information with respect to the Class A Notes and the offering thereof
permitted to be omitted from the Registration Statement when it becomes
effective pursuant to Rule 430A.
(c) On the Effective Date, the Registration Statement did or will comply
in all material respects with the applicable requirements of the Act and the
Rules and Regulations; assuming compliance by each Underwriter with Section
2(a), 2(b) and 2(c) hereof when the Prospectus is first filed (if required) in
accordance with Rule 424(b), as of its date and on the Closing Date, the
Prospectus (and any supplements thereto) will comply in all material respects
with the applicable requirements of the Act and the Rules and Regulations; on
the Effective Date, the Registration Statement, did or will not contain any
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
-4-
5
misleading; and, as of its date and on the date of any filing pursuant to Rule
424(b) (if required) and on the Closing Date, the Prospectus (together with any
supplement thereto) will not, include any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided, however, that the Seller makes no representations or
warranties as to the information contained in or omitted from the Registration
Statement or the Prospectus (or any supplements thereto) in reliance upon and
in conformity with information furnished in writing to the Seller by or on
behalf of the Underwriters specifically for use in connection with the
preparation of the Registration Statement or the Prospectus (or any supplements
thereto).
(d) Since the respective dates as of which information is given in the
Prospectus, or the Prospectus, as amended and supplemented at the Closing Time,
there has not been any material adverse change in the general affairs,
management, financial condition, or results of operations of any of the Credit
Line Owners or the Seller or of their subsidiaries, otherwise than as set forth
or contemplated in the Prospectus or the Prospectus as amended and supplemented
at the Closing Time.
(e) Each of the Credit Line Owners and the Seller has been duly
incorporated and is validly existing as a corporation in good standing under
the laws of its respective jurisdiction of incorporation, with the full right,
power and authority (corporate and other) to own, lease and operate its
properties and conduct its business as described in the Prospectus and to enter
into and perform its obligations under the Basic Documents to which each is a
party, and with respect to the Seller, to authorize the execution, delivery and
performance of the Indenture and the issuance of the Notes and the
Certificates, respectively, by the Issuer; each of the Credit Line Owners and
the Seller is duly qualified as a foreign corporation to transact business and
is in good standing in each jurisdiction which requires such qualification,
except where failure to be so qualified would not have a material adverse
effect on the business or financial condition of any such Credit Line Owner or
the Seller; and each Credit Line Owner is duly authorized under the statutes
which regulate the business of making loans or of financing the sale of goods
(commonly called "small loan laws," "consumer finance laws," or "sales finance
laws"), or is permitted under the general interest statutes and related laws
and court decisions, to conduct in the various jurisdictions in which any of
them do business the businesses as currently conducted therein by any of them.
(f) There are no legal or governmental proceedings pending to which any
Credit Line Owner or the Seller is a party or of which
-5-
6
any property of any Credit Line Owner or the Seller is the subject, which
if determined adversely to any Credit Line Owner or the Seller would
individually or in the aggregate have a material adverse effect on the
financial position, shareholders' equity or results of operations of such
Credit Line Owner or the Seller; and to the best knowledge of the Credit Line
Owners and the Seller, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others.
(g) Each of the Basic Documents to which the Seller or the Credit Line
Owners are a party, when executed and delivered as contemplated thereby, will
have been duly authorized, executed and delivered by the Seller and the Credit
Line Owners, as applicable, and the Basic Documents to which the Seller or the
Credit Line Owners are a party when executed and delivered as contemplated
herein will constitute, legal, valid and binding instruments enforceable
against the Seller or the Credit Line Owners, as applicable, in accordance with
their respective terms, subject as to enforceability (i) to applicable
bankruptcy, reorganization, insolvency, moratorium or other similar laws
affecting creditors' rights generally, (ii) to general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity or at
law) and (iii) with respect to rights of indemnity under this Agreement, to
limitations of public policy under applicable securities laws.
(h) The issuance and delivery of the Securities, the consummation of any
other of the transactions contemplated herein or in the Basic Documents, or the
fulfillment of the terms of the Basic Documents, do not and will not conflict
with or violate any term or provision of the Certificate or Articles of
Incorporation or Bylaws of any of the Credit Line Owners or the Seller, any
statute, order or regulation applicable to any of the Credit Line Owners or the
Seller of any court, regulatory body, administrative agency or governmental
body having jurisdiction over any of the Credit Line Owners or the Seller and
do not and will not conflict with, result in a breach or violation or the
acceleration of or constitute a default under or result in the creation or
imposition of any lien, charge or encumbrance upon any of the property or
assets of any of the Credit Line Owners or the Seller pursuant to the terms of,
any indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which any of the Credit Line Owners or the Seller is a party or
by which any of the Credit Line Owners or the Seller may be bound or to which
any of the property or assets of any of the Credit Line Owners or the Seller
may be subject except for conflicts, violations, breaches, accelerations and
defaults which would not, individually or in the aggregate, be materially
adverse to any of the Credit Line Owners or the Seller or materially adverse to
the transactions contemplated by this Agreement.
-6-
7
(i) Xxxxxx Xxxxxxxx LLP is an independent public accountant with respect
to the Credit Line Owners and the Seller as required by the Act and the Rules
and Regulations.
(j) The direction by the Seller to the Deposit Trustee to execute,
countersign, issue and deliver the Series 1997-2 Participation Interest has
been duly authorized by the Seller, and assuming the Deposit Trustee has been
duly authorized to do so, when executed, countersigned, issued and delivered by
the Deposit Trustee in accordance with Pooling and Servicing Agreement, the
Series 1997-2 Participation Interest will be validly issued and outstanding and
will be entitled to the benefits provided by the Pooling and Servicing
Agreement.
(k) The Seller has directed the Issuer to execute, issue and deliver the
Notes and the Issuer has directed the Indenture Trustee to authenticate the
Notes and assuming such direction has been duly authorized by the Issuer, and
assuming the Indenture Trustee has been duly authorized to do so, when
executed, countersigned, issued and delivered in accordance with the Indenture,
the Notes will be validly issued and outstanding and will be entitled to the
benefits provided by the Indenture.
(l) No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body of the United
States is required for the issue and sale of the Class A Notes to the
Underwriters, or the consummation by any of the Credit Line Owners, the Seller
or the Issuer of the other transactions contemplated by the Basic Documents,
except the registration under the Act of the Class A Notes and such consents,
approvals, authorizations, registrations or qualifications as may be required
under state securities or Blue Sky laws in connection with the purchase and
distribution of the Class A Notes by the Underwriters or as have been obtained.
(m) Each of the Credit Line Owners and the Seller possesses all material
licenses, certificates, authorities or permits issued by the appropriate state,
federal or foreign regulatory agencies or bodies necessary to conduct the
business now conducted by it and as described in the Prospectus and none of the
Credit Line Owners or the Seller has received notice of proceedings relating to
the revocation or modification of any such license, certificate, authority or
permit which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would materially and adversely affect the conduct
of its business, operations or financial condition.
(n) As of the date any Receivables are transferred to the Deposit Trustee,
(i) each Credit Line Owner will have good and marketable title to the
Receivables being transferred by it to the
-7-
8
Seller free and clear of any lien, mortgage, pledge, charge, encumbrance,
adverse claim or other security interest (collectively, "Liens"), (ii) each
Credit Line Owner will not have assigned to any person any of its right, title
or interest in such Receivables or in the Receivables Purchase Agreement and
(iii) each Credit Line Owner will have the power and authority to sell such
Receivables to the Seller; and upon the consummation of the sale and the
assignment provided for pursuant to the terms of the Receivables Purchase
Agreement, the Seller will have acquired all the related Credit Line Owners'
right, title and interest in and to the Receivables.
(o) As of the date any Receivables are transferred to the Deposit Trustee,
the Seller (i) will have good and marketable title to the Receivables being
transferred by it to the Deposit Trustee pursuant to the Pooling and Servicing
Agreement, free and clear of any Liens, (ii) will not have assigned to any
person any of its right, title or interest in such Receivables or in the
Receivables Purchase Agreement, and (iii) will have the power and authority to
sell such Receivables to the Deposit Trustee and assuming due execution and
delivery of the Pooling and Servicing Agreement and any Assignment of
Receivables in Credit Lines by the Deposit Trustee, the Deposit Trustee will
have acquired all of the Seller's right, title and interest in and to the
Receivables. As of the Closing Date, the Seller (i) will not have assigned to
any person other than the Issuer any of its right, title or interest in the
Series 1997-2 Participation Interest being issued pursuant to the Pooling and
Servicing Agreement and (ii) will have the power and authority to convey the
Series 1997-2 Participation Interest to the Issuer pursuant to the Trust
Agreement.
(p) At the Closing Time, the Seller will (i) have good and marketable
title to the Series 1997-2 Participation Interest, free and clear of any Lien
and (ii) have the power and authority to sell the Series 1997-2 Participation
Interest to the Issuer and to authorize the Issuer to issue the Securities.
Upon execution and delivery of the Trust Agreement by the Seller and the
conveyance of the Series 1997-2 Participation Interest from the Seller to the
Issuer, the Issuer will have acquired ownership of all of the Seller's right,
title and interest in and to the Series 1997-2 Participation Interest.
(q) As of the Closing Time, each of the Initial Receivables will meet the
eligibility criteria described in the Prospectus and Pooling and Servicing
Agreement.
(r) None of the Credit Line Owners, the Seller, the Deposit Trust or the
Issuer will conduct its operations while any of the Securities are outstanding
in a manner that would require any Credit Line Owner, the Seller, the Deposit
Trust or the Issuer to
-8-
9
be registered as an "investment company" under the Investment Company Act
of 1940, as amended (the "1940 Act"), as in effect on the date hereof.
(s) At the Closing Time, the Securities and the Basic Documents that are
described in the Prospectus will conform in all material respects to the
descriptions thereof.
(t) At the Closing Time, Xxxxx'x and Standard & Poor's each shall have
assigned to each class of the Notes the respective ratings for the Notes as set
forth in the Prospectus.
(u) Any taxes, fees and other governmental charges in connection with the
execution and delivery of the Basic Documents and the issuance of the
Securities have been paid or will be paid at or prior to the Closing Time.
(v) At the Closing Time, each of the representations and warranties of the
Seller and the Credit Line Owners set forth in this Agreement will be true and
correct in all material respects.
Any certificate signed by an officer of any Credit Line Owner or the
Seller and delivered to the Underwriter or counsel for the Underwriter in
connection with an offering of the Securities shall be deemed, and shall state
that it is, a representation and warranty as to the matters covered thereby to
each person to whom the representations and warranties in this Section 1 are
made.
SECTION 2. Representations and Warranties of the Underwriters. Each
Underwriter severally, and not jointly, represents and warrants to, and agrees
with the other Underwriters, the Credit Line Owners, the Seller, the Servicer
and HFC that:
(a) Such Underwriter has not furnished and will not furnish, in writing or
by electronic transmission, any Derived Information relating to the Class A
Notes to any such prospective investor, except as otherwise contained in the
Preliminary Prospectus dated November ___, 1997 relating to the Class A Notes.
For purposes of this Agreement, "Derived Information" means the type of
information defined as Collateral Term Sheets, Structural Term Sheets or
Computational Materials (as such terms are interpreted in the No-Action Letters
(as defined below)), if any, that have been distributed to prospective
investors in written form or by electronic transmission that:
(i) is not contained in the Prospectus without taking into account
information incorporated therein by reference; and
-9-
10
(ii) does not constitute Seller-Provided Information.
"Seller-Provided Information" means the information contained on any computer
tape furnished to the Underwriters by the Seller concerning the assets
comprising the Issuer.
The terms "Collateral Term Sheet" and "Structural Term Sheet" shall have
the respective meanings assigned to them in the February 13, 1995 letter (the
"PSA Letter") of Cleary, Gottlieb, Xxxxx & Xxxxxxxx on behalf of the Public
Securities Association (which letter, and the Commission staff's response
thereto, were publicly available February 17, 1995). The term "Collateral Term
Sheet" as used herein includes any subsequent Collateral Term Sheet that
reflects a substantive change in the information presented. The term
"Computational Materials" has the meaning assigned to it in the May 17, 1994
letter (the "Xxxxxx Letter" and together with the PSA Letter, the "No-Action
Letters") of Xxxxx & Xxxx on behalf of Xxxxxx, Peabody & Co., Inc. (which
letter, and the Commission staff's response thereto, were publicly available
May 20, 1994).
(b) Each Underwriter acknowledges that the Credit Line Owners, the Seller
or HFC will not be deemed to have breached any representation and warranty or
to have failed to satisfy any other agreement contained herein, to the extent
any such breach or failure on the part of such party resulted solely from an
Underwriter's breach of the representation and warranty set forth in subsection
(a) above; provided, however, that the rights and obligations otherwise
available to an Underwriter pursuant to Sections 9 and 10 hereof are not
limited solely as a result of an Underwriter's breach of the representation and
warranty set forth in subsection (a) above.
SECTION 3. Purchase and Sale. The commitment of the Underwriters to
purchase and of the Seller to sell the Class A Notes pursuant to this Agreement
shall be deemed to have been made on the basis of the respective
representations and warranties of each of the parties herein contained and
shall be subject to the terms and conditions herein set forth. The Seller
agrees to instruct the Issuer to issue and agrees to sell to the Underwriters,
and the Underwriters agree, severally and not jointly (except as provided in
Section 12 hereof), to purchase from the Seller, at a purchase price for each
Class of the Notes set forth on Schedule A hereto, the respective principal
amount of each Class of the Notes set forth opposite the name of such
Underwriter on Schedule A hereto.
SECTION 4. Delivery and Payment. Payment of the purchase price for, and
delivery of, any of the Class A Notes to be purchased by the Underwriters shall
be made at the office of Xxxxxx Xxxxxx & Xxxxx, of Chicago, Illinois or at such
other place as
-10-
11
shall be agreed upon by the Underwriters, the Seller and HFC at 10:00 a.m.
eastern time on November ____, 1997 or at such other time or date as shall be
agreed upon in writing by the Underwriters, the Seller and HFC (the "Closing
Time"). The Class A Notes will be delivered in book-entry form through the
facilities of the Depository Trust Company, Cedel Bank Societe Anonyme and the
Euroclear System. Payment shall be made to the Seller by wire transfer of same
day funds payable to the account of the Seller. Delivery of the Class A Notes
shall be made to the Underwriters for the respective accounts of the
Underwriters against payment of the purchase price thereof. Such Notes shall
be in such denominations and registered in such names as the Underwriters may
request in writing at least one business day prior to the applicable Closing
Time. Such Notes, which may be in temporary form, will be made available for
examination and packaging by the Underwriters no later than 3:00 p.m. central
time on the first business day prior to the Closing Time.
SECTION 5. Offering by the Underwriters. It is understood that the
Underwriters propose to offer the Class A Notes for sale to the public as set
forth in the Prospectus.
SECTION 6. Covenants of the Seller and HFC. The Seller and HFC covenant
with each of the Underwriters as follows:
(a) If at any time when the Prospectus as amended or supplemented is
required by the Act to be delivered in connection with sales of the Class A
Notes by the Underwriters, any event shall occur or condition exist as a result
of which it is necessary, in the opinion of counsel to the Underwriters or
counsel for the Seller, to further amend or supplement the Prospectus as then
amended or supplemented in order that the Prospectus as amended or supplemented
will not include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of
circumstances under which they were made, not misleading or if it shall be
necessary, in the opinion of any such counsel, at any such time to amend or
supplement the Registration Statement or the Prospectus as then amended or
supplemented in order to comply with the requirements of the Act or the Rules
and Regulations, or if required by such Rules and Regulations, including Rule
430A thereunder, to file a post-effective amendment to such Registration
Statement (including an amended Prospectus), the Seller will promptly prepare
and file with the Commission such amendment or supplement as may be necessary
to correct such untrue statement or omission or to make the Registration
Statement comply with such requirements, and within two business days will
furnish to the Underwriters as many copies of the Prospectus, as amended or
supplemented, as the Underwriters shall reasonably request.
-11-
12
(b) The Seller will give the Underwriters reasonable notice of its
intention to file any amendment to the Registration Statement, the Prospectus
or the Prospectus as amended or supplemented, pursuant to the Act, will furnish
the Underwriters with copies of any such amendment or supplement proposed to be
filed a reasonable time in advance of filing, and will not file any such
amendment or supplement to which the Underwriters or counsel to the
Underwriters shall object.
(c) The Seller will notify the Underwriters immediately, and confirm the
notice in writing, (i) of the effectiveness of any amendment to the
Registration Statement, (ii) of the mailing or the delivery to the Commission
for filing of any supplement to the Prospectus or the Prospectus as amended or
supplemented, (iii) of the receipt of any comments from the Commission with
respect to the Registration Statement or the Prospectus or the Prospectus as
amended or supplemented, (iv) of any request by the Commission for any
amendment to the Registration Statement or any amendment or supplement to the
Prospectus or for additional information and (v) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or the initiation of any proceedings for that purpose. The Seller
will make every reasonable effort to prevent the issuance of any stop order
and, if any stop order is issued, to obtain the lifting thereof at the earliest
possible moment.
(d) The Seller will deliver to the Underwriters as many signed and as many
conformed copies of the Registration Statement (as originally filed) and of
each amendment thereto (including exhibits filed therewith or incorporated by
reference therein and documents incorporated by reference in the Prospectus) as
you may reasonably request.
(e) The Seller will make generally available to holders of the Notes as
soon as practicable, but in any event not later than 120 days after the close
of the period covered thereby, an earning statement of the Issuer (which need
not be audited) complying with Section 11(a) of the Act and the Rules and
Regulations (including, at the option of the Seller, Rule 158) and covering a
period of at least twelve consecutive months beginning not later than the first
day of the first fiscal quarter following the Closing Time.
(f) The Seller will endeavor, in cooperation with you, to qualify the
Class A Notes for offering and sale under the applicable securities laws of
such states and other jurisdictions of the United States as you may designate,
and will maintain or cause to be maintained such qualifications in effect for
as long as may be required for the distribution of the Class A Notes. The
Seller will file or cause the filing of such statements and reports
-12-
13
as may be required by the laws of each jurisdiction in which the Class A
Notes have been qualified as above provided.
(g) Neither the Seller nor HFC will, without your prior written consent,
publicly offer or sell or contract to sell any asset-backed securities or
participation interests or other similar securities representing interests in
or secured by other consumer loan-related assets originated or owned by the
Seller or HFC for a period of five days following the commencement of the
offering of the Class A Notes to the public.
(h) So long as the Class A Notes shall be outstanding, the Seller will
cause the Issuer to deliver to the Underwriters the annual statement as to
compliance delivered to the Indenture Trustee pursuant to Section 3.10 of the
Indenture and each monthly report delivered pursuant to Section 3.23 of the
Indenture. So long as the Class A Notes are outstanding, the Servicer will
deliver to the Underwriters the annual statement of a firm of independent
public accountants furnished to the Deposit Trustee pursuant to Section 3.06 of
the Pooling and Servicing Agreement and the monthly servicing report delivered
pursuant to Article V of the Pooling and Servicing Agreement.
(i) The Seller will apply the net proceeds from the sale of the Class A
Notes in the manner set forth in the Prospectus.
(j) If, between the date hereof and the Closing Time, to the knowledge of
HFC or the Seller there are any legal or governmental proceedings instituted or
threatened against HFC or the Seller which, if determined adversely to HFC or
the Seller would individually or in the aggregate have a material adverse
effect on the financial condition, shareholders' equity or results of
operations of HFC or the Seller, and HFC and the Seller, as applicable, will
give prompt written notice thereof to the Underwriters.
SECTION 7. Conditions to Underwriters' Obligations. The respective
obligations of the Underwriters to purchase, and of the Seller to sell, the
Class A Notes pursuant to this Agreement are subject to the accuracy on and as
of the Closing Time of the representations and warranties on the part of the
Credit Line Owners and the Seller on the one hand and the Underwriters on the
other, each as herein contained, and to the material accuracy of the statements
of officers of the Credit Line Owners, the Seller and HFC, respectively, made
pursuant hereto, to the performance by the Credit Line Owners, the Seller and
HFC of all of their respective obligations hereunder and to the following
conditions at the Closing Time:
-13-
14
(a) If the Registration Statement has not become effective prior to the
date of this Agreement, unless the Underwriters agree in writing to a later
time, the Registration Statement shall have become effective not later than (i)
6:00 p.m. New York City time on the date of determination of the public
offering price, if such determination occurred at or prior to 10:00 a.m. New
York City time on such date, or (ii) 3:00 p.m. on the business day following
the day on which the public offering price was determined, if such
determination occurred after 10:00 a.m. New York City time on such date; if
filing of the Prospectus, or any supplement thereto, is required pursuant to
Rule 424(b), the Prospectus shall be filed in the manner and within the time
period required by Rule 424(b); and no stop order suspending the effectiveness
of the Registration Statement shall have been issued and no proceedings for
that purpose shall have been instituted or threatened.
(b) There shall not have come to the Underwriters' attention any facts
that would cause the Underwriters to believe that the Prospectus, at the time
it was required to be delivered to a purchaser of the Class A Notes, contained
an untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(c) The Underwriters shall have received the favorable opinion, dated the
date of the Closing Time, of Xxxx X. Xxxxxx, Esq., Vice President--Corporate
Law of Household International, Inc., the parent company of HFC, in the form
attached hereto as Exhibit A.
(d) The Underwriters shall have received the favorable opinion, dated the
date of the Closing Time, of Xxxx X. Xxxxxx, Esq., Vice President--Corporate
Law of Household International, Inc., the parent company of HFC, in form and
substance satisfactory to the Underwriters, to the effect that:
(i) HFC has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware,
with corporate power to own its properties, to conduct its business as
described in the Prospectus and to enter into and perform its obligations
under the Basic Documents to which it is a party.
(ii) The Seller has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of
Delaware, with corporate power to own its properties, to conduct its
business as described in the Prospectus and to enter into and perform its
obligations under the Basic Documents to which it is a party.
-14-
15
(iii) Each of the Credit Line Owners has been duly incorporated and
is validly existing as a corporation in good standing under the laws of
its jurisdiction of incorporation, with corporate power to own its
properties, to conduct its business as described in the Prospectus and to
enter into and perform its obligations under the Basic Documents to which
it is a party.
(iv) HFC has full corporate power and authority to serve in the
capacity of servicer of the Receivables as contemplated by the Pooling
and Servicing Agreement.
(v) Each of the Credit Line Owners, the Seller and HFC is duly
authorized under related statutes, laws and court decisions, to conduct
in the various jurisdictions in which they do business the respective
businesses therein currently conducted by them, except where failure to
be so permitted or failure to be so authorized will not have a material
adverse effect on the business or financial condition of the Credit Line
Owners, the Seller or HFC, and the Credit Line Owners are duly authorized
under the statutes which regulate the business of making loans or of
financing the sale of goods (commonly called "small loan laws," "consumer
finance laws," or "sales finance laws"), or are permitted under the
general interest statutes and related laws and court decisions, to
conduct in the various jurisdictions in which any of them do business the
businesses as currently conducted therein by any of them.
(vi) None of the Credit Line Owners, the Seller or HFC is in
violation of its Certificate or Articles of Incorporation or Bylaws or,
to the best of such counsel's knowledge, in default in the performance or
observance of any material obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, loan agreement, note,
lease or other instrument known to such counsel to which any of the
Credit Line Owners, the Seller or HFC is a party or by which it or its
properties may be bound, which default might result in any material
adverse changes in the financial condition, earnings, affairs or business
of any of the Credit Line Owners, the Seller or HFC or which might
materially and adversely affect the properties or assets, taken as a
whole, of any of the Credit Line Owners, the Seller or of HFC.
(vii) Each of the Basic Documents to which HFC, the Seller and the
Credit Line Owners are a party has been duly authorized, executed and
delivered by HFC, the Seller and the Credit Line Owners, as applicable,
and, assuming the due authorization, execution and delivery of such
agreements by the other parties thereto, such agreements constitute the
-15-
16
valid and binding obligation of each of the Seller, HFC and the Credit
Line Owners, enforceable against each of the Seller, HFC and the Credit
Line Owners, in accordance with its terms, except that in each case as to
enforceability (A) such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally, (B) the
remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought and (C) the enforceability as to rights to indemnification under
this Agreement (to the extent indemnification under this Agreement
relates to liability under the Act) may be subject to limitations of
public policy under applicable securities laws.
(viii) The issuance and delivery of the Securities and the Series
1997-2 Participation Interest, the consummation of any other of the
transactions contemplated hereby or by the Basic Documents, or the
fulfillment of the terms of such agreements do not and will not conflict
with or violate any term or provision of the Certificate or Articles of
Incorporation or Bylaws of the Seller or, to the best of such counsel's
knowledge, any statute, order or regulation applicable to the Seller of
any court, regulatory body, administrative agency or governmental body
having jurisdiction over the Seller and do not and will not conflict
with, result in a breach or violation or the acceleration of or
constitute a default under or result in the creation or imposition of any
lien, charge or encumbrance upon any of the property or assets of the
Seller pursuant to the terms of any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument known to such counsel to
which the Seller is a party or by which the Seller may be bound or to
which any of the property or assets of the Seller may be subject except
for conflicts, violations, breaches, accelerations and defaults which
would not, individually or in the aggregate, be materially adverse to the
Seller or materially adverse to the transactions contemplated by this
Agreement.
(ix) The consummation of any of the transactions contemplated by
the Basic Documents to which the Credit Line Owners are a party and the
fulfillment of the terms of such documents, do not and will not conflict
with or violate any terms or provision of the Certificate or Articles of
Incorporation or Bylaws of any of the Credit Line Owners or, to the best
of such counsel's knowledge, any statute, order or regulation applicable
to any of the Credit Line Owners or, to the best of such counsel's
knowledge, any statute, order or regulation applicable to any of the
Credit Line Owners and do
-16-
17
not and will not conflict with, result in a breach or violation or
the acceleration of or constitute a default under or result in the
creation or imposition of any lien, charge or encumbrance upon any of the
property or assets of any of the Credit Line Owners pursuant to the terms
of, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument known to such counsel to which any of the Credit
Line Owners may be bound or to which any of the property or assets of any
of the Credit Line Owners may be subject except for conflicts,
violations, breaches, accelerations and defaults which would not,
individually or in the aggregate, be materially adverse to the applicable
Credit Line Owners or materially adverse to the transactions contemplated
by this Agreement.
(x) The consummation of any of the transactions contemplated
herein or the fulfillment of the terms of the Basic Documents do not
and will not conflict with or violate any term or provision of the
Certificate or Articles of Incorporation or By-laws of HFC or, to the
best of such counsel's knowledge, any statute, order or regulation
applicable to HFC and do not and will not conflict with, result in a
breach or violation or the acceleration of or constitute a default under
or result in the creation or imposition of any lien, charge or
encumbrance upon any of the property or assets of HFC pursuant to the
terms of, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument known to such counsel to which HFC is a party or
by which HFC may be bound or to which any of the property or assets of
HFC may be subject except for conflicts, violations, breaches,
accelerations and defaults which would not, individually or in the
aggregate, be materially adverse to HFC or materially adverse to the
transactions contemplated by this Agreement.
(xi) The direction by the Seller to the Deposit Trustee to execute,
issue, countersign and deliver the Series 1997-2 Participation Interest
has been duly authorized by the Seller and, assuming that the Deposit
Trustee has been duly authorized to do so and when executed and
countersigned and delivered by the Deposit Trustee in accordance with the
Pooling and Servicing Agreement, the Series 1997-2 Participation Interest
will be validly issued and outstanding and will be entitled to the
benefits of the Pooling and Servicing Agreement.
(xii) The direction by the Seller to the Owner Trustee to execute,
issue, countersign and deliver the Certificates on behalf of the Issuer
has been duly authorized by the Seller and, assuming that the Owner
Trustee has been duly authorized
-17-
18
to do so and when executed and countersigned and delivered by the
Owner Trustee in accordance with the Trust Agreement, the Certificates
will be validly issued and outstanding and will be entitled to the
benefits of the Trust Agreement.
(xiii) To the best of such counsel's knowledge, no consent,
approval, authorization, order, registration or qualification of or
with any court or governmental agency or body of the United States is
required for the issuance of the Securities and the sale of the
Securities to the Underwriters, or the consummation by the Credit Line
Owners, the Seller and HFC of the other transactions contemplated by the
Basic Documents, except the registration under the Act of the Securities
and such consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or Blue Sky laws
in connection with the purchase and distribution of the Securities by the
Underwriters or as have been obtained.
(xiv) The Registration Statement is effective under the Act and to
the best of such counsel's knowledge and information, no stop order
suspending the effectiveness of the Registration Statement has been
issued under the Act or proceedings therefor initiated or threatened by
the Commission.
(xv) The conditions to the use by the Seller of a registration
statement on Form S-3 and Form S-1 under the Act, as set forth in the
General Instructions to Form S-3 and Form S-1, have been satisfied with
respect to the Registration Statement and the Prospectus. To the best of
such counsel's knowledge, there are no contracts or documents of the
Seller which are required to be filed as exhibits to the Registration
Statement pursuant to the Act or the Rules and Regulations thereunder
which have not been so filed. The statements in the Prospectus under the
caption "Risk Factors--Legal Considerations" and under the caption
"Certain Legal Aspects of the Receivables", to the extent that statements
in such sections constitute matters of law or legal conclusions with
respect thereto, have been reviewed by attorneys under such counsel's
supervision and are complete and correct in all material respects.
(xvi) There are no actions, proceedings or investigations pending
before or, to the best knowledge of such counsel, threatened by any
court, administrative agency or other tribunal to which any of the Credit
Line Owners, HFC or the Seller is a party or of which any of their
respective properties is the subject (A) which if determined adversely to
any of the Credit Line Owners, HFC or the Seller would have a
-18-
19
material adverse effect on the business or financial condition of any of
the Credit Line Owners, HFC or the Seller, (B) asserting the invalidity
of any of the Basic Documents, or the Securities, (C) seeking to prevent
the issuance of the Securities or the consummation by any of the Credit
Line Owners, HFC or the Seller of any of the transactions contemplated by
any of the Basic Documents, as the case may be, or (D) which might
materially and adversely affect the performance by any of the Credit Line
Owners, HFC or the Seller of their respective obligations under, or the
validity or enforceability of any of the Basic Documents or the
Securities.
(xvii) The Registration Statement at the time it became effective,
and any amendment thereto at the time such amendment becomes effective,
complied as to form in all material respects with the applicable
requirements of the Act and the Rules and Regulations.
(xviii) Such counsel has no reason to believe that (A) the
Registration Statement and the Prospectus, as of the date the
Registration Statement became effective, or the Registration Statement
(excluding the exhibits thereto) as of the date that the most recent
post-effective amendment thereto became effective, contained or contains
any untrue statement of a material fact or omitted or omits to state any
material fact required to be stated therein or necessary in order to make
the statements therein not misleading or (B) assuming compliance by each
of the Underwriters with Section 2(a) hereof, the Prospectus, as of its
date and the date of such opinion, contained or contains any untrue
statement of a material fact or omitted or omits to state any material
fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading (it being
understood that such counsel need express no opinion as to information
set forth in the financial statements or other financial and statistical
data contained or incorporated by reference in the Registration
Statement).
Such opinion may express its reliance as to factual matters on the
representations and warranties made by the parties hereto, and on certificates
or other documents furnished by officers of such parties to the instruments and
documents referred to therein. Such opinion may be qualified, insofar as it
concerns the enforceability of the documents referred to therein, to the extent
that such enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of creditors'
rights in general, or by general principles of equity (regardless of whether
such enforcement is considered in a
-19-
20
proceeding in equity or at law) and no opinion need be given as to the
enforceability of Section 9 of this Agreement.
(e) The Underwriters shall have received the favorable opinion of counsel
to the Indenture Trustee, dated the date of the Closing Time, addressed to the
Underwriters and in form and scope satisfactory to counsel to the Underwriters,
to the effect that:
(i) The Indenture Trustee has duly authorized, executed and
delivered the Indenture which constitute the valid and legally binding
agreements of the Indenture Trustee, are enforceable against the
Indenture Trustee in accordance with its terms, subject, as to
enforcement of remedies, (A) to applicable bankruptcy, insolvency,
reorganization, and other similar laws affecting the rights of creditors
generally and (B) to general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law).
(ii) The Indenture Trustee has duly countersigned the Notes issued
on the date hereof on behalf of the Issuer.
(iii) The execution and delivery by the Indenture Trustee of the
Indenture and the performance by the Indenture Trustee of its obligations
thereunder do not conflict with or result in a violation of the
organizational charter or Bylaws of the Indenture Trustee.
(iv) The Indenture Trustee has full power and authority to execute
and deliver the Indenture and to perform its obligations thereunder.
(v) To the best of such counsel's knowledge, there are no actions,
proceedings or investigations pending or threatened against or affecting
the Indenture Trustee before or by any court, arbitrator, administrative
agency or other governmental authority which, if adversely decided, would
materially and adversely affect the ability of the Indenture Trustee to
carry out the transactions contemplated by the Indenture.
(vi) No consent, approval or authorization of, or registration,
declaration or filing with, any court or governmental agency or body of
the United States of America or any state thereof is required for the
execution, delivery or performance by the Indenture Trustee of the
Indenture.
(f) The Underwriters shall have received the favorable opinion of counsel
to the Owner Trustee, dated the Closing Date,
-20-
21
addressed to the Underwriters, satisfactory to counsel to the Underwriters,
to the effect that:
(i) The Owner Trustee is duly incorporated and validly
existing as a banking corporation under the laws of the State of
Delaware and has the power and authority to execute and deliver the
Basic Documents to which it is a party;
(ii) The Basic Documents to which it is a party have been duly
authorized, executed and delivered to the Owner Trustee and
constitutes the legal, valid and binding agreements of the Owner
Trustee, enforceable against the Owner Trustee in accordance with
its respective terms;
(iii) The Securities have been duly authorized, executed and
delivered by Owner Trustee on behalf of the Issuer;
(iv) No consent, approval or other authorization of, or
registration, declaration or filing with, any court or governmental
agency or commission of the State of Delaware is required by or
with respect to the Owner Trustee or the Issuer for the issuance
and sale of the Securities or the valid execution and delivery of
the Trust Agreement, or for the validity and enforceability
thereof, or for the payment of any amounts by the Issuer
thereunder;
(v) Neither the execution and delivery by the Owner Trustee
of the Basic Documents to which it is a party, nor the issuance,
execution and delivery by the Issuer of the Securities, nor the
consummation of the transactions contemplated thereby, nor
compliance with the terms thereof, (i) conflicts with or results in
a breach of, or constitutes a default under, the provisions of the
Trust Agreement or the Certificate of Incorporation of the Owner
Trustee or any law, rule or regulation of the State of Delaware
applicable to the Owner Trustee or, to such counsel's knowledge,
any judgment or order applicable to the Owner Trustee or their
respective properties or, to such counsel's knowledge, any
indenture, mortgage, contract or other agreement or instrument to
which the Owner Trustee is a party or by which it is bound or (ii)
to such counsel's knowledge, results in the creation or imposition
or any lien, charge or encumbrance upon the Owner Trustee's
properties or the Owner Trust Estate (except as permitted by the
Trust Agreement);
-21-
22
(vi) To such counsel's knowledge, there are no pending or
threatened actions, suits or proceedings affecting the Issuer or
the Owner Trustee before any court or other governmental authority
which, if adversely decided, would materially and adversely affect
the ability of the Issuer or the Owner Trustee, as the case may be,
to carry out the transactions contemplated in the Trust Agreement;
(vii) The Issuer has been duly formed and is validly existing
as a business trust under the Delaware Business Trust Act 12 Del.
C. Section 3801 et seq.
(g) The Underwriters shall have received the favorable opinion of counsel
to the Deposit Trustee, dated the Closing Date, addressed to the Underwriters,
satisfactory to counsel to the Underwriters, to the effect that:
(i) The Deposit Trustee is duly incorporated and validly
existing as a banking corporation under the laws of the United
States and has the power and authority to execute and deliver the
Pooling and Servicing Agreement;
(ii) The Pooling and Servicing Agreement has been duly
authorized, executed and delivered to the Deposit Trustee and
constitutes the legal, valid and binding agreements of the Deposit
Trustee, enforceable against the Deposit Trustee in accordance with
its respective terms;
(iii) The Series 1997-2 Participation Interest has been duly
authorized, executed and delivered by the Deposit Trust, and, when
authenticated in accordance with the provisions of the Pooling and
Servicing Agreement, and when delivered to and paid for by the
Seller, will be entitled to the benefits and security afforded by
the Pooling and Servicing Agreement, and will constitute legal,
valid and binding obligations of the Deposit Trust, enforceable
against the Deposit Trust in accordance with the terms of the
Pooling and Servicing Agreement;
(iv) No consent, approval or other authorization of, or
registration, declaration or filing with, any court or governmental
agency or commission is required by or with respect to the Deposit
Trustee or the Deposit Trust for the issuance and sale of the
Series 1997-2 Participation Interest or the valid execution and
delivery of the Pooling and Servicing Agreement, or for the
validity and
-22-
23
enforceability thereof, or for the payment of any amounts by the
Deposit Trust thereunder;
(v) Neither the execution and delivery by the Deposit Trustee
of the Pooling and Servicing Agreement, nor the issuance, execution
and delivery by the Deposit Trustee of the Series 1997-2
Participation Interest, nor the consummation of the transactions
contemplated thereby, nor compliance with the terms thereof, (i)
conflicts with or results in a breach of, or constitutes a default
under, the provisions of the Pooling and Servicing Agreement or the
certificate of incorporation of the Deposit Trustee or any law,
rule or regulation of the United States applicable to the Deposit
Trustee or, to such counsel's knowledge, any judgment or order
applicable to the Deposit Trustee or their respective properties
or, to such counsel's knowledge, any indenture, mortgage, contract
or other agreement or instrument to which the Deposit Trustee is a
party or by which it is bound or (ii) to such counsel's knowledge,
results in the creation or imposition or any lien, charge or
encumbrance upon the Deposit Trustee's properties or the Deposit
Trust's properties (except as permitted by the Pooling and
Servicing Agreement); and
(vi) To such counsel's knowledge, there are no pending or
threatened actions, suits or proceedings affecting the Deposit
Trust or the Deposit Trustee before any court or other governmental
authority which, if adversely decided, would materially and
adversely affect the ability of the Deposit Trust or the Deposit
Trustee, as the case may be, to carry out the transactions
contemplated in the Basic Documents.
(h) The Underwriters shall have received the favorable opinion or
opinions, dated the date of the Closing Time, of Xxxxx & Xxxx LLP, as counsel
for the Underwriters, with respect to the issue and sale of the Notes, the
Registration Statement, this Agreement, the Prospectus and such other related
matters as the Underwriters may require.
(i) The Underwriters shall have received opinions, dated the date of the
Closing Time, of Xxxxxx Xxxxxx & Zavis, as special counsel to the Seller and
HFC, addressed to the Indenture Trustee, the Seller and the Underwriters
relating to certain matters specified in Section 2.03(iii) of the Indenture.
(j) The Underwriters shall have received an opinion, dated the date of the
Closing Time, of Xxxxxx Xxxxxx & Zavis, as special counsel to the Seller and
HFC addressed to the Seller and
-23-
24
satisfactory to the Rating Agencies relating to (i) the sale of the Receivables
to the Seller, (ii) the transfer of the Receivables to the Deposit Trustee and
(iii) the transfer of the Series 1997-2 Participation Interest from the Seller
to the Issuer and such counsel shall have consented to reliance by the Rating
Agencies and the Underwriters on such opinion as though such opinion had been
addressed to each such party.
(k) Each of the Credit Line Owners, the Seller and HFC shall have
furnished to the Underwriters a certificate signed on behalf of the Credit Line
Owners, the Seller and HFC by the respective principal accounting or principal
financial officer thereof, dated the date of the Closing Time, as to (i) the
accuracy of the representations and warranties (except for the representations
made in Section 1(f) hereof) of the Credit Line Owners and the Seller herein at
and as of the Closing Time, (ii) there being no legal or governmental
proceedings pending, other than those, if any, referred to in the Prospectus to
which any of the Credit Line Owners, the Seller or HFC is a party or of which
any property of any of the Credit Line Owners, the Seller or HFC is the
subject, which, in the judgment of any of the Credit Line Owners, the Seller or
HFC, as applicable, have a reasonable likelihood of resulting in a material
adverse change in the financial condition, shareholders' equity or results of
operations of the Credit Line Owners, the Seller or HFC; and to the best
knowledge of each of the Credit Line Owners, the Seller or HFC, as applicable,
no such proceedings are threatened or contemplated by governmental authorities
or threatened by others, (iii) the performance by the Credit Line Owners, the
Seller and HFC of all of their respective obligations hereunder to be performed
at or prior to the Closing Time, and (iv) such other matters as the
Underwriters may reasonably request.
(l) The Indenture Trustee shall have furnished to the Underwriters a
certificate of the Indenture Trustee, signed by one or more duly authorized
officers of the Indenture Trustee, dated the Closing Time, as to the due
authorization, execution and delivery of the Indenture by the Indenture Trustee
and the acceptance by the Indenture Trustee of the trusts created by the
Indenture and the due execution and delivery of the Notes by the Indenture
Trustee thereunder and such other matters as the Underwriters shall reasonably
request.
(m) The Owner Trustee shall have furnished to the Underwriters a
certificate of the Owner Trustee, signed by one or more duly authorized
officers of the Owner Trustee, dated the Closing Time, as to the due
authorization, execution and delivery of the Trust Agreement by the Owner
Trustee and the acceptance by the Owner Trustee of the trusts created by the
Trust Agreement and the due execution and delivery of the Notes by the Issuer
under the
-24-
25
Indenture and such other matters as the Underwriters shall reasonably request.
(n) The Deposit Trustee shall have furnished to the Underwriters a
certificate of the Deposit Trustee, signed by one or more duly authorized
officers of the Deposit Trustee, dated the Closing Time, as to the due
authorization, execution and delivery of the Pooling and Servicing Agreement by
the Deposit Trustee and the acceptance by the Deposit Trustee of the trusts
created by the Pooling and Servicing Agreement and the due execution and
delivery of the Series 1997-2 Participation Interest by the Deposit Trustee
thereunder and such other matters as the Underwriters shall reasonably request.
(o) The Class A-1 Notes, the Class A-2 Notes and the Class A-3 Notes shall
have been rated at least "AAA", "AA" and "A", respectively, by at least two
nationally recognized rating organizations, two of which shall be Standard &
Poor's and Xxxxx'x.
(p) Counsel and special counsel to HFC and the Seller shall have furnished
to the Underwriters any opinions supplied to the Rating Agencies relating to
certain matters with respect to the Notes.
(q) The Underwriters shall have received from Xxxxxx Xxxxxxxx LLP, or
other independent certified public accountants acceptable to the Underwriters,
a letter, dated as of the date of this Agreement in the form heretofore agreed
to.
(r) Prior to the Closing Time, Xxxxx & Wood LLP, as counsel for the
Underwriters, shall have been furnished with such documents and opinions as
they may reasonably require for the purpose of enabling them to pass upon the
issuance and sale of the Class A Notes as herein contemplated and related
proceedings or in order to evidence the accuracy and completeness of any of the
representations and warranties, or the fulfillment of any of the conditions,
herein contained; and all proceedings taken by the Seller and HFC in connection
with the issuance and sale of the Class A Notes as herein contemplated shall be
satisfactory in form and substance to the Underwriters and Xxxxx & Xxxx LLP.
(s) Since the respective dates as of which information is given in the
Prospectus, there shall not have been any change, or any development involving
a prospective change, in or affecting the general affairs, management,
financial condition, stockholders' equity or results of operations of the
Seller, any of the Credit Line Owners or HFC otherwise than as set forth or
contemplated in the Prospectus, the effect of which is in the judgment of the
Underwriters so material and adverse as to make it impracticable or inadvisable
to proceed with the public offering or the delivery of
-25-
26
the Notes on the terms and in the manner contemplated in the Prospectus.
(t) Prior to the Closing Time, the Credit Line Owners, the Seller and HFC
shall have furnished to the Underwriters such further information, certificates
and documents as the Underwriters may reasonably request.
If any condition specified in this Section 7 shall not have been fulfilled
when and as required to be fulfilled, this Agreement may be terminated by the
Underwriters by notice to the Seller at any time at or prior to the Closing
Time, and such termination shall be without liability of any party to any other
party except as provided in Section 7.
SECTION 8. Payment of Expenses. The Seller, the Credit Line Owners and
HFC jointly and severally agree to pay all expenses incident to the performance
of their obligations under this Agreement, including without limitation those
related to (i) the filing of the Registration Statement and all amendments
thereto, (ii) the preparation, issuance and delivery of the Notes, (iii) the
fees and disbursements of Xxxxxx Xxxxxx & Zavis, as special counsel for the
Seller and HFC, and Xxxxxx Xxxxxxxx LLP, accountants of the Seller and HFC,
(iv) the qualification of the Class A Notes under securities and Blue Sky laws
and the determination of the eligibility of the Class A Notes for investment in
accordance with the provisions of Section 6(f) including filing fees, and the
fees and disbursements of Xxxxx & Wood LLP, as counsel for the Underwriters
(not to exceed $28,000), in connection therewith and in connection with the
preparation of any Blue Sky Survey, (v) the printing and delivery to the
Underwriters, in such quantities as the Underwriters may reasonably request, of
copies of the Registration Statement and Prospectus and all amendments and
supplements thereto, and of any Blue Sky Survey, (vi) the delivery to the
Underwriters, in such quantities as the Underwriters may reasonably request, of
copies of the Basic Documents and (vii) the fees charged by nationally
recognized statistical rating agencies for rating the Notes, and (viii) the
fees and expenses of the Deposit Trustee, the Indenture Trustee and the Owner
Trustee and their counsel, respectively.
If this Agreement is terminated by the Underwriters in accordance with the
provisions of Section 7, the Seller, the Credit Line Owners and HFC shall
reimburse the Underwriters for all reasonable out-of-pocket expenses, including
the fees and disbursements of Xxxxx & Xxxx LLP, as counsel for the
Underwriters.
SECTION 9. Indemnification. (a) HFC and the Seller jointly and severally
agree to indemnify and hold harmless the Underwriters
-26-
27
and each person, if any, who controls the Underwriters within the meaning of
Section 15 of the Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement (or any amendment thereto), including the information deemed to
be a part of the Registration Statement pursuant to Rule 430A under the
Act, if applicable, or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the
statements therein not misleading or arising out of any untrue statement
or alleged untrue statement of a material fact contained in the
Prospectus (or any amendment or supplement thereto) or the omission or
alleged omission therefrom of a material fact necessary in order to make
the statements therein, in light of the circumstances under which they
were made, not misleading, unless (a) such untrue statement or omission
or alleged untrue statement or omission was made in reliance upon and in
conformity with written information furnished to the Seller, or
information, if any, electronically transmitted to the Seller by the
Underwriters expressly for use in the Registration Statement (or any
amendment thereof) or (b) such loss, liability, claim, damage or expense
is incurred by an Underwriter solely as a result of the dissemination by
it of Derived Information in violation of Section 2(a) hereof;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, if such settlement is effected with
the written consent of the Seller; and
(iii) against any and all expense whatsoever (including the fees and
disbursements of counsel chosen by the Underwriters) as reasonably
incurred in investigating, preparing to defend or defending against or
appearing as a third party witness with respect to any litigation, or
investigation or proceeding by any governmental agency or body, commenced
or threatened, or any claim whatsoever based upon any such untrue
statement or omission, as such expense is incurred and to the extent that
any such expense is not paid under (i) or (ii) above.
This indemnity agreement will be in addition to any liability which the
Seller may otherwise have.
-27-
28
(b) Each of the Underwriters severally agree to indemnify and hold
harmless the Seller, each of its directors, each of its officers who signed the
Registration Statement, and each person, if any, who controls the Seller within
the meaning of Section 15 of the Act (each, an "Indemnified Party") against any
and all loss, liability, claim, damage and expense, as incurred, described in
the indemnity contained in subsection (a) of this Section 9, arising out of any
untrue statements or omissions, or alleged untrue statements or omissions, made
in the Registration Statement (or any amendment thereto) or the Prospectus (or
any amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to the Seller by such Underwriter expressly for
use in the Registration Statement (or any amendment thereto) or the Prospectus
(or any amendment or supplement thereto). The parties hereto acknowledge that
the only information supplied to the Seller by the Underwriter expressly for
use in the Registration Statement or the Prospectus is limited to the
information set forth in the last paragraph on the cover, the first paragraph
on page 2 and the second paragraph under the caption "Underwriting" in the
Prospectus. This indemnity agreement will be in addition to any liability
which the Underwriters may otherwise have.
(c) [Reserved].
(d) Each indemnified party shall give prompt notice to each indemnifying
party of any action commenced against it with respect to which indemnity may be
sought hereunder but failure to so notify an indemnifying party shall not
relieve it from any liability which it may have hereunder unless it has been
materially prejudiced by such failure to notify or from any liability which it
may have otherwise than on account of this indemnity agreement. An
indemnifying party may participate at its own expense in the defense of such
action. In no event shall the indemnifying parties be liable for the fees and
expenses of more than one counsel for all indemnified parties in connection
with any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances,
unless (i) if the defendants in any such action include one or more of the
indemnified parties and the indemnifying party, one or more of the indemnified
parties shall have employed separate counsel after having reasonably concluded
that there may be legal defenses available to it or them that are different
from or additional to those available to the indemnifying party or to one or
more of the other indemnified parties or (ii) the indemnifying party shall not
have employed counsel reasonably satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of the
commencement of the action.
SECTION 10. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnity
-28-
29
agreement provided for in Section 9 is for any reason held to be
unenforceable by the indemnified parties although applicable in accordance with
its terms, HFC and the Seller on the one hand, and the Underwriters (or
Underwriter, if such loss, liability, claim, damage or expense arises solely as
a result of such Underwriter's breach of a representation and warranty set
forth in Section 2(a) hereof) on the other, shall contribute to the aggregate
losses, liabilities, claims, damages and expenses of the nature contemplated by
said indemnity agreement incurred by the Seller and one or more of the
Underwriters (i) except for any Underwriter's indemnification arising solely
from a breach of its representation and warranty set forth in Section 2(a)
hereof, in such proportion as is appropriate to reflect the relative benefits
to HFC and the Seller on the one hand and the Underwriters or such Underwriter
in the case of a breach of a representation or warranty set forth in Section
2(a) hereof on the other in connection with the matter to which the
indemnification relates, which relative benefits shall be deemed to be in such
proportions that the Underwriters are responsible for that portion represented
by the percentage that the underwriting discount on the cover of the Prospectus
as amended or supplemented bears to the initial public offering price as set
forth thereon, and HFC and the Seller shall be jointly and severally
responsible for the balance or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law or otherwise prohibited hereby, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of HFC and the
Seller on the one hand and the Underwriters or Underwriter, as applicable, on
the other in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, or actions in respect thereof, as well
as any other relevant equitable considerations; provided, however, that no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. Relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by HFC or the Seller, on
the one hand, or the Underwriters, on the other hand, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission. HFC, the Seller and the Underwriters agree
that it would not be just and equitable if contributions pursuant to this
Section 10 were to be determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other
method of allocation which does not take into account the equitable
considerations referred to in the first sentence of this Section 10. The
amount paid by an indemnified party as a result of the losses, claims, damages
or liabilities (or actions in respect
-29-
30
thereof) referred to in the first sentence of this Section 10 shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating, preparing to defend or
defending against any action or claim which is the subject of this Section 10.
Notwithstanding the provisions of this Section 10, except for any loss, claim,
damage, liability or expense resulting solely from a breach of any
Underwriter's breach of the representation and warranty set forth in Section
2(a) hereof, no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Notes underwritten
by such Underwriter and distributed to the public were offered to the public
exceeds the amount of any damages which such Underwriter has otherwise been
required to pay in respect of such losses, liabilities, claims, damages and
expenses. The Underwriters' obligations in this Section 10 to contribute are
several in proportion to their respective underwriting obligations and not
joint and no Underwriter shall be required to contribute to any loss,
liability, claim, damage or expense as a result of another Underwriter's breach
of the representation and warranty set forth in Section 2(a) hereof. Each
party entitled to contribution agrees that upon the service of a summons or
other initial legal process upon it in any action instituted against it in
respect to which contribution may be sought, it shall promptly give written
notice of such service to the party or parties from whom contribution may be
sought, but the omission so to notify such party or parties of any such service
shall not relieve the party from whom contribution may be sought for any
obligation it may have hereunder or otherwise (except as specifically provided
in Section 9 hereof). For purposes of this Section 10, each person, if any,
who controls any Underwriter within the meaning of Section 15 of the Act shall
have the same rights to contribution as such Underwriter and each respective
director of the Seller, each respective officer of the Seller who signed the
Registration Statement, and each person, if any, who controls the Seller within
the meaning of Section 15 of the Act shall have the same rights to contribution
as the Seller.
SECTION 11. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or contained in certificates of officers of the Credit Line Owners,
the Seller or HFC submitted pursuant hereto shall remain operative and in full
force and effect, regardless of any investigation made by or on behalf of the
Underwriters or controlling person thereof, or by or on behalf of the Credit
Line Owners, the Seller or HFC and shall survive delivery of any Class A Notes
to the Underwriters.
SECTION 12. Termination of Agreement. You, as representative of the
Underwriters, may terminate this Agreement, immediately upon notice to the
Seller, at any time at or prior to the Closing Time
-30-
31
(i) if there has been an outbreak or material escalation of hostilities
involving the United States of America where armed conflict appears imminent,
or the declaration by the United States of America of a national emergency or
war, if the effect of any such event in the Underwriter's reasonable judgment
makes it impracticable or inadvisable to proceed with the public offering of
the Notes or (ii) if trading generally on the New York Stock Exchange has been
suspended, or minimum prices have been established by the exchange or by order
of the Commission or any other governmental authority, or if a banking
moratorium has been declared by either federal or New York State authorities.
In the event of any such termination, the covenant set forth in subsection
6(b), the provisions of Section 8, the indemnity agreement set forth in Section
9, and the provisions of Sections 10 and 15 shall remain in effect.
SECTION 13. Default by One or More of the Underwriters. If one or more
of the Underwriters participating in the public offering of the Class A Notes
shall fail at the Closing Time to purchase the Notes which it is (or they are)
obligated to purchase hereunder (the "Defaulted Notes"), then such of the
non-defaulting Underwriters shall have the right, within 24 hours thereafter,
to make arrangements for one or more of the non-defaulting Underwriters, or any
other underwriters, to purchase all, but not less than all, of the Defaulted
Notes in such amounts as may be agreed upon and upon the terms herein set
forth. If, however, the Underwriters have not completed such arrangements
within such 24-hour period, then:
(i) if the aggregate principal amount of Defaulted Notes does not
exceed 10% of the aggregate principal amount of the Class A Notes to be
purchased pursuant to this Agreement, the non-defaulting Underwriters
named in this Agreement shall be obligated to purchase the full amount
thereof in the proportions that their respective underwriting obligations
hereunder bear to the underwriting obligations of all such non-defaulting
Underwriters, or
(ii) if the aggregate principal amount of Defaulted Notes exceeds
10% of the aggregate principal amount of the Notes to be purchased
pursuant to this Agreement, this Agreement shall terminate, without any
liability on the part of any non-defaulting Underwriters.
No action taken pursuant to this Section 13 shall relieve any defaulting
Underwriter from the liability with respect to any default of such Underwriter
under this Agreement.
In the event of a default by the Underwriters as set forth in this Section
13, either the Underwriters or the Seller shall have
-31-
32
the right to postpone the Closing Time for a period not exceeding five
Business Days in order that any required changes in the Registration Statement
or Prospectus or in any other documents or arrangements may be effected.
SECTION 14. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to them at the address set forth on the first
page hereof. Notices to the Seller or HFC shall be directed to Household
Finance Corporation, 0000 Xxxxxxx Xxxx, Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000, to
the attention of the Secretary, with a copy to the Treasurer.
SECTION 15. Parties. This Agreement shall inure to the benefit of and be
binding upon the Underwriter, the Credit Line Owners, the Seller and HFC, and
their respective successors. Nothing expressed or mentioned in this Agreement
is intended nor shall it be construed to give any person, firm or corporation,
other than the parties hereto or thereto and their respective successors and
the controlling persons and officers and directors referred to in Sections 9
and 10 and their heirs and legal representatives any legal or equitable right,
remedy or claim under or with respect to this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are
intended to be for the sole and exclusive benefit of the parties and their
respective successors and said controlling persons and officers and directors
and their heirs and legal representatives (to the extent of their rights as
specified herein and therein) and except as provided above for the benefit of
no other person, firm or corporation. No purchaser of Class A Notes from the
Underwriter shall be deemed to be a successor by reason merely of such
purchase.
SECTION 16. Governing Law and Time. This Agreement shall be governed by
the law of the State of New York and shall be construed in accordance with such
law. Specified times of day refer to New York City time.
SECTION 17. Counterparts. This Agreement may be executed in
counterparts, each of which shall constitute an original of any party whose
signature appears on it, and all of which shall together constitute a single
instrument.
-32-
33
If the foregoing is in accordance with the Underwriters' understanding of
our agreement, please sign and return to us a counterpart hereof, whereupon
this instrument along with all counterparts will become a binding agreement
among the Underwriters, the Seller, HFC and the Credit Line Owners in
accordance with its terms.
Very truly yours,
HOUSEHOLD CONSUMER LOAN CORPORATION
By:
-------------------------------
Name:
Title:
HOUSEHOLD FINANCE CORPORATION
By:
-------------------------------
Name:
Title:
-33-
34
HOUSEHOLD REALTY CORPORATION,
HOUSEHOLD FINANCE CORPORATION OF
CALIFORNIA,
HOUSEHOLD FINANCE CORPORATION II,
HOUSEHOLD FINANCE CORPORATION III,
HOUSEHOLD FINANCE INDUSTRIAL LOAN
COMPANY,
HOUSEHOLD FINANCE REALTY CORPORATION
OF NEW YORK,
HOUSEHOLD FINANCIAL CENTER, INC.,
HOUSEHOLD FINANCE CORPORATION OF
NEVADA,
HOUSEHOLD FINANCE REALTY CORPORATION
OF NEVADA,
HOUSEHOLD INDUSTRIAL LOAN COMPANY
OF KENTUCKY,
HOUSEHOLD FINANCE INDUSTRIAL LOAN
COMPANY OF IOWA,
HOUSEHOLD FINANCE CONSUMER DISCOUNT
COMPANY,
HOUSEHOLD INDUSTRIAL FINANCE
COMPANY, AND
MORTGAGE ONE CORPORATION
By:
---------------------------------
Name:
Title:
CONFIRMED AND ACCEPTED, as of
the date first above written:
XXXXXX BROTHERS INC.,
as Representative of the Underwriters
By:
------------------------------------
Name:
Title:
-34-
35
SCHEDULE A
UNDERWRITING
------------
Class A-1 Notes Purchase Price
--------------- --------------
X.X. Xxxxxx Securities Inc..................................................$
_______________ .............................................................
_______________ .............................................................
_______________ .............................................................
Total .................................................................$
Class A-2 Notes
---------------
X.X. Xxxxxx Securities Inc. ................................................$
_______________ .............................................................
_______________ .............................................................
_______________ .............................................................
Total .................................................................$
Class A-3 Notes
---------------
X.X. Xxxxxx Securities Inc. ................................................$
_______________ .............................................................
_______________ .............................................................
_______________ .............................................................
Total .................................................................$
-35-
36
EXHIBIT A
Opinion of Xxxx X. Xxxxxx, Esq.
Section 7(c) of the Underwriting Agreement
November ___, 1997
X.X. XXXXXX SECURITIES INC.
as Representative of the several Underwriters
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Re: Household Consumer Loan Asset
Backed Notes and Certificates,
Series 1997-2
------------------------------
Ladies and Gentlemen:
I address this opinion to the Underwriters pursuant to Section 7(c) of the
Underwriting Agreement dated November ___, 1997 (the "Underwriting Agreement")
among Household Consumer Loan Corporation (the "Seller"), Household Finance
Corporation, a Delaware corporation (the "Company"), Household Realty
Corporation, Household Finance Corporation of California, Household Finance
Corporation II, Household Finance Corporation III, Household Finance Industrial
Loan Company, Household Finance Realty Corporation of New York, Household
Financial Center, Inc., Household Finance Corporation of Nevada, Household
Finance Realty Corporation of Nevada, Household Industrial Loan Company of
Kentucky, Household Finance Industrial Loan Company of Iowa, Household Finance
Consumer Discount Company, Household Industrial Finance Company, and Mortgage
One Corporation (collectively, the "Credit Line Owners" and each individually,
a "Credit Line Owner") and the underwriters referred to therein (together, the
"Underwriters"). The Seller has entered into a Trust Agreement dated as of
November 1, 1997 (the "Trust Agreement") with Chase Manhattan Bank Delaware
(the "Owner Trustee"), creating Household Consumer Loan Trust 1997-2 (the
"Issuer"), a statutory business trust established under the laws of the State
of Delaware. The Seller proposes to direct the Owner Trustee pursuant to the
Trust Agreement to cause the Issuer to issue Household Consumer Loan Asset
Backed Notes, Series 1997-2, Class A and Class B (the "Notes") and Household
Consumer Loan Asset Backed Certificates, Series 1997-2 (the "Certificates" and,
together with the Notes, the "Securities"). Only the Class A Notes are being
purchased by the Underwriters.
A-1
37
The Notes will be issued pursuant to an Indenture dated as of November 1,
1997 (the "Indenture") between the Issuer and The Bank of New York (the
"Indenture Trustee") and will represent indebtedness of the Issuer. The
Certificates will be issued pursuant to the Trust Agreement. The Notes will be
secured by (i) a participation interest (the "Series 1997-2 Participation
Interest") in (a) receivables held in Household Consumer Loan Deposit Trust I
(the "Deposit Trust") arising under certain fixed and variable rate revolving
secured and unsecured consumer credit lines (the "Credit Lines") and the
proceeds thereof and (b) the preferred stock of the Seller held by the Deposit
Trustee (as defined herein), (ii) amounts on deposit in certain accounts of the
Issuer held for the benefit of the holders of the Securities and (iii) an
assignment of the Issuer's rights under the Series 1997-2 Supplement (as
defined below) (collectively, the "Trust Assets"). The Deposit Trust was
formed pursuant to a Pooling and Servicing Agreement dated as of September 1,
1995 (the "Base Pooling and Servicing Agreement") among the Seller, the
Company, as Servicer (the "Servicer") and Texas Commerce Bank National
Association as successor trustee to The Chase Manhattan Bank, N.A., as Deposit
Trustee (the "Deposit Trustee"). The Series 1997-2 Participation Interest was
issued pursuant to the Supplement for Series 1997-2 dated as of November 1,
1997 among the Seller, the Servicer and the Deposit Trustee (the "Supplement"
and together with the Base Pooling and Servicing Agreement, the "Pooling and
Servicing Agreement"). The Pooling and Servicing Agreement, together with the
Trust Agreement, the Certificate of Trust thereto, the Indenture, the
Receivables Purchase Agreement, the Administration Agreement and the
Underwriting Agreement constitute the "Basic Documents" herein. Capitalized
terms used herein shall have the meanings ascribed to them in the Underwriting
Agreement unless herein otherwise defined.
As Vice President--Corporate Law and the Secretary of Household
International, Inc., a Delaware corporation, the ultimate parent corporation of
the Company, the Seller and each of the Credit Line Owners, I, or the attorneys
under my supervision have, among other things (i) participated in the
preparation of the Pooling and Servicing Agreement and (ii) cooperated with
officers of the Seller and the Company, representatives of the Underwriters and
independent accountants in the preparation of the Registration Statement on
Form S-1 and S-3 (Registration Nos. 333-36405, 000-00000-00 and 333-36405-02)
filed with the Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Act"), and the Prospectus dated
November ___, 1997 in the form in which it was transmitted for filing with the
Commission pursuant to Rule 424(b) of the Rules and Regulations under the Act
(the "Final Prospectus").
I advise you that in my opinion:
A-2
38
(i) The Pooling and Servicing Agreement is not required to be qualified
and the Indenture has been duly qualified under the Trust Indenture Act;
(ii) None of the Seller, the Deposit Trust or the Owner Trust is an
"investment company" or under the "control" of an "investment company" as such
terms are defined in the Investment Company Act of 1940; and
(iii) The Notes and the Basic Documents that are described in the Final
Prospectus conform in all material respects to the respective descriptions
thereof in the Final Prospectus.
The opinions set forth herein are subject to the following qualifications:
No opinion is expressed as to the effect of the compliance or
noncompliance of the Seller, Credit Line Owners, Servicer, Deposit Trustee,
Owner Trustee or Indenture Trustee with any state or federal laws or
regulations applicable to them because of their legal or regulatory status or
the nature of their respective businesses and to the extent that the opinions
set forth herein relate to the due authorization, execution and delivery of the
Pooling and Servicing Agreement and the Certificates.
I, or the attorneys under my supervision, have examined originals, or
copies of originals certified to my satisfaction, of such agreements,
documents, certificates and other statements of public officials and
responsible officers of each of the Seller, Company, Deposit Trustee, Owner
Trustee and Indenture Trustee and other papers and matters of fact and law as I
have deemed relevant and necessary as a basis for the opinions I expressed
herein. I have relied, with respect to factual matters, on representations and
warranties made by, and on certificates and other documents furnished by
responsible officers of each of the Deposit Trustee, Owner Trustee, Indenture
Trustee, the Seller and the Servicer. In expressing the foregoing opinions, I
have assumed, with the Underwriters' permission, (i) the authenticity of all
documents submitted to me as originals and the conformity with the original
documents of any copies of such documents submitted to me for my examination,
(ii) that each of the Seller, Deposit Trustee, Owner Trustee and Indenture
Trustee has been duly organized and is validly existing and in good standing
under the laws of its jurisdiction of incorporation and (iii) the due execution
and delivery, pursuant to due authorization, of the agreements and documents
referred to above by each of the Deposit Trustee, Owner Trustee and Indenture
Trustee.
A-3
39
The opinions expressed herein are only with respect to federal laws of the
United States and the laws of the State of Illinois. I consent to the reliance
on this opinion by Standard & Poor's Ratings Services, a Division of The
XxXxxx-Xxxx Companies, Inc., and Xxxxx'x Investors Service, Inc. Subject to
the foregoing sentence, this opinion is solely for the Underwriters' benefit
and may not be relied upon by, nor copies be delivered to, any other person
without my prior written consent.
Very truly yours,
A-4
