1
________________________________________________________________________________
HRSI FUNDING, INC.,
HOUSEHOLD BANK (SB), N.A.
and
HOUSEHOLD RECEIVABLES ACQUISITION COMPANY
RECEIVABLES PURCHASE AGREEMENT
Dated as of _______, 2001
________________________________________________________________________________
2
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS 1
Section 1.01. Definitions............................................................ 1
Section 1.02. Other Definitional Provisions.......................................... 3
ARTICLE II PURCHASE AND CONVEYANCE OF RECEIVABLES....................................... 4
Section 2.01. Purchase............................................................... 4
ARTICLE III CONSIDERATION AND PAYMENT................................................... 5
Section 3.01. Purchase Price......................................................... 5
ARTICLE IV REPRESENTATIONS AND WARRANTIES............................................... 6
Section 4.01. Representations and Warranties of the Bank Relating to the Bank........ 6
Section 4.02. Representations and Warranties of the Bank Relating to the Agreement
and the Receivables.................................................... 7
Section 4.03. Representations and Warranties of HRAC................................. 8
Section 4.04. Representations and Warranties of HRSIFI............................... 9
Section 4.05. Representations and Warranties of HRSIFI Relating to the Agreement
and the Receivables.................................................... 10
ARTICLE V COVENANTS..................................................................... 11
Section 5.01. Covenants of HRSIFI.................................................... 11
ARTICLE VI REPURCHASE OBLIGATION........................................................ 11
Section 6.01. Reassignment of Ineligible Receivables................................. 11
Section 6.02. Reassignment of Trust Portfolio........................................ 12
ARTICLE VII CONDITIONS PRECEDENT........................................................ 12
Section 7.01. Conditions to HRAC's Obligations Regarding Initial Receivables......... 12
Section 7.02. Conditions Precedent to the HRSIFI's Obligations....................... 13
ARTICLE VIII TERM AND PURCHASE TERMINATION.............................................. 13
Section 8.01. Term................................................................... 14
ARTICLE IX MISCELLANEOUS PROVISIONS..................................................... 14
Section 9.01. Amendment.............................................................. 14
Section 9.02. Governing Law.......................................................... 14
Section 9.03. Notices................................................................ 14
Section 9.04. Severability of Provisions............................................. 15
Section 9.05. Assignment............................................................. 15
i
3
Page
----
Section 9.06. Acknowledgement and Agreement of the Bank and HRSIFI................. 15
Section 9.07. Further Assurances................................................... 16
Section 9.08. No Waiver; Cumulative Remedies....................................... 16
Section 9.09. Counterparts......................................................... 16
Section 9.10. Binding; Third-Party Beneficiaries................................... 16
Section 9.11. Merger and Integration............................................... 16
Section 9.12. Headings............................................................. 16
Section 9.13. Schedules and Exhibits............................................... 16
Section 9.14. Survival of Representations and Warranties........................... 16
Section 9.15. Nonpetition Covenant................................................. 17
EXHIBIT A.............................................................................
FORM OF SUPPLEMENTAL CONVEYANCE.......................................................
Schedule I............................................................................ I-1
LIST OF ACCOUNTS...................................................................... I-1
ii
4
RECEIVABLES PURCHASE AGREEMENT, dated as of ________, 2001 by and among
HRSI FUNDING, INC., a Nevada Corporation ("HRSIFI"), HOUSEHOLD RECEIVABLES
ACQUISITION COMPANY, a Delaware corporation ("HRAC"), and HOUSEHOLD BANK
(SB), N.A., a national banking association (the "Bank").
W I T N E S S E T H:
WHEREAS, HRAC desires to purchase, certain Receivables (hereinafter
defined) owned by HRSIFI which arose under certain revolving credit accounts
owned by the Bank;
WHEREAS, HRSIFI desires to sell and assign such Receivables to HRAC upon
the terms and conditions hereinafter set forth;
WHEREAS, it is contemplated that the Receivables purchased hereunder will
be transferred by HRAC to HRSI Funding, Inc. II then to the Trust (hereinafter
defined) in connection with the issuance of certain Securities (hereinafter
defined);
WHEREAS, the Bank agrees that all representations, warranties, and
agreements made by the Bank herein with respect to the Accounts (hereinafter
defined) and Receivables shall also be for the benefit of HRSI Funding, Inc. II,
the Owner Trustee (hereinafter defined), the Indenture Trustee (hereinafter
defined) and all beneficiaries of the Trust, including the holders of the
Securities; and
WHEREAS, HRSIFI agrees that all representations, warranties, covenants, and
agreements made by HRSIFI herein with respect to Receivables shall also be for
the benefit of HRSI Funding, Inc. II, the Owner Trustee (hereinafter defined),
the Indenture Trustee (hereinafter defined) and all beneficiaries of the Trust,
including the holders of the Securities.
NOW, THEREFORE, it is hereby agreed by and among HRSIFI, HRAC and the Bank
as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. All capitalized terms used herein or in any
certificate, document, or Conveyance Paper made or delivered pursuant hereto,
and not defined herein or therein, shall have the meaning ascribed thereto in
the Transfer and Servicing Agreement; in addition, the following words and
phrases shall have the following meanings:
"Account" shall mean (a) each Initial Account, and (b) each account into
which an Account shall be transferred (a "Transferred Account") provided that
(i) such transfer was made in accordance with the Credit Guidelines and (ii)
such account can be traced or identified as an account into which an Account has
been transferred, but shall exclude (x) any Account that after the Removal Date,
the Receivables in which shall not be assigned to HRAC hereunder, (y) the right,
title and interest of HRAC in the Receivables in which are assigned to the Bank
pursuant to Section 6.01 or (z) the right, title and interest of the Trust in
the Receivables in which are assigned and transferred to the Servicer pursuant
to Section 3.03 of the Transfer and Servicing Agreement.
5
"Account Owner" shall mean HRSIFI, the Bank, or any entity which is the
issuer of the revolving credit relating to an Account pursuant to a Credit
Agreement and/or a seller of Receivables to HRAC.
"Agreement" shall mean this Receivables Purchase Agreement and all
amendments hereof and supplements hereto.
"Bank" shall mean Household Bank (SB), N.A., a nationally chartered bank,
and its successors and permitted assigns.
"Closing Date" shall mean _________, 2001.
"Company" shall mean HRSI Funding, Inc. II, a Delaware corporation, and its
permitted successors and assigns.
"Conveyance" shall have the meaning specified in subsection 2.01(a).
"Debtor Relief Laws" shall mean (a) the Bankruptcy Code of the United
States of America and (b) all other applicable liquidation, conservatorship,
bankruptcy, moratorium, rearrangement, receivership, insolvency, reorganization,
suspension of payments, readjustment of debt, marshalling of assets or similar
debtor relief laws of the United States, any state or any foreign country from
time to time in effect affecting the rights of creditors generally.
"Eligible Receivable" shall have the meaning set forth in the Transfer and
Servicing Agreement, except that HRSIFI shall be substituted for each occurrence
of "the Transferor," "HRAC" shall be substituted for each occurrence of "the
Owner Trustee," and all references to the Notes shall be ignored.
"Finance Charge and Administrative Receivables" shall mean all Receivables
in the Accounts which would be treated as "Finance Charge and Administrative
Receivables" in accordance with the definition for such term in the Transfer and
Servicing Agreement.
"HRAC" shall mean Household Receivables Acquisition Company, a Delaware
corporation, and its successors and permitted assigns.
"HRSIFI" shall mean HRSI Funding, Inc., a Nevada corporation, and its
successors and permitted assigns.
"Indenture" shall mean the Master Indenture between the Trust and U.S. Bank
National Association, as Indenture Trustee, dated as of ________, 2001 as
supplemented by Indenture Supplements applicable to any Series that may be
issued from time to time.
"Indenture Supplement" shall mean the indenture supplement pursuant to
which a Series is issued.
"Indenture Trustee" shall mean U.S. Bank National Association in its
capacity as indenture trustee, or any successor indenture trustee.
2
6
"Initial Account" shall mean each Account included in the computer file
delivered to the Indenture Trustee as of the Closing Date.
"Insolvency Event" shall have the meaning specified in Section 8.02.
"Obligor" shall mean, with respect to each Account, each person that would
be treated as an "Obligor" in accordance with the definition for such term in
the Transfer and Servicing Agreement.
"Owner Trustee" shall mean Wilmington Trust Company, a Delaware banking
corporation the institution executing the Trust Agreement as and acting in the
capacity of Owner Trustee thereunder, or its successor in interest, or any
successor trustee appointed as provided in the Trust Agreement.
"Principal Receivables" shall mean all Receivables other than Finance
Charge and Administrative Receivables.
"Purchase Price" shall have the meaning set forth in Section 3.01.
"Purchased Assets" shall have the meaning set forth in Section 2.01.
"Receivables" shall mean all amounts shown on HRSIFI's records as amounts
payable by Obligors on any Account from time to time, including amounts payable
for Principal Receivables and Finance Charge and Administrative Receivables.
"Securities" shall mean any one of the Notes (as such term is defined in
the Indenture) or the Transferor Certificates.
"Transfer and Servicing Agreement" shall mean the Transfer and Servicing
Agreement, dated as of _______, 2001 among Household Finance Corporation, as
Servicer, the Company, as Transferor, and the Owner Trustee on behalf of the
Trust, and all amendments and supplements thereto.
"Trust" shall mean the Household Private Label Credit Card Master Note
Trust I, acting by and through Wilmington Trust Company, not in its individual
capacity but solely as Owner Trustee.
"Trust Agreement" shall mean the Household Private Label Credit Card Master
Note Trust I Trust Agreement, dated as of _____, 2001 between the Company, as
Transferor, and the Owner Trustee on behalf of the Trust.
"Trust Collateral" shall have the meaning set forth in Section 2.01.
Section 1.02. Other Definitional Provisions.
All terms defined in this Agreement shall have the defined meanings when
used in any certificate, other document, or Conveyance Paper made or delivered
pursuant hereto unless otherwise defined therein.
3
7
The words "hereof," "herein" and "hereunder" and words of similar import
when used in this Agreement or any Conveyance Paper shall refer to this
Agreement as a whole and not to any particular provision of this Agreement; and
Section, Subsection, Schedule and Exhibit references contained in this Agreement
are references to Sections, Subsections, Schedules and Exhibits in or to this
Agreement unless otherwise specified.
All determinations of the principal or finance charge balance of
Receivables, and of any collections thereof, shall be made in accordance with
the Transfer and Servicing Agreement and the Indenture.
All capitalized terms used herein and not otherwise defined herein have the
meanings ascribed to them in the Indenture or the Transfer and Servicing
Agreement.
ARTICLE II
PURCHASE AND CONVEYANCE OF RECEIVABLES
Section 2.01. Purchase.
(a) By execution of this Agreement, HRSIFI does hereby sell, transfer,
assign, set over and otherwise convey to HRAC (collectively, the "Conveyance"),
without recourse except as provided herein, all its right, title and interest
in, to and under the Receivables existing at the close of business on the
Closing Date in the Initial Accounts, all Recoveries with respect to such
Accounts, all monies due or to become due and all amounts received or receivable
with respect thereto, and all proceeds (including, without limitation,
"proceeds" as defined in the UCC) thereof (the "Purchased Assets").
(b) In connection with such Conveyance, HRSIFI agrees (i) to record and
file, at its own expense, any financing statements (and continuation statements
with respect to such financing statements when applicable) with respect to the
Receivables existing at the close of business on the Closing Date in the Initial
Accounts, meeting the requirements of applicable state law in such manner and in
such jurisdictions as are necessary to perfect, and maintain perfection of, the
Conveyance of such Receivables from HRSIFI to HRAC, (ii) that such financing
statements shall name HRSIFI, as seller, and HRAC, as purchaser, of the
Receivables and (iii) to deliver a file-stamped copy of such financing
statements or other evidence of such filings (excluding such continuation
statements, which shall be delivered as filed) to HRAC as soon as is practicable
after filing.
(c) In connection with each such Conveyance, HRSIFI further agrees that it
will, at its own expense, (i) on or prior to the Closing Date, indicate in its
computer files that, Receivables created in connection with the Initial Accounts
have been conveyed to HRAC in accordance with this Agreement and have been
conveyed by HRAC to the Company in accordance with the Receivables Purchase
Agreement by and between HRAC and the Company and have been conveyed by the
Company to the Trust pursuant to the Transfer and Servicing Agreement and have
been pledged by the Trust to the Indenture Trustee pursuant to the Indenture for
the benefit of the Noteholders by including in such computer files the code that
identifies each such Account and (ii)
4
8
on or prior to the Closing Date, to deliver to HRAC, or its designee, a computer
file or microfiche list containing a true and complete list of all such Accounts
specifying for each such Account, as of the Closing Date, (1) its account
number, (2) the aggregate amount outstanding in such Account and (3) the
aggregate amount of Principal Receivables in such Account. Each such computer
file or microfiche list, as supplemented from time to time to reflect Removed
Accounts, shall be marked as Schedule I to this Agreement, shall be delivered to
HRAC, or its designee, and is hereby incorporated into and made a part of this
Agreement. HRSIFI further agrees not to alter the code referenced in clause (i)
of this paragraph with respect to any Account during the term of this Agreement
unless and until such Account becomes a Removed Account.
(d) The parties hereto intend that the conveyance of HRSIFI's right, title
and interest in and to the Purchased Assets shall constitute an absolute sale,
conveying good title free and clear of any liens, claims, encumbrances or rights
of others from HRSIFI to HRAC and that the Purchased Assets shall not be part of
HRSIFI's estate in the event of the bankruptcy of HRSIFI. It is the intention of
the parties hereto that the arrangements with respect to the Purchased Assets
shall constitute a purchase and sale of such Purchased Assets and not a loan or
a borrowing secured by such Purchased Assets. In the event, however, that it
were to be determined that the transactions evidenced hereby constitute a loan
and not a purchase and sale, it is the intention of the parties hereto that this
Agreement shall constitute a security agreement under applicable law, and that
HRSIFI shall be deemed to have granted and does hereby grant to HRAC a first
priority perfected security interest in all of HRSIFI's right, title and
interest, whether now owned or hereafter acquired, in, to and under the
Receivables and other Purchased Assets to secure the obligations of HRSIFI
hereunder.
(e) To the extent that HRSIFI retains any interest in the Purchased
Assets, HRSIFI hereby grants to the Indenture Trustee for the benefit of the
Noteholders a security interest in all of HRSIFI's right, title, and interest,
whether now owned or hereafter acquired, in, to, and under the Receivables and
other Purchased Assets that are intended to be pledged to the Indenture Trustee
pursuant to the Indenture (collectively, the "Trust Collateral"), to secure the
performance of all of the obligations of HRSIFI under this Agreement and any
other agreement or document related to the Transfer and Servicing Agreement or
the Indenture. With respect to the Trust Collateral, the Indenture Trustee shall
have all of the rights that it has under the Transfer and Servicing Agreement
and the Indenture and all of the rights of a secured creditor under the UCC.
ARTICLE III
CONSIDERATION AND PAYMENT
Section 3.01. Purchase Price.
(a) The "Purchase Price" for the Receivables in the Initial Accounts and
the related Purchased Assets conveyed to HRAC under this Agreement shall be
payable on the Closing Date and shall be an amount equal to 100% of the
aggregate balance of Principal Receivables in those Accounts as of the Closing
Date, plus the present value of anticipated excess spread, computed by taking
into account factors such as historical losses, servicing fees, delinquencies
and paydown rates, yield and such other factors as HRSIFI and HRAC mutually
agree (and discounted to take into account any uncertainty as to future
performance matching
5
9
historical performances) will result in a Purchase Price determined to be the
fair market value of such Purchased Assets. This computation of initial purchase
price shall assume no reinvestment in new Receivables.
(b) The Purchase Price to be paid by HRAC on the Closing Date shall be
paid in cash (including netting against other payments).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01. Representations and Warranties of the Bank Relating to the
Bank. The Bank hereby represents and warrants to, and agrees with, HRAC as of
the Closing Date that:
(a) Organization and Good Standing. The Bank is a national bank duly
organized and validly existing in good standing under the laws of the United
States and has, in all material respects, full power and authority to own its
properties and conduct its business as such properties are presently owned and
such business is presently conducted, and to execute, deliver and perform its
obligations under this Agreement.
(b) Due Qualification. The Bank is duly qualified to do business and is
in good standing as a foreign corporation (or is exempt from such requirements)
and has obtained all necessary licenses and approvals, in each jurisdiction in
which failure to so qualify or to obtain such licenses and approvals would
(i) render any Credit Agreement relating to an Account or any Receivable
unenforceable by the Bank, HRAC, the Company or the Owner Trustee on behalf of
the Trust and (ii) have a material adverse effect on the Noteholders.
(c) Due Authorization. The execution, delivery and performance of this
Agreement and any other document or instrument delivered pursuant hereto, and
the consummation of the transactions provided for in this Agreement have been
duly authorized by the Bank by all necessary corporate action on the part of
the Bank.
(d) No Conflict. The execution and delivery of this Agreement by the
Bank, the performance of the transactions contemplated by this Agreement, and
the fulfillment of the terms of this Agreement will not conflict with, violate
or result in any breach of any of the material terms and provisions of, or
constitute (with or without notice or lapse of time or both) a material default
under, any indenture, contract, agreement, mortgage, deed of trust, or other
instrument to which the Bank is a party or by which it or any of its properties
are bound.
(e) No Violation. The execution, delivery and performance of this
Agreement by the Bank and the fulfillment of the terms contemplated herein and
therein applicable to the Bank will not conflict with or violate any
Requirements of Law applicable to the Bank.
(f) No Proceedings. There are no proceedings or investigations pending
or, to the best knowledge of the Bank, threatened against the Bank, before any
Governmental Authority (i) asserting the invalidity of this Agreement,
(ii) seeking to prevent the consummation of any of
6
10
the transactions contemplated by this Agreement, (iii) seeking any determination
or ruling that, in the reasonable judgment of the Bank, would materially and
adversely affect the performance by the Bank of its obligations under this
Agreement, (iv) seeking any determination or ruling that would materially and
adversely affect the validity or enforceability of this Agreement or (v) seeking
to affect adversely the income tax attributes of the Trust under the United
States Federal or Delaware income tax systems.
(g) All Consents. All authorizations, consents, orders or approvals of or
registrations or declarations with any Governmental Authority required to be
obtained, effected or given by the Bank in connection with the execution and
delivery by the Bank of this Agreement and the performance of the transactions
contemplated by this Agreement by the Bank have been duly obtained, effected or
given and are in full force and effect.
The representations and warranties set forth in this Section 4.01 shall
survive the transfer and assignment of the Receivables to HRAC. Upon discovery
by the Bank or HRAC of a breach of any of the foregoing representations and
warranties, the party discovering such breach shall give written notice to the
other party, the Company, the Owner Trustee and the Indenture Trustee within
three Business Days following such discovery.
Section 4.02. Representations and Warranties of the Bank Relating to the
Agreement and the Receivables.
(a) Representations and Warranties. The Bank hereby represents and
warrants to HRAC as of the date of this Agreement and as of the Closing Date
that:
(i) this Agreement constitutes a legal, valid and binding
obligation of the Bank enforceable against the Bank in accordance with its
terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally from time to time in effect or
general principles of equity;
(ii) as of the Closing Date with respect to Initial Accounts,
Schedule I to this Agreement, is an accurate and complete listing in all
material respects of all the Initial Accounts as of the Closing Date, and
the information contained therein with respect to the identity of such
Initial Accounts and the Receivables existing thereunder is true and
correct in all material respects as of the Closing Date;
(iii) each Receivable has been conveyed to HRAC free and clear of any
Lien;
(iv) all authorizations, consents, orders or approvals of or
registrations or declarations with any Governmental Authority required to
be obtained, effected or given by the Bank in connection with the
conveyance of Receivables to HRAC have been duly obtained, effected or
given and are in full force and effect;
(v) on the Closing Date, each related Initial Account is an
Eligible Account;
7
11
(vi) on the Closing Date, each Receivable generated under an Initial
Account is an Eligible Receivable; and
(vii) no selection procedures believed by the Bank to be materially
adverse to the interests of HRAC or the Noteholders have been used in
selecting such Accounts.
(b) Notice of Breach. The representations and warranties set forth in
this Section 4.02 shall survive the transfer and assignment of the Receivables
to HRAC. Upon discovery by any of the Bank, HRSIFI or HRAC of a breach of any of
the representations and warranties set forth in this Section 4.02, the party
discovering such breach shall give written notice to the other parties, the
Company, the Owner Trustee and the Indenture Trustee within three Business Days
following such discovery; provided that the failure to give notice within three
Business Days does not preclude subsequent notice. The Bank hereby acknowledges
that HRAC intends to rely on the representations hereunder in connection with
representations made by HRAC to secured parties, assignees or subsequent
transferees including but not limited to transfers made by HRAC to the Company
pursuant to the Receivables Purchase Agreement, dated _____, 2001, by and
between HRAC and the Company, and by the Company to the Trust pursuant to the
Transfer and Servicing Agreement and by the Trust to the Indenture Trustee
pursuant to the Indenture and that the Company, the Owner Trustee and the
Indenture Trustee may enforce such representations directly against the Bank.
Section 4.03. Representations and Warranties of HRAC. As of the Closing
Date, HRAC hereby represents and warrants to, and agrees with, the Bank and
HRSIFI that:
(a) Organization and Good Standing. HRAC is a corporation duly organized
and validly existing under the laws of the State of Delaware and has, in all
material respects, full power and authority to own its properties and conduct
its business as such properties are presently owned and such business is
presently conducted and to execute, deliver and perform its obligations under
this Agreement.
(b) Due Authorization. The execution and delivery of this Agreement and
the consummation of the transactions provided for in this Agreement have been
duly authorized by HRAC by all necessary corporate action on the part of HRAC.
(c) No Conflict. The execution and delivery of this Agreement by HRAC,
the performance of the transactions contemplated by this Agreement, and the
fulfillment of the terms of this Agreement applicable to HRAC, will not conflict
with, result in any breach of any of the material terms and provisions of, or
constitute (with or without notice or lapse of time or both) a material default
under, any indenture, contract, agreement, mortgage, deed of trust or other
instrument to which HRAC is a party or by which it or any of its properties are
bound.
(d) No Violation. The execution, delivery and performance of this
Agreement by HRAC and the fulfillment of the terms contemplated herein and
therein applicable to HRAC will not conflict with or violate any Requirements of
Law applicable to HRAC.
(e) No Proceedings. There are no proceedings or investigations pending
or, to the best knowledge of HRAC, threatened against HRAC, before any
Governmental Authority (i) asserting the invalidity of this Agreement,
(ii) seeking to prevent the consummation of any of the
8
12
transactions contemplated by this Agreement, (iii) seeking any determination or
ruling that, in the reasonable judgment of HRAC, would materially and adversely
affect the performance by HRAC of its obligations under this Agreement or
(iv) seeking any determination or ruling that would materially and adversely
affect the validity or enforceability of this Agreement.
(f) All Consents. All authorizations, consents, orders or approvals of or
registrations or declarations with any Governmental Authority required to be
obtained, effected or given by HRAC in connection with the execution and
delivery by HRAC of this Agreement and the performance of the transactions
contemplated by this Agreement have been duly obtained, effected or given and
are in full force and effect.
The representations and warranties set forth in this Section 4.03 shall
survive the Conveyance of the Receivables to HRAC. Upon discovery by HRSIFI,
HRAC or the Bank of a breach of any of the foregoing representations and
warranties, the party discovering such breach shall give prompt written notice
to the other parties, the Owner Trustee and the Indenture Trustee.
Section 4.04. Representations and Warranties of HRSIFI. As of the Closing
Date HRSIFI hereby represents and warrants to, and agrees with, HRAC that:
(a) Organization and Good Standing. HRSIFI is a corporation duly organized
and validly existing under the laws of the State of Nevada and has, in all
material respects, full power and authority to own its properties and conduct
its business as such properties are presently owned and such business is
presently conducted and to execute, deliver and perform its obligations under
this Agreement.
(b) Due Authorization. The execution and delivery of this Agreement and
the consummation of the transactions provided for in this Agreement have been
duly authorized by HRSIFI by all necessary corporate action on the part of
HRSIFI.
(c) No Conflict. The execution and delivery of this Agreement by HRSIFI,
the performance of the transactions contemplated by this Agreement, and the
fulfillment of the terms of this Agreement applicable to HRSIFI, will not
conflict with, result in any breach of any of the material terms and provisions
of, or constitute (with or without notice or lapse of time or both) a material
default under, any indenture, contract, agreement, mortgage, deed of trust or
other instrument to which HRSIFI is a party or by which it or any of its
properties are bound.
(d) No Violation. The execution, delivery and performance of this
Agreement by HRSIFI and the fulfillment of the terms contemplated herein and
therein applicable to HRSIFI will not conflict with or violate any Requirements
of Law applicable to HRSIFI.
(e) No Proceedings. There are no proceedings or investigations pending
or, to the best knowledge of HRSIFI, threatened against HRSIFI, before any
Governmental Authority (i) asserting the invalidity of this Agreement, (ii)
seeking to prevent the consummation of any of the transactions contemplated by
this Agreement, (iii) seeking any determination or ruling that, in the
reasonable judgment of HRSIFI, would materially and adversely affect the
performance by HRSIFI of its obligations under this Agreement or (iv) seeking
any determination or ruling that would materially and adversely affect the
validity or enforceability of this Agreement.
9
13
All Consents. All authorizations, consents, orders or approvals of or
registrations or declarations with any Governmental Authority required to be
obtained, effected or given by HRSIFI in connection with the execution and
delivery by HRSIFI of this Agreement and the performance of the transactions
contemplated by this Agreement have been duly obtained, effected or given and
are in full force and effect.
The representations and warranties set forth in this Section 4.04 shall
survive the Conveyance of the Receivables to HRAC. Upon discovery by HRSIFI,
HRAC or the Bank of a breach of any of the foregoing representations and
warranties, the party discovering such breach shall give prompt written notice
to the other parties, the Owner Trustee and the Indenture Trustee.
Section 4.05. Representations and Warranties of HRSIFI Relating to the
Agreement and the Receivables. HRSIFI hereby represents and warrants to HRAC as
of the date of this Agreement, as of the Closing Date that:
(a) this Agreement constitutes a valid sale, transfer and assignment to
HRAC of all right, title and interest of HRSIFI in the Receivables and the
proceeds thereof and the Recoveries payable pursuant to this Agreement;
(b) this Agreement constitutes a legal, valid and binding obligation of
HRSIFI enforceable against HRSIFI, in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally from time to time in effect or general principles of equity;
(c) as of the Closing Date with respect to Initial Accounts, Schedule I to
this Agreement is an accurate and complete listing in all material respects of
all the Accounts as of the Closing Date, and the information contained therein
with respect to the identity of such Accounts and the Receivables existing
thereunder is true and correct in all material respects as of the Closing Date;
(d) each Receivable has been conveyed to HRAC free and clear of any Lien;
(e) all authorizations, consents, orders or approvals of or registrations
or declarations with any Governmental Authority required to be obtained,
effected or given by HRSIFI in connection with the conveyance of Receivables to
HRAC have been duly obtained, effected or given and are in full force and
effect;
(f) on the Closing Date, each related Initial Account is an Eligible
Account;
(g) on the Closing Date, each Receivable generated under an Initial
Account is an Eligible Receivable; and
(h) no selection procedures believed by HRSIFI to be materially adverse to
the interests of HRAC or the Noteholders have been used in selecting such
Accounts.
10
14
ARTICLE V
COVENANTS
Section 5.01. Covenants of HRSIFI. HRSIFI hereby covenants and agrees
with HRAC as follows:
(a) Security Interests. Except for the conveyances hereunder, HRSIFI will
not sell, pledge, assign or transfer to any other Person, or take any other
action inconsistent with HRAC's ownership of the Receivables or grant, create,
incur, assume or suffer to exist any Lien (arising through or under HRSIFI) on,
any Receivable, whether now existing or hereafter created, or any interest
therein, and HRSIFI shall not claim any ownership interest in the Receivables
and shall defend the right, title and interest of HRAC in, to and under the
Receivables, whether now existing or hereafter created, against all claims of
third parties claiming through or under HRSIFI.
(b) Delivery of Collections or Recoveries. In the event that HRSIFI
receives Collections or Recoveries, HRSIFI agrees to pay to HRAC (or to the
Servicer if HRAC so directs) all such Collections and Recoveries as soon as
practicable after receipt thereof.
(c) Documentation of Transfer. HRSIFI shall undertake to file the
documents which would be necessary to perfect and maintain the transfer of the
Purchased Assets to HRAC.
ARTICLE VI
REPURCHASE OBLIGATION
Section 6.01. Reassignment of Ineligible Receivables.
(a) In the event any representation or warranty under Section 4.02(a)(ii),
(iii), (iv), (v), (vi) or (vii) is not true and correct in any material respect
as of the date specified therein with respect to any Receivable or the related
Account and as a result of such breach HRAC is required to accept reassignment
of Ineligible Receivables previously sold by HRSIFI to HRAC pursuant to Section
6.01(b) of the Receivables Purchase Agreement between HRAC and the Company, the
Bank shall accept reassignment of HRAC's interest in such Ineligible Receivables
on the terms and conditions set forth in Section 6.01(b) of this Agreement.
(b) The Bank shall accept reassignment from HRAC of any Ineligible
Receivables previously sold by HRSIFI to HRAC on the date on which such
reassignment obligation arises, and shall pay for such reassigned Ineligible
Receivables by paying to HRAC, not later than 3:00 p.m., New York City time on
such date, an amount equal to the unpaid principal balance of such Ineligible
Receivables plus accrued and unpaid finance charges at the annual percentage
rate applicable to such Receivables from the last date billed through the end of
the Due Period in which such reassignment obligation arises. Upon reassignment
of such Ineligible Receivables, HRAC shall automatically and without further
action be deemed to sell, transfer, assign, set-over and otherwise convey to the
Bank, without recourse, representation or warranty, all the right, title and
interest of HRAC in and to such Ineligible Receivables, all Recoveries
11
15
related thereto, all monies and amounts due or to become due with respect
thereto and all proceeds thereof; and such reassigned Ineligible Receivables
shall be treated by HRAC as collected in full as of the date on which they were
transferred. HRAC shall execute such documents and instruments of transfer or
assignment and take such other actions as shall reasonably be requested by the
Bank to effect the conveyance of such Ineligible Receivables and other property
pursuant to this subsection.
Section 6.02. Reassignment of Trust Portfolio. In the event any
representation or warranty set forth in Section 4.01(a), (c), (d), (f) or (g) or
Section 4.02(a)(i) is not true and correct in any material respect and as a
result of such breach HRAC is required to accept a reassignment of the
Receivables previously sold by HRSIFI to HRAC pursuant to Section 6.02 of the
Receivables Purchase Agreement between HRAC and the Company, the Bank shall be
obligated to accept a reassignment of HRAC's interest in such Receivables on the
terms set forth below.
The Bank shall pay to HRAC by depositing in the Collection Account in
immediately available funds, not later than 1:00 P.M. New York City time, on the
first Transfer Date following the Due Period in which such reassignment
obligation arises, in payment for such reassignment, an amount equal to the
amount specified in Section 2.06 of the Transfer and Servicing Agreement. Upon
such reassignment of Receivables, HRAC shall automatically and without further
action be deemed to sell, transfer, assign, set-over and otherwise convey to the
Bank, without recourse, representation or warranty, all the right, title and
interest of HRAC in and to such Receivables, all Recoveries related thereto, all
monies and amounts due or to become due with respect thereto and all proceeds
thereof; and such reassigned Receivables shall be treated by HRAC as collected
in full as of the date on which they were transferred. HRAC shall execute such
documents and instruments of transfer or assignment and take such other actions
as shall reasonably be requested by the Bank to effect the conveyance of such
Receivables and other property pursuant to this subsection.
ARTICLE VII
CONDITIONS PRECEDENT
Section 7.01. Conditions to HRAC's Obligations Regarding Initial
Receivables. The obligations of HRAC to purchase the Receivables in the Initial
Accounts on the Closing Date shall be subject to the satisfaction of the
following conditions:
(a) All representations and warranties of the Bank and HRSIFI contained in
this Agreement shall be true and correct on the Closing Date with the same
effect as though such representations and warranties had been made on such date;
(b) All information concerning the Initial Accounts provided to HRAC, or
its designee, shall be true and correct as of the Closing Date in all material
respects;
(c) HRSIFI shall have delivered to HRAC, or its designee, a computer file
or microfiche list containing a true and complete list of all Initial Accounts
identified by account number and by the Receivables balance as of the Closing
Date and (ii) HRSIFI and the Bank
12
16
substantially performed all other obligations required to be performed by the
provisions of this Agreement;
(d) HRSIFI shall have recorded and filed, at its expense, any financing
statement with respect to the Receivables now existing for the transfer of
accounts and general intangibles (each as defined in Section 9-106 of the UCC)
meeting the requirements of applicable state law in such manner and in such
jurisdictions as would be necessary to perfect the sale of and security interest
in the Receivables from HRSIFI to HRAC, and shall deliver a file-stamped copy of
such financing statements or other evidence of such filings to HRAC, or its
designee;
(e) On or before the Closing Date, (i) the Bank and HRAC shall have
entered into a Receivables Purchase Agreement, (ii) HRAC and the Company shall
have entered into a Receivables Purchase Agreement (iii) the Company and the
Owner Trustee shall have entered into the Trust Agreement (iv) the Company,
Household Finance Corporation and the Owner Trustee shall have entered into the
Transfer and Servicing Agreement, (iv) the Trust and the Indenture Trustee shall
have entered into the Indenture and (vi) the closing under the Transfer and
Servicing Agreement and the Indenture shall take place simultaneously with the
initial closing hereunder; and
(f) All corporate and legal proceedings and all instruments in connection
with the transactions contemplated by this Agreement shall be satisfactory in
form and substance to HRAC, and HRAC shall have received from HRSIFI and copies
of all documents (including, without limitation, records of corporate
proceedings) relevant to the transactions herein contemplated as HRAC may
reasonably have requested.
Section 7.02. Conditions Precedent to the HRSIFI's Obligations. The
obligations of HRSIFI to sell Receivables in the Initial Accounts on the Closing
Date shall be subject to the satisfaction of the following conditions:
(a) All representations and warranties of HRAC contained in this Agreement
shall be true and correct with the same effect as though such representations
and warranties had been made on such date;
(b) Payment or provision for payment of the Purchase Price in accordance
with the provision of Section 3.01 hereof shall have been made; and
(c) All corporate and legal proceedings and all instruments in connection
with the transactions contemplated by this Agreement shall be satisfactory in
form and substance to HRSIFI, and HRSIFI shall have received from HRAC copies of
all documents (including, without limitation, records of corporate proceedings)
relevant to the transactions herein contemplated as HRSIFI may reasonably have
requested.
ARTICLE VIII
TERM AND PURCHASE TERMINATION
13
17
Section 8.01. Term. This Agreement shall commence as of the date of
execution and delivery hereof and shall continue until the earlier of (i) the
termination of the Trust as provided in Article VIII of the Trust Agreement or
(ii) such time when all amounts payable under all Receivables purchased under
this agreement have been paid out by the Trust.
ARTICLE IX
MISCELLANEOUS PROVISIONS
Section 9.01. Amendment. This Agreement and any Conveyance Papers and the
rights and obligations of the parties hereunder and thereunder may not be
changed orally, but only by an instrument in writing signed by HRAC, HRSIFI and
the Bank in accordance with this Section 9.01. This Agreement may be amended
from time to time by HRAC, HRSIFI and the Bank (i) to cure any ambiguity,
(ii) to correct or supplement any provisions herein which may be inconsistent
with any other provisions herein, (iii) to add any other provisions with respect
to matters or questions arising under this Agreement which shall not be
inconsistent with the provisions of this Agreement, (iv) to change or modify the
Purchase Price and (v) to change, modify, delete or add any other obligation of
the Bank, HRSIFI or HRAC; provided, however that no amendment pursuant to clause
(v) of this Section 9.01 shall be effective unless the Bank, HRSIFI and HRAC
have been notified in writing that the Rating Agency Condition has been
satisfied; provided, further, the Bank, HRSIFI and HRAC shall have delivered to
the Company, the Owner Trustee and the Indenture Trustee an Officer's
Certificate, dated the date of any such action, stating that each of the Bank
and HRAC, respectively, reasonably believes that such action will not have an
Adverse Effect, unless the Company, the Owner Trustee and the Indenture Trustee
shall consent thereto. Any reconveyance executed in accordance with the
provisions hereof shall not be considered to be an amendment to this Agreement.
A copy of any amendment to this Agreement shall be sent to the Rating Agency.
Section 9.02. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 9.03. Notices. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if personally
delivered at or mailed by registered mail, return receipt requested, to (a) in
the case of the Bank, 0000 Xxxx Xxxxxx Xxxxx, Xxx Xxxxx, Xxxxxx 00000,
Attention: General Counsel, (b) in the case of HRAC, 0000 Xxxxxxx Xxxx, Xxxxxxxx
Xxxxxxx, XX 00000, Attention: General Counsel, (c) HRSIFI , 0000 Xxxxxxx Xxxx,
Xxxxxxxx Xxxxxxx, XX 00000, Attention: Legal Department, (d) in the case of the
Owner Trustee, Xxxxxx Square North, 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx,
XX 00000-0000, (e) in the case of the Indenture Trustee, 000 Xxxx Xxxxxx Xxxxx,
Xxxxxxx, Xxxxxxxx, 00000, Attention: Corporate Trust Department, (f) in the case
of the Servicer, Household Finance Corporation, 0000 Xxxxxxx Xxxx, Xxxxxxxx
Xxxxxxx, Xxxxxxxx 00000, Attention: X.X. Xxxxx, Assistant Treasurer, (g) in
the case of Fitch, Fitch, Inc., Xxx Xxxxx Xxxxxx Xxxxx, Xxx Xxxx, XX 00000,
Attention: ABS Surveillance,
14
18
(h) in the case of Moody's, Xxxxx'x Investors Service Inc., 00 Xxxxxx Xxxxxx,
Xxx Xxxx, XX 00000, Attention: ABS Monitoring Group, or (i) in the case of
Standard & Poor's, Standard & Poor's Ratings Group, 00 Xxxxx Xxxxxx, Xxx Xxxx,
XX 00000, Attention: Credit Card ABS; or, as to each party, at such other
address as shall be designated by such party in a written notice to each other
party.
Section 9.04. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall for any
reason whatsoever be held invalid, then such covenants, agreements, provisions,
or terms shall be deemed severable from the remaining covenants, agreements,
provisions, and terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement.
Section 9.05. Assignment. Notwithstanding anything to the contrary
contained herein, other than HRAC's assignment of its rights, title, and
interests in, to, and under this Agreement to the Company and the Company's
assignment of its rights, title and interest in, to and under this Agreement to
the Trust and the Trust's assignment of its rights, title and interests in, to
and under this Agreement to the Indenture Trustee for the benefit of the
beneficiaries of the Trust, including the Noteholders as contemplated by the
Transfer and Servicing Agreement, the Indenture and Section 9.06 hereof, this
Agreement and may not be assigned by the parties hereto unless the Bank shall
assign its rights, title and interests in, to and under this Agreement to
(a) any successor by merger assuming this Agreement (b) to any affiliate owned
directly or indirectly by Household International, Inc. which assumes the
obligations of this Agreement or (c) to any entity provided that the Rating
Agency has advised HRAC and the Bank that the Rating Agency Condition has been
satisfied.
Section 9.06. Acknowledgement and Agreement of the Bank and HRSIFI. By
execution below, each of HRSIFI and the Bank expressly acknowledges and agrees
that all of HRAC's right, title, and interest in, to, and under this Agreement,
including, without limitation, all of HRAC's right, title, and interest in and
to the Receivables purchased pursuant to this Agreement, shall be assigned by
HRAC to the Company, and shall be assigned by the Company to the Owner Trustee,
and shall be assigned by the Owner Trustee to the Indenture Trustee for the
benefit of the beneficiaries of the Trust, including the Noteholders, and each
of HRSIFI and the Bank consents to such assignments. Each of HRSIFI and the Bank
further agrees that notwithstanding any claim, counterclaim, right of setoff or
defense which it may have against HRAC, due to a breach by HRAC of this
Agreement or for any other reason, and notwithstanding the bankruptcy of HRAC or
any other event whatsoever, each of HRSIFI and the Bank's sole remedy shall be
a claim against HRAC for money damages, and then only to the extent of funds
received by HRAC pursuant to the Receivables Purchase Agreement between HRAC and
the Company, and in no event shall the Bank or HRSIFI assert any claim on or any
interest in the Receivables or any proceeds thereof or take any action which
would reduce or delay receipt by the Company or the Owner Trustee of collections
with respect to the Receivables. Additionally, the Bank agrees for the benefit
of the Noteholders that any amounts payable by the Bank to HRAC hereunder which
are to be paid by HRAC to the Company then paid by the Company to the Owner
Trustee and pledged to the Indenture Trustee for the benefit of the Noteholders
shall be paid by the Bank, on behalf of HRAC, directly to the Company.
Additionally, the Bank agrees for the benefit of the Noteholders that any
amounts payable by the Bank to HRAC hereunder which are to be paid by HRAC to
the Company then paid by the Company to the Owner Trustee and pledged to the
15
19
Indenture Trustee for the benefit of the Noteholders shall be paid by the Bank,
on behalf of HRAC, directly to the Company. Additionally, HRSIFI agrees for the
benefit of the Noteholders that any amounts payable by HRSIFI to HRAC hereunder
which are to be paid by HRAC to the Company then paid by the Company to the
Owner Trustee and pledged to the Indenture Trustee for the benefit of the
Noteholders shall be paid by HRSIFI, on behalf of HRAC, directly to the Company.
Section 9.07. Further Assurances. HRAC and the Bank agree to do and
perform, from time to time, any and all acts and to execute any and all further
instruments required or reasonably requested by the other party, the Company,
the Owner Trustee or the Indenture Trustee more fully to effect the purposes of
this Agreement, and the Transfer and Servicing Agreement, including, without
limitation, the execution of any financing statements or continuation statements
or equivalent documents relating to the Receivables for filing under the
provisions of the UCC or other law of any applicable jurisdiction.
Section 9.08. No Waiver; Cumulative Remedies. No failure to exercise and
no delay in exercising, on the part of HRAC , HRSIFI or the Bank, any right,
remedy, power or privilege hereunder, shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege. Subject to Section 9.06, the rights,
remedies, powers and privileges herein provided are cumulative and not
exhaustive of any rights, remedies, powers and privileges provided by law.
Section 9.09. Counterparts. This Agreement may be executed in two or more
counterparts (and by different parties on separate counterparts), each of which
shall be an original, but all of which together shall constitute one and the
same instrument.
Section 9.10. Binding; Third-Party Beneficiaries. This Agreement will
inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns. The Company, the Owner Trustee and
the Indenture Trustee shall be considered third-party beneficiaries of this
Agreement.
Section 9.11. Merger and Integration. Except as specifically stated
otherwise herein, this Agreement set forth the entire understanding of the
parties relating to the subject matter hereof, and all prior understandings,
written or oral, are superseded by this Agreement. This Agreement may not be
modified, amended, waived or supplemented except as provided herein.
Section 9.12. Headings. The headings are for purposes of reference only
and shall not otherwise affect the meaning or interpretation of any provision
hereof.
Section 9.13. Schedules and Exhibits. The schedules and exhibits attached
hereto and referred to herein shall constitute a part of this Agreement and are
incorporated into this Agreement for all purposes.
Section 9.14. Survival of Representations and Warranties. All
representations, warranties and agreements contained in this Agreement, shall
remain operative and in full force and effect and shall survive conveyance of
the Receivables by HRSIFI to HRAC and thereafter to the Company pursuant to the
Receivables Purchase Agreement between HRAC and the Company,
16
20
and thereafter by the Company to the Trust pursuant to the Transfer and
Servicing Agreement and by the Trust and the Indenture Trustee pursuant to the
Indenture.
Section 9.15. Nonpetition Covenant. Notwithstanding any prior termination
of this Agreement, each of the HRSIFI and the Bank shall not, prior to the date
which is one year and one day after the termination of this Agreement,
acquiesce, petition or otherwise invoke or cause HRAC to invoke the process of
any Governmental Authority for the purpose of commencing or sustaining a case
against HRAC under any Federal or state bankruptcy, insolvency or similar law or
appointing a receiver, conservator, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of HRAC or any substantial part of its
property or ordering the winding-up or liquidation or the affairs of HRAC.
17
21
IN WITNESS WHEREOF, HRSIFI, HRAC and the Bank have caused this Agreement to
be duly executed by their respective officers as of the day and year first above
written.
HRSI FUNDING, INC.
By: _____________________________________
Name:
Title:
HOUSEHOLD BANK (SB), N.A.
By: _____________________________________
Name:
Title:
HOUSEHOLD RECEIVABLES ACQUISITION COMPANY
By: _____________________________________
Name:
Title:
18
22
Schedule I
LIST OF ACCOUNTS
COMPUTER FILES CONTAINING ACCOUNT INFORMATION DELIVERED TO HRAC
ARE INCORPORATED BY REFERENCE
I-1
