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HRSI FUNDING, INC. II,
TRANSFEROR,
HOUSEHOLD FINANCE CORPORATION,
SERVICER,
AND
WILMINGTON TRUST COMPANY, AS OWNER TRUSTEE OF THE
HOUSEHOLD PRIVATE LABEL CREDIT CARD MASTER NOTE TRUST I,
ISSUER
TRANSFER AND SERVICING AGREEMENT
Dated as of _________, 2001
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TABLE OF CONTENTS
ARTICLE I DEFINITIONS..................................................... 1
Section 1.01. Definitions............................................. 1
Section 1.02. Other Definitional Provisions........................... 15
ARTICLE II CONVEYANCE OF RECEIVABLES...................................... 16
Section 2.01. Conveyance of Receivables............................... 16
Section 2.02. Acceptance by Owner Trustee............................. 18
Section 2.03. Representations and Warranties of Each Transferor
Relating to Such Transferor............................. 18
Section 2.04. Representations and Warranties of each Transferor
Relating to the Agreement and Any Participation Interest
Supplement and the Receivables.......................... 20
Section 2.05. Reassignment of Ineligible Receivables.................. 22
Section 2.06. Reassignment of Trust Portfolio......................... 23
Section 2.07. Covenants of each Transferor............................ 24
Section 2.08. Covenants of each Transferor with Respect to Receivables
Purchase Agreement...................................... 25
Section 2.09. Addition of Accounts.................................... 26
Section 2.10. Removal of Accounts..................................... 30
Section 2.11. Account Allocations..................................... 32
Section 2.12. Discount Option......................................... 33
ARTICLE III ADMINISTRATION AND SERVICING OF RECEIVABLES................... 33
Section 3.01. Acceptance of Appointment and Other Matters Relating to
the Servicer............................................ 33
Section 3.02. Servicing Compensation.................................. 35
Section 3.03. Representations, Warranties and Covenants of the
Servicer ............................................... 35
Section 3.04. Reports and Records for the Owner Trustee and the
Indenture Trustee....................................... 38
Section 3.05. Annual Certificate of Servicer.......................... 39
Section 3.06. Annual Servicing Report of Independent Public
Accountants; Copies of Reports Available................ 39
Section 3.07. Tax Treatment........................................... 40
Section 3.08. Notices to Household Finance Corporation................ 40
Section 3.09. Adjustments............................................. 40
Section 3.10. Reports to the Commission............................... 41
ARTICLE IV OTHER MATTERS RELATING TO EACH TRANSFEROR...................... 41
Section 4.01. Liability of each Transferor............................ 42
Section 4.02. Merger or Consolidation of, or Assumption of the
Obligations of, a Transferor............................ 42
Section 4.03. Limitations on Liability of Each Transferor............. 43
Section 4.04. Assumption of the Transferor Obligations................ 43
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ARTICLE V OTHER MATTERS RELATING TO THE SERVICER.......................... 45
Section 5.01. Liability of the Servicer............................... 45
Section 5.02. Merger or Consolidation of, or Assumption of the
Obligations of, the Servicer............................ 45
Section 5.03. Limitation on Liability of the Servicer and Others...... 45
Section 5.04. Servicer Indemnification of the Owner Trustee and the
Indenture Trustee....................................... 46
Section 5.05. Resignation of the Servicer............................. 46
Section 5.06. Access to Certain Documentation and Information Regarding
the Receivables......................................... 47
Section 5.07. Delegation of Duties.................................... 47
Section 5.08. Examination of Records.................................. 47
ARTICLE VI INSOLVENCY EVENTS.............................................. 47
Section 6.01. Rights upon the Occurrence of an Insolvency Event....... 48
ARTICLE VII SERVICER DEFAULTS............................................. 48
Section 7.01. Servicer Defaults....................................... 48
Section 7.02. Indenture Trustee To Act; Appointment of Successor...... 51
Section 7.03. Notification to Noteholders............................. 52
ARTICLE VIII TERMINATION.................................................. 53
Section 8.01. Termination of Agreement................................ 53
ARTICLE IX MISCELLANEOUS PROVISIONS....................................... 53
Section 9.01. Amendment; Waiver of Past Defaults...................... 53
Section 9.02. Protection of Right, Title and Interest to Trust........ 55
Section 9.03. Governing Law........................................... 56
Section 9.04. Notices; Payments....................................... 56
Section 9.05. Severability of Provisions.............................. 57
Section 9.06. Additional Obligations of the Servicer.................. 57
Section 9.07. Further Assurances...................................... 57
Section 9.08. No Waiver; Cumulative Remedies.......................... 58
Section 9.09. Counterparts............................................ 58
Section 9.10. Third-Party Beneficiaries............................... 58
Section 9.11. Actions by Noteholders.................................. 58
Section 9.12. Rule 144A Information................................... 58
Section 9.13. Merger and Integration.................................. 58
Section 9.14. Headings................................................ 59
Section 9.15. Representative Capacity................................. 59
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TABLE OF CONTENTS (CONT'D.)
EXHIBITS
EXHIBIT A Form of Assignment of Receivables in Additional Accounts A-1
EXHIBIT B Form of Reassignment of Receivables in Removed Accounts B-1
EXHIBIT C Form of Annual Servicer's Certificate................... X-0
XXXXXXX X-0 Form of Opinion of Counsel with Respect to Amendments... X-0-0
XXXXXXX X-0 Form of Opinion of Counsel with Respect to Accounts..... X-0-0
XXXXXXX X-0 Provisions to be Included in Annual Opinion of Counsel.. D-3-1
SCHEDULES
SCHEDULE 1 List of Accounts........................................ I-1
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TRANSFER AND SERVICING AGREEMENT, dated as of _______, 2001 among
HRSI FUNDING, INC. II, a Delaware corporation, as Transferor; HOUSEHOLD FINANCE
CORPORATION, a Delaware corporation, as Servicer; and WILMINGTON TRUST COMPANY,
not in its individual capacity but solely as Owner Trustee on behalf of the
HOUSEHOLD PRIVATE LABEL CREDIT CARD MASTER NOTE TRUST I, a common law trust
organized and existing under the laws of the State of Delaware.
In consideration of the mutual agreements herein contained, each
party agrees as follows for the benefit of the other parties, the Noteholders
and any Series Enhancer (as defined below) to the extent provided herein, in the
Indenture and in any Indenture Supplement:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. Whenever used in this Agreement, the
following words and phrases shall have the following meanings, and the
definitions of such terms are applicable to the singular as well as the plural
forms of such terms and to the masculine as well as to the feminine and neuter
genders of such terms.
"Account" shall mean (a) each Initial Account, (b) each Additional
Account (but only from and after the Addition Date with respect thereto), (c)
each Related Account, and (d) each Transferred Account, but shall exclude (i)
any Account that has been closed and terminated in accordance with the relevant
Credit Guidelines and (ii) any Account all the Receivables in which are (A)
after the Removal Date, removed by the Transferor pursuant to Section 2.10, (B)
reassigned to the Transferor pursuant to Section 2.05 or (C) assigned and
transferred to the Servicer pursuant to Section 3.03.
"Account Owner" shall mean the Bank or any other 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 the Transferor.
"Addition Date" shall mean (a) with respect to Aggregate Addition
Accounts and New Accounts, the date from and after which such Aggregate Addition
Accounts and New Accounts are to be included as Accounts pursuant to subsection
2.09(a), (b) or (d), and (b) with respect to Participation Interests, the date
from and after which such Participation Interests are to be included as assets
of the Trust pursuant to subsection 2.09(a) or (b).
"Additional Account" shall mean each New Account and each Aggregate
Addition Account.
"Additional Cut-Off Date" shall mean (a) with respect to Aggregate
Addition Accounts or Participation Interests, the date specified as such in the
notice delivered with respect thereto pursuant to subsection 2.09(c) and (b)
with respect to New
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Accounts, the later of the dates on which such New Accounts are originated or
designated pursuant to subsection 2.09(d).
"Additional Transferor" shall have the meaning specified in
subsection 2.09(g).
"Adverse Effect" shall mean, with respect to any action, that such
action will (a) result in the occurrence of an Amortization Event, a
Reinvestment Event or an Event of Default, (b) materially adversely affect the
amount or timing of distributions to be made to the Noteholders of any Series or
Class pursuant to this Agreement, the Indenture or the related Indenture
Supplement or (c) materially and adversely affect the rights and obligations of
any Series Enhancer of any Series or Class pursuant to this Agreement, the
Indenture or the related Indenture Supplement.
"Affiliate" shall mean, with respect to any specified Person, any
other Person controlling or controlled by or under common control with such
specified Person. For the purposes of this definition, "CONTROL" shall mean the
power to direct the management and policies of a Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "CONTROLLING" and "CONTROLLED" have meanings correlative to the
foregoing.
"Aggregate Addition" shall mean the designation of additional
Eligible Accounts, other than New Accounts, to be included as Accounts or of
Participation Interests to be included as Trust Assets pursuant to subsection
2.09(a) or (b).
"Aggregate Addition Account" shall mean each Eligible Account
designated pursuant to subsection 2.09(a) or (b) to be included as an Account
and identified in the computer file or microfiche list delivered to the Owner
Trustee by the Transferor pursuant to Sections 2.01 and 2.09(h).
"Agreement" shall mean this Transfer and Servicing Agreement, as the
same may be amended, supplemented or otherwise modified from time to time.
"Amortization Event" shall have the meaning specified in the
Indenture.
"Appointment Date" shall have the meaning specified in Section 6.01.
"Assignment" shall have the meaning specified in subsection 2.09(h).
"Authorized Newspaper" shall mean any newspaper or newspapers of
general circulation in the Borough of Manhattan, City of New York, printed in
the English language (and, with respect to any Series or Class, if and so long
as the Notes of such Series are listed on the Luxembourg Stock Exchange and such
Exchange shall so require, in Luxembourg, printed in any language satisfying the
requirements of such Exchange) and customarily published on each business day at
such place, whether or not published on Saturdays, Sundays or holidays.
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"Bank" shall mean Household Bank (SB), N.A., and its successors and
permitted assigns.
"Bankruptcy Code" shall have the meaning specified in subsection
4.02(a)(i)(x).
"Bearer Notes" shall have the meaning specified in the Indenture.
"Business Day" shall mean any day other than (a) a Saturday or
Sunday or (b) any other day on which national banking associations or state
banking institutions in New York City, New York, Delaware, Nevada or any other
State in which the principal executive offices of the Bank, the Servicer, the
Owner Trustee, the Indenture Trustee or other Account Owner, as the case may be,
are located, are authorized or obligated by law, executive order or governmental
decree to be closed or (c) for purposes of any particular Series, any other day
specified in the related Indenture Supplement.
"Class" shall have the meaning specified in the Indenture.
"Closing Date" shall mean, with respect to any Series, the closing
date specified in the related Indenture Supplement.
"Collections" shall mean all payments by or on behalf of Obligors
(including Insurance Proceeds) received in respect of the Receivables, in the
form of cash, checks, wire transfers, electronic transfers, ATM transfers or any
other form of payment in accordance with a Credit Agreement in effect from time
to time and all other amounts specified by this Agreement, the Indenture or any
Indenture Supplement as constituting Collections. As specified in any
Participation Interest Supplement or Indenture Supplement, Collections shall
include amounts received with respect to any related Participation Interests as
specified therein. All Recoveries with respect to Receivables previously
charged-off as uncollectible will be treated as Collections of Finance Charge
and Administrative Receivables.
"Commission" shall mean the Securities and Exchange Commission and
its successors in interest.
"Company" shall mean HRSI Funding, Inc. II, a Delaware corporation,
and its successors and permitted assigns.
"Corporate Trust Office" shall have the meaning (a) when used in
respect of the Owner Trustee, specified in the Trust Agreement and (b) when used
in respect of the Indenture Trustee, specified in the Indenture.
"Coupon" shall have the meaning specified in the Indenture.
"Credit Agreement" shall mean, with respect to a revolving credit
account, the agreements between an Account Owner and the Obligor governing the
terms and conditions of such account, as such agreements may be amended,
modified or otherwise
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changed from time to time and as distributed (including any amendments and
revisions thereto) to holders of such account.
"Credit Guidelines" shall mean the respective policies and
procedures of the Bank, HRAC, the Servicer, and/or any other Account Owner, as
the case may be, as such policies and procedures may be amended from time to
time, (a) relating to the operation of its credit business, which generally are
applicable to its portfolio of revolving credit accounts or, in the case of an
Account Owner that has only a portion of its portfolio subject to a Receivables
Purchase Agreement, applicable to such portion of its portfolio, and in each
case which are consistent with prudent practice, including the policies and
procedures for determining the creditworthiness of Obligors and the extension of
credit to Obligors, and (b) relating to the maintenance of credit accounts and
collection of receivables created thereunder.
"Date of Processing" shall mean, with respect to any transaction or
receipt of Collections, the date on which such transaction is first recorded on
the Servicer's computer file of revolving credit accounts (without regard to the
effective date of such recordation).
"Defaulted Amount" shall mean, with respect to any Due Period, an
amount (which shall not be less than zero) equal to (a) the amount of Principal
Receivables which became Defaulted Receivables in such Due Period, minus (b) the
amount of any Defaulted Receivables of which the Transferor or the Servicer
became obligated to accept reassignment or assignment in accordance with the
terms of this Agreement during such Due Period; provided, however, that, if an
Insolvency Event occurs with respect to the Transferor, the amount of such
Defaulted Receivables which are subject to reassignment to the Transferor in
accordance with the terms of this Agreement shall not be added to the sum so
subtracted and, if any of the events described in subsection 7.01(d) occur with
respect to the Servicer, the amount of such Defaulted Receivables which are
subject to reassignment or assignment to the Servicer in accordance with the
terms of this Agreement shall not be added to the sum so subtracted.
"Defaulted Receivables" shall mean, with respect to any Due Period
and any Pool and related Group, all Principal Receivables which are charged off
as uncollectible in such Due Period in accordance with the Credit Guidelines and
the Servicer's customary and usual servicing procedures for servicing revolving
credit accounts. A Principal Receivable shall become a Defaulted Receivable on
the day on which such Principal Receivable is recorded as charged-off on the
Servicer's computer file of revolving credit accounts.
"Discount Option Date" shall mean each date on which a Discount
Percentage designated by the Transferor pursuant to Section 2.12 takes effect.
"Discount Option Receivable, Collections" shall mean on any Date of
Processing occurring after a Discount Option Date occurs, the product of (a) a
fraction the numerator of which is the Discount Option Receivables and the
denominator of which is the sum of the Principal Receivables and the Discount
Option Receivables in each case
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(for both the numerator and the denominator) at the end of the preceding Due
Period and (b) Collections of Principal Receivables on such Date of Processing
(without giving effect to the proviso in the definition of Principal
Receivables).
"Discount Option Receivables" shall have the meaning specified in
Section 2.12. The aggregate amount of Discount Option Receivables outstanding on
any Date of Processing occurring on or after a Discount Option Date shall equal
the sum of (a) the aggregate Discount Option Receivables at the end of the prior
Date of Processing (which amount, prior to the Discount Option Date, shall be
zero) plus (b) any new Discount Option Receivables created on such Date of
Processing minus (c) any Discount Option Receivables Collections received on
such Date of Processing. Discount Option Receivables on any Date of Processing
shall mean the product of the amount of any Principal Receivables outstanding on
such Date of Processing (without giving effect to the proviso in the definition
of Principal Receivables) and the Discount Percentage.
"Discount Percentage" shall mean the percentages, if any, designated
by the Transferor pursuant to Section 2.12.
"Distribution Date" shall mean, with respect to any Series, the date
specified in the applicable Indenture Supplement.
"Document Delivery Date" shall have the meaning specified in
subsection 2.09(h).
"Dollars", "$" or "U.S. $" shall mean United States dollars.
"Due Period" shall have the meaning specified in the Indenture.
"Eligible Account" shall mean a revolving credit account owned by
the Bank in the case of the Initial Accounts on the Initial Cut-Off Date, or the
Bank or other Account Owner, in the case of Additional Accounts which, as of the
Initial Cut-Off Date with respect to an Initial Account or as of the Additional
Cut-Off Date with respect to an Additional Account meets the following
requirements:
(a) is a revolving credit account in existence and maintained by the
Bank or other Account Owner, as the case may be;
(b) is payable in Dollars;
(c) has an Obligor who has provided, as his most recent billing
address, an address located in the United States or its territories,
possessions or military bases provided, however, that as of any date of
determination, up to 1% of the Principal Receivables arising under the
revolving credit accounts may have account obligors who have provided as
their billing addresses, addresses outside of the United States;
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(d) except as provided below, has an Obligor who has not been
identified by the Servicer in its computer files as being currently
involved in a voluntary or involuntary bankruptcy proceeding;
(e) has not been identified as an account with respect to which (i)
the related card, if any, has been lost or stolen or (ii) the related
account number has been stolen;
(f) has not been sold or pledged to any other party except for any
sale to another Account Owner that has either entered into a Receivables
Purchase Agreement or is an Additional Transferor;
(g) does not have receivables which have been sold or pledged to any
other party other than any Transferor;
(h) with respect to the Initial Accounts, is an account in existence
and maintained by the Bank or other Account Owner as of the Initial
Cut-Off Date, or as of the Additional Cut-Off Date with respect to
Additional Accounts;
(i) except as provided below, does not have any Receivables that are
Defaulted Receivables; and
(j) does not have any Receivables that have been identified by the
Servicer or the relevant Obligor as having been incurred as a result of
fraudulent use of any related credit card, if any, or related account
number.
Eligible Accounts may include Accounts, the Receivables of which
have been charged off, or with respect to which the Servicer believes the
related Obligor is bankrupt, in each case as of the Initial Cut-Off Date, with
respect to the Initial Accounts, and as of the related Additional Cut-Off Date,
with respect to Additional Accounts; provided, that (a) the balance of all
Receivables included in such Accounts is reflected on the books and records of
such Transferor (and is treated for purposes of this Agreement) as "zero" and
(b) charging privileges with respect to all such Accounts have been canceled in
accordance with the relevant Credit Guidelines.
"Eligible Receivable" shall mean each Receivable:
(a) which has arisen in an Eligible Account;
(b) which was created in compliance in all material respects with
all Requirements of Law applicable to the institution which owned such
Receivable at the time of its creation and pursuant to a Credit Agreement
which complies in all material respects with all Requirements of Law
applicable to the Bank or other Account Owner, as the case may be;
(c) with respect to which all material consents, licenses, approvals
or authorizations of, or registrations or declarations with, any
Governmental Authority required to be obtained, effected or given in
connection with the
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creation of such Receivable or the execution, delivery and performance by
the Bank or other Account Owner, as the case may be, of the Credit
Agreement pursuant to which such Receivable was created, have been duly
obtained, effected or given and are in full force and effect;
(d) as to which at the time of the transfer of such Receivable to
the Trust, the Transferor or the Trust will have good and marketable title
thereto and which is free and clear of all Liens (other than any Lien for
municipal or other local taxes if such taxes are not then due and payable
or if the Transferor is then contesting the validity thereof in good faith
by appropriate proceedings and has set aside on its books adequate
reserves with respect thereto);
(e) which has been the subject of either a valid transfer and
assignment from the Transferor to the Trust of all the Transferor's right,
title and interest therein (including any proceeds thereof), or the grant
of a first priority perfected security interest therein (and in the
proceeds thereof), effective until the termination of the Trust;
(f) which at all times will be the legal, valid and binding payment
obligation of the Obligor thereon enforceable against such Obligor in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws, now or hereafter in effect, affecting the enforcement of
creditors' rights in general and except as such enforceability may be
limited by general principles of equity (whether considered in a suit at
law or in equity);
(g) which, at the time of transfer to the Trust, has not been waived
or modified except as permitted in accordance with the Credit Guidelines
and which waiver or modification is reflected in the Servicer's computer
file of revolving credit accounts;
(h) which, at the time of transfer to the Trust, is not subject to
any right of rescission, setoff, counterclaim or any other defense
(including defenses arising out of violations of usury laws) of the
Obligor, other than defenses arising out of applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights in general;
(i) as to which, at the time of transfer to the Trust, the Bank or
other Account Owner, as the case may be, has satisfied all of its
obligations required to be satisfied by such time;
(j) as to which, at the time of transfer to the Trust, none of the
Transferor, the Bank or any other Account Owner, as the case may be, has
taken any action which would impair, or omitted to take any action the
omission of which would impair, the rights of the Trust or the Noteholders
therein; and
(k) which constitutes either an "account" or a "general intangible"
under and as defined in Article 9 of the UCC as then in effect in the
State of
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Delaware and any other state where the filing of a financing statement is
required to perfect the Trust's interest in the Receivables and the
proceeds thereof.
"Eligible Servicer" shall mean the Indenture Trustee or, if the
Indenture Trustee is not acting as Servicer, an entity which, at the time of its
appointment as Servicer, (a) is servicing a portfolio of revolving credit
accounts, (b) is legally qualified and has the capacity to service the Accounts,
(c) in the sole determination of the Indenture Trustee, which determination
shall be conclusive and binding, has demonstrated the ability to service
professionally and competently a portfolio of similar accounts in accordance
with high standards of skill and care, (d) is qualified to use the software that
is then being used to service the Accounts or obtains the right to use or has
its own software which is adequate to perform its duties under this Agreement
and (e) has a net worth of at least $50,000,000 as of the end of its most recent
fiscal quarter.
"Event of Default" shall have the meaning specified in the
Indenture.
"FDIA" shall mean the Federal Deposit Insurance Act, as amended by
the Financial Institutions Reform, Recovery and Enforcement Act of 1989 and as
further amended from time to time.
"FDIC" shall mean the Federal Deposit Insurance Corporation or any
successor.
"Finance Charge and Administrative Receivables" shall mean with
respect to any Pool, all amounts billed to the Obligors on any Account in
respect of (a) all Periodic Rate Finance Charges, (b) cash advance fees, (c)
annual membership fees and annual service charges, (d) Late Fees, (e) Overlimit
Fees, (f) Discount Option Receivables and (g) any other fees or charges with
respect to the Accounts designated by the Transferor at any time and from time
to time to be included as Finance Charge and Administrative Receivables. Finance
Charge and Administrative Receivables shall also include the interest portion of
Participation Interests as shall be determined pursuant to, and only if so
provided in, the applicable Participation Interest Supplement or Indenture
Supplement for any Series.
"Fitch" shall mean Fitch, Inc. or its successors.
"Governmental Authority" shall mean the United States of America,
any state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Group" shall have the meaning set forth in the Indenture.
"Household Finance Corporation" shall mean Household Finance
Corporation, a Delaware corporation, and its successors and permitted assigns.
"HRAC" shall mean Household Receivables Acquisition Company, a
Delaware corporation, and its successors and permitted assigns.
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"HRAC RPA" shall mean the Receivables Purchase Agreement, dated as
of ________, 2001, between the Bank and HRAC, as amended from time to time, and
includes any other receivables purchase agreement, substantially in the form of
such agreement entered into between HRAC and an Account Owner or other
Affiliated entity in the future.
"HRSIFI" shall mean HRSI Funding, Inc., a Delaware corporation, and
its successors and permitted assigns.
"HRSFI RPA" shall mean the Receivables Purchase Agreement, dated as
of ________, 2001, between the Bank, HRSIFI and HRAC, as amended from time to
time, and includes any other receivables purchase agreement, substantially in
the form of such agreement entered into between HRAC and an Account Owner or
other Affiliated entity in the future.
"Indenture" shall mean the Master Indenture, dated as of ______,
2001 between the Issuer and the Indenture Trustee, as the same may be amended,
supplemented or otherwise modified from time to time.
"Indenture Supplement" shall have the meaning specified in the
Indenture.
"Indenture Trustee" shall mean U.S. Bank National Association, in
its capacity as trustee under the Indenture, its successors in interest and any
successor indenture trustee under the Indenture.
"Ineligible Receivables" shall have the meaning specified in
subsection 2.05(a).
"Initial Account" shall mean each revolving credit account
established pursuant to a Credit Agreement between the Bank and any Obligor,
which account is identified in the computer file or microfiche list delivered to
the Owner Trustee by the Transferor pursuant to Section 2.01 on the Initial
Issuance Date.
"Initial Cut-Off Date" shall mean ___________.
"Initial Issuance Date" shall mean ___________, the date the
Transferor's Certificate is issued by the Trust to the Transferor pursuant to
the Trust Agreement.
"Insolvency Event" shall have the meaning specified in Section 6.01.
"Insurance Proceeds" shall mean any amounts received pursuant to the
payment of benefits under any credit life insurance policies, credit disability
or unemployment insurance policies covering any Obligor with respect to
Receivables under such Obligor's Account.
"Invested Amount" shall mean, with respect to any Series and for any
date, an amount equal to the invested amount or adjusted invested amount, as
applicable, specified in the related Indenture Supplement.
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"Issuer" shall mean the Trust.
"Late Fees" shall have the meaning specified in the Credit Agreement
applicable to each Account for late fees or similar terms.
"Lien" shall mean any mortgage, deed of trust, pledge,
hypothecation, assignment, deposit arrangement, equity interest, encumbrance,
lien (statutory or other), preference, participation interest, priority or other
security agreement or preferential arrangement of any kind or nature whatsoever,
including any conditional sale or other title retention agreement, any financing
lease having substantially the same economic effect as any of the foregoing and
the filing of any financing statement under the UCC or comparable law of any
jurisdiction to evidence any of the foregoing; provided, however, that any
assignment permitted by subsection 3.06(b) of the Trust Agreement or Section
4.02 of, and the lien created by, this Agreement shall not be deemed to
constitute a Lien.
"Merchant Agreement" shall mean (a) a written agreement between the
Bank or other Account Owner, as the case may be, and any merchant pursuant to
which such merchant sells, assigns or otherwise transfers to the Bank or other
Account Owner, as the case may be, certain Credit Agreements between such
merchant and Obligors, including all such merchant's rights and interests in the
Accounts and Receivables arising under such Credit Agreements, or (b) a written
agreement between the Bank or other Account Owner, as the case may be, and any
merchant or co-branding participant establishing private label or co-branded
credit programs pursuant to which the Bank or other Account Owner will enter
into Credit Agreements with Obligors.
"Monthly Servicing Fee" shall have the meaning specified in Section
3.02.
"Moody's" shall mean Xxxxx'x Investors Service, Inc., or its
successor.
"New Account" shall mean each revolving credit account established
pursuant to a Credit Agreement, which account is designated pursuant to
subsection 2.09(d) to be included as an Account and is identified in the
computer file or microfiche list delivered to the Owner Trustee by the
Transferor pursuant to Section 2.01 and subsection 2.09(h).
"Note Owner" shall have the meaning specified in the Indenture.
"Note Register" shall have the meaning specified in the Indenture.
"Noteholder" or "Holder" shall have the meaning specified in the
Indenture.
"Notices" shall have the meaning specified in subsection 9.04(a).
"Obligor" shall mean, with respect to any Account, the Person or
Persons obligated to make payments with respect to such Account, including any
guarantor thereof, but excluding any merchant.
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"Officer's Certificate" shall have the meaning specified in the
Indenture.
"Opinion of Counsel" shall have the meaning specified in the
Indenture.
"Overlimit Fees" shall have the meaning specified in the Credit
Agreement applicable to each Account for overlimit fees or similar terms if such
fees are provided for with respect to such Account.
"Owner Trustee" shall mean Wilmington Trust Company in its capacity
as owner trustee under the Trust Agreement, its successors in interest and any
successor owner trustee under the Trust Agreement.
"Participation Interest Supplement" shall mean a supplement to this
Agreement entered into pursuant to subsection 2.09(a)(ii) or (b) in connection
with the conveyance of Participation Interests to the Trust.
"Participation Interests" shall have the meaning specified in
subsection 2.09(a)(ii).
"Paying Agent" shall have the meaning specified in the Indenture.
"Periodic Rate Finance Charges" shall have the meaning specified in
the Credit Agreement applicable to each Account for finance charges (due to
periodic rate) or any similar term.
"Person" shall mean any legal person, including any individual,
corporation, limited liability company, partnership, joint venture, association,
joint-stock company, trust, unincorporated organization, governmental entity or
other entity of similar nature.
"Pool" shall have the meaning specified in the Indenture.
"Preferred Stock" shall mean the preferred shares of the Transferor
designated as such, with a par value of $1.00 per share and a liquidation value
of $1.00 per share.
"Principal Receivables" shall mean with respect to any Pool all
Receivables other than Finance Charge and Administrative Receivables or
Defaulted Receivables; provided, however, that after a Discount Option Date,
Principal Receivables on any Date of Processing thereafter shall mean Principal
Receivables as otherwise determined pursuant to this definition minus the amount
of any Discount Option Receivables. Principal Receivables shall also include the
principal portion of Participation Interests as shall be determined pursuant to,
and only if so provided in, the applicable Participation Interest Supplement or
Indenture Supplement for any Series. In calculating the aggregate amount of
Principal Receivables on any day, the amount of Principal Receivables shall be
reduced by the aggregate amount of credit balances in the Accounts on such day.
Any Principal Receivables which the Transferor is unable to
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transfer as provided in Section 2.11 shall not be included in calculating the
amount of Principal Receivables.
"Rating Agency" shall have the meaning specified in the Indenture.
"Rating Agency Condition" shall have the meaning specified in the
Indenture.
"Reassignment" shall have the meaning specified in Section 2.10.
"Receivables" shall mean all amounts shown on the Servicer'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. Receivables which become Defaulted Receivables will cease to be
included as Receivables as of the day on which they become Defaulted
Receivables. Receivables, where applicable, shall include also the interest and
principal portion of Participation Interests.
"Receivables Purchase Agreement" shall mean the applicable HRAC RPA,
HRSIFI RPA or Transferor RPA.
"Recoveries" shall mean all amounts received (net of out-of-pocket
costs of collection) including Insurance Proceeds, which is reasonably estimated
by the Servicer to be attributable to Defaulted Receivables, including the net
proceeds of any sale of such Defaulted Receivables by the Transferor.
"Registered Notes" shall have the meaning specified in the
Indenture.
"Reinvestment Event" shall have the meaning specified in the
Indenture.
"Related Account" shall mean an Account with respect to which a new
account number has been issued by the applicable Account Owner or Servicer or
the applicable Transferor under circumstances resulting from a lost or stolen
credit card or account number, and not requiring standard application and credit
evaluation procedures under the Credit Guidelines.
"Removal Date" shall have the meaning specified in Section 2.10.
"Removed Accounts" shall have the meaning specified in Section 2.10.
"Required Delivery Date" shall have the meaning specified in
subsection 2.01(c).
"Required Designation Date" shall have the meaning specified in
subsection 2.09(a).
"Required Minimum Principal Balance" shall mean, unless otherwise
provided in an Indenture Supplement relating to a Series having a Paired Series,
with
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respect to any date and any Pool (a) the sum of the Series Adjusted Invested
Amounts for each Series outstanding on such date in such Pool plus the Required
Transferor Amount on such date, minus (b) the Special Funding Amount.
"Required Transferor Amount" shall have the meaning specified in the
Indenture.
"Requirements of Law" shall mean any law, treaty, rule or
regulation, or determination of an arbitrator or Governmental Authority, whether
Federal, state or local (including usury laws, the Federal Truth in Lending Act
and Regulation B and Regulation Z of the Board of Governors of the Federal
Reserve System), and, when used with respect to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of such
Person.
"Revolving Credit Agreement" shall mean the revolving credit
agreement by and between the Transferor and Household Finance Corporation, dated
as of _________, as such agreement may be amended from time to time in
accordance therewith, and any substantially similar agreement entered into
between any lender and the Transferor or any Additional Transferor in the future
in accordance with the provisions hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Series" shall have the meaning specified in the Indenture.
"Series Account" shall have the meaning specified in the Indenture.
"Series Adjusted Invested Amount" shall have the meaning specified
in the related Indenture Supplement.
"Series Enhancement" shall have the meaning specified in the
Indenture.
"Series Enhancer" shall have the meaning specified in the Indenture.
"Series Portfolio Yield" shall have the meaning specified in the
related Indenture Supplement.
"Service Transfer" shall have the meaning specified in Section 7.01.
"Servicer" shall mean Household Finance Corporation, in its capacity
as Servicer pursuant to this Agreement and, after any Service Transfer, the
Successor Servicer.
"Servicer Default" shall have the meaning specified in Section 7.01.
"Servicing Fee" shall have the meaning specified in Section 3.02.
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"Special Funding Account" shall have the meaning specified in the
Indenture.
"Special Funding Amount" shall have the meaning specified in the
Indenture.
"Standard & Poor's" shall mean Standard & Poor's Ratings Group, or
its successor.
"Successor Servicer" shall have the meaning specified in subsection
7.02(a).
"Supplemental Certificate" shall have the meaning specified in the
Trust Agreement.
"Tax Opinion" shall have the meaning specified in the Indenture.
"Termination Notice" shall have the meaning specified in subsection
7.01(d).
"Transfer Agent and Registrar" shall have the meaning specified in
the Indenture.
"Transfer Restriction Event" shall have the meaning specified in
Section 2.11.
"Transferor" shall mean (a) the Company, a wholly owned special
purpose subsidiary of Household Finance Corporation and incorporated in the
State of Delaware, or its successor or permitted assigns under this Agreement
and (b) any Additional Transferor or Transferors. References to "EACH
TRANSFEROR" shall refer to each entity mentioned in the preceding sentence and
references to "THE TRANSFEROR" shall refer to all of such entities.
"Transferor RPA" shall mean the Receivables Purchase Agreement,
dated as of ________, 2001, between HRAC and the Transferor, as amended from
time to time, and includes any other receivables purchase agreement,
substantially in the form of such agreement entered into between the Transferor
and an Account Owner or other Affiliated entity in the future.
"Transferor Amount" shall have the meaning specified in the
Indenture.
"Transferor Certificate" shall have the meaning specified in the
Trust Agreement.
"Transferor Certificates" shall mean, collectively, the Transferor
Certificate and any outstanding Supplemental Certificates.
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"Transferred Account" shall mean each account into which an Account
shall be transferred 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.
"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 Trust Agreement relating to the
Trust, dated as of ________, between the Company and the Owner Trustee, as the
same may be amended, supplemented or otherwise modified from time to time.
"Trust Assets" shall have the meaning specified in Section 2.01.
"UCC" shall mean the Uniform Commercial Code, as amended from time
to time, as in effect in any specified jurisdiction.
"Zero Balance Account" shall mean an account which, according to the
Servicer's records, has had a balance of zero for a period of time in accordance
with the Credit Guidelines.
Section 1.02. Other Definitional Provisions.
(a) With respect to any Series, all terms used herein and not
otherwise defined herein shall have meanings ascribed to them in the Trust
Agreement, the Indenture or the related Indenture Supplement, as applicable.
(b) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms not
defined in this Agreement or in any such certificate or other document, and
accounting terms partly defined in this Agreement or in any such certificate or
other document to the extent not defined, shall have the respective meanings
given to them under generally accepted accounting principles or regulatory
accounting principles, as applicable and as in effect on the date of this
Agreement. To the extent that the definitions of accounting terms in this
Agreement or in any such certificate or other document are inconsistent with the
meanings of such terms under generally accepted accounting principles or
regulatory accounting principles in the United States, the definitions contained
in this Agreement or in any such certificate or other document shall control.
(d) Any reference to each Rating Agency shall only apply to any
specific rating agency if such rating agency is then rating any outstanding
Series.
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(e) Unless otherwise specified, references to any amount as on
deposit or outstanding on any particular date shall mean such amount at the
close of business on such day.
(f) The words "HEREOF," "HEREIN" and "HEREUNDER" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement; references to any
subsection, Section, Schedule or Exhibit are references to subsections,
Sections, Schedules and Exhibits in or to this Agreement unless otherwise
specified; and the term "INCLUDING" means "INCLUDING WITHOUT LIMITATION."
ARTICLE II
CONVEYANCE OF RECEIVABLES
Section 2.01. Conveyance of Receivables(a) . By execution of this
Agreement, each of the Company and, in the case of Additional Accounts, the
Company or, if applicable, any Additional Transferor does hereby transfer,
assign, set over and otherwise convey to the Owner Trustee on behalf of the
Trust, 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 Initial Cut-Off Date, in the case of Receivables arising in the Initial
Accounts, and on each Additional Cut-Off Date, in the case of Receivables
arising in the Additional Accounts, and in each case thereafter created from
time to time until the termination of the Trust, all Recoveries allocable to the
Trust as provided herein, all monies due or to become due and all amounts
received or receivable with respect thereto and all proceeds (including
"proceeds" as defined in the UCC) thereof. Such property, together with all
monies and other property credited to the Collection Account, the Series
Accounts and the Special Funding Account (including any subaccounts of such
account), the Preferred Stock of the Transferor, the property conveyed to the
Owner Trustee on behalf of the Trust under any Participation Interest Supplement
and the right to receive Recoveries attributed to Obligor charges for
merchandise and services in the Accounts shall constitute the assets of the
Trust (the "TRUST ASSETS"). The foregoing does not constitute and is not
intended to result in the creation or assumption by the Trust, the Owner
Trustee, the Indenture Trustee or any Noteholder of any obligation of HRAC, the
Bank or other Account Owner or the Transferor, any Additional Transferor, the
Servicer or any other Person in connection with the Accounts or the Receivables
or under any agreement or instrument relating thereto, including any obligation
to Obligors, merchant banks, merchants clearance systems or insurers. The
Obligors shall not be notified in connection with the creation of the Trust of
the transfer, assignment, set-over and conveyance of the Receivables to the
Owner Trustee on behalf of the Trust.
(b) Each Transferor agrees to record and file, at its own expense,
financing statements (and continuation statements when applicable) with respect
to the Receivables conveyed by such Transferor existing on the Initial Cut Off
Date and thereafter created meeting the requirements of applicable state law in
such manner and in
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such jurisdictions as are necessary to perfect, and maintain the perfection of,
the transfer and assignment of its interest in such Receivables to the Owner
Trustee on behalf of the Trust, and to deliver a file stamped copy of each such
financing statement or other evidence of such filing to the Owner Trustee as
soon as practicable after the first Closing Date, in the case of Receivables
arising in the Initial Accounts, and (if any additional filing is so necessary)
as soon as practicable after the applicable Addition Date, in the case of
Receivables arising in Additional Accounts. The Owner Trustee shall be under no
obligation whatsoever to file such financing or continuation statements or to
make any other filing under the UCC in connection with such transfer and
assignment.
(c) Each Transferor further agrees, at its own expense, on or prior
to (A) the first Closing Date, in the case of the Initial Accounts, (B) the
applicable Addition Date, in the case of Additional Accounts specified in the
Transferor RPA, and (C) the applicable Removal Date, in the case of Removed
Accounts specified in the Transferor RPA, (i) to indicate or cause to be
indicated in the appropriate computer files that Receivables created (or
reassigned, in the case of Removed Accounts) in connection with the Accounts
have been conveyed to the Owner Trustee on behalf of the Trust pursuant to this
Agreement (or conveyed to each such Transferor or its designee in accordance
with Section 2.10, in the case of Removed Accounts) by including (or deleting in
the case of Removed Accounts) in such computer files the code that identifies
each such Account and (ii) on or prior to (A) the Closing Date, in the case of
the Initial Accounts, (B) the date that is five Business Days after the
applicable Addition Date, in the case of designation of Aggregate Addition
Accounts, (C) the Distribution Date on which the Opinion of Counsel is required
to be delivered with respect to the Due Period which includes the applicable
Additional Date, in the case of New Accounts, and (D) the date that is five
Business Days after the applicable Removal Date, in the case of Removed Accounts
(any of (A), (B), (C) or (D), the "Required Delivery Date"), to deliver to the
Owner Trustee a computer file or microfiche list containing a true and complete
list of all such Accounts specifying for each such Account, as of the Initial
Cut-Off Date, in the case of the Initial Accounts, the applicable Additional
Cut-Off Date in the case of Additional Accounts, and the applicable Removal Date
in the case of Removed Accounts, (1) its account number, (2) the aggregate
amount outstanding in such Account, and (3) the aggregate amount of Principal
Receivables outstanding in such Account. Each such file or list, as
supplemented, from time to time, to reflect Additional Accounts and Removed
Accounts, shall be marked as SCHEDULE 1 to this Agreement and is hereby
incorporated into and made a part of this Agreement. Each Transferor further
agrees not to alter the code referenced in this paragraph with respect to any
Account during the term of this Agreement unless and until such Account becomes
a Removed Account.
(d) If the arrangements with respect to the Receivables hereunder
shall constitute a loan and not a purchase and sale of such Receivables, it is
the intention of the parties hereto that this Agreement shall constitute a
security agreement under applicable law, and that each Transferor shall be
deemed to have granted and does hereby grant to the Owner Trustee on behalf of
the Trust a first priority perfected security interest in all of such
Transferor's right, title and interest, whether now owned or hereafter acquired,
in, to and under the Receivables and the other Trust Assets conveyed by such
Transferor to secure its obligations hereunder.
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Section 2.02. Acceptance by Owner Trustee.
(a) The Owner Trustee hereby acknowledges its acceptance on behalf
of the Trust of all right, title and interest to the property, now existing and
hereafter created, conveyed pursuant to Section 2.01. The Owner Trustee further
acknowledges that, prior to or simultaneously with the execution and delivery of
this Agreement, the Transferor delivered to the Owner Trustee the computer file
or microfiche list relating to the Initial Accounts described in subsection
2.01(c). The Owner Trustee shall maintain a copy of SCHEDULE 1, as delivered
from time to time, at the Corporate Trust Office.
(b) The Owner Trustee hereby agrees not to disclose to any Person
any of the account numbers or other information contained in the computer files
or microfiche lists marked as SCHEDULE 1 and delivered to the Owner Trustee,
from time to time, except (i) to a Successor Servicer or as required by a
Requirement of Law applicable to the Owner Trustee, (ii) in connection with the
performance of the Owner Trustee's duties hereunder, (iii) to the Indenture
Trustee in connection with its duties in enforcing the rights of Noteholders or
(iv) to bona fide creditors or potential creditors of any Account Owner, the
Bank, HRAC or any Transferor for the limited purpose of enabling any such
creditor to identify Receivables or Accounts subject to this Agreement or the
Receivables Purchase Agreements. The Owner Trustee agrees to take such measures
as shall be reasonably requested by any Transferor to protect and maintain the
security and confidentiality of such information and, in connection therewith,
shall allow each Transferor or its duly authorized representatives to inspect
the Owner Trustee's security and confidentiality arrangements as they
specifically relate to the administration of the Trust from time to time during
normal business hours upon prior written notice. The Owner Trustee shall provide
the applicable Transferor with notice five Business Days prior to disclosure of
any information of the type described in this subsection 2.02(b).
(c) The Owner Trustee shall have no power to create, assume or incur
indebtedness or other liabilities in the name of the Trust other than as
contemplated in this Agreement and the Indenture.
Section 2.03. Representations and Warranties of Each Transferor
Relating to Such Transferor. Each Transferor hereby severally represents and
warrants to the Owner Trustee and the Trust (and agrees that the Indenture
Trustee may conclusively rely on each such representation and warranty in
authenticating the Notes) as of each Closing Date (but only if it was a
Transferor on such date) that:
(a) Organization and Good Standing. Such Transferor is a corporation
validly existing under the laws of the jurisdiction of its organization or
incorporation and has, in all material respects, full power and authority to own
its properties and conduct its business as presently owned or conducted, and to
execute, deliver and perform its obligations under this Agreement, any
Receivables Purchase Agreement to which it is a party and each applicable
Participation Interest Supplement.
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(b) Due Qualification. Such Transferor is duly qualified to do
business and is in good standing as a foreign corporation 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 specified in the applicable Receivables
Purchase Agreement with such Transferor or any Receivable conveyed to the Trust
by such Transferor unenforceable by such Transferor or the Trust or (ii) have a
material adverse effect on the Noteholders.
(c) Due Authorization. The execution and delivery of this Agreement,
the applicable Receivables Purchase Agreement and each applicable Participation
Interest Supplement by such Transferor and the order to the Owner Trustee to
have the Notes authenticated and delivered and the consummation by such
Transferor of the transactions provided for in this Agreement, the applicable
Receivables Purchase Agreement and each applicable Participation Interest
Supplement have been duly authorized by such Transferor by all necessary
corporate action on the part of such Transferor.
(d) No Conflict. The execution and delivery by such Transferor of
this Agreement, the applicable Receivables Purchase Agreement and each
applicable Participation Interest Supplement, and the performance of the
transactions contemplated by this Agreement, the applicable Receivables Purchase
Agreement and each applicable Participation Interest Supplement and the
fulfillment of the terms hereof and thereof applicable to such Transferor, will
not conflict with or violate any Requirements of Law applicable to such
Transferor or 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 such Transferor is a party or by
which it or its properties are bound.
(e) No Proceedings. There are no proceedings or investigations,
pending or, to the best knowledge of such Transferor, threatened against such
Transferor before any Governmental Authority (i) asserting the invalidity of
this Agreement, the applicable Receivables Purchase Agreement or any applicable
Participation Interest Supplement, (ii) seeking to prevent the consummation of
any of the transactions contemplated by this Agreement, the applicable
Receivables Purchase Agreement or any applicable Participation Interest
Supplement, (iii) seeking any determination or ruling that, in the reasonable
judgment of such Transferor, would materially and adversely affect the
performance by such Transferor of its obligations under this Agreement, the
applicable Receivables Purchase Agreement or any applicable Participation
Interest Supplement, (iv) seeking any determination or ruling that would
materially and adversely affect the validity or enforceability of this
Agreement, the applicable Receivables Purchase Agreement or any applicable
Participation Interest Supplement or (v) seeking to affect adversely the income
or franchise tax attributes of the Trust under the United States Federal or any
State income or franchise tax systems.
(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 such Transferor in connection with the
execution and delivery by
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such Transferor of this Agreement, the applicable Receivables Purchase Agreement
and each applicable Participation Interest Supplement and the performance of the
transactions contemplated by this Agreement, the applicable Receivables Purchase
Agreement and each applicable Participation Interest Supplement by such
Transferor have been duly obtained, effected or given and are in full force and
effect.
Section 2.04. Representations and Warranties of each Transferor
Relating to the Agreement and Any Participation Interest Supplement and the
Receivables.
(a) Representations and Warranties. Each Transferor hereby severally
represents and warrants to the Owner Trustee and the Trust as of the Initial
Issuance Date, each Closing Date and, with respect to Additional Accounts, as of
the related Addition Date (but only if, in either case, it was a Transferor on
such date and only with respect to Accounts it has designated on such date and
Receivables arising therein) that:
(i) this Agreement, the applicable Receivables Purchase
Agreement, each applicable Participation Interest Supplement and, in the
case of Additional Accounts, the related Assignment, each constitutes a
legal, valid and binding obligation of such Transferor enforceable against
such Transferor 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 Initial Cut-Off Date with respect to the
Initial Accounts and as of the related Additional Cut-Off Date with
respect to Additional Accounts, the portion of SCHEDULE 1 to this
Agreement under such Transferor's name, as supplemented to such date, is,
or will be on the Required Delivery Date in the case of Additional
Accounts, an accurate and complete listing in all material respects of all
the Accounts the Receivables in which were transferred by such Transferor
on the first Closing Date or the Addition Date, as the case may be, and
the information contained therein with respect to the identity of such
Accounts and the Receivables existing thereunder is, or will be on the
Required Delivery Date in the case of Additional Accounts, true and
correct in all material respects as of the Initial Cut-Off Date or such
Additional Cut-Off Date, as the case may be;
(iii) on the date each Receivable is conveyed to the Trust by
such Transferor, such Receivable has been conveyed to the Trust 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 such Transferor in connection with the
conveyance by such Transferor of Receivables to the Trust have been duly
obtained, effected or given and are in full force and effect;
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(v) either this Agreement or, in the case of Additional
Accounts, the related Assignment constitutes a valid sale, transfer and
assignment to the Trust of all right, title and interest of such
Transferor in the Receivables conveyed to the Trust by such Transferor and
the proceeds thereof and Recoveries identified as relating to the
Receivables conveyed to the Trust by such Transferor which have become
Defaulted Receivables or, if this Agreement or, in the case of Additional
Accounts, the related Assignment does not constitute a sale of such
property, it constitutes a grant of a first priority perfected "security
interest" (as defined in the UCC) in such property to the Trust, which, in
the case of existing Receivables and the proceeds thereof and said
Recoveries, is enforceable upon execution and delivery of this Agreement,
or, with respect to then existing Receivables in Additional Accounts, as
of the applicable Addition Date, and which will be enforceable with
respect to such Receivables hereafter and thereafter created and the
proceeds thereof upon such creation. Upon the filing of the financing
statements and, in the case of Receivables hereafter created and the
proceeds thereof, upon the creation thereof, the Trust shall have a first
priority perfected security or ownership interest in such property and
proceeds;
(vi) on the Initial Cut-Off Date, each Initial Account
specified in SCHEDULE 1 with respect to such Transferor is an Eligible
Account and, on the applicable Additional Cut-Off Date, each related
Additional Account specified in SCHEDULE 1 with respect to such Transferor
is an Eligible Account;
(vii) on the Initial Cut-Off Date, each Receivable then
existing and conveyed to the Trust by such Transferor is an Eligible
Receivable and, on the applicable Additional Cut-Off Date, each Receivable
contained in the related Additional Accounts and conveyed to the Trust by
such Transferor is an Eligible Receivable;
(viii) as of the date of the creation of any new Receivable in
an Account specified in the applicable Receivables Purchase Agreement,
such Receivable is an Eligible Receivable;
(ix) no selection procedures believed by such Transferor to be
materially adverse to the interests of the Noteholders have been used in
selecting such Accounts; and
(x) each of the Initial Accounts is a consumer revolving
credit account.
(b) Notice of Breach. The representations and warranties set forth
in Section 2.03, this Section 2.04 and subsection 2.09(f) shall survive the
transfers and assignments of the Receivables to the Trust, the pledge of the
Receivables to the Indenture Trustee pursuant to the Indenture, and the issuance
of the Notes. Upon discovery by any Transferor, the Servicer or the Owner
Trustee of a breach of any of the representations and warranties set forth in
Section 2.03, this Section 2.04 or subsection 2.09(f), the party discovering
such breach shall give notice to the other parties and to the
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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.
Section 2.05. Reassignment of Ineligible Receivables.
(a) Reassignment of Receivables. In the event (i) any representation
or warranty contained in subsection 2.04(a)(ii), (iii), (iv), (vi), (vii),
(viii) or (ix) 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 such
breach has a material adverse effect on any Receivable (which determination
shall be made without regard to whether funds are then available pursuant to any
Series Enhancement) unless cured within 60 days (or such longer period, not in
excess of 120 days, as may be agreed to by the Indenture Trustee and the
Servicer) after the earlier to occur of the discovery thereof by the Transferor
which conveyed such Receivables to the Trust or receipt by the Transferor of
written notice thereof given by the Owner Trustee, the Indenture Trustee or the
Servicer, or (ii) it is so provided in subsection 2.07(a) with respect to any
Receivables conveyed to the Trust by such Transferor, then such Transferor shall
accept reassignment of all Receivables in the related Account ("INELIGIBLE
RECEIVABLES") on the terms and conditions set forth in paragraph (b) below.
(b) Price of Reassignment. The Servicer shall deduct the portion of
such Ineligible Receivables reassigned to each Transferor which are Principal
Receivables from the aggregate amount of the Principal Receivables used to
calculate the Transferor Amount. In the event that, following the exclusion of
such Principal Receivables from the calculation of the Transferor Amount, the
Transferor Amount would be less than the Required Transferor Amount, not later
than 1:00 P.M., New York City time, on the first Distribution Date following the
Due Period in which such reassignment obligation arises, the applicable
Transferor shall make a deposit into the Special Funding Account in immediately
available funds in an amount equal to the amount by which the Transferor Amount
would be below the Required Transferor Amount (up to the amount of such
Principal Receivables).
Upon reassignment of any Ineligible Receivable, the Trust shall
automatically and without further action be deemed to transfer, assign, set over
and otherwise convey to the applicable Transferor or its designee, without
recourse, representation or warranty, all the right, title and interest of the
Owner Trustee and the Trust in and to such Ineligible Receivable, all Recoveries
related thereto, all monies and amounts due or to become due and all proceeds
thereof and such reassigned Ineligible Receivable shall be treated by the Owner
Trustee and the Trust as collected in full as of the date on which it was
transferred. The obligation of each Transferor to accept reassignment of any
Ineligible Receivables conveyed to the Trust by such Transferor, and to make the
deposits, if any, required to be made to the Special Funding Account as provided
in this Section, shall constitute the sole remedy respecting the event giving
rise to such obligation available to Noteholders (or the Indenture Trustee on
behalf of the Noteholders) or any Series Enhancer. Notwithstanding any other
provision of this subsection 2.05(b), a reassignment of an Ineligible Receivable
in excess of the amount that would cause the Transferor Amount to be less than
the Required Transferor Amount
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shall not occur if the applicable Transferor fails to make any deposit required
by this subsection 2.05(b) with respect to such Ineligible Receivable. The Owner
Trustee shall execute such documents and instruments of transfer or assignment
and take such other actions as shall reasonably be requested and provided by the
applicable Transferor to effect the conveyance of such Ineligible Receivables
pursuant to this subsection 2.05(b), but only upon receipt of an Officer's
Certificate from such Transferor that states that all conditions set forth in
this Section 2.05 have been satisfied.
Section 2.06. Reassignment of Trust Portfolio. In the event any
representation or warranty of a Transferor set forth in subsection 2.03(a) or
(c) or subsection 2.04(a)(i) or (v) is not true and correct in any material
respect and such breach has a material adverse effect on the Receivables or
Participation Interests conveyed to the Trust by such Transferor or the
availability of the proceeds thereof to the Trust (which determination shall be
made without regard to whether funds are then available pursuant to any Series
Enhancement), then either the Owner Trustee, the Indenture Trustee or the
Holders of Notes evidencing not less than 50% of the aggregate unpaid principal
amount of all outstanding Notes, by notice then given to such Transferor and the
Servicer (and to the Owner Trustee and Indenture Trustee if given by the
Noteholders), may direct such Transferor to accept a reassignment of the
Receivables and any Participation Interests conveyed to the Trust by such
Transferor if such breach and any material adverse effect caused by such breach
is not cured within 60 days of such notice (or within such longer period, not in
excess of 120 days, as may be specified in such notice), and upon those
conditions such Transferor shall be obligated to accept such reassignment on the
terms set forth below; provided, however, that such Receivables and
Participation Interests will not be reassigned to such Transferor if, on any day
prior to the end of such 60-day or longer period (i) the relevant representation
and warranty shall be true and correct in all material respects as if made on
such day and (ii) such Transferor shall have delivered to the Owner Trustee a
certificate of an authorized officer describing the nature of such breach and
the manner in which the relevant representation and warranty has become true and
correct.
The applicable Transferor shall deposit in the Collection Account in
immediately available funds not later than 1:00 P.M., New York City time, on the
first Distribution Date following the Due Period in which such reassignment
obligation arises, in payment for such reassignment, an amount equal to the sum
of the amounts specified therefor with respect to each outstanding Series in the
related Indenture Supplement. Notwithstanding anything to the contrary in this
Agreement, such amounts shall be distributed to the Noteholders on such
Distribution Date in accordance with the terms of each Indenture Supplement. If
the Owner Trustee, the Indenture Trustee or the Noteholders give notice
directing the applicable Transferor to accept a reassignment of the Receivables
and Participation Interests as provided above, the obligation of such Transferor
to accept such reassignment pursuant to this Section 2.06 and to make the
deposit required to be made to the Collection Account as provided in this
paragraph shall constitute the sole remedy respecting an event of the type
specified in the first sentence of this Section 2.06 available to the
Noteholders (or the Indenture Trustee on behalf of the Noteholders) or any
Series Enhancer. Upon reassignment of the Receivables and Participation
Interests on such Distribution Date, the Trust shall automatically and
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without further action be deemed to transfer, assign, set over and otherwise
convey to the applicable Transferor, without recourse, representation or
warranty, all of the right, title and interest of the Owner Trustee and the
Trust in and to the Receivables and Participation Interests, all Recoveries
allocable to the Trust, all monies and amounts due or to become due with respect
thereto and all proceeds thereof. The Owner Trustee shall execute such documents
and instruments of transfer or assignment and take such other actions as shall
reasonably be requested by the applicable Transferor to effect the conveyance of
such property pursuant to this subsection.
Section 2.07. Covenants of each Transferor. Each Transferor hereby
severally covenants that:
(a) Receivables Not To Be Evidenced by Promissory Notes. Except in
connection with its enforcement or collection of an Account, such Transferor
will take no action to cause any Receivable conveyed by it to the Trust to be
evidenced by any instrument (as defined in the UCC) and if any such Receivable
is so evidenced it shall be deemed to be an Ineligible Receivable in accordance
with Section 2.05(a) and shall be reassigned to such Transferor in accordance
with Section 2.05(b).
(b) Security Interests. Except for the conveyances hereunder, such
Transferor will not sell, pledge, assign or transfer to any other Person, or
grant, create, incur, assume or suffer to exist any Lien on, any Receivable or
Participation Interest conveyed by it to the Trust, whether now existing or
hereafter created, or any interest therein, and such Transferor shall defend the
right, title and interest of the Trust and the Indenture Trustee in, to and
under the Receivables and any Participation Interest, whether now existing or
hereafter created, against all claims of third parties claiming through or under
such Transferor.
(c) Transferor Amount. Except for (i) the conveyances hereunder, in
connection with any transaction permitted by subsection 4.02(a)(i) and as
provided in subsection 2.09(g) of this Agreement or Section 2.12 of the
Indenture or (ii) conveyances with respect to which the Rating Agency Condition
shall have been satisfied and a Tax Opinion shall have been delivered, such
Transferor agrees not to transfer, sell, assign, exchange or otherwise convey or
pledge, hypothecate or otherwise grant a security interest in the Transferor
Amount, the Transferor Certificate or any Supplemental Certificate or the
Transferor's interest in the Trust and any such attempted transfer, assignment,
exchange, conveyance, pledge, hypothecation, grant or sale shall be void;
provided, however, that nothing in this subsection 2.07(c) shall prevent the
owner of an interest in the Transferor Amount from granting to an Affiliate a
participation interest or other beneficial interest in the rights to receive
cash flows related to the Transferor Amount, if (i) such interest does not grant
such Affiliate any rights hereunder or delegate to such Affiliate any
obligations or duties hereunder, (ii) the transferor of such interest obtains
the prior written consent of such Transferor and (iii) after giving effect to
such transfer, the interest in the Transferor Amount owned directly by such
Transferor represents an undivided ownership interest in two percent (2.0%) or
more of the Trust Assets.
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(d) Delivery of Collections or Recoveries. In the event that such
Transferor receives Collections or Recoveries, such Transferor agrees to pay the
Servicer all such Collections and Recoveries as soon as practicable after
receipt thereof.
(e) Notice of Liens. Such Transferor shall notify the Owner Trustee,
the Indenture Trustee and each Series Enhancer promptly after becoming aware of
any Lien on any Receivable or Participation Interest conveyed by it to the Trust
other than the conveyances hereunder and under the applicable Receivables
Purchase Agreement and the Indenture.
(f) Amendment of the Certificate of Incorporation. Such Transferor
will not amend in any material respect its certificate of incorporation without
providing the Rating Agency with notice no later than the fifth Business Day
prior to such amendment (unless the right to such notice is waived by the Rating
Agency) and satisfying the Rating Agency Condition.
(g) Other Indebtedness. Such Transferor shall not incur any
additional debt, unless (i) such debt is incurred pursuant to the Revolving
Credit Agreement or (ii) the Rating Agency is provided with notice no later than
the fifth Business Day prior to the incurrence of such additional debt (unless
the right to such notice is waived by the Rating Agency) and the Rating Agency
Condition is satisfied with respect to the incurrence of such debt.
Section 2.08. Covenants of each Transferor with Respect to
Receivables Purchase Agreement. Each Transferor, in its capacity as purchaser of
Receivables from HRAC, the Bank or another Account Owner pursuant to a
Receivables Purchase Agreement, hereby covenants that such Transferor will at
all times enforce the covenants and agreements of HRAC, the Bank or such other
Account Owner in such Receivables Purchase Agreement to the extent applicable,
including covenants substantially to the effect set forth below:
(a) Periodic Rate Finance Charges. (i) Except (A) as otherwise
required by any Requirements of Law or (B) as is deemed by HRAC, the Bank or any
other Account Owner, as the case may be, to be necessary in order for it to
maintain its credit business or a program operated by such credit business on a
competitive basis based on a good faith assessment by it of the nature of the
competition with respect to the credit business or such program, it shall not at
any time take any action which would have the effect of reducing the Series
Portfolio Yield to a level that could be reasonably expected to result in an
Adverse Effect with respect to any Series based on the insufficiency of the
Series Portfolio Yield or any similar test.
(b) Credit Agreements and Guidelines. Subject to compliance with all
Requirements of Law and paragraph (a) above, HRAC, the Servicer or the Bank (or
other Account Owner if HRAC or the Bank is not the Account Owner) may change the
terms and provisions of the applicable Credit Agreements or the applicable
Credit Guidelines of HRAC, the Servicer or the Bank (or other Account Owner if
HRAC or the Bank is not the Account Owner) in any respect (including the
calculation of the amount or the timing
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of charge-offs and the Periodic Rate Finance Charges to be assessed thereon).
Notwithstanding the above, unless required by Requirements of Law or as
permitted by paragraph (a) above, HRAC, the Servicer or the Bank (or other
Account Owner if HRAC or the Bank is not the Account Owner) will not take any
action unless (i) at the time of such action, HRAC, the Servicer or the Bank (or
other Account Owner if HRAC or the Bank is not the Account Owner) reasonably
believes that such action will not cause an Adverse Effect, and (ii) such change
is made applicable to the comparable segment of the revolving credit accounts
owned by the Bank (or other Account Owner if the Bank is not the Account Owner)
or serviced by the Servicer which have characteristics the same as, or
substantially similar to, the Accounts that are the subject of such change,
except as otherwise restricted by an endorsement, sponsorship, or other
agreement between the Bank (or other Account Owner if the Bank is not the
Account Owner) and an unrelated third party or by the terms of the Credit
Agreements.
Section 2.09. Addition of Accounts
(a) Required Aggregate Additions.
(i) Required Additional Accounts. If, as of the close of
business on the last Business Day of any calendar month, the aggregate
amount of the Principal Receivables is less than the Required Minimum
Principal Balance (as adjusted for any Series having a Paired Series as
described in the Indenture Supplement for such Series) on such date, the
Transferor shall on or prior to the close of business on the last Business
Day of the next succeeding Due Period (the "REQUIRED DESIGNATION DATE"),
unless the aggregate amount of the Principal Receivables exceeds the
Required Minimum Principal Balance as of the close of business on any day
after the last Business Day of such calendar month and prior to the
Required Designation Date, effect the addition of Eligible Accounts to be
included as Accounts as of the Required Designation Date or any earlier
date in a sufficient amount (or such lesser amount as shall represent all
Eligible Accounts constituting revolving credit accounts then available to
the Transferor under the Receivables Purchase Agreement) such that, after
giving effect to such addition and the addition by each other Transferor,
the aggregate amount of the Principal Receivables is at least equal to the
Required Minimum Principal Balance on such date.
(ii) Optional Participation Interests. In lieu of, or in
addition to, causing the designation of Additional Accounts pursuant to
clause (i) above, the Transferor may (but shall not be required), subject
to the conditions specified in paragraph (c) below, convey to the Trust
participations (including 100% participations) representing undivided
interests in a pool of assets primarily consisting of revolving credit
receivables and any interests in any of the foregoing, including
securities representing or backed by such receivables and collections,
together with all earnings, revenue, dividends, distributions, income,
issues and profits thereon ("PARTICIPATION INTERESTS"). The addition of
Participation Interests in the Trust pursuant to this paragraph (a) or
paragraph (b)
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below shall be effected by a Participation Interest Supplement, dated the
applicable Addition Date and entered into pursuant to subsection 9.01(a).
(iii) Any Additional Accounts or Participation Interests
designated to be included as Trust Assets pursuant to clauses (i) or (ii)
above may only be so included if the applicable conditions specified in
paragraph (c) below have been satisfied.
(b) Permitted Aggregate Additions. Each Transferor may from time to
time, in its sole discretion, subject to the conditions specified in paragraph
(c) below, voluntarily cause the designation of additional Eligible Accounts to
be included as Accounts or Participation Interests to be included as Trust
Assets, in either case as of the applicable Addition Date.
(c) Conditions to Aggregate Additions. On the Addition Date with
respect to any Aggregate Additions, the Trust shall acquire the Receivables in
such Aggregate Addition Accounts (and such Aggregate Addition Accounts shall be
deemed to be Accounts for purposes of this Agreement) or shall acquire such
Participation Interests existing as of the close of business on the applicable
Additional Cut-Off Date, subject to the satisfaction of the following
conditions:
(i) on or before the fifth Business Day immediately preceding
the Addition Date, the applicable Transferor shall have given the Owner
Trustee, the Indenture Trustee, the Servicer and each Rating Agency notice
(unless such notice requirement is otherwise waived by the Rating Agency)
that the Aggregate Addition Accounts or Participation Interests will be
included and specifying the applicable Addition Date, the Additional
Cut-Off Date and the Pool or Pools to which such addition will be made;
(ii) as of the applicable Additional Cut-Off Date, such
Aggregate Addition Accounts shall be Eligible Accounts;
(iii) on or before the Required Delivery Date, the applicable
Transferor shall have delivered to the Owner Trustee and the Indenture
Trustee copies of UCC-1 financing statements covering such Aggregate
Addition Accounts or Participation Interests, if necessary to perfect the
Owner Trustee's and the Trust's interest in the Receivables arising
therein and a schedule of such Aggregate Addition Accounts;
(iv) to the extent required by Section 8.04 of the Indenture,
such Transferor shall have deposited in the Collection Account all
Collections with respect to such Aggregate Addition Accounts or
Participation Interests since the Additional Cut-Off Date;
(v) as of each of the Additional Cut-Off Date and the Addition
Date, no Insolvency Event with respect to HRAC, the Bank or any other
Account Owner, as applicable, or such Transferor shall have occurred nor
shall the transfer to the Trust of the Receivables arising in the
Aggregate Addition Accounts or of
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the Participation Interests have been made in contemplation of the
occurrence thereof;
(vi) solely with respect to Aggregate Additions designated
pursuant to subsection 2.09(b), the Rating Agency Condition shall have
been satisfied;
(vii) such Transferor shall have delivered to the Owner
Trustee and the Indenture Trustee an Officer's Certificate, dated the
Addition Date, confirming, to the extent applicable, the items set forth
in clauses (ii) through (vi) above;
(viii) the addition to the Trust of the Receivables arising in
the Aggregate Addition Accounts or of the Participation Interests will not
result in an Adverse Effect and, in the case of Aggregate Additions, such
Transferor shall have delivered to the Owner Trustee and the Indenture
Trustee an Officer's Certificate, dated the Addition Date, stating that
such Transferor reasonably believes that the addition to the Trust of the
Receivables arising in the Aggregate Addition Accounts or of the
Participation Interests will not have an Adverse Effect; and
(ix) such Transferor shall have delivered to the Owner
Trustee, the Indenture Trustee and each Rating Agency an Opinion of
Counsel, dated the Addition Date, in accordance with subsection
9.02(d)(ii) or (iv), as applicable.
(d) New Accounts.(i) (i) Each Transferor may from time to time, at
its sole discretion, subject to the conditions specified in paragraph (e) below,
voluntarily designate newly originated Eligible Accounts to be included as New
Accounts. For purposes of this paragraph, Eligible Accounts shall be deemed to
include only revolving credit accounts (a) originated or underwritten by the
Bank or any other Affiliate of the ultimate parent of the Bank and (b) which are
of the same nature as those included as Initial Accounts or which have
previously been included in any Aggregate Addition if the Assignment related to
such Aggregate Addition expressly provides that such type of revolving credit
account is permitted to be designated as a New Account.
(ii) The number of New Accounts designated with respect to any
of the three consecutive Due Periods commencing in January, April, July
and October of each calendar year shall not exceed 15% of the number of
Accounts as of the first day of the calendar year during which such Due
Periods commence (or the Initial Cut-Off Date, in the case of 2001) and
the number of New Accounts designated during any such calendar year shall
not exceed 20% of the number of Accounts as of the first day of such
calendar year (or the Initial Cut-Off Date, in the case of 2001);
provided, however, New Accounts may be designated in excess of such 15%
and 20% limitations if the Rating Agency Condition is satisfied with
respect to such designation.
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(e) Conditions to Addition of New Accounts. On the Addition Date
with respect to any New Accounts, the Trust shall acquire the Receivables in
such New Accounts (and such New Accounts shall be deemed to be Accounts for
purposes of this Agreement) as of the close of business on the applicable
Addition Date, subject to the satisfaction of the following conditions:
(i) the New Accounts shall all be Eligible Accounts;
(ii) on or before the Required Delivery Date, the applicable
Transferor shall have delivered to the Owner Trustee and Indenture Trustee
copies of UCC-1 financing statements covering such New Accounts, if
necessary to perfect the Owner Trustee's and the Trust's interest and the
Indenture Trustee's interest in the Receivables arising therein and a
schedule of such New Accounts;
(iii) to the extent required by Section 8.04 of the Indenture,
the applicable Transferor shall have deposited in the Collection Account
all Collections with respect to such New Accounts since the Additional
Cut-Off Date;
(iv) as of each of the Additional Cut-Off Date and the
Addition Date, no Insolvency Event with respect to the Bank or any other
Account Owner, as applicable, or such Transferor shall have occurred nor
shall the transfer to the Trust of the Receivables arising in the New
Accounts have been made in contemplation of the occurrence thereof;
(v) such Transferor shall have delivered to the Owner Trustee
and the Indenture Trustee an Officer's Certificate, dated the Addition
Date, confirming, to the extent applicable, the items set forth in clauses
(i) through (iv) above;
(vi) the addition of the Receivables arising in the New
Accounts to the Trust will not result in an Adverse Effect and such
Transferor shall have delivered to the Owner Trustee and the Indenture
Trustee an Officer's Certificate, dated the Addition Date, stating that
such Transferor reasonably believes that the addition to the Trust of the
Receivables arising in the New Accounts will not have an Adverse Effect;
(vii) with respect to each Distribution Date following a Due
Period ending in March, June, September, and December, such Transferor
shall deliver to the Owner Trustee, the Indenture Trustee and each Rating
Agency, an Opinion of Counsel substantially in the form of EXHIBIT D-2
with respect to the New Accounts, if any, included as Accounts during the
three consecutive Due Periods ending prior to such Distribution Date. The
opinion delivery requirement set forth in the immediately preceding
sentence may be modified provided that the Rating Agency Condition is
satisfied; and
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(viii) on or before the fifth Business Day preceding the
Addition Date the applicable Transferor shall have given each Rating
Agency notice specifying the Pool or Pools to which such New Accounts will
be added.
(f) Representations and Warranties. Each Transferor conveying
Additional Accounts or Participation Interests hereby represents and warrants to
the Owner Trustee and the Trust as of the related Addition Date as to the
matters set forth in clauses (v) and (viii) of subsection 2.09(c) above and
that, in the case of Additional Accounts, the list delivered pursuant to
subsection 2.09(h) is, as of the applicable Additional Cut-Off Date, true and
complete in all material respects.
(g) Additional Transferors. The Transferor may designate Affiliates
of the Transferor to be included as Transferors ("ADDITIONAL TRANSFERORS") under
this Agreement in an amendment hereto pursuant to subsection 9.01(a) and, in
connection with such designation, the Transferor shall (i) surrender the
Transferor Certificate to the Owner Trustee in exchange for a newly issued
Transferor Certificate modified to reflect such Additional Transferor's interest
in the Transferor Certificate or (ii) if the Transferor Certificate is
uncertificated, direct the Indenture Trustee to make the appropriate entries in
its books and records to reflect such Additional Transferor's interest in the
Transferor Certificate; provided, however, that prior to any such designation
and exchange the conditions set forth in clauses (iii) and (v) of subsection
3.06 of the Trust Agreement shall have been satisfied with respect thereto.
(h) Delivery of Documents. In the case of the designation of
Additional Accounts, the Transferor designating such Accounts shall deliver to
the Indenture Trustee and the Owner Trustee (i) the computer file or microfiche
list required to be delivered pursuant to Section 2.01 with respect to such
Additional Accounts on the date such file or list is required to be delivered
pursuant to Section 2.01 (the "DOCUMENT DELIVERY DATE") and (ii) a duly
executed, written Assignment (including an acceptance by the Trust),
substantially in the form of EXHIBIT A (the "ASSIGNMENT"), on the Document
Delivery Date.
Section 2.10. Removal of Accounts.
(a) On any day of any Due Period each Transferor shall have the
right to (x) designate Zero Balance Accounts, specific terminated merchant or
co-branding participant accounts as requested by the terminated merchants or
co-branding participant and randomly chosen removed accounts from the Trust and
(y) require the reassignment to it or its designee of all the Owner Trustee's
and the Trust's right, title and interest in, to and under the Receivables then
existing and thereafter created, all Recoveries related thereto after the
Removal Date, all monies due or to become due and all amounts received or
receivable with respect thereto and all proceeds thereof in or with respect to
the Accounts (the "REMOVED ACCOUNTS") (unless otherwise set forth in the
applicable Indenture Supplement) and designated for removal by the Transferor,
upon satisfaction of the conditions in clauses (i) through (v) below; provided,
however, that the conditions listed in clauses (iv) and (v) below need not be
satisfied if the Removed Accounts (x) are Zero Balance Accounts or (y) relate to
a terminated Merchant Agreement and the related
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merchant or co-branding participant or designee has elected to purchase or
direct the purchase of the Receivables in such Removed Accounts:
(i) on or before the fifth Business Day immediately preceding
the Removal Date, such Transferor shall have given written notice to the
Owner Trustee, the Indenture Trustee, the Servicer, the Rating Agency and
each Series Enhancer (unless such notice requirement is otherwise waived)
of such removal and specifying the date for removal of the Removed
Accounts (the "REMOVAL Date");
(ii) on or prior to the date that is five Business Days on or
before the Removal Date, such Transferor shall amend SCHEDULE 1 by
delivering to the Owner Trustee a computer file or microfiche list
containing a true and complete list of the Removed Accounts specifying for
each such Account, as of the date notice of the Removal Date is given, its
account number, the aggregate amount outstanding in such Account and the
aggregate amount of Principal Receivables outstanding in such Account;
(iii) such Transferor shall have represented and warranted as
of the Removal Date that the list of Removed Accounts delivered pursuant
to paragraph (ii) above, as of the Removal Date, is true and complete in
all material respects;
(iv) the Rating Agency Condition shall have been satisfied
with respect to the removal of the Removed Accounts; and
(v) such Transferor shall have delivered to the Owner Trustee
and the Indenture Trustee an Officer's Certificate, dated the Removal
Date, to the effect that such Transferor reasonably believes that (A) such
removal will not have an Adverse Effect and (B) no selection procedures
believed by such Transferor to be materially adverse to the interests of
the Noteholders have been used in selecting the Removed Accounts.
Upon satisfaction of the above conditions, the Owner Trustee shall
execute and deliver to such Transferor a written reassignment in substantially
the form of EXHIBIT B (the "REASSIGNMENT") and shall, without further action, be
deemed to transfer, assign, set over and otherwise convey to such Transferor or
its designee, effective as of the Removal Date, without recourse, representation
or warranty, all the right, title and interest of the Owner Trustee and the
Trust in and to the Receivables arising in the Removed Accounts, all Recoveries
related thereto, all monies due and to become due and all amounts received or
receivable with respect thereto after the Removal Date and all proceeds thereof
and any Insurance Proceeds relating thereto. The Owner Trustee may conclusively
rely on the Officer's Certificate delivered pursuant to this Section 2.10 and
shall have no duty to make inquiries with regard to the matters set forth
therein and shall incur no liability in so relying.
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In addition to the foregoing, on the date when any Receivable in an
Account becomes a Defaulted Receivable, the Trust shall automatically and
without further action or consideration be deemed to transfer, set over and
otherwise convey to the Transferor with respect to such Account, without
recourse, representation or warranty, all right, title and interest of the Owner
Trustee and the Trust in and to the Defaulted Receivables in such Account, all
monies and amounts due or to become due with respect thereto, all proceeds
thereof and any Insurance Proceeds relating thereto; provided, that Recoveries
of such Account shall be applied as provided herein.
(b) Anything to the contrary herein notwithstanding, the Transferor
shall be entitled to purchase all Receivables in Accounts designated for
purchase or re-purchase by a merchant or co-branding participant pursuant to the
termination of a Merchant Agreement to which such merchant or co-branding
participant is a party. Any repurchase of Receivables pursuant to this
subsection 2.10(b) shall be effected in the manner, and at a price determined in
accordance with subsection 2.05(b) as if the Receivables being repurchased were
Ineligible Receivables. Amounts deposited in the Collection Account in
connection therewith shall be deemed to be Collections of Principal Receivables
and shall be applied in accordance with Article VIII of the Indenture and the
terms of each Indenture Supplement.
Section 2.11. Account Allocations. In the event that any Transferor
is unable for any reason to transfer Receivables to the Trust in accordance with
the provisions of this Agreement, including by reason of the application of the
provisions of Section 6.01 or any order of any Governmental Authority (a
"TRANSFER RESTRICTION EVENT"), then, (a) such Transferor and the Servicer agree
(except as prohibited by any such order) to allocate and pay to the Trust, after
the date of such inability, all Collections, including Collections of
Receivables transferred to the Trust prior to the occurrence of such event, and
all amounts which would have constituted Collections but for such Transferor's
inability to transfer Receivables (up to an aggregate amount equal to the amount
of Receivables transferred to the Trust by such Transferor in the Trust on such
date), (b) such Transferor and the Servicer agree that such amounts will be
applied as Collections in accordance with Article VIII of the Indenture and the
terms of each Indenture Supplement and (c) for so long as the allocation and
application of all Collections and all amounts that would have constituted
Collections are made in accordance with clauses (a) and (b) above, Principal
Receivables and all amounts which would have constituted Principal Receivables
but for such Transferor's inability to transfer Receivables to the Trust which
are charged off as uncollectible in accordance with this Agreement shall
continue to be allocated in accordance with Article VIII of the Indenture and
the terms of each Indenture Supplement. For the purpose of the immediately
preceding sentence, such Transferor and the Servicer shall treat the first
received Collections with respect to the Accounts as allocable to the Trust
until the Trust shall have been allocated and paid Collections in an amount
equal to the aggregate amount of Principal Receivables in the Trust as of the
date of the occurrence of such event. If such Transferor and the Servicer are
unable pursuant to any Requirements of Law to allocate Collections as described
above, such Transferor and the Servicer agree that, after the occurrence of such
event, payments on each Account with respect to the principal balance of such
Account shall be allocated first to the oldest principal balance
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of such Account and shall have such payments applied as Collections in
accordance with Article VIII of the Indenture and the terms of each Indenture
Supplement. The parties hereto agree that Finance Charge and Administrative
Receivables, whenever created, accrued in respect of Principal Receivables which
have been conveyed to the Trust shall continue to be a part of the Trust
notwithstanding any cessation of the transfer of additional Principal
Receivables to the Trust and Collections with respect thereto shall continue to
be allocated and paid in accordance with Article VIII of the Indenture and the
terms of each Indenture Supplement.
Section 2.12. Discount Option.
(a) The Transferor shall have the option to designate at any time
and from time to time, a percentage or percentages, which may be a fixed
percentage or a variable percentage based on a formula (the "DISCOUNT
PERCENTAGE"), of all or any specified portion of Principal Receivables existing
on and after a Discount Option Date to be treated as Finance Charge and
Administrative Receivables ("DISCOUNT OPTION RECEIVABLES"). The Transferor shall
also have the option of increasing, reducing or withdrawing the Discount
Percentage, at any time and from time to time; provided that the Discount
Percentage shall be reduced or withdrawn on the date which the Transferor shall
deliver to the Indenture Trustee and the Owner Trustee an Officer's Certificate
to the effect that, in the reasonable belief of the Transferor, the continued
discounting of Principal Receivables would have an adverse regulatory
implication with respect to the Transferor, the Bank or other Account Owner. The
Transferor shall provide to the Servicer, the Owner Trustee, the Indenture
Trustee and the Rating Agency 30 days' prior written notice of a Discount Option
Date and such designation shall become effective on a Discount Option Date only
if, (i) the Transferor delivers an Officer's Certificate to the effect that such
designation in the reasonable belief of the Transferor, would not cause an
Adverse Effect and (ii) the Rating Agency Condition shall have been satisfied
with respect to such designation.
(b) Discount Option Receivable Collections shall be treated as
Collections of Finance Charge and Administrative Receivables.
ARTICLE III
ADMINISTRATION AND SERVICING
OF RECEIVABLES
Section 3.01. Acceptance of Appointment and Other Matters Relating
to the Servicer.
(a) Household Finance Corporation agrees to act as the Servicer
under this Agreement and the Noteholders by their acceptance of Notes consent to
Household Finance Corporation acting as Servicer.
(b) As agent for each Transferor, the Owner Trustee and the Trust,
the Servicer shall service and administer the Receivables and any Participation
Interests,
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shall collect and deposit into the Collection Account amounts received under the
Receivables and any Participation Interests and shall charge-off as
uncollectible Receivables, all in accordance with its customary and usual
servicing procedures for servicing revolving credit receivables comparable to
the Receivables and in accordance with the Credit Guidelines. As agent for each
Transferor, the Owner Trustee and the Trust, the Servicer shall have full power
and authority, acting alone or through any party properly designated by it
hereunder, to do any and all things in connection with such servicing and
administration which it may deem necessary or desirable; provided, however, that
subject to the rights of the Owner Trustee, the Indenture Trustee and the
Noteholders hereunder, the Company shall have the absolute right to direct the
Servicer with respect to any power conferred on the Servicer hereunder in
accordance with any such direction. Without limiting the generality of the
foregoing and subject to Section 7.01, the Servicer or its designee is hereby
authorized and empowered, unless such power is revoked by the Indenture Trustee
on account of the occurrence of a Servicer Default pursuant to Section 7.01, (i)
to instruct the Owner Trustee or the Indenture Trustee to make withdrawals and
payments from the Collection Account, the Special Funding Account and any Series
Account, as set forth in this Agreement, the Indenture or any Indenture
Supplement, (ii) to take any action required or permitted under any Series
Enhancement, as set forth in this Agreement, the Indenture or any Indenture
Supplement, (iii) to execute and deliver, on behalf of the Trust, any and all
instruments of satisfaction or cancellation, or of partial or full release or
discharge, and all other comparable instruments, with respect to the Receivables
and, after the delinquency of any Receivable and to the extent permitted under
and in compliance with applicable Requirements of Law, to commence collection
proceedings with respect to such Receivables and (iv) to make any filings,
reports, notices, applications and registrations with, and to seek any consents
or authorizations from, the Commission and any state securities authority on
behalf of the Trust as may be necessary or advisable to comply with any Federal
or state securities or reporting requirements or other laws or regulations. Each
of the Owner Trustee and the Indenture Trustee shall furnish the Servicer with
any documents in such Person's possession reasonably necessary or appropriate to
enable the Servicer to carry out its servicing and administrative duties
hereunder.
(c) The Servicer shall not, and no Successor Servicer shall, be
obligated to use separate servicing procedures, offices, employees or accounts
for servicing the Receivables from the procedures, offices, employees and
accounts used by the Servicer or such Successor Servicer, as the case may be, in
connection with servicing other revolving credit receivables.
(d) The Servicer shall comply with and perform its servicing
obligations with respect to the Accounts and Receivables in accordance with the
Credit Agreements relating to the Accounts and the Credit Guidelines except
insofar as any failure to so comply or perform would not materially and
adversely affect the Trust or the Noteholders.
(e) The Servicer shall pay out of its own funds, without
reimbursement, all expenses incurred in connection with the Trust and the
servicing activities hereunder including expenses related to enforcement of the
Receivables, fees
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and disbursements of the Owner Trustee and the Indenture Trustee (including the
reasonable fees and expenses of its outside counsel) and independent accountants
and all other fees and expenses, including the costs of filing UCC continuation
statements, and the costs and expenses relating to obtaining and maintaining the
listing of any Notes on any stock exchange. The Transferor shall pay out of its
own funds, without reimbursement, the costs and expenses relating to any stamp,
documentary, excise, property (whether on real, personal or intangible property)
or any similar tax levied on the Trust or the Trust's assets that are not
expressly stated in this Agreement to be payable by the Trust or the Transferor
(other than federal, state, local and foreign income and franchise taxes, if
any, or any interest or penalties with respect thereto, assessed on the Trust).
Section 3.02. Servicing Compensation. As full compensation for its
servicing activities hereunder and as reimbursement for any expense incurred by
it in connection therewith, the Servicer shall be entitled to receive a
servicing fee (the "SERVICING FEE") with respect to each Monthly Period, payable
monthly on the related Distribution Date, in an amount equal to one-twelfth of
the product of (a) the weighted average of the Servicing Fee Rates with respect
to each outstanding Series (based upon the Servicing Fee Rate for each Series)
and (b) the Invested Amount (or such other amount as specified in the related
Indenture Supplement) of such Series, in each case as of the last day of the
prior Monthly Period prior to the termination of the Trust pursuant to 8.01 of
the Trust Agreement. The share of the Servicing Fee allocable to a particular
Series with respect to any Due Period (the "MONTHLY SERVICING FEE") will each be
determined in accordance with the relevant Indenture Supplement. The portion of
the Servicing Fee with respect to any Due Period not so allocated to any
particular Series shall be paid by the Holders of the Transferor Certificates on
the related Distribution Date and in no event shall the Trust, the Owner
Trustee, the Indenture Trustee, the Noteholders of any Series or any Series
Enhancer be liable for the share of the Servicing Fee with respect to any Due
Period to be paid by the Holders of the Transferor Certificates.
Section 3.03. Representations, Warranties and Covenants of the
Servicer. Household Finance Corporation, as initial Servicer, hereby makes, and
any Successor Servicer by its appointment hereunder shall make, with respect to
itself, on each Closing Date (and on the date of any such appointment), the
following representations, warranties and covenants on which the Owner Trustee
and the Indenture Trustee shall be deemed to have relied in accepting the
Receivables in trust and in entering into the Indenture:
(a) Organization and Good Standing. The Servicer is a corporation
validly existing under the laws of the jurisdiction of its organization or
incorporation and has, in all material respects, full power and authority
to own its properties and conduct its credit servicing business as
presently owned or conducted, and to execute, deliver and perform its
obligations under this Agreement.
(b) Due Qualification. The Servicer is duly qualified to do business
and is in good standing as a foreign corporation or other foreign entity
(or is exempt from such requirements) and has obtained all necessary
licenses and
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approvals in each jurisdiction in which the servicing of the Receivables
and any Participation Interests as required by this Agreement requires
such qualification except where the failure to so qualify or obtain
licenses or approvals would not have a material adverse effect on its
ability to perform its obligations as Servicer under this Agreement.
(c) Due Authorization. The execution, delivery, and performance of
this Agreement and the other agreements and instruments executed or to be
executed by the Servicer as contemplated hereby, have been duly authorized
by the Servicer by all necessary action on the part of the Servicer.
(d) Binding Obligation. This Agreement constitutes a legal, valid
and binding obligation of the Servicer, enforceable 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 by
general principles of equity.
(e) No Conflict. The execution and delivery of this Agreement by the
Servicer, and the performance of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof and thereof applicable
to the Servicer, 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 Servicer is a party or by which it or its
properties are bound.
(f) No Violation. The execution and delivery of this Agreement by
the Servicer, the performance of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof and thereof applicable
to the Servicer will not conflict with or violate any Requirements of Law
applicable to the Servicer.
(g) No Proceedings. There are no proceedings or investigations
pending or, to the best knowledge of the Servicer, threatened against the
Servicer before any Governmental Authority seeking to prevent the
consummation of any of the transactions contemplated by this Agreement or
seeking any determination or ruling that, in the reasonable judgment of
the Servicer, would materially and adversely affect the performance by the
Servicer of its obligations under this Agreement.
(h) Compliance with Requirements of Law. The Servicer shall duly
satisfy all obligations on its part to be fulfilled under or in connection
with each Receivable and the related Account, if any, will maintain in
effect all qualifications required under Requirements of Law in order to
service properly each Receivable and the related Account, if any, and will
comply in all material respects with all other Requirements of Law in
connection with servicing each Receivable and the related Account the
failure to comply with which would have an Adverse Effect.
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(i) No Rescission or Cancellation. The Servicer shall not permit any
rescission or cancellation of any Receivable except in accordance with the
Credit Guidelines or as ordered by a court of competent jurisdiction or
other Governmental Authority.
(j) Protection of Rights. The Servicer shall take no action which,
nor omit to take any action the omission of which, would impair the rights
of the Trust, the Owner Trustee, the Indenture Trustee or the Noteholders
in any Receivable or the related Account or any Participation Interest, if
any, nor shall it reschedule, revise or defer payments due on any
Receivable except in accordance with the Credit Guidelines.
(k) Receivables Not To Be Evidenced by Promissory Notes. Except in
connection with its enforcement or collection of an Account, the Servicer
will take no action to cause any Receivable to be evidenced by any
instrument (as defined in the UCC) and if any Receivable is so evidenced
it shall be reassigned or assigned to the Servicer as provided in this
Section.
(l) 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 Servicer in connection
with the execution and delivery of this Agreement by the Servicer and the
performance of the transactions contemplated by this Agreement by the
Servicer, have been duly obtained, effected or given and are in full force
and effect.
(m) Subject to compliance with all Requirements of Law, the Servicer
may change the terms and provisions of the applicable Credit Guidelines of
the Servicer in any respect (including the calculation of the amount or
the timing of charge-offs and the Periodic Rate Finance Charges to be
assessed thereon). Notwithstanding the above, unless required by
Requirements of Law, the Servicer will not take any action unless (i) at
the time of such action, the Servicer reasonably believes that such action
will not cause an Amortization Event, Reinvestment Event or Event of
Default to occur, and (ii) such change is made applicable to the
comparable segment of the revolving credit accounts owned by the Bank (or
other Account Owner if the Bank is not the Account Owner) which have
characteristics the same as, or substantially similar to, the Accounts
that are the subject of such change, except as otherwise restricted by an
endorsement, sponsorship, or other agreement between the Bank (or other
Account Owner if the Bank is not the Account Owner) and an unrelated third
party or by the terms of the Credit Agreements.
In the event (x) any of the representations, warranties or covenants
of the Servicer contained in subsection 3.03(h), (i) or (j) with respect to any
Receivable or the related Account is breached, and such breach has a material
adverse effect on such Receivable (which determination shall be made without
regard to whether funds are then available to any Noteholders pursuant to any
Series Enhancement) and is not cured within 60 days (or such longer period, not
in excess of 120 days, as may be agreed to by
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the Indenture Trustee and the Transferor) of the earlier to occur of the
discovery of such event by the Servicer, or receipt by the Servicer of notice of
such event given by the Indenture Trustee or the Transferor, or (y) as provided
in subsection 3.03(k) with respect to any Receivable, all Receivables in the
Account or Accounts to which such event relates shall be assigned and
transferred to the Servicer on the terms and conditions set forth below.
The Servicer shall effect such assignment by making a deposit into
the Collection Account in immediately available funds on the Distribution Date
following the Due Period in which such assignment obligation arises in an amount
equal to the amount of such Receivables.
Upon each such reassignment or assignment to the Servicer, the Trust
shall automatically and without further action be deemed to sell, transfer,
assign, set over and otherwise convey to the Servicer, without recourse,
representation or warranty, all right, title and interest of the Owner Trustee
and the Trust in and to such Receivables, all Recoveries related thereto, all
monies due or to become due and all amounts received or receivable with respect
thereto and all proceeds thereof. The Owner Trustee shall execute such documents
and instruments of transfer or assignment and take such other actions as shall
be reasonably requested by the Servicer to effect the conveyance of any such
Receivables pursuant to this Section but only upon receipt of an Officer's
Certificate of the Servicer that states that all conditions set forth in this
section have been satisfied. The obligation of the Servicer to accept
reassignment or assignment of such Receivables, and to make the deposits, if
any, required to be made to the Collection Account as provided in the preceding
paragraph, shall constitute the sole remedy respecting the event giving rise to
such obligation available to Noteholders (or the Indenture Trustee on behalf of
Noteholders) or any Series Enhancer, except as provided in Section 5.04.
Section 3.04. Reports and Records for the Owner Trustee and the
Indenture Trustee.
(a) Daily Records. On each Business Day, the Servicer shall make or
cause to be made available at the office of the Servicer for inspection by the
Owner Trustee and the Indenture Trustee upon request a record setting forth (i)
the Collections in respect of Principal Receivables and in respect of Finance
Charge and Administrative Receivables processed by the Servicer on the second
preceding Business Day in respect of each Account and (ii) the amount of
Receivables as of the close of business on the second preceding Business Day in
each Account. The Servicer shall, at all times, maintain its computer files with
respect to the Accounts in such a manner so that the Accounts may be
specifically identified and shall make available to the Owner Trustee and the
Indenture Trustee at the office of the Servicer on any Business Day any report
necessary to make such identification. The Owner Trustee and the Indenture
Trustee shall enter into such reasonable confidentiality agreements as the
Servicer shall deem necessary to protect its interests and as are reasonably
acceptable in form and substance to the Owner Trustee and the Indenture Trustee.
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(b) Monthly Servicer's Certificate. Not later than the second
Business Day preceding each Distribution Date, the Servicer shall, with respect
to each outstanding Series, deliver to the Owner Trustee, the Indenture Trustee
and each Rating Agency a certificate of an Authorized Officer in substantially
the form set forth in the related Indenture Supplement.
Section 3.05. Annual Certificate of Servicer. The Servicer shall
deliver to the Owner Trustee, the Indenture Trustee and each Rating Agency on or
before March 31 of each calendar year, beginning with March 31, 2002, an
Officer's Certificate substantially in the form of EXHIBIT C.
Section 3.06. Annual Servicing Report of Independent Public
Accountants; Copies of Reports Available.
(a) On or before March 31 of each calendar year, beginning with
March 31, 2002, the Servicer shall cause a firm of nationally recognized
independent public accountants (who may also render other services to the
Servicer or the Transferor) to furnish a report (addressed to the Owner Trustee)
to the Owner Trustee, the Indenture Trustee, the Servicer and each Rating Agency
to the effect that they have applied certain procedures agreed upon with the
Servicer and examined certain documents and records relating to the servicing of
Accounts under this Agreement, the Indenture and each Indenture Supplement and
that, on the basis of such agreed-upon procedures, nothing has come to the
attention of such accountants that caused them to believe that the servicing
(including the allocation of Collections) has not been conducted in compliance
with the terms and conditions as set forth in Article III and Section 5.08 of
this Agreement and the applicable provisions of the Indenture and each Indenture
Supplement, except for such exceptions as they believe to be immaterial and such
other exceptions as shall be set forth in such statement. Such report shall set
forth the agreed-upon procedures performed. In the event such firm requires the
Indenture Trustee to agree to the procedures performed by such firm, the
Servicer shall direct the Indenture Trustee in writing to so agree; it being
understood and agreed that the Indenture Trustee will deliver such letter of
agreement in conclusive reliance upon the direction of the Servicer, and the
Indenture Trustee shall not make any independent inquiry or investigation as to,
and shall have no obligation or liability in respect of, the sufficiency,
validity or correctness of such procedures.
(b) On or before March 31 of each calendar year, beginning with
March 31, 2002, the Servicer shall cause a firm of nationally recognized
independent public accountants (who may also render other services to the
Servicer or the Transferor) to furnish a report (addressed to the Owner Trustee)
to the Owner Trustee, the Indenture Trustee, the Servicer and each Rating Agency
to the effect that they have applied certain procedures agreed upon with the
Servicer to compare the mathematical calculations of certain amounts set forth
in the Servicer's certificates delivered pursuant to subsection 3.04(b) during
the period covered by such report with the Servicer's computer reports that were
the source of such amounts and that on the basis of such agreed-upon procedures
and comparison, such accountants are of the opinion that such amounts are in
agreement, except for such exceptions as they believe to be immaterial and such
other
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exceptions as shall be set forth in such statement. Such report shall set forth
the agreed-upon procedures performed. In the event such firm requires the
Indenture Trustee to agree to the procedures performed by such firm, the
Servicer shall direct the Indenture Trustee in writing to so agree; it being
understood and agreed that the Indenture Trustee will deliver such letter of
agreement in conclusive reliance upon the direction of the Servicer, and the
Indenture Trustee shall not make any independent inquiry or investigation as to,
and shall have no obligation or liability in respect of, the sufficiency,
validity or correctness of such procedures.
(c) A copy of each certificate and report provided pursuant to
subsection 3.04(b), or Section 3.05 or 3.06 may be obtained by any Noteholder or
Note Owner by a request in writing to the Owner Trustee addressed to the
Corporate Trust Office.
Section 3.07. Tax Treatment. Unless otherwise specified in the
Indenture or an Indenture Supplement with respect to a particular Series, the
Transferor has entered into this Agreement, and the Notes will be issued, with
the intention that, for federal, state and local income and franchise tax
purposes, (i) the Notes of each Series which are characterized as indebtedness
at the time of their issuance will qualify as indebtedness secured by the
Receivables and (ii) the Trust shall not be treated as an association (or
publicly traded partnership) taxable as a corporation. The Transferor, by
entering into this Agreement, and each Noteholder, by the acceptance of any such
Note (and each Note Owner, by its acceptance of an interest in the applicable
Note), agree to treat such Notes for federal, state and local income and
franchise tax purposes as indebtedness of the Transferor. Each Holder of such
Note agrees that it will cause any Note Owner acquiring an interest in a Note
through it to comply with this Agreement as to treatment as indebtedness under
applicable tax law, as described in this Section 3.07. The parties hereto agree
that they will not, under any circumstances, and at any time, make an election
on IRS Form 8832 or otherwise, to classify the Trust as an association taxable
as a corporation for federal, state or any other applicable tax purpose and,
except as required by Section 6.13 of the Indenture, shall not file tax returns
or obtain any federal employer identification number for the Trust but shall
treat the Trust as a security device or disregarded entity for such purposes.
The provisions of this Agreement shall be construed in furtherance of the
foregoing intended tax treatment.
Section 3.08. Notices to Household Finance Corporation. In the event
that Household Finance Corporation is no longer acting as Servicer, any
Successor Servicer shall deliver or make available to Household Finance
Corporation each certificate and report required to be provided thereafter
pursuant to subsection 3.04(b) and Sections 3.05 and 3.06.
Section 3.09. Adjustments.
(a) If the Servicer adjusts downward the amount of any Receivable
because of a rebate, refund, unauthorized charge or billing error to an Obligor,
because such Receivable was created in respect of merchandise which was refused
or returned by an Obligor, or if the Servicer otherwise adjusts downward the
amount of any Receivable
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without receiving Collections therefor or charging off such amount as
uncollectible, then, in any such case, the amount of Principal Receivables used
to calculate the Transferor Amount, and (unless otherwise specified) any other
amount required herein or in the Indenture or any Indenture Supplement to be
calculated by reference to the amount of Principal Receivables, will be reduced
by the amount of the adjustment. Similarly, the amount of Principal Receivables
used to calculate the Transferor Amount and (unless otherwise specified) any
other amount required herein or in any Indenture Supplement to be calculated by
reference to the amount of Principal Receivables will be reduced by the
principal amount of any Receivable which was discovered as having been created
through a fraudulent or counterfeit charge or with respect to which the covenant
contained in subsection 2.07(b) was breached. Any adjustment required pursuant
to either of the two preceding sentences shall be made on or prior to the end of
the Due Period in which such adjustment obligation arises. In the event that,
following the exclusion of such Principal Receivables from the calculation of
the Transferor Amount, the Transferor Amount would be less than the Required
Transferor Amount, not later than 1:00 p.m., New York City time, on the
Distribution Date following the Due Period in which such adjustment obligation
arises, the Transferor shall make a deposit into the Special Funding Account in
immediately available funds in an amount equal to the amount by which the
Transferor Amount would be less than the Required Transferor Amount, due to
adjustments with respect to Receivables conveyed by such Transferor (up to the
amount of such Principal Receivables).
(b) If (i) the Servicer makes a deposit into the Collection Account
in respect of a Collection of a Receivable and such Collection was received by
the Servicer in the form of a check which is not honored for any reason or (ii)
the Servicer makes a mistake with respect to the amount of any Collection and
deposits an amount that is less than or more than the actual amount of such
Collection, the Servicer shall appropriately adjust the amount subsequently
deposited into the Collection Account to reflect such dishonored check or
mistake. Any Receivable in respect of which a dishonored check is received shall
be deemed not to have been paid. Notwithstanding the first two sentences of this
paragraph, adjustments made pursuant to this Section shall not require any
change in any report previously delivered pursuant to subsection 3.04(a).
Section 3.10. Reports to the Commission. The Servicer shall, on
behalf of the Trust, cause to be filed with the Commission any periodic reports
required to be filed under the provisions of the Securities Exchange Act of
1934, as amended, and the rules and regulations of the Commission thereunder.
The Transferor shall, at its own expense, cooperate in any reasonable request of
the Servicer in connection with such filings.
ARTICLE IV
OTHER MATTERS RELATING TO EACH TRANSFEROR
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Section 4.01. Liability of each Transferor. Each Transferor shall be
severally, and not jointly, liable for all obligations, covenants,
representations and warranties of such Transferor arising under or related to
this Agreement. Except as provided in the preceding sentence, each Transferor
shall be liable only to the extent of the obligations specifically undertaken by
it in its capacity as a Transferor.
Section 4.02. Merger or Consolidation of, or Assumption of the
Obligations of, a Transferor.
(a) No Transferor shall dissolve, liquidate, consolidate with or
merge into any other corporation or convey, transfer or sell its properties and
assets substantially as an entirety to any Person unless:
(i) (x) the corporation formed by such consolidation or into
which such Transferor is merged or the Person which acquires by
conveyance, transfer or sale the properties and assets of the Transferor
substantially as an entirety shall be, if such Transferor is not the
surviving entity, organized and existing under the laws of the United
States of America or any State or the District of Columbia, and shall be a
savings association, a national banking association, a bank or other
entity which is not eligible to be a debtor in a case under Title 11 of
the United States Code (the "Bankruptcy Code") or is a special purpose
corporation whose powers and activities are limited to substantially the
same degree as provided in the certificate of incorporation of the Company
and, if such Transferor is not the surviving entity, shall expressly
assume, by an agreement supplemental hereto, executed and delivered to the
Owner Trustee and the Indenture Trustee, in form reasonably satisfactory
to the Owner Trustee and the Indenture Trustee, the performance of every
covenant and obligation of such Transferor hereunder; and (y) such
Transferor or the surviving entity, as the case may be, has delivered to
the Owner Trustee and the Indenture Trustee (with a copy to each Rating
Agency) an Officer's Certificate and an Opinion of Counsel each stating
that such consolidation, merger, conveyance, transfer or sale and such
supplemental agreement comply with this Section, that such supplemental
agreement is a valid and binding obligation of such surviving entity
enforceable against such surviving entity 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, and that all conditions precedent herein provided
for relating to such transaction have been complied with; and
(ii) the Rating Agency Condition shall have been satisfied
with respect to such consolidation, merger, conveyance or transfer.
(b) Except as permitted by subsection 2.07(c), the obligations,
rights or any part thereof of each Transferor hereunder shall not be assignable
nor shall any Person succeed to such obligations or rights of any Transferor
hereunder except (i) for conveyances, mergers, consolidations, assumptions,
sales or transfers in accordance with
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the provisions of the foregoing paragraph and (ii) for conveyances, mergers,
consolidations, assumptions, sales or transfers to other entities (1) which such
Transferor and the Servicer determine will not result in an Adverse Effect, (2)
which meet the requirements of clause (ii) of the preceding paragraph and (3)
for which such purchaser, transferee, pledgee or entity shall expressly assume,
in an agreement supplemental hereto, executed and delivered to the Owner Trustee
and the Indenture Trustee in writing in form satisfactory to the Owner Trustee
and the Indenture Trustee, the performance of every covenant and obligation of
such Transferor thereby conveyed.
Section 4.03. Limitations on Liability of Each Transferor. Subject
to Section 4.01, no Transferor nor any of the directors, officers, employees,
incorporators or agents of any Transferor acting in such capacities shall be
under any liability to the Trust, the Owner Trustee, the Indenture Trustee, the
Noteholders, any Series Enhancer, any other Transferor or any other Person for
any action taken or for refraining from the taking of any action in good faith
in such capacities pursuant to this Agreement, it being expressly understood
that such liability is expressly waived and released as a condition of, and
consideration for, the execution of this Agreement, the Indenture and any
Indenture Supplement and the issuance of the Notes; provided, however, that this
provision shall not protect any Transferor or any such person against any
liability which would otherwise be imposed by reason of willful misfeasance, bad
faith or gross negligence in the performance of duties or by reason of reckless
disregard of obligations and duties hereunder. Each Transferor and any director,
officer, employee or agent of such Transferor may rely in good faith on any
document of any kind prima facie properly executed and submitted by any Person
(other than such Transferor) respecting any matters arising hereunder.
Section 4.04. Assumption of the Transferor Obligations.
Notwithstanding the provisions of Section 4.02, each Transferor may assign,
convey and transfer its interests in the Transferor Amount, which may include
all, but not less than all, of the Transferor's interest in the Transaction
Documents and its remaining interest in the Accounts and Receivables
(collectively, the "ASSIGNED ASSETS"), together with all servicing functions and
other obligations under this Agreement or relating to the transactions
contemplated hereby (collectively, the "ASSUMED OBLIGATIONS"), to other entities
(such entity or entities, the "ASSUMING ENTITY"), which may be entities that are
not affiliated with such Transferor, and such Transferor may assign, convey and
transfer the Assigned Assets and the Assumed Obligations to such Assuming
Entity, without the consent or approval of the Holders of the Notes, upon
satisfaction of the following conditions:
(a) such Assuming Entity, such Transferor and the Trust shall have
entered into an assumption agreement (the "ASSUMPTION AGREEMENT")
providing for the Assuming Entity to assume the Assumed Obligations,
including the obligation under this Agreement to transfer the Receivables
arising under the Accounts to the Trust, and such Transferor shall have
delivered to the Owner Trustee and the Indenture Trustee an Officer's
Certificate and an Opinion of Counsel each stating that such transfer and
assumption comply with this Section, that such Assumption Agreement is a
valid and binding obligation of such
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Assuming Entity enforceable against such Assuming Entity in accordance
with its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, receivership,
conservatorship or other similar laws affecting creditors' rights
generally or creditors of national banking associations, from time to
time, in effect and except as such enforceability may be limited by
general principles of equity (whether considered in a suit at law or in
equity), and that all conditions precedent herein provided for relating to
such transaction have been complied with;
(b) such Transferor or such Assuming Entity shall have delivered to
the Owner Trustee and the Indenture Trustee copies of UCC-1 financing
statements covering such Accounts to perfect the Owner Trustee's and the
Trust's interest and the Indenture Trustee's interest in the Receivables
arising herein;
(c) if such Assuming Entity shall be eligible to be a debtor in a
case under the Bankruptcy Code, such Transferor shall have delivered to
the Rating Agency (with a copy to the Servicer and the Indenture Trustee)
notice of such transfer and assumption, and that each Rating Agency that
has rated an Outstanding Series of Notes confirm in writing that such
transfer will not result in a reduction or withdrawal of its rating of any
Class of any Outstanding Series of Notes and a copy of such written
confirmation shall be delivered to the Owner Trustee and the Indenture
Trustee or, if such Assuming Entity shall not be eligible to be a debtor
under the Bankruptcy Code, such Transferor shall have delivered to the
Rating Agency notice of such transfer and assumption and such notice shall
be delivered to the Owner Trustee and Indenture Trustee;
(d) the Owner Trustee and the Indenture Trustee shall have received
an Opinion of Counsel to the effect that (i) the transfer of such
Receivables by such Assuming Entity shall constitute either a sale of, or
the granting of a security interest in, such Receivables by such Assuming
Entity to the Trust, (ii) the condition specified in clause (b) shall have
been satisfied, and (iii) if such Assuming Entity shall be subject to the
FDIA, the interest of the Trust in such Receivables should not be subject
to reclamation or recovery by the FDIC if the FDIC were to become the
receiver or conservator of such Assuming Entity; and
(e) the Indenture Trustee shall have received a Tax Opinion.
Upon any such transfer to and assumption by an Assuming Entity, the Transferors
shall surrender Transferor Certificate to the Transfer Agent and Registrar for
registration of transfer and the Owner Trustee shall issue a new Transferor
Certificate in the name of such Assuming Entity and any non-assigning
Transferor. Notwithstanding such assumption, such assigning Transferor shall
continue to be liable for all representations and warranties and covenants made
by it and all obligations performed or to be performed by it in its capacity as
Transferor prior to such transfer.
Notwithstanding the provisions of this Section 4.04 to the contrary,
any Transferor may transfer, from time to time, Assigned Assets to any other
Transferor upon
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the satisfaction of subsections (a) and (b), above. Such Transferor shall
promptly provide notice to the Rating Agency indicating the occurrence of any
such transfer.
ARTICLE V
OTHER MATTERS RELATING TO THE SERVICER
Section 5.01. Liability of the Servicer. The Servicer shall be
liable under this Article only to the extent of the obligations specifically
undertaken by the Servicer in its capacity as Servicer.
Section 5.02. Merger or Consolidation of, or Assumption of the
Obligations of, the Servicer. The Servicer shall not consolidate with or merge
into any other corporation or convey, transfer or sell its properties and assets
substantially as an entirety to any Person, unless:
(a) (i) the corporation formed by such consolidation or into which
the Servicer is merged or the Person which acquires by conveyance,
transfer or sale the properties and assets of the Servicer substantially
as an entirety shall be, if the Servicer is not the surviving entity, a
corporation or a national banking association organized and existing under
the laws of the United States of America or any State or the District of
Columbia, and, if the Servicer is not the surviving entity, such
corporation shall expressly assume, by an agreement supplemental hereto,
executed and delivered to the Owner Trustee and the Indenture Trustee, in
form satisfactory to the Owner Trustee and the Indenture Trustee, the
performance of every covenant and obligation of the Servicer hereunder;
(ii) the Servicer has delivered to the Owner Trustee and the
Indenture Trustee an Officer's Certificate and an Opinion of Counsel each
stating that such consolidation, merger, conveyance, transfer or sale
comply with this Section and that all conditions precedent herein provided
for relating to such transaction have been complied with;
(iii) the Servicer shall have given the Rating Agencies notice
of such consolidation, merger or transfer or assets; and
(b) the corporation formed by such consolidation or into which the
Servicer is merged or the Person which acquires by conveyance or transfer the
properties and assets of the Servicer substantially as an entirety shall be an
Eligible Servicer.
Section 5.03. Limitation on Liability of the Servicer and Others.
Except as provided in Section 5.04, neither the Servicer nor any of the
directors, officers, employees or agents of the Servicer in its capacity as
Servicer shall be under any liability to the Trust, the Owner Trustee, the
Indenture Trustee, the Noteholders, any Series Enhancer or any other Person for
any action taken or for refraining from the taking of any action in good faith
in its capacity as Servicer pursuant to this Agreement; provided,
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however, that this provision shall not protect the Servicer or any such Person
against any liability which would otherwise be imposed by reason of willful
misfeasance, bad faith or gross negligence in the performance of duties or by
reason of reckless disregard of obligations and duties hereunder. The Servicer
and any director, officer, employee or agent of the Servicer may rely in good
faith on any document of any kind prima facie properly executed and submitted by
any Person (other than the Servicer) respecting any matters arising hereunder.
The Servicer shall not be under any obligation to appear in, prosecute or defend
any legal action which is not incidental to its duties as Servicer in accordance
with this Agreement and which in its reasonable judgment may involve it in any
expense or liability. The Servicer may, in its sole discretion, undertake any
such legal action which it may deem necessary or desirable for the benefit of
the Noteholders with respect to this Agreement and the rights and duties of the
parties hereto and the interests of the Noteholders hereunder.
Section 5.04. Servicer Indemnification of the Owner Trustee and the
Indenture Trustee. The Servicer shall indemnify and hold harmless the Owner
Trustee and the Indenture Trustee and any trustees predecessor thereto
(including the Indenture Trustee in its capacity as Transfer Agent and Registrar
or as Paying Agent) and their respective directors, officers, employees and
agents from and against any and all loss, liability, claim, action, suit, cost,
expense, damage or injury of any kind or nature whatsoever suffered or sustained
by reason of (a) any acts or omissions of the Servicer with respect to the Trust
pursuant to this Agreement or (b) the administration by the Owner Trustee of the
Trust (in the case of clause (a) or (b), other than such as may arise from the
negligence or willful misconduct of the Owner Trustee or the Indenture Trustee,
as applicable), including any judgment, award, settlement, reasonable attorneys'
fees and other costs or expenses incurred in connection with the defense of any
action, proceeding or claim. Indemnification pursuant to this Section shall not
be payable from the Trust Assets. The Servicer's obligations under this Section
5.04 shall survive the termination of this Agreement or the Trust or the earlier
removal or resignation of the Owner Trustee or the Indenture Trustee, as
applicable.
Section 5.05. Resignation of the Servicer. The Servicer shall not
resign from the obligations and duties hereby imposed on it except (a) upon
determination that (i) the performance of its duties hereunder is no longer
permissible under applicable law and (ii) there is no reasonable action which
the Servicer could take to make the performance of its duties hereunder
permissible under applicable law or (b) upon the assumption, by an agreement
supplemental hereto, executed and delivered to the Owner Trustee and the
Indenture Trustee, in form satisfactory to the Owner Trustee and the Indenture
Trustee, of the obligations and duties of the Servicer hereunder by any of its
Affiliates that is a direct or indirect wholly owned subsidiary of the ultimate
parent of the Servicer or by any other entity the appointment of which shall
have satisfied the Rating Agency Condition and, in either case, qualifies as an
Eligible Servicer. Any determination permitting the resignation of the Servicer
shall be evidenced as to clause (a) above by an Opinion of Counsel to such
effect delivered to the Owner Trustee and the Indenture Trustee. No resignation
shall become effective until the Indenture Trustee or a Successor Servicer shall
have assumed the responsibilities and obligations of the Servicer in accordance
with Section 7.02 hereof. If within 120 days of the date of the
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determination that the Servicer may no longer act as Servicer under clause (a)
above the Indenture Trustee is unable to appoint a Successor Servicer, the
Indenture Trustee shall serve as Successor Servicer. Notwithstanding the
foregoing, the Indenture Trustee shall, if it is legally unable so to act,
petition a court of competent jurisdiction to appoint any established
institution qualifying as an Eligible Servicer as the Successor Servicer
hereunder. The Indenture Trustee shall give prompt notice to each Rating Agency
and each Series Enhancer upon the appointment of a Successor Servicer.
Notwithstanding anything in this Agreement to the contrary, Household Finance
Corporation may assign part or all of its obligations and duties as Servicer
under this Agreement to an Affiliate of Household Finance Corporation so long as
Household Finance Corporation shall have fully guaranteed the performance of
such obligations and duties under this Agreement.
Section 5.06. Access to Certain Documentation and Information
Regarding the Receivables. The Servicer shall provide to the Owner Trustee or
the Indenture Trustee, as applicable, access to the documentation regarding the
Accounts and the Receivables in such cases where the Owner Trustee or the
Indenture Trustee, as applicable, is required in connection with the enforcement
of the rights of Noteholders or by applicable statutes or regulations to review
such documentation, such access being afforded without charge but only (a) upon
reasonable request, (b) during normal business hours, (c) subject to the
Servicer's normal security and confidentiality procedures and (d) at reasonably
accessible offices in the continental United States designated by the Servicer.
Nothing in this Section shall derogate from the obligation of the Transferor,
the Owner Trustee, the Indenture Trustee and the Servicer to observe any
applicable law prohibiting disclosure of information regarding the Obligors and
the failure of the Servicer to provide access as provided in this Section as a
result of such obligation shall not constitute a breach of this Section.
Section 5.07. Delegation of Duties. In the ordinary course of
business, the Servicer may at any time delegate its duties hereunder with
respect to the Accounts and the Receivables to any Person that agrees to conduct
such duties in accordance with the Credit Guidelines and this Agreement. Such
delegation shall not relieve the Servicer of its liability and responsibility
with respect to such duties, and shall not constitute a resignation within the
meaning of Section 5.05.
Section 5.08. Examination of Records. Each Transferor and the
Servicer shall indicate generally in their computer files or other records that
the Receivables arising in the Accounts have been conveyed to the Owner Trustee,
on behalf of the Trust, pursuant to this Agreement. Each Transferor and the
Servicer shall, prior to the sale or transfer to a third party of any
receivable, examine its computer records and other records to determine that
such receivable is not, and does not include, a Receivable.
ARTICLE VI
INSOLVENCY EVENTS
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Section 6.01. Rights upon the Occurrence of an Insolvency Event. If
any Transferor shall consent or fail to object to the appointment of a
bankruptcy trustee or conservator, receiver, liquidator or similar official in
any bankruptcy proceeding or other insolvency, readjustment of debt, marshalling
of assets and liabilities or similar proceedings of or relating to any
Transferor or of or relating to all or substantially all of such Transferor's
property, or the commencement of an action seeking a decree or order of a court
or agency or supervisory authority having jurisdiction in the premises for the
appointment of a bankruptcy trustee or conservator, receiver or liquidator in
any insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings, or for the winding-up, insolvency, bankruptcy,
reorganization, conservatorship, receivership or liquidation of such entity's
affairs, or notwithstanding an objection by such Transferor any such action
shall have remained undischarged or unstayed for a period of 60 days or upon
entry of any order or decree providing for such relief; or such Transferor shall
admit in writing its inability to pay its debts generally as they become due,
file, or consent or fail to object (or object without dismissal of any such
filing within 30 days of such filing) to the filing of, a petition to take
advantage of any applicable bankruptcy, insolvency or reorganization,
receivership or conservatorship or similar statute, make an assignment for the
benefit of its creditors or voluntarily suspend payment of its obligations (any
such act or occurrence with respect to any Person being an "INSOLVENCY EVENT"),
such Transferor shall on the day any such Insolvency Event occurs (the
"APPOINTMENT DATE"), immediately cease to transfer Principal Receivables to the
Owner Trustee or the Trust and shall promptly give notice to the Indenture
Trustee and the Owner Trustee thereof. Notwithstanding any cessation of the
transfer to the Owner Trustee or the Trust of additional Principal Receivables,
Principal Receivables transferred to the Trust prior to the occurrence of such
Insolvency Event, Collections in respect of such Principal Receivables and
Finance Charge and Administrative Receivables (whenever created) accrued in
respect of such Principal Receivables shall continue to be a part of the Trust
Assets and shall be allocated and distributed to Noteholders in accordance with
the terms of the Indenture and each Indenture Supplement.
ARTICLE VII
SERVICER DEFAULTS
Section 7.01. Servicer Defaults. If any one of the following events
(a "SERVICER DEFAULT") shall occur and be continuing:
(a) any failure by the Servicer to make any payment, transfer or
deposit or to give instructions or to give notice to the Indenture Trustee
to make such payment, transfer or deposit on or before the date occurring
five Business Days after the date such payment, transfer or deposit or
such instruction or notice is required to be made or given, as the case
may be, under the terms of this Agreement, the Indenture or any Indenture
Supplement;
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(b) failure on the part of the Servicer duly to observe or perform
in any material respect any other covenants or agreements of the Servicer
set forth in this Agreement which has an Adverse Effect and which
continues unremedied for a period of 60 days after the date on which
notice of such failure, requiring the same to be remedied, shall have been
given to the Servicer by the Owner Trustee or the Indenture Trustee, or to
the Servicer, the Owner Trustee and the Indenture Trustee by Holders of
Notes evidencing not less than 10% of the aggregate unpaid principal
amount of all Notes (or, with respect to any such failure that does not
relate to all Series, 10% of the aggregate unpaid principal amount of all
Series to which such failure relates); or the Servicer shall assign or
delegate its duties under this Agreement, except as permitted by Sections
5.02 and 5.07;
(c) any representation, warranty or certification made by the
Servicer in this Agreement or in any certificate delivered pursuant to
this Agreement shall prove to have been incorrect when made, which has an
Adverse Effect on the rights of the Noteholders of any Series (which
determination shall be made without regard to whether funds are then
available pursuant to any Series Enhancement) and which Adverse Effect
continues for a period of 60 days after the date on which notice thereof,
requiring the same to be remedied, shall have been given to the Servicer
by the Owner Trustee or the Indenture Trustee, or to the Servicer, the
Owner Trustee and the Indenture Trustee by the Holders of Notes evidencing
not less than 10% of the aggregate unpaid principal amount of all Notes
(or, with respect to any such representation, warranty or certification
that does not relate to all Series, 10% of the aggregate unpaid principal
amount of all Series to which such representation, warranty or
certification relates); or
(d) the Servicer shall consent to the appointment of a bankruptcy
trustee, conservator, receiver, liquidator or similar official in any
bankruptcy proceeding or other insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or
relating to the Servicer or of or relating to all or substantially all its
property, or a decree or order of a court or agency or supervisory
authority having jurisdiction in the premises for the appointment of a
bankruptcy trustee, conservator, receiver, liquidator or similar official
in any bankruptcy, insolvency, readjustment of debt, marshalling of assets
and liabilities or similar proceedings, or the winding-up or liquidation
of its affairs, shall have been entered against the Servicer; or the
Servicer shall admit in writing its inability to pay its debts generally
as they become due, file a petition to take advantage of any applicable
bankruptcy, insolvency or reorganization statute, make any assignment for
the benefit of its creditors or voluntarily suspend payment of its
obligations;
Then, in the event of any Servicer Default, so long as the Servicer
Default shall not have been remedied, either the Indenture Trustee or the
Holders of Notes evidencing more than 50% of the aggregate unpaid principal
amount of all Notes, by notice then given to the Servicer and the Owner Trustee
(and to the Indenture Trustee if given by the Noteholders) (a "TERMINATION
NOTICE"), may terminate all but not less than all the rights and obligations of
the Servicer as Servicer under this Agreement; provided,
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however, if within 60 days of receipt of a Termination Notice the Indenture
Trustee does not receive any bids from Eligible Servicers in accordance with
subsection 7.02(c) to act as a Successor Servicer and receives an Officer's
Certificate of the Servicer to the effect that the Servicer cannot in good faith
cure the Servicer Default which gave rise to the Termination Notice, the
Indenture Trustee shall grant a right of first refusal to the Transferor which
would permit the Transferor at its option to acquire the Notes on the
Distribution Date in the next calendar month.
The price for the Notes shall be equal to the sum of the amounts
specified therefor with respect to each outstanding Series in the related
Indenture Supplement. The Transferor shall notify the Indenture Trustee prior to
the Record Date for the Distribution Date of the acquisition if it is exercising
such right of first refusal. If the Transferor exercises such right of first
refusal, the Transferor shall deposit the price into the Collection Account not
later than 1:00 p.m., New York City time, on such Distribution Date in
immediately available funds. The price shall be allocated and distributed to
Noteholders in accordance with the terms of the Indenture and each Indenture
Supplement.
After receipt by the Servicer of a Termination Notice, and on the
date that a Successor Servicer is appointed by the Indenture Trustee pursuant to
Section 7.02, all authority and power of the Servicer under this Agreement shall
pass to and be vested in the Successor Servicer (a "Service Transfer"); and,
without limitation, the Indenture Trustee is hereby authorized and empowered
(upon the failure of the Servicer to cooperate) to execute and deliver, on
behalf of the Servicer, as attorney-in-fact or otherwise, all documents and
other instruments upon the failure of the Servicer to execute or deliver such
documents or instruments, and to do and accomplish all other acts or things
necessary or appropriate to effect the purposes of such Service Transfer. The
Servicer agrees to cooperate with the Indenture Trustee and such Successor
Servicer in effecting the termination of the responsibilities and rights of the
Servicer to conduct servicing hereunder, including the transfer to such
Successor Servicer of all authority of the Servicer to service the Receivables
provided for under this Agreement, including all authority over all Collections
which shall on the date of transfer be held by the Servicer for deposit, or
which have been deposited by the Servicer, in the Collection Account, or which
shall thereafter be received with respect to the Receivables, and in assisting
the Successor Servicer. The Servicer shall within 20 Business Days transfer its
electronic records relating to the Receivables to the Successor Servicer in such
electronic form as the Successor Servicer may reasonably request and shall
promptly transfer to the Successor Servicer all other records, correspondence
and documents necessary for the continued servicing of the Receivables in the
manner and at such times as the Successor Servicer shall reasonably request. To
the extent that compliance with this Section shall require the Servicer to
disclose to the Successor Servicer information of any kind which the Servicer
deems to be confidential, the Successor Servicer shall be required to enter into
such customary licensing and confidentiality agreements as the Servicer shall
deem reasonably necessary to protect its interests. The Servicer shall pay to
the Indenture Trustee and any Successor Servicer the reasonable transition
expenses incurred by such person and the agents in connection with any
transition of Servicing.
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Notwithstanding the foregoing, a delay in or failure of performance
referred to in paragraph (a) above for a period of 10 Business Days after the
applicable grace period or under paragraph (b) or (c) above for a period of 60
Business Days after the applicable grace period, shall not constitute a Servicer
Default if such delay or failure could not be prevented by the exercise of
reasonable diligence by the Servicer and such delay or failure was caused by an
act of God or the public enemy, acts of declared or undeclared war, public
disorder, rebellion or sabotage, epidemics, landslides, lightning, fire,
hurricanes, earthquakes, floods or similar causes. The preceding sentence shall
not relieve the Servicer from using all commercially reasonable efforts to
perform its obligations in a timely manner in accordance with the terms of this
Agreement and the Servicer shall provide the Indenture Trustee, Owner Trustee,
each Transferor and any Series Enhancer with an Officer's Certificate giving
prompt notice of such failure or delay by it, together with a description of its
efforts so to perform its obligations.
Section 7.02. Indenture Trustee To Act; Appointment of Successor.
(a) On and after the receipt by the Servicer of a Termination Notice
pursuant to Section 7.01, the Servicer shall continue to perform all servicing
functions under this Agreement until the date specified in the Termination
Notice or otherwise specified by the Indenture Trustee or until a date mutually
agreed upon by the Servicer and the Indenture Trustee. The Indenture Trustee
shall as promptly as possible after the giving of a Termination Notice appoint
an Eligible Servicer as a successor servicer (the "SUCCESSOR SERVICER"), and
such Successor Servicer shall accept its appointment by a written assumption in
a form acceptable to the Indenture Trustee. In the event that a Successor
Servicer has not been appointed or has not accepted its appointment at the time
when the Servicer ceases to act as Servicer, the Indenture Trustee without
further action shall automatically be appointed the Successor Servicer. The
Indenture Trustee may delegate any of its servicing obligations to an Affiliate
or agent in accordance with subsection 3.01(b) and Section 5.07. Notwithstanding
the foregoing, the Indenture Trustee shall, if it is legally unable so to act,
petition at the expense of the Servicer a court of competent jurisdiction to
appoint any established institution qualifying as an Eligible Servicer as the
Successor Servicer hereunder. The Indenture Trustee shall give prompt notice to
each Rating Agency and each Series Enhancer upon the appointment of a Successor
Servicer.
(b) Upon its appointment, the Successor Servicer shall be the
successor in all respects to the Servicer with respect to servicing functions
under this Agreement and shall be subject to all the responsibilities, duties
and liabilities relating thereto placed on the Servicer by the terms and
provisions hereof, and all references in this Agreement to the Servicer shall be
deemed to refer to the Successor Servicer.
(c) In connection with any Termination Notice, the Indenture Trustee
will review any bids which it obtains from Eligible Servicers and shall be
permitted to appoint any Eligible Servicer submitting such a bid as a Successor
Servicer for servicing compensation not in excess of the aggregate Monthly
Servicing Fees for all Series plus the sum of the amounts with respect to each
Series and with respect to each Distribution Date equal to any Collections of
Finance Charge and Administrative Receivables
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allocable to Noteholders of such Series which are payable to the holders of the
Transferor Certificates after payment of all amounts owing to the Noteholders of
such Series with respect to such Distribution Date or required to be deposited
in the applicable Series Accounts with respect to such Distribution Date and any
amounts required to be paid to any Series Enhancer for such Series with respect
to such Distribution Date pursuant to the terms of any Enhancement Agreement;
provided, however, that the Holders of the Transferor Certificates shall be
responsible for payment of the Transferor's portion of such aggregate Monthly
Servicing Fees and all other such amounts, including any amount of reasonable
transition expenses not paid by the Servicer pursuant to subsection 7.01, in
excess of such aggregate Monthly Servicing Fees. Each Holder of the Transferor's
Certificates agrees that, if Household Finance Corporation (or any Successor
Servicer) is terminated as Servicer hereunder, the portion of the Collections in
respect of Finance Charge and Administrative Receivables that the Transferor is
entitled to receive pursuant to this Agreement, the Indenture or any Indenture
Supplement shall be reduced by an amount sufficient to pay the Transferor's
share of the compensation of the Successor Servicer.
(d) All authority and power granted to the Servicer under this
Agreement shall automatically cease and terminate upon termination of the Trust
pursuant to Section 8.01 of the Trust Agreement, and shall pass to and be vested
in the Transferor and, without limitation, the Transferor is hereby authorized
and empowered to execute and deliver, on behalf of the Servicer, as
attorney-in-fact or otherwise, all documents and other instruments, and to do
and accomplish all other acts or things necessary or appropriate to effect the
purposes of such transfer of servicing rights. The Servicer agrees to cooperate
with the Transferor in effecting the termination of the responsibilities and
rights of the Servicer to conduct servicing of the Receivables. The Servicer
shall transfer its electronic records relating to the Receivables to the
Transferor or its designee in such electronic form as it may reasonably request
and shall transfer all other records, correspondence and documents to it in the
manner and at such times as it shall reasonably request. To the extent that
compliance with this Section shall require the Servicer to disclose to the
Transferor information of any kind which the Servicer deems to be confidential,
the Transferor shall be required to enter into such customary licensing and
confidentiality agreements as the Servicer shall deem necessary to protect its
interests.
Section 7.03. Notification to Noteholders. Within five Business Days
after the Servicer becomes aware of any Servicer Default, the Servicer shall
give notice thereof to the Owner Trustee, the Indenture Trustee, each Rating
Agency and each Series Enhancer and the Indenture Trustee shall give notice to
the Noteholders. Upon any termination or appointment of a Successor Servicer
pursuant to this Article, the Indenture Trustee shall give prompt notice thereof
to the Noteholders.
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ARTICLE VIII
TERMINATION
Section 8.01. Termination of Agreement. This Agreement and the
respective obligations and responsibilities of the Trust, the Owner Trustee, the
Transferor and the Servicer under this Agreement shall terminate, except with
respect to the duties described in Section 5.04, on the Trust Termination Date.
ARTICLE IX
MISCELLANEOUS PROVISIONS
Section 9.01. Amendment; Waiver of Past Defaults.
(a) This Agreement may be amended by the parties hereto from time to
time prior to, or in connection with, the issuance of the first Series of Notes
hereunder without the requirement of any consents or the satisfaction of any
conditions set forth below. This Agreement may be amended from time to time by
the Servicer, the Transferor and the Owner Trustee, by a written instrument
signed by each of them, without the consent of the Indenture Trustee or any of
the Noteholders, provided that (i) the Transferor shall have delivered to the
Indenture Trustee and the Owner Trustee an Officer's Certificate, dated the date
of any such Amendment, stating that the Transferor reasonably believes that such
amendment will not have an Adverse Effect and (ii) the Rating Agency Condition
shall have been satisfied with respect to any such amendment; provided, however,
the Servicer, the Transferor and the Owner Trustee, may enter into one or more
amendments, without the consent of the Indenture Trustee or the Holders of any
Notes or prior notice to the Rating Agencies (provided that a final amendment to
this Agreement signed by the parties hereto shall be delivered to each Rating
Agency within 10 days of its execution) in order to (A) cure any ambiguity, to
correct or supplement any provision herein or in any amendment hereto that may
be inconsistent with any other provision herein or in any amendment hereto, (B)
to make any other provisions with respect to matters or questions arising under
this Agreement or in any amendment hereto or (C) qualify for sale treatment
under generally accepted accounting principles; provided, that such amendment
shall not have an Adverse Effect and, in the case of clause (C), the Transferor
shall have delivered a Tax Opinion to the Indenture Trustee with respect to such
amendment. Additionally, notwithstanding the preceding sentence, this Agreement
will be amended by the Servicer and the Owner Trustee at the direction of the
Transferor without the consent of the Indenture Trustee or any of the
Noteholders or Series Enhancers to add, modify or eliminate such provisions as
may be necessary or advisable in order to enable all or a portion of the Trust
(i) to qualify as, and to permit an election to be made to cause the Trust to be
treated as, a "financial asset securitization investment trust" as described in
the provisions of Section 860L of the Code, and (ii) to avoid the imposition of
state or local income or franchise taxes imposed on the Trust's property or its
income; provided, however, that (i) the Transferor delivers to the Indenture
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Trustee and the Owner Trustee an Officer's Certificate to the effect that the
proposed amendments meet the requirements set forth in this subsection, (ii)
each Rating Agency will have notified the Transferor, the Servicer, the
Indenture Trustee and the Owner Trustee in writing that the amendment will not
result in a reduction or withdrawal of the rating of any outstanding Series or
Class as to which it is a Rating Agency and (iii) such amendment does not affect
the rights, duties or obligations of the Indenture Trustee or the Owner Trustee
hereunder. The amendments which the Transferor may make without the consent of
Noteholders or Series Enhancers pursuant to the preceding sentence may include,
without limitation, the addition of a sale of Receivables.
(b) This Agreement may also be amended from time to time by the
Servicer, the Transferor and the Owner Trustee, with the consent of the Holders
of Outstanding Notes evidencing not less than 66-2/3% of the aggregate unpaid
principal amount of the Outstanding Notes of all affected Series for which the
Transferor has not delivered an Officer's Certificate stating that there is no
Adverse Effect, for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement or of modifying in
any manner the rights of the Noteholders; provided, however, that no such
amendment shall (i) reduce in any manner the amount of or delay the timing of
any distributions (changes in Amortization Events or Reinvestment Events that
decrease the likelihood of the occurrence thereof shall not be considered delays
in the timing of distributions for purposes of this clause) to be made to
Noteholders or deposits of amounts to be so distributed or the amount available
under any Series Enhancement without the consent of each affected Holder of
Outstanding Notes, (ii) change the definition of or the manner of calculating
the interest of any Noteholder without the consent of each affected Holder of
Outstanding Notes, (iii) reduce the aforesaid percentage required to consent to
any such amendment without the consent of each Holder of Outstanding Notes or
(iv) adversely affect the rating of any Series or Class by each Rating Agency
without the consent of the Holders of Outstanding Notes of such Series or Class
evidencing not less than 66-2/3% of the aggregate unpaid principal amount of the
Outstanding Notes of such Series or Class.
(c) Promptly after the execution of any such amendment or consent
(other than an amendment pursuant to paragraph (a)), the Owner Trustee shall
furnish notification of the substance of such amendment to the Indenture Trustee
and each Noteholder, and the Servicer shall furnish notification of the
substance of such amendment to each Rating Agency and each Series Enhancer.
(d) It shall not be necessary for the consent of Noteholders under
this Section 9.01 to approve the particular form of any proposed amendment, but
it shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Noteholders shall be subject to such reasonable
requirements as the Indenture Trustee may prescribe.
(e) Notwithstanding anything in this Section 9.01 to the contrary,
no amendment may be made to this Agreement or any Participation Interest
Supplement
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which would adversely affect in any material respect the interests of any Series
Enhancer without the consent of such Series Enhancer.
(f) Any Indenture Supplement executed in accordance with the
provisions of Article X of the Indenture shall not be considered an amendment of
this Agreement for the purposes of this Section 9.01.
(g) The Holders of Outstanding Notes evidencing more than 66-2/3% of
the aggregate unpaid principal amount of the Outstanding Notes of each Series
or, with respect to any Series with two or more Classes, of each Class (or, with
respect to any default that does not relate to all Series, 66-2/3% of the
aggregate unpaid principal amount of the Outstanding Notes of each Series to
which such default relates or, with respect to any such Series with two or more
Classes, of each Class) may, on behalf of all Noteholders, waive any default by
the Transferor or the Servicer in the performance of their obligations hereunder
and its consequences, except the failure to make any distributions required to
be made to Noteholders or to make any required deposits of any amounts to be so
distributed. Upon any such waiver of a past default, such default shall cease to
exist, and any default arising therefrom shall be deemed to have been remedied
for every purpose of this Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereon except to the
extent expressly so waived.
(h) The Owner Trustee may, but shall not be obligated to, enter into
any such amendment which affects the Owner Trustee's rights, duties or
immunities under this Agreement or otherwise. In connection with the execution
of any amendment hereunder, the Owner Trustee shall be entitled to receive the
Opinion of Counsel described in subsection 9.02(d).
Section 9.02. Protection of Right, Title and Interest to Trust.
(a) The Transferor shall cause this Agreement, all amendments and
supplements hereto and all financing statements and continuation statements and
any other necessary documents covering the Indenture Trustee's and the Owner
Trustee's right, title and interest to the Trust to be promptly recorded,
registered and filed, and at all times to be kept recorded, registered and
filed, all in such manner and in such places as may be required by law fully to
preserve and protect the right, title and interest of the Indenture Trustee,
Noteholders and the Owner Trustee hereunder to all property comprising the
Trust. The Transferor shall deliver to the Owner Trustee and Indenture Trustee
file-stamped copies of, or filing receipts for, any document recorded,
registered or filed as provided above, as soon as available following such
recording, registration or filing. The Servicer shall cooperate fully with the
Transferor in connection with the obligations set forth above and will execute
any and all documents reasonably required to fulfill the intent of this
paragraph.
(b) Within 30 days after any Transferor makes any change in its
name, identity or corporate structure which would make any financing statement
or continuation statement filed in accordance with paragraph (a) seriously
misleading within the meaning
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of Section 9-402(7) (or any comparable provision) of the UCC, such Transferor
shall give the Owner Trustee and the Indenture Trustee notice of any such change
and shall file such financing statements or amendments as may be necessary to
continue the perfection of the Owner Trustee's and the Trust's security interest
or ownership interest in the Receivables and the proceeds thereof.
(c) Each Transferor shall give the Owner Trustee and the Indenture
Trustee prompt notice of any relocation of its chief executive office or any
change in the jurisdiction of its organization and whether, as a result of such
relocation or change, the applicable provisions of the UCC would require the
filing of any amendment of any previously filed financing or continuation
statement or of any new financing statement and shall file such financing
statements or amendments as may be necessary to perfect or to continue the
perfection of the Owner Trustee's and the Trust's security interest in the
Receivables and the proceeds thereof. Each Transferor shall at all times
maintain its chief executive offices within the United States and shall at all
times be organized under the laws of a jurisdiction located within the United
States.
(d) The Transferor shall deliver to the Owner Trustee and the
Indenture Trustee (i) upon the execution and delivery of each amendment of this
Agreement, an Opinion of Counsel to the effect specified in EXHIBIT D-1; (ii) on
each date specified in subsection 2.09(c)(ix) with respect to Aggregate
Additions to be designated as Accounts, an Opinion of Counsel substantially in
the form of EXHIBIT D-2, (iii) on each date specified in subsection
2.09(e)(vii), with respect to any New Accounts included as Accounts, an Opinion
of Counsel substantially in the form of EXHIBIT D-2, (iv) on each Addition Date
on which any Participation Interests are to be included in the Trust pursuant to
subsection 2.09(a) or (b), an Opinion of Counsel covering the same substantive
legal issues addressed by EXHIBITS D-1 and D-2 but conformed to the extent
appropriate to relate to Participation Interests; and (v) on or before April 30
of each year, beginning with April 30, 2002, an Opinion of Counsel substantially
in the form of EXHIBIT D-3.
Section 9.03. 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 OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 9.04. Notices; Payments.
(a) All demands, notices, instructions, directions and
communications (collectively, "NOTICES") under this Agreement shall be in
writing and shall be deemed to have been duly given if personally delivered at,
mailed by registered mail, return receipt requested, or sent by facsimile
transmission (i) in the case of the Transferor, to HRSI Funding, Inc. II, 0000
Xxxxxxx Xxxx, Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000, Attention: President (facsimile
no. (000) 000-0000), (ii) in the case of the Bank, to Household Bank (SB),
National Association at 0000 Xxxx Xxxxxx, Xxx Xxxxx, Xxxxxx 00000 Attention:
General Counsel (facsimile no. (000) 000-0000), (iii) in the case of the
Servicer, to
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Household Finance Corporation, at 0000 Xxxxxxx Xxxx, Xxxxxxxx Xxxxxxx, Xxxxxxxx
00000, Attention: X.X. Xxxxx, Assistant Treasurer (facsimile no. (847)
205-7538), with copies to Household International at 0000 Xxxxxxx Xxxx, Xxxxxxxx
Xxxxxxx, Xxxxxxxx 00000, Attention: General Counsel's Office, Securities and
Funding Unit (facsimile no. (000) 000-0000), (iv) in the case of the Owner
Trustee, to Wilmington Trust Company, at Xxxxxx Square North, 0000 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx, XX 00000-0000, Attention: Corporate Trust Administration
(facsimile no. (000) 000-0000), (v) in the case of Fitch, to Fitch, Inc., Xxx
Xxxxx Xxxxxx Xxxxx, Xxx Xxxx, XX 00000, Attention: ABS Surveillance (facsimile
no. (000) 000-0000), (vi) in the case of Moody's, to Xxxxx'x Investors Service
Inc., 00 Xxxxxx Xxxxxx, Xxx Xxxx, XX 00000, Attention: ABS Monitoring Group
(facsimile no. (000) 000-0000), (vii) in the case of Standard & Poor's, to
Standard & Poor's Ratings Group, 00 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000, Attention:
Credit Card ABS (facsimile no. (000) 000-0000), and (viii) to any other Person
as specified in the Indenture or any Indenture Supplement; or, as to each party,
at such other address or facsimile number as shall be designated by such party
in a written notice to each other party.
(b) Any Notice required or permitted to be given to a Holder of
Registered Notes shall be given by first-class mail, postage prepaid, at the
address of such Holder as shown in the Note Register. No Notice shall be
required to be mailed to a Holder of Bearer Notes or Coupons but shall be given
as provided below. Any Notice so mailed within the time prescribed in this
Agreement shall be conclusively presumed to have been duly given, whether or not
the Noteholder receives such Notice. In addition, (a) if and so long as any
Series or Class is listed on the Luxembourg Stock Exchange and such Exchange
shall so require, any Notice to Noteholders shall be published in an Authorized
Newspaper of general circulation in Luxembourg within the time period prescribed
in this Agreement and (b) in the case of any Series or Class with respect to
which any Bearer Notes are outstanding, any Notice required or permitted to be
given to Noteholders of such Series or Class shall be published in an Authorized
Newspaper within the time period prescribed in this Agreement.
Section 9.05. 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 provisions shall be deemed
severable from the remaining provisions of this Agreement and shall in no way
affect the validity or enforceability of the remaining provisions or of the
Notes or the rights of the Noteholders.
Section 9.06. Additional Obligations of the Servicer. The Servicer
further agrees to perform all duties of the Servicer as described in the
Indenture and any Indenture Supplement.
Section 9.07. Further Assurances. The Transferor and the Servicer
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 Owner
Trustee and the Indenture Trustee more fully to effect the purposes of this
Agreement, including the execution of
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62
any financing statements or continuation statements relating to the Receivables
for filing under the provisions of the UCC of any applicable jurisdiction.
Section 9.08. No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of the Owner Trustee, the Indenture
Trustee or the Noteholders, any right, remedy, power or privilege under this
Agreement shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege under this Agreement preclude
any other or further exercise thereof or the exercise of any other right,
remedy, power or privilege. The rights, remedies, powers and privileges provided
under this Agreement 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. Third-Party Beneficiaries. This Agreement will inure
to the benefit of and be binding upon the parties hereto, the Indenture Trustee,
the Owner Trustee, the Noteholders, any Series Enhancer and their respective
successors and permitted assigns. Except as otherwise expressly provided in this
Agreement, no other Person will have any right or obligation hereunder.
Section 9.11. Actions by Noteholders.
(a) Wherever in this Agreement a provision is made that an action
may be taken or a Notice given by Noteholders, such action or Notice may be
taken or given by any Noteholder, unless such provision requires a specific
percentage of Noteholders.
(b) Any Notice, request, authorization, direction, consent, waiver
or other act by the Holder of a Note shall bind such Holder and every subsequent
Holder of such Note and of any Note issued upon the registration of transfer
thereof or in exchange therefor or in lieu thereof in respect of anything done
or omitted to be done by the Owner Trustee, the Transferor or the Servicer in
reliance thereon, whether or not notation of such action is made upon such Note.
Section 9.12. Rule 144A Information. For so long as any of the Notes
of any Series or Class are "restricted securities" within the meaning of Rule
144(a)(3) under the Securities Act, each of the Transferor, the Owner Trustee,
the Indenture Trustee, the Servicer and any Series Enhancer agree to cooperate
with each other to provide to any Noteholders of such Series or Class and to any
prospective purchaser of Notes designated by such Noteholder, upon the request
of such Noteholder or prospective purchaser, any information required to be
provided to such holder or prospective purchaser to satisfy the condition set
forth in Rule 144A(d)(4) under the Securities Act.
Section 9.13. Merger and Integration. Except as specifically stated
otherwise herein, this Agreement sets forth the entire understanding of the
parties relating to the subject matter hereof, and all prior understandings,
written or oral, are superseded
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by this Agreement. This Agreement may not be modified, amended, waived or
supplemented except as provided herein.
Section 9.14. Headings. The headings herein are for purposes of
reference only and shall not otherwise affect the meaning or interpretation of
any provision hereof.
Section 9.15. Representative Capacity. It is expressly understood
and agreed by and between the parties hereto that this Agreement is executed and
delivered by Wilmington Trust Company, not it its individual capacity but solely
as Owner Trustee under the Trust Agreement in the exercise of the power and
authority conferred and vested in it as such Owner Trustee.
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64
IN WITNESS WHEREOF, the Transferor, the Servicer and the Owner Trustee have
caused this Transfer and Servicing Agreement to be duly executed by their
respective officers as of the day and year first above written.
Dated: ____________ HRSI FUNDING, INC. II,
Transferor
By:
----------------------------------------
Name:
Title:
HOUSEHOLD FINANCE CORPORATION,
Servicer
By:
----------------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Owner
Trustee on behalf of the HOUSEHOLD PRIVATE
LABEL CREDIT CARD MASTER NOTE TRUST I
By:
----------------------------------------
Name:
Title:
Acknowledged and Accepted:
By: U.S. BANK NATIONAL ASSOCIATION,
not in its individual capacity but solely
as Indenture Trustee
By:
---------------------------------------
Name:
Title:
60
65
EXHIBIT A
FORM OF ASSIGNMENT OF RECEIVABLES IN ADDITIONAL ACCOUNTS
(As required by Section 2.09 of
the Transfer and Servicing Agreement)
ASSIGNMENT No. _________ OF RECEIVABLES IN ADDITIONAL ACCOUNTS,
dated as of ____________,(1) by and among HRSI FUNDING, INC. II, a Delaware
corporation, as Transferor (the "TRANSFEROR"), HOUSEHOLD FINANCE CORPORATION, a
Delaware corporation, as Servicer (the "SERVICER"), and WILMINGTON TRUST
COMPANY, not in its individual capacity but solely as owner trustee (the "OWNER
TRUSTEE") of the HOUSEHOLD PRIVATE LABEL CREDIT CARD MASTER NOTE TRUST I (the
"TRUST"), a Delaware common law trust, pursuant to the Amended and Transfer and
Servicing Agreement referred to below.
WITNESSETH:
WHEREAS the Transferor, the Servicer and the Owner Trustee are
parties to the Transfer and Servicing Agreement dated as of _________, 2001 (the
"AGREEMENT");
WHEREAS, pursuant to the Agreement, the Transferor wishes to
designate Additional Accounts to be included as Accounts and to convey the
Receivables of such Additional Accounts, whether now existing or hereafter
created, to the Owner Trustee on behalf of the Trust; and
WHEREAS the Owner Trustee on behalf of the Trust is willing to
accept such designation and conveyance subject to the terms and conditions
hereof;
NOW, THEREFORE, the Transferor, the Servicer and the Owner Trustee
hereby agree as follows:
1. Defined Terms. All capitalized terms used herein shall have the
meanings ascribed to them in the Agreement unless otherwise defined herein.
"ADDITION DATE" shall mean, with respect to the Additional Accounts
designated hereby, __________, ____.
"ADDITIONAL CUT-OFF DATE" shall mean, with respect to the Additional
Accounts designated hereby, __________, ____.
2. Designation of Additional Accounts. On or before the Document
Delivery Date, the Transferor will deliver to the Owner Trustee a computer file,
microfiche list or printed list containing a true and complete schedule
identifying all
-----------------------------------------
(1) To be dated as of the applicable Addition Date.
A-1
66
Additional Accounts designated hereby (the "Additional Accounts") specifying for
each such Account, as of the Additional Cut-Off Date, its account number, the
aggregate amount outstanding in such Account and the aggregate amount of
Principal Receivables outstanding in such Account, which computer file,
microfiche list or printed list shall be marked as Schedule 1 to this Assignment
and shall supplement SCHEDULE 1 to the Agreement.
3. Conveyance of Receivables. (a) The Transferor does hereby sell,
transfer, assign, set over and otherwise convey, without recourse except as set
forth in the Transfer and Servicing Agreement, to the Owner Trustee on behalf of
the Trust, all its right, title and interest in, to and under the Receivables of
such Additional Accounts existing on the Additional Cut-Off Date and thereafter
created from time to time until the termination of the Trust, all Recoveries
related thereto, all monies due or to become due and all amounts received or
receivable with respect thereto and all proceeds (including "proceeds" as
defined in the UCC) thereof. The foregoing does not constitute and is not
intended to result in the creation or assumption by the Trust, the Owner
Trustee, the Indenture Trustee, any Noteholders or any Series Enhancer of any
obligation of the Servicer, the Transferor or any other Person in connection
with the Accounts, the Receivables or under any agreement or instrument relating
thereto, including any obligation to Obligors, merchant banks, merchants
clearance systems or insurers.
(b) The Transferor agrees to record and file, at its own expense,
financing statements (and continuation statements when applicable) with respect
to the Receivables existing on the Additional Cut-Off Date and thereafter
created in Additional 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 sale and assignment of its interest in such
Receivables to the Owner Trustee on behalf of the Trust, and to deliver a
file-stamped copy of each such financing statement or other evidence of such
filing to the Owner Trustee on or prior to the Addition Date. The Owner Trustee
shall be under no obligation whatsoever to file such financing or continuation
statements or to make any other filing under the UCC in connection with such
sale and assignment.
(c) In connection with such sale, the Transferor further agrees, at
its own expense, on or prior to the date of this Assignment, to indicate in the
appropriate computer files that Receivables created in connection with the
Additional Accounts and designated hereby have been conveyed to the Owner
Trustee on behalf of the Trust pursuant to the Agreement and this Assignment.
(d) The Transferor does hereby grant to the Owner Trustee on behalf
of the Trust a security interest in all of its right, title and interest,
whether now owned or hereafter acquired, in and to the Receivables of the
Additional Accounts existing on the Additional Cut-Off Date and thereafter
created from time to time until the termination of the Trust, all Recoveries
related thereto, all monies due or to become due and all amounts received or
receivable with respect thereto and all "proceeds" (including "proceeds" as
defined in the UCC) thereof. This Assignment constitutes a security agreement
under the UCC.
A-2
67
4. Acceptance by Owner Trustee on behalf of the Trust. The Owner
Trustee on behalf of the Trust hereby acknowledges its acceptance of all right,
title and interest to the property, now existing and hereafter created, conveyed
to the Owner Trustee on behalf of the Trust pursuant to Section 3 of this
Assignment. The Trust further acknowledges that, prior to or simultaneously with
the execution and delivery of this Assignment, the Transferor delivered to the
Owner Trustee the computer file, microfiche list or printed list described in
Section 2 of this Assignment.
5. Representations and Warranties of the Transferor. The Transferor
hereby represents and warrants to the Owner Trustee on behalf of the Trust, as
of the date of this Assignment and as of the Addition Date that:
(a) Legal Valid and Binding Obligation. This Assignment constitutes
a legal, valid and binding obligation of the Transferor enforceable against the
Transferor in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect affecting the enforcement of
creditors' rights in general and except as such enforceability may be limited by
general principles of equity (whether considered in a suit at law or in equity);
(b) Eligibility of Accounts. As of the Additional Cut-Off Date,
each Additional Account designated hereby is an Eligible Account;
(c) Insolvency. As of each of the Additional Cut-Off Date and the
Addition Date, no Insolvency Event with respect to the Transferor has occurred
and the transfer by the Transferor of Receivables arising in the Additional
Accounts to the Trust has not been made in contemplation of the occurrence
thereof;
(d) Amortization Event; Event of Default. The Transferor
reasonably believes that (A) the addition of the Receivables arising in the
Additional Accounts will not, based on the facts known to the Transferor, then
or thereafter cause an Amortization Event or Event of Default to occur with
respect to any Series and (B) no selection procedure was utilized by the
Transferor which would result in the selection of Additional Accounts (from
among the available Eligible Accounts available to the Transferor) that would be
materially adverse to the interests of the Noteholders of any Series as of the
Addition Date;
(e) Security Interest. This Assignment constitutes a valid sale,
transfer and assignment to the Trust of all right, title and interest, whether
now owned or hereafter acquired, of the Transferor in the Receivables existing
on the Additional Cut-Off Date and thereafter created in the Additional
Accounts, all Recoveries related thereto, all monies due or to become due and
all amounts received or receivable with respect thereto and the "proceeds"
(including "proceeds" as defined in the UCC) thereof, or, if this Assignment
does not constitute a sale of such property, it constitutes a grant of a
"security interest" (as defined in the UCC) in such property to the Owner
Trustee on behalf of the Trust, which, in the case of existing Receivables and
the proceeds thereof, is enforceable upon execution and delivery of this
Assignment, and which will be
A-3
68
enforceable with respect to such Receivables hereafter created and the proceeds
thereof upon such creation. Upon the filing of the financing statements
described in Section 3 of this Assignment and, in the case of the Receivables
hereafter created and the proceeds thereof, upon the creation thereof, the Trust
shall have a first priority perfected security or ownership interest in such
property;
(f) No Conflict. The execution and delivery by the Transferor of
this Assignment, the performance of the transactions contemplated by this
Assignment and the fulfillment of the terms hereof applicable to the Transferor,
will not conflict with or violate any Requirements of Law applicable to the
Transferor or 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 the Transferor is a party or by which
it or its properties are bound;
(g) No Proceedings. There are no proceedings or investigations,
pending or, to the best knowledge of the Transferor, threatened against the
Transferor before any court, regulatory body, administrative agency or other
tribunal or governmental instrumentality (i) asserting the invalidity of this
Assignment, (ii) seeking to prevent the consummation of any of the transactions
contemplated by this Assignment, (iii) seeking any determination or ruling that,
in the reasonable judgment of the Transferor, would materially and adversely
affect the performance by the Transferor of its obligations under this
Assignment or (iv) seeking any determination or ruling that would materially and
adversely affect the validity or enforceability of this Assignment; and
(h) All Consents. All authorizations, consents, orders or approvals
of any court or other governmental authority required to be obtained by the
Transferor in connection with the execution and delivery of this Assignment by
the Transferor and the performance of the transactions contemplated by this
Assignment by the Transferor, have been obtained.
6. Ratification of Agreement. As supplemented by this Assignment,
the Agreement is in all respects ratified and confirmed and the Agreement as so
supplemented by this Assignment shall be read, taken and construed as one and
the same instrument.
7. Counterparts. This Assignment 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 shall constitute one and the same
instrument.
8. GOVERNING LAW. THIS ASSIGNMENT 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.
A-4
69
IN WITNESS WHEREOF, the Transferor, the Servicer and the Owner
Trustee have caused this Assignment to be duly executed by their respective
officers as of the day and year first above written.
HRSI FUNDING, INC. II,
Transferor
By:
----------------------------------------
Name:
Title:
HOUSEHOLD FINANCE CORPORATION,
Servicer
By:
----------------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Owner
Trustee on behalf of the HOUSEHOLD PRIVATE
LABEL CREDIT CARD MASTER NOTE TRUST I, Issuer
By:
----------------------------------------
Name:
Title:
X-0
00
XXXXXXX X
FORM OF REASSIGNMENT OF RECEIVABLES IN REMOVED ACCOUNTS
(As required by Section 2.10 of
the Transfer and Servicing Agreement)
REASSIGNMENT No. ___________ OF RECEIVABLES dated as of
___________,(1) by and among HRSI FUNDING, INC. II, a Delaware corporation, as
Transferor (the "TRANSFEROR"), HOUSEHOLD FINANCE CORPORATION, a Delaware
corporation, as Servicer and WILMINGTON TRUST COMPANY, not in its individual
capacity but solely as owner trustee (the "OWNER TRUSTEE") of the HOUSEHOLD
PRIVATE LABEL CREDIT CARD MASTER NOTE TRUST I, (the "TRUST"), a Delaware common
law trust, pursuant to the Transfer and Servicing Agreement referred to below.
WITNESSETH:
WHEREAS the Transferor, the Servicer and the Owner Trustee are
parties to the Transfer and Servicing Agreement dated as of __________ (the
"AGREEMENT");
WHEREAS pursuant to the Agreement, the Bank wishes to remove from
the Trust all Receivables owned by the Owner Trustee on behalf of the Trust in
certain designated Accounts and to cause the Owner Trustee on behalf of the
Trust to reconvey the Receivables of such Removed Accounts, whether now existing
or hereafter created to the Transferor; and
WHEREAS the Owner Trustee on behalf of the Trust is willing to
accept such designation and to reconvey the Receivables in the Removed Accounts
subject to the terms and conditions hereof;
NOW, THEREFORE, the Transferor and the Trust hereby agree as
follows:
1. Defined Terms. All terms defined in the Agreement and used herein
shall have such defined meanings when used herein, unless otherwise defined
herein.
"REMOVAL DATE" shall mean, with respect to the Removed
Accounts designated hereby, __________, ____.
"REMOVAL NOTICE DATE" shall mean, with respect to the Removed
Accounts, __________, ____.
----------------------------
(1) To be dated as of the Removal Date.
B-1
71
2. Designation of Removed Accounts. On or before the Document
Delivery Date, the Transferor will deliver to the Owner Trustee a computer file,
microfiche list or printed list containing a true and complete schedule
identifying all Accounts (the "REMOVED ACCOUNTS") the Receivables of which are
being removed from the Trust, specifying for each such Account, as of the
Removal Notice Date, its account number, the aggregate amount outstanding in
such Account and the aggregate amount of Principal Receivables in such Account,
which computer file, microfiche list or printed list shall be marked as Schedule
1 of this Reassignment and shall supplement Schedule 1 to the Agreement.
3. Conveyance of Receivables. (a) The Owner Trustee on behalf of the
Trust does hereby transfer, assign, set over and otherwise convey to the
Transferor, without recourse, on and after the Removal Date, all right, title
and interest of the Owner Trustee and the Trust in, to and under the Receivables
existing at the close of business on the Removal Notice Date and thereafter
created from time to time in the Removed Accounts designated hereby, all
Recoveries related thereto, all monies due or to become due and all amounts
received or receivable with respect thereto and all proceeds thereof.
(b) In connection with such transfer, the Owner Trustee agrees to
execute and deliver to the Transferor on or prior to the date this Reassignment
is delivered, applicable termination statements prepared by the Transferor with
respect to the Receivables existing at the close of business on the Removal
Notice Date and thereafter created from time to time in the Removed Accounts
reassigned hereby and the proceeds thereof evidencing the release by the Owner
Trustee and the Trust of its interest in the Receivables in the Removed
Accounts, and meeting the requirements of applicable state law, in such manner
and such jurisdictions as are necessary to terminate such interest.
4. Representations and Warranties of the Transferor. The Transferor
hereby represents and warrants to the Owner Trustee and the Trust as of the
Removal Date:
(a) Legal Valid and Binding Obligation. This Reassignment
constitutes a legal, valid and binding obligation of the Transferor
enforceable against the Transferor, in accordance with its terms, except
as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect affecting the enforcement of creditors' rights in
general and except as such enforceability may be limited by general
principles of equity (whether considered in a suit at law or in equity);
and
(b) Amortization Event; Event of Default. The Transferor
reasonably believes that (A) the removal of the Receivables existing in
the Removed Accounts will not, based on the facts known to the Transferor,
then or thereafter cause an Amortization Event or Event of Default to
occur with respect to any Series and (B) no selection procedure was
utilized by the Transferor which would result in a selection of Removed
Accounts that would be materially adverse to the interests of the
Noteholders of any Series as of the Removal Date.
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72
(c) List of Removed Accounts. The list of Removed Accounts
delivered pursuant to subsection 2.10(a)(ii) of the Agreement, as of the
Removal Notice Date, is true and complete in all material respects.
5. Ratification of Agreement. As supplemented by this Reassignment,
the Agreement is in all respects ratified and confirmed and the Agreement as so
supplemented by this Reassignment shall be read, taken and construed as one and
the same instrument.
6. Counterparts. This Reassignment 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 shall constitute one and the same
instrument.
7. GOVERNING LAW. THIS REASSIGNMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
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73
IN WITNESS WHEREOF, the Transferor, the Servicer and the Owner
Trustee have caused this Reassignment to be duly executed by their respective
officers as of the day and year first above written.
HRSI FUNDING, INC. II,
Transferor
By:
----------------------------------------
Name:
Title:
HOUSEHOLD FINANCE CORPORATION,
Servicer
By:
----------------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Owner
Trustee on behalf of the HOUSEHOLD PRIVATE
LABEL CREDIT CARD MASTER NOTE TRUST I, Issuer
By:
----------------------------------------
Name:
Title:
B-4
74
EXHIBIT C
FORM OF ANNUAL SERVICER'S CERTIFICATE
(To be delivered on or before March 31 of
each calendar year beginning with ________,
pursuant to Section 3.05 of the Transfer and
Servicing Agreement referred to below)
HOUSEHOLD PRIVATE LABEL CREDIT CARD MASTER NOTE TRUST I
The undersigned, a duly authorized representative of Household
Finance Corporation, as Servicer ("HOUSEHOLD FINANCE CORPORATION"), pursuant to
the Transfer and Servicing Agreement, dated as of ________, 2001 (the
"Agreement"), among HRSI Funding, Inc. II, as transferor, Household Finance
Corporation, and Household Private Label Credit Card Master Note Trust I, does
hereby certify that:
1. Household Finance Corporation is, as of the date hereof, the
Servicer under the Agreement. Capitalized terms used in this Certificate have
their respective meanings as set forth in the Agreement.
2. The undersigned is an Authorized Officer who is duly authorized
pursuant to the Agreement to execute and deliver this Certificate to the Trust.
3. A review of the activities of the Servicer during the year ended
December 31, ____, and of its performance under the Agreement was conducted
under my supervision.
4. Based on such review, the Servicer has, to the best of my
knowledge, performed in all material respects its obligations under the
Agreement throughout such year and no default in the performance of such
obligations has occurred or is continuing except as set forth in paragraph 5
below.
5. The following is a description of each default in the performance
of the Servicer's obligations under the provisions of the Agreement known to me
to have been made by the Servicer during the year ended December 31, _____ which
sets forth in detail (i) the nature of each such default, (ii) the action taken
by the Servicer, if any, to remedy each such default and (iii) the current
status of each such default: [If applicable, insert "None."]
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75
IN WITNESS WHEREOF, the undersigned has duly executed this
Certificate this ____ day of _____________, 20___.
HOUSEHOLD FINANCE CORPORATION,
By:
----------------------------------------
Name:
Title:
X-0
00
XXXXXXX X-0
FORM OF OPINION OF COUNSEL
WITH RESPECT TO AMENDMENTS
Provisions to be included in
Opinion of Counsel to be delivered pursuant
to Section 9.02(d)(i) of the Transfer and
Servicing Agreement
The opinions set forth below may be subject to all the
qualifications, assumptions, limitations and exceptions taken or made in the
Opinions Of Counsel delivered on any applicable Closing Date.
The Amendment has been entered into in accordance with the terms and
provisions of Section 9.01 of the Transfer and Servicing Agreement.
X-0-0
00
XXXXXXX X-0
FORM OF OPINION OF COUNSEL
WITH RESPECT TO ACCOUNTS
Provisions to be included in
Opinion of Counsel to be
delivered pursuant to
subsection 9.02(d)(ii) or (iii) of the
Transfer and Servicing Agreement
The opinions set forth below may be subject to all the
qualifications, assumptions, limitations and exceptions taken or made in the
Opinions of Counsel delivered on any applicable Closing Date.
1. The Supplemental Conveyance creates in favor of the Transferor a
security interest in the rights of the Account Owner in such Additional
Receivables and the proceeds thereof.
2. To the extent that the transfer of Additional Receivables by the
Transferor to the Owner Trustee pursuant to the Assignment does not constitute
an absolute assignment by the Transferor to the Owner Trustee of such Additional
Receivables or the proceeds thereof, the Assignment creates in favor of the
Owner Trustee a security interest in the rights of the Transferor in such
Additional Receivables and the proceeds thereof.
3. The security interests described in paragraphs 1 and 2 above are
perfected and of first priority.
X-0-0
00
XXXXXXX X-0
PROVISIONS TO BE INCLUDED IN
ANNUAL OPINION OF COUNSEL
The opinions set forth below may be subject to all the
qualifications, assumptions, limitations and exceptions taken or made in the
Opinions of Counsel delivered on any applicable Closing Date. Unless otherwise
indicated, all capitalized terms used herein shall have the meanings ascribed to
them in the Transfer and Servicing Agreement and in the Assignment.
1. The Transfer and Servicing Agreement, together with the
Assignments, create in favor of the Owner Trustee a security interest in the
relevant Transferor's rights in the Receivables identified in Schedule 1 to the
Transfer and Servicing Agreement. Such security interest is perfected and of
first priority.
D-3-1
79
SCHEDULE 1
List of Accounts
[Original list delivered to Owner Trustee]
1-1
