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________________________________________________________________________________
HOUSEHOLD BANK (SB), N.A.
and
HOUSEHOLD RECEIVABLES ACQUISITION COMPANY
RECEIVABLES PURCHASE AGREEMENT
Dated as of _______, 2001
________________________________________________________________________________
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TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS 1
Section 1.01. Definitions.............................................. 1
Section 1.02. Other Definitional Provisions............................ 4
ARTICLE II PURCHASE AND CONVEYANCE OF RECEIVABLES......................... 5
Section 2.01. Purchase................................................. 5
Section 2.02. Addition of Aggregate Addition Accounts.................. 7
Section 2.03. Addition of New Accounts................................. 8
Section 2.04. Representations and Warranties........................... 9
Section 2.05. Delivery of Documents.................................... 9
ARTICLE III CONSIDERATION AND PAYMENT..................................... 9
Section 3.01. Purchase Price........................................... 9
Section 3.02. Adjustments to Purchase Price............................ 10
ARTICLE IV REPRESENTATIONS AND WARRANTIES................................. 10
Section 4.01. Representations and Warranties of the Bank
Relating to the Bank..................................... 10
Section 4.02. Representations and Warranties of the Bank
Relating to the Agreement and the Receivables............ 11
Section 4.03. Representations and Warranties of HRAC................... 13
ARTICLE V COVENANTS....................................................... 14
Section 5.01. Covenants of the Bank.................................... 14
ARTICLE VI REPURCHASE OBLIGATION.......................................... 15
Section 6.01. Reassignment of Ineligible Receivables................... 15
Section 6.02. Reassignment of Trust Portfolio.......................... 16
ARTICLE VII CONDITIONS PRECEDENT.......................................... 16
Section 7.01. Conditions to HRAC's Obligations Regarding
Initial Receivables...................................... 16
Section 7.02. Conditions Precedent to the Bank's Obligations........... 17
ARTICLE VIII TERM AND PURCHASE TERMINATION................................ 18
Section 8.01. Term..................................................... 18
Section 8.02. Purchase Termination..................................... 18
ARTICLE IX MISCELLANEOUS PROVISIONS....................................... 18
Section 9.01. Amendment................................................ 18
Section 9.02. Governing Law............................................ 19
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Section 9.03. Notices.................................................. 19
Section 9.04. Severability of Provisions............................... 19
Section 9.05. Assignment............................................... 19
Section 9.06. Acknowledgement and Agreement of the Bank................ 20
Section 9.07. Further Assurances....................................... 20
Section 9.08. No Waiver; Cumulative Remedies........................... 20
Section 9.09. Counterparts............................................. 20
Section 9.10. Binding; Third-Party Beneficiaries....................... 21
Section 9.11. Merger and Integration................................... 21
Section 9.12. Headings................................................. 21
Section 9.13. Schedules and Exhibits................................... 21
Section 9.14. Survival of Representations and Warranties............... 21
Section 9.15. Nonpetition Covenant..................................... 21
EXHIBIT A ................................................................ A-1
FORM OF SUPPLEMENTAL CONVEYANCE .......................................... A-1
Schedule I ............................................................... I-1
LIST OF ACCOUNTS ......................................................... X-0
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XXXXXXXXXXX XXXXXXXX AGREEMENT, dated as of ________, 2001 by and between
HOUSEHOLD RECEIVABLES ACQUISITION COMPANY, a Delaware corporation ("HRAC"), and
HOUSEHOLD BANK (SB), N.A., a national banking association (the "Bank").
W I T N E S S E T H:
WHEREAS, HRAC desires to purchase, from time to time, certain Receivables
(hereinafter defined) arising under certain revolving credit accounts owned by
the Bank;
WHEREAS, the Bank desires to sell and assign from time to time certain
Receivables to HRAC upon the terms and conditions hereinafter set forth;
WHEREAS, it is contemplated that the Receivables purchased hereunder will
be transferred by HRAC to HRSI Funding, Inc. II then to the Trust (hereinafter
defined) in connection with the issuance of certain Securities (hereinafter
defined); and
WHEREAS, the Bank agrees that all representations, warranties, covenants
and agreements made by the Bank herein with respect to the Accounts (hereinafter
defined) and Receivables shall also be for the benefit of HRSI Funding, Inc. II,
the Owner Trustee (hereinafter defined), the Indenture Trustee (hereinafter
defined) and all beneficiaries of the Trust, including the holders of the
Securities.
NOW, THEREFORE, it is hereby agreed by and between HRAC and the Bank as
follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. All capitalized terms used herein or in any
certificate, document, or Conveyance Paper made or delivered pursuant hereto,
and not defined herein or therein, shall have the meaning ascribed thereto in
the Transfer and Servicing Agreement; in addition, the following words and
phrases shall have the following meanings:
"Account" shall mean (a) each Initial Account, (b) each Additional Account
(but only from and after the Addition Date with respect thereto), (c) each
Related Account, and (d) each account into which an Account shall be transferred
(a "Transferred Account") provided that (i) such transfer was made in accordance
with the Credit Guidelines and (ii) such account can be traced or identified as
an account into which an Account has been transferred, but shall exclude (e) any
Account that (x) after the Removal Date, the newly generated Receivables in
which shall not be assigned to HRAC hereunder, (y) the right, title and interest
of HRAC in the Receivables in which are reassigned to the Bank pursuant to
Section 6.01 or (z) the right, title and interest of the Trust in the
Receivables in which are assigned and transferred to the Servicer pursuant to
Section 3.03 of the Transfer and Servicing Agreement.
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"Account Owner" shall mean the Bank, or any entity which is the issuer of
the revolving credit relating to an Account pursuant to a Credit Agreement
and/or a seller of Receivables to HRAC.
"Addition Date" shall mean (a) with respect to Aggregate Addition Accounts
(or Participation Interests), the date from and after which such Aggregate
Addition Accounts are to be included as Accounts pursuant to Section 2.02 and
(b) with respect to New Accounts, the first Distribution Date following the
calendar month in which the later of the dates on which such New Accounts are
originated or designated (or such Participation Interests are included) pursuant
to Section 2.03 occurs.
"Addition Notice Date" shall have the meaning specified in Section 2.02 of
this Agreement.
"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, the date specified as such in the notice delivered with respect
thereto pursuant to Section 2.02, and (b) with respect to New Accounts, the
later of the dates on which such New Accounts are originated or designated
pursuant to Section 2.03.
"Aggregate Addition Account" shall mean each Eligible Account that is
designated pursuant to Section 2.02 to be included as an Account and is
identified in the computer file or microfiche list delivered to HRAC by the Bank
pursuant to Sections 2.01 and 2.05.
"Agreement" shall mean this Receivables Purchase Agreement and all
amendments hereof and supplements hereto.
"Bank" shall mean Household Bank (SB), N.A., a nationally chartered bank,
and its successors and permitted assigns.
"Closing Date" shall mean _________, 2001.
"Company" shall mean HRSI Funding, Inc. II, a Delaware corporation, and its
permitted successors and assigns.
"Conveyance" shall have the meaning specified in subsection 2.01(a).
"Conveyance Papers" shall have the meaning specified in subsection 4.01(c).
"Credit Adjustment" shall have the meaning specified in Section 3.02.
"Debtor Relief Laws" shall mean (a) the Bankruptcy Code of the United
States of America and (b) all other applicable liquidation, conservatorship,
bankruptcy, moratorium, rearrangement, receivership, insolvency, reorganization,
suspension of payments, readjustment of debt, marshalling of assets or similar
debtor relief laws of the United States, any state or any foreign country from
time to time in effect affecting the rights of creditors generally.
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"Eligible Receivable" shall have the meaning set forth in the Transfer and
Servicing Agreement, except that "the Bank" shall be substituted for each
occurrence of "the Transferor," "HRAC" shall be substituted for each occurrence
of "the Owner Trustee," and all references to the Notes shall be ignored.
"Finance Charge and Administrative Receivables" shall mean all Receivables
in the Accounts which would be treated as "Finance Charge and Administrative
Receivables" in accordance with the definition for such term in the Transfer and
Servicing Agreement.
"HRAC" shall mean Household Receivables Acquisition Company, a Delaware
corporation, and its successors and permitted assigns.
"Indenture" shall mean the Master Indenture between the Trust and U.S. Bank
National Association, as Indenture Trustee, dated as of ________, 2001 as
supplemented by Indenture Supplements applicable to any Series that may be
issued from time to time.
"Indenture Supplement" shall mean the indenture supplement pursuant to
which a Series is issued.
"Indenture Trustee" shall mean U.S. Bank National Association in its
capacity as indenture trustee, or any successor indenture trustee.
"Initial Account" shall mean each Account included in the computer file
delivered to the Indenture Trustee as of the Closing Date.
"Insolvency Event" shall have the meaning specified in Section 8.02.
"New Account" shall mean each revolving credit account established pursuant
to a Credit Agreement, which account is designated pursuant to Section 2.03 to
be included as an Account and is identified in the computer file or microfiche
list delivered to HRAC by the Bank pursuant to Sections 2.01 and 2.05.
"New Principal Receivables" shall have the meaning set forth in
Section 3.01.
"Obligor" shall mean, with respect to each Account, each person that would
be treated as an "Obligor" in accordance with the definition for such term in
the Transfer and Servicing Agreement.
"Owner Trustee" shall mean Wilmington Trust Company, a Delaware banking
corporation the institution executing the Trust Agreement as and acting in the
capacity of Owner Trustee thereunder, or its successor in interest, or any
successor trustee appointed as provided in the Trust Agreement.
"Principal Receivables" shall mean all Receivables other than Finance
Charge and Administrative Receivables.
"Purchase Price" shall have the meaning set forth in Section 3.01.
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"Purchased Assets" shall have the meaning set forth in Section 2.01.
"Receivables" shall mean all amounts shown on the Bank's records as amounts
payable by Obligors on any Account from time to time, including amounts payable
for Principal Receivables and Finance Charge and Administrative Receivables.
Receivables that become Defaulted Receivables will cease to be included as
Receivables as of the day on which they become Defaulted Receivables.
"Removed Account" shall mean an Account hereunder that is a "Removed
Account" (as such term is defined in the Transfer and Servicing Agreement) that
is designated for removal pursuant to Section 2.10 of the Transfer and
Servicing Agreement.
"Securities" shall mean any one of the Notes (as such term is defined in
the Indenture) or the Transferor Certificates.
"Servicer" shall mean Household Finance Corporation, in its capacity as
Servicer pursuant to the Transfer and Servicing Agreement and, after any
Service Transfer, the Successor Servicer.
"Supplemental Conveyance" shall have the meaning set forth in Section 2.05.
"Transfer and Servicing Agreement" shall mean the Transfer and Servicing
Agreement, dated as of _______, 2001 among Household Finance Corporation, as
Servicer, the Company, as Transferor, and the Owner Trustee on behalf of the
Trust, and all amendments and supplements thereto.
"Transferor RPA" shall mean the Receivables Purchase Agreement, dated
______, 2001, between HRAC and the Company.
"Trust" shall mean the Household Private Label Credit Card Master Note
Trust I, acting by and through Wilmington Trust Company, not in its individual
capacity but solely as Owner Trustee.
"Trust Agreement" shall mean the Household Private Label Credit Card Master
Note Trust I Trust Agreement, dated as of _____, 2001 between the Company, as
Transferor, and the Owner Trustee on behalf of the Trust.
"Trust Collateral" shall have the meaning set forth in Section 2.01.
Section 1.02. Other Definitional Provisions.
All terms defined in this Agreement shall have the defined meanings when
used in any certificate, other document, or Conveyance Paper made or delivered
pursuant hereto unless otherwise defined therein.
The words "hereof," "herein" and "hereunder" and words of similar import
when used in this Agreement or any Conveyance Paper shall refer to this
Agreement as a whole and not to any particular provision of this Agreement;
and Section, Subsection, Schedule and Exhibit
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references contained in this Agreement are references to Sections, Subsections,
Schedules and Exhibits in or to this Agreement unless otherwise specified.
All determinations of the principal or finance charge balance of
Receivables, and of any collections thereof, shall be made in accordance with
the Transfer and Servicing Agreement and the Indenture.
All capitalized terms used herein and not otherwise defined herein have the
meanings ascribed to them in the Indenture or the Transfer and Servicing
Agreement.
ARTICLE II
PURCHASE AND CONVEYANCE OF RECEIVABLES
Section 2.01. Purchase.
(a) By execution of this Agreement, the Bank does hereby sell, transfer,
assign, set over and otherwise convey to HRAC (collectively, the "Conveyance"),
without recourse except as provided herein, all its right, title and interest
in, to and under the Receivables existing at the close of business on the
Closing 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 the Participation Interests conveyed pursuant to a
Participation Interest Supplement, and in each case thereafter created from time
to time until the termination of this Agreement pursuant to Article VIII hereof,
all Recoveries with respect to such Accounts and all such Participation
Interests, all monies due or to become due and all amounts received or
receivable with respect thereto, and all proceeds (including, without
limitation, "proceeds" as defined in the UCC) thereof (the "Purchased Assets").
(b) In connection with such Conveyance, the Bank agrees (i) to record and
file, at its own expense, any financing statements (and continuation statements
with respect to such financing statements when applicable) with respect to the
Receivables existing at the close of business on the Closing Date and thereafter
created in the Initial Accounts and existing as of the Additional Cut-Off Date
and thereafter created in the Additional Accounts and the Participation
Interests conveyed pursuant to a Participation Interest Supplement, meeting the
requirements of applicable state law in such manner and in such jurisdictions as
are necessary to perfect, and maintain perfection of, the Conveyance of such
Receivables and all such Participation Interests from the Bank to HRAC,
(ii) that such financing statements shall name the Bank, as seller, and HRAC,
as purchaser, of the Receivables and all such Participation Interests and
(iii) to deliver a file-stamped copy of such financing statements or other
evidence of such filings (excluding such continuation statements, which shall be
delivered as filed) to HRAC as soon as is practicable after filing.
(c) In connection with each such Conveyance, the Bank further agrees that
it will, at its own expense, (i) on or prior to (A) the Closing Date, in the
case of Initial Accounts, (B) the applicable Addition Date, in the case of
Additional Accounts, and (C) the applicable Removal Date, in the case of Removed
Accounts, indicate in its computer files that, in the case of the Initial
Accounts or the Additional Accounts, Receivables created in connection with
such Accounts have
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been conveyed to HRAC in accordance with this Agreement and have been conveyed
by HRAC to the Company in accordance with the Transferor RPA and have been
conveyed by the Company to the Trust pursuant to the Transfer and Servicing
Agreement and have been pledged by the Trust to the Indenture Trustee pursuant
to the Indenture for the benefit of the Noteholders by including (or deleting,
in the case of newly originated Receivables in 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 date that is 30 days after
the applicable Addition 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, to deliver to HRAC, or its designee, a computer file or microfiche
list containing a true and complete list of all such Accounts specifying for
each such Account, as of the Closing Date, 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 in such Account. Each such computer
file or microfiche list, as supplemented from time to time to reflect Additional
Accounts or Removed Accounts, shall be marked as Schedule I to this Agreement,
shall be delivered to HRAC, or its designee, and is hereby incorporated into and
made a part of this Agreement. The Bank further agrees not to alter the code
referenced in clause (i) of this paragraph with respect to any Account during
the term of this Agreement unless and until such Account becomes a Removed
Account.
(d) The parties hereto intend that the conveyance of the Bank's right,
title and interest in and to the Purchased Assets shall constitute an absolute
sale, conveying good title free and clear of any liens, claims, encumbrances or
rights of others from the Bank to HRAC and that the Purchased Assets shall not
be part of the Bank's estate in the event of the insolvency of the Bank or a
conservatorship, receivership or similar event with respect to the Bank. It is
the intention of the parties hereto that the arrangements with respect to the
Purchased Assets shall constitute a purchase and sale of such Purchased Assets
and not a loan or a borrowing secured by such Purchased Assets. In the event,
however, that it were to be determined that the transactions evidenced hereby
constitute a loan and not a purchase and sale, it is the intention of the
parties hereto that this Agreement shall constitute a security agreement under
applicable law, and that the Bank shall be deemed to have granted and does
hereby grant to HRAC a first priority perfected security interest in all of the
Bank's right, title and interest, whether now owned or hereafter acquired, in,
to and under the Receivables and other Purchased Assets to secure the
obligations of the Bank hereunder.
(e) To the extent that the Bank retains any interest in the Purchased
Assets, the Bank hereby grants to the Indenture Trustee for the benefit of the
Noteholders a security interest in all of the Bank's right, title, and interest,
whether now owned or hereafter acquired, in, to, and under the Receivables and
other Purchased Assets that are intended to be pledged to the Indenture Trustee
pursuant to the Indenture (collectively, the "Trust Collateral"), to secure the
performance of all of the obligations of the Bank under this Agreement and any
other agreement or document related to the Transfer and Servicing Agreement or
the Indenture. With respect to the Trust Collateral, the Indenture Trustee shall
have all of the rights that it has under the Transfer and Servicing Agreement
and the Indenture and all of the rights of a secured creditor under the UCC.
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Section 2.02. Addition of Aggregate Addition Accounts.
(a) If, from time to time, the Company becomes obligated to designate
Aggregate Addition Accounts (as such term is defined in the Transfer and
Servicing Agreement) pursuant to subsection 2.09(a) of the Transfer and
Servicing Agreement, then HRAC may, at its option, give the Bank written notice
thereof on or before the fifth Business Day (the "Addition Notice Date") prior
to the Addition Date therefor, and upon receipt of such notice the Bank shall on
or before the Addition Date, designate sufficient Eligible Accounts to be
included as Additional Accounts so that after the inclusion thereof HRAC will be
in compliance with the requirements of said subsection 2.09(a). Additionally,
subject to subsections 2.09(b) and (c) of the Transfer and Servicing Agreement
and subsection 2.02(b), from time to time Eligible Accounts may be designated to
be included as Aggregate Addition Accounts, upon the mutual agreement of the
Company, HRAC and the Bank. In either event, the Bank shall have sole
responsibility for selecting the Aggregate Addition Accounts.
(b) On the Addition Date with respect to any designation of Aggregate
Addition Accounts, HRAC shall purchase the Bank's right, title and interest in,
to and under the Receivables in Aggregate Addition Accounts (and such Aggregate
Addition Accounts shall be deemed to be Accounts for purposes of this Agreement)
and the related Purchased Assets, subject to the satisfaction of the following
conditions on such Addition Date:
(i) all Aggregate Addition Accounts shall be Eligible Accounts;
(ii) the Bank shall have delivered to HRAC copies of UCC-1 financing
statements covering such Aggregate Addition Accounts or Participation
Interests, if necessary to perfect the HRAC's undivided interest in the
Receivables arising therein;
(iii) to the extent required of the Company by Section 2.09(c) of the
Transfer and Servicing Agreement, the Bank shall have deposited in the
Collection Account (as such term is defined in the Indenture) all
Collections with respect to such Aggregate Addition Accounts or
Participation Interests 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 other Account Owner,
as the case may be, shall have occurred nor shall the transfer of the
Receivables arising in the Aggregate Addition Accounts or Participation
Interests to HRAC have been made in contemplation of the occurrence
thereof;
(v) solely with respect to Aggregate Addition Accounts designated
pursuant to the second sentence of subsection 2.02(a), the Rating
Agency Condition shall have been satisfied;
(vi) the Bank shall have delivered to HRAC, or its designee, an
Officer's Certificate, dated the Addition Date, confirming, to the extent
applicable, the items set forth in clauses (i) through (v) above; and
(vii) the transfer of the Receivables arising in the Aggregate
Addition Accounts or Participation Interests to HRAC will not result in an
Adverse Effect and the
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Bank shall have delivered to HRAC, or its designee, an Officer's
Certificate, dated the Addition Date, stating that the Bank reasonably
believes that the addition of the Receivables arising in the Aggregate
Addition Accounts or Participation Interests to HRAC will not have an
Adverse Effect.
Section 2.03. Addition of New Accounts.
(a) Upon the mutual agreement of the Company, HRAC and the Bank, subject
to compliance with the conditions specified in subsections 2.09(d) and (e) of
the Transfer and Servicing Agreement and compliance with subsection 2.03(b), the
Bank may designate newly originated Eligible Accounts to be included as New
Accounts. Upon such designation, such New Accounts shall be deemed to be
Accounts hereunder. The Bank shall cooperate with the Company and HRAC to enable
the Company to comply with the requirements of Section 2.09 of the Transfer and
Servicing Agreement and shall cooperate with the Company and HRAC to enable the
Company to perform with respect to the Receivables in such New Accounts all
actions specified in subsections 2.09(d) and (e) of the Transfer and Servicing
Agreement.
(b) On the Addition Date with respect to any New Accounts, HRAC shall
purchase the Bank's right, title and interest in, to and under the Receivables
in 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
Additional Cut-Off Date and the related Purchased Assets, subject to the
satisfaction of the following conditions on such Addition Date:
(i) all New Accounts shall be Eligible Accounts;
(ii) the Bank shall have delivered to HRAC, or its designee, copies
of UCC-1 financing statements covering such New Accounts, if necessary to
perfect HRAC's interest in the Receivables arising therein;
(iii) to the extent required of the Company by Section 2.09(e) of the
Transfer and Servicing Agreement, the Bank shall have deposited in the
Collection Account all Collections with respect to such 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 other Account Owner,
as applicable, shall have occurred nor shall the transfer of the Receivables
arising in the New Accounts to HRAC have been made in contemplation of the
occurrence thereof;
(v) the Bank shall have delivered to HRAC, or its designee, an
officer's certificate, dated the Addition Date, confirming, to the extent
applicable, the items set forth in clauses (ii) through (iv) above; and
(vi) the transfer of the Receivables arising in the New Accounts to
HRAC will not result in an Adverse Effect, and the Bank shall have
delivered to HRAC, or its designee, an officer's certificate, dated the
Addition Date, stating that the Bank reasonably believes that the addition
to the Trust of the Receivables arising in the New Accounts will not have
an Adverse Effect.
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Section 2.04. Representations and Warranties. The Bank hereby represents
and warrants to HRAC as of the related Addition Date as to the matters set forth
in subsections 2.02(b)(ii) and 2.03(b)(ii) above and that, in the case of
Additional Accounts, the list delivered pursuant to Section 2.05 below is, as of
the applicable Additional Cut-Off Date, true and complete in all material
respects.
Section 2.05. Delivery of Documents. In the case of the designation of
Additional Accounts, the Bank shall deliver to HRAC, or its designee, (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 HRAC),
substantially in the form of Exhibit A (the "Supplemental Conveyance"), on the
Document Delivery Date. In addition, in the case of the designation of New
Accounts, the Bank shall deliver to HRAC, or its designee, on the Document
Delivery Date an Officer's Certificate confirming, to the extent applicable, the
items set forth in clause (i) through (vi) of subsection 2.03(b) above.
ARTICLE III
CONSIDERATION AND PAYMENT
Section 3.01. Purchase Price.
(a) The "Purchase Price" for the Receivables in the Initial Accounts and
the related Purchased Assets conveyed to HRAC by the Bank under this Agreement
shall be payable on the Closing Date and shall be an amount equal to 100% of the
aggregate balance of Principal Receivables in those Accounts as of the Closing
Date, plus the present value of anticipated excess spread, computed by taking
into account factors such as historical losses, servicing fees, delinquencies
and paydown rates, yield and such other factors as the Bank and HRAC mutually
agree (and discounted to take into account any uncertainty as to future
performance matching historical performances), will result in a Purchase Price
determined to be the fair market value of such Purchased Assets. This
computation of initial purchase price shall assume no reinvestment in new
Receivables. The Purchase Price for the Receivables and the related Purchased
Assets (including Receivables and the related Purchased Assets in Additional
Accounts) to be conveyed to HRAC under this Agreement which come into existence
after the Closing Date, shall be payable on the Distribution Date following the
Due Period in which such Receivables and Purchased Assets are conveyed by the
Bank to HRAC in an amount equal to 100% of the aggregate balance of the
Principal Receivables so conveyed (the "New Principal Receivables"), plus the
present value of anticipated excess spread, computed by taking into account
factors such as historical losses, servicing fees, delinquencies, paydown rates
and yield and such other factors as the Bank and HRAC mutually agree (and
discounted to take into account any uncertainty as to future performance
matching historical performances).
(b) The Purchase Price to be paid by HRAC on the Closing Date and on each
Distribution Date following a Due Period during which New Principal Receivables
are conveyed to HRAC shall be paid in cash (including netting against other
payments).
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Section 3.02. Adjustments to Purchase Price. The Purchase Price shall be
adjusted on each Distribution Date (a "Credit Adjustment") with respect to any
Receivable previously conveyed to HRAC by the Bank which has since been reversed
because of a rebate, refund, unauthorized charge or billing error to a
cardholder because such Receivable was created in respect of merchandise which
was refused or returned by a cardholder. The amount of such adjustment shall
equal (x) the reduction in the principal balance of such Receivable resulting
from the occurrence of such event multiplied by (y) the quotient (expressed as a
percentage) of (i) the Purchase Price for Principal Receivables payable on such
Distribution Date computed in accordance with Section 3.01(a) divided by (ii)
the Principal Receivables paid for on such date pursuant to such Section. In the
event that an adjustment pursuant to this Section 3.02 causes the Purchase Price
to be a negative number, the Bank agrees that, not later than 1:00 P.M. New York
City time on such Distribution Date, the Bank shall pay to HRAC an amount equal
to the amount by which the Purchase Price minus the Credit Adjustment would be
reduced below zero.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01. Representations and Warranties of the Bank Relating to the
Bank. The Bank hereby represents and warrants to, and agrees with, HRAC as of
the Closing Date and on each Addition Date, that:
(a) Organization and Good Standing. The Bank is a national bank duly
organized and validly existing in good standing under the laws of the United
States and has, in all material respects, full power and authority to own its
properties and conduct its business as such properties are presently owned and
such business is presently conducted, and to execute, deliver and perform its
obligations under this Agreement.
(b) Due Qualification. The Bank is duly qualified to do business and is
in good standing as a foreign corporation (or is exempt from such requirements)
and has obtained all necessary licenses and approvals, in each jurisdiction in
which failure to so qualify or to obtain such licenses and approvals would
(i) render any Credit Agreement relating to an Account or any Receivable
unenforceable by the Bank, HRAC, the Company or the Owner Trustee on behalf of
the Trust and (ii) have a material adverse effect on the Noteholders.
(c) Due Authorization. The execution, delivery and performance of this
Agreement and any other document or instrument delivered pursuant hereto,
including any Supplemental Conveyance to which the Bank is a party (such other
documents or instruments, collectively, the "Conveyance Papers"), and the
consummation of the transactions provided for in this Agreement and the
Conveyance Papers have been duly authorized by the Bank by all necessary
corporate action on the part of the Bank.
(d) No Conflict. The execution and delivery of this Agreement and the
Conveyance Papers by the Bank, the performance of the transactions contemplated
by this Agreement and the Conveyance Papers, and the fulfillment of the terms of
this Agreement and the Conveyance Papers applicable to the Bank will not
conflict with, violate or result in any breach of
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any of the material terms and provisions of, or constitute (with or without
notice or lapse of time or both) a material default under, any indenture,
contract, agreement, mortgage, deed of trust, or other instrument to which the
Bank is a party or by which it or any of its properties are bound.
(e) No Violation. The execution, delivery and performance of this
Agreement and the Conveyance Papers by the Bank and the fulfillment of the terms
contemplated herein and therein applicable to the Bank will not conflict with or
violate any Requirements of Law applicable to the Bank.
(f) No Proceedings. There are no proceedings or investigations pending
or, to the best knowledge of the Bank, threatened against the Bank, before any
Governmental Authority (i) asserting the invalidity of this Agreement or the
Conveyance Papers, (ii) seeking to prevent the consummation of any of the
transactions contemplated by this Agreement or the Conveyance Papers, (iii)
seeking any determination or ruling that, in the reasonable judgment of the
Bank, would materially and adversely affect the performance by the Bank of its
obligations under this Agreement or the Conveyance Papers, (iv) seeking any
determination or ruling that would materially and adversely affect the validity
or enforceability of this Agreement or the Conveyance Papers or (v) seeking to
affect adversely the income tax attributes of the Trust under the United States
Federal or Delaware income tax systems.
(g) All Consents. All authorizations, consents, orders or approvals of or
registrations or declarations with any Governmental Authority required to be
obtained, effected or given by the Bank in connection with the execution and
delivery by the Bank of this Agreement and the Conveyance Papers and the
performance of the transactions contemplated by this Agreement or the Conveyance
Papers by the Bank have been duly obtained, effected or given and are in full
force and effect.
The representations and warranties set forth in this Section 4.01 shall
survive the transfer and assignment of the Receivables to HRAC. Upon discovery
by the Bank or HRAC of a breach of any of the foregoing representations and
warranties, the party discovering such breach shall give written notice to the
other party, the Company, the Owner Trustee and the Indenture Trustee within
three Business Days following such discovery.
Section 4.02. Representations and Warranties of the Bank Relating to the
Agreement and the Receivables.
(a) Representations and Warranties. The Bank hereby represents and
warrants to HRAC as of the date of this Agreement, as of the Closing Date and,
with respect to Additional Accounts, as of the related Addition Date that:
(i) this Agreement and, in the case of Additional Accounts, the
related Supplemental Conveyance, each constitutes a legal, valid and
binding obligation of the Bank enforceable against the Bank in accordance
with its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally from time to time in effect or
general principles of equity;
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(ii) as of the Closing Date with respect to Initial Accounts, and as
of the related Additional Cut-Off Date with respect to Additional Accounts,
Schedule I to this Agreement, as supplemented to such date, is an accurate
and complete listing in all material respects of all the Accounts as of the
Closing Date or such Additional Cut-Off 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 true and correct in all material
respects as of the Closing Date or such applicable Additional Cut-Off Date,
as the case may be;
(iii) each Receivable has been conveyed to HRAC free and clear of any
Lien;
(iv) all authorizations, consents, orders or approvals of or
registrations or declarations with any Governmental Authority required to
be obtained, effected or given by the Bank in connection with the
conveyance of Receivables to HRAC have been duly obtained, effected or
given and are in full force and effect;
(v) this Agreement or, in the case of Additional Accounts, the
related Supplemental Conveyance constitutes a valid sale, transfer and
assignment to HRAC of all right, title and interest of the Bank in the
Receivables and the proceeds thereof and the Recoveries payable pursuant to
this Agreement;
(vi) on the Closing Date or on the Additional Cut-Off Date, as
applicable, each related Initial Account or each related Additional, as
applicable, Account is an Eligible Account;
(vii) on the Closing Date or on the applicable Additional Cut-Off
Date, as applicable, each Receivable generated under the related Initial
Account or Additional Accounts, as applicable, is an Eligible Receivable;
(viii) as of the date of the creation of any new Receivable, such
Receivable is an Eligible Receivable; and
(ix) no selection procedures believed by the Bank to be materially
adverse to the interests of HRAC or the Noteholders have been used in
selecting such Accounts.
(b) Notice of Breach. The representations and warranties set forth in
this Section 4.02 shall survive the transfer and assignment of the Receivables
to HRAC. Upon discovery by either the Bank or HRAC of a breach of any of the
representations and warranties set forth in this Section 4.02, the party
discovering such breach shall give written notice to the other party, the
Company, the Owner Trustee and the Indenture Trustee within three Business Days
following such discovery; provided that the failure to give notice within three
Business Days does not preclude subsequent notice. The Bank hereby acknowledges
that HRAC intends to rely on the representations hereunder in connection with
representations made by HRAC to secured parties, assignees or subsequent
transferees including but not limited to transfers made by HRAC to the Company
pursuant to the Receivables Purchase Agreement, dated _____, 2001, by and
between HRAC and the Company, and by the Company to the Trust pursuant to the
Transfer and Servicing Agreement and by the Trust to the Indenture Trustee
pursuant to the Indenture and that the
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Company, the Owner Trustee and the Indenture Trustee may enforce such
representations directly against the Bank.
Section 4.03. Representations and Warranties of HRAC. As of the Closing
Date and on each Addition Date, HRAC hereby represents and warrants to, and
agrees with, the Bank that:
(a) Organization and Good Standing. HRAC is a corporation duly organized
and validly existing under the laws of the State of Delaware and has, in all
material respects, full power and authority to own its properties and conduct
its business as such properties are presently owned and such business is
presently conducted and to execute, deliver and perform its obligations under
this Agreement.
(b) Due Authorization. The execution and delivery of this Agreement and
the Conveyance Papers and the consummation of the transactions provided for in
this Agreement and the Conveyance Papers have been duly authorized by HRAC by
all necessary corporate action on the part of HRAC.
(c) No Conflict. The execution and delivery of this Agreement and the
Conveyance Papers by HRAC, the performance of the transactions contemplated by
this Agreement and the Conveyance Papers, and the fulfillment of the terms of
this Agreement and the Conveyance Papers applicable to HRAC, will not conflict
with, result in any breach of any of the material terms and provisions of, or
constitute (with or without notice or lapse of time or both) a material default
under, any indenture, contract, agreement, mortgage, deed of trust or other
instrument to which HRAC is a party or by which it or any of its properties are
bound.
(d) No Violation. The execution, delivery and performance of this
Agreement and the Conveyance Papers by HRAC and the fulfillment of the terms
contemplated herein and therein applicable to HRAC will not conflict with or
violate any Requirements of Law applicable to HRAC.
(e) No Proceedings. There are no proceedings or investigations pending
or, to the best knowledge of HRAC, threatened against HRAC, before any
Governmental Authority (i) asserting the invalidity of this Agreement or the
Conveyance Papers, (ii) seeking to prevent the consummation of any of the
transactions contemplated by this Agreement or the Conveyance Papers, (iii)
seeking any determination or ruling that, in the reasonable judgment of HRAC,
would materially and adversely affect the performance by HRAC of its obligations
under this Agreement or the Conveyance Papers or (iv) seeking any determination
or ruling that would materially and adversely affect the validity or
enforceability of this Agreement or the Conveyance Papers.
(f) All Consents. All authorizations, consents, orders or approvals of or
registrations or declarations with any Governmental Authority required to be
obtained, effected or given by HRAC in connection with the execution and
delivery by HRAC of this Agreement and the Conveyance Papers and the performance
of the transactions contemplated by this Agreement and the Conveyance Papers
have been duly obtained, effected or given and are in full force and effect.
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The representations and warranties set forth in this Section 4.03 shall
survive the Conveyance of the Receivables to HRAC. Upon discovery by HRAC or the
Bank of a breach of any of the foregoing representations and warranties, the
party discovering such breach shall give prompt written notice to the other
party, the Owner Trustee and the Indenture Trustee.
ARTICLE V
COVENANTS
Section 5.01. Covenants of the Bank. The Bank hereby covenants and agrees
with HRAC as follows:
(a) Receivables Not To Be Evidenced by Promissory Notes. Except in
connection with its enforcement or collection of an Account, the Bank will take
no action to cause any Receivable to be evidenced by any instrument (as defined
in the UCC) and if any Receivable is so evidenced as a result of any action by
the Bank it shall be deemed to be an Ineligible Receivable in accordance with
Section 6.01(a) and shall be reassigned to the Bank in accordance with
Section 6.01(b)
(b) Security Interests. Except for the conveyances hereunder, the Bank
will not sell, pledge, assign or transfer to any other Person, or take any other
action inconsistent with HRAC's ownership of the Receivables or grant, create,
incur, assume or suffer to exist any Lien (arising through or under the Bank)
on, any Receivable, whether now existing or hereafter created, or any interest
therein, and the Bank shall not claim any ownership interest in the Receivables
and shall defend the right, title and interest of HRAC in, to and under the
Receivables, whether now existing or hereafter created, against all claims of
third parties claiming through or under the Bank.
(c) Account Allocations. In the event that the Bank is unable for any
reason to transfer Receivables to HRAC in accordance with the provisions of this
Agreement (including, without limitation, by reason of the application of the
provisions of Section 8.02 or any order of any Governmental Authority), then, in
any such event, the Bank agrees (except as prohibited by any such order) to
allocate and pay to HRAC, after the date of such inability, all amounts that
HRAC will be required to allocate and pay to the Company pursuant to
Section 5.01 of the Receivables Purchase Agreement between HRAC and the Company.
(d) Delivery of Collections or Recoveries. In the event that the Bank
receives Collections or Recoveries, the Bank agrees to pay to HRAC (or to the
Servicer if HRAC so directs) all such Collections and Recoveries as soon as
practicable after receipt thereof.
(e) Notice of Liens. The Bank shall notify HRAC promptly after becoming
aware of any Lien on any Receivable other than the conveyances hereunder, under
the Transfer and Servicing Agreement and under the Indenture.
(f) Documentation of Transfer. The Bank shall undertake to file the
documents which would be necessary to perfect and maintain the transfer of the
Purchased Assets to HRAC.
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(g) Periodic Rate Finance Charges. Except (A) as otherwise required by
any Requirements of Law or (B) as is deemed by the Bank or 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.
(h) Credit Agreements and Guidelines. Subject to compliance with all
Requirements of Law and paragraph (g) above, the Bank (or other Account Owner if
the Bank is not the Account Owner) or the Servicer may change the terms and
provisions of the applicable Credit Agreements or the applicable Credit
Guidelines of the Bank (or other Account Owner if the Bank is not the Account
Owner) or the Servicer in any respect (including the calculation of the amount
or the timing of charge-offs and the Periodic Rate Finance Charges to be
assessed thereon). Notwithstanding the above, unless required by Requirements of
Law or as permitted by paragraph (g) above, the Bank (or other Account Owner if
the Bank is not the Account Owner) or the Servicer will not take any action
unless (i) at the time of such action, the Bank (or other Account Owner, as the
case may be) or the Servicer, reasonably believes that such action will not
cause an Adverse Effect, and (ii) such change is made applicable to the
comparable segment of the revolving credit accounts owned by the Bank (or other
Account Owner, as the case may be) 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, as the
case may be, and an unrelated third party or by the terms of the Credit
Agreements.
(i) Approval and Official Records. The Bank shall cause this Agreement to
be duly approved by the Bank's Board of Directors, and the Bank shall maintain
this Agreement as a part of the official records of the Bank for the term of
this Agreement.
ARTICLE VI
REPURCHASE OBLIGATION
Section 6.01. Reassignment of Ineligible Receivables.
(a) In the event any representation or warranty under Section 4.02(a)(ii),
(iii), (iv), (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 as a result of such breach HRAC is required to accept
reassignment of Ineligible Receivables previously sold by the Bank to HRAC
pursuant to Section 6.01(b) of the Receivables Purchase Agreement between HRAC
and the Company, the Bank shall accept reassignment of HRAC's interest in such
Ineligible Receivables on the terms and conditions set forth in Section 6.01(b)
of this Agreement.
(b) The Bank shall accept reassignment from HRAC of any Ineligible
Receivables previously sold by the Bank to HRAC on the date on which such
reassignment
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obligation arises, and shall pay for such reassigned Ineligible Receivables by
paying to HRAC, not later than 3:00 p.m., New York City time on such date, an
amount equal to the unpaid principal balance of such Ineligible Receivables plus
accrued and unpaid finance charges at the annual percentage rate applicable to
such Receivables from the last date billed through the end of the Due Period in
which such reassignment obligation arises. Upon reassignment of such Ineligible
Receivables, HRAC shall automatically and without further action be deemed to
sell, transfer, assign, set-over and otherwise convey to the Bank, without
recourse, representation or warranty, all the right, title and interest of HRAC
in and to such Ineligible Receivables, all Recoveries related thereto, all
monies and amounts due or to become due with respect thereto and all proceeds
thereof; and such reassigned Ineligible Receivables shall be treated by HRAC as
collected in full as of the date on which they were transferred. HRAC shall
execute such documents and instruments of transfer or assignment and take such
other actions as shall reasonably be requested by the Bank to effect the
conveyance of such Ineligible Receivables and other property pursuant to this
subsection.
Section 6.02. Reassignment of Trust Portfolio. In the event any
representation or warranty set forth in Section 4.01(a), (c), (d), (f) or (g) or
Section 4.02(a)(i) or (a)(v) is not true and correct in any material respect and
as a result of such breach HRAC is required to accept a reassignment of the
Receivables previously sold by the Bank to HRAC pursuant to Section 6.02 of the
Receivables Purchase Agreement between HRAC and the Company, the Bank shall be
obligated to accept a reassignment of HRAC's interest in such Receivables on the
terms set forth below.
The Bank shall pay to HRAC by depositing in the Collection Account in
immediately available funds, not later than 1:00 P.M. New York City time, on the
first Transfer Date following the Due Period in which such reassignment
obligation arises, in payment for such reassignment, an amount equal to the
amount specified in Section 2.06 of the Transfer and Servicing Agreement. Upon
such reassignment of Receivables, HRAC shall automatically and without further
action be deemed to sell, transfer, assign, set-over and otherwise convey to the
Bank, without recourse, representation or warranty, all the right, title and
interest of HRAC in and to such Receivables, all Recoveries related thereto, all
monies and amounts due or to become due with respect thereto and all proceeds
thereof; and such reassigned Receivables shall be treated by HRAC as collected
in full as of the date on which they were transferred. HRAC shall execute such
documents and instruments of transfer or assignment and take such other actions
as shall reasonably be requested by the Bank to effect the conveyance of such
Receivables and other property pursuant to this subsection.
ARTICLE VII
CONDITIONS PRECEDENT
Section 7.01. Conditions to HRAC's Obligations Regarding Initial
Receivables. The obligations of HRAC to purchase the Receivables in the Initial
Accounts on the Closing Date shall be subject to the satisfaction of the
following conditions:
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(a) All representations and warranties of the Bank contained in this
Agreement shall be true and correct on the Closing Date with the same effect as
though such representations and warranties had been made on such date;
(b) All information concerning the Initial Accounts provided to HRAC, or
its designee, shall be true and correct as of the Closing Date in all material
respects;
(c) The Bank shall have (i) delivered to HRAC, or its designee, a computer
file or microfiche list containing a true and complete list of all Initial
Accounts identified by account number and by the Receivables balance as of the
Closing Date and (ii) substantially performed all other obligations required to
be performed by the provisions of this Agreement;
(d) The Bank shall have recorded and filed, at its expense, any financing
statement with respect to the Receivables (other than Receivables in Additional
Accounts) now existing and hereafter created for the transfer of accounts and
general intangibles (each as defined in Section 9-106 of the UCC) meeting the
requirements of applicable state law in such manner and in such jurisdictions as
would be necessary to perfect the sale of and security interest in the
Receivables from the Bank to HRAC, and shall deliver a file-stamped copy of such
financing statements or other evidence of such filings to HRAC, or its designee;
(e) On or before the Closing Date, (i) HRAC and the Company shall have
entered into a Receivables Purchase Agreement (ii) the Company and the Owner
Trustee shall have entered into the Trust Agreement (iii) the Company, Household
Finance Corporation and the Owner Trustee shall have entered into the Transfer
and Servicing Agreement, (iv) the Trust and the Indenture Trustee shall have
entered into the Indenture and (v) the closing under the Transfer and Servicing
Agreement and the Indenture shall take place simultaneously with the initial
closing hereunder; and
(f) All corporate and legal proceedings and all instruments in connection
with the transactions contemplated by this Agreement shall be satisfactory in
form and substance to HRAC, and HRAC shall have received from the Bank copies of
all documents (including, without limitation, records of corporate proceedings)
relevant to the transactions herein contemplated as HRAC may reasonably have
requested.
Section 7.02. Conditions Precedent to the Bank's Obligations. The
obligations of the Bank to sell Receivables in the Initial Accounts on the
Closing Date shall be subject to the satisfaction of the following conditions:
(a) All representations and warranties of HRAC contained in this Agreement
shall be true and correct with the same effect as though such representations
and warranties had been made on such date;
(b) Payment or provision for payment of the Purchase Price in accordance
with the provision of Section 3.01 hereof shall have been made; and
(c) All corporate and legal proceedings and all instruments in connection
with the transactions contemplated by this Agreement shall be satisfactory in
form and substance to the Bank, and the Bank shall have received from HRAC
copies of all documents (including, without
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limitation, records of corporate proceedings) relevant to the transactions
herein contemplated as the Bank may reasonably have requested.
ARTICLE VIII
TERM AND PURCHASE TERMINATION
Section 8.01. Term. This Agreement shall commence as of the date of
execution and delivery hereof and shall continue until the termination of the
Trust as provided in Article VIII of the Trust Agreement.
Section 8.02. Purchase Termination. If the Bank shall fail generally to,
or admit in writing its inability to, pay its debts as they become due; or if a
proceeding shall have been instituted in a court having jurisdiction in the
premises seeking a decree or order for relief in respect of the Bank in an
involuntary case under any Debtor Relief Law, or for the appointment of a
receiver, liquidator, assignee, trustee, custodian, sequestrator, conservator or
other similar official of the Bank or for any substantial part of the Bank's
property, or for the winding-up or liquidation of the Bank's affairs and, if
instituted against the Bank, any such proceeding shall continue undismissed or
unstayed and in effect, for a period of 60 consecutive days, or any of the
actions sought in such proceeding shall occur; or if the Bank shall commence a
voluntary case under any Debtor Relief Law, or if the Bank shall consent to the
entry of an order for relief in an involuntary case under any Debtor Relief Law,
or consent to the appointment of or taking possession by a receiver, liquidator,
assignee, trustee, custodian, sequestrator, conservator or other similar
official of, or for, any substantial part of its property, or any general
assignment for the benefit of its creditors; or the Bank or any subsidiary of
the Bank shall have taken any corporate action in furtherance of any of the
foregoing actions (each an "Insolvency Event"); then the Bank shall immediately
cease to transfer Principal Receivables to HRAC and shall promptly give notice
to HRAC, the Company, the Owner Trustee and the Indenture Trustee of such
Insolvency Event. Notwithstanding any cessation of the transfer to HRAC of
additional Principal Receivables, Principal Receivables transferred to HRAC
prior to the occurrence of such Insolvency Event and 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 property of HRAC available for transfer by HRAC to the Company
pursuant to the Transferor RPA.
ARTICLE IX
MISCELLANEOUS PROVISIONS
Section 9.01. Amendment. This Agreement and any Conveyance Papers and the
rights and obligations of the parties hereunder and thereunder may not be
changed orally, but only by an instrument in writing signed by HRAC and the Bank
in accordance with this Section 9.01. This Agreement and any Conveyance Papers
may be amended from time to time by HRAC and the Bank (i) to cure any ambiguity,
(ii) to correct or supplement any provisions herein which may be inconsistent
with any other provisions herein or in any such other Conveyance Papers, (iii)
to add
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any other provisions with respect to matters or questions arising under this
Agreement or any Conveyance Papers which shall not be inconsistent with the
provisions of this Agreement or any Conveyance Papers, (iv) to change or modify
the Purchase Price and (v) to change, modify, delete or add any other obligation
of the Bank or HRAC; provided, however that no amendment pursuant to clause (v)
of this Section 9.01 shall be effective unless the Bank and HRAC have been
notified in writing that the Rating Agency Condition has been satisfied;
provided, further, the Bank and HRAC shall have delivered to the Company, the
Owner Trustee and the Indenture Trustee an Officer's Certificate, dated the date
of any such action, stating that each of the Bank and HRAC, respectively,
reasonably believes that such action will not have an Adverse Effect, unless the
Company, the Owner Trustee and the Indenture Trustee shall consent thereto. Any
reconveyance executed in accordance with the provisions hereof shall not be
considered to be an amendment to this Agreement. A copy of any amendment to this
Agreement shall be sent to the Rating Agency.
Section 9.02. Governing Law. THIS AGREEMENT AND THE CONVEYANCE PAPERS
SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.
Section 9.03. Notices. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if personally
delivered at or mailed by registered mail, return receipt requested, to (a) in
the case of the Bank, 0000 Xxxx Xxxxxx Xxxxx, Xxx Xxxxx, Xxxxxx 00000,
Attention: General Counsel, (b) in the case of HRAC, 0000 Xxxxxxx Xxxx, Xxxxxxxx
Xxxxxxx, XX 00000, Attention: General Counsel, (c) in the case of the Owner
Trustee, Xxxxxx Square North, 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, XX
00000-0000, (d) in the case of the Indenture Trustee, 000 Xxxx Xxxxxx Xxxxx,
Xxxxxxx, Xxxxxxxx, 00000, Attention: Corporate Trust Department, (e) in the case
of the Servicer, Household Finance Corporation, 0000 Xxxxxxx Xxxx, Xxxxxxxx
Xxxxxxx, Xxxxxxxx 00000, Attention: X.X. Xxxxx, Assistant Treasurer, (f) in the
case of Fitch, Fitch, Inc., Xxx Xxxxx Xxxxxx Xxxxx, Xxx Xxxx, XX 00000,
Attention: ABS Surveillance, (g) in the case of Moody's, Xxxxx'x Investors
Service Inc., 00 Xxxxxx Xxxxxx, Xxx Xxxx, XX 00000, Attention: ABS Monitoring
Group, or (h) in the case of Standard & Poor's, Standard & Poor's Ratings Group,
00 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000, Attention: Credit Card ABS; or, as to each
party, at such other address as shall be designated by such party in a written
notice to each other party.
Section 9.04. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement or any Conveyance
Paper shall for any reason whatsoever be held invalid, then such covenants,
agreements, provisions, or terms shall be deemed severable from the remaining
covenants, agreements, provisions, and terms of this Agreement or any Conveyance
Paper and shall in no way affect the validity or enforceability of the other
provisions of this Agreement or of any Conveyance Paper.
Section 9.05. Assignment. Notwithstanding anything to the contrary
contained herein, other than HRAC's assignment of its rights, title, and
interests in, to, and under this Agreement to the Company and the Company's
assignment of its rights, title and interest in, to and under this Agreement to
the Trust and the Trust's assignment of its rights, title and interests in, to
and under this Agreement to the Indenture Trustee for the benefit of the
beneficiaries of the Trust,
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including the Noteholders as contemplated by the Transfer and Servicing
Agreement, the Indenture and Section 9.06 hereof, this Agreement and all other
Conveyance Papers may not be assigned by the parties hereto unless the Bank
shall assign its rights, title and interests in, to and under this Agreement to
(a) any successor by merger assuming this Agreement (b) to any affiliate owned
directly or indirectly by Household International, Inc. which assumes the
obligations of this Agreement or (c) to any entity provided that the Rating
Agency has advised HRAC and the Bank that the Rating Agency Condition has been
satisfied.
Section 9.06. Acknowledgement and Agreement of the Bank. By execution
below, the Bank expressly acknowledges and agrees that all of HRAC's right,
title, and interest in, to, and under this Agreement, including, without
limitation, all of HRAC's right, title, and interest in and to the Receivables
purchased pursuant to this Agreement, shall be assigned by HRAC to the Company,
and shall be assigned by the Company to the Owner Trustee, and shall be assigned
by the Owner Trustee to the Indenture Trustee for the benefit of the
beneficiaries of the Trust, including the Noteholders, and the Bank consents to
such assignments. The Bank further agrees that notwithstanding any claim,
counterclaim, right of setoff or defense which it may have against HRAC, due to
a breach by HRAC of this Agreement or for any other reason, and notwithstanding
the bankruptcy of HRAC or any other event whatsoever, the Bank's sole remedy
shall be a claim against HRAC for money damages, and then only to the extent of
funds received by HRAC pursuant to the Receivables Purchase Agreement between
HRAC and the Company, and in no event shall the Bank assert any claim on or any
interest in the Receivables or any proceeds thereof or take any action which
would reduce or delay receipt by the Company or the Owner Trustee of collections
with respect to the Receivables. Additionally, the Bank agrees for the benefit
of the Noteholders that any amounts payable by the Bank to HRAC hereunder which
are to be paid by HRAC to the Company then paid by the Company to the Owner
Trustee and pledged to the Indenture Trustee for the benefit of the Noteholders
shall be paid by the Bank, on behalf of HRAC, directly to the Company.
Section 9.07. Further Assurances. HRAC and the Bank agree to do and
perform, from time to time, any and all acts and to execute any and all further
instruments required or reasonably requested by the other party, the Company,
the Owner Trustee or the Indenture Trustee more fully to effect the purposes of
this Agreement, the Conveyance Papers and the Transfer and Servicing Agreement,
including, without limitation, the execution of any financing statements or
continuation statements or equivalent documents relating to the Receivables for
filing under the provisions of the UCC or other law of any applicable
jurisdiction.
Section 9.08. No Waiver; Cumulative Remedies. No failure to exercise and
no delay in exercising, on the part of HRAC or the Bank, any right, remedy,
power or privilege hereunder, shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege. Subject to Section 9.06, the rights,
remedies, powers and privileges herein provided are cumulative and not
exhaustive of any rights, remedies, powers and privileges provided by law.
Section 9.09. Counterparts. This Agreement and all Conveyance Papers 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.
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Section 9.10. Binding; Third-Party Beneficiaries. This Agreement and the
Conveyance Papers will inure to the benefit of and be binding upon the parties
hereto and their respective successors and permitted assigns. The Company, the
Owner Trustee and the Indenture Trustee shall be considered third-party
beneficiaries of this Agreement.
Section 9.11. Merger and Integration. Except as specifically stated
otherwise herein, this Agreement and the Conveyance Papers set forth the entire
understanding of the parties relating to the subject matter hereof, and all
prior understandings, written or oral, are superseded by this Agreement and the
Conveyance Papers. This Agreement and the Conveyance Papers may not be modified,
amended, waived or supplemented except as provided herein.
Section 9.12. Headings. The headings are for purposes of reference only
and shall not otherwise affect the meaning or interpretation of any provision
hereof.
Section 9.13. Schedules and Exhibits. The schedules and exhibits attached
hereto and referred to herein shall constitute a part of this Agreement and are
incorporated into this Agreement for all purposes.
Section 9.14. Survival of Representations and Warranties. All
representations, warranties and agreements contained in this Agreement or
contained in any Supplemental Conveyance, shall remain operative and in full
force and effect and shall survive conveyance of the Receivables by the Bank to
HRAC and thereafter to the Company pursuant to the Receivables Purchase
Agreement between HRAC and the Company, and thereafter by the Company to the
Trust pursuant to the Transfer and Servicing Agreement and by the Trust and the
Indenture Trustee pursuant to the Indenture.
Section 9.15. Nonpetition Covenant. Notwithstanding any prior termination
of this Agreement, the Bank shall not, prior to the date which is one year and
one day after the termination of this Agreement, acquiesce, petition or
otherwise invoke or cause HRAC to invoke the process of any Governmental
Authority for the purpose of commencing or sustaining a case against HRAC under
any Federal or state bankruptcy, insolvency or similar law or appointing a
receiver, conservator, liquidator, assignee, trustee, custodian, sequestrator or
other similar official of HRAC or any substantial part of its property or
ordering the winding-up or liquidation or the affairs of HRAC.
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IN WITNESS WHEREOF, HRAC and the Bank have caused this Agreement to be duly
executed by their respective officers as of the day and year first above
written.
HOUSEHOLD BANK (SB), N.A.
By: ____________________________________
Name:
Title:
HOUSEHOLD RECEIVABLES ACQUISITION
COMPANY
By: ____________________________________
Name:
Title:
26
EXHIBIT A
FORM OF SUPPLEMENTAL CONVEYANCE
(As required by Section 2.05 of
the Receivables Purchase Agreement)
SUPPLEMENTAL CONVEYANCE No. ____ dated as of ____________ __, ____, by and
between HOUSEHOLD BANK (SB), N.A. (the "Bank"), and HOUSEHOLD RECEIVABLES
ACQUISITION COMPANY ("HRAC"), pursuant to the Receivables Purchase Agreement
referred to below.
W I T N E S S E T H:
WHEREAS, the Bank and HRAC are parties to an Receivables Purchase
Agreement, dated as of ____________ (hereinafter as such agreement may have
been, or may from time to time be, amended, supplemented or otherwise modified,
the "Receivables Purchase Agreement");
WHEREAS, pursuant to the Receivables Purchase Agreement, the Bank wishes to
designate Additional Accounts to be included as Accounts and the Bank wishes to
convey its right, title and interest in the Receivables of such Additional
Accounts, whether now existing or hereafter created, to HRAC pursuant to the
Receivables Purchase Agreement; and
WHEREAS, HRAC is willing to accept such designation and conveyance subject
to the terms and conditions hereof.
NOW, THEREFORE, the Bank and HRAC hereby agree as follows:
1. Defined Terms. All capitalized terms used herein shall have the
meanings ascribed to them in the Receivables Purchase 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. The Bank delivers herewith a
computer file or microfiche list containing a true and complete schedule
identifying all such Additional Accounts designated hereby (the "Additional
Accounts") and specifying for each such Additional 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 in such Additional
Account. Such computer file, microfiche list or other documentation shall be as
of the date of this Supplemental Conveyance incorporated into and made part of
this Supplemental Conveyance and is marked as Schedule I to this Supplemental
Conveyance.
X-0
00
0. Conveyance of Receivables.
(a) The Bank does hereby sell, transfer, assign, set over and otherwise
convey to HRAC, without recourse except as provided in the Receivables Purchase
Agreement, all its right, title and interest in, to and under the Receivables
generated by such Additional Accounts, existing at the close of business on the
Additional Cut-Off Date and thereafter created until termination of the
Receivables Purchase Agreement pursuant to Article VIII thereof, all Recoveries
with respect to such Accounts, all monies due or to become due and all amounts
received or receivable with respect thereto and all "proceeds" (including,
without limitation, "proceeds" as defined in Article 9 of the UCC) thereof.
(b) In connection with such sale, the Bank agrees to record and file, at
its own expense, one or more financing statements (and continuation statements
with respect to such financing statements when applicable) with respect to the
Receivables, existing on the Additional Cut-Off Date and thereafter created, for
the transfer of accounts and general intangibles meeting the requirements of
applicable state law in such manner and in such jurisdictions as are necessary
to perfect the sale and assignment of and the security interest in the
Receivables to HRAC, and to deliver a file-stamped copy of such financing
statement or other evidence of such filing to HRAC.
(c) In connection with such sale, the Bank further agrees, at its own
expense, on or prior to the date of this Supplemental Conveyance, to indicate in
the appropriate computer files or microfiche list that all Receivables created
in connection with the Additional Accounts designated hereby have been conveyed
to HRAC pursuant to this Supplemental Conveyance.
(d) The parties hereto intend that the conveyance described in
Section 3(a) constitute an absolute sale consistent with the intent expressed in
Section 2.01(d) of the Receivables Purchase Agreement. In the event, however,
that notwithstanding such intent a court of competent jurisdiction were to hold
that the transactions evidenced hereby constitute a loan and not a purchase and
sale, it is the intention of the parties hereto that this Supplemental
Conveyance shall constitute a security agreement under applicable law, and that
the Bank shall be deemed to have granted, and the Bank does hereby grant, to
HRAC a first priority perfected security interest in all of the Bank's right,
title and interest, whether now owned or hereafter acquired, in, to and under
all Receivables existing on the Additional Cut-Off Date in the Additional
Accounts and thereafter created from time to time until the termination of the
Receivables Purchase Agreement pursuant to Article VIII thereof, all Recoveries
with respect to such Accounts, all monies due or to become due and all amounts
received or receivable with respect thereto, and all proceeds (including,
without limitation, "proceeds" as defined in Article 9 of the UCC) thereof.
4. Acceptance by the HRAC. HRAC hereby acknowledges its acceptance of all
right, title and interest to the property, now existing and hereafter created,
conveyed to HRAC pursuant to Section 3 of this Supplemental Conveyance, and
declares that it shall maintain such right, title and interest. HRAC further
acknowledges that, prior to or simultaneously with the execution and delivery of
this Supplemental Conveyance, the Bank delivered to HRAC the computer file or
microfiche list described in Section 2 of this Supplemental Conveyance.
X-0
00
0. Representations and Warranties of the Bank. The Bank hereby
represents and warrants to HRAC as of the date of this Supplemental Conveyance
and as of the Addition Date that:
(a) Legal, Valid and Binding Obligation. This Supplemental Conveyance
constitutes a legal, valid and binding obligation of the Bank enforceable
against the Bank in accordance with its terms, except as such enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally from time to time in
effect or general principles of equity;
(b) Eligibility of Accounts. On the Additional Cut-Off Date, each
Additional Account designated hereby is an Eligible Account;
(c) No Liens. Each Receivable in an Additional Account designated hereby
has been conveyed to HRAC free and clear of any Lien;
(d) Eligibility of Receivables. On the Additional Cut-Off Date, each
Receivable existing in an Additional Account designated hereby is an Eligible
Receivable and as of the date of creation of any Receivable in an Additional
Account designated hereby, such Receivable is an Eligible Receivable;
(e) Selection Procedures. No selection procedure believed by the Bank to
be adverse to the interests of HRAC or the Noteholders was utilized in selecting
the Additional Accounts;
(f) Transfer of Receivables. This Supplemental Conveyance constitutes a
valid sale, transfer and assignment to HRAC of all right, title and interest of
the Bank in the Receivables arising in the Additional Accounts designated hereby
now existing or hereafter created, all monies due or to become due and all
amounts received with respect thereto and the "proceeds" (including, without
limitation, "proceeds" as defined in Article 9 of the UCC) thereof and the
Recoveries with respect thereto;
(g) No Conflict. The execution and delivery of this Supplemental
Conveyance, the performance of the transactions contemplated by this
Supplemental Conveyance and the fulfillment of the terms hereof, will not
conflict with, result in any breach of any of the material terms and provisions
of, or constitute (with or without notice or lapse of time or both) a material
default under, any indenture, contract, agreement, mortgage, deed of trust or
other instrument to which the Bank is a party or by which it or its properties
are bound;
(h) No Violation. The execution and delivery of this Supplemental
Conveyance by the Bank, the performance of the transactions contemplated by this
Supplemental Conveyance and the fulfillment of the terms hereof applicable to
the Bank will not conflict with or violate any Requirements of Law applicable to
the Bank;
(i) No Proceedings. There are no proceedings or investigations, pending
or, to the best knowledge of the Bank, threatened against the Bank before any
Governmental Authority (i) asserting the invalidity of this Supplemental
Conveyance, (ii) seeking to prevent the consummation of any of the transactions
contemplated by this Supplemental Conveyance,
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29
(iii) seeking any determination or ruling that, in the reasonable judgment of
the Bank, would materially and adversely affect the performance by the Bank of
its obligations under this Supplemental Conveyance or (iv) seeking any
determination or ruling that would materially and adversely affect the validity
or enforceability of this Supplemental Conveyance; and
(j) All Consents. All authorizations, consents, orders or approvals of
any Governmental Authority required to be obtained by the Bank in connection
with the execution and delivery of this Supplemental Conveyance by the Bank and
the performance of the transactions contemplated by this Supplemental Conveyance
by the Bank, have been obtained.
6. Ratification of the Receivables Purchase Agreement. The Receivables
Purchase Agreement is hereby ratified, and all references to the "Receivables
Purchase Agreement," to "this Agreement" and "herein" shall be deemed from and
after the Addition Date to be a reference to the Receivables Purchase Agreement
as supplemented by this Supplemental Conveyance. Except as expressly amended
hereby, all the representations, warranties, terms, covenants and conditions of
the Receivables Purchase Agreement shall remain unamended and shall continue to
be, and shall, remain, in full force and effect in accordance with its terms and
except as expressly provided herein shall not constitute or be deemed to
constitute a waiver of compliance with or consent to non-compliance with any
term or provision of the Receivables Purchase Agreement.
7. Counterparts. This Supplemental Conveyance may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument.
8. Governing Law. THIS SUPPLEMENTAL CONVEYANCE SHALL BE CONTRUED 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
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IN WITNESS WHEREOF, the undersigned have caused this Supplemental
Conveyance to be duly executed and delivered by their respective duly authorized
officers on the day and the year first above written.
Dated: ____________ ___, 200__ HOUSEHOLD BANK (SB), N.A.
By: _____________________________________
Name:
Title:
HOUSEHOLD RECEIVABLES ACQUISITION
COMPANY
By: _____________________________________
Name:
Title:
A-5
31
Schedule I to
Supplemental
Conveyance
ADDITIONAL ACCOUNTS
COMPUTER FILES CONTAINING ACCOUNT INFORMATION DELIVERED TO HRAC
ARE INCORPORATED BY REFERENCE
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Schedule I
LIST OF ACCOUNTS
COMPUTER FILES CONTAINING ACCOUNT INFORMATION DELIVERED TO HRA
ARE INCORPORATED BY REFERENCE
I-2
