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EXHIBIT 10.3
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HOUSEHOLD BANK (SB), N.A.
and
HOUSEHOLD RECEIVABLES ACQUISITION COMPANY
RECEIVABLES PURCHASE AGREEMENT
Dated as of June 12, 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.............................................................................12
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...................................................................................16
Section 6.01. Reassignment of Ineligible Receivables..................................................16
Section 6.02. Reassignment of Trust Portfolio.........................................................17
ARTICLE VII CONDITIONS PRECEDENT...................................................................................17
Section 7.01. Conditions to HRAC's Obligations Regarding Initial Receivables..........................17
Section 7.02. Conditions Precedent to the Bank's Obligations..........................................18
ARTICLE VIII TERM AND PURCHASE TERMINATION.........................................................................18
Section 8.01. Term....................................................................................18
Section 8.02. Purchase Termination....................................................................18
ARTICLE IX MISCELLANEOUS PROVISIONS................................................................................19
Section 9.01. Amendment...............................................................................19
Section 9.02. Governing Law...........................................................................20
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Section 9.03. Notices.................................................................................20
Section 9.04. Severability of Provisions..............................................................20
Section 9.05. Assignment..............................................................................20
Section 9.06. Acknowledgement and Agreement of the Bank...............................................20
Section 9.07. Further Assurances......................................................................21
Section 9.08. No Waiver; Cumulative Remedies..........................................................21
Section 9.09. Counterparts............................................................................21
Section 9.10. Binding; Third-Party Beneficiaries......................................................21
Section 9.11. Merger and Integration..................................................................21
Section 9.12. Headings................................................................................22
Section 9.13. Schedules and Exhibits..................................................................22
Section 9.14. Survival of Representations and Warranties..............................................22
Section 9.15. Nonpetition Covenant....................................................................22
EXHIBIT A FORM OF SUPPLEMENTAL CONVEYANCE.........................................................................A-1
Schedule I LIST OF ACCOUNTS.......................................................................................I-2
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RECEIVABLES PURCHASE AGREEMENT, dated as of June 12, 2001 by
and between HOUSEHOLD RECEIVABLES ACQUISITION COMPANY, a Delaware corporation
("HRAC"), and HOUSEHOLD BANK (SB), N.A., a national banking association (the
"BANK").
WITNESSETH:
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 June 12, 2001.
"Company" shall mean HRSI Funding, Inc. II, a Delaware
corporation, and its permitted successors and assigns.
"Conveyance" shall have the meaning specified in subsection
2.01(a).
"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 June 12,
2001 as supplemented by Indenture Supplements applicable to any Series that may
be issued from time to time.
"Indenture Supplement" shall mean the indenture supplement
pursuant to which a Series is issued.
"Indenture Trustee" shall mean U.S. Bank National Association
in its capacity as indenture trustee, or any successor indenture trustee.
"Initial Account" shall mean each Account included in the
computer file delivered pursuant to Section 2.01(c)(ii)(A) of this Agreement to
HRAC or its designee in respect of the Closing Date.
"Insolvency Event" shall have the meaning specified in Section
8.02.
"New 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 June 12, 2001 among Household Finance
Corporation, as Servicer, the Company, as Transferor, and the Owner Trustee on
behalf of the Trust, and all amendments and supplements thereto.
"Transferor RPA" shall mean the
Receivables Purchase
Agreement, dated June 12, 2001, between HRAC and the Company.
"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 June 12, 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, as applicable, have
been conveyed by HRAC to the Company in accordance with the Transferor RPA and,
as applicable, have been conveyed by the Company to the Trust pursuant to the
Transfer and Servicing Agreement and, as applicable, have been pledged by the
Trust to the Indenture Trustee pursuant to the Indenture for the benefit of the
Noteholders by including (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 date that is five Business
Days after 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) the Bank is a national bank duly organized and validly
existing in good standing under the laws of the United States and has, in all
material respects, full power and authority to own its properties and conduct
its business as such properties are presently owned and such business is
presently conducted, and to execute, deliver and perform its obligations under
this Agreement;
(b) the Bank is duly qualified to do business and is in good
standing as a foreign corporation (or is exempt from such requirements) and has
obtained all necessary licenses and approvals, in each jurisdiction in which
failure to so qualify or to obtain such licenses and approvals would (i) render
any Credit Agreement relating to an Account or any Receivable unenforceable by
the Bank, HRAC, the Company or the Owner Trustee on behalf of the Trust and (ii)
have a material adverse effect on the Noteholders;
(c) the execution, delivery and performance of this Agreement
and any other document or instrument delivered pursuant hereto, 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) 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 any of the material
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terms and provisions of, or constitute (with or without notice or lapse of time
or both) a material default under, any indenture, contract, agreement, mortgage,
deed of trust, or other instrument to which the Bank is a party or by which it
or any of its properties are bound;
(e) the execution, delivery and performance of this Agreement
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) 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 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;
(h) the Bank does not own directly or indirectly any ownership
interest in HRAC, the Transferor or the Trust;
(i) the consolidated financial statements of the Bank do not
include the assets or liabilities of HRAC, the Transferor or the Trust;
(j) the Bank has conducted and will conduct its business
solely in its own name through its duly authorized officers or agents so as not
to mislead others as to the identify of the entity with which those others are
concerned;
(k) the Bank has maintained and will maintain its corporate
records and books of account separate, and apart from those of each Affiliate;
(l) the assets of the Bank (including its funds) have not been
and will not be commingled with those of any Affiliate;
(m) the board of directors of the Bank has held and will hold
all appropriate meetings or will properly execute written consents with respect
to all actions requiring such consents;
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(n) the Bank has been and will be adequately capitalized as
defined in 12 U.S.C. Section 1831 o(b)(1)(B) in light of its contemplated
business obligations;
(o) the Bank has not and will not guaranty debts of the Trust;
(p) the Bank has not and will not acquire obligations or
securities of, or make loans or advances to, the Trust;
(q) the Bank has received fair consideration in exchange for
its interests in the related Receivables;
(r) the Bank will treat the transfer to HRAC of the related
Receivables as a sale for tax and accounting purposes; and
(s) there are no agreements or understandings between the Bank
or the Trust relating to the related Receivables, except as set forth in the
Transaction Documents.
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;
(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;
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(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 June 12, 2001, by and
between HRAC and the Company, and by the Company to the Trust pursuant to the
Transfer and Servicing Agreement and by the Trust to the Indenture Trustee
pursuant to the Indenture and that the Company, the Owner Trustee and the
Indenture Trustee may enforce such representations directly against the Bank.
Section 4.03. Representations and Warranties of HRAC. As of
the Closing Date 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.
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(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.
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:
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(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.
(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
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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 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
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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:
(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
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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 limitation, records of
corporate proceedings) relevant to the transactions herein contemplated as the
Bank may reasonably have requested.
ARTICLE VIII
TERM AND PURCHASE TERMINATION
Section 8.01. Term. Notwithstanding the date of this
Agreement, this Agreement shall commence and be effective on May 7, 2001 and
shall continue until 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
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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 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.
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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, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: General Counsel, (b) in the case of HRAC, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: General Counsel, (c) in the case of the Owner
Trustee, ▇▇▇▇▇▇ Square North, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇-▇▇▇▇, (d) in the case of the Indenture Trustee, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇, Attention: Corporate Trust Department, (e) in the case
of the Servicer, Household Finance Corporation, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇.▇. ▇▇▇▇▇, Assistant Treasurer, (f) in the
case of Fitch, Fitch, Inc., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇,
Attention: ABS Surveillance, (g) in the case of Moody's, ▇▇▇▇▇'▇ Investors
Service Inc., ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ABS Monitoring
Group, or (h) in the case of Standard & Poor's, Standard & Poor's Ratings Group,
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, 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, 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
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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.
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.
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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: /s/ ▇. ▇. ▇▇▇▇
--------------------------------------
Name: ▇. ▇. ▇▇▇▇
Title: Vice President
HOUSEHOLD RECEIVABLES ACQUISITION COMPANY
By: /s/ ▇. ▇. ▇▇▇▇
--------------------------------------
Name: ▇. ▇. ▇▇▇▇
Title: Vice President
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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.
WITNESSETH:
WHEREAS, the Bank and HRAC are parties to an Receivables
Purchase Agreement, dated as of June 12, 2001 (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.
▇-▇
▇▇
▇. 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.
▇-▇
▇▇
▇. 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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(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
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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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.
HOUSEHOLD BANK (SB), N.A.
By:
--------------------------------------
Name:
Title:
HOUSEHOLD RECEIVABLES ACQUISITION COMPANY
By:
--------------------------------------
Name:
Title:
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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 HRAC
ARE INCORPORATED BY REFERENCE
I-2
