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EXHIBIT 10.4
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HOUSEHOLD RECEIVABLES ACQUISITION COMPANY
and
HRSI FUNDING, INC. II
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 HRAC Relating to HRAC.................................10
Section 4.02. Representations and Warranties of HRAC Relating to the Agreement and the Receivables....11
Section 4.03. Representations and Warranties of the Company...........................................13
Section 4.04. Assignment of Rights to the Company.....................................................14
ARTICLE V COVENANTS................................................................................................14
Section 5.01. Covenants of HRAC.......................................................................14
ARTICLE VI REPURCHASE OBLIGATION...................................................................................16
Section 6.01. Reassignment of Ineligible Receivables..................................................16
Section 6.02. Reassignment of Trust Portfolio.........................................................16
ARTICLE VII CONDITIONS PRECEDENT...................................................................................17
Section 7.01. Conditions to the Company's Obligations Regarding Initial Receivables...................17
Section 7.02. Conditions Precedent to HRAC'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................................................................................19
Section 9.01. Amendment...............................................................................19
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Section 9.02. Governing Law...........................................................................19
Section 9.03. Notices.................................................................................19
Section 9.04. Severability of Provisions..............................................................20
Section 9.05. Assignment..............................................................................20
Section 9.06. Acknowledgement and Agreement of HRAC...................................................20
Section 9.07. Further Assurances......................................................................20
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................................................................................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 FORM OF SUPPLEMENTAL CONVEYANCE.........................................................................A-1
Schedule I LIST OF ACCOUNTS.......................................................................................I-1
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RECEIVABLES PURCHASE AGREEMENT, dated as of June 12, 2001 by
and between HRSI FUNDING, INC. II, a Delaware corporation (the "COMPANY"), and
HOUSEHOLD RECEIVABLES ACQUISITION COMPANY, a Delaware corporation ("HRAC").
WITNESSETH:
WHEREAS, the Company desires to purchase, from time to time,
certain Receivables (hereinafter defined) arising under certain revolving credit
accounts;
WHEREAS, HRAC desires to sell and assign from time to time
certain Receivables to the Company upon the terms and conditions hereinafter set
forth;
WHEREAS, it is contemplated that the Receivables purchased
hereunder will be transferred by the Company to the Trust (hereinafter defined)
in connection with the issuance of certain Securities (hereinafter defined); and
WHEREAS, HRAC agrees that all representations, warranties,
covenants and agreements made by HRAC herein with respect to the Accounts
(hereinafter defined) and Receivables shall also be for the benefit of 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 the Company
and HRAC 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 the Company hereunder,
(y) the right, title and interest of the Company in the Receivables in which are
reassigned to HRAC 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 HRAC, 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 the Company.
"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 the Company by,
or at the direction of, HRAC pursuant to Sections 2.01 and 2.05.
"Agreement" shall mean this
Receivables Purchase Agreement and
all amendments hereof and supplements hereto.
"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 "HRAC" shall be substituted for
each occurrence of "the Transferor," "the Company" 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.
"Household Bank (SB)" shall mean Household Bank (SB), N.A., a
nationally chartered bank, and its successors and permitted assigns.
"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
the Company 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 the Company by, or at the direction of,
HRAC 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.
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"Principal Receivables" shall mean all Receivables other than
Finance Charge and Administrative Receivables.
"Purchase Price" shall have the meaning set forth in Section
3.01.
"Purchased Assets" shall have the meaning set forth in Section
2.01.
"Receivables" shall mean all amounts shown on HRAC'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.
"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.
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The words "HEREOF," "HEREIN" and "HEREUNDER" and words of
similar import when used in this Agreement or any Conveyance Paper shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement; and Section, Subsection, Schedule and Exhibit references contained in
this Agreement are references to Sections, Subsections, Schedules and Exhibits
in or to this Agreement unless otherwise specified.
All determinations of the principal or finance charge balance
of Receivables, and of any collections thereof, shall be made in accordance with
the Transfer and Servicing Agreement and the Indenture.
All capitalized terms used herein and not otherwise defined
herein have the meanings ascribed to them in the Indenture or the Transfer and
Servicing Agreement.
ARTICLE II
PURCHASE AND CONVEYANCE OF RECEIVABLES
Section 2.01. Purchase.
(a) By execution of this Agreement, HRAC does hereby sell,
transfer, assign, set over and otherwise convey to the Company (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 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, HRAC agrees, acting
directly, or through agents, (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 such
Participation Interests from HRAC to the Company, (ii) that such financing
statements shall name HRAC, as seller, and the Company, as purchaser, of the
Receivables and 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 the Company
as soon as is practicable after filing.
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(c) In connection with each such Conveyance, HRAC further
agrees, acting directly, or through agents, 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 been
conveyed to the Company in accordance with this Agreement 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 the Company 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 the Company, and is hereby incorporated into and made a
part of this Agreement. HRAC 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 HRAC'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 HRAC to the Company and that the Purchased
Assets shall not be part of HRAC's estate in the event of the insolvency of HRAC
or a conservatorship, receivership or similar event with respect to HRAC. 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 HRAC shall be deemed to have granted and does hereby
grant to the Company a first priority perfected security interest in all of
HRAC'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 HRAC hereunder.
(e) To the extent that HRAC retains any interest in the
Purchased Assets, HRAC hereby grants to the Indenture Trustee for the benefit of
the Noteholders a security interest in all of HRAC'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
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of all of the obligations of HRAC 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.
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 the Company may, at its option, give HRAC 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 HRAC shall
on or before the Addition Date, designate sufficient Eligible Accounts to be
included as Additional Accounts so that after the inclusion thereof the Company
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 and HRAC. In either event, HRAC shall have sole
responsibility for selecting the Aggregate Addition Accounts.
(b) On the Addition Date with respect to any designation of
Aggregate Addition Accounts, the Company shall purchase HRAC'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) HRAC shall have delivered, or caused to be
delivered, to the Company copies of UCC-1 financing statements covering
such Aggregate Addition Accounts or Participation Interests, if
necessary to perfect the Company'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, HRAC shall
have deposited, or caused to be 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 HRAC 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 the Company 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;
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(vi) HRAC shall have delivered, or caused to be
delivered, to the Company 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 the Company
will not result in an Adverse Effect and HRAC shall have delivered, or
caused to be delivered, to the Company an Officer's Certificate, dated
the Addition Date, stating that HRAC reasonably believes that the
addition of the Receivables arising in the Aggregate Addition Accounts
or Participation Interests to the Company will not have an Adverse
Effect.
Section 2.03 Addition of New Accounts.
(a) Upon the mutual agreement of the Company and HRAC, 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),
HRAC 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. HRAC shall cooperate with the Company 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 to enable it 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, the
Company shall purchase the HRAC'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) HRAC shall have delivered, or caused to be
delivered, to the Company copies of UCC-1 financing statements covering
such New Accounts, if necessary to perfect the Company'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, HRAC shall
have deposited, or caused to be 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 HRAC or other
Account Owner, as applicable, shall have occurred nor shall the
transfer of the Receivables arising in the New Accounts to the Company
have been made in contemplation of the occurrence thereof;
(v) HRAC shall have delivered, or caused to be
delivered, to the Company an officer's certificate, dated the Addition
Date, confirming, to the extent applicable, the items set forth in
clauses (ii) through (iv) above; and
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(vi) the transfer of the Receivables arising in the
New Accounts to the Company will not result in an Adverse Effect, and
HRAC shall have delivered, or caused to be delivered, to the Company an
officer's certificate, dated the Addition Date, stating that HRAC
reasonably believes that the addition to the Trust of the Receivables
arising in the New Accounts will not have an Adverse Effect.
Section 2.04. Representations and Warranties. HRAC hereby
represents and warrants to the Company 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, HRAC shall deliver to the Company (i) the
computer file or microfiche list required to be delivered pursuant to Section
2.01 with respect to such Additional Accounts on the date such file or list is
required to be delivered pursuant to Section 2.01 (the "DOCUMENT DELIVERY DATE")
and (ii) a duly executed, written assignment (including an acceptance by the
Company), 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, HRAC shall deliver to the Company 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 the Company 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 HRAC and the
Company 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 the Company 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 HRAC to the Company 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
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and such other factors as HRAC and the Company 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 the Company on the
Closing Date and on each Distribution Date following a Due Period during which
New Principal Receivables are conveyed to the Company shall be paid in cash
(including netting against other payments).
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 the Company by HRAC 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, HRAC agrees
that, not later than 1:00 P.M.
New York City time on such Distribution Date,
HRAC shall pay to the Company 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 HRAC Relating
to HRAC. HRAC hereby represents and warrants to, and agrees with, the Company as
of the Closing Date and on each Addition Date, that:
(a) (Organization and Good Standing) HRAC is a corporation
duly organized and validly existing in good standing 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 Qualification) HRAC 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 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 HRAC is a party
(such other documents or instruments, collectively, the "CONVEYANCE PAPERS"),
and the consummation of the transactions provided for in
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this Agreement and the Conveyance Papers have been duly authorized by HRAC by
all necessary corporate action on the part of HRAC;
(d) (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, violate or result in any breach of any of the material terms
and provisions of, or constitute (with or without notice or lapse of time or
both) a material default under, any indenture, contract, agreement, mortgage,
deed of trust, or other instrument to which HRAC 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 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;
(f) (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, (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; and
(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 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 or the
Conveyance Papers by HRAC 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 the
Company. Upon discovery by HRAC or the Company 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 Owner Trustee and the
Indenture Trustee within three Business Days following such discovery.
Section 4.02. Representations and Warranties of HRAC Relating
to the Agreement and the Receivables.
(a) Representations and Warranties. HRAC hereby represents and
warrants to the Company 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:
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(i) this Agreement and, in the case of Additional
Accounts, the related Supplemental Conveyance, each constitutes a
legal, valid and binding obligation of HRAC enforceable against HRAC 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 the
Company 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 HRAC in
connection with the conveyance of Receivables to the Company 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 the Company of all right, title and interest
of HRAC 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 Account, as applicable, 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 Account , 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 HRAC to be
materially adverse to the interests of the Company 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 the Company. Upon discovery by either HRAC or the Company 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 Owner Trustee and the Indenture Trustee within three Business Days
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following such discovery; provided that the failure to give notice within three
Business Days does not preclude subsequent notice. HRAC hereby acknowledges that
the Company intends to rely on the representations hereunder in connection with
representations made by the Company to secured parties, assignees or subsequent
transferees including but not limited to transfers made 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 Owner Trustee and the
Indenture Trustee may enforce such representations directly against HRAC.
Section 4.03. Representations and Warranties of the Company.
As of the Closing Date and on each Addition Date, the Company hereby represents
and warrants to, and agrees with, HRAC that:
(a) (Organization and Good Standing) the Company 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 the Company by all necessary corporate action on the part of the
Company;
(c) (No Conflict) the execution and delivery of this Agreement
and the Conveyance Papers by the Company, 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 Company,
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 Company 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 the Company and the fulfillment of
the terms contemplated herein and therein applicable to the Company will not
conflict with or violate any Requirements of Law applicable to the Company;
(e) (No Proceedings) there are no proceedings or
investigations pending or, to the best knowledge of the Company, threatened
against the Company, 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 Company, would materially and adversely affect the
performance by the Company 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; and
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(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 the Company in connection with the
execution and delivery by the Company 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 the Company. Upon
discovery by the Company or HRAC 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.
Section 4.04. Assignment of Rights to the Company. HRAC also
assigns to the Company its rights as to the representations and warranties (a)
made to HRAC by Household Bank (SB) as set forth in Sections 4.01 and 4.02 of
the
Receivables Purchase Agreement, dated June 12, 2001, by and between HRAC and
Household Bank (SB) and (b) made to HRAC by Household Bank (SB) and HRSI
Funding, Inc., as set forth in Sections 4.01, 4.02 and 4.04 of the
Receivables
Purchase Agreement, dated June 12, 2001, among HRAC, Household Bank (SB) and
HRSI Funding, Inc., provided, however, that if the Company chooses to exercise
its rights against HRAC under this Article hereto, then HRAC will, nonetheless,
in such case retain all of its rights against Household Bank (SB) and HRSI
Funding, Inc. under the before mentioned
Receivables Purchase Agreements.
ARTICLE V
COVENANTS
Section 5.01. Covenants of HRAC. HRAC hereby covenants and
agrees with the Company as follows:
(a) Receivables Not To Be Evidenced by Promissory Notes.
Except in connection with its enforcement or collection of an Account, HRAC 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 HRAC it shall be deemed to be an Ineligible Receivable in accordance
with Section 6.01(a) and shall be reassigned to HRAC in accordance with Section
6.01(b)
(b) Security Interests. Except for the conveyances hereunder,
HRAC will not sell, pledge, assign or transfer to any other Person, or take any
other action inconsistent with the Company's ownership of the Receivables or
grant, create, incur, assume or suffer to exist any Lien (arising through or
under HRAC) on, any Receivable, whether now existing or hereafter created, or
any interest therein, and HRAC shall not claim any ownership interest in the
Receivables and shall defend the right, title and interest of the Company in, to
and under the Receivables, whether now existing or hereafter created, against
all claims of third parties claiming through or under HRAC.
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(c) Account Allocations. In the event that HRAC is unable for
any reason to transfer Receivables to the Company 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, HRAC agrees (except as prohibited by any
such order) to allocate and pay to the Company, after the date of such
inability, all amounts that the Company will be required to allocate and pay to
the Trust pursuant to Section 2.11 of the Transfer and Servicing Agreement.
(d) Delivery of Collections or Recoveries. In the event that
HRAC receives Collections or Recoveries, HRAC agrees to pay to the Company (or
to the Servicer if the Company so directs) all such Collections and Recoveries
as soon as practicable after receipt thereof.
(e) Notice of Liens. HRAC shall notify the Company 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. HRAC shall undertake to file
the documents which would be necessary to perfect and maintain the transfer of
the Purchased Assets to the Company.
(g) Credit Agreements and Guidelines. Subject to compliance
with all Requirements of Law, HRAC (or other Account Owner if HRAC 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 HRAC (or
other Account Owner if HRAC 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, HRAC (or other Account Owner
if HRAC is not the Account Owner) or the Servicer will not take any action
unless (i) at the time of such action, HRAC (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 HRAC (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 HRAC or other Account Owner, as the case may be, and an
unrelated third party or by the terms of the Credit Agreements.
(h) Approval and Official Records. HRAC shall cause this
Agreement to be duly approved by the HRAC's Board of Directors, and HRAC shall
maintain this Agreement as a part of the official records of HRAC for the term
of this Agreement.
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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 the Company is
required to accept reassignment of Ineligible Receivables previously sold by
HRAC to the Company pursuant to Section 2.05(a) of the Transfer and Servicing
Agreement, HRAC shall accept reassignment of the Company's interest in such
Ineligible Receivables on the terms and conditions set forth in Section 6.01(b).
(b) HRAC shall accept reassignment from the Company of any
Ineligible Receivables previously sold by HRAC to the Company on the date on
which such reassignment obligation arises, and shall pay for such reassigned
Ineligible Receivables by paying to the Company, 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, the Company shall
automatically and without further action be deemed to sell, transfer, assign,
set-over and otherwise convey to HRAC, without recourse, representation or
warranty, all the right, title and interest of the Company 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 the Company as collected
in full as of the date on which they were transferred. The Company shall execute
such documents and instruments of transfer or assignment and take such other
actions as shall reasonably be requested by HRAC 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 the Company is required to accept a
reassignment of the Receivables previously sold by HRAC to the Company pursuant
to Section 2.06 of the Transfer and Servicing Agreement, HRAC shall be obligated
to accept a reassignment of the Company's interest in such Receivables on the
terms set forth below.
HRAC shall pay to the Company 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, the Company shall
automatically and without further action be deemed to sell, transfer, assign,
set-over and otherwise convey to HRAC, without recourse, representation or
warranty, all the right, title and interest of the Company in and to such
Receivables, 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 the Company as collected in full as of the date
on which they were transferred. The Company shall execute such documents and
instruments of transfer or assignment and take such other actions as shall
reasonably be requested by HRAC to effect the conveyance of such Receivables and
other property pursuant to this subsection.
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ARTICLE VII
CONDITIONS PRECEDENT
Section 7.01. Conditions to the Company's Obligations
Regarding Initial Receivables. The obligations of the Company 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 HRAC 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 the Company shall be true and correct as of the Closing Date in all material
respects;
(c) HRAC shall have (i) delivered, or caused to be delivered,
to the Company 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) HRAC 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 HRAC to the Company, and shall deliver a file-stamped
copy of such financing statements or other evidence of such filings to the
Company;
(e) On or before the Closing Date, (i) the Company and the
Owner Trustee shall have entered into the Trust Agreement (ii) the Company,
Household Finance Corporation and the Owner Trustee shall have entered into the
Transfer and Servicing Agreement, (iii) the Trust and the Indenture Trustee
shall have entered into the Indenture and (iv) 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 the Company, and the Company shall have
received from HRAC copies of all documents (including, without limitation,
records of corporate proceedings) relevant to the transactions herein
contemplated as the Company may reasonably have requested.
Section 7.02. Conditions Precedent to HRAC's Obligations. The
obligations of HRAC to sell 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 Company
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 HRAC, and HRAC shall have received from
the Company copies of all documents (including, without limitation, records of
corporate proceedings) relevant to the transactions herein contemplated as HRAC
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 HRAC 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
HRAC 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 HRAC or for any substantial part of the
HRAC's property, or for the winding-up or liquidation of HRAC's affairs and, if
instituted against HRAC, 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 HRAC shall commence a
voluntary case under any Debtor Relief Law, or if HRAC 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 HRAC or any subsidiary of HRAC
shall have taken any corporate action in furtherance of any of the foregoing
actions (each an "INSOLVENCY EVENT"); then HRAC shall immediately cease to
transfer Principal Receivables to the Company and shall promptly give notice to
the Company, the Owner Trustee and the Indenture Trustee of such Insolvency
Event. Notwithstanding any cessation of the transfer to the Company of
additional Principal Receivables, Principal Receivables transferred to the
Company 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 the Company available for transfer by the
Company to the Trust pursuant to the Transfer and Servicing Agreement.
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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 the
Company and HRAC in accordance with this Section 9.01. This Agreement and any
Conveyance Papers may be amended from time to time by the Company and HRAC (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 HRAC or the Company; provided, however that no
amendment pursuant to clause (v) of this Section 9.01 shall be effective unless
HRAC and the Company have been notified in writing that the Rating Agency
Condition has been satisfied; provided, further, HRAC and the Company shall have
delivered to the Owner Trustee and the Indenture Trustee an Officer's
Certificate, dated the date of any such action, stating that each of HRAC and
the Company, respectively, reasonably believes that such action will not have an
Adverse Effect, unless 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 HRAC, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: General Counsel, (b) in the case of the Company, ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: President, (c) in the case of
the Owner Trustee, Wilmington Trust Company, at ▇▇▇▇▇▇ Square North, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: Corporate Trust
Administration (facsimile no. (▇▇▇) ▇▇▇-▇▇▇▇), (d) in the case of the Indenture
Trustee, U.S. Bank National Association, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, 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
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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 the Company's assignment of its rights,
title, and interests 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 HRAC 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 the Company and HRAC that the Rating Agency Condition has
been satisfied.
Section 9.06. Acknowledgement and Agreement of HRAC. By
execution below, HRAC expressly acknowledges and agrees that all of the
Company's right, title, and interest in, to, and under this Agreement,
including, without limitation, all of the Company's right, title, and interest
in and to the Receivables purchased pursuant to this Agreement, 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 HRAC consents to such assignments. HRAC
further agrees that notwithstanding any claim, counterclaim, right of setoff or
defense which it may have against the Company, due to a breach by the Company of
this Agreement or for any other reason, and notwithstanding the bankruptcy of
the Company or any other event whatsoever, HRAC's sole remedy shall be a claim
against the Company for money damages, and then only to the extent of funds
received by the Company pursuant to the Transfer and Servicing Agreement, and in
no event shall HRAC 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 Owner Trustee of collections with respect to the Receivables. Additionally,
HRAC agrees for the benefit of the Noteholders that any amounts payable by HRAC
to the Company hereunder which are to be paid by the Company to the Owner
Trustee and pledged to the Indenture Trustee for the benefit of the Noteholders
shall be paid by HRAC, on behalf of the Company, directly to the Owner Trustee.
Section 9.07. Further Assurances. The Company and HRAC 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
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
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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 the Company or HRAC, 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, provided that where the
Company exercises its rights assigned to the Company by HRAC as per Section 4.04
of this Agreement, then it will not exercise any of its rights under Section
4.01 and 4.02 hereto against HRAC. Notwithstanding the foregoing and 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 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 HRAC to the
Company and thereafter 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, HRAC 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 the Company to invoke the process of any Governmental
Authority for the purpose of commencing or sustaining a case against the Company
under any Federal or state bankruptcy, insolvency or similar law or appointing a
receiver, conservator, liquidator, assignee, trustee, custodian, sequestrator or
other
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similar official of the Company or any substantial part of its property or
ordering the winding-up or liquidation or the affairs of the Company.
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IN WITNESS WHEREOF, the Company and HRAC have caused this
Agreement to be duly executed by their respective officers as of the day and
year first above written.
HOUSEHOLD RECEIVABLES ACQUISITION COMPANY
By: /s/ ▇. ▇. ▇▇▇▇
-----------------------------------------
Name: ▇. ▇. ▇▇▇▇
Title: Vice President
HRSI FUNDING, INC. II
By: /s/ ▇. ▇. ▇▇▇▇▇
-----------------------------------------
Name: ▇. ▇. ▇▇▇▇▇
Title: Vice President and Treasurer
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EXHIBIT A
FORM OF SUPPLEMENTAL CONVEYANCE
(As required by Section 2.05 of
the Amended and Restated
Receivables Purchase Agreement)
SUPPLEMENTAL CONVEYANCE No. ____ dated as of ____________ __,
____, by and between HOUSEHOLD RECEIVABLES ACQUISITION COMPANY ("HRAC"), and
HRSI FUNDING, INC. II ("THE COMPANY"), pursuant to the
Receivables Purchase
Agreement referred to below.
WITNESSETH:
WHEREAS, HRAC and the Company 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, HRAC
wishes to designate Additional Accounts to be included as Accounts and HRAC
wishes to convey its right, title and interest in the Receivables of such
Additional Accounts, whether now existing or hereafter created, to the Company
pursuant to the Receivables Purchase Agreement; and
WHEREAS, the Company is willing to accept such designation and
conveyance subject to the terms and conditions hereof.
NOW, THEREFORE, HRAC and the Company 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. HRAC delivers herewith,
or has caused the delivery of, 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
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made part of this Supplemental Conveyance and is marked as SCHEDULE I to this
Supplemental Conveyance.
3. Conveyance of Receivables.
(a) HRAC does hereby sell, transfer, assign, set over and
otherwise convey to the Company, 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, HRAC 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 the Company, and to deliver a
file-stamped copy of such financing statement or other evidence of such filing
to the Company.
(c) In connection with such sale, HRAC 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 the Company 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
HRAC shall be deemed to have granted, and HRAC does hereby grant, to the Company
a first priority perfected security interest in all of the HRAC'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 Company. The Company hereby acknowledges
its acceptance of all right, title and interest to the property, now existing
and hereafter created, conveyed to the Company pursuant to Section 3 of this
Supplemental Conveyance, and declares that it shall maintain such right, title
and interest. The Company further acknowledges that, prior
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to or simultaneously with the execution and delivery of this Supplemental
Conveyance, HRAC delivered to the Company the computer file or microfiche list
described in Section 2 of this Supplemental Conveyance.
5. Representations and Warranties of HRAC. HRAC hereby
represents and warrants to the Company 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 HRAC enforceable
against HRAC 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 the Company 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
HRAC to be adverse to the interests of the Company 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 the Company of all right,
title and interest of HRAC 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 HRAC is a party or by which it or its properties are
bound;
(h) No Violation. The execution and delivery of this
Supplemental Conveyance by HRAC, the performance of the transactions
contemplated by this Supplemental Conveyance and the fulfillment of the terms
hereof applicable to HRAC will not conflict with or violate any Requirements of
Law applicable to HRAC;
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(i) 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
Supplemental Conveyance, (ii) seeking to prevent the consummation of any of the
transactions contemplated by this Supplemental Conveyance, (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 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 HRAC in
connection with the execution and delivery of this Supplemental Conveyance by
HRAC and the performance of the transactions contemplated by this Supplemental
Conveyance by HRAC, 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 RECEIVABLES ACQUISITION COMPANY
By:
--------------------------------------------
Name:
Title:
HRSI FUNDING, INC. II
By:
--------------------------------------------
Name:
Title:
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Schedule I to
Supplemental
Conveyance
ADDITIONAL ACCOUNTS
COMPUTER FILES CONTAINING ACCOUNT INFORMATION DELIVERED TO THE
COMPANY ARE INCORPORATED BY REFERENCE
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Schedule I
LIST OF ACCOUNTS
COMPUTER FILES CONTAINING ACCOUNT INFORMATION DELIVERED TO THE
COMPANY ARE INCORPORATED BY REFERENCE
I-2
