EXHIBIT 10.3
EXECUTION COPY
 
HSBC PRIVATE LABEL ACQUISITION CORPORATION (USA)
and
HSBC FUNDING (USA) INC. V
 
AMENDED AND RESTATED
RECEIVABLES PURCHASE AGREEMENT
Dated as of August 11, 2006
amending and restating in full the
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
    9  
 
       
ARTICLE II PURCHASE AND CONVEYANCE OF RECEIVABLES
    11  
 
       
Section 2.01. Purchase
    11  
Section 2.02. Addition of Aggregate Addition Accounts
    12  
Section 2.03. Addition of Automatic Additional Accounts
    13  
Section 2.04. Representations and Warranties
    14  
Section 2.05. Removal and Deletion of Accounts
    14  
 
       
ARTICLE III CONSIDERATION AND PAYMENT
    15  
 
       
Section 3.01. Purchase Price
    15  
Section 3.02. Adjustments to Purchase Price
    15  
 
       
ARTICLE IV REPRESENTATIONS AND WARRANTIES
    16  
 
       
Section 4.01. HPLAC’s Representations and Warranties Relating to HPLAC
    16  
Section 4.02. Representations and Warranties of HPLAC Relating to the Agreement
and the Receivables
    17  
Section 4.03. Representations and Warranties of HSBC Funding
    18  
 
       
ARTICLE V COVENANTS
    21  
 
       
Section 5.01. Covenants of HPLAC
    21  
 
       
ARTICLE VI REPURCHASE OBLIGATION
    23  
 
       
Section 6.01. Reassignment of Ineligible Receivables
    23  
Section 6.02. Reassignment of Other Receivables
    23  
 
       
ARTICLE VII CONDITIONS PRECEDENT
    25  
 
       
Section 7.01. Conditions to HSBC Funding’s Obligations Regarding Receivables
    25  
Section 7.02. Conditions Precedent to HPLAC’s Obligations
    25  
 
       
ARTICLE VIII TERM AND PURCHASE TERMINATION
    26  
 
       
Section 8.01. Term
    26  
Section 8.02. Purchase Termination
    26  
 
       
ARTICLE IX SERVICING
    27  
 
       
Section 9.01. Transfer and Servicing Agreement Controls with respect to the
Receivables
    27  

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TABLE OF CONTENTS
(continued)

              Page
ARTICLE X MISCELLANEOUS PROVISIONS
    28  
 
       
Section 10.01. Amendment
    28  
Section 10.02. GOVERNING LAW
    28  
Section 10.03. Notices
    28  
Section 10.04. Severability of Provisions
    28  
Section 10.05. Assignment
    28  
Section 10.06. Acknowledgment and Agreement of HPLAC
    28  
Section 10.07. Further Assurances
    29  
Section 10.08. No Waiver; Cumulative Remedies
    29  
Section 10.09. Counterparts
    29  
Section 10.10. Binding Effect; Third-Party Beneficiaries
    29  
Section 10.11. Merger and Integration
    29  
Section 10.12. Headings
    29  
Section 10.13. Schedules and Exhibits
    29  
Section 10.14. Survival of Representations and Warranties
    30  
Section 10.15. Nonpetition Covenant
    30  

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Exhibit A
  Form of Supplemental Conveyance
 
   
Schedule 1
  List of Accounts

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          AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT, dated as of
August 11, 2006, by and between HSBC FUNDING (USA) INC. V, a Delaware
corporation (as successor by assignment to HRSI Funding, Inc. II, together with
its permitted successors and assigns, “HSBC Funding”), and HSBC PRIVATE LABEL
ACQUISITION CORPORATION (USA), a Delaware corporation (as successor by
assignment to Household Receivables Acquisition Company II, together with its
permitted successors and assigns, “HPLAC”).
W I T N E S S E T H:
          WHEREAS, HPLAC desires to sell and assign from time to time certain
Receivables (hereinafter defined) to HSBC Funding, and HSBC Funding desires to
purchase such Receivables;
          WHEREAS, it is contemplated that certain Receivables purchased
hereunder will be transferred by HSBC Funding to the Trust (hereinafter defined)
in connection with the issuance of certain Notes (hereinafter defined) pursuant
to the Indenture (hereinafter defined);
          WHEREAS, HPLAC agrees that all representations, covenants and
agreements made by HPLAC with respect to the Accounts (hereinafter defined)
shall also be for the benefit of the Owner Trustee (hereinafter defined), the
Indenture Trustee (hereinafter defined) and all holders of the Notes;
          WHEREAS, the parties hereto previously entered into the Receivables
Purchase Agreement, dated as of June 12, 2001 (the “Prior Agreement”); and
          WHEREAS, the parties hereto desire to amend and restate the Prior
Agreement in its entirety;
          NOW, THEREFORE, it is hereby agreed by and between HSBC Funding and
HPLAC as follows:
ARTICLE I
DEFINITIONS
          Section 1.01. Definitions. All capitalized terms used herein 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, (d) any account originated as a replacement of an
Account in connection with the upgrade of such Account to premium status
(provided that such replacement account can be identified by reference to its
predecessor Account), (e) each Transferred Account, and (f) each surviving
account resulting from the combination, in accordance with the Credit
Guidelines, of two or more of the Accounts; provided, however, that the term
“Account” shall not include any Account that has been closed and terminated in
accordance with the relevant Credit Guidelines, Removed

 

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Accounts and any Account all of the Receivables in which are reassigned to HPLAC
pursuant to Section 6.01 or Section 6.02.
          “Account Owner” shall mean the Bank, or any other entity which is the
issuer of the revolving credit relating to an Account pursuant to a Credit
Agreement and/or a seller of Receivables to HSBC Funding.
          “Addition Date” shall mean, with respect to any Additional Account,
(a) the date from and after which such Additional Account is included as an
Additional Account pursuant to this Agreement and the related Supplemental
Conveyance, or (b) such other date on which the related Receivables were first
transferred to HSBC Funding.
          “Addition Notice Date” shall have the meaning specified in
Section 2.02(a) of this Agreement.
          “Additional Account” shall mean (a) each Automatic Additional Account,
(b) each Aggregate Addition Account, and (c) each other Account included in the
computer file delivered to the Indenture Trustee, other than an Initial Account.
          “Additional Cut-Off Date” shall (a) have the meaning specified in the
applicable Supplemental Conveyance, or (b) mean, with respect to clause (c) of
the definition of “Additional Account”, such other date on which the related
Receivables were first transferred to HSBC Funding.
          “Additional Transferor” shall have the meaning specified in the
Transfer and Servicing Agreement.
          “Adverse Effect” shall have the meaning specified in the Transfer and
Servicing Agreement.
          “Aggregate Addition Account” shall mean each revolving credit account
established pursuant to a Credit Agreement between the Account Owner and an
Obligor, which account is owned by the Account Owner, is designated pursuant to
Section 2.02, and is identified in the computer file or microfiche list
delivered pursuant to Section 2.01 and Section 2.04 of this Agreement.
          “Agreement” shall mean this Amended and Restated Receivables Purchase
Agreement and all amendments and supplements hereto.
          “Amortization Event” shall have the meaning specified in the
Indenture.
          “Applicable Transferee” shall mean the Owner Trustee or the Indenture
Trustee, as applicable.
          “Appointment Date” shall have the meaning specified in Section 8.02.
          “Automatic Additional Account” shall mean each revolving credit
account established pursuant to a Credit Agreement between the Account Owner and
an Obligor, which

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account is owned by the Account Owner, is designated pursuant to Section 2.03,
and is identified in the computer file or microfiche list delivered pursuant to
Section 2.01 and Section 2.04 of this Agreement.
          “Bank” shall mean HSBC Bank Nevada, National Association, a national
bank or any successors or assigns of HSBC Bank Nevada, National Association.
          “Bank Purchase Agreement” shall mean the Amended and Restated
Receivables Purchase Agreement, dated as of August 11, 2006, between the Bank
and HPLAC, and all amendments and supplements thereto.
          “Business Day” shall mean any day other than a Saturday, a Sunday or a
day on which banking institutions in New York, New York, or Las Vegas, Nevada,
are authorized or obligated by law or executive order to be closed.
          “Code” shall have the meaning specified in the Indenture.
          “Collection Account” shall mean the Collection Account as defined in
the Indenture.
          “Collections” shall mean all payments received (including Recoveries)
in respect of the Receivables, in the form of cash, checks, wire transfers,
electronic transfers, ATM transfers or any other form of payment.
          “Conveyance” shall have the meaning specified in Section 2.01(a).
          “Conveyance Papers” shall have the meaning specified in
Section 4.01(c).
          “Credit Adjustment” shall have the meaning specified in Section 3.02.
          “Credit Agreement” shall mean, with respect to a revolving credit
account, the agreements between the Account Owner and the Obligor governing the
terms and conditions of such account, as such agreements may be amended,
modified or otherwise changed from time to time.
          “Credit Guidelines” shall mean the respective policies and procedures
of the Bank, the Servicer, and/or any other Account Owner, as the case may be,
as such policies and procedures may be amended from time to time, (a) relating
to the operation of its credit business, which generally are applicable to its
portfolio of revolving credit accounts or, in the case of an Account Owner that
has only a portion of its portfolio subject to this Receivables Purchase
Agreement, applicable to such portion of its portfolio, and in each case which
are consistent with prudent practice, including the policies and procedures for
determining the creditworthiness of credit card customers and the extension of
credit to credit card customers, and (b) relating to the maintenance of credit
accounts and collection of receivables created under the revolving credit
accounts.
          “Defaulted Receivable” shall mean a Principal Receivable which is
charged off as uncollectible in accordance with the Credit Guidelines or the
Servicer’s customary and usual

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servicing procedures for servicing revolving credit accounts. A Principal
Receivable shall become a Defaulted Receivable no later than the day on which
such Principal Receivable is recorded as charged-off on the Servicer’s computer
file of revolving credit accounts.
          “Dissolution Event” shall have the meaning specified in Section 8.02.
          “Distribution Date” shall have the meaning specified in the Indenture.
          “Eligible Account” shall mean a revolving credit account owned by the
Bank in the case of the Initial Accounts on the Initial Cut-Off Date, or the
Bank or other Account Owner, in the case of Additional Accounts which, as of the
Initial Cut-Off Date with respect to an Initial Account or as of the Additional
Cut-Off Date with respect to an Additional Account meets the following
requirements:
          (a) is a revolving credit account in existence and maintained by the
Bank or other Account Owner, as the case may be;
          (b) is payable in United States dollars;
          (c) has an Obligor who has provided, as his or her most recent billing
address, an address located in the United States or its territories, possessions
or military bases; provided, however, that as of any date of determination, up
to 1% of the Principal Receivables arising under the revolving credit accounts
in the trust, may have account obligors who have provided as their billing
addresses, addresses outside of the United States;
          (d) except as provided below, has an Obligor who has not been
identified by either the Account Owner or the Servicer in its computer files as
being currently involved in a voluntary or involuntary bankruptcy proceeding;
          (e) has not been identified as an account with respect to which
(i) the related card, if any, has been lost or stolen or (ii) the related
account number has been stolen;
          (f) has not been sold or pledged to any other party except for any
sale to another Account Owner that has either entered into a Receivables
Purchase Agreement or is an Additional Transferor;
          (g) does not have receivables which have been sold or pledged by the
Bank or any other Account Owner, as the case may be, to any other party other
than HPLAC or any Transferor pursuant to a Receivables Purchase Agreement;
          (h) with respect to the Initial Accounts, is an account in existence
and maintained by the Bank or other Account Owner as of the Initial Cut-Off
Date, or as of the Additional Cut-Off Date with respect to Additional Accounts;
          (i) except as provided below, does not have any Receivables that are
Defaulted Receivables; and

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          (j) does not have any Receivables that have been identified by the
Servicer or the relevant Obligor as having been incurred as a result of
fraudulent use of any related credit card, if any, or related account number.
Eligible Accounts may include Accounts, the Receivables of which have been
charged off, or with respect to which the Servicer believes the related Obligor
is bankrupt, in each case as of the Initial Cut-Off Date, with respect to the
Initial Accounts, and as of the related Additional Cut-Off Date, with respect to
Additional Accounts; provided, that (a) the balance of all Receivables included
in such Accounts is reflected on the books and records of such Transferor (and
is treated for purposes of this Agreement) as “zero” and (b) charging privileges
with respect to all such Accounts have been canceled in accordance with the
relevant Credit Guidelines.
          “Eligible Receivable” shall mean each Receivable, including, where
applicable, the underlying receivable:
     (a) which has arisen in an Eligible Account;
     (b) which was created in compliance in all material respects with all
Requirements of Law applicable to the institution which owned such Receivable at
the time of its creation and pursuant to a Credit Agreement which complies in
all material respects with all Requirements of Law applicable to the Bank or
other Account Owner;
     (c) with respect to which all material consents, licenses, approvals or
authorizations of, or registrations or declarations with, any Governmental
Authority required to be obtained, effected or given in connection with the
creation of such Receivable or the execution, delivery and performance by the
Bank or other Account Owner of the Credit Agreement pursuant to which such
Receivable was created, have been duly obtained, effected or given and are in
full force and effect;
     (d) as to which at the time of the sale of such Receivable to HSBC Funding,
HPLAC will have good and marketable title thereto and which itself is, and the
underlying receivables are, free and clear of all Liens (other than any Lien for
municipal or other local taxes if such taxes are not then due and payable or if
HPLAC is then contesting the validity thereof in good faith by appropriate
proceedings and has set aside on its books adequate reserves with respect
thereof);
     (e) which has been the subject of either a valid transfer and assignment
from HPLAC to HSBC Funding of all of HPLAC’s right, title and interest therein
(including any proceeds thereof), or the grant of a first priority perfected
security interest therein (and in the proceeds thereof);
     (f) which at all times will be the legal, valid and binding payment
obligation of the Obligor thereon enforceable against such Obligor in accordance
with its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws, now or
hereafter in effect, affecting the enforcement of creditors’ rights in general
and except as such enforceability may be limited by general principles of equity
(whether considered in a suit at law or in equity);

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     (g) which, at the time of sale to HSBC Funding, has not been waived or
modified except as permitted in accordance with the Credit Guidelines and which
waiver or modification is reflected in the Servicer’s computer file of revolving
credit accounts;
     (h) which, at the time of sale to HSBC Funding, is not subject to any right
of rescission, setoff, counterclaim or any other defense (including defenses
arising out of violations of usury laws) of the Obligor, other than defenses
arising out of applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors’ rights in general;
     (i) as to which, at the time of sale to HSBC Funding, HPLAC has satisfied
all of its obligations required to be satisfied by such time;
     (j) as to which, at the time of sale to HSBC Funding, HPLAC has not taken
any action which would impair, or omitted to take any action the omission of
which would impair, the rights of HSBC Funding therein; and
     (k) which constitutes an “account” or “general intangible” under and as
defined in Article 9 of the UCC as then in effect in the State of Delaware and
any other state where the filing of a financing statement is required to perfect
HSBC Funding’s interest in the Receivables and the proceeds thereof.
          “Event of Default” shall have the meaning specified in the Indenture.
          “Finance Charge and Administrative Receivables” shall mean Receivables
created in respect of Periodic Rate Finance Charges, cash advance fees, late
fees, overlimit fees, fees and charges relating to annual membership fees and
all other incidental and miscellaneous fees and charges.
          “Governmental Authority” shall mean the United States of America, any
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
          “HPLAC” shall have the meaning specified in the recitals of this
Agreement.
          “HSBC Funding” shall have the meaning specified in the recitals of
this Agreement.
          “Indenture” shall mean the Amended and Restated Master Indenture
between the Trust and U.S. Bank National Association, as the Indenture Trustee,
dated as of August 11, 2006, as supplemented by Indenture Supplements (as
defined in the Indenture) applicable to any Series (as defined in the Indenture)
that may be issued from time to time, and all other amendments and supplements
thereto.
          “Indenture Trustee” shall mean U.S. Bank National Association, in its
capacity as indenture trustee, or any successor indenture trustee.

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          “Initial Account” shall mean each Account included in the computer
file delivered to the Indenture Trustee as of the Initial Cut-Off Date.
          “Initial Cut-Off Date” means June 12, 2001.
          “Interchange” shall mean interchange fees (net of expenses) paid to
HPLAC pursuant to the Bank Purchase Agreement (or, with respect to an Account
Owner other than the Bank, pursuant to a similar agreement between such Account
Owner and HPLAC).
          “Lien” shall mean any security interest, mortgage, deed of trust,
pledge, hypothecation, assignment, deposit arrangement, equity interest,
encumbrance, lien (statutory or other), preference, participation interest,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever, including any conditional sale or other title retention
agreement, any financing lease having substantially the same economic effect as
any of the foregoing and the filing of any financing statement under the UCC or
comparable law of any jurisdiction to evidence any of the foregoing; provided,
however, that the term “Lien” shall not include any lien or other encumbrance
for municipal or other local taxes if such taxes are not then due and payable or
if the validity of such taxes is then being contested in good faith by
appropriate proceedings and adequate reserves with respect to such taxes have
been set aside on the appropriate books.
          “Monthly Period” shall mean the period from and including the first
day of a calendar month to and including the last day of such calendar month.
          “Note” shall have the meaning specified in the Indenture.
          “Noteholder” shall have the meaning specified in the Indenture.
          “Obligor” shall mean, with respect to any Account, any Person
obligated to make payments with respect to such Account, including any guarantor
thereof but excluding any merchant.
          “Officer’s Certificate” shall mean a certificate delivered and signed
by the Controller, Treasurer or any Vice President or more senior officer of
HPLAC or HSBC Funding, as applicable.
          “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.
          “Periodic Rate Finance Charges” shall have the meaning specified in
the Credit Agreement applicable to each Account for finance charges (due to
periodic rate) or any similar term.
          “Person” shall mean any person or entity, including any individual,
corporation, limited liability company, partnership, joint venture, association,
joint-stock company, trust, unincorporated organization, governmental entity or
other entity of any nature.

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          “Prior Agreement” shall have the meaning specified in the recitals of
this Agreement.
          “Principal Receivables” shall mean all Receivables other than Finance
Charge and Administrative Receivables. In calculating the aggregate amount of
Principal Receivables on any day, the amount of Principal Receivables shall be
reduced by the aggregate amount of credit balances in the Accounts on such day.
          “Purchase Price” shall have the meaning specified in Section 3.01(a).
          “Purchase Price Payment Date” shall have the meaning specified in
Section 3.01(a).
          “Purchased Assets” shall have the meaning specified in
Section 2.01(a).
          “Rating Agency” shall mean the nationally-recognized statistical
rating agency or agencies, if any, selected by HSBC Funding to rate any Notes.
          “Rating Agency Condition” shall have the meaning specified in the
Indenture.
          “Receivables” shall mean all amounts payable by Obligors on any
Account from time to time, including amounts payable for Principal Receivables
and Finance Charge and Administrative Receivables, but only to the extent that
such amounts payable have been conveyed by the Bank to HPLAC pursuant to the
Bank Purchase Agreement (or, with respect to an Account Owner other than the
Bank, pursuant to a similar agreement between such Account Owner and HPLAC). If
HPLAC sells only a fractional undivided interest in a receivable to HSBC Funding
pursuant to the express terms of a Supplemental Conveyance, and unless the
context otherwise requires (whether or not there is a specific reference to the
underlying receivable), any reference in this Agreement or any Supplemental
Conveyance to such Receivable and any Collections thereon shall refer to only
the fractional undivided interest that is sold by HPLAC to HSBC Funding, which
fractional interest may be less than a 100% undivided interest therein. Any
reference in this Agreement to the “underlying receivable” with respect to a
Receivable shall refer to the receivable in which such Receivable represents an
undivided interest.
          “Recoveries” shall mean all Recoveries (net of expenses) as defined in
the Bank Purchase Agreement (or, with respect to an Account Owner other than the
Bank, in a similar agreement between such Account Owner and HPLAC) that are paid
to HPLAC as provided in the Bank Purchase Agreement (or such similar agreement).
          “Reinvestment Event” shall have the meaning specified in the
Indenture.
          “Related Account” shall mean an Account with respect to which a new
account number has been issued by the Account Owner under circumstances
resulting from a lost or stolen credit card or account number and not requiring
standard application and credit evaluation procedures under the Credit
Guidelines.

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          “Removed Account” shall mean any Account as to which HPLAC has
received notice from the Servicer that such Account is a “Removed Account” as
defined in the Transfer and Servicing Agreement.
          “Repurchase Price” shall have the meaning specified in
Section 6.01(b).
          “Requirements of Law” shall mean any law, treaty, rule or regulation,
or determination of an arbitrator or Governmental Authority, whether federal,
state or local (including usury laws, the Federal Truth in Lending Act and
Regulation B and Regulation Z of the Board of Governors of the Federal Reserve
System), and, when used with respect to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of such
Person.
          “Servicer” shall mean the entity acting as Servicer under the Transfer
and Servicing Agreement.
          “Stop Date” shall have the meaning specified in Section 2.05(a).
          “Supplemental Conveyance” shall have the meaning specified in
Section 2.01(a).
          “Transfer and Servicing Agreement” shall mean the Amended and Restated
Transfer and Servicing Agreement, dated as of August 11, 2006, among HSBC
Finance Corporation, as Servicer, HSBC Funding, as Transferor, and the Trust,
and all amendments and supplements thereto.
          “Transfer Date” shall have the meaning specified in the Indenture.
          “Transferred Account” shall mean an Account into which an Account
shall be transferred pursuant to the Credit Guidelines; provided, however, that
such Transferred Account can be traced or identified as an account into which an
Account has been transferred.
          “Trust” shall mean the HSBC Private Label Credit Card Master Note
Trust (USA) I (formerly known as Household Private Label Credit Card Master Note
Trust I), acting by and through the Owner Trustee.
          “Trust Agreement” shall mean the Amended and Restated Trust Agreement,
dated as of August 11, 2006, between HSBC Funding, as Transferor, and the Owner
Trustee on behalf of the Trust, and all amendments and supplements thereto.
          “UCC” shall mean the Uniform Commercial Code as in effect in the
applicable jurisdiction.
          Section 1.02. Other Definitional Provisions. (a) 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.
          (b) 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

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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.
[END OF ARTICLE I]

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ARTICLE II
PURCHASE AND CONVEYANCE OF RECEIVABLES
          Section 2.01. Purchase. (a) Subject to the terms of this Agreement,
and by execution from time to time of certain assignments substantially in the
form of Exhibit A hereto (each a “Supplemental Conveyance”) supplementing this
Agreement, HPLAC hereby sells, transfers, assigns, sets over and otherwise
conveys to HSBC Funding (collectively, the “Conveyance”), without recourse, all
of its right, title and interest in, to and under the Receivables of the
Accounts existing prior to the date hereof and thereafter created from time to
time until the termination of this Agreement pursuant to Article VIII hereof,
all Interchange, Recoveries allocable to such Receivables, all monies due or to
become due and all amounts received or receivable with respect thereto, all
Collections with respect thereto and all proceeds (including “proceeds” as
defined in the UCC) thereof (the “Purchased Assets”). The Receivables existing
in Accounts on the related Additional Cut-Off Date with respect to Additional
Accounts and thereafter arising in such Accounts on or prior to the related
Addition Date, and the related Purchased Assets, shall be sold by HPLAC and
purchased by HSBC Funding on the related Addition Date. Receivables arising
after such Addition Date in such Accounts and the related Purchased Assets shall
be sold by HPLAC and purchased by HSBC Funding on the date such Receivables
arise.
          (b) In connection with each Conveyance of Receivables arising under
Accounts, HPLAC agrees (i) to record and file, at its own expense, any financing
statements (and amendments with respect to such financing statements when
applicable) with respect to such Receivables and the related Purchased Assets,
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 other Purchased Assets from HPLAC to HSBC
Funding on and after the applicable Addition Date, (ii) to cause such financing
statements and amendments to name HPLAC, as seller, and HSBC Funding, as
purchaser, of such Receivables and other Purchased Assets and (iii) to deliver a
file-stamped copy of such financing statements or amendments or other evidence
of such filings to HSBC Funding (and to one or more Applicable Transferees, if
HSBC Funding so directs) as soon as is practicable after filing.
          (c) In connection with each Conveyance of Receivables arising under
Accounts, HPLAC further agrees that it will, at its own expense, (i) on or prior
to the respective Addition Date, indicate in its computer files and microfiche
lists that Receivables created in connection with such Accounts and the related
Purchased Assets have been sold to HSBC Funding in accordance with this
Agreement and the Supplemental Conveyance, and (ii) on or prior to the date that
is five Business Days after the respective Addition Date, deliver to HSBC
Funding (and to one or more Applicable Transferees, if HSBC Funding so directs)
a computer file or microfiche list containing a true and complete list of all
such Accounts specifying for each such Account, as of the Additional Cut-Off
Date, (A) its account number, (B) the aggregate amount outstanding in such
Account and (C) the aggregate amount of Principal Receivables in such Account.
Such computer files and microfiche lists, as supplemented from time to time to
reflect Accounts and Removed Accounts, shall be marked as Schedule 1 to this
Agreement, shall be delivered to HSBC Funding (and to one or more Applicable
Transferees, if so directed by

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HSBC Funding), shall be marked as proprietary and confidential, and are hereby
incorporated into and made a part of this Agreement.
          (d) The parties hereto intend that the conveyance of HPLAC’s right,
title and interest in and to the Purchased Assets pursuant to this Agreement and
any Supplemental Conveyance shall constitute an absolute sale, conveying good
title free and clear of any Liens from HPLAC to HSBC Funding and that the
Purchased Assets shall not be part of HPLAC’s estate in the event of the
insolvency of HPLAC or a bankruptcy or similar event with respect to HPLAC. It
is the intention of the parties hereto that the arrangements with respect to the
Purchased Assets pursuant to this Agreement and any Supplemental Conveyance
shall constitute a purchase and sale of such Purchased Assets and not a loan or
borrowing secured by such Purchased Assets, including for accounting purposes.
In the event, however, that notwithstanding such intent it were determined that
the transactions evidenced hereby constitute a loan or borrowing 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 HPLAC shall
be deemed to have granted, and HPLAC does hereby grant, to HSBC Funding a first
priority perfected security interest in all of HPLAC’s right, title and
interest, whether now owned or hereafter acquired, in, to and under the
Receivables and other Purchased Assets.
          Section 2.02. Addition of Aggregate Addition Accounts. (a) If, from
time to time, HSBC Funding becomes obligated to designate Aggregate Addition
Accounts (as defined in the Transfer and Servicing Agreement) pursuant to
Section 2.09(a) of the Transfer and Servicing Agreement, then HSBC Funding may,
at its option, give HPLAC written notice thereof on or before the fifth Business
Day (the “Addition Notice Date”) prior to the Addition Date therefor, and HPLAC
shall on or before the related Addition Date designate sufficient Eligible
Accounts to be included as Aggregate Addition Accounts so that, after the
inclusion thereof, HSBC Funding will be in compliance with the requirements of
said Section 2.09(a). In addition, from time to time and subject to HSBC
Funding’s covenant in the Transfer and Servicing Agreement to comply with
Sections 2.09(b) and (c) of the Transfer and Servicing Agreement, Eligible
Accounts may be designated to be included as Aggregate Addition Accounts upon
the mutual agreement of HPLAC and HSBC Funding.
          (b) On the Addition Date with respect to any designation of Aggregate
Addition Accounts, HSBC Funding shall purchase HPLAC’s right, title and interest
in, to and under the Receivables in such Aggregate Addition Accounts and the
related Purchased Assets (and such Aggregate Addition Accounts shall become
Accounts for purposes of this Agreement), subject to the satisfaction of the
following conditions on such Addition Date:
     (i) all Aggregate Addition Accounts shall be Eligible Accounts;
     (ii) HPLAC shall have delivered to HSBC Funding copies of UCC financing
statements covering such Aggregate Addition Accounts, if necessary to perfect
HSBC Funding’s interest in the Receivables arising therein;
     (iii) HPLAC shall have delivered to HSBC Funding (or deposited in the
Collection Account, if required under Section 2.09(c) of the Transfer and

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Servicing Agreement and so directed by HSBC Funding) all Collections with
respect to such Aggregate Addition Accounts since the Additional Cut-Off Date;
     (iv) as of each of the Additional Cut-Off Date and the Addition Date, no
Dissolution Event with respect to HPLAC shall have occurred nor shall the sale
of the Receivables arising in the Aggregate Addition Accounts to HSBC Funding
have been made in contemplation of the occurrence thereof;
     (v) HPLAC shall have delivered to HSBC Funding an Officer’s Certificate of
HPLAC, dated the Addition Date, confirming, to the extent applicable, the items
set forth in clauses (i) through (iv) above; and
     (vi) HPLAC and HSBC Funding shall have entered into a duly executed,
written Supplemental Conveyance.
          Section 2.03. Addition of Automatic Additional Accounts. (a) Upon the
mutual agreement of HPLAC and HSBC Funding, and subject to HSBC Funding’s
covenant in the Transfer and Servicing Agreement to comply with Sections 2.09(d)
and (e) of the Transfer and Servicing Agreement, HPLAC may designate Eligible
Accounts to be included as Automatic Additional Accounts. HPLAC shall cooperate
with HSBC Funding to enable HSBC Funding to comply with the requirements of
Section 2.09 of the Transfer and Servicing Agreement and to enable HSBC Funding
to perform with respect to the Receivables in the Automatic Additional Accounts
all actions specified in Section 2.09(d) or (e) of the Transfer and Servicing
Agreement.
          (b) On the Addition Date with respect to any designation of Automatic
Additional Accounts, HSBC Funding shall purchase HPLAC’s right, title and
interest in, to and under the Receivables in such Automatic Additional Accounts
and the related Purchased Assets (and such Automatic Additional Accounts shall
become Accounts for purposes of this Agreement), subject to the satisfaction of
the following conditions on such Addition Date:
     (i) all Automatic Additional Accounts shall be Eligible Accounts;
     (ii) HPLAC shall have delivered to HSBC Funding copies of UCC financing
statements covering such Automatic Additional Accounts, if necessary to perfect
HSBC Funding’s interest in the Receivables arising therein;
     (iii) HPLAC shall have delivered to HSBC Funding (or deposited in the
Collection Account, if required under Section 2.09(e) of the Transfer and
Servicing Agreement and so directed by HSBC Funding) all Collections with
respect to such Automatic Additional Accounts since the Additional Cut-Off Date;
     (iv) as of each of the Additional Cut-Off Date and the Addition Date, no
Dissolution Event with respect to HPLAC shall have occurred nor shall the sale
of the Receivables arising in the Automatic Additional Accounts to HSBC Funding
have been made in contemplation of the occurrence thereof;

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     (v) HPLAC shall have delivered to HSBC Funding an Officer’s Certificate of
HPLAC, dated the Addition Date, confirming, to the extent applicable, the items
set forth in clauses (i) through (iv) above; and
     (vi) HPLAC and HSBC Funding shall have entered into a duly executed,
written Supplemental Conveyance.
          Section 2.04. Representations and Warranties. HPLAC hereby represents
and warrants to HSBC Funding on the related Addition Date as to the matters set
forth in Sections 2.02(b)(ii) and 2.03(b)(ii) above and that, in the case of
Additional Accounts, the computer file or microfiche list delivered pursuant to
Section 2.01(c) is, as of the applicable Additional Cut-Off Date, true and
complete in all material respects.
          Section 2.05. Removal and Deletion of Accounts. (a) If an Account
becomes a Removed Account, then HPLAC shall stop selling to HSBC Funding
Principal Receivables arising in such Removed Account effective on the Business
Day (the “Stop Date”) after the date such Account becomes a Removed Account.
Notwithstanding the cessation of the sale to HSBC Funding of additional
Principal Receivables arising in such Removed Account, Principal Receivables
sold to HSBC Funding prior to the Stop Date, Collections in respect of such
Principal Receivables, Finance Charge and Administrative Receivables whenever
created that accrue in respect of such Principal Receivables, and Collections in
respect of such Finance Charge and Administrative Receivables and all
Interchange and Recoveries related thereto, shall continue to be property of
HSBC Funding available for transfer by HSBC Funding to the Trust. To the extent
that it is not clear to HPLAC whether collections relate to a Principal
Receivable that was sold to HSBC Funding or to a principal receivable that HPLAC
did not sell to HSBC Funding, HPLAC shall allocate payments on each such Removed
Account with respect to the principal balance of such Removed Account first to
the oldest principal balance of such Removed Account.
          (a) On and after the Stop Date for a Removed Account, HPLAC may mark
its books and records to indicate that such Account is a Removed Account, and
once an Account has become a Removed Account, HPLAC shall promptly delete such
Removed Account from Schedule 1 hereto and shall indicate in its computer files
that such Removed Account is no longer an Account.
[END OF ARTICLE II]

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ARTICLE III
CONSIDERATION AND PAYMENT
          Section 3.01. Purchase Price. (a) The “Purchase Price” for the
Receivables in Accounts existing on the related Additional Cut-Off Date, and the
related Purchased Assets, that are conveyed to HSBC Funding under this Agreement
and the related Supplemental Conveyance shall be payable in cash on the Addition
Date in an amount equal to the sum of (i) 100% of the aggregate balance of the
Principal Receivables, so conveyed, plus (ii) the present value of anticipated
excess spread, including Interchange, computed by taking into account factors
such as historical losses (and discounted to take into account any uncertainty
as to future performance matching historical performance), servicing fees,
delinquencies, payment rates and yield, such sum adjusted to reflect any other
factors as HPLAC and HSBC Funding mutually may agree will result in a Purchase
Price determined to be the fair market value of such Receivables and the related
Purchased Assets. This computation of initial Purchase Price shall assume no
reinvestment in new Receivables. The Purchase Price for the Receivables in
Accounts which come into existence after the related Additional Cut-Off Date,
and the related Purchased Assets, shall be payable on a date (the “Purchase
Price Payment Date”) mutually agreed to by HPLAC and HSBC Funding (but no later
than the Distribution Date following the Monthly Period in which such
Receivables and the related Purchased Assets are conveyed by HPLAC to HSBC
Funding) in cash in an amount equal to the Purchase Price.
          (b) Notwithstanding any other provision of this Agreement, HPLAC shall
not be obligated to continue to sell Receivables or other Purchased Assets to
HSBC Funding to the extent that HPLAC is not paid the Purchase Price therefor as
provided herein.
          Section 3.02. Adjustments to Purchase Price. The Purchase Price shall
be adjusted on each Purchase Price Payment Date (a “Credit Adjustment”) with
respect to any Receivable previously conveyed to HSBC Funding by HPLAC which has
since been reversed by HPLAC or the Servicer because of a rebate, refund,
unauthorized charge or billing error to an Obligor or because such Receivable
was created in respect of merchandise which was refused or returned by an
Obligor, but in each case other than by reason of Servicer error. 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 payable on such
Purchase Price Payment Date computed in accordance with Section 3.01(a) divided
by (ii) the amount of Principal Receivables, and such of the Finance Charge and
Administrative Receivables as constitute fees and charges relating to debt
cancellation, debt waiver and other insurance and enhancement programs
administered by the Account Owner, 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, HPLAC agrees that, not later than
1:00 p.m. New York City time on such Purchase Price Payment Date, HPLAC shall
pay or cause to be paid to HSBC Funding an amount equal to the amount by which
the Credit Adjustment exceeds the unadjusted Purchase Price.
[END OF ARTICLE III]

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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
          Section 4.01. HPLAC’s Representations and Warranties Relating to
HPLAC. HPLAC hereby represents and warrants to, and agrees with, HSBC Funding on
the date of this Agreement and each Addition Date that:
          (a) Organization and Good Standing. HPLAC 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. HPLAC 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 unenforceable or
(ii) have a material adverse effect on this Agreement or the transactions
contemplated hereby or on the ability of HPLAC to perform its obligations under
this Agreement.
          (c) Due Authorization. The execution, delivery and performance by
HPLAC of this Agreement and any other document or instrument delivered pursuant
hereto to which HPLAC is a party (such other documents or instruments,
collectively, the “Conveyance Papers”), and the consummation by HPLAC of the
transactions provided for in this Agreement or any other Conveyance Papers, have
been duly authorized by all necessary corporate action on the part of HPLAC, and
this Agreement will remain from the time of its execution an official record of
HPLAC.
          (d) No Conflict. The execution and delivery of this Agreement and the
Conveyance Papers by HPLAC, the performance by HPLAC of the transactions
contemplated by this Agreement and the Conveyance Papers, and the fulfillment by
HPLAC of the terms of this Agreement and the Conveyance Papers applicable to
HPLAC 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 HPLAC 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 HPLAC and the fulfillment by HPLAC of the
terms contemplated herein and therein applicable to HPLAC will not conflict with
or violate any Requirements of Law applicable to HPLAC.
          (f) No Proceedings. There are no proceedings or investigations pending
or, to the best knowledge of HPLAC, threatened against HPLAC before any
Governmental Authority (i) asserting the invalidity of this Agreement or the
Conveyance Papers, (ii) seeking to prevent

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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 HPLAC, would materially and adversely affect the
performance by HPLAC 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 Code.
          (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 HPLAC in connection with the execution and
delivery by HPLAC of this Agreement or the Conveyance Papers and the performance
of the transactions contemplated by this Agreement or the Conveyance Papers by
HPLAC 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 sale and assignment of the Purchased Assets to HSBC Funding.
Upon discovery by HPLAC or HSBC Funding 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 five Business Days following such discovery.
          Section 4.02. Representations and Warranties of HPLAC Relating to the
Agreement and the Receivables.
          (a) Representations and Warranties. HPLAC hereby represents and
warrants to HSBC Funding, as of the date of this Agreement, and with respect to
Additional Accounts, on 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 HPLAC enforceable against HPLAC in accordance with its terms, except as such
enforceability may be limited by (A) applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws, now or hereafter in effect,
relating to creditors’ rights generally, (B) the possible unavailability of
remedies of specific performance and injunctive and other forms of equitable
relief, and (C) equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought;
     (ii) as of the Closing Date with respect to the Initial Accounts and as of
the related Additional Cut-Off Date with respect to Additional Accounts,
Schedule 1 to this Agreement, as supplemented to such date, is an accurate and
complete listing in all material respects of such Accounts, 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;
     (iii) each Receivable sold to HSBC Funding has been sold free and clear of
any Lien;

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     (iv) all consents, orders, approvals or authorizations of or registrations
or declarations with any Governmental Authority required to be obtained,
effected or given by HPLAC in connection with the conveyance of each Receivable
to HSBC Funding (or its predecessor) have been duly obtained, effected or given
and are in full force and effect;
     (v) this Agreement or, in the case of Additional Accounts, each related
Supplemental Conveyance constitutes a valid sale, transfer and assignment to
HSBC Funding (or its predecessor) of all right, title and interest of HPLAC (or
its predecessor) in the Receivables of the related Accounts and the proceeds
thereof, and the Interchange and Recoveries allocable to such Receivables;
     (vi) on the Closing Date with respect to the Initial Accounts, and on the
applicable Additional Cut-Off Date with respect to Additional Account, each such
Account is an Eligible Account;
     (vii) on the Closing Date with respect to the Initial Accounts and on the
applicable Additional Cut-Off Date with respect to Additional Accounts, each
Receivable contained in such Account on such date and sold to HSBC Funding by
HPLAC is an Eligible Receivable;
     (viii) on the date of the creation of any new Receivable, such Receivable
is an Eligible Receivable; and
     (ix) no selection procedures believed by HPLAC to be materially adverse to
the interests of HSBC Funding, the Owner Trustee, the Indenture Trustee or the
Trust have been used by HPLAC in selecting such Accounts from among any pool of
accounts of a similar type available to HPLAC.
          (b) Notice of Breach. The representations and warranties set forth in
this Section 4.02 shall survive the sale and assignment of the Purchased Assets
to HSBC Funding. Upon discovery by either HPLAC or HSBC Funding 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 five Business Days following such
discovery; provided that the failure to give notice within five Business Days
does not preclude subsequent notice. HPLAC hereby acknowledges that HSBC Funding
intends to rely on the representations hereunder in connection with
representations made by HSBC Funding to secured parties, assignees or subsequent
transferees, including but not limited to transfers made by HSBC Funding 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 HPLAC.
          Section 4.03. Representations and Warranties of HSBC Funding. On the
date of this Agreement and each Addition Date, HSBC Funding hereby represents
and warrants to, and agrees with, HPLAC that:
          (a) Organization and Good Standing. HSBC Funding is a corporation duly
organized and validly existing under the laws of the State of Delaware and has,
in all material

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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 and the Conveyance Papers to which HSBC Funding is a party.
          (b) Due Authorization. The execution and delivery by HSBC Funding of
this Agreement and the Conveyance Papers to which HSBC Funding is a party, and
the consummation by HSBC Funding of the transactions provided for in this
Agreement and the Conveyance Papers to which HSBC Funding is a party, have been
duly authorized by HSBC Funding by all necessary corporate action on the part of
HSBC Funding.
          (c) No Conflict. The execution and delivery by HSBC Funding of this
Agreement and the Conveyance Papers to which HSBC Funding is a party, the
performance by HSBC Funding of the transactions contemplated by this Agreement
and the Conveyance Papers to which HSBC Funding is a party, and the fulfillment
by HSBC Funding of the terms hereof and thereof, 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 HSBC Funding is a party or by which it or any of its properties are bound.
          (d) No Violation. The execution, delivery and performance by HSBC
Funding of this Agreement and the Conveyance Papers to which HSBC Funding is a
party and the fulfillment by HSBC Funding of the terms contemplated herein and
therein applicable to HSBC Funding will not conflict with or violate any
Requirements of Law applicable to HSBC Funding.
          (e) No Proceedings. There are no proceedings or investigations pending
or, to the best knowledge of HSBC Funding, threatened against HSBC Funding
before any Governmental Authority (i) asserting the invalidity of this Agreement
or the Conveyance Papers to which HSBC Funding is a party, (ii) seeking to
prevent the consummation of any of the transactions contemplated by this
Agreement or the Conveyance Papers to which HSBC Funding is a party,
(iii) seeking any determination or ruling that, in the reasonable judgment of
HSBC Funding, would materially and adversely affect the performance by HSBC
Funding of its obligations under this Agreement or the Conveyance Papers to
which HSBC Funding is a party or (iv) seeking any determination or ruling that
would materially and adversely affect the validity or enforceability of this
Agreement or the Conveyance Papers to which HSBC Funding is a party.
          (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 HSBC Funding in connection with the execution and
delivery by HSBC Funding of this Agreement and the Conveyance Papers to which
HSBC Funding is a party and the performance by HSBC Funding of the transactions
contemplated by this Agreement and the Conveyance Papers to which HSBC Funding
is a party or the fulfillment by HSBC Funding of the terms of this Agreement and
the Conveyance Papers to which HSBC Funding is a party have been duly obtained,
effected or given and are in full force and effect.

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          The representations and warranties set forth in this Section 4.03
shall survive the sale and assignment of the Purchased Assets to HSBC Funding.
Upon discovery by HPLAC or HSBC Funding 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 five Business Days following such discovery.
[END OF ARTICLE IV]

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ARTICLE V
COVENANTS
          Section 5.01. Covenants of HPLAC. HPLAC hereby covenants and agrees
with HSBC Funding as follows:
          (a) Receivables Not To Be Evidenced by Instruments. HPLAC will take no
action to cause any Receivable (or any underlying receivable) to be evidenced by
any instrument or chattel paper (as defined in the UCC), except in connection
with the enforcement or collection undertaken with regard to the related
Account. In the event of a breach of this Section 5.01(a), such Receivable shall
be reassigned to HPLAC in accordance with Section 6.01(b).
          (b) Security Interests. Except for the conveyances hereunder or as
otherwise provided herein, HPLAC will not sell, pledge, assign or transfer to
any other Person, or take any other action inconsistent with HSBC Funding’s
ownership of, the Purchased Assets or grant, create, incur, assume or suffer to
exist any Lien (arising through or under HPLAC) on any Purchased Asset or any
underlying receivable, whether now existing or hereafter created, or any
interest therein, and HPLAC shall not claim any ownership interest in any
Purchased Asset and shall defend the right, title and interest of HSBC Funding
in, to and under the Purchased Assets, whether now existing or hereafter
created, against all claims of third parties claiming through or under HPLAC.
          (c) Account Allocations. In the event that HPLAC is unable for any
reason to sell Receivables to HSBC Funding 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 Governmental Authority having regulatory
authority over HPLAC or any court of competent jurisdiction ordering that HPLAC
not sell any additional Principal Receivables to HSBC Funding), then in any such
event, HPLAC agrees (except as prohibited by any such order) to allocate and pay
to HSBC Funding, after the date of such inability, all Collections with respect
to Principal Receivables previously sold to HSBC Funding. To the extent that it
is not clear to HPLAC whether collections relate to a Principal Receivable that
was sold to HSBC Funding or to a principal receivable that HPLAC is unable to
sell to HSBC Funding, HPLAC agrees that it shall allocate payments on each
Account with respect to the principal balance of such Account first to the
oldest principal balance of such Account. Notwithstanding any cessation of the
sale to HSBC Funding of additional Principal Receivables, Principal Receivables
sold to HSBC Funding prior to the occurrence of the event giving rise to such
inability, Collections in respect of such Principal Receivables, Finance Charge
and Administrative Receivables whenever created that accrue in respect of such
Principal Receivables, and Collections in respect of such Finance Charge and
Administrative Receivables, shall continue to be property of HSBC Funding
available for transfer by HSBC Funding to the Trust.
          (d) Delivery of Collections. In the event that HPLAC receives
Collections in respect of the Purchased Assets sold to HSBC Funding hereunder,
HPLAC agrees to pay to HSBC Funding (or to the Servicer if HSBC Funding so
directs) all such Collections as soon as practicable after receipt thereof.

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          (e) Notice of Liens. HPLAC shall notify HSBC Funding promptly after
becoming aware of any Lien on any Purchased Asset other than the conveyances
hereunder.
          (f) Enforcement of Agreements. HPLAC hereby covenants that HPLAC will
at all times enforce the covenants and agreements of the Bank under the Bank
Purchase Agreement (or, with respect to an Account Owner other than the Bank, in
a similar agreement between such Account Owner and HPLAC), including those
relating to periodic rate finance charges, credit agreements, and credit
guidelines related to the Accounts.
          (g) Interchange. Not later than 1:00 p.m., New York City time, on each
Distribution Date, HPLAC shall pay to or at the direction of HSBC Funding, in
immediately available funds, any amount of Interchange allocable to the
Receivables which is received by HPLAC.
          (h) Documentation of Transfer. HPLAC shall undertake to file the
documents which would be necessary to perfect and maintain the perfection of the
sale of the Purchased Assets to HSBC Funding.
          (i) Approval of Office Records. HPLAC shall cause this Agreement and
all Conveyance Papers to be duly approved by HPLAC’s Board of Directors, and
HPLAC shall maintain this Agreement and all Conveyance Papers as a part of the
official records of HPLAC for the term of the Agreement.
          (j) Name and Type and Jurisdiction of Organization. HPLAC shall not
change its name or its type of organization or jurisdiction of organization
without taking all actions and making all filings as are necessary to continue
and maintain the first-priority perfected ownership interest of HSBC Funding in
the Purchased Assets.
[END OF ARTICLE V]

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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) or (viii) 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 HSBC Funding is
required to accept a reassignment of the Receivables previously sold by HPLAC to
HSBC Funding pursuant to Section 2.05 of the Transfer and Servicing Agreement,
HPLAC shall accept reassignment of such Receivables on the terms and conditions
set forth in Section 6.01(b).
          (b) The “Repurchase Price” for the Receivables described in
Section 6.01(a), and any related Purchased Assets that are reassigned to HPLAC
from HSBC Funding on the date on which such Receivables and related Purchased
Assets are reassigned to HPLAC from HSBC Funding, shall be payable in
immediately available funds on the next Purchase Price Payment Date in an amount
equal to the sum of (i) 100% of the aggregate balance of the Principal
Receivables, so reconveyed, plus (ii) the present value of the anticipated
excess spread, including Interchange, computed by taking into account factors
such as historical losses (and discounted to take into account any uncertainty
as to future performance), servicing fees, delinquencies, payment rates and
yield, such sum adjusted to reflect any other factors as HPLAC and HSBC Funding
mutually may agree will result in a Repurchase Price determined to be the fair
market value of such Receivables and Purchased Assets. Upon reassignment of such
Receivables and related Purchased Assets, HSBC Funding shall automatically and
without further action sell, transfer, assign, set over and otherwise convey to
HPLAC, without recourse, representation or warranty, all the right, title and
interest of HSBC Funding in and to such Receivables and related Purchased
Assets, and such reassigned Receivables and related Purchased Assets shall be
treated by HSBC Funding as collected in full as of the date on which they are
transferred. HSBC Funding shall execute such documents and instruments of
transfer or assignment and take such other actions as shall reasonably be
requested by HPLAC to effect the conveyance of such Receivables and related
Purchased Assets pursuant to this Section 6.01(b).
          Section 6.02. Reassignment of Other Receivables.
          (a) In the event any representation or warranty set forth in
Section 4.01(a) or (c) 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 HSBC Funding is required
to accept a reassignment of the Receivables previously sold by HPLAC to HSBC
Funding pursuant to Section 2.06 of the Transfer and Servicing Agreement, HPLAC
shall accept reassignment of such Receivables on the terms and conditions set
forth in Section 6.02(b).
          (b) HPLAC shall accept reassignment of any Receivables described in
Section 6.02(a), and any related Purchased Assets, from HSBC Funding on the date
on which such Receivables and related Purchased Assets are reassigned to HSBC
Funding, and shall pay for such reassigned Receivables and related Purchased
Assets by paying to HSBC Funding in

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immediately available funds, not later than 1:00 p.m. New York City time, on the
Transfer Date following the Monthly Period in which such reassignment obligation
arises, an amount equal to the Repurchase Price. If HSBC Funding so directs,
HPLAC shall deposit such payment directly into the Collection Account in
accordance with the terms of the Transfer and Servicing Agreement and the
Indenture. Upon reassignment of such Receivables and related Purchased Assets,
HSBC Funding shall automatically and without further action sell, transfer,
assign, set over and otherwise convey to HPLAC, without recourse, representation
or warranty, all the right, title and interest of HSBC Funding in and to such
Receivables and related Purchased Assets, and such reassigned Receivables and
related Purchased Assets shall be treated by HSBC Funding as collected in full
as of the date on which they are transferred. HSBC Funding shall execute such
documents and instruments of transfer or assignment and take such other actions
as shall reasonably be requested by HPLAC to effect the conveyance of such
Receivables and related Purchased Assets pursuant to this Section 6.02(b).
[END OF ARTICLE VI]

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ARTICLE VII
CONDITIONS PRECEDENT
          Section 7.01. Conditions to HSBC Funding’s Obligations Regarding
Receivables. The obligations of HSBC Funding to purchase any Receivables created
on or after any Addition Date shall be subject to the satisfaction of the
following conditions:
          (a) All representations and warranties of HPLAC 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 (except that, to the
extent any such representation or warranty expressly relates to an earlier date,
such representation or warranty was true and correct on such earlier date);
          (b) All information (concerning any Account to which such Receivables
relate) provided or to be provided to HSBC Funding shall be true and correct in
all material respects;
          (c) HPLAC shall have indicated in its computer files and microfiche
lists that such Receivables have been sold to HSBC Funding in accordance with
this Agreement; and
          (d) HPLAC shall have recorded and filed, at its own expense, any
financing statements with respect to such Receivables meeting the requirements
of applicable state law in such jurisdictions as would be necessary to perfect
the sale of such Receivables from HPLAC to HSBC Funding, and shall deliver a
file-stamped copy of such financing statements or other evidence of such filings
to HSBC Funding.
          Section 7.02. Conditions Precedent to HPLAC’s Obligations. The
obligations of HPLAC to sell, on any date, Receivables shall be subject to the
satisfaction of the following conditions:
          (a) All representations and warranties of HSBC Funding 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 (except that, to the
extent any such representation or warranty expressly relates to an earlier date,
such representation or warranty was true and correct on such earlier date);
          (b) Payment or provision for payment of the Purchase Price in
accordance with Sections 3.01 and 3.02 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 HPLAC, and HPLAC shall have received from
HSBC Funding copies of all documents (including, without limitation, records of
corporate proceedings) relevant to the transactions herein contemplated as HPLAC
may reasonably have requested.
[END OF ARTICLE VII]

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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 at least until the termination
of the Trust as provided in Article VIII of the Trust Agreement. Thereafter this
Agreement may be terminated by the mutual agreement of the parties hereto.
          Section 8.02. Purchase Termination. If (a) HPLAC shall file a petition
or commence a proceeding (i) to take advantage of any bankruptcy,
conservatorship, receivership, insolvency or similar laws or (ii) for the
appointment of a trustee, conservator, receiver, liquidator or similar official
for or relating to HPLAC or all or substantially all of its property, (b) HPLAC
shall consent or fail to object to any such petition filed or proceeding
commenced against or with respect to it or all or substantially all of its
property, or any such petition or proceeding shall not have been dismissed or
stayed within sixty (60) days of its filing or commencement, or a court, agency,
or other supervisory authority with jurisdiction shall have decreed or ordered
relief with respect to any such petition or proceeding, (c) HPLAC shall admit in
writing its inability to pay its debts generally as they become due, (d) HPLAC
shall make an assignment for the benefit of its creditors, (e) HPLAC shall
voluntarily suspend payment of its obligations, or (f) HPLAC shall take any
action in furtherance of any of the foregoing (any of the foregoing, a
“Dissolution Event”), HPLAC shall, on the day of such Dissolution Event (the
“Appointment Date”), immediately cease to sell additional Principal Receivables
to HSBC Funding and shall promptly give notice to HSBC Funding and the
Applicable Transferees of such Dissolution Event. Notwithstanding any cessation
of the sale to HSBC Funding of additional Principal Receivables, Principal
Receivables sold to HSBC Funding prior to such Appointment Date, Collections in
respect of such Principal Receivables, Finance Charge and Administrative
Receivables whenever created accrued in respect of such Principal Receivables,
and Collections in respect of such Finance Charge and Administrative
Receivables, shall continue to be property of HSBC Funding available for
transfer by HSBC Funding to the Trust.
[END OF ARTICLE VIII]

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ARTICLE IX
SERVICING
          Section 9.01. Transfer and Servicing Agreement Controls with Respect
to the Receivables. HPLAC acknowledges that the Receivables are to be deposited
in the Trust pursuant to the Transfer and Servicing Agreement and are to be
serviced by the Servicer. HPLAC agrees to cooperate fully with the Servicer and
to permit the Servicer to take any and all actions necessary in connection with
the Receivables.
[END OF ARTICLE IX]

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ARTICLE X
MISCELLANEOUS PROVISIONS
          Section 10.01. 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 HSBC Funding and
HPLAC in accordance with this Section 10.01. This Agreement and any Conveyance
Papers may be amended from time to time by HSBC Funding and HPLAC, provided that
HSBC Funding provides to HPLAC an Officer’s Certificate of HSBC Funding to the
effect that HSBC Funding reasonably believes that such amendment will not have
an Adverse Effect.
          Section 10.02. 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 10.03. 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 certified mail, return receipt requested,
to (a) in the case of HSBC Funding, HSBC Funding (USA) Inc. V, 1111 Town Center
Drive, Las Vegas, Nevada 89144; (b) in the case of HPLAC, HSBC Private Label
Acquisition Corporation (USA), [1111 Town Center Drive, Las Vegas, Nevada
89144]; (c) in the case of the Owner Trustee, Wilmington Trust Company, as Owner
Trustee, 1100 North Market Street, Wilmington, Delaware 19890-0001; and (d) in
the case of the Indenture Trustee, U.S. Bank National Association, [209 South La
Salle, Suite 300, Chicago, Illinois 60604]; 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 10.04. 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 10.05. Assignment. Notwithstanding anything to the contrary
contained herein, other than HSBC Funding’s assignment of its right, title and
interest in, to and under this Agreement to the Trust (and the subsequent
assignment pursuant to the Indenture), this Agreement may not be assigned by the
parties hereto, except for an assignment by a party hereto of its right, title
and interest in, to and under this Agreement to (i) a successor by merger
assuming this Agreement, (ii) any Affiliate of the Servicer (or any successor
thereto) which assumes the obligations of this Agreement, or (iii) any entity
provided that the Rating Agency Condition has been satisfied.
          Section 10.06. Acknowledgment and Agreement of HPLAC. By execution
below, HPLAC expressly acknowledges and agrees that all of HSBC Funding’s right,
title and

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interest in, to and under this Agreement, including, without limitation, all of
HSBC Funding’s right, title and interest in and to the Receivables, shall be
assigned by HSBC Funding to the Trust pursuant to the Transfer and Servicing
Agreement and by the Trust to the Indenture Trustee pursuant to the Indenture.
HPLAC hereby expressly consents to such assignments. Additionally, HPLAC agrees
to pay, or cause to be paid, directly to the Indenture Trustee any amounts
payable by HPLAC to HSBC Funding hereunder which are identified to HPLAC as
required to be paid by HSBC Funding to the Trust and by the Trust to the
Indenture Trustee. Any payment required to be made on or before a specified date
in same-day funds may be made on the prior Business Day in next-day funds.
          Section 10.07. Further Assurances. HPLAC and HSBC Funding 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 and the Conveyance Papers, including, without limitation, the
execution of any financing statements or amendments thereto or equivalent
documents relating to the Purchased Assets for filing under the provisions of
the UCC or other law of any applicable jurisdiction.
          Section 10.08. No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of HPLAC or HSBC Funding, 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 10.06, the rights,
remedies, powers and privileges herein provided are cumulative and not
exhaustive of any rights, remedies, powers and privileges provided by law.
          Section 10.09. Counterparts. This Agreement and the 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 10.10. Binding Effect; 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 Applicable Transferees shall be considered third-party beneficiaries of this
Agreement.
          Section 10.11. 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 10.12. Headings. The headings are for purposes of reference
only and shall not otherwise affect the meaning or interpretation of any
provision hereof.
          Section 10.13. 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.

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          Section 10.14. 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 the conveyance of any Purchased Assets by
HSBC Funding to the Trust pursuant to the Transfer and Servicing Agreement and
by the Trust to the Indenture Trustee pursuant to the Indenture.
          Section 10.15. Nonpetition Covenant. Notwithstanding any prior
termination of this Agreement, HPLAC 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 HSBC Funding or the Trust to petition or invoke the
process of any Governmental Authority for the purpose of commencing or
sustaining a case against HSBC Funding or the Trust under any bankruptcy,
insolvency or similar law or appointing a trustee, receiver, conservator,
liquidator, assignee, custodian, sequestrator or other similar official of HSBC
Funding or the Trust or any substantial part of its property or ordering the
winding-up or liquidation of the affairs of HSBC Funding or the Trust.
[END OF ARTICLE X]

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          IN WITNESS WHEREOF, HPLAC and HSBC Funding have caused this Agreement
to be duly executed by their respective officers as of the day and year first
above written.

                  HSBC PRIVATE LABEL ACQUISITION         CORPORATION (USA)    
 
           
 
  By:   /s/ Derek R. Rogers    
 
           
 
      Name: Derek R. Rogers    
 
      Title: Vice President and Controller    
 
                HSBC FUNDING (USA) INC. V    
 
           
 
  By:   /s/ Steven H. Smith    
 
                Name: Steven H. Smith         Title: Vice President and
Assistant Treasurer    

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EXHIBIT A
FORM OF SUPPLEMENTAL CONVEYANCE
(As required by Section 2.02 and Section 2.03
of the Receivables Purchase Agreement)
          SUPPLEMENTAL CONVEYANCE No. ___, dated as of                     , by
and between HSBC FUNDING (USA) INC. V, a Delaware corporation (together with its
permitted successors and assigns, “HSBC Funding”), and HSBC PRIVATE LABEL
ACQUISITION CORPORATION (USA), a Delaware corporation (together with its
permitted successors and assigns, the “HPLAC”), pursuant to the Receivables
Purchase Agreement referred to below.
W I T N E S S E T H :
          WHEREAS, HPLAC and HSBC Funding are parties to the Amended and
Restated Receivables Purchase Agreement, dated as of August 11, 2006
(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, HPLAC wishes
to designate Additional Accounts and to sell the Receivables of such Additional
Accounts, whether existing on the Additional Cut-Off Date or thereafter created,
to HSBC Funding pursuant to the Receivables Purchase Agreement; and
          WHEREAS, HSBC Funding is willing to accept such designation and
conveyance subject to the terms and conditions hereof.
          NOW THEREFORE, HPLAC and HSBC Funding 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,
                    .
          “Additional Accounts” shall have the meaning specified in Section 2.
          “Additional Cut-Off Date” shall mean, with respect to the Additional
Accounts, [the close of business on]                     .
          “Additional Purchased Assets” shall have the meaning specified in
Section 3(a).
          2. Designation of Additional Accounts. Within five Business Days of
the Addition Date, HPLAC shall deliver a computer file or microfiche list
containing a true and complete schedule identifying all Additional Accounts
designated hereby (the “Additional Accounts”) and specifying for each such
Additional Account, as of the Additional Cut-Off Date,

A-1

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(a) its account number, (b) the aggregate amount outstanding in such Additional
Account and (c) the aggregate amount of Principal Receivables in such Additional
Account. On the date of this Supplemental Conveyance, such computer file or
microfiche list shall be incorporated into and made part of this Supplemental
Conveyance and the Receivables Purchase Agreement and is marked as Schedule 1 to
this Supplemental Conveyance and shall supplement Schedule 1 of the Receivables
Purchase Agreement.
          3. Conveyance of Receivables.
          (a) HPLAC does hereby sell, transfer, assign, set over and otherwise
convey to HSBC Funding, without recourse, all of its right, title and interest
in, to and under the Receivables of the Additional Accounts existing on the
Additional Cut-Off Date and thereafter created from time to time until the
termination of the Receivables Purchase Agreement pursuant to Article VIII
thereof, all Interchange, Recoveries allocable to such Receivables, all monies
due or to become due and all amounts received or receivable with respect
thereto, all Collections with respect thereto and all proceeds (including
“proceeds” as defined in the UCC) thereof (the “Additional Purchased Assets”).
          (b) In connection with such sale and if necessary, HPLAC agrees to
record and file, at its own expense, one or more financing statements (and
amendments with respect to such financing statements when applicable) with
respect to the Additional Purchased Assets meeting the requirements of
applicable state law in such manner and in such jurisdictions as are necessary
to perfect the sale of the Additional Purchased Assets to HSBC Funding, and to
deliver a file-stamped copy of such financing statements or amendments or other
evidence of such filing to HSBC Funding.
          (c) In connection with such sale, HPLAC further agrees, at its own
expense, on or prior to the date of this Supplemental Conveyance, to indicate in
the appropriate computer files and microfiche lists that all Receivables created
in connection with the Additional Accounts and the related Additional Purchased
Assets have been sold to HSBC Funding pursuant to this Supplemental Conveyance.
          (d) The parties hereto intend that the conveyance of the Additional
Purchased Assets described in Section 3(a) constitute an absolute sale
consistent with the intent expressed in Section 2.01(d) of the Receivables
Purchase Agreement. It is the intention of the parties hereto that the
arrangements with respect to the Additional Purchased Assets shall constitute a
purchase and sale of such Additional Purchased Assets and not a loan, including
for accounting purposes. In the event, however, that notwithstanding such intent
it were 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
Supplemental Conveyance shall constitute a security agreement under applicable
law, and that HPLAC shall be deemed to have granted, and HPLAC does hereby
grant, to HSBC Funding a first priority perfected security interest in all of
HPLAC’s right, title and interest, whether now owned or hereafter acquired, in,
to and under the Additional Purchased Assets to secure the obligations of HPLAC
hereunder and under the Receivables Purchase Agreement.

A-2

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          4. Acceptance by HSBC Funding. Subject to the satisfaction of the
conditions set forth in Section 6 of this Supplemental Conveyance, HSBC Funding
hereby acknowledges its acceptance of the Additional Purchased Assets, now
existing and hereafter created, conveyed to HSBC Funding pursuant to Section 3
of this Supplemental Conveyance. HSBC Funding further agrees to enforce HPLAC’s
covenant to deliver to HSBC Funding (and to the Applicable Transferees if HSBC
Funding has so directed) the computer file or microfiche list described in
Section 2 of this Supplemental Conveyance within five Business Days of the
Addition Date.
          5. Representations and Warranties of HPLAC. HPLAC hereby represents
and warrants to HSBC Funding on the date of this Supplemental Conveyance and on
the Addition Date that:
          (a) Legal, Valid and Binding Obligation. This Supplemental Conveyance
constitutes a legal, valid and binding obligation of HPLAC enforceable against
HPLAC in accordance with its terms, except as such enforceability may be limited
by (i) applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws, now or hereafter in effect, relating to creditors’ rights
generally, (ii) the possible unavailability of remedies of specific performance
and injunctive and other forms of equitable relief and (iii) equitable defenses
and the discretion of the court before which any proceeding therefor may be
brought;
          (b) Selection Procedures. No selection procedures believed by HPLAC to
be materially adverse to the interests of HSBC Funding, the Owner Trustee, the
Indenture Trustee or the Trust have been used by HPLAC in selecting the
Additional Accounts from among any pool of accounts of a similar type available
to HPLAC;
          (c) Insolvency. HPLAC is not insolvent and, after giving effect to the
conveyance set forth in Section 3 of this Supplemental Conveyance, will not be
insolvent;
          (d) Sale of Receivables. This Supplemental Conveyance constitutes a
valid sale, transfer and assignment to HSBC Funding of all right, title and
interest of HPLAC in the Receivables of the Additional Accounts and the proceeds
thereof, and the Interchange and Recoveries allocable to such Receivables;
          (e) No Conflict. The execution and delivery of this Supplemental
Conveyance by HPLAC, the performance by HPLAC of the transactions contemplated
by this Supplemental Conveyance, and the fulfillment by HPLAC of the terms of
this Supplemental Conveyance applicable to HPLAC 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 HPLAC is a party or by which it or any of its properties are
bound;
          (f) No Violation. The execution, delivery and performance of this
Supplemental Conveyance by HPLAC and the fulfillment by HPLAC of the terms
contemplated herein applicable to HPLAC will not conflict with or violate any
Requirements of Law applicable to HPLAC;

A-3

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          (g) No Proceedings. There are no proceedings or investigations pending
or, to the best knowledge of HPLAC, threatened against HPLAC 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 HPLAC, would materially and adversely
affect the performance by HPLAC of its obligations under this Supplemental
Conveyance, (iv) seeking any determination or ruling that would materially and
adversely affect the validity or enforceability of this Supplemental Conveyance
or (v) seeking to affect adversely the income tax attributes of the Trust under
the Code;
          (h) 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 HPLAC in connection with the execution and
delivery by HPLAC of this Supplemental Conveyance and the performance of the
transactions contemplated by this Supplemental Conveyance by HPLAC have been
duly obtained, effected or given and are in full force and effect;
          (i) No Liens. Each Receivable sold to HSBC Funding has been sold free
and clear of any Lien, and each related underlying receivable is then free and
clear of all Liens;
          (j) Eligibility of Additional Accounts. On the Additional Cut-Off
Date, each Additional Account is a Eligible Account; and
          (k) Eligibility of Receivables. On the Additional Cut-Off Date, each
Receivable contained in an Additional Account on such date and sold to HSBC
Funding by HPLAC is an Eligible Receivable.
          6. Conditions Precedent. The acceptance of HSBC Funding set forth in
Section 4 of this Supplemental Conveyance is subject to the satisfaction, on or
prior to the Addition Date, of the following conditions precedent:
          (a) Representations and Warranties. Each of the representations and
warranties made by HPLAC in Section 5 of this Supplemental Conveyance shall be
true and correct on the date of this Supplemental Conveyance and on the Addition
Date.
          (b) Officer’s Certificate. HPLAC shall have delivered to HSBC Funding
an Officer’s Certificate of HPLAC confirming that (i) no selection procedures
believed by HPLAC to be materially adverse to the interests of HSBC Funding, the
Owner Trustee, the Indenture Trustee or the Trust have been used by HPLAC in
selecting the Additional Accounts from among any pool of accounts of a similar
type available to HPLAC; and (ii) the list of Additional Accounts, as of the
Additional Cut-Off Date, is a true and complete schedule identifying all such
Additional Accounts and specifies for each such Additional Account, as of the
Additional Cut-Off Date, (x) its account number, (y) the aggregate amount
outstanding in such Additional Account and (z) the aggregate amount of Principal
Receivables in such Additional Account.
          (c) Additional Information. HPLAC shall have delivered to HSBC Funding
such information as was reasonably requested by HSBC Funding to satisfy itself
as to the

A-4

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accuracy of the representation and warranty set forth in Section 5(d) of this
Supplemental Conveyance.
          7. 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 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.
          8. Counterparts. This Supplemental Conveyance may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument.
          9. 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.

A-5

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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.

            HSBC PRIVATE LABEL
ACQUISITION CORPORATION (USA)
      By:           Name:           Title:           HSBC FUNDING (USA) INC. V
      By:           Name:           Title:      

A-6

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Schedule 1 to
Supplemental
Conveyance
Additional Accounts
Computer Files Containing Account Information Delivered to HSBC Funding
are Incorporated by Reference

 

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Schedule 1
LIST OF ACCOUNTS
COMPUTER FILES CONTAINING ACCOUNT INFORMATION DELIVERED TO HSBC
FUNDING
ARE INCORPORATED BY REFERENCE