EX-10.3



 




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



 




 









 





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	 






-i-









 





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	 






-ii-









 






	 	 	 
	Exhibit A

	 	Form of Supplemental Conveyance
	 
	 	 
	Schedule 1

	 	List of Accounts






-iii-









 





          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

 









 








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

2









 








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

3









 








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



4









 






          (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);



5









 






     (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.




6









 








          “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.




7









 








          “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.




8









 








          “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

9









 








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]




10









 








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

11









 








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



12









 







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;



13









 






     (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]




14









 








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]




15









 








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

16









 








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;



17









 



 


     (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

18









 








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.




19








 








          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]




20









 








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.




21









 








          (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]




22









 








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

23









 








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]




24









 








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]




25









 








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]




26









 








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]




27









 








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

28









 








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.




29









 








          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]




30









 








          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	 	 






31









 






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









 







(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









 








          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









 








          (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









 








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









 








          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









 






	 	 	 	 	 



Schedule 1 to

Supplemental

Conveyance




Additional Accounts




Computer Files Containing Account Information Delivered to HSBC Funding

are Incorporated by Reference




 









 





Schedule 1




LIST OF ACCOUNTS




COMPUTER FILES CONTAINING ACCOUNT INFORMATION DELIVERED TO HSBC

FUNDING

ARE INCORPORATED BY REFERENCE