Document:

exv10w2

 

EXHIBIT 10.2

EXECUTION COPY

HRSI FUNDING, INC. II,

Seller,

HSBC FUNDING (USA) INC. V,

Purchaser,

WILMINGTON TRUST COMPANY,

not in its individual capacity but

as Owner Trustee on behalf of the

HOUSEHOLD PRIVATE LABEL CREDIT CARD MASTER NOTE TRUST I,

Issuer

and

HSBC FINANCE CORPORATION

(successor by merger to Household Finance Corporation)

RECEIVABLES SALE AND PURCHASE,

ASSIGNMENT AND ASSUMPTION

AGREEMENT

Dated as of December 29, 2004

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page

	SECTION 1.
	 	DEFINITIONS	 	 	1	 
	SECTION 2.
	 	SALE AND PURCHASE OF RECEIVABLES AND SECURITIZATION ASSETS	 	 	3	 
	SECTION 3.
	 	PURCHASE PRICE	 	 	5	 
	SECTION 4.
	 	REPRESENTATIONS AND WARRANTIES OF SELLER	 	 	5	 
	SECTION 5.
	 	INDEMNIFICATION BY SELLER AND HBFC	 	 	7	 
	SECTION 6.
	 	COVENANT OF SELLER	 	 	9	 
	SECTION 7.
	 	CONDITIONS OF SALE	 	 	9	 
	SECTION 8.
	 	CLOSING	 	 	9	 
	SECTION 9.
	 	TAXES	 	 	9	 
	SECTION 10.
	 	REPRESENTATIONS AND WARRANTIES OF THE PURCHASER	 	 	10	 
	SECTION 11.
	 	INDEMNIFICATION BY PURCHASER	 	 	10	 
	SECTION 12.
	 	NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES	 	 	12	 
	SECTION 13.
	 	NOTICES	 	 	12	 
	SECTION 14.
	 	SEVERABILITY	 	 	12	 
	SECTION 15.
	 	AMENDMENTS	 	 	12	 
	SECTION 16.
	 	COUNTERPARTS	 	 	12	 
	SECTION 17.
	 	HEADINGS	 	 	12	 
	SECTION 18.
	 	GOVERNING LAW	 	 	12	 
	SECTION 19.
	 	INDEPENDENT CONTRACTOR	 	 	12	 
	SECTION 20.
	 	NO JOINT VENTURE	 	 	13	 
	SECTION 21.
	 	ENTIRE AGREEMENT	 	 	13	 
	SECTION 22.
	 	LIMITATION OF LIABILITY OF OWNER TRUSTEE	 	 	13	 
	SECTION 23.
	 	NONPETITION COVENANT	 	 	13	 

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     RECEIVABLES SALE AND PURCHASE, ASSIGNMENT AND ASSUMPTION AGREEMENT (the
“Agreement”), dated as of December 29, 2004, by and between HRSI FUNDING, INC.
II, a Delaware corporation (“HRSI II” or the “Seller”), HSBC FUNDING (USA) INC.
V, a Delaware corporation, (“HSBC V” or the “Purchaser”), WILMINGTON TRUST
COMPANY, not in its individual capacity but as owner trustee (the “Owner
Trustee”) on behalf of HOUSEHOLD PRIVATE LABEL CREDIT CARD MASTER NOTE TRUST I,
a common law trust organized and existing under the laws of the State of
Delaware (the “Issuer”) and HSBC FINANCE CORPORATION (successor by merger to
Household Finance Corporation), a Delaware corporation (“HBFC”).

W I T N E S S E T H:

     WHEREAS, Seller is engaged in the business of entering into
securitizations relating to receivables of revolving credit accounts which
accounts were originated in the ordinary course of business of Household Bank
(SB), N.A. (the “Bank”), such receivables having been sold to Seller by
Household Receivables Acquisition Company (“HRAC”) who purchased them from the
Bank; and

     WHEREAS, Seller desires to sell to Purchaser existing receivables as
defined below related to certain private label merchant credit accounts, the
Securitization Assets (as defined below) and certain related liabilities,
including, but not limited to, Seller’s obligations under various
securitizations; and

     WHEREAS, Purchaser desires to purchase such Receivables and Securitization
Assets and assume such Liabilities from Seller, as more particularly defined
herein on the terms and conditions set forth in this Agreement;

     NOW THEREFORE, in consideration of the foregoing recitals and the mutual
covenants and conditions contained in this Agreement, and for other good and
valuable consideration the receipt and sufficiency of which is hereby
acknowledged, it is agreed as follows:

            SECTION 1. DEFINITIONS. All capitalized terms used herein or in any document,
made or delivered pursuant hereto, and not defined herein or therein, shall
have the meaning ascribed thereto in the Transfer and Servicing Agreement; in
addition, the following words and phrases shall have the following meanings:

     “Account” shall mean each revolving credit account established by the Bank
under its private label credit card program the Receivables of which have been
sold by the Receivables Purchase Agreement.

     “Accrued Interest” shall mean the aggregate amount of all finance charges
that have accrued on the Accounts as of the Closing Date which has not been
posted to such Accounts, but will be posted to the Accounts in the billing
cycle immediately following the Closing Date.

 

 

     “Accrued Fee” shall mean the aggregate amount of all fees that have
accrued on the Accounts as of the Closing Date which has not been posted to
such Accounts, but will be posted to the Accounts in the billing cycle
immediately following the Closing Date.

     “Affiliate” shall mean, with respect to a particular person or entity, any
person or entity that directly or indirectly is in control of, is controlled
by, or is under common control with, such person or entity.

     “Bank” shall mean Household Bank (SB), N.A., and its successors and
assigns.

     “Closing Date” shall mean the date of the closing of the sale and purchase
of the Receivables and Securitization Assets and assumption of the Liabilities
associated with the Accounts, as further defined in Section 8.

     “Cut-Off Time” shall mean 11:59 p.m. on the calendar day preceding the
Closing Date.

     “Liabilities” shall mean Seller’s interest in any outstanding credit
balances associated with all Accounts as of the Closing Date contained in
Section 2 of this Agreement and Seller’s obligations under the Receivables
Purchase Agreement, the Transfer and Servicing Agreement and the Trust
Agreement.

     “O/C Amount” shall mean the overcollateralization amount as set forth in
each of the Series Supplements listed on Schedule A.

     “Purchase Price” shall be the sum set forth on the bill of sale delivered
to the Purchaser by the Seller.

     “Receivables” shall mean all amounts, if any, shown on Seller’s records as
amounts due and payable as of the Closing Date on any Account issued by the
Bank under the programs listed on Schedule A to this Agreement, which were
purchased by Seller, pursuant to the Receivables Purchase Agreement, other than
Securitized Receivables, and the Receivables shall include principal, finance
charges, all administrative and transaction fees, and insurance/debt
cancellation proceeds. The Receivables shall not include any Accrued Interest
or Accrued Fees.

     “Receivables Purchase Agreement” shall mean the Receivables Purchase
Agreement (as has been or may be amended from time to time), dated as of June
12, 2001, between Household Receivables Acquisition Company and HRSI Funding,
Inc. II.

     “Securitization Assets” shall be as defined in Section 2(c) of this
Agreement.

     “Securitized Receivables” shall mean the Receivables, as such term is
defined pursuant to the Transfer and Servicing Agreement.

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     “Separately Conveyed Assets” shall mean

     (a) the Class B Notes issued pursuant to

     (i) the Series 1995-A-1 Indenture Supplement, dated as of
June 12, 2001, between Wilmington Trust Company, not in its
individual capacity but as owner trustee (“Owner Trustee”) on
behalf of the Trust, and U.S. Bank National Association, not in
its individual capacity, but solely as the Indenture Trustee,

     (ii) the Series 2002-A Indenture Supplement, dated as of
December 20, 2002, between Wilmington Trust Company, not in its
individual capacity but as Owner Trustee on behalf of the Trust,
and U.S. Bank National Association, not in its individual
capacity, but solely as the Indenture Trustee, and

     (b) the note purchase agreements and fee letters related to the
Class B Notes described in clause (a) above.

     “Transfer and Servicing Agreement” shall mean the transfer and servicing
agreement, dated as of June 12, 2001, among HRSI Funding, Inc. II, Household
Finance Corporation (as a result of a merger, HSBC Finance Corporation is the
successor thereto) and the Trust, and all amendments and supplements thereto.

     “Trust” shall mean Household Private Label Credit Card Master Note Trust
I, acting by and through Wilmington Trust Company, not in its individual
capacity but as Owner Trustee.

     “Trust Agreement” shall mean the trust agreement, dated as of June 12,
2001 between HRSI Funding, Inc. II and Wilmington Trust Company.

            SECTION 2. SALE AND PURCHASE OF RECEIVABLES AND SECURITIZATION ASSETS.

     (a) Subject to the terms of this Agreement and as described below,
on the Closing Date, Seller agrees to sell, convey, transfer and assign
to Purchaser and Purchaser agrees to purchase from Seller, for the
consideration herein provided, all right, title, interest and obligations
of Seller in and to any Receivables now existing in connection with the
Accounts offered by the Bank, if any (the “Sale”). All Receivables sold
to Purchaser under this Agreement are sold and transferred without
recourse as to their enforceability, collectibility or documentation. On
the Closing Date, Seller shall transfer to Purchaser all Receivables and
Liabilities existing on such date associated with the Accounts.

     (b) Subject to the terms of this Agreement, on the Closing Date,
Seller agrees to assign its rights to and under each of the Receivables
Purchase Agreement, the Transfer and Servicing Agreement, the Trust
Agreement, the Transferor Amount, the Transferor Certificate and the O/C
Amount, excluding the

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Separately Conveyed Assets, and to be released from
its obligations to and under each of the Receivables Purchase Agreement,
the Transfer and Servicing Agreement, the Trust Agreement, the Transferor
Amount, the Transferor Certificate and the O/C Amount, excluding the
Separately Conveyed Assets, and Purchaser agrees to assume all of
Seller’s covenants and obligations to and under the Receivables Purchase
Agreement, the Transfer and Servicing Agreement, the Trust Agreement, the
Transferor Amount, the Transferor Certificate and the O/C Amount,
excluding the Separately Conveyed Assets. On and after the Closing Date,
Purchaser agrees that it will be bound by the provisions of the
Receivables Purchase Agreement, the Transfer and Servicing Agreement, the
Trust Agreement, the Transferor Amount, the Transferor Certificate and
the O/C Amount, excluding the Separately Conveyed Assets, and hereby
assumes and will perform in accordance with its terms all the covenants
and obligations which by the terms of the Receivables Purchase Agreement,
the Transfer and Servicing Agreement, the Trust Agreement, the Transferor
Amount, the Transferor Certificate and the O/C Amount, excluding the
Separately Conveyed Assets, were required to be performed by Seller prior
to this Agreement and which Seller would be required to perform on or
after this Agreement had Seller not entered into this Agreement.

     (c) In consideration of the payment by Purchaser of the Purchase
Price, receipt of which is hereby acknowledged by Seller, and Purchaser’s
assumption of all of Seller’s obligations under the Receivables Purchase
Agreement, the Transfer and Servicing Agreement, and the Trust Agreement,
as of the Closing Date, Seller does hereby grant, bargain, sell, convey,
transfer and deliver unto Purchaser, its successors and assigns, all of
Seller’s right, title and interest in and to all assets, accounts,
investment property, general intangibles, chattel paper, instruments,
documents, money, deposit accounts, certificates of deposit, goods,
letters of credit, and advices of credit and all proceeds thereof
belonging to Seller, except for the Separately Conveyed Assets, including
all of Seller’s right, title and interest in, to and under the
Receivables Purchase Agreement, the Transfer and Servicing Agreement, the
Trust Agreement, and receivables and other purchased assets under the
Receivables Purchase Agreement, the Transferor Amount, the Transferor
Certificate (as defined in the Transfer and Servicing Agreement) and the
O/C Amount (collectively all such assets hereinafter referred to as the
“Securitization Assets”).

     (d) With respect to the foregoing transactions, the parties hereto
intend that this Agreement shall be deemed to be (i) an agreement
supplemental to the Transfer and Servicing Agreement, among HRSI II, HSBC
V and the Issuer, for the purpose of Section 4.02(a)(i) therein and (ii)
an assumption agreement, among HRSI II, HSBC V and the Issuer for the purpose of Section 4.04(a) of
the Transfer and Servicing Agreement.

     (e) In connection with the Sale, Seller agrees (i) to record and
file, at its own expense, any financing statements, or if a financing
statement relating to the Receivables and Securitization Assets is
already on record, an assignment of

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the financing statement (and
continuation statements with respect to such financing statements when
applicable) or a new financing statement with respect to the Receivables
and Securitization Assets which meets the requirements of applicable
state law in such manner and in such jurisdictions as are necessary to
perfect and maintain perfection of the Sale of such Receivables and
Securitization Assets from Seller to Purchaser, (ii) that such financing
statements or assignments shall name Seller, as seller, and Purchaser, as
purchaser, of the Receivables and Securitization Assets and (iii) to
deliver a file-stamped copy of such financing statements or assignments
or other evidence of such filings to Purchaser as soon as is practicable
after filing.

     (f) The parties hereto intend that the Sale of Seller’s right, title
and interest in and to the Receivables and Securitization Assets shall
constitute an absolute sale, conveying good title free and clear of any
liens, claims, encumbrances or rights of others from Seller to Purchaser
and that the Receivables and Securitization Assets shall not be part of
Seller’s estate in the event of the bankruptcy or insolvency of Seller or
a conservatorship, receivership or similar event with respect to Seller.
It is the intention of the parties hereto that the arrangements with
respect to the Receivables and Securitization Assets shall constitute a
purchase and sale of such Receivables and Securitization Assets and not a
loan or a borrowing secured by such Receivables and Securitization
Assets. In the event, however, that it were to be determined that the
transactions evidenced hereby constitute a loan and not a purchase and
sale, it is the intention of the parties hereto that this Agreement shall
constitute a security agreement under applicable law, and that Seller
shall be deemed to have granted and does hereby grant to Purchaser a
first priority perfected security interest in all of Seller’s right,
title and interest, whether now owned or hereafter acquired, in, to and
under the Receivables and Securitization Assets to secure the obligations
of seller hereunder.

            SECTION 3. PURCHASE PRICE. Subject to the terms and conditions of this
Agreement, and in reliance upon the representations, warranties and covenants
of Seller made herein, Purchaser shall pay and deliver to Seller the Purchase
Price, for the Receivables and Securitization Assets purchased and the
Liabilities assumed under this Agreement which shall be fair market value
consideration for the assets purchased as described in the bill of sale or
schedules or computer files delivered therewith.

            SECTION 4. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller represents and
warrants to Purchaser that as of the Closing Date (as defined in Section 8
below):

     (a) Seller is a corporation duly organized and validly existing
under the laws of its state of incorporation.

     (b) The execution, delivery and performance by Seller of this
Agreement has been duly authorized by all necessary corporate action on
the part of Seller. Seller has full power to consummate the transactions
contemplated hereby. Neither the execution and delivery by Seller of
this Agreement, the consummation by Seller of the transactions
contemplated

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hereby, nor compliance by Seller with the provisions hereof
will conflict with or result in a breach of, or constitute a default
under, any law or governmental regulation or any judgment or order
binding Seller or its properties or any agreement or instrument to which
Seller is a party or by which it is bound.

     (c) Seller will, on the Closing Date and immediately prior to such
date, be the owner of all right, title and interest in and to all of the
Receivables and Securitization Assets of such Seller to be sold pursuant
to this Agreement. Seller transfers the assets to be sold, free and
clear of all assignments, liens, charges, encumbrances and other security
interests.

     (d) This Agreement, and the consummation of the transactions
contemplated herein, constitutes a legal, valid and binding obligation of
Seller, enforceable against Seller in accordance with its terms, except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect, affecting the enforcement of creditor’s rights in general and as
such enforceability may be limited by general principles of equity
(whether considered in a proceeding at law or in equity).

     (e) Seller is the legal and beneficial owner of all right, title and
interest in and to the Receivables and Securitization Assets to be sold
by Seller.

     (f) The Receivables and Securitization Assets have been conveyed to
Purchaser in compliance, in all material respects, with all laws
applicable to Seller.

     (g) Seller has taken the necessary action to notify the Bank and its
respective employees, agents and representatives of the transfer of the
Receivables and Securitization Assets to Purchaser.

     (h) To Seller’s knowledge, it is not in material breach of the
Receivables Purchase Agreement, Transfer and Servicing Agreement, or
Trust Agreement or other agreement that affects the transactions
contemplated herein.

     (i) Each Receivable was created in compliance in all material
respects with all requirements of law and regulation applicable to the
Bank and pursuant to a credit card agreement which complies in all
material respects with all requirements of law applicable to the Bank.

     (j) As of the Closing Date, each Receivable is in compliance in all
material respects with the Federal Financial Institution Examination
Council guidelines.

     (k) With respect to each Receivable, all material consents,
licenses, approvals or authorizations of, or registrations or
declarations with, any governmental authority required to be obtained,
effected or given by the Bank in

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connection with the creation of such
Receivable or the execution, delivery and performance by the Bank of its
obligations under the credit card agreement pursuant to which such
Receivable was created, have been duly obtained, effected or given and
are in full force and effect.

     (l) At the time of the sale of each Receivable to Purchaser, Seller
has good and marketable title thereto, free and clear of all liens,
encumbrances, charges and security interests.

     (m) Each Receivable is the legal, valid and binding payment
obligation of the obligor thereof, 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).

     (n) No Receivable is, at the time of the sale of such Receivable to
Purchaser, subject to any right of rescission, setoff, counterclaim or
any other defense (including defenses arising out of violations of usury
laws) of the obligor thereunder, other than defenses arising out of
applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws, now or hereafter in effect, affecting the enforcement of
creditors’ rights in general.

     (o) At the time of the sale of each Receivable to Purchaser, Seller
has satisfied all of its obligations, if any, required to be satisfied by
such time with respect to such Receivable.

     (p) At the time of the sale of each Receivable to Purchaser, Seller
has not taken any action which, or omitted to take any action the
omission of which, would impair at the time of such sale the rights of
Purchaser therein.

 
     (q) Seller confirms that all representations and warranties of
Seller under each of the Receivables Purchase Agreement, the Transfer and
Servicing Agreement and the Trust Agreement are true and correct as to
Seller.

     SECTION 5. INDEMNIFICATION BY SELLER AND HBFC.

     (a) Seller and HBFC agree to jointly and severally defend, indemnify
and hold harmless Purchaser and its respective employees, agents and
representatives against any and all liabilities, judgments, damages,
claims, demands, costs, expenses or losses (including reasonable
attorney’s fees) (i) incurred by reason of any representation or warranty
made by Seller in connection with this Agreement having been untrue or
incorrect in any respect when made or deemed made, (ii) incurred by
reason of any breach by Seller of any covenant or agreement made herein,
or (iii) relating to the Receivables prior to the Closing Date; provided
that in no event shall Seller or HBFC be obligated under this Section 5
to indemnify Purchaser against (x) liability, loss, cost or expenses to
the

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extent that it results from Purchaser’s negligent or willful acts or
omissions or the negligent or willful acts or omissions of Purchaser’s
agents or assignees or (y) any credit loss suffered on any Receivable not
attributable to the actions of Seller or any merchant for whom the Bank
issues Accounts.

     (b) In the event any claim is made, or any suit or action is
commenced against Purchaser with respect to which indemnification may be
sought by it under this Section 5, Purchaser shall within ten (10) days
thereof give Seller and HBFC notice and Seller and HBFC shall be entitled
to conduct the defense thereof at Seller’s and HBFC’s expense; provided,
however, that Purchaser shall be entitled to participate in the defense
thereof at its own expense if such claim, suit or action relates to or
includes events after the Closing Date. Seller and HBFC may (but need
not) defend or participate in the defense of any such claim, suit or
action, but Seller and HBFC shall notify Purchaser within ten (10)
business days if Seller or HBFC shall not desire to defend or participate
in the defense of any such claim, suit or action, however, Seller and
HBFC shall continue to be liable to Purchaser in connection with the cost
of the defense of such claim, suit or action. Any such election to not
defend or participate shall have no effect upon Seller’s and HBFC’s
obligation to indemnify and hold harmless Purchaser pursuant to this
Section 5.

     (c) Purchaser may at any time notify Seller and HBFC of its
intentions to settle or compromise any claim, suit or action against
Purchaser which may be indemnifiable under this Section (and in the
defense of which Seller or HBFC has not previously elected to
participate), and Purchaser may settle or compromise
any such claim, suit or action unless Seller or HBFC notifies
Purchaser in writing (within thirty (30) days after Purchaser has given
written notice of its intention to settle or compromise) that Seller or
HBFC intends to conduct the defense of such claim, suit or action and
that Seller and HBFC agrees to further indemnify and hold Purchaser
harmless from any liability, loss, cost or expense to Purchaser in excess
of that which Purchaser would have incurred had the settlement or
compromise been effected on the terms proposed by Purchaser. Any such
settlement or compromise of, or any final judgment or decree entered on
or in any claim, suit or action which Purchaser has defended or
participated in the defense of in accordance herewith, shall be deemed to
have been consented to by, and shall be binding upon, Seller and HBFC as
fully as if Seller and HBFC had assumed the defense thereof and a final
judgment or decree had been entered in such suit or action, or with
regard to such claim, by a court of competent jurisdiction for the amount
of such settlement, compromise, judgment or decree, including without
limitation court costs and reasonable attorney’s fees.

     (d) Seller or HBFC shall obtain the prior written approval of
Purchaser before entering into any settlement of any claim, suit or
action, which it defends or ceases to defend, if pursuant to or as a
result of such settlement or cessation, any injunctive or other equitable
relief or admission of liability would be imposed against Purchaser.
Neither Seller nor HBFC shall consent to the entry of any judgment or
enter into any settlement that does not include, as an unconditional

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term
thereof, the giving by the claimant or plaintiff to Purchaser of a
release from all liability in respect to such claim.

            SECTION 6. COVENANT OF SELLER. After the Closing Date, Seller shall remit to
Purchaser all payments received with respect to the Receivables and
Securitization Assets as soon as practicable after the receipt thereof.

            SECTION 7. CONDITIONS OF SALE.

     (a) The obligations of Purchaser to perform hereunder and purchase
the Receivables and the Securitization Assets and assume the Liabilities
on the Closing Date shall be subject to the satisfaction on or before the
Closing Date of the following further conditions: (i) the representations
and warranties contained in Section 4 hereof shall be true and correct in
all respects on the Closing Date as if made on such date; and (ii) Seller
shall have performed and observed all covenants, agreements and
conditions hereof to be performed or observed by it on or before the
Closing Date.

     (b) The obligations of Seller to perform hereunder and sell the
Receivables and the Securitization Assets and transfer the Liabilities at
Closing shall be subject to the satisfaction, on or before the Closing
Date, of the further
condition that Purchaser shall have delivered to Seller the Purchase
Price specified in Section 3 hereof.

            SECTION 8. CLOSING. The closing of the sale and purchase of the Receivables
and the Securitization Assets and assumption of the Liabilities associated with
the Accounts and owned by Seller on December 29, 2004, as described in Section
2, shall take place on December 29, 2004 (the “Closing Date”), at the location
as shall be mutually agreed upon by the parties hereto. The closing documents
may each be executed in two or more counterparts including telefax transmission
thereof (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. On the Closing Date, the following actions shall be taken:

     (a) Seller shall deliver or cause to be delivered to Purchaser such
bills of sale, assignments, conveyances and other good and sufficient
instruments of transfer (all of which shall be consistent with the terms
set forth in this Agreement), which shall be effective to vest in
Purchaser good and valid title to the Receivables and the Securitization
Assets to be sold hereunder.

     (b) Purchaser shall pay to Seller the Purchase Price.

     SECTION 9. TAXES.

     (a) Each party shall promptly pay in full when due any tax or other
governmental charge or fee imposed upon it under applicable law on the
sale of the Receivables and Securitization Assets from Seller to
Purchaser pursuant to this Agreement.

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     (b) Seller shall be liable for and pay any taxes related to the
Receivables and Securitization Assets that accrue or otherwise relate to
any taxable year or period (or portion thereof) ending or deemed to end
on or prior to the Closing Date.

     (c) Purchaser shall be liable for and pay any taxes related to the
Receivables and Securitization Assets that accrue or otherwise relate to
any taxable year or period (or portion thereof) beginning or deemed to
begin after the Closing Date.

            SECTION 10. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. Purchaser
represents and warrants to Seller that as of the date of this Agreement and on
the Closing Date (as defined in Section 8 above):

     (a) Purchaser is a corporation duly organized and validly existing
under the laws of its state of incorporation.

     (b) The execution, delivery and performance by Purchaser of this
Agreement has been duly authorized by all necessary corporate action on
the part of Purchaser. Purchaser has full power to consummate the
transactions contemplated hereby. Neither the execution and delivery by
Purchaser of this Agreement, the consummation by Purchaser of the
transactions contemplated hereby, nor compliance by Purchaser with the
provisions hereof will conflict with or result in a breach of, or
constitute a default under, any law or governmental regulation or any
judgment or order binding Purchaser or its properties or any agreement or
instrument to which Purchaser is a party or by which it is bound.

     (c) This Agreement, and the consummation of the transactions
contemplated herein, constitutes a legal, valid and binding obligation of
Purchaser, enforceable against Purchaser in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect, affecting the enforcement of creditor’s rights in
general and as such enforceability may be limited by general principles
of equity (whether considered in a proceeding at law or in equity).

     (d) Purchaser confirms that all representations and warranties of
Seller under each of the Receivables Purchase Agreement, the Transfer and
Servicing Agreement, and Trust Agreement are true and correct as to
Purchaser.

     SECTION 11. INDEMNIFICATION BY PURCHASER.

     (a) Purchaser agrees to defend, indemnify, and hold harmless Seller
and its respective employees, agents, and representatives against any and
all liabilities, judgments, damages, claims, demands, costs, expenses or
losses (including reasonable attorney’s fees) arising after the Closing
Date and incurred by reason of any representation or warranty made by
Purchaser in connection with this Agreement, having been untrue or
incorrect in any respect when made or

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deemed made, or by reason of the
breach by Purchaser of any covenant or agreement made herein, or by
reason of any negligent or willful acts of Purchaser, or by reason of any
action or proceeding being instituted by any person based upon an
allegation or assertion which, if true, would indicate the existence of
any of the foregoing circumstances.

     (b) In the event any claim is made, or any suit or action is
commenced against Seller in respect to which indemnification may be
sought by Seller under this Section 11, Seller shall promptly give
Purchaser notice thereof and Purchaser shall be entitled to conduct the
defense thereof at Purchaser’s expense; provided, however, that Seller
shall be entitled to participate in the defense thereof at its
own expense if such claim, suit or action relates to or includes
events prior to the Closing Date. Purchaser may (but need not) defend or
participate in the defense of any such claim, suit or action, but
Purchaser shall notify Seller within ten (10) business days if Purchaser
shall not desire to defend or participate in the defense of any such
claim, suit or action, however, Purchaser shall continue to be liable to
Seller for the cost of the defense of such claim, suit or action. Any
such election to not defend or participate in the defense shall have no
effect upon Purchaser’s obligation to indemnify and hold harmless
Purchaser pursuant to this Section 11.

     (c) Seller may at any time notify Purchaser of its intention to
settle or compromise any claim, suit or action against Seller which may
be indemnifiable under this Section (and in the defense of which
Purchaser has not previously elected to participate), and Seller may
settle or compromise any such claim, suit or action unless Purchaser
notifies Seller in writing (within thirty (30) days after Seller has
given Purchaser written notice of its intention to settle or compromise)
that Purchaser intends to conduct the defense of such claim, suit or
action and that Purchaser agrees to further indemnify Seller and hold
Seller harmless from any liability, loss, cost or expense to Seller in
excess of that which Seller would have incurred had the settlement or
compromise been effected on the terms proposed by Seller. Any such
settlement or compromise of, or any final judgment or decree entered on
or in, any claim, suit or action which Seller has defended or
participated in the defense of in accordance herewith shall be deemed to
have been consented to by, and shall be binding upon, Purchaser as fully
as if Purchaser had assumed the defense thereof, and a final judgment or
decree had been entered in such suit or action, or with regard to such
claim, by a court of competent jurisdiction for the amount of such
settlement, compromise, judgment or decree, including without limitation
court costs and reasonable attorney’s fees.

     (d) Purchaser shall obtain the prior written approval of Seller
before entering into any settlement of any claim, suit or action which it
defends or ceases to defend, if pursuant to or as a result of such
settlement or cessation, any injunctive or other equitable relief or
admission of liability would be imposed against Seller. Purchaser shall
not consent to the entry of any judgment or enter into any settlement
that does not include as an unconditional term thereof the giving by the
claimant or plaintiff to Seller of a release from all liability in
respect to such claim.

11

 

            SECTION 12. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
statements contained in this Agreement or in any Exhibit, Schedule or other
document delivered pursuant to this Agreement shall be deemed representations
and warranties hereunder to the party receiving delivery of same.

            SECTION 13. NOTICES. Any notice or other communication provided for herein or given hereunder to
a party hereto shall be in writing and shall be delivered in person to such
party or mailed by first class registered or certified mail, postage prepaid,
addressed as follows:

	 	 	 
	If to Seller:

	 	HRSI Funding, Inc. II
	

	 	1111 Town Center Drive
	

	 	Las Vegas, NV 89144
	 
	 	 
	If to Purchaser:

	 	HSBC Funding (USA) Inc. V
	

	 	1111 Town Center Drive
	

	 	Las Vegas, NV 89144

            SECTION 14. SEVERABILITY. If any provision, or application thereof, of this
Agreement is held unlawful or unenforceable in any respect, the parties hereto
agree that such illegality or unenforceability shall not affect other
provisions or applications thereof that can be given effect, and this Agreement
shall be construed as if the unlawful or unenforceable provisions are amended
so as to make it valid, reasonable and enforceable and agree to be bound by the
terms of such provision, as modified by the court.

            SECTION 15. AMENDMENTS. This Agreement may be amended or modified only by a
written instrument executed by all the parties hereto.

            SECTION 16. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute but one instrument.

            SECTION 17. HEADINGS. The headings contained in this Agreement and in any
Exhibits appended hereto are for convenience only and shall not be deemed to
affect the interpretation of the provisions of this Agreement.

            SECTION 18. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO ITS CONFLICTS OF
LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

            SECTION 19. INDEPENDENT CONTRACTOR. In performing their responsibilities pursuant to this Agreement, Seller
shall not be deemed to be the agent of Purchaser and Purchaser shall not be
deemed to be the agent of Seller and each party shall at all times take
whatever measures as are necessary to ensure that its status shall be that of
an independent contractor and in no circumstances shall either party be deemed
to be the

12

 

partner, agent or employee of the other. This Agreement is not
intended to create, nor does it create and shall not be construed to create, a
relationship of principal and agent, partner or joint venturer or an
association for profit between Purchaser and Seller. Any amounts ever owing by
Purchaser and Seller pursuant to this Agreement represent contractual
obligations only and are not a loan or debt.

            SECTION 20. NO JOINT VENTURE. Nothing in this Agreement shall be deemed to
create a partnership or joint venture between any of the parties. Except as
expressly set forth herein, no party shall have any authority to bind or commit
the other parties.

            SECTION 21. ENTIRE AGREEMENT. This Agreement is intended to define the full
extent of the legally enforceable undertakings of the parties hereto, and no
related promise or representation, written or oral, which is not set forth
explicitly in this Agreement is intended by either party to be legally binding.
Both parties acknowledge that in deciding to enter into this transaction they
have relied on no representations, written or oral, other than those explicitly
set forth in this Agreement.

            SECTION 22. LIMITATION OF LIABILITY OF OWNER TRUSTEE. Notwithstanding
anything contained herein to the contrary, this instrument has been signed by
Wilmington Trust Company not in its individual capacity but solely in its
capacity as Owner Trustee of the Trust and in no event shall Wilmington Trust
Company in its individual capacity or any beneficial owner of the Trust have
any liability for the representations, warranties, covenants, agreements or
other obligations of the Trust hereunder, as to all of which recourse shall be
had solely to the assets of the Trust.

            SECTION 23. NONPETITION COVENANT. Notwithstanding any prior termination of
this Agreement, HRSI II shall not, prior to the date which is one year and one
day after the final payment or discharge of all securities issued by the
Issuer, acquiesce, petition or otherwise invoke or cause HSBC V to invoke the
process of any Governmental Authority for the purpose of commencing or
sustaining a case against HSBC V under any Federal or state bankruptcy,
insolvency or similar law or appointing a receiver, conservator, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of HSBC V
or any substantial part of its property or ordering the winding-up or
liquidation or the affairs of HSBC V.

[Remainder of Page Intentionally Left Blank]

13

 

     IN WITNESS WHEREOF, the parties hereto have entered into this Agreement as
of the date first written above.

	 	 	 	 	 
	 	HRSI FUNDING, INC. II, as Seller

 	 
	 	By:  	/s/ S.H. Smith
 	 
	 	 	Name:  	S.H. Smith 	 
	 	 	Title:  	Vice President & Assistant
Treasurer 	 
	 

	 	 	 	 	 
	 	HSBC FINANCE CORPORATION

(successor by merger to Household Finance

Corporation) (with respect to Section 5 only)

 	 
	 	By:  	/s/ Edgar D. Ancona
 	 
	 	 	Name:  	Edgar D. Ancona 	 
	 	 	Title:  	Senior Vice President - Treasurer 	 
	 

	 	 	 	 	 
	 	HSBC FUNDING (USA) INC. V, as Purchaser

 	 
	 	By:  	/s/ S.H. Smith
 	 
	 	 	Name:  	S.H. Smith 	 
	 	 	Title:  	Vice President & Assistant
Treasurer 	 
	 

	 	 	 	 	 	 	 
	 	 	HOUSEHOLD PRIVATE LABEL CREDIT CARD
	 	 	MASTER NOTE TRUST I, as Issuer
	 
	 	 	 	 	 	 
	

	 	By:
	 	Wilmington Trust Company, not in
its individual capacity but as
Owner Trustee on behalf of the
Household Private Label Credit
Card Master Note Trust I	 	 

	 	 	 	 	 
	 	 	 
	 	By:  	/s/ Rachel L. Simpson	 	 
	 	 	Name: Rachel L. Simpson	 
	 
	 	 	Title: Financial Services Officer  	 
	 

[Signature Page to BSA II (Page 1 of 2)]

 

 

ACKNOWLEDGMENT:

the signatories listed below hereby acknowledge the agreements,

assignments and assumptions set forth herein:

WILMINGTON TRUST COMPANY, not in its individual

capacity but as Owner Trustee
on behalf of the Household

Private Label Credit Card Master Note Trust I

	 	 	 
	By:

	 	     /s/ Rachel L. Simpson
	

	 	

	

	 	Name: Rachel L. Simpson
	

	 	Title: Financial Services Officer
	 
	 	 
	U.S.

	 	BANK NATIONAL ASSOCIATION, as Indenture Trustee
	 
	 	 
	By:

	 	     /s/ Patricia M. Child

Name: Patricia M. Child
	

	 	Title: Vice President

[Signature Page to BSA II (Page 2 of 2)]

 

 

Schedule A

	1.	 	ACCOUNT PROGRAMS

Multi-Merchant Private Label Credit Card Program

	2.	 	SERIES SUPPLEMENTS

Series 2002-1 Indenture Supplement, dated as of March 28, 2002, between
Wilmington Trust Company, not in its individual capacity but as Owner
Trustee on behalf of the Household Private Label Credit Card Master Note
Trust I, and U.S. Bank National Association, not in its individual
capacity, but solely as the Indenture Trustee, as amended.

Series 2002-2 Indenture Supplement, dated as of March 28, 2002, between
Wilmington Trust Company, not in its individual capacity but as Owner
Trustee on behalf of the Household Private Label Credit Card Master Note
Trust I, and U.S. Bank National Association, not in its individual
capacity, but solely as the Indenture Trustee, as amended.

Series 2002-3 Indenture Supplement, dated as of November 25, 2002,
between Wilmington Trust Company, not in its individual capacity but as
Owner Trustee on behalf of the Household Private Label Credit Card Master
Note Trust I, and U.S. Bank National Association, not in its individual
capacity, but solely as the Indenture Trustee, as amended.

A-1exv4w1

 

EXHIBIT 4.1

AMENDMENT NO. 5

TO THE

MASTER POOLING AND SERVICING AGREEMENT

          This AMENDMENT NO. 5, dated as of December 29, 2004 (the “Amendment”), to
the MASTER POOLING AND SERVICING AGREEMENT, dated as of August 21, 1997 (as
amended and supplemented, the “Master Pooling and Servicing Agreement”), is by
and among HRSI FUNDING, INC. III, a Delaware corporation, as Successor
Transferor (“HRSI III or the “Successor Transferor”), HSBC FINANCE CORPORATION
(successor by merger to Household Finance Corporation), a Delaware corporation,
as Successor Servicer (“HBFC” or the “Successor Servicer”), and WELLS FARGO
BANK, NATIONAL ASSOCIATION, a national banking association, as trustee (the
“Trustee”). Capitalized terms used and not otherwise defined herein shall have
the meanings ascribed to them in the Master Pooling and Servicing Agreement.

RECITALS:

          WHEREAS, the parties hereto (collectively, the “Parties”) desire to amend
the Master Pooling and Servicing Agreement in accordance with the terms hereof;

          WHEREAS, the Parties have taken each and all of the actions required to
properly amend the Master Pooling and Servicing Agreement in accordance with
its terms; and

          NOW, THEREFORE, in consideration of the mutual promises contained herein
and in the Master Pooling and Servicing Agreement, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties, intending to be legally bound hereby, hereto agree
as follows:

Section 1. Amendments to the Master Pooling and Servicing Agreement.

          1.1 The definition of “Receivables Purchase Agreements” in Section 1.1. of
the Master Pooling and Servicing Agreement is amended in its entirety to read
as follows:

“Receivables Purchase Agreements” shall mean (i) the receivables
purchase agreement between Household Bank and any successor or
permitted assign, as seller, and Household Receivables Acquisition
Company and any successor or permitted assign, as purchaser, dated
as of April 15, 2003, as amended; and (ii) the receivables
purchase agreement between Household Receivables Acquisition
Company and any successor or permitted assign, as seller, and HRSI
Funding, Inc. III and any successor or permitted assign, as
purchaser, dated as of April 15, 2003, as amended.”

 

 

          1.2 Subsection 7.2(a)(i) of the Master Pooling and Servicing Agreement
shall be amended in its entirety to read as follows:

          “The Transferor shall not consolidate with, merge into any other business
entity, convey or transfer its properties and assets substantially as an
entirety to any Person or assign its rights, obligations and interests
hereunder to any Person, unless:

     (i) the entity formed by such consolidation or into which the
Transferor is merged or the Person which acquires by conveyance or
transfer the properties and assets of the Transferor substantially as an
entirety shall be organized and existing under the laws of the United
States of America or any State or the District of Columbia, a national
banking association or a state banking corporation or other depository
entity whose deposits are insured by the FDIC which is not subject to the
bankruptcy laws of the United States of America, or a single purpose,
bankruptcy remote entity that is organized under the laws of any state of
the United States, in each case, which is an Affiliate of the Company or
its successors or assigns, and meets the Rating Agency Condition and if
the Transferor is not the surviving entity, shall expressly assume, by an
agreement supplemental hereto, executed and delivered to the Trustee, in
form satisfactory to the Trustee, the performance of every covenant and
obligation of the Transferor, as applicable, hereunder and shall benefit
from all the rights granted to the Transferor, as applicable, hereunder.
To the extent that any right, covenant or obligation of the Transferor is
inapplicable to the successor entity, such successor entity shall be
subject to such covenant or obligation, or benefit from such right, as
would apply, to the extent practicable, to such successor entity;

Section 2. Representations and Warranties.

          (a) Each of the Parties hereby represents and warrants severally and not
jointly that, with respect to each Party:

     (i) Its execution, delivery and performance of this Amendment are
within its corporate powers, have been duly authorized by all necessary
corporate action and do not require any consent or approval which has not
been obtained.

     (ii) This Amendment is the legal, valid and binding obligation of
it, enforceable in accordance with its terms, except as enforcement may
be limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors’ rights generally or by general
equitable principles.

          (b) Each of the Successor Transferor, the Successor Servicer and the
Trustee hereby further represents and warrants that:

     (i) The Master Pooling and Servicing Agreement as amended hereby is
the legal, valid and binding obligation of it, enforceable in accordance
with its terms, except as enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting
creditors’ rights generally or by general equitable principles.

2

 

Section 3. Conditions Precedent.

          This Amendment shall become effective as of its date, provided that all of
the following conditions are first met:

          (a) HBFC, as Successor Servicer, shall have furnished the Trustee with an
Officer’s Certificate to the effect that this Amendment will not materially and
adversely affect the interests of any Certificateholders;

          (b) The Amendment will not cause the Trust to be characterized as a
corporation for Federal income tax purposes or otherwise have a material
adverse effect on the Federal income taxation of any Series;

          (c) Household Finance Corporation (as a result of a merger, HSBC Finance
Corporation is the successor thereto), as Successor Servicer, shall have given
each Rating Agency ten (10) Business Days’ prior written notice of this
Amendment and shall have received written confirmation from each Rating Agency
rating the affected Series that the Rating Agency Condition will be met, where
appropriate;

          (d) The Trustee shall receive and shall be permitted to rely upon an
Opinion of Counsel from Dewey Ballantine LLP to the effect that the conditions
and requirements of Section 13.1(a) of the Master Pooling and Servicing
Agreement have been satisfied; and

          (e) HRSI III, as Successor Transferor, shall deliver prior written notice
of this Amendment to each Rating Agency.

Section 4. Miscellaneous.

          (a) Applicability of the Master Pooling and Servicing Agreement.

          In all respects not inconsistent with the terms and provisions of this
Amendment, the provisions of the Master Pooling and Servicing Agreement are
hereby ratified, approved and confirmed.

          (b) Headings.

          The captions in this Amendment are for convenience of reference only and
shall not define or limit the provisions hereof.

          (c) Counterparts.

          This Amendment may be executed in counterparts by facsimile or otherwise,
each of which shall constitute an original, but all of which, when taken
together, shall constitute but one and the same instrument.

          (d) Governing Law.

          THIS AMENDMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS,
AND OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.

[Remainder of Page Intentionally Left Blank]

3

 

          IN WITNESS WHEREOF, the Parties have duly executed this Amendment as of
the date first set forth above.

	 	 	 	 	 
	 	 	HRSI FUNDING, INC. III,
	 	 	as Successor Transferor
	 
	 	 	 	 
	

	 	By:
	 	/s/ S.H. Smith
	

	 	 	 	

	

	 	 	 	Name: S.H. Smith
	

	 	 	 	Title: Vice President & Assistant
	

	 	 	 	Treasurer
	 
	 	 	 	 
	 	 	HSBC FINANCE CORPORATION, as 
	 	 	Successor Servicer (successor by merger to
	 	 	Household Finance Corporation)
	 
	 	 	 	 
	

	 	By:
	 	/s/ Edgar D. Ancona
	

	 	 	 	

	

	 	 	 	Name: Edgar D. Ancona
	

	 	 	 	Title: Executive Vice President -
	

	 	 	 	Treasurer
	 
	 	 	 	 
	 	 	WELLS FARGO BANK, NATIONAL ASSOCIATION,
	 	 	as Trustee
	 
	 	 	 	 
	

	 	By:
	 	/s/ Sue Dignan
	

	 	 	 	

	

	 	 	 	Name: Sue Dignan
	

	 	 	 	Title: Assistant Vice President

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