Document:

Exhibit 10.2

 

Execution Copy

 

MASTER RECEIVABLES PURCHASE
AGREEMENT

 

between

 

HOUSEHOLD AUTOMOTIVE FINANCE
CORPORATION,

as Seller

 

and

 

HOUSEHOLD AUTO RECEIVABLES
CORPORATION,

as Purchaser

 

 

dated as of

 

November 18, 2002

 

 

TABLE OF CONTENTS

 

	
   

  	
  Page

  
	
   

  	
   

  
	
  ARTICLE I DEFINITIONS

  	
  1

  
	
   

  	
   

  	
   

  
	
  SECTION 1.1

  	
  General

  	
  1

  
	
  SECTION 1.2

  	
  Specific
  Terms

  	
  1

  
	
  SECTION 1.3

  	
  Other
  Definitional Provisions

  	
  2

  
	
  SECTION 1.4

  	
  Certain
  References

  	
  2

  
	
  SECTION 1.5

  	
  No
  Recourse

  	
  3

  
	
   

  	
   

  	
   

  
	
  ARTICLE II CONVEYANCE OF THE RECEIVABLES AND THE OTHER
  CONVEYED PROPERTY

  	
  3

  
	
   

  	
   

  	
   

  
	
  SECTION 2.1

  	
  Purchase.

  	
  3

  
	
   

  	
   

  	
   

  
	
  ARTICLE III REPRESENTATIONS AND WARRANTIES

  	
  5

  
	
   

  	
   

  	
   

  
	
  SECTION 3.1

  	
  Representations
  and Warranties of Seller

  	
  5

  
	
  SECTION 3.2

  	
  Representations
  and Warranties of HARC

  	
  7

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV COVENANTS OF SELLER

  	
  8

  
	
   

  	
   

  	
   

  
	
  SECTION 4.1

  	
  Seller’s Covenants

  	
  8

  
	
   

  	
   

  	
   

  
	
  ARTICLE V REPURCHASES

  	
  9

  
	
   

  	
   

  	
   

  
	
  SECTION 5.1

  	
  Repurchase
  of Receivables Upon Breach of Warranty

  	
  9

  
	
  SECTION 5.2

  	
  Reassignment
  of Repurchased Receivables

  	
  10

  
	
  SECTION 5.3

  	
  Waivers

  	
  10

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI MISCELLANEOUS

  	
  11

  
	
   

  	
   

  	
   

  
	
  SECTION 6.1

  	
  Liability
  of Seller

  	
  11

  
	
  SECTION 6.2

  	
  Amendment

  	
  11

  
	
  SECTION 6.3

  	
  GOVERNING
  LAW

  	
  11

  
	
  SECTION 6.4

  	
  Notices

  	
  11

  
	
  SECTION 6.5

  	
  Severability
  of Provisions

  	
  11

  
	
  SECTION 6.6

  	
  Assignment

  	
  11

  
	
  SECTION 6.7

  	
  Acknowledgment
  and Agreement of Seller

  	
  12

  
	
  SECTION 6.8

  	
  Further
  Assurances

  	
  12

  
	
  SECTION 6.9

  	
  No
  Waiver; Cumulative Remedies

  	
  12

  
	
  SECTION 6.10

  	
  Counterparts

  	
  12

  
	
  SECTION 6.11

  	
  Binding
  Effect; Third-Party Beneficiaries

  	
  12

  
	
  SECTION 6.12

  	
  Merger
  and Integration

  	
  13

  
	
  SECTION 6.13

  	
  Heading

  	
  13

  
	
  SECTION 6.14

  	
  Schedules
  and Exhibits

  	
  13

  
	
  SECTION 6.15

  	
  Survival
  of Representations and Warranties

  	
  13

  
	
  SECTION 6.16

  	
  Nonpetition
  Covenant

  	
  13

  

 

i

 

EXHIBITS

 

	
  EXHIBIT A

  	
  Form of
  Receivables Purchase Agreement Supplement

  	
  A-1

  
	
   

  	
   

  	
   

  
	
  SCHEDULE A

  	
  Schedule of
  Related Master Sale and Servicing Agreements

  	
   

  

 

ii

 

THIS MASTER RECEIVABLES
PURCHASE AGREEMENT, dated as of November 18, 2002, executed between
Household Auto Receivables Corporation, a Nevada corporation, as purchaser (“HARC”)
and Household Automotive Finance Corporation, a Delaware corporation, as seller
(“Seller”).

 

W I T N E S S E T H :

 

WHEREAS, HARC has agreed
to purchase from time to time from Seller, and Seller, pursuant to this
Agreement, has agreed to transfer from time to time to HARC the Receivables and
the Other Conveyed Property.

 

WHEREAS, HARC intends
from time to time to transfer Receivables and Other Conveyed Property to
different Delaware business trusts, each of which will issue notes and
certificates secured by the Receivables and Other Conveyed Property.

 

NOW, THEREFORE, in consideration
of the premises and the mutual agreements hereinafter contained, and for other
good and valuable consideration, the receipt of which is acknowledged, HARC and
Seller, intending to be legally bound, hereby agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

SECTION 1.1         General.  Capitalized terms used herein without
definition shall have the respective meanings assigned to such terms in the
related Master Sale and Servicing Agreement.

 

SECTION 1.2         Specific Terms.  Whenever used in this Agreement, the following
words and phrases, unless the context otherwise requires, shall have the
following meanings:

 

“Agreement” means
this Master Receivables Purchase Agreement and all amendments hereof and
supplements hereto.

 

“Conveyance” shall
have the meaning specified in Section 2.1.

 

“Conveyance Papers”
shall have the meaning specified in Section 3.1.

 

“Cutoff Date”
shall have the meaning assigned to such term in the applicable
Series Supplement or Receivables Purchase Agreement Supplement.

 

“Master Sale and
Servicing Agreement” means each agreement so entitled set forth on
Schedule A among HARC, Household Finance Corporation, as Master Servicer,
the indenture trustee named therein and the issuer named therein, each as
supplemented by a related series supplement among HARC, Household Finance

 

1

 

Corporation, as
Master Servicer, the indenture trustee named therein, the issuer named therein
and the owner trustee named therein, pursuant to which Receivables are conveyed
by HARC to such issuer.

 

“Other Conveyed
Property” means all money, instruments, rights and other property that are
subject or intended to be subject to the lien and security interest of the
related Indenture (including all property and interests granted to the related
Indenture Trustee), including all proceeds thereof, other than the Receivables.

 

“Purchase Date”
means, with respect to Receivables, any date, on which Receivables are to be
purchased by HARC pursuant to this Agreement and a Receivables Purchase
Agreement Supplement is executed and delivered by Seller and HARC.

 

“Receivables”
means the Receivables listed on the Schedules of Receivables attached to a
Receivables Purchase Agreement Supplement as Schedule A.

 

“Receivables Purchase
Agreement Supplement” means an agreement between HARC and Seller in
connection with a Series, substantially in the form of Exhibit A hereto.

 

“Repurchase Event”
means a determination pursuant to Section 3.2 of the related Master Sale
and Servicing Agreement that HARC is required to repurchase a Receivable.

 

“Schedule of
Receivables” means a schedule of Receivables sold and transferred
pursuant to this Agreement and a related Receivables Purchase Agreement
Supplement, which is attached as Schedule A to such related Receivables
Purchase Agreement Supplement.

 

SECTION 1.3         Other Definitional Provisions.

 

(a)                                  All
terms defined in this Agreement shall have the defined meanings when used in
any certificate, other documents, or Conveyance Paper made or delivered
pursuant hereto unless otherwise defined herein.

 

(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
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.

 

(c)                                  All
determinations of the principal or finance charge balance of any Receivable,
and of any collections thereof, shall be made in accordance with the related
Master Sale and Servicing Agreement.

 

SECTION 1.4         Certain References.  All references to the Principal Balance of a
Receivable as of any date of determination shall refer to the close of

 

2

 

business on such day, or
as of the first day of a Collection Period shall refer to the opening of
business on such day.  All references to
the last day of a Collection Period shall refer to the close of business on
such day.

 

SECTION 1.5         No Recourse.  Without limiting the obligations of Seller
hereunder, no recourse may be taken, directly or indirectly, under this
Agreement or any certificate or other writing delivered in connection herewith
or therewith, against any stockholder, officer or director, as such, of Seller,
or of any predecessor or successor of Seller.

 

ARTICLE II

 

CONVEYANCE OF THE RECEIVABLES

AND THE OTHER CONVEYED PROPERTY

 

SECTION 2.1         Purchase.

 

(a)                                  By
execution of this Agreement and subject to the terms and conditions of this
Agreement, on a Purchase Date with respect to a Receivables Purchase Agreement
Supplement, Seller shall sell, transfer, assign, and otherwise convey to HARC
(each, a “Conveyance”) without recourse (but without limitation of its
obligations in this Agreement), and HARC shall purchase, all right, title and
interest of Seller in and to:

 

(i)                                     each
and every Receivable listed from time to time on Schedule A to such
related Receivables Purchase Agreement Supplement and all monies paid or
payable thereon or in respect thereof on or after the related Cutoff Date
(including amounts due on or before the related Cutoff Date but received by
Seller after such date);

 

(ii)                                  the
security interests in the related Financed Vehicles granted by Obligors
pursuant to such Receivables and any other interest of Seller in such Financed
Vehicles;

 

(iii)                               all rights of Seller
against Dealers pursuant to Dealer Agreements or Dealer Assignments related to
such Receivables;

 

(iv)                              any
proceeds and the right to receive proceeds with respect to such Receivables
repurchased by a Dealer pursuant to a Dealer Agreement;

 

(v)                                 all
rights of Seller under any Service Contracts on the related Financed Vehicles;

 

(vi)                              any
proceeds and the right to receive proceeds with respect to the related
Receivables from claims on any physical damage, loss, credit life or disability
insurance policies, if any, covering Financed Vehicles or Obligors, including
rebates of insurance premiums relating to

 

3

 

the Receivables and any proceeds from the liquidation of such
Receivables;

 

(vii)                           all items contained in the
Receivables Files with respect to such Receivables and any and all other
documents that Seller or Master Servicer keeps on file in accordance with its
customary procedures relating to the related Receivables, or the related
Financed Vehicles or Obligor;

 

(viii)                        all property (including the
right to receive future Net Liquidation Proceeds) that secures each related
Receivable and that has been acquired by or on behalf of HARC pursuant to the
liquidation of such Receivable; and

 

(ix)                                all
present and future claims, demands, causes and choses in action in respect of
any or all of the foregoing and all payments on or under and all proceeds of
every kind and nature whatsoever in respect of any or all of the foregoing,
including all proceeds of the conversion, voluntary or involuntary, into cash
or other liquid property, all cash proceeds, accounts, accounts receivable,
notes, drafts, acceptances, chattel paper, checks, deposit accounts, insurance
proceeds, condemnation awards, rights to payment of any and every kind and
other forms of obligations and receivables, instruments and other property which
at any time constitute all or part of or are included in the proceeds of any of
the foregoing.

 

(b)                                 Simultaneously
with each Conveyance, HARC will pay or cause to be paid to or upon the order of
Seller an amount equal to 100% of the Principal Balance of the related
Receivables on the books and records of Seller, plus the present value of
anticipated excess spread on such Receivables, discounted to take into account
any uncertainty as to future performance matching historical performance,
servicing fees, delinquencies, pay down rates, yield and such other factors as
may be mutually agreed upon between Seller and HARC, by wire transfer of
immediately available funds.

 

(c)                                  In
connection with each Conveyance, Seller further agrees that it will, at its own
expense, on or prior to the related Purchase Date (i) indicate in its
computer files or microfiche lists that the related Receivables have been
conveyed to HARC in accordance with this Agreement and the related Receivables
Purchase Agreement Supplement, and have been conveyed by HARC to the related
Indenture Trustee pursuant to the related Master Sale and Servicing Agreement
for the benefit of the related Secured Parties by including in such computer
files and microfiche lists the code identifying each such Receivable and
(ii) deliver to HARC (or to the related Indenture Trustee if HARC so
directs) a computer file or microfiche list containing a true and complete list
of all such Receivables specifying for each such Receivable, as of the Cutoff
Date (A) its account number and (B) the outstanding balance of such
Receivable.  Such computer files or
microfiche lists shall be delivered to HARC (or to the related Indenture
Trustee if so directed by HARC) and marked as proprietary and
confidential.  Seller further agrees not

 

4

 

to alter the code referenced in clause (i) of
this paragraph with respect to any Receivable during the term of this
Agreement.

 

(d)                                 The
parties hereto intend that each Conveyance shall constitute a sale of the
Seller’s right, title and interest in and to the related Receivables and Other
Conveyed Property, conveying good title free and clear of any liens, claims,
encumbrances or rights of others from Seller to HARC and that the such
Receivables and Other Conveyed Property subject to such Conveyance shall not be
part of Seller’s estate in the event of the 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 each Conveyance of Receivables and Other
Conveyed Property shall constitute a purchase and sale of such Receivables and
Other Conveyed Property and not a loan. 
In the event, however, that a court of competent jurisdiction were to
hold that the transactions evidenced hereby constitute a loan and not a
purchase and sale, it is the intention of the parties hereto that this
Agreement shall constitute a security agreement under applicable law, and that
Seller shall be deemed to have granted to HARC a first priority perfected
security interest in all of such Seller’s right, title and interest in and to
the Receivables and Other Conveyed Property.

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES

 

SECTION 3.1         Representations and Warranties of
Seller.  Seller makes the
representations and warranties set forth in Section 3.1(b) through
(h) as of each Purchase Date on which HARC relies in purchasing the
Receivables and the Other Conveyed Property subject to the related Conveyance
and in transferring the Receivables and the Other Conveyed Property to the
Issuer under the related Master Sale and Servicing Agreement.  The representations set forth in
Section 3.1(a), on which HARC relies in purchasing the Receivables and the
Other Conveyed Property subject to the related Conveyance and in transferring
the Receivables and the Other Conveyed Property to the Issuer under the related
Master Sale and Servicing Agreement, are made with respect to Receivables and
Other Conveyed Property conveyed hereunder, as of the execution and delivery of
the related Receivables Purchase Agreement Supplement, but shall, together with
the representations and warranties set forth in
Section 3.1(b) through (h), survive the sale, transfer and assignment
of the Receivables and the Other Conveyed Property hereunder, and the sale,
transfer and assignment thereof by HARC to the Issuer under each Master Sale
and Servicing Agreement.  Seller and HARC
agree that HARC will assign to Issuer all HARC’s rights under this Agreement
and each Receivables Purchase Agreement Supplement and that the Indenture
Trustee will thereafter be entitled to enforce this Agreement and each
Receivables Purchase Agreement Supplement against Seller in the Indenture
Trustee’s own name on behalf of the Securityholders.

 

(a)                                  Eligibility
Criteria.  Each of the Receivables
which is to be pledged as collateral for a Series of Notes will satisfy
the applicable Eligibility Criteria set forth in, or to be set forth in,
Schedule I to the Series Supplement establishing such Series.

 

5

 

(b)                                 Organization
and Good Standing.  Seller 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.

 

(c)                                  Due
Obligation.  Seller 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 Receivable unenforceable by Seller, HARC or
any Trust and (ii) have a material adverse effect on any Secured Parties.

 

(d)                                 Due
Authorization.  The execution,
delivery and performance of this Agreement and any other document or instrument
delivered pursuant hereto (such other documents and instruments, including, but
not limited to, the Receivables Purchase Agreement Supplement collectively, the
“Conveyance Papers”) and the consummation 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 Seller and constitute or will
constitute the legal, valid and binding obligation of Seller, enforceable in
accordance with their terms.

 

(e)                                  No
Conflict.  The execution and delivery
of this Agreement and the Conveyance Papers, the performance of the
transactions contemplated by this Agreement and the Conveyance Papers, and the
fulfillment of the terms of this Agreement and the Conveyance Papers applicable
to Seller 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 Seller is a
party or by which it or any of its properties are bound.

 

(f)                                    No
Violation.  The execution, delivery
and performance of this Agreement and the Conveyance Papers and the fulfillment
of the terms contemplated herein and therein applicable to Seller will not
conflict with or violate any requirements of law applicable to Seller.

 

(g)                                 No
Proceedings.  There are no
proceedings or investigations pending or, to the best knowledge of Seller,
threatened against Seller, before any court, regulatory body, administrative
agency or other tribunal or governmental instrumentality (i) asserting the
invalidity of this Agreement or the Conveyance Papers, (ii) seeking to
prevent the consummation of any of the transactions contemplated by this
Agreement or the Conveyance Papers, (iii) seeking any determination or
ruling that, in the reasonable judgment of Seller, would materially and
adversely affect the performance by Seller 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 any Trust under United States Federal, Nevada or
California income tax systems.

 

6

 

(h)                                 All
Consents.  All authorizations,
consents, orders, approvals, registrations or declarations with, or of, any
Governmental Authority required to be obtained, effected or given by Seller in
connection with the execution and delivery by Seller of this Agreement or the
Conveyance Papers and the performance of the transactions contemplated by this
Agreement or the Conveyance Papers by Seller have been duly obtained, effected
or given and are in full force and effect.

 

SECTION 3.2         Representations and Warranties of
HARC.  HARC makes the representations
and warranties set forth in Section 3.2 (a) through (f) as of
each Purchase Date, on which Seller relies in selling, assigning, transferring
and conveying the Receivables and the Other Conveyed Property subject to the
related conveyance to HARC hereunder. 
The representations are made with respect to Receivables and Other
Conveyed Property conveyed hereunder, as of the execution and delivery of the
related Receivables Purchase Agreement Supplement, but shall survive the sale,
transfer and assignment of the Receivables and the Other Conveyed Property
hereunder and the sale, transfer and assignment thereof by HARC to the related
Issuer under each Master Sale and Servicing Agreement.

 

(a)                                  Organization
and Good Standing.  HARC is a
corporation duly organized and validly existing under the laws of the State of
Nevada 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 and the Conveyance Papers.

 

(b)                                 Due
Authorization.  The execution and
delivery of this Agreement and the Conveyance Papers and the consummation of
the transactions provided for in this Agreement and the Conveyance Papers have
been duly authorized by HARC by all necessary corporate action on the part of
HARC.

 

(c)                                  No
Conflict.  The execution and delivery
of this Agreement and the Conveyance Papers, the performance of the
transactions contemplated by this Agreement and the Conveyance Papers, and the
fulfillment 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 HARC is a party or by which it or its properties is bound.

 

(d)                                 No
Violation.  The execution, delivery
and performance of this Agreement and the Conveyance Papers by HARC and the
fulfillment of the terms contemplated herein and therein applicable to HARC
will not conflict with or violate any requirements of law applicable to HARC.

 

(e)                                  No
Proceeding.  There are no proceedings
or investigations pending or, to the best knowledge of HARC, threatened against
HARC, before any court, regulatory body, administrative agency, or other
tribunal or governmental instrumentality (i) asserting the invalidity of
this Agreement or the Conveyance Papers, (ii) seeking to

 

7

 

prevent the consummation of any of the transactions
contemplated by this Agreement or the Conveyance Papers, (iii) seeking any
determination or ruling that, in the reasonable judgment of HARC, would
materially and adversely affect the performance by HARC of its obligations under
this Agreement or the Conveyance Papers or (iv) seeking any determination
or ruling that would materially and adversely affect the validity or
enforceability of this Agreement or the Conveyance Papers.

 

(f)                                    All
Consents.  All authorizations,
consents, orders or approvals of or registrations or declarations with any
Governmental Authority required to be obtained, effected or given by HARC in
connection with the execution and delivery by HARC of this Agreement and the
Conveyance Papers and the performance of the transactions contemplated by this
Agreement and the Conveyance Papers or the fulfillment of the terms of this
Agreement and the Conveyance Papers by HARC have been duly obtained.

 

In the event of any
breach of a representation and warranty made by HARC hereunder, Seller
covenants and agrees that it will not take any action to pursue any remedy that
it may have hereunder, in law, in equity or otherwise, until a year and a day
have passed since the date on which all Notes and Certificates issued by any
Trust have been paid in full.  Seller and
HARC agree that damages will not be an adequate remedy for such breach and that
this covenant may be specifically enforced by HARC, the related Issuer or by
the related Indenture Trustee on behalf of the related Secured Parties and the
related Owner Trustee on behalf of the related Certificateholders.  Seller agrees that with respect to its
obligations in connection with a Repurchase Event it will exercise no rights of
offset with respect to any claims it may have against HARC.

 

ARTICLE IV

 

COVENANTS OF SELLER

 

SECTION 4.1         Seller’s Covenants.  Seller hereby covenants and agrees with HARC
as follows:

 

(a)                                  Receivables
Not To Be Evidenced by Promissory Notes. 
Seller will take no action to cause any Receivable to be evidenced by
any instrument (as defined in the UCC).

 

(b)                                 Security
Interests.  Except for the
conveyances hereunder or as otherwise provide herein, Seller will not sell,
pledge, assign or transfer to any other Person, or take any other action
inconsistent with HARC’s ownership of the Receivables and Other Conveyed
Property or grant, create, incur, assume or suffer to exist any Lien on any
Receivable or any Other Conveyed Property, whether now existing or hereafter
created, or any interest therein, and Seller shall not claim any ownership
interest in the Receivables or any Other Conveyed Property and shall defend the
right, title and interest of HARC in and to the Receivables and Other Conveyed
Property, whether now existing or hereafter created, against all claims of
third parties claiming through or under Seller.

 

8

 

(c)                                  Security’s
Interest.  Except for the conveyances
hereunder and in connection with any transaction permitted pursuant to
Section 6.6, Seller hereby agrees not to transfer, assign, exchange or
otherwise convey or pledge, hypothecate or otherwise grant a security interest
in the Receivables or any Other Conveyed Property and any such attempted
transfer, assignment, exchange, conveyance, pledge, hypothecation or grant
shall be void.

 

(d)                                 Delivery
of Collections or Recoveries.  In the
event that Seller receives collections or recoveries with respect to the
Receivables, Seller agrees to pay to HARC (or to the Master Servicer if HARC so
directs) all such collections and recoveries to the extent such amounts are
payable to HARC as soon as practicable after receipt thereof.

 

(e)                                  Notice
of Liens.  Seller shall notify HARC
promptly after becoming aware of any Lien on any Receivable or any Other
Conveyed Property other than the conveyances hereunder.

 

(f)                                    Documentation
of Transfer.  Seller shall undertake
to file the documents which would be necessary to perfect and maintain the
transfer of the security interest in and to the Receivables and Other Conveyed
Property.

 

(g)                                 Approval
of Office Records.  Seller shall
cause this Agreement to be duly approved by Seller’s Board of Directors, and
Seller shall maintain this Agreement as a part of the official records of
Seller for the term of this Agreement.

 

(h)                                 Maintenance
of Security Interests in Vehicles. 
In the event that the assignment of a Receivable to HARC or any assignee
thereof is insufficient, without a notation on the related Financed Vehicle’s
certificate of title, or without fulfilling any additional administrative
requirements under the laws of the state in which the Financed Vehicle is
located, to perfect a security interest in the related Financed Vehicle in
favor of HARC or any assignee thereof, Seller hereby agrees that the
designation of Seller or any Affiliate of Seller as the secured party on the
certificate of title is in its capacity as agent of HARC or the agent of any
assignee of HARC for such limited purpose.

 

ARTICLE V

 

REPURCHASES

 

SECTION 5.1         Repurchase of Receivables Upon
Breach of Warranty.  Upon the
occurrence of a Repurchase Event, Seller shall, unless the breach which is the
subject of such Repurchase Event shall have been cured in all material
respects, repurchase the Receivable relating thereto from the related Issuer
under the related Master Sale and Servicing Agreement by the last day of the
first full calendar month following the discovery of such breach by Seller or
receipt by Seller of notice of such breach from any of the Master Servicer,
HARC, a Trust Officer of the related Indenture Trustee or the related Owner
Trustee and, simultaneously with the repurchase of the Receivable, Seller shall
deposit the Repurchase Amount in full, without deduction or offset, in the
Collection Account, pursuant to Section 3.2 of the related Master Sale and

 

9

 

Servicing Agreement.  It is understood and agreed that, except as
set forth in Section 6.1 hereof, the obligation of Seller to repurchase
any Receivable, as to which a breach occurred and is continuing, shall, if such
obligation is fulfilled, constitute the sole remedy against Seller for such
breach available to HARC, the related Issuer, the related Secured Parties, the
related Certificateholders, the related Indenture Trustee on behalf of the
related Noteholders or the related Owner Trustee on behalf of the related
Certificateholders.  The provisions of
this Section 5.1 are intended to grant the related Indenture Trustee or
the related Issuer a direct right against Seller to demand performance
hereunder, and in connection therewith, Seller waives any requirement of prior
demand against HARC with respect to such repurchase obligation.  Any such repurchase shall take place in the
manner specified in Section 3.2 of the related Master Sale and Servicing
Agreement.  Notwithstanding any other
provision of this Agreement or the related Master Sale and Servicing Agreement
to the contrary, the obligation of Seller under this Section shall not
terminate upon a termination of Household Finance Corporation as Master Servicer
under the related Master Sale and Servicing Agreement and shall be performed in
accordance with the terms hereof notwithstanding the failure of the Master
Servicer or HARC to perform any of their respective obligations with respect to
such Receivable under the related Master Sale and Servicing Agreement.

 

SECTION 5.2         Reassignment of Repurchased
Receivables.  Upon deposit in the
Collection Account of the Repurchase Amount of any Receivable repurchased by
Seller under Section 5.1 hereof, HARC and the related Issuer shall take
such steps as may be reasonably requested by Seller in order to assign to
Seller all of HARC’s and the related Issuer’s right, title and interest in and
to such Receivable and all security and documents and all Other Conveyed
Property conveyed to HARC and the related Issuer directly relating thereto,
without recourse, representation or warranty, except as to the absence of
liens, charges or encumbrances created by or arising as a result of actions of
HARC or the related Issuer.  Such assignment
shall be a sale and assignment outright, and not for security.  If, following the reassignment of a
Repurchased Receivable, in any enforcement suit or legal proceeding, it is held
that Seller may not enforce any such Receivable on the ground that it shall not
be a real party in interest or a holder entitled to enforce the Receivable,
HARC and the related Issuer shall, at the expense of Seller, take such steps as
Seller deems reasonably necessary to enforce the Receivable, including bringing
suit in HARC’s or in the related Issuer’s name.

 

SECTION 5.3         Waivers.  No failure or delay on the part of HARC, or
the related Issuer as assignee of HARC, in exercising any power, right or
remedy under this Agreement shall operate as a waiver thereof, nor shall any
single or partial exercise of any such power, right or remedy preclude any
other or future exercise thereof or the exercise of any other power, right or
remedy.

 

10

 

ARTICLE VI

 

MISCELLANEOUS

 

SECTION 6.1         Liability of Seller.  Seller shall be liable in accordance herewith
only to the extent of the obligations in this Agreement specifically undertaken
by Seller and the representations and warranties of Seller.

 

SECTION 6.2         Amendment.  This Agreement and any Conveyance Papers and
the rights and obligations of the parties hereunder may not be changed orally,
but only by an instrument in writing signed by HARC and Seller in accordance
with this Section 6.2.  This Agreement
and any Conveyance Papers may be amended from time to time by HARC and Seller
only with the prior written consent of all of the Secured Parties.

 

SECTION 6.3         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 6.4         Notices.  All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered at or mailed by registered mail, return receipt requested,
to (a) in the case of Seller, 5855 Copley Drive, San Diego, CA 92111,
Attention:  Chief Operating Officer, with
a copy to 2700 Sanders Road, Prospect Heights, Illinois 60070  Attention: 
Director—Asset Securitization, (b) in the case of HARC, 1111 Town
Center Drive, Las Vegas, Nevada 89134 Attention:  Compliance Officer, with a copy to 2700
Sanders Road, Prospect Heights, Illinois 60070, 
Attention:  Treasurer; 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 6.5         Severability of Provisions.  If any one or more of the covenants,
agreements, provisions, or terms of this Agreement or 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 6.6         Assignment.  Notwithstanding anything to the contrary
contained herein, other than HARC’s assignment of its rights, title, and
interests in, to, and under this Agreement to the Issuer specified in a Master
Sale and Servicing Agreement (which Issuer shall assign such rights, title and
interest in and to this Agreement to the related Indenture Trustee for the
benefit of the related Secured Parties), as contemplated by the Master Sale and
Servicing Agreement and Section 6.7 hereof, the Receivables, the Other
Conveyed Property, this Agreement and all other Conveyance

 

11

 

Papers may not be
assigned by the parties hereto; provided, however, that Seller
shall have the right to assign its rights, title and interests, in to and under
this Agreement to (i) any successor by merger or consolidation, or any Person
which acquires by conveyance, transfer or sale the properties and assets of
Seller or (ii) any Affiliate owned directly or indirectly by Household
International, Inc.  The right
granted in the foregoing proviso is subject to the further condition that any
such successor or other Person shall expressly assume by written agreement, in
form and substance satisfactory to HARC, the obligations of Seller hereunder
and under the Conveyance Papers.

 

SECTION 6.7         Acknowledgment and Agreement of
Seller.  By execution below, Seller
expressly acknowledges and agrees that all of HARC’s right, title, and interest
in, to, and under this Agreement, including, without limitation, all of HARC’s
right title, and interest in and to the Receivables purchased pursuant to this Agreement,
shall be assigned by HARC to an Issuer specified in a Master Sale and Servicing
Agreement and by such Issuer to the related Indenture Trustee for the benefit
of the related Secured Parties, and Seller consents to such assignment.  Additionally, Seller agrees for the benefit
of such Indenture Trustee that any amounts payable by Seller to HARC hereunder
which are to be paid by HARC to such Indenture Trustee for the benefit of the
related Secured Parties shall be paid by Seller, on behalf of HARC, directly to
such 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 6.8         Further Assurances.  HARC and Seller agree to do and perform, from
time to time, any and all acts to authenticate any and further records, to
execute any and further instruments, in each case required or reasonably
requested by the other party more fully to effect the purposes of this
Agreement and the Conveyance Papers, including, without limitation, the
execution of any financing statements or continuation statements or equivalent
documents relating to the Receivables for filing under the provisions of the
UCC or other law of any applicable jurisdiction.

 

SECTION 6.9         No Waiver; Cumulative Remedies.  No failure to exercise and no delay in
exercising, on the part of HARC or Seller, 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.  The rights,
remedies, powers and privileges herein provided are cumulative and not
exhaustive of any rights, remedies, powers and privileges provided by law.

 

SECTION 6.10       Counterparts.  This Agreement and all Conveyance Papers may
be executed in two or more counterparts (and by different parties on separate
counterparts), each of which shall be an original, but all of which together
shall constitute one and the same instrument.

 

SECTION 6.11       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.  Each of the Indenture Trustee and Issuer with
respect to a Master Sale and Servicing Agreement and

 

12

 

the related Owner Trustee
shall be considered a third-party beneficiary of this Agreement.

 

SECTION 6.12       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 6.13       Heading.  The headings are for purposes of reference
only and shall not otherwise affect the meaning or interpretation of any
provision hereof.

 

SECTION 6.14       Schedules and Exhibits.  The schedules and exhibits attached hereto
and referred to herein shall constitute a part of this Agreement and are
incorporated into this Agreement for all purposes.

 

SECTION 6.15       Survival of Representations and
Warranties.  All representations,
warranties and agreements contained in this Agreement or contained in any
Conveyance Paper, shall remain operative and in full force and effect and shall
survive conveyance of the Receivables by HARC to the Issuer pursuant to the
Master Sale and Servicing Agreement and the pledge thereof by the Issuer to the
Indenture Trustee pursuant to the related Indenture and the related
Series Supplement.

 

SECTION 6.16       Nonpetition Covenant.  Until the date which is one year and one day
after payment in full of all the Notes of all Series, neither HARC nor Seller
shall petition or otherwise invoke the process of any court or government
authority for the purpose of commencing or sustaining a case against Seller or
any Issuer under any federal or state bankruptcy, insolvency or similar law or
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator
or other similar official of Seller or any Issuer or any substantial part of
their respective properties, or ordering the winding up or liquidation of the
affairs of Seller or any Issuer.  This
provision shall survive the termination of this Agreement.

 

[Signature Page Follows]

 

13

 

IN WITNESS WHEREOF, the
parties have caused this Master Receivables Purchase Agreement to be duly
executed by their respective officers as of the day and year first above
written.

 

	
   

  	
  HOUSEHOLD AUTOMOTIVE FINANCE

  CORPORATION

  
	
   

  	
  as Seller

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Timothy R. Condon

  	
   

  
	
   

  	
   

  	
  Name: Timothy R. Condon

  
	
   

  	
   

  	
  Title: Executive Vice President &
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HOUSEHOLD AUTO RECEIVABLES

  CORPORATION,

  
	
   

  	
  as Purchaser

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Steven H. Smith

  	
   

  
	
   

  	
   

  	
  Name: Steven H. Smith

  
	
   

  	
   

  	
  Title: Vice President & Assistant
  Treasurer

  

 

14

 

EXHIBIT A

 

FORM OF RECEIVABLES PURCHASE AGREEMENT
SUPPLEMENT

 

Transfer
No.     of Receivables, dated as of
                               ,
pursuant to a Master Receivables Purchase Agreement (the “Purchase Agreement”)
dated as of November 18, 2002, between Household Automotive Finance
Corporation, a Delaware corporation (“Seller”) and Household Auto
Receivables Corporation, a Nevada corporation (“HARC”).

 

W I T N E S S E T H :

 

WHEREAS pursuant to the
Purchase Agreement, Seller wishes to convey Receivables and Other Conveyed
Property to HARC; and

 

WHEREAS, HARC is willing
to accept such conveyance subject to the terms and conditions hereof.

 

NOW, THEREFORE, Seller
and HARC hereby agree as follows:

 

1.                                       Defined Terms.  Capitalized terms used herein shall have the
meanings ascribed to them in the Purchase Agreement unless otherwise defined
herein.

 

“Cutoff Date”
shall mean with respect to the Receivables conveyed hereby, the close of
business on
                          ,
200  .

 

“Master Sale and
Servicing Agreement” means the agreement dated as of
                        ,             
among HARC, Household Finance Corporation, as Master Servicer,
                            ,
as indenture trustee and                             ,
as issuer.

 

“Purchase Date”
shall mean with respect to the Receivables conveyed hereby,
                             ,
200  .

 

“Purchase Price”
shall mean 100% of the Principal Balance of the Receivables on the books and
records of Seller, plus the present value of anticipated excess spread on such
Receivables, discounted to take into account any uncertainty as to future
performance matching historical performance, servicing fees, delinquencies,
paydown rates, yield and such other factors as may be mutually agreed upon by
Seller and HARC.

 

“Transfer Date”
means, with respect to Receivables, the date on which Receivables and Other
Conveyed Property are to be transferred to the Trust pursuant to the Master
Sale and Servicing Agreement.

 

A-1

 

2.                                       Schedule of
Receivables.  Annexed as
Schedule A hereto is a computer file which reflects the Receivables that
constitute the Receivables to be conveyed pursuant to this Agreement on the
Purchase Date.

 

3.                                       Conveyance of
Receivables.  In consideration of
HARC’s delivery to or upon the order of Seller of the Purchase Price, Seller
does hereby sell, transfer, assign, set over and otherwise convey to HARC,
without recourse (except as expressly provided in the Purchase Agreement), all
right, title and interest of Seller in and to:

 

(i)                                     each
and every Receivable listed on Schedule A hereto and all monies paid or
payable thereon or in respect thereof on or after the Cutoff Date (including
amounts due on or before the Cutoff Date but received by Seller after such
date);

 

(ii)                                  the
security interests in the related Financed Vehicles granted by Obligors
pursuant to such Receivables and any other interest of Seller in such Financed
Vehicles;

 

(iii)                               all rights of Seller
against Dealers pursuant to Dealer Agreements or Dealer Assignments related to
such Receivables;

 

(iv)                              any
proceeds and the right to receive proceeds with respect to such Receivables
repurchased by a Dealer pursuant to a Dealer Agreement;

 

(v)                                 all
rights of Seller under any Service Contracts on the related Financed Vehicles;

 

(vi)                              any
proceeds and the right to receive proceeds with respect to the related
Receivables from claims on any physical damage, loss, credit life or disability
insurance policies, if any, covering Financed Vehicles or Obligors, including
rebates of insurance premiums relating to the Receivables and any proceeds from
the liquidation of such Receivables;

 

(vii)                           all items contained in the
Receivables Files with respect to such Receivables and any and all other
documents that Seller or the Master Servicer keeps on file in accordance with
its customary procedures relating to the related Receivables, or the related
Financed Vehicles or Obligor;

 

(viii)                        all property (including the
right to receive future Net Liquidation Proceeds) that secures each related
Receivable and that has been acquired by or on behalf of HARC pursuant to
liquidation of such Receivable;

 

(ix)                                all
present and future claims, demands, causes and choses in action in respect of
any or all of the foregoing and all payments on or under and all proceeds of
every kind and nature whatsoever in respect of any or all of the foregoing,
including all proceeds of the conversion, voluntary or involuntary, into cash
or other liquid property, all cash proceeds, accounts, accounts receivable,
notes, drafts, acceptances, chattel paper, checks, deposit accounts, insurance
proceeds, condemnation awards, rights to payment of any and every kind and

 

A-2

 

other forms of obligations and receivables, instruments and other
property which at any time constitute all or part of or are included in the
proceeds of any of the foregoing.

 

4.                                       Representations
and Warranties of Seller.  As of the
Purchase Date, Seller hereby makes the representations and warranties to HARC
that are set forth in Section 3.1 of the Purchase Agreement with respect
to the Conveyance effected hereby to the same extent as if set forth in full
herein.

 

5.                                       Representations
and Warranties of HARC.  As of the
Purchase Date, HARC hereby makes the representations and warranties to Seller
that are set forth in Section 3.2 of the Purchase Agreement with respect
to the Conveyance effected hereby to the same extent as if set forth in full
herein.  In the event of any breach of a
representation and warranty made by HARC hereunder, Seller covenants and agrees
that it will not take any action to pursue any remedy that it may have
hereunder, in law, in equity or otherwise, until a year and a day have passed
since the date on which all Notes and Certificates issued by the Trust have
been paid in full.  Seller and HARC agree
that damages will not be an adequate remedy for such breach and that this
covenant may be specifically enforced by HARC, the related Issuer or by the
related Indenture Trustee on behalf of the related Secured Parties and the
related Owner Trustee on behalf of the related Certificateholders.

 

6.                                       Conditions
Precedent.  The obligation of HARC to
acquire the Receivables hereunder is subject to the satisfaction, on or prior
to the Purchase Date, of the following conditions precedent:

 

(a)           Representations and Warranties.  Each of the representations and warranties made
by Seller in Section 4 of this Agreement and in Section 3.1 of the
Master Receivables Purchase Agreement shall be true and correct as of the date
of this Agreement and as of the Purchase Date.

 

(b)           Additional Information.  Seller shall have delivered to HARC such
information as was reasonably requested by HARC to satisfy itself as to
(i) the accuracy of the representations and warranties set forth in
Section 4 of this Agreement and in Section 3.1 of the Purchase
Agreement and (ii) the satisfaction of the conditions set forth in this
Section.

 

7.                                       Ratification
of Agreement.  As supplemented by
this Agreement, the Purchase Agreement is in all respects ratified and
confirmed and the Purchase Agreement as so supplemented by this Agreement shall
be read, taken and construed as one and the same instrument.

 

8.                                       Counterparts.  This Agreement may be executed in two or more
counterparts (and by different parties in separate counterparts), each of which
shall be an original but all of which together shall constitute one and the
same instrument.

 

A-3

 

9.                                       Conveyance of
the Receivables and the Other Conveyed Property to the Issuer.  Seller acknowledges that HARC intends,
pursuant to the related Master Sale and Servicing Agreement, to convey the
Receivables and the Other Conveyed Property, together with its rights under
this Agreement, to the related Issuer on the Transfer Date.  The Seller acknowledges and consents to such
conveyance and pledge and waives any further notice thereof and covenants and
agrees that the representations and warranties of the Seller contained in this
Agreement and the rights of HARC hereunder are intended to benefit the related
Issuer, the related Owner Trustee, the related Indenture Trustee, the related
Secured Parties and the related Certificateholders.  In furtherance of the foregoing, the Seller
covenants and agrees to perform its duties and obligations hereunder, in
accordance with the terms hereof for the benefit of the related Issuer, the
related Owner Trustee, the related Indenture Trustee and the related Secured
Parties and that, notwithstanding anything to the contrary in this Agreement,
the Seller shall be directly liable to the related Issuer, the related Owner
Trustee, the related Indenture Trustee and the related Secured Parties
(notwithstanding any failure by the Master Servicer or HARC to perform their
respective duties and obligations hereunder or under any Basic Document) and
that the related Indenture Trustee may enforce the duties and obligations of
Seller under this Agreement against Seller for the benefit of the related
Secured Parties and the related Owner Trustee.

 

10.                                 GOVERNING LAW.  THIS AGREEMENT 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-4

 

IN WITNESS WHEREOF,
Seller and HARC have caused this Purchase Agreement to be duly executed and
delivered by their respective duly authorized officers as of day and the year
first above written.

 

	
   

  	
  HOUSEHOLD AUTOMOTIVE FINANCE

  
	
   

  	
  CORPORATION,

  
	
   

  	
  as Seller

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HOUSEHOLD AUTO RECEIVABLES

  
	
   

  	
  CORPORATION,

  
	
   

  	
  as Purchaser

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

A-5

 

SCHEDULE A

 

SCHEDULE OF RELATED MASTER
SALE AND SERVICING AGREEMENTS

 

(1) Master Sale and Servicing Agreement dated as of
November 18, 2002, among Household Finance Corporation, as Master
Servicer, Household Automotive Trust 2002-3, as Issuer, Household Auto
Receivables Corporation, as Seller and U.S. Bank National Association, as
Indenture Trustee.

 

(2) Master Sale and Servicing Agreement dated as of May 29,
2003, among Household Finance Corporation, as Master Servicer, Household
Automotive Trust 2003-1, as Issuer, Household Auto Receivables Corporation, as
Seller and U.S. Bank National Association, as Indenture Trustee.

 

(3) Master Sale and
Servicing Agreement, dated as of November 26, 2003, among Household
Finance Corporation, as Master Servicer, Household Automotive Trust 2003-2, as
Issuer, Household Auto Receivables Corporation, as Seller and Wells Fargo Bank
Minnesota, National Association, as Indenture Trustee.

 

(4) Master Sale and
Servicing Agreement, dated as of June 22, 2005, among HSBC Finance
Corporation (formerly Household Finance Corporation), as Master Servicer, HSBC
Automotive Trust 2005-1, as Issuer, HSBC Auto Receivables Corporation (formerly
Household Auto Receivables Corporation), as Seller, Wells Fargo Bank, National
Association, as Indenture Trustee and HSBC Bank USA, National Association, as
Administrator.

 

(5) Master Sale and
Servicing Agreement, dated as of July 27, 2005, among HSBC Finance
Corporation, as Master Servicer, HSBC Automotive Trust 2005-2, as Issuer, HSBC
Auto Receivables Corporation, as Seller, U.S. Bank National Association, as
Indenture Trustee and HSBC Bank USA, National Association, as Administrator.

 

(6) Master Sale and
Servicing Agreement, dated as of November 3, 2005, among HSBC Finance
Corporation, as Master Servicer, HSBC Automotive Trust 2005-3, as Issuer, HSBC
Auto Receivables Corporation, as Seller, JPMorgan Chase Bank, N.A., as
Indenture Trustee and HSBC Bank USA, National Association, as Administrator.EXHIBIT 10.15

 

Severance Agreement
Dated August 1, 2005

Between the Company and
Bryan Lampropoulos

 

CONSULTING AGREEMENT AND
RELEASE OF ALL CLAIMS

 

THIS
CONSULTING AGREEMENT AND RELEASE OF ALL CLAIMS (the “Agreement”) is entered
into between Merit Medical Systems, Inc., a Utah corporation (“Employer”),
and Bryan Lampropoulos (“Consultant”) (together the “Parties”).

 

Definitions

 

Employer:  As used herein, the term “Employer” shall
mean and refer to Merit Medical Systems, Inc., a Utah corporation.

 

Affiliate:  As used herein, the term “Affiliate” shall
mean and refer to any officer, director, shareholder, employee, and/or agent of
Employer; and/or any subsidiary, division, or affiliate of Employer (including
without limitation any officer, director, shareholder, employee, and/or agent
of any such subsidiary, division, or affiliate); and/or any entity (including
without limitation any officer, director, shareholder, employee, and/or agent
of such entity) in which Employer owns, directly or indirectly, a legal or
beneficial interest (whether in whole or in part); and/or any individual or
entity (including without limitation any officer, director, shareholder,
employee, and/or agent of such entity) that owns, directly or indirectly, a
legal or beneficial interest (whether in whole or in part) in Employer.

 

Background

 

Employer
terminated Consultant’s employment, effective August 1, 2005 (the “Termination
Date”).  By this Agreement, and the sums
to be paid for the benefit of Consultant, 
the Parties intend to (1) enter into a consulting agreement
effective August 1, 2005 for a one-year term; and (2) to resolve any
and all disputes of any kind or character, if any, between them, including
without limitation any and all disputes arising from or related to Consultant’s
employment with Employer or any Affiliate, the termination of that employment,
or otherwise.  Accordingly, Employer and
Consultant hereby agree as follows:

 

Agreement

 

1.                                      Consulting
Services.  Employer desires to engage
Consultant to provide certain consulting services that pertain to Employer’s
international and OEM business, including without limitation, providing
pricing, customer information, customer introductions, marketing information,
and product configurations and any other related information reasonably
requested by Employer  (“Consulting
Services”).  Consultant agrees to be
available by telephone upon Employer’s reasonable request for the purpose of
transitioning the international and OEM business (“Professional Services”).  Consultant shall perform his obligations
hereunder as an independent contractor, and nothing contained herein shall be
deemed to create a relationship of employer-employee, master-servant, agency,
partnership or joint venture.  Consultant
shall have no authority to bind Employer to any agreements or other
commitments.  Consultant shall not,
explicitly or implicitly, give any appearance of having specific or apparent
authority to bind Employer to any agreements or other commitments.

 

2.                                      Term.  Consultant agrees to perform the Consulting
Services for a one-year period commencing August 1, 2005 until July 31,
2006 (“Term”).

 

3.                                      Payment to
Consultant.

 

a.               Employer shall pay Consultant the
total sum of Four Hundred Fifty Thousand Dollars ($450,000) during the Term (“Payment
Amount”), payable in 26 equal, bi-weekly installments in the amount of
$17,307.70.  The bi-weekly installments
shall commence on Employer’s first regular payroll date immediately following
the Termination Date and continuing thereafter until paid in full (the “Payout
Period”).  The Payment Amount shall be
calculated as follows:  In consideration
for the promises and covenants of Consultant under

 

 

Sections 7, 8, 9, and 10,
Employer shall pay to Consultant $360,000. 
In consideration for Consulting Services under Section 1, Employer
shall pay Consultant $90,000.

 

b.               If Consultant properly elects
continuation coverage under Employer’s group medical and/or dental insurance
plan pursuant to Sections 601 through 607 of the Consultant Retirement Income
Security Act of 1974, as amended (“COBRA”), Employer will pay that portion of
the premium which Employer paid on behalf of Consultant and Consultant’s
enrolled family members prior to the Termination Date through the earlier of (a) August 31,
2007; (b) the date Consultant first becomes eligible for coverage under
any group health plan maintained by another employer of Consultant or his
spouse; or (c) the date such COBRA continuation coverage otherwise
terminates as to Consultant under the provisions of Employer’s group medical
insurance plan.  Nothing herein shall be
deemed to extend the otherwise applicable maximum period in which COBRA
continuation coverage is provided or supersede the plan provisions relating to
early termination of such COBRA continuation coverage.  Consultant agrees that his portion of the
premium for such coverage, if any, shall be deducted from the payments payable
to Consultant under Section 1.a. above.

 

c.               Payment of any monies to or on
behalf of Employer under this Section 3 shall be subject to all applicable
federal, state and local payroll withholding taxes.

 

d.               Consultant will not be reimbursed
for any expenses incurred in connection with the performance of this Agreement,
unless approved in advance and in writing by an authorized representative of Merit.

 

4.                                      Review and Revocation.  Consultant understands and agrees
that he has 21 days from the date he receives this Agreement to consider the
terms of and to sign this Agreement. 
Consultant understands that, at his sole and absolute discretion, he may
sign this Agreement prior to the expiration of the 21-day period.

 

Consultant
further acknowledges and understands that he may revoke this Agreement for a
period of up to 7 days after he signs it (not counting the day it was signed)
and that the Agreement shall not become effective or enforceable until the 7-day
revocation period has expired.  To revoke
this Agreement, Consultant must give written notice stating that he wishes to
revoke the Agreement to General Counsel, Merit Medical Systems, Inc., 1600
Merit Drive, South Jordan, UT 84095, Telefax: 801/208-4302.  If Consultant mails a notice of revocation to
Employer, it must be postmarked no later than 7 days following the date on
which he signed this Agreement (not counting the day it was signed) or such revocation
shall not be effective.

 

5.                                      Release of All Claims.  In consideration for the payments
stated in Section 3 and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Consultant, for
himself and his heirs, assigns, and all persons and entities claiming by,
through, or under him, hereby irrevocably, unconditionally, and completely
releases, discharges, and agrees to hold Employer and its Affiliates,
individually or in any combination thereof (hereinafter collectively referred
to as “Releasees”), harmless of and from any and all claims, liabilities,
charges, demands, grievances, and causes of action of any kind or nature
whatsoever, including without limitation claims for contribution, subrogation,
or indemnification, whether direct or indirect, liquidated or unliquidated,
known or unknown, which Consultant had, has, or may claim to have against
Releasees (hereinafter collectively referred to as “Claim(s)”).

 

The
release, discharge, and agreement to hold harmless set forth in this Section 5
includes without limitation any Claim(s) that Consultant has, had, or may claim
to have against Releasees (a) for wrongful termination or discharge,
negligent or intentional infliction of emotional distress, breach of express or
implied contract of employment, any other written or oral agreement of any type
or kind, or otherwise, breach of the covenant of good faith and fair dealing,
defamation, breach of privacy, whistleblowing, employment-related torts,
negligence, or personal injury (whether physical or mental); (b) for any
Claim(s) arising under federal or state law, including without limitation Title
VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the
Americans with Disabilities Act, the Age Discrimination in Employment Act, the
Utah Antidiscrimination Act, or any other federal, state, or local law
prohibiting discrimination or harassment on the basis of race, color, religion,
sex, age, national origin, disability, or any other protected group status; (c) for
any Claim(s) arising under the Consultant Retirement Income Security Act (“ERISA”),
(d) for any Claim(s) arising under the Family and Medical Leave Act or any
similar family, medical, school, or other leave law under any Utah state,
county, or city law or ordinance; (e) for any Claim(s) for attorney’s fees
or costs, and (f) for any other Claim(s) in any way related to or arising
out of Consultant’s employment with Employer or the termination of that
employment.

 

Nothing
in this Agreement waives Consultant’s rights, if any, to continue Consultant’s
participation in Employer’s group health insurance plan, as allowed by COBRA
and the terms, conditions, and limitations of the plan.

 

2

 

6.                                      Full and Complete Release.  Consultant understands and agrees that he is
releasing and waiving Claim(s) that he does not know exist or may exist in his
favor at the time he signs this Agreement which, if known by him, would
materially affect his decision to sign this Agreement.  Nonetheless, for the purpose of implementing
a full and complete release and discharge of Releasees, Consultant expressly
acknowledges that the release set forth in Section 3 is intended to
include in its effect, without limitation, all Claim(s) which Consultant does
not know or suspect to exist in his favor and that the release set forth in Section 5
contemplates the extinguishment of any such Claim(s).

 

7.                                      Covenant of Confidentiality.  Consultant agrees that, as a
material term of this Agreement and to protect the goodwill, the Confidential
Information (as defined below), and the business of Employer, Consultant shall
not, from the date of this Agreement through the end of the Payout Period or at
any time thereafter, without the express, prior written consent of the
President of Employer: (i) ever reveal, disclose, furnish, make
accessible, or disseminate any of Employer’s Confidential Information or any
other matter concerning the business affairs of Employer or of any customer or
vendor of Employer or (ii) ever use or exploit any of Employer’s
Confidential Information or any other matter concerning the business affairs of
Employer or of any customer or vendor of Employer for the personal and/or
financial use, gain, or benefit of Consultant or of any other person or entity
or for any other purpose.

 

For
purposes of this Agreement, “Confidential Information” means individually or in
any combination thereof, all names, addresses, telephone numbers, contact
persons, and other identifying and confidential information about persons,
firms, corporations, and/or other entities that are or become customers,
accounts, licensors, vendors, and/or suppliers of goods or services to or of
Employer; customer lists; details of client or consultant contracts; details of
customer usage; non-public pricing policies; operational methods; marketing
plans or strategies; product and program developments and plans; research
projects; technology and technical processes; business acquisition plans;
personnel information and plans, including without limitation compensation and
contract terms; methods of production; inventions; improvements; designs;
original works of authorship; derivative works; formulas; processes;
compositions of matter; computer software and related information, including
without limitation programs, code, concepts, methods, routines, formulas,
algorithms, designs, specifications, architectures, or inventions embodied
therein, as well as all data, documentation, and copyrights related thereto;
patent applications; databases; mask works; trade secrets; know-how; ideas;
service marks; planned or proposed Website ideas and plans, including but not
limited to look and feel; and other intellectual property or proprietary
information rights and any and all rights, applications, extensions and
renewals in connection therewith (either proposed, filed, or in preparation for
filing); and financial information and general confidential business
information of the Employer.  Such
information is confidential and unique, not generally known in the industry,
and gives the Employer a competitive advantage and significantly enhances the
Employer’s goodwill.

 

Notwithstanding
the foregoing, Confidential Information excludes information not protected by
trademark, copyright, patent, or other similar state, federal, or worldwide
protection and that, through no fault of Consultant, is generally known to the
public, is generally employed in the medical device or equipment manufacturing
industry at or after the time Consultant first learns of such information, or
generic information or knowledge which the Consultant would have learned in the
course of similar employment or work elsewhere in the medical device or
equipment manufacturing industry; provided, however, that Consultant shall bear
the burden of proving that any information disclosed or used by Consultant does
not meet the definition of Confidential Information set forth above and/or that
the disclosure or use of Confidential Information occurred through no fault of
Consultant.

 

8.                                      Covenant Not to Provide Services / Solicit
Existing Customers. 
Consultant acknowledges the character of Employer’s business and the
substantial amount of time, money, and effort that Employer has spent and will
spend in recruitment of clients, customers, and/or accounts.  As a material term of this Agreement and to
protect the goodwill, the Confidential Information, and the business of
Employer, Consultant covenants that, from the date of this Agreement for a period
of two (2) years, Consultant shall not, anywhere in the United States,
either individually or on behalf of or with any person or entity, directly or
indirectly (a) provide services relating to the manufacture or sale of
medical devices or equipment of the type and kind manufactured and/or sold by
Employer to any individual or entity that was a customer, client, or account of
Employer at the time Consultant’s employment with Employer terminated or at any
time during two (2) year period immediately preceding such termination, (b) solicit
or otherwise attempt to sell medical devices or equipment of the type and kind
manufactured and/or sold by Employer to any individual or entity that was a
customer, client, or account of Employer at the time Consultant’s employment
with Employer terminated or at any time during the two (2) year period
immediately preceding such termination, (c) solicit or otherwise attempt
to sell medical devices or equipment of the type and kind manufactured and/or
sold by Employer to any individual or entity that was a prospective customer,
client, or account whose business Consultant solicited as a representative of
or on behalf of

 

3

 

Employer or with whom
Consultant became acquainted or whose identity Consultant learned of as a
consequence of his employment with Employer within the six (6) month
period immediately preceding the termination of Consultant’s employment with
Employer, (d) solicit or otherwise deal with any clients, vendors, or
independent contractors of Employer in any manner designed to (or that
reasonably could) divert business from Employer, and/or (e) solicit or
otherwise induce any employee of Employer to terminate his/her employment with
Employer.

 

9.                                      Return of Goods to Employer.  Consultant covenants and represents
that he has returned to Employer all Confidential Information, the cellular
phone provided to him by Employer, all company credit cards, office keys, etc.
that he obtained or that were made available to him as a consequence of his
employment with Employer. 
Notwithstanding the foregoing, Consultant may retain the laptop computer
provided for his use by Employer after Employer has had the opportunity to
erase all Confidential Information or other matters Employer deems appropriate
from such laptop computer.

 

10.                               Limited Covenant Not to
Compete.  As a material term of this Agreement and to
protect the goodwill, the Confidential Information, and/or the business of
Employer, and Employer’s investment in the training and education of
Consultant, Consultant agrees that, during the “Covenant Period” (as defined
below), Consultant shall not, anywhere within the State of Utah, directly or
indirectly, either individually or on behalf of or with any person or entity: (i) compete
with or against Employer or engage in any aspect of the medical device industry
in competition with Employer; (ii) directly or indirectly own, manage,
operate, control, be employed by, or provide management or consulting services
to any person or entity (other than Employer or any affiliate of Employer) that
competes with, or is a competitor of, Employer (“Competing Entity”); (iii) discuss
the possibility of employment or other relationship with any Competing Entity; (iv) render
or provide any services to or for any Competing Entity; or (v) discuss or
otherwise deal with any client or vendor of Employer regarding the extent or
nature of the present or future business of any client or vendor with
Employer.  For purposes of this
Agreement, “Covenant Period” means the period beginning on the date of this
Agreement and continuing for two years (2) years.

 

11.                               Remedies.  In the event that Consultant fails to perform any obligations set forth
in Section 7  “Covenant of
Confidentiality,” Section 8 “Covenant Not to Provide Services / Solicit
Existing Customers,”  Section 10 “Limited
Covenant Not to Compete,” or Section 15 “Nondisparagement,” then
Consultant agrees that he will reimburse Employer for all amounts paid by
Employer.  The foregoing remedies are in
addition to other remedies that may be available to Employer under law.

 

12.                               Resignation as Officer.  Consultant hereby resigns as an
officer of Employer or any Affiliate, effective August 1, 2005.

 

13.                               Wages and Commissions Paid in Full.  Except as specifically set forth in Section 1
above, Consultant acknowledges that he has received all monies due and owing to
Consultant from Employer, including without limitation any monies due and owing
to Consultant for wages, accrued but unused vacation benefits, commissions, or
otherwise and that he has no claim against Employer whatsoever for the payment
of any further wages, commissions, vacation benefits, or other monies except as
specifically set forth in Section 1. 
Consultant acknowledges and agrees that he shall not be eligible for
vacation, sick leave, retirement, life insurance, disability insurance, worker’s
compensation, or any other benefit that is or may become available to employees
of Employer.

 

14.                               Agreement Confidential.  This Agreement is confidential
information owned by Employer.  Consultant
agrees that he shall not disclose the terms of this Agreement except to the
extent required by law.  Notwithstanding
the foregoing, Consultant may disclose the terms of this Agreement to his
spouse, attorney, and/or tax advisor.  If
Consultant discloses the terms of this Agreement to his spouse, attorney,
and/or tax advisor, he will advise such person that, as a condition of such
disclosure, they must not disclose the terms of this Agreement except to the
extent required by law.  Consultant
acknowledges that Employer may be legally required to disclose the terms of
this Agreement.

 

15.                               Nondisparagement.  Consultant covenants that, as an agreed
on material term of this Agreement, he will not make any disparaging remarks
about Employer, or any director, officer, or employee of Employer, and shall
refrain from saying or doing anything that could in any way hold Employer or
any director, officer, or employee of Employer up to disrepute in the eyes of
any other person or entity or that could in any way interfere with Employer’s
current or future business plans or activities.

 

16.                               Not an Admission.  This Agreement does not constitute an
admission by Releasees, and Releasees specifically deny, that Releasees have
violated any contract, law, or regulation or that they, it, or s/he

 

4

 

has discriminated against
Consultant or otherwise infringed on Consultant’s rights and privileges or done
any other wrongful act.

 

17.                               Severability.  If a court of competent jurisdiction shall
find that the provisions of Sections 5,7,8 and 10 of this Agreement are
unenforceable, whether in whole or in part, then Employer shall have the right,
at its sole option and to the extent allowed by applicable law, to rescind this
Agreement and to cease any payments due and/or to recover from Consultant all
sums paid by Employer to Consultant under Section 1 of this
Agreement.  Except as set forth in the
immediately preceding sentence, if any part of this Agreement is found to be
unenforceable, the other provisions shall remain fully valid and
enforceable.  It is the intention and
agreement of the parties that all of the terms and conditions hereof be
enforced to the fullest extent permitted by law.

 

18.                               Entire Agreement.  This Agreement constitutes the entire
integrated understanding between the parties regarding the subject matter
hereof and supersedes all negotiations, representations, prior discussions, and
preliminary agreements between the parties with respect to the subject matter
hereof.  No promise, representation,
warranty, or covenant not included in this Agreement has been or is relied upon
by either party.  Notwithstanding any
statute or case law to the contrary, this Agreement may not be modified except
by a written instrument signed by each of the parties, whether or not such
modification is supported by separate consideration.

 

19.                               Governing Law.  Notwithstanding any conflict of laws
provisions to the contrary, this Agreement shall be governed by the laws of the
State of Utah, and each party hereby expressly submits itself or himself to the
exclusive, personal jurisdiction of the courts situate in the State of Utah
with respect to any and all claims, demands, and/or causes of action asserted
or filed by any party in any way relating to, or arising out of, this Agreement
or the subject matter hereof.

 

20.                               Waiver.  Any waiver by any party hereto of any breach
of any kind or character whatsoever by any other party, whether such waiver be
direct or implied, shall not be construed as a continuing waiver of, or consent
to, any subsequent breach of this Agreement on the part of the other
party.  In addition, no course of dealing
between the parties, nor any delay in exercising any rights or remedies
hereunder or otherwise, shall operate as a waiver of any of the rights or
remedies of the parties.

 

21.                               Binding Nature.  This Agreement shall inure to and
bind the heirs, devisees, executors, administrators, personal representatives,
successors, and assigns (as applicable) of the respective parties hereto.

 

22.                               Headings.  The headings contained in this Agreement are
for ease of reference only and shall not limit or otherwise affect the
interpretation of this Agreement

 

23.                               Entire Agreement.  This Agreement contains the entire
integrated understanding of the parties with respect to the subject matter of
this Agreement and shall not be modified other than by an instrument in writing
signed by both Employer and Consultant.

 

24.                               Attorney’s Fees.  If a civil action or other proceeding is
brought to enforce this Agreement, the prevailing party shall be entitled to
recover reasonable attorney’s fees, costs, and expenses incurred, in addition
to any other relief to which such party may be entitled.

 

25.                               Knowing and Voluntary Execution.  Consultant acknowledges that he has read this
Agreement carefully and fully understands the meaning of the terms of this
Agreement.  Consultant acknowledges that
he has signed this Agreement voluntarily and of his own free will and that he
is knowingly and voluntarily releasing and waiving all Claim(s) that he has or
may have against Releasees.  Consultant further acknowledges that he has been
advised, by this Agreement, to consult with an attorney of his choice prior to
signing this Agreement.  Each
party agrees that he or it shall be solely responsible for any attorney’s fees
incurred by that party in the negotiation and execution of this Agreement.

 

5

 

	
   

  	
  “EMPLOYEE”

  
	
   

  
	
  DATED:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Bryan
  Lampropoulos

  
	
   

  	
   

  
	
   

  	
  “EMPLOYER”

  
	
   

  	
   

  
	
   

  	
  Merit Medical Systems, Inc.,

  
	
   

  	
    a
  Utah corporation,

  
	
   

  	
   

  
	
  DATED:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Its:

  	
   

  	
   

  	
   

  
										

 

6

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