1
EXHIBIT 1.1
HOUSEHOLD PRIVATE LABEL CREDIT CARD MASTER NOTE TRUST I
Series 2001-1
$400,000,000 Floating Rate Asset Backed Notes, Series 2001-1
$58,275,000 Floating Rate Asset Backed Notes, Series 2001-1
UNDERWRITING AGREEMENT
August 8, 2001
Credit Suisse First Boston Corporation as Representative of the
Underwriters set forth herein (the "Representative")
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
Household Bank (SB), N.A. (the "Bank") has conveyed and proposes to
further convey, from time to time, the receivables (the "Receivables") that are
generated in a portfolio of certain consumer revolving credit card accounts and
other rights and property to HRSI Funding, Inc. II (the "Transferor"), which has
conveyed and will convey the Receivables to the Household Private Label Credit
Card Master Note Trust I, acting through Wilmington Trust Company, not in its
individual capacity but solely as Owner Trustee therefor (the "Issuer"), and the
Transferor proposes to cause the Issuer to sell to you and to the underwriters
named in Schedule I hereto (the "Underwriters"), for whom you are acting as
representative (the "Representative"), $400,000,000 Class A Floating Rate Asset
Backed Notes, Series 2001-1 (the "Class A Notes") and $58,275,000 Class B
Floating Rate Asset Backed Notes, Series 2001-1 (the "Class B Notes" and,
together with the Class A Notes, the "Notes") in the Trust. The Receivables have
been, and will from time to time be, conveyed to the Transferor by Household
Receivables Acquisition Company ("HRAC") pursuant to a Receivables Purchase
Agreement, dated as of June 12, 2001 (the "Transferor Receivables Purchase
Agreement"), between HRAC and the Transferor. The Receivables have been, and
will from time to time be, conveyed to HRAC by (i) the Bank pursuant to a
Receivables Purchase Agreement, dated as of June 12, 2001 (the "Bank Receivables
Purchase Agreement"), between the Bank and HRAC, and (ii) HRSI Funding Inc.
("HRSIFI") pursuant to a Receivables Purchase Agreement, dated as of June 12,
2001 (the "Tri-Party Receivables Purchase Agreement"), among the Bank, HRSIFI
and HRAC. Collectively, the Transferor Receivables Purchase Agreement, the Bank
Receivables Purchase Agreement, and the Tri-Party Receivables Purchase Agreement
are referred to herein as the Receivables Purchase Agreement. The Receivables
have been, and will from time to time be, conveyed by the Transferor to the
Issuer pursuant to a Transfer and Servicing Agreement, dated as of June 12, 2001
(the "Transfer and Servicing Agreement"), among the Transferor, Household
Finance Corporation ("HFC"), as servicer (the "Servicer"), and the Issuer. The
Bank, the Transferor and HFC are direct or indirect subsidiaries of Household
International, Inc.
2
("Household"). HFC, the Bank and the Transferor are referred to collectively
herein as the "Household Entities".
The Issuer is a Delaware common law trust formed pursuant to a Trust
Agreement, dated as of June 12, 2001 (the "Trust Agreement"), between the
Transferor and Wilmington Trust Company ("Wilmington"), as owner trustee (the
"Owner Trustee").
The Notes will be issued pursuant to a Master Indenture, dated as of
June 12, 2001 (the "Master Indenture"), between the Issuer and U.S. Bank
National Association, as indenture trustee (the "Indenture Trustee"), as
supplemented by the Series 2001-1 Indenture Supplement with respect to the Notes
to be dated as of August 16, 2001 (the "Indenture Supplement," and together with
the Master Indenture, the "Indenture").
HFC has agreed to provide notices and perform on behalf of the Issuer
certain other administrative obligations required of the Issuer by the Transfer
and Servicing Agreement, the Master Indenture and each indenture supplement for
each series of Notes issued by the Issuer, pursuant to an Administration
Agreement, dated as of June 12, 2001 (the "Administration Agreement"), between
HFC, as administrator (in such capacity, the "Administrator"), and the Issuer.
The Transfer and Servicing Agreement, the Receivables Purchase Agreement, the
Indenture, the Trust Agreement and the Administration Agreement are referred to
herein, collectively, as the "Transaction Documents."
The Notes will be sold pursuant to this Underwriting Agreement (this
"Agreement") and will represent undivided interests in certain assets of the
Trust (as hereinafter described).
Capitalized terms used herein without definition shall have the
meanings set forth in the Transaction Documents.
Section 1. REPRESENTATIONS AND WARRANTIES OF THE BANK AND THE
TRANSFEROR.
(a) Each of the Bank and the Transferor, each as to itself, represents
and warrants to, and agrees with, each Underwriter as set forth in this Section
1(a). Certain terms used in this Section 1(a) are defined in the second
paragraph of subsection 1(a)(i) below.
(i) A registration statement on Form S-3 (No. 333-58400), including a
form of prospectus and prospectus supplement and such amendments
thereto as may have been filed prior to the date hereof, relating to
the Notes and the offering thereof in accordance with Rule 415 under
the Securities Act of 1933, as amended (the "Act"), has been filed by
the Transferor with, and has been declared effective by, the
Commission. If any post-effective amendment to such registration
statement has been filed with the Commission prior to the execution and
delivery of this
2
3
Agreement, the most recent such amendment has been declared effective
by the Commission.
The terms which follow, when used in this Agreement, shall have the
meanings indicated. The term "Effective Date" shall mean each date that
the Registration Statement and any post-effective amendment or
amendments thereto became or become effective under the Act. "Execution
Time" shall mean the date and time that this Agreement is executed and
delivered by the parties hereto. "Registration Statement" shall mean
the registration statement referred to in the preceding paragraph and
any registration statement required to be filed under the Act or rules
thereunder, including amendments, incorporated documents, exhibits and
financial statements, in the form in which it has or shall become
effective and, in the event that any post-effective amendment thereto
becomes effective prior to the Closing Date (as hereinafter defined),
shall also mean such registration statement as so amended. "Rule 424"
refers to such rule under the Act. The Transferor proposes to file with
the Commission pursuant to Rule 424(b) ("Rule 424(b)") under the Act a
supplement (the "Prospectus Supplement") to the prospectus included in
the Registration Statement (such prospectus, in the form it appears in
the Registration Statement or in the form most recently revised and
filed with the Commission pursuant to Rule 424(b), is hereinafter
referred to as the "Base Prospectus") relating to the Notes and the
method of distribution thereof. The Base Prospectus and the Prospectus
Supplement, together with any amendment thereof or supplement thereto,
are hereinafter referred to as the "Prospectus."
(ii) On the Effective Date, the Registration Statement conformed in all
respects to the requirements of the Act and the rules and regulations
of the Commission thereunder and the TIA and the rules and regulations
thereunder and did not include any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and on the
date of this Agreement, the Registration Statement and the Prospectus
conform, and at the time of filing of the Prospectus pursuant to Rule
424(b) the Registration Statement and the Prospectus will conform, in
all respects with the requirements of the Act and the Rules and
Regulations and the TIA and the rules and regulations thereunder and
neither of such documents includes, or will include, any untrue
statement of a material fact or omits, or will omit, to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that neither the
Bank nor the Transferor makes any representations or warranties as to
(a) the information contained in or omitted from the Registration
Statement or the Prospectus (or any supplements thereto) in reliance
upon and in conformity with information furnished in writing to the
Bank or the Transferor by or on behalf of any Underwriter through the
Representative specifically for use in connection
3
4
with the preparation of the Registration Statement or the Prospectus
(or any supplements thereto) or (b) information in any Derived
Information provided by the Underwriters (other than information
resulting from the Transferor Provided Information).
(iii) The Bank is duly organized, validly existing and in good standing
as a national banking association under the laws of the United States
and the Transferor is a corporation duly organized and validly existing
and in good standing under the laws of its jurisdiction of
incorporation. Each of the Bank and the Transferor has all requisite
power and authority to own its properties and conduct its business as
presently conducted and is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction which
requires such qualification, except where failure to have such
requisite power and authority or to be so qualified would not have a
material adverse effect on the business or consolidated financial
condition of the Bank or the Transferor.
(iv) Neither the Transferor nor the Bank is in violation of its charter
or certificate of incorporation or in default in the performance or
observance of any material obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, loan agreement, note,
lease or other instrument to which it is a party or by which it may be
bound, or to which any of the property or assets of the Transferor or
the Bank, as the case may be, is subject, except where any such
violation or default would not have a material adverse effect on the
transactions contemplated by this Agreement.
(v) The execution, delivery and performance by the Transferor of each
of this Agreement, the Transferor Receivables Purchase Agreement, the
Transfer and Servicing Agreement and the Trust Agreement and the
consummation of the transactions contemplated hereby and thereby have
been duly and validly authorized by all necessary action or proceedings
and will not conflict with or constitute a breach of, or default under,
or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Transferor pursuant to,
any contract, indenture, mortgage, loan agreement, note, lease or other
instrument to which the Transferor is a party or by which it may be
bound, or to which any of the property or assets of the Transferor is
subject, nor will such action result in any violation of the provisions
of the charter or by-laws of the Bank or any applicable law,
administrative regulation or administrative or court decree, except
where any such conflict, breach, default, encumbrance or violation
would not have a material adverse effect on the transactions
contemplated by this Agreement.
(vi) The execution, delivery and performance by the Bank of this
Agreement, Bank Receivables Purchase Agreement and the Tri-Party
Receivables Purchase Agreement, and the consummation of the
4
5
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary action or proceedings and will not conflict
with or constitute a breach of, or default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Bank pursuant to, any contract, indenture,
mortgage, loan agreement, note, lease or other instrument to which the
Bank is a party or by which it may be bound, or to which any of the
property or assets of the Bank is subject, nor will such action result
in any violation of the provisions of the charter or by laws of the
Bank or any applicable law, administrative regulation or administrative
or court decree, except where any such conflict, breach, default,
encumbrance or violation would not have a material adverse effect on
the transactions contemplated by this Agreement.
(vii) This Agreement, the Transferor Receivables Purchase Agreement,
the Transfer and Servicing Agreement and the Trust Agreement have been
duly executed and delivered by the Transferor; and this Agreement, the
Transferor Receivables Purchase Agreement, the Transfer and Servicing
Agreement and the Trust Agreement constitute legal, valid and binding
instruments enforceable against the Transferor in accordance with their
respective terms, subject as to enforceability (A) to applicable
bankruptcy, reorganization, insolvency, moratorium or other similar
laws affecting creditors' rights generally and the rights and remedies
of creditors of thrifts, savings institutions or national banking
associations, (B) to general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law) and
(C) with respect to rights of indemnity under this Agreement, to
limitations of public policy under applicable securities laws.
(viii) This Agreement and the Bank Receivables Purchase Agreement and
the Tri-Party Receivables Purchase Agreement have been duly executed
and delivered by the Bank; and this Agreement and the Bank Receivables
Purchase Agreement and the Tri-Party Receivables Purchase Agreement
constitute legal, valid and binding instruments enforceable against the
Bank in accordance with their respective terms, subject as to the
enforceability (A) to applicable bankruptcy, reorganization,
insolvency, moratorium or other similar laws affecting creditors'
rights generally and the rights and remedies of creditors of thrifts,
savings institutions or national banking associations, (B) to general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law) and (C) with respect to rights of
indemnity under this Agreement, to limitations of public policy under
applicable securities law.
(ix) The Bank has authorized the conveyance of the Receivables to the
Transferor; the Transferor has authorized the conveyance of the
Receivables to the Issuer; and the Transferor has directed the Issuer
to issue and sell the Notes.
5
6
(x) The Bank will, upon request by the Representatives, provide to the
Representatives complete and correct copies of publicly available
portions of the Consolidated Reports of Condition and Income of the
Bank for the year ended December 31, 2000, as submitted to the
Comptroller of the Currency. Except as set forth or contemplated in the
Registration Statement and the Prospectus, there has been no material
adverse change in the consolidated condition (financial or otherwise)
of the Bank and its subsidiaries taken as a whole since December 31,
2000.
(xi) Any taxes, fees and other governmental charges in connection with
the execution, delivery and performance of this Agreement, each of the
Transaction Documents and the Notes shall have been paid or will be
paid by the Transferor at or prior to the Closing Date.
(xii) The Notes have been duly and validly authorized, and, when
validly executed, authenticated, issued and delivered in accordance
with the Indenture and as provided herein will conform in all material
respects to the description thereof contained in the Prospectus and
will be validly issued and outstanding and entitled to the benefits of
the Indenture.
(xiii) There are no legal or governmental proceedings pending, or to
the knowledge of the Bank or the Transferor threatened, to which the
Bank or the Transferor is a party or of which any property of any of
them is the subject, other than actions, suits or proceedings which are
not reasonably expected, individually or in the aggregate, to have a
material adverse effect on the shareholder's equity or consolidated
financial position of such person and its subsidiaries taken as a
whole, or which would have a material adverse effect upon the
consummation of this Agreement.
(xiv) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP is an independent public accountant with
respect to the Bank and Transferor.
(xv) No consent, approval, authorization, order, registration, filing,
qualification, license or permit of or with any court or governmental
agency or body of the United States is required for the issue and sale
of the Notes, or the consummation by the Bank or the Transferor of the
other transactions contemplated by this Agreement or any Transaction
Document to which it is a party, except for (A) the registration under
the Act of the Notes, (B) such consents, approvals, authorizations,
orders, registrations, qualifications, licenses or permits as have been
obtained or as may be required under State securities or Blue Sky laws
in connection with the purchase of the Notes and the subsequent
distribution of the Notes by the Underwriters or (C) where the failure
to obtain such consents, approvals, authorizations, orders,
registrations, filings, qualifications, licenses or permits would not
have a material adverse effect on the business or consolidated
financial condition of the Bank and its
6
7
subsidiaries taken as a whole or the Transferor or the transactions
contemplated by such agreements.
(xvi) Neither the Bank nor the Transferor will conduct their operations
while any of the Notes are outstanding in a manner that would require
the Transferor or the Issuer to be registered as an "investment
company" under the Investment Company Act of 1940, as amended (the
"1940 Act") as in effect on the date hereof.
(b) HFC represents and warrants to, and agrees with, each Underwriter
as set forth in this Section 1(b).
(i) HFC is a corporation duly organized and validly existing and in
good standing under the laws of its jurisdiction of incorporation. HFC
has all requisite power and authority to own its properties and conduct
its business as presently conducted and is duly qualified as a foreign
corporation to transact business and is in good standing in each
jurisdiction which requires such qualification, except where the
failure to have such power and authority or to be so qualified would
not have a material adverse effect on the business or consolidated
financial condition of HFC and its subsidiaries taken as a whole.
(ii) HFC is not in violation of its restated articles of incorporation
or in default in the performance or observance of any material
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other instrument to
which HFC is a party or by which it may be bound, or to which any of
the property or assets of HFC is subject except where any such
violation or default would not have a material adverse effect on the
transactions contemplated by this Agreement.
(iii) The execution, delivery and performance by HFC of this Agreement,
the Transfer and Servicing Agreement, the Indenture, the Indenture
Supplement and the Administration Agreement and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary action or proceedings and will not conflict
with or constitute a breach of, or default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any
property or assets of HFC pursuant to, any contract, indenture,
mortgage, loan agreement, note, lease or other instrument to which HFC
is a party or by which it may be bound, or to which any of the property
or assets of HFC is subject, nor will such action result in any
violation of the provisions of the restated articles of incorporation
or by laws of HFC or any applicable law, administrative regulation or
administrative or court decree, except where any such conflict, breach,
default, encumbrance or violation would not have a material adverse
effect on the transactions contemplated by this Agreement.
7
8
(iv) This Agreement, the Transfer and Servicing Agreement and the
Administration Agreement have been duly executed and delivered by HFC;
and this Agreement, the Transfer and Servicing Agreement and the
Administration Agreement constitute legal, valid and binding
instruments enforceable against HFC in accordance with their respective
terms, subject as to enforceability (A) to applicable bankruptcy,
reorganization, insolvency, moratorium or other similar laws affecting
creditors' rights generally, (B) to general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity
or at law) and (C) with respect to rights of indemnity under this
Agreement, to limitations of public policy under applicable securities
laws.
(v) HFC will, upon request by the Representative, provide to the
Representative complete and correct copies of all reports filed by it
with the Commission pursuant to the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), during 2001. Except as set forth in or
contemplated in such reports, there has been no material adverse change
in the consolidated financial condition of HFC and its subsidiaries
taken as a whole since the respective dates as of which information is
given in the Prospectus.
(vi) There are no legal or governmental actions, suits or proceedings
pending, or to the knowledge of HFC threatened, to which HFC is a party
or of which any of its property is the subject, other than proceedings
which are not reasonably expected, individually or in the aggregate, to
have a material adverse effect on the shareholder's equity or
consolidated financial position of HFC and its subsidiaries taken as a
whole or which would have a material adverse effect upon the
consummation of this Agreement.
(vii) No consent, approval, authorization, order, registration, filing,
qualification, license or permit of or with any court or governmental
agency or body of the United States is required for the consummation by
HFC of the transactions contemplated by this Agreement, the Transfer
and Servicing Agreement, the Indenture, the Indenture Supplement and
the Administration Agreement, except for (A) the registration under the
Act of the Notes, (B) such consents, approvals, authorizations, orders,
registrations, filings, qualifications, licenses or permits as have
been obtained or as may be required under State securities or Blue Sky
laws in connection with the purchase of the Notes and the subsequent
distribution of the Notes by the Underwriters or (C) where the failure
to obtain such consents, approvals, authorizations, orders,
registrations, filings, qualifications, licenses or permits would not
have a material adverse effect on the business or consolidated
financial condition of HFC and its subsidiaries taken as a whole or the
transactions contemplated by such agreements.
8
9
(viii) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP is an independent public accountant with
respect to HFC.
(c) Any certificate signed by an officer on behalf of any of the
Household Entities and delivered to the Underwriters or counsel for the
Underwriters in connection with an offering of the Notes shall be deemed, and
shall state that it is, a representation and warranty as to the matters covered
thereby to each person to whom the representations and warranties in this
Section 1 are made.
Section 2. PURCHASE AND SALE. Subject to the terms and conditions and
in reliance upon the covenants, representations and warranties herein set forth,
the Transferor agrees to sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from the Transferor
the principal amount of Class A Notes set forth opposite such Underwriter's name
in Schedule I pursuant to the terms of this Agreement at a purchase price equal
to 99.825% of the aggregate principal amount represented by the Class A Notes.
(a) Subject to the terms and conditions and in reliance upon the
covenants, representations and warranties herein set forth, the Transferor
agrees to sell to each of the Underwriters, and each of the Underwriters agrees,
severally and not jointly, to purchase from the Transferor the principal amount
of Class B Notes set forth opposite such Underwriter's name in Schedule I
pursuant to the terms of this Agreement at a purchase price equal to 99.825% of
the aggregate principal amount represented by the Class B Notes.
Section 3. DELIVERY AND PAYMENT. Delivery of and payment for the Notes
to be purchased by the Underwriters in accordance with this Agreement shall be
made at 9:00 A.M. at the offices of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ on August 16, 2001, which date, time or place
may be postponed or changed by agreement between the Representatives and the
Transferor (such date and time of delivery and payment for the Notes being
herein referred to as the "Closing Date"). Delivery of one or more global notes
representing the Notes shall be made to the accounts of the several Underwriters
against payment by the several Underwriters of the purchase price therefor, to
or upon the order of the Transferor by one or more wire transfers in immediately
available funds. The global notes to be so delivered shall be registered in the
name of Cede & Co., as nominee for The Depository Trust Company ("DTC"). The
interests of beneficial owners of the Notes will be represented by book entries
on the records of DTC and participating members thereof. Definitive Notes
representing the Notes will be available only under limited circumstances as
described in the Indenture.
The Transferor agrees to have copies of the global notes or the
Definitive Notes available for inspection, checking and packaging by the
Underwriters in New York, New York, not later than 1:00 p.m., New York City
time, on the business day prior to the Closing Date.
9
10
Section 4. OFFERING BY UNDERWRITERS.
(a) It is understood that the Underwriters propose to offer the Notes
for sale to the public as set forth in the Prospectus. The Household Entities
agree that the Underwriters may, but are not obligated to, make a market in the
Notes and that any such market making by the Underwriters may be discontinued at
any time in the respective sole discretion of the Underwriters
(b) Each Underwriter severally agrees that if it is a foreign broker
dealer not eligible for membership in the National Association of Securities
Dealers, Inc. (the "NASD"), it will not effect any transaction in the Notes
within the United States or induce or attempt to induce the purchase of or sale
of the Notes within the United States, except that it shall be permitted to make
sales to the other Underwriters or to its United States affiliates provided that
such sales are made in compliance with an exemption of certain foreign brokers
or dealers under Rule 15a-6 under the Exchange Act and in conformity with the
NASD's Conduct Rules as such Rules apply to non-NASD brokers or dealers.
(c) Each Underwriter severally represents and agrees that (i) it has
complied and will comply with all applicable provisions of the Financial
Services Act 1986 with respect to anything done by it in relation to the Notes
in, from or otherwise involving the United Kingdom; (ii) it has only issued or
passed on and will only issue or pass on to any person in the United Kingdom any
document received by it in connection with the issue of the Notes if that person
is of a kind described in Article 11(3) of the Financial Services Act 1986
(Investment Advertisements) (Exemptions) Order 1996 or is a person to whom that
document may otherwise lawfully be issued or passed on; (iii) if it is an
authorized person under Chapter III of the Financial Services Act 1986, it has
only promoted and will only promote (as that term is defined in Regulation
1.02(2) of the Financial Services (Promotion of Unregulated Schemes) Regulations
1991) to any person in the United Kingdom the scheme described in the Prospectus
if that person is of a kind described either in Section 76(2) of the Financial
Services Act 1986 or in Regulation 1.04 of the Financial Services (Promotion of
Unregulated Schemes) Regulations 1991; and (iv) it is a person of a kind
described in Article 11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1996; and (v) it has not offered or sold and,
prior to the expiry of six months from the Closing Date, will not offer or sell
any Series 2001-1 Notes to persons in the United Kingdom except to persons whose
ordinary activities involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purpose of their businesses or
otherwise in circumstances which have not resulted and will not result in an
offer to the public in the United Kingdom within the meaning of the Public
Offers of Securities Regulations 1995.
(d) Each Underwriter severally, and not jointly, represents and
warrants to, and agrees with the other Underwriters, the Bank, the Transferor
and HFC that:
(i) it has not used, and will not use, any Derived Information in
connection with the offering of the Notes as such term is defined below;
10
11
(ii) as of the date hereof and as of the Closing Date that such
Underwriter has complied and will comply with all of its obligations arising
hereunder and, has complied with the Act, the Exchange Act, and the Rules
and Regulations, with respect to the Derived Information provided by such
Underwriter, if any is provided in breach of violation of the representation
and warranty stated in clause (i) above, and such Derived Information is
accurate in all material respects (taking into account the assumptions
explicitly set forth in the Derived Information, except for any errors
therein attributable to errors or mistakes in the Transferor-Provided
Information). Any Derived Information provided by such Underwriter to the
Transferor constitutes a complete set of all Derived Information required to
be filed with the Commission pursuant to the No-Action Letters;
(iii) such Underwriter shall provide the Transferor no later than one
Business Day after any Collateral Term Sheet is delivered to a prospective
investor, if any is provided in violation of the representation and warranty
stated in clause (i) above, or in the case of any Structural Term Sheets and
Computational Materials no later than one Business Day before the date on
which the Prospectus is required to be filed pursuant to Rule 424, all such
Derived Information delivered to a prospective investor by it during the
period commencing on the Effective Date and ending on the date the
Prospectus is filed with the Commission. Such Underwriter shall deliver to
the Transferor a hard copy and, in a mutually agreed upon format, a disk or
electronic transmission of such Derived Information;
(iv) assuming the accuracy of the Transferor-Provider Information used
in the preparation of Derived Information, the Derived Information,
delivered by such Underwriter, if any is provided in violation of the
representation and warranty stated in clause (i) above, as of the date
thereof, is accurate in all material respects, taking into account the
assumptions set forth in such Derived Information, but without making any
representations as to the appropriateness of such assumptions; and
(v) each Underwriter acknowledges that none of the Bank, the Transferor
or HFC will be deemed to have breached any representation and warranty or to
have failed to satisfy any other agreement contained herein, to the extent
any such breach or failure on the part of such party resulted solely from an
Underwriter's breach of the representation and warranty set forth in
subsection (d) (ii), (iii) or (iv) above.
For purposes of this Agreement, "Derived Information" means the type of
information defined as Collateral Term Sheets, Structural Term Sheets or
Computational Materials (as such terms are interpreted in the No-Action
Letters). The terms "Collateral Term Sheet" and "Structural Term Sheet" shall
have the respective meanings assigned to them in the February 13, 1995 letter
(the "PSA Letter") of ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ on behalf of the Public
Securities Association (which letter, and the Commission staff's response
thereto, were publicly available February 17, 1995), and with respect to
11
12
"Collateral Term Sheet" includes any subsequent Collateral Term Sheet that
reflects a substantive change in the information presented. The term
"Computational Materials" has the meaning assigned to it in the May 17, 1994
letter (the "▇▇▇▇▇▇ Letter" and together with the PSA Letter, the "No-Action
Letters") of Brown & ▇▇▇▇ on behalf of ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & Co., Inc. (which
letter, and the Commission staff's response thereto, were publicly available May
20, 1994). "Transferor-Provided Information" means the information contained on
any computer tape or microfiche list furnished to the Underwriters by the
Transferor or other Household Entities concerning the assets comprising the
Issuer.
Section 5. AGREEMENTS. Each of the Household Entities, each as to
itself, covenants and agrees with the several Underwriters that:
(a) Immediately following the execution of this Agreement, the
Transferor will prepare a Prospectus Supplement setting forth the amount of
Notes covered thereby and the terms thereof not otherwise specified in the Base
Prospectus, the price at which such Notes are to be purchased by the
Underwriters, the initial public offering price, the selling concessions and
allowances, and such other information as the Transferor deems appropriate. The
Transferor will transmit the Prospectus, including such Prospectus Supplement,
to the Commission pursuant to Rule 424(b) by a means reasonably calculated to
result in filing with the Commission pursuant to Rule 424(b). The Transferor
will promptly advise the Representative (i) when the Registration Statement
shall have become effective, (ii) when any amendment thereof shall have become
effective, (iii) of any request by the Commission for any amendment or
supplement of the Registration Statement or the Prospectus or for any additional
information, (iv) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement or the institution or
threatening of any proceeding for that purpose, and (v) of the receipt by the
Transferor of any notification with respect to the suspension of the
qualification of the Notes for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose. The Transferor will not file any
amendment of the Registration Statement or supplement to the Prospectus to which
the Representative reasonably objects. The Transferor will use its best efforts
to prevent the issuance of any such stop order and, if issued, to obtain as soon
as possible the withdrawal thereof.
(b) If, at any time when a Prospectus relating to the Notes is required
to be delivered under the Act, any event occurs as a result of which the
Prospectus as then supplemented would include any untrue statement of a material
fact or omit to state any material fact necessary to make the statements therein
in the light of the circumstances under which they were made not misleading, or
if it shall be necessary to supplement such Prospectus to comply with the Act or
the rules thereunder, the Transferor shall be required to notify the
Representative and upon the Representative's request to prepare and furnish
without charge to each Underwriter as many copies as such Underwriter may from
time to time reasonably request of an amended Prospectus or a supplement to the
Prospectus which shall correct such statement or omission or effect such
compliance.
12
13
(c) As soon as practicable, the Transferor will make generally
available to Noteholders and to the Representative an earnings statement or
statements of the Issuer which will satisfy the provisions of Section 11(a) of
the Act and Rule 158 under the Act.
(d) The Transferor will furnish to the Representative and counsel for
the Underwriters, without charge, copies of the Registration Statement
(including exhibits thereto) and, so long as delivery of a prospectus by an
Underwriter or dealer may be required by the Act, as many copies of the
Prospectus and any supplement thereto as the Underwriters may reasonably
request.
(e) The Household Entities, jointly and severally, agree to pay all
expenses incidental to the performance of their obligations under this
Agreement, including without limitation (i) expenses of preparing, printing and
reproducing the Registration Statement, the Prospectus, this Agreement, the
Transaction Documents and the Notes, (ii) any fees charged by any rating agency
for the rating of the Notes, (iii) any expenses (including reasonable fees and
disbursements of counsel not to exceed $10,000) incurred by the Underwriters in
connection with qualification of the Notes for sale under the laws of such
jurisdictions as the Representative designates, (iv) the fees and expenses of
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, (v) the fees and expenses of the Indenture Trustee and any
agent of the Indenture Trustee and the fees and disbursements of counsel for the
Indenture Trustee in connection with the Indenture and the Notes, and (vi) the
cost of delivering the Notes to the offices of the Underwriters, insured to the
satisfaction of the Underwriters (it being understood that, except as provided
in this paragraph (e) and in Sections 7 and 8 hereof, the Underwriters will pay
their own expenses, including the expense of preparing, printing and reproducing
this Agreement, any agreement among underwriters, the fees and expenses of
counsel for the Underwriters, any transfer taxes on resale of any of the Notes
by them and advertising expenses connected with any offers that the Underwriters
may make).
(f) The Transferor will take all reasonable actions requested by the
Underwriters to arrange for the qualification of the Notes for sale under the
laws of such jurisdictions within the United States or as necessary to qualify
for the Euroclear System or Clearstream Banking, societe anonyme and as the
Representative may designate, will maintain such qualifications in effect so
long as required for the distribution of the Notes.
(g) For so long as the Notes are outstanding, the Transferor shall
deliver to the Representative by first-class mail and as soon as practicable a
copy of all reports and notices related to Series 2001-1 Notes and delivered to
the Owner Trustee, the Indenture Trustee or the Noteholders under the Indenture.
(h) For so long as the Notes are outstanding, the Household Entities
will furnish to the Representative as soon as practicable after filing, any
other information concerning the Household Entities filed with any government or
regulatory authority which is otherwise publicly available, as the
Representative may reasonably request.
13
14
(i) To the extent, if any, that any rating provided with respect to the
Notes set forth in Sections 6(j), (k) and (l) hereof is conditional upon the
furnishing of documents reasonably available to the Household Entities, the
Household Entities shall furnish such documents.
(j) To the extent that Derived Information is utilized by an
Underwriter in violation of its representation and warranty set forth in Section
4(d)(i) the Transferor will, at the expense of the Underwriters, file the
Derived Information provided to it by the Underwriters under Section 4(d)(iii)
with the Commission pursuant to a Current Report on Form 8-K not later than 5:00
p.m. on the day the Prospectus is delivered to the Underwriters; provided,
however, that as a condition to the filing of the Derived Information by the
Transferor, the Transferor must receive a letter from a firm of independent
certified public accountants reasonably acceptable to the Transferor, which
letter shall be satisfactory in form and substance to the Transferor, HFC and
their counsel, to the effect that such accountants have performed certain
specified procedures, all of which have been agreed to by the Transferor, as a
result of which they have determined the accuracy in all material respects of
the numerical and financial information included in the Derived Information
provided by the Underwriters to the Transferor for filing with the Commission.
The Transferor shall not be obligated to file any Derived Information that has
been determined to contain any material errors or omission; provided, however,
that, at the request of an Underwriter the Transferor shall file Derived
Information containing material errors or omissions if clearly marked
"superseded by materials dated ________" and accompanied by corrected Derived
Information that is marked "these materials supersede and correct the materials
dated ________."
Section 6. CONDITIONS OF CLOSING; TERMINATION OF RIGHTS UNDER SECTION
2. The obligations of the Underwriters to purchase and pay for the Notes on the
Closing Date shall be subject to the material accuracy of the representations
and warranties of the Household Entities contained herein as of the Execution
Time and as of the Closing Date, to the material accuracy of the statements of
the Household Entities made in any certificates delivered pursuant to the
provisions hereof, to the performance by the Household Entities of their
obligations hereunder and to the following additional conditions:
(a) The Prospectus shall have been filed with the Commission in
accordance with the Rules and Regulations and Section 5(a) of this Agreement;
and, prior to the Closing Date, no stop order suspending the effectiveness of
the Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or threatened by the Commission.
(b) Each of the Household Entities shall have delivered a certificate,
dated the Closing Date, signed by its President or any Vice President and its
principal financial or principal accounting officer or its Treasurer or any
Assistant Treasurer or its Secretary or any Assistant Secretary to the effect
that the signers of such certificate, on behalf of the named Household Entity,
have carefully examined this Agreement, each of
14
15
the Transaction Documents, the Prospectus (and any supplements thereto) and the
Registration Statement, stating that:
(i) the representations and warranties of such Household Entity in this
Agreement are true and correct in all material respects at and as of
the date of such certificate as if made on and as of such date (except
to the extent they expressly relate to an earlier date);
(ii) such Household Entity has complied, in all material respects, with
all the agreements and satisfied, in all material respects, all the
conditions on its part to be performed or satisfied at or prior to the
date of such certificate;
(iii) nothing has come to the attention of such Household Entity that
would lead it to believe that the Registration Statement contains any
untrue statement of a material fact or omits to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and
(iv) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or, to the knowledge of the ▇▇▇▇▇▇, threatened.
(c) ▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President-Corporate Law and Assistant
Secretary of Household, as counsel for the Household Entities, shall have
delivered a favorable opinion with respect to clauses (i) through (x) of this
paragraph (c), ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP shall have delivered a favorable opinion
with respect to clauses (xi) through (xvii) of this paragraph (c) each opinion
shall be dated the Closing Date and satisfactory in form and substance to the
Representative and counsel for the Underwriters, to the effect that:
(i) the Bank has been duly chartered as a national banking association
and is validly existing and in good standing under the laws of the
United States, is duly qualified to do business under the laws of each
jurisdiction which requires such qualification wherein it owns or
leases material properties or conducts material business, and has full
power and authority to own its properties, and to enter into and
perform its obligations under the Bank Receivables Purchase Agreement
and the Tri-Party Receivables Purchase Agreement, except where failure
to have such power and authority or to be so qualified will not have a
material adverse effect on the business or consolidated financial
condition of the Bank and its subsidiaries taken as a whole;
(ii) each of HFC and the Transferor is duly incorporated and validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation with corporate power and authority to own
its properties and to conduct its business, except where failure to
have such power and
15
16
authority do not have a material adverse effect, as the case may be, on
the business or consolidated financial condition of HFC and its
subsidiaries, taken as a whole, or the Transferor, to enter into and
perform its obligations under this Agreement and the Transaction
Documents which it is a party thereto and to consummate the
transactions contemplated hereby and thereby;
(iii) this Agreement and each of the Transaction Documents to which it
is a party have been duly authorized, executed and delivered by HFC,
the Bank or the Transferor, as the case may be, and, when executed by
the Indenture Trustee and the Representative, constitute the legal,
valid and binding agreement of HFC, the Bank or the Transferor, as the
case may be, enforceable in accordance with its terms subject, as to
enforceability (A) to applicable bankruptcy, reorganization,
insolvency, moratorium or other similar laws affecting creditors'
rights generally and the rights and remedies of creditors of thrifts,
savings institutions or national banking associations, (B) to general
principles of equity (regardless of whether enforcement is sought in a
proceedings in equity or at law) and (C) with respect to rights of
indemnity under this Agreement, to limitations of public policy under
applicable securities laws;
(iv) the Notes have been duly authorized and, when executed and
authenticated in accordance with the terms of the Indenture and
delivered to and paid for by the Underwriters pursuant to this
Agreement, will be validly issued and outstanding, enforceable in
accordance with their terms subject, as to enforceability (A) to
applicable bankruptcy, reorganization, insolvency, moratorium or other
similar laws affecting creditors' rights generally and the rights and
remedies of creditors of thrifts, savings institutions or national
banking associations and (B) to general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity
or at law);
(v) neither the execution nor the delivery of this Agreement or any
Transaction Document nor the issuance or delivery of the Notes, nor the
consummation of any of the transactions contemplated herein or therein,
nor the fulfillment of the terms of the Notes, this Agreement or any
Transaction Document will conflict with or violate any term or
provision of the charter, by-laws or organizational documents of any of
the applicable Household Entities, as the case may be, or result in a
breach or violation of, or default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or
assets of any of the applicable Household Entities (except the lien of
the Indenture) pursuant to, any material law, statute or regulation
currently applicable to any of them or any order or regulation known to
such counsel to be currently applicable to any of them of any court,
regulatory body, administrative agency or governmental body having
jurisdiction over the Bank or the Transferor, as the case may be, or
the terms of any indenture or other
16
17
agreement or instrument known to such counsel to which any of the
applicable Household Entities is a party or by which any of them or any
of their properties are bound, except where any such conflict, breach,
violation, default or encumbrance would not have a material adverse
effect on the transactions contemplated by this Agreement;
(vi) to the best knowledge of such counsel, there is no pending or
threatened action, suit or proceeding before any court or governmental
agency, authority or body or any arbitrator with respect to this
Agreement, the Notes or the Transaction Documents or any of the
transactions contemplated herein or therein or with respect to the
Household Entities which, in the case of any such action, suit or
proceeding with respect to any of them, would have a material adverse
effect on the Noteholders or upon the ability of any of them to perform
their obligations under any of such agreements; and the statements
included in the Registration Statement and Prospectus describing
statutes (other than those relating to tax and ERISA matters), legal
proceedings, contracts and other documents (other than financial
statements and other financial and statistical information contained
therein as to which such counsel need express no opinion) fairly
summarize the matters therein described;
(vii) the Registration Statement has become effective under the Act;
any required filing of the Prospectus or any supplement thereto
pursuant to Rule 424 has been made in the manner and within the time
period required by Rule 424; to the best knowledge of such counsel, no
stop order suspending the effectiveness of the Registration Statement
has been issued, no proceedings for that purpose have been instituted
or threatened; the Registration Statement and the Prospectus (and any
supplements thereto) (other than for Derived Information and for
financial and statistical information contained therein as to which
such counsel need express no opinion) comply as to form in all material
respects with the applicable requirements of the Act and the rules
thereunder;
(viii) such counsel has no reason to believe that at any Effective Date
the Registration Statement (excluding any exhibits filed therewith)
contained any untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary to make
the statements therein not misleading or the Prospectus, as of its
date, includes any untrue statement of a material fact or omits to
state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading
(other than financial and statistical information contained therein as
to which such counsel need express no opinion);
(ix) to the best of knowledge of such counsel, no consent, approval,
authorization, order, registration, filing, qualification, license or
permit of or with any court, federal or state governmental agency or
regulatory body
17
18
is required for any Household Entity to consummate the transactions
contemplated in this Agreement or the Transaction Documents, except (A)
such consents, approvals, authorizations, orders, registrations,
filings, qualifications, licenses or permits as have been made or
obtained or as may be required under the State securities or blue sky
laws of any jurisdiction in connection with the purchase of the Notes
by the Underwriters and the subsequent distribution of the Notes by the
Underwriters or (B) where the failure to have such consents, approvals,
authorizations, orders, registrations, filings, qualifications,
licenses or permits would not have a material adverse effect on the
Issuer's interests in the Receivables or the transactions contemplated
by such agreements;
(x) the Notes, this Agreement and the Transaction Documents conform in
all material respects to the descriptions thereof contained in the
Registration Statement and the Prospectus;
(xi) the Indenture has been duly qualified under the Trust Indenture
Act of 1939, as amended (the "TIA"), and complies as to form with the
TIA and the rules and regulations of the Commission thereunder;
(xii) the Issuer is not required to be registered as an "investment
company" under the 1940 Act;
(xiii) to the extent that the transfer of the Receivables by the Bank
to the Transferor does not constitute an absolute assignment of such
Receivables, the Receivables Purchase Agreement creates in favor of the
Transferor a security interest in the rights of the Bank in such
Receivables, and to the extent that the transfer of the Receivables by
the Transferor to the Issuer does not constitute an absolute assignment
of such Receivables, the Transfer and Servicing Agreement creates in
favor of the Issuer a security interest in the rights of the Transferor
in such Receivables;
(xiv) the Indenture creates in favor of the Indenture Trustee a
security interest in the rights of the Issuer in the Receivables;
(xv) the statements in the Registration Statement and Prospectus under
the headings "Prospectus Summary--Tax Status" and "Material Federal
Income Tax Consequences", to the extent that they constitute statements
of matters of law or legal conclusions with respect thereto, have been
prepared or reviewed by such counsel and accurately describe the
material Federal income tax consequences to holders of the Notes and
the statements under the heading "ERISA Considerations", to the extent
that they constitute statements of matters of law or legal conclusions
with respect thereto, have been prepared or reviewed by such counsel
and accurately describe the material consequences to holders of the
Notes under ▇▇▇▇▇;
18
19
(xvi) If the FDIC is appointed as conservator or receiver for the Bank
and if a court were to determine that the Indenture Trustee has a
security interest in the Receivables and the proceeds thereof, the
court would hold that the security interest of the Indenture Trustee
would be enforceable against the Bank with respect to the Receivables
and such proceeds; and
(xvii) No other filings or other actions, with respect to the Indenture
Trustee's interest in the Receivables, are necessary to perfect the
interest of the Indenture Trustee in the Receivables, and proceeds
thereof, against third parties, except that appropriate continuation
statements must be filed in accordance with the applicable state's
requirements, which is presently at least every five years.
In rendering such opinion, counsel may rely (A) as to matters involving
the application of the law of any jurisdiction other than (i) with respect to
the opinion delivered by ▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President-Corporate Law and
Assistant Secretary of Household, the State of Illinois, the United States
Federal laws and the corporation law of the State of Delaware and (ii) with
respect to the opinion delivered by ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP, the State of New York,
the United States Federal Laws and the corporation law of the State of Delaware,
to the extent deemed proper and stated in each such opinion, upon the opinion of
other counsel of good standing believed by each such counsel to be reliable and
acceptable to you and your counsel, and (B) as to matters of fact on
certificates of responsible officers of the Issuer, Household Entities and
public officials. References to the Prospectus in this paragraph (c) include any
supplements thereto.
(d) ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP, as counsel for the Underwriters, shall have
delivered a favorable opinion dated the Closing Date with respect to the
validity of the Notes, this Agreement, the Transfer and Servicing Agreement, the
Indenture, the Indenture Supplement, the Registration Statement, the Prospectus
and such other related matters as the Representatives may reasonably require and
the Household Entities shall have furnished to such counsel such documents as
they reasonably request for the purpose of enabling them to pass on such
matters. In giving their opinion, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP may rely (i) as to
matters of Illinois law upon the opinions of counsel delivered pursuant to
subsection (c) above, (ii) as to matters involving the application of laws of
any jurisdiction other than the State of New York, the United States Federal
laws or the corporation law of the State of Delaware, to the extent deemed
proper and specified in such opinion, upon the opinion of other counsel of good
standing believed to be reliable, and (iii) as to matters of fact, to the extent
deemed proper and as stated therein on certificates of responsible officers of
the Issuer, Household Entities and public officials.
(e) At the Execution Time and at the Closing Date, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
shall have furnished to the Representatives a letter or letters, dated
respectively as of the date of this Agreement and the date of the Closing Date,
in form and substance satisfactory to the Representative and counsel for the
Underwriters, confirming that they are certified independent public accountants
within the meaning of the Act, the Exchange Act and the rules and regulations
promulgated thereunder and stating in effect that they
19
20
have performed certain specified procedures as a result of which they determined
that certain information of an accounting, financial or statistical nature
(which is limited to accounting, financial or statistical information derived
from the general accounting records of the Issuer, the Bank and the Transferor)
set forth in the Registration Statement and the Prospectus (and any supplements
thereto), agrees with the accounting records of the Issuer, and the Household
Entities, excluding any questions of legal interpretation, and (ii) they have
performed certain specified procedures with respect to the computer programs
used to select the Eligible Accounts and to generate information with respect to
the Accounts set forth in the Registration Statement and the Prospectus (and any
supplements thereto).
(f) The Representative shall receive evidence satisfactory to the
Representative that, on or before the Closing Date, UCC-1 financing statements
are being or have been filed in the offices of the Secretaries of State of its
incorporation (and such other states as may be necessary or desirable pursuant
to applicable state law) reflecting the interest of the Indenture Trustee in the
Receivables and the proceeds thereof.
(g) Counsel to the Indenture Trustee shall have delivered a favorable
opinion, dated the Closing Date, and satisfactory in form and substance to the
Representative and counsel for the Underwriters, the Household Entities and
their counsel, to the effect that:
(i) the Indenture Trustee has been duly incorporated and is validly
existing and in good standing as a banking corporation under the laws
of the State of Minnesota, is duly qualified to do business in all
jurisdictions where the nature of its operations as contemplated by the
Indenture requires such qualifications, and has the power and authority
(corporate and other) to issue, and to take all action required of it
under, Indenture;
(ii) the execution, delivery and performance by the Indenture Trustee
of the Indenture and the issuance of the Notes by the Indenture Trustee
have been duly authorized by all necessary corporate action on the part
of the Indenture Trustee, and under present laws do not and will not
contravene any law or governmental regulation or order presently
binding on the Indenture Trustee or the charter, the by-laws or
organizational documents of the Indenture Trustee or contravene any
provision of or constitute a default under any indenture, contract,
agreement or other instrument to which the Indenture Trustee is a party
or by which the Indenture Trustee is bound;
(iii) the execution, delivery and performance by the Indenture Trustee
of the Indenture and the issuance of the Notes by the Indenture Trustee
do not require the consent or approval of, the giving of notice to, the
registration with, or the taking of any other action in respect of any
Federal, state or other governmental agency or authority which has not
previously been effected;
20
21
(iv) each of the Notes has been duly authenticated and delivered by the
Indenture Trustee and each of the Notes and the Indenture constitute
legal, valid and binding agreements of the Indenture Trustee,
enforceable against the Indenture Trustee in accordance with its terms
(subject to applicable bankruptcy, insolvency and similar laws
affecting creditors' rights generally); and
(v) no approval, authorization or other action by, or filing with, any
governmental authority of the United States of America or the State of
Minnesota having jurisdiction over the banking or trust powers of the
Indenture Trustee is required in connection with its execution and
delivery of the Indenture or the performance by the Indenture Trustee
of the terms of the Indenture.
(h) Counsel to the Owner Trustee shall have delivered a favorable
opinion, dated the Closing Date, and satisfactory in form and substance to the
Representative and counsel for the Underwriters, the Household Entities and
their counsel, to the effect that:
(i) the Owner Trustee is duly incorporated and validly existing as a
banking corporation in good standing under the laws of the State of
Delaware and has the power and authority to execute, deliver and
perform the Trust Agreement and to consummate the transactions
contemplated thereby;
(ii) the Trust Agreement has been duly authorized, executed and
delivered by the Owner Trustee and constitutes a legal, valid and
binding obligation of the Owner Trustee, enforceable against the Owner
Trustee in accordance with its terms;
(iii) each of the Indenture, the Trust Agreement and the Transfer and
Servicing Agreement (collectively referred to in this subsection (h) as
the "Trust Documents") has been duly executed and delivered by the
Owner Trustee, as Owner Trustee on behalf of the Issuer;
(iv) neither the execution, delivery or performance by the Owner
Trustee, in its individual capacity or as Owner Trustee, as the case
may be, of the Trust Documents or the Notes, nor the consummation of
the transactions by the Owner Trustee, in its individual capacity or as
Owner Trustee, as the case may be, contemplated thereby, requires the
consent or approval of, the withholding of objection on the part of,
the giving of notice to, the filing, registration or qualification
with, or the taking of any other action in respect of, any governmental
authority or agency of the State of Delaware or the United States of
America governing the banking or trust powers of the Owner Trustee;
21
22
(v) neither the execution, delivery and performance by the Owner
Trustee, in its individual capacity or as Owner Trustee, as the case
may be, of the Trust Documents, nor the consummation of the
transactions by the Owner Trustee, in its individual capacity or as
Owner Trustee, as the case may be, contemplated thereby, is in
violation of the charter, bylaws or organizational documents of the
Owner Trustee or of any law, governmental rule or regulation of the
State of Delaware or of the United States of America governing the
banking or trust powers of the Owner Trustee or, to such counsel's
knowledge, without independent investigation, any indenture, mortgage,
bank credit agreement, note or bond purchase agreement, long-term
lease, license or other agreement or instrument to which it is a party
or by which it is bound or, to such counsel's knowledge, without
independent investigation, of any judgment or order applicable to the
Owner Trustee;
(vi) no consent, approval or other authorization of, or registration,
declaration or filing with, any court or governmental agency or
commission of the State of Delaware is required by or with respect to
the Owner Trustee, in its individual capacity or as Owner Trustee, as
the case may be, for the valid execution and delivery of the Trust
Documents, or for the validity or enforceability thereof (other than
the filing of the certificate of trust, which certificate of trust has
been duly filed); and
(vii) to such counsel's knowledge, without independent investigation,
there are no pending or threatened actions, suits or proceedings
affecting the Owner Trustee before any court or other governmental
authority which, if adversely determined, would materially and
adversely affect the ability of the Owner Trustee to carry out the
transactions contemplated by the Trust Agreement.
(i) Special Delaware counsel to the Issuer shall have delivered a
favorable opinion, dated the Closing Date, and satisfactory in form and
substance to the Representatives and counsel for the Underwriters, the Household
Entities and their counsel, to the effect that;
(i) the Issuer has been duly formed and is validly existing in good
standing as a common law trust under Delaware law.
(ii) the Trust Agreement constitutes a legal, valid and binding
obligation of the Owner Trustee and the Transferor, enforceable against
the Owner Trustee and the Transferor, in accordance with its terms;
(iii) under the Trust Agreement, the execution and delivery of the
Transfer and Servicing Agreement and the Indenture, the issuance of the
Notes, the Transferor Certificate and the Ownership Interest
Certificate and the granting of the Collateral to the Indenture Trustee
as security for
22
23
the Notes has been duly authorized by all necessary trust action on the
part of the Issuer;
(iv) under the Trust Agreement, the Issuer has (i) the trust power and
authority to execute, deliver and perform its obligations under the
Administration Agreement, the Indenture and the Transfer and Servicing
Agreement (collectively referred to in this subsection (i) as the
"Trust Documents"), the Notes, the Transferor Certificate and the Owner
Interest Certificate and (ii) duly authorized, executed and delivered
such agreements and obligations;
(v) when the Transferor Certificate and Ownership Interest Certificate
have been duly executed and issued by the Issuer and duly authenticated
by the Owner Trustee in accordance with the Trust Agreement, the
Transferor Certificate and Ownership Interest Certificate will be
validly issued and entitled to the benefits of the Trust Agreement;
(vi) neither the execution, delivery and performance by the Issuer of
the Trust Documents, the Notes, the Transferor Certificate or the
Ownership Interest Certificate, nor the consummation by the Issuer of
any of the transactions by the Issuer contemplated thereby, requires
the consent or approval of, the withholding of objection on the part
of, the giving of notice to, the filing, registration or qualification
with, or the taking of any other action in respect of, any governmental
authority or agency of the State of Delaware and the filing of any
financing statements with the Delaware Secretary of State in connection
with the Indenture;
(vii) neither the execution, delivery and performance by the Issuer of
the Trust Documents, nor the consummation by the Issuer of the
transactions contemplated thereby, is in violation of the Trust
Agreement or of any law, rule or regulation of the State of Delaware
applicable to the Issuer;
(viii) with respect to the Issuer and the Receivables: (a) there is no
document, stamp, exercise or other similar tax imposed by the State of
Delaware upon the perfection of a security interest in the Receivables,
in the transfer of the Receivables to or from the Issuer, or upon the
issuance of the Notes; (b) there is no personal property tax imposed by
the State of Delaware upon or measured by the corpus of the Issuer; (c)
the characterization of the Issuer for federal income tax purposes will
be determinative of the characterization of the Issuer for Delaware
income tax purposes and assuming that the Issuer will be taxed as a
partnership for federal income tax purposes, the Issuer will not be
subject to Delaware income tax and Noteholders who are not otherwise
subject to Delaware income tax will not be subject to tax by reason of
their ownership of the Notes and the receipt of income therefrom; and
(d) any income tax imposed by the State of Delaware that might be
applicable to the Issuer
23
24
would be based upon "federal taxable income," and for the purposes of
determining such income, the characterization of such income for
federal income tax purposes will be determinative, whether the
characterization of the transaction is that of a sale or a loan; and
(ix) the Transferor is the sole beneficial owner of the Issuer.
(j) The Class A Notes shall be given the highest investment grade
rating by each of ▇▇▇▇▇'▇ Investors Service, Inc. ("▇▇▇▇▇'▇"), ▇▇▇▇▇, Inc.
("Fitch") and Standard & Poor's Ratings Services ("S&P") and none of ▇▇▇▇▇'▇,
S&P or Fitch shall have placed the Class A Notes under review with possible
negative implications.
(k) The Class B Notes shall be rated at least "A" or its equivalent by
each of ▇▇▇▇▇'▇, Fitch and S&P and none of ▇▇▇▇▇'▇, S&P or Fitch shall have
placed the Class B Notes under review with possible negative implications.
(l) Subsequent to the respective dates as of which information is given
in the Registration Statement and the Prospectus, there shall not have been any
change, or any development involving a prospective change, in or affecting the
business or properties of the Issuer or any of the Household Entities other than
as set forth or contemplated in the Registration Statement or Prospectus, the
effect of which, in any case referred to above, is, in the reasonable judgment
of the Representative, so material and adverse as to make it impractical or
inadvisable to proceed with the offering or the delivery of the Notes as
contemplated by the Registration Statement and the Prospectus.
(m) All proceedings in connection with the transactions contemplated by
this Agreement and all documents incident hereto shall be reasonably
satisfactory in form and substance to the Representative and counsel for the
Underwriters, and the Representative and counsel for the Underwriters shall have
received such information, certificates and documents as the Representative or
counsel for the Underwriters may reasonably request.
If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
or if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Representative and counsel for the Underwriters, this
Agreement and all obligations of the Representative and the Underwriters
hereunder may be canceled at, or at any time prior to, the Closing Date by the
Representative. Notice of such cancellation shall be given to the Indenture
Trustee and the Transferor in writing or by telephone or telegraph confirmed in
writing.
Section 7. REIMBURSEMENT OF EXPENSES. If the sale of the Notes provided
for herein is not consummated because any condition to the Representative's
obligations set forth in Section 6 hereof is not satisfied, because of any
termination pursuant to Section 10 hereof or because of any refusal, inability
or failure on the part of the Indenture Trustee or the Household Entities to
perform any agreement herein or
24
25
comply with any provision hereof other than by reason of a default by the
Representative or the Underwriters, the Household Entities, jointly and
severally, will reimburse the Underwriters severally upon demand for all
out-of-pocket expenses (including but not limited to reasonable fees and
disbursements of counsel) that shall have been incurred by them in connection
with the proposed purchase and sale of the Notes.
Section 8. INDEMNIFICATION AND CONTRIBUTION.
(a) As an inducement to the Underwriters to participate in the public
offering of the Notes, the Transferor and HFC, jointly and severally (and the
Bank with respect to any information that it has provided in connection with the
preparation of the Prospectus and, with respect to the breach of any of its
representations and warranties under Section 1 hereunder), agree to indemnify
and hold harmless each Underwriter each of their directors and officers and each
person who controls any Underwriter within the meaning of either Section 15 of
the Act or Section 20 of the Exchange Act against any and all losses, claims,
damages or liabilities, joint or several, to which they or any of them may
become subject under the Act, the Exchange Act or other Federal or state
statutory law or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon (i) any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, or in the Prospectus, or
in any amendment thereof or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading or (ii) any error,
misstatement, or incorrect or incomplete information contained in any Derived
Information resulting from any Transferor-Provided Information, and agrees to
reimburse each such indemnified party, as incurred, for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that (x) the Household Entities will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon (A) any such untrue statement or alleged untrue statement or omission or
alleged omission made therein in reliance upon and in conformity with written
information furnished to the Household Entities by or on behalf of any
Underwriter through the Representative specifically for use in connection with
the preparation thereof, (B) or relates to any Derived Information provided by
the Underwriters to a prospective investor (except to the extent such
statements, errors, or incorrect or incomplete information contained therein
result from Transferor-Provided Information), and (y) such indemnity with
respect to any such untrue statement or alleged untrue statement or omission or
alleged omission in the Prospectus shall not inure to the benefit of any
Underwriter (or any person controlling such Underwriter) from whom the person
asserting any such loss, claim, damage or liability purchased the Notes which
are the subject thereof if such person was not sent a copy of the Prospectus (or
the Prospectus as supplemented) at or prior to the confirmation of the sale of
such Notes to such person in any case where such delivery is required by the
Act. This indemnity agreement will be in addition to any liability which the
Household Entities may otherwise have.
25
26
(b) Each Underwriter, severally, agrees to indemnify and hold harmless
each of the Household Entities, each of their directors, each of the officers
who signs the Registration Statement, and each person who controls any Household
Entity within the meaning of Section 15 of the Act or Section 20 of the Exchange
Act, to the same extent as the foregoing indemnities from the Household Entities
to each Underwriter, but only with reference to (i) losses, claims, damages or
liabilities which arise from written information relating to such Underwriter
furnished to the Household Entities by or on behalf of such Underwriter
specifically for use in the preparation of the documents referred to in the
foregoing indemnity or (ii) information in any Derived Information provided by
such Underwriter (except to the extent that such untrue statements or errors
contained therein resulting from any error, misstatement, or incorrect or
incomplete information contained in any Transferor-Provided Information). This
indemnity agreement will be in addition to any liability which any Underwriter
may otherwise have. The Household Entities acknowledge that the statements
relating to the Underwriters set forth in the third and fourth paragraphs and
the last four paragraphs under the heading "Underwriting" in the Prospectus
constitute the only information furnished in writing by the Underwriters or on
behalf of the Underwriters for inclusion in the Prospectus.
(c) Promptly after receipt by an indemnified party under this Section 8
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party in writing of the commencement thereof;
but the failure so to notify the indemnifying party (i) will not relieve it from
liability under paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and such failure results in the forfeiture by the
indemnifying party of substantial rights and defenses and (ii) will not, in any
event, relieve the indemnifying party from any obligations to any indemnified
party other than the indemnification obligation provided in paragraph (a) or (b)
above. In case any such action is brought against any indemnified party and it
notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein and, to the extent that it may
wish, jointly with any other indemnified party similarly notified, to assume the
defense thereof and to appoint counsel of the indemnifying party's choice at the
indemnifying party's expense to represent the indemnified party in any action
for which indemnification is sought (in which case the indemnifying party shall
not thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be satisfactory to the indemnified
party. Notwithstanding the indemnifying party's election to appoint counsel to
represent the indemnified party in an action, the indemnified party shall have
the right to employ separate counsel (including local counsel), and the
indemnifying party shall bear the reasonable fees, costs and expenses of such
separate counsel if (i) the use of counsel chosen by the indemnifying party to
represent the indemnified party would present such counsel with a conflict of
interest, (ii) the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, (iii) the
26
27
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of the institution of such action or (iv) the indemnifying party
shall authorize the indemnified party to employ separate counsel at the expense
of the indemnifying party.
(d) If the indemnification provided for in this Section 8 is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in subsection (a) or (b) above (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Household Entities on the one hand and the Underwriters on the other from
the offering of the Notes or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of the Household Entities on the one hand and the
Underwriters on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities as well as any other
relevant equitable considerations. The relative benefits received by the
Household Entities on the one hand and the Underwriters on the other shall be
deemed to be in the same proportion as the total net proceeds from the offering
(before deducting expenses) received by the Household Entities bears to the
total underwriting discounts and commissions received by the Underwriters. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Household Entities or the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The Household Entities and the Underwriters agree
that it would not be just and equitable if contribution pursuant to this
subsection (d) were determined by pro rata allocation (even if the Underwriters
were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred
to above in this subsection (d). The amount paid by an indemnified party as a
result of the losses, claims, damages or liabilities referred to in the first
sentence of this subsection (d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any action or claim which is the subject of this
subsection (d). Notwithstanding the provisions of this subsection (d), no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Notes underwritten by it and distributed
to the public were offered to the public exceeds the amount of any damages which
such Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations in this subsection
8(d) to contribute are several in proportion to their respective underwriting
obligations and not joint.
Section 9. DEFAULT BY AN UNDERWRITER. If any one or more Underwriters
shall fail to purchase and pay for any of the Notes agreed to be purchased
27
28
by such Underwriter or Underwriters hereunder on the Closing Date and such
failure to purchase shall constitute a default in the performance of its or
their obligations under this Agreement, the remaining Underwriters shall be
obligated severally to take up and pay for (in the respective proportions which
the amount of Notes set forth opposite their names in Schedule I with respect to
the Closing Date hereto bears to the aggregate amount of Notes set forth
opposite the names of all the remaining Underwriters) the Notes which the
defaulting Underwriter or Underwriters agreed but failed to purchase; provided,
however, that in the event that the aggregate amount of Notes which the
defaulting Underwriter or Underwriters agreed but failed to purchase shall
exceed 10% of the aggregate amount of Notes set forth in Schedule I hereto, the
remaining Underwriters shall have the right to purchase all, but shall not be
under any obligation to purchase any, of the Notes, and if such nondefaulting
Underwriters do not purchase all the Notes, the obligations will terminate
without liability of any nondefaulting Underwriter, the Issuer, or any Household
Entity. In the event of a default by any Underwriter as set forth in this
Section 9, the Closing Date shall be postponed for such period, not exceeding
seven days, as the Underwriters shall determine in order that the required
changes in the Registration Statement and the Prospectus or in any other
documents or arrangements may be effected. Nothing contained in this Agreement
shall relieve any defaulting Underwriter of its liability, if any, to the
Transferor, HFC, the Bank and any nondefaulting Underwriter for damages
occasioned by its default hereunder.
Section 10. TERMINATION. This Agreement shall be subject to termination
in the absolute discretion of the Representative, by notice given to the
Transferor if after the Execution Time and prior to delivery of and payment for
the Notes on the Closing Date, (i) trading in the Common Stock of Household
International, Inc. shall have been suspended by the Commission or the New York
Stock Exchange or trading in securities generally on the New York Stock Exchange
shall have been suspended or limited or minimum prices shall have been
established on such Exchange, (ii) a banking moratorium shall have been declared
by Federal or State of New York authorities or (iii) there shall have occurred
any outbreak or escalation of hostilities involving the United States of
America, declaration by the United States of a national emergency or war or the
occurrence of any other calamity or crisis the effect of which on the financial
markets of the United States is such as to make it, in the reasonable judgment
of the Representative, impractical or inadvisable to proceed with the offering
or delivery of the Notes as contemplated by the Prospectus.
Section 11. REPRESENTATIONS AND INDEMNITIES TO SURVIVE. The respective
agreements, representations, warranties, indemnities and other statements of the
Household Entities or the officers of each of them and of the Underwriters set
forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation made by or on behalf of the
Underwriters, the Household Entities or any of the officers, directors or
controlling persons referred to in Section 8 hereof, and will survive delivery
of and payment for the Notes. The provisions of Sections 7 and 8 hereof shall
survive the termination or cancellation of this Agreement.
Section 12. NOTICES. All communications hereunder shall be in writing
and effective only on receipt, and, if sent to the Underwriters, will be mailed,
delivered or
28
29
telegraphed and confirmed to the Representative at ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Asset Finance Group; if sent to any Household
Entity, will be mailed, delivered or telegraphed and confirmed to them at ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, attention of General Counsel;
provided, however, that any notice to an Underwriter pursuant to Section 8 will
be mailed, delivered or telegraphed and confirmed to such Underwriter.
Section 13. APPLICABLE LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO THE CONFLICTS OF LAW PRINCIPLES THEREOF.
The Bank, Transferor and HFC hereby submit to the non-exclusive
jurisdiction of the Federal and state courts in the Borough of Manhattan in The
City of New York in any suit or proceeding arising out of or relating to this
Agreement or the transactions contemplated hereby.
Section 14. SUCCESSORS. This Agreement will inure to the benefit of and
be binding upon the parties hereto and their respective successors and the
officers, directors and controlling persons referred to in Section 8 hereof, and
no other person will have any right or obligation hereunder.
Section 15. COUNTERPARTS. This Agreement may be executed by one or more
parties to this Agreement on any number of separate counterparts, and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument.
Section 16. MISCELLANEOUS. This agreement supersedes all prior
agreements and understandings relating to the subject matter hereof. Neither
this Agreement nor any term hereof may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against whom enforcement of the change, waiver, discharge or termination is
sought. The headings in this Agreement are for purposes of reference only and
shall not limit or otherwise affect the meaning hereof.
29
30
If you are in agreement with the foregoing, please sign two
counterparts hereof and return one to each of the Bank and the Transferor
whereupon this letter and your acceptance shall become a binding agreement among
the Household Entities and the several Underwriters.
Very truly yours,
HOUSEHOLD BANK(SB), N.A.
By:
--------------------------------------
Name:
Title:
HRSI FUNDING, INC. II
By:
--------------------------------------
Name:
Title:
HOUSEHOLD FINANCE CORPORATION
By:
--------------------------------------
Name:
Title:
The foregoing Agreement
is hereby confirmed and
accepted as of the date hereof.
By CREDIT SUISSE FIRST BOSTON CORPORATION
By
----------------------------
Name:
Title:
For themselves and the other
several Underwriters named
in Schedule I to the
foregoing Agreement.
30
31
SCHEDULE I
CLASS A NOTES
Principal
Amount
------------
Credit Suisse First Boston Corporation 100,000,000
Bank One Capital Markets, Inc. 100,000,000
▇.▇. ▇▇▇▇▇▇ Securities Inc. 100,000,000
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. 100,000,000
CLASS B NOTES
Principal
Amount
------------
Credit Suisse First Boston Corporation 14,568,750
Bank One Capital Markets, Inc. 14,568,750
▇.▇. ▇▇▇▇▇▇ Securities Inc. 14,568,750
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. 14,568,750
31