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EXHIBIT 1
HOUSEHOLD CONSUMER LOAN TRUST 1997-1
HOUSEHOLD CONSUMER LOAN ASSET BACKED NOTES,
Series 1997-1, Class A-1, Class A-2 and Class A-3
HOUSEHOLD FINANCE CORPORATION
(Servicer)
HOUSEHOLD CONSUMER LOAN CORPORATION
(Seller)
FORM OF UNDERWRITING AGREEMENT
March ___, 1997
LEHMAN BROTHERS INC.,
as Representative of the Underwriters
3 World Financial Center
New York, New York 10285
Ladies and Gentlemen:
Household Consumer Loan Corporation, a Nevada corporation (the
"Seller") and a wholly-owned, special purpose subsidiary of Household Finance
Corporation ("HFC"), has entered into a Trust Agreement dated as of March 1,
1997 (the "Trust Agreement") with Chase Manhattan Bank Delaware (the "Owner
Trustee"), creating Household Consumer Loan Trust 1997-1 (the "Issuer"), a
statutory business trust established under the laws of the State of Delaware.
The Seller proposes to direct the Owner Trustee under the Trust Agreement to
cause the Issuer to issue Household Consumer Loan Asset Backed Notes, Series
1997-1, Class A-1 Notes, Class A-2 Notes, Class A-3 Notes and Class B Notes
(collectively, the "Notes") and Household Consumer Loan Asset Backed
Certificates, Series 1997-1 (the "Certificates" and, together with the Notes,
the "Securities"). The Class A-1, Class A-2 and Class A-3 Notes are collectively
referred to herein as the "Class A Notes". Only the Class A Notes are being
purchased by the underwriters named in Schedule A hereto (the "Underwriters")
for whom Lehman Brothers Inc. is acting as representative (the
"Representative"). The Seller and HFC understand that the Underwriters propose
to make a
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public offering of the Class A Notes as soon as the Underwriters deem advisable
after the date hereof.
The Notes will be issued pursuant to an Indenture dated as of March 1,
1997 (the "Indenture") between the Issuer and The Bank of New York (the
"Indenture Trustee") and will represent indebtedness of the Issuer. The
Certificates will be issued pursuant to the Trust Agreement. The Notes will be
secured by (i) a participation interest (the "Series 1997-1 Participation
Interest") in (a) receivables held in Household Consumer Loan Deposit Trust I
(the "Deposit Trust") originated under certain fixed and variable rate revolving
unsecured consumer credit lines (the "Credit Lines") and (b) certain other
participation interests, (ii) amounts on deposit in certain accounts of the
Issuer held for the benefit of the holders of the Securities and (iii) an
assignment of the Issuer's rights under the Series 1997-1 Supplement (as defined
below) (collectively, the "Trust Assets"). The Deposit Trust was formed pursuant
to a Pooling and Servicing Agreement dated as of September 1, 1995 (the "Base
Pooling and Servicing Agreement") among the Seller, HFC, as Servicer (the
"Servicer"), and Texas Commerce Bank National Association as successor trustee
to The Chase Manhattan Bank, N.A., as Deposit Trustee (the "Deposit Trustee").
The Series 1997-1 Participation Interest was issued pursuant to the Supplement
for Series 1997-1 dated as of March 1, 1997 among the Seller, the Servicer and
the Deposit Trustee (the "Supplement" and, together with the Base Pooling and
Servicing Agreement, the "Pooling and Servicing Agreement"). The Pooling and
Servicing Agreement, together with the Trust Agreement, the Certificate of Trust
thereto, the Indenture, the Receivables Purchase Agreement, the Administration
Agreement and this Agreement, constitute the "Basic Documents" herein.
Capitalized terms used but not defined herein shall have the meanings assigned
to such terms in the Indenture.
The Notes are more fully described in the Registration Statement (as
defined below) which the Seller has furnished to the Underwriters.
SECTION 1. Representations and Warranties of the Seller and the Credit
Line Owners. Each of the Credit Line Owners (as defined in the Pooling and
Servicing Agreement) and the Seller, each as to itself, represents and warrants
to, and agrees with the Underwriters that:
(a) A registration statement on Form S-3 (Nos. 333-20147-01 and
333-20147-02) in respect of the Notes and a registration statement on Form S-1
(No. 333-20147) in respect of the Series 1997-1 Participation Interest,
including a prospectus and such amendments thereto as may have been required on
the date hereof, relating to the Notes and the Series 1997-1 Participation
Interest, have been filed with the Securities and Exchange Commission (the
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"Commission"). The conditions to the use of a registration statement on Form S-3
and Form S-1 under the Securities Act of 1933, as amended (the "Act"), as set
forth in the General Instructions to Form S-3 and Form S-1, as applicable, have
been, or will prior to the effective date of the Registration Statement (defined
herein) be, satisfied in all material respects with respect to the Seller and
the Registration Statement. The Commission has not issued any order preventing
or suspending the use of the Preliminary Prospectus. There are no contracts or
documents of the Seller which are required to be filed as exhibits to the
Registration Statement pursuant to the Act or the Rules and Regulations (defined
herein) which have not been so filed or incorporated by reference therein on or
prior to the Effective Date of the Registration Statement, assuming compliance
by each Underwriter with Section 2(a) hereof.
To the extent that any Underwriter (i) has provided to the Seller
Collateral Term Sheets (as hereinafter defined) that such Underwriter has
provided to a prospective investor, the Seller has filed such Collateral Term
Sheets as an exhibit to a report on Form 8-K within one business day of its
receipt thereof, or (ii) has provided to the Seller Structural Term Sheets or
Computational Materials (each as hereinafter defined) that such Underwriter has
provided to a prospective investor, the Seller will file or cause to be filed
with the Commission a report on Form 8-K containing such Structural Term Sheet
and Computational Materials, as soon as reasonably practicable after the date of
this Agreement, but in any event, not later than the date on which the
Prospectus is filed with the Commission pursuant to Rule 424 or 430A of the
Rules and Regulations.
(b) The Seller will next file with the Commission either, (i) prior to
the effectiveness of the Registration Statement, a further amendment thereto
(including the form of final prospectus) or (ii) after effectiveness of the
Registration Statement, a final prospectus in accordance with Rules 430A and
424(b)(1) or (4). In the case of clause (ii), the Seller has included in such
Registration Statement, as amended at the Effective Date (defined herein), all
information (other than Rule 430A Information (defined herein)) required by the
Act and the rules and regulations thereunder (the "Rules and Regulations") to be
included in the Registration Statement with respect to the Series 1997-1
Participation Interest and the Notes and the offering of the Notes. As filed,
such amendment and form of final prospectus, or such final prospectus, shall
include all Rule 430A Information and, except to the extent the Underwriters
shall agree in writing to a modification, shall be in all substantive respects
in the form furnished to the Underwriters prior to the Execution Time (defined
herein) or, to the extent not completed at the Execution Time, shall contain
only such specific additional information and other
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changes (beyond that contained in the Preliminary Prospectus which has
previously been furnished to the Underwriters) as the Seller has advised the
Underwriters, prior to the Execution Time, will be included or made therein.
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.
"Preliminary Prospectus" shall mean any preliminary prospectus included in the
Registration Statement, or amendments thereof, which, as completed, is proposed
to be used in connection with the sale of the Notes and any prospectus
subsequently filed with the Commission by the Seller with the consent of the
Underwriters pursuant to Rule 424(a) of the Rules and Regulations. "Prospectus"
shall mean the prospectus relating to the Notes that is first filed with the
Commission pursuant to Rule 424(b) and any prospectus subsequently filed
pursuant to Rule 424 or, if no filing pursuant to Rule 424(b) is required, shall
mean the form of final prospectus included in the Registration Statement at the
Effective Date. Reference made herein to the Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include any documents incorporated by
reference therein pursuant to Item 12 of Form S-3 under the Act, as of the date
of the Preliminary Prospectus or the Prospectus, as the case may be, and any
reference to any amendment or supplement to the Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include any document filed under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), after the date
of the Preliminary Prospectus or the Prospectus and incorporated by reference in
the Preliminary Prospectus or the Prospectus; and any reference to any amendment
to the Registration Statement shall be deemed to include any report of the
Seller filed with the Commission pursuant to Section 13(a) or 15(d) of the
Exchange Act after the Effective Time that is incorporated by reference in the
Registration Statement. "Registration Statement" shall mean both registration
statements referred to in Section 1(a) hereof and any registration statements
required to be filed under the Act or the Rules and Regulations, including
incorporated documents, exhibits and financial statements, in the form in which
it has or shall become effective and, in the event of any post-effective
amendment thereto which becomes effective prior to the Closing Date (defined
herein), shall also mean such Registration Statement as so amended and including
the Rule 430A Information deemed to be included therein at the Effective Date as
provided by Rule 430A. "Rule 424" and "Rule 430A" refer to such rules and
regulations under the Act. "Rule 430A Information" means information with
respect to the Notes and the offering thereof
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permitted to be omitted from the Registration Statement when it becomes
effective pursuant to Rule 430A.
(c) On the Effective Date, the Registration Statement did or will
comply in all material respects with the applicable requirements of the Act and
the Rules and Regulations; assuming compliance by each Underwriter with Section
2(a), 2(b) and 2(c) hereof when the Prospectus is first filed (if required) in
accordance with Rule 424(b), as of its date and on the Closing Date, the
Prospectus (and any supplements thereto) will comply in all material respects
with the applicable requirements of the Act and the Rules and Regulations; on
the Effective Date, the Registration Statement, did or will not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading;
and, as of its date and on the date of any filing pursuant to Rule 424(b) (if
required) and on the Closing Date, the Prospectus (together with any supplement
thereto) will not, include any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading; provided,
however, that the Seller makes no representations or warranties as to (i) 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 Seller by or on behalf of the
Underwriters specifically for use in connection with the preparation of the
Registration Statement or the Prospectus (or any supplements thereto) or (ii)
any Derived Information (as defined below).
(d) Since the respective dates as of which information is given in the
Prospectus, or the Prospectus, as amended and supplemented at the Closing Time,
there has not been any material adverse change in the general affairs,
management, financial condition, or results of operations of any of the Credit
Line Owners or the Seller or of their subsidiaries, otherwise than as set forth
or contemplated in the Prospectus or the Prospectus as amended and supplemented
at the Closing Time.
(e) Each of the Credit Line Owners and the Seller has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of its respective jurisdiction of incorporation, with the full right, power
and authority (corporate and other) to own, lease and operate its properties and
conduct its business as described in the Prospectus and to enter into and
perform its obligations under the Basic Documents to which each is a party, and
with respect to the Seller, to authorize the execution, delivery and performance
of the Indenture and the issuance of the Notes and the Certificates,
respectively, by the
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Issuer; each of the Credit Line Owners and the Seller 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 be so
qualified would not have a material adverse effect on the business or financial
condition of any such Credit Line Owner or the Seller; and each Credit Line
Owner is duly authorized under the statutes which regulate the business of
making loans or of financing the sale of goods (commonly called "small loan
laws," "consumer finance laws," or "sales finance laws"), or is permitted under
the general interest statutes and related laws and court decisions, to conduct
in the various jurisdictions in which any of them do business the businesses as
currently conducted therein by any of them.
(f) There are no legal or governmental proceedings pending to which any
Credit Line Owner or the Seller is a party or of which any property of any
Credit Line Owner or the Seller is the subject, which if determined adversely to
any Credit Line Owner or the Seller would individually or in the aggregate have
a material adverse effect on the financial position, shareholders' equity or
results of operations of such Credit Line Owner or the Seller; and to the best
knowledge of the Credit Line Owners and the Seller, no such proceedings are
threatened or contemplated by governmental authorities or threatened by others.
(g) Each of the Basic Documents to which the Seller or the Credit Line
Owners are a party, when executed and delivered as contemplated thereby, will
have been duly authorized, executed and delivered by the Seller and the Credit
Line Owners, as applicable, and the Basic Documents to which the Seller or the
Credit Line Owners are a party when executed and delivered as contemplated
herein will constitute, legal, valid and binding instruments enforceable against
the Seller or the Credit Line Owners, as applicable, in accordance with their
respective terms, subject as to enforceability (i) to applicable bankruptcy,
reorganization, insolvency, moratorium or other similar laws affecting
creditors' rights generally, (ii) to general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law) and (iii)
with respect to rights of indemnity under this Agreement, to limitations of
public policy under applicable securities laws.
(h) The issuance and delivery of the Securities, the consummation of
any other of the transactions contemplated herein or in the Basic Documents, or
the fulfillment of the terms of the Basic Documents, do not and will not
conflict with or violate any term or provision of the Certificate or Articles of
Incorporation or Bylaws of any of the Credit Line Owners or the Seller, any
statute, order or regulation applicable to any of the Credit Line Owners or the
Seller of any court, regulatory body, administrative
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agency or governmental body having jurisdiction over any of the Credit Line
Owners or the Seller and do not and will not conflict with, result in a breach
or violation or the acceleration of or constitute a default under or result in
the creation or imposition of any lien, charge or encumbrance upon any of the
property or assets of any of the Credit Line Owners or the Seller pursuant to
the terms of, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which any of the Credit Line Owners or the Seller is
a party or by which any of the Credit Line Owners or the Seller may be bound or
to which any of the property or assets of any of the Credit Line Owners or the
Seller may be subject except for conflicts, violations, breaches, accelerations
and defaults which would not, individually or in the aggregate, be materially
adverse to any of the Credit Line Owners or the Seller or materially adverse to
the transactions contemplated by this Agreement.
(i) Arthur Andersen LLP is an independent public accountant with
respect to the Credit Line Owners and the Seller as required by the Act and the
Rules and Regulations.
(j) The direction by the Seller to the Deposit Trustee to execute,
countersign, issue and deliver the Series 1997-1 Participation Interest has been
duly authorized by the Seller, and assuming the Deposit Trustee has been duly
authorized to do so, when executed, countersigned, issued and delivered by the
Deposit Trustee in accordance with Pooling and Servicing Agreement, the Series
1997-1 Participation Interest will be validly issued and outstanding and will be
entitled to the benefits provided by the Pooling and Servicing Agreement.
(k) The Seller has directed the Issuer to execute, issue and deliver
the Notes and the Issuer has directed the Indenture Trustee to authenticate the
Notes and assuming such direction has been duly authorized by the Issuer, and
assuming the Indenture Trustee has been duly authorized to do so, when executed,
countersigned, issued and delivered in accordance with the Indenture, the Notes
will be validly issued and outstanding and will be entitled to the benefits
provided by the Indenture.
(l) No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body of the United
States is required for the issue and sale of the Notes to the Underwriters, or
the consummation by any of the Credit Line Owners, the Seller or the Issuer of
the other transactions contemplated by the Basic Documents, except the
registration under the Act of the Notes and such consents, approvals,
authorizations, registrations or qualifications as may be required under state
securities or Blue Sky laws in connection with the purchase and
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distribution of the Notes by the Underwriters or as have been obtained.
(m) Each of the Credit Line Owners and the Seller possesses all
material licenses, certificates, authorities or permits issued by the
appropriate state, federal or foreign regulatory agencies or bodies necessary to
conduct the business now conducted by it and as described in the Prospectus and
none of the Credit Line Owners or the Seller has received notice of proceedings
relating to the revocation or modification of any such license, certificate,
authority or permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would materially and adversely affect
the conduct of its business, operations or financial condition.
(n) As of the date any Receivables are transferred to the Deposit
Trustee, (i) each Credit Line Owner will have good and marketable title to the
Receivables being transferred by it to the Seller free and clear of any lien,
mortgage, pledge, charge, encumbrance, adverse claim or other security interest
(collectively, "Liens"), (ii) each Credit Line Owner will not have assigned to
any person any of its right, title or interest in such Receivables or in the
Receivables Purchase Agreement and (iii) each Credit Line Owner will have the
power and authority to sell such Receivables to the Seller; and upon the
consummation of the sale and the assignment provided for pursuant to the terms
of the Receivables Purchase Agreement, the Seller will have acquired all the
related Credit Line Owners' right, title and interest in and to the Receivables.
(o) As of the date any Receivables are transferred to the Deposit
Trustee, the Seller (i) will have good and marketable title to the Receivables
being transferred by it to the Deposit Trustee pursuant to the Pooling and
Servicing Agreement, free and clear of any Liens, (ii) will not have assigned to
any person any of its right, title or interest in such Receivables or in the
Receivables Purchase Agreement, and (iii) will have the power and authority to
sell such Receivables to the Deposit Trustee and assuming due execution and
delivery of the Pooling and Servicing Agreement and any Assignment of
Receivables in Credit Lines by the Deposit Trustee, the Deposit Trustee will
have acquired all of the Seller's right, title and interest in and to the
Receivables. As of the Closing Date, the Seller (i) will not have assigned to
any person other than the Issuer any of its right, title or interest in the
Series 1997-1 Participation Interest being issued pursuant to the Pooling and
Servicing Agreement and (ii) will have the power and authority to convey the
Series 1997-1 Participation Interest to the Issuer pursuant to the Trust
Agreement.
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(p) At the Closing Time, the Seller will (i) have good and marketable
title to the Series 1997-1 Participation Interest, free and clear of any Lien
and (ii) have the power and authority to sell the Series 1997-1 Participation
Interest to the Issuer and to authorize the Issuer to issue the Securities. Upon
execution and delivery of the Trust Agreement by the Seller and the conveyance
of the Series 1997-1 Participation Interest from the Seller to the Issuer, the
Issuer will have acquired ownership of all of the Seller's right, title and
interest in and to the Series 1997-1 Participation Interest.
(q) As of the Closing Time, each of the Initial Receivables will meet
the eligibility criteria described in the Prospectus and Pooling and Servicing
Agreement.
(r) None of the Credit Line Owners, the Seller, the Deposit Trust or
the Issuer will conduct its operations while any of the Securities are
outstanding in a manner that would require any Credit Line Owner, the Seller,
the Deposit Trust 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.
(s) At the Closing Time, the Securities and the Basic Documents that
are described in the Prospectus will conform in all material respects to the
descriptions thereof.
(t) At the Closing Time, Moody's and Standard & Poor's each shall have
assigned to each class of the Notes the respective ratings for the Notes as set
forth in the Prospectus.
(u) Any taxes, fees and other governmental charges in connection with
the execution and delivery of the Basic Documents and the issuance of the
Securities have been paid or will be paid at or prior to the Closing Time.
(v) At the Closing Time, each of the representations and warranties of
the Seller and the Credit Line Owners set forth in this Agreement will be true
and correct in all material respects.
Any certificate signed by an officer of any Credit Line Owner or the
Seller and delivered to the Underwriter or counsel for the Underwriter in
connection with an offering of the Securities 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. Representations and Warranties of the Underwriters. Each
Underwriter severally, and not jointly,
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represents and warrants to, and agrees with the other Underwriters, the Credit
Line Owners, the Seller, the Servicer and HFC that:
(a) Prior to the Effective Date of the Registration Statement, such
Underwriter has not and will not furnish, in writing or by electronic
transmission, Derived Information relating to the Notes to any prospective
investor.
(b) Such Underwriter shall provide the Seller no later than one
Business Day after any Collateral Term Sheets are delivered to a prospective
investor, or in the case of any Structural Term Sheets and Computational
Materials no later than one Business Day before 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 of
the Registration Statement and ending on the date the Prospectus is filed with
the Commission. Such Underwriter shall deliver to the Seller a hard copy and, in
a mutually agreed upon format, a disk or electronic transmission of such Derived
Information.
(c) Assuming the accuracy of the Seller-Provided Information used in
the preparation of Derived Information, the Derived Information, delivered by
such Underwriter, 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.
(d) Each Underwriter acknowledges that the Credit Line Owners, the
Seller or HFC will not be deemed to have breached any representation and
warranty or to have failed to satisfy any other agreement contained herein as a
result of an Underwriter's breach of a representation and warranty set forth in
clause (a), (b) or (c) above; provided, however, that the rights and obligations
otherwise available pursuant to Sections 9 and 10 hereof are not limited solely
as a result of an Underwriter's breach of a representation and warranty set
forth in clause (a), (b), or (c) above.
SECTION 3. Purchase and Sale. The commitment of the Underwriters to
purchase and of the Seller to sell the Notes pursuant to this Agreement shall be
deemed to have been made on the basis of the respective representations and
warranties of each of the parties herein contained and shall be subject to the
terms and conditions herein set forth. The Seller agrees to instruct the Issuer
to issue and agrees to sell to the Underwriters, and the Underwriters agree,
severally and not jointly (except as provided in Section 12 hereof), to purchase
from the Seller, at a purchase price for each Class of the Notes set forth on
Schedule A hereto,
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the respective principal amount of each Class of the Notes set forth opposite
the name of such Underwriter on Schedule A hereto.
SECTION 4. Delivery and Payment. Payment of the purchase price for, and
delivery of, any Notes to be purchased by the Underwriters shall be made at the
office of Katten Muchin & Zavis, of Chicago, Illinois or at such other place as
shall be agreed upon by the Underwriters, the Seller and HFC at 10:00 a.m.
eastern time on March ___, 1997 or at such other time or date as shall be agreed
upon in writing by the Underwriters, the Seller and HFC (the "Closing Time").
The Notes will be delivered in book-entry form through the facilities of the
Depository Trust Company, Cedel Bank Societe Anonyme and the Euroclear System.
Payment shall be made to the Seller by wire transfer of same day funds payable
to the account of the Seller. Delivery of the Notes shall be made to the
Underwriters for the respective accounts of the Underwriters against payment of
the purchase price thereof. Such Notes shall be in such denominations and
registered in such names as the Underwriters may request in writing at least one
business day prior to the applicable Closing Time. Such Notes, which may be in
temporary form, will be made available for examination and packaging by the
Underwriters no later than 3:00 p.m. central time on the first business day
prior to the Closing Time.
SECTION 5. Offering by the Underwriters. It is understood that the
Underwriters propose to offer the Notes for sale to the public as set forth in
the Prospectus.
SECTION 6. Covenants of the Seller and HFC. The Seller and HFC covenant
with each of the Underwriters as follows:
(a) If at any time when the Prospectus as amended or supplemented is
required by the Act to be delivered in connection with sales of the Notes by the
Underwriters, any event shall occur or condition exist as a result of which it
is necessary, in the opinion of counsel to the Underwriters or counsel for the
Seller, to further amend or supplement the Prospectus as then amended or
supplemented in order that the Prospectus as amended or supplemented will not
include an untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in the light of circumstances
under which they were made, not misleading or if it shall be necessary, in the
opinion of any such counsel, at any such time to amend or supplement the
Registration Statement or the Prospectus as then amended or supplemented in
order to comply with the requirements of the Act or the Rules and Regulations,
or if required by such Rules and Regulations, including Rule 430A thereunder, to
file a post-effective amendment to such Registration Statement (including an
amended Prospectus), the Seller will promptly prepare and file with the
Commission such amendment or supplement as may be
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necessary to correct such untrue statement or omission or to make the
Registration Statement comply with such requirements, and within two business
days will furnish to the Underwriters as many copies of the Prospectus, as
amended or supplemented, as the Underwriters shall reasonably request.
(b) The Seller will give the Underwriters reasonable notice of its
intention to file any amendment to the Registration Statement, the Prospectus or
the Prospectus as amended or supplemented, pursuant to the Act, will furnish the
Underwriters with copies of any such amendment or supplement proposed to be
filed a reasonable time in advance of filing, and will not file any such
amendment or supplement to which the Underwriters or counsel to the Underwriters
shall object.
(c) The Seller will notify the Underwriters immediately, and confirm
the notice in writing, (i) of the effectiveness of any amendment to the
Registration Statement, (ii) of the mailing or the delivery to the Commission
for filing of any supplement to the Prospectus or the Prospectus as amended or
supplemented, (iii) of the receipt of any comments from the Commission with
respect to the Registration Statement or the Prospectus or the Prospectus as
amended or supplemented, (iv) of any request by the Commission for any amendment
to the Registration Statement or any amendment or supplement to the Prospectus
or for additional information and (v) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose. The Seller will make every
reasonable effort to prevent the issuance of any stop order and, if any stop
order is issued, to obtain the lifting thereof at the earliest possible moment.
(d) The Seller will deliver to the Underwriters as many signed and as
many conformed copies of the Registration Statement (as originally filed) and of
each amendment thereto (including exhibits filed therewith or incorporated by
reference therein and documents incorporated by reference in the Prospectus) as
you may reasonably request.
(e) The Seller will make generally available to holders of the Notes as
soon as practicable, but in any event not later than 120 days after the close of
the period covered thereby, an earning statement of the Issuer (which need not
be audited) complying with Section 11(a) of the Act and the Rules and
Regulations (including, at the option of the Seller, Rule 158) and covering a
period of at least twelve consecutive months beginning not later than the first
day of the first fiscal quarter following the Closing Time.
(f) The Seller will endeavor, in cooperation with you, to qualify the
Notes for offering and sale under the applicable
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securities laws of such states and other jurisdictions of the United States as
you may designate, and will maintain or cause to be maintained such
qualifications in effect for as long as may be required for the distribution of
the Notes. The Seller will file or cause the filing of such statements and
reports as may be required by the laws of each jurisdiction in which the Notes
have been qualified as above provided.
(g) Neither the Seller nor HFC will, without your prior written
consent, publicly offer or sell or contract to sell any asset-backed securities
or participation interests or other similar securities representing interests in
or secured by other consumer loan-related assets originated or owned by the
Seller or HFC for a period of five days following the commencement of the
offering of the Notes to the public.
(h) So long as the Notes shall be outstanding, the Seller will cause
the Issuer to deliver to the Underwriters the annual statement as to compliance
delivered to the Indenture Trustee pursuant to Section 3.10 of the Indenture and
each monthly report delivered pursuant to Section 3.23 of the Indenture. So long
as the Notes are outstanding, the Servicer will deliver to the Underwriters the
annual statement of a firm of independent public accountants furnished to the
Deposit Trustee pursuant to Section 3.06 of the Pooling and Servicing Agreement
and the monthly servicing report delivered pursuant to Article V of the Pooling
and Servicing Agreement.
(i) The Seller will apply the net proceeds from the sale of the Notes
in the manner set forth in the Prospectus.
(j) If, between the date hereof and the Closing Time, to the knowledge
of HFC or the Seller there are any legal or governmental proceedings instituted
or threatened against HFC or the Seller which, if determined adversely to HFC or
the Seller would individually or in the aggregate have a material adverse effect
on the financial condition, shareholders' equity or results of operations of HFC
or the Seller, and HFC and the Seller, as applicable, will give prompt written
notice thereof to the Underwriters.
SECTION 7. Conditions to Underwriters' Obligations. The respective
obligations of the Underwriters to purchase and of the Seller to sell the Notes
pursuant to this Agreement are subject to the accuracy on and as of the Closing
Time of the representations and warranties on the part of the Credit Line Owners
and the Seller on the one hand and the Underwriters on the other, each as herein
contained, and to the material accuracy of the statements of officers of the
Credit Line Owners, the Seller and HFC, respectively, made pursuant hereto, to
the performance by the
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Credit Line Owners, the Seller and HFC of all of their respective obligations
hereunder and to the following conditions at the Closing Time:
(a) If the Registration Statement has not become effective prior to the
date of this Agreement, unless the Underwriters agree in writing to a later
time, the Registration Statement shall have become effective not later than (i)
6:00 p.m. New York City time on the date of determination of the public offering
price, if such determination occurred at or prior to 10:00 a.m. New York City
time on such date, or (ii) 3:00 p.m. on the business day following the day on
which the public offering price was determined, if such determination occurred
after 10:00 a.m. New York City time on such date; if filing of the Prospectus,
or any supplement thereto, is required pursuant to Rule 424(b), the Prospectus
shall be filed in the manner and within the time period required by Rule 424(b);
and 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.
(b) There shall not have come to the Underwriters' attention any facts
that would cause the Underwriters to believe that the Prospectus, at the time it
was required to be delivered to a purchaser of the Notes, contained an untrue
statement of a material fact or omitted to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(c) The Underwriters shall have received the favorable opinion, dated
the date of the Closing Time, of John W. Blenke, Esq., Vice President--Corporate
Law of Household International, Inc., the parent company of HFC, in the form
attached hereto as Exhibit A.
(d) The Underwriters shall have received the favorable opinion, dated
the date of the Closing Time, of John W. Blenke, Esq., Vice President--Corporate
Law of Household International, Inc., the parent company of HFC, in form and
substance satisfactory to the Underwriters, to the effect that:
(i) HFC has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware, with corporate power to own its properties, to conduct its
business as described in the Prospectus and to enter into and perform
its obligations under the Basic Documents to which it is a party.
(ii) The Seller has been duly incorporated and is
validly existing as a corporation in good standing under the laws of
the State of Delaware, with corporate power to own its
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properties, to conduct its business as described in the Prospectus and
to enter into and perform its obligations under the Basic Documents to
which it is a party.
(iii) Each of the Credit Line Owners has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation, with corporate
power to own its properties, to conduct its business as described in
the Prospectus and to enter into and perform its obligations under the
Basic Documents to which it is a party.
(iv) HFC has full corporate power and authority to serve
in the capacity of servicer of the Receivables as contemplated by the
Pooling and Servicing Agreement.
(v) Each of the Credit Line Owners, the Seller and HFC
is duly authorized under related statutes, laws and court decisions, to
conduct in the various jurisdictions in which they do business the
respective businesses therein currently conducted by them, except where
failure to be so permitted or failure to be so authorized will not have
a material adverse effect on the business or financial condition of the
Credit Line Owners, the Seller or HFC, and the Credit Line Owners are
duly authorized under the statutes which regulate the business of
making loans or of financing the sale of goods (commonly called "small
loan laws," "consumer finance laws," or "sales finance laws"), or are
permitted under the general interest statutes and related laws and
court decisions, to conduct in the various jurisdictions in which any
of them do business the businesses as currently conducted therein by
any of them.
(vi) None of the Credit Line Owners, the Seller or HFC
is in violation of its Certificate or Articles of Incorporation or
Bylaws or, to the best of such counsel's knowledge, 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 known to such counsel
to which any of the Credit Line Owners, the Seller or HFC is a party or
by which it or its properties may be bound, which default might result
in any material adverse changes in the financial condition, earnings,
affairs or business of any of the Credit Line Owners, the Seller or HFC
or which might materially and adversely affect the properties or
assets, taken as a whole, of any of the Credit Line Owners, the Seller
or of HFC.
(vii) Each of the Basic Documents to which HFC, the
Seller and the Credit Line Owners are a party has been duly
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authorized, executed and delivered by HFC, the Seller and the Credit
Line Owners, as applicable, and, assuming the due authorization,
execution and delivery of such agreements by the other parties thereto,
such agreements constitute the valid and binding obligation of each of
the Seller, HFC and the Credit Line Owners, enforceable against each of
the Seller, HFC and the Credit Line Owners, in accordance with its
terms, except that in each case as to enforceability (A) such
enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally, (B) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought and (C) the enforceability as to
rights to indemnification under this Agreement (to the extent
indemnification under this Agreement relates to liability under the
Act) may be subject to limitations of public policy under applicable
securities laws.
(viii) The issuance and delivery of the Securities and the
Series 1997-1 Participation Interest, the consummation of any other of
the transactions contemplated hereby or by the Basic Documents, or the
fulfillment of the terms of such agreements do not and will not
conflict with or violate any term or provision of the Certificate or
Articles of Incorporation or Bylaws of the Seller or, to the best of
such counsel's knowledge, any statute, order or regulation applicable
to the Seller of any court, regulatory body, administrative agency or
governmental body having jurisdiction over the Seller and do not and
will not conflict with, result in a breach or violation or the
acceleration of or constitute a default under or result in the creation
or imposition of any lien, charge or encumbrance upon any of the
property or assets of the Seller pursuant to the terms of any
indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument known to such counsel to which the Seller is a party or
by which the Seller may be bound or to which any of the property or
assets of the Seller may be subject except for conflicts, violations,
breaches, accelerations and defaults which would not, individually or
in the aggregate, be materially adverse to the Seller or materially
adverse to the transactions contemplated by this Agreement.
(ix) The consummation of any of the transactions
contemplated by the Basic Documents to which the Credit Line Owners are
a party and the fulfillment of the terms of such documents, do not and
will not conflict with or violate any terms or provision of the
Certificate or Articles of Incorporation or Bylaws of any of the Credit
Line Owners or,
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to the best of such counsel's knowledge, any statute, order or
regulation applicable to any of the Credit Line Owners or, to the best
of such counsel's knowledge, any statute, order or regulation
applicable to any of the Credit Line Owners and do not and will not
conflict with, result in a breach or violation or the acceleration of
or constitute a default under or result in the creation or imposition
of any lien, charge or encumbrance upon any of the property or assets
of any of the Credit Line Owners pursuant to the terms of, any
indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument known to such counsel to which any of the Credit Line
Owners may be bound or to which any of the property or assets of any of
the Credit Line Owners may be subject except for conflicts, violations,
breaches, accelerations and defaults which would not, individually or
in the aggregate, be materially adverse to the applicable Credit Line
Owners or materially adverse to the transactions contemplated by this
Agreement.
(x) The consummation of any of the transactions
contemplated herein or the fulfillment of the terms of the Basic
Documents do not and will not conflict with or violate any term or
provision of the Certificate or Articles of Incorporation or By-laws of
HFC or, to the best of such counsel's knowledge, any statute, order or
regulation applicable to HFC and do not and will not conflict with,
result in a breach or violation or the acceleration of or constitute a
default under or result in the creation or imposition of any lien,
charge or encumbrance upon any of the property or assets of HFC
pursuant to the terms of, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument known to such counsel to
which HFC is a party or by which HFC may be bound or to which any of
the property or assets of HFC may be subject except for conflicts,
violations, breaches, accelerations and defaults which would not,
individually or in the aggregate, be materially adverse to HFC or
materially adverse to the transactions contemplated by this Agreement.
(xi) The direction by the Seller to the Deposit Trustee
to execute, issue, countersign and deliver the Series 1997-1
Participation Interest has been duly authorized by the Seller and,
assuming that the Deposit Trustee has been duly authorized to do so and
when executed and countersigned and delivered by the Deposit Trustee in
accordance with the Pooling and Servicing Agreement, the Series 1997-1
Participation Interest will be validly issued and outstanding and will
be entitled to the benefits of the Pooling and Servicing Agreement.
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(xii) The direction by the Seller to the Owner Trustee to
execute, issue, countersign and deliver the Certificates on behalf of
the Issuer has been duly authorized by the Seller and, assuming that
the Owner Trustee has been duly authorized to do so and when executed
and countersigned and delivered by the Owner Trustee in accordance with
the Trust Agreement, the Certificates will be validly issued and
outstanding and will be entitled to the benefits of the Trust
Agreement.
(xiii) To the best of such counsel's knowledge, no
consent, approval, authorization, order, registration or qualification
of or with any court or governmental agency or body of the United
States is required for the issuance of the Securities and the sale of
the Securities to the Underwriters, or the consummation by the Credit
Line Owners, the Seller and HFC of the other transactions contemplated
by the Basic Documents, except the registration under the Act of the
Securities and such consents, approvals, authorizations, registrations
or qualifications as may be required under state securities or Blue Sky
laws in connection with the purchase and distribution of the Securities
by the Underwriters or as have been obtained.
(xiv) The Registration Statement is effective under the
Act and to the best of such counsel's knowledge and information, no
stop order suspending the effectiveness of the Registration Statement
has been issued under the Act or proceedings therefor initiated or
threatened by the Commission.
(xv) The conditions to the use by the Seller of a
registration statement on Form S-3 and Form S-1 under the Act, as set
forth in the General Instructions to Form S-3 and Form S-1, have been
satisfied with respect to the Registration Statement and the
Prospectus. To the best of such counsel's knowledge, there are no
contracts or documents of the Seller which are required to be filed as
exhibits to the Registration Statement pursuant to the Act or the Rules
and Regulations thereunder which have not been so filed. The statements
in the Prospectus under the caption "Risk Factors--Legal
Considerations" and under the caption "Certain Legal Aspects of the
Receivables", to the extent that statements in such sections constitute
matters of law or legal conclusions with respect thereto, have been
reviewed by attorneys under such counsel's supervision and are complete
and correct in all material respects.
(xvi) There are no actions, proceedings or investigations
pending before or, to the best knowledge of such counsel, threatened by
any court, administrative agency or other
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tribunal to which any of the Credit Line Owners, HFC or the Seller is a
party or of which any of their respective properties is the subject (A)
which if determined adversely to any of the Credit Line Owners, HFC or
the Seller would have a material adverse effect on the business or
financial condition of any of the Credit Line Owners, HFC or the
Seller, (B) asserting the invalidity of any of the Basic Documents, or
the Securities, (C) seeking to prevent the issuance of the Securities
or the consummation by any of the Credit Line Owners, HFC or the Seller
of any of the transactions contemplated by any of the Basic Documents,
as the case may be, or (D) which might materially and adversely affect
the performance by any of the Credit Line Owners, HFC or the Seller of
their respective obligations under, or the validity or enforceability
of any of the Basic Documents or the Securities.
(xvii) The Registration Statement at the time it became
effective, and any amendment thereto at the time such amendment becomes
effective, complied as to form in all material respects with the
applicable requirements of the Act and the Rules and Regulations.
(xviii) Such counsel has no reason to believe that (A) the
Registration Statement and the Prospectus, as of the date the
Registration Statement became effective, or the Registration Statement
(excluding the exhibits thereto) as of the date that the most recent
post-effective amendment thereto became effective, contained or
contains any untrue statement of a material fact or omitted or omits to
state any material fact required to be stated therein or necessary in
order to make the statements therein not misleading or (B) assuming
compliance by each of the Underwriters with Section 2(a) and (b)
hereof, the Prospectus, as of its date and the date of such opinion,
contained or contains any untrue statement of a material fact or
omitted 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 (it being understood that such counsel
need express no opinion as to information set forth in the financial
statements or other financial and statistical data contained or
incorporated by reference in the Registration Statement).
Such opinion may express its reliance as to factual matters on the
representations and warranties made by the parties hereto, and on certificates
or other documents furnished by officers of such parties to the instruments and
documents referred to therein. Such opinion may be qualified, insofar as it
concerns the enforceability of the documents referred to therein, to the extent
that such enforceability may be limited by bankruptcy, insolvency,
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reorganization or other similar laws affecting the enforcement of creditors'
rights in general, or by general principles of equity (regardless of whether
such enforcement is considered in a proceeding in equity or at law) and no
opinion need be given as to the enforceability of Section 9 of this Agreement.
(e) The Underwriters shall have received the favorable opinion of
counsel to the Indenture Trustee, dated the date of the Closing Time, addressed
to the Underwriters and in form and scope satisfactory to counsel to the
Underwriters, to the effect that:
(i) The Indenture Trustee has duly authorized, executed
and delivered the Indenture which constitute the valid and legally
binding agreements of the Indenture Trustee, are enforceable against
the Indenture Trustee in accordance with its terms, subject, as to
enforcement of remedies, (A) to applicable bankruptcy, insolvency,
reorganization, and other similar laws affecting the rights of
creditors generally and (B) to general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity
or at law).
(ii) The Indenture Trustee has duly countersigned the
Notes issued on the date hereof on behalf of the Issuer.
(iii) The execution and delivery by the Indenture Trustee
of the Indenture and the performance by the Indenture Trustee of its
obligations thereunder do not conflict with or result in a violation of
the organizational charter or Bylaws of the Indenture Trustee.
(iv) The Indenture Trustee has full power and authority
to execute and deliver the Indenture and to perform its obligations
thereunder.
(v) To the best of such counsel's knowledge, there are
no actions, proceedings or investigations pending or threatened against
or affecting the Indenture Trustee before or by any court, arbitrator,
administrative agency or other governmental authority which, if
adversely decided, would materially and adversely affect the ability of
the Indenture Trustee to carry out the transactions contemplated by the
Indenture.
(vi) No consent, approval or authorization of, or
registration, declaration or filing with, any court or governmental
agency or body of the United States of America or any state thereof is
required for the execution, delivery or performance by the Indenture
Trustee of the Indenture.
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(f) The Underwriters shall have received the favorable opinion of
counsel to the Owner Trustee, dated the Closing Date, addressed to the
Underwriters, satisfactory to counsel to the Underwriters, to the effect that:
(i) The Owner Trustee is duly incorporated and
validly existing as a banking corporation under the laws of
the State of Delaware and has the power and authority to
execute and deliver the Basic Documents to which it is a
party;
(ii) The Basic Documents to which it is a party have
been duly authorized, executed and delivered to the Owner
Trustee and constitutes the legal, valid and binding
agreements of the Owner Trustee, enforceable against the Owner
Trustee in accordance with its respective terms;
(iii) The Securities have been duly authorized,
executed and delivered by Owner Trustee on behalf of the
Issuer;
(iv) 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 or the Issuer
for the issuance and sale of the Securities or the valid
execution and delivery of the Trust Agreement, or for the
validity and enforceability thereof, or for the payment of any
amounts by the Issuer thereunder;
(v) Neither the execution and delivery by the Owner
Trustee of the Basic Documents to which it is a party, nor the
issuance, execution and delivery by the Issuer of the
Securities, nor the consummation of the transactions
contemplated thereby, nor compliance with the terms thereof,
(i) conflicts with or results in a breach of, or constitutes a
default under, the provisions of the Trust Agreement or the
Certificate of Incorporation of the Owner Trustee or any law,
rule or regulation of the State of Delaware applicable to the
Owner Trustee or, to such counsel's knowledge, any judgment or
order applicable to the Owner Trustee or their respective
properties or, to such counsel's knowledge, any indenture,
mortgage, contract or other agreement or instrument to which
the Owner Trustee is a party or by which it is bound or (ii)
to such counsel's knowledge, results in the creation or
imposition or any lien, charge or encumbrance upon the Owner
Trustee's properties or the Owner Trust Estate (except as
permitted by the Trust Agreement);
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(vi) To such counsel's knowledge, there are no
pending or threatened actions, suits or proceedings affecting
the Issuer or the Owner Trustee before any court or other
governmental authority which, if adversely decided, would
materially and adversely affect the ability of the Issuer or
the Owner Trustee, as the case may be, to carry out the
transactions contemplated in the Trust Agreement;
(vii) The Issuer has been duly formed and is validly
existing as a business trust under the Delaware Business Trust
Act 12 Del. C. Section 3801 et seq.
(g) The Underwriters shall have received the favorable opinion of
counsel to the Deposit Trustee, dated the Closing Date, addressed to the
Underwriters, satisfactory to counsel to the Underwriters, to the effect that:
(i) The Deposit Trustee is duly incorporated and
validly existing as a banking corporation under the laws of
the United States and has the power and authority to execute
and deliver the Pooling and Servicing Agreement;
(ii) The Pooling and Servicing Agreement has been
duly authorized, executed and delivered to the Deposit Trustee
and constitutes the legal, valid and binding agreements of the
Deposit Trustee, enforceable against the Deposit Trustee in
accordance with its respective terms;
(iii) The Series 1997-1 Participation Interest has
been duly authorized, executed and delivered by the Deposit
Trust, and, when authenticated in accordance with the
provisions of the Pooling and Servicing Agreement, and when
delivered to and paid for by the Seller, will be entitled to
the benefits and security afforded by the Pooling and
Servicing Agreement, and will constitute legal, valid and
binding obligations of the Deposit Trust, enforceable against
the Deposit Trust in accordance with the terms of the Pooling
and Servicing Agreement;
(iv) No consent, approval or other authorization of,
or registration, declaration or filing with, any court or
governmental agency or commission is required by or with
respect to the Deposit Trustee or the Deposit Trust for the
issuance and sale of the Series 1997-1 Participation Interest
or the valid execution and delivery of the Pooling and
Servicing Agreement, or for the validity and
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enforceability thereof, or for the payment of any amounts
by the Deposit Trust thereunder;
(v) Neither the execution and delivery by the Deposit
Trustee of the Pooling and Servicing Agreement, nor the
issuance, execution and delivery by the Deposit Trustee of the
Series 1997-1 Participation Interest, nor the consummation of
the transactions contemplated thereby, nor compliance with the
terms thereof, (i) conflicts with or results in a breach of,
or constitutes a default under, the provisions of the Pooling
and Servicing Agreement or the certificate of incorporation of
the Deposit Trustee or any law, rule or regulation of the
United States applicable to the Deposit Trustee or, to such
counsel's knowledge, any judgment or order applicable to the
Deposit Trustee or their respective properties or, to such
counsel's knowledge, any indenture, mortgage, contract or
other agreement or instrument to which the Deposit Trustee is
a party or by which it is bound or (ii) to such counsel's
knowledge, results in the creation or imposition or any lien,
charge or encumbrance upon the Deposit Trustee's properties or
the Deposit Trust's properties (except as permitted by the
Pooling and Servicing Agreement); and
(vi) To such counsel's knowledge, there are no
pending or threatened actions, suits or proceedings affecting
the Deposit Trust or the Deposit Trustee before any court or
other governmental authority which, if adversely decided,
would materially and adversely affect the ability of the
Deposit Trust or the Deposit Trustee, as the case may be, to
carry out the transactions contemplated in the Basic
Documents.
(h) The Underwriters shall have received the favorable opinion or
opinions, dated the date of the Closing Time, of Brown & Wood LLP, as counsel
for the Underwriters, with respect to the issue and sale of the Notes, the
Registration Statement, this Agreement, the Prospectus and such other related
matters as the Underwriters may require.
(i) The Underwriters shall have received opinions, dated the date of
the Closing Time, of Katten Muchin & Zavis, as special counsel to the Seller and
HFC, addressed to the Indenture Trustee, the Seller and the Underwriters
relating to certain matters specified in Section 2.03 (iii) of the Indenture.
(j) The Underwriters shall have received an opinion, dated the date of
the Closing Time, of Katten Muchin & Zavis, as special counsel to the Seller and
HFC addressed to the Seller and
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satisfactory to the Rating Agencies relating to (i) the sale of the Receivables
to the Seller, (ii) the transfer of the Receivables to the Deposit Trustee and
(iii) the transfer of the Series 1997-1 Participation Interest from the Seller
to the Issuer and such counsel shall have consented to reliance by the Rating
Agencies and the Underwriters on such opinion as though such opinion had been
addressed to each such party.
(k) Each of the Credit Line Owners, the Seller and HFC shall have
furnished to the Underwriters a certificate signed on behalf of the Credit Line
Owners, the Seller and HFC by the respective principal accounting or principal
financial officer thereof, dated the date of the Closing Time, as to (i) the
accuracy of the representations and warranties (except for the representations
made in Section 1(f) hereof) of the Credit Line Owners and the Seller herein at
and as of the Closing Time, (ii) there being no legal or governmental
proceedings pending, other than those, if any, referred to in the Prospectus to
which any of the Credit Line Owners, the Seller or HFC is a party or of which
any property of any of the Credit Line Owners, the Seller or HFC is the subject,
which, in the judgment of any of the Credit Line Owners, the Seller or HFC, as
applicable, have a reasonable likelihood of resulting in a material adverse
change in the financial condition, shareholders' equity or results of operations
of the Credit Line Owners, the Seller or HFC; and to the best knowledge of each
of the Credit Line Owners, the Seller or HFC, as applicable, no such proceedings
are threatened or contemplated by governmental authorities or threatened by
others, (iii) the performance by the Credit Line Owners, the Seller and HFC of
all of their respective obligations hereunder to be performed at or prior to the
Closing Time, and (iv) such other matters as the Underwriters may reasonably
request.
(l) The Indenture Trustee shall have furnished to the Underwriters a
certificate of the Indenture Trustee, signed by one or more duly authorized
officers of the Indenture Trustee, dated the Closing Time, as to the due
authorization, execution and delivery of the Indenture by the Indenture Trustee
and the acceptance by the Indenture Trustee of the trusts created by the
Indenture and the due execution and delivery of the Notes by the Indenture
Trustee thereunder and such other matters as the Underwriters shall reasonably
request.
(m) The Owner Trustee shall have furnished to the Underwriters a
certificate of the Owner Trustee, signed by one or more duly authorized officers
of the Owner Trustee, dated the Closing Time, as to the due authorization,
execution and delivery of the Trust Agreement by the Owner Trustee and the
acceptance by the Owner Trustee of the trusts created by the Trust Agreement and
the due execution and delivery of the Notes by the Issuer under the
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Indenture and such other matters as the Underwriters shall reasonably request.
(n) The Deposit Trustee shall have furnished to the Underwriters a
certificate of the Deposit Trustee, signed by one or more duly authorized
officers of the Deposit Trustee, dated the Closing Time, as to the due
authorization, execution and delivery of the Pooling and Servicing Agreement by
the Deposit Trustee and the acceptance by the Deposit Trustee of the trusts
created by the Pooling and Servicing Agreement and the due execution and
delivery of the Series 1997-1 Participation Interest by the Deposit Trustee
thereunder and such other matters as the Underwriters shall reasonably request.
(o) The Class A-1 Notes, the Class A-2 Notes and the Class A-3 Notes
shall have been rated at least "AAA", "AA-" and "A", respectively, by at least
two nationally recognized rating organizations, Standard & Poor's and Moody's,
respectively.
(p) Counsel and special counsel to HFC and the Seller shall have
furnished to the Underwriters any opinions supplied to the Rating Agencies
relating to certain matters with respect to the Notes.
(q) The Underwriters shall have received from Arthur Andersen LLP, or
other independent certified public accountants acceptable to the Underwriters, a
letter, dated as of the date of this Agreement in the form heretofore agreed to.
(r) Prior to the Closing Time, Brown & Wood LLP, as counsel for the
Underwriters, shall have been furnished with such documents and opinions as they
may reasonably require for the purpose of enabling them to pass upon the
issuance and sale of the Notes as herein contemplated and related proceedings or
in order to evidence the accuracy and completeness of any of the representations
and warranties, or the fulfillment of any of the conditions, herein contained;
and all proceedings taken by the Seller and HFC in connection with the issuance
and sale of the Notes as herein contemplated shall be satisfactory in form and
substance to the Underwriters and Brown & Wood LLP.
(s) Since the respective dates as of which information is given in the
Prospectus, there shall not have been any change, or any development involving a
prospective change, in or affecting the general affairs, management, financial
condition, stockholders' equity or results of operations of the Seller, any of
the Credit Line Owners or HFC otherwise than as set forth or contemplated in the
Prospectus, the effect of which is in the judgment of the Underwriters so
material and adverse as to make it impracticable or inadvisable to proceed with
the public offering or the delivery of
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the Notes on the terms and in the manner contemplated in the Prospectus.
(t) Prior to the Closing Time, the Credit Line Owners, the Seller and
HFC shall have furnished to the Underwriters such further information,
certificates and documents as the Underwriters may reasonably request.
If any condition specified in this Section 7 shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be terminated
by the Underwriters by notice to the Seller at any time at or prior to the
Closing Time, and such termination shall be without liability of any party to
any other party except as provided in Section 7.
SECTION 8. Payment of Expenses. The Seller, the Credit Line Owners and
HFC jointly and severally agree to pay all expenses incident to the performance
of their obligations under this Agreement, including without limitation those
related to (i) the filing of the Registration Statement and all amendments
thereto, (ii) the preparation, issuance and delivery of the Notes, (iii) the
fees and disbursements of Katten Muchin & Zavis, as special counsel for the
Seller and HFC, and Arthur Andersen LLP, accountants of the Seller and HFC, (iv)
the qualification of the Notes under securities and Blue Sky laws and the
determination of the eligibility of the Notes for investment in accordance with
the provisions of Section 6(f) including filing fees, and the fees and
disbursements of Brown & Wood LLP, as counsel for the Underwriters (not to
exceed $28,000), in connection therewith and in connection with the preparation
of any Blue Sky Survey, (v) the printing and delivery to the Underwriters, in
such quantities as the Underwriters may reasonably request, of copies of the
Registration Statement and Prospectus and all amendments and supplements
thereto, and of any Blue Sky Survey, (vi) the delivery to the Underwriters, in
such quantities as the Underwriters may reasonably request, of copies of the
Basic Documents and (vii) the fees charged by nationally recognized statistical
rating agencies for rating the Notes, and (viii) the fees and expenses of the
Deposit Trustee, the Indenture Trustee and the Owner Trustee and their counsel,
respectively.
If this Agreement is terminated by the Underwriters in accordance with
the provisions of Section 7, the Seller, the Credit Line Owners and HFC shall
reimburse the Underwriters for all reasonable out-of-pocket expenses, including
the fees and disbursements of Brown & Wood LLP, as counsel for the Underwriters.
SECTION 9. Indemnification. (a) HFC and the Seller jointly and
severally agree to indemnify and hold harmless the Underwriters
-26-
27
and each person, if any, who controls the Underwriters within the meaning of
Section 15 of the Act as follows:
(i) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, arising out of any untrue
statement or alleged untrue statement of a material fact contained in
the Registration Statement (or any amendment thereto), including the
information deemed to be a part of the Registration Statement pursuant
to Rule 430A under the Act, if applicable, or the omission or alleged
omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading or arising out
of any untrue statement or alleged untrue statement of a material fact
contained in the Prospectus (or any amendment or supplement thereto) or
the omission or alleged omission therefrom of a material fact necessary
in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, unless (a) such untrue
statement or omission or alleged untrue statement or omission was made
in reliance upon and in conformity with written information furnished
to the Seller, or information electronically transmitted to the Seller
by the Underwriters expressly for use in the Registration Statement (or
any amendment thereto) or (b) such loss, liability, claim, damage or
expense is incurred by an Underwriter solely as a result of the
dissemination by it of Derived Information in violation of Section
2(a), 2(b) or 2(c) hereof;
(ii) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, or investigation or
proceeding by any governmental agency or body, commenced or threatened,
or of any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, if such
settlement is effected with the written consent of the Seller; and
(iii) against any and all expense whatsoever (including
the fees and disbursements of counsel chosen by the Underwriters) as
reasonably incurred in investigating, preparing to defend or defending
against or appearing as a third party witness with respect to any
litigation, or investigation or proceeding by any governmental agency
or body, commenced or threatened, or any claim whatsoever based upon
any such untrue statement or omission, as such expense is incurred and
to the extent that any such expense is not paid under (i) or (ii)
above.
This indemnity agreement will be in addition to any liability which the
Seller may otherwise have.
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28
(b) Each of the Underwriters severally agree to indemnify and hold
harmless the Seller, each of its directors, each of its officers who signed the
Registration Statement, and each person, if any, who controls the Seller within
the meaning of Section 15 of the Act (each, an "Indemnified Party") against any
and all loss, liability, claim, damage and expense, as incurred, described in
the indemnity contained in subsection (a) of this Section 9, arising out of (i)
any untrue statements or omissions, or alleged untrue statements or omissions,
made in the Registration Statement (or any amendment thereto) or the Prospectus
(or any amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to the Seller by such Underwriter expressly for
use in the Registration Statement (or any amendment thereto) or the Prospectus
(or any amendment or supplement thereto). The parties hereto acknowledge that
the only information supplied to the Seller by the Underwriter expressly for use
in the Registration Statement or the Prospectus is limited to the information
set forth in the last paragraph on the cover, the first paragraph on page 2 and
the second paragraph under the caption "Underwriting" in the Prospectus, and
(ii) and the Derived Information described below. This indemnity agreement will
be in addition to any liability which the Underwriters may otherwise have.
(c) Each Underwriter agrees to provide the Seller the Derived
Information as set forth in Section 2(b), for filing with the Commission on Form
8-K. Each Underwriter severally and not jointly agrees, assuming all
Seller-Provided Information (as defined below) is accurate and complete in all
material respects, to indemnify and hold harmless the Seller, each of the
Seller's officers and directors and each person who controls the Seller within
the meaning of Section 15 of the Act against all losses, claims, damages or
liabilities, joint or several, to which they may become subject under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement of a
material fact contained in the Derived Information provided by such Underwriter,
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, and agrees to reimburse each such indemnified party for any
legal or other expenses reasonably incurred by him, her or it in connection with
investigating or defending or preparing to investigate or defend any such loss,
claim, damage, liability or action as such expenses are incurred. The
obligations of an Underwriter under this Section 9(c) are in addition to any
liability which such Underwriter may otherwise have. The procedures set forth in
Section 9(d) shall be equally applicable to this Section 9(c).
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29
"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 (as defined below)), if any,
that have been distributed to
prospective investors in written form that:
(i) is not contained in the Prospectus without taking
into account information incorporated therein by reference;
and
(ii) does not constitute Seller-Provided Information.
"Seller-Provided Information" means the information contained on any computer
tape furnished to the Underwriters by the Seller concerning the assets
comprising the Issuer.
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 Cleary, Gottlieb, Steen & Hamilton on behalf of the Public
Securities Association (which letter, and the Commission staff's response
thereto, were publicly available February 17, 1995). The term "Collateral Term
Sheet" as used herein 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 "Kidder Letter" and together with the PSA Letter, the "No-Action
Letters") of Brown & Wood on behalf of Kidder, Peabody & Co., Inc. (which
letter, and the Commission staff's response thereto, were publicly available May
20, 1994).
(d) Each indemnified party shall give prompt notice to each
indemnifying party of any action commenced against it with respect to which
indemnity may be sought hereunder but failure to so notify an indemnifying party
shall not relieve it from any liability which it may have hereunder unless it
has been materially prejudiced by such failure to notify or from any liability
which it may have otherwise than on account of this indemnity agreement. An
indemnifying party may participate at its own expense in the defense of such
action. In no event shall the indemnifying parties be liable for the fees and
expenses of more than one counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances,
unless (i) if the defendants in any such action include one or more of the
indemnified parties and the indemnifying party, one or more of the indemnified
parties shall have employed separate counsel after having reasonably concluded
that there may be legal defenses available to it or them that are different from
or additional to those available to the indemnifying party or to one or more of
the other indemnified parties or (ii) the indemnifying party shall not
-29-
30
have employed counsel reasonably satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of the
commencement of the action.
SECTION 10. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Section 9 is for any reason held to be unenforceable by the indemnified parties
although applicable in accordance with its terms, HFC and the Seller on the one
hand, and the Underwriters (or Underwriter, if such loss, liability, claim,
damage or expense arises solely as a result of such Underwriter's breach of a
representation and warranty set forth in Section 2(a), 2(b) or 2(c) hereof), on
the other, shall contribute to the aggregate losses, liabilities, claims,
damages and expenses of the nature contemplated by said indemnity agreement
incurred by the Seller and one or more of the Underwriters (i) except for any
Underwriter's indemnification arising solely from a breach of its representation
and warranty set forth in Section 2(a), 2(b) or 2(c) hereof, in such proportion
as is appropriate to reflect the relative benefits to HFC and the Seller on the
one hand and the Underwriters or such Underwriter in the case of a breach of a
representation or warranty set forth in Section 2(a), 2(b) or 2(c) hereof on the
other in connection with the matter to which the indemnification relates, which
relative benefits shall be deemed to be in such proportions that the
Underwriters are responsible for that portion represented by the percentage that
the underwriting discount on the cover of the Prospectus as amended or
supplemented bears to the initial public offering price as set forth thereon,
and HFC and the Seller shall be jointly and severally responsible for the
balance or (ii) if the allocation provided by clause (i) above is not permitted
by applicable law or otherwise prohibited hereby, 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 HFC and the Seller on the one hand and the
Underwriters or Underwriter, as applicable, on the other in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities, or actions in respect thereof, as well as any other relevant
equitable considerations; provided, however, that 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. 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 HFC or the Seller, on the one hand, or the Underwriters,
on the other hand, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. HFC, the Seller and the Underwriters agree that it would not be just
and equitable if
-30-
31
contributions pursuant to this Section 10 were to be 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 into account
the equitable considerations referred to in the first sentence of this Section
10. The amount paid by an indemnified party as a result of the losses, claims,
damages or liabilities (or actions in respect thereof) referred to in the first
sentence of this Section 10 shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating, preparing to defend or defending against any action or claim
which is the subject of this Section 10. Notwithstanding the provisions of this
Section 10, except for any loss, claim, damage, liability or expense resulting
solely from a breach of any Underwriter's breach of the representation and
warranty set forth in Section 2(a) or 2(b) hereof, 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 such Underwriter 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 in respect of such losses,
liabilities, claims, damages and expenses. The Underwriters' obligations in this
Section 10 to contribute are several in proportion to their respective
underwriting obligations and not joint and no Underwriter shall be required to
contribute to any loss, liability, claim, damage or expense as a result of
another Underwriter's breach of the representation and warranty set forth in
Section 2(a) or 2(b) hereof. Each party entitled to contribution agrees that
upon the service of a summons or other initial legal process upon it in any
action instituted against it in respect to which contribution may be sought, it
shall promptly give written notice of such service to the party or parties from
whom contribution may be sought, but the omission so to notify such party or
parties of any such service shall not relieve the party from whom contribution
may be sought for any obligation it may have hereunder or otherwise (except as
specifically provided in Section 9 hereof). For purposes of this Section 10,
each person, if any, who controls any Underwriter within the meaning of Section
15 of the Act shall have the same rights to contribution as such Underwriter and
each respective director of the Seller, each respective officer of the Seller
who signed the Registration Statement, and each person, if any, who controls the
Seller within the meaning of Section 15 of the Act shall have the same rights to
contribution as the Seller.
SECTION 11. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or contained in certificates of officers of the Credit Line Owners,
the Seller or HFC submitted pursuant hereto shall remain operative and in full
force and effect, regardless of any investigation made by or on behalf of the
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32
Underwriters or controlling person thereof, or by or on behalf of the Credit
Line Owners, the Seller or HFC and shall survive delivery of any Notes to the
Underwriters.
SECTION 12. Termination of Agreement. You, as representative of the
Underwriters, may terminate this Agreement, immediately upon notice to the
Seller, at any time at or prior to the Closing Time (i) if there has been an
outbreak or material escalation of hostilities involving the United States of
America where armed conflict appears imminent, or the declaration by the United
States of America of a national emergency or war, if the effect of any such
event in the Underwriter's reasonable judgment makes it impracticable or
inadvisable to proceed with the public offering of the Notes or (ii) if trading
generally on the New York Stock Exchange has been suspended, or minimum prices
have been established by the exchange or by order of the Commission or any other
governmental authority, or if a banking moratorium has been declared by either
federal or New York State authorities. In the event of any such termination, the
covenant set forth in subsection 6(b), the provisions of Section 8, the
indemnity agreement set forth in Section 9, and the provisions of Sections 10
and 15 shall remain in effect.
SECTION 13. Default by One or More of the Underwriters. If one or more
of the Underwriters participating in the public offering of the Notes shall fail
at the Closing Time to purchase the Notes which it is (or they are) obligated to
purchase hereunder (the "Defaulted Certificates"), then such of the
non-defaulting Underwriters shall have the right, within 24 hours thereafter, to
make arrangements for one or more of the non-defaulting Underwriters, or any
other underwriters, to purchase all, but not less than all, of the Defaulted
Certificates in such amounts as may be agreed upon and upon the terms herein set
forth. If, however, the Underwriters have not completed such arrangements within
such 24-hour period, then:
(i) if the aggregate principal amount of Defaulted
Certificates does not exceed 10% of the aggregate principal amount of
the Notes to be purchased pursuant to this Agreement, the
non-defaulting Underwriters named in this Agreement shall be obligated
to purchase the full amount thereof in the proportions that their
respective underwriting obligations hereunder bear to the underwriting
obligations of all such non-defaulting Underwriters, or
(ii) if the aggregate principal amount of Defaulted
Certificates exceeds 10% of the aggregate principal amount of the Notes
to be purchased pursuant to this Agreement, this Agreement shall
terminate, without any liability on the part of any non-defaulting
Underwriters.
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33
No action taken pursuant to this Section 13 shall relieve any
defaulting Underwriter from the liability with respect to any default of such
Underwriter under this Agreement.
In the event of a default by the Underwriters as set forth in this
Section 13, either the Underwriters or the Seller shall have the right to
postpone the Closing Time for a period not exceeding five Business Days in order
that any required changes in the Registration Statement or Prospectus or in any
other documents or arrangements may be effected.
SECTION 14. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to them at the address set forth on the first
page hereof. Notices to the Seller or HFC shall be directed to Household Finance
Corporation, 2700 Sanders Road, Prospect Heights, Illinois 60070, to the
attention of the Secretary, with a copy to the Treasurer.
SECTION 15. Parties. This Agreement shall inure to the benefit of and
be binding upon the Underwriter, the Credit Line Owners, the Seller and HFC, and
their respective successors. Nothing expressed or mentioned in this Agreement is
intended nor shall it be construed to give any person, firm or corporation,
other than the parties hereto or thereto and their respective successors and the
controlling persons and officers and directors referred to in Sections 9 and 10
and their heirs and legal representatives any legal or equitable right, remedy
or claim under or with respect to this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the parties and their respective
successors and said controlling persons and officers and directors and their
heirs and legal representatives (to the extent of their rights as specified
herein and therein) and except as provided above for the benefit of no other
person, firm or corporation. No purchaser of Notes from the Underwriter shall be
deemed to be a successor by reason merely of such purchase.
SECTION 16. Governing Law and Time. This Agreement shall be governed by
the law of the State of New York and shall be construed in accordance with such
law. Specified times of day refer to New York City time.
SECTION 17. Counterparts. This Agreement may be executed in
counterparts, each of which shall constitute an original of any party whose
signature appears on it, and all of which shall together constitute a single
instrument.
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If the foregoing is in accordance with the Underwriters' understanding
of our agreement, please sign and return to us a counterpart hereof, whereupon
this instrument along with all counterparts will become a binding agreement
among the Underwriters, the Seller, HFC and the Credit Line Owners in accordance
with its terms.
Very truly yours,
HOUSEHOLD CONSUMER LOAN CORPORATION
By:
---------------------------------------
Name:
Title:
HOUSEHOLD FINANCE CORPORATION
By:
---------------------------------------
Name:
Title:
35
HOUSEHOLD REALTY CORPORATION,
HOUSEHOLD FINANCE CORPORATION OF
CALIFORNIA,
HOUSEHOLD FINANCE CORPORATION II,
HOUSEHOLD FINANCE CORPORATION III,
HOUSEHOLD FINANCE INDUSTRIAL LOAN
COMPANY,
HOUSEHOLD FINANCE REALTY CORPORATION
OF NEW YORK,
HOUSEHOLD FINANCIAL CENTER, INC.,
HOUSEHOLD FINANCE CORPORATION OF
NEVADA,
HOUSEHOLD FINANCE REALTY CORPORATION
OF NEVADA,
HOUSEHOLD INDUSTRIAL LOAN COMPANY
OF KENTUCKY,
HOUSEHOLD FINANCE INDUSTRIAL LOAN
COMPANY OF IOWA,
HOUSEHOLD FINANCE CONSUMER DISCOUNT
COMPANY,
HOUSEHOLD INDUSTRIAL FINANCE
COMPANY, AND
MORTGAGE ONE CORPORATION
By:
---------------------------------------
Name:
Title:
CONFIRMED AND ACCEPTED, as of
the date first above written:
LEHMAN BROTHERS INC.,
as Representative of the Underwriters
By:
-------------------------------------
Name:
Title:
36
SCHEDULE A
UNDERWRITING
Class A-1 Notes Purchase Price
- --------------- --------------
Total........................................$
-------------
Class A-2 Notes
Total........................................$
-------------
Class A-3 Notes
Total........................................$
-------------
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37
EXHIBIT A
Opinion of John W. Blenke, Esq.
Section 7(c) of the Underwriting Agreement
March ___, 1997
LEHMAN BROTHERS INC.,
as Representative of the Underwriters
World Financial Center
Three World Financial Center
New York, New York 10285
Re: Household Consumer Loan Asset
Backed Notes and Certificates,
Series 1997-1
Ladies and Gentlemen:
I address this opinion to the Underwriters pursuant to Section 7(c) of
the Underwriting Agreement dated March ___, 1997 (the "Underwriting Agreement")
among Household Consumer Loan Corporation (the "Seller"), Household Finance
Corporation, a Delaware corporation (the "Company"), Household Realty
Corporation, Household Finance Corporation of California, Household Finance
Corporation II, Household Finance Corporation III, Household Finance Industrial
Loan Company, Household Finance Realty Corporation of New York, Household
Financial Center, Inc., Household Finance Corporation of Nevada, Household
Finance Realty Corporation of Nevada, Household Industrial Loan Company of
Kentucky, Household Finance Industrial Loan Company of Iowa, Household Finance
Consumer Discount Company, Household Industrial Finance Company, and Mortgage
One Corporation (collectively, the "Credit Line Owners" and each individually, a
"Credit Line Owner") and the underwriters referred to therein (together, the
"Underwriters"). The Seller has entered into a Trust Agreement dated as of March
1, 1997 (the "Trust Agreement") with Chase Manhattan Bank Delaware (the "Owner
Trustee"), creating Household Consumer Loan Trust 1997-1 (the "Issuer"), a
statutory business trust established under the laws of the State of Delaware.
The Seller proposes to direct the Owner Trustee pursuant to the Trust Agreement
to cause the Issuer to issue Household Consumer Loan Asset Backed Notes, Series
1997-1, Class A and Class B (the "Notes") and Household Consumer Loan Asset
Backed Certificates, Series 1997-1 (the "Certificates" and, together with the
Notes, the "Securities"). Only the Class A Notes are being purchased by the
Underwriters [ ].
A-1
38
The Notes will be issued pursuant to an Indenture dated as of March 1,
1997 (the "Indenture") between the Issuer and The Bank of New York (the
"Indenture Trustee") and will represent indebtedness of the Issuer. The
Certificates will be issued pursuant to the Trust Agreement. The Notes will be
secured by (i) a participation interest (the "Series 1997-1 Participation
Interest") in (a) receivables held in Household Consumer Loan Deposit Trust I
(the "Deposit Trust") originated under certain fixed and variable rate revolving
secured and unsecured consumer credit lines (the "Credit Lines") and (b) certain
other participation interests, (ii) amounts on deposit in certain accounts of
the Issuer held for the benefit of the holders of the Securities, and (iii) an
assignment of the Issuer's rights under the Series 1997-1 Supplement (as defined
below) (collectively, the "Trust Assets"). The Deposit Trust was formed pursuant
to a Pooling and Servicing Agreement dated as of September 1, 1995 (the "Base
Pooling and Servicing Agreement") among the Seller, the Company, as Servicer
(the "Servicer") and Texas Commerce Bank National Association as successor
trustee to The Chase Manhattan Bank, N.A., as Deposit Trustee (the "Deposit
Trustee"). The Series 1997-1 Participation Interest was issued pursuant to the
Supplement for Series 1997-1 dated as of March 1, 1997 among the Seller, the
Servicer and the Deposit Trustee (the "Supplement" and together with the Base
Pooling and Servicing Agreement, the "Pooling and Servicing Agreement"). The
Pooling and Servicing Agreement, together with the Trust Agreement, the
Certificate of Trust thereto, the Indenture, the Receivables Purchase Agreement,
the Administration Agreement and the Underwriting Agreement constitute the
"Basic Documents" herein. Capitalized terms used herein shall have the meanings
ascribed to them in the Underwriting Agreement unless herein otherwise defined.
As Vice President--Corporate Law and the Secretary of Household
International, Inc., a Delaware corporation, the ultimate parent corporation of
the Company, the Seller and each of the Credit Line Owners, I, or the attorneys
under my supervision have, among other things (i) participated in the
preparation of the Pooling and Servicing Agreement and (ii) cooperated with
officers of the Seller and the Company, representatives of the Underwriters and
independent accountants in the preparation of the Registration Statement on Form
S-3 and S-1 (Registration Nos. 333-20147, 333-20147-01 and 333-20147-02) filed
with the Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Act"), and the Prospectus dated March
___, 1997 in the form in which it was transmitted for filing with the Commission
pursuant to Rule 424(b) of the Rules and Regulations under the Act (the "Final
Prospectus").
I advise you that in my opinion:
A-2
39
(i) The Pooling and Servicing Agreement is not required to be
qualified and the Indenture has been duly qualified under the Trust Indenture
Act;
(ii) None of the Seller, the Deposit Trust or the Owner Trust is
an "investment company" or under the "control" of an "investment company" as
such terms are defined in the Investment Company Act of 1940; and
(iii) The Notes and the Basic Documents that are described in the
Final Prospectus conform in all material respects to the respective descriptions
thereof in the Final Prospectus.
The opinions set forth herein are subject to the following
qualifications:
No opinion is expressed as to the effect of the compliance or
noncompliance of the Seller, Credit Line Owners, Servicer, Deposit Trustee,
Owner Trustee or Indenture Trustee with any state or federal laws or regulations
applicable to them because of their legal or regulatory status or the nature of
their respective businesses and to the extent that the opinions set forth herein
relate to the due authorization, execution and delivery of the Pooling and
Servicing Agreement and the Certificates.
I, or the attorneys under my supervision, have examined originals, or
copies of originals certified to my satisfaction, of such agreements, documents,
certificates and other statements of public officials and responsible officers
of each of the Seller, Company, Deposit Trustee, Owner Trustee and Indenture
Trustee and other papers and matters of fact and law as I have deemed relevant
and necessary as a basis for the opinions I expressed herein. I have relied,
with respect to factual matters, on representations and warranties made by, and
on certificates and other documents furnished by responsible officers of each of
the Deposit Trustee, Owner Trustee, Indenture Trustee, the Seller and the
Servicer. In expressing the foregoing opinions, I have assumed, with the
Underwriters' permission, (i) the authenticity of all documents submitted to me
as originals and the conformity with the original documents of any copies of
such documents submitted to me for my examination, (ii) that each of the Seller,
Deposit Trustee, Owner Trustee and Indenture Trustee has been duly organized and
is validly existing and in good standing under the laws of its jurisdiction of
incorporation and (iii) the due execution and delivery, pursuant to due
authorization, of the agreements and documents referred to above by the Trustee.
A-3
40
The opinions expressed herein are only with respect to federal laws of
the United States and the laws of the State of Illinois. I consent to the
reliance on this opinion by Standard & Poor's Ratings Services, a Division of
The McGraw-Hill Companies, Inc., and Moody's Investors Service, Inc. Subject to
the foregoing sentence, this opinion is solely for the Underwriters' benefit and
may not be relied upon by, nor copies be delivered to, any other person without
my prior written consent.
Very truly yours,
A-4